author: Fuld, J. Froessel, J.

text:
    Raleigh Associates, Inc., Appellant and Respondent, v. Ryder Henry II, as Administrator with the Will Annexed of Emily S. Jackson, Deceased, Respondent and Appellant.
    Argued March 1, 1951;
    decided May 24, 1951.

      Samuel Gottlieb, Howard D. Pack, Joseph P. Segal and Walter P. Arenwald for plaintiff, appellant and respondent.
    I. The written modification agreement of July 9, 1942, satisfied the requirements of the Statute of Frauds and is not rendered unenforcible thereby. (Roberts v. Fulmer, 301 N. Y. 277; Newburger v. American Sur. Co., 242 N. Y. 134; Barkin Constr. Co. v. Goodman, 221 N. Y. 156; Karnal v. Horovitz, 187 Misc. 851, 272 App. Div. 796.) II. The modification agreement affected the rent for the renewal term, because it specifically changed the basic rental in the lease for determining renewal. Any doubt with respect to the legal effect of the language employed therein must be resolved in favor of- tenant. Extrinsic evidence as to intent was inadmissible and rightfully excluded. There is no issue of overreaching nor any factual or legal basis for such claim. (455 Seventh Ave., Inc., v. Hussey Realty Corp., 295 N. Y. 166.) III. Plaintiff specifically sought to renew the lease as modified. There was no possible basis for the Special Term holding that plaintiff is now bound by a renewal of the lease at the original rental. Such adjudication penalized plaintiff for having sought a timely determination of its renewal rights through this action for declaratory judgment and was justifiably reversed at the Appellate Division. (151-163 West 26th St., Inc., v. Mary Brosnan, Inc., 183 Misc. 804.) IV. An exercise of an option which by its specific terms is an offer to renew a lease as modified cannot be accepted so as to bind the offeror to a renewal of that lease without modification. (Gram v. Mutual Life Ins. Co. of N. Y., 300 N. Y. 375.)

      Chester Bordeau and Robert F. Little for defendant, respondent and appellant.
    I. The renewal terms of the lease are unaffected by the modification agreement of July 9, 1942. (455 Seventh Ave., Inc., v. Hussey Realty Corp., 295 N. Y. 166; Tanenbaum v. Levy, 83 App. Div. 319, 178 N. Y. 594.) II. Plaintiff’s renewal notice of July 3, 1946, served to create a renewal lease in accordance with the renewal provisions of the original lease. (Heller v. Pope, 250 N. Y. 132; Orr v. Doubleday, Page & Co., 223 N. Y. 334.) III. If the lease has not been renewed defendant may at his option treat plaintiff as a trespasser or as a common-law holdover at an annual net rental of $25,000 per year. (Schuyler v. Smith, 51 N. Y. 309; Giordano v. Loperfide, 203 App. Div. 164; Austin v. Stevens, 38 Hun 41; Scully v. Roche, 76 Misc. 458; Stern v. Equitable Trust Co., 238 N. Y. 267; United Merchants’ Realty & Improvement Co. v. Roth, 193 N. Y. 570.) IV. The modification agreement of July 9, 1942, is void under, the Statute of Frauds. (McKenzie v. Harrison, 120 N. Y. 260; Meyers v. Knights of Pythias Bronx Temple Assn., 194 App. Div. 405; Imperator Realty Co. v. Tull, 228 N. Y. 447; Bailey v. Ogden, 3 Johns. 399; Mentz v. Newwitter, 122 N. Y. 491; Ward v. Hasbrouck, 169 N. Y. 407; Irvmor Corp. v. Rodewald, 253 N. Y. 472; Basma v. Weekes, 66 Times L. R. 1047; Lerand Corp. v. Meltzer, 267 N. Y. 343.)
   Fuld, J.

This action was brought by plaintiff-tenant to obtain a judgment (1) declaring its right to exercise an option to renew a lease for a further term of twenty-one years and (2) fixing its total annual rental upon such renewal at $12,000, with no obligation to pay real estate taxes or other charges.

In 1927, Henry Gluck as tenant and Emily Jackson as landlord entered into a twenty-one-year lease for the land and building at 556 Madison Avenue, New York City. The lease prescribed a fixed annual rental of $25,000, the tenant being required to pay, as “ additional rents ”, all taxes, assessments and other charges on the property. The lease gave the tenant, if not in any default, an option to renew for two further twenty-one-year terms. If the tenant exercised the option, the parties were to execute a new lease containing substantially similar terms “ except as to the regular net annual rental which is hereinafter provided for ”.

As to such rental, the lease recited that, if the parties should not agree upon the amount, within ten months before the expiration of the current term, then, “ the net annual rent to be provided in the said renewal leases shall be six (6) per centum per annum on the value of said land,” such value to be fixed by arbitration. Next followed a clause, focal upon this appeal, to the effect that in no event was the “ net annual rent ” for the renewal term to be less than the net annual rent reserved for the last year of the then current term.” In all cases, the lease continued, the tenant under the renewal lease was to pay taxes, assessments and other charges upon the property.

In 1928, Gluck assigned the original lease to Hops Building, Inc., a family corporation of which Gluck — who remained personally liable on the lease — was president and virtually sole stockholder. The rent provisions of the lease gave way in 1942 to a superseding agreement in writing which incorporated a rental arrangement under which the parties had been informally operating for many years. Executed while the original lease still had some six years to run, that agreement not only eliminated the tenant’s obligation to pay taxes and other charges for the duration of the original term, but reduced the fixed rental. Specifically, as to the latter item, it altered the “ provisions for the payment of fixed annual rent contained ” in the original lease “ so as to provide * * * rent at the rate of $12,000.00 per year during the said term instead of $25,000.00 per year, effective as of July 1, 1942.” The agreement — signed by the party to be charged, in this instance, the landlord, and adequately describing and identifying both parties to the agreement, a landlord and a tenant — satisfied the requirements of the Statute of Frauds and effectively reduced the rent reserved under it. (See, e.g., Irvmor Corp. v. Rodewald, 253 N. Y. 472, 475; cf. Lerand Corp. v. Meltzer, 267 N. Y. 343, 346; Real Property Law, § 279, subd. 1.)

By virtue of an assignment for which it paid upwards of $22,000, plaintiff became tenant of the premises in February of 1946, more than two years before the expiration of the original term. For fully five months after the assignment, from February to August, 1946, plaintiff paid the landlord each month at the rate of an annual gross rental of $12,000, and the landlord accepted each payment “ without reservation.”

Meanwhile, in July of 1946, plaintiff notified the landlord that it elected to exercise the option to renew the lease, “ as modified ” by the 1942 agreement, for the renewal term of twenty-one years. Thereafter, in a letter dated September 9, 1946, more than four years after execution of the modifying agreement, the landlord informed plaintiff that the agreement was “ineffective”; that the rent had never validly been reduced from $25,000 a year plus taxes; that plaintiff owed over $200,000 in rent and tax arrears and that “ In view of the defaults mentioned above and the terms of the lease,” plaintiff’s election to renew the lease was “ of no effect.”

Arbitration proceedings, stipulated to be without prejudice, were then held to determine the value of the land, as a step in computing the possible renewal rent in accordance with the formula specified in the lease. Arbitrators placed the value of the land at $200,000. Accordingly, the rent for the renewal term — 6% of that figure — amounted to $12,000 a year, unless “ the net annual rent reserved for the last year of the then current term ” should exceed that figure, in which event the renewal lease was to provide for payment of the higher rental.

The modification agreement having validly and effectively reduced the rental for the duration of the original term and that rental having been paid in full, the tenant was privileged to exercise the option to renew and the landlord could not demur thereto or avoid the consequences of that election. Consequently, the prime question before us is whether the net annual rental to be paid upon renewal is the $25,000 specified in the original lease or the amount of $12,000, representing 6% of the land value.

In resolving that question, we concern ourselves with what the parties intended, but only to the extent that they evidenced what they intended by what they wrote (see, e.g., Brainard v. New York Central R. R. Co., 242 N. Y. 125, 133; 455 Seventh Ave. v. Hussey Realty Corp., 295 N. Y. 166,172), and this is what they wrote: upon the tenant’s exercising the option to renew the lease for a further twenty-one-year term, the renewal rental to be paid each year was either (a) a rental agreed upon in writing or (b) 6% of the value of the land as fixed by arbitration — unless the latter amount should fall below the “net annual rental reserved for the last year of the then current term.” In addition, the renewal lease was to obligate the tenant — and the requirement was not affected by any term of the modification agreement — to pay all taxes and other charges on the property.

