author: Conway, J. Froessel, J. Lewis, Ch. J.

text:
    Hornblower & Weeks, Respondent, v. Eleanor B. Sherwood, Appellant; The Sheriff of the City of New York et al., Respondents, et al., Defendants.
    Argued March 11, 1954;
    decided June 3, 1954.

      Sidney G. Kingsley and Charles L. Sylvester for appellant.
    I. The order of January 4, 1932, was a final order in a special proceeding and was therefore a judgment within the meaning of section 44 of the Civil Practice Act. Under that statute, payment of the fine imposed by the final order is conclusively presumed to have been made after the lapse of twenty years from the date of its entry. (Matter of Barnes, 204 N. Y. 108; People ex rel. Hastings v. Hofstadter, 258 N. Y. 425; Moore v. Moore, 143 App. Div. 428, 208 N. Y. 97; Hosack v. Rogers, 11 Paige Ch. 603; Continental Mtge. Guar. Co. v. Whitecourt Constr. Corp., 164 Misc. 56; Koenig v. Eagle Waist Co., 176 App. Div. 724; Matter of Douglas v. Adel, 269 N. Y. 144; People ex rel. Negus v. Dwyer, 90 N. Y. 402; Matter of City of New York [Elm St.], 239 N. Y. 220; Matter of Lexington Ave. [No. 2], 30 App. Div. 609.) II. Since sequestration is a possessory process, service of the order of sequestration and of the final order on Hornblower & Weeks did not, in the absence of an applicable statute, constitute a “ levy ” or give rise to any “ lien ”, and the property in the hands of Hornblower & Weeks was never in custodia legis. (Erdheim v. Mabee, 305 N. Y. 307; Baker v. Hull, 250 N. Y. 484; Wood v. Dock & Mill Co., 193 App. Div. 236; Moran Towing & Transp. Co. v. Fleming, 287 N. Y. 571; Simpson v. Jersey City Contr. Co., 165 N. Y. 193; Warner v. Fourth Nat. Bank, 115 N. Y. 251; Ajax Craftsmen, Inc., v. Whinston, 269 N. Y. 7; Agar v. Orda, 264 N. Y. 248; First Nat. Bank of Boston v. Maine, 284 U. S. 312.)

