Third Department, March, 1922. [Vol. 200 Before STATE INDUSTRIAL BOARD, Respondent. In the Matter of the Claim of FLORENCE M. OTTERSTEDT, Respondent, on Behalf of Herself and Minor Children, for Compensation under the Workmen's Compensation Law, for the Death of Her Husband, CHARLES E. OTTERSTEDT, v. LEHIGH AND HUDSON RIVER RAILWAY COMPANY, Employer and Self-Insurer, Appellant. Third Department, March 17, 1922. Workmen's Compensation Law-interstate commerce member of repair and construction gang not engaged in interstate commerce while building new crossover switch. The decedent, who was a member of a repair and construction gang working on the defendant railroad, was not engaged in interstate commerce at the time of the injury which caused his death, where it appeared that he was injured in the morning while on his way to work and that the gang with which he was connected and with which he would have worked on the day of the accident was engaged in making a new crossover switch on the defendant's tracks. APPEAL by the defendant, Lehigh and Hudson River Railway Company, from a decision and award of the State Industrial Board, entered in the office of said Board on the 26th day of August, 1921. Charles B. Sullivan, for the appellant. Charles D. Newton, Attorney-General [E. C. Aiken, Deputy Attorney-General, and Edward P. Lyon of counsel], for the respondents. KILEY, J.: Claimant's intestate was injured, while at work for appellant, on the 17th day of August, 1920. He died on the eighteenth, the following day. The accident occurred at Hudson Junction located as being one-half mile east of Eastchester in this State. At that junction the appellant's railroad intersects and is connected with other lines of railroad. This railroad company had employed Otterstedt from July 30, 1920, until August seventeenth, aforesaid, except he had lost several days' time before August twelfth, and did not work from that date until he came to work on the morning of the seventeenth. He was injured at six-nineteen A. M., before commencing work. He was run over by one of appellant's trains, and on that part of its line which runs between Warsaw and Greycourt wholly within this State and at that time was not carrying any interstate freight. At Greycourt it hitched on to milk cars destined for New Jersey. That fact does not signify here, because he was not one of the train crew, but was a laborer working in the repair and construction gang. The only question here is whether App. Div. 386] Third Department, March, 1922. the man was to commence work on that morning on new work or was going to work on tracks already finished and in use. At this crucial point the record is confusing. The last work he did on the twelfth day of August was in foreman Barry's gang, although before that time he had worked under another foreman or superintendent named Bellew. The work was being rushed at that point and both gangs, consisting of about twenty men, worked together. From Barry's evidence I glean that the company wanted to change and lay a new crossover switch, and in the course where this switch was to be laid stood a rock six or seven feet high toward which they were building this particular part of the crossover. Barry says that they were going to take out this rock and level up the surface of the track already built toward it on that day, which they actually did after the man was injured. He says they surfaced or leveled the surface on the track; that trains had not run over it and could not until such leveling and surfacing, viz., removing stone and dirt and making it level with the rails, was completed. This last is, in part, inference but admits of no other, because all of the other construction trains had been running since August twelfth previously. On the morning of the seventeenth of August there were about 100 feet of this new construction to be built before that particular part was completed so that connection with the other track could be made. No doubt is present as to the nature of the business of this carrier it was interstate commerce but here is an uncompleted facility which would not engage in interstate commerce until completed. It seems to me that the work of claimant's intestate ended before interstate commerce began. In New York Central R. R. Co. v. White (243 U. S. 188) the court says: "The admitted fact that the new station and tracks were designed for use, when finished, in interstate commerce does not bring the case within the federal act.* The test is 'Was the employee at the time of the injury engaged in interstate transportation or in work so closely related to it as to be practically a part of it.'" Citing Shanks v. Delaware, L. & W. R. R. (239 U. S. 556), and continuing: "Decedent's work bore no direct relation to interstate transportation, and had to do solely with construction work." It seems to me that this is a stronger case than Saccomanno v. Grasse River R. R. Corp. (191 App. Div. 761). Under the holding of Mr. Justice HUGHES in Osborne v. Gray (241 U. S. 16), the respondent urges that the employer had the burden of proof. I would like to hold so, but it is not necessary, and previous decisions of this court would conflict with such holding. Query, why? Because if it could * See 35 U. S. Stat. at Large, 65, chap. 149, as amd. by 36 id. 291, chap. 143, being Federal Employers' Liability Act.- [REP. Third Department, March, 1922. (Vol. 200 be held as a rule against the employer it would necessarily call for the application of the same rule against the employee. As before observed, there is much confusion in the record in the evidence given by appellant's witnesses. On the day in question the remainder of the gang worked on two tracks. Some parts of the evidence would indicate that this crossover which was being built over the ground from which the large rock was to be removed, became a part of the main track. The Industrial Board had to make its findings from this evidence. The confusion lies in the evidence as to just what track or portion of track the men worked upon in the forenoon of the seventeenth of August. The trains were running on all of the other tracks, and the inference that it was on the uncompleted part seems warranted. I report for affirmance. Award unanimously affirmed, with costs. THE PEOPLE OF THE STATE OF NEW YORK ex rel. JOHN R. KEIM, Relator, v. JAMES A. WENDELL, as Comptroller of the State of New York, Respondent. Third Department, March 17, 1922. Taxation income tax-losses deductible on transaction commencing before January 1, 1919, cannot be greater than actual loss or loss sustained during taxable year- Tax Law, § 353, covers all transactions entered into for profit-sale of stock short before January 1, 1919 — sale covered during 1919 at loss-loss deductible is amount representing actual loss on transaction or difference between market price of stock on January 1, 1919, and purchase price to cover, whichever is less. Losses deductible from gross income for the purpose of determining the net income subject to taxation on a transaction commencing before January 1, 1919, and terminating thereafter, cannot be greater than the actual loss incurred on the whole transaction, nor than the loss sustained during the taxable year, that is, after January 1, 1919. While the language used in section 353 of the Tax Law, in declaring how gains and losses shall be ascertained, mentions only a purchase and subsequent sale, the intent and meaning of the Legislature was to cover all transactions in which profits are had or losses sustained in dealing in property, and the Legislature did not intend to exclude from its rule all transactions entered into for profit other than a purchase and subsequent sale. Accordingly, said section is applicable to the case of a short sale of corporate stock prior to January 1, 1919, and a purchase at a loss to cover said sale after January 1. 