text:
    Frank G. Hanssel, Doing Business as Frank G. Hanssel Company, Respondent, v. P. Tomasetti Contracting Corporation, Appellant, Impleaded with Another.

      Argued April 15, 1940;
    decided May 28, 1940.

      Jesse L. Goldberg and David Epstein for appellant.
    The parties have agreed that the conclusion of the engineers of the Authority is binding. (Weston v. State, 262 N. Y. 46; Foundation Co. v. State, 233 N. Y. 177; Holdsworth v. Wills, Inc., 279 N. Y. 768; Del Balso Constr. Corp. v. City, 278 N. Y. 154; Leary v. City of Watervliet, 222 N. Y. 337; Matter of Semper v. Duffy, 227 N. Y. 151; Peterson v. City of New York, 205 N. Y. 323; Norcross v. Wills, 198 N. Y. 336; Mechanic’s Bank v. City of New York, 164 App. Div. 128; Lowry v. Inman, 46 N. Y. 119; Fortunato v. Patten, 147 N. Y. 277; Nolan v. Whitney, 88 N. Y. 648; Flaherty v. Miner, 123 N. Y. 382; O’Brien v. Mayor, 139 N. Y. 543; Mac Knight Flintic Stone Co. v. Mayor, 160 N. Y. 72; Sweet v. Morrison, 116 N. Y. 19.) The contract provides that there can be no charge for extra work unless agreed upon in advance. Plaintiff has failed to establish an agreement with the defendant to pay for the alleged extra work. (Miller v. Schloss, 218 N. Y. 400; DeKlyn v. Gould, 165 N. Y. 282; Delany & Co. v. Duvoli, 278 N. Y. 328; Smith v. Vara, 136 Misc. Rep. 500; New York Tel. Co. v. Jamestown Tel. Corp., 256 App. Div. 1; Eustathopoulo v. Gillespie, 218 App. Div. 179; Mahar v. Compton, 18 App. Div. 536; Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310; Wittwer v. Hurwitz, 216 N. Y. 264; Howells v. Stroock, 50 App. Div. 344; Sidney Glass Works v. Barnes & Co., 86 Hun, 374; McCotter v. Mayor, 37 N. Y. 325.)

      Clayton M. Smith for respondent.
    The conclusion of the engineers for the Sewer Authority is not binding upon the plaintiff. (Uvalde Contracting Co. v. City of New York, 160 App. Div. 284; St. George Construction Co. v. City of New York, 205 N. Y. 126; Borough Construction Co. v. City of New York, 200 N. Y. 149; President, Managers & Co. D. & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250; Seward v. City of Rochester, 109 N. Y. 164; Degnon Contracting Co. v. City of New York, 235 N. Y. 481; Cauldwell-Wingate Co. v. State, 276 N. Y. 365; McGovern v. City of New York, 202 App. Div. 317; 235 N. Y. 277; Pilkington Co. v. City of New York, 211 App. Div. 558; Gearty v. Mayor, 171 N. Y. 73.) The plaintiff is entitled to recover against the defendant-appellant the cost of the extra or additional labor and material on the basis of and according to the provisions of the contract made by the latter with the Sewer Authority and which had been made a part of the contract between the plaintiff and the defendant-appellant. (Evelyn Building Corp. v. City of New York, 257 N. Y. 501; Mason Co. v. City of New York, 249 App. Div. 538.) The plaintiff having performed extensive extra or additional work for which he received no payment either under the lump sum bid price or the unit prices, is entitled to payment under “ Article XI — Extra work, mcreased compensation ” of the contract. (Faber v. City of New York, 222 N. Y. 255; Foundation Co. v. State of New York, 233 N. Y. 177; McGovern v. City of New York, 202 App. Div. 317; 235 N. Y. 275; Walbridge-Aldinger Co. v. Rudd, 26 Fed. Rep. [2d] 636.)
   Conway, J.

On May 10,1937, P. Tomasetti Contracting Corporation (hereinafter called Tomasetti) entered into a contract with Buffalo Sewer Authority (hereinafter called Sewer Authority) for the construction of certain portions of the sewer system in the city of Buffalo. Included in the contract was division X, item X-l, covering the construction of the Cornelius creek intercepting and overflow chamber and connection. The agreed price for that portion of the work was $60,000. The contract covered other items also but with them we are not concerned on this appeal. Nor are we concerned with the cause of action of plaintiff against Sewer Authority. The trial court dismissed the complaint against the Sewer Authority and plaintiff appealed to the Appellate Division from that decision and judgment. After the affirmance by the Appellate Division, no further appeal was taken by plaintiff to this court.

The contract between Tomasetti and Sewer Authority provided, in the event that extra work was required:

The amount of compensation to be paid to the Contractor for any extra work as so ordered shall be determined as follows:
“ 1. By such applicable unit prices, if any, as are set forth in the contract, or
“ 2. E no such unit prices are so set forth, then by a lump sum mutually agreed upon by the Authority, and the Contractor; or
‘‘ 3. If no such unit prices are so set forth and if the parties cannot agree upon a lump sum, then by the actual net cost in money to the Contractor of the materials and of the wages of applied labor (including premium for workmen’s compensation insurance) required for such extra work, plus such rental for plant and equipment (other than small tools) required and approved for such extra work, plus fifteen per cent (15%) as compensation, for all other items of profit and cost or expense, including administration, overhead, superintendence, insurance (other than workmen’s compensation insurance), materials used in temporary structures, allowances made by the Contractor to the subcontractors, additional premium upon the performance bond of the Contractor and the use of small tools.”

On June 22, 1937, Tomasetti entered into a contract with the plaintiff, Frank G. Hanssel, doing business as the Frank G. Hanssel Company (hereinafter referred to as Hanssel). By the terms of that contract Hanssel agreed to furnish the labor, equipment and material called for in doing the work in division X, item X-l, for the agreed price of $49,145. Tomasetti did not reserve to itself the doing of any work under its contract with Sewer Authority. Hanssel was to do all of it.

Tomasetti’s contract with Hanssel provided:

Twelfth. It is mutually agreed that the intent of this agreement is that the respective rights and obligations of the parties hereto shall, except as otherwise provided herein, be precisely the same as the respective rights and obligations of the contractor and the Buffalo Sewer Authority with respect to items X-l and X-5 of Division X of the contractor’s agreement with the Buffalo Sewer Authority, dated, as aforesaid, May 10,1937.” (Italics added.)

Among those matters in the contract between Tomasetti and Hanssel which were “ otherwise provided herein ” was extra work. As to that, the contract provided:

“ Third. The amount to be paid to the subcontractor for items not provided in the contractor’s contract with the Buffalo Sewer Authority such as subsequent items or extra work orders and for which no unit or lump sum price is provided, shall be agreed upon between the parties hereto in advance of the work being done, subject, however, to the approval of the Buffalo Sewer Authority, should the same be required.” (Italics added.)

Hanssel was approved as subcontractor by Sewer Authority and made ready to do the work. Then an unfortunate situation developed. On July 23, 1937, Sewer Authority wrote to Tomasetti advising that it had come to its attention that there were four lines of sixty-inch pipes in the bed of Cornelius creek. Sewer Authority directed that the excavation be carried to a point sufficient to expose the pipes so that they might be examined and stated that the payment therefor would be under item X-8, additional earth excavation.” That excavation was made and paid for as stated and there is no dispute with reference thereto. Hanssel testified that he had his equipment ready about September 1st and began driving piles about September 8th. The old pipes were found to be three or more feet below the lowest point to be excavated. The increased depth necessitated the use of longer piles. Under the pipes was found timber about which Hanssel had never been told. After the pipes were exposed, plaintiff notified Sewer Authority and its engineers made an inspection about November 10th or 11th. Then followed conflicting orders from the engineers of Sewer Authority. First Hanssel was told to fill the excavation with washed crushed stone and to build bulkheads so that the stone would not slide. Then Hanssel was told to take out the crushed stone. That was at a time when Hanssel was ready to pour concrete upon it. After the removal of the crushed stone, work was suspended on the orders of the engineers of Sewer Authority and nothing was done for some days. Then Hanssel was directed to drive wooden piles between the old pipes. Upon the insistence of the engineers Hanssel ordered the piles although he told the engineers there was no room between the pipes to drive them. The engineers of Sewer Authority were depending upon a blueprint which was inaccurate. Then Hanssel was told to take out the pipes, which would necessitate breaking them up. Hanssel had been directed to purchase the washed crushed stone on November 11th and began to break up the old pipes on November 22nd. On November 18th Hanssel wrote a letter to Tomasetti. This letter and those following determine whether or not there was any contract between Hanssel and Tomasetti for the extra work done by Hanssel on a cost plus basis and whether there is any right of recovery in this action. I shall, therefore, quote in part the correspondence.

