text:
    Elsa Dilger, an Infant, by Carl Kleinknecht, Her Guardian ad Litem, Appellant, v. Herman Kumpf, Respondent.
    (Argued January 7, 1931;
    decided February 10, 1931.)

      James C. O’Brien for appellant.

      Robert C. Winchell for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


source: Caselaw Access Project

license: Public Domain

text:
    Stephen Tonella et al., as Executors of Charles Tonella, Deceased, Respondents, v. Fishkill Rural Cemetery, Appellant, Impleaded with Another.
    (Argued January 7, 1931;
    decided February 10, 1931.)

      Charles B. Sullivan, Elijah T. Russell and Robert W, Doughty for appellant.

      William Harry Montgomery for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


text:
    Sara V. Murphy, Respondent, v. Union Central Life Insurance Company, Appellant.
    (Argued January 7, 1931;
    decided February 10, 1931.)

      Edward L. Robertson for appellant.

      Frank H. Hiscock and Daniel Scanlon for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


text:
    L. M. Rabinowitz & Company, Inc., Appellant, v. Interwoven Hook & Eye Company, Inc., et al., Respondents.
    (Argued January 8, 1931;
    decided February 10, 1931.)

      Joseph A. Seidman for appellant.

      George Z. Medalie, Jacob J. Rosenblum and William B. Herlands for respondents.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


text:
    Paul M. Preller, Respondent, v. Brooklyn, Queens County and Suburban Railroad Company, Appellant.
    (Argued January 8, 1931;
    decided February 10, 1931.)

      Harold L. Warner and George D. Yeomans for appellant.

      Edward J. Conlon for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


text:
    Brooklyn and Queens Transit Corporation, Appellant, v. City of New York, Respondent.
    (Argued January 8, 1931;
    decided February 10, 1931.)

      D. A. Marsh and George D. Yeomans for appellant.

      Arthur J. W. Hilly, Corporation Counsel (Judson Hyatt and M. Maldwin Fertig of counsel), for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J.


text:
    Peter DiBiase, an Infant, by Antonio DiBiase, His Guardian ad Litem, Appellant, v. Ewart & Lake, Inc., Respondent.
    (Submitted January 9, 1931;
    decided February 10, 1931.)

      James 0. Sébring for appellant.

      W. Earle Costello for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ. Not sitting: Kellogg, J


text:
    Upper Hudson Rye Flour Mills, Inc., Respondent, v. Boutwell Milling and Grain Company of Troy et al., Defendants, and Hugh Galbraith, Appellant.
    (Argued January 9, 1931;
    decided February 10, 1931.)

      John T. Norton for appellant.

      Shirley Moore for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, O’Brien and Hubbs, JJ. Not sitting: Crane and Kellogg, JJ.


text:
    Leon G. Dodge et al., Appellants, v. Lillian Campbell et al., Respondents.
    (Argued January 9, 1931;
    decided February 10, 1931.)

      John T. Norton and Alvin E. Mcmbert for appellants.

      Frederick E. Draper for respondents.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, O’Brien and Hubbs, JJ. Not sitting: Crane and Kellogg, JJ.


text:
    The People of the State of New York ex rel. Charles W. Jannicky, Appellant, v. Warden of the City Prison in the Borough of Brooklyn, Respondent.
    (Argued January 12, 1931;
    decided February 10, 1931.)

      Peter P. Smith, Max Herzfeld and Dominic B. Griffin for appellant.

      William F. X. Geoghan, District Attorney {Henry J. Walsh of counsel), for respondent.
   Order affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


text:
    In the Matter of Agnes V. Birmingham, Appellant, against Frank P. Graves, State Commissioner of Education, Respondent.
    (Argued January 12, 1931;
    decided February 10, 1931.)

      Benjamin Deutsch and Isidore Scherer for appellant.

      Ernest E. Cole and Irwin Esmond for respondent.

      Arthur J. W. Hilly, Corporation Counsel (William E. C. Mayer of counsel), for the Board of Education of the city of New York, respondent.
   Appeal dismissed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


text:
    William E. Crist, an Infant, by Abraham L. Spero, His Guardian ad Litem, Respondent, v. The Art Metal Works, Appellant. Joseph W. Crist, Respondent, v. The Art Metal Works, Appellant.
    (Argued January 12, 1931;
    decided February 10, 1931.)

      Almet Reed Latson, Jr., and William T. Condon for appellant.

      Joseph Sussman for respondents.
   Order in each action affirmed, with costs, and question certified answered in the affirmative; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


text:
    Joseph Steinhardt, Appellant, v. Max Pinner, Respondent, Impleaded with Another.
    (Submitted January 13, 1931;
    decided February 10, 1931.)

      Meyer D. Sie'gel for appellant.

      Ralph Stout and Thomas E. Shea for respondent.
   Judgment affirmed with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


text:
    John Jennings, an Infant, by Michael Jennings, His Guardian ad Litem, Appellant, v. Albert Delaney, Respondent.
    (Argued January 13, 1931;
    decided February 10, 1931.)

      Leonard F. Fish and Harry Zeitlan for appellant.

      Louis E. Schwartz and James J. Dooling for respondent.
   Judgment affirmed, with costs, on the ground that, irrespective of the ordinance, the plaintiff as matter of law is chargeable with contributory negligence; no opinion.

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


text:
    Leo Ermann, Appellant, v. Harry Kahn et al., Defendants, and Charles W. McHose, Respondent.
    (Argued January 13, 1931;
    decided February 10, 1931.)

      Harry A. Gair for appellants.

      John W. Jordan, Harold R. Medina and Harry A. Talbot for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


text:
    Louis N. Thomas, Appellant, v. Howard A. Vidal, Respondent.
    (Argued January 13, 1931;
    decided February 10, 1931.)

      Worthy B. Paul for appellant.

      James 0. Moore and Hubert C. Minará for respondent.
   Judgment affirmed, with costs; no opinion.

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


text:
    The People of the State of New York, Respondent, v. Robert H. Bowley, Appellant.
    (Argued January 14, 1931;
    decided February 10, 1931.)

      Henry Hirschberg and William P. Gregg for appellant.

      Franklin A. Schriver, District Attorney, for respondent.
   Judgment affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


author: Per Curiam.

text:
    The People of the State of New York ex rel. Nathan A. Smyth, Respondent, v. Thomas M. Lynch et al.. Constituting the State Tax Commission, Appellants,

      (Submitted January 12, 1931;
    decided February 10, 1931.)
    (See 254 N. Y. 427.)
   Per Curiam.

Nothing in our decision was intended to reflect upon the good faith of the relator or the sincerity of his belief that the moneys paid to him by his corporation were not subject to a tax.

He is chargeable with knowledge in view of the terms of the agreement that the payments so received were compensation for his work.

His belief that the essential nature of the transaction was affected by giving to the compensation the aspect or the style of dividends is unavailing to diminish his obligation to the State, an obligation which must be determined by the realities of the transaction rather than its form.

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


text:
    In the Matter of Bernard K. Marcus et al., Appellants. The Attorney-General of the State of New York, Respondent.
    (Argued February 11, 1931;
    decided February 13, 1931.)

      John J. Bennett, Jr., Attorney-General (Max D. Steuer and Paul J. McCauley of counsel), for motion.

      Charles H. Tuttle and Emory R. Buchner opposed.
   Motion granted and appeal dismissed.


text:
    Severnoe Securities Corporation, Respondent, v. London and Lancashire Insurance Company, Ltd., Appellant, and Northern Insurance Company of Moscow, Respondent.
    (Submitted February 9, 1931;
    decided February 17, 1931.)
    (See 255 N. Y. 120.)
   Per Curiam.

The burden was on the plaintiff to show the existence of such a state of emergency as would justify the intervention of conservators for the preservation of the assets.

In the opinion heretofore filed, we assumed that the Northern Insurance Company of Moscow maintained a branch or agency in England. The plaintiff now informs us that this assumption is not in accordance with the facts, though the company had agents resident in England who did, from time to time, contract in its behalf. The defendant insists that there was a continuing branch or agency whereby the insurance company became subject to liquidation in Great Britain in respect of British business.

The difference is not important enough, standing by itself, to establish a necessity for the intervention of our courts. It might become important, however, if supplemented by other proof. If the plaintiff should make it appear that under the law of Great Britain the Northern Insurance Company of Moscow was without any effective remedy against the defendant either through proceedings at the instance of the surviving directors, or through the appointment of a liquidator, or in any other form, a situation might be found to exist where a remedy would be appropriate here.

We conclude that another opportunity should be given to the plaintiff to establish an emergency sufficient to sustain the acts of the conservators..

The motion for a reargument should be denied.

The motion to amend the remittitur should be granted, the return of the remittitur requested, and when recalled it will be amended by striking out the provision dismissing the complaint with costs in all courts, and substituting a direction for a new trial with costs to abide the event.


text:
    Donald Friedman & Company, Inc., Respondent, v. Leo Newman, Appellant.
    (Submitted February 9, 1931;
    decided February 17, 1931.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 255 N. Y. 340.)


text:
    Gustavos T. Kirby, Respondent, v. Brown, Wheelock: Harris, Vought & Co., Inc., Appellant.
    (Submitted February 9, 1931;
    decided February 17, 1931.)
   Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 255 N. Y. 274.)


text:
    In the Matter of the Accounting of the United States Trust Company of New York, as Trustee under the Will of Enos S. T. Richardson, Deceased, Appellant, and the Accounting of Richard S. Earl, as Executor of Edward Earl, Deceased, Appellant. Enos Richardson, 4th, et al., Respondents.
    (Argued February 9, 1931;
    decided February 17, 1931.)

