THIRD DEPARTMENT, JULY TERM, 1895. [Vol. 88. the action acted fraudulently and with intent to defraud the plaintiff. The referee finds that the defendant made the alleged representations about the condition of the company knowing them to be false, and with intent to and for the purpose of inducing the plaintiff to purchase the stock in question. The appellant further urges that the referee's findings were not supported by the evidence. We will not undertake to discuss the evidence in the case. After a careful consideration of it we are of opinion that it was such that this court could not properly reverse the judgment directed by the learned and experienced referee on the facts. Nor do we think it necessary to discuss the many exceptions made by the appellant on the trial, which are referred to in his brief, and which it is now claimed should cause a reversal of the judgment entered in the action. After a careful reading of the case and consideration of the briefs presented by the parties we should be in favor of an affirmance of the judgment, were it not for what was doubtless an inadvertent error of the learned referee in overruling the objections of defendant to improper evidence offered by the plaintiff. On the trial the plaintiff read the reports of the St. Lawrence Manufacturing Company for January 1, 1888, and January 1, 1889. Plaintiff also called as a witness Sylvester F. Hartley, who was a trustee of said company at said periods, and acted as treasurer or secretary. It was shown by the witness that he was at plaintiff's house on one occasion in 1890. He was asked: "Did you on that occasion state that Mr. Corbin (defendant) stated that it was necessary to put in these patents to cover the deficiency?" The question referred to the report of 1889. The witness answered: "No, sir." He was further asked: "Q. Did you state to him that these were put in to cover a deficiency? A. Not to my knowledge. I will not swear that I didn't. Q. Did you state to Mr. Mason what else could they be put there for except to cover a deficiency? * A. That was the position taken by Mr. Mason. Question repeated. A. No, sir. Possibly Mr. Mason did * * * * ask me if I put my name on that statement, and possibly I did tell him that I didn't put it there, but that I suppose Mr. Corbin did.” The witness further testified: "I was not aware that any old and Hun.] THIRD DEPARTMENT, JULY TERM, 1895. worthless accounts went into the statement of January 1, 1888. Did not so state to Mr. Mason at his house at Carthage. Did not state to him that of $5,000 that went into that inventory they were not worth five cents on the dollar. Did not state to him that for the $7,000 I would not give over $2,000." The above-quoted evidence of conversations of the witness with plaintiff was properly objected to by the defendant. It did not appear that the defendant was present. Hartley was plaintiff's witness, and, under well-settled principles, his testimony as to said conversations was hearsay and incompetent. * * Afterwards Ezra E. Jenne was called by plaintiff, and testified as to the interview of Hartley with plaintiff at the latter's house. The witness was then, among other things, asked the following questions and made the following answers, defendant interposing the proper objections, after the witness had stated: "Met Mr. Hartley at Mr. Mason's house in February or March last. There was a conversation between them in reference to the annual statement of 1889. Q. Upon that occasion did Mr. Mason ask Mr. Hartley this question: What are the patents put in for? * X- A. Yes, sir. Q. Did he reply, you can judge for yourself? * A. That was not just the answer. Q. Did Mr. Mason say to him, I have my own opinion about it; what do you think they were put in for? ** * A. That was not the conversation. Q. Did Mr. Hartley say, what else could they be put in for except to cover up a deficit ? * A. Yes; he did say that. On that occasion Hartley and plaintiff talked with reference to the statement of January 1st, 1888. Q. Did Mr. Hartley upon that occasion say that worthless accounts went into that statement under his objection? ** A. Yes, sir. Q. Did Hartley say there were $5,000 put in that he would not give five cents upon the dollar for? * A. Yes, sir; he said that. Q. Did he say with reference to the statement of January 1st, 1889, that he refused to sign that statement? A. He did. * * * * * * * * * * Q. Did Mr. Hartley say to you on the train going to Champlain that he declined to sign the statement and left the room? * * X- A. He did." The plaintiff was thus allowed by the referee to prove by his own witness conversations had between the plaintiff and the witness, and to impeach the statement of his own witness as to said conversa THIRD DEPARTMENT, JULY TERM, 1895. [Vol. 8. tions by proving contradictory statements made out of court. It is clear that such evidence was incompetent. (People v. Safford, 5 Den. 112; Thompson v. Blanchard, 4 N. Y. 303; Pollock v. Pollock, 71 id. 137, 138; Becker et al. v. Koch, 104 id. 394-401.) We are unable to say that the evidence so improperly received was immaterial and did not affect the result. No such claim is made by the counsel for respondent. For this error we feel compelled to direct a reversal of the judgment and a new trial of the case, with costs to abide the event. MAYHAM, P. J., and HERRICK, J., concurred. Judgment reversed and a new trial granted, costs to abide the event. 