author: Pound, J.

text:
    The People of the State of New York, Respondent, v. Charles Wendling, Arche Sayer, Frank McGlynn, Arthur Griffin, Kenneth Burton, Valerie Valaire, John M. Kirkland, Edgar Henning, Don Rowan, Cliff Heckinger, Neil Stone, Josephine Evans and Alberta Beatty, Appellants. The People of the State of New York, Respondent, v. Lee Ellmore and Anne Forrest, Appellants.
    (Submitted February 15, 1932;
    decided March 3, 1932.)

      Harry H. Oshrin for appellants.
    The testimony adduced was insufficient, as a matter of law, to warrant a verdict of guilty. (People v. Muller, 96 N. Y. 411; People v. Eastman, 188 N. Y. 480; People v. Seltzer, 122 Misc. Rep. 329.)

      Charles P. Sullivan, Acting District Attorney (Mordecai Konowitz of counsel), for respondent.
    That the presentation was obscene, indecent, immoral . and impure beyond a reasonable doubt, may reasonably be inferred from the evidence and the verdict of conviction may, therefore, not be disturbed. (Halsey v. New York Society, 234 N. Y. 1; People v. Pesky, 230 App. Div. 200; 254 N. Y. 373; People v. Eastman, 188 N. Y. 478; People v. Muller, 96 N. Y. 408; United States v. Dennett, 39 Fed. Rep. [2d] 564; United States v. Bennett, 16 Blatchf. 338; Commonwealth v. Buckley, 200 Mass. 346; Reg. v. Hicklin, L. R. 3 Q. B. 360; People v. Hallenbeck, 52 How. Pr. 502.)
   Pound, J.

The prosecution herein arises out of the dramatizacion of the ancient folk song Frankie and Johnnie,” which told the tale of the adventures of Johnnie, a country boy, in a St. Louis resort for drinking, gambling and prostitution in the middle of the last century.

The language of the play is coarse, vulgar and profane; the plot cheap and tawdry. As a dramatic composition it serves to degrade the stage where vice is thought by some to lose half its evil by losing all its. grossness.” “ That it is ‘ indecent ’ from every consideration of propriety is entirely clear ” (People v. Eastman, 188 N. Y. 478, 480), but the court is not a censor of plays and does not attempt to regulate manners. One may call a spade a spade without offending decency, although modesty may be shocked thereby. (People v. Muller, 96 N. Y. 408, 411.) The question is not whether the scene is laid in a low dive where refined people are not found or whether the language is that of the bar room rather than the parlor. The question is whether the tendency of the play is to excite lustful and lecherous desire. (People v. Eastman, supra; People v. Muller, supra.)

Prostitutes are not so rarely representated on the stage as to arouse the sexual propensities of the spectators-whenever they appear. G. B. Shaw’s play, “ Mrs. Warren’s Profession,” deals, in the language of the polite dramatist, with what has been styled “ the oldest profession in the world.” The heroine of Rain ” was a seductive harlot. Scenes of The Shanghai Gesture ” are laid in a house of bad character. “ Lysistrata ” is frank in the discussion of sex relations but does not excite desire as might the lascivious display of female charms. The Bible talks bluntly of harlots and whores but it does not incite to immorality. (Chapters 17 and 18 of the Book of Revelations.)

The play is said to tend to corrupt the morals of youth.” Here again the question is not whether it would tend to coarsen or vulgarize the youth who might witness it but whether it would tend to lower their standards of right and wrong, specifically as to the sexual relation. Unless the mere representation on the stage of prostitutes and their patrons would tend to have the effect of stimulating sexual impulses, the performance should not be barred. (United States v. Dennett, 39 Fed. Rep. [2d] 564; United States v. One Obscene Book Entitled “ Married Love,” 48 Fed. Rep. [2d] 821; United States v. One Book Entitled “ Contraception,” by Marie C. Stopes, 51 Fed. Rep. [2d] 525.)

Compare the seductive studies in the etiquette of the liaison and all its nuances ” with their accompanying appeal to sexual passion contained in Schnitzler’s “ Reigen,” where it was held by a divided court that the finders of fact might pronounce the book obscene by applying local standards of propriety thereto (People v. Pesky, 230 App. Div. 200, 202; affd., 254 N. Y. 373), with this uncultured depiction of a phase in the frontier life of the middle west. A coarse realism is its dramatic offense. Perhaps in an age of innocence the facts of life should be withheld from the young but a theatre goer could not give his approval to the modern stage as “ spokesman of the thought and sentiment ” of Broadway (Halsey v. New York Society for Suppression of Vice, 234 N. Y. 1) and at the same time silence this rough and profane representation of scenes which repel rather than seduce.

The production of such a play may be repulsive to puritanical ideas of propriety as would “ Camille ” and may be offensive to the more liberal minded as lacking in taste and refinement, as would the morally unobjectionable “ Abie’s Irish Rose.” The play may be gross and its characters wanting in moral sense. It may depict women who carry on a vicious trade and their male associates. It cannot be said to suggest, except “to a prurient imagination, ” unchaste or lustful ideas. It does not counsel or invite to vice or voluptuousness. It does not deride virtue. Unless we say that it is obscene to use the language of the street rather than that of the scholar, the play is not obscene under the Penal Law, although it might be so styled by the censorious. •

We have repeatedly said that fine language does not excuse the expression of filthy thoughts. (Halsey v. New York Society for Suppression of Vice, supra.) Neither do coarse scenes and vulgar language in themselves create such thoughts. (Dysart v. United States, 272 U. S. 655.)

We do not purpose to sanction indecency on the stage by this decision or to let down the bars against immoral shows or to hold that the depiction of scenes of bawdry on the stage is to be tolerated. We hold merely that the fact that Frankie and Johnnie and their companions were not nice people does not in itself make the play obscene. A history of prostitution or of sexual life is not per se indecent although such a book might easily be so written as to offend decency.

The judgment in each action should be reversed and the informations dismissed.

Cardozo, Ch. J., Lehman and Kellogg, JJ., concur; Crane, O’Brien and Hubbs, JJ., dissent.

Judgments reversed, etc.

       Dr. Sigmund Spaeth, “Read ’em and Weep — 'The Songs You Forgot to Remember,” p. 34.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    In the Matter of the Public Service Interstate Transportation Company, Inc., Respondent, against Public Service Commission of the State of New York et al., Appellants.

      (Argued February 8, 1932;
    decided March 3, 1932.)

      Russell B. Burnside and Charles G. Blakeslee for Public Service Commission, appellant.
    On the record before it, it was the duty of the Public Service Commission to issue a certificate of public convenience and necessity to the petitioner. (People ex rel. N. Y. C. & H. R. R. R. Co. v. Public Service Comm., 227 N. Y. 248; People ex rel. N. Y. C. R. R. Co. v. Public Service Comm., 195 N. Y. 157.) No provisions of the Public Service Law, the Transportation Corporations Law or any other statute prohibits the Commission from granting a certificate of convenience and necessity for the furnishing of motor bus or other public utility service in territory where like service is being furnished. (Cons. -Laws, ch. 64, § 244, amd. L. 1929, ch. 642.) The Appellate Division could not substitute its judgment for that of the Public Service Commission in determining whether the action of the latter was reasonable or unreasonable. (People ex rel. New York & Queens Gas Co. v. McCall, 219 N. Y. 84; Matter of Grade Crossings [N. Y. C. R. R. Co.], 255 N. Y. 320.)

      Colley E. Williams and B. Meredith Langstaff for Tappan and Nyack Bus, Inc., appellant.
    The Public Service Commission has both the power and the duty of granting a second certificate where the first certificate holder has disposed of its equipment, discharged its employees, abandoned the service, and thus indicated the discontinuance of a lawful service necessary to the public. (People ex rel. New York & Queens Gas Co. v. McCall, 219 N. Y. 84; Matter of Niagara Falls Lighting Co., 2 P. S. C. Rep. 116; Matter of Hibbard, 1 P. S. C. Rep. [1922] 240.) The Public Service Commission may issue as many certificates as public convenience and necessity require. (People ex rel. Depew & Southwestern R. R. Co. v. Board of Railroad Commrs., 4 App. Div. 259; People ex rel. New York City & Westchester Ry. Co. v. Board of Railroad Commrs., 81 App. Div. 237; 176 N. Y. 577; Matter of Rochester, Corning, Elmira Traction Co. v. Board of Railroad Commrs., 118 App. Div. 521; Matter of Amsterdam, Johnstown & Gloversville R. R. Co., 86 Hun, 578.)

      Charles L. Craig and Ernest W. Hofstatter for respondent.
    There was no evidence or finding of inadequacy of existing service or that public convenience and necessity would be served by the additional bus fine. (Matter of Amsterdam, Johnstown & Gloversville R. R. Co., 86 Hun, 578; Choate v. Commerce Comm., 309 Ill. 248; Coney Island Motor Bus Co. v. Public Utilities Comm., 115 Ohio St. 47; Chicago, Rock Island & Pacific Ry. v. State, 252 Pac. Rep. 849; Lykins v. Public Utility Comm., 115 Ohio St. 376.) Duplication of certificates of public convenience and necessity for operation of motor buses is contrary to established law. Such certificate is never granted against the protest of an existing fine rendering or capable of rendering such service as may be required. (Matter of City of Long Beach v. Public Service Comm., 249 N. Y. 480; People ex rel. N. Y. C. & H. R. R. R. Co. v. Public Service Comm., 195 N. Y. 157; 227 N. Y. 248; Matter of Wood, 99 App. Div. 334; 181 N. Y. 93; Matter of Auburn & Western Ry. Co., 37 App. Div. 162; Matter of Empire City Traction Co., 4 App. Div. 103; Matter of Amsterdam, Johnstown & Gloversville R. R. Co., 86 Hun, 578.)
   Crane, J.

On April 28, 1926, the Northern Valley Bus Line, Inc., the respondent herein (before change of name), obtained from the Public Service Commission certificates of public convenience and necessity for the operation of motor buses running a local service over a route from Tappan to Nyack, in Rockland county. The route is entirely within the State of New York, and passes through and is designed to furnish service to the villages of Upper Nyack, Nyack, South Nyack, Grand View-on-Hudson and Piermont, and the hamlets of Sparkill and Tappan in the town of Orangetown. The length of the route is approximately seven and four-tenths miles. The town of Orangetown and the village of Grand View-on-Hudson brought themselves under the operation of sections 66 and 67 of the Transportation Corporations Law (Cons. Laws, ch. 63), so that the bus line became a common carrier within the meaning and operation of the law.

