author: McAdam, J.

text:
    William S. Wood, Pl’ff, v. Walter W. Taylor, Def't.

      (New York Superior Court, Special Term,

      Filed September 27, 1894.)

      1. Deed—Construction—Heirs.
    The word “ heirs,” in a deed to one for life, and at his death to “ his own lawful heirs,” means heirs of the body.
    •2. Same—Void limitation.
    When the granting clause of a deed purports to convey a fee, a void limitation in the habendum does not restrict the estate conveyed.
    Action for the specific performance of a contract for the purchase of certain real estate.

      James 0. Be La Mare, for pl’H; Arthur W. Birkins, for deft.
   McAdam, J.

James Wood, in 1872, conveyed the premises in question to his son, William Gr. Wood, and to his heirs and. assigns, forever, by a warranty deed in the usual form, purporting in the premises or granting clause to convey the entire fee, but with an habendum clause reading as follows: “ To have and to hold the above granted, bargained, and described premises with the appurtenances, unto the said party of the second part, for and during the term of his natural life only, and at his decease then to go to his own lawful heirs, to and for their own proper use, benefit, and behoof, forever; but, in case of his death without lawful issue, then the said property conveyed shall revert back to said party of the first part, his heirs and assigns, forever.”

The plaintiff, the grantee, afterwards, in '1883, by a quitclaim deed, conveyed the same premises back to’ his father, the grantor. His father died after that, leaving a will by which he devised all his real estate to the plaintiff and Elizabeth Wood, the plaintiff’s mother, to be equally divided between them; and then Elizabeth Wood conveyed to the plaintiff all her interest in the property in question, and has since died. The plaintiff has a wife; but has never had any children. Assuming to be the owner of the land in fee simple, he made an agreement with the defendant to sell it to him; and the defendant now refuses to take title, on the ground that, as he claims, the plaintiff has only a life estate in the premises, and that, in case of his death, leaving a child or children, the title would vest in them, or that there is now a vested remainder in the heirs at law of the plaintiff. In this he is mistaken. It is clear from the language of the habendum clause,- particularly taken in connection with the premises or granting clause, that by the words “his own lawful heirs” the grantor meant children of the grantee, the grantee’s own lawful children. In no other way can the different parts of the habendum be reconciled or made consistent. He clearly desired and intended to say that his son should have the land during his life, and,then at his death that it should go to the son’s children, if he had any, but, if he had none, then that it should come back to himself (the grantor); and he evidently supposed that the words he used were appropriate words to accomplish that purpose. It is no uncommon thing -for such blunde/s to be made, nor for courts to construe the word “heir’’ to mean “ child,” and to so read a deed or will. Scott v. Guernsey, 48 N. Y. 106, 107, 122; Heath v. Hewitt, 127 N. Y. 166; 38 St. Rep. 687. The deed, or rather the habendum, clause, then, if it is to have any effect, should be read as giving the land to the plaintiff for and during the term of his natural life, and then at his death to go to his children, if he has any, and, if not, then to revert to the grantor. So construing the deed, and assuming that the habendum, qualifies and describes the estate granted in this case, if the plaintiff, at the time of the delivery of the deed, had had a child living, the child would then.have been vested with an estate in remainder in fee, as there would then have been a person in being who would have been entitled to immediate possession on the termination of the intermediate estate; that is, if his father had then died. 1 Rev. St. p. 728, § 13. This is assuming that the estate of the plaintiff was only a life estate. But as the plaintiff had no child or children at the time of the delivery of 'the deed, and holding, as we must, that the word “heirs,” in the habendum clause, should be read “child” or “children,” or “heirs of the body,” it is not clear that the limitation in the habendum has any validity. Where, as in this case, the grantor, by the principal or granting clause, called the “premises,” conveys or uses words purporting to convey his entire estate, there must be some, person in being in whom, on the delivery of the deed, the entire estate vests. The fee cannot be in abeyance. Billings v. Baker, 28 Barb. 367. It cannot swing in abeyance to await the coming of some one into being,, in whom the title may vest. Henderson v. Henderson, 113 N. Y. 2; 21 St. Rep. 800. A conveyance to a grantee and his heirs gives to the’grantee a fee. But a conveyance may be to a grantee for life, and the remainder to his heirs, and be good as a conveyance of a remainder to the heirs, if at the time of the delivery of the deed there are then persons in being who, if the grantee should die, would be his heirs.. Such was the case of Moore v. Littel, 41 N. Y. 66. In such a case, there being a person in being at the time of the delivery of the deed who would take and be entitled to immediate possession of the life estate, the grantee, under our statutes, since the abrogation of the rule in Shelley's Case, would take but a life estate. Sheridan v. House, 4 Keyes, 569. In this case the remainder, by the terms of the habendum,, is limited to the issue, the children or' heirs of the body of the grantee; and at the time of the delivery of the deed there were none such, nor have there ever been any. There was no person in whom the remainder vested or could vest, and, as the fee must always be in some one, the fee either vested in the grantee, or it never passed out of the grantor. The deed in this case, if the habendum is to have effect, instead of being a conveyance to the grantee and his heirs, which would have given him a fee, is a conveyance to the grantee for life, and at his death to certain designated heirs, or rather heirs of his body, which, prior to the statute abolishing entails, would have created an estate tail, but which now, by our statutes, is converted into a fee simple. 1 Rev. St. p. 722, § 3. By that statute the fee, in such a case, is not vested in the grantee or first taker, but in the tenant in tail—the one who takes after the determination of the life estate. Wendell v. Crandall, 1 N. Y. 491; Jenkins v. Fahey, 73 N. Y. 364; Barber v. Cary, 11 N. Y. 397; Van Rensselaer v. Poucher, 5 Denio, 35. But that is only in cases where a valid remainder is limited on the intermediate estate. Where it is not, the grantee of the life estate takes the fee. 1 Rev. St. p. 722, § 3. In this case there was no child of the grantee in existence when the deed was delivered, and no valid remainder was limited on the estate granted; and certainly, if the lirpitation ifi the habendum is void, then by the terms of the deed, as expressed in the granting clause, the grantor conveyed his entire estate to the grantee. There are two reasons for so considering and holding it void: One is that by the premises or granting clause in the deed the grantor conveys, or uses language appropriate to convey, the entire fee; and the other is that there was no person in being in whom the remainder could vest at the time of the delivery of the deed.

Ordinarily, if there is an irreconcilable inconsistency between the' premises or granting clause in a deed and the habendum (which is not essential to the validity of a deed) the habendum must yield. Greenl. Cruise, tit. 32, p. 273, §§ 75, 76; 2 Washb. Real Prop. (2d Ed.) 691 (644), § 63; Mott v. Richtmyer, 57 N. Y. 49, 63. Such appears to be this case. By the premises or granting clause in the deed, it is a conveyance in fee simple to the grantee, his heirs and assigns, forever. If, by the premises or granting clause, the conveyance had been to the grantee and his heirs, and in the habendum it had been limited to the grantee for life, and at his death to the heirs of his body, as it is, it would have been what, prior to the abolition of entails, was an estate tail. The habendum, in that case, would but have described the particular heirs before mentioned in the granting clause; and the premises and the habendum might thus be reconciled, and the deed held good as a conveyance to the first taker for life, and of the remainder to the designated heirs. Mott v. Richtmyer, 57 N. Y. 63; Tyler v. Moore, 42 Pa. St. 386. But that could be so, under our statutes, only in case the grantee had such heir of his body at the time of the delivery of the deed. It was different under the common law before the abolition of entails, when the grantee or first taker had or might have a fee called a determinable fee.

The difficulty in this case lies i« the fact that the grantee had no child or heirs of his body at the time of the delivery of the deed, in whom the fee could vest;, and, as the premises or granting clause cannot be entirely disregarded, the only way to give effect to the deed is to hold the habendum clause void. It is then a conveyance of the entire fee to this plaintiff, the grantee, who ■got thereby a complete title, and who, by a conveyance to his father, .and by the devise and subsequent conveyance to him before mentioned, became reinvested with the title, and when -the contact with the defendant was made he had a good title in fee simple. That being the case, the defendant has no legal excuse for refusing to take title. If these views are correct, there is no occasion for considering the other questions.

There was no suspension of the power of alienation beyond. two lives in being. If there was any suspension at all, it was only for the life of one person, the plaintiff. But if there had been, and the deed had been void Cor that reason, the subsequent devise and deed would have given him a complete title, freed from all the other objections based upon the first deed. The provision in the habendum for a reversion to the grantor in case of the failure of issue of the grantee is void, if the limitation over to the possible heirs of the body of the grantee is void, or if by the premises or granting clause the grantor conveyed, as the deed purports to, the entire fee. A reversion is the residue of an estate left to the grantor or his heirs, commencing in possession on the determination of a particular estate granted or devised (1 Rev. St. p. 723, §12), and it necessarily assumes that the grantor has not parted with his entire estate (4 Kent, Comm. 353). As the grantor in this case parted with his entire estate, of course there could be no reversion.

The conclusions are that by the words in the habendum, “his own lawful heirs,” the grantor meant “ the grantee’s own lawful children,’) and that, taken in connection with the rest of the habendum, they will bear no other construction, and must be so read; also, that as there was no person in being at- the time of the delivery of the deed, answering to the description of “ his lawful issue,” who would have been entitled to immediate possession in case the grantee had then died, the limitation over to the grantor’s lawful issue is void; that the habendum is repugnant to and irreconcilably inconsistant with the premises or grant of the fee to the grantee, and that by the premises or granting clause in the deed the conveyance to the 'plaintiff was of the entire fee, and consequently that the plaintiff is entitled to judgment on the demurrer.


source: Caselaw Access Project

author: Pryor, J.

license: Public Domain

text:
    Leonora Cielfield, App’lt, v. Fanny Browning et al., Resp’ts.

