author: PATTERSON, J. INGRAHAM, J.

text:
    In the Matter of a Proceeding for Taxation of the Estate of Augustus Whiting, Deceased.

      (Supreme Court, Appellate Division, First Department,

      Filed March, 20, 1896.)

    1. Transfer tax—Bonds of foreign corporation.
    ’ • The bonds of a foreign corporation kept with a safe deposit company in Mew York at the death of the nonresident owner, are subject to a transfer: tax.
    3. Same—United states bonds.
    , Such tax is properly imposed on United States bonds.
    Appeal from an order of the surrogate, affirming an order fixing' an assessment.
    Geo. L. Rives, for app’lts; Jabish Holmes, Jr., for resp’t.
   PATTERSON, J.

This is an appeal from an order of the surrogate of the city and county of New York affirming an order fixing an assessment upon certain personal property and interests-' which, under the will of Augustus Whiting, a resident of RhodeIsland, passed to his executors in trust for his daughter and her issue Among the assets of Mr. Whiting’s estate, were certain-corporate bonds which, before and at time of his death, were kept, oh deposit in a safe-deposit company in the city of New York. Mr. Whiting was domiciled at Newport, in the state of RhodeIsland, and the bonds referred to were issued by corporations-foreign to the state of New York. The order from which this, appeal is taken sustained an assessment for the purposes of a succession tax; the surrogate holding that, although they were bonds-of foreign corporations, they were nevertheless property within this state subject to assessment for this species of taxation.

The learned counsel for the appellants, in an instructive and forcible argument, has properly confined the discussion to the-single question of the nature of the securities taxed. Are bonds-of foreign corporations, belonging to a nonresident, and which are-actually within this state at the time of his death, property within-this state, within the meaning of subdivision 2 of section 1, c. 399*. of the Laws of 1892 ? The power to tax all assets of the estate-of the nonresident testator situated in this state that may be rightly-described as “ property within the state ” is fully conceded ; and ¡that such assets may, for the purposes of state taxation, have a situs separate from the domicile of the decedent is also undisputed, ¡But the argument is that bonds of a corporation, being merely 'evidences of an indebtedness of that corporation; they cannot 'have a situs independent of the domicile of the debtor or creditor, 'because the indebtedness, and not the evidence of it, is the essential thing owned, and is that which constitutes property, in a legal sense. When considered in connection with the imposition of taxes, and as between a debtor and a nonresident creditor, it has been decided, on very high authority, that the situs of corporate bonds, such as those involved here, is the domicile of the latter, and they cannot be taxed in the state under the laws of which the corporation is organized and exists. Case of State Tax on Foreign Held Bonds, 15 Wall. 300. In that case, it was said by the court that:

“All the property there can be, in the nature of things, in debts of corporations, belongs to the creditors to whom they are payable, and follows their domicile, wherever that may be. Their debts can have no locality separate from the parties to whom they are-due. This principle might be stated in many different ways, and. supported by citations from numerous adjudications, but no number of authorities, and no forms of expression, can add anj'thing, to its truth, which is recognized upon this simple statement."

From the language of the court just quoted, there can be no-room to doubt what it regarded as the subject of property, viz., the indebtedness of the corporation, and not merely the bonds, the evidence of that indebtedness. There are decisions of the-courts of this and of other states which hold or tend to hold the-same rule. In Re Will of Enston, 113 N. Y. 174; 22 St. Rep. 569, Judge Andrews, in writing for the court, argues that the-bonds of foreign corporations in the hands of the agent of the decedent in this state or not, in a legal sense, property within this-state, and are not, under the general rules or policy of the state,, ¡taxable here. It is true that this remark was not made concerning the particular property involved in that case, but was used as an illustration to enfore the decision which was reached concerning the nontaxability of the shares of stock that were the subjects-of that particular action. So, in Orcutt’s Appeal, 97 Pa. St. 179, it was held, under an act of the legislature of Pennsylvania substantially to the same effect as the inheritance tax law of this state, that bonds of a nonresident of the state of Pennsylvania, left on deposit in a trust company of the city of Philadelphia for safe-keeping, were not .to be regarded as property m the state of Pennsylvania, because they were simply evidences of indebtedness, and could have no situs different from the domicile of the-owner.

It must therefore be admitted that the contention of the learned counsel for the appellants, so far as we have considered it, has the support of authority ; but, looking at and giving effect to recent -legislation concerning the imposition of an inheritance tax upon. property within this state, and decisions of the court of appeals, we! are compelled to hold that, as the law now'stands, the assessment! for the tax upon the bonds in question was lawfully imposed.By chapter 399 of the Laws of 1892, the tax may be levied “when! the transfer is by will or intestate law of property within the state,, and the decedent was a nonresident of the state at the time of hi'si death.” The word “property,” as used in that act, is defined, generally, as all property over which this state has any jurisdiction' for the purposes of taxation.” By section 4 of chapter 677 of the: Laws of 1892, personal property is defined as including “all written instruments themselves, as distinguished from the rights or interests to which they relate, by which * * *. any debt on ■financial obligation is created, acknowledged, evidenced, *' * * wholly or in part.” If these statutory provisions and definitions are to be given operation according to their obvious meaning, but ■one conclusion can be drawn from them, namely, that bonds of' corporations that are actually—physically—within the jurisdiction of this state constitute property, in a legal sense, and are, therefore, subject to taxation by the state. The effect of these enact-) ments is to give to securities of the character of those involved) here the same qualities of property that are recognized to exist in any other species of tangible personal property. A bond for the' payment of money becomes something more than a mere evidence' of an intangible indebtedness, and is placed by the statutes in the category of chattels generally. !

Moreover, the course and tendency of decision in the Courts of this state has" been, irrespective of the statute (chapter 677 of the Laws of 1892); to regard corporate bonds as property dissociated from the indebtedness represented by them. Thus, in People v. Smith, 88 N. Y. 576, Earl, J., says:

“ It is clear, * * * from an understanding of business men in commercial transactions, as well as of jurists and legislators,!' that mortgages, bonds, bills and notes, have, for many purposes,! come to be regarded as property, and not as the mere evidence of) debts; and they may thus have a situs at the place where they arej found, like other visible tangible assets.” 1

And so, in Re Romaine, 127 N. Y. 80; 38 St. Rep. 76, it wasi held that securities, consisting of stocks and bonds of different corporations (although it did not appear whether the stocks and bonds were issued by foreign or domestic corporations), owned by a nonresident intestate at the time of his death, but which were; habitually kept in the state of New York, were Subject to taxation1, under the collateral inheritance act of the state of New York. In1 the opinion of the court in that case the authorities are collated) and commented upon respecting the taxation of personal property! of nonresidents of the state, and it was held that, where such! property is habitually kept, even for safety, the statute applied both in the letter and spirit, and the bonds were held to be proper subjects of taxation.

In view of the statutes referred to, and of the condition of the precedents in this state respecting what constitutes property im securities such as the bonds involved here, we feel constrained to affirm the decree of the surrogate, notwithstanding the cogent reasons which, were the question a new one, might induce a contrary ■conclusion. We recognize the difficulty existing in the case by reason of the possibility of this property being included in a double inheritance tax, viz., both here and in Rhode Island, and also that the collateral inheritance tax is a succession tax and one which may be differently imposed in this state and in the state of Rhode Island; but we cannot escape the conclusion that the effect of the legislation of 1892 upon this subject is such as authorized the imposition of the tax complained of in this case. With the policy ■or propriety of the law we have nothing to do, but are obliged to' apply it as we fiud it enacted.

It has been suggested, but not seriously argued, by counsel for the appellants, that the United States bonds are not to be included ■in the property of Mr. Whiting in the appraisal made in this matter ; and that suggestion is regarded by some of the members of this court as controlling. Bonds or obligations of the United States cannot be taxed by a state, either directly or indirectly. Mo form or mode of taxation can be resorted to to evade 'the prohibition. Home Ins. Co. v. New York State, 134 U. S. 594. But that principle has no application to this case. The charge is not upon property. It is purely and exclusively something required to be paid out of an estate of a deceased person for the privilege ■enjoyed of succeeding to it. The precise question was considered in the supreme court of Pennsylvania. In Strode v. Com., 52 Pa. St. 181, the court said:

“The mistake of the counsel for the plaintiff in error consists, we conceive, in treating this as a tax upon government bonds, when it is really a tax upon the estate of a decedent dying without lineal heirs. And it does not help the argument that the bulk ■of the estate is made up of these [United States] bonds; for that estate passed into the hands of the executor for administration, and is taxed in his hands as an estate. The law takes every decedent’s estate into custody, and administers it for the benefit of, creditors, legatees, devisees and heirs, and delivers the residue that remains, after discharging all obligations, to the distributees entitled to receive it. One of the legal obligations to which every estate .that is to go to collateral kindred is subject is this * * * duty to the commonwealth. And it is not until this work of administration is performed that the right of succession attaches.”

The nature of a succession tax is well described in the extract quoted, The tax in this case is in no proper sense on the United-States bonds owned by Mr. Whiting and on deposit here at the' time of his death. Mor is it at all material, now, that the succession is such as is prescribed or ordained by the laws of Rhode Island. So much of the estate as consisted of these bonds, and some other personal property passing to the executor, was within this state, and the Romaine Case clearly applied to that other property, as counsel for the appellants concedes; and we must hold that the United States bonds are also within the principle of that case.

We are therefore of the opinion that the order appealed from, should be affirmed, with costs.

WILLIAMS and O'BEIEN, JJ., concur.

INGRAHAM, J.

