should remove it to a designated place for him, the city had the right to conclude that he did not intend to remove it. Under such circumstances, the city had the right to treat it as having been abandoned and to use it for such streets as it saw fit. It follows from what we have said that the second paragraph of answer is bad. But the error in overruling the demurrer was not reversible error. The court found as a fact that the gravel, as it lay on First street after being excavated and loosened, had no value of any kind and was not worth the cost of removal. It is evident that appellant did not fail in the court below because of the defense set up in this paragraph of answer, but because of failure to prove his complaint. Upon the facts found, the appellant failed to recover independently of anything alleged in the second paragraph of answer. As we believe the judgment to be right on the facts, it cannot be reversed on intermediate errors. Burns' Rev. St. 1894, §§ 401, 670 (Rev. St. 1881, §§ 398, 658); Elliott, App. Proc. §§ 637, 638; Walling v. Burgess. 122 Ind. 299, 22 N. E. 419, and 23 N. E. 1076; Butt v. Butt, 118 Ind. 31, 20 N. E. 538; Foster v. Bringham, 99 Ind. 505. Judgment aflirmed.

In re HATCH et al.

(Court of Appeals of New York. April 19, 1898.)

SET-OFF-DEBT DUE INSOLVENT.

A creditor of an insolvent, whose debt is due at the time of the making of a general assignment by the debtor, is entitled to set off such debt against a debt from himself to the insolvent, which had not matured at the time of the assignment.

Appeal from supreme court, appellate division. First department.

In the matter of the general assignment of Alfrederick S. Hatch and Frederick S. Hatch. From an order modifying the report of a referee establishing claims against the assigned estate (47 N. Y. Supp. 850), the assignee appeals. Reversed.

Maxwell Evarts, for appellant. George C. Lay, for respondent.

O'BRIEN, J. The only question necessary for us to consider in this case is that of the right to offset one claim against another. The facts that bear upon this question are these: On the 14th of November, 1887, the firm of A. S. Hatch & Co., as a firm, and each of the individual members as such, made a general assignment for the benefit of creditors. At that time, Huntington had a claim against A. S. Hatch, individually, of $17,389.22. and against the firm of $20,167.49; and he still holds these claims against the individual and firm estate in the hands of the assignee. On the 24th of June, 1886, more than a year before the assign50 N.E.-4

ment, Huntington had entered into a written contract with A. S. Hatch. individually, whereby the latter transferred to the former certain judgments which were to be collected, and, when collected, divided between the parties in the manner indicated in the agreement. Nothing, however, had been collected on these judgments, and nothing was due on this contract at the date of the assignment above mentioned. Several years after the assignment was made, a considerable sum of money was paid to Huntington in compromise and satisfaction of the judg ments by the defendants therein; and for a certain share of the sum so paid, after deducting certain expenses, Huntington is bound to account to Hatch, or, in this case, to his assignee. This was a proceeding, under the statute, relating to general assignments for the purpose of ascertaining and adjusting the claim of the assignee against Huntington by reason of the money in his hands received on the judgments, and of Huntington against the assignee, in consequence of his debt against Hatch individually, above stated. The amount of the claim of each party was determined upon a reference under the statute, and subsequently confirmed by the court. The referee and the court permitted Huntington to set off, against the claim of the assignee for the moneys collected on the judgments, the debt held against Hatch individually at the date of the assignment; but the appellate division reversed the order in so far as it permitted the offset, and this presents the only question of law which we need consider.

In the view that we have taken of the case, it is not necessary to decide whether the right of set-off exists under the statute on that subject. Code, §§ 501, 502. The question can be disposed of under the rule in equity, which exists, as it always did. quite independent of the statute. It is this rule that the learned court below dealt with, as will appear from the opinion. But we think that the learned judge who spoke for the court misapprehended the true scope and application of the decisions on the question in assuming, as he evidently did, that it is necessary that the mutual debts or claims should both be due at the time of the assignment of the insolvent estate. The insolvency of one of the parties in this case draws the question with respect to the right of set-off into the domain of equity. The party who asserts the right is Huntington alone. His debt was due when the assignment was made, though the claim of the assignee against him did not accrue until some years afterwards. The question is whether Huntington is not entitled to apply the former in extinguishment of the latter. The general language used in some of the decisions would seem to sustain the decision below; but it will be seen on closer examination that it is not necessary, in order to warrant the set-off, that both debts should