The letter of November 18, 1937, detailed at some length the difficulties under which Hanssel had been laboring. It then continued:

“You realize that this delay has seriously hindered us from completing our contract and caused us a great additional expense.

“ In view of the above, we wish to state before proceeding further with this contract, we demand that we receive from you, officially in writing, instructions to proceed on a definite plan with the understanding that we are to be reimbursed for all additional expense we have been put to for proceeding thus far, on the indefinite plans, plus a reasonable profit and an extension of time for every day delayed; also an extension of time for any additional work we are authorized to perform that was not shown on the original drawings or specifications.

“ Due to the unusual condition we have encountered, a condition that Greeley & Hansen should have been familiar with before designing this project, as the information regarding this unusual condition has been on file in the city engineer’s office for many years, we cannot give you an estimate as to what the additional cost will be, but will proceed on this additional work on a cost plus basis, plus a reasonable profit, as there is not the slightest reference in the specifications regarding this condition, and therefore is not covered under our contract. * * *

Trusting we may hear from you without the least possible delay so we will be able to complete our contract, we remain.” (Italics supplied.)

It will be noted that this letter did not seek payment for the extra work on a basis of cost plus fifteen per cent as outlined in the contract between Sewer Authority and Tomasetti. The letter was signed by Hanssel and addressed to Tomasetti,

Under date of November 18, 1937, Tomasetti wrote the following letter to the engineers of Sewer Authority:

We are attaching herewith a copy of letter from our subcontractor Frank G. Hanssel in reference to his work at Cornelius Creek under Item X-l, Contract 20. In his letter he refers to yours of July 23rd which orders the uncovering of the 60" cast iron pipe referred to, also furnishing and driving of sheeting for the cofferdam of sufficient length to permit the dewatering to that elevation, so you would be able to make a study of the conditions at a future date.
“ As he enumerates in his letter of subsequent conditions he has encountered and his inability to proceed on some definite plan, we are taking this matter up with you so that the work may proceed and be prosecuted immediately.”

On November 19th the engineers of Sewer Authority wrote the following letter to Tomasetti:

“ We acknowledge receipt of your letter of November 18, 1937 enclosing copy of letter from your subcontractor, the Frank G. Hanssel Company, referring to conditions connected with construction of the Cornelius Creek Intercepting and Overflow Chamber.
“ The subcontractor’s letter has been carefully read, and you are advised that it contains many misstatements of fact and unwarranted conclusions.
“ If, as Mr. Hanssel states, a dangerous condition exists at the outlet of the trunk sewer, it is his responsibility to provide necessary protection at once.
“ A work order is about to be issued covering the necessary work to be done to provide proper foundation for this chamber.”

On November 19, 1937, the engineers of Sewer Authority also wrote to Tomasetti the following which appears to be a work order:

Under the provisions of your contract with the Buffalo Sewer Authority for the construction of the Intercepting Sewer, Division X, and in accordance with the specifications, you are hereby ordered to excavate below the subgrade of Cornelius Creek Intercepting and Overflow chamber to depths ordered by the Engineers, to furnish and place round timber piles in designated locations and to increase the thickness of the concrete bottom of the chamber as ordered by the Engineers.

The purpose of this work is to provide a proper foundation for this chamber.

Measurement and payment for this work will be made under the provisions of the following items:

Item X-8, Additional Earth Excavation
“ Item X-10, Additional Concrete, Class A-2
“ Item X-24, Timber Piles
Upon completion of this work, a supplement to this work order will be issued, setting forth the quantities for which payment will be made.”

On November 22, 1937, Tomasetti wrote Hanssel as follows:

We are enclosing herewith copy of the letter from Greeley & Hansen in reply to yours of November in connection with the conditions existing at Cornelius Creek Intercepting and Overflow Chamber, in which they comment on the statement of facts and unwarranted conclusions and also the serious condition if it exists at the outlet of the sewer is your responsibility.
Attached herewith also is a copy of Greeley & Hansen’s Engineers work order #7 of which they mention that the extra work involved will be paid for under X-8, X-10 and X-24-
I was speaking to Mr. Sellnow this afternoon and he informs me that they are at present making up plans showing the layout of piles and it will be forwarded as soon as we receive it.”

The final letter was from Hanssel to Tomasetti, undated:

“ This will acknowledge receipt of your letter of November 22nd, in which you enclose copy of letter from Greeley & Hansen, dated November 19th, 1937 signed by F. C. Sellnow, which instructs us to perform additional work in connection with this contract.
Please be advised that we are proceeding with the additional work as directed on the basis of our letter to you of November 18th, 1937, which states that we will make an extra charge for all additional work not covered by the original drawings, specifications or contract.”

It is clear from this correspondence that there was no agreement between Hanssel and Tomasetti in advance of the work being done.” There was no agreement at all. There was a proposal but no acceptance. Instead there was a rejection of the proposal. Under the terms of the contract between Hanssel and Tomasetti there had to be an agreement “ in advance of the work being done.”

Hanssel seeks to escape from the situation in which he finds himself by reason of the correspondence, in the following ingenious manner: Disregarding the request in his letter to Tomasetti under date of November 18, 1937, for instructions officially in writing, he calls attention only to the portion of the same sentence in which he sought instructions “ to proceed on a definite plan;” then, disregarding the second paragraph in the letter from Tomasetti to him under date of November 22, 1937, he calls attention to the third paragraph of that letter in which Tomasetti wrote: “ I was speaking to Mr. SeUnow this afternoon and he informs me that they are at present making up plans showing the layout of piles and it will be forwarded as soon as we receive it;” Hanssel then claims that when later the engineers of Sewer Authority delivered to him a blueprint (Exhibit 21) that that constituted the definite plan requested in his letter of November 18th and that he was thereupon authorized to go ahead on the basis of that letter. This despite his own final letter, undated, to Tomasetti in which he advised that he was proceeding with the additional work on the basis of his letter of November 18, 1937, without making any reference to a plan, definite or otherwise. The statement of the contention is a statement of its refutation.

In the complaint the eighth allegation is as follows:

Eighth. That the greater portion of the extra work and extra materials necessitated by the various orders alleged above, was of such a nature as was not provided for in the unit price provisions of the original general contract, or original subcontract, and that by reason of that fact plaintiff notified defendant, P. Tomasetti Contracting Corporation, which in turn communicated such notification to the defendant, Buffalo Sewer Authority, that plaintiff would proceed with the extra work necessitated by the aforementioned orders on a cost basis, plus a reasonable profit; that the defendants, and each of them, assented to this offer to proceed on a cost plus basis, and directed the plaintiff to proceed, and plaintiff did proceed and duly perform all the necessary extra labor and furnished all the necessary extra material and extra supplies, pursuant to such agreement, beginning on or about the 10th day of November, 1937, and completing such extra work on or about the 6th day of April, 1938-.’"

Nowhere in the record does it appear “ that the defendants, and each of them, assented to this offer to proceed on a cost plus basis * * Tomasetti’s answer to Hanssel’s proposal that he proceed on the basis of cost plus a reasonable profit was to transmit a copy of a work order from Sewer Authority directing plaintiff to perform-the work at unit prices. Nothing further from an acceptance or assent can be imagined.

Finding No. 12 is without evidence to support it. The trial court found that plaintiff performed extra work and furnished extra materials for which Tomasetti agreed to pay in accordance with the contract between Sewer Authority and Tomasetti. To the contrary, the trial court found in proposed finding No. 17 of Tomasetti that Hanssel received verbal orders from the engineers of Sewer Authority to remove the iron pipes and crushed fill in the absence of and without the knowledge, consent or approval of Tomasetti. Finding No. 17 was in accordance with the evidence. Hanssel had taken over Tomasetti’s contract in its entirety and received all his orders from the engineers of Sewer Authority. Tomasetti never kept a foreman or superintendent on the work and Hanssel never received a work order from Tomasetti authorizing him to break up and remove the sixty-inch pipes. In view of finding No. 17 and the absence of evidence to support finding No. 12, the judgment may not be sustained.

This disposition of the case renders it unnecessary to pass upon the question whether the action of the engineers of Sewer Authority was arbitrary and unreasonable in insisting that, under the terms of the contract, removal of the pipes was additional earth excavation.” The engineers of Sewer Authority ruled under the power conferred upon them by article XXIII of the contract between Tomasetti and Sewer Authority that the removal and disposal of all excavated material except rock was to be paid for under Item X-8 as additional earth excavation ” and that that included pipes, since pipes were not rock.

Inasmuch as Hanssel has accepted payment at unit prices, under X-8 for the work done, under protest, there is nothing further to be litigated.

The judgments should be reversed and the complaint dismissed, with costs in all courts. (See 283 N. Y. 697.)

Lehman, Ch. J., Loughean and Finch, JJ., concur; Tippet, J., dissents; Sears and Lewis, JJ., taking no part.

