text:
    Louis Lewis, Appellant, v. Henry Petersen et al., Respondents.
    Vendor and purchaser — contract — sale—■ terms of sale by which purchaser assumed payment of taxes and assessments levied after sale — meaning of words “ taxes and assessments levied ”—vendor obliged to pay assessment where everything required by law to make the levy had been done before sale and nothing remained but to collect amount.
    Where by the terms of an auction sale of real property, situated in the city of Long Beach, it was provided that the purchaser assumes the payment of “all taxes and assessments levied on said property from the date of the auction sale,” and, where it appears that prior to said sale, pursuant to the charter of said city, everything had been done required by law to levy and impose an assessment for local improvements upon property sold, and that nothing was left to be done except to collect the amount, the vendor and not the purchaser is obliged to pay said assessment. The words “ levied and imposed ” applied to the completion of the assessment when the tax rolls were delivered to the city clerk and not to the delivery of the tax roll with the warrant for collection to the city treasurer. Upon refusal, therefore, of the vendor to pay the assessments at the time for closing, the purchaser may successfully maintain an action to recover his deposits. (Matter of Bdbcoclt, 115 N. Y. 450; Hall v. Hess, 232 N. Y. 472, followed; Coudert v. Huerstel, 60 App. Div. 83; Ogden v. Getty, 100 App. Div. 430, distinguished.) •

      Lewis v. Petersen, 210 App. Div. 750, reversed.
    (Argued October 28, 1925;
    decided November 24, 1925.)
    Appeal from a judgment, entered December 1, 1924, upon an order of the Appellate Division of the Supreme Court in the second judicial department, reversing a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term and directing a dismissal of the complaint.

      Ira Skutch and Wilbur C. Davidson for appellant.
    The assessments in the amount of $759.20 were levied and imposed against the premises on August 1, 1922. (Matter of Babcock, 115 N. Y. 450.)

      David Michelsohn, John M. Detjen and Milton Dammann for respondents.
    The assessments were not levied and imposed on the property until November 15, 1922, after the date of the auction sale. (Wall v. Hess, 232 N. Y. 472; Ogden v. Getty, 100 App. Div. 430; Coudert v. Hurstel, 60 App. Div. 83; Apex Leasing Co. v. White Enamel, 202 App. Div. 354; Doonan v. Killilea, 222 N. Y. 392; Real Estate Corp. v. Harper, 174 N. Y. 123.)
   Crane, J.

This litigation arises out of the purchase of ten lots by the plaintiff at an auction sale held on September 2, 1922. The property offered for sale consisted of a large number of lots at Long Beach, auctioned by Joseph P. Day, Inc., under printed terms of sale. The plaintiff purchased lots Nos. 6 to 10, and 46 to 50 of block 38, for the sum of $13,750, and paid 10 per cent at the time, together with the auctioneer’s fees; and the second installment on October 9, 1922, of 10 per cent, making a total payment of $2,900, for the recovery of which this action is brought.

The terms of sale, or contract, under which the plaintiff’s purchase was made is apparently a very carefully prepared paper, as it contains many conditions, and takes up seventeen pages of the printed record. Only two paragraphs, however, concern this case. They read as follows:

“ Terms of Sale

The premises shown on the map distributed at the Auction Sale will be sold by various owners by lots as shown on said maps.

The sale will be governed by the following terms and conditions:

First. * * * Ten per cent on October 2nd, 1922, and the balance in payments of 2 per cent, monthly on the purchase price herein, said monthly payments to commence on November 1st, 1922, and to be paid on the -first day of each and every month thereafter until. said principal sum, together with interest on the unpaid balances of the purchase price from the date hereof, at the rate of 6 per cent, per annum, payable semi-annually on the first day of June and December, shall have been paid by the purchaser. The purchaser assumes payment of all taxes and assessments levied on said property from the date of the auction sale. * * *

“ Seventh. Policies of Title Insurance will be issued free to the purchasers by the Title Guarantee & Trust Company, free from incumbrances excepting the covenants and incumbrances hereinafter mentioned, and taxes and assessments levied and imposed on the property subsequent to the date of the auction sale.”

Twice, therefore, in this agreement, do we find the condition that the purchaser assumes the payment of “ all taxes and assessments levied on said property from the date of the auction sale.”

The date of the auction sale, as before stated, was September 2, 1922, which is a pivotal date in this case.

At the closing of the title it was found that there had been an assessment for local improvements levied on the property in the amount of $759.20, prior to September 2, 1922, which the plaintiff refused to pay. His contract required him to pay assessments levied after September second, and not those levied and assessed prior to that date. The vendors, however, through the title company, insisted that the plaintiff was obliged to meet the assessments, for the reason that although levied and assessed prior to September 2, 1922, they were not collectible until after that date. The title was not closed, both sides adhering firmly to the position taken. Thereupon the plaintiff commenced this action to recover his deposits, as above stated, and while he succeeded at the Special Term, his complaint has been dismissed by the Appellate Division.

What was meant by the words “ taxes and assessments levied? ” By paragraph 7, the title is to be “ free from incumbrances excepting the covenants and incumbrances hereinafter mentioned. ” The assessment here in question was not an incumbrance thereafter mentioned in the agreement. Another exception, beside the incum- " brances hereinafter mentioned ” was contained in this clause. Taxes and assessments levied and imposed after September 2,1922, were also excepted. The reverse must, therefore, be true. The taxes levied and assessed before that date were not excepted. The title was to be free from these; that is, the owner, and not the purchaser, was to pay them. What, therefore, was meant by these words, “levied and assessed?” Did they mean taxes which had become an incumbrance and a hen, or did they mean assessments which had been levied and imposed, although not yet due and payable, or not yet a hen upon the property? We may expect from an agreement as carefully drawn as these terms of sale by such a well-known auctioneer, that legal terms were used with their precise and actual meaning.

This was the view taken by counsel on the trial. The court said: “ It is only a question when the assessments were levied.

“ Mr. Dammann (defendant’s counsel): That is all. * * * And that the only question for the Court to decide is whether the amount of assessment set forth in your complaint constituted a levy and an imposition under" the contract on the date of sale.

“ Mr. Wolbarst (plaintiff’s counsel): I except to levy and imposition; the only question being whether the assessments were levied and imposed following the language of the contract.

“ Mr. Dammann: I accept the substitution.”

The charter of the city of Long Beach is found in chapter 635 of the Laws of 1922, and contains the procedure for levying and collecting assessments. All legislative powers are vested in the city council, which is given authority by section 79 to borrow money and to issue bonds for municipal purposes. All assessment bonds shall mature within ten years and shall be in anticipation of the collection of assessments levied or to be levied for local improvements.” The collection of an assessment is a different act from levying the assessment.

The charter further provides:

Sect. 81-a. Pavements; council may direct construction. The council may, by ordinance, direct and require any street or public ground in said city, or any part of either of them, to be graded, paved or macadamized, or to be regraded, repaved or resurfaced, or otherwise improved or repaired, at the cost and expense of the owners of the lots or parcels of land adjacent to the street, or public ground, or part thereof, so graded, paved, macadamized, repaved or resurfaced, improved or repaired and of the public at large, which cost and expense shall be apportioned, assessed and collected as hereinafter provided.

Sect. 81-b. Ordinance and notice to be published; hearing; action thereon. The council shall cause the proposed ordinance for an improvement specified in the last preceding section to be published once a week for at least two successive weeks in the official newspaper with a notice that at the time and place to be stated therein, which shall not be less than fifteen days from the first publication thereof, it will meet to consider such ordinance, and that at such meeting all parties interested may be heard. The council at the time and place stated in such notice, or at such other time and place as shall then be appointed for such purpose, shall hear all parties interested in the matter of such ordinance who shall desire to be heard, and by a majority of the members then present may adopt, modify or reject such proposed ordinance.”

By section 120 an assessment for local improvements shall be made to resemble in form, as nearly as practicable, the general tax list, and all provisions relating to the collection of taxes are made applicable to the collection of assessments.

The yearly taxes raised for general purposes are based upon assessment rolls, which when completed are filed with the city clerk. On or before the first day of December the city clerk delivers a certified copy of the roll with the taxes extended thereon to the city treasurer, with the warrant annexed, signed by the mayor and the city clerk, commanding him to receive and collect the several sums assessed against the persons or property mentioned. All taxes assessed and levied upon real estate in the city of Long Beach are a lien on the first day of December following. (Sections 104 and 107.) The collection of assessments is to follow as far as practicable this procedure for the collection of the general yearly tax. There is this difference, however: The whole city constitutes a tax district, and the board of assessors consists of three persons who have a right to review the assessment of property for taxation after the roll has been filed with the city clerk. This procedure does not apply to assessments for local improvements. For these, the city council makes the assessment on the property declared by it to be benefited so that after the hearing by the city’ council, as provided by section 81-b, and the delivery of the assessment roll to the city clerk, the assessments become final.

