text:
    Marie C. Lowe, Respondent, v. Henry W. Lowe et al., Appellants.
    (Argued May 22, 1934;
    decided July 3, 1934.)

      Martin W. Littleton and Andrew E. Stewart for appellants.

      Jeremiah T. Mahoney and John A. Bell, Jr., for respondent.
   Lehman, J.

The plaintiff has brought an action for a declaratory judgment that the plaintiff is the lawful wife of the defendant Henry W. Lowe; that a decree of divorce made without jurisdiction in the State of Nevada is void and that the defendants are not husband and wife. In an action for a declaratory judgment further or consequential relief ” may be claimed. (Rules Civ. Prac. rule 211; Civ. Prac. Act, § 473.) The plaintiff in this action asks as further or consequential relief ” an injunction restraining the defendants from holding themselves out as husband and wife, and restraining the defendant Kathleen Dunning from using the name of Mrs. Lowe and from seeking or using rights or courtesies in any club as the wife of the defendant Lowe,

The defendants moved to dismiss the complaint under rule 112 of the Rules of Civil Practice. Upon the argument of the motion their attorney stated that the defendants admitted that the Nevada decree is void and that the plaintiff is entitled to a declaratory judgment as prayed for in the complaint. After that admission the motion proceeded, without objection, as an attack upon the plaintiff’s cause of action for injunctive relief. To that extent the motion to dismiss the complaint must be deemed to have been amended or limited by consent. At Special Term the motion was denied on the ground that whether plaintiff is entitled to the further and consequential relief which she demands cannot be determined on a motion of this nature.” The Appellate Division by a divided court affirmed the order of Special Term, but granted permission to appeal upon certified questions.

The admitted allegations of the complaint that the Nevada decree of divorce was granted by a court which was without jurisdiction; that thereafter the defendants in the State of Nevada went through a marriage ceremony before a clergyman; and that they are living together and holding themselves out as husband and wife, are sufficient to constitute a cause of action for a judgment which will declare and establish the plaintiff’s “ rights and other legal relations.” Such a judgment would not carry with it as a legal consequence a right to injunctive relief, In order to establish a right to injunctive relief, the plaintiff must allege and prove in addition that the defendants are infringing upon marital or other rights of the plaintiff which a court of equity will protect by injunctive decree. (Baumann v. Baumann, 250 N. Y. 382.)

The decree of divorce granted without jurisdiction in Nevada is here entirely void and without legal consequences. It was merely a step in the consummation of an alleged conspiracy by the defendants to hold themselves out as husband and wife, and thus cause the world to believe that the plaintiff was no longer the wife of the defendant Lowe. It did not itself deprive the plaintiff of any right or cause any injury. Because it gave color of right to an open claim that the plaintiff was no longer the lawful wife of Lowe, it furnishes a ground for the invocation of the court’s power to declare the plaintiff’s rights to the legal relation of the parties, in order to preclude possible controversy hereafter. (Cf. Baumann v. Baumann, supra; Somberg v. Somberg, 263 N. Y. 1.) Such a declaration destroys even the color of right of the defendants to hold themselves out as husband and wife, but itself furnishes no ground for further relief by injunction to operate in the future. The injury which the plaintiff seeks to prevent in the future by further relief in the nature of an injunction is the injury that may be caused by continuance of the defendants' conduct of holding themselves out as husband and wife. All the allegations of the complaint except the admitted allegations of the colorable decree of divorce, the subsequent marriage ceremony of the defendants and their open assertion that their relations are lawful, are relevant only to plaintiff’s claim for injunctive relief.

These additional allegations furnish no ground for the invocation of the general equitable power of the court to grant an injunction which was not present in the case of Baumann v. Baumann (supra), and Somberg v. Somberg (supra). In those cases the court decided that no injunction might issue. The decision in those cases is applicable here and precludes the court from granting any relief other than a declaratory judgment. Though the members of this court who joined in a vigorous dissent from the previous decision of the court still adhere to their views, they agree that such decision must now be regarded as binding. The sole question which remains is whether the court upon a motion made in accordance with section 476 of the Civil Practice Act and rule 112 of the Rules of Civil Practice may dismiss that part of the complaint directed toward injunctive relief.

Section 476 provides that judgment may be rendered by the court as to a part of a cause of action and the action proceed as to the remaining issues, as justice may require." That does not mean that where all the allegations of a pleading are directed towards the establishment of a single cause, and the relief asked is appropriate to such cause of action, a motion may be granted for a judgment which merely adjudicates selected issues, and leaves adjudication of whether a cause of action is established and appropriate relief should be granted, until the determination of the remaining issues. (Cf. Valentine v. Perlman, 216 App. Div. 548.) There can be no resort to the courts except for the purpose of obtaining some form of relief, and issues which are irrelevant to a cause of action for relief may be disregarded. A judgment must carry with it legal consequences. It must grant or deny relief. The- Civil Practice Act should not be so construed as to authorize a judgment upon a part of a cause of action " where the part is an incomplete fragment of an entire claim which cannot be thus divided without mutilation.

Here we are told by the appellant that the allegations of the complaint which are intended to establish a right to injunctive relief constitute a separate cause of action. The tests usually applied in determining whether a complaint contains separate causes of action might lead to such conclusion. An action for a declaratory judgment is, however, a creature of the statute. Claim for further or consequential relief ” may be made therein. Perhaps in such case new tests should be applied in order that the new form of action should not be cumbered with outworn technicalities. No useful purpose would be served here by a consideration of whether a claim for further ” relief which is properly interposed in an action for a declaratory judgment constitutes technically a separate cause of action. Section 476 of the Civil Practice Act requires no such technical test. It expressly authorizes a judgment upon a “ part of a cause of action.” The only test that can be applied without thwarting the legislative intent is a practical test. Is it possible to divide the claims or cause of action so that an effective judgment can be rendered as to part, without mutilation of the whole?

Judged by that test, it is clear that a judgment dismissing that part of the complaint which makes claim for injunctive relief may be granted where the complaint contains no allegations which would entitle the plaintiff to such relief, especially where the right to a declaratory judgment is established by the pleadings or by admissions made for the purpose of permitting the entry of appropriate judgment. A judgment which dismisses that part of a cause of action ” which claims injunctive relief constitutes a complete adjudication of a separate part of the complaint. The cause of action for a declaratory judgment remains complete and no cause of action for other relief has been effectively pleaded.

The order should be reversed, without costs, and the motion granted. The second question certified should be answered in the affirmative and the other question not answered.

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

Order reversed, etc.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    Charles D. Rawstorne, Appellant, v. William G. Maguire, Respondent.
    (Argued May 21, 1934;
    decided July 3, 1934,)

      David S. Hecht and Leonard P. Moore for appellant.

      Kenneth E. Walser and George Rosier for respondent.
   Lehman, J.

On August 30,1933, the plaintiff obtained an order for “ substituted service ” of the summons in this action upon the defendant. The affidavits upon which the order was made allege that the defendant resides at the Hotel Vanderbilt in the city of New York. The summons was served on September second, in accordance with the order, by leaving a ■ copy thereof with a person of proper age at the Hotel Vanderbilt. On September 18, 1933, the defendant appeared specially in the action by his attorneys and moved to vacate the order for substituted service and to set aside the service of the summons made thereunder on the ground that he is a resident of Virginia and was not at the time of the service of the summons or at any other time a resident of the State of New York. The Appellate Division has reversed an order of Special Term which denied the defendant’s motion.

Section 230 of the Civil Practice Act provides for substituted service upon a natural person residing within the state.” It is undisputed that the defendant’s domicile prior to the year 1932 was in Chicago, 111., and that since 1932 his domicile has been at the family home which he established in Stafford county, Va. During the year 1932, and at least until July 2, 1933, he spent more time in New York than at the family home. While in New York he always stopped at the Hotel Vanderbilt. In May, 1932, the room clerk at the hotel arranged that the defendant could, while absent from the hotel, leave his baggage in his room there, though he was charged only for the time he occupied the room. He was not at the hotel between July 2, 1933, and August 21, 1933, and he gave up his room and removed his baggage on August 23, 1933, a week before the order for substituted service was made.

The purpose of the provisions for substituted service contained in the Civil Practice Act is to give the courts of this State jurisdiction of the person of a defendant upon whom personal service within the State cannot be effected. The courts of the State can obtain jurisdiction of the persons of those who are domiciled within the State but temporarily absent therefrom, by any form of service which is reasonably calculated to give knowledge of the action and an opportunity to be heard. (Pennoyer v. Neff, 95 U. S. 714.) We may assume that the courts of the State can by similar service obtain jurisdiction of the person of one who is physically within the State. (De La Montanya v. De La Montanya, 112 Cal. 101; American Law Institute, Restatement of “ Conflict of Laws,” § 83.) Here the defendant at the time of the service was not domiciled here nor was he physically present in the State nor did he maintain a permanent place of abode here either at the time when the order for substituted service was made or at the time the service was effected. The question presented upon this appeal is whether the Legislature intended and had power to provide that the courts of this State should by substituted service acquire jurisdiction of the person of a defendant under such conditions.

