author: Rippey, J.

text:
    Lawyer Weidman, Respondent, v. Elmer Ketcham, Appellant.

      Argued April 18, 1938;
    decided May 24, 1938.

      Clyde H. Proper for appellant.
    The verdict was against the weight of the evidence. (Rumney v. Worthley, 186 Mass. 144.) The contents of the written card were not disclosed by the defendant. (Snyder v. Andrews, 6 Barb. 43.)

      William H. Dynes for respondent.
    There was a publication of the postcard. (Townshend on Slander & Libel, § 95; McLaughlin v. Schellbacher, 65 Ill. App. 50; Callan v. Gaylord, 3 Watts [Pa.], 321; Fox v. Broderick, Tr. L. C. 453; Rumney v. Worthley, 186 Mass. 144; Seip v. Deshler, 170 Penn. St. 334; Pullman v. Hill & Co., [1891] 1 Q. B. 524; Miller v. Johnson, 79 Ill. 58; Hammond v. Stewart, 72 Ill. App. 512; Schenck v. Schenck, 20 N. J. L. 208; Snyder v. Andrews, 6 Barb. 43; Miller v. Donovan, 16 Misc. Rep. 453; Van Clief v. Lawrence, 2 City Hall Recorder, 41; Ostrowe v. Lee, 230 App. Div. 461; 256 N. Y. 36.)
   Rippey, J.

This action was brought to recover damages for libel. After a verdict was rendered for plaintiff, a motion by defendant to set it aside was granted and defendant’s motion to dismiss the complaint at the close of plaintiff’s case and renewed at the close of all the evidence, upon which decision had been reserved, was granted. The Appellate Division reversed the judgment entered for defendant and reinstated the verdict. Defendant does not question here that there was sufficient evidence to warrant the jury to find that the written words constituted a libel. -He asserts that there was no evidence of publication, without which no action will lie.

There can be no actionable libel unless the defamatory writing, through some act or the carelessness of the defendant, is read by or otherwise communicated to someone other than the person defamed who understood its meaning and knew to whom it referred (Youmans v. Smith, 153 N. Y. 214, 218; Snyder v. Andrews, 6 Barb. 43, 46; Ostrowe v. Lee, 256 N. Y. 36; 38; Townshend on Slander and Libel [4th ed.], § 95; Seelman on the Law of Libel and Slander, § 121). The author may directly publish it. He may read it and give information as to whom it relates to a third party. He may treat the writing in such a way that the natural or reasonably expected result will be that it will come into the hands of a third party before it reaches the person defamed. He might then be required to pay for his improper conduct if the writing is defamatory, 'malicious, untrue, and not privileged. But if he keeps the writing to himself or communicates it only to the one to whom it relates, there is.no publication upon which any suit for damages may be based. Plaintiff set forth in his complaint and attempted to establish at the trial that the libel was published within the meaning of the above (1) at the post office at Schoharie, New York, and (2) at the home of the plaintiff. The question as to whether there was publication at either place was submitted to the jury. It is necessary to consider the testimony in its aspect most favorable to the plaintiff to determine whether or not there was evidence of publication of the libel at either place.

For evidence that the libel was published at the post office, plaintiff must rely on the testimony of the postmaster and that of defendant. If the jury discarded that, there was no evidence concerning the happenings in the post office. The following appeared from their testimony. The defendant was the assistant postmaster at Schoharie, New York. Early in the morning of October 8, 1934, he wrote upon a postcard which was addressed to the plaintiff at Esperance, New York, the following words: “ You want to come and pay for those apples that you have stole out of my orchard or I will have you arrested. Yours, Elmer Ketcham.” The postmaster was present in the office at the time the writing was done but was from fifteen to eighteen feet from defendant and did not see the writing on the card. No other person was present. Defendant said to the postmaster that he was sending a card to a man who had been in his orchard stealing apples. The postmaster did not see the address on the card and was not told to whom it was to be sent, nor was the name of any person mentioned. Defendant was either told by the postmaster or decided for himself that the card should not be sent through the mail without being inclosed in an envelope. He thereupon procured a stamped envelope, placed the postcard in the envelope, sealed the envelope and addressed it to the plaintiff. There is no evidence that the postmaster saw the address on the envelope or knew to whom it was to be sent. Defendant’s duties were to make up the mail that left the post office each morning in bundles and put them in the mailbag for delivery. He took the sealed envelope, placed it in a bundle with other mail matter, placed the bundle in a bag for delivery and gave the bag to the carrier. Without evidence that the postmaster knew to whom the defamatory card or its containing envelope was addressed or to whom it referred, there was no publication within the meaning of that requirement in the law of defamation (Miller v. Maxwell, 16 Wend. 9; Northrop v. Tibbies, 215 Fed. Rep. 99). It is asserted that the jury might infer the postmaster knew and must have known to whom the card was sent. The evidence may have furnished food for speculation. But imagination and speculation are no substitute for proof. From the evidence here adduced, the jury could not infer the essential fact that the postmaster knew to whom the libel referred (Pauley v. Steam Gauge & Lantern Co., 131 N. Y. 90, 100; Kelly v. Nassau Electric R. R. Co., 227 N. Y. 39, 42; Corrigan v. Bobbs-Merrill Co., 228 N. Y. 58, 69; Von Reitzenstein v. Tomlinson, 249 N. Y. 60, 67).

The sealed envelope addressed to the plaintiff containing the libelous postcard was delivered the same morning by carrier to the mailbox at plaintiff’s premises. Plaintiff was away from home at the time. His wife procured the envelope from the box, opened it, read the contents and handed the card to plaintiff’s mother, who also read it. Libelous matter may be published to members of the family of the person defamed the same as to others, and the mere fact of the relationship of the parties would not relieve defendant from the charges and consequences of the publication, if made (Schenck v. Schenck, 20 N. J. L. 208; Hammond v. Stewart, 72 Ill. App. 512; Miller v. Johnson, 79 Ill. 58; Rumney v. Worthley, 186 Mass. 144).

There is no presumption of fact or law that sealed mail matter addressed to one member of a family will be opened and the contents read by another. The evidence in this case established that plaintiff’s wife was not only authorized to open his mail during his absence but had frequently done so. The fact that she was so authorized and that it was the custom and practice for her to open and read plaintiff’s mail during his absence. is insufficient to fix liability for publication upon the defendant in the absence of knowledge or information on his part that she had and exercised such authority or in the absence of there being reasonable grounds to believe that such an arrangement existed (Youmans v. Smith, supra; Rumney v. Worthley, supra). There was no evidence that the defendant had any knowledge of such authority or practice. He testified that he had no such knowledge. Neither was there any evidence or facts from which any inference might be drawn that he had reasonable grounds to believe or might have reasonably anticipated or might have delivered the matter with the expectation that it would come into the hands of some third person and be read. In the absence of such evidence, the defendant had the right to assume that the plaintiff alone would first see the contents of the envelope. Subsequent communication by him of the libelous matter to members of his family would have constituted a publication by him and not by the author.

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

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

Judgment accordingly.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    City Bank Farmers Trust Company, as Trustee, Respondent, against Ado T. Miller et al., Respondents, and Chester L. O’Brien et al., Appellants.

      Argued April 19, 1938;
    decided May 24,1938.

      Leslie Kirsch, Joseph Glass and Walter A. Lynch for Chester L. O’Brien, appellant.
    The trust agreement gave rise to a reversion, not a remainder subject to a power of appointment, (Whittemore v. Equitable Trust Co., 250 FT. Y. 298; Berlenbach v. Chemical Bank & Trust Co., 235 App. Div. 170; 260 N. Y. 539; Doctor v. Hughes, 225 N. Y. 305; Davies v. City Bank Farmers Trust Co., 248 App. Div. 380; Guaranty Trust Co. v. Harris, 267 N. Y. 1; Cruger v. Union Trust Co., 173 App. Div. 797; Morsman v. Commissioner of Internal Revenue, 90 Fed. Rep. [2d] 18; Fidelity & Trust Co. v. Williams, 268 Ky. 671; Sequin State Bank & Trust Co. v. Locke, 102 S. W. Rep. [2d] 1050.) The fund held by plaintiff is subject to appellant O’Brien’s right of election. (Newman v. Dore, 275 N. Y. 371; Matter of Byrnes, 260 N. Y. 465; Bodner v. Feit, 247 App. Div. 119; Rubin v. Myrub Realty Co., 244 App. Div. 541; Matter of Ogsbury, 7 App. Div. 71; Matter of Sadowski, 246 App. Div. 490; Matter of Green, 155 Misc. Rep. 641; 246 App. Div. 583; Persky v. Bank of America Nat. Assn., 261 N. Y. 212.) If it be held that the trust agreement created a remainder subject to a power of appointment, the deceased’s surviving spouse, father and mother are entitled to take the appointive fund as remaindermen, in default of exercise of the power of appointment. (Guaranty Trust Co. v. Halsted, 245 N. Y. 447; Herzog v. Title Guarantee & Trust Co., 210 N. Y. 531.) Assuming that there was a remainder and not a reversion, the surviving spouse, father and mother are entitled to take the appointive fund on the ground that the anterior will was not intended to be an exercise of the posterior power. (Chase Nat. Bank v. Chicago Title & Trust Co., 246 App. Div. 201; United States Trust Co. v. Chauncey, 32 Misc. Rep. 358; Title Guarantee & Trust Co. v. Ebaugh, 184 N. Y. Supp. 351; Gassinger v. Thillman, 160 Md. 194; Close v. Farmers’ Loan & Trust Co., 195 N. Y. 92; Moffett v. Elmendorf, 152 N. Y. 475.) If exercised at all, the power was exercised by the entire will, not the residuary clause. In that event, the appointive fund passed to the executor and merged with her general estate, subject to her surviving spouse’s right of election and payment of all her debts and legacies. (Lockwood v. Mildeberger, 159 N. Y. 181; Matter of Blackinton, 153 Misc. Rep. 580; Matter of Thompson, 126 Misc. Rep. 99; 218 App. Div. 130; 245 N. Y. 565; Dillon v. Spilo, 275 N. Y. 275; Schenck v. Barnes, 156 N. Y. 316; Cutting v. Cutting, 86 N. Y. 522; Mercantile Trust Co. v. Bergdorff & G. Co., 167 Md. 158; Matter of Title G. & T. Co., 195 N. Y. 339.)

