author: Lehman, J. Pound, Ch. J.

text:
    The People of the State of New York, Respondent, v. Clifford Ryan and Thomas Venetucci, Appellants.

      (Argued November 27, 1933;
    decided January 16, 1934.)
    i' Victor J. Dowling, J. Arthur Leve, Thomas A. McGrath and Samuel Saline, for Clifford Ryan, appellant.
    There is no proof in the record that deceased was killed by the co-defendants while engaged in the commission of a robbery, or in an attempt to rob deceased. (United States v. Breitling, 20 How. 252; People v. Razezicz, 206 N. Y. 249; People v. Fitzgerald, 156 N. Y. 253; People v. Kennedy, 32 N. Y. 141; United States v. Ross, 92 U. S. 281; Manning v. Ins. Co., 100 U. S. 693; Lamb v. Union Ry. Co., 195 N. Y. 260; People v. Collins, 234 N. Y. 355; People v. Sobieskoda, 235 N. Y. 411; People v. Zackowitz, 254 N. Y. 192; People v. Caruso, 246 N. Y. 437; People
      v. Marwig, 227 N. Y. 382; People v. Moran, 246 N. Y. 100; People v. Walsh, 262 N. Y. 140; People v. Giusto, 206 N. Y. 67.) The admission of hearsay testimony of what the co-defendants said after their alleged return from the scene of the homicide constituted prejudicial reversible error. (Collenger v. United States, 50 Fed. Rep. [2d] 345; Hogg v. United States, 53 Fed. Rep. [2d] 967; Logan v. United States, 144 U. S. 263; People v. Davis, 56 N. Y. 95; People v. Stetz, 206 App. Div. 223; Dowdy v. United States, 46 Fed. Rep. [2d] 417; People v. McQuade, 110 N. Y. 284.)

      James D. C. Murray, for Thomas Venetucci, appellant.
    There was a complete failure of proof that the killing was committed while the co-defendants were engaged in an attempt to commit a robbery. (People v. Marendi, 213 N. Y. 600; People v. Squire, 6 N. Y. Cr. Rep. 475; People v. Kief, 126 N. Y. 661; People v. Razezicz, 206 N. Y. 249; People v. Kennedy, 32 N. Y. 141; People v. Harris, 136 N. Y. 423; People v. Fitzgerald, 156 N, Y. 253; United States v. Ross, 92 U. S. 281; Lamb v. Union Ry. Co., 195 N. Y. 260; O’Gara v. Eisenlohr, 38 N. Y. 296; Ruppert v. Brooklyn H. R. R. Co. 154 N. Y. 90.) The trial court committed reversible error in its charge in assuming that an attempted robbery had been committed and in taking from the jury the question of fact as to whether or not a homicide was committed during the progress of an attempted robbery. (People v. Walsh, 262 N. Y. 140; People v. Schleiman, 197 N. Y. 383; People v. Smith, 232 N. Y. 239.)

      Thomas C. T. Crain, District Attorney (Robert C. Taylor of counsel), for respondent.
    There was proof that the co-defendants were engaged in an attempt to rob deceased when the homicide occurred. (People v. Sullivan, 173 N. Y. 122.) A- felony murder was proved. (People v. O’ Neill, 260 N. Y. 523; People v. Raffaele, 233 N. Y. 590; People v. Cusamano, 235 N. Y. 560; People
      v. Marino, 235 N. Y. 560; People v. Vitusky, 155 App. Div. 139; Justice v. Lang, 52 N. Y. 323; People v. Majone, 91 N. Y. 211; People v. Conroy, 97 N. Y. 62; People v. Galbo, 218 N. Y. 283.) The statements of the co-defendants were in furtherance of the original conspiracy, and properly received for that reason. (People v. Giro, 197 N. Y. 152; People v. Becker, 215 N. Y. 126; People v. Connolly, 253 N. Y. 330.)
   Lehman, J.

The appellants, Ryan and Venetucci, were indicted jointly with Thomas Fitzgerald and John Croghan for the murder of Paul Cassullo. Fitzgerald and Croghan pleaded guilty of murder in the second degree and have been sentenced to imprisonment. Ryan and Venetucci have been convicted of murder in the first degree.

The dead body of Paul Cassullo was found at about six o’clock on the morning of December 8, 1932, on the stoop in front of a building on West Fifty-ninth street, where he conducted a grocery store and lived in an apartment above his store. Death was caused by a revolver bullet which had entered his body from the back. It was shown without dispute that Fitzgerald and Croghan had, earlier on the same morning, left Ryan and Venetucci and walked toward Fifty-ninth street with the express intention of “ holding up ” Cassullo when he opened the grocery store.

In accordance with a prearranged design, the appellant Venetucci followed them in a car which the defendant Ryan and another youth, who maintained a speakeasy with him, had stolen. About a half hour later, Venetucci, as planned, picked up Fitzgerald and Croghan and the three proceeded to Ryan’s apartment where they told Ryan that they had to shoot Cassullo. They had previously made a similar statement to Venetucci.

No eye-witnesses to the actual homicide were produced. Ryan was a half-mile away when it occurred. It is said that he “participated in planning a “ hold up ” and even picked Cassullo’s grocery store as an easy place to rob; that he joined in secreting Fitzgerald’s and Croghan’s revolvers; that he loaned the automobile to be used in the proposed crime and that he expected to share in its fruits if any were obtained, though no express promise to give him anything had been made by Fitzgerald and Croghan. Perhaps all this happened and an inference might be drawn by the jury that Ryan joined in a conspiracy to commit a felony. Then he could be held as a principal, if such felony was thereafter committed or attempted, and is guilty of murder in the first degree, if Cassullo was killed by any person when engaged in the commission of, or in an attempt to commit, such felony. (Penal Law, § 1044.) If the People have proven that Cassullo was killed by Fitzgerald and Croghan while attempting to commit the felony of robbery in pursuance of a concerted plan in which Ryan and Venetucci joined, then the judgment of death must be afiirmed however slight may be the defendants’ guilt compared with the guilt of the ones who not only took part in the conspiracy to commit a felony, but who entered upon its execution and while so engaged committed the homicide.

The penal responsibility for the killing of a human by a person engaged in the commission of, or in an attempt to commit a felony,” which by statute extends to all concerned in the felony or attempt to commit a felony,” cannot be further extended by the courts beyond the field covered by the statute. It does not extend to every killing more or less connected with the conspiracy to commit a felony. The responsibility is confined to a killing committed during the period between the inception of the attempt to commit the felony and the consummation or the frustration and abandonment of the attempt. The question in this case is whether the evidence justifies the inference that Cassullo was killed by Fitzgerald or Croghan during that period.

It may be assumed that competent evidence admitted upon the trial justifies and indeed almost dictates the inference that the killing was committed by Fitzgerald and Croghan. They were at the place where the body was found about the time when the killing must have occurred. They went there armed with loaded revolvers intending to commit a felony. It is possible that some other person might at that time have shot Cassullo either accidentally or in pursuance of some purpose of his own, but, in the absence of special circumstances importing some degree of probability to what would otherwise be extraordinary, a jury might well in the exercise of its reasoning faculties discard such possibility. Against the probability, tested by experience, that men bent on robbery, arming themselves with loaded revolvers, will shoot to accomplish their purpose or to effect their escape if their purpose be thwarted, the possibility that some other undisclosed armed person, for some undisclosed reason, may have shot the fatal bullet weighs but light in the balance. Quite evidently then the jury might find that the shooting of Cassullo was committed by Fitzgerald or Croghan as a result direct or remote of the conspiracy to commit a robbery.

That alone is not sufficient to sustain the conviction of these defendants who were not even present at that time. We may paraphrase what was said by this court in People v. Sobieskoda (235 N. Y. 411). “ Fitzgerald and Croghan were the defendants’ agents only in the prosecution of the design against Cassullo. Only what they did in the execution of that design is chargeable against the defendants. The defendants’ moral guilt may be established. Their guilty design against Cassullo was the remote, if not the proximate cause of the killing. Yet, however bad their moral predicament, their legal guilt may be defined only in terms of law.” The circumstantial evidence must be sufficient to permit an inference free from reasonable doubt that Cassullo was killed in the attempted execution of the design to commit a robbery. That is the mandate of the Legislature.

Various possibilities must be discarded before that result can be reached. The body of Cassullo was found, as stated, on the stoop in front of the building. “ Presence upon the premises at the time the homicide was committed has been regarded as very important as indicating that the criminal was still engaged in the commission of the original crime.” (People v. Smith, 232 N. Y. 239, 242.) That circumstance is wanting here. There is possibility that the homicide may have been accidentally committed before attempt to rob had begun or after the criminals had made good their escape from the premises. There is possibility that one of the criminals shot Cassullo for personal reasons. There is possibility that the shooting occurred after abandonment of the attempt to rob and after escape by the criminals from the premises while Cassullo was attempting to apprehend them.

We recognize that the first possibilities are remote. The last possibility creates at least a substantial question of fact. Unless the jury resolved that question against these defendants, it could not convict. (People v. Marwig, 227 N. Y. 382.) It is said that some circumstances, such as the facts that a bullet was found in the store and that the deceased was shot in the back, show that the homicide occurred before escape was effected. Whether these circumstances are sufficient to show, in spite of the place where the body was found, that the shooting occurred before abandonment of an unsuccessful attempt to rob and escape from the premises may well be debatable. It need not be decided now, for the People produced evidence that Fitzgerald and Croghan asserted or admitted to these two defendants that the homicide had occurred during the attempt to rob. If such assertions or admissions are competent evidence of the facts stated therein against the defendants then the chain of proof is complete. If incompetent then its reception and the charge based on its reception presents error requiring a reversal and a new trial at which other proof may be adduced.

The statements of Fitzgerald and Croghan concerned occurrences at which these defendants were not present and of which they had no personal knowledge. No admission of the truth of a statement made by a third party can be inferred from the silence of an auditor where the auditor is under no duty to speak and has no personal knowledge upon which he could base contradiction. That is conceded, but it is said that these statements were admissible against these defendants because made by a fellow conspirator.

Declarations made by one conspirator in the prosecution of the enterprise are evidence against all, but they must be made in furtherance of the enterprise and while the enterprise is pending. Narration of past facts after the enterprise has come to an end by success or failure is not admissible in evidence against the others. (People v. Davis, 56 N. Y. 95; Logan v. United States, 144 U. S. 263.) Here the statements were not made in furtherance of the common enterprise. That had come to an end by failure. They were merely part of explanation given for the failure. The conspirators in making the statements were certainly not acting as agents in behalf of their fellows when they made this explanation to them. It follows that the reception of this narration as evidence binding upon the defendants who had no personal knowledge of the facts is erroneous. It has no more logical probative force against them than any other hearsay testimony. It follows that the judgment of conviction must be reversed.

