author: Crouch, J.

text:
    Adeline Smith, Respondent, v. Peerless Glass Company, Inc., et al., Appellants. William H. Smith, Respondent, v. Peerless Glass Company, Inc., et al., Appellants.
    (Argued April 28, 1932;
    decided June 1, 1932.)

      Osmond K. Fraenkel and Arnold J. Brock for Peerless Glass Company, appellant.
    The complaint should have been dismissed as to the defendant glass company because no' negligence on its part was proved. (Torgesen v. Schultz, 102 N. Y. 156.) The complaint should have been dismissed because any negligence on the part of the glass company was too remote to create liability in favor of the plaintiff. (MacPherson v. Buick Motor Co., 217 N. Y. 382; Gailbraith v. Illinois Steel Co., 143 Fed. Rep. 485; 201 U. S. 643; Thomas v. Winchester, 6 N. Y. 397; Guinea v. Campbell, 22 Quebec Super. Ct. 257; O’ Neill v. James, 138 Mich. 567; Wheeler v. Laurel, 111 Miss. 442; Stone v. Van Noy, 153 Ky. 240; Statler v. Ray Mfg. Co., 195 N. Y. 478; Losee v. Clute, 51 N. Y. 494; P. G. Poultry Farm v. Newtown Mfg. Co., 248 N. Y. 293; Ultramares Corp. v. Touche, 255 N. Y. 170; Comstock v. Wilson, 257 N. Y. 231.)

      Frank H. Hiscock, Gerald Donovan and Joseph Henry Cohen for Minck Bros. & Co., appellant.
    The undisputed evidence showed that the defendant bottling company, having no actual knowledge of the alleged defect in the bottle, made the reasonable customary tests of beverage bottlers to determine whether the filled bottle would stand up- on the market. (People v. Lichtman, 173 N. Y. 63; Glaser v. Seitz, 35 Misc. Rep. 341; Bruckel v. Milhau’s Son, 116 App. Div. 832; O’ Neill v. James, 138 Mich. 567; Simon v. Sun Ray Water Co., 162 N. Y. Supp. 968; Guinea v. Campbell, 22 Quebec Super. Ct. 257; Wheeler v. Laurel Bottling Works, 111 Miss. 442; Stone v. Van Noy, 153 Ky. 240; Burnham v. Lincoln, 225 Mass. 408; Colyar v. Little Rock Bottling Works, 114 Ark. 140; Bates v. Batey & Co., L. R. [1913] 3 K. B. 351; Favo v. Remington Arms Co., 67 App. Div. 414; 173 N. Y. 600; Rosebrock v. General Electric Co., 236 N. Y. 227.) The plaintiff failed to prove that the alleged negligence was the proximate cause of her injuries.' (Searles v. Manhattan

      Ry. Co., 101 N. Y. 661; Ruback v. McCleary, Wallin & Crouse, 220 N. Y. 188.)

      Alfred W. Meldon and Maurice Brandt for respondent.
    The negligence of the defendants was not only established as a matter of fact, but the evidence compelled a finding of negligence upon the part of both. (MacPherson v. Buick Motor Co., 217 N. Y. 382; Gallagher v. Crooks, 132 N. Y. 338; Harbor Co. v. R. R. Co., 76 Hun, 258; Statler v. Ray Mfg. Co., 195 N. Y. 478; Torgesen v. Schultz, 192 N. Y. 156; Ultramares Corp. v. Touche, 255 N. Y. 170; Crist v. Art Metal Works, 230 App. Div. 114; Wanamaker v. Otis, 228 N. Y. 192; Rosebrock v. General Electric Co., 236 N. Y. 227; Nolan v. Fach, 178 App. Div. 115; Willey v. Mynderse, 165 App. Div. 620; Bernstein v. Kritzer, 253 N. Y. 410; McAleenan v. Mass. Bonding & Ins. Co., 232 N. Y. 199.)
   Crouch, J.

The plaintiffs in the actions are father and daughter. - It will be convenient to discuss only the daughter’s action. The plaintiff, a waitress or clerk at her father’s wayside soda and cigar stand, lost the sight of one eye by the explosion of a soda water bottle. The bottle was made by the defendant Peerless Glass Co., Inc., and sold by it to the defendant Minck Bros. & Co., Inc. The latter filled it with soda water and put it on the market.

If the filled bottle may be regarded as an assembled product of which the bottle itself was a component part, the approach to the applicable rule of law may be made by way of MacPherson v. Buick Motor Co. (217 N. Y. 382). By analogy, the bottler will be in the position of the defendant in that case and the maker of the bottle in that of the anonymous maker of the wheel. The liability of the bottler will then be ruled clearly enough by the law of that case and the evidence only need be considered. Not so, however, as to the maker of the bottle; for while the opinion perhaps foreshadowed his liability, the point was left open. We are not required at this time to say that it is legitimate to go-back * * * and hold the manufacturers of the component parts ” (p. 390). The doubt seemed to hang on the problem of causation. Whatever was shadowy then in respect to the principles both of negligence and of causation has vanished in the light of subsequent decisions. (Wanamaker v. Otis Elevator Co., 228 N. Y. 192; Rosebrock v. General Electric Co., 236 N. Y. 227; Sider v. General Electric Co., 203 App. Div. 443; affd., 238 N. Y. 64; Ultramares Corp. v. Touche, 255 N. Y. 170, 181.)

There emerges, we think, a broad rule of liability applicable to the manufacturer of any chattel, whether it be a component part or an assembled entity. Stated with reference to the facts of this particular case, it is that if either defendant was negligent in circumstances pointing to an unreasonable risk of serious bodily injury to one in plaintiff’s position, liability may follow though privity is lacking. (Cf. The American Law Institute, Restatement of the Law of Torts, §§ 265, 266.)

The case against the maker of the bottle is that on its surface were little ridges, known as striae, higher than the rest of the bottle. While the existence of striae does not always or necessarily weaken a bottle as against ordinary constant pressure, either internal or external, it is nevertheless regarded as a defect and as a dangerous point. It is principally so because- such a bottle, subjected to contact with cold, undergoes an uneven contraction which starts a slight crack and thereupon blows out under the pressure of the charged water. That is what happened here, or at least the jury could so find. The result of such a blow-out may be and in the present case was serious. The maker knew the purpose for which the bottle was to be used, knew that bottles sometimes exploded and may readily be presumed to have known that when used for its intended purpose this bottle would be subjected to contact with cold and that it would, if striated, be apt to explode. There was, therefore, a duty to use reasonable care. Reasonable care consists among other things in making such inspections and tests düring the course of manufacture and after the article is completed as the manufacturer should recognize as reasonably necessary to secure the production of a safe article. Substantially the only test made was an examination by means of a polariscope of six bottles out of every batch of 2,880 for the sole purpose of checking the process of annealing. Defendant admits that no specific examination was made to detect striations. It says there was no practicable method. But the jury has found otherwise upon evidence that a customary test was by putting the bottles first in hot water and then in cold. Defendant was not called upon to subject each bottle to the infallible polariscopic examination. Under the evidence that seems to have been impracticable. It was bound, however, to use ordinary, customary methods to detect defects from which something more than trivial danger could be foreseen. This it failed to do. The contention that its negligence was too remote to create liability lacks support in the facts. Whether or not the bottle was old and had been in use must on conflicting evidence be deemed to have been decided against it by the jury.

The case against the bottler is otherwise under the evidence. It is not pressing analogy too far to regard the bottle, when filled, as a product made up of component parts. Its greater simplicity does not differentiate it in principle from the automobile in the MacPherson case. A defective bottle empty and a defective bottle filled with charged soda water are two distinct articles. This defendant, therefore, was under a duty to make such tests and inspections as one in its business should recognize as reasonably necessary to put out a safe article. That it bought its bottles from a reputable concern which presumably had made proper tests does not absolve it from its own duty of care any more than the probability of intervening tests absolved the maker of the bottles. Those are merely evidential facts which enter into the standard of reasonable care. The evidence shows that the bottles were bought under a guaranty by the maker that they would withstand a pressure of ninety pounds to the square inch. When received, one or two bottles out of each gross were tested by being put under the guaranteed pressure. No bottle thus tested had ever broken. As filled and marketed the pressure was thirty-five pounds to the square inch. Plaintiff’s expert witness testified that the actual process of filling and capping was about the best test of whether they are going to stand on the conditions under which the bottle is used.” It is possible, however, that he was there speaking of the effect of a constant pressure upon a defective bottle as distinguished from the effect upon it of contact with cold. It is clear that bottles did break in the process of filling and that defendant recognized such breakage as a danger to its workmen. Every bottle was washed in hot water at 130 degrees, thoroughly brushed, and immersed in cold water at city tap temperature. Those temperatures, however, did not reach the extremes of hot and cold involved in the hot water-cold water test referred to above. During the process of washing each bottle was examined under a strong light and defective bottles were thrown out. There was evidence on the part of defendant that the filling and capping process was a good and rehable test. There was no specific test or inspection aimed at the detection of striations as distinguished from other defects. But there is nothing to indicate that defendant knew anything about the idiosyncracies of striated glass. In any event, there is no evidence to show that any tests other than those above mentioned were customarily or ever used by bottlers. Plaintiff’s expert witness was" an expert on the subject of bottle making, not on the business of bottling. When he spoke of the hot water-cold water test as being customary in “ the bottling trade ” it is clear from all the context that he was referring only to the bottle-making trade. There was no proof that this defendant was negligent.

The judgments against the defendant Peerless Glass Co., Inc., should be affirmed, with costs. The judgments of the Appellate Division and those of the Trial Term as to the defendant Minck Bros. & Co., Inc., should be reversed and a new trial granted, with costs to the appellant to abide the event. (See 259 N. Y. ___.)

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

license: Public Domain

text:
    Edward C. Becherer, Appellant, v. James M. Keefe, as Temporary Administrator of the Estate of Elizabeth V. Becherer, Deceased, Respondent.
    (Argued May 3, 1932;
    decided June 1, 1932.)

      Harry A. Gair for appellant.
    There is no identity between the cause of action previously tried and the one now before the court. The earlier action was to annul deeds. The present action rests on the deeds and seeks to retain the benefit of an agreement pursuant to which they were delivered. The present issue was not raised, could not be raised and was not adjudicated in the former action. (Packet Co. v. Sickles, 5 Wall. 580; Russell v. Place, 94 U. S. 606; Bell v. Merrifield, 109 N. Y. 202; Lewis v. O. N. & P. Co., 125 N. Y. 341; House v. Lockwood, 137 N. Y. 259; Cromwell v. County of Sac, 94 U. S. 351; Belden v. State, 103 N. Y. 1; Dawley v. Brown, 79 N. Y. 390; Godley v. Crandal & Godley Co., 212 N. Y. 121; Reynolds v. Ætna Life Ins. Co., 160 N. Y. 635.)

