(190 App. Div. 578) (180 N.Y.S.) BRYANT et al. v. SHAW et al. (Supreme Court, Appellate Division, Second Department. February 13, 1920.) 1. PARTITION 12 (2)-RIGHT OF EQUITABLE OWNERS TO MAINTAIN SUIT IS DOUBTFUL. The right of equitable beneficiaries only, without legal title, to maintain partition suit, is doubtful. 2. TRUSTS 21 (1)-DECLARATION OF TRUST IN LAND PRIOR TO ACQUISITION VALID, THOUGH NOT UNDER SEAL. A writing acknowledging the receipt of $1,000 from plaintiffs as subscription in a syndicate to be managed by defendant, formed for the purpose of acquiring title to certain land and erecting on it an apartment house, was not ineffective, though it preceded the acquisition of the land, but was a valid declaration of trust, which, under Real Property Law, §§ 242, 243, may be by writing without being under seal, and the instrument took full effect when subsequent title of record vested in defendant. 3. TRUSTS 11(1), 132-SYNDICATE FOR PURCHASE OF LAND HELD NOT A PERMITTED TRUST; BENEFICIARIES OF SUCH TRUST TAKE TITLE AS TENANTS IN COMMON. A trust or syndicate, formed for the purpose of acquiring title to certain premises, and erecting an apartment house thereon, was not one of the four express trusts permitted by Real Property Law, § 96; and as it could not be upheld as a trust, the equitable owners, who had joined the syndicate under sections 66, 91, 99, became at once tenants in common, each participating member, under section 92, taking a legal estate of the same quality and duration as the equitable estate attempted by the declaration. 4. PARTITION 12 (2)—INTERESTS OF PART OWNERS UNDER ATTEMPTED EXPRESS TRUST ARE LEGAL. The interests of tenants in common, under Real Property Law, §§ 66, 92, 96, resulting from an attempted, but invalid, express trust, are legal estates, entitling the part owners or tenants in common to maintain partition, or otherwise to exercise ownership. 5. TRUSTS 21 (2)-DECLARATION OF TRUST IN LAND HELD NOT INDEFINITE AS TO BENEFICIARIES. Objection that a declaration of trust in land, under which, pursuant to Real Property Law, §§ 66, 92, 96, on account of its invalidity, plaintiffs seek partition as tenants in common, was indefinite in regard to the beneficiaries, cannot avail as against plaintiffs, who are sufficiently described, and whose contributing interest in the trust or syndicate to acquire land and erect a building is definitely stated. 6. PARTITION 13-ABSOLUTE RIGHT TO PARTITION OF TENANTS IN COMMON WHO BECAME SUCH THROUGH INVALIDITY OF ATTEMPTED EXPRESS TRUST. Where, under Real Property Law, §§ 66, 92, 96, members of a syndicate or trust to acquire land and erect a building obtained full title as tenants in common on failure of such unpermitted express trust, they can enforce their remedies by division or partition sale, under Code Civ. Proc. § 1532 et seq.; their absolute rights dependent only on their status as cotenants, entitled to actual or constructive possession, and not upon any breach of the syndicate or trust agreement by the other parties. 7. PARTITION 55 (2)—COMPLAINT BY TENANTS IN COMMON UNDER UNPERMITTED DECLARATION OF TRUST NEED NOT NEGATIVE INCORPORATION. In suit for partition by tenants in common, who became such through failure of an attempted express trust or syndicate to acquire land and erect a building, not permitted by Real Property Law, § 96, the com. plaint need not negative the fact of the incorporation of the syndicate, which was only a future possibility, suggested at the close of the declaration of trust, a point which may be raised by answer. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes Appeal from Special Term, Westchester County. Action by Fred S. Bryant and Emma H. Bryant against Anna H. Shaw, impleaded with Edna B. Lewis and others. From an order granting a motion of defendant Shaw for judgment on the pleadings, on her demurrer to the complaint for partition on the ground that it did not state facts sufficient to constitute a cause of action, plaintiffs appeal. Order reversed, and motion denied, with leave to withdraw demurrer and to answer. Argued before RICH, PUTNAM, BLACKMAR, KELLY, and JAYCOX, JJ. Theodore J. Breitwieser, of New York City, for appellants. PUTNAM, J. This suit is based upon the following instrument: "New York, March 6, 1914. "I acknowledge the receipt from Emma Harris Bryant and Fred S. Bryant of 65 West 127th street, city of New York, and state of New York, the sum of one thousand dollars ($1,000) as subscription in syndicate to be managed by undersigned, formed for the purpose of acquiring title from American Real Estate Company of premises on the east side of Bayley Avenue, Yonkers, N. Y., and erecting thereon an apartment dwelling house; the interest of each member of such syndicate and the improvement to be erected thereon to be evidenced by a deed of trust made by undersigned, which shall set forth respective interests of the owners thereof. It is understood that the undersigned is to hold title in her own name, merely for purposes of convenience, and she is to have charge of erecting the building, managing the same after completion, and all proper charges and disbursements for purchase, erection of building, obtaining of mortgages, and maintenance of building are to be deducted from amounts in her possession which have been subscribed by the members of this syndicate, or