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N. Y.)

SPITZER V. VILLAGE OF FULTON.

thereon, it is manifest that these rulings were correct, and constituted no error for which this judgment can be properly reversed. As those are the only questions which this court has jurisdiction to determine, it follows that the judgment appealed from should be affirmed, with costs.

PARKER, C. J., and GRAY, VANN, and CULLEN, JJ., concur with WERNER, J. HAIGHT, J., dissents. MARTIN, J., not sitting.

Judgment reversed, etc.

(172 N. Y. 285)

SPITZER et al. v. VILLAGE OF FULTON.
(Court of Appeals of New York. Oct. 21, 1902.)
ELECTIONS-QUALIFICATION OF VOTERS-CON-
STITUTIONAL LAW.

1. Laws 1898, c. 269 (charter of the village of Fulton), provides that, to entitle a voter to vote on a proposition that the village establish a system of waterworks and issue bonds for that purpose, he must be entitled to vote for an officer, aud he or his wife must also be an owner of property in the village assessed on roll thereof. the last preceding assessment

Const. art. 2, § 1, provides that every male citizen of the age of 21 years, possessing the required qualifications as to residence, shall be entitled to vote for all officers elected by the people, and on all questions which may be submitted to the vote of the people. Held, that the provision of the statute requiring a property qualification of voters voting on the question of issue of bonds by a village was not in conflict with the constitution, when construed in connection with article 12, § 1, of the same, providing that the legislature shall provide for the organization of cities and villages, and restrict their power of taxation, borrowing money, and contracting debts, so as to prevent abuse in assessments and contracting debts by such municipal corporations.

Appeal from supreme court, appellate division, Fourth department.

Action by Ceilam N. Spitzer and others against the village of Fulton. From a judgment of the appellate division (69 N. Y. Supp. 1146) entering an order affirming a judgment for defendant (68 N. Y. Supp. 660), plaintiffs appeal. Affirmed.

Jordan J. Rollins, for appellants. Nevada N. Stranahan, for respondent.

PER CURIAM. This action was to recover $1,000 which the plaintiffs had deposited with the defendant as earnest money to secure the performance by them of a bid or contract for the purchase of 115 bonds, of the par value of $1,000 each, to be issued by it for the purpose of securing the money with which to construct a system of waterworks within its boundaries for the use of the defendant and its inhabitants. The bonds were advertised for sale, and each bidder was required to deposit a certified check for $1,000.

The check of the successful bidder was to be applied on account of the purchase price of the bonds, or to be re

tained by the defendant as liquidated dam-
ages in case the purchaser should fail to
The plaintiffs made a
comply with his bid.
written bid for the purchase of the bonds,
and delivered to the treasurer of the defend-
ant a cashier's check for $1,000, to be applied
on the purchase price of the bonds if award-
ed to them. The bonds were thus awarded.
They were tendered to the plaintiffs, but they
refused to accept them, and notified the de-
fendant that they elected to rescind their
contract. They then made a demand upon
the fiscal officer of the defendant for the
amount thus deposited, which was refused,
and this action was commenced. The de-
fendant demurred to the complaint upon the
ground that it appears upon its face that it
does not state facts sufficient to constitute
a cause of action. The demurrer was sus-
tained at special term, and unanimously af-
firmed by the appellate division.

That the defendant was authorized by
chapter 269 of the Laws of 1898 to establish
a system of waterworks and to issue bonds
for that purpose is not denied. The conten-
tion of the plaintiffs is that that statute was
unconstitutional and void because it was in
conflict with the provisions of section 1, arti-
cle 2, of the constitution of the state, which
defines the general qualifications of the elect-
ors of the state as follows: "Every male cit-
izen of the age of twenty-one years, who shall
have been a citizen for ninety days, and an
inhabitant of this state one year next preced-
ing an election, and for the last four months
a resident of the county, and for the last thir-
ty days a resident of the election district in
which he may offer his vote, shall be entitled
to vote at such election in the election district
of which he shall at, the time be a resident,
and not elsewhere, for all officers that now
are or hereafter may be elective by the people;
and upon all questions which may be sub-
mitted to the vote of the people." The pro-
visions of the statute of 1898 which the plain-
tiffs claim rendered it unconstitutional are
as follows: "A voter at a village election
must possess the following qualifications:
(1) To entitle him to vote for an officer, he
must be qualified to vote at a town meeting
of the town of Volney, and must have resided
in the village thirty days next preceding such
election. (2) To entitle him to vote upon a
proposition, he must be entitled to vote for
an officer, and he or his wife must also be
the owner of property in the village, assessed
upon the last preceding assessment roll there-
of." The manifest purpose of these provi-
sions was to define the qualifications of elect-
ors who should be authorized to vote at the
various municipal elections of the defendant
for the election of its public officers, and also
to define the qualifications they must possess
to vote upon the various propositions which
should arise as to the business or financial
affairs of the municipality. To vote for pub-
lic officers, they were required to possess
only the qualifications required of an elector