We are told that the Legislature used the words “ residing within the State ” as synonymous with domiciled within the State.” Doubtless such words are frequently used even in our statutes, as if they had the same meaning, but they are not identical terms, for a person may have two places of residence, as in the city and country, but only one domicile. * * * Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one’s domicile. The existing domicile, whether of origin or selection, continues until a new one is acquired.” (Matter of Newcomb, 192 N. Y. 238, 250.) The sense in which these words are used in a particular statute may depend upon the nature of the subject-matter of the statute as well as the context in which the words are used.

The foundation of jurisdiction is physical power.” (McDonald v. Mabee, 243 U. S. 90, 91.) The sovereignty of the State extends only as far as its territorial boundaries. Where there is bodily presence ” within the boundaries of the State there is opportunity for the exercise of the State’s sovereignty, even though bodily presence is not accompanied by any intention to remain there permanently. So, too, domicile within the State may establish a status within the territorial limits of sovereignty which also gives opportunity for the exercise of that sovereignty. The intention to make a particular place of residence a permanent domicile remains, at times, undisclosed, and is difficult of proof by an adverse party. Where the question is one of the effect which under the Constitution must be given to a decree of a sister State, the place of domicile may be a decisive factor, and then the question of intention to return must be decided, however difficult may be the proof. (Cf. Pennoyer v. Neff, supra.) We may not, however, unreasonably limit the provisions for substituted service upon persons residing within the State ” to those who not only reside, but are domiciled, here. The language of the statute calls for the construction that the Legislature intended to provide a means of giving to persons who are subject to the sovereignty of the State and against whom a decree may be issued enforceable within or without the State, reasonable notice of the commencement of an action and opportunity to defend.

Though such construction be adopted, the Appellate Division correctly held that the service should in this case be vacated. Where there is no bodily presence in the State; where there is no permanent place of abode and no domicile; it is plain that there is no residence here and no basis for the exercise of the jurisdiction of the court, It may be that while the defendant was actually in residence at the Hotel Vanderbilt, with intention to make it his home whenever he came to New York, he did reside in the State within the meaning of the statute. A person continues a resident ” of a State where he is domiciled even though temporarily absent from the State. A person is certainly not a “ resident ” of the State when he leaves the State to return to bis domicile and gives up his home here. True, the defendant may have left the Hotel Vanderbilt and given up his rooms there because he had learned that a process server was attempting personal service upon him there. He had a right to do so at any time and for any cause. He was not bound to submit himself to the jurisdiction of our courts if he chose to leave the State. Upon his return here he becomes subject to the jurisdiction of our courts if proper service of a summons is made upon him. Service by leaving the summons at a hotel while the defendant is out of the State is not a proper service and does not give the court jurisdiction of his person.

The order should be affirmed, with costs, and the first question certified answered in the affirmative. The other questions certified are not answered.

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

Order affirmed, etc.


author: Per Curiam.

text:
    In the Matter of John Burke, Appellant, against S. Howard Cohen et al, Constituting the Board of Elections of the City of New York, et al., Respondents. Eustace Seligman et al., Interveners, Appellants.
    (Argued July 3, 1934;
    decided July 3, 1934.)

      Samuel D. Smoleff and William M. Chadbourne for petitioner and William J. Schieffelin, as chairman of Citizens Union of the City of New York, appellants.

      Walter M. Weis for Eustace Seligman, as treasurer of the City Fusion Party, appellant.

      William J. O’Shea, Jr., for Michael J, Cruise, as Clerk of the City of New York, respondent.

      George W. Whiteside, J. Arthur Leve, John T. Dooling, Edward Ward McMahon, Seymour Mork, Theodore J. Groh, Charles W. Froessel and Charles Mulligan, Jr., for David H. Knott, as chairman of the New York County Democratic Committee et al., respondents.

      Matthew M. Levy for Socialist party of the city of New York, respondent.
   Per Curiam.

In the light of fuller experience the distinction drawn by this court in People ex rel. Ward v. Scheu (167 N. Y. 292) between vacancies in offices created by the Constitution and vacancies in other city offices has proven impracticable. Inroads into the rule of that case create constant doubt. We now hold that article X, section 5, of the Constitution applies to all elective city offices.

The order should be affirmed without costs.

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

Order affirmed.


text:
    Wirth & Hamid Fair Booking, Inc., et al., Respondents, v. Frank Wirth et al., Appellants.

      (Argued June 5, 1934;
    decided July 3, 1934.)

      I. Maurice Wormser, A. L. Geilich and Irving Mariash for appellants.

      Arthur Hutter for respondents.
   Lehman, J.

As part of a contract for the sale of the stock of Wirth & Hamid Fair Booking, Inc., the defendant Frank Wirth agreed that for the term of seven years he Would not engage within a specified territory in the booking and /or supplying of theatrical artists and/or entertainers of any kind or character, whose services are to be performed in any fair, park, celebration, pier, carnival, circus (except as hereinafter provided) style show or pageant, fireworks at parks and/or fairs, auto races at parks and/or fairs, or any of them * * The purpose of the restrictive clause was to prevent Frank Wirth, who had previously conducted the business of the plaintiff corporation, from competing in the business of that corporation and thus destroying or diminishing the value of the good will of the corporate business. Wirth was at that time interested in a circus, and the parties to the contract understood that he intended to continue booking that circus. In order to permit that, the general restrictive covenant was made subject to specified exceptions in regard to booking performers at a circus.

Concededly the defendant Wirth has, since the execution of the contract, attempted to book his circus at various fairs and piers and parks, and he did book his circus at a fair of the Maryland State Fair and Agricultural Society of Baltimore. He claims that in so doing he has kept strictly within the exception to the restrictive covenant. The plaintiffs, claiming that these acts constitute a violation of the restrictive covenants, have brought this action in which they seek a judgment, declaring that the defendant Wirth has breached and violated the contract, and enjoining him from continuing such violation, and from carrying out contracts which it is claimed were made in violation of the restrictive clause.

The complaint incorporates the contract between the parties. By its terms the restrictive covenant is made subject to the exception that notwithstanding the restrictive covenants contained in this subdivision, the party of the first part herein, however, shall have the right and privilege to conduct, operate, control, book and engage theatrical artists for one circus and/or specialty show in any of the states and provinces enumerated in this subdivision during the months of November, December, January, February, March and April of each year * * * and the said party of the first part shall have the right and privilege to conduct, operate, control, book and engage theatrical artists for two circuses and/or specialty shows in any of the states and provinces enumerated in this subdivision during the months of May, June, July, August, September and October in each year.”

The restrictive covenant by its terms precludes the defendant from booking performers at any “ circus except as hereinafter provided.” The subsequent provisions permit the defendant to book performers for one circus during the winter months and for two circuses during the summer months. The defendant has not booked more, and it is not shown that he is endeavoring to book more. Therefore, the plaintiffs have failed to show that the defendant has violated that part of the restrictive covenant which in terms precludes the booking of artists or entertainers whose services are to be performed at a circus. They do not, however, rely primarily upon that part of the restrictive covenant. The restrictive covenant is not confined to the booking of entertainers whose services are to be performed at a circus. The restriction by its terms applies to the booking of artists or entertainers whose services are to be performed in any fair, park, celebration, pier, carnival, circus except as hereinafter provided, style show or pageant, fireworks at parks and /or fairs, auto races at fairs or any of them.” If the words circus except as hereinafter provided ” had been omitted from this enumeration, the omission would not have resulted in excluding from the restrictive covenant the booking of entertainers whose services would be performed in any fair, park, celebration, pier or carnival,” though in connection with a circus. Because these words are included in the enumeration, the scope of the restriction is broadened so that it now embraces booking of performers in a “ circus except as hereinafter provided,” though the performance does not take place in any fair, park, celebration, pier or carnival.” The question then arises whether the parties, by the use of the words circus except as hereinafter provided,” intended not only to extend the restrictive covenant to include a circus which does not come within the exception as thereinafter provided, though not performed in a fair, park, celebration, pier or carnival, but also to exclude, from the scope of the other restrictions, performances at such a place but in connection with a circus for which the defendant would otherwise be permitted to book performers in accordance with the subsequent provisions of the contract.