      (New York Common Pleas, General Term,

      Filed June 4, 1894.)

    1. Appeal—Dismissal oe complaint.
    Error in the refusal to dismiss the complaint as bad in substance, is waived by failure to object to evidence in its support.
    2. Same—Nonsuit.
    It is error to nonsuit, or to dismiss a complaint as unsupported by the evidence, if taking the evidence in its most favorable aspect for the plaintiff and conceding him all the inferences it imports, the jury would be authorized to And the facts necessary to his recovery.
    3. Master and servant—Appliances.
    > A master is responsible to his servant for an injury the servant sustains from a defect in the building where he works, which the master knew or might have known by the exercise of ordinary care.
    4. Same—Risk.
    A servant assumes the risk of only such defects in the building as he knew or might have known by the exercise of ordinary care.
    5. Same.
    When the servant does not know of the defect, whether he assumed the risk of it is a question for the jury.

      Appeal from judgment on dismissal of complaint at the close of plaintiff’s case. Action by servant for injury from defect in master’s building in which servant was employed to work. The opinion sufficiently states the facts.

      Lamb, Osborne & Petty (Gilbert D. Lamb, of counsel), for app’lt; S. P. & J. McL. Nash (S. P. Nash, of counsel), for resp’ts.
   Pryor, J.

The sufficiency of the complaint is not in controversy. After denial of the motion to dismiss, defendants made no objection to evidence in support of .the complaint, but silently proceeded with the trial. Tooker v. Arnoux, 76 N. Y. 397, 401.

In reviewing a judgment upon a nonsuit, “plaintiff’s theory in respect to the facts, so far as they are supported by the evidence, must be deemed to be established; and where inferences are to be drawn, not in themselves certain and incontrovertible, it is for the jury, and not for the court.” McNally v. Phœnix Ins. Co., 137 N. Y. 390, 394; 50 St. Rep. 680. So, “if, in any view of the evidence, a verdict might have been rendered for the plaintiff, or if there were questions of fact which might have been determined for the plaintiff, and which, if determined in his favor, would have entitled him to recover, the case should not have been taken from the jury.” Pratt v. Dwelling House M. F. Ins. Co., 130 N. Y. 206, 212; 41 St. Rep. 303. Emphatically, in an accident case, “ negligence-is a question of fact; and, where the inferences to be drawn from the proof are not. certain and incontrovertible, it cannot be decided as a question of law, by directing a verdict or non-suit, but must be submitted to the jury.” Thurber v. Baltimore, M. & F. Railroad Co., 60 N. Y. 326. And, “to justify a nonsuit on the ground of contributory negligence, the negligence must appear so clearly that no construction of the evidence or inference from the facts will warrant a contrary conclusion.” Stackus v. N. Y. C. & H. R. R. R. Co., 79 N. Y. 464.

• The question, then, is whether, upon the aspect of the evidence most favorable to the plaintiff, the jury might not have found the facts of the defendants’ negligence and the plaintiff’s non-negligence.

The respondents insist that, at the time of the accident, the appellant was their employe. Conceding to them the advantage of this position, the evidence is abundant to show that the plaintiff sustained the injury by a fall from a 'platform or stairway leading into her apartment; that the cause of her fall was the absence of a railing round this platform, or other safeguard; that this defect had existed for a month or more; that the defendants’ agent was about the premises two or three times a week. Whatever may be the law elsewhere, in this jurisdiction ,la master is responsible to his servant for injuries received by the latter from defects in the building in which the services are rendered, which the master knew or ought to have known.” Ryan v. Fowler, 24 N. Y. 410; Buzzell v. Laconia Mfg. Co., 77 Am. Dec. 212, note 218; Chicago, etc., R. R. Co. v. Sweet. 92 id. 196, note 213; Woodward v. Shumpp. 6 Am. St. Rep. 716, note 719; Smith v. Car Works, 1 id. 542, note 548. Plaintiff's injury was from a defect in the building of which she was janitress; and 'the evidence authorizes the inference that the defendants knew, or should have known, of the defect. Upon the proof the jury might well have found the fact of the defendants’ negligence. The appellants contend, however, that by accepting service in the building the plaintiff assumed the hazards of its condition. Such undoubtedly would be the legal implication were the defect known to the plaintiff, or had she opportunity to know it by the exercise of reasonable care. Gibson v. Erie R. R. Co., 63 N. Y. 449. But the proof is positive that she was ignorant of the defect; and the circumstances of her one previous visit to the place, in the twilight, and for five minutes, when her attention “was not called to it in any way,’’ were such as to warrant the jury in the conclusion that she was not negligent in failing to observe the defect. Fredenburg v. Northern C. R. R. Co., 114 N. Y. 582, 585; 24 St. Rep. 550; and Citations supra. The only negligence imputed to the plaintiff being the failure to notice the defect, the question was for the jury, and the nonsuit was error. Schwander v. Birge, 33 Hun, 186; Clarke v. Holmes, 7 Hurl. & N. 944; Hill v. Ninth Ave. R. R. Co., 109 N. Y. 239; 14 St. Rep. 844. The adjudication on which appellants rely, Seymour v. Maddox, 16 Q. B., Ad. & El. N. S. 326, is repudiated by our court of appeals, Ryan v. Fowler, 24 N. Y. 410, 415. We are clear that the case was -for the jury; and that the court erred in dismissing the complaint.

Judgment reversed and new trial- awarded, costs to abide event.

All concur.


author: Daly, Oh. J.

text:
    In the Matter of George S. Wilkes et al.

      (New York Common Pleas, Special Term,

      Filed May 17, 1894.)

    Contempt—Bond—Insolvent surety.
    An offer of a bond -with, an insolvent surety, for the purpose of discharging a mechanic’s lien is not a contempt of court, where the statutory notice of justification has not been given:
    Motion to punish contempt in offering bond with an insolvent surety, to discharge a mechanic’s lien.

      Robé. J. Mahon, for motion ; Thos. Allison, for Beekman ; Solomon Kohn, for Donnington ; Jas. Kearney, for Wilkes.
   Daly, Oh. J.

It appeared that a mechanic’s lien was filed by Mahoney and Wood upon premises owned by Donnington, and the latter, desiring to have- the lien discharged, caused to be offered to the lienors’ attorney a bond executed by himself and Wilkes as surety in $1,500, and asked the attorney to consent that the court fix the amount of the security to be given at that sum. The attorney of the lienor stated that Wilkes was insolvent, and that it would be futile to'proceed further thereon. The suggestion seems to have been adopted, and the bond withdrawn. Application is now made to punish the parties concerned for contempt in offering the insolvent as surety. It is a conclusive answer to the application that no right of a party to an action' or special proceeding has been affected by the offer of the bond. The power of the court to punish for contempt civilly is limited to the cases iri which the conduct complained of may defeat, impair, impede or prejudice the right or remedy of a party to a civil action or proceeding (Code, § 14), or is calculated to do so (Code, § 2281). There was no action or proceeding pending. The lienors not having been noticed to appear in court for the justification of the sureties, as required by the mechanic’s lien act. Laws 1885, chap. 342, § 24, subd. 6. The proposal for consent to the fixing of the amount of the bond was no part of any judicial proceeding, for until the statutory notice had been given no proceeding was instituted. The lienors, therefore, were not parties to any action or proceeding, and the case is not within the provisions of the Code.

Motion denied, without costs.


author: Signor, S.

text:
    In the Matter of the Will of Amanda Sanderson, Deceased.

      (Surrogate’s Court, Orleans County,

      Filed September, 1894.)

    1. Will—Execution.
    Wliere provisions relating to a disposition of testatrix’ estate follow after tlie signature, there is no signing at the end of the will, as required by statute.
    2. Same.
    A paper, containing disposing clauses, cannot be made part of a will by a reference to it in the will.
    3. Same.
    Where the will is all in the handwriting of the testatrix and apparently all written at the same time, it should not be refused probate simply because a blank space intervenes between the disposing clauses and the clause appointing the executor.

      4. Same.
    Nor will the fact that there is a reference to a paper in the valid will, which cannot be identified, have the effect of nullifying the will.
    6. Same.
    The facts and circumstances were held sufficient, in this case, to establish proper execution of the will.
    Probate of will.

      WZieclon & Ryan, for proponent; Theodore L. Gross, for contestant.
   Signor, S.

The decedent left two papers, each in a separate envelope, sealed. On one envelope was written “Amanda Sander-son’s Will, Shelby, Orleans County, New York.” On the other, “Amanda Sanderson’s Will. I direct that this shall not be opened until after the death of my brother Stewart and my sister Harriett.” Both indorsements were in the handwriting of the testatrix, but were not signed. In the first envelope was a paper giving the possession and use of all her estate to her brother and sister, and containing this provision, “and from and after the death of the longest lives of my said brother and sister, I give, devise and bequeath my said estate to persons named on another sheet, and inclosed in another envelope, which shall not be opened until after the death of my said brother and sister.” This paper-, as well as the other, purports to have been executed May 28, 1892, and this appears to have been executed in due form.

The other envelope contained a paper containing two small bequests, and gives the remainder to Charles Sanderson, names an executor, contains the usual attestation clause, and is signed by two witnesses, and is also signed by the testatrix with the usual attestation clause. Between the signature of the testatrix and the attestation clause of the two witnesses these words are inserted: “I direct my land shall be sold, including what I have heire.d, and the money securely sent to the foregoing bequests. I direct that my brother, Clinton Sanderson, shall take charge of my household effects, and I direct you to send one-half of the effects to-Mrs. Nettie Tracy, of Madison, Madison county, New York. Take one-fourth for yourself, and the remaining one-fourth you may distribute to sister Eleanor Barker’s children and to Mrs. Mary S. Parker, as you deem it advisable.” No mention is made of the other paper in this last one. It is also to be noticed that the first paper is written only on one side of each of the half sheets of a sheet of legal cap, so that between the final disposing clause of that paper and the clause appointing an executor there is an entire blank space of one page.

