text:
    The People, Resp’ts, v. John C. Wilherding, App’lt.

      (Court of Appeals,

      Filed January 17, 1893.)

    1. Auctioneers—Duties on sale or imported goods.
    Subsequent to 1868 there was no statute of this state providing for the payment of the duties or fees upon sales of merchandise at auction, as the repeal of chap. 547 of the Laws of 1866 by chap. 106 of the Laws of 1868 did not revive chap. 62 of the Laws of 1846.
    3. Same—Payment under protest.
    Although payments of such duties were made under protest, they cannot be recovered back where there was no coercion and the payments were purely voluntary.
    Appeal from judgment of the supreme court, general term, first department, in favor of plaintiff, entered upon an agreed state of facts.

      Daniel P. Hays, for app’lt; W A. Poste, for resp’t.

       Reversing 42 St. Rep., 139.

   Peckham, J.

This controversy comes before us on appeal from a judgment of the general term of the first department in favor of the plaintiff, entered upon a submission of an agreed case to the court without suit.

The defendant is an auctioneer residing in the city of New York, and during the last six months of the year ending in December, 1889, he made certain sales of goods which had been imported, and upon which sales the plaintiff claimed certain fees or duties had accrued and were payable by the defendant to the state comptroller. The defendant asserted that the act under which the duties were claimed had been repealed before the duties were alleged to have accrued. If wrong in that, he asserted the act was unconstitutional, in that it assumed to exact duties on imports and 'that the goods, upon the sale of which the duties were demanded, were imported goods and sold in their original packages, and that no duties upon such sales could be constitutionally demanded under state authority.

It was also alleged that this statute under which the duties were claimed had been held unconstitutional so far as applicable to sales of imported articles in their original packages, and even if -the goods in question had become mingled with the general merchaudise of the country at the time when the sales were made upon which the duties accrued, yet the act could not be separated in its application and rendered valid as to duties upon sales of goods after their first sale in the original importer’s packages, while void as to such first sales.

It is unnecessary to discuss the question of constitutionality or the question whether the goods were still imports at the time of the sale, and, therefore, had not yet become part of the merchandise of the country, provided we should conclude there was no-existing statute which directed the collection of the duties claimed. Some examination of the legislation on this subject is necessary in order to answer this question. It is sufficient for this purpose to resort to the act as set forth in 1 R. S., 528, relating to sales by auctioneers.

The first section provided for the payment of duties on merchandise therein described each time the goods were struck off on a sale, various rates of duties being imposed upon different classes of merchandise, depending upon the character thereof and its-place of growth or manufacture. The act contained some forty sections and legislated concerning many details regarding sales by auction and as to auctioneers, their giving bonds, making quarterly accounts, verifying the same, paying the duties imposed by law, and many other matters. The act was in the nature of a Code relating to auctioneers and sales of goods by them at auction, and it remained in this condition until the passage of the act-of 1846, chap. 62.

That act in its first section made some alterations in the provisions of the first section of the Revised Statutes above cited,, and also enacted some new provisions in other sections as to auctioneers, and by § 10 expressly repealed the first and fourth sections of the act in the Revised Statutes.

The act as contained in the Revised Statutes was not touched by the act of 1846, other than by the repeal of its first and fourth sections, and after the passage of the act of 1846 the two acts stood together as constituting the legislation upon the subject-treated of by them.

The next act upon the subject was passed in 1866 and is chapter 547 of the Laws of that year. The beginning of the first section of the act is in these words : “ Section 1. Section 1 of chapter-62 of the Laws of 1846 is hereby amended so as to read as follows : ” The section,as amended then makes the same provisions for imposing duties or fees upon each and every sale of goods and merchandise at auction and at the same rates as in the first section of the act of 1846. The amendment, however, enlarges the class of persons liable to pay these duties on sales by including brokers offering goods for sale by sample or otherwise, and an addition to-the section is also made in regard to the fees or duties upon damaged goods, and as thus amended the section stood thereafter as-the only legislation providing for the payment of duties on sales, etc. The first section in the act of 1846 was annulled and destroyed by it as to all future cases.

Then came the act, chapter 106 of the Laws of 1868, part of whose title is, “ An act to repeal chapter 547 of the Laws of 1866,” and the first section of which enacts that “chapter 547 of the Laws of 1866, entitled 1 An act to amend chapter 62 of the Laws of 1846 and other acts additional to the same,’ is hereby repealed.” At the same time and by the same section the act, chapter 399 of the Laws of 1849, is amended “so as to read as follows,” and it then proceeds to amend that section so as to add a provision that the agents employed by the comptroller might approve the bond required by law to be given by auctioneers, etc.

It is now contended on the part of the defendant that the repeal by the act of 1868 of the enactment contained in the act of 1866, does not revive the first section of the act of 1846, and that since the statute of 1868 there has been no statute in existence under which auctioneers can be compelled to pay fees or duties upon sales of goods at auctions.

It is a general rule that where a statute repealing an earlier statute is itself repealed, the earlier statute comes in force upon such last repeal. Van Denburgh v. Greenbush, 66 N. Y., 1. There is also another rule well established in this court which holds that a statute declaring a former statute to be thereby amended so as to read as prescribed in the amending act, is not a repeal of the original statute, and that from the time of the passage of the amendatory act it is the only enactment on the subject as to future transactions, and the former statute is merged and lost in, and has no vitality distinct from, the amendatory act. And it has been held that a repeal of the amendatory act does not revive the original act, but both fall by virtue of the repeal of the later act. People v. Supervisors, 67 N. Y., 109.

If there were nothing more than this .statement, it would seem that under the authority of this case the repeal of the act of 1866 had not worked the restoration of the first section of the act of 1846, and that, consequently, there was no statute in existence which provided for collecting those fees or duties. The plaintiffs, however, answer this claim by alleging that it was, nevertheless, the legislative intent contained in the act of 1868 to revive the first section of the act of 1846 by the repeal of the act of 1866. The evidence of this intent is to be found, they say, in the fact that if the section were not revived there would be no statute for the collection of fees or duties upon sales of goods at auction. Further evidence of such intent is also to be found, as the plaintiffs allege, in the fact that the repealing act of 1868, in its second section, amends so as to read as is therein prescribed the second section of the act of 1849, chap. 399, which was passed to prevent frauds in auctioneers’ returns made to the comptroller, and such second section of this act of 1868, while amending the provision of the act of 1849 for the appointment of an agent by the comptroller to carry the act into effect, and empowering the agent to administer oaths to auctioneers and to require necessary information to ascertain the true amount of goods sold at auction by them, adds a provision authorizing the agent to take and approve the bond required by law to be given by auctioneers, and provides for their fees therefor. It is asked what would be the sense or propriety of aménding the act of 1849 in this manner, if at the same time and in the same statute enacting such amendments a section existed which by virtue of its provisions utterly wiped out all enactments providing for the payment of fees or duties by auctioneers upon the sale of goods or merchandise at auction ? Judging from these facts as to the legislative intent, the plaintiffs urge that the legislature intended to restore the first section of the act of 1846, when it repealed in so many words the act of 1866.

The fact first stated, that unless the first section of the act of 1846 is to be held as revived by the repeal of the act of 1866, then there is no statute providing for the collection of these duties, is of no significance when standing alone. That may have been the legislative purpose, and judging of that purpose from the use of the language adopted, it would be conclusive of an intent to accomplish that very result. The fact becomes important only when regarded in connection with the second ground taken by the plaintiffs as just stated. The whole argument does not, as it seems to me, give due and proper weight to the principle which has been so plainly and so recently decided by this court in the case of People v. Supervisors, above cited.

It was there distinctly decided that an earlier statute which was amended and re-enacted in the shape of an amendment, so as to read as prescribed in the later amendatory statute, was thereby wholly annulled as to all future cases and became merged and incorporated into the later statute. It was further held that when the statute accomplishing an amendment in this manner is itself repealed, the repealing act as effectually annihilated the earlier act which was amended as if it had been expressly mentioned in such repealing act.

It thus appears that the enactment of the later statute of 1866, by reason of the language used in the first section thereof, did thereby incorporate into it all the life and force of the first section of the act of 1846, so that the later act stood from that time and as to all future cases as the sole and only exponent of legislative intent and power upon the subject, and such act thereby utterly blotted out and annihilated the earlier statute, except as to rights or duties already existing. And when the act of 1866 was itself repealed in clear and direct language by the act of 1868, the latter act not only by repealing annihilated the act of 1866, but also the first section of the act of 1846, as if such first section had been mentioned in the repealing act. This is expressly decided by the case above cited. And it did so upon the principle that the first section of the act of 1846, by reason of its amendment in 1866, and its incorporation in that act, lost all separate existence, and must, therefore, stand or fall, live or die, with the act of which it had become an integral part, and if that act were repealed, such repeal could not thereby revive the first section of the act of 1846, because it had no existence and had had none since the enactment of the act of 1866.

