text:
    Frantiska Hermes, Individually and as Administratrix of the Estate of Anton Hermes, Deceased, et al., Respondents, v. Title Guarantee and Trust Company, Appellant.

      Argued November 15, 1939;
    decided December 28, 1939.

      C. Elmer Spedick and Arthur L. Reuter for appellant.
    Assuming the negligence of appellant, respondents suffered no damage thereby. (Rothschild v. Title Guarantee & Trust Co., 204 N. Y. 458.)

      Arthur Morris and Morris O. Roshken for respondents.
    The cause of action in negligence accrued at once, and was not subject to be defeated by subsequent events. The damages are the amount with which plaintiffs parted for the spurious bond and mortgage. (Fay v. McGuire, 20 App. Div. 569; 162 N. Y. 644; Gardner v. Wood, 37 Misc. Rep. 93; Lawall v. Groman, 180 Penn. St. 532; Ehmer v. Title Guarantee & Trust Co., 156 N. Y. 10; Schade v. Gehner, 133 Mo. 252; Gate City Abstract Co. v. Post, 55 Neb. 742; Russell v. Polk Co. Abs. Co., 87 Iowa, 233; Provident Loan Trust Co. v. Walcott, 5 Kan. App. 473; Lattin v. Gillette, 95 Cal. 317; Trimboli v. Kinkel, 226 N. Y. 147; Byrnes v. Palmer, 18 App. Div. 1; 160 N. Y. 699; National Sav. Bank v. Ward, 100 U. S. 195; 25 L. Ed. 621; Security Abstract of Title Co. v. Longacre, 56 Neb. 469; Renkert v. Title Guarantee & Trust Co., 102 Mo. App. 267; Ninth Ave. & Forty-second St. Cory. v. Zimmerman, 217 App. Div. 498.)
   Lehman, J.

In October, 1928, Anton Hermes, Frantiska Hermes and Antonia Stolba agreed tojnake a loan of $5,0Q0 to be secured by mortgage upon a parcel of real property in the county of Queens. They retained the defendant Title Guarantee and Trust Company to search and insure the title to the real property. The search made by the title company disclosed that the record title stood in the name of August Robertson and Louisa Robertson, his wife, and the title company so certified. In fact, August Robertson was dead and, under his last' will and testament, Louisa Robertson had become the sole owner of the premises. The will had not been probated and the title company did not know of its existence.

The closing took place at the office of the title company. The lenders, hereinafter referred to as the plaintiffs, appeared there with the $5,000 they had agreed to loan. Louisa Robertson, the owner of the property, did not appear, but her son, named like her deceased husband, August Robertson, and his wife, Johanna Robertson, appeared and signed a bond and mortgage in the names of August Robertson and Louisa Robertson, his wife, the record owners of the property as certified by the title company. The agent of the title company, in charge of the closing of the title, took their acknowledgment to these instruments. The defendant urges that the name of Louisa was signed with innocent intent by authority of Louisa Robertson, the true owner, for the purpose of binding her. That is disputed, and we assume that it has been conclusively shown that the purpose of August Robertson and his wife, Johanna Robertson, was not innocent and that the bond and mortgage executed by them did not bind Louisa Robertson, the sole owner of the property, even though her name was signed to it.

Upon the faith of that bond and mortgage, the plaintiffs paid over the sum they had agreed to pay and the defendant title company insured the title to the premises, described in the mortgage. Interest was paid regularly on the mortgage until April, 1933, and in October, 1932, an extension agreement was executed and delivered which, again, was signed in the names of August and Louisa Robertson, the record owners, but this time the instrument was signed in fact by Louisa Robertson, the real owner, and, of course, was binding upon her. Even though, as we assume, the original mortgage was executed in the name of Louisa Robertson without her authority, the extension agreement constituted a complete ratification of the execution in her name of the original mortgage. There was default in payment of interest thereafter and then, for the first time, the plaintiffs discovered, and gave notice to the defendant title company that Louisa Robertson was the sole owner of the mortgaged property and that her name to the original mortgage was forged.

After receipt of such notice the defendant title company probated the will of August Robertson, deceased, thus establishing upon the record that Louisa Robertson was the sole owner, and obtained from Louisa Robertson a formal instrument ratifying and confirming the bond and mortgage as her act. When that had been done, the bond and mortgage, which the plaintiffs held, had legal effect as if they had been executed originally by Louisa Robertson and the plaintiffs were in exactly the same position as if there had been no fraud. Indeed, Louisa Robertson offered to execute and deliver a deed to the property or to permit foreclosure of the mortgage without opposition.

The plaintiffs preferred to assert that fraud tainted the transaction from its inception and in an action against Louisa Robertson, August Robertson and Johanna Robertson obtained judgment rescinding the transaction and canceling the bond and mortgage on the ground of fraud. Then the plaintiffs brought this action against the title company. The complaints set forth two causes of action. The first cause of action is for damages caused by the alleged negligence of the defendant’s agent in failing to discover the fraud which August Robertson, the younger, and his wife perpetrated, and in taking the acknowledgment to the bond and mortgage and there certifying that the agent knew the persons who executed these instruments. The second cause of action is for indemnity under the policy of insurance. The plaintiffs have recovered a judgment upon the first cause of action for the sum of $5,000, with interest. The second cause of action has been dismissed.

The title company urges, upon this appeal, that the plaintiffs have failed to show any negligence on the part of the agent of the company. We do not pass upon that question now for, even assuming that the plaintiffs have established negligence, it appears that they have suffered no damages. The defendant’s negligence, it is said, contributed to a successful fraud upon the plaintiffs, but pecuniary loss to the deceived party is absolutely essential to the maintenance of the action.” (Urtz v. N. Y. C. & H. R. R. R. Co., 202 N. Y. 170, 173.) Before the plaintiffs retained the defendant to search the title they had, according to the allegations of the complaint, agreed to lend the sum of $5,000 to the owners of the premises, described in the complaint, “ and who were unknown to them ” in consideration of the execution, acknowledgment and delivery to them of a good and sufficient bond and mortgage in the snm of $5,000. There is neither allegation nor proof that the plaintiffs relied upon the responsibility of any particular owner. The loan was to be made solely in consideration of the receipt of a valid bond and mortgage executed by the owner or owners of the property, whoever he or they might be. Whether the owner of the premises was old or young, a widow or a husband and wife, was entirely immaterial in view of their agreement to lend to “ unknown owners.” Doubtless the agreement to loan was consummated in reliance upon the validity of the bond and mortgage which the plaintiffs received but, otherwise, the claim is without foundation that the loan was made in reliance upon the representation, express or implied, of August Robertson, the younger, and Johanna, his wife, that they were the persons named in that bond and mortgage as the owners of the property. By the exercise of care the defendant might have obtained for the plaintiffs a valid bond and mortgage executed by the real owner. The plaintiffs could not have asked or received more than that and any damages which they have suffered could arise only from receiving less than what they had a right to demand and expect to receive.

When they discovered the alleged fraud that had been perpetrated upon them they had in their possession muniments of title which insured to them exactly those rights for which they had stipulated in their agreement to loan and which they would have received if there had been no fraud. True, that may have been brought about only through the ratification or acceptance, by the true owner, of a false impersonation and, because of the taint of fraud in the original transaction, the plaintiffs have been accorded the right to rescind the entire transaction, disregarding the ratification of the fraud by the real owner. The equitable right to rescind the transaction tainted with fraud and to recover the consideration paid from those who participated in the fraud and received that consideration does not give the plaintiffs a right of action to recover the same amount as damages from this defendant, which was not a party to the fraud and did not share in the spoils of the fraud. Its only fault was a lack of care which enabled those guilty of fraud to palm off upon the plaintiffs an instrument which did not convey the rights which it purported to convey until, through subsequent events, it acquired a force it did not originally possess. The damages for that lack of care are the loss which was caused to the plaintiffs by that fraud. The basic principle underlying all rules for the measurement of damages for deceit is indemnity for the actual loss sustained as the direct result of the wrong.” (Ochs v. Woods, 221 N. Y. 335, 340.)

The wrong was complete when the negligence of the defendant caused the plaintiffs to accept instruments tainted with fraud and it is said that the damages then became fixed. The cases cited by the plaintiffs lend no support to that contention. Though the wrong was complete, the loss which would follow from that wrong could not be foreseen with certainty. What the plaintiffs received was not entirely valueless. It had potential value if the owner of the property chose to recognize its validity, and, as we have pointed out, before the plaintiffs even discovered the defendant’s wrong the owner of the property had conclusively waived any defect which she might have asserted had she chosen to do so. That put the plaintiffs in as good a position as they would have been if there had been no wrong by the defendant. At the time the wrong was committed it might have seemed very probable that the plaintiff would suffer loss of all or part of the money loaned upon the faith of an instrument tainted with fraud. By the time the fraud was discovered such loss was no longer probable or even possible unless the plaintiffs chose to assert such invalidity themselves. For their own purposes they did choose to assert that invalidity. They could not by such assertion impose liability upon the defendant for a loss which otherwise they would not have suffered.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts, (See 282 N. Y. 803.)

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

Judgments reversed, etc.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of the Application of the United States of America, Respondent. Century Indemnity Company, Appellant.
    Argued January 8, 1940;
    decided January 23, 1940.

      Leo T. Kissam and J. Francis Hayden for appellant.
    The government failed to show any default, dehnquency or misconduct on the part of the property clerk. (People ex rel. Blatchford v. McAdoo, 101 App. Div. 183; 181 N. Y. 547; Matter of Williams v. Darling, 67 Misc. Rep. 205; United States v. Rogde, 214 Fed. Rep. 283; Dowler v. Johnson, 225 N. Y. 39; Walsh v. Trustees of New York & Brooklyn Bridge, 96 N. Y. 427; Bieling v. City of Brooklyn, 120 N. Y. 98; Donovan v. McAlpin, 85 N. Y. 185; City of New York v. Fox, 189 App. Div. 440; 232 N. Y. 167; People ex rel. Nash v. Faulkner, 107 N. Y. 477; U. S. Fidelity & Guaranty Co. v. United States, 91 Fed. Rep. [2d] 848; Duboff v. Haslan, 195 App. Div. 117; People v. Pennock, 60 N. Y. 421.)

