author: Cardozo, Ch. J. Andrews, J.

text:
    Morton H. Meinhard, Respondent, v. Walter J. Salmon et al., Appellants.

      (Argued December 4, 1928;
    decided December 31, 1928.)

      Nathan L. Miller, Harold Otis and Walter H. Bond for appellants.
    Under the terms of the Salmon-Meinhard agreement Meinhard had no interest in Salmon’s expectancy of renewal of the Bristol lease. (Lobsitz v. Lissberger Co., 168 App. Div. 840; Jones v. Gould, 209 N. Y. 419; Heye v. Tilford, 2 App. Div. 346; 154 N. Y. 757; London Assurance Co. v. Drennen, 116 U. S. 461; McPhillips v. Fitzgerald, 76 App. Div. 15; 177 N. Y. 543; Bussell v. Herrick, 127 App. Div. 503; Ketchum v. Clark, 6 Johns. 144; Marquard v. N. Y. Mfg. Co., 17 Johns. 525; Waring v. Robinson, 1 Hoff. Ch. 524; Bank v. Carrollton Railroad, 11 Wall. 624.) The Midpoint lease was not in the nature of a renewal of the Bristol lease. (Harris v. Bedell Co., 248 N. Y. 109.) If Meinhard had a half interest in Salmon’s expectancy of renewal of the Bristol lease and if the Midpoint lease comprehended a renewal of the Bristol lease, then Meinhard would be entitled only to a half interest in that part or proportion of the Midpoint lease constituting such renewal. (The Idaho, 93 U. S. 575; Ryder v. Hathaway, 21 Pick. 298; Acheson v. Fair, 3 Dru. & W, 512; 2 Con. & L. 298; O’Brien v. Egan, 5 L. B. Ir. Ch. 633.)

      John W. Davis, Ralph Wolf, Edwin D. Hays and Samuel R. Feller for respondent.
    In view of the fiduciary relationship existing between the parties in respect of their ownership of the Bristol lease, neither party could obtain a renewal thereof for his sole benefit. (Mitchell v. Reed, 61 N. Y. 123; Robinson v. Jewett, 116 N. Y. 40; Thayer v. Leggett, 229 N. Y. 152; Selwyn v. Waller, 212 N. Y. 507; Beatty v. Guggenheim Exploration Co., 225 N. Y. 380; Essex v. Enwright, 214 Mass. 507; Trice v. Comstock, 121 Fed. Rep. 620; Blakeslee v. Sottile, 118 Misc. Rep. 513.) Defendant has not shown that the fiduciary relationship existing between the parties was terminated at any time. (Brady v. Erlanger, 165 App. Div. 29; New York Bank Note Co. v. Hamilton Bank Note Co., 180 N. Y. 280; Barguilo v. California Wineries, 103 Misc. Rep. 691.) By the express terms of the agreement of May 19, 1902, plaintiff was entitled to “ fifty per centum of the net profits arising or growing out of the leased premises.” It being conceded on the record that the renewal lease obtained by the defendant is valuable, said renewal lease represents a “ profit arising or growing out of said leased premises.” (Mayer v. Nethersole, 71 App. Div. 383; Eyster v. Centennial Board of Finance, 94 U. S. 500; Jones v. Davis, 48 N. J. Eq. 493.) The defendant is .not aided because the owner planned to lease to him both plot A and plot B under one lease, with a common building, or because the owner negotiated with others and finally turned to the defendant to conclude the lease. (Beatty v. Guggenheim Exploration Co., 225 N. Y. 380.) Meinhard’s rights are not affected by the fact that •theMidpoint lease is upon other or different terms than the Bristol lease. (Selwyn v. Waller, 212 N. Y. 507; Maas v. Goldman, 122 Misc. Rep. 221; 210 App. Div. 845.) Plaintiff is entitled to a one-half interest in the property covered by the Midpoint lease. (Beatty v. Guggenheim Exploration Co., 225 N. Y. 380; Holmes v. Gilman, 138 N. Y. 369.)
   Cardozo, Ch. J.

On April 10, 1902, Louisa M. Gerry leased to the defendant Walter J. Salmon the premises known as the Hotel Bristol at the northwest corner of Forty-second street and Fifth avenue in the city of New York. The lease was for a term of twenty years, commencing May 1, 1902, and ending April 30, 1922. The lessee undertook to change the hotel building for use as shops and offices.at a cost of $200,000. Alterations and additions were to be accretions to the land.

Salmon, while in course of treaty with the lessor as to execution of the' lease, was in course of treaty with Meinhard, the plaintiff, for the necessary funds. The result was a joint venture with terms embodied in a writing. Meinhard was to pay to Salmon half of the moneys requisite to reconstruct, alter, manage and operate the property. Salmon was to pay to Meinhard 40 per cent of the net profits for the first five years of the lease and 50 per cent for the years thereafter. If there were losses, each party was to bear them equally. Salmon, however, was to have sole power to “manage, lease, under-let and operate ” the building. There were to be certain pre-emptive rights for each in the contingency of death.

The two were coadventurers, subject to fiduciary duties akin to’ those of partners (King v. Barnes, 109 N. Y. 267). As to this we are all agreed. The heavier weight of duty rested, however, upon Salmon. He was a coadventurer with Meinhard, but he was manager as well. During the early years of the enterprise, the building, reconstructed, was operated at a loss. If the relation had then ended, Meinhard as well as Salmon would have carried a heavy burden. Later the profits became large with the result that for each of the investors there came a rich return. For each, the venture had its phases of fair weather and of foul. The two were in it j ointly, for better or for worse.

When the lease was near its end, Elbridge T. Gerry had become the owner of the reversion. He owned much other property in the neighborhood, one lot adjoining the Bristol Building on Fifth avenue and four lots on Forty-second street. He had a plan to lease the entire tract for a long term to some one who would destroy the buildings then existing, and put up another in their place. In the latter part of 1921, he submitted such a project to several capitalists and dealers. He was unable to carry it through with any of them. Then, in January, 1922, with less than four months of the lease to run, he approached the defendant Salmon. The result was a new lease to the Midpoint Realty Company, which is owned and controlled by Salmon, a lease covering the whole tract, and involving a huge outlay. The term is to be twenty years, but successive covenants for renewal will extend it to a maximum of eighty years at the will of either party. The existing buildings may remain unchanged for seven years. They are then to be torn down, and a new building to cost $3,000,000 is to be placed upon the site. The rental, which under the Bristol lease was only $55,000, is to be from $350,000 to $475,000 for the properties so combined. Salmon personally guaranteed the performance by the lessee of the covenants of the new lease until such time as the new building had been completed and fully paid for.

The lease between Gerry and the Midpoint Realty Company was signed and delivered on January 25, 1922. Salmon had not told Meinhard anything about it. Whatever his motive may have been, he had kept the negotiations to himself. Meinhard was not informed even of the bare existence of a project. The first that he knew of it was in February when the lease was an accomplished fact. He then made demand on the defendants that the lease be held in trust as an asset of the venture, making offer upon the trial to share the personal obligations incidental to the guaranty. The demand was followed by refusal, and later by this suit. A referee gave judgment for the plaintiff, limiting the plaintiff’s interest in the lease, however, to 25 per cent. The limitation was on the theory that the plaintiff’s equity was to be restricted to one-half of so much of the value of the lease as was contributed or represented by the occupation of the Bristol site. Upon cross-appeals to the Appellate Division, the judgment was modified so as to enlarge the equitable interest to one-half of the whole lease. With this enlargement of plaintiff’s interest, there went, of course, a corresponding enlargement' of his attendant obligations. The case is now here on an appeal by the defendants.

Joint adventurers, like copartners, owe to one another, while the enterprise continues, the duty of the finest loyalty. I Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties.| A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. ' Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the “ disintegrating erosion ” of particular exceptions: (Wendt v. Fischer, 243 N. Y. 439, 444). Only thus has the level of conduct for fiduciaries been kept at" a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court. /

The owner of the reversion, Mr. Gerry, had vainly striven to find a tenant who would favor his ambitious scheme of demolition and construction. Baffled in the search, he turned to the defendant Salmon in possession of the Bristol, the keystone of the project. He figured to himself beyond a doubt that the man in possession would prove a likely customer. To the eye of an observer, Salmon held the lease as owner in his own right, for himself and no one else. In fact he held it as a fiduciary, for himself and another, sharers in a common venture. If this fact had been proclaimed, if the lease by its terms had run in favor of a partnership, Mr. Gerry, we may fairly assume, would have laid before the partners, and not merely before one of them, his plan of reconstruction. The pre-emptive privilege, or, • better, the pre-emptive' opportunity, that was thus an incident of the enterprise, Salmon appropriated to himself in secrecy and silence. He might have warned Meinhard that the plan had been submitted, and that either would be free to compete for the award. If he had done this, we do not need to say whether he would have been under a duty, if successful in the competition, to hold the lease so acquired for the benefit of a venture then about to end, and thus prolong by indirection its responsibilities and duties] The trouble about his conduct is that he excluded his coadventurer from any chance to compete, from any chance to enjoy the opportunity for benefit that had come to him alone by virtue of his agency. This chance, if nothing more, he was under a duty to concede. The price of its denial is an extension of the trust at the option and for the benefit of the one whom he excluded.

No answer is it to say that the chance would have been of little value even if seasonably offered. Such a calculus of probabilities is beyond the science of the chancery. Salmon,the real estate operator, might have been preferred to Meinhard, the woolen merchant. On the other hand, Meinhard might have offered better terms, or reinforced his offer by alliance with the wealth of others. Perhaps he might even have persuaded the lessor to renew the Bristol lease alone, postponing for a time, in return for higher rentals, the improvement of adjoining lots. We know that even under the lease as made the time for the enlargement of the building was delayed for seven years. All these opportunities were cut away from him through another’s intervention. He knew that Salmon was the manager. As the time drew near for the expiration of the lease, he would naturally assume from silence, if from nothing else, that the lessor was willing to extend it for a term of years, or at least to let it stand as a lease from year to year. Not impossibly the lessor would have done so, whatever his protestations of unwillingness, if Salmon had not given assent to a project more attractive. At all events, notice of termination, even if not necessary, might seem, not unreasonably, to be something to be looked for, if the business was over and another tenant was to enter. In the absence of such notice, the matter of an extension was one that would naturally be attended to by the manager of the enterprise, and not neglected altogether. At least, there was nothing in the situation to give warning to any one that while the lease was still in being, there had come to the manager an offer of extension which he had locked within his breast to be utilized by himself alone. The very fact that Salmon was in control with exclusive powers of direction.' charged him the more obviously with the duty of disclosure, since only through disclosure could opportunity be equalized. If he might cut off renewal by a purchase for his own benefit when four months were to pass before the lease would have an end, he might do so with equal right while there remained as many years (cf. Mitchell v. Reed, 61 N. Y. 123, 127). He might steal a march on his comrade under cover of the darkness, and then hold the captured ground. Loyalty and comradeship are. not so easily abjured.

