The ownership of the majority of stock of a domestic corporation by a foreign corporation which is authorized by its charter to hold stock is employing capital within the state of Alabama. Likewise lending money by a foreign corporation to a domestic corporation, the foreign corporation being authorized by its charter to lend money and having qualified in the state of Alabama for that purpose and for the purpose of holding stock in a domestic corporation, constitutes the employment of capital in the state of Alabama. Const. 1901, § 232; Acts 1927, p. 176, § 54; People ex rel. v. Williams, 198 N.Y. 54, 91 N.E. 266, 28 L.R.A. (N.S.) 371; People ex rel. Fourteenth St. Realty Co. v. Kelsey, 110 App. Div. 797, 97 N.Y. S. 197; Id., 184 N.Y. 572, 77 N.E. 1194; People ex rel. v. Sohmer, 155 App. Div. 842, 140 N.Y. S. 507; State v. Burchfield, 211 Ala. 32, 99 So. 198; 1 Words and Phrases, Second Series, pages 561, 564; Smith v. Dana, 77 Conn. 543, 60 A. 117, 69 L.R.A. 76, 107 Am. St. Rep. 51; Educational Films Co. v. Ward, 282 U.S. 379, 51 S.Ct. 170, 75 L.Ed. 400; People ex rel. v. Campbell, 138 N.Y. 543, 34 N.E. 370, 20 L.R.A. 454. Wilkinson Burton and Hollis O. Black, all of Birmingham, for appellee.
The relator concedes that it accomplished the purpose for which it was incorporated. In view of these facts we think the relator must be held to have been engaged in business within the intendment of section 182 of the Tax Law (Consol. Laws, chap. 60; Laws of 1909, chap. 62). ( People ex rel. Waclark Realty Co. v. Williams, 198 N.Y. 54; People ex rel. Vandervoort Realty Co. v. Glynn, 194 id. 387; People ex rel. Fourteenth Street Realty Co. v. Kelsey, 110 App. Div. 797; affd., 184 N.Y. 572; People ex rel. Coney Island Jockey Club v. Sohmer, 155 App. Div. 842; affd., 210 N.Y. 549.) The second question to be considered is whether the distribution to its stockholders of the proceeds of the sale of its interests in the real property constituted a distribution of capital or the payment of a dividend.
In such a case the capital stock must be held to be employed rather than invested. ( People ex rel. Vandervoort Realty Co. v. Glynn, supra; People ex rel. Fourteenth Street Realty Co. v. Kelsey, 110 App. Div. 797; affd., 184 N.Y. 572.) Using is employing. "From the moment when the relator began to use its money to purchase real estate for the purposes of its incorporation it employed its capital in this State within the purview of the statute."
The relator was not responsible for the leases, and simply made the best of the situation in endeavoring to terminate them, without having any discretion or exercising any control in respect to their creation. The case, therefore, is clearly distinguishable from People ex rel. Vandervoort Realty Co. v. Glynn ( 194 N.Y. 387); People ex rel. Wall Hanover Street Realty Co. v. Miller (181 id. 328), and People ex rel. Fourteenth Street Realty Co. v. Kelsey ( 110 App. Div. 797), relied on by the respondent. The determination should be annulled, with fifty dollars costs and disbursements.