text:
    In the Matter of the Claim of Shirley Goldberg, against 954 Marcy Corporation et al., Appellants. State Industrial Board, Respondent.

      Argued November 17, 1937;
    decided January 11, 1938.

      James J. Mahoney, George J. Stacy and William S. Sinclair for appellants.
    The condition of blotches which plaintiff testified were on her legs and weakened them and caused her to fall did not constitute an occupational disease. (Matter of Bishop v. Comer & Pollock, Inc., 251 App. Div. 492; Matter of Lerner v. Rump Bros., 241 N. Y. 153; Matter of Lurye v. Stern Bros. Dept. Store, 275 N. Y. 182; Matter of Doulin v. City of Saratoga, 261 N. Y. 558; Matter of Nielsen v. Firemen’s Fund Indemnity Co., 239 App. Div. 239; Matter of Andrews v. L. & S. Amusement Corp., 253 N. Y. 97.)

      Frank C. Laughlin, Arthur Butler Graham, P. Tecumseh Sherman, Hervey J. Drake, Joseph W. Kirkpatrick and Stewart W. Bowers for Association of Casualty and Surety Executives, amicus curiæ.

    In so far as it is predicated on the theory of an occupational disease the award should be reversed because the claimant did not have an occupational disease within the fair intent and meaning of the statute (Workmen’s Compensation Law, Cons. Laws, ch. 67). (Matter of Aylesworth v. Phoenix Cheese Co., 170 App. Div. 34; Matter of Stoerze v. City of New York, 267 N. Y. 339; Matter of Wilson v. Dorflinger & Sons, 218 N. Y. 84; Pardy v. Boomhower Grocery Co., 178 App. Div. 347; Balcom v. Ellintuch & Yarfitz, 179 App. Div. 548; Matter of Sickles v. Ballston R. S. Co., 171 App. Div. 108; Madeo v. Dibner & Bro.) Inc., 186 Atl. Rep. 616; Matter of Connelly v. Hunt

      Furniture Co., 240 N. Y. 83; Matter of Nielsen v. Firemen’s Fund Indemnity Co., 239 App. Div. 239.) The statute plainly contemplates that the occupational disease must result from the process followed by the employee in the performance of his duties, namely, his actual physical contact in the performance of his duties with something which causes the occupational disease, and the process referred to does not extend to or include the place in which the employee is required to work. (Dille v. Plain-view Coal Co., 217 Iowa, 827; Madeo v. Dibner & Bro., Inc., 121 Conn. 664; Gentry v. Swann Chemical Co., 174 So. Rep. 530; Matter of Nielsen v. Firemen’s Fund Indemnity Co., 239 App. Div. 239; Ramsay v. Sullivan Mining Co., 61 Idaho, 36; Glodenis v. American Brass Co., 118 Conn. 29; Matter of Lerner v. Rump Bros., 241 N. Y. 153; Barrencotto v. Cocker Saw Co., 266 N. Y. 139; Wager v. White Star Candy Co., 217 App. Div. 316; Trout v. Wickwire Spencer Steel Corp., 195 N. Y. Supp. 528; Industrial Commission v. Roth, 98 Ohio St. 34; McNeely v. Carolina Asbestos Co., 206 N. C. 568; Victory Sparkler & Specialty Co. v. Francks, 147 Md. 368; Seattle Can Co. v. Department of Industries, 147 Wash. 303.)

      John J. Bennett, Jr., Attorney-General (Leon Freedman and Joseph A. McLaughlin of counsel), for respondent.
    The injuries sustained by the claimant were accidental injuries. (Matter of Unger v. New York Sportswear Co., 243 App. Div. 659; 268 N. Y. 651; Matter of Andrews v. Emporium Forestry Co., 224 App. Div. 327; Matter of Pickerell v. Schumacher, 242 N. Y. 577; Armstrong v. American Red Cross, 202 App. Div. 766; Matter of Blass v. Long Island Motor Parkway, Inc., 222 App. Div. 706; Matter of Chudomel v. Weber, Bunke, Lange Coal Co., 221 App. Div. 824; Matter of Kennedy v. Cuddihy, 225 App. Div. 713; Matter of Cleveland v. Rice, 239 N. Y. 530; Matter of Hughes v. St. Patrick’s Cathedral, 245 N. Y. 201; Matter of Madura v. City of New York, 238 N. Y. 214; Matter of Katz v. Kadans & Co., 232 N. Y. 420.) The accident arose out of and in the course of the employment. (Matter of Younger v. Motor Cab Transportation Co., 260 N. Y. 396; Matter of Kenney v. Lord & Taylor, Inc., 254 N. Y. 532; Roos v. Loft, Inc., 247 App. Div. 842; Matter of Clapham v. David, 232 App. Div. 458; Springer v. North, 205 App. Div. 754; Carroll v. Stokes, 238 App. Div. 886; Matter of Monaco v. Kesselman’s Baby Stores, Inc.., 240 App. Div. 930; Allen v. Richfield Oil Corp., 237 App. Div. 861.) The disability of the claimant was the result of an occupational disease covered by the Workmen’s Compensation Law. (Matter of Bishop v. Comer & Pollock, Inc., 251 App. Div. 492; Barrencotto v. Cocker Saw Co., 266 N. Y. 139.)
   Finch, J.

This is a workmen’s compensation case. The Industrial Board made an award which has been affirmed by the Appellate Division, one justice dissenting.

The claimant was a cashier in a moving picture theatre. Her work involved selling tickets in a ticket booth in the street outside the lobby of the theatre. This booth was heated by an electric heater which the claimant could turn on and off as she wished. Her claim is that the alternate heat and cold caused blotches to appear on her limbs and caused her feet to become numb and weak. She complained about this condition to her employer, and he sent her to a physician. While on the way to the physician’s office she claims that, due to the weakness of her feet, she fell, sustaining a fracture of her left ankle.

The Industrial Board found the injuries sustained by said Shirley Goldberg were accidental injuries and arose out of and in the course of her employment,” and made an additional finding that “ the disease from which the said Shirley Goldberg was suffering was an occupational disease and was contracted by her within twelve months previous to the date of her disablement, and was due to the nature of her employment and was characteristic of and peculiar to the employment in which she was engaged.”

The question presented is whether the award may be sustained upon the ground of an accidental injury arising out of and in the course of her employment or upon the ground that it resulted from an occupational disease.

We take up first whether the award may be sustained upon the finding of occupational disease. This necessitates a consideration of the Workmen’s Compensation Law (Cons. Laws, ch. 67) and its recent amendments. The original purpose of the law was to provide an insurance system to compensate employees for accidental injuries sustained in the course of hazardous employment. Included as accidents were certain occupational diseases which were specifically named. Section 3, subdivision 2, of the act provides that compensation may be had for disabilities sustained or death incurred by an employee resulting from the following occupational diseases.” This is followed by two parallel columns, one headed Description of Diseases,” and the other, Description of Process.” In the first column the disease is named or described, and in the second column, the process in which it must be contracted in order to make it compensable. Concededly the claimant does not come within the provisions of any of these twenty-seven paragraphs. In 1935, however, a twenty-eighth paragraph was added. (Laws of 1935, ch. 254.) In the first column it reads “ any and all occupational diseases; ” in the second column, the process is described as “ any and all employments enumerated in subdivision one of section three of this chapter.” The subdivision referred to lists all the hazardous employments to which the Workmen’s Compensation Law is applicable.

The contention is made that this paragraph 28 extends the Workmen’s Compensation Law so as to make it applicable to any disease arising out of and in the course of the employment, just as it is applicable to any accident arising out of and in the course of employment. This in substance would make workmen’s compensation the equivalent of life and health insurance.

The question is, to what diseases did the Legislature intend to apply workmen’s compensation insurance when it added paragraph 28 to subdivision 2 of section 3.

The very wording of subdivision 2 and of paragraph 28 shows that they were not intended to apply to all diseases contracted during the course of the employment, since both are limited to “ occupational diseases.” Moreover the twenty-seven paragraphs which precede paragraph 28 specifically list diseases which are peculiar to specific occupations; therefore, the principle of ejusdem generis applies and paragraph 28 should be limited in a similar manner. Manifestly, it was not the intention of the Legislature to change the Workmen’s Compensation Law from a statute affording protection to employees against the hazards of their occupation to a law insuring against diseases which might happen to be contracted while the employee was engaged in his occupation.

The questions which remain are what diseases arising out of the employment are occupational diseases and whether the claimant was afflicted by such a disease.

The' Workmen’s Compensation Law has not attempted to define diseases known as occupational diseases, but it has shown perhaps more clearly than by definition what is meant, by enumerating certain diseases in the first twenty-seven paragrahs in section 3, subdivision 2. Each disease is linked with the process used by the employee by which the disease is caused, such as lead poisoning contracted in a process involving the use of or direct contact with lead. Every such disease is thereby required to be actually caused in the course of the employment and from the particular work the employee is performing. Certain sections of the statute refer to occupational diseases as those due to the nature of the employment and contracted therein, and expressly limit compensation to those diseases. (§§ 39, 40.) Thus an occupational disease is one which results from the nature of the employment, and by nature is meant, not those conditions brought about by the failure of the employer to furnish a safe place to work, but conditions to which all employees of a class are subject, and which produce the disease as a natural incident of a particular occupation, and attach to that occupation a hazard which distinguishes it from the usual run of occupations and is in excess of the hazard attending employment in general. Thus compensation is restricted to disease resulting from the ordinary and generally recognized risks incident to a particular employment, and usually from working therein over a somewhat extended period. Such disease is not the equivalent of a disease resulting from the general risks and hazards common to every individual regardless of the employment in which he is engaged.