Little profit will come from a dissection of the precedents. None precisely similar is cited in the briefs of counsel. What is similar in many, or so it seems to us, is the animating principle. Authority is, of course, abundant that one partner may not appropriate to his own use a renewal of a lease, though its term is to begin at the expiration of the partnership (Mitchell v. Reed, 61 N. Y. 123; 84 N. Y. 556). The lease at hand with its many changes is not strictly a renewal. Even so, the standard of loyalty for those in trust relations is without the fixed divisions of a graduated scale. There is indeed a dictum in one of our decisions that a partner, though he may not renew a lease, may purchase the reversion if he acts openly and fairly (Anderson v. Lemon, 8 N. Y. 236; cf. White & Tudor, Leading Cases in Equity [9th ed.], vol. 2, p. 642; Bevan v. Webb, 1905, 1 Ch. 620; Griffith v. Owen, 1907, 1 Ch. 195, 204, 205). It is a dictum, and r\o more, for on the ground that he had acted slyly he was charged as a trustee. The holding is thus in favor of the conclusion that a purchase as well as a lease will succumb to the infection of secrecy and silence. Against the dictum in that case, moreover, may be set the opinion of Dwight, C., in Mitchell v. Read, where there is a dictum to the contrary (61 N. Y. at p. 143). To say that a partner is free without restriction to buy in the reversion of the property where the business is conducted is to say in effect that he may strip the good will of its chief element of value, since good will is largely dependent upon continuity of possession (Matter of Brown, 242 N. Y. 1, 7.) Equity refuses to confine within the bounds of classified transactions its precept of a loyalty that is undivided and unselfish. Certain at least it is that a man obtaining his locus standi, and his opportunity for making such arrangements, by the position he occupies as a partner, is bound by his obligation to his co-partners in such dealings not to separate his interest from theirs, but, if he acquires any benefit, to communicate it to them ” (Cassels v. Stewart, 6 App. Cas. 64, 73). Certain it is also that there may be no abuse of special opportunities growing out of a special trust as manager or agent (Matter of Biss, 1903, 2 Ch. 40; Clegg v. Edmondson, 8 D. M. & G. 787, 807). If conflicting inferences are possible as to abuse or opportunity, the trier of the facts must make the choice between them. There can be no revision in this court unless the choice is clearly wrong. It is no answer for the fiduciary to say “ that he was not bound to risk his money as he did, or to go into the enterprise at all ” (Beatty v. Guggenheim Exploration Co., 225 N. Y. 380, 385). He might have kept out of it altogether, but if he went in, he could not withhold from his employer the benefit of the bargain ” (Beatty v. Guggenheim Exploration Co., supra). A constructive trust is then the remedial device through which preference of self is made subordinate to loyalty to others (Beatty v. Guggenheim Exploration Co., supra). Many and varied are its phases and occasions (Selwyn & Co. v. Waller, 212 N. Y. 507, 512; Robinson v. Jewett, 116 N. Y. 40; cf. Tournier v. Nat. Prov. & Union Bank, 1924, 1 K. B. 461).

We have no thought to hold that Salmon was guilty of a conscious purpose to defraud. Very likely he assumed in all good faith that with the approaching end of the venture he might ignore his coadventurer and take the extension for himself. He had given to the enterprise time and labor as well as money. He had made it a success. Meinhard, who had given money; but neither time nor labor, had already been richly paid. There might seem to be something grasping in his insistence upon more. Such recriminations are not unusual when coadventurers fall out. They are not without their force if conduct is to be judged by the common standards of competitors. That is not to say that they have pertinency here. Salmon had put himself in a position in which thought of self was to be renounced, however hard the abnegation. He was much more than a coadventurer. He was a managing coadventurer (Clegg v. Edmondson, 8 D. M. & G. 787, 807). For him and for those like him, the rule of undivided loyalty is relentless and supreme (Wendt v. Fischer, supra; Munson v. Syracuse, etc., R. R. Co., 103 N. Y. 58, 74). A different question would be here if there were lacking any nexus of relation between the business conducted by the manager and the opportunity brought to him as an incident of management (Dean v. MacDowell, 8 Ch. D. 345, 354; Aas v. Benham, 1891, 2 Ch. 244, 258; Latta v. Kilbourn, 150 U. S. 524). For this problem, as for most, there are distinctions of degree. If Salmon had received from Gerry a proposition to lease a building at a location far removed, he might have held for himself the privilege thus acquired, or so we shall assume. Here the subject-matter of the new lease was an extension and enlargement of the subject-matter of the old one. A managing coadventurer appropriating the benefit of such a lease without warning to his partner might fairly expect to be reproached with conduct that was underhand, or lacking, to say the least, in reasonable candor, if the partner were to surprise him in the act of signing the new instrument. Conduct subject to that reproach does not receive from equity a healing benediction

A question remains as to the form and extent of the equitable interest to be allotted to the plaintiff. The trust as declared has been held to attach to the lease which was in the name of the defendant corporation. We think it ought to attach at the option of the defendant Salmon to the shares of stock which were owned by him or were under his control. The difference may be important if the lessee shall wish to execute an assignment of the lease, as it ought to be free to do with the consent of the lessor. On the other hand, an equal division of the shares might lead to other hardships. It might take away from Salmon the power of control and management which under the plan of the joint venture he was to have from first to last. The number of shares to be allotted to the plaintiff should, therefore, be reduced to such an extent as may be necessary to preserve to the defendant Salmon the expected measure of dominion. To that end an extra share should be added to his half.

Subject to this adjustment, we agree with the Appellate Division that the plaintiff’s equitable interest is to be measured by the value of half of the entire lease, and not merely by half of some undivided part. A single building covers the whole area. Physical division is impracticable along the lines of the Bristol site, the keystone of the whole. Division of interests and burdens is equally impracticable. Salmon, as tenant under the new lease, - or as guarantor of the performance of the tenant’s obligations, might well protest if Meinhard, claiming an equitable interest, had offered to assume a liability not equal to Salmon’s, but only half as great. He might justly insist that the lease must be accepted by his coadventurer in such form as it had been given, and not constructively divided into imaginary fragments. What must be yielded to the one may be demanded by the other. The lease as it has been executed is single and entire. If confusion has resulted from the union of adjoining parcels, the trustee who consented to the union must bear the inconvenience (Hart v. Ten Eyck, 2 Johns. Ch. 62).

Thus far, the case has been considered on the assumption that the interest in the joint venture acquired by the plaintiff in 1902 has been continuously his. The fact is, however, that in 1917 he, assigned to his wife all his right, title and interest in and to ” the agreement with his coadventurer. The coadventurer did not object, but thereafter made his payments directly to the wife. There was a reassignment by the wife before this action was begun.

We do not need to determine what the effect of the assignment would have been in 1917 if either coadventurer had. then chosen to treat the venture as dissolved. We do not even need to determine what the effect would have been if the enterprise had been a partnership in the strict sense with active duties of agency laid on each of the two adventurers The form of the enterprise made Salmon the sole manager. The only active duty laid upon the other was one wholly ministerial, the duty of contributing his share of the expense. This he could still do with equal readiness, and still was bound to do, after the assignment to his wife. Neither by word nor by act did either partner manifest a choice to view the enterprise as ended. There is no inflexible rule in such conditions that dissolution shall ensue against the concurring wish of all that the venture shall continue. The effect of the assignment is then a question of intention (Durkee v. Gunn, 41 Kan. 496, 500; Taft v. Buffum, 14 Pick. 322; cf. 69 A. S. R. 417, and cases there cited).

Partnership Law (Cons. Laws, ch. 39), section 53, subdivision 1, is to the effect that a conveyance by a partner of his interest in the partnership does not of itself dissolve the partnership, nor, as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled.” This statute, which took effect October 1,1919, did not indeed revive the enterprise if automatically on the execution of the assignment a dissolution had resulted in 1917. It sums up with precision, however, the effect of the assignment as the parties meant to shape it. We are to interpret their relation in the revealing light of conduct. The rule of the statute, even if it has modified the rule as to partnerships in general (as to this see Pollock, Partnership, p. 99, § 31; Bindley, Partnership [9th ed.], 695; Marquand v. N. Y. M. Co., 17 Johns. 525), is an accurate statement of the rule at common law when applied to these adventurers. The purpose of the assignment, understood by every one concerned, was to lower the plaintiff’s tax by taking income out of his return and adding it to the return to be made by his wife. She was the appointee of the profits, to whom checks were to be remitted. Beyond that, the relation was to be the same as it had been. No one dreamed for a moment that the enterprise was to be wound up, or that Meinhard was relieved of his continuing obligation to contribute to its expenses if contribution became needful. Coadventurers and assignee, and most of all the defendant Salmon, as appears by his own letters, went forward on that basis. For more than five years Salmon dealt with Meinhard on the assumption that the enterprise was a subsisting one with mutual rights and duties, or so at least the triers of the facts, weighing the circumstantial evidence, might not unreasonably infer. By tacit, if not express approval, he continued and preserved it. We think it is too late now, when charged as a trustee, to come forward with the claim that it had been disrupted and dissolved.

The judgment should be modified by providing that at the option of the defendant Salmon there may be substituted for a trust attaching to the lease a trust attaching to the shares of stock, with the result that one-half of such shares together with one additional share will in that event be allotted to the defendant Salmon and the other shares to the plaintiff, and as so modified the judgment should be affirmed with costs.

Andrews, J.

