author: Hobbs, J.

text:
    In the Matter of the Nomination of Aaron M. Orange et al., Appellants, as Candidates of Social Labor Party. Louis Schapiro, Respondent.
    (Argued October 23, 1936;
    decided October 23, 1936.)

      Andrew Byrnes for appellants.

      Samuel W. Phillips for respondent.
   Hobbs, J.

A petition was filed and a motion made at a Trial Term of the Supreme Court, Albany county, held by Mr. Justice Foster, for an order declaring the nominating petition of the Social Labor party invalid and restraining the Secretary of State from certifying the nominations of that party. The motion was granted and an order made declaring the nominating petitions void and restraining the Secretary of State. The Appellate Division has unanimously affirmed that order. Apparently the hearing at the Trial Term was rather informal. No sustaining affidavits were used and no oral ■ evidence was taken. After the oral hearing the justice examined the original petitions of the Social Labor party and the original petitions of the American Labor party and thereafter decided that twenty-three of the signatures on the petition of the Social Labor party were duplicated on the petition of the American Labor party, and, therefore, that the petition of the Social Labor party did not contain the minimum number required by law —■ fifty signatures. The petition of the Social Labor party from Putnam county was signed with the names of sixty-four voters in that county. That petition was executed in June, 1936, about two months before the petition of the American Labor party was signed by voters of that county. The question for decision is whether the trial justice was justified, without having supporting affidavits or other testimony, in determining the fact that some of 'the signatures on one petition were written by the same person who wrote the signatures on the other petition. No written answer was filed. On a review by the Appellate Division, it had before it the same papers, also the original petitions, which were examined by the trial justice in arriving at his decision. It does not appear that any objection was made, either at the Trial Term or at the Appellate Division, to the practice adopted of examining the original petitions and the signatures thereon for the purpose of assisting the courts in determining whether there were duplicate signatures. It is conceded by appellants that the trial justice had the legal right to examine the petition of the Social Labor party to ascertain whether there were any defects on the face of the petition, and also had the right to examine the petition of the American Labor party for the purpose of ascertaining whether similar names appeared on both petitions. It is urged, however, that the court did not have the right, in the absence of testimony, to pass on the question as to whether the signatures in question on the different petitions were written by the same persons. It is urged by the appellants that the question of handwriting is the only question involved and that the justice at the hearing could not determine that fact from an examination of the original petitions alone. It is urged that only eleven of the signatures in question are spelled exactly alike and that if those eleven signatures are stricken from the petition there would still remain over the fifty required by law. If those eleven are stricken from the petition it would leave fifty-three names on the petition. The appellants have copied a number of the disputed signatures. Signature No. 1 is that of Daniel J. Rooney. His name appeared on the American Labor party petition. On the Social Labor party petition appears the name D. J. Rooney. No. 3 is the name Joseph Diroto as it appeared on the American Labor party petition. On the Social Labor party petition appears the name J. Diroto. As No. 5 appears the name Fred Julian —■ Social Labor party. On the American Labor party petition appears the name Freddie Julian. As No. 7 appears the name Wm. Budney — Social Labor party. On the American Labor party appears the name Wm. J. Budney. If those four names are of the same person appearing oh each of the two petitions, and are stricken out, then the petition would not contain the fifty names required by the statute. Using those names as fair illustrations, the question is: From the way in which they were written and the similarity in the names, did the justice who heard the motion and the Appellate Division have authority, under the Election Law, to determine as a fact that the names appearing on the two petitions were the names of the- same party? By section 137, subdivision 4, of the Election Law (Cons. Laws, ch. 17) it is provided that duplicate signatures cannot be counted on either petition. The trial justice and Appellate Division have found as a fact that the four signor turcs referred to above were duplicates; also that there were other duplicate signatures- — -twenty-three in all. The Election Law does not refer to similarity of handwriting. The language is: “ If the name of a person who has signed such a petition appear upon another petition nominating the same or a different person for the same office, it shall not be counted on either petition.” Where the same name and address appears on two different petitions there is a presumption that the signatures represent the same person. Attention is called to a Special Term case (Matter of Commissioners of Election, 64 Misc. Rep. 620) which lays down that rule, and 22 Corpus Juris, p. 92, is cited. As a general rule, identity of name is prima facie evidence of identity of person. In addition, we have here the same addresses given, which strengthens the presumption. The appellants failed to offer any proof to overcome that presumption. But in addition to the presumption, the court had before it the original petitions and without objection examined the same and determined as a fact that the different signatures referred to, appearing upon the two different petitions, were in the same handwriting. The appellants having consented, or at least not having objected, to the court examining the original petitions for the purpose of assisting it in reaching the proper decision, are now in no position to urge the objection.

To illustrate, take the name Wm. Budney and Wm. J. Budney, the place of address opposite both signatures

being the same. Could the court say that the signatures represented the same name? It is true that they are not written exactly the same. One uses as the representation of the given name the letters Wm.” The other uses the same letters and, in addition, the letter J.,” one being Wm. Budney ” and the other being Wm. J. Budney.” The court is required to treat these matters in a summary way and is cautioned to make such an order as justice requires. (Election Law, § 330.) The requirements of justice, however, do not permit a court to find that a petition is legal when it lacks the legal number of signatures. In Matter of Commissioners of Election (64 Misc. Rep. 620) Judge Andrews laid down the rule that where from the petitions the same name and address*' appears more than once the presumption is that the several signatures represent but one person and but one should be counted. He also said that a court would not be justified in finding from a mere inspection of the petition that because of similarity of handwriting the names were signed by the same person; that every presumption would be against the commission of such a crime. We think, however, that under the facts of this case a clear question of fact was presented and that the trial justice and the Appellate Division, having passed upon that question of fact, this court should affirm such determination.

The order should be affirmed, without costs.

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

Order affirmed.


source: Caselaw Access Project

author: Crane, Ch. J.

license: Public Domain

text:
    Henry K. Rosenbaum et al., Respondents, v. Herman Schatia, Appellant.
    (Argued October 6, 1936;
    decided November 24, 1936.)

      I. Maurice Wormser and Alexander Kahn for appellant.

      Jacob Greenwald and Gordon S. P. Kleeberg for respondents.
   Crane, Ch. J.

This action is based upon a written agreement entered into between the plaintiffs and the defendant. The plaintiffs had an ironing board cover which they desired to place upon the market through the forming of a corporation to manufacture and sell the same. The contract recited that Rechnitzer and Rosenbaum were the designers and inventors of this article, known as E-Z-ON ironing board cover, and were about to apply for letters patent. It is alleged that the other plaintiff, Penn, was interested in the cover. As capital was required to manufacture and sell E-Z-ON the contract was made with the defendant to procure credit. The parties agreed to form a corporation under the laws of the State of New York, to be known as Ezon Corporation. Rosenbaum was to be president; Rechnitzer, vice-president; Frances M. Parker, treasurer, and Frank Borut, secretary. Upon the organization of the corporation the trade-mark and patents were to be transferred to it, and the corporation was to issue one hundred shares of common stock of no par value, to Rechnitzer twenty-eight shares, Rosenbaum twenty-eight shares, Fenn nineteen shares, Herman Schatia or his nominee twenty-five shares. Rechnitzer and Fenn agreed to purchase twenty shares for $2,000. The twenty-five shares issued to Schatia were to be held in escrow. Paragraphs 5, 6 and 7 are quoted in full as they contain all of the defendant’s agreement to furnish money:

“ 5. The party of the second part agrees to finance purchases and obtain credit on behalf of the corporation for the carrying on of the corporation’s business and for the necessary materials to manufacture two hundred (200) gross of the said covers and deliver the materials to the corporation at the cost price which is to be repaid to the Second party as provided in paragraph 6 ’ hereof or in the alternative to have the corporation purchase the same and the said party of the second part will finance, provide for ample credit and guarantee the purchase price to the sellers.

<c 6. The corporation shall then proceed to manufacture two hundred gross of the said E-Z-ON covers and sell the same. The monies on hand the monies realized on the sale of the said merchandise, shall be paid in the following order:

"A. The cost of labor and all other expenses including operating expenses, sales, merchandising, incidental and necessary expenses in the manufacture and sale of the merchandise.

“ B. The cost of the material financed by Herman Schatia on behalf of said corporation or to the creditors guaranteed by Herman Schatia in the purchase of said materials for the corporation. * * *

7. During the period of the manufacture and sale of the said two hundred gross of E-Z-ON covers, the corporation shall maintain an office at No. 1 West 34th Street, New York City, at a monthly rental of $60.00, a stenographer at the salary of $18.00 a week, and the usual telephone and other services as well as advertising. Beginning with the week of March 12th, 1934, the parties of the first part shall each receive a salary of $40.00 a week from the corporation which shall be figured as an expense.

“ It is understood that for the first six months of the first year this contract is in force the parties of the first part shall each receive a salary of $40.00 per week, and that thereafter any proposition concerning any increases shall be decided by the Board of Directors.”

The plaintiffs have sued for breach of this contract, alleging, “ the defendant agreed for one year to finance the said enterprise and pay all its expenses inclusive of at least forty dollars per week salary to each of the plaintiffs herein, for a period of one year beginning with the week of March 12, 1934, and the plaintiffs were to devote their time and attention to the enterprise. Plaintiffs beg leave to refer to the original of said contract upon the trial of this action for greater particularity as to its contents.”