      Nathaniel L, Goldstein, Attorney-General (Abe Wagman, Wendell P. Broiun and Irving L. Rollins of counsel), for People of the State of New York, respondent.
    I. One, who seeks to use the Statute of Limitations as a shield against a just claim, must bring himself squarely within the statute. The limitation contained in section 44 is expressly made applicable only to a “ judgment or decree.” The contempt order imposing a fine on Sherwood was not a judgment or decree either within the literal meaning or intent of section 44. (Matter of Murray, 272 N. Y. 228; Maguire v. Yellow Taxicab Corp., 253 App. Div. 249; Matter of Douglas v. Adel, 269 N. Y. 144; People ex rel. Rochester, Syracuse & Eastern R. R. Co. v. Moroney, 224 N. Y. 114; Matter of Gibson, 195 N. Y. 466; Matter of Lexington Ave. [No. 2], 30 App. Div. 609; Warren v. Garlipp, 217 App. Div. 55; Matter of Foote, 129 Misc. 2; Matter of Schoenewerg, 277 N. Y. 424; People ex rel. Munsell v. Court of Oyer & Terminer, 101 N. Y. 245.) II. A fine imposed as punishment in a criminal contempt proceeding does not come within the purview of section 44, even if the provision be construed to include an order in a special proceeding. (People ex rel. Backus v. Spalding, 10 Paige Ch, 284, 7 Hill 301, 45 How. [U. S.] 21; Stewart v. Smith, 186 App. Div. 755; Burbank v.
      Fay, 65 N. Y. 57; Matter of Koronsky, 170 F. 719; Matter of Hall, 170 F. 721; Matter of McRoberts, 17 F. Supp. 82; Matter of Spagat, 4 F. Supp. 926; Matter of Thomashefsky, 51 F. 2d 1040; People ex rel. Otterstedt v. Sheriff of Kings Co., 206 F. 566.) III. A fine imposed under section 406-a of the Civil Practice Act is not subject to section 44 since it runs in favor of the People of the State of New York. If this be denied, it must necessarily follow that section 44 is tolled by Sherwood’s continued absence from the State. (Brinkman v. Cram, 175 App. Div. 372, 225 N. Y. 720; People v. Gilbert, 18 Johns. 227; People v. Herkimer, 4 Cow. 345; Matter of Gewertz v. Berry, 258 N. Y. 505; Jacobs v. Del Genovese, 179 App. Div. 163; Matter of New York Univ. [Moore], 271 App. Div. 131, 296 N. Y. 913; Connecticut Mut. Life Ins. Co. v. Moore, 297 N. Y. 1, 337 U. S. 551.) IY. Even if section 44 be deemed applicable to the fine imposed upon Sherwood, the presumption of payment therein contained is not conclusive in this case since part payment has been made by Sherwood within the meaning of the section as judicially construed. (Moran Towing & Transp. Co. v. Fleming; 261 App. Div. 978, 287 N. Y. 571.) V. Even if section 44 is fully applicable, it simply bars the institution of a new action or a new proceeding for the enforcement of the final order. It does not render nugatory any proceeding instituted, or lien acquired, during the twenty-year period. The impleaded property having been levied upon, and constructive seizure having been made, during the twenty-year period, the statute does not bar its turnover and sale for the payment of the fine. (House v. Carr, 185 N. Y. 453; Harvey v. Guaranty Trust Co., 134 Misc. 417, 229 App. Div. 774, 256 N. Y. 526; Continental Bank & Trust Co. v. Tanager Constr. Corp., 193 Misc. 245, 276 App. Div. 988, 302 N. Y. 663; Matter of Slote, 188 Misc. 144; Matthews v. Matthews, 240 N. Y. 28; Van Rensselaer v. Wright, 121 N. Y. 626; Barnard v. Onderdonk, 98 N. Y. 158; Matter of City of New York [Walton Ave.], 244 App. Div. 125, 270 N. Y. 513.) YI. It is within the power of a court of equity to deny to a litigant the benefit of the Statute of Limitations. Aside from all else, both Sherwood and his wife should be estopped from using the statute as a shield. In any event, they should not be granted any affirmative relief. (Dodds v. McColgan, 229 App. Div. 273; Shohfi v. Shohfi, 303 N. Y. 370; Small v. Housman, 208 N. Y. 115; Matter of O’Byrne, 55 Hun 438, 121 N. Y. 675; Johnson v. Albany & Susquehanna R. R. Co., 54 N. Y. 416.)
   Conway, J.

In March of 1931, a joint legislative committee had been appointed to investigate the affairs of the City of New York. The committee caused a subpoena to be issued for the appearance of one Bussell T. Sherwood so that testimony might be obtained from him. Upon his failure to obey the subpoena a proceeding was instituted on October 30,1931, under section 406-a of the Civil Practice Act to punish Sherwood, who had placed himself beyond the jurisdiction of the State, for contempt. The order required Sherwood to show cause why he should not be punished and directed under section 406-a that his property in the State to the amount of $100,000 be levied upon and seized by the Sheriff ’ ’ and held to satisfy any judgment rendered against him in the proceeding. That order was served at once on the plaintiff in this interpleader action, Hornblower & Weeks, a brokerage firm. The service was recorded in the Attachment and Beplevin Begister ” of the Sheriff of New York County. Hornblower & Weeks informed the Sheriff that Sherwood’s account showed that a balance was due plaintiff against which plaintiff was carrying the stocks then in the account The Sheriff also served copies of the order of October 30,1931, upon banks and brokerage firms other than plaintiff which had possession of Sherwood’s property and from them some $8,000 was collected.

Thereafter an order was entered on January 4, 1932, sustaining the charge of recusancy against Sherwood and imposing a fine of $50,000 and costs. The order further provided that the fine “ be satisfied, unless paid, by a sale of, and out of, the property of the said Bussell T. Sherwood heretofore seized and levied upon by the Sheriff of any County of the State of New York, pursuant to the order * * * dated October 30, 1931 * * (Emphasis added.) The order of January 4, 1932, further provided that Sherwood “ be confined in close custody in the County Jail of the County in which he shall be apprehended, there to remain until the said fine of $50,000 shall be paid to the Comptroller of the State of New York for the benefit of the People of the State of New York and he shall have submitted to examination as a witness before the said Joint Legislative Committee * *

