Not applicable to foreign corporations in business less than thirteen months.- A foreign corporation not having employed its capital in the state for a period of thirteen months may sue out a writ of attachment without first obtaining the certificate required by section 181, Tax Law. Reedy Elevator Co. v. American Grocery Co., 82 N. Y. St. Rep. 619. The provisions of the Tax Law of 1896, that the tax must be paid within thirty days after December 1, 1901, by a foreign corporation engaged in business for more than thirteen months previous to that date does not bar it from maintaining an action, if the tax has been paid prior to the commencement of the action. Dunbarton Flax Spinning Co. v. G. & J. R. Co., 87 App. Div. 21 (1903). The amendment of 1910 makes this point clear, because the action may be commenced after thirteen months from the time the corporation has begun business in the state, provided the tax has been paid.

Corporation not within jurisdiction until license fee paid.— While corporations are not "citizens," they have been deemed "persons" within the meaning of the 14th amendment, by which no state shall "deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the law;" but a foreign corporation that has not paid its state license fee, was held to be not within the "jurisdiction," although a "person," until it complied with this prerequisite. Phila. Fire Ins. Co. v. N. Y., 119 U. S. 110 (1886). Nor is there any doubt about the right of the state to impose a tax on a foreign corporation for the privilege of doing business in the state. Ducat v. Chicago, 10 Wall. 410.

Measure of the amount of capital stock employed in the state. This subject applies to the annual tax as well as to the license tax and is, therefore, treated under that head in the next chapter.

CHAPTER IV.

ANNUAL FRANCHISE TAX; DOMESTIC AND FOREIGN CORPORA

TIONS.

BESIDES paying a tax upon its organization, or when it begins to do business in the state, an annual franchise tax "for the privilege of doing business or exercising its corporate franchise within the state" must be paid every year by each of the following classes of corporations doing business in the state:

1. Every corporation, joint stock company or association organized, incorporated or formed under the laws of this state.

2. Every corporation, joint stock company or association organized, incorporated or formed under the laws of any other state, territory or foreign government.

The following corporations are excepted from the provisions of the annual franchise tax, payable under section 182 of the Tax Law:

1. Banks, savings banks, and institutions for savings.

2. Title guaranty companies;

3. Insurance companies;

4. Surety companies;

5. Trust companies.

6. Laundering, manufacturing and mining companies to the extent of the capital employed in laundering, manufacturing and mining, provided at least 40 per cent. of the capital stock is invested in property in the state.

7. Elevated and surface railroads, liable under section 185, Tax Law.

8. Water, lighting and power companies liable under section 186, Tax Law.

9. Agricultural and horticultural associations and corpora

tions.

Franchise tax on corporations.- For the privilege of doing business or exercising its corporate franchises in this state every corporation, joint stock company or association, doing business in this state, shall pay to the state treasurer annually, in advance, an annual tax to be computed upon the basis of the amount of its capital stock, employed during the preceding year within this state, and upon each dollar of such amount. The measure of the amount of capital stock employed in this state shall be such a portion of the issued capital stock as the gross assets employed in any business within this state bear to gross assets wherever employed in business. For purposes of taxation, the capital of a corporation invested in the stock of another corporation shall be deemed to be assets located where the physical property represented by such stock is located. If the dividends upon the capital stock amount to six, or more than six per centum upon the par value of the capital stock, during any year ending with the thirty-first day of October, the tax shall be at the rate of one-quarter of a mill for each one per centum of dividends made or declared upon the par value of the capital stock during said year. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, and

1. The assets do not exceed the liabilities, exclusive of capital stock, or

2. The average price at which such stock sold during said year, did not equal or exceed its par value, or

3. If no dividend was declared,

Then each dollar of the amount of capital stock employed in this state, determined as hereinbefore provided, shall be taxed at the rate of three-fourths of one mill. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, and