It may be argued that in accordance with a strict grammatical construction of the restrictive covenant, the inclusion in the enumeration of a " circus except as hereinafter provided ” does not limit the scope of the other prohibitions there enumerated. We search a contract to discover the intention which the parties have formulated in its written language. Often punctuation and grammatical construction are reliable signposts in the search. At times the language of a contract, read as a whole and in the light of the circumstances surrounding its execution, may disclose an intention which would be thwarted by a strict grammatical construction. We refuse to follow a signpost when it appears that it points in the wrong direction. Intention may be formulated in words that are not strictly accurate, and in terms that are not grammatical. Here the language of the contract shows clearly that the parties intended that the defendant should, notwithstanding the restrictive covenants, have the right to book performances for two circuses during the summer months. To that extent there is an exception to the restriction which would otherwise exclude the booking of performers for any circus. Whether the more general restrictions upon the booking of entertainers to perform at specified places were intended to apply to these two circuses can, perhaps, not be deterinined solely by grammatical construction of the language of the contract. Because of possible doubt there, the plaintiffs have alleged in the complaint that such was the intention of the parties and that they so agreed. The complaint, for • that reason, after the prayer for a declaratory judgment and an injunction, asks that “ if it should become necessary to obtain the relief hereinbefore prayed for, that the said contract Plaintiffs’ Exhibit A, be reformed and corrected.”

The trial resulted in a decision that the contract in clear language excepted booldngs for two circuses during the summer months from all the restriétive covenants, and that the plaintiffs were not entitled to a reformation of the contract which should provide that the restrictions as to the place of performance applied to such circuses. Judgment was entered dismissing the complaint. The Appellate Division reversed the judgment upon the law and the facts. It held that the contract in clear language provided that the restrictive covenant as to the place for which performances might be booked should apply even to the two circuses for which the defendant might book performers. It further held that the paroi testimony clearly showed that the parties so intended and understood, and that the plaintiffs would be entitled to a reformation of the contract if the language of the contract failed to carry out such intention. New findings of fact and conclusions of law were made, and judgment entered in favor of the plaintiffs enjoining the defendant from continued violation of the restrictive covenant or carrying out any contracts for a performance at a fair, park, celebration, pier, carnival, etc. The judgment also provided for the specific performance of another clause of the contract to which we shall refer hereafter.

In its opinion, the Appellate Division has set forth the evidence upon which it bases its finding that the parties intended and agreed that the defendant Wirth should be permitted to book performers for two circuses, only provided that such circuses were not exhibited at a fair or park or any other of the places or types of performances referred to in the restrictive clause of the contract. The record fully sustains that finding. Even without the paroi testimony that intention is manifested by the language of the written contract. True, the parties might have used language that would have eliminated room for dispute. None the less, a fair construction of the restrictive covenant and its exception, whether read alone or in connection with the other clauses of the contract, supports the plaintiffs’ contentions. If there is ambiguity or doubt it is removed by the paroi testimony.

The plaintiffs have, thus, established their right to an injunction against future breach of the restrictive clause through the booking of any circus at a fair. They have asked, and the judgment grants them, more. In accordance with the terms of the contract the plaintiffs delivered a series of notes in payment of the purchase price. Some of these notes had been paid at the time this action was begun. Eight notes were not yet due and were held by the defendant Monheimer. The contract provides that the parties, recognizing that a breach by the defendant Wirth of the restrictive covenants would materially reduce the value of the stock * * * ” and " recognizing the difficulties involved in establishing the actual damage resulting from a breach of any of such restrictive covenants,” have agreed that at the commencement of any action for a breach of these covenants the remaining outstanding notes shall be delivered to Monheimer, and that payment of any notes falling due during the pendency of the action be made to Monheimer, and that upon the final determination in favor of the plaintiffs of such action, Monheimer should deliver to them the moneys collected and the notes received. The judgment in plaintiffs’ favor contains a provision for such payment.

The result of the judgment then is that the plaintiffs have an injunction against the further breach of the restrictive covenant, yet they are absolved of any obligation to pay the notes which became due after the commencement of the action, though these notes constitute a considerable part of the purchase price. Indeed, if the breach had occurred and an injunction had issued before any notes became due, the plaintiffs would have obtained the full benefit of the contract and have been absolved from payment of almost the entire purchase price.

We may assume that the provision which the judgment specifically enforces was intended as an agreement for stipulated damages. We may further assume that the plaintiffs could enforce that agreement, though strong argument might be made to the contrary. Even so, it is quite plain that the plaintiffs cannot ask an injunction against a breach and at the same time claim liquidated damages for such breach. In a similar situation it has been said that the plaintiffs have an option to elect between but cannot adopt both remedies. If they elect to take liquidated damages there is no room for an injunction, for the £100 damages is all they are entitled to. If, on the other hand, they elect, as they do here, to take an injunction, they may have it, but they cannot have judgment as well for the £100 liquidated damages.” (General Accident Assurance Corp. v. Noel, [1902] 1 K. B. 377.)

Payment of damages for a breach of contract constitutes satisfaction for the injury caused by the breach. That is true regardless of whether the damage has been fixed by agreement of the parties or by judicial decree. The remedy at law for a breach of contract is the collection of damages. Only where that remedy is inadequate may the equitable remedy of specific performance be invoked. A decree of specific performance is in effect and, in this case, even in form, an injunction to prevent a breach of the contract. Quite obviously a suit for injunction against a breach of contract is inconsistent with a claim for damages caused by the same breach. There cannot be any injunction which will prevent an injury where satisfaction for such injury has already been given.

True, there may be successive breaches of the same contract or covenant, and each new breach may cause new damages and give rise to a new cause of action. Then an injunction against a.breach which is threatened may not be inconsistent with a recovery for damages suffered by a previous breach. So, too, a court of equity may enjoin a continuing wrong for which damages would not furnish an adequate remedy, and even in the same action award damages for injury already caused to the plaintiff. (Lynch v. Metropolitan El. Ry. Co., 129 N. Y. 274.) In such cases an injunction and an award of damages are not inconsistent. Together they furnish a complete remedy for injuries threatened and suffered. That is not true, of course, where the damages constitute a satisfaction both for injuries suffered and injuries that may follow in the future.

Liquidated damages constitute the compensation which, the parties have agreed, must be paid in satisfaction of the loss or injury which will follow from a breach of contract. They must bear reasonable proportion to the actual loss. (Seidlitz v. Auerbach, 230 N. Y. 167.) Otherwise an agreement to pay a fixed sum, upon a breach of contract, is an agreement to pay a penalty, though the parties have chosen to call it liquidated damages,” and is unenforceable. The restrictive covenant in this case was inserted in order to protect the good will of the business. The stipulation for the forfeiture of the right to enforce the notes upon a breach of that covenant cannot be regarded as “ liquidated damages ” and enforced accordingly, unless the parties fixed that sum as a reasonable estimate of the loss that would follow from “ a material interference with the good will of the business.” (Hackenheimer v. Kurtzmann, 235 N. Y. 57, 66.) Then the payment of such stipulated damages would completely satisfy the injury caused by such material interference.” The damages cannot be retained merely as compensation for the loss already suffered through that injury. The stipulated damages were estimated and agreed upon because, as the parties state in their contract, they recognized that a breach would materially reduce the value of the stock,” and recognized also the difficulties involved in establishing the actual- damage resulting from a breach.” The parties thus fixed the entire damage, and their stipulation becomes unenforceable when the plaintiffs invoke a remedy which will protect them against the damages that might follow in the future from the breach.

Indeed there was, at one time, doubt whether a party might invoke the equitable remedy of injunction against a breach of a contract where the parties had stipulated the amount of damages which should be paid upon such breach. Argument was made that a provision for liquidated damages must be construed as providing the alternative rights in the promisor to perform his promise or pay the liquidated damages as the price of non-performance. In Diamond Match Co. v. Roeber (106 N. Y. 473, 486) this court has settled the rule in this State, saying: “ It is a question of intention, to be deduced from the whole instrument and the circumstances; and if it appear that the performance of the covenant was intended, and not merely the payment of damages in case of a breach, the covenant will be enforced. It was said in Long v. Bowring (33 Beav. 585), which was an action in equity for the specific performance of a covenant, there being also a clause for liquidated damages, all that is settled by this clause is that if they bring an action for damages the amount to be recovered is £1,000, neither more nor less.’ ” If a decree is made for specific performance, the provision for stipulated damages cannot be enforced; for the distinction between payment of a fixed sum as penalty or as stipulated damages upon a breach of contract becomes unsubstantial when an action is brought for an injunction against a continuance of the breach. (Ropes v. Upton, 125 Mass. 258.) Conversely where there has been a recovery of stipulated damages in an action at law, there can be no subsequent action for an injunction. (Soainter v. Ferguson, 1 Macnaghten & Gordon, 286.)

