tangible things. People ex rel. Clock Co. v. Wemple, 133 N. Y. 323 (1892).

The provisions of Laws 1880, chap. 542; as amended by Laws 1881, chap. 361, Laws 1890, chap. 522, for a tax on foreign corporations by the State comptroller, apply only to a tax on capital employed in this State, and the comptroller has no authority to impose a tax on real estate in this State, purchased by the corporation from its surplus as an investment, and not used in its business. People ex rel. Singer Manufacturing Co. v. Wemple, 78 Hun, 63; S. C., 60 N. Y. St. Repr. 662; 29 N. Y. Supp. 92 (1894).

A foreign corporation which maintains a sales agency in the city of New York, refined crude oil, and sold the product of its mills in this State, maintained a storage for its products here and kept on deposit large sums in New York for carrying on its business,- held, to be liable to tax under Laws 1880, chap. 542, § 3, as a corporation doing business in this State. People ex rel. Southern Cotton Oil Co. v. Wemple, 39 N. Y. St. Repr. 738; S. C., 15 N. Y. Supp. 446.

Such part of the capital stock of a railroad corporation, as is invested in freight cars permanently used out of the State, is not subject to the franchise tax under Laws 1880, chap. 542, and the acts amendatory thereof. People v. Campbell, 88 Hun, 544; S. C., 68 N. Y. St. Repr. 811; 34 N. Y. Supp. 801 (1895). Nor is the stock of a foreign corporation in which a portion of the capital stock is invested capital employed within the State. Id. But bonds of foreign corporation held by it are not part of its capital employed out of the State. Id.

The fact that a corporation is engaged in interstate, as well as State, commerce does not preclude the imposition of the tax by the comptroller. People ex rel. Postal Telegraph Co. v. Campbell, 70 Hun, 507; S. C., 53 N. Y. St. Repr. 790; 24 N. Y. Supp. 208 (1893).

The property of a foreign corporation engaged in foreign or interstate commerce may be taxed equally with like property of a domestic corporation engaged in the same business. People ex rel. Southern Cotton Oil Co. v. Wemple, 131 N. Y. 64; S. C., 42 N. Y. St. Repr. 632; affirming 61 Hun, 83 (1892). A tax or other burden imposed upon the property of either because it is used to carry on interstate commerce, or upon the transportation of persons or property upon, or for the navigation of, public waters is invalid as an interference with the power of Congress in the regulation of commerce. Id. Under the existing statute the amount of capital used in the State is the basis of the tax. Id.

A foreign corporation carrying on any part of its manufacturing operations within this State, however small, in the ordinary course of business, and in good faith was not taxable here before Laws 1889, chap. 353. People ex rel. Clock Co. v. Wemple, 133 N. Y. 323; S. C., 45 N. Y. St. Repr. 234; revg. 42 id. 60; S. C., 16 N. Y. Supp. 602 (1892). Otherwise if its business here was merely putting together parts of machines manufactured elsewhere. Id.

A corporation organized under the laws of another State, where it was engaged in mining and refining, shipped its bullion for refining to the United States assay office in this State. It maintained an office in the city of New York solely for meetings of directors, payment of dividends and correspondence with its superintendents at the mines and refineries. Held, that it was a foreign corporation doing business in this State, and subject to tax as such; and that it could not claim exemption from taxation under Laws 1880, chap. 542, as amended by Laws 1881, chap. 361, as a manufacturing company carrying on manufacture within this State. People v. Horn Silver Mining Co., 105 N. Y. 76 (1887); affg. 38 Hun, 276 (1885).

Under the provisions of Laws 1880, chap. 542, § 3, as amended by Laws 1881, chap. 361, a corporation, which has declared dividends during the year amounting to 53-4 per cent. is subject to a tax at the rate of one and one-half mills on each dollar of the value of its stock, although the stock is valued above par and the result is the imposition of a larger tax than if the corporation had paid 6 per cent. dividends and been taxed at the rate of one-quarter mill for each 1 per cent. dividend under the prior clause of the statute. People v. D. & H. Canal Co., 54 Hun, 598; S. C., 27 N. Y. St. Repr. 624; 7 N. Y. Supp. 890; 121 N. Y. 666 (1889).

The taxes upon corporations imposed by Laws 1880, chap. 542, as amended by Laws 1881, chap. 361, are taxes upon franchises, not upon property, and the fact that dividends, a portion of which is derived from securities exempt from taxation, furnish the basis for computing the amount of the tax, does not invalidate the statute. People v. Home Ins. Co., 92 N. Y. 328 (1883); affg. 29 Hun, 204 (1883).

