National Automobile Mutual Casualty Company, against William L. Weinstock. From an order of the Appellate Division (221 App. Div. 822, 224 N. Y. S. 754), affirming an order of Special Term, which granted defendant's motion for judgment on the pleadings, plaintiff appeals by permission of the Appellate Division. Reversed.

losses and expenses upon the members liable to assessment therefor, in proportion to their several liability. Every member shall be liable to pay and shall pay his proportionate part of any tion in accordance with law and his contract, assessment which may be laid by the corporacovering any deficiency (excess of liabilities over admitted assets) if he is notified of such assessment within one year after the expiration or

Clarence C. Fowler, Alfred C. Bennett and Pinckney Estes Glantzberg, all of New York City, for appellant.

of the deficiency for which an assessment is made shall be determined by applying to the premium earned on the member's policy during the period to be covered by the assessment the ratio of the total deficiency to the total pre

CRANE, J. The National Automobile Mutual Casualty Company was organized as a corporation and conducted an insurance business under and by virtue of article 10-B of the Insurance Law of the State of New York (Consol. Laws, c. 28), and had its principal office for the transaction of business at 75 Maiden Lane, in the city of New York.

On June 28, 1923, the superintendent of insurance took possession of the company, pursuant to section 63 of the Insurance Law, for the purpose of liquidating its business. The order of liquidation fixed the rights and liabilities of the corporation, its creditors and policyholders, as of July 12, 1923.

Subsequently, and on May 29, 1924, the superintendent of insurance made his report, wherein he levied an assessment upon the members and policyholders of the company for the purpose of paying the losses and expenses of said company. The amount of the assessment was equal to twice the amount of the cash premium written in the respective policy contracts. The defendant William L. Weinstock, a policyholder, was assessed $206.38, and this action has been brought to recover the amount. The defense interposed, and which has been successful below, is that the insured was not notified of the assessment within the time specified in section 346 of the Insurance Law governing assessments.

[1] This defendant took out his policy for one year on April 17, 1922. As amended to take effect April 1, 1922 (Laws 1922, c. 417. § 9), section 346 read:

"Section 346. Assessments. The corporation shall in its by-laws and policies fix the contingent mutual liability of the members for the payment of losses and expenses not provided for by its cash funds; but such contingent liability of a member shall not be less than an amount equal to twice the amount of, and in addition to, the cash premium written in the policy. If the corporation is not possessed of cash funds above its unearned premium sufficient for the payment of the incurred losses and expenses, as estimated or determined, it shall make an assessment for the amount needed to pay such

icies subject to assessment. All proposed premium assessments shall be filed in the insurance department and shall not take effect until approved by the superintendent of insurance, aftAll funds of the corporation and the contingent er such investigation as he may deem necessary. liability of the members thereof shall be available for the payment of any liability of the corporation."

The defendant's policy expired April 17, 1923. The one year referred to in this section after expiration in which to notify a policyholder of an assessment would in the defendant's case expire April 17, 1924. As he was not assessed by the insurance liquidator until May 29, 1924, he was not notified within the year after the expiration of his policy. This has been found by the courts below to be fatal to the plaintiff's recovery. The Attorney General insists that the one year's notice does not apply to liquidation proceedings, and we are inclined to agree with him for the following reasons:

This was a mutual insurance company in which the insured was also the insurer. The only funds to pay insurance losses came from the premiums or assessments. Persons other than the insured were interested in maintain

ing a sufficient insurance fund to pay losses. By section 109 of the Insurance Law the company was directly liable in case of the insolvency of the insured to persons injured in an accident covered by the policy.

Section 346 provided for a fund to pay losses. First, there was the premium stated in the policy. Then the contingent mutual liability of the members for the payment of losses in excess of its cash funds was provided by assessments, not to be less than an amount equal to twice the amount of, and in addition to, the cash premium written in the policy. The defendant's policy contained similar provision, except that the amount of the assessment was not to be greater than twice the premium. The defendant in this case has not been assessed in excess of this amount.