In the case before us we have these facts: On June 9, 1922, at a meeting of the common council, an ordinance" was passed for grading and paving certain named streets at the cost and expense of the owners of the lots and parcels adjacent thereto. At the same time another ordinance was passed for the construction of a sewer in streets named, at the expense of the owners of the land and parcels benefited thereby. On June twenty-seventh the city council adopted a resolution relating to the cost of these improvements, reading in part as follows:

“ * * * the Council shall make and file in the office of the City Clerk an apportionment of such cost and expense of the portion thereof to be assessed thereon, upon such lots or parcels of land and shall cause a notice thereof and that at a specified time and place a hearing will be had to consider and review the same to be published once a week for at least two successive weeks in the official newspaper. * * * The Council shall meet at the time and place specified and hear objections of such apportionment. It may modify and correct the same, and exclude land from the area of local assessment. Upon the completion of such apportionment the Council shall file the same with the City Clerk.”

On August 1, 1922, the day set for hearing, the city council took action as follows: “A hearing was called on the apportionment of assessment and map and plan of proposed area of assessment pursuant to notice in proceedings for construction of the sewerage system in the city of Long Beach (also for grading and paving of streets).” Then follows a description of the lots and the amount of the assessment levied on each lot for the sewer and for the grading improvements.

The property purchased by the plaintiff and the assessments objected to were included in this action by the common council.

On the first day of August, 1922, we, therefore, find that pursuant to the charter of Long Beach, everything had been done required by law to levy and impose an assessment upon the plaintiff’s property for local taxation. Nothing was left to be done except to collect the amount. The city council had determined the cost of the improvement, had apportioned the expense among the various lots affected, and had filed the assessment roll with the city clerk. The minutes of the hearing on August first conclude with this statement: Resolved that the amount so apportioned be assessed accordingly.”

The next step taken was on November 15, 1922, when the city clerk certified the assessment roll to the treasurer for collection.

It seems quite clear to us, therefore, that on September 1, 1922, there had been levied and imposed upon the plaintiff’s property within the wording of the sales agreement, assessments for local improvements, and that the owner, and not the plaintiff, was obliged to pay them.

Previous cases support our views about this contract. In Matter of Babcock (115 N. Y. 450) one Detmold died on July 2, 1887, owning real estate liable to taxation. Previous to his death his real estate had been assessed to him for the taxes of 1887 and the assessment rolls had been delivered to the aldermen for the ascertainment of the amount of the tax and its extension by them upon such rolls. It was claimed that the taxes were improperly inventoried by the executors as liabilities of the estate. The tax laws applicable provided that the assessment rolls were to be delivered to the aldermen of the city on the first Monday of July, who were thereafter to extend on the rolls the amount of the taxes respectively chargeable upon the property to the persons described. When the assessment rolls were finally completed by the extension of the tax thereon, the aldermen were required, on or before the first Monday of September, to deliver them to the receiver of taxes with their warrant for collection. The testator died on July 2, 1887, after the delivery of the assessment rolls to the aldermen, and before delivery to the receiver for collection. This court said:

It would seem, therefore, that the testator’s property had been legally assessed to him, and his liability for the payment of the tax thereon had become irrevocably fixed prior to the date of his death. We think the question in this case is controlled by the decision of this court in Rundell v. Lakey (40 N. Y. 513). In that case the defendants sold and conveyed to the plaintiff a farm on the first day of September. Previous to that time it had been assessed by the town officers to the defendants and the assessment-roll had been delivered to the supervisors in accordance with the statute. The amount of the taxes thereon was not ascertained and extended on the roll by the supervisors until November thereafter. The decision of the case depended upon the construction of a contract between them, which provided that the person legally hable to the payment of the tax should pay it. It was held that the vendors were so hable by reason of their ownership of the property at the time the assessment was made.” The court held that the habihty for such tax is conclusively fixed by the completion and dehvery of the roll.

A similar question arose regarding the terms of a lease in Wall v. Hess (232 N. Y. 472). The lease provided that the tenant shall pay and discharge when due and payable or within sixty days thereafter, all and every tax and taxes, * * *' which shall be assessed, levied or imposed upon the said premises, or any part thereof, during the said term.” The term ended on the 30th day of April, 1917, at twelve o’clock midnight. Taxes for the year 1917 were fixed and levied on the 28th day of March, 1917, although not payable until later. This court said: The obligation of this defendant was to pay all taxes that might be assessed, levied or imposed against the premises during the term. No escape is possible from the conclusion that the taxes for the year 1917 were finally and unalterably fixed and imposed against the demised premises during the term of the lease, although not payable until after the expiration of such term.”

Reading these cases, it is well to bear in mind that the court was dealing with the terms of a contract made by the parties. That is what we are now doing in this case. We are holding that the words levied and imposed ” prior to September 1, 1922, applied to the completion of the assessment on August first, when the tax rolls were delivered to the city clerk, and not to the delivery of the tax roll with the warrant for collection to the city treasurer on November 15, 1922; in other words, that the levy was complete on August first.

The case of Coudert v. Huerstel (60 App. Div. 83) was dealing with the question of liens, and not the interpretation of a contract.. Ogden v. Getty (100 App. Div. 430) is not unlike Wall v. Hess (supra), and is cited in the opinion in that case. The fact that the tax rolls were delivered to the receiver of taxes with the proper warrant annexed for collection prior to the expiration of the lease was not the determining point. It was only another fact showing that the taxes had been assessed and imposed during the term. Apex Leasing Co., Inc., v. White Enamel Refrigerator Co. (202 App. Div. 354) followed our decision in Wall v. Hess (supra).

For these reasons the judgment of the Appellate Division should be reversed, and that of the Special Term affirmed, with costs in. this court and in the Appellate Division.

His cock, Ch. J., Cardozo, Pound, McLaughlin, Andrews and Lehman, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    In the Matter of the Transfer Tax upon the Estate of Sigismund L. Fieux, Deceased. Maurice Fieux et al., Individually and as Executors, Appellants; State Tax Commission, Respondent.
    Tax — transfer tax — contract — agreement between stockholders that each would hold stock subject to right of the others to purchase at his death or severance of connection with corporation — purchase of stock pursuant to such agreement on death of a stockholder not a taxable transfer.
    An irrevocable contract entered into by five stockholders of a corporation, upon good and valuable consideration, whereby each bound himself not to dispose of any of his stock, but to hold it intact for the benefit of the other four parties, and to sell it at par to his associates, at their election, on his severance of his connection with the corporation by voluntary act or by his death, is not a transfer, agreement or deed made in contemplation of death, or to take effect at death, within the meaning of section 220 of the Tax Law (L. 1909, ch. 62, amd. L. 1922, eh. 430) providing for a tax upon such transfers. The agreement and its binding irrevocable obligations took effect when made. The right to purchase the stock at par could take effect in the lifetime of the parties as well as at death. Resignation from the corporation, or death, merely marked the time when the right of purchase could be exercised. Nor was the agreement made on such a consideration as to evidence an attempt to evade the Tax Law. The promises were mutual and each was obliged to hold his stock subject to the right of the others to purchase. .A purchase of the stock of one of the parties, therefore, made by two others upon his death, was not a taxable transfer and the assessment of a transfer tax thereon was error. (Matter of Cole, 235 N. Y. 48; Matter of Baker, 83 App. Div. 530; 178 N. Y. 575, followed; Matter of Cory, 177 App. Div. 871; 221 N. Y. 612; Matter of Orvis, 223 N. Y. 1, distinguished.)

      Matter of Fieux, 212 App. Div. 868, reversed.
    .(Argued October 7, 1925;
    decided November 24, 1925.)
    Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered February 20, 1925, which affirmed an order of the New York County Surrogate’s Court assessing a transfer tax upon the estate of Sigismund L. Fieux, deceased.

      Hiram C. Todd and Donald B. Vail for appellants.
    The transfer is not taxable because it was based upon an irrevocable agreement immediately determining all of the rights of the parties, including the right to this transfer based upon valuable consideration, and in which death merely sets the time when part of the terms of the agreement are to be performed. (Matter of Cole, 202 App. Div. 546; 235 N. Y. 48; Matter of Baker, 83 App. Div. 530; 178 N. Y. 575.)

      Charles A. Curtin and A. Welles Stump for respondent.
    The difference between the actual value of the stock of the Castle Realty Co., Inc., and the amount paid to the estate therefor, was properly taxed to the recipients of the said stock. (Matter of Cory, 177 App. Div. 871; 221 N. Y. 612; Matter of Orvis, 223 N. Y. 1; Matter of

      Hellman, 172 N. Y. Supp. 671; 187 App. Div. 934; 226 N. Y. 702.)
   Crane, J.

The parties to this proceeding stipulated in writing as follows: “ That the only question submitted to the Appellate Division of the Supreme Court for review is whether the transfer of the corporate stock of Castle Realty Company, Inc., to Maurice Fieux and Ernest D. Fieux by virtue of the memorandum of Agreement dated July 3, 1918, copy of which is a part of the papers herein, is taxable under the statutes of New York regarding taxable transfers.”