One witness swears: “Amanda told us she had a couple of papers she wanted us to sign; said that was her will; would like to have us sign it; that was all that transpired that I can remember. Then Mr. Eckerson signed it first, and I signed after him. We both signed both papers. * * * We were both in the room when she said she wanted us to sign it. I think it was after we signed it that she said it was her will; I am not sure whether before or after; I know she said it; she told us to sign both of them. * * * I don’t remember whether she signed her name there or not. The words ‘28th May’ and ‘ninety-two,7 and the signature ‘Amanda Sanderson’ and the witnesses appear to be in the same ink and different from the rest of the will.”

William Eckerson, 'the other witness, says she handed him the pen to sign his name and said it was not a very good one. “She pointed out the line where I should sign ; I think that is all; my memory is not as good as it used to be; some things it bother me to hear unless people talk very loud. I can’t say whether she did or did not say it was her will. * * * She took the papers up and turned and sat at the desk ; I did not see her sign them; I think she was folding them up. * * * I think to the best of my recollection she folded the papers without writing; I did not hear her say anything about there being a will; she might have said it and I did not hear her.” On cross-examination he says: “I don’t pretend that I can remember everything that was said. * * * gpe was n0(¡ a loud-speaking person ; I did not specially notice it enough to know whether there was any signature or not; I can’t say that the signature was there or was not there.”

It seems quite evident from the fact before referred to that the date, the name of the testatrix and the witnesses’ names were all in the same kind of ink and different from the main body of the will, and that, as the witness remembers, she folded up the papers without signing, after they had sighed, as well as her having the pen before they signed, her remark about the pen, and her statement, as remembered by the other witness, that it was her will, as well as her having written the attestation clause, showing that she knew what was required, that she wrote her name with the same pen and ink at some time before the witnesses; so far as the signing in the presence of the witnesses and the acknowledgment of the will, I think those facts are established within the rulings in Matter of Hunt, 110 N. Y. 278; 18 St. Rep. 118.

The evidence in the case is simply that the witnesses do not remember whether the will was signed or not One says he did not observe it enough to know whether the name was there, and the other does not remember whether it was signed in their presence or not. The attestation clause, written by the testatrix, states that it was done. It is conceded that the date, the name of the testatrix, and the names of the witnesses are with a different ink from the body of the will and are in the same ink. It also appears that she had the pen in her hand before they signed, and handed it to the witnesses to sign, remarking that it was not a very good pen, indicating that she had used it. "Under these proofs, and with no proof or circumstance indicating that it was not signed and acknowledged in the presence of the witnesses, I think that it should be held that in these respects it was properly signed and acknowledged.. The presumptions are in favor of such a conclusion. In re Cottrell, 95 N. Y. 820.

The case of Matter of Mackay, 110 N. Y. 611; 18 St, Rep, 558, differs from this that in that case the proof was positive that the testator did not sign in the presence of the witnesses, and that the paper was so folded that the signature could not be seen.

It is true, as laid down in several'cases cited by contestant’s counsel, that presumptions will not establish the execution when .there is positive proof to the contrary, but such proof is here wanting.

The second paper is void as a will for the reason that it is not signed at the end thereof. After the signature follows the important provisions for a sale of her real estate, and the disposition of her household effects. Sister's of Charity v. Kelly, 67 N. Y. 409; Matter of Niles, 13 St. Rep. 756.

Neither can this second paper stand as a part of the first. It is not sufficiently identified as the paper referred to, nor can a paper containing disposing clauses be, in this way, made a part of a valid will. Matter of O'Neil, 91 N. Y. 516.

Whether a will with a blank space to the extent found in the first paper, between the disposing clauses and the clause appointing an executor, is signed “ at the end thereof,” has been several times discussed, but never judicially determined. Matter of Heady's Will, 15 Abb. N. S. 211; McCord v. Lounsbury, 5 Dem. 68.

This point was not urged in this case, and while it is a question of importance, and the practice one that should not be regarded with favor, leaving room, as it does, for gross frauds by inserting in the blank space disposing clauses not made by the testator or not properly authenticated, yet in this case, as the will is all in the handwriting of the testatrix, and was apparently all written at the same time, I do not think that the will should be refused probate for this reason.

Neither should the fact that there is a reference to a paper in the valid will which cannot be identified have the effect of nullifying the will. For these reasons the first paper may be admitted as a valid will and the second refused probate.

Ordered accordingly.


author: Yann, J.

text:
    Frank Hiscock et al., Pl’ffs, v. Henry Lacy et al., Def’ts.

      (Supreme Court, Onondaga Special Term,

      Filed September, 1894.)

    1. Corporation—Stockholders—Relief.
    Where the surplus of a corporation is ample, and the directors, or a majority, in bad faith and without reasonable cause, refuse to declare a dividend, the court will interfere in favor of those stockholders who otherwise would be without remedy.
    2. Same.
    In such case, a state court has jurisdiction to compel the directors of a national bank to declare a dividend.
    8. Pleading—Demurrer—Waiver.
    An objection that the plaintiffs sue in thhir own behalf only, and not also in behalf of all other stockholders, etc., is waived if not taken by answer or demurrer.
    Action against the Third National Bank of Syracuse and its directors, by certain of its stockholders, to compel the payment of a dividend out of its surplus earnings.

      Frank E. Hiscock, for pl’ffs; Louis Marshall, for def’ts.
   Yann, J.

The Third National Bank of Syracuse, one of the defendants, is a national banking association organized rirany years ago under the Federal Banking Act, and the other defendants are its directors, Mr. Henry Lacy being also its president. The plaintiffs are stockholders, holding 1,243 shares of stock, worth at par the sum of $124,800. The largest stockholder among the plaintiffs is Senator Hiscock, who owns and controls 914 shares, while the largest stockholder among the defendants is Mr. Lacy, who holds in his own name 1,782 shares, and as executor of the estate of Lucius Gleason, deceased, 474 more, thus having a vot ing power upon 2,256 out of the 4,000 shares of the bank’s stock, or an absolute majority.

For years prior to 1887 Lucius Gleason and Frank Hiscock, both large stockholders, acting in unison, had controlled the management of the bank, apparently io the satisfaction of all concerned. Mr. Gleason was president, and in the dischai-ge of his duties was accustomed to advise with Mr. Hiscock, who was vice-president. - They were in entire accord as to the general, policy to be pursued in managing the affairs of the bank. It was understood between them that all stock of the bank purchased by either should be for the joint benefit of both, and this understanding was faithfully adhered to. There had been no contest over the election of directors or otherwise, and regular dividends were declared and paid semi-annually at the rate o! eight or ten per cent, each year. The bank prospered and all were satisfied.

In 1887 differences arose between these two gentlemen over a large loan made by the bank through Mr. Gleason to the El Oro Mining Company, which had become insolvent. Mr. Hiscock was so severe in his criticism of this loan.that finally Mr. Gleason indorsed the paper, amounting to between $60,000 and $70,000, in his own name, but afterwards refused to pay more than $80,000 thereof, and the bank lost the remainder. Bitter feelings resulted, and, owing to their estrangement, a contest arose between these men over the election of directors held in January, 1888, in which each tried to secure control of the board, and Mr. Hiscock succeeded. Thereupon Mr. Gleason was retired from the position of president, which he had held since the organization of the bank, but was made vice-president, while Mr. George P. Ilier was elected president, and Mr. Leonard, the old cashier, was continued in office. Mr. Lacy, a nephew of Mr; Gleason, and for some years prior a director of the bank, was not reelected, and the management passed to the substantial, but not exclusive, control of the Hiscock interest. This action was deeply resented by Mr. Gleason, who regarded it as a personal affront, and he at once devised a plan to punish those who had heaped indignity upon him, as he thought, and with secrecy and adroitness he carried it into effect. His custom of purchasing stock on joint account was no longer followed, but he quietly bought enough to give him a controlling interest, taking the precaution, however, not to'have it transferred on the stock book, which would have.warned the existing management, until in time for the annual election in January, 1889, when, having the power, he used it to turn out of the board of directors Mr. Hiscock, Mr. Hier and their friends, all of whom had been directors for years, and some ever since the bank was organized, and to fill their places with his own friends and relatives. Mr. Gleason became president, Mr. Niver vice-president, and Mr. Leonard, the cashier for sixteen years, was compelled" to surrender his office tollr. Lacy, one of the bookkeepers, who, up to that time, had had little experience to qualify him for so important a position, although he soon developed intoan excellent business man. Mr. Tolman, a friend of Mr. Hiscock and the owner of considerable stock, was deprived of his place as inspector of elections, which he had filled for a long time, and a clerk in the office of Mr. Gleason’s attorneys was chosen in his stead. Mr. His-cock and all who had acted with him in opposing Mr. Gleason, except Mr. Giles Everson, were deprived of any voice Jn the management of the bank, although they owned more than one-third of its stock, which at that time amounted to but $300,000. The new directors, aside from Gleason and Lacy, did not own 200 shares, all told. Mr. Everson, although elected director, did not see fit to accept under the circumstances, partly, at least, because he was informed by Mr. Gleason that he should discontinue the payment of dividends, as it would promote his personal interest and was not material to the stockholders. The evidence discloses no reason for such a sweeping change of ‘directors, except the desire of Mr. Gleason to elect men who would represent his views and do his will. The most of the new directors were small stockholders, and apparently only nominal owners of the stock standing in their names, and while all were eminently respectable gentlemen, they did not all compare favorably in business experience or ability with those whom they supplanted. Two were brothers of Mr. Gleason, one of whom lived with him and was his agent. Among the others, one was related to Mr. Lacy and was in Mr. Gleason’s employment, another was a heavy borrower at the bank, while another still was Mr. Gleason’s attorney, but a man of exceptional ability in his profession. All of them sustained such relations to Mr. Gleason, or to the bank, as to give him a powerful, if not controlling, influence over their action as directors. To some of them stock was transferred by him apparently for the purpose of qualifying them to act in the board of directors, and all of them knew that they held their positions subject to his pleasure, as he could turn them out at any annual election.