We have referred to an occupational disease as “ * * * the natural and unavoidable result of the conditions of the employment.” (Barrencotto v. Cocker Saw Co., 266 N. Y. 139, 143; Matter of Lerner v. Rump Bros., 241 N. Y. 153, 155.)

Definitions of occupational disease similar to those above have been enunciated by courts of other States in construing like statutes. (Madeo v. Dibner & Bro., Inc., 121 Conn. 664; Dille v. Plainview Coal Co., 217 Iowa, 827; Victory Sparkler & Specialty Co. v. Francks, 147 Md. 368; Lovell v. William Bros., Inc., 50 S. W. Rep. [2d] [Mo. App.] 710; McNeely v. Carolina Asbestos Co., 206 N. C. 568; Industrial Comm. v. Roth, 98 Ohio St. 34; Seattle Can Co. v. Dept, of Labor Industries, 147 Wash. 303.)

With this distinction in mind, we search the record to find if there is any evidence to show that the plaintiff was suffering from an occupational disease. Her occupation was that of handling cash and theatre tickets and it is obvious that this work in and of itself could not have caused the leg injury or disease. The disease ” which befell hér, therefore, was caused not by the nature of her employment, but by the failure of her employer to furnish her with a proper and safe place in which to work. There being no evidence whatsoever to sustain the finding that the claimant contracted an occupational disease in the course of her employment, the award cannot be sustained on that ground.

The award, however, can be sustained on the ground of accidental injury arising out of and in the course of her employment. The fall occurred while the claimant, pursuant to the directions of her employer, was on her way to the doctor. It is urged that an injury resulting from such a fall is not compensable, and we are referred to our ruling in Matter of Andrews v. L. & S. Amusement Corp. (253 N. Y. 97). In that case the claimant’s injuries were the result of a fall, but the fall was caused by an epileptic fit which had nothing to do with the employment. In the case at bar the fall of the claimant was the result of weakness of her feet which was caused not by an internal disorder, disease or illness having no connection with her employment, but by the conditions of her employment. More analogous to the case at bar are Matter of Unger v. N. Y. Sportwear Co. (268 N. Y. 651) and Matter of Pickerell v. Schumacher (242 N. Y. 577), in which cases we affirmed awards granted to claimants who fell while on the street but in the course of their employment. There was evidence from which the Industrial Board was justified in finding that the claimant suffered accidental injuries arising out of and in the course of her employment. (Matter of Younger v. Motor Cab Trans. Co., 260 N. Y. 396.)

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Loughran and Rippey, JJ., concur.

Order affirmed.


source: Caselaw Access Project

author: Crane, Ch. J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Irving Sacks, Appellant.
    Argued December 6, 1937;
    decided January 11, 1938.

      Harold H. Corbin and Edward J. Bennett for appellant.
    Proof of the value of the articles sold or delivered was essential to establish that the rate of return intended or received was in excess of six per cent. Failure to prove disparity between such value and the amount to be paid by the alleged borrower is fatal to any claim of usury. (Schermerhorn v. Talman, 14 N. Y. 93; People v. Silverberg, 160 N. Y. Supp. 727; 171 App. Div. 914.)

      William Copeland Dodge, District Attorney (James J. Wilson of counsel), for respondent.
    Value of the articles pawned was and is immaterial because nothing was sold; the entire transaction was a loan. (Quackenbos v. Sayer, 62 N. Y. 344; Schermerhorn v. Talman, 14 N. Y. 93; Fiedler v. Darrin, 50 N. Y. 437.) If any count in the information is proved, the judgment must stand. (People v. Faden, 271 N. Y. 435.)
   Crane, Ch. J.

The defendants have been convicted of the crime of violating section 340 of the Banking Law (Cons. Laws, ch. 2), and the judgment has been affirmed by the Appellate Division on the ground that the evidence was sufficient to sustain the conspiracy count in the information, thereby indicating that as to the other count the evidence was insufficient in the opinion of that court. The information is in two counts: The first charges the crime of violating section 340 of the Banking Law, in that the defendants did unlawfully engage in the business of making loans “ of money, credit, goods and things in action in the amount of three hundred dollars or less, and charging, contracting for and receiving a greater rate of interest therefor than permitted by law without being lawfully authorized by article 9 of the said Banking Law.” The second count charges the defendants with the crime of conspiracy in that they conspired with each other and with divers other persons to commit a crime, to wit, the crime of violating sections 340 and 357 of the said Banking Law * * * that is to say, unlawfully to engage in the business of making loans of money in amounts of three hundred dollars or less without being duly licensed so to do.”

Section 340 of the Banking Law reads: “No person * * * shall engage in the business of making loans of money, credit, goods, or things in action in the amount or of the value of three hundred dollars or less and charge, contract for, or receive a greater rate of interest, discount, or consideration therefor than the lender would be permitted by law to charge if he were not a licensee hereunder except as authorized by this article and without first obtaining a license from the superintendent of banks.”

Section 357 of the Banking Law refers to loans made by those not engaged in the business.

The dominant fact, upon which the crime of violating these sections must be based, is a loan — a loan for which excessive interest is received. The transaction may take many forms. For the purpose of evading the statute it may have the appearance of a legal transaction but, if in essence or in fact, the transaction be a loan, and excessive interest taken, a crime has been committed.

The defendant Irving Sacks has been in the installment business in the city of New York for thirty years. His place of business at the time of the trial was 100 West Forty-second street, on the fourth floor. He testified: “ I sell clothing, jewelry, radios, haberdashery, almost anything anybody could use for personal use, electrical appliances or furniture and so on, etc., on installment plan. I occupy approximately at 100 West 42nd Street, four thousand square feet for showrooms and stockrooms. My inventory value of all kind of merchandise amounts from fifty to sixty-five thousand dollars. I have another place of business at 1370 Broadway, where I have been thirteen or fourteen years.” In the latter store Sacks sold jewelry and novelties for cash and on installment, as the case might be, and his average stock in that store for a number of years had been inventoried at forty thousand dollars. The method of the installment business is to require security, and Sacks described it as follows: Selling on installment, we must have for our protection when a man buys anything such as an assignment of wages or a mortgage or a confession. It all depends upon the customer. Sometimes a promissory note, whatever the case may be.” The business was transacted in the name of the Metropolitan Credit Company, and employed fifteen to twenty salesmen, with an office staff of approximately twenty-five employees. The company paid its salesmen a commission of twenty per cent. Collections required one and one-half to two years before the final payment was made.

The defendant Samuel M. Morton had been selling jewelry on the installment plan for years. He had been sales manager for O. F. Bale & Company, 21 Maiden lane, and said that his duties were capacity as outside sales manager, meaning I trained salesmen how to sell merchandise on installment such as clothing, watches, etc. to people that held a job, industrial workers, factory workers, chain store operators, etc., elevator operators, also city employees.” • He met Mr. Sacks at the jewelers’ convention at the McAIpin Hotel in 1932, and thereafter, in 1935, went with Sacks as a salesman to concentrate on a special type of business, city employees exclusively.” Sacks said to him: city employees, if they miss payments we put the garnishee in against them and I receive my money.”

Morton pleaded guilty and turned State’s evidence. He was the first witness called by the People, and his description of the scheme as planned I now outline. Sacks showed him a letter and said: “ ‘ This is the proposition that brings the people to your place; you will be astonished to see the amount of response. Take a copy of this letter, have the letters printed, take an office space so you may have privacy to yourself, operate at the place of business wherever you may find the location. I will advance all your expenses that may be involved in respect to the office space. When a customer comes into your place, well, you know and I know that they are not going to come in for merchandise. What they want is loans. This letter is going to bring the people to your office. The rest of that is up to you to handle then. When they come to your office with this particular letter asking you for a loan, you will switch them, in a scientific way. Tell them you are not a finance company, tell them you are not in the loan business or banking business, but you can give them something in merchandise to hold or satisfy their demands. You get the name of the prospective buyer. Call me up at the office. I will have that person cleared for you within a few minutes. I have a connection, Secan Service, for which I pay fifty cents for each name that is cleared; so it will put you in a position, it will enable me to tell you whether or not, that person has not too many garnishees ahead. Regardless of the amount of the sale you need not attempt to collect any deposit on it. There is no deposit required on it whether it is a three, five or seven hundred dollar sale.’ ”

A letter was sent out in the form prepared by Sacks, and is People’s Exhibit 1, which read:

“ S. M. Morton
287 Broadway
New York, N. Y.
Room 402
Corner Reade St.
Diamonds
Watches
Jewelry
CITY EMPLOYEES
“ $50.00 to $200.00
Bring Your Badge
“ No Red Tape No Co Makers
Yours very truly,
S. M. MORTON.”

This letter was subsequently changed to another form, Plaintiff’s Exhibit 2, which reads as follows:

“ Phone
Wisconsin 7-2313
“ METROPOLITAN CREDIT CO.
General Merchandise
100 West 42nd St.
Corner 6th Ave.
New York, N. Y.
“ CITY EMPLOYEES
“ It Will Be to Your Interest
To See Me
Your Credit Is Good
$50-to-$500
Diamonds and Jewelry
2 Years or Longer in Which to Pay
No Red Tape — No Guarantors — No
Investigations
Strictly Confidential
Yours very truly,
METROPOLITAN CREDIT CO.”