1919; such a transaction is not distinguishable from a loss sustained from a long purchase of corporate stock and a subsequent sale. The relator, who sold corporate stock short during 1918 and purchased corporate stock in 1919 at an advance in price to cover his short sale, had the right to deduct from his gross income, for the purpose of determining his net income, an amount representing the actual loss on the entire transaction or the difference between the market price of the stock on January 1, 1919, and the price that he paid for stock purchased to cover, whichever was less. HINMAN, J., and COCHRANE, P. J., dissent in part, with opinion. App. Div. 388] Third Department, March, 1922. CERTIORARI issued out of the Supreme Court and attested on the 8th day of April, 1921, directed to James A. Wendell, as Comptroller of the State of New York, commanding him to certify and return to the office of the clerk of the county of Albany all and singular his proceedings had relating to his adjustment of an account for income taxes for the taxable year 1919 against the relator, under article 16 of the Tax Law, and in revising said account. The relator had three stock transactions; the first and second were short sales of securities made in 1918 and "covered" in 1919; the third was a purchase of securities in 1918 and a sale thereof in 1919. The first transaction: The relator sold short during 1918 securities totaling in market value $363,220. On January 1, 1919, the market value of these securities was $378,687.50. He "covered " (that is, bought in like securities in like amounts) in 1919 for $411,917.50. The Comptroller refused to allow deduction for the loss due to the increase in market value of the securities between the time of the sale and January 1, 1919, but did allow for the loss sustained by the increase in their market value from January 1, 1919, to the time of the purchase in 1919, $33,230. The second transaction: During 1918 the relator sold short securities aggregating in market value $159,107.50. The market value of these securities on January 1, 1919, was $156,812.50. He covered in 1919, paying therefor $172,515. Between the time of the short sale and January 1, 1919, there was a profit, had the relator then covered, of $2,295. But at the time he did cover in 1919 there was a loss upon the transaction of $13,407.50. The Comptroller allowed deduction for the loss sustained between January 1, 1919, and the time relator covered, $15,702.50. It is conceded now that the allowance in this transaction should have been $13,407.50, the amount of the actual loss. The third transaction: During 1918 the relator purchased securities for $121,475. The market value of these securities on January 1, 1919, was $102,625. He sold these securities during 1919 for $76,251.35. The Comptroller allowed deduction for the loss sustained, being the difference in value of the securities on January 1, 1919, and their value at the time of the sale, $26,373.15. Meyer Moskowitz, for the relator. Charles D. Newton, Attorney-General [James S. Y. Ivins and Laurence Graves of counsel], for the respondent. VAN KIRK, J.: No question arises as to the third transaction involving the purchase of securities before January 1, 1919, and a sale of those Third Department, March, 1922. [Vol. 200 securities during 1919. It is conceded that the decision in People ex rel. Klauber v. Wendell (196 App. Div. 827; affd., 232 N. Y. 549) controls. But it is claimed that a different rule must be applied as to the first and second transactions, involving a short sale of securities prior to January 1, 1919, and the covering of the short sale during 1919. The relator claims that he should be allowed to deduct the entire loss sustained in the transaction, while the Comptroller claims that the relator may deduct that part only of the loss which accrued after January 1, 1919. The position of the relator seems to be that no loss in either short sale transaction was incurred until his entire loss was taken; that is, that no part of the loss suffered accrued during 1918. This question requires the construction of three sections of the Tax Law, sections 351, 359 and 360, as added by chapter 627 of the Laws of 1919. These three sections, so far as their contents are essential to solving the question presented, contain the following: Section 351 of the Tax Law, entitled "Imposition of income tax," imposes a tax upon every resident of the State with respect to his entire "net income as herein defined." "Such tax shall first be levied, collected and paid in the year nineteen hundred and twenty upon and with respect to the taxable income for the calendar year nineteen hundred and nineteen, or for any taxable year ending during the year nineteen hundred and nineteen." Section 359 of the Tax Law defines "gross income: " "The term gross income:' 1. Includes gains, profits and income derived from * * dealings in property whether real or personal, growing out of the ownership or use of or interest in such property * or gains or profits and income derived from any source whatever Section 360 of the Tax Law (as amd. by Laws of 1920, chap. 693) provides: "Deductions. In computing net income there shall be allowed as deductions: Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in any transaction entered into for profit, By these three sections the tax is imposed upon the entire net income of the taxpayer and is to be first levied and collected in the year 1920 with respect to the taxable income for the calendar year 1919. Then the elements of the gross income are defined and the deductions from this gross income, that are to be allowed for the purpose of ascertaining the net income, are identified and defined. So that, in the three sections, we have a complete scheme for ascertaining the entire net income on which the tax is to be levied and collected. It is clearly provided that, in ascertaining this net income, not only gains and profits, but also the losses, which must be allowed as deductions from gross income, must be confined to those which accrued during the calendar year * * * * * * 5. |