author: Putnam, J. Herrick, J., (concurring). Mayham, P. J., (dissenting).

text:
    The People ex rel. Singer Manufacturing Company, App’lt, v. Edward Wemple, as Comptroller, etc., Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed May 8, 1894.)

    Taxes—Foreign corporation.
    A foreign corporation is not taxable on investments of undivided profits in real estate. '
    Certiorari to review an assessment of taxes made by the comptroller of the city of New York. •
    Lowrey, 'Stone & Auerbach (Julien T, Davies and Wm. A. Poste, of counsel), for relator; T. H. Hancock, Atty. Gen. (John W. Hogan, of counsel), for resp’t.
   Putnam, J.

There is no dispute between the parties as to the facts of this case. The relator is a foreign corporation, with a paid up capital of $10,000,000, on which, for the year ending November 1, 1890, a dividend of T2j- per cent, was declared. Of that capital, during said year, $372,397.10 was employed in the state in the business of the corporation. During the last six months of the same ypar,, relator invested $900,000 in real estate in the city of New York, and which was purchased with its undivided profits or surplus. The comptroller, claiming that he was authorized so to do, under the provisions of chapter 542, Laws 1880 (as amended by chapter 361, Law's 1881; chapter 151, Laws 1882 ; chapters 359, 501, Laws 1885; and chapters 193, 353, Laws 1889), assessed the tax authorized by said act upon the amount of capital stock employed by relator in this state as aforesaid, viz. $372,397.10, and also upon said surplus of $900,000, so, invested in real estate. ' 1

The only question submitted is whether the comptroller was authorized to include in the assessment against relator said real estate so purchased by it with its surplus or undivided profit If he could legally make such assessment, his authority must be found in the statutes above referred to.

Section 1 of the act of 1880, as amended, provides as follows : “Hereafter it shall be the duty of the president or treasurer of every * * * corporation * * * liable to be taxed on its corporate franchise or business, as provided in section 3 of this act, to make a report in writing to the comptroller, annually, on or before the fifteenth day of November, stating specifically the amount of capital paid in, the date, the amount, and rate per centum of each and every dividend declared by their respective corporations * * * during the year ending with the first day of said month.”

The section further provides that in any year when any such corporation shall fail to make a dividend, or make one less than 6 per cent, on the par value of its capital stock, the officers of the corporation shall, between the 1st and loth of November, forward to the comptroller a certificate containing a statement of the cash value of the capital stock of said company, at a sum not less than the average price said stock sold for during said year.

Section 3 of said act provides as follows: “ Every corporation, * * * now or hereafter incorporated, organized or formed under, by, or in pursuant to law in this state or in any other state, or country, and doing business in this state, except * * *, shall be liable to and shall pay a tax upon its franchise or business, into the state treasury annually, to be computed as follows: If the dividend or dividends made or declared by such corporation, * * * during any year ending with the first day of November, amount to six or more than six per centum upon the par value of its capital stock, then the tax to be at the rate of ¿ mill upon the capital stock for each one per centum of dividends so made or declared; or if no dividend be made or declared, or if the dividend or dividends made or declared do not amount to six per centum upon the par value of said”capital stock, then the tax to be at the rate of 1J mills upon each dollar of the valuation of the said capital stock made in accordance with the provisions of the first section of this act.”

Section 11 provides as follows, viz.: “The amount of capital stock which shall be the basis for tax under the provisions of section 3 of this act, in the case of every corporation * * * 1 * liable to taxation thereunder, shall be the amount of capital stock employed within this state. In making to the comptroller the report in writing or certificate of estimate and appraisal of the capital stock of such corporation * * * provided for by the first section of this act, it shall be the duty of the president or treasurer thereof, as the case may be, to state specifically the amount of capital stock employed within this state, of such corporation * * * Whenever the comptroller is dissatisfied with such report * * * of any corporation * * * whose capital is only partially employed within this state, he is authorized and émpowered to ascertain, fix and determine the amount of capítal employed within this state, and to settle and account for the taxes and penalties duet the state thereon.”

In my view, under the above provisions of the act of 1880 and the acts amendatory thereof, the action of the comptroller in assuming to assess the $900,000, surplus moneys invested b_y relator-in real estate, was unauthorized. The statute only authorizes the comptroller to levy a tax upon the capital stock of a corporation. It will be observed that by the provisions of § 11, above quoted, the basis of thetax against every corporation under the provisions of § 3 of the act shall ,be the amount of its capital stock employed within this state. Section 11, supra, leaves in force the provisions of § 3, except in limiting the franchise tax, authorized by the act, to capital stock employed within the state. Section 3, above quoted, provides that, if a dividend of six per cent, or upward is made by a corporation during any year ending November 1st, the tax shall be at the rate .of one-fourth mill upon the capital stock of the corporation for each one per cent, of dividend so made. If no dividend is made, or one less than six per cent, on the par value of the capital stock of»the corporation, then the tax is to be at the rate of I-J mills upon every dollar of the valuation of the said capital stock made in accordance with the provisions of the first section of the act. Section 1, as we have seen, provides for an appraisal of the value of the capital stock of the corporation at its actual cash value where no dividends have been declared, or a dividend less than six per cent. The act in question, then, only provides for a tax against relator to be assessed upon its capital stock. It did not authorize the comptroller to assess the corporation on its surplus or undivided profits. ' In Williams v. W. U. Tel. Co., 93 N.Y. 162-188, Judge Eabl discusses the meaning of the words “ capital stock ” as follows, viz.: “ The 1 capital stock,’ in this section, does not mean share stock, but it means the property of the corporation contributed by its stockholders, or otherwise obtained by it, to the extent required by its charter. While the term ‘capital stock’ is frequently used in a loose and indefinite sense in this section ard in legal phrase generally, it means that and no more. In State v. Morristown Fire Ass'n, 23 N. J. Law, 195, Green, C. J., said: ‘The phrase “capital stock” is very generally, if not universally, used to designate the amount of capital to be contributed for the purposes of-the corporation. The amount thus contributed constitutes the “capital stock” of the company.’ In Burrall v. Bushwick Railroad Co., 75 N. Y. 211, Folger, J., defined ‘capital stock’ as ‘that money or property which is put in a single corporate fund by those who, by subscription therefor, become members of a corporate body.’ In Barry v. Merchants Exchange Co., 1 Sandf. Ch. 280, Yice Chancellor Sandford said: ‘ The capital stock of a corporation is, like that of a copartnership or joint-stock company, the amount which the partners or associates put in as their stake in the concern.’ By loss or misfortune, or misconduct of the managing officers of a corporation, its capital stock may be reduced below the amount limited by its charter; but whatever property it has up to that limit must be regarded as -its capital stock. When its property exceeds that limit, then the excess is surplus. Such surplus belongs to the corporation, and is a portion of its property, and, in a general sense, may be regarded as a portion of its capital, but, in a strictly legal sense, it is not a portion of its capital, and is always regarded as surplus profits.”

See, also, Barclay v. Culver, 30 Hun, 1-5; State Bank of Wisconsin v. City of Milwaukee, 18 Wis. 281. As suggested above, the only authority which the comptroller possessed to tax the relator was derived from the statutes above referred to and quoted, -and those acts only authorize him to assess relator's capital stock, and not its undivided surplus. It is true that § 11, supra, of the act, providing^that the basis of the tax against a corporation, under the provisions of section 3 of the act in question, shall be the amount of capital stock employed within the state, and that the corporation, in making its report to the comptroller, shall report the amount of capital stock so used in the state, uses the word “ capital ” twice in the section instead of “ capital stock.” But it will be observed that it only authorizes the assessment upon the capital stock of the corporation, and in sections 1 and 3 of the act the tax authorized is also to be assessed on “ capital stock " of the corporation. I cannot believe that it was the intent of those who framed the statutes in question to authorize an assessment by the comptroller on the undivided profits or surplus of the corporations mentioned therein. If relator, during the year in question had only paid a divident of 5 per cent., the tax under § 3 of the act would have been 1-|- mills upon each dollar of the valuation of its capital stock made in accordance with the provisions of § 1 of the act. It seems to me that the language contained in § 3 necessarily limited the tax to the capital stock, and precluded the idea of an assessment on the surplus. Under § 1 the valuation of the stock is to be its actual value in cash, and not less than the average price said stock sold for during the year. The surplus, which the comptroller taxed, increased the value of the capital stock, which under the act is assessed. If the position of the réspondent can be sustained, a corporation can be taxed on its surplus and on its stock, which is increased in value by such surplus. To illustrate: A corporation has a capital stock of a million, and a surplus of equal amount, and makes a dividend of 5 per cent, per annum, all its capital stock and surplus being employed within this state. In consequence of-the large surplus the capital stock of the corporation is worth $2,000,000. The corporation then, according to the position taken by the comptroller, must pay the franchise tax assessed on the surplus of $1,000,000, and also on the value of its capital stock, which is doubled in consequence of such surplus. The effect of such a procedure must necessarily be to compel the corporation to pay a double tax on its surplus. In the case supposed, the surplus or undivided profits, under the acts in question, are taxed by the assessment of the capital stock of the corporation at its market value. The surplus necessarily increases the value of the stock, and the comptroller, in assessing the increase in value, taxes the surplus. To continue our illustration : A corporation with a capital stock, of one million, and a surplus of like amount, all employed in this state, during the year expiring November 1st, has made a dividend of 12% per cent, on the par value of its stock. Now, it is clear that the dividend is increased in amount, perhaps doubled, by, the surplus; and hence the franchise tax assessed by the comptroller under the provisions of § 3, supra, is increased, perhaps doubled. Therefore, whether a corporation pays a dividend of 6 per cent, or upward, or not, the surplus is necessarily taxed by the comptroller in assessing the franchise tax in question, because the-surplus necessarily increases the income of the corporation, and hence the annual dividend, and also increases the- market value of its capital stock.

