author: Htjbbs, J.

text:
    Catherine Fearon, Appellant, v. Charles Treanor, Respondent.
    (Argued November 24, 1936;
    decided December 31, 1936.)

      Joseph S. Robinson for appellant.

      Robert J. Fitzsimmons and Warren H. Mayell for respondent.

      John J. Bennett, Jr., Attorney-General (Henry Epstein of counsel), for State of New York.

      Reese D. Alsop et al., amici curiæ.

   Htjbbs, J.

By chapter 263 of the La ws of 1935 a new article (2-A) was added to the Civil Practice Act, by which civil actions to recover damages for alienation of affections, criminal conversation, seduction and breach of promise to marry are declared to be against public policy and are abolished, excepting causes of action which were in existence on the effective date of the act.

This action is to recover damages for a breach of promise to marry and seduction occurring after the act became effective. A verdict was directed in favor of defendant by the trial court on the ground that the cause of action had been abolished by the amendment. The judgment has been affirmed by the Appellate Division.

The question presented for determination is whether the act, in so far as it abolishes the cause of action for breach of promise to marry, is constitutional. The allegation of the complaint in which seduction is alleged is not of the gist of the action. Proof under such an allegation relates only to the question of damages. In any event, there can be no doubt that the Legislature had the legal right to abolish a cause of action for seduction brought by a woman seduced against the seducer, as that cause of action did not exist at common law. (Hamilton v. Lomax, 26 Barb. 615; Wells v. Padgett, 8 Barb. 323.)

The appellant asserts broadly that the entire act is unconstitutional as it deprives injured parties of a remedy for the enforcement of property rights growing out of contracts which constituted valid causes of action at common law. (N. Y. Const., art. I, §§ 1, 6, 16.)

That contention presents debatable questions which are not free from doubt. We shall not attempt to solve those questions in detail at this time. We place our decision upon the broad ground that the Legislature in dealing with the subject of marriage has plenary power.

In this State marriage is considered a civil contract but of a peculiar character and subject to peculiar principles. (Domestic Relations Law [Cons. Laws, ch. 14], art. 3, § 10.)

“ It, certainly, does differ from ordinary common-law contracts, by reason of its subject-matter and of the supervision which the State exercises over the marriage relation, which the contract institutes. In such respects, it is sui generis. While the marriage relation, in its legal aspect, has no peculiar sancity, as a social institution, a due regard for its consequences and for the orderly constitution of society has caused it to be regulated by laws, in its conduct as in its dissolution.” (diLorenzo v. diLorenzo, 174 N. Y 467, 472.)

Marriage is more than a personal relation between a man and woman. It is a status founded on contract and established by law. It constitutes an institution involving the highest interests of society. It is regulated and controlled by law based upon principles of public policy affecting the welfare of the people of the State. “ Marriage, as creating the most important relation in life, as having more to do with the morals and civilization of a people than any other institution, has always been subject to the control of the Legislature. That body prescribes the age at which parties may contract to marry, the procedure or form essential to constitute marriage, the duties and obligations it creates, its effects upon the property rights of both, present and prospective, and the acts which may constitute grounds for its dissolution.” (Maynard v. Hill, 125 U. S. 190, 205.)

There are, in effect, three parties to every marriage, the man, the woman and the State. (Trammell v. Vaughan, 158 Mo. 214.) Marriage is not a contract within the meaning of the provision of the Federal Constitution which prohibits the impairment by the States of the obligation of contracts. (Maynard v. Hill, supra.) The Domestic Relations Law provides in great detail when and how marriage may be entered into, how the relation may be dissolved, the grounds for divorce and annulment, the rights and liabilities of husband and wife, the age at which the relation may be entered into and the class of persons who are disqualified from marrying.

From time immemorial the State has exercised the fullest control over the marriage relation, justly believing that happy, successful marriages constitute the fundamental basis of the general welfare of the people. Our people believe that marriage should be entered into freely as a matter of choice, not through fear, restraint or compulsion. The marriage state ought not to be lightly entered into. It involves the profoundest interests of human life, transmitting its complex influences direct to posterity, and invading the happiness of parents and near kindred. * * * From such a stand-point, we view the marriage engagement as a period of probation, so to speak, for both parties,— their opportunity for finding one another out; and if that probation results in developing incompatibility of tastes and temperament, coldness, suspicion, and incurable repugnance of one to the other, though all this may impute no vice to either, nor afford matter for judicial demonstration, duty requires that the match be broken off.”

The above, taken from an article written by Prof. Schouler, was quoted with approval in Goddard v. Westcott (82 Mich. 180). That those are words of wisdom few will question.

The statute here involved contains a legislative statement of facts which in the judgment of that body required the enactment of the statute. It is therein stated: “ It is hereby declared as the public policy of the state that the best interests of the people of the state will be served by the abolition of such remedies.”

Thoughtful people who have given attention to the matter have long realized that the scandals growing out of actions to recover damages for breach of promise to marry constituted a reflection upon the courts and a menace to the marriage institution, and thereby a danger to the State. That does not mean that there may not be specific cases where the maintenance of such an action may be justified. The Legislature, however, in dealing with the subject must have in mind the general welfare. It must determine what is for the best interest of the people of the State as a whole. If the subject is one within its jurisdiction, courts may not pass upon the wisdom of its action and substitute their judgment for that of the law malting body. (Williams v. Mayor, 289 U. S. 36, 42.)

Because experience has demonstrated that the maintenance of actions for breach of promise to marry have resulted in injury to the marriage institution and thereby interfered with the general welfare, the Legislature, in order to correct the evil and remove the cause, had authority to abolish the cause of action. Not all causes of action and rights which existed at common law are beyond legislative control. (People v. Noelke, 94 N. Y. 137.)

Legislation which impairs the obligation of a contract or otherwise deprives a person of his property can be sustained only when enacted for the promotion of the general good of the public, the protection of the lives, health, morals, comfort and general welfare of the people and when the means adopted to secure that end are reasonable.” (Matter of People [Title & Mortgage Guar. Co.], 264 N. Y. 69, 84; Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398.)

“ In all such cases the question becomes, therefore, one of reasonableness, and of that the Legislature is primarily the judge.” (Antoni v. Greenhow, 107 U. S. 769, 775; Matter of Stubbe v. Adamson, 220 N. Y. 459.)

“ To justify the court, however, in declaring a statute invalid, the conflict between the act and the Constitution must be clear and certain. Every presumption favors the validity of the statute. If there is a reasonable doubt, the act should be upheld.” (Gardner v. Ginther, 232 App. Div. 296, 298; affd., 257 N. Y. 578.)

The Legislature, acting within its authority, has determined as a matter of public policy that marriages should not be entered into because of the threat or danger of an action to recover money damages and the embarrassment and humiliation growing out of such an action.

We are convinced that the Legislature in passing the statute acted within its constitutional power to regulate the marriage relation for the public welfare. Realizing that the statute as a whole presents other constitutional questions, we confine our decision to the facts presented in this case.

The judgment should be affirmed, with costs.

Lehman, O’Brien, Crouch, Loughran and Finch, JJ., concur; Crane, Ch. J., concurs in result.

Judgment affirmed.


source: Caselaw Access Project

author: Htjbbs, J. O’Brien, J.

license: Public Domain

text:
    In the Matter of Mendoza Fur Dyeing Works, Inc., Respondent, against Frank J. Taylor, as Comptroller of the City of New York, Appellant.
    (Argued November 18, 1936;
    decided December 31, 1936.)

      Paul Windels, Corporation Counsel (Meyer Bernstein, Oscar S. Cox and Frank J. Derrick of counsel), for appellant.

      George J. Beldock and Lawrence Bloomgarden for respondent.

      A. Joseph Geist, George E. Netter and Isaac Katz for Great Northern Fur Dyeing Corporation et al., amici curise.

   Htjbbs, J.

The respondent was engaged in the business of dyeing and processing fur skins owned by dealers and manufacturers. Respondent does not trade in, buy or sell fur skins. It does, however, in performing the service of dyeing and processing, use certain chemicals and dye stuffs purchased by it. Such chemicals and dye stuffs, except so far as they may adhere to or be incorporated into the skins processed, are consumed in its service operations.

In 1934 the Legislature, by chapter 873 of the laws of that year, authorized the city of New York, enacting through its local legislative body, to adopt and amend local laws imposing any tax or taxes which the Legislature would have power and authority to impose, to relieve the people of the city from hardships and suffering caused by unemployment. Pursuant to such authorization, the local legislative body of the city in 1934 adopted Local Law No. 24 (published as Local Law No. 25, in Local Laws, 1934, pp. 164-175), imposing a tax upon the sale of tangible personal property to any person for any purpose other than for resale in the form of tangible personal property, the tax to be paid by the purchaser and collected by the seller. I'

Acting under the authority conferred upon him by law, the Comptroller of the city of New York adopted certain rules and regulations. By article 34 thereof it was provided that a purchaser who disposes of tangible personal property in any other manner than by resale becomes the consumer thereof; that persons engaged in cleaning and dyeing industries are rendering a service and are not in the business of selling tangible personal property; that a dyer, including a fur dyer, is the consumer of all articles of tangible personal property purchased and used by him in connection with the service he renders and that he is required to pay the tax to his vendors. By section 39 of the regulations the liability of a fur dyer for the tax on tangible personal property sold to and consumed by him is reasserted and it is specified that persons who sell tangible personal property to such service industries are required to collect the tax.