The parties failed to agree upon the amount to be paid, as the first alternative contemplated. Therefore, argues the landlord, the rent upon renewal becomes the rental actually set forth and provided in the original lease for the last year of the term. If that were indeed what the parties intended, the language which they chose concealed most successfully that thought. The amount of rent reserved for the last year of the term at the time when the original lease was written was $25,000 a year, a fact, of course, well known to the parties. If they had purposed to do what the landlord now claims, several methods were at hand to express that design. They would have provided in the original lease that the net annual rental would be “at least $25,000” upon the first renewal or they would have specified — as in the Hussey case (supra, 295 N. Y. 166), upon which the landlord heavily relies — that the'renewal rent would in no event be fixed at a less sum than “ herein provided ” to be paid or they would have signified in the modification agreement itself that the reduced rental was not to be used in measuring or determining the minimum rent for the renewal term. In short, if the parties had desired the $25,000 figure to continue as the minimum renewal rental in the face of any modification of the rent for the last year of the term, if they had intended the rent reserved for such last year not to control the renewal rent, they could very easily, by the use of two or three words, have so provided. As a matter of fact, not only did they not so provide, but they actually and explicitly agreed in the modification agreement that “ Except as herein specifically provided, the aforementioned [original] lease shall remain in full force and effect.”

To eschew a path so plain indicates a design to travel a different route, and to a different destination. As we read the operative renewal provision of the original lease, the rental reserved for the last year could be no figure other than $12,000. In so many words, the modification agreement declares that the “ rent ” was to be at the rate of $12,000 a year during the said term “ instead of ” $25,000 a year. By that substitution, the base rent was converted to the lesser figure. It follows inexorably that, when the renewal option came to be exercised, there was to be carried forward into the new term a sum not less than the substituted rental base of $12,000, since that amount was unquestionably the fixed “ annual rent reserved for the last year of the then current term.” To find otherwise would necessitate our saying that, although $12,000 was in fact the annual rent reserved for the key year, it was, for some reason not apparent from the contract between the parties, to be disregarded and nullified. That we may not do.

In our opinion, the language of the modification agreement admits of no doubt as to what the parties intended. They revised the base rent under the original lease and that revised base rent traveled into the renewal lease in accordance with the formula prescribed when the tenant unequivocally declared its intention to renew the lease as modified ”.

A useful contrast — illustrating a case where the base rental was not thus effectively modified for renewal purposes — is 455 Seventh Ave. v. Hussey Realty Corp. (supra, 295 N. Y. 166), to which we have before adverted. There, the original lease carefully specified that in no event ” was the renewal rent “ to be fixed at a less sum than herein provided to he paid as the rental for the [lease] period ending February 1, 1945 ”, and the modification agreement left unaltered that basic “ rental ”. It merely prescribed the payment of an extra sum, expressly denominated “ additional rent ”. Specifically noting that There are no words [in the modification agreement] indicating an intention to increase the base rent. All modified rental amounts were described as 1 additional yearly rent ’ ”, this court held that the engraftment of “ additional ” rent did not — for purposes of arriving at the base rent for the renewal term — increase or affect the amount of the rental ” “ herein provided to he paid ” for the specified lease period (295 N. Y., pp. 171, 172). Here, on the other hand, as already noted, the base rent was effectively modified. The modification agreement before us actually used the phrase “ instead of ” in connection with the old and new rents; the recital that the “ rent ” was to be at the rate of $12,000 a year — including the last year of the term — “ instead of ” $25,000 a year plainly demonstrates that the parties fixed an entirely new rent, a rent that completely superseded the old.

The intention of the parties, as reflected in the language used to express such intention, as well as the scheme of the lease, clearly emerges. Both parties were intent that the landlord receive as rent an amount that would assure her a 6% return on the land — an almost new building at a cost of $70,000 having been erected by the tenant — and, accordingly, they provided that, unless some other figure was agreed upon or unless the rent reserved for the last year of the term was greater, the net annual rent was to be 6% of the valué of the land. In short, since the lease agreement is unambiguous, paroi evidence as to what might have been in the mind of one party or the other as to the amount of the renewal rent, was neither necessary nor justified. (See, e.g., Fogelson v. Rackfay Constr. Co., 300 N. Y. 334, 338-339; 455 Seventh Ave. v. Hussey Realty Corp., supra, 295 N. Y. 166, 172; Brainard v. New York Central R. R. Co., supra, 242 N. Y. 125, 133; Metzger v. Aetna Ins. Co., 227 N. Y. 411, 415-417.) There is no necessity ”, the court declared in the Hussey case (supra, 295 N. Y. 166, 172), “ for extrinsic evidence as the dispute centers around the legal effect of the words rather than any inherent ambiguity in their use.” Nor do we experience any difficulty with the fact that the modification agreement relieved the tenant of its obligation to pay taxes and other charges for the balance of the first term. The lease provisions that the renewal rent was to be at least as much as ‘1 the net annual rent ” for the last year of the term and that in all cases ” the tenant was to “ pay all of the additional rents [i.e., taxes] as provided in this lease ”, merely made it plain that, regardless of who might be paying the taxes at the end of the current rental period, the tenant was under the necessity of paying them during the renewal term.

It is our conclusion, therefore, that plaintiff validly exercised its option to renew the lease for a further period of twenty-one years at a fixed annual rent of $12,000, plus taxes and other charges on the property.

The judgment of the Appellate Division should be modified to the extent of directing entry of a judgment (1) declaring that plaintiff validly exercised the option to renew contained in the lease of April 5, 1927, and (2) ordering that the parties execute a new lease for a twenty-one-year period beginning May 1, 1948, at a fixed rental of $12,000 a year, plus the additional rents provided for in the said 1927 lease, and, as so modified, affirmed, without costs.

Froessel, J.

(dissenting). The controversy in this case arises between a landlord and her tenant and revolves around their rights under a twenty-one-year lease and its renewal provisions. The original lease was made on April 5, 1927; the fixed annual rent reserved was $25,000; “ additional rents ” were also provided for. The tenant was given an option to renew for two further twenty-one-year periods, the options to be exercised at least one year prior to the expiration of each term. If the parties did not agree upon the renewal rent, arbitration was provided, with the proviso, however, that in any event the net annual rent for each renewal term shall be at least as much as the net annual rent reserved for the last year of the then current term.”' (Emphasis supplied.) That rent as fixed was $25,000 and, as we read the lease, that sum is what the quoted language means on this first renewal. Such language was obviously employed instead of the specific amount by reason of the fact that the original lease envisioned two renewal terms, and it was contemplated that the net annual rent reserved during the first renewal period might well differ from that under the original term.

Because the parties in 1942 modified the original lease “ so as to provide the rent at the rate of $12,000.00 per year during the said term instead of $25,000.00 per year ”, it is said that the annual rent for the first renewal period should be $12,000. We do not so interpret the writings, and conclude that ££ the net annual rent reserved for the last year ” of the original term refers to the basic rent under the original lease and not to the rent stated in the modification agreement. We agree with Special Term that plaintiff had unconditionally renewed the lease and that it was required to pay the annual rent of $25,000 for the renewal period ££ plus the additional rental specified in the lease ”. The Appellate Division likewise agreed “ that the option to renew was at $25,000 a year ”, but adopted the view that the ££ option was not exercised.” (277 App. Div. 978, 979.)

The modification agreement here merely fixed the annual rent for a limited period of time, namely, during the said term ” (the twenty-one-year term would expire in six years), and not for the renewal period. It expressly provided: Except as herein specifically provided, the aforementioned lease shall remain in full force and effect.” It is of course true that we search a writing to discover the intention which the parties have formulated in the written language, but that is not to exclude the circumstances surrounding its execution or the setting in which it was made (Wirth & Hamid Fair Booking v. Wirth, 265 N. Y. 214, 219; Utica City Nat. Bank v. Gunn, 222 N. Y. 204, 207).

The landlord here had voluntarily substantially reduced the rent of this tenant during the period of the depression and since 1932. In 1942 the tenant sought a written modification for the balance of the term. It should be noted that said modification was not drawn by the landlord’s attorney but by counsel for the tenant; at the time, the landlord was an old lady eighty years of age. It is utterly unreasonable to assume that after a landlord has voluntarily consented to a substantial reduction of rent over a period of years, to which the tenant was in nowise legally entitled, it may be said that she intended such reduction to be effective for a first renewal period of twenty-one years and for a probable second renewal covering a like period — forty-two years in all — and thus deprive herself of hundreds of thousands of dollars. Certainly, in the absence of language unambiguously and specifically so providing, we should not impute to the contracting parties a purpose so extraordinary and inequitable.

