Misc. 712] Surrogate's Court, Westchester County, May, 1922. 66 Decedent, a woman of large means and in good health, about fifteen years or more before her death commenced to transfer her real estate to her children and at various times gave them money and took from them certain promissory notes. Certain agreements between her and the children provided that such conveyances should be considered as 'advancements," the amount of which was to be deducted from any amount thereafter becoming payable to the grantee out of her estate, and her will provided that "any and all advancements made to any of my children, or loans made to them shall be deducted from his or her share without interest except as charged on her books. Held, that the advancement agreements operated only by way of limitation upon the share of the several grantees received by them under the will, and the deeds appearing to have been gifts inter vivos the real estate conveyed thereby was not subject to a transfer tax. The several notes having been made more than six years before the death of the testatrix and no principal or interest having been paid on any of them were not assets in the hands of the executor and, therefore, not subject to a transfer tax. APPEAL from order fixing transfer tax. William Howell Orr, for executor. Francis A. Winslow, for state tax commission. SLATER, S. It appears that the decedent commenced some fifteen years or more before her death to transfer real estate to her several children. She also, at various times, gave them money and took from them certain promissory notes. It appears that she was a woman of large means and was in good health. Two questions arise upon the facts: Were the conveyances of the real estate in the nature of a gift? Have the promissory notes become outlawed by the running of the Statute of Limitations? The conveyances were all absolute in terms, contained no reservations or conditions, were delivered, the transaction was complete, and the grantees acquired immediate right to the property. A bona fide transfer of property between the living unless made in contemplation of death, or intended to take effect in possession or enjoyment at or after death is not within the reach of the transfer tax. Matter of Voorhees, 200 App. Div. 259; Gleason & Otis on Inheritance Taxation, 4. The deeds appear to have been gifts inter vivos. Ridden v. Thrall, 125 N. Y. 572; Matter of Mills, 172 App. Div. 530; affd., 219 N. Y. 642; Matter of Mather, 90 App. Div. 382; affd., 179 N. Y. 526. It is contended, however, by the tax commission that, because of certain agreements entered into between the parties, the gift was not complete and did not take effect until at and after death. The agreements provide that such conveyances should be considered as "advancements" out of the estate of the grantor and that the amount of such advancements was to be deducted from any amount thereafter becoming payable to the grantees out of the estate of the grantor. The 7th paragraph of the will of the Surrogate's Court, Westchester County, May, 1922. [Vol. 118 testatrix provides that " any and all advancements made to any of my children, or loans made to them shall be deducted from his, or her share without interest, except where interest is indicated as having been charged on my books." The testatrix had no power or control of any kind over the real property from and after its conveyance by her. Matter of Cochrane, 117 Misc. Rep. 18; affd., 202 App. Div. —; Matter of Voorhees, supra. The gifts were not made in contemplation of death. Matter of Spaulding, 49 App. Div. 541; affd., 163 N. Y. 607. The gifts of the real estate are not taxable. In my opinion the advancement agreements only operate by way of limitation upon the share of the several grantees received by them under the will. In other words, they were agreements in diminution of their several bequests, and made to equalize the legacies to the several children. Matter of Edgerton, 35 App. Div. 125; affd., 158 N. Y. 671; Matter of Orvis, 223 N. Y. 1; JessupRedfield on Surrogates' Courts, 1172. As to the notes in question, they were all made more than six years before the death of the testatrix. It is conceded that no interest, nor any part of the principal had been paid on any of these notes. The contention of the executors is that they could not enforce payment because the Statute of Limitations had run. The tax commission contends that the running of the Statute of Limitations makes no difference, that the statute is one of repose. This is the English rule and is based on the theory that there is no substance in an offset but a retention of part of the funds in the course of distribution. The trend of American authorities is away from the English view. Matter of Flint, 118 Misc. Rep. 354, and cases cited. Therefore, the court will decide that the several promissory notes are not assets in the hands of the executors for taxation purposes. The assessment of the transfer tax appraiser in so far as said appraisal includes as assets of the estate certain promissory notes and certain real property heretofore deeded by the testatrix to certain of her children is reversed. The proceedings are remitted to the appraiser for the purpose of giving his report in accordance with this opinion. Decreed accordingly. Misc. 715] THE NEW ENGLAND STEAMSHIP COMPANY, Plaintiff, v. Geo. H. MERRILL COMPANY OF N. Y., INC., Defendant. Municipal Court of the City of New York, Borough of Manhattan, Ninth District, May, 1922. Carriers no recovery for storage charges of property public street. "stored " on A carrier under a bill of lading and the tariff schedules filed with the interstate commerce commission is not entitled to recover storage charges except when the merchandise is stored" in or on railroad premises," and upon proof that it was stored in the public street judgment will be given in favor of defendant. The court will take judicial notice that the marginal way or farm which lies between the westerly side of West street and the North river is a part of the public streets of the city of New York. ACTION to recover on a bill of lading. Charles M. Sheafe, Jr., for plaintiff. Henry W. Hardon, for defendant. LAUER, J. The question here involved is as to the right of the plaintiff to recover under the bill of lading, copy of which is in evidence, and under the tariff schedule filed with the interstate commerce commission. It appears that the charges made by the plaintiff against the defendant which are sought to be recovered in this action represent storage charges which the plaintiff claims are due it for the storage of sixty-five drums, weighing 32,671 pounds, stored on what is known as the marginal way or farm which lies between the westerly side of West street and the North river. According to the evidence these drums were unloaded at pier 14 and immediately taken to this marginal way where they were kept during all the time for which the charges are now claimed in this action. The defendant contests the right of the plaintiff to charge for storage of these