suggested that the amount of the personal property on the farm which was mentioned in the contract, had better be accurately ascertained before signing the contract, and the signing of the contract was adjourned to enable defendant to go to the farm to take an account of the personal property, although Donahue was willing to sign the paper as defendant had requested plaintiff to draw it. The defendant then went to the farm and took account of the personal property and had his lawyer draw up a contract for the exchange, which he handed to the plaintiff to submit to Donahue and to procure Donahue, if possible, to agree to it. The plaintiff handed the contract, which the defendant's lawyer drew, to Stone, Donahue's broker, and Stone explained and read the contract as revised to Donahue, who agreed to sign it, and Donahue attended next day at Jackson & Burr's office to sign the contract, and was there willing to do so, but the defendant said the whole trade was off, and refused to make the trade. The defendant, on cross-examination, testified that at the time he gave the amended contract to plaintiff to enable him to get Donahue to agree to it, he had already made up his mind not to make the trade.

Defendant's evidence was to the effect that he employed plaintiff upon condition that the commission was only payable in case the trade went through. Plaintiff denied that any such condition was annexed to his right to pay.

Jacob Brenner, for resp't; Jackson & Burr for app'lt.

PER CURIAM. The plaintiff alleges that he was employed by defendant to exchange his farm and stock thereon for city property that would be acceptable to defendant; that plaintiff procured one Donahue to offer certain property for defendant's farm and stock, and that said offer was accepted by defendant. The defense of defendant was two-fold: First, that defendant did not accept such offer; second, that he was not to be liable for commissions until the exchange should be actually consummated by delivery of deeds. There was a conflict of evidence on both of these questions, which were submitted to a jury. They decided both in favor of plaintiff. After careful examination of the testimony, we think these questions were properly submitted to the jury, and see no reason for disturbing the verdict.

Judgment and order must be affirmed, with costs.
CLEMENT, Ch. J., and VAN WYCK, J., concur.

In the Matter of the Estate of HARRIET BROWN, Deceased. (Surrogate's Court, Orange County, Filed September 22, 1890.)

EXECUTORS AND ADMINISTRATORS-REPRESENTATIVE OF DECEASED RESIDUARY LEGATEE NOT ENTITLED TO LETTERS OF ADMINISTRATION,

The personal representative of a residuary legatee who survived the testator but died before the probate of the will, is not entitled to letters of administration with the will annexed, but the right thereto passes to the next class under § 2643 of the Code.

APPLICATION for letters of administration with the will an

nexed.

C. G. Dill, for Effie A. Miller, a niece, and as executor of Maria Brown, a deceased sister; John L. Wiggins, for Leander L. Purdy, administrator, etc., of Dolly J. Brown, a deceased sister; Wm. D. Mills, for Gilbert Brown, a brother.

COLEMAN, S.-Harriet Brown died December 10, 1889, a resident of this county, leaving a will, which has recently been ad mitted to probate, in and by which her sister, Dolly J. Brown, was made her sole legatee and sole executor. The sister survived the testatrix, but died before the will was admitted to probate. Applications for letters of administration with the will annexed have been filed by Leander L. Purdy, the administrator with the will annexed of the said Dolly J. Brown, deceased; by Charles G. Dill, the executor, etc., of Maria Brown, another deceased sister; by Gilbert Brown, the only brother of the said Harriet Brown, and by Effie A. Miller, a niece. There are other next of kin living, but none so nearly related to the testatrix as the brother Gilbert.

Section 2643 of the Code of Civil Procedure provides who must be appointed by the surrogate. First residuary legatees, next principal or specific legatees, and next one or more of the next of kin.

It is claimed on behalf of the applicant Purdy that, as the representative of the residuary legatee, he is first entitled to the appointment, and on behalf of the brother it is claimed that the residuary legatee being dead and there being no other legatees, that the right to the administration belongs to the third class of persons designated by the section, the next of kin, and that in that class he is first entitled, the others being nephews and nieces or their descendents.

