text:
    William C. Heaton et al., Doing Business under the Firm Name of W. C. Heaton and Company, Respondents, v. City of Cohoes, Appellant.
    (Argued December 6, 1935;
    decided March 3, 1936.)

      John A. Brady, Corporation Counsel, for appellant.
    The Mayor of the city of Cohoes had no power or authority to enter into the alleged contract with plaintiffs for and on behalf of the city of Cohoes as set forth in the complaint. (L. 1915, ch. 130, §§ 31, 99, 110, 115, 187; Lord v. City of New York, 171 App. Div. 140; 221 N. Y. 663; Wakefield v. Gaynor, 67 Misc. Rep. 298; 144 App. Div. 905; 207 N. Y. 772; Dickinson v. City of Poughkeepsie, 75 N. Y. 65; McDonald v. Mayor, 68 N. Y. 23; People ex rel. Coughlin v. Gleason, 121 N. Y. 634; Village of Fort Edward v. Fish, 156 N. Y. 363; Schneider v. City of Rochester, 160 N. Y. 165; Matter of Village of Kenmore, 59 Misc. Rep. 396; Parr v. Village of Greenbush, 72 N. Y. 463; Brady v. City of New York, 20 N. Y. 312; Whiteside v. United States, 93 U. S. 247; Hawkins v. United States, 96 U. S. 689; Matter of Niland v. Bowron, 113 App. Div. 661; 193 N. Y. 180; Salmon v. Rochester & Lake Ontario Water Co., 120 Misc. Rep. 131; Matter of City of New York [Piers Old Nos. 8-11], 228 N. Y. 140; Wallace v. San Jose, 29 Cal. 180; Mark v. Village of West Troy, 23 N. Y. Supp. 422;; O’Connor v. Walsh, 83 App. Div. 179; Lyddy v. Long Island City, 104 N. Y. 218; Graham v. City of New York, 33 Misc. Rep. 56.) The Mayor under section 55 of the charter of the city of Cohoes is authorized and empowered solely to appoint one or more competent persons to examine, without notice, the accounts of any city officer or department and the money, securities and property belonging to the city in the possession or charge of any officer or department and to report the result of any examination. (Carney v. New York Life Ins. Co., 19 App. Div. 160; Crofut v. Brandi, 58 N. Y. 106; Matter of Cassidy v. Devoy, 164 App. Div. 897; Gibson v. Roach, 2 App. Div. 86; Haswell v. Mayor, 81 N. Y. 255; Wittmer v. City of New York, 50 App. Div. 482; O’Connor v. City of New York, 95 N. Y. Supp. 504.)

      Kenneth S. MacAffer and A. Kendall Roberts for respondents.
    Section 55 of the Cohoes charter (L. 1915, ch. 130) authorized employment of respondents. (Poillon v. City of Brooklyn, 101 N. Y. 132; O’Brien v. City of Niagara Falls, 65 Misc. Rep. 92; Peterson v. Mayor, 17 N. Y. 449; Cain v. Warner, 45 App. Div. 450.) The provisions of sections 31, 99, 110, 115 and 187 of the charter do not apply. (City of Brooklyn v. Furey, 9 Misc. Rep. 193; Snyder v. Hylan, 105 Misc. Rep. 78; 188 App. Div. 995; Harlem Gaslight Co. v. City of New York, 33 N. Y. 309; People ex rel. Smith v. Flagg, 17 N. Y. 584; O’Brien v. City of Niagara Falls, 65 Misc. Rep. 92; North River Electric Co. v. City of New York, 48 App. Div. 14; Mosher v. City of Elmira, 83 Misc. Rep. 328; Vermeule v. City of Corning, 186 App. Div. 206; Moore v. Mayor, 73 N. Y. 238.)
   Crouch, J.

Plaintiffs, certified accountants, sued to recover the contract price of professional services rendered to the defendant city under employment by the Mayor. Judgment was entered upon the verdict of a jury for $4,000 and interest and affirmed by the Appellate Division.

The essential facts found by the jury were that on October 2, 1929, the plaintiffs and the Mayor, acting for the defendant city, entered into a contract whereby the plaintiffs were authorized, (1) to examine the books and papers of the office of the Comptroller of the city of Cohoes, with a view to a thorough investigation and examination of the finances of the city of Cohoes and all its fiscal affairs; (2) to examine into the books and papers of all other departments of the city of Cohoes in any way relating to its financial condition or management; (3) to make recommendations as to the installation of a better system of accountancy and financial management; (4) to report as to each of said matters; that plaintiffs substantially performed the contract on their part; that the contract price was $4,000, and that the city had refused to pay.

If the Mayor in making the contract with plaintiffs acted within the scope of the authority granted to the

Mayor by the charter of the city of Cohoes (Laws of 1915, ch. 130), the judgment may be affirmed, otherwise not. The charter contains various provisions carefully limiting the power of city officers, boards and departments to contract debts on behalf of the city, and it is broadly provided (§ 115) that no person shall have power to contract any debt for which the city shall be liable unless specifically authorized by the provisions of the charter. The manner in which the power to contract debts shall be exercised and evidenced is also prescribed by various provisions. In particular the city points to section 110, which relates to the functions of the Board of Contract and Supply and provides, among other things, that it shall be the duty of such board after public notice, to let to the lowest bidder all contracts for the performance of any work for the use of any officer, board or department of the city in all cases where the expenses of such work shall exceed the sum of two hundred and fifty dollars, unless by ordinance of the Common Council unanimously adopted and unanimously approved by the Board of Estimate and Apportionment, it is determined to be impracticable to procure such work by contract, in which case said ordinance shall designate the officer, board or department to procure such work. Attention is also called to section 99, which provides that no officer, board or department shall incur any liability upon or by virtue of an open market order until an order in writing, made in triplicate, is submitted to the Comptroller, and he shall have certified thereon that unexpended funds, appropriated for that purpose, are available to meet a claim therefor if incurred.

It may be conceded that the contract in suit was not made in compliance with any of these various provisions. Because of such failure the defendant contends that the contract is unenforceable. Plaintiffs rest their entire case on section 55 of the city charter which reads as follows: j

“ § 55. Examination of books and accounts. The mayor shall have authority at all times to examine the books and papers of any officer, employee or department of the city and, as often as he may deem proper, to appoint one or more competent persons to examine, without notice, the accounts of any city officer or department, and the money, securities and property belonging to the city in the possession or charge of any officer or department and to report the result of such examination; and he may administer oaths to witnesses and take affidavits in all cases relating to the affairs of the city and its officers and employees, and he may issue a subpoena commanding a person to appear and produce books and papers in his possession.”

If under that section the Mayor was authorized to employ the plaintiffs for the purposes specified in the contract, he was authorized to do so without compliance with the general provisions relating to the ordinary contracts for work and material and, in the absence of fraud or utter abuse of discretion, his judgment as to the need of investigation or the expense thereof is a political and not a legal question. Any other construction would frustrate the essential purpose underlying that section. We are left then with the single question of whether the Mayor had authority to employ the plaintiffs to render their services for the purposes specified in the contract. We agree with the Appellate Division that the Legislature by section 55 intended to confer upon the Mayor the right to make summary investigations of the accounts, moneys, securities and property belonging to the city, whenever, in his judgment, there was reason to think there was or might have been unfaithfulness, intentional or otherwise, on the part of those persons charged with duties in relation thereto. Should officers become dishonest or corrupt, the power to investigate summarily is indispensable to the honest administration of municipal government.” (Heaton v. City of Cohoes, 244 App. Div. 19, 23.) So, also, when they become negligent or slipshod. Section 53 places upon the Mayor the duty “ to see that the city officers and departments faithfully perform their duties.” It seems clear enough that the power summarily to examine and to investigate is given to enable him to fulfill that duty. Beyond that it does not go.

But the plaintiffs were employed for no such purpose. They make no such' claim. They say they were employed to examine the accounts for the purpose of determining the financial position of the city of Cohoes, in particular reference to the constitutional debt limit; ” and to give “ substantial advice on finances,” presumably with reference to the better system of accountancy and financial management,” referred to in the contract. The written claim filed by them and approved by the Mayor so states. We find nothing in the language of section 55 to indicate that the Mayor may employ accountants for such purposes. There is nothing to prevent the Legislature from authorizing a municipality to employ a public accountant to examine its books for the purposes mentioned, in plaintiffs’ contract and in plaintiffs’ claim. (Gaynor v. Village of Port Chester, 230 N. Y. 210, 220.) If the Legislature has conferred such authority upon the city of Cohoes, it must be found in the general provisions relating to the power of contract. It was not, as we think, conferred upon the Mayor alone by the terms of section 55.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts.

Crane, Ch. J., O’Brien, Loughran and Finch, JJ., concur; Lehman, J., concurs in result; Hubbs, J., dissents.

Judgments reversed, etc.


source: Caselaw Access Project

author: Crouch, J.

license: Public Domain

text:
    Joseph A. Broderick, as Superintendent of Banks of the State of New York, Respondent, v. Robert Adamson et al., Defendants, and Isaac Gordon et al., Appellants.
    (Argued January 21, 1936;
    decided March 3, 1936.)

