New York Law Review

Tag: 1891

  • St.Amant v. The President, Directors and Company of the Mechanics’ National Bank of New York, 130 N.Y. 96 (1891): Equitable Title Prevails Over Legal Lien

    St.Amant v. The President, Directors and Company of the Mechanics’ National Bank of New York, 130 N.Y. 96 (1891)

    When a party has an equitable title to goods or their proceeds arising from a joint enterprise, that title is superior to the lien of individual creditors of another party involved in the enterprise.

    Summary

    This case concerns a dispute over funds held by a receiver, stemming from a contract between St.Amant and Pease for the sale of sardines. St.Amant claimed the funds as proceeds from goods he provided to Pease, while banks asserted a lien as Pease’s creditors. The court found the contract established a joint venture rather than a sale, giving St.Amant an equitable interest in the goods and proceeds superior to the banks’ liens. The court affirmed the judgment awarding the funds to St.Amant, holding that his equitable title took precedence over the legal claims of Pease’s individual creditors, even if St.Amant’s original pleading characterized Pease as a selling agent.

    Facts

    St.Amant, a merchant in Paris, contracted with Pease, a merchant in New York, for the shipment and sale of sardines. Drexel, Morgan & Co. provided Pease a letter of credit for advances to St.Amant, claiming a banker’s lien on the goods. Pease failed and assigned his assets for the benefit of creditors. The Mechanics’ National Bank and National City Bank (the Banks) attached goods in Pease’s possession and collected accounts owed to him, claiming these were assets of Pease. St.Amant asserted the goods and accounts were his property under the contract. The goods were shipped to Pease by St.Amant under their agreement. The collected accounts represented goods shipped and sold by Pease under the same agreement.

    Procedural History

    Drexel, Morgan & Co. sued to enforce their banker’s lien, naming the Banks, Pease’s assignee, and St.Amant as defendants. A receiver was appointed to manage funds from collected accounts and sold goods. The Special Term awarded Drexel, Morgan & Co. their lien and ordered a reference to determine the remaining claims between St.Amant and the Banks. The Banks appealed the reference order, but the General Term dismissed the appeal. The referee found in favor of St.Amant. The Special Term adopted the referee’s findings, awarding the remaining funds to St.Amant. The General Term affirmed, and the Banks and assignee appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the contract between St.Amant and Pease constituted a sale, thus subjecting the funds to the Banks’ attachments.

    2. Whether sufficient evidence supported the finding that the funds were proceeds from goods St.Amant sent under the contract.

    3. Whether the court had the power to order the reference to ascertain specific facts.

    Holding

    1. No, because the contract established a joint enterprise for the sale of sardines, rather than a simple sale of goods to Pease.

    2. Yes, because the record contained sufficient evidence, including a stipulation allowing the referee to refer to prior proceedings, to justify the finding that the funds derived from sales of St.Amant’s goods.

    3. Yes, because Section 1013 of the Code of Civil Procedure authorized the court to order a reference to report findings on specific questions of fact.

    Court’s Reasoning

    The court determined the contract language indicated a joint enterprise, not a sale. The agreement detailed sharing advances, expenses, and profits, signifying a joint venture. As St.Amant represented the joint enterprise, his equitable title to the goods and proceeds was superior to the individual creditors of Pease. While St.Amant’s answer may have characterized Pease as a selling agent, the trial court properly disregarded the variance. The court cited I. & T. N. Bank of N. Y. v. Peters, 123 N. Y. 272 in support of the principle that St.Amant’s equity attached to the funds. Regarding the evidence, the court noted a stipulation allowed the referee to consider prior proceedings, meaning sufficient evidence supported the finding that the funds came from St.Amant’s goods. As to the reference, the court found Section 1013 of the Code of Civil Procedure authorized the reference to report on specific factual questions; the Special Term could adopt or reject the referee’s findings. The court stated, “By the last clause of section 1013 of the Code power is given in such a case as this to order a reference ‘to report the referee’s findings upon one or more specific questions of fact involved in the issue.’”