We have not overlooked the claim of the plaintiffs that in this case they are not seeking damages stipulated for non-performance of a covenant, but are seeking solely to enforce the contract in all its terms, and the contract itself relieves the plaintiffs of any obligation for further payments thereunder. The clause under consideration is intended to compensate the plaintiffs for loss suffered by a breach of contract. It is immaterial whether we call the clause one for a penalty, for stipulated damage, or for a termination of the plaintiffs’ obligations under the contract. Regardless of the form of covenant which the parties adopted, invocation of the equitable remedy against a breach of contract is inconsistent with the assertion of a right which the parties have agreed should accrue as compensation for all the loss that may follow from the breach.

The plaintiffs are entitled to a complete remedy for the defendant’s breach of contract — neither more nor less. A judgment that compels the defendant to perform his contract and at the same time permits the plaintiffs to retain the price of performance or which awards them compensation for non-performance would give them more than they are entitled to. A judgment which fails to award them damages for loss suffered in the past, though it compels performance in the future, would furnish them incomplete relief. The judgment of the Appellate Division should be modified by striking therefrom the provision that the defendant Monheimer should pay the moneys and notes to the plaintiffs and also the award of costs against Monheimer and by providing that a referee be appointed to fix the amount of the damages suffered by the plaintiffs through the defendant’s breach of contract.

The judgment should be modified in accordance with this opinion and as so modified affirmed, without costs.

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

Judgment accordingly.


text:
    The Womans Hospital in the State of New York, Respondent, v. Sixty-Seventh Street Realty Co., Inc., et al., Respondents; Manufacturers Trust Company, Appellant, Impleaded with Others. Fulton Trust Company of New York, as Committee of Clara A. Downey, an Incompetent Person, Respondent, v. Sixty-Seventh Street Realty Co., Inc., et al., Respondents; Manufacturers Trust Company, Appellant, Impleaded with Others.

      (Argued June 8, 1934;
    decided July 3, 1934.)

      Hastings S. Morse and David Barnett for appellant.

      Albert Stickney and Vincent Keane for Womans Hospital in the State of New York, respondent.

      Isaac N. Jacobson for Sixty-Seventh Street Realty Co., Inc., et al., respondents.
   Lehman, J.

The Sixty-seventh Street Realty Company was the owner of the equity in two parcels of real property which were subject to first mortgages owned by the plaintiffs. The mortgages were guaranteed by the Lawyers Mortgage Company. There were defaults in the payment of moneys as they became due under the terms of the mortgages. The plaintiffs had the right to declare due the principal sum secured by the mortgages upon any default. They did not choose to exercise such right, but they brought actions to foreclose the mortgages in so far as they secured the delinquent items. The judgments directed the sale of the mortgaged premises, subject to the first mortgages thereon, to the amount of the principal not then due.

The Lawyers Mortgage Company, about the time when the foreclosure actions were begun, obtained assignments of rents of the mortgaged properties. These assignments authorize the assignee to apply the income from the mortgaged premises to the payment of arrears now or at any time existing under the terms of the first mortgages upon the premises, to the payment of interest or installments payable on account of the principal sum secured by the mortgages, to the payment of salaries, wages, commissions or fees of servants, employees, agents or attorneys, or of any charges, expenses or fees in the operation of the premises, “ and to apply any balance remaining thereafter to the reduction of the principal of the mortgage hereby affected.” The order in which the rents collected should be applied, and the amount and time of such application, rested entirely in the discretion of the assignee under the express terms of the assignments.

The mortgaged premises were purchased by the Manufacturers Trust Company at the sale held under the judgments of foreclosure for amounts which left a small surplus after payment of the sums found due under the mortgages, and the costs and expenses of the foreclosure actions and sales. The assignee still holds some rents which it collected under the assignments, and which have not yet been applied to any of the purposes for which the assignments were given. The Manufacturers Trust Company as the owner of the second mortgages upon the mortgaged premises, has moved to compel the assignee to pay the unapplied rents to the referee, appointed in the foreclosure actions, such rents to be treated as surplus moneys arising upon the sale of the property. The assignee of the rents, who is also the guarantor of the mortgages, is technically not a party to the foreclosure actions or to this motion, though quite probably it may have conducted the foreclosure actions through its attorney acting in the name of the plaintiffs. By an order made at Special Term the plaintiffs were directed to pay to the referee the rents which the assignee holds as the agent of the plaintiffs. The Appellate Division, upon appeal, reversed the orders and denied the motions, holding that the assignee was not the agent of the plaintiffs and that a second mortgagee has no interest in any rents collected by an assignee under an assignment of rents given as security for a first mortgage.

In spite of the fact that the Appellate Division based its decision in part upon a holding that the assignee of the rents is not the agent of the plaintiffs, the plaintiffs as respondents upon the present appeal maintain that the assignee is their agent. Moreover, upon the motions the plaintiffs presented affidavits by the assignee’s attorney stating that the assignee claims no right to hold the rents still in its hands, but does not know whether those rents belong to the second mortgagee or to the former owner of the equity. The assignee was, as we have said, also the guarantor of the mortgages. It received the assignments of rents because under the terms of the mortgages, the mortgagees had a right to look to the rent for additional security, at least after a default by the mortgagor. We are asked on these appeals to answer the certified question: Was Lawyers Mortgage Company the agent of [the mortgagees] in collecting rents and income from mortgaged premises under the assignment of rents herein? ”

That question is not decisive of the appeal, and we do not answer it. The assignee had as guarantor an interest in collecting these rents and applying them upon the mortgages. Regardless of whether we classify the relation of the assignee to the mortgagees as that of agent with or without an interest, or as principal acting for its own benefit, it certainly received and held the moneys collected as a trust fund for application upon the mortgages and for the protection of the owners of the mortgage, so far as under the assignments the rents may be applied to such purposes. (Matter of People [Lawyers Title & Guaranty Co.], 265 N. Y. 20, decided herewith, opinion by Crane, J.) The mortgagees can compel such application by the trustee and the affidavits of the attorney for the assignee show that the moneys are held by the assignee subject to direction of the court in the premises, and that the assignee claims no right to retain them. Thus if the plaintiffs, who are the first mortgagees, were under any duty toward a second mortgagee to compel the application of such moneys upon defaulted payments due under their mortgages, the court can upon these motions direct the mortgagees to perform that duty, and its directions can be made effective without infringing upon any rights which the assignee might be able to assert if it were a party to the motion.

Though the rents were pledged as security under the terms of the first mortgages, title to such rents, as they became due and were collected, remained in the owner of record until the pledge was made effective, and the owner of the equity divested of title to the rents by appointment of a receiver or by assignment. Even where a receiver of rents is appointed, or an assignment of rents procured, as additional security under a first mortgage, the holder of a subordinate hen upon the mortgaged premises does not thereby obtain any interest in such rents. The subordinate hen does not attach to the rents of the mortgaged property under such circumstances.

For these reasons the Appellate Division decided that the second mortgagee has no right to the relief asked. That does not follow. The second mortgagee upon this motion claimed no interest in or subordinate lien upon the rents collected by the assignee. It claims that because it had no interest in, or hen upon, these rents, the plaintiffs as first mortgagees were under an equitable duty to compel the application of the rents upon their mortgage debts, and thus avoid, pro tanto, depletion of the moneys received upon the sale of the properties which were subject to the subordinate hens of the second mortgages after the prior hens of the first mortgages were satisfied; and that under the doctrine of marshalhng of assets ” á court of equity may make such application as if the plaintiffs had in fact done what in equity they should have done.

It has been said that, if one party has a hen on, or interest in, two funds, for a debt, and another party has a hen on, or interest in one only of the funds for another debt, the latter has a right in equity to compel the former to resort to the other fund, in the first instance, for satisfaction, if that course is necessary for the satisfaction of the claims of both parties, whenever it will not trench upon the rights, or operate to the prejudice, of the party entitled to the double fund ” (1 Story’s Equity Jurisprudence [10th ed.], § 633). That statement of the doctrine of marshalhng of assets was adopted and applied in the case of Keogh v. McManus (34 Hun, 521). There the court directed that the rents collected by a receiver, even if appointed solely for the benefit of the holder of a prior mortgage, should be applied, as if part of the moneys arising from the sale of the mortgaged premises, after the prior mortgage has been satisfied out of the proceeds of the sale. As the plaintiff elected to and did receive satisfaction of his prior mortgage out of the proceeds of the sale of the land, without resorting to the fund created by the rents in the hands of the receiver, and in that manner diminished the proceeds of the land to such an extent as to deprive the holder of the last mortgage of the power of obtaining satisfaction of his debt out of that fund, he had the equitable right to resort to the fund created by the rents for the payment of the mortgage debt.” (Cf. Vogel v. Nachemson, 137 App. Div. 200; affd., 199 N. Y. 535.)