      Barnett E. Kopelman for appellants.
    Defendants having sold their stock in good faith prior to the insolvency of the bank, for a valuable consideration, to a person capable in law of taking and holding, such sale does not come within the purview of section 120 of the Banking Law (Cons. Laws, ch. 2) which cannot be construed to continue the seller’s assessment liability either by the application of the rules of statutory construction, or under the interpretation by the trial court, which would render it unconstitutional and void. (Matter of Gibson, 21 N. Y. 9; Broderick v. Aaron [Kornberg], 268 N. Y. 260; Broderick v. Adamson [Dinnen], 148 Misc. Rep. 353; 243 App. Div. 692; Richards v. Ackerman, 162 N. Y. Supp. 657; Van Tuyl v. Hachlier, 160 App. Div. 41; 211 N. Y. 540; Brown v. Crabb, 156 N. Y. 447; Cheney v. Woodruff, 45 N. Y. 98; Broderick v. Adamson, 148 Misc. Rep. 353; 243 App. Div. 692; Robinson v. National Bank of New Berne, 95 N. Y. 637; Lou Ow Bew v. United States, 144 U. S. 47; Bertles v. Nunan, 92 N. Y. 152; Matter of Steinway, 31 App. Div. 70; 159 N. Y. 250; Broderick v. Aaron [Sternlieb], 240 App. Div. 537; 266 N. Y. 506; Persons v. Gardner, 113 App. Div. 597; 188 N. Y. 571; Van Tuyl v. Schwab, 174 App. Div. 665; 220 N. Y. 661; Graham v. First Nat. Bank, 84 N. Y. 393.)

      Harold N. Cohen, Edward Feldman, Samuel K. Field and Carl J. Austrian for respondent.
    Defendants are personally liable for the assessment under section 120 of the Banking Law as transferors to a non-resident. (Broderick v. McGuire, 119 Conn. 83; Broderick v. Aaron [Kornberg], 268 N. Y. 260; Persons v. Gardner, 113 App. Div. 597; 188 N. Y. 571; Broderick v. Aaron [ Kessler], 268 N. Y. 411; Broderick v. Aaron [Sternlieb], 240 App. Div. 537; 266 N. Y. 506; Sinclair v. Fuller, 9 App. Div. 297; 158 N. Y. 607; McDonald v. Dewey, 202 U. S. 510; Matter of Reciprocity Bank, 22 N. Y. 9; Corning v. McCullough, 1 N. Y. 47; Cochran v. Wiechers, 119 N. Y. 399; Lowry v. Inman, 46 N. Y. 119; Wiles v. Suydam, 64 N. Y. 173; Bailey v. Hollister, 26 N. Y. 112; Van Tuyl v. Schwab, 174 App. Div. 665; 220 N. Y. 661; Howarth v. Angle, 162 N. Y. 179; Broderick v. Normandie Nat. Securities Corp., 240 App. Div. 409; 265 N. Y. 540; Broderick v. Adamson [Dixon & Co.], 240 App. Div. 229; Lowry v. Inman, 46 N. Y. 119; Flash v. Conn, 109 U. S. 371; Hancock Nat. Bank v. Farnum, 176 U. S. 640; Whitman v. National Bank of Oxford, 176 U. S. 559; Bernheimer v. Converse, 206 U. S. 516; Converse v. Hamilton, 224 U. S. 243; Selig v. Hamilton, 234 U. S. 652; Marin v. Augedahl, 247 U. S. 142; Broderick v. Aaron, 264 N. Y. 368; Johnson v. Underhill, 52 N Y. 203.) Defendants are personally liable for the assessment under subdivision 1 of section 120 of the Banking Law as stockholders of record. (Telegraph Co. v. Davenport, 97 U. S. 369; Broderick v. Aaron, 151 Misc. Rep. 516; Mohr v. Penny Co., 242 App. Div. 385.)
   Crouch, J.

On and prior to December 11, 1930, the defendant Isaac Gordon appeared and now appears upon the stock ledger of The Bank of United States as the owner and holder of eighty shares of its capital stock which were represented by three certificates, one of fifty shares, one of twenty shares and one of ten shares; and defendants Isaac Gordon and Yale Schulman appeared and now appear as the joint owners and holders of 150 additional shares of the capital stock of said bank, represented by two certificates, one of 100 shares and one of 50 shares. On December 9, 1930, defendants sold and delivered the entire 230 shares to one Ethel Gordon, who then resided and still resides in Stamford, Conn.

This action was brought upon an assessment of twenty-five dollars per share, levied against the defendants as the holders of record of said 230 shares. Plaintiff had judgment which was unanimously affirmed upon appeal.

Prior to the closing of the bank, the five certificates representing the 230 shares had been presented for transfer and transfer had been refused. It was found below that the refusal was unwarranted as to three of the certificates representing 160 shares. We may disregard that phase of the case and deal with the question presented as if the transfer of the entire 230 shares had been made of record, since the decision below was that a full and complete transfer by the defendants Isaac Gordon and Yale Schulman to Ethel Gordon, a resident of the State of Connecticut, of the stock held by them upon the books of The Bank of United States would not have relieved them from liability for the payment of the assessment so levied against them.” The reason given for that decision was that “ under the provisions of section 120 of the Banking Law the transfer of stock of a domestic banking corporation to a non-resident of the State of. New York does not operate to relieve that transferor from liability.”

It is the contention of the appellants that since article VIII, section 7, of the State Constitution provides that stockholders ” shall be liable fdr the assessment, the Legislature could not preserve the liability of persons, once stockholders, who had ceased to occupy that status prior to the closing of the bank; and, in any event, that the Legislature has not done so.

The constitutional provision is not self-executing, nor does it define the term stockholder.” We turn to the statute. Section 120 of the Banking Law (Cons. Laws, ch. 2) says that The stockholders of every bank shall be individually responsible, equally and ratably and not one for another, for all contracts, debts and engagements of the bank; ” and then it says: “ The term ‘ stockholder/ as used in this section shall apply to: 1. Such persons as appear by the books of the bank to be stockholders; 2. Every owner of stock, legal or equitable, although the same may be on such books, in the name of another person.” The defendants, having in good faith transferred their stock, and the transfer having been made on the books of the bank, they are neither stockholders of record nor the legal or equitable owners of the stock. But section 120 further says: “ No person who has in good faith, and without any intent to evade his liability as a stockholder, caused his stock to be transferred on the books of the bank when such bank is solvent to any resident of this state of full age previous to any default in the payment of any debt or liability of the bank, shall be subject to any personal liability for any contracts, debts or engagements of the bank.” Because that so-called immunity clause of the statute is phrased in the negative, it is urged that there was a failure by the Legislature affirmatively to impose a continuance of liability upon a stockholder who transfers in disregard of its limitations. The point is without substance. Where the Legislature fixes specific boundaries within which a stockholder must act to escape liability, it follows necessarily that an act outside the limits leaves the stockholder hable. The courts have repeatedly so held; as where the transfer was made after the bank became insolvent (Persons v. Gardner, 113 App. Div. 597; affd., 188 N. Y. 571), or where made to an infant (Broderick v. Aaron [Sternlieb], 240 App. Div. 537; affd., 266 N. Y. 506).

That the Legislature had power to enact the immunity clause and thereby preserve, or perhaps extend, the liability of the class mentioned in article VIII, section 7, of the Constitution, cannot be doubted. (Broderick v. Aaron [Kornberg], 268 N. Y. 260.) “ The Federal and State Constitutions alone bound the freedom and power of the Legislature.” (Racine v. Morris, 201 N. Y. 240, 244.) The State constitutional provision, while permitting no legislative limitation upon the responsibility of those who are stockholders, does not, expressly or impliedly, prohibit the Legislature from preserving that responsibility once it has attached. Nor is there any interference with freedom of contract by imposing transfer to a resident of New York as one condition of escaping liability. The right to transfer the stock, inherent in ownership, is not affected. The nonresident transferee gets a good title, though the transferor has breached all the terms of the immunity clause; and since the non-resident transferee, by becoming a stockholder, is subjected to the statutory liability, there can be no just claim of discrimination.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


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

text:
    The People of the State of New York ex rel. Joseph Tipaldo, Appellant, against Frederick L. Morehead, as Warden of the City Prison in the Borough of Brooklyn, Respondent.
    (Argued January 22, 1936;
    decided March 3, 1936.)

      Nathan L. Miller and Arthur Levitt for appellant.
    Legislation fixing wages for adult women violates the freedom of contract protected by the Fifth and Fourteenth Amendments of the Federal Constitution. (Adkins v. Children’s Hospital, 261 U. S. 525; Adair v. United States, 208 U. S. 174; Coppage v. United States, 236 U. S. 14; Truax v. Raisch, 239 U. S. 33; Prudential Ins. Co. v. Cheek, 257 U. S. 516; Murphy v. Sardell, 269 U. S. 530; Donham v. West-Nelson Mfg. Co., 273 U. S. 657; Tyson v. Banton, 273 U. S. 418; Ribnik v. McBride, 277 U. S. 350; Wolff v. Court of Industrial Relations, 262 U. S. 522; Williams v. Standard Oil Co., 278 U. S. 235; Folding Furniture Works, Inc., v. Industrial Commission, 300 Fed. Rep. 991; Topeka Laundry Co. v. Court of Industrial Relations, 237 Pac. Rep. 1041; Stevenson v. St. Clair, 201 N. W. Rep. 628.) The factual background recited in section 550 of the Labor Law (Cons. Laws, ch. 31; L. 1933, ch. 584) involves no new or exceptional circumstances. (Adkins v. Children’s Hospital, 261 U. S. 525; Coppage v. Kansas, 236 U. S. 1.) Freedom of contract cannot be denied simply because one of the contracting parties is a woman. Such discrimination is a denial of the equal protection of the laws guaranteed by the Fourteenth Amendment to the Federal Constitution. (Coppage v. Kansas, 236 U. S. 1; Child Labor Tax Case, 259 U. S. 20; Pennsylvania Coal Co. v. Mahon, 260 U. S. 393.)