The

In

be due at the time of the insolvency. learned court below supposed that the case of Fera v. Wickham, 135 N. Y. 223, 31 N. E. 1028, deprived Huntington of the right of setoff. In that case neither claim was due at the time of the assignment, but both accrued afterwards, and the right was for that reason denied. It was held that, where this right did not exist at the time of the insolvency or assignment, it could not arise afterwards. Smith v. Felton, 43 N. Y. 419, an assignee of an insolvent sued upon a note made by the defendant to the insolvent not due at the time of the assignment. The defendant had a debt against the insolvent exceeding the amount of the note which was due at the time of the assignment. It was held that the defendant was entitled to set off this claim against the note. In Smith v. Fox, 48 N. Y. 674, the debt due to the assignee did not accrue till after the assignment, but that held by the defendant was due, and the latter was allowed to set off the debt so due. In Richards v. La Tourette, 119 N. Y. 54, 23 N. E. 531, the debt due from the assignee accrued prior to the assignment, while the debt due to him matured afterwards, as is the case here, and it was held that the right of set-off existed in such a case. In Rothschild v. Mack, 115 N. Y. 8, 21 N. E. 728, the court said: "It has been frequently held that, as to the right of set-off in equity, the fact that the debt owing to the insolvent is not due when he makes an assignment is entirely immaterial." The same rule was laid down in the same words in the case of Richards v. La Tourette, 119 N. Y. 58, 23 N. E. 531, and a careful reading of the opinion in Fera v. Wickham, supra, will show that the learned judge had the same principle in mind.

The principle upon which the rule proceeds is that, in case of mutual debts, it is only the balance which is the real and just sum owing by or to the insolvent. Hence, when the assignee in this case became vested with the assets of his insolvent assignor, he took the contract above mentioned, which had not then matured into a claim or right of action, but which did mature in his hands some years thereafter. He acquired no greater right than his assignor had prior to the assignment, had the claim then matured, and since Huntington had, prior to the assignment, a valid existing set-off against what the assignee took, that right was not lost or impaired by the assignment. The rights of the parties being adjusted in equity as of the date of the insolvency, all the assignee took as assets was the balance subsequently accruing on the contract, after deducting Huntington's debt due against the assignor before the rights of creditors intervened. Had Huntington's debt accrued after the insolvency, as that of the assignee did, then equity would not permit the set-off, and the case would come within the rule laid down in Fera v. Wickham, supra; but, as already shown, such was not the case. When the debt of the party claiming the set-off does

not exist when the insolvent estate passed into the hands of a trustee for creditors, but accrued subsequently during the administration of the estate, then the equities of the other creditors will intervene to prevent the depletion of the assets in the hands of the trustee by extinguishing a good debt due to the estate by a bad one due to the creditor from the estate. In all cases of mutual debts, it is the insolvency of one of the debtors and the rights of the other creditors in the assigned estate that equity takes notice of, and modifies the legal right of set-off accordingly, in order to promote equality and justice. But that condition of things exists only from the time when the assignment takes effect; and, while it is the general rule in the administration of insolvent estates that equality among creditors is equity, yet the court will not ignore the principle that it is only the balance in case of mutual debts or obligations which is the real sum owing by or to the insolvent, and the assets in the hands of the trustee for distribution to creditors are measured by this rule. Equity always regards as done what ought to have been done, and hence in this case it applies the past-due debt of Huntington, existing at the time of the assignment, upon his unmatured obligation in the hands of Hatch, which passed to the trustee. Hughitt v. Hayes, 136 N. Y. 163, 32 N. E. 706. This is the rule that prevails with respect to the right of set-off in the supreme court of the United States. In Scott v. Armstrong, 146 U. S. 499, 13 Sup. Ct. 148, the receiver of an insolvent national bank sought to recover upon a note which fell due after his appointment. The maker of the note claimed a right to set off against his obligation a sum of money deposited to his credit with the bank prior to the insolvency. The precise question certified to the court for its decision was this: "Where a national bank becomes insolvent, and its assets pass into the hands of a receiver appointed by the comptroller of the currency, can a debtor of the bank set off against his indebtedness the amount of a claim he holds against the bank, supposing the debt due from the bank to have been payable at the time of its suspension, but that due to it to have been payable at a time subsequent thereto?" The court answered the question in the affirmative, and, in delivering the opinion, the learned chief justice said: "Where a set-off is otherwise valid, it is not perceived how its allowance can be considered a preference; and it is clear that it is only the balance, if any, after the set-off is deducted, which can justly be held to form part of the assets of the insolvent.

