against the persons to whom, through the action of the corporation and by the subsequent act of Lisman & Co., the only available corporate assets have been transferred in fraud of the rights of creditors. [5] The Iron Railway Company is not a necessary party to the action; but its presence as a nominal party defendant is proper enough, in order, if the plaintiff be eventually successful in his action, that by its voluntary appearance therein the other defendants may have the benefit of its being concluded by the judgment. The orders appealed from should be affirmed, and the questions certified should be answered in the affirmative. CULLEN, C. J., and WILLARD BARTLETT, HISCOCK, CHASE, HOGAN, and MILLER, JJ., concur. Orders affirmed, with costs. (208 N. Y. 463) PEOPLE v. TRUST CO. OF AMERICA. (Court of Appeals of New York. June 3, 1913.) TAXATION (§ 83*)—MORTGAGE REGISTRATION TAX-LIABILITY OF TRUSTEE. Tax Law, § 301 (Laws 1906, c. 532), imposes a tax upon each mortgage of real estate recorded prior to July, 1906, when any part of the amount of principal indebtedness which may be secured is advanced thereafter, which tax shall be at the rate of 50 cents for each $100, and shall be paid to the recording officer of the county in which the mortgage is first recorded. Other sections impose the same tax upon the recordation of either mortgages or deeds of trust, but no sections provide by whom the tax imposed upon further advances of the principal should be paid. Held, that where the trustee in a mortgage given to secure bonds consented to the issue of additional bonds, it was liable for the payment of such tax, particularly where the trustee had to consent to the issuance of the bonds, for it had the duty of protecting the security for the bondholders. [Ed. Note. For other cases, see Taxation, Cent. Dig. §§ 172, 173; Dec. Dig. § 83.*] Hiscock, Werner, and Collin, JJ., dissenting. Appeal from Supreme Court, Appellate Division, Third Department. Action by the People against the Trust Company of America. From a judgment of the Appellate Division (139 N. Y. Supp. 1139), affirming a judgment overruling defendant's demurrer, defendant appeals. Affirmed. See, also, 205 N. Y. 74, 98 N. E. 207. Charles P. Howland, of New York City, for appellant. Thomas Carmody, Atty. Gen. (Franklin Kennedy, of Albany, of counsel), for the People. CHASE, J. Since the former decision of this court herein (People v. Trust Company of America, 205 N. Y. 74, 98 N. E. 207) the complaint has been amended by adding thereto the following paragraphs, viz.: certified other bonds in addition to those theretofore issued as aforesaid, serially numbered from 3,201 to 3,600, of the total aggregate of $400,000; and the defendant herein duly delivered such bonds so certified to the mortgagor, the Union Bag & Paper Company, for issue." "That thereafter, and on or about February 15, 1907, the aforesaid bonds, numbered 3,201 to 3,600, certified and delivered by defendant, as aforesaid, were issued by said mortgagor, and on or about said date there was advanced on said bonds the sum of $400,000, under and pursuant to the terms of said mortgage; and such sum accrued upon the principal indebtedness of said mortgage and became secured thereby." By the addition of such paragraphs there are (as it was suggested by the chief judge in the opinion on the former appeal there would be in such case) different questions presented on this appeal than were before the court when the complaint was then considered. The legislation commencing in 1905 relating to the taxation of mortgages shows a general intention to treat a trust mortgagee as a party to the trust instrument having an active duty to perform in behalf of the holders of bonds secured by the trust mortgage. The sections of the Tax Law added by chapter 729 of the Laws of 1905 prescribing a property tax on mortgages were wholly remodeled by chapter 532 of the Laws of 1906, and a different scheme of mortgage taxation was provided to take effect July 1st of that year. The tax as provided by the act of 1906 is called a recording tax. The statute provides for the payment of a tax "of fifty cents for each one hundred dollars and each remaining major fraction thereof of principal debt or obligation which is, or under any contingency may be secured by mortgage of real property situated within the state recorded on or after" July 1, 1906. The tax so imposed is payable "on the recording of each mortgage of real property subject to taxes thereunder," and it is further provided that such tax shall be paid "to the recording officer of any county in which the real property or any part thereof is situated," and it is made the duty of the recording officer to indorse upon each mortgage a receipt for the amount of the tax so paid. The payment of such tax is made certain and secure by the fact that the mortgage can neither be recorded nor enforced unless the tax imposed by the statute is paid as therein provided. A different provision is made in the act in case of trust mortgages (section 296). That section provides for the payment at the time of the recording of the mortgage of a tax upon the amount advanced, and it is "That after July 1, 1906, and on or about also provided that "the tax for such sums February 15, 1907, the defendant herein, duly of principal indebtedness as may be advanc ed, accrue or become secured after the execution and delivery of any such mortgage shall be payable at or before the time when such sums are advanced, accrue or become secured. Such additional tax shall be paid to the recording