text:
    In the Matter of Maybel Newbrand, Appellant, against City of Yonkers et al., Respondents.

      Argued January 7, 1941;
    decided March 6, 1941.

      Ulysses S. Adler and David Gorfinkel for appellant.

      Leonard G. McAneny, Corporation Counsel (Harold T. Garrity of counsel), for respondents.
   Lehman, Ch. J.

Edward Newbrand died on the 25th day of March, 1938. He was a member of the police force of the city of Yonkers and at the time of his death his annual salary was $3,000. Local Law No. 1 of the City of Yonkers for the year 1931 provides that the “ board of trustees shall grant pensions out of said pension fund, in the following cases * * * 2. To the widow of any mer of the police force who shall have been killed while in actual performance of police duty, or who shall have di from the effect of any injuries received in the actual dischai of such duty one-half of the annual salary of such member at time of death, payable to said widow during her lifetime, unless she remarries when said pension is to terminate. To the widow of any such member, who has died, or shall hereafter die after three months of service on said police force, a sum not exceeding six hundred dollars per year, during widowhood ” (§4). The Board of Trustees of the Police Pension Fund granted to the widow of the deceased officer a pension of $600 per annum, but rejected the widow’s claim that the death of her husband was due to injuries sustained by him in the actual discharge of his duties in 1926, twelve years before his death.

The widow then applied to the Supreme Court for relief pursuant to the provisions of article 78 of the Civil Practice Act. Her original petition is not in this record. One of the members of the Board of Trustees filed an answer or return to the widow’s petition and annexed thereto the minutes of a meeting of the Board of Trustees of the Police Pension Fund held on May 16, 1938, which set forth that attached to Mrs. Newbrand’s claim was an affidavit or letter from Dr. Leon A. Giammette, supporting her contention. After due consideration and an opinion from the Corporation Counsel’s office, the Trustees unanimously decided to disallow Mrs. Newbrand’s claim for additional compensation.” The opinion ” of the Corporation Counsel, referred to in the minutes, is annexed to the answer or return. It is in the form of a letter stating: “ I wish to advise that I have very carefully examined the file on this matter, and find that no legal evidence that would entitle Mrs. Newbrand to a pension amounting to one-half of the salary of above deceased officer * * * exists.” From the answer or return it appears, also, that in addition to this opinion of the Corporation Counsel, the Board of Trustees had before it a letter from Dr. Philip S. McCormick, the police surgeon of the Police Department of the City of Yonkers, which states amongst other things that “ the only opinion I can express * * * as to the causation of the patrolman’s recent illness, is, that it is too ridiculously absurd that it is unworthy of any further comment.” It does not appear that the Board of Trustees in rejecting the claim of the widow had any information or evidence to sustain their determination except these letters.

In November, 1938, an order was entered “ that the issues in the above-entitled action be and the same hereby are referred to Hon. J. Addison Young, Official Referee, in and for the Ninth Judicial District, to hear, try and determine the issues in this action with the same force and effect as if the same were tried at a regular term of this court.” The order of reference recites that the attorneys for both parties consented and stipulated in open court that the issues should be so referred. In June, 1939, seven months after the order of reference was made and entered, the widow requested the Board of Trustees of the Police Pension Fund to reconsider her claim and to grant a rehearing upon it. The trustees complied with that request and on October 13, 1939, after such rehearing had been held, again denied the application for an additional pension. Then the appellant filed an amended ” petition which recites that the rehearing was held and that “ the action of the respondents in denying your petitioner’s application for a pension based on one-half of the annual salary of said Edward Newbrand, deceased, was capricious, biased and prejudiced and contrary to law and against the weight of the evidence and the rights of your petitioner were damaged and injured therefor.” On November 27, 1939, a hearing was held before the Official Referee who had been appointed a year earlier.

The only “ issues ” which could have been referred to the Official Referee in November, 1938, were the issues ” raised by the original petition and the original answer or return to that petition. These issues ” concerned the determination of the Board of Trustees which was made before the original petition was filed and which the widow at that time challenged. At the time of the hearing before the referee, that determination and the proceedings held prior thereto had been superseded by the rehearing and determination thereafter made. The parties apparently-assumed that the original petition has been superseded by the amended petition and that the referee should determine the issues ” which might arise concerning the allegations of the amended ” petition, and should review the determination made upon the rehearing. Any irregularity or defect in the manner in which those issues were brought before the referee for determination has, it is plain, been waived by the parties. They submitted to the referee the controversy arising from the rejection by the Board of Trustees of the petitioner’s claim at the rehearing though that rehearing was held and the controversy arose after the order of reference was entered. No answer to the amended petition had been filed by the trustees, but at the hearing before the referee the trustees were permitted to deny the allegations in that “ amended ” petition concerning the cause of the death of the police officer and especially to deny the allegation that the action of the trustees was capricious, biased and prejudiced and contrary to law and against the weight of the evidence.” Then the petitioner presented her evidence intended to establish the allegations of her claim that the police officer’s death in 1938 was due to injuries received in an accident in 1926, and the trustees, after objection to the evidence introduced for that purpose by the petitioner, presented medical evidence intended to show the contrary.

After hearing that evidence the referee filed a decision in which he reviewed the evidence and stated: “ I have read very carefully all the evidence given in this proceeding, and have reached the conclusion that, while the case is unusual, I believe the petitioner has fairly established her claim and that she is entitled to the relief sought in her petition.” An order was entered upon that decision on the 4th day of January, 1940, adjudging “ that the action of the respondents in denying the application of Maybel Newbrand, petitioner, and widow of said Edward Newbrand, for a pension of $1,500 * * * was capricious, biased, prejudiced and contrary to law and against the weight of

the evidence and the said action and determination of the respondents be and the same is hereby annulled, vacated and set aside.” The order further provided that the respondents, Joseph F. Loehr, Dennis M. Morrissey and James E. Hushion, as Trustees of the Police Pension Fund of the City of Yonkers, New York, or their successors in office, be and they are hereby directed to place the name of Maybel Newbrand on the pension rolls of the City of Yonkers, as a widow of a deceased member of the Bureau of Police, as of March 25, 1938, at an annual pension of $1,500, which equals one-half of the annual salary of the said Edward Newbrand at the time of his death.”

On January 4, 1940, when the order was entered, the terms of office of the trustees named in the order had expired, but the successor to one of the trustees so named was not appointed till January 18th. Though none of the three trustees was in office on January 20, 1940, the Corporation Counsel on that day served and filed a notice of appeal to the Appellate Division in their behalf or, at least, in their names. On February 6th the widow who had been successful before the Official Referee moved in the Appellate Division to dismiss the appeal on the ground that the appellants named in the notice of appeal were not parties aggrieved. The Corporation Counsel made a cross-motion to amend the notice of appeal nunc fro tunc so that the new trustees should be named as parties appellant therein. The Appellate Division, on the 19th of February, 1940, denied the motion to dismiss the appeal and granted the cross-motion “ to substitute parties appellant ” named in the notice of appeal. Thereafter, upon the appeal from the final order or judgment entered upon the decision of the referee, the Appellate Division reversed that order on the law and dismissed the proceedings on the merits, stating in its opinion that: “ On all the proof there was at least a fair question of fact to be determined by appellants and it cannot be said that the determination made was not within the reasonable exercise of their discretionary power.” (259 App. Div. 1089, 1090.)

Upon the appeal to this court from that determination of the Appellate Division, the appellant seeks to bring up for review, in accordance with the provisions of section 580 of the Civil Practice Act, the intermediate order of the Appellate Division denying her motion to dismiss the appeal and granting the countermotion for a substitution of parties appellant. The members of the Board of Trustees named in the petition were not parties aggrieved after the date when they ceased to hold office and could not appeal from a final order entered upon the decision against them of the referee. A proceeding to review a determination made by the members of an administrative board is brought against them in their official character. After they cease to hold office only their successors may invoke action by the court. (People ex rel. Walker v. Ahearn, 200 N. Y. 146, 148; Matter of Rox v. Doherty, 284 N. Y. 550.) A notice of appeal by former members of the Board of Trustees would be ineffective, but at the time when the Appellate Division granted the motion for the substitution of the parties appellant, the limitation of time during which an appeal might be taken had not run against the successors to the trustees who had originally taken the appeal. After the successors to the original appellants, by motion for substitution, “ invoked the action of the court,” the court might properly permit the substitution and deny the motion to dismiss. (People ex rel. Walker v. McAneny, 202 N. Y. 551.) In that case the court indeed went further. After it had entered an order dismissing the appeal in People, ex rel. Walker v. Ahearn (supra) orders were entered in the courts below substituting Ahearn’s successor as party defendant in the proceedings in those courts though those proceedings had long terminated and this court then refused to dismiss an appeal taken by the successor to Ahearn from the determination of the Appellate Division in which the successor had been retroactively substituted.