In repealing the later act it is the same (so far as regards the prior act) as if such later act were the only one which had ever existed upon the subject, and the prior one could no more spring into life simply by reason of such repeal than if such prior act had never been passed. The mere legislative intent of the act of 1868 (assuming it to exist) could not revive the first section of the act of 1846 without something in the nature of an enactment to that effect.

There is nothing in the case of Matter of Rochester Water Works Com’rs, 66 N. Y., 415, which is at all inconsistent with the views herein expressed. The opinion therein was written by the same learned judge who subsequently wrote in the Peoples. Supervisors, and there is no inconsistency between the two. In the Rochester case the later statute which amended § 23 of the earlier statute “ so as to read as follows,” did in truth enact an entirely new section, leaving wholly out of it the original twenty-third section of the earlier act. From a perusal of the two acts and the powers granted therein the court felt sure that the legislature, by amending the twenty-third section of the earlier act in the manner stated in the later one, did not intend to repeal the earlier twenty-third section, and in truth did intend to incorporate its text into the amended section so that it should all read as one section, and thus the original section was to be continued in force. This intent was said to be made more apparent by reference to the fact that the same legislature which passed the amendatory statute, and but five days subsequent thereto, re-enacted § 23 of the earlier statute with § 23 of the amendatory act added to it.

The amendment was accomplished in the same form as the first amendment (as is stated by the court), by enacting that the original section should be “ amended so as to read as follows

Taking all the facts into consideration, the court held that it was plain the legislature, by the first amendment of the original section, did not intend to thereby repeal such original section, and giving effect to the legislative intent, the court held that such original twenty-third section was not repealed by the passage of the later amendatory act.

Applying this principle to the case in hand, the inquiry would be as to the intent of the legislature of 1866, in passing the act which, among other things, amended the first section of the act of 1846. Did that legislature intend that the first section of the act of 1846 should no longer, and as to all future matters, continue in force other than as it was re-enacted, and formed a part of the body of the section in the act of 1866 ? To that question there can be but one answer, and that is, that the legislature most undoubtedly meant by the passage of the act of 1866 to wipe out for the future, and to utterly destroy the first section of the act of 1846 ; and it is perfectly clear that such intention was carried out. Having thus, by the amendment of 1866, accomplished the total annihilation of the first section of the act of 1846, as to all matters subsequently arising the case is then brought within the principle of that of People v. Supervisors, supra, and hence a mere repeal of the act of 1866, without some language equivalent to an enactment, could not revive the absolutely dead provision of the first section of the act of 1846.

The language used by the legislature of 1868 in repealing the whole of the act of 1866 is incapable of any construction other than that which the plain language of the statute calls for. It says, in so many words, that such act “is hereby repealed," and it was thereby repealed.

The case falls within the principle of the above cited case of People v. Supervisors.

How is this result altered by the claim that the legislature of 1868 supposed, when it passed the act repealing the act of 1866, that it thereby revived the first section of the act of 1846? That supposition of the legislature of 1868, assuming it to be proved by the facts to which the plaintiffs have called our attention, cannot alter the effect of the passage of the act of 1866 upon that ■of 1846. The first section of the act of 1846 was thereby and for the future wholly and effectually blotted out, and the act of 1866 remained the only act upon the subject. Is it of any materiality that in repealing the act of 1866 the legislature intended to recreate the first section of the act of 1846, and thought it had done so, as long as it used no language to acomplish such intent? There are no words of revival or enactment to be found in the act of 1868. And to say that the act of 1868 did not wholly repeal the act of 1866 is to refuse to give judicial sanction to legislative language which is so plain as to be susceptible of but one meaning. If the entire act of 1866 be repealed by the act of 1868, then the only claim that remains must be that, notwithstanding such repeal, which in itself confessedly did not revive the first section of the act of 1846, yet the legislature proceeded in the following section of the act •of 1868 to enact provisions upon other matters which it would not have done if it had supposed that the repeal oi the act of 1866 did not work a revival of the first section of the act of 1846, and, therefore, such supposition or intent to revive, even though unaccompanied by any language which could be construed as enacting such revival, must be considered as sufficient to revive the prior act. I cannot assent to this reasoning. This is not a question of mere legislative intent. A legislative intent, to work a revival of a law which already, by legislative action, has been wholly annihilated, is not alone sufficient to accomplish such revival. There must be some language used which is at least equivalent to an enactment before an act, which had become wholly extinct and blotted out, can be revived and have the breath of life again breathed into it. -

I think it clear that legislative action upon a separate subject grounded upon an assumed revivor of a prior act, which was not accomplished by the language used, cannot stand in the place of or supply language equivalent to an enactment. In other words, legislative, intent in this instance is not equal to legislative action. The fact that in 1878 the legislature passed an act which proved that it supposed that there was then some statute in existence which provided for the payment of these fees and duties, is of no moment. If the simple belief of the legislature of 1868 as to the effect of its repeal of the act of 1866 could not accomplish the reenactment of the first section of the act of 1846, it is quite certain the result was not attained by the erroneous belief of the legislature of 1878.

Again, it appears that by chap. 310 of the Laws of 1883, the . legislature proceeded to amend § 3 of chap. 547 of the Laws of 1866, “so as to read as follows,” not remembering, as it would seem, that a legislature had totally repealed the whole of that act fifteen years before by the act of 1868, already cited.

Very probably the legislature of 1883 was not familiar with the act of 1868, and it also probably believed that § 3 of the act of 1866 was in full life. The belief of the legislature of 1883, however, has not the slightest tendency to prove what was the legal effect of the action of the legislature of 1868 upon the prior statutes. That is a simple question of law. We find from an examination of the act of 1868, that the act of 1866 was plainly and in unmistakable language repealed. The fact that the legislature of 1883 treated the third section of the act of 1866 as still alive, is simply proof of a legislative error in regard to the law.

The case at bar also plainly differs from that of In re Estate of Prime, decided at this term. In that case the later act re-enacted the provisions of the former act although not in identical language. It was argued by the appellants that the later act repealed the former one and that rights which had already accrued under the former one could neither be enforced under it because of its implied repeal, nor under the later act because its provisions were prospective only.

This highly technical and refined reasoning was not sustained by the court. We held that no such consequence followed the re enactment of the statute, because there was no such repeal of the former act under these circumstances as to prevent the enforcement of rights or duties granted or imposed under it. As to all future cases the later statute would govern.

I have thus alluded to all the statuets which have seemed to me material, and by reason of these*various enactments I think that subsequent to 1868 there was no statute of this state which provided for the payment of the duties or fees upon sales of merchandise at auction and that the plaintiffs are not entitled to recover the amounts demanded by them. As to the amounts already paid by the defendant, I do not think he can recover them back even though paid under protest. There was no coercion in the case, so that the payments which defendant actually made were purely voluntary, and for that reason not to be recovered back.

The judgment must be reversed and judgment given in favor of the defendant in conformity to this opinion, with costs in all courts.

All concur, Andrews, Ch. J., and Earl, J., in result, except Maynard, J., not sitting.


source: Caselaw Access Project

author: Andrews, Ch. J.

license: Public Domain

text:
    In the Matter of the Estate of Edward D. G. Prime, Deceased.

      (Court of Appeals,

      Filed January 17, 1893.)

    1. Statutes—Amendments.
    When a statute amends a former statute “ so as to read as follows : ” it operates as a repeal by implication of inconsistent provisions in the former law, and of provisions omitted in the amended law. Where the amended act re-enacts provisions in the former law either ipsissimis verbis or by the use of equivalent, though different, words, the law will be regarded as having been continuous, and the new enactment as to such parts will not operate as a repeal so as to affect a duty accrued under the prior law, although, as to all new transactions, the later law will be referred to as the ground of obligation.
    3. Collateral inheritance tax—Exemption—Foreign corporations.
    The exemption provided by chapter 553, Laws 1890, for charitable corporations, does not apply to foreign corporations.
    3. Same—American board of foreign missions.
    Chapter 376 of the Laws of 1877, conferring upon the American Board of Commissioners for Foreign Missions a limited privilege of taking and holding real and personal property in this state, does not relieve that corporation from a legacy duty.
    Appeal from judgment of the supreme court, general term, first department, affirming order of the surrogate of New York county fixing and assessing a collateral inheritance tax.

      Ralph E. Prime, Austin Abbott and William H. Arnoux, for app’lts; Edgar L. Levey, Emmet R. Olcott and David B. Hill, for resp’ts.