  • People v. Ulster & Delaware R.R. Co., 128 N.Y. 280 (1891): State’s Power to Waive Corporate Forfeiture

    People v. Ulster & Delaware R.R. Co., 128 N.Y. 280 (1891)

    The state retains the power to waive forfeiture of a corporate charter, even after initiating legal action to dissolve the corporation, especially when a subsequent statute alters the conditions for forfeiture.

    Summary

    The People, by the Attorney General, sued the Ulster & Delaware Railroad Company, seeking to annul its corporate existence for failing to complete its originally planned railway line. The defendant argued that a subsequent statute, combined with a certification from the railroad commissioners, absolved them of the obligation to extend the line and thus prevented forfeiture. The Court of Appeals held that the state, through legislative action, could waive the forfeiture, and the railroad commissioner’s certificate acted as a bar to the action, demonstrating the state’s broad authority over corporate existence and the enforcement of forfeitures.

    Facts

    The Rondout & Oswego Railroad Company was formed in 1866 to build a railroad from Rondout to Oneonta. The company built the line from Rondout to Stamford but failed to complete the Stamford-to-Oneonta section. The Ulster & Delaware Railroad Company succeeded the Rondout & Oswego Company through reorganization following foreclosure in 1875. The State initiated an action to dissolve Ulster & Delaware, alleging forfeiture of its charter due to the failure to build the complete original route.

    Procedural History

    The Attorney General brought the action in the name of the People to dissolve the corporation. The defendant argued a subsequent statute barred the action. The trial court awarded an extra allowance to the defendant which was appealed. The Court of Appeals reviewed the judgment annulling the corporation’s existence and the order denying an extra allowance, ultimately affirming both.

    Issue(s)

    1. Whether the state, through legislative enactment, can waive a cause of action for corporate charter forfeiture after initiating legal proceedings to enforce such forfeiture.

    2. Whether a certificate from the railroad commissioners, stating that no public interest required the extension of the railroad, bars an action to annul the corporation’s existence for failure to complete the original route.

    3. Whether the trial court correctly determined the motion for an extra allowance.

    Holding

    1. Yes, because the state retains absolute control over actions for forfeiture and can waive such forfeitures through legislative action, even after an action has been initiated.

    2. Yes, because the legislature gave conclusive weight to the railroad commissioners’ certificate, thereby barring actions to annul the corporation’s existence for failure to extend its road.

    3. Yes, because the undisputed evidence did not show that the corporate franchise had any definite value.

    Court’s Reasoning

    The court reasoned that an action to forfeit a corporate charter is not about recovering a benefit for the prosecutor but rather about punishing an offender for violating the law. The state has absolute control over these actions and can discontinue them or waive the forfeiture at will. The court emphasized, “By enforcing the forfeiture of corporate existence the state receives no benefit and acquires no property, and by waiving such forfeiture it loses no privilege and interferes with no vested right.”

    The court cited chapter 286 of the Laws of 1889, which amended chapter 430 of the Laws of 1874, stating that “Nothing herein contained shall be construed to compel a corporation, organized under this act, to extend its road beyond the portion thereof constructed at the time said corporation acquired title to such railroad property and franchise, provided the board of railroad commissioners shall certify that, in their opinion, the public interests, under all the circumstances, do not require such extension…” The court interpreted this to mean the state gave the railroad commissioners the power to determine whether enforcing a forfeiture was in the public interest. The court found that the statute effectively removed the penalty for failing to complete the railroad if the commission certified it was not in the public interest. Citing Nash v. White’s Bank of Buffalo, 105 N.Y. 243, the court stated “there being no clause in the act of 1889 saving ‘pending prosecutions or existing rights from the effect of the statute, by settled rules, the abolition of the penalties left all actions in which judgments had not been obtained subject to the rule created by the amended statute alone.”

    Regarding the extra allowance, the court found that the evidence failed to show any definite value of the corporate franchise, and therefore the motion was correctly denied.

  • In re Romaine’s Estate, 127 N.Y. 80 (1891): Taxation of Non-Resident Intestate’s Property

    In re Romaine’s Estate, 127 N.Y. 80 (1891)

    A state can tax the succession of personal property owned by a non-resident intestate when the property is invested or habitually kept within the state, receiving the protection of its laws.