In principle there can be no distinction between rents collected by a receiver and rents collected under an assignment where the purposes for which the rent may be applied are the same. If the holder of a prior mortgage who can resort both to the proceeds of á sale under foreclosure, and to the rents collected, for satisfaction of his debt, chooses to satisfy it out of the proceeds of the sale and thus exhausts the only fund to which the holders of subordinate liens may resort, the court will allow the latter claimant to stand in the place of the former pro tanto in enforcing his claim out of the fund to which otherwise he could not resort. (Keogh v. McManus, supra)

It is, therefore, upon equitable subrogation to the rights of the prior mortgagee and not upon any primary right of its own that the claim of the second mortgagee rests. But the doctrine of equitable marshalling of assets and equitable subrogation is applicable, as pointed out by Story, only where it will not trench upon the rights or operate to the prejudice of the party entitled to the double fund.” Here, though the amounts in arrears under the first mortgages were satisfied out of the proceeds of the sales under foreclosure, yet the principal, not yet due, of the debts secured by the mortgage has not been satisfied, and the mortgages are still, to that extent, unforeclosed and a continuing hen upon the mortgaged premises. The surplus of the proceeds of the sale under foreclosure after payment of the judgment of foreclosure constitutes a fund to which the holder of a subordinate hen upon the mortgaged premises may resort. The holders of the prior mortgages have no claim upon this surplus. On the other hand, in so far as the assignments of rents permit the application of the rents towards reduction of the principal of the mortgages, the first mortgagees could look to the rents collected for satisfaction of their unpaid debt. The plaintiffs had the right to foreclose their mortgages for defaults in the payment of interest and installments due and unpaid, and obtain a judgment that the property be sold “ subject to the continuing lien of the mortgage for the amount of the debt not then due and unpaid according to its terms.” (Civ. Prac. Act, § 1086.) They had also the right at their option to compel the application of the rents collected either upon the arrears under the mortgage or in reduction of the mortgage debt. The doctrine of marshalling of assets cannot be applied in the manner asked by the second mortgagee without trenching upon the right of the first mortgagees to compel the application of the rents received in reduction of their mortgages.

The equities of the parties are clear. The fee of the mortgaged premises were cumbered by successive liens. The rents were assigned as additional security for the debt secured by the prior lien. Thus both the proceeds of the sale of the mortgaged property and the rents could be used for the satisfaction of the successive liens upon the mortgaged premises. A court of equity may marshal the moneys which can be used for the satisfaction of these debts in a manner which will result in an equitable division for that purpose, so far as that can be done without trenching upon the rights of any party. The first mortgagees have satisfied the arrears due and unpaid under their mortgages out of the proceeds of the sale. Their mortgages still continue as a hen upon the mortgaged premises. Any surplus, remaining after satisfaction of these arrears out of moneys derived from the sale of the property which is subject to this continuing lien, must be used for the satisfaction of the subordinate liens. That surplus would have been larger if the first mortgagees had applied the rents collected upon the arrears due and unpaid under the first mortgages. It is the duty of the person who collects rents, either as receiver of the property or as the assignee of the owner of the rents, to apply the rents to the purpose for which they have been received by him. The only right remaining in the owner of the equity is to a return of the surplus of the rents after the receiver or assignee has performed his duty. Since the assignee of the rents was given an option to apply the rents collected either upon the moneys due and unpaid under the mortgages or in reduction of the principal of the mortgage debt, and was bound to exercise that option for the benefit of the mortgagees, the court cannot deprive the mortgagees and assignee of the rents of the benefit of the option. The rents which have not yet been applied in accordance with the assignments must be so applied; but the option may still be exercised unless the plaintiff mortgagees have by inequitable conduct lost that option.

Here delay in the exercise of that option has worked no prejudice either to the second mortgagee or to the owner of the equity. Reduction in the amount of the continuing lien might have resulted in a correspondingly higher price for the property subject to that hen. The surplus remaining after payment of the judgment out of the proceeds would then have been correspondingly increased. The same result follows if the unapplied rents are added to the fund to which the subsequent lienors may look for satisfaction of their debts. On the other hand, if the motion of the second mortgagee were now granted and the plaintiffs deprived of any right which the first mortgagees or assignee may have to apply the rents collected upon the principal sum secured by the continuing hen, the mortgagees will be deprived of the additional security for that sum which, by assignments of the rents, they obtained for the mortgage indebtedness through the assignment. Exact justice can be done only if the rents are applied in conformity with the powers granted to the assignee.

The second mortgagee did not upon these motions ask for such relief. What the second mortgagee did ask for the court could not grant at that time upon these papers. Perhaps it might have granted alternative relief, but it was not bound .to do so when no party asked for it. Denial of the motion does not preclude the second mortgagee from renewing the motion or asking other relief hereafter if the rents collected are not applied within a reasonable time upon the mortgage indebtedness.

In each action the order should be affirmed, with costs, and the fourth question certified, “ Should the net proceeds collected under the assignment of rents be turned over to the referee herein to be held subject to surplus money proceedings? ” answered in the negative. The other questions cértified are not answered.

Pound, Ch. J., O’Brien, Hubbs, Crouch and Loughran, JJ., concur; Crane, J., not sitting.

Orders affirmed, etc.


text:
    Clara I. Sielcken-Schwarz, Respondent, v. American Factors, Limited, Appellant.
    (Argued April 16, 1934;
    decided July 3, 1934.)

      Charles E. Hughes, Jr., Allen S. Hubbard, William W. Owens, Alfred Sutro and W. H. Lawrence for appellant.

      I. Gainsburg for respondent.
   Lehman, J.

Paul Isenberg, the plaintiff’s father, was an officer and large stockholder of H. Háckfeld & Co., Ltd., a corporation organized under the laws of Hawaii and which conducted there the business of sugar-factor agent, general merchandising and related enterprises. He was also an executive officer and owned a substantial stock interest in a number of corporations owning or maintaining sugar plantations, which were represented by H. Hackfeld & Co. as factor. Paul Isenberg died in 1903. Under his will his wife received one-third of the shares owned by him in these' corporations, and his eight children, including the plaintiff, received the remainder in equal shares. At the time of the declaration of war against Germany in 1917, the plaintiff and her mother still owned the stock so received in these corporations. At that time, though American citizens, they were in Germany. Their stock was in the possession and control of agents appointed by them. At the close of the war the defendant corporation had acquired their interest in the corporation for a consideration which it is alleged was far below the market value. Claiming that in that way the corporation consummated a fraudulent scheme for the ultimate purpose of divesting completely plaintiff and her mother of their valuable rights and interests as shareholders in said corporations as going concerns,” the plaintiff in this action seeks damages for the alleged fraud and deceit of the defendant while acting as agent or in a fiduciary capacity for the plaintiff and her mother. The first cause of action in the complaint is based upon the plaintiff’s original interest in corporate stock received by her under the will of her father; the second cause of action is based upon an assignment from her mother.

The defendant moved under rule 107 of the Rules of Civil Practice for a dismissal of the complaint. The motion was denied, and the Appellate Division has concurred in the ruling of the court at Special Term, but has certified two questions for review upon this appeal: 1. Under subdivision 5 of rule 107 of the Rules of Civil Practice should defendant’s motion to dismiss the complaint have been granted? 2. Under subdivision 6 of rule 107 of the Rules of Civil Practice should defendant’s motion to dismiss the complaint have been granted? ”

The plaintiff and her mother, in other jurisdictions, have sought redress for the loss which it is claimed was caused by transfer of their interest in corporate stock to the defendant corporation, and final judgments have been rendered there in favor of the defendant corporation. (See Isenberg v. Sherman, 212 Cal. 454; Sielcken-Schwarz v. American Factors, Ltd., and Isenberg v. American Factors, Ltd., 60 Fed. Rep. [2d] 43; certiorari denied, 287 U. S. 654.) Rule 107, subdivision 5, provides for a dismissal of the complaint where it appears “ that there is an existing final judgment or decree of a court of competent jurisdiction rendered on the merits, determining the same cause of action between the parties.” An analysis of the judgment rolls in the prior actions in the California and Federal courts discloses many differences in the causes of action there pleaded and the cause of action which the plaintiff is asserting now.

We have said that “ a judgment in one action is conclusive in a later one not only as to any matters actually litigated therein, but also as to any that might have been so litigated, when the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first. [Citing cases.] It is not conclusive, however, to the same extent when the two causes of action are different, not in form only, but in the rights and interests affected. The estoppel is limited in such circumstances to the point actually determined.” (Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304, at pp. 306, 307.) The causes of action upon which there are existing judgments in favor of the defendant are based upon alleged wrongs consummated by the transfer to the defendant of stock belonging to plaintiff and her mother. The causes of action alleged in the complaint in the pending action are based upon alleged wrongs consummated by the same transfer. The redress, however, which the plaintiff is now seeking is different in essential respects from the redress which has been heretofore denied to her. So, too, the wrongful acts alleged as the basis for redress are not identical. The plaintiff does not now attack the title of the defendant corporation to the stock transferred to it, nor does she ask an accounting from the defendant. She seeks only damages for alleged fraudulent acts by which the defendant has obtained the stock. Judgment in plaintiff’s favor in this action would not affect the defendant’s title to the stock, and the prior judgments establish no right to immunity in the defendant for fraud or other wrong committed by it in obtaining such title. Indeed, in the pending action the plaintiff seeks redress for the transfer of some shares of stock not included within the allegations of the complaint in the California action. The causes of action are, thus, different not in form only, but in the rights and interests affected,” and they have not “ such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first.”