What we have said about Ryan applies also to Venetucci. True his participation in the original attempt to commit the felony is more direct, but as in the case of Ryán, his conviction can be sustained only upon competent proof that Cassullo was killed during the commission of an attempt to commit a felony.

The indictment against these defendants is in common-law form, but the trial' judge submitted the case to the jury only upon the theory of a felony murder. Whether the defendants might have been convicted upon another theory is not before us.

The judgments of conviction should be reversed and a new trial ordered.

Pound, Ch. J.

(dissenting). The deceased, Paul Cassullo, ran a grocery store on West Fifty-ninth street, New York city. He lived in an apartment over the store. At about six o’clock in the morning of December 8, 1932, he was found leaning against the banister of the stoop in front of his residence mortally wounded. The death wound was caused by a 32-calibre revolver bullet which had entered his body from the back.

Four persons were indicted for the commission of murder, these two appellants and two others named Fitzgerald and Croghan. The prosecution accepted pleas of murder in the second degree from the two latter and they have been sentenced.

These two appellants were brought to trial upon indictments charging them with murder in the first degree, and have been convicted of that crime on the ground that they, although absent (Penal Law, § 2), aided and abetted in the commission of a felony — the attempted robbery of the deceased — during which the killing was done. (Penal Law, § 1044, subd. 2.)

No eye-witnesses to the shooting were produced. Confessions were obtained from both appellants showing guilty knowledge on their part of the purpose of Fitzgerald and Croghan to rob Cassullo.

The appellants contend that, as no evidence of the commission of an independent felony is brought home to them, the prosecution must fail. (People v. Marendi, 213 N. Y. 600, 611.) Evidence may, however, be circumstantial, as well as direct, and a verdict may be the result of justifiable inferences.

The theory of the People is that Ryan advised and counseled the commission of the felony by planning and counseling therein before its commission and that Venetucci aided and abetted therein by accompanying Fitzgerald and Croghan, who did the actual killing, to the neighborhood .of the Cassullo store and bringing them away after the killing.

Ryan lived on West Fiftieth street. He and Michael Hynes ran a speakeasy a few doors away. On the night of December 7th, both appellants and Fitzgerald and Croghan were in the speakeasy. Hynes testified that at that time there was a discussion as to a likely place to stage a robbery. Both appellants knew of the store of deceased and of his habits. Both advised the other two that Cassullo’s store was an easy place to rob.

On the following afternoon Fitzgerald and Croghan came to Ryan’s apartment with two revolvers, one of 32-calibre and one of 38, which were left, secreted in the inverted globe of a chandelier by either Ryan or Venetucci.

Ryan had in his possession a stolen automobile, ownership of which was claimed by him and his partner Hynes. In the confessions of both of the appellants it is admitted that all four of the alleged participants were again together in Ryan’s apartment early on the morning of December 8th. This is testified to by a Miss Partridge and a sister-in-law of Ryan who were staying there. In both confessions it is stated that Ryan again said that the Fifty-ninth street place was easy. He picked out the place and told them to go there as a place where they could get some dough. The two pistols were given to Fitzgerald and Croghan in the presence of both appellants, and about five-thirty o’clock they left the apartment with them. They walked toward Fifty-ninth street, nine blocks away, Venetucci following them in a stolen car, which belonged to Ryan and Hynes, who had loaned it to them. About half an hour later Venetucci picked them up on Fifty-ninth street and they came back to Ryan’s apartment where the revolvers were again secreted in the chandelier. Venetucci threw exploded shells down the toilet. Nothing seems to have been obtained as a result of the expedition, and the confessions disclose that while there was no actual agreement as to a division of anything which was to be obtained, Ryan expected a part if anything was obtained. Fitzgerald and Croghan told Ryan when they returned to his apartment, and Venetucci when they got in his car, that they had to shoot.

A 38-calibre bullet was found on the floor in the store of Cassullo. It had passed through a box of raisins and was flattened. A 32-calibre bullet was extracted from the body of the deceased. There were no blood stains either in the store or the place where the deceased was found. The autopsy showed considerable internal hemorrhage. The deceased was a large man, weighing about 240 pounds. After several searches the police found the two revolvers in Ryan’s chandelier, but this was not until after they were located through information obtained from the confessions. The deceased was found about eight feet from the door of the store, which was closed.

Summarizing this evidence, we find that both appellants knew of the deceased and knew that he opened his store about six in the morning. Fitzgerald and Croghan, who took the revolvers, had conferred with the appellants in regard to the proposed robbery of the deceased. They were advised by Ryan, at least, that such robbery would be easy.

The evidence points to an intent to commit an. independent felony with the aid and advice of both appellants. It places Croghan and Fitzgerald in close proximity to the spot where the robbery was planned to take place. The deceased was killed by a 32-ealibre bullet. Croghan and Fitzgerald had a pistol of such calibre. Going to Fifty-ninth street thus armed is inconsistent with any innocent purpose. It is possible but most improbable that the killing, of Cassullo was committed by others than Fitzgerald and Croghan, but it is impossible to disregard the errand on which they set forth from Ryan’s. It could well have been found that the felonious intent with which they left Ryan’s and which both defendants shared was continued and carried out, and that in the execution of such intent Cassullo was shot and killed.

As threats to commit a crime are constantly received in evidence as circumstances tending to connect a person with the crime (Stokes v. People, 53 N. Y. 164, 175), so plans to commit a crime may be received to connect a person with the crime thus planned. Had defendants said that they were going themselves to rob Cassullo, and Cassullo had been thereafter found killed, the inference would be reasonable that they had attempted to rob Cassullo and in the execution of such an attempt had killed him.

The evidence of a commission of a felony, although circumstantial as against defendants, is sufficient. It is impossible to disregard the part which defendants had in sending the actual killers to the Cassullo store in order to clothe them with the presumption of innocence at the conclusion of the evidence. The jury might properly draw the inference that a felony was committed and that defendants were acting as accessories thereto. (People v. Sullivan, 173 N. Y. 122, 132; People v. O’ Neill, 260 N. Y. 523; People v. Raffaele, 233 N. Y. 590.) It is not to be imagined that Fitzgerald and Croghan changed their purpose and went off towards Cassullo’s armed, to buy peanuts or soda water.

Defendants argue that evidence that Fitzgerald and Croghan told Ryan and Venetucci in effect that they had to kill a man, that they had both fired, was improperly admitted on the ground that such declarations were made after the so-called conspiracy to rob had come to an end. (Logan v. United States, 144 U. S. 263, 308.) Such declarations accompanied the return of the revolvers by Fitzgerald and Croghan to the Ryan apartment and the concealment thereof therein. They were not offered as an admission that Ryan had engaged directly in the commission of the felony. It was competent in order to show that Ryan was aiding and abetting in the commission of the felony to show that the revolvers were taken from his apartment and returned thereto. The accompanying statements either were competent or, if not competent, were not prejudicial. They merely informed defendants of that which they were bound to expect, that if they sent out armed men who were intending to commit a felony, a killing would be the natural and probable result ” of such a criminal undertaking. (Ruloff v. People, 45 N. Y. 213.)

We have examined the entire record to discover error which would require reversal and find none which would “ affect the substantial rights of the parties ” (Code Crim. Pro. § 542). We are not unmindful that moral certainty of guilty participation by these defendants does not justify an affirmance of the judgment unless their guilt is established by competent evidence (Code Crim. Pro. § 3), but we are not bound in this case to reverse in order to prevent injustice. Defendants have been fairly tried. The jury has disposed of all questions of fact. Cassullo is dead. To do justice, we should give all the evidence a fair and reasonable meaning. Reading the evidence as reasonable men, drawing reasonable conclusions therefrom, we cannot find that there is no evidence of guilt to sustain the verdict.

The judgments of conviction should be affirmed.

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

Judgments reversed, etc.


source: Caselaw Access Project

author: Pound, Ch. J.

license: Public Domain

text:
    In the Matter of Paul F. Foster, Appellant, v. John A. Hastings, Respondent.
    (Argued November 22, 1933;
    decided January 16, 1934.)

      Eli S. Silberfeld and Milton P. Kupfer for appellant.
    The Supreme Court has inherent power, under the statute, to punish a judgment debtor for disobeying its mandate by deliberately giving false testimony. (Cons. Laws, ch. 30, § 753; People ex rel. Platt v. Rice, 144 N. Y. 249; Civ. Prac. Act, § 800; Feinberg v. Kutcosky, 147 App. Div. 393; Howe v. Welch, 11 Civ. Proc. Rep. 444; Lathrop v. Clapp, 40 N. Y. 328; Jackson v. Murray, 25 App. Div. 140; Matter of Black, 138 App. Div. 562; Fenner v. Sanborn, 37 Barb. 610; Matter of Becker v. Qerlich, 72 Misc. Rep. 157; Matter of Hansen v. Hechheimer, 124 Misc. Rep. 509; Zwerdling v. Hamman Building Corp., 145 Misc. Rep. 471; People v. Ales, 247 N. Y. 351; People v. Carlson, 222 App. Div. 54; Ferguson v. Perk, 138 Misc. Rep. 326.)

      David H. Lehman for respondent.
    Contempt proceedings must be based upon a violation of a clear and precise mandate of the court. (Lathrop v. Clapp, 40 N. Y. 328; Gernhardt v. Boland, 211 N. Y. Supp. 879; Bernheimer v. Kelleher, 31 Misc. Rep. 464; Matter of Silberman Dairy Co. v. Econopouly, 177, App. Div. 97; Moynihan v. Devaney, 90 Misc. Rep. 346; Baum v. Rosenberg, 155 N. Y. Supp. 404; Matter of Shorowitz v. Canimez, 152 App. Div. 758; Matter of Manzelle v. Ryan, 73 App. Div. 137; Fromme v. Gray, 148 N. Y. 695.)
   Pound, Ch. J.

The Appellate Division, in granting leave to appeal to this court, certified the following questions of law: -

“ I. Did the court at Special Term err in denying, as a matter of law, the motion of the judgment-creditor herein?

