PUTNAM, J.
This is a proceeding to review the determination of the comptroller in assessing a franchise tax against relator for the four years ending November 1, 1894, under the provisions of chapter 542 of the Laws of 1880, and the several acts amendatory and supplementary thereto. The relator is a domestic corporation incorporated under the manufacturing act of 1848, with a paid-up capital of $165,000, solely invested in an apartment house in Gramercy Park, N. Y. The company purchased the building with said capital, subject to a mortgage of $225,000, since reduced to $205,000. At the organization of the company, leases in perpetuity, or during the existence of the corporation, were made to its 18 stockholders of 18 apartments in the building. The lessees contracted to pay in certain proportions the deficit in the annual.expenses of conducting the corporate business. The trustees fixed the amount of the assessment in proportion to the number of shares of stock owned by those to whom the leases were made. Eight apartments were reserved by the relator, and have been from time to time rented to others, not stockholders. The expenses of the company were: Interest on the mortgage, taxes, insurance, water rents, elevator, engineer, machinery, and janitor’s services, and amounted to between $30,000 and $35,000 annually. The gross income from the apartments leased to those not stockholders was about $12,000, leaving an annual deficit of about $20,000. This deficit was proportioned among and paid by the holders of the 18 perpetual leases, as before stated, in proportion to the amount of stock held by them, respectively. There are three classes: In the third class, the assessment was based on 45 shares of stock; in the second, 80 shares; and in the first, a number above 80 shares. The papers submitted do not contain a copy of the articles of association of the corporation, or a statement of the provisions of the leases, but I infer that a sale of stock necessarily accompanied a transfer of a lease. It is not denied that relator is liable to pay a franchise tax, under the act [278]*278of 1880, on the cash value of its capital stock. But it is urged that the evidence produced before the comptroller on the rehearing made it appear that the relator’s capital stock had no cash value whatever.
In a proceeding to review an assessment against a corporation under the act of 1880, the burden rests upon a relator to show the error of the comptroller, if anv. People v. Campbell, 80 Hun, 466, 30 N. Y. Supp. 472; Id., 145 N. Y. 587, 40 N. E. 239; People ex rel. American C. & D. Co. v. Wemple, 129 N. Y. 565, 29 N. E. 812; People ex rel. Roebling & Sons’ Co. v. Wemple, 138 N. Y. 583, 34 N. E. 386. The question, therefore, to be determined by us, is, does the relator show error on the part of the comptroller in his valuation of its capital stock? He clearly had some basis for his valuation of such stock. It was shown that the whole amount of relator’s capital, $165,000, was paid up, and invested by it in the Gramercy Park apartment house, which the corporation purchased for said sum, subject to a mortgage of $225,000, since reduced to $205,000. The fact that the corporate capital of $165,000 was recently invested by the company in real estate yet owned lay it was sufficient, in the first instance, to justify the action of the comptroller. He had at least some grounds for not believing that the capital stock of relator, of $165,000, so invested in real estate, was, as claimed by petitioner, of no value whatever. The corporation raised by the subscription of its stockholders $165,000, for which sum it purchased the apartment house in Gramercy Park, issuing to its subscribers $165,000 of stock. The stockholders, so to speak, are the corporation. They own the corporate stock, control corporate action, are entitled to the profits resulting from the corporate business, and ultimately, on the dissolution of the company, to so much of the fund created by their subscriptions as remains unimpaired, and is not liable for corporate debts. Relator, on the rehearing before the comptroller, took on itself the burden of showing that its capital stock, $165,000, recently raised, and invested in real estate, was of no value, or of less value than the amount at which it was assessed by the comptroller. As none of the stock had been sold, the question was not as to its market, but its intrinsic, value. In the absence of other satisfactory evidence, the sum raised by the stockholders, paid over to the corporation, and by it invested in real estate, was some evidence of the value of the capital stock issued for the amount thus raised. Had relator, on the rehearing, made it appear that the Gramercy Park apartment house, for which it had paid $165,000, was worth nothing, or a less sum than the amount so paid, that fact would have tended to show that the comptroller had not reached a correct conclusion. But no such fact was shown. On the contrary, the evidence rather indicated that the interest of the corporation in the house in question was worth more than when it first made the investment. It had reduced the mortgage on the premises, subject to which it purchased, -$20,000. For all that appears in the case, should the company elect to dissolve and sell the premises,—which it could do, as the leases are only made to continue during the corporate existence,—the corporation, on such sale, might receive a sum equal to the whole amount of the capital stock invested; and, as it was not claimed that it had incurred debts, such sum could [279]*279be divided among the stockholders. Again, it appeared that the annual expenses of carrying on relator’s business was about $32,000. If it had shown that the rental value of the rooms in the Gramercy Park apartment house did not exceed $32,000, or very slightly exceeded that sum, such fact would have tended to show an error in the calculation of the comptroller. It might well have been inferred therefrom that the corporation had made a poor investment, and in consequence thereof the value of its capital stock was not equal to the amount invested in the building. But relator did not show any such state of facts. According to the statement of the witness Peabody, of the 1.8 apartments leased to stockholders, 6 or 7 were of the first class, and worth $2,000 each per year (1 of them worth $2,500); 6 of the second class, worth $1,600 each; and 5 of the third class, worth $900 each. The 8 apartments rented to those not stockholders brought $12,000 per year. The real value of the apartments of the Gramercy Park apartment house, as far as the evidence discloses, therefore, were as follows:
For eight apartments............................................. $12,000
Seven apartments, first class, $2,000 each......................... 14,000
Six apartments, second class, $1,600 each.......................... 9,600
Five apartments, third class, $900 each............................ 4,500
Total....................................................... $40,100
Annual expenses were........................................... 32,500
Leaving as the balance of the value of the rents over the expenses .................................................... $ 7,600
—A sum equal to a fair interest on the capital stock of the corporation.