The memorandum agreement referred to was executed by the five stockholders of the Castle Realty Company, Inc., a domestic corporation. They were Louis Runkel, Maurice Fieux, Sigismund L. Fieux, Ernest D. Fieux and Albert Runkel. Each of these stockholders mutually agreed not to dispose of his stock, and further covenanted that on the severance of his connection with the corporation, or at his death, the other parties could purchase his stock at par. The agreement in this part reads as follows:

The party of the first part herewith grants and gives to the parties of the second, third, fourth and fifth parts jointly or severally, the absolute and irrevocable right, privilege and option at any time within a period of five years from the date of the resignation of the party of the first part as an officer of said corporation and severance of his connection with said corporation or with Runkel Brothers, Inc., for whatsoever cause or reason, whether through his act or the act of the company, to purchase from him, or in the event of his death, to purchase from his personal representatives or legatees during a period of five years after the death of said party of the first part, the whole or any number of shares of Castle Realty Company, Inc., which the said party of the first part now owns or which he may hereafter acquire, and during the life of the option herewith granted, the said party of the first part agrees that he will not directly or indirectly dispose of any of the said stock, but hold the same intact to the .end that the parties of the second, third, fourth and fifth parts jointly or severally may have an opportunity during the aforesaid period of five years subsequent to either his severance of connection with said corporation or with Runkel Brothers, Inc., or his death, of taking advantage of the said option and exercising the same.”

Each of the parties made a like covenant and agreement. The five were, therefore, mutually bound by an irrevocable contract entered into upon good and valuable consideration to do two things; not to dispose of any of his stock, but to hold it intact for the benefit of the other four parties, and second, to sell his stock at par to his associates at their election on his severance of his connection with, the corporation by voluntary act or by his death.

This was not a transfer, agreement or deed made in contemplation of death, or to take effect at death. The . agreement and its binding, irrevocable obligations took effect the third day of July, 1918. The right to purchase the stock at par could take effect in the lifetime of the parties as well as at death. Resignation from the corporation, or death, merely marked the time when the right of purchase could be exercised.

In this respect, the agreement is not a taxable, transfer within section 220 of chapter 62 of the Laws of 1909, as amended by chapter 430 of the Laws of 1922, even if such amendment could affect rights vested under a previous contract, which we do not hold.

Sigismund L. Fieux died on the twentieth day of June, 1923, owner of 81 shares of stock of the Castle Realty Company, Inc. Maurice Fieux and Ernest D. Fieux, his brother, exercised the option to purchase the aforesaid stock at $100 per share, and paid to the estate of the decedent the sum of $8,100. The appraiser found that the stock of the corporation was of the value of $200.50 per share, which left a balance of the valuation over the amount paid to the estate of $8,140.50, which has been assessed and taxed as a taxable transfer.

The Tax Law above referred to, so far as applicable to this case, reaches the following:

When the transfer is of property made by a resident, * * •* and is made by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor, or donor or intended to take effect in possession or enjoyment at or after such death, * * * If any one of the foregoing transfers is made for a valuable consideration, the portion of the transfer for which the grantor or vendor receives equivalent monetary value is not taxable, but the remaining portion thereof is taxable.”

The bargain, or the gift, to come within this Tax Law, must have been made in contemplation of death, or intended to take effect in possession or enjoyment after such death. The last sentence added by the amendment of 1922 taxing the remaining portion of the property over and above the consideration received by the estate is likewise limited to such agreements made in contemplation of or to take effect at death.

This agreement made by the five stockholders of the Castle Bealty Company, Inc., on July 3, 1918, was not a bargain made in contemplation of the death of Sigismund L. Fieux, or intended to take effect in possession or enjoyment at or after such death. The bargain became binding and took effect at once on the date of its execution. It was irrevocable; it obligated the signer to hold his stock, and not sell or dispose of it. If he resigned from the corporation, he was compelled to sell his stock at par to the other parties to the contract, if they so elected. This agreement, therefore, was not one made in contemplation of Fieux’s death, but in contemplation of his withdrawal from the corporation, either by resignation or death. Death was an incident of the contract, a means whereby Fieux would sever his connection from the corporation. It was the event of this withdrawal from the combined business activities of the parties that gave occasion for the exercise of the colitracted right. The sale of the stock was as binding upon Sigismund L. Fieux in his lifetime as upon his estate after his death. Death, like the resignation, created no rights; it merely marked the time when previously created rights and obligations could be enforced.

In this respect this case is in line with Matter of Cole (235 N. Y. 48); Matter of Baker (83 App. Div. 530; 178 N. Y. 575) and is distinguishable for the same reason from Matter of Cory (177 App. Div. 871; 221 N. Y. 612) and Matter of Oros (223 N. Y. 1). In the Cory case there was no requirement on the part of either party to retain ownership of the stock. The owner might sell it and thus terminate the agreement. Until one of the parties died, the contract remained wholly executory. So in the Oros case there was no provision for the upkeep of the funds, no requirement that the partnership could continue up to the date of death, and nothing to prevent the total extinguishment of the subject-matter of the agreement, prior to the death of either party.

In the case before us, Sigismund L. Fieux was held in his lifetime to keep his stock, and not sell it except to his associates. The agreement was as binding upon him in cáse of his resignation from the corporation as upon his estate in case of his death. It is the nature of the agreement, its intent and purpose which must determine its classification, and whether or not it amounts to a taxable transfer. This is wbat we said in the Oros case (p. 7) and still remains applicable to the amendment of 1922. It was intended to tax all transfers which are accomplished by will, the intestate laws of this State, and those made or incepted prior to the death of the transferor in contemplation of or intended to take effect in possession or enjoyment after his death which are in their nature and character instruments or sources of bounty or benefaction and which can be classed as similar in nature and effect with transfers by wills or the intestate laws, because they accomplish a transfer of property, donative in effect, under circumstances which impress on it the characteristics of a disposition made at the time of the transferor’s death. In all cases in which the value of the consideration for the property transferred, under the statutory conditions, is so disproportionately less than the value of the property transferred that the transfer is, in the light of reason or of ordinary intelligence and judgment, beneficent and donative, the transfer is taxable.”

Fieux’s agreement was not made on such a consideration as to evidence an attempt to evade the Tax Law. The promises were mutual. Ever since it was made on July 3, 1918, the four survivors connected with the corporation have been unable to sell or transfer their stock. Up to the time of his death on June 20, 1923, each was obliged to hold his stock subject to Sigismund’s right of purchase. The evidence shows that the stock was worth twice its par value and might have been disposed, of in the market at a profit, yet the stockholders were obligated not to sell. How can an appraiser value this relinquishment of the right of sale, or at least say that it had no value?

For the reasons here stated, we determine that the purchase made under the agreement of July 3, 1918, was not a taxable transfer, and that the order of the Appellate Division and decree of the surrogate should be reversed, with costs in all courts and the proceeding remitted to the Surrogate’s Court for further proceedings in accordance with this opinion.

His cock, Ch. J., Cardozo and Lehman, JJ., concur; Pound, McLaughlin and Andrews, JJ., dissent.

Ordered accordingly.


author: Hiscock, Ch. J.

text:
    Anna Slater, Respondent, v. Alfred V. Barnes, Appellant.
    Negligence — landlord and tenant — trial — charge — rule of res ipsa loquitur predicated amongst other things upon exclusive possession, control and oversight of agency producing injury — injury to tenant from fall of plaster from ceiling — erroneous charge that burden rested upon landlord to show cause of fall.
    1. The rule of res ipsa loquitur amongst other things is predicated upon the condition that the agency which has produced an injury is within the exclusive possession, control and oversight of the person charged with negligence, whence, legitimately, flows the inference that if there is any explanation of the accident consistent with freedom from negligence, he ought to be able to give that explanation, and if he does not give it, a presumption arises against him.
    2. In an action, tenant against landlord, to recover for injury through being struck by plaster falling from the ceiling of a rented apartment, where it appeared that the plaster which fell had been filled in about four years before, at which time defendant had caused the ceiling to be repaired, it was error for the trial justice to instruct the jury that the fall of the ceiling established a prima facie ease of negligence on the part of the defendant and that the burden rested on him of showing how the ceiling came to fall, where there is nothing to indicate that the defendant had any opportunity to observe the cause or causes of the fall, he not being in possession of the premises or at a post of observation, and so far as appears there having been no sign of weakness or unsafe condition of the plaster.

      Slater v. Barries, 212 App. Div. 860, reversed.
    (Argued October 13, 1925;
    decided November 24, 1925.)
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered February 10, 1925, unanimously affirming a judgment in favor of plaintiff entered upon a verdict.

      Walter L. Glenney, John D. Fearhalce and Bertrand L. Pettigrew for appellant.
    Reversible error was committed .in instructing the jury as to the effect of the application of the doctrine of res ipsa loquitur. (Klein v. Fraser, 169 App. Div. 812; Courtney v. Gainsborough Studios, 186 App. Div. 820, 829; Griffin v. Manice, 166 N. Y. 188; Sweeney v. Edison El. Ill. Co., 158 App. Div. 449; Huscher v. N. Y. & Q. El. L. & P. Co., 158 App. Div. 422.)

