Matter of Receivership of Columbian Ins. Co.

Beaston v. Far. Bank of Delaware, 12 Id. 133; R. L. 1813, 513; L. 1829, p. 34, § 21; p. 42; 1 R. S. 591, §§ 9, 20; 9 Abb. Pr. 132; 2 R. S. 20, § 24; 46, §§ 32, 33; 464, § 42; 470, § 79; Matter of Hurst, 7 Wend. 240; Morewood v. Hollister, 6 N. Y. (2 Seld.) 323. Tax laws must be strictly construed. Regina v. St. Leonards, 14 Q. B. 340; Rex v. Pease, 4 B. & Ad. 30, 40; Reed v. Wilmot, 7 Bing. 577, 582; Tompkins v. Ashby, 6 B. & C. 541; Ramsden v. Gibbs, 1 Id. 324; 1 Cooke Bankr. L. 379 (or 392, 4 ed.); Rex v. Cotton, Park. Exch. 112, 127; 2 Ves. Sr. 288, 295; Attorney-General v. Capell, 2 Shower, 480; approved by PARKER, J., Park. 127; Rex v. Mann, 2 Strange, 749; Bunbury, 164; Archb. on Bankr. 11 ed. 217 (7 ed. 162); Regina v. Edwards, 9 Exch. 32, 628; 2 R. S. 469, § 67; Porter v. Williams, 9 N. Y. (5 Seld.) 147; Stat. 24 and 25 Vict. c. 134, § 156; Act 1849, § 166; 1 Cooke Bankr. L. 125; Re Wetherell, 19 Law Jour. (M. C.) 115. That these taxes were not due to the State, but to the city only; the city officers were parties, and that the city could not claim to succeed to the prerogative of the king, or to have the same rights of priority as the State. Citing Exp. Muggeridge, 1 Cooke Bankr. L. 125; Seabury v. Bowen, 3 Bradf. 207; Lloyd v. Heathcote, 1 Brod. & B. 388.

Richard O'Gorman, for the respondents;-Cited State v. Pemberton, Dudley, Geo. 15; Edw. on Receivers, 3, 4; Chart. of Duke of York, 1664; Const. of State of N. Y. of 1777, § 35; Id. 1822, § 13; Id. 1846, art. 1, § 17; Canal Appraisers v. People, 17 Wend. 572; Giles v. Conover, 9 Bing. 155–6-7, 1832; Acts of Cong. March 3, 1797, b. 74, § 5; March 2, 1799, c. 128, § 65; Thelusson v. Smith, 2 Wheat. 108; Fisher v. Bligh, 2 Cranch, 382; L. 1801, ƒ 551, c. 178, § 11; L. 1813, p. 513, c. 52, § 10; L. 1823, p. 399, c. 262, ap. 23, § 2; 1 R. S. 956 (5 ed.), § 50; 2 Id. 470, § 79; People v. Gilbert, 18 Johns. 227; 8 Bac. Abr. 92, "Prerogative"; 3 R. S. (5 ed.) 770, § 78; Fuller v. Allen, 16 How. Pr. 247-249; Reg. v. Edwards, 9 Exch. 32, 628.

Nelson Smith, for the receiver of taxes, respondent;—Cited Toller, 259; Const. of 1777, § 35; Id. 1846, art. 1, § 17; Law

Matter of Receivership of Columbian Ins. Co.

rence Tax L. 31, 59; L. 1850, 194, c. 121, § 34; Code, § 207, subd. 4; 2 L. 1857, 2, § 5; 2 R. S. 87, § 27; 470, § 79; People v. Gilbert, 18 Johns. 227; Inhabitants of Stoughton v. Baker, 4 Mass. 522; United States v. Hoar, 2 Mas. 311; L. 1801, 55, c. 178, § 11; L. 1813, 515, c. 52, § 10; L. 1823, 390, § 2; L. 1828-9, 34, 42, § 156.

BY THE COURT.-PORTER, J.-There is great force in the argument submitted by the counsel for the corporation of the city of New York, in support of the broad position, that the people of this State have succeeded to all the prerogatives of the British crown, so far as they are essential to the efficient exercise of powers, inherent in the nature of civil government, and that there is the same priority of right here, in respect to the payment of taxes, which existed at common law in favor of the public treasury.

It is unnecessary, however, to express an opinion on this question, as we entertain no doubt that, in this case, the lien acquired by the public authorities, when the warrant was issued, is entitled to take precedence of the equitable claim of the creditor of the corporation. At the date of the warrant, the property was in the hands of the corporation. The interest subsequently acquired by the creditor was subject to the prior rights of the State; and when the property, in virtue of legal process, came to be in custodia legis, it was the duty of the court to respect this priority of right in the application of the funds of the insolvent corporation.

The dissolution of the latter having already been adjudged by the court, the intervention of the attorney-general was un

necessary.

The application of the fund to this purpose, in the first instance, involves no departure from the policy of the statute regulating the distribution of the assets of insolvent corporations. 2 R. S. 470, § 79. Such assets consist, practically, only of the residue remaining after the discharge of all antecedent claims entitled to priority of payment under the settled rules of general law; and in making such distribution, the courts cannot ignore the universal and familiar rule, that a general statute is never to be so construed as to extinguish the rights

Matter of Saltus.

of the government by which it is enacted, unless it is couched in terms which unmistakably evince such an intent. People v. Gilbert, 18 Johns. 227, 229; United States v. Hoar, 2 Mas. 311, 314.

