plied to assessments charged against abut- | is,-and in this case does not form an excepting lots, where the lotowners have the right tion,—that statutes prescribing forms of prosecured to them to construct in front of their cedure, and providing for the orderly conproperty the improvements for or in which duct of proceedings by public officers or boda patented method or process is used, we can- ies, are only obligatory to the extent and in not see that there is any good reason to hold cases to which they are by their terms apthat the statute applies to the patented mode plicable. The legislature cannot be preor process, when in respect to all else the sumed to have intended to declare that no statutory requirement of competition is se- power should be exercised, or work done, or cured. Under any other theory a municipal supplies furnished, unless of a character that corporation would be obliged to forego the would admit of competitive bids. The grant purchase and use of all patented implements, of power was for public purposes, and th modes, or processes, a result which we can discretion vested in the common council was not think the legislature contemplated." in the interests of the public, and neither the The case of Newark v. Bonnell, 57 N. J. L. public nor the parties to be benefited by local 424, is in point, also. improvements can be deprived of the benefit of this discretion, or the right to the best or most improved pavements, because full effect cannot in a particular case be given to an act designed for another purpose, to wit, to the power. In other cases in this court a like statute, intended to accomplish the same purpose, that is, the performance of work, and the furnishing of supplies at the lowest price and on the most favorable terms, although sufficiently broad in its terms to include the contracts and the services in question, was held not applicable to, and there The case of Re Dugro, 50 N. Y. 517, sustains the authority to use patented articles. In the opinion it was said: "Section 104 of the act is relied upon as a limitation upon the powers of the common council, to the ex-regulate the exercise of, and not to limit, tent of a prohibition to undertake any work, or order or direct the making or paving any street, in a manner or with a material which will not admit of competitive bids or proposals. It requires all work to be done and supplies to be furnished by contract when the expenditure will exceed $1,000, and di1ects all contracts to be made or let after an advertisement for proposals, and to the low-fore as not embracing, them. People, Smith, est bidder. The statute was complied with, in that the proper officers of the city did advertise for bids or proposals for paving the street, and the contract was let to the only bidder, and at the price named in the bid. The objection is that the 'Nicolson pavement' was patented, and the right to lay it was in a single person or corporation, and that, therefore, the advertisement being for bids to pave the street with that particular pavement, there could be no competition, and the form of advertising for and receiving bids, and acting upon them, was but a form, and was not, and could not be, a compliance with the act looking to competition; and it is claimed that the contract based upon the proceedings was void, and the assessment for the work therefore illegal. It is urged, that because a statute prescribing general rules for the exercise of the powers granted to the municipal corporation are not, in all their detail, applicable to every case that may arise, that, to the extent they cannot be applied, the powers are annulled, and cannot be exercised. This would be to give undue effect to the act prescribing the forms of procedure, and modal in its character, at the expense of the general grant of power. Whether the corporate authorities could or should have known that there could be no possible competition for the work (if such was the fact, which is not entirely certain), and, knowing that, could or should have made a contract without advertising for bids, need not be considered. There is no pretense of fraud, or that the contract, as made, was not a provident and proper contract, and reasonable and right in all its terms and provisions, so that the form of advertising and receiving bids cannot vitiate it, even if no such procedure was necessary. The general rule v. Flagg, 17 N. Y. 584; Harlem Gaslight Co. v. New York, 33 N. Y. 309. This case is not within the precise principle ruled in those cases, but it is quite analogous, and much of the reasoning of the judges who then