      Adelma H. Burd for respondent.
   Hiscock, Ch. J.

This action is brought to recover damages for personal injuries caused by the fall of plaster from the ceiling of a room included in an apartment rented by plaintiff of defendant in 1917.

Stripped of legal questions presented by the manner in which the case was. tried, the real claim of the plaintiff is that in 1913 some plaster fell from the ceiling of the same room then rented by her, that defendant caused the hole in the ceiling thus produced to be repaired by replastering and that the plaster which fell and caused plaintiff’s injuries was the same plaster which was thus filled in on the prior occasion, and that the fall was due to the negligent manner in which the replastering had been done.

The trial judge originally held that this situation was covered by section 102 of the Tenement House Law (Cons. Laws, ch. 61) and that thereunder an absolute obligation rested on the defendant to keep the ceiling in proper repair. Subsequently, however, he changed his views and eliminated from application and consideration this provision and thus left the rights and liabilities of the parties to be measured by the ordinary principles of common law applicable to the relationship of landlord and tenant. It is unnecessary to consider whether under these principles an obligation rested upon the defendant to repair the ceiling when the plaster fell in 1913, there being no allegation in the complaint of any obligation assumed by him in the lease then existing to make such repairs. The defendant on the trial assumed that such duty existed and that he was responsible for repairing the ceiling in a reasonably safe and proper manner. Thus a simple issue of fact was presented by the claim and evidence of the plaintiff on one side that this prior work of repairing was not properly or safely done resulting in her accident, and of the defendant on the other side that the contrary was true and that the work was properly and safely done. If this issue had been submitted to the jury under the rules ordinarily applicable to the decision by it of a question of negligence we should find no trouble with the judgment appealed from. Unfortunately, however, this was not done. The trial justice in his instructions to the jury did at times seem to regard the issue as one to be submitted to the jury under ordinary principles such as we have referred to. But in other places and repeatedly in his charge he applied the doctrine of res ipsa loquitur to the case in such a manner as was erroneous and was so necessarily calculated in our opinion to mislead the jury as to require a new trial.

He stated the general rule of res ipsa loquitur and then in attempted application of it to the facts of this case stated in substance that in the absence of explanation by the defendant of how the ceiling fell the plaintiff had made out a prima facie case; that the circumstances testified to by the plaintiff called upon the defendant for a reasonable explanation of how the ceiling fell and that in the absence of such explanation a jury would be permitted to infer negligence; that only if the proof of the defendant rebutted the presumption of negligence would the jury be entitled to find a verdict for the defendant and, as his final words on this subject, in response to a request by the defendant to charge that no obligation rested on the defendant to establish by proof the cause of the fall of the ceiling in 1917, the judge stated that the duty of going forward and reasonably explaining how the ceiling fell is upon the defendant. And if they have made such an explanation the plaintiff must then establish the negligence of the defendant and her own freedom from con-tributary negligence.” Thus the trial judge started out with the proposition that the fall of the ceiling established a prima facie case of negligence on the part of the defendant and that then the burden rested on him of showing why this ceiling fell in 1917, no matter how strong the evidence may have been that the plaster was properly put up in 1913.

These instructions in our opinion violated one of the fundamental conditions permitting the application of the rule of res ipsa loquitur. That rule amongst other things is predicated upon the condition that the agency which has produced an injury is within the exclusive possession, control and oversight of the person charged with negligence whence, legitimately, flows the inference that if there is any explanation of the accident consistent with freedom from negligence, he ought to be able to give that explanation, and if he does not give it, a presumption arises against him. The reason for and common sense of this rule under such conditions is obvious. It frequently happens in the law that if a person fails to explain that of which apparently he has knowledge the presumption goes against him. (Griffen v. Manice, 166 N. Y. 188.)

But that condition did not exist at all in this case. This piece of plaster, on plaintiff’s theory, had remained in place for four years without so far as appears any sign of weakness or unsafe condition as the result of negligent repair in 1913. We can imagine that a variety of causes might have made it fall after a lapse of four years. But however many or potential these causes may have been there is nothing to indicate that the defendant had any opportunity to observe them. He was not in possession of the premises or at a post of observation and, therefore, when the trial judge erroneously imposed upon him this duty of explanation of something which happened beyond the realm of his observation or control, he in effect instructed the jury to find a verdict against him.

Of course, this error is too important to be disregarded and, therefore, the judgments should be reversed and a new trial granted, with costs to abide event.

Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgments reversed, etc.


text:
    In the Matter of Max Wulfsohn, Appellant, v. John Burden, as Inspector of Buildings of the City of Mount Vernon, Respondent.
    Municipal corporations — zoning laws — constitutional law — police power — statute authorizing cities to regulate height and bulk of buildings, the area of open spaces, and to adopt zoning regulations — constitutionality of ordinances attacked by extraneous evidence on ground that they are confiscatory — burden on petitioner of overcoming presumption of constitutionality— exclusion of large apartment houses from residential districts justified — exercise of police power extends to so dealing with conditions as to promote the greatest welfare of the people —■ argument that ordinances limit the use and may depreciate the value of petitioner’s premises not effective — regulation of height of apartment houses and of open area that shall surround them —■ additional provision that there shall be no display of advertising from street does not invalidate ordinance — reasonableness of regulation for set-backs and back yards — violation by proposed building of three regulations — petitioner to succeed must establish that each is so arbitrary and unreasonable as to be invalid.
    1. By the statute in relation to cities (L. 1909, eh. 26, as amd.), broad authority amongst other things is given to such municipalities to regulate the height and bulk of buildings, to regulate and determine the area of yards, courts and open spaces and for such purposes to divide a city into districts and to adopt various other provisions, classifying and regulating the use of land within its borders in the interest of the public health, safety and general welfare.
    2. Where no claim is made that the Legislature has not properly conferred upon local authorities the right to exercise the powers enumerated in the statute but the constitutional validity of zoning ordinances adopted by a city is attacked by extraneous evidence on the ground that they are confiscatory, and a peremptory mandamus is sought to compel the issuance of a permit to build, the petitioner has the burden of overcoming the presumption of constitutionality applicable to such ordinances by reference not only to facts of which we may take judicial notice but also facts appearing in the affidavits. He must demonstrate that, as matter of law, these regulations are unconstitutional and that there is no permissible interpretation of all of these facts which justifies the adoption of these ordinances as a reasonable exercise of the broad police power of the State.
    3. In the exercise of pohce power, while the fundamental rule must be observed that there is some evil existent or reasonably to be apprehended which the police power may be invoked to prevent and that the remedy, proposed must be generally adapted to the purpose, the limit upon conditions held to come within this rule has been greatly enlarged. The power is not limited to regulations designed to promote public health, public morals or public safety or to the suppression of what is offensive, disorderly or unsanitary but extends to so dealing with conditions which exist as to bring out of them the greatest welfare of the people by promoting public convenience or general prosperity.
    4. The zoning authorities of the city of Mount Vernon were entitled to assume and the courts have found that the orderly and advantageous development of that city and the welfare of its citizens would be promoted by a fundamental division of the city into districts devoted respectively to business and residential purposes and it cannot properly be said, as matter of law, that a zoning regulation excluding large apartment houses from residential districts cannot be justified.
    5. Having the power to establish residential districts, the zoning authorities of Mount Vernon had the power to make such classification really effective by adopting such regulations as would be conducive to the welfare, health and safety of those desiring to live in such a district and enjoy the benefits thereof, by excluding big apartment houses whereby the enjoyment of adjoining premises might be impaired, the character and safety of the district as a residential one destroyed and the value of property already devoted to private residences impaired.
    6. It is not an effective argument against these ordinances, if otherwise valid, that they limit the use and may depreciate the value of petitioner’s premises. That frequently is the effect of police regulation and the general welfare of the public is superior in importance to the pecuniary profits of the individual.
    7. The zoning authorities, in any event, have the right to regulate the construction of apartment houses by restricting their height and prescribing the open area which shall surround them, to consider the different possibilities of apartment house construction and make general rules to govern them, and it cannot be said, as matter of law, that the present zoning regulations are so unreasonable that they exceed the limits of discretion reposed in the zoning commission, where they provide that in the use of a lot in the A residential district for an apartment house or a hotel the height shall not exceed five stories and that there must be a “ set-back ” from each lot and street line of fifty feet, and in a B residential district of twenty-five feet, and that there must be left in the rear of the lot as used an open space in part graduated according to the depth of the lot and height of building.
    8. An argument that because the provisions permitting the erection of apartment houses provide, in substance, that there shall be no display of advertising visible from any street, the zoning regulations are based upon unsustainable esthetic considerations, cannot be upheld. The restriction referred to is a minor incident, the main regulations are of height and of open spaces and these provisions are not rendered invalid because consideration is given to appearance of buildings as a minor and auxiliary reason.
    9. A complaint that the regulations for set-backs are unreasonable because they do not graduate such set-backs to the size of the building but require the same area for a small as for a large building is not available to petitioner. The only question which he is entitled to argue is that these set-backs are unreasonable in the case of a building four and five stories high and designed to accommodate nearly six hundred people.
    10. Nor can it be successfully urged that an arbitrary discrimination is displayed in the matter of set-backs and rear yards between apartment houses and other buildings, all located in the same district. Upon examination of the zoning regulations it cannot be said as matter of law that the authorities acted arbitrarily in making the differentiation which they did between apartment houses and other buildings permitted in both A and B residential districts.
    11. In any event the petitioner’s proposed building violates three distinct and severable regulations —• the one providing for open back yards, for set-backs of fifty feet in A residential districts and of twenty-five feet in B residential districts. He can only succeed by establishing, as matter of law, that each of these regulations is so arbitrary and unreasonable as to be invalid and it cannot be said that a requirement of twenty-five feet of open space between such an apartment house and adjoining property is an unreasonable protection.

