text:
    Harold Anderson, Appellant, v. N. V. Transandine Handelmaatschappij et al., Respondents. The State of the Netherlands, Respondent.

      Argued April 13, 1942;
    decided July 29, 1942.
    The following question was certified:

      “ Did the Netherlands Boyal Decree of May 24,1940 operate to bar the levy of an attachment by the plaintiff subsequent to the enactment of said decree on property in this State belonging to the defendants when said decree was enacted, and the title to which was declared by said decree to be thereby vested in the State of the Netherlands? ”

      John Schulman, Arthur Garfield Hays, Morris Shilenshy, Milton Sargay and Bene Loeb for appellant.
    The Netherlands decree in its effect upon creditors of the defendant must be considered confiscatory and therefore contrary to the public policy of New York, (Sutherland v. Bradner, 116 N. Y. 410; Cullin v. Alvard, 44 Misc. Rep. 485, 111 App. Div. 911, 188 N. Y. 574; Sliosberg v. New York Life Ins. Co., 244 N. Y. 482; Vladikavkazsky Ry. Co. v. N. Y. Trust Co., 263 N. Y. 369; Matter of People [Title & Mortgage Guarantee Co.], 264 N. Y. 69; Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398.) The implementation of the Netherlands decree is inconsistent with the public policy of this State and is not required under any rule of comity. (Barth v. Backus, 140 N. Y. 230; Matter of Waite, 99 N. Y. 433; Martyne v. American Union Fire Ins. Co., 216 N. Y. 183; James & Co. v. Second Russian Ins. Co., 239 N. Y. 248; Oliner v. American-Oriental Banking Corp., 252 App. Div. 212; 277 N. Y. 588; Mertz v. Mertz, 271 N. Y. 466; Griffin v. McCoach, 313 U. S. 498; Loucks v. Standard Oil Co., 224 N. Y. 99; Hutchison v. Ross, 262 N. Y. 381; Dougherty v. Equitable Life Assur. Society, 266 N. Y. 71; The Western Maid, 257 U. S. 419; United States v. Manhattan Co., 276 N. Y. 396; Oetjen v. Central Leather Co., 246 U. S. 297; The Navemar, 102 Fed. Rep. [2d] 444; Holzer v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474; Commission for Polish Relief v. Banca Nalionala A. Rumaniei, 262 App. Div. 543.) The circumstance that the State Department took official cognizance of the Netherlands decree does not preclude judicial inquiry into its effect upon the property or the rights of creditors in this State. (United States v. Pink, 315 U. S. 203; Ulen & Co. v. Bank Gospodarstwa Krajowego, 261 App. Div. 1; Hannes v. Kingdom of Rumania Monopolies Institute, 260 App. Div. 189; Lamont v. Travelers Ins. Co., 281 N. Y. 362.)

      Jay Leo Rothschild and Louis Rivkin, appearing specially for respondents.
    Since legal title to the property upon which levies were attempted is not in the defendants or any of them, it cannot be the subject of levy. (Koninklijke v. Chase Nat. Bank, 177 Misc. Rep. 186; United States v. Belmont, 301 U. S. 324; United States v. Pink, 315 U. S. 203; United States v. Manhattan Co., 276 N. Y. 396; Compania Espanola de Navegacion Maritima S. A. v. The Navemar, 303 U. S. 68; Lamont v. Travelers Ins. Co., 281 N. Y. 362; Sullivan v. State of Sao Paulo; 36 Fed. Supp. 503; 122 Fed. Rep. [2d] 355; Stoehr v. Wallace, 255 U. S. 239; Schrijver v.
      Sutherland, 19 Fed. Rep. [2d] 688; American Surety Co. v. Kasco Mills, Inc., 149 Misc. Rep. 10; 237 App. Div. 880; 262 N. Y. 585.)

      Allen W. Dulles, Philip L. Miller and Henry P. de Vries for the State of the Netherlands, respondent.
    The Netherlands decree is a valid act of the State of the Netherlands, and is intended to cover the property sought to be attached. (Guaranty Trust Co. v. United States, 304 U. S. 126; Oetjen v. Central Leather Co., 246 U. S. 297.) By comity, rights acquired under foreign law should be recognized and enforced in our courts unless to do so is against the public policy of the forum. (Bank of Augustus v. Earle, 38 U. S. 519; Hilton v. Guyot, 159 U. S. 113; The Athanasios, 228 Fed. Rep. 558.) There is no general public policy, either of the United States or of the State of New York, against legislation by a recognized foreign state vesting title in such foreign state to property of its nationals in the United States or in this State. (United States v. Belmont, 301 U. S. 324; United States v. Manhattan Co., 276 N. Y. 396.) The Netherlands decree is in conformity with the manifested legislative and executive policy of the United States and of this State. (Hines v. Davidowitz, 312 U. S. 52; Koninklijke Lederfabriek “ Oisterwijk ” N. V. v. Chase Nat. Bank, 177 Misc. Rep. 186; 263 App. Div. 815.) It is not against the public policy of this State to enforce the decree as against the plaintiff. (Clark v. Williard, 292 U. S. 112; 294 U. S. 211; Matter of People [Norske Lloyd Ins. Co.], 242 N. Y. 148; Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398; Matter of People [Title & Mortgage Guarantee Co.], 264 N. Y. 69.)

      Mathias F. Correa, United States Attorney (Francis M. Shea, Assistant Attorney-General and Sidney J. Kaplan, Special Assistant to Attorney-General, of counsel), for United States of America.
   Lehman, Ch. J.

The plaintiff in his complaint alleges that he is the assignee of Martin Tietz; that on or about April 26, 1940, April 30, 1940 and May 9, 1940, the corporate defendant at the instigation and with the assistance of the individual defendants converted securities and moneys owned by Tietz and which Tietz had delivered to the corporate defendant. The complaint demands judgment for the sum of $48,394.38 as damages for the alleged conversion.

The plaintiff is a resident of this State; the defendants are residents of Amsterdam, in the Netherlands, and subjects of the State of the Netherlands. The cause of action arose outside of the State and plaintiff’s assignor is a non-resident alien. On July 25, 1940, the plaintiff obtained a warrant of attachment against the property of the defendants. The Sheriff served the warrant upon persons or corporations in this State holding, for safekeeping, corporate stocks and bonds which, it is claimed, belong to the defendants or some of them. By such service the Sheriff has attempted to levy upon such property and upon deposits of funds in ordinary banking, checking or brokerage accounts in the name or names of the defendants. Thereafter the plaintiff obtained an order directing service of the summons herein by publication pursuant to the provisions of section 232 of the Civil Practice Act.

The defendants named in the summons and complaint appeared specially and, upon an order to show cause, moved to vacate and set aside the warrant of attachment and any levies made thereunder, and to vacate and set aside the attempted service upon the defendants by publication. In affidavits filed in support of their motion, the defendants challenged on several grounds the validity of the warrant of attachment. They also challenged the attempted levies under that warrant on the ground that by a decree of the lawful government of the State of the Netherlands promulgated on May 24,1940, title to the property and funds which the Sheriff has sought to attach is “ vested in the State of the Netherlands, as represented by the Royal Netherlands Government, temporarily resident in London.”

While the motion to dismiss made by the defendants was pending, the court made an order permitting the State of the Netherlands to appear specially by a motion to vacate the attachment heretofore issued herein and the levies under said attachment,” The State of the Netherlands asserts that it holds title to the property of the defendants in this State. The decree promulgated on May 24, 1940, provides in article I that:

“ 1) Title to claims against persons, partnerships, compames, corporations, firms, institutions and public bodies, which claims belong to natural or legal persons domiciled in the Kingdom of the Netherlands, * * * in so far as these claims are in any form whatsoever capable of being encumbered, pledged, transferred or sold or the like, outside of the Realm in Europe, is hereby vested in the State of the „ Netherlands, as represented by the Royal Netherlands Government, temporarily resident in London and exercising its functions there * *

ic 2) * * *

3) The proprietary rights vested in the State of the Netherlands, by virtue of the provisions of the preceding paragraphs, shall only be exercised for the conservation of the rights of the former owners.” The State Department certified that: “ The Government of the United States continues to recognize as the Government of the Kingdom of the Netherlands the Royal Netherlands Government, which is temporarily residing and exercising its functions in London.” The question presented upon the motion of that government to vacate the attempted levy upon property to which that government claims title under the decree which it has promulgated, concerns solely the construction and effect of the decree.

At Special Term Mr. Justice Shientag, in a scholarly opinion, sustained the claim of the Royal Netherlands Government, and the Appellate Division has unanimously affirmed the order granting the motion to vacate. The Appellate Division granted leave to appeal, certifying the following question: “ Did the Netherlands Royal Decree of May 24, 1940, operate to bar the levy of an attachment by the plaintiff subsequent to the enactment of said decree on property in this State belonging to the defendants when said decree was enacted, and the title to which was declared by said decree to be thereby vested in the State of the Netherlands? ”

The answer to that question is decisive of the validity of the levy upon the property to which the State of the Netherlands claims title; it is not entirely clear that the answer will determine whether the warrant of attachment is also invalid and should have been ■vacated. No such distinction was, however, urged by the plaintiff in the courts below, and it is not urged by the plaintiff upon this appeal. For that reason we could not consider any such question upon this appeal even if the scope of review of the order were not limited by the form of the certified question. If the order is too broad, relief must be sought by a motion in the courts below to resettle it.