Judgments reversed, etc.


source: Caselaw Access Project

author: Sears, J.

license: Public Domain

text:
    Max Mencher, Appellant, v. Edward A. Richards et al., Respondents, Impleaded with Others.
    Argued April 22, 1940;
    decided May 28, 1940.

      Donald I. Peyser and Lester Nurick for appellant.
    Since the action is against directors of a moneyed corporation, former section 48, subdivision 3, of the Civil Practice Act by its terms cannot apply to any portion of the complaint. If the plaintiff can secure complete and adequate relief at law, section 49, subdivision 4, is applicable and former section 48, subdivision 3, by its own terms can have no application. (Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Hayes v. Brooklyn Heights R. R. Co., 200 N. Y. 183; Federal Debenture Co. v. Harriman Nat. Bank & Tr. Co., 254 App. Div. 362; Bucklin v. Ford, 5 Barb. 393; Warren Defining & Chemical Co. v. Sebring, 192 App. Div. 14; Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214; 280 N. Y. 551; Dumbadze v. Ligmante, 244 N. Y. 1; Van Schaick v. Aron, 170 Misc. Rep. 520.) Since the action is in equity, the ten-year period of limitations provided in section 53 of the Civil Practice Act is the applicable statute. (Potter v. Walker, 276 N. Y. 15; Bosworth v. Allen, 168 N. Y. 157; Lattin v. McCarty, 41 N. Y. 107; Woolson Spice v. Columbia Trust Co., 110 Misc. Rep. 687; Cruikshank Building Corp. v. Egbert, 129 Misc. Rep. 268; National Bank of Commerce v. Wade, 84 Fed. Rep. 10; Everitt v. Everitt, 41 Barb. 385; McCormack v. Halstead, 132 Misc. Rep. 916; Kelly v. Potter, 16 N. Y. Supp. 446; Chance v. Guaranty Trust Co., 251 App. Div. 855; Pitcher v. Sutton, 238 App. Div. 291; McKenzie v. Wappler Electric Co., 128 Misc. Rep. 827; Matter of Menahan, 224 App. Div. 139; Matter of Rogers, 153 N. Y. 316; Galway v. Metropolitan El. Ry. Co., 128 N. Y. 132; Brinckerhoff v. Bostwick, 99 N. Y. 185; Reubens v. Joel, 13 N. Y. 488; Boot v. Railway Co., 105 U. S. 189; Gilbert v. Ackerman, 33 App. Div. 371; 159 N. Y. 118; Hanna v. Lyon, 35 Misc. Rep. 517; 179 N. Y. 107.)

      Franklin S. Wood, Paul A. Crouch and Clarence Fried for George C. Holmberg et al., amici curiæ.

      John P. McGrath and Raymond J. McGrover for Edward A. Richards et al., respondents.
    The three-year and six-year Statutes of Limitations are not mutually exclusive. (Curtis v. Connly, 257 U. S. 260; Anderson v. Gailey, 33 Fed. Rep. [2d] 589; Schmidt v. Merchants Despatch Trans. Co., 270 N. Y. 287.) Plaintiff can procure full and adequate relief at law for all wrongs charged in the complaint except possibly the charges of secret profits against certain defendants. (Potter v. Walker, 276 N. Y. 15; Gerdes v. Reynolds, 281 N. Y. 180; Dykman v. Keeney, 154 N. Y. 483; O’Brien v. Fitzgerald, 143 N. Y. 377; 150 N. Y. 572; Hun v. Cary, 82 N. Y. 65.) The three-year Statute of Limitations applies to the entire complaint regardless of whether it be deemed equitable or legal in whole or in part. (Brinckerhoff v. Bostwick, 99 N. Y. 185; Gilbert v. Ackerman, 159 N. Y. 118; Van Schaick v. Cronin, 237 App. Div. 7; Ford v. Clendenin, 215 N. Y. 1; Treadwell v. Clark, 190 N. Y. 51; Gilmore v. Ham, 142 N. Y. 1; Loder v. Hatfield, 71 N. Y. 92.)

      Bruce R. Duncan for Empire Title and Guarantee Company, respondent.

      Ralph M. Carson for Henry Russell et al., amici curiæ.

    The three-year statute exclusively governs all actions, whether legal or equitable, against stockholders or directors of a moneyed corporation to enforce a liability created by statute. (Schram v. Cotton, 281 N. Y. 499; Wright v. Russell, 155 Misc. Rep. 877; 269 N. Y. 683; Nettles v. Childs, 281 N. Y. 636; Reisman v. Hall, 257 App. Div. 892; Platt v. Wilmot, 193 U. S. 602; Ramsden v. Gately, 142 Fed. Rep. 912; Whitman v. Atkinson, 130 Fed. Rep. 759; Hilliker v. Hale, 117 Fed. Rep. 220; Platt v. Hungerford, 116 Fed. Rep. 771; Seattle Nat. Bank v. Pratt, 103 Fed. Rep. 62; 111 Fed. Rep. 841; Hobbs v. National Bank of Commerce, 96 Fed. Rep. 396; 178 U. S. 613; Hillmer v. Anderson, 15 Fed. Supp. 457; Brinckerhoff v. Bostwick, 99 N. Y. 185; Hirshfeld v. Fitzgerald, 157 N. Y. 166; Gilbert v. Ackerman, 159 N. Y. 118; Van Schaick v. Cronin, 237 App. Div. 7; Shepard Co. v. Taylor Pub. Co., 234 N. Y. 465.) The ten-year statute has no application to liabilities imposed by common law or by statute on stockholders or directors of a moneyed corporation. (Butler v. Johnson, 111 N. Y. 204; Peters v. Delaplaine, 49 N. Y. 362; Cwerdinski v. Bent, 256 App. Div. 612; 281 N. Y. 782; Mason v. Henry, 152 N. Y. 529; Welles v. Yates, 44 N. Y. 525.)

      A. Hayne Yampert, Thomas A. Sully and David Joyce for Mabon & Company et al., amicus curiæ.

    The ten-year Statute of Limitations, Civil Practice Act, section 53, applies only to such causes of action for which no other period of limitation is prescribed in any of the preceding sections of article 2 of the Civil Practice Act. (Galway v. Metropolitan Elev. Ry. Co., 128 N. Y. 132; Gilmore v. Ham, 142 N. Y. 1; Hofferberth v. Nash, 191 N. Y. 446; Shepard Co. v. Taylor Publishing Co., 234 N. Y. 465; Schmidt v. Merchants Despatch Transp. Co., 270 N. Y. 287; Brinckerhoff v. Bostwick, 99 N. Y. 185; Buttles v. Smith, 281 N. Y. 226; Keys v. Leopold, 241 N. Y. 189; Dwinelle v. Edey, 102 N. Y. 423; Rhinelander v. Farmers’ Loan & Trust Co., 172 N. Y. 519; Pollitz v. Wabash R. R. Co., 207 N. Y. 113.) The three-year Statute of Limitations applied to actions against directors of moneyed corporations to enforce a liability created by the common law. (Gilbert v. Ackerman, 159 N. Y. 118; Brinckerhoff v. Bostwick, 99 N. Y. 185; Van Schaick v. Cronin, 237 App. Div. 182.) The three-year Statute of Limitations applied to actions against stockholders of moneyed corporations or banking associations to enforce their liability created by statute. (Brinckerhoff v. Bostwick, 99 N. Y. 185; Bicknell v. Hood, 168 Misc. Rep. 727; Bicknell v. Central Hanover Bank & Trust Co., 169 Misc. Rep. 7; 255 App. Div. 956; Wright v. Russell, 155 Misc. Rep. 877; 245 App. Div. 708; 269 N. Y. 683; Reisman v. Hall, 257 App. Div. 892; Platt v. Wilmot, 193 U. S. 602; Schram v. Cotton, 281 N. Y. 499; Hillmer v. Anderson, 15 Fed. Supp. 457; Nettles v. Childs, 281 N. Y. 636.)
   Sears, J.

The part of the order which is before us for review denies an examination before trial of the defendant Empire Title & Guarantee Company and certain individual defendants, directors of the Empire Title & Guarantee Company. The result of the appeal depends upon the particular section of the Statute of Limitations applicable to the plaintiff’s alleged causes of action to which the examinations relate. The action is a stockholder’s derivative action to recover on behalf of the corporate defendant from the individual defendants for losses resulting from illegal investment by the individual defendants of the funds of the corporate defendant. The corporate defendant is concededly a moneyed corporation. The acts which constitute the alleged causes of action occurred in 1929 and 1930 in respect to which the examinations are' sought and are not alleged to have resulted in profit for the individual defendants. This action was begun March 3, 1937. The pertinent parts of the three sections of the Civil Practice Act here involved are:

“ § 48 [as it was before amendment, L. 1936, ch. 558]. Actions to be commenced within six years. The following actions must be commenced within six years after the cause of action has accrued:

££ * * *
it ^ * * *
“ 3. An action to recover damages for an injury to property, or a personal injury except in a case where a different period is expressly prescribed in this article.”