This then was not a fine for a civil contempt by way of indemnity for the benefit of a private litigant but a fine as punishment for a public or criminal contempt. This was a fine for flouting the power of the Legislature of a sovereign State •— the power of one of the three co-ordinate branches of government — which had called for aid upon another co-ordinate branch of government — the judiciary. No better language to describe a criminal contempt, such as that found here may be found than that of our court in People ex rel. Munsell v. Court of Oyer & Terminer of County of N. Y. (101 N. Y. 245, 248-249) as follows; “ The second class of contempts consists of those whose cause and result are a violation of the rights of the public as represented by their constituted legal tribunals, and a punishment for the wrong in the interest of public justice, and not in the interest of an individual litigant. In these cases if a fine is imposed its maximum is limited by a fixed general law, and not at all by the needs of individuals; and its proceeds when collected go into the public treasury and not into the purse of an individual suitor. The fine is punishment rather than indemnity, and if imprisonment is added, it is in the interest of public justice and purely as a penalty, and not at all as a means of securing indemnity to an individual. Necessarily these contempts in their origin and punishment partake of the nature of crimes, which are violations of the public law, and end in the vindication of public justice; and hence are named criminal contempts. As described in the statute, an element of willfulness, or of evil intention enters into and characterizes them. They are a disturbance of the court which interferes with its performance of duty as a judicial tribunal; willful disobedience to its lawful mandate; resistance to such mandate willfully offered; contumacious and unlawful refusal to be sworn as a witness, or to answer a proper question; and publication of a false and grossly inaccurate report of its proceedings, These cases and their punishment are placed under the head of ‘ general powers of the courts and their attributes; ’ and they very evidently relate to public offenses tending to cast discredit upon the administration of public justice, and having no reference to the particular rights of suitors. But here again we find that they occur as well in civil as in criminal actions, and so, for convenience, we may speak of them in view of the present classification, as public contempts, although the established legal nomenclature must remain unchanged.”

A certified copy of the order of January 4, 1932, was immediately served by the Sheriff upon the plaintiff. Within a few days thereafter the Sheriff made demand on plaintiff, stating that a writ of attachment had been served on plaintiff on October 30, 1931, and demanding that plaintiff turn over property or money in its possession belonging to Bussell T. Sherwood. Plaintiff wrote calling attention to its previous letter advising that Sherwood’s account showed a balance due to plaintiff. Three years later the plaintiff notified the Sheriff that the account showed a credit balance of some $3,000. That was not collected. Until the commencement of this action, the Sheriff took no further action. Sherwood has never been apprehended and has given no testimony. There is now a balance due Sherwood of some $38,000.

On September 24, 1952, Sherwood assigned his interest in ‘ ‘ his account with plaintiff ’ ’ to his wife who demanded that the property be turned over to her. She concedes that the assignment was accepted with the knowledge of the prior proceedings. This interpleader action followed. Summary judgment and judgment on the pleadings were rendered for defendants-respondents and affirmed below.

The proceeding resulting in the order of January 4, 1932, was a civil special proceeding resulting in a final order. The appellant concedes that and we are all agreed upon it. (People ex rel. Rochester, Syracuse & Eastern R. R. Co. v. Moroney, 224 N. Y. 114, 124; Matter of Gibson, 195 N. Y. 466.) The appellant insists, however, that, although a final order in a special proceeding, it is a judgment within the meaning of section 44 of the Civil Practice Act and is now conclusively presumed to have been paid after the expiration.of a period of twenty years from January 5, 1932.

Section 44 of the Civil Practice Act reads as follows: “ When satisfaction of judgment presumed. A final judgment or decree for a sum of money or directing the payment of a sum of money, rendered in a court of record within the United States or elsewhere, or a judgment of a court of this state not of record docketed in a county clerk’s office upon a transcript filed therein pursuant to law, is presumed to be paid and satisfied after the expiration of twenty years from the time when the party recovering it was first entitled to a mandate to enforce it. This presumption is conclusive, except as against a person, who within twenty years from that time makes a payment or acknowledges an indebtedness of some part of the amount recovered by the judgment or decree, or his heir or personal representative, or a person whom he otherwise represents. Such an acknowledgment must be in writing and signed by the person to be charged thereby. A person may avail himself of the presumption created by this section under an allegation that the action was not commenced, or that the proceeding was not taken, within the time therein limited.”