      John N. Regan and Edward G. Bathon for respondent.
    The issues and facts presented in the present action are res adjudicata and are barred by the judgment in the former trial. (Hull v. Hull, 225 N. Y. 342.)
   Crouch, J.

To adjust a marital dispute plaintiff conveyed certain real property to his wife by deeds absolute in’ form. She, at the same time, executed and delivered into his custody a will by which she devised the same property to him. Later, he sued to set aside the deeds. His claim was that under the duress of a separation suit based on false charges and by the inducement of false representations knowingly made by the wife, he had conveyed the property to her upon condition that she should hold it for his benefit and should reconvey it to him when he desired. Among many other facts the complaint alleged the making of the will above referred to. The answer was a denial. Upon the trial of that action the complaint was dismissed on the merits.

The court specifically found that the deeds delivered by the plaintiff to the defendant were not conditional but absolute; that they were based upon a sufficient consideration; that they were the free will and acts of the plaintiff; and that they were not procured through any undue influence," duress, fraud or false and fraudulent representations as the inducing cause. The court made no specific finding as to the making of the will nor as to whether that incident was or was not part of the transaction between the parties. It did refuse to find at plaintiff’s request that defendant executed the will at the same time and as part of that transaction.

Thereafter the present action was brought by the plaintiff against his wife, who has since died. Its purpose was to prevent any transfer or incumbrance of the property beyond the term of her fife, upon the theory that although by virtue of the judgment in the former action she owned the property, she nevertheless had agreed at the time the deeds were given to make a will devising it to plaintiff; that she had in fact made such a will and that she was now threatening to sell it. The judgment in the former action was pleaded in bar. The defense, overruled at Special Term, has been sustained in the Appellate Division.

The complaint in the former action, rambling and prolix, alleged many evidentiary facts concerning the mingled marital and business relations of the parties, including the making of the will. It seems to.have been the purpose of the pleader to disclose the creation and existence of an atmosphere in which the alleged wiles of the wife might well have flourished. All of that matter was irrelevant except so far as it afforded an evidentiary setting for the essential charge that the deeds had been procured by means of duress, fraud and undue influence. The, denial of an asserted fact creates an issue of some sort. It may be an ultimate issue or it may be an evidential issue. Its judicial determination when pleaded in bar is ordinarily conclusive only so far as it was ultimate and was necessary to a premise upon which the decision rests. (Donohue v. New York Life Ins. Co., 259 N. Y. 98.)

That any issue at all relating to the will was ever decided in the former action is not at all clear. It is true that the complaint alleged and the answer denied the making of the will pursuant to an agreement. It is true that evidence on the point was given by both parties. But it is also true that no express finding was made. We are asked to infer one from the findings and the refusal to find stated above. The inference, while arguable, is too uncertain to meet the burden of proof resting on the defendant. (Bell v. Merrifield, 109 N. Y. 202, 211.)

In any event, it is clear that such a finding would have decided a fact which was merely evidentiary and collateral. What the agreement between the parties may have been when the deeds were given was not necessary to a determination of whether they had been fraudulently or otherwise wrongfully procured.

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.

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment accordingly.


author: Kellogg, J.

text:
    The Thrift, Appellant, v. Henry E. Michaelis et al., Defendants, and Frederick Wagner et al., as Executors of and Trustees under the Will of Marie Wagner, Deceased, Respondents.
    (Argued May 11, 1932;
    decided June 2, 1932.)

      Samuel C. Whitman for appellant.
    The plaintiff should have been granted subrogation to the three mortgages which it paid and which 'were prior to the Wagner mortgage. (Barnes v. Mott, 64 N. Y. 397; Gans v. Thieme, 93 N. Y. 225; Zimmerman v. Haller, 91 Misc. Rep. 273; Clute v. Emmerich, 99 N. Y. 342; Emigrant Industrial Sav. Bank v. Clute, 33 Hun, 82.)

      Louis J. Halbert for respondents.
    There can be no subrogation. (25 R. C. L. 1337, subd. 22; Barnes v. Mott, 64 N. Y. 397; Banta v. Garmo, 1 Sandf. Ch. 383;
      Boley v. Daniel, 72 Fla. 121; Snelling v. McIntyre, 6 Abb. N. C. 469.)
   Kellogg, J.

The defendant Henry Michaelis, an owner of real estate, made application to the plaintiff for a loan of $3,500, to be secured by a mortgage upon his premises. The purpose of the application was stated therein to be for paying off mortgages.” Michaelis stated to the plaintiff that there were but three mortgages against his land. The title guarantee company which made a search for the plaintiff reported but three mortgages. Michaelis made an affidavit that there were no other mortgage liens than the mortgages reported. Accordingly, the plaintiff accepted from Michaelis a bond for $3,500, secured by a mortgage upon the premises, and, at the request of Michaelis, paid out the sum of $3,500 to the three mortgagees, whose liens were thereupon discharged and satisfied of record. It turned out that there was a fourth mortgage running to Marie Wagner which had not been recorded when the title company made its search. The existence of this mortgage was never revealed to the plaintiff prior to its acceptance of the $3,500 mortgage and its distribution of the moneys loaned thereupon. The Wagner mortgage, however, was recorded a few days prior to the plaintiff’s mortgage. It had been a lien inferior to the three mortgages which were extinguished. Thereafter, through the acts of the plaintiff, performed under mistake due to fraud, it assumed, upon the records, the aspect of a first mortgage; whereas the plaintiff’s mortgage appeared as a second mortgage. In this action to foreclose the plaintiff asks to have it declared that it is subrogated to the rights of the three mortgagees, whose liens were satisfied of record; that, as the owner in equity of these mortgages, its lien is superior to that of the Wagner mortgage, and that it is entitled to a decree accordingly.

We think that upon the plainest principles of equity and good conscience, the plaintiff is entitled to the relief prayed for. Under an honest mistake of fact, dishonestly occasioned by a false statement of the mortgagor, it paid off the three prior mortgages, when their assignment to it might have been required. If the cancellations of the three mortgages are permitted to stand, the owners of the Wagner mortgage will be unjustly enriched; if the mortgages are restored to their former record position, those owners will have suffered no disadvantage. We can conceive of no case more worthy of the application of the equitable doctrine of subrogation. In Barnes v. Mott (64 N. Y. 397, 401) it was held that an owner of premises, who purchased subject to a mortgage, in ignorance of a judgment against a former owner which was subsequent to the mortgage, and paid off the mortgage, might have the lien reinstated. It was said that the owner, “ having caused the same to be satisfied under circumstances authorizing an inference of a mistake of fact, equity will presume such mistake and give the party the benefit of the equitable right of subrogation. To do so in this case is to prevent manifest injustice and hardship, and interferes with no superior intervening equities.” We perceive no difference in the fact that in the case cited the party paying the mortgage owned the title to the land, whereas, in this case, the party paying is the owner of a hen. Certainly, the plaintiff was in no sense a volunteer. It paid the moneys at the request of the owner; it paid them to become the first lienor, as the parties agreed that it should be.

The judgment of the Appellate Division and that of the Special Term should be reversed and judgment granted in favor of plaintiff for the relief demanded in the complaint, with costs in all courts.

Pound, Ch. J., Crane, Lehman, O'Brien, Hubbs and Crouch, JJ., concur.

Judgment accordingly.


author: Per Curiam.

text:
    Village of Monroe, Respondent, v. Robert Benjamin, Appellant. Village of Monroe, Respondent, v. Henrietta Shearin et al., Appellants.
    (Argued May 11, 1932;
    decided June 2, 1932.)

      Philip A. Rorty and Thomas Gagan for appellants.
    No absolute title in fee to the lands overflowed could be acquired by the building of the dam or by either of the subsequent raises. (Matter of Brookfield, 176 N. Y. 138; Case v. Haight, 3 Wend. 632; Howard v. Wadsworth, 3 Greene, 471; Bryan v. Idaho Q. M. Co., 73 Cal. 249; Brigham v. Ross, 55 Conn. 373; Mack v. Bensley, 63 Wis. 80; Emery v. Three Rivers, 78 Mich. 438; Barber v.
      Nye, 65 N. Y. 211; Erie R. R. Co. v. Steward, 170 N. Y. 172; Belings, S. & M. Co. v. Hanger, 160 Vt. 160; Goodrich v. Lingley, 1 Gray, 615; Jennison v. Walker, 11 Gray, 423; Bradley v. Warner, 21 R. I. 36; Hammond v. Zehner, 21 N. Y. 118; Hall v. Augsburg, 46 N. Y. 622; Ely v. State of New York, 199 N. Y. 213; Hazelton v. Webster, 20 App. Div. 177.)

      John Bright for respondent.
    The exception in the deed of 1803 was of a fee and was not confined to the erection of one dam. In that construction the defendants and their predecessors in title have acquiesced for over 100 years. (French v. Carhart, 1 N. Y. 96; Trustees of Brookhaven v. Strong, 60 N. Y. 56; Read v. Erie, 97 N. Y. 341; McRoberts v. Bergman, 132 N. Y. 73; Carthage T. P. Mills v. Village of Carthage, 200 N. Y. 5; White v. Knickerbocker Ice Co., 254 N. Y. 152; Kingsland v. Mayor, 45 Hun, 198; 110 N. Y. 569.)
   Per Curiam.

Our decision must not be taken as an approval of finding 21 of the trial justice, that Peter Townsend and his successors have the right to flow back and drown the land by the waters of Mombasha lake by reason of a succession of raises in the height of the dam. We leave this question open.

The judgment in each action should be affirmed, with costs.

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Judgments affirmed.


text:
    Charles R. Drake, Respondent, v. Harry C. Reiner, Appellant.
    (Argued April 27, 1932;
    decided June 7, 1932.)

      Clarence P. Moser and Herbert R. Reif for appellant.
    There was no obligation, express or implied, to pay the sum demanded or any other sum. (Fink v. Cox, 18 Johns. 145; Dougherty v. Salt, 227 N. Y. 200; White v. Corlies, 46 N. Y. 467; Pershall v. Elliott, 249 N. Y. 183; Axelrod v. 77 Park Ave. Corp., 225 App. Div. 557; Seeley v. Osborne, 220 N. Y. 416; Mance v. Hossington, 205 N. Y. 33; Komp v. Raymond, 175 N. Y. 102; Mayer v. Metropolitan Traction Co., 105 App. Div. 497; Strahl v. Fink, 132 App. Div. 12; Moyer v. Shoemaker, 5 Barb. 319; Wolff v. Flatow, 7 N. Y. Supp. 416.) Recovery cannot be allowed upon the theory of an executed gift. (Fink v. Cox, 18 Johns. 145; Dougherty v. Salt, 227 N. Y. 200; Matter of Van Alstyne, 207 N. Y. 298.)