      Frank II. Hiscock, Eli Blair, Francis B. Hamlin and Conrad Saxe Keyes for motion.
    No one opposed.
   Motion for judgment of reversal as specified in stipulation and consent and not as an adjudication on the merits of the appeal, granted.


text:
    Walter B. J. Mitchell, Appellant, v. City of Yonkers, Respondent.
    (Argued February 9, 1931;
    decided February 17, 1931.)

      Harry J. Laragh, Corporation Counsel (Vincent C. De Carlo of counsel), for motion.

      William W. Schrugham opposed.
   Motion granted and appeal dismissed, with costs and ten dollars costs of motion.


text:
    Caroline T. Woodbury et al., Appellants, v. Charles A. Garrity et al., Defendants, and Max Schrage et al., Respondents.
    (Submitted February 9, 1931;
    decided February 17, 1931.)
   Motion for reargument denied. (See 255 N. Y. 597.)


text:
    In the Matter of the Will of Catherine C. Devine, Deceased. Thomas F. Hickey, Appellant; Patrick J. Mee, Respondent.
    (Argued February 9, 1931;
    decided February 19, 1931.)

      Daniel G. Connolly and Thomas F. Magnet for appellant.

      Leon G. Godley, David S. Garland, John Lehman and Charles C. Lockwood for respondent.
   Order affirmed, with costs; no opinion.

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


text:
    Annie Schatzberg, Respondent, v. Louis Schatzberg, Appellant.
    (Argued February 9, 1931;
    decided February 19, 1931.)

      Abraham Mopper and Charles A. Winter for appellant.

      Louis Jersawit for respondent.
   Appeal dismissed, with costs; no opinion.

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


text:
    In the Matter of Martha Ward et al., as Executrices of Theresa F. Ward, Deceased, Appellants, against The Teachers’ Retirement Board, Respondent.
    (Argued February 9, 1931;
    decided February 19, 1931.)

      William H. Hyman, Paul J. McCauley and Harold W. Hayman for appellants.

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly, Henry J. Shields and William E. C. Mayer of counsel), for respondent.
   Order affirmed, with costs; no opinion.

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


text:
    Ella E. Herstein, Appellant, v. New York Telephone Company, Respondent.
    (Argued February 9, 1931;
    decided February 19, 1931.)

      Herman Silverman for appellant.

      Irving W. Young, Jr., N. H. Egleston, Edward F. Snydstrwp and Charles T. Russell for respondent.
   Judgment affirmed, with costs; no opinion.

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


text:
    The People of the State of New York, Respondent, v. Sam Jenkins, Osia Bersey and Adolph Weiss, Appellants.
    (Argued February 10, 1931;
    decided February 19, 1931.)

      Harry Kopp for appellants.

      Thomas C. T. Crain, District Attorney (Robert C. Taylor of counsel), for respondent.
   Judgment affirmed; no opinion.

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


text:
    The People of the State of New York, Appellant, v. The City Island Land and Dock Company et al., Respondents.
    (Argued February 10, 1931;
    decided February 19, 1931.)

      John J. Bennett, Jr., Attorney-General (Eugene L. Brisach and Francis X. Disney of counsel), for appellant.'

      John A. Kelly and Walter S. Throop for City Island Land and Dock Company, respondent.

      Ralph C. Taylor and William B. Ewing for Charles Wiehe et al., respondents.

      Charles J. Nehrbas for Archer M. Huntington et al., respondents.

      William Ascher for Martin J. F. Scurry, respondent.

      Eugene E. Kelly for Louise Wigger, respondent.

      Edward J. Martin for Ernest Johnson et al., respondents.

      Henry W. Baird for Charles A. McAllister et al., respondents.

      David Carll for Robert Jacob, Inc., et al., respondents.

      H. Schieffelin Sayers and William Harvey Smith for Broad Channel Corporation et al., respondents.
   Judgment affirmed, with separate bills of costs to the defendants appearing by separate attorneys and filing briefs in this "court; no opinion.

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


text:
    Mojac Finance Co., Inc., Respondent, v. Waterside Holding Corporation et al., Defendants, and The Continental Insurance Company, Appellant.
    (Submitted February 10, 1931:
    decided February 19, 1931.)

      Abraham Kaplan and Philip Samuels for appellant.

      Louis Rosenberg and Joseph Feldman for respondent.
   Judgment affirmed, with costs; no opinion.

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


text:
    Mercantile Paper Products Co., Inc., Appellant, v. 1491 Third Avenue Realty Corporation et al., Respondents.
    (Argued February 10, 1931;
    decided February 19, 1931.)

      Louis Rosenberg for appellant.

      Oscar Englander and Reuben Greenbaum for respondents.
   Judgment affirmed, with costs; no opinion.

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


text:
    Alice A. Beck et al., Appellants, v. Broad Channel Bathing Park, Inc., Respondent.
    (Submitted February 10, 1931;
    decided February 19, 1931.)

      William S. O’Connell for appellants.

      Robert H. Charlton, Michael F. Dee and William A. Earl for respondent.
   Judgment affirmed, with costs; no opinion.

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


text:
    In the Matter of the Application of the City of New York, Relative to the Opening of Mott Avenue, in the Borough of Queens. Amy A. Norton, Appellant; Cornaga Avenue Holding Corporation, Respondent.
    (Argued February 10, 1931:
    decided February 19, 1931.)

      Charles S. Noyes and William 3. Pettit for appellant.

      Charles J. Nehrbas for respondent.
   Judgment affirmed, with costs; no opinion.

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


text:
    Matter of Tri-State Investors Corporation, Appellant, v. Frederick McH. Kitching et al., Defendants. Elizabeth F. Vilkomerson, Respondent.
    (Submitted February 16, 1931,
    decided February 19, 1931.)

      Elizabeth F. Vilkomerson for motion.

      Samuel Meyers opposed.
   Motion granted and appeal dismissed, with costs.


author: Cardozo, Ch. J.

text:
    Mary Barile, Appellant, v. Reuben W. Wright, Respondent.

      (Argued February 20, 1931;
    decided March 24, 1931.)

      Gerald A. Herrick for appellant.
    The defendant was the agent of the plaintiff. (Hathaway v. Orient Ins. Co., 134 N. Y. 409; Excelsior Fire Ins. Co. v. Royal Ins. Co., 55 N. Y. 343; Heilbrunn v. German Alliance Ins. Co., 150 App. Div. 670; Kent v. Ætna Ins. Co., 84 App. Div. 428.) The plaintiff was not guilty of contributory negligence as collection of insurance was placed in the defendant’s hands within sixty days after the fire. (Greef Eng. & Mfg. Co. v. Scourene Mfg. Co., 182 App. Div. 311; Littlejohn & Brill v. Deutsch, 182 App. Div. 759; Silberman v. Permanent Bldg. Co., 174 N. Y. Supp. 711; McCoy v. Munro, 76 App. Div. 435; Shortsleve v. Stebbins, 77 App. Div. 588; Lasarous v. Spencer, 29 Misc. Rep. 767; Freedman v. Schlossberg, 186 N. Y. Supp. 78; Townsend v. Hirshkind, 176 App. Div. 520.)

      Ray M. Stanley for respondent.
    Failure of the plaintiff to serve proofs of loss upon the insurer bars a recovery.
      (Stoebe v. Hanover Fire Ins. Co., 112 N. Y. Supp. 553; Peabody v. Satterlee, 166 N. Y. 174; Quinlan v. Providence Washington Ins. Co., 133 N. Y. 356; McDowell v. St. Paul Fire & Marine Ins. Co., 207 N. Y. 482.)
   Cardozo, Ch. J.

Plaintiff, an inexperienced woman, unable to speak English, bought a farm from the defendant, giving back a purchase-money mortgage for $12,000, payable to defendant’s wife. In the mortgage was the usual clause (Real Prop. Law; Cons. Laws, ch. 50, § 254, subd. 4) that the mortgagor would keep the buildings insured against loss by fire for the benefit of the mortgagee. One of the policies expired two years thereafter, and the defendant gave notice to the plaintiff to renew it. She told him that she was unable to insure because she was without the needed money, to which he answered that in that event he would insure the buildings himself. This he promptly did. He took out a policy for $2,000 in the name of the plaintiff as the assured, with a standard mortgage clause appended to protect his wife, the mortgagee. The premium was $60. The defendant sent the plaintiff a bill for that amount. She reimbursed him for the outlay with the next installment of the interest.

The policy, which was kept in the defendant’s custody, was voidable in its inception as between the insurer and the plaintiff. It was voidable because it contained a clause to the effect that the insurer would not be liable if there was any other policy covering the property insured. Such a policy there was, as the defendant well knew. With that knowledge he omitted to disclose the truth to the insurer, and to obtain the waiver or consent that woúld have made the new insurance valid. A year or more thereafter the dwelling was destroyed by fire. The insurer refused to recognize the policy as valid in so far as there was an apparent coverage of the interest of the owner. It made a settlement with the defendant, who was then the holder of the mortgage by succession to his wife, and took an assignment of an undivided interest in the mortgage proportioned to the payment.