The determination of the Appellate Division dismissing the proceedings on the merits is, as we have already pointed, out, based upon the ground that there was “ a fair question of fact to be determined by appellants,” i. e., by the Board of Trustees of the Pension Fund. The question of fact to be determined by the “ appellants ” was whether or not the police officer died from the effects of injuries received twelve years before his death in the discharge of his duty. After the trustees had notified the widow that they had determined that question against her, the referee, as we have said, took new evidence upon that question and upon conflicting evidence reached the opposite conclusion. If the referee was authorized, either by the statute or by the parties, to determine that question of fact upon conflicting evidence, then the decisive question before the Appellate Division was not whether on all the proof there was at least a fair question of fact to be determined by the Board of Trustees of the Pension Fund, but whether on all the proof there was at least a fair question to be determined by the Official Referee.

At the same time that the Legislature by article 78 of the Civil Practice Act abolished “ the classifications, and writs and orders of certiorari to review, mandamus and prohibition ” it provided that the relief heretofore obtained by such writs or orders shall hereafter be obtained as provided in this article.” (§ 1283.) No right to relief theretofore available by certiorari, by mandamus, or by prohibition, for the review of a determination made by a public body or officer or for the annulment of an official act not performed in accordance with law or to compel performance of a duty specifically enjoined by law ” was destroyed. (§§ 1283 and 1284.) The primary purpose of the new article was to wipe out technical distinctions which had been a snare for suitors approaching the court for relief and which, at times, hampered the court in granting relief for proven grievances. Under its provisions, when a suitor shows a right to some relief the court grants the relief to which he is entitled, unrestricted by the form of the proceedings brought by the aggrieved person.

'"v The nature of the alleged grievance determines, none the less, the form of the hearing before the court to which the aggrieved party is entitled, the questions to be determined at such hearing, and the relief which the court has power to grant. The suitor’s alleged grievance may be that a determination of a body or officer made as the result of a hearing held, and at which evidence was taken, pursuant to statutory direction ” is erroneous. The suitor is entitled, under the new article as under the superseded articles, to invoke the power of the Supreme Court to review the challenged determination, and upon such review the court will determine the same questions and will grant substantially the same relief as if the proceedings had been initiated by a writ or order of certiorari now abolished. (Cf. Civ. Prac. Act, new art. 78, § 1296, subds. 3, 4, 5, 6 and 7; old art. 78, § 1304.) Where the grievance alleged is not that a determination, made as the result of a hearing, is not sustained by sufficient competent proof, or is otherwise erroneous, but the grievance is rather that the determination is the result of prejudice; or where the grievance is that a public body or officer has in other respect acted arbitrarily or without authority or has failed to perform a duty enjoined upon him by law, the answer or return to the petition may raise issues of fact which must be determined upon the evidence presented to the court. (Matter of Davis v. Wiener, 285 N. Y. 537.) The nature of the grievance and the relief which may be granted indicate the questions, whether of law or fact, which must be determined before relief may be granted or denied, and the statute prescribes the procedure to be followed by the court. (§§ 1295 and 1296.) The same grievances may still be brought before the court for redress as before the new article 78 was enacted; the same relief may still be granted and, in general, the questions of law and fact which the court must determine remain the same as the court was required to determine when redress was asked for the same grievances under the earlier statute. Only hampering restrictions and technicalities have been removed.

The provision of the local law that the Board of Trustees shall grant, out of the pension fund, to the widow of a member of the police force, who shall have died from the effects of injuries received in the discharge of police duty, a pension of one-half of his annual salary is mandatory. After the fact of death from the effect of such injuries has been established, the Board of Trustees has no discretion whether to grant or withhold such pension. The local law does not in express terms prescribe how that fact, if disputed, may be established, and who shall determine that fact where there is conflicting proof, or conflicting inferences might be drawn. If the trustees were authorized to act upon a certificate of a physician or medical board which should have presumptive force until challenged by other proof (Cf. Matter of Hodgins v. Bingham, 196 N. Y. 123); or if the widow’s right to a pension under the statute could, ordinarily, be established by proof merely of the existence of physical conditions which can be observed and reported by a lay witness and their effect measured by application of definite objective standards (Cf. Matter of Monument Garage Corp. v. Levy, 266 N. Y. 339; Matter of Small v. Moss, 279 N. Y. 288), there might be room for argument that failure to confer upon the Board of Trustees express power to hear and determine the claim of a widow indicates a legislative intent to confer upon the widow the right to compel the Board to grant the pension where the court finds, upon evidence presented to it, that the facts which should entitle the widow to the pension exist, though a contrary finding by the Board is sustained by proof presented to the Board. A finding that a police officer did or did not die from the effects of injuries received in the course of his duties, perhaps, as in this case, many years before death, must, however, often be based upon conflicting proof of lay or medical witnesses and upon inference drawn from such testimony, in regard to which there is room for difference of opinion. The clear intendment of the law is that the Board, before denying a pension, will take proof and then weigh it — usually with the benefit of scientific opinion. Thus the law which places upon the Board of Trustees the duty to grant a pension where causal relation is established between death and antecedent injury, suffered in the course of duty, by necessary implication also places upon the Board the duty to determine whether the fact which calls for action exists.

The statute also omits any express provision defining the manner in which the Board must proceed in order to obtain the information or proof which will enable it to determine whether such fact has been established. But the nature of the right to a pension conferred by the law, under the specified circumstances, indicates unequivocally that the claimant must have fair opportunity to present both proof and argument to sustain the claim. We need not now define the nature or source of the information or proof upon which the Board of Trustees may act nor the procedure which the Board should adopt in order to give the claimant fair opportunity to establish the claim. It is sufficient now to decide that each claimant must be accorded a fair hearing and consideration of the claim and that, when a determination of the Board is challenged, a record must be presented which will enable the court to review the determination. (Matter of Elite Dairy Products, Inc., v. Ten Eyck, 271 N. Y. 488; Matter of New York Water Service Corp. v. Water Power & Control Comm., 283 N. Y. 23.)

Where the law imposes upon a body or officer the duty to make a determination after a hearing, the court, in reviewing a determination so made in proceedings instituted under article 78 of the Civil Practice Act, may not substitute its determination, based upon evidence presented to the court, for the determination made by the body or officer clothed with judicial or quasi-judicial power based upon proof presented at the hearing previously held before the Board or officer. The determination in this case by the Board of Trustees that the police officer’s death was not the result of antecedent injury might be challenged on the ground that it was capricious, biased and prejudiced or was otherwise tainted by illegality or was not sustained by substantial evidence presented at the administrative hearing and the court had authority to decide the issues raised by such a challenge. Upon the hearing before the court, the definition of the powers of the court and of the questions it may determine, contained in sections 1295 and 1296, must be observed. Where the questions that may be determined upon the hearing before the court involve issues of fact, new evidence relevant to such issues may be presented and must be considered by the court. Such issue of fact may be involved where the claim is made that an act is arbitrary or a determination is the result of prejudice. Upon that issue in this case the referee might properly take evidence extraneous to the record of the proceedings before the Board of Trustees. A court or referee has no power, however, under the statute, to substitute new findings of fact based on evidence presented to it in place of findings made by the Board, upon whom the duty of determining the facts was placed by law, or even to take new evidence in regard to those facts where a hearing has been held as required by law.