      William MacFarlane for respondent.
    Plaintiff was entitled to a verdict upon the theory that the transaction evidenced by the receipt was a gift. (Matter of Mills, 172 App. Div. 530; 219 N. Y. 642; Gray v. Barton, 55 N. Y. 68; Carpenter v. Soule, 88 N. Y. 251; Ferry v. Stephens, 66 N. Y. 321; McKenzie v. Harrison, 120 N. Y. 260; Matter of Babcock, 85 Misc. Rep. 256; 169 App. Div. 903; 216 N. Y. 717; Matter of Cohn, 187 App. Div. 392; Ridden v. Thrall, 125 N. Y. 572; Matter of Brady, 228 App. Div. 56; 254 N. Y. 590.) The plaintiff was entitled to a verdict upon the theory that the transaction was a credit based upon a valid consideration. (Marie v. Garrison, 83 N. Y. 14; Grossman v. Schenker, 206 N. Y. 466; Willets v. Sun Mut. Ins. Co., 45 N. Y. 45; Sun Oil Co. v. Heller, 248 N. Y. 28; Matter of Bradbury, 105 App. Div. 250; Wigand v. B. B. Brewing Co., 222 N. Y. 272; Brassil v. Maryland Casualty Co., 210 N. Y. 235; Simon v. Etgen, 213 N. Y. 589; Parsil v. Onyx Hosiery, Inc., 220 App. Div. 148; 246 N. Y. 559.)
   Kellogg, J.

The plaintiff was the general manager and a director of the Line-a-Time Manufacturing Company, Inc. The defendant owned a majority of the common stock of the corporation. On or about December 2, 1919, the defendant caused the corporation to issue to the plaintiff, out of treasury stock to which the defendant was entitled, one hundred and forty-six shares of the common stock. Contemporaneously the parties signed a writing which defined their interests in the stock so issued.

The writing provides that the plaintiff will pay the defendant $14,600 for the stock thus issued; that all dividends declared upon the stock and paid to the plaintiff will immediately be paid over by him to the defendant; that these payments will continue until the full purchase price with interest has been paid. The principal sum payable for the stock is to become due in ten years from the date of the agreement. Within thirty days after the termination of this period, the plaintiff may redeem the stock from the lien or pledge in the defendant’s favor, by paying off the balance of the purchase price then due with interest. In the event that the plaintiff fails thus to redeem the stock, title thereto will immediately vest in the defendant. The defendant will thereupon deliver to the plaintiff a release from all liability for the principal sum agreed to be paid.

The writing further provides that if the relationship between the plaintiff and the corporation is severed, at the instance of the corporation, the title to the stock shall immediately vest, in the defendant provided the defendant pay the plaintiff the total amount of dividends applied prior thereto in payment of said stock. In case the severance of relationship comes about through the voluntary act of the plaintiff, then the transfer shall take effect, without the repayment of any sum whatever.

About the time of this transaction, the defendant had made a profit in the purchase of certain other shares of the corporate stock. He determined to award the plain tiff participation in some of the benefits derived. Accordingly, he executed and delivered to the plaintiff a ’ reading as follows: “ Rochester N. Y. Dec. 2. Received of C. R. Drake Seventeen Hundred forty-seven and 30/100 dollars. To apply on the capital stock alloted to him as per agreement signed this day. $1,747.30.”

In August, 1927, the corporation notified the plaintiff that his services would no longer be required. At this time no dividends had ever been declared" and paid by the corporation. Under the express terms of the agreement, therefore, the stock, standing in the plaintiff’s name, immediately became, without any refund of dividends, the absolute property of the defendant. Nevertheless, the plaintiff thereafter brought this action to recover from the defendant the sum of $1,747.30, the amount named in the receipt, with interest from its date, and has had judgment therefor.

No tenable theory for a recovery may be conceived. The writing signed by the parties does not disclose a binding promise made by the plaintiff in exchange for a promise made by the defendant. It does in form express a promise by the plaintiff to pay for the 146 shares of stock at par. However, this was qualified by the provision that if he did not make payment, title to the stock should pass to the defendant, and the plaintiff should be released from any obligation to pay. Thus, no consideration was supplied to make a binding contract. Even if there were a consideration, the defendant never committed a breach of the contract. When the corporation discharged the plaintiff from its employment, the defendant became entitled to the stock. True, he had promised, in that event, to pay the plaintiff the amount of the dividends previously declared and applied upon the purchase. However, there were no dividends; so the defendant’s right to the stock was absolute. Moreover, the writing between the parties made no reference to the credit of $1,747.30, and expressed no promise in relation thereto. Nor does the law of quasi-contracts afford the slightest basis for a recovery. The plaintiff never made any payment to the defendant whatever, so that the defendant in no wise has ever been unjustly enriched at the expense of the plaintiff. The sum of $1,747.30, referred to in the receipt, was a profit which the defendant had made by his own devices. If he chose to allow a credit to the plaintiff, in reduction of the sum named in the option to purchase, that fact is immaterial here for the plaintiff never took up the option.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts.

O’Brien and Hubbs, JJ., concur; Lehman, J., concurs in result; Pound, Ch. J., and Crane, J., dissent; Crouch, J., not sitting.

Judgments reversed, etc.


text:
    Hammond Oil Company, Respondent, v. Standard Oil Company, Appellant, Impleaded with Another.

      (Argued May 10, 1932;
    decided June 7, 1932.)

      Clarence J. Shearn and Chester O. Swain for appellant.
    The agreement of December 30, 1919, was not a contract of joint adventure, but was a simple sale of an option. (Ross v. Willett, 76 Hun, 211; Hutchinson v. Birdson, 211 App. Div. 316; Hardin v. Robinson, 168 App. Div. 724; Pattison v. Blanchard, 5 N. Y. 186; Columbian Laundry v. Hencken, 203 App. Div. 140; Reynolds v. Searle, 186 App. Div. 202; Thompson v. Batcheller, 134 App. Div. 506; Walker v. Tupper, 152 Penn. St. 1; Partnership Law, § 11; Oppenheimer v. Van Raalte, 151 App. Div. 601; Smith v. Bodine, 74 N. Y. 30; Hill v. Curtis, 154 App. Div. 662; Peirce v. McDonald, 168 App. Div. 47; Clark v. Rumsey, 59 App. Div. 435; 178 N. Y. 592.)

      Ellwood M. Rabenold for respondent.
    Levering & Co. was under a fiduciary duty to Imbrie & Co. as evidenced by the letter of October 22, 1920, and defendant took over the options subject to the same duty. (May v. Hettrick Bros. Co., 181 App. Div. 3; 226 N. Y. 580; Underhill v. Schenck, 238 N. Y. 7; Meinhard v. Salmon, 249 N. Y. 458; Boice v. Jones, 106 App. Div. 547; Franken-Karch Corp. v. Castriotis, 195 App. Div. 529; Tate v. Williamson, L. R. 2 Ch. App. Cas. 60.) What defendant purchased from Levering & Co. were advantages inherent in the options as well as strict contract rights; and defendant having used such advantages to acquire the properties, they are subject to plaintiff’s claim in equity. (Matter of Brown, 242 N. Y. 1; Meinhard v. Salmon, 249 N. Y. 458; Mitchell v. Reed, 61 N. Y. 123; Gaddie v. Mann, 147 Fed. Rep. 960; May v. Hettrick, 181 App. Div. 3; Underhill v. Schenck, 238 N. Y. 7; Brown v. Leach, 189 App. Div. 158; Lonabaugh v. Midwest Refining Co., 285 Fed. Rep. 63.) The written agreements for the percentage were not limited to a purchase of the concessions by the exercise of the option for they extended to any purchase made on continuous pursuit, consequent upon the option relation. (Simon v. Etgen, 213 N. Y. 589; Valdes v. Larrinaga, 233 U. S. 705; Cleveland Cliffs Iron Co. v. Gamble, 201 Fed. Rep. 329; Hussey v. Flanagan, 237 N. Y. 227; Foley v. N. Y. Mutual Ben. Soc., 141 App. Div. 180; 208 N. Y. 538.) There was continuous pursuit and the purchase was consequent upon the options. (Meinhard v. Salmon, 249 N. Y. 458; May v. Hettrick, 181 App. Div. 3; 226 N. Y. 580; Valdes v. Larrinaga, 233 U. S. 705; Gamble v. Cleveland Cliffs Iron Co., 158 Fed. Rep. 49; Cleveland Cliffs Iron Co. v. Gamble, 201 Fed. Rep. 329.)
   Kellogg, J.

At La Paz, Bolivia, on October 10th, 1919, John S. Hammond, representing Imbrie & Co., a New York banking house, and Ivar Hoppe entered into an agreement which was recorded in the records of a notary at La Paz.

The agreement recited that Hoppe had been awarded two oil concessions by the government of Bolivia, one termed Ayacucho,” consisting of 48,900 hectares; and the other, termed Enriqueta,” containing 7,850 hectares. The agreement provided that Hammond should have an option to purchase these concessions at a price, for Ayacucho, of £35,000, and, for Enriqueta, of £15,000; that he should have three months to determine whether to accept the transaction; that if he should give notice of acceptance within three months he must send out a technical commission to make surveys of the land, and must pay the taxes for the first half of the year 1920; that the commission should have four months within which to report; that, if drillings were necessary, it should have four additional months; that, in such event, the purchaser was to pay the balance of the taxes for 1920; that, if the purchaser should find the surveys satisfactory, he should have three more months to perfect the contract of sale. It will be seen that Hammond, if he paid the taxes for the first half year, was to have ten months within which to exercise the option; if drillings were necessary and he paid taxes for the second half year, he was to have an additional four months. In the one event, therefore, the option was to expire on August 10th, 1920; in the other, on December 10th, 1920.

On December 30th, 1919, Hammond, acting for Imbrie & Co., entered into an agreement with Fred Bielaski, acting for Richmond Levering & Co., Inc., of New York, which was entered in the records of a notary at La Paz, Bolivia.