      Matter of Wulfsohn v. Burden, 214 App. Div. 824, affirmed.
    (Argued October 9, 1925;
    decided November 24, 1925.)

      Appeal from an order of the Appellate Division of the Supreme Court in the second judicial department, entered July 16, 1925, which reversed an order of Special Term granting a motion for a peremptory order of mandamus to compel the defendant to approve plans and issue to the petitioner a building permit and denied said motion.

      J. Henry Esser for appellant.
    The answering affidavits offer no justifying reason recognized by the police power for the discriminatory and arbitrary provisions here before the court. (Mayor & Council of Wilmington v. Turk, 129 Atl. Rep. 512; City of Janesville v. Carpenter, 77 Wis. 288; Matter of Barker-Switzer, 209 App. Div. 151; 238 N. Y. 624; People ex rel. Wineburgh Adv. Co. v. Murphy, 195 N. Y. 126; Vernon v. Mayor & Council of Town of Westfield, 124 Atl. Rep. 248; Handy v. Village of South Orange, 118 Atl. Rep. 838.) The provisions here in question constitute an unlawful taking of petitioner’s property, without due process of law and without compensation. (Const, of U. S., art. 14; Const, of N. Y., art. 1, § 6; City of St. Louis v. Hill, 116 Mo. 527; Buchanan v. Warley, 245 U. S. 74; Pennsylvania Coal Co. v. Mahon, 260 U. S. 393.) Neither the Legislature, nor the municipality, has the power to establish arbitrary set-backs or building lines within private property, nor to prevent the owner from making a full legitimate use of his land subject only to such limitations as are dictated by the public health, safety and general welfare. (People ex rel. Dilzer v. Colder, 89 App. Div. 503; Matter of Hecht-Dann Co., Inc., v. Burden, 124 Misc. Rep. 632; People ex rel. Lankton v. Roberts, 90 Misc. Rep. 439; Matter of Isenbarth, 206 App. Div. 546; 237 N. Y. 617; 1 Lewis on Em. Dom. [3d ed.] § 227; 2 Dillon on Mun. Corp. § 695; Matter of Opinion of the Justices, 128 Atl. Rep. 181; Val Fruth v. Board of Affairs of Charleston, 84 S. E. Rep. 105; St. Louis
      v. Hill, 116 Mo. 527; Willison v. Cooke, 130 Pac. Rep. 828; Crawford v. City of Topeka, 51 Kan. 756; City of Grand Rapids v. Powers, 14 L. R. A. 498; City of Janesville v. Carpenter, 77 Wis. 288; Northrop v. Waterbury, 81 Conn. 305.) Under existing constitutional and statutory provisions in this State the provisions of zoning ordinances which rest solely upon aesthetic or economic bases cannot be upheld. (People ex rel. Wineburgh Adv. Co. v. Murphy, 195 N. Y. 126; Matter of Barker v. Switzer, 209 App. Div. 151; 238 N. Y. 624; Vernon v. Mayor & Council of Westfield, 124 Atl. Rep. 248; Lincoln Trust Co. v. Williams, 229 N. Y. 313; Isenbarth v. Bartnett, 206 App. Div. 546; 237 N. Y. 617; Matter of Opinion of the Justices, 128 Atl. Rep. 181; Stubbs v. Scott, 127 Md. 86; Spann v. Dallas, 111 Tex. 350; Stake v. McKelvey, 301 Mo. 1; People v. Chicago, 261 Ill. 16; Passaic v. Patterson Posting & Sign Co., 72 N. J. Law, 285; Haller Sign Works v. Physical Culture School, 249 Ill. 436; Byrne v. Maryland Realty Co., 129 Md. 202.) The set-back, or building line, and excessive rear yard provisions here involved, having no apparent relation to the accepted functions of the police power, it is the duty of the court to declare them invalid. (Mayor & Council of Wilmington v. Turk, 129 Atl. Rep. 502; State v. Harper, 182 Wis. 148; People ex rel. Wineburgh Adv. Co. v. Murphy, 195 N. Y. 126; Ives v. South Buffalo Ry. Co., 201 N. Y. 271; Matter of Stubbe v. Adamson, 220 N. Y. 459.) The Legislature has not delegated to the city the power to enact the set-back building line and excessive rear yard provisions in question here. (Matter of Hecht-Dann Co., Inc., 124 Misc. Rep. 632; Matter of Jacobs, 98 N. Y. 98; People v. Mark, 99 N. Y. 377; Wynehamer v. People, 13 N. Y. 378; Rensselaer, etc., R. Co. v. Davis, 43 N. Y. 137; New York, etc., R. Co. v. Kip, 46 N. Y. 546; Matter of Poughkeepsie Bridge Co., 108 N. Y. 483; Fitzgerald v. Quann, 109 N. Y. 441; Sharpe v. Speir, 4 Hill, 76; New York, etc., R. Co. v. Central Union Tel. Co., 21 Hun, 261;
      People v. Wells, 181 N. Y. 252; State Water Supply Comm. v. Curtis, 192 N. Y. 319; Matter of Simmons, 206 N. Y. 577, 580; Matter of McAneny v. Board of Estimate, 232 N. Y. 377.) The set-back and rear yard provisions in question are arbitrary and legally unreasonable. (People ex rel. Wineburgh Adv. Co. v. Murphy, 195 N. Y. 126.) The use of petitioner’s property for apartment purposes, being lawful and expressly permitted, the set-back provisions in question are, on the face of the ordinance, unlawfully discriminatory. (Lincoln Trust Co. v. Williams, 229 N. Y. 313; People ex rel. Duryea v. Wilbur, 198 N. Y. 1; Vernon v. Mayor, etc., of Westfield, 124 Atl. Rep. 248.)

      Hugh M. Hewson, Corporation Counsel, Arthur M. Johnson and Lester D. Stickles for respondent.
    The learned court below erred on the questions of the burden of proof and the quality of proof. (People ex rel. Knoblauch v. Warden, 216 N. Y. 154; People ex rel. Publicity Leasing Co. v. Ludwig, 218 N. Y. 540; Yellow Taxicab Co. v. Gaynor, 82 Misc. Rep. 94; 159 App. Div. 888; Waldorf Hotel Co. v. City of New York, 212 N. Y. 97; Hartman v. Collins, 106 App. Div. 11; Namm v. Carlin, 182 App. Div. 626; Isenbarth v. Barnett, 206 App. Div. 546.) The Zoning Ordinance, in the provisions attacked, is a proper exercise of the police power. (Story v. N. Y. El. R. Co., 90 N. Y. 122; Foster v. Scott, 136 N. Y. 577; People v. Priest, 206 N. Y. 274; Health Department v. Trinity Church, 145 N. Y. 32; People v. Havnor, 149 N. Y. 195; Carthage v. Frederick, 122 N. Y. 268; People v. Klinck Packing Co., 214 N. Y. 121; People v. Griswold, 213 N. Y. 92; Matter of Viemeister, 179 N. Y. 235; People v. Briesecker, 169 N. Y. 53; People v. Cipperley, 101 N. Y. 634; Mueller v. Oregon, 208 U. S. 412; Tenement House Department v. Moeschen, 179 N. Y. 325; 203 U. S. 583.)
   Hiscock, Ch. J.

The appellant Wulfsohn is seeking by peremptory mandamus to compel the respondent Burden to approve plans and issue a building permit for an apartment house which he desires to erect in the City of Mount Vernon. The refusal to issue this permit, which has been sustained by the court, is based upon the fact that the proposed building will violate certain zoning regulations. Appellant challenges these regulations as unconstitutional and void and thus is framed the question of constitutionality on which we are to pass.

By the statute in relation to cities (Laws of 1909, ch. 26, as amended), of which Mount Vernon is one, broad authority amongst other things is given to such municipalities to regulate the height and bulk of buildings, to regulate and determine the area of yards, courts and open spaces and for such purposes to divide a city into districts and to adopt various other provisions classifying and regulating the use of land within its borders in the interest of the public health, safety and general welfare. While the appellant has made some question whether this statute authorizes a municipality like the City of Mount Vernon to adopt zoning regulations he does this rather faintly and the statute authorizes such action so clearly and broadly that we shall not take time to discuss this question but shall assume without discussion that it conferred the power upon the City of Mount Vernon to adopt the regulations which have been adopted, if reasonable.