In 455 Seventh Ave. v. Hussey Realty Corp. (295 N. Y. 166) we were faced with a somewhat similar situation except that an increased rent liability was sought to be imposed upon a tenant. We there pointed out (pp. 171-172):

££ The lease stands as the basic contract of the parties which the modification agreement provides £ shall be and remain in full force and effect, excepting as modified by this agreement.’ * * * Had the parties sti desired, they could easily have stated in so many words that the additional rental in the modification agreement was to be deemed the rent reserved in the original lease for purposes of renewal. * * *

“ Since the question of rent was of major importance to both parties, and the modification agreement did not specifically change the basic formula for determining the renewal rental, that rental should be $150,000 [the amount reserved in the original lease, not in the modification.] ’ ’

Because that construction there happened to favor the tenant, we may not now change the rule if it favors the landlord. Whether the modification prescribes an additional or a lesser rent does not, in our view, alter the situation. That case is clearly applicable to the present situation. The tenant here was not obligated to exercise this option; it could have freed itself of all obligations if it had chosen to do so.

The judgment of the Appellate Division should be reversed and that of Special Term affirmed, with costs.

Loughran, Ch. J., Lewis and Conway, JJ., concur with Ftjld, J.; Froessel, J., dissents in opinion in which Desmond and Dye, JJ., concur.

Judgment accordingly. [See 302 A. Y. 940.]


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    In the Matter of Alan C. Abeel et al., as Directors of Diamond Mills Paper Company, Incorporated, Respondents. Fredericka D. Ackerman et al., Appellants.
    Argued February 28, 1951;
    decided May 24, 1951.

      John E. Egan, Louis P. Francello and Frank Campochiaro for appellants.
    I. The written agreement of May 9, 1945, was a valid arbitration contract under which the parties voluntarily agreed to submit the labor controversy then pending between them to the decision of the hearing officer and the National War Labor Board as the duly nominated arbitrators under said agreement. (Garr v. Gomez, 9 Wend. 649; Matter of Hub Industries [George Mfg. Corp.], 183 Misc. 767, 269 App. Div. 177, 294 N. Y. 897; Matter of Webster v. Van Allen, 217 App. Div. 219; Davis v. Rochester Can Co., 124 Misc. 123; Metropolitan Life Ins. Co. v. Durkin, 301 N. Y. 376; Matter of Mencher [Abeles & Kahn], 274 App. Div. 585; Matter of Thorsen & Co. [Neves], 179 Misc. 11; Publishers’ Assn. of N. Y. City v. New York Typo. Union No. 6,168 Misc. 267; Berizzi Co.v. Krausz, 239 N. Y. 315.) II. The decisions of the nominated arbitrators, made after due hearings and upon the evidence and which were rendered in accordance with the aforesaid written agreement of submission, were not merely advisory, but were binding on all parties in accordance with their agreement and understanding. III. The ■ two-day strike which took place a month after the final decision of the hearing officer did not constitute a breach of the agreement; but even if it did, such breach did not vitiate the entire contract of arbitration— at most it would give rise to an offset of damages had any in fact accrued. (Trainor Co. v. Amsinck & Co., 236 N. Y. 392; Matter of Mencher [Abeles & Kahn], 274 App. Div. 585.)

      William A. Kirk and Robert F. Nolan for respondents.
    I. The parties followed the usual procedure in submitting their differences to the National War Labor Board. The stipulation of submission did not extend the customary jurisdiction of the board. II. Directives of the National War Labor Board are only advisory and cannot be enforced in a court of law. (Employers Group of Motor Frgt. Carriers v. National War

      Labor Bd., 143 F. 2d 145; National War Labor Bd. v. Montgomery Ward & Co., 144 F. 2d 528, 323 U. S. 774; National War Labor Bd. v. United States Gypsum Co., 145 F. 2d 97, 324 U. S. 856; Baltimore Tr. Co. v. Flynn, 50 F. Supp. 382.) III. The conduct of appellants in striking prior to final decision of the National War Labor Board constituted a breach of the contract of submission. (Jerome v. Queen City Cycle Co., 163 N. Y. 351.) IV. The stipulation entered into before the referee did not lead him to conclude, as he did, that appellants agreed not to strike during the pendency of the proceeding before the National War Labor Board. (Baltimore Tr. Co. v. Flynn, 50 F. Supp. 382; Pines v. Beck, 300 N. Y. 181; Hine v. New York Elevated R. R. Co., 149 N. Y. 154; Matter of New York, L. & W. R. R. Co., 98 N. Y. 447.)
   Conway, J.

Claimants, 139 in number, have filed claims against the corporate assets of the Diamond Mills Paper Company, Incorporated, now in dissolution under section 105 of the Stock Corporation Law. The claims are based upon wage awards to which the claimants assert they are entitled as a result of a proceeding before the National War Labor Board.

All of the claimants are former employees of the Diamond Mills Paper Company (hereinafter referred to as Company) and all were members of a union known as the International Brotherhood of Papermakers, Local 452 (hereinafter referred to as Union), which had a labor agreement with Company expiring December 31, 1944. Upon the expiration of the contract, negotiations were begun between Union and Company with respect to the terms of a new contract. Negotiations continued for a period, of over four months, to May 9, 1945, during which time the employees continued to work without a labor contract. The death of the sole stockholder on February 15,1945, undoubtedly delayed-matters. At his death he appointed the three petitioners as executors, one of whom had been his counsel.

Company and the employees were unable to resolve their differences in respect to wages, paid holidays and vacation pay. Neither party was willing to enter into a new contract until Un agreement was reached covering those three issues. Union threatened to go out on strike but on May 9, 1945, both parties agreed tq submit the matters in dispute to the National War Labor Board. Thereafter, hearings were held before a hearing officer appointed by the Begional War Labor Board who made findings favorable to claimants. The Begional War Labor Board thereupon made directives dated August 29, 1945, and September 8, 1945, granting claimants certain wage increases, paid holidays and vacation pay, retroactive to the date the dispute arose. The petition of Company for review was denied by the National War Labor Board and the directive orders of the Begional Board were affirmed and adopted by a directive order dated November 8, 1945. In the meantime, after the directives of the Begional Board and while the application for review was pending, the employees of Company went out on strike on October 6, 1945, because of the claimed failure of the employer to consider itself bound to comply, as promised by counsel, to be referred to later, with the directives of the board.

On October 9, 1945, three days later, the mill and all other assets at Saugerties, New York, where the claimants were employed, were sold to a new owner. The directors retained the stock and are now dissolving the corporation under section 105 of the Stock Corporation Law.

The principal question to be determined is whether the parties are bound by the decision of the National War Labor Board. The board was created on January 12,1942, by Executive Order No. 9017 (U. S. Code, tit. 50, Appendix, § 1507, Note; 7 Federal Register 237), to assist in the peaceful settlement of disputes during World War II. No legislation was enacted making directives of the board enforcible and reviewable in courts of law, Congress having decided against such action. (See Employers Group of Motor Frgt. Carriers v. National War Labor Bd., 143 F. 2d 145, 148-149, certiorari denied 323 U. S. 735). The Federal courts in the cases that came before them uniformly held that the directives of the National War Labor Board were advisory only and not enforcible in the courts. (Employers Group of Motor Frgt. Carriers v. National War Labor Bd., supra; National War Labor Bd. v. Montgomery Ward & Co., 144 F. 2d 528, certiorari denied 323 U. S. 774; National War Labor Bd. v. United States Gypsum Co., 145 F. 2d 97, certiorari denied 324 U. S. 856; Baltimore Tr. Co. v. Flynn, 50 F. Supp. 382; May Dept. Stores Co. v. Brown, 60 F. Supp. 735). On the other hand where parties have agreed that they will abide by the decision of the board and then one of the parties deliberately violates the agreement, an estoppel should be raised against the violator under general equitable principles. This view has been suggested in Baltimore Tr. Co. v. Flynn (supra, p. 388). Of course, the parties, if they so chose, could have explicitly stipulated that the matters in dispute would be decided by arbitration and that would be binding on both parties. That is what was done in Metropolitan Life Ins. Co. v. Durkin (301 N. Y. 376), where the parties expressly stipulated that they would not question the power or authority of the National War Labor Board to fix the wages of insurance agents. When the case came to this court we noted that the stipulation removed from the case any question as to the jurisdiction of the board.

Turning now to the case at bar, it is true that the matters in dispute were submitted to the National War Labor Board in accordance with usual procedure, followed in every case, whereby the parties sign a standard mimeographed form supplied by the board. However, the instant case presents unique features which distinguish it from the cases cited (supra, p. 483), dealing with the nature of directives of the board. We are persuaded that the parties here construed their submission of differences by conduct and writing so that they became bound to abide by the decision of the board. Two factors constrain us to reach this result. The first of these is the statement made by counsel for Company, who is not only its counsel but a director and an executor of the sole owner' of the stock of Company. The statement was: I want you to play ball with me, keep the mill running until the Hearing Officer has made her report and the Board decided. Needless to say, we are bound by the decision of the Board.” It will be recalled that the Begional War Labor Board, to which the Hearing Officer reported, made its directives on August 29,1945, and September 8,1945. The second of these is that when the same counsel drew the petition herein and had it verified approximately four years later he seems to have had the same idea still in mind. Paragraph 8 of the petition reads as follows: “ 8. That on May 9, 1945, through the intervention of the United States Conciliation Service, the Diamond Mills Paper Company, Incorporated, and said International Brotherhood of Paper Mahers, Local 452, AFL, agreed to subonit their differences to the National War Labor Beard for determination and to enter into a contract embodying such provisions as might be determined by said Board, provided that the International Brotherhood of Paper Makers, Local 452, AFL, were to continue to work and receive compensation in accordance with the contract which expired on December 31,1944, provided, however, if a new contract was eventually entered into, its provisions were to be retroactive until December 31, 1944.” (Emphasis supplied.)