The certification by the State Department that the Government of the United States has recognized the Royal Netherlands Government in England as the government of the State of the Netherlands constitutes a determination of political questions concerning the legitimacy of that government and its decrees. (Guaranty Trust Co. v. United States, 304 U. S. 126.) The scope and the effect within this State of a decree promulgated by the recognized government are judicial questions, just as the scope and effect of the law of any long-established and recognized friendly foreign government, like that of England, would be judicial questions. The certification was not intended to withdraw from the court jurisdiction or right to determine those questions, just as it would decide other judicial questions, without advice or suggestion from the political branch of the government.

While the appeal from the order of the Appellate Division was pending in this court the Department of State sent to the chief judge of the court a letter stating: Since the entry of the United States into the present war and the signing of the Declaration of the United Nations, the Department has undertaken to formulate the policy of the United States with reference to the effectiveness of the said decree of May 24,1940. In view of the formulation of policy which has now been made, the Department of State intends to ask the Attorney-General to make formal representation to your Court, setting forth that policy.” Accordingly, the United States Attorney for the Southern District of New York applied at the direction of the Attorney-General of the United States to this court for leave to appear and file a Suggestion of the Interest of the United States in the Matter in Litigation,” bringing to the attention of the court the formulation by the State Department of its policy in respect to the effect to be given to the decree of the foreign State. Upon that application the United States Attorney stated that “ in the interest of orderly procedure ” the matter is being presented by motion for leave to file the suggestion, though he questioned whether leave of the court is necessary. Without considering or deciding whether leave is necessary, the court granted leave.

The suggestion filed by the United States Attorney states:

I. The United States has an interest and concern in the subject matter and outcome of this action insofar as there is involved the question of the effect on assets within the United States of the decree of May 24, 1940, of the Royal Netherlands Government, purporting to affect title to certain assets of nationals of the Netherlands. That interest arises from certain policies of the Government of the United States in the conduct of its international relations, which policies have been determined by the executive branch of the government of the United States and should be given effect.

II. The Attorney-General of the United States has received from the Honorable Cordell Hull, Secretary of State of the United States, a communication dated February 10, 1942, a certified copy of which is hereto annexed, wherein the Secretary of State requests that there be brought to the attention of this Court the position of the Department of State relating to the effect of the Decree of May 24, 1940, of the Royal Netherlands Government. The Attorney-General has directed the undersigned to bring said communication to the attention of this Court, as the Secretary of State has requested.

“ III. As appears from said communication, at the time of the adoption of the Decree of May 24, 1940, the Royal Netherlands Government was recognized by the Government of the United States, and the Government of the United States has consistently taken cognizance of that Decree as an act of the Royal Netherlands Government; and an expression of that cognizance was embodied in a letter to the Secretary of the Treasury under date of June 27, 1940, an authenticated copy of which is appended to the communication of the Secretary of State. However, as the Secretary points out, prior to the entry of the United States into the present war and to the signing of the Declaration of the United Nations, the Government of the United States did not adopt any policy with reference to the effect which should be given to that Decree on assets within the United States; and pending the adoption of such a policy by the Government of the United States, the Department of State considered that the effect, if any, of that Decree on assets within the United States was a matter to be determined by the courts of competent jurisdiction.

IV. It appears from the opinion of the Supreme Court of the State of New York herein (28 N. Y. Supp. [2d] 547, at pp. 553, 558) that that court gave to the expression of cognizance of June 27, 1940, a construction broader than was intended, apparently finding in it a determination by the executive branch of the Government relative to public policy (Ibid p. 553) and holding that the Decree, ‘ implemented by the recognition given to it by our national government, is self-executing ’ (Ibid p. 558). On the contrary, as set forth in the Secretary’s communication annexed hereto, the recognition was merely of the Royal Netherlands Government, and of the Decree as an act of that Government without the adoption at that time of any policy with reference to the effect which should be given to that Decree on assets within the United States, leaving that question, pending the adoption of such a policy, for judicial determination.

“ V. The Secretary points out, however, that since the entry of the United States into the present war and the signing of the Declaration of the United Nations, the Government of the United States has adopted a policy with reference to the particular question presented by this case. That policy, as announced by the Secretary, is as follows:

1 It is the policy of the United States that effect shall be given within the territory of the United States to that Decree insofar as it is intended to prevent any person from securing an interest in, or control over, assets of nationals of the Netherlands located in the United States on account of claims arising outside of the United States in territory now or at any time under the jurisdiction of the Netherlands Government, for the benefit of persons who are not at the time of their assertion citizens or residents of the United States.’

“ VI. The foregoing statement of policy is made with express reservation by the Secretary of State, as follows:

This statement reserves for further determinations of policy, in the light of further consideration and developments, all questions relating to the effectiveness of the Decree as applied to other circumstances or persons and relating to the bearing of control which the Government of the United States may undertake through its executive and legislative branches to exercise over any assets purported to be affected by the terms of that Decree.’

“ VII. The Secretary of State, as shown by said communication, finds that the result of the decision of the Supreme Court of the State of New York, as affirmed by the Appellate Division, is in harmony with and will promote the policy of the United States, but the Secretary expressly refrains from expressing any views as to the compatibility with that policy of all the reasons stated in the opinion of the Supreme Court of the State of New York. The Secretary points out that it would be highly desirable that this Court, in deciding the present case, confine itself to giving effect to the announced policy of the United States stated in that communication without expressing any view with respect to the effectiveness of the Decree as applied to persons and circumstances other than those referred to in the statement of policy set forth in that communication.

VIII. It is submitted that the policy announced by the Department of State, if given effect, is dispositive of the controlling issues herein. As appears from the opinion of the Supreme Court of the State of New York (28 N. Y. Supp. [2d] 547, 550), the plaintiff, although a resident of the State of New York, is what is commonly known as an assignee for collection, the alleged assignment to him having been made solely for the purpose of making him, instead of his assignor, the plaintiff in the action, and that the plaintiff’s assignor is a non-resident alien, a citizen of a country in Europe said to be Liechtenstein, and is now understood to be resident in Cuba. It further appears from said opinion that the plaintiffs alleged cause of action arose outside of the United States in territory under the jurisdiction of the Netherlands Government.

IX. The Secretary’s communication points out that while no view is expressed as to the compatibility with the policy of the United States of all the reasons stated in the opinion of the Supreme Court of the State of New York, should occasion arise wherein it is desirable to announce a policy of the United States bearing on those reasons, the Department of State will be pleased to undertake such a statement, but that the present case presents no such occasion. Should, contrary to this submission, the Court hold that the policy announced by the Secretary of State is not full enough to dispose of the controlling issues herein presented and that the questions reserved by the Secretary of State need be determined in order to dispose of this case, it is respectfully requested that an opportunity be afforded the Secretary of State to announce the policy, if any, of the United States, bearing on those questions, prior to the disposition of this cause.”

There can be no doubt that the decree of May 24, 1940, promulgated by the recognized government of the State of the Netherlands is part of the law of a friendly sovereign State of which the defendants are subjects and in which the defendants are domiciled, and that under such law title to the property described in the decree belonging to the nationals and residents of the State of the Netherlands (including the property upon which the Sheriff has attempted to levy) is vested in the State of the Netherlands. By comity of nations, rights based upon the law of a foreign State to intangible property, which has a situs in this State, are recognized and enforced by the courts of this State, "unless such enforcement would offend the public policy of this State. That rule is part of the law of this State, as it is, in general, the law of all countries which accept the reign of law. The question which the courts below were called upon to decide is whether the sequestration by the government of the State of the Netherlands of property here belonging to its own nationals offends our public policy.

Argument may be made that confiscatory decrees of foreign countries offend the fundamental rule upon which our economic and social system rests, that no person may be deprived of his property without due process of law and upon payment of fair compensation. Here the challenged decree does not in purpose or effect violate that rule. Under its terms, the State becomes in effect a trustee for its subjects of their property which might otherwise be without protection and perhaps subject to seizure by a ruthless enemy. By article V of the decree it is provided that: “ Three months after the present emergency conditions shall in Our judgment have ceased to exist, restitution shall be made of the claims mentioned in Article I to the former owners.” The emergency conditions ” were created by the invasion of the Netherlands by a foreign enemy. The decree is in part designed to prevent such property from falling into the hands of the enemy of the Netherlands for use in prosecuting the war. That enemy is now our enemy. A decree designed for such purposes and having such effect may hardly be said to offend a public policy of this State.

The plaintiff does not, indeed, claim seriously that it offends the public policy of the State, except to the extent that it excludes a resident creditor of a foreign debtor from resort to property of the debtor within the State for satisfaction of the debt. He seeks support for his contention in the decision of this court in Barth v. Backus (140 N. Y. 230). The limits of the application of the rules and principles there stated have been defined in Martyne v. American Union Fire Ins. Co. (216 N. Y. 183). The situation here presented does not fall within those limits. We agree with the courts below in their determination of the judicial question that the decree of the Government of the Netherlands is valid and bars a levy upon the property. The effect of that decree is not merely to “ freeze ” the property of the debtor. It divests the debtor of all title to the property.

We need not consider now whether the Department of State by “ formulation ” of its public policy as to the effect of the decree could change the judicial question determined by the court below into a “ political question ” which the courts are not empowered to decide or whether the Department of State can in that manner create a public policy of the United States which supersedes and renders immaterial any public policy of a State. We recognize that the political departments of the United States Government may do so where enforcement of the public policy of a State might render ineffective a transfer of property within the State in accordance with an agreement entered into by the United States, in the exercise of powers conferred by the Constitution of the United States, with a recognized foreign government vested with title to the property by its own decree. (United States v. Pink, decided February 2, 1942, 315 U. S. 203.) An answer to the question whether the courts must give effect to the mere formulation of a public policy by the State Department in respect to the effect of a decree of a foreign State relating to property within a State, regardless of whether such decree offends the public policy of the State, might involve very serious consequences in other cases. It can have no consequence where, as here, the public policy so formulated accords with the public policy of the State. For that reason we do not now consider or decide the question.