(dissenting).—The appellants, the executors and trustees of this estate, appeal from an order of the surrogate, which order affirmed an order made confirming an appraisement of tlie value of the inheritance of Charlotte Whiting under the will of Augustus Whiting, deceased. The testator was a nonresident, living at Newport, in the state of Bhode Island, and by his will he left all his estate, real and personal, to his executors, the appellants, in trust, to receive the income and apply the same to the-education and support of his daughter, Charlotte Whiting, until she arrived at the age of twenty-one, and after twenty-one to pay all the income of the estate to the said Charlotte during her life, and upon'her death to pay the said principal of the trust over to the issue of the said Charlotte, and in case she should leave no-issue, to the testator’s next of kin. The beneficiary, Charlotte-Whiting, is also a resident of Bhode Island, and, so far as appears, neither the testator nor the beneficiary has ever been a resident of" this state. The testator died at Newport, and his will was admitted to probate at Newport, B. I., on August 20, 1894. The appellants appeal from the action of the surrogate by which he: assessed, as liable to taxation, bonds of foreign corporations secured1 by a mortgage upon railroads outside of the state of New York, at. the par value of $15,000 and four per cent, -bonds'of the United States of the par value of- $46,500.

The question presented affects two kinds of securities: First,, bonds of foreign corporations secured by a mortgage upon prop- ¡ erty outside of the state of New York; and second, bonds of the-United States. It does not appear whether these various bonds-were coupon bonds or registered bonds, but I do not think that, .that is material. The act under which this assessment is made,, which was in force at the time of the death of the testator, is chapter 399 of the Laws of 1892.

The first section of the act in question provides that:

“A tax shall be and is hereby imposed upon the transfer of any property, real or personal, * * * to persons or corporations^ not exempt by law from taxation on real or personal property in the following cases : * • * * (2) When the transferís by will or intestate law, of property within the.state, and the decedent-was a nonresident of the state at the time of his death.”

And by section 22 of the act it is provided that:

“ The words ‘ estate ’ and 1 property ’ as used in this act shall be taken to mean the property or interest therein of the testator, * * * passing or transferred to those not herein specifically exempted from the provisions of this act, * * * and shall include all property or interest therein, "whether:situated within or without this state, over which this-state -has any jurisdiction for the purpose of taxation.”

There has been considerable discussion, and some conflict of judicial opinion, as to whether the tax imposed under the provisions of this act is a tax upon “ property,” or a tax upon the right of succession; but it now appears to be settled that the tax is imposed on the right of succession under a will, or devolution in case of intestacy. See In re Merriam’s Estate, 141 N. Y. 484; 57 St. Rep. 593. There can be no doubt but that it was the intention of the legislature to include within the property subject to this tax all property that was within this state over which the state had jurisdiction for the purpose of taxation, so that a legatee, devisee, heir, or next of ldn would take the property subject to this tax, imposed upon the right to take under a will or a devotion in case of intestacy.

Before the state, however, can subject a person to whom property is thus devised or bequeathed to this tax, it seems to be clear that the state must have acquired, in some way, jurisdiction over the persons who were or who become the owners of the property by the transfer, or over the property itself that passes by the will or by operation of law. Under the 22d section of the act the property, as. defined in the act, the right to take whiqh is taxed, is to include property over which the state has jurisdiction for the purpose of taxation. If it appears that the state has no jurisdiction over the specific property, then we must get jurisdiction over this right of succession. Where did this right of succession to this property accrue ? In whose favor had it accued ? The testator was a resident of Rhode Island. He died there. His will was admitted to probate there. Upon the granting of letters there to his executors, the title to the property vested in them. And his title is recognized by the laws of this state as giving a right to an executor to maintain an action individually to recover the possession of the property as its legal owner, without a grant of letters by the courts of this state. See Toronto General Trust Co. v. Chicago, B. & Q. R. Co., 123 N. Y. 45; 33 St. Rep. 78. Thus, the right to succeed to this property became vested upon the probate of the will and the grant of the letters there. Over that right, if that can be considered property, and taxable, this state has no jurisdiction, for it vested under the laws of a foreign state, entirely uncontrolled or unaffected by any law of this state. Thus, .the former owner and the beneficiary under the will were both without this state, and the title passed under the laws of a foreign state. So that the right of succession, or right to take the property, was never within the jurisdiction of this state. I do not think this act should be extended so as to include, by a forced construction, property or interests not fairly within its provisions. And the intention of the court of appeals so to construe it is apparent from the case of In re Seaman’s Estate, 147 N. Y. 77; 69 St. Rep. 316.

There are three subdivisions to section 1 of this act imposing the tax. The first subdivision applies to' property of a resident of this state passing by will or intestate laws, and the second applies to the property of a decedent who was a nonresident of the state at the time of his death. The first subdivision, applying the legal principle that the situs of all the personal property of a decedent was at the place of his domicile, taxed all such personal property located in this state or in a foreign state; thus asserting, in a most! general way, the right by the state to impose upon one of its citizens a' tax upon his property, irrespective of its actual locality. When the statute comes to deal with nonresidents, however, a different problem is presented. The state has no jurisdiction over the residents of other states to compel them to pay a tax upon, property which is .not, when the tax is imposed, within the jurisdiction of the state. But it says, however, that, when the property of such nonresident is here,—is within the jurisdiction of the state,—such property shall pay a tax to the otate. A consistent scheme can be given to this act by confining it to such property as has a tangible, visible existence here, as distinct from the residence or domicile of the owner; so, that, in both cases, the tax is upon the right of succession,—in the one case because, the testator being a resident of this state, that right of succession passes to the legatee, devisee, heir at law, or next of kin, under and by virtue of the laws of this state, in consequence of such residence; in the other case, such right of succession is within the jurisdiction of this state because of the fact that the property is so located within this state, and under the control of its laws, that the right' to succeed is created by the law of this state, and the title to the property passes under its law. It is this property, the right of succession to which is taxed, over which the courts of this state have jurisdiction for the purpose of taxation, and thus is included within the definition contained in section 22 of the act

The question as to whether this state had any jurisdiction over these bonds of foreign corporations seems to be answered by the judgment of the supreme court of the United States in the Foreign Bond Case, 15 Wall. 300. In that case a corporation organized under the laws of the state of Pennsylvania issued bonds, secured by a mortgage upon its property, some of which bonds were held by the plaintiff in error, a resident of Ireland, in the kingdom of Great Britain. Under the laws of the state of Pennsylvania, that state assumed to tax the interest payable upon such bonds, and to require the Pennsylvania corporation to deduct from the interest that it paid upon such bonds the amount of the. tax. And the supreme court of the United States held that such( a tax was invalid. An extract from the opinion seems to be de-, cisive of this question:

“ But debts owing by corporations, like debts owing by indi-’ viduals, are not property of the debtors in any sense. They are obligations of the debtors, and only possess value in the hands of the creditors. With them they are property, and in their hands, they may be taxed. To call debts property of the debtors is simply to misuse terms. All the property there can be, in the nature of things, in debts of corporations belongs to the creditors, to whom they are payable, and follows their domicile, whatever that may be. Their debts can have no locality separate from the parties to whom they are due. This principle might be stated in., many different ways, and supported by citations from numerous, adjudications;. but no number of authorities and no forms of expression could add anything to its obvious truth, which is recognized upon its simple statement.”

And, on joage 323, the court say :

“ A mortgage being there a mere chose in action, it only confers upon the holder, or the party for whose benefit the mortgage is given, aright to proceed against the property mortgaged, upon a given contingency, to enforce by its sale the payment of his demand. This right has no locality independent of the party in whom it resides. It may, undoubtedly, be taxed by the state when held by a resident therein ; but, when held by a nonresident, it is as much beyond the jurisdiction of the state as the person of the owner. It is undoubtedly true that the actual situs of personal property which has a visible and tangible existence, and not the domicile of the owner, will in many cases determine the state in which it may be taxed. The same- thing is true of public securities, consisting of state bonds of municipal bodies and circulating notes of banking institutions. The former, by general usage, have adquired the character of, and are treated as, property in the place where they are found, though removed from the domicile of the owner. The latter are treated and passed as money wherever they are. But, other personal property, consisting of bonds, mortgages, and debts generally, has no situs independent of the domicile of the owner, and certainly can have none where the instruments, as in the present case, constituting the evidences of debt, are not separated from the possession of the owners.”

Applying the principles here established, it seems to me plain that these obligations of a foreign corporation, secured by a mortgage upon its property, are not property over which this state has jurisdiction for the purpose of taxation. The testator was a nonresident, as are the beneficiaries under this will. Over them this state has no jurisdiction ; and debts due to them, or rights of. action vested in them, are their property, which are subject to taxation in the state or county of their domicile. There is no evidence as to the length of time that either of these obligations remained within this state. It does not appear that they were permanently located here, or that they were not here for some special- purpose of a temporary nature. The legislature might as well authorize its officers to break into every safe-deposit company in this state, and seize the securities or obligations held in such safe-deposit companies, and tax them during the lifetime of their owners, regardless of their domicile, as to seize them upon the death of a person to whom such obligations are due, aud tax them before they are allowed to be sent to the legal representatives of the testator in the foreign country, for distribution according to the laws of such country. In such a case, as in the case at bar, if the claim of the comptroller were to be allowed, as was said by Mr. Jusliee FIELD in the case before cited :

“ It is only one of many cases where, under the name of taxation, an oppressive exaction is made without constitutional warrant, amounting to little less than an arbitrary seizure of private property. It is, in fact, a forced contribution levied upon property held in other states, where it is subjected, or may be subjected, to taxation upon an estimate of its full value,”

That the same right of succession would be subjected to taxation in the state of testator’s domicile, if the laws of that state] were the same as the act in question, is clear; and we thus would! subject this right of succession to double taxation, simply because,: for some reason not disclosed, the obligation of the debtor evidencing the debt happened to be within this state at the time of the death of the testator.

