the tax is not on the property, but on the corporate franchises. Home Ins. Co. v. N. Y., 134 U. S. 594 (1890).

Patent rights.-The tax on that part of a corporation's capital invested in patent rights is not contrary to the United States Constitution. The tax is on the franchise or business, no matter how the corporate capital is invested. People ex rel. Edison E. Illum. Co. v. Wemple, 61 Hun, 53 (1891); see, also, Home Ins. case, supra. And if the entire capital is invested in patent rights, the rule is not otherwise. People ex rel. U. S. Aluminum Plate Co. v. Knight, 174 N. Y. 475 (1903); rev'g 67 App. Div. 333. Trade marks.-The same rule applies to the case of a foreign corporation doing business in this state, having part of its capital invested in a trade mark. People ex rel. Spencerian Pen Co. v. Kelsey, 105 App. Div. 133 (1905).

How good-will and patents may be valued.-In estimating the value of the good-will it is not improper to assume that it is worth the price paid for it. People ex rel. Keochl & Co. v. Morgan, 96 App. Div. 110 (1904). This rule also appears to be true in the case of patents. People ex rel. Automatic Vending Co. v. Kelsey, 101 App. Div. 325 (1905); particularly if the company has been paying dividends of six per cent. on its entire authorized capital stock. Ibid.

Realty corporations.-There has been a lack of uniformity in the law in cases affecting the taxation of corporations investing their capital in real estate. For example, it has been held that the capital of a corporation invested in unproductive real estate, like swamp land, was not "capital employed within the state" and, therefore, not taxable. People ex rel. Niagara R. Hydraulic Co. v. Roberts, 30 App. Div. 180 (1898); aff'd 157 N. Y. 676. And in an earlier case, it was held that the franchise tax did not apply to real estate bought with the surplus of the corporation and not used in the business. People ex rel. Singer Mfg. Co. v. Wemple, 150 N. Y. 46 (1896). A more recent case to the same effect is that of People ex rel. Fort George Co. v. Mil

ler, 179 N. Y. 49 (1904), in which the Court of Appeals by a divided court of four to three held that the capital stock of a corporation invested in unimproved New York City land was not employed in business in the state.

On the other hand, in People ex rel. Wall & H. St. Realty Co. v. Miller, 181 N. Y. 328 (1905); a realty corporation incorporated for the purpose of, and actively engaged in, leasing and managing a large office building, with the right to acquire and sell both real and personal property and to carry on any other business which could be conveniently conducted, was held to be taxable on this property as "capital employed."

The Court of Appeals in the last named case, by a divided court, of four to three, in its prevailing opinion, distinguishes the three cases cited in the last paragraph from the one then before it on the ground that the company in that case was found to do a realty business, and was not exempt by reason of its business from the franchise tax. The dissenting opinion, in this case, which is concurred in by two of the judges who wrote the prevailing opinion in the Fort George case, points out that there is no material difference between the three cases above cited and that of the Fort George Company, and that if the court is to stand on the doctrine of stare decisis, the Wall Street Realty Co. would be exempt from taxation on similar grounds. The Wall Street Realty Co. case was followed in People ex rel. Hubert Apt. Assn. v. Kelsey, 110 App. Div. 618 (1906) aff'd 184 N. Y. 573.

The amendment of 1906 bases the amount of "capital stock employed" on the gross assets wherever employed, and realty companies would hence seem to be taxable thereunder whether the capital was productively or unproductively invested.

In People ex rel. Fifth Ave. Bldg. Co. v. Williams, 198 N. Y. 242 (1910), it was said:

"This court is now committed to the doctrine that corporations organized for the purposes of buying, selling, leasing, renting and owning real estate, and of erecting buildings or other structures thereon are taxable under the Tax Law as it now stands.

From the moment when the relator began to use its money to

purchase real estate for the purposes of its incorporation it employed its capital in this state within the purview of the statute."

Realty although unproductive is capital employed.-It matters not whether the capital stock of a realty company be employed in business. If it be employed at all, it is sufficient. People ex rel. Waclark R. Co. v. Williams, 198 N. Y. 54 (1910); rev'g 134 App. Div. 83.