officer where such mortgage has been or is first recorded and a receipt therefor shall be indorsed upon the mortgage and payment therefor shall be noted in the margin of the record of such mortgage. The payment of such tax is made certain and secure by the necessity of obtaining a receipt therefor indorsed upon the mortgage and noted in the margin of the record thereof. ** There is a further and independent imposition of a tax upon mortgages recorded prior to July 1, 1906, when any part of the amount of principal indebtedness is advanced after July 1, 1906. Such tax is imposed by section 301, which is as follows: "A tax is imposed hereby on each mortgage of real property recorded prior to the first day of July, nineteen hundred and six, when any part of the amount of principal indebtedness which is or under any contingency may be secured by any such mortgage is advanced, after first day of July, nineteen hundred and six. The tax imposed by this section shall be at the rate of fifty cents for each one hundred dollars, and each remaining major fraction thereof which is, or under any contingency may be secured by any mortgage taxed under this section, deducting therefrom however any tax paid on such mortgage under chapter seven hundred and twentynine of the laws of nineteen hundred and five. The tax imposed by this section shall be paid to the recording officer of the county in which the mortgage is first recorded and shall be paid when at any time any part of the said amount of principal indebtedness is advanced after the first day of July, nineteen hundred and six." Whether it is termed a property tax or a tax upon the benefit derived from the previous record of the mortgage it is due and payable as therein specified. Such a tax is not made payable by any named person or corporation, neither is its payment made certain or secure by any special provision of the statute. The Legislature intended that the tax therein provided should be paid, and it may be inferred that it intended that the persons or corporations actively engaged in the transaction which results in the tax becoming payable be charged with its payment. After July 1, 1906, and on February 15, 1907, the defendant as trust mortgagee certified $400,000 of bonds, and delivered them so certified to the mortgagor for issue, and they were so issued on the same day. It is upon such $400,000 of bonds that the people seek to compel the defendant as the trust mortgagee to pay the tax. It was necessary that the bonds be so certified by the defendant before they could be issued. They were of the purpose for which they were certified, and the defendant is presumed to have had knowledge of the statute relating to the tax on the mortgage held by it payable at the time of the advance to be made upon the bonds so certified. It is provided in the trust mortgage that "after delivery of $3,000 of said bonds, further bonds shall be certified and delivered by the trustee only upon receipt of a certificate signed by the president or first vice president and two-thirds of the directors of the mortgagor and that the same or the proceeds thereof are needed for and will be applied in acquiring or constructing additional plant or property or making additional improvements or additions to the mortgaged property." It will be assumed that such certificate was given to the defendant prior to its certification of the $400,000 of bonds on February 15, 1907. It, therefore, had knowledge by such certificate of the proposed further advance of the principal secured by the mortgage and such certificate also showed to the defendant that the money so to be advanced was then needed for and would be applied as provided by the terms of the mortgage. The defendant as the trustee named in the mortgage is not only a party thereto, but to some extent the representative of all parties interested in the instrument. It is particularly the representative of the persons who own the bonds for which the trust instrument is collateral. As such trustee it has the legal title to the trust property to the extent of the lien thereon provided in the instrument. It cannot be said that there is no duty resting upon the trustee to record the mortgage or to see that it is recorded, or to pay the tax on the mortgage required to be paid when a deferred part of the mortgage indebtedness is advanced, as provided by the statute quoted. Whatever may be the general practice as to recording a trust mortgage or in paying the recording tax therefor, or the tax upon the mortgage upon an advancement of any part of the principal indebtedness secured by the mortgage, it is the trustee named as the mortgagee therein who represents the bondholders for whose benefit and security the mortgage is recorded. Any agreement relating to recording the mortgage as between the parties to the instrument affecting the responsibility of the trustee as between the parties to the instrument cannot affect the determination of the questions involved on this appeal. The defendant is not a gratuitous trustee. Its assumption of the duties devolved upon it are of value. The assumption of the duties of trustee was pursuant to some contract, express or implied, and the recording tax, or any tax upon the mortgage by reason of the mortgage having been previously recorded, is a proper disbursement by it as trustee. Its duty to pay such recording tax or the tax upon the mortgage, as pro the trust which it has accepted. It rests upon the benefit derived by those for whom the trust is created. When a statute imposes a tax on a