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PEOPLE v. SILVERBERG.

(Court of Special Sessions, New York County. February 26, 1915.)

1. USURY 149(1)-LOAN-BANKING LAW.

Under Banking Law (Consol. Laws, c. 2) § 314, forbidding usury, a transaction whereby a complainant, who was in sharp need of money, applied to defendant for a loan of $100, and was told that defendant would sell him a diamond ring, which he could pawn for that amount, followed by defendant's delivery of the ring, for which complainant agreed to pay $295 in monthly installments, and which he pawned for $125, when the wholesale value of the ring was $145, and its retail value $180, constituted the offense of usury.

[Ed. Note. For other cases, see Usury, Cent. Dig. § 441; Dec. Dig. ~149(1).]

Moss, J., dissenting.

Jacob Silverberg was charged with usury. Defendant found guilty. Judgment affirmed, 171 App. Div. 914, 155 N. Y. Supp. 1132. Argued before RUSSELL, C. J., and FLEMING and MOSS, JJ. Charles Albert Perkins, Dist. Atty., and Walter S. Heilborn, Deputy Asst. Dist. Atty., both of New York City, for the People.

Goldstein & Goldstein, of New York City (Abraham Lipton, of New York City, of counsel), for defendant.

RUSSELL, C. J. The facts in the case at bar are simple, and present a single very clear issue. The defendant is charged with usury, and violation of section 314 of the Banking Law, in that he charged more than at the rate of 6 per cent. per annum for a loan of money.

The complainant, one Thomas Kane, testified that he applied to the defendant, Silverberg, for a loan of $100 on the 21st of February, 1914. He was informed by said defendant that he had no money to lend, but that he would sell the said Kane a diamond ring, which he could pawn for that amount. Thereupon defendant delivered to the said Kane a ring, for which the complainant agreed to pay $295 in monthly installments. On the same day Kane pawned the ring for $125. The value of the ring is variously estimated by the witnesses who testified at the trial. The wholesale value of the ring, which is the value of the ring to the defendant, was put at $145; the fair retail value of the ring, according to the people's expert, was put at $180. On the testimony of the people, therefore, the defendant is charged with having exacted $115-the difference between the retail value of the ring and the price charged to the complainant-for the loan of $180. If this transaction, or pretended or apparent sale, can properly be regarded as a mere disguise of a loan, and a devise to evade the usury law, then the defendant is guilty of the crime charged.

The only difficult question presented in this controversy is a question of fact, namely, "Was the transaction a loan of money or a sale of goods?" Defendant's contention is, and must be, that the said

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however, the object of the parties is a loan of money, and something else under the form of an exchange or sale is substituted for it, the principal of the loan, and consequently of the debt contracted by the nominal vendee, will be the value in money of the substitute received by him; and any consideration paid or secured to the vendor beyond that will in general be considered as interest for its forbearance. 1 Bro. Ch. C. 150; Lowe v. Waller, Dougl. 708; 2 Camp. N. P. 375; Holt's N. P. C. 295; Comyn on Usury, 94, 95."

The device employed by the defendant is the latest refuge of the money lender in this city. It is a plain and palpable attempt to evade the statute by an old and worn-out contrivance.

The court finds the defendant guilty.

FLEMING, J., concurs. MOSS, J., dissents.

In re SPIEGELBERG'S ESTATE.

(Surrogate's Court, New York County. April 9, 1915.)

TAXATION 887-TRANSFER TAX-REMAINDER INTERESTS.

Under a will giving the executors the power to invade a trust fund, certain remainder interests passing under the will were not presently liable to a transfer tax, but were properly suspended from taxation. .

[Ed. Note.-For other cases, see Taxation, Cent. Dig. § 1709; Dec. Dig. 887.]

Proceeding to assess inheritance tax on the estate of Betty Spiegelberg, deceased. From the appraiser's report, and the order entered thereon fixing the tax, the State Comptroller appeals. Appeal dismissed, and order affirmed.

Eugene E. Spiegelberg, of New York City, for executors.

COHALAN, S. This is an appeal by the state comptroller from the appraiser's report, and the order entered thereon, upon the ground that certain remainder interests passing under the will of decedent and suspended from taxation should now be taxed.

