text:
    In the Matter of Albert F. Glassman, Respondent, against Arthur G. Fries, as County Auditor of Erie County, Appellant, Impleaded with Another.
    (Argued April 23, 1936;
    decided May 19, 1936.)

      Jacob Tick and Paul J. Bait for appellant.

      Seth T. Cole for respondent.
   Loughran, J.

In December, 1926, the Board of Supervisors of the county of Erie, at the request of the then Auditor of the county, adopted a resolution “ that the position of Chief Clerk in the Auditor’s Department be abolished and that the position of Secretary be created at the same salary allowance.” Thereupon the State Civil Service Commission transferred the position to the exempt class pursuant to subdivision 2 of section 13 of the Civil Service Law (Cons. Laws, ch. 7), on the representation that the employment was primarily that of “ secretary to the auditor ” and so “in a sense of a confidential nature.” For eight years thereafter the relator, an exempt volunteer fireman, had been employed as such secretary when in January, 1935, the then Auditor of the county summarily appointed another in his place.

On these facts the relator claimed that his removal transcended the power of the Auditor as limited by section 22 of the Civil Service Law. The Auditor answered that preferences thereby secured to volunteer firemen are not attached “ to the position of private secretary * * * of any official or department.” The relator replied that (although he was a secretary within the meaning of section 13) he none the less was not a “ private ” secretary in the sense of section 22 (subd. 2). The Special Term denied the validity of this distinction. The Appellate Division thought the distinction substantial and ordered reinstatement of the relator. We share the view of the Special Term.

The Appellate Division held that the Legislature here used the words private secretary ” as the distinctive title of an employment to be discriminated from the work of secretaries in general. In the opinion of that court it was said: " While the duties of a secretary as well as those of a private secretary cannot be prescribed by any mathematical formula, and are determined by the resolution creating the position or by the appointing power in each individual case, there is, in the public mind, a somewhat undefined distinction between the two. A private secretary ordinarily looks after the personal affairs of his chief, and sustains a highly confidential relationship to him. Such services are largely of a personal rather than of a public nature. The attachment of the ordinary secretary is to the service, while that of the private secretary is to the individual.” (246 App. Div. 468, 470.)

This construction of the statute does not commend itself to us. As originally enacted the limitations upon the power to remove veterans and exempt volunteer firemen were qualified by the provision that Nothing in this section shall be construed to apply to the position of private secretary or deputy of any official or department, or to any other person holding a strictly confidential relation to the appointing officer.” (Laws of 1899, ch. 370, § 21.) In 1902 that qualification was amended so as to substitute the text now part of section 22 as follows: Nothing in this section shall be construed to apply to the position of private secretary, cashier or deputy of any official or department.” (Laws of 1902, ch. 270, § 1, [§ 21].) Then came the decision of this court in People ex rel. Ryan v. Wells (176 N. Y. 462). In that case the relator, a volunteer fireman, had been summarily removed from the position of Deputy Tax Commissioner of the city of New York. He demanded reinstatement on the ground that, since he bore no confidential relation to the Board of Tax Commissioners, they could remove him only for incompetency or misconduct shown after a proper hearing. In rejecting that contention, the court said: We are by no means clear that the language of the civil service statute in its original form justified such a qualification or limitation of the term ‘ deputy.’ However that may be, since the amendment of 1902, by which the provision as to ‘ any other person holding a strictly confidential relation to the appointing officer ’ has been stricken out and the position of cashier, which is not necessarily confidential * * * added to the exceptions, such an interpretation we think no longer admissible and that the statute excepts all deputies in the various city departments” (pp. 464-465). This reasoning, in our judgment, leads also to the conclusion that the words of exception in section 22 embrace every person holding the position of secretary under section 13.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division.

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

Ordered accordingly.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    In the Matter of the Accounting of Richard M. Coleman et al., as Trustees under the Will of James F. D. Lanier, Deceased. William W. Coleman, as Executor of Richard M. Coleman, Deceased, Appellant; Central Hanover Bank and Trust Company, as Trustee, et al., Respondents.
    (Argued April 14, 1936;
    decided May 19, 1936.)

      T. L. J. Curran and Thomas J. Curran for appellant.

      Frederick R. Crane, as special guardian for Anne R. Schenck, et al., respondents.
   Finch, J.

James F. D. Lanier died in 1881 leaving a will by which he created a trust for his granddaughter, Mary L. Schenck, for her life. He appointed as sole trustee his son, Charles Lanier. Charles Lanier acted as trustee until his death in 1926. The will had provided that the three executors were to act as trustees in the event of the death of Charles Lanier, but in 1926 when he died all of these executors were dead. Mary L. Schenck, the life beneficiary, made an application to the Surrogate’s Court for the appointment of new trustees. Her petition was granted and in accordance therewith the Surrogate appointed as successor trustees Richard M. Coleman and the Central Union Trust Company (now the Central Hanover Bank and Trust Company). After the death of Richard M. Coleman in 1934, an accounting was filed by the trust company. The amount of the trust accounted for was in excess of $400,000. The only question upon which dispute has arisen concerns the amount of commissions to which the trustees are entitled.

The Surrogate decided that under the provisions of section 188, subdivision 2, of the Banking Law (Cons. Laws, ch. 2) he was bound to allow only one full commission to be divided between the trustees. The Appellate Division affirmed the decree of the Surrogate.

The Surrogate’s Court Act provides that where the gross value of an estate or of a fund accounted for exceeds $100,000 each testamentary trustee is entitled to full compensation unless there are more than three such trustees (§ 285). The trust company and Richard M. Coleman, having been appointed successors to the testamentary trustee in accordance with section 168 of the Surrogate’s Court Act, are each entitled to full commissions unless the Banking Law bars such commissions.

Section 188, subdivision 2, of the Banking Law, upon which the learned Surrogate relied to bar a full commission, provides:

2. Guardian, trustee or administrator. Any trust company may be appointed guardian, trustee or administrator, with or without the will annexed, on the application or consent of any person acting as such or as an executor or entitled to such appointment and in the place and stead of such person, or such trust company may be joined with any person so acting or entitled to such appointment; * * * No appointment so made shaE be deemed to increase the number of persons entitled to full compensation beyond the number so entitled under the terms of the will or deed creating the trust or appointing a guardian or authorized by law. * * * ”

This section apparently has never before been considered by the courts.

A careful reading of the statute reveals that the case at bar does not come within its terms. The trust company was not appointed on an application or with the consent of a trustee “ acting as such * * * or entitled to such, appointment and in the place and stead of such person,” nor was it joined with any person so acting or entitled to such appointment.” It and the individual trustee, Richard M. Coleman, were appointed simultaneously as successor trustees to the deceased individual trustee.

Section 188, subdivision 2, was aimed at the situation where a trustee seeks to be relieved of the details of the trust and arranges for the substitution of a trust company to do the work or where a trust company is brought in as co-trustee to share the burden of the duties. The Legislature was willing to permit the trust companies to be substituted as trustees or to be brought in as co-trustees, apparently regarding such appointment as desirable from the standpoint of security. The Legislature, however, was not willing to permit a testamentary trustee to place an additional financial burden on the estate because he desired to shift his work or to share it with a trust company. The protection furnished the estate by section 188, subdivision 2, is not necessary when the testamentary trustee is no longer in existence and the appointment by the Surrogate of a trust company as trustee is not made at the instance of an existing trustee seeking to ease or shift the burden of his duties, but at the request of persons interested in the estate, and at least one of whom will bear the expenses of the added commissions. Thus is revealed the purpose of the Legislature in not including the appointment of such successor trustees within the scope of section 188, subdivision 2.

The situation involved in the case at bar comes neither within the letter nor the spirit of section 188, subdivision 2, and the learned Surrogate inadvertently fell into error in holding that that section required him to deny a full commission to the appellant.

The order of the Appellate Division and that of the Surrogate’s Court should be reversed, with costs in all courts to appellant and respondent payable out of the estate. The accounting trustees should each be allowed full commissions.

Lehman, O’Brien, Hubbs, Crouch and Loughran, JJ., concur; Crane, Ch. J., taking no part.

Ordered accordingly.


author: Hubbs, J.

text:
    E. T. C. Corporation, Respondent, v. Title Guarantee and Trust Company, Appellant.
    (Argued April 23, 1936;
    decided May 19, 1936.)

      Richard S. Holmes, W. H. L. Edwards and Harold P. Winans for appellant.

      Paul Collins and James J. Carroll for respondent.
   Hubbs, J.

In February, 1931, the respondent purchased from the appellant two guaranteed mortgage certificates for the sum of $37,500. Respondent claims that it was induced to enter into the contract of purchase by the false and fraudulent representations of appellant that the certificates participated in a guaranteed mortgage on improved real estate in the city of New York. In October, 1933, according to respondent’s proof, its officers first learned that the representations were false and that these certificates did not give respondent a share in a guaranteed mortgage on improved real property but that the land covered by the mortgage was vacant land. On August 28, 1934, the respondent wrote the following letter to the appellant: “ We hereby notify you that we elect to rescind our contracts of purchase of February 10, 1931 and February 13, 1931, hereby tender back to you certificates #118,501 and #118,431 with interest received by us in the sum of $3,702.95, and demand that you return to us the purchase price paid by us amounting to $37,500 with interest on $12,500 from the 10th day of February, 1931, and on $25,000 from the 13th day of February, 1931.”

Appellant made no reply to this letter. Respondent never returned the certificates nor the sum received as interest, nor did it make any further offer so to do.

In this action the respondent seeks to recover the money paid for these certificates based upon rescission of the contract. At the close of the respondent’s case the court granted the motion of appellant to dismiss the complaint on the- ground that respondent had never tendered the certificates prior to the commencement of the action. The court also indicated as a second possible ground of dismissal that respondent’s long delay in attempting to rescind after knowledge of the alleged fraud was undue delay and fatal to its cause.