    Summary

    This case addresses whether New York can tax the inheritance of personal property within the state belonging to a non-resident intestate. The Court of Appeals held that it could, clarifying the scope of New York’s Collateral Inheritance Act. Worthington Romaine, a non-resident, had investments and bank deposits in New York. Upon his death, the state sought to tax the transfer of this property. The court reasoned that because the property was physically located and protected within New York, it was subject to its inheritance tax, regardless of the owner’s residency. This decision established a practical basis for taxing non-residents’ property within the state’s jurisdiction.

    Facts

    Worthington Romaine, a non-resident of New York, invested money in a bond and mortgage within New York and maintained deposits in New York savings banks.

    Romaine died intestate (without a will).

    The state of New York sought to impose an inheritance tax on the personal property of Romaine located within the state, which was passing to collateral relatives.

    Procedural History

    The lower courts upheld the imposition of the inheritance tax.

    The case was appealed to the New York Court of Appeals.

    Issue(s)

    Whether the succession of personal property of a non-resident intestate, invested or habitually kept within New York, is subject to taxation under the Collateral Inheritance Act.

    Holding

    Yes, because the property is located within New York, receives the protection of its laws, and therefore, contributes to the expense of the government.

    Court’s Reasoning

    The court reasoned that the 1887 amendment to the Collateral Inheritance Act extended its reach to the property of non-resident decedents located within the state. The court distinguished this situation from property temporarily brought into the state by a traveler. The court stated that when a non-resident’s money is invested or habitually kept in New York, the statute applies both in letter and spirit. Such property receives the protection of New York laws and has every advantage from the government. The court emphasized the state’s power to tax property within its borders, stating, “A nation within whose territory any personal property is actually situated has as entire dominion over it while therein, in point of sovereignty and jurisdiction, as it has over immovable property situated there.” The court further noted that the legal fiction of mobilia sequuntur personam (movable property follows the person) does not apply in a well-adjusted system of taxation. The court noted earlier cases had held that the act applied only to estates of resident decedents, but the amendment changed that. The court also cited provisions of the act that made administrators liable for taxes and restricted the transfer of stock by foreign executors. Ultimately, the court held that the Act extended to property of non-resident intestates, because “all administrators” were liable for taxes and corporations could only transfer stock standing upon their books in the name of a non-resident decedent at their own risk until taxes were paid.

  • In re Booth’s Will, 127 N.Y. 109 (1891): Intent to Sign Requirement for Wills

    In re Booth’s Will, 127 N.Y. 109 (1891)

    When a testator’s name appears within the body of a will, rather than at the end, there must be clear evidence that the testator intended that name to serve as their signature for the will to be validly executed.

    Summary

    This case concerns the validity of a will where the testator’s name appeared at the beginning of the document rather than as a signature at the end. Cecilia L. Booth wrote “Cecilia L. Booth” at the beginning of a document presented as her will. She declared it was her will to two witnesses and asked them to sign. The court held that because the name was not written at the end of the document, there must be proof that the testator intended for it to be her signature. Since there was no such evidence, the will was deemed invalidly executed, emphasizing the importance of intent when a name appears in an unconventional location on a will.

    Facts

    Cecilia L. Booth wrote a document purporting to be her last will and testament.
    The document began with the words “I, Cecilia L. Booth…” but was not signed at the end.
    Booth declared to two witnesses, Mamie Clifford and another individual, “This is my will; take it and sign it.”
    The witnesses signed the document.
    The will was challenged based on the absence of a formal signature at the end.

    Procedural History

    The Surrogate Court admitted the will to probate.
    An appeal was taken to the General Term, which reversed the Surrogate Court’s decision.
    The case then went to the New York Court of Appeals.

    Issue(s)

    Whether the appearance of the testator’s name in the body of the will, absent a signature at the end, and with the declaration that the document is her will, constitutes a valid signature under New Jersey law, thus properly executing the will.

    Holding

    No, because there was no evidence presented to show that Mrs. Booth intended for her name at the beginning of the document to act as her signature. The court emphasized that when a name appears in an unconventional location, the intent for it to serve as a signature must be proven.