** The state of case where the claim sought to be offset is acquired after the act of insolvency is far otherwise, for the rights of the parties become fixed as of that time, and to sustain such a transfer would defeat the object of these provisions. The transaction must necessarily be held to have been entered into with the intention to produce its

natural result,-the preventing of the application of the insolvent's assets in the manner prescribed." From this review of the authorities, I think it is quite apparent that the decision of the court at special term allowing the set-off in this case was correct. The order of the appellate division should therefore be reversed, and that of the special term affirmed, with costs. All concur. Order reversed, etc.

In re STEWART et al. (two cases). (Court of Appeals of New York. April 19, 1898.)

ELECTIONS-RETURNS OF CANVASS-CORRECTIONMANDAMUS.

Under the election law of 1896, the returns of the canvass, made by the inspectors of elec-tion, in the several election districts, are not conclusive evidence of the number of votes cast for the several candidates; but if, through error or fraud, such returns do not correctly state the number of votes cast, the inspectors of election may be required, by mandamus, to correct such returns according to the tally sheets, which are the original records of the votes cast, and the county canvassers may likewise be required to canvass such corrected returns.

Appeal from supreme court, appellate division, First department.

In the matter of the application of Perez M. Stewart and Howard P. Okie for a peremptory writ of mandamus directed to the board of county and city canvassers of the city and county of New York, and in the matter of the application of the same party for a peremptory writ of mandamus directed to the inspectors of election of the Seventh, Eighth, Tenth, Fourteenth, Seventeenth, Eighteenth, Nineteenth, and Twentieth election districts of the Nineteenth assembly district of the city and county of New York. From two orders of the appellate division (48 N. Y. Supp. 957) reversing the orders of the special term which denied the writs, defendants appeal. Affirmed.

Asa Bird Gardiner, for appellants. Horace E. Deming, for respondents.

BARTLETT, J. These appeals seek the construction of the election law of 1896. They were argued together, and involve the same questions upon the merits, although differing as to the relief asked. The first proceeding against the board of county and city canvassers of the city and county of New York asks for a peremptory mandamus, requiring them to summon the inspectors of election of eight election districts in the Nineteenth assembly district, to correct their returns of the votes cast in such districts for the offices of assemblyman and alderman, and directing the county canvassers to canvass the corrected returns. This proceeding is taken under the provisions of the election law to have the inspectors make a true statement (section 132). The second proceeding asks for a peremptory writ of mandamus, requir

ing the inspectors of election in the districts named to convene and make correct returns of the votes cast in sucn districts for said offices, and directing the county canvassers to canvass the corrected returns. The theory of this latter proceeding is that, inasmuch as the inspectors have through error or otherwise made a false return contrary to their duties under the law, the court must intervene and authorize, and, if need be, compel, them to make a true return. This is wholly independent of the election law itself, and rests upon the fundamental and elemental principle that every public officer can be compelled by the court to perform the duties pertaining to his office. People v. Maher, 141 N. Y. 330, 336, 36 N. E. 396. In each of these proceedings the facts and the question of law are identical. It appears that the tally sheets required by the election law to be kept as an official contemporaneous record of the count show that, in the election districts concerned, the petitioners, Stewart and Okie, received a certain number of votes, respectively, for member of assembly and member of the board of aldermen; while, under the returns of the election district inspectors, they received, respectively, a less number of votes, the result being to elect the opposing candidates, Weil and Geagan, respectively, as member of assembly and member of the board of aldermen.

The question presented by these appeals is whether there is any remedy for the petitioners upon such a state of facts. The main position of the respondents is that the tally sheet, by the terms of the law itself, is made the best and highest evidence of the canvass of the votes, and the so-called original statement or return by the inspectors is an abstract or summary of the facts and data contained in the tally sheet, and only a ministerial act made after the canvass is completed. In order to appreciate the object of the present election law, it is necessary to recall the evils it was designed to remedy. The old law provided no adequate restraints upon the officials whose duty it was to canvass the votes. The inspectors made up a statement of the result, and immediately thereafter all the ballots and memoranda of the canvass were destroyed. The ballots were printed by the candidates, and the memoranda were not official. In the event of a fraudulent return made by the inspectors to the county board of canvassers, it was exceedingly difficult to make the necessary proofs in the absence of record evidence. In a flagrant case an inspector might be indicted, a quo warranto proceeding instituted. or an investigation before a legislative committee set in motion, but the result was usually unsatisfactory. It was out of this state of affairs there developed a public sentiment demanding an election law that should render it possible to deal effectively with errors or willful frauds in the canvass of the votes. The present election law of

1896 is the culmination of a series of acts seeking to throw around the canvass of the votes and the returns of inspectors of election such safeguards as will protect the candidate and the general public against the mistakes or frauds of the inspectors. If the return of the inspectors is practically final, as contended by the appellants, then the present election law has failed to accomplish its main object.