• I conclude that the capital stock referred to in the act of 1880 and acts amendatory thereto is capital stock authorized by the charter or the corporation, and subscribed or raised by its stockholders, on which it pays dividends, and which it is obliged to maintain intact; not the surplus or undivided profits owned by it, however invested, which it can at any time turn into money, and divide among the stockholders. This surplus or undivided profits it is true, until divided, belongs to the corporation, increasing the value of the corporate stock; but it cannot be deemed capital stock, which can be assessed for the franchise tax authorized by the acts above mentioned. The views above stated render it unnecessary to consider the position taken by appellant that the surplus belonging to relator, so assessed by the comptroller, was not employed in the state, within the meaning of § 11 of the act of 1880 and acts amendatory thereto. I think the determination of the comptroller should be reversed with the usual costs.

Herrick, J., (concurring).

When a foreign corporation, whose , business is manufacturing, and the selling of its manufactured products, uses a portion of its surplus in the purchase of real estate, and holds the same as an investment, not using it in its business, I do not think that such purchase and holding is an employment of its capital stock within this state, within the meaning of the statute. “ The basis of the tax is the amount or portion of its capital in use here in the transaction of its ordinary business.” People ex rel. Southern C. O. Co. v. Wemple, 131 N. Y. 64; 42 St. Rep. 632. The holding of the real estate, and the receiving of rentals therefrom, is no part of the ordinary business of-the corporation. If the money so invested was not employed within this state, then it is not the subject of taxation here. People v. Am. Bell Telephone Co., 117 N.Y. 241; 27 St. Rep. 459. The determination of the, comptroller was therefore erroneous, and should be reversed.

Mayham, P. J., (dissenting).

The relator being a foreign corporation, doing business in this state, inits report to the comptroller for the year ending on the 1st of November, 1890, for the purpose of taxation, it stated the amount of capital stock employed in the state of New York was §372,397.10, on which it was liable, under the Laws of 1880 and 1881, to a tax of $1,163.74. The comptroller, in addition to the sum reported, found that within the six months next preceding the 1st of November, 1890, the relator had employed within this state $900,000 capital, the tax on which would amount to the sum of $1,406.25, making the aggregate tax imposed by him $2, 565.99. It seems conceded that this latter sum of $900,000 consisted of an investment by the relator, in April of that year, of about that amount in real estate in the city of New York, which it then held under leases for the purpose of its business. Notice of this assessment was given to the relator by the comptroller, whereupon the relator applied for a rehearing, which was granted; and on such rehearing the comptroller determined to readjust the tax, and affirmed the same, whereupon the relator sued out this writ of certiorari.

The principal question raised by the certiorari is whether the investment of this $900,000 of the surplus earnings of the relator is taxable under § 11 of chapter 542 of the Laws of 1880, as added by chapter 151 of Laws of 1882, and amended by chapter 501 of Laws of 1885. That section reads as follows: “ The amount of capital stock which shall be the basis for tax under the provisions of § 3 of this act, in the case of every corporation, joint stock company and association liable to taxation thereunder, shall be the amount of capital stock employed within this state. In making to the comptroller, the report in writing or certificate of estimate and appraisal of the capital stock of such corporation, joint stock company or association provided for by the first section of this act, it shall be the duty of the president or treasurer thereof, as the case may be, to state specifically the amount of capital stock employed within this state, of such corporation, joint stock company or association. Whenever the comptroller is dissatisfied with such report or certificate of estimate and appraisal as the case may be, of any corporation, joint stock company or association whose capital is only partially employed 'within this state, he is authorized and empowered to ascertain, fix and determine the amount of capital employed within this state, and to settle an account for the taxes and penalties due the state thereon.”

Doas this section authorize the comptroller to impose this tax on the surplus capital of a foreign corporation, doing business within this state, when the same is invested in real estate which is not used by the corporation in its business, but solely as a place of investment of its surplus earnings? The power of the comptroller to impose a tax upon a foreign corporation doing business in the state is not questioned to the extent that its capital stock is employed in this state; but the learned counsel for the relator insists that there is a distinction between the term “ capital stock ” and capital represented by the surplus earnings of a corporation, and that, as the surplus earnings of the relator were used in the purchase of property in this state, did not employ its capital stock within this state. A distinction is thus sought to be drawn between the capital stock of a corporation, measured by the number of shares of the same at its par or nominal value, and the additions or accretions to the par value of such shares measured by its surplus earnings, and that, before the use or investment of its surplus earnings in this state in the purchase oí real estate is not the use of any part of its capital stock in this state. It can hardly be denied that, until dividends of the surplus earnings of a corporation are declared and paid to the shareholders, such surplus belongs to the corporation, and constitutes a part of its capital, and that its aggregate capital is represented by the shareholders of its capital stock. It would seem, to follow, therefore, that the capital of a corporation is the amount of its aggregated assets, whether it consists of the paid-up capital of each individual share of stock, or the paid-up shares and the undivided accumulations of profits on the business. If this reasoning be sound, then the source from which the money is derived which was used by the corporation in this state for the purchase of real estate is immaterial, as it would be the employment of the capital stock .in this state, whether the funds received for the par value of the original stock or from the net profits of its business. In either event, it would be the lawful employment of the company’s capital stock in this state, and hence the subject of assessment and taxation.

The case of People ex rel. Am. C. & D. Co. v. Wemple, decided by this court, and reported in 38 St. Rep. 17, which was affirmed in the court of appeals in 129 N. Y. 558; 42 St. Rep. 400, seems to be analogous in principle to the one under consideration. It is true that the relator in that case was a domestic corporation ; but it became important in the decision of that case to consider what constituted the employment of capital in this state, and it was held that the balance of funds kept on deposit in bank in this state, the amount of rent paid for premises occupied by the relator in this stare, and the salaries paid to the officers of the corporation therein, could properly be regarded by the comptroller as capital employed in this state, for the purpose of fixing the amount of tax to be imposed on the corporation. The words “capital” and “capital stock ” seem, in § 11 of the act of 1885, to be used interchangeably. In that portion of the section imposing upon the president or other fiscal officer the duty of the corporation to make a report the words “ capital stock ” are used; and in the part of the section requiring the comptroller to make the assessment the word “ capital ” is used. For the purpose of this act, therefore, we think the words “ capital stock ” and “ capital ” were treated by the legislature as equivalent or synonymous, and employed in the same sense, and mean all the property of the corporation which it may properly use or invest in any business or pursuit in which it may lawfully use its capital or assets. We are also of the opinion that the purchase by the relator of these pieces of real estate, on which, at the expiration of the existing leases thereon, it intended to erect new buildings, to be used in part as offices for the company and for the office requirements of the company,” as appears in folio 32 of the case, was such an employment of the capital of the relator in this state as to bring it within the jurisdiction of the assessing and taxing power of the comptroller. It is true that the court of appeals in the case of People ex rel. Southern C. O. Co. v Wemple, 131 N. Y. 68; 42 St. Rep. 632, say : “ The basis of the tax is the amount or portion of its capital in use here in the transaction of its ordinary business.” In that case, however, it was held that a corporation of another "state, which engaged in a manufacturing business, maintained a sales agency in this state, which engaged in a manufacturing business, maintained a sales agency in another state, with a warehouse for its manufacturing, sold a portion thereof in the state, and kept large sums of money on deposit in the state, was doing business within the state, within the meaning of this taxing act. The court also in that case-says : “ How much that [tax] may be in any particular case is generally a question of fact to be • determined by the comptroller, under the procedure pointed out by the statute.”

The court also in this case holds that when a corporation of another state employs any portion of its capital here, and thus has the benefit and protection afforded by the laws of this state, to the extent of the capital employed, there is no reason why it should not be burdened by state tax to the same, extent as a domestic corporation. In the case of People v. Am. Bell Tel Co., 117 N. Y. 241; 27 St. Rep. 459, cited by the l’elator, the court held that it was not employing any of its capital in carrying on business in this state. It was a Massachusetts corporation, created under the laws of that state, with its office in Boston, where it made all of its contracts with independent corporations in this state, such corporations paying all the rental and royalty growing out of the contractual relation to the defendant in Boston, so that none of its capital was used or employed in this state; and Huger, J., says: “The Bell Telephone Company has no office or office agent or employe in the state of Hew York, unless the local corporations can be so denominated.” He then proceeds to show that the local corporations bear no such relation. We do not think that case is an authority against the validity of the tax imposed in. the case at bar. Hor do we think that the contention of the relator that the imposition of this tax upon the capital of the relator employed in the purchase of this real estate will subject the property of the relator to double taxation can be considered and taken as a ground for reversing the determination of the comptroller in this case. The power of the legislature to impose terms upon which foreign corporations may do business in this state is not disputed, and, under the authorities in this state and in the federal courts, cannot be questioned, so long as they do not violate the federal constitutibn or law regulating interstate commerce. The court cannot, therefore, relieve the relator from this tax, on the equitable ground that it is a double taxation, feo long as the use of its capital in this state makes it the subject of taxation by the comptroller, under the provisions of § 11 of chapter 501 of Laws of 1885. We are, therefore, of the Opinion that the assessment made by the comptroller was correct, and should be confirmed. Assessment of comptroller confirmed, and writ of certiorari quashed, with $50 costs and disbursements to the respondent


source: Caselaw Access Project

author: Hardin, P. J.

license: Public Domain

text:
    In the Matter of the Application of Daniel De Camp to Lay Out a Highway in the Town of Lansing, etc.