The service thereafter furnished by the Northern Valley Bus Line, Inc., became so unsatisfactory that repeated complaints were made to the village and town officials of the delays, change in schedules, and failure to operate. The corporation apparently either suspended all operation or else transferred all its rights to foreign holdings not responsive to the direction of the Public Service Commission. Thereupon a new corporation was formed by former employees of the Northern Valley Bus Line, Inc., and took the name of Tappan and Nyack Bus, Inc. Having obtained the necessary consents from the towns and villages, application was made under section 53 of the Public Service Commission Law (Cons. Laws, ch. 48) for permission and approval to operate a bus line over the specified route. This application was opposed by the persons interested, by transfer or otherwise, in the Northern Valley Bus Line, Inc. The Public Service Commission held numerous hearings, at which much testimony was taken, being the return on the certiorari proceeding to review its ruling, and constituting the record in this case. The Commission granted the application, finding that the Northern Valley Bus Line, Inc., had suspended its operations and disposed of its property; that the new corporation, the Tappan and Nyack Bus, Inc., the petitioner, was in a position to furnish proper service, which was greatly needed. On appeal, by a divided court, this ruling of the Public Service Commission was set aside, its order annulled, and the petition of the applicant denied.

The necessity and convenience for a proposed bus or railroad fine, and the giving of permission and approval to a common carrier to operate over it, are matters which rest in the discretion and good judgment of the Commission, and its determination is not to be interfered with by the courts unless it is arbitrary or contrary to law. The court cannot substitute its judgment for that of the Commission, but is limited to a determination whether the order of the Commission is in excess of its powers. (People ex rel. New York & Queens Gas Co. v. McCall, 219 N. Y. 84, p. 90; Matter of Grade Crossings [N. Y. C. R. R. Co.], 255 N. Y. 320.) We find no evidence in this record of an abuse of power or an arbitrary disposition of the matter by the Public Service Commission.

Some time prior to the application of the petitioner herein, all the stock of the Northern Valley Bus Line, Inc., passed into the hands of one T. Wilson Van Middles-worth, who is the treasurer of the Public Service Co-ordinated Transport Co., — a New Jersey corporation,— and thereupon the operation of the line was turned over to the said transport company, which thereafter operated or attempted to operate over the route specified, without having obtained the consent of the Public Service Commission or a certificate of convenience and necessity required by law. These findings made by the Commission are amply supported by the evidence. Mr. Van Middlesworth testified that he was treasurer of the Public Service Co-ordinated Transport Co., and likewise treasurer of the- Public Service Interstate Transportation Company of New Jersey, and president of the Public Service Interstate Transportation Company, Inc., of New York, and that the New York company had no operating employees and made no returns, as required by law, to the Public Service Commission. To quote him: “We [the New York company] do not operate the line. The actual operation was turned over to the Public Service Interstate Transportation Company by an operating contract. [This is the New Jersey company.] * * * The Interstate of New Jersey took over all the property of the New York corporation under the contracts we made with them.”

Whether a common carrier can discharge all its employees, transfer or Sell all its property, and by contract or lease turn over its franchises and its right to operate a bus line or railroad in this State to a foreign corporation, without the consent of the Public Service Commission (Transp. Corp. Law, §§ 65, 66, 67; Pub. Serv. Comm. Law, art. 3), we need not determine or pass upon, as the Commission has found, upon ample evidence, that necessity requires the granting of permission to the Tappan and Nyack Bus, Inc., to maintain a bus line between Upper Nyack and Tappan. Even if buses are now running over the route under prior certificates of convenience and necessity, there is nothing in the law to prevent the Commission from granting the right to operate over the same highways, if the circumstances of the situation make it necessary and convenient for the public. (Matter of Amsterdam, Johnstown & Gloversville R. R. Co., 86 Hun, 578; People ex rel. Depew & Southwestern R. R. Co. v. Board of Railroad Commissioners, 4 App. Div. 259; Matter of Rochester, Corning, Elmira Traction Co., 118 App. Div. 521.)

This necessity the Commission has found and expressed in the following language: " It should be added that the record shows that the service afforded by the New Jersey corporation has not been satisfactory, and that for a time the area involved in the present proceeding was deprived almost entirely of the service of local buses, such local service as was furnished being furnished chiefly by certain through interstate buses operated by said corporation, which buses were insufficient to take care of both interstate and local business; and although the service of local buses was subsequently restored, the record indicates that the restoration of such service was not effected voluntarily but only under prod of anticipated competition.’ * * * ”

The evidence supports these findings of the Commission to the extent, at least, of showing that its action in granting the petitioner’s application was not arbitrary or so unreasonable as to show an abuse of discretion.

For these reasons the order of the Appellate Division should be reversed and the determination of the Public Service Commission confirmed, with costs in the Appellate Division and in this court.

Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Ordered accordingly.


author: Kellogg, J.

text:
    Homac Corporation et al., Respondents, v. Sun Oil Company, Appellant.
    (Argued February 11, 1932;
    decided March 3, 1932.)

      William H. Harding for appellant.
    Neither the plaintiff Homac Corporation nor the defendant owned any part of the intervening street and they were, therefore, not adjoining or abutting owners. (Matter of City of New York, 209 N. Y. 344; Monogram Development Co. v. Natben Construction Co., 253 N. Y. 320; Ansorge v. Belfer, 248 N. Y. 145; Ryan v. N. Y. C. R. R. Co., 35 N. Y. 210.) Whatever the cause of the fire it was not the proximate cause of the destruction of the Homac Corporation’s premises. (Ryan v. N. Y. C. R. R. Co., 35 N. Y. 210; Hoffman v. King, 160 N. Y. 618; Moore v. Van Beuren & New York Bill Posting Co., 208 App. Div. 352; 240 N. Y. 673; Rose v. Pennsylvania R. R. Co., 236 N. Y. 568; McDonough v. N. Y. C. R. R. Co., 124 App. Div. 38; Read v. Nichols, 118 N. Y. 224.)

      George W. O’Brien, Jesse E. Kingsley and H. Duane Bruce for respondents.
    The fire resulted from defendant’s negligence. (Couslish v. Standard Oil Co., 122 N. Y. 118; Warner v. N. Y., O. & W. R. R. Co., 209 App. Div. 211; Field v. N. Y. C. R. R. Co., 32 N. Y. 339; Jacobs v. N. Y. C. R. R. Co., 107 App. Div. 134; People v. N. Y. C. R. R. Co., 155 App. Div. 699; Hinds v. Barton, 25 N. Y. 544; Crist v. Erie Ry. Co., 58 N. Y. 638.) Whether defendant’s negligence was the proximate cause of damage by fire to the Homac property was properly for the jury to determine. (Milwaukee Ry. Co. v. Kellogg, 94 U. S. 469; Sheldon v. Sherman, 42 N. Y. 484; Webb v. R., W. & O. R. R. Co., 49 N. Y. 420; Pollett v. Long, 56 N. Y. 200; Lowery v. Manhattan Ry. Co., 99 N. Y. 158; O’Neill v. N. Y., O. & W. R. Co., 115 N. Y. 579; Read v. Nichols, 118 N. Y. 224; Frace v. N. Y., L. E. & W. R. R. Co., 143 N. Y. 182; Hoffman v. King, 160 N. Y. 618; Rose v. Pennsylvania R. R. Co., 236 N. Y. 568; Davies v. D., L. & W. R. R. Co., 215 N. Y. 181; Moore v. Van Beuren & New York Bill Posting Co., 208 App. Div. 352; 240 N. Y. 673; Nicoll v. Long Island R. R. Co., 232 App. Div. 435.)
   Kellogg, J.

The defendant, a distributor of gasoline in the city of Syracuse, maintained a plant for its storage on premises owned by it on the north side of Turtle street. Storage tanks, designed to store gasoline in large quantities, had been erected upon the premises. The plaintiff Homac Corporation owned several buildings on the south side of Turtle street. The width of the street was sixty-six feet; the shortest distance separating the nearest of the defendant’s tanks from the nearest building of the plaintiff Homac was seventy-seven feet. Turtle street, which intervened between the two properties, was a bare dirt roadway with no inflammable material appearing upon it. On a certain night the gasoline in one of the storage tanks exploded; fire was communicated to other tanks which exploded; flames shot into the sky; and the heat became intense. The fire, by spark, or flame, or through the intense heat generated, was communicated directly to the plaintiff Homac’s premises; fire broke out in one building owned by that plaintiff and then in another, with the result that many buildings were destroyed. The evidence was sufficient to justify a jury in finding that the original explosion was due to the defendant’s negligence. The jury found a verdict for the plaintiff owner, and a verdict for the insurance carriers of the owner, which had paid insurance to it, and been made parties plaintiff. The verdicts were substantial and a judgment thereupon has been affirmed. The appellant asserts that its negligence in causing the fire upon its own premises, within the meaning of Ryan v. N. Y. C. R. R. Co. (35 N. Y. 210) and other cases, was not the proximate cause of the destruction of the plaintiff’s buildings.