This agreement makes reference to the option on Ayacucho and Enriqueta which Hammond acquired. By it Hammond “ transfers and assigns said option under the terms and upon the clauses of. the aforementioned instrument of October 9th of the current year, to Mr. Fred Bielaski, representing the Richmond Levering Company, Inc.” Bielaski -undertakes to allow to Mr. John S. Hammond ” by way of remuneration for this transfer of his rights and interests on and in the oil claims Ayacucho and Enriqueta as follows: “ (a) 10% of the gross output of any oil or oil products obtained from the lands covered by this option, which oil or oil products shall be delivered at the terminal stations of the oil pipes that are being erected by the Richmond Levering Company for the working of the fields; (b) at the time of the execution of this instrument, and in settlement of all other rights, a sum in legal tender currency of 15,000 Bolivianos, which Mr. John S. Hammond acknowledges to have received to his entire and complete satisfaction.” Levering & Co. undertakes to make all proper surveys, and, if its engineers reported favorably, to make all necessary drillings. Hammond is to have recourse to the reports of the engineers, and may co-operate in making surveys and researches through his own personnel.

On January 5th, 1920, within the three months’ period prescribed therefor in the option from Hoppe, Levering .& Co., the transferee thereof, notified Hoppe of its acceptance of the transaction. It thereby obligated itself merely to the extent of paying the taxes for the first half of the year 1920, and of sending a commission to examine the properties. Levering & Co. did thereafter, in compliance with the terms of the Hoppe option, send out a commission to make surveys and report.

Prior to April 1st, 1920, Levering & Co. acquired a number of private concessions in the Bolivian field, and had procured a concession from the Bolivian government of oil rights in 1,000,000 hectares of land. On May 15th, 1920, Levering & Co. and the defendant the Standard Oil Company entered into an agreement for a joint enterprise ” or partnership.” Levering places at the disposal of Standard Oil its concession contracts, the Bolivian government concession for 1,000,000 hectares, as well as the Ayacucho and Enriqueta concessions, its entire Bolivian organization, as well as all its reports and data. During six months Levering is to refrain from negotiating with others than Standard Oil. At the end of this period Standard Oil is to determine whether it will proceed with a joint adventure with Levering. In case it does, Standard Oil is to pay Levering $1,050,000; the concessions are to belong to the partnership; the Standard Oil is to manage the enterprise; and the respective interests are to be Levering 22½%, Standard Oil 77½%. The six months’ period was subsequently extended to January 31st, 1921. In pursuance of this agreement Standard Oil received from Levering its reports of the explorations made by its technical commission, and sent out its own geologist to explore the lands.

During the period between May 15th and October 5th, 1920, pursuant to advices from Standard Oil that 12|% was the maximum royalty which could be paid, Levering & Co. procured the consent of Imbrie & Co. to reduce their participation in Ayacucho and Enriqueta concessions from- 10% to 2½%, so that with royalties payable to the government, the maximum of 12½% would not be exceeded.

In September, 1920, Hoppe made a claim that the option granted to Hammond for Imbrie & Co. had expired. Since drilling had not been found necessary, this was, indeed, the fact. On the 24th of that month, at La Paz, Bolivia, Hoppe and Fred Bielaski, representing Levering & Co., entered into a formal agreement in writing, canceling the option of October 10th, 1919, executed by Hoppe to Hammond, except for the obligation of Levering to pay taxes for the second half of 1920. On October 6th, 1920, Hoppe and Bielaski entered into new option agreements covering the concessions Ayacucho and Enriqueta. The agreements gave Levering an option to purchase Ayacucho for $127,000, and an option to purchase Enriqueta for $52,000. These options were terminable on December 1st, 1920, if the installments of the purchase price due that day were not paid.

On October 22d, 1920, Imbrie, having learned of the cancellation of the original option and the acceptance of a second option, wrote Levering, expressing a desire that the latter would make a declaration that these acts would not affect the contract obligations between the parties and that in any development of the enterprise, whether in exercise of the option or consequent upon the option, our participation as agreed upon between us to the extent of not less than two and one-half per cent of the brute product of petroleum or its derivatives shall be recognized.” On the same day Levering, using language almost identical, made reply, saying: “ I am very glad to assure you that any instruments of cancellation executed by us or in our name and delivered in Bolivia, or elsewhere, relating to the subject matter of the contract between us shall not in any way be deemed to affect or impair the contractual obligation between us, and that in any development of the enterprise, whether in exercise of the option or consequent upon it, your participation as agreed upon between us shall be recognized to the extent of not less than two and one-half per cent of the brute product of petroleum or other hydrocarbons.”

The options of October 6th, 1920, were not exercised, and expired on December 1st, 1920. From December 1st, 1920, to January 11th, 1921, there were no outstanding options, and Hoppe was free to deal with the concessions as he saw fit. On January 11th, 1921, Levering & Co. obtained new options from Hoppe and paid him $5,000 in cash therefor. The options provided for a price of $127,000 for Ayacucho, and for Enriqueta a price of $52,000. If the installments of payments due on June 1st, 1921, as provided in the option, were not made," the options were to terminate.

On January 31st, 1921, the defendant Standard Oil Company had not given Levering & Co. notice that it elected to enter into partnership with it, as provided for in the agreement of May 15th, 1920. Accordingly, the agreement of that date was no longer effective. Thereafter, on March 3d, 1921, the Standard Oil made an outright purchase from Levering & Co. of all its Bolivian concessions, for the sum of $550,000. This purchase included the government concession of 1,000,000 hectares, as well as the Ayacucho concession of 48,900 hectares and the Enriqueta concession of 7,850 hectares. Attached to this agreement were copies of the options granted by Hoppe on January 11th, 1921; also a copy of Levering’s letter to Imbrie & Co. dated October 22d, 1920.

The payments required to be made on June 1st, 1921, by the option of January 11th, 1921, granted by Hoppe to Levering, were not forthcoming, and the option expired. During the following four months Hoppe made numerous efforts to sell his concessions to Levering & Co. and to various other concerns interested in oil. During August and September various negotiations were had between Armstrong, representing the Standard Oil, and Hoppe for the purchase by the Standard Oil direct, of the concessions held by Hoppe. On October 14th, 1921, the purchase of the Ayacucho concession by the Standard Oil was closed at $55,000; on October 21st, 1921, the purchase of Enriqueta was closed at $7,850. The Standard Oil Company took title to the concessions in the name of the Standard Oil Company of Bolivia, all the stock in which was owned by the defendant the Standard Oil Company.

Upon these facts, it has been held that the plaintiff, as the successor in interest of Imbrie & Co., is entitled to 2½% of the brute product recovered from the oil wells on Ayacucho and Enriqueta by the Standard Oil Company of Bolivia. This holding is based upon the theory that Imbrie & Co. and Levering & Co., by their agreement of December 30th, 1919, became joint adventurers in the exploitation of the Ayacucho and Enriqueta oil fields; that their fiduciary relationship was such that a new option taken upon the same fields by Levering, after the expiration of the option referred to in the agreement, must be deemed to have become subject to its provisions precisely as had been the expired option; that when the Standard Oil purchased the Levering interests the option acquired remained subject to the same provisions; that its relationship to Imbrie & Co. became such that when it acquired concessions upon the same land for itself, the provisions of the agreement attached to give Imbrie & Co. a 2½% interest in the brute product of the wells which it subsequently established thereupon.

We do not conceive that the agreement of December 30th, 1919, created between Imbrie & Co. and Richmond Levering & Co. the relationship of partners, joint adventurers, trustee and cestui que trust, or any fiduciary relationship whatsoever. By that agreement Hammond, acting for Imbrie & Co., “ transfers and assigns ” to Fred Bielaski, acting for Levering & Co., an option to purchase oil concessions in Ayacucho and Enriqueta. Bielaski pays to Hammond 15,000 bolivianos therefor. He also stipulates, as an additional consideration, that Hammond •shall have “ 10% of the gross output of any oil or oil products obtained from the lands covered by this option.” The subject-matter of the agreement is not lands or oil concessions in Bolivia; it is an option to buy such concessions. Levering neither expressly nor impliedly undertakes to buy them. Imbrie, which parts with its entire title to the option, retains no right of purchase. If Levering exercises the option; if Levering chooses to develop the oil properties when bought, then and then only is Imbrie entitled to a percentage of the gross products. Even in the event of development, no partnership or joint venture is in contemplation. Imbrie will take a percentage of gross profits regardless of the cost of production; it will make good no deficiencies; it will be liable for no debts. There will be no common profit; there will be no common loss. All the risk will be borne by Levering; none by Imbrie. To say that there is a joint venture, where all the risk is borne by one, is to state a manifest contradiction. However, we are not concerned with a possible partnership which might have resulted had Levering exercised the option and chosen to develop and operate oil wells upon the premises. Levering, having absolute choice in the matter, did not purchase and develop. ■ Therefore, such a partnership, if any were in contemplation, never came into existence. The question is, what was the relationship of the parties in respect, not to- the oil lands, but to the option for the oil lands. Certainly, Levering owed to Imbrie no positive duty in relation thereto, either to exercise it, to renew it, or to do any other thing therewith except to make a survey of the lands. Nor do we conceive that Levering owed any negative duty in respect thereto. Such being the case, the parties were not in a trust relationship towards one another.

Even if there were a trust relationship established by the agreement of December 30th, 1919, in respect to its subject-matter, .the option for the oil lands, that option-terminated on August 10th, 1920, and with it the relationship was extinguished. The doctrine that neither partner, in the business and affairs of the partnership, may sell or buy for himself to the exclusion of the other, is qualified by the proviso that the transaction be initiated during the term of the partnership. “ While the relation lasts r one partner cannot clandestinely and exclusively profit by the trust relation.” (Mitchell v. Reed, 61 N. Y. 123, 136.) The sound rule is, that he cannot make any profit to himself from a secret transaction initiated while the relation of trustee and cestui que trust exists, no matter when it springs into active operation.” (Id. p. 137.) “ Joint adventurers, like co-partners, owe to one another, while the enterprise continues, the duty of the finest loyalty.” (Meinhard v. Salmon, 249 N. Y. 458, 463.) The italics in the last citation are the writer’s. The original option having expired, Levering no longer was a co-adventurer of Imbrie, if ever it had been, at the time when it negotiated for a new option from Hoppe, and might, therefore, bargain exclusively for itself. It did so bargain, and on October 6th, 1920, took an option on Ayacucho and Enriqueta running to itself alone.

It may be said that Imbrie and Levering, by their letters of October 22d, 1920, modified their agreement of December 30th, 1919, to extend the application of its terms, express and implied, to the new options of October 6th, 1920. We do not consider this to have been the fact. At the time when the letters were written, the original agreement was at an end; Levering was the exclusive owner of the new option; and the grant of an interest therein to Imbrie, attempted or promised by the Levering letter, was unsupported by a consideration. The suggestion that Imbrie furnished a consideration, in that it yielded its claim that the original option had not expired, has no force. In the first place, such a claim would have been without color of right. In the second, nothing indicates that the parties intended, Imbrie to release a valuable claim, Levering to grant a property right, the one thing to be done in exchange for the other. Whether value given constitutes a consideration depends on whether it was in fact the exchange or at least a requested detriment induced by the promise.” (Williston on Contracts, § 100.) Imbrie expresses no intent to yield its claim that the old option still continued; Levering expresses no thought that it desires such a surrender, in return for the promised interest. The whole tenor of the correspondence indicates, not that Levering was making a trade of one valuable thing for another, but that, conceiving it to be an honorable duty to let Imbrie share in the new option, it was gratuitously promising so to do.