“ II. Where the judgment-debtor in this proceeding has been directed, by an order of a justice of the Supreme Court, ' to appear and make discovery on oath concerning his property ’ in supplementary proceedings, and it be found as a fact that the judgment-debtor, upon the examination directed by said order, deliberately gave false answers concerning his sources of income, and thereby impedes and defeats the rights of the judgment-creditor, is the judgment-debtor punishable for a civil contempt of court under the provisions of section 753 of the Judiciary Law and section 800 of the Civil Practice Act? ”

A court of record has power to punish as for a civil contempt misconduct by which a right or remedy of a party to a civil action or special proceeding may be defeated, impaired, impeded or prejudiced, in any case where a person subpoenaed as a witness refuses or neglects to answer as a witness (Judiciary Law, § 753, subd. 5; Cons. Laws, ch. 30) or, in supplementary proceedings, neglects to obey the order of a judge or referee (Civ. Prac. Act, § 800) and otherwise as provided in such sections.

Senator Hastings, the respondent, on examination pursuant to the order of Hon. Edward J. Byrne, justice of the Supreme Court, having been duly sworn, testified that, apart from his employment with the advertising firm of B. G. Collier and his salary as State Senator, he had no other income. It appeared that this answer was false; that at the time of the examination, and for seven months after the examination, he had been receiving a salary from Terminal Cab Corporation, first of $18,000 and later of $10,000 a year. This fact was brought out in the course of hearings before a Joint Legislative Committee to investigate the affairs of- the city of New York and seemingly admits of no doubt. It may be assumed that bis purpose in testifying falsely was to avert garnishment of his salary and to impair and impede the rights and remedies of the judgment creditor.

When the judgment debtor appears and submits to an examination and there is no evidence tending to show his disobedience to any order or direction of the court, a conviction for contempt cannot be upheld under the provisions of Judiciary Law, section 753, or Civil Practice Act, section 800, even though he swears falsely on such examination. (Fromme v. Gray, 148 N. Y. 695.) This rule has been consistently followed by the lower courts (Matter of Silberman Dairy Co. v. Econopouly, 177 App. Div. 97), and may be regarded as the established law of this State. While the exact question here presented has not been passed upon by this court, it would be a strained construction of the statutes defining civil contempts to include therein perjury on the part of a judgment debtor on the ground that false swearing is not to be distinguished from a refusal to testify. On the bare issue of perjury, the judgment debtor is entitled to a trial by jury under the safeguards of the criminal law. Generally speaking, false swearing does not constitute a civil contempt. No statute so provides, expressly or by reasonable implication.

When the witness refuses to answer or when it plainly appears that the witness denies knowledge or recollection of a fact, obviously to evade an answer as to matters within his recollection, the court may refuse to aid in a mere subterfuge and may compel an answer, but this power must not be used to punish perjury.” (Hand, J., in United States v. Appel, 211 Fed. Rep. 495.)

Nothing on the face of the judgment debtor’s evidence indicated that it was false. Nothing suggests that it was not a bona fide effort to answer the questions. No exception to the general rule can be relied on.

Decisions of other States, sustaining the right to punish for contempt, are of little value here where such right has been limited by statute. (Matter of Fellerman, 149 Fed. Rep. 244, 248.)

It is urged as an argument for upholding contempt proceedings that if Hastings cannot be punished for contempt he has taken an immunity bath by testifying in the supplementary proceeding and that he cannot be punished for perjury (Civ. Prac. Act, § 791) because “ an answer cannot be used as evidence against the person so answering in a criminal action or criminal proceeding.” Questions which call for answers which tend to convict the judgment debtor of a fraud may be answered by him with impunity, but perjury committed on such examination cannot be indulged in with freedom from criminal liability. Such perjury is a crime and it would be a droll conclusion to reach that the mere fact of testifying permitted false swearing to be indulged in without fear of prosecution. It is the truthful answer which confers the statutory immunity.

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

Crane, Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Order affirmed, etc.


author: Hubbs, J,

text:
    In the Matter of the Claim of Walter Burmester against Antonio De Lucia et al., and Maryland Casualty Company, Respondent. State Industrial Board, Appellant.

      (Submitted November 21,1933;
    decided January 16, 1934.)

      John J. Bennett, Jr., Attorney-General (John B. O’Hanlon of counsel), for appellant.
    By filing a claim for compensation the claimant elected to take compensation under the Workmen’s Compensation Law and the subsequently instituted common-law suit was a nullity. (Matter of Breital v. Hinderstein, 236 App. Div. 203; 261 N. Y. 556; Travelers Ins. Co. v. Brass Goods Mfg. Co., 239 N. Y. 273.) The insurance carrier by its conduct has waived any defense of prejudice by reason of the discontinuance of the third party suit subsequent to the expiration of the Statute of Limitations. (Kiernan v. Dutchess County Mut. Ins. Co., 150 N. Y. 190.)

      William S. Sinclair and James J. Mahoney for respondent.
    Claimant is estopped from asserting any claim for compensation against respondent. He, and the employers acting without the consent or knowledge of the respondent, gave away all its rights against the wrongdoer. (Travelers Ins. Co. v. Brass Goods Mfg. Co., 239 N. Y. 273.)
   Hubbs, J,

Claimant was injured on April 13, 1927. He was then nineteen years of age. The next day he filed a claim for compensation with the Department of Labor. On July 28, 1927, he filed an election to sue a third party. Under section 49 of the Civil Practice Act the Statute of Limitations required the bringing of the action before April 13, 1930. The day before, or on April 12, 1930, plaintiff’s attorney in the third party action, notified the Bureau of Workmen’s Compensation that the third party action had been discontinued and that an order would be entered to that effect.

On May 10, 1930, the attorneys for the parties to the third party action signed a stipulation discontinuing that action. On May 15, 1930, claimant, the plaintiff in the third party action, executed an affidavit consenting to such discontinuance, but a court order based on the stipulation and affidavit was not signed by a justice of the Supreme Court in which the action was pending until October 15th. Before the stipulation of discontinuance was signed, plaintiff had become of age.

Before September 29, 1930, the date when a hearing was held by the referee, by the stipulation and consent, the third party action had been discontinued as between the parties. The formality of having an order signed and entered had not been complied with, but that was not necessary to give effect to the stipulation as between the parties. On the date of the hearing the time within which a third party action could be commenced had expired. At the hearing it was stated that the third party action had been discontinued, which was true as between the parties, although an order had not been signed and entered. The counsel for the carrier then stated that the carrier was contesting the claim on the ground that the accident did not arise out of or in the course of employment.” The hearing then proceeded. Claimant was sworn as a witness and was cross-examined by the attorney for the carrier, who required the claimant to submit to a medical examination. The referee made an award, and thereafter the carrier sent the claimant a check for the same. Later it was discovered that the order for the discontinuance of the third party action had not been entered and the carrier stopped payment on the check.

It then moved to dismiss the proceeding on the ground that it had been prejudiced by the dismissal of the third party action without its consent as the time to commence a new action had expired and it had lost its right to subrogation. (Workmen’s Comp. Law [Cons. Laws, ch. 67], § 29, as amd. by Laws of 1924, ch. 499; Matter of McKee v. White, 218 App. Div. 300; affd., 244 N. Y. 610.) Its motion was denied and the award affirmed. The Appellate Division reversed the award against the carrier upon the ground that it had been prejudiced by the conduct of the claimant.

The carrier’s attorney, with knowledge that the third party action had been discontinued as between the parties, and that the time to commence a new action had expired, elected to defend upon the express ground that the accident did not happen ■ in the course of claimant’s employment. He participated in the hearing and cross-examined the claimant and caused him to submit to a physical examination by a doctor. Thereafter, the carrier sent a check to the claimant for the amount of the award, but stopped payment on the check when it ascertained that an order of discontinuance had not been entered. It also sent notice to the Compensation Bureau that the claim had been paid.

It seems that there was a clear question of fact as to whether the carrier, with full knowledge of the defense on which it now seeks to rely, elected to proceed with the hearing upon an entirely different defense and whether, with knowledge of that known defense, it elected to waive it and put the claimant to the trouble and expense of going on with the hearing and undergoing a physical examination by a physician. The carrier could not with knowledge of one defense resist the claim upon another ground and upon failing to succeed upon that ground, avail itself of the defense which it knew about but failed to urge upon the hearing. ’

Under that condition of the record, the Board had before it evidence upon which it could legally determine the claim in favor of the claimant and its determination was binding upon the Appellate Division and this court.

A defendant, as a general rule, who has knowledge of a defense which he fails to plead cannot avail himself of it upon the trial. (Taylor v. Spader, 48 N. Y. 664.)

One who, with knowledge of the facts, has a full defense may waive that defense by causing the other party to incur trouble and expense. (Roby v. American Central Ins. Co., 120 N. Y. 510.)

It is urged that the attorney for the carrier at the time he furnished the evidence of waiver, did not know that the third party action had not been discontinued. He knew that a stipulation of discontinuance had been entered into and he knew that the Statute of Limitations had run. The fact that the formal order had not been signed and entered is immaterial. The stipulation of discontinuance was good between the parties and could be enforced as a contract. (Cole v. Stearns, 23 App. Div. 446; affd., 162 N. Y. 637.)

The time to commence a new action had expired. The carrier’s right to subrogation was lost. (O’Brien v. Lodi, 246 N. Y. 46.) (Cf. Matter of Breital v. Hinderstein, 236 App. Div. 203.)

The attorney for the carrier knew that and with knowledge took his position. The fact that the order had not been signed and entered did not alter the situation or prejudice the carrier. The fact that the time within which to commence a new action had expired was the fact which prejudiced the carrier. ' The attorney for the carrier must have believed from the statement made that the right to subrogation had been lost. It was with that knowledge that he proceeded with the hearing.

Matter of McKee v. White (supra) is not applicable. No question of waiver or election was involved.

The Board passed upon a question of fact and its decision is binding upon us.

The order of the Appellate Division as to the carrier should be reversed, and the award of the State Industrial Board reinstated, with costs in this court and in the Appellate Division.

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien and Crouch, JJ., concur.

Ordered accordingly.


author: Per Curiam.

text:
    William F. Avey, Respondent, v. Town of Brant, Appellant.
    (Argued January 8,1934;
    decided January 16, 1934.)