Beading paragraph 8 of the petition in conjunction with the statement of counsel for Company, it becomes clear that the fail* and reasonable interpretation of the intention of the parties is that they both understood and, in that sense, had agreed as practical people in an employer and employee relation that they would abide by the determination made by the board.

It is urged that by going out on strike on October 6, 1945, and remaining on strike for either two or three days during the pendency of the appeal of Company from the Begional Board to the National Board, the employees lost all right to any wage claims. There is no evidence of an agreement not to strike, and such an agreement should not be implied, in view of Executive Order No. 9017 which established the National War Labor Board. Paragraph 7 of the order provided: Nothing herein shall be construed as superseding or in conflict with the provisions of * * * the National Labor Belations Act (Act of July 5,1935, 49 Stat. 457; 29 U. S. Code 151 et seq.) * * *.”

Section 163 of title 29 of the United States Code provided during the period that- the controversy was before the board as follows: § 163. Right to strike preserved. Nothing in sections 151-166 of this title shall be construed so as to interfere with or impede or diminish in any way the right to strike. (July 5, 1935, ch. 372, § 13, 49 Stat. 457.)”

Thus, under the provisions of Executive Order No. 9017 and of section 163 of title 29 of the United States Code, the right to strike was expressly preserved to the employees. In view of the absence of any proof or evidence of a waiver of such right to strike, we conclude that the employees did not lose their rights to the wage awards granted to them by the board.

Conversely, the employees concede that there was no agreement or obligation on the part of Company not to close down or sell its plant, during the pendency of the proceeding before the board, subject only to the requirement that if the board decided that the employees were entitled to an increase in pay, that increase would have to be paid by Company for the period during which employees worked prior to the sale or closing of the plant.

The orders should be reversed, with one bill of costs to appellants in all courts and the matter remitted to Special Term for further proceedings not inconsistent with this opinion.

Loughban, Ch. J., Lewis, Desmond, Dye, Fuld and Fboessel, JJ., concur.

Orders reversed, etc.


author: Loughran, Ch. J.

text:
    Helen Cyran, Appellant, v. Finlay Straus, Inc., Respondent, et al., Defendants.
    Argued March 5, 1951;
    decided June 1, 1951.

      Louis P. Goldberg and Sebastian Leone for appellant.
    I. The allegations contained in the first and fourth causes of action constitute a libel per se and allegations of special damages are unnecessary. (Keating v. Conviser, 219 App. Div. 836, 246 N. Y. 632; Neaton v. Lewis Apparel Stores, 267 App. Div. 728; Katapodis v. Brooklyn Spectator, Inc., 287 N. Y. 17; Bennet v. Commercial Advertiser Assn., 230 N. Y. 125; Sydney v. MacFadden Newspaper Pub. Corp., 242 N. Y. 208; Triggs v. Sun Print. & Pub. Assn., 179 N. Y. 144; Wells v. Belstrat Hotel Corp., 212 App. Div. 366.) II. Some of the publications contained in the complaint charge plaintiff with the commission of a crime and therefore are libelous per se. (Dooley v. Press Pub. Co., 170 App. Div. 492, 224 N. Y. 640.) III. The question whether the allegation in the complaint can be interpreted to hurt plaintiff’s reputation and thus hold her up to ridicule and disgrace is within the province of the jury. (Mencher v. Chesley, 297 N. Y. 94; Balabanoff v. Hearst Consolidated Publications, 294 N. Y. 351; Katapodis v. Brooklyn Spectator, Inc., 287 N. Y. 17; Neaton v. Lewis Apparel Stores, 267 App. Div. 728; Tracy v. Kline & Son, 274 App. Div. 149; Keating v. Conviser, 219 App. Div. 836.)

      George II. Klein for respondent.
    I. The innuendoes pleaded and the innuendoes argued cannot enlarge the matter set forth in the alleged libelous communication. (Hays v. American

      Defense Soc., 252 N. Y. 266; Waldron v. Time, Inc., 83 N. Y. S. 2d 826; National Variety Artists, Inc., v. Mosconi, 169 Misc. 982; O’Connell v. Press Pub. Co., 214 N. Y. 352.) II. The first cause of action was properly dismissed as insufficient on its face. (Moore v. Francis, 121 N. Y. 199; Keating v. Conviser, 219 App. Div. 836, 246 N. Y. 632.) III. The alleged defamatory matter is not libelous per se. (O’Connell v. Press Pub. Co., 214 N. Y. 352; Rosenberg & Sons v. Craft, 182 Va. 512; Neaton v. Lewis Apparel Stores, 267 App. Div. 728; Birkmier v. Uneeda Jamaica, Inc., 259 App. Div. 924.) IV. The fourth of action, for conspiracy to libel, was properly dismissed as insufficient on its face. (Loewinthan v. Beth David Hosp., 9 N. Y. S. 2d 367.)
   Loughran, Ch. J.

In her complaint herein, the plaintiff Helen Cyran alleges four causes of action. There are three defendants. The first cause of action is for libel and is brought against Finlay Straus, Inc., as sole defendant. The second and third causes of action stand unchallenged in this record and consequently will be disregarded. The fourth cause of action repeats the gist of the first cause and goes on to charge all three defendants with a conspiracy to publish a libel against the plaintiff.

The defendant Finlay Straus, Inc., moved at Special Term for an order dismissing the first and fourth causes of action on the ground of insufficiency. Special Term denied that motion, but upon appeal by the defendant Finlay Straus, Inc., to the Appellate Division, the order of Special Term was reversed on the law and facts and the 'first and fourth causes of action were dismissed by a judgment which the plaintiff has now brought here for review. The only defendant appearing as a respondent in this court is Finlay Straus, Inc.

The first cause of action (without alleging any special damage) sets forth the following items of fact: On October 9, 1947, the plaintiff purchased on credit from the defendant Finlay Straus, Inc., a wrist watch for $75.79 and paid that price in installments, the last of which was received by the defendant Finlay Straus, Inc., from the plaintiff on February 10,1949. No other transaction ever took place between the parties. Finlay Straus, Inc., after it had been paid in full by the plaintiff, sent or caused to be sent to her ten writings demanding remittance of a balance stated to be $57.07. None of these writings was mailed to the plaintiff at her own residence and none was received directly by her; each writing was addressed to her in care of a relative or friend with whom she did not reside; each was enclosed in an unsealed envelope and was read by the person to whom it was delivered and by whom it was forwarded to the plaintiff. The defendant Finlay Straus, Inc., also caused a collecting agency to send to the plaintiff’s employer on January 20, 1950, a false written assertion that the plaintiff’s delinquent account ” with the defendant Finlay Straus, Inc., was almost two years overdue. This circulation among friends, relatives and business associates of the plaintiff of a false written charge that she had long been delinquent in paying a small debt was, as we see it, at least capable of a defamatory construction and, that being so, it is for a jury to say whether she was thereby held up to contempt, ridicule or disesteem (Bennet v. Commercial Advertiser Assn., 230 N. Y. 125, 127). The actionable quality of the writings as libels is not in any degree diminished by the circumstance that the false accusation did not reflect upon the plaintiff in respect of her employment (Sanderson v. Caldwell, 45 N. Y. 398, 405-406). Hence the first cause of action should not have been dismissed.

As we have said, the fourth cause of action repeats the substance of the first cause. The Appellate Division dismissed the fourth cause because that court held the first cause to be insufficient in law. Since we reach a contrary conclusion in respect of the sufficiency of the first cause, the fourth cause must also be reinstated as against the defendant Finlay Straus, Inc.

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

Lewis, Conway, Desmond, Dye, Fuld and Fboessel, JJ., concur.

Judgment accordingly.


author: Feoessel, J.

text:
    Alfred W. Spitz, Appellant, v. Martin Lesser, Doing Business as Playtown Products Co., Respondent.
    Argued April 5, 1951;
    decided June 1, 1951.

