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Misc.] Surrogate's Court, New York County, December, 1917.

the transaction of business, that she did not solicit business or transact business with the public or hold herself out to the public as a person having money to lend. Her business activities were confined to receiving interest and dividends on her investments and investing in securities so much of her income as was not required for her living expenses. Under these circumstances I am inclined to think that she was not doing business in this state within the meaning of these words in the transfer tax statute. It seems to me that it was the intention of the legislature in enacting the amendment above quoted to bring within the provisions of the transfer tax statute the capital invested in business in this state by a person actually doing business, for example, with the public in the purchase and sale of commodities or securities, and that it was not intended to apply to a person who did not buy from and sell to the public, but who was exclusively engaged in investing his own money in securities in this state. It would seem to me to be essential, in order to bring a person within the intent of the amendment, to show that he was actually engaged in some general common-law "business." The process of investing capital, even for gain, is not a common-law business. It may be proper to show that decedent maintained an office or place in this state where he could meet persons interested in the particular business in which he was engaged and make purchases or sales either as principal or agent. That is a detail.

I have, however, been unable to find a decision which holds that a person who occasionally invests his own money in securities selected by him is engaged in business, and none has been cited by the parties. If, as contended by the state comptroller, the decedent was doing "business" in this state during the two years immediately prior to her death, how could such business be

Surrogate's Court, New York County, December, 1917. [Vol. 102.

designated or classified? Not as a money lender, because the evidence shows that during that time she did not loan money on call; not as a broker, because she did not purchase securities for others or on commission. I am therefore inclined to think that the occasional purchase of securities by the decedent for her own account did not constitute doing business in this state within the meaning of those words in the transfer tax statute. The common law governs the meaning of words in statutes, unless the statute provides otherwise.

It is contended, however, that the purchase and sale of securities by the Westminster Company, a domestic corporation, was really the transaction of business by the decedent, because the entire capital stock of the Westminster Company was furnished by the decedent. The company was organized in 1911 with a capital stock of $125,000. The number of shares issued was 1,250, of which the decedent held 630. The decedent's son held 600 shares. The dividends were divided among the stockholders in proportion to the number of shares held by each, so that, while the capital with which the company commenced to do business was furnished by the decedent, she was only entitled to dividends on 630 shares. Since 1914 she had nothing to do with the management of the affairs of the company, and it did not act as her agent. In Peterson v. Chicago, Rock Island & Pacific R. Co., 205 U. S. 364, it was held that a railroad company is not doing business in a state simply because another railroad company of which it owns practically the entire capital stock does business there. In Philadelphia & Reading R. Co. v. McKibbin, 243 U. S. 264, it was held that the fact that a corporation subsidiary to another is doing business in a state does not warrant the finding that the controlling corporation is doing business there. And

Misc.] Surrogate's Court, New York County, December, 1917.

in People v. American Bell Telephone Co., 117 N. Y. 241, it was held that although the telephone company, organized under the laws of Massachusetts, subscribed largely to the stock of corporations organized in this state for the purpose of supplying telephone service, it was not thereby doing business in this state. It would seem, therefore, that any business done by the Westminster Company, in which the decedent held a controlling interest, was not the business of the decedent individually and did not constitute the doing of business by her in this state within the meaning of the transfer tax statute.

The questions propounded by the attorney for the state comptroller, which were objected to by the attorney for the executor and which objections were sustained by the appraiser, were inquiries as to the names of banks in which the decedent had accounts, the character of the notes which the decedent purchased, the aggregate value of the notes which the Westminster Company had on hand on the 1st day of July, 1914, the amount of capital which that company had on hand at the date of the death of the decedent, and the value of the stocks purchased by the company for Mrs. Green. The questions in relation to the amount of the cash balances held by the decedent in New York banks were immaterial, unless it was first shown that the decedent was engaged in business in this state, and that the money in bank was used by her in connection with that business. No proof having been adduced before the appraiser to show that the decedent was engaged in business in this state, the amount of her cash balances in banks in this state was immaterial, and the objections to questions asked by the state comptroller in relation to such balances were properly sustained. The appraiser also correctly sustained the objections to the questions designed to obtain from the executor

Appellate Term, First Department, December, 1917. [Vol. 102.

the nature of the notes in which the decedent occasionally invested her surplus dividends. Such interrogations could not be relevant either to the question of whether she was doing business in this state or the value of her tangible assets in this state at the time of her death. The aggregate value of the notes which the Westminster Company had on hand on the 1st of July, 1914, could have no materiality to the question of the taxability of the estate of the decedent as a non-resident of this state. The other questions to which objection was made by the executor and sustained by the appraiser were of a similar nature, and the rulings of the appraiser were correct.

From a consideration of all the evidence taken before the appraiser I am inclined to think that he acted properly and with required fairness, and that no substantial error was committed. I hold on the evidence submitted that the decedent at the time of her death was not doing business in this state within the meaning of those words in the Transfer Tax Law, and that the appraiser was correct in sustaining the objections to the questions propounded by the attorney for the state comptroller. Order fixing tax affirmed.

Order affirmed.

WILLIAM W. JOHNSTONE, Appellant, v. JOHN W. BUTLER, INC., Respondent.

(Supreme Court, Appellate Term, First Department, December,

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Where plaintiff's cause of action and defendant's counterclaim were both predicated upon an account stated, and defendant, in support of its contention that the receipt by

Misc.] Appellate Term, First Department, December, 1917.

plaintiff without objection of a statement prepared by an audit company, plus the implied approval thereof evidenced by plaintiff as treasurer of defendant signing the check given to the audit company in payment for services in preparing the account, and its deposit by him or its continued presence in defendant's safe, constituted an account stated between plaintiff and defendant, in addition to testimony brought out on plaintiff's cross-examination as to the circumstances under which the account had been prepared, and the conversations between him and the only real stockholder of defendant, its president and manager, showed that plaintiff had not objected to the account, and substantially all the evidence on defendant's affirmative case was that elicited from plaintiff, because between the time of the preparation of the account and the commencement of the instant action defendant's president and treasurer had died; and not only is there nothing in the testimony to warrant the conclusion that plaintiff and defendant's president and manager agreed to accept as final, either by way of an account stated or as an arbitration, the report of the auditor, but all the circumstances plainly indicate that what was sought from the accountant was either a corroboration or a correction of the statement prepared by defendant's bookkeeper from the books of defendant, the denial of a motion to dismiss the counterclaim was reversible error and a judgment in favor of defendant thereon, entered upon a verdict, will be reversed and a new trial granted.

APPEAL by plaintiff from a judgment in favor of defendant on its counterclaim, entered upon the verdict of a jury in the City Court of the City of New York.

Franklin Taylor (Joseph J. Zeiger, of counsel), for appellant.

Julius Offenbach (Max D. Steuer and Sydney J. Loeb, of counsel), for respondent.

BIJUR, J.

Plaintiff's cause of action and defendant's counterclaim were both predicated upon an account stated.

The facts as testified to by plaintiff and confirmed

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