" We are told, however, that here the parties waived any limitation imposed by law upon the questions which might be considered by the court or referee in reviewing under article 78 a determination of a board or officer and that, in effect, the parties joined in submitting to the referee the questions which otherwise the Board of Trustees alone would have had power to determine. We do not find that the Board of Trustees attempted to waive such limitations and a public board or officer could not, even if it would, shift to a court the responsibility and duty of making determinations which only the board or officer has, under the law, power to make.

For those reasons the Appellate Division correctly decided that the referee was limited to a review of the determination of the administrative body in accordance with section 1296 of the Civil Practice Act and could not make a different determination upon conflicting evidence where the determination of the administrative body is supported by substantial evidence. (Cf. Matter of Nash v. Brooks, 276 N. Y. 75; Matter of Sheridan v. McElligott, 278 N. Y. 59; Matter of Phillips v. McElligott, 279 N. Y. 792.) It does not follow that the referee was not fully| justified in deciding in this case that the determination of the trustees was “ capricious, biased and prejudiced and contrary to law and against the weight of the evidence.”

The trustees originally rejected the claim of the widow without receiving any evidence to contradict her claim, fortified as it was by a letter from her physician. Without the presentation of any evidence they adopted the reports of the Corporation Counsel and the police surgeon. Though we do not doubt that under proper safeguards they might seek advice and information from the Corporation Counsel and police surgeon, the responsibility of determining the claim was placed solely upon the Board and may not be shifted by the Board. Upon the rehearing they received an affidavit from the police surgeon in which the surgeon reveals information which he obtained while treating thee deceased officer. The claimant was never informed that such an affidavit had been presented. We do not now pass upon the question of whether the claimant could or1 did waive the provisions of section 352 of the Civil Practice ! Act, but at least the claimant should have been informed that the trustees received and acted upon the affidavit of the surgeon and should have been given opportunity to object to its reception or to controvert the allegations contained therein. Under these circumstances the determination of the trustees should be annulled and the matter remitted to the new trustees to determine, after a new ¡ hearing, whether the claimant is entitled to a pension of' $1,500.

The orders should be modified in accordance with this opinion, and as so modified affirmed, with costs in all courts to the appellant, and the proceeding remitted to the respondents to proceed in accordance with this opinion.

Loughran, Finch, Rippey,_= Lewis, Conway and Desmond, JJ., concur.

Ordered accordingly.


source: Caselaw Access Project

author: Desmond, J.

license: Public Domain

text:
    Celia Lifshutz, Appellant and Respondent, v. John C. Adams et al., Appellants, and Gilbert W. Chapman et al., Respondents and Appellants, Impleaded with Others.

      Argued January 23, 1941;
    decided March 13, 1941.

      Louis Boehm and Bernard D. Fischman for plaintiff, appellant and respondent.

      Inzer B. Wyatt for defendants, respondents and appellants.
   Desmond, J.

The action is a stockholder’s derivative action, brought on behalf of Community Water Service Company against eighteen of the corporation’s past and present directors for an accounting and for damages. The amended complaint sets forth two causes of action, one in fraud; the other in negligence, against all the individual defendants. Eight of the individual defendants have challenged, by a motion for judgment on the pleadings, the sufficiency of the facts stated as constituting a first cause of action against them.

The facts said to constitute a first cause of action may be summarized as follows: Community Water Service (hereinafter referred to as “ Community ”) is a foreign corporation doing business in this State. P. W. Chapman & Co., Inc., whose name has been changed to Wadsworth Securities Corporation (hereinafter referred to as Chapman Co.”), is a domestic corporation. In February, 1931, the defendants Paul W. Chapman, Johnson and Swart were officers and directors of both companies and both companies were dominated by Paul W. Chapman. Chapman used his control over the affairs of Community in furtherance of his own interests and the interests of those defendants who were then directors of Community to the detriment of the corporation and its stockholders, in this manner: Chapman Co. was permitted to retain out of the proceeds of a sale of stock for Community the sum of $587,133.82. In addition, Community loaned Chapman Co. the sum of $647,049.60. Pursuant to a conspiracy to defraud Community of these sums, Chapman and his codirectors caused Community to contract with a subsidiary of Chapman Co. for the purchase of premises worth $2,738,000 (the aggregate amount of the liens on the property) for the sum of $3,985,000. Community delivered to the subsidiary its demand note in the face amount of $1,234,383.42 (the amount of the indebtedness of Chapman Co. to Community) and took title to the premises, subject to the existing liens, in the name of a corporation organized by Community for that purpose. The sole asset of the new corporation was the building so acquired which, as before stated, had no value in excess of the liens thereon. Community received from the new corporation its demand note for $1,234,383.42. Community. received from Chapman Co. the demand note given by Community to the subsidiary of Chapman Co. in payment of the aforementioned debts of Chapman Co. to Community.

After this transaction had been effected defendants-appellants became directors of Community.

The allegations of the first cause of action relied upon as stating a cause of action against defendants-appellants are: That “ the defendants and each of them, entered upon, became parties to, and ratified a conspiracy (1) to defraud Community of the sum of $1,234,383.42, due and owing to it from Chapman Company; (2) to conceal from and misrepresent to the stockholders the manner and means by which Community was defrauded of the said $1,234,383.42;” that none of the annual statements submitted to stockholders for the years 1931 to 1937 contained any reference to the transactions, except that the note given by Community’s subsidiary was listed among the notes receivable from subsidiaries; that for the purpose of hiding the truth the stockholders were given false information in 1937 to the effect that the depreciation provided for on its subsidiary’s building had not been inadequate and that an additional reserve was provided; “ that by means of these annual statements and otherwise, the defendants, in furtherance of the conspiracy, fraudulently concealed the transaction from the stockholders;” that from 1931 to 1938 (when the building was sold) Community suffered losses of upward of $25,000 per annum, arising out of the operation of the premises by its subsidiary; “ that each of the defendants was aware of the fraud practiced on Community and that the building was being operated at a loss;” and that despite such fact, they not only failed to rescind or take any steps to rescind the transaction, but ratified the fraud and continued to permit Community to operate said building and to suffer the aforesaid losses.”

Plaintiff’s theory of the first cause of action is that all the defendants, including defendants-appellants, were parties to the original fraud upon the corporation and may be held hable for the damages which ensued.

Contained within these allegations involving defendants-appellants, is an assumption that the original wrong against the corporation continued so long as it was not made the subject of an action or was not brought to the attention of the stockholders. The fraudulent act was consummated, however, when the worthless property was acquired and the debts of Chapman Co. to Community were paid with Community’s own note. Of course, the effects of a fraudulent act are, in a sense, continued by subsequent concealment, but the act itself is not continuous. The subsequent concealment of the transaction was not part of the original fraud, but another and different breach of fiduciary duty, from which no damage is here shown to have been sustained by the corporation. There is no allegation such as is contained in the second cause of action that if defendants-appellants had acted or spoken, the damage to the corporation as a result of the fraud could have been avoided or mitigated.

Even assuming that the subsequent concealment by the directors who perpetrated the fraud was a continuation of their conspiracy to defraud the corporation, the foregoing allegations with respect to the part played by defendants-appellants in such a conspiracy are mere conclusions and are not supported by other allegations of fact. The allegation that all the defendants ratified the conspiracy would not, standing alone, prove anything. “ General allegations of wrongdoing based upon undisclosed facts do not state a cause of action.” (Gerdes v. Reynolds, 281 N. Y. 180, 183.) The allegation of ratification found in Pollitz v. Wabash R. R. Co. (207 N. Y. 113) was supported by other allegations as to time, place and manner. Here, so far as defendants-appellants are concerned, no other allegations support the conclusion that they became parties to the conspiracy. It is not charged that they became directors of Community knowing of the fraud of their predecessors and with an intent to conceal the same. It is merely alleged that as directors they failed to act or to reveal what had come to their attention after they had become directors. The evidentiary allegations with respect to the incompleteness of the annual statements to stockholders, the misleading nature of the notice in 1937 that insufficient depreciation reserve had been provided for the building, and the policy of continuing to operate the building at a loss are insufficient to constitute the first cause of action which plaintiffs have attempted to allege. The other allegations as to the intent of defendants-appellants are merely general statements, and are not supported by any allegation of fact from which an intent to do a wrongful act may be inferred.

