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GAYNOR, J. Those claiming under the deed of conveyance put in an answer denying the mortgage and asserting their title. The learned trial judge held that the mortgage was delivered in the lifetime of the mother, the mortgagor. The delivery of the key of the box in which she kept it to the third person with instructions to get it and deliver it was a delivery. It was a delivery to him to deliver to the mortgagee, the plaintiff, and that was a good delivery to the plaintiff. Hathaway v. Payne, 34 N. Y. 92. But the trouble is that at the time of such delivery the mortgagor did not own the land, and therefore nothing passed under the mortgage. She had conveyed to

her daughter.

The decision of the learned judge that the deed to the daughter was void for a suspension of the absolute power of alienation for 21 years, was erroneous. The suspension was void, but not the conveyance. The grantee took the fee free of the illegal condition. A void or unlawful condition to a conveyance in fee, like a repugnant one, does not affect the conveyance. And a forfeiture cannot be predicated upon such a condition. Washb. on Real Est. book 1, c. 14, art. 6; Roosevelt v. Thurman, 1 Johns. Ch. 220; Schermerhorn v. Negus, 1 Denio, 448; De Peyster v. Michael, 6 N. Y. 467, 57 Am. Dec. 470; Oxley v. Lane, 35 N. Y. 340.

The judgment should be reversed.

Judgment reversed, and new trial granted; costs to abide the final award of costs. All concur.

(118 App. Div. 437.)

PEOPLE v. TROY CHEMICAL CO.

(Supreme Court, Appellate Division, Third Department. March 13, 1907.) 1. CORPORATIONS-ACTIONS TO DISSOLVE.

It is no ground of objection to an action to dissolve a corporation, brought as authorized by Code Civ. Proc. § 1786, by the Attorney General, in the name of the people, on the verified application of a creditor, showing grounds under section 1785 for the action, that the creditor is interested in another corporation of the same name; there being nothing to indicate that it was not brought by the Attorney General in the discharge of a public duty and in good faith.

2. SAME-GROUNDS OF DISSOLUTION-SUSPENDING BUSINESS.

The ground for dissolution of a corporation provided by Code Civ. Proc. § 1785, subd. 3, that it has suspended its ordinary and lawful business for at least a year, is shown by the answer admitting that, since the filing of the petition in bankruptcy against such corporation May 10, 1904, its business had not been conducted; the action for dissolution having been commenced February 13, 1906.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, § 2389.]

3. SAME-FAILURE TO PAY NOTES.

Discharge in bankruptcy of a corporation's note, so far as it was not paid by dividends of the bankrupt estate, does not save it from Code Civ. Proc. § 1785, subd. 2, declaring it a ground for dissolving a corporation that it has neglected or refused for a year to pay and discharge its notes.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, §

4. SAME-DISCRETION OF COURT.

Even if the court has some discretion as to dissolution under Code Civ. Proc. § 1785, providing that in either of the enumerated cases an action to procure a judgment dissolving a corporation may be maintained, it is not a proper exercise of the discretion, when a cause of action is clearly established, to refuse a judgment of dissolution.

Appeal from Trial Term.

Action by the people against the Troy Chemical Company. From an adverse judgment, plaintiff appeals. Reversed, and new trial granted.

The action was begun by the Attorney General, in behalf of the people, to secure the dissolution of the defendant corporation under subdivisions 1, 2, and 3 of section 1785 of the Code of Civil Procedure. The grounds stated in the complaint upon which the dissolution was sought were that the defendant has remained insolvent for at least one year, that it has neglected and refused for at least one year to pay and discharge its notes, and that it has suspended its ordinary and lawful business for at least one year. In the answer, the allegations of defendant's insolvency and of its failure to pay its notes were denied. It was also alleged, as an excuse for its suspension of business, that proceedings for the voluntary dissolution of the defendant in the Supreme Court of the state were instituted, and also that proceedings in involuntary bankruptcy against it in the United States District Court had been taken and its assets seized. It was also alleged that its estate had been administered in these proceedings, and that a discharge in bankruptcy of the debts of the defendant had been had, and that the action was not instituted for public purposes.

The defendant was a domestic corporation organized in 1898, having its principal place of business at Troy. Among its assets were two formulas for medicinal preparations; one called "Pixine," and one called "Save the Horse." The trustee in bankruptcy of the defendant sold the "Pixine" formula, and the exclusive right to the use of the trade-mark therefor, to one M. Arthur Wheeler, who was a stockholder and vice president, of the defendant. All the other assets of the defendant, including the formula "Save the Horse," were sold by the trustee in bankruptcy to one Edgar G. McKaller. The latter, with his associates, formed a new corporation, with its principal office at Binghamton, under the same name as that of the defendant, viz., the Troy Chemical Company.