spoke for the court is entirely applicable here. A thing within the letter is not within the stat ute, unless within the intention. The act of 1870 can have full effect in cases to which it can be applied, but, if there are cases to which it could not be reasonably applied, they are not within the intention, and therefore not within the statute. It seems to be absurd to say that all powers and all authority are by necessary implication taken from the municipal authorities, except such as can be exercised in strict conformity to this one provision of law,-that this section of the law of 1870 is to be the touchstone to determine the limit and extent of the powers vested in the common council, and that all other acts must conform to it. It should rather be interpreted with respect to the other statutes to which it is ancillary. The decisions of the courts in Wisconsin are ad verse, while the Michigan courts are in ac cord with the views now expressed. If, as alleged, there could be no competition for the paving with the Nicolson pavement, the common council had nevertheless the power to cause the street to be paved with it; and it is simply a case not within the statute, al though the words are broad enough to include it. It constitutes one of the necessary exceptions to it. No other question was presented upon this appeal; the counsel, in terms, limiting the discussion to the operation and effect of the provisions of the act of 1870, requiring certain contracts to be given to the lowest bidder after an advertisement for proposals." In Fones Bros. Hardware Co. v. Erb, 54 | but of quality. In this case the complainArk. 645, 13 L. R. A. 353, the view enter- ants seek to apply a new regulation, viz., that tained by Chief Justice Christiancy was ap- in all such cases the city must be satisfied proved. The Arkansas court said: "When with some other article alleged to be equally a contract to build a bridge is to be let, there good. They not only did not comply with are two kinds of competition that may arise: the specifications, by naming one of the First, that between persons desiring to build kinds of brick specified, but bid upon a brick different kinds of bridges; and, second, that the name of which was not divulged, and between those desiring to build the same they now ask relief upon the ground that kind. And, as was said by Judge Chris- such a bid should have been considered. tiancy in discussing a provision similar to Municipal improvements afford an opportunthat under consideration, the bidding which ity for corruption and jobbery, and the pubit contemplates is of the latter kind,-bid- lic opinion that it is not uncommon may be ding for the same particular thing, to be justified. This is perhaps unavoidable, but, done according to the same specifications: whether it is or not, we think the remedy For, says he, no bids for different kinds of is not that suggested, viz., to deprive the work, and referring to different specifica- cities of the power to get what is desired, and tions, could be recognized as coming in com- compel them to take what is not wanted, or petition with each other, for the purpose of nothing. We think the law is complied with, determining the lowest bid, within the re- in the absence of actual fraud or corruption, quirement of this section, without opening when specifications are submitted to competthe door to the same corrupt combinations, itive bidding, although some article is speciand furnishing facilities for the same fraud- fied, which, by reason of a patent or circumulent practices which it was the purpose of stances, is in the hands or under the control this provision to prevent. Atty. Gen., Cook, of a single dealer. v. Detroit, 26 Mich. 263." The decree will be reversed, and the bill dismissed, with costs. Montgomery, J., did not sit. The other Justices concur. NEW YORK COURT OF APPEALS. PEOPLE of the State of New York, ex rel. | mon stock, each share being of the par value A. J. JOHNSON COMPANY, Appt., 1. v. James A. ROBERTS, Respt. (159 N. Y. 70.) of $100. It was incorporated to publish and sell Johnson's Universal Cyclopædia, under copyrights, of which it became the assignee and owner. The comptroller imposed a tax upon it for the year ending October 31, 1897, of $782.50, calculated upon a dividend Copyrights, like patent rights, are of 20 per cent paid during the year on $135, exempt from taxation by state authority 500 of preferred stock issued, and upon a valbecause they are Federal grants or privi-uation of the $88,000 of common stock issued leges. 