       Affirming 45 St. Rep., 883.

   Andrews, Ch. J.

Edward D. G. Prime, a resident of this state, died in the city of New York on the 7th day of April, 1871, leaving a will of real and personal property. By his will he gave cer: tain legacies to collateral relatives and to three sisters of his wife, and also to two foreign corporations, the Presbyterian Board of Relief for Disabled Ministers and the American Board of Commissioners for Foreign Missions, the former a Pennsylvania and the latter a Massachusetts corporation. His residuary estate, consisting of personal property and of real property within this state, was given to collateral relatives.

Under proceedings instituted in the surrogate’s court of the city of New York, June 5, 1891, an appraiser was appointed under the act, chapter 488 of the Laws of 1885, as amended by chapter 713 of the Laws of 1887, and chapter 215 of the Laws of 1891, and such proceedings were had that on the 12th day of October, 1891, an order of the surrogate was made assessing and fixing a tax upon the several legacies and upon the interest of the residuary legatees and devisees under the will at the rate of five per cent, on the amount of the legacies and the value of the residuary estate.

This appeal is taken by the individual legatees and devisees and by the corporations named, from the order of the general term affirming the order of the surrogate.

There are two questions in the case, one of which is common to all the appellants, and one which pertains to the two corporations alone. The general question is presented by the claim on the part of the appellants, that the only statute in force at the time of the institution of proceedings for assessing the tax, in June, 1891, imposing a legacy tax, was the act, choper 215 of the Laws of 1891, which amended the first section of the act of 1885, as amended by the act of 1887, by declaring that said first section was amended to read as follows,” and then proceeded to recite the first section as amended. The act of 1891 did not in terms repeal the corresponding section in the former acts. The section as amended embodied the same principle in respect to the taxation of what for brevity may be called collateral inheritances, as did the corresponding section in the former acts, and made no change in the rate, but in prescribing the rate it does not follow the exact language of the prior acts.

The claim as we understand it is that a statute which amends a prior statute in some particulars under the formula, “ so as to read as follows,” operates as a repeal of the whole statute amended, unless provisions intended to be retained are incorporated in the amended statute in the same precise words of the former statute, without change of phraseology; and that it makes no difference although the same provision in substance is contained in the amending, as in the original statute, nor although the transposition and collocation of words in the amending act was for the purpose of adjusting the new features brought in by the amendment so as to make the new and the old provisions harmonious in their relation and expression. Starting with this premise, it is then claimed that the first section of the act of 1887 having been repealed by implication, without saving to the state the right to proceed under the prior law to assess and collect the tax on estates of decedents who died prior to the passage of the act of 1891, there was no law when the assessment in this case was made authorizing such assessment. No assessment, it is insisted, could be made at that date under the law of 1887, because the first section of that act (the one imposing a tax) had been repealed by the act of 1891 before any fixed right of the state to assess and tax the estate in question had accrued, and no assessment could be made under the act of 1891, because that act was prospective and applies only to cases where death occurred subsequent to its passage.

Bj this process of reasoning it is sought to establish that the tax in this case was unauthorized, and although it is admitted that if the act of 1885 had remained in force, or if the decedent had died after the passage of the act of 1891, or if the language of the first section of the act of 1887, as to the taxation of collateral inheritances, had been incorporated ipsissimds verbis in the act of 1891, the interests in question would have been taxable, yet it is insisted that the right to tax has been lost by the lack of verbal identity between the two sections.

We think the contention upon this point has no support in authority or reason. The appellants rely upon the language of Denio, J., in Ely v. Holton, 15 N. Y, 595, in which case there was under consideration an amendment to one of the sections of the Code, which re-enacted the original section “ to read as follows,” but added a new provision giving a right of appeal where none existed before, which new right was invoked by a party whose rights had been concluded before the amendment, according to the prior law. It was held that a party so situated was not entitled to the new privilege. Judge Denio, in the course of his opinion, speaking of the effect of such amendatory statutes, said: “The portions of the amended sections which are merely copied without change are not to be considered as repealed and again enacted, but to have been the law all along; and the new parts, or the changed portions, are not to be taken to have been the law at any time prior to the passage of the amended act.” The language “ copied without change ” is relied upon as indicating that it is only where there is verbal identity between the language in the first act and that of the second act, that the amended act will be deemed a continuation of the former act, and that it is not sufficient to prevent a repeal by implication that the provisions are identical in substance. The learned judge used, language appropriate to the case before the court, but the general provision enforced by the decision cannot have so narrow and confined an application as is now claimed.

It is very plain that the legislature, which bad established a new policy in the taxation of the right of devolution or succession, and was year by year perfecting the system and enlarging its scope and efficiency by new legislation, never intended to repeal the prior acts in these respects in which the new enactment corresponded in meaning with the prior law. It is obvious that the main purpose of the act of 1891 was to add a new class of taxable estates exempted by the former law, and to this extent there was a repeal of the inconsistent provision of the former acts. In recasting the section much of the language of the act of 1887 is repeated, sections are transposed, and in respect to the tax on collateral interests the rule is expressed in slightly different language, but with no change in substance

The distinction sought to be made between this case and the principle decided in Ely v. Holton, supra, is narrow, technical and illogical. The appellants refer in support of this contention to the case of Nash v. White's Bank of Buffalo, 105 N. Y., 245; 8 St. Rep., 31. In that case the subsequent a!ct, which was held to be a repeal of the former one, changed and increased the penalty prescribed by the first act for taking unlawful interest, and expressly repealed “ all acts and parts of acts inconsistent therewith,” and it was properly held that this terminated proceedings under the prior law.

The case of Commonwealth v. Herrick, 6 Cush., 465, resembles much more nearly the case before us. The defendant had been convicted of selling spirituous liquors contrary to law, and a motion was made in arrest of judgment on the ground that the statute under which the defendant had been convicted had been since repealed. The repeal was claimed to have been effected by the statute of 1853, which amended the former law by inserting the word ‘‘intoxicating" in place of the word “spirituous.” The court, Shaw, Oh. J., after noting the fact that the penalty had not been changed, proceeded to inquire as to the intent of the legislature, and said : “ It is very manifest that it was not the intention to put an end to the operation of the former act; on the contrary, they intended that it should continue in operation under a modification. Their intention manifestly was not to take away, diminish or alter the penalties in existing cases, but to bring another class of cases within the operation of the act not included before. So.far as this did include new cases, it was a new law.” He then proceeded to show that the word “ intoxicating " included “ spirituous liquors,” and, therefore, that there had been no moment from the time the offense was committed that the law was not in force punishing the offense of retailing spirituous liquors, and the motion was denied.

We conceive the general rule to be that when a statute amends a former statute “ so as to read as follows,” it operates as a repeal by implication of inconsistent provisions in the former law, and of provisions omitted in the amended law. Where the amended act re-enacts provisions in the former law, either ipissimis verbis or by the use of equivalent, though different, words, the law will be regarded as having been continuous, and the new enactment as to such parts will not operate as a repeal so as to affect a duty accrued under the prior law, although, as to all new transactions, the later law will be referred to as the ground of obligation. See Moore v. Mausert, 49 N. Y., 332 ; People v. Supervisors, 67 id., 109.

The conclusion we have reached makes it unnecessary to consider the point whether, if the act of 1891 repealed the first section of the act of 1887, the repeal operated to prevent the subsequent assessment and collection of a tax on the estate of decedents who died intermediate the act of 1887 and the act of 1891.

The more interesting question, and the one of greater importance from the larger interests involved in its determination, arises on the appeal of the charitable corporations. It is claimed that they are exempted from a legacy tax under the Law of 1891, by the act, chapter 553 of the Laws of 1890. Under the act of 1887 legacies to charitable and religious corporations, whether domestic or foreign, were not exempt from the collateral inheritance tax. This was adjudged in the case of Catlin v. Trustees of Trinity College et at, 113 N. Y., 133; 22 St. Rep., 189. In that case two legacies were in question, one to a church in Poughkeepsie, and one to Trinity College, Hartford, Conn. The act of 1887 limited the general words in the first section of the act, subjecting “all property ” passed by will or upon intestacy to the tax, by exempting property so passing to certain near relatives, and property passing to “ societies, corporations and institutions now exempted by law from taxation.” It was claimed in the Catlin case that the legacies there in question were within the exemption of the act of 1887, for the reason that the personal property of a college or religious corporation was exempt from taxation under the provision of the Revised Statutes, 1 R. S., 388, § 4, subd. 7, exempting from taxation “ the personal property of every incorporated company not made liable to taxation on its capital in the fourth title of this chapter.” It was held that religious or charitable corporations were not exempted from general taxation under this provision of the Revised Statutes, and there being no other statute under which exemption from general taxation was claimed, the court affirmed the judgment sustaining the tax.

