People ex rel. Metropolitan Street Railway Co. v. State Board of Tax Commissioners (79 A.D. 183, 1903)

Parker, P. J.:

The first question presented by this appeal is whether the provisions of the law which authorize the assessment and tax complained of are violative of section 2 of article 10 of our State Constitution. Such act, being chapter 712 of the Laws of 1899, first amends subdivision 3 of section 2 of the Tax Law (Laws of 1896, chap. 908) by adding to the subjects of taxation therein specified the right or franchise to construct, maintain or operate upon, over or under the streets, highways or public places of any town or municipality in the State the tangible property thereon which was. already specified in the section as being real estate, and, therefore,, assessable. The value of such tangible property, plus the value of the - right to maintain or operate the same, is thereafter to be-assessed and taxed together, and is denominated in the act as a. “ special franchise.”. No criticism is made that this addition to the-taxable property named in the section violated any provision of the-Constitution, but the act further provides that the assessment of such special franchise shall be made by the State Board of Tax. Commissioners. That board is required to fix the valuation of all such special franchises wherever found in the State and to report such assessment or valuation to the proper local assessor, and such-local officer is required to place such special franchise upon his roll of the taxable property in his district at the valuation so received,, and the tax is thereupon levied and collected against the same in the same manner and for the same purposes as against the other-property on such roll.

This provision, if is claimed, violates the above-cited section of.' the Constitution, for the reason that it deprives the local assessors of a portion of their duties as such assessors, and directs the performance of the same duties by officers who are not chosen by the electors or any authorities of such locality.

In People v. Raymond (37 N. Y. 428) this section, which is familiarly known as the home rule provision of the Constitution, received judicial construction in its application to the subject of assessment for the purposes of taxation.

In that case the Legislature, by chapter 410, Laws of 1867, sought to transfer the duties of the commissioners of taxes and assessments for the city of Xew York, who were officers appointed by local authorities, to a board of three commissioners appointed by the Governor, by and with the consent of the Senate. At the time of the adoption of the Constitution of 1846, such duties of assessment were, and for a long time had been, performed by district assessors. By various acts passed in 1850, 1857 and 1859, the Legislature had regulated the performance of such duties and changed the officers who were to perform them. But in each instance the selection of such officers was left to local authorities. The act of 1867, however, sought to change the selection of such officers from the city to the State, and it was at once challenged as being violative of the home rule provision of the Constitution. The question came before the court in the case above cited, and it was there distinctly held as follows: That beyond controversy the office in question was exclusvoely a city office $ that the duties imposed by the act upon the new board, although broader in their extent, were essentially the same as those exercised by the city assessors in 1846; that the plain intent of the section of the Constitution in question “was to preserve to localities the control of the official functions of which they were then possessed, and this control was carefully preserved, consistent with the power of the Legislature to make needful changes, by restricting the power of appointment of other officers to perform the same functions to the people, or some authority of the locality.” That, hence, the act of .1867 deprived the people of the city of a right seemed to them by the Constitution, and was, therefore, void.

This case has never been reversed or modified, so far as I can ascertain, and would, I think, be conceded by the respondent in this case to he a controlling authority, in a case where the conditions were in all respects similar.

But in what respect does that case differ, in principle, from the one before us % There the act sought to transfer from local assessors to those, appointed by the State authorities the. duty of assessing all the property in the city of New York. The decision is that the Legislature was without authority to do that thing; that the function of assessing such property was, by the Constitution, secured to officers selected by the locality. The act before us does not transfer the duty of assessing all the property in the various tax districts to the State assessors, but only all of a certain specified kind. Now, if the Legislature is without authority to transfer the duty of assessing all, I am at a loss to discover whence it gets the right to interfere with the assessment of any part of such property. The right to have all the property in its locality assessed by officers chosen by itself was secured to each town and municipality in the State by the constitutional provision in question; and, in my judgment, the Legislature has no more power, to infringe upon that right by withdrawing from its operation one particular species of property than it has to withdraw a dozen. It is clear that by the statute before us the right to assess a distinct kind of property in every district, and in some localities a very considerable portion thereof, is transferred from local to State assessors; and this transfer would seem to be as unwarranted as was the transfer attempted by the statute of 1867, which the Raymond case condemned.