In People ex rel. Coney Island Jockey Club v. Sohmer, 140 N. Y. Supp. 507 (1913), the words "capital" and "capital stock" as well as the words "employed" in reference to capital, are defined. In that case it was held that a domestic corporation incorporated "for improving the breed of horses" and owning two tracts of land, one of which was paid for out of the capital stock, the other of which was paid for out of profits, is subject to a franchise tax under section 182 of the Tax Law, although it claimed it was not exercising its franchise under its certificate of incorporation, and that its capital was simply lying dormant. When the company used its capital to purchase real estate, it was employing its capital in the state. "Using" is employing. Citing People ex rel. Fifth Ave. Bldg. Co. v. Williams, 198 N. Y. 238 (1910); People ex rel. Vandervoort v. Glynn, 194 N. Y. 387; People ex rel. 14th St. Realty Co. v. Kelsey, 110 App. Div. 797 (1909). The fact that one of the two tracts of land was paid for out of the capital stock and the other out of profits is immaterial. Both are capital. The words "capital stock" and "capital" are practically equivalent within the meaning of the provisions of the franchise tax. By "capital stock" is meant the value of the net assets, and since surplus forms part of the capital, it must be taken into account in valuing the capital stock. People ex rel. Commercial Cable Co. v. Morgan, 178 N. Y. 433 (1904); People ex rel. Wiebusch & Hilger Co. v. Roberts, 154 N. Y. 101 (1897).

Real estate; property without the state.-Real estate employed in business within the state may be taxed, even though it results in double taxation. This does not make the law uncon

stitutional. People ex rel. Postal Tel. Co. v. Campbell, 70 Hun, 507 (1893). If the real estate is not within the state, the capital so invested is not taxable here. People ex rel. American Surety Co. v. Campbell, 74 Hun, 101 (1893); aff'd 143 N. Y. 625. The same rule applies to United States bonds deposited in other states. Ibid.

Nor will freight cars permanently outside of the state be taxed as capital employed within the state. People v. Compbell and Roberts, 88 Hun, 545 (1895).

Outstanding accounts of domestic corporations.-Outstanding accounts, representing property of a domestic corporation invested outside of the state, which has never come within the state, have been held to be capital employed without the state. People ex rel. Rees v. Miller, 90 App. Div. 591 (1904). This decision has been modified, but does not seem to have been overruled, on the point cited in People ex rel. Williams v. Sohmer, 151 App. Div. 764 (1912).

Joint stock company taxable.-Joint stock companies were held liable to taxation under the law as amended. The insertion of words "or organized" in Chapter 361 of the Laws of 1881 indicated that the legislature did not intend to confine the third section of Chapter 542 of the Laws of 1880 to bodies which were strictly incorporated. People ex rel. Platt v. Wemple, 117 N. Y. 136; affg 52 Hun, 434 (1889). The legislature amended this section by making it applicable to a "corporation, joint stock company or association, incorporated, organized or formed." (Chap. 353, L. 1889, now included in sec. 182 Tax Law.)

Amount of franchise tax payable by corporations with shares without nominal or par value under chap. 351, L. 1912.—The franchise tax upon any corporation issuing such shares of stock payable under sec. 182 of the tax law shall be determined by taking as a base such portion of net assets of the corporation as its gross assets employed in any business within this state, bear to its entire gross assets wherever employed in business, and the rate of such franchise tax shall be fixed in the manner provided in said sec. 182 of the tax law. For this purpose the rate of dividends shall be computed by dividing

the total amount of dividends which have been paid during the year by the amount of net assets of the corporation upon the first day of such year. (Stock Corp. L., sec. 21 am'd ch. 501, L. 1917, in accordance with the recommendation of the Tax Commission of 1915.)

NOTE.-After ascertaining the total amount taxable as above, if there are several classes of stock, the preferred having preference in payment of principal, it would appear that the value of the common may be determined by deducting the proportionate share of the par value of the preferred from such amount.