      David L. Delman for appellant.
    Plaintiff’s damages are the minimum royalties guaranteed by defendant for the first year, or $2,500, minus the $150 given to plaintiff as an earnest. (Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205; Orester v. Dayton Rubber Mfg. Co., 228 N. Y. 134; Broadway Photoplay Co. v. World Film Corp., 225 N. Y. 104; Story Parchment Co. v. Paterson Parchment Paper Co., 282 U. S. 555; Riggs v. Palmer, 115 N. Y. 506; People v. Schmidt, 216 N. Y. 324; Haughey v. Belmont Quadrangle Drilling Corp., 284 N. Y. 136; MacGregor v. Watts, 254 App. Div. 904; Steitz v. Gifford, 280 N. Y. 15; Industrial & Gen. Trust, Ltd., v. Tod, 180 N. Y. 215; Central Trust Co. v. West India Improvement Co., 144 App. Div. 560; Baer v. Durham Duplex Razor Co., 228 App. Div. 350.)

      Samuel Eerbsman for respondent.
    1. The proper measure of damages is the value of the contract at the time of the breach, as limited by the provision giving defendant the option to cancel. (Warth v. Liebovitz, 179 N. Y. 200; Watson v. Russell, 149 N. Y. 388; Custen v. Robison, 180 App. Div. 384; Bitterman v. Gluck, 256 App. Div. 336; Chatham Plan, Inc., v. Clinton Trust Co., 246 App. Div. 498.) II. There is no justification for allowing damages which exceed 5% of shipments up to April 1,1949, in the absence of evidence of special damages. (Wake-man v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205.)
   Feoessel, J.

Plaintiff, inventor of a toy carrousel, entered into a contract with defendant on October 27,1948, whereby the latter, “Under an exclusive arrangement” with plaintiff, agreed to “ produce ” and make the toy “ for mass production sales to promote, market and ship same, under our own expense and by January 2, 1949, to have production samples * * * ready for market, complete with printed containers.” Defendant also agreed to pay plaintiff a royalty of 5% on the first $100,000 of net sales, 3% thereafter, and “ a Minimum for the first year —1949 — of. not less than ’ ’ $2,500; subject, however, to his right to “ return this item * * * not later than Apr. 1st —1949 — after the Toy Show ’ ’, in which event full royalties were to be paid for any and all goods shipped under the agreement up to April 1,1949, and the agreement, which otherwise continued for three years subject to further renewal, would thereby be terminated.

All the courts below agree that defendant breached the foregoing contract. Not only did he fail to manufacture any production samples ” or any printed containers, which he was required to do by January 2, 1949, but he purported to exercise his right to cancel the contract on January 24, 1949, long before the toy show scheduled for March 7, 1949, and only after which he had any right to do so. The trial court found that defendant’s breach entitled plaintiff to the minimum royalties due under the contract, less $150 paid on account, as “ the agreed measure of damages ”. The Appellate Term affirmed without opinion, but the Appellate Division modified the judgment of the trial court by reducing the award of damages to the nominal amount of six cents.

We are of the opinion that the trial court was correct. For a wrong, the law’s ideal, not always realized, is compensation, neither more nor less. Theoretically the loss to an injured party because of a broken contract is its value to him.” (Orester v. Dayton Rubber Mfg. Co., 228 N. Y. 134, 136.) “ The value to the plaintiff of an executory contract under which he is to receive a certain compensation for the doing of an act is ordinarily the amount of such compensation less what it would cost him to perform, and this is the general measure of damages for the defendant’s wrongful repudiation of the contract.” (1 Clark, New York Law of Damages, § 156, citing Orester v. Dayton Rubber Mfg. Co., supra, and numerous other cases.)

Plaintiff’s contract represented to him a unique and valuable opportunity to market his invention, for, regardless of its other provisions, defendant by said agreement was bound to have production samples ready for market on January 2, 1949, and thus ready for the toy show on March 7, 1949. By defendant’s inexcusable breach, plaintiff has been denied this opportunity and the benefit of a valuable season. Defendant may not now profit by his own wrong by claiming that, because of his total breach, plaintiff had failed to establish any damages. If plaintiff cannot measure his damage in terms of the minimum royalties upon which the parties agreed, there is no satisfactory measure of his loss. If that were the law, the breaker of covenants would be cloaked with an immunity wrought from his own wrong. We cannot accept any such anomalous result, nor do we think precedent requires it.

Leaving aside for the moment the option to cancel, there can be no doubt that on defendant’s default plaintiff, whose performance was already complete, would be entitled to the minimum damages agreed upon. Nor can it be disputed that had defendant performed his agreement by January 2, 1949, and prior to the toy show, he would have had the right to exercise his option to cancel after the toy show on March 7th, but not later than April 1, 1949, in which event he would have been liable in damages only for the agreed percentage of “ all goods shipped under this agreement ”. Since he not only failed to produce and market the toy as aforesaid, but also failed to exercise his conditional option to cancel in accordance with the provisions of the agreement authorizing same, he cannot destroy plaintiff’s right to the minimum commissions of $2,500 mutually agreed upon for the first year.

This was the guaranteed compensation in the event of performance in other respects by defendant; it cannot be less by reason of his breach. Plaintiff may indeed have been damaged far more than this sum, but the minimum was all that could be proved. (Baer v. Durham Duplex Razor Co., 228 App. Div. 350, affd. 254 N. Y. 570.) Even though this measure of damages may not be as mathematically accurate as might be desired, it should not be condemned for that reason (Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205; Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240, 250), since contracts and the circumstances related thereto are so varying that there can be no inflexible rule of damages (Haughey v. Belmont Quadrangle Drilling Corp., 284 N. Y. 136, 142; Steitz v. Gifford, 280 N. Y. 15, 20; Ehrenwirth v. Stuhmer & Co., 229 N. Y. 210, 221; Taylor v. Bradley, 39 N. Y. 129, 142-145).

Here, defendant agreed to pay minimum royalties reasonable in amount, and the use of such sum as the measure of damages for his total breach of the contract furnishes a sufficiently definite standard as a “ practical means that will be just to the parties.” (Dunkel v. McDonald, 272 App. Div. 267, 270, affd. 298 N. Y. 586.) The value of the contract may be found in the stipulated royalties for the period within which the breach occurred (see Warth v. Liebovitz, 179 N. Y. 200, 204 — 205). Since it is defendant’s own wrong which has rendered it impossible for plaintiff to prove his damages with more certainty, he cannot complain of the alleged uncertainty. The reason for this has been well expressed by the Supreme Court of the United States in Bigelow v. RKO Radio Pictures (327 U. S. 251, 264-265):

Any other rule would enable the wrongdoer to profit by his wrongdoing at the expense of his victim. It would be an inducement to make wrongdoing so effective and complete in every case as to preclude any recovery, by rendering the measure of damages uncertain. * * *

“ The most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.”

The judgment of the Appellate Division should be modified so as to reinstate the damages awarded in the judgment of the City Court, and as so modified affirmed, with costs in this court and in the Appellate Division.

Lottghban, Ch. J., Lewis, Conway and Dye, JJ., concur with Fboessel, J.; Desmond and Ftjld, JJ., dissent for the reasons assigned by the Appellate Division in its Per Curiam opinion.

Judgment accordingly.


author: Dye, J.

text:
    Association of Contracting Plumbers of the City of New York, Inc., Respondent, v. Contracting Plumbers Association of Brooklyn and Queens, Inc., Appellant.
    Argued January 11, 1951;
    decided June 1, 1951.

      Harold Dublirer and A. E. Robert Friedman for appellant.
    I. Relief under section 964 of the Penal Law should he denied because defendant is a noncommercial organization and there was no intent to deceive or mislead the public. (Overseas News Agency v. Overseas Press, 185 Misc. 1010, 270 App. Div. 754; Matter of Overseas News Agency v. Overseas Press, 183 Misc. 40, 268 App. Div. 856; Bristor v. Smith, 158 N. Y. 157; Matter of Julius Restaurant v. Lombardi, 282 N. Y. 126; Matter of Brennan v. Mahoney, 165 Misc. 276, 252 App. Div. 741; Matter of Pignatelli v. Pignatelli, 175 Misc. 139; Montalti v. Montelione, 72 N. Y. S. 2d 879.) II. There was no proof of any intent to deceive or mislead the public. (Matter of Overseas News Agency v. Overseas Press, 183 Misc. 40.)