We can find nothing whatever in the contract wherein the defendant agreed to pay all the expenses of the enterprise, inclusive of at least forty dollars per week salary to each of the plaintiffs herein. Paragraph 5 states the defendant’s obligation. He agrees to finance purchases and obtain credit on behalf of the corporation for carrying on the business and for the necessary materials to manufacture two hundred gross of said covers. This is the extent of the defendant’s obligation. Nowhere do we find that he agreed to pay any salaries to these men, or to pay all the expenses of the corporation; in fact, it will be noted that in paragraph 6 it is said that the monies realized on the sale of the merchandise shall be paid in the following order, first, the cost of labor and all other expenses, including operating expenses, and after these are paid, the cost of the material “ financed by Herman Schatia on behalf of said corporation.” Further will it be noted that in paragraph 7 it is provided that the plaintiffs shall receive forty dollars a week from the corporation which shall be figured as an expense.” Referring back to subdivision A of paragraph 6, it will be seen that the expenses are paid out of monies realized on the sales of merchandise. The plaintiffs’ allegations in the complaint are not supported by the written contract.

In submitting this case to the jury the judge charged that if the defendant had broken his contract these plaintiffs could recover damages measured by the extent of their salaries, which was to be a part of the expense of the corporation which the defendant agreed to finance. This was error, as the defendant undertook no such obligation. Motions made by the defendant to dismiss the complaint at the end of the case were sufficient to raise this point. Also, exception was taken to the judge’s charge as follows: “ I except to your Honor’s charge as to the measure of damages being the $40 a week; and I ask your Honor to charge that the damages should be measured by the profits which plaintiffs may be able to show with reasonable certainty were lost to them by the breach.”

The defendant has not failed to meet his obligation to finance the corporation in the purchase of materials or to furnish credit for the corporate business. All through the contract the emphasis is laid upon the fact that his undertaking is to the creditors in the purchase of materials for the corporation.” The salary of these plaintiffs was to come out of the earnings, not out of the defendant. Whatever may have been done by the defendant under this contract in paying the plaintiffs or in furnishing money for the corporation does not extend or enlarge his obligation now that the parties have come into a court of law. We are bound by the writing and the fair interpretation of it.

Counsel has laid much stress in his argument and brief upon the measure of damage and has said little about the meaning of the contract. We feel that as the point was sufficiently raised upon the trial and the measure of damage necessarily includes the statement which the judge made regarding the defendant’s obligation to pay salaries, we have the question before us for decision.

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

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

Judgments reversed, etc.


author: Finch, J.

text:
    The People of the State of New York, Respondent, v. Joseph Kuc, Appellant.

      (Argued October 7, 1936;
    decided November 24, 1936.)

      Benjamin I. Tunick for appellant.

      Walter A. Ferris, District Attorney (Samuel La Rosa of counsel), for respondent.
   Finch, J.

The defendant, Joseph Kuc, has been convicted of a misdemeanor for offering a newspaper for sale on a public street of the village of Port Chester between the hours of nine p. m. and seven A. M.

The conviction was for the violation of the following ordinance:

“1. It shall be unlawful for any person, firm or corporation to hawk or sell, or offer for sale, or carry or expose for sale, on any public street or sidewalk, or other public place, or by going from house to house, or place of business to place of business, on foot, or from any animal or vehicle; newspapers or similar publications between the hours of nine o’clock in the evening and seven o’clock in the forenoon.

“2. Nothing in this ordinance shall be deemed to restrain or prohibit the sale of such newspapers or similar publications, by any newsdealer at his stand, store or place of business, * *

The charter of the village of Port Chester delegates to the^village the power to regulate the sale of goods, wares, merchandise and other property in the streets “ or to permit the same, under such restrictions, upon such terms, and at such times and places, and with such penalties as the said trustees shall by ordinance prescribe, * * and to prohibit the crying, hawking or peddling of any property within the village limits. (Laws 1868, ch. 818, tit. 3, § 1, subd. 2.)

The only question is the constitutionality of this ordinance enacted under the power granted by the charter.

An ordinance enacted by a village pursuant to a delegation of power should be reasonable and its purpose should be to protect the public health, morals, safety, order or general welfare. (People ex rel. Wineburgh Adv. Co. v. Murphy, 195 N. Y. 126, 131; People v. Ringe, 197 N. Y. 143, 149.) It must not be discriminatory. General ordinances forbidding unsolicited house to house canvassing or peddling, or limiting peddling or hawking to the market places have been upheld. (Town of Green River v. Fuller Brush Co., 65 Fed. Rep. [2d] 112; Shelton v. Mayor of Mobile, 30 Ala. 540; Town of St. Martinville v. Dugus, 158 La. 262; City of St. Louis v. Jackson, 25 Mo. 37; State v. Perry, 151 N. C. 661.) This ordinance, however, applies only to the hours between nine p. m. and seven a. m. Regulations of the hours during which specified businesses may be conducted have been declared constitutional. (Biddles v. Enright, 239 N. Y. 354; Barbier v. Connolly, 113 U. S. 27.) In these cases the relation between the regulation and the protection of health, safety, morals or the general welfare was patent.

The necessity for the restriction imposed by the ordinance involved herein is not so clear. Reasons understandable enough when all street selling is forbidden cannot be advanced to support a regulation which applies only to newspapers. The sole reason suggested by the village authorities is that the ordinance was intended to prevent interference with the peace, comfort and repose of the inhabitants of the village by the cries of hawkers of newspapers and extras during the hours when they might be expected to be asleep. A regulation reasonably designed to accomplish this and non-discriminatory would be valid as a proper exercise of the police power. This ordinance goes too far. It does not stop at forbidding hawking. It also forbids absolutely the sale or offering for sale or the delivery of newspapers on any public street or public place within the limits of the time named. The information upon which this defendant has been convicted seems carefully drawn so as to limit the charge to the- sale of a single newspaper on the public street. It is difficult to understand why the charge has been so restricted unless to test the power of the village to prohibit during these hours any sale on a public street not made at a street stand. If this conviction is upheld the ordinance would seem sufficiently broad to bar even the delivery of newspapers until after seven a. m. As noted, it is sought to be justified on the ground that its aim is to eliminate disturbing noises at night. The brief on behalf of the village urges that the ordinance restricts the sale of newspapers by peddling and hawking in a loud and boisterous manner at night. This it does and against this no valid complaint could be made, but it also goes far beyond this and prohibits sales of newspapers however noiseless. Even this so-called justification would not apply to the delivery of newspapers before seven a. m. No reasonable grounds explain the extreme lengths to which this ordinance goes. Explanation can only be found in a desire to discriminate unconstitutionally in favor of the local newsdealers. (People v. Ringe, supra; People ex rel. Moskowitz v. Jenkins, 202 N. Y. 53; City of Buffalo v. Linsman, 113 App. Div. 584; McQuillin on The Law of Municipal Corporations [2d ed.], vols. 2, 3, §§ 775,1001.)

Chief Judge Cullen said in People ex rel. Moskowitz v. Jenkins (202 N. Y. 53, 58): These features of the statute plainly show its purpose, which was not to safeguard customers against fraud, but local shopkeepers from competition. * * * Judge Peckham said of the statute: ' It is evidently of that kind which has been so frequent of late, a kind which is meant to protect some class in the community against the fair, free and full competition of some other class, the members of the former class thinking it impossible to hold their own against such competition, and therefore flying to the legislature to secure some enactment which shall operate favorably to them or unfavorably to their competitors.’ ”

The only issue presented upon this record to us for decision is the appeal by the defendant from his conviction. So judged we find the ordinance unconstitutional and, therefore, reverse the judgment of the Court of Special Sessions of Port Chester and the County Court of Westchester, and dismiss the information.

The judgments should be reversed and the information dismissed.

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

Judgments reversed, etc.


text:
    The People of the State of New York ex rel. Adams Electric Light Company, Appellant, v. Mark Graves et al., Constituting the State Tax Commission, Respondents.
    (Argued October 5, 1936;
    decided November 24, 1936.)

      Francis E. Cullen for appellant.

      John J. Bennett, Jr., Attorney-General (Wendell P. Brown of counsel), for respondents.
   Finch, J.

The question presented is whether the transfer of a portion of a corporation’s earned surplus to its no par value capital stock account is in effect the declaration or payment of a dividend ” within the meaning of that term as used in section 186 of the Tax Law (Cons. Laws, ch. 60).

The petitioner is a corporation engaged in the business of selling and distributing electricity and is subject to the franchise tax imposed by section 186 of the Tax Law which required it to pay “ three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capital employed in this state * * (§ 186, later amended by Laws 1935, ch. 745, § 6.)

The only stock issued by the petitioner is 2,316 shares without par value. Prior to May 16, 1933, the capital of this corporation was approximately $50,000. At that time the corporation had a surplus in excess of $100,000. On that date the board of directors adopted a resolution directing the transfer from the surplus account to the no par value capital stock account of approximately $90,000 of this surplus, thereby increasing the capital account to $140,000.

The Tax Commission held that this transfer constituted in effect the declaration and distribution of a stock dividend and was taxable under section 186. The Appellate Division has confirmed this tax assessment, two justices dissenting.

The question presented is wholly one of statutory construction. When the Legislature used the word “ dividend ” did it use that word to include only cash or property received by the stockholders or was it intended to include within the concept also an excise upon the corporation when the corporate funds are transferred from surplus to capital account even though the latter in no way increases the amount then received by the stockholder?

The franchise tax levied by section 186 is based upon the dividends declared or paid by a corporation. Can the transaction involved herein be treated as the declaration of a dividend? A dividend on corporate stock implies a division or distribution of corporate profits. Normally dividends are paid in cash. Frequently, however, dividends are declared in the form of scrip, or stock.