The words of the statute are “ judgment or decree ”. They were words of art when written and concededly did not mean nor include a final order ”. They were written originally into statute law before the first Code of Civil Procedure in 1848 because of which it came to pass thereafter that actions ended in judgments and special proceedings ended in final orders. It has been so since. Yet we have had a second Code of Civil Procedure adopted in 1876 and 1880 (1 Carmody-Wait on New York Practice, pp. 3, 4) and later our Civil Practice Act but the Legislature has never, in all of those enactments over the years, amended section 44 so as to provide that its applicability should extend also to a final order in a special proceeding. (See Warren v. Garlipp, 217 App. Div. 55.)

It is not that the People and the Legislature overlooked the fact that the Code of 1848 had made a change. The Legislature could have amended the language of what is now section 44 of the Civil Practice Act so as to add the word order ” but it was not required to do so unless it thought the amendment necessary or advisable. Before 1848 and the abolition of the distinction between actions at law and suits in equity, the Legislature, when it thought it necessary or advisable, provided for the filing of an order and the consequent docketing of it ££ as if the same was the transcript of a judgment ” and that a certified copy of such order together with other papers ££ shall be the judgment record ”, and that such judgment should be a lien on real estate. (L. 1844, ch. 315, § 8; Gildersleeve v. People, 10 Barb. 35, 43; People v. Lott, 21 Barb. 130, 142; Code Crim. Pro., §§ 593, 595; People v. Wirtschafter, 305 N. Y. 515, 519.) That has never been changed to date. So also after 1848, when the Legislature saw the necessity for providing that an order might be “ deemed a judgment ” or “ docketed as a judgment ”, it so provided. Thus in section 773 of the Civil Practice Act it is provided: ££ A decree or order awarding the payment of money shall be deemed a judgment for the purpose of this article.” (Emphasis supplied.) The article is the one dealing with supplementary proceedings. So also as to condemnation proceedings. Section 17 of the Condemnation Law (derived from Code Civ. Pro., § 3373) specifically provides that the final order in the condemnation proceeding ££ shall be docketed as a judgment * * * and it shall have all the force and effect of a money judgment * * Again in section 1332 of the Civil Practice Act, prior to the enactment of article 78 of the Civil Practice Act, the Legislature made specific provision that in a mandamus proceeding ££ * * * the final order is deemed to be a final judgment * * *.” Finally, as continuing the pointed distinction between judgments and orders, except-when otherwise specifically provided, the People amended the Constitution and the Legislature amended the Civil Practice Act recently so as to provide for both judgment or order absolute (N. Y. Const., art. VI, § 7; Civ. Prac. Act, § 588, subd. 3) when prior thereto there had been provision only for judgment absolute. (See Tenth Annual Report of N. Y. Judicial Council, 1944, p. 369 et seq.)

We must read and follow the plain words of the statute as enacted by the Legislature more than a century ago and never changed. Section 44 of the Civil Practice Act applies a fiction of payment to judgments or decrees in favor of litigants where ordinary money claims have been adjudicated and in other litigation specifically provided for by legislation. It fits into the pattern of government exemplified by the maxim: “ It concerns the welfare of a state that an end be put to litigation (Co. Litt. 303.) It was passed by the Legislature to end litigation where successful litigants had slept on adjudications in their favor for twenty years. Appellant would have us write into the statute the word order ”, which the Legislature has omitted, and then apply it, when thus amended, to a situation where we do not think it may properly be said that the Legislature intended to create a fiction of payment so as to presume satisfaction of a claim of the State to a fine in a criminal contempt proceeding imposed to vindicate an affront to the power and authority of the same Legislature when the failure to reduce to possession property available to pay the fine in part was the result of inaction — not by the party litigant — but by employees of the Sheriff over a period of more than twenty years.

I concur also in the concurring memorandum of Judge Froessel as to sections 10 and 54 of the Civil Practice Act.

The judgment should be affirmed, with costs.

Froessel, J.