      John T. Cahill, United States Attorney (Richard Delafield of counsel), for respondent.
    The payment was improper. (Czieslik v. Burnet, 57 Fed. Rep. [2d] 715; Maryland Casualty Co. v. Charleston Lead Works, 24 Fed. Rep. [2d] 836; United States v. Snyder, 149 U. S. 210; Matter of Rosenberg, 269 N. Y. 247; United States v. American Exchange Irving Trust Co., 43 Fed. Rep. [2d] 829; Duboff v. Haslan, 195 App. Div. 117; Heinricks v. Schmidt, 68 Fed. Rep. 425; United States v. Anchor Warehouses, 92 Fed. Rep. [2d] 57.)
   Per Curiam.

The motion papers contain allegations sufficient to empower the court m its discretion to grant to the United States leave to sue. We pass on no other question. Whether on the facts and the law the United States has a cause of action must await trial of the action.

The order should be affirmed, with costs.

Lehman, Ch. J., Loughran, Finch, Rippey, Sears, Lewis and Conway, JJ., concur.

Order affirmed.


author:
      Per Curiam.
     Finch, J.

text:
    Margaret De Matteis, Appellant, v. Village of Peekskill et al., Respondents.
    Submitted January 12, 1940;
    decided January 25, 1940.

      Harold J. Drescher, Robert F. Barrett and Jacob Katz for appellant.
    The franchise granted is illegal, null and void in that the village board did not comply with the village ordinance. (Colonial Motor Coach Corp. v. City of Oswego, 126 Misc. Rep. 829; Mayor v. Dry Dock, E. B. & Battery R. R. Co., 133 N. Y. 104; Matter of Ballard v. Roth, 141 Misc. Rep. 319; Parsons Const. Corp. v. City of New York, 163 Misc. Rep. 932; McCabe v. City of New York, 213 N. Y. 468; Village of Carthage v. Frederick, 122 N. Y. 268; Jones v. Foster, 43 App. Div. 33; Blanshard v. City of New York, 262 N. Y. 5; Crayton v. Larabee, 220 N. Y. 493; People v. Reicherter, 128 App. Div. 675; Cunningham v. City of Niagara Falls, 242 App. Div. 39; Borst v. Town of Sharon, 24 App. Div. 599.) The franchise granted became null and void by its terms in that the acceptance of the franchise was not approved as to form by the village of Peekskill as required by the franchise. (Deshong v. City of New York, 176 N. Y. 475; Colonial Motor Coach Corp. v. City of Oswego, 126 Misc. Rep. 829; Fisher v. City of Mechanicville, 94 Misc. Rep. 134; Matter of Ulster County v. State Dept. of Public Works, 211 App. Div. 629; 240 N. Y. 648; Old Colony Trust Co. v. City of Wichita, 123 Fed. Rep. 762; Pacific T. & T. Co. v. City of Seattle, 14 Fed. Rep. [2d] 877; People ex rel. Schieffelin v. Walker, 247 N. Y. 320.) The franchise was illegally granted in that the village board failed to comply with section 90 of the Village Law (Cons. Laws, ch. 64) in granting the same. (Matter of City of Long Beach v. Public Service Comm., 249 N. Y. 480; Greenberg v. City of New York, 152 Misc. Rep. 488; Yonkers R. R. Co. v. Hume, 225 App. Div. 313; Holst v. Savannah Electric Co., 131 Fed. Rep. 931; City of Paterson v. Barnet, 46 N. J. L. 62; Newman v. City of Emporia, 32 Kan. 456.)

      Edward G. Halsey, Jr., for Village of Peekskill, respondent.

      Arthur Carter Hume for Mayflower Transit Lines, Inc., respondent.
    It was unnecessary that the procedural part of the provisions of the village ordinance be complied with. (Reycroft v. City of Binghamton, 138 Misc. Rep. 257; Mills v. Sweeney, 219 N. Y. 213; Matter of McCabe v. Voorhis, 243 N. Y. 401; People ex rel. Casler v. Eysaman, 126 Misc. Rep. 853; Greenberg v. City of New York, 152 Misc. Rep. 488; Blanshard v. City of New York, 262 N. Y. 5; Village of Carthage v. Central New York T. & T. Co., 185 N. Y. 448; Mayor v. D. D., E. B. & B. R. R. Co., 133 N. Y. 104; Browne v. City of New York, 213 App. Div. 206; County Securities, Inc., v. Seacord, 278 N. Y. 34.) There was no implied power in the village to add additional requirements. (Ottawa v. Carey, 108 U. S. 110; N. Y., O. & W. Ry. Co. v. Griffin, 235 N. Y. 174.)
   Per Curiam.

The plaintiff attacks the validity of a consent to the operation of the omnibus line of the defendant Mayflower Transit Lines, Inc., given by the trustees of the defendant, the Village of Peekskill. It is the contention of the plaintiff that in giving the consent there was a failure to comply with the terms of an ordinance of the village which purports to impose certain conditions upon the power of the village trustees to act in such a matter. The ordinance in question provides that certain details of proposed operation should be stated in the application and that the application, itself, should be published in a daily newspaper. In the present case the application was not published and otherwise did not fully meet the requirements of the ordinance.

The right to operate an omnibus line over the public highways comes from the State. Section 66 of the Transportation Corporations Law (Cons. Laws, ch. 63), made applicable to this village by the provision of section 67 and a resolution of the village trustees, requires the consent of the local authorities to be procured after public notice and a hearing as a prerequisite to operation and to the issuance of the necessary certificate of public convenience and necessity. Section 89, subdivision 39, of the Village Law (Cons. Laws, ch. 64) further specifies the manner in which the notice is to be given.

It has been found in this case that notice of the hearing was published in the official newspapers of the village in accordance with a resolution of the trustees and in compliance with the provisions of the Village Law, and that pursuant thereto a hearing was held. The terms of section 66 of the Transportation Corporations Law were thus fully complied with. These were the only prerequisites fixed by statute to the giving of the consent. They assured to the citizens and property owners information that a consent was sought and when and where objection or criticism, if any, might be interposed. The interests of property owners and citizens were thereby fully protected. No authority was vested by the State in the trustees permitting them to impose other or different conditions.

The other points upon which the plaintiff attacks the consent have been examined and found without foundation.

We have, therefore, reached the conclusion that the consent of the village authorities to the operation of the omnibus line is valid.

The judgment should be affirmed, with costs.

Finch, J.

(dissenting). The State by statute requires a public utility transportation company, as a condition precedent to its right to a franchise to operate upon the streets of a municipality, to obtain the consent of the latter. In this same statute the State has also provided that such consent should not be procured until “ after public notice and a hearing * * (Transportation Corporations Law, § 66.) Just how extensive should be this public notice and what should be the procedure to obtain such consent was left to the municipality.

Pursuant to this statute, the village of Peekskill passed an ordinance providing that the applicant for a franchise to operate buses upon the village streets should publish once in the daily paper the essentials of the application, including, among other things, the fare to be charged and the service it proposed to render therefor. The ordinance then goes on to provide that when the Village Clerk presents this application to the Board of Trustees, he must submit with it proof that the application has been published in a daily newspaper. “ The Board of Trustees shall thereupon have a public hearing thereafter * *

A majority of the court are about to hold that upon such an application for a public franchise in perpetuity, the words of the statute “ public notice and a hearing ” prohibit the village of Peekskill from passing the ordinance requiring the publication of the application and limit the village solely to a notice and hearing upon the petition after it has been presented to the Board of Trustees. With this construction of the statute we are unable to agree. By the terms of the statute providing for the consent of the village to a franchise for the use of its streets, there is no language showing the intent of the Legislature to exclude any reasonable requirement for public notice. On the other hand, it was left to the municipality to prescribe what procedure should constitute reasonable public notice. The ordinance prescribes a reasonable public notice to the inhabitants of the village of the essentials of a petition about to be filed to obtain a franchise and is valid.

It is said, however, that subdivision 39 of section 89 of the Village Law specifies what shall constitute public notice and a public hearing and that even if section 66 of the Transportation Corporations Law does not render this village ordinance invalid, that subdivision 39 of section 89 prevents the village from requiring an applicant for a franchise to be required to publish the essentials of his application. Section 89 of the Village Law merely provides that “ no franchise shall be granted without a public hearing notice of which shall be given by publication in the official newspaper at least ten days before the meeting.” (Subd. 39.) Such language obviously lays down the minimum requirement for publication, but this does not prevent the village from requiring in addition to the publication of notice of the public hearing a prior publication of the essentials of the application before the Board of Trustees considers the desirability of granting the application.

If the ordinance is valid, any taxpayer may insist upon its validity and observance and it is no disqualification to the plaintiff that she is connected with the owner of a franchise with whom this present applicant is about to compete. The ordinance is valid and the plaintiff may insist upon its observance.

Valid ordinances within the territory affected have the force of law. (Crayton v. Larabee, 220 N. Y. 493, 501.) It was illegal for the Board of Trustees to ignore the ordinance and the failure to comply therewith renders the franchise illegal.

Municipal officers have no power to waive any of the requirements of a statute enacted for the protection of the people of the town or municipality of which they are officers * * (Borst v. Town of Sharon, 24 App. Div. 599, 602.)

The judgments appealed from should be reversed and the injunctions issued.

Lehman, Ch. J., Loughran, Sears, Lewis and Conway, JJ., concur in per curiam opinion; Finch, J., dissents in opinion, in which Rippey, J., concurs.

Judgment affirmed.


author: Sears, J.

text:
    Green Bus Lines, Inc., Appellant, v. Ocean Accident and Guaranty Corporation, Ltd., Respondent.
    Argued January 9, 1940;
    decided March 5, 1940.