The question certified on the appeal of defendants-appellants should be answered in the negative and the orders of the Appellate Division and of the Special Term should be modified to the extent that the motion to dismiss the first cause of action is granted.

There is before us also an appeal by plaintiff “ from so much and such parts of the order of the Appellate Division * * * as modified the order of the Supreme Court, * * * and * * * dismissed the second cause of action of plaintiff's complaint as against defendants Phillip L. Ross, Lorenzo Semple, Jr., and Gilbert W. Chapman.” The appeal should be dismissed, with costs, on the ground it is taken from the order of the Appellate Division and not from a judgment entered thereon, without prejudice, however, to an appeal from such judgment if the time to appeal therefrom has not expired.

[_Upon defendants-appellants’ appeal, the order of the Appellate Division and that of the Special Term should be reversed, with costs in all courts, and the motion to dismiss the first cause of action granted. The question certified should be answered in the negative.

The appeal by the plaintiff should be dismissed on the ground that it does not appear that any judgment has been entered, and no leave to appeal has been granted by the Appellate Division.

Lehman, Ch. J., Loughran, Finch. Rippey, Lewis and Conway, JJ., concur.

Ordered accordingly.


author: Per Curiam.

text:
    In the Matter of Charles E. Collins et al., Doing Business under the Name of Charles Collins & Sons, Appellants, against Joseph C. Behan et al., Constituting the Board of Zoning Appeals of the City of Troy, Respondents. William Miney, Intervener, Respondent.
    Argued January 9, 1941;
    decided March 13, 1941.

      Lindsley McChesney for appellants.

      Frank S. Parmenter, Corporation Counsel (John P. Judge of counsel) for Board of Zoning Appeals, respondent.

      James T. Foley for intervener, respondent.
   Per Curiam.

The record of the proceeding which resulted in the determination here presented for review is so inadequate that intelligent review is impossible. We cannot tell whether the determination is based upon such evidence as appears in the record, which is insufficient (Otto v. Steinhilber, 282 N. Y. 71, 76) or upon evidence not contained therein, which appears to be the case. To review a determination made by an administrative board there must be presented a record of all the evidence upon which the determination is based. The record must indicate the factual basis of the determination made. (Matter of New York Water Service Corp. v. Water P. & C. Commission, 283 N. Y. 23; Matter of Guernsey Breeders Co-op. v. Noyes, 284 N. Y. 197.)

The order of the Appellate Division should be reversed and the determination of the Board of Zoning Appeals annulled, with costs to petitioners in all courts, and the proceeding remitted to the Board of Zoning Appeals with instructions to make findings of fact in support of whatever determination it may reach on the evidence, with leave to petitioners and to the intervener to introduce further evidence upon another hearing, if another hearing be had.

Lehman, Ch. J., Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Ordered accordingly. ,


author: Finch, J. Loughran, J.

text:
    In the Matter of the Estate of Libertus Van Bokkelen, Deceased. In the Matter of the Accounting of D’Arcy Van Bokkelen, as Administrator de Bonis Non of the Estate of Libertus Van Bokkelen, Deceased. Carroll G. Walter, as Successor Administrator de Bonis Non of the Estate of Libertus Van Bokkelen, Deceased, Appellant; Glens Falls Indemnity Company, Respondent.
    (Appeal No. 1.)
    (Appeals Nos. 2 and 3.)
    (Consolidated Appeals.)

      Argued January 7, 1941;
    decided March 13, 1941.

      A. F. Schaeffner and J. Frederick Eagle for appellant.

      Sidney J. Loeb, Stephen F. Maher and Edward L. Johnson for respondent.
   Finch, J.

This is a proceeding to determine the liability of a surety upon an administrator’s bond.

An administrator de bonis non, one D’Arcy Van Bokkelen, commenced a proceeding for his own accounting. After the hearings had been concluded, but before the order was made settling the account, National Surety Corporation, as surety for Van Bokkelen under a $50,000 bond, filed a petition under section 109 of the Surrogate’s Court Act, asking, as a matter of right, “to be relieved from liability as such surety * * * for the act or omission of such principal, occurring after the date of * * the entry of the order applied for. The administrator was ordered to file a new bond in the sum of $5,000 “ in the place and stead of the bond on which the National Surety Corporation is surety.” His offer of the bond of the Glens Falls Indemnity Company was accepted by the Surrogate, who then ordered that National Surety Corporation be “ released and discharged from all subsequent responsibility for any act or default of the said D’Arcy Van Bokkelen subsequent to the 3rd day of November, 1937, on which day this court has approved the bond * * * with the Glens Falls Indemnity Compan'y as surety.” (Italics added.) Shortly thereafter, the Surrogate made his decree in the Van Bokkelen aceounting proceeding,. removing him as administrator and surcharging him in the sum of $9,923.24 for moneys improperly expended more than four years prior thereto. This surcharge was subsequently reaffirmed by another decree entered in a second accounting proceeding.

Van Bokkelen having failed to pay the sum as directed by the final decrees in both the first and the second accounting proceedings, appellant herein, Van Bokkelen’s successor as administrator, commenced a proceeding under section 115-a of the Surrogate’s Court Act to fix the liability of National Surety Corporation and Glens Falls Indemnity Company upon their respective bonds. The Surrogate dismissed the proceeding as to National Surety Corporation, but ordered that Glens Falls Indemnity Company must bear the loss up to the amount of its bond. Upon appeal by the Glens Falls Indemnity Company to the Appellate Division, the decrees of the Surrogate were reversed in so far as they imposed liability upon that company. It is from that order that the successor administrator appeals to this court.

The only question involved on this appeal is whether respondent assumed liability for the acts of Van Bokkelen as administrator committed more than four years before the execution and filing of its bond. The liability of respondent is predicated on the fact that after its bond became effective, Van Bokkelen failed to obey the decree of the Surrogate directing him to pay the surcharge to his successor. Since the Glens Falls Indemnity Company was free to assume such liability as it intended to assume, we look to the language of the bond and to the orders of the Surrogate pursuant to which it was given to determine this intent. The orders, in so far as pertinent, have been quoted above. The condition of the bond is as follows: The condition of this obligation is such, that if the above bounden D’Arcy Van Bokkelen shall hereafter faithfully execute the trust reposed in him as administrator de bonis non of all and singular the goods, chattels and credits of Libertus Van Bokkelen, late of Buenos Aires, Argentine Republic, S. A., deceased, and obey all lawful decrees and orders of the Surrogate’s Court of the County of New York touching the administration of the estate committed to D’Arcy Van Bokkelen then this obligation to be void, else to remain in full force and virtue.” (Italics added.)

The bond of the National Surety Corporation for $50,000 had been in force since 1932. Every dollar of the $9,923.24 for which Van Bokkelen as administrator was surcharged had been disbursed prior to May 31, 1933. The bond of the Glens Falls Indemnity Company was not executed and filed until more than four years later. When the new bond was filed, the hearings on the objections to the account of Van Bokkelen as administrator had already been concluded, and the learned Surrogate then had in his mind the amount of the surcharge claimed and all the evidence upon which he made his decree surcharging Van Bokkelen. Also in the proceeding on the petition of the National Surety Corporation to be relieved from future liability, the court had ordered that a new bond be filed “ in the place and stead of the bond on which the National Surety Corporation is surety.” It, therefore, appears that a $50,000 bond was being replaced with a $5,000 bond. If the new bond were liable immediately for the surcharge of $9,923.24 which had been expended four years before, would an order have been made limiting the amount of the new bond to only $5,000, or little more than one-half of the amount of the surcharge? If this were to be the obligation of the Glens Falls Indemnity Company, is a liability for a past surcharge amounting to $9,923.24 compatible with a payment of $35 premium? In addition, in directing the discharge of the National Surety Corporation the use of the word subsequent ” twice by the Surrogate, first when he directed that the National Surety Corporation be “ released and discharged from all subsequent responsibility,” and again when he provided that the discharge was from such “ responsibility for any act or default of the said * * * subsequent to the 3rd day of November, 1937,” coincides with the provision of the new bond which provides that the administrator shall hereafter faithfully execute the trust.” This would seem to show clearly the intention that the bond was to be limited to acts and defaults of the administrator occurring after the date when this bond was executed and filed. It is true that the phrase “ * * * obey all lawful decrees and orders of the Surrogate’s Court * * * ” might, standing by itself, be read as imposing an unrestricted liability, but when these words occur in connection with the limitation contained in the words previously used in the same sentence, namely, “ * * * shall hereafter faithfully execute * * it would seem clear that the bond of the Glens Falls Indemnity Company was not intended to cover a loss resulting from acts which had occurred four years before this bond was executed.