After these letters had been sent out to city employees, many responded, apparently believing that they could, through Morton or the Metropolitan Credit Company, obtain a loan. This was a deception practiced by Sacks and Morton for the purpose of getting people into the stores to buy jewelry or merchandise. No loans of money were made by Morton or Sacks or by the Metropolitan Credit Company. When the prospective customer or borrower came to Morton, or was turned over to Sacks or to the employees of the Metropolitan Credit Company, he was told that they were not in the loaning business; they were not bankers or financiers; that they merely sold jewelry and merchandise on the installment plan. When the borrower said he had to have cash or money, and was not interested in buying, he was informed that he could buy the jewelry and thereafter could do what he pleased with it — borrow on it at a pawnshop or a finance company. As this seemed to satisfy those who were pressed for money, a sale was made, the customer paying for the jewelry by confessing judgment, which was immediately filed with the Comptroller of the city. By thus garnisheeing the city employee’s salary Sacks received every month an installment on the price of the jewelry sold. Although he received no cash from the sale he did receive security in the form of a confession of judgment, so that in the course of time he would receive full payment unless the employee died or was discharged. Some of these purchasers, city employees, took the jewelry to pawnshops or finance companies and procured a loan. The persons or concerns making the loan were in no way connected with the defendants; it was conceded upon the argument in this case that, after Sacks had parted with the jewelry to the customer he lost all title in and control over it; in no way could he get it back except by repurchasing it.

Here was a clever, tricky scheme — a fraud, if you will — to procure customers for merchandise. The customers did not want the merchandise; they wanted money;, they wanted to borrow money. Taking advantage of their necessities, Sacks sold them merchandise, upon which they could obtain money from others, but not from him. The fact is, however — and it is the underlying fact in these transactions — that Sacks made no loans; he made sales of jewelry, of property, in which title passed to the purchaser as fully and completely as on any other sale. The price was secured by the confession of judgment and the installment payments came from the customer’s salary. Sacks did not care what became of the jewelry; the customer could keep it or give it away; Sacks had in its place a judgment, secured by the garnishee process. The loan subsequently made upon the property or jewelry was made by persons over whom Sacks had no control.

It is the tricky device by which Sacks got customers into his store which has infected the whole transaction and led to the belief that he was making illegal loans in violation of the Banking Law. He made no loans; he sold property to credulous purchasers who, having obtained the property, for which ultimately they would have to pay, procured loans from others. Sacks’ transaction was a sale, not a loan. The evidence does not warrant his being convicted of violating the_above sections of the Banking Law.

There is even another weakness in this conviction. The sections of the Banking Law, to which we have referred, are aimed at usurious interest. There is no evidence in the case to show the value of the jewelry sold by Sacks. The merchandise sold may have been worth the price or the amount of the judgment confessed. Naturally we assume that such is not the case, or Sacks would not be doing business in this way; but in a criminal case we cannot guess or surmise at what might or must have been. Even had Sacks loaned his property or his jewelry instead of selling it, and was to receive back pay •for the use of it, there must at least be some evidence to show that the pay received so exceeded the value of the use of the property loaned as to amount to usury. There is no such evidence in this case.

The judgment of Sacks’ conviction should be reversed and the information dismissed.

Lehman, O’Brien, Httbbs, Loughran and Rippey, JJ., concur; Finch, J., concurs in result on the last ground stated in the opinion.

Judgments reversed, etc.


text:
    George A. Glendon, Appellant, v. City of New York, Respondent.
    Argued December 6, 1937;
    decided January 11, 1938.

      Albert Massey for appellant.
    The action of the Governor in determining and fixing the reasonable value of the plaintiff’s services and disbursements, coupled with his requisition to the Board of Estimate and Apportionment, and his approval of the plaintiff’s voucher, fixed and liquidated the obligation of the city to the plaintiff and made payment thereof by the city mandatory. (People v. Green, 5 Daly, 194; Traverse City v. Blair Township, 190 Mich. 313; People ex rel. Wells & Newton Co. v. Craig, 232 N. Y. 125; People ex rel. Hirschberg v. Board of Supervisors, 251 N. Y. 156; People ex rel. Nash v. Board of Supervisors, 164 App. Div. 89; People ex rel. Ostrander v. Chapin, 105 N. Y. 309; New York v. Sands, 105 N. Y. 210; Hyland v. Baxter, 98 N. Y. 610; People ex rel. King v. Gallagher, 93 N. Y. 438; Langdon v. New York, 93 N. Y. 129; Matter of McAneny v. Board of Estimate, 232 N. Y. 377; Lord & Burnham Co. v. City of New York, 251 N. Y. 198; Matter of Levy, 192 App. Div. 550; Henn v. City of Mt. Vernon, 198 App. Div. 152; Bullock v. Cooley, 225 N. Y. 566; New York v. N. Y. C. Ry. Co., 193 N. Y. 543.)

      Paul Windels, Corporation Counsel (Paxton Blair and Oren Clive Herwitz of counsel), for respondent.
    Plaintiff’s claim under subdivision 7 of section 34 of the Public Officers Law (Cons. Laws, ch. 47) is unliquidated and subject to audit by the Comptroller of the city of New York. (People ex rel. Rand v. Craig, 231 N. Y. 216; Easton v. Pickersgill, 55 N. Y. 310; Matter of City of New York, 217 N. Y. 1; People ex rel. Hirschberg v. Board of Supervisors, 251 N. Y. 156; People ex rel. Gagan v. Purdy, 173 App. Div. 350; People ex rel. Benner v. Queens County, 39 Him, 442.)
   Crane, Ch. J.

Charges having been filed against Mayor Walker of the city of New York, a hearing was ordered before the Governor who, on the 10th day of August, 1932, made the following order:

“ George A. Glendon be and the same hereby is appointed to take down stenographically and produce mimeographed typewritten copies of all hearings had before me in the above entitled matter, commencing on the 11th day of August, 1932, and continuing thereafter until such hearings are closed, that he furnish my office and those whom I authorize to receive such copies, as many copies of such proceeding as they need, that such copies be furnished complete within one-half hour after the ending of each and every day’s proceedings, and to be paid as provided by law.
“ FRANKLIN D. ROOSEVELT,
“ Governor of the State of New York.”

In order to do the work as required, Glendon employed other stenographers, and worked them in relays; also a staff of typists and mimeograph workers. At the end of the hearing he presented his bill for $32,363.10, which, after investigation, the Governor, on the 27th day of October, 1932, audited and allowed in the sum of $16,776.45. The Governor certified: I hereby approve the above bill and order its payment, upon the audit and warrant of the Comptroller.”

On December 22,1932, the Governor made the following requisition upon the Board of Estimate and Apportionment of the city of New York:

“ Pursuant to the provisions of Subdivision 7 of Section 34 of the Public Officers Law, as added thereto by Chapter 15 of the Laws of 1928, I hereby make requisition upon you for the following sums of money, which you are to appropriate to meet the reasonable expenses of conducting before me the hearing of the said charges against Hon. James J. Walker, Mayor of the City of New York. That is to say: * * *
“ Compensation allowed and approved by me to George A. Glendon, Jr., Esq., as Official Stenographer at the hearing of the said charges for 120 copies of the verbatim report taken at the said hearing............$16,776.45
“ Dated Albany, New York,
“ December 22, 1932.
FRANKLIN D. ROOSEVELT.”

The Comptroller of the city of New York refused to recognize the order and the requisition other than to allow the bill in the amount which he thought reasonable, to wit, the sum of $8,964. The Comptroller considered it to be his duty to reaudit this claim, inquire into the nature and value of the services, and fix the extent of the compensation. This action has been brought to recover $7,812.45, the balance of the sum fixed by the Governor, and the question is whether subdivision 7 of section 34 of the Public Officers Law (Cons. Laws, ch. 47) intended to have two officials make inconsistent audits of claims for services, or clothe two officials with the power to fix the reasonable value thereof; in other words, whether the Comptroller of the city of New York was intended to override the Governor in this particular. The dispute has arisen through a misunderstanding of this provision of the law; and, while we can see two sides to the question, yet we think reason, the wording and the purpose in view lead to the interpretation — that the Governor has the final word.

Let us turn to the law (§ 34), which reads as follows:

“1. In any proceeding for the removal by the governor of a public officer, he may conduct an investigation into the charges, and may take the evidence as to the truth of the charges at a hearing for such purpose, * * *.”

3. * * * Both in the investigation of the charges and at the hearing into the truth of the charges, the governor * * * may require witnesses to attend before him, and may also require the production of any books, papers, or other documents, deemed by him to be material, and shall issue subpoenas for such witnesses for appearance at the hearing as may be requested by the officer proceeded against.”

“5. * * * the governor, * * * is authorized .to employ counsel * * * and to employ such personnel as may be necessary to assist him in the performance of his duties under this section,

“ 6. B the proceeding be for removal of a state officer, the reasonable expenses incurred in the conduct thereof, including the compensation of authorized counsel and of necessary assistants, in the taking and printing of the testimony, shall be paid by the state, on the certificate of the governor, out of moneys appropriated or available therefor.

7. E the proceeding be for the removal of a county or city officer, the reasonable expenses incurred in the conduct thereof shall be a county or city charge, as the case may be. The board of supervisors of the county, or the board of estimate and apportionment or other board or body of the city vested with the power to make appropriations, on the requisition of the governor, from time to time, shall forthwith appropriate such sum as shall be needed to pay such expenses; and after such appropriation shall have been duly made, the fiscal officer of the county or city, as the case may be, shall pay such expenses, upon vouchers approved by the governor, after audit, in the same manner and by the same authority as other county or city charges are audited and paid. B there be no funds available for such purpose, the board of supervisors of the county, or the comptroller or other chief fiscal officer of the city, is hereby authorized and directed to sell certificates of indebtedness or revenue bonds of such county or city in anticipation of the receipt of taxes, and out of the proceeds thereof to make the payments required to be made by this section. The amount necessary to pay the principal and interest of such certificates or bonds shall be included in the estimate of moneys necessary to be raised by taxation to carry on the business of such county or city and shall be made a part of the tax levy for the year next following the year in which such appropriations are made.