A tax was collected upon the sale of dye stuffs and chemicals purchased by the respondent. It applied to the Comptroller for a refund of the tax paid. The application was denied. It thereafter petitioned for a certiorari order to review the determination of the Comptroller. The order was granted, the determination reviewed and annulled by the Appellate Division upon the ground that prior to dyeing, the materials dyed are colorless, and after the application of the dye the materials acquire a hue or color; that, therefore, the chemicals maintain their chemical character after completion of the dyeing process; that in view of such fact, the dyer is not the ultimate consumer and the sale to him is not taxable, and that if the Comptroller’s determination were confirmed, a double tax would result.

Reference is made to other rules and regulations made by the Comptroller which are said to be in conflict with the rules and regulations here involved. The promulgation of such rules and regulations does not tend to establish the legality or illegality of the rules and regulations in question.

1 Section 1 (g) of the local law1 reads: “ A ‘ retail sale ’ or * sale at retail ’ means a sale to a customer, or to any person for any purpose other than for resale in the form of tangible personal property.”

Section 1 (f) defines tangible personal property ” as corporeal personal property.”

Obviously, the fur dyer is not engaged in the business of reselling chemicals and dye stuffs as such or as tangible personal property. Its business is that of rendering skilled services and performing labor upon the property of others. The fact that in so doing it is required to use and consume chemicals and dye stuffs is incidental to the services rendered. As stated in United States v. Fur Dressers’ & Fur Dyers’ Assn. (5 Fed. Rep. [2d] 869, 872), “ The defendants [i. e., the fur dressers and fur dyers] neither buy nor sell furs. They only dress and dye furs belonging to others at their places of business. Dyeing and dressing furs do not constitute trade or commerce, but only the performance of labor.”

The only cases in this jurisdiction to which we are referred where a question of somewhat similar nature was under consideration are People ex rel. Walker Engraving Corp. v. Graves (243 App. Div. 652; affd., 268 N. Y. 648) and People ex rel. Foremost Studio, Inc., v. Graves (246 App. Div. 130).

In People ex rel. Walker Engraving Corp. v. Graves (supra) the question presented was whether the sale of engraved plates by the engraving company constituted a sale of tangible personal property or a contract for services. There the photo engraver furnished a piece of copper or zinc plate upon which he engraved a design. The value of the metal was not more than two per cent of the purchase price. The engraver was not in that case doing work upon materials furnished by others to him. The completed product was delivered. The court held that under the facts of that case there was a sale of the engraved metal plate.

In People ex rel. Foremost Studio, Inc., v. Graves (supra) the court upheld the New York State retail sales tax upon the sale to manufacturers of designs to be used on cloth fabrics. The vendor created a design on paper. That design was sold to the manufacturer and by the manufacturer copied or reproduced on its product. The physical thing bearing the design sold to the manufacturer did not itself become a part of the finished product. In that case, as in People ex rel. Walker Engraving Corp. v. Graves (supra), the vendor in the sale taxed did not perform a service upon the property of another in connection with which it was necessary for the vendor to use certain other materials. In each of those cases a finished product was sold, regardless of the fact that into that product went certain materials which had been purchased by the vendor.

In the present case the dyer did not sell a finished product but performed work on the property of others in connection with which the chemicals and dye stuffs were used. In neither of the two cases above referred to was there involved the question of whether or not the materials used by the vendee in the taxed sale were taxable on their sale to such purchaser.

While double taxation is not to be favored and a statute is to be construed, if possible, to avoid such a result, a taxing statute must be given a practical construction, and where the tax involved is a sales tax upon the sale of tangible personal property to the consumer, it is not always possible to reach a practical determination as to who is the ultimate consumer with entire certainty so.as to avoid entirely the possibility of a resultant double taxation to a limibed exbent. To carry to its logical conclusion the argument that only the sale to the ultimate consumer should be taxed would result in excluding from taxation many sales of tangible personal property. We think, therefore, that the construction thus far placed upon the law as it applies to the sale of chemicals and dye stuffs to a dyer who does not resell the product as such but consumes ib in performance of services upon bhe property of another, is entirely too narrow. The mere fact that some part of the product so sold to the dyer adheres to the property of another upon which its services are performed, and such part is discernible by microscopic examination, is insufficient to make the dyer a vendor of the dyes and chemicals purchased by it.

The order of the Appellate Division should be reversed and the order of certiorari dismissed, with costs in all courts.

O’Brien, J.

(dissenting). 1 agree with the Appellate Division that these chemicals were purchased by the fur dyer for the purpose of “ resale in the form of tangible personal property,” and that the dyer does not consume them but resells them in the form of tangible personal property. Article 34 of the Rules and Regulations, issued by the Comptroller, which provides that Persons engaged in the cleaning and dyeing industries are rendering a service and are not in the business of selling tangible personal property,” fails to recognize the vital distinction between cleaning and dyeing. In cleaning a garment or a building, the material is, of course, consumed by the cleaner. Title to the soap used in a laundry or the fluid employed to obliterate spots from a suit of clothes or the material used to remove paint or varnish from a building or from furniture is not transferred to the person for whom the cleaning is performed. The cleaner never sells this material but consumes it in the process of cleaning. After that process has been completed the soap suds .or cleaning, fluid or paint remover becomes waste and is either destroyed or remains the property of the cleaner. In respect to dyeing, the principle is entirely different. The dyer purchases his material, applies it to cloth or fur just as the painter buys his paint and applies it to a building or some other article. The dyer or the painter charges his customer not only for the manual service of adding color to some object but also for the cost of the material which he applies. For a consideration he parts with the ownership of this tangible coloring matter and transfers title to the person who owns the article to which he affixes it. After this tangible coloring matter has been applied to fur, cloth or, in the case of paint, to wood or metal, it remains tangible. Unlike an incorporeal right or interest, this material can be seen after the process of dyeing and it can also be removed from the object to which it has been attached and can be touched and tasted. It can be physically identified. The fur dyer is engaged not only in rendering service and performing labor upon the property of others; he makes a physical addition to that property and charges for it. In cleaning, only services are performed and the material used in the process becomes waste and is destroyed; in dyeing, services are performed and tangible property is sold.

After the garments have been dyed by this respondent, they are sold in the market by their owners and a second tax is imposed. The statute in no respect indicates an intent to impose double taxation and, accordingly, the regulation of the Comptroller is not authorized.

Crane, Ch. J., Crouch, Loughran and Finch, JJ., concur with Hubbs, J.; O’Brien, J., dissents in memorandum, in which Lehman. J., concurs.

Ordered accordingly.


author: Per Curiam.

text:
    Charles J. Haas, Respondent, v. Home Indemnity Company, Appellant.
    (Argued December 2, 1936;
    decided December 31, 1936.)

      Daniel Mungall and Fred H. Rees for appellant.

      James W. Ryan for respondent.
   Per Curiam.

The policy upon which this action is brought provides broadly that the defendant will pay the assured for all loss of merchandise by robbery from a custodian. But it “ covers on two custodians while conveying property * * * it being agreed that the Company’s liability is limited to the sum of Five Thousand Dollars ($5000.00) on each custodian.” The policy, however, was issued and accepted as excess insurance only, and upon the express condition that if the assured should fail to carry other insurance against the same kind of loss, in the amount of at least Ten Thousand Dollars ($10,000.00) on each custodian,” in the Fidelity and Deposit Company of Maryland, then the insurance in question should be null and void. The assured did not comply with the condition in two respects: (a) The policy of primary insurance which it carried was not in the specified company; and (b) it was only in the amount of $10,000 on one “ truck,” and not in the amount of $10,000 on each custodian.” If we disregard the failure in respect to the particular insurer, we are still left with a material failure in respect to the amount of coverage. There is a distinct and substantial difference between primary insurance limited to $10,000 and primary insurance which, under given circumstances, might amount to $20,000; and the given circumstances existed here under the undisputed evidence of plaintiff’s own witness. The truck when robbed was in charge of two custodians within the policy definition. There is no evidence to support any other conclusion.

The judgments should be reversed and the complaint dismissed, with costs in all courts.

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

Judgments reversed, etc.


author: Finch, J.

text:
    In the Matter of William Sherman et al., Respondents, against James W. Higgins, as Commissioner of Police of the City of Buffalo, Appellant, Impleaded with Others.
    (Argued November 17, 1936;
    decided December 31, 1936.)

      Gregory U. Harmon, Corporation Counsel (Andrew P. Ronan of counsel), for appellant.

      Gilbert J. Pedersen and Gordon M. Chambers for respondents.
   Finch, J.

The petitioners were variously laborers, porters, janitors or mechanics’ helpers in the police department of the city of Buffalo. In April and May, 1934, they were dismissed without the filing of written charges and a hearing thereon. In August, 1935, they instituted this proceeding for reinstatement.

At Special Term an alternative order of mandamus was granted and the payment of back pay directed from the time of their dismissal. In the Appellate Division the order was modified, the mandamus made peremptory and the back pay limited to the period after May 6th, 1935, when the Civil Service Law (Cons. Laws, ch. 7) was amended so as to provide for the payment of back salary in the event of wrongful dismissal (Civil Service Law, § 23).

The positions involved are all in the non-competitive class of the classified civil service of the city of Buffalo.

The history of the enactment of the various legislative acts reveals clearly the legislative intent to permit the dismissal of employees in the police department who are in the non-competitive classes without the necessity of filing written charges and having a hearing thereon.

We start with the charter of the city of Buffalo (L. 1914, ch 217, as amd.) and the amendment thereto in 1920. This specifically provides that not only members of the police force but “ clerks and employees ” should not be dismissed except upon written charges (§251 of old charter, as amended by L. 1920, ch. 172).

In 1925, pursuant to the City Home Rule Law (Cons. Laws, ch. 76), the Common Council of Buffalo provided by local law that no employee of the city of Buffalo, in the classified civil service subject to competitive or qualifying examination, should be removed except upon written charges (Local Law No. 6 of 1925). As these petitioners were employees of the city of Buffalo and had taken qualifying examinations, they could not be removed except upon written charges at that time.