The plaintiff brings this action to recover damages from the defendant for his negligence in taking out a policy unavailing to protect her. Negligence there was, or so the triers of the facts might find, and negligence that was actionable if diligence was a duty. The defendant disputes the agency and so denies the duty. In his view he was acting, not as agent for the owner, but solely in his own behalf or in that of his wife, the mortgagee, to give protection to the mortgage lien. The trial judge left the quality of the relation to be determined by the jury as an inference of fact in the light of all the circumstances. A judgment for the plaintiff was reversed by the Appellate Division (two justices dissenting), the majority of the court holding “ that the record presents no evidence on which a finding can be based that defendant was acting as plaintiff’s agent in procuring the insurance ” (231 App. Div. 788). Upon an appeal by the owner, the case is here.

We think the- record permits the inference that the defendant in procuring the insurance was acting as the plaintiff’s agent, apd was chargeable with a duty of reasonable diligence. The words of his promise may be insufficient to prove an agency if they are extracted from their setting. They wear another aspect in the light of the events that followed. The defendant did not take out a policy confined to his own interest, or to the interest of his wife, who was then the holder of the mortgage (Carpenter v. Providence Washington Ins. Co., 16 Pet. [U. S.] 495; Leyden v. Lawrence, 79 N. J. Eq. 113; Vance on Insurance [2d ed], p. 653). The policy that he procured was issued in the name of the plaintiff as the owner, loss payable to the mortgagee to the extent of the mortgage lien. He thus assumed to act as agent for the owner in the procurement of the policy, and the owner ratified his act by reimbursing him for the payment of the premium and by making claim under the policy after suffering the loss (Vance on Insurance [2d ed.], p. 655). In such circumstances the defendant is not relieved of liability because in so acting as an agent he was serving without pay. We do not need to inquire whether he would have been chargeable with damages if he had ignored his promise altogether and failed to take out any policy whatever (Mechem on Agency, vol. 1, § 1258; cf. Siegel v. Spear & Co., 234 N. Y. 479). What happened was something different. He entered upon the business of his agency, took out the promised policy and exacted money from his principal to make him whole for his expense. He could not do these things in performance of the mandate, and win exemption thereafter if performance was remiss or ineffective (Isham v. Post, 141 N. Y. 100, 105, 106; Marks v. Nambil Realty Co., 245 N. Y. 256; Mechem on Agency, vol. 1, §§ 1258, 1283).

A question remains as to the measure of the damage. If the policy had been valid as between the insurer and the owner, the sum of $2,000, due from the insurer, would have been applied by the mortgagee in reduction of the mortgage, or paid over to the mortgagor for the restoration of the building (Real Prop. Law, § 254, subd. 4). The policy, however, was invalid as between the insurer and the owner, though valid by force of the mortgage clause as between insurer and mortgagee (Goldstein v. National Liberty Ins. Co., 256 N. Y. 26; Hastings v. Westchester Fire Ins. Co., 73 N. Y. 141). In consequence of this, the insurer, upon settling with the mortgagee, became subrogated under a clause of the policy to an interest in the mortgage, and received an assignment of an undivided interest in proportion to the payment (Foster v. Van Reed, 70 N. Y. 19). This does not mean, however, that the defendant was at liberty to keep the proceeds of the settlement as his own, and refuse to give the owner the benefit of the sum collected. The law would not permit him to do anything so unjust after paying for the policy with moneys furnished by the plaintiff and negligently failing to give her adequate protection. The situation would be different if the forfeiture of the policy were due to some fault of hers, and not to the wrong of her agent, the holder of the mortgage (Foster v. Van Reed, supra). There is no occasion to determine whether the mortgagee in such circumstances might keep the money for himself (See Real Prop. Law, § 254, subd. 4). Here, as we have seen, the present holder of the mortgage is also the delinquent agent. Upon the settlement with the insurer, his duty was' to credit the collection on the undivided interest in the mortgage that continued to be his after the assignment to the company, or else to pay it over to the plaintiff for the restoration of the building (Real Prop. Law, supra). If that duty had been discharged, the plaintiff would be as well off as if the policy were valid except to the extent of the difference between the face of the policy ($2,000) and the amount received in settlement ($1,650). Possibly the defendant would have been entitled to a charge that the difference ($350) was the limit of the damage. We do not go into that question, for the charge was not requested, and the point, if it be valid, was not saved by an exception. Our jurisdiction does not permit us to revise the quantum of the damages. At best, the point is technical, for in one form of action or another the defendant is liable to the plaintiff in an amount equal to the verdict. If he pays the policy in full as damages for negligence, he may not be charged with liability for money had and received, and compelled to pay again. Satisfaction of this judgment will work a full acquittance.

A point is made that the plaintiff was to blame for the forfeiture of the policy, in that she failed to furnish the insurer with timely proofs of loss. There was thus negligence, it is said, on her part, which neutralized the defendant’s negligence in respect of the form of the insurance. As to this a sufficient answer is that within the term of sixty days allowed by the policy for the presentation of the proofs, the plaintiff turned over to the defendant the business of collection, and that the defendant professed thereafter to act in her behalf. We do not overlook the fact that the testimony as to the assumption of this duty is uncertain and at times conflicting. In view of the failure of the defendant to take the stand in his own defense, a jury, not unreasonably, resolved the doubt against him.

The judgment of the Appellate Division should be reversed and that of the Trial Term affirmed with costs in the Appellate Division and in this court.

Crane, Lehman, Kellogg and O’Brien, JJ., concur; Pound and Hubbs, JJ., not sitting.

Judgment accordingly.


author: Crane, J.

text:
    Jacoby Hirsch, Appellant and Respondent, v. Schwartz & Cohn, Inc., et al., Respondents, and Highway Improvement and Repair Company, Inc., Appellant, Impleaded with Others.

      (Argued February 18, 1931;
    decided March 24, 1931.)

      Harry G. Anderson for plaintiff, appellant and respondent.
    That part of the judgment in favor of the defendants-respondents is contrary to law and against the weight of the evidence. (Clark v. Thayer, 205 App. Div. 206; 237 N. Y. 544; Bolton v. Madsen, 205 App. Div. 180; Lowell v. Williams, 228 N. Y. 592; Thompson on Negligence [2d ed.], §§ 2, 446.) Defendant-appellant was properly held liable to the plaintiff for the injuries sustained. (Mullins v. Siegel Cooper Co., 183 N. Y. 129; Paltey v. Egan, 200 N. Y. 83; Bergen v. Morton Amusement Co., 178 App. Div. 400; City of Buffalo v. Holloway, 7 N. Y. 493; Brusso v. City of Buffalo, 90 N. Y. 679; McMahon v. Second Ave. R. R. Co., 75 N. Y. 231; Johnson v. Friel, 50 N. Y. 679; Parsan v. Johnson, 208 N. Y. 337; Phoenix Bridge Co. v. Creem, 102 App. Div. 354; 185 N. Y. 580; Junkermann v. Tilyou Realty Co., 213 N. Y. 404; Barrett v. Lake Ontario Imp. Co., 174 N. Y. 310; Gardner v. Frederick, 25 App. Div. 521; 163 N. Y. 568; Hughes v. Harbor Assn., 131 App. Div. 185; Ya Deau v. Gasparrini, 170 N. Y. Supp. 1011.)

      George J. Stacy and James J. Mahoney for defendant-appellant.
    There was no large, deep hole or excavation or dangerous condition left unguarded by defendant-appellant at the place of the accident. (Beebe v. Schenectady Ry. Co., 164 App. Div. 774; Whalen v. Citizens Gas Light Co., 151 N. Y. 70.)

      Everett F. Warrington for defendants-respondents.
    The verdict in favor of defendants-respondents is supported by the evidence. (Mieuli v. New York & Queens County Ry. Co., 136 App. Div. 373; Grogan v. Brooklyn Heights R. R. Co., 107 App. Div. 254; Slomka v. Nassau El. R. R. Co., 191 App. Div. 727; Puczko v. Kovacs, 129 App. Div. 889; Larsen v. Lackawanna, 146 App. Div. 238; New York Evening Journal v. Simpson Advertising Agency, 56 Misc. Rep. 347; Cooper v. Fleischman, 85 Misc. Rep. 1; Viele v. Mack, 150 App. Div. 839; McDonald v. Metropolitan St. Ry. Co., 167 N. Y. 66; Berkowitz v. Consolidated Gas Co., 134 App. Div. 389; Meyers v. Hines, 199 App. Div. 594.)
   Crane, J.

Louis Krolick was the driver of a truck for Schwartz & Cohn, Inc., a domestic corporation. On the 29th day of September, 1925, he was driving the truck westerly through Vernon avenue, in the borough of Brooklyn, and over and across Sumner avenue, through which ran a street railroad. On the seat with him was a young boy named Lester Hirsch, who had been injured. The driver was taking him to a drug store. The boy was stretched out on the seat of the truck, while his father, the plaintiff in this case, Jacoby Hirsch, sat in the space between the dashboard and the seat, with his back toward the dashboard.

The Brooklyn, Queens County and Suburban Railroad Company had raised its tracks on Sumner avenue some six or seven inches to conform to a new grade, and had constructed on the farther, or west, side a ramp or inclined plane, running from the top of the rail to the level of the street. From the top of the rail this ramp extended on an incline out about two feet, where it reached the surface of the street. It was a gradual descent from the top to the surface of the highway. The width of this construction was sufficient for the passing of one truck —■ the narrowest estimate of its width is given as eight feet.