from the income from the building after erection, and accountings from time to time to be made by the undersigned as requested by parties interested. If it should be deemed advisable later to transfer title to a corporation, the various members of this syndicate shall receive stock in proportion to the amounts which they have subscribed. "[Seal] Jean Alison Hunter, "N. Y. Co. No. 1741. "N. Y. Reg. No. 5247." "[Signed] Edna B. Lewis. The complaint sets out: That the plaintiffs and defendants are seized as tenants in common of undivided shares of certain described lands in the city of Yonkers, which lands are identified by map numbers and by metes and bounds. That the plaintiffs are seized as tenants in common of an estate of inheritance, in fee simple absolute, in an undivided one-tenth part of said premises, with a like allegation as to the respective defendants, except that defendant Edna B. Lewis has no title or interest in the premises, but she holds the record title by virtue of the quoted agreement of March 6th. It is also averred that she has collected all the rents of said premises, but has not accounted therefor to plaintiffs. The complaint asks for a sale, division of proceeds, and an accounting by the defendant Lewis, with a receivership of the rents and profits. [1] If this instrument of March 6, 1914, created a valid trust under our Real Property Law, then this would be a suit by equitable bene (180 N.Y.S.) ficiaries only, without legal title, whose right to maintain a partition suit is doubtful. Side v. Brenneman, 7 App. Div. 273, 40 N. Y. Supp. 3. [2] A further objection is made that the land now the subject of suit had not been acquired on March 6, 1914, so that the instrument lacked the requisite subject-matter. Although the writing preceded the acquisition of the land, it was not ineffective. It was a valid declaration of trust, which under our Real Property Law (Consol. Laws, c. 50, § 242) may be by writing, without being under seal (Id. § 243; Chaplin on Express Trusts and Powers, §§ 71, 72; 1 Perry on Trusts [6th Ed.] § 82). The instrument took full effect when the subsequent title of record vested in defendant Lewis, the declarant. [3,4] But this was not one of the four express trusts permitted in this state. Real Property Law, § 96. As it could not be upheld as a trust, the equitable owners, who had joined this syndicate, became at once tenants in common by Real Property Law, §§ 66, 91, and 99. Each participating member of the syndicate took a legal estate as tenant in common, which was "of the same quality and duration" as the equitable estate attempted by this declaration. Real Property Law, § 92; Hutchins v. Van Vechten, 140 N. Y. 115, 35 N. E. 446. Such interests resulting from an attempted express trust are legal estates, which entitle the part owners to maintain partition, or otherwise to exercise ownership. Stanley v. Payne, 65 Misc. Rep. 77, 119 N. Y. Supp. 570. [5] The objection that this declaration of trust was indefinite in regard to the beneficiaries cannot avail as against the plaintiffs, who are sufficiently described and their contributing interest definitely stated. [6] Respondent urges that no breach of this syndicate agreement is shown, and therefore that plaintiffs are not at liberty to retire from their agreement. But as by our statute plaintiffs obtained the full title, they can enforce their remedies as tenants in common by division or partition sale, which are absolute rights, dependent only on the plaintiff being a cotenant entitled to actual or constructive possession. 30 Cyc. 189; Code Civ. Proc. § 1532 et seq. [7] We are also of opinion that the complaint need not negative the fact of incorporation, which was only a future possibility, suggested at the close of this declaration. If since incorporated, that may be raised by answer. The order granting this defendant judgment on the pleadings should therefore be reversed, with $10 costs and disbursements, and motion denied, with $10 costs, with leave within 20 days, on payment of such costs, to withdraw the demurrer and to answer. All concur. (110 Misc. Rep. 281) NEW YORK INTERURBAN WATER CO. v. CITY OF MT. VERNON et al. (Supreme Court, Special Term, Westchester County. February 3, 1920.) 1. WATERS AND WATER COURSES 203 (6)—CITY CANNOT FIX RATES TO BE CHARGED BY WATER COMPANY. The power to regulate the rates to be charged by public utilities is vested only in the state, and in such bodies, commissions and municipalities as the state may clothe with such power; and hence the city of Mt. Vernon, to which has not been delegated the rate-making power, cannot by ordinance fix the rates to be charged by a water company. 2. WATERS AND WATER COURSES 203 (5)-WATER COMPANY MAY FIX RATES, SUBJECT TO REVIEW BY COURTS. A water company in a city to which has not been delegated the power to fix rates may determine and fix the rates for itself, subject to the power of the court to review the same and determine whether they are fair and reasonable. 3. PUBLIC SERVICE COMMISSIONS 7-Waters and Water COURSES 203 (6) -DELEGATION OF STATE'S RATE-FIXING POWER NOT IMPLIED. The power of the state to fix rates charged by public utilities is never delegated by implication, and no municipality, board, or commission may exercise such power, unless it is clearly and unmistakably granted by the state. 