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

Loughran, Finch, Eippey, Lewis, Conway and Desmond, JJ. concur. .

Order affirmed, etc.


source: Caselaw Access Project

author: Lehman, Ch. J.

license: Public Domain

text:
    Amy Martorano et al., Respondents, v. Capital Finance Corporation, Appellant.
    Argued April 23, 1942;
    decided July 29, 1942.

      William F. Bleakley, Jackson R. Collins, Richard O. Wiesner, James D. Hopkins and Melvin Howard Osterman for appellant.
    The requirement by appellant that the respondents obtain fire and theft insurance covering an automobile offered as security for a loan, followed by the fact that respondents paid the premium therefor out of the proceeds of the loan, is not a violation of the provisions of section 352 of the Banking Law (Cons. Laws, ch. 2.) (National Bank v. Lewis, 75 N. Y. 516; Hennessey v. Personal Finance Co., 176 Misc. Rep. 201; Domestic Finance Corp. v. Williams, 174 Misc. Rep. 227; Behan v. People, 17 N. Y. 516; Howell v. Mills, 53 N. Y. 322; People ex rel. Lyon Co. v. McDonough, 76 App. Div. 257; 173 N. Y. 181; Stradar v. Stern Bros., 184 App. Div. 700; People v. Lamphere, 219 App. Div. 422; Daly v. Haight, 170 App. Div. 469; Cashmore v. Peerless Motor Car Co., 154 App. Div. 814; Platz v. Lapinski, 263 Mich. 240; Niles v. Kavanagh, 179 Cal. 98; Stein v. General Discount Co., 22 Pa. Dist. & County Rep. 666; Auto Owner’s Finance Co. v. Coleman, 89 N. H. 356.)

      Irwin Slater and Harry Wolf son for respondents.
    The contract of loan between respondents and appellant was void because of the charge for insurance. (London Realty Co. v. Riordan, 207 N. Y. 264.) The insurance is,, in part, exclusively for the benefit of appellant, and thus unlawful, on such ground alone. (Personal Finance Co. v. Lyons, 128 Conn. 254; Olcott v. Tioga R. R., 40 Barb. 179; Harrison v. Hall, 239 N. Y. 51.) Even if appellant does not profit from the premium, the payment for the premium represents an additional charge forbidden by the statute. (Cons. Laws, ch. 28; § 352.)
   Lehman, Ch. J.

On December 28, 1940, the plaintiff borrowed from the defendant the sum of $300, giving to the defendant a promissory note for that amount with interest from date “ payable monthly, at the rate of 3% per month on any part of the unpaid principal balance of this loan not in excess of $150.00 and T}/¿% per month on any remainder of the unpaid principal balance of this loan until said loan with interest as aforesaid is fully paid.” As security for the loan the plaintiffs executed a wage assignment and chattel mortgage upon their household goods and upon an Oldsmobile motor car.

“ In order to obtain said loan, Salvatore Martorano, the plaintiff, was required at the time of the making of said loan and before its completion, to apply for insurance ” on the automobile and “ said insurance was obtained and the premium paid out of the proceeds of said loan ” by means of a check dated December 28, 1940, in the amount of six dollars, which was payable to Salvatore Martorano and delivered to the plaintiff as part of such proceeds at the time the loan was consummated. The plaintiffs claim that by reason of these conceded facts the contract of loan violates section 352 of article IX of the Banking Law, chapter 524 of the Laws of 1941 as thereafter amended. The controversy was submitted to the Appellate Division upon a statement of agreed facts. By a divided court the Appellate Division directed judgment in favor of the plaintiffs.

Section 352 of the Banking Law (Cons. Laws, ch. 2), provides in part: In addition to the maximum rate or amount of interest, consideration, or charges above specified, no further or other charge or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing, recording, or releasing in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter. If any interest, consideration or charges in excess of those permitted by this act are charged, contracted for, or received the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest, or charges whatsoever.”^

Without insurance a chattel mortgage upon an automobile provides, it is plain, less security for the repayment of a loan than a chattel mortgage upon an automobile which is insured. Certainly mortgagees of real or personal property not infrequently recognize that; and as a condition of granting a loan they stipulate that an insurance policy upon the mortgaged property payable to the mortgagee as interest may appear, must be obtained. The cost of the insurance which the mortgagor must purchase is an expense which the mortgagor must bear in order to meet the conditions upon which the lender is willing to make the loan. The cost of repairing the mortgaged property would also be an expense to the mortgagor if the lender refused to make a loan upon property in need of repair, but neither is an expense ” which is directly or indirectly charged, contracted for or received ” by the lender within the meaning of the statute.

As the prevailing opinion of the Appellate Division (263 App. Div. 79, 80) states: It seems plain that the intention of the statute was that the interest fixed therein should completely compensate the lender for all charges and expenses of every character attached to the loan with the exception of those specifically set forth in the statute. To hold otherwise would open the door to the imposition of charges and alleged expenses which would add to the burden of the borrower and confer upon the lender compensation in excess of that contemplated by the statute.” The test, then, is whether the lender has placed upon the borrower the burden of an additional charge in order to give to the lender “ compensation in excess of that contemplated by the statute.” That is in accord with the test formulated by the court under an earlier statute in London Realty Co. v. Riordan (207 N. Y. 264, 268).

Here the cost of the insurance gives to the lender the indirect benefit of better security for the repayment of the loan. It can give to the lender no other benefit. Under no circumstances can the lender receive more than the principal amount of the loan and the compensation expressly permitted by the statute. Out of that compensation the lender pays for every service connected with the making of the loan and every other expense to which the lender might be put in connection with the loan, and the lender has not stipulated for reimbursement for such expenses. The statute does not forbid the lender from demanding, as a condition of making the loan, that the borrower shall provide the form of security for repayment of the loan which the lender deems adequate, even though the borrower may be put to some expense in order to furnish the stipulated security. The lender may, of course, not impose such condition as a cover for obtaining greater compensation than the law permits, and here there is no claim that the lender could or did obtain additional compensation in any form. That the borrowers for their own convenience chose to pay the cost of insurance out of the proceeds of the loan, of course, does not render illegal what would otherwise be legal.

In other jurisdictions the courts have construed analogous statutes in manner which sanctions the practice which has been condemned in the courts below. (Auto Owners Finance Co. v. Coleman, 89 N. Y. 356; Platz v. Lapinski, 263 Mich. 240; Niles v. Kavanagh, 179 Cal. 98.) The Department of Banks of this State sanctioned it until 1941 when the Appellate Term of the Supreme Court of the first department decided otherwise in the case of Krulik v. Confidential Personal Loan Co. (176 Misc. Rep. 138). Such administrative rulings upon which lenders rely are entitled to weight. We find no violation of the statute by the lender in this case.

The judgment of the Appellate Division should be reversed and judgment directed in favor of the defendant, without costs.

Lewis, J. (dissenting). I cannot agree with the decision about to be made which involves an interpretation of the following portion of section 352 of the Banking Law:

“§352. * * * In addition to the maximum rate or amount of interest, consideration, or charges above specified, no further or other charge or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing, recording, or releasing in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter. If any interest, consideration or charges in excess of those permitted by this act are charged, contracted for, or received the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest, or charges whatsoever.” (Emphasis supplied.)

The quoted portion of the statute gives us evidence of a studied effort by the Legislature to enact a law which will accomplish the elimination of the “ loan shark ” evil. To that end there were inserted in section 352 prohibitions which are broad in scope — broad enough, as I believe, to prohibit a licensed lender under article IX of the Banking Law from requiring, as a prerequisite to a loan, that the borrower shall furnish prepaid fire and theft insurance covering the mortgaged chattel. It may well be that as a matter of practical dealing between business men, such a requirement is a matter of common practice and certainly is good judgment. But we are concerned here with limitations upon those rights given to a licensed lender by a statute designed to protect the borrowers of small sums against excessive charges in connection with that method of financing — charges which have been the subject of grave abuse. If the Legislature had intended to permit the practice which is to be approved by a majority of the court, it would have enacted a law which would specifically permit such a practice, as has been done in the States of California, Florida, Colorado and Oregon.

In London Realty Co. v. Riordan (207 N. Y. 264), this court was called upon to determine whether the exaction from a borrower of a payment of ten dollars to a licensed lender’s attorney, for services in examining the title to mortgaged property, had the effect of making the loan void. That decision was in 1913 when the statutory prohibitions were not as broad in scope as they are to-day. In the course of the opinion Chief Judge Cullen stated for the court: (p. 268) “ I think that the case fell directly within the terms of the statute, not necessarily as a device for excessive interest, but as a charge which, under the statute, the lender is forbidden to exact either in its own favor or in favor of any one else.” At that time the court made clear its intention not to extend the charges which a licensed lender might require of the borrower as a condition of the loan.

In the present case I attach importance to that paragraph of the agreed statement of facts which states — “ That in order to obtain said loan * * * the plaintiff was required at the time of the making said loan and before its completion, to apply for insurance. * * * ” (Emphasis mine.) The appellant-lender asserts that the requirement which is made, that insurance upon the mortgaged chattel be furnished by the borrowers, was merely preliminary to the loan. We are told that there was no contractual relationship with respect to insurance between the borrowers and lender. I do not so interpret the agreed facts. The requirement by the lender that the borrowers should furnish fire and theft insurance upon the chattel with premium prepaid — which insurance we may assume would have to be kept in force until the loan is paid — cannot be said to be merely a preliminary requirement but is a part of the contract of loan. The agreed facts inform us that “ * * * the plaintiff was required at the time of the making of said loan and before its completion, to apply for insurance on said 1936 Oldsmobile and that said insurance was obtained and the premium paid out of the proceeds of said loan * * Furthermore, I think it significant that the fire and theft insurance coverage which the borrowers furnished was a participation in a master policy issued by an insurance company to the lender with loss, if any, payable to • the lender and borrowers as their interests may appear.