      Abraham Wilson and Elliot A. Wysor for respondent.
    I. Relief under section 964 of the Penal Law was properly extended to respondent membership corporation trade association against its competitor, appellant membership corporation trade association. (Matter of Julius Restaurant v. Lombardi, 257 App. Div. 370; Matter of Fainblatt v. Leo Sportswear Co., 178 Misc. 760; Matter of Bill’s Gay Nineties, Inc., v. Fisher, 180 Misc. 721; Campus Coat Co. v. Campus Togs, Inc., 177 Misc. 893; Cape May Yacht Club v. Cape May Yacht & Country Club, 81 N. J. Eq. 454; Vick Medicine Co. v. Vick Chemical Co., 11 F. 2d 33.) II. By application of the common law of unfair competition in the use of corporate names, as nonprofit membership corporations, appellant is subject to, and respondent is entitled to, the protection of the civil portion of the statute. (B. P. O. E. v. Improved B. P. O. E., 205 N. Y. 459; Salvation Army in U. S. v. American Salvation Army, 141 App. Div. 931, 205 N. Y. 619; Society of War of 1812 v. Society of War of 1812 in State of N. Y., 46 App. Div. 568; Brooklyn Bar Assn. v. Kings Co. Bar Assn., 174 Misc. 997; Town Hall, Inc., v. Franklin, 174 Misc. 17; New York World’s Fair 1939 Inc. v. World’s Fair News, Inc., 163 Misc. 661, 256 App. Div. 373, 280 N. Y. 853; Trustees of Columbia Univ. v. Axenfeld, 136 Misc. 831.) III. Appellant’s imitative intent and deliberate deceptive use of its name to compete with respondent, established by the uncontroverted facts, amply justified the lower court’s exercise of discretionary power under section 964 of the Penal Law to grant injunctive refief summarily to respondent. On the uncontroverted facts here, a plenary action could not have produced any different disposition. (International Com. of Y. W. C. A. v. Y. W. C. A., 194 Ill. 194; Societa, etc., Christoforo Colombo v. Lombardo, 350 Pa. 530; Liberty Life Assur. Soc. v. Heralds of Liberty, 138-A. 634.)
   Dye, J.

The question presented on this appeal concerns the measure of proof required to justify the summary remedy provided by section 964 of the Penal Law (L. 1937, ch. 638). It turns on whether an order granted on affidavits alone, without a trial, permanently restraining and enjoining the appellant-respondent from the use of the name Contracting Plumbers Association of Brooklyn and Queens, Inc.” and particularly the words “ Contracting" Plumbers Association ” either alone or in conjunction with other words, was justified.

We think not. When the Legislature enacted section 964 of the Penal Law, it provided a new and summary proceeding not heretofore available by which an aggrieved party in a proper case, could obtain speedy and drastic relief without the delays incident to a plenary action (Matter of Julius Restaurant v. Lombardi, 282 N. Y. 126). This is not to say, however, that compliance with basic evidentiary rules may be dispensed with. The very nature of the remedy — a permanent injunction — to be had without a trial on affidavits alone — requires that it be invoked only when the right thereto is established in a clear and convincing manner. Where basic factual allegations of violation are controverted summary relief may be denied (Matter of Alexander’s Dept. Stores v. Cohen, 269 App. Div. 117, revd. 295 N. Y. 557).

Both parties hereto are local nonprofit trade associations incorporated under section 2 of the New York State Membership Corporations Law (L. 1926, ch. 722, as amd.), for the purpose of promoting the interest and welfare of their members in the plumbing business and with other trade associations in the plumbing business. In practice, however, the principal activity is in the field of labor relations and acting as collective bargaining agent in the negotiation, making and supervision of employment contracts with local trade unions.

The petitioner-appellant, as presently constituted, was originally organized in 1900 as an unincorporated association of master plumbers, its members being drawn from and its activities covering all parts of New York City, including the boroughs of Brooklyn and Queens. In 1939, it incorporated with no change of name except the addition of the abbreviation “ Inc.” In 1942, without change of name, it absorbed by consolidation another trade association of master plumbers which had been incorporated under the Membership Corporations Law in about 1881 as Association of Master Plumbers of the City of New York,” its name being changed in 1908 by the addition of the words Manhattan Branch ”. In 1946, the petitioner was chartered as an affiliate by the New York State Association of Master Plumbers and also chartered as an affiliate of the National Association of Master Plumbers. Thereafter dissen-sion developed among certain of its officers and members culminating in the withdrawal of the dissenting group who organized themselves and others as a trade association under the Membership Corporations Law, the certificate being filed- with the Secretary of State, July 12,1948, under the name in controversy.

The petition also alleges that its members perform a considerable portion of all plumbing work done in New York City; that it is recognized as the collective bargaining agent for the plumbing industry by the building trade employers’ association of New York City; that it is the collective bargaining agent in a contract with Local Union No. 1 of the United Journeymen, Plumbers, Gas Fitters and Apprentices of the United States and Canada and that it shares in the administration of a welfare fund established under such agreement.

The petitioner alleges that by use in its name by the respondent of the words “ Contracting Plumbers Association ” it has appropriated and intends to appropriate in. substantial part the name, good will and prestige of petitioner and thereby create the impression that it is a branch or an affiliate of the petitioner and that such action on its part tends to mislead and deceive the public ” particularly in the building industry.

The opposing affidavits generally deny any such intent or purpose and, on the contrary, allege circumstances which it is claimed show its good faith and a right to use its name. That in the first instance it had submitted the name “ Brooklyn and Queens Master Plumbers Association, Inc.” which the Secretary of State had rejected because of conflict with the name of an existing association; that it limits its membership and activities to master plumbers doing business in Brooklyn and Queens. It is also chartered as an affiliate of the New York State association under the controverted name. That at all times it has maintained an office in Brooklyn and conducted its affairs under such name and title. Statistics are also developed which indicate, superficially at least, that the petitioner’s membership does not in fact perform a considerable portion of the plumbing work in the city; that of the 3,100 licensed master plumbers in New York City only 90 are currently members of the city association while of the 1,400 licensed plumbing contractors in Brooklyn and Queens, 67 are members of appellant association and only 4 are members of the city association.

The threshold question as to the availability of section 964 in a nonprofit trade association dispute as distinguished from commercial or trading corporations finds its answer in the initial words of the statute declaring: “No * * * corporation shall * * * use as * * * a corporate * * * name, for advertising purposes, or * * * for any other purpose, any name * * * which may deceive or mislead the public ”. (Emphasis supplied.)

Legislative intent is best gathered by according the language employed its usual and ordinary meaning. When so read the generality of the language here employed is broad enough to include both parties. The statute creates no new legal principle— at common law equity afforded a remedy for misuse of name in unfair competition which was not confined to commercial disputes. It included nonprofit corporations (B. P. O. E. v. Improved B. P. O. E., 205 N. Y. 459, 464; National Circle, Daughters of Isabella v. National Order of Daughters of Isabella, 270 F. 723). The parties here even though organized as nonprofit trade associations, are in a sense competitors, serving as they do a membership of licensed plumbers (cf. International News Service v. Associated Press, 248 U. S. 215).

In reaching this conclusion we have not overlooked certain lower court decisions which gave the impression without so ruling, that the statutory remedy was limited to cases involving commercial fraud (Matter of Hirsch v. Perlman, 268 App. Div. 1035; Matter of Overseas News Agency v. Overseas Press, 183 Misc. 40, affd. 268 App. Div. 856; Matter of Pignatelli v. Pignatelli, 175 Misc. 139). Our decision in Matter of Julius Restaurant v. Lombardi (supra) is not to the contrary for there we considered only the procedural question.

The proof here, as we view it, falls far short of the expressed showing that the words “ Contracting Plumbers Association ” as used are violative of section 964.

The statute so far as pertinent, provides: “No * * * corporation shall, with intent to deceive or mislead the public, asume, adopt or use as * * * a corporate * * * name, for advertising purposes, or for the purposes of trade, or for any other purpose, any name * * * or a part of any name * * * which may deceive or mislead the public as to the identity of such * * * corporation or as to the connection of such * * * corporation with any other * * * corporation ”. (Emphasis supplied.)

This, like many other legislative enactments, must be considered as a comprehensive effort to deal with the consequences of a single act either as a criminal offense or a civil wrong, depending upon its public impact. Severability depends upon circumstances but the substantive definition is equally applicable to either situation which is, “No * * corporation shall, with intent to deceive or mislead the public * * * use * * * a * * * name ’ ’. The significance and importance of this essential element is not extinguished by the latter provision that “ an injunction may be issued * * * without requiring proof that any person has in fact been deceived or misled thereby.” This latter provision is meaningless when lifted out of context. It must be read as part of the whole and when so read it becomes crystal clear why proof “ that any person has in fact been deceived or misled thereby ” is dispensed with. The wrong is in the use with intent. When that is established a case for summary relief is made out. Here the proof falls short of such a showing. In fact the answering affidavits tend to show the contrary.