of the town in which the defendant corpora- | tecting such taxpayers could be devised than tion was situated, which were only such as an elector was required to possess under the provisions of article 2. But when a proposition was presented to be voted upon which related only to the business or private affairs of the corporation, and involved the creation of a debt or an extraordinary expenditure to be raised by taxation, then the added qualification of being a taxpayer was required.

The contention of the plaintiffs is that the provisions of chapter 269 contain a restriction upon the provisions of article 2 as to the right to vote for elective officers and upon all questions which may be submitted to the vote of the people, and hence are violative of its provisions. The obvious purpose of that article was to prescribe the general qualifications that voters throughout the state were required to possess to authorize them to vote for public officers, or upon public questions relating to general governmental affairs. But we are of the opinion that that article was not intended to define the qualifications of voters upon questions relating to the financial interests or private affairs of the various cities or incorporated villages of the state, especially when, as in this case, it relates to borrowing money or contracting debts. This becomes manifest when we also consider section 1 of article 12 of the constitution, which provides: "It shall be the duty of the legislature to provide for the organization of cities and incorporated villages,, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent abuses in assessments, and in contracting debt by such municipal corporations." Article 2 must be construed in connection with article 12. When read together, we have two provisions of the constitution which relate to this question. The first was intended merely to define the general qualifications of voters for elective officers, or upon questions which may be submitted to the vote of the people which affect the public affairs of the state; the second, a provision by which it is made the duty of the legislature to protect the taxpayers of every city and village in the state and to restrict their power of taxation, assessment, borrowing money, and contracting debts, so as to prevent any abuse thereby. One is general, relating to the whole state. The other is, in effect, local, relating only to the cities and villages of the state. One relates only to the general governmental affairs of the state. The other relates to the business or private affairs of the municipalities specified. By the latter section the manner of restraining municipal corporations from contracting debts and of preventing abuses in that regard is left to the sound discretion of the legislature, and was to be controlled by such legislation as it should deem proper, and which tended to secure that end. What better or more effective method of preventing such abuses and pro

to restrict the right of voting upon propositions for borrowing money or for contracting debts to the persons who are liable to be taxed for the payment of such debts? Indeed, the proposition that the incurring of such indebtedness shall be sustained only when a majority of the taxable inhabitants shall vote in its favor seems not only to be pre-eminently just, but such has been the method which has hitherto been generally, if not universally, adopted by the legislature to restrain the various villages of the state in their power of borrowing money or contracting debts so as to prevent such abuses. Not until now, so far as we know, has it been even claimed that such a provision was violative of the article of the constitution defining the general qualifications of the electors of the state. Indeed, the established policy of this state has been to limit the right of suffrage as to the business or financial affairs of its various villages to the taxpayers of the municipality, and it has never been its policy to confide their financial affairs to the general voters therein.

When we consider all the provisions of the constitution bearing upon this subject, we feel assured that none of the changes or amendments of that instrument was intended to alter or affect the power of the legislature to restrict the right of villages to borrow money or contract debts for unusual or extraordinary expenditures to cases where a majority of the taxpaying electors should by their votes consent thereto. It was the obvious intention of its framers to provide that any abuses of that character should be prevented by the legislature, and article 12 so plainly declares. Such, we think, was the purpose and effect of the legislation under consideration, that it was fully justified, and is not in conflict with the provisions of the organic law. Hence we conclude that the proceedings of the defendant which resulted in issuing the bonds in question were justified by the statute, that it is valid, and that the judgment herein should be affirmed.

The judgment and order should be affirmed, with costs.