I am not left in doubt that by such an arrangement — “ required ” of the borrowers as a prerequisite to the loan — the lender receives a benefit at the expense of the borrowers who must pay a premium for a stated term before the “ completion ” of the loan. That benefit is something of value received by the lender in connection with the loan. Indeed, it is the view of a majority of the court, as expressed by the opinion herein, that Here, the cost of the insurance gives to the lender the indirect benefit of better security for the repayment of the loan.” I believe that such benefit, concededly received by the lender, is — within the language of section 352 —“ in addition to the maximum rate or amount of interest, consideration, or charges ” which the statute permits. (Cf. Stuback v. Sussman, 8 N. Y. Supp. [2nd] 141; affd., 256 App. Div. 903; affd., 281 N. Y. 719.)

While the rule of practical construction of a statute by an administrative officer may be influential in interpreting a law, I do not think it may be applied in the present case. The Banking Department of this State was not consistent in its attitude toward the problem which this case presents. It promulgated in 1934 a regulation (art. Y, par. “ h ” of regulations of June 21, 1934) which from 1934 to 1938 forbade the charging of a fee from the borrower “ for insurance or examining the security or property or for the drawing of papers, or for any services or upon any pretext whatsoever except court and statutory costs actually provided for by law.” As to that regulation the appellant makes the doubtful comment that it did not prohibit the requirement of insurance. It merely prohibits a lender from charging any fee for its services as broker or as agent for the borrower in connection with the requirement of insurance.” That regulation was deleted from the Department’s regulations published on December 31, 1938, and there was nothing promulgated upon the subject until March 15, 1941 — after the decision in Krulik v. Confidential Personal Loan Co. ([Appellate Term] 176 Misc. Rep. 138). At that time a special bulletin was sent to all licensed lenders which called attention to the then recent ruling in the Krulik case (supra) and advised them to regard the decision as controlling. In the Krulik case the Appellate Term had ruled that an item of expense for the insurance of the mortgaged chattel was not permitted by section 352 of the Banking Law and that accordingly the debt there involved was discharged and the security avoided. This brief history of the Banking Department’s attitude toward the question whether an item of expense for insurance may be required of a borrower by the lender does not impress me as strong evidence of practical construction favorable to the appellant.

I believe the rule of London Realty Co. v. Riordan (supra) is decisive in the case at bar. There, as we have seen, the lender required the borrower to pay for the services of attorneys to examine the title of the mortgaged property; and there the lender received no part of the attorneys’ fees. So, in the case before us, the lender required the borrower to pay for fire and theft insurance upon the mortgaged chattel and received no part of the premium. In the Riordan case the benefit to the lender was assurance of good title; in the present case the benefit to the lender is assurance against loss of the chattel by fire or theft.

My conclusion is that the expense item of six dollars which was “ required ” of the borrowers by the lender “ at the time of making of said loan and before its completion ” is, in the circumstances disclosed by the agreed facts, a substantial item. I do not regard it in this instance as a device to cover an excessive interest charge. However, as a benefit to the lender incidental to the loan, I believe the requirement of prepaid insurance upon the mortgaged chattel bears such a reasonable relation to the amount charged by the lender for the loan as to violate the prohibitions contained in section 352 of the Banking Law.

Accordingly, I dissent and vote for affirmance.

Loughran, Finch and Rippey, JJ., concur with Lehman, Ch. J.; Lewis, J., dissents in opinion in which Conway and Desmond, JJ., concur.

Judgment accordingly.


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    In the Matter of Fred C. Doering, Respondent, against Adolf Hinrichs, as Director of Public Works of the City of New Rochelle, et al., Appellants.
    Argued May 29, 1942;
    decided July 29, 1942.

      Aaron Simmons, Corporation Counsel (Murray C. Fuerst of counsel), for appellants.
    Petitioner’s resignation broke his tenure of service. (People ex rel. Davie v. Lynch, 164 App. Div. 520; Matter of Weicher v. Greene, 239 App. Div. 652; People ex rel. Perrine v. Connolly, 217 N. Y. 570; Matter of Marcus v. Ingersoll, 266 N. Y. 359; Schwartz v. Brandt, 261 App. Div. 83; Matter of Abrams v. Ryan, 244 App. Div. 284; Matter of Canfield v. Greene, 250 App. Div. 181; Matter of Mullane v. McKenzie, 271 N. Y. 172; Matter of McEneny v. McKee, 236 App. Div. 140.)

      Seth T. Cole for respondent.
    Resignation from a competitive civil service position followed by reinstatement within one year thereafter does not break continuity of service so as to render inapplicable the inverse order of appointment rule for suspension prescribed by section 31 of the Civil Service Law (Cons. Laws, ch. 7). (Matter of Marcus v. Ingersoll, 243 App. Div. 560; People ex rel. Davie v. Lynch, 164 App. Div. 517; Matter of Knights v. Staley, 118 Misc. Rep. 837; Matter of Horn v. Gillespie, 267 N. Y. 333; Matter of Spivak v. Delaney, 264 N. Y. 491; Matter of Weiher v. Greene, 239 App. Div. 652; United States v. Thornton, 160 U. S. 654.)
   Lehman, Ch. J.

On April 14, 1941, the Council of the City of New Rochelle adopted an ordinance purporting to abolish the position, which the petitioner then held, of Clerk in Central Garage in the Department of Public Works.” The petitioner was notified that his services would not be required after April 30, 1941. George F. Mohr was retained in the service of the Department of Public Works in the position of clerk. The Civil Service Law (Cons. Laws, ch. 7), section 31, provides that any person whose position in the competitive class under civil service law or rules “ is abolished or made unnecessary, through no delinquency or misconduct on his part shall be deemed to be suspended without pay, which suspension shall be made in the inverse order of original appointment.” The petitioner, claiming that his original appointment was prior to the appointment of George F. Mohr, has brought proceedings under article 78 of the Civil Practice Act for an order directing that he be “ reinstated ” in the position which Mohr continues to occupy.

The petitioner has alleged in his petition that he was appointed on April 17,1917, to the position of cost clerk in the Street Department (now Department of Public Works) of the City of New Rochelle after taking a competitive examination for that position; “ that petitioner held such position continuously until December 15, 1928, when he resigned; that on September 1, 1929, petitioner was duly reinstated to the position of Clerk in the office of the Comptroller (now Department of Finance) of the City of New Rochelle; that on January 1, 1938, petitioner was duly transferred from the Comptroller’s office (Department of Finance) to the Department of Public Works.” The petitioner further alleges in his petition that George F. Mohr “ was first appointed to a position in the service of the City of New Rochelle on April 16, 1925; * * * that said George F. Mohr was originally appointed as the result of a competitive civil service examination to the position of File and Index Clerk, the title of which position was changed to Clerk by resolution of the Municipal Civil Service Commission of the City of New Rochelle adopted July 16, 1929; that said George F. Mohr entered the service of the City of New Rochelle eight years after petitioner entered said service and petitioner is entitled to the seniority rights provided for in section 31 of the Civil Service Law.”

The petitioner’s claim that after the abolition of the position petitioner held, Mohr should have been suspended and petitioner assigned to perform the duties previously performed by Mohr in accordance with the provisions of section 31, is challenged on the ground that by his resignation in 1928 the petitioner terminated his employment in the civil service of the city; that his “ reinstatement ” thereafter was in effect a new appointment and- that rights of seniority under section 31 must be calculated from that time. If that contention is sustained then Mohr’s original appointment in 1925 antedates the petitioner’s appointment, and we need not consider other grounds upon which the petitioner’s claim that he must be retained in the service of the city and assigned to Mohr’s position has been challenged.

In 1928 and 1929, when petitioner resigned his position and was reinstated ” in a similar position in another department, rule XXIII of the Rules for the Civil Service of the City of New Rochelle provided that “ any person who has held a position by appointment under the Civil Service Rules, as the result of examination and who has been separated from the service through no delinquency or misconduct on his part, may be reinstated without re-examination in the same or a similar position in the same office or grade, within one year from the date of such separation, provided * * *.” The petitioner, we are told, was “ reinstated ” after his resignation in accordance with the rule.

We assume, but without pausing to consider whether the assump- . tion is sound, that rule XXIII authorized the reinstatement ” or appointment of the petitioner to the position of clerk in the office of the Comptroller within one year after he had resigned from the position of clerk in the Street Department. In Matter of Marcus v. Ingersoll (266 N. Y. 359, 361), this court, while considering the effect of a similar rule, held that where a person who had resigned from a position in the competitive class in the civil service is within one year thereafter appointed to a different position, and such appointment is in no wise connected with the previous service ” but is made from an eligible list promulgated after competitive examination, the new appointment “ must be regarded as an original appointment, and forms the date from which the petitioner’s place in the order of suspension must be determined.” We expressly left open, however, the question of the date from which the order of suspension must be determined where, without new examination, there has been a re-entry into the service by reinstatement or by a new appointment which would be unauthorized by the Civil Service Law and would be prohibited by the Constitution of the State unless there had been previous service under an appointment, made after merit and fitness were ascertained by competitive examination. “ Reinstatement,” we there said, “ might then have the effect of wiping out the resignation and renewed service might be traced in unbroken line to original appointment.” The question is now posed whether “ reinstatement ” after resignation actually has that effect.

