576 



NEW YOEK (STATE). 



77. The men employed during the greater 

 part of the year numbered 1,300 to 1,400. 



Adirondack Forests. A special committee of 

 the Senate was appointed, under a resolution 

 adopted May 2d, to ascertain what lands could 

 be bought, and at what prices, adjacent to the 

 forest-lands already owned by the State in the 

 Adirondack wOderness, with a view to preserv- 

 ing such forests as were necessary to protect 

 the sources of water-supply in that region. The 

 subject was one on which there was consider- 

 able discussion during the year. It was said 

 that much injury had already been done by the 

 reckless destruction of forests by lumbermen 

 and charcoal-burners, and by fires carelessly 

 kindled by hunting and camping parties. There 

 was a demand that the State acquire control 

 over such lands as it was desirable to maintain 

 in a wild condition, and prevent the further 

 destruction of the forests within the area 

 which fed the important streams of the State. 

 The acquisition of lands by purchase, and the 

 appointment of a commission to have charge 

 of them, were urged. The Senate committee 

 reported in January, 1884, in favor of preserv- 

 ing the lands already owned by the State, and 

 establishing a public park, within which should 

 be inclosed all that it was desirable to protect. 

 It did not, however, recommend a direct pur- 

 chase of land from private owners, as it was 

 likely to fall into the hands of the State from 

 non-payment of taxes, as much had already 

 done. The subject is one on which the Legis- 

 lature of 1884 is likely to act. 



Telegraph Suits. In a suit brought by the 

 State against the Western Union Telegraph 

 Company for taxes claimed to be due for the 

 year 1881, under the act taxing corporations 

 on their franchises and capital stock, a decision 

 was rendered by the referee, Judge Samuel 

 Hand, on the 28th of September, and judg- 

 ment was entered in favor of the State for 

 $178,397.26. The referee held that 



Under the new tax laws the company must pay a 

 tax upon its franchise of a quarter- mill for each one per 

 cent, of dividends declared during the year, computed 

 upon its whole capital stock, and not merely upon that 

 portion of such capital invested within the State, as 

 claimed by the defendant. He followed the decision 

 of the Court of Appeals in the case of the people against 

 the Albany Insurance Company. The judgment was 

 only for taxes due in 1881, and' included $12,000 pen- 

 alty for non-payment of the tax on the demand of 

 the Comptroller. Other taxes due the State from the 

 Western Union Company, in accordance with this de- 

 cision, make the total amount recoverable from the 

 corporation about $626,000. The law findings were : 



1. That the said acts of 1880 and 1881 imposed a 

 new and different system of taxation upon the de- 

 fendant, as to taxes for State purposes ; from any here- 

 tofore existing as to telegraph companies under chap- 

 ter 471 of the laws of 1853, or any other statute ; that 

 by said acts the said defendant was subjected to a tax 

 upon its franchise for State purposes of one quarter 

 of a mill upon the whole capital stock for eveiy one 

 per centum of dividend declared during the year 

 whenever these dividends reached six per centum, and 

 not merely upon that portion of such capital invested 

 within this State. 



2. That the defendant has become liable to pay ten 

 per centum of said tax imposed by the said acts in 



case of neglect or refusal to pay such tax within fif- 

 teen days after the 1st day of January, 1882. 



3. That, in accordance with the decision of the 

 Court of Appeals in the case of the people against the 

 Albany Insurance Company, the only part of the divi- 

 dend of $15,526,500 in stock declared March 26, 1881, 

 to be estimated as the basis for the franchise tax im- 

 posed by the said statutes of 1880 and 1881, is the sum 

 of $1,135,102.62 declared from the earnings and profits 

 made by the company since the law took effect, June 

 1, 1880. 



4. Although this last part of the dividend does not 

 amount to six per centum upon the then capital stock, 

 yet I conclude the tax is to be at the rate of one quar- 

 ter of a mill for each one per centum of such dividend, 

 because the entire dividends declared during the year, 

 including the cash dividend, make together more than 

 six per centum either upon the original capital, $41,- 

 000,000, or the subsequent capital, $80,000.000. 



5. No part of the dividend in stock exchanged for 

 the Atlantic and Pacific Telegraph Company's stock, 

 under the principle of the Court of Appeals decision 

 in the people against the Albany Insurance Company, 

 can be taken as any basis for taxation of the franchise 

 under the acts of 1880 and 1881, as that stock was pur- 

 chased with earnings made before the date of these 

 acts, and docs not seem to have permanently increased 

 in value since 1879, but has been exchanged on about 

 the basis of value existing in November, 1879. I hold 

 that the temporary fluctuations in value during the 

 year of property previously wholly purchased from 

 previous earnings of the company are not a basis for 

 the imposition of this franchise-tax. 



6. I hold that no part of the dividend of $58,858.50 

 in the stock of the company was from earnings or 

 profits made during the year, or afforded any basis for 

 an additional franchise-tax. 



7. I find the plaintiff is entitled to recover from the 

 defendant the said sum of $118,718.66, with interest 

 thereon from the 15th day of January, 1882 ; also, the 

 sum of $12,000 ; also, the sum of $28,377.56, with in- 

 terest thereon from the said 15th day of January, 1882, 

 and the sum of $2 ; 837.76 ; and I direct judgment in 

 favor of the plaintiff against the defendant for the 

 aggregate sum of $161,938.98, principal, and $16,- 

 463.28, interest making a total of $178,397.26, with 

 costs of the action. 



The question of the validity of the issue of 

 stock by the Western Union Telegraph Com- 

 pany, to be distributed as stock dividends, 

 which was made in 1881, was decided in favor 

 of the company by the Court of Appeals on 

 the 2d of October. 



In a suit brought against the Western Union 

 Company to restrain the issue of stock, the 

 special term of the Superior Court of New 

 York city had held that the consolidation with 

 the other companies was lawful, and the issue 

 of stock to pay for their franchises and prop- 

 erty was valid. It was also found that there 

 was no conspiracy in the case, and that the 

 stock distributed as a dividend "was not a 

 division, withdrawal, or payment to its stock- 

 holders " of the capital stock, and its issue was a 

 proper and lawful exercise of corporate power 

 under the circumstances. This decision, was re- 

 versed at the General Term of the court, and 

 the case was before the Court of Appeals on an 

 appeal by the company from the judgment of re- 

 versal. Judge Earle, in rendering the decision, 

 said: ".There are no laws in this State prohib- 

 iting the making of a stock dividend, and 

 there is no public policy which, in all cases, 

 condemns such dividends. No harm is done, 



