The appellants’ sole complaint is that the surrogate has approved and fixed too high a valuation and too large a tax upon certain capital stock belonging to the estate of the decedent and passing under his will to his daughter.
I think that the complaint is well founded and that the valuation and resulting tax should be reduced.
The specific property involyed is 3,737 shares of the common, and 2,025 shares of the preferred, capital stock of Curtice Brothers Company, and which has been appraised at $110 and $107.50 per share. It is claimed that said valuations should not have exceeded $80 and $90 per share respectively. While the determination of the values of these stocks must be more or less a matter of speculation, I think that a valuation of the preferred stock at $97.50 and of the common stock at $100 per share will be nearer correct for the purposes of this proceeding than that adopted by the learned surrogate.
Curtice Brothers Company was a private family corporation, engaged in manufacturing catsups, jellies, etc., and having its principal place of business in Rochester. The entire capitalization of the company consisted of 7,000 shares of preferred and 8,000 shares of common stock. The active manager of the company was a brother of the deceased. The company had been in existence four or five years and had paid dividends at the rate of ten per cent per annum upon the common, and of seven per cent per annum upon the perferred.
The stock, as might be expected, was an inactive one. It does not appear to have been listed or dealt in upon any stock exchange or market other than the local one at Rochester. A few scattering sales had been reported at the latter during the year or more preceding decedent’s death, and immediately after his death there was a bid quotation of $110 per share for the common and a reported sale upon the exchange sheet of ten shares of the preferred at $107.50, and which figures were adopted by the surrogate. Outside of one sale of- fifty shares at 105-J there is no evidence of any sale of or quotation upon a larger lot of stock than ten or twenty shares. Only two witnesses were sworn as to the value of the stock, and they seem to have been entirely familiar with the limitations of the market for it, and with the conditions and considerations which *232would fix itg value.... They agreed that the fair market valuations would be for the preferred, ninety and for the common eighty.. Upon cross-examination they referred to the sales of occasional small lots at the higher prices.already mentioned, and accounted for the difference between such prices and the valuations fixed by them by and upon the theory in substance that while small lots could be sold for the higher prices, there would not be a demand which would absorb in any reasonable time the large amount held by decedent’s estate at 'such prices.
It is urged 'by the learned counsel for the respondent that this theory is hypothetical, and speculative, an.d that it should'yield to. tlie/concrete fact that some of the stock has actually been sold or bid for at the prices adopted by the surrogate. But in my judgment the fact referred to is not wholly applicable to or controlling of the conditions and question now presented to us.'
The basic issue 'to- be determined by the surrogate was what was the “ clear market value,” the “ fair market value ” of 3,737 shares of the common and of 2,025 shares of the preferred stock in question, for purposes of taxation, With a reasonable time and under fair opportunities for purchase. The executors would not be- justified in recklessly and precipitately. throwing the stock upon the "market in. such a manner as would . inevitably invite sacrifice. Neither should they be compelled to occupy an indefinite time in the attempt to peddle the stopk out in ten:share lots.
It must be apparent at once-that tire question thus, presented, under the circumstances of this case is a very different one from that of the. prices obtained for a few small lots from timerto time, and mostly before any possible complications were suggested by the death of decedent. .
The only witnesses sworn testified positively that there'would not be a market for such a large amount at the higher prices, and that the valuations named by them would be a fair market price.
It is true that that is an opinion merely, but - it is..the opinion of conceded experts who are not Contradicted except by the record of the. sales already referred to. Moreover, ordinary observation and judgment tends to confirm their opinion, at least to some extent.