      Joseph P. Brennan, Jr., for Edwin D. Reynolds, appellant.
    The power of appointment, if exercised at all, was exercised by the entire will, not the residuary clause. In that event the appointive fund passed to the executor and merged with the general estate of the deceased subject to the payment of all her debts and legacies. (Fargo v. Squiers, 154 N. Y. 250; Farmers Loan & Trust Co. v. Kip, 192 N. Y. 266; Matter of Franklin Trust Co., 103 Misc. Rep. 143; Matter of Blackinton, 153 Misc. Rep. 580; Low v. Bankers Trust Co., 270 N. Y. 143.)

      Edward M. Cameron, Jr., and Isaac J. Quesenberry for plaintiff, respondent.
    Upon the death of the settlor the inter vivas trust property passed pursuant to the terms of the trust agreement either to the appointees under her will or to the class of persons who constituted her distributees as though she had died intestate and domiciled in this State. The trust agreement created a remainder now subject to the settlor’s power of appointment by will, and not a reversion. (Whittemore v. Equitable Trust Co., 250 N. Y. 298; Cons. Laws, ch. 13, § 47; Matter of Slade, 154 Misc. Rep. 275; Parsons v. Lyman, 20 N. Y. 103; Moultrie v. Hunt, 23 N. Y. 394; Doctor v. Hughes, 225 N. Y. 305; Hussey v. City Bank Farmers Trust Co. 236 App. Div. 117; 261 N. Y. 533; Kuntze v. Guaranty Trust Co., 242 App. Div. 7; 265 N. Y. 669; Guaranty Trust Co. v. Harris, 267 N. Y. 1; Schoellkopf v. Marine Trust Co., 267 N. Y. 358.) The power of appointment under the inter vivas trust agreement was exercised by the residuary clause of the will. (Howard v. Carusi, MacArth. & M. [D. C.] 260; 109 U. S. 725; United States Trust Co. v. Chauncey, 32 Misc. Rep. 358; Title Guaranty & Trust Co. v. Ebaugh, 184 N. Y. Supp. 351; Lockwood v. Mildeberger, 159 N. Y. 181; Low v. Bankers Trust Co., 270 N. Y. 143; Matter of Pennsylvania Co., 264 Penn. St. 433; Matter of Beaumont, 147 Misc. Rep. 118; Matter of Franklin Trust Co., 103 Misc. Rep. 143.) The power of appointment under the inter vivas trust agreement was not exercised in favor of the executor. (Cutting v. Cutting, 86 N. Y. 522; Farmers’

      Loan & Trust Co. v. Mortimer, 219 N. Y. 290; Crooke v. County of Kings, 97 N. Y. 421; Kirsch v. Bucki, 162 App. Div. 659; Matter of Beaumont, 147 Misc. Rep. 118.) The inter vivas trust fund is not subject to right of election by appellant O’Brien. (Whittemore v. Equitable Trust Co., 250 N. Y. 298; Herrmann v. Jorgenson, 263 N. Y. 348; Matter of McCulloch, 263 N. Y. 408; Bodner v. Feit, 247 App. Div. 119; Rubin v. Myrub Realty Co., 244 App. Div. 541; Newman v. Dore, 275 N. Y. 371.)

      Samuel W. Tannenbaum and Harry A. Tifford for Ado T. Miller, defendant-respondent.
    There was a valid exercise of the power of appointment by the will even though the power reserved in the trust agreement was created after the making of the will. (Lockwood v. Mildeberger, 159 N. Y. 181; Low v. Bankers Trust Co., 270 N. Y. 143; Hirsch v. Bucki, 162 App. Div. 659; United States Trust Co. v. Chauncey, 32 Misc. Rep. 358; Title Guaranty & Trust Co. v. Ebaugh, 184 N. Y. Supp. 351; Matter of Pennsylvania Co., 264 Penn. St. 433.) The settlor created a fund separate and apart from her estate. (Van Cott v. Prentice, 104 N. Y. 45.) The exercise of the power of appointment in favor of the testamentary trustee was valid. (49 C. J. 1267; Farmers Loan & Trust Co. v. Kip, 192 N. Y. 266; Low v. Bankers Trust Co., 270 N. Y. 143; Maynard v. Farmers Loan & Trust Co., 119 Misc. Rep. 503.) To hold that the power of appointment was exercised in favor of the executors under the will would destroy the evident intention of the deceased to make her mother and sisters her principal beneficiaries. (Farmers Loan & Trust Co. v. Kip, 192 N. Y. 266; Low v. Bankers Trust Co., 270 N. Y. 143; Bevan v. Cooper, 72 N. Y. 317; Matter of Beaumont, 147 Misc. Rep. 118.) The settlor, by her trust agreement, made a complete disposition of all her interest in the trust fund and created a valid remainder in her appointee designated under the residuary clause of her will. (Whittemore v. Equitable Trust Co., 250 N. Y. 298; Beam v.
      Central Hanover Bank & Trust Co., 248 App. Div. 182; Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Guaranty Trust Co. v. Harris, 267 N. Y. 1; Nicoll v. New York & Erie R. R. Co., 12 N. Y. 121.)

      William Caverly for W. Laurence Whittemore, defendant-respondent.
    The deceased was both the settlor and the beneficiary of the trust fund. It was, therefore, a transfer of personal property in trust for the use of the person making the transfer and, in so far as her creditors are concerned, it is absolutely void. (Matter of Blackinton, 153 Misc. Rep. 580; Young v. Heermans, 66 N. Y. 374; Jackson v. Tallmadge, 124 Misc. Rep. 389; 216 App. Div. 100; 246 N. Y. 133.)

      Gerald B. O’ Neill and Robert C. Thomson, Jr., for William M. Chadbourne, as executor of Marilyn M. O’Brien, deceased, defendant-respondent.
   Finch, J.

This is an appeal by defendants-appellants from a final judgment of the Supreme Court, based on an interlocutory judgment, for the construction of an inter vivas trust agreement. The appeal brings up for review the determination and order of the Appellate Division unanimously affirming said interlocutory judgment. Appellant O’Brien has excepted from his appeals so much of the interlocutory and final judgments as determined that he has duly elected to take the share of the estate of his deceased wife which, as her surviving spouse, he is entitled to receive pursuant to section 18 of the Decedent Estate Law (Cons. Laws, ch. 13).

Appellant Reynolds has excepted from his appeal so much of the interlocutory and final judgments as determined that the creditors of the settlor may invade the trust fund to the extent that the assets of the estate are insufficient to discharge their claims. In brief, the question involved is whether the remainder of the trust funds in the hands of the plaintiff, as trustee under an inter vivas trust which terminated upon the death of the settlor, goes to her estate to be administered by her executor under her will or to her next of kin according to the laws of New York regarding intestacy, under the terms of the inter vivas trust, or to the testamentary trustee under the will, having regard to the rights of creditors in the last two contingencies.

The facts, in so far as necessary to present the questions, are, briefly, as follows: On April 23, 1931, Mrs. O’Brien, then unmarried and known as Marilyn Miller, executed a will. She then possessed an estate having a net worth of half a million dollars. When she died five years later her estate, exclusive of some $63,000 then held by plaintiff under the inter vivas trust, had $31,000 in assets against the claims of creditors of $34,000.

By her will, after directing that her debts and funeral expenses and testamentary charges be paid, she bequeathed to her two sisters and to her niece certain personal effects. To her father, the appellant Reynolds, she bequeathed $25,000. To Robert Montgomery and John Sweeney, her sisters’ husbands, she bequeathed $1 each. To Carrie Carter, the mother of her deceased first husband, she bequeathed $15,000. To Woodlawn Cemetery she bequeathed $5,000 in trust to apply the income to improve and maintain her own mausoleum. All the rest, residue and remainder of her estate she bequeathed to the executors and trustees, therein named, in trust, to receive and collect the income, and to pay the same to her mother in the sum of $150 per week, and such additional sums from time to time as my Executors and Trustees shall, in their uncontrolled discretion, consider necessary for her comfortable maintenance and support, so long as she shall live; such payments to be made out of the income of said trust fund, and out of the principal thereof to the extent, if any, that such income shall be insufficient for the purpose.” Upon the death of the mother, any balance of income and the principal of the trust fund then remaining was given to the two sisters or to their issue if they be not living. At the time of the making of the will and for the two preceding years Marilyn Miller had received as income for her services an annual sum of approximately $260,000.

On October 1, 1934, approximately three and one-half years after the execution of her will, Marilyn Miller married as her third husband Chester Leo O’Brien. For the next two years Mrs. O’Brien spent approximately $144,000 in living expenses for herself and her husband and gave to her husband in addition some $65,000. On July 26, 1935, apparently fearful of her own extravagance, Mrs. O’Brien, then a resident of the borough of Manhattan, city of New York, gave to plaintiff City Bank Farmers Trust Company, as trustee, some $82,000 with which to purchase approximately $78,000 of United States government securities under an inter vivas trust providing that the trustee should pay to the settlor the sum of $500 weekly so long as the net income and the principal shall provide funds for that purpose and leave over in the hands of the trustee the sum of at least $5,000. When the principal of the trust fund is reduced to $5,000 or less by reason of these payments, or for any other reason, the trust shall cease and the then principal shall be distributed to the settlor. On the death of Mrs. O’Brien the trustee is to dispose of any remaining principal as she shall by her last will and testament appoint, or, in default of such appointment, to the parties who would be her distributees under the laws of the State of New York. The trustee could only reinvest the principal in securities of the government of the United States. The trust agreement also contained provisions permitting additions to the trust. None was ever made. The original investment of $78,000 principal amount of United States Treasury notes was never changed, except such sales were made as were necessary to pay to Mrs. O’Brien the $500 weekly out of the principal. At the time of her death such payments had reduced the principal to the extent of more than $16,000. Appellant O’Brien, as the surviving spouse of Mrs. O'Brien, duly elected to take the share of her estate which he was entitled to receive pursuant to section 18 of the Decedent Estate Law.