      (Supreme Court, General Term, Fourth Department,

      Filed May 18, 1894.)

    Appeal—Decision op county court—Highway.
    ■ An appeal does not lie from a decision of the county court, confirming the decision of commissioners appointed to lay out a highway.
    Appeal from an order granting an application to lay out a highway and assessing damages therefor.

      William W. Hare and T. E. Courtney, for app’lts; J. E. Oropsey, for resp’t.
   Hardin, P. J.

Chapter 568 of the Laws of 1890, known as the “ Highway Law,” contains the provisions under which the proceedings were prosecuted, and in § 89 it is provided that any party interested in the proceedings “may apply to the court appointing the commissioners for an order confirming, vacating or modifying their decision, and such court may confirm, vacate or modify such decision. If the decision be vacated, the court may order another hearing of the matter before the same or other commissioners. If no such motion is made the decision of the commissioners shall be deemed final. Such motion shall be brought on upon the service of papers upon adverse parties in the proceeding, according to the usual practice of the court in actions and special proceedings pending therein; and the decision of the county court shall'be final, excepting that a new hearing may be ordered as herein provided". If the final decision shall be adverse to the applicant no other application for laying out, altering or discontinuing the same highway shall be made within two years.” Ho provision is found in the statute inconsistent with the idea that it was the intention of the legislature to provide, in an unqualified manner, that “the decision of the county court .shall be final ” unless that court shall order a “new hearing.” Appellants have called our attention to In re Ryers, 72 N. Y. 1. In that case it was said that the act of 1869 gave an appeal on questions of law from the decisions of the county judge to the supreme court, and that the act of 1871 gave a similar right of appeal. Ho such provision is found ,-in the highway act. We should", therefore, follow the doctrine laid down in People v. Betts, 55 N. Y. 600. In re Swan, 97 N. Y. 492, is consistent with the views already expressed. We think the decision made by the county court was final, and that an appeal therefrom does not lie to this court. Appeal dismissed, with $10 costs and disbursements.'

All concur.


author: Hardiu, P. J.

text:
    Levi M. Algase, Resp’t, v. The Horse Owners’ Mutual Indemnity Association of Rochester, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed May 18, 1894.)

    1. Evidence—Pleadings.
    A party may put in evidence a portion, and deny the residue, of hid adversary’s pleading.

      2. Insurance—Assignee oe policy.
    Though the owner of a horse, killed by an engine, has been paid by the railroad company for its loss, the assignee of a policy on such horse may recover thereon against the insurance company.
    Appeal from a judgment in favor of plaintiff.

      Babcock, Sperry & Van Gleve, for app’lt; W. D. Bdmister, for resp’t.
   Hardiu, P. J.

On the 16th day of June, 1891, the defendant issued a policy of insurance or indemnity to John T. Brooks, upon his horse, wherein the défendant agreed, “ upon receiving satisfactory proofs of the death of said animal by disease, accident, or broken leg, to pay to the said insured, executors, administrators, or assigns, the sum of one hundred dollars, from its mortuary fund, within sixty days after the approval of the claim by its executive board.” It was averred in the complaint, and proven on the trial, that on the 13th day of August, 1891, Brooks, by a written indorsement upon the certificate, transferred arid assigned to the plaintiff all his “ right, title, and interest in said certificate, and to all advantages to be derived therefrom,” which assignment was in writing, and bears date the 13th day of August, 1891, and was executed in the presence of a witness, and thereafter, on the 15th day of August, 1891, the assignment was approved by Elsbree, the general manager of the defendant. It is averred in the complaint that the plaintiff became the owner and holder of the certificate. The answer of the defendant alleges 11 that at the time of said alleged indorsement upon said certificate the said plaintiff in this action loaned to the said John T. Brooks the gum of fifty dollars; that as security for the said loan the said John T. Brooks executed and gave a chattel mortgage or bill of sale of or upon said horse mentioned in said certificate, and upon other property, to the said Levi M. Algase, for the purpose of securing the payment to the said Levi M. Algase of said loan of fifty dollars that, for the purpose of further securing the said Algase for said loan, said alleged assignment of said certificate was made; that said consent given by defendant to said indorsement upon said certificate was so given for the purpose and to the extent only of permitting said insurance or certificate or indemnity to continue upon said insured property after the giving of such chattel mortgage or bill of sale, and for no other purpose was such consent given.” When the hearing commenced before the referee, the defendant’s counsel moved to dismiss the complaint on the ground that “it does not state facts sufficient to constitute a cause of action.” The motion was denied, and an exception was taken.

■It is to be observed that the defendant, in its motion, in no way pointed out any specific defect in the complaint; and we are of the opinion that, considering the allegations, of the complaint in connection with the allegations found in the answer, it appeared that a sufficient cause of action was stated, and therefore the motion was properly overruled. In Olmsted v. Keyes, 85 N. Y. 598, it was said: “A life insurance is not, like fire insurance, a contract of indemnity, but a mere contract to pay a certain sum of money on the death of a person, in consideration of the due payment of a certain annuity for his life. * * * Like every other contract to pay money, such a policy is a chose in action, with all the ordinary incidents of every other chose in action.”

Upon the hearing before the referee the plaintiff offered in evidence that portion of the defendant’s answer which alleged “that at the time of said alleged indorsement upon said certificate the said plaintiff in this action loaned to the said John T. Brooks the sum of fifty dollars; that as security for the said loan the said John T. Brooks executed and gave a chattel mortgage or bill of sale of or upon the horse mentioned in said certificate.” The defendant objected to the admission of the answer in evidence. The objection was overruled, and the defendant took an exception. In Mott v. Consumers' Ice Co., 73 N. Y. 543, it was held: ‘•'Where a party gives in evidence an admission in the pleading of his adversary, he is not estopped from questioning a portion thereof which is against him. He is at liberty to use the admission so far as it makes in his favor, and to disprove the residue.”

In Holmes v. Jones, 121 N. Y. 461; 31 St. Rep. 379, it was Leld: “ Statements, admissions, and allegations in pleadings are always in evidence for all the purposes of the trial. They are before the court and jury, and may be used for any legitimate purpose.”

In the course of the opinion, it was held: “ They are made for the purpose of the trial, and are before the court and jury, and may be used for any legitimate purpose.”

Our attention is called to Quinn v. Neeson, 48 St. Rep. 570; 21 N. Y. Supp. 106, by the appellant; but the case does not aid its contention, because it appears in the opinion that “ it was expressly charged that the answer might be considered by the jury as evidence in the case,” although it had not been offered in evidence. We are of the opinion that no error was committed by the referee in receiving that portion of the answer of the defendant in evidence which was offered at the hearing, nor in overruling the defendant’s motion to dismiss the -complaint on the ground stated. Williams v. Ins. Co., 9 How. Pr. 365; Peabody v. Washington Co. M. Ins. Co., 20 Barb. 841; Fowler v. N. Y. Ind. Ins. Co., 26 N. Y. 422:—are not applicable to the case before us, as they were cases where the question pre-' sented to the court arose upon demurrers.

2. We are of the opinion that no error was committed in receiving evidence that the plaintiff, at the time of the death of the horse, held security upon the horse for the indebtedness due to him from Brooks. The defendant, in its answer, had alleged the loan by the plaintiff to Brooks, and the giving of a chattel mortgage upon the horse in question; and it was competent for the plaintiff to prove that .the security thus referred to remained unsatisfied and unpaid,” to the extent of $50, which is the amount awarded by the referee. The case differs from Thomas v. Montauk F. Ins. Co., 12 St. Rep. 738.

3. Evidence was given that the horse died in November, 1891, after receiving injuries at the railroad crossing of the Delaware & Hudson Canal Company. Immediately after the injuries, information thereof was communicated to Mr. Fisher, the agent of the defendant, who went with a veterinary surgeon to see the horse, and to take charge of the horse, and the agent continued to visit the horse every day until he died, on the 23d day of November; and, after the death of the horse, Fisher furnished blank proofs of death to Brooks, and they, together, went to the defendant’s attorney’s office, and the proofs, after being made out, were left with the agent of the defendant, having been filled out by its attorney, who “ was the man that done the business all the way through.” The proofs were retained by the defendant, and, in the answer of the defendant, it is admitted that about December 1, 1891, “ defendant was notified of the death of said horse; that, about the same day, papers purporting to be proofs of loss were given to this defendant, which said defendant still retains.” We think the proof relating to the circumstances attending the making out of the proofs, and delivery of them to the defendant, were properly received, and that the court properly overruled the objection that “there is no proof of any proofs having been submitted to this company.” Prior to the commencement of this action, application was made to the defendant in respect to the loss claimed to have been sustained, and in reply to the application an officer of the defendant wrote a letter on March 24, 1892, in which it was stated that the company had “once decided against the claim, as being one of gross and willful carelessness,” although the officer writing the letter volunteered the statement in the following.language: “I shall advocate its payment.” We think no error was committed in receiving the letter in evidence, as it tended to corroborate the evidence already before the referee, to the effect that proofs had been submitted, and to establish the fact that the defendant bad refused to make payment of the claim before suit brought.