The courts of this State have held that franchise taxes apply to the distribution of corporate profits whether in the form of a bond dividend (People ex rel. Wedgewood Realty Co. v. Lynch, 262 N. Y. 202), a preferred stock dividend (People ex rel. Eastern Bldg. Corp. v. Lynch, 245 App. Div. 787), an ordinary stock dividend (People ex rel. Empire State Dairy Co. v. Sohmer, 218 N. Y. 199; People ex rel. Pullman Co. v. Glynn, 130 App. Div. 332; affd. on opinion below, 198 N. Y. 605), or loans to stockholders which bore no interest and which were made with no intention of repayment (People ex rel. Fox Film Corp. v. Loughman, 259 N. Y. 30). In all these cases there was a distribution to stockholders of either cash or an instrument which could be sold for cash. In the case at bar there has been no distribution. There has-been a transfer as shown by a bookkeeping entry. The transfer from surplus to the capital stock account is authorized by section 12 of the Stock Corporation Law (Cons. Laws, ch. 59). If nothing more was done than to transfer an amount from surplus to the capital stock account it is not the equivalent of the payment of a dividend. Neither money nor property nor a stock dividend has come into the hands of the stockholders as the result of the transfer. No stockholder has the right unless further corporate action is taken to receive any equivalent of the amount transferred.

It is true that if the stockholders desire to have each share of stock represent approximately $21 of paid-in capital instead of the new amount of approximately $60 per share that this may be brought about by issuing additional shares of stock as provided for in sections 36 to 38 of the Stock Corporation Law. But only then and not till then will the stockholders receive anything which can fairly be comprised within the word “ dividend.” Until that further action takes place the Tax Law imposes no tax upon a transfer confined to the corporate books and the courts cannot hold by even the most liberal construction that such a bookkeeping entry constitutes a dividend. (Cf. Gould v. Gould, 245 U. S. 151.) It is likewise true that after the capital stock was increased from $50,000 to $140,000 the latter was the amount upon which the petitioner was entitled to pay a four per cent dividend without incurring a tax under section 186 of the Tax Law. This result, however, does not make the transfer equivalent to the declaration of a dividend. The measure of value of each share of stock before as well as after the increase of capital stock being the proportionate interest of the holder thereof in the net assets of the corporation, the stock of each stockholder was worth the same after such increase as before. The entries of capital stock and surplus were both on the liability side of the balance sheet and the footing of the liability column was no different after the entry than before.

We are constrained, therefore, to hold that the transfer did not constitute the declaration of a dividend.

The order of the Appellate Division confirming the assessment of the Tax Commission should be reversed and the determination of the State Tax Commission annulled in so far as it is based upon the transfer from the surplus account to the capital account, with costs in this court and in the Appellate Division.

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

Ordered accordingly.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v. Peter La Pella, Appellant.
    (Argued October 14, 1936;
    decided November 24, 1936.)

      George J. Todaro for appellant.

      William Copeland Dodge, District Attorney (Ambrose J. Delehanty of counsel), for respondent.
   Per Curiam.

Defendant has been convicted of the crime of having and carrying a firearm concealed upon his person, without a license therefor, after having been convicted of a crime. (Penal Law, § 1897, subd. 5.) He offered evidence that, having found the weapon in a public toilet room, he had put it in his pocket, intending to deliver it to the police, after keeping an appointment with his wife at a nearby street corner. Without request or suggestion, the weapon was there surrendered by the defendant to a detective. This, the defendant says, was twenty minutes after he had found it.

The sole question here presented is that raised by the refusal of the trial court to instruct the jury, that if this defendant found this pistol as claimed by him, and if he thereafter took this gun for the purpose of delivering it to an officer or to a police station, that he was performing a civic duty, and that such possession was -not the possession intended by Section 1897.” We think this ruling was error. The possession ” forbidden by the statute should not be construed to mean a possession * * * which might result temporarily and incidentally from the performance of some lawful act ” (People v. Per see, 204 N. Y. 397, 402), particularly when, as is here claimed, the act was designed to meet the social policy of the law.

The judgments should be reversed and a new trial ordered.

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

Judgments reversed, etc.


author: Hubbs, J.

text:
    Jacob Heiman, Appellant, v. Henry Bishop et al., Respondents, Impleaded with Others.

      (Argued September 30, 1936;
    decided November 24, 1936.)

      Gustavus A. Rogers for appellant.

      Howard C. Taylor and Charles L. Fleming for respondents.
   Hubbs, J.

After a sale on foreclosure, appellant made a motion for a deficiency judgment under section 1083-a of the Civil Practice Act. The matter was referred to an official referee who reported that at the date of the foreclosure sale on June 16, 1935, there existed “ no fair and reasonable market value of the mortgaged premises,” that the nearest date when there was such market value was in 1930, at which time the market value of the property was more than the amount of the mortgage. The motion for a deficiency judgment was, therefore, denied.

Prior to the emergency legislation embodied in section 1083-a and other related provisions of the Civil Practice Act, a mortgagee was in a proper case entitled as of course to enter a judgment for the deficiency disclosed by the mortgage sale. Owing to conditions existing in the real property market as a result of the depression, it became manifest that something must be done to reheve mortgagors from the hardship growing out of the position in which they found themselves. Their unfortunate position has been described in detail by many court decisions. It would serve no useful purpose to reiterate it. (Cf. Klinke v. Samuels, 264 N. Y. 144.)

Section 1083-a and other related sections of the Civil Practice Act were enacted as emergency legislation to relieve the unfortunate situation. Section 1083-a provides that no deficiency judgment shall be granted except as provided in the section; also that a motion may be made for leave to enter a deficiency judgment. It then provides: Upon such motion the court, whether or not the respondent appears, shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date such premises were bid in at auction or such nearest earlier date as there shall have been any market value thereof and shall make an order * *

The purpose of the enactment, as has been repeatedly said, was to set up a new equitable standard for dealing with the question of deficiency judgments growing out of foreclosures; on the one hand, to protect unfortunate mortgagors, and, on the other, to allow mortgagees, when equitable in the circumstances, to secure deficiency judgments.

The section provides in effect that a deficiency judgment may not be entered in cases where the fair and reasonable market value of the mortgaged premises ” as of the date of sale equalled or exceeded the amount due and unpaid on the mortgage; and, in cases where'no market value existed at that time, that the court shall fix such value at “ such nearest earlier date as there shall have been any market value thereof.” In any event, the court is required to determine the market value of the premises either at the date of the sale or at such earlier date.

Prior to the depression, the method of determining the market value of real property was fairly well established by the decisions of the courts. In a general way, the market value of real property is the amount which one desiring but not compelled to purchase will pay under ordinary conditions to a seller who desires but is not compelled to sell.

It is to be noted that in the various definitions of market value of real property stated by the courts there appears the words “ under ordinary conditions ” or under ordinary circumstances ” or words of like import. Certainly, during the depression, ordinary conditions have not existed in the real property market. Conditions in that market have been extraordinary and unprecedented. The Legislature when it enacted section 1083-a understood those conditions and it was because of such conditions that the section was enacted. Nevertheless, the section requires the court to determine the market value of the premises. In the depressed condition of the market for real property, the old standard of market value has become utterly useless. The new and unusual conditions necessarily required a new standard for determining value, otherwise the section would have the effect of depriving mortgagees of deficiency judgments in practically all cases. That certainly could not have been the intent of the Legislature. The court below adopted the old standard. The learned referee during the hearing and in his report repeatedly stated "that there was no fair and reasonable market value of the premises on the date of sale in June, 1935, or between that date and 1930, which he fixes as the “ nearest earlier date ” when there existed a market value of the premises. At the hearing, he stated “ the question to be decided in cases of this kind is not the value of the property; the question to be decided is £ what is the fair and reasonable market value ’ and for that purpose a market must exist. * * * what is the fair and reasonable market value has several times been determined prior to this emergency legislation. It must be an open market.” We think that the learned official referee adopted a view too narrow and strict, and contrary to the spirit and purpose of the statute. In carrying out the directions contained in the statute, the court should receive evidence of all elements that can in reason affect the value of the premises together with the opinion of experts upon the subject.

There is a marked distinction between the method of proving the market value of a commodity dealt in by many persons and in a large number of transactions, so that a definite price or range of prices is established and the commodity may be said to have a market price which is quoted in the market and varies from time to time, depending largely upon supply and demand, and the method of proving the market value of a particular piece of real property. In a proceeding under section 1083-a, the court should receive evidence of the age and construction of the buildings on the premises, the rent received therefor, assessed value, location, condition of repair, the sale price of property of a similar nature in the neighborhood, conditions in the neighborhood which affect the value of property therein, accessibility and of all other elements which may be fairly considered as affecting the market value of real property in a given neighborhood. With such evidence before it, the trial court, in the exercise of its best judgment, should determine the market value of the premises in the existing' circumstances.

The learned official referee was influenced in arriving at his decision by a statement contained in the opinion in the case of Klinke v. Samuels (supra) to the effect that there is no market value of real estate of any kind. That was a general statement made in- discussing the question as to whether section 1083-b was constitutional. It has no application to the question presented in this case.

The orders should be reversed and the case remitted to the Special Term to proceed in accordance with this opinion, with costs in this court and in the Appellate Division to the appellant.

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

Ordered accordingly.


author: Lehman, J.

text:
    In the Matter of the Estate of Abigail Cunniff, Deceased. Thirza Cunniff, Appellant; Herbert C. Cunniff, Respondent.
    (Argued September 29, 1936;
    decided November 24, 1936.)

      M. James Conboy and J. Stanley Carter for appellant.

      Isaiah Fellows for respondent.
   Lehman, J.