§ 49. Actions to be commenced within three years. The following actions must be commenced within three years after the cause of action has accrued:

* * *
££ 2 * * *
ÍÍ g * * *
“ 4. An action against a director or stockholder of a moneyed corporation, or banking association, to recover a penalty or forfeiture imposed, or to enforce a liability created by the common law or by statute. The cause of action is not deemed to have accrued until the discovery by the plaintiff of the facts under which the penalty or forfeiture attached or the liability was created. ’ ’
§ 53. Limitation where none specially prescribed. An action, the limitation of which is not specifically prescribed in this article, must be commenced within ten years after the cause of action accrues.”

In Potter v. Walker (276 N. Y. 15) we had before us a stockholder’s derivative action against directors of a corporation (which was not a moneyed corporation) and we there held in applying the Statute of Limitations that the action was to be treated in the same way as though the corporation were the plaintiff, and, that if the action was to recover profits which the director had wrongfully received and for which he would be liable to account, it was equitable in nature and subject to the ten-year statute, but, if the action was for damages suffered by the corporation from the negligent action of the director where there had been no participation by him in the receipt of wrongful profits, the six-year statute (as it then was) applied. Here the causes of action are of the latter class and the ten-year statute is not applicable. The six-year statute is applicable under the authority of the Potter case (supra) unless the fact that the corporation involved is a moneyed corporation requires a different ruling because of the quoted language of subdivision 4 of section 49. We need not inquire as to the reason for this statutory distinction between cases involving directors of moneyed corporations and those involving directors of other corporations. The statute is unambiguous and definite. The causes of action here, as to which examinations are sought and have been denied, are the very causes of action which subdivision 4 of section 49 specifies. It seems clear that that provision is here applicable.

The respondents urge, however, that even though subdivision 4 of section 49 is applicable, subdivision 3 of section 48 (the six-year statute as above quoted) is also applicable and that the two provisions must be construed together so that in any event, even though the facts under which the liability was created were not discovered, the Statute of Limitations would have run at the expiration of six years. We do not so read the statutes. Some force must be given the words in the six-year statute, section 48, “ except in a case where a different period is expressly prescribed in this article.” While the action here is to be looked at as one for an injury to property, a different period is expressly prescribed in subdivision 4 of section 49. Further, in section 49, subdivision 4, which contains the provision that the statute runs only from discovery of the facts, there is no limitation upon the time of the discovery, nor is it easily understood why there should be. In 1936 (L. 1936, ch. 558) the six-year period of limitation contained in section 48, subdivision 3, was reduced to a three-year period. (See § 49, subd. 7, as now in effect.) If before the amendment section 48, subdivision 3, was applicable so as to confine the period of limitation to six years in any event despite section 49, subdivision 4, then after the amendment subdivision 7 of section 49 would similarly apply. Thus the exception in subdivision 4 would be rendered nugatory, for in any case, despite the time of discovery, a three-year period of limitation would prevail.

For these reasons we conclude that subdivision 4 of section 49 is the only Statute of Limitation here applicable, and, as it does not appear what was the date of the discovery of the facts under which the liability was created, the examination should not have been denied as matter of law.

The order, so far as appealed from, should be reversed, with costs, and the certified question answered in the negative. (See 283 N. Y. 776.)

Loughran, Finch, Sippet and Lewis, JJ., concur; Lehman, Ch. J., and Conway, J., taking no part.

Order reversed, etc.


author: Lewis, J.

text:
    City Bank Farmers Trust Company, as Trustee under a Deed of Trust Made by Mary G. Abbey, Appellant and Respondent, v. Susan M. Arnold et al., Defendants; Bessie Mead et al., Appellants; Barbara E. Arnold et al., Respondents and Appellants, and Yale University et al., Respondents.

      Argued April 23, 1940;
    decided May 28, 1940.

      Grace Humiston for Bessie Mead, appellant.
    The additional gifts of £30,000 and £2,000 are now lapsed gifts because title to Chelsea Lodge did not pass to The Royal Academy of Arts. As they are not trust funds and no provision was made for distribution of lapsed gifts in the deed of trust, they should be treated as intestate funds and pass to the next of kin. (City Bank Farmers Trust Co. v. Arnold, 268 N. Y. 297; Salsman v. Greene, 130 Misc. Rep. 497; 231 App. Div. 781; 256 N. Y. 636; Matter of Harrington, 243 App. Div. 235; Matter of Rappolt, 140 Misc. Rep. 239; Fralick v. Lyford, 107 App. Div. 543; 187 N. Y. 524.)

      Raymond M. Tierney and Ambrose J. Delehanty for Julia B. Holmes et al., appellants.
    The doctrine of cy pres should not be applied to the gift of £30,000 to the Royal Academy of Arts. (Fralick v. Lyford, 107 App. Div. 543; 187 N. Y. 524; Matter of Compton, 72 Misc. Rep. 289; Matter of Rappolt, 140 Misc. Rep. 239; Matter of O’Hanlon, 147 Misc. Rep. 546; Camp v. Presbyterian Society, 105 Misc. Rep. 139; Matter of Wilson, 1 Ch. Div. 314.) The fund cannot properly be distributed to the beneficiaries to repair the previous abatement caused by insufficiency of funds. (Lyons v. Steinhardt, 37 Misc. Rep. 628.) The property passes by intestacy. (Wetmore v. N. Y. Institute for the Blind, 56 Hun, 313.)

      Benjamin Nassau and Charles Angulo for plaintiff, appellant and respondent.
    If the gifts provided for in the deed of trust were contained in a will it would be quite clear, under well-established rules, that the “ bequest ” in paragraph (j), if it were held to fail, would form part of the general estate of the decedent and would first be applicable to the payment of other general legacies under the will and thereafter fall into and form part of the residuary. (Carter v. Presbyterian Board of Education, 144 N. Y. 621; Albany Hospital v. Albany Guardian Society, 214 N. Y. 435;
      Matter of Title Guarantee & Trust Co., 195 N. Y. 339; Matter of Farmers’ Loan & Trust Co., 186 App. Div. 722; 226 N. Y. 691; Wetmore v. New York Institute for the Blind, 56 Hun, 313.) The provisions of paragraph (j) of the deed of trust violate the rule against perpetuities. (Matter of Potts, 205 App. Div. 147; 236 N. Y. 658; Maynard v. Farmers’ Loan & Trust Co., 208 App. Div. 112; 238 N. Y. 592; Long v. Union Trust Co., 272 Fed. Rep. 699; 280 Fed. Rep. 686; Matter of Swain, L. R. 1 Ch. Div. 669; Brandenburg v. Thorndyke, 139 Mass. 102; Matter of Fletcher, 280 N. Y. 86; Cruikshank v. Home for the Friendless, 113 N. Y. 337.)

      Cornelius J. Smyth for Barbara E. Arnold et al., defendants, appellants and respondents.
    The fact that title to Chelsea Lodge did not vest in the Royal Academy of Arts makes it impossible to carry out the intent of the settlor as to the gifts under paragraph (j) and forbids the application of the cy pres doctrine. (City Bank Farmers Trust Co. v. Arnold, 268 N. Y. 297; Mount v. Tuttle, 183 N. Y. 358; Saltsman v. Greene, 136 Misc. Rep. 497; 256 N. Y. 636; Fralick v. Lyford, 107 App. Div. 543; 187 N. Y. 524; Ely v. Megie, 219 N. Y. 112; Matter of Fletcher, 280 N. Y. 86; Matter of Merritt, 222 App. Div. 773; 249 N. Y. 532.)

      Louis Bevier for National Academy of Design et al., as trustees, defendants, appellants and respondents.
    The fund may not go to Yale University for the reason that the cy pres doctrine may only be invoked in an effort to carry out as nearly as possible the intention of the settlor and may not be invoked to reach a result contrary to that intention as it appears in the trust deed. (Matter of Rappolt, 140 Misc. Rep. 239; Matter of Fletcher, 280 N. Y. 86; Bowditch v. Attorney-General, 241 Mass. 168; Imbrie v. Steen, 96 N. J. Eq. 190; Larkin v. Wykoff, 75 N. J. Eq. 462.)