As Krolick was driving the truck over the tracks on Sumner avenue, the front wheel slipped off the edge of the ramp, giving the truck such a jar as to throw the plaintiff, Jacoby Hirsch, to the street, causing him the injuries for which he has brought this suit.

The Brooklyn City Railroad Company, having been made a party, the action against it was dismissed at the opening of the trial, on the consent of plaintiff’s counsel. The jury found a verdict in favor of the defendants Schwartz & Cohn, Inc., and Louis Krolick, the owner and driver of the truck, and gave a verdict of $15,000 against the Highway Improvement and Repair Company, Inc., the contractor, which had undertaken with the city of New York to asphalt Sumner avenue between Broadway and Fulton street. The action was separated by order of the court, resulting in two separate judgments in the trial court. Both judgments have been affirmed.

The judgment as to Schwartz & Cohn, Inc., and Louis Krolick, having been unanimously affirmed, the Appellate Division allowed an appeal to this court. This judgment must be affirmed. There are no questions of law in the case, as against these defendants, for us to review. The plaintiff having failed to move for the direction of a verdict at the end of the case, he is in the same position as a defendant who fails to make a similar motion; he concedes there is a question of fact to go to the jury; or, to state the legal situation with precision, there is no exception by the plaintiff at the end of the case to a ruling of the court which raises the question of law whether there should have been a recovery as matter of law. As to the judgment against the Highway Improvement and Repair Company, Inc., there being a dissent in the Appellate Division, the case is here as a matter of right, and after a review of the evidence, we are of the opinion that the judgment must be reversed.

On the 27th of March, 1925, the Highway Improvement and Repair Company, Inc., made a contract with the city of New York for regulating and repaving with permanent asphalt pavement on a six-inch concrete foundation, the roadway of Sumner avenue, from Broadway to Fulton ■street. This is a distance of about thirty blocks, or a little over a mile. As the grade of the street was to be raised, the Brooklyn, Queens County and Suburban Railroad Company was granted permission on the 13th day of June, 1925, by the Superintendent of Highways, to open the surface of Sumner avenue for the purpose of reconstructing its tracks; and in July it raised its rails at Vernon avenue seven inches, and constructed the ramp over the two feet to the west of the westerly rail. Every street surface railroad corporation is obliged to keep in permanent repair that portion of the street between the rails of its tracks and two feet in width outside of its tracks (Railroad Law; Cons. Laws, ch. 49, § 178). The ramp, constructed of dirt and cement, remained from July until November of the same year, when the Highway Improvement and Repair Company, Inc., removed it in order to asphalt the surface of the street level with'the rails. The accident happened, as before stated, on the 29th day of September, up to which time the repair company had not yet reached, in the progress of its asphalt work, the westerly side of Sumner avenue at Vernon avenue. The easterly side of Sumner avenue, and the space between the rails and the tracks at this point, had been asphalted level with the rails, but on the westerly side the surface of Sumner avenue was the same as it always had been; the old asphalt was still there in the same condition it was in at the time the contract was made with the city in March of 1925. This old surface of the street on the westerly side was from four to seven inches below the top of the westerly rail, or the new asphalted street to the east of the most westerly rail. The only work going on in the latter part of September on the westerly side at this intersection was the resetting of the curbstones for the sidewalk. This point at the intersection of Vernon avenue and Sumner avenue was reasphalted in November, or a month or more after the date of the accident.

As before stated, the ramp or incline, descending from four to seven inches from the rail to the old surface of Sumner avenue, was constructed and maintained during all of this time by the railroad company. It covered the two feet outside the westerly rail. The city of New York and the borough of Brooklyn permitted the street to be open for use. If there were anything dangerous about the construction/ it remained with the"implied consent of the city. TheTEighway Improvement and Repair Company, Inc., did not create the danger, if any, nor maintain it. The utmost negligence which can be claimed by the plaintiff is that the company was under duty to guard this ramp, or to enlarge, or make it safe. We can find no such duty arising out of the nature or progress of the work, nor in the contract with the city. When the contractor agreed with the city to reasphalt this mile of street, and undertook the work, it did not immediately become responsible for every previous defect existing in the highway; it was under a duty regarding its own work in the course of construction, but it assumed no obligation for the work of others or for holes or other obstructions in the street at points where it was not working. The city remained under its obligation to travelers to maintain the streets and highways in a reasonably safe condition, and the contractor had shared this duty only to the extent expressed in its contract. Subdivisions (T) and (U) of the mutual agreements, as contained on page 14 of the contract, are referred to by the plaintiff as creating a liability for this accident. They read as follows:

“ (T) The Contractor will observe the law and all ordinances of The City in relation to obstructing the streets, keeping open passageways and protecting the same where they are exposed and would be dangerous to the public travel, and such passageways, if across excavation or concrete, shall be planked or bridged by the Contractor, and he will also provide suitable means for passengers to get on or off street cars on the line of work during the construction period, as may be required, at his own expense.

(IT) During the performance of the work herein set forth, the Contractor shall place proper guards upon and around the same for the prevention of accidents, furnish, erect and maintain suitable detour and other signs controlling and directing traffic, and at night will put up and keep suitable and sufficient lights, and he will indemnify and save harmless The City against and from all suits and actions of every name and description brought against it, and all costs and damages to which it may be put on account or by reason of any injury or alleged injury to the person or property of another resulting from negligence or carelessness in the performance of the work, or in guarding the same, or from any improper materials used in its prosecution, or by or on account of any act or omission of the Contractor, his employees, agents, or subcontractors; and that the whole or so much of the moneys due to the Contractor, under and by virtue of this contract, as shall or may be considered necessary by the Comptroller of The City, may at its option be retained by The City until all such suits or claims for damages as aforesaid shall have been settled, and evidence to that effect furnished to the satisfaction of the Comptroller.”

These clauses refer to the work done by the contractor and to the excavations made and material placed by it in the street; they have no reference to obstructions or dangers created by others or previously existing in the highway before the contractor had reached the place in the progress of its work or had assumed control of the location for repair.

We fail to find sufficient evidence of any violation of duty or of negligence by the Highway Improvement and Repair Company, Inc., and are, therefore, obliged to reverse the judgment recovered below. The judgment of the Appellate Division and that of the Trial Term against the defendant Highway Improvement and Repair Company, Inc., should be reversed, and a new trial granted, with costs to abide the event. The judgment in favor of Schwartz & Cohn, Inc., and Louis Krolick should be affirmed,' with costs.

Cardozo, Ch. J., Lehman, Kellogg and O’Brien, JJ., concur; Pound and Hubbs, JJ., not sitting.

Judgment accordingly.


author: Cabdozo, Ch. J.

text:
    Pat Marr, Appellant, v. Joseph P. Tumulty et al., as Receivers of the Southern States Oil Corporation, Middle States Oil Corporation and Gulf States Oil and Refining Corporation et al., Respondents, Impleaded with Others,

      (Argued February 17, 1931;
    decided March 24, 1931.)