(concurring). I concur in the opinion of Judge Cohway for affirmance and upon the following additional ground:

Section 54 of the Civil Practice Act, so far as pertinent, provides: u The limitations prescribed in this article for actions * * * apply alike to actions brought in the name of the people of the state, or for their benefit, and to actions by private persons ” (emphasis supplied). The State has thereby surrendered its immunity in this respect only as to “ actions ”. The contempt order in this case was not obtained in any action, resulting in a judgment or decree. Nor is it “ necessary ” in this contempt case to construe the word “ action ” as “ including a special proceeding ”, as is provided in section 10 of the Civil Practice Act, to the detriment of the People of the State of New York. The surrender of the State’s immunity is not to be so lightly implied. As we said in Smith v. State of New York (227 N. Y. 405, 410): “ The liability of the state has not been enlarged and it is not true that whenever an individual is liable for a certain act the state is liable for the same act. (Barrett v. State, 220 N. Y. 423.) * * " In the absence of a legislative enactment specifically waiving this immunity, the state cannot be subjected to a liability therefor.”

We should adhere to the strict statutory definition. (Warren v. Garlipp, 217 App. Div. 55.)

Lewis, Ch. J.

(dissenting). Our dissent from the decision about to be made has as its basis the following facts:

The plaintiff Hornblower & Weeks, a partnership, holds under a contract as pledgee certain securities of value in excess of $30,000 which on April 8,1926, and thereafter until September 24, 1952, were the property of the defendant Bussell T. Sherwood (hereinafter referred to as Sherwood). On the date last mentioned Sherwood assigned to his wife, the defendant Eleanor B. Sherwood, all of his right, title and interest in his contract as pledgor with the plaintiff. Meantime, on October 30, 1931, the Sheriff of New York County served upon the plaintiff a certified copy of a Supreme Court order directing Sherwood to show cause why he should not be adjudged in contempt for his refusal to appear before a joint legislative committee appointed to investigate the administration and conduct of various departments of the City of New York, and directing further that property in the amount of $100,000 within the State of New York be levied upon and seized by the Sheriff, and held to satisfy any judgment that might be rendered against Sherwood in the contempt proceeding. On January 5, 1932, the Sheriff of New York County served upon plaintiff a certified copy of a Supreme Court order dated January 4,1932, made in accord with section 406-a of the Civil Practice Act, adjudging Sherwood in contempt for refusal to appear before the legislative committee mentioned above, ordering him to pay a fine of $50,000, and directing that, in the event of his failure to make such payments, such fine be satisfied out of any property seized and levied upon in accord with the Supreme Court order dated October 30, 1931. Thereafter, on January 13, 1932, the Sheriff made demand on plaintiff that it turn over to bim all property or money belonging to Sherwood then in its possession. The plaintiff did not then comply with that demand, nor has it since turned over to the Sheriff any money or property belonging to Sherwood, although it has been advised of the assignment mentioned above made by Sherwood to his wife. Instead, the plaintiff has instituted the present interpleader action in which it makes no claim to Sherwood’s property which it holds as pledgee, except for its counsel fees, its disbursements, its costs and any expense connected with its transfer of stocks to the person adjudged herein to be entitled thereto. The judgment sought herein by the plaintiff is that the court determine and enforce the right, title and interest of the various defendants whose interests are adverse.

We thus reach a consideration of the legal consequences of the following additional facts: Although, as we have seen, the plaintiff has failed to comply with the Supreme Court order which demanded that it turn over to the Sheriff the property of Sherwood which it holds as pledgee, the Sheriff — whose duty it was in 1932 and thereafter, under court order, to levy upon and seize such property — has taken no steps to gain possession thereof and has since made no effort to that end.

Thus was the contempt proceeding dormant for a period in excess of twenty years, until December 11, 1952, when the plaintiff instituted the present interpleader action. It is that quiescent period in excess of twenty years which, in our view, makes applicable the following provisions of section 44 of the Civil Practice Act: “ A final judgment or decree for a sum of money or directing the payment of a sum of money, rendered in a court of record within the United States or elsewhere, or a judgment of a court of this state not of record docketed in a county clerk’s office upon a transcript filed therein pursuant to law, is presumed tote paid and satisfied after the expiration of twenty years from the time when the party recovering it was first entitled to a mandate to enforce it. This presumption is conclusive, except as against a person, who within twenty years from that time makes a payment or acknowledges an indebtedness of some part of the amount recovered by the judgment or decree, or his heir or personal representative, or a person whom he otherwise represents. Such an acknowledgment must be in writing and signed by the person to be charged thereby * * * ” (emphasis supplied).