The provision in the act of 1891 as to exemptions of corporations from the collateral inheritance tax is the same as in the act of 1887, except that the words “ or from collateral inheritance tax ” were added. It is obvious that the corporations now claiming exemption from the legacy tax must be able to point to some statute of this state antedating the assessment of the legacy duty which exempts foreign religious and charitable corporations from taxation generally, or specially from taxation under the inheritance tax law. There was no such statute in existence when the Gatlin case was decided, and if it is to be found, it must have been enacted between 1887 and the time of the assessment of the taxes in question, in 1891.

It is conceded by the appellants that no exemption from a legacy duty upon legacies to foreign religious and charitable corporations exists unless given by the act, chap. 553 of the Laws of 1890, but it is claimed, and the claim has been enforced by most elaborate argument of counsel, that that act does exempt from the operation of the inheritance tax law all charitable and religious corporations, foreign or domestic, whether created by the laws of this state or the laws of any other state or government.

The respondents contend that the act of 1890 applies to domestic corporations only, and that foreign corporations of the class mentioned in the act are not entitled to the benefit of its provisions. The decision of the question as to the validity of the legacy tax imposed on the legacies to the foreign corporations turns upon this controversy. The act, chap. 553 of the Laws of 1890, is entitled “An act to amend chapter one hundred and ninentv-one of the Laws of eighteen hundred and eighty-nine, entitled ‘An act to limit the amount of property to be held by corporations organized for other than business purposes, and relating to such corporations.’ ” It amends the several sections of the former act “ so as to read as.follows,” and the act is as follows :

“ Section 1. Any religious, educational, bible, missionary, tract, literary, scientific, benevolent or charitable corporation, or corporation organized for the enforcement of laws relating to children or animals, or for hospital, infirmary, or other than business purposes, may take and hold, in its own right or in trust for any purpose comprised in the objects of its incorporation, property not exceeding in value three million dollars, or the yearly income derived from which shall not exceed two hundred and fifty thousand dollars, notwithstanding the provisions of any special or general act heretofore passed or certificate of incorporation affecting such corporations. In computing the value of such property, no increase in value arising otherwise than from improvements made thereon shall be taken into account. The personal estate of such corporations shall be exempt from taxation and the provisions of chapter four hundred and eighty-three of the laws of eighteen hundred and eighty-five, entitled An act to tax gifts, legacies and collateral inheritances in certain cases,’ and the acts amendatory thereof, shall not apply thereto, nor to any gift to any such corporation by grant, bequest or otherwise; provided, however, that this provision shall not apply to any moneyed or stock corporation deriving an income or profit from the capital or otherwise, or to any corporation which has the right to make dividends or to distribute profits or assets among its members.

“ § 2. This act shall not affect the right of any such corporation to take and hold property exceeding in value the amount specified in section one of this act, provided such right is conferred upon such corporation by special statute; nor affect any statute by which its real estate is exempt from taxation.

“ § 3. This act shall take effect immediately.”

The act of 1889, of which the act above quoted is an amendment, contained no provision exempting the corporations named therein from taxation, either general or special. The sole purpose of the original enactment was, as the title indicates, to fix a limit within which corporations of the classes mentioned should be permitted to take and hold property. This legislation was the culmination of a policy, which had steadily been pursued through successive acts of legislation, to remove the close restrictions originally imposed upon the power of such corporations as to the amount of property which they should be permitted to take and hold. The act permitted such corporations to hold property not exceeding two million dollars, or property, the yearly income from which shall not exceed one hundred thousand dollars.

The changes effected by the amendment of 1890, were (1) the inclusion of other corporations of a charitable character in the enumeration ; (2) the extension of the limit of property from two to three million dollars, and of income from one hundred to two hundred and fifty thousand dollars; (3) the exemption of the personal estate of the corporations named from general taxation and from collateral inheritance tax; (4) the exclusion of certain corporations which (although organized for quasi charitable purposes) derived an income or profit from capital or otherwise, and dividend paying corporations, from the benefit of the provision granting exemption from taxation.

It seems very plain that the purpose of the original act of 1889, and of the amending act of 1890, was to regulate and define the corporate powers and privileges of the domestic corporations only. They are acts conferring and regulating corporate capacity and privileges. The power of corporations to take and hold property is a corporate power and depends upon their charters. The law of this state cannot enlarge or change the powers of a foreign corporation. They are solely those given by the law of the domicil. Foreign corporations are permitted by comity to exercise their powers within this state, when not in contravention of our statutes or public policy. Statutes have been framed from time to time permitting such corporations to hold property here. The statute of 1887 (chap. 450), which authorizes corporations organized under the laws of other states, doing business in this state, to hold necessary real estate herein, is an example. But such enactments do not change, modify or enlarge the powers of corporations given by the state which created them. They are simply enabling statutes authorizing such corporations to exercise their charter powers in this jurisdiction. The question now presented is the same as would have arisen under the original statute of 1885, if a foreign corporation while that statute was in force had claimed the right to take and hold real property within this state of the value of $2,000,000. It is scarcely possible to conceive that there could have been in the case supposed a serious question that the statute applied to foreign corporations, or was intended to give to such corporations the powers claimed. Such legislation would be unprecedented. Under the act of 1890, if foreign charitable corporations are within its purview, they may acquire and hold in this state real estate to the amount of $8,000,000, or property yielding an annual income of $250,000, and are placed on the same footing as domestic corporations of the same character.

One of the amendments made by the act of 1890, to the act of 1889, was the insertion after the words “ may take and hold ” the words “ in its own right or in trust for any purpose comprised in the object of its incorporation," so that, as the act now stands, giving it the construction claimed by the appellants, real property of a value, or yielding the income specified in the act, may be acquired and held here by any foreign corporation of the class mentioned, upon any trust authorized by its charter, however .much such trust might contravene the policy of this state or our statutes regulating and 'defining trusts in real property. If the statute relates to domestic corporations only, there is no inconsistency. They derive their powers from this state, and it is to be assumed that corporate powers will be granted with reference to the general policy of our laws.

Some stress is laid by the learned counsel for the appellants upon the words in the act of 1890, “nor to any gift to such corporation by grant, bequest or otherwise,” at the end of the clause of exemption. The exemption clause commences with the words, The personal estate of such corporation shall be exempt from taxation," etc. The words “ grant, bequest or otherwise ” may have been inserted at the end to cover grants or devises of real property. It is not necessary to decide whether this object was effected by the words used. But the emphasis- is not, we think, to be found on the words, “any such corporation," so as to strengthen the argument of the appellants that foreign corporations are comprehended in the statute.

In general we are of opinion that a statute of a state granting powers and privileges to corporations must, in the absence of plain indications to the" contrary, be held to apply only to corporations created by the state and over which it. has the power of visitation and control. Such is the natural interpretation of such legislation, in the absence of contrary intention appearing on the face of the act. The law in such cases is dealing with its own creations, whose rights and obligations it may limit, define and control.

In the case of White v. Howard, 46 N.Y., 144, a question arose as to the construction of § 3, 2 Rev. St., 57, which declared that lI no devise to a corporation shall be valid unless such corporation be expressly authorized, either by its charter or by a statute, to take by devise,” as applied to a devise to a foreign corporation authorized by its charter to take by devise. The devise was held to be invalid on the ground, among others, that the words “ by its charter or by statute ” in the section quoted, referred to a charter or statute of this state. Grover, J., delivering the opinion of the court, said:

“ Creating or chartering corporations involves an exercise of the legislative power. They may be created by a particular statute granting the charter or organized by virtue of general statutes prescribing the mode, specifying the powers and privileges to be enjoyed. In either mode the corporation is, in a legal sense, created by statute; and where § 3 provides that no devise to a corporation shall be valid unless such corporation be expressly authorized by its charter or by statute to take by devise, it is equally clear that such charters were only intended as were granted by a statute of this state, or organized under a general statute of the state, as it is that by the words 1 by statute ’ a statute of the state was intended. Any other construction would work a complete revolution of the policy of the state.”

The claim that the test of liability of foreign corporations to- a legacy tax is the liability of a domestic corporation of the same character to the payment of such a tax, and that if one is exempt, the other is exempt also, has, we think, no foundation. In both cases the question is the same, has the statute made the legacy taxable ? In the Gatlin case exemption of both the domestic and foreign corporations was claimed under the Revised Statutes alone. If this statute did not exempt the domestic corporation, concededly it did not exempt the foreign one, and, for convenience in deciding the case, both were regarded as domestic corporations.