2. The goodwill of a corporation which is the result of carrying on its business in the state and inseparable from that business is taxable as capital em ployed in the state, although the corporation is nominally a corporation of another state in which it has never done any business. (Gray, O'Brien, and Haight, JJ., dissent from jected to Proposition 2.) (April 25, 1899.) A Statement by Gray, J.: The relator was organized under the laws of the state of West Virginia, with a capital stock of $250,000, divided into 150 shares of preferred stock, and 100 shares of com NOTE. As to the exemption of property in patent rights from state taxation, see note to Com. v. Petty (Ky.) 29 L. R. A. on page 793; at $70,000. Subsequently, upon the relator's application, the tax was revised and settled by the comptroller at the sum of $612.98, which figure of assessment was reached by stating the amount of the preferred capital stock at $111,450, and the value of the common stock at $37,150. The relator has obthe assessment upon various grounds, among which are these: That its property is nearly all invested in copyrights, and that the capital stock employed within this state constituted only the tangible assets, and did not embrace either those copyrights or the goodwill of the company; that the state has no jurisdiction to tax it for the privilege of publishing a copyrighted produc tion; and that the decision of the comptroller is without any basis in fact or evidence. The tangible assets within the state, as testified to, were the average value of cyclopædias printed within the state during the year, amounting to $55,000, an average bank acalso People, Edison Electric Illuminating Co., v. Brooklyn Bd. of Assessors (N. Y.) 42 L. R A. 290. ment, and are not subject to taxation in any sense by the states. People, Edison Electric Illuminating Co., v. Brooklyn Bd. of Assessors, 156 N. Y. 417, 42 L. R. A. 290; Patterson v. Kentucky, 97 U. S. 503, 24 L. ed. 1116; Webber v. Virginia, 103 U. S. 344, 26 L. ed. 565; Ex parte Robinson, 2 Biss. 309; Re Sheffield, 64 Fed. Rep. 833; Helm v. First Nat. Bank, 43 Ind. 167, 13 Am. Rep. 395; Grover & B. Sewing. Mach. Co. v. Baker, 53 Ind. 454, 21 Am. Rep. 200; Com. v. Petty, 96 Ky. 452, 29 L. R. A. 786; Com. v. Westinghouse Electric & Mfg. Co. 151 Pa. 265; Com. v. Westinghouse Air Brake Co. 151 Pa. 276; Com. v. Philadel phia Co. 157 Pa. 527; Com. v. Edison Electric Light Co. 157 Pa. 529; Philadelphia & S. S. S. Co. v. Pennsylvania, 122 U. S. 326, 30 L. ed. 1200, 1 Inters. Com. Rep. 308; Leloup v. Port of Mobile, 127 U. S. 640, 32 L. ed. 311, 2 Inters. Com. Rep. 134. count of $1,800, and accounts receivable of | $17,000. From the aggregate of these items, namely, $73,800, debts for rent and salaries, amounting to $10,000, were deducted, leaving a sum of $63,800, which the relator claims represents the value of its tangible assets and the amount of capital employed here. The relator had no office in West Virginia, and substantially the whole business of the corporation was conducted at its office in the city of New York, and consisted in putting upon the market, and selling, a new edition of Johnson's Universal Cyclopædia. The comptroller, in his return to the writ of certiorari, stated "that he determined from the evidence, and from the information from all sources which he was able to obtain, that the amount of capital stock employed by the relator in the state of New York, for the year ending October 31, 1897, was $148,600, and that among the items of property which went to make up that amount were the books, copyrights, and the goodwill of the corporation, and the goodwill acquired by it, which copyrights, goodwills, and property were determined by me to have their situs and to be amenable, to taxation under chapter 542, Laws 1880, and the acts amendatory there-eral, and G. D. B. Hasbrouck, for reof, in New York state." The appellate division, in the third department, affirmed the comptroller's decision, and the relator now appeals to this court. Co. 96 N. Y. 387. The franchises of a foreign corporation must exist at its place of domicil. Plimpton v. Bigelow, 93 N. Y. 592; People, Pennsylvania R. Co., v. Wemple, 138 N. Y. 1, 19 L. R. A. 694; People, United Verde Copper Co., v. Roberts, 156 N. Y. 585. The relator's copyrights do not constitute capital employed within this state. Nor is the goodwill of the corporation, or the goodwill of the Cyclopædia, capital employed within this state. If the revised tax law were to be construed so as to require taxation of the copyrights and goodwill of the relator, such a construction would offend against the Federal Constitution, for patent rights and copyrights are exclusively derived from the Federal govern This state has no jurisdiction to tax the relator for the privilege of publishing a copyrighted production. California v. Central P. R. Co. 127 U. S. 41, 32 L. ed. 157, 2 Inters. Com. Rep. 153. Messrs. John C. Davies, Attorney Gen spondent: The relator was engaged in the transaction of business in this state. It employs its capital stock in the state of New York. Copyright is property and it is a proper measure of the business tax in this instance, though it may not be taxable itself. 