(dissenting). A tenant’s expectancy of the renewal of a lease is a thing, tenuous, yet often having a real value. It represents the probability that a landlord will prefer to relet his premises to one already in possession rather than to strangers. Less tangible than “ good will ” it is never included in the tenant’s assets, yet equity will not permit one standing in a relation of trust and confidence toward the tenant unfairly to take the benefit to himself. At times the principle is rigidly enforced. Given the relation between the parties,- a certain result follows. No question as to good faith, or injury, or as to other circumstances is material. Such is the rule as between trustee and cestui (Keich v. Sanford, Select Gas. in Ch. 61); as between executor and estate (Matter of Brown, 18 Ch. Div. 61); as between guardian and ward (Milner v. Harewood, 18 Ves. 259, 274).

At other times some inquiry is allowed as to the facts involved. Fair dealing and a scrupulous regard for honesty is required. But nothing more. It may be stated generally that a partner may not for his own benefit secretly take a renewal of a firm lease to himself. (Mitchell v. Reed, 61 N. Y. 123.) Yet under very exceptional circumstances this may not be wholly true. (W. & T. Leading Cas. in Equity [9th ed.], p. 657; Clegg v. Edmondson, 8 D. M. & G. 787, 807.) In the case of tenants in common there is still greater liberty. There is said to be a distinction between those holding under a will or through descent and those holding under indepe.ndent conveyance. But even in the former situation the bare relationship is not conclusive. (Matter of Biss, 1903, 2 Ch. 40). In Burrell v. Bull (3 Sand. Ch. 15) there was actual fraud. In short, as we once said, “ the elements of actual fraud — of the betrayal by secret action of confidence reposed, or assumed to be reposed, grows in importance as the relation between the parties falls from an express to an implied or a quasi trust, and on to those cases where good faith alone is involved.” (Thayer v. Leggett, 229 N. Y. 152.)

Where the trustee, or the partner or the tenant in common, takes no new lease but buys the reversion in good faith a somewhat different question arises. Here is no direct appropriation of the expectancy of renewal. Here is no offshoot of the original lease. We so held in Anderson v. Lemon (8 N. Y. 236), and although Judge' Dwight casts some doubt on the rule in Mitchell v. Reed, it seems to have the support of authority. (W. & T. Leading Cas. in Equity, p. 650; Lindley on Partnership [9th ed.], p. 396; Bevan v. Webb, 1905, 1 Ch. 620.) The issue then is whether actual fraud, dishonesty, unfairness is present in the transaction. If so, the purchaser may well be held as a trustee. (Anderson v. Lemon, cited above.)

With this view of the law I am of the opinion that the issue here is simple. Was the transaction in view of all the circumstances surrounding it unfair and inequitable? I reach this conclusion for two reasons. There was no general partnership, merely a joint venture for a limited object, to end at a fixed time. The new lease, covering additional property, containing many new and unusual terms and conditions, with a possible duration of eighty years, was more nearly the purchase of the reversion than the ordinary renewal with which the authorities are concerned.

The findings of the referee are to the effect that before 1902, Mrs. Louisa M. Gerry was the owner of a plot on the corner of Fifth avenue and Forty-second street, New York, containing 9,312 square feet. On it had been built the old Bristol Hotel. Walter J. Salmon was in the real estate business, renting, managing and operating buildings. On April 10th of that year Mrs. Gerry leased the property to him for a term extending from May 1, 1902, to April 30, 1922. The property was to be used for offices and business, and the design was that the lessee should so remodel the hotel at his own expense as to fit it for such purposes, all alterations and additions, however, at once to become the property of the lessor. The lease might not be assigned without written consent.

Morton H. Meinhard was a woolen merchant. At some period during the negotiations between Mr. Salmon and Mrs. Gerry, so far as the findings show without the latter’s knowledge, he became interested in the transaction. Before the lease was executed he advanced $5,000 toward the cost of the proposed alterations. Finally, on May 19th he and Salmon entered into a written agreement. “ During the period of twenty years from the 1st day of May, 1902,” the parties agree to share equally in the expense needed to reconstruct, alter, manage and operate the Bristol Hotel property; ” and in all payments required by the lease, and in all losses incurred “ during the full term of the lease, i. e., from the first day of May, 1902, to the 1st day of May, 1922.” During the samé term net profits are to be divided. Mr. Salmon has sole power to “ manage, lease, underlet and operate ” the premises. If he dies, Mr. Meinhard shall be consulted before any disposition is made of the lease, and if Mr. Salmon’s representatives decide to dispose of it, and the decision-is theirs, Mr. Meinhard is to be given the first chance to take the unexpired term upon the same conditions they could obtain from others.

The referee finds that this arrangement did not create a partnership between Mr. Salmon and Mr. Meinhard. In this he is clearly right. He is equally right in holding that while no general partnership existed the two men had entered into a joint adventure and that while the legal title to the lease was in Mr. Salmon, Mr. Meinhard had some sort of an equitable interest therein. Mr. Salmon was to manage the property for their oint benefit. He was bound to use good faith. He could not willfully destroy the lease, the object of the adventure, to the detriment of Mr. Meinhard:

Mr. Salmon went into possession and control of the property. The alterations were made. At first came losses. Then large profits which were duly distributed. At all times Mr. Salmon has acted as manager.

Some time before 1922 Mr. Elbridge T. Gerry became the owner of the reversion. He was already the owner of an adjoining lot on Fifth avenue and of four lots' adjoining on Forty-second street, in all 11,587 square feet, covered by five separate buildings. Obviously all this property together was more valuable than the sum of the value of the separate parcels. Some plan to develop the property as a whole seems to have occurred to Mr. Gerry. He arranged that all leases on his five lots should expire on the same day as the Bristol Hotel lease. Then in 1921 he negotiated with various persons and corporations seeking to obtain a desirable tenant who would put up a building to cover the entire tract, for this was the policy he had adopted. These negotiations lasted for some months. They failed. About January 1, 1922, Mr. Gerry’s agent approached Mr. Salmon and began to negotiate with him for the lease of the entire tract. Upon this he insisted as he did upon the erection of a new and expensive building covering the whole. He would not consent to the renewal of the Bristol lease on any terms. This effort resulted in a lease to the Midpoint Realty Company, a corporation entirely owned and controlled by Mr. Salmon. For our purposes the paper may be treated as if the agreement was made with Mr. Salmon himself.

In many respects, besides the increase in the land demised, the new lease differs from the old. Instead of an annual rent of $55,000 it is now from $350,000 to $475,000. Instead of a fixed term of twenty years it may now be, at the lessee’s option, eighty. Instead of alterations in an existing structure costing about $200,000 a new building is contemplated costing $3,000,000. Of this sum $1,500,000' is to be advanced by the lessor to the lessee, “ but not to its successors or assigns,” and is to be repaid in installments. Again no assignment or sale of the lease may be made without the consent of the lessor.

This lease is valuable. In making it Mr. Gerry acted in good faith without any collusion with Mr. Salmon and with no purpose to deprive Mr. Meinhard of any equities he might have. But as to the negotiations leading to it or as to the execution of the lease itself Mr. Meinhard knew nothing. Mr. Salmon acted for himself to acquire the lease for his own benefit.

Under these circumstances the referee has found and the Appellate Division agrees with him, that Mr. Meinhard is entitled to an interest in the second lease, he having promptly elected to assume his share of the liabilities imposed thereby. This conclusion is based upon the proposition that under the original contract between the two men “ the enterprise was a joint venture, the relation between the parties was fiduciary and governed by principles applicable to partnerships,” therefore, as the new lease is a graft upon the old, Mr. Salmon might not acquire its benefits for himself alone.

Were this a general partnership between Mr. Salmon and Mr. Meinhard I should have little doubt as to the correctness of this result assuming the new lease to be an offshoot of the old. Such a situation involves questions of trust and confidence to a high degree; it involves questions of good will; many other considerations. As has been said, rarely if ever may one partner without the knowledge of the other acquire for himself the renewal of a lease held by the firm, even if the new lease is to begin after the firm is dissolved. Warning of such an intent, if he is managing partner, may not be sufficient to prevent the application of this rule.

We have here a different situation governed by less drastic principles. I assume that where parties engage in a joint enterprise each owes to the other the duty of the utmost good faith in all that relates to their common venture. Within its scope they stand in a fiduciary relationship. I assume prima facie that even as between joint adventurers one may not secretly obtain a renewal of the lease of property actually used in the joint adventure where the possibility of renewal is expressly or impliedly involved in the enterprise. I assume also that Mr. Meinhard had an equitable interest in the Bristol Hotel lease. Further, that an expectancy of renewal inhered in that lease. Two questions then arise. Under his contract did he share in that expectancy? And if so, did that expectancy mature into a graft of. the original lease? To both questions my answer is “ no.”

The one complaint made is that Mr. Salmon obtained the new lease without informing Mr. Meinhard of his intention. Nothing else. There is no claim of actual fraud. No claim of misrepresentation to any one. Here was no movable property to be acquired by a new tenant at a sacrifice to its owners. No good will, largely dependent on location, built up by the joint efforts of two men. Here was a refusal of the landlord to renew the Bristol lease on any terms; a proposal made by him, not sought by Mr. Salmon, and a choice by him and by the original lessor of the person with whom they wished to deal shown by the covenants against • assignment or under-letting, and by their ignorance of the arrangement with Mr. Meinhard. •

What then was the scope of the adventure into which the two men entered? It is to be remembered that before their contract was signed Mr. Salmon had obtained the lease of the Bristol property. Very likely the matter had been earlier discussed between them. The $5,000 advance by Mr. Meinhard indicates that fact. But it has been held that the written contract defines their rights and duties.

Having the lease Mr. Salmon assigns no interest in it to Mr. Meinhard. He is to manage the property. It is for him to decide what alterations shall be made and to fix the rents. But for twenty years from May 1, 1902, Salmon is to make all advances from his own funds and Meinhard is to pay him personally on demand one-half of all expense's incurred and all losses sustained “ during the full term of said lease,” and during the same period Salmon is to pay him a part of the net profits. There was no joint capital provided.