The Appellate Division reversed the judgment of the Trial Term on the law and granted a new trial, holding that the tender at the trial was sufficient. Appellant having given the proper stipulation appealed to this court. It is conceded that an offer to return the money received by respondent as interest was not necessary since it would be entitled to receive either that sum as interest, or if successful, interest at six per cent on the sum paid for the certificates.

In an action at law based upon a rescission of a voidable contract, the rule has long been established that the party must restore or offer to restore before suit whatever he has received by virtue of the contract. (Casey v. Kastel, 237 N. Y. 305; Gould v. Cayuga County Nat. Bank, 86 N. Y. 75.)

In an equitable action for rescission, it is sufficient to make the offer in the complaint. The effect of a rescission of an agreement is to put the parties back in the same position they were in prior to the making of the contract. Where a contract has been wholly or partly executed before an action a,t law can be maintained based on a rescission, the parties must be restored to the position they occupied before the contract was entered into. “All rights which are transferred, released or created by the agreement are revested, restored or discharged by avoidance.” (Gould v. Cayuga County Nat. Bank, supra, p. 80.)

“ Many of the courts have, in dealing with this question, completely lost sight of the plain distinction between the equitable remedy of rescission or cancellation (where, as in all equity decrees, complete relief is awarded to the defendant as well as to the plaintiff), and the legal remedies, based upon rescission of a contract by the act of a party thereto, where, in the act of rescission itself, the plaintiff must restore or attempt to restore the consideration, since, in legal theory, the ex parte act of rescission reinvests him with the legal title to the thing for the possession of which he subsequently sues, and must, therefore, be conditioned upon a surrender of the thing already received by him in pursuance of the transaction which he thus avoids.” (5 Pomeroy on Equity Jurisprudence, p. 4765.)

It is an elementary principle that in an action at law based upon a rescission, restitution before action is necessary. (American Law Institute, Restatement of the Law of Contracts, § 480.)

Exceptions to this rule have been recognized. Where the injured party holds the note of the other party, it has been held that he need not offer to make restoration before trial. That is on the theory that a note, as between the parties, constitutes a mere promise to pay and becomes valueless when the contract is voided. (Nichols v. Michael, 23 N. Y. 264; Berry v. American Central Ins. Co., 132 N. Y. 49.)

Likewise where what a party has received consists only of money, the amount of which he will be entitled to in any event, he need not make offer of restitution. (Gould, v. Cayuga County Nat. Bank, 86 N. Y. 75.) But where a party has been by fraud induced to accept a note of a third party as payment of a debt, he must make restitution of the note before proceeding upon his original claim. (Estabrook v. Swett, 116 Mass. 303.)

Where a party has received certificates of stock under a contract, he must return the certificates before bringing action to recover what he has paid. (Cobb v. Hatfield, 46 N. Y. 533; Bassett v. Brown, 105 Mass. 551.)

It seems, therefore, to be well settled that if these participation certificates are in themselves things of value, an offer to return them should have been made before suit was brought to recover the sum paid. On the other hand, if, as respondent contends, they are merely evidentiary of the agreement between the parties, respondent has sufficiently indicated its rescission of the contract. Let us consider the nature of the mortgage certificates in question.

They recite that the Title Guarantee and Trust Company (called the Company) has received from the E. T. C. Corporation a sum of money for the purchase of and hereby assigns to the purchaser an undivided share ” of a certain mortgage. The bond and mortgage together with the policy of the Bond and Mortgage Guarantee Company guaranteeing to the holders the payment of principal and interest are declared to be held by the Company as depositary and agent for the holders of the certificates. The Company is to receive the principal and interest when due and distribute it. The Company has the privilege to take up and cancel the certificates upon giving thirty days’ notice to the holder and paying the amount due. It is further provided: “ This certificate is not negotiable. The only way that the interest of the purchaser can be transferred is by the surrender of this certificate to the Company duly assigned and the issuing of another certificate to the transferee.”

Respondent urges that the certificates are not things of value; that they are merely evidence of an equitable title to a part of the mortgage and, therefore, that it was not necessary to tender them to respondent before commencing the action. If they had been promissory notes evidencing appellant’s promise to pay a sum of money, there would have been no necessity of tendering their return before action brought, since they would constitute merely one of the promises of the contract and would go out of existence with the contract. The certificates were more than that. They were things of value. In each one appellant assigned to respondent an equitable interest in the mortgage which it owned. Each certificate gave respondent certain rights and certain interests. Appellant had legal title to the mortgage. But while these certificates were outstanding they cumbered its title with a lien. (Matter of People [Title & Morggage Guarantee Co.] 264 N. Y. 69, 88.)

“ If they were capable of serving any purpose of advantage by their possession or control, or if their loss was a disadvantage to the tenant in any way, he was entitled to have them returned.” (Bassett v. Brown, 105 Mass. 551, 558.)

Before respondent could rescind the contract, it should have returned or have attempted to make a return of the certificates. Its letter of August 28, 1934, was not sufficient for this purpose. It stated “we * * * hereby tender back to you certificates * * * and demand that you return to us ” the sum paid. No attempt was ever made to return the certificates. That gesture was ineffectual.

The order of the Appellate Division should be reversed and the judgment of the Trial Term affirmed, with costs in this court and in the Appellate Division. (See 271 N. Y. 659.)

Crane, Ch. J., Lehman, O’Brien, Crouch and Finch, JJ., concur; Loughran, J., not voting.

Ordered accordingly.


author: Crane, Ch. J. Lehman, J.

text:
    Elizabeth McSpedon, Respondent, v. Albert Kunz et al., Respondents, and Armour & Company, Appellant.
    (Argued April 21, 1936;
    decided May 19, 1936.)

      Irvin E. Klein for appellant.

      Myron J. Shon for plaintiff and defendant, Rubin Brothers, respondents.
   Crane, Ch. J.

Elizabeth McSpedon, the plaintiff, lived with her husband and two children at Hastings in Westchester county. They were humble folk and she had to do the cooking and housework.

For years she had dealt with the butcher in the neighborhood named Albert Kunz. Kunz bought his meat from Rubin Brothers who in turn purchased it from Armour & Company of Chicago. On the 20th day of October, 1931, the plaintiff purchased from Kunz four pork chops which she fried on a gas stove. They were about half an inch thick, and she cooked them in a big frying pah until she thought they were well done. After eating the pork chops she was poisoned and developed a disease known as trichinosis. Trichina, or trichina spiralis, is a worm, a parasite found in pork. It is about one and four-tenths of a millimeter long, the female being larger and about three or four millimeters long. Trichinae are found in rats, pigs, dogs, polecats and monkeys. Two or three per cent of all fresh pork, or pigs cut up for consumption, are infected with these little parasites. They render food or the pig meat unwholesome, causing the disease known as trichinosis. Trichinae cannot be seen with the naked eye but, as they infest the muscles, can readily be discovered and seen with the microscope.

In Rinaldi v. Mohican Co. (decided in this court in 1918, 225 N. Y. 70) the veterinary of the State Department of Agriculture, and a graduate of Cornell Veterinary College, Eugene J. Sullivan, testified to the inspection which could be made to discover trichinae and which at that time was made by government inspectors: They have a sort of an instrument with a hook on the end of it, something like a fish hook, they go around and stick that in several muscles and bring out parts of muscle and treat it with caustic potash and put it under the microscope and examine it to see if they can find parasites or trichinae, that is the examination for trichinae.”

This method of discovering trichinae is known to all the slaughterers and packers. In this case now before us the evidence shows this well-known infection of two or three per cent of fresh pork. Armour & Company knew it. The company also knew the method to discover it as well as the method to kill or eradicate the parasite.

If these pork chops had been cooked to 137 degrees Fahrenheit, the heat would have destroyed the little worms, but the chops that Mrs. McSpedon was cooking on the gas stove would have had to be cooked for twenty minutes or more at this degree of heat until the heat reached the center of the chops. This housewife testified that she knew nothing about the requisite degree of heat or about trichinae; all she knew was that the chops should be well cooked, and she fried them in her pan until she supposed they were well cooked. What would any ordinary housewife do? She buys meat at reputable butchers, supposing it fit to eat after being cooked in the customary way and manner. The expert in this case testified that he did not know these things until he had been taught them in the professional school after he had graduated from college. Of course Armour & Company could not cook the chops. They were shipped and packed for sale to retail butchers. Armour could, however, freeze the chops or the fresh pork to five degrees above zero and kill all these little worms or trichinae. The process was well known to the trade and Armour & Company. It in no way injured the edible quality of the pork; in fact the defendant’s manager states that some of the pork was treated in this way. As to freezing and the effect of it upon the meat, the testimony shows that after killing, all meat is stored in a refrigerator at a temperature of thirty-two degrees, which is freezing point.

William J. Grace, the superintendent of Armour’s plant in Jersey City, testified that there was no inspection at Armour’s plant for trichinae. They let the meat go out to the public without making any effort whatever to discover its infection by this parasite. He also said that if the fresh pork were placed in refrigeration at five degrees above zero for a period of twenty days all the parasites would be killed. Q. Now, I ask you, does Armour & Company do that with their pork? A. Some of it.

“ Q. They don’t do it with all of it? A. No.

“ Q. What is the government requirement? A. * * * Pork that is to be eaten by the consumer without being cooked must be subjected to certain rules and regulations, one of which is it must be kept under refrigeration for twenty days at a temperature of 5 degrees or lower. * * * What I meant to say is pork eaten without further processing, for instance, bologna.

Q. Pork chops, that is supposed to be cooked before eating? A. That is correct. * * * Pork chops are cooked by the housewife or by somebody home before they are eaten.”

He further testified that if pork is frozen at a temperature of five degrees above zero it does not change the palatability of the pork. On recross-examination, regarding pork chops he gave this testimony:

“ Q. You say, pork chops are not so frozen, is that right? A. Well, at times they are, but not for the purpose of destroying trichinae, not under governmental rules. The Government don’t require pork chops to be frozen.”