      Charles J. Campbell for New York State Hotel Association, amicus curiæ. The Minimum Wage Law (L. 1933, ch. 584) so far as it affects adult women, contravenes the Fifth and Fourteenth Amendments of the Constitution of the United States. (Adkins v. Children’s Hospital, 261 U. S. 525; Wolf Packing Co. v. Court of Industrial Relations, 262 U. S. 522; Murphy v. Sardell, 269 U. S. 530; Donham v. West- Nelson Mfg. Co., 273 U. S. 657; Ribnik v. McBride, 277 U. S. 350; Tyson v. Banton, 273 U. S. 418; Folding Furniture Works, Inc., v. Industrial Commissioner, 300 Fed. Rep. 991; Topeka Laundries v. Court of Industrial Relations, 119 Kan. 12; Stevenson v. St. Claire, 161 Minn. 444; Coppage v. Kansas, 236 U. S. 1; Truax v. Raisch, 239 U. S. 33; Prudential Ins. Co. v. Cheek, 257 U. S. 516; Wilson v. New, 243 U. S. 332; Fort Smith & Western R. R. Co. v. Mills, 235 U. S. 206.)

      John J. Bennett, Jr., Attorney-General (Henry Epstein, John F. X. McGohey, Benjamin Heffner and John C. Crary of counsel), for respondent.
    The New York Minimum Wage Law is a valid exercise of the police power. (Nebbia v. New York, 291 U. S. 502; McLean v. Arkansas, 211 U. S. 539; McCulloch v. Maryland, 4 Wheat. 316; Northern Securities Co. v. United States, 193 U. S. 197; Jacobson v. Massachusetts, 197 U. S. 11; Mugler v. Kansas, 123 U. S. 623; Minnesota v. Barber, 136 U. S. 313; Atkin v. Kansas, 191 U. S. 207; O’Gorman & Young v. Hartford Ins. Co., 282 U. S. 251; Frisby v. United States, 157 U. S. 160.)

      George X. Levine for Interborough Coat & Apron Supply Association, Inc., et al., amici curiæ. The enactment of the Minimum Wage Law was a proper exercise of the police power of the State. It does not contravene the Fourteenth Amendment of the Constitution of the United States. (Nebbia v. New York, 291 U. S. 502.)
   Crane, Ch. J.

The appellant is the manager of a laundry establishment operating in the borough of Brooklyn. Together with three other individuals he was indicted by the grand jury of Kings county for the violation of the Minimum Wage Law for Women (Laws of 1933, ch. 584, in effect April 29, 1933). He was charged with the crime of paying to an adult woman employee a wage less than that promulgated byjthe Industrial Commissioner as the mandatory minimum wage applicable to such a woman engaged in that employment, in violation of section 565, subdivision 2, of the Labor Law (Cons. Laws, ch. 31). By this 'habeas corpus proceeding the relator seeks to test the legality of his arrest and imprisonment, raising as the only question before the court the constitutionality of the statute, for the violation of which he has been held for trial. His contention is that the law contravenes the Fourteenth Amendment of the Constitution of the United States, and article I, section 6, of the Constitution of the State of New York, both of which provisions are the same in this particular.

Chapter 584 of the Laws of 1933, thus attacked, is entitled, “An Act to amend the labor law, in relation to the determination and establishment of minimum fair wage standards for women and minors, with provision for the imposition of penalties for the violation thereof.” The applicability of the law as to minors is not questioned. The act provides the machinery for determining the minimum wage to be paid women in “ an industry, trade or business or branch thereof or class of work therein in which women or minors are gainfully employed, but shall not include domestic service in the home of the employer or labor on a farm.” (Labor Law, § 551, subd. 6.) The act defines “ an oppressive and unreasonable wage ” (§ 551, subd. 7) to be a wage which is both less than the fair and reasonable value of the services rendered and less than sufficient to meet the minimum cost of living necessary for health. “A fair wage ” (subd. 8) shall mean a wage fairly and reasonably commensurate with the value of the service or class of service rendered. In establishing the fair minimum wage the Commissioner and the wage board may take into account (1) all relevant circumstances affecting the value of the service or class of service rendered; (2) may be guided by like considerations as would guide a court in a suit for the reasonable value of service rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid; and (3) may consider the wages paid in the State for work of like or comparable character by employers who voluntarily maintain minimum fair wage standards.

Section 552 reads as follows: It is hereby declared to be against public policy for any employer to employ any woman or minor in an occupation in this state at an oppressive and unreasonable wage as defined in section five hundred and fifty-one of the article and any contract, agreement or understanding for or in relation to such employment shall be null and void.”

The rest of the act provides for the establishment of a wage board, for hearings, for the determination of the minimum wage, and for the directory order of the Commissioner regarding the payment thereof.

Section 565, subdivision 2, for violation of which the relator has been indicted and imprisoned, reads as follows: “Any employer or the officer or agent of any corporation who pays or agrees to pay to any woman or minor employee less than the rates applicable to such woman or minor under a mandatory minimum fair wage order shall be guilty of a misdemeanor and upon conviction be punished by a fine of not less than fifty nor more than two hundred dollars or by imprisonment of not less than ten nor more than ninety days or by both such fine and imprisonment, * *

We do not see wherein this act differs materially from the act of Congress ruled upon in Adkins v. Children’s Hospital (261 U. S. 525), wherein it was held that the Minimum Wage Act of September 19, 1918, chapter 174 (40 U. S. Stat. 960), was an unconstitutional interference with liberty of contract. The interpretation of the Federal Constitution by the United States Supreme Court is binding upon us; we are in duty bound to follow its decisions unless they are inapplicable. We find no material difference between the act of Congress and this act of the New York State Legislature. The act of Congress, it is said, was to protect women from conditions resulting from wages which were inadequate to maintain decent standards of living. The Attorney-General’s brief states it in these words: “ The purpose of the statute in the Adkins case was to guarantee a wage based solely upon the necessities of the workers. The statute did not provide for the wages to have any relationship to earning power; was applicable to all vocations and not to the character of - the work. * * * As contrasted with this statute, the New York Minimum Wage Law provides a definite standard for wages paid. It provides that the worker is to be paid at least the value of the services rendered.”

This is a difference in phraseology and not in principle. The New York act, as above stated, prohibits an oppressive and unreasonable wage, which means both less than the fair and reasonable value of the services rendered and less than sufficient to meet the minimum cost of living necessary for health. The act of Congress had one standard, the living wage; this State act has added another, reasonable value. The minimum wage must include both. What was vague before has not been made any clearer. One of the elements, therefore, in fixing the fair wage is the very matter which was the basis of the congressional act. Forcing the payment of wages at a reasonable value does not make inapplicable the principle and ruling of the Adkins case.

The distinctions between this case and the Adkins case are differences in details, methods and time; the exercise of legislative power to fix wages in any employment is the same. We should follow the law as given, and not speculate as to the changes which have come or are supposed to have come to economic conditions in the last decade which may move the Supreme Court to a further consideration of its ruling. The Adkins case has not been lightly passed over nor its rulings forgotten. It was cited and followed in Wolff Packing Co. v. Court of Industrial Relations (262 U. S. 522); Murphy v. Sardell (269 U. S. 530); Tyson & Brother v. Banton (273 U. S. 418); Donham v. West-Nelson Mfg. Co. (273 U. S. 657); Ribnik v. McBride (277 U. S. 350), and Near v. Minnesota (283 U. S. 697).

When minimum wage laws somewhat similar to our own have been challenged since the Adkins case the courts have felt bound by that decision to declare them unconstitutional without re-examination of the principles involved in these particular statutes. (Topeka Laundry Co. v. Court of Industrial Relations, 119 Kan. 12; Folding Furniture Works, Inc., v. Industrial Commission, 300 Fed. Rep. 991; Stevenson v. St. Clair, 161 Minn. 444; cf. Holcombe v. Creamer, 231 Mass. 99.)

The order below should be reversed, the writ sustained, and the prisoner discharged, as chapter 584 of the Laws of 1933, under which he is held, is unconstitutional according to Adkins v. Children’s Hospital (261 U. S. 525).

Lehman, J.

(dissenting). The appellant is held in custody under an indictment. By writ of habeas corpus proceedings he challenges the legality of his commitment. The indictment charges, we are told, that the appellant, as manager of the Spotlight Laundry, disobeyed a mandatory order, issued by the Industrial Commissioner under article 19 of the Labor Law (Cons. Laws, ch. 31), commonly known as the minimum wage law for women and minors (Laws of 1933, ch. 584) “ prescribing certain minimum wages for certain adult women employees of the said laundry; ” and that the appellant “ conspired to make false entries in the time book of the said laundry for the purpose of making it appear that the said adult women employees did in fact receive the amount of wages,” ordered to be paid by the Industrial Commissioner. The wrong charged in the indictment finds its roots in the statute, and the appellant attacks the statute as unconstitutional and void. The State raises no objections to the form of the attack. It concedes that the appellant’s detention is lawful only if the statute is constitutional. That is the only question presented upon this appeal.

Minimum wage laws, i. e., laws which require employers to pay to women and children employed by them a wage which shall not fall below a fixed minimum amount, have been enacted by many foreign countries; and, in the United States, sixteen States have enacted such statutes. So, also, the Congress of the United States in 1918 provided for the fixing of minimum wages for women and children in the District of Columbia. (40 U. S. Stat. 960, eh. 174.) Such a statute constitutes a restriction on freedom of contract protected by the Fifth and Fourteenth Amendments of the Constitution of the United States. On that ground, the Supreme Court of the United States in Adkins v. Children’s Hospital (261 U. S. 525), decided that the provisions of the Federal statute, there challenged at least in so far as they applied to adult women, violated the constitutional limitation upon legislative power. We are told that under that decision and for the same reasons which induced the Supreme Court to declare the Federal statute unconstitutional, we are bound to declare the New York statute void and unconstitutional.