“ 8. A person designated by the governor to conduct an investigation or hearing, or both, under this section, who is not regularly employed by the state or by a county or city, shall be paid a reasonable compensation for his services, to be fixed by the governor, and paid in the same manner as other expenses for the removal of a state officer, or a county or city officer, as the case may be, as provided in this section.”

The compensation to be paid this stenographer, Glen-don, is regulated by this paragraph 8: “ shall be paid a reasonable compensation for his services, to be fixed by the governor.” If it is to be fixed by the Governor it is not to be undone by any other official. We cannot have two independent fixings.

Again, attention must be called to paragraph 6, which applies to the proceedings against State officials. Here the reasonable expenses are to be paid by the State on the certificate of the Governor, again indicating that, in these removal proceedings, it is the Governor who determines what help is necessary and what pay is reasonable.

The same thing applies to paragraph 7, applicable to city officers, except that the wording has caused some confusion. The reasonable expenses incurred by the Governor shall be a city charge. The Board of Estimate on the requisition of the governor, from time to time, shall forthwith appropriate such sum as shall be needed to pay such expenses.” The Governor shall make requisition from time to time for the money needed, and the Board of Estimate must appropriate the sum, even if it be necessary to sell bonds for the purpose. We note above that the Governor in this case made such a requisition upon the Board of Estimate. Then subdivision 7 also provides how the money thus appropriated under the mandate of the Governor shall be paid out: * * * the fiscal officer of the county or city * * * shall pay such expenses, upon vouchers approved by the governor, after audit, in the same manner and by the same authority as other county or city, charges are audited and paid.” The Governor, as above stated, in this instance approved the vouchers for the payment of the plaintiff, but the Comptroller has interpreted the words after audit,” to mean that he is to go over the work of the Governor, re-examine the claim for expenses, and himself determine its reasonableness and whether the requisition of the Governor was proper. We do not think that this is the meaning of the provision. )i

We must read this whole law as giving the Governor the power and the authority to appoint his staff for the purpose stated and to determine the reasonable pay for their services. He cannot be crippled in the investigation by his requisitions from time to time being turned down or interfered with by the city authorities. The Legislature must have intended that the authority it had given to the Governor in using the words “ requisition,” approve,” fix,” as applicable to expenses, was full and complete. These words so indicate. Fixing a compensation,” “ approving expenses,” requisitioning ” for money which shall be forthwith appropriated can mean nothing less. The words directing the Comptroller to pay such expenses after audit in the same manner and by the same authority as other city charges refer to the method of payment after checking up to see that the papers .are regular, the Governor’s signature genuine, and that other provisions of this law have been complied with. The Comptroller will audit in the same manner as other city claims are audited except he may not reduce the amount of the claim as fixed by the Governor. This is our interpretation of the statute.

Mandatory provisions regarding payments of salaries or claims are not unusual or unknown in legislative enactments. (Matter of McAneny v. Bd. of Estimate & Apportionment, 232 N. Y. 377.)

It follows, therefore, that the judgments should be reversed and a new trial granted, with costs to abide the event.

Lehman, O’Brien, Hubbs, Loughran, Finch and Rippey, JJ., concur.

Judgment accordingly.


author: Finch, J.

text:
    Clarence O. Lewis, Respondent, v. City of Lockport, Appellant.
    Argued December 7, 1937;
    decided January 11, 1938.

      The following question was certified:

      “ Is the defendant entitled to judgment on the pleadings? ”

      Alfred W. Brimm, Corporation Counsel (Daniel J. Kenefick, Jr., and Daniel J. Kenefick of counsel), for appellant.
    The failure of the respondent to pursue the remedy conferred by the charter (L. 1911, ch. 870) bars his right to maintain the action. (Matter of Schroeder, 187 N. Y. Supp. 680; Matter of Allen Square Co. v. Krieger, 217 App. Div. 123; N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165; Oak Hill Country Club v. Town of Pittsford, 264 N. Y. 133; Loomis v. City of Little Falls, 176 N. Y. 31; Jamaica & Brooklyn Road Co. v. City of Brooklyn, 123 N. Y. 375; MacLaury v. Hart, 121 N. Y. 636; Heiser v. Mayor, 104 N. Y. 68; People v. Wasson, 64 N. Y. 167; McCall v. City of Rochester, 44 Misc. Rep. 129; Singer Sewing Machine Co. v. Benedict, 229 U. S. 481; Indiana Mfg. Co. v. Koehne, 188 U. S. 681; Moore v. City of Yonkers, 235 Fed. Rep. 485; Filiau v. Hartford, 94 Conn. 510; Goodwin v. Millville, 75 N. J. Eq. 270; People ex rel. Crane v. Hahlo, 228 N. Y. 309; People ex rel. D., L. & W. R. R. Co. v. County Court, 152 N. Y. 214; Ford v. Clendenin, 215 N. Y. 10; Schooner v. Lissauer, 107 N. Y. 111.) The alleged defects in the assessment upon which respondent relies are not sufficient to invoke the interference of equity. (Matter of Kiernan, 62 N. Y. 457; People ex rel. Brownell v. Board of Assessors, 193 N. Y. 498; Mansfield v. City of Lockport, 24 Misc. Rep. 25; Menzie v. City of Greensbwrg, 85 N. E. Rep. 484; Tumwater v. Pix, 18 Wash. 153; Sikora Realty Corp. v. City of New York, 262 N.Y. 312; Friedman & Son, Inc., v. City of New York, 262 N. Y. 665; People ex rel. Harway Impr. Co. v. Berry, 139 Misc. Rep. 614; 233 App. Div. 851; 258 N. Y. 590; Y. W.C. A. v. City of New York, 220 App. Div. 49; 247 N. Y. 591; Y. W. C. A. v. City of New York, 217 App. Div. 406; 245 N. Y. 562.) Equity should not intervene unless the remedy which it gives will afford complete justice to all parties. (N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165; N. Y. C. & H. R. R. R. Co. v. City of Buffalo, 67 Misc. Rep. 642; State Railroad Tax Cases, 92 U. S. 575.)

      J. Carl Fogle for respondent.
    An action to remove
    an assessment as a cloud upon title can be maintained where it appears that the proceedings are regular on their face but are invalid because of defects outside of the record which can only be shown by extrinsic evidence. (Bussing v. City of Mt. Vernon, 198 N. Y. 196; County of Monroe v. City of Rochester, 154 N. Y. 570; Elmhurst Fire Co. v. City of New York, 213 N. Y. 87.) The right to appeal provided in the city charter is not exclusive and does not prevent the plaintiff from maintaining an action to remove the assessment as a cloud on title. City of Rochester v. 14th Ward Co-Op. B. L. Assn., 183 N. Y. 23; People ex rel. N. Y. M.-M. T. Co. v. Gaus, 198 N. Y. 250; Morse v. Press Pub. Co., 71 App. Div. 351; Brennan v. City of Buffalo, 13 App. Div. 453; Kinnan v. 42nd St. Ry. Co., 140 N. Y. 183; Pierpont v. Farnum, 234 App. Div. 205.) The remedy sought by plaintiff has always been permitted where the assessment was illegal, in the absence of express prohibitory language in the local or special statute. (McKechnie Brewing Co. v. Trustees, 15 App. Div. 139; 162 N. Y. 631; Brennan v, City of Buffalo, 8 Misc. Rep. 178; 13 App. Div. 453; 162 N. Y. 491; Bussing v. City of Mt. Vernon, 198 N. Y. 196; Mutual Life Ins. Co. v. New York, 144 N. Y. 494; Ogden City v. Armstrong, 168 U. S. 224; Elmhurst Fire Co. v. City of New York, 213 N. Y. 87; Sikora Realty Corp. v. City of New York, 262 N. Y. 312; Matter of Ransom, 87 Misc. Rep. 1; Pittsburgh, A. & M. Ry. Co. v. Township of Stowe, 252 Penn. St. 149; Charlotte v. Brown, 165 N. C. 435; Manning v. City of Ames, 192 Iowa, 998.) The defects in the assessment were not irregularities but were jurisdictional. (Mutual Life Ins. Co. v. Mayor,
      144 N. Y. 494; Elmhurst Fire Co. v. City of New York, 213 N. Y. 87; Jex v. Mayor, 103 N. Y. 536; National Bank v. City of Elmira, 53 N. Y. 49.)
   Finch, J.

An ordinance providing for an assessment

for local improvements involving the construction of a drain and sewer pipe was adopted by the Council of the city of Lockport in 1927. It ordained that the expense of the improvement, aside from a portion to be borne by the city as a whole, was to be defrayed by an assessment on the real property benefited. The assessment was confirmed by the Council in 1929.

This equity action to remove a cloud on title and to recover partial payments made on the assessments, was instituted in 1935 by one of the property owners thus assessed. The complaint alleges that, although the assessment appears to be valid on its face, it was in fact illegal and void by reason of certain matters, the most outstanding of which is that extra compensation was awarded to the contractor for rock excavation without competitive bidding. The original competitive bid and contract price was $95,000, but the sum ultimately paid was $195,000. The answer, among other things, alleges that the charter of the city of Lockport provides for the method and manner of appeal from such an assessment and affords an adequate remedy at law. On this ground Special Term granted a motion by defendant for judgment on the pleadings, and dismissed the complaint. The Appellate Division reversed.