We agree with the statement in the majority’s opinion that ‘ ‘ The proceeding resulting in the order of January 4, 1932, was a civil special proceeding resulting in a final order.” We do not agree with the majority’s position that the time limitation of twenty years contained in section 44 of the Civil Practice Act applies only against a “ judgment or decree,” ánd does not bar the enforcement of the order of January 4, 1932.

After a long succession of enactments, by which the bases for time limitations affecting litigation of various types has been changed from common-law to statutory rules, the Legislature finally brought together in article 2 of the Civil Practice Act a complete scheme of time limitations applicable to all civil remedies. The scope of article 2 is defined in section 10 (formerly Code Civ. Pro., § 414) which provides in part: “10. Application of article. The provisions of this article apply and constitute the only rules of limitation applicable to a civil action or special proceeding * * There follows in section 10 — after two exceptions not relevant to our present problem — “ The word action ’ contained in this article is to be construed, when it is necessary so to do, as including a special proceeding or any proceedimg therein or in an action.” (Emphasis supplied, and see Conyngham v. Duffy, 125 N. Y. 200, 202; Matter of Rogers, 153 N. Y. 316, 321.)

It is also of interest to note that to assure completeness in its statutory fixation of time limitations applicable to legal remedies, the Legislature — after prescribing limits applicable to a wide field of remedies — has provided in section 53 of article 2: “ Limitation where none specially prescribed. An action, the limitation of which is not specifically prescribed in this article, must be commenced within ten years after the cause of action accrues.”

Thus, if the twenty-year Statute of Limitations is not applicable to the present case, it would seem that the omnibus ten-year statute would apply.

As a counsel of caution in the realm of statutory construction Mr. Justice Cardozo, writing for the court in Van Beeck v. Sabine Towing Co. (300 U. S. 342, 351) reminded us that “ ‘ The Legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed.’ ” That statement is in accord with this court’s admonition (per Pound, J.) in Matter of City of New York (Elm St.) (239 N. Y. 220, 225): “The statute [of limitations] is one of repose. The court may not pervert its purpose in order to avert an unjust result.”

Beading section 44 of the Civil Practice Act in the light of section 10 (id., quoted supra), we find statutory warrant for our conclusion that, when the period of twenty years had elapsed after service upon the plaintiff of the Supreme Court order of January 4, 1932, without further legal action by the Sheriff during that twenty-year period to enforce that order, section 44 became legally effective to bar such enforcement.

Accordingly, we dissent and vote to reverse the judgment and to deny the motions made on behalf of the People of the State of New York. The matter should be remanded to Special Term with directions to cause delivery to the appellant of property now in possession of the plaintiff to which the appellant may be legally entitled, with costs to plaintiff in all courts and its expenses incident to such delivery payable out of the property held by the plaintiff as pledgee, or its proceeds.

Desmond and Fuld, JJ., concur with Conway, J.; Froessel, J., concurs for affirmance in separate memorandum; Lewis, Ch. J., dissents in opinion in which Dye and Van Voorhis, JJ., concur.

Judgment affirmed.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    In the Matter of the Claim of John F. Congdon, Respondent, against Henry N. Klett, Doing Business as The Klett Co., et al., Appellants. Workmen’s Compensation Board, Respondent.
    Argued April 21, 1954;
    decided June 4, 1954.

      Noel 8. Symons for appellants.
    The accident sustained by claimant did not arise out of or in the course of his employment. (Davis v. Newsweek Magazine, 305 N. Y. 20; Matter of Wilson v. General Motors Corp., 298 N. Y. 468; Matter of Tedesco v. General Elec. Co., 305 N. Y. 544; Matter of Davidson v. Pansy Waist Co., 240 N. Y. 584; Matter of Hall v. City of New York, 282 N. Y. 708; Matter of Pisko v. Mintz, 262 N. Y. 176; Matter of Bowen v. Saratoga Springs Comm., 267 App. Div. 928; Matter of Dunning v. Park School of Buffalo, 279 App. Div. 832; Matter of Fagan v. Albany Evening Union Co., 261 App. Div. 861.)