4. WATERS AND WATER COURSES 203 (12)—EQUITY WILL PROTECT MUNICIPALITY AGAINST DANGER TO HEALTH PENDING LITIGATION CONCERNING WATER RATES. Although a water company, in a municipality to which has not been delegated rate-fixing power, may fix its own rates, subject to review by the court, a court of equity, pending a determination of the fairness of rates, will protect the municipality against dangers to its health and safety. 5. WATERS AND WATER COURSES 203 (10)-REASONABLENESS OF WATER RATES DETERMINED BY CONSIDERING RETURN ON VALUE OF PROPERTY. If what is determined to be a fair return on the value of the property of a water company and a fair allowance for depreciation equal or exceed the net income under the rates charged by the water company, then it must be held that such rates are fair and reasonable. 6. WATERS AND WATER COURSES 203(10)-FIXING OF FAIR VALUE OF PROP ERTY OF WATER COMPANY NOT MATTER OF FORMULAS. In determining what is the present fair value of property of a water company, all the material and relevant facts must be considered; it not being a matter of formulas. 7. WATERS AND WATER COURSES 203(10)-COST OF REPRODUCTION LESS DEPRECIATION NOT CONTROLLING IN FIXING PRESENT VALUE OF WATER COMPANY FOR PURPOSE OF FIXING RATES, In determining what is the fair value of the property of water company for the purpose of fixing reasonable rates, the cost of reproduction, less accrued depreciation, cannot alone control during a period of high prices, where the question of the permanency or duration of the high prices is problematic. 8. WATERS AND WATER COURSES 203 (10)-PLANTS NOT USED NOT CONSIDERED IN DETERMINING VALUE OF WATER COMPANY'S PROPERTY FOR PURPOSE OF FIXING REASONABLE RATES. In estimating the value of real estate of a water company, reservoir sites not in use by the water company as part of its system will not be considered. 9. WATERS AND WATER COURSES 203(12)—PRESUMPTIONS AS TO GOING VALUE OF PUBLIC UTILITIES IN CONTROVERSY AS TO REASONABLENESS OF RATES. In the absence of proof to the contrary, it must be assumed that the income of a water company was sufficient to pay a fair return upon its For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes (180 N.Y.S.) actual investment, and the burden of proving otherwise rests upon the public utility in a controversy as to the reasonableness of rates. 10. WATERS AND WATER COURSES 203 (10)—No ALLOWANCE FOR GOING VALUE IN DETERMINING REASONABLENESS OF RATES. In determining the value of the property of a water company in a controversy concerning reasonableness of rates, the fair return to which the water company is entitled is to be reckoned upon the fair value of the property and its actual investment therein, rather than on an overissue of its securities, and no allowance should be made for "going value" merely by reason of an overissue of security when the water company first took over the properties from another company. 11. WATERS AND WATER COURSES 203 (10)-No INTEREST ALLOWED ON LAND IN FIXING VALUE OF PUBLIC UTILITY PROPERTY FOR PURPOSE OF FIXING RATES. In arriving at the present fair value of property of a water company for the purpose of fixing reasonable rates, interest on land will not be allowed as an element. 12. WATERS AND WATER COURSES 203 (10)—NET INCOME OF SEVEN PER CENT. TO WATER COMPANY HELD REASONABLE. The net income of 7 per cent. on the fair present value of the property of a water company held reasonable, in view of future hazards and condition of the money market, and difficulty with which bonds and stock of public utility corporations are being sold. Action by the New York Interurban Water Company against the City of Mt. Vernon and others. Judgment for plaintiff. See, also, 185 App. Div. 305, 173 N. Y. Supp. 38. Arthur M. Johnson, of Mt. Vernon, for plaintiff. J. Henry Esser, of Mt. Vernon (Joseph S. Wood, of Mt. Vernon, of counsel), for defendants. TOMPKINS, J. The plaintiff brings this action in equity for two purposes: First, to have it adjudged that the ordinance marked Exhibit C and annexed to the complaint, relating to the rates to be charged by the plaintiff and regulating the plaintiff's service of the city of Mt. Vernon and its inhabitants, was and is illegal and void; and, second, that the plaintiff's new rates, which were to have become effective September 1, 1919, are fair and reasonable. The plaintiff is a domestic corporation engaged in the business of supplying water for hire to the city of Mt. Vernon and inhabitants thereof, and other communities in the county of Westchester, and was incorporated in June, 1901, and thereupon took over the property and franchises of the New York Suburban Water Company, and thereafter several other water companies were merged in the plaintiff. In 1913 the plaintiff increased its water rates, whereupon an action was brought by one of its customers, one David L. Whitmore, to enjoin the plaintiff from collecting its new rates, and judgment was entered in that action in July, 1914, by which said new rates were adjudged to be fair and reasonable; that the rates then established were continued until 1919, when the plaintiff, on July 31st of that year, gave notice to its customers that on and after September 1, 1919, new rates would be put in operation, whereupon the common council of the city of For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 180 N.Y.S.-20 |