A new charter for the city of Buffalo went into effect January 1st, 1928 (Local Law No. 4, 1927; published in Local Laws, 1932, p. 21). This repealed both section 251 of the old charter and Local Law No. 6 and enacted in place thereof sections 443,444 and 445, which are as follows:

“ § 443. Removal of mayor, comptroller and president of the council. The mayor, comptroller and the president of the council may each be removed from office by the governor in the same manner as sheriffs are removable under the constitution of the state.

§ 444, Removal of employees. No employee of the city holding a position in the classified civil service subject to competitive or qualifying examination, shall be removed from such position, except for incompetency, misconduct or insubordination shown after hearing, upon written charges and the burden of proof shall be upon the accuser. The trial of the charges shall be had before a board consisting of the mayor, the comptroller and the president of the council. A copy of the charges shall be served upon the accused employee, who shall be accorded a reasonable time in which to prepare for the hearing and who shall be entitled to be heard in person and by counsel and to furnish evidence in his behalf. * * * Nothing herein contained shall be deemed to apply to any employee who has been separated from the service through the abolition in good faith of his position by the appointing power.

“ § 445. Removal of policemen and firemen. No member of the police or fire department, other than the head of either department, shall be removed, reduced in rank, suspended, fined or otherwise punished or disciplined except upon charges as provided in sections four hundred forty-six to four hundred fifty inclusive, and such sections shall apply only to members of the police and fire departments.”

The intent of the above sections, 443, 444 and 445, seems clear. First, provision is made under section 443 for the removal of the Mayor, the Comptroller and the President of the Council. Next, in section 444, provision is made for the removal of all employees. Finally, in section 445, provision is made for the removal of firemen and policemen. Therefore, provision is made for the removal of all employees of the city except those in the exempt and labor classes who could, of course, be removed summarily.

Under section 444 the petitioners, as employees of the city, since they had taken a qualifying examination, were specifically protected from summary removal. By the express language of section 444 all the employees of the city in the classified civil service, whether in the competitive or non-competitive class, could only be removed after the filing of written charges and a hearing thereon. Such was the state of the law when on July 8th, 1930, another local law was enacted which amended section 444 (Local Law No. 2 of 1930, p. 21). This local law amending section 444 provided that “ no employee of the city holding a position in the classified civil service subject to competitive examination shall be removed ” except upon the filing of written charges and a hearing thereon. By this amendment the protection of this section was continued with respect to those in the classified civil service, subject to competitive examination, but was removed from those subject to qualifying examination. In the latter class, as already noted, were the petitioners. Admittedly the petitioners, employees in the police department, came within the -language used in section 444. Petitioners argue that although they - are not entitled to the filing of written charges and a hearing thereon under section 444, they are so protected under section 445, which is entitled, Removal of policemen and firemen.” Clearly petitioners are neither policemen nor firemen, but laborers, porters, janitors or mechanics in the police department. Hence this section at least in the title does not apply to them. Petitioners claim, however, that the wording of the body of section 445 refers to a member of the police department and hence is sufficiently broad to cover the petitioners. There are two answers to this contention: First, the title of the section indicates the scope rather than ambiguous phraseology in the body of the section. Second, the phrase “ members of the department ” may mean only members of the uniformed force or may be used to include all the employees of the department as is shown by the use of this phrase in sections 462 and 477 of the charter, which read as follows:

§ 462. Membership of the police pension fund. All present and future members of the police force, and all employees of the police department now entitled to participate in the benefits of the police pension fund, shall be members of the police pension fund.

“ § 477. Membership of firemen’s pension fund. All present and future members of the fire department and all employees as distinguished from members of the fire department now, entitled to participate in the benefits of the firemen’s relief and pension fund, shall be members of the firemen’s pension fund.”

A reading of these sections shows an intention to make a distinction between a member of the police or fire department as distinguished from an employee thereof. Hence, when section 445 was entitled — Removal of policemen and firemen1 — 'and then followed the words No member of the police or fire department * * * ” a fair reading would apply this section solely to the members of the uniformed force.

The Police Commissioner further contends that his construction has been the practical construction put upon the charter since the adoption of Local Law No. 2. In answer petitioners point to a rule of the police department (Section 355 of Rules and Regulations providing that the trial of a member or employee of the department shall be on charges and specifications) which apparently was not changed after the adoption of Local Law No. 2 of 1930. In any event a rule of the department may not override a legislative enactment.

Since the petitioners were not entitled to a hearing upon written charges, the act of the Police Commissioner in removing them for the good of the service was entirely within his right. (Matter of Merriweather v. Roberts, 268 N. Y. 12.)

It follows that the order of the Appellate Division and that of the Special Term should be reversed and the motion denied, with costs in all courts.

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

Orders reversed, etc.


author: Crane, Ch. J. O’Brien, J.

text:
    Marba Sea Bay Corporation, Appellant, v. Clinton Street Realty Corporation et al., Defendants, and The City of New York, Respondents. Arverne-By-The-Sea Company, Appellant, v. Helen M. Amerman et al., Defendants, and The City of New York, Respondent. Boardwalk Development Co., Inc., Appellant, v. July Development Co., Inc., et al., Defendants, and The City of New York, Respondent.
    (Argued November 19, 1936;
    decided December 31, 1936.)

      Max J. Rubin, Charles S. Noyes, Eph A. Karelsen, Seymour Graubard, Frank E. Karelsen, Jr., Frederick Baum and Malcolm R. Lawrence, Jr., for appellants.

      A. Joseph Geist, Leo B. Mittelman and Isaac Katz for Chamber of Commerce of the Rockaways, amicus curise.

      Paul Windels, Corporation Counsel (Paxton Blair, George S. Parsons and Rollin H. Reid of counsel), for respondent.
   Crane, Ch. J.

The grant of eleven miles of foreshore, being the entire ocean front of the borough of Queens, which grant is to a private person for neither commercial nor governmental purposes, is one not recognized by the law. Neither the King nor the State could grant away for private purposes so much of the public’s rights in the lands under water. The matter was discussed in Coxe v. State (144 N. Y. 396, 406), where it was said: When the general doctrines of the English courts on this subject are given full scope, the conclusion is inevitable that the Parliament and the Crown together were not competent to grant to a private corporation, for priv'ate purposes, the seacoast around the island below the shore line, without violating established principles of law. (Martin v. Waddell, 16 Peters, 367.) While I am not aware of any such restriction to be found in the Constitution of this State, in terms, yet, from the very nature of the question, it must be deemed to be inherent in the title and power of disposition. The title which the State holds and the power of disposition is an incident and part of its sovereignty that cannot be surrendered, alienated or delegated, except for some public purpose, or some reasonable use which can fairly be said to be for the public benefit.” See the same point in People v. New York & Staten Island Ferry Co. (68 N. Y. 71); Illinois Central R. R. Co. v. Illinois (146 U. S. 387); also People v. Steeplechase Park Co. (218 N. Y. 459, 482). Grants to towns or other bodies endowed with local sovereignty form an exception to the rule. (Martin v. Waddell, 16 Pet. [U. S.] 367.) The grant, therefore, or patent given by Lieutenant-Governor Dongan to John Palmer in 1685, attempting to convey all this shore front or foreshore to low-water mark to the said John Palmer was contrary to the public policy and the law and, therefore, void.

That it was so considered and treated by the owners and lawyers and conveyancers in the past century is clearly indicated by the partition suit brought by John Cornwell against William Cornwell in 1809 involving these premises. The petition in the partition suit described the land as “ bounded southerly by the Atlantic Ocean.” The Commissioners appointed by the Court of Common Pleas described the southerly boundary as “ bounded southerly by the Atlantic Ocean.” The description of the lot here in question as made in the report of the Commissioners in this partition suit is as follows: “And we do allot to Nathaniel Ryder, who holds under John Mott, by and with the consent of John Mott, as appears by writing under his, the said John Mott’s hand for that purpose executed, all that certain lot in the first division of the beach, known and distinguished by lot number ten, bounded on the north by the marsh; on the east by lot number eleven; on the south by the ocean, and on the west by lot number nine, being sixteen rods wide as the said lot is staked out.”

Bounding property by the ocean, or as here, “ bounded southerly by the Atlantic Ocean,” carries title no further than high-water mark, and excludes the foreshore. (Tiffany v. Town of Oyster Bay, 209 N. Y. 1.) There can be no doubt that under these partition suits the plaintiffs and their predecessors received no title to the foreshore. The property partitioned was limited by the high-water mark and all the proceedings and conveyances thereafter, down to and including the plaintiffs’, carried title no further.

The first deed given after the partition decree, plaintiff’s Exhibit 18, described their property as “ bounded southerly by the Atlantic Ocean.” For a period of one hundred and one years, 1828 to 1929, this property has been “ bounded by the Atlantic Ocean ” high-water mark, in all descriptions. The lawyers and conveyancers for the past century have not all been wrong in considering the grant of 1685 as incapable under the law then and now of conveying the foreshore to private individuals for private purposes. The fact that the owners and their attorneys, as well as the courts, have considered for more than a century that the title to these lands did not extend below high-water mark should lead this court to affirm these conclusions. (Mulry v. Norton, 100 N. Y. 424.)

For these reasons I favor the affirmance of the judgments below.

• In each action the judgment should be affirmed, with costs.

O’Brien, J.