Mr. Gleason was greatly elated over his success in thus getting permanent control of the bank, and said that he never enjoyed anything more than voting out those people who had voted against him ; that it had come out exactly as he planned it on the night after his defeat; that it would be some time before Mr. Hiscock and his friends would get any dividend on their stock, and that he now proposed to dictate the policy of the bank to suit himself. .As a part of that policy he announced that he did not propose to pay any more dividends for some time to come, and refused to say when dividends would be resumed. No dividend has since been declared, although the condition of the bank would at all times have warranted it, and as long as he lived, although frequently urged by the largest stockholders, other than himself and Lacy, to at least allow a dividend large enough to pay the taxes on the stock, he persistently refused to do so, stating that the bank was doing well and that he preferred to accumulate a large surplus and do more business rather than declare dividends. When Mr. His-cock suggested that he was trying to “ freeze out ” the minority stockholders and proposed that each should put up his stock and let the other say what he would give or take, Mr. Gleason declined and said he had all the stock he wanted. To another stockholder, who asked him to buy his stock, he said he did not want to buy any more because he had a majority, and as he did not propose to make any more dividends for some time to come, he did not want any more stock to hold. He did, however, offer par for some stock and purchased some at that rate when it was worth a good deal more. When asked to sell a controlling interest in the bank he refused to do so, saying that his bank stock was the best paying property be had. The withholding of dividends depressed the market price of stock and tended to force the outside stockholders to sell for less than their stock was worth.

Mr. Lacy co-operated with his uncle in obtaining control of the bank and in bis policy of excluding the minority frdni Uny representation in the board of directdrs, Us Well ás ih the non-payment of dividends. He stated in 1888 to a ñéár relative that he and his uncle Would buy up a controlling interest in the stock and then they would have the Hiscdcks’ money to use. He told Mr. Hiscock, on one occasion, that it was hot for his interest to make .a dividend, because he was paying no interest on the notes he had given to Mr. Gleason for his stock, and if dividends were paid, Gleason would take them, but if they were allowed to accumulate he would, himself, have the benefit of them.

Mr. Gleason was a bachelor, well advanced in years, with impaired health, and Mr. Lacy, although not his nearest, was apparently his favorite relative. The title to much of the’ •stock bought by Mr. Gleason to get control of the bank was 'taken in Mr. Lacy’s name until at last he held nearly 2,000 .shares, for Which he had given his botes to Mr. Gleasdn, payable on demand, arid had turned over the stock ás collateral Security. Mr. Láey ivas not then a man of finárieial strength, and could only pay the principal of his notes by means of the stock, or the interest upon the notes, if he had been required to pay interest, through dividends upon the stock. In fact, he paid .no interest on his notes. Owing to his indebtedness he was enabled to avoid the payment of taxes on the stock, and thus Mr. Gleason, who controlled and still equitably owned it, was enabled to obtain relief from taxation thereon. The arrangement Was ingenious and effective, but was open to question both in law and morals. The nominal owner was indebted on paper.to the real owner for the purchase price of the stock, and both avoided the payment of any taxes whatever on such stock. They thus eluded a burden Which the minorit.’ stockholders, with one exception, had to bear, and they could deny the request, so often made by the latter, for a dividend large enough to pay the taxes; without inconvenience to themselves. The taxes averaged substantially two per cent, each year on the par value of the stock. They also arranged matters in other respects so that the nonpayment of dividends was not so grievous to them as to the minority stockholders. When Mr. Gleason obtained control neither he nor Mr. Lacy was a debtor to the bank for any amount, but he soon began making loans to himself, until, in less than á year, his line of discounts amounted to $119,640.36. It soon fell to $45,960, but raised again until in December it reached $125,475.51. During 1891 and 1892 it. ranged from $15,382.52 to $184,825.61, but averaged considerably more than $100,000. At the time of his death, in January, 1893; it was $128,463.50, at which figure it has since been carried for his estate, except that $6,000 was paid thereon September 1, 1893. Of this amount $30,000 was wholly unsecured, except by the individual, unindorsed notes of Mr. Gleason, who, however, was a man of ample means. Of the remainder over $90,000 was in notes made by three men, who, with perhaps one exception,, had not the means to pay them, hut they were all indorsed by Mr. Gleason, which made them perfectly good, and they were doubtless all made simply for his accommodation. The bank also carried for Mr. Gleason, and on his indorsement, a loan of between $>30,000 and $40,000 to the Porter Manufacturing Company, a concern in which he was largely interested, but which was insolvent.

Loans were also made to Mr. Lacy ranging from $3,600 on the 1st of January, 1891, to $22,061.30 in January, 1892, but falling a year later to $8,566. The average was from $10,000 to $11,-000, a part being the naked paper of Mr. Lacy, which, although it may not have been good prior to Mr. Gleason’s death, has undoubtedly 'been good ever since that event, Mr. Lacy was also paid a salary as cashier largely in excess of the amount paid to his predecessor, who, although of long experience in that capacity, had received but $2,500 a year, except in 1888, when he had $3,000. On the other hand, Mr. Lacy, who had for some years been employed by the bank in a subordinate capacity, at a salary that never exceeded $1,500, was paid by the direction of Mr. Gleason, and with only a pretense of authority from the board of directors, $5,500 for his services as cashier in 1889 ; in 1890, $6,500; in 1891, $10,500_; in 1892, $13,500. In "1893 he. became president and his salary in that capacity was fixed by the board at $5,000. His successor as cashier, who was thoroughly qualified for the position, received $2,500 per year. A son and daughter of Mr. Lacy, both undgr age at the time, but competent to perform "the duties required of them, were paid for their services in the bank as receiving teller and discount clerk respectively, at the rate of $50 a month, each, in 1890; .$100 a month each, after June, 1891, and $200 a month each, after April, 1892. The payments were reduced in 1893 to $225 per month for both together. Their respective predecessors had received $87.50 and $66.66 per month. Thus, iii four years, Mr. Lacy received $36,000, and his children, during a similar period, $10,650 more, from the bank. Mr. Gleason’s salary as president had never exceeded $2,500, while Mr. Hier’s was but $2,000. When Mr. Lacy was cashier Mx\ Gleason dx-ew no salary and none was fixed for him by the directors, but he allowed the cashier to have the sum which he claimed he was entitled to, and this is the reason given for the large salary of Mr. Lacy. In 1892, when Lacy was paid the sum of $13,500, it was charged to several different accounts, instead of to current expenses only, as has always been done before with the salaries paid. This action is suggestive, as the current expense account had increased from $6,033.39 for the six months ending June 1, 1889, to $11,845.65 for the six •months ending December 1,1891. These salaries were manifestly excessive and they have not been satisfactorily explained. They point to an object other than compensation for services rendered- and give support to the theory of the plaintiffs that they were in, tended in part to take the place of dividends so as to enable the controlling interest to punish its opponents without loss. This theory finds further support in the circumstances connected with the "increase of" the capital stock. In 1890 Messrs. Gleason and-Lacy wished to increase the stock from $300,.000 to $400,000, and in oi’der to obtain the consent of two-thirds of the stockholders, as required by law, it became necessary to temporarily conciliate the Hiscock interest. Accordingly, Mr. Gleason assured Mr. Hiscock that if he would consent to the increase, dividends should be resumed and they might get together again. In reliance upon this statement Mr. Hiscock, without whom the stock could not have been increased, gave his consent and took his share of the new stock, the bank lending him the money for the purpose. At the same time Mr. Lacy told Mr. Tolman that as soon as the increase was made and the necessary reserve of twenty per cent, accumulated, they would commence making dividends again, and on the strength of this assurance -Mr. Tolman gave his consent. Dividends, however, were not resumed, although, as admitted by one of the learned counsel for the defendants upon the trial,- there never was a time when the bank was not able to declare a dividend.

For some purpose, at variance with the previous history of the bank, Gleason and Lacy soon began to reduce the apparent value of the assets, by charging off good, items and reducing others to a point below their intrinsic value. Thus the bank had for some time owned government bonds of the par value of $375,000, and in 1891 it increased the holding to $400,000. The premium on these bonds amounted to from $45,000 to $50,000.

If retained by the bank and circulation was taken out upon them, as was in fact done, they would produce enough income to pay six per cent, on their face value, and also enable enough of the premium to be charged off each year to completely wipe it out before the bonds matured. Yet all of the premium was charged off in 1890, except $5,000, which followed in 1891.

About 1887 the bank erected a convenient and beautiful banking house at a cost, somewhat exceeding $80,000, and which is now worth from $60,000 to $70,000. Of this item over $55,000 was charged off on the 18th of February, 1889, and the 17th of May, 1891. March 17, 1893, certain real estate known as the Park block, belonging to the bank, and worth $10,000, was' wholly charged off. Omitting other .assets of less value which took the same course, but perhaps with a different purpose, the three mentioned amount to $111,598.44, tlie whole of which was perfectly good, except as reduced by some deficiency in the price of the banking house. After maldng a reasonable allowance for this item, there still remains from $90,000 to $100,000 of good, assets charged off the books of the bank, or about one-fourth of its capital. Notwithstanding this heavy reduction in the apparent value of its assets', the bank has had a surplus,' even-upon that basis of value, ranging from $70,000 and upwards to about $115,000; Thus its actual surplus is about $200,000, or the equivalent of one-half its capital, and more, proportionately, than'when the bank was paying dividends every year. It is not without significance that the charging off was so timed as to reduce the apparent surplus whenever it would otherwise have shown a marked increase. Thus, in 1889 therevwas an apparent, loss on the business of the year, according to-the books, of $22,195.80, but good assets were charged off to the amount of $80,871.17, so that the actual net profits were $8,675.37.