Appellant urges that, as the bond was drawn and proffered by the Glens Falls Indemnity Company, any ambiguity therein should be construed against the surety, but upon a consideration of all the circumstances enumerated above, the intention of the bond as given is sufficiently clear and obviates any such ambiguity.

Appellant also relies upon Scofield v. Churchill (72 N. Y. 565, 568). In that case, upon an application to remove the executor, an order was made which required that the executor file a surety bond or else be removed. He then, for the first time, filed such a bond, and the surety upon that bond was subsequently held liable for defalcations which had occurred prior to the date when the bond was given. In the Scofield case the bond was required as the result of a proceeding under statutory provisions now substantially incorporated in section 107 of the Surrogate’s Court Act whereby any person interested in an estate may present a petition to the Surrogate praying that additional security be afforded in a proper case. In that event, the object of the statute is “ no doubt to furnish protection against any improper use of the fund which had transpired, as well as any future misconduct or default of the executor. * * * If it were otherwise, and a default had already occurred, all proceedings against the executor might be suspended until he was called to a final account, and that portion which had been wasted or lost might never be recovered.” (Scofield v. Churchill, 72 N. Y. 565, 568.) In the case at bar, as already noted, the new bond was given to replace the old one in a proceeding under section 109 of the Surrogate’s Court Act which confers a statutory right upon the old surety to be relieved of liability for subsequent misconduct on the part of the principal. In accordance, therefore, with this section 109, the order of the Surrogate releasing National Surety Corporation for future acts and accepting the bond of the respondent, Glens Falls, directed Van Bokkelen to file and settle his account * * * within twenty days from the date of the entry of this order * * *; and for that purpose cause a citation to be issued and served upon all the interested parties * * This resulted in the second accounting referred to earlier in this opinion. It was for the failure of Van Bokkelen to pay the sum with which he was surcharged by the decree dated December 27, 1939, in this second accounting proceeding, that the successor administrator brought the present proceeding under section 115-a to fix the liabilities of the respective sureties. Thus a proceeding under section 109, unlike one under section 107, is not for the purpose of providing additional security. Section 109 requires an accounting by the principal so that those beneficially interested in the estate will have a convenient means for the prompt enforcement of the liability of the old surety. That there was an accounting conducted in the case at bar is undisputed and, indeed, is clearly presented by the record. Under section 109, where the circumstances are such as in the case at bar, each bond is liable for the defaults occurring during the period the bond in question is in effect.

The orders should be affirmed, with costs to all parties filing separate briefs, payable out of the estate.

Loughran, J.

(dissenting). Section 109 of the Surrogate’s Court Act gives a surety an absolute right to retire. In a proceeding under that section by a surety for a release, the only parties are the surety and the fiduciary-principal. The beneficiaries of the trust are not to be cited. Where no accounting has been made in the course of the proceeding (as was the case in this instance) it may very well result that the beneficiaries will have no notice of a substitution of sureties until the fiduciary thereafter makes an accounting — perhaps after delay such that the beneficiaries may then meet sizable difficulties in fixing the period during which a default of their fiduciary occurred.

The application of a surety for a discharge does not diminish the powers of the fiduciary until on his failure to give a new bond (as was not the case in this instance) the fiduciary’s letters have been canceled. It is true that in a proceeding under section 109 a successor surety has the right to have completed transactions in the estate closed up. But it is only completed transactions of the fiduciary that can be so concluded.

Consequently, as I apprehend, the beneficiaries of an estate will be seriously prejudiced in the practical enforcement of their rights if (as the court now holds) the liability of a substituted surety is to begin only as of the date when the former surety is let out. I cannot believe that by section 109 of the Surrogate’s Court Act the Legislature intended so to improve the interests of business sureties to the disadvantage of beneficiaries of their undertakings. (Cf. Scofield v. Churchill, 72 N. Y. 565.) The fact is that section 109 says nothing in respect of the inception or extent of the liability of a successor surety.

The order of the Appellate Division should be reversed and the decree of the Surrogate's Court affirmed, with costs in this court and in the Appellate Division to all parties filing separate briefs payable out of the estate.

Lehman, Ch. J., Lewis and Desmond, JJ., concur with Finch, J.; Loughran, J., dissents in opinion in which Rippey and Conway, JJ., concur.

Orders affirmed, etc.


author: Lehman, Ch. J. Conway, J.

text:
    In the Matter of Irving Wolff, Appellant, against William Hodson, as Commissioner of Public Welfare of the City of New York, Respondent.

      Argued January 7, 1941;
    decided March 13, 1941.

      Murray B. Hillman for appellant.

      William C. Chanler, Corporation Counsel (David Du Vivie and Paxton Blair of counsel) for respondent.
   Lehman, Ch. J.

The petitioner, Irving Wolff, in March, 1938, was appointed to the position of social investigator in the Department of Welfare, City of New York, at a yearly salary of $1,500. His appointment was made from an eligible list furnished to the Commissioner of Public Welfare by the Municipal Civil Service Commission after the petitioner had passed a competitive examination held by the Commission. The petitioner had previously been employed by the Public Works Administration as a supervising clerk at a yearly salary of $1,440. He resigned that position in order to accept the appointment in the competitive civil service and assumed the duties of his new position on April 4, 1938.

A little more than a year thereafter, the petitioner received a letter notifying him that he was discharged and dropped from the payroll of the Department of Welfare at the close of business on the 19th day of April, 1939. The reason given was that he was disqualified by the Civil Service Commission.

The petitioner received a satisfactory rating at the end of the probationary period of his employment. He is an honorably discharged veteran soldier, having served as such in the army of the United States in the World war, and in accordance with the provisions of section 22 of the Civil Service Law (Cons. Laws, ch. 7), he may not be removed ” from his position except for incompetency or misconduct shown after a hearing upon due notice upon stated charges.” He has received no notice of any charges and no hearing has been held. Though he is not permitted to perform the duties of the position to which he was appointed, and is no longer on the payroll of the Department, no claim is made by the Commissioner of Public Welfare that he had been removed ” from his position, if his original appointment to that position was valid. The courts below have found that his separation from his position and from the payroll is justified because he was never lawfully appointed to that position.

The Civil Service Law formulates and protects rights of those lawfully appointed to positions in the civil service, after they have demonstrated merit and fitness by examination held pursuant to the Constitution and the statute. No person may assert any right to continue to hold a position to which he was not appointed in accordance with law. In opposition to an application made by the petitioner for an order directing his reinstatement in the position of social investigator, an affidavit by the Secretary of the Municipal Civil Service Commission, intended to show basic illegality in the petitioner’s appointment, was presented.

Only those who can meet the educational requirements formulated by the Municipal Civil Service Commission were eligible for the examination which the petitioner took and passed. These requirements were “ graduation from a recognized college following a four-year course ” or one or more complete years “ of education beyond senior high school,” combined with a type of experience, defined by the Commission, for periods varying with the number of years of the education of the applicant “ beyond senior high school ” or, in the alternative, “ a manifest equivalent ” of the above combinations of education and experience beyond the required minimum of graduation from high school. It is alleged in the affidavit of the Secretary of the Municipal Civil Service Commission that: In his experience paper petitioner stated that he had attended Public School No. 77, Normal School for three years and DeWitt Clinton High School from September, 1913, to June, 1914. In accordance with this statement he received a final rating on the examination of approximately 72% and passed the examination. Thereafter he was declared eligible and certified to the position of Social Investigator, Grade 1, in the Department of Welfare,” and that upon further investigation, however, it was disclosed that petitioner was not a graduate of a senior high school and had, in fact, never attended high school and had taken no courses after he left elementary school.” It is upon this alleged misstatement by the petitioner that the claimed justification for the petitioner’s discharge is based.