It remains, therefore, to consider the precise character of the statement or return of the inspectors. In order to do this, it is essential to keep in mind that the central idea of the present law is to preserve for at least six months after election a contemporaneous record of the canvass made by the inspectors and the poll clerks. Among the various persons and officers who are permitted to be within the polling place on election day are the inspectors of election, the poll clerks, and the ballot clerks. It is the duty of the poll clerks to keep the tally sheets, and of the ballot clerks to handle, give out, and account for the ballots under the provisions of the law. Section 84 of the election law of 1896 provides that the officer charged with the duty of furnishing official ballots shall furnish to the board of inspectors of each election district two tally sheet blanks and three election return sheet blanks, one of which shall be indorsed "original return," the others "copies of the original return." The statute gives the form of the tally sheet and minute directions as to the manner of keeping it. We come, then, to consider the details of the canvass under the new statute. It is apparent, on reading all of its provisions, that it was the legislative intention to furnish a contemporaneous official record of the actual count, which should control in case of any discrepancy between it and the clerical statement made from it by the inspectors after the completion of the canvass, and for the purpose of convenience. This contemporaneous, self-proving record is the tally sheet, it being the original entry of the casting and canvassing of a vote. Sections 84 and 110, subd. 3, provide in substance, that the tally sheet is to be kept by the poll clerk under the direction of the inspectors; that each office is to be canvassed separately, and the total of the entries of votes in the different columns opposite that office must balance with the total of ballots voted at the polling place; and, if it does not, there has been a mistake in the count, and the ballots must be recounted for such office.

As soon

as the count is completed for each office, the poll clerks submit the result to the inspectors for examination; and, if found to be correct, the chairman at once announces the result. This provision shows that the inspectors are responsible for the correctness of the tally sheet, and are afforded every opportunity to know that it speaks the truth. When the canvass for a particular office is completed in the city of New York, the chairman of the

board of inspectors must deliver to the police officer on duty at the polling place a statement of the result, subscribed by the board of inspectors, to be at once delivered to the officer in command of the station house of the police precinct in which the place of canvass is located, to be by him immediately transmitted to the officer in command of the police department, where it is to be preserved for six months, and is presumptive evidence of the result of such canvass. Thus, the total vote for each office, as disclosed by the tally sheet, is placed on file while the canvass is in progress, and be fore the tally sheet is completed. An accurate account of ballots is kept, and the total of unused, destroyed, and voted ballots must equal the number of ballots delivered at he polling place. These are the main features of the procedure, and, when all the offices have been dealt with, the poll clerks sign the tally sheet, and the canvass is complete. Each step has been taken, and announcement made, in the presence of officials and watchers. Section 111 provides that, upon the completion of the canvass, the board of inspectors of election shall make and sign an original statement thereof, which is to contain, among other things, the votes cast for each candidate. The form of this statement, as provided for in section 84, shows it must necessarily be an abstract from the tally sheet made after the canvass is completed, and is, under the circumstances, a purely ministerial act on the part of the inspectors. The statement must correspond with the tally sheet, as it contains the official figures, and the inspectors exercise no discretion in the premises. In addition to the original, two copies of this statement are filed, and the appellants lay some stress upon the fact that one of these three statements is called an original by the statute, and the others copies. It seems clear that one of these returns is called an original for the reason that it is necessary to attach to it the void ballots and those protested as marked for identification. It is obvious that these original ballots could only be attached to one of the statements, and that for this reason it is called the original, and is filed with the board of police commissioners. There is no other sense in which it can be deemed an original document. It is a mere statement of the canvass after it is completed, and represents no judicial act of the inspectors. Section 113 of the law provides that, in the city of New York, the original statement of the canvass and the sealed package of the void and protested ballots shall be filed within 12 hours of the completion of the canvass with the board of police commissioners, together with one of the poll books and one of the tally sheets properly certified by the poll clerks. One certified copy of such original statement, one poll book, and one tally sheet is to be filed within the same time with the county clerk of New York county, and

the other certified copy of the original statement with the clerk of the board of aldermen. It is further provided in sections 111 and 113 that all such sealed packages above referred to, all ballots used and unused, shall be preserved inviolate in the office in which they are filed for a period of six months, and that they may be opened and examined on the order of the supreme court or a justice thereof, and thereafter may be disposed of in the discretion of the officer or board having the custody of the same.