The rule in English courts undoubtedly was and still is that "where the residuary legatee survives the testator and has a beneficial interest, his representative has the same right to administration cum testamento annexo as the residuary legatee himself, and is therefore entitled to administration in preference to the next of kin, or to legatees." Williams on Exrs., 465, orig. paging. So strong have been the efforts of those courts that the right of administration should follow the right of property, that in some cases where the statute expressly gave the right of administration to the next of kin the courts have held that the spirit of the act excluded the next of kin where there is a residuary legatee. Id., 464. And the courts in this state were at first inclined to give the same construction to the statute designating who are entitled to administration and administration with the will annexed. Public Administrator v. Watts, 1 Paige, 382; Public Administrator v. Peters, 1 Bradf., 100; Willard on Exrs., 195; Dayton on Surrogates, 235. But in the case of Lathrop v. Smith, 35 Barb., 64, affirmed in 24 N. Y., 417, it was held that the next of kin were entitled under the statute to administration, although not entitled to share in the distribution of the estate.

And in Kircheis v. Scheig, 3 Redf., 277, the surrogate of New York county, upon the authority of Lathrop v. Smith, held the

same way in the case of administration with the will annexed, and the same rule of construction was again applied in Butler v. Perrott, 1 Dem., 9.

The counsel for Mr. Purdy claims that the case of Kircheis v. Scheig, supra, is not authority in this case, because the moving party in that case was the legatee of the deceased residuary legatee and not the deceased residuary legatee's executor or administrator, and therefore not within the English rule, and further that a different rule applies in cases of administration with will annexed from that of ordinary administration.

The only instance that I recall in this state where one occupying a representative capacity is entitled to administration upon another's estate in the right of the person whom he represents, is in the case of a guardian of a minor, and then it is because of a statute giving that right. 4 R. S., 2553, § 33, 8th ed.

At the time of the decision of Kircheis v. Scheig, in 1878, § 14, of 2 R. S., 71 was in force, and provided that letters with the will annexed shall be granted * * * "in the same manner and under the same regulations as letters of administration in cases of intestacy." This section was repealed by chapter 245 of the Laws of 1880, and provision was made by § 2643 of the Code of Civil Procedure regulating the issuing of such letters, which does not include any provision similar to that just quoted.

However it seems to me that the same reasoning by which Judge Davis in the opinion in Lathrop v. Smith, supra, reached the conclusion that administration must be granted in the order mentioned by the statute, although by so doing it may, in some circumstances, give the letters to one who has no distributive interest in the estate, apply with equal force to this section of the Code, which provides that the surrogate must issue letters to the persons there designated in the order prescribed. And if it shall happen that there were none of the first class, or if there have been such, but who are not, at the time of the application, then the right passes to the next class, and not to the representatives of the deceased of the first class.

Letters will, therefore, be granted Gilbert Brown.

In the Matter of the judicial settlement of the Estate of WILLIAM L. F. WARREN, Deceased.

(Surrogate's Court, Orange County, Filed October 16, 1890.)

EXECUTORS AND ADMINISTRATORS-STOCK DIVIDENDS.

By the will of testator he gave to his wife "the use, interest and income, during the term of her natural life, of all the rest and residue," with remainder. At the time of his death he owned stock in a bank, The bank subsequently resolved to reduce its capital by returning to the stockholders half of the capital, with a premium of forty per cent payable out of surplus profits, and thereafter res lved that a dividend of forty per cent. on such half be paid. Held, that the forty per cent. received by the executor in pursuance of such action by the bank was earnings, and went to the widow under the terms of the will as income.

JUDICIAL settlement of Warren estate.

E. L. Fancher, for Carolyn C. Vermeule, remainderman; E. A. Brewster, for Alida J. and Wm. W. Carpenter, remaindermen; Howard Thornton, for Catharine Warren, life tenant.

COLEMAN, S.-The testator, William L. F. Warren, died in November, 1879. At the organization of the Newburgh National Bank in 1864, he subscribed for and became the owner of fifty shares of the capital stock, for which he paid $5,000, its par value. At the time of his death he was still the owner of this stock, and the executor and trustee under his will retained the same until June 15, 1890, when the capital stock of the bank was reduced one-half. On the 27th of January, 1890, the directors passed the following resolution:

"Resolved, that in the opinion of the members of this board it is expedient and they recommend, that the capital stock of this bank be reduced from $800,000 to $400,000, by returning to the stockholders $400,000 of the capital with a premium of 40 per cent. payable out of the surplus profits.

