
    People ex rel. Nathan Strauss, etc., Resp’ts, v. Michael Coleman et al., Commissioners of Taxes and Assessments of the city of New York, App’lts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 31, 1887.)
    
    1. Taxes and assessments—Executors and trustees—What taxable as PERSONAL PROPERTY OF
    The testator died in November, 1885, leaving a will by which the relators, who reside in New York, were appointed executors. At the time of his death the testator was a member of a firm in San Francisco and one in New York, both being composed of the same persons. On the second Monday of January, 1886, the value of decedent’s interest in the San Francisco firm had not been ascertained, nor had an accounting been had between the relators as executors, etc., and said firm, to ascertain the value of said interest. On said day the assets of the San Francisco firm consisted of local securities, government bonds and stock in trade. The tax commissioners (defendants herein) on said day assessed the relators as executors and trustees in the sum of $100,000 personal property. They had then received nothing, but afterward received about $500,000 from the surviving members of said firm. Held, That there was no existing debt due or owing to the relators on the said second Monday of January, from the surviving members of the last named firm. That the assessment was illegal.
    2. Same—Co-partnership—Surviving members—Entitled to assets— Liquidation.
    The surviving members of said firm were entitled to the possession of the whole of the firm’s assets for the purposes of liquidation, and they became trustees for that purpose. They were under no obligation to pay over until all the firm debts have been paid, and until the interest of the deceased partner had been absolutely determined and fixed. Then only would a debt arise due from the surviving partners to the personal representatives of the deceased partner which could be enforced or taxed.
    8. Same—Right of executor before liquidation completed.
    The relators had an equitable lien upon these assets to the extent of having them applied solely to the purpose of liquidation. But they had no legal claim as long as the surviving partners conducted the liquidation in a proper manner, and could not in any way interfere therewith.
    4. Same—“Accounts” means mercantile accounts.
    In the expression “ debts due from solvent debtors, whether on account,” etc., in the statute defining what is subject to taxation: Held, That the word "account ” is there used in its mercantile sense, and does not refer to those cases where a person is entitled in equity to have an account taken to settle the rights and interest of parties to a fund.
    Appeal from a judgment declaring an assessment illegal and an order vacating the same.
    Jonas Strauss, residing in the city of New York and doing business in said city and also in San Francisco, died in New York in November, 1885, leaving a will by which the relators were appointed his executors and trustees.
    The will was duly admitted to probate in January, 1886, and the relators, who also resided in New York city, duly qualified as the executors thereof.
    At the time of his death the said Jonas Strauss was a member of the firm of Levi Strauss & Co., of San Francisco, and of the firm of J. Strauss, Bro. & Co., of New York.
    The members of both firms were Jonas Strauss, Levi Strauss, Estate of David Stern, Nathan Strauss, Jacob Stern and David Marks.
    The value of the interest of decedent in said firm in San Francisco had not been ascertained on the second Monday of January, 1886, nor had any accounting been had between the relators, as executors, and said firm with a view of ascertaining the value of such interest.
    On said last mentioned day the assets of said firm in San Francisco consisted of local securities of California government bonds and stock in trade, all of which were in California, and on said day the respondents assessed the relators as executors and trustees in the sum of $100,000 personal property.
    The value of the interest of Jonas Strauss in the assets of his firm in November, 1885, was supposed to be about $700,000, none of which had been paid over to the relators until after the second Monday of January, 1886.
    Between that date and April 24, 1886, the relators received a little over $500,000 from the surviving members of the firm in San Francisco on account of the deceased member’s interest in the assets of the firm.
    On April 24, 1886, the relators, having objected to the assessment, had a hearing before the respondents upon the question of their liability, and in May, 1886, the respondents decided that the relators were liable to pay taxes on said assessed sum of $100,000. <
    The relators then, pursuant to the provisions of the Laws of 1880, chap. 269, brought certiorari proceedings to reverse such decision.
    Testimony was taken, and, upon the submission of the question to the court, it was held that the assessment was illegal, and, from the order and judgment thereupon entered this appeal is taken.
    
      George S. Coleman, for app’lts; W. F. Severance, for respt’s.
   Van Brunt, P. J.