The reason for referring to this testimony of the superintendent is to show that trichinae can be destroyed by a method well known to Armour & Company and which is used in treating some of the pork chops which it sells; that the company sends this fresh pork out to the public without any notice that it has not been treated or frozen to the destroying point, or any caution to cook the meat to above 137 degrees Fahrenheit and to cook it long enough to carry this heat through the center of the meat. This requisite of thorough heating and the nature of trichinae may seem very simple things to us and to experts who are dealing with these matters daily, but there are many people in this country who know nothing about trichinosis or the danger lurking in meats or the requisite heating point to destroy parasites, and who must rely and do rely upon the grocer and the butcher and such reputable concerns as Armour & Company to sell them wholesome food.

This is the reason why we said in the Rinaldi case that on every such sale of food by a dealer for immediate human consumption there is an implied warranty of its wholesomeness. I quote the words of Judge Andrews in that case to show that we have heretofore squarely passed upon this question of implied warranty and the liability of the seller under just such circumstances as we have here:

“ Such is the case before us. On December 16th, 1915, the plaintiff bought a lokTof pork at a market owned by the defendant. The meat was infested with trichinae. She cooked and ate it and was made ill. The action was brought to recover for the resulting damages. It was not tried on any theory of negligence or fraud but upon that of implied warranty. The jury found a verdict for the plaintiff and the judgment has been affirmed in the Appellate Division. The plaintiff found no defect in the meat. The court submitted to the jury the question as to whether she could have found such a defect if she had used reasonable care. And finally the defendant insists strenuously that no such defect could have been discovered.
There is no question but what such an action for damages caused by the breach of the implied warranty with regard to food may be maintained, at least by him to whom the warranty is made” (p. 75).

In fact, vthe Rinaldi case on the evidence was not as strong as this, for in that case the defendant proved that the government inspectors had examined the pork for trichinae and had given the pork their stamp of approval. In this case the defendant relies solely upon the fact that the Federal government has discontinued the examination for trichinae and deems that a sufficient answer to our statute regarding implied warranty. (Pers. Prop. Law; Cons. Laws, ch. 41, § 96.) If the government withdrew all its inspectors would the defendant be justified in selling any kind of impure or diseased meat?

We should not reverse or attempt to weaken the authority of our Rinaldi case. Judge Andrews’ opinion had the approval of the entire court. Our statute of implied warranties was passed for the very purpose of protecting and safeguarding the life and health of people like Mrs. McSpedon and her little family, and especially should this protection be afforded when there is a well-known means for the detection of trichinae in pork and a well-known method of killing the parasite before the pork is put upon the market.

It may'be appropriate at this point to state that the plaintiff brought action against Kunz, the butcher; Rubin Brothers, the middle man, and Armour & Company, the slaughterer and packer. Judgment was given against Kunz for a small amount, with recovery over against Rubin Brothers, and recovery over by them against Armour & Company. Rubin Brothers assigned their judgment to the plaintiff,- which is the reason why she is the respondent in this cóurt.

The judgment should be affirmed, with costs.

Lehman, J.

(dissenting). The plaintiff, claiming to have become infected with the disease known as trichinosis, by eating pork chops which contained trichinae, has recovered a judgment for the consequent damages against the retail dealer from whom she purchased the chops. That dealer impleaded the wholesale dealer who sold the chops to him and recovered judgment over against the wholesale dealer. The wholesale dealer impleaded Armour & Company, the packer of the pork, and recovered judgment against it. The packer alone has appealed from the judgment.

The trial judge has found “ that the defendant Armour & Company was not negligent in the preparation of said loins of pork and pork chops.” Upon this record the court could not find otherwise, for it appears by uncon-tradicted evidence, and the trial court has found, that “Armour & Company prepared its loins of pork in conformance with the general usage and universally approved practices of the packing industry in the United States.” (Cf. Ketterer v. Armour & Co., 247 Fed. Rep. 921.) The evidence shows that many hogs are infected with the parasites known as trichinae, and the court has found that “ there is no known practical method by. which trichinae may be discovered in slaughtered hogs.” For that reason the United States government has discontinued the practice of examining with a microscope the carcasses of hogs in an endeavor to discover the presence of trichinae. Here the pork was approved by the United States government. inspectors. True, trichinae in the pork could be destroyed by cooking or by keeping the meat for twenty days under refrigeration at a temperature of five degrees or lower; but in the meat industry where pork is sold in its raw state to be cooked by the purchaser before it is used, it is not subjected to freezing in advance. No contention is now made that failure of Armour & Company to freeze the pork before sale constitutes negligence, and there is no exception in the record to the finding that Armour & Company was not negligent.

Since the court has found that Armour & Company was not negligent, it can be held liable for the damage which resulted from the presence of trichinae in the pork they prepared and sold only if Armour & Company warranted that the pork was free from parasites. In that regard the court has found that the pork “ was infected with a disease known as trichinosis and was therefore not of a merchantable quality and was unfit for human consumption by reason thereof.” The court also found that Armour & Company warranted that the goods it sold were of a merchantable quality. That upon the sale of the pork by Armour & Company there was an implied warranty that the pork was of merchantable quality is clear. (Pers. Prop. Law, § 96; Cons. Laws, ch. 41.) The question in the case is whether the presence of trichinae renders pork " unmerchantable.” (Cf. Rinaldi v. Mohican Co., 225 N. Y. 70.)

In that case a recovery was sustained against a retail dealer for damages resulting to the purchaser from eating pork infested with trichinae, upon the theory that a dealer who sells meat for human consumption ordinarily impliedly warrants- that the meat is fit to be used for food. Any distinction between a warranty that pork is merchantable or that it is fit for human consumption is unsubstantial. We draw no such distinction. The retail dealer’s warranty to his customer that food purchased for immediate use is fit for human consumption and the packer’s warranty upon a sale by description that the pork is merchantable, are substantially alike.

In the Rinaldi case, however, this court did not pass upon the question whether the evidence showed that the pork was, in-fact, unfit for human consumption because it contained trichinae. Upon the appeal to this court the unanimous decision of the Appellate Division that there was 'evidence to sustain the verdict of the jury was not subject to "review. In this case we must pass upon that question; Here there is no evidence or finding that the pork was unwholesome or unmerchantable for any reason other than that trichinae were present. The pork when sold was raw, and as the court has found, it was not fit for human consumption in a raw state. The court has also found-that the plaintiff knew that eating raw pork chops or raw pork which is not well cooked might cause illness. The pork was sold to be eaten when cooked. The evidence establishes, and the court has found, that if raw'pork containing trichinae is heated to 137 degrees Fahrenheit all the trichinae will be destroyed and the pork remains wholesome and fit for human consumption ” and that it was impossible for Elizabeth McSpedon to have contracted trichinosis by eating said pork chops if same had been cooked at a temperature of 137 degrees or over.”

Thus, it appears not only that the pork was prepared by the packer with all the care that is customarily used by packers, but also that the presence of the parasites could not be discovered in the exercise of reasonable care, and ¡rendered the meat unwholesome only if it was not heated to 137 degrees. A similar condition exists not infrequently in pork products, but becomes harmless when the pork is well cooked. The pork was not unmerchantable or unwholesome unless it was intended for human consumption without being well cooked and heated to 137 degrees.

The court refused to find that in the ordinary usage and in the course of trade raw pork loins and raw pork chops are not intended to be fit for human consumption in such state;” yet the evidence, read in the light of common knowledge, conclusively establishes that proposed finding. “ The warranty in the present case was not that the food was fit-to eat without cooking, but that it was fit to eat after ordinary domestic cooking.” (Holt v. Mann [Supreme Judicial Court of Mass., Feb. 28, 1936], 200 N. E. Rep. 403.) In that case there was evidence that the ham was cooked for three hours and the court said “ it could have been found that the ham was cooked as thoroughly as could be expected in a family, but without killing trichinae with which it was infested.” For that reason the court found that there was a breach of warranty. Here there is no evidence or finding that the pork was cooked as thoroughly as could be expected. Without such finding there is no basis for a conclusion that there was any breach of warranty by the packer.

The packer is not an insurer of the wholesomeness of raw pork. It is not bound to cook pork before sale or to freeze it so as to kill trichinae when ordinary cooking will destroy the trichinae. The packer impliedly warrants • that goods sold by description are fit for their intended purpose and, therefore, merchantable. Its warranty does not extend to the wholesomeness of raw pork when the pork is intended for ordinary cooking. “ Fresh pork is not ordinarily intended to be eaten raw. The warranty should be applied only to food used in the usual, rather than in the unusual and improper manner.” (Cheli v. Cudahy Bros. Co., 267 Mich. 690.)

The implied warranty of the packer that the pork is merchantable and, therefore, fit for human consumption, is not breached by sale of pork prepared in the usual manner approved in the industry, salable in the usual way and not unfit for human consumption if used in the manner in which the packer might reasonably expect it to be used and for which it was intended. The warranty may be breached where pork sold is unfit for human consumptign without cooking and the packer has notice that it is intended to be used in the condition in which it is sold (Cf. Gindraux v. Maurice Mercantile Co., [Cal.] 47 Pac. Rep. [2d] 708), or where it remains unwholesome in spite of cooking in the ordinary manner. (Holt v. Mann, supra; Rinaldi v. Mohican Co., supra.) In this case there is no finding that the pork was unwholesome if cooked in the ordinary manner and no evidence which would justify such a finding. Without such a finding no judgment against Armour & Company can be sustained.

The judgment should be reversed and a new trial ordered, with costs to abide the event.

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

•Judgment affirmed.


author: Finch, J. Crane, Ch. J.

text:
    Commercial Casualty Insurance Company, Respondent, v. Hartford Accident and Indemnity Company et al., Appellants, Impleaded with Another.
    (Argued April 22, 1936;
    decided May 19, 1936.)