We confine our consideration to the effect of reinstatement ” after resignation. Perhaps “ separation ” from the service otherwise effected might in some circumstances be only tentative, and after reinstatement, renewed service might perhaps “ be traced in unbroken line to original appointment.”' A resignation constitutes a complete break in the service, and the absolute termination of relations. Thereafter the person resigning has no rights or duties. Reentry into the service can be accomplished only by the voluntary act of the person who has power of appointment. The prior service may furnish sufficient ground for the legislative authorization of reentry into the service without a new examination;— the reentry marks, nonetheless, a new beginning and the renewed service cannot be traced further back in unbroken line. The renewed service is based upon a new appointment, though called reinstatement, and marks the date which determines right to priority in the order of suspension.

The order of the Appellate Division should be reversed and that order of the Special Term affirmed, without costs.

Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Ordered accordingly.


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    William R. White, as Superintendent of Banks of the State of New York, Appellant, v. Pearl Adler et al., Defendants and Henry D. Gasner et al., Respondents.

      Argued April 30, 1942;
    decided July 29, 1942.

      Henry L. Bayles and Carl J. Austrian for appellant.
    Respondents having failed to cause their stock to be transferred on the books of the bank previous to its default remain liable for the assessment under section 113-A of the Banking Law (Cons. Laws, ch. 2). (Broderick v. Aaron [Kessler], 268 N. Y. 411; Broderick v. Adamson [Dinnen], 159 Misc. Rep. 634.) The cause of action here involved is different from that reduced to judgment in the prior suit against respondents. (Broderick v. Adamson, 148 Misc. Rep. 353; Broderick v. Aaron [Kornberg], 268 N. Y. 260; White v. Adler, 255 App. Div. 762; Persons v. Gardner, 113 App. Div. 597; 188 N. Y. 571; Broderick v. Adamson [Gordon], 270 N. Y. 228; Broderick v. Aaron, 240 App. Div. 537; 266 N. Y. 506; Secor v. Sturgis, 16 N. Y. 548; Perry v. Dickerson, 85 N. Y. 345; Reilly v. Sicilian Asphalt Paving Co., 170 N. Y. 40; White v. Adler, 159 Misc. Rep. 604; Lowry v. Inman, 46 N. Y. 119; Van Tuyl v. Schwab, 174 App. Div. 665; 220 N. Y. 661; Brown v. Smith, 106 Fed. Rep. 438; 187 U. S. 637.) The court at Special Term had jurisdiction and properly permitted the institution of the present action, although thereby a cause of action may be split. (Secor v. Sturgis, 16 N. Y. 548; La France v. La France, 127 Conn. 149; Beltz v. Great Western Lead Mfg. Co., 251 Fed. Rep. 696; Gedney v. Gedney, 160 N. Y. 471; O’Dougherty v. Remington Paper Co., 81 N. Y. 496; Saypol v. Wolf, 165 Misc. Rep. 517; White v. Adler, 159 Misc. Rep. 604; Wilson v. Colorado Mining Co., 227 Fed. Rep. 721; United States v. Pan-American Petroleum Co., 55 Fed. Rep. [2d] 753; 287 U. S. 612; Marcus v. Village of Mamaroneck, 283 N. Y. 325; Matter of Rothschild, 160 App. Div. 530; Monpel Realty Corp. v. North American Mortgage & Building Corp., 230 App. Div. 826.)

      Joseph Katz and Henry D. Levy for respondents.
    The finding in the first action to the effect that on December 11, 1930, the defendants-respondents appeared upon the stock ledger of the bank as the owners of a number of' shares of stock and the judgment. directed against them for their pro rata liability on those shares was res judicata and barred a subsequent action in which it was claimed that on December 11, 1930, the same defendants appeared upon the stock ledger as the owners of additional shares of stock. (Broderick v. Aaron [Kessler], 268 N. Y. 411; Cromwell v. County of Sac, 94 U. S. 351; Broderick v. Aaron [Kornberg], 268 N. Y. 260; Broderick v. Adamson, 148 Misc. Rep. 353; Baltimore S. S. Co. v. Phillips, 274 U. S. 316; Montrose v. Wanamaker, 134 N. Y. 590; Eissing Chemical Co. v. People’s Nat. Bank, 205 App. Div. 89; Steinbach v. Relief Fire Ins. Co., 77 N. Y. 498; Silberstein v. Begun, 232 N. Y. 319; Harrison v. Remington Paper Co., 140 Fed. Rep. 385; Martin v. Home Bank, 160 N. Y. 190.)
   Lehman, Ch. J.

On December 11, 1930, before the hour when banks in the city of New York open for the transaction of business, the Superintendent of Banks of the State of New York took possession of the business and property of the Bank of United States pursuant to the provisions of the Banking Law (Cons. Laws, ch. 2). In the course of liquidation of the affairs of the bank, and before July 1, 1932, the Superintendent of Banks determined that the reasonable value of the assets of the bank was not sufficient to pay its creditors in full. The statute provided that the stockholders of every bank should be responsible, equally and ratably and not one for another, for all contracts, debts and engagements of the bank * * * to the extent of the amount of their stock therein * * *. (Banking Law, § 120, now § 113-a.) Acting pursuant to the powers conferred upon him by the statute, the Superintendent of Banks decided on July 1, 1932, that an assessment of twenty-five dollars against each stockholder for each share of stock was necessary to provide funds for the payment of the debts of the bank. Written demands, dated July 6, 1932, were addressed to each stockholder of the bank, for the payment of twenty-five dollars for each share of stock appearing upon the stock ledger of the bank, to be held by him. The notice to the defendant Henry D. Gasner stated: “ The total assessment against you as holder of 1 share of stock is $25.” The notice to the defendant Bessie Gasner stated: The total assessment against you as holder of 8 shares of stock is $200.”

The Superintendent of Banks thereafter brought an action pursuant to the provisions of the Banking Law against stockholders of the bank to enforce their liability as defined by the statute. The names of the stockholders upon whom claim was made in that action were set forth in “ Schedule A ” annexed to the complaint. The plaintiff alleged in the complaint: “Each of the defendants enumerated upon Schedule A was, on and prior to December 11, 1930, the owner and holder of the number of shares set opposite his name upon said schedule, and appeared and now appears under such name as such owner and holder upon the stock ledger of said bank.” Upon the list of “ defendants enumerated upon Schedule A ” the defendant Henry D. Gasner was named as the owner and holder of one share of stock and the defendant Bessie Gasner was named as the owner and holder of eight shares. Decision in that action was rendered in favor of the plaintiff on April 11, 1934, and, upon appropriate findings of fact and conclusions of law in the decision, judgment was entered against Henry D. Gasner for twenty-five dollars and interest as the owner of one share of stock, and judgment entered against Bessie Gasner for $200 and interest as the owner of eight shares of stock. On October 28, 1935, a receipt was issued to the defendant Henry D. Gasner stating: “ This is to acknowledge receipt of the sum of" $25. in payment, release and discharge of all liability of Henry D. Gasner as owner and holder of one (1) share of capital stock of the Bank of United States, assessed by the Superintendent of Banks of the State of New York pursuant to the notice dated July 6th, 1932.” A similar receipt for the sum of $200. was issued, to the defendant Bessie Gasner.

On October 1, 1935, the plaintiff, Superintendent of Banks, had begun another action to enforce the statutory liability of stockholders of the bank, and in that action the defendant Henry D. Gasner was named as the owner and holder of 325 shares of stock and the defendant Bessie Gasner as the owner and holder of two shares of stock. Judgment was sought against:each for the sum of twenty-five dollars for each share of stock so ov^ned and held. The defendants interposed an answer which, in addition to denials of material allegations of the complaint, contained a statement of new matter intended to constitute two separate affirmative defenses. As a first defense the defendants pleaded that they had sold the stock and “ caused their said stock to be transferred on the books of the bank ” prior to the 11th day of December, 1930, and that at the time of the sale the bank was solvent. As a second affirmative defense the defendants pleaded that the recovery of the plaintiff in the first action to enforce the liability of the defendants as stockholders of the bank barred any second action to enforce the same liability. Judgment in favor of the plaintiff was rendered at Special Term. Upon appeal to the Appellate Division the judgment was reversed “ on both the law and the facts ” and judgment granted in favor of the defendants dismissing the complaint on the merits, on the ground that the action was barred by the recovery in the prior action.

The same section of the Banking Law which defines the individual liability of stockholders ” of an insolvent bank also defines the “ stockholders ” who are subject to that liability. The term ‘ stockholder ’ as used in this Section shall apply to: 1. Such persons as appear by the books of the bank * * * to be stockholders; 2. Every owner of stock, legal or equitable, although the same may be on such books in the name of another person * •* *. No person who has in good faith, and without any intent to evade his liability as a stockholder, caused his stock to be transferred on the books of the bank or trust company when such bank or trust company is solvent to any resident of this state of full age previous to any default in the payment of any debt or liability of the bank or trust company, shall be subject to any personal liability for any contracts, debts or engagements of the bank or trust company.” (§ 120, now § 113-a.) Upon evidence produced by the plaintiff at the trial the court at Special Term made appropriate findings which, if sustained by the evidence, would establish that the defendants were subject to the liability defined by the statute not only for the small amount recovered by the Superintendent of Banks in the prior action brought to enforce that liability, but also for the much greater amount sought by the Superintendent in the second action. The Appellate Division did not reverse or change these findings. It reversed only the findings and conclusions contained in the decision, relating to the determination that the recovery in the first action did not bar recovery in the second action.