The contention of the executors is that power to invade the trust fund is specifically given to them under the decedent's will and that these remainders, therefore, are not now liable for a transfer tax. Under the ruling in Matter of Granfield, 79 Misc. Rep. 374, 140 N. Y. Supp. 922, the contention of the executors should be sustained. The appeal is therefore dismissed, and the order fixing tax affirmed. Settle order on notice.

In re BLYN'S ESTATE.

(Surrogate's Court, New York County. Jan. 28, 1915.)

TAXATION 887-TRANSFER TAX-REMAINDER INTERESTS.

Under a will giving the life tenant a power to use the principal of the fund, its exercise by the executors to the exhaustion of the principal

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would leave nothing that could be transferred to the remaindermen at the death of the life tenant, so that the taxation of the remainder interests was properly suspended.

[Ed. Note. For other cases, see Taxation, Cent. Dig. § 1709; Dec. Dig. 887.]

Proceeding to assess inheritance taxes on the estate of Marianna Blyn, deceased. From the appraiser's report, and the order entered thereon, the State Comptroller appeals. Appeal dismissed, and order fixing tax affirmed.

Jonas, Lazansky & Neuburger, of New York City, for executor. Ed. F. Boyle, of New York City, for state comptroller.

COHALAN, S. This is an appeal by the state comptroller from the appraiser's report and the order entered thereon, upon the ground that the taxation of certain remainder interests passing under the will of decedent was improperly suspended.

The executors contend that there was not improper suspension of taxation, inasmuch as the life tenant is given a power to use the principal of the fund. This power is found in the will of decedent. If it should be exercised by the executors to its fullest extent, i. e., to the exhaustion of the principal, there would be nothing that could be transferred to the remaindermen at the death of the life tenant. In the Matter of Granfield, 79 Misc. Rep. 374, 381, 140 N. Y. Supp. 922, 927, a case very similar to the one under discussion, the court said:

"To tax the estate at the present time, in the event nothing should ultimately pass to the remaindermen, would be imposing a tax upon the property and not upon the transfer, in direct conflict with the whole theory of the transfer tax."

Applying this rule to the situation herein, I find that the contention of the executors should be sustained. The appeal is therefore dismissed, and the order fixing tax affirmed. Settle order on notice.

In re BLUN'S ESTATE.

(Surrogate's Court, New York County. March 25, 1916.)
495(3)-CONVERSION-COMMISSION.

1. EXECUTORS AND ADMINISTRATORS

Where executors are empowered to convert the real estate into personalty they are entitled to commissions on the real estate affected by such provision in the will.

[Ed. Note.-For other cases, see Executors and Administrators, Cent. Dig. § 2092; Dec. Dig. 495(3).]

2. EXECUTORS AND ADMINISTRATORS

495(2)—ADMINISTRATION-COMMISSION. In a case where the line of distinction between the duties of the executors and of the trustees is not clearly drawn, and the duties of the executors and trustees do not at any particular place or time appear susceptible of severance, and as executors they may fully carry out the duty of administering the trust created by the will, the executors were not entitled to double commissions as executors and as trustees.

[Ed. Note. For other cases, see Executors and Administrators, Cent. Dig. § 2089; Dec. Dig. 495(2).]

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

3. TAXATION 884-TRANSFER TAX.

To divide a life interest in one-fifth of a residuary estate, so that the transfer of two-thirds was assessed against the life tenant and one-third against the trustees for the benefit of persons of the 1 per centum class, was error.

[Ed. Note. For other cases, see Taxation, Dec. Dig. 884.]

4. TAXATION

887-TRANSFER TAX-TRUST FUND-PAYMENT OF PRINCIPAL. Under a will giving the executors power to pay out a part of the principal of a trust fund to decedent's son, if he should desire to use it for business purposes, there was a power to invade the principal, but the remainder was presently taxable.

[Ed. Note.-For other cases, see Taxation, Cent. Dig. § 1709; Dec. Dig. ~~887.]

In the matter of the estate of Ferdinand S. M. Blun. From the transfer tax appraiser's report, and the order entered thereon fixing the tax, the State Comptroller appeals. Order vacated, and report remitted to the appraiser for correction.

Heymann & Herman, of New York City, for executor.