7 Am. & Eng. Ene. Law, Copyright; PalmPeople, Edison Electric Light Co., v. Camper v. DeWitt, 47 N. Y. 539, 7 Am. Rep. 480; bell, 138 N. Y. 547, 20 L. R. A. 453. Goodwill has been held to be property which could be used in estimating the amount of capital stock which should be made the measure of the tax. People, Wiebusch & H. Co., v. Roberts, 154 N. Y. 108. The situs of these copyrights, and this goodwill, is in the state of New York. Bradbury v. Dickens, 27 Beav. 53; Bell v. Locke, 8 Paige, 75, 34 Am. Dec. 371. The goodwill of a "business," and this iswhat the Johnsons sold, is in the same category with place and article. White v. Jones, 1 Abb. Pr. N. S. 337; Howe v. Searing, 6 Bosw. 354; Dayton v. Wilkes, 17 How. Pr. 510; People, Wiebusch & H. Co., v. Roberts, 154 N. Y. 108. It would be most unreasonable for these foreign corporations to ask the privilege of doing business under our laws, in competition. with domestic institutions, and then to ask exemption from the obligations and liabilities which attach to the latter. Martine v. International L. Ins. Soc. 53 N. Y. 339, 13 Am. Rep. 529. Vann, J., delivered the opinion of the court: Copyrights clearly stand on the same basis as patent rights, with reference to the subject of taxation by the state, and, as we have held that the former are exempt, the | lar name or firm, and which may induce them latter should be held exempt also. People, to continue giving their custom to it." Edison Electric Illuminating Co., v. Brooklyn In another part of the opinion he said: Bd. of Assessors, 156 N. Y. 417, 42 L. R. A. "Goodwill must mean every advantage 290. The comptroller, therefore, erred when that has been acquired by the old he included the copyrights of the relator firm in carrying on its business, whether "among the items of property which went to connected with the premises in which the make up" the amount "of the capital em- business was previously carried on, or with ployed by it within this state." Laws 1896, the name of the late firm, or with any other chap. 908, § 182; Laws 1880, chap. 542, § 3. inatter carrying with it the benefit of the No other item is open to discussion except business." In Ginesi v. Cooper, L. R. 14 Ch. the "goodwill of the corporation and the Div. 596, 600, Sir George Jessel quoted the goodwill acquired by it," neither of which, latter definition, and added: “Attracting as the appellant claims, was properly in customers to the business is a matter concluded as an element of value, because each nected with the carrying of it on. It is the is an intangible asset and beyond legislative formation of that connection which has made control in this state. In the Wiebusch Case, the value of the thing which the late firm 154 N. Y. 101, it was held that "the actual sold, and they really had nothing else to value of the capital stock of” a domestic cor- sell in the shape of goodwill." In 1895 the poration "is the value of its assets, after House of Lords, through Lord Herschell, deducting its liabilities, and adding to the adopted the position taken in these cases, and sum then remaining the value of the good- also held that where the goodwill of the busiwill of the business, including its right to ness is sold without further provision, alconduct it under its franchise." By this de- though the vendor may set up a rival busicision it is established that the goodwill of ness, he is not entitled to canvass the cusa domestic corporation is property which tomers of the old firm, and may be restrained was taxable as a part of its capital stock un- by injunction from soliciting any person who der the act of 1880. That act was repealed was a customer of the old firm prior to the by chapter 908 of the Laws of 1896, known sale to continue to deal with the vendor or as the "Tax Law," which took effect June not to deal with the purchaser. Trego v. 15, 1896. The substance of the earlier act Hunt [1896] A. C. 7. In Wedderburn v. was re-enacted in the later, with a decided Wedderburn, 22 Beav. 84, Sir John Romilly, change of arrangement and phraseology, but