88 544 25ap 18 25ap 90 THE PEOPLE OF THE STATE OF NEW YORK V. FRANK CAMPbell, as Late Comptroller of the State of New York, and JAMES A. ROBERTS, Comptroller of the State of New York, Respondents. Railroad corporation — readjustment of a franchise tax under section 19 of chapter 542 of 1880 [added by chapter 463 of 1889]-sufficiency of the verification of the petition — discretion of the Comptroller in receiving evidence — property employed without the State - bonds and stock of foreign corporations, their legal situs. A petition was made to the Comptroller of the State of New York by a railroad corporation, under the provisions of section 19 of chapter 542 of the Laws of 1880 (added by chapter 463 of the Laws of 1889), for the readjustment of the franchise tax assessed against it for certain years. The petition was signed by John Carstensen, comptroller of such corporation. The verification to the petition was not signed by him and was in the following form: "John Carstensen, being duly sworn, and being duly known to me as the Comptroller of the New York Central and Hudson River Railroad, states that he is the said comptroller and that the facts set forth in the foregoing statements are correct and true to the best of his knowledge and belief. "[L. S.] D. W. PARDEE, Notary Public, Kings County. 'Cert. filed in New York County, Nov. 28, 1893." Hun.] THIRD DEPARTMENT, JULY TERM, 1895. Held, that Carstensen, having signed the petition and being named in the affidavit of verification, it was not necessary for him to sign the verification; That the effect of the affidavit of verification was not impaired because of the words "to the best of his knowledge and belief" at the end thereof. In reviewing the decision of the Comptroller, under the provisions of section 19 of chapter 542 of the Laws of 1880 (added by chapter 463 of the Laws of 1889), the General Term of the Supreme Court is not governed by the same rules as are applicable on an appeal from a judgment entered in an ordinary action of law. The strict rules of evidence applied in actions do not govern in a proceeding before the Comptroller, and he may receive affidavits as well as evidence. The Comptroller of the State of New York, in a proceeding brought before him for a readjustment of a franchise tax under the provisions of section 19 of chapter 542 of the Laws of 1880 (added by chapter 463 of the Laws of 1889), is in fact an assessor; and, on a motion for the revision of an assessment on account of a mistake as to the amount of the capital stock of a corporation employed in the State, the Comptroller may usually determine for himself what evidence he requires of the facts, and it is competent for him to rely upon the books and records of the corporation showing the amount of its property employed out of the State, and the General Term of the Supreme Court will not reverse his finding on the ground that it was based on such evidence. That part of the capital stock of a railroad company which is invested in freight cars, permanently engaged out of the State, is not subject to a franchise tax under the provisions of chapter 542 of the Laws of 1880, and the acts amendatory thereof and supplemental thereto, and the stock of foreign corporations, in which a portion of the capital stock of such railroad company is invested, is not capital stock used in the State of New York. The bonds of foreign corporations, owned by a railroad company incorporated under the laws of the State of New York, are presumably held at the office of such company within this State, and, in determining the amount of its franchise tax, such bonds, as well as all choses in action, unless kept, employed or used without the State, have their situs at the domicile of the owner, and are properly included as part of the capital stock of the railroad corporation. CERTIORARI issued out of the Supreme Court and attested on the 24th day of March, 1894, directed to Frank Campbell, as late Comptroller of the State of New York, and James A. Roberts, as Comptroller of the State of New York, commanding them to certify and return to the office of the clerk of the county of Albany all their acts and proceedings relative to the revision and readjustment of the amount of taxes of the New York Central and Hudson River Railroad Company. T. E. Hancock, Attorney-General, and G. D. B. Hasbrouck, Deputy Attorney-General, for The People. THIRD DEPARTMENT, JULY TERM, 1895. [Vol. 88. J. Newton Fiero, Willard Brown and Charles W. Wells, for Frank Campbell, late Comptroller. Nathaniel W. Norton, for Comptroller James A. Roberts. PUTNAM, J.: The New York Central and Hudson River Railroad Company, for the years 1885, 1886, 1887, 1888, 1889, 1890 and 1891, made the annual report required by chapter 542, Laws of 1880, and the several acts amendatory and supplementary thereto, and paid the tax required by said statute on its franchise or business. It will be seen by an examination of its reports contained in the case, on which the annual franchise tax was computed, that it failed to state in either the amount of its capital stock employed within the State, as required by section 11 of chapter 542 of the Laws of 1880 (added by chapter 151, Laws of 1882), as amended by chapter 501, Laws of 1885. The Comptroller, therefore, assessed the corporation for each year above mentioned upon its full capital stock, and the tax by him assessed was duly paid. On or about November 29, 1893, in pursuance of the provisions of section 19 of chapter 542 of the Laws of 1880 (added by chapter 463 of the Laws of 1889), the said corporation applied to the Comptroller for a revision or readjustment of said franchise tax so assessed for each of the years above mentioned. The application was made by a petition or communication to the Comptroller, purporting to be made by the New York Central and Hudson River Railroad Company, and signed by J. Carstensen, its comptroller. The verification to said communication was not signed by said Carstensen, and was as follows: "John Carstensen, being duly sworn, and being duly known to me as the Comptroller of the New York Central and Hudson River Railroad, states that he is the said comptroller, and that the facts set forth in the foregoing statements are correct and true to the best of his knowledge and belief. "[L. S.] D. W. PARDEE, Notary Public, Kings County. "Cert. filed in New York county, Nov. 28, 1893.” |