It would seem that such decision “ absolutely dominates ” the case before us, and should control our disposition of the same. And so it does, even in the judgment of the learned jurist whose decision as referee was adopted by the court at Special Term, and whose opinion is now before us, were it not that he sees a distinction in the fact that the amount of property transferred from local to State assessment is, in every instance, very small as compared with the whole amount of property taxed, and in some, localities does not amount to anything. All of the principles decided in the Raymond case he seems to adopt, but he sustains the act before us upon the theory that it does not substantially interfere with the home rule principle, which it is the purpose of this section of the Constitution to protect. The argument is, that it does not take away from the local assessors enough of their functions to operate as a substantial invasion of the right of home rule in any locality, and that, therefore, it is not a violation of the provisions of that section. As illustrating and sustaining this claim, he cites many cases in which acts of the Legislature have been sustained that, to some extent, transferred from local to State officers certain duties . which the local officers might, within the line of their duties, have performed. But in no one of them do I find that the act was sustained upon the ground upon which the referee would sustain this act.

In People v. Draper (15 N. Y. 532), which is one of the earliest cases to adjudicate upon this section, the validity of a law was in question which created a new metropolitan police district from the county of Xew York and three adjacent counties, and which provided for the appointment by State officers of the commissioners therein and abolished the existing police departments of the several municipalities within such district. That case sustained the act on the ground that the State had authority to create new civil divisions for police purposes, and to administer through its own officers the duties and regulations prescribed for the same. It distinctly held that, had the act applied to the city of Xew York alone, it could not have been sustained; but it denied that the Constitution assumed that the subject of police was localized in the several cities and counties of the State. It held that “ as a political society, the State has an interest in the repression of disorder and the maintenance of peace and security in every locality within its limits, and if from exceptional .causes the public good requires that legislation, either permanent or temporary, be directed toward any particular locality, whether consisting of one county or of several counties, it is within the discretion of the Legislature to apply such legislation as in its judgment the exigency of the case may require, and it is the sole judge of the existence of such causes.” Hence it treated the authority of the State upon the subject of police as paramount over that of the localities, and substantially held that for such reason no exclusively local function had been interfered with. As to such functions there was in fact no right of home rule to be preserved to the localities. And this is the principle which pervades and controls all the cases relied upon by the court below. In People v. Shepard (36 N. Y. 285) the act was held good upon the same principle; while in. People ex rel. Bolton v. Albertson, (55 N. Y. 50) the act was condemned because it was held to apply to the city of Troy only. So in the case of Rathbone v. Wirth (150 N. Y. 459) the act concededly dealt with the subject of police for the city of Albany merely, and a very slight interference with it's power of local appointment was condemned.

Upon the same principle statutes concerning excise (Metropolitan Board of Excise v. Barrie, 34 N. Y. 657), and the preservation of the public health (Metropolitan Board of Health v. Heister, 37 id. 661) were sustained. So those authorizing the construction of public-parks, avenues and even a court house by commissioners named by the State have also been sustained, even though such construction was within the scope of the functions of local officers. (Astor v. Mayor, 62 N. Y. 567; People ex rel. Kilmer v. McDonald, 69 id. 362; People ex rel. Kilmer v. Cheritree, 6 T. & C. 473; Hanlon v. Supervisors of Westchester, 57 Barb. 383.) But the foundation of each decision has been that the .State had a parar mount right to direct the work to be done, and hence could do it through its own instrumentalities. This is especially made clear by the reasoning of the opinion in People ex rel. Commissioners, etc., v. Supervisors Oneida (170 N. Y. 108).

My analysis of these cases is made only for the purpose of ascertaining how far they sustain the principle upon which the court below has decided this case. Whatever criticism has been or may be made of any of them is quite unimportant to this case, so long as it is apparent that in none of them is the decision placed upon the ground that the infringement complained of was not sufficient to substantially imperil the principle of home rule. • In many of them the functions of the local officer were entirely transferred, and in each of them the controlling principle has been that the act of the Legislature did not invade any right or function that was exclusively local in its character. In each instance it was held or assumed that; the State had the paramount right to control the subject affected by the act, and hence that there was no invasion of local functions. As is said in the very excellent and scholarly brief submitted by the-appellant’s counsel on this question, it has been the nature of the power sought to be conferred upon the State officers that has controlled the decisions of the court.

Whenever the courts were of the opinion that the act did not interfere with any functions that were exclusively local then the act was sustained, even though it wholly abolished the local office and transferred its functions to . a State or department officer. But whenever the functions affected by the act were exclusively local, whenever they did not come within the category of those over which it has always been recognized that the State, for the benefit of the State at large, has the paramount control, then any transfer whatever of such local functions has not been permitted. And therein lies the clear distinction between the Haymond case and those above cited. It is practically conceded by the referee that the subject of assessment of local property, for local taxation, is not a subject over which the State has paramount authority. As stated by him: “ The assessment of property for the purpose of taxation has always in this State been a function of local officers elected or appointed in the locality where they discharged their duties, and this system of assessment is entrenched in the Constitution to secure to the people the home rule to which they had always been accustomed, and of which the people of our race have always been tenacious.” Therefore, as against the position taken by the court below, no argument is needed to establish that proposition.