      Clark H. Hammond and Robert J. Schutrum for appellant.
    The complaint does not state a cause of action. (Tripler v. Mayor, 125 N. Y. 617; Wood v. Amory, 105 N. Y. 278; Hurlburt v. Durant, 88 N. Y. 121; Pierce v. Brown, 7 Wall. 205; Dunham v. Griswold, 100 N. Y. 224; Strong v. Grannis, 26 Barb. 122; Foshay v. Ferguson, 5 Hill, 154; Knapp v. Hyde, 60 Barb. 80; Slayton Realty Corp. v. Rhodes, 200 App. Div. 108; 234 N. Y. 515; Orinoco Realty Co. v. Bandler, 233 N. Y. 24; McPherson v. Cox, 86 N. Y. 472; Sprung v. Zalowitz, 232 App. Div. 471; Heller & Son, Inc., v. Lassner Co., 214 App. Div. 315; Levy Leasing Co. v. Siegel, 230 N. Y. 634; Hartsvill Oil Mill v. United States, 271 U. S. 43.) No actual facts of duress are alleged to support a cause of action. (Kam

      enitsky v. Corcoran, 177 App. Div. 605; Crossways Apartments Corp. v. Amante, 213 App. Div. 430; City of New York v. Fox, 232 N. Y. 167; Boyden v. United States, 13 Wall. 17; Muzzy v. Shattuck, 1 Den. 233; Upshaw v. Mutual Loan Assn., 29 Misc. Rep. 143; Quincy v. White, 63 N. Y. 370.)

      Elijah W. Holt for respondent.
    The cause of action is for the recovery of plaintiff’s moneys, extorted from him wrongfully, received and retained by defendant without right thereto, and which defendant refuses to repay after proper demand. All allegations essential to sustain such cause are alleged in the complaint, and such cause justifies the relief demanded. (Augustine v. Town of Brant, 249 N. Y. 198; Deshong v. City of New York, 176 N. Y. 475; Freeman v. Grant, 132 N. Y. 22; Knee v. Waist Co., 153 N. Y. Supp. 56; Haviland v. Willets, 141 N. Y. 35.)
   Per Curiam.

Payments coerced by duress may be recovered back. “ The coercion, however, must be illegal, unjust or oppressive.” (Deshong v. City of New York, 176 N. Y. 475, 479.) The complaint alleges no facts showing that it was illegal, unjust dr oppressive for. the town to attempt to collect moneys apparently due to it from the Supervisor. The words “ wrongfully claimed ” state a mere conclusion and do not imply that defendant knew that plaintiff had expended the money for authorized town purposes. All that is alleged is consistent with threats to enforce what the town believed to be its legal rights, which do not constitute duress. (Benson v. Monroe, 61 Mass. 125, 131.)

The order of the Appellate Division and that of the Special Term should be reversed, the question certified answered in the negative and the- complaint dismissed, with costs in all courts. The plaintiff may have thirty days in which to serve an amended complaint on payment of costs.

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur; Crouch, J., dissents.

Ordered accordingly.


author: Pound, Ch. J. Lehman, J.

text:
    Francis X. McQuade, Respondent, v. Charles A. Stoneham et al., Appellants.

      (Argued December 4, 1933;
    decided January 18, 1934.)

      Nathan L. Miller, Harold H. Corbin, Edward J. Bennett and Leo J. Bondy for appellants.
    The contract is void as against public policy in so far as it imposes any obligation on the appellants to elect or continue, or to urge the continuance of, the respondent in office as treasurer. (Manson v. Curtis, 223 N. Y. 313; Fells v. Katz, 256 N. Y. 67; Caskie v. International Ry. Co., 261 N. Y. 47; Fennessy v. Ross, 5 App. Div. 342; Fabre v. O’Donohue, 185 App. Div. 779; Odell v. Wells, 183 App. Div. 242; Flaherty v. Carey, 62 App. Div. 116; Abbott v. Harbeson Textile Co., 162 App. Div. 405; West v. Camden, 135 U. S. 507; Guernsey v. Cook, 120 Mass. 501; Jackson v. Hooper, 76 N. J. Eq. 592; Teich v. Kaufman, 174 Ill. App. 306; Snow v. Church,
      13 App. Div. 108; Leland v. Ford, 245 Mich. 599; Van Slyke v. Andrews, 178 N. W. Rep. 959; Gilchrist v. Hatch, 100 N. E. Rep. 473; 106 N. E. Rep. 694; Hellier v. Achorn, 151 N. E. Rep. 305; Seitz v. Michel, 181 N. W. Rep. 102.) Plaintiff, at the time the agreement sued on was entered into, and until a time subsequent to the commencement of the action, was a City Magistrate which prohibits a recovery. (Inferior Criminal Courts Act, § 102 [Laws of 1915, ch. 531].)

      Joseph M. Proskauer, Isaac N. Jacobson and J. Alvin Van Bergh for respondent.
    The contract is not against public policy. (Manson v. Curtis, 223 N. Y. 313; Fells v. Katz, 256 N. Y. 67; Barnes v. Brown, 80 N. Y. 527.) Agreements among the majority stockholders, in so far as they provide merely for election of particular persons to office in the corporation, are valid though not binding upon the directors. (Lorillard v. Clyde, 86 N. Y. 384; 99 N. Y. 196; Bonta v. Gridley, 185 N. Y. 614; Drucklieb v. Harris, 209 N. Y. 211; Bliss v. Matteson, 45 N. Y. 22; Kreitner v. Burgweger, 174 App. Div. 48; Fells v. Katz, 256 N. Y. 67; Faulds v. Yates, 57 Ill. 416; Kantzler v. Bensinger, 214 Ill. 589; Venner v. Chicago City Ry. Co., 258 Ill. 523; Thompson v. Thompson Carnation Co., 279 Ill. 54; Smith v. S. F. & N. P. Ry. Co., 115 Cal. 584; Winsor v. Commonwealth Coal Co., 63 Wash. 62; Brightman v. Bates, 175 Mass. 105; Weber v. Della Mountain Min. Co., 14 Ida. 404; Robertson v. First Nat. Bank, 35 Ida. 363.) Section 102 (now section 161) of the Inferior Criminal Courts Act does not prohibit recovery. (Matter of Deuel, 127 App. Div. 640; Matter of Levy, 198 App. Div. 326; Dunham v. Hastings Pavement Co., 56 App. Div. 244; Russell Co. v. Utica Co., 195 N. Y. 54.)
   Pound, Ch. J.

The action is brought to compel specific performance of an agreement between the parties, entered into to secure the control of National Exhibition Company, also called the Baseball Club (New York Nationals or Giants ”)■ This was one of Stoneham’s enterprises which used the New York polo grounds for its home games. McGraw was manager of the Giants. McQuade was at the time the contract was entered into a City Magistrate. He resigned December 8, 1930.

Defendant Stoneham became the owner of 1,306 shares, or a majority of the stock of National Exhibition Company. Plaintiff and defendant McGraw each purchased seventy shares of his stock. Plaintiff paid Stoneham $50,338.10 for the stock he purchased. As a part of the transaction the agreement in question was entered into. It was dated May 21, 1919. Some of its pertinent provisions are

“ VIII. The parties hereto will use their best endeavors for the purpose of continuing as directors of said Company and as officers thereof the following:

Directors:
Charles A. Stoneham,
John J. McGraw,
Francis X. McQuade,
with the right to the party of the first part [Stoneham] to name all additional directors as he sees fit:
Officers:
Charles A. Stoneham, President,
John J. McGraw, Vice-President,
Francis X. McQuade, Treasurer.
“ IX. No salaries are to be paid to any of the above officers or directors, except as follows:
President............................ $45,000
Vice-President........................ 7,500
Treasurer............................ 7,500

“ X. There shall be no change in said salaries, no change in the amount of capital, or the number of shares, no change or amendment of the by-laws of the corporation or any matters regarding the policy of the business of the corporation or any matters which may in anywise affect, endanger or interfere with the rights of minority stockholders, excepting upon the mutual and unanimous consent of all of the parties hereto. ^ * *

XIV. This agreement shall continue and remain in force so long as the parties or any of them or the representative of any, own the stock referred to in this agreement, to wit, the party of the first part, 1,166 shares, the party of the second part 70 shares and the party of the third part 70 shares, except as may otherwise appear by this agreement * *

In pursuance of this contract Stoneham became president and McGraw vice-president of the corporation. McQuade became treasurer. In June, 1925, his salary was increased to $10,000 a year. He continued to act until May 2, 1928, when Leo J. Bondy was elected to succeed him. The board of directors consisted of seven men. The four outside of the parties hereto were selected by Stoneham and he had complete control over them. At the meeting of May 2, 1928, Stoneham and McGraw refrained from voting, McQuade voted for himself and. the other four voted for Bondy. Defendants did not keep their agreement with McQuade to use their best efforts to continue him as treasurer. On the contrary, he was dropped with their entire acquiescence. At the next stockholders’ meeting he was dropped as a director although they might have elected him.

The courts below have refused to order the reinstatement of McQuade, but have given him damages for wrongful discharge, with a right to sue for future damages.

The cause for dropping McQuade was due to the falling out of friends. McQuade and Stoneham had disagreed. The trial court has found in substance that their numerous quarrels and disputes did not affect the orderly and efficient administration of the business of the corporation; that plaintiff was removed because he had antagonized the dominant Stoneham by persisting in challenging his power over the corporate treasury and for no misconduct on his part. The court also finds that plaintiff was removed by Stoneham for protecting the corporation and its minority stockholders. We will assume that Stoneham put him out when he might have retained him, merely in order to get rid of him.

Defendants say that the contract in suit was void because the directors held their office charged with the duty to act for the corporation according to their best judgment and that any contract which compels a director to vote to keep any particular person in office and at a stated salary is illegal. Directors are the exclusive executive representatives of the corporation, charged with administration of its internal affairs and the management and use of its assets. They manage the business of the corporation. (Gen. Corp. Law; Cons. Laws, ch. 23, § 27.) “ An agreement to continue a man as president is dependent upon his continued loyalty to the interests of the corporation.” (Fells v. Katz, 256 N. Y. 67, 72.) So much is undisputed.

Plaintiff contends that the converse of this proposition is true and that an agreement among directors to continue a man as an officer of a corporation is not to be broken so long as such officer is loyal to the interests of the corporation and that, as plaintiff has been found loyal to the corporation, the agreement of defendants is enforceable.

Although it has been held that an agreement among stockholders whereby it is attempted to divest the directors of their power to discharge an unfaithful employee of the corporation is illegal as against public policy (Fells v. Katz, supra), it must be equally true that the stockholders may not, by agreement among themselves, control the directors in the exercise of the judgment vested in them by virtue of their office to elect officers and fix salaries. Their motives may not be questioned so long as their acts are legal. The bad faith or the improper motives of the parties does not change the rule. (Manson v. Curtis, 223 N. Y. 313, 324.) Directors may not by agreements entered into as stockholders abrogate their independent judgment. (Creed v. Copps, 103 Vt. 164; 71 A. L. R., Annotated, p. 1287.)

