since such release of damages is not revenue or rent.

Appeal from superior court, Worcester county; William B. Stevens, Judge.

Action by Louie S. Miller, as collector of taxes of the town of Westminster, against the city of Fitchburg. Judgment for defendant.

Frank P. Goulding and James A. Stiles, for plaintiff. Wm. P. Hall, City Sol., for defendant.

LATHROP, J. On December 1, 1891, the city council of the defendant passed a vote that the mayor be requested to petition the general court to give the defendant the right "to take and hold, by purchase or otherwise, for the purpose of supplying said city with pure water, the waters of Wachusett lake, in the town of Princeton, the waters of Meetinghouse pond, in the town of Westminster, and the waters of Wyman's reservoir, in the town of Westminster, for a compensating reservoir for all damages that would otherwise result to mill owners, and for authority to take in like manner all lands, water rights, etc., as shall be necessary for the use and enjoyment of said waters taken or purchased." In pursuance of this vote the mayor petitioned the general court to grant such authority, and St. 1892, c. 60, was enacted, which, by section 10, was to take effect upon its passage, and was approved March 14, 1892. By sections 1 and 2 of this act the city was authorized to take and hold, by purchase or otherwise, the waters of Wachusett lake, in the towns of Princeton and Westminster, and of Meetinghouse pond in the town of Westminster, and the waters which flow into and from the lake and pond, and any water rights connected therewith, and convey the water to and into the city, for the purpose of supplying water to its inhabitants, and to take and hold, by purchase or otherwise, such land on and around the margin of the lake and pond, not exceeding five rods in width, as might be necessary for the preservation and purity of the waters. Section 4 of the act is as follows: "Said city

hold,

chase or otherwise, the waters of Wyman's reservoir, so-called, in the town of Westminster, and the waters which flow into and from the same, and any water rights connected therewith, to be used as a compensating reservoir for all damages that would otherwise arise to mill owners by reason of the taking and diverting of the waters of Wachusett lake and Meetinghouse pond; and to take and hold in like manner such lands as may be necessary for building, erecting and maintaining a dam for storing and distributing said waters. Said city is authorized to contract with mill owners whose rights are affected, in relation to the manner and mode of using, controlling and operating said compensating reservoir." Wachusett lake and Meetinghouse pond are great

ponds, whose natural outlets flow through Wyman's reservoir, and thence into a branch of the Nashua river, carrying the waters through the defendant city. On April 26, 1892, in pursuance of the power given by section 4, above cited, and of a vote of the city council, the city bought of one Wyman various tracts of land in Westminster, including therein the whole of Wyman's reservoir, together with all the rights of Wyman in the waters of the pond and reservoir. The purchase money so expended was charged by the city to its water-loan account. After this purchase the city proceeded to construct a reservoir, occupying substantially the same position as Wyman's reservoir, and a dam, gatehouse, etc. The new dam was built where the old dam of Wyman's reservoir had stood. This land, in 1899, was assessed by the town of Westminster as "dam and land flowed," and this is the tax sought to be collected in this action. The city also bought land above the reservoir, and constructed therein a basin, now known as "Smith's Basin," a dam, and a gatehouse. This was for the purpose of turning the waters of Meetinghouse pond into the distributing pipes for the use of the inhabitants of the city, which are laid from this basin to, through, and beyond Wyman's reservoir. These pipes go into a chamber of the gatehouse at the dam of Wyman's reservoir in such a manner that, by shutting certain gates and opening certain other gates, the waters of Wyman's reservoir can be drawn into the pipes leading from Meetinghouse pond to the city, and distributed to its inhabitants, though in fact no water has yet been drawn from this reservoir for use by the city. On April 10, 1895, the city made an agreement with the owners of mills on the branch of the Nashua river flowing through the city by which, in consideration of the release of damages on the part of the mill owners, the city agreed to maintain the reservoir for the use of such owners, and to allow the water to flow only into the natural channel of the Nashua river, except in case of a serious conflagration in West Fitchburg or in the city of Fitchburg proper, or in case of a break in the pipes above Wyman's reservoir. In such case the city reserved the right to draw the waters of the reservoir into the pipes which supply the city with water. The city also reserved the right to withdraw the waters of the reservoir, when necessary, for the purpose of repairing the pipes laid upon the bottom thereof. The agreed facts contain also the following statements: "Said Wyman's dam and gatehouse is necessary at the present time in order to turn the waters of Wyman's reservoir into the distributing pipes, and would always be necessary if it were desired to utilize the waters of Wyman's reservoir for distribution to the inhabitants of the city; but said dam at Wyman's reservoir, as a mechanical proposition, is not necessary at the present