The cases on the distinction between franchise and property taxes are collated in the opinion.

Id.

In taxing corporations under Laws 1880, chap. 542, as amended by Laws 1881, chap. 361, it is not necessary to deduct the amount of stock which the corporation holds in United States bonds from the total amount of its capital stock, and to compute the tax only upon dividends derived from the remainder, since the tax is upon the franchise, and not upon the property. Id.

Division of a surplus earned before 1880,- held, not a dividend within the meaning of Laws 1880, chap. 542, § 3, making the dividend the measure of the value of the franchise for taxable purposes. People v. Albany Ins. Co., 92 N. Y. 458 (1883); affg. 29 Hun, 204 (1883).

It seems, that the division of a surplus acquired during the operation of the statute, may be treated as a dividend, though made in a year subsequent to that in which it was earned. Id.

The statute does not authorize the apportionment of the tax according to the amount of dividends earned in this State, or of its capital stock employed here. People v. Equitable Trust Co. of New London, 96 N. Y. 387 (1884). See the cases of the Pembina Mining Co. v. Pennsylvania, 125 U. S. 181 (1888), and W. U. Tel. Co. v. Attorney-General, Mass., id. 530 (1888); also Leloup v. Port of Mobile, 127 id. 640 (1888).

§ 183. Certain corporations exempt from tax on capital stock.Banks, saving banks, institutions for savings, insurance or surety corporations, manufacturing corporations to the extent only of the capital actually employed in this state in manufacturing, and in the sale of the product of such manufacturing, mining corporations wholly engaged in mining ores within this state, agricultural and horticultural societies or associations, and corporations, joint-stock companies or associations operating elevated railroads or surface railroads not operated by steam, or formed for supplying water or gas or for electric or steam heating, lighting or power purposes, and liable to a tax under sections one hundred and eighty-five and one hundred and eightysix of this chapter, shall be exempt from the payment of the taxes prescribed by section one hundred and eighty-two of this chapter. This exemption shall not be construed to include title guaranty or trust companies.

[Revisers' Note.- L. 1881, chap. 361, § 3; R. S., 8th ed., 1153, as am. by

L. 1890, chap. 522; R. S., 8th ed., supp., 3255,
re-enacted in part without change of substance.]

See Form No. 25.

This section as originally reported by the commission did not change the exemption of the original law. Several material changes were made by the committee. The original law exempted life insurance corporations and foreign insurance corporations. The act of 1886 (chap. 679), as amended by Laws 1895, chap. 418, exempted fire, marine and casualty insurance corporations, both domestic and foreign, from a capital stock tax. The committee of the senate, therefore, expressly exempted from the capital stock tax all insurance corporations, and placed surety corporations on the same basis as other insurance corporations by exempting them from the capital stock tax and including them in section 187 as taxable on their gross premiums.

The second important change made by the committee was in relation to manufacturing corporations. The act of 1881 exempted manufacturing corporations "carrying on manufacture within this State." Laws 1889, chap. 353, however, provided that such a corporation should not be exempt unless "wholly engaged in carrying on manufacture within this State." In the case of People ex rel. Tiffany & Co. v. Campbell, 144 N. Y. 166 (1894); affg. 80 Hun, 95, the Court of Appeals held that a domestic manufacturing corporation engaged in incidental business, the doing of which was ultra vires, was taxable only on the capital employed in such incidental business, and not upon its entire capital, the court saying: "If a manufacturing corporation is engaged in business outside of its corporate powers, in connection with its manufacturing business, it does not

cease to be wholly engaged' in the business of manufacture; that is to say, its only legal and authorized business was that of manufacture." This disposed of the Tiffany case and probably was a just, if somewhat strained, decision. In the case of People ex rel. Western Electric Co. v. Campbell, 145 N. Y. 587; affg. 80 Hun, 466 (1895), a different state of facts was presented. The company was authorized by its charter to engage in a manufacturing and general business, including the purchase and sale of articles manufactured by others. The larger portion of the capital employed within the State was employed in manufacturing. The comptroller assessed the tax upon the entire capital employed within the State whether in manufacturing or other business. The Court of Appeals, while recognizing the harshness of the application, was unable to escape from the statute, and the assessment of the comptroller was upheld, the court remarking that "it is a subject to be brought to the attention of the legislature." See, also, People ex rel. Stokes Co. v. Roberts, 90 Hun, 533 (1895). The amendment proposed by the committee seems to be a just disposition of the subject.