The charter of the city of Lockport (Laws of 1911, ch. 870), in so far as it is pertinent, reads as follows:

An appeal may be taken within twenty days from the time of the first publication of every ordinance directing any local improvement, to the county court of the county of Niagara; and in case the county judge of said county shall be interested in any such local improvement, he shall certify such appeal to the supreme court of the judicial district in which said city is located. An appeal may in like manner be taken to said county court or supreme court from any local assessment and the order confirming the same within__twenty days from the confirmation of such assessment.” (§ 246).
“ § 249. Determination on appeal. Upon the hearing of the appeal the appellate court shall hear and determine all questions as to the legality or regularity of the matter or proceedings appealed from, and if such matter or proceedings appear to be not in accordance with law, said appellate court shall give judgment setting aside, vacating and annulling the same, and the same shall thereafter be held and deemed illegal and invalid; but if such matter or proceedings appear to be in accordance with law, said appellate court shall give judgment affirming the same; provided, however, that if an assessment for a local improvement, or any order confirming such assessment, be so vacated and set aside on account of any irregularity in the proceedings or defect in levying the same, it shall be lawful for the common council to cause a new assessment for such improvement to be made and collected in the manner hereinbefore in this article provided.”

This provides a taxpayer with a complete and expeditious remedy for all improper assessments, whether they involve mere irregularities or jurisdictional defects. The question to be determined is whether, despite the existence of an adequate and expeditious remedy which provides all necessary relief, a property owner may allow to run the time to appeal provided by the charter, and nevertheless subsequently bring an action in equity to have the assessment set aside.

Since this case is before us on a motion for judgment on the pleadings, we must accept plaintiff’s allegations as true and, therefore, we will assume that the defects alleged were jurisdictional and not mere irregularities. (Mutual Life Ins. Co. v. Mayor, 144 N. Y. 494.) There are numerous cases holding that where the defect in the assessment is a mere irregularity, relief may be had only by following the statutory procedure. (United States Trust Co. v. Mayor, 144 N. Y. 488; Sikora Realty Corp. v. City of New York, 262 N. Y. 312.) There are also many cases holding that for jurisdictional defects, the remedy by way of an equity action to remove a cloud on title is available. (Elmhurst Fire Co. v. City of New York, 213 N. Y. 87; McKechnie Brewing Co. v. Trustees of Vil. of Canandaigua, 15 App. Div. 139; affd. on opinion below, 162 N. Y. 631. Cf. Jex v. Mayor, 103 N. Y. 536; Mutual Life Ins. Co. v. Mayor, supra.) The basic ground for affording equitable relief in such cases is clearly stated in Strusburgh v. Mayor (87 N. Y. 452), in which the court said:

Three propositions may be regarded as established in the law as to taxation and assessments, by the courts of this State: First, An action in equity to vacate an assessment and restrain its collection cannot be maintained merely because the assessment is for any reason invalid or illegal. (Heywood v. City of Buffalo, 14 N. Y. 534; Guest v. City of Brooklyn, 69 id. 506.) This has its foundation principally in public policy. It would lead to great embarrassment and inconvenience if the collection of taxes and assessments were to be delayed by such actions. Second, An action at law cannot be maintained to recover back money paid upon an illegal assessment which the assessors had jurisdiction to impose, and which is not void upon its face, so long as the assessment remains unvacated and unreversed. (Swift v. City of Poughkeepsie, 37 N. Y. 511; Bank of Commonwealth v. The Mayor, 43 id. 184; Marsh v. City of Brooklyn, 59 id. 280; Peyser v. The Mayor, 70 id. 497; Wilkes v. The Mayor, 79 id. 621.) This is so because the action of the assessors is regarded as judicial, and because the assessment is regarded as in the nature of a judgment which cannot be attacked collaterally. The money paid upon the assessment in such a case is treated as if collected by virtue of a valid judgment which can be retained until the judgment is vacated or reversed. Third, An action can be maintained to vacate an assessment which is a lien upon land, and thus a cloud upon title, when the assessment is in fact invalid, and the invalidity does not appear upon the face of the assessment, and will not necessarily appear in any proceeding taken by a purchaser, under the tax sale for nonpayment of the assessment, to recover possession of the land. This is so, because in such a case the action comes under one of the recognized heads of equity jurisprudence. * * *.

No degree of vigilance which could have been expected or required of him would have enabled him before payment to discover the illegality in the assessment. Unless, then, he can have equitable relief, there will be a wrong without a remedy an absolute failure of justice. Upon general principles of equity, then, we think he should have the equitable relief he seeks, against the obstacle interposed, in aid of the legal relief which he demands ” (pp. 455, 456). (Italics interpolated.)

In the above case the court was dealing with a situation where the statutory procedure providing relief against improper assessments was limited to irregular assessments, and where to obtain relief from jurisdictionally defective assessments it was necessary to resort to equity. Where an adequate remedy at law is provided, the reason for granting equitable relief disappears. (Delaware & Hudson Canal Co. v. Atkins, 121 N. Y. 246. See Southern Leasing Co. v. Ludwig, 217 N. Y. 100.)

It is urged that an assessment which is jurisdictionally defective is void and, therefore, is subject to collateral attack at any time. We have held, however, that if the Legislature provides a proper means for reviewing such assessments, such remedy may be exclusive. (New York Central & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165; Oak Hill Country Club v. Town of Pittsford, 264 N. Y. 133. See Loomis v. City of Little Falls, 176 N. Y. 31, 34.) True it is that in these cases the statute expressly provided that it was to be exclusive, whereas in the case at bar the charter lacks such an express statement. The Legislature might very well intend a remedy to be exclusive without including a specific provision to that effect. In determining the intention of the Legislature, we must keep in mind that we are dealing with matters of taxation. Unless the statutory remedy is exclusive, a property owner may delay many years before instituting action to set an assessment aside as a cloud on title. (See Schoener v. Lssauer, 107 N. Y. 111, 117; Ford v. Clendenin, 215 N. Y. 10, 16.) In this very case there was a delay of six or seven years between the confirmation of the assessment and the institution of the action. Such a delayed attack, if successful, tends to disrupt budgets and tax plans. To prevent this, most statutes providing a method for obtaining relief from improper assessments or taxes, fix a limited period during which relief may be sought. In the case at bar it is twenty days from the first publication of the ordinance and also twenty days from the confirmation of the assessment. Two effective opportunities are thereby given to appeal, one at the time the proceeding is initiated and the other when the assessment is confirmed. Thus the remedy is not only complete but expeditious. Where such a statute applies, one should not be permitted to sit by and, long afterward, come forward and ask a court of equity to relieve him from the tax. That the charter provision was intended to be exclusive can be seen from the fact that the remedy it affords is complete, covering all situations, and from the further provision that, if an assessment be vacated, the Common Council may cause a reassessment to be levied. Where the speedy charter remedy is followed, there will be no difficulty in making the reassessment. Where, however, many years elapse before the assessment is set aside, a reassessment may be impossible or, because of changed conditions, may be unfair to those who own the realty at that time. If for any reason reassessment is impossible, the burden of a local improvement which should have been borne by those benefited is cast upon all taxpayers.

The cases which hold that the equitable remedy is available where the defect is jurisdictional, all seem to have arisen where the existing statutory remedy afforded no relief because not applicable to jurisdictional defects, or under statutes which clearly showed that they were not intended to be exclusive. In the case at bar, a reading of the charter provision reveals that it is implicit with the intention to provide an exclusive remedy. This construction is not shaken by the fact that the charter provides that “ an appeal may be taken ” and does not employ the imperative “ must.” In this statute it is evident that the alternative afforded by the use of the word “ may ” is between seeking relief or submitting to the assessment.

The case at bar, of course, must be distinguished from one in which relief from taxation is sought because, in so far as the statute is applicable to the protesting taxpayer, the entire statute'is unconstitutional. (New York Rapid Transit Corp. v. City of New York, 275 N. Y. 258.) A provision in a tax statute establishing the procedure for recovering taxes illegally collected, normally is not intended to apply where the claim is made that the statute is entirely unconstitutional as applied to that taxpayer. In the case at bar, however, there is no claim that the imposition of an assessment was unconstitutional, the challenge being on the ground that jurisdictionally defective procedure was followed in making the assessment.

The order of the Appellate Division should be reversed, and the judgment of the Special Term affirmed, with costs in this court and in the Appellate Division. The certified question is answered in the affirmative.

Crane, Ch. J., O’Brien, Hubbs and Loughran, JJ., concur; Lehman, J., concurs in result; Bippey, J., concurs for reversal on the ground that plaintiff has been guilty of loches.

Ordered accordingly.


author:
Hubbs, J.
      O’Brien, J.

text:
    John N. Howitt, Respondent, v. Street & Smith Publications, Inc., Appellant.
    Argued December 1, 1937;
    decided January 11, 1938.

      Louis P. Eisner for appellant.
    The grant of a right to reproduce a work of art is not a sale of tangible personal property within the meaning of Local Law No. 20, 1934, as amended by Local Law No. 24, 1934, under which a sales tax was imposed. (American Tobacco Co. v. Werckmeister, 207 U. S. 284; Harms v. Cohen, 279 Fed. Rep. 276.) The definition of “ sale ” or “ selling ” as contained in the Local Laws does not enlarge the scope of the sales tax to cover the transactions here involved, nor do said transactions fall within such definition (Matter of Chapman, 166 U. S. 661; United States v. 1412 Gallons of Distilled Spirits, 10 Blatchf. 428; Gould v. Gould, 245 U. S. 151; Hecht v. Malley, 265 U. S. 144; United States v. Field, 255 U. S. 257; United States v. Watts, 1 Bond, 580; United States v. Merriam, 263 U. S. 179; Matter of Luchow, Inc., v. Taylor, 251 App. Div. 164; Matter of Mendoza Fur Dyeing Works, Inc., v. Taylor, 272 N. Y. 275; Hunter v. Royal Ins. Co., 209 App. Div. 15; Sullivan v. Sullivan, 66 N. Y. 37.)