Even were the letters expressive of a contract, the plaintiff is not helped. Levering promises that in any development of the enterprise, whether in exercise of the option or consequent upon it, your participation as agreed upon between us shall be recognized' * * *.” This letter follows the precise wording of a letter from Imbrie, asking for the declaration, except that the expression whether in exercise of the option or consequent upon the option,” contained in the Imbrie letter, becomes in the Levering letter, “ whether in exercise of the option or consequent upon it.” As Levering meant to make the precise declaration desired by Imbrie we must conclude that the somewhat ambiguous word “it,” used by Levering, was intended to be the equivalent of the word “ option,” used by Imbrie. Thus considered, what is the meaning of the statement that “ in any development of the enterprise, whether in exercise of the option or consequent upon the option,” Imbrie’s participation shall remain the same as it had been? The option referred to was the new option of October 6th, for that was the option which was the subject of the Imbrie and Levering letters and no other options were then in contemplation. The “ development of the enterprise ” to which the parties gave thought was a development by “ exercise of the option ” or by operations undertaken “ consequent upon the option,” i. e., pursuant to an exercise of that option. As the option of October 6th, 1920, was never exercised, obviously there was never any development of the enterprise, through exercise of the option, or consequent upon the option. Consequently, Levering’s letter of October 22d, even if theretofore binding, lost all force, as did the option, when on December 1st, 1920, the latter expired. At that time Levering ceased to be a co-adventurer with Imbrie, if ever it had been; ceased to be a partner; ceased to be in any fiduciary relationship. On the cessation of any such relationship, Levering was at perfect liberty to take a new option, exclusively for its own benefit, as it did on January 11th, 1921.

We have heretofore dealt with the relationship between Imbrie and Levering and the obligations which may have sprung therefrom to bind Levering. The courts below have assumed that Standard Oil and Levering were in a like situation; that each owed the same duty; that if Levering would have been bound, had it acted as did Standard, Standard equally must have been bound. We can see no basis for the assumption. The position of Standard Oil is wholly distinct from that of Levering. There was a relationship between Levering and Imbrie which may have given rise to a duty. There was no such relationship between Standard and Imbrie.

The only connection between Standard Oil, on the one hand, and Levering and Imbrie, on the other, is found in the fact that on March 3d, 1921, when Levering possessed the options from Hoppe, dated January 11th, 1921, Standard Oil purchased Levering’s interest therein. Clearly, this did not make Standard Oil a partner of Imbrie. It is true that the sale of a partnership interest by one partner does not necessarily dissolve the partnership. Nevertheless, the purchaser does not thereby become a partner; does not become entitled to interfere in the management or administration of the partnership business; ” does not gain the right to require any information or account of partnership transactions; ” becomes entitled only “ to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled.” (Partnership Law; Cons. Laws, ch. 39, § 53.) The restrictive obligation which the plaintiff seeks to impose upon Standard, that as a joint owner with Imbrie of the option of January 11th, 1921, it could not purchase the concessions covered by the option exclusively for itself, is one which must have had “ its origin, not in a right of property, but in a contract or relation.” (Per Cardozo, J., in Underhill v. Schenck, 238 N. Y. 7, 14.) At the very most, there was here, between Imbrie and Standard Oil, only that connection afforded by the fact that each may have had a right of property ” in the same option. Otherwise, there was never any contract or relation between Imbrie and Standard Oil. They never contracted with one another; they never even negotiated. They were not partners; they were not co-adventurers; they were not trustee and cestui que trust. Surely persons may become partners only by the assent of both, and here there was no assent. It is said that Standard Oil occupies the position which Levering would have occupied in a like situation, because of a concession made upon the trial by its counsel. That concession is: “ We are charged with the legal obligation which Levering owed to Imbrie & Co.” We take this to mean that if Levering, because of its letter of October 22d, 1920, was bound to accord to Imbrie property rights in the options of January 11th, 1921, then Standard Oil, having notice thereof, would take subject to such rights. That is undoubtedly true. However, the plaintiff is not now seeking to enforce property rights in the option of that date. It is seeking to enforce not a “ legal obligation,” but a trust duty arising out of a relationship. As Standard was never in any relationship whatever with Imbrie & Co., its right to purchase exclusively for its own benefit was absolute.

For all these reasons we are clear that when Standard Oil, on October 14th and October 21st, 1921, after the termination of the options of January 11th, 1921, made its purchases of the oil concessions Ayacucho and Enriqueta, it was entitled to develop and enjoy the oil lands conveyed, without rendering to Imbrie & Co. a percentage of its gross profits.

The judgment of the Appellate Division should be reversed and the judgment of the Trial Term affirmed, with costs in the Appellate Division and in this court.

Pound, Ch. J., Crane, Lehman, O’Brien, Hubbs and Crouch, JJ., concur.

Judgment accordingly.


author: Pound, Ch. J.

text:
    Joseph Perlmutter et al., Copartners, under the Firm Name of Perlmutter Furniture Company, Respondents, v. Frederick S. Greene, as Superintendent of Public Works of the State of New York, et al., Appellants.
    (Argued June 15, 1932;
    decided July 19, 1932.)

      John J. Bennett, Jr., Attorney-General (Henry Epstein and Timothy F. Cohan of counsel), for appellants.
    It is the duty of the State to keep the highways safe for the traveling public, and the erection of the screen is a legitimate performance of this duty. (Johnson v. State of New York, 104 Misc. Rep. 399; Packer Corp. v. State of Utah, 52 Sup. Ct. Rep. 273; Cohen v. Mayor of New York, 113 N. Y. 532; Fifth Ave. Coach Co. v. City of New York, 194 N. Y. 19; 221 U. S. 467.) The plaintiffs have no vested right that their sign shall be read from the highway. (Boot v. Conkling, 199 App. Div. 90; Story v. New York Elev. R. R. Co., 90 N. Y. 122; Lahr v. Metropolitan R. R. Co., 104 N. Y. 268; Kane v. New York Elev. R. R. Co., 125 N. Y. 164.) The plaintiffs have no independent easement of prospect or view. (Aldred’s Case, 9 Coke, 57-b; Brown-Brand Realty Co. v. Saks & Co., 126 Misc. Rep. 336; 218 App. Div. 827; Bradley v. Degnon Contracting Co., 224 N. Y. 60; First Nat. Bank v. Tyson, 133 Ala. 459; Field v. Barling, 149 Ill. 556; Hallock v. Scheyer, 33 Hun, 111.) Recognition should be accorded aesthetic considerations in determining questions of public welfare under the police power. (State ex rel. Civello v. New Orleans, 154 La. 271; State v. Roberge, 141 Wash. 74; General Outdoor Advertising Co. v. City of Indianapolis Department of Public Works, 172 N. E. Rep. 312; Cochrane v. Preston, 109 Md. 220; Ware v. Wichita, 113 Kan. 153; State ex rel. Carter v. Harper, 182 Wis. 148; Walnut & Quince Streets Corp. v. Mills, 154 Atl. Rep. 29; Varney v. Williams, 155 Cal. 318; Welch v. Swasey, 214 U. S. 91; Matter of Clinton Avenue, 57 App. Div. 166; Matter of Wulfsohn v. Burden, 241 N. Y. 288; State v. Houghton, 144 Minn. 13; People v. Sterling, 128 Misc. Rep. 650.)

      John E. Mack and Edward A. Conger for respondents.
    The owner of land abutting the highway has easements of light and air, access, prospect and view, which cannot be taken without just compensation. (Story v. N. Y. Elev.

      R. R. Co., 90 N. Y. 122; Lahr v. Metropolitan Elev. R. R. Co., 104 N. Y. 268; Muhlker v. Harlem R. R. Co., 197 U. S. 544; Kane v. N. Y. Elev. R. R. Co., 125 N. Y. 164; Bohm v. Metropolitan Elev. R. R. Co., 129 N. Y. 576; Hallock v. Scheyer, 33 Hun, 111; Brown-Brand Realty Co. v. Saks & Co., 126 Misc. Rep. 336; 218 App. Div. 827.) The real purpose of the erection of the shield by defendants is to preserve the aesthetic surroundings and not to protect the travelers on the highway. (People v. Rubenfeld, 254 N. Y. 245.)
   Pound, Ch. J.

Plaintiffs are lessees of a parcel of land immediately south of the east approach to the Mid-Hudson Bridge at Poughkeepsie. They purposed to erect a large display sign or billboard thereon for advertising purposes in full view of travelers along the adjacent approach which is a part of the State highway. The State of New York is the owner of the fee of the highway. The defendant Greene, as State Superintendent of Public Works, for the purpose of blocking a view of the sign from the highway, purposed to construct a screen or shield .on the highway in front of the billboard. The billboard would be about fifty-three feet long, ten feet high and thirty-five feet from the traveled part of the bridge approach, on a pronounced curve in a narrow road. It may be illuminated at night.

Plaintiffs have obtained a judgment restraining defendants from placing the screen in. the highway where it would prevent motorists from seeing their sign. The courts below have held that the State may not lawfully erect the screen so as to obscure plaintiffs’ sign; that it may not thus prevent plaintiffs from using their property for advertising purposes; and that the erection of the screen for the purpose of obscuring the billboard does not safeguard the traveler or serve any highway purpose.

When the fee of the highway has been transferred to the State, the State may use the highway for any public purpose not inconsistent with or prejudicial to its use for highway purposes. (Thompson v. Orange & Rockland Elec. Co., 254 N. Y. 366, 369.) The mere disturbance I j of the rights of light, air and access of abutting owners on j such a highway by the imposition of a new use, consistent I; with its use as an open public street, must be tolerated ' by them and no right of action arises therefrom, although such use interferes with the enjoyment of their premises. (Kane v. N. Y. Elev. R. R. Co., 125 N. Y. 164, 176.) The highway must, however, be kept open as a public highway and not diverted to wholly inconsistent uses. This right to have the highway kept open for light, air and access as well as for travel has been termed an easement ” but it is the right deduced by way of consequence from the purposes of a public street. (Muhlker v. N. Y. & H. R. R. Co., 197 U. S. 544.)

