of the books of the firm. None of the parties to this proceeding, however, have in any way changed their positions by reason thereof, so that nothing in the nature of an estoppel arises. An examination of a copy of the account of the firm also leads me to the conclusion that the partnership business had no good will with which the petitioner is chargeable. Matter of Silkman, 121 App. Div. 202, 105 N. Y. Supp. 872, affirmed without opinion 190 N. Y. 560, 83 N. E. 1131; Matter of Seaich, 170 App. Div. 686, 156 N. Y. Supp. 579.

From all of the evidence that has been produced, it is my opinion that the executor has sustained the burden, which, under the circumstances, is upon him, of showing that the sale price was a fair one. Bauchle v. Smylie, 104 App. Div. 513, 93 N. Y. Supp. 709. It follows, therefore, that objection II and objection III must be dismissed. Under the stipulation, this disposes of all the objections, except objection VII.

The decedent in his will provided that, should the executor not be able to pay over to the persons mentioned in his will the shares which the will prescribes within 18 months, he was to have "an additional extension of twelve (12) months." It appears, however, that the executor sold the business to the corporation in the year 1914.

There is nothing in the account showing that any interest was earned upon the amount of the purchase price of the decedent's share in the partnership business between the time of the sale and the time when the account was filed. The testimony discloses that the executor left the purchase price for which he sold the partnership assets in the business of the corporation which was formed on February 16, 1914. The corporation in question was, for all practical purposes, the business of the executor; he was the president, and his wife was the secretary. Under such circumstances, I believe that he should be surcharged with interest on the same from the date when the sale was made, at the rate of 6 per cent. per annum, compounded annually. Hannahs v. Hannahs, 68 N. Y. 610; Farrell v. Farrell, 142 App. Div. 605, 127 N. Y. Supp. 764, reversed on other grounds 205 N. Y. 450, 98 N. E. 857; Matter of United States Mortgage & Trust Co., 114 App. Div. 532, 100 N. Y. Supp. 12.

The fact that the will provides that, if the executor is not able to pay over the shares referred to in the will "within the prescribed eighteen months allowed him by law," he shall have an additional 12 months within which to do so, in my opinion, does not change the situation, because it appears that the business was sold long before the expiration of the thirty months.

The executor will therefore be surcharged with interest on the net amount stated in the account to have been realized upon the sale of the decedent's interest in the copartnership business from the date of sale at 6 per cent. per annum, compounded annually. Settle decision and decree accordingly, on notice.

(182 N.Y.S.)

In re COLLIER'S ESTATE.

(Surrogate's Court, New York County. May 11, 1920.)

1. Taxation 895 (5)-Debt owed by decedent to corporation is asset of corporation in determining value of its bonds owned by decedent.

The transfer tax appraisers, who deducted from decedent's estate a debt owed by him to the corporation whose bonds he owned, properly included that debt as an asset of the corporation in determining the value of the bonds.

2. Taxation 895 (5)—Securities payable only from corporate assets after other indebtedness are not "bonds."

The distinguishing feature of a bond is that it is an obligation to pay a fixed sum, with stated interest, so that securities issued by a corporation, which were payable only out of the assets of the corporation after its other obligations were paid, though designated as "bonds," were more like preferred stock, and were not taxable as bonds, under Tax Law, §§ 221b, 330. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Bond.J

3. Corporations 178-Stockholder has no lien on assets.

A stockholder in a corporation, whether his stock is common or preferred, cannot have a lien on the property of the corporation, though the stock by its terms is accorded a lien.

In the matter of the estate of Robert J. Collier, deceased. From the report of the transfer tax appraiser, and the order thereon, Sarah Steward Collier and another appeal. Order assessing the tax modified.

Hornblower, Miller, Garrison & Potter, of New York City (William R. Begg and Lloyd Church, both of New York City, of counsel), for appellants.

Lafayette B. Gleason, of New York City (Schuyler C. Carlton, of New York City, of counsel), for state comptroller.

FOLEY, S. This appeal is taken by Sarah Steward Collier, the widow of decedent, individually, and by her and the United States Trust Company as administrators c. t. a., from the report of the transfer tax appraiser and the order thereon, on the ground (1) that the assets of the estate have been appraised at a sum in excess of their true market value, and (2) that certain bonds of P. F. Collier & Son, Incorporated, have been reported as taxable pursuant to the provisions of section 221b of the Tax Law (Consol. Laws, c. 60).