The controverted name had the approval of the Secretary of State, the State and National Association of Master Plumbers, together with a large segment of the plumbing industry doing business in the boroughs of Brooklyn and Queens. It appears also that the use of the phrases “ Association of Contracting Plumbers ” or Contracting Plumbers Association ” is nationwide and that the national organization is encouraging the use of such phrases by all groups affiliated with it. Such words are of widespread and common usage in the plumbing trade. Under such circumstances no secondary meaning may be acquired. The petitioner, notwithstanding its prior organization, has no monopoly on the use of such terms. The very use of the terms in connection with New York City, Brooklyn and Queens indicates a separate and distinct entity and it is unreasonable to assume, without clear proof, that in such use the respondent-appellant intended to mislead or deceive any member of either association or any labor union with whom they bargain collectively or any trade association in the building industry particularly when its membership and activities are confined to geographical limits, and neither has any dealings with the general public as such. Section 964 is drastic in scope and content. The summary relief authorized should be invoked only when there is conclusive evidence of intent “ to deceive and mislead the public ”.

The orders should be reversed and the petition dismissed, without costs, and without prejudice to the commencement of an appropriate action in equity.

Loughran, Ch. J., Lewis, Conway, Desmond, Fuld and Froessel, JJ., concur.

Orders reversed, etc.


text:
    Walter Hanlon, Appellant, v. Macfadden Publications, Inc., Respondent.
    Argued April 4, 1951;
    decided June 1, 1951.

      John B. Doyle, Thomas R. McTigue, Frederic A. Johnson and Hugh G. Perry for appellant.
    I. Dismissal of the first cause of action alleged in the complaint, on the law, was error because, taken with the bill of particulars, it alleges a sufficient cause of action in fraud and deceit. (Green v. Doniger, 300 N. Y. 238; Ochs v. Woods, 221 N. Y. 335; Reno v. Bull, 226 N. Y. 546; Advance Music Corp. v. American Tobacco Co., 296 N. Y. 79; Morgan v. Skiddy, 62 N. Y. 319; Delano v. Rice, 23 App. Div. 327; Adams v. Gillig, 199 N. Y. 314; Albert v. Title Guar. & Trust Co., 277 N. Y. 421; Isman v. Loring, 130 App. Div. 845; Webster v. Longstaff, 263 App. Div. 930.) II. Plaintiff proved a flagrant fraud which induced him to continue in defendant’s employ at a reduced rate of compensation. (Davis v. Long Island R. R. Co., 301 N. Y. 450; Sadowski v. Long Island R. R. Co., 292 N. Y. 448; Horton v. New York Central R. R. Co., 237 N. Y. 38; Middleton v. Whitridge, 213 N. Y. 499; Blum v. Fresh Grown Preserve Corp., 292 N. Y. 241; Matter of Whipple, 294 N. Y. 292; Loewinthan v. Le Vine, 299 N. Y. 372; Rosen v. Equitable Paper Bag Co., 286 N. Y. 410; Horowitz v. La France Industries, 274 App. Div. 46; Vail v. Reynolds, 118 N. Y. 297; Weigel v. Cook, 237 N. Y. 136; Von Au v. Magenheimer, 126 App. Div. 257, 196 N. Y. 510.) III. Defendant’s fraud deprived plaintiff of earned commissions, $33,579, retained by defendant as the fruits of its fraud. This was the proper measure of damages, pleaded, proved and adopted by the parties. (Baily v. Hornthal, 154 N. Y. 648; Homin v. Cleveland & Whitehill Co., 281 N. Y. 484; Sager v. Friedman, 270 N. Y. 472; Reno v. Bull, 226 N. Y. 546; Urtz v. New York Central & H. R. R. R. Co., 202 N. Y. 170; Ochs v. Woods, 221 N. Y. 335; Allaire v. Whitney, 1 Hill 484; Northrop v. Hill, 57 N. Y. 351; Whipple v. Brown Bros. Co., 225 N. Y. 237.) IV. Defendant’s misrepresentations regarding the Salary Stabilization Board were also not true as affecting the legal status of plaintiff’s rights under the authority of the board. (Arman v. Structiform Engineering Co., 147 Neb. 658.)

      Henry E. Schultz, Joseph Schultz and Joseph E. Ginn for respondent.
    I. Plaintiff did not plead or prove a cause of action. (Ming v. Woolfolk, 116 U. S. 599.) II. In the fall of 1943, at the very time of the alleged misrepresentations, the Salary Stabilization Unit of the United States Treasury Department had in fact ruled that commissions similar to those payable to plaintiff could not be continued if the amounts to be received exceeded the commissions earned in the year 1942. The alleged representations regarding Stabilization Board policy, which defendant denied having given as a reason for its change of policy, were in fact true and therefore could form no basis for a cause of action. III. There was no basis for an award of damages for the years 1945 and 1946.
   Conway, J.

This is an action to recover damages sustained by plaintiff by reason of the deceit of the defendant, his employer. Plaintiff commenced to work for defendant in 1921 and by 1935, was advertising manager of a group of defendant’s magazines, earning, in addition to a base salary, a bonus or commission of 2% on all “billing” or sales of advertising space above a certain quota. This was an overriding commission in that plaintiff sold no advertising space himself but supervised the work of a group of salesmen, his commission being based upon the sales of such subordinate employees. Compensation on that basis continued through 1943. For the next year, 1944, plaintiff’s commission rate was reduced from 2% to one .half of 1% on certain billing above quota, and it is with the circumstances surrounding that reduction that we are here concerned.

Plaintiff had no formal contract of employment with defendant. He could have been discharged at any time or could have resigned at any time. The defendant employer at all times had the right to fix his compensation, to reduce it or to change it, without assigning any reason therefor. The employment was thus a hiring at will and the reduction in the commission rate iu 1944 constituted a material change in the terms of that hiring, resulting in a new or a rehiring. (Watson v. Gugino, 204 N. Y. 535, 541; Horowitz v. La France Industries, 274 App. Div. 46, 47.)

The present action is based upon the claim that defendant, by false and fraudulent representations, induced plaintiff to assent to the rehiring and to continue in defendant’s employ at the lowered commission rate, thereby causing him damage. Since plaintiff’s complaint has been dismissed as a matter of law after a jury verdict in his favor, we consider the facts in the light most favorable to plaintiff and give him the benefit of every favorable inference which may reasonably be drawn from the evidence.

On several occasions in the latter part of 1943, two of defendant’s executives talked with plaintiff about his commission rate. One, defendant’s vice-president in charge of advertising, told plaintiff that the Salary Stabilization Board (a wartime agency organized in the Treasury Department to regulate wages and salaries to aid in preventing inflation, hereafter referred to as Board) was concerned about all the money that the advertising department was making ” and was threatening “ to lock the top ”, i.e., to freeze the compensation of the advertising managers and salesmen at the dollar amount earned the previous year. Plaintiff objected that the principle of the 2% bonus was important to him, that his base salary was small in comparison with the character and responsibilities of his position but that he had been content to continue in defendant’s employ at a fairly nominal salary and take my income from the bonus arrangement * * *. When business was good it paid off well; when business was bad the company didn’t have to defray as much.” Plaintiff said he thought that his bonus arrangement was “ a time-honored one in American business ” and, in effect, that his services were worth at least what he had theretofore been receiving for them.

The vice-president said that he agreed with him. He urged plaintiff to ‘ ‘ keep your shirt on ’ ’ and promised that ‘ ‘ he was going to fight it.”

Subsequently, plaintiff inquired of him as to “ how he was getting along in his fight ”, and was told that no determination had yet been made by the Board. On other occasions, the vice-president told him that he was going to go before the Board himself, along with onr comptroller, and fight it himself in person ”, and, later, that he had been before the Board and had presented the case bnt that no decision had been made. Finally, he told plaintiff that, in view of the attitude of the Board, the defendant had decided to cut the commission rate for managers to the level above noted. The decision, he said, was “ designed to placate the Board ” so that the Board would not “ lock the top .completely.” Plaintiff replied that he thought the vice-president had done “ a very poor selling job on the Board ” and requested permission 1 ‘ to go to the Board and state my own case ”, but that was refused, the vice-president saying that “ he couldn’t have his managers trooping down to the Board with exceptions.” Plaintiff said he would be happy “ to play along with whatever was good for the country in the war ” but that he thought the issue should be met squarely, either compensation should be frozen at the previous year’s dollar amount or the long-standing commission rate honored and continued without reduction in the rate. To this, the vice-president replied that plaintiff “ should be a good soldier ”.

Plaintiff had similar conversations with defendant’s supervising advertising director and later its president, who likewise told plaintiff that the reduction of his commission rate was made “in an effort to placate the Board ”. “In all of these many discussions ”, plaintiff said, “ the issue had been the Salary Stabilization Board. It was the hete noir, if you want to use the expression.” He further stated that he had believed what these two officers had told him about the necessity of the reduction in commission rate in order to placate the Board and was induced by their statements to submit to the cut, for ‘ ‘ I had worked for them for 20 years, and I believed what they told me.” Plaintiff’s testimony as to his position in the dispute was supported by the introduction of certain documentary evidence, office memos which he had dictated at the time to the two officers mentioned.