It seems to me that the venture so inaugurated had in view a limited object and was to end at a limited time. There was no intent to expand it into a far greater undertaking lasting for many years. The design was to exploit a particular lease. Doubtless in it Mr. Meinhard had an equitable interest, but in it alone. This interest terminated when the joint adventure terminated. There was no intent that for the benefit of both any advantage should be taken of the chance of renewal — that the adventure should be continued beyond that date. Mr. Salmon has done all he promised to do in return for Mr. Meinhard’s undertaking when he distributed profits up to May 1, 1922. Suppose this lease, non-assignable without the consent of the lessor, had contained a renewal option. Could Mr. Meinhard have exercised it? Could he have insisted that Mr. Salmon do so? Had Mr. Salmon done so could -he insist that the agreement to share losses still existed or could Mr. Meinhard have claimed that the joint adventure was still to continue for twenty or eighty years? I do not think so. The adventure by its express terms ended on May 1, 1922. The contract by its language and by its whole import excluded the idea that the tenant’s expectancy was to subsist for the benefit of the plaintiff. On that date whatever there was left of value in the lease reverted to Mr. Salmon, as it would had the lease been for thirty years instead of twenty. Any equity which Mr. Meinhard possessed was in the particular lease itself, not in any possibility of renewal. There was nothing unfair in Mr. Salmon’s conduct.

I might go further were it necessary. Under the circumstances here presented had the lease run to both the parties I doubt whether the talcing by one of a renewal without the knowledge of the other would cause interference by a court of equity. An illustration may clarify my thought. A and B enter into a joint venture to resurface a highway between Albany and Schenectady. They rent a parcel of land for the storage of materials. A, unknown to B, agrees with the lessor to rent that parcel and one adjoining it after the venture is finished, for an iron foundry. Is the act unfair? Would any general statements, scattered here and there through opinions dealing with other circumstance, be thought applicable? In other words, the mere fact that the joint venturers rent property together does not call for the strict rule that applies to general partners. Many things may excuse what is there forbidden. Nor here does any possibility of renewal exist as part of the venture. The nature of the undertaking excludes such an idea.

So far I have treated the new lease as if it were a renewal of the old. As already indicated, I do not take that view. Such a renewal -could not be obtained. Any expectancy that it might be had vanished. What Mr. Salmon obtained was not a graft springing from the Bristol lease, but something distinct and different — as distinct as if for a building across Fifth avenue. I think also that in the absence of some fraudulent or unfair act the secret purchase of the. reversion even by one partner is rightful. Substantially this is such a purchase. Because of the mere label of a transaction we do not place it on one side of the line or the other. Here is involved the possession of a large and most valuable unit of property for eighty years, the destruction of all existing structures and the erection of a new and expensive building covering the whole. No fraud, no deceit, no calculated secrecy is found. Simply that the arrangement was made without the knowledge of Mr. Meinhard. I think this not enough.

The judgment of the courts below should be reversed and a new trial ordered, with costs in all courts to abide the event.

Pound, Crane and Lehman, JJ., concur with Cardozo, Ch. J., for modification of the judgment appealed from and affirmance as modified;* Andrews, J., dissents in opinion in which Kellogg and O’Brien, JJ., concur.

Judgment modified, etc.


source: Caselaw Access Project

author: Kellogg, J. Andrews, J.

license: Public Domain

text:
    In the Matter of the City of Long Beach, Appellant, against Public Service Commission of the State of New York, Respondent. Long Beach Bus Company, Respondent.

      (Submitted November 19, 1928;
    decided December 31, 1928.)

      Maurice Rubinger and Walter Underhill for appellant.
    The attempted granting of the franchise by the City Council violated the provisions of the charter of the city of Long Beach and was void. (L. 1922, ch. 635, §§ 71, 76; Quinby v. Public Service Comm., 223 N. Y. 244; City of Rochester v. Bloss, 185 N. Y. 42; Matter of Pennie, 108 N. Y. 364; Gleason v. Peerless Mfg. Co., 1 App. Div. 257; 163 N. Y. 574.)

      Harry Myron Chamberlain and Charles G. Biakeslee for Public Service Commission, respondent.
    The resolution of December 17, 1925, granting. the city’s consent did not have to be signed by the mayor. . The attempted veto by the mayor was and is a nullity. (L. 1922, ch. 635, § 71; Hoey v. Dalton, 126 Misc. Rep. 194. The new City Council of the city of Long Beach had no power to revoke the consent granted by the previous City Council to the assignor of Long Beach Bus Company, Inc., and its action in attempting to revoke such consent was and is a nullity. (Coney Island, etc., R. R. Co. v. Kennedy, 15 App. Div. 588; Suburban Rapid Transit Co. v. Mayer, 128 N. Y. 510; New York v. Second Avenue R. R. Co., 32 N. Y. 261; City of Buffalo v. Chadeayne,
      134 N. Y. 163; People ex rel. City of Olean v. Western N. Y. & Penn. Traction Co., 214 N. Y. 526; People v. O’Brien, 111 N. Y. 1; Lord v. Equitable Life Assurance Soc., 194 N. Y. 212; People ex rel. Woodhaven Gas Light Co. v. Beehan, 153 N. Y. 528; Huntington Traction Co., Inc., v. Walker, 209 App. Div. 904; People ex rel. City of New York v. New York Railways Co., 217 N. Y. 310.)

      John J. Curtin and Irving G. Warshaw for Long Beach Bus Company, respondent.
    The attempted veto by the mayor and the action of the new City Council on January 2, 1926, attempting to rescind and repeal the resolution granting the franchise on December 17, 1925, was and is a nullity. (Bohl v. City of Schenectady, 220 N. Y. Supp. 349.)
   Kellogg, J.

The Public Service Commission, on the third day of March, 1926, after hearing the proofs and arguments of the parties, issued its certificate to the Long Beach Bus Company, Inc., the intervenor, whereby it certified that public convenience and necessity required the operation, by that corporation, of a motor bus line along certain streets in the city of Long Beach, the petitioner. The petitioner seeks to review the action of the Public Service Commission in granting this certificate and asks for a reversal of the decision on the ground, among others, that its consent to the operation upon its streets of the vehicles of the Long Beach Bus Company, Inc., had not been legally given prior to the issuance of the certificate.

The Transportation Corporations Law (Cons. Laws, ch. 63) now contains section 25, a section added to the law by chapter 495 of the Laws of 1913, and thereafter amended by chapter 667 of the Laws of 1915. The section provides that any person or corporation operating a bus line along any street of a city “ shall be deemed to be included within the meaning of the term ‘ common carrier ’ as used in the public service commissions law and shall be required to obtain a certificate of convenience and necessity for the operation of the route or vehicles proposed to be operated, and shall be subject to all the provisions of the said law applicable to common carriers.” The Public Service Commissions Law (Cons. Laws, ch. 48) as re-enacted in the year 1910 (Laws of 1910, ch. 480), provides in section 53 that “ no railroad corporation * * * shall begin the construction of a railroad ” nor shall any “ common carrier exercise any franchise or right under any provision of the Railroad Law, or of any other law, not heretofore lawfully exercised, without first having obtained the permission and approval of the proper commission.” Under the Railroad Law (Laws of 1892, ch. 676, amd. L. 1895, ch. 575, § 1), also re-enacted in the year 1910 (Laws of 1910, ch. 481), no railroad corporation may begin the construction of its railway until the Public Service Commission has made its certificate, certifying that “ public convenience and necessity require the construction of said railroad.” Although the Railroad Law is not expressly referred to in section 25 of the Transportation Corporations Law, it is the undoubted meaning of the section that every person proposing to operate a bus line must first obtain a certificate from the Public Service Commission, similar to the certificate required by the Railroad Law, certifying that “ public convenience and necessity require ” the operation of the proposed route. (N. Y., O. & W. Ry. Co. v. Griffin, 235 N. Y. 174.)

In the year 1915 section 26 was added to the Transportation Corporations Law. (Laws of 1915, ch. 667.) The section, as originally enacted, provided that “No bus line * * * shall be operated wholly or partly upon or along any street * * * in any city, nor receive a certificate of public convenience and necessity until the owner or owners thereof shall have procured, after public notice and a hearing, the consent of the local authorities of said city, as defined by the Railroad Law, to such operation * * The intervenor places great reliance upon the word received,” employed in this section. It reasons that the Commission is not directed by the section to refuse its certificate until local consent is granted, but the applicant for the certificate is merely forbidden to receive ” it, that is to say, it is inhibited from exercising a privilege thereby intended to be conferred. The argument, while ingenious, is not tenable. The section provides that, without the procurement of local consent (1) no bus line shall be operated upon the local streets and (2) no applicant therefor shall receive a certificate of public convenience and necessity. The proposed interpretation of the phrase “ receive a certificate,” to have the meaning receive the benefits of a certificate,” renders the second prohibition wholly meaningless, since the first prohibition would be sufficient to cover the entire field.

In the year 1919 there was added to section 26 of the Transportation Corporations Law a new clause. (Laws of 1919, ch. 307.) This clause provided that the town board of any town or the board of trustees of any village might adopt a resolution providing that the section should apply to such town or village. It further provided that after the adoption of such a resolution no bus line * * * shall be operated * * * in such town or village, nor receive a certificate of public convenience and necessity until the owner or owners thereof shall have procured the consent of the local authorities of such town or village * * *.” In New York, Ontario & Western Railway Company v. Griffin (supra) this court had before it the case of a bus corporation which had obtained from the Public Service Commission a certificate of convenience and necessity for the operation of its vehicles in the village of Liberty, a village which had by resolution adopted the provisions of section 26. In an opinion by Crane, J., the court said: Before the public service commission granted its certificate of public convenience and necessity the village of Liberty by resolution of its trustees had come within these provisions of section 26 and it was necessary for the defendant owner to procure the consent of the village trustees before the certificate of public convenience and necessity could be issued permitting the operation of buses on the streets of the village.”

In 1926 the Legislature revised and rc-enacted the Transportation Corporations Law. (Laws of 1926, ch. 762.) Section 66 of the re-enacted law is substantially the same as former section 26. However, it provides, not that a bus operator is forbidden to receive a certificate of public convenience and necessity ” until local consent has been procured, but that no such certificate shall be issued ” until the consent has been obtained. It is true that this rewording of the provision was made after the certificate now in question had been issued. It is significant, however, that the Legislature saw fit so to reword the statutory provisions that the meaning ascribed by Judge Crane to the provisions of section 26 was given precise expression in the enactment of section 66. We think it entirely clear that unless the local authorities of the city of Long Beach had legally consented to the operation upon its streets of the intervenor’s buses, the Public Service Commission was without jurisdiction to issue the certificate in question.