1. The appraiser has found the net estate for distribution to be $202,194.99. The facts are undisputed, and the appraisals of assets are substantially those of the estate's experts. The appellants claim that the estate is insolvent. The question of the solvency of the estate depends upon the value at the time of death. The decedent was the owner of $2,500,000 par value "7 per cent. cumulative income bonds" of that company. The appraiser finds that these securities, the entire issue of which was owned by the decedent, were worth the sum of $1,509,296.74 (the value of all the assets of the company). The appellants contend that their value was $1,251,330.14. The difference between the two figures is the sum of $257,966.60. This latter sum

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represents the indebtedness of the decedent, with interest, under a contract entered into between him and the company, by which he agreed, among other things to pay to it the sum of $200,000 within two years from the date of the agreement, January 13, 1912.

The appraiser has allowed the debt as a deduction, and has also included it among the assets of the company. The appellants admit that it is a valid debt, and it is scheduled as such by the administrators. They contend, however, that while it is properly deductible from the gross value of his estate, it is not an asset of the company, and therefore does not enhance the value of the bonds.

[1] If it was an admitted debt, it was also a proper asset of the company, and it would be neither moral nor legal, by any process of bookkeeping jugglery, to allow it for a purpose favorable to the estate and at the same time to disallow it against the state. The result is the same, whether the amount is included on both sides of the account between the estate and the company or excluded therefrom. The appraiser therefore properly included this indebtedness as an asset of the company.

[2] 2. An examination of the terms and conditions of the so-called "7 per cent. cumulative income bonds" and of the trust agreement, under which they were issued, convinces me that they are not investments as defined by section 221b and section 330 of the Tax Law. The principal and interest "are payable only out of the assets of the company remaining after the payment of all other indebtedness." The bonds, instead of being a debt due from the corporation, are really preferred stock. The certificates are similar in form to the "bonds" discussed in the opinion of the Appellate Division in the case of Cass v. Realty Securities Co., 148 App. Div. 96, 132 N. Y. Supp. 1074, affirmed 206 N. Y. 649, 99 N. E. 1105, which were held. to be, in legal effect, certificates of stock.

[3] The substance of the securities, not the form or name, must be considered. Sohmer v. Hebden, 216 N. Y. 728, 111 N. E. 1100; U. S. Radiator Co. v. State of N. Y., 208 N. Y. 144, 149, 101 N. E. 783, 46 L. R. A. (N. S.) 585. The opinion of the Appellate Division, First Department, in the Cass Case, supra, reads as follows:

"The distinguishing feature of a bond is that it is an obligation to pay a fixed sum, with stated interest. It may or may not be secured; but, if it is, and the security proves to be insufficient, the indebtedness is not thereby wiped out. The distinguishing feature of stock is that it confers upon the holder a part ownership of the assets and right to participate according to the amount of his stock in the surplus profits of the corporation, and ultimately, on its dissolution, in the assets remaining after the payment of its debts. Burrall v. Bushwick R. R., 75 N. Y. 211; Plimpton v. Bigelow, 93 N. Y. 592. It is fundamental that a stockholder, whether common or preferred, cannot have a lien on the property of the corporation, even though the stock, by its terms, is accorded a lien. Cook, Corp. (6th Ed.) § 271; Warren v. King, 108 U. S. 389. The securities upon which plaintiffs claim partake in a marked degree of the distinguishing characteristics of stock. It is true that they contain a promise to pay a stated sum of money at a fixed time and to pay meanwhile a stated rate of interest; but these obligations are qualified by what follows. It is provided that, after the payment of certain fixed dividends on the common and preferred stock, the holders of the bonds in suit are 'entitled to a proportionate share in the surplus income, if any.' So upon the liquidation

(182 N.Y.S.)

of the company the holders of the bonds are entitled to share, after certain payments have been made, in the surplus capital of the corporation, and finally the bond will be satisfied, not only upon payment of its face value, but upon payment of a ratable proportion of the assets, whether more or less than the amount called for on its face."

The appraiser erred in reporting these securities as taxable under the provisions of section 221b of the Tax Law. An order may be entered on notice, modifying the order assessing tax, so as to eliminate the provision for the tax imposed by section 221b of the Tax Law.