Abigail Cunniff died intestate on the 12th day of April, 1933. Letters of administration on her estate were issued to Herbert C. Cunniff on the 18th day of May, 1933. The administrator began proceedings in January, 1935, for the settlement of his accounts. In July, 1935, while the proceedings were still pending, Thirza Cunniff filed a petition praying that the administrator be cited to show cause * * * why a procseding should not be commenced by him under article 13 of the Surrogate’s Court Act for the sale of the real estate of the decedent for the purpose of paying the decedent’s debts.” The administrator in his answer to the petition urged that any lien of creditors upon the decedent’s real property or the proceeds thereof had expired after eighteen months from the grant of letters of administration on the decedent’s estate, and that a creditor could not thereafter initiate any proceeding in the Surrogate’s Court to compel the sale of such property. (Surrogate’s Court Act, § 233.) The Surrogate decided that a creditor might file a petition for such relief during the pendency of proceedings for the judicial settlement of the accounts of an executor or administrator, though more than eighteen months had passed since the date when letters first issued to the executor or administrator, and made an order granting the relief for which the creditor prayed. The Appellate Division has reversed the order and dismissed the petition.

The verified claim of the petitioning creditor was presented to the administrator in November, 1933. He rejected the claim. It was allowed by the Surrogate in May, 1935, in the proceedings for the settlement of the executor’s accounts. The personal property of the decedent with which the administrator is chargeable is insufficient to pay the claim. The decedent owned some real property also. One of the decedent’s next of kin brought an action for its partition before eighteen months had elapsed from the grant of letters of administration and, in accordance with the provisions of section 1045 of the Civil Practice Act, the judgment entered in that action directed that the proceeds of the sale of the real property be deposited with the County Treasurer to await the further order of the court. The creditor now seeks in this proceeding to reach these proceeds.

The proceeding to sell a decedent’s real property to pay his debts is statutory. When resort to the real property of a decedent for the payment of his debts is sought by his creditors it can only be had by virtue of the statute and the prescribed statutory proceedings must be strictly pursued. * * * With certain exceptions relating to specialties and matters of record not necessary to mention here, a decedent’s real property was not assets available for the payment of his debts by the English common law. The first statute on the subject ever enacted in this State is chapter 27 of the Laws of 1786.” (Personeni v. Goodale, 199 N. Y. 323, 332.) The statutory provisions governing disposition of the real property of a decedent for the payment of his debts are now contained in article 13 of the Surrogate’s Court Act and especially in sections 233 to 236 thereof. The only question to be decided upon this appeal is whether under these sections a Surrogate has power to order the sale of a decedent’s real estate, to pay his debts, upon the application of a , creditor made more than eighteen months after the grant I of letters of administration, but during the pendency of | proceedings for the judicial settlement of the adminis•'trator’s accounts.

The content and general purpose of these sections is indicated by their titles. Section 233 defines the “ real property subject to disposition for the satisfaction of charges against the same and for distribution.” Section 234 enumerates for what purposes real property is subject to disposition,” and section 236 decrees when and how real property may be mortgaged, leased or sold.”

Section 236 provides in part that “ a verified petition may be filed by an executor or administrator or by any person interested for an order to mortgage, lease or sell the real property of the decedent for any of the purposes specified in section two hundred and thirty-four of this act, which shall set forth * * * the condition of the estate, and if the petition be entertained by the surrogate a citation shall issue to all persons interested, and also to the creditors if the surrogate shall direct. And upon a judicial settlement of the accounts of an executor or admioistrator, any party to the proceeding may allege and show by proof such facts and circumstances as are required to give the court jurisdiction to order the mortgage, lease or sale of the real property left by the deceased. * * * Where such relief is sought upon an accounting notice of such application to sell, mortgage or lease, shall be given in the citation.” The creditor here was a party to the proceeding for the judicial settlement of the accounts of the administrator. She has alleged and shown by proof the facts and circumstances “ required to give the court jurisdiction ” to order the sale of the real property left by the deceased in accordance with the provisions of that section. The Surrogate correctly made the order, unless by section 233 the Legislature intended to limit the time for such application to the period of eighteen months from the grant of letters.

Section 233 provides that no real property or interest in real property of which a decedent died seized, “ shall be mortgaged, leased or sold under an order in surrogate’s court to satisfy any claim, debt or demand, unless the proceeding therefor, or the proceeding in which such relief is asked, shall have been commenced within eighteen months from the date when letters first issued to an executor or administrator, or unless the proceeding in which such relief is asked shall have been commenced by an executor or administrator during the pendency of a proceeding for the judicial settlement of his accounts and in such case only in case the real property or interest therein sought to be disposed of has not been aliened or incumbered by the distributees or by the devisees of a decedent prior to the institution of such proceeding.” It is plain that, after eighteen months from the date when letters first issued, no proceeding to sell the property may be commenced by an executor, administrator, creditor or other person, unless a proceeding for the judicial settlement of the accounts of an executor or administrator is then pending. It is equally plain that the effect of this section is “to authorize an executor or administrator to petition for the sale of real property for the payment of debts and administration expenses in an accounting proceeding whenever had.” (Matter of Collins, 122 Misc. Rep. 265, 266, per Foley, S.) The question remains whether in a pending judicial proceeding for the settlement of his account an executor or administrator may be compelled, upon the return of an order to show cause obtained by a creditor, to commence a proceeding for such relief or whether, after eighteen months have expired since letters first issued, payment of the debts of a decedent out of his real property depends not upon the merits of the creditor’s position but upon the untrammeled will of the executor or administrator.

A brief survey of the history of the statutory provision for the sale of the real estate of a decedent, and the changes made from time to time in the procedure required, will serve to clarify the legislative intent embodied in section 233. The original statute (Laws of 1786, ch. 27) required that an executor or administrator who “ shall discover or suspect that the personal estate of his, her or their testator or intestate is insufficient to pay his or her debts,” should “ as soon as conveniently may be make a just and true account of the said personal estate and debts as far as he or she can discover the same and deliver the said account to the judge of the court of probates of this State for the time being and request his aid in the premises.” Then, after notice to all persons interested, the judge was required to hear and examine “ the allegations and proofs of such executors or administrators and of all such other persons interested in such estate as shall think proper to make or offer any; and if upon due examination, the said judge shall find, that the personal estate of such testator or intestate, is not sufficient to pay his or her debts, the said judge shall direct the whole, if necessary, or if not, so much, of the real estate of such testator or intestate, then remaining unsold, to be sold, as ■will pay his or her debts.” Thus in that statute the duty was placed upon the executor or administrator to request the aid of the judge of the court of probate so that creditors might be paid out of real property of a decedent if the personal property was insufficient and the filing of an account of the personal estate and debts must precede the making of any order to sell real estate.

During the succeeding forty years some additional or amendatory legislation was enacted, which, however, throws no light upon the question here presented, but under the Eevised Statutes of 1829 the statutory provisions assumed a form and content more nearly analogous to those now in force. Then it was provided that after the executors and administrators of a decedent shall have made and filed an inventory according to law “ if they discover the personal estate of their testator or intestate, to be insufficient to pay his debts, they may, at any time within three years, after the granting of their letters testamentary or of administration, apply to the surrogate for authority to mortgage, lease or sell so much of the real estate of their testator or intestate, as shall be necessary to pay such debts.” (R. S. pt. 2, ch. 6, tit. 4, § 1.) Under the same title provision was made for the issuance upon the application of a creditor of an order on the “ executor or administrator, to show cause why he should not be required to proceed and sell, or otherwise dispose of, the real estate of the deceased, for the payment of his debts.” (§ 48.)

The substance of both these sections of the Eevised Statutes was incorporated with some changes in chapter 460 of the Laws of 1837 entitled: “An Act concerning the proof of wills, executors and administrators, guardians and wards, and surrogates’ courts.” Section 48 (supra) was in terms repealed, but in place thereof the Legislature substituted a new section which reads, in part, as follows:

“ If after the rendering of an account by an executor or administrator to a surrogate as is provided in chapter sixth, part second, title fourth of the Revised Statutes, it shall appear that there are not sufficient assets to pay the debts of the deceased, the surrogate, upon the application of any creditor made at any time after the granting of letters testamentary or of administration, shall grant an order for such executor or administrator to show cause why he should not be required to mortgage, lease or sell the real estate of the deceased for the payment of his debts.” (§ 72.)

Without substantial change these provisions remained upon the statute books until 1880. The Legislature, in these provisions, placed upon an executor or administrator the duty, in proper case, to bring proceedings, within three years of the grant of letters, for the sale of real property of a decedent for the payment of his debts. A creditor could not initiate such proceedings. Nevertheless, creditors were not left at the mercy of the executor or administrator, for after the filing of the account of the executor or administrator, a creditor might compel him to act. Since creditors could not take such action 'until the filing of the accounts, it was held that limitations contained in the Code of Procedure did not begin to ran until such filing.

The "Legislature by chapter 178 of the Laws of 1880 revised the statutory provisions governing the disposition by proceedings in the Surrogate’s Court of a decedent’s real property for the payment of his debts. They have been summarized in the opinion of this court in Matter of Haxtun (102 N. Y. 157). A member of the Commission which drafted the legislation made note that “ The most noticeable change, thus made, consists of the extension, to a creditor, of the right to institute proceedings in the first place; whereas, the former statute required him to proceed circuitously, by taking proceedings to compel the executor or administrator to make the application.”