      Daniel A. Dorsey, Louis Timberg, Rubin Mazel and Walter R. Hart for appellant.
    The complaint states a valid cause of action. (Gillespie v. Brooklyn Heights R. R. Co., 178 N. Y. 347; Putnam v. Broadway & Seventh Ave. R. R. Co., 55 N. Y. 108; People v. Martin, 203 App. Div. 423; 235 N. Y. 550; Hutchinson v. McCue, 101 Fed. Rep. [2d] 111; Floralbell Amusement Corp. v. Standard S. & C. Co., 256 App. Div. 221.)

      Nathaniel H. Jackson and Harold L. Fierman for respondent.
    The complaint fails to state a valid cause of action. (Cornell v. Travelers Ins. Co., 175 N. Y. 239; Mayor, Lane & Co. v. Commercial Casualty Ins. Co., 169 App. Div. 772; White v. Maryland Casualty Co., 139 App. Div. 179; Royal Indemnity v. May & Ball, 222 Ky. 157; Coleman v. New Ansterdam Casualty Co., 247 N. Y. 271; Roth v. National Automobile Mut. Cas. Co., 202 App. Div. 667; 235 N. Y. 605; Suydam v. Public Indemnity Co., 10 N. J. Misc. Rep. 868; Assets Realization Co. v. Howard, 211 N. Y. 430; Bear Film Co. v. Indemnity Co. of North America, 22 Cal. App. [2d] 520; Weatherwax v. Royal Indemnity Co., 250 N. Y. 281; Hermanee v. Globe Indemnity Co., 221 App. Div. 394.)
   Sears, J.

The basic question here is as to the sufficiency of the plaintiff's complaint. It appears therefrom that on December 31, 1934, the defendant issued to the plaintiff its policy of insurance by which the defendant agreed to pay any sums which the plaintiff might become obligated to pay by reason of the liability imposed by law upon the plaintiff for damages for and incident to injuries to persons resulting from the ownership, operation, maintenance, use or defective construction of certain motor vehicles if suffered or alleged to have been suffered during the following twelve months by any person or persons, with certain exceptions not here material. It also appears from the complaint that the defendant by the terms of the policy agreed to investigate all reported accidents; to defend in the name and on behalf of the plaintiff any suit, even if groundless, brought against the plaintiff to recover damages covered by the policy unless the defendant elected to effect settlement; to pay all.expenses incurred by the defendant for investigation, settlement or defense, including all costs assessed against the plaintiff. It further appears that on the 25th day of August, 1935, while the policy was in effect, a person named Rose Berger became a passenger on one of the plaintiff’s vehicles as prescribed in the policy, and thereafter brought suit against the plaintiff for injuries which she received or claimed to have received while such a passenger. Attached to the complaint is a copy of Rose Berger’s complaint in her action against the plaintiff. Further allegations in the complaint are to the effect that the plaintiff, pursuant to the terms of the policy, notified the defendant of the commencement of the Berger action and forwarded to it the summons and complaint. Thereafter the defendant sent the plaintiff a letter reading as follows:

“ January 14, 1936.

“ Green Bus Lines, Inc.,

“ Queens Boulevard and 37th St.

“ Long Island City, N.Y.

“ Re: 0-13487 Levy et al vs. Green Bus Lines, Inc.

“ Your #5912

“ Gentlemen:

“ Referring to the above captioned claim, which we are defending in the Supreme Court, County of New York, please be informed that we are instructed by Home Office to advise you this claim is not covered under your policy; that we will investigate and defend the action with a full reservation of rights and that our act will not be construed as waiving any of the terms or conditions of the policy.

Very truly yours,

“ JAMES J. HOREAU

“ Claims Manager.

“ JJH:K

“ CC RICHMOND ”

Still later defendant sent the plaintiff a letter in the following words:

“ July &th, 1938.

Green Bus Lines, Inc.

“ c /o Walter Hart, Esq.

66 Court Street “ Brooklyn, N.Y.

Re: 0-13487 Rose Berger vs. Green Bus Lines Gentlemen:

In accordance with our telephone conversation this date, we advise you, as follows:

We are willing that you settle the above captioned action for $2,700.00 without prejudice to your rights under your policy with the Ocean Accident & Guarantee Corporation, Ltd., and our reservation of rights thereunder delivered to you in connection with the above matter.

“ In connection with any action instituted by you under said policy, in reference to this proposed settlement if made, we agree to accept service of the summons and complaint .in the Supreme Court of the State of New York, County of New York or County of Queens. In such action we agree that we will not present, by way of defense or testimony, any defense as to the amount of the settlement, or any restrictive provisions in the policy with reference to your rights to settle. In that way, the issue in the action will be whether or not you are indemnified under the policy.

“ In the event that you do not consummate the settlement above referred to, the foregoing is, of course, without prejudice to your rights, or our rights under the policy, or the reservation of rights made by us thereunder in behalf of the company.

“ Very truly yours,

“ JAMES J. HOREAU

Claims Manager

JJH:C ”

The complaint then continues, as follows:

Thirteenth: That subsequent thereto and on or about the 17th day of June, 1938, the plaintiff herein, with the consent of the defendant herein, settled the action instituted by the said Rose Berger as aforesaid, by paying to the said Rose Berger, the sum of Twenty Seven Hundred ($2700.00) Dollars in full settlement of said action.” Nowhere in the complaint is there any allegation that the plaintiff was under any legal obligation to pay Rose Berger any sum in compensation for her injuries or are there any allegations from which legal liability to Rose Berger can be inferred, and yet the only obligation assumed by the defendant under the policy is to protect the plaintiff from legal liability in a situation such as is here involved. The policy does not provide for reimbursement of moneys expended to settle or compromise groundless claims. (Cornell v. Travelers, Ins. Co., 175 N. Y. 239.) The plaintiff seems to realize its failure to assert a claim within the direct promise of the insuring clause, and relies upon the letters of the defendant as admissions by the defendant that its claim for the sum paid Rose Berger is to be treated as covered by the policy. To understand the letters, attention must be given to a further clause of the policy, as follows: “No action shall be maintained against the Company]the defendant] under this policy unless brought after the amount of loss shall have been fixed either by a final determination of litigation or by agreement between the parties with the written consent of the Company.” The second letter is such a written consent to-the amount of the settlement. It, as well as the first letter, specifically states that the defendant waives no defense available to it under its agreement in respect to the Berger action and the loss resulting therefrom, except as to the amount which properly compensates Rose Berger for her injuries. It still remains necessary, despite the letter, for the plaintiff to show that the plaintiff was liable to Rose Berger for the injuries, although it is no longer necessary for the plaintiff to show the character of the injuries or the amount that would fairly compensate her.

There being a total failure to allege liability to Rose Berger directly or indirectly, the complaint fails to state facts sufficient to constitute a cause of action, and the judgment appealed from should be affirmed, with costs. The appeal from the order denying plaintiff’s motion for summary judgment should be dismissed without costs, as academic. (See 282 N. Y. 737.)

.Lehman, Ch. J., Loughran, Finch, Rippey, Lewis and Conway, JJ., concur.

Judgment affirmed and appeal from order dismissed.


author: Loughran, J.

text:
    In the Matter of William J. McNamara, Respondent, against Thomas L. Holling, as Mayor of the City of Buffalo, et al., Appellants.

      Argued January 10, 1940;
    decided March 5, 1940.

      David Diamond, Corporation Counsel (Bart J. Shanahan of counsel), for appellants.
    A position held by a veteran may be abolished for purposes of economy and the burden is on the veteran to point out a position vacant at the time of the abolition of his position in the same grade and group before he is entitled to relief. (Matter of Clancy v. Halleran, 263 N. Y. 258; Matter of Wolf v. Delaney, 266 N. Y. 262; Matter of Sergeant v. Kern, 279 N. Y. 709; Matter of Franklin v. Rathmann, 143 Misc. Rep. 786; Matter of Brizzolara v.
      McKenzie, 253 App, Div. 886; Matter of Blodgett v. Board of Supervisors, 246 App. Div. 188; Matter of Smith v. Greene, 247 App. Div. 425; Matter of Breckenridge v. Scannell, 160 N. Y. 103.) There being no existing vacancy when petitioner’s position was abolished, his rights under section 22 of the Civil Service Law (Cons. Laws, ch. 7) terminated. (Matter of Schmidt v. Bd. of Supervisors, 244 App. Div. 493; Matter of Clancy v. Halleran, 263 N. Y. 258; Matter of Wolf v. Delaney, 266 N. Y. 262; Matter of Sergeant v. Kern, 279 N. Y. 709; Matter of Dorsa v. Forbes, 270 N. Y. 443.) The local civil service commission prescribed rules which made the tests and qualifications for appointments, respectively, to the positions of deputy sealer and assistant assessor essentially different. (Matter of Carr v. Kern, 279 N. Y. 42; Matter of Krapp v. Kern, 255 App. Div. 305; 281 N. Y. 617; Matter of Stryker v. Board of Education, 274 N. Y. 620.) In so far as subdivision 1 of section 22 of the Civil Service Law gives a preference in appointment, without competitive examination, to the petitioner, a non-disabled veteran, it contravenes the provisions of section 6 of article V of the State Constitution. (Matter of Andresen v. Rice, 277 N. Y. 271; Matter of Barthelmess v. Cukor, 231 N. Y. 435; Matter of Keymer, 148 N. Y. 219; Hale v. Worstell, 185 N. Y. 247; Chittenden v. Wurster, 152 N. Y. 345; Palmer v. Board of Education, 276 N. Y. 222; Matter of Scahill v. Drzewucki, 269 N. Y. 343; Hurley v. Board of Education, 270 N. Y. 275; Ciaccia v. Board of Education, 271 N. Y. 336; Matter of Carow v. Board of Education, 272 N. Y. 341; Matter of Rooney v. Rice, 274 N. Y. 347.)