COHALAN, S. This is an appeal from the transfer tax appraiser's report and the order entered thereon fixing tax, on the grounds that said report and order are erroneous, in that commissions on real estate are disallowed, that commissions are not allowed to executors and trustees, that one-third of the life estate of F. Melville Blun in one-fifth of the residuary estate until reaching the age of 40 years was improperly taxed, and that the transfer of a portion of decedent's estate is found liable to taxation, notwithstanding the provision of the testator's will which empowered the executors to invade the principal said portion.

[1] Where the executors are empowered to convert the real estate into personalty, as they are under the testator's will, it is well settled. that the executors are entitled to commissions on the real estate affected by such provision in the will. Matter of Saunders, 77 Misc. Rep. 54, 137 N. Y. Supp. 438. On this ground the appeal is sustained. [2] As to the second ground of appeal it seems to me that this is a case where the line of distinction between the duties of the executors and of the trustees is not very clearly drawn. In other words, the duties of the executors and trustees do not appear, at any particular place or time indicated, susceptible of severance or distinction, and that as executors I think they may carry out fully and completely the duty of administering the trust created by the will. Under such circumstances the case under consideration falls in the same class with the Estate of William Ziegler, 168 App. Div. 735, 154 N. Y. Supp. 652. In the disposition of the appeal in that case the court said (168 App. Div. 744, 154 N. Y. Supp. 658):

"Under this will the accounting parties may rightfully administer the estate only by acting wholly as executors or wholly as trustees, and not in both capacities, and this is evidenced from the fact that whether they act only as executors or only as trustees, provided they do act in the one capacity only, they can fully carry out and perform the terms of the will."

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

[3] The appellants also contend that the appraiser erred in dividing the life interest of F. Melville Blun in one-fifth of the residuary estate, so that the transfer of two-thirds was assessed against him and one-third against the trustees for the benefit of persons of the 1 per centum class. This undoubtedly was error, and I sustain the appellants' contention.

[4] Under the seventh clause of decedent's will the executors are given the power to pay out a portion of the principal of the trust fund. to decedent's son if he should desire to use it for business purposes. This is undoubtedly a power to invade the principal. The appellants contend that under the law, as laid down in the Matter of Granfield, 79 Misc. Rep. 374, 140 N. Y. Supp. 922, Matter of Blyn, 160 N. Y. Supp. 730, and Matter of Spiegelberg, 160 N. Y. Supp. 730, this portion of the estate, owing to the fact that the power of invasion is created, should be suspended from taxation. I do not agree with this contention. An examination of the last two mentioned cases shows that they were based upon the decision in the Matter of Granfield, supra. This case was decided prior to the decision of the Court of Appeals in the Matter of Zborowski, 213 N. Y. 109, 107 N. E. 44. The theory of law as laid down in that case consequently was not applied in the disposition of the said cases. I think, therefore, that in the case under discussion the Matter of Zborowski governs, and that the said remainder is presently taxable.

As to the second and fourth grounds, the order fixing tax is affirmed. Let the order fixing tax be vacated and the report remitted to the appraiser for the purpose of correcting it in the respects above noted.

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(Surrogate's Court, Bronx County. May, 1916.)

1. INSURANCE 589-LIFE POLICIES-RIGHT TO.

Where an industrial life policy, providing for payment either to the executor, administrator, husband or wife, or any blood relative of the insured, named insured's first wife as beneficiary and after her death the designation was not changed, the second wife, who became administratrix and received payment, cannot claim the proceeds as her own.

[Ed. Note. For other cases, see Insurance, Cent. Dig. §§ 1472-1474; Dec. Dig.

2. INSURANCE

589.]

585(1)-LIFE INSURANCE-PAYMENT.

Insured's second wife, not being entitled under the policy to the proceeds, cannot claim them by reason of the payment.

[Ed. Note. For other cases, see Insurance, Cent. Dig. §§ 1461, 1464, 1468; Dec. Dig. 585(1).]

3. EXECUTORS AND ADMINISTRATORS 214-EXPENSES-CLAIMS FOR FUNERAL EXPENSES.

Where an association in which deceased was a member provided that upon the death of a member in good standing the sum of $200 should be paid to those defraying the expenses of the funeral, and that the overplus, if any, should be paid to the widow, eldest child, or parents of deceased, the widow, who as administratrix paid deceased's funeral exFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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