Stockholders may, of course, combine to elect directors. That rule is well settled. As Holmes, Ch. J., pointedly said (Brightman v. Bates, 175 Mass. 105, 111): If stockholders want to make their power felt, they must unite. There is no reason why a majority should not agree to keep together.” The power to unite is, however, limited to the election of directors and is not extended to contracts whereby limitations are placed on the power of directors to manage the business of the corporation by the selection of agents at defined salaries.

The minority shareholders whose interests McQuade says he has been punished for protecting, are not, aside from himself, complaining about his discharge. He is not acting for the corporation or for them in this action. It is impossible to see how the corporation has been injured by the substitution of Bondy as treasurer in place of McQuade. As McQuade represents himself in this action and seeks redress for his own wrongs, we prefer to listen to [the corporation and the minority stockholders] before any decision as to their wrongs.” (Faulds v. Yates, 57 Ill. 416, 421.)

It is urged that we should pay heed to the morals and manners of the market place to sustain this agreement and that we should hold that its violation gives rise to a cause of action for damages rather than base our decision on any outworn notions of public policy. Public policy is a dangerous guide in determining the validity of a contract and courts should not interfere lightly with the freedom of competent parties to make their own contracts. We do not close our eyes to the fact that such agreements, tacitly or openly arrived at, are not uncommon, especially in close corporations where the stockholders are doing business for convenience under a corporate organization. We know that majority stockholders, united in voting trusts, effectively manage the business of a corporation by choosing trustworthy directors to reflect their policies in the corporate management. Nor are we unmindful that McQuade has, so the court has found, been shabbily treated as a purchaser of stock from Stoneham. We have said: “A trustee is held to something stricter than the morals of the market place ” (Meinhard v. Salmon, 249 N. Y. 458, 464), but Stoneham and McGraw were not trustees for McQuade as an individual. Their duty was to the corporation and its stockholders, to be exercised according to their unrestricted lawful judgment. They were under no legal obligation to deal righteously with McQuade if it was against public policy to do so.

The courts do not enforce mere moral obligations, nor legal ones either, unless someone seeks to establish rights which may be waived by custom and for convenience. We are constrained by authority to hold that a contract is illegal and void so far as it precludes the board of directors, at the risk of incurring legal liability, from changing officers, salaries or policies or retaining individuals in office, except by consent of the contracting parties. On the whole, such a holding is probably preferable to one which would open the courts to pass on the motives of directors in the lawful exercise of their trust.

A further reason for reversal exists. At the time the contract was made the plaintiff was a City Magistrate. He complains that the defendant Stoneham breached the contract by failure “ to use his best endeavors ” for the purpose of continuing him as a director and treasurer of the corporation which Stoneham controlled. The plaintiff resigned as City Magistrate after the commencement of this action. He has recovered a judgment for “ the amount of the salary of the treasurer of the National Exhibition Company at the rate of $10,000 per year from the second day of May, 1928, to the date of the entry of this decree.”

The Inferior Criminal Courts Act (Laws of 1910, ch. 659, as amd.) provides that no “ city magistrate shall engage in any other business, profession or hold any other public office or shall serve as the representative of any political party for any assembly, aldermanic, senatorial or congressional district in the executive committee or other governing body of any political party organization or political party association. No city magistrate shall engage in any other business or profession or act as referee, or receiver, but each of said justices and magistrates shall devote his whole time and capacity, so far as the public interest demands, to the duties of his office. * * * ” (§ 161, Laws 1933, ch. 746, formerly § 102 as amended, Laws 1915, ch. 531). The contract contemplated that the plaintiff should hold an executive office at a stipulated and substantial salary. The by-laws of the corporation impose upon the treasurer regular duties as the fiscal agent of the corporation and provide in addition that “ he shall perform such other duties, as shall be, from time to time assigned to him by the board of directors or the president, or as may be required by these by-laws.” If the performance of regular duties in the management of a business corporation for a substantial remuneration does not constitute “ engaging in a business ” then these words are futile and meaningless. The statute requires that a magistrate shall devote his whole time and capacity, so far as the public interest demands, to the duties of his office ” but it does not, in all cases, leave to the magistrate or to any other court or judge the delicate question of whether the encroachment of other activities upon the time and capacity of the magistrate interferes with the performance of his duty to the public. The statute provides in clear, even if redundant, language, that a magistrate must in the performance of his public duties be free from the rival claims of a business or profession upon his time and capacity. He cannot serve both masters for hire. Though the performance of the duties of public office or the active practice of a business may leave some leisure for outside activities, the magistrate is prohibited from attempting to make the management of a business an outside activity. Occasional transaction of business, or voluntary assistance rendered in the management of a business, may not violate the statutory command that a magistrate shall devote to the duties of bis office his whole time and capacity, so far as the public interest demands;” the assumption for a substantial salary of important executive office of a corporation with prescribed regular duties in the management of the business does violate the express provision that a magistrate shall not engage in any business.

It is said by counsel that the validity of the agreement rests upon its making, not upon what the plaintiff did afterwards. We are told that the parties did not limit the contract to the time when the plaintiff would also be City Magistrate. He might have resigned before the next annual election of corporate officers, then there would have been no possible claim that in purpose and result the contract constituted a violation of the statute. He did resign before the time of the trial, perhaps to make legal what was theretofore forbidden. Therefore, we are told that at least at the time of the trial the contract was valid and enforceable.

Until the date when the defendants repudiated the agreement, its performance constituted a violation of the statute. Even though we should assume that the contract was not illegal in purpose at its inception, it created a combination which resulted in a succession of illegal acts. The defendants cannot be held in damages for refusal to continue such a combination. The plaintiff can recover no compensation for loss of opportunity to perform services forbidden by law. The circumstance that at the time of the trial performance of such services was no longer illegal does not change the fact that at the time the defendants repudiated the agreement, its performance would have offended the law. The plaintiff could not be continued as treasurer. The illegality was not temporary and unexpected. It lasted for a period of years. Removal of the legal obstacle to the plaintiff’s continuance in office came too late after his tenure of office was terminated.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts.

Lehman, J.

(concurring). I concur in the decision of the court on the second ground stated in the opinion. I desire to state the reasons why I do not accept the first ground.

The defendant Stoneham owned the majority stock of the corporation and could exercise the control of the corporation which the holder of the majority stock possesses. He could choose the directors of the corporation who in turn would elect the officers and determine the corporate policies. The agreement between the defendant Stoneham, the plaintiff McQuade, and McGraw provided, in effect, that, in consideration of the sale by Stoneham of part of his majority stock, the power of control which Stoneham had previously exercised should be shared with McQuade and McGraw and, specifically, that mutual assurance should be given that 'this power of control would be used in concert to continue each of the three parties to the contract as directors and officers of the corporation at stipulated salaries and to preclude change without common consent in matters regarding the policy of the business of the corporation or any matters which may in any wise affect, endanger or interfere with the rights of minority stockholders.”

We have said: An ordinary agreement, among a minority in number, but a majority in shares, for the purpose of obtaining control of the corporation by the election of particular persons as directors is not illegal.” (Manson v. Curtis, 223 N. Y. 313, 319.) We are agreed that if the contract had provided only for the election of directors it would not have been illegal. Its vice, if any, is inherent in the provisions intended to give assurance that the directors so elected would act according to the prearranged design of the stockholders in apportioning the corporate offices and emoluments of such offices among the majority stockholders.

The corporate charter and statutory provisions fix the manner in which the corporate affairs must be conducted. The majority stockholders do not own the corporation nor have they unhmited power of control. Their corporate powers are conférred by the charter and may be exercised only in the field defined by the charter. They act at stockholders’ meetings in relation to matters which may be decided at such meetings. There, the directors are chosen by the vote of the holders of a majority of the stock, but the stockholders have no power, except as provided by charter or statute, to divest directors of any of their functions or direct them in the exercise of their functions. The directors are constituted managers of the corporate affairs. They determine the corporate policies, they elect the corporate officers. In the functioning of the corporate machinery the power of control of the holders of the majority stock is, as in such matters, exhausted with the election of the directors. When elected the directors must act in behalf of the corporation, not in behalf of any group of stockholders. It would constitute a wrong to the corporation and its minority stockholders if the directors were permitted to transfer their powers and functions to the holders of a majority of the stock or to bind themselves to accept direction from any persons not vested with power of control by law.

There can, I think, be no doubt that shareholders owning a majority of the corporate stock may combine to obtain and exercise any control which a single owner of such stock could exercise. What may lawfully be done by an individual may ordinarily be lawfully done by a combination, but no combination is legal if formed to accomplish an illegal object. No such combination or agreement may contravene any express charter or statutory provision or contemplate any fraud, oppression or wrong against other stockholders or other illegal object.” (Manson v. Curtis, supra.)

In that case we held invalid, on that ground, an agreement for the selection “ of directors who should remain passive or mechanical to the will and word of one of the parties to the agreement. Now it is said that, for the same reason, this agreement must be held unenforceable, though here the agreement contemplated no restriction upon the powers of the board .of directors, and no dictation or interference by stockholders except in so far as concerns the election and remuneration of officers and the adhesion by the corporation to established policies.

It seems difficult to reconcile such a decision with the statements in the opinion in Manson v. Curtis that it is not illegal or against public policy for two or more stockholders owning the majority of the shares of stock to unite upon a course of corporate policy or action, or upon the officers whom they will elect,” and that shareholders have the right to combine their interests and voting powers to secure such control of the corporation and the adoption of and adhesion by it to a specific policy and course of business.” Obviously a combination intended to effect the election of certain officers and to obtain control of the corporation and adhesion by it to a specific policy and course of business can accomplish its ends only to the extent that directors will bow to the will of those who united to elect them. The directors have the power and the duty to act in accordance with their own best judgment so long as they remain directors. The majority stockholders can compel no action by the directors, but at the expiration of the term of office of the directors the stockholders have the power to replace them with others whose actions coincide with the judgment or desires of the holders of a majority of the stock. The theory that directors exercise in all matters an independent judgment in practice often yields to the fact that the choice of directors lies with the majority stockholders and thus gives the stockholders a very effective control of the action by the board of directors. In truth the board of directors may check the arbitrary will of those who would otherwise completely control the corporation, but cannot indefinitely thwart their will.