Whether the city of Long Beach ever gave its consent to the operation of the intervenor’s buses upon its streets depends upon legal principles which are to be applied to an admitted state of facts. The facts are, briefly, these: On December 11, 1925, Elliott B. Seagraves filed with the city council of the city of Long Beach an application for the consent of the city to the operation of a bus line upon certain streets of the city. On December 17, 1925, a special meeting of the council was held, at which all the members of the council, including the mayor, in number, five, were present. A resolution or ordinance, whereby the consent of the common council to the operation of the proposed bus route was apparently given was adopted by a vote of four to one, the mayor voting no ” and the others voting aye." The mayor thereupon said: I hereby take this resolution under consideration for veto and would ask the city clerk to submit the papers to me tomorrow so that I may act within a reasonable time." On December 18, 1925, Seagraves assigned the consent, apparently thus obtained, to the Long Beach Bus Company, Inc., the intervenor. On December 21, 1925, the Long Beach Bus Company, Inc., filed with the Public Service Commission its petition for a certificate of convenience and necessity. On January 2, 1926, the city council again met. Four of the councilmen, having failed of election in the preceding month of November, had gone out of office and four other men had been elected to take their places. The mayor of the city, who had been continued in office, announced his veto of the resolution previously adopted on December 17, 1925, whereby consent had apparently been granted to Elliott B. Seagraves. His written veto of the prior resolution was filed with the common council. Thereupon the common council adopted a resolution unanimously rescinding the apparent consent theretofore given to Seagraves. It was after this meeting, in March, 1926, that the certificate of public convenience and necessity now in question was granted by the Public' Service Commission.

The charter of the city of Long Beach (Laws of 1922, ch. 635), in section 70 thereof, provides, in part, as follows: All the legislative powers of the city, howsoever conferred upon or possessed by it, are hereby vested in the council of the city of Long Beach, save as may be hereafter specially excepted. Such council shall be composed of the mayor, three councilmen and the supervisor, each of whom shall have a right to vote on all questions coming before the council.” In section 71 the charter provides, in part, as follows: “Meetings of the council shall be public. Stated meetings thereof shall be held at such times as the council shall prescribe by ordinance. * * * The mayor shall preside at all meetings. He shall have power to veto any motion, resolution or ordinance. • Any such motion vetoed by the mayor may be passed by the council by a four-fifths vote over his veto, and the same shall be carried and enacted as though it received the mayor’s affirmative vote and signature. Every resolution or ordinance passed by the council must be signed by the mayor, or by three councibnen and must be properly recorded before the same shall be in force.” It will be noted that the provision in relation to the mayor’s right of veto is simply this: “He shall have power to veto any motion, resolution or ordinance.” The method of exercising the veto, whether by voice or by writing; the time within which a veto must be exercised; the result which follows if the mayor neglects to pronounce or file a veto; whether, in case of such neglect, the resolution becomes effective or utterly fails; these are matters concerning which the charter is wholly silent. The respondent and the intervener argue that the mayor must exercise his veto forthwith; the petitioner that he must exercise it within a reasonable time. Evidently, between the two extremes, of a time which is immediate and a time which is reasonable, there is no satisfactory intermediate point which may be selected to determine the timeliness of a veto. The one or the other must be chosen. Which it shall be must be determined by a reference to those attributes with which the veto power is generally conceived to be invested.

The opinion is commonly entertained that the veto power is not executive in its nature, but essentially legislative. (Mason, The Veto Power, sec. 100; Black on Constitutional Law, sec. 67; Hare’s American Constitutional Law, vol. 1, p. 212; Cooley, General Principles of Constitutional Law, p. 51 [third ed. 1898]; Commonwealth v. Barnett, 199 Penn. St. 161 at p. 170.) In respect to the exercise of a veto power the chief executive of the Nation or of a State is in effect a third branch of the Legislature. (Black, sec. 67; Cooley, p. 51; Hare, p. 212.) In our case, the mayor served in a double capacity. He was a voting member of the legislative body, the common council; he was the chief executive of the city, having the legislative power of veto exercisable by himself alone. “ The power of the mayor to approve or disapprove an ordinance is entirely separate and distinct from the functions with which he may be vested as presiding officer of the common council.” (Dillon, Municipal Corporations, sec. 578.) The fact that the mayor, as a member of the council, hears an ordinance read, puts a motion for its adoption, declares it adopted and signs and approves the journal in which it is entered, “ is not a compliance with a statutory requirement that the ordinance be approved by him, or passed by a specified majority over his veto, and does not dispense with his approval in the manner prescribed by the charter.” (Id.) In Cassidy v. City of Brooklyn (60 Barbour, 105; affd. in 47 N. Y. 659, and subsequently cited with approval in People ex rel. Ennis v. Sehroeder, 76 N. Y. 160) it was held that a mayor who sat as a voting member of a common council might subsequently veto a resolution passed at a meeting participated in by him. Clearly, the presence of a mayor, with a councilman’s power, is not the presence of a mayor with the legislative power of an executive; nor does it follow that, because the council is in session, the mayor, as a legislating executive, is likewise in session. Although the councilmen and the mayor may be physically present at the same place and time, the council as a body, and the mayor as an official, are distinct and independent governmental authorities and the functioning of the one in nowise furnishes a criterion of timeliness for the functioning of the other. Carried to its logical conclusion, the argument for immediate veto would deny to the mayor all vetoing power unless he was physically in attendance during the meeting of the council or at the conclusion of the meeting. Carried one step further, the mayor would exercise his power of veto or approval when he voted as a councilman against or in favor of a resolution. The adoption of that conclusion would destroy the case of the respondent and the intervenor, .since in this instance the mayor voted against the resolution granting consent and the resolution was not repassed over his veto. We think there is no force in the contention that the mayor must have exercised his power of veto either during the meeting of the common council or immediately upon its adjournment.

The purpose of the veto power “is to increase the chances in favour of the community against the passing of bad laws, through haste, inadvertence, or design ” (The Federalist, 1866, p. 548); the veto power is “a guard against hasty and inconsiderate action ” (Webster’s Works, vol. 1, p. 267); “ The power is important as an additional security against the enactment of rash, immature, and improper laws ” (Story on the Constitution, vol. 1, p. 625.) Clearly, the evil of hasty legislation would find no cure in an equally hasty veto or approval. In order, then, that a mayor’s power of approval or disapproval of a legislative act may be made to serve the very purpose of its bestowal, ample opportunity for deliberation should be afforded. We hold that the mayor of the city of Long Beach was entitled, within a reasonable time, to veto or approve the Seagraves resolution.

The period for a positive exercise of a veto by an executive is fixed at ten days by the Federal'Constitution, the State Constitution, the Second Class Cities Law, the New York city charter, and various other city charters which have been granted by the State Legislature. Under the two Constitutions the period during which the executive may by action or inaction render an enactment nugatory, varies in length accordingly as Congress or the Legislature may be in session. If in session, the bill presented becomes a law, unless the executive acts in a positive manner, within ten days, by returning the bill with his veto. On the other hand, if the legislative body is not in session, and the executive fails to act within thirty days, the bill does not become a law. (U. S. Const, art. 1, sec. 7; State Const, art. IV, sec. 9.) The controlling factor is the presence of the legislative body in regular session, or the absence of such a body. Self-evidently, the ten-day provision obtains, when the Legislature is present, in order that, upon the prompt return of a veto, that body may exercise its prerogative of repassing the bill over the veto by a sufficient vote, so that it may become a law. We think that the limits of a reasonable period, for the exercise of the veto power by the mayor of Long Beach, should be determined by these analogies and the reasons which have given them vogue. He should have a minimum period of ten days, or if the common council is not in regular session during that period, then until the next regular meeting of the common council. This is substantially the provision of the New York city charter. (Greater New York charter, sec. 40.) We fix upon the next “ regular meeting rather than a special meeting for the reason that the power to shorten the veto period by calling a special meeting should not be accorded to members of the common council. Stated meetings of the common council of the city of Long Beach must be held at such times as the council shall prescribe by ordinance. (Laws of 1922, ch. 635, sec. 71.) There is proof in the case that monthly meetings have been prescribed by ordinance. The date when such meetings are required to be held has not been given. However, it appears from the proof that all the meetings held between December 17, 1925, when the Seagraves resolution was passed, and January 2, 1926, when the mayor filed his veto, were special, not regular, meetings. Therefore, we hold that the period for the exercise of the veto power had not been exhausted and that the veto filed on January 2, 1926, was effective to nullify the resolution of consent.

The charter of the city of Long Beach (Laws of 1922, ch. 635) in section 85 thereof provides in part as follows: In legislative sessions the council shall act by ordinance, resolution or motion * * *. No ordinance shall be passed finally on the date it is introduced, except in cases of special emergency. * * * No ordinance making grant of any franchise or special privilege shall over be passed as an emergency measure.” Section 76 provides that “ Every ordinance or resolution * * * authorizing any franchise or right to occupy or use the streets, * * * shall be complete in the form in which it is finally passed ” and that every proposed ordinance shall be published once in full in a newspaper published in the city of Long Beach * * * at least ten days before such ordinance is finally passed.” The consent of local authorities to the operation of buses upon its streets, when coupled with a certificate of convenience and necessity issued by the Public Service Commission, constitutes a grant of a special franchise. (City of New York v. Bryan, 196 N. Y. 158.) We take it to be the clear meaning of the charter provisions quoted that in the city of Long Beach the required consents may be granted only through the medium of an ordinance. Such an ordinance must be published in a newspaper at least ten days before it is finally passed. There was no such publication of the Seagraves resolution. Therefore, the resolution did not constitute an ordinance; it had not been legally adopted as such; it was ineffective to constitute a consent by the city to the operation of the intervenor’s buses upon the city streets.

For these reasons we think that the Public Service Commission was without jurisdiction to issue a certificate of convenience and necessity to the intervenor.

The order of the Appellate Division should be reversed and the determination of the Public Service Commission annulled, with costs in all courts.

Andrews, J.