The provision of section 346 relating to notice of assessment, in our opinion, relates to assessments made by the corporation as a

going concern. Every member, it says, shall be liable for his proportionate part of any assessment laid by the corporation in accordance with law and his contract. All such assessments shall be filed in the insurance department, and shall not take effect until approved by the superintendent of insurance after such investigation as he may deem necessary. As assessment made by the liquidator, the insurance superintendent, would not have to be filed as here stated in the insurance department. Such an assessment would not be referred to as taking effect only after the approval of the superintendent of insurance and an investigation by him; and yet this provision applies to all proposed premium assessments, indicating that the assessments referred to excluded those made in liquidation proceedings to pay the debts of the company.

[2] The defendant knew, when he entered the mutual company, that assessments could be levied up to twice his premium for the purpose of paying the losses. The law so provided; so did his policy. To the extent of this superadded liability, he became an insurer. Commonwealth v. Monitor Insurance Co., 112 Mass. 150. The company, as a going concern, from day to day could estimate its apparent contingent liabilities for losses which had occurred, and make from time to time the assessments necessary to meet these losses. Under such circumstances, it was reasonable that the company should notify the policyholder as soon as possible, and at least within the year provided by the statute. A different situation confronted the liquidator. All losses and liabilities were fixed as of a certain date. He would have to gather in all available assets, ascertain all the losses up to that time, and figure out the assessments upon policyholders. He would not only have one company to deal with, but, as a state department, would in all probability have many proceedings going at the same time. No new business would be taken, of course, after the liquidator took possession. All liability and, assets would be fixed in amount as of the date stated. The liabilities of the policyholders could not be increased by the taking on of any new business. It would therefore be of little importance whether the policyholder, liable to assessment to pay the debts, received notice at once or within the year, or later in the course of the proper administration of the insurance department liquidations. The main thing is that the debts and liabilities are fixed as of a certain date and a policyholder made liable by the statute for these debts up to a certain amount.

The winding up of a corporation, such as a mutual insurance company, takes time, and it can hardly be expected that the Legislature

intended to force the insurance department to proceed to collect the assets within a definite period. I can see no reason for so limiting its powers.

Therefore the context of the statute and this reasoning would indicate that the oneyear notice of assessment does not apply to liquidation proceedings. The order of the Appellate Division and that of Special Term should be reversed, and the motion for judgment on the pleadings denied, with costs in all courts.

CARDOZO, C. J., and POUND, ANDREWS, LEHMAN, KELLOGG, and O'BRIEN, JJ.,

concur.

Orders reversed, etc.

(247 N. Y. 227)

PEOPLE ex_rel. LEHIGH VALLEY RY. CO. v. BURKE et al., City Assessors. Court of Appeals of New York. Jan. 20, 1928. I. Taxation 496(10)—Evidence held to show that 226.725 acres of submerged land two miles from, business center of Buffalo was properly assessed at $498,626.

226.725 acres of submerged land two miles from business center of city of Buffalo held properly assessed at $498,626, instead of $1,378,000, under evidence showing that land was unproductive, and that it was problematic whether land could be brought above water level and sold at price greater than cost. of filling.

2. Taxation

496(10)-Railroad's implied declaration of value of submerged land, in submitting report of real estate dealer to valuation bureau of Interstate Commerce Commission, was admissible in proceeding to review assessment, but was not declaration against interest (49 USCA § 19a).

Implied declaration of railroad as to value of submerged land in submitting written report such land to valuation bureau of Interstate of real estate dealer containing valuation of Commerce Commission, though admissible in proceeding by railroad to review assessment of such property, was not declaration against interest, notwithstanding that valuation might affect limit for issuance of securities under Act Feb. 4, 1887 (49 USCA § 19a; U. S. Comp. St. Cong. March 1, 1913, adding section 19a to Act § 8591).

3. Taxation 496 (9)-In reviewing assessment, property is not deemed worthless because owner allows it to go to waste.

In reviewing assessment of submerged land, property is not to be deemed worthless because owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use.

4. Taxation 348-Taxable value of submerged lands is value when filled in, less cost of filling.

Value of submerged land for purpose of taxation, where full title is privately owned, is value of land when filled in, less cost of filling.