(Throop’s Code of Civil Procedure [1880 ed.], pt. 2, p. 635.) As a corollary to that change the statutory limitation upon such proceedings, whether brought by the executor or administrator or by a creditor, began to run from the time letters upon the estate were issued and was complete three years thereafter. The creditor’s rights at that time were defined by this court- as follows: “ The debts of a decedent can be ordered to be paid out of his real estate or by bis heirs or devisees only in the manner provided by statute. During three years after his death his creditors have a kind of statutory hen upon the real estate left by him, and such real estate cannot be so aliened by his heirs or devisees during that time as to defeat the claims of creditors thereon (2 R. S. 100, etc.; Code, sections 2749, etc.). After the expiration of the three years the debts of the decedent may be enforced against the heirs and devisees in the mode specified in the statute, and they then cease to be a hen or charge in any sense upon the real estate.” (Platt v. Platt, 105 N. Y. 488, 497.)

In 1914 after a report by a Commission Appointed to Revise Practice and Procedure in the Surrogate’s Court, these provisions were again revised and became article third of title IV of chapter XVIII of the Code of Civil Procedure. Then it was provided that no such property, or interest in property, shah be mortgaged, leased or sold under a decree in surrogate’s court to satisfy any claim, debt, or demand, unless a proceeding for a judicial settlement, or to compel a settlement, of the accounts of an executor or administrator shah have been commenced within eighteen months from the date when letters first issued to an executor or administrator.” (§ 2702.) Though an amendment made in 1918 restored the provision that a creditor might ask for the sale of the real property in an independent proceeding brought by him, such rehef was barred unless the proceeding therefor, or the proceeding in which such rehef is asked, shall have been commenced within eighteen months from the date when letters first issued.” (Laws of 1918, ch. 317.) A revisers’ note indicates that since a creditor could by prompt presentation of his claim compel a judicial settlement of the accounts of an executor or administrator, it was believed that in order to facilitate transfers of property, the duration of a creditor’s lien could properly be reduced by requiring that any proceedings in which enforcement of the lien was asked should be initiated within eighteen months instead of within three years after the issue of letters. A creditor whose hen was barred by the statute might still bring an action against heirs or devisees under section 1837 of the Code of Civil Procedure.

In 1920 when the Legislature enacted the Civil Practice Act and the Surrogate’s Court Act, the statutory limitation of eighteen months upon the bringing of any proceedings in the Surrogate’s Court to compel the sale of a decedent’s real property to satisfy a claim, debt or demand, contained in section 2702 of the Code of Civil Procedure, was transferred to section 233 of the Surrogate’s Court Act. In 1921 section 233 was amended substantially to its present form. (L. 1921, ch. 201, § 5.) From that time the limitation of eighteen months did not apply if the pro-, ceeding in which such relief is asked shall, have been commenced by an executor or administrator during the pendency of a proceeding for the judicial settlement of his accounts,” and the real property had not previously been incumbered and delivered. Section 236 of the Surrogate’s Court Act (formerly section 2705 of the Code of Civil Procedure), entitled “ When and How Real Property May Be Mortgaged, Leased or Sold,” provided at that time, as section 2705 had provided before, that at any time after his appointment and qualification an executor or administrator may apply for an order to mortgage, lease or sell the real property of the decedent * * *.” The section further provided that upon a judicial settlement of the accounts of an executor or administrator, any party to the proceeding may allege and show by proof such facts and circumstances as are required to give the court jurisdiction to order the mortgage, lease or sale of the real property * * *.” The section did not in terms provide procedure by which a creditor could himself initiate proceedings for the sale of real estate. The omission was corrected thereafter so that any person interested ” as well as an executor or administrator, was by the express terms of the statute authorized to file a verified petition for the mortgage, lease or sale of the real property of the decedent. So far as concerns the question presented upon this appeal the statute otherwise remained unchanged since that time in spite of formal amendment.

Id the administration of the estate of a decedent, his executor or administrator has at all times been subject to a duty to pay the debts of the decedent to the extent that assets of the decedent which came into the hands of the executor or administrator sufficed for that purpose. Title to real property of a decedent passes directly to his heir or devisee and is ordinarily not an asset which becomes part of the decqfid^t’s estate which his personal representatives may administer. Since the adoption of the first statute of 1786 relating to the disposition of a decedent’s real property for the payment of his debts, we can trace plainly through all the changes thereafter made in the statutory provisions, a legislative intent that a decedent’s real property should be made available for the payment of his debts, and that an executor or administrator might obtain an order of the probate court which would permit the payment of the decedent’s debts out of his real property which had passed -to his devisee or heir upon his death, if in the course of administration of the decedent’s estate the personal property which passed to the executor or administrator proved insufficient. The duty of the executor or administrator to see that the debts of the decedent were paid out of any property of the decedent available for that purpose and the jurisdiction of the court of probare to supervise and direct the performance of that duty, existed before any of these statutes were enacted; the statutes merely provided the means by which property not previously available could be used for that purpose. Then, too, we may plainly trace in all the statutes relating to the subject a legislative intent that a creditor or person interested might in proper case interpose and compel an application to the court for such relief if the executor or administrator failed to act for it, just as a person interested might, in other respects, compel a proper administration of a decedent’s property and its use for the purposes to which it should be put in accordance with law.

Until a creditor has established his right to payment of his debt out of the assets of the estate and also that the personal property of the decedent is insufficient for the payment of his debts, there is no sound basis for an application to the court, either by the creditor or by the executor or administrator, for the sale of a decedent’s real property. Ordinarily the filing of che accounts of the administrator or executor will precede a judicial determination of such matters and application may appropriately be made in the proceedings for the judicial settlement of such accounts. Accordingly in the original statute and in its changed forms for almost a century a creditor was compelled to await the filing of accounts before he could ask relief of the court, and the statute did not provide for the bringing of an independent proceeding for that purpose by a creditor or other person interested. Until the time had elapsed in which application might be made for the sale of a decedent’s real property, an heir or devisee who had title to the property could not convey it free from a hen for the payment of decedent’s debts. For that reason the Legislature early provided a definite period of three years and then of eighteen months, during which such an application might be made. The period of eighteen months might, however, in some cases prove too short for bringing an application which awaited the filing of the accounts of the executor or administrator, so in section 233 of the Surrogate’s Court Act the Legislature provided that though after eighteen months no application might be made for the disposition of real property of a decedent for the payment of his debts, where the property had been previously aliened or incumbered, such application for the disposition of property to which the hen or devisee still had title might be made by the executor or administrator at any time during the pendency of proceedings for the settlement of his accounts. Though the Legislature did not in express terms provide that if in proper case the executor failed in the accounting proceedings to make such application, a creditor might ask the court to direct such application to be made, yet in the light of the history and purpose of the statute, it is clear that the Legislature did not intend that a court of probate should be denied jurisdiction to make such directions when a creditor shows in the accounting proceedings that the personal property is not sufficient to pay the debts of the decedent and that real property would be available for such payment if the executor or administrator need the means provided by statute for that purpose.

The order of the Appellate Division should be reversed and the decree of the Surrogate’s Court affirmed, with costs in this court and in the Appellate Division payable out of the estate.

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

Ordered accordingly.


author: Loughran, J.

text:
    William W. Vaughan et al., Copartners under the Firm Name of Vaughan & Company, Appellants, v. The State of New York, Respondent.
    (Argued October 15, 1936;
    decided November 24, 1936.)

      John W. Davis, William F. Unger, Samuel P. Gilman and Irving K. Rubin for appellants.

      John J. Bennett, Jr., Attorney-General (Henry Epstein, Leon M. Layden and Caleb Candee Brown, Jr., of counsel), for respondent.
   Loughran, J.

This is a claim for a refund of stock transfer stamp taxes collected under sections 270 and 270-a of the Tax Law (Cons. Laws, ch. 60), as amended by chapter 643 of the Laws of 1933. It embraces only taxes paid on transfers of par value stock. Its basis is the proposition that the statute deprives the claimants of their property without due process of law and denies to them the equal protection of the laws,- contrary to the Fourteenth Amendment of the Constitution of the United States and section 6 of article I of the Constitution of the State. The Court of Claims dismissed the claim on the merits. Claimants appeal pursuant to Civil Practice Act, section 588, subdivision 3.

The problem presented has its background in the evolution of the challenged legislation.

By section 1 of chapter 241 of the Laws of 1905 there was levied on transfers of stock a tax of two cents on each hundred dollars of face value or fraction thereof.” The constitutionality of that law was upheld in People ex rel. Hatch v. Reardon (184 N. Y. 431; affd., 204 U. S. 152).

By an amendment attempted in 1906, the tax of two cents was thereafter to be computed “ on each share of one hundred dollars of face value or fraction thereof ” (Laws of 1906, ch. 414, § 1). In People ex rel. Farrington v. Mensching (187 N. Y. 8) we ruled that this taxing clause of the act of 1906 was unconstitutional and that the taxing clause of the act of 1905 was not thereby in any way affected. Thereafter the taxing clause of the act of 1905 was transferred to section 270 of the Tax Law. (See the notes to chapter 38 of the Laws of 1910, pp. 64, 65.)

By chapter 351 of the Laws of 1912, the Legislature authorized the issuance of shares of stock without nominal or par value.. An amendment to section 270 of the Tax Law followed, providing that “ in cases where the shares or certificates of stock are issued without designated monetary value * * * the tax shall be at the rate of two cents for each and every share.” (Laws of 1913, ch. 779, § 1.)

This development of section 270 of the Tax Law may conveniently be restated in the text of that section as it stood in 1930 before its amendment in 1933 by the statute here in question. At that time the section imposed a tax measured as follows: “ On each hundred dollars of face value or fraction thereof, two cents, except in cases where the shares or certificates are issued without designated monetary value, in which cases the tax shall be at the rate of two cents for each and every share.” (Laws of 1930, ch. 190.)