There can be no doubt that the determination in that case that the Federal statute transcended the legislative power of Congress over the District of Columbia, made futile further argument that the statutes enacted by the various States, which were open to the same objections, should be sustained by the courts of those States. The Supreme Court of the United States must construe the provisions of the Constitution and its definition of inviolate rights guaranteed by the Constitution and of the division or restriction of powers thereunder must be accepted by all other courts of the country. A State court may previously have decided the same question. Such decision is of no effect after the Supreme Court of the United States has construed otherwise the Constitution which binds all, and when the same question arises again in a State court it must follow the decision of the Supreme Court regardless of its own opinion. (Topeka Laundry Co. v. Court of Industrial Relations, 119 Kan. 12; Stevenson v. St. Clair, 161 Minn. 444. Cf. Sparks v. Moritz, 141 Wash. 417.) The effect of the decision, there, is not measured by the persuasive force of the arguments which support it; for under any system of orderly administration of the law, it is the function of the court of last resort to pass finally upon the cogency of conflicting arguments and the weight of conflicting considerations. The effect is not measured by the unanimity or lack of unanimity of the court, for the decision by a majority of one becomes the decision of the court. So Mr. Justice Holmes, who dissented forcibly in the Adkins case, bowed to the decision as a precedent and concurred on that ground alone in later decisions of similar purport. (Murphy v. Sardell, 269 U. S. 530. Cf. Donham v. West-Nelson Mfg. Co., 273 U. S. 657.)

That does not mean, of course, that a court of last resort may not reconsider the same question when it is again presented, and then reach a contrary conclusion. In the light of wider experience, broader information or changed conditions, the weight that should, reasonably, be given to conflicting considerations may change and error may become manifest. A Constitution may be amended only in manner provided therein, but a court which under the Constitution is charged with the duty of construing the Constitution may change its construction when convinced of error. That courts have not been willing to perpetuate a construction after they have been convinced of its unsoundness, has been a source of strength to our system of constitutional government. The Attorney-General, upon this appeal, argues that the statute now under consideration is free from the objections to the earlier Minimum Wage ” legislation, which the Supreme Court, in the Adkins case, held to be in violation of the provisions of the Constitution; but urges, also, that time and experience have demonstrated the soundness of the dissenting opinions there, and that the Supreme Court would now decide differently if the same objections were now presented. What the Supreme Court would now decide rests purely in conjecture, and even though we should assume that a court might under any circumstances properly base decision upon such conjecture, we should certainly hesitate to venture upon such an uncharted and treacherous sea. We start our consideration of the validity of the statute here challenged upon the assumption that the construction placed upon the Constitution by the decision of the Supreme Court in the Adkins case is open to attack only in that court. Our personal views of the soundness of that construction then become irrelevant, except in so far as they might, perhaps even unconsciously, dictate our conclusion as to how far such construction should be carried.

Article 19 of the Labor Law, which the appellant now attacks, provides, in section 552 that It is hereby declared to be against public policy for any employer to employ any woman or minor in an occupation in this state at an oppressive and unreasonable wage as defined in section five hundred and fifty-one of the article and any contract, agreement or understanding for or in relation to such employment shall be null and void.” The definition contained in section 551 is “ an oppressive and unreasonable wage ’ shall mean a wage which is both less than the fair and reasonable value of the services rendered and less than sufficient to meet the minimum cost of living necessary for health ” (subd. 7). (Italics are ours throughout this opinion.) The same section defines “ a fair wage ” as a wage fairly and reasonably commensurate with the value of the service or class of service rendered ” (subd. 8). The statute then provides for the manner in which a minimum fair wage ” shall be fixed in occupations where “ any substantial number of women or minors * * * are receiving oppressive and unreasonable wages as defined in section five hundred and fifty-one ” (§ 554) and the manner in which employers in such occupations may be induced or compelled to pay the “ minimum fair wage ” so fixed.

The statute is unquestionably a “ price fixing ” statute. Ordinarily the price paid for labor, like the price to be paid for goods, is determined by agreement of the parties primarily concerned. The right by agreement to fix prices, whether of labor or goods, is part of the freedom of which no person may be deprived without “ due process of law.” The attack upon the statute is directed mainly to the point that the State violates this constitutional guaranty whenever it attempts to fix a fair wage for adults who are fully competent to enter into contracts fixing wages at a price which they are willing to accept, rather than reject employment offered to them at such wages. Inextricably interwoven in that attack are objections based upon the method of fixing minimum fair wages ” and the effect of the enforcement of payment of such wages as provided in this statute. We postpone analysis of the provisions for fixing the “ minimum fair wage ” and for enforcement of payment, until we have determined the extent of the power of the State to interfere in any form or manner with the free exercise of the right by adults of competent mental ability to fix wages by contract.

There is, of course, no such thing as absolute freedom of contract. It is subject to a great variety of restraints. But freedom of contract is, nevertheless, the general rule and restraint the exception; and the exercise of legislative authority to abridge it can be justified only by the existence of exceptional circumstances. Whether these circumstances exist in the present case constitutes the questian to be answered.” (Adkins v. Children’s Hospital, supra, p. 546.) Thus in the case upon which the appellant here relies, it was authoritatively held that the State under exceptional circumstances may place some restraint upon freedom of contract. The difference of opinion in the court concerned only the question of whether the circumstances were so exceptional as to justify, reasonably, the restraints imposed.

The general rules which govern consideration of the validity of a statute which restricts liberty of contract are, indeed, too well established to be challenged now. Liberty of contract is “ subject to restrictions passed by the legislative branch of the Government in the exercise of its power to protect the safety, health and welfare of the people.” (McLean v. Arkansas, 211 U. S. 539, 547.) The guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be obtained.” (Nebbia v. People, 291 U. S. 502, 525.) Liberty to fix by contract the price of labor does not differ in its nature from liberty to fix other terms and conditions of employment though, it may be conceded, that restriction there may encroach more seriously upon the essentials of our economic competitive system. Thus, perhaps, circumstances which might reasonably justify restrictions upon contracts in matters less vital might be insufficient here. Here, too, however, there are many instances where the State has been justified in imposing restrictions under its reserved police power to legislate for the general welfare. The difference then is, at most, one of degree. Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power. The reserved power cannot be construed so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in its essential aspects. They must be construed in harmony with each other.” (Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398, 439.) It is with the background of these general rules that we must analyze the provisions of article 19 of the Labor Law now challenged.

The Legislature in section 550 of that article has set forth the conditions which in its opinion called for the exercise of the reserved power of the State: The employment of women and minors in trade and industry in the state of New York at wages unreasonably low and not fairly commensurate with the value of the services rendered is a matter of grave and vital public concern. Many women and minors employed for gain in the state of New York are not as a class upon a level of equality in bargaining with their employers in regard to minimum fair wage standards, and ‘ freedom of contract ’ as applied to their relations with their employers is illusory. Since a very large percentage of such workers are obliged from their week to week wages to support themselves and others who are dependent upon them in whole or in part they are, by reason of their necessitous circumstances, forced to accept whatever wages are offered them. Judged by any reasonable standard, wages are in many cases fixed by chance and caprice and the wages accepted are often found to bear no relation to the fair value of the service rendered. Women and minors employed for gain are peculiarly subject to the overreaching of inefficient, harsh or ignorant employers and under unregulated competition where no adequate machinery exists for the effective regulation and maintenance of minimum fair wage standards, the standards such as exist tend to be set by the least conscionable employers. In the absence of any effective minimum fair wage rates for women and minors, the constant lowering of wages by unscrupulous employers constitutes a serious form of unfair competition against other employers, reduces the purchasing power of the workers and threatens the stability of industry. The evils of oppressive, unreasonable and unfair wages as they affect women and minors employed in the state of New York are such as to render imperative the exercise of the police power of the state for the protection of industry and of the women and minors employed therein and of the public interest of the community at large in their health and well-being and in the prevention of the deterioration of the race. In the considered judgment of the legislature this article is constitutional.”

The appellant does not challenge these findings of fact by the Legislature, nor does he challenge the statements in the factual brief ” submitted by the respondent to sustain and amplify these findings. Though no reasonable man, today, can doubt the mental capacity of women and though, happily, in this country there are few vestiges of the ancient law which discriminated between men and women and incapacitated women from entering upon independent industrial, business or professional careers, yet it is notorious that in the free competition of such careers they are at a disadvantage with men. The reason may be found in ancient prejudice, in custom, in training or in physical difference. Whatever may be the reason, the fact is patent that often women are willing or forced to accept lower compensation for service than men receive in the same occupation. If wages constitute a fair and reasonable value of the services rendered,” perhaps it would be arbitrary to require an employer to pay more even though such wages be less than sufficient to meet the minimum cost of living necessary for health.” (Cf. Adkins v. Children’s Hospital, supra.) If wages are both less than the “ fair and reasonable value of the services rendered ” and less than sufficient to meet the minimum cost of living necessary for health, some element of inequality or oppression may reasonably be found to enter into the bargain.

From wages so fixed a vicious chain of results may follow. The health of the underpaid women suffers, or they must become a burden upon their families or communities. That is a matter which is certainly of public concern and which might well engage the attention of the Legislature. It is clearly unjust that an unscrupulous employer should obtain the services of his employees upon payment of wages “ less than the * * * value of the

services rendered ” and that the community should bear the burden of his cupidity. True, not all employers who pay such inadequate wages are unscrupulous. In unrestrained competition an employer can seldom afford to increase his costs beyond those paid by his competitors. Thus if in any occupation a considerable number of persons are employed at “ oppressive and unreasonable wages ” by those willing to profit by the weakness of their employees, more scrupulous employers may be driven to pay the same wages. Competition, however desirable generally, becomes unfair when one employer by the use of practices which, though not unlawful, are unjust and injurious to his employees or to the public, can force his competitors to the wall or compel them to avail themselves of the same practices. It has been held in many cases that -under such circumstances the Legislature may, within proper limits, restrain such practices. That is in the interest of proper competition.