The authorities of the municipality, acting under this statute, have made a comprehensive classification of its territory and have divided the same into six districts, A, B and C residential districts, A and B business districts, and industrial districts and have prescribed regulations applicable to the erection and use of buildings and lands in these various districts. We are only concerned with these regulations as they create, and regulate the erection of buildings and use of lands in, the first two districts. These fix the boundaries of these two districts, enumerate the classes of buildings which may be erected therein and, as their substantial restrictions involved in this case, provide that in the use of a lot in the A residential district for an apartment house or a hotel the height shall not exceed five stories and that there must be a “ set-back ” from each lot and street line of 50 feet, and in a B residential district of 25 feet, and that there must be left in the rear of the lot as used (this not being confined to these particular buildings) an open space which is in part graduated according to the depth of the lot and height of building and which in the present case would be 90 feet in depth. They only affect new; buildings and those which may be reconstructed. Appellant owns a lot situate at the intersection of two streets with a frontage on one of these of 100 feet and upon the other of 300 feet and located in part in the A residential district and partly in the B residential district.

No claim is made that the Legislature has not properly conferred upon local authorities the right to exercise the powers enumerated in the statute which has been cited. But we shall assume that these ordinances were adopted under a general legislative authority and that their constitutional validity was subject to attack by extraneous evidence (Matter of Stubbe v. Adamson, 220 N. Y. 459), and in accordance with this rule affidavits were presented upon appellant’s motion for a mandamus in the efforts respectively to impeach and to sustain the validity of the regulations. While these affidavits probably do not greatly enlarge the scope of the facts of which we might take judicial notice in determining the validity of the ordinances from their face, there are some facts to which reference may properly be made.

As we understand them, the territory now included in these residential districts, and especially the A district, was before the adoption of the zoning regulations in question a residential district almost entirely devoted to and occupied by private one-family dwelling houses. Therefore, the zoning regulations did not have the effect of working any revolution in the character and uses of the territory covered by them, but it is evident that it was their purpose to continue a character and purposes already established and to limit these districts and especially the A district to private residences and to buildings of a character which it was thought would not greatly impair the character of the district as a residential one, and to allow buildings such as hotels and apartment houses only under restrictions which it was thought would prevent them from endangering the health, safety and general welfare of those desiring to dwell in such a district. The water and sewage systems in the districts in question are so limited that they would be overtaxed if apartment houses such as appellant desires to erect were largely located in these districts and their construction will impair the value of surrounding property already devoted to private residential purposes. Since the ordinances were adopted they have been obeyed by substantially all builders. The plans filed by appellant for the apartment house which he desires to erect show that the building will be four and five stories in height covering, with the exception of narrow strips of open space, his entire lot and that it will accommodate on each floor 30 families or, in the aggregate, 144 families or, on an average of 4 persons to a family, nearly 600 people. The regulations in question will prevent him from using in the neighborhood of 50 per cent of his lot for an apartment house but would not restrict him in its use for many other purposes.

Under the circumstances of this proceeding already referred to, as appellant seeks to gain a permit to erect his apartment house by attacking the zoning regulations as confiscatory and unconstitutional, he has the burden of overcoming the presumption of constitutionality applicable to such ordinances by reference not only to facts of which we may take judicial notice but also facts appearing in the affidavits. He must demonstrate that, as matter of law, these regulations are unconstitutional and that there is no permissible interpretation of all of these facts which justifies their adoption as a reasonable exercise of the broad police power of the State. If on any permissible interpretation of the facts, the court could say as a finding of fact that the ordinances could be reasonably adopted, appellant was not entitled to a peremptory mandamus but only to an alternative one, which he did not seek.

For the purpose of disposing of a minor objection to the ordinances hereafter referred to we shall consider the question first in the form of the query whether the zoning authorities would have had the power to create residential districts devoted to ordinary family residences and exclude therefrom altogether apartment houses of a typical character, for if they would have had this power of exclusion they would have a power of regulation broad enough to co.ver the restrictions here complained of. (People v. Rosenheimer, 209 N. Y. 115.) In support of such a regulation we think the zoning authorities could assume and the courts below could have found that the orderly and advantageous development of the City of Mount Vernon and the welfare of its citizens would be promoted by a fundamental division of the city into districts devoted respectively to business and residential purposes under which its dwellers might establish homes in the latter districts where they would be free from disturbing conditions and risks and deprivation of health conditions, such as abundant light and air, ordinarily incident to congested business districts; that in the residential districts of Mount Vernon municipal facilities for sewage and water were liable to be overtaxed if the erection of large apartment houses was permitted; that through the construction of apartment houses whereby there would be gathered a large number of people in the space ordinarily occupied by a single family there would result a congestion of population increasing the dangers of traffic, especially to children, and multiplying the chances that through the carelessness of some individual &e and conflagration might be started or disease communicated and epidemics set on their way; that the advantages and value of property devoted to private residences would be impaired. And if we are right that such facts could be found or assumed we do not think that a court could say as matter of law that a zoning regulation excluding large apartment houses could not be justified. There would be no object in creating a residential district •unless there were to be secured to those dwelling therein the advantages and that immunity from risks and danger which would ordinarily be considered the main benefits of such residence.

Of course zoning regulations are an exercise of the police power and as we approach the decision of this question we must realize that the application of the police power has been greatly extended during a comparatively recent period and that while the fundamental rule must be observed that there is some evil existent or reasonably to be apprehended which the police power may be invoked to prevent and that the remedy proposed must be generally adapted to that purpose, the limit upon conditions held to come within this rule has been greatly enlarged. The power is not limited to regulations designed to promote public health, public morals or public safety or to the suppression of what is offensive, disorderly or unsanitary but extends to so dealing with conditions which exist as to bring out of them the greatest welfare of the people by promoting public convenience or general prosperity. (Bacon v. Walker, 204 U. S. 311, 317, 318.)

Being designed to promote public convenience or general prosperity as well as public health, public morals or public safety the validity of a police regulation must depend upon the circumstances of each case and the character of the regulation for the purpose of determining whether it is arbitrary or reasonable and whether really designed to accomplish a legitimate public purpose. (C., B. & Q. Ry. Co. v. Drainage Commrs., 200 U. S. 561.) The field of regulation constantly widens into new regions. The question (of regulation) in a broad and definite sense is one of degree. Changing economic conditions, temporary or permanent, may make necessary or beneficial the right of public regulation. (People ex rel. Durham Realty Corp. v. La Fetra, 230 N. Y. 429; affd., in principle, 257 U. S. 665.) While the validity of police regulation certainly is not to be rested simply upon popular opinion it has been said that it has been put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare.” (Noble State Bank v. Haskell, 219 U. S. 104, 575.)

Acting in accordance with these general principles courts on the whole have been consistently and sensibly progressive in adjusting the use of land in thickly populated districts to the necessities and conditions created by congested and complex conditions by upholding as a constitutional exercise of the police power zoning ordinances passed under State authority to regulate the use of land in urban districts. What was once a matter of voluntary submission to restrictive covenants in grants has become a matter of compulsory obedience to ordinances having the force of statutes. It has come about that 40 States have passed laws authorizing zoning ordinances which in one form and another had, in January, 1925, been adopted by 320 municipalities. Commencing, generally speaking, where restrictive covenants commonly stopped,"with the exclusion from residential districts of factories and business buildings, these regulations have developed until as in the present case they create residential districts in a large sense limited to private dwellings as distinguished from hotels and apartment houses. Thus far they have been sustained as being conducive to public health, safety and morals. With few exceptions courts have not been ready to say that they might be sustained merely because they preserved the aesthetic appearance of a private residential district and prevented it from being blotched by the erection of some incongruous structure whereby the value of all neighboring property was impaired. The Supreme Court of the United States has, however, gone so far as to approve in substance the views of the Massachusetts Supreme Court that aesthetic considerations might be considered as auxiliary of what thus far have been regarded by the courts as more effective and sufficient reasons. (Welch v. Swasey, 193 Mass. 364; Welch v. Swasey, 214 U. S. 91, 108.)

In attempting to apply all of these principles to the present case we deem it unnecessary to consider the proposition that zoning authorities may establish residential districts. This court has so definitely approved that proposition that we may take its decision as a starting point in the consideration of the further questions now before us. (Lincoln Trust Co. v. Williams Bldg. Corp., 229 N. Y. 313.) .

Having the power as we thus assume to establish residential districts it seems to us that the zoning authorities of Mount Vernon had the power to make such classification really effective by adopting such regulations as would be conducive to the welfare, health and safety of those desiring to live in such a district and enjoy the benefits thereof as we ordinarily conceive them. Outside of large cities where more or less congestion is inevitable, we ordinarily think of a residential district as devoted to private homes rather than to large commercial buildings. Such was apparently the character of the territory here involved before the zoning regulations were adopted. The primary purpose of such a district is safe, healthful and comfortable family life rather than the development of commercial instincts and the pursuit of pecuniary profits. Such life goes on by night as well as by day. It includes children as well as people of mature judgment and is housed in buildings which are not ordinarily of that character most designed to resist conflagrations and located where fire protection is scantier and less effective than it would be elsewhere. (Welch v. Swasey, 214 U. S. 91, 107.)