And on June 9, 1890, they also passed the following:

"Resolved, that the cashier be and he is hereby authorized and directed to transfer $80,000 from the account of surplus fund and place the same to the credit of 'profit and loss.'

"Resolved, that a dividend of forty per cent. (40 per cent.) on the one-half of the capital stock of $800,000 to be returned to the shareholders be declared and payable to the shareholders on and after June 16, 1890."

Shortly after the executor surrendered to the bank the certificate for the fifty shares of stock, and received from the bank a new certificate for twenty shares and $3,500 in cash. Regular semiannual dividends have been declared and paid by the bank up to and since the reduction of the capital stock. Upon the hearing the president of the bank testified that the 40 per cent. was paid from the accumulated earnings of the bank.

The will of the deceased contains the following clause: "I also give and bequeath to my said wife the use, interest and income, during the term of her natural life, of all the rest and residue of my personal property and estate," with remainder over as to the principal.

The executor still retains $1,000 of the money paid him by the bank, being the forty per cent. dividend, and on the settlement it is claimed on behalf of the widow that it should be paid to her as income, derived from the $2,500 of capital returned, and to this the remainderman objects and claims that it should be considered capital.

To whom the $1,000 belongs, whether to the life tenant or to the remainderman, must be determined by the construction to be given to the clause in the will quoted. I think it may properly be inferred that the testator supposed that after his death the bank stock would form a part of his estate; and it is also properly assumed that he knew when he provided that his widow should N. Y. STATE REP., VOL. XXXIII. 74

receive the income from his estate, she would not have any right in or to the earnings of the bank until a dividend was declared, though the bank might earn thousands and might defer dividing for years. But that whenever a dividend was declared, such dividend became at once income to the estate, whether it was paid from earnings made by the bank since the death of the testator or before that time. Hyatt v. Allen, 56 N. Y., 553; Matter of Kernochan, 104 id., 618; 6 N. Y. State Rep., 439. I therefore conclude that the true construction of this clause in the will gives to the widow as income of the estate any dividend of earnings properly declared by the bank upon stock belonging to his estate.

This payment of forty per cent. on that part of the capital of the bank which was retired was however an unusual and extraordinary dividend, and there may be a doubt whether it is to be considered as a dividend of earnings to the shareholders, or whether it should not be considered a payment back to the shareholders of capital.

The bank in one resolution proposes “to return" to the shareholders $400,000 "with a premium of forty per cent. payable out of the surplus and profits." And again it is resolved "that a dividend of forty per cent" on the capital to be returned "be declared and payable to the shareholders." The bank by its action could have capitalized its surplus earnings, or it could have divided its earnings among the shareholders in the form of dividends. It had the power to do either, and whether its action was one or the other determines whether the $1,000 was a part of the capital or income from the capital. Until the proceedings were taken by the bank, the surplus earnings belonged only to the bank. By its proceedings the shareholders acquired a right to so much of the surplus as the bank determined to part with. Did the bank give up this part of its surplus as capital or as earnings? I conclude that it was as earnings. It was determined by the bank to return to the shareholders a portion of the capital they had in the bank, with a "premium" or "dividend" or whatever you may choose to call it, but whatever it was, it was payable from the "surplus and profits," and the amount was directed to be taken from the "account of surplus funds." It was recorded in the books of the bank as a dividend and paid out as such.

I am of opinion that the widow is entitled to this sum of $1,000 as income derived from the bank stock.

In the Matter of the judicial settlement of the Accounts of the Executors, etc., of ZENAS SMITH, Deceased.

(Surrogate's Court, Orange County, Filed October 20, 1890.) WILLS-EFFECT OF LAPSE OF LEGACY CHARGED ON REAL ESTATE,

Testator, by his will, devised an undivided half of a farm in trust for the life of a cousin, with remainder to the children of the latter. He then bequeathed $500 to another cousin, N., to be paid to him or his heirs in one year after testator's death, by said trustee, and made the same a first charge on the land devised in trust, and authorized the trustee to mortgage the land for such payment. N. died before the testator. Held, that the legacy thereby lapsed and sank into the land, and that the trustee was not required to pay it to any one.