speaking of goodwill, said: "It seems to be perhaps with no change of meaning, so far, that species of connection in trade which inat least, as the question now before us is con- duces customers to deal with a particular cerned. By § 182 of the tax law it is pro- firm." In Bradbury v. Dickens, 27 Beav. vided that "every corporation.. formed 53, it was said: "The property in a literary under, by, or pursuant to law in this state, periodical like this is confined purely to the shall pay to the state treasurer annually, mere title, and the title of this work is an annual tax to be computed upon the basis ‘Household Words,' and that forms part of of the amount of its capital stock employed the partnership assets, and must be sold for within this state and upon each dollar of the benefit of the partners." In Williams such Every corporation v. Wilson, 4 Sandf. Ch. 379, it was held that formed under the laws of any other the goodwill of the business built up by a state or country, shall pay a like tax for the copartnership in conducting an insane hosprivilege of exercising its corporate fran- pital and an immigrant lazaretto was an chises or carrying on its business in such important and valuable interest, which the corporate or organized capacity in this state, law recognizes and will protect. So the to be computed upon the basis of the capital name and reputation of a newspaper, the employed by it within this state." carrier's route of a city newspaper, and the name which a firm has rendered valuable by doing business under it, are regarded as belonging to the goodwill. Hathaway v. Bennett, 10 N. Y. 108, 61 Am. Dec. 739; Dayton v. Wilkes, 17 How. Pr. 510; Fenn v. Bolles, 7 Abb. Pr. 202. In Elliott's Appeal, 60 Pa. 161, it was held that the goodwill of an inn is local, and does not exist independently of the house in which it is kept; and to the same effect is Musselman's Appeal, 62 Pa. 81, 1 Am. Rep. 382. In Chittenden v. Witbeck, 50 Mich. 401, it was held that goodwill is the favor which the management of a business wins from the public, and the probability that old customers will continue their patronage, but that it attaches to the property, and, in the case of a lease belongs to the lessee only during its continuance, and on its expiration reverts to the lessor. In Barber v. Connecticut Mut. L. Ins. Co. 15 Fed. Rep. 312, it was said that "the goodwill of an established business, which is a amount. The remaining question presented for decision, therefore, is whether the goodwill of the relator was "capital employed by it within this state." "Goodwill" is a modern but important growth of the law, not mentioned by some of the early writers, but given great prominence at the present time. In 1810, Lord Eldon defined it as "the probability that the old customers will resort to the old place." Cruttwell v. Lye, 17 Ves. Jr. 335, 346. In 1859, Vice Chancellor Wood, in deciding the case of Churton v. Douglas, Johns. V. C. (Eng.) 174, 188, held that goodwill carried more with it than simply the advantage of keeping the premises which were occupied by a former firm, and the chance thereby had of the customers of the former firm being attracted to those premises. He expanded the definition so as to make it embrace "all that good disposition which customers entertain towards the house of business identified by the particu common subject of contract, is nothing but | an incident to a place, an established busithe chance of being able to keep the business ness, or a name known to the trade. which has been established. The sale of a mere chance, which vests in the purchaser nothing but the possibility that the preference which has been usually extended to those whose rights he acquires will be extended to him, has been enforced in equity, and recognized at law as effectual between the parties to the contract." Judge Story, in his work on Partnership (§ 99), says that "goodwill may be properly enough described to be the advantage or benefit which is acquired by an establishment beyond the mere value of the capital stock, funds, or property | employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices." He adds that it may be assigned with the premises and the rest of the effects. In Parsons on Partnership, 4th ed. § 181, it is defined as "that benefit or advantage which rests only on the goodwill or kind and friendly feeling of others;" and in a note it is added "that, so far as it has a transferable value, it consists in the additional value which a business possesses when it can be sold as 'a going concern.' The learned author also indorses Lord Eldon's