drums because the place of storage was not railroad premises but was a public street of the city of New York. The court, I think, may take judicial notice of the fact that the place where this shipment was stored was a part of the public streets of the city of New York and not property owned or controlled by the plaintiff steamship company. The provision of the bill of lading is to the following effect (§ 5): "Property not removed by the party entitled to receive it within 48 hours (exclusive of legal holidays) after notice of its arrival has been sent or given may be kept in car, depot or place of delivery of the carrier or warehouse, subject to a reasonable charge for storage and to carrier's responsibility as warehouseman Supreme Court, June, 1922. [Vol. 118 only, or may be at the option of the carrier removed to and stored in a public or licensed warehouse at the cost of the owner, and there held at the owner's risk and without liability on the part of the carrier, and subject to a lien for freight and other lawful charges including a reasonable charge for storage." The schedule of charges of the interstate commerce commission applicable to this shipment authorizes charges for storage if stored "in or on railroad premises." The plaintiff proves no right to charge for storage other than that of the provision in the interstate commerce commission schedules referred to. I conclude, therefore, that the plaintiff is not entitled to recover except for storage of merchandise "in or on railroad premises." Unquestionably this merchandise was stored in the public streets of the city of New York, in a place other than "in or on railroad premises," and under the circumstances I do not believe the plaintiff is entitled to a recovery. Judgment is accordingly given for the defendant. Judgment accordingly. JACOB REISS, Plaintiff, v. VELLEMAN & Co., INC., Defendant. Supreme Court, New York County, June, 1922. - fraud Bankruptcy - composition agreement good faith-party cannot beneassignment - when debtor not All parties to a composition agreement are to be held to the most scrupulous good faith and a creditor who was a party thereto will not be permitted to make a secret reservation of a part of his claim from the operation of the composition or to stipulate for a secret advantage over the other creditors. A promissory note for $4,400 signed by the defendant as maker was indorsed by plaintiff's assignor and discounted with the bank. Plaintiff's assignor at the time both of the indorsement and of the payment of the note was the president of the defendant. Before the note matured the maker found itself in financial difficulty and at a meeting of its creditors held six days after a petition in bankruptcy had been filed against it a proposition was received from one M., by the terms of which he was to furnish a certain sum of money and the creditors, with certain specified exceptions, were to receive thirty-three and one-third per cent of their claims. In accordance with an agreement reached at that meeting a petition was presented to the bankruptcy court, verified by defendant's president, stating that a compromise had been arranged with all the creditors on a basis of thirty-three and one-third per cent, to be paid in cash, and it being made to appear that all the creditors had agreed to the compromise an order was granted dismissing the proceedings in bankruptcy. On the day that said order of dismissal was granted the $4,400 note, which was not specifically mentioned in any of these documents, matured, and on the same day, but after the granting of the order of dismissal, the president of the bankrupt, who was liable as indorser, arranged with a member of the creditors' committee, who was an official of the bank which discounted the note, to take it up by borrowing from said bank the necessary funds on his individual new note, secured by the same collateral. It so happened that this collateral was the property of the Misc. 716] Supreme Court, June, 1922. plaintiff herein, but that part of the transaction was with his express consent nor did he ever make any claim on account of his ownership of the collatera! until after the filing of the petition for the dismissal of the bankruptcy proceeding although his firm, as a merchandise creditor, had taken part in all the proceedings. The new note was not paid at maturity except by the sale of the collateral and subsequently the maker of this note assigned to plaintiff the cause of action which he, as indorser, had against the maker of the $4,400 note. M. made the payments to creditors called for by the composition agreement, acquired from the maker of the new note the outstanding shares of defendant's capital stock and is now its president. In an action to recover from the maker of the $4,400 note which plaintiff's assignor had paid at maturity the defense was a charge of fraud arising out of the compromise with creditors. Held, that all liability of defendant arising out of the execution of the note in suit was terminated by the compromise of its other debts. The failure of either the maker of the new note or the bank which discounted the note in suit or plaintiff, the owner of the collateral, to disclose to the other creditors the existence of the $4,400 note at the time the compromise agreement was reached was such fraud as to bar the action, and a verdict in favor of defendant will be directed pursuant to the stipulation entered into at the close of the trial. ACTION to recover on a note. Strasburger & Schallek, for plaintiff. Joseph S. Weinberger (Thomas T. Reilley, of counsel), for defendant. MARSH, J. The plaintiff's assignor indorsed a promissory note of the defendant and paid it at maturity. This action is brought to recover from the maker the amount so paid. The defense is a charge of fraud arising out of a compromise with creditors. The note was for $4,400, dated January 2, 1919, payable May 3, 1919, signed by the defendant as maker, indorsed by the plaintiff's assignor and discounted with the Citizens' National Bank. David Krauskopf, the plaintiff's assignor, was president of the defendant at the time both of the indorsement and of the payment of the note. Before the note became due the defendant found itself in financial difficulties, and on February nineteenth a meeting of creditors was held and a committee of four was appointed to look after their interests. The next day a petition in bankruptcy was filed against the defendant in the United States District Court. On February twenty-sixth another meeting of creditors was held and a proposition was received from one Mayer, by the terms of which the latter was to furnish about $20,000, and the creditors, with certain specified exceptions, were to receive thirty-three and one-third per cent of their claims. The total debts at that time amounted to about $60,000, of which $20,000 was owed to the Chemical National Bank, $19,400 (including the note of January second) to the Citizens' National Bank, and over $20,000 in small amounts to more than one hundred merchandise creditors. The |