From the terms of the trust agreement alone it must be determined whether the settlor intended to reserve a reversion in herself or to make a gift in remainder to her distributees. (Whittemore v. Equitable Trust Co., 250 N. Y. 298.) If it be determined that a proper construction of this instrument shows a reversion in the settlor and not a remainder to others, then we need consider no further the other proposed questions. It has already been noted that no one, at least until the exercise of the power of appointment, had any interest in the trust agreement except the settlor. Principal and income was to be paid in a weekly sum to the settlor. When the principal of the trust was reduced to $5,000 or below, the entire remainder was to be paid to the settlor. In default of the exercise of the power of appointment, what remained of principal and interest under the trust agreement was to go to the next of kin as provided by the laws relating to intestacy of the State where the settlor resided. Whether or not a power of appointment should be exercised, and, if so, for whose benefit it should be exercised, depended solely upon the will of the settlor. If the latter had determined to revoke this trust under section 23 of the Personal Property Law (Cons. Laws, ch. 41), no other consent would have been required than that of the settlor, because no one else had any interest as a beneficiary under the trust. The intent as expressed in the trust agreement was that the property was to be returned to the donor if she lived long enough. If not, then it should go to her legatees or next of kin. In either event it would go as her property. In case of intestacy, those who would take would take as next of kin and not by purchase. In such case no remainder was created but a reversion only. (Doctor v. Hughes, 225 N. Y. 305; Berlenbach v. Chemical Bank & Trust Co., 235 App. Div. 170; affd., 260 N. Y. 539.)

Respondents urge that the foregoing cases relate to the revocability of a trust during the lifetime of a settlor, and contend that the death of the settlor affects the question of construction as to whether a reversion or a remainder was created. Whether construed during the lifetime or at the time of death has no effect on whether the trust agreement sets up a remainder or a reversion. During the lifetime of the settlor no one had any interest in the trust agreement except the settlor, and at the instant of her death, being a reversion, it would pass as part of her estate. The nature of the estate created by the trust deed is determined once and for all at the moment of the legal inception of the trust deed. Whether this deed is construed during the lifetime or after the death of the settlor, the nature of the estate created by the intent of the settlor, as measured by the language of the trust deed, remains the same. No valid distinction exists between the case at bar and the authorities cited.

It is further urged that because the settlor directed that any residue of principal existing at her death, in default of appointment by her last will and testament should pass according to the laws of intestacy of the State of New York, causes us to hold that a remainder and not a reversion has been created. At the time of the inception of this trust deed the settlor was a resident of the State of New York. Hence the provision respecting the disposition of the balance after the cessation of her life estate merely provided for the same disposition as would have occurred had she not used the words she did. In so doing she merely reserved in herself the balance of her estate after the life estate ceased. There was thus created no more than a reversion. (Doctor v. Hughes, supra.) The respondents rely on Schoellkopf v. Marine Trust Co. (267 N. Y. 358). That case, however, is not an authority for respondents. There the settlor directed that the income and principal be paid to such of his heirs under the laws of the State of New York as would be living, not at the time of his death, but at the time of distribution, upon the expiration of the Uves of the two grandchildren whose lives he employed to measure the duration of the trust. If these grandchildren had lived until the time of the expiration of the two lives which were employed to measure the trust, they would have taken under the definition of the word “ heirs ” as it was used in the Schoellkopf trust.

In the case at bar the settlor provided for distribution at her death according to the laws of her domicile, and did not intend to vary the ordinary line of intestate succession. (Doctor v. Hughes and Whittemore v. Equitable Trust Co., supra.) The direction to the trustee to dispose of any remaining principal or income on the death of the settlor in one of two ways only, namely, in accordance with her will or the laws of intestacy, was merely a superficial expression of a duty imposed upon the trustee by law. The same disposition would have occurred had not those directions been contained in the trust agreement.

It follows that the trust agreement gave rise to a reversion and not a remainder subject to a power of appointment. The fund held by the plaintiff, therefore, passes to the executors of Mrs. O’Brien, subject to the right of election of her surviving spouse and the administration of the fund in accordance with her will.

■ The orders and judgments, in so far as appealed from, should be reversed and judgment directed in favor of the appellants in accordance with this opinion, without costs.

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

Ordered accordingly.


text:
    In the Matter of Charles Beckmann, as Executor of William Beckmann, Deceased, Appellant, against Charles N. Talbot, Jr., et al., Composing the Board of Trustees and Building Committee of the Village of Island Park, Respondents.
    Argued April 18, 1938;
    decided May 24, 1938.

      Robert L. Callahan and Joseph P. Brennan for appellant.
    The Zoning Board of Appeals properly granted a variance of the zoning ordinance. (People ex rel. St. Albans S. Corp. v. Connell, 257 N. Y. 73; Matter of Eaton v. Sweeny, 257 N. Y. 176; Dowsey v. Village of Kensington, 257 N. Y. 221; People ex rel. Sheldon v. Board of Appeals, 234 N. Y. 484.) The determination of the Zoning Board of Appeals may not be reviewed in this mandamus proceeding for the Board is not a party to the proceeding and the record of its proceedings is not before the court. (Lewis v. City of Lockport, 276 N. Y. 336; Matter of Tishman Realty & Const. Co. v. Walsh, 135 Misc. Rep. 315; People ex rel. Werner v. Walsh, 212 App. Div. 635; 240 N. Y. 689; People ex rel. Fordham, M. R. Church v. Walsh, 244 N. Y. 280; Matter of Rosenbush v. Keller, 271 N. Y. 282; Matter of Towers Management Corp. v. Thatcher, 271 N. Y. 94.) There was no evidence of an attempt by the Board of Appeals to amend or set aside the zoning ordinance. (People ex rel. Sheldon v. Board, of Appeals, 234 N. Y. 484; Matter of Levy v. Board of Standards & Appeals, 267 N. Y. 347; Matter of Pounds v. Board of Standards & Appeals, 129 Misc. Rep. 676; 223 App. Div. 861; 248 N. Y. 591; People ex rel. St. Albans S. Corp. v. Connell, 257 N. Y. 73; Matter of Goldenberg v. Walsh, 242 N. Y. 576; Matter of Smith v. Ross, 243 App. Div. 562; Matter of New York & Richmond Gas Co. v.
      Connell, 242 App. Div. 691; Matter of Vesell v. Board of Standards & Appeals, 137 Misc. Rep. 806; 225 App. Div. 742; Matter of Tishman Realty & Const. Co. v. Walsh, 135 Misc. Rep. 315.) The Appellate Division erred in reversing the order upon grounds not urged at Special Term. (People ex rel. Minard v. Donovan, 228 App. Div. 596; People ex rel. Hoefle v. Cahill, 188 N. Y. 489; People ex rel. McGinley v. Cahill, 188 N. Y. 623; Berman v. Kadin, 140 Misc. Rep. 77; Day v. Town of New Lots, 107 N. Y. 148.)

      Simon M. Platt and Francis J. Williams for respondents.
    The Board of Appeals in granting the appeal for a variance attempted to amend the village ordinance. (Matter of Pounds v. Board of Standards & Appeals, 129 Misc. Rep. 676; 223 App. Div. 861; 248 N. Y. 591; Matter of Levy v. Board of Standards & Appeals, 267 N. Y. 347; Matter of Stevens v. Clarke, 216 App. Div. 351; Altschul v. Ludwig, 216 N. Y. 459; Norris v. Wurster, 23 App. Div. 124.) The Board of Trustees had the right to prohibit storage within the village. (Matter of Church v. Bouyea, 246 App. Div. 109; Matter of Cherry v. Isbister, 201 App. Div. 856; 234 N. Y. 607; Matter of Larkin Co. v. Schwab, 242 N. Y. 330.) The court cannot lend its aid and approval to the performance of an illegal act. ■ (New York Fire Department v. Gilmour, 149 N. Y. 453; Kathan v. Jones, 201 App. Div. 580; Altschul v. Ludwig, 216 N. Y. 459; Norris v. Wurster, 23 App. Div. 124; Matter of Lindgren, 198 App. Div. 319.) A question of jurisdiction may be raised at any time. (Matter of Doey v. Howland Co., 224 N. Y. 30.)
   Rippey, J.

Article 7 of the Building Zone Ordinances of the village of Island Park, adopted in conformity with the Village Law of the State of New York (Cons. Laws, ch. 64), on December 22, 1932, provided that in an industrial district all uses are permitted except that no building or premises shall be used and no building, or part thereof shall be erected or altered which is arranged, intended or designed to be used for any of the following specified trade industries or uses; * * * Storage or refining of petroleum except storage of gasoline in garages or oil filling stations under conditions allowed by law.” Petitioner was the owner of vacant property within an industrial district in said village and applied to the proper village authorities for permission to use the premises for the erection of tanks in connection with the business of the storage or refining of petroleum. The application was denied. An appeal was taken to the Board of Zoning Appeals from the decision of the Building Committee, where a variance was granted. No review by way of certiorari of the decision of the Board of Zoning Appeals was had by the village authorities. After the time had expired within which such a review could be had the petitioner applied to the trustees, who constituted the Building Committee under the ordinance of the village, for a permit under section 7 of the Building Ordinances to erect the tanks the erection of which had been allowed by the decision of the Zoning Board of Appeals. The application was denied, whereupon petitioner sought and procured a peremptory order of mandamus requiring the Board of Trustees of the village to grant the permit. The order of mandamus was reversed by the Appellate Division on the law and not in the exercise of discretion.

We are not called upon to pass on the constitutionality of the ordinance or upon the question of whether it is within the legislative grant to villages under the general Village Law. We take the ordinance as we find it under the particular circumstances in this case as shown by the record before us to determine, assuming it to be constitutional and legally enacted, whether the Zoning Board of Appeals had jurisdiction, in the first instance, to entertain and pass upon the appeal. If it had that jurisdiction we may not consider the propriety of its action in this proceeding for several reasons, among which the following are sufficient: (1) The Board of Appeals is not a party to the proceeding; (2) the record of the proceeding before that Board is not before us; (3) that question can be brought before the courts only in certiorari proceedings instituted by the party aggrieved to review the decision of the Zoning Board of Appeals as and within the time provided by section 179-b of the Village Law (Laws of 1923, ch. 564, as amd. by Laws of 1927, ch. 650). If aggrieved, the statute gave the village a remedy by certiorari which was complete and adequate. That remedy was exclusive. (Cf. Lems v. City of Lockport, 276 N. Y. 336.) The respondents failed to avail themselves of the remedy provided and the time has long since passed within which they might have applied for an order in such a proceeding. The parties to the proceeding were there the same as here. The Building Committee and the Board of Trustees are made up of the same persons. The rule that a prior judgment is a bar to further proceedings has application alike whether it be in a formal action or in a special or summary proceeding. (Supervisors of Onondaga v. Briggs, 2 Den. 26, 33; Van Wormer v. Mayor, 15 Wend. 262; Demarest v. Darg, 32 N. Y. 281.)

There are no facts in the record that indicate that the petitioner sought to set aside the zoning ordinance as a whole. It is conceded that the property involved was in “an industrial district ” within said village. . How many other industrial districts may have been created within the village does not appear. All uses of property within any industrial district are permitted by the ordinance except that no building therein should be erected or used for the “ storage or refining of petroleum except storage of gasoline in garages or oil filling stations under conditions allowed by law.” There is no evidence in the record that the village ordinances contain any absolute prohibition against the storage of petroleum products. Petitioner sought permission to erect on certain of his property within this particular industrial district storage tanks for petroleum products and a variation of the ordinance for that purpose. It appears that the property in the neighborhood was wholly given over to industrial purposes. The property of petitioner was bounded on the north by a private right of way, on the east by the tracks of the Long Island Railroad, on the south by the Wreck Lead Channel, a deep water channel, also known as Reynolds Channel, and on the west by the property of Whitney-Dodson, Inc. It does not appear that there was any residential property within the district and the district was not so zoned. In 1932, before the zoning ordinance went into effect, the Whitney Company erected and has since been using storage tanks of 200,000 gallons capacity for the storage of petroleum products, and immediately to the west the Petroleum Heat and Power Company maintains tanks on its property of 840,000 gallons capacity, an office building, garage and power house. There can be no doubt that, under the existing facts, the Board had power to entertain an appeal from the decision of the Building Committee and that it had power to grant a variation of the regulation contained in the zoning ordinance under definitely formulated statutory procedure. It is provided in section 179-b of the Village Law that where there are practical difficulties or unnecessary hardship in the way of carrying out the strict letter of such ordinance, the board of appeals shall have the power in passing upon appeals, to vary or modify the application of any of the regulations or provisions of such ordinance relating to the use, construction or alteration, of buildings or structures, or the use of land, so that the spirit of the ordinance shall be observed, public safety and welfare secured and substantial justice done.” As above stated, we cannot concern ourselves as to whether the decision of the Board upon appeal was correct upon the merits. It will be noted, however, that all the relief asked by petitioner was not granted. Application was made for á ■ variance as to lots 1 to 8 in block 14 on the map of Island Park-Long Beach, Inc. This variance was denied. The application was also for a variance as to lots 115 to 122 in block 30 on said map. That variance was granted. Both parcels of lots were in the same unrestricted district. The variance to allow the use of lots 115-122 to be used for the erection of oil tanks ás described in the application was granted “ upon the ground that there are practical difficulties and unnecessary hardships in the way of carrying out the strict letter of the said zoning ordinance of said Village.” The basis for the granting of the variation was for the special benefit of the petitioner alone. There is nothing in the record to indicate that it was not in harmony with the spirit of the ordinance, would not promote equal justice, would be subversive to the public health, safety and general welfare, or that the enforcement of the ordinance according to its strict letter would not create a special and unnecessary hardship and difficulty only as to him. There is nothing in the record to indicate that the Board of Appeals abused its discretion or acted in bad faith or that its action was unreasonable, arbitrary, discriminatory or illegal, and the variation could not here be set aside. (People ex rel. Werner v. Walsh, 212 App. Div. 635; affd., 240 N. Y. 689.) The Board, having jurisdiction to entertain the appeal and vary the ordinance, in this proceeding it must conclusively be presumed that it acted according to law.

Thereupon an application was made to respondents, as required by section 7 of the Building Ordinances, for a permit to erect five tanks on the property. Attached to the application were detailed plans and specifications, as required by the ordinance, and the applicant agreed that he would “ comply with all reasonable regulations of the incorporated Village of Island Park, which in any practical way assure greater safety, comfort and protection.” The application was denied by the passage of the following resolution: “ While the Board has no objection to the plans they do not think 'under the Ordinances they have any right to grant a building permit for tanks as there is no such provisions in the Building Code and accordingly the application is denied.”

The theory on which the application was denied by the Building Committee for lack of power was based on the statement of the Mayor in an affidavit drawn by him in opposition to the granting of the application for the order of mandamus in which he says: “No provisions have ever been made in the Building Code governing the method or plan to be followed in their erection and no specifications have been outlined therein to guide the Building Committee and its Building Inspector in passing upon precautions to be taken in their construction and operation.” The omission from the Building Code of such provisions is no fault of petitioner. The resolution denying the application, however, specifically stated that there were no objections to the plans. This was the only official act of the Committee, and upon this they rely. Section 7 of the Building Ordinances contemplates the presentation and passing upon plans in a proper case for the erection of any building or structures, without restrictions, within the village limits. The fact that the ordinances do not provide as to the type and size of structures and the material to be used in the construction of tanks for the storage of petroleum or what inspection shall be made is not here material. Detailed plans and specifications were submitted with the application, and additionally the petitioner specified that he would take any steps or rearrange the plans in any way that the village Trustees might reasonably deem necessary for greater protection, comfort and safety of the inhabitants of the village. Thereupon the Committee said the plans were sufficient and satisfactory.

Mandamus cannot direct the Board of Trustees (the Building Committee) in detail how to act, but it may compel action where a clear legal right exists. The duty of the Building Committee to grant the permit was purely ministerial. The exercise of no judgment or discretion was vested in the Committee except as to the approval of the plans. The plans were said not to be objectionable. The Committee had the power to grant the permit and it was the duty of the court to compel the Committee to act. (People ex rel. Harris v. Commissioners of Land Office, 149 N. Y. 26, 30.)

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division. (See 278 N. Y. 700.)

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

Ordered accordingly.


text:
    Del Balso Construction Corporation, Respondent, v. City of New York, Appellant.

      Argued April 21, 1938;
    decided May 24, 1938.

      William G. Chanler, Corporation Counsel (Oren Clive Herwitz, Paxton Blair and Charles Blandy of counsel), for appellant.
    The elimination of the underpinning did not change the main purpose or object of the contract and did not alter the essential identity of the thing contracted for, i. e., the section of the subway as described in the contract. Therefore, reinstatement of the judgment dismissing the second cause of action is required. (Litchfield Construction Co. v. City of New York, 244 N. Y. 251; Kingsley v. City of Brooklyn, 78 N. Y. 200; McMaster v. State, 108 N. Y. 542; National Contracting Co. v. Hudson River Water Power Co., 192 N. Y. 209; Dunning v. County of Orange, 139 App. Div. 249; 204 N. Y. 647; Kinser Construction Co. v. State, 204 N. Y. 381; Clark v. Mayor, 4 N. Y. 338.) The reservation of a right to make changes in a public contract did not impair its validity. (Matter of Merriam, 84 N. Y. 596.)

      John F. Collins, Harry Merwin and Moses S. Finesilver for respondent.
    The contract contemplated the underpinning of the buildings and the parties never intended that the underpinning could be omitted. (Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519; Afgo Engineering Co. v. State, 244 App. Div. 395; 268 N. Y. 716; Moran v. Standard Oil Co., 211 N. Y. 187; Mason Co. v. City of New York, 249 App. Div. 538; 275 N. Y. 514; Brooklyn Bus Corp. v. City of New York, 274 N. Y. 140; Wilson & English Constr. Co. v. N. Y. C. R. R. Co., 240 App. Div. 479; Lowe v. City of New York, 240 App. Div. 484; 265 N. Y. 583.) Defendant could not omit the underpinning to save money for the city. (Kinser Constr. Co. v. State,
      204 N. Y. 381; National Contracting Co. v. Hudson River Water Power Co., 192 N. Y. 209; McMaster v. State, 108 N. Y. 542.) The underpinning work was not incidental work. (McMaster v. State, 108 N. Y. 542; Cage v. City of New York, 110 App. Div. 403.) Changes and alterations of work called for in construction contracts, under rights reserved by the owner in such contracts, do not permit radical or substantial changes or alterations. The same principles are applicable to omissions. (McMaster v. State, 108 N. Y. 542; Smith Contracting Co. v. City of New York, 240 N. Y. 491; Salt Lake City v. Smith, 104 Fed. Rep. 457; Bates & Rogers Const. Co. v. Board of Commrs., 274 Fed. Rep. 659.)
   Finch, J.

This action arose out of a contract for the construction by plaintiff of a portion of the New York city subway system. The plaintiff was awarded the contract on its bid of $4,654,052, which was the lowest of those submitted by competing bidders.

In addition to the construction of the subway the contract provided for underpinning and demolition work. Accordingly, among those items upon which plaintiff was required to bid unit prices there was a series calling for the underpinning of certain buildings and another series calling for the demolition of specified buildings. Included among the forty-two buildings upon which plaintiff was asked to bid a price for underpinning was one at 335-355 Schermerhorn street, Brooklyn, for which the bid was $505,000, and one at 62 Flatbush avenue, for which the bid was $4,000. Both of these buildings belonged to the same company.

To accomplish the underpinning work it was necessary for the city to acquire easements in the property. An attempt to purchase such easements through negotiations prior to the preparation of the subway contract had failed. Proceedings were commenced to acquire these easements by condemnation, and, subsequent to the execution of the contract involved herein, they were so acquired. Thereafter negotiations were commenced for the purchase of the entire property, including the right of the owner to the awards for easements already acquired by condemnation. Finally the owner agreed to sell for $1,100,000. At this figure the city, by acquiring the property, demolishing the buildings, and then, after the subway had been built, selling the remaining property, would expend $384,000 less than would be necessary if it merely acquired the easements and used the underpinning method. For this reason, and apparently also because the city had been informed that from an engineering standpoint there were hazards involved in the underpinning of the type of buildings involved, the city purchased the property and demolished the buildings. When the sale was consummated plaintiff was notified that the underpinning of the buildings would not be necessary. To this the plaintiff took exception and, although it subsequently, after reserving all rights under the contract, did some extra work resulting from the demolition of one of these buildings, it brought suit against the city for breach of contract.

The complaint in this action among other things sought to recover $354,782.50 damages for the failure of the city to permit plaintiff to do this underpinning work. This cause of action was based on the theory that plaintiff would have made approximately $293,000 profit on this work, and there would have been about $61,000 additional paid to it for concrete and steel if the underpinning work had been done. Eleven other causes of action were alleged in the complaint, of which this constituted the second cause of action. The other causes are not pertinent on this appeal. The trial court dismissed the second cause of action at the close of the plaintiff’s case. The Appellate Division, one justice dissenting, reversed and granted a new trial. The appeal is here on a stipulation for judgment absolute.

Does the contract between the city and plaintiff permit the city to alter its plans so as to omit this underpinning without making it hable to plaintiff for loss of profits?

The contract provides:

“Article XLIII. Drawings May Be Amplified or Altered. * * * (b) The Board further reserves the right to alter, in any way it may deem necessary for the public interest, the drawings aforesaid, in part or altogether, at any time during the progress of the work or to omit any portion of the work without constituting grounds for any claim by the contractor for payment or allowance for damages or extra service other than is provided for under the classified Items of the Schedule of Unit Prices.” (Italics interpolated.)

Thus in the clearest of language the city reserves to itself this power to omit work without incurring liability.

Examination shows that in so far as the situation involved herein is concerned this provision is not limited by any other provision of the contract.

In none of the cases relied on by plaintiff was there involved a contract containing the omission clause quoted above. As a matter of fact, it was only after it had been held that the city could not with impunity omit certain work under the old form of contract which merely gave the city the power “ to alter, in any way it may deem necessary for the public interest, the drawings,” and contained the usual right to change work quantities, that, to remedy the situation, the omission clause involved herein was made a part of the standard form city contract. (See Litchfield Construction Co. v. City of New York, 244 N. Y. 251.)

Even under the old contract it was held that, in the exercise of the right to alter, the city could make changes in the details of the work which did not alter or destroy the essential identity of the work. In Kingsley v. City of Brooklyn (78 N. Y. 200) this court said, concerning such changes: “ They were clearly within the scope and object of the contract and the plan, which was the construction of the storage reservoir, and the alterations made as to the details did not, we think, constitute such a departure from the object in view as to affect the right to maintain an action for the work actually done under the requirements of the engineer ” (p. 211). This right of the State to make changes in detail has been reaffirmed in Kinser Construction Co. v. State (204 N. Y. 381).

In the case at bar not only do we have the added rights reserved to the city by the omission clause but we have a situation where the omission of the work did not alter the essential identity or the main purpose of the contract. That purpose was to construct a subway, and the underpinning and demolition work were merely incidental to this main purpose. Even if the underpinning work did not come within the technical definition of incidental work as used in the contract it still would be obvious that the underpinning was incidental and subway construction was the primary object of this contract. We find, however, that even the contract refers to the underpinning work as incidental. In article VII (b) of the contract it is stated that “ In order to construct the Railroad it will be necessary to take up and relay the sidewalks and roadway pavement or other surface material; to protect, support and maintain all buildings.” Then follow a number of other things necessary to be done, including such incidental matters as remaking manholes and moving or altering gaspipes, poles and wires, and, finally, the following catchall: and to do all such additional and incidental work as may be necessary.” The omission, in fact, constituted only ten per cent, but whether an omission is incidental does not depend on the percentage of the work or the cost involved, but on the character of the work omitted. For example, compare Kinser Construction Co. v. State (204 N. Y. 381), where it was held admissible to eliminate forty-one per cent of the work, with Litchfield Construction Co. v. City of New York (244 N. Y. 251), where it was held that the city lacked the power to omit two and one-half per cent of the work.

Nor can it be argued that the general omission clause of the contract is limited by the specific clauses contained therein. In the contract there are listed buildings with unit prices for their underpinning. The contract goes on to provide that the city shall have the alternative to require the removal of these buildings at a unit price fixed in the contract or it may require these buildings to be removed by other contractors. From this it is argued that, since no such alternative provisions are made for the buildings involved herein, the city lacks the right to omit this underpinning work. If this construction were adopted not only would the 'specific provisions of the contract limit the general provisions, but the existence of a specific provision would completely destroy the effect of a general provision. Certainly, the city, by inserting these specific provisions, did not intend to nullify the effect of the omission clause deliberately inserted in the contract to remedy the situation created by the decision in the Litchfield case. The city knew that in connection with certain buildings it might decide to demolish them rather than have them underpinned. Under such circumstances, in all fairness to the contractor, the city informed the contractor that it might decide to use this alternative. The fact that the city informed the contractor of the possible changes which it already had in mind does not mean that the city cannot make other changes which at that time it did not have in mind and which were later made necessary because of intervening facts.

Nor is there merit in the contention that it is unfair to deprive the contractor of a portion of the contract because in making his bid he figured on the burden of fixed overhead being borne by the entire contract. Where an omission clause is contained in a contract the contractor must have this in mind in calculating his overhead when preparing his bid. Bidders were bound to take notice that the State reserved the right to make additions and deductions in the work and changes in the plans and specifications covering the work, with no right on their part to claim damages for loss of profits on account thereof.” (Kinser Construction Co. v. State, 204 N. Y. 381, 394.)

This brings us to the contention that to permit the city to make such an omission as is here involved will give city officials the power to evade the requirements of competitive bidding; that city officials could thereby eliminate the profitable work from the contracts of those whom they did not favor. A somewhat similar contention was rejected in Matter of Merriam (84 N. Y. 596). While this argument concerning the evasion of competitive bidding requirements might be applicable in a case where the city arbitrarily omitted work, that situation is not now before us. Nor is this a case where the city has awarded an entire contract to the lowest bidder for the complete piece of work and has subsequently discovered someone who will do a portion thereof at a lower price. Here the city acted in good faith throughout. Prior to entering into the contract it had no idea that by purchasing the property it could save a substantial sum of money. Subsequently the opportunity to save this money was afforded to it, and, under the express terms of the contract, the city had the right to take advantage of such opportunity. It is true that the city did not find it absolutely necessary to omit this work, although even this is not certain in view of the statements of engineers that this underpinning work would be hazardous.

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

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

Ordered accordingly.


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

text:
    In the Matter of the Application of the City of New York, Respondent, Relative to Acquiring Title to Real Property Required for the Opening and Extending of Braddock Avenue (Rocky Hill Road) and Other Avenues in the Borough of Queens. Mott Homes, Inc., et al., Appellants.

      Argued March 9, 1938;
    decided May 24, 1938.

      Arthur Morris for Mott Homes, Inc., et al., appellants.
    Where the damage parcel and the abutting property are in the same ownersMp there is no basis for the application of the rule of nominal damages even though the property be subject to reciprocal easements between adjoining owners. With regard to easements of this type, the owner is always entitled to substantial damages. (City of Buffalo v. Pratt, 131 N. Y. 293; Matter of City of New York [Northern Blvd.], 258 N. Y. 136; Greenfarb v. R. S. K. Realty Corp., 256 N. Y. 130; Cole v. Hadley, 162 Mass. 579; Matter of City of NewYork [E. 177th St.], 239 N.Y. 119; Matter of City of New York [90 $t], 22 Misc. Rep. 32; Matter of City of New York [E. 173d St.], 78 Hun, 487; Matter of City of New York [Roosevelt Ave.], 186 App. Div. 457; Matter of City of New York [E. 64th St.], 183 App. Div. 708; Matter of City of New York [Sedgewick Ave.], 213 N. Y. 438.) Assuming that the easements were created during the pendency of the proceeding, it was witMn the absolute right of the parties to extinguish such easements by mutual consent at any time prior to the vesting date, and the motive may not be made a matter of inquiry. (Matter of City of New York [Titus St.], 139 App. Div. 238; Matter of City of New York [E. 177th St.], 239 N. Y. 119; Matter of City of New York [Northern Blvd.], 258 N Y. 136; Matter of City of Buffalo v. Pratt, 131 N. Y. 293; Matter of City of New York [Sedgewick Ave.], 213 N. Y. 438; Snell v. Levitt, 110 N. Y. 595; Matter of City of New York [Ludlow & Whitlock

      Aves.), 164 App. Div. 839; Andrews v. Cohen, 221 N. Y. 148; Fritz v. Tompkins, 18 Misc. Rep. 514; 168 N. Y. 524; Lathrop v. Lytle, 84 Misc. Rep. 161; Stillman v. City of Olean, 228 N. Y. 322.) No easements of any kind were created in damage parcels 67L and 67M for the reason that a grantor may not claim in himself a reservation in the property conveyed in derogation of his deed in the absence of record evidence. (Reis v. City of New York, 188 N. Y. 58; Nichols Copper Co. v. Connolly, 208 App. Div. 667; 240 N. Y. 596; Fritz v. Tompkins, 18 Misc. Rep. 514; 168 N. Y. 524; Parsons v. Johnson, 68 N. Y. 62; Lathrop v. Lytle, 84 Misc. Rep. 161; Andrew v. Cohen, 221 N. Y. 148.) No easements were ever created as to damage parcel 67D. (Matter of City ofNewYork [Northern Blvd.), 258 N. Y. 136.) The circumstance that Mott Homes, Inc., improved abutting damage parcels 67E to J according to the new line before making the deed by which it is claimed easements were created is no indication of an intention to create a new street line independently of the city’s proceeding. (Matter of City of New York [Briggs Ave.], 196 N. Y. 255; Matter of Opening Rogers Ave., 29 Abb. N. C. 361; Sherwood v. St. Paul & Chicago R. R. Co., 21 Minn. 122.)

      Arthur Morris for William Diederich et al., appellants.
    Notwithstanding the subsequent creation by the fee owner of easements which may, as to the fee owner, reduce the value of the damage parcel, the mortgagee is entitled to the full unencumbered fee value of the damage parcel up to the amount of the mortgage. A mortgage is a lien for the full amount thereof on each and every part of the property and the hypothetical value of the remainder may not be deducted from the award. (Matter of City of New York [43d Ave.], 241 App. Div. 889; 242 App. Div. 661; Merriman v. City of New York, 227 N. Y. 279; Hill v. Wine, 35 App. Div. 520; Gates v. De La Mare, 142 N. Y. 312; Deering v. Schreyer, 171 N. Y. 451; Matter of City of New York [East River Park], 184 App. Div. 509; 226 N. Y. 640; Matter of City of New York [Houghton Ave.], 266 N. Y. 26; Matter of Beach 2d St. Far Rockaway, 141 Misc. Rep. 820; Matter of Forman, 240 N. Y. Supp. 718; Matter of City of New York [Neptune Ave.], 271 N. Y. 331; Cyllene Corp. v. Bisen, 272 N. Y. 526; Matter of City of New York [E. 29th $£.], 273 N. Y. 62.) Any acts by the owner of the equity of redemption subsequent to the execution of the mortgage tending to create easements, dedicate, or in any way encumber the mortgaged lands are void as against the mortgagee. (Ward v. Davis, 3 Sandf. 502; Rice v. Dewey, 54 Barb. 455; Howe v. Bell, 143 N. Y. 190; Rector v. Mack, 93 N. Y. 488; City of Buffalo v. D., L. & W. R. R. Co., 68 App. Div. 488; 178 N. Y. 561.)

      Edward J. Connolly and Louis Costagliola for National City Bank of New York, as trustee, appellant.
    The mortgagee has a lien for the full amount of the mortgage indebtedness on the land taken despite the fact that the mortgage covers other lands not taken. (Matter of City of New York [East River Park], 184 App. Div. 509; 226 N. Y. 640; Hill v. Wine, 35 App. Div. 520; Gates v. De La Mare, 142 N. Y. 307; Matter of Beach 2d St. Far Rockaway, 141 Misc. Rep. 820; Matter of Forman [Rockaway Blvd.], 240 N. Y. Supp. 718; Matter of City of New York [Houghton & Olmstead Aves.], 266 N. Y. 26.) A mortgagee is an owner of the land taken and entitled to a substantial award. (City of Buffalo v. D., L. & W. R. R. Co., 68 App. Div. 488; 178 N. Y. 561.)

      William, C. Chanter, Corporation Counsel (Reuben Levy and William S. Gaud, Jr., of counsel) for respondent.
    Private street easements were created over the damage parcels, all of which were located in the bed of Braddock avenue, as a result of the conveyances with reference to the new northerly line of Braddock avenue as shown on the topographical maps. (Matter of City of New York [Northern Blvd.], 258 N. Y. 136; Reis v. City of New York, 188 N. Y. 58; Lord v. Atkins, 138 N. Y. 184; White’s Bank

      of Buffalo v. Nichols, 64 N. Y. 65; Matter of City of New York [Edgewater Road], 138 App. Div. 203; 199 N. Y. 560; Matter of City of New York [Harrison Ave], 267 N. Y. 64; Matter of Village of Olean v. Steyner, 135 N. Y. 341; Matter of Eleventh Ave., 81 N. Y. 436; Smith v. Smith, 120 App. Div. 278; 193 N. Y. 667; Matter of City of New York [Sedgewick Ave], 213 N. Y. 438; Matter of City of New York [Johnson Ave], 135 App. Div. 630; 198 N. Y. 505.) The nominal awards for the damage parcels were proper in view of their physical condition, their actual use, and the permanent improvements built on the abutting property with reference to such street use. (Matter of City of New York [City Hall Place], 271 N. Y. 199; Matter of City of New York [Old Third Ave], 241 App. Div. 13; 265 N. Y. 503; Matter of City of New York [Westchester Ave], 126 App. Div. 839; Matter of City of New York [Northern Blvd], 258 N. Y. 136.) Where a portion of mortgaged real property is subjected to private street easements without the mortgagee’s express consent, the damage of the mortgagee in a condemnation proceeding to acquire the easement-burdened strip should be measured by the extent to which the taking has impaired the value of the mortgage lien. (Matter of City of New York [Forty-third Ave], 241 App. Div. 889; 242 App. Div. 661;Lane v. Hitchcock, 14 Johns. 213; Van Petty. McGraw, 4 N. Y. 110; Ogden Lumber Co. y. Busse, 92 App. Div. 143; Morgan v. Waters, 122 App. Div. 340; Hartshorn v. Chaddock, 135 N. Y. 116; Alexander y. City of Plattsmouth, 30 Neb. 117; Omaha Bridge & Terminal Ry. Co. v. Reed, 69 Neb. 514; Federal Trust Co. v. East Hartford. Fire Dist., 283 Fed. Rep. 95; Rector v. Mack, 93 N. Y. 488; Queens County Sav. Bank y. Graham, 83 App. Div. 629; New York Life Ins. & Trust Co. v. Milnor, 1 Barb. Ch. 353; Ridge of Brooklyn Realty Co. v. Offerman, 149 App. Div. 878; Boston Chamber of Commerce v. Boston, 217 U. S. 189; Tax Lien Co. v. Schultze, 213 N. Y. 9.)
   Finch, J.

Was the Appellate Division justified in limiting the award to nominal damages for taking property as part of a widened avenue? The answer to this question depends on whether there was present an intention to burden the property taken with private street easements of light, air and access.

The mortgagees also have appealed, seeking an award based on the unincumbered fee value of the land taken without regard to the extent of the impairment of the security of the mortgage where the part so taken was burdened with such private easements without the consent of the mortgagee.

This proceeding to acquire title for street purposes was instituted pursuant to several resolutions of the Board of Estimate, the first having been adopted March 11, 1926. Its purpose was to widen Braddock avenue to the uniform width of 100 feet throughout its length. This avenue, as widened to 100 feet, was shown on at least four topographical maps of the city plan adopted at intervals between November, 1925, and December, 1929. The lines on these topographical maps are identical with the lines of Braddock avenue as described in this proceeding. Title to the damage parcels vested May 2, 1931.

In September, 1926, after the institution of the condemnation proceedings, the appellant Mott Homes, Inc., became the owner of a tract of land under a farm description, which included the damage parcels., Thereafter at various times between May, 1927, and October, 1929, Mott Homes, Inc., conveyed to different grantees certain lots between Two Hundred and Fortieth and Two Hundred and Forty-second streets abutting upon these parcels. The descriptions in these deeds bounded the lots conveyed by metes and bounds upon the new northerly line of Braddock avenue as shown on the topographical maps. The damage parcels were not included within this description, but passed to the grantee in each case under a separate street clause, which provided that the grantee would be entitled to any award in condemnation proceedings. After these sales, only two parcels remained in the ownership of Mott Homes, Inc. These two parcels were each in a block where sales had been made by Mott Homes, Inc., with reference to the new northerly line of Braddock avenue. After the trial an award of nominal damages was made for damage parcel No. 67, which embraced all the damage parcels involved herein. After hearing objections to the tentative decree, the trial justice changed his position and awarded substantial damages for the damage parcels, basing his determination upon Matter of City of New York (Northern Boulevard) (258 N. Y. 136).

Upon appeal to the Appellate Division there was an unanimous reversal and a determination that the facts and circumstances surrounding the various conveyances by Mott Homes, Inc., to the several grantees established the intention of the parties to create private easements upon Braddock avenue as that avenue is shown on the topographical map of the city of New York. The Northern Boulevard case was held inapplicable to the facts in the case at bar. Upon reargument the Appellate Division unanimously adhered to its determination that these facts and the other circumstances evidenced by the proof in the case are expressive of the intention of the parties to dedicate to street purposes the property lying between the old and new lines of Braddock avenue.” (251 App. Div. 669, 671.) The Appellate Division, however, was divided three to two as to whether the mortgagees of certain parcels were entitled to awards based on the full unincumbered fee value unaffected by the easements, because such easements were created subsequent to the giving of the mortgages. The majority of the court held the rule applicable which is applied in cases of waste, that is, that the mortgagees were entitled to damages only to the extent that they could show that the security of the mortgage loans was impaired by the taking. The dissenting judges argued that the mortgagees were entitled to awards without regard to impairment of security, and entitled to liens which attached to the awards, and that such awards may be sufficient to satisfy the entire amount of the mortgage. The minority of the court also held that where, as in the present case, the owner is entitled only to a nominal award, payment by the city to such mortgagee of a substantial award for the land taken would unjustly enrich the owner, and that to prevent such unjust enrichment, equity should subrogate the city, upon payment of the award to the mortgagee, to the rights of the latter under the mortgage in the part of the mortgage property not taken, subject to the right of the mortgagee to the balance due upon his mortgage.

We held in Matter of City of New York (Northern Boulevard) (supra), that whether property was burdened with street easements, or was dedicated to street purposes, was a question of fact depending upon the intention of the parties. In that case there was a sale with reference to a private property map, which indicated the width of the old street as well as the new; the lots were sold by lot numbers and the damage parcels passed under the same lot numbers description and the space between the old and new lines was covered with trees and boulders, having none of the physical aspects of a street. Under these circumstances it was held that an intention to create private easements was not shown.

In the case at bar the sale was made with reference to topographical maps which showed Braddock avenue as widened, and only dotted lines served to identify the old street fines. The sales also were made by metes and bounds with reference to the new street fine, and titles to the damage parcels passed under a separate street clause. The space between the old and the new fines was actually in use as a street, had been so used for several years and had all the physical aspects of a street with sidewalks and curbs laid, and the abutting property was improved with stores and dwellings which

were so built as to recognize the new line of Braddock avenue.

Let us consider the various damage parcels separately. In May, 1927, Mott Homes, Inc., conveyed damage parcel 67-M by a deed which, as noted, described the property as bounded by the new street line, and included the damage parcel in a separate street clause. In the same year the purchaser of the property acted upon the new street line as deeded by Mott Homes, Inc., by erecting thereon six one-story brick stores, and laid down sidewalks and curbs all conforming with the new street line. These facts and the other circumstances evidenced by the proof in the record, together with the fact that all the damage parcels were in use and had been for years as a well-known arterial avenue unmistakably show the intention of the parties to create private street easements.

In May, 1928, Mott Homes, Inc., improved approximately one-half of the other blocks, namely, between Two Hundred and Fortieth and Two Hundred and Forty-first streets, by erecting thereon two-story brick stores and dwellings, and thereafter conveyed the property. The buildings thus erected recognized the new street line, and sidewalks and curbs were built in conformity therewith. The property included damage parcels 67-E through J. Following these conveyances Mott Homes, Inc., was irrevocably committed in this block also to the street easements in accordance with which they had built and conveyed these properties.

Damage parcel 67-D was sold in 1929, and had not been improved. Nevertheless the owner cannot contend that a private easement was not created in view of the description in the deed, the reference to the topographical map, and the fact that other property on the same block had previously been improved and sold by this same owner in conformity with the new street line. Damage parcels 67 and 67-L were retained by Mott Homes, Inc., and were never Improved. Nevertheless, Mott Homes, Inc., having conveyed various other properties on these blocks with reference to the topographical map, and. having created private easements in these other properties, cannot contend that the property which it has retained is not subject to the same private easements.

With all the damage parcels thus subject to street easements, are the owners of the fee of the land entitled to more than nominal awards? Ordinarily, land in the bed of a street, being a naked, unproductive fee, useless, bereft of enjoyment and incapable of pecuniary advantage, its owner is entitled to no more than a nominal award. (Matter of City of New York [Decatur Street], 196 N. Y. 286.) Does the additional circumstance in the case at bar, that the lands of the claimants abut upon the lands so burdened, compel us to reach a different result. In this outlying and sparsely settled district, no material distinction appears between the value of this land lying beneath an extensive and well-known avenue, in use as a street for years, and its value if the claimants had not been abutters. No evidence appears that the value of any possible use of the land beneath the street would equal the cost of excavation and structural support above such excavation. Additional land appears plentiful and, therefore, comparatively cheap; excavation beneath a street in use, difficult and costly. We agree with the Appellate Division that the owners of the damage parcels suffered no substantial damage.

We now approach the questions certified by the Appellate Division, namely:

1. In this condemnation proceeding, is the mortgagee entitled to a direct award based on the unincumbered fee value of the land taken without considering the value of the part of the mortgage premises not taken?

2. Should the award to the mortgagee be limited to the amount by which his security has been impaired by the taking?

In the case at bar it is conceded with respect to damage parcels Nos. 67-E, G, H, I and J that the mortgage covered the property prior to the creation of the street easements and the dedication of the land taken to street purposes. The mortgagee, therefore, was entitled to the unincumbered fee value of the land taken. The mortgagee had contracted for the entire land covered by the mortgage as security for his mortgage. It was without the power of the court to diminish his security by a finding of the court that a portion taken did not impair the value of the security for which the mortgagee had contracted. Where a portion of land is taken by condemnation on which there is a mortgage, the mortgagee has a lien which attaches to the award made. (Matter of City of New York [Houghton Ave.], 266 N. Y. 26, 29.) Where, as in the present case, the owner is entitled only to a nominal award, payment by the city to such a mortgagee of a substantial award for the land taken would inure to the benefit of the owner, and would unjustly enrich the owner. In order to prevent such unjust enrichment, when the city pays such substantial award to the mortgagee, the city will become, to the extent of the payment, subrogated to the rights of the mortgagee under the mortgage in the part of the mortgaged premises not taken, but will be subordinated to the rights of the mortgagee in the mortgaged property not taken for the balance due upon his mortgage. The application of this equitable principle thus prevents unjust enrichment.

It follows that the order of the Appellate Division, in so far as it awards nominal damages for the damage parcels taken, should be affirmed without costs, the first question certified answered in the affirmative, and the second question answered in the negative.

Crane, Ch. J.

(dissenting in part). I concur as to the claim of the mortgagee, but dissent as to the owners. I can see no dedication or creation of street easements because property is sold or developed according to street lines created by the city. Property cannot be taken by a city without payment by simply filing street maps.

Lehman, J.

(dissenting in part). I dissent from so much of the opinion as holds that an abutting owner of land subject to private street easements is entitled to only nominal damages, especially in view of the fact that the city’s own estimate shows that part of the original value still remains.

O’Brien, Hubbs, Loughran and Rippey, JJ., concur with Finch, J.; Crane, Ch. J., and Lehman, J., dissent in part in separate memorandums.

Ordered accordingly. (See 278 N. Y. 703.)


author: Loughrah, J. Crane, Ch. J.

text:
    Westchester Lighting Company, Respondent, v. Westchester County Small Estates Corporation, Appellant.

      Argued April 14, 1938;
    decided May-24, 1938.

      William F. Bleakley, T. Carlyle Jones, Leo G. Fritz, Winthrop G. Brown and Daniel Miner for appellant.
    The Workmen’s Compensation Law (Cons. Laws, ch. 67) is a complete bar to plaintiff’s claim against defendant. (New York Central R. R. Co. v. White, 243 U. S. 188; Barencotto v. Cocker Saw Co., 266 N. Y. 139; Shanahan v. Monarch Engineering Co., 219 N. Y. 469; Matter of Babb v. Conboy & Brown Constr. Co., 264 N. Y. 357; Matter of State Treasurer v. West Side Trucking Co., 233 N. Y. 202; Matter of State Treasurer v. Niagara Falls Power Co., 241 N. Y. 521; Matter of Plouff v. Port Henry L., H. & P. Co., 225 App. Div. 704; 250 N. Y. 616; Phoenix Indemnity Co. v. Tannenbaum, 250 App. Div. 853; Thompson v. International Harvester Co., 141 Misc. Rep. 757.) The claim of plaintiff against defendant is a claim of one alleged to be entitled to recover damages on account of the employee’s death. (Liberty Mutual

      Ins. Co. v. Mueller, 154 Misc. Rep. 718; Haran v. Woolley, 32 Haw. 61.)

      Alfred M. Bailey for respondent.
    The defense is insufficient in law. (City of Brooklyn v. Brooklyn City R. R. Co., 47 N. Y. 475; Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550; Oceanic S. N. Co. v. Companía, 134 N. Y. 461; Dunn v. Uvalde A. P. Co., 175 N. Y. 214; Fulton County Gas & Electric Co. v. Hudson River Tel. Co., 130 App. Div. 343; Phoenix Bridge Co. v. Creem, 102 App. Div. 354; 185 N. Y. 580; New York Consolidated R. R. Co. v. Massachusetts B. & I. Co., 193 App. Div. 438; 233 N. Y. 547; Iroquois Gas Corp. v. International Ry. Co., 240 App. Div. 432; Parker Sheet Metal Works, Inc., v. Allied M. L. Ins. Co., 124 Misc. Rep. 756; 216 App. Div. 746; Ives v. South Buffalo Ry. Co., 201 N. Y. 271; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514.) The statute is susceptible of no other just and reasonable interpretation. (Cavanaugh v. Boland Co., 149 Misc. Rep. 576; Williams v. Village of Port Chester, 72 App. Div. 505; Broderick v. Alexander [Kahn], 268 N. Y. 306; Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550; N. Y. Consolidated R. R. Co. v. Massachusetts B. & I. Co„ 193 App. Div. 438; 233 N. Y. 547.)
   Loughrah, J.

The question arises upon the pleadings. So much of the complaint as is material alleges that employees of the defendant negligently broke a gas pipe maintained by the plaintiff in a public highway and negligently inclosed the point of fracture within a tile drain laid by them; that as a result gas escaped into a nearby house and there asphyxiated John Haviland, an employee of the defendant, who was in the course of his employment at the time; that the only wrong of the plaintiff which contributed to this casualty was a failure to make timely discovery that gas was escaping from its pipe; that Haviland’s administratrix had judgment against the plaintiff in an action brought to recover the damages caused by her decedent’s death; and that the plaintiff paid that judgment and also the cost of the defense of that action. Plaintiff demands indemnity from the defendant for the moneys so paid. The case was decided below and has been argued here on the assumption that the foregoing allegations sufficiently state a cause of action at common law. We do not go behind that assumption. (Cf. Small v. Sullivan, 245 N. Y. 343.)

The answer alleges that the defendant had secured compensation to its employees in compliance with the Workmen’s Compensation Law (Cons. Laws, ch. 67). Whether this is a valid defense to the assumed cause of action is the single issue presented for decision.

Section 10 of the Workmen’s Compensation Law provides: “ Every employer subject to this chapter shall in accordance with this chapter, except as otherwise provided in section twenty-five-a hereof, secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury, except that there shall be no liability for compensation under this chapter when the injury has been solely occasioned by intoxication of the injured employee while on duty or by wilful intention of the injured employee to bring about the injury or death of himself or another.” Section 25-a is unrelated to this case.

It is provided by section 11: “ The liability of an employer prescribed by the last preceding section shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or anyone otherwise entitled to recover damages, at common law or otherwise on account of such injury or death, except that if an employer fail to secure the payment of compensation for his injured employees and their dependents as provided in section fifty of this chapter, an injured employee, or his legal representative in case death results from the injury, may, at his option, elect to claim compensation under this chapter, or to maintain an action in the courts for damages on account of such injury; and in such an action it shall not be necessary to plead or prove freedom from' contributory negligence nor may the defendant plead as a defense that the injury was caused by the negligence of a fellow servant nor that the employee assumed the risk of his employment, nor that the injury was due to the contributory negligence of the employee.”

The whole point made by the defendant is that these provisions bar the present action.

We think this position has no warrant in the text that has been quoted from the statute. Plaintiff does not sue for damages “ on account of ” Haviland’s death. Plaintiff asserts its own right of recovery for breach of an alleged independent duty or obligation owed to it by the defendant.

Nor does the policy of the statute countenance the defendant’s position. “ The act was passed pursuant to a widespread belief in its value as a means of protecting workingmen and their dependents from want in case of injury when engaged in certain specified hazardous employments. It was the intention of the Legislature to secure such injured workmen and their dependents from becoming objects of charity, and to make reasonable compensation for injuries sustained or death incurred by reason of such employment a part of the expense of the lines of business included within the definition of hazardous employments as stated in the act. It was also the intention of the Legislature to make such compensation not only a part of the expense of the business and a part of the cost of the things manufactured and of transportation as defined by the act, but ultimately to require such compensation to be paid by the consumer of the manufactured goods and by those securing transportation.” (Matter of Post v. Burger & Gohlke, 216 N. Y. 544, 553, 554. See N. Y. Const, art. I, § 19.)

Nor is the defendant’s position sanctioned by the legal nature of its liability under the statute. Such liability is a quasi contractual obligation imposed by reading the statute into a contract of employment. (Matter of Post v. Burger & Gohlke, supra; Matter of Smith v. Heine Safety Boiler Co., 224 N. Y. 9.)

It may be admitted that if the defendant is held to answer to the plaintiff in this action the result (as the Chief Judge says) is that an employer is made liable indirectly in an amount which could not be recovered directly. This consequence, we think, does not decide the issue against the plaintiff. Recovery over against the employer in an unusual case like this need not be rested upon any theory of subrogation. An independent duty or obligation owed by the employer to the third party is a sufficient basis for the action. (Schubert v. Schubert Wagon Co., 249 N. Y. 253.)

We agree with the courts below that the challenged defense is insufficient in law.

The order should be affirmed, with costs, and the question certified answered in the negative.

Crane, Ch. J.