The Romaine Case, 127 N. Y. 80; 38 St. Rep. 76, does not determine this question. That case is distinguished by the court of appeals, in Re James, 144 N. Y. 12; 62 St. Rep. 855, where the court say:

“ The property of the nonresident decedent, in that case, which was held to be liable to taxation, was stated to be a mortgage upon, real estate in the city of New York, deposits in savings banks in that city, and stocks and bonds of different corporations, butr whether domestic or foreign it was not made to appear.”

The Romaine Case, therefore, is not an authority for holding'that the stock and bonds of foreign corporations are property within this state; and the court in Re James, in discussing whether: or not the certificates of stock of foreign corporations which were! in this state at the time of the death of the testator, who was a nonresident, say: ]

“ The appellant, in substance, argues that the provision for a tax: on ‘property * * * within this state,’ which the act of 1887' contains, show that the legislature intended to include as property,, for the purpose of taxation, in the estate of a nonresident decedent,., evidences of property, like certificates of stock; but, without discussing the power of the legislature to do any such thing, we! think that he is straining construction and importing a sense in-the word ‘property’ which the law has not attached. Both in the: Swift Case, 137 N. Y. 77; 50 St. Rep. 81, and in the Merriam Case, 141 N. Y. 479; 57 St. Rep. 593, the testator was a resident of the state, and we held that certain personal chattels without the' state in the one case, and the stocks of foreign corporations in the othep case, should be included in the. appraisement of the estate for the purpose of taxation. The decision in eaclficsse, of course,, rested upon the theory that the legal situs of the personalty could' be regarded as at the owner’s domicile.” j

Thus, reading these four cases together, the rule would seem to' be that the situs of stock in foreign corporations owned by a decedent would be regarded as at the owner’s domicile, and. that' the same would apply to bonds of foreign corporations, under the rule as laid down in the Foreign Bond Case, supra; and, the legal situs of such stocks and bonds not being within this state, .this; state could have nd jurisdiction over the property in them for the purpose of taxation. The Romaine Case, thus limited by the James Case, is not opposed to this view.

Section 4 of the statutory construction act, being chapter 677 of. the Laws of 1892, is relied upon as in some way changing the. ¡meaning of the term “personal property,” contained in the act in ■question. This section provides that the term “personal property” includes things in action and written instruments themselves, as distinguished from the rights or interests to which they relate. This act became a law at the same session of the legislature as -chapter 399 of the Laws of 1892, but subsequent to the passage of the last-named act; the statutory construction act having become a law May 18, 1892, and chapter 399, the tax law, having become a law April 30, 1892. This statutory construction act does not, in express terms, apply to statutes passed prior to the time of its passage. Section 1 provides that the act “is applicable to every statute unless its general object or the context of the language construed, or other provisions of law, indicate that a different meaning or application was intended from that required to be given by this chapter.” It is a general rule in the construction of statutes that they will not be given retroactive effect unless the language used expressly indicates such an intention. And I do ■not think that this general language could be held applicable to ¡statutes in force at the date of its passage. It would certainly be a most dangerous principle to modify existing law seriously affecting property rights by the passage of an act which did not specifically change the existing laws, but which assumed to provide definitions for words used, and which did not, by its express terms, have a retroactive effect. This statutory construction act only applies to a statute where its general object, or the context of the language construed, or other provisions of law, did not indicate that a different meaning or application was intended. Mow, this act of 1892 (section 22 before cited), which was a law at the time of the passage of this construction act, does give a definite meaning to the words “personal property.” The act itself attempts to ■ define what is to be taxed, and it thus shows that the legislature intended to depend upon provisions of the act itself to define what it intended to tax, and not to depend upon any statutory construction law theretofore or thereafter passed. It would come, I think, expressly within the limitation of section 1 of the construction law, which would indicate that a different meaning or application was intended to be given to this word “property,” as distinct from that given by the statutory construction law.

But, even assuming that section 4 applied, it still does not affect this question. An analysis of the section will show that it was not the intention of the legislature to say that the rule of law that regarded a debt as property where the creditor resided was to be changed. It simply said that the term personal property ” ■should include the obligation or written instrument itself, as distinguished from the right or interest to which it relates, so that, when the word “property ” was used, it should include both the written instrument and the obligation created by it. And that this was not intended to have, and has not had, the effect of changing the rule theretofore existing, is apparent from the cases which decide that, where a resident of this state dies, his property, wherever actually located, is taxable here, That this statutory construction act did undoubtedly give a specific meaning to the word ^property” in statutes that- were thereafter passed, by which the word “property,” when used, unless a different meaning was* clearly intended, so that such word “property" should apply to* the instruments evidencing an indebtedness, as well as the debts itself, is clear. But nothing therein would indicate an intention of the legislature to change the well-settled rule of law that the-actual property was the indebtedness, and that that vested in the-creditor. And when the instrument evidencing the inc[ebtednesswas separated from the domicile of the creditor, and the court had to determine which of the two places should be taken as the situs of the property (namely/ the indebtedness), the statute does not-provide that the settled rule should not apply, as had been the law-prior to this time; that is, that the situs of such indebtedness-should be at the residence of the debtor, rather than at the location of the instrument evidencing the indebtedness.

Considering the debt or demand due to the creditor as property it is clear that the obligatiop to pay a debt cannot be separated from the debt itself, so as to make two separate and distinct pieces of property,—one a debt, and the other the obligation to pay the debt. The debt„and the writing creating or evidencing the obligation to pay the debt, together constitute the specific property, which vests in the creditor, and which is the' right to receive from the1 debtor the amount due. And the question is, where is that rights to receive the amount due actually situated ? There is nothing in this act, under which this tax is imposed, to show that the legislature intended to give a different situs to property in subdivision 1 than it did to property in subdivision 2- Subdivision 1 has been expressly construed to include all personal property, wherever-situated, which vested in a resident of this state, on the ground-that the legal situs of such property is at the residence of its owner. Nothing that is contained in the act justifies us in assuming that it was intended, by section 2 of the act, to change that rule, and' to say th'at the situs of personal property of nonresidents was elsewhere than was the situs of the personal property of residents, a& applied to such a piece of property as a debt or demand due to an-individual. On the contrary, the construction given by the court of appeals to this section in the case of In re James, supra, clearly indicates that such an intention was not to be assumed from ther language of the act in question.

The next question is as to the right of the state to tax the United: States bonds, or to tax the transfer of the United States bonds. In-determining this question it should be noticed that the act in ques-¡ tion is entitled “An act in relation to taxable transfers of property; ” and section 1 of the act provides: “ A tax shall be and isl hereby imposed upon the transfer of any property, real and personal,” etc. Has this state a right to tax the transfer of, or right, of succession to, bonds issued by the United States? This ques>, tion, I think, is clearly settled by one or two decisions of the supreme court of the United States. In the case of Weston v. City Council, 2 Pet. 460, an ordinance of the city council of Charles tom was passed imposing a tax of twenty-five cents upon every $1,000 of all personal estate consisting of six and seven per cent, stock of v&P United States; and the supreme court of the United States./ Marshall, C. J., delivering the opinion, held that the act was unconstitutional. The court thus states the question:

Is the stock issued for loans made by the government of th© United States liable to be taxed by states and corporations? ”

And, in holding that the ordinance was in conflict with the constitution, he said:

• “ The American people have conferred the power of borrowing money on their government, and, by making that government supreme, have shielded its action in the exercise of this power ■from the action of the local governments. The grant of the power is incompatible with a restraining or controlling power, and the declaration of supremacy is a declaration that no such restraining or controlling power shall be exercised. The right to tax the contract to any extent, when made, must operate upon the power to borrow before-it is exercised, and have a sensible influence on the contract. The extent of this influence depends on the will' of a distinct government. To any extent, however inconsiderable, it is a burden on the operations of government It may be carried to an extent which shall arrest them entirely. •* * * The tax on government stock is thought by this court to be a tax on the contract, a tax on the power to borrow money on the credit of the United States, and, consequently, to be repugnant to the constitution.” . *

In the case of People v. Commissioners of Taxes, 2 Black, 628, it was held that this principle applied to an act taxing the capital of a bank organized under the laws of the state of New York where a portion of the capital of the bank was invested in United States stock; and the difference was noted between the ordinance-of the city of Charleston and the law of New York, which consists in the circumstance that the tax in the former case was imposed on the stock, eo nomine, whereas, in the present case, it is taxed on the aggregate of the taxpayer’s property, and to - be valued at its real worth in the same manner as all other items of his taxable property.” It was still held that it was a tax upon the power of the United States to borrow money, and was repugnant to the constitution. And in the Bank Tax Case, 2 Wall. 206, this principal was e applied to an act by which a tax was imposed on valuation equal to the amount of the capital paid in or secured to be paid in by a state bank, and it was held that, where a portion of the capital of the bank was invested in the stock of the United States, it was a tax upon the property of such bank The court then said:

“ Having come to the conclusion that the tax on the capital of the Bank of the Commonwealth is a tax on the property of the institution, and which consists of the stock of the United States, we do not see how the case can be distinguished from that of People v. Commissioners of Taxes, 2 Black, 620. That the bonds or obligations of the United States cannot be subject to taxation by & ■state is settled law. It is a tax upon the exercise of the power of congress to borrow money. Nor can this inhibition upon th© states be evaded by anv change in the mode or form of taxation» ■provided the same result is effected; that is, an impediment is: thereby interposed to the exercise of a power of the United States.; That which cannot be accomplished directly cannot be accomplished indirectly. Through all such attempts the court will loold to the end sought to be reached; and, if that would trench uponl ■a power of the government, the' law creating it will be set aside,! or its enforcement restrained. ..... I

Home Ins. Co. v. New York State, 134 U. S. 598.