The action was tried by the court, which found, among others, the facts hereinafter stated. On March 14, 1904, a majority of the directors of the defendant instituted a proceeding for the voluntary dissolution of the defendant, because of its insolvency, pursuant to the provision of the Code of Civil Procedure. By the schedule attached to the petition in said proceeding, the total demands of the creditors of the defendant were stated to be $11,930.14, and the total value of all its property to be $7,892.83. A temporary receiver of the defendant was appointed in said proceeding, who qualified on March 10, 1904, and took possession of all the property of the defendant and continued the business until May, 1904. On that day three of the creditors of the defendant filed in the office of the clerk of the District Court of the United States for the Northern District of New York a petition in involuntary bankruptcy against the defendant. Such proceedings were had therein that on June 18, 1904, an adjudication was made adjudging the defendant to be bankrupt, and a trustee in bankruptcy of the estate of the defendant was appointed, who qualified by filing his bond on the 28th day of July, 1904, and all the property and assets of the defendant were turned over to him, and he continued the business for about four weeks from that time, and in doing so bought and sold property. On September 2, 1904, such trustee sold all the assets of the defendant except the cash and deposits in bank. Such assets, when reduced to money, amounted to $19,945.45. The debts and liabilities of the defendants, as ascertained in said bankruptcy proceedings, were $16,729.21. The expenses of said bankruptcy proceedings were such that after the payment thereof by the trustee the remaining assets were insufficient to meet the lia

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bilities; the deficiency being $1,600. An order was duly granted by the United States District Court on April 3, 1906, discharging the defendant from its debts. In the month of December, 1903, the defendant executed two promissory notes, aggregating $2,500 in amount, which became due and payable in the month of January, 1904. Sald notes were transferred before maturity to the Union National Bank of Troy, which bank remained the owner and holder thereof at maturity, and until June 15, 1905, neither of which have been paid by the defendant. The court rendered judgment dismissing the complaint on the merits, and from that judgment this appeal is taken.

Argued before SMITH, P. J., and CHESTER, KELLOGG, COCHRANE, and SEWELL, JJ.

Julius M. Mayer and Hinman, Howard & Kattell, for the People. William M. Morrill, for respondent.

CHESTER, J. It is claimed by the defendant that McKaller caused this suit to be instituted to take the life of the defendant for the purpose of leaving his company, of the same name, the only one in existence, and that the action is not for a public, but for a private, purpose. A sufficient answer to this contention is that the action was instituted by the Attorney General, in the name of the people, under a provision of the Code of Civil Procedure authorizing him so to do. Code Civ. Proc. § 1786. It appears that the action was so begun by the Attorney General upon the verified application of McKaller, who was a creditor of the defendant, after a hearing thereon before a Deputy Attorney General, upon notice to the defendant, upon which hearing defendant appeared by its attorney, who conceded that the facts stated in the complaint were true. The Attorney General therefore was fully justified in commencing the action, and nothing appears to indicate that it was not brought in the discharge of a public duty and in entire good faith on his part.

It was admitted in the answer that, since the time of filing the said petition in bankruptcy (May 10, 1904), the business of the defendant had not been conducted. The action was commenced February 13, 1906, and the answer was dated April 20, 1906. This admission alone shows that the defendant had suspended its ordinary and lawful business for more than a year, which is one of the reasons assigned in the statute for which a judgment dissolving a corporation may be had. Another ground for a judgment of dissolution is where a corporation has neglected or refused for at least one year to pay and discharge its notes or other evidences of debt. It is true that the notes held by the Union National Bank of Troy, so far as they have not been paid by dividends from the bankrupt estate, have been discharged in bankruptcy; but such a discharge is not a payment of the notes. Dusenbury v. Hoyt, 53 N. Y. 521, 13 Am. Rep. 543. The Legislature has seen fit to provide that a corporation must "pay and discharge" its obligations to save itself from being subjected to an action of this character. That it has not done, and it has allowed these notes to remain outstanding and unpaid for more than one year. The fact that it has received a discharge in bankruptcy cannot avail to save its corporate life, for the statute has decreed otherwise. Code Civ. Proc. § 1785, subd. 2.

We need not go into the question as to whether or not the learned trial court was correct in its conclusion that the defendant was not insolvent under the facts found, for the other two reasons are sufficient to require a reversal. The defendant, however, claims that the statute is simply permissive, and that the court may or may not, as it deems wise in the exercise of its discretion, award judgment dissolving a corporation, even though facts justifying its dissolution may be found. Even if it should be assumed that the court had some discretion in actions of this kind, it would evidently not be a proper exercise of it, when a cause of action is clearly established, for the court to prevent the law from taking its course and from being made effective. The plaintiff, having shown facts which under the law are clearly sufficient to sustain an action dissolving a corporation, should have been awarded a judgment for that purpose.