'True, the plaintiff asserted, as a basis for the redress asked in the California actions, alleged fraudulent and wrongful acts which are in many respects similar to, if not identical with, most of the alleged fraudulent and wrongful acts asserted now as a basis for other form of redress. Upon the issues actually litigated and determined in the California action, the judgment there rendered may be conclusive, and if received in evidence upon a trial of the pending action, might leave few, if any, issues of substance which could be litigated anew. Even if that be so, a complaint may not be dismissed upon motion under subdivision 5 of rule 107 unless the cause of action alleged in the complaint has been determined by a prior judgment in another action. Where the prior judgment merely creates an estoppel limited to points actually decided in that action, but leaves open other issues which might be raised in the second action, there can be no dismissal under that subdivision. That is true even where the remaining issues are probably unsubstantial.

The law of this State, nevertheless, does not permit the bringing of successive actions, even though different in form and substance, for an indefinite time after an alleged wrong has been committed. In time the Statute of Limitations imposes an automatic bar to the bringing of actions, and subdivision 6 of rule 107 provides for the dismissal of a complaint upon motion where it appears “ that the cause of action did not accrue within the time limited by law for the commencement of an action thereon.” Here the alleged fraudulent acts of the defendant occurred in 1917 and 1918, but the plaintiff’s cause of action is “ not deemed to have accrued until the discovery by the plaintiff, or the person under whom he claims, of the facts constituting the fraud.” (Civ. Prac. Act, § 48, subd. 5.) The question which must now be determined is whether the defendant has shown conclusively that the statutory limitation has run since the date when the plaintiff and her mother knew the facts constituting the alleged fraud of the defendant.

Though the judgments in the prior actions have not determined the causes of action now asserted by the plaintiff, yet the plaintiff cannot now disclaim knowledge of the facts alleged in the complaint in the earlier actions or embodied in the decision of the courts in those actions. Thus it appears conclusively that not later than 1924 the plaintiff claimed that the defendant corporation, together with other persons, had by fraud and other wrongful means obtained a transfer of her shares of stock for an inadequate amount. True, the complaint alleges that the plaintiff and assignor for the first time and within six years last past, acquired actual knowledge of certain alleged facts of which she now complains. A detailed statement of the facts alleged to have been newly discovered and an analysis of their relation both to the causes of action pleaded in the earlier litigation, would extend this opinion to undue length. It is plain that at best the allegations of newly-discovered facts ” show only that within six years the plaintiff and her mother obtained additional knowledge concerning the steps taken to consummate a conspiracy to transfer their property to the defendant corporation, and additional evidence of alleged fraud and wrong. The basic facts that there had been such a conspiracy consummated by fraud and other wrong were embraced within the allegations of the earlier complaints and, if true, were known to the plaintiffs in the earlier actions.

A new cause of action for fraud does not accrue each time a plaintiff discovers new elements of fraud in a transaction or new evidence to prove such fraud. Where there is knowledge of facts sufficient to suggest to a person of ordinary intelligence the probability that he has been defrauded, a duty of inquiry arises ” and may thus start the running of the statute. (Higgins v. Crouse, 147 N. Y. 411, 416; Klotz v. Angle, 220 N. Y. 347; Taft v. Wright, 47 How. Pr. 1; affd., 59 N. Y. 646.) The plaintiff and her mother, it is clear, knew prior to 1924 the basic facts upon which the claim of a conspiracy to defraud was based. Failure to discover all the details did not prevent the statute from running.

The orders should be reversed, with costs in all courts, and the motion granted with ten dollars costs. The second question certified should be answered in the affirmative, and the first question certified not answered.

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

Orders reversed, etc.


text:
    The People of the State of New York, Respondent, v. Anna Antonio, Appellant.
    (Argued July 16, 1934;
    decided July 16, 1934.)

      Daniel H. Prior for motion.

      John T. Delaney, District Attorney (Joseph J. Casey of counsel), opposed.
   Per Curiam.

The motion for reargument must be denied. It presents no points overlooked or misapprehended by the court on the original decision. New matter cannot be considered on a motion for reargument.

For the guidance of future cases, the court states the following rule: After affirmance of judgment of death, no stay of execution can be granted except by the Governor. (Code Crim. Pro. § 495.) The only stay of proceedings of course on appeal in death cases is that provided for on appeal to the Court of Appeals from a judgment of conviction. (Code Crim. Pro. § 528.)

Pound, Ch. J., Crane, O’Brien, Hubbs and Crouch, JJ., concur; Loughran, J., taking no part in the decision of the motion for reargument as he did not sit on the original hearing of the appeal; Lehman, J., not sitting.

Motion denied.


text:
    The People of the State of New York, Respondent, v. Anna Antonio and Sam Faraci, Appellants.
    (Argued July 16, 1934;
    decided July 16, 1934.)

      John T. Delaney, District Attorney (Joseph J. Casey of counsel), for motions.

      Daniel H. Prior for Anna Antonio, opposed.

      Charles J. Duncan for Sam Faraci, opposed.
   Per Curiam.

An appeal does not lie to the Court of Appeals from an order of the trial court denying a motion for a new trial on the ground of newly-discovered evidence made after the affirmance of a judgment of death. (People v. Mayhew, 151 N. Y. 607.)

The motions should, therefore, be granted and the appeals dismissed.

Pound, Ch. J., Crane, O’Brien, Hubbs, Crouch and Loughran, JJ., concur; Lehman, J., not sitting.

Appeals dismissed.


author: Crane, J.

text:
    Anne S. Van Cortlandt et al., Appellants and Respondents, v. The New York Central Railroad Company, Respondent and Appellant.

      (Argued June 6, 1934;
    decided October 2, 1934.)

      Kenneth O. Mott-Smith, Frederick L. Wheeler and. Jacob Aronson for defendant, respondent and appellant.

      E. J. Dimock, M. Gregg Latimer, C. O. Donahue and Eleanor S. Burch for plaintiffs, appellants and respondents.
   Crane, J.

The plaintiffs have sought by this action to obtain a judgment declaring the rigid and immovable railroad bridge of the defendant over the Croton river to be an unlawful obstruction and a public nuisance, and further directing its removal. The trial court dismissed the complaint on the ground that the Croton river was non-navigable and that, moreover, the plaintiffs were guilty of loches in failing to make any move or objection for a period of over forty years. The Appellate Division reversed many of the findings of fact and conclusions of law, made new findings, but failed to afford the plaintiffs the asked for relief. Both sides have appealed: the plaintiffs because an immediate injunction has been denied them, and the defendant because the court has found the river to be navigable, the crossover a public nusiance, the plaintiffs not barred by loches and possibly entitled to relief later when conditions have changed. As there has been a reversal on the facts this court has jurisdiction to review the facts and could, therefore, determine whether the evidence is such as to sustain the new findings made by the Appellate Division. In the view which we have taken of the case we think it unnecessary to pass on many of these questions, as we are of the opinion that the plaintiffs cannot maintain this action for the reasons which we shall attempt to state.

The Hudson River Railroad Company was chartered and organized by chapter 216 of the Laws of 1846, entitled, “An Act to Authorize the Construction of a Railroad from New York to Albany.” Section 15 of the act provided:

“ § 15. The said corporation is hereby authorized to build or erect a bridge over the Spuytenduyvel creek and other navigable streams or inlets, for the passage of the said road or ways, from or to the city of New York. Such bridges shall be substantially constructed, and shall contain a draw of sufficient width to admit the passage of vessels adapted to the navigation of said river, streams or inlet, with standing masts, and shall be so attended as not to obstruct, delay or hinder, the progress of any vessel navigating said river. They are also required to construct such bridges as may be necessary to provide for the free passage of such vessels and boats as heretofore have or now can pass into and from the same, the bays that may be crossed by said railroad; and if any wharf or dock shall be cut off by the said railroad, the said company shall extend or so improve the same as to restore it to its former usefulness, so far as it may be practicable to do so. And the owner or owners thereof are hereby authorized to occupy the river front, outside of said railroad, for the erection and use of wharves or docks.”

The defendant is the successor to the Hudson River Railroad Company.