      Harland B. Tibbetts and Murray D. Welch for appellants.

      Colley E. Williams, Henry Jaffe and William Lurie for respondent.
   Finch, J.

This case involves a question of liability on a reinsurance contract. The stipulated facts are as follows:

The plaintiff, the Commercial Casualty Insurance Company, issued a bankers’ blanket bond to the Parisi Trust Company (subsequently changed to Central Bank and Trust Company) on November 3, 1928, by the terms of which the plaintiff undertook to indemnify the bark in an amount not exceeding $25,000 for losses which the bank might sustain as a result of dishonest or criminal acts of its employees. Subsequently the amount of the bond was increased to $50,000. This bond will be referred to hereafter as “ Bond No. 1.” The bond was in effect from November 3, 1928, to November 3, 1930, indemnifying losses occurring during this period if the losses were discovered prior to the expiration of twelve months after the termination of the bond. The bond thus indemnified against losses sustained between these dates if the losses were discovered prior to November 3, 1931. This additional twelve months’ period is technically known as the “ cut-off period.”

On November 3, 1930, a second bond was issued by the plaintiff to the bank. This bond will be referred to as Bond No. 2.” This bond ran for two years and covered the period from November 3, 1930, to November 3, 1932. It had a cut-off period expiring November 3, 1933. Bond No. 2 had attached to it a so-called “ Superseded Surety-ship Rider.” This rider, among other things, provided:

1. That the attached bond [Bond No. 2] shall be construed to cover, subject to its terms, conditions and limitations, any loss or losses under the prior bond [Bond No. 1] which shall be discovered after the expiration of the time limited therein for the discovery of loss thereunder [November 3, 1931] and before the expiration of the time limited in the attached bond for discovery of loss thereunder, and which would have been recoverable under the prior bond had it continued in force. ’ ’ (Explanatory words in brackets inserted.)

To sum up the situation: Bond No. 1 covered losses sustained by the bank between November 3, 1928, and November 3, 1930, if the losses were discovered prior to November 3, 1931. Bond No. 2 covered (a) losses sustained between November 3,1930, and November 3, 1932, if discovered prior to November 3, 1933; (b) losses sustained between November 3, 1928, and November 3, 1930 (that is while Bond No. 1 was in force), if discovered subsequent to November 3, 1931 (when the cut-off period of Bond No. 1 terminated), and prior to November 3, 1933.

The rider to Bond No. 2 acted to extend the period during which losses under Bond No. 1 could be recovered. The combination of both bonds and the rider furnished the bank with continuous protection for the four-year period from November 3, 1928, to November 3, 1932, if the losses were discovered prior to November 3, 1933.

The plaintiff on November 3, 1930, reinsured $25,000 of its risk under Bond No. 2. For the sake of convenience, the two companies which furnished this reinsurance will be termed Group A.” The Group A reinsurance continued in force until August 25,1931, when it was canceled. The plaintiff then entered into a contract of reinsurance with the appellant compames which will be referred to as “ Group B.”

In April, 1932, it was discovered that an employee of the bank had been embezzling its funds, starting in February, 1929, and continuing until the time of his apprehension on April 12, 1932. This litigation involves only the sums taken between February 13, 1929, and November 3,1930; that is, while Bond No. 1 was in effect.

The loss involved occurred during the currency of Bond No. 1. It was not discovered until April, 1932, which was after the expiration of the cut-off period of Bond No. 1. The loss thus came within the terms of the superseded suretyship rider attached to Bond No. 2.

The plaintiff indemnified the bank for the losses and then instituted this action against the Group B reinsurers and the Consolidated Indemnity Insurance Company, one of the companies in Group A. (The other company in Group A is affiliated with the plaintiff and, therefore, was not made a formal party, but agreed to abide by the result of this litigation.) The Consolidated Company was subsequently taken over by the State Superintendent of Insurance and the action against it was severed. The plaintiff has recovered a judgment against the Group B reinsurers which has been affirmed by the Appellate Division.

The Group B reinsurers assert that they did not assume liability for the losses involved and that in fact they expressly excluded liability for such losses. The fact that the plaintiff is liable to the bank under the terms of the rider attached to Bond No. 2 does not necessarily predicate an equivalent liability on the part of the Group B reinsurers. Their liability is a contractual one and must be found under the provisions of their contract with the plaintiff.

The contract or policy entered into between the plaintiff and the Group B reinsurers is the standard form of reinsurance agreement adopted in 1930 by the Surety Association of America. Included in the terms of the agreement is section 12 which in part reads as follows: If reinsurance hereunder supersedes, in whole or in part, any cancelled reinsurance, the Reinsurer [Group B] hereby assumes liability wholly or in pro rata part, as the case may be, for losses which occurred before the effective date of the cancellation [August 25, 1931, the effective date of cancellation of Group A reinsurance] of such superseded reinsurance, but notification of which was not received by the Reinsured [the respondent] before the expiration of the period specified in the first paragraph of this section [thirteen months after August 25, 1931, i. e., September 25, 1932].” (Explanatory words in brackets inserted.)

Thus if the reinsurance of the Group B reinsurers superseded reinsurance of Group A, Group B is not liable for any loss which occurred before the cancellation on August 25, 1931, if notice of such losses was received by the plaintiff prior to September 25, 1932. The losses in the case at bar occurred prior to November 3, 1930, and notice of them was received in April, 1932. Section 12, therefore, exempts the Group B reinsurers from liability if the reinsurance superseded canceled reinsurance. The question then is whether the reinsurance by Group B on the rider attached to Bond No. 2 superseded canceled reinsurance of Group A.

Group A reinsured all liability under Bond No. 2 including liability under the superseded suretyship rider. The rider picked up liability under Bond No. 1 at the expiration of the cut-off period of that bond; that is, on November 3, 1931. The plaintiff argues that since the Group A reinsurers canceled their reinsurance on August 25, 1931, and the cut-off period under Bond No. 1 did not expire until November 3, 1931, liability for losses during the term of Bond No. 1 did not attach to Bond No. 2 until after the cancellation by Group A and that, therefore, they never reinsured under the rider. If this reasoning were accepted it would follow that the reinsurance of the rider by Group B was new reinsurance and did not supersede canceled reinsurance. But can it be said that Group A did not reinsure liability under the rider?

On November 3, 1930, Group A reinsured a rider to the bond which provided insurance for losses occurring between November 3, 1928, and November 3, 1930, if the losses were discovered subsequent to November 3, 1931. The mere fact that liability could not be imposed on Group A unless the losses were discovered after November 3, 1931, does not mean that no insurance existed prior to that time. The appellants refer to this liability of the Group A reinsurers as “ latent liability.” Term it what you will it cannot be gainsaid that prior to November 3, 1931, the plaintiff under Bond No. 2 was subject to a potential liability for losses which had occurred during the life of Bond No. 1 and this potential liability was reinsured by Group A. Actual liability could not arise until after November 3, 1931, but insurance against such liability could be given at any time.

To illustrate by a hypothetical analogy. X may take out a life insurance policy in 1936 which provides that if death occurs during the first year no liability on the part of the insurance company shall accrue. It would not be proper to say that X will not be insured until 1937 when the one-year period elapses. Liability may not .arise until a fixed period expires but the liability which may arise after the fixed period is insured from the time the policy is issued.

We conclude that liability under the rider attached to Bond No, 2 was reinsured by the Group A reinsurers and that, therefore, the Group B reinsurance superseded this canceled reinsurance of Group A and under the terms of section 12 of their policy Group B is not liable for the losses which occurred prior to November 3, 1930, and were discovered on April 12, 1932.

The foregoing would lead to a reversal but it appears that the Group B reinsurers admit liability for small amounts.

The judgments appealed from should be modified by reducing the amount awarded against the appellant, The Hartford Accident and Indemnity Company, to $579.01, and against the iEtna Casualty and Surety Company to $386, and as so modified affirmed, with costs to appellants.

Crane, Ch. J.

(concurring). I agree with the opinion of Judge Finch. The question first to be determined is, what did Bond No. 2 with its rider cover? This rider provides: 1. That the attached bond [Bond No. 2] shall be construed to cover, subject to its terms, conditions and limitations, any loss or losses under the prior bond [Bond No. 1] which shall be discovered after the expiration of the time limited therein for the discovery of loss thereunder [November 3, 1931] and before the expiration of the time limited in the attached bond for discovery of loss thereunder, and which would have been recoverable under the prior bond had it continued in force.”

Bond No. 2 covered losses occurring subsequent to its issuance and also by the rider covered losses occurring during the time of Bond No. 1 which could not be recovered under the provisions of Bond No. 1. In other words, Bond No. 2 covered losses sustained between November 3, 1930, and November 3, 1932 (the period when Bond No. 2 was in force) if discovered prior to November 3,1933 (when the cut-off period of Bond No. 2 ended). Bond No. 2 also covered losses sustained between November 3, 1928, and November 3,1930 (period of Bond No. 1), if discovered subsequent to November 3, 1931 (cut-off period of Bond No. 1), but prior to November 3, 1933, the termination of the cut-off period of Bond No. 2.

From this we readily see that the insured was covered for losses occasioned during the periods stated and discovered any time prior to November 3, 1933. The Commercial Casualty Insurance Company issued the policies and sought from the defendants reinsurance. Group A of the reinsurers took the risk of losses under Bond No. 2, which included those covered by the rider or, in other words, losses under Bond No. 1 as extended by the rider. As we saw, this rider extended the period of discovery up to November 3, 1933.