The facts in Ryan v. N. Y. C. R. R. Co. (supra) were these: Sparks from the defendant’s locomotive, emitted through the defective bonnet of her smoke pipe,” fell upon and ignited a shed upon the defendant’s right of way; sparks from the burning shed ignited and destroyed the house of the plaintiff. It was held that the burning of the plaintiff’s house was not traceable to the negligence of the defendant in relation to the defective bonnet; that the fire in the railroad budding was an intervening cause which broke the chain of causation leading from the defendant’s negligence; that the damages were not the immediate but the remote result of the negligence of the defendant. The immediate result was the destruction of their own wood and sheds; beyond that, it was remote ” (p. 213). Recovery was denied. In the case of Webb v. R., W. & O. R. R. Co. (49 N. Y. 420), decided shortly thereafter, the facts were: Live coals were negligently permitted to drop from the defendant’s locomotive; the coals set fire to a railroad tie; fire jumped from that tie to another at the side of the track; thence to an accumulation of dried grass; thence to the railroad fence; thence to the adjoining lands of the plaintiff, destroying the plaintiff’s trees. It was held that the plaintiff might have a recovery. It is difficult, if not impossible, to reconcile the decision in that case with the decision in Ryan v. N. Y. C. R. R. Co. (supra). Thus, if in the Ryan case the discontinuous progress of the fire from the bonnet ” to the shed and thence to the plaintiff’s house belied causal connection between the original fire and the house fire, then in the Webb case, where the plaintiff’s trees were burned by a fire proceeding to them discontinuously from live coals negligently dropped, through the firing of at least four intermediate objects, there was even greater reason to say that causal connection did not exist. Indeed, if the reasoning in the Ryan case were carried to its logical result, no fire negligently set on a defendant’s property, proceeding through the grass, blade by blade, to a plaintiff’s property, could cause a fire thereupon. The court distinguished the Ryan case by stating that there the plaintiff’s premises were not in contiguity with those of the defendant (p. 427). Doubtless, the court, in making this assertion, had in mind a statement made in the opinion in the Ryan case that the plaintiff’s house was “ situated at a distance of 130 feet from the shed” (p. 210). Although this was the fact, it does not appear that the premises of the parties were separated by intervening lands. No such fact is stated in the record on appeal, in the briefs filed, or in any of the various opinions delivered in the case. All persons concerned must have deemed the question immaterial, for the fact of contiguity or non-contiguity was not established by the proof, and was not referred to either by judge or counsel. The whole point decided was that if building A is ignited through negligence and building B is ignited by sparks proceeding from building A, building A causes the second fire, and the original fire, negligently set, is not the cause thereof. However, whether or not the Webb case overruled the Ryan case, this is now the accepted rule: If a fire negligently starts upon a defendant’s land, spreads to the land of an adjoining owner and destroys his buildings, the owner may recover for the loss of all the buildings, even though the fire be ignited in one building from a fire burning in another; whereas, if the fire spreads from a defendant’s land to a plaintiff’s building across intervening land there can be no recovery. (O’Neill v. N. Y., O. & W. R. R. Co., 115 N. Y. 579; Frace v. N. Y., L. E. & W. R. R. Co., 143 N. Y. 182; Hoffman v. King, 160 N. Y. 618; Davies v. D., L. & W. R. R. Co., 215 N. Y. 181; Read v. Nichols, 118 N. Y. 224; Moore v. Van Beuren, etc., Co., 208 App. Div. 352; 240 N. Y. 673; Rose v. Pennsylvania R. R. Co., 236 N. Y. 568.)

What, then, shall be the rule, if a fire negligently set upon a defendant’s land proceeds by sparks or flames across intervening land, nothing upon which is ignited, directly to the buildings of a plaintiff situated on premises not contiguous to the defendant’s premises and ignites one of them? So far as the writer is aware, a decision of that question has never been made by this court. However in the Hoffman case it was said that if a fire, negligently started on a defendant’s land, spreads ” to a building on the abutting premises of a plaintiff and destroys it, there is liability; that, to constitute a legal cause, the defendant’s fire must immediately precede ” the plaintiff’s fire; that if other lands intervene, between the plaintiff and the defendant, covered with inflammable material ovt-i which the defendant had no control, and without which the fire could not have extended upon plaintiff’s premises,” there would be no liability (p. 629).

Clearly, if a spark from a defective locomotive stack flies over intervening .land directly to ignite the house of a distant owner, the causes which immediately precede ” the fire are to be found in the negligence of the owner of the locomotive in respect to the defective stack. Certainly, in such a case, the intervening land, no part of which has been touched by fire, provides no element of causation. The case would be otherwise did the spark first set fire to an object upon the intervening land, sparks from which in turn set fire to the lands or buildings beyond. In the case now before us it appears that a public highway intervened between the property of the defendant and the property of the plaintiff, Homac corporation. The fire did not spread to the street and thence to the plaintiff’s buildings; indeed, nothing upon the street was set afire. Flames or sparks, or intense heat proceeding from the defendant’s property, passed directly to one of the plaintiff’s buildings, causing its ignition and destruction, as well as the destruction of adjoining buildings. Therefore, even if title to the Soil of the street was in the city of Syracuse, liability may properly attach.

The judgment should be affirmed with costs.

Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ., concur.

Judgment affirmed.


author: O'Brien, J.

text:
    In the Matter of Annie Littman, Respondent. Joseph A. Broderick, as Superintendent of Banks, Appellant.
    (Argued February 11, 1932;
    decided March 3, 1932.)

      Joseph F. Hunter, Warren C. Fielding, Julius L. Neidle and Carl J. Austrian for appellant.
    The relation between the bank and the claimant was that of debtor and creditor and not that of bailor and bailee. (Legniti v. Mechanics & Metals Nat. Bank, 230 N. Y. 415; Safian v. Irving Nat. Bank, 202 App. Div. 459; 236 N. Y. 513; Beecher v. Cosmopolitan Trust Co., 239 Mass. 48; Katcher v. American Express Co., 94 N. J. L. 165; Taussig v. Carnegie Trust Co., 156 App. Div. 519; 213 N. Y. 627; Kuehne v. Union Trust Co., 133 Mich. 602; Equitable Trust Co. v. First Nat. Bank, 275 U. S. 359.) Even if a special deposit agency or other fiduciary relationship were undertaken by the bank, the claimant must fail for lack of identification of her alleged property. (Matter of Cavin v. Gleason, 105 N. Y. 256; Matter of Hicks, 170 N. Y. 195; Madison Trust Co. v. Carnegie Trust Co., 215 N. Y. 475; Atkinson v. Rochester Printing Co., 114 N. Y. 168; Fur & Wool Trading Co. v. Fox, Inc., 245 N. Y. 215; Whiting v. Hudson Trust Co., 234 N. Y. 394; Butler v. Sprague, 66 N. Y. 392; Ferris v. Van Vechten, 73 N. Y. 113; Roca v. Byrne, 145 N. Y. 182; Blair v. Hill, 50 App. Div. 33; 165 N. Y. 672.)

      Abraham Feit for respondent.
    The original transaction between the bank and the claimant resulted in a special deposit and not in a relationship of debtor and creditor. (Cutler v. American Exchange Nat. Bank, 113 N. Y. 593; Zotti v. Flynn, 135 App. Div. 276; Musco v. United Surety Co., 132 App. Div. 300.) The relationship between the claimant and the Superintendent of Banks is that of bailor and bailee. (Matter of Union Bank, 204 N. Y. 313; Matter of Bank of Cuba, 198 App. Div. 733.)
   O'Brien, J.

Sixteen hundred dollars' was deposited by Annie Littman in the Bank of United States at New York for transmission by cable or radio to the credit of Berko Polejes at Havana. The amount so received by the bank was not segregated from its general assets but was mingled with them. The next day the bank sent a cable message to its Havana correspondent, the Royal Bank of Canada, directing it to pay $1,600 to Polejes and credited that sum to the general account of the Royal Bank’s agency at New York. By letter dated December 10, 1930, the manager of the Royal Bank at Havana notified the Bank of United States at New York that Polejes had requested the return of the order and by letter dated December 12, the Royal Bank formally gave notice that, at the request of Polejes, it had canceled the cable transfer. On December 11, before these communications had been received at New York, the Superintendent of Banks, pursuant to section 57 of the Banking Law (Cons. Laws, ch. 2), took over the affairs of the Bank of United States for the purpose of liquidating them, and on January 2, 1931, the general account of the New York agency of the Royal Bank was debited with the amount of $1,600. The effect, of course, was to re-transfer the credit to the Bank of United States. The question is whether this sum, as part of the assets now in the possession of the Superintendent of Banks as liquidator, is in the nature of a special deposit as a bailment or trust fund or whether it constitutes part of the general assets of the bank.

This bank had a credit with a correspondent in a foreign country. It accepted a sum of money and mingled it with its other deposits, receipted for it and contracted to transmit by cable an order for an identical amount to be credited or paid by its foreign correspondent to the person named as recipient in the contract. In this instrument the one making the deposit is denominated purchaser.” The Bank of United States for compensation sold to Annie Littman part of its credit with the Royal Bank. It was credit, not money, which was transferred to Havana and again returned to New York. If, instead of contracting to send an order by cable, the bank had agreed to draw a draft or check upon its correspondent at Havana and had delivered such an instrument to Annie Littman, the transaction would have constituted nothing more than a sale of its credit to her, as purchaser, and in that event the money deposited by her would have become the bank’s money and would have established merely the status of debtor and creditor but no trust relationship. The circumstance that the credit was sold by cable rather than by draft or check does not mark a distinction in principle and the fact that the credit was rejected by the payee and returned to the bank leaves the transaction in the same state as if the order had never been Sent. In the absence of identification of a particular fund, the money still belongs to the bank and the relationship of debtor and creditor remains. (Legniti v. Mechanics & Metals Nat. Bank, 230 N. Y. 415.) The bank owes respondent $1,600. Her rights do not differ from those of other general depositors.

The order of the Appellate Division should be reversed and that. of the Special Term affirmed with costs in this court and in the Appellate Division.

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and Hubbs, JJ., concur.

Ordered accordingly.


author: Hubbs, J.

text:
    Albertina Realty Company, Respondent, v. Rosbro Realty Corporation, Appellant, Impleaded with Others.
    (Argued February 15, 1932;
    decided March 3, 1932.)

      Joseph Kahn, D. Freiberger and J. Freiberger for appellant.
    As the summons and complaint were served subsequent to a tender made by defendant of the installment due and no other election to declare the entire principal due was made prior to the service of the summons, the action was premature and should have been dismissed. (Trowbridge v. Malex Realty Corp., 111 Misc. Rep. 211; 198 App. Div. 656; Cohen v. Beiber, 123 App. Div. 528; Haynes v. Onderdonk, 2 Hun, 619; Nosrep Corp. v. Clinton Securities Corp., 193 App. Div. 878; Kilpatrick v. Germania Life Ins. Co., 183 N. Y. 163.) If the statutory construction of the acceleration clause contained in subdivision 2 of section 254 of the Real Property Law is to be taken as an absolute legislative fiat in disregard of the intent of the parties using the language it is to be deemed unconstitutional as an impairment of the obligation of contracts or a denial of the freedom to enter into lawful contracts. (Besas v. Slobodoff, 129 Misc. Rep. 205; Matter of Thurber, 162 N. Y. 244; Carpenter v. Newland, 92 Misc. Rep. 596; People v. Fox, 144 App. Div. 611; Newell v. People, 7 N. Y. 9.)

      Samuel W. Dorfman and Jacob R. Schiff for respondent.
    The record shows an election by plaintiff to declare the entire balance of principal due prior to the tender made by defendant. (Hothorn v. Louis, 52 App. Div. 218; 170 N. Y. 576; Beach v. Shanley, 35 App. Div. 566; Cresco Realty Co. v. Clark, 128 App. Div. 144; Pizer v. Herzig, 120 App. Div. 102.) The plain language of subdivision 2 of section 254 of the Real Property Law, construing the very clause con Gained in the mortgage being foreclosed, cannot be disregarded. (Besas v. Slobodoff, 129 Misc. Rep. 205; Kelmenson v. Boulevard Construction Corp., 232 App. Div. 847; Hothorn v. Louis, 52 App. Div. 218.)
   Hubbs, J.