4. The circumstances attending the injuries of the horse, and the cause of its death, were fully detailed in the evidence, and, after considering them, the referee, upon the evidence relating to that subject, found “that such injury to said horse was caused by negligence of the president, managers, and company of the Delaware & Hudson Canal Company, and without any neglect or carelessness on the part of said John T. Brooks, who was driving said horse at the time of said injury; that at the same time the harness and wagon of said Brooks were broken and injured by the negligence of said company.” We think the evidence warranted the finding made by the referee. It being a question of fact, upon which there was some evidence, we are not disposed to disturb the conclusion reached by the referee in that regard. Nor arc we inclined to hold that the fact that Brooks presented a claim to the railroad company for damages sustained by reason of its negligence in injuring his horse, harness, and wagon, and gave a release to the railroad therefor, furnishes a defense to the defendant. It had issued its certificate of indemnity, and entered into a contract to pay in case of the death of the horse, if riot “ caused by the willful neglect or carelessness ; ” and, as the injury and death of the horse were caused without the negligence or carelessness of plaintiff or Brooks, the obligation of the defendant assumed in its certificate so held by the plaintiff at the time of the death of the horse should be enforced against the defendant. It does not appear from the evidence that the plaintiff aided Brooks in presenting his claim to the railroad comjiany, or in obtaining a settlement with it, for the damages which he had sustained, or in any way consented to a discharge of the mortgage which he held, against the property, or to a liquidation of the certificate which was collateral thereto; and in our opinion the evidence fails to establish any ground upon which the plaintiff should be prevented from a recovery upon the contract entered into by the defendant, and held by the plaintiff at the time of the death of the horse. Hathaway v. Orient Ins. Co., 134 N. Y. 409; 48 St. Rep. 230; Kellogg v. N. Y. C. & H. R. R. R. Co., 79 N. Y. 77; Winne v. Niagara F. Ins. Co., 91 N. Y. 192 ; Dakin v. L., L. & G. Ins. Co., 77 N. Y. 600. It is apparent from the pleadings and frpm the evidence, as well as the findings of the referee, that the defendant had notice of the assignment of the certificate to the plaintiff, and all his interest therein, prior to the death of the horse, and it appears that no act of the plaintiff has occurred which should deprive him of the interest acquired by him in the certificate. After the assignment the obligation of the defendant ran to the plaintiff, and he cannot be deprived of his interest in the certificate of insurance without his consent. Cromwell v. Brooklyn F. Ins. Co., 44 N. Y. 42.

Judgment affirmed, with costs.

All concur.


text:
    Anna Sullivan, Resp’t, v. City of Syracuse, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed May 18, 1894.)

    1. Evidence—Negligence-Condition after accident.
    In an action for negligence, evidence of the condition of the place, several days afterwards, where the accident occurred, is admissible if followed up by proof that the place has remained the same.
    2. Negligence—Contributory—Inference.
    Freedom from contributory negligence may be established from facts and circumstances warranting an inference to that effect.
    3. Municipal corporations—Streets—Notice of injury.
    A notice, which states that the injury occurred August 5th, is sufficient though it in fact occurred on August 4th.
    Appeal from a j udgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial on the minutes.

      Charles H. Ide, for app’lt; Hoyt & Farrington, for resp’t.
   Hardin, P. J.

Plaintiff’s action was brought to recover damages for personal injuries sustained by her while, on the 5th of August, 1891, in passing along Linden street, as she claims, she was thrown down by a loose or broken board in the sidewalk, and that on that occasion she received a severe blow across both her ankles, and ■'that she sprained both ankles, and received other bodily injury. Plaintiff is a widow, some 55 years of age, who supported herself by her own work; and she alleges she was passing along the sidewalk in question, carrying a basket of eggs to a customer of hers who lived on Harrison street, and that when near the sehoolhouse gate, on Linden street, she stepped upon a loose or broken board in the sidewalk, which flew up and struck her across the ankles with a severe blow. One witness who was called testified that the boards were broken, and that he had seen some of them in the gutter. Considerable evidence was given as to the condition of the walk at the time the injuries were received, and at times preceding the occasion of the injuries. It is insisted in behalf of the defendant that an error was committed in receiving evidence of the condition of the walk two or three days after the injuries occurred. When the attention of the trial judge was called to the objection made by the defendant, he observed : “ The condition that the walk was in two or three days afterward may be given, if there was no change in the condition from what it was at the time of the accident. If it is followed by evidence, that it remained the same, the evidence may be given. The jury will not consider it, unless it appears that the walk was in the same condition at this time—two or three days after—as it was at the time of the accident.”

We thing the trial judge committed no error in laying down the rule to be applied. Corcoran v. Village of Peekskill, 108 N. Y. 151; 13 St. Rep. 105, is unlike the case before us. The evidence in that case that was held to be improper related to the fact that the defendant, after the accident, had built a fence around the area where the accident occurred.

2. While the rule is, as stated in Wiwirowski v. L. S. & M. S. Ry. Co., 124 N. Y. 425 ; 36 St. Rep. 405, that the burden is upon the plaintiff of showing that she was free of contributory negligence, the want of negligence may be established from facts and circumstances warranting an inference to that effect. Galvin v. Mayor, 112 N. Y. 223; 20 St. Rep. 569; Chisholm v. State, 56 St. Rep. 811. And the evidence in the case was such that the court could not rule, as a matter of law, that the plaintiff was guilty of contributory negligence. On the contrary, it was his duty to submit that question, as he did, to the jury. Gibbons v. Village of Phœnix, 39 St. Rep. 658; 15 N. Y. Supp. 410; Goff v. Village of Little Falls, 47 St. Rep. 729; 20 N. Y. Supp. 175; Sherman v. Village of Oneonta, 49 St. Rep. 267; 21 N. Y. Supp. 137.

3. Plaintiff, in her complaint, alleges that the injuries were sustained on the 5th day of August, 1891. The notice given to the mayor of the defendant asserts that the accident was on the 5th day of August, 1891. The learned counsel for the plaintiff asked the court to charge the jury that “unless the jury find that the accident occurred on the 5th day of August, 1891, the plaintiff cannot recover under the notice served in the case.” The court refused to so charge, and an exception was taken, and thereupon the court did charge as follows: “ As I have already said, gentlemen, it is not fatal’ to her caseiif it was the evening'of the 4th ; but the question for your consideration - is whether substantially at that place, and substantially at the time she has given, whether she sustained the accident and the injury that she claimed.”

Dr. Jarvis was called as a witness, and he said, in the course of his testimony : “L think it was in August, 1891. I believe the 5th of August was the first time she called upon me.”

The notice was served on the 21st of September, 1891. The statute which requires notice provides that the city shall not be liable for—“Damages resulting from any defect or improper condition in or upon any street or sidewalk unless written notice specifying time, place and cause of such injury or damage shall be served upon the mayor or city clerk wdthin six months after the injury or damage was received.” Laws 1888, c. 449 ; Laws 1885, c. 66.

In Paddock v. City of Syracuse, 61 Hun, 8; 39 St. Rep. 662, a question was presented as to the sufficiency of a notice given under the statute, and it was held that the notice was too general as to the character of the defects complained of, and in the course of the opinion it was said.: * “The city was entitled to the benefit of the ■statute, and a substantial compliance by the plaintiff with its provisions was a condition precedent to the right 'of the plaintiff to bring the action.”

We think the construction of the statute which obtained at the trial of this case was not inconsistent with the rule laid down in the Paddock Case.

We are of the opinion that no error was committed during the . progress of the trial, and the verdict of the jury should be sustained. Judgment and order affirmed, with costó. All concur.


author: Williams, J.

text:
    The People, App’lt, v. The Milk Exchange (Limited) Resp’t.

      (Supreme Court, General Term, Fourth Department,

      Filed April, 1894.)
    1. Corporations—Dissolution.
    The people are entitled to a judgment dissolving a corporation and adjudging its franchise to be forfeited, where the purposes for which it is conducted are unlawful.
    2. Same—Question op pact.
    When it is error to take from the jury a question presented ,by the evidence.
    Appeal by the plaintiff, The People of the state of New York, from a judgment of the supreme court in favor of the defendant, entered in the office of the clerk of the county of Broome on the 17th day of May, 1893, upon the decision of the court rendered at the Broome circuit dismissing the plaintiff’s complaint.
    The action was brought to procure a dissolution of the defendant corporation and forfeiture of its franchise under the provisions of 1785 and 1798 of the Code of Civil Procedure.
    ít was claimed at the trial and was urged on the appeal that the defendant had suspended its ordinary and lawful business for at least one year and had failed to exercise its powers, and that it had violated provisions of law and abused its power and had exercised privileges and franchises not conferred upon it by law, and that by reason thereof the People were entitled to the relief asked for in the complaint.
    The object and nature of the business for which the corporation was formed, as stated in its articles of incorporation, was “the buying and selling of milk at wholesale and retail; the purchase of dairies of milk when deemed advisable, and the sale of the same to milk dealers.”
    The claim that the defendant suspended its business and failed to exercise its powers was based upon the assertion that defendant’s business, as carried on, was not the buying and selling of milk, within the terms of the articles of incorporation.
    The claim that the defendant had violated provisions of law and abused its powers was based upon the charge that defendant had engaged in a combination to restrain competition in the purchase and sale of milk, to fix the price thereof, and so control the market price.
    Evidence was given in behalf of the People upon these subjects, which the trial court, however, held insufficient to establish either of these allegations or claims.