PARKER, C. J., and GRAY, BARTLETT, MARTIN, CULLEN, and WERNER, JJ concur. HAIGHT, J., absent. Judgment and order affirmed.

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provided by the will, and, if the remainder eventually vesting should prove taxable at a higher rate, to make such increased rate payable at the time of its enjoyment.

Bartlett, O'Brien, and Vann, JJ., dissenting. Appeal from supreme court, appellate division. Second department.

In the matter of the appraisal, under the transfer tax act, of the estate of John D. Brez. Proceedings by the comptroller of the state against Jules Racine and others, executors. From an order of the appellate division (75 N. Y. Supp. 1122) affirming a decree of the surrogate's court, the comptroller appeals. Reversed.

Robert B. Bach, for appellant. Frederic R. Coudert, Jr., and Howard Thayer Kingsbury, for respondents.

CULLEN, J. We are of opinion that all the questions presented on this appeal, including both the construction and the constitutionality of the statute of 1899 (chapter 76) providing for the present appraisal and taxation of remainders created by will upon contingencies, or where the ultimate beneficiaries cannot be immediately ascertained, are disposed of by our recent decision in Re Vanderbilt's Estate, 172 N. Y. 69, 64 N. E. 782; and the order appealed from must therefore be reversed on the authority of that case. We feel, however, justified in calling the attention of the legislature to an inequality caused by the statute, which may have escaped its notice, and which we submit to its wisdom whether it would not be proper to remedy. In all the cases covered by this statute there must be one or more intermediate estates, generally life estates, during the period elapsing between the death of the testator and the happening of the contingency (commonly the death of the life tenant) on which the remainders become vested absolutely, and the remaindermen become certain. The tax on the remainders, being paid out of the corpus of the estate, diminishes the income of the life tenant by the interest on the amount of the tax. The constitutionality of this provision, though it affects the life tenant, we have upheld because the rate or amount of tax on the succession of the life tenant is within the discretion of the legislature to prescribe, and the scheme, in effect, is simply the imposition of an additional tax on the life tenant. It is evident, however, that the legislature has determined that in many instances the tax may be excessive; for, while it directs that the tax shall be imposed at the highest rate for any possible succession that may occur in any contingency, it provides that, if it eventually transpires that the succession which actually happens is subject to a lower rate, the excess of tax, with interest, shall be repaid by the state. The interest on this excess ought fairly to go to the life tenant, though the statute is silent on the subject. But even if given to the life tenant, it can

be repaid to his estate only after his death, for it is commonly his death that finally settles the rate of tax. This is hardly an equivalent for the diminution of his income during life, an income oftentimes necessary for his support. It seems to us that, bearing in mind the general character of the tax, and that the legislature has deemed it right to prescribe different rates of taxation, depending on the relation of the legatee or devisee to the deceased, if it is desired to make taxes on remainders payable immediately it would be fairer to the life tenant to have the tax assessed at the lowest rate of any succession provided for by the will, and that, in case the remainder eventually vesting should prove taxable at a higher rate, then such increased tax should be payable at the time of its enjoyment. Nor would this change be detrimental to the state. Our experience informs us that in the majority of cases the remainders are first appointed to the issue of the life tenant and descendants of the testator, and are given to collaterals or strangers only in default of issue. The lowest rate of tax thus usually proves the final rate. Where the state imposes in the first instance a higher rate of tax, it becomes obligated to repay the excess, after a lifetime, with 6 per cent. interest, while it could borrow the money at half that rate.

The orders of the surrogate and appellate division should be reversed, and proceedings remitted to the surrogate of Kings county to assess the tax as prescribed in the statute.

BARTLETT, J. (dissenting). I am of opinion that the recent decision of this court in Re Vanderbilt's Estate, 172 N. Y. 69, 64 N. E. 782, does not cover all the questions raised in this case, and is therefore not a controlling authority.