Plaintiff is the holder of a real property mortgage upon which there became due one hundred sixty-six and 66/100 dollars ($166.66) of principal on July 15th, 1930, which was not paid. On July 18th the plaintiff caused to be filed in the office of the County Clerk a summons and verified complaint and a lis pendens in an action to foreclose the mortgage. The complaint alleged the default in payment of the installment of principal and stated that the plaintiff elected that the entire balance of principal remaining unpaid should immediately become due and payable. Three days later, on July 21st, the appellant, then owner of the premises in question, tendered to the plaintiff the amount of the installment of principal which became due on July 15th. The plaintiff declined to accept the tender upon the ground that it had elected to declare due the whole amount unpaid on the mortgage, had turned the matter over to its attorney and the summons and verified complaint and lis pendens had been filed in the County Clerk’s office. The mortgage contains an acceleration 'clause which reads: That the whole of said principal sum shall become due after default in the payment of any installment of the principal or of interest for thirty days, or after default in the payment of any tax, water rate or assessment for thirty days after notice and demand.”

At the trial two questions of importance were raised. First, at the time of the tender had the whole amount of the principal become due because the plaintiff had so elected, and second, did the mortgage give plaintiff the right to So elect, before the expiration of thirty days from the due date?

It is conceded by appellant that if the action had been commenced by the service of the summons upon one or more defendants before the tender, the tender would have been too late, as the notice of plaintiff’s election would have been sufficiently evidenced by the commencement of the action.

It is urged, however, that, as the action had not been commenced by the service of a summons (Civ. Pr. Act, § 218), there had been no election at the time of the tender and the only amount then due was the amount tendered which tender precluded the plaintiff from thereafter maintaining the action to recover the full amount unpaid. We think the construction urged by appellant is too narrow.

The acceleration clause does not constitute a for-\ feiture or a penalty. It is a fair and legal contract which 1 the parties to the mortgage had a right to enter into. (Noyes v. Anderson, 124 N. Y. 175, 180; Graf v. Hope Building Corp., 254 N. Y. 1.) There is no claim that the contract was made as a result of fraud or mistake.

It is true that on July 15th, and until the plaintiff exercised his right to have the whole amount become due, there remained due only the installment of one hundred sixty-six and 66 /100 dollars ($166.66) of principal, and if the tender was made before the right of election was exercised, it could not be thereafter availed of by plaintiff. (Cresco Realty Co. v. Clark, 128 App. Div. 144.) (See, also, Brown v. Kennedy, 309 Mo. 335; 41 A. L. R. 729, 732 and note.) No demand was necessary to enable plaintiff to elect to exercise his right to insist that the whole amount was due. (Hothorn v. Louis, 52 App. Div. 218; affd., 170 N. Y. 576; Northampton Nat. Bank v. Kidder, 106 N. Y. 221; New York Security & Trust Co. v. Saratoga Gas & El. L. Co., 88 Hun, 569; affd., 157 N. Y. 689.)

The agreement does not provide what the holder of the mortgage must do to evidence its election to declare the whole amount due. Such a provision could have been embodied in the contract if the parties had so desired.

The trial court found as a fact that the plaintiff had elected that the whole of the principal should immediately become due and payable. Such finding was justified by the evidence. It is unnecessary to decide just what a holder of a mortgage must do to exercise the right of election, under an acceleration clause. We are satisfied, however, that the unequivocal overt act of the plaintiff in filing the summons and verified complaint and lis pendens constituted a valid election. It disclosed the choice of the plaintiff and constituted notice to all third parties of such choice. To elect is to choose. The fact of election should not be confused with the notice or manifestation of such election. The complaint recited that the plaintiff had elected. The mere fact that before the summons could be served, the defendant made a tender, did not as a matter of law destroy the effect of the sworn statement that plaintiff had elected. (Hothorn v. Louis, supra; Pizer v. Herzig, 120 App. Div. 102; 2 Jones on Mortgages [7th ed.], § 1182.)

The acceleration clause used in the mortgage is the statutory clause provided by Schedule M of section 258 of the Real Property Law (Cons. Laws, ch. 50). That section does not prevent or invalidate the use of other forms.”

The parties to the mortgage in question were not limited to the use of the form of acceleration clause contained in the mortgage in question. They might have provided that the whole of the principal sum should become due after any default in the payment of principal or interest for thirty days, thereby providing that the days of grace should apply to a default in the payment of an installment of the principal as well as of the interest.

Having chosen the statutory form, they are bound by the statutory construction given that form, as the mortgage was executed after the enactment of the statute. Section. 254, subdivision 2, as amended by Laws of 1917, chapter 682, provides that such acceleration clause must be construed as meaning that should any default be made in the payment of any installment of principal or any part thereof, or in the payment of the said interest, or of any part thereof, on any day whereon the same is made payable, or should any tax, water rate or assessment, which now is or may be hereafter imposed upon the premises hereinafter described, become due or payable, and should the said interest remain unpaid and in arrear for the space of-days, or such tax, water rate or assessment remain unpaid and in arrear for-days after written notice by the mortgagee or obligee, his executors, administrators, successors or assigns, that such tax or assessment is unpaid, and demand for the payment thereof, then and from thenceforth, that is to say, after the lapse of either one of said periods, as the case may be, the aforesaid principal sum, with all arrearage of interest thereon, shall,' at the option of the said mortgagee or obligee, his executors, administrators, successors or assigns, become and be due and payable immediately thereafter, although the period above limited for the payment thereof may not then have expired, anything thereinbefore contained to the contrary thereof in any wise notwithstanding.”

The effect of such construction is to make the default in the payment of the installment of principal on the due date, a ground for accelerating the due date of the entire principal of the mortgage at the election of the holder thereof without regard to the days of grace allowed in case of default in the payment of interest. The distinction between the effect of a default in the' payment of an installment of principal and a failure to pay interest on a due date is of vital importance. The distinction has been called to the attention of the profession in the cases where the question has been raised, but has never before been passed upon by this court. (More Realty Corp. v. Mootchnick, 232 App. Div. 705; Kelmenson v. Boulevard Construction Corp., 232 App. Div. 847.)

We have considered the other questions raised by appellant and are satisfied with the disposition made of them in the Supreme Court.

The judgment should be affirmed with costs.

Cardozo, Ch. J., Pound, Crane, Kellogg and O’Brien, JJ., concur; Lehman, J.', not sitting.

Judgment affirmed._


text:
    Maria Montemarano, Respondent, v. Home Title Insurance Company, Appellant.
    (Argued February 10, 1932;
    decided March 3, 1932.)

      John S. Russell for appellant.
    Defendant completely performed its obligation to plaintiff. (Empire Develop
      ment Co. v. Title Guarantee & Trust Co., 225 N. Y. 53; Hadley v. Baxendale, 9 Exch. 341; Booth v. Spuyten Duyvil Rolling Mill Co., 60 N. Y. 487; United States Trust Co. v. O’Brien, 143 N. Y. 284.) The defendant is not hable for remote or consequential damages. (Murphy v. United States Title Guaranty Co., 104 Misc. Rep. 607; Palliser v. Title Ins. Co., 61 Misc. Rep. 490; Trimboli v. Kinkel, 226 N. Y. 147; Roake v. Sullivan, 69 Misc. Rep. 429; Deschenes v. Tallman, 248 N. Y. 33; Grant v. Tallman, 20 N. Y. 191; Stearn v. Hesdorfer, 9 Misc. Rep. 134; Harrington v. Murphy, 109 Mass. 299; Copeland v. McAdory, 100 Ala. 553.)

      Thomas W. Constable for respondent.
    The loss in the agreed amount sustained under the agreed facts is particularly within the terms of the defendant’s title policy. (Murphy v. United States Title Guaranty Co., 104 Misc. Rep. 607; Empire Development Co. v. Title Guaranty & Trust Co., 225 N. Y. 53; Werner v. Wheeler, 142 App. Div. 358; Hillicker v. Rueger, 228 N. Y. 11; Deschenes v. Tallman, 248 N. Y. 33.)
   Crane, J.

The counsel in this case stipulated the following facts in writing, upon which judgment has been entered for the plaintiff. These facts are that on or about the sixth day of July, 1925, the defendant, Home Title Insurance Company, issued to the plaintiff its policy No. 104436 of title insurance, in the sum of $57,500, on three certain parcels of real property, fully described in the complaint and designated Parcels “ A,” “ B ” and C.” Thereafter the plaintiff sold Parcel B, and on February 18, 1930, contracted to sell Parcels A and C. The purchaser refused to take title to Parcel A on the ground that there was an outstanding interest to that part of the parcel lying between the southwesterly side of Old road from Flatbush to Flatlands, and to the northeasterly side of Flatbush avenue, and that title to that strip had never come into the possession of the plaintiff and hence that she could not convey the same. This objection was valid and the plaintiff’s title unmarketable for the reason stated. The closing of the title was adjourned from time to time to April 7, 1930. The defendant title company was notified of the objection to the title, and took such steps as in its opinion were necessary to remove the defect. On April 2 the title company requested the plaintiff to procure a further adjournment, but this the purchaser refused to grant, and made tender on the closing date, April 7, 1930. The next day the plaintiff notified the defendant that the purchaser had rejected title. By May 14, 1930, the defendant had cured the defect in the title, without any cost to the plaintiff, and notified the attorneys for the plaintiff of that fact. The stipulation of the attorneys in this case further states as a fact that $14,000 was the best price plaintiff could obtain from May 14, 1930, to July 3, 1930, for said Parcel A, and that the plaintiff sold the property for that price after she had first offered it to the defendant, which refused to accept it. The cost to the plaintiff of Parcel A in 1925, at the time of the issuance to her of the policy, was $22,500. The defect in the title was not listed as one of the exceptions in the policy of insurance. On the question of damage the parties have also stipulated that if it be determined that the defendant is Hable to the plaintiff under the policy for other than nominal damages, the parties agree that those damages shall be fixed at the sum of $5,600 and costs.

The only point arising on this appeal is the liability of the defendant under its policy for the actual loss sustained by the plaintiff as distinguished from so-called nominal damages which are the expenses the plaintiff had to pay to her purchaser, i. e., cost of search and brokers’ commissions.

We agree with the lower courts that the pohcy covers more than nominal damages. The terms of the policy determine the question. It reads: “ This Policy of Insuranee Witnesseth: That the Home Title Insurance Company in consideration of the payment of its charges for the examination of title, insures Maria Montemarano, her heirs and devisees, against all loss or damage not exceeding fifty-seven thousand five hundred dollars which the insured shall sustain by reason of any defect or defects of title affecting the premises described in Schedule A, hereto annexed, * * The defect in the title to the plaintiff’s property, Parcel A, caused an actual loss to the plaintiff which consisted in the difference between the price she contracted to sell it for and the price she received for it after the defect was cured. This loss has been stipulated by the parties to be $5,600, so that we ■have nd question arising here as to the elements which go to make up damage. We need not consider the difference in value between the property with, and without, the defect in title. All these elements have been eliminated by the stipulation of counsel.