A contract which destroys this check contravenes express charter or statutory provisions ” and is, therefore, illegal. A contract which merely provides that stockholders shall in combination use their power to achieve a legitimate purpose is not illegal. They may join in the election of directors who, in their opinion, will be in sympathy with the policies of the majority stockholders and who, in the choice of executive officers, will be influenced by the wishes of the majority stockholders. The directors so chosen may not act in disregard of the best interests of the corporation and its minority stockholders, but with that limitation they may and, in practice, usually are swayed by the wishes of the majority. Otherwise there would be no continuity of corporate policy and no continuity in management of corporate affairs.

The contract now under consideration provides, in a narrow field, for corporate action within these limitations. Its purpose and intent is to fix the manner in which control vested in the stockholders shall be exercised. It is not designed to create a control which is itself illegal. True it does contemplate that the parties will, as directors, vote to place each other in specified offices. If this represented a corrupt bargain intended to despoil the corporation, it would be an illegal combination, but there is no evidence or finding that it had such purpose or result. Neither the corporation nor any minority stockholders are complaining and the findings establish that the arrangement resulted in protection which the minority stockholders would not otherwise have had and that it was repudiated by defendant (Stoneham) because such protection proved irksome to him. It does constrain the parties while acting as directors to vote for officers in a predetermined manner, but there is no suggestion that such vote would not accord with their best judgment and be in the interests of the corporation. It is subject to the implied condition that the officers so elected will be loyal to the corporation. (Fells v. Katz, 256 N. Y. 67.) It binds the directors only in a matter where freedom is a fiction rather than a fact. If this contract is unenforceable and contrary to public policy, then every purchase of a substantial block of stock upon the promise of the majority stockholders that the purchaser will be elected a director and officer of the corporation is likewise against public policy.

We have said: The law requires of the majority of the stockholders the utmost good faith in their control and management of the corporation as regards the minority, and in this respect the majority stand in much the same attitude towards the minority that the directors sustain towards all the stockholders.” (Farmers L. & T. Co. v. New York & Northern Ry. Co., 150 N. Y. 410, 430.) The courts should and do enforce the rule of good faith towards all stockholders. No group of stockholders may use their power to wrong others. No director may repudiate his trust to exercise his best judgment. A contract calculated to deprive the corporation and its minority stockholders of statutory safeguards constitutes such a wrong. So, too, does a contract by directors to repudiate their trust. A • contract which merely provides for the election of fit officers and adhesion to particular policy determined in advance constitutes an agreement by which men in combination exercise a power which could be lawfully exercised if lodged in a single man. It is legal if designed to protect legitimate interests without wrong to others. PubEc poEcy should be governed by facts, not abstractions. The contract is, in my opinion, vaEd. It is unenforceable only because it resulted in an employment which was itself illegal.

Crane, Kellogg, O’Brien and Hubbs, JJ., concur with Pound, Ch. J.; Lehman, J., concurs in result in opinion in which Crouch, J., concurs.

Judgments reversed, etc.


author: Lehman, J.

text:
    In the Matter of the Claim of Margaret Ruppert against Plattdeutsche Volksfest Verein et al., Respondents. State Industrial Board, Appellant.
    (Argued November 21, 1933;
    decided January 18, 1934.)

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum and Henry Epstein of counsel), for appellant.
    The decedent’s death arose out of and in the course of the employment. (Matter of Wickham v. Glenside Woolen Mills, 252 N. Y. 11; Matter of Babington v. Yellow Taxi Corp., 250 N. Y. 14; Matter of Corrina v. DeBarbieri, 247 N. Y. 357; Matter of Miles v. Gibbs & Hill, Inc., 250 N. Y. 590; Matter of Martucci v. Hills Bros. Co., 171 App. Div. 370; Matter of Pendl v. Haenel, 229 App. Div. 52; 234 App. Div. 643; Matter of Field v. Charmette, 245 N. Y. 139; Matter of Crippen v. Press Co., 254 N. Y. 535.) The average weekly wages were properly determined by the State Industrial Board. (Mackin v. Press Pub. Co., 209 App. Div. 252; Kapler v. Camp Taghconic, 222 App. Div. 785.) Claimant was the legal widow of the decedent at the time of his death. (Matter of Crandall v. Davison, 196 N. Y. 127; Bamberger v. Bamberger, 217 N. Y. Supp. 675.)

      William Warren Dimmick for respondents.
    The alleged accidental injuries and the death of the decedent did not arise out of and in the course of his employment. (Matter of Shearer v. Niagara Falls Power Co., 242 N. Y. 70; 245 N. Y. 199; Matter of Stillwagon v. Callan Bros., Inc., 183 App. Div. 141; 224 N. Y. 714; Raven Halls, Inc., v. U. S. Fidelity & Guaranty Co., 142 Misc. Rep. 454; Matter of Magna v. Hegeman Harris Co., 258 N. Y. 82; Matter of Cunningham v. Hunterspoint Dumber & Supply Co., 256 N. Y. 574; Stimal v. Jewett & Co., 198 App. Div. 427; 205 App. Div. 170; Schoenherr v. Hartfield, 172 App. Div. 294; Hume v. Elder & Wells, 178 App. Div. 652; Reilly v. Connable, 214 N. Y. 586; Fallon v. Swackhamer, 226 N. Y. 444; Hartlett v. Gryzmish, 218 Mass. 288.) The average weekly wage of deceased as found by the State Industrial Board is excessive, erroneous and not within the meaning of the Workmen’s Compensation Law. (Matter of Littler v. Fuller, 223 N. Y. 369; Matter of Kerchik v. LaFontaine Novelty Co., 225 App. Div. 437; Szmuda v. Kent Bag Co., 214 App. Div. 341; Lerner v. Jakwall Embroidery Co., 203 App. Div. 381; Foyt v. Daigler, 236 App. Div. 420; Crueber v. Kramer Amusement Corp., 207 App. Div. 564; McDonald v. Burden Iron Co., 206 App. Div. 571; Testo v. Burden Iron Co., 211 App. Div. 219; Kittle v. Town of Kinderhook, 214 App. Div. 345; Matter of DeVerso v. Parsons, 221 App. Div. 622.) The finding of the State Industrial Board that the widow did not receive a final decree of divorce from the deceased and that her marriage was not legally terminated so as to bar her right to compensation, is not decisive, constitutes legal error, and is based upon speculation, guess and conjecture. (Matter of Hanson v. Turner Construction Co., 224 N, Y. 331; Matter of Belcher v. Carthage Machine Co., 224 N. Y. 326; Matter of Albrecht, 194 N. Y. Supp. 432.)
   Lehman, J.

The decedent was employed as a special policeman at a picnic grounds on Long Island. Some drunk and disorderly patrons caused a disturbance there and after a scuffle left in an automobile. The decedent pursued them in a taxicab and was killed while attempting to force their car to halt.

The decedent’s employment was for the purpose of protecting the picnic grounds and those who used the grounds. Arrest of disturbers of the peace was within the general scope of the decedent’s employment. The evidence is sufficient to sustain an inference that the pursuit by the decedent was for the purpose of effecting an arrest in an attempt to further the interests of the employer, The decedent’s action may have been ill-advised. It did not constitute an abandonment or interruption of the employment. Death arose out of the employment and in the course of the employment. The claimant was married to the decedent. She instituted divorce proceedings, but it does not conclusively appear that these proceedings were carried to a successful conclusion, The Appellate Division erred in dismissing her claim.

The award was, however, for an amount not authorized by the Workmen’s Compensation Law (Cons. Laws, ch. 67). The decedent was employed as a special policeman at the picnic grounds during the warm months of the year and usually only on Sundays. There is also a suggestion that in winter he was occasionally employed by the same employer in a dance hall and ballroom. He also, it is said, conducted a “ fish business.” His employment as special policeman was occasional and seasonal and at a daily wage of eight dollars. Since neither subdivision 1 nor 2 of section 14 of the Workmen’s Compensation Law can reasonably be applied in such case the Industrial Board attempted to apply subdivision 3 of that section. Upon testimony that special policemen working steadily in that neighborhood earned $35 per week, the decedent’s earning capacity was fixed at that amount. The difficulty is that the decedent’s employment was not similar to that of the usual special policeman. The decedent’s employment as a special policeman was not during usual working time, but was occasional and seasonal. His earning capacity in that employment must be measured by the wages of those similarly employed. A special policeman working regularly during the usual working hours of each working day to the exclusion of other regular occupation is not for such purpose in a similar employment.

The order of the Appellate Division and the award of the State Industrial Board should be reversed and the claim remitted to the State Industrial Board to determine the wage rate in accordance with this opinion and to take such further testimony in regard to other controverted matter as they may be advised, with one bill of costs to appellant against the employer and insurance carrier.

Pound, Ch. J., Crane, Kellogg, O’Brien, Hubbs and Crouch, JJ,, concur.

Ordered accordingly.


author: Pound, Ch. J. Crane, J.

text:
    City Bank Farmers Trust Company, Individually and as Trustee, Plaintiff, v. Anna F. Ernst et al., Appellants, and City Bank Farmers Trust Company, as Executor of Wood Fosdick, Deceased, et al., Respondents, Impleaded with Another.
    (Argued January 10, 1934;
    decided January 23, 1934.)

      Windsor B. Putnam and Fitzhugh McGrew for appellants.
    The distribution of the common stock of Electric Bond and Share Securities Corporation was not a stock dividend within the donor’s meaning. (United States Trust Co. v. Heye, 224 N. Y. 242; Matter of Lavanburg, 130 Misc. Rep. 551; Morris v. Sickly, 133 N. Y. 456; Matter of Tamargo, 220 N. Y. 225.) The term “ stock dividend ” means a dividend capitalizing surplus, paid in stock of the declaring corporation, and not a dividend distributing surplus that happens to be paid in stock of a subsidiary or other corporation. (Matter of Rogers, 22 App. Div. 428; 161 N. Y. 108; Liebman v. Auto Strop Co., 241 N. Y. 427; Equitable Trust Co. v. Prentice, 250 N. Y. 1; Gray v. Hemenway, 212 Mass. 239; Union & New Haven Trust Co. v. Taintor, 85 Conn. 452; Union & New Haven Trust Co. v. Sherwood, 110 Conn. 150; Lloyd v. Lloyd, 341 Ill. 461; Smith v. Cotting, 231 Mass. 42; Old Colony Trust Co. v. Jameson, 256 Mass. 179; Creed v. McAleer, 275 Mass. 353; Mercer v. Buchanan, 132 Fed. Rep. 501; Krug v. Mercantile Trust & Deposit Co., 133 Md. 110; Towne v. Eisner, 245 U. S. 418; Peabody v. Eisner, 247 U. S. 347; Eisner v. Macomber, 252 U. S. 189; United States v. Phellis, 257 U. S. 156.) The donor’s use of the term “ stock dividends ” was unambiguous. (New York Life Ins. & Trust Co. v. Hoyt, 161 N. Y. 1; Matter of Tamargo, 220 N. Y. 225.) The regular quarterly dividends of the new Electric Bond and Share Company are not stock dividends within the meaning of the trust deed. (People ex rel. Clark v. Gilchrist, 243 N. Y. 173; Matter of Hagen, 262 N. Y. 301; Matter of Villard, 147 Misc. Rep. 472; Spencer v. Spencer, 219 N. Y. 459; Matter of Buechner, 226 N. Y. 440.)