      Eugene V. Hanavan, Erma R. Hallet and John J. Brown for respondent.
    There being no vacancy when petitioner’s position was abolished, he was not discharged from public service, but was suspended without pay, and, although his name was placed on a preferred list created pursuant to section 31 of the Civil Service Law, he still maintained his full rights under section 22 of the statute. (Matter of Clancy v. Halleran, 263 N. Y. 258; Matter of Wolf v. Delaney,
      266 N. Y. 262; Matter of Sergeant v. Kern, 279 N. Y. 709; Matter of DeFeo v. Chadsey, 254 App. Div. 441.) Section 22 of the Civil Service Law does not limit a veteran’s transfer privilege to a vacancy having the identical requirements as his former position. (Matter of Nitschke v. Kern, 278 N. Y. 726; Matter of DeFeo v. Chadsey, 254 App. Div. 441.)
   Loughran, J.

On April 26, 1938, the petitioner was appointed deputy sealer of weights and measures for the city of Buffalo. This employment wag in the competitive class of the civil service. On June 30, 1938, the position was abolished.

Petitioner is an honorably-discharged veteran of the World war. Section 22 of the Civil Service Law (Cons. Laws, ch. 7) provides that when a veteran-held position is abolished the veteran shall not be discharged from the public service but that he " shall be transferred to any branch of the said service for duty in such position as he may be fitted to fill, receiving the same compensation therefor.” (Subd. 1.) On June 30, 1938, there was no vacancy in any position to which the petitioner could have been transferred. Vacancies thereafter occurred in the competitive position of assistant deputy assessor of the city. Petitioner’s demand that he be put into one of these unfilled places went unheeded by the city authorities. Compliance with that demand has now been ordered by the courts below. This court granted the city authorities leave to appeal.

When positions in the public service are abolished a soldier-incumbent must go in his turn unless there is opportunity for his continuance elsewhere in the service on the conditions prescribed by section 22 of the Civil Service Law. (Matter of Clancy v. Halleran, 263 N. Y. 258.) But the statutory right of translocation is not conditioned upon the immediate existence of a vacancy which the veteran is entitled to fill. The right continues for a reasonable time after it accrues. (Matter of Nitshke v. Kern, 278 N. Y. 726.) Concededly, this petitioner’s claim of the right was seasonably made.

He did not assert that his service as deputy sealer of weights and measures fitted him to fill a vacancy in the position of assistant deputy assessor. The basis of his claim was the fact that in March, 1927, he had successfully passed a competitive examination for the position of deputy assessor. The difference between that position and the vacant position of assistant deputy assessor is one in name only. The petitioner, however, had received no appointment from the eligible list that resulted from the 1927 examination and that list had expired in 1931. A later list for the vacant positions in question was in force when the vacancies occurred.

The courts below have held that the petitioner’s fitness in 1938 to fill the position of assistant deputy assessor was attested by the presence of his name on the then dead 1927 list of those who were eligible until 1931 for appointment to the same position. This ruling, we think, is against the fundamental purpose of the civil service principle of the State Constitution. (Art. 5, § 6.)

With exceptions now immaterial, the substance of the command of the Constitution is this: Merit and fitness shall be the basis of the choice of public servants and the test of merit and fitness shall be competitive examination. This command, as the petitioner says, speaks of appointments and promotions ” in the civil service and does not make mention of “ transfers ” therein. We assume with him that the transference he demands would not be a promotion, since his former position of deputy sealer of weights and measures was classified in the same salary grade with the vacant position of assistant deputy assessor. But these two positions are essentially different in respect both of duties and of entrance requirements; and so the petitioner cannot be shifted from the one position to the other without in effect receiving an extra appointment unsanctioned by the competitive examination commanded by the Constitution. This result, we think, cannot be validated by calling it a transfer.”

The eligible list that expired in 1931 is without significance. Suppose that list had been alive at all times here in issue. Even then the petitioner could have excluded his felloweligibles from the vacancy in question only in the event that his relative standing on the live list would have entitled him to an appointment therefrom ahead of them. In any different situation (and so in this case) the benefit conferred upon a veteran by section 22 of the Civil Service Law can be no more than a right of transfer to a vacancy existing in a branch of the public service wherein vacancies are filled from a list applicable to the position that has been abolished. This is only to say that the operation of section 22 of the Civil Service Law is limited by the same constitutional command, viz.: The sole test of merit and fitness is competitive examination, unless competitive examination would be futile.

Inasmuch as Matter of Nitshke v. Kern (supra) naturally enough was read by the courts below as authority to the contrary, it is only fair to add that the question now decided was not considered by us in that case.

The orders should be reversed and the proceeding dismissed, without costs.

Lehman, Ch. J., Finch, Rippey and Conway, JJ., concur; Sears and Lewis, JJ., taking no part.

Orders reversed, etc.


text:
    The People of the State of New York ex rel. Beatrice Liss, Appellant, against Superintendent of Women’s Prison et al., Respondents.
    Argued January 15, 1940;
    decided March 5, 1940.

      Joseph A. Solovei and Harold H. Corbin for appellant.
    Relator having been tried and convicted of an offense of which she had been previously acquitted, may raise the issue of her second unlawful jeopardy by resort to habeas corpus before sentence. (People v. Spitzer, 148 Misc. Rep. 97; Clawans v. Rives, 104 Fed. Rep. [2d] 240; People ex rel. Tweed v. Liscomb, 60 N. Y. 559; People ex rel. Jannicky v. Warden, 231 App. Div. 131; People ex rel. Pulko v. Murphy, 244 App. Div. 382; People ex rel. Ticineto v. Brewster, 241 App. Div. 467; Matter of Nielson, 131 U. S. 176; Johnson v. Zerbst, 304 U. S. 458; Bowen v. Johnston, 306 U. S. 19; Matter of Bonner, 151 U. S. 242; People ex rel. Meyer v. Warden, 269 N. Y. 426; People ex rel. Stabile v. Warden, 202 N. Y. 138; People ex rel. Brinkman v. Barr, 248 N. Y. 126.) The acquittal of relator in the Federal court divested the State court of jurisdiction to try her upon the same facts. (People ex rel. Kwiatkowski v. Trenkle, 169 Misc. Rep. 687; People v. McGowan, 17 Wend. 386; People v. Allen, 1 Parker Crim. Rep. 445; People v. Peck, 4 N. Y. Crim. Rep. 148; Lohman v. People, 1 N. Y. 379; People v. Grzesczak, 77 Misc. Rep. 202; People v. Cryan, 123 Misc. Rep. 358; People ex rel. Ticineto v. Brewster, 241 App. Div. 467; People v. Spitzer, 148 Misc. Rep. 97.)

      William F. X. Geoghan, District Attorney (Henry J. Walsh of counsel), for respondents.
    The plea of former jeopardy was not available to the relator under the writ of habeas corpus. (People ex rel. Stabile v. Warden, 202 N. Y. 138; People ex rel. Collins v. McLaughlin, 194 N. Y. 556; People ex rel. Scharff v. Frost, 198 N. Y. 110; People ex rel. Hubert v. Kaiser, 206 N. Y. 46; People ex rel. Brink-man v. Barr, 248 N. Y. 126; People ex rel. Meyer v. Warden, 269 N. Y. 426.)
   Loughran, J.

This is a habeas corpus proceeding brought to procure the release of the relator-appellant from the custody of the respondent, as warden of a house for the detention of women. The case is stated in a stipulation submitted by the parties in substitution of the minutes of the hearing.

This stipulation first recites: That on December 6, 1938, an indictment was returned by the grand jury for the Eastern District of New York against Beatrice Liss [the relator] and another, which charged a violation of Title 21, United States Code, Sections 173, 174 and Title 26, United States Code, Sections 1040 and 1043-A, which said indictment resulted from a discovery by police officers of the Police Department of the City of New York on December 3, 1938, in the home of said relator, at No. 716 Ocean Parkway, in the Borough of Brooklyn, City and State of New York, of a quantity of narcotics, to wit: morphine. The trial of said indictment was held in the United States District Court for the Eastern District of New York, before Hon. Grover M. Moscowitz, United States District Judge and a jury, on December 22nd and 23rd, 1938, and resulted in a verdict of acquittal as to the relator.”

The Federal indictment so described was found against the relator and her husband. It is stipulated that in respect of the husband the Federal court charged the jury as follows: “ All you have to consider is count one so far as he is concerned. As I have read to you, the possession of narcotics shall be deemed sufficient evidence to authorize a conviction unless the defendant explains the possession to the satisfaction of the jury. He has got to explain, it seems to me, a lawful purchase or possession of that drug. However, that is for you to say upon this evidence.” It is stipulated that the Federal court said to the jury respecting the relator: “ This defendant, Beatrice Liss, lived with him, with knowledge that her husband had these narcotics there. Was she aiding or abetting or assisting him? That is for you to say upon the testimony and the testimony alone.” _ Thus it appears that the basis to the prosecution of the relator in the Federal court was her alleged possession of a quantity of morphine contrary to the Federal narcotic laws. (See U. S. Code, tit. 21, § 174.)

The stipulation further shows these facts: “ An information was filed against said Beatrice Liss, relator-respondent herein, in the Court of Special Sessions of the City of New York, County of Kings, which charged a violation of Public Health Law, section 422, said information having been based upon the possession of the identical narcotics found at the home of said relator, at No. 716 Ocean Parkway, Brooklyn, New York, on December 3, 1938, as set forth in the indictment tried before United States District Judge Moscowitz and a jury on December 22nd and 23rd, 1938 * * *. Substantially the same testimony was offered by the prosecution at the trial of said information in the Court of Special Sessions, County of Kings, as was relied upon by the government at the trial of the indictment in the United States District Court for the Eastern District of New York.”

