Aldrich, 108 N. W. Rep. 1063; Bank for Savings v. Grace, 102 N. Y. 313; Rice v. City of Milwaukee, 100 Wis. 516.) Assessment bonds should be deducted in determining the debt limit. (Sackett v. City of New Albany, 88 Ind. 473; Brashear. v. City of Madison, 142 Ind. 645; Quill v. City of Indianapolis, 124 Ind. 292; Strieb v. Cor, 111 Ind. 299; Davis v. Des Moines, 71 Iowa, 500; Grant v. Davenport, 36 Iowa, 396; Addyston Co. v. Corry, 197 Pa. St. 41; Gable v. Altoona, 200 Pa. St. 15; Commissioners v. Jackson, 165 Ill. 17; Board v. Reeves, 143 Ind. 467; Kelly v. City of Minneapolis, 63 Minn. 125.) Daniel P. Hays and B. S. Horkheimer for Fleischmann Realty and Construction Company, appellant. Special franchises, as defined in subdivision 3, section 1 of the Tax Law, as amended by the Laws of 1896, chapter 908, further amended by chapter 712, Laws of 1899, are not "real estate" within the terms of article S, section 10, of the Constitution. (Cooley on Const. Lim. [7th ed.] 92; Gibbons v. Ogden, 9 Wheat. 1; Settle v. Van Evera, 49 N. Y. 281; People v. N. Y. C. R. R. Co., 34 Barb. 128; 24 N. Y. 485; People ex rel. Williams v. Dayton, 55 N. Y. 367; People ex rel. Lent v. Carr, 100 N. Y. 242; Matter of Silkman, 88 App. Div. 102; Rhode Island v. Massachusetts, 12 Pet. 657; Nellis v. Munson, 108 N. Y. 458; People ex rel. P. R. R. Co. v. Tax Comrs., 104 N. Y. 240.) Assessment bonds constitute an indebtedness under the constitutional provision. (Fowler v. Superior, 85 Wis. 41; 1 Abb. Mun. Corp. § 152.) When the city has entered into a contract for municipal improvements which contract has been certified by the comptroller in accordance with section 149 of the Greater New York charter the total amount which the city obligates itself to pay is an "indebtedness" within the meaning. of the constitutional provision. (Rodman v. Munson, 13 Barb. 197; Matter of R. T. R. R. Comrs., 5 App. Div. 290; Latimer v. Veeder, 20 App. Div. 418; Matter of R. T. Comrs., 23 App. Div. 472; Bank of Savings v. Grace, 102 N. Y. 318; Spillman v. City of Parkersburg, 35 W. Va. 606; Culbertson v. City of Fulton, 127 Ill. 30; Windsor v City of Des Moines, 81 N. E. Rep. 476; Schnell v. City of Rock Island, 232 Ill. 89; Village of East Moline v. Pope, 224 Ill. 386; Ramsey v. Shelbyville, 83 S. W. Rep. 116.) Property of the city of New York, such as docks, wharves and market places, from which the city derives a revenue from private individuals and corporations, should be included in the assessed valuation of such property subject to taxation, for the purpose of determining the borrowing capacity of the city within the meaning of the Constitution. (People ex rel. Mayor, etc., v. Bd. of Assessors, 111 N. Y. 505; City of Rochester v. Brush, 80 N. Y. 302.) Francis K. Pendleton, Corporation Counsel (Theodore Connoly and Lewis H. Hahlo of counsel), for respondent. Special franchises are properly assessed as real estate. (2 Cooley Blackstone, 21; Waslib. on Real Prop. [6th ed.] § 1185; Gerard on Titles of Real Estate [4th ed.], 19, 100; Joyce on Franchises, § 26; 1 Reeves on Real Prop. 142; People ex rel. M. S. Ry. Co. v. Tax Comrs., 174 N. Y. 439; 199 U. S. 1; Kronsbein v. City of Rochester, 76 App. Div. 494.) Interest on the estimated value of land, title of which has vested in the city, where no final award has been made in condemnation proceedings, and interest on the unpaid amount of awards for the condemnation of land, title to which has vested in the city, but which awards have not been paid, is not an indebtedness within the prohibition. (Gibbons v. M., etc., Ry. Co., 36 Ala. 410; Blanchard v Benton, 109 Ill. App. 569; Jones v. Iurlbut, 13 Neb. 125; Eppig v. City of Columbus, 117 Ga. 263; Gray on Limi tations, § 2120.) Special revenue bonds issued in one year to be redeemed out of taxes levied for the next succeeding year; and special revenue bonds issued in 1907, whose redemption was provided for in the budget of 1908, do not constitute an indebtedness within the constitutional provision. (State Warrants, 6 S. D 518.) Special revenue bonds issued N. Y. Rep.] Opinion of the Court, per GRAY, J. in 1908 prior to June 30, the provision for the redemption of which was made in the budget for 1909 should not be included in the computation of indebtedness. (Kronsbein v. City of Rochester, 76 App. Div. 494.) Revenue bonds other than those issued in anticipation of the collection of taxes of the year in which they were issued should not be included in the computation of indebtedness. (State Warrants, 6 S. D. 518.) Outstanding contracts should not be considered an indebtedness within the purview of the constitutional provision. (Weston v. City of Syracuse, 17 N. Y. 110; Smith v. City of Newburgh, 77 N. Y. 130; Walla Walla City v. W. W. W. Co., 172 U. S. 1; V. W. W. Co. v. Vicksburg, 185 U. S. 65; Herman v. City of New York, 114 N. Y. Supp. 1107; McBean v. City of Fresno, 112 Cal. 159; Higgins v. City of San Diego, 45 Pac. Rep. 824; Crowder v. Town of Sullivan, 128 Ind. 486; Fowland v. Town of Frankton, 142 Ind. 546; Grant v. City of Davenport, 3 Iowa, 396; Board v. City of Hopkinsville, 95 Ky. 239.) Claims arising against the city of New York either ex contractu