When both "book value" and actual value are given in a corporation's return to the tax department, the latter will be taken, for the purpose of taxation, even though smaller than the book value, where nothing else appears in the verified statement to cast a doubt on the corporation's figures. A. G. Hyde & Sons v. Wells, Sup. Ct. Sp. Term, N. Y. Law Journal, April 5, 1904; aff'd 116 App. Div. 161 (1906).

Since

Erroneous to assess capital stock on share value. the subject of valuation is not the share stock, but the capital stock and surplus, which must be assessed at actual value, it is an erroneous and illegal method to fix the assessment of the corporation's capital stock at its market price. People ex rel. Equitable Gas Light Co. v. Barker, 66 Hun, 21 (1892).

It is the value of the corporate assets, constituting its capital, and not the value of its shares in the hands of individual owners, which is the subject of taxation. People ex rel. Bleecker St. Ry. Co. v. Barker, 85 Hun, 210 (1895).

To the same effect it was held that the actual value of the capital stock and not the market value of the share stock is to be considered. U. S. Trust Co. v. Mayor, 77 Hun, 182; People ex rel. Manhattan R'y Co. v. Barker, 146 N. Y. 304 (1895).

Earnings and dividends are to be considered in assessing capital stock in the absence of other proof.-When it appeared from the statement of a corporation to the commissioners of taxes that the earnings of the corporation enabled it to pay its interest on its indebtedness, to declare a dividend on its stock and still have a surplus, it was proper to assume that the capital stock remained unimpaired, and that there were surplus assets sufficient to pay outstanding indebtedness. People ex rel. Manhattan R'y v. Barker, 146 N. Y. 304 (1895). In another case between the same parties, it was held that while assessors may assume that the capital is unimpaired when it

pays six per cent. dividends, evidence may be introduced to rebut this presumption. People ex rel. Manhattan R'y Co. v. Barker, 165 N. Y. 305 (1901).

Surplus profits or reserve funds exceeding ten per cent.— A deduction of ten per cent. of the capital stock of a corporation depends on whether a surplus equal to that sum has been returned for taxation. If the surplus is represented by the franchise, which is exempt from taxation, it may have arisen from enhancement of the value of that franchise and not from accumulations or savings. People ex rel. Citizens' Elec. Illum. Co. v. Neff, 26 App. Div. 542 (1898); aff'd 165 N. Y.

340.

The issuing of interest-bearing certificates to stockholders for their pro rata share in the surplus does not affect the status of the accumulation as surplus profits. People ex rel. Williamsburgh Gas Light Co. v. Assessors, 16 Hun, 196 (1878); aff'd 76 N. Y. 202 (1879). And where a corporation by resolution of board of directors voluntarily distributes a part of its capital and surplus, it is not taxable on its entire capital as it existed prior to said resolution. People ex rel. Genesee Bank v. Olmstead et al., Assessors, 45 Barb. 644 (1866).

The value of the surplus should not be assessed in addition to the value of the capital stock, for the valution placed upon the latter should include the former. People ex rel. 23rd St. Ry. Co. v. Com'rs, 95 N. Y. 554 (1884).

Assessed value of real estate deducted.-The assessed value only of the real estate of a corporation should be deducted from its capital, but not necessarily the cost of it. People ex rel. Van Nest v. Com'rs, 80 N. Y. 573 (1880). It seems that to arrive at the assessed value of real estate of a corporation not situated in the same town or ward, with its principal office, though within the state, reference may be had to the proper assessment rolls. If it is without the state, the price paid, in

the absence of other evidence, may be taken as the assessed value. People ex rel. 23rd St. R. R. Co. v. Com'rs, 95 N. Y. 554 (1884). But the actual value of real estate without the state cannot be arrived at in the case of a resident corporation operating a railroad without the state by capitalizing the net income for three years and then deducting the value of the personal estate from this result, since the income is derived from the use of the franchise of the railroad as well as from its real and personal property. People ex rel. Panama R. R. Co. v. Com'rs, 104 N. Y. 240 (1887).