By section 422 of the Public Health Law (Cons. Laws, ch. 45) the unauthorized possession of any narcotic drag is made unlawful. Punishment therefor is prescribed by the Penal Law. (Public Health Law, § 444; Penal Law., §§ 1751, 1751-a.) The pertinent sections of the Public Health Law are parts of article 22 thereof, the “ Uniform Narcotic Drag Act.”

Before she was sentenced by the Court of Special Sessions the relator instituted this habeas corpus proceeding. The writ was sustained by the Supreme Court at Special Term and dismissed at the Appellate Division. We now review the order of the Appellate Division on this appeal by the relator.

“No person shall be subject to be twice put in jeopardy for the same offense.” (N. Y. Const. art. 1, § 6.) This constitutional guaranty is invoked by the relator in opposition to the present prosecution against her in this State for what she asserts is the same offense of which she was acquitted in the Federal court. She is wrong in that position. A single act which violates both Federal and State criminal laws is generally held to result in distinct offenses against the two separated governments. “ Each government in determining what shall be an offense against its peace and dignity is exercising its own sovereignty, not that of the other. It follows that an act denounced as a crime by both national and State sovereignties is an offense against the peace and dignity of both and may be punished by each.” (Taft, Ch. J., in United States v. Lanza, 260 U. S. 377, 382. See 1 Bishop on Criminal Law [9th ed.], § 987; 2 Freeman on Judgments [5th ed.], § 652; 2 Willoughby on the Constitutional Law of the United States [2d ed.], § 706; 1 Cooley on Constitutional Limitations [8th ed.], p. 686. Cf. Puerto Rico v. Shell Co., 302 U. S. 253, 264, 265.)

The relator also contends, however, that the present prosecution against her is outlawed by the very statute which the People say she transgressed. In this contention we think she is right.

The charge made against her by the People was that she possessed the morphine contrary to article 22 of the Public Health Law. Section 445 of article 22 reads as follows: No person shall be prosecuted for a violation of any provision of this article if such person has been acquitted or convicted under the federal narcotic laws of the same act or omission which, it is alleged, constitutes a violation of this article.” The act of which the relator had been acquitted in the Federal court (possession of the morphine) was the self-same act for which she was put on trial again in the Court of Special Sessions. There was no power in the Court of Special Sessions so to proceed in the premises. When the Federal court found the relator not guilty of possession of the morphine, that alleged act was no longer ground for even the initiation of a criminal prosecution against her for violation of article 22 of the Public Health Law. This was the manifest effect of section 445 of that article. (Cf. Penal Law, § 33; Code Crim. Proc. § 139.)

Since the want of jurisdiction of the Court of Special Sessions was apparent upon the face of the conceded facts, the case was clearly an appropriate one for the remedy of habeas corpus.

The order of the Appellate Division should be reversed and that of the Special Term affirmed.

Lehman, Ch. J., Finch, Rippey, Sears, Lewis and Conway, JJ., concur.

Ordered accordingly. .


text:
    Louis Levine et al., Appellants, v. Sosthenes Behn et al., Respondents, Impleaded with Others.
    Argued January 17, 1940;
    decided March 5, 1940.

      Arthur G. Warner and David L. Stehr for appellants.
    The defendants’ general denial is not a “ defense ” within the meaning of rule 113 of the Rules of Civil Practice. (Knickerbocker Trust Co. v. Miller, 149 App. Div. 685; Ebin v. Equitable Life Assur. Society, 177 App. Div. 458; Barone v. O’Leary, 44 App. Div. 418; Siede v. Newkirk, 148 App. Div. 864; Curtis v. Searles, 206 App. Div. 287; Moffat v. Phœnix Brewery Corp., 247 App. Div. 552; People ex rel. Freligh v. Matsell, 94 N. Y. 179; Matter of New York & Brooklyn Bridge, 72 N. Y. 527; Palmer v. Van Santvoord, 153 N. Y. 612.) The self-serving declarations in the corporate minutes as to the directors’ motives, assertions and discussions, together with a decision in a case to which neither the plaintiffs nor the defendants were parties are incompetent and inadmissible in evidence and cannot be the basis of a motion for summary judgment. (Reilly v. Freeman, 84 App. Div. 433; Thayer v. Schley, 137 App. Div. 166; Matter of Hayes, 153 Misc. Rep. 233; Matter of Mandelbaum, 80 Misc. Rep. 475; 159 App. Div. 909; Gallagher v. Perot, 122 Misc. Rep. 845; Lederer v. Wise Shoe Co., 276 N. Y. 459; Goldstein v. Massachusetts Acc. Co., 246 App. Div. 823.) The Special Term found that the so-called documentary evidence was not conclusive. Therefore, it was error to grant summary judgment under the fifth paragraph of rule 113, which requires the plaintiff merely to raise an issue as to the conclusiveness of the documentary evidence. (Karpas v. Bandler, 218 App. Div. 418; Weiss v. Goldberger, 209 App. Div. 615; Miner v. Reinhardt, 225 App. Div. 530; Brooklyn Clothing Corp. v. Fidelity-Phœnix Fire Ins. Co., 205 App. Div. 743; Rogan
      v. Consolidated Coppermines Co., 117 Misc. Rep. 718; Woodmere Academy v. Moskowitz, 212 App. Div. 457.)

      Robert Nias West, John R. Henry and Guy Cary for respondents.
    The defense is sufficient as a matter of law. (Staten Island Midland R. R. Co. v. Hinchliffe, 170 N. Y. 473; Pross v. Foundation Properties, Inc., 158 Misc. Rep. 304; Lederer v. Wise Shoe Co., 276 N. Y. 459; Holland v. Presley, 280 N. Y. 835; Curry v. Mackenzie, 239 N. Y. 267; Rice v. Chapman, 234 App. Div. 279; Holland v. Atlantic Stevedoring Co., 239 N. Y. 605; MacAffer v. Boston & Maine Railroad, 268 N. Y. 400; Broadway Trust Co. v. Manheim, 47 Misc. Rep. 415; Morgan Munitions Supply Co. v. Studebaker Corp., 226 N. Y. 94; Securities & Exchange Comm. v. Timetrust, Inc., 28 Fed. Supp. 34.) The defense is established, not only prima facie but conclusively, by documentary evidence: (Kelly v. Jackson, 6 Pet. [U. S.] 622;

      United States Vinegar Co. v. Schlegel, 143 N. Y. 537; Hull v. Littauer, 162 N. Y. 569; Leonard v. Faber, 52 App. Div. 495; Gentry-Futch Co. v. Gentry, 90 Fla. 595; Commissioner of Banks v. Cosmopolitan Trust Co., 253 Mass. 205; Mooresville Building, Savings & Loan Assn. v. Thompson, 212 Ind. 306; Catholic F. M. Society v. Oussani, 215 N. Y. 1; Friend v. Hamill, 34 Md. 298.)
   Sears, J.

The plaintiffs are stockholders of the defendant The National City Bank of New York. The defendants, other than the bank, were the directors of the bank at the time the transactions mentioned in the complaint occurred, and the executor of one such director who has died. The action is a derivative one in which the plaintiffs seek to recover for the bank a large sum of money by reason of the alleged wrongful, willful, reckless and negligent acts of the individual defendants in paying out of the bank’s funds the sum of $725,000 in settlement of a claim against the bank in favor of the receiver of another banking institution, namely, the Harriman Bank, which, as plaintiffs allege, the directors knew or could and should have known was palpably unfounded. Answers have been interposed by the defendants containing general denials of the material allegations of the complaint which are amplified by specific statements of fact in conflict with the allegations of the complaint. The answers contain no other affirmative defenses. The defendants have moved for summary judgment under the fifth paragraph of rule 113 of the Rules of Civil Practice which reads as follows: Where an answer is served in any action setting forth a defense which is sufficient as a matter of law, where the defense is founded upon facts established prima facie by documentary evidence or official record, the complaint may be dismissed on motion unless the plaintiff by affidavit, or other proof, shall show such facts as may be deemed by the judge hearing the motion, sufficient to raise an issue with respect to the verity and conclusiveness of such documentary evidence or official record.”

The plaintiffs contend that inasmuch as the answers contain no affirmative defense but only denials, direct and inferential, a motion for summary judgment is unauthorized by the rule. The case does not fall within any of the eight classes enumerated in the first paragraph of the rule. Authority to make the motion must, therefore, be found in the language quoted from the rule. (Lederer v. Wise Shoe Co., 276 N. Y. 459.) The controversy wages over the meaning of the word “ defense.” The plaintiffs urge that the word “ defense ” must be confined in application to an affirmative defense, in the nature of avoidance. In support of their position they refer to the use of the words “ denials or defenses ” in the second paragraph of the rule as demonstrating a differentiation between negative and affirmative matter in an answer. They direct attention also to the phrasing of section 261 of the Civil Practice Act where the contents of an answer are stated to be (1) denials of material allegations of the complaint, and (2) “ a statement of any new matter constituting a defense * * *.” The plaintiffs also assert that the phrase “ where an answer * * * setting forth a defense which is sufficient as a matter of law,” is peculiarly applicable to allegations of new matter, and, if referable to denials, is awkward and redundant.

The defendants, on the other hand, contend that the word “ defense ” in the quoted language must be given a broad meaning in order to carry out the general intention of the rule, and must be construed to include denials as well as statements in avoidance. They argue that the quoted language would have little purpose unless a broad interpretation were given to the word inasmuch as rule 107, which was in effect before the quoted language was added to rule 113, would under the construction urged by the plaintiffs cover substantially the same field; and that a construction of the word “ defense ” to include a denial has received judicial approval. (Staten Island Midland R. R. Co. v. Hinchliffe, 170 N. Y. 473, 481.)

The choice between these positions is not an easy one. The word “ defense ” is ambiguous. We find no authority holding that a general denial is not a defense. In fact, in the second paragraph of the very rule under consideration occurs a provision requiring a statement by a plaintiff moving for summary judgment to show belief by the plaintiff that there is no defense to the action.” In this clause manifestly defense ” is used in its broadest sense and includes everything which would defeat the plaintiff’s claim. As neither the construction sought by the plaintiffs nor that sought by the defendants would do violence to definition or grammatical construction, we look to the purposes sought to be accomplished by the rule. We conclude that more was intended by the paragraph than a reassertion and limited amplification of the provisions of rule 107, and that a broad construction of the word “ defense ” better accords with the developing use of motions for summary judgment to secure prompt determination of judiciable controversies. (Lederer v. Wise Shoe Co., supra.)

As we find the pleadings to be such as to authorize the defendants to move for summary judgment, we must consider the sufficiency of the documentary evidence and official records to establish a defense. While a large number of documents and records are included in the defendants’ motion papers, the defense centers about the minutes of meetings of the executive committee of the defendant bank and of its board of directors when the settlement of the Harriman Bank claim was authorized. The minutes show that reasons were then brought to the attention of the members of the executive committee and of the directors as to why the settlement would be advantageous to the bank, even though the Harriman Bank’s claim might not be legally enforceable. These reasons were stated, according to the minutes, before authorization of the settlement was given by executive committee and directors. We need not consider whether the minutes as documentary evidence are competent to establish anything beyond the vote recorded. Even if consideration is given to all the matters which are included in the minutes, it appears therefrom that other statements not included in the minutes of the executive committee were made at the meeting of that body. It appears further that the minutes of the executive committee were signed by a defendant director who was charged by the representatives of the Harriman Bank with personal responsibility for the claim which the Harriman Bank was seeking also to enforce against the defendant National City Bank. Questions of fact are thus presented as to the verity and conclusiveness of the documentary evidence. Nor is this all. Here is an instance where bank directors authorized the expenditure of a large amount of the bank’s funds in settlement of a claim as to which they had received advice from at least one legal consultant that the bank was not liable and apparently had no advice that it was liable, and where the reasons for the action as given by the minutes were principally the protection of the reputation of the bank and the retention of the approval of public officials while other motives not wholly lacking in factual support are urged by the plaintiffs as entitled to consideration in determining what the actual purposes of the defendant directors were. Although the advice of counsel is not in itself a controlling factor (Continental Ins. Co. v. New York & Harlem R. R. Co., 187 N. Y. 225; Codman v. Dumaine, 249 Mass. 451), and although we find that the claim which was settled was not palpably unfounded, nevertheless we must conclude that, under all the circumstances, the documentary evidence and official records do not negative beyond question the allegations of wrongful, willful, reckless and negligent conduct contained in the complaint. Only the director defendants know the sources from which their actions flowed. Their credibility remains to be tested in a court of justice. Whether their actions came from justifiable or improper motives remains a question of fact despite the statements in the minutes. To use the words of the rule, facts are shown sufficient to raise an issue with respect to the verity and conclusiveness of the documentary evidence.

The judgments should be reversed and the defendants’ motion for summary judgment denied, with costs in all courts.

Lehman, Ch. J., Loughran, Pinch, Rippey, Lewis and Conway, JJ., concur.

Judgments reversed, etc. 0


author: Finch, J.

text:
    In the Matter of Julius Restaurant, Inc., Appellant, against Julius Lombardi, Respondent.

      Argued November 20, 1939;
    resubmitted January 24, 1940;
    decided March 5, 1940.

      Myron Engelman and Sidney Katzen for appellant.
    Section 964 of the Penal Law contemplates a special proceeding designed to provide a summary method of preventing or terminating a species of commercial fraud involving the use of a name and no action is required to be instituted by the service of a summons and complaint. (Matter of Brennan v. Mahoney, 165 Misc. Rep. 276; 252 App. Div. 741; New York Worlds Fair 1939 v. Worlds Fair News, Inc., 256 App. Div. 373; People ex rel. Bennett v. Laman, 277 N. Y. 368; McHenry v. Jewett, 90 N. Y. 58.)

      Max Chopnick for respondent.
    No summons and no complaint was served in this matter. The papers served do not initiate any action or proceeding. It was, therefore, properly held that Special Term was without jurisdiction. (Eastern Construction Co. v. Eastern Engineering Corp.,
      246 N. Y. 459; Boyshform Brassiere Co. v. Modishform B. Co., 205 App. Div. 14; Furey v. Town of Gravesend, 104 N. Y. 405; McKuskie v. Hendrickson, 128 N. Y. 555; Transit Commission v. Long Island R. R. Co., 253 N. Y. 345; Matter of Simmons, 130 App. Div. 350; 195 N. Y. 573; Jones v. City of Albany, 151 N. Y. 223; Seligman v. Friedlander, 199 N. Y. 373; Walsh v. Henel, 226 App. Div. 198; Sanders v. Ader, 26App. Div. 176; B. P. O. E. v. Improved B. P. O. E., 205 N. Y. 459; New York World’s Fair 1939 v. Worlds Fair News, Inc., 256 App. Div. 373; People ex rel. Bennett v. Laman, 277 N. Y. 368; Cranford v. Tyrrell, 128 N. Y. 341.)
   Finch, J.

Petitioner-appellant is a domestic corporation engaged in the business of conducting a restaur ant-bar- and-grill at 159 West Tenth street, New York city, and alleges that its restaurant has been identified from its inception with the name Julius ” or “ Julius’ Restaurant.” Petitioner, in this proceeding, seeks to enjoin the defendant-respondent from the use of the name Julius ” in connection with the defendant’s restaurant-bar-and-grill which is located close to that of petitioner.

We are concerned here solely with the question of the power of Special Term to entertain a proceeding pursuant to section 964 of the Penal Law which has been instituted only by a notice of motion and a verified petition, no summons or complaint having been served. The Special Term denied the relief requested. The Appellate Division, first judicial department, affirmed by a divided court.

Does section 964 of the Penal Law contemplate a special proceeding designed to provide a summary method of preventing or terminating a species of commercial fraud involving the use of a name where no action has been instituted by the service of a summons and complaint? We are of the opinion that it does. Section 964, enacted by chapter 638 of the Laws of 1937, provides: No person, firm or corporation shall, with intent to deceive or mislead the public, assume, adopt or use as, or as part of, a corporate, assumed or trade name, for advertising purposes, or for the purposes of trade, or for any other purpose, any name, designation or style, or any symbol or simulation thereof, or a part of any name, designation or style, or any symbol or simulation thereof, which may deceive or mislead the public as to the identity of such person, firm or corporation or as to the connection of such person, firm or corporation with any other person, firm or corporation; nor shall any person, firm or corporation, with like intent, adopt or use as, or as part of, a corporate, assumed or trade name, for advertising purposes, or for the purposes of trade, or for any other purpose, any address or designation of location in the community which may deceive or mislead the public as to the true address or location of such person, firm or corporation. A violation of this section shall be a misdemeanor. Whenever there shall be an actual or threatened violation of this section, an application may be made to a court or justice having jurisdiction to issue an injunction, upon notice to the defendant of not less than five days, to enjoin and restrain said actual or threatened violation; and if it shall appear to the satisfaction of the court or justice that the defendant is in fact assuming, adopting or using such name, or is about to assume, adopt or use such name, and that the assumption, adoption or use of such name may deceive or mislead the public, an injunction may be issued by said court or justice, enjoining and restraining such actual or threatened violation without requiring proof that any person has in fact been deceived or misled thereby.”

It will be observed that the statute consists of but three sentences. The first describes the offense. The second denominates it as a misdemeanor. The third provides for injunctive relief available upon five days’ notice. Clearly the scheme of the statute is to create two avenues whereby the evil which it denounces may be reached. First, those charged with the enforcement of the criminal law may prosecute the offender as a criminal. Second, the aggrieved individual may have speedy relief on the civil side by the preventive device of an injunction. Generally, a wrong prevented results in better justice than an attempted cure. If the act be committed, only punishment or damage remains.

Objection to allowing the proceeding at bar is made upon two scores; first, that it was not the intent of the Legislature to authorize a proceeding different from that available heretofore in obtaining injunctive relief to restrain the objectionable conduct in question; and second, that if the Legislature did so intend, then the language employed for the purpose is abortive for failure to enumerate all the steps in the new proceeding.

The intent of the Legislature. The statute in question provides that an application may be made * * * upon notice * * * of not less than five days.” There is no established canon of construction from which it follows that five days’ notice means twenty days in which to answer, as is provided by the Civil Practice Act in ordinary actions. Further, that “ an application may be made ” is contrary to the idea that a summons and complaint are required. An application ” is generally understood • as referring to a more informal type of procedure than an action constitutes. (Cf. Civ. Prac. Act, §§ 113-119, wherein the term application ” is used; also Civ. Prac. Act, §§ 1287, 1288, 1359; Insurance Law [Cons. Laws, ch. 28; Laws of 1939, ch. 882], § 528, in which the statute provides, “ upon an application * * * to show cause * * * the court * * * may * * * issue an injunction * * *.”) If the Legislature had intended restricting a proceeding brought pursuant to section 964 of the Penal Law, to the relief heretofore available, the language would have referred to an action ” or similar language, and not to the making of an application for the desired relief.

The efficacy of the language employed in section 964. The failure of the Legislature to enumerate the detailed procedure is but further indication of an intent to allow to the courts sufficient scope to adopt the procedure necessary to accomplish prompt relief. There is nothing to prevent a court from making the necessary rules, save only as these may be inconsistent with acts of the Legislature prescribing an inflexible procedure for the courts. Every other body possesses the absolute right to adopt a procedure best suited to the need to be accomplished. The Stock Corporation Law (Cons. Laws, ch. 59), section 21, provides that Either such stockholder or the corporation may apply upon eight days’ notice to the other ” for the relief authorized by that section. This statute has been in existence since enacted in its original form by chapter 638 of the Laws of 1893. It has generally been accepted that the words may apply upon eight days’ notice ” were sufficient description of a special proceeding created by that statute. If those words are sufficient authorization for the courts to entertain a special proceeding, so must the words “ an application may be made * * * upon notice * * * of not less than five days.” Unless the entire latter portion of section 964 be treated as useless verbiage, it must be recognized to have created a new special proceeding not available heretofore.

And is this not an attempt by the Legislature to keep the procedural side of the law more in step with modern conditions in other walks of life? It may be that the proverbial lagging steps of the law may not do harm under other circumstances, but this petitioner alleges that there is here shown an attempt to capitalize for commercial profit a procedure which had become somewhat archaic in dealing with a state of facts similar to those in the case at bar and as prescribed for the courts by the Legislature. Petitioner further alleges that this restaurant had built up, over the course of the years, by dint of hard work and conscientious attention, a good will of great value. The defendant conducted a restaurant a few doors away in the same block and, it is contended, installed an electric sign so constructed as to deceive all except the most wary. This sign, so petitioner infers, was hung in the late spring; the hanging was so timed that under the procedure theretofore in force, including twenty days to answer and the summer vacation, it precluded a disposition of the issues until the fall or winter. Meanwhile it may be that the cream of the restaurant trade for the year had been obtained.

It is submitted that to prevent the use of the name or address of another with intent to deceive, the Legislature enacted a new and summary special proceeding adequate to modern needs.

The application of petitioner-appellant, therefore, should not have been denied upon the ground that he initiated his proceeding pursuant to section 964 and gained nothing.

The orders should be reversed and the matter remitted for further proceedings in accordance with this opinion, without costs.

Lehman, Ch. J., Loughran, Rippey, Sears, Lewis and Conway, JJ., concur.

Ordered accordingly.


author: Conway, J.

text:
    In the Matter of Edward B. Gould, an Incompetent Person. Charles F. Hammond, as Committee, et al., Appellants; Norman J. Gould, Respondent.

      Argued January 10, 1940;
    decided March 5, 1940.

      Earl W. Murray and Joseph J. Doyle for appellants.
    Neither respondent’s petition for the appointment of a special guardian nor the order appointing the special guardian constituted the initiation of a proceeding for the payment of the incompetent’s debts. (Finch v. Goldstein, 245 N. Y. 300.) The alleged claim is defective. (Diehl v. Becker, 227 N. Y. 318.)

      Alfred L. Becker and Philip Serling for respondent.
    A waiver by court and committee of any further or more formal proof or notice of claim was established. (Matter of Miles, 170 N. Y. 75; Lambert v. Craft, 98 N. Y. 342; Gansevoort v. Nelson, 6 Hill, 389; Matter of Williams, 121 Misc. Rep. 54; Watertown Nat. Bank v. Bagley, 134 App. Div. 831; State Loan & Trust Co. v. Cochran, 130 Cal. 245; O’ Neil Supply Co. v. Petroleum H. & P. Co., 280 N. Y. 50.)
   Conway, J.

There were three brothers named Gould, Edward B., Norman J., and Seabury S. Edward B. had a wife, Wilma, with whom he had marital difficulties. In an action which he brought against her for divorce, she counterclaimed for separation and obtained an order for temporary alimony, counsel fees and expenses. Payments of alimony under the order making such provision became due on June 1 and July 1, 1931. Payment of $1,500 for counsel fees and expenses became due May 15, 1931. On May 16, 1931, Norman J. Gould petitioned for the appointment of a committee of the person and property of Edward B. Gould and a declaration that he was an incompetent person. The first jury to pass upon the matter in June of 1931 found that Edward B. Gould was competent. After the verdict had been set aside a second jury, in January, 1932, found that he was incompetent. In between those two verdicts a special guardian was appointed on July 28, 1931, to take care of the affairs of the alleged incompetent, upon the petition of Norman J. Gould.

It would appear that the reason for filing that petition was that Wilma Gould had made a motion in the divorce action for a sequestration of assets and income of her husband and the appointment of a receiver of his property. He had income by reason of a trust which he had set up of certain shares of stock in the Goulds Manufacturing Company under which upon his death the shares would pass to his brothers, Norman J. and Seabury S. It would appear to have been important to defeat the motion for sequestration and the appointment of a receiver, made to compel payment of the sums due for alimony, counsel fees and expenses. As a basis for the application for the appointment of a special guardian, Norman J. Gould alleged that his brother, Edward B., had not signed any checks nor taken any steps for the care of any of his affairs; that he was in a hospital by order of the County Court; that installments for alimony were due; that nearly all of his personal property was the subject of a trust agreement dated November 14, 1930; that the alleged incompetent was indebted by reason of “ approximate amount advanced by Norman J. Gould and Seabury S. Gould to Edward B. Gould at latter’s request for various purposes at various times, $12,000.”

It would be difficult to recite an obligation in terms more vague, but it is claimed that this constituted a presentation of a claim against Edward B. Gould.

A hearing upon the petition was held on July 28, 1931. Seabury S. Gould testified as to claims. He offered no proof as to any claim of his own or of Norman J. Gould.

Upon that petition, on July 28, 1931, James M. Ryan was appointed special guardian to receive income, pending the termination of the proceeding for the appointment of a committee, and to apply it, first, for the care and maintenance of the said Edward B. Gould or any medical care or attention which he might require; second, to apply any remaining portion of the said income for the support of the family of said Edward B. Gould and in payment of any award for any alimony and counsel fee made in the divorce action between Edward B. Gould and Wilma E. Gould; third, to apply and pay any portion of said income remaining toward payment of such other debts of the said Edward B. Gould as in the judgment of said special guardian should be just and proper claims against his estate and the payment of which would be for the best interests of his estate and the conservation of his property pending that proceeding.

The alleged claim was not recognized or adjudicated in or by that order.

Following the finding of incompetency and on January 12, 1932, Ryan was also appointed committee of the person and estate of Edward B. Gould.

Thereafter in the same year Ryan filed his account both as special guardian and as committee. He annexed to the account a schedule containing a statement of all claims presented to him against the estate remaining unpaid. He further swore that the debts listed were justly due and owing. There was no mention in the schedule of the alleged claim of $12,000. Norman J. Gould waived the issuance of citation and consented that the account proceed to decree. Ryan was thereupon discharged and turned over the balance in his hands to one Hammond, who was appointed committee.

The allegation of the claim in the petition had served its purpose in obtaining the appointment of the special guardian, the assets and income of Edward B. Gould had not been sequestrated, nor had a receiver been appointed, the trust estate continued intact and the shares of stock in the Goulds Manufacturing Company would go to Norman J. and Seabury S. if Edward B. predeceased them. The claim was abandoned.

In April of 1937 there was tried in the Supreme Court, Cayuga county, an action brought by Wilma E. Gould, the incompetent’s wife, to set aside the living trust made by the incompetent and to which reference has been made heretofore. It will be remembered that the trust agreement was executed November 14, 1930, six months before the original petition of Norman J. Gould for the appointment of a committee of Edward B. Gould. The trial resulted in the setting aside of the trust. Thereafter, in October, 1937, Hammond, as committee, brought a proceeding under article 9 of the Debtor and Creditor Law (Cons. Law, ch. 12) for the purpose of obtaining an order directed to creditors of the incompetent to prove their claims against the estate. Annexed to that petition were two schedules, the first marked “ A,” containing a list of the known creditors of the incompetent. With one exception they were the creditors listed by Ryan on his accounting. There was also attached a second schedule marked “ B ” which included those interested in the action brought by Wilma E. Gould to set aside the trust. Norman J. Gould was listed in the second schedule but not in the first.

Thereupon Norman J. Gould filed a bill of particulars of so much of the $12,000 claim, mentioned in the petition for the appointment of the special guardian, as represented moneys advanced by him, stating that there were no particulars furnished of any claim of Seabury S. Gould because he had died and it was impossible to furnish such particulars.

The particulars attempted to be furnished totalled upwards of $13,000. - No vouchers were furnished with them, although the Debtor and Creditor Law so requires. Moreover, the bill of particulars does not appear to have been furnished under the Debtor and Creditor Law, since no bill of particulars is provided for therein, and it recited that it was furnished voluntarily pursuant to the request therefor ” of the committee and his attorney.

The contentions of Norman J. Gould are recited in the order of October 4, 1938, of the county judge appealed from. They are: That the petition presented to this Court by Norman J. Gould on July 7, 1931, for the appointment of a Special Guardian and having annexed to said Petition, a schedule of assets and liabilities of said Edward B. Gould, so far as the same were known to said petitioner, constituted a presentation of the claim of Norman J. Gould against the estate of said Edward B. Gould, said claim being set forth in the Schedule annexed to said petition as follows: ‘ Approximate amount advanced by Norman J. Gould, and Seabury S. Gould *to Edward B. Gould at latter’s request for various purposes at various times, $12,000,’ ” and “ that when the said Court took jurisdiction of said proceeding, and received evidence regarding claims against the estate generally' and allowed an amendment of the petition for the appointment of a special guardian so as among other things to take cognizance of the claims presented or known, and to entertain a motion looking toward the payment of certain thereof out of surplus income, and made certain directions with reference to the claims referred to in said Schedule or proved at said hearing, it was in the nature of an initiation of litigation concerning said claims, and further that even though it did not constitute an actual filing of a claim by the claimants, as the Statute requires, yet it could be construed as equivalent to the filing of a claim, and that when the Court made the directions in the Order appointing the Special Guardian as hereinabove referred to, and gave directions with reference to the general claims against the estate, that thereby a proceeding ‘ in the nature of an initiation of litigation ’ concerning those claims, had been commenced and that therefore all claims referred to in said Schedule or proved at said hearing, were thereby saved from the tolling of the Statute of Limitations, and that the special guardian, the committees and the Court itself, as custodian of the property of the incompetent, waived any requirements of any further, different or more formal presentation of all such claims, and that the committee at the present time is and equitably ought to be estopped from setting up the Statute of Limitations as a bar to any items of said claims accruing less than six years prior to July, 1931.”