In these cases the one principle was applied that any tax, direct, or indirect, upon stock of the United States, pr upon money or property invested in the stock of the United States, was repugnant to the constitution of the United States, as being a tax upon the power granted to the government of the United States to bor,row money; and thus such bonds or stock were property over which the state had no jurisdiction for the purpose of taxation. This statute in express terms imposes a tax upon the transfer of' the property,' and it seems too clear for argument that a tax upon, a transfer of property, or a right to receive or own property, is a ■tax upon the property, within the principle thus settled. So far .as it affects the power of the United States, it is just as much an interference with that power to tax the transfer of the stock as to tax the stock itself; and it clearly follows, I think, that over this stock of the United Statds this state had no jurisdiction for the purpose of taxation.

The order of the surrogate should therefore be reversed, and the proceedings remitted, with instructions to strike out the bonds and stock mentioned in the notice of appeal of the executors from the property subject to taxation, with costs and disbursements in favor of the appellants.

YAN BRUNT, P. J., concurs.


source: Caselaw Access Project

author: INGRAHAM, J.

license: Public Domain

text:
    People, Pl'ff, v. American Steam Boiler Insurance Company, Def't. Southern National Bank, Pl’ff, v. Ward, Def't.

      (Supreme Court, Appellate Division, First Department,

      Filed April 10, 1896.)

    1. Corporations—Dissolution.
    The reference of a disputed claim to a referee by a receiver appointed in dissolution proceedings by agreement with a claimant, as authorized by section 2429 of the Code, is not a motion or application to the court in an action or proceeding for the dissolution of the corporation or the distribution of its assets, within the provisions of the above section.
    A Same—Notice to attorney general.
    Where notice of the final judgment and a copy thereof or order are served upon the attorney general, who interposed no objection to it, any irregularity in the granting of the order of reference is thereby waived.

      8. Same.
    A party waives whatever right he has to object to the confirmation of , the referee’s report, or to make a motion to set it aside on this ground, by proceeding before a referee and submitting himself to his jurisdiction, without objection until the case has been fully decided,

      4. Same—Notes—Validity.
    Where the vice president of a corporation receives to his order a check which he deposits in the bank to the credit of the corporation, and subsequently a demand note for the amount 'is given by the officers of the corporation, such note constitutes a valid obligation of the corporation.
    ■8. Same.
    In such case, neither the corporation making the loan, nor the bank to whom the obligation to repay the loan is transferred, is responsible for the application made by the corporation of the money which it received.
    <S. Same.
    Where the by-laws of a corporation, empowered to borrow money, do not restrain its officers from executing notes for money borrowed by the corporation, a note so executed by its officers is, as to third parties, a valid obligation of the corporation.
    Appeal from an order, denying a motion to set aside the referee's report, and from an order confirming the same and ordering judgment against the receiver,
    Henry D. Hotchkiss, for app’lts, stockholdérs; Gf. M. Speir,. for •app’lt, receiver; John R. Abney, for resp’t, claimant.
   INGRAHAM, J.

The Southern National Bank presented a claim against the receiver of the American Steam Boiler Insurance Company, who was appointed receiver of such corporation in an action brought by the people to dissolve the corporation, which claim the said receiver disputed. Thereupon the claimant and receiver agreed to refer the question as to the validity of the •claim to a referee, under the provisions of the statute applicable to trustees of insolvent debtors, which statute is made expressly applicable to claims against receivers by section 2429 of the Code. ‘The provision of the Revised Statutes under which this receiver was appointed provides that, “if any controversy shall arise between the trustees and any other person in the settlement of any demand against such debtor, . * * * the same may be referred to one or more indifferent persons, who may be agreed upon by the trustees and the party with whom such controversy shall exist by a writing to that effect signed by them.” 2 Rev. St. p. 45, § 19. Such a writing was signed by the attorney ’for the claimant and by the attorney for the receiver. The statute further provides “that such certificate or the written agreement of the parties shall be filed by the trustees in the office of the clerk of the supreme court, * * * and q rule shall thereupon be entered by such clerk in vacation or in term appointing the persons so selected to determine the controversy.” Id. § 23. This agreement in writing to refer having been filed in the office of.the clerk of the supreme court, an order was entered by such clerk, under direction of a justice of the supreme court, appointing the person selected to determine the controversy; and this motion to vacate is based upon an allegation that a copy of the application for such order, or a copy of the order itself, was not served upon the attorney general, under the provisions of section 8 of chapter 378 of the Laws of 1883.

No objection was taken to this proceeding before the referee,, but the moving parties, namely, certain stockholders, who were allowed to intervene, proceeded before the referee. The question was fully tried before him, and no objection was taken until his report had been filed and a motion had been noticed for its confirmation. Under such circumstances, to entitle the court to set aside the report on the ground that the order was void under the provisions of the act of 1883, known as the “ Haggerty Act,” clear evidence should be required that notice of the application-for the order of reference, or a copy of the order, had not been served upon the attorney general. The motion papers did not furnish such evidence. No notice to the attorney general is recited in the order, but that is not evidence that he did not receive notice. The only other evidence was an affidavit of one Maddox, who says that he was informed by an assistant to the attorney general that no notice was served on the attorney general. This, clearly, is not evidence of the fact. In the first place, it is merely evidence that an unverified statement was made by an assistant to the attorney general; and, if verified, it would not show that tho attorney general did not have notice. As, however, the motion seems to have been submitted and decided upon the assumption that no such notice was actually served, we will not rest our decision upon this absence of competent evidence.

Section 8 of the Haggerty act provides that “a copy of all motions and all motion papers, and a copy of any other application-to the court, together with a copy of the order or judgment to be proposed thereon to the court, in any action or proceeding now pending for the dissolution of a corporation or a distribution of its assets, or which shall hereafter be commenced for such purposes, shall in all cases be served on the attorney general.” We-agree with the court below that this was not a motion or an application to the court in an action or proceeding for the dissolution of the corporation or the distribution of its assets, within the provisions of this section. Under the provisions of the statute, a special proceeding seems to be authorized for the purpose of determining questions of the validity of claims against a corporation which has been dissolved, and the assets of which are in the hands, of a receiver, so as to determine whether or not the claimant- is entitled to participate in a distribution of the property of the corporation in the hands of the receiver. The reference in such a case is simply to determine the controversy between the receiver and the claimant as to the validity of the.claim against the corporation. ■ If the claim is held to be valid, the statute provides, that the report of the referee shall be filed in the office where the rule for his appointment was entered, and shall be conclusive on the rights of the parties, unless set aside by the court. The order of reference is to be entered by the clerk, as a matter of course, upon the filing of a stipulation or agreement to refer. No application to the court is necessaiy for such order, and the mere ¡fact that a justice of the supreme court did direct its entry was entirely immaterial. The order did not, either actually or in effect, distribute the assets of the corporation. It simply provided, as a preliminary to such distribution, a tribunal which 'was to determine as to the validity of the demand ; and, that having been '•determined, application to the court was necessary for the proper !order to be entered upon such report.

It might well be, under this statute, that before a final order or ¡judgment should be entered against the receiver, which would affect the distribution of the property in the hands of the receiver, «lotice should be given-to the attorney general. It is not necessary to determine this point, because notice of such final judgment and a copy of such judgment or order were served upon the attorney general, who interposed no objection to it; and any irregularity in the granting of the order of reference was thereby waived. We also think that this moving party waived whatever ■right he had to object to the confirmation of the report, or to ■make a motion to set it aside on this ground, by proceeding before a referee; and submitting himself to his jurisdiction, without objection until the case had been fully decided. He should have objected to proceeding before the referee, or made a motion to set aside the order of reference before proceeding before the referee. He could not go on before the referee, take his chances of obtaining a favorable result, and then, when defeated, claim that the .proceeding was void because of a failure to give notice to the attorney general, when the failure to give such notice had no effect upon the interests of the moving party. The right of the attorney general to insist upon such objection is not presented. Whatever right he had was wavied by his failing to object to the entry of the final order.

The other question presented on the motion can be more properly considered on the appeal from the judgment or order entered -confirming the report of the referee and the order directing the payment of the amount reported due by the referee. The appeal from this judgment and order bring up for review the question as to whether or not the respondent had a valid demand against the corporation of which the appellant is the receiver. It is conceded that, if this note of May 2, 1893, for $21,000, was a valid obligation in the hands of Beecher, Schenck & Co., its transfer by the payees to the Southern Hational Bank cannot be questioned by the receiver. It appeared before the referee, and was conceded by the appellant on this appeal, that on May 2, 1893, the American Steam Boiler Insurance Company was indebted to the Chatham national Bank in a sum exceeding $21,000. On May 2, 1893, W. E. Midgley, who was the vice president of the American Steam Boiler Insurance Company, received a-check of Beecher, Schenck & Co., drawn to his individual order, for $21,000, and on the same day deposited that check in the Chatham national Bank to the account of the American Steam Boiler Company, where such corporation had an account That deposit was credited upon the pass book of the American Steam Boiler Insurance Company with the bank, and this amount was entered upon the; books of that corporation as a demand loan to .it by Beecher,. Sehenck & Co. Subsequently, but when, does -not appear, the American, Steam Boiler Company made its promissory note, dated. May 2, 1893, by which it promised to pay, on demand, to Bepcher,. Sehenck & Co. or order, $21,000, reciting that there had been deposited as collateral security for the payment of that note certain •securities therein named. This note was signed by the president, and assistant secretary of the American Steam Boiler Company, and it is for the balance due upon such note that this demand was, made. We think that the referee was clearly right in holding that this constituted a valid demand against the corporation, and that the corporation was liable to the holder of this note for dis-balance due. It is, as before stated, undisputed, that the vice-, president of the corporation received to his order a. check for $21,-000, that he deposited that check in the bank to the credit of the? corporation, and that subsequently a demand note the amount that he had received was given by the officers of the corporation. The money thus went into the hands of the corporation, was used by the corporation for its own purposes, and thus was constituted a valid obligation of the corporation; and the execution of the-demand note was a simple recognition by the corporation of its-obligation to repay the amount that it received. The.disposition made of this money by the-officers of the corporation was entirely immaterial. It received the money, and. subsequently gave its obligation to repay it; and neither-the corporation making the loan,, nor the bank to whom the obligation to repay the loan was transferred, is responsible for the application made by the corporation of the money that it had -received as the consideration for the note-The evidence is conclusive that this note was executed prior to-the appointment of the receiver of the ..American Steam Boiler Company; and the entry on'the books-of Beecher, Schenck.& Co. as to this loan of $21,000 is not sufficient to overcome the presumption that attaches to the receipt by the American Steam Boiler-Company of the money and its giving this obligation to repay the same.

