Court Opinion

ID: 3624235
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:05:14.961466+00
Date Added: 2024-06-11T11:53:15.818578
License: Public Domain

The only question presented by this appeal is whether a corporation, liable to taxation under section 12 of the General Tax Law (L. 1896, ch. 908) and owning real estate subject to mortgage, is entitled to have deducted from its capital stock and surplus profits exceeding ten per cent of its capital the whole assessed valuation of its real estate, when it has included in its statement of capital stock only its equity in such real estate.
Section 12 of the General Tax Law provides that "The capital stock of every company liable to taxation, except such part of it as shall have been excepted in the assessment roll or shall be exempt by law, together with its surplus profits or reserve funds exceeding ten per centum of its capital, after deducting theassessed value of its real estate, and all shares of stock in other corporations actually owned by such company which are taxable upon their capital stock under the laws of this state,shall be assessed at its actual value."
Under the authority of this statute the appellants assessed the relator upon the basis of certain figures which need not be examined in detail, because the single question of law we are called upon to decide depends upon the construction of section 12, above quoted, as applied to one parcel of real estate owned by the relator.
This parcel of land, situated on Seventh avenue and Seventeenth street, in the city of New York, was valued at $250,000 and was held by the relator subject to a mortgage of $200,000, thus leaving in the owner an equity of $50,000. It was assessed at $150,000. In relator's statement of its capital stock, etc., only the equity of $50,000 was included, and it *Page 67 
insisted upon the right to deduct the whole assessed valuation. This contention was disallowed by the appellants who held that the ratio of deduction for assessed valuation should not exceed that included in relator's statement of capital stock; in other words, that the deduction for assessed valuation upon the Seventeenth street property should be confined to the equity therein which the relator had included in its statement of capital stock. The Special Term reversed the determination of the appellants and held that although the relator's equity in this real estate was all that could properly be considered in fixing the amount of its capital stock for purposes of taxation, it had the right to have the whole assessed valuation thereof deducted from its total capital stock, and the order entered upon that decision has been affirmed by the Appellate Division.
Since it is conceded that the term "capital stock" as used in section 12 is synonymous with the term "assets," and that, therefore, only the relator's equity in the Seventeenth street property was properly included in its statement of capital stock, that phase of the case need not be discussed, and the only question that remains to be considered is whether the assessed valuation of the whole parcel is to be deducted before the relator's taxable assets can be ascertained.
The statute says that the capital stock of a corporation liable to taxation under section 12 and its surplus profits or reserve funds exceeding ten per centum of its capital, "after deducting the assessed valuation of its real estate," shall be assessed at its actual value. The object of this unequivocal declaration is obvious. While the equity of a corporation in its real estate is all that should properly be included in its actual assets, the corporation is nevertheless considered the owner of the whole land for the purpose of its taxation as real estate, and the provision for deducting from the taxable assets of a corporation the assessed valuation of its real estate is simply designed to prevent double taxation. (People ex rel. Equitable Gas LightCo. v. Barker, 144 N.Y. 94.) If only the assessed valuation upon the equity of a corporation in its real *Page 68 
estate were to be deducted from its total assets, such corporation would be subjected to double taxation, for it is taxed upon its capital stock as well as its real estate. The argument that by this process of counting as part of its assets only its equity in real estate and deducting from its total capital stock the whole assessed value of the real estate, a corporation gains an unjust advantage over the natural person who is liable to taxation is neither germane nor sound. A corporation is burdened by several forms of taxation that do not affect the individual. Under our laws all business corporations pay a tax for the right to exist. Franchise corporations pay a tax for the privilege of exercising their franchises. Both classes pay a tax upon their assets which represent capital stock, and both are taxed upon their real estate. It is true that the individual may not deduct the assessed valuation of his real estate from the valuation of his personal property for which he is taxed, but that is so, first, because the statute has made no such provision in the case of individuals as in the case of corporations, and, second, because there is not the same reason for it in the former case that there is in the latter. Quite aside from the fact that corporations are subjected to several forms of taxation from which individuals are exempt, it is common knowledge that the assets of a corporation are all laid bare to the view of the taxing authorities, while much of the personal property of the individual is put in such form or kept in such places that it cannot be reached for taxation. Then, too, it is true in practice, if not in theory, that corporations, simply because they are corporations, are taxed far in excess of individuals having the same or similar kinds of property liable to taxation. But, whatever the reason for the distinction may be, whether sound or unsound in principle, the fact remains that the legislature has enacted that the capital stock and surplus profits of a corporation exceeding ten per centum of its capital shall only be taxed after deducting therefrom the assessed value of its real estate, and this in itself is a sufficient argument for the affirmance of the order herein. *Page 69 
The cases of People ex rel. Van Nest v. Commissioners ofTaxes (80 N.Y. 573), and People ex rel. Eden Musee Co. v.Feitner (60 App. Div. 282), relied upon by the appellants, are not analogous, because there the relators owned buildings upon lands leased for long terms, and upon which the lessees were bound to pay the land taxes as part of their rent. In those cases the courts properly held that the relators were not entitled to have deducted from their taxable assets the value of the land, because the land did not belong to them. In the case at bar the relator is the owner of the land, and it pays taxes thereon, not as part of the rent, but simply because it has the title.
The order of the Appellate Division should be affirmed, with costs.
GRAY, HAIGHT and VANN, JJ., concur with CULLEN, Ch. J.; O'BRIEN and BARTLETT, JJ., concur with WERNER, J.
Orders reversed.