time in order to store the water of Meetinghouse pond or Wachusett lake for distribution to the inhabitants, nor to aid in its distribution, and is built at a level lower than the point at which water for the city is and was admitted to the distributing pipes at Smith's basin. All the lands, waters, and water rights conveyed by said Franklin Wyman to the city of Fitchburg were purchased by the city at its sole expense, and became the property of the city. All the dams, gates, and gatehouses erected or maintained thereon by the city, and the Wyman dam, have been so erected and maintained at the sole expense of the city, and are the property of the city. All the water pipes laid or maintained by the city in, through, and upon said premises have been so laid and maintained at its own expense by the city, and are the property of the city. The city has also, at its own expense, provided for the adjustment of the gates at said Wyman's reservoir at Wyman's dam, and the regulation of the flow of the waters thereof in the manner stipulated in the aforesaid agreement with the mill owners. The city has never received, nor does the city now receive, any revenue in the nature of rent or otherwise from any person occupying or using the Wyman dam, gates, and gatehouses at the Wyman reservoir, the waters and water rights in said reservoir, and the land flowed by said waters, except such rights or benefits, if any, as have accrued to the city under said mill owners' agreement."

By St. 1893, c. 352, § 1, it is provided: "Any city or town holding property, taken by purchase or otherwise, for the purpose of its water supply, whether for domestic, manufacturing or other purposes, in another city or town, shall not pay any tax on such property, but shall hereafter in the month of September annually pay to such other city or town for each lot of land held therein for said purposes an amount of money equal to the rate of taxation per thousand dollars in such other city or town, for every one thousand dollars of the average of the assessed valuations of the land, without buildings or other structures, for the three years next preceding the taking thereof, the said assessed valuation for each year being first reduced by the amount of all abatements allowed thereon: provided, however, that any land or building from which any revenue in the nature of rent is received from any person occupying or using the same shall be subject to taxation." If this act applies to the land sought to be taxed in this case, it is obvious that the plaintiff cannot recover a tax assessed under Pub. St. c. 11. The question is, therefore, whether the land and dam were purchased by the defendant "for the purposes of its water supply." We are of opinion that this question must be answered in the affirmative. What was done by the defendant in the case before us was authorized by the legislature, and

was in pursuance of a scheme to supply the city with pure water. It was as much a part of the scheme as any other part, and was not a measure standing by itself. It cannot be questioned that it is for the legislature to decide whether a public exigency or necessity existed for the establishment of the reservoir, although it is for the court to determine whether the use is or is not a public one. Inhabitants of Wayland v. Middlesex Co. Com'rs, 4 Gray, 500; Talbot v. Hudson, 16 Gray, 417; Inland Fisheries Com'rs v. Holyoke Water Power Co., 104 Mass. 446, 6 Am. Rep. 247. Before St. 1893, c. 352, lands and structures owned and used by a city or town for the purposes of its water supply, and situated in another city or town, were held to be exempt from taxation, as public works. Inhabitants of Wayland v. Middlesex Co. Com'rs, 4 Gray, 500. On the same principle land and structures of a railroad corporation, included within their location, and used for railroad purposes, are exempt from taxation and from special assessments. Inhabitants of Worcester v. Western R. Corp., 4 Metc. 564; City of Charlestown v. Middlesex Co. Com'rs, 1 Allen, 199; City of Boston v. Boston & A. R. Co., 170 Mass. 95, 49 N. E. 95, and cases cited. So as to gravel pits owned by one city within the limits of another, and used for public purposes. City of Somerville v. City of Waltham, 170 Mass. 160, 48 N. E. 1092.

The question remains whether the case falls within the proviso at the end of section 1 of St. 1893, c. 352. We are of opinion that it cannot fairly be said that any "revenue in the nature of rent" is received by the defendant "from any person occupying or using the same." This applies to a case where a parcel of land or building not used for water purposes is let to a person, or used by him, and the city derives revenue therefrom in the nature of rent. It does not seem to us to have any bearing upon the facts of this case.

Judgment for the defendant.

BROWN v. CASE.

(180 Mass. 45)

(Supreme Judicial Court of Massachusetts. Worcester. Oct. 18, 1901.) BANKRUPTCY-VOLUNTARY PETITION-EXECUTION LEVY-BONA FIDE PURCHAS

ER-NOTICE.