A broader and bolder position, however, was taken upon the argument of this appeal. It was there said that no authority can be found for the claim that the assessment of property for local taxation is a function exclusively appertaining to local officers, and that the State has the same power to take from a local officer his duties and transfer them to a State officer as it had to take from the police commissioners of the city of Xew Tork their duties and transfer them to officers of a department of the State. In short, that its power over the subject of assessment is as paramount as is its power over all the several subjects referred to in the cases above cited, and that while the Constitution prohibits the State from filling a local office, which, at the time of its adoption was filled by election or appointment by local authorities, yet it does not prohibit it from abolishing such local office and transferring the duties of that office to an officer of the State at large; that it may take to itself the performance of any, or all, the functions of the local office, but it may not name the local officer to perform them ; and so far as the question now before us is concerned this is upon the theory that the State possesses the absolute power to tax, and hence it may take to itself the assessing of property which is but an incident to the power of taxation. Evidently this theory utterly annihilates constitutional protection to the principle of home rule for local municipalities, and leaves very little importance or effect to the section in question. It is at variance with many decisions of the courts construing this section and is approved by none. In the recent decision of this court in Matter of Brenner (67 App. Div. 381) it was said: “It must be regarded as well settled that the purpose of the constitutional provision in question is to secure to' localities the fundamental right of self-government ; that it protects all official duties existing at the time of its adoption vested in local officers, and inhibits the transference of such duties to officers not elected by the electors of the locality or appointed by local authorities; that it is not the officer but the office, the existing duties and functions, to which the protection is extended and which cannot be transferred to cm officer elected or appointed other than in the prescribed manner P And this case was affirmed in the Court of Appeals (170 N. Y. 185.)

Moreover, the Raymond case, above cited, is a direct authority against such view. As shown above, it declares that the plain purpose of the section was to preserve to localities the control of the official functions of which they were possessed at the time it was passed, and that “ any other construction would render the section in question, when applied to the cities of the State, substantially nugatory.” Undoubtedly at that time assessors of the localities were the only ones whose duty it was to assess property for local taxation. If the power to make such assessments may be now transferred to a State officer the control of the localities over that subject is as much taken away as if it were transferred to a local officer named by the State, and thus the purpose of that section is evaded. Clearly the Raymond case proceeds upon the theory that the duty of assessing local property for the purpose of local taxation was exclusively a function of the local assessors, and, hence, is authority for the claim that such duties may not be transferred by the Legislature to any officer whatever who is not chosen by the localities themselves.

We are left then with the single question whether the views of the court below can be sustained upon principle only.

Its argument is that the amount of property, the assessment of which is transferred from local to State assessors by this act, is so inconsiderable a portion of the whole that, as a matter of fact, neither of the localities is “ in any material manner deprived of local self-government.” That, therefore, their home rule rights are not “ substantially invaded,” and, hence, it does not at all infringe against the constitutional prohibition.

But the question is not whether such transfer affects their home rule rights or their local self-government “ materially ” or “ substantially,” or, as I understand the argument, to an extent sufficient to do them any harm ; but whether it does or does not amount to a direct and actual invasion of such rights. Beyond controversy this act takes away from the local assessors the function of assessing a certain kind of property, and transfers it to. the State Board of Tax Commissioners, and to this extent makes such board perform the functions of a local officer; and if we sustain this act we must sustain their authority to do that very thing. But this is the very thing that the Constitution says they may not do. Officers appointed by State authority may not'be authorized to perform the functions of an office exclusively local. Clearly, the invasion which we would thus sustain, if repeated, would ultimately transfer the whole function of assessment from local to State officers; and so it would seem that the first invasion is as much a violation of the constitutional prohibition as would be the one that transferred the last remnant of property remaining to the local assessor.

I cannot agree that the principle of home rule is not endangered because the courts may tell the Legislature that it has intruded upon it far enough. Such is not the constitutional scheme for its protection. That instrument declares what the Legislature may not do; They may not transfer the functions of a local office to State officers. If an act of the Legislature attempts to do that, presumptively it is a dangerous invasion of the home rule principle — certainly it is a prohibited one. It is a question of authority on the part of the Legislature. Concededly it would not be authorized to so transfer, by other acts, many other specified kinds of property. Concededly the time would come when, to save to localities their home rule rights, the courts must hold an act to be unconstitutional that in itself attempts to do no more than this act does. In my judgment both acts would be equally unauthorized.