The county judge, after reciting in the order the filing of the Ryan account without making mention of the alleged claim of Norman J. Gould as having been filed, and the entry of an order approving said account, adjudged and decreed that the alleged claim was not duly or properly filed at any time with the committee or special guardian, that the reference to said claim in the schedule annexed to the petition for the appointment of the special guardian did not constitute such filing or presentation as required by statute (Debtor and Creditor Law, §§ 250, 252) and that the Statute of Limitations was a bar to it. (The last date of a claimed advance made in the so-called bill of particulars was July 31, 1931.)

The record completely refutes the contentions of claimant. There is no evidence to support them. Ryan, on his account-,' ing, recibed that Schedule ‘ C ’ hereto annexed contains a statement of all claims presented to me against the said estate which remain unpaid.” In his affidavit of May 7, 1932, he deposed that: “ According to the best of his knowledge, information and belief, all the debts stated in such account at the .time of the settlement thereof were justly due and owing; * * * and that he does not know of any error in said account or anything omitted therefrom which may in anywise prejudice the right of any party interested in the estate of the said Incompetent.”

Seabury S. Gould, a joint claimant with Norman J. Gould, had testified as to claims on the hearing before Ryan was appointed and had offered no proof as to the $12,000 claim on behalf of himself or his brother. He was the only witness. On the accounting of Ryan, Norman J. Gould consented to the entry of a decree thereon. Upon the entering of the decree the abandonment of the claim was completed.

That disposition by the parties may not now be attacked collaterally in this proceeding under the Debtor and Creditor Law.

As to the decision of the county judge under date of August 4, 1931, it provided for payment of charges for the maintenance of Edward B. Gould, then for payment of alimony and counsel fees and that “ any portion of the income that shall remain shall then be applied toward the payment of such of the remaining debts of Edward B. Gould as in the judgment of the Special Guardian shall be just and proper claims against his estate and the payment of which shall be for his best interest and the conservation of his property pending this proceeding.”

The order dated July 28, 1931 (sic), after providing for the payment of maintenance for Edward B. Gould and payments of alimony and counsel fee and for support of his family, directed the special guardian: Third, to apply and pay any portion of said income remaining toward payment of such other debts of the said Edward B. Gould as in the judgment of said Special Guardian shall be just and proper claims against his estate, and the payment of which shall be for the best interests of his estate, and the conservation of his property pending this proceeding.”

The debts and proper claims referred to were, of course, those presented and established. The contentions of Norman J. Gould are without substance. Indeed, it would seem fair to say that, after the claim had been abandoned, there was an attempt to resurrect it by means of the bill of particulars to meet the new condition presented by the setting aside of the trust indenture of November 30, 1930. This may not be accomplished.

The order of the Appellate Division should be reversed and that of the County Court affirmed, with costs in this court and in the Appellate Division.

The first question certified is answered in the affirmative; the second in the negative.

Lehman, Ch. J., Loughran, Finch and Rippey, JJ., concur; Sears and Lewis, JJ., taking no part.

Ordered accordingly.


text:
    In the Matter of William L. Clay, an Attorney, Appellant. International Hod Carriers’ Building and Common Laborers’ Union of America, Local No. 435, Respondent.

      Argued January 24, 1940;
    decided March 5, 1940.

      Victor Levine for appellant.
    Appellant was not guilty of gross negligence which warranted disciplinary action against him. (Matter of Janover, 179 App. Div. 882.) Appellant did not deceive his clients when they inquired as to the status of their litigation. (Matter of Palmieri, 221 N. Y. 611.)

      Daniel J. O’Mara, District Attorney (Stephen K. Pollard of counsel), for respondent.
    Appellant was guilty of gross negligence which warranted disciplinary action against him. (Matter of Marcus, 208 App. Div. 300; Matter of Gluck, 139 App. Div. 894.) Appellant deceived his clients when they inquired as to the status of their litigation. (Matter of Babcock, 230 App. Div. 323; Matter of Cantor, 248 App. Div. 390.) The record discloses evidence that appellant accepted money from bis clients for services which he did not perform. (Matter of Steierman, 237 App. Div. 584.) Appellant cast unworthy reflections upon the courts which were prejudicial to the administration of justice. (Matter of Markewich, 192 App. Div. 243; Matter of Manheim, 113 App. Div. 136.)
   Loughran, J.

The appellant, William L. Clay, is a member of the bar of this State practicing his profession in the city of Bochester. In July, 1935, he was retained by one faction of a local labor union to act for them in a controversy with another faction for dominion of the affairs of the organization. This retainer continued until April, 1937.

A year later, these clients laid before the Appellate Division charges that Mr. Clay had been unfaithful in the matters they had committed to his professional care. The charges were heard by a referee. Upon his report, the court made findings as follows: “Mr. Clay was guilty of gross negligence in the conduct of the business intrusted to him by his clients, the local Union. He was not frank and truthful and deceived his clients when they inquired the status of their litigation. He accepted money from bis clients for services which he never performed, which money, in good conscience, he should have returned to his clients, and in part received and demanded fees to which he was not entitled. Without reasonable cause or justification he cast unworthy reflections upon the courts which were of a character to be prejudicial to the administration of justice. He displayed a callous indifference to the entreaties of his clients and to his duty to them as a lawyer. He was thus guilty of professional misconduct within the meaning of Section 88 of the Judiciary Law, Subdivision 2.”

Thereupon an order was entered suspending Mr. Clay from the practice of his profession for six months and thereafter until the further order of the court. By leave of the Appellate Division, Mr. Clay presents its order to us for review of questions of law asserted by him to be involved therein. (See Judiciary Law [Cons. Laws, ch. 30], § 88, subd. 6.)

It is to be premised that no claim was made that any activity or remissness of Mr. Clay was corrupt.

In the warfare for control of the local union, the faction opposed to Mr. Clay’s clients was a minority but had the support of an international union with which the local was affiliated. The date of Mr. Clay’s retainer was July 9, 1935. The record shows, as the Appellate Division has said, that his clients then directed him “ to procure an injunction restraining the international from interfering with the men on the jobs and to take proceedings to recover the books, records and property of the local and to secure to the local a bank account of about $1,000 which it had on deposit with the Rochester Trust and Safe Deposit Company.” (256 App. Div. 528, 529.)

Mr. Clay commenced an action to restore to the local union its books, records and property. No trial of that action has been had. He commenced, too, an action to compel payment to the local union of the amount of its bank deposit. An order has been entered dismissing that action for delay in prosecution. In his handling of both actions Mr. Clay on occasion failed to exhibit the ardor and diligence that are exacted by the trust upon which a lawyer receives the concerns of a client. Even so, we do not understand the court below to have found that those shortcomings had in them any element of willfulness such as would necessarily call for disciplinary action.

The court below has found, however, that on July 30, 1935, there was “ paid to Mr. Clay $150 for his services in the proposed injunction action and for no other purpose.” Upon that finding, we take it, the court rested its ultimate conclusions of gross negligence and of unjust enrichment, — Mr. Clay having failed to institute any action for such an injunction.

At the hearing Mr. Clay’s clients characterized the $150 they paid to him on July 30, 1935, as his fee for bringing the injunction action. But they did not say that the payment was on either side stated to have been intended for that single purpose. Indeed, their chief witness testified: “’At the time this money was paid to Mr. Clay I talked to him about the funds on deposit in the Rochester Trust and Safe Deposit Company’s Bank.” Thereafter and on August 16, 1935, Mr. Clay informed his clients that he had brought the replevin suit instead of an injunction suit. They made no protest then that this was a departure from his engagement with them. On the contrary, as their chief witness testified: “ Well, the members decided that they would either have to go along or abandon the whole position and we had been informed by him, that the replevin suit would serve equally as well as an injunction suit. On the strength of that condition they decided that they would go along on the replevin suit.”

In that state of the record we are persuaded to hold that there is no evidence to support the underlying finding that the fee received by Mr. Clay from his clients on July 30, 1935, was limited exclusively to services to be rendered by him in the proposed injunction action.

The court below also found that in July, 1936, Mr. Clay’s clients again requested him to obtain an injunction against interference by the international union with the employment of members of the local; that Mr. Clay was paid twenty-eight dollars of a fee of fifty dollars then demanded by him; that he left the business to his clerk; and that the clerk had not finished the task two weeks later when “ the job for which the injunction was wanted had been lost to the men of the local union.” This finding in itself implies nothing more unfavorable to Mr. Clay than lack of assiduity on his part. The further finding that he was not entitled in July, 1936, to a fee of fifty dollars assumes that the original fee of $150 was paid solely for his services in the proposed injunction action. This assumption (as we have already seen) is without foundation.

The charge of conduct aspersive of the administration of justice is based upon the testimony of Mr. Clay’s clients that he gave them counsel which in their words was that labor unrest, and particularly the sit-down strikes that were on at the time had prejudiced the public interest against labor; that the courts were affected by this, and he did not believe that we could get a favorable decision, no matter how strong the evidence might be in our favor.” Such animadversions upon the nature of the judicial process are not sensational. It has been observed before that judges have at times been moved by the prejudices they share with their fellow men. Calculations made on that score do not become sinister merely because they have been whispered by a lawyer to his client. In our judgment the finding of conduct prejudicial to the administration of justice was unwarranted.

Mr. Clay’s clients made their case against him without the aid of counsel. The referee remarked that their animosity was on the same side with their testimony. None the less, there is evidence that Mr. Clay was not accurate in his reports to his clients and that he misled them when they inquired as to the status of their litigation. We cannot say that this conduct necessarily was merely thoughtless. Whether it was motivated by a wrongful purpose was on this record a delicate inquiry but one that was to be made by the Appellate Division.

The order should be reversed and the matter remitted to the Appellate Division for' disposition in accordance with this opinion.

Lehman, Ch. J., Finch, Rippey and Conway, JJ., concur; Sears and Lewis, JJ., taking no part.

Ordered accordingly.