The vicious result of oppressive wages does not stop even with the underpaid wage earner. It extends throughout the industry and in lesser degree even beyond the industry. Labor which for one reason or another is deficient in bargaining power has come to be known as cheap labor,” that is, labor which fails to obtain wages commensurate with the value of the services rendered. Just as experience has shown that, in a community where peonage or slavery exists, free labor cannot flourish, so in an industry, or even community, where oppressive wages are paid to those deficient in bargaining power, it is not unreasonable to believe that such wages affect indirectly but nevertheless very substantially the wages of all others. At least the Legislature might so find. It cannot then be gainsaid that the conditions which the Legislature found to exist call for some remedy. Indeed, the appellant does not seriously argue otherwise. The real question here presented is whether the remedy applied is reasonable and complies with the requirements of “due process,” as defined by the Supreme Court, without which there may be no restriction upon liberty of contract.

Here we may profitably examine the prevailing opinion in Adkins v. Children’s Hospital (supra) to determine whether the statute now under consideration is subject to the objections which dictated the conclusion of the court in that case. In that case the statute provided for the fixing of standards of minimum wages for women in any occupation adequate to supply the necessary cost of living to women workers * * * to maintain them in health and to protect their morals.” No other standard was there prescribed. It was there said that while the physical differences [between men and women! must be recognized in appropriate cases, and legislation fixing hours or conditions of work may properly take them into account, we cannot accept the doctrine that women of mature age, sui juris, require or may be subjected to restrictions upon their liberty of contract which could not lawfully be imposed in the case of men under similar circumstances (p. 553). We accept that statement with all its implications.

The Legislature has then no greater power to restrict the liberty of women than of men. All are equally entitled to the protection of the law, and, in regard to all, liberty of contract is the rule, and restriction can be justified only by exceptional circumstances. What was said by the court can mean only that. None the less, just as in legislation in relation to health, the physical differences between men and women may properly be taken into account so in legislation in other fields, the Legislature cannot reasonably be required to disregard actual conditions which affect women differently from men. The test in each case is whether the conditions justify the remedy regardless of whether those conditions affect men or women. Classification must of course be based upon actual conditions, not outworn' theories of sex inferiority or superiority. In the Adkins case the question was whether the Legislature could require an employer to pay minimum wages to women sufficient to maintain them in good health and to protect their morals, regardless of the value of the service rendered. The court held that such a requirement is unreasonable in its nature and not justified because it is confined to women. In this case the question is whether employers can be compelled to pay women wages which are not “ oppressive.” There is here no contention that the legislation is justified on the ground that the Legislature may restrict the liberty of women where it could not restrict the liberty of men. The Legislature has found that women are not “ as a class upon a level of equality in bargaining with their employers in regard to minimum fair wage standards, and freedom of contract ’ as applied to their relations with their employers is illusory ” (§ 550). Undoubtedly there is ground for the belief that women are paid less than men in most occupations. That groups of men may also be paid “ oppressive ” wages may be entirely true. Perhaps they, too, should be protected by similar legislation. Upon that question we are not now called upon to pass. It is sufficient to point out that here the Legislature has not unlawfully discriminated between groups or sexes. Since it might reasonably be found that in the unrestrained play of economic forces, women as a class are at a disadvantage, with resultant injury to the general welfare, the Legislature might in its discretion adopt legislation, confined to them, which is reasonably adapted to meet the conditions peculiarly affecting them. The distinction is not based upon assumed need to protect the health or morals of women but upon the need of protecting the public against the evil of oppressive ” wage contracts imposed upon women because of economic conditions peculiarly affecting women. So in this case, as in the Adkins case, the fundamental question is whether the remedy is reasonable and appropriate.

In the Adkins case the court said that the law forbids “ two parties having lawful capacity — under penalties as to the employer — to freely contract with one another in respect of the price for which one shall render service to the other in a purely private employment where both are willing, perhaps anxious, to agree, even though the consequence may be to oblige one to surrender a desirable engagement and the other to dispense with the services of a desirable employee ” (p. 554). That criticism might be applied to the earlier statute; it has no application here, for, as we have shown, the Legislature might reasonably find that acceptance of a contract for wages less than the reasonable value for services rendered and less than the minimum cost of healthful living must from its nature be induced by the necessities of the wage earner rather than by any opinion that the employment is “ desirable.” Then the court said: “ the price fixed by the board need have no relation to the capacity or earning power of the employee, the number of hours which may happen to constitute the day’s work, the character of the place where the work is to be done, or the circumstances or surroundings of the employment; and, while it has no other basis to support * * * the necessities of the employee, it takes no account of any independent resources she may have” (p. 555). Again, this objection does not apply to the statute now challenged. It has, as we have shown, other basis than the “ necessities of the employee.” Its basis is rather that wages which bear no fair relation to the capacity or earning power of the employee, the number of hours which may happen to constitute the day’s work, the character of the place where the work is to be done, or the circumstances or surroundings of the employment; ” in other words, relation to all those conditions might enter into the measure of fair compensation for the value of services, are not fair wages; and when in addition, they are insufficient to maintain the health of the employee, such wages are detrimental to the general welfare.

The next source of invalidity in the Adkins case is the uncertainty of the standard to be applied in fixing the minimum wages which must be made. There the formula to be applied was the “ necessary cost of living to women workers to maintain them in health and to protect their morals.” Here the formula to be applied in fixing wages is that of “ a fair wage ” as defined by the statute, i. e., “ a wage fairly and reasonably commensurate with the value of the service or class of service rendered ” (§551, subd. 8). The necessities of the employee do not enter into that standard. True, under the statute, jurisdiction to fix fair wages is made dependent upon a finding that the wages paid to a substantial number of women or minors is “ less than * * * the minimum cost of living necessary for health ” (§ 551, subd. 7), but even though, as the Supreme Court has pointed out, the necessary cost of living is not “ a precise or unvarying sum,” yet obviously there must be a point where determination with reasonable certainty is possible that wages paid are less than the necessary cost of living to maintain a woman in good health. Thus the objection to the standard in the.statute considered in the Adkins case has no application here. We postpone consideration whether similar objections might be raised to the standards to be applied under the present statute until after we have completed analysis of the objections set forth in the opinion in the Adkins case.

It is further said in that opinion that “ the law takes account of the necessities of only one party to the contract. It ignores the necessities of the employer by compelling him to pay not less than a certain sum, not only whether the employee is capable of earning it, but irrespective of the ability of his business to sustain the burden, generously leaving him, of course, the privilege of abandoning his business as an alternative for going on at a loss. * * * It compels him to pay at least the sum fixed in any event, because the employee needs it, but requires no service of equivalent value from the employee. It therefore undertakes to solve but one half of the problem. The other half is the establishment of a corresponding standard of efficiency, and this forms no part of the policy of the legislation, although in practice the former half without the latter must lead to ultimate failure, in accordance with the inexorable law that no one can continue indefinitely to take out more than he puts in without ultimately exhausting the supply. * * * To the extent that the sum fixed exceeds the fair value of the services rendered, it amounts to a compulsory exaction from the employer for the support of a partially indigent person, for whose condition there rests upon him no peculiar responsibility, and therefore, in effect, arbitrarily shifts to his shoulders a burden which, if it belongs to anybody, belongs to society as a whole ” (p. 557).

Here we reach the crux of the objections which, in the opinion of the Supreme Court, rendered the earlier statute arbitrary and unreasonable and here, too, it is evident that the Legislature, in the new statute, recognized these objections and sought to provide a remedy which should be free from them. . Assuming that it is possible to measure, in accordance with the provisions of the statute, the value of the service or class of service ” rendered, it is clear that a requirement that the employer shall not be permitted to pay less than such value does not compel the employer to pay a sum which the employee is not capable of earning,” nor can it fairly be said that the law compels payment irrespective of the ability of the business to bear the burden, for with the exception perhaps of a business which can exist only through practices which are unfair and economically unsound, a business must ordinarily be able to bear the burden of paying fair compensation for service given to the business. An employer who pays wages less than that, and less than the cost of healthful living, places upon society the burden of paying part of the legitimate costs of the business.

That these differences are vital appears from the opinion itself in the Adkins case, for it continues: “ The feature of this statute which, perhaps more than any other, puts upon it the stamp of invalidity is that it exacts from the employer an arbitrary payment for a purpose and upon a basis having no causal connection with his business, or the contract or the work the employee engages to do. The declared basis, as already pointed out, is not the value of the service rendered, but the extraneous circumstance that the employee needs to get a prescribed sinn of money to insure her subsistence, health and morals ” (p. 558). The exact opposite is true in this case. The moral requirement implicit in every contract of employment, viz., that the amount to be paid and the service to be rendered shall bear to each other some relation of just equivalence, is completely ignored in the earlier statute. It is not ignored here. Indeed what the statute aims to do is to declare that the moral requirement implicit in every contract of employment ” cannot be excluded by agreement of parties where through such exclusion the general welfare may suffer. Indeed, the court went further in the Adkins case and expressly pointed out that a statute like the one under consideration might not be subject to the objections there held insuperable, saying: “A statute requiring an employer to pay in money, to pay at prescribed and regular intervals, to pay the value of the services rendered, even to pay with fair relation to the extent of the benefit obtained from the service, would be understandable. But a statute which prescribes payment without regard to any of these things and solely with relation to circumstances apart from the contract of employment, the business affected by it and the work done under it, is so clearly the product of a naked, arbitrary exercise of power that it cannot be allowed to stand under the Constitution of the United States ” (p. 559).