The defendants maintain upon this appeal not only that the plaintiff’s claims, now asserted, are barred by the recovery in the prior action, but also that, quite aside from the defense of prior adjudication, the defendants are entitled to judgment dismissing the complaint, because even the. findings which have not been reversed by the Appellate Division are unsupported by the evidence. Before we discuss the effect of the prior adjudication we consider briefly the facts established by the evidence and embodied in the findings which are now challenged, though they have been affirmed by the Appellate Division.

On the morning of December 10, 1930, the last day upon which the Bank of United States was open for the transaction of business, Henry D. Gasner was the record holder of 326 shares of stock upon the books of the bank, though he had ceased to be the actual owner, legal or equitable, of 325 of these shares. On that day certificates for these 325 shares of stock were presented at the bank for transfer to Lois Johnson. The certificates were accepted for transfer by the bank. Upon the face of all stock certificates of Bank of United States, including the certificates presented for transfer on December 10th, appeared the following provisions: This certificate is not valid until registered by the Registrar. The Chase National Bank of the City of New York, Registrar, by .............., Assistant Cashier.” The stock certificates presented for transfer to the Bank of United States on December 10th were cancelled in accordance with the usual routine and course of business of the bank and new certificates in the name of the transferee were prepared and signed by the officers of the bank and were then ready for registry by Chase National Bank as registrar. In advance of such registration the transfer was recorded upon transfer sheets in the bank.

The transfer of the stock on the books of the bank was not yet complete. That required entry in the stock book of the bank after the new certificates were registered by the Chase National Bank. Certificates presented and accepted for transfer by Bank of United States and the new certificates prepared by Bank of United States for registry were, in the ordinary course of business and in accordance with its usual routine, sent to the registrar, Chase National Bank, on the morning of December 11th. The registration was not completed and no entry made in the stock book until after the Superintendent of Banks had taken possession of the business and property of the bank. Between December 13 and December 15 the transfer of the certificates was entered upon the books as of December 10, 1930. Though no officer or employee of Bank of United States or of Chase National Bank has personal knowledge or recollection of the entries of the transfer of the specific certificates of stock which had belonged to the defendants, the inference that the usual routine was followed is inescapable, and the findings of the court are fully sustained by the evidence.

The individual liability of the stockholders of the bank became fixed when the Superintendent of Banks took possession of the business of the bank on the morning of December 11th. All persons who then appeared by the books of the bank to be stockholders were subject to that liability. At that time Henry D. Gasner appeared by those books to be the owner of 326 shares. Neither actual transfer by him of the certificates for 325 shares of stock nor presentation of the certificates on December 10th, when the bank was transacting business as usual, terminated or diminished his liability. That could not be accomplished until the transfer was complete and appropriate entry made upon the books of the bank, or until after request for transfer had been made and “ at least a reasonable time has elapsed to enable the bank in accordance with established and reasonable routine to act upon the request.” (Broderick v. Aaron [Kessler], 268 N. Y. 411, 416.) Under the rule there stated the defendant Henry D. Gasner would have had no defense if the Superintendent of Banks had, in the prior action, sought to enforce liability measured by ownership of these shares.

We do not speculate why the Superintendent of Banks in the prior action to enforce the statutory individual liability of the stockholders sought judgment against Henry D. Gasner to the extent of the par value of only one share of stock though at the time the hank closed he appeared by the books of the bank to be the holder of 326 shares. Perhaps the reason was that at the time of the commencement of the action he appeared to be the holder of only one share, for the transfer of 325 shares had, as we have said, been entered upon the books a few days after the bank was closed but as of December 10th, when the bank was still transacting its regular business and the Superintendent of Banks or his counsel, examining these books in preparation for the enforcement of the liability of the stockholders, may have had no personal knowledge or may have forgotten that the entries in the books of the bank as of December 10th were, in fact, ¡made thereafter. Perhaps even if that fact was present in their minds they may have failed to recognize its significance, for our decision in Broderick v. Aaron (Kessler) (supra), formulating the applicable rule, was rendered only in July, 1935. In any event, immediately after that decision the Superintendent of Banks made an additional demand upon these defendants and commenced this action to enforce the additional liability.

The statute defines a single liability of stockholders to the extent of the amount of their stock therein, at the par value thereof.” The liability of the stockholder is measured by the number of his shares, but the statute does not create or define a separate liability upon each share of stock or upon each stock certificate in single ownership. Only a single cause of action accrues upon failure to satisfy a single liability. Though in the prior action the plaintiff sought recovery for only a small fraction of the total liability of the defendants and the question whether the defendants were subject to a greater liability was not in issue, yet the recovery upon part of a single cause of action ordinarily bars an action thereafter for the remainder. The serious question presented upon this appeal is whether under the circumstances here presented the ordinary rule against splitting causes of action should be applied and a second recovery denied upon part of defendants’ statutory liability which the plaintiff' omitted to assert in the prior action.

The rule has been stated in Bendernagle v. Cocks (19 Wend. 207, 215) (cited in Pakas v. Hollingshead, 184 N. Y. 211): “ If a party will sue and recover for a portion, he shall be barred of the residue.” “ The reason for the rule lies in the necessity for preventing vexatious and oppressive litigation, and its purpose is accomplished by forbidding the division of a single cause of action so as to maintain several suits when a single suit will suffice.” (Kennedy v. City of New York, 196 N. Y. 19, 22.) Implicit in such statements of the rule is an assumption that a plaintiff who has split his causes of action has acted inequitably, knowing that he was causing unnecessary vexation to the defendant, or at least careless whether or not he causes such vexation. Of necessity, the splitting up of accounts, or demands, implies, on the part of the suitor, a conscious act, or knowledge.” (Gedney v. Gedney, 160 N. Y. 471, 475.)

Here the plaintiff is a public officer seeking to enforce a liability created by the State against all stockholders of the bank for the benefit of all of the creditors. A sound public policy demands that the liability created by the State should be enforced equally against all stockholders — that none should benefit by mistake or even dereliction of duty by the public officer upon whom the duty of enforcing the liability is imposed — nor should those members of the public for whose benefit the liability has been created suffer because of dereliction of duty by the public officer.

The courts of other jurisdictions have noted that a rigid application of the rule against splitting of causes of action at times would produce injustice. It has even been said that exceptions should be recognized “ as the evident justice of the particular case requires.” (State ex rel. White Pine Sash Co. v. Superior Court, 145 Wash. 576, 579. See, also, United States v. Pan-American Petroleum Co., 55 Fed. Rep. [2d] 753, p. 776.) It is not necessary to decide now whether in this State the courts may, in the exercise of a sound discretion, refuse, either in an action at law or in equity, to give full effect to a violation of the rule against splitting causes of action, as the evident justice of the particular case requires.” The stock owned by the defendants was represented by several stock certificates. Each certificate was assignable by indorsement upon the certificate and delivery. The defendants did assign some or all of their certificates before the closing of the bank when the liability of each individual stockholder became fixed. Though that assignment did not terminate or diminish the liability of the defendant measured by his stock, the assignment nonetheless created a liability also against each person to whom a certificate of stock was transferred to the extent of the number of those shares which had been assigned to him. The Superintendent of Banks might enforce liability measured by the shares assigned either against the assignor or assignee, but if the liability was enforced against the assignor, the assignee was bound to indemnify him. (Broderick v. Aaron [Rice], 264 N. Y. 368.) Each separate certificate could be separately presented for transfer upon the books of the bank. Thus the defendants, by assigning separate stock certificates, did themselves initiate the splitting of liability against them. The assignment carried with it legal consequences even before the transfer on the books was completed and created a condition in which there was reasonable doubt about the extent of the recovery which could be had against the defendants. The plaintiff in these circumstances in the prior action sought recovery only for the amount for which the defendants were liable beyond possible doubt. We decide only that in these circumstances the reason for the rule fails' and that recovery upon the defendants’ statutory liability to the extent of the amount of their stock ” never presented for transfer, does not bar recovery thereafter for the amount of their stock represented by the certificate which had been presented for transfer before the bank closed.

The defendants have not been vexed or harassed, unreasonably, by a multiplicity of actions brought to enforce the liability imposed upon them by law. When the prior action was commenced and decided the courts had not yet decided the grave legal question whether stockholders were subject to liability for the amount of their stock ” which they had assigned and which had been presented on December 10th for transfer upon the books of the bank. The plaintiff was under a duty to enforce to its full extent the liability created for the protection of those doing business with banks organized under the laws of the State. Stockholders might have had reason to complain if, before the courts had defined the extent of their statutory liability, the plaintiff had sought to recover the full amount for which they might be liable under every possible judicial decision which might be rendered thereafter. The general rule that a second recovery cannot be had upon a single cause of action does not apply when, in such circumstances, a public officer seeks to enforce the statutory liability of stockholders “ to the extent of the amount of their stock ” for which liability at that time was clear without including in his demand the amount of other stock represented by separate certificates which the stockholders had attempted to transfer, though under the rule formulated in a later judicial decision the stockholders were liable also for the amount of that stock. The rule against splitting a cause of action is one made by judges to promote the public policy of the State. It should not be applied “ to frustrate the purpose of its laws or to thwart public policy.” (United States v. Pan-American Petroleum Co., supra.)

The judgment of the Appellate Division should be reversed and that of the Special Term affirmed, without costs.

Lottghran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Judgment accordingly. (See 289 N. Y. 646.)


text:
    Rockland Light and Power Company, Respondent, v. City of New York, Appellant.