or ex delicto not reduced to judgment should not be considered existing indebtedness. (Gray on Lim. of Taxing Power, § 2091; A. Nat. Bank v. Lyon Co., 81 Fed. Rep. 127.) GRAY, J. The above three actions are brought by taxpayers and, in each, the plaintiffs demand that the municipal authorities of the city of New York be restrained from committing the city to certain proposed contracts for the construction of a subway in Brooklyn and for various other public improvements, and from issuing corporate stock therefor; upon the ground that thereby, the provisions of the Constitution of the state, with respect to the limitation of the city indebtedness, will be violated. Upon an application for a preliminary injunction, an order of reference was made, which was extended to each action, whereby the referee was required to take proof of, and to report with his opinion, the amount in which the city was indebted for any purpose, or in any manner, on June 30th, 1908; to take proof as to its obliga Opinion of the Court, per GRAY, J. [Vol. 196. tions and to classify such indebtedness, to the end that the court may be "enabled to determine thereupon the amount of existing indebtedness coming under constitutional limitations". The learned referee, with great care and elaborateness, complied with the order and, in his report, he has discussed, with marked ability, the important questions presented. Upon the coming in of his report, the applications for an injunction were denied and, on appeal to the Appellate Division, in the first department, the orders of the Special Term were affirmed. Leave was given to the plaintiff to appeal to this court and a great number of questions have been certified for our review. The constitutional provisions, which are brought into question, are contained in section 10 of article VIII of the State Constitution, and they read as follows: "No county or city shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city subject to taxation, as it appeared by the assessment rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness; and all indebtedness in excess of such limitation, except such as now may exist, shall be absolutely void, except as herein otherwise provided. No county or city, whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate subject to taxation, shall be allowed to become indebted in any further amount until such indebtedness shall be reduced within such limit. This section shall not be construed to prevent the issuing of certificates of indebtedness or revenue bonds issued in anticipation of the collection of taxes for amounts actually contained, or to be contained in the taxes for the year when such certificates or revenue bonds are issued and payable out of such taxes. Nor shall this section be construed to prevent the issue of bonds to provide for the supply of water *** "All certificates of indebtedness or revenue bonds issued in anticipation of the collection of taxes, which are not retired N. Y. Rep.] Opinion of the Court, per GRAY, J. * * within five years after their date of issue, and bonds issued to provide for the supply of water *shall be included in ascertaining the power of the city to become otherwise indebted; except that debts incurred by the city of New York after the first day of January, 1904, * * to provide for the supply of water, shall not be so included." The assessment roll of the year 1907 was taken as the basis for a statement of the assessed valuation of the real estate subject to taxation; necessarily, forasmuch as that for 1908 did not go into effect until July 6th, From such assessment roll that assessed valuation appears to have been $6,240,500,602. The constitutional limit for the incurring of municipal indebtedness would be ten per centum of that amount, or $624,050,060.20. It is strenuously objected that, in computing the indebtedness of the city, within the purview of this provision of the Constitution, it was incorrect to include special franchises as a part of the real estate, which is valued for assessment purposes. It was shown that they entered into the valuation of the real estate, appearing by the tax assessment rolls, to the amount of $466,855,000, and the referee held that they were properly so assessed. The language of the constitutional article is explicit that "the assessed valuation of the real estate" must be taken "as it appeared by the assessment rolls", and I think the rolls are made conclusive upon the subject. In these complaints, they are not attacked and are assumed to be correct. But, if we should assume that the items in the real estate column of the assessment rolls are open to legal objections, with respect to their classification as real estate for purposes of taxation, the referee's conclusion was absolutely correct. These special franchises are rights, or privileges, of a public nature, the exercise of which is permitted under grants from the state to corporations, and the legislature, in the General Tax Law, has classified them as real estate. (See Laws of 1896, chap. 908, sec. 1, sub. 3, as amended by Laws of 1899, chap. 712.) In the nature of incorporeal hereditaments, at common law, franchises partook |