Crane, J., dissenting.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by the People, on the relation of the Lehigh Valley Railway Company, against William J. Burke and others, as Assessors of the City of Buffalo. From an order of the Appellate Division, Fourth Department (221 App. Div. 248, 223 N. Y. S. 168), reversing a final order of the Special Term, which adopt ed the findings of fact of the referee, and reduced an assessment of real estate in the City of Buffalo for taxing purposes from the sum of $1,378,000 to the sum of $498,626, relator appeals. Order of Appellate Division reversed, and that of Special Term affirmed.

Lyman M. Bass, of Buffalo, for appellant. Frederic C. Rupp, Corp. Counsel, and Herbert A. Hickman, both of Buffalo, for respondents.

KELLOGG, J. This is a certiorari proceeding to review an assessment of certain real estate of the relator, made by the respondents, assessors of the city of Buffalo, for general tax purposes for the year 1923. The property was assessed at the figure of $1,378,000. The issues joined by the service of a return to the writ of certiorari were referred by the Special Term to a referee to take evidence and report the same with his findings of fact and conclusions of law. The referee took the proof, found as a fact that the full value of the land did not exceed the sum of $498,626, and reported to the Special Term that the relator's assessment should be reduced to the figure named. The Special Term adopted the findings of the referee, and ordered the assessment reduced to the sum of $498,626. The Appellate Division, upon an appeal to it by the present respondents, reversed the Special Term, found that the true value of the land was the sum of $1,378,000, and directed that the assessment made by the respondents, at the sum named, be reinstated. Thereupon the relator took this appeal.

[1] The subject of the assessment is a tract of land having an area of 226.725 acres, situate within the city limits of the city of Buffalo, and about two miles distant from the business center thereof. It is a strip running northerly and southerly, at the easterly end of Lake Erie, with a length of 5,937.44 feet, or approximately 1 miles, and a width varying from 1,444 feet, at its southerly boundary, to 2,101 feet on its northerly boundary. All

of the land, except about 12 acres, lies under the waters of Lake Erie. Its easterly boundary is the Hamburg turnpike, a paved street carrying the rails of a surface railroad, upon which trolley cars run along the entire frontage. Beneath the Hamburg turnpike there is an underpass, which affords a means of connection between the assessed land and the railroad lines of the relator lying to the east of the turnpike. Sloping banks from the turnpike to the water's edge constitute the 12 acres of uplands. The remainder of the property, or about 215 acres, is under water having a mean depth of 8.6 feet. The vertical distance from the surface of the water to bedrock averages 60 feet. The westerly line of the property is the harbor line established by the United States government. Still farther westerly is a breakwater maintained by the United States, which extends the full length of the property. About 1,600 feet of water lie between this breakwater and the harbor line.

Title to the land came to the relator from two sources. It had acquired many years prior to the year 1921, from individual owners, that portion of the land which lies east of the shore line of Lake Erie. The waters of Lake Erie, through a series of years, had washed away the original shore, so that it became necessary for the Legislature to establish the correct boundary line. Accordingly, the line was fixed by statute in the year 1913 at a point which gave to the relator's holdings an area of 111.49 acres, of which about 100 acres were under water. This property had been assessed by the city of Buffalo, during the years 1917 to 1922, at the figure of $85,500, or at the rate of approximately $760 an acre. In the year 1921 the remainder of the land, consisting of 115.235 acres, was purchased by the relator from the state of New York for the sum of $86,426.25, or at the rate of about $750 an acre. This carried the relator's proprietorship to the established harbor line. Thereafter the city of Buffalo, acting through these respondents, made this assessment, appraising the land at about $6,000 per acre.

Self-evidently the exact counterpart of the relator's land does not exist. Nor has any parcel of land, similar in area, location, and adaptability for industrial uses, ever been the subject of purchase and sale. Consequently, no identity of opinion on the part of traders as to the value of this land, tested by moneys actually paid and received for other lots of an identical character, has ever been exhibited by any market. Moreover, the land, which is almost wholly submerged, has never been put to industrial uses, and has never produced a revenue. Therefore its value cannot be judged by the fact of market price or the fact of previous earnings. It must necessarily rest, for the purposes of this proceeding, in

the opinion of the trier of fact, based upon data of an exceedingly uncertain and unsatisfactory character.