It is suggested that so much of thé “ special franchise ” as consists of the mere right to operate the tangible property in streets and public places has never heretofore been the subject of taxation, and that as to such new property the' act in question, by depriving the local officei'S of the right to assess it, takes no right from them that they ever had before, and hence the principle of home rule is not involved.

But it has been the duty of local assessors ever since the office existed to assess all property in their district that was liable: to taxation, and. they were .the sole and only officers upon whom such duty was imposed. The Legislature from time to time, as new species of property have come into existence, has imposed-the burden of taxation upon them, yet it did not need .an act of the Legislature to enable the assessors to ■ assess such new property. That duty devolved upon them as soon as the property was declared taxable, by virtue of the long-existing and well-recognized function of their office, and it is this very duty of assessing all the property in a locality upon which the Legislature shall impose the obligation of paying a local tax that the localities insist should be exercised by officers chosen by themselves. The functions of the office are neither enlarged by an addition of property, to the tax list nor are they diminished by a removal of property from that list. Undoubtedly the Legislature has the power to< do either, but the function of the assessors’ office remains the same. The right and the duty of the assessors to assess whatever property in their district, the Legislature shall declare taxable for local purposes is the long-existing and assured function of that office which is sought to be preserved. Therefore, when the Legislature deemed it wise to add to the taxable list the so-called “ special franchise,” thé duty of assessing it devolved at once upon the local assessors. Its creation at once brought it within the scope of their official duties. By virtue of the functions of such office .it became the duty of the assessors to assess' it. It is true that the assessors have never heretofore had the -opportunity of assessing- such property. It has never been made taxable and so brought within the scope of. their duties, -but their right and duty to -assess, now that it has been made taxable, has always existed, and by appointing another officer to perform that duty the act in question directly invades the functions of such office and attacks' the principle of home rule.

Moreover, a considerable portion of the “ special franchise ” consists of tangible property that has long been assessed by the local officers. In the city of Xew York alone it amounts to something over §76,000,000: All such property the law in question withdraws from the assessment by local assessors. It is argued that such property is a mere adjunct to the franchise or right to use it, and that as the duty of assessing such right may be taken away, the duty of assessing its adjuncts must go with it. As said above, this is a question of power in the Legislature, and I am unable to understand how that body gets the power to withdraw the tangible property from local assessment by merely requiring it to be assessed with the intangible right to use it. It cannot do indirectly what it may not do directly. It has no more power to add it to intangible property and so withdraw it from local assessment than it has the power to withdraw it directly from such assessment.

I am forced to the conclusion that so much of the act in question as provides for the assessment of a special franchise by the State Board of Tax Commissioners is unconstitutional and void.

I am not unmindful of the importance of this question. The great interest which the taxpayers of the State take in this effort to subject to the burden of taxation a very large amount of property which undoubtedly is of immense value to its owners, and the disappointment which will naturally accrue to them, through its failure, and to those legislators who evidently adopted this plan as the one best calculated to protect alike the owner and the public, is fully appreciated by me. But this court does not enter as a pioneer upon-the consideration of this question. Every principle involved in it. has been settled by the Court of Appeals, and we may do. no more than recognize and enforce such principles in their application to this case. As stated above, in my judgment the decision in the Ba/ymond case absolutely dominates this case.

Chase, J., concurred; Kellogg, J., concurred in an opinion; Smith and Chester, JJ., dissented in opinions.

Kellogg, J. (concurring):

The question of the constitutionality of the so-called “ special franchise ” amendment of the General Tax Law is approached with no little hesitancy, owing to its importance, also to the fact, that it has been discussed and determined by an able jurist, the learned referee appointed herein, and the further fact that the • question is avowedly on its way to the Court of Appeals where alone the question can be finally answered. Counsel on both sides have very ably and with evident conviction argued this question before us and insist upon the deliberate judgment of this court unbiased by what has gone before or what may come after, and we are, therefore, called upon to .express our independent convictions and briefly state the grounds upon which they are based.

The learned referee has held that assessing property for the purpose of taxation under the General Tax Law of the State is a local function and can be exercised only by local assessors elected by the electors of the locality or appointed by the local authorities. He says: “ The assessment of property for the purpose of taxation has always in this State been a function of local officers elected or appointed in the locality where they discharged their duties, and this system of assessment is entrenched in the Constitution to secure to the people the home rule to which they had always been accustomed and of which the people of our race have always been tenacious.”