1. The assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or

2. The average price at which such stock sold during said year is equal to or greater than the par value,

Then the amount of capital stock, determined as hereinbefore provided to be employed in this state, shall be taxed at the rate of one and one-half mills on each dollar of the valuation of the capital stock employed in this state, but such valuation shall not be less than

1. The par value of such stock.

2. The difference between the assets and liabilities, exclusive of capital stock.

3. The average price at which such stock sold during said year.

If such corporation, joint-stock company or association shall have more than one kind of capital stock, and upon one of such kinds of stock a dividend or dividends amounting to six, or more than six percentum upon the par value thereof, has been made or declared, and upon the other no dividend has been made or declared, or the dividend or dividends made or declared thereon amount to less than six percentum upon the par value thereof, then the tax shall be at the rate of one-quarter of a mill for each one percentum of dividends made or declared upon the capital stock upon the par value of which the dividend or dividends made or declared amount to six or more than six percentum, and in addition thereto a tax shall be charged upon the capital stock,

1. Upon which no dividend was made or declared, or

2. Upon which the dividend or dividends made or declared did not amount to six per centum upon the par value,

At the rate as hereinbefore provided for the taxation of capital stock upon which no dividend was made or declared, or upon which the dividend or dividends made or declared did not amount to six percentum on the par value.

All corporations not taxable under the preceding paragraphs of this section shall be taxed in an amount not less than would be produced by an assessment of one and one-half mills on each one dollar of the actual value of its capital stock, determined to be employed in this state as hereinbefore provided, or one and one-half mills upon each dollar of such capital stock at the average price at which said stock sold during the said year. (Sec. 182, former sec. 182, Tax Law, as amended by ch. 558, L. 1901, ch. 474, L. 1906, and ch. 734, L. 1907.)* Source: Ch. 542, L. 1880, as amended by ch. 361, L. 1881.

Value of stock to be appraised.-If the dividend or dividends amount to less than six per centum on the par value of the capital stock, or no dividend is declared the president, treasurer or secretary of the company liable to pay a tax under the provisions of section one hundred and eighty-two of this chapter, shall, under oath, between the first and fifteenth days of November in each year, estimate and appraise the capital stock of such company at its actual value.

And shall forward the same to the comptroller with the report provided for in the last section. If the comptroller is not satisfied with

*NOTE: For amount of franchise tax payable by corporations incorporated under Chap. 351 L. 1912. providing for shares of capital stock without nominal or par value, see end of this chapter.

the valuation so made and returned he is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and interest to be paid the state. (Sec. 193, former sec. 190, Tax Law, as amended by ch. 474, L. 1906, ch. 734, L. 1907.)

Source: Ch. 540, L. 1880, as amended by ch. 361, L. 1881.

Section 182 of the Tax Law must be taken in connection with section 193 (former section 190) which it supplements. People ex rel. N. Y. & E. R. Ferry Co. v. Roberts, 168 N. Y. 14 (1901).

By Chapter 474, Laws of 1896 and Chapter 734, Laws of 1907, the provisions governing the annual franchise tax (Sections 182, 193 Tax Law) were materially amended in the following particulars:

1. The franchise tax was declared to be payable in advance. 2. A rule was provided in the statute itself, by which the amount of capital stock employed within and without the state could be easily determined.

3. A method was provided in the statute for determining the amount of capital stock employed within the state represented by stock in other corporations, owned by the company

taxed.

4. Corporations paying less than 6 per cent. dividends, or paying no dividends, were re-classified in two divisions, so that a different rate applied to them as they fell into one or the other classification.

The arrangement under section 182 is inartificial and does not lend itself easily to any accurate grouping or classification of corporations. The evident intent of the statute was to group corporations into classes according to the amount of dividend paid, and vary the rate on that basis. In the case of corporations paying dividends of less than six per cent., there is also a variation of the rate, depending upon the market price of the stock or the value of the net assets. The following general classification seems to be called for by the statute: