author: Per Curiam.

text:
    A. Katherine Long, Appellant, v. Parmelee Transportation Company, Respondent, et al., Defendants.
    Argued November 27, 1950;
    decided March 8, 1951.

      Ralph Stout and Thomas O’Rourke Gallagher for appellant.
    I. The evidence establishes that defendant Parmelee, the parent corporation of M. C. T. Co., Inc., fraudulently diverted and appropriated to itself moneys which properly belonged to its subsidiary corporation. (Farmers’ Loan & Trust Co. v. New York & Northern Ry. Co., 150 N. Y. 410; Pennsylvania Canal Co. v. Brown, 235 F. 669; Southern Pacific Co. v. Bogert, 250 U. S. 483; Green v. People’s Gas Light & Coke Co., 118 Misc. 1, 206 App. Div. 647; Overfield v. Pennroad Corp., 42 F. Supp. 586; Barrie v. United Ry. Co., 125 Mo. App. 96; Sage v. Culver, 147 N. Y. 241; Baltimore & Ohio Tel. Co. v. Interstate Tel. Co., 54 F. 50.) II. The new findings of the Appellate Division that the payments made to Parmelee under the agreement were based upon a fair and adequate consideration, and that Parmelee acted throughout in g'ood faith, are not merely contrary to the evidence — they are without evidence to support them. (Boyd v. Boyd, 252 N. Y. 422.)

      Eugene J. Keogh and Edward S. St. John for respondent.
    I. Appellant has failed to sustain her burden of affirmatively proving fraud on the part of respondent. (Strongin v. International Acceptance Bank, 70 F. 2d 248.) II. Regardless of any questions of fraud, appellant is not entitled to participate in the distribution of any assets of M. C. T. Co., Inc. (including any interest in the funds under the agreement of November 1, 1933), because at the time of its bankruptcy on March 9, 1932, she did not have a liquidated, provable claim nor did she liquidate her claim within the statutory period thereafter. (Brown v. O’Keefe, 300 U. S. 598; Williams v. United States Fidelity & Guar. Co., 236 U. S. 549; Matter of Merrill & Baker, 186 F. 312; Schall v. Camors, 251 U. S. 239; Matter of S. W. Strauss & Co., 67 F. 2d 605; Stalick v. Slack, 269 F. 123; Cawthon v. Bancokentucky Co., 52 F. 2d 850; Matter of Cohen, 25 F. Supp. 365.) III. Inasmuch as appellant was not insured .under the New Jersey insurance company bond, she has no claim against the funds, regardless of whether or not M. C. T. Co,, Inc., became a bankrupt.
   Per Curiam.

Plaintiff is a judgment creditor seeking to follow funds alleged to belong to her judgment debtor. Defendant owned all of the stock of Motor Cab Transportation Corporation, which in turn owned all of the stock of Black Beauty Cab Corp., M. C. T. Co., Inc., Motor Cab Transportation Company, Inc., and other corporations. Other affiliated companies of defendant were Yellow Taxicab Corporation, National Transportation Co., Inc., Hamilton-Peters Operating Co., Inc., engaged in the operation of taxicabs; Alpha Brokerage Corporation, engaged principally in arranging taxicab bonds, and Transportation Adjustments, Inc., engaged in the adjustment of claims. The majority of the capital stock of defendant was owned by Checker Cab Manufacturing Corporation, engaged in manufacturing and selling taxicabs, and which, through defendant, controlled all of its subsidiary corporations. All these companies had offices on the same floor, and presented an integrated system of corporate parent, subsidiary and affiliated relationship covering the whole taxicab field, from their manufacture to their actual operation, their bonding and the adjustment of their claims.

Plaintiff was injured while riding in a taxicab operated by Black Beauty Cab Corp., on March 16, 1930. In November of that year the stock of Motor Cab Transportation Corporation was acquired by defendant, whereupon the former was dissolved and its assets, including the stock of M. C. T. Co., Inc., were distributed to defendant. The following month Black Beauty Cab Corp. was merged with M. C. T. Co., Inc., the latter corporation thereby assuming all of its liabilities, as provided in section 85 of the Stock Corporation Law.

On June 16, 1934, plaintiff obtained a default judgment against Black Beauty Cab Corp. and Motor Cab Transportation Company, Inc., in the sum of $15,670.55, of which all but $2,000 is unpaid. She could not, however, enforce her judgment against M. C. T. Co., Inc., which by merger had assumed this liability, because on March 9, 1932, it had been adjudicated a bankrupt. Plaintiff, as a tort claimant for negligence who had not reduced her claim to judgment, had no provable claim in the bankruptcy proceeding, and was not a creditor in bankruptcy under the applicable Federal statute then in force and was not affected thereby (former Bankruptcy Act, U. S. Code, tit. 11, § 1, subd. [11]; § 103).

It follows therefrom that to succeed here she must show not only that defendant came into possession of funds belonging to M. C. T. Co., Inc., but that such funds were available to satisfy her judgment, that is, that such funds were not part of the estate in bankruptcy of M. C. T. Co., Inc. We are of the opinion that she has succeeded in such showing, and that the weight of the evidence supports the determination of Special Term.

Under the agreement of December 1, 1930, made for the benefit of claimants under bonds issued by New Jersey Fidelity and Plate Class Insurance Company, defendant contributed $27,000 and M. C. T. Co., Inc., over $285,000 toward a total deposit of $659,000. Thereafter, defendant succeeded in withdrawing $625,000 in cash from this fund and substituting therefor taxi paper, so-called because it represented notes secured by conditional sale or chattel mortgage agreements on the sale of taxicabs originally held by Checker Cab Manufacturing Corporation, and which paper both of said corporations unconditionally guaranteed. Following defaults by defendant under its guaranties, the liquidation of the bonding company, and subsequent agreements with respect to such defaults, the final agreement was entered into on November 1,1933. In accordance with this agreement, to which the aforesaid operating companies, Checker Cab Manufacturing Corporation, Alpha Brokerage Corporation and defendant were parties, defendant restored cash for the taxi paper, claims against the fund were paid, and a surplus resulted which was turned over to defendant, subject, however, to. the provisions of the agreement, which in paragraph VI thereof contemplated an accounting, said agreement specifically stating that as between defendant and the operating companies, their £ £ actual contributions * * shall be the net credit of the contributing party ”, and said parties shall not be deprived ££ of any right of accounting between them ”. Defendant, in making good its guaranties, was not making any new or additional contributions or furnishing any new consideration; it was merely performing obligations which it had theretofore assumed, and correcting its own defaults.

Defendant on its books credited M. C. T. Co., Inc., plaintiff’s judgment debtor, with the sum of $158,336, designating it Surplus —M. C. T.”, with a note that this was a credit for their interest in the excess funds returned by the Trustees ”. Upon the record before us — and more particularly this bookkeeping record of defendant and the explanatory letter, plaintiff’s Exhibit 3 — plaintiff has succeeded in tracing funds belonging to M. C. T. Co., Inc., at least sufficient to pay her judgment.

In view of the fact that the trustee in bankruptcy received no consideration for his signature to the agreement of November 1, 1933, and he through his accountant thereafter acquired full knowledge of the foregoing facts, notwithstanding all of which he permitted the closing of the bankrupt estate without any attempt to assert a claim to the surplus which was then in existence, his conduct is tantamount to an abandonment as a matter of law, and title to the surplus therefore reverted to M. C. T. Co., Inc., or its successor, this defendant, subject, however, to the judgment of plaintiff, who was in nowise bound by the bankruptcy (First Nat. Bank v. Lasater, 196 U. S. 115; Matter of Malcom, 48 F. Supp. 675; Stephan v. Merchants Collateral Corp., 256 N. Y. 418, 422; 4 Collier on Bankruptcy, § 70.42).

Accordingly, the judgment of the Appellate Division should be reversed and that of Special Term affirmed, with costs in this court and in the Appellate Division.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Fboessel, JJ., concur.

Judgment accordingly. [See 302 N. Y. 771.]


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of New York ex rel. Ottley Estate Corporation, Appellant, against Joseph Lilly et al., Constituting the Tax Commission of the City of New York, Respondents.
    Argued January 16, 1951;
    decided March 8, 1951.

      Leon London for appellant.
    Service of a certified copy of the final order upon the comptroller and service of an uncertified copy upon the department of finance, with notice of entry, constituted a sufficient demand for “audit and allowance ” under section 296 of the Tax Law. The comptroller has not promulgated any regulation requiring anything more to be done and respondents should not be permitted to impose a more rigorous standard than that set by the Civil Practice Act (§ 505) in like circumstances. (Browne v. City of New York, 241 N. Y. 96; Robia Holding Corp. v. Walker 257 N. Y. 431; People ex rel. 270 Park Ave. Corp. v. Sexton, 295 N. Y. 589.)

      John P. McGrath, Corporation Counsel (Edith I. Spivack, Imre Schwarz and Morris Handel of counsel), for respondents.
    Since the Tax Law expressly requires an application for audit and allowance as a condition to allowance of interest upon a refund directed in tax certiorari proceedings, interest does not begin to run upon the mere service of the order reducing assessments, unaccompanied by such application or any demand for payment pursuant to the statute. Eelator having served only the order on April 30, 1945, and having delayed the making of an application for audit and allowance until November 28, 1947, the Appellate Division,properly held that no interest was payable for the period between those two dates. (O’Keeffe v. City of New York, 176 N. Y. 297; Rapid Tr. Subway Constr. Co. v. City of New York, 259 N. Y. 472; Smith v. Board of Educ. of

      City of N. Y., 208 N. Y. 84; People ex rel. Taylor v. Miller, 262 App. Div. 1018, 288 N. Y. 491; People ex rel. 277 Park Ave. Corp. v. Miller, N. Y. L. J., May 20, 1941, p. 2257, col. 5; People ex rel. 2176 Third Ave. Realty Co. v. Miller, N. Y. L. J., May 19, 1941, p. 2241, col. 4; People ex rel. Myers v. Barnes, 114 N. Y. 317; People ex rel. Desiderio v. Conolly, 238 N. Y. 326; Matter of City of New York [Montgomery St.], 91 App. Div. 532.)
   Per Curiam.

The order in the tax certiorari proceeding

directed that there shall be audited and allowed * * * and paid to ” the relator the refund prescribed therein, together with the interest * * * from the dates of payment ”. Service of a certified copy of that order upon the comptroller of the city of New York, and service of a copy thereof, with notice of entry, together with a letter of transmittal by relator’s attorney upon the department of finance, were sufficient to start interest running on the refund (People ex rel. 270 Park Ave. Corp. v. Sexton, 295 N. Y. 589; Tax Law, § 296, subd.,2). It is unnecessary to consider the effect of any alleged regulation of the comptroller to the contrary, for no such regulation has ever been officially promulgated (New York City Charter [1938], § 885). The order of the Appellate Division should be reversed and that of Special Term affirmed, with costs in this court and in the Appellate Division.

Loughean, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Feoessel, JJ., concur.

Ordered accordingly.


author:
      Per Curiam.

      Desmond, J.

text:
    John W. Becker, Appellant, v. New Penn Development Corporation, Respondent.
    Argued January 3, 1951;
    decided March 8, 1951.

      George J. Skivington for appellant.
    I. A mortgagee of chattels after default has a right to maintain an action for conversion against a purchaser of the mortgagor with notice of the mortgage and notice of the default. (Barrett Mfg. Co. v. Van Ronk, 212 N. Y. 90; Harrison v. Hall, 239 N. Y. 51; Rodack v. New Moon Theatre, 121 Misc. 63; Manchester v. Tibbetts, 121 N. Y. 219; Moore v. Prentiss Tool Supply Co., 133 N. Y. 144; Gibson v. Warden, 14 Wall. [U. S.] 244; Whitt v. Kentucky Oil Products Co., 223 Ky. 348; Leadbetter v. Leadbetter [Ltd.], 125 N. Y. 290.) II. A mortgagee after default may maintain an action against a purchaser of the mortgagor, with notice of the mortgage and of the default, to recover the unpaid purchase money in his hands. (Butt v. Ellett, 19 Wall. [U. S.] 544; Farmers Co-op. v. Lorimor State Bank, 214 N. W. 491 [Iowal:
      Smith v. Shellabarger, 291 F. 144; Peoples Nat. Bank v. Myers, 65 Kan. 122; Welsh v. Spivak, 272 App. Div. 845; Haxton & Son v. Rich, 267 App. Div. 492; Whitt v. Kentucky Oil Products Co., 223 Ky. 348; Western Oil Ref. Co. v. Venago Oil Corp., 24 P. 2d 971 [Cal.]; Matter of Lathrap, 61 F. 2d 37.) III. A mortgagee after default may maintain an action against the purchaser for money in his hands received by him from his resale of the mortgaged chattels, where such purchaser has resold the chattels with knowledge of the mortgage and after default. (Moore v. Prentiss Tool & Supply Co., 133 N. Y. 144; Manchester v. Tibbetts, 121 N. Y. 219; Farmers Co-op. v. Lorimor State Bank, 214 N. W. 491 [Iowa]; Smith v. Shellabarger, 291 F. 144; Peoples Nat. Bank v. Myers, 65 Kan. 122; Butt v. Ellett, 19 Wall. [U. S.] 544.) IV. A mortgagee of chattels after default does not have to foreclose his mortgage and cut off the mortgagor’s equity of redemption before he can maintain an action for conversion, or, for injury to the property, or, for its possession, or, for any cause of action which must have for its basis the legal title or ownership in the plaintiff. (Harrison v. Hall, 239 N. Y. 51; Rodack v. New Moon Theatre, 121 Misc. 63; Manchester v. Tibbetts, 121 N. Y. 219; Moore v. Prentiss Tool & Supply Co., 133 N. Y. 144; Waters v. Cass Co. Bank, 65 Iowa 234; Farmers Co-op. v. Lorimor State Bank, 214 N. W. 491 [Iowa]; Sprague v. Glynn, 136 Misc. 163; Whitmore v. Fisher, 132 Ill. 243.) V. The royalty secured was a covenant running with the land; it was incumbent on the subsequent assignee to discharge the covenant so long as it enjoyed the estate. (Willetts v. Reid, 5 N. Y. St. Rep. 175; Bellows Falls Trust Co. v. Am. Mineral Pro. Co., 89 N. H. 551; Bedford v. Terhune, 30 N. Y. 453; Washington Nat. Gas Co. v. Johnson, 123 Pa. 576; Indiana Nat. Gas Co. v. Hinton, 159 Ind. 398; Van Rensselaer v. Bonesteel, 24 Barb. 365; Bradford Oil Co. v. Blair, 113 Pa. 83; Wells v. Mfg. Co., 130 Pa. 222; Stone v. Marshall Oil Co., 188 Pa. 602; Col. Gas & Fuel Co. v. Knox Co., O. & G. Co., 91 Ohio St. 38; Kribbs v. Alford, 120 N. Y. 519.)

      Francis Currie for respondent.
    I. Plaintiff’s chattel mortgage is absolutely void as against defendant under section 230 of the Lien Law. (Becker v. New Perm Development Corp., 269 App. Div. 395; Hamill v. Gillespie, 48 N. Y. 556; Schwartz v.
      Cahill, 220 N. Y. 174.) II. Since the chattel mortgage is not binding on defendant, there is no other basis on which plaintiff can recover. (Goldstein v. Hunter, 257 N. Y. 401; Holt v. Fleischman, 75 App. Div. 593; Bedford v. Terhune, 30 N. Y. 453.) III. Plaintiff cannot recover as an assignee from Atwater. (Thompson v. Gimbel Bros., 71 Misc. 126, 145 App. Div. 436, 207 N. Y. 659; Jules-Wallace & Co. v. R. A. Management, Inc., 148 Misc. 180.)
   Per Curiam.

We are all agreed that defendant’s rights under its absolute assignment from Atwater were prior to those of plaintiff under his mortgage on part of the leasehold, since defendant took its assignment without notice of said mortgage, which was never properly recorded. Inasmuch as defendant paid Atwater the full consideration of $5,000 for said absolute assignment, its rights as a bona fide purchaser for value and without notice were fully crystallized long before plaintiff’s notice of August 12, 1937. The additional one and one-half cents for each thousand cubic feet, if natural gas were produced and marketed, and which defendant was obligated to pay Atwater, arose out of a separate agreement between them involving their respective additional obligations relating to the development and operation of the. property following the assignment.

Actions in equity, such as Macauley v. Smith (132 N. Y. 524 [1892]), and Fish v. Potter (2 Keyes 64 [1865]), where plaintiff sought to reach his security through the property itself, are not apposite here. Under the circumstances disclosed by this record, plaintiff may not recover directly from defendant in this action at law, in which Atwater is not a party, upon his (plaintiff’s) mortgage, which defendant neither signed nor assumed (see People ex rel. Balbrook Realty Corp. v. Mills, 295 N. Y. 190, 194). Moreover, inasmuch as defendant’s production of gas here was in a well already opened in August, 1937, and was incidental to the utilization of the land in the manner in which it was expected to be used, waste in the legal sense may not be ascribed to defendant (5 Tiffany on Real Property, § 1428; 1 Reeves on Real Property, § 555, p. 781; 2 Thompson on Real Property, § 825).

The judgment should be affirmed, with costs.

Desmond, J.

(dissenting). Plaintiff’s mortgage on this oil and gas lease was a valid one, executed and delivered before the assignment of the same lease to defendant. However, since defendant took its assignment without notice or knowledge of plaintiff’s said mortgage and before that mortgage was recorded, defendant’s rights were prior to those of plaintiff. But that priority was only as to so much of the consideration running from defendant, for the assignment, as was paid by defendant before it had actual notice of plaintiff’s mortgage (Fisk v. Potter, 2 Keyes 64, 74; Macauley v. Smith, 132 N. Y. 524, 532, and cases cited; 1 Jones on Chattel Mortgages and Conditional Sales, § 313). It appears that practically all the royalty payments due from defendant pursuant to the assignment to it became due after defendant got actual notice of plaintiff’s mortgage, and after plaintiff had demanded that defendant pay plaintiff the royalties as security for which plaintiff got his mortgage. Defendant’s refusal to give any effect to that notice and demand and its subsequent removal of the gas from the well, effectually destroyed plaintiff’s entire security and defendant is liable at law in damages for that violation of plaintiff’s rights (Van Pelt v. McGraw, 4 N. Y. 110; Manning v. Monaghan, 23 N. Y. 539, 546 et seq.). The cases cited herein show that it is unnecessary in such a suit to make the mortgagor a party.

Since there may be open questions here as to the amount of plaintiff’s damages and as to the effect, if any, of assignments to other persons of the same lease, there should be a new trial, with costs to abide the event.

Loughran, Ch. J., Lewis, Conway, Fuld and Froessel, JJ., concur in Per Curiam opinion; Desmond, J., dissents in opinion in which Dye, J., concurs.

Judgment affirmed.


author: Dye, J.

text:
    In the Matter of Katz’s Delicatessen, Inc., Doing Business under the Name of Katz’s Delicatessen, Respondent, against John F. O’Connell et al., Constituting the State Liquor Authority, Appellants.
    Argued January 8, 1951;
    decided March 8, 1951.

      Alvin McKinley Sylvester for appellants.
    It is undisputed that seven persons, two of them officers of petitioner, engaged in a game of stud poker, for stakes, on the licensed premises. Such activity constituted a violation of subdivision 6 of section 106 of the Alcholic Beverage Control Law which prohibits any gambling on licensed restaurant premises. (Matter of Fischer, 231 App. Div. 193; People v. Welti, 179 Misc. 76; Watts v. Malatesta, 262 N. Y. 80; Lyman v. Shenandoah Social Club, 39 App. Div. 459; Hitchins v. People, 39 N. Y. 454; Matter of Ilnicki v. O’Connell, 275 App. Div. 1018; Matter of Wendell v. Lavin, 246 N. Y. 115; Port Chester Wine & Liquor Shop v. Miller Bros., 253 App. Div. 188, 254 App. Div. 780, 281 N. Y. 101; Matter of Erikson v. Cohen, 243 App. Div. 1; Handler v. Doelger Brewing Corp., 173 Misc. 173, 259 App. Div. 846; Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192; Bertholf v. O’Reilly, 74 N. Y. 509; Matter of Fortino v. State Liq. Authority, 273 N. Y. 31; Matter of Sagos v. O’Connell, 301 N. Y. 212.)

      Morton S. Robson and Eugene J. Robson for respondent.
    The card game was of the friendly or social variety. The participants were all close friends of long standing and none of them were patrons of the licensed premises. The game was played in the basement storeroom of the premises in which patrons were not allowed. Neither respondent, its officers nor any other person received any consideration or benefit, either direct or indirect, from the card game other than as participants on an equal basis with the other participants. Such a card game, played under these circumstances, does not constitute a violation of the Penal Law and, therefore, is not gambling within the meaning of subdivision 6 of section 106 of the Alcoholic Beverage Control Law. (People v. Bright, 203 N. Y. 73; People v. Pack, 179 Misc. 316; People v. Molea, 191 Misc. 951; Green v. Hart, 41 F. 2d 855; State v. Baitler, 131 Me. 285.)
   Dye, J.

The State Liquor Authority, after notice and hearing, suspended for five days the petitioner’s retail beer license for having suffered and permitted gambling on the licensed premises in violation of subdivision 6 of section 106 of the Alcoholic Beverage Control Law which provides: “ 6. No person licensed to sell alcoholic beverages shall suffer or permit any gambling on the licensed premises, or suffer or permit such premises to become disorderly.” (Emphasis supplied.) Concededly, the gambling was not of the variety condemned by the criminal statutes but was a social game of poker played in a basement room of the licensed premises between officers of the licensee corporation and five others, all men of good repute and substantial means. The stakes were nominal and there was no element of professionalism. When taken before the Magistrate’s Court variously charged with violating sections 722 and 973 of the Penal Law, the charges were dismissed and quite properly so (People v. Stedeker, 175 N. Y. 57; People v. Bright, 203 N. Y. 73; Watts v. Malatesta, 262 N. Y. 80). Nonetheless, the Liquor Authority used the incident as the basis for the disciplinary proceeding which is here challenged for insufficiency.

Disciplinary penalties imposed by the Authority for gambling prohibited by the criminal statutes present no difficulty when there is evidence to sustain the charge (Matter of Avon Bar & Grill v. O’Connell, 301 N. Y. 150 [book-making]). Conversely, a determination based on gambling will be set aside when substantial evidence is lacking (Matter of Arnold Reuben, Inc., v. State Liq. Authority, 294 N. Y. 730).

The validity of the within determination depends not on sufficiency of proof to establish the forbidden act but whether the act as conceded — social gambling for nominal stakes on the licensed premises — constitutes grounds for discipline within the statute or, to state it more simply, whether the determination of the Authority when based on circumstances insufficient in law to sustain a criminal conviction is so unreasonable as to be arbitrary and capricious.

It is the policy of the State to regulate ” the traffic in liquor in the public interest * * * for the protection, health, welfare and safety of the people of the state ” (L. 1934, ch. 478; Alcoholic Beverage Control Law, § 2). A liquor license is not a right but a privilege which, once issued, is enjoyed subject to the power reserved to the Authority to amend, suspend or revoke or, in its discretion, to impose disciplinary penalties for specific infractions (§ 113). Subdivision 6 of section 106 confers broad powers designed to assure the complete separation of gambling from the liquor traffic. The phrase 11 any gambling ” as used in the statute is susceptible of only one interpretation: it is all inclusive and may be read to embrace both casual and professional betting. The distinction between casual and professional gambling now recognized in the enforcement of criminal'statutes provides no basis for saying that the phrase “ any gambling ” as used in the Alcoholic Beverage Control Law was intended to mean otherwise than its clear language indicates.

The prohibition of any ” gambling on the licensed premises is not an unreasonable restriction and it does not become unreasonable as matter of law when applied to an act otherwise innocuous such as social gambling, so long as there is a reasonable relation between the clear language of the statute and the act complained of (Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192). The circumstance that the players here were not patrons of the restaurant in the ordinary sense, but friends and guests of the proprietor, does not serve to avoid the prohibition of the statute. The Legislature used language of sufficient breadth and common meaning to embrace any gambling, casual and social or professional and criminal. The test is not whether a crime was being committed but whether the Alcoholic Beverage Control Law was being violated, a matter for initial determination by the Authority. When such determination is based on the existence of circumstances — which in this instance are conceded — reasonably within the statutory prohibition, such determination may not be set aside as arbitrary and capricious but will be upheld (Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104, 108; National Labor Relations Bd. v. Hearst Publications, 322 U. S. 111; Rochester Tel. Corp. v. United States, 307 U. S. 125).

The order of the Appellate Division should be reversed and the determination of the State Liquor Authority confirmed, with costs in this court and in the Appellate Division.

Loughban, Ch. J., Lewis, Conway and Desmond, JJ., concur with Dye, J.; Fuld and Fboessel, JJ., dissent and vote to affirm for the reasons set forth in the opinion of the Appellate Division.

Order reversed, etc.


author: Desmond, J. Conway, J.

text:
    The People of the State of New York, Respondent, v. Michael Richetti, Appellant.
    Argued November 20, 1950;
    decided March 8, 1951.

      James J. Abernethy for appellant.
    The matters presented by appellant’s affidavit showing that he was not advised of his right to counsel raised a question of fact as to which appellant was entitled to an oral hearing or trial notwithstanding the statements in the opposing affidavits that it was the practice of the court to advise defendants of their right to counsel. (U. S. Const., 6th Amendt.; N. Y. Const., art. I, § 6; Code Crim. Pro., §§ 8, 308; Matter of Bojinoff v. People, 299 N. Y. 145; Rice v. Olson, 324 U. S. 786; Canizio v. New York, 327 U. S. 82; “ The Writ of Error Coram Nobis ” by Judge Stanley H. Fuld, N. Y. L. J., June 6, 1947, p. 2230, col. 1; People v. Gillette, 185 Misc. 803; People v. Sadness, 275 App. Div. 731.)

      Charles P. Sullivan, District Attorney (Henry W. Schober of counsel), for respondent.
    There was no violation of defendant’s constitutional rights. (Uveges v. Pennsylvania, 335 U. S. 437; Matter of Bojinoff v. People, 299 N. Y. 145; Foster v. Illinois, 332 U. S. 134; Hysler v. Florida, 315 U. S. 411; Rex v. Wilkes, 4 Burr. 2527; Jacques v. Cesar, 2 Saund. 100; Smith v. Kingsley, 19 Wend. 620; Ferris v. Douglass, 20 Wend 626; Hayen v. People, 3 Parker Cr. Rep. 175; Seacord v. Burling, 1 How. Pr. 175; State ex rel. Emmert v. Gentry, 223 Ind. 535; People ex rel. Hirschberg v. Orange Co. Ct., 271 N. Y. 151; Berson v. Berson, 243 App. Div. 801; Bronson v. Schulten, 104 U. S. 410; Pickett’s Heirs v. Legerwood, 7 Pet. [U. S.] 144.)
   Desmond, J.

In 1949, this defendant, confined in Dannemora Prison, moved in the County Court of Queens County (by a “ coram nobis ” type application), to set aside a 1922 judgment of that court convicting him of, and sentencing him for, two felonies. Defendant’s stated grounds were two: first, that his 1922 sentence was void in that, at the time he (then seventeen years old) pleaded guilty he was in no wise informed of his right to have counsel; and, second, that a probation officer had informed defendant that because of defendant’s youth, the County Judge would probably put defendant on probation if he would plead guilty. The first of those allegations, if sustained, would, of course, nullify the conviction (Matter of Bojinoff v. People, 299 N. Y. 145; Code Crim. Pro., §§ 8, 308). The second of defendant’s assertions describes an alleged prediction only, by a court attache, and would, obviously, be no ground for a vacatur of the sentence. In filing his sworn petition (which was actually a renewal of a similar motion made by defendant, and denied, in 1944) he expressly requested that he be granted an order, under section 10-c of the Code of Criminal Procedure, allowing him to appear and be heard in person on the application. Defendant’s moving papers showed that he had been indicted on April 18, 1922, and had pleaded guilty on the same day, and had been sentenced on April 24, 1922, that he did not then know, and was not told by anyone, that he was entitled to be represented by a lawyer, that he was convicted of two other crimes in 1932 (receiving then a twenty-year sentence as a second offender) but that he never knew, till shortly before he made (in 1944) the first of these two coram nobis applications, that his 1922 conviction was void because of the deprivation of his right to have a lawyer.

The papers submitted by the People to the County Judge, in opposition to these motions to annul the 1922 criminal judgment, consisted of affidavits by a former County Court stenographer (Sullivan) and by the probation officer (Butler) referred to in the moving papers. Neither affiant remembered the 1922 proceedings as to this defendant, but each stated his recollection as to practices then current in the Queens County Court. Each swore that it was the unvarying custom of the then County Judge (now dead) to inform every defendant of his right to counsel. Sullivan’s affidavit showed that his stenographic minutes for 1922 had been destroyed, as was routinely done, and Butler’s affidavit denied any promise or suggestion that defendant would be put on probation, the latter alleging that he never had any contact with a prisoner until after sentence had been imposed. Butler’s affidavit showed, however, that the probation office report on defendant’s case did establish that he was not represented by any lawyer. There are no other records available. Thus we had, as pleadings or statements of the respective positions, the sworn allegations by defendant that he had been denied his rights in a matter most fundamental, with a request that he have a trial in open court of that charge, and countering allegations which went no further than to point to customs said to have been in vogue. Defendant’s sworn assertions were certainly not incredible on their face. They were not specifically denied. Our own records (Matter of Bojinoff v. People, supra, referring to People ex rel. Moore v. Hunt, 258 App. Div. 24), tell us that as late as 1936, years after the judgment here assailed, at least one able and experienced judge of a busy criminal court, had an invariable custom of not notifying defendants of their right to counsel, if and when they pleaded guilty on arraignment. Nonetheless, the County Court of Queens County refused to order a hearing on this application, or to bring defendant into court for a hearing, but, on the papers, denied the motion.

The County Judge, noting that defendant had not made any such contention (as to the 1922 conviction) when tried on another charge in 1932, was “ not impressed by the sincerity or the accuracy of the recollection of this defendant ”. (Those impressions were, of course, gained from an inspection of papers only, and defendant was denied any opportunity of submitting himself to cross-examination, or of cross-examining the affiants whose statements of imperfect recollection the County Judge accepted as the truth of the matter.)

On appeal, the Appellate Division, Second Department, affirmed. Its views on the case may be summed up in two sentences from its memorandum (276' App. Div. 1091, 1092): Under the presumption of regularity attending judgments of conviction, in the absence of creditable evidence to the contrary, it may not be gainsaid that the appellant was properly advised, at the time of the acceptance of his plea of guilty and his conviction in 1922, as to his right to counsel, (Matter of Bojinoff v. People, 299 N. Y. 145, 150-151). Appellant’s bald assertions to the contrary upon the prior motion, first put forth in 1944, twenty-two years after the conviction, when the stenographic minutes of the proceeding in 1922 were no longer available (having been lawfully disposed of), must be rejected as insufficient to rebut the presumption. (See Foster v. Illinois, 332 U. S. 134, 138-139.) ”

Defendant was granted leave to appeal to this court, primarily to examine into this question, of undoubted prime importance: May a convicted defendant, moving by way of coram nobis, to set aside his conviction on alleged grounds sufficient therefor if proven, and not conclusively shown by opposing papers to be false, be denied a trial, if properly demanded, of those sworn allegations? The question, we think, answers itself, in the negative.

Fundamental concepts of due process, decisions of the United States Supreme Court and of our own court, and the very nature of the coram nobis type of relief — all demand a trial of such sworn assertions. The possibility, or probability, that such trials will be numerous, is no answer at all, and will not be. further noticed herein. Likewise, as to the fact that defendant is a convict, and the opposing affiants court officers. Defendant has been denied his day in court, and we must see that he has it, be he right or wrong, truthful or lying, good citizen or bad. We do comment, however, that power in a court to deny hearings in such cases might sometimes work out to the opposite result and one distasteful to the prosecution. If relief can be denied without a trial, may it not be granted to the prisoner in similar summary fashion?

We think the United States Supreme Court decided this case for us when, in Rice v. Olson (324 U. S. 786, 789), it said, of a disputed contention like that advanced here, that it ‘ must be determined by evidence where the facts are in dispute.” Several years earlier, in Walker v. Johnston (312 U. S. 275, 286-287), the court remarked, as to the sworn statements in a convict’s petition: It is true that they are denied in the affidavits filed with the return to the rule, but the denials only serve to make the issues which must be resolved by evidence taken in the usual way.” An identical ruling was made by the same court in Waley v. Johnston (316 U. S. 101, 104). True enough, the Walker and Waley cases were in habeas corpus, not coram nobis, but that difference is procedural only. Those very cases were cited by us in our own leading coram nobis case of Matter of Lyons v. Goldstein (290 N. Y. 19, 25, of which more hereafter), as authority for the proposition that due process can be satisfied 11 only when a person may be granted a hearing upon the merits before a competent tribunal where he may appear and assert and protect his rights ”.

It is suggested that Hysler v. Florida (315 U. S. 411) and Taylor v. Alabama (335 U. S. 252) leave it to the States to say whether an oral hearing is to be allowed in such cases. Neither decision so holds. Each says that Federal due process requires no trial if the State courts he convinced, on the record, that there is no reasonable probability at all, that defendant’s averments are true. Similar reasons for denying a hearing appear in Canizio v. New York (327 U. S. 82, 85) and in Foster v. Illinois (332 U. S. 134) the latter being cited in the Appellate Division memorandum in the present case. Such is not the situation here.

But, even if the Supreme Court holdings did not constrain us to give this man a trial, we would be faced with our own declarations on the subject. As Judge Fuld has said in a notable speech on “ The Writ of Error Coram Nobis ” (N. Y. L. J., June 5, 6 and 7,1947), Matter of Lyons v. Goldstein (supra) was “ a landmark in the field of criminal law.” (N. Y. L. J., June 6, 1947, p. 2230, col. 2.) Ruling that every court has inherent power, without or despite the statutes, to deal with its own fraudulently contrived judgments, we used, in Matter of Lyons v. Goldstein (supra), language that cannot be reconciled with a refusal to grant this defendant’s prayer for a hearing in open court. We there asserted (p. 25) every defendant’s right, in such a dispute, to “ a hearing upon the merits before a competent tribunal where he may appear and assert and protect his rights ”, that is, “ to be heard on proof that he was defrauded or coerced into pleading guilty to a crime ”. Later came the case of Whitman (see New York ex rel. Whitman v. Wilson, 318 U. S. 688) and the subject was canvassed by us again (Matter of Morhous v. New York Supreme Court, 293 N. Y. 131). The description in the latter opinion (p. 134), of coram nobis type motions, as the “ appropriate ‘ corrective judicial process to remedy the alleged wrong ’ ” required by due process (see Mooney v. Holohan, 294 U. S. 103, 113), means nothing ■ at all unless that a person, swearing to allegations of such a wrong, and not conclusively refuted by unquestionable documentary proof contra, must have a trial in open court if he wants one. To make such solemn assertions of the availability in New York of full, complete processes to right such wrongs, and then, in practice, to throw such allegations out of court without trial, is to extend relief with one hand and take it away with the other. Due process insists on a real hearing,1 ‘ not a sham or a pretense ” (Palko v. Connecticut, 302 U. S. 319, 327).

A motion, like defendant’s here, is, it is settled, the modern counterpart, in civil and criminal causes, of the old coram nobis writ (Smith v. Kingsley, 19 Wend. 620; Matter of Lyons v. Goldstein, supra; Matter of Morhous v. New York Supreme Court, supra), and it would be easy to multiply citations to show that disputes of fact in such proceedings have always been tried like similar issues in any other cause. Such is the meaning of Arnold v. Sandford (14 Johns. 417, Supreme Court of Judicature, 1817) and of many cases from other States (see Chambers v. State, 136 Fla. 568, revd. on other grounds 309 U. S. 227; People ex rel. Courtney v. Green, 355 Ill. 468; Stephenson v. State, 205 Ind. 141; Cook v. Conway, 3 Dana [Ky.] 454; State v. Ray, 111 Kan. 350; Mitchell v. State, 179 Miss. 814; Simms v. Thompson, 291 Mo. 493; Crawford v. Williams, 1 Swan [Tenn.] 341; 4 Crim. L. Mag., Note, 376; 18 L. R. A., Note, 842). Those holdings, ancient and recent, criminal and civil, justify the statement made by Judge Fulb, in his speech on the subject above referred to, when, citing- Waley v. Johnston and Walker v. Johnston (supra) he said: “ improbable or unbelievable though the allegations may seem — though they 1 may tax credulity ’ — the defendant is entitled to a hearing ”. And we know, from records on appeals in this court, that it is the practice in trial courts throughout the State to hold formal trials in these matters, whenever the petition exhibits a prima facie case. People v. Oddo (300 N. Y. 649) is not to the contrary since Oddo’s allegations were such that, true or false, they were no ground for coram nobis relief.

A “ hearing ” or trial ” of such an issue of fact is an empty form unless it takes place in open court, with the right, on each side, to examine and cross-examine. For centuries a trial ” of a dispute of fact has meant the examination, before a competent tribunal, according to the laws of the land, of the facts put in issue, for the purpose of determining such issue ” (Ward v. Davis, 6 How. Prac. 274, 275). A hearing ” contemplates the right to be present and to put forth one’s contentions by proof and argument (Black’s Law Dictionary, p. 882, and cases cited). This State’s courts have always been faithful to these concepts. Since 1938 our State Constitution (art. I, § 6) has put into most solemn form the traditional rule (see People v. Henriques & Co., 267 N. Y. 398, 402; People v. Sickles, 156 N. Y. 541, 547; Ives v. South Buffalo Ry. Co., 201 N. Y. 271, 293), that “ in any trial in any court whatever the party accused shall he allowed to appear and defend in person and with counsel as in civil actions and shall be informed of the nature and cause of the accusation and be confronted with the witnesses against him, ’ ’ Speaking of a disputed demand for a deficiency judgment, this court said: In so important a matter the witness should be produced before the court, subject to observation and cross-examination ” (New York Life Ins. Co. v. Guttag Corp., 265 N. Y. 292, 296). The liberty of one who, at seventeen years of age, was indicted and plead on the same day is an important matter, too. To quote a deathless utterance of a great American: Shall we be more tender of onr dollars than of the lives of our sons? ”

We comment briefly on the Appellate Division’s memorandum. Beciting defendant’s contentions and the contents of the opposing affidavits, it refers to “ the presumption of regularity attending’ judgments of conviction ” and holds that, on the papers here, the presumption was not rebutted. We do not think that presumption of regularity can serve to settle without trial, what otherwise would be a plain dispute of fact. A presumption of regularity exists only until contrary substantial evidence appears (People ex rel. Wallington Apts. v. Miller, 288 N. Y. 31, 33; Galpin v. Page, 18 Wall. [U. S.] 350, 365; 9 Wigmore on Evidence [3d ed.], § 2491). It forces the opposing party (defendant here) to go forward with proof but, once he does go forward, the presumption is out of the case. It could not conceivably be used to prevent defendant from proving his allegations.. There must be a trial, as we have indicated, and it will be for the Trial Judge to pass on all questions of fact, including the credibility of defendant and of any other witnesses on either side. There are references, too, in the Appellate Division memorandum to defendant’s long delay in raising that question, but we have held (Matter of Bojinoff v. People, supra; Matter of Lyons v. Goldstein, supra) that there is no time limit on such applications. Even if loches could be a defense (which we doubt but do not decide), that defense itself would require a trial.

The orders should be reversed, and the case remitted to the County Court of Queens County for trial.

Conway, J.

(dissenting). The defendant when arraigned in the County Court of Queens County in April, 1922, pleaded guilty to an indictment which charged him with the crimes of burglary in the third degree and grand larceny in the second degree. Thereafter he was sentenced to the New York State Reformatory at Elmira. The defendant’s pedigree, taken at the time of his plea of guilt, disclosed that, although he was then but seventeen years of age, he had already been confined in the New York Catholic Protectory for truancy and in the New York House of Refuge for larceny.

Elmira Reformatory was thus the third institution to which he had been committed. The fact that he was sentenced there, rather than to a State prison, saved his citizenship for him and made him eligible for parole in thirteen months. We mention this to indicate that this young man was mildly punished, in view of the fact that the distinguished County Judge who sentenced him is not alive to defend himself against the claim that he failed to ask Richetti when he was arraigned and before he pleaded guilty whether he desired the aid of counsel (see Code Crim. Pro., § 308).

Approximately ten years later, .in 1932, the defendant was convicted of burglary in the third degree and petit larceny in the same county. As a second felony offender he was sentenced to imprisonment for a term of twenty years. He was then represented by counsel.

We have recently passed upon a still later episode in the defendant’s life in Matter of Richetti v. New York State Bd. of Parole (300 N. Y. 357).

In August of 1944, twenty-two years after his plea of guilt in 1922, the defendant moved in the County Court of Queens County to vacate the judgment of conviction of 1932, sentencing him as a second offender and to set aside the judgment of conviction of 1922 upon the ground that he had not been advised of his right to the aid of counsel prior to his plea of guilt.

When he made that motion, the County Judge who sentenced him in 1922 was dead. The court stenographer, Sullivan, had retired and made affidavit that he had destroyed his notes upon retirement as permitted by law. He further deposed: Your deponent has no independent recollection of the cause of the above named defendant but in his experience as stenographer your deponent has never known the Honorable.Burt Jay Humphrey, when County Judge, to omit to inform a defendant that he had the right to the aid of counsel prior to arraignment and at all stages of the proceedings.”

A further affidavit was submitted by the probation officer, Butler, now deceased, attached to the Queens County Court in which he deposed that although he had no indepentent recollection of the case: 6 ‘ That your deponent well recalls that it was the regular and every day practice of the County' Court of Queens County during the time that the Honorable Burt Jay Humphrey presided therein that upon each and every arraignment of a defendant for pleading to an indictment such defendant was notified of the nature of the charge and advised further that he was entitled to counsel and that if he so desired and could not afford to retain counsel one would be assigned by the court.”

The defendant asserted also in his affidavit: “ Mr. Butler interrogated me about my family history and then told me I was to go into court to plead to the indictment pending against me. He also said further: 1 You’re kind of young to be sent to prison, if you plead guilty I believe the judge will put you on probation.’ ”

To that Butler, in a counteraffidavit, replied:

“ That at no time did your deponent ever counsel or advise ' any defendant to enter a plea of guilty; nor did your deponent at any time inform any defendant that should a plea of guilty be entered by such defendant leniency would be shown by the court upon sentence.

In fact, your deponent received the cases and made his investigation only after the defendant had pleaded guilty or had been found guilty by the verdict of a jury.”

The motion was denied and an opinion written. In July, 1949, the defendant moved for leave to renew his prior motion and for an order in the nature of a writ of error coram nobis to vacate and set aside the 1922 conviction and for an order-directing his production before the court for a hearing on the motion. The District Attorney relied upon the affidavits submitted in connection with the 1944 application. The second application was denied and the Appellate Division unanimously affirmed the order of denial.

The contention is made that, so long as the defendant asserted that when he was arraigned he was not asked by the court if he desired the aid of counsel before he pleaded guilty, the County Court and the Appellate Division lost all power to determine on the papers submitted whether there was merit in defendant’s application. Since it is conceded in the majority opinion that the quoted statement of Butler would he no ground for vacating the judgment, our court is now determining that so long as a prisoner makes the bare allegation that he was not advised that he was entitled to counsel before he pleaded guilty, his assertion deprives the County Court and the Supreme Court of the jurisdiction to decide the motion upon the papers submitted. We are referred to no statute or case for this new rule which affects the powers of the County and Supreme Courts. To the contrary, in People v. Oddo (300 N. Y. 649) where the petitioner asked to be heard in person, we held, on the authority of People v. Fanning (300 N. Y. 593), that he had been given full opportunity through submission of documents to prove his case and that that was sufficient. (See, also, Hysler v. Florida, 315 U. S. 411; Taylor v. Alabama, 335 U. S. 252.)

Citation of authorities in Federal courts in habeas corpus proceedings are not helpful. Where issues are raised by writ of habeas corpus it has been indicated that a hearing must of necessity be accorded in a Federal court. (Walker v. Johnston, 312 U. S. 275, and Waley v. Johnston, 316 U. S. 101.) This is because of the command of the Federal statute (U. S. Code, tit. 28, § 2243) which now provides: “ The court shall summarily hear and determine the facts, and dispose of the matter as law and justice require.” (Emphasis supplied.) The prior statute (U. S. Code, tit. 28, § 461), while differing in language, was to the same effect. The Federal statute has gone further since 1867 than the practice of our State. (Matter of Morhous v. New York Supreme Court, 293 N. Y. 131, 139 [Lehman, Ch. J.].) The difference between habeas corpus and coram nobis is more than “ procedural only

We do not read the papers or brief of the prisoner as attempting to establish a fraudulently contrived ” judgment. Nor is there claim here that the prisoner was defrauded or coerced into pleading guilty to a crime * * * ” as quoted by the majority from Matter of Lyons v. Goldstein (290 N. Y. 19, 25). These are harsher expressions than used by the prisoner in referring to one who served as County Judge and Supreme Court Justice for thirty-three years.

Thus we return to the sole question posed. Where a prisoner who has pleaded guilty asserts that he was not asked if he desired the aid of counsel, before pleading guilty, are our courts divested of power to decide his application for a writ in the nature of coram nobis upon the papers submitted. The Appellate Division decided, upon the petition of the defendant, the affidavits submitted by the People and the exhibits, that the presumption of regularity of judicial proceedings supported the conclusion, in the absence of a clear showing to the contrary (Canizio v. New York, 327 U. S. 82, 84), that the Trial Judge had asked the petitioner if he desired the aid of counsel in accordance with section 308 of the Code of Criminal Procedure. In other words the Appellate Division decided upon the facts that the prisoner had not overcome the presumption of regularity of judicial proceedings because he had not made a clear showing that he had not been asked if he desired the aid of counsel when arraigned. When that court read the affidavits of the prisoner, the official stenographer and the probation officer, it was within its competency, as it had been of the County Court, to say that on this record there was no credible evidence requiring a contrary holding by reason of a clear showing by the defendant. We cannot say as a matter of law that the Appellate Division was without power to so determine. Unless we can say that as a matter of law, we cannot disturb the finding of fact but must affirm. It has not been argued that the County Court and Appellate Division should have exercised discretion in favor of according an oral hearing to the defendant and abused that discretion as a matter of law — no doubt because so to do would have conceded the power in an appropriate case to make determination upon the papers siibnaitted; We hold that this was stich an appropriate ease.

Matter of Bojinoff v. People (299 N. Y. 145) the case principally relied upon by the defendant is readily distinguishable. In that case the defendant was convicted of grand larceny, second degree, on a plea of 1 ‘ guilty ’ ’ in 1936 when he was sixteen years old. He made a coram nobis application to vacate two judgments of conviction (January, 1936, and June, 1936) on the grounds that he was not asked if he desired the aid of counsel and that no counsel was assigned. The sentencing Judge had died and the stenographer’s minutes were no longer available, presumably having been destroyed as authorized by law. The Monroe County Court, where the defendant was convicted, kept as part of its routine administration a permanent record of judgments of conviction on a printed form with blanks for the insertion of information. The printed forms contained the following: [defendant] was asked if he desired the aid of counsel, to which he answered-”. In both instances the space allowed for the answer was left blank. Thus we could quite properly conclude that the presumption of regularity which attaches to every judgment was rebutted. We said (299 N. Y. 145,150): Without a definite answer, we cannot be sure that the question was asked and the inference normally attending regularity is open to doubt.” No such printed forms were used in Queens County, where the defendant in the case at bar was convicted, so that the presumption of regularity which attaches to every judgment was not rebutted. Moreover, in the Bojinoff case the sentencing Judge expressed his view on the very question at issue in an opinion rendered in a contemporary case where a conviction was challenged because the prisoner claimed he had been without benefit of counsel. In his opinion the Judge said (p. 150): “ ‘ Doubtless this was true, as it has been [the] invariable custom to assign counsel only when the defendant pleaded not guilty, as obviously, it is only upon a plea of not guilty that the defendant requires a defense.’ (People ex rel. Moore v. Hunt, 258 App. Div. 24, 26.) ” (Emphasis in original.) That such was the practice was not controverted by the People who contended only that the defendant could not rely on the statement of the existing practice because he had not connected it with certainty to his own case. Court attaches who served at the time of arraignment made affidavit that it was the general practice of the court to ask an accused whether he desired counsel only if the accused pleaded not guilty ”. The People offered no affirmative proof. We therefore concluded that the presumption of regularity had been rebutted and that the People had not met the burden of establishing compliance with the statutory requirements. (Code Crim. Pro., § 308.) The Appellate Division pointed out the distinction between the Bojinoff case and the case at bar, saying: The affidavits there were offered as rebuttal to the presumption and not to buttress it.” (276 App. Div. 1091, 1092.)

The order should be affirmed.

Loughban, Ch. J., Dye and Fuld, JJ., concur with Desmond, J.; Conway, J., dissents in opinion in which Lewis and Froessel, JJ., concur.

Orders reversed, etc.


author: Loughban, Ch. J.

text:
    In the Matter of the Claim of Beulah Carpenter, Appellant, against Sibley, Lindsay & Curr Co. et al., Respondents.
    Argued January 17, 1951;
    decided March 9, 1951.

      Ellsworth Van Graafeiland for appellant.
    Claimant sustained an accidental injury arising out of and in the course of her employment. (Matter of Masse v. Robinson Co., 301 N. Y. 34.)

      Myer Braiman for respondents.
    There is no evidence to support a finding that claimant suffered from an accident or series of accidents arising out of and in the course of her employment. (Matter of Lerner v. Rump Bros., 241 N. Y. 153; Matter of Jeff reyes v. Sager Co., 233 N. Y. 535; Matter of Harman v. Republic Aviation Corp., 298 N. Y. 285; Matter of Champion v. Gurley, 299 N. Y. 406.)
   Loughban, Ch. J.

In this workmen’s compensation case the first question is whether there is sufficient evidence to support the finding that the claimant’s employment as a saleswoman in a book store was causally related to a detachment of the retina of her right eye — the injury for which an award was made by the Workmen’s Compensation Board.

The evidence in question consists of testimony of the claimant’s physician whose examination reads in part as follows: “ Q. * * * Is it your opinion with reasonable medical certainty that the retinal detachment which you found on your examination # * * was caused in whole or in part directly or indirectly by work she did * * * as she testified to here in your presence here today? A. I will answer that yes. * * * Q. Is it your opinion, Doctor, that the requirements of her regular employment involving more or less lifting and stooping as she has testified- to in your presence today was an adequate cause of the retinal detachment considering that it occurred in a myopic eye known to be so prior to the detachment? A. Yes.” This testimony (unless it was later repudiated by the witness himself) was enough to warrant the finding of causal relationship (see Matter of Wood v. Joyce Co., 228 App. Div. 729; 135 A. L. R. 516; cf. Matter of Altschuller v. Bressler, 289 N. Y. 463; 7 Wigmore on Evidence [3d ed.], § 1976).

Upon his cross-examination, the claimant’s physician was asked- this question: “ Doctor, as- a matter of fact, isn’t it a matter of conjecture as to what causes this detachment?” The witness replied: “ The answer is ‘ yes ’.” Then on his redirect examination, the witness said: “ My opinion is that the work should be considered as a possible predisposing cause to her detachment.”

As respondents here, the employer and its carrier would have us dismiss the above testimony as being quite deficient in respect of medical certainty. But to the Workmen’s- Compensation Board and to the Appellate Division that testimony appeared to have a different quality. Thus three Justices of the Appellate Division said:. “There is evidence that the physical efforts incident to the usual course of claimant’s employment was a predisposing cause of the detachment of the retina of claimant’s long-standing myopic right eye ”. (277 App. Div. 801.) The other, two Justices of the Appellate Division were of the same opinion. They said: “ Claimant was compelled to do heavier work for some time. There is medical testimony to the effect that this finally caused a detachment of the retina.” (277 App. Div. 802.) In that state of the record, the assertion by the employer and carrier of a want of any proof of causal relation between the claimant’s employment and the impairment of her eye is of no avail. For it was within the power of the Workmen’s Compensation Board to decide whether in point of fact the testimony of the claimant’s physician — notwithstanding some shortage of agreement within itself — nevertheless established a causal relationship between the claimant’s routine occupation and the harm, that happened to her. (Workmen’s Compensation Law, § 20. See Williams v. Dela ware, L. & W. R. R. Co., 155 N. Y. 158,162-163; Cannon v. Fargo, 222 N. Y. 321, 325; Loewinthan v. Le Vine, 299 N. Y. 372, 377-378.)

The only other question in the case can he more shortly disposed of. The injury sustained by the claimant was found by the board to have been accidental in its essential character. This finding was reversed by a divided vote of the Appellate Division. But, as the board validly found, the claimant was subjected to unusual exertion in her work for a considerable period prior to the day of her misfortune. Hence .the finding of accidental injury appears to our minds to have been legally right (see Matter of Masse v. Robinson Co., 301 N. Y. 34).

The order of the Appellate Division should be reversed, and the award of the Workmen’s Compensation Board reinstated, with costs to the claimant in this court and in the Appellate Division.

Lewis, Conway, Desmond, Dye, Fuld and Froessel, JJ., concur.

Order reversed, etc.


author: Lotjgheau, Ch. J.

text:
    The People of the State of New York, Appellant, v. Maybelle Wakelee, Respondent. The People of the State of New York, Appellant, v. Benjamin Sprung, Respondent. The People of the State of New York, Appellant, v. Lee Moore, Respondent.
    Argued November 30, 1950;
    decided March 9, 1951.

      Theodore A. Viehe for appellant.
    I. The appeal to the Court of Appeals was proper. (People v. Wolf, 247 N. Y. 189; People v. Ward, 146 Misc. 606; People v. Van Houten, 13 Misc. 603, 91 Hun 638; People v. Whitcomb, 273 App. Div. 610, 298 N. Y. 635.) II. The conviction of defendant Moore was proper. (People v. Underhill, 267 App. Div. 833; People v. Mills, 160 Misc. 730.) III. The pinball machines should be destroyed.

      Charles J. McDonough for respondents.
    I. The order for destruction of the pinball machines is civil in nature and appellant is in the wrong court. (General Construction Law, §§ 18-a, 46-a; Code Crim. Pro., §§ 5, 5-a; People v. Whitcomb, 273 App. Div. 610, 298 N. Y. 635.) II. The conviction of defendant Moore was properly reversed. (People v. Underhill, 267 App. Div. 833; People v. Mills, 160 Misc. 730.) III. The police justice had no jurisdiction to order destruction of the pinball machines under section 985 of the Penal Law. (People v. Nelson, 153 N. Y. 90.) IV. Summary destruction of pinball machines is not authorized by section 985 of the Penal Law. (People v. Nelson, 153 N. Y. 90; Hornstein v. Paramount Pictures, 292 N. Y. 468; People v. Jennings, 257 N. Y. 196; Kearney v. City of Elmira, 238 App. Div. 678.)
   Lotjgheau, Ch. J.

An ordinance of the Village of Hamburg in Erie County makes these provisions: No person shall keep or use, or permit to be kept or used in any place within said village of Hamburg, any table, instrument or device of any nature whatsoever for the purpose of gambling or with which money, liquor or anything of value shall be played for in any manner, and no person shall be an inmate in any such place where said gambling device may be kept, nor be engaged in any game of chance as banker, dealer, player or otherwise.”

After trial before a Police Justice, each of the three defendants (Wakelee, Sprung and Moore) was found guilty of a separate violation of the above ordinance and was fined $25.

At the same time, the Police Justice made an order pursuant to section 985 of the Penal Law directing the destruction of a number of pinball machines which had been seized by the police when the defendants were arrested.

Upon appeals taken by all of the defendants, the County Court of Erie County affirmed the convictions of Wakelee and Sprung, but reversed the conviction of Moore and dismissed the charge against him. By the same order, the County Court vacated the direction of the Police Justice for the destruction of the pinball machines. Then a Judge of this court gave leave to the village attorney to bring here for review so much of the order of the County Judge as (1) reversed the conviction of Moore; and (2) vacated the direction for destruction of the pinball machines.

At the outset, a question in respect of our jurisdiction should be noticed. The proceeding against Moore for his alleged violation of the village ordinance was a'prosecution for a criminal offense (People v. Wolf, 247 N. Y. 189; People v. Scheinman, 295 N. Y. 142). Hence the appeal from that part of the order of the County Court which reversed the conviction of Moore was rightly taken (Code Crim. Pro., § 520, subd. 3). As to him, the charge was that he “ did keep, use and permit to be kept and used a pinball machine or device used for gambling purposes ’ ’. Moore was a counterman and bartender employed by the owner of a bowling alley and barroom. The owner-employer of that establishment was the bailee of the pinball machine that was found there and winning players were paid from his till.

By its terms, the village ordinance is addressed to persons who “ shall keep ” or “ permit to be kept ” a gambling device. As so used, the word “keep ”, of course, can refer only to the owner or bailee of such a machine. (See People v. Shakun, 251 N. Y. 107.) As we read the ordinance, it is not aimed at employees, servants or agents and so we are in agreement with the reversal by the County Court of the conviction of Moore (cf. Penal Law, § 982; People v. Underhill, 267 App. Div. 833).

The village attorney would nonetheless have us sustain Moore’s conviction under that provision of the village ordinance which is directed against a person who engages in any game of chance “ as banker, dealer, player or otherwise.” But no such charge was made against Moore in the police court. As we have said, the information alleged only that he “ did keep, use and permit to "be kept and used a pinball machine or device used for gambling purposes”. "We think it is not now open to the village attorney to adopt a theory so far different from that on which the original trier of the facts presumably made his decision against Moore (see, e.g., People v. Weiss, 290 N. Y. 160, 172-174).

We turn now to that direction of the order of the County Court which vacated the command for destruction of the pinball machines. Such destruction was authorized by section 985 of the Penal Law which in part says: “ It shall be the duty of the trial court, after the disposition of the case, and whether the defendant be convicted, acquitted or fails to appear for trial, to cause the immediate destruction of the machine, apparatus or device.” The order so authorized runs against the machine and is operative irrespective of the conviction, acquittal or failure of appearance of the person having possession thereof. Thus such a proceeding is one in rem of a civil nature (see Dobbins’s Distillery v. United States, 96 U. S. 395, 399-401; United States v. 935 Cases More or Less, 136 F. 2d 523, 526; Colusa Remedy Co. v. United States, 176 F. 2d 554, 557; 1 Bishop on Criminal Law [9th ed.], § 835, pp. 596-597). For that reason, so much of the order of the County Court as saved the pinball machines from destruction is not appealable to this court under the provisions of the Code of Criminal Procedure (People v. Whitcomb, 298 N. Y. 635; cf. Federal Buies of Civil Procedure, rule 81, subd. [a], par. [2]).

The order of the County Court insofar as it reverses the judgment of conviction of the defendant Moore should be affirmed. In all other respects, the appeal by the Village of Hamburg should be dismissed.

Lewis, Dye, Fuld and Fboessel, JJ., concur with Loughban, Ch. J.; Conway and Desmond, j J., dissent and vote to reverse the order of the County Court insofar as it reversed the judgment of conviction of defendant Moore, and to that extent to affirm the judgment of the Police Justice’s Court. Defendant Moore was convicted of violating section 4 of chapter 7 of the Village of Hamburg (rambling Ordinance, which is quoted in the majority opinion. The information against Moore charged that he “ did commit the offense of keeping, using and permitting to be kept and used in a place within the Village of Hamburg an instrument or device for the purpose of gambling The proof showed that Moore, a bartender, permitted a boy of the age of seventeen years to use a pinball machine located in the barroom, and, because of the boy’s age, placed the winnings therefrom upon the bar so that the boy’s companion, aged twenty, might take them and deliver them to the boy. In addition, there was conflicting testimony in the record from which the trial court was at liberty to find that the proprietor or owner of the barroom was not there present at the time of the gambling or at the time of the payoff by defendant Moore. These facts serve to distinguish the case at bar from cases such as People v. Underhill (267 App. Div. 833). Granting, as stated in the prevailing opinion, that the word u keep ” can only refer to the owner or bailee of the gambling machine, here the ordinance under which Moore was convicted was applicable not only to a person who “ shall keep ” or “ permit to be kept ” such a machine, but also to a person such as Moore who shall use ” it or permit ” it to be “ used ”.

Ordered accordingly.


author: Fuld, J. Dye, J.

text:
    In the Matter of the Claim of Bernard M. Gawrys, Respondent, against Buffalo Bolt Company, Appellant, and American Motorists Insurance Company, Respondent. Workmen’s Compensation Board, Respondent.
    Argued January 17, 1951;
    decided April 12, 1951.