This must mean that the Legislature has not the power to take from the local assessors this function and settle it upon an individual or body appointed by the Legislature. It is not a function which the Legislature has power to change from a local to a State function. This conclusion of the learned referee is supported by the Court of Appeals in People v. Raymond (37 N. Y. 428) and by every case in that court in which' the question of assessment of property for purposes of general taxation has directly or indirectly arisen. The organization tax and franchise tax levied by the Comptroller upon corporations are held not to be taxes¡, but charges by the State upon the right to do business in a corporate capacity, a privilege the State may give or tako away. So with the inheritr anee tax; it is held not to be a tax upon property, but a charge upon the succession, also a right the State may give or take away. (Matter of Estate of Swift, 137 N. Y. 77.) It has never been claimed that valuations made by the Comptroller or by his appointees, or by any appointee of the State in such cases, for the purpose of fixing the sum to be charged for the enjoyment of these State privileges, was a local function.' The State has seen fit to base its claim against certain corporations upon a valuation of- capital employed in the State. It might have demanded a share of its earnings instead, and it might, without valuation, have taken a share in kind of the property of a deceased person as the price of transmission of the remainder to the heir, devisee or legatee. I do not, therefore, see how such incidental valuations for special purposes have any bearing upon’ the question before us.

Speaking generally of the home rule which the Constitution essays to protect, the courts in many instances have undertaken to define, distinguish and point out what is not a local function as contemplated by the Constitution ; but as to the matter of assessment of property for general taxation they have uniformly held that to be a local function. The class of cases in which the courts have held the function to be exercised not to be exclusively local are such as relate to the exercise of police powers, and instances of these are People v. Draper (15 N. Y. 532); People v. Pinckney (32 id., 377); Metropolitan Board of Health v. Heister (37 id. 661); Metropolitan Board of Excise v. Barrie (34 id. 657); Astor v. Mayor (62 id. 567); People ex rel. Kilmer v. McDonald (69 id. 362); People ex rel. Kilmer v. Cheritree (6 T. & C. 473); Hanlon v. Supervisors of Westchester (57 Barb. 383); City of Syracuse v. Hubbard (64 App. Div. 587); People ex rel. Commissioners, etc., v. Supervisors Oneida (170 N. Y. 105).

In these cases the court in every instance professed to see that the principle of home rule contemplated by the Constitution was not involved for the reason that the function sought to be exercised was not local in such a sense as to deprive the State of its unlimited exercise. In some cases it is true that the prevailing opinion of the court conveys the impression that local self-government as a principle, so far as recognized by the Constitution, is a sort of nebula with limitations as uncertain, unstable and elusive as the tail of a comet (Matter of Allison, v. Welde, 172 N. Y. 421), but all, nevertheless, declare that the Constitution does recognize the principle and protects it against legislative encroachment.

It will be of little worth to here state the process of court reasoning by which conclusions were in those cases arrived at. Wé are only concerned with the uniform finding of the court in each case that the function sought to be exercised by the State was not a local function and that the home rule principle embedded in the Constitution was in no manner or degree invaded. None of these cases excuses the conclusion arrived at on the ground that the invasion of the field protected by the Constitution was slight or not substantial. None of them claims that there is a difference between a small invasion and a great one in determining whether an act of the Legislature is constitutional or otherwise. If the theory of “ substantial; invasion” is the proper theory in determining whether or not there¡ has been an unlawful violation of the Constitution, the courts might1 well have held in the Brenner case (Matter of Brenner, 170 N. Y. 185) that the act considered was constitutional because there was left to home rule the power of appointment and election of so many other officers that the taking away of a single office was not a substantial infringement.

It seems to me that the question of the constitutionality of the act: we are considering hinges wholly upon the question as to .whether! or not the assessment of property for general' taxation is an exclusively local function. If it is conceded to be, or is determined to be, an exclusively local function and, as said by the referee, is a “ system of assessment * * * entrenched in the Constitution to secure to* the People the home rule to which they had always been accustomed and of which the people of our race have always been tenacious,” then it must be the duty of the courts, until the People shall! change the organic law, to see that these secured rights are not¡ unlawfully invaded. It matters not, it seems to- me, how little or how great may be the invasion proposed. Every little violation of the Constitution is as inexcusable as is a larger violation. Considerations of convenience or better service have no place in the discus-! sion or in the determination of this question, If we were authorized to hew away the Constitution every time it binds and so make it run in accord with the legislative idea of public needs we might then take into account the good and the bad which might result from the change.