John D. Brez died November 18, 1899, leaving a last will and testament, which was admitted to probate in Kings county on January 23, 1900. The testator, after certain directions as to the investment of his residuary estate, directed his executors and trustees to pay to his sister, Elizabeth Aline Gillet, the income thereof, not exceeding $20,000 per year; the remainder to be capitalized and added to the principal. In a construction suit, this provision as to income was held illegal and void, and it was determined that Mrs. Gillet was entitled to receive the total income of the residuary estate, if she had no issue. If issue were born to her, the income in excess of $20,000 per year should be paid to such issue. If she died leaving issue, they would be entitled to the principal of the residuary estate. If she died leaving no issue, the will provides that the income of the residuary estate "be devoted to purposes of charity or religion of the Protestant faith only, or, still better, to education and art, applied to industry, either directly or by means of encouragement, such as prizes for essays or prizes for examples, or in any other way

which, according to their best judgment, will be most beneficial to mankind; said income to be devoted and distributed by said executors and trustees, or by a society organized for that purpose, according to their best judgment and the wants of the times." This clause of the will was also judicially construed, and it was held that, upon the death of Mrs. Gillet without issue, the discretionary powers "will vest in the qualifying executors then living or acting, or, in default of any such executor, in the supreme court in perpetuity; that, if the transfer to a society to be incorporated as above referred to be made, then the trust will vest in such society; if no such transfer be made by the executors, upon the death of the last surviving executor the trust and powers will vest in the supreme court in perpetuity."

This case involves the construction of the transfer tax act, as amended by chapter 76 of the Laws of 1899. This act added the new provision in regard to imposing a transfer tax, as follows: "When property is transferred in trust or otherwise, and the rights, interests or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this article, and such tax so imposed shall be due and payable forthwith, out of the property transferred: provided, however, that on the happening of any contingency whereby the said property, or any part thereof, is transferred to a person or corporation exempt from taxation under the provisions of this article, or to a person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this article, with legal interest thereon from the time of payment." The amount of the net residuary estate was determined by the appraiser to be $1,022,178.72. The present value of the total residuary estate, after the death of Mrs. Gillet, was assessed at $575,252, and the tax thereon at 5 per cent. fixed at $28,762.60. The remainder, in both real and personal estate, was declared to be contingent. This report was confirmed by the surrogate, but afterwards, on appeal to him, it was modified by striking out the interests of the unknown persons styled "contingent remaindermen," as not presently taxable or ascertainable, and that there was no present transfer of the remainder of the estate of the testator after the death of Mrs. Gillet, and that the fair market value of the interests to be hereafter transferred were not presently ascertainable, and that the imposition of the tax should be postponed. This order was

unanimously affirmed by the appellate division.

In

We have, therefore, presented the question, where contingent remaindermen are persons unborn, corporations unformed, and charitable schemes undevised, whether it is competent for the legislature to take from the body of the residuary estate the highest rate of tax upon these contingent transfers, thereby reducing the income of the life tenant. In other words, are these contingent interests presently taxable? It is insisted that our recent decision in the case of In re Graves, 171 N. Y. 40, 63 N. E. 787, sustains, in principle, the validity of this tax. It is doubtless true that this case holds, following Allen v. Stevens, 161 N. Y. 122, 55 N. E. 568, that the naming of indefinite beneficiaries in a will no longer invalidates a trust contemplating such beneficiaries, but that case did not in any way involve the present phase of the transfer tax now under consideration. the case before us we have a very peculiar and novel situation: (1) As to the issue of Mrs. Gillet, who are entitled to take the residuary estate at her death, if they are in being at that time. It is true that, owing to the advanced age of Mrs. Gillet, the probability of issue is quite remote, but the possibility of issue exists physiologically. We have here possible contingent remaindermen not in being, to whom no transfer has been made, as it cannot logically be said that the effect of a will is to transfer from the testator to the beneficiary when the latter is not in existence. (2) In the event of the failure of issue, the will directs the executors and trustees to use the income of the residue of the estate for the "purposes of charity or religion of the Protestant faith only, or, still better, to education and art, applied to industry, either directly or by means of encouragement, such as prizes for essays or prizes for examples, or in any other way which, according to their judgment, will be most beneficial to mankind; said income to be devoted and distributed by said executors or trustees, or by a society organized for that purpose, according to their best judgment and the wants of the times." We have here disclosed certain contingencies. The executors and trustees are authorized to devote the income of the residuary estate to purposes of charity or religion of the Protestant faith only. If the executors should see fit to organize a strictly religious corporation of the Protestant faith, it would not be subject to the transfer tax. On the other hand, if it was a charitable society of the Protestant faith, it would be liable to the transfer tax. In re Watson, 171 N. Y. 256, 63 N. E. 1109. The important point presented, which was not involved in Re Vanderbilt's Estate, supra, is that, aside from the possibility of unborn heirs becoming contingent remaindermen, there is the additional possibility that a religious corporation may be organized in the future, not taxable, and become the remain