Plaintiff thereafter continued in defendant’s employ, accepted L,he cut and was paid at the reduced commission rate for 1944, 1945, and through September of 1946, when he left defendant’s employ. Plaintiff then investigated the matter further by communicating with the former head of the Salary Stabilizatian Board in New York City and learned that defendant’s representation as to the necessity of the reduction to placate the Board was a cock-and-bull story ”.

Plaintiff also read into evidence portions of examinations before trial of defendant’s two executives already referred to, who conceded therein that they had never appeared before the Board in connection with plaintiff’s commission rate, that the Board had made no objection that the overriding commissions of the managers were too high, that there had been no direction by the Board to cut them down and that no threat had been made by the Board to freeze compensation at the dollar level of the previous year. In other words, the representations to plaintiff were false.

The case was submitted to the jury under a charge as to which there were no exceptions or requests by defendant. In the course of his charge, the court said: As a matter of the damage that the plaintiff is entitled to, if he is entitled to anything, he is entitled to the difference between what he would have gotten at two per cent and what he did get at one-half of one per cent. That is the measure of damage. ’ ’

The jury at first returned a verdict for plaintiff without specifying the amount thereof. The jury was sent back for further deliberations but returned almost immediately asking for instructions as to the amount of damages requested by the plaintiff in this action.”

The court then said: “ The amount that the plaintiff asks for is $33,579. I must say, however, that you must use your own judgment in arriving at any verdict. You have got to take different things into consideration. You are not bound by that figure. That is simply the amount that is asked. You must take into consideration that had he continued to work at that time, whether he would have earned that amount, whether by reason of illness, death, or any of the other elements, they might have been lessened. You can’t speculate in any verdict. If you are satisfied that he would have continued, then you will apply this other figure as that which is offered by the plaintiff, after having taken, of course, into consideration the other things involved, as I have suggested. You are not bound by that figure. This is the figure the plaintiff asks for.”

Defendant’s counsel again took no exception, but instead asked for an additional charge that, even if the jury find that “ a fraud has been committed on the plaintiff under which he is entitled to compensation ”, they could in their discretion award damages ‘ ‘ for one year, two years, two and one-half years, or no years at all.” The court so charged and defendant’s counsel further requested that there be read to the jury the ‘1 different amounts that he [plaintiff] has computed would have been due him for his commissions for the different years of 1944, 1945 and 1946.” That was done. The jury then returned a verdict in favor of plaintiff for the full amount, $33,579.

“ The essential constituents of the action [for deceit] are tersely and adequately stated as representation, falsity, scienter, deception and injury.” (Ochs v. Woods, 221 N. Y. 335, 338, and cases there cited; see, also, Reno v. Bull, 226 N. Y. 546, 550; Restatement, Torts, § 525; Prosser on Torts, pp. 705-706.)

In the case at bar, the evidence fully justifies findings that defendant represented to plaintiff that a reduction in his commission rate had been made necessary by the attitude of the Salary Stabilization Board; that this representation was made for the purpose of inducing plaintiff to consent to the cut in commission rate and to remain in defendant’s employ at the lowered rate; that the representation was entirely false and fraudulent, and known by defendant to be so, in that defendant had never been in any difficulty with the Board, its executives had never appeared before the Board in connection with plaintiff’s commission rate, and the Board had made no objection as to the amount of plaintiff’s commissions; that plaintiff believed the false representation and relied upon it; that his reliance was reasonable since he was not permitted to go before the Board personally to check its accuracy; and that induced by and in reliance upon the false representation, plaintiff submitted to the cut in his commission rate, and continued in defendant’s employ, rendering the same services as before but at a lower rate of compensation. All of these findings are amply supported by the proof and were implicit in the jury’s verdict in plaintiff’s favor. They cannot be seriously challenged now.

The dispute in the case at bar, at least upon the appeals, centers upon the question whether plaintiff sustained any damage or injury by relying upon the false representation. At the trial, as above noted, this point was not raised by defendant. On the contrary, the Trial Judge charged, without exception, that if the jury found that defendant had misrepresented to plaintiff, then he was dapiaged thereby and the measure of damage, with certain qualifications, was 11 the difference between what he would have gotten at two per cent and what he did get at one-half of one per cent.” Indeed, defendant’s counsel himself caused the dollar amount of such difference, for each of the years involved, to be read to the jury. Nevertheless, it is argued here by the defendant that the plaintiff did not prove that he was damaged by the false representation, and that consequently he has not established a cause of action.

Actual damage or injury to the plaintiff is, of course, an essential element of the action for deceit. (Urtz v. New York Central & H. R. R. R. Co., 202 N. Y. 170, 173; Ochs v. Woods, supra; Sager v. Friedman, 270 N. Y. 472, 479; Prosser on Torts, p. 768.) When, however, we accept plaintiff’s proof as true and give him the benefit of every favorable inference therefrom, there can be no doubt that he has here met that requirement. It is a permissible inference on this record that plaintiff would not have continued in defendant’s employ if he had known that defendant, in reducing his commission rate, was deliberately reducing his compensation for the benefit of the company, and was not acting under the compulsion of a governmental agency. What other purpose could defendant have had in making the false representation but to attempt to insure plaintiff’s continuance in its employ? The inference is plain that defendant feared that if plaintiff were told the truth he would leave defendant’s employ and go elsewhere in order to maintain his established commission rate. By deliberately falsifying the facts, defendant induced plaintiff to continue to render his services to defendant but at a lower rate of compensation. Plaintiff’s area of choice was unlawfully circumscribed. He relied upon the false representation, continued to give his services to defendant, and accepted in return a rate of compensation lower than he had been receiving. Defendant’s statements to plaintiff to keep your shirt on ” and that it would fight ” the case before the Board would alone justify a finding that plaintiff would have left defendant if his rate of compensation were merely reduced as a matter of company policy and not because of the Board. In effect, plaintiff was asked to stay on with defendant and was told that his services were actually worth what he had been receiving for them, but was falsely informed by defendant that for reasons beyond its control it was prohibited by law from paying him that value. This evidence, as a jury could find, established both the true value of plaintiff’s services and the fact that he had been induced to .go without part of such true value through the defendant’s deceit. If a jury should so find, they could then determine the extent of the injury and damage that was so inflicted upon the plaintiff.

The measure of damages in an action for deceit is firmly established. Plaintiff is entitled to indemnity for the actual pecuniary loss sustained as a direct result of the wrong. (Sager v. Friedman, supra, p. 481; Reno v. Bull, supra, pp. 552-553; 1 Clark, New York Law of Damages, § 421.) The instant case, while unusual on its facts, clearly calls for the application of this general rule. Plaintiff, of course, was not induced to part with any tangible object such as land, chattels or money as in the typical case of deceit. Instead, he parted with personal services. He was induced to render those services for a price fraudulently lowered. In the ordinary case of deceit, the measure of damage would be ‘ ‘ the difference between the value of the thing bought, sold or exchanged and its purchase price or the value of the thing exchanged for it ”. (Restatement, Torts, § 549, par. [a].) The only distinction in the present case is that the jury was required to calculate the value of plaintiff’s services instead of the value of the “ thing bought, sold or exchanged ”. The true measure of damages here is the difference between the value of plaintiff’s services and the price he was actually paid for them by reason of defendant’s deceit. That, in effect, we think was the measure of damages applied in the trial court when the two portions quoted from the charge (supra, p. 508) are read together. The rule might have been expressed more directly and explicitly, but defendant, which took no exceptions and made no requests but instead concurred in the charge as given, cannot now complain on that score.

If the plaintiff were induced by false and fraudulent representations to render services for defendant gratuitously, without any compensation therefor, there could certainly be no doubt that he would have sustained injury as a result of defendant’s wrong and that the measure of damages would be the reasonable value of the services fraudulently procured. Thus, it is said in Sedgwick on Damages (Vol. 2, § 673c), “ * * * so where the performance of the service by the servant is obtained by fraud of the master, who by his fraud induces the servant to serve gratuitously, the servant on discovering the fraud is entitled to recover the value of his services.” The measure of damage in that situation is the difference between the value of the services and zero, the amount received being nothing since the services were rendered gratuitously. The instant case differs from that situation only in degree. Here, plaintiff received some compensation for his services; but the rate of compensation was fraudulently lowered by the defendant employer. Plaintiff therefore was entitled to recover the difference between the true value of his services and the price he received for them. (Cf. Richard v. Stanton, 16 Wend. 25, 26-27.) It so happens that the jury in the case at bar decided that the true value of plaintiff’s services was an amount computed on the basis of the commission rate plaintiff enjoyed before the fraudulent reduction, even though, under the court’s charge, the jury could have arrived at a lesser figure.

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

Loughran, Oh. J., Lewis, Desmond, Dye, Fuld and Froessel. JJ., concur.

Judgments reversed, etc.