definition, and, in another note, says: "This definition, as we have above intimated, makes | goodwill local and an incident of the place where business has been carried on, and not of the persons by whom it has been conducted. It is in this sense only that good will is recognized by the law as a pecuniary interest." Mr. Lindley, in his treatise on Partnership (vol. 2, p. 439), says: "The term 'goodwill' can hardly be said to have any precise significance. It is generally used to denote the benefit arising from connection and reputation, and its value is what can be got for the chance of being able to keep that connection and improve it. Upon the sale of an established business its goodwill has a marketable value, whether the business is that of a professional man or of any other person. But it is plain that goodwill has no meaning except in connection with a continuing business; it may have no value except in connection with a particular house; and may be so inseparably connected with it as to pass with it under a will or deed without being specially mentioned." Mr. Pollock says "that which the purchaser of a goodwill actually acquires, as between himself and his vendor, is the right to carry on the same business under the old and to represent himself to former customers as the successor to that business." Pollock, Partn. art. 57. Goodwill embraces at least two elements,-the advantage of continuing an established business in its old place, and of continuing it under the old style or name. While it is not necessarily altogether local, it is usually to a great extent, and must of necessity be, name, The relator was incorporated in 1892, under the laws of the state of West Virginia, for the purpose of publishing and selling Johnson's Universal Cyclopædia, and of carrying on a general business of publishing and selling books, maps, charts, etc. The firm of D. Appleton & Co., of the city of New York, owns substantially all the shares of stock that have been issued, and its president, secretary, and treasurer are members of that firm. It never did any business, owned any property, or had an office in West Virginia, and its only connection with that state is its charter, and the payment of an annual license tax of $50. It also employs a lawyer to represent it in that state, but for what purpose does not appear. While nominally a corporation of West Virginia, for all practical purposes it is a New York corporation. In its petition for a writ to review the determination of the comptroller, referring to that officer it says "that he has erroneously appraised a portion of goodwill as capital employed within this state; that no proof was adduced before him as to the value of such goodwill, or that said goodwill had any value whatsoever, or as to what part, if any, was employed in this state." In its report to the comptroller, made for the year in question, which ended October 31, 1897, it stated that its business for that year was "the putting upon the market and selling a new edition of Johnson's Universal Cyclopædia, completed in eight volumes," and that such business was carried on at "72 Fifth avenue, in the city of New York." The blank in the report, calling for information as to the "nature of business transacted and amount invested outside New York state," was left unanswered. It stated, however, that all its capital was employed within this state except its copyrights, which, it claimed, were not capital employed within the state, and were not taxable for other reasons. Its secretary and treasurer testified that substantially all its stock, so far as issued, or $225,000 in amount, was transferred for the copyrights, the right to publish, and the goodwill of an old business established and owned by William W. Johnson. The copyrights granted by the United States government to publish the cyclopædia formerly belonged to Mr. Johnson, who transferred them to the relator in exchange for stock, which he subsequently assigned to Appleton & Co. The cyclopædia is a new one, with new articles, prepared under the supervision of a new editor, and the only thing not original about it is the name. All the business of the relator is done, and all its stock owned, in the state of New York. The cyclopædia is sold throughout the country through D. Appleton & Co. as selling agents, and the sales of the relator are made almost exclusively to that firm, and wholly in this state. By an instrument dated October 25, 1892, "William W. Johnson, of the city of Yonkers, Westchester county, New York," assigned to the relator "Johnson's New General Cyclopædia and Copper-Plate Hand |