Group A reinsurers canceled their reinsurance August 25, 1931, but this did not cancel their liabilities. They were .still liable for losses which had occurred on Bond No. 1 and were discovered prior to September 25, 1932. Why do we fix this date of September 25, 1932? Because of the standard form of reinsurance agreement binding upon these parties. It reads, so far as applicable here:

“ 12. If the reinsurance hereunder shall be cancelled as provided herein before the termination of the Bond, the Reinsurer shall not be liable on account of any losses which occurred before the effective date of such cancellation, but which were unknown to the Reinsured at that date, unless notification thereof shall be received by the Reinsured within a period beginning on the effective date of such cancellation and continuing for a term equal to that of the cut-off period [one year], plus the notification period, defined in the bond * * (Thirty days, making the time of notification of loss after cancellation run in this case from August 25, 1931, to September 25, 1932.)
The reinsurance agreement further provides: If reinsurance hereunder supersedes, in whole or in part, any cancelled reinsurance, the Reinsurer hereby assumes liability wholly or in pro rata part, as the case may be, for losses which occurred before the effective date of the cancellation of such superseded reinsurance, but notification of which, was not received by the Reinsured before the expiration of the period specified in the first paragraph of this section.”

The loss under Bond No. 1 was discovered in April, 1932. This brought it within the reinsurance liability of Group A which did not expire, as I have stated, until September 25, 1932. Group B of the reinsurers come under the last clause above quoted. This specifically provides that they assume liability only for those losses which occur before the effective date of cancellation but notification of which was not received by the reinsured before the expiration of the period specified in the first paragraph of this section (September 25, 1932). In other words, Group B are liable for losses occurring prior to cancellation provided the notification of the loss is not made until after . September 25, 1932.

I do not see in view of these provisions how the defendants in this case are liable for the loss occurring under Bond No. 1 before cancellation, notification of which was given in April of 1932 before and not after September 25, 1932.

For these reasons I believe the judgment should be 'reversed, or at least modified, as stated by Judge Finch.

Lehman, O’Brien, Htjbbs, Crouch and Loughran, JJ., concur with Finch, J.; Crane, Ch. J., concurs in separate opinion in which all concur.

Judgment accordingly.


author: Crane, Ch. J.

text:
    The People of the State of New York ex rel. Henry Hirschberg, as District Attorney of Orange County, Appellant, v. Orange County Court et al., Respondents.
    (Argued April 14, 1936;
    decided May 19, 1936.)

      Henry Hirschberg, District Attorney, for appellant.

      Henry Hunter, ip person, and for Peter Thompson, respondents.
   Crane, Ch. J.

The District Attorney of Orange county has sought to obtain a prohibition order to restrain the County Court or the Special County Judge from exercising powers and amending records in a manner unauthorized by law. His application has been denied by the Special Term and the Appellate Division. In our opinion it should have been granted in part at least, as we shall presently demonstrate.

Fifteen years ago, in June, 1921, one Peter Thompson, alias Peter McCarty, with three associates was arraigned in the County Court of Orange county upon an indictment charging him with burglary in the third degree. The records of the court show a conviction upon a plea of guilty to burglary in the third degree, and a sentence of Thompson to eleven months in Westchester County Penitentiary and a fine of one hundred dollars.

In November, 1934, Thompson was again convicted, this time for manslaughter in the second degree, and being a second felony offender under section 1943 of the Penal Law, was sentenced to a term of fifteen years in a State prison.

He was tried in the Supreme Court. After his conviction, and before sentence, the District Attorney, pursuant to said section of the Penal Law, filed an information charging him with being a second felony offender in that he had previously and in 1921 been convicted and sentenced for burglary in the third degree. Thompson remained silent and refused to plead or answer to this information. A jury being impaneled and testimony taken, he was found to be the person previously convicted as alleged in the information. (People v. Gowasky, 244 N. Y. 451.) What took place at the trial before the jury on the information charging the defendant with the former conviction appears only in so far as Thompson’s affidavit alleges that his attempt to challenge and impeach the court records was excluded.

Thompson took no appeal from this last judgment of conviction and made no motion in arrest of judgment. His time to do so has long since expired.

Six months after his sentence, and in June, 1935, Thompson obtained an order from the County Judge of Orange county requiring the District Attorney to show cause why a proceeding should not be had in such court before a jury to determine whether Thompson had pleaded guilty to a felony or a misdemeanor in 1921. Thompson in his petition stated that he had pleaded to unlawful entry, a misdemeanor. Upon the return day, having heard the respective parties, the Special County Judge to whom the matter had been referred, made an order dated July 13, 1935, reading as follows:

“ Ordered that the petition of the petitioner herein may be entertained by this Court and that a proceeding may be had before the Court with a jury for the hearing and the determination of the issues raised by the petition and affidavits filed herein, and it is further
Ordered that the County Clerk of the County of Orange or the properly deputized County Clerk of said County shall, on the 14th day of August, 1935, at 1:00 o’clock in the afternoon of said day at the County Court House in the Village of Goshen, in the presence of the District Attorney of Orange County and the attorney for the petitioner herein, draw from the official jury lists of said County, a list of the names of twenty-five eligible jurors for the empanelment therefrom of twelve jurors for the hearing of such proceeding, and it is further
Ordered that at said time and place the Court may fix the time and place for the trial of such proceeding before the Court with a jury.”

The Special County Judge further ordered the prisoner, although sentenced to a State prison to be kept by the Sheriff in the county jail pending the determination of these proceedings. The judge, however, failed to cite or refer to any statute or authority permitting such a practice and none has been furnished to us.

The present proceeding comes here as the result of an application made by the District Attorney of Orange county for an order of prohibition restraining the Special County Judge from conducting or attempting to conduct any such proceeding or trial. The Special Term of the Supreme Court refused to grant the order of prohibition and the Appellate Division has affirmed.

The Code of Criminal Procedure establishes the practice in all criminal cases and the authority for the orders and judgments of the courts. Unless we can find there some justification for the above order it does not exist. Chief Judge Roger said in People v. Hovey (92 N. Y. 554, 558): “ The general object and design of the Code of Criminal Procedure was to collect the various statutes relating to the subject and to furnish a uniform, harmonious and comprehensive system of criminal practice, to apply to and govern all criminal proceedings thereafter instituted in any of the courts of the State.”

Mr. Justice McLaughlin (subsequently a member of this court) wrote in People v. Bissert (71 App. Div. 118, 121; affd., 172 N. Y. 643): And independent of the construction put upon the Code by the Court of Appeals, the slightest consideration of the various sections of it is sufficient to indicate that it was intended by the Legislature that this Code was to take the place of, and be substituted for, all of the statutes of the State bearing upon the subject, to which end provisions were made for every necessary step to be taken in every criminal case, commencing with the formation of a grand jury, leading up to a trial, conviction, sentence or discharge of a defendant.” (See, also, People v. Redmond, 225 N. Y. 206; People v. Adler, 140 N. Y. 331, 336; People ex rel. Jerome v. General Sessions, 185 N. Y. 504, 506.) In reference to motions to set aside indictments Werner, J., said in People v. Glen (173 N. Y. 395,400): “ Such matters are now regulated by the provisions of the Code of Criminal Procedure, and however inconvenient, or even oppressive, they may appear to be in specific cases, the courts must apply them, as best they can, for they embody the commands of the law-making power in matters wherein its fiat is supreme and final.”

The Code in section 962 provides.: This Code applies to criminal actions, and to all other proceedings in criminal cases which are herein provided for, from the time when it takes effect * *

Thus an appeal from a judgment of conviction must be taken within thirty days. (Code Crim. Proc., §§ 517, 520, 521.) The courts have no power to extend the time. A motion for a new trial on newly-discovered evidence must be made within a year. (Code Crim. Proc., § 466.) The courts can afford no relief after the expiration of the time limit, even though the new evidence establishes the defendant’s innocence beyond any doubt. The Governor of the State may pardon or commute the sentence in such extreme cases. Where four defendants were convicted of an attempt to commit robbery and only one appealed to this court, which reversed the conviction and dismissed the indictment, the only remedy for those in prison who did not appeal was an application for a pardon. (See People v. Rizzo, 246 N. Y. 334.)

While we find nothing in the Code relating to the correction of merely clerical mistakes in the court records, yet we believe that any court from its very nature as a court must have inherent power to conform its records to the conceded or apparent facts. Such a power relates, however, to clerical errors, mistakes in recording the true facts and should be exercised with great caution and only where it clearly appears that a mistake has been made. The proceedings which have taken place or the rulings and judgments which in fact have been given cannot thus be amended or changed. The limitations are given by Gray, J., in Bohlen v. Metropolitan Elev. Ry. Co. (121 N. Y. 546, 550), which, though a civil case, must, we think, express the rule also for criminal courts. I am not aware that the courts have ever been denied the inherent power to correct their records, where the correction relates to mistakes, or errors, which may be termed clerical in their nature, or where it is made in order to conform the record to the truth. They should not, after the final judgment, by amendment, change a ruling upon the law, or alter the decision upon the merits, for, by so doing, the substantial rights of the adverse party would be really affected. But, where the amendment is in the line of the correction of a mistake, or of an omission, obviously due, as in this case, to the trial judge’s oversight, the power to make it is a general and incidental one. The question is not one of terms, or of sessions of the court.” (See, also, Clark v. Scovill, 198 N. Y. 279; Matter of Henderson, 157 N. Y. 423; Dalrymple v. Williams, 63 N. Y. 361.)

Applying the above principles to the facts of this case we find the defendant insisting that his plea in 1921 was to a misdemeanor — unlawful entry —- not to a felony — burglary, third degree. He is supported by the affidavit of his attorney and also by the fact that his sentence was to the penitentiary for less than a year, while the punishment for burglary, third degree, is imprisonment in a State prison for a term not exceeding five years. Such was the penalty in 1921, as it is today. The County Court had jurisdiction to entertain the motion to correct its records. If it clearly appears to that court that there was a clerical error in recording the plea and that in fact the defendant was sentenced for a misdemeanor, then we can see no reason why the correction should not be made.