(dissenting). The power of the Public Service Commission to grant a certain certificate of convenience and necessity is here challenged. Under section 20 of the Transportation Corporations Law a corporation was organized to operate omnibuses upon public streets in the city of Long Beach. It is, therefore, a common carrier ” within the meaning of the Public Service Commissions Law and it must obtain the consent of the city, given by the common council “ acting subject to the power now possessed by the mayor to veto ordinances.” It must also obtain the certificate mentioned, but this may not be received until after public notice and a hearing, the consent of the local authorities ” of Long Beach has been procured. Only then may its line be operated. (Transportation Corp. Law, secs. 25, 26; Railroad Law, sec. 171.)

It is claimed that this local consent is a prerequisite to any action on the part of the Commission. Should it appear, therefore, that it has not in fact been given because a favorable ordinance or resolution has been vetoed by the mayor; because there has been no public notice or hearing; because some provision of a city charter as to the method of adopting ordinances has been neglected; because for any reason the consent is invalid; then the Commission has no jurisdiction. It is required to determine for itself, as a preliminary matter, questions of law and fact, often, as here, numerous; often doubtful.

Such was not the intent of the Legislature. There was no design to turn the attention of the Commission from its appropriate and exacting duties. In one section a corporation is required to obtain a certificate. In the next it is forbidden to operate until it has procured local consent, nor receive the certificate until it has done so. Here is no hint of a limitation of the jurisdiction of the Commission. Had such been designed it naturally would .have been placed in section 25 or in some part of the Commissions Law. At least it would have been plainly expressed in this paragraph, not left to inference from a casual statement. The injunction that the consent shall not be received by the petitioner until the consent is procured may not be so extended. The word receive ” may have been inapt. Yet one meaning is to be affected by the thing transmitted.” Here two distinct prerequisites to the operation of omnibuses over city streets are specified, the certificate and the consent. The corporation may not take delivery of the former, it may not accept it when offered in the sense of treating it as alone adequate for its purposes. The whole purpose of section 26 is to indicate that local consent is necessary and that it may be given subject to terms, not to fix the time when it shall be obtained. It is also to prohibit beyond question all operation until compliance with every condition imposed by statute.

In the record is a concession that public convenience and necessity would be promoted by the grant of this certificate. I think that to be the sole question with which the Commission deals. Its action was, therefore, right. If in truth the corporation has never obtained the consent of the local authorities, then until it does so it may not operate in the public streets of the city. Such a dispute is to be settled elsewhere.

The judgment of the Appellate Division should be affirmed, with costs.

Cardozo, Ch. J., Pound, Crane and O’Brien, JJ., concur with Kellogg, J.; Andrews, J., dissents in opinion, in which Lehman, J., concurs.

Ordered accordingly.


author: Pound, J. Crane, J. Cardozo, Ch. J. Andrews, J.

text:
    Little Falls Fibre Company et al., Respondents, v. Henry Ford & Son, Inc., Appellant.

      (Argued October 23, 1928;
    decided December 31, 1928.)

      Charles E. Nichols, Jr., and Robert E. Whalen for appellant.
    Defendant’s complete justification is found in its license from the Federal Power Commission, as supplemented by the regulations, approved by the Secretary of War, which govern the installation of the flashboards. (People v. Page, 39 App. Div. 110; People ex rel. Loomis v. Canal Appraisers, 33 N. Y. 461; Danes v. New York, 219 N. Y. 67; People v. Gilchrist, 221 App. Div. 19; People v. N. Y. & O. Power Co., 219 App. Div. 114; Gibbons v. Ogden, 9 Wheat. 1; People v. Hudson River Connecting R. R. Corp., 228 N. Y. 203; Gilman v. Philadelphia, 3 Wall. 713; United States v. Chandler-Dunbar Co., 229 U. S. 53; Alabama Power Co. v. Gulf Power Co., 283 Fed. Rep. 606; New Jersey v. Sargent, 269 U. S. 328.) What the Federal government itself could have done legally, it can lawfully accomplish through the agency of the defendant. (Wisconsin v. Duluth, 96 U. S. 379; Clallan County v. U. S., 263 U. S. 341; Westfall v. U. S., 274 U. S. 256; People v. Hudson River Connecting R. R. Co., 228 N. Y. 203; Central Pacific R. R. v. California, 162 U. S. 91; Southern Pacific R. R. v. United States, 183 U. S. 519; Transportation Co. v. Chicago, 99 U. S. 635; Green Bay, etc., Co. v. Patten Paper Co., 172 U. S. 58; Jaybird Mining Co. v. Weir, 271 U. S. 609; Alabama Power Co. v. Gulf Power Co., 283 Fed. Rep. 606.) The motive of the defendant in erecting the flashboards is immaterial. (Green Bay, etc., Co. v. Patten Paper Co., 172 U. S. 58; Kiff v. Youmans, 86 N. Y. 324; Waterloo Mfg. Co. v. Shanahan, 128 N. Y. 345; ChaseHibbard Co. v. City of Elmira, 207 N. Y. 460.) Even were the judgment right on the merits, the extra allowance granted to plaintiffs exceeds the statutory limit. (People v. Page, 39 App. Div. 110; Conaughty v. Saratoga County Bank, 92 N. Y. 401; Hathorn v. Natural Carbonic Gas Co., 179 App. Div. 425; Williamsburgh City Fire Ins. Co. v. Central New England Ry. Co., 202 App. Div. 813; Rothery v. New York Rubber Co., 24 Hun, 172; 90 N. Y. 30.)

      George E. O’Connor and Thomas O’Connor for respondents.
    The mere permission or Acense from the Secretary of War for the installation of flashboards on the dam does not create any agency nor does it invest the defendant with any “ privilege ” or “ immunity ” to seize a portion of plaintiffs’ water power without incurring any Aability. (Cobb v. Commissioners of Lincoln Park, 202 Ill. 427; Pumpelly v. Green Bay Co., 80 U. S. [30 Wall.] 166; Sammons v. City of Gloversville, 175 N. Y. 346; Murphy v. Commissioners of Emigration, 28 N. Y. 134; Brown-Brandt Realty Co. v. Saks, 126 Misc. Rep. 336; Bellinger v. New York Central R. R. Co., 23 N. Y. 42.) The Federal government itself could not take plaintiffs’ water power without making compensation therefor as required by the Constitution. (United States v. Cress, 243 U. S. 316; Matter of State Reservation, 37 Hun, 537; Monongahela Navigation Co. v. United States, 148 U. S. 312; Boyd v. The United States, 115 U. S. 616; United States v. Lynch, 188 U. S. 445; American Woolen Co. v. State, 195 App. Div. 698; Comrs. of Canal Fund v. Kempshall, 26 Wend. 414.) The extra allowance granted to plaintiffs should be increased. (Conaughty v. Saratoga County Bank, 92 N. Y. 401; United Paper Bd. Co. v. Iroquois P. & P. Co., 226 N. Y. 38; Lattimer v. Livermore,
      72 N. Y. 174; Empire City Subway Co. v. Broadway & Seventh Ave. R. R. Co., 87 Hun, 279; 1-59 N. Y. 555; Henderson Est. Co. v. Carroll Elect. Co., 113 App. Div. 775; 189 N. Y. 533; Hudson Riv. Tel. Co. v. Walefvliet T. & R. Co., 135 N. Y. 393; People v. Rochester Dime Sav. Assn., 7 App. Div. 350; Rochester & H. V. R. R. Co. v. City of Rochester, 17 App. Div. 257; 163 N. Y. 58; Hayden v. Matthews, 4 App. Div. 338; 158 N. Y. 785.)
   Pound, J.

The Federal Water Power Act (June 10, 1920, ch. 285; 41 Stat. 1063; U. S. Code, title 16, § 797, subd. d) created the Federal Power Commission which is empowered, with limitations not applicable to this case, “ To issue licenses to citizens of the United States, or to any association of such citizens, or to any corporation organized under the laws of the United States or any State thereof, or to any State, or municipality for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient for the development and improvement of navigation, and for the development, transmission, and utilization of power across, along, from or in any of the navigable waters of the United States, or upon any part of the public lands and reservations of the United States (including the Territories), or for the purpose of utilizing the surplus water or water power from any Government dam, except as herein provided.”

The defendant applied to the Federal Water Power Commission for permission to install dashboards on the Troy Dam in connection with our power house.” The Troy Dam is a Federal wing dam in the Hudson river at Troy constructed to regulate navigation under an act of Congress. Defendant has a power house at Green Island using power developed at the dam. It desired to raise the level of the dam in order to develop more power. The Commission thereupon issued to it a water power license. The terms of the license are unnecessarily broad and are operative practically, so far as this litigation is concerned, only as applied to the maintenance of the flashboards. The flashboards were erected by defendant with the result that the water from down stream backed up so as to reduce the head at plaintiffs’ manufacturing plants up stream. Plaintiffs are riparian owners who claim to be entitled to the flow of the stream as against this defendant, unobstructed by the flashboards. (Clinton v. Myers, 46 N. Y. 511, 516; U. S. v. Rio Grande Dam & Irrigation Co., 174 U. S. 690, 702.) Their rights must yield to the power of Congress to regulate commerce (U. S. Const. art. 1, § 8, clause 3), but not to individuals. (Sage v. Mayor, 154 N. Y. 61.) They brought this action for an injunction and damages. They have succeeded in obtaining a judgment enjoining the defendant from maintaining the flashboards and awarding damages. The question is whether they must submit to the authority of the Federal Water Power Commission as asserted by the defendant under its license.

The construction of dams in the Hudson river without the consent of the Federal government is prohibited.

“ It shall not be lawful to construct or commence the construction of any bridge, dam, dike, or causeway over or in any port, roadstead, haven, harbor, canal, navigable river, or other navigable water of the United States until the consent of Congress to the building of such structures shall have been obtained and until the.plans for the same shall have been submitted to and approved by the Chief of Engineers and by the Secretary of War: Provided, That such structures may be built under authority of the Legislature of a State across rivers and other waterways the navigable portions of which lie wholly within the limits of a single State, provided the location and plans thereof are submitted to and approved by the Chief of Engineers and by the Secretary of War before construction is commenced.” (U. S. Code, title 33, § 401.)

Since the enactment of chapter 425, Acts of Congress, 1899, “ the creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity of any of the waters of the United States is * * * prohibited,” even though the waterway is within the limits of a single State. (U. S. Code, title 33, § 403; U. S. v. Rio Grande Dam & Irrigation Co., supra, pp. 708, 709; Economy Light Co. v. U. S., 256 U. S. 113, 123.) It has been .held that these sections do not imply that the “affirmative authorization” of the building of a dam under such a permit is given by Congress with the same effect as though Congress had undertaken the enterprise itself. They merely place a condition upon the exercise of such right. The right to construct the dam must be established independently of the Federal permit. (International Bridge Co. v. New York, 254 U. S. 126, 132.)