The courts below have treated this act as if it required a drawbridge over any stream which was navigable in fact or in law at any time; such as came within the definition of “ navigability ” found in the court decisions. We think the act must be interpreted in the light of legislative intent. The plaintiffs’ claim rests entirely upon the meaning of this act. No question of Federal authority is involved in the case. If the Croton be non-navigable the consent of the Secretary of War to the erection of the railroad bridge was unnecessary; if navigable, nowhere does it appear that such consent was not given. (Egan v. Hart, 165 U. S. 188.) The State of New York may improve its highways in such fashion as it deems best for travel even to the extent of erecting bridges without draws over navigable streams unless or until some act of Congress takes cognizance of the matter. Until Congress acts the State may act. In this charter to the railroad the State has provided for drawbridges in certain cases, but, bearing in mind its power in the absence of Federal control, we must decide what are those cases, what the charter act means. No rights, we may repeat, arise from the Croton being navigable or unnavigable. The plaintiffs’ claim rests entirely upon the statutes. The nature of a navigable stream is stated in United States v. Holt State Bank (270 U. S. 49, 56) as follows: that they are navigable in fact when they are used, or are susceptible of being used, in their natural and ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water; and further that navigability does not depend on the particular mode in which such use is or may be had ■ — ■ whether by steamboats, sailing vessels or flatboats — nor on an absence of occasional difficulties in navigation, but on the fact, if it be a fact, that the stream in its natural and ordinary condition affords a channel for useful commerce.” (See, also, Economy Light Co. v. United States, 256 U. S. 113.) The New York definition may be even a little broader. (Morgan v. King, 35 N. Y. 454.)

The power of the States over navigable streams in the absence of congressional action may be illustrated by the case of Gilman v. Philadelphia (70 U. S. 713, 720), where bridges without turnspans were erected over the Schuylkill, shutting out the customary passage of sailing vessels to the plaintiff’s wharves. Vessels with masts could not pass, and the property of the complainant was rendered less valuable.’ The court said, “ The injury to the property of the complainants will be entirely consequential. A large city is rising up on the opposite side of the river. The new bridge is called for by public convenience ” (p. 722). The defendants are proceeding to build the bridge under the authority of an act of the legislature of Pennsylvania. The Schuylkill River is entirely within her limits, and is an ancient river and common highway of the State.’ For many years it has been navigable for masted vessels for the distance of about seven and a half miles only, from its mouth. * * * It must not be forgotten that bridges, which are connecting parts of turnpikes, streets, and railroads, are means of commercial transportation, as well as navigable waters, and that the commerce which passes over a bridge may be much greater than would ever be transported on the water it obstructs” (pp. 721, 729). The plaintiff was denied relief.

Hamilton v. Vicksburg, Shreveport & Pacific R. R. (119 U. S. 280, 281) is another example. The court, through Mr. Justice Field, said: The authority vested by its act of incorporation in the Vicksburg, Shreveport, and Texas Railroad Company to construct a railroad from a point opposite Vicksburg to the State line of Texas, empowered it to construct as part of the road all necessa,ry bridges for the crossing of navigable streams, which might be on its line. * * * What the form and character of the bridges should be, that is to say, of what height they should be erected, and of what materials constructed, and whether with or without draws, were matters for the regulation of the State, subject only to the paramount authority of Congress to prevent any unnecessary obstruction to the free navigation of the streams. Until Congress intervenes in such cases, and exercises its authority, the power of the State is plenary. When the State provides for the form and character of the structure,Indirections will control, except as against the action of Congress, whether the bridge be with or without draws, and irrespective of its effect upon navigation.” (See, also, Transportation Co. v. Chicago, 99 U. S. 635.)

In granting this charter to the Hudson River Railroad Company in 1846 the State Legislature was not obliged to provide a drawbridge over the Croton river by reason of anything in the United States Constitution or the acts of Congress so far as the record here discloses. No such claim is made. The Legislature was, therefore, free to declare in what instances and cases the drawbridge should be constructed. This is the only point we desire to make for the present, and it merely emphasizes what we have heretofore said, that the intent must govern, not merely the navigability of the streams. Now what was the intent, and did it ever cover such conditions as exist to-day?

In 1846, and for many years thereafter, the Croton was used in navigation, having two or more mills or factories on its banks. Sailing vessels passed through the draw which the defendant maintained in its railroad bridge. By 1891 all had changed, with the inroads of time. The factories and mills had been demolished and all traffic in the river had ceased.

The plaintiffs are the owners of 153.09 acres of land east of the New York Central’s railroad tracks and south of Harmon station and the village of Croton. The Croton river runs through their property at least up to the Albany Post road, a distance of twenty-four hundred feet east of the railroad bridge. This road is carried over the waters of the Croton on a masonry arch bridge at the southerly end and a culvert at the northerly end, with a fill or causeway seven hundred and thirty feet in length between them. The bridge culvert and fill are permanent structures erected by the county of Westchester and State of New York in the years 1922-1924. There is no claim made in this case that the Croton is navigable beyond this roadway. Whatever may have been its condition before the construction of this Post road crossing, there is now no possibility of any commercial navigation on the river beyond the road. No claim is made in this case, not even a suggestion, that the roadway, this shutting off any navigation, is illegal or a public nuisance. We, therefore, have the case presented, where navigation, if any, can under any and all circumstances run only from the railroad to the Albany Post road through the plaintiffs’ marsh lands, a distance of about a half mile.

These 153.09 acres owned by the plaintiffs consist of 35.45 acres of upland, 51.64 acres of lands under water, called sedge lands, and 66 acres under water. Between the deep water of the Hudson and the Albany Post road bridge, such channel as exists is at best 80 feet wide, with a minimum depth of 5 feet at mean high tide and 1.6 feet at mean low tide. These 51 acres of sedge or marsh lands are on the north and south side of this channel between the railroad and the bridge. They have apparently always been in the same condition, for the evidence fails to show any use made of them or of the stream by the plaintiffs or their predecessors.

For many years prior to 1891 the portion of the defendant’s railroad constructed over and across the Croton river consisted of two tracks upon a trestle, with a span therein capable of being elevated and swung to one side to admit boats in compliance with the above quoted section of its charter. The last time such lift span was operated and the last time there was any need for the operation thereof was in 1888, and during the preceding decade said lift span was operated on a few occasions only. The chief engineer of the defendant, in a letter to the vice-president, Mr. H. Walter Webb, dated January 22, 1898 (Defendant’s Exhibit NN), wrote: The entire length of the present structure is about 404 ft. and consists of seven short spans, one of which was originally built for a draw span. It has been opened but once or twice * in the past 18 years, and not at all within the past five years, and there now exists a bar across the mouth of the river west of the bridge, having but 3 ft. of water at low tide, so that there is no longer a navigable channel, and of course the completion of the Cornell Croton Dam will make even less water to pass through this opening; therefore, there now exists no reason whatever for continuing the further maintenance of a draw span.” While this letter may be a self-serving declaration or hearsay it is in accordance with all the other evidence, with the possible exception of the statement that there is no longer a navigable channel. We have already seen that this had narrowed to 80 feet. The letter, however, is evidence that the defendant was informed by its chief engineer and thus knew that the draw was no longer necessary. The evidence warrants the statement that there was no reason whatever for continuing the further maintenance of a draw span. The evidence is conclusive and so also the findings that for over forty years no one has had any reason to use a draw through the railroad bridge, no boat has sought to go in or out, and has had no occasion to do so; there was no place to go, no commerce, no business of any kind, no user of adjoining property requiring or demanding navigation, even were navigation possible.

The plaintiffs do not claim that they or their predecessors ever used or desired to use the river channel for boats of any kind. Not a person has come forward to say that at any time he or anybody else in the past half century desired to use the river for commerce and was prevented or hindered by the bridge. The fact is that the river had been abandoned for navigation. The factories formerly on its shores had been demolished, its water had been diverted for a New York city aqueduct, a broken dam had clogged its upper waters and a drift in its currents had collected sand and mud, narrowing its channel. West of the railroad bridge a sand bar had stretched out across the mouth of the river so that Captain Bowers, making the experiment, had hard work driving his tug The West Farms up through the mud to a point near the railroad bridge. Navigation might have been possible but no one evidently desired to try it. The whole community apparently considered this river as no longer requiring an open draw at the railroad bridge. The plaintiffs do not now insist upon a change because of any desire to use it either for themselves or others; the utmost of their claim is, that their property will be more valuable if there is the possibility of a future use by dredging and bulkheading, and an open draw through which boats may perhaps come when such work is complete. No such proposed plans are in the offing; so far they are only on paper; the sum of $410,520 is necessary to be spent by the plaintiffs on this 2,400 feet of sedge channel before any occasion can arise for the use of the drawbridge. (The Appellate Division raised the cost to $700,000,.) This is the sum Mr. Charles A. Ellems, Jr., says is required to make proper docks and water ways from the railroad bridge to the Albany Post road for commercial navigation.