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PUTNAM, J.
This is a proceeding to review the determination of the comptroller in assessing a franchise tax against relator for the four years ending November 1, 1894, under the provisions of chapter 542 of the Laws of 1880, and the several acts amendatory and supplementary thereto. The relator is a domestic corporation incorporated under the manufacturing act of 1848, with a paid-up capital of $165,000, solely invested in an apartment house in Gramercy Park, N. Y. The company purchased the building with said capital, subject to a mortgage of $225,000, since reduced to $205,000. At the organization of the company, leases in perpetuity, or during the existence of the corporation, were made to its 18 stockholders of 18 apartments in the building. The lessees contracted to pay in certain proportions the deficit in the annual.expenses of conducting the corporate business. The trustees fixed the amount of the assessment in proportion to the number of shares of stock owned by those to whom the leases were made. Eight apartments were reserved by the relator, and have been from time to time rented to others, not stockholders. The expenses of the company were: Interest on the mortgage, taxes, insurance, water rents, elevator, engineer, machinery, and janitor’s services, and amounted to between $30,000 and $35,000 annually. The gross income from the apartments leased to those not stockholders was about $12,000, leaving an annual deficit of about $20,000. This deficit was proportioned among and paid by the holders of the 18 perpetual leases, as before stated, in proportion to the amount of stock held by them, respectively. There are three classes: In the third class, the assessment was based on 45 shares of stock; in the second, 80 shares; and in the first, a number above 80 shares. The papers submitted do not contain a copy of the articles of association of the corporation, or a statement of the provisions of the leases, but I infer that a sale of stock necessarily accompanied a transfer of a lease. It is not denied that relator is liable to pay a franchise tax, under the act [278]*278of 1880, on the cash value of its capital stock. But it is urged that the evidence produced before the comptroller on the rehearing made it appear that the relator’s capital stock had no cash value whatever.