The respondents insist that the strongest proof upon which to base an opinion as to the value of the land will be found in facts proven by them in relation to three sales of underwater lands, in the vicinity of the land in question. These sales are: (1) A sale in March, 1918, of 7.14 acres of land to the Empire Engineering Company at a price of $17,000 per acre. (2) A sale in 1923 of 7.86 acres by the Buffalo Harbor Land Company to the city of Buffalo at a price of $25,000 per acre. (3) A sale in December, 1923, of 5% acres by Alice Perew to the city of Buffalo at a price of $24,500 per acre. All these parcels lie under the waters of Lake Erie at points north of the land in question. They are situate at least one mile nearer to the business center of the city of Buffalo. The area sold aggregates 20 acres; 6 years were required to make the sales. At this rate it would take approximately 66 years to effect a sale of all the 226 acres here involved. The purchase of the parcel sold to the Empire Engineering Company was made to procure a site for industrial operations for the purposes of the Great War. The other purchases were made by a municipality. In all such transactions political considerations and influences frequently play a part. Moreover, these sales are balanced by the sale made in January, 1917, to the South Buffalo Railroad Company. This parcel was just south of the land in question, and consists of 21.76 acres of land, of which not more than 5 acres were under water. The purchase price of this parcel was at the rate of $19,300 per acre. In other words, the filled-in land sold at a less price than the sum which the preponderance of the proof shows would have been the cost per acre of filling an equal acreage. The sale tends, therefore, to establish the proposition that the submerged tract now under consideration is without economic value. These sales indicate a widely divergent opinion as to the value of underwater properties in this vicinity; 20 acres of unfilled land, on the one hand, sold for more than $17,000 an acre. On the other hand, 20 acres of land, threequarters of which was filled-in land, sold at approximately the same price, or a price not equal to the price of the filling. Moreover, opinions expressed thereby as to the value of two 20-acre parcels necessarily involve considerations widely different from those involved, when, as here, the opinion to be formed relates to the value of a tract of 226

acres.

The respondents also assert that the exhibi'tion by the relator of a certain valuation report, to appraisal clerks in the employ of the

Interstate Commerce Commission, was a fact of controlling importance. The commission had made a tentative report valuing the relator's properties. This covered carrier properties of the relator in Buffalo as well as noncarrier properties. The former were tentatively valued for rate-making purposes. The latter were tentatively valued, since they might become important in determining the maximum limit for the issuance of securities by the relator. Act of Congress of March 1, 1913, § 19a (49 USCA § 19a; U. S. Comp. St. § 8591). The relator made no objection to the valuation of the noncarrier properties, which included the property in question. It does not appear that any application to issue securities was before the commission.

[2] A Mr. Parke, a real estate dealer in Buffalo, had made a written report to the relator in which he had valued all the relator's Buffalo properties, whether carrier or noncarrier. Upon this report there appeared an appraisal of the property in question at the figure of $10,000 per acre. The entire report was exhibited by the relator to clerks in the valuation bureau of the commission. It is said that this constituted a controlling admission by the relator upon the question at issue. We think otherwise. The value of the particular property in question was not in issue before the commission. The report upon its value was not used either to fix rates or to establish a maximum sum to limit the issuance of securities. It was not vouched for by the relator, except as it was submitted by it, with other data, to the consideration of the commission. It is as if the relator had said to the commission, "We have no quarrel with you as to the valuation made of our noncarrier properties. However, we have in our files a valuation report upon all our properties, including our lands under water, made by a Buffalo real estate dealer, which you may look at and which we now submit." This attitude of the relator was far removed from a position of express approval of the report or an assertion of its correctness. Moreover, even if it be thought that the relator, by its submission of the report, impliedly declared that the land in question was worth $10,000 per acre, it must be remembered that the declaration, when made, was not against the relator's interest. This fact, while it made the declaration none the less admissible, nevertheless impaired its weight as a determining factor upon the issue here involved. Wigmore on Evidence, § 1048. The assessors themselves did not take the declaration at its face value, for they found the properties worth not $10,000 per acre, but $6,000 per acre. Moreover, the valuation made by Mr. Parke was in terms based upon a purported sale of underwater lands to the Standard Milling Company, a

sale which in fact was never effectuated. For all these reasons we consider that the conduct of the relator, in submitting the Parke report to a bureau of the Interstate Commerce Commission, is not, for the decision of issues here presented, of controlling importance.