(dissenting). This action is in partition and was instituted to determine title to premises formerly lying between high- and low-water mark at Rockaway beach, but now filled in by the city of New York, and to adjudge that neither the city of New York nor the State has any interest in these premises, but that plaintiff and Clinton Street Realty Corporation are seized in fee. The premises are described as bounded on the north by the high-water line of the Atlantic ocean as it existed in 1925, and on the south by the north line of the public beach or boardwalk. The complaint alleges that plaintiff’s title is derived from the grant made in 1685 by Governor Dongan to John Palmer and from an earlier Indian deed to Palmer executed during the same year.

The premises within the Palmer grant are described as: “All that tract or parcel of land and meadow, situate, lying and being on the south side of Long Island in Queens County called by the name of Rockaway * * * bounded on the east with Hemstead West Patent Line, on the south with the Maine Sea or Ocean to low water mark * * * together with all and all manner of messuages, pastures feedings meadows marshes * * * beach or beaches * * *.” The Indian deed conveyed the same premises to Palmer and describes them as a “ Par cell of Land and Meadow,” also bounds them “ on the south with the Maine Sea or Ocean to Low Water Marke” and includes all “ Meadows, Marshes, * * * Beach or Beaches.”

The Palmer grant bears every indication of an intent to convey lands submerged by the tide. The description of the boundary to low-water mark in this grant manifests a departure from the usual rule that, in the absence of an expressed intention to the contrary, a grant by the sovereign of land on tide water extends only to high-water mark. (Matter of Mayor, etc., of New York, 182 N. Y. 361, 365; Tiffany v. Town of Oyster Bay, 209 N. Y. 1, 9; Rockaway Park Imp. Co. v. City of New York, 140 App. Div. 160, 169.) In Matter of City of New York (Feltman) (256 N. Y. 156) we applied the usual rule. The Colonial grants to the town of Gravesend under consideration in that case, the Kieft patent of 1645, the Mcolls patent of 1668, the Lovelace patent of 1670 and the Dongan patent of 1686, were bounded by the Maine ocean without mention of low-water mark and did not vest title in the town to the land between high and low water. In the Dongan grant to Palmer, which constitutes the source of title to the lands now in litigation, not only in express terms does the boundary run to low-water mark but among the lands included in the grant are the beaches and marshes.

Concluding as we do that the intention of the Dongan grant to Palmer was to convey to low-water mark, the question arises whether such an extensive grant to an individual of the foreshore, including several miles, was valid. At the time of this grant the ownership of the soil was regarded as jus privatum, was vested in the Crown and could be alienated by the Crown or its representative subject to the jus publicum which resided within the control of Parliament. (People v. New York & Staten Island Ferry Co., 68 N. Y. 71, 77, 78; Langdon v. Mayor, 93 N. Y. 129,155; People v. Steeplechase Park Co., 218 N. Y. 459, 473.) A grant in modern times by which the State, as successor to the Crown and Parliament, attempted to divest itself of all jurisdiction over vast areas of the foreshore in the counties of Kings, Queens, Richmond and Suffolk in favor of a private corporation for speculative purposes, of course, is invalid. (Coxe v. State, 144 N. Y. 396.) So too, is legislation abdicating control by the State of miles of waterfront in the harbor of Chicago and vesting control in a railroad corporation. (IllinoisCentral R. R. Co. v. Illinois, 146 U. S. 387.) But the Dongan grant to Palmer, as interpreted by us, conveyed no more than title to the soil subject to the rights of the public. That the Palmer grant which included a large tract between the ocean and Jamaica bay was not so extensive as to be invalid has been decided in Rockaway Park Imp. Co. v. City of New York (140 App. Div. 160); Rockaway Pacific Corp. v. State (122 Misc. Rep. 503); Kellum v. Corr (149 App. Div. 200; affd., 209 N. Y. 486) and Best Renting Co. v. City of New York (248 N. Y. 491, 502).

In Palmer’s deed to Richard Cornwell, November 20, 1685, seventeen days after the issue of the Dongan patent, the premises are described as bounded on the south with the Maine Sea or Ocean to low water markeP The will of Richard Cornell, dated 1693, devised to his son William a certain part of his lands and meadows, including beaches, at Rockaway bounded southerly by the sea including all * * * marshes beaches * * William Cornell’s will, dated 1742, devised to his sons John and William all my Beach Marshes and broken Lands * * By the will of William Cornell, Jr., dated 1756, all his lands, meadows, tenements and hereditaments in any part of the world are directed to be sold. By deed dated 1767 John Cornell conveyed to Josiah Martin “ a certain tract or parcel of land or beach lying and joyning to the old inlet called Far Rockaway.” By deed dated June 15, 1807, Ruth Cornwell and Fannie Cornwell conveyed to William Cornwell a certain tract of land at Rockaway beach described and set forth in a certain patent now in possession of the said William Cornwell as by reference thereunto will more fully appear together with all and singular the marshes, meadows * *

The petition of John Cornwell in the partition action upon which the Commissioners made their report in 1809 described the lands sought to be partitioned as “ that certain tract of beach, salt marsh, salt meadows and beach or bills covered with cedars, with the hereditaments and appurtenances thereunto belonging, situate, lying and being at a place called Far Bockaway, in the town of Hempstead, County of Queens and State of New York; bounded southerly by the Atlantic Ocean" Although the beach is included within the lands to be partitioned there is no reference in the petition to low-water mark.

The report of the Commissioners made partition of a " certain tract of beach, salt marsh, salt meadow and beach ” and allotted to Nathaniel Byder all that certain lot in the first division of the beach known and distinguished by lot number ten, bounded on the north by the marsh; on the east by lot number eleven; on the .south by the ocean * * Although the beach is included there is no specific reference to low-water mark.

The finding both by the Special Term and the Appellate Division is that the premises in question lie within the lines of beach lots 10 and 11 as described in the report of the Commissioners in the partition suit of Corn-well v. Cornwell and that the Commissioners in that suit awarded lot 10 to Nathaniel Byder. Both the Special Term and the Appellate Division found that it does not appear from the evidence that Nathaniel Byder ever conveyed lot 10 to any one in the chain of title through which the plaintiff and the defendant Clinton Street Bealty Corporation claim ownership of these premises. The Special Term refused but the Appellate Division did find that the part of lot 10 claimed to be owned by plaintiff and the Clinton Street Bealty Corporation included no land lying south of the high-water mark of the Atlantic ocean.

After the termination of the partition action in Corn-well v. Cornwell, many deeds were recorded. A deed dated 1828 between Nostrand and Byder and Wanser described lots Nos. 9 and 10 as two lots of beach land bounded southerly “ by the Atlantic Ocean,” and there are other deeds in 1841,1850,1853 and 1870. Lots No. 11 and No. 12 were conveyed to Brandreth by deed in 1882, described those premises as running a due south course to the Atlantic Ocean; thence running westerly and bounded southerly by the Seashore thirty three rods and thirteen links thence running a due north course by lot No. Ten to a stake in the meadow.” Deeds by Brandreth to Chase in September and October, 1887, described the premises conveyed as extending to the Atlantic ocean. A deed from Larkin to Sheahan in 1902 conveyed to the Atlantic Ocean thence running easterly along the Atlantic Ocean ” and the deed from Sheahan to Westphal in 1921 conveyed southerly two hundred feet to the Atlantic ocean.

The deed from Rich-EI-Hara Corporation to this plaintiff Marba Sea Bay Corporation, recorded May 9, 1929, conveyed the premises described in the 1921 deed from Sheahan to Westphal.

Neither in the petition in the action of Cornwell v. Cornwell nor in the report of the Commissioners nor in any of the deeds executed subsequent to that action is any reference made to low-water mark. The only deed describing the boundary as extending to low-water mark is the deed of 1685 from Palmer to Richard Cornwell. However, the various instruments by which the successors of Palmer alienated their interests in the lands included within the Dongan patent of 1685 convey beaches, marshes and meadows. The word “ beach ” includes land between high- and low-water mark. When used to describe a boundary it signifies high-water mark but when it is included within land conveyed, the premises, considered in relation to all the circumstances, may be deemed to extend to low-water mark. (Trustees of Town of East Hampton v. Kirk, 68 N. Y. 459, 463; McRoberts v. Bergman, 132 N. Y. 73, 83; Best Renting Co. v. City of New York, 248 N. Y. 491, 500, 501.) The beach and beaches are expressly granted and such a conveyance usually carries to low water. (Rockaway Park Imp. Co. v. City of New York, 140 App. Div. 160, 170.) The same is true in respect to marshes. (Best Renting Co. v. City of New York, supra.) Plaintiff’s predecessors as upland proprietors conveyed such interest as vested in them in respect to the foreshore even though they failed expressly to use the words to low water mark.” (Archibald v. N. Y. C. & H. R. R. R. Co., 157 N. Y. 574, 579.) They will be presumed to have intended to convey all that they owned. (Matter of Mayor of New York, 182 N. Y. 361, 364, 365; Matter of City of New York [W. 10th St. Realty Corp.], 256 N. Y. 222,226,227.)

Under binding precedents, I am of the opinion that Palmer obtained title to low-water mark subject to the jus publicum, that the lands partitioned in the Cornwell suit in 1809 included the beaches to low-water mark and that plaintiff by conveyances subsequent to the report of the Commissioners in that suit obtained title, subject to the rights of the public. Plaintiff being owner of the upland and possessing an interest in the foreshore subject to the jus publicum, when the foreshore was filled in by the city, there remained no land under water, and the city, as successor to the State (Laws of 1926, ch. 542), being vested with the jus publicum, extinguished the public right in land which had formerly been under water. Moreover, the Dongan patent of 1685 is not void on its face and cannot be collaterally assailed. (Blakslee Mfg. Co. v. Blakslee’s Sons Iron Works, 129 N. Y. 155, 160; N. Y. C. & H. R. R. R. Co. v. Aldridge, 135 N. Y. 83, 92; People v. Steeplechase Park Co., 218 N. Y. 459, 470.)

