
    In the Matter of the Transfer Tax upon the Estate of Ferruccio A. Vivanti, Deceased. Charles H. Gaus, as Comptroller of the State of New York, Appellant; William Greenbaum, as Executor, etc., of Ferruccio A. Vivanti, Deceased, Respondent.
    First Department,
    May 6, 1910.
    Tax—transfer' tax—perpetual lease of lands in foreign country— partnership — good will — valuation by acts of parties.
    Land owned by a decedent in a foreign country under a perpetual lease reserving rent being real, not personal property, is not subject" to a transfer tax.
    The interest of a deceased partner in the good will of the business is an asset of his estate, subject to a transfer tax.
    Such good will may be valued at the sum which the surviving partner agreed to pay the decedent therefor in case .of his death or retirement.
    The value of the good will should be taken as of the date of the decedent’s death.
    Appeal by Charles H. Gaus, as Comptroller of the State of New York, from an order of the Surrogate’s Court of the county of New York, entered in said Surrogate’s Court on the 30th day of June, 1909, .which modified an order entered in said court, on the 26th day of October, 1908, confirming the report of the appraiser herein and fixing the amount of the transfer tax. (See 63 Misc. Rep. 618.)
    
      Thomas JS. Casey, for the appellant.
    
      Walter M. Hosebault, for the respondent.
   Dowling, J.:

This appeal from the order of the surrogate determining the amount of the tax to be imposed upon the decedent’s estate is taken upon two grounds: (1) That certain property located at Yokohama, Japan, was, in contemplation of law, personal property, and, therefore, taxable, and (2) that the value of the interest of decedent in the good will of the firm of Vivanti Brothers was erroneously fixed at $25,374, which was less than its real value; As to the first objection, it would seem clear, upon all the testimony, that the premises in' question were held, by decedent under a perpetual lease, reserving rent, and that under the law of Japan, as well as under our own, the interest of the decedent therein was real property and not personal. As to the second question, it would appear that an erroneous rule was followed in fixing the value of decedent’s interests in the good will of the business. It is well settled that the good will of a business is an asset of the estate in the hands of an executor, chargeable against' him on his accounting. While its precise value may be difficult of ascertainment in any way short of actual sale, in this case the parties themselves have furnished by their agreement the rule by which that value- can be determined. Under his original agreement with Tegner the surviving partner was to pay, in case of the retirement or death of the senior partner (Vivanti), to him or to such person as he might by .will or deed appoint, a sum equal to one-third of the annual profits of the business, each year for ten years, in payment for his interest in the good will of the firm of Vivanti Brothers. When William G-reenbaum was admitted to the firm he bound himself to pay for the senior partner’s interest in the good will the same sum, in like annual payments, to Vivanti, or in case of his death to his wife, and on her decease to a third person. After the death of Vivanti, when Greenbaum was. sole surviving partner, he made a written agreement with Vivanti’s widow,.whereby he bound himself to pay for the rights of Vivanti in 'the good will of the business,- instead of the -one-third originally provided, twelve and one-half per cent of the not profits for the first year, beginning July 1, 1906, and fifteen per cent for every year thereafter ' until the period of ten years had expired, or -until the death of the widow. It appears that the latter’s expectancy of life is more than the ■ period limited. The appraiser arrived at the value of the good will by averaging the profits of the business for the four years preceding decedent’s death, taking fifteen per cent of that amount and multiplying it by ten, giving a total of $59,088.21. The léarned surrogate fixed the value at the amount-of Vivanti’s share of the profits of the business for the year immediately preceding his death. • For this computation there seems to be no- authority. The amount fixed by agreement of the- parties must determine the value. But an error has been made in the computation, for tlie percentage for the first year should be only twelve and.one-half per cent instead of fifteen per cent, and what is to be determined is the value of the good will as of the time of decedent’s death — that is, it would not in any event have been $59,088.21, but the present value of a sum payable in ten annual installments, made up of twelve and on'e-lialf per cent of the first year’s profits for one year, arid fifteen per cent of the same amount for the next nine years.

The order appealed from must, therefore, be reversed, without costs, and the matter remitted to the Surrogate’s Court for further action, in accordance with this determination.

Ingraham, P. J., McLaughlin, Clarke and Scott, J J., concurred.

Order reversed and proceeding remitted to surrogate.  