The opening clause of the policy just quoted covers this loss and the plaintiff is entitled to it unless there be other provisions of the policy restricting its application.

As stated in the stipulation, the defect in title was not within the exceptions. Neither do any of the conditions apply. These provide, in substance, that the title company shall defend the insured in all actions founded on a claim of title, and that no claim for damages shall arise except where there has been a final determination in a court of competent jurisdiction, under which the insured may be dispossessed, or evicted, or an adverse claim established. • No. Ill of section 2 of the conditions reads as follows: “ (III) Where the insured shall have contracted in good faith in writing to sell the insured estate or interest, and the title has been rejected because of some defect or incumbrance not excepted in this policy, and notice in writing of such rejection shall have been given to this company within ten days thereafter. For thirty days after receiving such notice this company shall have the option of paying the loss, of which the insured must present proper proof, or of maintaining or defending either in its own name or at its option in the name of thi insured some proper action or proceeding, begun or to be begun in a court of competent jurisdiction, for the purpose of determining the validity of the objection alleged by the vendee to the title, and only in case a final determination is made in such action or proceeding, sustaining the objection to the title, shall this company be liable ©a this policy.” This condition does not apply because the defendant did not pay the loss and it did not defend the title as against the objection of the purchaser; it acquiesced in the objection, finding it valid. There was no necessity for going to court; the decision of the defendant itself was as final as a judgment. The defendant recognized the defect and its liability, and thereupon proceeded to perfect the title. This is set forth in the stipulation. Condition 7 reads: “7. In every case where the liability of this company has been definitely fixed in accordance with these conditions, the loss or damage shall be payable within thirty days thereafter. Provided, however, that in every case this company may demand a valuation of the insured estate or interest, to be made by three arbitrators or any two of them, one to be chosen by the insured and one by this company, and the two thus chosen selecting an umpire; and then no right of action shall accrue until thirty days after such valuation shall have been served upon this company, and the insured shall have tendered a conveyance or transfer of the insured estate or interest to a purchaser to be named by this company, at such valuation, less the amount of any incumbrance on said insured estate or interest not hereby insured against, and this company shall have failed within that time, said tender being during that time kept good to find a purchaser for the estate or interest upon such terms. * * * ”

The company did not demand any valuation of the insured estate, and refused to take title to the property when tendered by the plaintiff at a valuation of $14,000. This condition does not apply. These are the only conditions which approach the question, but they do not come near enough to it to make their inapplicability even doubtful.

The numerous cases cited by the appellant, which limit damages to such loss as may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract, do not help it, as we consider the actual loss sustained by the plaintiff as coming within the terms of the contract which insured her against all loss sustained by reason of any defect in title. The loss occasioned by the failure to sell the property is neither speculative, contingent or remote. The stipulation admits the loss as being a very real one, due to the defect in title, and the policy covers all her loss. The defendant very readily could have added a few words to its contract accomplishing the limitation which it now desires to have the court read into its policy.

What we have here written has no application to those defects in title consisting of hens or incumbrances which can be satisfied by payment. Other provisions of the defendant’s policy cover such .outstanding claims. The title in this case was bad because of outstanding interests in the property, which had to be purchased or foreclosed.

For the reasons here stated the judgment appealed from should be affirmed, with costs.

Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment affirmed.


author: O’Brien, J.

text:
    In the Matter of E. Gerli and Company, Inc., Appellant, v. Oscar Heineman Corporation, Respondent.
    (Argued February 15, 1932;
    decided March 3, 1932.)

      John F. Caskey and William T. Gossett for appellant.
    The arbitrators were guilty of no misconduct or misbehavior; their conduct in ordering official tests of the unsold silk and in two of them making an examination of the silk upon the testing boards was proper. (Matter of Robins Silk Mfg. Co., 224 App. Div. 83; 251 N. Y. 87; Cobb v. Dolphin Mfg. Co., 108 N. Y. 463; Dechant v. Globe & Rutgers Fire Ins. Co., 194 Wis. 579; Small v. Trickey, 43 Me. 507; Straw v. Truesdale, 59 N. H. 109; Hall v. Norwalk Fire Ins. Co., 57 Conn. 105; Bangor Sav. Bank v. Niagara Fire Ins. Co., 85 Me. 68; Green Bay & Mississippi Canal Co. v. Kaukauna Gas, Elec. Lt. & Pr. Co., 157 Wis. 412; Matter of Horowitz, 221 App. Div. 567.) The inspection of the silk and the result of the test did not constitute the basis of the award but served only to confirm a decision already arrived at. (Sweet v. Morrison, 116 N. Y. 19; Fudickar v. Guardian Mut. Life Ins. Co., 62 N. Y. 393; People v. Gonzalez, 35 N. Y. 49; Burke v. Baker, 188 N. Y. 561; Post v. Brooklyn Heights R. R. Co., 195 N. Y. 62; McGean v. Manhattan Ry. Co., 117 N. Y. 219.)

      Ralph M. Ketcham for respondent.
    There was misconduct in the ex parte inspection by two arbitrators in the absence of the third. (Civ. Prac. Act, § 1453; Bulson v. Lohnes, 29 N. Y. 291; Matter of Bullard v. Grace Co., 240 N. Y. 388; Smith v. Smith, 28 Ill. 56; Doherty v. Doherty, 148 Mass. 367; Jones v. Bishop, 218 Ill. App. 318; Little v. Newton, 2 M. & G. 351.) There was misconduct in conducting the ex parte test. (Berizzi Co. v. Krausz, 239 N. Y. 315; Matter of Brook & Delcomyn, 16 C. B. [N. S.] 403.)
   O’Brien, J.

A large quantity of raw silk was sold by Oscar Heineman Corporation to E. Gerli & Co., Inc., which disposed of some of it to customers. Many of them rejected it for the reason, as they believed, that its quality did not conform with the required standard. A controversy concerning it arose between Heineman and Gerli which was submitted to arbitration and resulted in a unanimous award by the three arbitrators in favor of Gerli. This award, holding that the quality was not equal to the standard exacted by the contract, is based upon tests submitted by the buyer, upon official tests made by order of the arbitrators and upon the personal inspection of some of the unsold silk by two of the arbitrators. That inspection was made by only two of the three arbitrators and the official test was ordered without the knowledge or the express consent of the unsuccessful party to the arbitration. For that reason the award was vacated at Special Term, the order vacating it was affirmed and questions have been certified to this court. We are asked to decide whether the arbitrators were guilty of misconduct or misbehavior and, if they were, was their misconduct such as to prejudice the rights of either party within the meaning of section 1457 of the Civil Practice Act.

The silk delivered to Gerli was described in the contract with Heineman as 13 /15 Japan Yellow Gunze Fil; 50 bales Shake Hands, 110 bales Shake Hands B, 290 bales Shake Hands A.” Among the matters within the scope of the arbitration were the quality of the silk and the timeliness of the presentation of the buyer’s claim against the seller. The only issue to which the certified questions are directed relates to the conduct of the arbitrators in ascertaining the quality of the silk. In the silk trade, material possessing a standard of ninety per cent or more in the evenness of the threads is recognized as the highest quality. Introduced at the hearing were reports of seriplane tests made by Japan Cotton Trading Company which had sold the silk to Heineman. These reports had been delivered by Heineman to Gerli and showed an average of ninety per cent in evenness. Other seriplane tests made at the request of eight or nine of Gerli’s customers and showing only eighty to eighty-five per cent in evenness were also in evidence. The seriplane; test is the usual one for evenness of raw silk and is the official test of the Silk Association of America and of the National Haw Silk Exchange, After all these reports had been submitted to the arbitrators, the chairman inquired of HeineiMn’s representative, then present, whether he insisted that a test at their order be made of the unsold silk then remaining in Gerli’s possession. He replied that, in his opinion, the matter of quality was outside the scope of the arbitration. Three times he declined to answer the question more directly but rested upon his position that Heineman’s defense was based entirely upon his interpretation of a rule of the Silk Association which, according to his contention, made void the notice of claim presented by Gerli. Slight, if any, effort to defend the quality of the silk appears in the record or in respondent's brief. Neither the arbitrators nor the buyer impute ant intention to substitute an inferior article. All agree that the seller acted in good faith but the arbitrators have found that somewhere a mistake was made and that the buyer did not obtain the quality which the contract required. The three arbitrators, all of whom are experts in the silk trade, swear that in their opinion the tests submitted by Gerli at the hearing constitute sufficient evidence upon which to base a finding of inferiority. However, two of the arbitrators determined to verify the efficiency of those semi-official tests, as they describe them, and, therefore, after the hearing had been closed, they ordered official tests by the United States Testing Company. The result was the same. In order that they might be sure that the tests were accurately conducted, these two arbitrators were present when they were made. They examined the silk only in so far as they were present at the seriplane test in the laboratory. The third arbitrator was absent from the final tests but he read the official report of them and was assured by the two others that they had been efficiently conducted. In view of the fact that Heineman’s representative, when repeatedly-pressed for an answer at the hearing, refused to signify objection to these tests other than that the ascertainment of the quality of the merchandise was not within the scope of the arbitration, the arbitrators cannot fairly be blamed for assuming his consent with that qualification. Apparently he went no further than to decline to waive the only defense, the invalidity of the notice of claim, upon which he relied.

Section 1457, subdivision 3, of the Civil Practice Act provides that the award must be vacated where the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.” Reference is made in this section to only two types of misconduct and, concededly, the arbitrators are free from both kinds. Inadvertent misbehavior, according to the strictest of all possible standards, perhaps there may have been, but have the rights of any party been prejudiced? Mere departure from formal technicalities without resulting injury is not sufficient cause under the statute to nullify an award. Where, as in Berizzi Co. v. Krausz (239 N. Y. 315), the evidence gathered ex parte by the arbitrator is the real basis of his decision, the prejudice is clear. Here, the final test may be regarded as merely confirmatory of the former tests upon which the arbitrators were warranted in basing their award and which they swear were sufficient in their opinion to establish the inferior quality of the merchandise. Conceding, as all do, the integrity of the arbitrators, the final official tests afforded to the seller the last opportunity by which the former tests, which were -unfavorable to it, might have been disproved. Whatever advantage may have attached to these official tests lay with the seller. It had everything to gain and nothing to lose. We think, on the whole, that according to the general range of the exceptions indicated in the Berizzi case, there was no misconduct or misbehavior within the meaning of section 1457 of the Civil Practice Act.

