173 N.E. 687 | NY | 1930
Charter Construction Company, of which plaintiffs were sole stockholders, owned real property situated at Park avenue and Eighty-fourth street in the borough of Manhattan. The corporation agreed to transfer the premises to its stockholders or their nominees in exchange for the surrender of their stock. This agreement contemplated that the record title should be transferred to the Glenbrook Company which would *486 issue to the stockholders of the Charter Construction Company certificates of ownership wherein the Glenbrook would certify that it had accepted the premises and held an undivided interest therein for the account of the Charter stockholders. In accordance with this agreement Charter conveyed to Glenbrook which took the record title and issued to each of the Charter stockholders its certificates of ownership. The Glenbrook Company was organized with a capital stock of only $500. All its officers were employees of Bing Bing who are agents for plaintiffs and none of its stockholders ever held stock in Charter Construction Company. The Glenbrook paid no consideration to Charter or its stockholders but on the contrary received compensation for acting as depositary of the record title. All these facts have been found and the findings unanimously affirmed.
For the ten years ending in 1926 the State, acting under the provisions of section
In order to succeed, plaintiffs must show as matter of law that they, rather than the Glenbrook Company, are the owners in fee of this property. (Real Prop. Law; Cons. Laws, ch. 50, § 501, subd. 1.) Their equitable interest has been proved. Legal title also must reside in them. Unless the Glenbrook Company has such title, it is vested in *487
plaintiffs. That corporation is found to have been organized for the purpose, among others, of holding real property as agent or attorney in fact. It agreed in its certificate of ownership that it would at any time assign or convey the property in such manner and upon such terms as the holder of the certificate might direct. Another finding of fact is that the Glenbrook Company performed no active duty with respect to the property but that the collection of rents and other activities in connection with the management and preservation of the property were performed by Bing Bing acting on behalf of the holders of the certificates. The intent of the Charter Construction Company to transfer this property to its stockholders in exchange for the surrender of their stock clearly appears. No purpose ever existed to confer upon the Glenbrook Company any property or right to possession. It was employed and paid to act merely as the depositary of the record title. The effect of the transaction as found is to confer upon the certificate holders the right to possession and to the receipt of the rents and profits. Glenbrook Company did nothing except to lend its name as of record to hold the title. Its status rose no higher than that of a trustee of a passive trust and it took no estate legal or equitable. (Real Prop. Law, §§ 92, 93; Wendt v. Walsh,
The judgment of the Appellate Division and that of the Special Term should be reversed and judgment canceling the lien of the tax directed in favor of the plaintiffs, with costs in all courts.
CARDOZO, Ch. J., POUND, CRANE, LEHMAN, KELLOGG and HUBBS, JJ., concur.
Judgment accordingly. *488