      Nathaniel L. Goldstein, Attorney-General (Daniel Polansky, Wendell P. Brown and Boy Wiedersum of counsel), for Workmen’s Compensation Board, respondent.
    Ample evidence supports the determination of the Workmen’s Compensation Board that claimant’s accidental injuries arose out of and in the course of his employment. (Matter of Kleid v. Carr Bros., 300 N. Y. 270; Matter of Bollard v. Engel, 278 N. Y. 463; Matter of Brown v. United Services for Air, 298 N. Y. 901; Matter of Tedesco v.
      General Elec. Co., 305 N. Y. 544; Matter of Piusinski v. Transit Valley Country Club, 283 N. Y. 674; Matter of Bowen v. Saratoga Springs Comm., 267 App. Div. 928; Matter of Dodge v. William J. Keller, Inc., 304 N. Y. 792; Matter of Kenney v. Lord & Taylor, 254 N. Y. 532; Matter of Graves v. Tide Water Oil Sales Co., 275 N. Y. 583; Matter of Hinkley v. Kuchler, 272 App. Div. 986; Matter of Fagan v. Albany Evening Union Co., 261 App. Div. 861.)
   Conway, J.

This is an appeal by permission of this court from an order of the Appellate Division, Third Department, which unanimously affirmed an award of the Workmen’s Compensation Board in favor of the claimant.

The sole issue is whether claimant’s accidental injuries arose out of and in the course of his employment.

The employer, The Klett Co., was engaged in the business of selling and servicing electrical appliances at Delmar, New York. The claimant worked for the employer in the capacity of a radio and television repair and serviceman. The employer’s business was conducted and operated by Mr. and Mrs. Henry Klett in a two-story building consisting of a store, workshop and display room on the first floor, and living quarters of Mr. and Mrs. Klett on the second floor. About twenty or thirty feet to the rear of the employer’s building, Mr. and Mrs. Klett maintained a private swimming pool where the accident occurred. The pool was fenced off from the public. The only means of access to the pool was through the rear exit of the building and this exit was not used in any way for business purposes. The pool was built by Mr. Klett for his own personal use and pleasure.

Mr. Klett testified that outside of himself and his family the pool was used by invited guests and that he allowed his two employees — claimant and another — the privilege of using it during their lunch hour and during their off hours.

The two employees were employed from 9:00 a.m. to 5:00 p.m. with an hour off for lunch, had no time clock to punch, were paid a straight weekly salary, were not penalized if late for work, and were allowed deviations in the time and length of their lunch hour.

The employer did not take emergency calls after hours and no work was done in the shop after 5:00 p.m. The only time the claimant ever worked after 5:00 p.m. was on one evening after supper when he voluntarily helped the employer paint the shop.

There was no fixed starting time for the lunch hour of the employees as it began when the men returned from being out on calls in the morning.

The employer’s testimony was that the employees were permitted to use the swimming pool during their lunch hour and after working hours.

The claimant’s testimony as to his use of the pool was that he was permitted to swim after working hours and quite a few times during working hours.

On the afternoon that he was injured claimant had been out on a call and returned about three-thirty or four o’clock. He had already eaten lunch. At that time Mrs. Klett told claimant to watch the store as she was going to take a swim, and in her conversation Mrs. Klett stated, When I come out you can go in ”. When she returned from her swim, Mrs. Klett said to claimant, “ You can go in now ”. Claimant did so and while diving sustained accidental injuries in the nature of a compressed fracture of the anterior border of the fifth dorsal vertebra.

The employee’s claim for compensation and the employer’s report of injury both stated that the accident happened at 5:30 p.m. — which was after working hours. On the hearing claimant likewise testified that he thought the accident took place about 5:30 p.m. but he was unable to state whether he had gone into the pool before or after 5:00 p.m.

The board found that the injuries sustained by claimant were accidental injuries and arose out of and in the course of his employment. The Appellate Division has affirmed.

Larson in his work on the Workmen’s Compensation Law (Vol. 1, § 22) has, in concise language, set forth situations wherein injuries, sustained by an employee engaged in recreational or social activities, have been held to be compensable, i.e., having arisen out of and in the course of employment. In the words of Larson, recreational or social activities are within the course of employment when:

(a) They occur on the premises during a lunch or recreation period as a regular incident of the employment; or

“ (b) The employer, by expressly or impliedly requiring participation, or by making the activity part of the services of an employee, brings the activity within the orbit of the employment; or

(c) The employer derives substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life.”

Manifestly, this case does not fall within any of those categories.

(a) The accident occurred on private property adjacent to but not part of the business property after working hours.