The sections above quoted are negative. The provisions of the Federal Water Power Act are affirmative. They purport to permit and regulate the granting of licenses for power purposes. Defendant claims to have obtained from the Commission more than a permit to place an obstruction in a navigable stream; more than a permit which purports to give the defendant no right to build the structure and merely sanctions the exercise of rights obtained elsewhere. The Commission has made a finding, without taking evidence to support it, in substance in the language of the Water Power Act (U. S. Code, title 16, § 797, subd. d) “ that the contemplated improvement is desirable and justified in the public interest far the purpose of improving and developing the Hudson River for the use and benefit of interstate commerce.” It has also made regulations pursuant to Federal Water Power Act, section 18 (U. S. Code, title 16, § 811) to govern the maintenance of the flashboards “ in the interests of navigation.”

Although the act provides (§ 10-c; U. S. Code, title 16, § 803, subd. c): “ Each licensee hereunder shall be liable for all damages occasioned to the property of others by the construction, maintenance, or operation of the project works or of the works appurtenant or accessory thereto, constructed under the license, and in no event shall the United States be hable therefor,” defendant contends that this section is inapplicable; that plaintiffs have suffered no damages because there has been no taking of private property but merely a regulation of the flow of the river by the Federal government in aid of navigation, for which the plaintiffs could have no compensation against the United States and, therefore, none against its licensee. Private property may not be taken for public use without compensation (U. S. v. Cress, 243 U. S. 316), but the flow of the stream of a navigable river is in no sense private property and there is no room for judicial review, at the instance of the private owner of the banks of a stream whose lands are not flooded, of a determination of Congress that such flow is needed for the purposes of navigation. (U. S. v. Chandler-Duribar Water Power Co., 229 U. S. 53; New Jersey v. Sargent, 269 U. S. 328, 337.) Defendant asserts that its license is the equivalent of such a determination of Congress and is not subject to judicial review.

The first question is as to the effect of a Federal permit to place an obstruction in a ■ navigable stream for the private business purposes of the licensee upon the rights of up-stream owners to the free flow of the stream.

The jurisdiction of the Federal Power Commission to issue a license for the use of the waters of the Hudson river for power purposes and the effect of such a license are to be determined by the courts. When some right asserted under a license becomes the subject of actual controversy, excess of jurisdiction is a necessary ground for judicial review to maintain the supremacy of law and keep administrative boards to the exercise of their delegated powers. (Matter of Quinby v. Public Service Commission, 223 N. Y. 244; New Jersey v. Sargent, supra, p. 339.) The. finding of the Commission that the project work is in aid of navigation is not conclusive on the courts in the absence of evidence to support it, even though the license is in form within the delegated powers of the Federal Water Power Commission. (People ex rel. N. Y. & Queens Gas Co. v. McCall, 245 U. S. 345, 348.)

It may be assumed, although we do not attempt to decide, that Congress may, in connection with its limited enumerated express or implied powers, provide for the development of water power in aid of or as incidental to such powers (U. S. Const, art. 1, § 8, clause 18); and that it may not, within the scope of the Constitution, go into the business of power development as an independent proposition. The extent of the authority of Congress to enact laws to carry into execution its enumerated powers need not be considered at this time. Doubtless it is very broad. (M’Culloch v. Maryland, 4 Wheaton [U. S.] 316; Legal Tender Case, 110 U. S. 421; New Jersey v. Sargent, supra.) How far Congress may delegate its powers to regulate navigation in this connection remains an open question. We will .assume, although we do not so decide, that the Federal Water Power Act, properly construed, is a constitutional exercise of legislative power. (New Jersey v. Sargent, supra.) The license granted to defendant herein does not result in any development and improvement of navigation. Its plain effect is the removal of the prohibition of Congress against the placing of an obstruction in a navigable stream; nothing more is accomplished.

The evidence on the trial clearly establishes the fact that the flashboards are neither authorized by the Commission nor maintained by defendant except for the private purposes of defendant in developing power and that their erection has no relation to the interests of navigation except that they must not interferejwith navigation. The license, so far as it purports to delegate to defendant the powers of Congress to regulate navigation, is an extra-jurisdictional act of an administrative board, affording no protection to defendant as against the rights of others.

In conclusion, we have no reason to assume that the Federal Water -Power Commission intended by its license to exempt the holder from liability for damages to the rights of others or to legalize what would otherwise be a trespass as to them. Defendant, we think, places more reliance on the form than on the substance of its permit. Congress did not authorize the grant of water power licenses which might be utilized to the detriment of existing power rights without compensation. (Head v. Amosheag Mfg. Co., 113 U. S. 9, 26; U. S. Code, title 16, § 814.)

, A question of costs remains. We are of the opinion that the additional allowance based on the value of the subject matter involved ” was proper (Civ. Prac. Act, § 1513, subd. 2), the subject-matter involved being the plaintiffs’ right to use the water of the river without interference and one of the plaintiffs having suffered no damage on which the additional allowance could be computed.

The judgment should be affirmed, with costs.

Crane, J.

(concurring). The permission given by the Federal Power Commission to install flashboards on the Troy Dam was nothing more or less than permission. It meant that so far as the United States government was concerned, it had no objection to the applicant making this use of the dam. In the same way, it might have given permission to an individual to walk over it. If he did any damage in walking over it, or any damage in putting up the flashboards, that was his own lookout, for which he would have to pay. The applicant was not obliged to put up any flashboards for any purposes of the United States government; it was solely his own affair; he could do it or not just as he pleased. The Commission merely said: “ We have no objection.” I do not see how the power of the Commission is involved in this litigation.

Cardozo, Ch. J.

(concurring in result). The license by the Commission, whether within the jurisdiction of that body or without it (cf. People ex rel. Lehigh Valley Ry. Co. v. State Tax Comm., 247 N. Y. 9, 15), did not exempt the holder from liability for damage caused to others by a diversion of the waters, nor authorize the impairment without requital of existing rights of property (U. S. Code, title 16, § 803, subd. c; § 814; Otis Co. v. Ludlow Mfg. Co., 201 U. S. 140, 152; Kaukauna Co. v. Green Bay Canal Co., 142 U. S. 254, 276; Head v. Amoskeag Mfg. Co., 113 U. S. 9, 23, 26).

Until such rights have been condemned by appropriate proceedings (U. S. Code, title 16, § 814; cf. N. Y. Condemnation Law [Consol. Laws, ch. 73], §§ 17, 24; Sweet v. Rechel, 159 U. S. 380, 401; Crozier v. Krupp, 224 U. S. 290), the defendant is still a trespasser in obstructing the flow of the stream to the damage of a neighbor.

Whether the power of eminent domain may lawfully be exercised under section 814 of the statute by one so situated as the defendant is a question not before us.

The judgment should be affirmed with costs.

Andrews, J.

(concurring in result). Before 1789 the bed of the Hudson river was the property of the State of New York. It also exercised governmental control over its waters. In a navigable stream, whatever property and powers the State had were held in trust for the people of New York and were subject to their right to use the river for their own navigation and commerce. (Matter of Mayor, 182 N. Y. 361; People ex rel. Palmer v. Travis, 223 N. Y. 150.) The State might regulate its flow by dams or other means. It might improve its bed. It might remove obstructions. It might to a reasonable extent divert its waters into canals. It might exercise all the powers possessed by the King and Parliament before the Revolution.

A riparian proprietor also had certain rights. He was entitled to access of the stream. He might erect docks not interfering with navigation. (Town of Brookhaven v. Smith, 188 N. Y. 74.) He might divert reasonably its flow and lead it over his own land so creating water power. And he might do this as well where the level of the river was raised by a State dam as where the river passed his property in its natural condition if only such surplus was taken as was not needed for State purposes. (United Paper Board Company v. Iroquois Pulp & Paper Company, 249 N. Y. 588.) Except to improve navigation the State would have no right to deprive him of the use of the amount of water which naturally ran past his premises.

Some things, however, were not permitted. Without consent he might not enter upon State lands and erect structures thereon. He might not build a dam or other obstruction to the flow of the river. If he did he created a purpresture, or, if it also interfered with navigation, a public nuisance. (People v. Vanderbilt, 26 N. Y. 287; Ice Company v. Schultz, 116 N. Y. 382.) In either case it might, be abated and removed at the suit of the Attorney-General. If a public nuisance a remedy might also be had in an action by any one shown to be especially injured thereby. So I think, if a purpresture. Under our form of government, title being in the people, any one especially injured by the invasion of their rights should have a remedy as in the case of a nuisance.

All these rights and powers remain unchanged except in so far as we have chosen to surrender them to the government of the United States. We did agree that Congress should have power to regulate commerce with foreign nations and among the several States. Just how far we believed we surrendered our authority over the Hudson by this clause is far from clear. Singularly little appears in the debates of the Convention, in the debates here when the Constitution was ratified or in the Federalist on the subject, although the need for the creation of a central authority to regulate commerce was one of the moving causes for the adoption of the Constitution. (Brown v. Maryland, 12 Wheat. [U. S.] 419.)

Whatever may have been understood at the time we are admonished that the words used are to be given a broad significance. (Gilman v. Philadelphia, 3 Wall. [U. S.] 713; Gibson v. United States, 166 U. S. 269; United States v. Chandler-Dunbar Water Power Co., 229 U. S. 53; New Jersey v. Sargent, 269 U. S. 328.) They confer the power not only to regulate shipping itself but to regulate the stream. Congress may deepen the river; turn one channel into another; remove obstructions; build dams to regulate the flow of the water; forbid, without its consent, the erection of structures that do or may interfere with navigation, and may doubtless do many other things. But there is a limit to its power. Whatever it does must be to regulate commerce with foreign nations and among the several states.” It has no rights in the Hudson not connected with navigation. (Groat v. Moah, 94 N. Y. 115; People v. International Bridge Company, 223 N. Y. 137, 145.) And it is for the courts to determine whether this limit has been exceeded. They must decide ultimately whether congressional regulation has any relation to commerce. (Chief Justice Fuller in Lottery Cases, 188 U. [S. 321.) If it has not, there is no basis upon which it may rest.

