Court Opinion

ID: 5184396
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:46:26.498305+00
Date Added: 2024-06-11T08:26:41.298059
License: Public Domain

Landon, J.:
The contention of the relator is that the tax contemplated by the statute is upon the active use of its capital in its corporate business, not upon the passive holding of it in the form of an unproductive investment. ■
The learned Attorney-General relies upon the letter of the statute which declares that “ every corporation * * * incorporated under any law of this. State, * * "x" except * * * ■ manufacturing corporations carrying on manufacture within this State *182* * * shall be subject to and, pay a tax,”1 etc. (§ 3, chap. 542, Laws of 1880.) As the relator does no manufacturing, it is • not exempt upon that ground. (People v. Horn Silver Mining Co., 105 N. Y. 82; People ex rel. Tiffany & Co. v. Campbell, 144 id. 173.)
The franchise tax is imposed upon domestic corporations because of their franchise. It is based upon their capital “ employed within this State ” and graduated according to dividends earned. In respect to foreign corporations, we do not grant;"them their franchises, but we permit them to do business here; and, as we should not accord them superior advantages over domestic corporations, We try to impose the same rate of taxation upon them, and thus- we tax them. ' upon their, business, upon the same basis and scale. In People ex rel. Singer Mfg. Co. v. Wemple (150 N. Y. 46) it was held as to a foreign corporation that the money, whether- capital or surplus, which it invested in real estate here, not for the transaction of its ordinary business, but for rental, was not “ employed within this State ” within the meaning of the statute. If capital cali be invested without being employed, the case.before us seems to be a fair instance of' it.' Of course, the statute does not" contemplate that a foreign corporation shall,, in this respect, be more favored than a domestic one, and - hence we must hold that the relator was-not -liable to the franchise tax.
The determination of, the Comptroller should be reversed, with fifty dollars costs and disbursements.
■ All concurred, except Putnam, J., dissenting.
Determination of Comptroller reversed, .with fifty dollars costs and disbursements.