      Argued May 26, 1942;
    decided July 29, 1942.
    The following question was certified:

      “ Does the complaint state facts sufficient to constitute a cause of action? ”

      William, C. Chanler, Corporation Counsel (Richard H. Burke, Paxton Blair and John E. Egan of counsel), for appellant.
    Where the property of a claimant, being idle and not presently devoted to any business, has merely suffered a depreciation in value because of the possibility that a project when executed will limit the uses to which the property may thereafter be put, the claimant has not suffered such a loss as is embraced in section K41-44.0 of the Administrative Code (L. 1937, ch. 929). (Matter of Board of Water Supply, 211 N. Y. 174; Matter of City of New York [Inwood Hill Park], 197 App. Div. 431; Buckeye Powder Co. v. DuPont De Nemours Powder Co., 248 U. S. 55; People ex rel. Janes v. Dickey, 206 N. Y. 581.)

      Jackson A. Dykman, Elton H. Beals and Samuel M. Cuddeback for respondent.
    The plaintiff has a right at the present time to file a claim for damages. (Matter of Van Etten v. City of New York, 226 N. Y. 483; Matter of Board of Water Supply, 211 N. Y. 174; People ex rel. Burhans v. City of New York, 198 N. Y. 439.)
   Lehman, Ch. J.

In the execution of its plan to obtain an additional water supply from tributaries of the Delaware river, the city of New York is engaged in the construction of a dam across the Never sink river in Sullivan county, New York. In March, 1940, the city instituted two proceedings described respectively as “ Delaware Section No. 10, Watershed Department ” and “ Delaware Section No. 11,” for the appropriation of real property required for the construction of the dam and for a reservoir of water behind the dam. Commissioners of Appraisal have been appointed in these proceedings.

The plaintiff is a gas and electric corporation organized under the laws of the State of New York. It is engaged in the manufacture, sale and distribution of electricity and gas to consumers in the counties of Rockland, Orange and Sullivan, and owns plants and systems for such manufacture, sale, and distribution. It also owns parcels of real property, available for development for use in its business, situated upon the Neversinlt river below the dam under construction by the city. In the two proceedings instituted by the city, the city is not seeking to appropriate any of the plaintiff’s property. Indeed, none of the property described in those proceedings is below the dam. Even though the city does not seek to appropriate real property on the Neversink river below the dam, the proposed diversion of water by the dam, when completed, will be an invasion of the property rights of the owners of such property and will cause damage to them.

Proceedings for the appropriation, by the city of New York for a city purpose, of real property, situated in Ulster, Delaware, Orange or Sullivan county, are regulated by chapter 41 of the Administrative Code of the City of New York (L. 1937, ch. 929). Section K41-44.0, so far as material upon this appeal, provides: The owner of any real estate, not taken, situate in any one or more of the counties of Ulster, Delaware, Orange or Sullivan, or of any established business, directly or indirectly decreased in value by reason of the execution of any plans for or by the acquisition of land by the city for a water supply from the Rondout and Delaware watersheds within such counties, or any of them, pursuant to law, his or its assigns, or personal representatives shall have a right to damages for such decrease in value, from the time of the beginning of such decrease in value, * *

The plaintiff, claiming that its real property and established business have been damaged by the execution ” of the city’s plan and the acquisition of land by the city for a water supply,” brought an action in which it “ prays for a declaration of its rights and other legal relations as follows: (1) That the plaintiff has a right at this time, pursuant to Title K, Chapter 41, of the Administrative Code of the City of New York, to file a claim for damages. (2) That the plaintiff is entitled to file such claim with the Commissioners of Appraisal, appointed under proceedings brought for ‘ Delaware Section No. 10, Watershed Department.’ ” The plaintiff states in its complaint that it “ claims ” that its parcels of real property are particularly adapted for the development of hydroelectric energy, and were acquired for that purpose and would have been developed by the erection of a great dam, reservoir and power house. Plaintiff further states that it “ claims that loss, damage and expense, direct or consequential, has already resulted to the plaintiff as an electric corporation and as the owner of water power, and that plaintiff’s real estate and established business have been decreased in value by reason of the said taking by the defendant, in that the water which would normally be available for such hydroelectric developments will be so depleted by the development of the defendant that plaintiff’s water power, both developed and undeveloped, will be destroyed and of no value.” The plaintiff further states in its complaint that: Defendant denies that the plaintiff has a right to file such a claim at this time, and maintains that the plaintiff will not have a right to file a claim until there is an appropriation map filed as to the plaintiff, or until the dam is closed.”

The defendant interposed no answer but, within twenty days after the service of the complaint, served notice of motion, pursuant to rule 106 of the Rules of Civil Practice, for judgment dismissing the complaint on the ground that the complaint fails to state facts sufficient to constitute a cause of action. The justice at Special Term in a careful opinion reached the conclusion that the plaintiff is not entitled to file a claim in the appropriation proceedings until it has suffered present damages by actual diversion of water. An order was then entered granting the defendant’s motion to dismiss the complaint as matter of law and not in the exercise of discretion.”

The plaintiff moved for a reargument of the motion to dismiss urging that, even assuming that upon the facts alleged in the complaint it does not appear that the plaintiff has a present right to file a claim yet the court should not have dismissed the complaint but should have retained jurisdiction in order to declare in due course the rights of the parties, whatever they may be (citing Bruckman v. Bruckman Co., 60 Ohio App. 361). Upon reargument,the justice at Special Term again rendered a decision in favor of the defendant and judgment was entered adjudging:

1. That the plaintiff has no right at this time, to file a claim for damages, pursuant to Title K, Chapter 41, of the Administrative Code of the City of New York.
“ 2. That the plaintiff is not entitled to file such claim with the commissioners of appraisal appointed under proceedings brought for Delaware Section No. 10, Watershed Department.’
“ 3. That an attempt to agree with the defendant or its representative as to the compensation to be made is not a prerequisite to the filing of a claim for damages pursuant to Title K, Chapter 41, of the Administrative Code of the City of New York.
4. That the statute of limitations does not begin to run against the plaintiff antecedent to the accrual of assessable damage to the plaintiff and the right to file a claim.
“ 5. That the complaint in this action be and the same hereby is dismissed.”

The plaintiff appealed from that judgment. By a divided court the judgment was reversed on the law and the motion to dismiss the complaint was denied. The order of the Appellate Division provides that the defendant have twenty (20) days after service of notice of entry hereof in which to serve an answer.” Leave to appeal was granted by the Appellate Division which certified the question: “ Does the complaint state facts sufficient to constitute a cause of action?”

The difference of opinion among the judges of the Appellate Division was confined to the question whether the plaintiff had the right to file now a claim for damages in the proceedings instituted by the city or whether it must await the time when execution of the plans for a new city water supply has proceeded so far that riparian rights of the plaintiff have been invaded and there has been interference with the plaintiff’s use of its property for the development of water power. The opposing arguments upon that question are forcibly presented in the prevailing and dissenting opinions. A minority of the judges were of the opinion that the time to file a claim should be fixed * * * by the event of appropriation or physical invasion ” and that “ the period of limitation in which to file a claim * * * will not begin to run until the time to file a claim has arrived.” They urged that the judgment appealed from which declares the jural rights of the parties in conformity herewith should be affirmed.” (263 App. Div. 284, 289.) The court reversed that judgment because the majority of the judges were of the opinion that the facts alleged in the complaint and constructively admitted by the defendants, upon its motion to dismiss, established that the plaintiff had, as it claimed, an immediate right to file a claim for damages. The order of the Appellate Division does not, however, purport to declare the jural rights of the plaintiff in conformity with the majority opinion. Its order, denying the defendant’s motion to dismiss, permits the defendant to interpose an answer and has the effect of postponing a declaration of the plaintiff’s jural rights until the defendant has had the opportunity to litigate on the merits, the extent of these rights. The sufficiency of the complaint has been sustained as a pleading. The order accomplishes nothing more. The order must be affirmed, regardless of the merits of the controversy or the scope of the' plaintiff’s rights, if we conclude that the complaint in an action for a declaratory judgment should not be dismissed as matter of law ” where the facts alleged show the existence of a controversy concerning “ rights and legal relations ” and where it appears that the discretionary and extraordinary powers of the court have been invoked for a sufficient reason. (See Woollard v. Schaffer Stores Co., 272 N. Y. 304: German Masonic Temple Association v. City of New York, 279 N. Y. 452.)

A declaratory judgment is ex vi termini a judgment on the merits. Until disputed questions of fact necessary to be determined before judgment can be rendered ” are settled, it is plain that rights and legal relations cannot be determined, defined and declared. See rule 213 of the Rules of Civil Practice. The court may, in the exercise of its sound discretion, decline to pronounce a declaratory judgment (Rule 212 of the Buies of Civil Practice). Its discretionary and extraordinary power is properly invoked only where resort to ordinary actions or proceedings would not afford adequate relief. A judgment declaring rights and other legal relations which could be challenged anew by either party in proceedings brought thereafter would be an anomaly and would serve no useful purpose. Upon a motion by the defendant to dismiss the complaint on the ground of its insufficiency, made before service of an answer, allegations of fact contained in the complaint are not in issue, and the court can determine only the question of law whether the pleading is sufficient to withstand challenge by demurrer or by its statutory modern substitute, motion to dismiss. If the court denies the motion to dismiss, then declaration of rights must await final judgment. If the court grants the motion to dismiss then it cannot logically grant, at the same time, a judgment on the merits declaring the rights and legal relations of the parties.