Shall we, on this basis, imply as against the State an easement of visibility from the highway which arises from the necessity that the highway be kept open;” hold that the screen would be an unlawful structure and that plaintiffs are entitled, by virtue of proximity to the highway, to protection from the injuries to the easements of light, air, view and access belonging to them ” which would result therefrom? (Bradley v. Degnon Contr. Co., 224 N. Y. 60, 72; Donahue v. Keystone Gas Co., 181 N. Y. 313, 319; Muhlker v. N. Y. & H. R. R. Co., supra.) Or shall we invoke the principle that considerations of an esthetic purpose may enter into the reasons for improving a State highway and thus sustain the Superintendent of Public Works in his action if it has any direct relation to a highway purpose? (Welch v. Swasey, 214 U. S. 91, 108; Matter of Wulfsohn v. Burden, 241 N. Y. 288, 300.)

We are dealing, not with a statute passed in the exercise of the police power of the State, prohibiting billboards on private property where the primary motive is esthetic (Public Esthetics and the Bill Board, 16 Cornell Law Quarterly, 151, 154), but with the act of the administrative officer in constructing and controlling a State highway placed in his charge. The question is as to the limits of his authority. The State Superintendent of Public Works has control of the Mid-Hudson Bridge (Laws of 1923, ch. 900, § 3; Laws of 1927, ch. 88, § 4) and has general supervision over all State highways. (Highway Law [Cons. Laws, ch. 25], art. 2, § 15.) In the exercise of such supervision and control doubtless he may plant shade trees along the road to give comfort to motorists and incidentally to improve the appearance of the highway. By so doing he aims to make a better highway than a mere scar across the land would be. If trees interfere with the view of the adjacent property from the road, no right is interfered with. So if the Superintendent desires to shield the travelers on the highway from obnoxious sights of public nuisances or quasi-nuisances by the erection of screens more pleasing to the eye, he still acts within his jurisdiction. He aims to make the highway free from sights which would offend the public. No adjacent owner has the vested right to be seen from the street in his back-yard privacy. Again, if the purpose is to shut out from view scenes which might distract the attention of the driver of a car, the Superintendent may aim to make the highway safer for those who use it by erecting screens to keep the eye of the driver on the road as he may erect barriers to keep the car on the road on dangerous curves. All these things are as incidental to the construction and operation, of the highway as are the matters of grade, materials or drainage.

Authorities are agreed that any considerations, other than purely esthetic ones, which are relevant to the operation of the highway, may influence the Superintendent’s action and, if such considerations exist, the fact that considerations of an esthetic nature also exist does not take away his authority to act. Our lower courts have differed on the question whether artistic considerations alone are sufficient to warrant the general prohibition of billboards on private property (People v. Wolf, 127 Misc. Rep. 382; 220 App. Div. 71; appeal dismissed, 247 N. Y. 189), and this court has said: “ One of the unsettled questions of the law is the extent to which the concept of nuisance may be enlarged by legislation so as to give protection to sensibilities that are merely cultural or aesthetic.” (People v. Rubenfeld, 254 N. Y. 245, 248.)

The Supreme Court of the United States has held that billboards may be prohibited in the interest of the safety, morality, health and decency of the community (Cusack Co. v. City of Chicago, 242 U. S. 526), and that they may be excluded from residence districts by zoning ordinances. (Village of Euclid v. Ambler Realty Co., 272 U. S. 365.)

Beauty may not be queen but she is not an outcast beyond the pale of protection or respect. She may at least shelter herself under the wing of safety, morality or decency. It is, however, needless for the decision of the case to delimit her sphere of influence. The immediate question is not whether the State Superintendent of Public Works may, as an incident to his power of highway control, shut off from the eyes of the traveling public all advertising signs erected on private property nor is it whether the highway, created by public money, is controlled in part by those who desire to thrust upon the notice of the public the ostentatious display of private advertising from the adjoining premises for their own profit wherever they see fit; nor is it whether advertisers have a right, independent of environment, to have" a highway kept open ” visually so that their signs may compel the eye of the passer-by. The question is whether the Superintendent was justified in erecting this screen to shut off the view of this sign in this location.

The elevated railway cases (Story v. N. Y. Elev. R. R. Co., 90 N. Y. 122; Lahr v. Metropolitan Elev. R. R. Co., 104 N. Y. 268), much relied on herein, went far to protect adjacent owners whose light, air and access had been interfered with by the construction of the elevated railroads in front of their premises on the city-owned street. Some expressions in the opinions, read apart from the context, may suggest that any disturbance in such a street, not essential to highway purposes, suffered by the owner of an adjacent lot, creates a cause of action in his favor. They do not go to that extent. This court has never discussed easements of prospect or view, although it has mentioned them. Doubtless they may exist in certain cases. Great diminution of values may impel the courts to find a remedy when the street, although still a street, is partially closed to common street uses, but every diminution of value does not call for compensation. (Muhlker v. N. Y. & H. R. R. Co., supra.) Aside from the elevated railway cases, it is generally held that any change in the street for the benefit of public travel is a matter of public right as against the private right of the adjacent owner. The highway in suit is still “ open to the plaintiffs. It is not closed to them in any sense. It is the same highway that it would be without the screen.

From new conditions of travel new rights and obligations arise. The State creates new values for adjacent owners by building good roads. It does not then destroy old values, as happened in the case of the elevated structures, by blocking the roadway. No contract exists between the State and the owner that the latter may forever use bis property to erect billboards anywhere along the highway; no right in rem exists, for the adjacent owner has no title to the highway. As one of the sovereign people for whom the title is held in trust the adjacent owner may compel the State to Unfit the use. of the highway to highway purposes when a proposed excess use would be to his disadvantage.

Some future case may call for new definitions of highway purposes. New highways and new uses arise. Enough for this decision to say that the Superintendent of Public Works may act reasonably in his discretion for the benefit of public travel in screening a billboard at a dangerous curve when by its enormity such a structure may] divert the attention of the motorist from the road. He then interferes with no property right of the adjacent owner and he should not be interfered with by the courts.. If, incidentally, the outlook from the road is improved by shutting off the view of the billboard, so much the better. We deal with the act and not with the motive. An act, lawful in itself and not done with malice, will not be restrained nor will the courts assume the management and control of State highways.

The judgments should be reversed and the complaint dismissed, with costs in all courts.

Crane, Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Judgments reversed, etc.


author: Crane, J.

text:
    Lois Harris, Respondent, v. Tudor Harris, Appellant.
    (Submitted May 31, 1932;
    decided July 19, 1932.)

      J. Harlin O’Connell for appellant.
    The court has no power in amending a final decree of divorce to provide that the amount therein directed to be paid to the plaintiff for her support and maintenance be increased as of a date prior to the entry of the order amending the decree. (Brice v. Brice, 225 App. Div. 453; Krauss v. Krauss, 127 App. Div. 740; Parkinson v. Parkinson, 222 App. Div. 838; Crawford v. Crawford, 129 Misc. Rep. 683; Goodsell v. Goodsell, 82 App. Div. 65; Kell v. Kell, 179 Iowa, 647; Livingston v. Livingston, 173 N. Y. 377; Walker v. Walker, 155 N. Y. 77; Ackerman v. Ackerman, 200 N. Y. 72.)

      W. H. Dannat Pell and John F. Le Viness, Jr., for respondent.
    The court had the power to direct the increase to be paid from the date of plaintiff's application therefor. (Harter v. Harter, 177 App. Div. 827; Cary v. Cary, 168 App. Div. 939; 217 N. Y. 670; McCarthy v. McCarthy, 143 N. Y. 235; Forrest v. Forrest, 25 N. Y. 501.)
   Crane, J.

By a decree of divorce entered in Westchester county, New York, on July 27, 1922, the defendant was directed to pay to the plaintiff.the sum of $1,200 annually for her support, and support, education and maintenance of the children. The husband having inherited a large sum of money, the wife made a motion, returnable on July 30, 1929, for an increase in the allowance for herself and children. The facts alleged in her petition being questioned by the defendant, the matter was sent to a referee to take proof and report back to the court. After protracted hearings, his report was filed January 7, 1931, and thereafter confirmed by the Special Term, which made an order directing that the amount to be paid to the plaintiff be increased to the sum of $3,000 a year to commence nunc pro tunc as of the 30th day of July, 1929,” the day on which the plaintiff’s motion to amend the decree of divorce was returnable.

The appellant denies the power of the Supreme Court to increase alimony to take effect prior to the date of the order directing the increase.

Sections 1155 and 1170 of the Civil Practice Act provide that by an order upon the application of either party, after due notice to the other, the court may vary or modify the amount of alimony at any time after final judgment. Notice was given in compliance with these sections and the matter came on to be heard on the date specified, July 30, 1929, but the court was unable to decide at that time what to do, as the material facts were in dispute. The court might have taken evidence then and there; instead, it appointed a referee, who thereafter held many hearings. Adjournments were taken with the consent, or, at the request of the husband, and the matter dragged on for over a year and a half. Apparently no objection was made by the husband, as no motion was made to discharge the referee or terminate the reference. Finally, the referee reported the facts upon which the court could and did act.

The court had power given to it by these provisions of the Civil Practice Act to increase alimony on July 30, 1929. This was the return day of the motion to amend the decree of divorce providing for alimony. The taking of testimony was to establish the facts upon which the court could act with caution and with justice. So far as the power of the court is concerned, those facts are deemed to have been established as of the date when the motion was made returnable, July 30, 1929, and the order could properly take effect as of that date. Were this not so, a defendant, by repeated adjournments for one excuse or another, might delay his wife in procuring for herself and his offspring the relief and help which they should have, owing to changed conditions and circumstances. The court is not bound to modify a decree either by increasing or decreasing the amount of alimony to take effect as of the date of the application, but it has the power so to do in its discretion. Such cases as Brice v. Brice (225 App. Div. 453); Krauss v. Krauss (127 App. Div. 740); Parkinson v. Parkinson (222 App. Div. 838), limiting the power of the court to reduce alimony, have reference to the amounts which have become due and owing.prior to the time of application to the court for a reduction. These past due sums have become vested rights of property in the plaintiff which the Supreme Court has no power to take from her. The practice upon these motions is like that in the action for divorce where a final decree may, in the discretion of the court, provide that alimony be payable nunc pro tunc as of the time of the commencement of the action. (McCarthy v. McCarthy, 143 N. Y. 235.)

The order appealed from should be affirmed, with costs.

Pound, Ch. J., Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Order affirmed.


text:
    Lillie Rosenberg, Respondent, v. Milton J. Rosenberg, Defendant. The Equitable Life Assurance Society of the United States et al., Appellants.
    (Argued June 2, 1932;
    decided July 19, 1932.)