derman, entitled in perpetuity to the income of the trust property. Notwithstanding this situation, the legislature has provided that there shall be taken out, for the benefit of the state, from the principal sum, to the income of which the life tenant is entitled, a tax at the rate of 5 per centum, which is to be refunded to the estate, with interest, at the death of the life tenant, if the property is transferred to a person or corporation exempt from taxation. This may be meting out a certain measure of justice to the remainderman, but the life tenant, who will have passed away when restitution is made, has been deprived of the income on the amount of the tax. How large this tax may be in these days of great wealth is well illustrated in the Vanderbilt estate, where the transfer tax was enormous. Under the operation of this amendment of 1899, it is possible for a life tenant to be deprived of the income from a large amount of property during the entire period of his life, which may endure for 40 or 50 years. At the instance of testator's death the life tenant becomes vested with the legal right to receive the income of the residuary estate during life. This right is property, in the strictest sense of the term. This court has repeatedly held that the transfer tax is not imposed upon property, but on the right of succession or transfer. What power has the state, even if it be omnipotent in the domain of taxation, as is so often said, to impose a transfer tax when the remainderman, not in existence, may be a religious corporation, subject to no tax? It is clearly, so far as the life tenant is concerned, depriving him of property without due process of law. power of the legislature to impose taxes is subject to certain constitutional limitations. To say that the state may deprive a life tenant of the income of many thousands of dǝllars during half a century by presently collecting a transfer tax on an unvested residuary estate, where the corporate remainderman to enjoy it is yet to be created, and may be exempt from taxation, is to override the plain provision of the constitution prohibiting the taking of property without due process of law.

The

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court, in a suit on a common-law cause of action, brought by an administrator, jurisdiction to order a reference of all the issues in the action to a referee to hear and determine the same, when the administrator opposes the granting of such order and demands a trial by jury?" Held, that as the questions whether the trial would involve examination of a long account, and whether independent issues are raised by the pleadings, have not been certified, the question cannot be answered correctly either in the negative or the affirmative, and the appeal granted must be dismissed.

2. Where independent issues are raised by the pleadings or issues in a common-law action brought by an executor or administrator, the determination of which may render an accounting unnecessary, they should be first tried before a jury; and if thereafter an accounting is necessary, and the trial will involve the examination of a long account, the court has power to order a compulsory reference.

Vann and O'Brien, JJ., dissenting.

Appeal from supreme court, appellate division, Second department.

Action by Sylvester L. Malone, as administrator of Sylvester Malone, deceased, against Sts. Peter and Paul's Church, Brooklyn. From an order of the appellate division (74 N. Y. Supp. 1005) reversing an order of the special term, defendant appeals by permission. Dismissed.

James M. Gray, Herbert T. Ketcham, and Joseph E. Owens, for appellant. Laurence E. Malone, for respondent.

HAIGHT, J. The question certified to this court by the appellate division is as follows: "Has the court, in a suit upon a commonlaw cause of action, brought by an administrator, jurisdiction to order a reference of all the issues in the action to a referee to hear and determine the same, when the administrator opposes the granting of such order and demands a trial by jury?" The court in this case ordered a reference upon the ground that the trial would involve the examination of a long account. Did the court have jurisdiction to make such an order? In order to answer the question certified, it becomes important to examine the legislation upon the subject.

The first law to which attention has been drawn is entitled "An act for the better determination of personal actions depending upon accounts." It was passed December 31, 1768, and, so far as is material to the question under consideration, provides as follows: "Whereas, instead of the ancient action of account, suits are of late, for the sake of holding to bail, and to avoid the wager of law, frequently brought in assumpsit, whereby the business of unraveling long and intricate accounts most proper for the deliberate examination of auditors, is now cast upon jurors, who, at the bar, are more disadvantageously circumstanced for such services; and this burden upon jurors is greatly increased, since the law made for permitting discounts in support of a plea of payment; so that by the change of the law and practice above mentioned the suits of

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