The order vacating the award should be reversed, and the motion to confirm granted, with costs in all courts, and the questions certified answered as follows: First question in the negative; second question not answered.

Cardozo, Ch. J., Pound, Crane, Kellogg and Hubbs, JJ., concur; Lehman, J., not sitting.

Ordered accordingly.


author: Kellogg, J. Crane, J.

text:
    Jacob J. Kirshenbaum, Respondent, v. General Outdoor Advertising Company, Inc., Appellant, and Elizabeth W. Chapman, Appellant and Respondent.

      (Argued January 6, 1932;
    decided March 3, 1932.)

      Richard T. Greene, Daniel S. Murphy and Vincent W. Farley for General Outdoor Advertising Company, Inc., appellant.
    The complaint should be dismissed because the lease between plaintiff and the defendant owner absolved the latter from liability. (Matter of Loew's Buffalo Theatres, Inc., 233 N. Y. 495; Heller v. Pope, 250 N. Y. 132; First Nat. Bank v. National Surety Co., 228 N. Y. 469; Rosenthal v. American Bonding Co., 207 N. Y. 162; Weinberg & Holman, Inc., v. P. W. Ins. Co., 254 N. Y. 387; Marcus v. United States Casualty Co., 249 N. Y. 21; Benton v. Safe Deposit Bank, 255 N. Y. 260; Hamilton Emp. Service, Inc., v. N. Y. Tel. Co., 253 N. Y. 468; Gaita v. Windsor Bank, 251 N. Y. 152; Graves v. Davis, 235 N. Y. 315; 236 N. Y. 507; Westinghouse, Church, Kerr & Co. v. L. I. R. R. Co., 160 App. Div. 200; 216 N. Y. 697; Anderson v. Erie R. R. Co., 223 N. Y. 277; Hirsch v. Radt, 228 N. Y. 100.)

      Manfred W. Ehrich and Benjamin M. Robinson for Elizabeth W. Chapman, appellant and respondent.
    A tenant’s contract with his landlord that the latter should not be responsible for damage resulting to the tenant from the landlord’s failure to repair, is valid and enforcible. (Waterside Holding Corp. v. Task, 253 N. Y. Supp. 183.)

      J. W. Friedman and I. Gainsburg for respondent.
    The terms of the lease do not absolve the landlord from liability. (Drescher Rothberg Co. v. Landeker, 140 N. Y. Supp. 1025; Kessler v. The Ansonia, 253 N. Y. 453; Peats Co. v. Bradley, 166 App. Div. 267; Rauth v. Davenport, 60 Hun, 70; Levin v. Habicht, 45 Misc. Rep. 382; Randolph v. Feist, 23 Misc. Rep. 650; Sacher v. Murray Lenox Land Co., 171 N. Y. Supp. 216; Lewis Co. v. Metropolitan Realty Co., 112 App. Div. 385; Botwin v. Rothkopf Realty Co., 128 Misc. Rep. 15; Garrity v. Propper, 209 App. Div. 508; Kuperschmid v. Tauszig, 124 Misc. Rep. 548; Lowry-Feffer v. Mor-Ro Realty Corp., 223 App. Div. 621; Candia & Co. v. Rubin, 209 App. Div. 357; Robertson v. Ongley Electric Co., 146 N. Y. 20; Coggs v. Bernard, 2 Ld. Raymond, 909; Glanzer v. Shepard, 233 N. Y. 236; Siegel v. Spear & Co., 234 N. Y. 479; Marks v. Narnbil Realty Co., 245 N. Y. 256.)
   Kellogg, J.

The plaintiff was the occupant of a store in a one-story building under a lease from the owner, the defendant Chapman. The landlord retained possession of the roof of the building and thereafter rented the same to the defendant General Outdoor Advertising Co., Inc. That defendant, as permitted by the lease, erected upon the roof a framework, from which to display advertisements for its customers. Thereafter, on several occasions, rain collected upon the roof, and, seeping through, dripped into the plaintiff’s store. The plaintiff tenant notified the defendant landlord, who made repairs. The roof continued to leak, and, finally, in a heavy rainstorm, water came through in great quantities, seriously damaging merchandise piled upon shelves in the tenant’s store. This action was thereafter brought by the tenant to recover damages alleged to have resulted from the landlord’s negligence in failing adequately to repair the roof. The landlord, the defendant Chapman, served an answer on the General Outdoor Advertising Company,, in which, among other things, she asserted liability on the part of that defendant, under an indemnity clause contained in the lease to it, to make reimbursement 'for all payments of damages which the defendant landlord might be required to make to the plaintiff, or other persons, arising by reason of defects in the roof occupied by it. The jury found the defendant landlord guilty of negligence and awarded the plaintiffs substantial damages. Judgment followed against the defendant Chapman in favor of the plaintiff, and against the defendant General Outdoor Advertising Company in favor of the defendant Chapman. That judgment has been affirmed.

The lease to the plaintiff from the defendant Chapman contained a clause exempting the latter from all liability to the former for any injury to person or property '' caused by or resulting from steam, electricity, gas, water, rain, ice or snow which may leak or flow from or into any part of said building,” and this whether the said damage or injury shall be caused by or be due to the neghgence of the landlord, the landlord’s agent, servant, employee or not.” The trial judge held that this clause did not apply, and instructed the jury that, if the landlord, after receiving notice of the leaks, did not reasonably and seasonably make repairs, she was liable to the tenant for damages occasioned by the omission. The defendant took exception to this charge and requested the court to charge as follows: “ Will your Honor charge the jury that under the provisions of Section 16 of the lease to the plaintiff, the defendant Chapman was absolved from habihty either for her own neghgence or the neghgence of her agents? ” The court dechned so to charge. It likewise denied a motion, made at the close of the evidence, that the complaint be dismissed.

In Kessler v. The Ansonia (253 N. Y. 453) we dealt with the question of habihty, on the part of the owner of an apartment house, for injury done to personal property stored in the rooms of a tenant, through the escape of steam from radiators designed to heat the rooms. In that case the lease provided: “ That the lessor shah not be hable for any damage to any property, at any time, in said premises or building, by leakage of Croton or other water, steam or gas, from or into any part of said building in which the demised premises are situated.” (227 App. Div. 290, 291.) The tenant had informed the landlord that steam was escaping. Nothing was done, although the defendant had been given timely warning and knew of the defective piping ” (p. 455). We held, citing the words of Judge Lehman in Drescher Rothberg Co. v. Landeker (140 N. Y. Supp. 1025), that the immunity clause meant merely that the landlord should be exempt from liability for damage caused “ by wear and tear, or inherent defects, or the action of the elements,” but that it did not exempt him from his liability to repair actual defects, when called to bis attention, or from acts of affirmative negligence ” (p. 455). We have here a very different clause providing for immunity. The landlord was to be exempt whether or not the said damage or injury shall be caused by or be due to the negligence of the landlord, the landlord’s agent, servant, employee or not.” Language more comprehensive could hardly be employed,. Explicitly it provides that the landlord shall not be liable for damage due to leakage, no matter how negligent the landlord, in respect thereto, may have been. We think that the clause, if it did not contravene public policy, relieved the landlord from any obligation to make repairs which might otherwise have arisen.

Contracts are illegal at common law, as being against public policy, when they are such as to injuriously affect, or subvert, the public interests. (1 Story Eq. Juris. § 260n; Chesterfield v. Janssen, 2 Vesey, Sr., 125, 156.) ” (Per Gray, J., in Johnston v. Fargo, 184 N. Y. 379, 384.) That common carriers cannot secure immunity from liability for damages caused by their negligence is the established doctrine in this country. “ The rule rests on broad grounds of public policy justifying the restriction of liberty of contract because of the public ends to be achieved.” (Per Hughes, J., in Santa Fe, P. & P. Ry. Co. v. Grant Bros. Constr. Co., 228 U. S. 177, at p. 184.) If such were not the rule all common carriers might exact from passengers and shippers stipulations for immunity, and, in consequence, cease all effort to make the business of transportation reasonably safe, a result which would seriously affect the welfare of all the public. This, because the superior position of the carrier might compel every shipper and traveler to accede to the stipulations. “ The carrier and Ms customer do not stand on a footing of equality. The latter is only one individual of a million. He cannot afford to Mggle or stand out and seek redress in the courts. His business will not admit such a course. He prefers, rather, to accept any bill of ladmg, or sign any paper the carrier presents; often, indeed, without knowmg what the one or the other contains.” (Per Bradley, J., in Railroad Co. v. Lockwood, 17 Wall. [U. S.] 357, 379.) It has been held that this rule condemmng stipulations for immunity applies only where the subject-matter of a contract made by a railroad company is the carriage of freight or passenger; that it does not apply when the railroad contracts otherwise than as a common carrier, for then: Those who choose to enter into engagements with it are not at a disadvantage.” (Santa Fe, P. & P. Ry. Co. v. Grant Bros. Constr. Co., supra, at p. 185.) “A tug is not a common carrier of the tow. The owners of a tug may restrict their liability by special agreement. No rule of public policy is involved.” (Per Pound, J., in Graves v. Davis, 235 N. Y. 315, 319.) Stipulations between a landlord and tenant, determining wMch shall bear a loss arising from non-repair or mis-repair of the tenement) and wMch shall be immune, are not matters of public concern. Moreover, the two stand upon equal terms; neither the one nor the other is under any form of compulsion to make the stipulations; either may equally well accept or refuse entry into the relationsMp of landlord and tenant. We think it clear that public policy does not condemn the immumty clause voluntarily agreed upon by these parties.

It is manifest that the judgment must be reversed for the errors of the trial judge in instructmg the jury that the landlord, for merely failing adequately to repair after notice given, might be held hable, and for its refusal to charge, when requested, the converse of the proposition. The interesting question is whether or not the action should have been, or should now be dismissed.

A lessor of land who undertakes to make repairs for a tenant though not obligated by the lease so to do, •and, in making them, through carelessness or unskillfulness, creates insecurity where formerly there was safety, is hable for the damages thereby occasioned. (Am. Law Inst., Re-Statement of the Law of Torts, § 232; Feeley v. Doyle, 222 Mass. 155; Gill v. Middleton, 105 Mass. 477; Pratt, Hurst & Co. v. Tailer, 186 N. Y. 417, 421.) “ Of course, it is perfectly plain that the landlords would not be relieved of liability for leakage occasioned by their own action or that of their agents , in actually making holes in the roof.” (Per Willard Bartlett, J., in Pratt, Hurst & Co. v. Tailer, supra.) The liability in such case does not spring from a gratuitous undertaking to repair; nor from the relationship of landlord and tenant. The liability is in tort; it attaches to landlords as it would to strangers, having no relationship with tenants, who create a risk of harm to others,” by some positive act. (Bohlen, Studies in the Law of Torts, p. 206; Riley v. Lissner, 160 Mass. 330.) No such liability may be found here, for there is no proof that the landlord by misrepair made a sound roof leaky, or an unsound roof more defective.