      Edward L. Robinson, William M. Fay and Solon J. Stone for appellant.
    I. Buie 922 of the Buies of the Board of Standards and Appeals, enacted pursuant to subdivision 11 of section 146 of the Labor Law, does not require that a gimlet pointer machine, such as the one at which claimant was working- when he was injured, be guarded even at its point of operation. • The guarding of the gears in which claimant caught his hand is specifically covered by another Industrial Code rule. That rule (rule 868) was complied with by appellant but even if it had not been, even if appellant had violated the rule, it, nevertheless, would not have been required to pay double compensation under section 14-a of the Workmen’s Compensation Law, as rule 868 does not prohibit the employment of minors on machines failing to comply with the terms thereof. (Matter of Hall v. Chatham, Elec. Light, Heat & Power Co., 220 App. Div. 18, 246 N. Y. 544; Matter of Sacripante v. United Metal Spinning Co., 299 N. Y. 419; Matter of Tesar v. National Ventilating Co., 227 App. Div. 333.) II. Even if the gimlet pointer machine had been listed in the rules as requiring a guard at its point of operation, the gears in which claimant caught his hand, not being located at the point of operation, required no guard under the terms of rule 922. (Hunter v. New York, O. & W. Ry. Co., 116 N. Y. 615; Laidlaw v. Sage, 158 N. Y. 73.) III. Even if the machine had been one which under the rules required guarding at its point of operation and even if the gears were the point of operation of the machine, appellant nevertheless should not be penalized under the provisions of section 14-a of the Workmen’s Compensation Law, since the guard provided by appellant for the gears had been inspected and approved by the State factory inspectors pursuant to statutory requirement and was in all respects proper. (Matter of Marcellus, 165 N. Y. 70; Hunter v. New York, O. & W. Ry. Co., 116 N. Y. 615; Michalski v. American Mach. & Foundry Co., 225 N. Y. 294; Pyne v. Cazenovia Canning Co., 220 N. Y. 126; Getty v. Town of Hamlin, 127 N. Y. 636.) IV. Even if it had been shown, and the Workmen’s Compensation Board had found, that appellant violated another rule or another section of the Labor Law, this would not subject appellant to the penalty of double compensation under section 14-a of the Workmen’s Compensation Law. (Matter of Hall v. Chatham Elec. Light, Heat & Power Co., 220 App. Div. 18, 246 N. Y. 544; Matter of Sacripante v. United Metal Spinning Co., 299 N. Y. 419.) V. That part of the award which requires appellant to pay double compensation should be reversed. (Penal Law, § 1275; People ex rel. Price v. Sheffield FarmsSlawson-Decker Co., 225 N. Y. 25.)

      Nathaniel L. Goldstein, Attorney-General (Gilbert M. Landy, Wendell P. Broivn and Roy Wiedersum of counsel), for Workmen’s Compensation Board, respondent.
    I. Claimant was' employed in violation of the provisions of the Labor Law and of the Buies of the Board of Standards and Appeals. The gimlet pointer machine upon which claimant was injured was required to be guarded at its point of operation by the provisions of rules 922, 877 and 878 of the Industrial Code Rules. (Matter of Mayo v. Special Mach. Tool Eng. Works, 256 App. Div. 863; Matter of Podola v. Crescent Box Mfg. Co., 256 App. Div. 1016; Matter of Hall v. Chatham Elec. Light, Heat & Power Co., 246 N. Y. 544; Matter of Tesar v. National Ventilating Co., 227 App. Div. 333.) II. The gears on the gimlet pointer machine at which claimant was injured were a point of operation. (Matter of Altschuller v. Bressler, 289 N. Y. 463; Matter of Daus v. Gunderman & Sons, Inc., 283 N. Y. 459.) III. The machine on which claimant was injured was improperly guarded.
   Fuld, J.

Acknowledging that its employee was entitled to regular compensation, the employer in this workmen’s compensation case questions only its liability to an award for double compensation.

Claimant was employed as a “ feeder ” on a gimlet pointer machine in a factory at North Tonawanda, New York. He stood in front of, and on the right of, the machine feeding blank bolts into it at a point on its top which was directly in front of him and, after the machine had put points upon them, the bolts dropped out at the back into a box. On the base of the machine and to the operator’s left are the buttons used to start and stop it. Further to the left, at the top of the machine and more than eighteen inches from the point where the bolts are inserted, are large gears which transmit power to this gimlet pointer. A metal guard covered these driving gears, but the guard was “ in a loose condition.”

Just before the accident occurred, claimant was sitting on a stool in front of the machine; the stool itself rested on a small platform. Because one of the bolts was too large, it jammed in the machine. This jamming, there was evidence to show, caused the loosened guard which covered the gears to fall from its position — leaving those gears exposed. As the guard flew to one side, claimant slipped; in attempting to shut off the machine’s power, his hand came into contact with the gears and, as a consequence, three fingers had to be amputated.

The Workmen’s Compensation Board, concluding that the employer had permitted claimant to work in violation of provisions of the Labor Law and of the Rules of the Board of Standards and Appeals, ordered the employer to pay compensation, pursuant to section 14-a of the Workmen’s Compensation Law, “ double the amount otherwise payable ”. The Appellate Division affirmed, and this court granted leave to appeal from so much of the order as relates to the award of double compensation.

Section 14-a of the Workmen’s Compensation Law provides “ Double compensation ” for minors “ suffered to work in violation of any provision of the labor law or in violation of any rule * * * adopted by the board of standards and appeals pursuant to subdivision eleven of section one hundred and forty-six of said law ’ ’, and that latter provision authorizes the board to “ adopt rules prohibiting or regulating the employment of * * * minors” after determining that a “process” or “method ” of manufacture is “dangerous or injurious to the health of minors under eighteen years ”. Pursuant to such authorization, the Board of Standards and Appeals adopted Rule 922 which (1) required “ the point of operation ” of certain ‘ ‘ dangerous machinery ” to be equipped with guards and (2) prohibited the employment of minors between the ages of sixteen and eighteen unless guards were used.

That this rule, covering the guarding of a machine’s “ point of operation ”, was not designed to cover guards on the driving gears in which claimant caught his hand, is made plain in the preceding rules. Thus, Rule 876 defines a “ Point of operation ” as a part of the machine “ where stock is actually inserted and maintained” during any necessary operation, and “Danger zone ” as a place “ at the point of operation, where the operator may be caught between the moving parts of the machine or between moving and stationary parts of machine, or between the material and the moving part or parts of the machine.” And Buie 877 provides that machines actually listed or machines “ similar ” in character “ in which the operator’s hands come within the danger zone shall be guarded at the point of operation ” in the manner specified.

As defined by Buie 876, the <£ point of operation ” on the machine at which claimant was working — the place where the ££ stock is actually inserted ” — was the place where the bolts were inserted. This was on the right side at the top of the machine, while the power gears in which claimant’s hand was caught were on the left side of the machine and at least eighteen inches away from the ££ point of operation ”. We cannot see how the failure of the employer to guard driving gears at the extreme left of the machine can be a violation of rules designed for the guarding of a point of operation located at the right end. The use of the phrase ££ danger zone ” does not extend the area defined by “point of operation”, for such “ danger zone ”, as is apparent from Buie 876 itself, lies within the “ point of operation ” and thereby restricts its area.

The Workmen’s Compensation Law should, of course, be liberally construed to carry out its beneficent purpose, but the courts may not invoke that principle to justify giving to a provision of the statute or a related rule — particularly one punitive in character — a construction at odds with its plain and evident meaning. To read the rule here involved as requiring guards for gears, remote from the machine’s point of operation, not only extends the language beyond permissible limits, but visits upon the employer a totally unwarranted penalty.

The order of the Appellate Division should be modified by reversing so much thereof as affirms the award requiring the employer to pay double compensation, and, as so modified, affirmed, without costs.

Dye, J.

(dissenting). It may not be said as a matter of law that the affirmed finding of fact that the gears in which the infant claimant lost his fingers were not a “ point of operation ” which was improperly guarded; that he was not employed in violation of subdivision 11 of section 146 of the Labor Law, and not entitled to double compensation benefits. The gimlet machine here involved is covered by the regulations (Rule 877) by which minors are forbidden to operate under penalty of double compensation for injuries unless guarded “ at the point of operation ” (Rule 922).

The point of operation ” (Rule 876, subd. 1) and “ danger zone ” (Rule 876, subd. 2), as we read the rule, need not be limited to the small hole where stock is actually inserted for shaping and forming or other necessary operation or where the operator may be caught between the material and the moving or stationary parts of the machine but extends to and includes the starting and stopping of such machine. Here it is an undisputed fact that the open and unguarded power gears were within eighteen inches of the slot — well within the orbit of the operator’s hands and thus within the danger zone at the point of operation. He lost his fingers while attempting to shut off the power which act, it seems clear and indisputable, was an other necessary operation ” sufficiently connected with the actual insertion of stock to be embraced by the rule and to justify double compensation for violation by the employer.

The order awarding double compensation should be affirmed, with costs.

Loughran, Oh. J., Lewis and Desmond, JJ., concur with Fuld, J.; Dye, J., dissents in opinion in which Conway and Froessel, JJ., concur.

Ordered accordingly.


text:
    Anthony Costaro et al., Respondents, v. Joseph Simons, as President of Newspaper and Mail Deliverers’ Union of New York and Vicinity, Defendant, and Rockaway News Supply Co., Inc., Appellant. Anthony Costaro et al., Appellants, v. Joseph Simons, as President of Newspaper and Mail Deliverers’ Union of New York and Vicinity, Defendant, and Rockaway News Supply Co., Inc., Respondent.
    (Appeal No. 1.)
    (Appeal No. 2.)
    Argued January 18, 1951;
    decided April 12, 1951.

      Julius Kass and Jack E. Bronston for appellant in first above-entitled action.
    I. The court is without jurisdiction to grant the relief requested since the matters alleged in the complaint are exclusively within Federal jurisdiction. (Gibbons v. Ogden, 9 Wheat. [U. S.] 1; Erie R. R. Co. v. New York, 233 U. S. 671; Bethlehem Steel Co. v. New York State Labor Relations Bd., 330 U. S. 767; National Labor Relations Bd. v. National Maritime Union, 175 F. 2d 686, 338 U. S. 954.) II. Congress intended its regulation of the matters upon which plaintiffs base their claim for relief to be exclusive of State regulation. (Amazon Cotton Mill Co. v. Textile Workers Union, 167 F. 2d 183; Bethlehem Steel Co. v. New York State Labor Relations Bd., 330 U. S. 767; Wisconsin Employment Relations Bd. v. Plankinton Packing Co., 255 Wis. 285.) III. The complaint actually sets forth an unfair labor practice charge and is therefore within the exclusive jurisdiction of the National Labor Relations Board. (Friedman v. Roseth Corp., 270 App. Div. 988, 297 N. Y. 495; Labow v. Para-Ti Corp., 272 App. Div. 890; Alonzo v. Industrial Container Corp., 193 Misc. 1008; Davis v. Hogan, 273 App, Div. 745; Faron v. Eastern Airlines, Inc., 193 Misc. 395.)