transaction, and no provision is made in the statute as to which party thereto shall pay it, the actors in the transaction, when acting in the performance of their duty, are liable therefor. The defendant was the principal actor in making possible the advancement after July 1, 1906. Its certification of the $400,000 of bonds was for the express purpose of enabling the mortgagor to secure the advance which was made to it that day. This action by the sovereign authority should, therefore, be sustained. Section 301 of the statute should be construed to impose a tax to be paid to the recording officer of the county in which the mortgage is first recorded at any and every time when an amount of the principal indebtedness is advanced after the 1st day of July, 1906 and upon the amount so advanced from time to time at the rate prescribed by the statute. The judgment should be affirmed, with costs. HISCOCK, J. (dissenting). This action was brought to recover from defendant as mortgage trustee under a corporate mortgage taxes on account of the certification and issue of $400,000 of bonds out of an issue of $5,000,000 of bonds secured by said mortgage, and for which taxes defendant is supposed by the people to be liable under the provisions of section 301, chapter 532, Laws of 1906, relating to mortgage taxation. Plaintiff's original complaint in connection with other proper allegations alleged that in June, 1905, the Union Bag & Paper Company, a domestic corporation, executed and delivered a mortgage to the defendant as trustee to secure an issue of not to exceed $5,000,000 par value of bonds, and that the defendant accepted the trust and was still acting as trustée; that the mortgage was duly recorded at said date, and prior to July 1, 1906, bonds to the amount of $3,200,000, secured by said mortgage, had been issued, and that on February 15, 1907, a further amount of $400,000 of bonds secured by said mortgage were issued, and that on account of said last transaction a tax of $2,000 had become due from defendant to the state. Defendant's demurrer to this complaint on the ground that it did not disclose any liability on its part was finally sustained by this court in an opinion written by the chief judge. People v. Trust Co. of America, 205 N. Y. 74, 98 N. E. 207. Under permission granted to it the plaintiff has served the present amended complaint wherein, in addition to previous allegations, the mortgage in question is referred to and made a part of the complaint, and also it is alleged that after July 1, 1906, defendant, as such trustee as aforesaid, duly certified $400,000 of bonds said mortgage, and "duly delivered such bonds so certified to the mortgagor, the Union Bag & Paper Company, for issue," it not being alleged that the moneys realized on the new loan in any manner passed into its possession. Thus the inquiry becomes whether, by grouping these additional facts with those before presented, we yet have the statement of a good cause of action under the statute. Said act took effect July 1, 1906. Prior to that date, chapter 729 of the Laws of 1905 provided for an annual tax "upon each and every debt and obligation and upon the mortgage securing the same," in the case of mortgages recorded after July 1, 1905. Chapter 532 of the Laws of 1906 provided for a new scheme of mortgage taxation in the shape of a recording tax, and, generally speaking, was only applicable to mortgages recorded on and after July 1, 1906. A variation from the general scheme of the act was contained in section 301, specifically relied upon. tion attempted to provide for a case where a mortgage had been executed and recorded before it took effect, but where part of the amount secured thereby was not advanced until after it became a law. It enacts as fol lows: "A tax is imposed hereby on each mortgage of real property recorded prior to the first day of July, nineteen hundred and six, when any part of the amount of principal indebtedness which is or under any contingency may be secured by any such mortgage is advanced, after the first day of July, nineteen hundred and six. The tax imposed by this section shall be at the rate of fifty cents for each one hundred dollars, and each remaining major fraction thereof which is, or under any contingency may be secured by any mortgage taxed under this section, deducting therefrom however any tax paid on such mortgage under chapter seven hundred and twenty-nine of the Laws of nineteen hundred and five. The tax imposed by this section shall be paid to the recording officer of the county in which the mortgage is first recorded, and shall be paid when at any time any part of the said amount of principal indebtedness is advanced after the first day of July, nineteen hundred and six." Manifestly this provision does not in explicit terms impose upon the defendant a liability for taxes in respect of the bonds which it certified, and in an attempt to reach a proper interpretation of its provisions much reference is made to prior and subsequent statutory provisions concerning taxation directly or indirectly of mortgages as tending to throw light on legislative intent and purpose. I do not deem it necessary to follow this discussion, for, in my opinion, the determination of the question now presented to us is dependent on an application of the provisions of the particular section which has been quoted and of general principles of law which can be little aided by reference to other statutes. In fact the counsel for the peo be of no consequence to it whether it be paid when due. As a matter of