      E. J. Dimock and Lewis L. Delafield for respondents.
    From the language of the deed of trust and from all of the circumstances surrounding the donor at the time of its execution, it is clear that he intended that a dividend such as that in Electric Bond and Share Securities Corporation stock should be delivered over to the donor or his executor. Effect should be given to his intention. (Pratt v. Ladd, 253 N. Y. 213; Equitable Trust Co. v. Prentice, 250 N. Y. 1; Matter of Megrue, 224 N. Y. 284.)
   Pound, Ch. J.

This action was brought by the plaintiff as trustee for a judicial settlement of its accounts and for a construction of the deed of trust. The deed of trust, dated May 4, 1918, made provision for the donor’s nieces, Anna Fosdick Ernst and Frances L’Hommedieu Jones. It recites that the donor has delivered to the trustee six hundred shares of stock of the General Electric Company in trust to divide the same into two funds of three hundred shares each, to pay the net income of each to the defendant Anna Fosdick Ernst and the defendant Frances L’Hommedieu Jones, respectively, and upon their respective deaths, to pay the net income to the defendant Katherine Davies Ernst for her life. The deed of trust contains the following clause which is the subject of this appeal:

“ Anything hereinabove contained to the contrary notwithstanding, said trustee shall transfer to said Donor, or if he is dead, to his executor or administrator, free of all trusts hereby created, any and all stock dividends which it may from time to time receive on any stocks held by it hereunder.”

In January, 1925, the General Electric Company distributed stock of Electric Bond and Share Securities Corporation to its stockholders share for share. This stock has been held undistributed by the trustee. The present Electric Bond and Share Company, the successor of the company whose stock was distributed, now pays its regular dividend in stock. The ownership of both groups of stock is in question.

The questions presented are as follows: An affirmance of the judgment below involves but one question. It concerns the ascertainment of the intent of the donor, Wood Fosdick, when he provided in the deed of trust that the trustee should transfer to the donor or his executor “ any and all stock dividends.” The question is whether the Appellate Division was right in holding that a dividend paid by the General Electric Company in stock of its subsidiary, the Electric Bond and Share Securities Corporation, was within the donor’s intention when he referred to “ stock dividends ” in this clause. Wood Fosdick has died since the establishment of the trust and the American Museum of Natural History, as residuary legatee under his last will and testament, stands in his shoes.

Another question arises if this court disagrees with the Appellate Division and holds that the distribution of stock of the Electric Bond and Share Securities Corporation was not a 11 stock dividend ” and hence did not go to the donor or his executor. The second question, like the first, also involves the ascertainment of the intent of the donor when he speaks of “ stock dividends ” and concerns a series of dividends on new Electric Bond and Share Company stock paid quarterly in its own stock at the rate of one and one-half per cent.

The Appellate Division, beside reversing the Special Term on the first question and holding that the dividend paid in stock other than that of the paying corporation constituted a “ stock dividend ” within the meaning of the donor when he provided that the trustee should transfer to the donor “ any and all stock dividends,” also expressed its opinion on the second question, saying that the dividends paid in the stock of the paying corporation were also within the donor’s meaning when he provided that stock dividends ” should belong to him.

The usual meaning of “ stock dividend ” is any dividend which shall be payable in the stock of the corporation * * * declaring or authorizing such dividend.” (L. 1926, ch. 843 [Personal Property Law, § 17-a; Cons. Laws, ch. 41]; Equitable Trust Co. v. Prentice, 250 N. Y. 1, 12; Gray v. Hemenway, 212 Mass. 239, 241, 242; Peabody v. Eisner, 247 U. S. 347, 350.) The converse of the proposition is equally true. A dividend of the stock of other corporations is not a stock dividend, but is the same as a dividend of cash. (Matter of Rogers, 22 App. Div. 428; affd., 161 N. Y. 108.)

Plainly, the distribution of the stock of the Securities Corporation to the stockholders of General Electric was not a stock dividend. In issuing a stock dividend the corporation does not divide or part with any of its property or assets, but merely changes the evidence of ownership which already exists. Here, General Electric Company actually parted with its holdings in Electric Bond and Share Company, and in consideration of receiving these holdings the Securities Corporation distributed its stock to the stockholders of General Electric. If General Electric had sold its holdings in Electric Bond and Share Company for cash and divided the cash among its stockholders, there could be no question, in the light of the decision in Gibbons v. Mahon (136 U. S. 549), that the dividend thus coming into the hands of the trustee would have been a cash dividend.

The intention of the settlor is to be found in the words of art used by him in expressing such intention. Obviously, his intent was to prevent the undue enrichment of the life beneficiaries and to preserve the ownership of the stock of the General Electric Company in himself. The language is unambiguous and its construction is for the court. (Brainard v. N. Y. C. R. R. Co., 242 N. Y. 125, 133.)

It follows that certain shares of the common stock of the new Electric Bond and Share Company, derived from the original Securities distribution will become a part of the trust principal. The new company pays its quarterly dividends in stock only. These dividends are dividends in stock of the declaring company. They are not stock dividends ” of the General Electric Company. The life beneficiaries are entitled to share in such income. (Matter of Jackson, 258 N. Y. 281.) It is not to be assumed that a provision for income would be rendered nugatory by a change in the form of the income. No question of apportioning extraordinary dividends arises. The dividends should be allocated between principal and income according to the stipulation herein.

The judgment of the Appellate Division should be reversed, the interlocutory judgment of the Special Term affirmed, and the matter remitted to the Special Term to modify its final judgment according to this opinion, with costs in this court and in the Appellate Division.

Crane, J.

(dissenting). The law as stated by the chief judge is correct, but I do not think the settlor used the words stock dividends ” as words of art or in their technical legal sense. He intended by the words “ any and all stock dividends ” to mean any kind ” of dividends. If this were not so, the use of any ” was superfluous as the word “ all ” would have been sufficient.

I, therefore, do not agree with the conclusion reached.

Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur with Pound, Ch. J.; Crane, J., dissents in memorandum.

Judgment accordingly.


author: Crane, J.

text:
    Hope Herrmann, Respondent, v. Kathryne Jorgenson et al., Appellants, and Barbara Jorgenson, Respondent.

      (Argued January 10, 1934;
    decided February 27, 1934.)

      Sherman Baldwin and Ernest D. North for appellants.
    The trial court should have held as a matter of law that the deed was delivered. (Wallace v. Berdell, 97 N. Y. 13; Hutchins v. Hutchins, 98 N. Y. 56; Lawton v. Sager, 11 Barb. 349; Worrall v. Munn, 5 N. Y. 229; Braman v. Bingham, 26 N. Y. 483; People v. Bostwick, 32 N. Y. 445; Diefendorf v. Diefendorf, 56 Hun, 639; 132 N. Y. 100; Hamlin v. Hamlin, 192 N. Y. 164; Blewitt v. Boorum, 142 N. Y. 357; Williams v. Williams, 142 N. Y. 156; Burden v. Burden, 10 App. Div. 340; Moore v. Winans, 23 App. Div. 308; 160 N. Y. 703; Stiebel v. Grosberg, 202 N. Y. 266.) The exclusion of the testimony of the respective husbands of defendants-appellants as to statements of the deceased constitutes reversible error. (Albany County Sav. Bank v. McCarty, 149 N. Y. 71; Matter of Clark, 40 Hun, 233; Cooper v. Monroe, 77 Hun, 1; Humphrey v. Sweeting, 92 Hun, 447; Spindler v. Gibson, 75 App. Div. 444; Hungerford v. Snow, 129 App. Div. 816; Whitman v. Foley, 125 N. Y. 651; Laka v. Krystek, 261 N. Y. 126.)

      Thomas L. Zimmerman, Jr., and Frank H. Crabtree for plaintiff-respondent.
    The trial court properly found that there was no delivery of the deed. (Saltzsieder v. Saltzsider, 219 N. Y. 523; Ten Eyck v. Whitbeck, 156 N. Y. 341; Gridley v. Home Ins. Co., 226 App. Div. 596; 254 N. Y. 635; Burnham v. Burnham, 58 Misc. Rep. 385; 132 App. Div. 937; 199 N. Y. 592; Rochester Sav. Bank v. Bailey, 34 Misc. Rep. 247; 70 App. Div. 622; Young v. Young, 80 N. Y. 422; Matter of Van Alstyne, 207 N. Y. 298; Vincent v. Rix, 248 N. Y. 76; Vincent v. Putnam, 248 N. Y. 76; Newcomb v. Lush, 84 Hun, 254; 155 N. Y. 687.) The conversations claimed to have been had with the decedent by the respective husbands of defendants-appellants were properly excluded but their admission could not have affected the result. (Hines v. Hines, 199 App. Div. 688; Matter of Eno, 196 App. Div. 131; Matter of Lottman, 261 N. Y. Supp. 400; Ward v. N. Y. Life Ins. Co., 225 N. Y. 314; Hamlin v. Stevens, 177 N. Y. 39.)

      Ralph O. L. Fay and Philip J. Dunn for defendant-respondent.
    There was no delivery to the alleged grantees of the deed. (Matter of Van Alstyne, 207 N. Y. 298; Beaver v. Beaver, 117 N. Y. 421; Saltzseider v. Saltzseider, 219 N. Y. 523; Ten Eyck v. Whitbeck, 156 N. Y. 341; Coventry v. McCreery, 144 App. Div. 68; Vincent v. Rix, 248 N. Y. 76; Farmers L. & T. Co. v. Winthrop, 238 N. Y. 477; Cussack v. Tweedy, 126 N. Y. 81.) The exclusion of testimony of the husbands of the appellants of admissions by the deceased was not reversible error. (Ward v. New York Life Ins. Co., 225 N. Y. 314; Hamlin v. Stevens, 177 N. Y. 39; Farmers Loan & Trust Co. v. Winthrop, 238 N. Y. 477.)
   Crane, J.