The judgment of the Appellate Division should be reversed and that of the Special Term affirmed, with costs.

Hubbs, Crouch, Loughran and Finch, JJ., concur with Crane, Ch. J.; O’Brien, J., dissents in opinion in which Lehman, J., concurs.

Judgment affirmed.


author: O’Brien, J.

text:
    William E. Woollard, Appellant, v. Schaffer Stores Company, Inc., Respondent, Impleaded with Another.

      (Argued November 24, 1936;
    decided December 31, 1936.)

      Michael D. Reilly and Walter A. Fullerton for appellant.

      I. Maurice Wormser and Harry M. Schaffer for respondent.
   O’Brien, J.

Plaintiff leased a building located on North Pearl street in Albany to defendant Schaffer Stores Company, Inc., for a term beginning September 1, 1933, and expiring August 1, 1936, at a rental of $500 per month together with an additional sum equal to one per cent of all gross sales made at the demised premises. The lease provides that the entire premises will be occupied and used as a food store and food shop, that the tenant shall use substantially the entire main floor for its own purposes, but that the remaining parts of the building might be sublet for other lines of merchandising subject to the one per cent of gross sales to the landlord. The parties agreed that the tenant would not let or underlet any part of the premises without the written consent of the landlord under penalty of forfeiture and damages nor would it make any structural changes, except certain specified ones, without the landlord’s written permission. Also the lease contains this provision: If said lessee shall fail, for any reason, to so conduct its said business in said demised premises, then it agrees to pay lessor, in lieu of the percentage of sales reserved herein, the sum of Twenty-five ($25) Dollars a day for each and every business day it may not for any reason conduct the said business therein.”

In September, 1934, the tenant, without the knowledge or consent of the landlord, sublet to Jay L. Woolman for a term of seven years a space ten feet by seventy feet on the main floor of the building and also a portion of the basement as a retail store for the sale of women’s clothes. Woolman, with the consent of the tenant but without the consent or knowledge of the_landlord, made certain structural changes in the building different from those authorized by the lease between plaintiff and defendant. After the landlord had acquired knowledge of these alterations in the structure of the building, he served written notice September 19, 1934, upon the tenant that, due to the fact that the tenant had sublet a substantial portion of the main floor as a retail ladies dress shop in violation of the terms of the lease, he elected that the relation of landlord and tenant should cease and that the lease should become void. He also demanded that defendant remove from the premises and that he would hold it responsible for damages. On September 29, 1934, plaintiff wrote to defendant that in his opinion it would be necessary to begin an action of ejectment and that any rentals you may pay hereafter will be received by me only with the understanding that the same are received without prejudice to the action which will follow your failure to comply with my notice of September 19.” Defendant wrote plaintiff October 1 stating that its position was that the lease remained in full force and effect. The next day plaintiff again wrote defendant: Have you any objection to my receiving your checks without prejudice to my rights? That is the question.” Defendant, on October 6, notified plaintiff that payments will be made as usual and they are tendered without strings or exceptions attached to them.”

This action was begun October 24, 1934. In the record are checks drawn by defendant in payment for rent from October, 1934, to April, 1935, inclusive. On their face are printed notations of which these are typical: By endorsement this check is accepted in full payment of the following account, Oct. rent.” “ Return if not correct. This check pays in full the following items, Nov. rent.” “ This check is in settlement of the following invoices, Jan. rent.” Most of the checks are indorsed by plaintiff: " Subject to litigation pending.” Received subject to law suit pending.” The checks for $500, dated October 2, 1934, December 3, 1934, and January 3, 1935, for the October, December and January rent, are indorsed by plaintiff without any limitation, reservation or comment and were cashed by him,.

The form of this action is one for a declaratory judgment. The complaint prays for a determination of the rights of these parties under the lease; the effect of the subletting and structural alterations upon the right to terminate the lease; whether the lease has been effectively canceled; plaintiff’s right to receive the sum of $25 for each business day that the premises are occupied by Woolman in lieu of the one per cent of gross sales.

The referee found as facts, and the Appellate Division has affirmed, that, since the occupancy of Woolman, the defendant Schaffer Stores Company has not used Substantially the entire main door for its own purposes, that during the month of September, 1934, Woolman, with the consent of Schaffer Stores Company, made structural changes other than those permitted by the lease, that since the occupancy of Woolman the one per cent of gross sales have not amounted to the sum of $625 per month, and that Schaffer Stores Company has not paid to plaintiff the full amount of $25 for each day of Woolman’s occupancy. Evidence supports these findings. The judgment entered upon the report of the referee awarded the sum of $750 against defendants Schaffer Stores Company and Woolman as cost of restoring the demised premises to the condition existing prior to the unauthorized structural changes and the sum of $5,310.39 against defendant Schaffer Stores Company at the rate of $25 per business day during Woolman’s occupancy less the amount of one per cent of the sales paid by defendant to plaintiff during that time. The Appellate Division, reversing the referee’s conclusions of law, held that plaintiff’s receipt and acceptance of the payment of rent accruing subsequent to the notice of election to declare a forfeiture was a waiver and dismissed the complaint.

If the courts below were without jurisdiction to entertain this action for a declaratory judgment or if their assumption of jurisdiction constitutes an abuse of discretion, the judgment of dismissal should be affirmed irrespective of the merits which might necessarily be involved in an action of different form. Pursuant to section 473 of the Civil Practice Act and rule 212 of the Rules of Civil Practice the Supreme Court is vested with power to declare rights and other legal relations on request for such declaration “ whether or not further relief is or could be claimed ” and it also has discretion to decline to pronounce a declaratory judgment if, in its opinion, the parties should be left to relief by existing forms of action. We may not limit by judicial construction a power which the Legislature has conferred without limitation. We may not define the bounds within which that power may be exercised, except as we find such bounds implicit in the statute, read in the light of established public policy.” (Westchester Mortgage Co. v. G. R. & I. R. R. Co., 246 N. Y. 194, 199.) While resort to the use of a declaratory judgment is usually unnecessary where an adequate remedy is already provided by another form of action, no limitation has been placed or attempted to be placed upon its use.” So we held in James v. Alderton Dock Yards (256 N. Y. 298, 305), but that judgment was necessarily reversed on the merits for the reason that plaintiff in no event was entitled to an equitable lien. The Supreme Court may, of course, exercise its discretion in refusing to proceed to a declaratory judgment when other remedies are adequate and that is all we held in Newburger v. Lubell (257 N. Y. 383). When, however, another action between the same parties, in which all issues could be determined, is actually pending at the time of the commencement of an action for a declaratory judgment, the court abuses its discretion when it entertains jurisdiction. (Colson v. Pelgram, 259 N. Y. 370.) We have never gone so far as to hold that, when there exists a genuine controversy requiring a judicial determination, the Supreme Court is bound, solely for the reason that another remedy is available, to refuse to exercise the power conferred by section 473 and rule 212. Here a genuine controversy existed, and the parties were unable to determine definitely the nature which the litigation should assume. Before this action was begun, plaintiff, in his letter of September 19, expressed the opinion that an action in ejectment would be proper. Respondent’s brief suggests either summary proceeding or ejectment. The numerous issues arising from the pleading are sufficient to confer upon the court power to entertain jurisdiction and to decide them all in this single action. While it had discretion to refuse jurisdiction it was not bound so to do.

We agree with the Appellate Division that acceptance of rent by the landlord, after the acquisition of knowledge by him of the violation of the terms of the lease in subletting without the landlord’s written consent, constitutes a waiver of the forfeiture. (Ireland v. Nichols, 46 N. Y. 413; Murray v. Harway, 56 N. Y. 337; Collins v. Hasbrouck, 56 N. Y. 157; Conger v. Duryee, 90 N. Y. 594; McIntosh v. Rector, etc., 120 N. Y. 7; Adams-Flanigan Co. v. Kling, 234 N. Y. 497; Schnell v. Perlmon, 238 N. Y. 362; Schuttinger v. Woodruff, 259 N. Y. 212.) The same rule applies in respect to the other violations. The lease provides: If default be made in the performance of any of the covenants or agreements herein contained, the said hiring, and the relation of landlord and tenant, at the option of the said party of the first part shall wholly cease and determine within ten days after the lessee receives written notice thereof from the landlord and fails to comply therewith; and the said party of the first part shall and may re-enter the said premises and remove all persons therefrom.” On September 16, 1934, plaintiff discovered the unauthorized structural changes made in the building, but in his letter to defendant, dated September 19, in which he states his election to declare the lease terminated and to re-enter, he makes no reference to the structural changes but refers only to the sublease and subsequently he accepted rent as rent. The Appellate Division, applying by analogy the rule in Littlejohn v. Shaw (159 N. Y. 188) and the rule as stated in 2 Tiffany on The Law of Landlord and Tenant (pp. 1393, 1394), held that plaintiff had waived the violation which he had omitted to specify. It is doubtful whether the analogy of the Littlejohn v. Shaw doctrine is complete and whether the rule in Cawley v. Weiner (236 N. Y. 357) is not more nearly applicable. In any event defendant in its amended answer pleads that by reason of the payment and acceptance of rent plaintiff recognized defendant as his tenant and thereby waived any and all rights for the forfeiture of the lease.

Although plaintiff, by accepting rent, must be deemed to have waived his right to forfeit the lease, he was not thereby deprived of all his contractual rights under that instrument. Defendant violated that covenant by which it agreed to make no structural changes without the landlord’s written permission. The parties stipulated on the trial that the cost of restoration of the building to its condition prior to Woolman’s occupancy is $750, and we are of the opinion that plaintiff is entitled to that sum.