It is the function and duty of the Civil Service Commission to pass upon the educational qualifications of applicants for civil service examination, then to rate the standing of those who have been admitted by the Commission to the examination and thereafter to furnish to the appointing power, upon request, a certified list of those graded highest in the competitive examination. The appointing officer cannot question the determination of the Commission as certified to him. Any determination of eligibility made by the Commission is conclusive upon the appointing officer and an appointment made from such list is lawful and in accordance with the provisions of the Constitution and statute even though the Commission erred in determining the eligibility of those on the eligible list. The Commission may not thereafter refuse to recognize an appointment made from its own eligible list merely because it erred in its determination of matters which it alone had power and jurisdiction to determine. So we held in Matter of Lazenby v. Municipal Civil Service Commission (116 App. Div. 135; affd., 188 N. Y. 588). (See, also, People ex rel. Joyce v. Schirmer, 253 App. Div. 845; affd., 277 N. Y. 676.)

A different question is presented where a statute or ordinance defines required qualifications for appointment to office instead of placing upon the Civil Service Commission the function and duty of determining such qualifications. Then, perhaps, the appointing officer may share with the Civil Service Commission the responsibility of determining whether eligibility exists, and neither can confer upon an applicant eligibility for appointment denied to him by the Legislature. That is, however-, not the case here. Nor did this court in the cited cases decide or say that an appointment is valid and not subject to revocation where the Civil Service Commission has been induced by the misrepresentation of an applicant to admit him to examination and to give him a rating upon the eligible list from which the appointment was made though in fact the applicant did not possess the qualifications formulated by the Commission. Such questions must await determination when presented upon an appeal where they might be decisive.

In this case, though the Secretary of the Civil Service Commission asserts in his affidavit that the alleged misrepresentations were fraudulently made, there is no claim that, even if true, they would have shown that in fact the applicant met the educational requirements as defined by the Civil Service Commission, or that the alleged misrepresentations misled the Commission into the error of holding him eligible for the examination. At the time the examination was held, the Appellate Division had decided (Matter of Grout v. Finegan, 250 App. Div. 753) that persons similarly situated might be given credit for experience in local emergency relief bureaus and were eligible for admission to the examination, and it was because of that decision that the applicant was admitted to the examination. The applicant’s lack of eligibility for the examination was made manifest by the reversal of the decision in the Finegan case upon appeal to this court (275 N. Y. 252), not by discovery of the alleged misstatement by the applicant.

The applicant denies that he ever intentionally or fraudulently misstated the extent of his previous education and the courts below have not determined that there was fraudulent misstatement. The charge that the defendant committed fraud is made against the petitioner, not as justification for the determination that his appointment was invalid from its inception, but rather as the basis for a claim that the petitioner was given a “ hearing ” and found guilty of the charge of fraud because in an interview which, it is said, the Secretary of the Commission had with him, he admitted that he had misstated his educational qualifications and “ that he did not have the minimum required of high school graduation necessary for the position of Social Investigator, Grade 1.” That contention is not seriously urged upon this appeal. If the appointment conferred upon the applicant any right of tenure, the interview with the Secretary of the Commission does not, it is clear, constitute the kind of hearing to which the applicant was entitled before he could be “ removed.” We do not now decide whether an intentional misstatement in an application even upon a matter which is in law not material would not be sufficient ground for “ removal ” where the applicant is found guilty upon charges made in accordance with the Civil Service Law.

In Matter of Lazenby v. Commission (supra) and People ex rel. Joyce v. Schirmer (supra) this court has decided that the Civil Service Commission has no inherent authority to correct its own error in determining eligibility to take an examination or in rating those who passed the examination, after an applicant has been appointed from an eligible list prepared by the Commission. The Corporation Counsel urges in his brief that these cases are clearly distinguishable because the certification here was not a final one but was “ expressly conditioned as ‘ subject to future investigation.’ ” (Italics in brief.) The Civil Service Law does not authorize the Commission to make a certification conditioned upon future investigation which may be conducted after an appointment has been made and it is not without significance that nowhere in the opposition affidavits is there any claim that the Commission's certification of the eligible list was merely provisional and subject to a retained power of revocation. The belated claim that the certification was so conditioned is based only upon a statement in a letter from the applicant to the Commission in which he says, “ I was certified to the Department of Welfare subject to future investigation.” There can be no reservation of power in the Commission to annul a determination after it has been acted upon.

The order of the Appellate Division and that of the Special Term should be reversed, with costs in all courts, and the application of the petitioner for an order directing his reinstatement granted.

Conway, J.

(concurring). The petitioner in order to establish his eligibility for the examination for the position of social investigator, Grade One, for the Department of Welfare of the City of New York, stated that he had attended Public School No. 77, Normal School for three years and DeWitt Clinton High School from September, 1913, to June, 1914.

The requirements for those taking the examination were in part: “ graduation from a recognized college following a four-year course ” or one or more complete years of education beyond senior high school.”

A normal school is one which provides education beyond that supplied by a senior high school.

This was a false statement made by the applicant for the purpose of obtaining admission to an examination and constituted a fraud upon the Civil Service Commission. Where there is proof of such fraud the doctrine of Matter of Lazenby v. Municipal Civil Service Com. (116 App. Div. 135; affd., 188 N. Y. 588) is not controlling, and charges based upon such fraud may be preferred against the applicant, after his appointment, by the Civil Service Commission or the appointing officer. To hold otherwise would put a premium upon the concealment of a fraud, practiced upon the Civil Service Commission and the appointing officer, until after the appointment had been made.

Here the applicant has admitted that he misstated his educational qualifications and that he did not have the minimum requirement of high school graduation necessary for the position of Social Investigator, Grade 1.” Not only did he confess to a misstatement of fact but on the day following his notification that the Commission would not change its original determination removing him, the petitioner made application for provisional appointment as social investigator in the Department of Welfare. In that application petitioner reiterated the misstatements regarding his educational qualifications. On the basis of the false information given on that application he was appointed as a provisional employee in the position of social investigator. Nine days later it was discovered that he had made such misstatements in his application for provisional appointment and petitioner was advised that his services were terminated forthwith.

I agree that the interview with the Secretary of the Commission does not constitute the kind of hearing to which the applicant was entitled before he could be removed in accordance with the provisions of section 22 of the Civil Service Law (Cons. Laws, ch. 7) requiring “ a hearing upon due notice upon stated charges.”

I concur in the reversal. The question of whether there was fraud which misled the Commission or appointing officer has not yet been litigated.

Loughran, Rlppey, Lewis and Desmond, JJ., concur with Lehman, Ch. J.; Conway, J., concurs in separate memorandum, in which Finch, J., concurs.

Orders reversed, etc.


author: Lehman, Ch. J.

text:
    In the Matter of Thomas H. Coulter, as Assessor of the Town of Cortlandt, Respondent. Clesson Croft, Appellant.
    Argued March 3, 1941;
    decided March 13, 1941.

      Myle J. Holley for appellant.

      Charles I. Sterling for City of Peekskill, amicus curiæ.

      Robert E. Dempsey and Frank J. Mahony for respondent.
   Lehman, Ch. J.

At the general election held in the town of Cortlandt in November, 1937, town officers were elected for terms expiring on December 31, 1939. When that election was held the village of Peekskill was part of the town of Cortlandt. • Thereafter the Legislature enacted chapter 194 of the Laws of 1938 entitled An Act to provide a charter for the city of Peekskill.” By its terms the statute was to become effective on January 1, 1940, but only if a proposition that the statute should be approved ” was adopted by a majority of the votes cast at the village election of the village of Peekskill to be held on April 12, 1938. A majority of the votes at the election were cast for approval of a proposition. The boundaries of the village of Peekskill were the same as the boundaries of the proposed city of Peekskill and in the statute it was provided that from and after January 1, 1940, the territory included within the boundaries of the said city shall not constitute or be a part of the town of Cortlandt.” (§ 5.) Accordingly at the election, held in 1939, for officers of the town of Cortlandt to take the place of the town officers whose terms expired on December 31, 1939, the names of candidates for town officers appeared on the voting machines only outside the territory of the proposed city and, on the voting machines within the territory of the proposed city, only the names of candidates for city officers appeared.