We deem it entirely unnecessary to consider the relations between the Chatham National 'Bank and the American Steam. Boiler Insurance Company prior to May 2, 1893, when this check was given. It is clear that at that time a debt was.owing by the-American Steam Boiler Company to the Chatham National Bank of upward of $21,000. As between the corporation and the bank there is nothing to show but that that was a valid and subsisting-claim against the corporation in favor of the bank. We assume-that it also appears that this check of Beecher, Sehenck & Go. for $21,000 was paid to the'bank on account of'that indedtedness. And we think it clear that that created a valid obligation on the-part of the steam boiler company to Beecher, Sehenck & Co. to-repay that snm of -money. There is not the-slightest evidence to-substantiate a claim that this money was received in any form than as a loan by Beecher, Sehenck & Co. to the steam boiler-company, unless it may be said that some inference may be drawn, .from the entries in the books of Beecher, Schenck & Go.; but these-are entirely insufficient to overcome the case made out by the-'claimant showing a payment to the steam boiler company o£ ’§21,000, and its appropriation of that sum, followed by a note ■signed by the officers of the company, by which it agrees to repay the same that it had received.

It is unnecessary to discuss the question as to the power of the president and secretary to execute a note of the corporation. The corporation was an insurance company. It had to borrow money and there is nothing in its by-laws to restrain its officers, when it borrowed money, from giving the usual obligations acknowledging the liability to repay the money borrowed; and we thinlc ■without further discussing the subject, that, as to third parties, a •note given under such circumstances was a valid and subsisting; obligation of the corporation, and that the referee properly so-held.

The order and judgment should be affirmed, with costs.

All concur.


author: PATTERSON, J.

text:
    Charles C. Pinckney, App’lt, v. Albert M. Darling, as Sheriff, etc., Resp’t.

      (Supreme Court, Appellate Division, First Department,

      Filed April 10, 1896.)
    1. Sale—Vesting of title.
    Where, by an agreement between buyer and seller, the seller Is to do anything to put the goods in that state or condition in which the purchaser would he bound to accept them, or where anything remains to be done to ascertain quantity or quality before the duty to deliver attaches, or where the buyer is bound to any condition precedent, the title will not pass.

      2. Replevin—When lies.
    A vendor, who has merely the right to rescind for fraud, cannot, where the property is seized under an execution against the purchaser before I any steps by the vendor towards rescission, maintain replevin against the- ! sheriff.
    3. Conversion—When lies.
    By giving notice and expression of his election to rescind the contract,, the vendor puts himself in position, technically, to maintain an action for conversion.
    4. Same.
    His subsequently acquiring possession of the goods, by process of replevin or otherwise, will not necessarily defeat his right to maintain trover, though it will go in mitigation of damages.
    6. Same.
    Where a levy is made, even though property is not removed from the-actual possession of the owner, or where the property is restored to his-possession, an action of trover will lie.
    6. Fraud—Insolvency.
    The fact of insolvency and the failure of a debtor to disclose the condition of his business, unless there is an intent not to pay for what was purchased, do not constitute such fraud as will entitle a creditor to rescind a, contract. _ _____
    Appeal from a judgment in favor of defendant, and from art order denying a motion for a new trial.

      J. M. Bowers, for app’lt; T. Cleveland, for resp’t.
   PATTERSON, J.

This appeal is from a 'judgment in favor of! the defendant, entered by direction of the court after a trial of the issues, and from an order denying plaintiff’s motion for a new trial.! The pleadings present a somewhat unusual situation as regards! the attempt at enforcement of a claim of the character sued uponi here. The facts as they appear are substantially the following:: The defendant, the sheriff of Suffolk county, on February 18,1892, levied upon certain personal property in the possession of the Orient Manufacturing Company at its works, in Suffolk county,, under an execution against that company issued upon a judgment' obtained by the firm of Crenshaw & Wisner, merchants in the city of New York, and also described as having been the agents of thei Oriental Manufacturing Company. On or about the 2d of March, 1892, the plaintiff, claiming the same property, began this action,, which was then in form an action in replevin, and caused a writ to be issued to the coroner of Suffolk county, who o'fl the same! day took the property from the possession of the sheriff, and held) it for the plaintiff, and that property was not rebonded, and never was in any form returned to the custody of the sheriff. For two years the action proceeded. upon the distinct baáis of its being ini replevin. In April, 1894, an application was made by the plaintiff to this court for. leave to amend the complaint, and to set up another cause of action, which leave was accorded; and thereupon the plaintiff inserted in the complaint a second count, charging the sheriff with the unlawful conversion of the merchandise, and asking a judgment for damages occasioned by such conversion. Upon this state of the pleadings, the cause came to trial, and the effort on the part of the plaintiff was to establish his own title to and right of possession of the goods at the time this action was instituted; or, failing in that, to establish his right to recover damages for the conversion of the goods, upon the ground that their retention by the sheriff after demand was unlawful, and authorized a recovery as in an action of trover. The facts appearing in evidence upon which these respective claims of the plaintiff are based must be stated in detail.

Mr. Pinckney, the plaintiff,' was the proprietor.of certain phosphate beds in South Carolina, the product of which beds was sold) in the market. The Orient Manufacturing Company was a cus-: tomer of Mr. Pinckney. All of-the transactions of the Orient: Manufacturing Company with Mr. Pinckney were had through a> broker in Baltimore, who represented the plaintiff; and for several years the Orient Company and its predecessor in business had1 purchased phosphate from Mr. Pinckney through the Baltimore broker. All of their dealings were carried ón by correspondence, between the broker and Crenshaw & Wisner, officers or agents of the Orient Company.

On the 14th of December, 1891, Mr. Pinckney’s broker in Baltimore made an offer in writing to the Orient Company of a certain quantity of phosphate, in a letter which is as follows;

“ December 14,1891.

•‘‘Messrs. Orient Manufacturing Company.

“ Mr. C. C. Pinckney, Jr.

“A cargo of about six hundred tons sand-rock phosphate from Magnolia Mines, South Carolina, hot air dried. All moisture over 2 per cent, to be allowed for at $6.00 per ton, 2,240 lbs., delivered to buyer’s schooner at seller’s wharf, Ashley river, South Carolina. Actual sworn weights. Prompt shipment. Payable, cash or by four months’ note, to buyer’s order, from date bill lading, adding ■interest at six per cent. P. at buyer’s option.”

On the 15th of December, 1891, the contract proposed in the letter above quoted was accepted by the Orient Manufacturing-Company through John H. Wisner, its treasurer, by a letter dated on the last-mentioned day, in which it is stated, among other things:

“Contract for sale of Magnolia rock herewith accepted. The clause about sworn weights we presume to be intended for output weights heretofore, but it is not clear. We shall be glad if you will amend the contract to cover this point.” And, “ We have a ■wire from our Mr. Armstrong advising the charter of a vessel now in Wilmington, North Carolina, and to proceed at once to loading point on the same date.”

The plaintiff’s agent at Baltimore wrote to Mi; Wisner, the treasurer, acknowledgedging the receipt of his letter, and said:

“Glad your man got vessel so promptly. ' Give us her name, please, and siza The clause about sworn weights referred to in ■contract means just as we have delivered heretofore.”

On the 17th of December, Mr. Wisner, the treasurer of the ■Orient Company,, wrote to the agent of the plaintiff at Baltimore a letter containing, among other things, the following:

“The vessel we have chartered to load in Charleston is the ‘Emma Knowlton,’ and we hand herewith copies of the charter •party. Will you kindly pass them to Mr. G. C. Pinckney, Jr., for inspection?”

On the 18th of December the plaintiff’s agent in Baltimore -wrote to the Orient Manufacturing Company as follows:

“Note you have taken the schooner ‘Emma Knowlton’ to load the cargo of Magnolia rock, and have handed the charter party to Mr. Pinckney. Inclosed, we beg to hand you note for this cargo (referring to the broker’s note).”

On the 30th of December, 1891, the agent of the plaintiff at Baltimore, wrote to Mr. Wisner, the-treasurer of the Orient Company, inclosing the bill of lading for the cargo per schooner Knowlton; and on the same day the receipt of that bill of hiding wras acknowledged by the Oriental Manufacturing Company.. On the 20th of January the Orient Company sent to the broker of Mr. Pinckney at Baltimore the weigher’s returns of the cargo of the Emma Knowlton, the receipt of which was acknowledged on January- 21, 1892. And on the 27th of the same month the agents wrote to the Orient Company that those weights were approved by Mr. Pinckney, and asked for a prompt settlement. On the-30th of January, 1892, a note at four months of the Orient Manufacturing Company for $3,184.86, dated back to December 4, 1891,, was forwarded in settlement.