[3] The price which a buyer will pay for land which can be made useful for industrial purposes only, in the last analysis, must depend upon the investment required thus to make it useful. "Property is not to be deemed worthless because the owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use. Others may be able to use it, and make it subserve the necessities or conveniences of life. Its capability of being made thus available gives it a market value which can be readily estimated." Per Mr. Justice Field in Mississippi & R. River Boom Co. v. Patterson, 98 U. S. 403, 25 L. Ed. 206. The land in question, in its present submerged condition, is useless for any industrial or economic purpose. "Its capability of being made thus available" for such uses will determine its value, if valuable it be. According to the relator's experts, the cost of filling in the land, in order to lift it to a point 10 feet above water, will be $30,000 per acre, or approximately $7,000,000 for the whole. According to the chief engineer of the city of Buffalo, the cost will be $56,000 per acre, or more than $12,000,000 for the whole. An intending purchaser of the entire tract, in making a decision as to the price which he would pay therefor, reasonably would consider the following facts: (1) In order to make the land available for industrial purposes, the use of at least $7,000,000 must first be expended to lift the land above the water line. (2) The land as thus improved cannot, as a whole, be immediately disposed of for industrial purposes. The land is adapted to the use of a grain elevator business. However, it cannot, as an entire tract, be devoted to such purposes. All the land in the city of Buffalo, one of the great milling centers of the world, upon which a grain elevator business is prosecuted, comprises less than 60 acres. The relator has commissioned many real estate brokers in the city of Buffalo to sell the tract. Nevertheless, during the lapse of several years, no substantial offers have been received therefor. The Ford Motor Company, the Standard Oil Company, the Pillsbury Flour Mill, and many other large manufacturing concerns, have passed up the property, and located their plants elsewhere within the city of Buffalo or in its vicinity. (3) Many years will be required to sell the property parcel by parcel. Witnesses have testified that from 50 to 75 years will have passed before the land can thus be disposed of. If the purchaser seeks to sell at the high prices paid

by the Empire Engineering Company and the city of Buffalo for three small parcels, the time which will elapse before the sales are completed, judged by the time elapsing in the case of such sales, may be 66 years. On the other hand, if he chooses to make immediate sales at the price controlling the South Buffalo Railroad Company sale, he will not receive the cost of filling in the lands to make the sale. (4) The purchaser who makes the necessary filling will have invested at least $7,000,000 in property which brings no annual return. Interest and taxes will be such that the amount of the investment will be doubled at the end of every 10 years. At the end of 10 years he will have an investment of approximately $15,000,000; at the end of 20 years of $30,000,000; at the end of 30 years of $60,000,000. In order to break even, for moneys expended in mere improvements, he must have disposed of all the property at the end of one of these periods for at least the amount which the investment will then total, as shown by the foregoing table. We think that, when an intending purchaser had considered these facts, he would not be ready to pay a high price therefor.

[4] In First Const. Co. of Brooklyn v. State, 221 N. Y. 295, 116 N. E. 1020, this court had under consideration the proper method of appraising the value of a franchise from the state to fill in underwater lands. It said:

"The value of the right in this respect will be the value of the land when filled in less the cost of filling and the addition of value as the result of filling in may be greater or less than the cost of the latter operation."

We see no reason why the same method may not be employed to appraise the value of submerged lands where full title thereto, rather than a franchise therein, is privately owned. In either case the land may not become useful without filling. Therefore the cost of filling is a necessary factor entering into the problem of value. It is a factor which every prospective buyer for investment would seek to measure. Its proper measure, therefore, might be of help in determining the price at which the unfilled lands would sell.

Summarizing the proof, we find this state of facts: The land in question is presently unproductive of income. No tract of land, similar in area and location, has ever been the subject of a market sale. No offers for the entire tract have ever been received. Lands similarly located, which have brought a substantial price, have a total area of 20 acres, or less than one-tenth the acreage of the land in question. They have been sold in three separate parcels through a period of 6 years. A parcel of upland, equal in area, has been sold' at a price, judged by which underwater lands