The learned referee has found that the tangible property heretofore assessed by local assessors throughout the State amounts to $76,585,225. The assessment of this is, by the legislative amendment to the General Tax Law, taken from the local assessors and the function transferred to a State board. No one can deny that this is a palpable violation of the Constitution, at least in some degree. It may not be a very large invasion, but it is a material invasion, for I assume that every invasion, if plainly an encroachment, however small it may be, is material to those who give heed to a constitutional inhibition. The excuse for transferring this power to assess the tangible property on, under and over the public streets and places is based upon the claim that this property is inseverable from the franchise, the intangible property. That it is not inseverable for the purpose of valuation is plain. That is manifest from the findings of the referee^ who has ascertained from the testimony of the State Board of Tax Commissioners the value of the tangible and intangible separately. It is also plain from tb e approved method of assessment adopted by the State board, viz., appraising first the whole property of the corporation and deducting therefrom the value of all tangible property of every name and kind owned by the corporation, estimated on the cost of reproduction, and taking the result as the net valuation of the intangible or franchise. It is not inseverable either for the purpose of enforcing payment of the tax. The franchise may be sold without the tangible property on, under or over the streets. Its value without the tangible would be the value of both, less the cost of reproduction of the tangible, so the State Board of Tax Commissioners have determined, and both are separately valuable. The tracks of a street railway are no more essential to a profitable use of the franchise than are the power houses which furnish the power and which are not assessed with the intangible property ; both the tracks and the power houses, as well as the rolling stock, may be replaced. The case cited (People v. O’Brien, 111 N. Y. 47) to show that “ the franchises would be of no value without tangible property to operate them, and so they are inseparable,” was based upon Gue v. Tide Water Canal Co. (24 How. [U. S.] 257). That was a case where the sale of a canal by piecemeal was sought to be enjoined in equity. A levy had been made on the locks of the canal, the tollhouse and land surrounding the outlet locks, all essential to the uses of the canal. The court held that to sell a canal lock would destroy all value in the canal itself, and would be of no value to the purchaser, hence the sale was enjoined. It is obvious that a canal so far differs from a street railway as to make the case cited wholly inapplicable. The tracks of a railway may be removed, but the lock of the canal could not be. There could be no replacement of the property sought to be sold appertaining to the canal, hence a sale would destroy the franchise. This cannot be the case as to any of the property contemplated to be assessed by the amendment of the Tax Law under the name of special franchise.

The assessment by a State board of the franchises themselves — the intangible property of a corporation as defined by the amended act —presents perhaps another question. This property is not new property coming to the locality, but has always existed there, though it has never been locally assessed. To assess this property judiciously or by the method adopted by the State board the local assessors in most cases would need to go beyond their precincts. The property can hardly be said to be localized. For instance, a. street surface railway, a telegraph, telephone or pipe line, which runs through several incorporated villages and on the highways of intervening towns, must possess a franchise from each municipality. The value of these franchises separately considered might be very little, but the value combined might be very great. The right to run cars on the highways of a town could only be valuable as connected with the right to run through the other municipalities. These franchises, therefore, are only links in a chain. The chain may have great value, but the links have no value except for their being component parts of the chain itself. It is obvious that to give a proper value to any link the value of the entire chain must be first ascertained, and then an approximate apportionment would not be difficult. But the value of the chain largely depends upon the earning capacity for the time being of the entire property of the corporation used to do the business which the franchises permit to be done, and the value of the chain of franchises, ascertained in the mode adopted by the board of assessors — and no better mode has been suggested — requires a valuation of the entire corporate assets and a separate valuation of all the tangible property in each municipality and elsewhere situated, and then by a process of elimination the value of all the franchises together may be determined. It is possible that-this might be done by local assessors, but in doing it they would be exercising something more than the usual local function of their offices. The appraisement by local assessors 'of property in another municipality would, if permissible, be a function never before exercised. They could not be protected in so doing by any principle of home rule. And if this is what would he required of them I do not see how their local functions could be disturbed or diminished by the appointment of a State board to make this assessment. The property to be assessed is not in its nature localized in any one taxing precinct. It is not property over which the local assessor has ever exercised jurisdiction. In some cities and in some other municipalities it may be that the entire corporate property, including its franchises, is located within the municipal limits, hut such cases make the exceptions rather than the rule.

I advise a reversal, and that the assessment be set aside, on the ground that the amendment to the General Tax Law creating a State Board of Tax Commissioners and giving them power to assess the tangible property on, under and over streets and public places is an invasion of the functions of local assessors, and, in this respect, is a violation of the Constitution.