In 1890 the apparent net profits were $1,420.91, but including good assets charged off they amounted to $42,148.18.

In 1891 the apparent net profits were $17,488.76, but with good assets charged off they were more than twice that sum. In 1892, when the salaries to Mr. Lacy and his family ran the highest, there was an apparent net loss of $3,962.84, and no assets were then charged off worth mentioning. In 1893 the apparent net profits were $5,309.30, but the actual net profits, including the good assets charged off, were $15,309.30. During the five years under consideration the average net profits exceeded five per cent, upon the capital, without taking into account the good assets charged off other than those above mentioned. The effect of the course pursued, as thus outlined, was to so depress the value of the stock as- to make it difficult to sell at par, when it is really worth from $140 to $150 per share. Mr. Lacy stated when on the stand as a witness that its present value is $150, and that it would realize upon liquidation $140.

Towards the close of 1892 the physical infirmities" of Mr. Gleason became so great that it was apprehended he was rapidly nearing his last days. On December 20, 1892, he made his will, by which, without disposing of any of his property, he simply appointed Mr. Lacy as his executor with power to sell. At this time he held Lacy’s notes payable on demand, with interest, given for stock taken in the latter’s name, to the amount of nearly $200,000. Four days after the will was made, or on December 24, 1892, a new note was givn by Lacy in the place of the old notes, and Mr. Gleason gave him back an instrument which allowed him ten years in wliLli to pay his note and relieved him from the payment of any interest in the meantime. This gave Mr. Lacy the option of not paying his note until the charter of the bank had expired. Ten days later, or on January 3, 1893, Mr. Gleason died, at the age of seventy-three, and soon after his will was admitted to probate with Mr. Lacy as sole executor. Some time before the will was made, Mi\ Lacy declared that the stock would not be split up among the heirs, but would be so fixed as not to be forced to a sale when Mr. Gleason died. Not long after he became sole executor, when asked by a stockholder to use his influence in favor of paying dividends, Mr. Lacy replied that he was not in favor of it, as he did not think his uncle would be, and he wanted to carry out his wishes. Having the power, he continued the policy of excluding from the board of directors every one connected with the minority interest. In the place of bis uncle he caused a gentleman to be elected director, to whom he sofd ten shares of stock, so that he could accept the position, but exacted an agreement authorizing him to take back the stock at any time upon repayment of the purchase price and interest.

The defendant directors were elected in January, 1893, .soon after the death of Mr. Gleason, and with two. exceptions they arc the same persons who acted as directors during his life after he got control of the bank. Seven out of the nine directors so elected together own but ninety-four out of the 4,000 shares of stock, and hence have but a small pecuniary interest in the management. The other two directors are said Lacy and Orson Gleason, hi3 uncle, who own, respectively, 1,782 and 113 shares. Mr. Lacy, as executor, also controls 474 shares in addition to those owned by him, as already stated.

During 1890, 1891 and 1892 Orson Gleason paid no taxes on his stock, and he is a somewhat heavy, but perfectly responsible, borrower at the bank.

As would naturally be expected from the existing state of affairs, Mr. Lacy is the controlling spirit of the present management, as Mr. Gleason was before him. Few meetings of directors, an average of less than two each year, have been held since they came into supreme control, and at none of them has any business of importance been transacted, except the election of officers and matters of that character. Even the committee, appointed for two years in succession to make a thorough examination into the affairs of the bank, has made neither examination nor report.

In May, 1893,. a meeting was held upon request of the plaintiffs, at which.a formal demand for a dividend was made in their behalf, but the resolution, introduced by one of the directors, to declare a dividend, was laid upon the table and the demand refused, there being two negative votes. Mr. Lacy said, in response to the request for a dividend, that he knew it was for the interest of the stockholders to declare one, but • that he was opposed to it. Another director, when served with a written demand for a dividend, said, as he read the notice: “Well, they will never get it.” The refusal was persisted in until the 25th of November, 1893, when this action was commenced, and down to the close of the trial in July, 1894, no dividend had been declared, nor any steps taken in that direction. One director, when the summons and complaint was served upon him, said that Senator Hiscock would get his dividend much sooner if he had not brought the action. On a like occasion another director said that it served the directors right, and that he advised them to declare a dividend at the last meeting. The directors, aside from Lucius Gleason, while he lived, Mr. Lacy, Mr. Marshall and Mr. Amos, have had little to do, and apparently took but little interest, in managing the business of the bank. They were of the opinion that a dividend could safely be declared, and the most of them upon cross-examination, seemed to think that dividends should be resumed. One testified that for a year or longer prior to the-demand he had been in favor of a dividend; another, that he knew of no reason why a dividend, reasonable in amount, should not be paid; two others, that they relied upon the judgment of Gleason and Lacy, and, without any extended examination, acquiesced in their desire that diviuends should not be paid; a fifth, that as he went into the directory upon the invitation of Mr. Lacy, and on stock transferred to him by that gentleman for the purpose, he would not sever from him unless he thought he was doing something radically wrong, immoral or criminal; a sixth said that he trusted to Mr. Gleason’s judgment and voted as he wauted him to; that he refused to vote upon the resolution of May, 1893, and that he favored a dividend large enough to pay the taxes on the stock. A seventh swore that he presumed he would not have voted against Mr. Gleason’s judgment upon any question; that he became a director practically expecting to do what Gleason and Lacy wanted him to in the matter of voting, and that he was in favor of a dividend at the time of testifying. Some, as directors in other banks during the same period, voted in favor of dividends by those, banks, although they had less surplus in proportion to capital than the defendant bank. All who spoke upon the subject were of the opinion that it was a source of strength in a bank to pay dividends, as it gave confidence to the community in its resources and management.' They all testified that they acted in good faith and without any intention to injure or oppress the plaintiffs, but it is clear to my mind, from the evidence as a whole, that the directors having small holdings of stock, with one or two exceptions, simply acquiesced in the policy of Gleason and Lacy with reference to the subject of dividends, without being really in favor of it as a matter of deliberate judgment based upon the actual condition of the bank. In the natural course of affairs acquiescence is to be expected from a director holding but ten or twenty shares in the wishes óf a director holding more than 2,000, or an absolute majority over all. Knowing that he was a director by invitation, and upon sufferance, lie would be a bold man who persisted in opposing the declared policy of one who not only had a much larger interest to protect, but also the power to protect it by selecting directors who would vote as he wanted them to. When one man is so powerful that he is practically the bank, he does not have to give many reasons, nor use persuasive arguments to secure compliance with his views. He insures acquiescence by his power to compel it. He prevents opposition because he can displace his opponents. With the actual voting power in the board of only one out of nine, he virtually casts all the votes when he wants to, because he elected the nine directors, and can elect nine others in their places. He who can at each annual election continue the directors in office, or turn them out at his pleasure, will seldom ask them to support his policy in vain. In fact, he ordinarily need not ask the support, if he simply announces his policy.

These facts, with others not mentioned, leave no doubt in my mind that Lucius Gleason and Henry Lacy, in adopting and persisting in the policy of paying no dividends, acted without reasonable cause and in bad faith for the purpose of punishing the minority interest and at the same time securing advantages for themselves and their friends which the other stockholders did not enjoy; that their professed object of strengthening the bank was only a pretext to conceal their abuse of powder; that it was the object of the will, note and agreemenfto enable Lacy to perpetuate such policy after the death of Mr. Gleason; that said policy was continued by him after that event in the same way and for the same purpose; and that a majority of the other directors have, some through carelessness and others' through a sense of obligation or through fear, acquiesced in such a policy, and aided m carrying it into effect by so voting as to express the wishes of Mr. Gleason and Mr. Lacy, rather than their own judgment. Thus, although not guilty of intentional fraud, their conduct had the same effect as fraud and calls for the same redress. Such being the facts, the question arises whether there is any remedy for these wrongs ?. While courts have required business corporations to divide surplus profits, no case is cited where they have ordered a bank to declare a dividend, but no case seems to have arisen before where such facts were presented to a court for its judgment. I approach the subject with caution, realizing its delicacy and importance.

In .authorizing the formation of business corporations the law has two objects in view: (1) To make the corporation strong, so that the public can safely deal with it; (2) to permit a reasonable division of its surplus earnings among the stockholders, so' as to attract the investment of capital. When the first is accomplished the second is authorized. The first is affected by certain mandatory provisions which must be complied with, not only in forming the corporation, but also in the management of its affairs after organization has been perfected. The second object is sought to be attained by certain permissive provisions under the theory that self-interest will impel the stockholders, through their directors, to secure a proper return upon their investments. The management of a corporation is intrusted to directors, who are elected by the stockholders by the vote of a majority of shares. The directors have a two-fold duty to perform, to obey those provisions of law made to strengthen the corporation for the security of the public, and, as trustees for the stockholders, to promote their interest by the exercise of good faith and honest judgment. The courts will not interfere with the efforts of directors to strengthen a corporation in any way authorized by law where that is the real object and not a pretext to conceal an illegal purpose. They will neither require nor permit directors to depart from the regulations of any public officer, made according to laws authorizing him to supervise the affairs of corporations, and they will lend their aid to such officers in order to make their supervision effective. People v. Ballard, 134 N. Y. 269; 48 St. Rep. 166.

The directors in the discharge of their duties to the public are protected only by absolute obedience to the law, even good faith being.no excuse for violating the governing statute, but in the discharge of their duties to the stockholders good faith is the standard of action. Directors are not required to be wise, but they are required to be honest. Errors of judgment are excused, even if they result in disaster to the stockholders, but bad faith, whether exercised to gratify malice or to promote personal interests, is condemned by the courts, which are zealous to find a remedy for the breach of trust.