In Hollis v. Drew Theological Seminary, 95 N. Y., 166, the question was whether the two months limitation in the 6th section of chapter 319, Laws of 1848, which section prohibited bequests to “ any corporation formed under this act,” applied to a bequest to the defendant, a corporation of another state, and it was held that it did not (1) because the prohibition was confined to bequests to corporations organized under the act of 1848, and (2) for the reason that no public policy existed which required its extension to bequests to foreign corporations. The absence of such a general policy was indicated by the numerous corporations in the state organized after the act of 1848, as to which the power of testators to make bequests was not subject to the restriction in that act.

The argument that gifts for the promotion of charity, education and religion should be encouraged and should not be diminished by exactions of the state, presents a moral and political rather than a judicial question. It is the duty of courts in the interpretation of statutes to declare the law as it is, and the interests of society are best subserved by a close adherence by courts to what they find to be the plain meaning, neither narrowing the application on the one hand, nor extending the meaning on the other, to meet cases not specified, which may seem to be within the reason of the law. A general law of the state prohibiting corporations from exercising particular powers will operate upon foreign corporations, not because the act binds such corporations ex proprio vigore, but for the reason that their exercise of such powers here would violate the public policy of the state indicated by the general restraint imposed upon our own corporations. It is the policy of society to encourage benevolence and charity. But it is not the proper function of a state to go outside of its own limits and devote its resources to support the cause of religion, education or missions for the benefit of mankind at large.

The argument may have force that the state might, consistently with its proper function, give immunity from taxation to some of the foreign corporations engaged in the work of education or charity. But, however this may be, we are convinced that the statute of 1891 has no application to foreign corporations, and having reached that conclusion our duty is ended.

• Upon the view we have taken the act, chapter 376 of the Laws of 1877, conferring upon the defendant, the American Board of Commissioners for Foreign Missions, a limited privilege of taking and holding real and personal property in this state, does not relieve that corporation from a legacy duty. That was an enabling statute merely. The corporation remained a foreign corporation as before, but possessing in this state a privilege granted by that statute.

Our conclusion is that the judgment below should be affirmed.

Judgment affirmed, with costs.

All concur.


author: O’Brien, J.

text:
    Dorman Walradt, Assignee, Resp’t, v. The Phœnix Ins. Co. of Hartford, Conn., App’lt.

      (Court of Appeals,

      Filed January 17, 1893.)

    Insurance (Fire)—Breach op condition op policy—Ownership.
    Defendant’s policy provided that it should be void if “any change other than by the death of an insured take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment or by voluntary act of the insured or otherwise.” Held, that a levy under an execution simply gave the sheriff authority at some future time and in the , mode prescribed by law to expose the property of the debtor for sale, but made no change of interest as contemplated by the policy.
    (Earl, Peckham and Gray, JJ., dissent.)

      Appeal from judgment of the supreme court, general term, third department, affirming judgment entered upon verdict of j ury.

      A. H. Sawyer, for appl’t; C. W. Thompson, for resp’t.

         Affirming 45 St. Rep., 908.

   O’Brien, J.

The payment of the loss in this case is resisted by the insurance company upon the ground that there was a breach of one of the conditions of the policy, upon which its liability depended. The question upon which the case turns is the construction and effect to be given to the following condition, constituting a part of the contact.

“ This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has, etc, * * * ; or if any change, other than by the death of an insured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard) whether by legal process or judgment or by voluntary act of the insured or otherwise.”

We agree with the learned counsel for the defendant that such a condition in a contract of insurance must be construed fairly and in accordance with what appears or must be presumed to have been the intention of the parties. The subject of the insurance was a stock of goods described as then in a brick store in the village of Theresa, N. Y. The property was destroyed by fire which occurred about twelve o’clock on the night of April 4, 1890, and when the policy was in force with respect to the time of the insur-. anee. Nearly two months before the fire a judgment was recov-t ered against the insured, who was the plaintiff’s assigor, and on April 2,1890, an execution was issued upon the judgment to the sheriff of the county and delivered to him the next day. On April 4, the day following, the sheriff went to the store of the insured and demanded payment of the amount of the execution, and payment not being made he levied upon all the goods, which, at the trial, were shown to have been worth about $11,000, and the sum due upon the execution was something over $1,000. Some discussion appears to have been had in the courts below in regard to the question whether what was done by the sheriff amounted to a legal levy upon the property, but a correct conclusion seems to have been reached in that respect, as it appears that he procured the key of the store and took what, at least, amounted to symbolical possession, at the same time making a minute of the levy upon his book. The day after the fire the insured made a general assignment to the plaintiff for the benefit of creditors. The defendant insists that, upon these facts, there was such a change of interest and change of the possession as avoids the policy, within the meaning of the above conditions. If there was a change of interest, within the meaning of the policy, that result was produced by the delivery of the execution to the sheriff, as the goods of the debtor are bound from that time. Code, § 1405. The levy was not necessary to work such change, and the only effect it had was to change the possession. We must first determine what the parties to the contract intended when they made use of the terms, “ change in the interest, title or possession of the subject of insurance.” The interest which a person may have in property is affected in many ways without producing a change in such interest, as that term is generally understood; when he contracts a debt or incurs an obligation this, in a broad sense, may affect such interest, as the property constitutes the means of payment, and his pecuniary condition, in a general sense, depends upon what he has left after discharging all his debts and obligations. The debt assumes another form by the recovery of a judgment, and. the execution is the process which, when delivered to the officer, clothes him with authority to enforce the collection of the debt. That is the foundation of all the subsequent steps, and while each event in the progress of proceedings for collection may bring the debtor and creditor into closer relations and press nearer upon the property of the debtor, yet his title or interest in the property is not divested or transferred until a sale is made, which operates in law to transfer his interest to another. By the delivery of the execution and the levy thereunder the officer has simply obtained authority, at some future time and in the mode prescribed by law, to expose the property of the debtor for sale, and that is the final act which changes the title and interest of the debtor. The officer has, no doubt, in law and from the necessity of the case, a sufficient interest in the property levied upon to enable him to protect it by insurance or against the acts of wrongdoers, otherwise the proceedings for collection of the debt might be defeated, but still the owner retains the title in the same sense that he did after he made ■ default in the payment of the debt, which, as we have seen, is the basis of every step in the, process of enforcement. His interest is, no doubt, affected by the issuing of the execution and the levy, but that is also true, though, perhaps, in a more remote sense, by contracting the debt. The words “change of interest,” as used in the policy, are substantially synonymous with the words “ change of title,” and neither event occurs until the sale upon the execution. It may be asked what effect is, under such construction, to be given to the word interest, as used in the condition. It must be borne in mind that the standard policy now in use is so framed as to contain words suitable and applicable to every subject of insurance, but all the provisions are not necessarily applicable in every case. That must always be so whenever a contract in the same form and expressed in the same language is sought to be applied to different things, or to different classes of property. The subject of insurance, its condition and situation and the surrounding circumstances may vary so as to render words and phrases contained in the policy not strictly applicable. There is a large class of risks, however, to which the word “ interest ” as used in the condition under consideration is, no doubt, applicable. Policies are frequently written in favor of parties who have a claim upon property in the nature of a lien to secure the payment of a debt, and, perhaps, for other purposes.

When the debt is paid or transferred the interest of the insured in the subject of insurance is changed and the idemnity of the policy cannot inure to the benefit of another in the absence of express provision or consent of the company. In such cases the word can have full effect and a perfectly natural and appropriate application. It is manifest that the parties to this contract knew and intended that in some respects the interest of the insured in the property covered by the insurance would be changing from, day to day. The insured was a country merchant who, after he had effected the insurance, was at liberty to carry on trade in the goods, to buy and sell and contract debts as before and, under such circumstances, to say that whenever an execution was delivered to the sheriff, or even the town constable, for any sum. no matter how insignificant, the policy was thereby avoided, would be to give to this condition a very harsh and narrow construction and one which, it seems to me, was never within the contemplation of the parties. The fair and reasonable construction which we are bound to give to the contract does not require us to go as far as that. Quinlan v. Providence W. Ins. Co., 133 N.Y., 365 ; 45 St. Rep., 200. There are cases where it has been held that the recovery of a judgment and the levy of an execution avoided a policy, but that was in consequence of an express provision to that effect in the policy. These provisions have been omitted from this policy and the same result cannot be accomplished by a condition against a change of interest.

