Case Name: PEOPLE ex rel. BRYAN et al. v. STATE BOARD OF TAX COM'RS
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1911-02-10
Citations: 127 N.Y.S. 858
Docket Number: 
Parties: PEOPLE ex rel. BRYAN et al. v. STATE BOARD OF TAX COM’RS.
Judges: 
Reporter: West's New York Supplement
Volume: 127
Pages: 858–866

Head Matter:
PEOPLE ex rel. BRYAN et al. v. STATE BOARD OF TAX COM’RS.
(Supreme Court, Appellate Division, First Department.
February 10, 1911.)
1. Taxation (§ 144 )—Corporation Franchises and Privileges—Construction of Tunnel—“Special Franchise.”
The New York & Long Island Railroad Company was incorporated in 1887 and obtained the consent of the then city of New York for the construction of a tunnel railroad under one of the streets of the borough of Manhattan, and the time for construction was extended to 1907, at which time the company’s corporate existence expired under the provisions of section 5 of the railroad law (Laws 1890, c. 565, amended by Laws Í901, c. 508), and its property became vested in the relators, who were its directors at that date, as trustees for stockholders and creditors in accordance with section 35 of the general corporation law (Consol. Laws, c. 23). The state in 1891, by patent, granted to the company and its successors a right of way to construct a tunnel under the waters of the East River with all “the rights, hereditaments and appurtenances” belonging and appertaining thereto, to have and to hold forever. Tax Law, Laws 1896, c. 908, § 2, subd. 3, as amended by Laws 1899, c. 712 (Consol. Laws, c. 60, art 1, § 2, subd. 3), provides that the terms “land, real estate and real property” shall include underground railroads, including the value of all franchises to construct and operate the same, to be known as special franchises and to include the value of the tangible property of a corporation, situated under any public waters. In 1908 and 1909 the State Board of Tax Commissioners assessed the company’s special franchise to the relators. Held, that while the patent was not an absolute conveyance of land, or a fee, that part of the tunnel beneath the bed of the river extending from a point 300 feet east of the bulkhead line of the Manhattan shore was property subject to taxation as a "special franchise” under the tax law.
[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 250; Dec. Dig. § 144.
For other definitions, see Words and Phrases, vol. 7, p. 6576.]
2. Navigable Waters (§ 36 )—Lands Under Water—Ownership by State-Tideway.
The state holds the title in fee in the tideway and to the lands under water in East River beyond the tideway as trustee for the public.
[Ed. Note.—For other cases, see Navigable Waters, Cent. Dig. §§ 180-200; Dec. Dig. § 36. ]
Laughlin, J., dissenting.
Appeal from Special Term, New York County.
Certiorari by the People of the State of New York, on the relation of E. P. Bryan and others, as trustees of the New York & Long Island Railroad Company, against the State Board of Tax Commissioners. From final orders in proceedings to review assessments for 1908 and 1909, respectively, made by the State Board of Tax Commissioners upon the special franchise of the relators in the borough of Manhattan, City of New York (G7 Mise. Rep. 508, 124 N. Y. Supp. 711), the relators appeal.
Affirmed.
Argued before INGRAHAM, P. J., and LAUGHLIN, CLARKE, SCOTT, and MILLER, JJ.
James L. Quackenbush (Ralph Norton, of counsel, and Charles E. Kingsley, on the brief), for relators.
Edward R. O’Malley, Atty. Gen. (William N. Cohen, of counsel, and Arthur J. Cohen, on the brief), for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
CLARKE, J.
The New York & Long Island Railroad Company was duly incorporated on or about the 30th day of July, 1887, and duly acquired the consent of the board of aldermen of the then city of New York for the construction, operation, and maintenance of a tunnel railroad in, through, and under the surface of Forty-Second street from its easterly end to a point therein between Tenth and Eleventh avenues in said city, and such tunnel has been actually constructed from the easterly end of Forty-Second street to a point at or near its intersection with Park avenue. The tunnel extends between the bed of the East River to certain designated points in Long Island City.
The time of the railroad company to complete the construction of its railroad was extended by various acts of the Legislature until the 1st of January, 1907, when, by reason of the failure of the company to complete its road, its corporate existence expired in accordance with the provisions of section 5 of the railroad law (Laws 1890, c. 565, amended by Laws 1901, c. 508), and all its property, franchises, and rights became vested in the individuals who were on that date its directors, as trustees for the benefit of stockholders and creditors of the corporation in accordance with the provisions of section 35 of the general corporation law (Consol. Laws, c. 23). The relators were on the 1st of January, 1907, the directors of said company, and they became the trustees of its property under- the statutory provisions referred to.