We have assumed, so far, that the provisions for fixing wages are fair and provide a standard which can be applied by administrative officers. That assumption must now be tested by analysis of the statute itself. The statute does not require that every employer shall pay a minimum “ fair wage, nor that at his peril and to avoid criminal prosecution, any employer must determine what is a fair ” wage. An employer must pay such a wage only where such a wage has been fixed for a particular service or class of service in a particular industry by administrative order, and where a further order has been made requiring employers in that industry to pay the minimum wage so fixed. Such an order may be made only when, on the basis of information in the possession of the Industrial Commissioner or the Director of the Minimum Wage Bureau, the Commissioner is of opinion that “ any substantial number of women or minors in any occupation or occupations are receiving oppressive and unreasonable wages as defined in section five hundred and fifty-one.” Even then he may not proceed summarily to make an order fixing wages, but must “ appoint a wage board to report upon the establishment of minimum fair wage rates for such women or minors in such occupation ” (§ 554).

The Minimum Wage Board must be composed of not more than three representatives of the employers in any occupation or occupations, an equal number of representatives of the employees in such occupation or ocupations and not more than three disinterested persons representing the public. “ Within sixty days of its organization a wage board shall submit a report including its recommendations as to minimum fair wage standards for the women or minors in the occupation or occupations the wage standards of which the wage board was appointed to investigate.” (§ 555, subd. 4.) That means a wage fairly and reasonably commensurate with the value of the service or class of service rendered. In establishing a minimum fair wage for any service or class of service under this article the commissioner and the wage board without being bound by any technical rules of evidence or procedure (1) may take into account all relevant circumstances affecting the value of the service or class of service rendered, and (2) may be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid, and (3) may consider the wages paid in the state for work of like or comparable character by employers who voluntarily maintain minimum fair wage standards” (§ 551, subd. 8).

It is said that the standard of fair value of services is too indefinite for accurate application. It is true that value is ordinarily determined by competitive agreement, and here, it is plain, the Board is required to fix a value different from the value fixed by such agreement. Courts and juries are at times required to fix values when there is no market price, and many price-fixing statutes have been sustained in occupations affected by a public interest, though there, too, the same difficulty may exist. The difficulty is met if some reasonable basis exists for fixing wages. Before a report of the Wage Board becomes effective there must be a public hearing, and only when the Commissioner, after such hearing, has approved, can any order be made fixing the fair wage.” (§§ 556 and 557.) Even then the order remains only directory for nine months. It can be made mandatory thereafter, but only upon a new public hearing. (§ 560.) At any time after an order fixing such wages, whether directory or mandatory, has been in effect a year, there must be a reconsideration of the wage upon the petition of fifty or more residents of the State. (§ 561.) In addition there is a “ right of review by .the industrial board, and the courts from any ruling or holding ón a question of law included or embodied in any decision or order of the commissioner or the director ” (§ 563), and upon such review the reasonableness of any rule or order may be challenged. (Labor Law, art. 3.)

An order so made seems to comply in all respects with constitutional requirements. The Legislature has set a standard which must guide the administrative officers. Though the standard cannot be applied mechanically, it is sufficient in most cases to admit of conclusions reasonably drawn from the evidence presented and which can be tested by application of rules of reason. The statute provides a hearing to all persons affected and a judicial review of the reasonableness of the conclusions drawn. There may, quite possibly, be exceptional cases where no evidence can be produced, from which any conclusion can logically be drawn. Then any person may attack the reasonableness of the finding. No such attack is here made, and an examination of the report of the Wage Board shows ample evidence to support its conclusion.

Doubtless, in the application of the statute, hardship to individuals may at times arise. Argument may be made that economic wrongs are best corrected by the free play of economic forces. Doubtless that consideration has dictated the conclusion of the courts in many cases where statutes restricting competition have been declared unconstitutional. Our economic system is based upon competition, and when we say liberty of contract is the rule and restriction can be justified only by exceptional circumstances, we probably mean just that. None the less, restrictions within reasonable limits and upon reasonable grounds are justified, and so long as the Legislature does not exceed those limitations it must determine whether the price that must be paid for restrictions is justified by the results that may reasonably be expected from such restrictions. .It is said that if the court permits the fixing of minimum prices, it must also permit the fixing of maximum prices. The problem is not so simple. We hold only that in this case the Legislature might reasonably fix minimum prices for women because within the limited field covered by the statute some employers have taken advantage of the economic weakness of women to the public injury. Competition there, it has been found, has been at times illusory, and at times unfair and has worked injury to the general welfare. Whether a law fixing maximum prices could ever be justified by circumstances so compelling as to render the law reasonable is not involved. Price fixing by free contract must remain unrestrained so long as .it does not injure the public welfare. In each case the test is whether the restriction is justified and in conformity to due process.”

Here, it may be interesting to observe that in this case no employer or employee has challenged the fairness of the wage fixed or claims it may result in injustice. The Wage Board agreed unanimously upon the amount of a fair wage in the laundry industry. No person appeared at the public hearings to object to the wage so fixed. No person sought a review of the order by appeal to the Industrial Board. The order has been in force for several years and there has been no application for a reconsideration. Even upon this appeal, a brief in support of the law has been filed by a trade association of owners of laundries, and the only person attacking the law is the appellant who has been charged with concealment by false entries of disobedience of the law. In such circumstances it can hardly be said that, at least in so far as concerns the laundry business, the statute or the wage fixing order is unfair or unreasonable. When orders are issued fixing wages of women in other occupations the courts may be called upon to decide whether they are reasonable and justified by the evidence.

We are told that this statute, though enacted primarily for the protection of women, may eventually result in injury to them; for some employers may prefer to employ men if they can obtain male employees for less wages than the law requires for women employees. That adult male employees of equal efficiency can be obtained at less than the minimum wage fixed for women and minors is contrary to common experience and contrary to the findings of the Legislature. Under these circumstances, that objection is one which the Legislature might reasonably disregard. If in truth it should appear that any substantial number of men have because of price fixing orders supplanted women in any industry, that might be convincing evidence that the orders were unreasonable. No such contention has been made by the appellant.

We are further told that such orders may work hardship to industries in some districts. The statute has provided against that. “ 5. A wage board may differentiate and classify employments in any occupation according to the nature of the service rendered and recommend appropriate minimum fair rates for different employments. A wage board may also recommend minimum fair wage rates varying with localities if in the judgment of the wage board conditions make such local differentiar tian proper and do not effect an unreasonable discriminar tian against any locality.” (§ 555.)

It is argued that the differentiation is permissive, not-mandatory. That may be true, but a permissive right to differentiate becomes mandatory where failure to exercise it would be unreasonable. There as elsewhere the judgment of the Board is subject to judicial review.

We have considered all the objections urged by the appellant or which have occurred to us, though perhaps the consideration of some of these objections rests exclusively with the Legislature. Doubtless some persons may suffer hardship. There may be some women replaced by other women of greater efficiency. Some businesses, which are economically unsound, may be discontinued. Such individual hardships may be the result of any restriction upon competition, but greater hardships of the same kind may be the result also of unrestrained competition, especially where that competition is tainted with overreaching or other unfair practices. The Legislature doubtless weighed these objections, they are not so weighty that a court should say the Legislature could not reasonably find that they are overbalanced by countervailing anticipated benefits.

Can such a statute be declared unconstitutional by the courts? The conditions which the Legislature seeks to remedy are not imaginary. The Legislature might reasonably find that they are caused by oppressive exercise of'liberty of contract, and that removal of such conditions is necessary for the general welfare. The remedy devised is reasonably calculated to end those conditions, though perhaps the remedy may carry in its train other evils. The remedy is on the whole not unfair to employers or to employees; though individuals may suffer hardship. Other countries with traditions similar to our own have adopted remedies more drastic to meet analogous conditions. The restriction upon liberty of contract is directed against a harmful and perhaps unfair use of that liberty. The constitutional limitations upon legislative power must be enforced by the court, but they may not be extended beyond their fair meaning. Liberty of contract, like other forms of liberty, must be zealously guarded against invasion by the State, but fear that in the fubure the State may encroach by unreasonable legislation upon the liberties of the individual cannot justify a present limitation upon the powers of the State, not expressed or clearly implicit in the Constitution. Liberty may be reasonably restrained upon grounds of general welfare. Courts must decide each case upon the facts there presented; upon the facts presented in this case we do not find any ground for saying that the Legislature has acted arbitrarily or transcended the limitations upon its powers.

The order should be affirmed, with costs.

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

Ordered accordingly.


author: Lehman, J.

text:
    Joseph A. Broderick, as Superintendent of Banks of the State of New York, Plaintiff, v. Robert Adamson et al., Defendants; Wilfrid Greif, Appellant, and Howard S. Hoit et al., Copartners under the Firm Name of Hoit, Rose & Troster et al., Respondents.

      (Argued January 15, 1936;
    decided March 3, 1936.)

      Hugh S. Williamson and Charles A. Howard, Jr., for appellant.
    When the bank closed, respondents owned the beneficial interest in 200 shares of stock standing of record in the name of appellant and accordingly are bound to indemnify him against the assessment levied on said stock. (Broderick v. Alexander [Kahn], 268 N. Y. 306; Wills v. Investors Bankstocks Corp., 257 N. Y. 451; Agar v. Orda, 264 N. Y. 248; Currie v. White, 45 N. Y. 822; Johnson v. Underhill, 52 N. Y. 203; Richards v. Robin, 175 App. Div. 296; 225 N. Y. 719; Broderick v. Aaron [Greer], 264 N. Y. 368.)

      Louis Schneider and Kevie Jaffe for respondents.
    Title to appellant’s stock did not pass to respondents until December 11, 1930. (Broderick v. Aaron, 152 Misc. Rep. 791; Cobb v. Knapp, 71 N. Y. 348; Meyers v. Redmond, 205 N. Y. 478; Richards v. Robin, 225 N. Y. 719; Broderick
      v. Alexander [Kornberg], 268 N. Y. 260.) The respondents resold the stock before December 11, 1930. (Broderick v. Aaron [Kahn], 268 N. Y. 306; Richardson v. Shaw, 209 U. S. 365; Caswell v. Putman, 120 N. Y. 153; Horton v. Morgan, 19 N. Y. 170; Broderick v. Aaron, 152 Misc. Rep. 791.)
   Lehman, J.