A landlord, who fails of full performance of a gratuitous undertaking to repair, is certainly not liable on contract, for his promise to perform is not supported by consideration paid, and, at least until acted upon by the tenant, may at any time be withdrawn. Nor, without more, would there be a liability in tort. There must be present an element of misrepresentation by the landlord and a reliance thereupon by the tenant. If a prospective bailee of merchandise has carelessly asserted that the goods have arrived and have been stored in a particular warehouse, so that the bailor, relying upon the statement, has insured them therein, when, in point of fact, the goods upon arrival were elsewhere stored, "with the result that when the goods are destroyed by fire all insurance is lost, the prospective bailee is liable for the damage resulting. (International Products Co. v. Erie R. R. Co., 244 N. Y. 331.) Similarly, a landlord, gratuitously making repairs ¡ for a tenant, and not fully performing his undertaking,!1 is Hable for a loss resulting from non-repair, if he has, by abandoning the work as finished, given a false assurance that the premises are in complete repair, and the tenani has placed full refiance thereupon. The gist of the defendant’s wrong is the misleading quality of his conduct and words.” (Bohlen, Studies in the Law of Torts, p. 212.) It is the duty of one choosing to perform a gratuitous undertaking to take care lest he should mislead his promisee into the belief that the work has been well done and the premises made safe for use.” (Idem, p. 224.) There is liability if the making of the repairs gives the premises a deceptive appearance of safety and so leads the tenant or others in his right to use the land in a way which but for the repairs they would recognize to be dangerous.” (Re-Statement, Law of Torts, § 232.) It is sufficient to create liability if the making of the repairs ^ has cloaked the defect, dulled the call to vigilance, and so aggravated the danger.” (Per Cardozo, Ch. J., in Marks v. Nambil Realty Co., 245 N. Y. 256, 259.) The^_ question, then, is whether or not we have a case of misrepresentation by conduct and reliance thereupon.

On May 26, 1927, the roof of the building leaked and water • dripped from the ceiling of the plaintiff’s store. On that day the plaintiff wrote the agent of the landlord complaining of the leakage and demanding that repairs be made. The agent said that he would make the repairs. Two days later men appeared to repair the roof, did some patching and departed. Before leaving they were asked if they could not stop the leaking so the plaintiff would have no more trouble. They replied that they could not promise it; that they were allowed a few dollars at a time to patch it up, and while those patches would hold for a time, they wouldn’t prevent the roof from leaking.” This statement was reported to the landlord’s agent who stated that he would make repairs to cure the trouble. Nothing more was done before June fourteenth. On that day, water again leaked through the roof, and dripped from the ceiling of the plaintiff’s store. The plaintiff again wrote the agent reporting the leakage and saying, This was supposed to be fixed, but as yet it has not been done.” The agent was asked if he would not make repairs so that the leakage would stop and he said that he would. On examination it was discovered that there were cracks in the tar covering the platform upon which the signs had been erected; that there was an opening in the platform thirty inches long by four inches wide; that there were cracks at the base of the platform. Men came to repair the roof; stayed twenty minutes; and then left, saying that they could not fix the roof and could only patch it, since they were only allowed a few dollars for the work. Upon an examination of the roof, the same cracks were observed which had been seen before. Nothing was done to make further repairs, although the agent was requested to make them. On August twenty-seventh rain water again came through the roof, the condition of the roof was a little worse, and the agent was so advised. No one called to make further repairs. On September first great quantities of water leaked through upon the plaintiff’s merchandise, causing the damage for which the plaintiff seeks to be compensated.

• It will be observed that the landlord never assured the plaintiff, by the conduct of herself or her employees, that the work of repair had been well done. On the contrary, »the men employed told the plaintiff that the repairs were insufficient to stop the leaks except temporarily. This was said by them on the occasion when the last repairs were undertaken to be made, and that was in June, nearly three months before the leakage of which the plaintiff complains. Not only that; the plaintiff was perfectly well aware that the repairs were insufficient, for an examination made of the roof in June, after the repairs had been made, disclosed the same open cracks which had been observed before. The defendant landlord never thereafter made or started to make any further repairs. There was, therefore, nothing in the conduct of the defendant which gave assurance to the plaintiff that further leakage would not occur, and no reliance was placed upon any such assurance by the plaintiff. It is useless, therefore, to direct a new trial, so that the case might be tried out upon a theory of misrepresentation by conduct, since the evidence presently before us gives no indication that liability upon such a theory might be established.

The judgment in favor of the plaintiff against the defendant Chapman should be reversed and the complaint dismissed, and the judgment in favor of the defendant Chapman against the General Outdoor Advertising Co., Inc., should be reversed, and the claim against it dismissed, with costs to the defendant Chapman against the plaintiff in all the courts.

Crane, J.

(dissenting). Elizabeth W. Chapman made a lease dated August 21, 1925, to Jacob J. Kirshenbaum, of the store and cellar known as 369 East Fordham road, in the borough of The Bronx, city of New York, for a term commencing September 15, 1925, to the end of August 31,1928, at an annual rental of $3,000. The store was one of a row of one-story buildings known colloquially as “ taxpayers,” and numbered 365, 367, 369, 371 and 373, all owned by Mrs. Chapman. Three sixty-nine, leased to Kirshenbaum, was the center store, with no access to the roof. Although the store and cellar constituted the whole of the building, the control and possession of the roof were retained by the landlord. In the lease therefor there ran this provision: “ The landlord also reserves the right to place upon the top or roof of said premises, or on the side or exterior walls thereof, any electric or other sign or signs for advertising purposes and such rights shall belong solely and exclusively to the landlord.”

On September 18, 1926, Elizabeth W. Chapman leased to the General Outdoor Advertising Co., Inc., a New Jersey corporation, the entire roof of the building, known as 365 to 373 Fordham road, at $1,200 a year, for the erection of advertising signs. Thereafter, the lessee, under this lease, erected over Kirshenbaum’s store a sign fourteen feet high, weighing 14,455 pounds, fastened through the roof to the beams of the building. The General Outdoor Advertising Co., Inc., made this covenant with the landlord: “ The Tenant does hereby undertake and agree on and after the day it constructs and maintains its signs and not otherwise, for and during the term of this agreement to make- all necessary repairs to the entire roof of said building at its own expense and to keep the said roof in good order and repair throughout the term. * * *

The Tenant shall indemnify and save harmless the landlord from all liability however arising to any and all persons whomsoever, whether for personal injuries or otherwise, by reason of the erection, maintenance, operation, unsafety of condition of any sign or signs or any part thereof, or any device or appliance used in connection therewith, and from any damage or injury resulting to any persons whomsoever from defects in or defective condition of that portion of the roof controlled by the Tenant.”

Kirshenbaum, the tenant of No. 369, maintained a store for the sale of women’s dress trimmings, piece goods, draperies and lamp shade trimmings, and had considerable stock on hand. In May of 1927 the roof commenced to leak and do damage to the tenant’s goods. The owner or her agents were notified, and thereupon men were sent by the General Outdoor Advertising Co., Inc., to make repairs. Their statements that insufficient money had been furnished to do the repairs properly was reported to the owner or her agents. The same thing happened again in June and in August, the owner being notified, and undertaking to make the repairs. Finally, on September 1st, water accumulating to the depth of six or seven inches upon the roof, broke through in many places, flooded the store and did the damage for which this action has been brought.

Because the General Outdoor Advertising Co., Inc., is liable on its covenants, above quoted, to the landlord, for any loss sustained by the landlord, through defective roofing or insufficient repairs, we will not make any distinction between these defendants, but hereafter refer to them as “ the landlord.” If Elizabeth W. Chapman is liable to the tenant, the General Outdoor Advertising Company must pay the damage.

Under the terms of Kirshenbaum’s lease, is the landlord liable for the loss sustained? That lease contains the following provision, which is pleaded as an absolute bar to a recovery.

“No Liability.

Sixteenth. As a consideration for the making of this lease the Landlord shall not be liable for any failure of water supply or electric current, nor for injury or damage which may be sustained to person or property by the Tenant or any other person caused by or resulting from steam, electricity, gas, water, rain, ice or snow which may leak or flow from or into any part of said building or from the breakage, leakage, obstruction or other defect of the pipes, wiring, appliances, plumbing or lighting fixtures of the same, the condition of said premises or any part thereof, or through the elevator, if any, or from the street or sub-surface, or from any other source or cause whatsoever, whether the said damage or injury shall be caused by or be due to the negligence of the Landlord, the Landlord’s agent, servant, employee or not, nor for interference with light or other incorporeal hereditaments, provided such interference is caused by anybody other than the Landlord, or caused by operations by or for the City in the construction of any public or quasi-public work; neither shall the Landlord be liable for any defect in the building, latent or otherwise.”

The proposition submitted is based upon these established facts: the landlord retained full and complete possession of the roof, making no agreement to repair, and attempting to relieve herself from any and all consequences by reason of the no liability ” clause, above quoted. The tenant made no agreement or covenant to repair the roof and had no rights thereon or access thereto. However, when the event occurred, and the roof sprung a leak, the tenant informed the landlord, and she, for a period of three months, undertook and attempted to make repairs, but failed to do so properly, resulting in loss and damage to the tenant. Who is to suffer the loss?