      E. Lacy Finnan and Patterson Humphrey for Incorporated Edwin Austin Abbey Memorial Scholarships et al., defendants, appellants and respondents.
    The validity of the gift of £30,000 under paragraph (j) is to be determined by the law of England; under English law the vesting of the gift is dependent upon an event which may not happen within the period limited by the rule for the vesting of future estates and is void; and the gift over is also void. (Shannon v. Irving Trust Co., 275 N. Y. 95; Matter of Bewick, [1911] 1 Ch. 116; Matter of Wood, [1894] 3 Ch. 310; Thomas v. Thomas, 87 L. T. 58; Attorney-General v. Gill, 2 P. Wms. 369; Matter of Roberts, 50 L. J. C. 265; Matter of Johnson, [1886] 2 Equity, 716; Matter of White, 33 Ch. Div. 449; Matter of Stratheden, [1894] 3 Ch. 365; Matter of Barnett, 24 T. L. R. 788; Beard v. Westcott, 5 B. & Ald. 801; Monypenny v. Dering, 2 DeG., M. & G. 145; Thatcher’s Trust, 26 Beav. 365.) Since the primary gift to the Boyal Academy of Arts and the secondary gift to the National Academy of Design are void, the proceeds become a part of the general trust estate. (Levy v. Levy, 33 N. Y. 97; Matter of Crawford, 113 N. Y. 366; Carter v. Presbyterian Board of Education, 144 N. Y. 621; Booth v. Baptist Church, 126 N. Y. 215; Albany Hospital v. Albany Guardian Society, 214 N. Y. 435; De Themmines v. Bonneval, 5 Russ. 288; Powell v. Rawle, 18 Eq. 243; Chamberlayne v. Brockett, 8 Ch. App. 206; Matter of Stratheden, [1894] 3 Ch. 365.)

      Frederic H. Poor, Jr., for Royal Academy of Arts, defendant, appellant and respondent.
    The doctrine of cy pres is inapplicable to the gift of £30,000 provided for in paragraph (j) of the deed of trust. (Matter of Wilson, [1913] 1 Ch. 314; Clark v. Taylor, 1 Drewry, 642; Matter of Packe, [1918] 1 Ch. 437; Matter of Rymer, [1895] 1 Ch. 19; [1895] 1 Ch. 27; Matter of Emson, [1905] 74 L. J. Ch. 565; Matter of Fletcher, 280 N. Y. 86; Matter of Merritt, 222 App. Div. 773; Saltsman v. Greene, 130 Misc. Rep. 497; 231 App. Div. 781; 256 N. Y. 636; Matter of Rappolt, 140 Misc. Rep. 239; Matter of O’Hanlon, 147 Misc. Rep. 546.)

      Morgan J. Callahan, Jr., and Thomas Boucher for Yale University, respondent.
    The facts and circumstances call for the application of the doctrine of cy pres to the fund set up under paragraph (j) of the deed of trust. (City Bank

      Farmers Trust Co. v. Arnold, 268 N. Y. 297; Matter of Gary, 248 App. Div. 373; 272 N. Y. 635; Moggridge v. Thackwell, 7 Vesey Jr. 36b; Matter of Parkes, 25 T. L. R. 523; Matter of Peel, [1921] 2 Ch. Div. 218; Matter of Robinson, 203 N. Y. 380; Matter of Cunningham, 206 N. Y. 601; Matter of MacDowell, 217 N. Y. 454; Butterworth v. Keeler, 219 N. Y. 446; Matter of Morris, 227 N. Y. 141; Matter of Neher, 279 N. Y. 370; Matter of Mills, 121 Misc. Rep. 147.) It was the clear intent of the settlor to preserve and maintain the works of art with the fund created by paragraph (j) of the deed of trust. (Hamburger v. Cornell University, 240 N. Y. 328; Kibbe v. City of Rochester, 57 Fed. Rep. [2d] 542; Matter of Tiffany, 157 Misc. Rep. 873; Green v. Britten, 42 L. J. R. [Ch.] 187; Camp v. Presbyterian Soc. of Sachets Harbor, 105 Misc. Rep. 139; Brice v. All Saints Memorial Chapel, 31 R. I. 183; Ely v. Attorney-General, 202 Mass. 545; Norris v. Loomis, 215 Mass. 344.) The other charities named in the deed of trust and the next of kin have no valid claims to the fund. (Attorney-General v. Ironmongers’ Co., 10 Cl. & F. 908; Matter of MacDowell, 217 N. Y. 454; Matter of Davis, [1902] 1 Ch. Div. 876.) Paragraph (j) of the deed of trust is valid. (Chamberlayne v. Brackett, 8 Ch. 206; 4 Halsbury’s Laws of England, 175; Matter of Potts, 205 App. Div. 147; 236 N. Y. 658; Matter of Juilliard, 238 N. Y. 499; Inglis v. Trustees of Sailors’ Snug Harbor, 3 Pet. [U. S.] 99; Odell v. Odell, 10 Allen, 1; Company of Pewterers v. Governor of Christ’s Hospital, 1 Vern. 161; Matter of LeFevre, 233 N. Y. 138; Maynard v. Farmers Loan & Trust Co., 208 App. Div. 112; 238 N. Y. 592; Matter of Roe, 281 N. Y. 541; Matter of DeBancourt, 279 Mich. 518; Chadwick v. Chadwick, 37 N. J. Eq. 71; Hill v. Gianelli, 221 Ill. 286; Belfield v. Booth, 63 Conn. 299; Bird v. Merklee, 144 N. Y. 544; Russell v. Allen, 107 U. S. 163.)

      John J. Bennett, Jr., Attorney-General (Robert P. Beyer of counsel), respondent.
    The provisions of the deed of trust, in providing for the public exhibition of the contents of Chelsea Lodge, created a trust for educational purposes.
      (Matter of Gary, 248 App. Div. 373; 272 N. Y. 635; Matter of Neher, 279 N. Y. 370; Butterworth v. Keeler, 219 N. Y. 446; Hamburger v. Cornell University, 204 App. Div. 664; 240 N. Y. 328; Matter of Frasch, 245 N. Y. 174; Matter of Judd, 242 App. Div. 389; 270 N. Y. 516; Matter of Hall, 247 App. Div. 719; 272 N. Y. 428; Matter of Merritt, 124 Misc. Rep. 709; 249 N. Y. 532; Matter of Dazian, 167 Misc. Rep. 151; 255 App. Div. 951; Matter of Browning, 165 Misc. Rep. 819; 254 App. Div. 843.) The settlor intended the £30,000 endowment as part of the public trust and same is to be transmitted to the substituted trustee nominated by the court. (Matter of Neher, 279 N. Y. 370; Matter of MacDowell, 217 N. Y. 454; Matter of Durbrow, 245 N. Y. 469.)
   Lewis, J.

Mary Gertrude Abbey, the settlor of the trust with which we are concerned upon this appeal, was the widow of Edwin Austin Abbey, an American artist of distinction in the field of mural painting. After the death of her husband in England in 1911, Mrs. Abbey continued to five there until her death on June 20, 1931. She never relinquished her American domicile.

On April 28, 1931, less than two months prior to her death, she executed two instruments by which she provided for the disposition of her entire estate. One instrument was a deed of trust by which she conveyed to the plaintiff, as trustee, the major portion of her property, reserving the income to herself for life and directing that upon her death the principal of the fund be paid to certain charitable institutions and to individuals named as donees, some of which donees were “ preferred.” The second instrument was her will by which she disposed of the remaining minor portion of her estate, including her residence in England, the devise of which has become an important factor in the present controversy.

Mrs. Abbey was survived by no children or descendants, father or mother, or by any brother or sister. Her nearest surviving kin were first cousins. By her will, which was admitted to probate in Surrogate’s Court, New York county, she devised her English residence, Chelsea Lodge at No. 42 Tite Street, S. W. 3, Chelsea, London, to the Trustees of the Royal Academy of Arts, an English corporation, in trust for the purpose of establishing a museum of art for the benefit of the public. She also bequeathed to the Royal Academy of Arts the contents of Chelsea Lodge, including books and works of art, chief among which were her husband’s paintings, drawings, studies and sketch books. In describing the use to which this property was to be put the will provided: “ This house is to be used for the purpose of displaying to the best advantage the works of art and other objects of interest therein, my husband’s works to take precedence of all others.”

In connection with this testamentary disposition of Chelsea Lodge and its contents the testatrix provided by paragraph (j) of the deed of trust, executed simultaneously with her will, that “ If upon the death of the Settlor, under the provisions of her * * * will * * * the title to * * * ‘ Chelsea Lodge ’ * * * and the contents [thereof] * * * shall pass to the Trustees of the Royal Academy of Arts in London, England, then to pay over out of the principal of said trust fund to the said Trustees of the Royal Academy of Arts the sum of Thirty thousand Pounds Sterling (£30,000) in trust, * * * and the income shall be used for the safe custody, upkeep, maintenance, payment of rates and taxes, if any, on the said house and land, insurance and repair of said house and its contents, including the provision of such appurtenances as may be deemed necessary by the said Trustees for the proper display of the works of art or other objects therein and for the payment of a Curator and servants for cleaning, for the proper maintenance of the-house as a Museum of Art, and its contents and the making and printing of catalogues and descriptive booklets. * * * In the event that by reason of fire or other accident the continuance of the said house and its contents as a Museum, as aforesaid, shall become impossible, the above mentioned fund of Thirty thousand pounds sterling (£30,000) shall be added to ‘ The Edwin Austin Abbey Memorial Trust Fund for Mural Painting in the United States of America ’ above mentioned in paragraph (f) of this Agreement and shall be paid over to the National Academy of Design in the City of New York, State of New York, as Trustee of the last mentioned fund.”