This correspondence contains the whole history of the transaction concerning the purchase and sale of the cargo of phospháterock, the subject of this action. It will be observed that there-was not one word of communication between the parties other than what is contained in this correspondence. It appeared in evidence at the trial that the Orient Manufacturing Company, at the time-the transaction was entered into, was, as matter of fact, in some-financial embarrassment; and the effort was made by the plaintiff" to show that the concern was actually, and to the knowledge of those engaged in its management, insolvent, and a claim is based-upon that state of facts which will presently be further considered.

Upon the proofs as they appear from the correpondence above-quoted, it is claimed by the plaintiff that he was entitled to repossess himself of the goods in an action of replevin, for the reason-that the title thereto never passed out of him, and that the facts-proved indicate that there was no intention that the title should, be divested from him until after the goods were weighed, the returns accepted, and the merchandise paid for, either in cash or by a good note of a solvent maker. We do not see how it is possible-to infer from the correspondence as it is spread out before us-that the contract entered into between the plaintiff and the Orient. Manufacturing Company was not fully performed, or how the-transaction remained incomplete in any sense. It is not to be disputed that where, by an agreement between buyer and seller, the-seller is to do anything to put the goods in that state or condition; in which the purchaser would be bound to accept them, or that where anything remains to be done to ascertain quantity or qualitjr before the duty to deliver attaches, or where the buyer is bound1 to any condition precedent, the title will not pass. But this case-falls within neither of these conditions. The clear intention of the-parties as expressed in the contract is-that the goods and all right, to them should pass to the purchaser on delivery. They were to-be delivered on board the Orient Manufacturing Company’s own chartered vessel. That company not only accepted that delivery from the plaintiff at the port of shipment in South Carolina named in the contract, but the plaintiff’s agent subsequently sent to it the-the bill of lading, and thus the consignee got the muniment off title in addition to the actual possession; and so complete dominion was acquired over the goods by paper title voluntarily given andt actual possession. The weighing of the goods was clearly a matter of detail subsequent to the passing of title and possession, and1 merely to determine the exact quantity that should be paid for att the fixed price of the contract on sworn returns. Such returns^ were made, and, furthermore, were accepted by Mr. Pinckneys • and by that acceptance every term of the contract was complied! with, except payment after delivery. The giving of a note was im performance of the contract, and was intended to be, and was re-ceived as, payment for the cargo. The case, therefore, is one in which an action for replevin will not lie, because, if anything adverse to the Orient Company is to be deduced from any feature of the transaction; it is not the want of title to the goods levied on by the sheriff, which were those ex Emma Knowlton, but only an inference of fraud on the part of the officers of that company whereby Mr. Pinckney was induced to part with the title to and possession of his goods; and whether that inference may be drawn will be the subject of further inquiry. We have, then, here presented, substantially the same state of facts as that which arose in the case of Wise v. Grant, 140 N. Y. 593; 56 St. Rep. 496. The title and possession of the plaintiff, even if parted with by fraud of the Orient Company, passed to the purchaser, notwithstanding the .fraud, subject to the right of the seller to rescind for the fraud; and meantime, and until the right of rescission was exercised, the title and possession remained in the purchaser; and when the property was seized by virtue of an execution against the purchaser, and before any step towards rescission was taken by the seller, the action of replevin could not be maintained against the sheriff. It was in accordance with this view, and in consequence of the decision of the court of appeals in Wise v. Grant, that, two years af.ter this action was commenced, the plaintiff undertook to reconstruct it, by adding the second cause of action, namely, that in conversion against the sheriff.

It is shown in the proofs that although the property was taken on a replevin writ, and thus actually passed out of the possession of the sheriff, nevertheless on March 1, 1892, and before the sheriff gave up the property to the coroner, the plaintiff, through his attorneys and in writing, demanded “the immediate return of his property now in your hands, under an execution upon the judgment of. Crenshaw and Wisner against the Orient Manufacturing Company, consisting of five hundred and twenty-six (and a fraction) tons Magnolia phosphate rock now in the Orient Manufacturing Company’s works. Said rock was obtained by the fraud of said company from Mr. Pinckney, and he claims the same, and has rescinded the sale and delivery of said rock to said company.” At about the same date, the plaintiff, through his attorneys, demanded the' merchandise from the Orient Manufacturing Company, and stated his resolution to rescind the sale and delivery thereof, as having been induced by fraud of the officers of the Orient Company ; and he offered to return at the proper time the note which was received in settlement, By giving this notice and the expression of his election to rescind the contract, the plaintiff put himself in a position, technically, to maintain an action for conversion. His subsequently acquired possession of the goods, by process of replevin or otherwise, would not necessarily defeat his right to maintain trover, although, of course, it would go in mitigation of damages; for, the goods being restored to him on the writ of replevin, the damages in controversion would be merely such as were suffered by reason of the interference of possession, and the deprivation of his right of dominion over his own property. But, so far as his right to the maintenance of the action is concerned, there is no doubt that the exercise of authority over personal property, to the exclusion or in defiance of the real owner’s right, is a conversion; and where a levy is made, even al-; though the property is not removed from the actual possession of! the owner, or where the property is restored to his possession, thel action of trover will lie. Reynolds v. Schuler, 5 Cow. 323. AndJ so it has been held that, to support trover, it is not necessary even! to show a manual taking of possession, but that the exercise of! dominion over the property, to the exclusion of the real owner, and without any attempt on the part of the defendant to apply the property to his own use, constitutes a conversion. Bristol v. Burt, 7 Johns. 254. Thus, finding in this case that the plaintiff' has put himself in a position, by notice and demand, while the sheriff held the goods, to institute, technically, the action, it be* comes necessary to inquire whether there was any proof made or offered at the trial sufficient to go to the jury, and upon which they might have found that the plaintiff was entitled to rescind' the contract for fraud. This becomes of paramount importance in this case, notwithstanding the fact that the damages by reason of the return of the property might be insignificant; for, upon the disposition of the case made by the learned judge at circuit, the n'ecessary result was the entry of a judgment in favor of the defendant, the sheriff, for the valve of the merchandise, and that judgment is now outstanding against the plaintiff.

The plaintiff urged that his right to rescind the contract arises from fraud or fraudulent practices on the part of the officers of the corporation respecting the transaction in and by which he was induced to part. with his goods to the Orient Company. We have already seen that of actual representatious concerning the condition of the company or its solvency, or the amount of its property, or of its business, there were none. The plaintiff has endeavored to establish by circumstances, from the books of the company, and- other evidence of its condition, and of the value of its assets and credits, that it was actually and hopelessly insolvent at the time the transaction was entered into for the purchase and' sale of the merchandise under the particular contract involved in' this action. The elements of fraud that would give rise to a right to rescind this contract are so well understood that it is scarcely necessary to cite authorities. It is not fraudulent per se, for a person in embarrassed circumstances to buy goods, with-, holding the information from the seller of the actual condition of his business affairs. It seems to be a cardinal factor in cases of this character that there must exist an intent on the part of the purchaser to cheat the seller, or, as said in Nichols v. Pinner, 18 N. Y. 295, there must exist, at least, an intention to do an act the necessary result of which will be to cheat and defraud another. And as said in the case of the Phœnix Iron Co. v. The Hopatcong and The Musconetcong, etc., 127 N. Y. 206; 38 St. Rep. 66, the fact of insolvency and the failure of a debtor to disclose the condition of his business, unless there is an intent not to pay for what was purchased, do not constitute such fraudas would entitle a creditor to rescind a contract. And so, also, in the case o£ Hotchkin v. Third. Nat. Bank, 127 N. Y. 329; 38 St. Rep. 754, it is said in the opinion of the court, that the law is well settled in in this state that the mere omission of a purchaser of goods on credit to disclose his insolvency to the vendor, in the absence of any attempt to defraud, will not avoid the sale, although the fact if known to the seller would have affected the credit of the purchaser. And in Morris v. Talcott, 96 N. Y. 100, it is said:

“ .It is well settled in this state that an intent to defraud cannot be imputed to a party who contracts a debt knowing that he is insolvent, merely from the fact of his insolvency, and his omission, upon a purchase of property upon credit, to disclose .such condition to his vendor. A condition of known insolvency on the part of an intending purchaser of property, accompanied with an intention of acquiring the property of his vendor without paying for it, constitutes such a fraud as will made the vendee liable to arrest in an action for the debt. But the intention not to pay can no more be inferred from the mere fact of insolvency than the fact that insolvency can be inferred from the existence of an intention not to pay. In either case it is essential that the necessary facts be made out by competent evidence.”