Where years have gone by since the sentence, and recollection has become dim, extreme caution should be used in correcting court records. The sentencing judge and the prosecuting attorney should be heard in the matter, if available.

But whether there be a mistake or not is a question for the County Court and the judge thereof. We know of no proceeding whereby a jury is to be summoned to determine whether a judge or a court clerk made a clerical error. The Code of Criminal Procedure provides for no such trial and none exists. A jury trial is an expense to the taxpayers which must be authorized by Constitution or statute. Crimes must be tried by a jury if the charge be a felony, but the defendant has been tried. The summoning of this jury is to try the judge or the clerk for mistake, or at least to determine whether a clerical error was made by someone in entering the defendant’s plea. The law permits no such use of a jury.

The order of the Special Term and that of the Appellate Division should be reversed and the application for an order of prohibition granted to the extent of restraining the respondents from summoning a jury or trying Thompson’s application by or before a jury, as provided in the order of the Special County Judge of July 13, 1935, without costs.

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

Ordered accordingly.


author: Lotjghkan, J.

text:
    Alice C. Dickinson, Respondent, v. George E. Dickinson, Appellant. Cora S. Dickinson et al., Appellants; Frederic H. Cowden, as Receiver for the Benefit of Alice C. Dickinson, Respondent.

      (Argued April 14, 1936;
    decided May 19, 1936.)

      Sydney A. Syme for Cora S. Dickinson et ah, appellants.

      Gerald FitzGerald for George E. Dickinson, appellant.

      Alfred L. Becker and Frederic P. Warfield for respondents.
   Lotjghkan, J.

In this controversy the real parties in interest are a twice divorced husband and his two former wives. The substantial question is that of the disposition to be made of property sequestrated by both wives for the satisfaction of their respective claims for unpaid permanent alimony. It will be convenient to state the case without emphasis on the mere procedure involved.

The first marriage was dissolved in 1911, the second in 1924. Both judgments of divorce were granted in this State. Permanent alimony awarded to either wife was paid until April, 1932. Since that time the husband while residing abroad has been in default under both judgments. The second wife promptly procured an order directing sequestration of his property in this State and appointing a receiver thereof. A similar order was obtained by the first wife in July, 1934.

In February, 1932, the husband had made himself insolvent by transfers of his. property to two sons by his first marriage. These conveyances were set aside as against the second wife and the property awarded to her receiver by judgments entered in April, 1935, in actions to which the first wife was not a party. Then the receiver appointed for the first wife served notice that in her behalf he asserted a superior right to the property. The result was a motion in the second divorce action for an order declaring the respective interests of all parties in the subject-matter of the sequestration proceedings. After all had been heard on the merits, it was ordered that the claim of the first wife was subject and subordinate ” to that of the second wife and her receiver, because they “ have acquired the right to the property obtained as a result of * * * prompt and diligent prosecution of their legal remedies.” That order and a subsequent order made in the first divorce action to substantially the same effect are the orders here reviewed.

The jurisdiction invoked was that conferred by Civil Practice Act, section 1171-a. Thereby the court was authorized to make the orders of sequestration and receivership. Since in both instances the husband had notice and an opportunity to be heard, there was no jurisdictional difficulty in his case. (Cf. Matthews v. Matthews, 240 N. Y. 28.) On the last motion both wives were before the court and the main question was presented by the conflict of their respective claims to support from property under its control. That issue was composed on the short ground that the self-interest which had been exhibited by the second wife should be rewarded by granting priority to her full claim. In this, we think, there was failure to give appropriate effect to the scope and end of section 1171-a.

It is thereby provided: ‘ ‘ The property thus sequestrated and the income therefrom may be applied in whole or in part and from time to time, under the direction of the court and as justice may require, to the payment of such sum or sums as the court may deem it proper to award, by order or judgment as the case may be.” Control defined in that way is obviously quite different from ordinary sequestration process as devised by courts of equity. Indeed it is hard to conceive of words whereby the Legislature could have left the matter more at large in judicial discretion. We think the purpose so declared should not here have been reduced to a conventional administrative rule based solely on the virtue of diligence.

It is not disputed that, other things remaining the same, the right of thé first wife was the better as being prior in point of time. Counsel for the second wife in his brief says: "All other equities being equal, let us assume that the wives should take in the order of their marriages.” The rule so conceded has been often stated. For example, when we say that A has a better equity than B, what is meant by that? It means only that according to those principles of right and justice which a court of equity recognizes and acts upon, it will prefer A to B, and will interfere to enforce the rights of A as against B.” (Rice v. Rice, 2 Drew. 73, quoted in 1 Pomeroy on Equity Jurisprudence [4th ed.], p. 777. See Berry v. Mutual Ins. Co., 2 Johns. Ch. 603.). What, then, is the case on that basis?

Doubtless the first wife stood by for three years in the confidence that she would fare well enough should the property in question be retained in the ownership of her children. During that period, however, the second wife received alimony of $23,438.72 out of a trust that had been set up by the husband to secure its payment. In the same period there became due to the first wife alimony at the rate of $150 per month, no part of which has been paid. There was no inequitable result of the inactivity of the first wife.

The second marriage was contracted in New Jersey in disregard of the prohibition of the first judgment of divorce. In New York that judgment meant that the husband had once a wife whose continuing right to permanent alimony was of the same character as the right of support which she had lost by the dissolution of her marriage. (See People v. Faber, 92 N. Y. 146; Wilson v. Hinman, 182 N. Y. 408.)

The equities appear to us to be on the side of the first wife.

We have considered the other questions argued. In our opinion these were properly decided.

The order of the Appellate Division and the orders of the Special Term should be reversed, without costs, and the matter remitted to the Special Term for further proceedings in accordance with this opinion. The questions certified are answered in the negative — the first three questions for the reason that the order of June 3, 1932 (the sequestration order granted to the second wife), may stand consistently with an adjudication of the claim of the first wife conformably to the statute.

Crane, Ch. J., Lehman, O’Brien, Htjbbs, Crouch and Finch, JJ., concur.

Ordered accordingly.


text:
    John Vlacancich, Respondent, v. Eugene J. Kenny et al., as Executors of Edward W. Ditmars, Deceased, Appellants.

      (Argued April 22, 1936;
    decided May 19, 1936.)

      Frank W. Holmes and Augustin S. Hart for appellants.

      Charles H. Wald and Frederick W. Ritter for respondent.
   Hubbs, J.

This is an action for an accounting. The appellants’ testator, Edward W. Ditmars, was a lawyer. On March 16, 1912, the respondent and Ditmars entered into the following agreement:

“Witnesseth: That in consideration of Six hundred and two Dollars paid by the said John Vlacancich to the said Edward W. Ditmars, the receipt whereof is hereby acknowledged, it is hereby mutually agreed that the said John Vlacancich is the owner of a one-third interest of the equity of redemption in all those certain five lots of land, together with the building thereon, situated in the First Ward of the Borough of Queens of the City and State of New York, situated at the northwesterly corner of Camelia and Crescent Streets, and being 150 feet on Camelia Street by 75 feet on Crescent Street.
“It is understood and agreed by and between the parties hereto that the property is subject to the following Mortgages now liens thereon; first Mortgage of $4250 held by the said Edward W. Ditmars, a second Mortgage of 12100, held by John J. Smith and a third Mortgage of $300 held by the said Edward W. Ditmars.
“It is further understood and agreed that whenever the said Edward W. Ditmars shall sell the above described property that of the sum realized from the sale thereof a sum sufficient to pay the above Mortgages namely for $4250, $2100 and $300 shall first be deducted and applied toward the payment of said Mortgages and any sum remaining thereafter shall be divided in the following proportions, that is to say: one-third to the said John Vlacancich and the balance of two-thirds to the said Edward W. Ditmars.
“ It is further understood and agreed that all rents received from the above property shall be taken by the said Edward W. Ditmars and applied first to the payment of the interest on the first Mortgage of $4250 and any balance of rent after said payment shall be divided in the following proportions, one-third to said John Vla-cancich and two-thirds to said Edward W. Ditmars.”

This agreement was subscribed by both parties, acknowledged by them and recorded. In the complaint, respondent alleges that by the terms of the agreement he became the owner of an undivided one-third part of the property; that the property has been sold; that rents had been collected prior to the sale, and that appellants have refused to account to respondent or to pay him his share.

The appellants filed an account which showed a sale of the property for $12,000, and rents received, $2,438.75, a total of $14,438.75. Against the amounts received, the account showed the following expenditures: payments on the three mortgages, $6,650; interest paid on the three mortgages, $4,108.68; taxes, assessments and water rates, $3,766.20; carrying charges, $2,111.95, a total, of $16,636.83. The net loss according to the account was $2,198.08.

Respondent admitted the correctness of the account, but disputed the relevancy of it. He contends that the rents were to be applied toward interest on the first mortgage, and thereafter divided between the parties, and that from the purchase price was to be deducted the principal sum of the three mortgages, and that no other deductions were to be made. After such deduction, he demanded one-third of the balance of the sale price.

The Special Term gave judgment for appellants on their counterclaim for one-third of the net loss. The Appellate Division reversed certain findings of fact, made new findings, and gave judgment for respondent for one-third of the difference between the sale price of the properties and the principal of the mortgages thereon.

It is conceded that the sole question here is the construction of the contract. The instrument provides that the respondent is the owner of a one-third interest of the equity of redemption ” in the property described. In his complaint he alleges that by the terms of the contract he thereby became the owner of an undivided one-third part of said lands. The instrument in question effected a conveyance of an interest in real property (Real Property Law, § 240, subds. 2, 3; Cons. Laws, ch. 50) and the parties thereto became tenants in common of the property. (Id. § 66.) If those words in the contract stood alone, respondent would be chargeable on an accounting for his proportionate share of the taxes, assessments and water rates levied against the property. [Hannan v. Osborn, 4 Paige, 336; Minion v. Warner, 238 N. Y. 413; Ford v. Knapp, 102 N. Y. 135.)