After the death of Mrs. Abbey- circumstances unforeseen occurred to thwart her plans thus laid. In the course of administration proceedings Chelsea Lodge was sold to raise funds sufficient to pay English death taxes. In consequence the title to Chelsea Lodge never passed to the Royal Academy of Arts. Lacking facilities for exhibiting the works of art. and other contents of Chelsea Lodge bequeathed to the Royal Academy of Arts, its trustees found it impracticable to take possession of the bequest and accordingly joined with the Attorney-General of England in giving formal consent to the transfer by the English administrator to the plaintiff trust company, as executor of Mrs. Abbey’s will, of the paintings, drawings, studies and sketch books of Edwin Austin Abbey and other articles among the contents of Chelsea Lodge. The plaintiff executor thereupon applied to Surrogate’s Court, New York county, under section 12 of the Personal Property Law (Cons. Laws, ch. 41) for a decree determining that the works of art and related articles received from the English administrator be administered cy pres in a manner which the Surrogate should determine would accomplish the general purpose of the bequest. Then followed, without objection, a Surrogate’s decree applying to the bequest the doctrine of cy pres and directing the plaintiff executor to transfer the art collection to Yale University, there to be used for exhibitional and educational purposes.

No party to this appeal objects to the decree by which the respondent Yale University was given possession and control of the works of art which had been originally bequeathed to the Royal Academy of Arts. Upon this accounting by the plaintiff trustee the controversy concerns chiefly the distribution to be made of the settlor's gift of thirty thousand pounds sterling under paragraph (j) of the deed of trust. The challenge by the appellants goes to the propriety of the order by Special Term, affirmed by the Appellate Division, one justice dissenting, which directs the plaintiff trustee to administer that gift cy pres by paying it to Yale University.

We agree with the disposition made of the gift in question. On a prior occasion, when the same deed of trust, executed by Mrs. Abbey, was before this court for consideration, it was said in the opinion by Judge Crouch that “ * * * upon her death by far the larger part of the principal was, in a manner intended to perpetuate the name and fame of her husband, devoted to purposes broadly educational and benevolent.” (City Bank Farmers Trust Co. v. Arnold, 268 N. Y. 297, 301.) Our adherence to that view has not been shaken as we have dealt with the problems which the present appeals present. The dominant note in paragraph (j) of the trust indenture and in the “ Seventh ” paragraph of the settlor’s will is her desire to give permanence to her husband’s achievements as an artist whose ability found its highest expression in mural painting. But there is clearly manifest an intent by the settlor to promote the style of painting peculiar to her husband’s murals which she endeavored to accomplish by making available for study not alone his paintings but his “ drawings, studies and sketches, including sketch books.” We aré told by various appellants before us that there was in her expressed intent, when viewed in a light purely legalistic, a specific purpose,” as distinguished from a general charitable purpose. But again we conclude — in this instance with reference to paragraph (j) — that the gift intended was to be “ * * * devoted to purposes broadly educational and benevolent.” Thus classified, and to avoid a failure of the settlor’s gift because of its relation to that part of the “ Seventh ” paragraph of her will which has become inoperative, we believe that the doctrine of cy pres was properly applied to effectuate her general purpose. (Matter of Neher, 279 N. Y. 370, 374; Matter of MacDowell, 217 N. Y. 454, 465, 466; Malter of Gary, 248 App. Div. 373, 375; affd., 272 N. Y. 635; American Law Institute, Restatement of the Law of Trusts, § 399; Biscoe v. Jackson, 35 Ch. Div. 460; Matter of Wilson, [1913] 1 Ch. 314, 321.)

We are not unmindful of the rule in Matter of Fletcher (280 N. Y. 86). But there, unlike the present case, there was no evidence of a general charitable intent by the donor and the will contained a definite provision for a gift over to a named beneficiary.

It has been suggested that the gift provided by paragraph (j) — the amount of which has been reduced one-third by abatement and by administrative charges — is excessive and that a portion should go to other preferred ” donees to lessen the abatement they have suffered. We cannot say in the circumstances disclosed by the record that the cost of the custody, maintenance and exhibition of three thousand objects of art by any institution which might have been designated by the application of the cy pres doctrine, is so at variance with the income available from the gift as to negative an intent by the settlor that the entire gift should be used as the source of income with which to maintain the collection for public benefit.

The recital in the decision at Special Term that the fund created by paragraph (j) is not a trust but an outright gift does not make inapplicable the doctrine of cy pres. (Pers. Prop. Law, § 12; Matter of Neher, supra; Matter of Gary, supra; Sherman v. Richmond Hose Co., 230 N. Y. 462, 467.)

Nor does the language of paragraph (j), as we read it, violate the rule against perpetuities. The trust indenture expresses the settlor’s intent that the gift of thirty thousand pounds sterling should vest in the donee at her death — not at some later date. The language is: “ B upon the death of the Settlor the title to Chelsea Lodge and its contents should pass to the Royal Academy of Arts, then the gift of thirty thousand pounds should be paid to that institution. The gift thus intended being, as we believe, for a general charitable purpose, there was implicit in the settlor’s language the legal inference that if for any reason not mentioned in the deed of trust, title to Chelsea Lodge should not pass to the Trustees of the Royal Academy of Arts, then the gift of thirty thousand pounds should be paid over upon her death to an institution appropriately designated by a court, upon the application of the cy pres doctrine. In either event the gift vests “ upon the death of the Settlor.” (Matter of Potts, 205 App. Div. 147; affd., 236 N. Y. 658. Cf. Matter of Juilliard, 238 N. Y. 499, 506.) The settlor’s language permits of no inference that a period may elapse between the death of the settlor and the vesting of the gift of thirty thousand pounds.

The exercise of the cy pres doctrine always involves a large measure of discretion.” (Sherman v. Richmond Hose Co., supra, p. 473.) We find in the record nothing to indicate an abuse of that discretion by Special Term. As to any questions of law argued by the appellants severally and not discussed herein, our views accord with the decision at Special Term, affirmed by the Appellate Division.

The judgment should be affirmed, with costs to all parties appearing by separate counsel and filing separate briefs, payable out of the fund.

Lehman, Ch. J., Loughban, Finch, Rippey, Seabs and Conway, JJ., concur.

Judgment affirmed, etc.


author: Per Curiam.

text:
    Mabel F. Stevens, Appellant, v. Peter J. Breen et al., Defendants, and Freeport Point Shipyard, Inc., Respondent.
    Argued April 23, 1940;
    decided May 28, 1940.

      Edward J. Crowe and Harold V. Seiferd for appellant.
    The enforcement of plaintiff’s mortgage by foreclosure is a matter of absolute legal and constitutional right, which cannot be denied or impaired simply on the ground that the “ result ” is “ harsh and unjust.” (Monroe County Sav. Bank v. Baker, 147 Misc. Rep. 522; Brooklyn Free Kindergarten Society v. Elbran Realty Corp., 255 App. Div. 852; Graf v. Hope Building Corp., 254 N. Y. 1; Ferlazzo v. Riley, 278 N. Y. 290; Hoard v. Luther, 251 App. Div. 692; Lomar Holding Corp. v. Cripple Bush Realty Corp., 265 N. Y. 463; Emigrant Industrial Sav. Bank v. Van

      Bokkelen, 269 N. Y. 110; Strochak v. Glass Paper Making Supplies Co., 239 App. Div. 312; Guaranteed Title & Mortgage Co. v. Scheffres, 275 N. Y. 30; Matter of City of New York [Elm St.], 239 N. Y. 220.) There was no hardship in the result. Defendant’s position is solely the result of his own negligent conduct, to which the plaintiff in no way contributed. (M. R. M. Realty Co. v. Title Guarantee & Trust Co., 270 N. Y. 126.)

      John S. Russell and Richard P. Charles for respondent.
    No right of plaintiff has been denied or impaired. (Matter of the City of Buffalo, 78 N. Y. 362; McCall v. McCall, 54 N. Y. 541; Ladd v. Stevenson, 112 N. Y. 325; Hatch v. Central Nat. Bank, 78 N. Y. 487; Barrett v. Third Ave. Ry. Co., 45 N. Y. 628.)
   Per Curiam.

While the order of the Appellate Division, reversing the judgment and granting a new trial, was on the law and the facts, it is clear from the court’s opinion that it was made in the exercise of its discretion in the interest of justice.” In view of the fact that certain defenses were not raised, in the first trial, which defenses, within reasonable expectation might cause the trial court to arrive at a different result, there has been no arbitrary abuse of discretion by the Appellate Division. Under these circumstances, the reversal and the granting of a new trial by the Appellate Division presents no question for review in this court.