The third amendment made by the committee was to exempt from section 182, elevated railroads, surface railroads not operated by steam, and water, gas, electric, steam-heating, lighting or power corporations, & new scheme for the taxation of such corporations being provided by sections 185 and 186 of this chapter.

The following decisions relating to what are and what are not manufacturing corporations may be of value:

A corporation organized under Laws 1848, chap. 47, authorizing the formation of gas-light companies, and engaged in the manufacture and supply of gas thereunder, is a manufacturing corporation within Laws 1880, chap. 542, and by section 3 excepted from the operation of that Statute. Nassau Gas-Light Co. v. City of Brooklyn, 89 N. Y. 409 (1882); affirming 25 Hun, 567 (1881).

A corporation organized under Laws 1855, chap. 301, extending the operation of Laws 1848, chap. 40, for the purpose of collecting, storing and preserving ice, preparing it for market, etc., is not a manufacturing corporation exempt from the taxes imposed by Laws 1880, ch. 542, § 3, as amended by Laws 1881, chap. 361. People v. Knickerbocker Ice Co., 99 N. Y. 181 (1885); affg. 32 Hun, 475 (1884).

A foreign corporation, whose business consists in the purchase of spices and baking powder in bulk and putting up the same in packages for sale, buying various kinds of tea and mixing them to produce a compound called combination tea, grinding coffee, and in some instances mixing various kinds together, is not engaged in manufacture, in this State, so as to be exempt from liability to the franchise tax. People ex rel. Union Pac. Tea Co. v. Roberts, 145 N. Y. 375; S. C., 64 N. Y. St. Repr. 827; affg. 82 Hun, 352; S. C., 63 N. Y. St. Repr. 573; 31 N. Y. Supp. 243 (1895).

A corporation engaged in furnishing electricity for light and power was, prior to the amendment of 1889, exempt from taxation under Laws 1880,

chap. 542, as a manufacturing corporation. People ex rel. Brush Electric Co. v. Wemple, 129 N. Y. 543; S. C., 42 N. Y. St. Repr. 272 (1892). So, also, a corporation engaged in same business, although incorporated as a gas company under Laws 1848, chap. 37. People ex rel. Edison Illuminating Co. v. Wemple, 129 N. Y. 664; S. C., 42 N. Y. St. Repr. 280; revg. 61 Hun, 53 (1892).

The business of owning and leasing to others patents for lighting, heating and furnishing motive power by electricity is not a manufacturing business within the meaning of the statutes. People ex rel. Edison Electric Lighting Co. v. Campbell, 88 Hun, 530; S. C., 68 N. Y. St. Repr. 747; 34 N. Y. Supp. 713 (1895).

The production of electricity is manufacturing within the meaning of Laws 1880, chap. 540, and the corporation engaged in it is exempt from tax thereunder by the State comptroller. People ex rel. Edison Electric Light Co. v. Campbell, 88 Hun, 527; S. C., 68 N. Y. St. Repr. 746; 34 N. Y. Supp. 711 (1895).

Charter of a foreign corporation provided that its business in New York was the sale of its manufactured goods, and it appeared that it merely did some incidental work in connection therewith. Held, that it was not entitled to exemption from taxation under Laws 1880, chap. 542, as amended by Laws 1881, chap. 361; Laws 1885, chap. 359; Laws 1889, chap. 353, on the ground that it carried on a manufacturing business in this State. People ex rel. Roebling's Sons Co. v. Wemple, 138 N. Y. 582; S. C., 53 N. Y. St. Repr. 297 (1893).

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§ 184. Additional franchise tax on transportation and transmission corporations and associations.- Every corporation and joint-stock association formed for steam surface railroad, canal steamboat, ferry, express, navigation, pipe-line, transfer, baggage express, telegraph, telephone, palace car or sleeping car purposes, and all other transportation corporations not liable to taxes under sections one hundred and eighty-five or one hundred and eighty-six of this chapter, shall pay for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, an annual excise tax or license fee which shall be equal to five-tenths of one per centum upon its gross earnings within the state, which shall include its gross earnings from its transportation or transmission business originating and terminating within this state, but shall not not include earnings derived from business of an interstate character. All settlements for such taxes heretofore based by the comptroller upon gross earnings excluding earnings from interstate business, have been ratified.