In respect to the covenant relating to payment of $25 per day, the Appellate Division held that, while the subletting to Woolman was a violation of the lease, the record shows that such violation did not have the effect of reducing plaintiff’s rental income from the demised premises, and refused to allow plaintiff the $25 per day during Woolman’s occupancy. As we interpret the lease, it provides for a cash rental of $500 per month plus one per cent of the gross sales on the entire premises. The provision in respect to payment of $625 per month applies only , in the event that defendant should sublet the entire premises and, since the entire premises were not sublet, the finding that the one per cent of the gross sales have not amounted to $625 per month during the time that defendant sublet a portion of the premises to Wool-man is immaterial. Both the referee and the Appellate Division rejected plaintiff’s claim under that covenant. The material part of the lease relating to payment of $25 per day is this: “If said lessee shall fail, for any reason, to so conduct its said business in said demised premises, then it agrees to pay lessor, in lieu of the percentage of sales reserved herein, the sum of Twenty-five ($25) Dollars a day for each and every business day it may not for any reason conduct the said business therein.” That language, indicating the manner in which the lessee’s business shall be conducted, is immediately preceded by this provision: “ The Lessee * * * will conduct a business therein similar in character to those which it has already established and is now conducting as Empire Food Market ’ on Hudson Avenue and Central Avenue in the City of Albany, New York, * * * and continuously carry on business therein during each business day of the term hereof and utilize the first floor of the Pearl Street level of the demised premises as a food center or market similar to that which is now being conducted in its said other stores, during the usual business hours of every business day throughout the demised term, and any extension thereof, and the Lessee Corporation agrees to advertise its business in such manner as it may deem suitable and to promote the sales of its merchandise in said store; and the Lessee agrees not to conduct, directly or indirectly, a similar store, or to be interested in any way in another within a distance of four (4) city blocks, as such blocks now exist, in all directions from said demised premises. Nothing herein shall be deemed to limit the kinds of merchandise, foods or otherwise, which the Lessee may sell or offer for sale, in the business conducted by it in the demised premises.”

The purpose of the provision relating to payment of $25 per day, in lieu of the percentage of sales, must be to compel the lessee to carry on its business at this location during each business day for the term of the lease in the same manner as at its other stores, to utilize the first floor of the Pearl street level, to advertise its business, and to refrain from engaging in any competing business in the vicinity which might cause a decrease in gross sales. The fact that defendant, without plaintiff’s written consent, sublet part of the premises on the Pearl street level, which we cannot say as matter of law is not a substantial part, is not sufficient to warrant the conclusion that defendant failed “to so conduct its said business in said demised premises.” Woolman’s gross sales were included in the one per cent which was paid monthly to plaintiff and accepted by him. Nothing in the record indicates that if defendant had occupied every square foot of area on the main floor, the gross sales would have been larger. Plaintiff has failed to prove any loss of rent due to the occupation by Woolman. So the Appellate Division held and we agree.

The judgment of the Appellate Division should be modified by directing judgment for plaintiff in the sum of $750, with interest thereon, and as so modified affirmed, with costs in this court to the appellant.

Crane, Ch. J., Lehman, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgment accordingly.


author: Loughran, J.

text:
    Joseph A. Broderick, as Superintendent of Banks of the State of New York, Plaintiff, v. Robert Adamson et al., Defendants; Alexander B. Halliday, Appellant, and W. Wallace Lyon et al., Respondents, Impleaded with Others.
    (Argued November 30, 1936;
    decided December 31, 1936.)

      Louis Newman and Karl R. Miner for appellant.

      William P. Cavanaugh and Harry H. Bernstein for respondents.
   Loughran, J.

This action* was brought to recover from the appellant, as the holder of record of 265 shares of the capital stock of the Bank of the United States, the amount of a statutory assessment. Appellant made a cross-claim for indemnity against the respondents to whom he had sold his stock the day before the bank was closed. The cross-claim has been dismissed on a finding of fact that on the same day the respondents resold the same stock to others. The only question is whether there is any evidence to support this finding.

In several aspects the fact situation is a familiar one. Here again, the contracts of sale and of resale were made on the day before the closing of the bank and delivery was made thereafter.” Here, too, “ no title to identified stock passed either upon the original sale or upon the resale prior to the closing of the bank.” Once more the fact is that, The purchaser from the stockholder of record dealt in numerous blocks of stock.” (Broderick v. Alexander [Kahn], 268 N. Y. 306, 311, 312.) As in that case, the issue here is whether the purchasers terminated their liability to the record owner through actual transfer of the beneficial ownership, by resale of the specific stock to which the beneficial ownership attached ” (p. 313).

That stock was evidenced by four certificates, two for 100 shares each, one for 50 and one for 15 shares. These 265 shares were acquired by the respondents for their own account as part of a lot of 275 shares purchased from brokers acting for the appellant, the additional 10 shares being evidenced by a certificate in the name of a third person. Immediately after their purchase of the 275 shares, the respondents agreed to sell an equal number of shares in lots of 50,100,100,15 and 10. A record made at the time described the 275 shares as bought by the respondents from Reinhart & Bennet (the appellant’s brokers) and denominated a vendee of each of the five lots of shares. Those transactions were carried on by the respondents without knowledge of the number of any certificate for any shares involved and without knowledge of the identity of the record owner in any instance. After the bank had closed, one person so named by the respondents as a vendee received from them two of the certificates standing in the name of the appellant in part performance of a committment to make delivery of a larger number of. shares. Two others so named received from the respondents certificates never owned by the appellant, and two of the four certificates registered in his name were delivered by the respondents upon transactions wholly unrelated to this controversy. The courts below have found: That there is no evidence to show how many shares of the Bank of United States Lyon, Clokey & Co. [the respondents] bought before or after the purchase of 275 shares from Reinhart & Bennet.”

On these facts, the case is ruled by Broderick v. Alexander (Kahn) (swpra), and Broderick v. Adamson (Greif) (270 N. Y. 260). There is no need to repeat what was said in those cases. The proof here fails to establish that before the closing of the bank, the respondents had agreed to sell or transfer to others the same stock they had purchased from the appellant. We have no concern now with any right of the respondents against any of their vendees.

The judgments in so far as appealed from should be reversed and judgment directed in favor of the appellant, with costs in all courts.

Crane, Ch. J., Lehman, O’Brien, Htjbbs, Crouch and Finch, JJ., concur.

Judgment accordingly.


text:
    The People of the State of New York, Respondent, v. Sam Cohen, Julius Silberman, Harry Spector, Benny Kobrinsky, Sol Fleischman, Jack Zaslow, Theodore Reiss, Sidney Seidorf, Abraham Berkowitz and Morris Siporin, Appellants.
    (Argued November 30, 1936;
    decided December 31, 1936.)

      Irving Davis, Murry Levine and David P. Siegel for appellants.

      William Copeland Dodge, District Attorney (Edwin J. Talley of counsel), for respondent.
   Per Curiam.

Defendants violated the following provisions of section 9-d of chapter 27 of the Code of Ordinances of the City of New York; “No fruits, vegetables or other foodstuffs intended for human consumption shall be kept, sold, offered for sale or displayed in any open window, space or doorway of any private market or building, used for the purpose of retail or wholesale trade; nor shall such foodstuffs be kept, sold, offered for sale or displayed within 36 inches of such doorway; nor shall such premises have any detachable windows or doors. The provisions of this section shall only apply to the following area: In the borough of Manhattan, along both the easterly and westerly sides of Broadway, from 59th Street to 116th Street, inclusive.”

If this ordinance were intended to promote public health or the general welfare, if it applied generally to the entire city or even only to such an area within the city as would reasonably require such a limitation upon the rights of merchants, doubtless it would be deemed valid within the exercise of the police power.

The complainant in this prosecution is the West Side Realty Company whose attorney was present at and assisted in the trial. He stated: “ The real reason behind this ordinance is to prevent the depreciation of realty; that outside residents coming to Broadway, and in shopping there, people would run over from the street, pick up their oranges and other fruits, throw the waste on the street and walk off. The purpose of the ordinance is to eliminate all that, your Honor, for the sake of the neighborhood."

This ordinance appears from all the evidence in the case to be wholly arbitrary in that its purpose is to favor real estate values in a restricted section of the city where conditions are not dissimilar from those existing in many other areas. It bears no relation to the welfare of the public but is designed for the convenience and interest of a special class.

As to each defendant the judgment should be reversed and the information dismissed.

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

Judgments reversed, etc.


author: Htjbbs, J. Lehman, J.

text:
    In the Matter of the Estate of James H. Montgomery, Deceased. Marguerite Montgomery, as Executrix of James H. Montgomery, Deceased, Appellant; Everett K. Van Allen, Respondent.
    (Argued November 23, 1936;
    decided December 31, 1936.)

      William MacFarlane for appellant.

      Nicholas J. Weldgen for respondent.
   Htjbbs, J.

The claimant, Everett K. Van Allen, as attorney, entered into a contract with Marguerite Montgomery, as executrix of the will of James H. Montgomery, deceased, to perform certain services in the settlement of the estate for the sum of $5,000. Prior to the execution of that contract, he had performed some services for the estate but without agreed compensation. Prior to the death of the testator, he had acted as his attorney and held an unliquidated claim against his estate for services rendered upon which he claimed to be entitled to recover over $10,000. After the death of the testator, the executrix had caused the claimant to prepare her will and she had named him as executor therein. She also allowed his claim at $10,000. The value of the estate was in excess of $600,000. It was made up of real estate holdings first and second mortgages, leases, etc., on property in Rochester. Concededly, it was a situation involving very much work on the part of an attorney. The executrix was an old lady and it is apparent that she was not the easiest kind of a client. She refused properly to co-operate with the attorney in the liquidation of the estate. When the claimant had performed about five-sixths of the services contracted to be performed, the executrix discharged him and secured another attorney.