That there was no such change of interest in this case as is fairly contemplated by the policy has been conclusively settled against the defendant’s contention by a decision of this court. In Green v. Homestead Fire Ins. Co., 82 N. Y., 517, the policy contained a condition rendering it void “if the interest of the insured be changed in any manner, whether by act of the insured or by operation of law.” The subject of the insurance was real property and a mechanics’ lien had been filed and took effect thereon within the life of the policy and before the loss. It was urged by the defendant that there could be no recovery in the case for the reason that there was a breach of the condition against any change of interest. Judge Rapallo, giving the opinion of the court, disposed of the question in a single sentence in which he said: “ The notice filed in pursuance of the mechanics’ lien law clearly did not affect any change of interest in the property insured,” and the plaintiff recoverd. I am unable to perceive that there is any satisfactory distinction to be made between the filing of a mechanics’ lien upon real estate and the delivery of an execution against personal property, followed by a levy. So that, upon authority and reasonable construction as to the intention of the parties, there was no change of interest in the case at bar.

The change of possession produced by the levy and the action of the sheriff remains to be considered. The policy is not avoided, by the terms of the condition referred to, by every change of possession that may take place in the property. A change of occupants, without increasing the hazard, is excepted from the operation of the condition and does not invalidate the insurance. The learned counsel for the defendant argues that the exception in the

condition does not apply when personal property is the subject of the insurance, and does not apply in this case, as there cannot be an occupant of goods in a store consistent with the ordinary and appropriate use of language. The general term- has shown that the word occupant is sometimes used with reference to personal property. When the subject of insurance is a ship, a building not attached to the soil, so as to become part of the realty, or other' ^things of like character, the term “ change of occupants ” would be" appropriate. When it is used in reference to goods in a store its fitness is not só appárent. But as the words of the policy were used to meet all cases, we have no right to say that the exception in the condition was not designed to apply when goods were the object of insurance, merely because the term “change of occupants ” does hot seem to be the most natural and appropriate. A large part of the contracts of insurance now entered into relates to personal property, and to hold that such an important exception, as that now under consideration, to the broad terms of a condition, had no application to such contracts, would make the rights of the parties turn upon the literal meaning of a word. What the parties intended was that a change in the control and dominion over the property should not avoid the policy, unless such change rendered the risk more hazardous. A change in the possession of a store of goods must, moreover, refer to the place where the goods are situated. In this case they are described as situated in a bric-lc store. The place where the goods were kept, though not the subject of insurance, was an important element in the risk, and it was natural and proper for the parties to provide against a more hazardous change in the occupancy of that place, and hence the. parties agreed that in case the possession of the goods changed, that fact alone would not avoid the policy unless the occupancy of the place where they were was also changed in such a manner as to become more hazardous. In this way the words of the exception can be given their ordinary and natural meaning and the exception itself can have effect. It is only in a plain case that we are warranted in saying -that the parties have used language not intended to have any application to the subject matter of the contract. Whether the change of possession that was shown in this case, followed by a change of occupants, was or "was not more hazardous, depended upon the circumstances shown and presented a question of fact which the learned trial judge properly submitted to the jury, and was determined in favor of the plaintiff. While the act of 1886 (chap. 488) makes the use of uniform policies by insurance companies compulsory, the state did not assume to dictate its form. That was left to the underwriters themselves, and it must be assumed that they used words and phrases in conditions with reference to the previous decisions of the courts in respect to their meaning and effect, and, when they used the expression “ change of interest," they must have had in mind the fact that this court had held that the filing of a mechanics’ lien did not work such change, and, therefore, it is reasonable to assume that it was understood that the lien acquired by a levy upon goods, under an execution, would have no such effect. So also the conditions with respect to change of possession had been frequently construed, and it had been held that the transfer of an. interest by one partner to another, or the appointment of a receiver of partnership property, in - an action to dissolve the partnership, and other acts of the insured in regard to the subject of the insurance, did not produce such change within the meaning of_conditions substantially like the one in this case. Keeney y. Home Ins. Co., 71 N. Y., 396; Hoffman v. Æina Fire Ins. Co., 32 id., 405; Browning v. Home Ins. Co., 71 id., 509 ; Shearman v. Niagara Fire Ins. Co., 46 id., 526; Hitchcock v. Northwestern Ins. Go., 26 id., 68 ; Hennessey v. Manhattan Fire Ins. Co., 28 Hun, 98.

While the provisions of the contract are not to receive a harsh or narrow construction against either the insurer or insured, still the question must be solved by an application of the principles which courts have applied in analogous cases. There is an exception in the case to the ruling of the learned trial judge, that the forfeiture of the policy, if any, might be considered as waived by the defendant in receiving notice and proofs of loss without objection, after knowledge of all the facts. No question of that kind seems to have been submitted to the jury, as they were allowed to pass upon but one question, namely, whether the hazard was increased by the change of possession. But as we are of opinion that there was no breach of the conditions, and that whatever was said upon the subject of waiver by the trial judge was upon the assumption that there was, or might have been, such breach, and a consequent forfeiture, the ruling is now immaterial. The other questions in the case present no ground for reversal, and were correctly disposed of in the courts below.

The judgment should be affirmed.

Judgment affirmed, with costs.

All concur, except Bare, Peckham and G-rat, JJ., dissenting.


author: Maynard, J.

text:
    Ophelia J. Cuthbert, Resp't, v. Cordelia D. Chauvet et al., Resp’ts, and The New York Life Insurance & Trust Co., App’lt.

      (Court of Appeals,

      Filed January 17, 1893.)

    Trustee—Cannot be compelled to join in compromise which would
    DESTROY THE TRUST.
    The supreme court has no power to authorize a trustee to enter into a stipulation which provides that a judgment shall be entered adjudging a will creating the trust void as a will of real property, and thus annihilating the real estate trusts created by it.
    Appeal from j udgment of the supreme court, general term, second department, affirming order directing the trust company to become a party to a compromise agreement entered into by the beneficiaries under a will.

      R. S. Emmet, for app’lt; Calvin Frost, for resp’ts.

       Reversing 48 St. Rep., 346.

   Maynard, J.

The appellant, who is the trustee of certain express trusts of real property, under the will of Francis W. Lasak, deceased, has been authorized and directed by the order of the supreme court to enter into a stipulation, which provides that a judgment shall be entered adjudging the will void as a will of real property and thus annihilating the real estate trusts created by it. We know of no power possessed by any court to compel a trustee to consent to a destruction of the trust, and the statutes of this state have denied to a trustee the power to do any act of his own volition which will accomplish such a result. The will of Lasak was admitted to probate by the surrogate of Westchester county after a prolonged contest, having for its foundation an alleged want,of testamentary capacity, and his decree has been affirmed by this court. In re Lasak, 131 N. Y, 624; 43 St. Rep., 101. The trustee has thus become vested with a title to the trust property which is presumptively valid, and which cannot be impeached except for the incapacity of the testator or for fraud or undue influence in the execution of the will. The burden of establishing its invalidity is cast by law upon the party assailing it, and the situation of the trustee in this respect is not different from that of the grantee of real estate under any other mode of conveyance. The grant may always be avoided by showing the incompetency of the grantor, or that its execution was procured by fraud or duress. By the 60th section of the Law of Uses and Trusts, 4 R. S. [8th ed.] 2438, the whole estate in the lands embraced in the trust provisions of the will is for the time being vested in the trustee, both in law and in equity, subject only to the execution of the trust. A judgment of the court which compels him to part with his title to this property without a trial, without the submission of competent proofs, and without the application of the well established principles of law regulating the determination of such questions, is in direct violation of the fundamental law of the state and of society.

It is true that courts of chancery and' other equity tribunals have always exercised a supervisory power over the management of trust estates and the conduct of trustees, but they have never, save in exceptional cases, asserted the power to dissolve a trust before the expiration of the term for which it was created. The exceptions have been rare, and have'always belonged to a well defined class, where the interference of the court did not disturb or destroy the trust scheme, but was rendered necessary in order to prevent its entire failure. Trusts which have become impossible of performance because of the existence of conditions not anticipated or foreseen when they were created, are of this character ; also marriage settlements where the marital relation has been annulled ; and other kindred cases. There was also a larger class, where the court would decree dissolution of the trust upon the application of all the interested parties, but this was strictly limited to cases where the whole design and object of the trust scheme had been practically accomplished, and all the interests created by it had become vested. 2 Perry on Trusts, 3 ed., § 920; Bowditch v. Andrew, 8 Allen, 341. Even then the assent of the trustee was essential to the exercise of jurisdiction. In none of these cases could it be said that the plan of the trust had been defeated, or the trust funds diverted from their original purpose. In ail of them the trust had become moribund and its life had practically terminated by the force of events not within the control of the trustee, and for which provision had not been made in the trust deed, and a final distribution of the trust estate could properly be decreed; but we have failed to find a case where it was ever attempted, as it is here, to strangle a trust in its infancy by judicial coercion. It is unnecessary to inquire whether, since the adoption of the Revised Statutes, even this limited power of a court of equity to abridge the trust term still survives, for none-of the facts have been shown to exist in the present case which are necessary to call for the exercise of its jurisdiction.