By chapter 62 of the Laws of 1932 a new section 270-a was added to the Tax Law. This imposed an additional emergency tax equal to that previously payable. These acts of 1930 and 1932 constituted the Stock Transfer Tax Law in force on May 1, 1933, when chapter 643 of the Laws of that year became effective. The act of 1933 is the statute now attacked and we pass to its consideration. Section 1 says: “ Declaration of législative intent. In enacting the amendments hereinafter made to sections two hundred seventy and two hundred seventy-a of the tax law, it is hereby declared to be the intent of the legislature to abolish the distinction heretofore existing, for the purposes of such sections, between shares of stock and other corporate certificates having a par or face value and those having no par or face value and to establish a more just and certain basis for the taxation of the transfer of such stock and certificates under such sections to the end and for the purpose thereby of preventing the continued avoidance of taxes upon such transfer through changes in the kind and number of such stock and certificates and the concomitant loss of revenue accruing to the state by reason of such changes.”

Sections 270 and 270-a of the Tax Law were recast by the act of 1933 into a form which, so far as is here material, is as follows: “ There is hereby imposed and shall immediately accrue and be collected a tax, as herein provided, on all sales * * * and all deliveries or transfers of shares or certificates of stock * * * of one and one-half cents for each and every share, except in cases where the shares or certificates are sold for twenty dollars or more per share, in which cases the tax shall be at the rate of two cents for each and every share.” (Laws of 1933, ch. 643., §§ 2, 3.) Thus the Legislature has said that the computation of the tax shall in all cases be based on the number of shares transferred. Is a tax on par shares, so fixed, constitutional? This is the main inquiry presented by the record. No question is made in respect of the taxing of transfers of no par shares.

The corner stone of the argument of the appellants is People ex rel. Farrington v. Mensching (supra). That case, as we have said, dealt with the Stock Transfer Tax Act of 1906, which imposed a tax of two cents on each share of one hundred dollars of face value or fraction thereof,” instead of “on each hundred dollars of face value or fraction thereof,” as provided by the act of 1905. The ruling of the Mensching case was that the act of 1906 was void as an arbitrary discrimination prohibited by the Fourteenth Amendment of the Constitution of the United States. It will be recalled that the act of 1905 had previously been sustained in People ex rel. Hatch v. Reardon (supra). The point of departure in the Mensching case was stated by the opinion in these sentences:

“ The act of 1905 * * * made no .discrimination between the shares of different corporations founded on the accident of the amount for which they were issued, but taxed on the basis of a uniform amount of face value as the standard. The tax was measured by one hundred dollars of face value, ascertained by counting the shares, if issued for exactly that amount; by dividing each share into multiples of one hundred dollars, if issued for more, and by adding the face values and dividing the result into multiples of that sum, if issued for less.

“ The act [of 1906] now before us does not classify by arranging according to quality, but by arranging according to accident. * * * Thus it imposes the same tax on the sale of dollar shares and hundred dollar shares. The tax is measured by the number of shares, regardless of face value or actual value. * * *

“ While it is true that the face value, which in multiples of one hundred dollars we held in the Hatch case to be a proper basis of classification, does not necessarily indicate actual value, still it bears some relation thereto, but a share apart from its size or face value can bear no relation whatever to its actual value ” (pp. 17, 21).

By the act of 1933'the basis of the tax on transfers of par stock is again the number of shares, regardless of face value or actual value ”— the rule condemned in the Mensching case. On that short ground the appellants say that case decides this. We think that case cannot now be regarded as controlling authority here.

The Mensching case was decided in 1907. Our statute sanctioning the issuance of no par shares — the first of its kind • — ■ was enacted in 1912. The Legislature thereby adopted the view that face value as a symbol of the real worth of shares in a corporation was a conception that had been rebutted by experience. That change in policy and the consequent alteration of the corporate structure brought in its train problems of taxation which spread beyond the field of the newly authorized shares.

On March 24, 1933, the Governor sent to the Legislature a message in which it was noticed that, following the enactment of section 270-a of the Tax Law, the kind and face value of many stocks had been so changed as materially to reduce the amount of transfer taxes. That message said:

“ As recently as in the year 1930 there were only 28 changes in the character of the stocks listed on the two New York exchanges. Though only 33 in the year 1931, the number last year suddenly advanced to 104. And this year has already shown more than 65 changes, either actually made or in process. In large measure these changes have been from no-par stock and par stock of high par value to par value stock of low face value, in many instances as low a $1.00 per share and in one instance as low as ten cents per share.
In the case of a change from a no-par stock to a par value stock of $1.00 per share, for example, the state revenue is thereby reduced to just one-hundredth. Multiplication of such cases seriously endangers the tax revenue at a time when the State needs every cent. For instance, in the year 1931, the total of such losses on the two exchanges was only $30,000. But last year they rose to about $634,000. The progressive accumulation of these losses, together with those which will result from contemplated changes, will severely impair the estimated revenues from this source.”

The act of 1933 was the response to this message. It cannot be denied that the necessity of preventing such evasion was an important factor in the legislative question (Hatch Case, 184 N. Y. at p. 447.)

In the face of these circumstances, this court must accept the judgment of the Legislature in rejecting the device of taxing transfers of par stock on the basis of par value and in determining to treat par and no par shares alike for the purposes of this tax.

We return, therefore, to the broad question whether a tax on transfers of par stock may validly leave out of account the actual value of the shares, and here, we think, the answer is clear in the light of the final and controlling judgment in the Hatch case which had not been delivered when the Mensching case was decided. In affirming the Hatch case, the Supreme Court of the United States said (204 U. S. 152,159,160): Yet another ground on which the owners of stock are said to be deprived of their property without due process of law is the adoption of the face value of the shares as the basis of the tax. One of the stocks was worth thirty dollars and seventy-five cents a share of the face value of one hundred dollars, the other one hundred and seventy-two dollars. The inequality of the tax, so far as actual values are concerned, is manifest. But, here again equality in this sense has to yield to practical considerations and usage. There must be a fixed and indisputable mode of ascertaining a stamp tax. In another sense, moreover, there is equality. When the taxes on two sales are equal the same number of shares is sold in each case; that is to say, the same privilege is used to the same extent. Valuation is not the only thing to be considered. As was pointed out by the Court of Appeals, the familiar stamp tax of two cents on checks, irrespective of amount, the poll tax of a fixed sum, irrespective of income or earning capacity, and many others, illustrate the necessity and practice of sometimes substituting count for weight.”

These views, it is now argued, were in part obiter — • that count ” there meant the counting of units of one hundred dollars of face value, and that it did not mean counting the number of shares involved in the transfer. We do not so interpret the opinion of the highest court of the nation. Taking the content of that opinion in what appears to us to be its plain significance, we are constrained to pass over the reasons suggested in favor of another course, and to hold that the act of 1933 is not unconstitutional because it taxes transfers of par stock without regard for the true value of the shares. (Cf. the opinion of this court in the Hatch Case, 184 N. Y. at p. 446.) It may be added that recent decisions have sustained other privilege taxes levied on no par shares at a flat rate per share or on the basis of assigned value (New York v. Latrobe, 279 U. S. 421; International Shoe Co. v. Shartel, 279 U. S. 429; People ex rel. Griffith v. Loughman, 249 N. Y. 369), a result wholly consistent with the quoted views of the Supreme Court in the Hatch case and scarcely to be reconciled with the principle of the decision in the Mensching case.

The appellants also make the point that it is an irrational division which fixes a higher rate for one of the two sales price levels at which the tax is laid. We think the rate is reasonably adjusted to the value of the privilege and to ability to pay. (See Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283; Clark v. Titusville, 184 U. S. 329. Cf. Louisville Gas & Elec. Co. v. Coleman, 277 U. S. 32.)

The judgment should be affirmed, with costs.

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

Judgment affirmed.


text:
    Dora L. Morris, Appellant, v. Arthur J. Morris et al., as Trustees, Respondents.
    (Submitted October 16, 1936;
    decided November 24, 1936.)

      Lloyd F. Thanhouser for appellant.

      James A. Bancroft for respondents.

      Robert H. Jackson, Assistant Attorney-General (Sewell Key and Helen R. Carloss of counsel), for Commissioner of Internal Revenue of the United States, amicus curiae.

   Crane, Ch. J.

The Personal Property Law (Cons. Laws, ch. 41), article 2, section 16, reads:

“ An accumulation of the income of personal property, directed by any instrument sufficient in' law to pass such property is valid:

“ 1. If directed to commence from the date of the instrument, or the death of the person executing the same, and to be made for the benefit of one or more minors, then in being, or in being at such dea/th, and to terminate at or before the expiration of their minority. * * *
3. All other directions for the accumulation of the income of personal property, not authorized by statute, are void. In either case mentioned in subdivisions one and two of this section a direction for any such accumulation for a longer term than the minority of the persons intended to be benefited thereby, has the same effect as if limited to the minority of such persons, and is void as respects the time beyond such minority.”

Thus a direction in a trust to accumulate income during the minority of an infant and at majority to pay the accumulation to any other person than the infant is void.

