the State in the past. It had been found that many corporations without merger or consolidation, but by trades and transfers, took over the whole or part of the assets of another corporation, and by blending or changing the names of the companies involved, escaped taxation.

CHAPTER XVI.

EXEMPTION FROM PERSONAL PROPERTY TAX AND FROM SECTION 182.-FIXTURES.

Section 219-j of the Act as amended in 1918, provided that "after this article takes effect, corporations taxable thereunder shall not be assessed on any personal property or capital stock, as provided for in Section 12 of this Chapter." The words "corporations taxable thereunder," refer to corporations taxable under Section 209 of Article 9-a, viz., foreign and domestic business corporations except those exempted under Section 210. Foreign corporations doing business in the State are taxed under Section 7 of the Tax Law, paragraph I, "on the capital invested in such business as personal property." Domestic corporations are taxable "upon their capital stock" under Section 12 of the Tax Law. The words "capital stock" in Section 12 of the Tax Law have been defined as referring to the capital of the company and not the shares of the stockholders. People ex rel. Union Trust Co. v. Coleman, 126 N. Y. 433. It denotes the property owned by the corporation and not the par or actual value of the shares of the stockholders. People ex rel. Second Avenue Railroad Co. v. Barker, 72 Hun, 126. While no reference is made in the statute to foreign corporations assessed under Section 7, being exempt from local taxation, the intendment is clear.

It is also provided in Section 219-j that "after this article takes effect, corporations taxable thereunder shall not be required to pay the Franchise Tax imposed under Section 182 of this Chapter, or to make the reports called for under Sections 27 and 192 of this Chapter."

Section 27 provides for the report to be made by a domestic corporation to local assessors as to its capital stock, real estate, etc.,

and Section 192 provides for the report by a domestic or foreign corporation to the State Tax Commission as to the rate and date of dividends, etc., for the purposes of Section 182.

Only corporations taxable under 9-a exempt.-Chap. 271 of the Laws of 1918, changed the language of the 1917 law by striking out the words "manufacturing and mercantile" and substituting for that phrase, the expression "corporations taxable thereunder," and chapter 628 of the Laws of 1919 made the act apply to all business corporations.

The amendments of 1919 therefore make the exemption from local personal property taxation and from taxation under Section 182 of the Tax Law apply to all business corporations taxable under Article 9-a. Those corporations that are exempt from taxation under Article 9-a, such as realty corporations, holding companies, public service and public utility corporations and all of the corporations taxable under Sections 184 to 189 of the Tax Law, are still liable to the personal property tax under Section 12. A curious feature in connection with the exemption of business corporations from the personal property tax, is that it has apparently revived the liability to assessment of the owner or holder of stock in an incorporated company. Heretofore, subdivision 16, Section 4 of the Tax Law provided, under the heading of "Exemption from Taxation," that the "owner or holder of stock of an incorporated company liable to taxation on its capital, shall not be taxed as an individual for such stock." Since business corporations are no longer liable to taxation on their capital, the exemption appears to fall.

Fixtures, when exempted from taxation.

The Income Tax Law passed in 1917, provided that personal property should, for the purpose of the exemption under Section 219-j, include machinery and equipment affixed to the building which would not pass as part of the premises as between grantor and grantee unless specifically mentioned in the deed, and such as would be moved, if the building were vacated or sold, or the nature of the work changed, carried on therein. This did not

extend to boilers, ventilating apparatus, elevators, shafting and apparatus for generating power by gas, electricity and water. Chapter 417 of the Laws of 1918, struck this provision from Section 219-j of the law, where it stood in the act as passed in 1917, and segregated it in a new section called Section 219-1. The provision of the former law was repeated with the addition "that the owner of the building is entitled to the same exemption under this section, as a lessee." The amendment of 1918 also provided that every assessment of real property made after June 4, 1917, should be subject to the provisions of this section.

Under a recent decision, it has been held that this section modifies the law embodied in Section 2, subdivision 6, of the Tax Law, under which the term "real property" includes in addition to the land itself, all articles and structures, substructures and superstructures erected upon, under or above, or affixed to the same.

The question of the taxation of machinery and fixtures as real estate when attached to a building had up to this time depended not on whether machinery and fixtures could be removed from the building without material injury thereto, but on whether they were annexed and essentially necessary to the character of the business for which the building was used. This principle was laid down in People ex rel. National Starch Co. v. Waldron, 26 App. Div. 527, and reaffirmed in a number of later cases, among them Herkimer County Light & Power Co. v. Johnson, 37 App. Div. 257; People ex rel. Federal Telephone & Telegraph Co. v. Longwell, 131 N. Y. Supp. 361; People ex rel. N. Y. Edison Co. v. Feitner, 99 App. Div. 274; aff'd without opinion, 181 N. Y. 549.

In a recent case before Judge Delehanty in the Supreme Court, New York County, he expressed the opinion that the effect of the amendment to Chapter 726 of the Laws of 1917 was to remove all removable machinery from taxation either as real estate or as personal property. He said in this connection, "Prior to the passage of the Emerson Act, 'real estate' for the purpose of taxation was defined by subdivision 6, Section 2, of the Tax Law, as 'the land itself above and under water, all buildings and other articles and structures, substructures and superstructures, erected

upon, under or above, or affixed to the same,' etc., and under the decisions of this State it has been held that pursuant to said section quoted machinery installed in a building and affixed to the realty is taxable as real estate (N. Y. Edison Co. v. Wells, 135 App. Div. 644, and cases there cited). But the situation in this respect is now changed. The Legislature by the Emerson Act has defined what shall constitute 'personal property' for the purpose of taxation of mercantile and manufacturing corporations and has made such exempt from local taxation. The language used in the statute is in nowise uncertain or doubtful of meaning, and in my opinion the plain intent thereof was to exempt from personal property tax such machinery and equipment affixed to the building as could be removed therefrom without material injury thereto, except, of course, boilers, etc., expressly precluded. This is obvious from the context of the statute quoted; otherwise why an enumeration of machinery and equipment not exempt from taxation?" People ex rel. Gen. Chemical Co. v. Cantor, 105 Misc. 62.

This case is now being appealed to the Appellate Division, Supreme Court, but since the trial of the case, the Legislature has amended the section in dispute and removed the element of doubt as to the character of machinery subject to real estate taxation, by making removable machinery used for trade or manufacture, exempt from personal property assessment and by striking out the paragraph as to real estate assessments made subsequent to June, 1917. The amendment also provides that the act shall not affect pending litigation.