Jurisdiction is assumed by courts of equity from their right to supervise trusts and to call trustees to an accounting. The property of private corporations is in the nature of a trust fund, under the control of directors, as trustees, for the benefit first of creditors and next of stockholders. Strictly speaking, the corporation holds the property in trust for the creditors and stockholders, and the directors are its agents to discharge the trust. But while the directors may not be technical trustees, because they do not have the legal title to the property, still as a corporation is a mere idea or legislative fiction, incapable of thinking or acting for itself, and its directors are empowered to think and act for it, they are charged with the duties and responsibilk ties of actual trustees. 2 Pom. Eq. Juris §§ 1088, 1097; Potter Corp. § 330; Taylor v. Chichester & M. By. Co., L. R. (2 Exch.) 379; Ervin v. Oregon Railway Co., 27 Fed. Rep. 625, 630.

Primarily the .corporation has the right, as a beneficiary of an implied trust, to call the directors to account, but as this is not practicable while the same persons continue directors, the stockholders may commence the action in their own names on making the corporation a party defendant.

While all the decisions hold that the general powers of a corporation reside in its directors, and that the ordinary power of the stockholders is confined to the choice of directors, they all proceed upon the theory that the directors, as trustees, must act in good faith, and unless they do so the courts will restrain or compel action in the interest of the aggrieved stockholders as justice may require. Thus, directors have been restrained upon the application of stockholders from misapplying funds, Carpenter v. N. Y. & N. H. R. R. Co., 5 Abb. Pr. 277; from so violating the charter as to hazard its forfeiture, Rendall v. Crystal Palace Co., 4 K. & J. 326; from transferring property with intent to injure a stockholder, Kelly v. Mariposa Land & Mining Co., 4 Hun, 632; from unfairly discriminating between stockholders so as to give one an advantage over the other, Luling v. Atlantic Mut. Ins. Co., 45 Barb. 510; from so contracting with themselves, in the name of the corporation, as to secure an undue advantage at its expense, Wardell v. R. R. Co., 103 U. S. 651, 658; from obtaining a valuable and exclusive privilege through their control over the corporation. Koehler v. Black River Falls Iron Co., 2 Black, 715, 720.

The courts have not only restrained directors from performing unuathorized acts, but they have also awarded affirmative relief by compelling the performance of acts required by good faith to the stockholders. Thus, they have compelled directors to perform a duty imposed by statute, People ex rel. Miller v. Cummings, 72 N. Y. 433; to defend against unfounded and illegal claims, Bronson v. La Crosse, etc., R. R. Co., 69 U. S. 283, 302; to resist the collection of a tax which the directors themselves believed was imposed in violation of law, Dodge v. Woolsey, 59 U. S. 381; to declare a dividend, where the surplus warranted it and the bylaws provided for it, Belfast, etc., R. R. Co. v. City of Belfast, 77 Maine, 445, 454; to declare a dividend where the right was not only clear but fixed by contract, Boardman v. Lake Shore & M. S. R. R. Co., 84 N. Y. 157; to pay over to a stockholder his share of corporate moneys that have been misapplied, but which ought to have been divided as dividends. Brown v. Buffalo, N. Y. & E. R. R. Co., 27 Hun, 342; Richardson v. Vermont, etc., R. R. Co., 44 Vt. 613; Dent v. London Tramways Co., L. R. (16 Ch. Div.) 344.

The sanction of the courts to precisely such an action as the one under consideration has thus far been by intimation rather than decision. Thus, in Scott v. Eagle Fire Ins. Co., 7 Paige, 198, 203, it was said that if the directors of an insurance company should, “without reasonable cause, refuse to divide what is actually surplus profits, the stockholders are not without remedy if they apply to the proper tribunal.” While this was not necessary in order to decide the case then in hand, it has been referred to with approval by many courts of last resort, and has been criticised by none to which my attention has been called.

In Seeley v. N. Y. Nat. Ex. Bank, 78 N. Y. 608; 8 Daly, 400, it was held, that where a national bank reduces its capital under the statute, the whole of the capital set free by the reduction must be returned to the stockholders, and that no portion of it can be retained as a surplus fund or for other purposes. In Williams v. W. Union Tel. Co., 93 N. Y. 162, 192, the court said: “When a corporation has a surplus, whether a dividend shall be made, and, if made, how much it shall be, and when and where it.shall be payable, rest in the fair and honest discretion of the directors, uncontrolable by the courts.” If the discretion is not fairly or honestly exercised, the inference is that the courts should interpose in behalf of the injured stockholder.

In McNab v. McNab & Marlin Mfg Co., 62 Hun, 18; 41 St. Rep. 906, it was held “that the rate of dividend to be paid and the amount of surplus to be retained by a corporation must rest in the fair and honest discretion of its trustees.” In that case there was no reason for doubting or impeaching the good faith of the trustees, and there was no occasion for interference, but the principle that good faith is required was recognized.

In Brown v. Buffalo, New York & Erie Railroad Co., 27 Hun, 342, the plaintiff, a stockholder, suing in behalf of himself and all other stockholders willing to unite, alleged that the corporation and its president had converted and misapplied corporate moneys and refused to account for the same; that they had withheld dividends and kept false books of account, and demanded that they account for and pay over to him his share of said moneys which ought to have been divided in the form of dividends among the stockholders. The demurrer interposed by the corporation, that the complaint did not state a cause of action, was overruled. This case, especially when the original complaint is examined, bears a strong analogy to the case under consideration. Supreme Court Oases, 1880, 4th department, vol. 1.

An instructive case was recently decided by the court of last resort in Michigan. It appeared that for seven years a stockholder, who owned a majority of the slock, elected himself and two of his dummies as directors, and caused the board to vote a large salary to him as president. By reason of this and other acts of like character, the corporation failed to pav dividends, and, upon the suit of a minority stockholder, the court took the management away from the directors altogether, appointed a receiver and dissolved the corporation. Miner v. Belle Isle Ice Co., 93 Mich. 97.

In Fougeray v. Cord, 24 Atl. Rep. 499, a corporation with but •three stockholders was controlled by two of them, who voted large salaries to themselves and refused to declare dividends, although there was a good surplus. The court not only ordered a dividend, but intimated a division of all the assets might be ordered on account of the fraudulent management.

The action of the federal courts in dealing with a tyrannous majority of stockholders in disregard of the rights of the minority may be seen in the following cases: Sellers v. Phœnix Iron Co., 15 Fed. Rep. 20; Davis v. Memphis City Railroad Co., 22 id. 883.

The elementary writers all agree that stockholders have a remedy if the directors do not act in good faith in refusing to declare a dividend. Thus, in Waterman on Corporations, it is said: “ The managers of a corporation are clothed with, a large discretion with reference to the declaration of dividends. They may be compelled to exercise their discretion if they improperly fail or refuse to do so. But when they have exercised it without any violation of the charter, their action cannot be disregarded or controlled by a court at the instance of a stockholder, unless it is shown to have been an abuse of their discretion, or the result of bad faith, or a willful neglect or breach of duty.* * * Should they, without reasonable cause, refuse to divide what is aetuallys urplus profits, the stockholders are not without a remedy." 2 Waterman Corp. 148-150.

“ The doctrine that where a corporation is about to exceed its powers by applying its property to objects beyond the authority of its charter a court of equity will grant relief to a minority of its stockholders who dissent from such use of its funds necessarily results from the principle that the corporation and its directors are trustees, and as such may be called into a court of equity, either for an accounting or to restrain them from mismanagement of the corporate property, especially for a fraudulent mismanagement of it, or for the purpose of compelling the corporation to declare dividends from its surplus earnings, when such dividends are needlessly and improperly withheld.” Id 154.

“The discretion of the directors in the matter of declaring or refusing to declare a dividend is not absolute. The courts exercise a supervisory power in this matter, and where there is a clear abuse of power in refusing to declare a divideud, a court of equity will, at the instance of any shareholder, compel the proper authorities to declare and pay the dividend.” Cook Stock. § 545.

“If a majority of the stockholders or directors of a corporation wrongfully refuse to declare a dividend and distribute profits earned by the company, any shareholder feeling aggrieved may obtain relief in a court of equity.” 1 Morawetz Corp. § 448 et seq.

“While a right to a dividend is no debt until the dividend is declared, the stockholders are not remediless in case the directors, without reasonable cause, refuse to divide the surplus profits. They may be compelled in such cases to make the distribution.” 2 Beach Corp. § 602.

“Should the directors act illegally, wantonly or oppressively, and willfully abuse their discretion in refusing to declare a dividend, where the right to one is clear, and there are funds from which it can properly be made, a court of equity will compel the directors or trustees* to declare and pay such a dividend as the funds accumulated will warrant.” Kerr Business Corps. 189. See, also, Angel & Ames Corp. §§ 391-393; Potter Corp. 100; Spelling Priv. Corp. 441, 442; Pierce Railroads, 122; Smith v. Prattville Manufacturing Co., 29 Ala. 503, 508; Park v. Grant Locomotive Works, 40 N. J. Eq. 114, 118; March v. Eastern Railroad Company, 43 N. H. 515; Taylor v. Miami Exporting Co., 5 Ohio, 165; Pratt v. Pratt, 33 Conn. 446, 456; Beers v. Bridgeport, etc., Co., 42 Conn. 17-27; Belfast, etc., Railroad Co. v. Belfast, 77 Maine, 445, 454; Hazeltine v. R. R. Co, 79 Maine, 411; Hunter v. Roberts, etc., Co., 83 Mich. 71; Ely v. Sprague, Clark’s Ch. 351; Richardson v. Vermont & Mass. R. R. Co., 44 Vt. 613; State of Louisiana v. Bank of Louisiana, 6 La. 745, 763; Barnard v. Vermont & Mass. R. R. Co., 7 Allen, 512, 521.