The findings are that the contract was not terminated by mutual consent; that the executrix was not justified by the attorney’s conduct or by the manner n which he performed his services in terminating the relation and that the discharge was without adequate cause. The Surrogate, as a conclusion of law, found that there was no breach of the contract by the executrix in terminating the contract.

At first it might seem that such conclusion of law is contrary to the finding of fact that the discharge was without adequate cause. It is, however, based on the ground that a client is permitted to discharge an attorney at any time without cause. In such a case the measure of recovery is based on the principle of quantum meruit, and the attorney must be paid for the services rendered. The question is how much he must be paid and on what principle his compensation must be adjusted. (Matter of Dunn, 205 N. Y. 398.)

On the other hand, an attorney who is discharged for sufficient cause has no right of recovery. (Holmes v. Evans, 129 N. Y. 140.)

In some jurisdictions the discharge of an attorney without cause gives the attorney a right of action for damages. (Martin v. Camp, 219 N. Y. 170, 175.)

In this jurisdiction we have adopted a different principle. Where an attorney engaged under a contract for a definite purpose and not -under a general retainer is discharged without cause, he is entitled to recover on quantum meruit the fair and reasonable value of the services rendered, although the client is not compelled to pay damages as for breach of contract for exercising the right of discharge given by law. (Martin v. Camp, supra.)

In the case at bar the recovery allowed is upon the basis of quantum meruit without regard to the contract price, and the question for determination is whether the right of the attorney to recover is limited by the contract price of $5,000.

Thus far it has been decided that the discharge of the attorney canceled and annulled the contract and that the contract having been canceled, it could not limit the amount of the recovery although it might be considered in fixing the amount of the reasonable value of the services rendered, the theory being that the cancellation could not be a half-way cancellation.

“ It wholly stands or totally fails.” (Matter of Tillman, 259 N. Y. 133; Matter of Krooks, 257 N. Y. 329.)

Under that theory, the contract price does not constitute a limitation on the amount of an attorney’s recovery, although its effect may be to enhance the amount the client may be compelled to pay and in a certain sense penalizes the client for exercising a privilege given by law to discharge an attorney at will regardless of cause.

We are committed to the quantum meruit rule without limitation to the contract price in cases where the client voluntarily discharges the attorney. If the termination of the contract is, however, involuntary, as by the death of or disability of an attorney before his specific contract is performed, recovery for services rendered is limited to the contract price. (Sargent v. McLeod, 209 N. Y. 360.)

In such cases it is said the contract comes to an end without default by either party; therefore, that recovery should be limited by the terms of the contract.

In the case at bar, however, the client has voluntarily canceled the contract. Why should the attorney be bound by the contract which the client has voluntarily canceled and is no longer bound by?

“ After cancellation, its [contract] terms no longer serve to establish the sole standard for the attorney’s compensation.” (Matter of Tillman, 259 N. Y. 133.)

The contract has been canceled and its terms cannot establish the standard for compensation.” (Matter of Krooks, 257 N. Y. 329, 332; Lurie v. New Amsterdam Casualty Co., 270 N. Y. 379.)

Matter of Snyder (190 N. Y. 66) is authority for holding that the attorney is not limited by the contract price. (Cf. 3 Williston on The Law of Contracts, p. 2595.)

The first impression that there is something wrong with a rule that allows an attorney to recover upon quantum meruit more than the contract price, although he has only performed in part, disappears in this case when it is considered that other elements entered into the agreement which induced the attorney to make a contract to perform the work for less than a reasonable fee.

The application of the rule will work both ways, sometimes in favor of a discharged attorney and at other times in favor of a client. In determining the amount of recovery, the learned Surrogate has considered those' facts and also the fact that the contract fixed the price to be paid for the services to be rendered under it. The evidence fully justified the Surrogate in fixing the fair and reasonable value of the services rendered at the sum allowed claimant.

The order should be affirmed, with costs.

Lehman, J.

(dissenting). The respondent agreed to perform certain services for the sum of $5,000. Before the respondent had completely rendered the stipulated services the appellant retained another attorney and discharged the respondent. She had a right to do so even though the respondent committed no fault. A client “ may at any time for any reason which seems satisfactory to him, however arbitrary, discharge his attorney.” (Matter of Dunn, 205 N. Y. 398, 402.) “ It follows as a corollary that the client cannot be compelled to pay damages for exercising a right which is an implied condition of the contract.” (Martin v. Camp, 219 N. Y. 170, 174.) The client’s obligation upon the discharge of his attorney is only to pay for the services rendered.

In this case the respondent had performed five-sixths of the services for which he was to be paid $5,000. The courts below have awarded as compensation for uncompleted services a sum greater than the price fixed by the parties for complete performance. The evidence shows that the services rendered were in fact worth the amount which has been awarded to the respondent. The parties, however, had fixed a lower price. In fixing that price below the actual value of the stipulated services the respondent may have been moved by the hope that this retainer might lead to more profitable retainers in the future. The remuneration which the respondent under any circumstances could receive for services rendered under the contract could not exceed the contract price. Damages for wrongful discharge or breach of a contract for services are ordinarily the profits which might have been earned except for such breach. Because in this case the discharge was not wrongful but in accordance with an implied term of the contract, a judgment has been granted against the appellant for a larger amount than she could have been compelled to pay as damages for a wrongful discharge, and the respondent receives larger compensation than he could possibly have earned under the contract which he made.

A contract for services to be rendered by an attorney, like other contracts for personal services requiring skill, which can only be performed by the person named, are * * * subject to the implied condition that the person designated shall be able to perform. If a lawyer dies before he has prosecuted to a judgment or settlement a litigation which he has undertaken to conduct for a certain compensation, his contract is at an end, because both parties must be supposed to contemplate the continuance of his ability to perform as a condition of the contract [citing cases] and the compensation agreed upon cannot be recovered by his representative under the agreement because he did not and his representative cannot carry out his agreement. The extent of the recovery permitted his representative is the full reasonable value of the services rendered under the contract, not exceeding, however, the sum or the rate fixed by it.” (Italics are mine.) (Sargent v. McLeod, 209 N. Y. 360, 364.) It would seem that the measure of compensation to be allowed to an attorney for incomplete performance of stipulated services should be the same in a case where the contract has been terminated by the client under a term of such contract, implied from the peculiar relationship which the contract calls into existence, that the client may terminate the contract at any time with or without cause ” (Martin v. Camp, supra), as in a case where the death terminates a contract which has been made “ subject to the implied condition that the person designated shall be able to perform.”

It is said that in this case the courts below have followed the rule formulated and applied by this court in Matter of Tillman (259 N. Y. 133, 135). The client is entitled to cancel his contract of retainer but such an agreement cannot be partially abrogated. Either it wholly stands or totally falls. After cancellation, its terms no longer serve to establish the sole standard for the attorney’s compensation.” Together with other elements, they may, however, be taken into consideration as a guide for ascertaining quantum meruit. (Matter of Krooks, 257 N. Y. 329.) In Matter of Tillman and in Matter of Krooks the retainers were for contingent fees, and because the value of one attorney’s services is not measured by the result attained by another,” and because one attorney does not contract for his contingent compensation on the hypothesis of success or failure by some other member of the bar,” the court held that the compensation which must be paid to a discharged attorney cannot be measured by or made contingent upon the success of the attorney retained in his place. The contract of the parties never provided for such measure or contingency.

Nothing there said and certainly nothing there decided is I think applicable to a case such as this. Here termination of the contract leaves intact the measure fixed by the parties for the compensation to be paid to the attorney, and neither reason nor authority in such case justifies a larger award of compensation to the attorney for a part of the stipulated services than he would have earned if the contract had not been terminated. (Cf. Prager v. New Jersey Fidelity & P. G. Ins. Co., 245 N. Y. 1.)

It is said in the prevailing opinion that application of the rule will work both ways, sometimes in favor of a discharged attorney and at other times in favor of a client. That is probably true, but whichever way it works, it works unfairly.

The order should be reversed.

Crane, Ch. J., O’Brien, Crouch, Loughran and Finch, JJ., concur with Hubbs, J.; Lehman, J., dissents in opinion.

Order affirmed.


author: Lehman, J.

text:
    Rose D. April et al., Appellants and Respondents, v. Philip April, Defendant, and Joseph G. Abramson, as Trustee, Respondent and Appellant.

      (Argued November 30, 1936;
    decided December 31, 1936.)

      Nathan L. Miller, Francis B. Delehanty, Jr., Monroe J. Cahn and Nathan Probst, Jr., for plaintiffs, appellants and respondents.

      Abraham J. Halpin, Clarence Horwitz and Henry Wald-man for defendant, respondent and appellant.
   Lehman, J.

The plaintiff in 1928 entered into a separation agreement with her husband, the defendant Philip April. It provides that Philip April should pay to his wife during her natural life the sum of $4,200 annually in monthly installments of $350 and the further sum of $3,000 annually in monthly installments of $250 for the support and education of their children. To secure the payment of $600 monthly the agreement provided for the transfer of specified property to the defendant Abramson as trustee and that the husband should transfer additional property as security, if the specified property proved insufficient. Until June, 1932, the wife received the stipulated payments of $600 per month. Then the' payments' ceased. The plaintiff, individually ' and .'-as guardian ad litem, of the surviving daughter, brought actions to compel the defendant April to make the agreed payments and to augment the principal of the trust funds, and brought separate actions to compel the trustee to account. The actions were consolidated and after a trial an interlocutory judgment was entered which adjudged that the defendant April is obligated to pay to the plaintiff Rose D. April for her own support and maintenance the sum of $350 a month on the first day of each and every month so long as she may live and to pay to her the further sum of $250 per month for the support, education and maintenance of her daughter, the infant plaintiff, until her daughter shall reach the age of twenty-one years, and that the defendant April is obligated to augment the principal of the trust fund in manner provided by the separation agreement. It further adjudges that under the terms of said agreement the defendant, Abramson, is obligated to pay to the plaintiff, Rose D. April, so long as she shall live, out of the income or principal of the trust funds in his hands under said agreement, so long as the same shall be sufficient in whole or in part, the sum of $350 per month ” and that the trustee is obligated also to pay $250 per month for the support of the infant plaintiff out of the income or principal of said trust funds in his hands under said agreement, so long as the same shall be sufficient in whole or in part.” The interlocutory judgment further provided that the action be referred to a referee, named in the judgment, to take and state the account of the trustee and to report to the court as to the additional amount which the defendant April should transfer to the trust fund to secure the stipulated payments.