As to the carrying charges, appellants’ account states that a large part of the repairs and improvements were made by respondent or procured to be made by him. Since respondent did not dispute the correctness of the account, but elected to proceed upon the theory that he was not liable under the terms of the contract, that concession we take as true. Under such circumstances, one co-tenant is chargeable on accounting for such expenditures. (Cosgriff v. Foss, 152 N. Y. 104, 108.)

He would likewise be accountable for interest paid on a mortgage against the premises. (Cf. Howland v. Stowe, [Mass.] 194 N. E. Rep. 888, 891.)

Respondent, however, urges that the contract makes these general rules inapplicable_since it makes provision for a different division. This could be accomplished by contract. It remains to be seen whether the contract has that effect. By the last clause of the contract it is agreed that all rents shall be taken by Ditmars and applied first to the interest on the first mortgage and any balance remaining after that payment shall be divided proportionately between the parties. By the preceding clause it is provided that whenever Ditmars shall sell the premises from the sum realized on the sale he shall pay the three mortgages mentioned and divide the balance according to the respective interests of the parties. Having made specific provisions for these payments, respondent argues that such provision was intended as the full measure of his accountability. It is urged by appellants that the last clause of the agreement was added for the purpose of permitting their testator to apply the rents toward the payment-of interest on the first mortgage, as otherwise he would have been obligated to use the money toward the payment of taxes and interest on the second mortgage.

The agreement does not expressly relieve the respondent from his legal obligation of sharing the expenses of carrying the property. It does not expressly provide that the appellants’ testator should bear the whole burden of carrying the property as though he were the sole owner. There was no necessity for embodying a specific agreement in the writing that respondent should bear his share, as the obligation followed as a matter of law. The parties knew that those items ■ — ■ taxes, interest and carrying charges ■ — • would have to be paid before the equity of redemption could be definitely fixed upon the sale.

The mortgages no doubt required the owners to pay taxes and assessments and water charges. The right to have those paid by the owners, the appellants’ testator retained by virtue of his ownership of the mortgages. The mortgages had not been merged in the deed of the-property. Ditmars might have at any time foreclosed his mortgages in case the interest and taxes had not. been paid. He was not only a tenant in common of the property but also a mortgagee holding two mortgages. The agreement provided also “ of the sum realized from the sale ” of the property “ a sum sufficient to pay the [three] mortgages ” shall first be deducted and applied towards the payment of said mortgages. The accruing interest on the mortgages was part of the mortgage debt. The mortgagee would have had the right to pay the taxes and add the amount to the amount unpaid on the mortgages. Theoretically, the value of the property would be decreased by the amount due and unpaid and, considerably more, because of penalties under the Tax Law. The amount realized ” on the sale in that event, would have been $12,000, the sale price, less the amount of the mortgages with interest and the amount paid out for taxes added.

Ordinarily, taxes and other proper charges against the property would have to be met by contribution between the tenants whether any rents were collected or not. If rents were collected and no charges were then outstanding, the rents and profits would be divided. Where one co-tenant collects the rents from the common property, he may use them in meeting proper charges against the. property. (Hannan v. Osborn, supra; Minion v. Warner, supra; Ford v. Knapp, supra; Howland v. Stowe, supra.)

This is because he is using the rents of the property for the protection of the interests of all tenants in the property. If he were to apply rents collected on an indebtedness due himself, he might be met with the claim that he was protecting no interest of his co-owner. Appellants’ testator was a lawyer and it was, no doubt, to obviate any such contention that this last clause was added. By it the parties agree that from the rents collected by him, he can apply such sum as is necessary to meet the interest due on the mortgage owned by him. Interest on the second mortgage, taxes and necessary charges, he could safely pay from the rents received. There was no need to stipulate as to such charges.

Respondent’s contention that he was not to share in any of the other carrying charges of the property is weakened by the fact that the taxes outstanding at the time of the agreement and then a hen upon the property were adjusted between the parties and respondent made a payment to Ditmars as his share. The construction placed upon the contract by the respondent is such an unusual construction, and is so contrary to the ordinary result of entering into the relation of tenants in common for the purpose of making profit on the sale of real property, that it cannot be accepted. We have reached the conclusion that the agreement did not have the effect of placing the whole burden of paying interest, taxes and carrying charges on the appellants’ testator. We agree with the Special Term that the complaint should be dismissed. However, as there was no agreement by respondent to repay the appellants’ testator any part of the money which he paid out for carrying charges over and above the rent received, the appellants’ counterclaim for one-third of the net loss must be dismissed. (Eitingon Schild Co. v. Niksal Plaza, Inc., 264 N. Y. 547.)

The judgment of the Appellate Division should be reversed and that of the Special Term modified by dismissing appellants’ counterclaim and as so modified affirmed, without costs.

Crane, Ch. J., Lehman, O’Brien, Crouch, Loughran and Finch, JJ., concur.

Judgment accordingly.


author: O’Brien, J.

text:
    In the Matter of John T. Mullane, Respondent, against John McKenzie, as Commissioner of Docks of the City of New York, et al., Respondents. William A. Carroll, Appellant. In the Matter of William A. Carroll, Appellant, against John McKenzie, as Commissioner of Docks of the City of New York, et al., Respondents.
    (Argued April 20, 1936;
    decided May 19, 1936.)

      Albert de Boode forappellant.

      John B. Doyle for John T. Mullane, respondent.

      Paul Windels, Corporation Counsel (Arthur Bainbridge Hoff, Jr., and Paxton Blair of counsel), for John McKenzie, as Commissioner of Docks of the City of New York, et ah, respondents.
   O’Brien, J.

On November 8, 1929, John T. Mullane and William A. Carroll were appointed dockmasters, a position in the competitive class, in the department of docks of the city of New York. On May 1, 1934, one of the positions of dockmaster was abolished. Carroll was retained but Mullane was suspended without pay. Section 31 of the Civil Service Law (Cons. Laws, ch. 7) provides that a person, holding a position in the competitive class, whose position is abolished without misconduct on his part shall be deemed to be suspended without pay, “ which suspension shall be made in the inverse order of original appointment in the service.” The question is whether, within the reasonable interpretation of this statute, Mullan e’s original appointment in the service ” antedates that of Carroll.

Mullane entered the classified service in the competitive class May 1, 1927, and from that date served continuously in positions subject to competitive examination until he was suspended May 1, 1934. Carroll entered the competitive class nearly ten years earlier as an auto truck driver. On January 1, 1926, he was appointed private secretary to the President of the Board of Aldermen. This position is in the unclassified service wholly exempt from competitive examination. For nearly four years, performing duties which bore no relation to his previous employment, he remained out of the competitive class and the classified service but re-entered it on November 8, 1929. The courts have decided that, within the meaning of section 31 of the Civil Service Law, November 8, 1929, must be deemed the date of Carroll’s original appointment in the service and that it is, therefore, subsequent to Mullane’s.

The facts in this case are not controlled by any previous decision of this court. They are unlike those in Matter of Marcus v. Ingersoll (266 N. Y. 359), where the employee completely severed his connection with every kind of public service. They are equally dissimilar from the facts in Matter of Horn v. Gillespie (267 N. Y. 333), wherein that petitioner, always in the competitive class, continuously performed services of the same general character. Here the opposite is true. Carroll relinquished his position and entered the unclassified service as a legislative employee (Matter of McEneny v. McKee, 262 N. Y. 494), where the duties of his position were of a character entirely different from those of the position which he had seen fit to abandon. The test of continuity of service must depend upon the answer to the question whether the service in different positions may be deemed to be of the same general nature and character. (Matter of Schaefer v. Rathnann, 237 App. Div. 491; 262 N. Y. 492.)

The orders should be affirmed, with costs.

Crane, Ch. J., Lehman, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Orders affirmed.


text:
    Lena Rinzler, Respondent, v. Citizens Savings Bank, Appellant.

      (Argued April 21, 1936;
    decided May 19, 1936.)

      C. De Witt Rogers for appellant.

      E. Ivan Rubenstein for respondent.
   Finch, J.

The plaintiff, Lena Rinzler, brought an action against the defendant savings bank for the amount of her deposits. The defendant answered and pleaded as a defense that it had paid the same deposits to nominees of the plaintiff’s husband, Samuel Rinzler, in obedience to a judgment of the Supreme Court in an action brought by Samuel Rinzler against the present plaintiff, Lena Rinzler, and the bank. In that action both Samuel Rinzler and Lena Rinzler claimed title to the deposit. The defendant bank in that action answered as follows: “ This defendant is not interested in said funds, except to see they are repaid, in accordance with its By-Laws, to the persons lawfully entitled thereto. Wherefore, this defendant demands judgment that the court adjudge to whom said moneys are due and payable to the end that this defendant may be relieved of responsibility in the premises; and for such other and further relief as may be just in the premises.”

After a trial of the issue of ownership the deposit was awarded to the husband. Thereupon Lena Rinzler appealed from the judgment but made no application for a stay. The defendant bank pursuant to the judgment paid the deposit to the nominees of the husband, Samuel Rinzler. Upon the appeal by Lena Rinzler said- judgment was reversed and a new trial ordered. Upon retrial the complaint of the husband was dismissed and the judgment of dismissal was sustained upon further appeals. In this action payment to the nominees of the husband pursuant to the original judgment in favor of the husband was pleaded by the bank as a complete defense. The court at Special Term held the defense to be insufficient in law because the defendant bank had not paid the money into court. The Appellate Division has unanimously affirmed.