The design of the trust has not been accomplished, for its execution has scarcely yet been undertaken by the trustee; the trustee refuses to consent to its extinguishment; and there is no insuperable obstacle in the way of its complete performance according-to the intent of the settlor. The only obstruction which,'it is claimed, stands in the way of the consummation of the trust, project is the opposition of the heirs-at-law of the testator and of the beneficiaries of the trust, who, it seems, are not disposed to-acquiesce in the decree of the surrogate as a final adjudication upon the mental capacity of their ancestor, and who have brought, ten actions in ejectment to recover possession of the lands devised in trust; which have been defended by the trustee, and one of which has been tried and resulted in a disagreement of the jury. An action of partition is also pending, in which this appeal is entitled, brought by one of the heirs, who is also a devisee. What the pleadings are we are not informed, but it is evident that under proper issues, framed according to the provisions of § 1537 of the Code, the validity of the real estate trusts can be litigated, and finally and conclusively determined in this suit. An action has. also been commenced for the establishment of the will, but whether brought under §§ 1866 or 2653a, passed May 14, 1892, does not-appear, probably under the former, as the latter is declared not to-be retroactiva It must be admitted that this array of litigation is not likely to be productive of great profit to the trust estate, and may possibly tend to its depletion, but it furnishes no sufficient reason why its extinction should be abruptly and summarily decreed by the court. The trustee makes no complaint that in-consequence oE it he finds the execution of his trust duties difficult or impossible, and the parties who have initiated the litigation will hardly be permitted to make use of it as a plea for the abandonment of the trust provisions in the will. Trusts are usually created for the purpose of withholding from the beneficiaries or-other interested parties the control and disposition of the principal of the trust fund for reasons which appear sufficient to the settlor, and they are not, as a general rule, regarded with satisfaction by the persons who are thus deprived of the possession of the trust estate ; and if the precedent here sought to be established should prevail, it would be easy for the parties who would profit, by a dissolution of the trust to create a condition which would render such a result attainable. We also think that this order is expressly inhibited by the provisions of §§ 63 and 65 of the Statute of Uses and Trusts, 4 R. S. [8th ed.] 2438 and 2439, which declare that in a trust of this character the beneficiary cannot assign or in any manner dispose of his interest, and that every sale, conveyance, or,other act of the trustee in contravention of the trust shall be absolutely void. The Revised Statutes effected great changes in the law of trusts. Secret, passive, formal and resulting trusts, with some exceptions, were abolished, and express ^ trusts authorized, but limited to a few designated objects, and their creation in perpetuity prohibited. At the same time the power of the beneficiary and of the trustee to alienate the trust property, even with the approval of the court, was taken away. The statute plainly endows all express trusts of realty which are valid in their creation with the attribute of indestructibility.

This statute received a construction very soon after its adoption by the chancellor in Wood v. Wood, 5 Paige, 596, where it was held that -the trustee could not, even at the request of the beneficiary ■and with the direction of the court of chancery, do any act, or ■consent to a different disposition of the estate, which would be. ■equivalent to a virtual alienation of the property devised to him in trust. In Cruger v. Jones, 18 Barb., 467, the only alienation proposed was a mortgage of the trust estate to provide funds for the erection of buildings and the making of other permanent improvements upon it for the purpose of enhancing its productiveness, and the learned judge who delivered the opinion of the court declared with great earnestness:

“ Large as its jurisdiction is, both in law and equity, I know of no such power, even in the supreme court, to dispense with the enactment of the legislature, and make that valid which the lawgiver has declared shall be void. The parties interested sanction, ^ it is said, the act, and desire that it may be done. But the law says, in such a trust, the parties beneficially interested cannot assign, or in any manner dispose of, their interest. How, then, can their consenting to, or joining in, the mortgage, improve its efficiency ? It is void as the act of the trustee, and void as the act ■of the beneficiary, and must, therefore, in this view, be void in ¡fofo.”

This language was quoted with approval by Judge Earl, in Douglas v. Cruger, 80 N. Y, 19, where it is said: “ The supreme ■court has not the power to destroy a valid trust The purpose of the statute was to make these trust estates and trust interests indestructible and absolutely inalienable during the existence of the trust, and if they could be rendered alienable by order of the } ■court, the whole scheme of the statute would be greatly impaired and its purpose thwarted. The statute does not confer upon the supreme court power to authorize such conveyances.”

The same doctrine was reiterated by Ch. J. Andrews in Lent v. Howard, 89 N. Y., 169.

The authorities to which our attention has been called by the respondent’s counsel all relate to matters resting in the discretion of the trustee. If he has been invested with a discretionary power in the trust deed, the court will closely scrutinize his acts, and interfere to control his conduct whenever necessary to prevent him from so exercising his discretion as to oppress the beneficiary or cause loss to the trust property. In other words, the jurisdiction of the court can always be invoked for the conservation of the trust, but never for its destruction. In the present case the trustee has no discretion to exercise. It has been suggested that he might allow judgment to be taken in this action adjudging the trust provisions of the will to be void, either by the service of an offer,, or by a failure to answer. We cannot approve of this view of his powers. The absolute and positive duty is imposed upon him to defend the life of the trust whenever it is assailed, if the means of defense are known to him or can with diligence be discovered. The statute above referred to, which enjoins upon him to refrain; from doing any act which will defeat the trust, embraces defaults- and other omissions of duty as well as open and avowed acts of hostility. If a stipulation which permits a judgment to be entered rendering void the trust conveyance is not an act “ which contravenes the trust,” it will be difficult to conceive of any action on the part of the trustee which could produce such a result.

It is urged that inasmuch as one of the beneficiaries of thesetru-sts is an infant, and his estate is endangered by the litigation, the court had power to intervene and compel the trustee to enter into a compromise which secures a fund for the benefit of the infant, which may otherwise be lost. >

Where only the rights of the infant are involved a court of equity undoubtedly possesses large discretionary power which it may exercise for the protection of the property of those who are in law deemed to be its wards; and which may be exerted to control the action of the custodian of the minor or of his estate. But this jurisdiction cannot be employed to deprive others of the title to property which they have lawfully acquired, and the trustee-holds the estate committed to him for the benefit of all the parties who are presently or will be eventually entitled to share in its enjoyment.

The orders of the general and special terms must be reversed and the petition dismissed, with costs out of the estate.

All concur, except Earl, J., not voting.


text:
    John J. P. Read, Resp’t, v. The Marine Bank of Buffalo, App’lt.

      (Court of Appeals,

      Filed January 17, 1893.)

    1. Banks—Certificate of deposit.
    The payee of commercial paper, who has not the possession of it, and who confesses his inability to surrender it on payment, cannot recover against the maker, when it appears by his own showing that the paper is not lost, but is in the hands of another, although wrongfully, who produces it at the trial, but refuses to surrender it, and claims title to it in hostility to the payee.
    2. Same.
    Plaintiff deposited moneys with defendant, and received certificates, therefor. He demanded repayment, offering a bond, and was refused.

      The executor oí defendant’s sister had possession of the. certificates, but it appeared that she had taken them without plaintiff's knowledge or consent.
    Upon the trial of an action against the bank for the recovery of the amount deposited, judgment was given for plaintiff. Held, error; that the certificates were negotiable, and the bank was not hound to pay, except upon the production and surrender of the certificates properly indorsed.
    Appeal from judgment of the supreme court, general term, fifth department, affirming judgment in favor of plaintiff, entered on verdict of jury directed by the court.

      Benjamin H. Williams, for app’lt; O. O. Cottle, for resp’t.

       Reversing 42 St. Rep., 161.

   Maynard, J.

The certificates, which the plaintiff received from the defendant, when he deposited the moneys which he seeks to recover in this action, possessed the attributes of negotiable paper, and were transferable in the same manner. Construing the defendant’s contract according to the rules of commercial law, it was not bound to pay the deposit, except upon the production and surrender of the certificates properly indorsed. When the action was brought and tried, the plaintiff was unable to comply with the implied stipulation in his contract with the •defendant, which required a tender of the certificates before pay: ment could be exacted. But performance of an impossible thing was not demanded, and the law imported into the contract an exception, that if the paper had been actually lost, and he did not know, and could not reasonably be expected to ascertain where it was, or if, knowing of its existence, it was beyond his power to reclaim it by any lawful method of procedure, the defendant would not be discharged from liability, but a recovery could be had by making substantial indemnity at the trial. The plaintiff’s embarrassment is due to his inability to establish his status as the owner of lost negotiable paper. It appears from the undisputed X evidence that these certificates are not lost in the legal signification of the term. They were received by the plaintiff at a time when his sister was living with him, and it is alleged in the answer, and some proof was offered and excluded to show, that they then held their property in common, and that she had an interest in the moneys deposited. Upon a subsequent separation growing •out of family differences she took the certificates away with her, .and claimed that in making the deposit her brother had acted as her agent, and that they rightfully belonged to her. Whether this claim was meritorious or fabricated was of no concern to the ■defendant, and cannot affect the determination of its rights. They may have in fact been abstracted from the custody of the plaintiff by the commission of a larceny, and if he knew where they ! were, and by the exercise of superior diligence could have recovered their possession, he cannot impose upon the maker the risk of a litigation with a stranger, involving the question of ownership, in which the possession of the certificates would be some evidence to support a claim of title.

