The sole question involved in this appeal is as to the taxability of two certain funds established by the deceased, Charles E. Orvis, and his brother and partner in business, "Edwin W. Orvis. Charles E. Orvis died on March 8, 1915.
These two brothers had been members of the copartnership of Orvis Bros. & Co., and on January 2, 1911, made a mutual agreement in the following form:
“ Whereas, it is the desire of Charles E. Orvis and Edwin W. Orvis, founders of the firm of Orvis Brothers & Co., to provide for the continuation of said firm, by the survivor, in event of the death of either of them:
“Now therefore it is hereby mutually agreed by and between said Charles E. Orvis and Edwin W. Orvis, that the sum of Five hundred thousand dollars shall be drawn from the profits and accumulations of said firm, heretofore accrued, and shall be placed to the credit of Foundation Account, and that such account shall be owned equally (half and half) by said Charles E. Orvis and Edwin W. Orvis, and it is hereby expressly and distinctly agreed by and between the parties hereto, "that in the event of the decease of either of them, the survivor of them shall be the sole owner of the said Foundation Account, and the heirs of the one deceased shall have no right, title, interest or claim thereto. And it is hereby further agreed that to provide against any impairment *3of said Foundation Account, an equal amount of Five hundred thousand dollars shall be placed to the credit of Contingent Account, and it is expressly and distinctly agreed by the parties hereto that the terms of this agreement, in relation to the said Contingent Account shall in .every respect be exactly the same, as the terms in regard to the Foundation Account, as hereinbefore stated.
“ In witness whereof we have signed, sealed and delivered this agreement on the second day of January, 1911.”
The two funds provided for by this agreement were set up and were continued until the death of Charles E. Orvis, by which time the so-called foundation account had been impaired to the extent of $134,000, the contingent account remaining intact.
As will be seen from a reading of the agreement, one-half of each fund was owned by Charles E. Orvis until at his death it passed by virtue of the agreement to his brother Edwin. The question is whether or not a tax should be levied upon this transfer or devolution of ownership. The learned surrogate held that it should not, because the agreement under which the devolution or transfer was to take place rested on what he termed a valuable consideration, such consideration being found in the mutuality of the agreement whereby the brothers reciprocally agreed that the survivor of them should take the interest in the business belonging to him who died first.
That this does furnish a sufficient consideration to support the agreement as between themselves I do not question, but I do not consider that that fact alone establishes the nontaxability of the transfer. Mutual promises may furnish a sufficient consideration for a promise to convey in the future, but if there be no other consideration the conveyance when it takes place is, in effect, a voluntary one.
Section 220 of the Tax Law (Consol. Laws, chap. 60 [Laws of 1909, chap. 62], as amd. by Laws of 1911, chap. 732) imposes a tax upon a transfer by “ grant, * * * sale or gift * * * intended to take effect in possession or enjoyment at or after such death,” i. e., that of the grantor, vendor or donor.
This language seems to fit exactly the present case. Whether *4the transaction be considered a sale or a gift, it was clearly intended to take effect only on the death of the vendor or donor, and not then unless the vendee or donee should outlive the vendor or donor.
Each copartner retained the sole ownership of one-half of the moneys going to make up the two funds, just as he had before the funds were set up, for it is specifically provided that “ such account shall be owned equally (half and half) by said Charles E. Orvis and Edwin W. Orvis.”
The effect of the transaction is precisely as it would have been if each brother had made a will leaving to the other his interest in the accumulated and funded profits, providing such brother survived. In such a case no one would doubt that the transfer was taxable.
Under the terms of the agreement each brother retained the sole ownership of his share of the two funds and was entitled to the profits arising from the use thereof. The only limitation upon his ownership was that he could not freely dispose of the funds after death, if he happened to predecease his brother. All the elements were present that have led to the taxation of property conveyed by trust deeds under which the creator of the trust has retained the beneficial title of the property during life, and has disposed of the remainder after death. (Matter of Green, 153 N. Y. 223; Matter of Brandreth, 169 id. 437; Matter of Cornell, 170 id. 423; Matter of Keeney, 194 id. 281.) In fact the agreement was essentially testamentary in character, and is, therefore, subject to the Transfer Tax Law. (Matter of Dana Co., 164 App. Div. 45; affd., 214 N. Y. 710.)
I am unable to distinguish the present case in principle from Matter of Kidd (188 N. Y. 274). In that case the testator had made a valid ante mortem agreement to leave his property by will to his wife’s daughter. He attempted to leave it otherwise, but the agreement was upheld and the daughter’s right to receive his property at his death was sustained, but it was held that the transfer was taxable. That case and this are clearly distinguishable from those in which the transfer at death is to be made in payment of an antecedent debt, as in Matter of Baker (83 App. Div. 530; affd., 178 N. Y. 575), or in those in which there had been *5an actual completed sale during life by title passed, although possession was to be postponed until death of grantor or vendor. Nothing of the sort appears in the present case. Charles E. Orvis distinctly did not confer title upon his brother during his own life, for it is expressly agreed that he should continue to own half of the two funds, and whatever consideration there was for his promise that the brother should take the whole fund at death, was but a reciprocal promise in future by the brother and in no sense a present, valuable consideration which created a debt.
In my opinion the order should be reversed, with costs and disbursements to the appellant, and the matter remitted to the Surrogate’s Court for entry of an order imposing the proper tax upon the transfer in question unless the parties can agree upon the figures, in which case a final order may be entered here.
Dowling and Smith, JJ., concurred; Page and Shearn, JJ., dissented.