Smith, J. (dissenting):

The legislative act, the constitutional warrant for which is here challenged, was passed in May, 1899. By its provisions a new species of property was added to the property theretofore taxable by law. This new species of property was-the franchise, right or permission granted by municipalities to use the public streets, highways and public places within the State. This franchise, right or permission was defined by the statute to include the value of the tangible property of the person, copartnership, association or corporation, the owner of the franchise itself, which was used upon the public way. It was provided that this tangible property should be taxed as a part of the special franchise; that the special franchise as thus defined should be assessed by the State Board of Tax Commissioners, and their assessment, as certified, should be entered by the assessors or other officers of the various localities in which said franchises existed in the proper column of the assessment roll. One of the grounds of the relator’s challenge is that this act violates the home rule provision of the State Constitution as found in section 2 of article 10 of the Constitution of 1894. That provision of the Constitution reads as follows: “ * * * All city, town and village officers whose election or appointment is not provided for by this Constitution shall be elected by the electors of such cities, towns and villages, or of some division thereof, or appointed by such authorities thereof, ' as the Legislature shall designate for that purpose. All other officers whose election or appointment is not provided for by this Constitution, and all officers whose offices may hereafter be created by law, shall be elected by the People, or appointed, as the Legislature may direct.”

The contention of the relator is that this constitutional provision is violated by giving to the State Board of Tax Commissioners the assessment, first, of the franchise, and, second, of the tangible property in the street, which, by the act, is made a part of the special franchise subject to assessment by the State officers.

That the Legislature might properly give to the State board the assessment of the franchise seems to me of undoubted right. The Constitution provides that “ all officers whose offices may hereafter be created by law shall be elected by the People, or appointed, as the Legislature may direct.” This provision is a clear index of the constitutional purpose to protect the localities in the home rule which existed at the time of the adoption of the Constitution, and to that extent only. All offices thereafter created are to be filled as the Legislature may direct. By this act the Legislature has in effect created a new office — a franchise tax assessor; and to the extent of the assessment of the franchise, with duties not existing at the time of the adoption of the Constitution. These duties, too, are distinct from and independent of any then existing duties of local officers. An intangible franchise has never been the subject of assessment by local assessors. This is held by the referee below. (See People ex rel. Manhattan R. Co. v. Barker, 152 N. Y. 417 ; People ex rel. Panama R. R. Co. v. Comrs. of Taxes, 104 id. 240.) Most franchises are enjoyed in connection with franchises from adjoining municipalities which have a value in their union, the value of which separately, however, is uncertain and practically undeterminable except by arbitrary apportionment. To assess these franchises, access must be had to the books of the corporation and to other data which it would be difficult if not impracticable to give to the assessors of every tax district in which the franchise existed. The duty, therefore, of assessing these intangible franchises, is, as I say, distinct from the duty of assessment of real and personal property. The fact that this franchise is, by the statute, termed real estate, and that the local assessors were, at the time, empowered to assess all real and personal property within their tax district, does not affect the situation. Whether it be called real estate, personal property, or neither, is a mere matter of form. The intent of the Legislature is plain to make taxable another species of property which had not theretofore been taxable, and to appoint State officers to assess the valuation of the same. And it is immaterial whether a new office has been created or new functions have been added to an old office. In either case existing home rule is not invaded by the assignment of such functions to legislative appointees. There is preserved to the locality every function possessed by it at the time of the adoption of the Constitution. (People v. Pinckney, 32 N. Y. 382; City of Syracuse v. Hubbard, 64 App. Div. 589.) In my judgment, therefore, the right seems clear, both within the letter and within the spirit of the Constitution to give to the State Board of Tax Commissioners the power to assess the intangible franchise. (See People v. Draper, 15 N. Y. 532; Matter of Allison v. Welde, 172 id. 421.)

By this statute, however, the tangible property of the corporation within the street, used in connection with the intangible franchise, is made a part of the special franchise which the State officers are empowered to assess. The constitutionality of this provision presents a more serious question. This tangible property amounts to upwards of §90,000,000 within the State. It has heretofore since its creation been assessed by the local assessors. It was so assessed at the time of the adoption of the Constitution. By this act this local function, existing at the time of the adoption of the Constitution, has been taken away from the local officers and given to the State board. By what rule of construction can this be justified ?

Chapter 564 of the Laws of 1865 conferred upon the commissioners of Central Park, appointed by the central power, the exclusive care, management and control of portions of Sixth avenue and certain other streets in the city of Xew York for the purpose of regulating, grading and otherwise improving the same. In Astor v. Mayor (62 N. Y. 567) that act was questioned as violating the home rule provision of the Constitution, by transferring to officers appointed by the central power functions theretofore always discharged by local officers elected or appointed in the locality. This act was held constitutional, and the rule as stated in the head note is as follows: “ That constitutional provision does not prohibit the

Legislature from clothing officers appointed by it for the purpose of carrying out a public improvement, with power to perform acts which have an especial relation to and connection with such improvement, simply because the power to perform such acts was, at the time of the adoption of the Constitution, vested in local officers elected by the People.” In discussing that act, Judge Miller, writing for the court, says: “ It would be carrying the doctrine of non-interference with local officers far beyond any reported case, to hold that in no case whatever could any of the powers existing in a local officer at the time of the adoption of the Constitution, be taken away without violating the provision cited.” In People v. Draper (15 N. Y. 543), Denio, Ch. J., in writing of this provision of the Constitution of 1846, says: “ If we were to establish the principle that the Legislature can never reduce the administrative authority of counties, cities or towns; can never resume in favor of the central power any portion of the jurisdiction of those local divisions, or change the partition of it among them, as it existed when the Constitution was adopted, we should, I think, make an impracticable government.”