convenience it was selected as the trustee and agent of the bondholders, and intrusted with the discharge of certain duties for their protection, and for the performance of which presumably it will receive compensation as its only interest in the entire matter. Amongst these duties was that of certification of bonds, but this, like others, was one of protection to bondholders by authentication of securities. Certification possesses no peculiar efficacy as a means of casting liability on the trustee. It was not an integral element in the substantial transaction, for bonds might conceivably be certified without consummation of any loan, and a loan might be made on bonds which were not certified. In short, unless this tax is to be regarded as one upon the right to act as trustee, which, I suppose, will hardly be claimed, I see no privilege enjoyed or act performed by the defendant which fairly imposes upon it a duty to pay the same. section is no part of the general scheme of | sion as trustee. It was of no direct concern the statute, and that it "may be considered to it whether the loan was made, and will either a direct property tax on mortgages, or a tax on the benefits of recordation after July 1, 1906, with reference to advances already made and the future advances, or a tax on the advances." Then, facing the omission of the statute to specify any one as liable for the tax, or to provide any method of collection, he further argues that where a taxing statute provides no method of collection of the tax thereby imposed, it is not for that reason to fail, but that an action in personam may be brought against the person who is liable for the tax. These contentions thus made will be accepted for the purposes of this discussion, and the issue thus narrowed to the one whether the defendant should be held to be a person properly liable. The general rule is that the right of the government to recover a personal judgment for a tax, whether it be regarded strictly as a debt or not, is dependent upon the existence of a duty to pay. U. S. v. Chamberlin, 219 U. S. 250, 262, 31 Sup. Ct. 155, 55 L. Ed. 204; City of Dubuque v. Ill. Cent. R. R. Co., 39 Iowa, 56. When we attempt to find somewhere an obligation or a duty on the part of this defendant to pay these taxes, we search in vain, in spite of the additional facts now alleged. Concededly the statute by its terms imposes upon it no such obligation, either in specific or general terms. It does not directly tax certification, and it does not, as it might have done and as later statutes do, make the trustee indirectly responsible for the payment of the tax as a condition of its right to certify the bonds. The mortgage itself under which the defendant is acting contains no provision which has been called to our attention which permits or, much less, requires it to pay this tax in behalf of the mortgagor or bondholders with the right to recover it over from one or both, or to have a superior lien on the mortgage property for repayment. Thus there is no agreement or covenant of the parties on which this action may indirectly rest. And, finally, there is, in my opinion, no fact outside of the statute or the mortgage which makes a basis for such an obligation or duty. The duty to pay taxes on a transaction must rest on some privilege or benefit derived from the transaction. Whatever we may regard as the technical subject of the present tax, there can be no doubt that the thing that serves as its substantial foundation is the loan of $400,000 on bonds issued under the mortgage after the statute was passed. The real parties to and beneficiaries under that transaction were the mortgagor who secured the loan and the bond purchasers who advanced it. The defendant was not a principal in the transaction, or in a direct sense interested therein or benefited thereby. It had no property right whatever in the mortgage which secured the loan; the It is a well-settled principle that taxing statutes are to be construed strictly in favor of the taxpayer. The statute which we are now considering might easily have been so framed and worded as to require payment of the taxes thereby sought to be imposed at the time when the bonds were issued and protection given to the trustee for the recovery of any sums which it might pay or advance for that purpose. But this was not done; and, so far as appears, there is now no ready or secure method by which it may recover over from the mortgagor or bondholders, if it shall pay the taxes in question. While the amount involved in this action is not a large one, it may easily happen that establishment of a liability such as is now urged will throw on some other mortgage trustee an unexpected burden of no light proportions, and it does not occur to us that we should, by construction, so enlarge the provisions of an obscure and incomplete statute as to impose upon a party a liability which could not have been reasonably anticipated, and for which there is no equitable basis. We are not called upon to indicate any opinion concerning the liability of the mortgagor, or of the bondholders, for the payment of these taxes, and we are all agreed that there is nothing in the opinion on the former appeal in this case which is controlling of the question now being decided. The judgment should be reversed, and judgment given for the defendant on demurrer, with costs in all courts. CULLEN, C. J., and WILLARD BARTLETT, and HOGAN, JJ., concur with CHASE, J. WERNER and COLLIN, JJ., concur with HISCOCK, J. (208 N. Y. 451) PEOPLE ex rel, WOGAN v. RAFFERTY. (Court of Appeals of New York. June 3, 1913.) 