The general principle is well established that strangers to the action, in the sense that they are neither plaintiffs nor defendants therein, may rely and act upon existing judgments of the court even though these are subsequently reversed. (Lowenstein v. Reikes, 258 N. Y. 444.) On the other hand, it is equally well established that, while parties to an action are bound by a judgment recovered therein as long as it remains unreversed, they lose that protection when a reversal is had upon appeal. (Haebler v. Myers, 132 N. Y. 363; Millfield Realty Co. v. Catena, 257 N. Y. 515.) The judgment in the case at bar was based upon the authority of these cases. The rule there enunciated, namely, that issues litigated are not finally determined until the judgment or order of the trial court has been affirmed upon appeal or the time to appeal has expired, cannot be successfully controverted because, unless the rights of the parties are subject to change by appeal, the appeal would be nugatory.

The question presented in the case at bar is whether a party to the litigation who takes the position in its answer that it is only a stakeholder and asks no judgment in its favor but merely the direction of the court as to the lawful disposition of the fund in its hands is subject to the rules relating to a party claimant in the action or to those applying to a third party. The position of such a stakeholder seems more nearly analogous to that of a stranger to the- litigation than to the position of a party to the action who is claiming advantage therefrom. Like a stranger to the action the stakeholder making no claim is in a helpless position because so long as the judgment remains unreversed he cannot appeal therefrom and it may be enforced against him. Furthermore, by such enforcement the stakeholder obtains no personal benefit which in fairness should be restored. The presence of the stakeholders in the action is solely for the purpose of making the judgment effective. Actually the litigation is between other parties. The plaintiff urges that the bank could have obviated any question as to its protection if it had obtained an order permitting the payment of the deposit into court. The question remains whether the disclaiming of any interest in these moneys, except that of a stakeholder and asking the court to adjudge to whom the moneys were due and payable so that the bank might be relieved of its responsibility was not in effect the equivalent of such payment into court. The Banking Law (Cons. Laws, ch. 2) provides: The funds on deposit which are the subject of such an action may remain with such savings bank to the credit of the action until final judgment therein, and be entitled to the same dividends as other deposits of the same class, and shall be paid by such savings bank in accordance with the final judgment of the court.” (§ 250, subd. 2.)

While the above section does not expressly apply since it specifically relates to a situation where the bank petitions the court to bring into a suit against it other claimants to the fund whereas here the rival claimants were already parties to the suit, yet the statute provides that such a situation permits the bank to hold the money subject to the credit of the action and directs payment in accordance with the final judgment of the court. The' action of the bant would seem to be in keeping with what was intended by the statute if not within its letter.'

The plaintiff wife pending her appeal might have stayed execution on the original judgment and obtained complete protection by giving the required security. (Civil Practice Act, § 615.) Perhaps also she might have obtained a stay of payment by making application to the court and complying with such terms as the court might have imposed. The plaintiff did neither. She is, therefore, in no position to compel the defendant bank to pay over again when it shows as a defense that it did not pay voluntarily but made payment pursuant to the judgment of the court to which it had submitted itself as a mere stakeholder and from whose judgment it could not appeal nor ask a stay since the court, at the request of the defendant bank, had adjudged to whom the moneys should be payable by said bank.

■ It follows that the judgments should be reversed and summary judgment in favor of the plaintiff denied, with costs in all courts.

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

Judgments reversed, etc.


author: Lehman, J.

text:
    Florence Drennan, an Infant, by Margaret Drennan, Her Guardian ad Litem, Appellant, v. Sun Indemnity Company of New York, Respondent.
    (Argued March 13, 1936;
    decided May 19, 1936.)

      M. Elliot Gordon for appellant.

      Joseph F. Hanley for respondent.
   Lehman, J.

On July 7th, 1930, the plaintiff was struck and injured by an automobile operated by the Zion Funeral Parlors, Inc. She recovered a judgment against that corporation for the consequent injuries. Execution upon that judgment has been returned unsatisfied. Then the plaintiff began this action to recover the amount of that judgment from the defendant insurance company pursuant to the provisions of section 109 of the Insurance Law (Cons. Laws, ch. 28). Judgment in favor of the plaintiff in this action was reversed by the Appellate Division and the complaint dismissed. The problem presented upon this appeal is whether the policy of insurance issued by the defendant insurance company to the Zion Funeral Parlors, Inc., had expired at the time of the accident.

The policy was issued on February 20th, 1930, by Louis C. Kuhn, a general agent of the insurance company. It was dated February 10th, 1930. The policy provided that The term of this policy is three months, beginning at noon on the 10th day of February, 1930, and ending at noon on the 10th day of May, 1930, Standard Time at the Assured’s address hereinafter set forth.” The policy bore an installment payment indorsement ” which provided in part:

“ The Company, having issued the undermentioned Policy for a period of three months in consideration of an advance premium of $114.00 Liab. $54.00 PD Dollars ($168.00), hereby agrees that at the option of the named Assured, the period of said Policy may be extended as follows: 1. If, on or before date of expiration of the said Policy, the named Assured shall request that it be continued in force for another three months from the said date and shall pay an additional advance premium of $85.50 Liab. $40.50 PD Dollars ($126.00) for said extension, the Company will by endorsement extend the Policy for the said period of three months to expire on August 10th, 1930, at twelve o’clock noon, Standard Time at the named Assured’s address given in such policy.”

No indorsement extending the policy was ever placed upon the policy, and concededly no payment of premium in advance was made to the company’s agent prior to the date set for its expiration. The contract between the parties was embodied in the policy. By its terms it had expired before the date of the accident on July 8th, 1930, but the plaintiff maintains that it was extended by an oral agreement made between the company’s agent and the broker of the assured.

We assume upon this appeal that the company’s agent did in fact assume to waive the provisions of the policy and to grant an oral extension of the policy without payment of the premium in advance. The question remains whether such oral extension was binding upon the insurance company. It was not binding unless the company had given its agent actual or apparent authority to grant such an extension in behalf of the company. Undoubtedly the company extended credit to the agent for the payment of premiums paid to the agent. Perhaps the agent had actual or apparent authority to give credit to an assured or to a broker of an assured for the payment of premiums, though the policy provided that such payment should be made in advance. Even though we assume all this, we fail to find in this record any basis for an inference that the company’s agent had any authority, either express or apparent, to extend the policy of insurance without indorsement upon it.

The assured had agreed to the provisions of the policy that any extension should be evidenced by indorsement upon it. The assured had notice of a limitation upon the authority of the agent to change or enlarge its terms, for the policy provided that No erasure or change appearing on this policy as originally printed nor change or waiver of any of its terms or conditions or statements, whether made before or after the date of this policy, shall be valid unless set forth in an endorsement added hereto and signed by the President or the Secretary of the Company. Neither notice given to nor the knowledge of any agent or any other person, whether received or acquired before or after the date of this policy, shall be held to waive any of the terms or conditions or statements of this policy, or to preclude the Company from asserting any defense under said terms, conditions, and statements, unless set forth in an endorsement added hereto and signed by one of the said officers.”

The company is bound by any acts or representations of its agents within the scope of this apparent authority. Secret limitations will not avail where the company holds out its agent as having plenary authority; but where the company gives to an assured notice of a limitation upon the authority of an agent, the assured can hold the company upon an agreement made by the agent in disregard of such limitations only where it is shown that the company has removed the limitations.

We have said long ago that the effect of such stipulations in a contract of insurance as well as the manner in which they may be modified or waived by agents of the company have been so thoroughly discussed, and so clearly pointed out that a reference to some of the more recent cases on the subject is all that is needful here. (Allen v. German Am. Ins. Co., 123 N. Y. 6; Quinlan v. Providence W. Ins. Co., 133 id. 356; Messelback v. Norman, 122 id. 583; Walsh v. Hartford Ins. Co., 73 id. 5.), Under the doctrine of these cases, we see no escape from the result which the parties to the contract stipulated should follow the breach of the condition, with respect to subsequent insurance, unless consent was given in the manner provided.” (Baumgartel v. Providence-Washington Ins. Co., 136 N. Y. 547, 551.)

It is true that we have also held that the insurance company may itself waive any contractual condition or restriction in a policy; even the condition that a waiver, extension or change must be in writing. Such waiver may be established by a course of conduct which gives rise to an estoppel or by word or act of a duly authorized agent. (Pechner v. Phœnix Ins. Co., 65 N. Y. 195; Manchester v. Guardian Assur. Co., 151 N. Y. 88; Smaldone v. President, etc., of Insurance Co. of North America, 162 N. Y. 580.) That does not mean that the provisions of a policy limiting the powers of an agent, or restricting the manner in which the policy may be extended or its provisions waived, are not given their intended effect. Such provisions are intended to be effectual unless or until the parties agree otherwise and the company can be bound by an agreement of waiver only where such agreement is made by an agent who is authorized to make it. “ There is no necessary inconsistency in the decisions of this court on the subject. The determination of the question depends on the rank and authority of the agent and the subject-matter with reference to which he assumes to act.” (Smaldone v. President, etc., of Insurance Co. of North America, supra, p. 583.)

We apply both rules here. The assured accepted a policy which provides that the term of the policy is three months subject to an extension by indorsement upon the policy. No such extension has been indorsed upon the policy. Therefore, according to its terms it had expired before the accident. The alleged oral agreement of extension or waiver of the express terms of the agreement was made by an agent in disregard of the limitations placed upon his authority by the policy. There is no proof in the record that the agent had any authority to make an oral agreement to extend the policy without indorsement or to waive the limitations placed in the policy upon his authority. There is no proof that the company or any officer or general agent knew that the agent assumed to exercise such authority. The assured may have failed to read its policy; the broker of the assured and the agent of the company may have chosen to disregard it; the company has done nothing which justified the assured or the broker in relying upon the promise or assurance of the company’s agent beyond the limitation placed upon the agent’s authority. It has a right, then, to stand upon the terms of the written policy, and the assured has no policy which places liability upon the company for the injuries suffered by the plaintiff.

The judgment should be affirmed, with costs

Crane; Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgment affirmed.