The only question which is presented by this appeal is whether or not, on the second Monday of January, 1886, there was a debt or obligation for the payment of money due and owing from the survivors of the California firm to the executors of their deceased partner exceeding $100,000

In determining the question it is necessary to consider for a moment the relations which surviving partners bear to the firm assets and to the personal representatives of the deceased partner.

In the case of Daby v. Ericsson (45 N. Y., 786-789), it is held that “ upon the death of one partner, the demands and choses in action of the co-partnership belong to the surviving partners, and they possess the sole and exclusive right to reduce them to possession, and when recovered they stand as trustees for the representatives of the deceased partner to the extent of his interest.

“The law not only vests the legal title to the choses in action in the surviving partner, but it casts upon him the duty to get in the debts and settle the affairs of the partnership. Thejtis accrescendi exists for this purpose.”

The surviving partners have, therefore, the whole legal title to the assets of the firm, but such assets subject to the payment of debts, are impressed with á lien in favor of the representatives of the deceased partner to the extent of the share of the deceased partner in the firm’s assets, and although the surviving partner is entitled to the possession of the whole of the assets of the firm for the purposes of liquidation, he is a trustee for that purpose and receives them impressed with the lien above stated, and in case the surviving partner misconducts himself as a trustee for the purposes of liquidation, and having disposed of old assets, invested the proceeds in new assets or stock, and mingled such purchases with stock bought upon his own credit so that the same cannot be separated, the lien above mentioned is impressed upon the whole stock to indemnify the trust fund except as against bona fide purchasers or a party having acquired a specifiec lien by the levy of an execution or attachment.

And this right acquired by lien is carried so far that it may be enforced to the exclusion of the individual creditors of the surviving partner, whose debts may have been incurred in the purchase of the very stock mingled as stated above. Hooley v. Grieve, 9 Daly, 104; affirmed in court of appeals on opinion in court below, 82 N. Y., 625.

It would thus appear that the representatives of a deceased partner have something more tangible than a mere claim for an accounting against the surviving partner—that they have a hen upon the firm assets to the extent of the deceased partner’s interest, which lien they may enforce according to equitable principles.

But does the liability of the survivors of the deceased partner constitute a debt or obligation for the payment of money ?

In the statute it seems to have been supposed that the words “debts” and “obligations for the payment of money” were applicable to different species of personal property, and that by “obligations for the payment of money,” the legislature meant to describe written' instruments for the payment of money, and not to the mere duty ■to pay money, which might be represented by the word “debt.”

Did, therefore, any debt exist on the second Monday of January, 1886, which was due or owing to the relators from the surviving members of the firm of the deceased ?

The surviving members as has been seen were entitled to the possession of the whole of the firm’s assets for the purposes of liquidation and they became trustees for that purpose.

The relators, it is true, had an equitable lien upon these assets to the extent of having them applied solely to the purposes of liquidation, but no further.

They had no legal claim as long as the surviving partners conducted the liquidation in a proper manner, and could not in any way interfere therewith, and their legal claim arose only after it had been determined what the interest of the deceased was, and a duty to pay over existed.

The trustee was under no obligation to pay over, there was no debt due or owing by him to the representatives of the deceased partner until liquidation,—until all the firm debts have been paid, and until the interest of the deceased partner had been absolutely determined and fixed.

When these things had been done, then a debt arose due from the surviving partners to the personal representatives of the deceased partner, which could be enforced.

In the case at bar none of these things had been done at the time of the imposition of the tax, and hence no debt existed.

It is true that there was an obligation resting on the surviving parters to liquidate the affairs of the firm as trustees for that purpose, which obligation the personal representatives of the deceased partner could enforce even to the extent of claiming their equitable lien upon the firm’s assets, as above mentioned, but such an obligation cannot be said to be an obligation for the payment of money, but rather an obligation to execute a trust.

Therefore stating the claims of the representatives of the deceased member of the firm in their strongest light, ■they do not seem to be either a debt or an obligation to pay money as these terms are used in the statute under consideration.

We notice in the points of the appellants that particular attention is called to the words debts dm from, solvent debtors, whether on account, etc., as though' the words, debts due on account, referred to a case like the present, where a debt might result from an accounting. We think the word account is there used in its mercantile sense, and that it does not refer to those where a person is entitled in equity, to have an account taken to settle the rights and interests of parties to a fund.

The costs and judgment appealed from must be affirmed, with costs.

Bartlett, J., concurs.  