By a written instrument which became effective January 1, 1925, a trust was created by Arthur J. Morris of New York in behalf of his daughter, the plaintiff, Dora Lyons Morris. The instrument created five separate trusts for the benefit of Morris’ wife, and his four daughters, but we have only one of these trusts presented to us in this case. Paragraph first of said trust instrument reads in part as follows:

“ First. * * * the Donor, Arthur J. Morris, * * * has granted, assigned, transferred, set over and delivered * * * unto the Trustees, H. F. Stevenson and A. J. Morris * * * all bonds, shares of capital stock, securities and all other property mentioned and described in the Schedule hereto annexed * * *.
To have and to hold the same and each and every part thereof in trust to receive all the income thereof and after paying therefrom all lawful charges and expenses * * * to pay or apply the net income or such part thereof as the Trustees may determine upon, from such trust estate arising each year in substantially equal monthly instalments, or in such other instalments as may be deemed advisable by the Trustees or their successors, to or for the benefit of Dora Lyons Morris, daughter of the Donor, during her life or until January 1, 1930. And upon the death of said Dora Lyons Morris, or on January 1, 1930, whichever sooner occurs, to pay over the principal of said trust estate as it shall then exist with all gains and increase of capital, if any, in fee simple to the Donor, if he is living. But if Donor be not living * * * to continue to hold said trust estate in trust to receive all the income thereof and after paying therefrom all lawful expenses * * * to pay or apply the net income thereof, or such part thereof as the Trustees may determine upon, arising each year, in substantially equal monthly instalments, or in such other instalments as may be deemed advisable by the Trustees or their successors, to or for the benefit of said Dora Lyons Morris until she attains the age of twenty-five years; upon the said Dora Lyons Morris attaining the age of twenty-five years, the said Trustees shall pay over said estate as it shall then exist with all gains or. increases in capital, if any, in fee simple and absolutely to the said Dora Lyons Morris.”

Paragraph third follows:

“ Third. In making payment or application of the income arising from the said trust estate, or any part thereof, the Trustees or their successors shall not be required to retain therefrom or otherwise to set up or maintain any fund or reserve for the amortization of losses * * * and the Trustees or their successors are hereby authorized, directed and empowered to pay or apply to or for the benefit of such person or persons as may at the time be entitled to the benefit of the income arising from the said trust, the entire net income arising therefrom without retaining therefrom or otherwise setting up or maintaining any such fund or reserve for amortization. But nothing herein shall prevent the said Trustees from paying out to the beneficiaries herein contemplated only part of said income and accumulating the balance for the purpose of increasing the principal of said trust fund in such manner and in such amounts as to the Trustees may seem proper.”

The plaintiff was a minor when her trust estate was created, but she attained her majority in September of 1929. She at all times resided with her father, the defendant Arthur J. Morris, and was not dependent upon the income from her trust estate for maintenance, education or support. The total income received during the calendar years 1925 and 1926 upon the securities held by the defendant-trustees for the plaintiff’s benefit was $9,616.50, but only $5,507.53 of that amount was paid over or applied to or for her account. The total balance of said income, to wit, $4,108.97, still remains in the hands of the defendants, and it has been withheld and accumulated by them in their discretion, for the purpose of increasing the principal of the trust estate. The plaintiff has demanded of the defendants that they pay over to her this $4,108.97 of income received by them from her trust estate, but they have declined to do so.

By the above instrument of trust Arthur J. Morris gave the income of the principal to his daughter until January, 1932. (The trust had been extended to that date.) At that time, or in case she died before then, the principal with all gains and increase in capital, if any, was to be paid over to him, the donor and the creator of the trust.

By the last sentence of paragraph three the trustees were permitted to accumulate the income to increase the principal. This was illegal and void as contrary to the provisions of the Personal Property Law, above quoted. The trust, to receive and pay over the income from the principal to the daughter until January of 1932 or until her death, if she died before then, was perfectly good, but the direction or permission to accumulate income for the benefit of the donor or the creator of the trust was void, as contrary to the specific provisions of the above statute.

The fact, however, that this suggestion or permission for accumulation is illegal, does not render the entire trust void. The part still remains which gives the income to the daughter for her fife or until January, 1932. The income was hers; it has been given to her by express words in the instrument; only the permission given to the trustees to accumulate a portion of this income for the benefit of the donor is void. This can be excised or eliminated from the instrument without in any way affecting that provision which gives the income to the daughter.

Courts should adopt a construction of an instrument which will render its provisions valid rather than one which will render them invalid. (Matter of Hoyt, 116 App. Div. 217; affd. unanimously, 189 N. Y. 511.) This case, frequently cited and followed, is directly, in point. A large sum of money was left in trust, the income to be applied for the use of a daughter during her natural life, to promote her convenience and comfort and “ as the same shall be required for her use and benefit.” (p. 218.) Any surplus of the income not applied to her use was given upon the death of the daughter to certain persons named. Reversing the Surrogate the Appellate Division held that the income belonged to the daughter and that the accumulation belonged to her executor, and did not pass under the provisions of the will .to the remaindermen therein named.

The Appellate Division said: “ The construction adopted by the surrogate is one which imputes to the testator an intent to make an illegal disposition of a portion of bis property, which is not to be presumed.” (p. 219.) Referring to the direction to pay over accumulations to the person named, the court said: “ This provision, however, is inconsistent with the prior provision, and I cannot believe that the words thus used were intended to qualify or destroy the prior provision, giving the entire income to the daughter, by lodging in the trustees a discretion as to what income, if any, should be devoted to her use; on the contrary, it seems to me the only discretion lodged in the trustees, construing both provisions together., was the method of payment, and not the amount to be paid. * * * If it be assumed that the intent of the testator was to give the remaindermen the surplus income which the trustees determined was not necessary for the use of the daughter, then the gift is invalid as involving an unlawful accumulation. The statute limits the accumulation of income to the period of minority. (1 R. S. 726, §§ 37, 38.) If it be true, as contended by the respondents, that the testator intended to lodge in his trustees a discretion as to the amount of income to be applied to his daughter’s use, then this necessarily clothed them with authority to accumulate the residue (Cochrane v. Schell, 140 N. Y. 516), which authority could not be enforced inasmuch as it contravenes the provisions of the statute with reference to accumulations. * * * The authority, as we have seen, to accumulate is void but the authority to pay the entire income to the daughter is nevertheless valid and enforcible.” (pp. 220, 221, 222.)

The courts below have given the accumulated income to Arthur J. Morris, the creator of the trust, in effect carrying out the provisions of the trust instrument which permitted the accumulations to be paid over to him. This, as we have seen, is in violation of law. The courts reached this result by applying section 63 of the Eeal Property Law (Cons. Laws, ch. 50) which in our judgment has no application to these facts. That section réads: When, in consequence of a valid limitation of an expectant estate, there is a suspension of the power of alienation, or of the ownership, during the continuance of which the rents and profits are undisposed of, and no valid direction for their accumulation is given, such rents and profits shall belong to the persons presumptively entitled to the next eventual estate.”

As the father, creator of this trust, would be entitled to the next eventual estate as the heir or next of kin of his daughter, the decision below has given him this accumulation, rendering section 16 of the Personal Property Law of no effect. The door is thus opened for a possible and probable evasion of these wise provisions against accumulations for the benefit of adults. Section 63 of the Real Property Law has no application because there is no time in this trust during the continuance of which the rents and profits are undisposed of and no valid direction for their accumulation is given.”

The income, called in this Real Property Law rents and profits, is given to the daughter, and the accumulation is good during the infancy of the daughter if payable to her.

The holding in Chemical Bank & Trust Co. v. Streat (263 N. Y. 159) is not in conflict with anything here stated. In that case we held that there was no gift of income to the beneficiary and no intent to pass the income to her. The settlor in that case reserved the fight to receive and retain any and all the income from the securities constituting the trust fund and to revoke the agreement at any time. vIn the opinion we called attention to this fact by saying: “ The right retained by the settlor to receive the income under certain conditions prevents the conclusion that the gift was absolute.” (p. 164.) In that case we were passing upon the sufficiency of the evidence to support the finding of the Appellate Division that the purpose in executing the deed of trust was not to increase the beneficiary’s income but was to insure her against the loss of income in case she should be unable to collect the income from her own property. Certain conditions had to exist before the beneficiary would be entitled to any income. The Chemical Bank & Trust Co. case has no bearing upon such facts as we have here nor does it modify in any way the rule laid down in the Hoyt case.

. The law still is that a direction for accumulation being void may be treated as stricken out of the trust provisions. (Williams v. Williams, 8 N. Y. 525, 538; Matter of Megrue, 170 App. Div. 653; affd., 217 N. Y. 623.) It will be noted that the donor in this trust agreement does not direct or command any accumulation. At most he permits it. When he states that at the termination of the trust the principal with all gains and increase of capital shall be paid over to him he has no reference whatever to accumulations. These words have reference to the increase in the value of the securities, not by adding to their value the income. True it is that in paragraph third he says the trustees may accumulate part of the income for the purpose of increasing the principal of said trust fund in such manner and in such amounts as to the Trustees may seem proper.” We have no reason to assume that the trustees would deem it proper to accumulate income in direct violation of the statute, but even if we should, these are the words which can readily be stricken from the instrument, leaving the provisions of paragraph first in full force and effect. This paragraph gives the income to the beneficiary and the principal at the termination of the trust to the donor.

According to the third subdivision of section 16 of the Personal Property Law, above quoted, the trustees could have legally accumulated the income until the plaintiff became twenty-one years of age. If an accumulation be permitted or directed by a will or trust instrument it must be presumed to have been made in contemplation of the provisions of the statute. In permitting the trustees in their discretion to pay all or a part of the income to Dora Lyons Morris the accumulation as it occurred from year to year would be undisposed of. It could not be turned over to the father or to the person presumptively entitled to the next eventual estate. The income accumulated when the infant was seventeen, eighteen or nineteen years of age could by the provisions of the trust instrument be paid to her or for her benefit any time before she became twenty-one. Therefore, at no time prior to the arrival of Dora at the age of twenty-one was the accumulation illegal. The words of the instrument are to pay the net income or such part thereof as the trustees may determine upon in monthly instalments “ or in such other instalments as may be deemed advisable by the trustees ” during the life of the daughter. The payment of the income, therefore, could have been made at any time in whole or in part before Dora arrived at twenty-one. But such an accumulation, says the statute, can only be made for the benefit of the infant, and when we once begin accumulating, and such accumulation for a period of years is legal, then the accumulation must be disposed of as the statute directs, that is, it must be naid to the infant.