From the authorities cited the rule may fairly be drawn that where, without doubt, the surplus of a corporation properly applicable to a dividend is ample for the purpose, and the directors, or a majority of them, acting in bad faith, and without reasonable cause, refuse to declare a dividend, the courts will interpose in favor of those stockholders who otherwise would be without remedy.

Such is the case now before, the court, and it follows that the plaintiffs are entitled to a decree requiring the defendants to declare a reasonable dividend, provided the practice pursued is regular.

The learned counsel for the defendants, in his able argument, insisted that the complaint should be dismissed, because the plaintiffs sue in their own behalf only and not also in behalf of all other stockholders' who might come in and unite in the action. As this objection, however, was raised neither by answer nor demurrer it has been waived. Code Civ. Proc. §§ 488, 498, 499; Tremper v. Conklin, 44 Barb. 456; 44 N. Y. 58; Merritt v. Walsh, 32 N. Y. 685.

It is also suggested that, as a national bank is the creature of the Federal government, it is not within the jurisdiction of a state court to interfere with the internal affairs of such a corporation. This would, perhaps, be the rule had not Congress provided otherwise. Osborn v. Bank of United States, 9 Wheat. 738. Any doubt as to jurisdiction, however, is dispelled by a reference to the statutes of the United States, one of which provides “that the jurisdiction for suits hereafter brougt by or against any association established under any law providing for national banking associations, except suits between them and the United States, or its officers and agents, shall be the same as and not other than the j urisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national banking associations may be doing business when such suits may be begun ; and all Jaws, and parts of laws, of the United States inconsistent with tins proviso be, and the same are hereby repealed.” U. S. Stat. 1882, chap. 290, § 4.

A later act provides “That all national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal or mixed, and all suits in equity, be deemed citizens of the states in which they are respectively located, and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same state.” U. S. Stat. 1888, chap. 866, § 4; Leather Mfrs. Bank v. Cooper, 120 U. S. 778, 781; Petri v. Commercial National Bank, 142 id. 644, 649.

The only questions remaining relate to the amount of the dividend to be declared and the costs of the action. After careful reflection I have reached the conclusion that the bank should pay a dividend of not less than twelve per cent., leaving it to the discretion of the directors.to increase the amount, if they think best. The bank can readily pay a larger dividend, but I wish to be on the safe side and to make a conservative decision; This is but little, if any, more than enough to pay the taxes assessed upon the stock during the period that dividends, have been suspended. The decree to be entered may provide for payment of one-half of the amount within sixty and the other half within ninety days after entry of judgment, with leave to the directors to pay the whole at an earlier date if they prefer.

The plaintiffs should recover costs, but, owing to the facts already stated, they should all be paid by Henry Lacy.

Findings and a decree may be prepared accordingly, and served, with a copy of this opinion, on the attorneys for the defendants, and, if not agreed upon as to form, they may be settled before me on a notice of two'days.

Ordered accordingly.


author: Lansing, S.

text:
    In the Matter of the Judicial Settlement of the Accounts of Alexander Traver, as Executor, etc.

      (Surrogate’s Court, Rensselaer County,

      Filed September, 1894.)

    1. Surrogate’s court—Decree—Opening.
    A surrogate lias power.to vacate his own decrees upon application, for sufficient reason in furtherance of justice.
    2. Will—Construction.
    A bequest to the widow during her natural life, with right to use as much of the principal as she might require, and the surplus, if any, to be equally divided between other persons, gives her no vested interest in any portion of the principal.
    Application to open a decree.

      C. Rockafeller, for Nicholas S. Miller, executor, etc., of Martha Melius, widow; John B. Hoag, for Alexander Traver, executor, etc., of Henry Melius.
   Lansing, S.

Two questions are presented upon this application.

The first is a technical one, and relates to the opening of the decree.

The second involves the construction of the provision of the will of Henry Melius, above set forth.'

Technically, Martha Melius in her lifetime had her day in court. Both she and her personal representative are bound by the decree. She was duly and legally cited to attend' the judicial settlement of the accounts of the executor of her late husband and failed to appear. She was not'of unsound mind, but it appears that she was sick and unable to transact business at the time she was cited, and probably had no actual knowledge of the hearing.

Under the circumstances of this case I have no doubt of my power, under subdivision 6, § 2481 of the Code of Civil Procedure, to open the decree.

It appears to be a case of excusable default:

“ The surrogate has the power of a court of general jurisdiction to vacate his decrees, and relief may be granted as in the supreme court upon the application of any one for sufficient reason in furtherance of justice.” Matter of Flynn, 136 N. Y. 287; 49 St. Rep. 388; Matter of Tilden, 98 N. Y. 434; Matter of Filley, 47 St. Rep. 428.

But a more serious question arises as to my duty to open this decree. This the law permits only for a sufficient reason and in furtherance of justice.

Undoubtedly if the petitioner show in addition to the excusable default of his testatrix that she has suffered manifest injustice in the decree herein, a case will be made to open it.

This brings me to the question of the construction of the said provision in the will in connection with the facts and circumstances of this case.

It is claimed by the petitioner that the widow, under the will of her deceased husband, was absolutely entitled to receive her necessary support from the principal of said sum of $1,000 provided for her use, without reference to her own income or estate, and this whether she demanded it during her lifetime or not; that the right to have and enjoy it was a vested right; that it became vested whenever it appeared that she needed it for her support.

It was further insisted that since it appears that the widow was compelled to encroach upon the principal of her own estate for her support and maintenance, her personal representative is entitled to be paid an amount at least sufficient to make good the principal of her individual estate.

To this it was answered that the widow by her acts and declarations had in her lifetime manifested a clear intent to waive all right to the fund in question and that such waiver concluded her personal representative.

I am satisfied that this view is untenable. If the widow had an absolute or vested right to the fund, neither her failure to demand or receive it nor her alleged acts or declarations in waiver of her right would divest her or her personal representative of such interest.

But this applicatian must be denied upon another ground. It involves an entire misapprehension, as I conceive, of the law governing the construction of the clause of the will in question.'

Provisions in wills similar to the one in this case have'been frequently before the court for construction.

It is well settled under the authorities that the widow took a life estate only in the sum of $1,000, with the right to use such portion of the principal as she might require during her lifetime, and that the limitation over to the daughters of the testator is valid. Colt v. Heard, 10 Hun, 189; Crozier v. Bray, 120 N. Y. 366; 31 St. Rep. 506; Wells v. Seeley, 47 Hun, 109; 13 St. Rep. 239; Smith v. Van Ostrand, 64 N. Y. 278.

It follows that the widow had a right to the income from the sum in question absolutely, but the right to the principal de pended upon the condition that she should apply it to her use, or at least demand it for that purpose, during her lifetime ; failing this, immediately upon her death the limitation over took effect and the daughters of the testator became entitled to the unexpended principal.

In the view which I have taken I do not deem it important to decide the question (much, discussed upon the argument) whether the word “require” -in the clause in question should be held to mean “ demand” or “need,” for I do not think the testator used the word in a technical sense.

If the ordinary support of the widow, in her judgment, required the use of the money, she was entitled to use it for that purpose ; whether that was the extent of her right it is unnecessary to decide here, but her right to dispose of it was unquestionably limited to her lifetime.

Doubtless a demand upon the executor in some form was required (it having remained in his possession) in order to perfect the widow’s right to the fund and avoid the limitation over. Perhaps when that right once became perfected by a demand by the widow and a wrongful refusal by the executor, it would survive to her, executor, but it is not necessary to decide that question, for concededly she did not demand it during her lifetime.

Manifestly, under the authorities, the widow had no vested right or interest in any portion of the principal; therefore, no portion of it passed under her will, nor had she perfected, or sought to perfect, her claim to the principal or any portion of it so as to create .a right of action which survived her.

It, therefore, follows that the petitioner’s claim, which it based upon the assumption that his testatrix had an interest in said principal sum which survived her death, is utterly untenable.

The cases of Holden v. Strong, 116 N. Y. 471; 27 St. Rep. 529; Estate of James Riley, 4 Misc. Rep. 338; Matter of Dickerman, 34 Hun, 585, which the petitioner cites, furnish no support for his contention.

In the case of Holden v. Strong, the trustee was given full power and authority to use so much of the trust estate, either principal or interest, as shall in the judgment and discretion ” of said trustee “ be necessary for the proper care, comfort and maintenance” of said beneficiary during his life.

The court held} construing this provision, that neither the fact that the beneficiary was able to support himself by his own exertions, or that he was frugal and saving and had accumulated a fund in the bank, would deprive him of the right to the support provided for him.

The other cases are to the same effect.

These cases simply illustrate the liberality of the courts in enforcing provisions made for the support of beneficiaries who demanded or required the benefits of the same during their lifetime, but do not furnish the slightest support to the petitioner’s contention that provision made for the support of a beneficiary, but not claimed or demanded by him in his lifetime, can be recovered by his personal representative where there is a valid limitation over, in the case of his death.

Application denied, with costs.


author: Pinch, J.

text:
    In the Matter of the Transfer Tax upon the Estate of Ella S. Hoffman, Deceased.

      (Court of Appeals,

      Filed October 16, 1894.)

    1. Tax—Transfer.
    Tlie transfer tax act imposes a tax upon the right of succession to the ' property of a decedent, vesting in his successors, severally and according to their respective shares or proportions.
    2. Same—Exemptions.
    In the case of lineal descendants, the limitation of $10,000 is attached to the estate of the decedent, and not to the several and particular estate passing to the successor.
    8. Same—Future estates.
    The taxing of future estates, which are either contingent or, if vested, are defeasable, must be postponed until the event happens which fixes absolutely the right to enjoy.

      Elihu Root, Emmet JR. Olcott and Edgar J. Levey, for Ashbel P. Pitch, Comptroller and the People, app’lts; William Allen Butler and Adrian H. Joline, for executors, resp’ts.
   Pinch, J.

