Court of Claims, April, 1922.

Misc. 516]

there is no public work and no legislative authority or direction. Strobel v. Kerr Salt Co., 164 N. Y. 303; Storm King Paper Co., Inc., v. Firth Carpet Co., 184 App. Div. 514; Whalen v. Union Bag & Paper Co., 208 N. Y. 1; Western N. Y. Water Co. v. City of Niagara Falls, 91 Misc. Rep. 73; 176 App. Div. 944; 226 N. Y. 671.

In the instant case there was being performed a work of great importance in the public interest. It was being performed pursuant to specific legislative authority and direction. The statute directed to be performed the specific work of which claimant complains. The Cayuga-Seneca canal could not be widened, deepened and straightened without roiling its water. This, claimant admits, was the inevitable and unavoidable result of the work, which was performed expeditiously and without trespass or negligence. The state was exercising its legal rights in improving this canal. Seneca outlet is a navigable stream and was such in its natural state. That it was navigable and navigated in its natural state, except at the rapids and falls at Waterloo and Seneca Falls, is a fact which history records, so well known as that it may and should be judicially noticed. DeCamp v. Thomson, 16 App. Div. 528; Buffalo Pipe Line Co. v. N. Y., L. E. & W. R. Co., 10 Abb. N. C. 107. Also the fact has been satisfactorily established by undisputed evidence in the record. In an action brought by this claimant against a state officer it was found and decided as a fact that this stream is a navigable public highway. Waterloo W. Mfg. Co. v. Shanahan, 128 N. Y. 345, 356.

It is the nature of the stream in its entirety which determines its character as to navigability, and its general character is not affected by the fact of the rapids and falls at Waterloo and Seneca Falls. Morgan v. King, 35 N. Y. 454; Matter of Com'rs of State Reservation, 37 Hun, 537; Water Power Co. v. Water Commissioners, 168 U. S. 349.

But whether the outlet be considered as a navigable stream or as a state canal, the result is the same. In either case the state had the right to improve navigation conditions. Nor is the rule invoked by the state confined in its application to works of improving navigation. It is equally applicable to building a railroad and grading a street. None of claimant's property has been taken, nor has there been any invasion of its lands. There has been no addition to water of any chemicals or other foreign substance, no pollution, no public or private nuisance. The interference with claimant's use of the water was not permanent but temporary. The dredging operations were carried on above the falls at Waterloo, upstream from claimant's lands and in that part of the stream which had always been practically navigable and which for scores

Surrogate's Court, New York County, April, 1922.

[Vol. 118 of years had been a part of the state's canal system, actually and extensively navigated. No waters which would otherwise have flowed over or along claimant's lands have been diverted therefrom, nor is any such claim made.

It is not even claimed that the roiled water flowing on down past claimant's lands in any way damaged claimant's land or other property. It was not until the claimant by artificial means diverted the roiled water from the stream and led it into its factory that damage ensued. The damage was not direct, nor did it constitute a taking of its property. The damage was purely consequential. Upon a similar state of facts recovery could not be had against an individual or corporation and, hence, cannot be had against the state.

The motion to dismiss should be granted, with an exception to claimant. An order to that effect may be entered.

Having reached the conclusion that the claim should be dismissed as matter of law, the requests for findings of fact have not been. passed upon and no findings of fact have been made.

ACKERSON, P. J., concurs.

Ordered accordingly.

Matter of the Estate of BERTHA PREISENDORFER, Deceased. Surrogate's Court, New York County, April, 1922.

Surrogate's Court

discovery proceeding — claim of title by respondent — when petition will be denied.

Where in a discovery proceeding the respondent by answer claims title to the property sought to be discovered, and the only result of an examination would be to discover and furnish evidence which the petitioner could use in a pending action, an order of discovery will be denied.

DISCOVERY proceedings.

A. Oberwager, for petitioner.

Roger J. Heisler, for Olga L. McCauley, respondent.

FOLEY, S. In this discovery proceeding an answer has been filed, in which the respondent claims title to the property sought to be discovered. It also appears that an action has been commenced by the respondent in the Supreme Court of this county, in which issue has been joined. That action is against the savings bank and the administrator for the recovery of a bank deposit standing in the name of the decedent, claimed by the respondent as a gift causa mortis. The Supreme Court having first acquired jurisdiction, comity requires that this proceeding be dismissed.

Misc. 525]

Surrogate's Court, New York County, April, 1922.

The only result of an examination held here would be to furnish and discover evidence which the petitioner could use in the pending action. Under the circumstances here present this course cannot be permitted. Matter of Denham, N. Y. L. J. June 23, 1917; affd., 180 App. Div. 935. Submit order on notice accordingly. Ordered accordingly.

Matter of the Proceedings to Fix a Transfer Tax in the Estate of MARY J. KINGSLAND, Deceased.

Surrogate's Court, New York County, April, 1922.

--

Transfer tax- amount at which mortgages bearing less than current rate of interest should be appraised — overdue mortgages - value where realty is insufficient to pay mortgage debt in full.

Decedent left a gross estate of over $9,000,000 including mortgages upon real estate in the city of New York of the face value of $4,014,300. About seventyfive per cent of the mortgages were overdue and the rate of interest in all but one was less than six per cent. Mortgages for amounts in excess of the value of the real estate were considered by the transfer tax appraiser as inadequately secured and after appraising the other mortgages at their face value he deducted ten per cent from the value thus found of all the mortgages, leaving the balance with interest on the mortgages to the date of decedent's death as his appraisal. Held, that the method followed was erroneous.

