People ex rel. Darrow v. Coleman , 60 N.Y. Sup. Ct. 482 ( 1889 )

Bartlett, J.

By chapter 392, Laws 1883, which is entitled “An act to further define property that shall be subject to taxation,” it is provided that “all debts and obligations for the payment of money due or owing to persons residing within this state, how'ever secured, or wherever such security shall be held, shall be deemed, for the purposes of taxation, personal estate within the state, and shall be assessed as such to the owner or owners thereof in the town, village, or ward in which such owner or owners shall reside at the time such assessment shall be made.” The property sought to be taxed in the present case consists of mortgages on lands in several of the western states, of the par value of $40,400, to which securities the trustees of Harriet Ivison hold the legal title. These trustees are three in number, namely, William Darrow and Charles A. Davidson, who are residents of Hew York, and David B. Ivison, who is a resident of Hew Jersey. The securities are in Hew Jersey, in the actual custody of Mr. Ivison. The original assessment was $60,000, and w7as made against all three trustees; but, upon an application to strike it off the books as erroneous and illegal, the commissioners of taxes and assessments struck from the roll the name of David B. Ivison, the Hew Jersey trustee, and reduced the assessment against the Hew York trustees from $60,000 to $45,000, which appears to have been regarded as the value of the mortgages already mentioned. It is this reduced assessment which the court at special term has vacated and set aside on the ground that it is irregular and erroneous. The phrase “owner or owners” in the act of 1883, as construed by the learned judge below, does not include a trustee or trustees, but applies only to owners of personal property in their individual right. After a careful consideration of the question I am unable to concur in this view. The purpose of the act of 1883 was not to define what persons should be subject to taxation, but to provide that persons already liable to be taxed under existing laws should be taxed for property that had hitherto been exempt from assessment by reason of the fact that the securities representing such property were outside the territorial limits of the state. The object of the enactment was to add to the taxable property which should fall within the scope of our system of taxation, but not to effect any change in respect to taxable persons. This is apparent from the title of the act itself. The expression “owner or owners” in the first section of chapter 392, Laws 1883, should therefore, it seems to me, be held bo comprise such persons as were taxable as owners under the Revised Statutes; and there can be no doubt that trustees were thus taxable. The first provision of the Revised Statutes in respect to the property which shall be subject to taxation is that “all lands and all personal estate within this state, whether owned by individuals or by corporations, shall be liable to taxation, subject to the exemptions hereafter specified.” 2 Rev. St. (7th Ed.) p. 981, § 1. It is further provided that “every person shall be assessed in the town or ward where he resides when the assessment is made, for all lands then owned by him within such town or ward, and occupied by him, or wholly unoccupied.” Id. p. 989, § 1. Although, in this latter provision, nothing is said about the taxation of lands owned by trustees, a subsequent provision in regard to the manner in which assessments are to be made shows that the ownership of land which subjects it to taxation under the Revised Statutes may be the mere legal title of a trustee, for the law further directs that where a person is assessed as trustee, guardian, executor, or administrator, he shall be assessed with the addition to his name of his representative character, and for the full value of the real-estate held by him in such representative character. Id. p. 991, § 10. So much for the ownership of real estate. As to personalty, the Revised Statutes make it perhaps even more clear that the title of a trustee renders him liable to taxation in this state as owner. “Every person shall be assessed in the town or ward where he resides when the assessment -is made, for all personal estate owned by him, including all personal estate in his possession or under his control as agent, trustee, guardian, executor, or administrator, and in no ease shall property so held under either of those trusts be assessed against any other person.” Id. p. 989, § 5. From these references it will be seen that the legislature, in establishing our system of taxation, which still has its basis in the Revised Statutes, was careful to leave no doubt as to the persons who should be taxable by reason of their ownership of lands or goods within this state; and out of-abundant caution it was made perfectly clear that those who held real estate or personal property in the representative capacity of trustees were to be taxed as owners, though the assessment rolls were required to show that they were assessed in their representative character. The act of 1883 must be construed and interpreted with reference to the existing state of the law at the time it was passed and took effect; and trustees, as I have shown, being then liable to taxation as owners, it follows that they fall within the scope and intent of the phrase “owner or owners” as employed in the statute in question. It is said by the learned judge who heard the case at special term that the trustees here are not the owners of the mortgage securities in the ordinary acceptation of that term; but it seems to me that it is only the legal ownership which is contemplated by an act of the legislature like that under consideration here. Certainly the beneficiaries could not be taxed on account of these securities, under the act of 1883. Upon this branch of the case my conclusion is that the persons taxable under chapter 392, Laws 1883, include those whose ownership in the debts or obligations which are the subject of taxation is representative, as well as those whose ownership is absolute. The order appealed from, so far as it wholly vacates the assessment, ought therefore to be reversed.

I think, however, that the relators were assessed for too large an amount. The value of the mortgage securities appears to have been $40,400. There are three trustees; and, as is remarked in the opinion of the court below, the property cannot be said to belong to any one or two of them as contradistinguished from the other. Only two of the three trustees are residents of this state. Under such circumstances it has been held that the trust property, for purposes of taxation, should be regarded as apportioned among the trustees according to their number. Hardy v. Inhabitants of Yarmouth, 6 Allen, 277, 285; State v. Matthews, 10 Ohio St. 431, 437; Mayor v. Stirling, 29 Md. 48. This rule is both equitable and practicable, and should be applied in such cases as the present. It requires that the amount assessed against the relators should be reduced by one-third. I think the order appealed from should be reversed, with costs, and the proceeding remitted to the special term, where application may be made for a reduction of the assessment in accordance with the views which have been expressed.

Van Brunt, P. J., concurs.