The order should be affirmed and judgment absolute ordered against the appellant on the stipulation, with costs in all courts.

Lehman, Ch. J., Loughran, Finch, Bjppey, Sears, Lewis and Conway, JJ., concur.

Ordered accordingly.


author: Lehman, Ch. J.

text:
    In the Matter of the Will of Banned Friend, Deceased. Douglass Newman et al., as Committee of Annie Ratkowsky, an Incompetent Person, Appellants; Isidor Friend, as Trustee under the Will of Banned Friend, Deceased, et al., Respondents.

      Argued May 4, 1940;
    decided May 28, 1940.

      Joshua Edelman and Irvin A. Edelman for appellants.
    The life estates for the “ widows ” of testator’s sons in validly suspend the power of alienation. (Matter of Franklin Trust Co., 190 App. Div. 575; Matter of Wilcox, 194 N. Y. 288; Meeker v. Draffen, 201 N. Y. 205; Cogan v. McCabe, 23 Misc. Rep. 739; Matter of Perkins, 245 N. Y. 478; Matter of Tamargo, 220 N. Y. 225; Matter of Nelson, 268 N. Y. 255; Matter of Hills, 264 N. Y. 349; Schettler v. Smith, 41 N. Y. 328; Durfee v. Pomeroy, 154 N. Y. 583; Tiers v. Tiers, 98 N. Y. 568; Matter of Harris, 152 App. Div. 52; Matter of Kerwin, 161 Misc. Rep. 364; Motter of Milhau, 151 Misc. Rep. 283; Wright v. Mercein, 34 Misc. Rep. 414; Williams v. Alt, 226 N. Y. 283; Man v. Man, 197 App. Div. 547; Matter of Liberman, 279 N. Y. 458.) There is no further valid disposition of the invalid life estates for the sons’ “ widows,” which are distributable via intestacy. (Schettler v. Smith, 41 N. Y. 328; Purdy v. Hayt, 92 N. Y. 446; Kalish v.
      Kalish, 166 N. Y. 368; Matter of Horner, 237 N. Y. 489; Matter of Silsby, 229 N. Y. 396; Schlereth v. Schlereth, 173 N. Y. 444; Matter of Barnes, 155 Misc. Rep. 320; Matter of Chapman, 169 Misc. Rep. 1035; Matter of Perkins, 245 N. Y. 478.)

      Maxwell A. Gronich for Isidor Friend, as trustee, respondent.
    The life estates given to “ the widow ” of Sol Friend and “ the widow ” of Ike Friend in paragraphs 14a and 14c of the testator’s will are valid. (Matter of Evans, 234 N. Y. 42; Scott v. Guernsey, 48 N. Y. 106; Matter of Pulis, 220 N. Y. 196; Miller v. Gilbert, 144 N. Y. 68; Matter of Corlies, 150 Misc. Rep. 596; Matter of King, 200 N. Y. 189; Matter of Milhau, 151 Misc. Rep. 283; Man v. Man, 197 App. Div. 547; Davis v. Kerr, 3 App. Div. 322; Allen v. Allen, 149 N. Y. 280; Beers v. Narramore, 61 Conn. 13; Van Brunt v. Van Brunt, 111 N. Y. 178; Durfee v. Pomeroy, 154 N. Y. 583; Tiers v. Tiers, 98 N. Y. 568; Meeker v. Draffen, 201 N. Y. 205; Matter of Kerwin, 161 Misc. Rep. 364.) Division of a residuary estate into four parts, each limited upon one life, coupled with a direction that upon the termination of one of the trusts, the corpus thereof be added to the trusts for the remaining lives, does not violate the rule against perpetuities. (Vanderpoel v. Loew, 112 N. Y. 167; Schey v. Schey, 194 N. Y. 368; Orr v. Orr, 147 App. Div. 753; 212 N. Y. 615; Boynton v. Lahens, 81 Misc. Rep. 352; Chastain v. Dickinson, 138 App. Div. 746; 201 N. Y. 538.)

      Alexander Pfeiffer for Martha Simon et al., respondents.
    The trusts forvthe lives of the widows of testator’s sons are valid. (Williams v. Alt, 226 N. Y. 283; Wood v. Lucy, Lady Duff-Gordon, 222 N. Y. 88; Burnett v. Wells, 289 U. S. 670; Schlettler v. Smith, 41 N. Y. 328; Matter of Coley, [1903] 2 Ch. Div. 102; Beers v. Narramore, 61 Conn. 13; Anshutz v. Miller, 81 Penn. St. 212; Matter of Solms, 253 Penn. St. 293; Van Brunt v. Van Brunt, 111 N. Y. 178; Meeker v. Draffen, 201 N. Y. 205; Allen v. Allen, 149 N. Y. 280; Man v. Man, 197 App. Div. 547; Davis v. Kerr, 3 App. Div. 322;
      Neponsit P. Q. Assn. v. Emigrant Industrial Sav. Bank, 278 N. Y. 248; Towne v. Eisner, 245 U. S. 418.) If the trusts for the lives of the widows of testator’s sons are invalid they must be excised and the residue accelerated. (Matter of Durand, 250 N. Y. 45; Matter of Trevor, 239 N. Y. 6; Matter of Horner, 237 N. Y. 489; Smith v. Chesebrough, 176 N. Y. 317; Kalish v. Kalish, 166 N. Y. 368; Matter of Berry, 154 App. Div. 509; Matter of Murray, 75 App. Div. 246; Hascall v. King, 162 N. Y. 134; Henderson v. Henderson, 113 N. Y. 1; Herzog v. Title G. & T. Co., 177 N. Y. 86; Matter of Abbey, 98 Misc. Rep. 506; 181 App. Div. 395; Matter of Central Union Tr. Co., 193 App. Div. 292; Carrier v. Carrier, 226 N. Y. 114; Matter of Gallien, 247 N. Y. 195; Matter of Silsby, 229 N. Y. 396; Oliver v. Wells, 254 N. Y. 451.)

      Ludlow S. Fowler and Thomas Stokes for Celia Friend et al., respondents.
    The trusts for the widows of the sons are valid. (Van Brunt v. Van Brunt, 111 N. Y. 178; Davis v. Kerr, 3 App. Div. 322; Allen v. Allen, 149 N. Y. 280; Beers v. Narramore, 61 Conn. 13; Anshutz v. Miller, 81 Penn. St. 212; Matter of Solms, 253 Penn. St. 293; Matter of Coley, [1903] 2 Ch. Div. 102.) There is no rule which necessitates a different construction for the words “ wife ” and “ widow.” (Schettler v. Smith, 41 N. Y. 328; Tiers v. Tiers, 98 N. Y. 568; Durfee v. Pomeroy, 154 N. Y. 583; Van Brunt v. Van Brunt, 111 N. Y. 178; Davis v. Kerr, 3 App. Div. 322; Man v. Man, 197 App. Div. 547; Meeker v. Draffen, 201 N. Y. 205; Allen v. Allen, 149 N. Y. 280.)

      Benjamin Esberg for Benjamin W. Huebsch et al., as administrators with the will annexed of Joshua Kantrowitz, deceased, respondents.
    The trust for the life of the widow of testator’s son, as set up in paragraph Fourteenth, subdivision (a), is. valid. (Matter of King, 200 N. Y. 189; Van Brunt v. Van Brunt, 111 N. Y. 178; Anshutz v. Miller, 81 Penn. St. 212; Beers v. Narramore, 61 Conn. 13; Davis v. Kerr, 3 App. Div. 322; Schettler v. Smith, 41 N. Y. 328; Meeker v. Draffen, 201 N. Y. 205; Purdy v. Hayt, 92 N. Y. 446; Man v. Man, 197 App. Div. 547; Central Trust Co. v. Egleston, 185 N. Y. 23.)

      William M. Silverman and Herbert Friedman for Milton Ratkowsky, respondent.
    The dominant purpose and intent of the testator was to dispose of his entire estate, to benefit his sons and daughters, to provide for his grandchildren and to provide an income for the wives of his sons during the rest of their natural lives or until they remarry. (Davis v. Kerr, 3 App. Div. 322; Schlettler v. Smith, 41 N. Y. 328.) Where a will is susceptible of two interpretations, one of which would render it valid and the other invalid, the presumption is that a valid disposition was intended. (Davis v. Kerr, 3 App. Div. 322.) .
   Lehman, Ch. J.