    Court’s Reasoning

    The court acknowledged that at common law, a signature within the body of a document could be valid if written with the intent to execute it.
    However, the court emphasized that when a name appears at the beginning of a document, it is typically descriptive and not intended as a signature. Therefore, there must be proof that the testator intended the name to serve as their signature.
    The court distinguished this case from cases where the signature was at the end of the document, where a presumption arises that the signature was affixed for the purpose of creating a valid instrument.
    Here, there was no evidence that Booth referred to her name in the first line as her signature, nor any act from which it might be inferred that the name was intended as a final execution of the will.
    The court emphasized the importance of construing will execution statutes closely to prevent fraud and imposition.
    The simple declaration “This is my will; take it and sign it” was insufficient to prove the necessary intent.
    As the court stated, “It has been the object of the statutes of the various states prescribing the mode in which wills must be executed, to throw such safeguards around those transactions as will prevent fraud and imposition, and it is wiser to construe these statutes closely, rather than loosely, and so open a door for the jierpetration of the mischiefs which the statutes were designed to prevent.”

  • People ex rel. Union Trust Co. v. Coleman, 126 N.Y. 433 (1891): Taxation of Corporate Franchise Based on Dividends

    People ex rel. Union Trust Co. v. Coleman, 126 N.Y. 433 (1891)

    Dividends declared from surplus funds accumulated prior to the enactment of franchise tax laws are not considered ‘dividends made or declared’ for the purpose of computing franchise taxes under those laws.

    Summary

    The New York Court of Appeals addressed whether a dividend paid from a corporation’s surplus, accumulated before the enactment of franchise tax laws, should be included when calculating the corporation’s franchise tax. The Court held that such dividends should not be included. The tax is on the corporate franchise, measured by dividends declared during the tax year. Dividends from previously accumulated surplus do not reflect the current year’s value of the franchise. Including them would be contrary to the spirit and intent of the tax law, which aims to measure the value of the privilege of doing business during the year in question.

    Facts

    The Union Trust Company had a capital of $2,000,000. On January 1, 1881, the company had a surplus of $201,942.64, accumulated from past earnings. In January 1881, the company declared a dividend of $12,500 (6.25% of its capital stock) from current earnings. In February 1881, the company also resolved to distribute $100,000 from its surplus fund to its stockholders, in anticipation of a charter extension. This $100,000 was earned before January 1, 1880.

    Procedural History

    The case originated from a dispute over the amount of franchise tax owed by the Union Trust Company. The lower court calculated the tax based on a dividend rate of 56.25% (including both the $12,500 and the $100,000 dividends). The Union Trust Company appealed. The Court of Appeals reversed the lower court’s decision, holding that the $100,000 dividend should not have been included in calculating the franchise tax.

    Issue(s)

    Whether a dividend paid out of a surplus fund, accumulated from earnings prior to the enactment of the franchise tax law, constitutes a ‘dividend made or declared’ during the relevant tax year for the purpose of calculating the franchise tax.

    Holding

    No, because the franchise tax is intended to measure the value of the corporate franchise during the year in question, and a distribution of previously accumulated earnings does not accurately reflect that value. The Court amended the judgement, excluding the $2,500 in tax associated with the $100,000 dividend from surplus.

    Court’s Reasoning

    The Court reasoned that the franchise tax is not a tax on dividends themselves or on the corporation’s property, but rather a tax on the privilege of operating as a corporation. The amount of dividends declared during the year is simply a measure of the annual value of that franchise. The court emphasized, “As dividends can be legally made only out of earnings or profits, and cannot be made out of capital, they are assumed to approximate as nearly as practicable the just measure of the tax which should be imposed upon the corporation for the enjoyment of its franchise.” The court distinguished between current earnings and previously accumulated surplus. The Court stated that including a distribution of surplus earned in prior years would be contrary to the spirit and intent of the law: “A division of property thus previously acquired could not have been within the contemplation of the framers of the act, in fixing upon the annual dividends as a measure of the value of the franchise of the corporation, and even if a dividend within the letter of the act, to construe it as a dividend for the purposes of the act would be so contrary to its spirit and intent, that such a construction is inadmissible.” The Court cited Bailey v. Railroad Co., 106 U.S. 109, where the Supreme Court held that a tax on dividends should only apply to earnings accrued after the passage of the tax law. The Court concluded that the tax should be calculated based only on the dividend of 6.25% paid from current earnings.