Therefore it seems to us quite in accordance with the decisions and principles to which we have referred that zoning authorities should have the right in a residential district to promote these purposes and to protect the people desiring to enjoy these conditions by excluding big apartment houses like the one proposed by appellant whereby the enjoyment of light and air by adjoining property would be impaired, the congestion and dangers of traffic be augmented on streets where children might be and the dangers of disease and fires would be increased to say nothing of other things such as the destruction of the character of the district as a residential one and the impairment in value of property already devoted to private residences.

This view has been taken by the courts of several States and to it we give our adherence, notwithstanding the fact that courts of other States have decided otherwise. (Matter of Opinion of Justices, 234 Mass. 597; Brett v. Building Commr., 250 Mass. 73; Spector v. Building Inspector, 250 Mass. 63; State ex rel. Beery v. Houghton, [Minn. Sup. Ct.] 204 N. W. Rep. 569; Town of Windsor v. Whitney, 95 Conn. 357; City of Des Moines v. Manhattan Oil Co., 193 Ia. 1096; Miller v. Board of Pub. Works, [Cal. Sup. Ct.] 234 Pac. Rep. 381; West v. City of Wichita, [Kan. Sup. Ct.] 234 Pac. Rep. 978; Kahn Bros. v. Youngstown, 25 Ohio N. P. [N. S.] 2; State ex rel. Carter v. Harper, 182 Wis. 148; State ex rel. Civello v. City of New Orleans, 154 La. Ann. 271.) In addition we think that this view was impliedly adopted in the case of People ex rel. Rosevale Realty Co., Inc., v. Kleinert (237 N. Y. 580), decided by this court without opinion and wherein a writ of error was dismissed by the United States Supreme Court by decision rendered June 8, 1925.

It is not an effective argument against these ordinances, if otherwise valid, that they limit the use and may depreciate the value of appellant’s premises. That frequently is the effect of police regulation and the general welfare of the public is superior in importance to the pecuniary profits of the individual. (Spector v. Building Inspector, 250 Mass. 63, 70.)

But even if it should be thought that zoning authorities would not have the right to protect the health, safety and welfare of those desiring to live in a residential district by excluding apartment houses and which power of exclusion if possessed would give the right to restriction, it seems to us quite clear that they have the right to regulate the construction of apartment houses as has been done by the zoning regulations now presented to us for consideration. These regulations restrict the height of an apartment house and prescribe the open area which shall surround it. It is to be borne in mind that there is nothing otherwise restricting the size of such a building. While in the present case the desire is to erect one on a lot of somewhat limited dimensions there is no legal or practical bar which would prevent a person from combining two or three lots and putting-up an apartment house much larger than .the one which appellant desires to erect. The zoning authorities had the right to consider the different possibilities of apartment house construction and make general rules which would govern them. When we consider this we do not think the restrictions which have been adopted can be said as matter of law to be so unreasonable that they exceed the limits of discretion reposed in the zoning commission and approved by the court below. All of the reasons which we have given tending to sustain the authority of the zoning commission to exclude apartment houses from such a residential district apply with even more force to the restrictive provisions regulating height and air space. The open spaces not only tend to minimize the danger of fire to adjoining buildings and thus a spreading conflagration, but they also afford a greater opportunity for access by fire departments to a burning building and thus increase the possibility of successfully stopping a conflagration before it spreads to other buildings.

So much for the substantial question involved and we then come to certain subordinate claims made by appellant.

Because the provisions permitting the erection of apartment houses provide in substance that there shall be no display of advertising visible from any street, the argument is made that the zoning regulations are based upon aesthetic considerations and, therefore, not sustainable. If we are right that the erection of apartment houses might be altogether prohibited it might at least be argued that as a condition of permitting their erection the restriction in question might be imposed. „ But the restriction of advertising matter referred to in this case is a minor incident; the main regulations are of height and of open spaces and these provisions are not rendered invalid because consideration is given to appearance of buildings as a minor and auxiliary reason. (Welch v. Swasey, supra.)

Appellant complains that the regulations for set-backs are unreasonable because they do not graduate such set-backs to the size of the building but require the same area for a small as for a large building. Such an argument is not available to him. The only question which he is entitled to argue is that these set-backs are unreasonable in the case of a building four and five stories high and designed to accommodate nearly 600 people. It will be time enough to consider whether they should not be reduced in the case of a smaller building when somebody desiring to erect such smaller building complains of them as unreasonable.

Then it seems to be urged that an arbitrary discrimination is displayed in the matter of set-backs and rear yards between apartment houses and other buildings, all located in the same district. When we keep in mind that while apartment houses may be constructed with a height of five stories in A residential districts while other buildings are restricted to a height of two and one-half stories and that all non-residential buildings' other than apartment houses and hotels are subject to regulations calling for open rear yards and set-backs of some extent, we think that it cannot be said as matter of law that the zoning authorities acted arbitrarily in making the differentiation which they did between apartment houses and other buildings permitted in both A and B residential districts. An examination of the zoning regulations shows that the other buildings permitted in A residential districts other than one-family residences are of such an entirely different character than a large apartment house that it is obvious that different regulations might properly be prescribed for the others. This particular proposition of appellant’s is presented for him most favorably by the provisions allowing the erection in B residental districts of hospitals and sanitariums for rion-contagious diseases, dispensaries and charitable institutions except correctional institutions, and public and semi-public buildings. We think, however, that in the case of these buildings there was a clear basis for difference in regulations. Then- height was very limited, the erection of these institutional buildings we know, as a matter of common observation, would be limited, the observation and watchfulness for contagious diseases would be much greater and more systematic than in an apartment house separated into the occupation of many different families, and the probability of fire in one of these institutions or in a public building usually not occupied at night would be much less than in a building which was subject to accidents arising from the carelessness of any one of a great number of people and not apt to be detected by any systematic watchfulness.

In conclusion* it is to be kept in mind that appellant’s proposed building violates three different regulations — the one providing for open back yards, for set-backs of 50 feet in A residential districts and of 25 feet in B residential districts. In our opinion these provisions are so distinct and severable that one regulation might survive even though others did not. Therefore, appellant can only succeed by establishing as matter of law that each of these regulations is so arbitrary and unreasonable as to be invalid. It would not be enough for him to establish for instance that a set-back of 50 feet on a large apartment house such as he proposes to erect is arbitrary and unreasonable, but he must go farther and establish that a set-back even of 25 feet is invalid because of its arbitrary and unreasonable character. If we have been right in our reasoning it cannot be held as matter of law that any of these regulations are so arbitrary and unreasonable as to be invalid. But certainly it seems to us that a requirement of 25 feet of open space between an apartment house such as the one proposed and adjoining property cannot be said to be an unreasonable protection against some of the dangers to which we have referred.

Therefore, for these reasons, we are led to the conclusion that the order should • be affirmed, with costs, and appellant’s application denied.

Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Order affirmed.


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    American Lithographic Company, Appellant, v. Dorrance-Sullivan & Company, Respondent.
    Debtor and creditor — account stated — principal and agent — implied if not express promise to pay forthwith arises from admission of correctness of account stated —■ condition that payment be postponed must be definite to rebut presumption of promise to pay at once — sufficiency of evidence of intention to admit correctness of balance stated — insufficient assertion of right to postponement of payment — inference that defendant acted merely as agent not warranted.
    1. Ordinarily, and in the absence of something else, there arises from an admission of the correctness of a balance of indebtedness stated to be due an implied, if not an express, promise to pay the same forthwith, upon which an action can be founded.
    2. If one against whom an account is stated couples with his admission of the correctness of the statement a binding condition that it shall not be payable until some time in the future, there is thereby necessarily excluded an implied promise to pay at once. But in order to work this exclusion of any implied promise, the condition must be definite and indicate that the admission of correctness is only made upon the understanding that the condition is to be observed. The two things must be so coupled together that the creditor cannot take advantage of the admission without submitting to the qualification. If the admission of correctness is either expressly or by fair implication definite and final and a mere hope or wish expressed that the time of payment of the indebtedness may be postponed by the creditor, such suggestion will not have the effect of rebutting the presumption of a promise to pay the indebtedness at once.
    3. A plain and explicit statement of indebtedness claimed by plaintiff to be due to it from defendant, coupled with a letter from defendant, which not only refrains from questioning the correctness of the balance as shown by the statement presented to it but asks the plaintiff to “ wait ” and for its “ indulgence in the matter ” of payment, evidences intention to admit that the balance due plaintiff is correctly stated.
    4. Complaints in the letter that the plaintiff had been late in making delivery of its goods to defendant’s customer, in the absence of any suggestion that plaintiff’s rights against defendant had been legally affected or impaired thereby, do not necessarily import to the sentences relating to payment of plaintiff’s account the assertion of a legal right to postponement of payment or a determination to insist upon it. They may be interpreted as merely precatory and in no sense an ultimatum entering into and conditioning the admission of correctness of the statement.
    5. An argument that because the word “ advertising ” appeared upon defendant’s letterhead it is to be inferred that it was merely acting as a disclosed agent for its principal, and that, therefore, there is no indebtedness due from it to plaintiff which could be made the basis for an account stated cannot be sustained. No such inference appears as matter of law from the face of the complaint. On the contrary, defendant’s letter implies a transaction wherein defendant acted as principal and not as agent.