What is the plaintiffs’ present injury? As at present constituted the Croton cannot be used for commerce. The plaintiffs own both sides of the river up to the Post road.. It is evident and conceded that changes will have to be made by the expenditure of large sums of money ■ to make possible commercial user. It is this change in conditions which will give increased value to the plaintiffs’ holdings, not merely the installation of an open drawbridge. The real estate experts for the defendant stated that the value of the property with, and without the draw was the same. Mr. William J. Yates, for the defendant, testified:

“ Q. What in your opinion is the fair market value of the property? A. $117,878.
Q. What, in your opinion, would be the fair market value of the property, assuming a draw span was installed in the railroad bridge? A. There would be no difference in my value.
“ Q. $117,878? A. Yes, sir”

True, Mr. William R. Bull, for the plaintiffs, said the present value was $447,500, and $893,000 with the bridge open. The Appellate Division in making new findings believed Mr. Yates, for the new or modified finding reads, “ The value of the plaintiffs’ property, described in the foregoing findings numbered ' 3 ’ and ' 4/ does not exceed $117,878.” While the Appellate Division elided the Special Term’s finding, “And it would not be increased if a draw span should be installed in said bridge,” the Appellate Division failed to find the reverse, that it would be. In other words, it refused to find as requeste by the plaintiffs, that “ if a draw were" maintained in the defendant’s bridge, the plaintiffs’ property would be substantially more valuable than it is with the bridge immovable and rigid.”

There is no finding that the plaintiffs are at present caused any injury, special injury or damage by the maintenance of the rigid rail crossing. The Appellate Division’s intimation is to the contrary. The new findings read: “ There is no evidence that plaintiffs have ever lost any rents or profits from leasing their property by reason of the construction, maintenance and. operation of defendant’s bridge across the Croton,” and The maintenance of defendant’s rigid and immovable bridge across the mouth of the Croton river proximately causes special damage to the plaintiffs in the nature of substantial and peculiar injury different from that of the general public but not of such a character as a court of equity will at present assess or use as the basis for an injunction.”

What this special and peculiar damage is the court fails to state. If it be insufficient to move a court of equity it must be nominal in the absence of other considerations. There is at present no material or substantial damage being done to the plaintiffs or their property by the maintenance of the present railroad structure. The extravagance of the estimates of the plaintiffs’ witness, Mr. Bull, is suggested by comparisons. He said the present value of the property in question is $447,500, yet there is a finding, unreversed, that the assessment for taxation for the year 1930 was $13,000.

The premises we have been considering are a part of the original manor of Cortlandt which was granted by royal charter to Stephanus Van Cortlandt in 1697, and since that date have been owned by his descendants, and are now owned and in the possession of the plaintiffs. The plaintiffs’ ancestor, Pierre Van Cortlandt, conveyed to the Hudson River Railroad Company, by deed dated August 23, 1847, the lands and lands under water, upon which the defendant’s bridge over the Croton river was originally constructed, and upon which its bridges now stand.

As before stated, up to 1891 the railroad maintained an open draw in its bridge, but in that year the draw-tower was dismantled and the ends of the lift span were spiked, and thereafter said bridge was maintained as a rigid structure until in or about the year 1898 when it was replaced by the present struss structure. In 1907 girder structures were erected for two additional tracks. The four main tracks are without any draw span or bridge, and this has been the condition since 1891. Immediately north of the defendant’s bridge are located the Harmon station and the shops and yards used for the repair and storage of the defendant’s electric and steam locomotives. Trains or engines pass over the bridge on an average of one every three minutes. In the year 1929 the bridge was used for the transportation of 5,916,768 passengers and for the movement of 5,404,644 net tons of freight. The installation of a draw span in the defendant’s bridge structures and the changes incident thereto would cost upwards of S3,000,000.

During all these years and amidst all these changes, which were made within full view of the plaintiffs’ home and must have come to their knowledge, no protests were made and no requests or demands for an open bridge. Acquiescence for all these years is strong evidence that the parties never thought they were being injured in any way. While this lapse of time may not preclude the plaintiffs from maintaining an action to enjoin the continuance of a public nuisance when they are suffering special and peculiar damage different from the public generally (Galway v. Metropolitan Elevated Ry. Co., 128 N. Y. 132; Bremer v. Manhattan Ry. Co., 191 N. Y. 333; and Weeks-Thorne Paper Co. v. Glenside Woolen Mills, 64 Misc. Rep. 205; 140 App. Div. 878; 204 N. Y. 563), yet there is no reason in the world why persons suffering such injury should not act promptly or why' their delay may not be considered as bearing upon the extent and materiality of the supposed injury. While the right to an action may not be barred, we must all admit that a delay of forty years strongly inclines one to think that there can be no justification for an action, i. e., no injury. Special damage must be proved resulting from the public nuisance before relief will be afforded to a plaintiff. Andrews, J. (later of this court) in Old Forge Co. v. Webb (31 Misc. Rep. 316, 321); Rumsey v. N. Y. & N. E. R. R. Co. (133 N. Y. 79, 87).

As said in Mississippi & Missouri R. R. Co. v. Ward (67 U. S. 485, 492), The private party sues rather as a public prosecutor than on his own account; and unless he shows that he has sustained, and is still sustaining, individual damage, he cannot be heard. * * * Then, again, the obstruction to navigation must be plainly a nuisance within this rule before it can be removed by decree. If the proceeding was by indictment, and the jury doubted whether the obstruction was a nuisance or not, they would be instructed ■ to acquit the defendant; and so, if this case was referred to a jury to try the fact, and they doubted, they would be bound to acquit. And the same rule applies in a Court of Chancery where the Court ascertains the fact of nuisance.” (See, also, City of Georgetown v. Alexandria Canal Co., 37 U. S. 91, p. 99.) Even an unlawful obstruction may not be abated as a nuisance at the suit of private persons if the State does not complain, and there is no showing of special damage by the champions of the public right.” (People ex rel. Lehigh Valley Ry. Co. v. Tax Comm., 247 N. Y. 9, p. 16.) See further limitations implied in Fort Plain Bridge Co. v. Smith (30 N. Y. 44, 62). “ Because a bridge over a navigable stream may be a nuisance to those navigating it, it does not follow that it is a nuisance as to others who do not navigate it.”

If this bridge be unlawful, as claimed by the plaintiffs, it is because it is a public nuisance. Such is indictable. (Kinney v. Koopman & Gerdes, 116 Ala. 310.) The State has taken no action for all these years and is not now seeking any relief.

When the Legislature of 1846 said to the defendant’s predecessor that it could put a railroad bridge over the Croton river — other navigable streams or inlets ”— and that “ such bridges * * * shall contain a draw of sufficient width to admit the passage of vessels adapted to the navigation of said river, streams or inlet, with standing masts,” there is very grave doubt, when considering the nature of the Croton at that time, whether there was any intent to have such a provision apply to a remaining bit of the original stream shut off by a highway 2,400 feet above the railroad crossing, unused for over forty years and of no commercial value now until its channel has been improved by the expenditure of three-quarters of a million of dollars.

For this reason, and because the plaintiffs have failed to prove sufficient special damage to maintain this action, the judgment of the Appellate Division should be reversed, that of the Special Term affirmed, and the complaint dismissed, with costs to the defendant-appellant in this court and in the Appellate Division.

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

Judgment accordingly.


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    Ethelbert I. Low et al., as Executors and Trustees under the Will of Lyman N. Hine, Deceased, Respondents, v. Bankers Trust Company, as Trustee, et al., Respondents, and Francis L. Hine, 2nd, et al., Infants, by Sibyl Y. Hine, Their Guardian ad Litem, Appellants.
    (Submitted July 3, 1934;
    decided October 2, 1934.)

      George W. Whiteside, Leonard P. Moore and David S. Hecht for motion.

      David Ferguson, J. Adam Murphy, Windsor B. Putnam, John A. Mullen and Jerome Heffer opposed.
   Per Curiam.

The court has no power to grant an application for leave to appeal unless such application is made within thirty days after notice of entry of the order of the Appellate Division refusing leave to appeal, except that if the court be in recess during all or part of such period, an application may be made upon notice served within such period to be heard after the expiration thereof, if noticed for a day not later than ten days after the court shall have re-convened.” (Civ. Prac. Act, § 591.) An application is not made to the court until brought before the court upon proper notice. Regardless of the date when notice is served that application will be made to the court, the application is too late unless noticed for hearing within thirty days after service of notice of entry of the order of the Appellate Division, or, in a proper case, for a day not later than ten days after the court shall have re-convened. (Metropolitan Casualty Ins. Co., v. Public Nat. Bank & Trust Co., 262 N. Y. 614.) Since the application in this case is made too late, the court does not now consider whether the judgment is final as to defendants other than the trustee.

Motion for leave to appeal denied, with ten dollars costs and necessary printing disbursements.