      Arthur Garfield Hays and Joseph Cassidy for respondent.
    The definition of sale or selling as contained in the Local Laws includes transactions where tangible personal property is licensed to be used for a consideration. (People ex rel. Foremost Studio, Inc., v. Graves, 246 App. Div. 130; Matter of United Artists Corp. v. Taylor, 273 N. Y. 334.)

      Louis H. Moos, Alfred B. Nathan and George X. Levine for Photographic Illustrators, Inc., amicus curiæ.

    The local law limits the imposition of the tax to retail sales of tangible personal property. The tax may not be extended by judicial construction. (City Bank F. T. Co. v. N. Y. C. R. R. Co., 253 N. Y. 49; Story v. Craig, 231 N. Y. 33; Town of Amherst v. County of Erie, 236 App. Div. 58; 260 N. Y. 361; People v. Lytle, 7 App. Div. 553; Matter of Long v. Jerzewski, 235 App. Div. 441.) Smith v. Browning, 225 N. Y. 358; People ex rel. Mutual Trust Co. v. Miller, 177 N. Y. 51; People ex rel. N. Y. Mail & Newspaper Transp. Co. v. Gaus, 198 N. Y. 250; Matter of Gates, 243 N. Y. 193; Iselin v. United States, 270 U. S. 245; Wallace v. Cutten, 298 U. S. 229; Matter

      of Erickson v. Cohen, 243 App. Div. 1; Robinson v. Graves, [1935] 1 K. B. 579; Racklin-Fagin Constr. Corp. v. Villar, 156 Misc. Rep. 220.)

      Karl W. Kirchwey for Hearst Magazines, Inc., amicus curiæ.

    The transactions were not sales of tangible personal property within the meaning of that term as used in the Local Laws taxing such sales. (American Tobacco Co. v. Werckmeister, 207 U. S. 284; Carbonelli v. City of Amsterdam, 197 App. Div. 848; Adamson v. Schreiner, 176 App. Div. 95; Massachusetts Mut. Ins. Co. v. United States, 288 U. S. 269.) Assuming that there was a “ transfer of possession ” and a “ license to use ” in the statutory sense, the consideration paid was not for such transfer or license, but for the intangible rights of copying and publication. (Stephens v. Cady, 14 How. 528; Stevens v. Gladding, 17 How. 447; Patterson v. Ogilvie Pub. Co. 119 Fed. Rep. 451; Harms v. Cohen, 279 Fed. Rep. 276; American Tobacco Co. v. Werckmeister, 207 U. S. 284.)
   Hubbs, J.

Respondent is an illustrator and artist, and appellant is a publisher of magizines and periodicals. Between May 16, 1935, and April 22, 1937, the appellant paid the respondent $1,410 for the right to reproduce sixteen of his paintings. No right to exhibit publicly the paintings was given, nor were the paintings sold. It was expressly understood that there would be no use, consumption, alteration or defacement of the paintings, and respondent reserved the right to and did in fact sell the paintings. Although delivery of the paintings into the possession of the appellant was not necessary in order that it reproduce them, nevertheless they were given into appellant’s possession, and it sent them to a photoengraving company which prepared blueprints and made final comparisons with the original either in the engraver’s plant or in appellant’s place of business. All this could just as conveniently have been done in the respondent’s studio. The agreed statement of facts stated:

“11. The only steps * * * in which the original paintings played any part were the photographing thereof for the preparation of the blueprints and the visual comparison of the paintings with the plates and proofs during the touching up and finishing process, and these two steps could just as conveniently have been performed by the photo-engraver at plaintiff’s studio without any delivery of the paintings into the custody of defendant, or the photo-engraver. ’ ’

On December 28,1934, Local Law No. 24 (published as No. 25, Local Laws, 1934, p. 164) was adopted and became law for the city of New York. That law provided for a tax on sales in the city of New York and the following provisions are in question in this case:

“ Section 1. * * * (e) The word ‘ sale ’ or selling ’ means any transfer of title or possession or both, exchange or barter, license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration, or any agreement therefor, and may include the rendering of any service specified in section two of this local law.”

On February 11, 1935, the Comptroller of the city of New York promulgated official Rules and Regulations. Article 53 thereof reads: “ The right to reproduce a painting, cover drawing, illustration or cartoon is not a sale and the amount received by the owner is not a receipt from the sale of tangible personal property, and is not taxable.”

Despite this rule, the Comptroller has assessed the respondent $28.20 on the transactions above described, and he seeks to recover the tax under the authority conferred by section 2 of said law: “ The vendor shall have the same right in respect to collecting the tax from the purchaser, or in respect to non-payment of the tax by the purchaser, as if the tax were a part of the purchase price of the property or service and payable at the time of the sale.”

I Payment is resisted, relying on the interpretation given to the local law in the Comptroller’s rule above quoted. Respondent contends that the transaction involved was a license to use]” as contemplated in the definition of a sale, above quoted. The question for determination is whether the transaction constituted a “ sale ” taxable under the local law.

The tax law was adopted to enable the city to defray the cost of granting unemployment work and home relief by imposing a tax upon the receipts from sales of certain properties and services in the city of New York.” The tax is imposed upon certain sales of tangible personal property, gas, electricity, telephone and other services, food, drink and entertainment in restaurants and other establishments, wines, liquors and other alcoholic beverages. The purpose of the law is to tax sales ” where specific goods are transferred, and certain services rendered. Thus we have recently held that one engaged in the business of dyeing and processing fur skins is not making a sale of tangible personal property but is rendering a service and thus the sale of the dye stuffs is not taxable to the ultimate consumer but to the dyer; that a person is not selling the dye merely because it can be distinguished on the finished products. (Matter of Mendoza Fur Dyeing Works, Inc., v. Taylor, 272 N. Y. 275.) In People ex rel. Walker Engraving Corp. v. Graves (268 N. Y. 648) the question involved was whether the sale of engraved plates constituted a sale of tangible personal property or a contract for services, and we decided that there was a sale of the engraved metal plates. As the purpose of the local law was to tax sales, it seems clear that the purpose of the definition that a sale meant also a transfer of title or possession or both, exchange or barter, license to use or consume,” was to cover a situation where the parties might attempt to call the sale by some other name. The local law was not intended to tax all transactions, but rather to cover only sales of tangible personal property and certain services.

In the light of such intent of the local law it seems to us that the transactions here involved are not such a license to use ” as make these transactions taxable. Here there was no such use permitted as contemplated by the local law. The “ use ” was reserved to the artist. There was no transfer of possession for which a consideration was paid. The consideration was paid for the right merely to reproduce, which could as well be done while still in the possession of the artist as elsewhere. The transaction here involved was similar to the payment of consideration for copyright purposes. For the consideration paid, an owner promises not to assert his ownership of a copyright. There is a distinction between the right to reproduce which is protected by the copyright law, and the production itself. (American Tobacco Co. v. Werckmeister, 207 U. S. 284.)

The only right given appellant was the right to reproduce paintings. Possession of the paintings was transferred temporarily but not for the purpose of sale, or exhibition, but merely to permit them to be photographed so that a copy of each could be reproduced on plates. There was no wearing out of the object, no consumption, no possessory interest for even a limited time. Respondent reserved the right to take them at any time. It was only by the artist’s permission that the paintings were taken out of his studio. The possession was merely incidental. There was no more a license to use these paintings than there is a license to use a picture in a museum when one is granted a license to come into a museum and photograph a picture. There was no transfer of a,tangible piece of property for which a consideration was paid as contemplated by the local law. The right to use and sell and exhibit was retained by the artist. In the agreed statement of facts it is stated that the original paintings executed by plaintiff * * * were not used or consumed by defendant, * * * that it was expressly understood and agreed that there would be no use, consumption, alteration or defacement of the paintings.” Such statement, in connection with the rule adopted by the Comptroller which excludes this transaction from a tax, tends to confirm our conclusion that a tax is not collectible in the case at bar.

We are referred to the case of People ex rel. Foremost Studio, Inc., v. Graves (246 App. Div. 130). But in that case there was a sale and transfer of the designs and the purchaser had exclusive right to them. In Matter of United Artists Corp. v. Taylor (273 N. Y. 334) there was a transfer by the distributor to the exhibitor of the possession of the positive and negative prints of photo-plays with the license to use or exhibit them for a certain time. The case of Dun & Bradstreet, Inc., v. City of New York (276 N. Y. 198) is similar to the present case. In that case the local law was held not to apply to the transactions in which the customers of Dun & Bradstreet paid a consideration for the financial services rendered though it was contended that there was at least a license to use the reference books furnished in connection with the services.

A tax law should be interpreted as the ordinary person reading it would interpret it. Referring to this local law, we have said: “ A taxing statute must be given a practical construction.” (Matter of Mendoza Fur Dyeing Works, Inc., v. Taylor, supra, p. 281.) And if there is ambiguity it should be interpreted in favor of the taxpayer. We believe that the ordinary interpretation of the word “ use ” is to assert possessory interest in the article for some length of time; in this case to hold the right to exhibit the picture or sell it or tamper with it in some manner to be decided upon by the purchaser. Anything less than this, as merely the right to reproduce, is not such a use as should make this transaction taxable as a sale of tangible personal property.

The judgment should be reversed and judgment directed in favor of the defendant, with costs.