      Frank C. Laughlin, S. Lawrence Miller, Joseph W. Kirkpatrick and Stewart W. Bowers for appellant.
    Plaintiff is entitled to rescind the contract under which the stock was exchanged on the ground that the defendant Southern States Oil Corporation with which he contracted fraudulently corrupted his agents and caused them to violate their fiducial relationship to him by paying them a bribe in money and stock. (Donemar, Inc., v. Molloy, 252 N. Y. 360; Knauss v. K. B. Co., 142 N. Y. 70; Rintel v. Steinberg, 225 App. Div. 891; 252 N. Y. 561; Dickinson v. Tysen, 209 N. Y. 395; Erland v. Gibbons, 176 App. Div. 552; Jacobs v. Beyer, 141 App. Div. 49; Schank v. Schuchman, 212 N. Y. 352; Merchants Loan v. B. & O. R. R. Co., 222 N. Y. 344; Sirkin v. Fourteenth Street Store, 124 App. Div. 384; Harrington v. Victoria Graving Dock Co., L. R. 3 Q. B. D. 549.) It is immaterial that the certificates of stock tendered by plaintiff were not the original certificates delivered.to him, and that some of them bear dates subsequent to the institution of the action. (Buffalo Builders Supply Co. v. Reeb, 247 N. Y. 170; Guckenheimer v. Angevine, 81 N. Y. 394; Butler v. Prentiss, 158 N. Y. 49; United Zinc Co. v. Harwood, 216 Mass. 474; Harris v. Equitable Life Assur. Soc., 64 N. Y. 196; Bloomquist v. Farson, 222 N. Y. 375; Thackrah v. Haas, 119 U. S. 499; Hay v. Hay, 13 Hun, 315; Halpin v. Mutual Brewing Co., 20 App. Div. 583; Pritz v. Jones, 117 App. Div. 643; Continental Securities Co. v. Belmont, 206 N. Y. 713.) The Appellate Division erred in finding as a fact that the exchange of stock of the Marr Oil Corporation by plaintiff and his co-directors for stock of the Southern States Oil Corporation was negotiated and executed as an entire contract, and that plaintiff's tender was insufficient in that he failed to tender to Southern States Oil Corporation the amount of stock received both by plaintiff and his co-directors upon the exchange of stock, together with all dividends received thereon by plaintiff and his co-directors. (Tompkins v. Sheehan, 158 N. Y. 617; Portfolio v. Rubin, 233 N. Y. 439; Villard v. Mayer, 123 App. Div. 629; Heatter v. Day Publishing Co., 181 App. Div. 888; Adriatic Fire Ins. Co. v. Treadwell, 108 U. S. 361; Ludlow v. McCrea, 1 Wend. 228; Doran v. Swift, 1 Pen. [Del.] 457; Bank of Antigo v. Union Trust Co., 149 Ill. 343; Da Ponte v. Simonian, 127 Wash. 214; Bamberger Bros. v. Burrows, 145 Iowa, 441; Thompson v. Fesler, 74 Ind. App. 80.) Plaintiff, as a condition to a rescission in equity, is not required to tender stock received by the agents who were corrupted by the Southern States Oil Corporation. (Hammond v. Pennock, 61 N. Y. 145; Butler v. Prentiss, 158 N. Y. 49; Guckenheimer v. Angevine, 81 N. Y. 394; Heckscher v. Edenborn, 203 N. Y. 210; American Surety Co. v. Conner, 251 N. Y. 1; Goins v. Atwood, 204 App. Div. 439.) The stockholders of the Gulf States Oil Corporation have no such equitable interest in the Marr Oil Corporation stock exchanged by plaintiff as will defeat bis right to a rescission of the transaction and the recovery of the stock transferred. (Cox v. Stokes, 156 N. Y. 491; Holden v. New York & Erie Bank, 72 N. Y. 286; Cragie v. Hadley, 99 N. Y. 131; Title Guarantee & Trust Co. v. Pam, 232 N. Y. 441; Giles D. M. Co. v. Klauder-Weldon D. M. Co., 233 N. Y. 470; Broad & Lackawanna Realty Co. v. Breitung, 239 N. Y. 154; Corrigan v. Bobbs-Merrill Co., 228 N. Y. 58; Shattuck v. Guardian Trust Co., 204 N. Y. 200; Botway v. Schnitzer, 217 App. Div. 468; Crooks v. People’s Nat. Bank, 72 App. Div. 331; 177 N. Y. 68.) The complaint should not be dismissed if it should be determined that there was an insufficiency in the amount of the tender made by plaintiff, or that it was not in every respect proper in form, for a court of equity will, mold the relief to the facts and circumstances of the particular case and provide in its decree for any adjustments of: equities between the parties and the conditions upon which the rescission of a contract and the restoration of the status quo of the parties thereto shall be effected. (Gould v. Cayuga County Nat. Bank, 86 N. Y. 75; Butler v. Prentiss, 158 N. Y. 49; United Zinc Co. v. Harwood, 216 Mass. 474; Buffalo Builders Supply Co. v. Reeb, 247 N. Y. 170; Harris v. Equitable Life Assur. Soc., 64 N. Y. 196; Bloomquist v. Farson, 222 N. Y. 375; Thackrah v. Haas, 119 U. S. 499; Baker v. Ziegler, 56 Hun, 405; Hay v. Hay, 13 Hun, 315; Halpin v. Mutual Brewing Co., 20 App. Div. 583; Pritz v. Jones, 117 App. Div. 643; Continental Securities Co. v. Belmont, 206 N. Y. 7; Moore v. Mutual Reserve Fund Life Assn., 121 App. Div. 335.)

      John J. Curtin, Adelbert P. Rich, Wesley S. Sawyer and William R. Willcox for respondents.
    Plaintiff not having tendered or offered to restore all of the property or benefits received in the trade, rescission was properly denied. (Graham v. Meyer, 99 N. Y. 611; Schiffer v. Dietz, 83 N. Y. 308; Guggenheimer v. Angevine, 81 N. Y. 394; Cox v. Stokes, 156 N. Y. 491; Getty v. Devlin, 54 N. Y. 403; City of Ironwood v. Wickes, 93 App. Div. 164; Telford v. Metropolitan Life Ins. Co., 223 App. Div. 175; Anderson v. Smithley, 141 App. Div. 421.) Plaintiff has not and cannot restore the defendants to status quo and the complaint was properly dismissed on that ground. (Gravenhorst v. Zimmerman, 236 N. Y. 22; Graham v. Meyer, 99 N. Y. 611; Cox v. Stokes, 156 N. Y. 491; Slater v. Slater, 208 App. Div. 567; Sheffield Nickel Co. v. Unwin, L. R. 2 Q. B. D. 214; Clarke v. Dickson, L. J. [1858] Q. B. 223; Snow v. Alley, 144 Mass. 546.) The complaint was properly dismissed because the rights of innocent third parties had intervened. (Beckwith v. Sheldon, 165 Cal. 319; Dettra v. Kestner, 147 Penn. St. 566; Jewell v. McIntyre, 62 App. Div. 396; Snow v. Alley, 144 Mass. 546.)
   Cabdozo, Ch. J.

Plaintiff brings this action for the rescission of a contract whereby shares of stock of the Marr Oil Corporation were sold to the Southern States Oil Corporation in exchange for shares of stock of the last-mentioned corporation.

He had a judgment in his favor at the Special Term. The Appellate Division reversed and dismissed the complaint, holding that the plaintiff had failed to tender all the benefits received as a result of the exchange, and that purchasers for value and in good faith had acquired intervening rights.

In August, 1923, plaintiff was the president and principal shareholder of the Marr Oil Corporation. He owned all the shares of class A stock (25,000), and also upwards of 87,000 shares of class B. Class A shares were the only ones with voting power. Class B shares were held, not only by the plaintiff, but also by his co-directors and by others.

Two of the co-directors, Rottenberg and McFadden, undertook to negotiate a sale of plaintiff’s shares to the Southern States Oil Corporation, represented by Ferris, its president, and Haskell, chairman of the board. The shares of the co-directors were to be sold at the same time.

A proposal to sell for cash was rejected by the buyer. There was substituted an exchange, the plaintiff and his co-directors assigning their shares in the Marr company and receiving in return at an agreed ratio the shares of Southern States. At the outset Rottenberg and McFadden, the agents conducting the negotiations, gave notice to Ferris, the representative of the Southern States, that they would expect “ to be taken care of ” for their services in recommending the exchange. To this there was ássent. They received a secret gratuity of $50,000 in cash ($25,000 each), and 7,039 shares in addition to the number due to them at the ratio of exchange made known to the others.

The Southern corporation did not limit its wrongdoing to the corruption of the plaintiff’s agents (Donemar, Inc., v. Malloy, 252 N. Y. 360). It added the offense of fraud. There were false representations as to its plant, its earnings, its capacity, and the value of its shares. The fraud is found by the trial judge, and the Appellate Division has not disturbed the findings. Found also is the bribe. The exchange of shares was made on August 30, 1923. Not till July, 1925, did the plaintiff learn that his agents were disloyal. This action was begun the following November.

(1) We deal first with the ruling that the tender was inadequate.

(a) The defendants make the objection that the plaintiff did not offer to return to the Southern company all the shares of Southern stock acquired in exchange.

He tendered all the shares acquired by himself and by his innocent co-directors. He did not tender any of the shares acquired by the guilty.

The omission does not avail to thwart a court of equity in decreeing a rescission. Rottenberg and McFadden were parties to a fraudulent conspiracy. The refusal of the conspirators to join in the undoing of the wrong may not be used as an excuse by partners in their guilt to keep the wrong alive. Equity is not crippled at such times by an inexorable formula. In exacting the return of benefits as a condition of rescission it proportions the exaction to the justice of the case before it (Buffalo Builders Supply Co. v. Reeb, 247 N. Y. 170, 175, 176; Butler v. Prentiss, 158 N. Y. 49, 63; Heckscher v. Edenborn, 203 N. Y. 210, 227). “ The wrongdoer will be left in the toils of his duplicity ” (American Surety Co. v. Conner, 251 N. Y. 1, 10).

(b) The defendants make the objection that the plaintiff did not return, or offer to return, $66,470, with interest from December 6, 1923, the sum received upon a resale to the Southern States, or to some allied syndicate, of 2,890 shares out of the total previously acquired.

What the plaintiff has done is to buy back in the market at a nominal price an equivalent number of certificates, and to make tender of these as a substitute for the certificates acquired at the time of the exchange. This does not exhaust the measure of his duty. If in ignorance of the fraud he has profited through the intervening ownership by turning the certificates into cash when market prices were high, he is not at liberty to keep the cash, and offer as a substitute certificates bought back when the market price was nominal.

The tender was deficient, but the deficiency does not exact the dismissal of the complaint. A different situation would be here if the action were at law upon the basis of a rescission already effectively declared. Instead, it is in equity to procure the declaration of a rescission on whatever terms may be just (Buffalo Builders Supply Co. v. Reeb, supra; Allerton v. Allerton, 50 N. Y. 670; Vail v. Reynolds, 118 N. Y. 297, 302; Thomas v. Beals, 154 Mass. 51). Suitable conditions may be imposed by the decree (Thomas v. Beals, supra; Allerton v. Allerton, supra; American Law Inst., Restatement, Contracts, § 98A).

(c) The defendants make the objection that there were other intervening sales, and that the profits growing out of them should have been included in the tender.