The value of mortgages paid or assigned is the amount received for their satisfaction or sale and they should be appraised at such sums less a discount of the difference between the mortgage rate of interest and six per cent, from the date of decedent's death to the date of payment.

Mortgages neither paid nor assigned but which are overdue should be appraised at their face value except where they exceed the value of the real estate, in which case they should be appraised at the real estate value.

Mortgages not due at decedent's death and neither paid nor assigned should be appraised at their face value discounted by the difference in percentage between the mortgage rate of interest and six per cent, from decedent's death to the date of maturity, and the mortgages if in excess of the value of real estate should be depreciated to such value.

The report of the appraiser remitted for revision and correction as to the appraisal of the mortgages, and the appeal of the state tax commission on the ground that the allowance for disbursements for administration expenses was excessive, denied.

APPEAL by the state tax commission from the order fixing the transfer tax herein.

Humes, Buck & Smith (Albridge C. Smith, Raymond J. Scully, of counsel), for the administrators c. t. a.

Lafayette B. Gleason (Schuyler C. Carlton, of counsel), for the state tax commission.

COHALAN, S. This appeal is taken by the state tax commission from the order fixing the transfer tax, on the ground that mortgages owned by decedent on real estate in the city of New York have

Surrogate's Court, New York County, April, 1922.

[Vol. 118

been appraised at less than their market value, and that excessive amounts have been allowed as administration expenses.

The decedent eft a gross estate of over $9,000,000, including mortgages on real estate in this city of the face value of $4,014,300. About seventy-five per cent of the mortgages were overdue. The rate of interest in all but one was less than six per cent.

The transfer tax appraiser depreciated to the value of the real estate the mortgages which were for sums in excess of that valuation and were, therefore, considered by him to be inadequately secured. He appraised the other mortgages at their face value. He then deducted ten per cent from the value thus found of all the mortgages and the balance with interest on the mortgages to the date of decedent's death is his appraisal.

The total sum by which the mortgages are depreciated is $444,405. The appraiser did not accept the valuation submitted by the executors, who claimed that the mortgages were worth $602,580 less than their face value, but his plan of applying a percentage of reduction to all the mortgages was that employed by the expert for the estate.

This method of appraisal is erroneous. No reason is given by the appraiser for adopting it. The true value of the mortgages could no more be ascertained in this way than could the value of an aggregation of bonds differing one from the other in amount, interest rate, date of maturity and sufficiency of security. The fact that the number of mortgages left by decedent is large cannot be considered as an element of depreciation. Matter of Gould, 19 App. Div. 352.

It is possible in this proceeding because of the completeness of the data furnished to the appraiser by the estate to fix the value of all the mortgages with reasonable accuracy.

The evidence justifies the assumption that a mortgage bearing interest at six per cent, secured by real estate of greater value than the mortgage, is worth its face value. Overdue mortgages similarly secured are, like past-due bonds, also worth their face value, irrespective of the interest rate. Mortgages which are secured by real estate at lesser value are ordinarily worth no more than the security.

The record contains a list of payments of mortgages in whole or in part from the date of decedent's death, August 10, 1919, to January, 1921. The best proof of the value of mortgages paid up or assigned is the amount received for their satisfaction or sale. They should be appraised at such sums less a discount of the difference between the rate of interest of the mortgage and six per cent, for the period from the date of death to the date of pay

Misc. 527]

Surrogate's Court, New York County, April, 1922.

ment. Mortgages not paid up or assigned but which are overdue should be appraised at their face value except where they exceed the value of the real estate, in which cases they should be appraised at the real estate value. Mortgages not due at decedent's death and not paid up or assigned, should be appraised at their face value discounted by the difference in percentage between the interest rate in the mortgage and six per cent, for the period from the date of decedent's death to the date of maturity. If in excess of the value of the security, the mortgages referred to in the foregoing paragraph should be depreciated to its value.

The appeal of the state tax commission as to the disbursements allowed is denied.

The report of the appraiser will be remitted to him for revision and correction in accordance with this decision. Submit order on notice.

Ordered accordingly.

In the Matter of the Estate of MATILDA B. BEINHAUER, Deceased. Surrogate's Court, New York County, April, 1922.

Wills - probate

trustee in bankruptcy of disinherited sons not interested party.

Where two sons of testatrix, who prior to her death had been adjudicated bankrupts, were by a codicil to her will excluded from any participation in her estate, their trustee in bankruptcy is not an interested party to a proceeding for the probate of the will, and a motion to dismiss his objections filed upon the proceedings will be granted.

MOTION to dismiss objections to petition for probate of will.

Thompson, Koss & Warren (George Flint Warren, Jr., of counsel), for petitioner.

Yankauer & Davidson (Sidney J. Loeb, of counsel), for trustee in bankruptcy.

FOLEY, S. The proponent moves to dismiss the objections filed in this probate proceeding by the trustee in bankruptcy of two of the sons of the testatrix. The codicil offered with the will excludes these two sons from any participation in the estate. The petition in bankruptcy was filed and the adjudication occurred prior to the death of the testatrix. The son Gustavus was adjudicated a bankrupt on July 18, 1921, and the son Edward, August 11, 1921. The testatrix died on January 9, 1922. After the commencement of the probate proceeding the trustee filed objections, claiming to represent the bankrupts' interests as next of kin. The motion to dismiss is granted.