On December 11, 1930, the Bank of United States failed to open, and the Superintendent of Banks took possession of its business and assets. At that time the defendant Wilfrid Greif was the owner of record of 300 shares of the stock of the bank, represented by three certificates. In the action subsequently brought by the Superintendent of Banks to enforce the statutory liability of the stockholders of the bank, judgment was entered against the defendant Greif; He does not upon this appeal challenge the validity of that judgment in favor of the bank. In the answer he interposed in the action he asserted a claim in accordance with the provisions of section 264 of the Civil Practice Act against the members of the firm of Hoit, Rose & Troster, and the appeal relates only to the dismissal of that claim.

The three certificates representing the stock of which the defendant Greif was the record owner had been deposited, prior to December 10, 1930, with a firm of stockbrokers in the name of Blanche Greif, the defendant’s wife. On that day the defendant gave an order to the broker for the sale of 300 shares of stock of the Bank of United States for the account of his wife. Pursuant to that order the brokers sold 100 shares to W. C. Orton & Co., and 200 shares to the firm of Hoit, Rose & Troster, dealers in securities, who at that time were trading actively in stock of the Bank of United States. On the following day the brokers delivered one certificate of the stock standing in the name of the defendant to Orton & Company and two certificates for the aggregate of 200 shares to Hoit, Rose & Troster. The defendant Greif now contends that upon the delivery of the stock to the purchasers, they became obligated to indemnify him against any liability arising from his record ownership of the stock from the time that he sold the stock. The statutory liability attached to record ownership of the stock at the moment when the Superintendent of Banks took possession of the business or assets of the bank. Duty of indemnity can arise only from beneficial ownership of the stock at the same moment. The problem presented is whether at that moment Hoit, Rose & Troster were the beneficial owners of the stock.

The brokers who sold 200 shares of stock acted as agents in the sale. The principal then became obligated to deliver on the following day 200 shares of stock. He was not under any obligation to deliver the specific stock which he then owned. He might, if he chose, deliver other shares which he might acquire in the interval. Thus until delivery the seller did not part with the beneficial interest in any specific shares of stock and the buyer acquired no beneficial interest in any specific shares of stock. None the less, the buyer was entitled to receive from the seller the stipulated number of shares, together with the right to any benefits accruing upon such shares from the time when the contract of purchase and sale was made. (Currie v. White, 45 N. Y. 822.) By delivery of certificates for the 200 shares of stock standing in the name of the defendant Greif, Hoit, Rose & Troster acquired the right also to any benefit which might have accrued upon those shares in the interval between sale and delivery. They also thereby became subject to the correlative duty of indemnifying the seller against any burden of liability which might have accrued against him as owner of record of the stock during the same interval. In that interval the statutory liability had accrued. Here it is immaterial whether or not specific shares of stock were appropriated to the contract of sale by the seller before that liability accrued. The obligation of indemnity rests upon equitable principles. If at the time of the contract of sale, title to specified shares of stock had passed to the buyer, then there could be no doubt that the buyer immediately would have become the beneficial owner of the stock and subject to the burden of liability accruing upon the stock thereafter so long as he remained such beneficial owner of the stock. The same equitable principles apply where the buyer becomes entitled to delivery of a stipulated number of shares, with the benefits attached to such shares. Again benefit and burden are correlative. When delivery of specific stock is made with the benefits of ownership of such stock from the date of contract of sale, the burden of indemnity is as broad as the benefit received and attaches to the same specific stock. Both relate back to the time when the contract of sale was made. (Broderick v. Alexander [Kahn], 268 N. Y. 306.)

At the moment when the bank closed, some person was the record owner of each share of stock in the bank, and he or some other person was entitled to the beneficial ownership of the same share and subject to the obligations which attach to such ownership. Though, at that time, Hoit, Rose & Troster had not acquired beneficial ownership in the specific shares standing in the name of Greif, they had by contract made by brokers upon Greif’s orders acquired the right to the delivery of 200 shares of stock of the bank with the beneficial ownership dating back to the contract. When delivery was made of certificates of 200 shares of stock standing in Greif’s name, the contract that the beneficial ownership should date back to the time of the sale must be given its intended effect. Thus, as between Greif and Hoit, Rose & Troster, the beneficial ownership in the interval between sale and delivery of the stock relates back to the contract, and the buyer is subject to all the rights and burdens connected with beneficial ownership during that time.

Beneficial ownership, like legal ownership or title, can, from its nature, attach only to specific identifiable stock, though after delivery and transfer of title to specific stock the beneficial ownership therein may, by earlier contract of sale, be made to relate back to the date of the contract. In the interval between such contract and the delivery of the stock, the buyer may agree to sell or transfer to another the same stock which he agreed to buy. Then he divests himself in advance of-beneficial ownership in the stock and also of the burden attached to such ownership. (Broderick v. Aaron [Rice], 264 N. Y. 368.) Again, however, it must be remembered that the original buyer does not divest himself of the beneficial ownership in the stock he has agreed to buy unless he has agreed to sell or transfer the same stocky That brings us to the question whether in this case Hoit, Rose & Troster did, before the closing of the bank, agree to sell the same stock which they had agreed to buy and which was thereafter delivered to them upon the contract made by the brokers, upon Greif’s orders. That contract was, as we have said, made on December 10th, and delivery was made on December 11th after the bank was closed. The buyers traded actively in bank stock, and it is apparent from the record that all purchases were made for the purpose only of immediate resale. On December 10th they bought or agreed to buy an aggregate of 1,686 shares of stock of the Bank of United States, including 200 shares from the brokers who acted upon Greif’s order. On the same day they sold 1,775 shares, and at the close of the day they were short ” 36 shares, i. e., they had agreed to sell more shares than they owned or had agreed to buy. They had made a contract to sell 200 shares shortly after they had purchased 200 shares from Greif’s brokers, but they did not then or thereafter appropriate to that contract of sale the specific shares which they expected to receive upon their contract of purchase. Though, doubtless, they intended to deliver, upon their contracts to sell, the stock which would be received by them upon their contracts to buy, yet in accordance with the customs of their business they intended to appropriate specific stock to specific contracts only when the time for delivery arrived. Thus on the morning of December 11th, when the bank failed to open, there was no person other than Hoit, Rose & Troster who could be identified as the beneficial owner of the stock standing in the name of the defendant Greif.

It is true that when Hoit, Rose & Troster thereafter delivered that stock to a purchaser from them under a contract of sale, the beneficial ownership would as between the parties to the agreement date back to the time when the contract was made and, perhaps, Hoit, Rose & Troster may, because of that contract, be entitled to indemnity from the buyer for all liability attached to beneficial ownership, just as Greif, because of similar contract, can obtain indemnity from Hoit, Rose & Troster. That question is not now before us. Even so an agreement that upon transfer of title to stock the title or beneficial ownership shall relate back to an earlier date, cannot deprive third parties of rights which would otherwise accrue to them. The law imposes upon the beneficial owner of stock an obligation in favor of the record owner. By contract made before such obligation arose, Hoit, Rose & Troster might acquire from the legal owner the beneficial ownership or title to specific stock which related back to an earlier time, and by similar contract they might confer ownership in the same stock to relate back to a time before the obligation arose. They could not, however, by any act of theirs divest themselves of the beneficial ownership in specific stock and its resultant obligation after that obligation became fixed. Some form of appropriation sufficient to identify the stock Hoit, Rose & Troster had agreed to purchase with the stock they had agreed to sell must be made before Hoit, Rose & Troster parted with their beneficial interest in the stock. Beneficial ownership in every share of the stock of the Bank of United States must rest at any given moment in some person. Mere appropriation by the owner of stock made after an obligation imposed by law upon the owner in favor of another has accrued, though made pursuant to a contract, cannot change a legal obligation owed to a third party. So we have decided in Broderick v. Alexander (Kahn) (supra) and in Broderick v. Aaron (Ungerleider) (269 N. Y. 661.)

The judgments so far as appealed from should be reversed and judgment directed in favor of the appellant as against the respondents, with costs to appellant in all courts.

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

Judgment accordingly.


text:
    M. Beatrice Donovan, Respondent, v. The Aeolian Company, Appellant.

      (Argued January 30,1936;
    decided March 3, 1936.)

      George D. Beattys for appellant.
    There was no express warranty as alleged in the complaint, nor is there any implied warranty to such effect. (Newburger v. American Surety Co., 242 N. Y. 134; Rinaldi v. Mohican Co., 225 N. Y. 70.) Plaintiff failed to comply with the provisions of section 130 of the Personal Property Law (Cons. Laws, ch. 41) in that she failed to give notice to defendant within a reasonable time of any alleged breach of warranty after she knew or ought to have known of such breach and plaintiff did not comply with the provisions of subdivision 3 of section 150 of the Personal Property Law in that she failed to notify defendant within a reasonable time of the election to rescind. Plaintiff cannot, therefore, hold defendant liable, nor could she legally rescind the sale. (Cudahy Packing Co. v. Narzisenfeld, 3 Fed. Rep. [2d] 567; Mason v. Smith, 130 N. Y. 474; Maggioros v. Edson Bros., 164 N. Y. Supp. 377; O. P. R. R. Co. v. Forrest, 128 N. Y. 83; Schenck v. State Line Tel. Co., 238 N. Y. 308; Boothby v. Scales, 27 Wis. 66; Greenwich Bank v. Hartford Fire Ins. Co., 250 N. Y. 116; Martin-Barris Co.
      v. Jackson, 24 App. Div. 354; Wurlitzer Co. v. Pappas, 215 App. Div. 23; Silberman v. Engel, 125 Misc. Rep. 816; Brunella v. Bracchi, 131 Misc. Rep. 301.)