      C. L. Andrus, for app’lt; Alfred Ely, for resp’t.
   Williams, J.

Evidence was given on the trial as to the nature of the business actually carried on by the defendant, as to whether it was the buying and selling of milk, or a broker business. Some portions of this evidence seem to indicate that the business was buying and selling, and others that it was merely a broker business. The conclusions to be drawn from the evidence were clearly for the jury and not for the court, but each party, having confidence that the court would draw the conclusion favorable to his side, conceded that the question was for the court and not for the jury. Whether there was, in the carrying on of the business, such a combination as the law condemns, to fix and control the price of milk and restrain competition in the purchase and sale of milk, was a question more or less complicated and mixed up with the question as to whether such business was a purchasing and selling of milk by the defendant or a broker business in milk. It seems to "me the taking of this question as to an illegal combination from the jury was not justified by the evidence.

In a recent case in the court of appeals. People v. Sheldon et al., 139 N. Y. 251; 54 St. Rep. 513, where the retail coal dealers in the city of Lockport had entered into an agreement organizing the “Lockport Coal Exchange,” for the purpose of their own protection in various ways, Andrews, Oh. J., says: “ The question here does not, we think, turn on the point whether the agreement * * did, as matter of fact, result in injury to the public or to the community in Lockport. The question is, was the agreement, in view of what might have been done under it and the fact that it was an agreement the effect of which was to prevent competition among the coal dealers, one upon which the law affixed the brand of condemnation ? It has hitherto been an accepted maxim in political economy that 1 competition is the’ life of trade.’ The courts have acted upon and adopted this maxim in passing upon the validity of agreements, the design of which was to prevent competition hi trade, and have held such agreements to be invalid. * * * The organization was a carefully devised scheme to prevent competition in the price of coal among the retail dealers, and the moral and material power of the combination afforded a reasonable guaranty that the others would not engage in the business in Lockport except in conformity with the rules of the exchange. * * * If agreements and combinations to prevent competition in prices are, or may be, hurtful to trade, the only sure remedy is to prohibit all agreements of that character. If the validity of such an agreement was made to depend upon actual proof of public prejudice or injury-, it would be very difficult in any case to establish the invalidity, although the moral evidence might be very convincing.”

And in another case, Judd v. Harrington, 139 N. Y. 105 ; 54 St. Rep. 471, where there was an agreement formed, known as a “ Sheep Brokers’ Association,” the same doctrine was laid down by Judge O’Brien.

Considerable evidence was given in this case as to the object and effect of this defendant corporation, the persons who organized it and became its stockholders and directors, the manner of the transaction of its business, and the fixing of the prices of milk, and the effect thereby produced upon the market price of milk generally. The stockholders have been mostly if not entirely persons interested as individuals in the milk trade, separate and apart from their interest as stockholders in the corporation. Indeed, the business of the corporation has not, in and of itself, been remunerative at all. No dividends have ever been paid. The assets of the corporation have not been increased since the organization of the corporation, but have rather steadily decreased. So that it is claimed the only real interest the stockholders have in the corporation is in its effect upon their business as individuals, by determining the prices to be paid and received for milk. Originally a by-law was enacted to the effect that the board of directors should have power to make and fix the market price at which milk should be purchased by stockholders, and should forfeit the stock of any stockholder who should purchase milk at any other price. This by-law was afterwards repealed, but the business of the corporation was continued, and it is claimed the effect produced by its fixing of prices for milk has been to establish1 the market price at which all milk has been sold in and about New York city, from whatever soure.e it has come. It is claimed, therefore, that the real object for which the defendant corporation was organized and is being conducted, was and is not to make money in the business carried on by it, but to control the market price of milk, and that an agreement between the persons who organized the corporation, and as stockholders and directors have carried on its business, to conduct it for the purpose stated, was and is an illegal combination, against public policy, and condeinned. by the law. Whether this claim was and is well founded, under the evidence, was, at least, a question for the jury. The jury may have found the purpose for which the corporation was conducted to be unlawful, and, in that event, the plaintiff would clearly have been entitled to the relief demanded in the complaint.

The judgment for this error should be reversed and a new trial ordered, with costs to abide the event.

Hardin, P. J., and Merwin, J., concur.

Judgment reversed and a new trial ordered, with costs to abide the event.


author: Forbes, J.

text:
    James Rutherford, Pl’ff, v. Leopold Krause, Impleaded, etc., Def't.

      (Supreme Court, Delaware Special Term,

      Filed April, 1894.)

    1. Pleading—Answer—Verification.
    'A complaint, charging the defendant with a' misdemeanor, states facts authorizing the omission of a verification of the answer.
    2. Same—Affidavit.
    Where the complaint shows upon its face the crime charged, no affidavit need accompany the answer.
    Motion.to set aside judgment entered, as upon default, for want of verification of the answer.

      Robert T. Johnson, for pl’ff; W. & G. W. Youmans, for def’t.
   Forbes, J.

The complaint is based upon an action for negligence for wrongfully and immoderately driving a team of horses upon the public highway while, it is claimed, the plaintiff was intoxicated or drunk. It is also claimed that the horses were injured by such driving and that the vehicle used was broken and destroyed.

The complaint is verified, and was served on the 21st day of June, 1893.

An answer in behalf of this defendant was interposed and served, without verification, about the 1st day of July, 1893. This answer was returned because it was not verified, and a judgment was entered as upon a default.

A motion is now made to set aside the judgment upon the ground that the judgment was unauthorized, that the cause is at issue, and the plaintiff's proceedings are irregular.

The single proposition presented is this: Does the complaint, upon its face, state facts sufficient to authorize the omission of the verification of the answer by the defendant answering ?

A careful review of the authorities, I think, is sufficient to show that, if all the facts alleged in the complaint áre to be taken as true, and an answer admitting those facts were served, that answer could be used against this defendant as an admission, on his part, of the, commission of a crime.

He is charged with being intoxicated in a public place. This is a crime both by statute and by the decisions of the courts Laws 1892, chap. 401, § 35, which reads as follows: “ Any person who shall be intoxicated in a public place shall be deemed guilty of disorderly conduct, and may be arrested without warrant while so intoxicated, and shall be punished by a fine not less than three nor more than ten dollars or by imprisonment not exceeding six months.” Hill v. People, 20 N. Y. 363.

He is also charged with immoderate driving, which must be-construed as overdriving, and upon the facts of intoxication and immoderate driving is based the cause of action alleged in the-complaint.

Overdriving is made a misdemeanor by § 655 of the Penal Code. This is defined by § 669 of the Penal Code as torture or cruelty to an animal, not a human being, which includes “ every act, omission or neglect whereby unjustifiable physical pain, suffering or de.ath is caused or permitted.”

These facts appear upon the face of the complaint, and the punishment is provided for under the Code of Criminal Procedure, § 56, subdivision 27.

I think the real test is, whether, any part of the pleading would excuse a party from testifying, or if there is more than one party, any one would be privileged, verification may be omitted. The criterion, is, whether, if called as a witness, the party would be excused from answering. Goff v. Star Printing Co.. 21 Abb. N. C. 211.

Assuming this as a test, then, were the defendant called as a witness by the plaintiff, could he decline to answer upon the ground that his evidence would tend to convict him of a crime?

Can there be any serious doubt about it, inasmuch as the complaint, in two particulars, charges him with a misdemeanor. Friess v. N. Y. C. & H. R. R. R. Co., 67 Hun, 205; 51 St. Rep. 391.

The fact of voluntary intoxication can be used in aggravation of damages. Immoderate driving, thus making the offense of cruelty to animals, can also be used in aggravation of damages, and must be presumed to have been charged in the complaint for that purpose.

When a person does, a wrongful act, which results in a particular injury to another, the latter has a remedy by action. Thomas v. Smith, 75 Hun, 573; 58 St. Rep. 597.

The omission to verify is given by the Code (Code Civ. Proc. § 523) “ whbre a party pleading would be privileged from testifying, as a witness, concerning an allegation, * * * in the-pleading.”

And this privilege may be claimed because it is given by the-Code, notwithstanding the pleading cannot be used in a criminal prosecution against the party. He is not obliged to spread an admission of his crime upon the record; he need neither admit nor deny the criminalitv of the act, but, may remain, silent. Friess v. N. Y. C. & H. R. R. R. Co., 67 Hun, 205; 51 St. Rep. 391. ; , .

And where the complaint shows upon its face the crime charged, no affidavit need accompany the answer. Goff v. Star Printing Co., 21 Abb. N. C. 211, and cases there cited; Dehn v. Mandeville, 68 Hun, 335; 52 St. Rep. 281.