(dissenting). Plaintiff is a public utility corporation engaged in supplying iUuminating gas for domestic uses. It maintained a certain pipe line in a public highway for the conduct of gas to consumers. The defendant, while engaged in constructing a tile pipe drain under that highway, allegedly performed the work negligently so that the gas pipe was fractured and then encased within the tile pipe drain. Illuminating gas was thus permitted to escape into nearby houses resulting in injury to persons and property. For negligently failing to discover the escape of gas from its mains, the plaintiff has been held hable to those injured, and seeks to recover indemnity from the person who is alleged to be the primary wrongdoer.

Among those whose death was caused by the escaping gas was one John Haviland, who was admittedly at the time of his death in the course of his employment with defendant. Defendant had fully complied with the provisions of the Workmen’s Compensation Law, and contends that plaintiff cannot, therefore, recover the amount which it was compelled to pay Haviland’s administratrix in an action brought against it.

Under section 10 of the Workmen’s Compensation Law: Every employer subject to this chapter shall in accordance with this chapter, * * * secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury * *

This liability of the employer, according to section 11, “ shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or anyone otherwise entitled to recover damages, at common law or otherwise on account of such injury or death * *

However, if an employer shall fail to secure the payment of compensation by proper insurance or satisfactory proof of his financial responsibility, the employee or his representatives have an option, either to claim compensation, or maintain an action at law for damages.

This statute sets aside one body of rules only to establish another system in its place. If the employee is no longer able to recover as much as before in case of being injured through the employer’s negligence, he is entitled to moderate compensation in all cases of injury, and has a certain and speedy remedy without the difficulty and expense of establishing negligence or proving the amount of the damages. Instead of assuming the entire consequences of all ordinary risks of the occupation, he assumes the consequences, in excess of the scheduled compensation, of risks ordinary and extraordinary. On the other hand, if the employer is left without defense respecting the question of fault, he at the same time is assured that the recovery is limited, and that it goes directly to the relief of the designated beneficiary.” (New York Central R. R. Co. v. White, 243 U. S. 188, 201.) .

This court said in Shanahan v. Monarch Engineering Co. (219 N. Y. 469, 478): “ Under this legislation both classes, employer and employee, gained benefits and made concessions. The liability of the employer is no longer bounded and limited by the rules of negligence but is imposed upon him when he is without fault as well as when he is guilty of negligence. The employee and his dependents receive compensation which may be smaller than would have been the amount of a judgment in a negligence action, but on the other hand they are compensated for injuries resulting from risks heretofore assumed by them, the relief is summary, the practice simple, and they are not hampered or defeated by rules of negligence law or by technical defenses and procedure. It is not to be assumed that the Legislature intended to provide rights and remedies for some of the dependent relatives and to leave the old form of remedy in force as to the others. A new system was substituted in its entirety for an outgrown and objectionable one.”

There is in this case no doubt at all that the dependents of the deceased employee could not have any recovery against the defendant employer. Plaintiff specifically alleges that the reason that this defendant was not joined in the action brought by the administratrix of Haviland was that at the time of his death he was an employee of defendant and “ the only remedy available to his administratrix against the present defendant was that provided by the Workmen’s Compensation Law.” It would seem that a liability that cannot be imposed upon defendant directly, cannot be imposed upon it indirectly, and so the defendant argues on this appeal. Plaintiff, however, takes the position that the basis of this action is the breach of an implied contract of indemnity; that this is not an action to recover damages “ on account of such death or injury; ” and that it is not barred by the language of section 11 of the Workmen’s Compensation Law.

It is well established that a person guilty of negligence is liable not only to the person directly injured as a result of the negligent acts but is accountable to the person who is legally liable for the negligence and who has been compelled to respond to the injured person in damages. It is not accurate to say that the basis of this liability is in contract. More aptly it may be said to be quasi-contractual. In Dunn v. Uvalde Asphalt Paving Co. (175 N. Y. 214) this court said that “ * * * the wrongdoer stands in the relation of indemnitor to the person who has been held legally Hable, and the right to indemnity rests upon the principle that every one is responsible for the consequences of his own wrong, and if another person has been compeHed to pay the damages which the wrongdoer should have paid the latter becomes Hable to the former ” (p. 217). In Ocean Steam Navigation Co. v. Companía Transatlantica Espanola (134 N. Y. 461) the court said: “ The right to indemnity stands upon the principle that everyone is responsible for the consequences of his own negHgence, and if another person has been compeHed (by the judgment of a court having jurisdiction) to pay the damages which ought to have been paid by the wrongdoer, they may be recovered from him” (p. 468). The rule is thus stated in the Law of Quasi Contracts by Woodward. (§ 259): But in some cases, as for example where the wrong consists of a mere unintentional neglect of duty, there can hardly be said to be an impHcation of a genuine promise of indemnity or contribution. In such cases, the obHgation may well be rested upon quasi contractual principles, for in so far as one tort-feasor pays what in equity and good conscience another tortfeasor ought to pay, the latter receives a benefit at the expense of the former, the retention of which is unjust.”

As has been pointed out, the Workmen’s Compensation Law abrogated one system and set up a new one in its place. That law prescribes certain definite rights, remedies and liabilities and provides that the liability of an employer so prescribed shall be exclusive. The employer is obligated to provide insurance or to furnish' satisfactory proof of his financial ability to pay such compensation and to give security. Failure to do so renders him liable in an action at law. Failure to secure compensation as required by law shall constitute a misdemeanor (§ 52).

The New York State Constitution, section 19 of article I, reads: Nothing contained in this Constitution shall be construed to limit the power of the Legislature to enact laws for the protection of the lives, health, or safety of employees; or for the payment, either by employers, or by employers and employees or otherwise, either directly or through a State or other system of insurance or otherwise, of compensation for injuries to employees or for death of employees resulting from such injuries without regard to fault as a cause thereof, * * * and the remedy therefor shall be exclusive of all other rights and remedies for injuries to employees or for death resulting from such injuries; or to provide that the amount of such compensation for death shall not exceed a fixed or determinable sum.”

The Legislature enacted the Workmen’s Compensation Law, sections 10 and 11, which are quoted above, and provided that the liability of the employer shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or anyone otherwise entitled to recover damages, at common law or otherwise on account of such injury or death, * * *.”

I can only interpret this constitutional provision and the law enacted under it so as to- limit the employer’s liability as well as the employee’s recovery. The employer, for an accident causing death to an employee, is liable for the amounts stated in the Compensation Law, and is not liable beyond that to any one upon any cause of action arising out of the death. What has been done below in this case is a violation of this statute under this constitutional provision, for it makes the employer liable indirectly in an amount which could not be recovered directly. The employee or the representatives for this accident had no cause of action against the employer; the remedy was solely under the Workmen’s Compensation Law, and for the amounts stated therein. This is conceded. Yet because a third party paid the employees’ representative it is permitted to recover the payment from the employer. In other words, the representatives receive a large sum of money through a negligence action from the employer merely because the money passes through the hands of a third party; and yet all concede that the employer is not hable to the representatives. To me this is mere sophistry.

I do claim, however, that the third party, if entitled to recover against the employer upon any principle of recoupment, should be limited to the amount that the employer would be obliged to pay to the representatives under the Workmen’s Compensation Law. That the recovery against third parties was contemplated is apparent by reading section 29 of the Workmen’s Compensation Law. A third party causing injury to an employee of another may be sued by the injured person and the amount recovered deducted from the award to be made against the employer, if one be less than the other. If the recovery be more than the award there is no additional sum to be paid. In other words, when a person has been injured through the neghgence of a third party the recovery and the award which would have been made are set off one against the other. It seems fair, therefore, that this remedy should be apphed when, because of some principle of law, the third party, liable for its neghgence, seeks in equity to recover from the employer because of primary neghgence. The Workmen’s Compensation Law should not be disrupted or its purpose overturned. The recovery, if any, should be limited to the amount that the employer would have been obliged to pay under the Workmen’s Compensation Law.

The Westchester Lighting Company was mulcted in damages for its own negligence, not solely for the negligence of the Westchester County Small Estates Corporation. It was not liable to the dead man or his representatives because its gas main had been broken by the defendant in this case. It was liable because of its negligence in failing to discover the break, in the exercise of reasonable care. Whether there could be any recovery over, even at common law, is a question which need not be decided at this time, as apparently it has not been raised below.

For the reasons here stated I favor the reversal of the order, striking out. the partial defense and denying the motion, with costs.

Lehman, O’Brien, Htjbbs, Finch and Rippey, JJ., concur with Lotighran, J.; Crane, Ch. J., dissents in opinion.

Order affirmed, etc.


author: Per Curiam.

text:
    John Werle, Appellant, v. David Rumsey et al., Individually and as Partners of the Firm of Rumsey & Morgan, Respondents.
    Argued April 13, 1938;
    decided May 24, 1938..

      William M. Kilcullen, Edwin J. Dryer and Wesley S. Sawyer for appellant.
    The defendants engaged that they would use reasonable skill, diligence and care in handling plaintiff’s mortgages. (Carter v. Tallcot, 36 Hun, 393; Degen v. Steinbrink, 202 App. Div. 477; 236 N. Y. 669; Kissam v. Squires, 102 App. Div. 536; Hatch v. Fogarty, 33 N. Y. Super. Ct. Rep. 166; Von Wallhoffen v. Newcombe, 10 Hun, 236.) An estoppel certificate given by the mortgagor to the mortgagee does not bar a defense of usury. (Merwin v. Romanelli, 141 App. Div. 711; Verity v. Stemberger, 62 App. Div. 112.) The intermingling of the accounts of a usurious security into the accounts of a new security makes the new security usurious. (Jackson v. Packard, 6 Wend. 415; Hammond v. Hopping, 13 Wend. 505; Cope v. Wheeler, 41 N. Y. 303; Price v. Lyons Bank, 33 N. Y. 55; Sheldon v. Haxtun, 91 N. Y. 124.)

      Louis J. Wolff and Harding Cowan for respondents.
    There was no negligence on the part of defendants. (Rupuzzi v. Stetson, 160 App. Div. 150.)
   Per Curiam.

The complaint was dismissed at the close of the plaintiff’s case. As the record stood there was testimony from which the jury might believe that the plaintiff consulted the defendants concerning the danger of the defense of usury, that there was a lack of due care in advising only the obtaining of an estoppel certificate and the plaintiff suffered a loss in consequence thereof. Thus a prima facie case was made out raising issues of fact for the jury. The defendants, however, are entitled to present evidence in explanation or denial of this testimony.

The judgments should be reversed and new trial granted, with costs to abide the event.

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

Judgments reversed, etc. '