The testator died on June 30, 1932. Four children, two daughters and two married sons, survived him. In his will (paragraph fourteenth) he directed his executors to divide his residuary estate into four equal parts. In four separate clauses of the same paragraph he then disposed of the four parts. In each of such clauses he provided that one share should be held in trust during the lifetime of the child named in that clause and the interest paid to such child and after the death of the life beneficiary leaving issue, the testator devised that share to such issue. In the contingency that the life beneficiary of any share died without issue, the testator made other disposition of that share. The validity of the testamentary disposition of the shares held in trust for the daughters is not challenged. Upon the death of each the share was devised absolutely to remaindermen. There is no suspension of the power of alienation of those shares beyond two fives in being at the death of the testator under any possible construction of the will or in any contingency. The questions presented upon this appeal concern only the validity of the testamentary disposition of the two shares held in trust for the benefit of the testator’s two sons.

The two clauses of the residuary paragraph of the will which dispose of the two shares of which the testator’s sons, Sol and Ike, were the fife beneficiaries are identical except for the name of the beneficiary. We quote plause “ a;”

“a: One of such equal shares and parts, I give, devise and bequeath unto my said Executors, in trust, to safely keep, invest and re-invest the same, and to collect and receive the rents, issues, interest and income thereof, and to apply the net amount of the said rents, issues, interest and income to and for the use and benefit of my son Sol Friend, for and during the term of his natural fife, and upon the death of my said son Sol Friend, I direct my said Executors to divide the principal thereof into as many equal parts as there are children of my said son Sol Friend, him surviving, and I give, devise and bequeath one of such equal shares or parts to each of the said children of my son Sol him surviving, per stirpes and not per capita, equally share and share alike. Should my said son Sol die without leaving issue him surviving, then and in that event, I direct my said Executors to divide the principal of the trust fund in this subdivision created, into two equal shares or parts, and I direct that one of such shares or parts shall revert to and form part of my residuary estate, and I direct my said Executors to apply the rents, issues, interest and income of the remaining one-half share or part to and for the use and benefit of the widow of my said son Sol, for and during the term of her natural life, or until she re-marries, and upon the happening of either event, the said remaining one-half share or part shall revert to and become part of my residuary estate.”

Sol Friend died on June 2, 1933, without issue. His wife survived him. Ike Friend died eight days thereafter. Like his brother he left a wife but no issue him surviving. Under the terms of the will, the disposition of the remainder of the fund held in trust for each son depended upon alternative contingencies, which could be determined only upon the death of the life beneficiary. In one contingency — the death of the life tenant leaving issue — the fund would go absolutely to such issue. In such contingency there would be no suspension or restraint of the power of alienation beyond one life, and the disposition would be valid. Since neither son died leaving issue, we are concerned only with the limitation to take effect upon the alternative contingency — the death of the life tenant without issue. In that contingency one-half of the fund was immediately to revert and form part of the residuary estate of the testator and the other half was to be held in trust for the life of the widow and after her death become part of the residuary estate.

In proceedings for the settlement of the account of the executors and for a construction of the will, the committee of one of the testator’s next of kin has challenged the validity of the provisions of the will for the benefit of the widows of the two sons. The sons were married to them at the time the testator executed the will, but it is said that at the death of the testator it was possible that either son might survive his wife and might then marry a woman not yet born at the death of the testator. In that event, a trust for the life of the son and thereafter for the life of his “ widow ” would not terminate upon the death of two persons in being at the death of the testator, if the term widow ” is broad enough to include not only the wife to whom the son was married at the death of the testator but any woman whom the son might marry thereafter. This court has said that a testamentary disposition which would in any possible contingency attempt to create such a trust would be invalid, for “ in determining the validity of limitation of estates * * * it is not sufficient that the estates attempted to be created may, by the happening of subsequent events, be terminated within the prescribed period, if such events might so happen that such estates might extend beyond such period.” (Schettler v. Smith, 41 N. Y. 328, 334.) The Surrogate held, however, that the testator in this case intended that after the death of each son without issue, a part of the share held in trust for him should continue to be held in trust for his widow ” only if the wife of such beneficiary, who was known to the testator and was in the testator’s mind when he executed the will, survived her husband and that the will is misread if the word “ widow ” is given wider scope. We agree with the interpretation which, under the circumstances of this case, the Surrogate has given to the word “ widow.”

Concededly, however, after the death of each widow the testamentary disposition of the fund held in trust for her is invalid. She would be the second life beneficiary and any additional life estate would violate the statute against perpetuities; and since the testator has provided that the fund shall, at the death of the widow, become part of his residuary estate, and since, under the terms of the will, each part of the residuary estate must be held in trust for one of the testator’s children during the life of that child, it cannot be questioned that in some contingencies there would be a suspension of the power of alienation beyond two lives. So the Surrogate has held in regard to the funds held for the widows of both sons, and no appeal has been taken from that part of his decision by any party.

The question remains whether the provision of the will that the remaining one-half of the share held in trust for each son shall immediately, after his death without children, revert to and become part of the residuary estate is valid. Upon Sol’s death, one-half of the share held in trust for him was then added to the shares held in trust for the testator’s three surviving children. Under the terms of the will, the shares of the residuary estate held in trust for the two daughters would, upon the death of the life beneficiary, be paid over to the remaindermen absolutely. Thus, the part of the share of the residuary estate which was originally held in trust for Sol and then added to the share held in trust for the testator’s daughters, would in no contingency be held in trust for more than two fives in being. That is not true of the part added to the share held in trust for the testator’s son Ike. As we have said, the clause of the will providing for the disposition of the share held in trust for Ike was in the same words as the clause providing for the disposition of the share held in trust for Sol. Under the terms of the will, one-half of the trust fund would be held in trust for his widow and the other half would be held in trust for the testator’s surviving children. Since at the death of Ike, the part or sub-share, which at Sol’s death was added to the principal of the fund held in trust for Ike, had already been held for two lives in being, the Surrogate was constrained to hold that no part of it could again be added to any trust fund in accordance with the provision of the will, but passed to the persons entitled to take the property of the testator as if he had died intestate.

At the testator’s death, when the testamentary disposition of the property took effect, it was, of course, impossible to foretell which son would survive the other or whether either son would survive his wife. If the limitations after the first life estate are given effect, then in some contingencies the share held for either son might be held in trust for only one life; in other contingencies, a one-sixth part of such share would be held in trust for more than two lives. If the validity or invalidity of the testamentary disposition is tested not “ by the happening of subsequent events ” but by every possible contingency ” which might occur after the will took effect, in accordance with the rule stated in Schettler v. Smith (supra), then the same taint which rendered invalid the testamentary disposition of part of the share directed to be held in trust for Sol was inherent in the testamentary disposition of the share directed to be held in trust for Ike; for the disposition was in the same terms and subject to the same contingencies. Nevertheless, perhaps by inadvertence, the Surrogate did not decree that one-sixth of the share which the testator directed should be held in trust for Ike and which would have been added at Ike’s death to the principal of the fund held in trust for Sol if Sol had survived Ike, passed as intestate property, and not under the will, after both Ike and Sol had died; though he did decree invalid the attempted testamentary disposition after Ike’s death of the part of the share originally held in trust for Sol, which at Sol’s death had been added to the principal of the trust for the benefit of Ike.

Only one of the respondents attempts to sustain this ruling. From the practical standpoint the ruling is not very important to any party and the question involved was not stressed either in the courts below or here. The test of the validity of limitations is always whether an estate attempted to be created must in every possible contingency terminate within two lives in being. That rule is complemented by the further rule that “ a limitation * * * made to take effect on two alternative events ” will be sustained if in every possible contingency the estate would terminate within the statutory period, though the limitation which would take effect if the alternative event had taken place would violate the statute. (Schettler v. Smith, supra, p. 336.) In accordance with that complementary rule, the disposition of the fund held for either son would have been valid if such son had died leaving issue. It has, however, no application here. The contingency upon which the testator provided that a part of the share held for each son shall become part of the residuary estate is the death of the life beneficiary without issue. The death of the brother of the life beneficiary before the life beneficiary was not a contingency which would give rise to any other gift or limitation. It was a contingency which would only determine when the trusts would terminate. The gift or limitation was bound to result in the suspension of the power of alienation beyond two lives if the life beneficiary died before his brother. Even an alternative limitation can be given no effect unless that limitation “ by no possibility and in no contingency can endure longer than during the existence of two lives in being.” (Schermerhorn v. Cotting, 131 N. Y. 48, 63.)

It follows that the order of the Appellate Division and the decree of the Surrogate’s Court should be modified by providing that upon the death of both Sol Friend and Ike Friend, one-sixth of the principal of the trust funds established for them by clauses “ a ” and “ c ” of paragraph fourteen of the will passed to the persons entitled to take the property of the testator as if he had died intestate, and as so modified, affirmed with costs, payable out of the estate, to all parties filing separate briefs. (See 283 N. Y. 775.)

Lotjghran, Finch, Rippey, Sears, Lewis and Conway, JJ ., concur.

Ordered accordingly.