The order of the supreme court should be affirmed, with costs.

All the judges concurred.

Order affirmed, with costs.

MATTER OF SALTUS.

September, 1867.

Executors, selling property at an inadequate price, may be charged, on the accounting, with what the property was actually worth at the time of the sale, and might, with reasonable diligence, have been obtained for it. Where executors make payments on account of the principal of a fund, to a beneficiary who has only become entitled to interest, their charge of such payments must not be wholly rejected on the accounting, but should be allowed to the extent of the interest which should have been paid.

If a testator was liable upon drafts drawn for the benefit of a third person, the payment of such drafts should not be allowed to the executors, unless the estate be credited with the same amount as a claim against the principal debtor; or, unless it be shown that the principal debtor is insolvent. The estate is not, in the first instance, chargeable in the executors' account with such a debt. Where the testator was principal owner of a business corporation,Held, that payments made by the executors, in satisfaction of the notes of such corporation, for the benefit of a person who purchased the stock and property of the corporation from the estate, were not, under the circumstances, properly allowed to the executors in their account.

Where an executor, as surviving partner of the decedent, continues the

business of the firm, the books of the firm and the balance sheet, showing the amount due the estate, are evidence against the executor on his accounting; and it is incumbent on the executor to show what deductions, if any, should be made with reference to the uncertain value of the assets.

Theodore Saltus. Anna Salus and Lansing Pruyn, executors

Matter of Saltus.

of Francis Saltus, deceased, cited the parties in interest to appear in the surrogate's court, in the city of New York, upon an accounting, and for a final settlement of their account. Theodore Saltus rendered the account, and various objections were taken to it, which appear fully in the opinion.

The surrogate decreed that a sale of certain leasehold property, made by the executors to a debtor of the testator, was made at an inadequate price, and he charged the executors with five thousand dollars additional to the price with which they had charged themselves in the account.

The will contained a clause setting apart a sum to produce an annuity of three thousand dollars, for the testator's wife, and giving the executors a sufficient sum to be invested for that purpose. Another clause gave the residuum to the executors in trust, with power of sale, &c., to pay, among other things, to testator's son, Francis Henry Saltus, the income of one-eighth part of the residuum, and on his death to pay over one-eighth of the residuum to Francis Saltus Saltus, testator's grandson. The executors made certain payments to Francis Henry Saltus, amounting altogether to seven thousand dollars. The surrogate disallowed these payments, and held, that the sums represented must be invested, and that the executor was liable therefor.

Among other items entered in the schedule of debts, or sums paid to creditors, was the following:

"1856. May 1.

"By notes Peru Iron Co., 1st Jan. 1855, for the payment of which the estate was bound, $41, 737 01."

This sum consisted partly of drafts purporting to be drawn by William F. Saltus, manager of the company at Clintonville, on the Peru Iron Company in New York, and accepted by Theodore Saltus, the secretary, and partly of drafts purporting to be drawn at New York by Saltus & Co. on the iron company, and likewise accepted. The executors relied on the fact, that the testator was the chief partner and sole capitalist in the firm of Saltus & Co., and the executors had continued the firm for the interest of the estate during the period in which these drafts were drawn, and that Saltus & Co. had received the

Matter of Saltus.

money on them; and that, as the works of the company had been sold, the testator's indebtedness on the drafts was properly charged against the estate, at least as to the draft drawn by his firm of Saltus & Co. The surrogate held, on this point, that the item must be stricken out of the account, being a debt of the Peru Iron Company, and not a proper charge against the parties selling their interest in that company.

In the inventory filed by the executor, and in his account, the personal property was stated as "An interest in the firm of Saltus & Co., estimated by the appraisers at $138,000 00." One of the parties in interest produced the balance-sheet of the firm of Saltus & Co., in which Theodore Saltus, the executor, was a member, and the business of which he carried on after the testator's death, by which it appeared that the amount due to the estate of the testator on January 31, 1855, the time at which the balance-sheet was made out, which was shortly before the personal accounting, was one hundred and fortynine thousand six hundred and seventy-six dollars and sixtyseven cents. Upon this point the surrogate directed that the executors reform their account, so as to account for that balance appearing by the books and balance-sheet.

The supreme court, on appeal from the surrogate, affirmed the order in all respects, but without rendering any opinion; and the executors, Theodore and Anna Saltus, appealed to this

court.

Charles Tracy, for appellants;-Cited 2 R. S. 82, § 6, subd.

1; 87, § 25.

G. M. Speir, for respondents;-Cited, Schenck v. Dart, 22 N. Y. 423; Downs v. Gazebrook, 3 Mer. 200; 4 Kent Com, 74, case cited; Parkinson v. Parkinson, 2 Bradf. 77; Stilwell v. Doughty, Id. 311.

BY THE COURT.-GROVER, J.-Upon the accounting before the surrogate, several items of credit, claimed by the appellants, against the estate, were disallowed. An additional credit of five thousand dollars was given to the estate, on account of the sale, by the appellants, of the store and premises, 83 Mur