The judgment against this defendant must, therefore, be vacated and canceled of record, and the answer must be deemed to have been served in time, but without costs to either party. Ordered accordingly.


author: Coffin, S.

text:
    In the Matter of the Estate of Charles Park, Deceased.

      (Surrogate’s Court, Westchester County,

      Filed May, 1894.)

    Tax—Transfer—Refunding.
    Where a transfer tax remains in the hands of the county treasurer, the surrogate has power, upon reversal, to direct him to refund it.
    Application for order directing the county treasurer to refund a tax imposed under the Transfer Tax Act of 1892.
    The deceased, by his last will and testament, gave what was construed by the appraiser to be a legacy of $10,000 to Mary E. Field, On the coming in of the report - the surrogate fixed a tax thereon under the Transfer Tax Law of $500. Notice was given accordingly, whereupon an appeal therefrom was taken to the surrogate, pending which, and in order to save a possible penalty, the executors paid the tax, under protest, to the county treasurer. On the appeal, heard shortly thereafter, the decree fixing the tax was reversed, and it was asked thereupon that the county treasurer be authorized and directed to refund said tax if the same had been paid to him and still remained in his hands.

      Jonathan Marshall, for Mary E. Field, legatee; John Hoag, county treasurer, in person.
   Coffin, S.

The amount of the tax not having been paid into the state treasury, as is conceded, but still remaining in the hands of the county treasurer, the question arises whether the surrogate has power to direct him to refund it Section 10 of chapter 399 of the Laws of 1892 declares that the surrogate “ shall have jurisdiction to hear and determine all questions arising under the provisions of this act, and to do any act in relation thereto authorized by law to be done by a surrogate in other matters or proceedings coming within his jurisdiction.” It is within his jurisdiction to order the county treasurer to pay money to minors on coming of age, or for their benefit, to others, while they are still minors. If it should be found that a sum of money had, on an accounting, been directed to be paid to the county treasurer for the benefit of a supposed minor, and was paid accordingly, and it should afterwards be made to appear that the supposed minor was of full age before the commencement of the proceeding, the surrogate would have power to correct the decree and to order the county treasurer to refund the money; and so, in case an amount in excess of the real amount were paid to him, the surrogate would have power to direct the refunding of such excess. Other illustrations of the power of the surrogate “ in other matters or proceedings coming within his jurisdiction” might be given, but these will suffice to show that the jurisdiction to make the order sought exists.

IE the tax had been paid to the state treasurer, then another and different question would have arisen. It seems that the matter of the refunding would pass entirely into the hands of the state comptroller, and it would be for him alone to determine, under the provisions of the latter clause of § 6, whether the proof presented to him was sufficient to establish the fact of the erroneous or illegal payment. In that case he would act judicially, and that is the only instance in which he could so act under the provisions of that law. . >

By § 6, above referred to, it is enacted that If any debts shall be proven against the estate of a decedent after the payment of any legacy or distributive share thereof, from which any such tax has been deducted, or upon which it has been paid by the person entitled to such legacy or distributive share, and such person is required to refund the amount of such debts, or any part theieof, an equitable proportion of the tax shall be repaid to him by the executor, administratoT or trustee, if the tax has not been paid to the county treasurer, comptroller of the city of New York, or to the state treasurer, or by such treasurer, comptroller or state treasurer, if such tax has been paid to him.” Now, who can compel the executor, administrator, trustee, county treasurer or comptroller of the city of New York to repay such equitable proportion, dum fervei opus, but the surrogate of the proper county ? No other method is pointed out than that conferred upon that official by § 10 referred to above. The comptroller of the state is clothed with no power in this respect, and it must exist somewhere, or there is no machinery provided for enforcing a compliance. But when the tax shall have been actually paid into the state treasury, then, and not until then, the state comptrollér, under § 6, is for the first time invested with authority to refund, or to order a refunding, in the mode there prescribed.

An order may be entered directing the county treasurer to refund the amount of the tax.


author: Rumsey, J.

text:
    George B. Swikehead et al., Pl’ffs, v. Fred. P. Michels et al., Def’ts.

      (Supreme Court, Steuben Special Term,

      Filed May, 1894.)

    1. Municipal corporations—Sewers—Local act.
    Chapter 603 of 1893 is not unconstitutional.
    3. Same—Power op legislature.
    The legislature has the power by local act to authorize the construction of a sewer in any city of the state.
    3. Same,
    The law may direct such an extension of the sewer as will supply the future needs of those who live, or are likely to live, within the area which might naturally drain into it.
    4. Same—Local act—Reference to general statute.
    A provision in a local act, that if the commissioners cannot agree with the owners, they may proceed under the Condemnation Act, is not objectionable.

      Proceedings to condemn lands of defendants for a sewer.

      W. F. Cogswell, II. C. Pierce and C. F. Bissell, for pl’ffs; Thos. Baines, for def’ts.
   Rumsey, J.

This proceeding has^ been begun under the authority conferred by chapter 603 of the Laws of 1892, providing for the construction of a sewer in certain wards of the city of Rochester, and in the town of Gates, which adjoins the city on the west. It has been adjudged that the work is necessary for the public health, and the plaintiffs have been duly appointed commissioners to carry it on. Being unable to agree with defendants for the purchase of lands required for the sewer, the plaintiffs have taken this proceeding. The answer contains denials of certain allegations of the petition, but those allegations I think upon the testimony submitted are sustained.

The only question here presented is whether the act in question is constitutional.

That the construction of the sewer is required for ,a public purpose, namely, to preserve the public health, cannot be denied, because it has been so formally decided and adjudged. But the claim of the defendants is that, conceding the public purpose, the act is yet not within the power of the legislature, because that body is. forbidden to pass a local or private bill providing for the drainage of swamps or other low lands, even for a public purpose. That this bill is local must be conceded. People ex rel. Lee v. Supervisors of Chautauqua, 43 N. Y. 10. It may, I think, be conceded also that a local bill which has for its sole or its main purpose the drainage of swamps or low Jands, although such drainage was required for the public health, is not constitutional, although, in view of the rule that these limitations upon the power of the legislature are not' to be extended, Matter of Gilbert El. Ry. Co., 70 N. Y. 361, 371, this may be open to argument, if it were necessary to deny it in this case.

But I think it is not to'be disputed that the legislature has now, as it always'had, the power by local act to authorize the construction of a sewer in any city of the state. Sucha power is nowhere prohibited by the Constitution, and, therefore, the legislature may by statute direct it to be done, and prescribe the manner of doing it. People ex rel. McLean v. Flagg, 46 N. Y. 401; People ex rel. Morrill v. Supervisors, of Queens Co.. 112 Id. 585, 588; 21 St. Rep. 771. Manifestly, it may provide for the carrying away of sewage when the public health and convenience requires it, whether the territory to be drained by the sewer be within the bounds of an incorporated city or village, or be any other portion of the state so thickly settled that health and decency require that sewage and foul refuse matter which may breed pestilence shall be removed. Indeed, did the needs of the city demand it, and the health of its citizens require such an action, the legislature might have directed the city authorities to construct the sewer upon the route selected, and pay for it out of the funds of the municipality. Matter of Mayor of N. Y., 99 N. Y., 569, 571, 585.

The question in each case being whether, upon the whole, the particular enterprise is primarily for the benefit of the people of the city, and within the ordinary range of the municipal action. If those conditions exist the purpose is a city purpose, although people outside are incidentally benefited.

When a great trunk sewer is to be built in a large and rapidly growing city, proper regal'd for economy and the interests of the community requires that some thought should be taken for the future growth and wants of the city. The law may, therefore prescribe not only sufficient size to such a sewer, but may also direct such an extension as will supply the future needs of those who, live or are likely to live within the area which might naturally drain into it. Matter of Mayor of N.Y., 99 N. Y. 569, 591. None of these things are seriously disputed by the defendants. They draw a, distinction between the power of the legislature to drain swamps and low lands for the public health by local acts, which they deny, and its power in the same manner to require the construction ’ of sewers to carry off the sewage from more or less thickly populated districts, which last power cannot be disputed. But of course the fact that more or less water is drawing off into a sewer for the purpose of draining alow piece of ground which happens to lie near it does not invalidate the act authorizing its construction. Indeed, the use of sewers is quite as much to carry away collections of rain and surface water which would otherwise become stagnant as to carry off sewage strictly so called. Although such results may incidently take place, it is of no importance if the principal use of the sewer is to do the office which sewers are called upon to do. It is not material that the commissioners have planned too large a sewer, if that be the fact. That must be corrected, if at all, in another way. We are only concerned with the provisions and objects of the law.

So- we are brought to the question whether, in fact, this act is one providing for the drainage of swamps and low lands, or for the construction of a,conduit to receive the sewage of a large extent of territory actually and potentially the residence of great numbers of people.

The act itself purports to provide for the construction of a sewer in a city, and upon adjoining- territory, a thing clearly within the power of the legislature. If we are bound by the title and provisions of the act there can be no doubt that it is constitutional, and I do not see how any question can arise upon it.