1. Bankr. Act 1898, § 67, cl. "f," provides that all liens obtained through legal proceedings against an insolvent within four months prior to the filing of a petition against him on which he is adjudged a bankrupt shall be void. Held, that this provision applies equally to liens so acquired in the case of a voluntary petition, since section 1 declares that "a person against whom a petition has been filed shall include a person who has filed a voluntary petition."

2. Where eight days before an execution sale a purchaser was handed a copy of the debtor's assignment, and at the sale the debtor publicly announced that he was insolvent, and the as

signee exhibited the assignment and forbade the sale, the purchaser had reasonable cause to believe such debtor to be insolvent, and cannot hold the property purchased as against the trustee of the debtor in bankruptcy on a petition filed within four months of the levy.

Exceptions from superior court, Worcester county; Franklin G. Fessenden, Judge.

Action by Thomas S. Brown, as trustee in bankruptcy of the estate of John J. Murphy, against Charles Case. From findings for plaintiff, and from a refusal to rule that plaintiff was not entitled to recover, defendant brings exceptions. Exceptions overruled.

Edward J. McMahon, for plaintiff. J. E. Sullivan and D. F. O'Connell, for defendant.

LATHROP, J. Section 67, cl. "f," of the bankruptcy act of 1898, reads in part as follows: "That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt: provided,

*

*

that nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry."

The defendant first contends that this section applies only to involuntary proceedings in bankruptcy; and so it has been asserted in three district courts of the United States, looking only to the language of the specific section, namely, "the filing of a petition in bankruptcy against him." In re De Lue (D. C.) 91 Fed. 510; In re Easley (D. C.) 93 Fed. 419; In re O'Connor (D. C.) 95 Fed. 943. Section 1 of the act, however, declares, "A person against whom a petition has been filed shall include a person who has filed a voluntary petition." For this reason, and because it would be absurd to leave the effect of making proceedings valid or invalid at the option of the debtor, the great weight of authority is in favor of the view-with which we concur-that clause "f" applies to a voluntary as well as to an involuntary petition in bankruptcy. In re Richards, 37 C. C. A. 634, 96 Fed. 935; In re Vaughan (D. C.) 97 Fed. 560; In re Lesser (D. C.) 100 Fed. 433; In re McCartney (D. C.) 109 Fed. 621; Jones v. Stevens, 94 Me. 582, 48 Atl. 170. See, as to the general intent of this section, In re Gutwillig, 34 C. C. A. 377, 92 Fed. 337, 339; In re Kenney, 45 C. C. A. 113, 105 Fed. 897, 898; In re Rhoads (D. C.) 3 Am. Bankr. R. 380, 98 Fed. 399.

The remaining question is whether the defendant is a bona fide purchaser for value

without notice or reasonable cause for inquiry. As the judge found for the plaintiff, it must be presumed that he found against the defendant on this issue, and his finding is conclusive if there was any evidence to support it. There clearly was such evidence. Eight days before the sale a copy of the general assignment for the benefit of creditors was handed to the defendant. Murphy, the debtor, was present at the sale, and publicly stated that he was insolvent, and the assignment was exhibited by the counsel for the assignee, who forbade the sale. As the petition in bankruptcy had not been filed, all was done that could be done. Exceptions overruled.

(168 N. Y. 360)

PEOPLE ex rel. BEAMAN et al. v. FEITNER et al., Com'rs of Taxes. (Court of Appeals of New York. Oct. 18, 1901.)

TAXES-ASSESSMENT-PERSONALTY HELD BY

TRUSTEES.

Where taxable property is held by two or more trustees jointly, each trustee must be assessed, under Laws 1896, c. 908, in the tax district in which he resides, for his proportionate share of the trust estate; and where two or more trustees are residents, and the third is a nonresident, each resident trustee should be taxed for one-third of all the taxable property of the trust estate.

Appeal from supreme court, appellate division, First department.

Application by the people, on the relation of Charles C. Beaman and others, trustees of the will of William M. Prichard, deceased, for a writ of certiorari against Thomas L. Feitner and others, commissioners of taxes and assessments of the city of New York. From an order of the appellate division (71 N. Y. Supp. 261) modifying and affirming an order of the special term reducing the assessment on the personal property of the relators, defendants appeal. Reversed.