The referee reported, among other things, that upon the accounting by the trustee he should be surcharged with the sum of $55,829.14, with interest from March 1, 1933, and in addition should pay costs and expenses of the accounting totalling over $8,000. Upon motion of the plaintiffs, final judgment was entered in accordance with the referee’s report. Upon appeal to the Appellate Division the judgment was modified and the amount with which the trustee was surcharged was reduced to the sum of $13,740.05, with interest at the rate of three per cent. The court left intact the provision that the trustee should, in addition, be charged with the expenses of the reference, fees paid to counsel and accountants, and other incidental expenses. The plaintiff and the trustee have both appealed from the judgment as modified.

To set forth the details of all the items which must be considered upon the accounting would serve slight purpose and would result in an opinion of inordinate length. We confine ourselves in this opinion to a statement of the most important questions and a consideration of the largest items. In other respects we shall state only our bare conclusion, though we have carefully considered all the contentions raised by the parties.

The trustee as well as the husband and wife was a party to the separation agreement which names the husband as party of the first part, the wife as party of the second part and the trustee as party of the third part. The instrument includes a provision which is, in form, a present assignment to the trustee of the specified property which it was agreed should be held by the trustee as security for the stipulated payments. At the time of the execution of the assignment, the husband by separate instrument executed a formal assignment of that property to the trustee Abramson. Prior to that time the husband April, the defendant trustee Abramson and one Joseph Levy had been associated in business ventures which were so numerous that, in some respects, the association resembled a partnership doing a general real estate business. The associates owned all the stock, or at least a controlling interest, in a number of real estate corporations; they held undivided interests in real estate mortgages, and they had a bank account which stood in the name of Abramson. The property described in the assignment to Abramson consisted of April’s interest in these corporations, mortgages and bank accounts and all other property of every nature and description in which I [April] am interested jointly with Joseph G. Abramson and/or with Joseph G. Abramson and Philip April [sic].” Abramson, an attorney, had been the active person in the association. After April transferred his interest in the property owned by the associates to Abramson as trustee, Abramson continued to treat the property so transferred as an interest in the property of a continuing partnership from which the assignee, until dissolution of the partnership, was entitled under section 53 of the Partnership Law (Cons. Laws, ch. 39) to receive only the profits to which the assigning partner would otherwise be entitled. The trustee did not reduce to possession and retain all the proceeds of the interest of the assignor in the property described in the assignment. Some of these proceeds were taken by the assignor.

The referee reported that in his opinion “ no partnership existed between Levy, Abramson and April within the meaning of the Partnership Law,” and the court at Special Term found “ that the property transferred by the defendant April to the defendant Abramson was not the property of a partnership among the defendants April, Abramson, and said Joseph Levy, in which the defendant April had a residual ” share. The Appellate Division has not reversed that finding. Our conclusion after scrutiny of the record is that the finding rests soundly upon the evidence presented.

Based upon that finding and upon evidence intended to show the property or money which, with proper diligence, the trustee should have reduced to possession and treated as part of the trust fund, the referee reported, and the court at Special Term found, that upon the accounting the trustee should be charged with assets valued at $180,272, subject to credits to which we shall refer hereafter, amounting to $124,443.54.

The Appellate Division fixed the amounts with which the trustee should be charged at $176,079 and the amounts which should be credited to the trustee at $162,339.25. Thus under the judgment entered upon the decision of the Appellate Division, the surcharge against the trustee is greatly reduced. In the charges against the trustee the Appellate Division of its own motion included an item of $4,452.24. There the court seems to have overlooked portions of the evidence which show that no such charge may properly be made against the trustee. The plaintiff did not claim such charge in the courts below and does not attempt to defend it in this court. Otherwise we agree with the decision of the Appellate Division in so far as it reduced the amount of the charges against the trustee. The increase by the Appellate Division of the amounts which should be credited to the trustee as an offset to these charges presents more serious questions.

The separation agreement and the assignment, made pursuant to that agreement, show quite clearly that the property was assigned in trust as security for the obligation of the assignor to pay to the plaintiff, his wife, $600 a month. The husband was under a further obligation to maintain the trust fund at an amount which would assure to the plaintiff at all times the payment of the stipulated sums. So long as the trust fund was sufficient security, the income might be used to satisfy the settlor’s obligation to the plaintiff, but the trustee had no right to deplete the security by application of part of the principal of the trust fund to such payments, except as resort to security furnished by an obligor may be made after default in performance of the primary obligation. We have said that the defendant trustee erroneously treated the property transferred to him as if it had been the interest of a partner in a continuing partnership. From the bank account which belonged to the husband, the trustee and a third associate, and which stood in the name of the trustee, he drew the checks which for over four years were used to meet the payments due to the plaintiff from her husband under the separation agreement. The trustee has been properly charged as trustee with the share in that bank account, which the husband assigned to him. He maintains that against this charge he should be credited with the moneys paid by him to the plaintiff from that account. The referee and the court at Special Term refused to allow that credit; the Appellate Division has allowed the trustee a credit in the amount of 129,400.

During the time that these payments were made, the trustee made no demand upon the husband for payment of the amount due from him to his wife, though for some, or all, of that time the husband had an income sufficient to meet this obligation. Perhaps the trustee was not under a duty to make such demand or to bring any proceedings to enforce it. We need not decide that now. At least the trustee’s duty to the plaintiff under the trust instrument, made for her protection, required the trustee to refrain from doing anything which might deceive the plaintiff or even lull the plaintiff into oblivion of the husband’s breach of his obligation or which would result in the depletion of the fund intended as security. The evidence establishes that the payments made by the trustee did produce these results, though as the Appellate Division has found, the trustee did not so intend or understand.

The trustee testified that he made these payments from the' moneys in the bank account, because the husband said to him: Pay it out of the funds and charge it to my account and then we will adjust it later on.” Believing, as the trustee did, that in spite of the formal assignment by the husband of his share in the bank account, the account still remained the property of a continuing partnership, the trustee might also conclude that he was justified in accepting this direction from the assignor. The result was, none the less, that in using trust property, held as security for the settlor’s obligation, to meet that obligation the trustee not only depleted the security but led the plaintiff to refrain from compelling the settlor to carry out his obligation and to assign additional security for its performance. The evidence compels the conclusion that if the plaintiff had not during these four years received each month the amount that her husband had agreed to pay her and had not believed that her husband was carrying out his obligation, she might have compelled its performance by him and left intact the trust property held as security.

The Appellate Division, though recognizing that these payments depleted the trust fund pro tanto, nevertheless allowed the trustee credit for these items because the agreement provided that the trustee shall not be liable or be held accountable for any mistakes or errors * * * in releasing any of said securities * * * or for any losses incurred or sustained, by reason of his having consented to act as such Trustee herein, except for wilful malfeasance,” and also because the court construed the provision in the interlocutory judgment, directing the trustee to pay to the plaintiff out of the income or principal of the trust funds in his hands ” the sums stipulated in the separation agreement, as a conclusive adjudication, made at the instance of the plaintiff, that the trust instrument permitted the trustee to make the payments for which he claimed credit.

We construe the interlocutory judgment differently. Unquestionably, after default upon his obligation by the husband, resort might be had to both the principal and interest of the trust fund held as security for that obligation; but before default no payment could be made which would deplete the security and thwart the purpose for which the fund was created. This action is based upon a default by the husband, and the plain intent of the direction in the interlocutory judgment for payment by the trustee “ out of the income or principal of said trust funds ” is to permit resort to the security after breach of the obligation for which the security was given. It was not intended and should not be construed as an adjudication inconsistent with the plaintiff’s claim in the action and inconsistent with the opinion of the referee and the decision of the court. The payments were not authorized by the trust instrument or agreement, and the court never intended to hold that they were justified.

Then the only question which remains is whether the agreement confers immunity from liability upon the trustee. The stipulated immunity cannot reasonably extend to repudiation of trust duties or to acts or omissions which are not due to misconstruction of the rights and obligations created by the trust instrument. Here the trustee made the payments for which he claims credit, not because he found, through honest misreading of the letter of the agreement, supposed authority to make the payments, but because the assignor directed him to do so, and the trustee believed that the moneys were not subject to any trust. The courts below agreed that the exculpatory clause failed to confer immunity for the omission of the trustee to reduce to possession and retain as trustee all the proceeds of the property which had been assigned to him as trustee, though the trustee may have honestly believed that he was not under any trust duty in the premises. By parity of reasoning the exculpatory clause does not permit him to claim credit for payments made from the property assigned when such payments were made by direction of the assignor which were accepted because the trustee similarly believed he had no such trust duty in the premises.

In other respects we find no ground for disturbing the judgment of the Appellate Division. We cannot review the discretion of the courts below in imposing upon the trustee the costs and expenses of the accounting.

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

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

Judgment accordingly.