In a proceeding to review an assessment against a corporation under the act of 1880, the burden rests upon a relator to show the error of the comptroller, if anv. People v. Campbell, 80 Hun, 466, 30 N. Y. Supp. 472; Id., 145 N. Y. 587, 40 N. E. 239; People ex rel. American C. & D. Co. v. Wemple, 129 N. Y. 565, 29 N. E. 812; People ex rel. Roebling & Sons’ Co. v. Wemple, 138 N. Y. 583, 34 N. E. 386. The question, therefore, to be determined by us, is, does the relator show error on the part of the comptroller in his valuation of its capital stock? He clearly had some basis for his valuation of such stock. It was shown that the whole amount of relator’s capital, $165,000, was paid up, and invested by it in the Gramercy Park apartment house, which the corporation purchased for said sum, subject to a mortgage of $225,000, since reduced to $205,000. The fact that the corporate capital of $165,000 was recently invested by the company in real estate yet owned lay it was sufficient, in the first instance, to justify the action of the comptroller. He had at least some grounds for not believing that the capital stock of relator, of $165,000, so invested in real estate, was, as claimed by petitioner, of no value whatever. The corporation raised by the subscription of its stockholders $165,000, for which sum it purchased the apartment house in Gramercy Park, issuing to its subscribers $165,000 of stock. The stockholders, so to speak, are the corporation. They own the corporate stock, control corporate action, are entitled to the profits resulting from the corporate business, and ultimately, on the dissolution of the company, to so much of the fund created by their subscriptions as remains unimpaired, and is not liable for corporate debts. Relator, on the rehearing before the comptroller, took on itself the burden of showing that its capital stock, $165,000, recently raised, and invested in real estate, was of no value, or of less value than the amount at which it was assessed by the comptroller. As none of the stock had been sold, the question was not as to its market, but its intrinsic, value. In the absence of other satisfactory evidence, the sum raised by the stockholders, paid over to the corporation, and by it invested in real estate, was some evidence of the value of the capital stock issued for the amount thus raised. Had relator, on the rehearing, made it appear that the Gramercy Park apartment house, for which it had paid $165,000, was worth nothing, or a less sum than the amount so paid, that fact would have tended to show that the comptroller had not reached a correct conclusion. But no such fact was shown. On the contrary, the evidence rather indicated that the interest of the corporation in the house in question was worth more than when it first made the investment. It had reduced the mortgage on the premises, subject to which it purchased, -$20,000. For all that appears in the case, should the company elect to dissolve and sell the premises,—which it could do, as the leases are only made to continue during the corporate existence,—the corporation, on such sale, might receive a sum equal to the whole amount of the capital stock invested; and, as it was not claimed that it had incurred debts, such sum could [279]*279be divided among the stockholders. Again, it appeared that the annual expenses of carrying on relator’s business was about $32,000. If it had shown that the rental value of the rooms in the Gramercy Park apartment house did not exceed $32,000, or very slightly exceeded that sum, such fact would have tended to show an error in the calculation of the comptroller. It might well have been inferred therefrom that the corporation had made a poor investment, and in consequence thereof the value of its capital stock was not equal to the amount invested in the building. But relator did not show any such state of facts. According to the statement of the witness Peabody, of the 1.8 apartments leased to stockholders, 6 or 7 were of the first class, and worth $2,000 each per year (1 of them worth $2,500); 6 of the second class, worth $1,600 each; and 5 of the third class, worth $900 each. The 8 apartments rented to those not stockholders brought $12,000 per year. The real value of the apartments of the Gramercy Park apartment house, as far as the evidence discloses, therefore, were as follows:
For eight apartments............................................. $12,000
Seven apartments, first class, $2,000 each......................... 14,000
Six apartments, second class, $1,600 each.......................... 9,600
Five apartments, third class, $900 each............................ 4,500
Total....................................................... $40,100
Annual expenses were........................................... 32,500
Leaving as the balance of the value of the rents over the expenses .................................................... $ 7,600
—A sum equal to a fair interest on the capital stock of the corporation.
The evidence before the comptroller therefore tends to show that if the corporation, instead of leasing to its stockholders, should lease to others, at the real value of the apartments, it would derive from rents a fair interest on its capital. But, instead of so leasing, the stockholders take the apartments, and thus, by a reduced rent, obtain the benefit of their stock investment. As may be inferred from the evidence, they are called upon to pay $20,000 rental for apartments worth $27,500. The witness Peabody, in giving the value of the several apartments, said:
“We have set off, as involving each one, a simultaneous assumption of a certain number of shares of capital, which fixed the assessment pro rata, as nearly ás we could estimate its value then.”
Again he says:
“My stock is worth less than nothing, if I -may express it that way. * * * It is utterly unsalable, because such a thing as a sale of stock has never taken place, unless except the necessary transfer on the stock books in connection with the sale of the lease, or, as we call it, the sale of an apartment.”
I do not think this evidence avails relator. It appears that a lease of an apartment is made to the several stockholders, and goes with the stock. Had the witness testified that his stock, together with his lease of an apartment, was of no value, the case might have been different. As the corporation conducts its business, a lease of an [280]*280apartment is, so to speak, appurtenant to the stock held by the several stockholders. In estimating the present value of the capital stock of relator, therefore, it is necessary to take into consideration the value of the several leases that go with the stock.
On the whole, I reach the conclusion that the comptroller was justified, in the first instance, in assuming that the value of the capital stock of relator, $165,000,—which represented a building for which it had paid that sum,—was the sum so paid; that the corporation has failed to show any impairment of its capital stock so represented by said building, or that its stockholders do not receive a benefit on account of their stock, in the way of reduced rentals, or that the determination of the comptroller in any regard was erroneous.
The decision of the comptroller should be affirmed, and the certiorari quashed, with $50 costs and disbursements. All concur.