O’Brien, J.

(dissenting). The Comptroller, practically construing the local law, assessed plaintiff a small sum as a sales tax upon the transaction between plaintiff and defendant. If the transaction constitutes a sale, plaintiff, as vendor, has the right to recover from defendant, as vendee, the amount of the tax paid to the city. The word “ sale ” is defined in the local law as “ any transfer of title or possession or * * * license to use * * * in any manner or by any means whatsoever for a consideration, or any agreement therefor * *

Por a consideration paid by defendant to plaintiff, an exclusive license to reproduce pictures painted by plaintiff was granted to defendant and these pictures were delivered into the custody of defendant for the purpose of reproducing them on the covers of defendant’s magazines which are sold to the public.

The noun possession ” and the verb to use ” occurring in this statute must be given their usual meaning. They have no technical significance but are intended to be understood by persons of ordinary intelligence who buy and sell. The pictures were delivered to defendant and for sometime remained in its custody. The statute distinguishes between transfer of title and transfer of possession. After these chattels had been delivered into defendant’s custody, they were in its possession and within its control for the limited purpose of making copies for defendant’s magazines. Such copies were made and, in making them, defendant necessarily did use the originals. The statute also distinguishes between the words “ use ” and “ consume.” The verb “ to use ” means, according to Webster, to employ,” to avail oneself of ” and the lexicographer gives as an example, “ an artist uses a model.” If a model is used when an artist paints a picture, surely the original picture is also used when some one copies or reproduces it. In the language of the statute, these pictures were used “ in any manner or by any means whatsoever.” If defendant did not use them “ in any manner or by any means whatsoever ” what did it do with them?

In order to constitute a sale, the transaction does not, according to the statutory definition, require both a transfer of possession and a license to use. E either right be granted for a consideration, sale results.

The Appellate Division is correct in going so far at least as to decidAthat &'license to use these pictures for the purpose of copying them and exhibiting the copies on the covers of magazines sold to the public is the thing that was sold by plaintiff to defendant.

Crane, Ch. J., Lehman, Lotjghran and Rippey, JJ., • concur with Hubbs, J.; O’Brien, J., dissents in opinion, in which Finch, J., concurs.

Judgment accordingly.


text:
    Gibraltar Realty Corporation, Respondent, v. Mount Vernon Trust Company, Appellant.

      Argued November 23, 1937;
    decided January 11, 1938.

      William M. Denman for appellant.
    The notice received by defendant was not effectual to cause it to recognize plaintiff’s claim. (Field v. Mayor, 6 N. Y. 179; Wilkins v. Batterman, 4 Barb. 47; Baldwin’s Bank v. Smith, 215 N. Y. 76; Glennan v. Rochester Trust & Safe Deposit Co., 209 N. Y. 12; Crawford v. West Side Bank, 100 N. Y. 50.)

      Jess H. Rosenberg for respondent.
    Defendant was guilty of gross negligence as a matter of law in disregarding the assignment after receipt of written notice thereof. (Field v. Mayor, 6 N. Y. 179; Wilkins v. Batterman, 4 Barb. 47; Cosgriff v. Hudson City Savings Institution, 24 Misc. Rep. 4; Royal Indemnity Co. v. International Ry. Co., 95 Misc. Rep. 670.) Defendant’s status as a bank does not absolve it from the consequences of its gross negligence in disregarding the assignment. (Allen

      v. Williamsburgh Sav. Bank, 69 N. Y. 314; Kelley v. Buffalo Sav. Bank, 180 N. Y. 171; Appleby v. Erie County Sav. Bank, 62 N. Y. 12; Gearns v. Bowery Sav. Bank, 135 N. Y. 557.)
   Hubbs, J.

The respondent, an assignee of a deposit in the appellant trust company, sued to recover the amount of the deposit. The defense interposed is that sufficient notice of the assignment was not received by the bank before a portion of the deposit was_withdrawn by the depositor.

In March, 1933, the appellant Mount Vernon Trust Company was closed during the bank holiday. On March 24, 1933, it was opened on a restricted basis with the privilege of paying out ten per cent of the deposits. On March 25, 1933, Patricia R. Chimanz had on deposit in the bank $1,285.41. On that date she purchased some real estate from the respondent Gibraltar Realty Corporation for $1,000, paying $128, the ten per cent she was allowed to withdraw from the bank, and assigned to the vendor the balance of the deposit.

On April 4, 1933, about a week after the assignment, respondent wrote to the trust company and stated that the account had been assigned to it. Nothing was done by the trust company until January 2, 1934, when for the first time, nine months after the notice of assignment, it wrote and acknowledged receipt of the respondent’s letter of April 4, 1933, but said that it would not recognize the assignment because the first charge against this account is the sale of stock under the depositor’s agreement ” to Mrs. Chimanz.

In the meantime, by the reorganization arrangement, to which Mrs. Chimanz agreed on May 23, 1933, and under which the bank reopened on June 4, 1934, the depositor had become entitled to fifty-five per cent in cash, thirty-three and three-fourths per cent in certificates of beneficial interest, and eleven and one-fourth per cent in capital stock. That meant $636.28 in cash. On October 9, 1933, six months after the assignment and notice to the trust company, Mrs. Chimanz signed a subscription for thirty additional shares of stock costing $375, to be deducted from the $636.28 on deposit. That amount has been charged against her account, and it is that charge which the appellant contends comes in ahead of respondent’s assignment.

Respondent contends that the bank, after it received the notice, should have held the money for it as assignee. It is true that in some cases a debtor must not pay an assignor when it has notice of an assignment, and some cases have gone so far as to say that the debtor must not pay the assignor when it has knowledge of facts sufficient merely to put it upon inquiry. But there is a recognized difference between banks and ordinary debtors. Ordinarily the relation between a bank and its depositors is that of debtor and creditor. It is bound by an implied contract to repay the deposit on the depositor’s demand or order. However, a bank deposit is more than an ordinary debt, and the depósitor’s relation to the bank is not identical with that of an ordinary creditor. (5 Michie on Banks and Banking, ch. 9.) In Crawford v. West Side Bank (100 N. Y. 50) it is said that “ in disbursing the customer’s funds, it can pay them only in the usual course of business, and in conformity to his [the depositor’s] directions ” (p. 53).

Where a bank dishonors a check of a depositor wrongfully it is hable for damages to the credit of the depositor caused by its wrongful act in refusing to honor the depositor’s check. (Wildenberger v. Ridgewood Nat. Bank, 230 N. Y. 425.) In that case the bank chose to honor the claim of an adverse claimant, and refused to honor checks of the depositor. The court, in holding the bank liable for damages to the credit of the depositor, said: “It dishonored them with full knowledge of the state of the account, setting one risk against another, the risk of adverse claims against the risk of broken contracts * * *. Defendant made its choice, and must answer for the consequences ” (p. 428).

Under such a duty, and in such a dilemma, the bank is entitled to more definite notice than is required of the ordinary assignee. “ The substitution of a new creditor is in derogation of the rights of the debtor, and was strictly prohibited by the ancient rules of the common law. It is only by relaxation of those rules, in deference to the convenience of trade, that such assignments have been recognized at all, and now enable a direct suit where the entire claim is assigned to one assignee * *

The fact, however, of such substitution of a new creditor must, in order to make the debtor liable to the assignee, be brought home to the debtor with much exactness and certainty before he has paid the debt. The rule of notice to him is much more stringent than that which may defeat the title of a purchaser of a chose in action or of real estate. The latter is free to purchase or refuse to purchase as he chooses, and therefore it is his duty, before acting, to trace out any reasonable doubt and inform himself of the true facts as soon as anything arises to put him on inquiry. But the debtor is not so situated. He must pay to his original creditor when the debt is due, unless he can establish affirmatively that someone else has a better right. The notice to him, therefore, must be of so exact and specific a character as to convince him that he is no longer liable to such original creditor, and to place in his hands the means of defense against him, or at least the information necessary to interplead the assignee.” (Skobis v. Ferge, 102 Wis. 122, 130; 2 Williston on Contracts [Rev. ed.], p. 1267.)

By virtue of the implied contract arising from the usage of the banking business a bank is entitled to have some written evidence of an order of a depositor to pay out or transfer his deposit, and is not bound to act on an oral order. (McEwen v. Davis, 39 Ind. 109; First Nat. Bank v. Stapf, 165 Ind. 162.) The reason for that is apparent. In dealing with its numerous depositors, a bank, in paying out its funds on the order of a depositor, must rely upon its knowledge of the signature of its customer in determining whether the document presented in fact bears the signature of its depositor. That usually is the only means it has from which to determine the validity of a check, order or other instrument directing it to pay to a third person, from the balance due from the bank to the maker of the instrument. It is for that reason that a bank requires a depositor to file with it a signature, so that in case of doubt as to the validity of a signature upon an instrument presented for payment, the bank can compare the signature of the depositor on file with it with the signature upon the instrument presented for payment.

“ The general custom in banking business is to pay on account of such indebtedness only upon a proper demand therefor by check or its equivalent at the banking house during ordinary banking hours. One who deposits money for his credit in such an account, without any special understanding to the contrary, is presumed to accept the undertaking of the bank to pay according to the general usage in such cases, which is known to all men.” (Koelzer v. First Nat. Bank, 125 Wis. 595, 598; First Nat. Bank v. Stapf, supra.)

It was doubtless the recognition of these principles that induced the Legislature to adopt section 134, subdivision 5, of the Banking Law (Cons. Laws, ch. 2), which was enacted to protect banks in case of a claim adverse to that of the depositor.