The appellants urge that the language of section 131 of the law, properly construed, shows that the tally sheets do not control the returns, but that the statement of the inspectors is the basis upon which the board of county canvassers must act. It reads, in part, as follows: "At such first meeting [of the board of county canvassers], or as soon as an original statement of the result of the canvass of the votes cast in such election in every election district of the county shall be produced before such board, or a copy thereof, in case the original cannot be produced, the board shall, from such original statements and certified copies, and the sealed packages of void and protested ballots, proceed to canvass the votes cast in such county at such election." It is doubtless true that this section contemplates that the board of county canvassers shall act upon the inspectors' statements without recourse to the tally sheets when the statements are unchallenged as to their accuracy; but to hold that the statements of the inspectors are the best evidence of the final result of the election, in case they are attacked for mistake or fraud, would be to render useless the contemporaneous, self-proving record of the canvass already discussed. The tally sheet

is made in the presence of officials and watchers as the canvass proceeds. The result it records as to each office is separately approved and certified by the inspectors to the police headquarters, and publicly announced in the polling place. To hold that such a document is inferior as evidence to the ministerial statement of the inspectors made after the canvass is completed is to defeat the effort made by the legislature to protect the canvass of the votes, so that the recorded will of the people may not be thwarted by the errors or frauds of the inspectors of election.

We agree with the learned appellate division that the accuracy of the tally sheets is not put in issue by the affidavits submitted by the appellants, as they fail to deny the allegation of the petitioners that the vote returned on the statement is different from that returned on the tally sheet. We are of opinion that the learned counsel for the appellants is in error when he states in his brief that there is no provision in the election law for correction of an erroneous record or mistake made and recorded in a tally sheet. If the tally sheet is attacked as

being carelessly or fraudulently kept, so that there is no reliable contemporaneous record of the canvass of the votes, it is the obvious intention of the statute that the boxes of voted ballots preserved for six months under section 111 shall be opened and examined under the order of the supreme court, or a justice thereof, in order to determine the actual vote cast. The election law presents a complete system, and, while it may require judicious amendment from time to time as experience demonstrates the necessity, it is a step in the right direction, and the statute should be liberally construed by the courts. Chief Judge Andrews well said in People v. Wood, 148 N. Y. 147, 42 N. E. 537: "The object of elections is to ascertain the popular will, and not to thwart it. The object of election laws is to secure the rights of duly-qualified electors, and not to defeat them. Statutory regulations are enacted to secure freedom of choice, and to prevent fraud, and not by technical obstructions to make the right of voting insecure and difficult." The order of the appellate division appealed from in each proceeding should be affirmed, with costs. All concur. Orders affirmed.

PEOPLE ex rel. NEW ENGLAND DRESSEDMEAT & WOOL CO. v. ROBERTS, Comptroller.

(Court of Appeals of New York. April 19, 1898.)

TAXATION - MANUFACTURING CORPORATIONS-EXEMPTIONS-DIVIDENDS.

1. A corporation whose principal business is the purchasing of sheep and lambs, slaughtering them, pulling the wool from the hides, selling it and the hides, converting the offal into fertilizer, reducing the carcasses to a temperature which will retard decomposition, and shipping them to places of delivery, is not carrying on manufacture. within the meaning of the statutes relating to the taxation of corporations.

2. A decision by the comptroller that a corporation is not subject to a tax is not conclusive upon his successors as to the liability of the same corporation to taxation in subsequent

years.

3. A corporation, otherwise subject to a tax upon the basis of its dividends, is not exempted therefrom by the fact that the dividends are earned outside the state and that its business within the state is without profit.

Appeal from supreme court, appellate division, Third department.

Certiorari, on the relation of the New England Dressed-Meat & Wool Company, to review the determination of James A. Roberts, as comptroller of the state of New York, in imposing a tax on the capital stock of relator, a corporation organized under the laws of the state of Maine. From an order of the appellate division (47 N. Y. Supp. 123) reversing the order of the comptroller, he appeals. Reversed.

The tax was assessed under the provisions of chapter 542, Laws 1880, as amended, and under article 9 of the present tax law (chapter