      Samuel Rubin for respondent.
    The facts and circumstances surrounding the transaction clearly established an intent on the part of the defendant to hold out the piano as a new, unused instrument. This was as much a representation as if it had been uttered in so many words. (Brennan v. National Equitable Investment Co., 247 N. Y. 486; Heckscher v. Edenborn, 203 N. Y. 210; Kuelling v. Lean Mfg. Co., 183 N. Y. 78; Rinaldi v. Mohican Co., 225 N. Y. 70; Grieb v. Cole, 60 Mich. 397.) The question of whether plaintiff gave notice of rescission within a reasonable time after she knew or ought to have known of the breach of warranty was properly left to the jury. (Andrews v. Hensler, 6 Wall. 254; Milz & Cie v. Bloomfield, 146 Misc. Rep. 649; Tighe v. Empire Bond & Mortgage Corp., 144 Misc. Rep. 146; Schnitzer v. Lang, 239 N. Y. 1; Baker v. Lever, 67 N. Y. 304; Richard v. Credit Suisse, 242 N. Y. 346; Carpenter v. German American Ins. Co., 135 N. Y. 298; Pierson v. Crooks, 115 N. Y. 539; Stone v. Molby Boiler Co., 195 App. Div. 68.)
   Lehman, J.

The plaintiff, in December, 1925, purchased from the defendant a piano for which she paid the sum of $3,475. In this action, brought on August 30, 1928, she has recovered the purchase price with interest. The complaint alleges that at the time of the said sale, and as a part thereof, and as an inducement to the plaintiff to agree to purchase said piano and equipment, the defendant warranted and represented to the plaintiff that the said piano was a new instrument of recent manufacture and had never been used.”

It is undisputed that the piano was, at the time of the sale, five years old. It had been used and partially rebuilt prior to the sale. The plaintiff gave no notice of any breach of the alleged warranty, or of any election to rescind the contract, until December 2, 1927, approximately two years after the delivery to her of the piano. Upon this appeal the defendant contends that there was no warranty that the piano was new and unused and that even if such warranty had been given, the notice of election to rescind was not given within a reasonable time.

There is a conflict of evidence as to what was said to the plaintiff by the defendant’s salesman at the time of the sale. The jury has resolved that conflict in favor of the plaintiff.

The evidence shows that the defendant manufactures and sells' “ Steinway Duo Art ” pianos. The plaintiff went to the defendant’s salesrooms to purchase such a piano. After hearing the tone of several pianos she selected one. She assumed that it was a new piano. Nothing was said by her that might have suggested to the salesman that she desired to purchase a used piano, and, according to her story, nothing was said by the salesman which might have suggested to her that she was buying a used piano at a small discount from the list price for new pianos of the same quality. The question then arises whether from the silence of the salesman a warranty can be inferred or implied that the piano offered for sale was new and unused.

Certain warranties of quality are implied under the statute in every sale or contract of sale, without evidence that the seller either promised or represented that the goods supplied would possess such quality. Unless there is agreement to the contrary, the intention to include such warranty must be presumed. No warranty that goods, supplied under a contract to sell or a sale, are new or unused, is included in such implied warranties. (Pers. Prop. Law, § 96; Cons. Laws, ch. 41.) A recovery in this action, in accordance with the allegations of the complaint, must be predicated upon a finding that the defendant agreed to give such warranty. " Any affirmation of fact or any promise by the seller relating to the goods is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the goods, and if the buyer purchases the goods relying? thereon.” (Pers. Prop. Law, § 93.) In determining whether such an affirmation of fact or promise has been made by the seller we must apply the same tests as we would apply in determining the terms of any oral contract. If the evidence does not show such affirmation or promise in direct and express language it must, at least, show acts or words from which an intention to make such affirmation or promise can be inferred.

Here there has not been a direct affirmation by the seller that the goods were new and unused. None the less, the evidence is sufficient to sustain a finding that the plaintiff in purchasing a piano from the manufacturer believed that she was buying a new and unused piano and was induced to make the purchase by that belief. Ordinarily a buyer from a manufacturer or a dealer in new articles does not inquire whether the article supplied is new and unused. In some cases that may be due to the fact that previous use does not affect either the market value or usefulness of the article. In other cases it may be due to the fact that the buyer assumes, even without affirmation by the seller, that the article is new and unused. If the seller does not know that the buyer is acting under the belief that the article is new and unused, and has done nothing to induce that belief, the buyer cannot complain. There is no duty upon the seller to speak where silence does not constitute deception. Silence may, however, constitute fraud and deception where the seller has notice that the buyer is acting upon a mistaken belief as to a material fact. It depends upon the circumstances of each case whether failure to disclose is consistent with honest dealing. Where failure to disclose a material fact is calculated to induce a false belief, the distinction between concealment and affirmative misrepresentation is tenuous. Both are fraudulent. In this case it is clear that the defendant’s salesman was under a duty to inform the plaintiff that the piano she had selected was not a new piano. Indeed, the defendant does not seriously contend otherwise. Its primary contention is that the salesman did make the required disclosure; but the jury has rejected that contention. The question remains whether the plaintiff has been awarded the proper remedy for the wrong she has suffered.

Mere failure to disclose a fact, though fraudulent, may not "be equivalent to affirmation of the contrary fact. Here the jury might find that there was more than a failure to disclose. It might find that the defendant implicitly agreed that the piano it sold was an unused piano. „When a manufacturer offers a piano for sale in the ordinary course of business without disclosure of the fact that the piano had been used and then repaired, the acts of the manufacturer, coupled with the words of the salesman, may be regarded as an affirmation that the piano was taken out of stock and unused. Then there is a warranty that the piano is new. (Cf. Grieb v. Cole, 60 Mich. 397; Fox v. Boldt, 172 Wis. 333.)

The plaintiff did not discover the breach of such warranty until November, 1927. Then the plaintiff gave notice of the breach and of her election to rescind. For almost two years the plaintiff had the use of the piano 'and so far as appears she was satisfied with its quality. Then for personal reasons she decided to sell the piano and she was informed by an expert who examined it that the piano was seven years old and had previously been used and remade.” The statute provides that “ if, after acceptance of the goods, the buyer fails to give notice to the seller of the breach of any promise or warranty within a reasonable time after the buyer knows, or ought to know, of such breach, the seller shall not be liable therefor.” (Pers. Prop. Law, § 130.) It cannot be said that the buyer should have made such an examination of the piano as would have revealed that the piano had been previously used. That would have required the skill of an expert. The plaintiff had no reason to suspect that the piano might be old or to hire an expert to examine it to ascertain its age. Thus the notice of breach of warranty was given within the time permitted by the statute, and the defendant may be held hable for breach of its warranty. It does not follow that the plaintiff may rescind the contract of sale and recover the purchase price.

The remedies of a buyer for breach of warranty are defined by section 150 of the Personal Property Law. They include the right to accept or keep the goods and maintain an action against the seller for damages for the breach of warranty (subd. 1-b) or to “ rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid ” (subd. 1-d). The first of these alternative remedies would have given the plaintiff complete compensation for the wrong suffered. She had selected the particular piano which she liked best. Its previous use affected its market value. It did not affect its tone. The plaintiff used it as long as she wished. She was damaged only because she paid for an old piano the price of a piano which was warranted as new. For these damages she is entitled to compensation.

By choosing the alternative remedy of rescission, the plaintiff has obtained more than the damages she has suffered and more than she is entitled to receive. That remedy is provided because it would be unjust to compel a buyer to retain goods which do not comply with the stipulated warranties or conditions. He might not desire to use the goods actually supplied and damages or recoupment in. diminution of price might prove an incomplete remedy for failure to obtain goods of the stipulated quality. Then the loss should rest wholly upon the person who caused the loss. In this case, however, the plaintiff has had the use for almost two years of the piano she selected, yet she has been awarded the purchase price without diminution for the value of such use or for the inevitable loss of value of the piano through such use. The statute does not permit a rescission under such circumstances.

It provides that where the goods have been delivered to the buyer, he cannot rescind the sale * * * if he fails to notify the seller within a reasonable time of the election to rescind, or if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were in at the time the property was transferred to the buyer.” (Pers. Prop. Law, § 150, subd. 3.) Here there is a distinction between the notice of breach of warranty required by section 130 to fasten liability upon the seller for its breach and the notice of election to rescind required by section 150 as a condition annexed to the remedyy of rescission for such breach. The notice of breach of warranty, to fasten liability upon the seller, must be giveff within a reasonable time “ after the buyer knows, or ought to know, of such breach.” Even then the buyer may not avail himself of the remedy of rescission if he fails to notify the seller within a reasonable time ” of his election to rescind. In this additional requirement there is no indication that a reasonable time ” begins only “ after the buyer knows, or ought to know, of such breach.” If the Legislature had so intended it would have said so. The words here used are open only to the construction that a reasonable time must be determined by all the circumstances of the particular case, not exclusively by the time when the breach should reasonably have been discovered.

Long-continued failure to discover the defect in the, goods, if the buyer is without fault, should not absolve the seller from liability for his breach of contract. So the Legislature has decreed, but it has not decreed that the buyer may rescind the contract and return the goods when such failure, though without the buyer’s fault, prevents the buyer from giving notice of election to rescind until after a reasonable time for rescission of the contract has elapsed. In such case the buyer should be relegated to the remedy of recovery or recoupment of damages. It cannot be said that a notice of election to rescind is given within a reasonable time when it is postponed for almost two years and during that time the buyer has obtained substantially the benefit which he expected to derive from his contract. The buyer may not profit at the expense of the seller from such a long delay in the discovery of the breach of contract. A buyer who has received and retained substantial benefit from the contract may then recover compensation only for that which he has failed to receive. (Cf. Ketterer v. Bay View Nash Co., 192 Wis. 343.)

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

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

Judgments reversed, etc.