On the second Monday of January, 1899, the respondents were trustees under the will of William M. Prichard, deceased, and their respective places of residence were as follows: Charles C. Beaman, New York City; Duncan Smith, city of Yonkers; Levy S. Tenny, town of Glenridge, state of New Jersey. They had had an accounting as executors, and had turned over to themselves, as trustees, pursuant to the directions of the will, the residuary estate, and thereafter they held the same as a trust fund for the benefit of certain persons who resided at Concord, Mass. The property liable to taxation thus held by them consisted of railroad bonds, bonds secured by mortgages on real estate in the city of New York, and promissory notes of the value in all of $91,737.50. They also had the sum of $8,621.10 on deposit in certain banks in the city of New York, making an aggregate of $100,358.60. On the 6th of January, 1899, all of said securities were deposited by the respondents

in a safe deposit company in Jersey City, N. J., for the express purpose of avoiding the payment of any taxes upon them in the state of New York. The interest on said securities was all collected in the city of New York, and deposited in banks there, and the cash on deposit was not removed to New Jersey, but allowed to remain undisturbed in the various banks where it had been deposit: ed. By agreement between the respondents and the safe deposit company, access to the securities deposited in the state of New Jersey could be had only when two of the trustees were present. The trust estate was originally assessed at the sum of $148,850, but upon application to the commissioners it was reduced to $33,450, representing onethird of the value of the trust estate, less the deductions required to be made by law. Upon review by the special term the assessment was reduced to $4,310.55, upon the ground that none of the securities were taxable in this state, and that only one-half of the amount of cash on deposit was liable to taxation in the city of New York. The appellate division modified the order of the special term by increasing the assessment to the sum of $8,621.10, upon the ground that all of the cash deposited was subject to taxation in New York City; the presiding justice dissenting upon the ground that the whole estate was taxable there. The commissioners appealed from the order of the appellate division to this court.

John Whalen, Corp. Counsel (James M. Ward, of counsel), for appellants. J. Hampden Dougherty, for respondents.

VANN, J. (after stating the facts). The Revised Statutes provided that "all lands and all personal estate within this state, whether owned by individuals or by corporations, shall be liable to taxation, subject to exemptions hereinafter specified." 2 Rev. St. (7th Ed.) p. 981. Under this statute it was held that mortgage securities owned by a resident of this state, but taken by and in the custody of his agents who resided in other states, were not "personal estate within this state," and not liable to taxation here. People v. Smith, 88 N. Y. 577. By chapter 392 of the Laws of 1883 it was provided that "all debts and obligations for the payment of money due or owing to persons residing within this state, however secured or whereever such securities shall be held, shall be deemed for the purposes of taxation personal estate within the state, and shall be assessed as such to the owner or owners thereof in the town, village or ward in which such owner or owners shall reside at the time such assessment shall be made." When this statute was under consideration in People ex rel. Darrow v. Coleman, 119 N. Y. 137, 23 N. E. 488, 7 L. R. A. 407, it was held that where two of three cotrustees resided in this state, and the third in another

*

state, the beneficiaries being also nonresidents, an assessment of securities in the hands of the nonresident trustee was void upon the ground that the act of 1883 "means that the debt must be one which is solely due or owing to residents of this state," and "not a debt due or owing to persons residing in this state * in connection with another who is a joint owner, and who is not a resident within this state, and such other has possession of the securities." The court further said that the statute did not mean "to include as owners persons who are trustees only, and thus assess them for the property not held by them, and not within this state." In People ex rel. Day v. Barker, 135 N. Y. 656, 32 N. E. 252, securities belonging to a trust fund were in the possession of three trustees jointly in another state; two being residents of that state, and one of this state. It was held (the same statute being still in force) that the question was not affected by the fact that such securities were bonds secured by mortgages upon land in this state, and that "the possession of the securities was in the three trustees jointly, and not in the relator alone." The court declared that there was no material distinction between the case then in hand and the Darrow Case, which was "regarded as controlling." By the tax law (Laws 1896, c. 908) chapter 392. of the Laws of 1883 was repealed, and the assessment in question is governed by the later statute. By section 2, subd. 4, of the tax law, it is provided that "the terms 'personal estate,' and 'personal property,' as used in this chapter, include chattels, money, things in action, debts due from solvent debtors, whether on account, contract, note, bond or mortgage; debts and obligations for the payment of money due or owing to persons residing within this state, however secured or wherever such securities shall be held.