Even before that election, however, question had been raised whether the statute (L. 1938, ch. 194) was valid under the Constitution of the State and whether the proposition that the statute should be approved had been submitted in legal manner to the voters at the village election held in April, 1938; and the town of Cortlandt had brought an action to obtain a declaratory judgment determining that the statute was inoperative and void. In October, 1939, the Appellate Division affirmed the judgment of Special Term dismissing the complaint in that action. On appeal to this court, heard and decided in November, 1939, after the election, the judgment was reversed, the court holding that the statute never became effective because notice had not been given as required by law that at the village election held in April, 1938, a proposition would be submitted to the voters that the statute should be approved. (Town of Cortlandt v. Village of Peekskill, 281 N. Y. 490.) Thus belatedly and after election, there was a final authoritative decision that the territory within the boundaries of the village of Peekskill would remain a part of the town of Cortlandt after December 31, 1939, and that the voters within the village were entitled to vote at the November election for town officers to succeed the town officers whose terms expired at the close of that year.

The question then remained whether the candidates for town office who had obtained a plurality of the votes cast at the general election of November, 1939, were validly elected although, through mistake of law, their names had not been placed before the voters in the most populous part of the town. If those candidates were not validly elected, then each town officer holding office and performing the duties of his office at the end of the year was commanded by statute to “ hold over and continue to discharge the duties of his office, after the expiration of the term for which he shall have been chosen, until his successor shall be chosen and qualified.” (Public Officers Law, § 5; Cons. Laws, ch. 47.) The officer, holding over, would in such case be the only person who could lawfully perform the duties of the office and every official act performed by him in accordance with the authority vested in 'him by law would be as effective as if performed before the expiration of his term. The question whether those candidates for town office, whose names had appeared on the voting machines in the part of the town outside of the village of Peekskill and who had received a majority of the votes cast, were entitled to office could be authoritatively settled only by the courts and pending such decision those in office continued to perform their official duties. Unless they had done so there would have been no government within that territory. Regardless of whether the old town officers were entitled to hold over after the expiration of their terms because no successors had been elected, or whether candidates for town offices were legally elected at the November election for the term beginning on January 1, 1940, public necessity dictated that the old officers should continue to perform their duties and public necessity would also dictate that their acts done in the course of the performance of their duties should be accorded at least the effect given to "the acts of de facto public officers.

The Board of Assessors of the town is appointed by the Town Board (Town Law, § 20; Cons. Laws, ch. 62) for a term of two years (§ 24). The term of the Board of Assessors appointed in January, 1938, expired in January, 1940, and the members of the old Town Board who continued to perform the duties of office, though their terms had expired, appointed a new Board of Assessors for a term of two years beginning in January, 1940. The Board of Assessors so appointed now claim that the appointment was made lawfully by a legally constituted Town Board and that they are entitled to hold office for the term for which they were appointed. To support that claim they argue that the Town Board making the appointment was acting in accordance with rights conferred by law, and not merely under a color of right, when it continued to hold office after the expiration of the term for which the members of the Board were elected and appointed the Town Board of Assessors for a full two-year term.

The controversy over the right to hold office between the members of the old Town Board and the candidates who claimed that they had been elected as successors to the old Board at the election held in November, 1939, was submitted to the Appellate Division, pursuant to sections 546 to 548 of the Civil Practice Act. That court held that the election was ineffective and that the members of the old Town Board were entitled to continue in office until successors were legally elected. (Lane v. Johnson, 258 App. Div. 1079.) We assume that under the law in effect when that decision was rendered the Appellate Division could not have reached any other decision. When this court decided that chapter 194 of the Laws of 1938 did not in accordance with its terms become effective, we said, in the opinion of Rippey, J., that the government of the village of Peeks-kill continues to function * * * in all respects as it functioned at the time of "the passage of the act creating the city of Peekskill ” (Town of Cortlandt v. Village of Peekskill, supra, p. 498), and it follows, as the Appellate Division held, that the inhabitants of the village of Peekskill should not be deprived of opportunity to vote for town officers of the town of Cortlandt who would perform their official duties while the government of the village of Peeks-kill continued to function as before and the village remained a part of the town.

Before the decision of the Appellate Division in Lane v. Johnson (supra) was reviewed in this court, the Legislature had, however, changed, by new statute, the law as it existed when the Appellate Division had rendered its decision. This court, giving to the statute, as it was bound to do, the retrospective effect intended by the Legislature, reversed the decision of the Appellate Division, but it indicated that in the absence of the new statute, it might well have reached the same conclusion as the Appellate Division had reached. (Lane v. Johnson, 283 N. Y. 244.)

The statute to which we were bound to give its intended retrospective effect (L. 1940, ch. 409) was intended, we pointed out, to cure “ the defects in the notice of the election of April, 1938, at which the proposition whether the 1 Act to incorporate the city of Peekskill ’ should be approved was submitted to the qualified voters and we said that Then, the statute incorporating the city, which until that time was ‘ inoperative ’ under the decision of this court rendered in November, 1939, would be given effect according to its terms as if the voters had given approval at a valid election. The separation of the city of Peekskill from the town of Cortlandt would be complete. The town officers chosen by a majority of the voters in the territory outside of the city would have jurisdiction only in that territory ” (p. 253). For that reason we held that by chapter 409 of the Laws of 1940, the Legislature effectively incorporated the city of Peekskill and excluded the territory within the city from the town of Cortlandt in the manner provided by the earlier statute which we had previously, declared inoperative and that, from the time that the new statute became effective, those persons previously elected to city and town offices at the election held in November, 1939, though such offices had not been established by any statute then in effect, were entitled under the new statute to occupy the offices for which they had been prematurely elected. In accordance with that decision the old Town Board could no longer hold office. The new Town Board then proceeded to appoint a new Board of Assessors. Upon the appeal now under consideration we must decide whether the Board of Assessors previously appointed by the old Town Board for a term of two years may continue to hold office till the end of the term, or whether the new Town Board may appoint a new Board of Assessors for the remainder of that term. The parties urge upon us conflicting inferences which they have drawn from what we said or decided in Lane v. Johnson, but both parties seek to read into the opinion words not said and conclusions which were not considered by us and were not implied in our words.

It is argued on the one hand that although this court had pointed out in Town of Cortlandt v. Village of Peekskill (supra) that the statute incorporating the city of Peekskill never became effective and that the government of the village of Peekskill continued to function as before and would continue to function as before until a city government was established by a new statute, yet that thereafter the court, in Lane v. Johnson (supra), held that by,new statute the Legislature had given effect to the statute the court had previously declared was without effect, and the Legislature thus had retroactively given life to a still born municipal corporation and conferred legitimacy upon a municipal government which previously did not function and which had no legal right to function. On the other hand, since in Lane v. Johnson (supra) we held that the city of Peekskill was established only in 1940 when chapter 409 of the Laws of 1940 became effective, it is argued that until then the members of the Town Board were de jure officers holding their office lawfully until successors were elected, and had power to appoint other town officers in accordance with the provisions of the Town Law, and that the town officers so appointed may continue to hold office until the expiration of the term for which they were appointed. We reject both contentions at least in part.