In re VANCE'S GUARDIANSHIP.

(Surrogate's Court, Bronx County. December, 1919.)

(Syllabus by the Court.)

Guardian and ward guardians on conditions. On a contest between an infant's maternal grandmother and its paternal uncle over the appointment of a guardian it appeared that the father, before his death, requested the aunt, for whose appointment the grandmother prayed, to take care of the infant, if anything happened to him, and it was held, that the best interests of the infant demanded that it remain in the custody and care of the grandmother, that the expressed wishes of the father should be followed as far as possible, that this can best be done by appointing both the grandmother and the aunt, and that the uncle should have the privilege of visiting the child at least once each week.

13 (4)—Grandmother and aunt of infant appointed

Application by Mary Batist for the appointment of her daughter, a maternal aunt of petitioner's infant granddaughter, Eleanor Vance, as a general guardian of the latter's personal property, consolidated with a petition by Robert J. Vance, a paternal uncle of the infant, for his appointment as guardian. Grandmother and aunt appointed guardians, on conditions.

Greenthal & Greenthal, of New York City, for petitioner Batist. Peter P. McElligott, of New York City, for petitioner Vance.

SCHULZ, S. The maternal grandmother of Eleanor Vance, an infant, about 2 years and 2 months of age, applied for the appointment of her daughter, a maternal aunt of the infant, as general guardian of the latter's person and property. On the day following the filing of the petition in that proceeding, a paternal uncle of the infant applied for his appointment, submitting with his application the consents of two other paternal uncles of the infant. Thereupon a citation was issued in the uncle's proceeding, directed to the petitioner in the grandmother's proceeding and also to the maternal aunt, and thereafter the two proceedings were consolidated and a hearing had thereon.

From the testimony it appears that the infant is entitled to property of the value of between $1,000 and $1,500; that the child was

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born on October 21, 1916, and at a time when the petitioning grandmother was living with the parents of the infant, she having resided with them from the time of their marriage; that the mother of the infant died in November, 1916, and that thereafter the father of the infant, the infant, and the petitioning grandmother continued to live together, the grandmother nursing and taking care of the infant up to the time of the death of the father on October 2, 1918. Thereafter the petitioning grandmother resided and now resides in the household of her other daughter, for whose appointment as guardian she now prays.

He

The grandmother, therefore, has had the care of this child from the day of its birth up to this time, with the exception of a short period in the month of July, 1918, when the father left the home occupied by himself and his mother-in-law, taking the child with him. returned within a few days, however, and remained with the grandmother up to the time of his death. The aunt, for whose appointment the grandmother prays, is married and has four children, the youngest being a boy of the age of 14 years. Her husband earns between $35 and $40 a week, and she occupies a five-room apartment. testifies that she had a conversation with the father of the infant while he was at the hospital, and that he told her that he wanted her to take care of her mother and the baby, if anything happened to him, and that she said she would. Her husband states that he is willing to bring up the child and to defray the child's expenses.

The petitioning brother of the decedent does not appear to have been in very close touch with this child at any time during its life. He is also a man of family, having two children, respectively 2 and 4 years of age, and his income is about $20 per week. It is conceded that the persons whose appointment is prayed for in both petitions are people of good character.

It is unnecessary to discuss again the authorities, of which there are a great many, having to do with the guardianship of children. I have had occasion to consider them at some length in several matters that have come before me in this court. Matter of Cross, 92 Misc. Rep. 89, 155 N. Y. Supp. 1020, affirmed without opinion 174 App. Div. 872, 159 N. Y. Supp. 1108; Matter of Munn, 101 Misc. Rep. 171, 167 N. Y. Supp. 443. I am satisfied that the best interests of this child demand that it remain in the custody and care of the grandmother, who seems to have taken such good care of it up to this time. I believe, also, that the wishes of the father, as testified to by the aunt, should be followed as far as possible, and I think that this can best be done by appointing both the grandmother and the aunt, for whose appointment she petitions, and this course will be followed. The uncle, however, shall have the privilege of visiting the child at least once each week, if he so desires, so that the infant may also have the opportunity of associating with him and receiving the benefit of his counsel and advice.

Settle decree accordingly.