According to section 3, "all real property within this state, and all personal property situated or owned within this state, is taxable unless exempt from taxation by law." The next section defines property exempt from taxation, but it does not include any of the property involved in this appeal. By section 8, which relates to the "place of taxation of property of residents," it is provided that "every person shall be taxed in the tax district where he resides when the assessment for taxation is made, for all personal property owned by him, or under his control as agent, trustee, guardian, executor, or administrator. Where taxable personal property is in the possession or under the control of two or more agents, trustees, guardians, executors, or administrators residing in different tax districts, each shall be taxed for an equal portion of the value of such property so held by them." By section 32, which is entitled "Assessment of Agent, Trustee, Guardian or Executor," it is provided that "if a person holds taxable property

as agent, trustee, guardian, executor or administrator, he shall be assessed therefor as such, with the addition to his name of his representative character, and such assessment shall be carried out in a separate line from his individual assessment." Such was the mode of assessment resorted to in the assessment under consideration.

Thus the legislature, knowing that the act of 1883, as construed by the courts, did not reach taxable securities held by trustees, one or more of whom were nonresidents of the state, at least unless the securities were actually within this state, provided for that contingency by making such obligations taxable in part here, and apportioning the assessment according to the number of resident trustees. The general rule of taxation was laid down, and it was supplemented by the further command that every person shall be taxed in the tax district where he resides when the assessment is made, not only for all personal property owned by him, but for all under his control as agent, trustee, etc. As this might lead to confusion where the property was in the possession or under the control of two or more agents or trustees residing in different tax districts, it was further provided that in such case each shall be taxed for an equal portion of the value of such property so held by them, and that each shall be assessed therefor as such, with the addition to his name of his representative character. The effect of this legislation was to change the rule which formerly prevailed, and to substitute a new one, founded on the equitable principle that where taxable personal property is in the possession or under the control of two or more trustees, who do not reside in the same district, each shall be assessed for an equal portion of the value of such property, and thus double taxation is avoided, and no taxable property is allowed to escape. If a similar method of taxation exists in the state of New Jersey, the same result would doubtless be reached there, as the trustee residing in that state would be assessed for an equal portion of the trust estate; but, according to the decision of the courts below, upon the assumption that the same scheme of taxation exists in both states, the property would be taxable in neither. The provision of the act of 1883, upon which the decision in the Darrow and Day Cases rested, was omitted from the act of 1896, although the rest of the earlier statute was substantially re-enacted. While the omission alone is significant, the intention of the legislature is made clear by the express command to assess trustees for all taxable personal property held by them or under their control as such, and, where it is in the possession or under the control of two or more trustees residing in different tax districts, to assess each for an equal portion, and specify his representative character. There is no difference

in the scheme of taxation provided by the tax law between the taxable obligations of an absolute owner and those of a trustee, except that the nature of the latter's title is to appear on the roll, and where the securities are not within the state the assessment must be apportioned according to the rule above mentioned. Thus, every person residing in a tax district of this state is assessable for all taxable personal property of which he is the sole owner, for all that he owns as trustee, and for an equal portion of all owned by him jointly with other trustees who do not reside in his tax district. This construction makes the statute operate equally upon all classes of citizens, and avoids unjust discrimination between an absolute owner and an owner in trust. A bad result suggests a wrong construction, for the legislature is presumed to have intended to do justice, unless its language compels the opposite conclusion. The construction adopted by us not only makes the statute just and equal in its operation, but gives effect to every part according to its natural meaning, while that which has thus far prevailed ignores certain portions as completely as if they had never been enacted.

As the result reached restores the assessment to the amount finally fixed by the commissioners, it is unnecessary for us to consider the effect of the arrangement between the trustees and the trust company in New Jersey when they deposited the securities with it for the avowed purpose of avoiding taxation in this state, that "access to them can be obtained only when two of the executors or trustees are present."

The orders of the courts below should be reversed and the assessment reinstated, with costs in all courts.

PARKER, C. J., and O'BRIEN, BARTLETT, HAIGHT, MARTIN, and LANDON, JJ., concur.

Orders reversed, etc.

(168 N. Y. 354)

CASTLEMAN v. MAYER et al. (Court of Appeals of New York. Oct. 18, 1901.)

CHATTEL MORTGAGE-FAILURE TO FILE-VALIDITY AS TO CREDITORS.

Personal property which had been mortgaged to secure advances was delivered with the consent of the mortgagor by the mortgagee to a sheriff, to be sold under the mortgage, which had not been filed. The property was sold and the proceeds paid over to the mortgagee before a judgment was rendered against the mortgagor on which a subsequent action was brought for the benefit of creditors. Held. that such mortgage was not void as against existing creditors where there was evidence that the execution and delivery of the mortgage were accompanied by immediate delivery of the property to the mortgagee, and a continued change of possession, and there was no evi