1. CLERKS OF COURTS (§ 65*)-CONSTITUTIONAL AND STATUTORY PROVISIONS. Under Laws 1847, c. 280, § 65, providing that the clerks of several counties shall be clerks of the County Courts, within their respective counties, Const. 1894, art. 6, § 14, providing that the existing County Courts are continued, and article 10, § 1, providing that clerks of counties shall be chosen by the electors of the respective counties, Judiciary Law (Consol. Laws 1909, c. 30) § 195, as amended by Laws 1911, c. 826, empowering the county clerk of Kings county to appoint a deputy to act as chief clerk for the County Court of that county, section 282 as amended by Laws 1911, c. 640, fixing such chief clerk's term of office at five years, and section 383, as amended by Laws 1911, c. 640, providing that such chief clerk shall have all the powers and fulfill all the duties of the county clerk of that county at any sitting or term of the County Court with respect to the business transacted thereat, so far as they provide that the term of such chief clerk shall extend beyond the expiration of the term of the county clerk appointing him, thus excluding an incoming county clerk from appointing a new chief clerk of the County Court, and vests such chief clerk with the powers and duties of the county clerk at any term of the County Court to the exclusion of the county clerk himself, are unconstitutional and invalid as depriving the county clerk of a substantial part of the powers and duties conferred upon him by the Constitution. [Ed. Note.-For other cases, see Clerks of Courts, Cent. Dig. §§ 89-97; Dec. Dig. & 65.*] 2. OFFICERS (§ 103*) — CONSTITUTIONAL AND STATUTORY PROVISIONS. Where the Constitution establishes an office or recognizes its existence and prescribes the manner in which it shall be filled, the Legislature cannot transfer any essential function of the office to a different officer chosen in a different manner, although it may regulate the duties of constitutional officers to some extent but not to the extent of depriving them of a substantial attribute of the office. [Ed. Note. For other cases, see Officers, Cent. Dig. §§ 163-172, 175; Dec. Dig. § 103.*1 Appeal from Supreme Court, Appellate Division, Second Department. Action in the nature of quo warranto by the People, on the relation of Thomas F. Wogan, against John T. Rafferty. A judgment in favor of the relator was affirmed by the Appellate Division, Second Department (154 App. Div. 767, 139 N. Y. Supp. 572), and defendant appeals. Reversed, and judgment directed for defendant. Hugo Hirsh, of Brooklyn, for appellant. Thomas Carmody, Atty. Gen. (Henry P. Malloy, of New York City, of counsel), for respondent. sections of the Judiciary Law. The first which we have to consider empowers the county clerk to appoint a deputy to act and be known as the chief clerk for the County Court of Kings county. Judiciary Law (Consol. Laws 1909, c. 30) § 195, as amended by Laws of 1911, c. 826. The second fixes the term of office of such chief clerk at five years from the date of his appointment. Judiciary Law (Consol. Laws 1909, c. 30) § 282, as amended by Laws of 1911, c. 640. The third provides that the said chief clerk shall have all the powers and fulfill all the duties of the county clerk of Kings county at any sitting or term of the County Court with respect to the business transacted thereat. Judiciary Law (Consol. Laws 1909, c. 30) § 283, as amended by Laws of 1911, c. 640. The fundamental objection urged against this legislation is that it is an attempt to take away from the county clerk, who is a constitutional officer, an integral and essential part of his office, to wit, the clerkship of the County Court, and confer it upon another officer who, although described as a deputy, is not really a deputy at all, but by the terms of the statute is vested with exclusive powers in respect to such clerkship. The question arises in this way: On July 13, 1911, Henry P. Molloy, then the county clerk of Kings county, appointed Thomas F. Wogan, the relator, to the position of chief clerk of the County Court of Kings county. Mr. Wogan entered upon the duties of the position and continued to discharge them until January 1, 1912, when Mr. Charles S. Devoy succeeded Mr. Molloy as county clerk. Mr. Devoy ignored any claim on the part of Mr. Wogan to continue to act as chief clerk for the County Court and appointed Mr. John T. Rafferty to that post. Mr. Wogan relinquished the clerkship to Mr. Rafferty, but speedily brought this action against him in the nature of quo warranto to test the title to the office. The case was tried by consent before a judge without a jury, and the trial resulted in a judgment of ouster against the defendant, which has been unanimously affirmed by the Appellate Division. [2] Where the Constitution establishes a specified office or recognizes its existence and prescribes the manner in which it shall be filled, the Legislature may not transfer any essential function of the office to a different officer chosen in a different manner. Warner v. People, 2 Denio, 272, 281, 43 Am. Dec. 740. The authority of the Legislature to regulate the duties of constitutional officers to some extent has frequently been recognized by the courts, but not to the extent of depriving them of a substantial attribute of the office. As was said by Chancellor Walworth in the case cited: "When the Legislature, as in this case, assumes the power to take from a constitutional officer the substance of the office itself and to transfer it |