The judgment should be reversed on the law and on the facts, and a new trial granted, with costs to the appellant to abide the event. All concur; SMITH, P. J., and KELLOGG, J., in result.

In re CLEMENT, State Excise Com'r.

(Supreme Court, Appellate Division, Fourth Department. May 1, 1907.) INTOXICATING LIQUORS-CANCELLATION OF LICENSE-GAMING.

Defendant was the tenant of a room wherein he conducted a saloon, and another person was the tenant of an adjoining room in which he conducted a billiard hall, there being a door between the two rooms which was usually open, and at times persons playing billiards ordered drinks from defendant's room. The other person installed a nickel slot machine in his room. Defendant protested against the presence of the machine, and there was no evidence of fraud or collusion. Held, that defendant's liquor tax certificate was not subject to cancellation on the ground that he suffered gaming to be carried on in a place appertaining to or connected with his premises.

Kruse and Robson, JJ., dissenting.

Appeal from Special Term, Erie County.

Petition by Maynard N. Clement, as state commissioner of excise, to revoke the liquor tax certificate issued to John Ulinski. From an order dismissing the proceedings, the commissioner appeals. Affirmed. Argued before MCLENNAN, P. J., and SPRING, WILLIAMS, KRUSE, and ROBSON, JJ.

H. Walter Lee, for appellant.
Henry W. Killeen, for respondent.

WILLIAMS, J. The order should be affirmed, with costs.

The certificate was issued April 28, 1905, to expire April 30, 1906, authorizing the defendant to traffic in liquor at premises situate on the southwest corner of Wasson avenue and Iron street, Lackawanna, Erie county, N. Y. The petitioner claimed that on October 13, 1905, the defendant permitted gambling in said premises by means of a nickel slot machine. The defendant denied this. The evidence was taken before a referee and reported to the court, and the court made the

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order appealed from based upon such evidence. It appeared by the evidence that the defendant's brother owned the building in which defendant carried on his business. The defendant leased the front room on the first floor, about 26 feet square, for his business, and occupied no other part of the building. Just back of this room, and adjoining it, was another room, leased by one Smiegel and occupied for a billiard room, which he conducted. Other parts of the building were leased and occupied by other parties. There was a partition between the two rooms, and a door in such partition 6 feet wide. There was a door leading from defendant's room out towards the street, and two doors from the back room-one at the side leading outdoors, and the other at the back leading to other parts of the building. The door in the partition between the two rooms was usually left open. Smiegel leased the back room from June 25, 1905. Neither of these two men was interested in the business of the other, or in the room rented by him. Their business was entirely separate, except that people playing billiards ordered drinks from defendant's room when they desired. The slot machine was put in the back of the billiard room by Smiegel about October 5, 1905. As soon as defendant saw the slot machine there, he told Smiegel it was unlawful, and he must take it out, and, if he did not, he would tell the owner of the building, and he would put it out. Smiegel did not take the machine out, and defendant complained to the owner of the building about it, who spoke to Smiegel, and he said he would take it out. The machine was still there on the 13th of October, 1905, when the agents of the state excise commissioner went there and used it, and upon their evidence the proceeding was based and the revocation of the license sought to be obtained.

No claim has been made that there was any collusion between defendant and Smiegel with reference to the maintenance of the machine. From the first, the defendant insisted it should be taken out. We desire this to be distinctly understood. The Special Term justice in his opinion expressly says: "No question of collusion or bad faith has been suggested in this matter." And the concession was made by counsel in this court and on the argument to the same effect. There is no evidence in the record tending to show collusion or fraud or bad faith on defendant's part. The defendant always claimed, and now claims, that he tried to have the machine taken out when it was first put in, and did all he could to procure it to be done, and that he had no power himself to remove it or prevent its maintenance and use by Smiegel. It will be seen that while in the petition it was claimed that the defendant permitted gambling in his premises, the evidence showed that the gambling was in the premises occupied by Smiegel, and the license was sought to be revoked, finally, upon the claim that defendant suffered and permitted the gambling to be carried on in a place appertaining to or connected with his premises. The matter was disposed of at Special Term upon the holding that, even though the place where the gambling was carried on might be regarded as one appertaining to or connected with the defendant's premises, still the defendant did not suffer or permit it to be maintained there, and the case was not one covered by the statute. In this conclusion we concur with the Special Term upon the grounds very fully set forth in the opin