The distinction between the effect of the official acts of public officers lawfully exercising their official powers and the acts of persons occupying public office without lawful right, but under a color of right, is not the product of legal fictions, but rather of public policy and public necessity. Here the Town Board continued in office in accordance with law, but the right of the Board to continue in office must, in accordance with the same law, end when successors were chosen who could replace them. We said in Lane v. Johnson (supra) that the Legislature “ had power to enact the curative statute and to give retroactive effect, in some matters, to a statute previously declared 1 inoperative.’ ” (Italics are new.) No statute can retroactively impound the water which has flowed over a dam, nor, in real sense, give retroactive existence to a newly created municipal corporation or government, and the Legislature in enacting the curative statute was not attempting the impossible, or creating legal fictions. It was attempting to solve in a manner it deemed practical a practical problem and to establish a city government for Peekskill as soon as possible under a charter previously formulated but which never went into effect, and to place in office both in the city of Peekskill and in the reconstituted town of Cortlandt the city and town officers previously chosen by the voters in the territory of the city and the reconstituted town as provided in that charter. To accomplish that the Legislature sought to give retroactive effect to elections for such officers which had been previously held, though under a statute which was at that time without force; and this court decided that the Legislature had that power. We did not say, and it is quite impossible to find in the statute any ground for holding, that the Legislature intended to create retroactively a fictional existence for city and town government which had neither juridical nor actual existence before the curative statute went into effect. Indeed, the Legislature, intent on finding a practical solution for a governmental problem, decreed that all official acts and proceedings heretofore done or taken * * * in connection with the government of the territory within the proposed city of Peeks-kill * * * are hereby legalized, ratified and confirmed,” and thus, so far as it could, gave legal sanction to official acts, without distinction between the acts of de jure officers and the acts of de facto officers.

We did point out in Lane v. Johnson (supra) that even though at the village election of April, 1938, the voters failed to indicate approval of “ An Act to provide a charter for the city of Peekskill ” in the manner required by the statute before the statute should become effective, yet the Legislature had power to decree thereafter that without requiring a new election it will incorporate the city of Peekskill as provided in the original statute of incorporation” (p. 255), and we did hold that the Legislature in chapter 409 of the Laws of 1940 had so decreed. To that statutory decree immediate effect was given as the Legislature commanded. Until the statute became effective the village government and the town government continued to function in all respects as they functioned at the time when the statute of 1938 which never became effective was passed. That is what we said and decided in Town of Cortlandt v. Village of Peekskill (supra). Prom the time the statute of 1940 became effective a new city government was established and the territory within tthe boundaries of the city ceased to be a part of the town, of Cortlandt. That is what we said and decided in Lane v. Johnson (supra). In that case we decided, too, that because the voters in the territory of the new city, acting under the mistaken belief that the statute of 1938 was effective, had elected city officers to serve until December 31, 1942, and the voters in the territory of the reconstituted town had elected town officers to serve till that date, the Legislature had power to provide that, from the moment when the city was effectively incorporated, the candidates previously elected as provided in the original statute might serve in the positions to which they were elected. In that matter, and in that matter alone, we decided that the Legislature intended to give retroactive effect to its earlier statute and had effectively done so. Nonetheless the village government of Peekskill and the town government of the town of Cortlandt continued to function lawfully in the same manner as before until chapter 409 of the Laws of 1940 became effective and incorporated the city of Peekskill to function from that date as provided in the earlier statute. The Legislature did not by incorporating the city deprive of their legitimate force the official acts previously performed by the village and town officers acting in accordance with the law then in effect. Indeed, to insure that the validity of such acts should not be challenged the Legislature in the same statute gave legal sanction to all such acts.

For these reasons it is plain that the validity of the official acts of the persons performing the duties of town and village offices does not depend upon fine spun distinctions. To all such acts the sanction of legality is attached; but in this case even though the appointment of the Board of Assessors by the Town Board, which continued to perform official duties after the term for which its members were elected had expired, must be treated as a valid official act, the question still remains whether town officers so appointed remain in office after the Legislature has changed the boundaries of the town and has decreed that the affairs of the town should thereafter be administered by the Town Board elected for that purpose at the general election held in the previous November, as if the boundaries of the town had been reconstituted before January 1, 1940. The answer to that question, like the answer to the question of the validity of the official acts of interim officials, depends not upon fine spun distinctions, but upon the intent of the Legislature and in the statute the Legislature by clear implication, if not in express terms, has declared its will that from the date when chapter Jfi9 of the Laws of 19Jfi went into effect the government of the town of Cortlandt and of the city of Peekskill should be administered, in accordance with the statute then given force, by officers elected the previous November and by officers appointed by officers so elected, all of whom should reside in the territory where they hold office. There is no basis for any construction of the statute which would permit officers of the town appointed in the interim to continue to hold office after the city was incorporated and the town boundaries reconstituted though in some cases such appointed officers might not even be residents of the territory of the reconstituted town.

For that reason the order should be affirmed, without costs.

Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Order affirmed.


author: Lewis, J.

text:
    In the Matter of the Claim of the Commissioner of Taxation and Finance of the State of New York, Respondent, against Riger Building Corporation et al., Appellants, Impleaded with Another. State Industrial Board, Respondent.
    Argued February 25, 1941;
    decided April 17, 1941.

      William B. Davis and E. C. Sherwood for appellants.

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum and Isaac Frank of counsel), for State Industrial Board, respondent.
   Lewis, J.

George S. Holblock died as the result of accidental injuries which arose out of and in the course of his employment. The question of law which this appeal presents rests upon four conceded facts: First, the decedent was survived by no person who was legally entitled to compensation as a result of his death; second, at the time-of his fatal injuries the decedent was employed by a subcontractor, the defendant Montell Construction Company — not by the general contractor, the defendant-appellant Eiger Building Corporation, against which an award has been made; third, the subcontractor is a non-insured employer; fourth, the character of the decedent’s employment was hazardous. Upon these facts we are to determine whether the Workmen’s Compensation Law (Cons. Laws, ch. 67) authorizes the award in suit which has been made by the State Industrial Board and affirmed by the Appellate Division.

The award directs the general contractor and its insurance carrier to pay the total sum of thirteen hundred dollars into three statutory funds — the “ Special Fund,” the “ Vocational Eehabilitation Fund,” and the Fund for Eeopened Cases,” which direction is made pursuant to ” sections 15 (subd. 8), 15 (subd. 9) and 25-a of the Workmen’s Compensation Law respectively. Each of the three sections cited provides: The employer, or if insured, his insurance carrier, shall pay into such [special] fund for every case of injury causing death in which there are no persons entitled to compensation, the sum of * * *.” (Emphasis supplied.) But concededly the appellant general contractor was not the decedent’s employer. The Industrial Board has found as a fact that his employer was Montell Construction Company, a non-insured subcontractor. That finding, viewed in the light of the sections cited and quoted above which govern payments to be made into the three designated special funds, supports the claim of the general contractor that the Industrial Board was without authority in law to require it, a non-employer, to make the payments directed by the award.

But we are told that authority for the award may be found in section 56 of the Workmen’s Compensation Law (as it read prior to amendment by L. 1939, ch. 541), the material portion of which provides.

“ § 56. Subcontractors. A contractor, the subject of whose contract is, involves or includes a hazardous employment, who subcontracts all or any part of such contract shall be liable for and shall pay compensation to any employee injured whose injury arises out of and in the course of such hazardous employment, unless the subcontractor primarily liable therefor has secured compensation for such employee so injured as provided in this chapter.

“ Any contractor, or his insurance carrier, who shall become liable for the payment of compensation to any employee or the dependents of a deceased employee of his subcontractor, pursuant to provisions of this section, may recover the amount of such compensation paid or for which liability is incurred from the subcontractor primarily liable for such compensation to the injured employee or his dependents. The claim for such recovery shall constitute a lien against any moneys due or to become due to the subcontractor from such general contractor. Such claim for recovery, however, shall not affect the right of the injured employee, or the dependents of a deceased employee, from recovering compensation due from the general contractor or his insurance carrier. * *

The requirement thereby placed upon the contractor is not to make payments into special funds. The statute goes no further than to direct that, in certain circumstances, the contractor shall pay “ compensation to any employee injured whose injury arises out of and in the course of such hazardous employment * * The payments directed by the award here challenged, which are to be made into special fund's, are, in the circumstances disclosed by the record at hand, in no sense payments of “ compensation ” to an employee. (See Workmen’s Compensation Law, § 2 [subd. 6]; also Matter of State Treasurer v. West Side Trucking Co., 198 App. Div. 432, 434; Matter of Martin v. Wurlitzer Co., 249 App. Div. 321, 323.)

The order of the Appellate Division should be reversed, the award of the State Industrial Board vacated as to the appellants, • and the claim for death benefits against appellants should be dismissed, with costs in this court and in the Appellate Division against the State Industrial Board.

Lehman, Ch. J., Lotxghran, Finch, Rippey, Conway and Desmond, JJ., concur.

Ordered accordingly.