Here was a total holding of stock of the par value' of $576,200 o.ut of a total capitalization of $1,500,000. Yet while it represents *233a very large amount, it was still a minority holding in a private corporation controlled by the family to which decedent had belonged. The stock was closely held. There was no general and public ownership of it or market for it, and while an investor might be willing to take a small amount at a high price, possibly determined by dividends, it does not follow that there could be found to absorb so large an amount either a sufficient number of small purchasers or large purchasers, who would be willing to invest so large a sum which still would not give them control, but leave them more or less at the mercy of a united family. It needs no extended argument to show that the sale of this large minority block of stock in a comparatively small concern upon a local and restricted market, is entirely different from that of a sale of much larger amount of -the stock of a large and public corporation in a broad and general market like the Hew York Stock Exchange. It must be more or less a matter of opinion and even of conjecture what- could be obtained for it. But what I do feel very certain of is, that the price obtained for a few little lots is not a fair measure of valuation for the large amount involved in these proceedings, and that the valuation suggested of par for the common and eighty-seven and one-half for the preferred is quite liberal in .view of all the attendant contingencies. Ho evidence was given as to the intrinsic value of the stock outside of the fact that it paid certain dividends. We may, however, take judicial notice of the fact that the value of industrial stocks often does not bear close apparent relations to the rate of dividends which they may happen to pay at a given time, and the latter is not by any means a controlling gauge of values. (Matter of Smith, 71 App. Div. 605.)
Counsel for respondent especially calls our attention to a statute and to a decision of the Court of Appeals as justifying the action of the surrogate.
Chapter 34 of the Laws of 1891 provides that “ Whenever * * * it shall become necessary to appraise in whole or in part the estate of any deceased person * * * the persons whose duty it shall be to make such appraisal shall value * . * * all such property, stocks, bonds, or securities as are customarily bought or sold in open markets in the city of Hew York, or elsewhere, for .the day on which such appraisal or report may be required, by ascertaining *234the range-of the market and the average of prices as thus found, running through a reasonable period of time.” '
Assuming that this statnteimight bo applicable to such an appraisal as this, I think it ■.quite apparent that it is not controlling here. The evidence does not /disclose' any such free, or customary market déal- • ings in the stock in question as fairly to bring it within the scope of this statute. " ■" ,
The same surrogate who decided this proceeding held that said statute was not applicable to the appraisal in a similar case of an inactive stock of which there were infrequent sales. (Matter of Judson [not reported], affd., 73 App. Div. 620.)
• The decision referred to is that found in Dana v. Fiedler (12 N. Y. 40). In that case the defendant had defaulted in . performance of a contract to deliver certain articles, and he attempted to reduce damages by showing -that if plaintiff had. attempted to ' sell,, the market price as evidenced by sales ^proved might have been broken. I think the case may. be distinguished from this. In the first place the courts would be less liberal in laying down the rule of damages against a defaulting vendor than in fixing the fair market value of an estate for the purpose of taxing an heir who had been guilty of no default or wrongdoing. In the second place the. rule is and was well established that plaintiff for his measure of damages was entitled to the difference between, his contract price and the price at which he could purchase in the open market. Therefore, the immediate question was not of selling, but of buying.. And iti the third place, the opinion does not indicate any such cogent evidence as in this case of the probabilities which would attend the attempt to sell a large amount of property.
' I do not think there is anything in the case which, compels us to attempt to look ovér or around the results to alleged market prices which in my judgment obviously would follow the effort to sell the stock in question. .
The order appealed from should be modified by deducting from the total valuation of decedent’s estate, as also from the amount transferred to Grace C. Curtice, the. sum of $57,620 (which is the difference between the amounts at which the capital stock in Curtice Brothers Company was appraised at par and $97.50 per share for, the common and preferred stocks respectively), and by deducting one *235per cent, or $576.20, from the total tax as well as from the tax upon the share of said Grace 0. Curtice. And as so modified said' order should be affirmed, without costs to either party.
All concurred, except Spring- and Williams, JJ., who dissented.
Order modified by deducting from the total valuation of dece-' dent’s estate, as also from the amount transferred to Grace. C, Curtice, the sum of fifty-seven thousand six hundred and twenty dollars ($57,620), (which is the difference between the amounts at which the capital stock in Curtice Brothers’ Company was appraised and par and ninety-seven dollars and fifty cents ($97.50) per share for the common and preferred stocks respectively), and by deducting one per cent or five hundred seventy-six dollars and twenty cents ($576.20) from the total tax, as well as from the tax upon the share of said Grace C. Curtice ; and as so modified said order is affirmed, X without costs of this appeal to either party.