Undoubtedly Congress may determine for itself what is an obstruction to a navigable stream and its determination is conclusive. It may forbid the erection of bridges or dams or it may, so far as it is concerned, permit them with the consent of some official. It does these things in connection with its power over commerce. It has no power, however, to give an individual plenary authority to erect a dam for power purposes across the Hudson. Its permit merely waives an objection to such a work that the United States might otherwise make. Any one relying on that permit alone commits a trespass upon the lands of the State. He invades its property. As has been said, it is a purpresture subject to abatement. And as I have before indicated, I think any one especially injured has a remedy.

The act we have before us is a general one as is pointed out by the chief judge subjecting all dams and similar buildings to Federal license and supervision. So much may be done. Their erection and maintenance directly affect the flow of a navigable river. They cannot be built without Federal consent. (People ex rel. Lehigh V. By. Co. v. Tax Commission, 247 N. Y. 9.) But this consent is not enough unless it is given in aid of navigation. It removes but one obstacle in the way of the lawful maintenance of the dam.

Taken at its face value the act does more than refer to navigation. It permits dams for the development of water power. This Congress has no power to do. At most it may give its consent if the dam is otherwise permitted. Under that consent alone the defendant has no authority to do what it has done.

For on its face the permission shows it was given with no reference to commerce. Clearly it was simply to allow the defendant to develop water power for manufacturing purposes. Acting under it alone the defendant has violated the rights of the State and has also injured the plaintiffs.

It seems to me immaterial whether we construe the statute with an or ” or an and.” If with “ or ” it is plainly a usurpation of power nowhere conferred. If with “ and,” I think it equally unauthorized. I do not think the United States may traffic in excess power, created by a dam legally created for purposes of commerce. What is said in the Chandler-Dunbar case is plainly a dictum. But whether this be so or not we need not decide. Here, as has been said, there is no attempt to sell such excess power. New power is attempted to be created for purely private purposes.

Crane, J., in memorandum, Lehman, Kellogg and O’Brien, JJ., concur with Pound, J.; Cardozo, Ch.' J., and Andrews, J., in opinions concur in result.

Judgment affirmed, etc.


text:
    Maudella M. Cahill, as Executrix of William P. W. Haff, Deceased, Respondent, v. Harmon B. W. Haff, Appellant.
    (Submitted July 19, 1928;
    decided October 2, 1928.)
   Motion to amend remittitur so as to authorize application forthwith to a Special Term of the Supreme Court for the entry of an interlocutory decree in accordance with the terms of the remittitur, granted. (See 248 N. Y. 377.)


author: Per Curiam.

text:
    Wallace S. Jacobs, Respondent, v. Albert Stieglitz et al., Copartners under the Firm Name of Halle & Stieglitz, Appellants, Impleaded with Others.
    (Argued October 1, 1928;
    decided October 9, 1928.)

      Osmond K. Fraenkel for appellants.

      Abraham Benedict and Gustavus A. Rogers for respondent.
   Per Curiam.

Without attempting to determine the effect of the admissions of the supplemental complaint in their bearing on the defendants’ counterclaim, we hold that they are not so inconsistent with the cause of action for an account stated as to justify a dismissal of the original complaint at this stage of the controversy.

No other question has been certified to this court.

Neither in the supplemental pleading, nor in the reply to the amended answer, is there an unequivocal admission that the plaintiff has charged his account with a lien in the defendants’ favor.

The order should be affirmed with costs, and the question certified answered “ No.”

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

Order affirmed, etc.


text:
    In the Matter of Mary H. Tompkins et al., Appellants, against Henry Bruckner, as President of the Borough of The Bronx, New York City, Respondent.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Per Curiam.

The order was affirmed upon the ground that there was no clear legal duty on the part of the Borough President to remove bungalows from streets which had not yet been regulated and opened to the public.

The motion for reargument should be denied, with ten dollars costs and necessary printing disbursements.

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


text:
    Helen Palsgraf, Respondent, v. The Long Island Railroad Company, Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Per Curiam.

Motion for reargument.

If we assume that the plaintiff was nearer the scene of the explosion than the prevailing opinion would suggest, she was not so near that injury from a falling package, not known to contain explosives, would be within the range of reasonable prevision.

The motion should be denied, with ten dollars costs and necessary printing disbursements.

Cardozo, Ch. J., Pound, Lehman and Kellogg, JJ., concur; Crane, Andrews and O’Brien, JJ., concur in result.


text:
    Bridget Carney, Respondent, v. James P. Morrison, Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)

      Ralph C. Taylor for motion.

      Florence J. Sullivan opposed.
   Motion granted and appeal dismissed, with costs and ten dollars costs of motion.


text:
    Rose Bovin, Respondent, v. Samuel Galitzka et al., Defendants, and Philip Schoor, Appellant.
    (Argued October 1, 1928;
    decided October 9, 1928.)

      Jesse S. Raphael for motion.

      J. Irwin Shapiro opposed.
   Motion denied.


text:
    Rosa Rosenfeld, Respondent, v. Hyman Aaron et al., Appellants.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion granted. Return of remittitur requested and remittitur when returned will be amended so as to read “ with separate bills of costs to each defendant.”


text:
    Silver’s Lunch Stores, Inc., Appellant, v. Richard L. Lee, Respondent.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 248 N. Y. 573.)


text:
    Miles R. Martin, Jr., Respondent, v. The Gotham National Bank of New York, Appellant, Impleaded with Others.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 248 N. Y. 313.)


text:
    Patrick W. Casey, Appellant, v. Frank A. Shane et al., Individually and as Copartners under the Name of Shane Construction Company, Respondents.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 248 N. Y. 625.)


text:
    The Tecla Corporation et al., Appellants, v. Salon Tecla, Ltd., Respondent.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motions to amend remittitur denied. (See 249 N. Y. 157.)


text:
    Augustus J. Buffington, as Administrator of the Estate of Earl A. Buffington, Deceased, Appellants, v. Boston and Maine Railroad, Respondent.
    (Argued October 1, 1928;
    decided October 9, 1928.)

      Jarvis P. O’Brien for motion.
    No one opposed.
   Motion granted and appeal dismissed, with costs and ten dollars costs of motion.


text:
    Ernest G. Hand, Respondent, v. Thomas Rourke, as Executor of John H. Rourke, Deceased, Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)

      Walter J. Relihan for motion.
    No one opposed.
   Motion granted and appeal dismissed, with costs.


text:
    Max Rosenblatt, Appellant, v. Surprise Building Company, Respondent.
    (Argued October 1, 1928;
    decided October 9, 1928.)

      Adam K. Strieker for motion.

      Benjamin Algase and Herman Shulman opposed.
   Motion denied.


text:
    Walston H. Brown, Individually and as Trustee for Stockholders of the California Company, Plaintiff, v. Bank of Pittsburgh National Association, as Administrator of the Estate of William L. Kann, Deceased, et al., Respondents. Eva R. I. Brown, as Committee of the Estate of Walston H. Brown, an Incompetent Person, Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 248 N. Y. 571.)


text:
    Henry Moritz, Respondent, v. J. Eisner & Sons, Inc., Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 249 N. Y. 100.)


text:
    John S. Kedrovsky, Individually and on Behalf of Others, Respondent, v. Archbishop and Consistory of the Russian Orthodox Greek Catholic Church et al., Defendants. Platon Rozdestvensky et al., Appellants.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion granted and the remittitur when returned will be amended by providing that the judgment of the Appellate Division and that of the Special Term so far as appealed from be reversed and a new trial granted, with costs to abide the event.


text:
    Corklite Company, Inc., Respondent, v. The Rell Realty Corporation, Defendant, Isaac Goldberg et al., Respondents, and Capital City Surety Company, Appellant. Louis Baron et al., Respondents, v. The Rell Realty Corporation et al., Defendants, G. Goldberg & Son, Inc., et al., Respondents, and Capital City Surety Company, Appellant.
    (Submitted October 1, 1928;
    decided October 9, 1928.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 249 N. Y. 1.)


text:
    In the Matter of the Estate of Margaret C. Wells, Deceased. Gurnsey S. Sheeley, Appellant; Harry L. Wells, as Executor, Respondent.
    (Submitted October 1, 1928;
    decided October 16, 1928.)

      Henry Hirschberg for appellant.

      Peter Cantline for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.


text:
    In the Matter of the County of Westchester, Appellant, against The Common Council of the City of Yonkers, Respondent.
    (Argued October 1, 1928;
    decided October 16, 1928.)

      Thomas M. Smith, Charles H. Peck, Francis J. Morgan and Henry R. Barrett for appellant.

      Harry J. Laragh, Corporation Counsel {Richard E. FitzGibbon of counsel), for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.


text:
    In the Matter of the Petition of Henry Bogardus, Appellant, for Revocation of Letters of Administration on the Estate of Elizabeth B. Payne, Deceased. Peter H. Payne, as Administrator, Respondent.
    (Argued October 1, 1928;
    decided October 16, 1928.)

      Louis L. Waters and George M. Haight for appellant.

      Ira P. Betts and George T. Fuggle for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.


text:
    In the Matter of the Claim of Charles K. Skora, Respondent, against Conservative Building Corporation et al., Appellants. The State Industrial Board, Respondent.
    (Argued October 2, 1928;
    decided October 16, 1928.)

      Joseph Force Crater and James A. Nooney for appellants.

      Albert Ottinger, Attorney-General {E. C. Aiken of counsel), for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.


text:
    In the Matter of the Claim of Label Loonsk, Respondent, against Loonsk Brothers Cleaning and Dyeing Works et al., Appellants. The State Industrial Board, Respondent.
    (Argued October 2, 1928;
    decided October 16, 1928.)

      Clayton M. Smith for appellants.

      Albert Ottinger, Attorney-General (E. C. Aiken of counsel), for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.


text:
    In the Matter of the Claim of Elsie Caniano, Respondent, against Yellow Taxi Corporation, Appellant. The State Industrial Board, Respondent.
    (Argued October 2,1928;
    decided October 16, 1928.)

      James A. Doherty, George L. Livingston and Abraham Jame for appellant.

      Albert Ottinger, Attorney-General (E. C. Aiken of counsel), for respondent.
   no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ.