Misc.] Supreme Court, June, 1900. Weeks, Battle & Marshall (H. S. Marshall, of counsel), for plaintiff. Alexander & Green (Charles W. Pierson, of counsel), for defendants. LEVENTRITT, J. The action is for an accounting between the parties as to the proceeds in stock and money of a certain pool, combination, or partnership arrangement into which the plaintiff claims they entered. This is an application for the appointment of a receiver, pendente lite, of certain undisposed stock of the enterprise, and for an injunction restraining the defendants from disposing thereof. It appears that in December, 1898, the plaintiff was a salaried employee of a corporation of which the defendants were respectively president and vice-president. At that time he brought to the attention of the defendant Hyde a valuable typesetting machine secured by patents, domestic and foreign, and owned by the Goodson Typecasting & Setting Machine Company, a corporation doing business at Providence, R. I. Attracted by the merits of the machine, the plan was conceived to negotiate for and acquire options, on a controlling interest in the 20,000 shares constituting the capital stock of the corporation. The plaintiff was commissioned to carry on the negotiations under an arrangement, as set out in the complaint, that "if the said stock and the said patents could be obtained at a price thought by the defendants to be reasonable, they, the said defendants, would on their part purchase the said stock and would reasonably compensate the said plaintiff for his services in securing such options to purchase". The plaintiff entered upon the employment, and with the cooperation of the defendant Hyde succeeded in securing for the defendants options on 10,100 shares for the sum of $106,000; and under those options the defendants subsequently purchased the stock. Thereafter, in order to reduce the compensation of the plaintiff to some degree of certainty, a pencil memorandum, initialed by the parties, was made on or about the 24th day of February, 1899, to the effect that plaintiff was to receive 250 of the 10,100 shares of the Goodson Typecasting & Setting Machine Company, and to participate in any surplus over the sum of $106,000, which might be realized on the sale of 4,750 of those Supreme Court, June, 1900. [Vol. 32. shares. The balance, 5,100 shares, were concededly the property of the defendants. After this memorandum had been made, a new scheme was evolved in accordance with which a new concern, the Goodson Graphotype Company, was incorporated under the laws of the State of New Jersey for the purpose of taking over the controlling interest, 10,100 shares, in the Goodson Typecasting & Setting Machine Company, and in exchange for which the new concern was to issue its own stock. Inasmuch as all the shares acquired under the option were to be surrendered a new arrangement had to be made to measure the compensation of the plaintiff in the stock of the new company. This new arrangement was expressed in a letter under date of March 27, 1899, from the defendant Hyde to the plaintiff and accepted by the latter. It provided for an exchange of 10,100 shares of the old, for a like number of shares of the new, stock, which latter was to be pooled and eventually sold The letter contains this paragraph: "As consideration for your services in connection with this matter, and with the understanding that you are to devote your time exclusively hereafter to the promotion of the new company and its business and welfare until all the stock in the pool is sold, we would be willing to set aside for your services, 15 per cent. of whatever net profits estimated on the above basis may be found to have been realized from the sale of the pooled stock after the entire 10,100 shares have been pooled and sold." After this arrangement had been made the proposed plan underwent further modification respecting the number of shares of the new, to be received in exchange for the 10,100 shares of the old, stock. This led to a conversation on May 8, 1899, between the plaintiff and the defendant Hyde, the result of which was embodied in a letter of the same date as follows: "CHAS. L. SPIER, Esq., New York: "DEAR SIR-In connection with my letter to you of March 27th in relation to the formation of the Goodson Graphotype Company I beg to say that as agreed between us to-day, you will be entitled to receive 375 shares of preferred and 375 shares of common stock of the Goodson Graphotype Company in the event of the formation of that company, which stock shall be in Misc.] Supreme Court, June, 1900. full for your services, and all demands under my letter to you of March 27th, 1899. "This, of course, depends upon the formation of the Goodson. Graphotype Company, and the carrying out of our plans of reorganization as mentioned to you to-day. "Yours truly, "CHAS. L. HYDE." The plaintiff's assent to the foregoing terms is expressed in the following words written beneath the defendant Hyde's signature: "The above is perfectly satisfactory to me, and is hereby accepted and confirmed. "CHAS. L. SPIER." While the conditions mentioned in this final understanding have come to pass, the plaintiff affects entirely to disregard this agreement of May eighth, and bases his right to an accounting on the percentage of interest reserved to him in the agreement of March twenty-seventh. The complaint in nowise refers to the final agree ment and no relief whatsoever is sought against it. It is ignored, not assailed, and there is, consequently, no prayer to have it annulled, abrogated or set aside. The affidavits, it is true, make reference to it and contain statements to the effect that its acceptance was induced by misrepresentation. Even conceding their adequacy, they are emphatically denied in the answering affidavits and are unconnected with the relief sought. It must be clear from this recital that whatever rights the plaintiff may have had under the agreement of March twenty-seventh, cannot be regarded on this application as forming the basis for an accounting or for any other relief, as all his rights and interests. thereunder were finally liquidated under the agreement of May eighth, which fixed his compensation at 375 shares cach of common and preferred stock. So long as that agreement stands unimpeached, what occasion can there be for an accounting? On its face his return is definitely, presently, fixed and computed at a specified number of shares, and is nowise dependent on profits to be realized or on any other contingency. It shows no such actual or quasi partnership relation as would entitle him to a receiver or to an accounting. Even conceding that the agreement of March 27, 1899, was expressive of such a joint adventure as would, under Supreme Court, June, 1900. [Vol. 32. the authorities, subject the defendants to the duty of accounting on the theory of agency or a trust reposed, with respect to moneys or stock received (Schantz v. Oakman, 163 N. Y. 148), the subsequent and final agreement must be regarded as the very accounting or liquidation to which, under the earlier agreement, the plaintiff was entitled. That mutual, voluntary accounting still in full force and effect and unattacked in the complaint, is a bar to the compulsory accounting sought. The motion must be denied, with ten dollars costs. Motion denied, with ten dollars costs. THE PEOPLE ex rel. THE DELAWARE & HUDSON CANAL Co., Relator, v. THOMAS L. FEITNER et al., as Commissioners of Taxes and Assessments of the City of New York, Respondents. Tax (Supreme Court, New York Special Term, June, 1960.) - Bonds of lessor corporation, guaranteed by lessee corporation, deductible by the latter. The provisions of the Tax Law (L. 1896, chap. 908, § 6), declaring that, in the assessment of personalty, no deduction shall be allowed for an indebtedness contracted or incurred "for or on account of any indirect liability as surety, guarantor, indorser or otherwise," have no application to bonds of a railroad corporation which have been guaranteed by another railroad corporation upon its leasing the former for as long a term as was possible, and which were issued in the interest of the lessee to facilitate the transfer, as such bonds are a direct liability of the lessee, are supported by a new and valuable consideration moving to it, and the lessee has, therefore, a right to deduct them from its assessment. CERTIORARI to review the action of the commissioners of taxes and assessments. David Willcox, for relator. John Whalen, Corporation Counsel (James M. Ward, of counsel), for respondents. LEVENTRITT, J. The preliminary question involved on this application as to the admissibility of the second stipulation I have Misc.] Supreme Court, June, 1900. decided adversely to the defendants. Tax Law, L. 1896, ch. 908, $253; People ex rel. Cornell Steamboat Co. v. Dederick, 161 N. Y. 195; People ex rel. Manhattan R. Co. v. Barker, 152 id. 417; People ex rel. Bronx Gas Co. v. Feitner, 43 App. Div. 198. Even in the absence of these authorities, the relevancy of the second stipulation flows from the unqualified admission of the first, inasmuch as it concededly correctly states the disposition of the bonds referred to in the latter. The fact existing, it would be inequitable not to consider its effect on the issues. On the entire record it seems quite clear that whether the interest of the relator in the disputed items of property be considered that of absolute ownership in fee, or merely that of lessee, the commissioners erred in refusing to deduct the indebtedness assumed by the relator for the ten millions of Susquehanna and Albany railroad bonds. I deem it unnecessary to consider other points in the case, as the allowance of this deduction necessarily cancels the assessment against the relator. The pertinent facts concerning this item may be very briefly stated. In the year 1870 the relator leased the property of the Albany & Susquehanna Railroad Company for the full term of its charter and for every renewal and continuance thereof. It is quite evident from the instrument, as is in fact stated in another lease to the relator and involved in the proceedings before the commissioners, that it was the intention of the parties to make the transfer as nearly perpetual as was possible and practicable under the law. There are at present outstanding bonds of the Albany & Susquehanna Railroad Company in the amount of $10,000,000, which are secured by the consolidated mortgage of that company, and which were issued pursuant to an agreement made in connection with the lease and to facilitate and effectuate the transfer. Of these bonds $377,000 were exchanged directly with the individual holders of bonds previously outstanding. The balance, $9,623,000, were issued to the relator, $3,073,000 in exchange for bonds which it had purchased, and $6,550,000 in payment for sums expended by it in construction work upon the property. The relator subsequently sold these bonds to the holders and received the amount thereof. Pursuant to one of the terms of the lease, there was indorsed upon each bond under the relator's seal the following guaranty: "The President, Managers and Company of the Delaware and Hudson Canal |