When a corporation liable to taxation owns real estate situated and assessed in another state, its assessed valuation, if shown, is usually sufficient evidence of actual value, and that amount is to be deducted. People ex rel. Fairfield Chemical Co. v. Com'rs, 115 N. Y. 178 (1889); distinguishing People ex rel. 23rd St. Ry. Co. v. Com'rs, supra, and People ex rel. Panama R. R. Co. v. Com'rs, supra. In the 23rd Street Railway Co. case, the real property was in another county of the state, and the court laid down the dictum that in the case of real estate outside of the state, in the absence of any other standard, the price paid therefor might be taken as the assessed value. In the Panama R. R. case the real estate was situated in New Grenada, and the company paid a gross sum in lieu of taxes on real estate and personal property. In such case there could be no assessed value. But where the real estate is situated in the same taxing district, the assessed value, and not the actual value of the real estate, is to be deducted. People ex rel. Equitable Gas L. Co. v. Barker, 66 Hun, 21 (1892); aff'd 137 N. Y. 544.

Assessed value of building on leased ground.—Where a company owns a building on leased ground, it may deduct the assessed value of the building, but not the assessed value of the whole property. People ex rel. Van Nest v. Tax Commis

sioners, 80 N. Y. 573 (1880); see, also, People ex rel. Eden Musee Co. v. Feitner, 60 App. Div. 282.

A corporation owning buildings placed upon leased ground, is not entitled to a deduction for the value of the land, but only for the value of the buildings and the ten per cent. of the surplus exempt by statute. However, the assessors, having accepted the corporation's statement, as to its capital stock and surplus, which consisted of real estate and buildings, should have given it credit for the assessed value of the land as well as the buildings. Otherwise, this would result in double taxation of the land. People ex rel. N. Y. Real Estate Assn. v. Barker, 29 App. Div. 325 (1898). If a corporation returns to the assessors in the valuation of its capital stock only its equity in real estate, on which there is a mortgage for which it is not liable, it should not be permitted to deduct the assessed value of the entire property, but only that portion of it represented by the equity. The statute permits the deduction by a corporation. of "the assessed value of its real estate." Not having credited itself with the entire piece of real estate, but only with the equity, it should only be permitted to deduct the assessed value of the equity. People ex rel. Weber Co. v. Wells, 180 N. Y. 62; rev'g 95 App. Div. 574; Werner, O'Brien and Bartlett, JJ., dissenting.

The rule that may be deduced from these cases is that where a corporation owns real estate in which there are several estates, such as a leasehold, or the equity in mortgaged premises, if it credits itself only with the ownership of a part of the estate, such as the value of the building in leasehold, or equity in mortgaged premises, it can only have deducted therefrom the assessed value of such part.

If it should appear, however, in the case of a divided ownership in real estate, as for instance, where a safe deposit corporation owns vaults annexed to and part of a leased building, that the assessment of the building did not include the assess

ment of the vaults, it seems that the safe deposit company would not be entitled to a deduction of the cost value of the vaults from the valuation of its capital stock. The apparent purpose of the provision of section 12 of the Tax Law requiring the deduction of the assessed value of the real estate was to avoid double taxation, and if there was no assessment of the real estate no claim for deduction can arise. People ex rel. Knickerbocker S. D. Co. v. Wells, 99 App. Div. 455; aff'd 181 N. Y. 245 (1905).

Assessed value of real estate to be deducted from aggregate value of capital stock, whether it be invested in real or personal property.-In assessing the capital of a corporation for purposes of taxation, it is immaterial in what description of property that capital may be invested. Both its real and personal property is to be considered and valued and from the aggregate value is to be deducted the assessed value of the real estate. People ex rel. Clearing House Bldg. Co. v. Barker, 31 App. Div. 315 (1898); aff'd 158 N. Y. 709; aff'd 179 U. S.

279.

If there be indebtedness, the value of the capital stock is ascertained by adding together the real estate and personal property and deducting therefrom the sum of the indebtedness and the assessed value of the real estate. People ex rel. Cord Meyer Co. v. Feitner, 39 Misc. 467 (1902).