Therefore, all the evidence that appeared in this case, and all the inference that may be deduced from that evidence with reference to the actual financial condition of the Orient Company, would be futile as constituting a right to rescind, unless it can be fairly deduced from all the circumstances of the case as they appeal-, or as it may be reasonably inferred they might have been made to appear by evidence offered and rejected at the trial, that the intent existed on the part of the agents of the Orient Manufacturing Company to get these particular goods from Mr. Pinckney, and not to pay for them. We think from an examination of the proofs that no such inference can be drawn. There can be no doubt that this Orient Company was conducting a going business, and conducting it in a legitimate manner. Messrs. Crenshaw & Wisner were the agents of that company, and had made large advances to it, to enable it to caryy on its business. These advances were honest loans of money and credit. The merchandise was bought of the plaintiff in the same way as all other merchandise which had been sold by Mr. Pinckney many times before, through his agent in Baltimore, to the Orient Company. No representation was made of any kind with respect to the business. There can be no doubt that Crenshaw & Wisner. advanced their moneys to keep the company on its feet, and it is shown bytheir own letter written to the other creditors of the company after its failure that the judgment which they entered, and under the execution on which the sheriff levied the goods in question, although they were honest creditors to the full amount'of that judgment, was one which they had obtained, “ not for the security of themselves, but one that would be used or might be used for the benefit of all creditors alike,” including the jilnintiff. In view of this letter, it is idle to contend that Crenshaw & Wisner entered into the contract with Mr. Pinckney for this cargo of merchandise simply for the purpose of obtaining his property by fraud to increase the corporate assets, or to feed the'fund to pay their claim for advances. Had they any such intention, they never would advised the creditors; immediátely their judgment was recovered, that that judg-_ ment was to be used as a basis for an arrangement for the benefit of all the. creditors On the 18th of February, in a circular sent to every creditor, they said they did not intend to make use of this judgment to secure preference for themselves, and proposing that1 all unsecured creditors, including themselves, should be treated alike. It appears sufficiently in this case that negotiations were pending with the foreign stockholders of the Orient Company to induce them to put money into that corporation to aid it in its business; and it was only upon receiving information that those stockholders would not come to the assistance of the company that Crenshaw & Wisner,.the agents and managers deemed it wise and for the interest of all to discontinue business, and to preserve the assets for the benefit of ail the creditors. That their action, which was begun in February, 1892, was not contemplated in December; 1891, seems to be an inevitable conclusion, and we are not able to find any where in the case any proof that these goods were procured from Mr. Pinckney by fraud with an intent not to pay for them, or in any such a way as'would entitle him to rescind Vne contract.

■ We have examined the exceptions taken during the progress of the trial; but, in the view that we take of the main questions of law and fact involved, it is unnecessary to consider them, as we the plaintiff cannot recover in any aspect in which the case was presented, and that the judgment should therefore be affirmed, with costs.

BARRETT, RUMSEY, and WILLIAMS, JJ., concur; VAN BRUNT, P. J., concurs in result.


author: CULLEN, J. PRATT, J.

text:
    Benjamin E. Valentine, Resp’t, v. Henry Schreiber, App’lt.

      (Supreme Court, Appellate Division, Second Department,

      Filed April 7, 1896.)

    1. Equity—Trespass.
    Repeated and continuous tresposses furnish good ground for equitable < relief.
    2. Easements—Creation.
    Easements may be created by agreements or covenants that one shall have a right or privileges in the state of another, as well as by expressed , grants.
    3. Same.
    No one can grant an easement greater in extent or duration than carved out of the' estate which the grantor has.
    4. Same—Lies tenant.
    ... A life tenant can create an easement, extending during his life.

      •S. Same—Executobs.
    Executors and trustees under a will with power to sell, may, in carrying out the provisions of the trust, convey an easement in favor of lands already sold, when such conveyance appears distinctly advantageous to the estate.

      <5. Same—Grant.
    A grant in gross is never presumed when it can be fairly construed as appurtenant to some other estate.
    '17. Same.
    Where the agreement provides that the parties shall have the use of the proposed way “ for access to and egress from their own lands lying near the same, and for the use of their survivors,” the right of way thus granted is not an easement personal to the grantee but is appurtenant to the lauds he then owned: and, on purchasing other lands lying near the road, he has a right of way over it to such tracks.
    .% Same.
    All easements, to which a land owner has a right in the soil of a third person, will pass to the grantee of the land under the general words of conveyance, “ together with all easements and appurtenances,” and even though tha word “easement” is omitted, the word “appurtenances” is sufficient to carry those rights. ____ .. ^
    '3. Same.
    Where a party acquires his easement by grant, his title will not be affected by a non-user, unless accompanied with an intent to abandon the easement.
    Appeal from a judgment in favor of plaintiff.
    Byron Traver and Davies, Stone & Auerbach, for app’lt; Benjamin E. Valentine, in pro. per.
   CULLEN, J.

One Samuel Wood, at the time of his decease, was seised and possessed of a tract of land at Woodsburgh, which, he devised to his executors and trustees upon certain trusts, and ■also empowered his executors to sell and convey the same. On November 7, 1885, the executors and trustees of Samuel Wood -conveyed to the plaintiff a tract of land fronting on the Woods-burgh boulevard and Franklin avenue. This conveyance cut off ■from access to the boulevard and Franklin avenue a tract of which the trustees remained the owners, lying in the rear of the tract •"Conveyed to the plaintiff. For this reason the deed to the plaintiff ■contained a provision authorizing the grantors to extend another street, called “Neptune Avenue,” through the premises conveyed, upon conveying to the grantor an equivalent amount of equally ■desirable land. The rear plot, which remained in the ownership and possession of the trustees, is called the “20-acre lot." In -July, 1886, the plaintiff and the trustees of Samuel Wood executed the following agreement:

“ This agreement, made by and between Edward T. Scheneclc •and Alfred L. Simonson, as surviving executors of and trustees under the will of Samuel Wood, deceased, parties of the first part, and Benjamin E. Valentine, party of the second part:

“Whereas, said parties are owners of real estate at Woodsburgh, fin the town of Hempstead, L. I., which is adapted for villa sites, 3but which has not yet been suitably opened by roads and streets ; and whereas, the parties are desirous of making such agreement in relation thereto as shall be advantageous to the premises of botht Now, therefore, the parties, in consideration of their mutual undertakings, agree as follows:

“(1) Said parties of the first part agree that the highway known, as ‘Franklin Avenue’ maybe extended on the northerly line thereof, where it passes through their premises, by increasing its width to a uniform distance of 60 feet, as adopted for other streets-on the Wood estate.

“(2) Said Valentine agrees that he will, at his own expense, build a fence of ceder along said northerly line, opposite his dwelling, like the fence on the southerly side of said Franklin avenue.

“ (3) Said parties of the first part agree that they will dedicate, and that said Valentine may open, for the purposes of a public-highway, having a width of 60 feet, a road through and along the-northerly line (or at a distance of 1 foot therefrom) of their lot, adjoining premises of said Valentine, known as the ‘20-acre lot of the Wood estate’ and designated on the annexed diagram by the-letter ‘A.’ This dedication and opening is to be without expense-to the parties of the first part, except for such surveyor’s fees and other disbursements as may be reasonably required for fixing the-boundaries, and for maps, etc.

“ (4) Said Valentine agrees that the parties of the first part shall' have a roadway and right to open a road 60 feet in width from the westerly terminus of said last-named road, over the premises-of said Valentine, designated on the annexed diagram by the letter ‘ B,’ substantially as indicated on -said diagram, to connect the said' road from the 20-acre lot of the Wood estate with said Franklin avenue or Sixth street. This to be taken in lieu of and as a substitute for the provision in deed of the parties dated November 7,. 1885, permitting the opening of Neptune avenue by the parties of the first part through land of said Valentine. And as an equivalent for the land of said Valentine so surrendered to the parties of the first part for said road, the parties of the first part agree to convey to the said Valentine that portion (of block 41, as shown on the map of Woodsburgh, filed in the Queens county clerk’s office) lying between boulevard, Sixth street, and Franklin avenue, which is designated on the annexed diagram by the letter ‘0.’’

“(5) Each of the parties hereto is to have the full and unrestricted right and privilege of access to and uses of all and every of said proposed roads and ways, and all parts thereof, for access-to and egrees from any and all of their own lands lying near the same, and for the use of- their survivors or grantees of any of the-said premises, without waiting for the acceptance of the same as-public highways by the town authorities.

“Witness our hands and seals this 26th day of July, 1896.”

After the execution of this agreement the plaintiff created and’ constructed a roadway through his own property from the 20-acre lot to the highway (Franklin avenue), and also a roadway along the whole north line of the 20-acre lot. The evidence showed that the defendant, who seems to have gone.into possession of the 20-acre lot in 1893 and 1894 used the part of the roadway on plaintiff’s land to store his wagons and farming utensils, and obstructed, plowed up, and destroyed the roadway over the 20-acre lot. This-action was brought for damages, and to restrain the defendant’s, trespass on' the plaintiff’s land and his obstructing and injuring-the road over the 20-acre lot. The special term rendered judgment for the plaintiff for six cents damage, and enjoined the defendant as prayed for in the complaint.

The only objection raised to that part of the judgment which enjoins the defendant from trespassing on the plaintiff’s land is that he should have been remitted to his action at law. The answer to this is that the trespasses were repeated and continuous, and this is a good ground for equitable relief. Broiestedt v. Railroad Co., 55 N. Y. 220.

The serious attack, however, on this appeal, is directed against the relief granted plaintiff as to his roadway or right of way over •the 20-acre lot. It is denied that, at the time of the commencement of the action, the plaintiff had any right whatever in thexoadway. As many objections are raised against such right, it-will be necessary to discuss them seriatim.

First, it is said that the agreement created no valid dedication of the roadway across the 20-acre lot. This may be conceded, but it-is immaterial to the disposition of the case. Granting that the-roadway never became a public highway, still the provisions of the agreement are express:

“ Each of the parties hereto is to have the full and unrestricted right and privilege of access to and uses of all and every of said, proposed roads and ways, and all parts thereof, for access to and. egress from any and all of their own lands lying near the same,, and for the use of their survivors or grantees of any of the said ^premises, without waiting for the acceptance of the same as public “highways by the town authorities.”

There is no force in the objection that this clause does not use the word “ grant,” or purport in express words to grant to the parties a right of way. It is settled law that easements may be-, created by agreements or covenants that one shall have a right or privileges in the estate of another, as well as by express grants. Such agreements are grants in effect. Washb. Easem. (4th ed.) 43; Stetson v. Curtis, 119 Mass. 268; Wetmore v. Bruce, 118 N. Y. 319; 28 St. Rep. 687.