The intimate relation of the tangible property in the street to the intangible property to which it is an incident is seen at a glance. For many purposes they are legally inseparable. In People v. O'Brien (111 N. Y. 47) the court in its opinion says: “ In the former class it has been held that at common law real estate acquired for the use of a canal company could not be sold on execution against the corporation separate from its franchise so as to destroy or impair the value of such franchise. (Gue v. Tide Water Canal Co., 24 How. [U. S.] 257.) And by parity of reasoning it must follow that the tracks of a railroad company and the franchise of maintaining and operating its road in a public street are equally inseparable in the absence of express legislative authority providing for their severance.” In Syracuse Water Co. v. City of Syracuse (116 N. Y. 182) the opinion reads: “ The corporate rights and the corporeal means of their exercise, therefore, constitute, as it were, a single body, consisting of property corporeal and incorporeal. Both the power and the means of exercising it are essentially united, and upon such union is dependent the enjoyment as well as the practical value of the franchise.” (Citing People v. O'Brien and Gue v. Tide Water Canal Co.) In the case of Gue v. Tide Water Canal Co., upon which both of these opinions rest, a creditor of a canal company had levied an execution upon a house and lot, some locks in the canal and some adjoining building lots, all the property of the canal company and necessary for the conduct of its business.’ It was there held that because a sale of the tangible property without the franchise would result in a sacrifice of the property, equity would enjoin the sale in behalf of creditors and stockholders of the corporation and leave the creditor to an equitable action for a sale of the whole property, including the franchise, upon which the proceeds could be equitably distributed. This case, and the authorities based thereon, are distinguished by Justice Kellogg in his opinion in which he says: “ It is obvious that a canal so far differs from a street railway as to make the case cited wholly inapplicable. The tracks of a railway may be removed, but the lock of the canal could not be. There could be no replacement of the property sought to be sold appertaining to the canal, hence a sale would destroy the franchise. This cannot be the case as to any of the property contemplated to be assessed by the amendment of the Tax Law under the name of special franchise.” This distinction of Justice Kellogg is clearly o verborne by the authorities. The principle of the case of Gue v. Tide Water Canal Co. has been applied by the courts with equal force to the tracks and equipment of a railroad which cannot be sold separately from the franchise itself. (See Hammock v. Loan & Trust Co., 105 U. S. 77; Buncombe County Commissioners v. Tommey, 115 id. 122 ; Kittel v. Augusta, T. & G. R. Co., 65 Fed. Rep. 861.) In the case last cited the opinion in part reads: “ It further appears that said sale covers all the construction plant, tools and construction material belonging to said corporation. In such circumstances, a creditor cannot dissever from the franchise property essential to its useful existence.” In National Foundry & Pipe Works v. Oconto Water Co. (52 Fed. Rep. 43), where a specific lien was given to a materialman upon a plant and franchise of a water company, it was held that they “ cannot be separated by judicial sale because of their peculiar public use.” The judge in writing the opinion says : “ The structure here is of the class of which canals, street railways, railroads, telegraph, telephone, electric light and gas plants are examples, and earn, only be dealt with as an entirety.”

But it is urged that the tangible and intangible are not inseparable for the purpose of assessment. Possibly they are not absolutely inseparable. As shown by the evidence the value of the intangible franchise must be determined by taking the-value of the whole property, tangible and ' intangible, and deducting therefrom the value of the tangible. Thus the determination of the value of the tangible property is a prerequisite to the valuation of the intangible. Their values and use depend upon each other. Those values thus interdependent are given to the State board to determine. They are reasonably connected for the purpose of assessment and taxation". And this is all that is necessary to authorize the Legislature to attach the tangible to the intangible property for this purpose. In the Astor case, above cited, the several avenues, jurisdiction of which, was taken from the local assessors and given to the State officers, were outside of Central Park, .and not within the jurisdiction of the park commissioners. These avenues might have been left to the local officers to improve. There was no absolute necessity that they be transferred to the park commissioners who were" appointed by the central power. Nevertheless, by reason of their intimate relation and connection with the park and with the scheme of park improvement, the Legislature was hel