The geographical limits of the borough of Manhattan extend to the bulkhead line of the Queens county shore, thus including the bed of the East River. The state board of tax commissioners levied an assessment of $3,175,000 upon the special franchises of the relators in the borough of Manhattan, city of New York, for the year 1908, and /of $3,350,000 upon said franchises for the year 1909, which assessments having been affirmed upon certiorari proceedings by the Special Term, from the orders entered thereon this appeal is taken.
It was stipulated between counsel that, if the court should hold that the entire tunnel in the borough of Manhattan was properly assessable by the State Board of Tax Commissioners as a special franchise, then the existing assessments for 1908 and 1909 respectively might be regarded as the equalized valuations for the purpose of taxation. Therefore the sole point presented to this court is whether so much of the tunnel beneath the bed of the river as extends from a point 300 feet east of the bulkhead line of the Manhattan shore to the bulkhead line of. the Queens shore is legally subject to taxation.
On the 5th of January, 1891, a patent was issued by the state to the company, reading as follows:
"Know ye, that pursuant to chapter 140 of the Laws of 1850, as amended By chapter 601, Laws of 1886, and a resolution of the commissioners of the land office adopted November 5, 1890, we have given and granted and by these presents do give and grant' unto the New York & Long Island Railroad Company, its successors and assigns, a right of way 99- feet in width and 50 feet in height within which to construct a tunnel for the use and operation of the above grantee's railroad beneath the waters of the East River, upon and along the route of said railroad between the city of New York and Hunter's point in Long Island City, as shown in plan and profile upon the charts filed in the office of our Secretary of State, with the water grant papers of the month of January, 1891, together with all and singular the rights, hereditaments and appurtenances to the same belonging or in any wise appertaining, to have and to" hold .the above-described premises unto the said New York & Long Island Railroad Company, its successors and assigns forever."
The consideration paid by the New York & Long Island Railroad Company for such grant was $575.
The relators contend that the portion of their tunnel under the river between the points above indicated is built entirely within their own property, and therefore is not subject to an assessment such as is under review here; in other words, that the patent is an absolute conveyance of real estate.
Subdivision 3 of section 2 of the tax law (chapter 908 of the Laws of 1896, as amended by chapter 712 of the Laws of 1899 [Consol. Laws, c. 60, art. 1, § 2, subd. 3]), provides:
"The terms, land, real estate, and real property as used in this chapter include all surface, underground or elevated railroads, including the value of all franchises, rights or permission to construct, maintain or operate the same, in, under, above, on or through streets, highways or public places, all railroad structures, substructures and superstructures, tracks and the iron thereon, branches, switches and other fixtures permitted or authorized to be made, laid or placed in, upon, above or under any public or private road, street or ground. A franchise, right, authority or permission specified in this subdivision shall, for the purpose of taxation, be known as a special franchise. A special franchise shall be deemed to include the value of the tangible property of a person, copartnership, association or corporation situated upon, under or above any street, highway, public place or public waters in connection with the special franchise. The tangible property so included shall be taxed as a part of the special franchise."
It seems to us that the contention of the relators is unsound. The intention of the Legislature in providing this source of revenue was to subject to taxation those making use of public property in the prosecution of their business. If a railroad be located in, upon, or under a public street, in accordance with the necessary permission granted by the proper authorities, it has a property right within the usual and common signification of that word as held in People v. O'Brien, 111 N. Y. 1, 18 N. E. 692, 2 L. R. A. 255, 7 Am. St. Rep. 684. The court said:
"The title to streets in New York is vested in the city in trust for the people of the state, but under the Constitution and statutes it had authority to convey such title as was necessary for the purpose, to corporations desiring to acquire the same for use as a street railroad. Grants similar in all material respects to the one in question have heretofore been before the courts of this state for construction, and it has been quite uniformly held that they vest the grantee with an interest in the street in perpetuity, for the purposes of a street railroad."
The land under water in the East River is held by the state. The Court of Appeals said, in Matter of City of New York, 168 N. Y. 134, 61 N. E. 158, 56 L. R. A. 500:
"The state holds the title in fee in the tideway and to the lands under water beyond the same, as trustees for the public in its organized capacity."
It has granted through this land so held in fee a right of way to construct a tunnel for the use and operation of the grantee's railroad. While the patent contains words of perpetuity, they do not transform the precise right of way granted into a fee by implication. No one would contend that the perpetuity held to attach to the permission to construct a railroad in the public streets constitutes a fee rather than a right of way.
Relator's road is situated under public waters, and therefore comes within the express terms of the tax law cited.
We have no doubt that the tunnel under the river was properly taken into consideration by the board in assessing the special franchise of relators for purposes of taxation, and it, follows,' therefore, that the orders appealed from should be affirmed, with costs and disbursements to the respondent.
INGRAHAM, P. J" and SCOTT and MILLER, JJ., concur.