      Arthur G. Warner and James E. Birdsall for respondents in first above-entitled action.
    I. The complaint charges a common-law action for breach of its obligation as an agent by defendant union in collusion with defendant employer. II. The jurisdiction of the National Labor Relations Board is not so exclusive as to deprive the Supreme Court of its jurisdiction over common-law causes of action. (Clark v. Curtis, 297 N. Y. 1014; Barile v. Fisher, 94 N. Y. S. 2d 346.)

      Arthur G. Warner and James E. Birdsall for appellants in second above-entitled action.
    The complaint states a valid cause of action. (Clark v. Curtis, 297 N. Y. 1014.)

      Julius Kass, Jack E. Bronston and Richard Halpern for respondent in second above-entitled action.
    I. Defendant-respondent was under no legal duty towards plaintiffs. (Langhurst v. Pittsburgh & Lake Erie R. R., 97 Pitts. L. J. 517.) II. Plaintiffs possess no inherent rights to seniority upon which to base damages. (Elder v. New York Central R. R. Co., 152 F. 2d 361.) III. Plaintiffs have an adequate remedy at law in the form of a complete administrative remedy. (National Labor Relations Bd. v. National Maritime Union, 175 F. 2d 686, 338 U. S. 954; Evans v. International Typographical Union, 76 F. Supp. 881; Domanick v. Triboro Coach Corp., 18 N. Y. S. 2d 650; Gibbons v. Ogden, 9 Wheat. [U. S.] 1; Bethlehem Steel Co. v. New York State Labor Relations Bd., 330 U. S. 767; Wisconsin Employment Relations Bd. v. Plankinton Packing Co., 255 Wis. 285.) IV. The complaint involves a labor dispute as defined by section 876-a of the Civil Practice Act, and therefore the court is without power to grant the relief requested, without plaintiffs having complied with the procedural requirements of the statute. (Wishnetzky Food Products v. Osman, 27 N. Y. S. 2d 750; Loffini v. Bellitteri, 250 App. Div. 855; De Neri v. Gene Louis Inc., 261 App. Div. 920; Johnson v. Bee Line, Inc., 262 App. Div. 762.)
   Per Curiam.

We read the complaint as alleging that the controversy involves unfair labor practices within the purview of the Labor Management Relations Act of 1947 (§8, subd. [a], par. [3]; subd. [b], par [2]; U. S. Code, tit. 29, § 158, subd. [a], par. [3] ; subd. [b], par [2]). That being so, plaintiffs are under the necessity of resorting in the first instance to the National Labor Relations Board. (See, e.g., Steele v. Louisville & Nashville R. R. Co., 323 U. S. 192, 207; Switchmen’s Union v. National Mediation Bd., 320 U. S. 297, 301; Sunshine Anthracite Coal Co. v. Adkins, 310 U. S. 381, 404; Meyers v. Bethlehem Shipbuilding Corp., 303 U. S. 41, 50-51; Matter of Meng, 227 N. Y. 264, 277; Amazon Cotton Mill Co. v. Textile Workers Union, 167 F. 2d 183, 190; National Labor Relations Bd. v. Robbins Tire & Rubber Co., 161 F. 2d 798, 801; see, also, 1 Benjamin on Administrative Adjudication [1942], pp. 365-366.) It follows therefore, that the state courts lack jurisdiction of the complaint and that the motion to dismiss upon that ground should have been granted. In that view, the question as to the sufficiency of the complaint is rendered moot and academic (see Matter of Adirondack League Club v. Board of Black Riv. Regulating Dist., 301 N. Y. 219, 223; Wilmerding v. O’Dwyer, 297 N. Y. 664), and no purpose is to be served by considering the motion upon that ground.

The order of the Appellate Division affirming Special Term’s denial of defendant-appellant’s motion to dismiss the complaint upon the ground that the court lacks jurisdiction of the subject matter of the action should be reversed, the complaint dismissed, and the question certified answered in the negative, with costs in all courts.

The order of the Appellate Division and judgment entered thereon, reversing Special Term’s order denying defendant-respondent’s cross motions to dismiss the complaint for insufficiency and for summary judgment should be reversed, not on the merits, but solely because disposition of the motion to dismiss upon the ground that the court lacks jurisdiction of the subject matter of the action, has rendered the issues moot.

Lotjghran, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Feoessel, JJ., concur.

Ordered accordingly. [See 302 N. Y. 841.]


author: Loughran, Ch. J.

text:
    Alexander Simons, Individually and as a Stockholder of Simons Furniture Co., Inc., Respondent, v. Joseph Fried et al., Appellants.
    Argued February 26, 1951;
    decided April 12, 1951.

      Leslie Kirsch for appellants.
    I. The restrictive sentence has as a matter of law been unreasonably construed in respect to its implied territorial extent. (Matthews v. Associated Press of State of N. Y., 136 N. Y. 333.) II. The restraint must be coextensive only with the interest to be protected. (Diamond Match Co. v. Roeber, 106 N. Y. 473; Davis v. A. Booth & Co., 131 F. 31; Goldstein v. Maisel, 271 App. Div. 971.) III. The restraining sentence in question is void because it was not ancillary to the sale of a business or to the transfer of ..good will or other property or to any other transaction dependent on it for its effectiveness. (Brett v. Ebel, 29 App. Div. 256; Ru Ton v. Everitt, 35 App. Div. 412; Lynch v. Bailey, 275 App. Div. 527, 300 N. Y. 615; Wood v. Whitehead Bros. Co., 165 N. Y. 545; United States v. Addyston Pipe & Steel Co., 85 F. 271; Vancouver M. & S. B. Co. Ltd. v. Vancouver Breweries, Ltd., [1934] A. C. 181.) IV. The judgment appealed from erroneously disregards the express time limitation in the restrictive sentence. It also erroneously grants specific performance of the entire third agreement. (Hartung v. Hilda Miller, Inc., 133 F. 2d 401; National Labor Relations Bd. v. Express Pub. Co., 312 U. S. 426; Lyon v. Botchford, 25 Hun 57.)

      Joseph Leary Delaney, Edward S-. Menapace and Lee Feltman for respondent.
    I. The paragraph numbered 3 of the agreement is a reasonable and valid provision accurately representing the parties’ intention when the agreement was made, and is not in restraint of trade, and does not impose an unreasonable restriction upon the parties. (Kinsman v. Parkhurst, 18 How. [U. S.] 289; Matter of International Match Corp., 20 F. Supp. 420; Matthews v. Associated Press of State of N. Y., 136 N. Y. 333.) II. The individual defendants having willfully and deliberately violated paragraph 3 of the agreement, the Appellate Division properly affirmed the trial court’s judgment enjoining said defendants from violating such agreement and compelling specific performance thereof.
   Loughran, Ch. J.

There is a public policy which in general holds competent contracting parties to bargains made by them with their eyes open. There is, however, an antagonistic public policy which proscribes any contract that would bring about an unreasonable restriction of the liberty of a man to earn Ms living or exercise Ms calling (see General Business Law, § 340). Whether the last-stated policy condemns a contract wMch is here before us is the question now to be determined.

The contract was made in 1947. There are four parties thereto, namely, Betty Fried and her husband Joseph Fried, Alexander Simons and the Simons Furmture Co. Inc., a domestic corporation which operates a retail furmture and appliance store at Flushing, New York. None of the individual parties is under any obligation to work for the Simons Furmture Company. When the contract in question was made, the Frieds owned one half of the issued stock of that company and Alexander Simons owned the other half thereof.

The contract makes these provisions: “So long as the parties of the first, second and third parts [the Frieds and Alexander Simons] or the wife of the party of the third part, Florence Simons, are stockholders of the corporation [the Simons Furniture Company], neither of them shall become interested, directly or indirectly, either as an employee, owner, partner (dormant or otherwise) as agent, or as stockholder, director or officer of a corporation or otherwise, in any business similar to the business transacted by the corporation [the Simons Furmture Company]. In the event that the parties of the second or third parts [Joseph Fried and Alexander Simons] should sell, assign, hypothecate, transfer or pledge their interest in and to the stock of the corporation to their wives, Betty Fried and Florence Simons, respectively, neither of the p.arties of the second or tMrd parts [Joseph Fried and Alexander Simons] shall become interested, directly or indirectly, either as an employee, owner, partner (dormant or otherwise) as agent, or as stockholder, director or officer of a corporation or otherwise, in any business similar to the business transacted by the corporation [the Simons Furniture Company]. * * * Any party to this agreement shall have the right to restrain by injunction any breach or threatened breach of tMs agreement by any of the other parties hereto, and any of the parties to tMs agreement shall have the right to compel specific performance of the terms of this agreement.”

In September, 1949, Joseph Fried organized and became a stockholder of Parsippany Showroom, Inc., a corporation wMch then began to conduct a business in the course of wMch furmture and appliances were sold at retail in Parsippany, New Jersey. Since the Frieds then still owned half of the issued stock of the Simons Furniture Company, Alexander' Simons brought this action to restrain them from engaging in their Parsippany business and to compel them specifically to perform their covenant not to become interested in any business similar to the business of the Simons Furniture Company, so long as they were stockholders of that company. A judgment to that effect was granted to Alexander Simons by the court at Special Term. The Appellate Division affirmed, one Justice dissenting and the Frieds then brought the case here, joining the Simons Furniture Company with them as appellant.

The contract in suit permits a sale by the Frieds of their stock in the Simons Furniture Company provided they first offer to sell that stock to Alexander Simons who, if he elects to buy it, must pay a price to be fixed in accordance with a stipulated method of valuation. Thus the Frieds have only to dispose of their Simons Company stock in accordance with the contract and they will then be wholly free to engage or invest in any lawful business anywhere.

The Frieds are not wanting in understanding. No fraud or imposition was practiced upon them by Alexander Simons. The contract in question was carefully drawn. We find therein no element of unfairness. The Frieds ought therefore to be held to their bargain.

The judgment should be affirmed, with costs.

Lewis, Conway, Desmond, Dye, Fuld and Fboessel, JJ., concur.

Judgment affirmed.