Just how far the courts may go behind the ostensible purpose of an act, as shown upon its face, and examine into its effects and mode of execution to enable them to declare its unconstitutionality, seems to be a little doubtful. In Waterloo Woolen Mfg. Co. v. Shanahan, 128 N. Y. 845; 40 St. Rep. 95, it was held that in deciding these questions the scrutiny which the court might exercise was confined to matters appearing upon the face of the bill and to things which were the subject of judicial notice. When the purpose of the bill was one within the power of the legislature to compass, and the means used were appropriate for that purpose and not forbidden,.it was held that a court was not at liberty to take testimony to show that the real effect of the bill was to do something different, and for that reason hold the bill to be unconstitutional. . Within that rule there is no i reason here to say that the law is not valid. It is passed to accomplish a thing which is within the power of the legislature, and which may lawfully be done by a local act, if we are to accept the bill itself as containing the true statement of its object.

But if that be not so, and we are to examine the testimony to ascertain whether or not the purpose which the law will in fact accomplish be within the power of the legislature by local act, what do we find ?

We find that Deep Hollow creek, so called, is a small stream taking its rise in the town of Gates near the western limits of the city of Rochester, and running through the city to the Genesee river. That portion of the town of Gates lying adjacent to the city, and which naturally drains into the creek, is largely opened up by streets and laid out into building lots, and to a considerable extent thickly settled. The streets so laid out are extensions of the city streets, and though not improved are opened. The creek is an an outlet for sewers in the town from the houses of the people living within the drainage area, and from shops and factories, and also for large sewers within the city limits. The population outside of the cit^y is quite large and increasing. There are already within the drainage area of the sewer in the town 825 houses, the sewage from which either does now, or in no great time hereafter will, drain into the creek. The number of acres in the drainage area is 6,544, of which 877 are within the limits of the city and the remainder lie in the town adjoining the city limits. This land is generally high and rolling, but there are scattered through it low and wet spots, some of which are already drained and improved, and some of which are still swampy. The total quantity of land is between 600 and 700 acres, of which about 100 acres arc in the city. This low land lies in detached pieces, part of it already openecl up for building lots both outside and inside the city. It is fair to infer that within no long time this drainage area will be thickly settled. Until that occurs the sewage and drainage water from the now settled parts of the territory can be carried off in a much smaller sewer than the one proposed. But when this territory shall have been built up, the proposed sewer will be none too large to dispose of the sewage and water which will flow into it. Considering these facts, it is clear that the principal object of the law is to provide means of disposing of the sewage which now flows out of this territory and that which it is reasonable to expect must be taken care of within a short time. It is quite true that much surface water will flow through it, and no doubt many wet spots will be drained by it, but such incidental benefits will not warrant the condemnation of the law. It is to be judged by its practical effect and operation, Foster v. Scott, 136 N. Y. 577, 584; 49 St. Rep. 699, and, so judged, not to be condemned unless it is clear and plain that some provision of the Constitution has been violated. People ex rel. Carter v. Rice, 135 N. Y. 473, 484; 47 St. Rep. 702. Indeed, it is just as necessary that a sower should carry off surface water from the streets and low places as that it should take away the sewage.

Upon all the facts, it seems to me that it would be a flagrant abuse of the power of the court to hold that this law was not within the power of the legislature to enact.

It is further objected that the act is unconstitutional because it does not provide for the payment of a compensation for the land taken. The statute (§ 6) prescribes that if the commissioners cannot agree with the owners they may proceed under the Condemnation Law This reference to the general law by way, of prescribing the modes of condemning land is riot objectionable. People ex rel. Commissioners v. Banks, 67 N. Y. 568. The Condemnation Act provides not only the manner of procedure to appraise the damages, but it directs the form of the final order, which is that “upon payment of such compensation” the plaintiff shall be entitled to enter into the land, etc. § 3371. No lands can be taken unless this is done.

It is true that the commissioners are authorized to issue certificates in payment for lands (§ 11), but no owner is required to accept them. He may, if he chooses, rely on the direction of the final order in the proceedings and insist upon his money before his land is actually taken. Upon the whole case tfhe plaintiffs are entitled to an order appointing commissioners to appraise the lands of the defendants.

Ordered accordingly.


author: Vance, S.

text:
    In the Matter of the Judicial Settlement of the Account of Alonzo Havens et al., as Executors, etc.

      (Surrogate’s Court, St. Lawrence County,

      Filed May, 1894.)

    1. Surrogate—Jurisdiction.
    A surrogate has jurisdiction, upon the settlement of the account of an executor, to construe the provisions of a will.
    2. Same.
    Where, on an accounting, a legatee claims the whole amount of the legacy, and another person claims to be an assignee of the same or a portion thereof, the surrogate can determine the controversy between them.
    Judicial settlement of accounts of executors.

      Isaac L. Wells, for executors; R. E. Waterman, for Samuel W. Havens.
   Vance, S.

In this matter the executors of the last will and testament of the deceased have petitioned for a judicial settlement of their accounts; all parties interested in the estate have been cited and Samuel W. Havens, one of the children of the deceased, has appeared. The executors have filed their account showing a balance of $5,391.59 in their hands, subject only to only to the commissions of the executors and the expense of this accounting. No objection has been made to any item of the account as filed. The correctness of the balance in the hands of the executors is conceded. The executors in their account allege that, under the provisions of the will and codicils thereto of the deceased, Alonzo Havens is entitled to the whole surplus now in their hands. This claim on the part of the executors is denied by Samuel W. Havens, who claims that, under the provisions of the will and codicils thereto of the deceased, he is entitled to one-half of the net surplus of the estate ; he also alleges, in substance, that, by an agreement heretofore made by and between himself and Alonzo Havens, it was, for a valuable consideration, agreed that the said Samuel W. Havens should have one equal half of the surplus. The alleged agreement, it is stated, arose out of a contest concerning the probate of the will. The records of this court show that the will of the deceased was contested before my predecessor in office, and after such contest admitted to probate. Samuel W. Havens now alleges that, while such contest was pending, Alonzo Havens agreed with him, that if he would not be a party to the contest, but would join with said Alonzo and endeavor to sustain said will, that in consideration thereof he should receive an equal share of the surplus of the estate with said Alonzo, which said Samuel W. agreed to do, and that said Samuel faithfully and carefully carried out said agreement. It is intimated that the questions thus arising deprive this court of jurisdiction. I would gladly be relieved from the labor and responsibility of the trial and decision of the question thus raised, yet, whatever may be the personal consequences, I must examine and determine the question of jurisdiction under the statutes as I understand them.

The objections filed by Samuel W. Havens raise two questions —one of law, and the other a mixed question of law and fact. The first subdivision of such objections, taken with the allegations of the executors in the account, raises pm rely a question of law, namely, the construction of the will and codicils. Has the surrogate jurisdiction to determine this question ?

The Code, § 2472, subdivision 3, provides that the surrogate’s court has power to direct and control the conduct and settle the accounts of executors, administrators and testamentary trustees.” Subdivision .4, “ To enforce the payment of debts and legacies, the distribution of the estates of decedents, and the payment or delivery by executors, administrators and testamentary trustees of money or other property in their possession belonging to the estate. Subdivision 6, “ To administer justice in all matters relating to the affairs of decedents, according to the provisions of the statutes relating thereto.” By § 2743 it is provided that Where an account is judicially settled as prescribed in this article, and any part of the estate remains and is ready to be distributed to the creditors, legatees, next of kin, husband or wife of the decedent, or their assigns, a decree must direct the payment and and distribution thereof to the persons so entitled, according to their respective rights.” By § 2481, subdivision 11, it is provided, among other things, that the surrogate’s court has power “ To exercise such incidental powers as are necessary to carry into effect the powers expressly conferred.”

In Matter of the Estate of Young, 92 N. Y. 235-238, upon an application to cause the executor to set apart the exempted articles of the widow, it was held that the surrogate had. jurisdiction, under his authority to direct and control the conduct-of executors and to administer justice in all matters relating to the affairs of decedents, according to the provisions of the statutes relating thereto,’1 to construe an ante-nuptial agreement made between the widow and her deceased husband.

The court of appeals in Matter of Verplanck, 91 N. Y. 439, 450, has held that, as incident to the duties cast upon the, surrogate’s court bV the provisions of § 2743, the surrogate must have jurisdiction to construe wills, so far as needful, at least, to deteimine to whom legacies shall be paid. See, also, Garlock v. Vandevort, 128 N. Y. 374; 40 St. Rep. 418.

It would seem that these authorities settle conclusively that the surrogate has jurisdiction to determine the matters raised by the first subdivision of the answer or objection of Samuel W. Havens.

The second subdivision of the objections made by Samuel W. Havens raised two questions — one of fact and one of law : First, YTas the alleged agreement made? Second. If made, is it a valid agreement ? ,

As to the latter question there is no room for a doubt. If this court, as an incident to powers expressly granted, may construe wills ánd ante-nuptial agreements, as the cases above cited hold, why has it not power to construe any other writing or agreement? The power to construe an agreement necessarily includes the power' to pass upon its validity.

Thus. I reach the conclusion that the question of law raised by the second subdivision of the objections filed may be determined by the court.

The only question remaining is, has this court jurisdiction to try the question of fact raised—to determine, in case the will be construed to mean that Alonzo Havens is the sole residuary legatee, whether or not he has transferred one-half of his legacy to his brother Samuel W. Havens ?