The validity df this agreement is next challenged on the ground that the trustees under the will of Samuel Wood had no power to-, execute it. To support this claim is cited the rule, often stated, “ that no one can grant an easement out of land, in favor of another, unless he has entire interest in the soil.” Washb. Easem. 46. 1 am frank to say that I do not understand the exact meaning of the doctrine thus pronounced. If it be intended to assert that no-one can grant an easement greater in extent or duration than can be carved out of the estate which the grantor has, the rule is. plain, and unquestionably sound. But if it is intended to go further, and assert that no easement, valid as against any person, can be granted except by the owner of the entire fee, I think it is-unsound. Then, in Crippen v. Morss, 49 N. Y. 63, where one of several tenants in common granted an easement to a third party, it was held that- such grant was invalid only as to the other •tenants in common. I certainly can see no'reason why a life tenant cannot create an easement, extending during his life, as ■well as convey the land itself, or a part thereof, for the same period. The will of Samuel Wood devised his residuary estate which includes these, lands, to’his executors, and directed them to collect and receive the rents, and apply them for the purposes of the trust created by the will. Many of these trusts were annuities. On -this appeal the validity of the trusts created by Samuel Wood’s will has not been challenged. Therefore, we shall not discuss them. The provisions of the will we have referred to created an -active trust, and the trustees have the legal title to the lands during the life of the trust. It was shown that these have terminated.

I think the authority of the trustees to execute this agreement can also be upheld under the power of sale granted to them by the will. The lands were villa property, and could he best sold by division or subdivision into villa lots. For this purpose it was necessary they should have access to the highway. The agreement was beneficial to the estate, and was so found by the trial court. I can see no more objection to the execution of such an agreement with Valentine than the laying out of the streets on -the land itself, and selling lots on such streets, by which purchasers ■of the lots would obtain easements in the streets. If such were the advantageous way of disposing of the property, the trustees had power to adopt it, even though, as to the lands unsold, they would create easements in favor of the lands they might dispose ■of.

I agree with the counsel for the defendant that the grant of the right of way was not a grant in gross, personal to the plaintiff, but •appurtenant to the lands he then owned. The agreement próvides . that the parties shall have the use of the proposed roads, “for access to and egress from their own lands lying near the same, and for the use of their survivors or grantees.” The general rule is' "that a grant in gross is never presumed when it can be fairly con-' strued as appurtenant to some other estate (Washb. Easem. 45), j and certainly the language of the agreement supports the latter •construction (Huntington v. Asher, 96 N. Y. 604). The plain tiff | •still holds the premises then owned by him. He has since purchased a tract on the north of the roadway across the 20-acre lot. As owner of this last tract, he may have no right to use the road, but as owner of the first parcel he has the right to use it to go to the last purchase, or to any other point where he may be able to! •obtain exit. It will be seen, from tfie relative positions of thej property of the plaintiff and the 20-acre lot, that the roadway over; •the 20-acre lot was not necessary, nor could it be used as a means, •of obtaining access from plaintiff’s lot the highway. This part of the roadway was a mere cul de sac. When, therefore, the plaintiff was granted a right of way over it, he was entitled to go over át to any highway, or to any property which he might either havei owned or have permission to go over. In other words, he was entitled to go over it to any point where he could find an exit, and •a similar right to return; and the new purchase neither increased nor diminished his rights in this respect, nor did it increase the ■extent of his grant.

It is further claimed that the plaintiff has lost whatever right he had under this agreement with the trustees. The first ground of this claim is that, before the commencement of the action, he conveyed the lands he had first purchased to one Elizabeth H. Valentine, who, in turn, reconveyed to him, and that in neither conveyance was there, in terms, any grant of the right of way. We think it entirely clear that the right of way passed to the grantee in these -conveyances under the term “appurtenances,” as appurtenant to ■the land conveyed. This is the general rule of law. 3 Washb. Real Prop. 394. The cases cited by the defendant’s counsel are' ■not in point. The question involved in those cases is whether, by the conveyance, there was an implied grant of an easement in -other lands of the grantor,—a question entirely different from that presented here. The settled rule is:

“All easements, properly so called, to which a landowner has a right in the soil of a third person, will pass to the grantee of the land under the general words of conveyance, ‘together with all -easements and appurtenances,’ and even if the word ‘easements’ is ■omitted, the word ‘appurtenances’ is sufficient to carry those rights.” God. Easem. 71.

As the plaintiff acquired his easement by grant, his title would mot be affected by a nonuser, unless accompanied with an intention to abandon the easement. Welsh v. Taylor, 134 N. Y. 450; 47 St. Rep. 653. We think that the evidence did not conclusively establish such intention.

The judgment appealed from should be affirmed, with costs.

BROWN, P. P., and BARLETT and HATCH, JJ., concur.

PRATT, J.

(concurring).—This controversy relates to what has been called, but what seems to me to be rather proved to be, a right of way claimed by plaintiff over lands which defendant ■claims under alease. The plaintiff’s claim is founded upon the act of the trustees under the will of Samuel Wood, the common .■source of title. Wood owned all the land in his lifetime, and ■made and filed a map indicating that he contemplated opening certain streets or roads through his land. The trustees conveyed a part of the land owned by their testator to plaintiff in 1895, bounding the same in part by a highway known as “ Brower Point Road,” which, on the map, was called “Franklin Avenue." The first point in the description in this conveyance is at a point on this road (Franklin avenue) “opposite the northerly line of Neptune avenue as now owned.” The parties to that grant plainly contemplated the opening of other roads or streets; for it contained a ¡provision that if the grantors, within two years after their grant, ■should decide to extend said Neptune avenue through the preni.áses conveyed, they should hqve the right to do so, by conveying to plaintiff an equivalent amount of other equally desirable land to compensate for that so taken for the said street, and complying with other terms. Thereafter, and within said two years, the grantors decided to extend this Neptune avenue, and made arrangements with'plaintiff, pursuant to the reservation in his deed, for that purpose. They accomplished this object by means of two instruments. One of them was an agreement under seal, which provided the terms of the opening of the road through the land conveyed to plaintiff in 1885, and specified the land which the trustees should convey to him in lieu of that which they took for the extension of Neptune avenue. The other was a new conveyance of land in lieu of that taken for the Neptune auenue extension. This agreement clearly shows that the parties contemplated that the roads which they there specified should ultimately become highways, but that, in view of the fact that the offer of dedication for that purpose must be accepted by the public before the roads should become lawful highways, they provided that each should have “full ahd unrestricted right and privilege of access to and uses of all! and every part of said proposed roads and ways, and all parts thereof, for access to and egress from any and all of their own lands lying near the same, and for the use of their survivors and grantees, * * * without waiting for acceptance by the town authorities.” The new proposed road was indicated on the said map, and appropriated part of plaintiff’s land, leaving the balance included in the angle formed by the old Brower Point road (Franklin avenue) and the proposed road. The land appropriated from plaintiff’s lot was marked “ B ” on the map. The proposed new road then ran on beyond plaintiff’s land, and on one side of premises owned by the trustees; this extension being marked “A” on the map. The two strips, A and B furnished means of access to one of the trustees’ lots which was otherwise inaccessible from the old Brower Point road (Franklin avenue). The plaintiff at that time did not own any land along the strip A, and the letter of the latter clause of the agreement would seem to limit the use of the strips A and B, until acceptance b,y the public, to the purposes of “access to and egress from any and all their own lands lying near the same.” Strictly speaking, this would seem to limit the plaintiff’s use of the proposed new road to the part marked “B,” but would give to the trustees the right to use both B, and its extension, A. But I do not think that is the true construction in view of other clauses of the agreement. The plaintiff had the right, under this agreement, to “open, for the purposes of a public highway, having a width of sixty feet, a road * * * designated on the annexed diagram by the letter lA.’ ” In other words, the plaintiff thereby acquired just as good right to open the strip A, and keep it open, through the land of the trustees, as they had to open the strip B through his land, and keep it open. It is quite too much to assume that he should not, under these circumstances, have the right to use the strip A, although he did not, at that time, own land lying thereon. Non constat he then contemplated doing just what he subsequently did do, namely, buying land from other parties along the strip A, opposite the trustees’ land. This was followed by his actual use for several years of the entire strips, A and B, for access to his subsequent purchase, and evinces a practical construction between the parties to the agreement of his rights thereunder. We therefore reach the conclusion that one of the objects of this so-called road agreement was to give plaintiff and his grantees a right of way over the entire strips, A and B, at his will and pleasure, and.especially so after his subsequent purchase along the strip A.

We may now obtain a clearer view of defendant’s contention that this road agreement was not within the power of the trustees under the will of their testator. I think it was within those powers for two reasons. In the first place, this road agreement was really a part of the original grant by the trustees to plaintiff. It was made in pursuance of a reservation contained in that grant, -and the trustees had just as much right to exercise their option, thus reserved, and agree with plaintiff upon the terms thereof, as they bad to make the grant itself. The latter right is not controverted. In the next place, the trustees evidently deemed that this proposed road, when accepted by the public, and the private right of way thus in the meantime obtained by them over plaintiff’s land from the junction of Neptune avenue and the old Brower Point road (Franklin avenue) to their lot lying along the strip A, was beneficial to the trust estate. We have no difficulty in seeing that it was beneficial to the estate. Certainly, the learned trial judge was justified in such a finding by the evidence before him, and that would seem to satisfy the requirements of the will.

We do not understand that defendant’s landlord, or the defendant himself, each of whose rights are subsequent to the plaintiff’s, •claim any right under the registry act. The only ground upon which the defendant claims the right to shut up this strip, A, are the want of power in the trustees to make this road agreement, and a theory of abandonment of the plaintiff’s right of way. I do not think the theory of abandonment is well founded.