      Peter C. Mann and James D. Ewing for The Equitable Life Assurance Society of the United States, appellant.
    The summary direction requiring the insurance company to make the payments to the receiver was in violation of the company’s constitutional rights and in violation of due process of law. (Rodman v. Henry, 17 N. Y. 482; Kenney v. South Shore Natural Gas & Fuel Co., 201 N. Y. 89; Matter of Delaney, 256 N. Y. 315; People v. Square Deal Poultry Corp., 218 App. Div. 781; Ecker v. Myer, 119 Misc. Rep. 375; Schreiber v. Garden, 152 App. Div. 817.) The receiver is not entitled under the form of tire policies either to the alleged cash surrender values or loan values of the policies. (Ecker v. Myer, 119 Misc. Rep. 375; Eltonhead v. Travelers Ins. Co., 117 App. Div. 170; Maurice v. Travelers Ins. Co., 121 Misc. Rep. 427; Lowenstein v. Koch, 165 App. Div. 760; 217 N. Y. 689; People v. Square Deal Poultry Corp, 218 App. Div. 781.)

      Samuel Gottlieb and Cornelius B. Chapman for respondent.
    The court had jurisdiction and plenary power summarily to sequester the proceeds of the paid-up policies of insurance, and to direct the application of the funds toward the fulfillment of the obligations of the decree, of which defendant was in contempt. (Mathews v. Mathews, 240 N. Y. 28; 247 N. Y. 32; Scott v. Scott, 219 App. Div. 451; 247 N. Y. 527.) The appeal should be dismissed, since leave to review the order appealed from was not applied for nor obtained from the Appellate Division. The order made below is a discretionary and intermediate one and not appealable as of right. (Scott v. v. Scott, 219 App. Div. 451; New York Security & Trust Co. v. Saratoga Gas & Electric Light Co., 156 N. Y. 645; Nod-Away Co. v. Carroll, 240 N. Y. 252; Dodge v. Cornelius, 168 N. Y. 242.)
   Crane, J.

On January 6, 1932, the plaintiff was appointed receiver of the personal property of the defendant Milton J. Rosenberg in sequestration proceedings, to enforce the payment of alimony ordered to be paid under a final decree of separation entered in January, 1927. This order provides “ that Lillie Rosenberg be and she hereby is appointed receiver of the personal property of the defendant Milton J. Rosenberg, and she hereby is directed to take possession of the personal property of the defendant.”

Thereafter the plaintiff, as receiver, moved, in the separation action, by order to show cause, dated February 3, 1932, for an order directing the Equitable Life Assurance Society of the United States — a third party, not a party to the action — to turn over and 'deliver to the plaintiff herein, as receiver, the cash surrender or loan value of three paid-up policies of life insurance issued upon the fife of Milton J. Rosenberg, the beneficiaries under said policies being the daughters of the insured.

The application was granted, and an order made, April 6, 1932, directing said assurance society forthwith to turn over to the plaintiff, as receiver, the sum of $13,339.52 and any and all other sums representing the cash surrender or loan values of said policies, and, upon the payment of such sum, discharging the society from any further liability. This order having been affirmed by the Appellate Division, by a divided court, the Equitable has appealed to this court, as a matter of right, from a final order in a special proceeding. Although this motion was made by the receiver in the separation action, the Equitable Life Assurance Society not being a party to that action, the application takes the form of a special proceeding, and the order of the Special Term becomes a final order, giving this court jurisdiction over the appeal. (Gang v. Gang, 253 N. Y. 356.)

Passing to the merits, we find that the order of the Special Term cannot be sustained. This is not a case where a third party has property which it concedes to belong to the debtor, and is ready and willing to give it to him or any one else entitled thereto. The Equitable appeared upon the motion in opposition and denied that there were any sums whatever due to the insured, or that the policies had any cash or surrender value. The three policies were paid-up policies, and it was and is alleged by the assurance society that, by the terms of the policies, a cash or surrender value was payable only upon a default in payment of the premiums, or upon a lapse; that, as these policies had been fully paid, the provisions relating to a surrender value had no application, as there could be no lapse or default. If we consider that the position taken by the assurance society may be open to question, we at least have the fact that the company denies any liability upon the policies and questions the debt. It denies that it has property of the judgment debtor and states that it owes him nothing. The obligations under the policies at most amount to debts or contract obligations due to the husband or to the persons representing him. The debt or obligation being denied, the controversy cannot be settled upon a motion, but only by an action, in which, under our Constitution, the assurance society would be entitled to a jury trial. The husband himself could not collect upon the policies by a summary motion or proceeding, and a receiver of his property has no better right. The company is entitled to have the terms of its policies passed upon in the usual form of action, and judgment against it rendered only after a hearing and a determination that there be an amount due to the insured. (Kenney v. South Shore Natural Gas & Fuel Co., 201 N. Y. 89; Matter of Delaney, 256 N. Y. 315.)

The terms of the policies, as we read them, indicate that the position taken by the assurance society is not without merit; and that as to these paid-up policies there is no cash surrender value or loan value payable to the insured as a matter of right, there being no default in the payment of premiums or a lapse of the policies. It may be that the company has an option upon the surrender of the policies to cancel them, upon' payment of certain scheduled amounts; in other words, buy the policies, but there has been no attempt to surrender these policies.

Whether this application be made under section 1171 or section 1171-a of the Civil Practice Act.is immaterial. Both these sections authorize the court, in matrimonial actions, to sequestrate the property, both real and personal, of the husband, section 1171-a extending the authority to property, whether tangible or intangible, and further authorize the court to appoint a receiver to take such property into his possession and control. However broadly these sections may be interpreted, they are at least limited to property which, beyond any reasonable question, belongs to the husband. Nothing in these provisions authorizes the court, upon affidavits, to determine the title to the property or permits the collection of disputed debts by summary proceedings. It may authorize or even direct the husband’s debtor to pay the amount due to the receiver, but it has no authority by such a method to adjudge the validity or the amount of an alleged debt, when the alleged debtor denies all liability.

The order of the Appellate Division and that of the Special Term-should be reversed and the motion directing the insurance company to pay the surrender value of insurance policies to the plaintiff as receiver in sequestration proceedings denied, with costs in all courts.

Pound, Ch. J., Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Ordered accordingly.


text:
    Central Chandelier Company, Appellant, v. Irving Trust Company, as Trustee in Bankruptcy, Respondent.
    (Argued June 10, 1932;
    decided July 19, 1932.)

      David M. Palley and Robert Netter for appellant.
    Under the conditional sales contract, the plaintiff, upon default in payment, became entitled to retake the electrical lighting fixtures. The right to the possession of the lighting fixtures, until such default, was in the defendant; upon such default, however, the right to the possession of the fighting fixtures vested in the plaintiff. (Mc Keage v. Hanover Fire Ins. Co., 81 N. Y. 38; Wahle-Phillips Co. v. Fitzgerald, 225 N. Y. 137; Madfes v. Beverly Development Corp., 251 N. Y. 12; Alf Holding Corp. v. American Stove Co., 253 N. Y. 450; Grossman v. Weiss, 129 Misc. Rep. 234.) The contract of conditional sale is absolutely valid as against the defendant, as though it were a party thereto. (Matter of Bradbury Co., 8 Fed. Rep. [2d] 496; Matter of Master Knitting Corp., 7 Fed. Rep. [2d] 11; Matter of Quinn v. Bancroft Jones Corp., 18 Fed. Rep. [2d] 727; Matter of Avlon Syrup Corp., 25 Fed. Rep. [2d] 342; Rivara v. Stewart & Co., 241 N. Y. 259; Stephens v. Meriden Britannia Co., 160 N. Y. 178; Carples v. Cumberland Coal & Iron Co., 240 N. Y. 187; Stowell v. Otis, 71 N. Y. 36; Hudson-Oliver Motor Co. v. Vivian, 116 Misc. Rep. 104; Conrad Mercantile Co. v. Silver, 75 Mont. 36; Sharp Bros., Inc., v. Bartlett, 76 Mont. 415; Hunt Mach. Co. v. Stewart, 57 Hun, 545; McEntee v. New Jersey Steamboat Co., 45 N. Y. 34.) If the mortgagee acquired a mortgage on the fighting fixtures, its mortgage covered only fighting fixtures which prior to the last advance were attached to the realty. It did not cover fixtures unattached. (Cohen v. 1165 Fulton Avenue Corp., 251 N. Y. 24.)

      Milton Elias Schattman for respondent.
    The building loan, mortgage by its express terms covered not only the real property involved, but also personal property. Plaintiff’s conditional bill of sale was, therefore, void as to such mortgagee, whether the fighting fixtures be considered as realty or personalty. (Wahle-Phillips Co. v. Fitzgerald, 225 N. Y. 137; Madfes v. Beverly Development Co., 251 N. Y. 12; Cohen v. 1165 Fulton Avenue Corp., 251 N. Y. 24.) Since plaintiff’s reservation of title was void as to a mortgagee, defendant was justified in refusing plaintiff’s demand for possession of the fixtures and replevin did not lie. (Griffin v. Long Island R. R. Co., 101 N. Y. 348; McCloskey v. Henderson, 231 N. Y. 130; Wahle-Phillips Co. v. Fitzgerald, 225 N. Y. 137; Kirk v. Crystal, 118 App. Div. 32; 193 N. Y. 622.)
   Crane, J.

The Adeline Building Corporation was engaged in erecting a six-story apartment house at No. 1741 Andrews avenue, in the Bronx, New York city. For that purpose it secured a building loan and first mortgage from the New York Title and Mortgage Company in the sum of $265,000. The mortgage covers the real property and such personal property as comes within the following clause: Together with all fixtures and articles of personal property, now or hereafter attached to, or used in connection with the premises, all of which are covered by this mortgage.”

The Adeline Building Corporation purchased its lighting fixtures from the plaintiff, the Central Chandelier Company, under a conditional bill of sale which stated that title to the fixtures should remain in the seller until paid for. This conditional bill of sale was made on the 14th day of March, 1929, and the fighting fixtures covered by it were delivered on April 15 and April 17. On April 23, the title company made the final payment under the building loan mortgage, amounting to $15,000. At the time of this advance all the lighting fixtures involved in this litigation had been delivered at the premises, but only about half of them had been set up, or attached. The other half were lying loose and unattached in the various rooms of the building. The seller-plaintiff failed to file its conditional bill of sale until after this advance made by the title company.

The Personal Property Law (Cons. Laws, ch. 41), section 61, defines “purchaser ” as including “ mortgagee,” and section 67 provides that If the goods are so affixed to realty at the time of a conditional sale or subsequently as to become part thereof but to be severable without material injury to the freehold, the reservation of property shall be void after the goods are so affixed as against subsequent purchasers of the realty for value and without notice of the conditional seller’s title, unless the conditional sale contract * * * shall be filed before such purchase * * *."