The language in this “ no liability ” clause is broader than that of any other case called to our attention. It expressly states that the landlord shall not be hable for any damage sustained by the tenant resulting from water, which may leak or flow from any part of the building, whether the damage shall be caused by, or due to the negligence of, the landlord or her agent. Similar cases there have been where the lease exempted the landlord from any damage or injury by water (Kessler v. The Ansonia, 253 N. Y. 453); from any damage or injury by water or from the negligence of other tenants (Levin v. Habicht, 45 Misc. Rep. 381); from damage caused by leakage of water pipes (Lewis Co. v. Metropolitan Realty Co., 112 App. Div. 385); from damage by water (Botwin v. Rothkopf Realty Co., 128 Misc. Rep. 15); and from damage by water or from any other injury resulting from the negligence of agents or employees (Garrity v. Propper, 209 App. Div. 508). In Drescher Rothberg Co. v. Landeker (140 N. Y. Supp. 1025), in which Judge Lehman, of this court, wrote the opinion, the exemption was from damage by water or any other injury resulting from the carelessness or negligence of agents or employees. In all these cases the exemption from habihty was strictly and narrowly construed so as to prevent the landlord escaping habihty for his own act of neghgence or for his failure to repair after actual notice had been received of the defective condition. Mr. Justice Gildersleeve, in Randolph v. Feist (23 Misc. Rep. 650, 651) used expressions which have been repeated in subsequent cases to the effect that the words not be hable for any damage caused by leakage of water,” referred to leakage which may result from ordinary wear and tear or the carelessness of tenants, but did not refer to the neghgence of a landlord in putting on a new roof. So, too, in Garrity v. Propper (supra) the Appellate Division of the First Department stated that the exempting words did not reheve the landlord from his own neghgence. So far the courts have not decided that a landlord may exempt himself from habihty for his own neghgence causing damage. The above cases state very frankly that the “ no habihty ” clauses have been narrowly and strictly construed to limit the effect of ah such exemptions. (See, also, Railton v. Taylor, 20 R. I. 279; Le Vaite v. Hardman Estate, 77 Wash. 320; Worthington v. Parker, 11 Daly, 545.) Tuttle Co. v. Phipps (219 Mass. 474) was decided on the authority of Fera v. Child (115 Mass. 32), a case of passive neghgence.

We in this case have a fuller exemption. The words cover damage caused by the neghgence of the landlord and his agent’s servants and employees. I construe these to mean, as apphcable to this case, that if the owner failed to repair, even although she knew of the leaky condition of the roof, there would be no habihty. The roof was reserved for the exclusive use of the landlord, and under this “ no habihty ” clause there was no duty upon her part to repair it or keep it in repair for the benefit of the tenants. What rights the tenant had if the premises, from non-repair, became untenantable, is another question.

But Elizabeth W. Chapman did more than remain passive or indifferent to the condition of the roof. On being informed of the leaks, she or her agent undertook to make repairs, and assured the tenant that the defects had been remedied. The tenant remained after these assurances. Each time of leakage repair men came upon notification. The evidence justified the finding that the tenant relied upon these acts and representations and was not neglectful in trusting the safety and security of the store to the attention of the landlord. That the roof was not properly repaired is apparent from the damage of September first, when six inches of water gathered on the roof, poured through in many places, and damaged a large quantity of the tenant’s property.

For the purposes of this argument, the negligence of the landlord in making repairs has been conceded, and we are referred to the no liability ” clause as a full protection against the consequences. That clause was not intended, in our opinion, to cover the circumstances here stated. Whatever protection it may have afforded the owner, from failing or neglecting to act, it did not relieve her from the consequences of work negligently performed. Having undertaken after the lease to voluntarily make the repairs, she was bound to use care. (Marks v. Nambil Realty Co., 245 N. Y. 256; Marston v. Frisbie, 168 App. Div. 666; Miller v. International Harvester Co., 193 App. Div. 258.)

This was not the view taken by the trial judge in his charge to the jury. Applying the ruling in the cases above cited, he Said that the. landlord was liable for her negligence in failing to make repairs after notice of defect. To this an exception was taken. This error was harmless, as both sides admitted that after notice the landlord’s agents attempted to make repairs. The entire roof was in the possession of the landlord and the damage was caused by the negligent manner in which the repairs were made. The work done was not sufficient; having been undertaken, it was not completed. The negligence is not the question before us for review; therefore, this part of the charge is immaterial at this time. The point of the appeal is the effect of the “ no liability ” clause upon this failure to exercise care in making repairs.

The judgments below should be affirmed, with costs.

Cardozo, Ch. J., Pound, Lehman and O’Brien, JJ., concur with Kellogg, J.; Hubbs, J., votes for a new trial on the ground that the question of defendant’s negligence in attempting to repair is a question of fact; Crane, J., dissents in opinion.

Judgment accordingly.


text:
    In the Matter of Namon Gewertz, Appellant, against Charles W. Berry, as Comptroller of the City of New York, Respondent.

      (Submitted February 8, 1932;
    decided March 3, 1932.)

      E. A. Deutschman for appellant.
    Section 44 of the Civil Practice Act is a Statute of Limitations. (Connelly v. City of New York, 121 N. Y. 9; Mayor v. Colgate, 12 N. Y. 148; Fisher v. Mayor, 67 N. Y. 736; McMahon v. Arnold, 107 App. Div. 132; Matter of Watson, 163 App. Div. 41; Matter of Van Tassel, 119 Misc. Rep. 478; Warren v. Garlipp, 126 Misc. Rep. 103; Matter of City of New York, 239 N. Y. 220; Bell v. Morrison, 1 Pet. [U. S.] 351; Shoemaker v. Benedict, 11 N. Y. 176; United States v. Oregon, 260 U. S. 290; Seaman v. Clarke, 60 App. Div. 416; Jacobs v. Del Genovese, 179 App. Div. 163; Meigs v. Roberts, 162 N. Y. 202.) The Statute of Limitations runs against a municipal corporation. (Dillon on Municipal Corporations [2d ed.], § 668; Evans v. Erie Co., 66 Penn. St. 222.) The common-law rule as to the immunity of the sovereign from the Statute of Limitations has been abrogated by an express provision to that effect. (New York Central & Hudson River R. R. Co. v. Cottle, 102 Misc. Rep. 30; Matter of Brandeth, 14 Hun, 585; Mayor v. Colgate, 12 N. Y. 140; Fisher v. Mayor of City of New York, 67 N. Y. 73; Donnelly v. City of Brooklyn, 121 N. Y. 9; Matter of Abelove, 138 Misc. Rep. 241.)

      Arthur J. W. Hilly, Corporation Counsel (Nelson Rosenbaum and Vine H. Smith of counsel), for respondent.
    The judgment in favor of the Department of Health of the city of New York against the petitioner was obtained by the municipality in the exercise of its public and governmental powers and is not affected by the provisions of section 44 of the Civil Practice Act. (Lloyd v. City of New York, 5 N. Y. 369; Adler v. Deegan, 251 N. Y. 467; Prime v. City of Yonkers, 192 N. Y. 105; People v. Gilbert, 18 Johns. 227; People v. Herkimer, 4 Cow. 345; People v. Rossiter, 4 Cow. 143; St. Vincent Orphan Asylum v. City of Troy, 76 N. Y. 108; People v. Baldwin, 197 App. Div. 285; 233 N. Y. 672; Simis v. Brookfield, 34 N. Y. Supp. 695; Brown v. Trustees of Schools, 224 Ill. 184; Commonwealth v. Moorhead, 118 Penn. St. 344; City of Vesalia v. Jacob, 65 Cal. 434; Cross v. Mayor of Morristown, 18 N. J. Eq. 305.)
   O’Brien, J.

Recently, Namon Gewertz recovered judgments against the city of New York. The nature of his cause of action is not stated. Twenty-four years prior to their entry, the Department of Health of the city of New York had docketed a judgment against him. Neither is the nature of its cause of action disclosed by the record but the amount of its judgment with accrued interest exceeds the aggregate of those in Gewertz’s favor. The Comptroller seeks to offset the city’s judgment against those obtained by Gewertz and declines to pay them. His position has been supported on the theory that the city, as a subordinate governmental agency, is not, in the absence of words expressly applicable to it, amenable to section 44 of the Civil Practice Act. This part of the statute provides that after the expiration of twenty years a judgment is, with exceptions not now pertinent, conclusively presumed to be paid. The courts below have relied as their authority upon the decisions in MacMullen v. City of Middletown (187 N. Y. 37); People v. Gilbert (18 Johns. 227), and People v. Herkimer (4 Cow. 345).

The Board of Health as head of the Department of Health, which is one of the administrative departments in the city of New York (Greater New York Charter, §§ 96,109, 1167; Laws of 1901, ch. 466, as amd. by Laws of 1917, ch. 404), may sue and be sued in the name of this department. (Id. §§ 1192, 1196.) The city, when acting through its Department of Health, performs a governmental function and, therefore, in the absence of statute, would not be liable for its acts or omissions. (Maxmilian v. Mayor, 62 N. Y. 160; Ham v. Mayor, 70 N. Y. 459; McKay v. City of Buffalo, 9 Hun, 401; affd., 74 N. Y. 619; Bamber v. City of Rochester, 26 Hun, 587; affd., 97 N. Y. 625; Lefrois v. County of Monroe, 162 N. Y. 563; Prime v. City of Yonkers, 192 N. Y. 105.) By section 1196 of the Greater New York Charter all officers and agents of the Health Department, when acting in good faith and with ordinary discretion, are rendered exempt from liability, but the same section creates a right of action against the city for damages growing out of unjust or illegal destruction or injury to property by this department or its officers or agents. Thus the common-law rule applicable' to the city of New York as a subordinate governmental agency in the administration of measures relating to public health is expressly altered. The cause of action so established does not rest upon a common-law right and its continued existence is dependent upon the pleasure of the Legislature. Where the charter voices the will of the legislature, upon the subject of the responsibility of the political agency of the state to answer to the complaint of a private individual, it announces a rule of conduct, which is to govern the relations of the municipality with its citizens.” (MacMullen v. City of Middletown, 187 N. Y. 37, 46.) In rendering this public corporation subject to suit for acts or omissions in its governmental capacity the Legislature has removed the barrier which obstructed action against the sovereign and has placed its agent on the same plane as a private corporation or an individual. Until this agent may be relieved by statute of its corporate responsibility thus imposed or until it may be expressly exempted from the operation of section 44 of the Civil Practice Act, it remains, like other judgment debtors and judgment creditors, subject to the provisions of this section. Unless the Legislature otherwise enacts, the time within which the Department of Health or the city may begin an action against an individual or corporation is the same as that prescribed in the Civil Practice Act for other plaintiffs. We are not referred to any law establishing a different time. The general rule that the people are not bound by the terms of a statute of limitation, or one of repose, unless expressly named in it (People v. Gilbert, 18 Johns. 227; People v. Herkimer, 4 Cow. 345), does not control in a case where a litigant, which partakes of a governmental character, has been shorn of the protection which surrounds the sovereign. Such a suitor stands on an equality with the individual. The conclusive presumption against private parties created by section 44 of the Civil Practice Act, therefore, applies to the city of New York and renders non-existent the judgment docketed by it against appellant and any cause of action which otherwise might arise from it.

The order of the Appellate Division and that of the Special Term should be reversed and the application for a mandamus granted, with costs in all courts.

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and Hubbs, JJ., concur.

Orders reversed, etc.