The plaintiff appears to have taken this view of the obligation of the parties, for in 1885 he brought an action against the sister to recover the possession of the certificates, upon the trial of which she produced them before the referee, but no decision had been reached when the action abated by her death. Her will was probated after a contest, and letters testamentary issued to her husband, and the certificates passed into his possession, and he claimed to hold them as the representative of her estate, and gave the defendant notice of his claim. The decree of probate was reversed upon appeal and the authority of the executor suspended, and a new trial at the circuit ordered, which had not occurred when this action was brought. Upon these facts the case is not distinguishable from Van Alstyne v. Commercial Bank, 4 Abb. Ct. App. Dec., 449. The suit there was to recover the amount of a draft alleged to have been lost, but shown upon the trial to be in the possession of a bank in West Virginia, who had obtained it by means of the forged indorsement of the payee, and who refused to deliver it to the plaintiff. A recovery was denied, although it appeared that the paper was beyond the jurisdiction of the courts of this state; and it was held that the plaintiff was bound to resort to the courts of the foreign jurisdiction, or to thedederal tribunals, which were open to him, to recover possession of the instrument, if it was wrongfully withheld, and place himself in a position where he could surrender it to the bank before he could compel it to part with the money represented by the absent draft. It is there stated that exhaustive research has failed to find any rejiorted ease, or any statement in any treatise upon the subject, which sustains the proposition that payment can be required under such circumstances.

There were no insuperable difficulties in the way of the plaintiff's recovery of these certificates. His action for that purpose against the sister could have been revived and continued after her death by the substitution of the executor as the defendant, or if his authority was suspended during the contest over the will, a temporary administrator could have been appointed and made the party defendant. A still more direct and effective remedy was within the plaintiff’s reach. He might have brought an action against the sister and the bank, joining them as parties defendant in the same action, and demanding judgment that she be required to surrender the certificates to the bank, and that upon such surrender the latter be required to pay the amount of them to the plaintiff. Such an action is proper when the surrender of the instrument is a condition of the right to enforce payment, and the paper is in possession of a wrongdoer, who refuses to deliver it to the payee, and the maker admits his liability to pay upon receipt of the evidence of his obligation. Thomas v. Thomas, 131 N. Y., 208; 42 St. Rep. 873. In such a controversy the defendant bank could have stood indifferent, and could have protected itself, even against a liability for costs, by paying the money into court, and abiding its decision as to the lawful ownership of it Even granting that the plaintiff’s right to bring or prosecute an action in either form was held in abeyance during the pendency of the contest over the will, it would not afford a sufficient reason for the maintenance of an action meanwhile against the bank alone. The inconvenience, if any, resulting from the situation, must be borne by the plaintiff, and cannot be cast upon the defendant, who was in no wise responsible for the safe keeping of the certificates by the plaintiff.

The provisions of the Code, § 1917, authorizing a recovery upon lost negotiable paper, if indemnity is given, do not relieve the plaintiff of his difficulty. A bond is not required or authorized as a condition precedent to the right to bring suit, but if it appears upon the trial that the instrument is lost, the plaintiff may • still recover upon executing the required undertaking to be approved by the trial judge. Here the loss of the paper was not shown at the trial, but the contrary affirmatively appeared, for the certificates were present in court, having been produced by the executor under a subpoena duces. The action of the court in summarily depriving the witness of the custody of the certificates, and impounding them pursuant to its direction, cannot affect the legal rights of the parties. They are still constructively in the possession of the executor, and the order of the court requiring him to deposit them with the clerk cannot be made to perform the functions of a judgment and execution in an action of replevin.

This appeal was twice argued at the general term. Upon the first argument, the judgment was reversed for substantially the same reasons we have here given. Subsequently the plaintiff’s case against the Bank of Attica, depending upon a certificate like those here involved, and taken from him by his sister under similar circumstances, was decided in his favor by this court in the second division. (124 N. Y., 671; 36 St. Rep., 894.) A rcargument was thereupon ordered by the general term, because it was claimed that the decision in that ease was controlling. Upon the second argument it was held that the Bank cf Attica case conclusively established plaintiff’s right to recover, and the judgment at the circuit was affirmed. A careful examination of the record in Read v. Bank of Attica fails to show that it is in any.respect decisive of the important questions presented upon this appeal. There were but two exceptions taken in the course of the trial, one to the exclusion of evidence, which was inadmissible under the pleadings, and the other to the direction of a verdict for the plaintiff. The latter exception was not well founded, for upon the proofs the plaintiff was entitled to recover. The defendant conceded that there was no question of fact for the jury, and it did not ask for the direction of a verdict in its own favor. All the material testimony was given by the plaintiff himself, who, it seems, had the certificate in his possession when upon the witness stand, although it had been brought into court by the executor under a subpoena. The plaintiff testified to the deposit of the money and the issue of the certificate, which was then read in evidence. Its non-payment was not disputed. The plaintiff’s case was then fully established, and he was entitled to the direction of a verdict.

It is true that it also appeared from the plaintiff’s testimony that the certificate had been taken by his sister, and that she had promised to return it, which -was a recognition of his title, and the production of the certificate by the executor in court, and the delivery of it to the plaintiff, were facts from which the infererence might be drawn that his possession was in subordination to the plaintiff’s title, and not in hostility to it, in the absence of evidence of a claim of title on his part. We have here an entirely different record. The plaintiff called the executor as a witness, who testified that he had the certificates in his possession, but declined to produce them, unless directed to do so by the court, which direction was given, but it was entered upon the minutes that he did not produce them as the property of the plaintiff. The certificates were then offered in evidence, and objected to on the ground that plaintiff was not in possession of them, and could not surrender them upon their payment. The objection was overruled and an exception taken.

The executor further testified, that he had been in possession of the certificates since June, 1887 ; that he received them from his wife; that she produced them before the referee in 1886, in the action brought by plaintiff against her, who then made copies of them; that she took them away, and upon her death they came into his hands as her executor; that he had held them ever since and was not willing to surrender them to the defendant, if payment should be made to the plaintiff. The plaintiff testified that he had never sold or transferred the certificates to anybody; that they were taken away by his sister, without his knowledge or consent; that he had requested her to bring them back and she had not done so; that he had commenced an action against her to recover their possession, which was undetermined, that he had never presented them, or either of them, for payment, and that they were not in his possession.

The defendant moved for a nonsuit upon the grounds that the certificates had never been presented to the bank indorsed for payment ; that it affirmatively appeared that they were not in plaintiff’s hands or in his possession; that they are negotiable paper, and an action cannot be maintained on such paper, unless the plaintiff has the power and is able to bring the paper into court and surrender it; that they appear to be held by parties claiming under an adverse title to the plaintiff, and that the plaintiff had not established a cause of action. The motion was denied and an exception taken. The features of the case were not changed by the defendant’s testimony, and at the conclusion of the evidence the court was asked to direct a verdict for the defendant upon the grounds specified in the motion for a non-suit, which was refused, and an exception noted, and the court directed a verdict for the plaintiff, which was also excepted to.

The question was thus sharply presented upon this trial, which is not in the record in the Bank of Attica case, whether the payee of commercial paper, who has not the possession of it, and who confesses his inability to surrender it on payment, can recover against the maker, when it appears, by his own showing, that the paper is not lost, but is in the hands of another, although wrongfully, who produces it at the trial, but refuses to surrender it, and claims title to it in hostility to the payee. We do not think a recovery can be had under such circumstances. To hold otherwise would require us to overrule the decision of this court in Van Alstyne v. Bank, and to establish a dangerous precedent in the administration of the law merchant. This question is not discussed in the opinion of the general term in the Bank of Attica case, and the second division merely declared its assent to tin-views of the court below, with the exception of the allowance of interest, and we are, therefore, not concluded by the decision there made.

The order and judgment must be reversed, and a new trial granted, with costs to abide the event.

All concur.