      American Lithographic Co. v. Dorrance-Sullivan & Co., 212 App. Div. 495, reversed.
    (Submitted October 5, 1925;
    decided November 24, 1925.)
    Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the first judicial department, entered April 3, 1925, which reversed an order of Special Term denying a motion by defendant for a dismissal of the complaint and granted said motion.
    The following question was certified: “Does the amended complaint herein state facts sufficient to constitute a cause of action? ”

      Henry G. Schackno and Irving Miller for appellant.
    The respondent having assented to the account and the balance as being correct, an account was stated. (Lockwood v. Thorne, 11 N. Y. 170; 18 N. Y. 285; Quincey v. White, 63 N. Y. 370; Volkening v. DeGraaf, 81 N. Y. 268; Spellman v. Muehlfeld, 166 N. Y. 245; Newburger-Morris Co. v. Talcott, 219 N. Y. 505; Hall v. New York Brick & Paving Co., 95 App. Div. 371; Briton v. Scognamillo, 238 N. Y. 375; Eames Vacuum Brake Co. v. Prosser, 157 N. Y. 289.)

      Alfred A. Walter for respondent.
    Even if an account stated is made out, such account stated was coupled with a promise to pay upon a contingency, and the happening of such contingency is not pleaded. (Hall v. New York Brick & Paving Co., 95 App. Div. 371; Work v. Beach, 53 Hun, 7; Cartledge v. West, 2 Denio, 378; Cole v. Saxby, 3 Esp. N. P. 159; Davies v. Smith, 4 Esp. 36; Scouton v. Eislord, 7 Johns. 36; Bush v. Barnard, 8 Johns. 407; Everson v. Carpenter, 17 Wend. 419; Thompson v. Lay, 4 Pick. 747; Proctor v. Sears, 4 Allen, 95; Chandler v. Glover, 32 Penn. St. 509.) The amended complaint fails to show an absolute and unconditional admission of liability and promise to pay, hence there is no account stated. (Stevens v. Ayers, 57 Hun, 51; 15 Leigh N. P. 99; Farrar v. Moore, 9 Mo. 316; Volkening v. DeGraaf, 81 N. Y. 268; Masters v. Walker, 195 Pac. Rep. 381; Evans v. Verrity, R. & M. 239; Weigel v. Hartman Steel Co., 51 N. J. L. 446; Ershowsky v. Corn, 113 N. Y. Supp. 478; Pierce v. Pierce, 199 Penn St. 4.) The amended complaint shows that the defendant was an agent acting for a disclosed principal, and as an agent acting for a disclosed principal there is no personal liability upon the defendant. (Title Guarantee & Trust Co. v. Leavitt, 121 App. Div. 485; Argus Co. v. Hotchkiss, 121 App. Div. 378.)
   Hiscock, Ch. J.

This action is based solely on an account alleged to have been stated between the parties. The Appellate Division has granted defendant’s motion to dismiss the complaint on the ground that it does not state a cause of action. The necessary implication from this determination of course is that on no permissible interpretation of the facts set forth in the complaint is plaintiff entitled to succeed. We do not agree with this view.

As appears from the complaint a transaction took place between the plaintiff and defendant, in the communications hereinafter referred to sometimes erroneously .called Dormice & Bulliyan, Inc., concerning a sale of colorgraphic mailers and cards, and on June 28th, 1923, an invoice was made out by the plaintiff which stated that there had been sold to defendant on terms net 30 days from date of invoice 300,000 .colorgraphic mailers and cards at $22 a thousand and amounting in the aggregate to $6,600. August 1st following, a statement was made by plaintiff showing defendant on July 1st, indebted for a balance of $6,600, there being written on this statement the following words: “ The final figures in ‘ balance ’ column represent total indebtedness on. your account as at date of statement * * * Please, forward remittance addressed to Cashier American Lithographic Company.” And on the same day a letter was written to defendant referring to the prior statement and reading as follows: “ Referring to the inclosed regular monthly statement of account as at August 1st please note that the June 28th charge amounting to $6,600 is now due. Will you kindly compare the same with your books and if it agrees be good enough to favor us with check at an early date? ”

In answer to this defendant through its treasurer wrote plaintiff as follows: “Answering your letter of August 1st regarding your June 28th charge against us amounting to $6,600, which covers work done for the Superior Underwear Company, we must ask you to wait until our client pays us for this job, the reason for this being that the job was ordered to be delivered at a specified time and you were 35 days late on this delivery; therefore, the job was of no value to them at that time necessitating them carrying it over for another season.

“We expect that the Superior Underwear Company will make payment within a reasonable time and we must ask your indulgence in the matter until that time.”

Thus we have a plain and explicit statement of indebtedness '.claimed by plaintiff to be due to it from defendant and also words which, in our opinion, might well be construed .as an unqualified admission by defendant of the balance thus claimed to be due. Not only does it refrain from questioning in any way the correctness of the balance as shown by the statement presented to it but when without -doing this it asks the plaintiff to “ wait ” and for its “ indulgence in the matter ” of payment it certainly evidences intention to admit that the balance due plaintiff is correctly stated.

Ordinarily and in the absence of something else there arises from an admission of the correctness of a balance of indebtedness stated to be due an implied if not an express promise to pay the same forthwith upon which an action can be founded. In this case, however, the defendant claims and the Appellate Division has held that there not only was no express promise to pay the balance forthwith but that there was in effect a refusal thus to pay which excluded the permissibility of an implied promise. This claim is based on the statements in the letter already quoted that plaintiff was late in making delivery thereby impairing the value of the contract to the Superior Underwear Company and that as a result thereof defendant was compelled to ask,” plaintiff to wait until its client paid it and to ask plaintiff’s “ indulgence ” in the matter until said company should make payment as expected within a reasonable time.

It is undoubtedly true that if one against whom an account is stated couples with his admission of the correctness of the statement a binding condition that it shall not be payable until some time in the future, there is thereby necessarily excluded an implied promise to pay at once. (Work v. Beach, 53 Hun, 7, 10.) But in order to work this exclusion of any implied promise the condition must be definite and indicate that the admission of correctness is only made upon the understanding that the condition is to be observed. The two things must be so coupled together that the creditor cannot take advantage of the admission without submitting to' the qualification. If the admission of correctness is either expressly or by fair implication definite and final and a mere hope or wish expressed that the time of payment of the indebtedness may be postponed by the creditor, such suggestion will not have the effect of rebutting the presumption of a promise to pay the indebtedness at once. We think that this was all that was done in the present case; at least that a jury could say that such is a permissible interpretation of the words used. While the defendant complained that the plaintiff had been late in making delivery of its goods to defendant’s apparent customer, there was no suggestion that plaintiff’s rights against defendant had been legally affected or impaired by this fact. According to the letter the goods had been accepted and as we read the letter its sentences relating to payment of plaintiff’s account may be interpreted as merely precatory and in no sense an ultimatum entering into and conditioning the admission of correctness of the statement. Because of plaintiff’s shortcoming defendant thought it was entitled to delay in payment of the account. It was asking for indulgence but was not in our opinion, necessarily, asserting a legal right to postponement of payment or a determination to insist upon it.

In these respects the facts are somewhat similar to those which were presented in the case of Britton v. Scognamillo (238 N. Y. 375) where the debtor by implication admitted the correctness of an account stated by the creditor but asked that it be held until the future when he would settle it. It was held that these facts resulted in an admission of correctness of the account and a promise to pay which was not defeated by a request for indulgence.

It is argued that because the word “ advertising ” appeared upon defendant’s letterhead it is to be infer.red that it was merely acting as a disclosed agent for its principal, the Superior Underwear Company, and that, therefore, there is no indebtedness due from it to plaintiff which could be made the basis for an account stated because of course an account stated cannot arise unless there is some indebtedness due. We do not think that any such inference as this appears as matter of law from the face of the complaint. On the contrary, defendant’s letter speaks of the Superior Underwear Company as defendant’s client ” and discusses its relations and its expected payment to defendant in a manner which implies a transaction between the Underwear Company and defendant as principal and not as agent. .

For these reasons we think the order appealed from should be reversed and that of the Special Term affirmed, with costs in this court and the Appellate Division and the question certified to us answered in the affirmative.

Pound, Crane, Andrews and Lehman, JJ., concur; Cardozo and McLaughlin, JJ., dissent.

Ordered accordingly.