In construing the Inheritance Tax law as it stood prior to the act of 1892, we had occasion to decide that it imposed a tax upon the right of succession to the property of the testator or intestate which vested in the successors severally and in their respective shares or proportions, and not upon the property or estate,of the decedent. The shares received, in the hands of the recipients, were the measures of the right which was subjected to assessment, and the imposed tax could be enforced personally against the successor charged.

One effect of this construction manifested itself when a question arose over the provision which limited the assessment to estates of five hundred dollars or over. The inquiry was what estate was meant, whether the aggregate estate passing from the testator or intestate, or the particular share passing toa the successor. We solved that problem in two cases. In Matter of Cager, 111 N. Y. 344; 19 St. Rep. 497; In Matter of Howe, 112 N. Y. 100; 20 St. Rep. 477. In the first of these Judge Buger said, somewhat curtly, that the tax was upon the individual; but in the second Judge Danforth explained that the scope of the enactment was to tax shares passing to their recipients; and the word “ estate,” to which the limitation of five hundred dollars was attached, must necessarily mean the estate received by the particular successor,- and not that of the testator or intestate upon which as such and in the aggregate no tax was imposed.

The precise nature of the succession tax grew to be a very important subject of investigation when questions arose over property situated without the state, and led to some differences of opinion. In Matter of Estate of Swift, 137 N. Y. 77; 50 N. Y. 81, Judge Gray expressed his own doubts as to the true nature of the tax, but declared the judgment of the court to be that it is a tax on the rights of-succession under a will, or by devolution in case of intestacy ; and the doctrine was confirmed and followed in the opinion of Judge Bartlett, dealing with a legacy given to the United States. The general doctrine must, therefore, be deemed settled in this court unless it has been changed by the act of 1892.

Before that was passed, the scope of the statute had been extended by including within its operation not only shares and interests passing to collaterals, but also those passing to lineals; although as to the latter the rate of taxation was lessened, and a limitation imposed applying to the tax only where the property exceeded in value the sum of ten thousand dollars. This provision raised the same question as to lineals which had previously been determined as to collaterals, viz., which property was meant, whether that passing from the decedent or that passing to the particular successor. Of course, it was determined in the same way, and by general consent scarcely needing adjudication, was held to mean the specific share passing to the successor. It was thus possible for a testator to avert the tax by reducing intended legacies of ten thousand dollars to lineals'1 to the sum slightly below that amount.

The act of 1892 was a revision of the whole law on the subject. It was. passed with knowledge of our decisions and in view of our construction, and was obviously intended in some respects to compel on our part different conclusions. I do not think there was any such purpose so far as our general doctrine as to the nature of the tax is concerned. There are some changes of phraseology in the more important sections, but I think it remains true that the tax is one upon the right of succession, levied upon successors in respect to the shares to which they succeed, and not upon the decedent’s estate as such.

The question first presented on this appeal, relating to a life estate bequeathed to the mother of the testatrix, and valued at less than $10,000, must be decided, as it always has been in similar cases hitherto, in favor of the legatee, unless in that respect the law of 1892 has changed the necessary interpretation. But I think it has, and that such result was directly and consciously intended by the legislature. I put little reliance upon changes of phrase which do not necessarily indicate a change of legislative intent, but I am unable to understand the entirely new provision of § 22, unless its purpose is to compel a change of our previous construction, and require us to attach the limitation of $10,000 of value to the estate of the decedent, and not to the several and particular estate passing to the successor. The material language of the section is this : "“ The words ‘ estate ’ and ‘ property,’ as used in this act, shall be taken to mean the property or interest therein of the testator, intestate, grantor, bargainer or vendor, passing or transferred to those not specifically exempted from the provisions of this act, and not as the property or interest therein passing or transferred to individual legatees, devisees, heirs, next of kin, grantees, donees or vendees. * * * The word ‘ transfer,’ as used in this act, shall be taken to include the passing of property, or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift in the manner herein prescribed.” It will be observed that the idea of the lawmaker is explained by declaring not only what the words “estate ” and “ property,” as used in the act, shall mean, but also what they shall not mean, and the negation is a denial in terms of the precise construction which this court had previously adopted in determining what was meant by the word “ estate,” when used ambiguously and without qualifying words, as it was used in connection with limitations,of value.

Í recall that I have somewhere spoken of the danger of legal definitions, because almost always certain to prove incomplete and inaccurate, and those referred to are now relied upon and used to overturn and utterly reverse the whole scope and theory of the act as described in our decisions; for the appellant claims that by force of those definitions the tax is no longer upon the shares of individuals or their right of succession, but upon the property of the decedent in the hands of his executors or administrators. It would have been easy to have said that if such a reversal of our theory of the tax had been intended; but all through the act it is persistently declared that the tax is imposed, not upon the property of the decedent, but upon the transfer of that property to persons not exempt from taxation. It was useless, upon this point, to define the word “ estate,” for it does not appear at all in the first two sections which impose the tax. But the definition of the word “ property ” as being the aggregate transfer to the aggregated taxable transferees, cannot be applied to those sections generally without involving the statute in contradictions and utter confusion, for the aggregate transfer is clearly not taxed as such ; it is constantly distributed into the separate transfers bearing different rates of taxation, chargeable severally against the several transferees, each made personally liable for his own tax, and that to be collected by executors and administrators severally and in due proportions out of the shares of each. The whole law is full of this distinction, provides for it in every direction and would be a discord of difficult explanation if we applied the definition generally. Nothing, therefore, in these definitions can be permitted to toucli our general doctrine of the nature of the tax. But what then do they touch, and what purpose do they subserve ? We must look for some place in. the act where the word “property” is used by itself and, to some extent,® ambiguously, and, therefore, needs the help of a definition. We find such a possible place in § 2, where the phrase is, “unless it is personal property of the value of ten thousánd dollars or more,” That may mean the aggregate value of all the property transferred to taxable persons, or the ’ separate value of each several transfer. We had said that it meant the latter, but now comes the legislature declaring that the word “ property,” shall mean what passes to those not exempted, and not what passes to individual transferees. While the prohibition cannot apply to the general theory of the tax, it can apply to this description of a specific limitation. We had said it related to the property of individual transferees, but that construction .§ 22 was intended to forbid and to prevent. If it does not mean that I am unable to perceive any office it can perform or any useful purpose it can subserve. That effect, I think, we are bound to give it, since we can do so without disturbing the scope of the act, and in view of the legal situation which existed and the possible evil which it was thought prudent to prevent. And so we are prepared to say that the interest of the mother is taxable at 1 per cent., although itself of a value of less than ten thousand dollars, because the aggregate transfers by the will to taxable persons exceeded that amount.

As to the estates of the daughter, Ella, and the granddaughter, Olga, we agree with the conclusions of the general term. By the will the mother took a life estate. ■ If upon her death Ella survives, the latter will take a life estate, but if she dies before her mother Ella will take nothing and have no estate to be taxed.

In that event there will have been no actual transfer to her of any portion of the property of the decedent. She ought not to be taxed until events make it certain that there is an actual and beneficial transfer of the property to her. The remainder goes to Olga if she is living at the death of her mother, but if she is then dead without issue, that remainder goes to certain nephews and nieces. If it goes to her it will be taxable at 1 per cent, but if to the collaterals then at 5 per cent. Until events determine the question, it cannot be known what tax is chargeable nor by whom it is payable. Our decision in Matter of Curtis, 142 N. Y. 219; 58 St. Rep. 348, is not decisive because the facts are essentially differerffi, but in that caso. I expressed what was our decided drift of opinion in cases more like the present, and fairly settled later in Matter of Estate of Roosevelt, 143 N. Y. 120; 62 St. Rep. 130; We are obliged to follow one of two lines of construction. We must open all the nice and difficult questions which arise under a will as to the vesting of technical legal estates although future and contingent, and assess the tax upon what are in reality only possibilities and chances, and so complicate the statute with the endless brood of difficult questions which gather about the construction of wills, or'we must construe it in view of its aim and purpose and the object it seeks to Accomplish, and so subordinate technical phrases to the facts of actual and practical ownership. For taxation is a hard fact, and should attach only to such ownership, and may properly be compelled to wait until chances and possibilities develop into the truth of an actual estate possessed or to which there exists an absolute right of future possession. I am not shutting my eyes to the statutory language, which is quite broad. The property taxed may be an estate “ for a term of years or for life, or determinable upon any future or contingent estate,” or “a remainder, reversion or other expectancy,” and the tables of mortality may be resorted to for the ascertainment of values. And jmt, it is the “fair market value,” the “fair and1 cleár market value” which is to be assessed, and with the proviso that if that value cannot be at once ascertained the appraisal is to be adjourned. I can scarcely imagine a contingency depending upon lives which mathematics could not solve by the doctrine of chances and the averages or mortality, and there could hardly be an adjournment unless upon some rare contingency having no averages, and the results incases dependent upon lives might still leave the “fair and clear market value’in doubt and yield sums which no sale in the market would prot duce. My judgment is further guided by the very significan’ definition of the word “ transfer ” in § 22. It “ shall be taken to include the passing of property or any interest therein in possession or enjoyment present or future. It thus 'contemplates a present enjoyment or a fixed and absolute right of future enjoyment and adjourns the appraisal until the fulfillment of contingencies leaves those results attained.

Here there must be that adjournment until the rights of Ella and Olga become fixed and actual. The result does no injustice to the state. The trust fund must remain in the hands of the executors to feed the life estates and for payment over of the remainder. The executors must pay the tax when they know against whom it is chargeable and the rate to be assessed. The state will get its tax when the legatees get their property.

The order of the general term should be modified by declaring the life estate of the mother taxable, as decreed by the surrogate, and, as modified, affirmed, without costs to either party.

All concur, except Andrews, Ch. J., not sitting.

Ordered accordingly.