Included they should have been if intervening sales were made. We cannot find in the record any evidence of the making. The plaintiff denies that he made any, though conceding that he tried, and there is nothing to contradict him. The whole case for the defendants in that regard is built upon the circumstance that some of the certificates tendered on the trial bear dates subsequent to the date of the beginning of the action. These certificates, however, represent only 2,475 shares, and by concession the plaintiff had to buy back 2,890 shares in replacement of the shares disposed of to the syndicate. There is nothing in the purchase that is evidence of other trades or profits.

The fact is not ignored that many of the earlier certificotes were made out in the name of Hale, the plaintiff’s assignee. Hale took them from the plaintiff in 1924, but merely as a dummy,” to sell them if he could. The uncontradicted testimony is that a sale was then impossible. What the plaintiff tells us to that effect does not rest on his word only. It is corroborated by the fact that the certificates were still in the name of Hale when tendered on the trial. It is corroborated even more convincingly by the fact that the market for the shares collapsed about Christmas, 1923, and that sales thereafter were impossible at more than a nonfinal price.

We discover no basis for a finding that the plaintiff had made profits (aside from the item of $66,470) which he was under a duty to return.

(2) We are now brought to the objection that rescission is precluded as a result of intervening interests.

The shares of the Marr Oil Corporation acquired by the Southern company in August, 1923, were transferred the following November to the Gulf States Oil and Refining Corporation. Ferris and Haskell, the officers of the Southern company, who were parties to the fraud and bribery, were officers also of the Gulf company, and acted in its behalf. What was notice to them was notice also to the company (Holden v. N. Y. & Erie Bank, 72 N. Y. 286; Title Guarantee & Trust Co. v. Pam, 232 N. Y. 441, 456, 457). Rescission is not checked until the property to be reclaimed has passed into the ownership of a purchaser for value without notice of the wrong.

The record leaves it uncertain whether the shares were transferred by the Southern company directly, or indirectly through another company, the Middle States Oil Corporation. The difference is not important. The two corporations were controlled by the same officers. The mazes of their interlocking directorates are not easily unraveled. Enough for present purposes that the common elements are adequate to charge each of them with notice (Mammoth Oil Co. v. United States, 275 U. S. 13, 54).

The defendants argue with earnestness that many innocent persons, strangers to the defendants’ wrong, have become shareholders in the Gulf corporation since November, 1923, and have done so in the belief that the Marr lands and leases were included in the assets. This does not avail to give validity to an assignment accepted by the corporation with notice of its tainted origin. The title to corporate assets is not vested in the shareholders. The title is in the corporation, and if voidable in its inception remains voidable thereafter without reference to changes in the distribution of the shares. The shareholders must suffer for the wrongs committed by their officers (Gardner v. Keogh Mfg. Co., 63 Hun, 519, 520; City Equity Co. v. Elm Park Realty Co., 135 App. Div. 856).

The defendants argue also that the transfer of the Marr shares to the Gulf States Oil and Refining Corporation, if set aside now, will work injustice to the Island Refining Corporation or to a reorganization committee of its bondholders. The documents are complicated and not easily understood. Analysis of their provisions does not sustain the claim of hardship.

There were two corporations, the Gulf Coast Refining Corporation (known as the refining company) and the Gulf States Oil and Refining Corporation (known as the operating company). The Island committee made a contract with the Southern States Company and the Middle States Company in anticipation of the formation of the refining and operating companies. The Island committee was to make certain transfers to the two Gulf companies, receiving back as consideration the mortgage bonds of the refining company. It was to receive as additional consideration the stock of the refining company, but the stock, unlike the bonds, was to be assigned after it was received. The Southern and the Middle companies were to transfer to the Gulf operating company oil lands and leases, including, it seems, those represented by the shares of stock in suit. For this they were to get a large block of the common stock of the operating company. In brief, the Island company was to be paid in bonds of the one corporation and the Southern and Middle in shares of the other.

The transaction, thus analyzed, does not offer an obstacle to the plaintiff in his claim for restitution. To set aside the transfer of the shares in suit will leave the Island committee in the ownership of everything that it was to receive from the Gulf companies or either of them in payment for its assets. It will still hold its mortgage on the property of the Gulf Coast Refining Company, and the bonds secured thereby. The only Gulf company that will be the poorer as the result of the rescission will be the operating company, whose stock was issued in payment, not for any Island assets, but for transfers by the Southern and the Middle corporations, privies to the fraud.

One provision of the Island contract ought to be added to the foregoing summary lest it be thought to have been forgotten. The Southern and the Middle corporations, after receiving the stock of the operating company, were to assign about ten per cent, of it to the Island committee. This latter assignment was not payment for anything conveyed by the Island committee to the Gulf operating company. It was payment for shares of the refining company assigned by the Island committee to the Middle company and the Southern.

(3) The conditions prescribed by the trial court are erroneous in that they are narrower than the plaintiff’s tender at the trial.

The plaintiff offered to return, not only his own certificates with dividends paid thereon, but also the certificates and dividends received by his associates other than the conspirators. The decree of rescission erroneously exempts him from the duty of restoring any certificates and dividends other than his own.

The judgment of the Appellate Division should be reversed, and that of the Special Term modified by providing that as a condition of the rescission the plaintiff shall pay to the defendants, receivers of the Southern States Oil Corporation, the sum of $66,470, with interest from December 6,1923, and shall also restore to them the shares of stock received by his associates (other than Rottenberg and McFadden), with any dividends paid thereon and interest from the dates of payment, and as so modified the judgment should be affirmed, without costs in the Appellate Division or in this court. (See 256 N. Y. 664.)

Crane, Lehman, Kellogg and O’Brien, JJ., concur; Pound and Hubbs, JJ., not sitting.

Judgment accordingly.


author: Pound, J.

text:
    Morris J. Goldstein, Respondent, v. National Liberty Insurance Company of America, Appellant, Impleaded with Another.
    (Argued February 16, 1931;
    decided March 24, 1931.)

      Louis S. Posner, Maurice Finkelstein and Samuel Markle for appellant.
    The warranty in the policy that the premises were owned by the corporation was a breach of the sole and unconditional ownership clause which barred a recovery by the plaintiff even though he was a mortgagee under the standard mortgagee clause. (Weed v. L. & L. Fire Ins. Co., 116 N. Y. 106; Walton v. Agricultural Ins. Co., 116 N. Y. 337; Germania Fire Ins. Co. v. Home Ins. Co., 144 N. Y. 195; Rosenstein v. Traders’ Ins. Co., 79 App. Div. 481; Graham v. Fireman’s Ins. Co., 87 N. Y. 69; Heilbrunn v. German Alliance Ins. Co., 140 App. Div. 557; Genesee Falls Savings Assn. v. U. S. Fire Ins. Co., 16 App. Div. 587; Cole v. Germania Fire Ins. Co., 99 N. Y. 36.) The breach of warranty that the buildings were in course of construction bars a recovery by the plaintiff. (Halpin v. Phenix Ins. Co., 118 N. Y. 165; Halpin v. Ætna Fire Ins. Co., 120 N. Y. 70; O’Brien v. Prescott Ins. Co., 134 N. Y. 28; Northrup v. Piza, 43 App. Div. 284; 167 N. Y. 578; Dodge v. York Fire Ins. Co., 2 O. W. N. 571; Dodge v. Western Canada Fire Ins. Co., 6 Dom. L. R. 355; Young Men’s Lyceum v. National Ben Franklin Fire Ins. Co., 177 App. Div. 351; Hartwig v. American Ins. Co., 169 App. Div. 60.)

      Frank C. Laughlin, Joseph W. Kirkpatrick and Stewart W. Bowers for respondent.
    The trial court erroneously held that plaintiff as mortgagee could not recover under the policy because the insured falsely represented to defendant on the issuance of the policy that the five houses on the premises insured were in course of construction. (Browning v. Home Ins. Co., 71 N. Y. 508; Woodruff v. Imperial Fire Ins. Co., 83 N. Y. 133; O’ Neil v. Buffalo Ins.

      Co., 3 N. Y. 122; Hill v. Hibernia Ins. Co., 10 Hun, 26; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Dodge v. York Fire Ins. Co., 2 O. W. N. 571; Dodge v. Western Canada Fire Ins. Co., 6 Dom. L. R. 355; Dilliber v. Home Life Ins. Co., 69 N. Y. 256; Robinson v. Supreme Commandery, 77 App. Div. 215; 177 N. Y. 564; Dineen v. General Accident Ins. Co., 126 App. Div. 167; Burleigh v. Gebhard Fire Ins. Co., 90 N. Y. 220.) There was no breach of warranty invalidating the policy as to the plaintiff by reason of the fact that the corporation, through an inadvertence was named the insured instead of the individual, who apparently held the record title of the insured premises. (Pacific Fire Ins. Co. v. Morris Co., 12 S. W. Rep. [2d] 971; Phoenix Assur. Co. v. Deavenport, 16 Tex. Civ. App. 283; Syndicate Ins. Co. v. Bohn, 65 Fed. Rep. 165; Hastings v. Westchester Fire Ins. Co., 73 N. Y. 141; Riggs v. C. N. Ins. Co., 125 N. Y. 7; Lipschitz v. Hotel Clark, 226 App. Div. 839; 252 N. Y. 518; Clinton v. Hope Ins. Co., 45 N. Y. 454; Weed v. H. B. F. Ins. Co., 133 N. Y. 394; Noyes v. Hartford Fire Ins. Co., 54 N. Y. 668; Wood v. American Fire Ins. Co., 149 N. Y. 382; Michael v. Prussian Nat. Ins. Co., 171 N. Y. 25.) Misrepresentation of ownership of property by the mortgagor or owner does not bar recovery in an action by the mortgagee insured under a mortgagee clause. (Matter of Aioss v. Sardo, 249 N. Y. 270; Perretta v. St. Paul Fire & Marine Ins. Co., 106 Misc. Rep. 91; Commercial Mutual Fire Ins. Co. v. Crawford, 219 App. Div. 110; Young Men’s Lyceum v. Nat. Ben Franklin F. Ins. Co., 177 App. Div. 351; Jammal v. Girard Fire & Marine Ins. Co., 210 App. Div. 145; Syndicate Ins. Co. v. Bohn, 65 Fed. Rep. 165; Eddy v. L. A. Corp., 143 N. Y. 311.)
   Pound, J.

