Court Opinion

ID: 5197518
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:45:37.550781+00
Date Added: 2024-06-11T08:27:08.260981
License: Public Domain

Kellogg, J.:
Within the -rule laid -down.in People ex rel. Wall & Hanover St. R. Co. v. Miller (181 N. Y. 328) a. corporation whose-only business is owning and- managing an apartment house is. employing its capital stock within the State and is taxable under section 182. of the Tax Law.- The Comptroller was, therefore,. right, in- determining that the- relator’s capital stock is taxable. ' •
*619The amount of the assessment and tax is not excessive if the value of the property of the corporation is considered with refer-' ence to its present rental value. But the relator contends that burdened as the association is with these, fifty year .leases at inadequate rentals, so' that at the'best it can only be self-sustaining, its stock cannot be assessed at more than its par value. The question then is whether the stockholders get these cheap rentals solely on account of the leases or by virtue of their being stockholders of the association. The petition alleges that the leases can be sold and transferred without reference to the stock, and that- the stock has no real market value except as it accompanies one of the leases, and that in one or two cases the actual lease has become disassociated from the stock. It is unnecessary to consider the- effect of those allegations, for the reason that the denial in the return puts them in issue,' and no evidence was offered before the Comptroller, although the facts were peculiarly within the knowledge of the relator. This determination must proceed'-upon the return, and allegations in the petition denied by the return cannot be considered. (People ex rel. Lester v. Eno, 176 N. Y. 513.) There is no evidence tending to show that any lease is now owned separate and apart from the stock, or that any stock has been sold or is owned separate and apart from the lease, or that they can be so separated. The terms ' of the lease, the ,terms of the stock certificates, if any, and the by-laws of the association are not before us, and there is no means of definitely determining whether a stockholder may sell his lease and retain his stock or sell his stock and retain his lease. -We may fairly infer from the certificate of incorporation that while others than stockholders may occupy the premises (either as tenants of' the two apartments reserved for outsiders, or as sub-tenants of stockholders), the intention is that the leases are apportioned and distributed among the stockholders and- members of the association, and it is not a broad inference that the ownership of the lease should remain with the stock, for the lease could not have been obtained without the stock. If such is the case then the benefits which a stockholder gets from his. lease he derives as a stockholder; such - benefits then did not all go to the original stockholders, but accrue each year to the then stockholder'; they may be called dividends or otherwise, but they come from, the association and go to the present *620stockholder. It is evident, that if the rents of the apartments leased to the stockholders are increased twenty or twenty-five per cept to their present value,' the association would pay a substantial dividend and its stock would be very valuable. The stockholders, therefore, are receiving by means of the leases the benefits which ordinarily accrue to a stockholder under the name-of dividends. In determining the value of the stock the present rental value of the property may be considered. The determination of the Comptroller is, therefore, Confirmed, with fifty dollars costs and disbursements^ to be paid by the. relator.
All concurred.
Determination of the Comptroller confirmed,, with fifty 'dollars costs and disbursements.