The judgment appealed from, entered in this case on the 28th day of November, 1932, declared a deed dated May 26, 1916, made by the late Frederick F. Brueck to the defendants Kathryne Brueck and Chrystine H. Brueck, now Kathryne Jorgenson and Chrystine H, Bender, invalid and insufficient to transfer to them the property described therein. The facts are not disputed and can as well be taken from the briefs of counsel as from the findings of the court. On this appeal from the unanimous affirmance by the Appellate Division we must determine whether these facts sustain the conclusion embodied in the judgment as well as pass upon an important ruling of law.

On May 26, 1916, Frederick F. Brueck owned an undivided one-half interest in premises at Forty-eighth street and Seventh avenue, New York city. On that date he executed and duly acknowledged two deeds, each in terms conveying an undivided one-quarter interest in the premises. One of these deeds conveyed a quarter interest to his wife, Sarah M. Brueck, which need not be mentioned again. The other deed conveyed, in consideration of natural love and affection, and for the sum of one dollar, an undivided one-quarter interest in the premises to the grantor’s sisters, then Kathryne Brueck and Chrystine H. Brueck. They are the defendants in this action.

On the next day, May 27th, a petition in bankruptcy was filed by Brueck & Wilson Co., the corporation through which Mr. Brueck was operating and of which he was an officer. While we do not see the materiality of this fact, we mention it as the trial justice stated that the only inference that can be deduced by the execution of the deed a day prior to the filing of the petition in bankruptcy against the company is that the deceased was either advised or himself believed that it was essential in order to protect the interest which he had in the real estate, but just what his reason was is not disclosed, and as he died without stating it, his reason can only be inferred from the facts established in the case.” Assuming this purpose to be the true one, in order that the respondent may have the benefit of every fact as well as every inference, we pass on to the other matters.

The deed in question was retained by Frederick F. Brueck, the grantor, from the date of its execution until September 15, 1919, when it was given by him to one of the grantees, his sister Chrystine H. Brueck, now Mrs. Bender. She testified on the trial, without objection, that she had received the deed the day before she took out her safe deposit box for the purpose of putting the deed in it. She had seen the deed the night previous at Mr. Brueck’s home. The trial justice found as a fact that the deed was given by Frederick F. Brueck to Chrystine H. Brueck on the 15th day of September, 1919; that it had been retained up until then by the grantor from the date of its execution. The deed remained in Miss Brueck’s safe deposit box at the Garfield Safe Deposit Company from September 16, 1919, until March 16, 1920, on which date Chrystine Brueck gave the grantor access thereto. Thereafter the deed was placed in other safe deposit boxes to which Frederick Brueck and his sisters had access.

Mr. Frederick F. Brueck died March 19, 1930, and the day after the deed in question was placed on record. Up to the date of his death Mr. Brueck collected the rents and was charged with his pro rata share of the expenses of maintaining the property. He executed a lease and entered into an agreement extending a mortgage on the property in both of which he referred to himself as the owner of the premises. There is no doubt that he received the benefits, whatever they were, from this property during his lifetime. That he waited three years before delivering the deed to his sister indicates that the transfer could not have been made in view of the bankruptcy of his corporation in 1916. Irrespective of the operation of law, this act would seem to evidence an intention to transfer the property to his sisters at the time of delivery or, perhaps, an intent to secure the passing of title at the time of his death.

As there is no claim of fraud or the breach of any trust, we find the law to be that the delivery of this duly executed deed to Miss Brueck on the" 15th of September, 1919, passed title, and that she and her sister thereupon became the owners of the one-quarter interest of the property conveyed thereby. Accordingly, Frederick Brueck, the grantor, if he were alive, would not be permitted to explain the purpose of the delivery, or that the deed was not intended to be delivered, or that it was a conditional delivery, or on an oral agreement or arrangement whereby title was not to vest until the death of the grantor. The plaintiff as devisee stands in the same position.

In Hamlin v. Hamlin (192 N. Y. 164, 168) we find the facts somewhat similar to those of the present case. There the plaintiff sought to have canceled certain deeds executed by her to her husband. She claimed that the deeds had never been delivered with the intention of passing title until the full value of the property was paid to her. She had executed two deeds by which she conveyed both parcels to him, and at the time of his death they were found in his safe deposit box although unrecorded. The contention upon the trial was that the delivery of the deeds was for temporary purposes or conditional and was not to operate to divest her of ownership. This court said; “ If we should give full effect to the plaintiff’s claim, it would be to hold the delivery by her of the deeds to have been conditional and not absolute; but that would be violative of the settled rule in this state that a delivery cannot be made to the grantee conditionally. Any oral condition accompanying the delivery, in such case, would be repugnant to the terms of the deed and parol evidence to prove that there was such a condition attached to the delivery is inadmissible. * * * It was not a case where the deeds were not to pass out of the possession of the grantor, until certain conditions were fulfilled. These deeds had passed out of the plaintiff’s possession and into that of the grantee, by the deliberate act of the former, and no oral condition, at the time, will be admitted to contradict the import of the written instruments.”

These words might just as well have been written for this case. The grantor executed a deed to his sisters. After keeping it in his possession for three years he deliberately delivered it to one of them who kept it in her sole possession for six months. It had not left her possession up to the time of the grantor’s death. For other cases sustaining this law, see Saltzsieder v. Saltzsieder (219 N. Y. 523); Ten Eyck v. Whitbeck (156 N. Y. 341); Blewitt v. Boorum (142 N. Y. 357); Williams v. Williams (142 N. Y. 156); Hutchins v. Hutchins (98 N. Y. 56); Wallace v. Berdell (97 N. Y. 13); Braman v. Bingham (26 N. Y. 483); Worrall v. Munn (5 N. Y. 229).

In Ten Eyck v. Whitbeck (supra) the question of delivery was uncertain and the evidence contradictory. Therefore, the passing of the deed itself to the grantee and its acceptance by him became a question of fact. In this case before us there is no conflicting evidence and no question of fact to be settled. Delivery, in so far as the paper deed passed from Frederick Brueck to his sister, is conceded. She accepted it and placed it in her safe deposit box, where it remained for six months. This is the delivery of a deed recognized by law and which cannot be explained away by evidence that it was a conditional delivery or that title was not intended to pass or that the grantor was to have a life interest in it. The effect of the delivery is not changed by the grantor’s subsequent access to the deed or even his repossession of it. Title once having passed, it cannot be reconveyed except by deed or the judgment of the court. ■ A deed once delivered and accepted, its redelivery by the grantee will not revest the legal title in the grantor. (People v. Bostwick, 32 N. Y. 445.) If there had been any question regarding the delivery of the deed, then the evidence showing the grantor’s control of the property and the receipt of its benefits up to the time of his death would have been material evidence to prove no delivery. However, as title had passed by delivery in this case, the receipt of the rents and the claim to ownership probably were due to some arrangement made with his sisters or by reason of their kindness and generosity, all of which could have no force in law for undoing what had been done. Whatever agreement he may have had with his sisters — perhaps that he should have the life interest and that they should receive the property at his death — could not be shown by parol evidence to change the effect of his deed. There is no such parol evidence in this case, much less can it be inferred. The delivery of the deed and the acceptance by the sisters passed title to them. The contrary conclusion reached by the trial justice on these facts cannot be sustained.

If there had been a breach of a trust arising out of a confidential relationship or in any other way parol evidence would have been competent to prove the situation. This case, however, was brought and tried by the devisee of the real estate under Mr. Brueck’s will on the theory that title had never passed from him because there had been no delivery which in law was sufficient to pass title. Had the action been brought to establish that the sisters held this property upon some orally declared trust we would not be confronted with the point we are deciding. The Statute of Frauds, requiring a writing to transfer an interest in lands, does not obstruct the recognition of a constructive trust affecting an interest in land where a confidential relation would be abused if there were repudiation without redress of a trust orally disclosed. (Foreman v. Foreman, 251 N. Y. 237.) Continued and unchanged possession and control over the property would be some evidence of such a trust. Beyond this, however, there is no testimony showing the nature of any trust or its extent and purpose.

There is one ruling on the evidence which requires consideration. Mr. Jorgenson and Mr. Bender were called as witnesses to the statements made to them by Mr. Brueck regarding the delivery of this deed and the ownership of the property in his sisters. Although their testimony was excluded, we have an offer of proof which shows that their evidence would have been material and pertinent. These gentlemen were the husbands respectively of the two sister grantees. The exclusion of the testimony was on the ground that since the Decedent Estate Law (Cons. Laws, ch. 13) had wiped out curtesy and in its place had given the husband one-half or one-third, as the case might be, of the wife’s estate of which she died seized or possessed, the husband had become a party or person in interest under section 347 of the Civil Practice Act. Prior to 1930 the rule was established that a curtesy interest as distinguished from an inchoate right of dower was not a sufficient interest to render a husband disqualified within this section. (Albany County Sav. Bank v. McCarty, 149 N. Y. 71; Laka v. Krystek, 261 N. Y. 126.) That the courts are not inclined to extend the disqualifying provisions is evidenced by the previous decisions of this court. (Hobart v. Hobart, 62 N. Y. 80, 84; Nearpass v. Gilman, 104 N. Y. 506; Eisenlord v. Clum, 126 N. Y. 552; Albany County Sav. Bank v. McCarty, supra; Laka v. Krystek, supra.)

The husband has no immediate interest in his wife’s property. She may, as heretofore, convey it without his consent or signature to the deed. The only interest given him by the change of section 18 and section 83 of the Decedent Estate Law is that if she make a will he may take the interest which he would have on intestacy. If she die intestate, section 83 gives him one-third or one-half of her property, dependent upon offspring. Of course the husband will always be interested more or less in the result of his wife’s litigation and the result may or may not ultimately be of benefit to him. These are matters which may touch his credibility as a witness for her. But he has no immediate interest in her property and his interest in the event, considering her power of disposition, is so remote and contingent as not to disqualify him under our law.

What we have here said regarding the qualification of a husband to testify applies equally to the wife. Since the abolition of dower they are now on an equality as witnesses.

For the reasons here stated the judgments below should be reversed and the complaint dismissed, with costs in all courts.

Pound, Ch. J., Lehman, O’Brien, Hubbs and Crouch, JJ., concur; Kellogg, J., not voting.

Judgments reversed, etc.