This is an action on a policy of fire insurance brought by plaintiff as mortgagee under a standard mortgagee clause, of real property in Nassau county, to recover for a fire loss thereon. The title to the premises was in the individual “Abraham B. Schlowsky.” The insurance policy insured the corporation “A. B. Schlowsky, Inc.,” although the individual was the owner of the corporate stock. The buildings were described in the policy as “ in courge of construction.” The insurer defends on the ground of breach of warranty (1) in that the interest of the insured was other than that of unconditional and sole ownership, and (2) in that the buildings were not “ in course of construction ” in that construction work had been abandoned thereon for a period of five months before the policy was issued. The trial court dismissed the complaint on the ground that the defense of breach of warranty that the buildings were “ in course of construction ” was established. The Appellate Division reversed on the ground that “ there were facts presented which required the submission of the case to the jury.” (228 App. Div. 833.)

If we were to proceed on the theory that a policy of fire insurance, invalid in its inception as to the insured by reason of breach of warranty as to ownership and nature of occupancy, was invalid as to the mortgagee under the standard mortgagee clause, we might find at least two questions of fact for the jury: (a) Is the corporation so completely an entity, apart from the individual owner of its stock, as to prevent a recovery on the policy by the individual who owns all or substantially all the stock? (b) Were the buildings correctly described as “ in course of construction ” when construction had been suspended for a considerable period from lack of funds to continue the work?

But these questions fade out of the case if we hold as matter of law that the standard mortgagee clause creates an independent contract of insurance for the separate benefit of the mortgagee which is valid and enforcible in its inception and so continues until rendered invalid by a subsequent act or neglect of the mortgagee.

The gradual evolution of the mortgagee’s rights may be traced in the reports. In Grosvenor v. Atlantic Fire Ins. Co. (17 N. Y. 391) it was held under the old clause reading loss if any payable to X as his mortgage interest may appear,” that where a fire insurance policy names the owner of the property as th6 person insured and declares the damages in case of loss to be payable to another person therein named as mortgagee, the latter cannot recover in case of a breach of the conditions of the policy by the mortgagor. So when the insured had conveyed the property after the policy had been issued he had no insurable interest at the time of the fire and no claim for indemnity and the mortgagee stood in no better position. “ The mortgagor must sustain a loss for which the insurers were hable, before the, party appointed to receive the money would have a right to claim it ” (p. 395).

The standard mortgagee clause is drawn more adequately to protect the mortgagee. It provides:

. Loss or damage, if any, under this policy, shall be payable to M. J. Goldstein as mortgagee, (or trustee) as interest may appear, and this insurance, as to the interest of. the mortgagee (or trustee) only therein shall not be invalidated by any act or neglect of the mortgagor, or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy; provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same.”

The insurance company contends that this clause is predicated upon a policy valid in its inception and does not apply to a policy void as to the insured by reason of breach of warranty as to ownership or nature of occupancy. It urges that the question is not an open one in this court. In Graham v. Fireman’s Ins. Co. (87 N. Y. 69) the mortgagee clause read as follows:

“It is hereby agreed, that this insurance, as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy.”

The owner of the insured premises was an infant three years of age. The court held that a misrepresentation as to the ownership of the insured premises made by the applicant for insurance was not an “ act or neglect of the mortgagor or owner of the property ” insured. The court said:

“ This clause provides that the interest of the mortgagee shall not be invalidated by any act or neglect of the mortgagor or owner of the property, and it clearly contemplated a case where the owner could act or could neglect, and not a case where the policy was issued in the name of an infant, who, by reason of its incapacity, could not furnish any protection to the company whatever ” (p. 78). Nothing else was essential to the decision.

Here we have, on the contrary, acts or neglects of the owner of the property, first, in taking out the insurance in the corporate name instead of his own name, and secondly, in describing the premises as “in course of construction.” These acts or neglects, if they are breaches of warranty as to him, come clearly within the language of the mortgagee clause. If we were to add to the words of the clause the further words, “ subsequent to the issuance of the policy ” we would be limiting its terms by construction without justification or excuse,

So it has been held in Reed v. Firemen’s Ins. Co. (81 N. J. Law, 523) where the court said:

“ It [insurance company] has independently promised to pay the mortgagee’s loss, and has represented the instrument to be a policy, and has, by referring to it, made use of that instrument as a valid subsisting agreement, for the purpose of more definitely, by such reference, manifesting its contract with the mortgagee. Therefore, the wording of the clause should be taken distinctly to declare, that the policy is valid and enforceable, and will so continue until rendered invalid by a subsequent act or neglect. The words of the clause ' loss shall be payable,’ amount to a waiver by the company, in favor of the mortgagee, of the effect of any prior or contemporaneous act of the owner which would have a vitiating effect upon the policy,” and by a strong preponderance of authority elsewhere. (Union Trust Co. v. Philadelphia Fire & Marine Ins. Co., 127 Me. 528, and cases cited.)

The holding is also in accord with the principle stated in Hastings v. Westchester Fire Ins. Co. (73 N. Y. 141) in which the court said:

It [the mortgagee clause] was an independent agreement partaking in no sense of the character of an assignment of a policy of insurance, but one in which the mortgagees were recognized as a separate party, having distinct rights, and entitled to receive the full amount of insurance money, without any regard whatever to the owner of the property” (p. 148).

It follows that a policy of fire insurance in the standard form, which is void as to the owner, because of his breach of warranty as to ownership and occupancy, may, under the standard mortgagee clause, be valid as to a mortgagee.

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

Cardozo, Ch. J., Crane, Lehman, Kellogg and O’Brien, JJ., concur; Hubbs, J., not sitting.

Order affirmed, etc.


text:
    Michael A. Smith, Respondent, v. Sophie Cohen et al., Appellants.
    (Argued February 13, 1931;
    decided March 24, 1931.)

      Ellsworth Baker for appellants.
    The complaint does not state a cause of action. (Brackett v. Griswold, 112 N. Y. 455; Phyfe v. Cohen, 74 Misc. Rep. 269; Hickey v. Morrell, 102 N. Y. 461; Gill v. Jamaica Bay Co., 171 App. Div. 165.)

      John D. Lyons and Nellie Childs Smith for respondent.
    The complaint states a cause of action in tort. (Brackett v. Griswold, 112 N. Y. 455.) There was ample proof from which the jury found fraud of the defendants and a wrongful conversion of plaintiff’s property. (Decker v. Matthews, 12 N. Y. 313; Deyo v. Hudson, 191 App. Div. 655; Stahl v. Dorman, 23 Misc. Rep. 461; Pease v. Smith, 61 N. Y. 477.)
   Crane, J.

For work and labor performed the defendants gave to the plaintiff, a builder, their promissory note in writing, dated September 25, 1929, for $790.85 payable in four months, with interest. Wanting cash badly, the parties met to carry out a new arrangement described by the plaintiff as follows:

“ They told me if I would bring my old note and agree to take one hundred dollars less, I would receive the cash. I was to meet them the next day in Monticello, bringing this old note, which I did. I went to Monticello on the eleventh day of December, nineteen hundred twenty-nine. Mrs. Cohen asked me for the note. I gave her the note. She said ' Come in here ’ and she walked several doors to a stationery store. She then told me to wait in the front of the store and she went in the back room. What she did I don’t know. She had my note. While I was waiting in the front, Mr. Cohen came in and walked directly to the back room. In space of ten minutes then both came in and either Mr. or Mrs. Cohen — I forget which — handed me a new note and told me to take that to the bank and get my money. I took the note. I looked at it. It was made out to Michael A. Smith. I handed it to Mrs. Cohen and told her it was wrong; that I had come there with the agreement to surrender my old note and receive one hundred dollars less in cash — not to receive another paper. She said it was all right; that she had made arrangements; to take it to the bank and I would get the money. I took that note to Mr. Osborne and asked him for the money.”

Mr. Osborne refused to cash the note unless the plaintiff indorsed it, which he says was not the understanding with the defendants. “ A. They told me they had made, or could make, arrangements with Mr. Osborne to get me the money, if I would accept one hundred dollars less on that note, and I would not have to indorse any notes; that this was to be cash, if I surrendered the old one.”

On this state of facts the plaintiff has sued the defendants for fraud in obtaining the first note by deception, trick and subterfuge.

