Opinion
September 26, 1907.
A. Dudley Britton, for the relator.
George P. Decker, Deputy Attorney-General, and William S. Jackson, Attorney-General, for the respondent.
We do not agree that the relator should be entirely exempt from taxation on the ground that all of its capital was employed within the State of New Jersey, and that the amount held to have been employed as capital within this State is a part of the company's surplus. To uphold such a contention would be to open the way to an easy evasion of the Tax Law of this State. (See, also, People ex rel. Commercial Cable Co. v. Morgan, 178 N.Y. 433. ) In the case cited Judge WERNER, in writing for the court, says: "In construing this section of the Corporation Tax Law, the authorized issue of the share stock of a corporation needs to be considered only as fixing the limit beyond which a corporate franchise cannot be taxed in a case where all of the corporate capital is employed within this State."
Nor can it be material that the money was expended upon leased ground, and that the structures erected thereby might become in law the property of the owner of the ground. It is nevertheless capital employed within this State whether invested in structures upon leased ground or upon ground that was the property of the corporation itself.
If these moneys be deemed a practical increase of capital stock, as is suggested by Judge BARTLETT in People ex rel. Singer Mfg. Co. v. Wemple ( 150 N.Y. 46), then the dividend should be estimated as a dividend upon the increased amount of capital stock. The capital stock authorized by the charter to the amount of $25,000 was actually invested in New Jersey. It appears that the amount of $12,500 in round numbers was in addition invested in this State. The $50,000 of dividends should be estimated then as paid upon a capital stock of $37,500, instead of upon a capital stock of $25,000. Otherwise the surplus actively used in this State would be deemed capital stock for the purpose of taxation, but not capital stock for the purpose of determining the amount of taxation. This would be an unnecessary construction of the statute, and in my judgment an unjust one. The assessment should, therefore, be modified to this extent, and as modified the determination of the Comptroller should be affirmed, without costs.
All concurred.
Determination of the Comptroller modified as per opinion, and as so modified affirmed, without costs.