, In other words, on an acconnting when the legatee claims the whole amount of the legacy, and another claims to be an assignee of the same or a portion thereof, can this court determine the controversy between them ?

It is commonly asserted that a surrogate’s court has no jurisdiction to try a disputed claim. This assertion may or may not be true. It may be safely stated that, as a general rule, such court has no jurisdiction to try and determine the validity of a disputed claim against an estate.

In a proceeding under § 2718 to compel the payment of a debt, legacy or distributive share, when the executor or administrator makes the verified answer prescribed by that section denying the validity thereof, the surrogate must dismiss the proceeding without prejudice to an action or. accounting in behalf of the petitioner.

Under proceedings for the sale of the real estate of the decedent, any claim may be contested before the surrogate, even a claim which has been presented to the executors or administrators and rejected by them. In re Haxtun, 102 N. Y. 157.

The statute having, as above seen, conferred jurisdiction in one proceeding to try and determine the validity of a disputed claim against an estate and prohibited such jurisdiction in another proceeding before the same court, it seems clear that the question of jurisdiction in any proceeding must be determined by the statutory provisions relating thereto. This being so, a decision upholding or denying jurisdiction in one proceeding is no authority for or against the jurisdiction in any other proceeding. A failure to recognize this fact has led to confusion and, I believe, error.

Another expression frequently used is that a surrogate’s court has no general equity jurisdiction. Just how much is meant by the word “ general ” no one has attempted to define. Its use implies that at least a limited equity jurisdiction is possessed by that court. What is the line of division between the limited equity jurisdiction which it is conceded has been conferred upon the court and the general equity jurisdiction which it does not possess ?

Subdivision 6 of § 2472 gives to a surrogate’s court power “ to .administer justice in all matters relating to the affairs of decedents, according to the provisions of the statutes relating thereto.”

If the last clause, “according to the provisions of the statutes relating thereto,” had been omitted in defining the power granted by the subdivision above cited, I am of the opinion it would have amounted to a grant of full or general equity jurisdiction in all matters relating to affairs of decedents ; to do justice in all such matters is to do what is right and equitable therein.

How far is this power to do justice (or equity) in all matters relating to the affairs of decedents limited by the clause “according to the provisions of the statute relating thereto ? ” Is this a limitation of the equitable powers of the court as to the sviject-matter over which those powers may be exercised? Or is it a limitation only as to the manner in which they shall he exercised? Clearly the latter. Here then we have a grant of equitable powers in all matters relating to the affairs of decedents coming before the court in the manner provided by the statute.

But this general power is limited by restrictions upon its exercise found in the provisions of the statute relating to the various special proceedings which may come before the court.

I have, therefore, arrived at the conclusion that a surrogate’s court has full, equitable jurisdiction in all matters relating to the affairs of decedents, except so far as that jurisdiction may be limited by the provisions of the statute relating to the special proceedings in which the question of jurisdiction may arise.

In most of the cases which I have examined the general proposition is asserted that no general equity jurisdiction is conferred, and then an effort is made to find authority, either direct or incidental, in the provisions of the statute relating to the special proceeding before the court, and if not there expressly conferred, then its existence has been denied.

The power granted by subdivision 6, above cited, in most cases where the decision has denied jurisdiction, has been generally unnoticed.

Starting, then, with the proposition that upon an accounting the surrogate’s court has jurisdiction to do justice or equity between all persons properly before it in all matters relating to the estate, lot us inquire how far such power has been limited by the provisions of § 2743. That section provides: “ When an account is judicially settled as prescribed in this article, and any part of the estate remains, and is ready to be distributed to the creditors, legatees * * * or their assigns (the point reached in this matter), the decree must direct the payment and distribution thereof to tIre-persons entitled according to their respective rights.''

Thus far, instead of a limitation upon the equitable powers of the court, we have imposed a duty to distribute the fund on hand between the legatee and his assignee, if there be one, according to their respective rights.

The imposing of a duty confers power for its performance, and that power thus conferred carries with it such incidental powers as are necessary to carry it into effect. Subd. 11, § 2481.

How, in this case, can this court make a decree for the distribution of this estate to the legatee and the other claimant according to their respective rights without determining their rights? In order to determine the rights of those parties, the court must try the controversies between them.

A question may be raised as to the effect of that portion of •§ 2743 which provides that “ Where the validity of a debt, claim or distributive share is not disputed or has been established, the decree must determine to whom it is payable,” etc.

This clause undoubtedly prohibits a surrogate’s court from trying a disputed debt or claim against the estate, but what can be meant by the validity of a distributive share ?

The distributive share of a legatee is fixed by the will, and in cases of intestacy by the Statute of Distributions. We have seen before that as to a legacy a surrogate’s court has full power to construe the will, and no court would assume to question the validity of the Statute of Distributions.

As to the clause under consideration, I concur fully with the opinion expressed in Du Bois v. Brown, 1 Dem. 317, that the words “distributive share” must have been inadvertently used, and that the only intent of that clause was to settle the question which had long agitated our courts as to the jurisdiction of a surrogate, upon the judicial settlement of the accounts of the executor or administrator, to try a contested claim against the estate.

From an examination of the statute I am strongly of the opinion that jurisdiction to try the issue raised exists in this court.

I will not, however, determine the question upon my own construction of the statute, but will examine the authorities bearing directly upon the point raised.

Eedfield, in his valuable work on the Law and Practice in Surrogate’s Court (4th ed., p. 752), says: “ Where the original party in interest and the alleged assignee both claim the same interest, the surrogate cannot try the question of the validity qf the assignment,” and cites in support of this proposition Decker v. Morton, 1 Redf. 477, and Matter of Estate of Heelas, 5 id 440.

An examination of the case of Decker v. Morton, reveals the fact that the surrogate (lid pass upon the validity of the assignment, holding it invalid. Upon appeal to the general term, Ingraham, J., delivering the opinion ot the court, says: “ It is not clear that the surrogate had any jurisdiction to try the question as to the validity of the assignment. * * * But upon the merits I think the surrogate, if he had jurisdiction, did not err.”

Slight authority in favor of the proposition stated, but all its force is dissipated when we consider that the case was decided under the provisions of the Revised Statutes, in which “assignees” were not enumerated among those to whom payment or distribution was to be decreed “ according to their respective rights.”

The other case, In re Estate of Heelas, was decided under the Code. All that was held in that case was, that creditors of a distributee are not proper parties to an accounting of the administrator, and cannot there contest the validity of an assignment of his distributive share, and the share was decreed to be paid to the assignee.

In that case the surrogate says: “As the statute now authorizes the court to decree payment to an assignee of a legatee or next of kin, etc., if the assignor were to appear on such an accounting and dispute the validity of the assignment, doubtless it would be the duty of the court to hear and determine the controversy, in order to decree payment to the person entitled thereto.”

In In re Brown, 3 Civ. Pro. Rep. 89, it was held that the court had no jurisdiction to determine the validity of an assignment. On the other hand, it has been held in In re McCabe's Estate, 18 N. Y. Supp. 715, that under § 2743, the surrogate, in settling an account, has power to try and determine the validity of an assignment of his distributive share by one of the next of kin, who appears and attacks the assignment on the ground that it was made without consideration, and was procured by false and fraudulent representations.

In Matter of the Estate of Orser, 4 Civ. Pro. Rep. 129, it was hold that § 2743 does not forbid surrogates from deciding a controversy in regard to the title, or any other question concerning a legacy or a distributive share.

The authorities upon the specific question presented seem to be in favor of the jurisdiction of the surrogate,

It is to be regretted that the precise question here involved has not been squarely passed upon by the higher courts.

In the case of Riggs v. Cragg, 89 N. Y. 479-491, the court of appeals held that the surrogate’s court had no authority to try an issue as to the validity of a legacy raised bv an executor on an application for an order directing him to pay the legacy.

In discussing the question of jurisdiction presented by that issue the court says: “When the surrogate, upon such an application, can see that other persons claim or may claim the same thing as the petitioner, and that a real question is presented as to the right of one of several persons to the legacy or fund, natural justice requires that he should not proceed to a determination without the presence of all the parties who may be affected by the adjudication. The statute provides for bringing in all the parties in interest on the final accounting, and in that proceeding jurisdiction is conferred to settle and adjust conflicting rights and interests, while no such authority is conferred in the special proceeding in favor of a single creditor or legatee, and such authority was not, we think, intended to be given.”

Here is a clear expression of the opinion that under the Revised Statutes the surrogate had jurisdiction on a final accounting to settle and adjust the conflicting rights and interests of all the parties before him as to the legacy or fund. •

In Matter of Verplanck, 91 N. Y. 439-450, the court', in speaking of the powers of the surrogate under the Code of Civil Procedure, as compared with those granted by the Revised Statutes, says : “It was clearly not the intention of the Code to narrow or diminish the jurisdiction of surrogates, but rather to enlarge it.” The section under consideration, 2743, contains an illustration of the intent to enlarge the jurisdiction in that it includes assignees of a creditor, legatees, next of kin, husband or wife among those to whom the decree must make distribution.

By the weight of authority, as well as by my own understanding of the provisions of the Code, I am constrained to overrule the objection made to the jurisdiction of the court, and hold that it has jurisdiction to hear and determine all the questions raised by the objections filed by Samuel W. Havens.

Ordered accordingly.