If we should consider the case alleged as made out it is quite apparent that the result cannot be sustained, as there is no proof of damage. The first note of four months was destroyed by Mrs. Cohen when she received it, but she did not and could not destroy the indebtedness. If the defendants were good financially the debt was as good as the note; in this case a judgment for the one could have been as easily collected or obtained as for the other. Damages on the fraud charge would be the value of the first note, not merely its amount. If the defendants were insolvent it had little or no value. There is no proof of damage. What the plaintiff should have done was to have tendered back the second note received for misunderstanding or mistake and to have sued on the indebtedness or the first note. An action at law under the facts of this case could have been maintained on the lost note — the one destroyed by the maker. (Bridgeford v. Masonville Mfg. Co., 34 Conn. 546; Matthews v. Matthews, 97 Me. 40; Kirkwood v. First National Bank, 40 Neb. 484.)

Furthermore, we do not see the fraud in this case. The plaintiff saw that the second note was for eleven months, without interest, and supposed he could get it cashed without his indorsement as payee. They told me they had made or could make arrangements with Mr. Osborne to get me the money * * * and I would not have to indorse any notes.”

What the defendants could do with the bank was at best a boast or a presumption and not the statement of an existing fact. Great expectations often prove disappointing but do not prove fraud. The evidence is too slim to sustain this legal accusation and the judgment must be reversed.

Although the defendants owe the money, the courts cannot give judgment as on contract when the complaint is in fraud. (Civ. Prac. Act, § 826.)

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

Gardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur Judgments reversed, etc.


text:
    Anna F. Ostrowe, Respondent, v. Richard L. Lee, Appellant.
    (Submitted February 9, 1931;
    decided March 24, 1931.)

      Henry Waldman and Joseph G. Abramson for appellant.
    The dictation of a libelous letter to one’s stenographer, followed by transcription and mailing, is not a publication. (Owen v. Ogilvie Pub. Co., 32 App. Div. 465; Wells v. Belstrat Hotel Corp., 212 App. Div. 366; Kennedy v. Butler, 245 N. Y. 204; Senamcour v. Societe Le Prevoyance, 146 Mass. 616; Landis v. Campbell, 79 Mo. 433; Gambrill v. Schooley, 93 Md. 48; Cartwright Caps Co. v. Fischel & Kaufman, 113 Miss. 359; Nelson v. Whitten, 272 Fed. Rep. 135; Pullman v. Hill, 1 Q. B. 524; Boxsius v. Goblet Freres, 1 Q. B. 843; Edmonstone v. Birch & Co., 1 K. B. 371; Berry v. City of N. Y. Ins. Co., 210 Ala. 369; Ferndon v. Dickens, 161 Ala. 181; Snyder v. Andrews, 6 Barb. 43; Grove Furniture Co. v. Right, 265 Fed. Rep. 873; Freeman v. Dayton Scale Co., 19 S. W. Rep. 255.)

      Alexander Pfeiffer and Jacob B. Goldberg for respondent.
    The dictation of the libel by the defendant to the stenographer and the reading and transcription thereof by her constitutes a publication of the libel. (Gambrill v. Schooley, 93 Md. 48; Williamson v. Freer, L. R. 9 C. P. 393; Nelson v. Whitten, 272 Fed. Rep. 135; Ferndon v. Dickens, 161 Ala. 181; Berry v. City of N. Y. Ins. Co., 219 Ala. 369; Snyder v. Andrews, 6 Barb. 43; Owen v. Ogilvie Pub. Co., 32 App. Div. 465; Wells v. Belstrat Hotel Corp., 212 App. Div. 366; Kennedy v. Butler, 245 N. Y. 204; Cartwright Caps Co. v. Fischel & Kaufman, 113 Miss. 359.)
   Cardozo, Ch. J.

The complaint states, or attempts to state, two causes of action, one for libel and the other for slander. In the first, the plaintiff charges that the defendant composed a letter accusing the plaintiff of the crime of larceny; that he dictated this letter to his stenographer; that the stenographer, in obedience to his orders, read the notes and transcribed them; and that the letter so transcribed was received by the plaintiff through the mails. In the second cause of action, the plaintiff charges that a like defamatory charge was made over the telephone.

The defendant concedes upon this appeal that the second cause of action states the publication of a slander. The question is whether the first states the publication of a libel.

In the law of defamation, publication is a term of art (Odgers, Libel and Slander, p. 131; Pollock, Torts [13th ed.], p. 255). A defamatory writing is not published if it is read by no one but the one defamed. Published it is, however, as soon as read by any one else. The reader may be a telegraph operator (Williamson v. Frere, L. R. 9 C. P. 393), or the compositor in a printing house (Baldwin v. Elphinston, 2 W. Bl. 1037), or the copyist who reproduces a long hand draft (Puterbaugh v. Gold Medal F. M. Co., 7 Ont. L. R. 582, 586). The legal consequence is not altered where the symbols reproduced or interpreted are the notes of a stenographer. Publication there still is as a result of the dictation, at least where the notes have been examined or transcribed (Pullman v. Hill & Co., [1891] 1 Q. B. 524; Boxsius v. Goblet Frères, [1894] 1 Q. B. 842; Gambrill v. Schooley, 93 Md. 48; Ferdon v. Dickens, 161 Ala. 181; Berry v. City of New York Ins. Co., 210 Ala. 369, 371; Nelson v. Whitten, 272 Fed. Rep. 135; Puterbaugh v. Gold Medal F. M. Co., supra; Gatley, Libel and Slander, p. 91; cf. Kennedy v. Butler, Inc., 245 N. Y. 204). Enough that a writing defamatory in content has been read and understood at the behest of the defamer (1 Street, Foundations of Legal Liability, p. 297).

The argument is made that the wrong in such a case is slander and not libel (Salmond, Torts [7th ed.], p. 530; Odgers, Libel and Slander, p. 135; Angelini v. Antico, 31 New Zealand Rep. 841; cf. Osborn v. Boulter & Son, [1930] 2 K B. 226, at pp. 231, 236, 237). “ It is difficult to see how A can publish to B a document which is written by B himself (Salmond, supra). The criticism would be just if B were the author of the document, or wrote it of his own motion. The point is dulled when we remember that in noting and transcribing he does the bidding of the defamer, who has used him as an instrument to give existence to the writing (Street, supra, p. 297). Very often a stenographer does not grasp the meaning of dictated words till the dictation is over and the symbols have been read. This is particularly likely to be the case where a defamatory charge is made equivocally or with evasive innuendoes. The author who directs his copyist to read, has displayed the writing to the reader as truly and effectively as if he had copied it himself.

To hold otherwise is to lose sight of history and origins. The schism in the law of defamation between the older wrong of slander and the newer one of libel is not the product of mere accident (Veeder, The History of the Law of Defamation, vol. 3, Essays in Anglo-American Legal History, 459, 461, 467, 468, 471; Fisher, The History of the Law of Libel, 10 Law Quarterly Review, 158; 1 Street, Foundations of Legal Liability, pp. 291, 292; 8 Holdsworth, History of English Law, p. 365). It has its genesis in evils which the years have not erased. Many things that are defamatory may be said with impunity through the medium of speech. Not so, however, when speech is caught upon the wing and transmuted into print. What gives the sting to the writing is its permanence of form. The spoken word dissolves, but the written one abides and' “ perpetuates the scandal ” (Harman and Delany, Fitzgibbon, 253; Veeder, supra, p. 472; Street, supra, p. 294). When one speaks of a writing in this connection, one does not limit oneself to writings in manuscripts or books. Any symbol suffices — pictures, hieroglyphics, shorthand notes — if only what is written is intelligible to him who reads (Odgers, Libel and Slander, pp. 7, 21). There is publication of a libel if a stenographer reads the notes that have been taken by another. Neither the evil nor the result is different when the notes that he reads have been taken by himself (Street, supra, p. 297, n).

The soundness of a conclusion may not infrequently be tested by its consequences. Let us assume a case where words, unaccompanied by special damage, are libelous if written, but are not slanderous per se. Let us assume that the defamer has a grudge that will be served by defaming his victim in the thought of a particular person. Let us assume that this person is also bis stenographer. With that mind he dictates the defamatory words and instructs the stenographer to preserve and read what has been written. By hypothesis, the one defamed is without a remedy for slander. By hypothesis, too, a writing has been created at the instance of the defamer and lodged in the custody of the very person whose mind was to be poisoned. The outrage is without redress if the libel is not published when written out and read.

There are decisions to the effect that publication to a stenographer, unless impelled by actual malice, is protected by a privilege whenever privilege attaches to the principal communication to which it is an incident (Boxsius v. Goblet Frères, L. R. [1894] 1 Q. B. 842; Osborn v. Boulter & Son, L. R. [1930] 2 K. B. 226; Roff v. B. & F. Chemical Mfg. Co., [1918] 2 K. B. 677, 684). If a business communication is privileged, as being made on a privileged occasion, the privilege covers all incidents of the transaction and treatment of that communication which are in accordance with the reasonable and usual course of business ” (Edmonson v. Birch & Co., (1907) 1 K. B. 371, 382.). We make no attempt at this time to state with precision the limits of this privilege, for no such question is here upon the record now before us. The plaintiff charges malice, and privilege is a defense to be pleaded and proved (Kennedy v. Butler, Inc., 245 N. Y. 204, 207). Enough for present purposes that the complaint is good upon its face.

The order should be affirmed, with costs, and the question certified answered yes.”

Pound, Crane and O’Brien, JJ., concur; Lehman, Kellogg and Hubbs, JJ., dissent.

Order affirmed, etc.