To construe this instrument as meaning that if the trustees had not paid out all of the income in any one month or year they could not pay the balance in the next month or year would be an absurdity and contrary to the very directions of the instrument. Therefore, the accumulation of income or unpaid balances during the minority of the infant, being perfectly legal and for her benefit, the statute steps in and says you cannot give the income which has thus been lawfully accumulated, to an adult, whether you do it directly or indirectly. It must go to the infant because she is the only one for whose benefit such an accumulation can be made. To hold otherwise we would have to wipe out the entire trust for the infant or so narrow it as to reverse the donor’s intentions.

In Smith v. Parsons (146 N. Y. 116, 121) this court said: “ * * * we are also of opinion that it is the policy of the statute permitting the accumulations of personal property for the benefit of a minor (1 R. S. 773, § 3) that they should vest in the infant beneficially when received, and it is only payment over that is postponed until the expiration of the minority.” (Matter of Kirby, 254 N. Y. 624; 228 App. Div. 640; 133 Misc. Rep. 152; Smith v. Campbell, 75 Hun, 155, 159.)

For cases bearing upon the question of accumulation, see Pray v. Hegeman (92 N. Y. 508); Barbour v. De Forest (95 N. Y. 13); Crawford v. Dexter (178 App. Div. 764; affd., 224 N. Y. 586); Matter of Megrue (170 App. Div. 653; affd., 217 N. Y. 623); Bloodgood v. Lewis (209 N. Y. 95); Curtis v. Curtis (184 App. Div. 274). The income of $4,108.97 accumulated by the trustees during the infancy of Dora Lyons Morris belongs to her.

The judgment of the Appellate Division should be reversed, and judgment directed for the plaintiff, without costs.

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

Judgment reversed, etc.


author: O’Brien, J.

text:
    In the Matter of the Estate of Olga Stone, Deceased. Home of the Daughters of Israel, Inc., Appellant; Amy Nathan, as Administratrix of the Estate of Olga Stone, Deceased, Respondent.

      (Argued September 29, 1936;
    decided November 24, 1936.)

      Charles Howard Levitt, Sol Tekulsky, Lawrence J. Greenberg and Daniel J. Madigan for appellant.

      David, Sallovitz, Henry K. Neidich and Francis X. Kelly for respondent.
   O’Brien, J.

By the order under review, the appellant has been directed to deliver to the estate of Olga Stone the sum of $1,477.54 which the courts below have adjudged to have been her property.

Olga Stone made application for admission to the home maintained by the Daughters of Israel and, after favorable action on her application, she executed an agreement. By its terms she promised to contribute $1,500 to the home as a contribution for the general maintenance of the home and not as compensation for her own admission or maintenance. In addition she agreed that, in the event of her death, all moneys in her possession or on deposit in bank should remain the property of appellant and that, in the event of her discharge from the home or in the event of her removal or her death any money contributed by her to the home should remain its property.

This agreement was executed October 12, 1930, and on October 23 Olga Stone was admitted to the home. She then paid $1,500 to appellant, in conformity with the terms of her agreement, and on January 21, 1931, paid $500 to cover expenses of burial and a monument. The validity of the receipt and retention of these payments is not contested.

In April, 1934, Olga Stone became ill and was transferred for treatment to Mt. Sinai Hospital, where she died. At the time of her death $1,477.54 remained to her credit in the Central Savings Bank and subsequently was transferred by the bank to appellant. This is the sum with which this litigation is concerned. The administratrix, a niece of Olga Stone, claims it as part of the estate. The agreement provides: “In consideration of the care and support received by the Guest from the Corporation, it is understood and agreed that in the event of death of said Guest, all moneys in her possession at that time, or on deposit in any bank or banks, or to her credit, shall remain the property of the Corporation.” This contract consists of a printed form into which were inserted dates, names and amounts and was not prepared especially for this inmate. It is in no way ambiguous. The word “ remain,” instead of “ become,” may perhaps be regarded as slightly inartificial but nothing in the language has a tendency to deceive. The signature is proved to be that of Olga Stone and the record includes no evidence which could support a finding that either party made any misrepresentation or took advantage of the other. Nothing justifies a presumption of unfair dealing. “ Ordinarily, the signer of a deed or other instrument, expressive of a jurai act, is conclusively bound thereby. That his mind never gave assent to the terms expressed is not material. (Wigmore on Evidence, § 2415.) If the signer could read the instrument, not to have read it was gross negligence; if he could not read it, not to procure it to be read was equally negligent; in either case the writing binds him.” (Pimpinello v. Swift & Co., 253 N. Y. 159, 162, 163.)

The orders should be reversed and the petition dismissed, with costs in all courts.

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

Orders reversed, etc.


text:
    Frank Messina, Respondent, v. Continental Purchasing Co., Inc., Appellant.
    (Argued September 28, 1936;
    decided November 24, 1936.)

      Adolph M. Newman for appellant.

      Gaylord Riggs for respondent.
   Per Curiam.

The plaintiff, an employee of a railroad company, prior to July 1, 1934, entered into a written agreement with the defendant whereby a judgment against him owned by the defendant was compromised for one hundred dollars upon his promise to pay thereon a small weekly sum. As security for performance, the plaintiff assigned to the defendant all wages earned or to be earned with authority to collect by any legal means. Following a default by the plaintiff, the defendant lodged the assignment with plaintiff’s employer which thereupon promptly dismissed the plaintiff. A subsequent request by the plaintiff to withdraw the assignment so that he might be re-employed was refused by the defendant. Thereupon this action was brought to recover damages as for a tortious interference with plaintiff’s employment. The complaint, attacked for insufficiency, has been sustained below. The question has been certified to this court.

We think the order should be reversed and the question certified answered in the negative. The assignment, when made, fell within none of the exceptions to section 41, subdivision 1, of the Personal Property Law (Cons. Laws, ch. 41). The plaintiff was then employed; there was no statute so far as we can ascertain forbidding or regulating such assignment; and we cannot see that it contravened any public policy. There is no charge of fraud or overreaching in the procurement of the assignment, or of malice in lodging it with the employer, even if the existence of malice would be of avail. An assignment would be of little value without notice to the employer. Section 46 of the Personal Property Law, in effect since July 1, 1934, regulating wage assignments, requires a filing with the employer as a condition precedent. In short, we perceive no tort.

The orders should be reversed and the motion granted, with costs in all courts. The question certified should be answered in the negative.

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

Orders reversed, etc.


author: Crouch, J.

text:
    In the Matter of the Claim of Anthony Gallagher, against Carol Construction Company et al., Respondents. State Industrial Board, Appellant.
    (Argued September 30, 1936;
    decided November 24, 1936.)

      John J. Bennett, Jr., Attorney-General (Leon Freedman of counsel), for appellant.

      Dickinson S. Talley for respondents.
   Crouch, J.

Claimant, for accidental injuries arising out of and in the course of his employment, was awarded compensation in the sum of $4,830. The employer and carrier were credited with $2,000, the amount of a judgment recovered and collected by claimant in a third party action, and were directed to pay the claimant the balance of $2,830.

The award was reversed and the claim dismissed by the Appellate Division upon the stated ground that the judgment of $2,000 was the result of a compromise of the third party action within the purview of section 29 of the Workmen’s Compensation Law (Cons. Laws, ch. 67); and that since it was made without the written approval of the insurance carrier, no deficiency compensation was recoverable.

The alleged compromise was this: On the trial of the action the plaintiff had a verdict for $5,000; upon a motion by the defendant to set aside the verdict as excessive and for a new trial, an order was entered granting the motion unless the plaintiff should stipulate a reduction to $2,000. The stipulation was given and judgment for that amount was entered.

Matter of Roth v. Harlem Funeral Car Co. (268 N. Y. 661), cited by the court below, is no authority under the facts here. What was paid by the third party there was paid, not because of any judicial determination, but by way of an agreed settlement out of court. No verdict was recorded, and no judgment thereon was entered. The contrary is true here. The judgment for $2,000 was rendered in accordance with immemorial common law practice after a full and constitutional jury trial. The optional order of remittitur and the stipulation of plaintiff pursuant thereto did not constitute a waiver of a jury trial. They were integral incidents of a jury trial actually had which eventuated by constitutional practice in a judgment actually entered (Arkansas Val. L. & C. Co. v. Mann, 130 U. S. 69; Chouteau v. Suydam, 21 N. Y. 179; Holmes v. Jones, 121 N. Y. 461; cf. Dimick v. Schiedt, 293 U. S. 474; and see generally: Scott on Fundamentals of Procedure in Actions at Law, p. 108 el seq.; Correction of Damage Verdicts by Remittitur and Additur, 44 Yale Law Journal, p. 318.) We think the compromise provision of section 29 of the Workmen’s Compensation Law was not intended to apply to the procedure here in question. Plaintiff’s stipulation consenting to take that portion of the verdict judicially determined as being not excessive, does not fall within any recognized meaning of the word compromise.”

The order of the Appellate Division should be reversed and the award of the State Industrial Board reinstated, with costs in this court and in the Appellate Division.

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

Ordered accordingly.