The logical consequences of such considerations were recognized in both the majority and minority opinions in the Appellate Division. All the judges recognized, too, the wisdom of the practice that a complaint praying for judgment declaring the rights and legal relations ” of the parties should not be dismissed as insufficient merely because the facts alleged in the complaint show that the plaintiff is not entitled to a declaration of rights as the plaintiff claims them to he. The court should, in proper case, retain jurisdiction of the action and should exercise its power to declare the rights and legal relations of the parties whatever they may be. The Appellate Division refused to give effect to these considerations only because it construed the decision of this court in German Masonic Temple Association v. City of New York (supra) as decisive authority that in this State the practice is different.

In that case the plaintiff brought an action to obtain an adjudication that it was exempt from the sales tax imposed by the city of New York. In its complaint it did not ask for an adjudication of its rights and legal relations in general but demanded judgment only “ that it be declared exempt ” from the tax and that the city be enjoined from its collection. The complaint was dismissed at Special Term on the ground that the local law authorizing the tax provided a special statutory method by which an aggrieved tax payer might challenge erroneous action by the tax officials of the city and that no special reason was shown by the plaintiff why it should not be relegated to the procedure provided by the local law. The judgment of dismissal was affirmed by the Appellate Division. In reversing the judgment of dismissal this court held that special reasons did exist why “ a declaratory judgment may appropriately be directed ” citing Dun & Bradstreet, Inc., v. City of New York (276 N. Y. 198).

The reasons for that determination are indicated in the cited case. Briefly stated these reasons are: (1) Assuming the truth of the allegations of the complaint it appears that the taxing officers acted without jurisdiction and their acts are illegal and void. (2) Certiorari and statutory remedies analogous to certiorari do not furnish an adequate remedy in such case. (3) Where the facts are undisputed and only the validity or legality of the statute is questioned there are no countervailing advantages in relegating the plaintiff to the statutory proceeding, though perhaps questions of fact could be settled at least as expeditiously in those proceedings as in an action for a declaratory judgment. We point out here, parenthetically, the reference in the opinion in that case to the circumstance that “ there is no issue of fact ” is misread when it is construed as an indication that an action for a declaratory judgment must be dismissed whenever there are disputed questions of fact. The rules of Civil Practice to which we have already referred provide a method by which disputed questions of fact may be settled.” The existence of disputed questions of fact which could be settled expeditiously in an ordinary action or proceeding may nonetheless in a particular case justify or even constrain the court in the exercise of a sound discretion to decline to pronounce a declaratory judgment. We did not say or decide anything else and our reference to disputed questions of fact in the opinion in that and other cases should be read in its relation to the problems there presented.

Nor should the discussion by this court of the merits of the claim of legal rights of the plaintiff as alleged in the complaint in Dun & Bradstreet, Inc., v. City of New York (supra), though the court affirmed the order of the Special Term denying a motion to dismiss, be accepted as an indication that ordinarily, upon a motion made by the defendant to dismiss the complaint, the merit or lack of merit of the claim of legal rights by the plaintiff in an action for a declaratory judgment is a decisive or even a relevant consideration. It was a relevant consideration in that case and was discussed in the opinion because, unless it appeared from allegations of the complaint that the tax officers acted without jurisdiction, the plaintiff could be compelled as matter of law to resort to the proceeding provided by the local law in order to challenge the determination of officers empowered to assess the tax authorized by that law. Thus the merits of the plaintiff’s claim of jural rights and the jurisdiction of the courts to declare ” those rights were inextricably intertwined. That is not true here, where the propriety of the invocation of the extraordinary powers of the court to declare the rights and legal relations of the parties is not dependent upon the nature or scope of those rights. For these reasons we conclude that regardless of the merits of the controversy, the Appellate Division properly reversed the judgment of the court at Special Term and denied the motion to dismiss.

We have not overlooked the fact that, in spite of what we have here said, this court in German Masonic Temple Association v. City of New York (supra), not only denied the motion by the defendant to dismiss the complaint, but upon that motion granted final judgment declaring, in accordance with the plaintiff’s claim, the rights of the parties. The reason is clear. The defendant admitted the facts as pleaded by the plaintiff not only “ constructively ” but actually, and impliedly requested the court to determine upon the plaintiff’s complaint the rights of the plaintiff if the court had jurisdiction. We acted upon that implied request.

That is, of course, not the case here where there is question whether the plaintiff has suffered present legal injury and damages, though no water has been diverted and it is possible that no water may be diverted in the future. Upon this appeal that question is not before us. We express no opinion upon it. It can be decided only when final judgment is granted.

The order should be affirmed without costs and the question certified answered in the affirmative.

Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Order affirmed, etc.


author: Per Curiam.

text:
    Stanley Clarke, as Trustee of Associated Gas and Electric Company, Respondent, v. Public National Bank and Trust Company of the City of New York, Appellant.
    Submitted June 16, 1942;
    decided July 29, 1942.
    The following questions were certified:
    “1. Is an Assistant Cashier, who is an officer of a national banking association, as a matter of law, a person prescribed by Section 228, subdivision 8, of the Civil Practice Act, as one to whom a copy of the summons might be delivered?

      “ 2. If question No. 1 be answered in the negative, may jurisdiction be acquired over a domestic corporation by delivery of a copy of the summons to a person not one of those prescribed in Section 228, subdivision 8, of the Civil Practice Act, who, however, was authorized by the corporation to receive service on its behalf?
    “ 3. If question No. 1 be answered in the negative, can a domestic corporation be estopped from asserting that a person to whom a copy of the summons was delivered was not a person prescribed in Civil Practice Act Section 228, subdivision 8?
    “ 4. Should the defendant’s motion to vacate and set aside the service of summons herein have been granted? ”

      Alfred W. Bressler and Henry Schneider, for appellant.
    An assistant cashier of defendant bank was not a proper person within the requirements of the Civil Practice Act upon whom service could be made on defendant’s behalf. Therefore the service was void, even though defendant thereby received the summons. (Baker v. New York Central R. R. Co., 258 App. Div. 854; Eisenhofer v. New Yorker Zeitung Pub. & Printing Co., 91 App. Div. 94; Van Damm v. New York Central Storage Co., 132 N. Y. Supp. 394; Winslow v. Staten Island R. T. R. R. Co., 51 Hun, 298; Taylor v. Granite State Provident Assn., 136 N. Y. 343; Kramer v. Buffalo Union Furnace Co., 132 App. Div. 415; 196 N. Y. 532; Hewitt v. Canadian Pacific Ry. Co., 124 Misc. Rep. 186; 212 App. Div. 815.) There is no evidence of any authority in said cashier to accept service or of facts estopping the bank from contesting such service. (Cowenhoven v. Ball, 118 N. Y. 231; Kramer v. Buffalo Union Furnace Co., 132 App. Div. 415; 196 N. Y. 532; Van Damm v. New York Central Storage Co., 132 N. Y. Supp. 394; Winslow v. Staten Island R. T. R. R. Co., 51 Hun, 298; Vitola v. Bee Publishing Co., 66 App. Div. 582.) Valid service may not be made upon a domestic corporation by delivery of a copy of the summons to a person not specified in section 228 of the Civil Practice Act even though such person were authorized to accept service; nor may jurisdiction be acquired on any theory of estoppel by an invalid service promptly repudiated. (Rosenthal v. United Transportation Co., 196 App. Div. 540.)

      Samuel J. Silverman and Stanley Clarke for respondent.
    The officer served was a cashier or a managing agent within the meaning of subdivision 8 of section 228 of the Civil Practice Act. (Palmer v. Pennsylvania Co., 35 Hun, 369; 99 N. Y. 679; Goetz v. Interlake S. S. Co., 47 Fed. Rep. [2d] 753; Coler v. Pittsburgh Bridge Co., 146 N. Y. 281; Westervelt v. Mohrenstecher, 76 Fed. Rep. 118;
      Copeland v. Melrose National Bank, 229 App. Div. 311; 254 N. Y. 632; Case v. First National Bank, 59 Misc. Rep. 269; Wells v. Southern Minn. Ry. Co., 1 Fed. Rep. 270; People ex rel. Throop v. Langdon, 40 Mich. 673.) The bank is estopped from contesting the validity of the service both because the officer served was authorized by the bank to receive service and because the bank represented that he was the proper officer to be served. (Amy v. Watertown, 130 U. S. 301; Ange v. General Crushed Stone Co., 262 App. Div. 553; Krause v. Krause, 282 N. Y. 355; Davis v. Wakelee, 38 Fed. Rep. 878; 156 U. S. 680; Underhill v. Schenck, 205 App. Div. 182; Olsen v. Jacklowitz, 247 App. Div. 753.)
   Per Curiam.

An assistant cashier is not one of the persons named in subdivision 8 of section 228 of the Civil Practice Act, upon whom a copy of a summons may be served. Nor is an assistant cashier, who is an officer of a national banking association, a “ managing agent,” within the meaning of the statute, unless he is vested with the broad powers of a managing agent. In this case the assistant cashier had no such powers.

The evidence is insufficient to show that the bank had authorized its assistant cashiers to receive service of process, though in some earlier cases to which this plaintiff was not a party the bank failed to challenge the jurisdiction of the court where the summons was delivered to an assistant cashier. Nor is there any evidence which would sustain a finding that the bank had given the assistant cashier to whom the summons was in this case delivered apparent authority to receive delivery of a summons, or that any representation, express or implied, was made by the bank upon which a finding of estoppel could be based.

For these reasons the motion to vacate the service of summons should have been granted.

The orders should be reversed with costs in all courts and the motion to vacate service of the summons granted. Question No. 1 should be answered in the negative, and question No. 4 in the affirmative. We do not answer questions Nos. 2 and 3. They are academic upon this record.

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

Orders reversed, etc.