The New York Title and Mortgage Company was a bona fide incumbrancer within the meaning of this law, and the conditional bill of sale was void as to the fixtures included within the terms of the mortgage. (Cohen v. 1165 Fulton Ave. Corp., 251 N. Y. 24; Madfes v. Beverly Development Corp., 251 N. Y. 12.)

The security for the money advanced by the New York Title and Mortgage Company was its mortgage upon the real property and the personal property attached to it. This mortgage did not by its terms amount to a full and complete chattel mortgage so as to cover personal property delivered to and in the possession of the vendee, but not yet attached to the real estate. The chattel mortgage clause reads: Together with all fixtures and articles/of personal property, now or hereafter attached to, or used in connection with the premises, all of which are covered by this mortgage.”

About fifty per cent of the lighting fixtures were not attached to the premises nor were they used in connection with the premises; they were lying around loose in the various rooms unattached and could not be used until attached. The plaintiff, vendor, retained title to these loose lighting fixtures under its unfiled conditional bill of sale and is entitled as against the defendant to a recovery of them or their value. (Madfes v. Beverly Development Corp., supra.)

In August, 1929, the Adeline Building Corporation was adjudicated a bankrupt and the Irving Trust Company became its trustee and substituted as a defendant herein. The point is raised that the trustee is in no better position than the vendee or bankrupt and cannot plead the title of the New York Title and Mortgage Company as a defense in this action. While the unfiled conditional bill of sale is good as between the vendor and the vendee (Stephens v. Meriden Britannia Co., 160 N. Y. 178), yet the trustee represents not merely the bankrupt, but all creditors, and is thus interested in preserving the assets of the estate. Incidentally, the trustee is interested in preserving the validity of the mortgage security for the title company and thus reducing a possible deficiency judgment against the bankrupt. (McCloskey v. Henderson, 231 N. Y. 130.)

This judgment should be modified to the extent of allowing the plaintiff to recover the unattached fixtures or their value. The difficulty with this court making the modification is that the record is indefinite as to the amount or value- of this merchandise. The statement is that about fifty per cent of the fixtures were lying around in the building, not yet installed at the time of the $15,000 advance by the title company. In this state of the record we deem it fairer to send this case back for a new trial and a modification by the- Trial Term unless the attorneys can agree upon the proper deduction to be made.

The judgments should be reversed and a new trial granted, with costs in all courts to abide the event.

Pound, Ch. J., Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Judgments reversed, etc.


author: O’Brien, J.

text:
    Madison County Trust and Deposit Company, Respondent, v. Ray B. Smith et al., Defendants and H. Seymour Getman et al., Appellants.
    (Argued May 11, 1932;
    decided July 19, 1932.)

      Victor Levine and Mandel Weisberg for appellants.
    The Appellate Division with only the judgment roll before it should not have given judgment for the plaintiff. It should, at most, have ordered a new trial. (Gleason v. Hamilton, 138 N. Y. 353; Corr v. Hoffman, 256 N. Y. 254; Wood v. Wyeth, 106 App. Div. 21; Gotham Construction Co. v. New York, 233 App. Div. 699; Benedict v. Arnoux, 154 N. Y. 715; Dixon v. James, 181 N. Y. 129; Duclos v. Kelly, 197 N. Y. 76; Elliott v. Guardian Trust Co., 204 N. Y. 212; Civ. Prac. Act, § 602; Bonnette v. Malloy, 209 N. Y. 167; Murphy v. Murphy, 251 N. Y. 207; Greenstaner v. Connecticut Fire Ins. Co., 228 N. Y. 388; Boyd v. Boyd, 252 N. Y. 422; York Mortgage Corp. v. Clotar Construction Corp., 254 N. Y. 128; Prager v. N. J. Fidelity & Plate Glass Ins. Co., 245 N. Y. 1; Schwarz v. Weber, 103 N. Y. 658; Delaney v. Valentine, 11 App. Div. 316; Aalholm v. People, 211 N. Y. 406.)

      Morris Gitlitz for respondent.
    An appeal to the Appellate Division taken in the manner authorized by section 575 of the Civil Practice Act, on exceptions to the ruling of the trial court on questions of law, and without making a case, does not limit the power of the Appellate Division on reversal to the granting of a new trial. The Appellate Division properly directed judgment for the plaintiff. (Dann v. Palmer, 151 App. Div. 151; Hydraulic Power Co. v. Pettebone-Cataract Paper Co., 194 App. Div. 819; Herpe v. Herpe, 225 N. Y. 323; Rochester Lantern Co. v. S. & P. Press Co., 135 N. Y. 209; Stoddard v. Whiting, 46 N. Y. 627; Delaney v. Valentine, 11 App. Div. 316; Morrison v. Chapman, 155 App. Div. 515; Casualty Co. of America v. U. S. Casualty Co., 161 App. Div. 591; Union Trust Co. v. Oliver, 155 App. Div. 646; Lamport v. Smedley, 213 N. Y. 82; United Paperboard Co. v. Iroquois Pulp & Paper Co., 217 App. Div. 253.) The Court of Appeals must conclusively presume that the Appellate Division reversed upon the law only, and can, therefore, only consider whether the findings justify the conclusions of law. A decision that they do not requires an affirmance of the judgment of the Appellate Division. (Schnibbe v. Glenz, 252 N. Y. 7; Caldwell v. Nicolson, 235 N. Y. 209; Snyder v. Seaman, 157 N. Y. 449; McNulty v. Mt. Morris El. Light Co., 172 N. Y. 410; Farleigh v. Cadman, 159 N. Y. 169.)
   O’Brien, J.

This action, begun August 30, 1929, is for the recovery of a balance on a demand note dated March 7, 1919, made by defendant Smith and indorsed by appellants Getman, Bedell and Miller as well as six other defendants who are not represented on this appeal. The principal defense of these three appellants is the Statute of Limitations. Payments on the note were made by -Smith as late as May 8, 1924, but the trial justice, without a jury, held that such payments by the maker of the note did not toll the running of the statute as against the indorsers. The Appellate Division reversed and decided that, inasmuch as the facts had been found at the trial that by agreement at the time of the execution of the note the maker and the indorsers were to be and were co-makers and primarily liable and were all principals and not accommodation indorsers and that the maker and one other were agents for all the signers and also that the payments were made by the maker with appellants’ consent and on their behalf, the case is taken out of the statute by reason of the payments by the indorsers through their authorized agent within the time fixed by statute. The opinion states that upon the facts as found ” (233 App. Div. 623, 625), plaintiff is entitled to judgment against the indorsers and the order and judgment so direct. These mandates reverse three conclusions of law but, without specific reference to any of the twenty-seven findings of fact and without making new ones, recite that the judgment is reversed on the law and the facts.

Only the judgment roll was before the Appellate Division. The evidence upon which the findings were made was omitted from the record. The appellants in this court, although successful at the trial, had excepted to the finding in relation to an agreement by them to be co-makers and principals and primarily liable as well as to the finding in relation to an agreement by which the maker was to represent them as agent and to the finding that payment was made with their consent and on their behalf. They argue that even though it might be concluded that the theory adopted for their favorable judgment at the trial was incorrect, 'they are entitled at some time to show that the result, for other reasons, was right and that the findings of fact upon which the Appellate Division based its conclusions of law were either contrary to or not supported by the evidence. They complain that, by reason of the absence of the evidence from the present record and on account of the final judgment directed against them on this record, they are for all time deprived of their right to a review of the whole case on the facts whereby their judgment might be supported on grounds differing from those stated at the trial.

We agree that the findings, as they stand, lead to the conclusion that payment by the maker, as agent, bound appellants (See Brooklyn Savings Bank v. Wechsler Estate, 259 N. Y. 9, 13, and cases therein cited), but the serious questions before us relate to their right, at some time, to a review of the facts upon which those findings rest and the power of an appellate court, under the circumstances, to direct final judgment against them. If the underlying evidence ever is presented to the Appellate Division and if upon a review of it that court makes findings of fact antagonistic to those to which defendants excepted, a conclusion of law resulting in harmony with the judgment at Trial Term but proceeding from a dissimilar theory might be adopted. On this record neither the Appellate Division nor this court can divine the nature of the evidence or its probative value. In the absence of that evidence, the Appellate Division was justified in reversing on the findings and would have been warranted in granting a new trial. (Rochester Lantern Co. v. S. & P. Press Co., 135 N. Y. 209.) Was that court, on the present record, empowered to go further and direct final judgment?

It was the plaintiff which was the party that appealed. Since it was satisfied with the findings of fact and relied only upon exceptions to rulings on questions of law, it was not bound to make a case (Civ. Prac. Act, § 575; Rochester Lantern Co. v. S. & P. Press Co., supra), and the form of the record, for the purpose of presenting questions of law only, meets the requirements of the statute. However, a party excepting to findings of fact has the right at some time during the course of the litigation to a review directed to the question whether such findings are supported by evidence. The authority conferred by section 584 of the Civil Practice Act upon any appellate court to render final judgment upon the right of any or all of the parties according to law is limited by the language of that section. Where it may be “ necessary or proper to grant a new trial,” any appellate court to which an appeal is taken, including of course this court, may grant it. Whether it be proper to protect a litigant’s right at some stage to an opportunity to review facts, in cases where the privilege of an appeal is permitted, admits of only one answer. According to the judgment before us no opportunity can ever be accorded. The case of Schnibbe v. Glenz (252 N. Y. 7), cited by respondent, is not analogous, for there the evidence was in the record. It was possible for the Appellate Division to have reversed specific findings and to have made new ones and, because it did neither, we were bound to presume that the findings had been affirmed and the judgment reversed solely on the law. Accordingly, we reversed the order of the Appellate Division and affirmed the judgment of the Special Term. Here it was impossible for the Appellate Division to reverse any finding or to make a new one, for that court was uninformed of the evidence upon which the findings were based. While the order recites that the judgment is reversed on the law and the facts, the opinion states that it is reversed on the facts as found.” The reasoning in such opinions as those in Bonnette v. Molloy (209 N. Y. 167, 173) and Aalholm v. People (211 N. Y. 406, 420) applies here and leads to the result that, since it is impossible to hold as matter of law that defendants cannot succeed on a new trial, their rights should not at this time be conclusively determined.

The judgment of the Appellate Division should be modified by granting a new trial and, as so modified, affirmed, with costs to appellants in the Appellate Division and in this court.

Pound, Ch. J., Crane, Lehman, Kellogg, Hubbs and Crouch, JJ., concur.

Judgment accordingly.