The appeal of the State Comptroller is based upon the fact that the appraiser did not tax a certain contingent account and foundation account in the firm of Orvis Bros. & Co. which Edwin W. Orvis claims he was entitled to under an agreement made between him and his brother, Charles E. Orvis, the decedent, “ 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.” The same provisions were made in reference to the contingent account. The claim of the respondent is that this agreement, which was made more than four years before the death of the decedent, was made upon a valid consideration and that the provision for survivorship became an effective agreement at that time, and consequently the funds were not taxable.
The decedent and his brother had been partners since prior to 1903 sharing equally in the profits and losses of the business. From time to time various members were admitted who had shares in the profits of certain departments but the general profits and losses were shared equally between *6the Orvis brothers. On January 2, 1911, the brothers made the agreement in question. It is called a copartnership agreement, but it is not and it has solely to do with providing for the creation of the foundation and contingent funds so as to provide for the continuation of the firm by the survivor in the event of the death of either of them without the necessity for any formal dissolution proceedings and without the necessity of the survivor going through an accounting and buying up the interest of the family of the deceased in the business. Further to carry out this idea, each brother had assigned his interest in the good will of the firm to the other. On June 1, 1914, the partnership agreement existing as to the firm of Orvis Bros. & Co. was renewed and extended for two years to expire on June 1, 1916, and Herbert R. Johnson was admitted as a member of the partnership, it being provided that the Orvis brothers should each have a capital interest of $250,000 and Warner D. Orvis $50,000, which was invested in the business previously. Johnson contributed $50,000 cash. This capital contributed by the Orvis brothers amounting to $500,000 is the original $500,000 constituting the foundation account which was created by the agreement of the brothers to withdraw that sum of money from the accrued profits of the firm and set it aside as a capital account, title ■ to which should go to the survivor. On the death of Charles E. Orvis on March 8, 1915, the accounts of the firm showed that the contingent account of $500,000, created to keep the foundation or capital account intact, was intact, and that the foundation or capital account had been impaired and reduced to $386,684.22. The appraiser found that under the agreement of January 2, 1911, the estate of Charles E. Orvis had no interest in the contingent fund or in the foundation account.
It is admitted that the Transfer Tax Law does not impose a tax upon property passing under a contract made for a valuable consideration. But the Comptroller claims that there was no consideration for the agreement or rather that the consideration if any was bound to fail in any event because the brother dying first could get no value for his gift to the survivor. This is unsound. The two accounts were created with moneys which belonged equally to the two partners from the accumulations in the business and the *7mutual agreement by which it was provided that the survivor should be entitled to the two funds was the consideration for the agreement of the other. Each was foregoing the advantage of an immediate sharing in $250,000 of accumulated profits for the benefit that would accrue from the use of his brother’s profits as capital and from being enabled, in case he survived, to continue the business with this entire fund as capital and as his own property. It was of present value to each one, irrespective of survivorship, to have it definitely and certainly determined that this capital would continue to be available for the continuation of the firm’s business, and, further, because during the life of both the brothers each obtained the benefit of the use of this foundation account as capital for the carrying on of the firm’s business. It was a benefit to each one to have the use of the other’s large share of profits as capital, which but for the contract would have been, or at least could have been, withdrawn and distributed as profits, and it was a detriment to the other to forego the immediate enjoyment of the profits. There was every element of a valuable consideration in this mutual agreement.
It does not seem to me to be correct to say that it was clearly intended that the transaction was to take effect only on the death of one of the parties. This gives no effect to the binding character of the agreement providing for the present use of the entire $500,000 fund as capital. Each partner did not retain the sole ownership of one-half of the moneys going to make up the two funds, in the sense of full ownership, for each had only a limited control over his half interest. Neither one could dispose of his interest by sale, or by mortgage or will, or incumber it in any way, because the entire disposition of the fund, so far as each one was concerned, had been irrevocably made in case of the death of either while the firm was in existence. On the execution of the agreement, Edwin W. Orvis’ rights became absolute and indefeasible, and there was an absolute transfer to Edwin W. Orvis at that time, which could be defeated only by his death before his brother.
In Matter of Kidd (188 N. Y. 274) the transaction was an ante mortem agreement to leave property by will and the testator attempted to leave the property by will contrary to *8the agreement. Here the “ Foundation Account” was segregated from profits and each gave up his present right thereto, then and there vesting in the other an indefeasible interest, enjoyment of which could only be defeated by the death of the grantee prior to the grantor, during the fife of the partnership.
The Comptroller claims that when the so-called new firm was formed in 1915 there was no renewal of this agreement and that it was in effect abrogated by their putting the foundation account into the new firm as capital. The evidence on this head is rather unsatisfactory but the forming of a new firm was little more than a rearrangement of the old firm and the admission of a new partner with $50,000 cash capital, and there is evidence that the previously existing partnership was extended and continued. It must be borne in mind that the partnership was substantially a two-men affair and that the agreement with respect to the foundation and contingency accounts was not a partnership agreement but an agreement between these two men for the creation of these two funds for a definite purpose. It was evidently their intention to have it continued during their lives and this agreement was in no manner affected by the technical forming of a new partnership and the admission of a new partner when we find the foundation account or capital of the previousy existing firm carried over and devoted to the use of the new firm.
The Comptroller claims that there was a clear intent to evade the Transfer Tax Law, but I can find no evidence of any such intent. Whether it was there or not, the transaction was entirely legal and there was no basis for a tax.
The order should be affirmed.