A bank which receives a general deposit of money becomes the debtor of the depositor and impliedly contracts to honor his checks up to the sum deposited, and it seems beyond doubt that if the bank essays to pass upon the right of an adverse claimant to the fund, and pays over to him any part thereof, it becomes responsible for the amount so paid. A bank cannot, after accepting a deposit as that of the depositor, deny the title of the depositor. * * * In paying out a deposit to one claiming it adversely to the depositor, however, the bank does so at its peril, and it is hable to the depositor for the amount so -paid if the claim was not a valid one. * * * In England the rule seems to be that a mere notice from a third person that he claims the balance standing to the credit of the customer will not justify the bank in dishonoring a check.” (7 Am. Jur., Banks, §§ 413, 414; Tassell v. Cooper, 9 C. B. 509; Jaselli v. Riggs Nat. Bank, 36 App. Cas. [D. C.] 159.)

The tendency of courts is in favor of enforcing the contract made by the bank with the depositor * * *.” (1 Morse on The Law of Banks and Banking, p. 800.)

Jaselli v. Riggs Nat. Bank (supra) holds that where a bank presumes to pass upon the validity of an adverse claim, it must exercise diligence in notifying its customer of its intention to protect itself by withholding enough from the deposit to protect itself against the adverse claimant. There is nothing in that case which enforces a duty on the bank to pass upon the validity of such claim. There is nothing in Scheffer v. Erie County Sav. Bank (229 N. Y. 50) which calls upon the bank to pay an assignee giving notice by letter. In that case there was sufficient proof of the assignment and the bank resisted payment on the wording of a statute.

Under the peculiar relation existing between a bank and its customers, we think the bank was not called upon to honor the assignment in this case. When the depositor presented her check the bank was in no position to question her title to the funds. That title may be questioned by one holding a better title, but the bank cannot assert that party’s right. It was bound to carry out its part of its contract to honor the depositor’s checks up to the amount of the deposit, until it had notice sufficient to show that the depositor had put the title to the funds out of her hands. The notice here was merely a statement by the assignee that it held an assignment of the funds. The bank could not, by reason of such notice, be convinced that it was no longer liable to the original depositor. It could not, by the production of this letter, establish affirmatively that someone else had a better right. There was not placed in its hands the means of: defense against the depositor. The case would be different if the assignment itself, bearing the signature of the depositor, had been filed with the bank. Anything less than that is not sufficient notice.

It is urged that appellant, upon receipt of the letter from respondent stating that it had an assignment of the deposit, should have made some effort to ascertain for itself the facts. The answer is clear. That was not its contract with its depositor. It never assumed any such obligation, and if it had assumed it gratuitously it might have made a mistake which would have made it liable for damages. Its obligation, under its contract with the depositor, was to pay, during banking hours, upon presentation of a proper document signed by the depositor. All that respondent had to do was to present the original assignment to the bank so that the bank could ascertain from the original signature that it was that of its depositor. That it failed to do, and because of such failure it should not be permitted to shift its loss onto the bank.

The fact that the bank at the time in question was restricted in its operations by' -the order of the State Superintendent of Banks did not have the effect of altering the contract between the bank and its depositor. The bank was no more bound by a telephone conversation with or letter from an unknown third party claiming an interest in a deposit, after the order of the Superintendent of Banks became effective, than it was before such order was issued.

The judgment of the Appellate Division and that of the Special Term should be reversed and the complaint dismissed, withcosts in all courts.

O’Brien, J.

(dissenting). From March 24, 1933, to June 5, 1934, defendant trust company was operating on a restricted basis which, under the authority of the Superintendent of Banks, prohibited it from paying out more than ten per cent of its deposits. Patricia R. Chimanz had on deposit with defendant the sum of $1,285.41. She had purchased real estate from plaintiff and, in part payment therefor, she drew her draft for $128, ten per cent of her deposit, and executed a written assignment to plaintiff for the balance. This is the language of that instrument: “For value received, I hereby assign, transfer and set over unto Gibraltar Realty Corporation the balance of $1,285.41 of my account and interest thereon accrued or to accrue thereon deposited in the Special Deposit or Interest Department of the Mount Vernon Trust Company, East Side Branch, East Third Street, at Fulton Avenue, Mt. Vernon, N. Y., represented by Pass Book No. 385, and direct that such sums so assigned be delivered to said Gibraltar Realty Corporation or to its order; I do hereby appoint said Gibraltar Realty Corporation or its attorney irrevocably my attorney with full power to demand, sue for and collect the amount thereof in my name or its name as it may deem proper. Patricia R. Chimanz (L. S.). In Presence of Sol. H. Lewis.”

The original document was not filed with defendant nor was a copy served at that time but under date of April 4, 1933, plaintiff’s attorney caused the following notice to be delivered to defendant trust company; “ Please be informed that the balance of the deposit by Patricia R„ Chimanz represented by your Pass Book No. 385 in the Special Deposit or Interest Department Account was assigned by Patricia R. Chimanz to the Gibraltar Realty Corporation to secure the payment of the balance of the purchase price for premises No. 102 North Road, Bronxville Manor, which she was obligated to pay pursuant to her contract of purchase thereof. Please make a record accordingly and inform me when the balance of this deposit account may be withdrawn. Copies to Mr. Morgan, Mr. Baker.” Defendant ignored this notice for nine months until January 2, 1934, and then refused, in a letter by its attorneys, to recognize the assignment. In the meantime during the process of the reorganization, defendant, then in receipt of the notice of the assignment and without making the slightest inquiry either from the assignor or assignee, accepted from the assignor a depositor’s agreement dated May 23, 1933, consenting to the plan of reorganization and a subscription dated October 9, 1933, for thirty shares of stock of defendant payable out of the balance of her deposit. These certificates have been issued to her.

Neither in the record nor in the brief of defendant is the validity of the assignment assailed. It defends on the ground that the assignment was never filed with it and that it never received due notice thereof. In defendant’s affidavit opposing plaintiff’s motion for summary judgment it states its position to be that the sole controversy in this action is whether or not the stock subscription signed by Patricia R. Chimanz and directing that it be charged against her deposit and thus deducted from the available balance should be recognized, and whether or not the notification of the assignment as made was duly and validly given to the defendant.”

The notice of April 4, 1933, is not sufficient to compel defendant, without some inquiry such as would satisfy a prudent business man, to give to plaintiff all the rights of an assignee. The law seems equally clear, however, that without inquiry it was not warranted, in the face of this notice, in continuing to accord to the assignor all the rights of a depositor. On the undisputed facts of this case, defendant as a banking institution, was put on notice to the same extent as any other corporation or individual.

If the validity of the assignment were subject to doubt or even if any one expressed any doubt concerning it, then plaintiff and the assignor might be deemed adverse claimants and the application of subdivision 5 of section 134 of the Ranking Law (Cons. Laws, ch. 2) might require consideration. However, when the depositor, in an instrument which no one attacks, wrote that she did direct that such sums so assigned be delivered to saidJLibraltar Realty Corporation or to its order ” she relinquished all claim and ceased to be a claimant. If she ever again became a claimant, she must have done so by invitation of defendant.

Defendant concedes in its brief that in the ordinary situation where a creditor assigns the debt to a third party, any notice of such assignment to the debtor is sufficient and that if the debtor then, disregarding such notice, pays the assignor he is still liable to the assignee. It argues, however, that this rule does not apply to the facts here because the debtor is a bank and it invokes as authority the decisions of this court in Crawford v. West Side Bank (100 N. Y. 50)_and Glennan v. Rochester T. & S. D. Co. (209 N. Y. 12). These cases do not appear to control. They deal with conditions existing when banks are operating according to full legal capacity and responsible for payment of deposits by check in the usual course of business. In the present situation, defendant was not engaged in the usual course of business but was prohibited from paying out any of the balance then in the assignor’s account by check or by any other method. It could accept the assignment and transfer the Chimanz account to the credit of Gibraltar Realty Corporation but could not pay it out. Plaintiff’s notice of April 4, 1933, requested: “ Please make a record accordingly and inform me when the balance of this deposit account may be withdrawn.” Defendant could not, at that time of restricted operation, allow this balance to be withdrawn but it was under a duty, before it continued to recognize and accord to the assignor all the rights of a depositor, to make a record of the transaction and at least inquire from the assignor concerning the facts and to request the assignee to display to it the assignment. It had no right after such notice to ignore the assignee. There is no case cited which compels courts to sustain a defense of lack of due notice when, with the exercise of the slightest degree of ordinary business prudence, defendant could have. satisfied itself concerning the validity of this assignment which has never been attacked. In the Crawford case, the check, as held by this court, never was a legal obligation enforceable against the drawer by its owner and holder. In the Glennan case, the bank, without knowledge of the death of a depositor, paid in the usual course of business a check drawn by him shortly prior to his death. In this court’s opinion in the Glennan case occurs this statement: “Its [the bank’s] contract with the depositor is to pay his checks as long as his deposit is sufficient for the purpose, and f.r a failure to pay the checks the bank is liable for any injury to the credit of the drawer occasioned thereby ” (p. 17). That rule can have no application to the facts in this case. Under the restrictions placed upon this defendant between March, 1933, and June, 1934, it could not have honored any checks which might have been drawn by the assignor. She had checked out her ten per cent before she made the assignment. The exercise of ordinary care and diligence would have satisfied defendant of the validity of this assignment.

Moreover, on defendant’s motion, the assignor was brought in as a party defendant and defendant trust company was authorized to serve an amended answer upon her.

Crane, Ch. J., Lehman and Loughran, JJ., concur with Hubbs, J.; O’Brien, J., dissents in opinion, in which Finch and Rippey, JJ., concur.

Judgments reversed, etc.