(b) The employee was not compelled or required to use the pool but was merely permitted to use it. Swimming was clearly not part of the services of claimant.

(c) The employer certainly derived no substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life.

Considerable emphasis is placed on claimant’s testimony that Mr. Klett used to say: ‘ ‘ Gfo in and have a swim before you go out on service ’ ’ from which claimant argues that the employer urged him to go swimming so that claimant would be better able to perform the duties required by his employer for the mutual benefit of the employer and employee.” However, the accident which is the subject of this claim occurred after the close of working hours. It may be that claimant would be refreshed by the swim for the performance of his duties upon the next day, but as this court said in Matter of Davis v. Newsweek Magazine (305 N. Y. 20, 25): “ If that is to be deemed a sufficient nexus between the employment and the injury, then one may say that in the ordinary effort of living a man continually makes himself ready for his employer’s service and thus should be compensated for whatever injury befalls him

It must also be noted that in the Davis case (supra) Judge Froessel, writing for the court, made an extensive review of compensation cases where the injury resulted from the employee’s engaging in recreatioxxal or social activities and concluded with this significant statement (p. 27): Careful exaxnination of these cases reveals that there is one operative factor coxnmoxi to all. In each and every instance the employee had been directed, as part of his duties, to remain in a particular place or locality until directed otherwise or for a specified length of time. In those circumstances, the rule applied is simply that the employee is not expected to wait immobile, but may indulge in any reasonable activity at that place, and if he does so the risk inherent in such activity is an incident of his employment.” (Emphasis in original.)

The activities of claimant do not come within the meaning or intent of that passage. Claimant’s hours of work were from 9:00 a.m. to 5:00 p.m. He was not required to remain in the vicinity of his employer’s shop beyond that hour. The injury took place at 5:30 p.m. The employee’s presence in the pool at that hour was the result of his election to remain there and enjoy a swim. The only reasonable conclusion is that at the time of injury he was engaged in a purely personal diversion totally unrelated to his work.

The case of Matter of Penzara v. Maffia Bros. (307 N. Y. 15), decided by us during the last session of this court, is not precedent for an award of compensation here. There, the employee was injured on the business premises where he had been directed to remain for a specified length of time. That case came directly within the meaning and intent of the above-quoted passage from the Davis case (supra).

Personal activities of an employee unrelated to the work and employment for which the employee has been hired, conducted off the business premises and not required by the employer, are not encompassed by the Workmen’s Compensation Law. To grant compensation here would do violence to the statute. Indeed, a grant of compensation here would serve to warn employers that, if they concern themselves with the social and recreational activities of their employees, even though the activities be conducted after hours and be totally unconnected with the work for which the employees have been hired, they run the risk of being subjected to liability for every accident and injury arising from such activities. The Legislature never intended such a result.

The order of the Appellate Division should he reversed, the award of the Workmen’s Compensation Board annulled and the claim dismissed, with costs in this court and in the Appellate Division against respondent Workmen’s Compensation Board.

Lewis, Ch. J., Desmond, Dye, Fuld and Froessel, JJ., concur with Conway, J.; Van Voorhis, J., concurs except regarding what is said concerning the rationale of Matter of Pen&ara v. Mafia Bros. (307 N. Y. 15).

Order reversed, etc.


author: Froessel, J.

text:
    In the Matter of the Claim of Sadie Gold, Appellant. Edward Corsi, as Industrial Commissioner, Respondent.
    Argued April 14, 1954;
    decided June 4, 1954.

      Samuel Harris Cohen and Dorothy Friedman for appellant.
    I. An employee may not be penalized for failure to file a declaration of gratuities where the employer is required to first notify her of her right to file such declaration and the employer fails to give such notice. (Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104; Matter of Federal Tel. & Radio Corp. [Corsi], 301 N. Y. 95; Isaac v. Town of Queensbury, 247 App. Div. 263, 277 N. Y. 37; Baldwin v. Hegeman Farms Corp., 154 Misc. 285.) II. Rule 6 is unreasonable and arbitrary in presuming that where claimant does not file a declaration, her tips are nil, where similar rules provide for certain minim-nm tips in regard to other categories of employees.

      Nathaniel L. Goldstein, Attorney-General (Francis B. Curran and Wendell P. Brown of counsel), for Edward Corsi, Industrial Commissioner, respondent. I.
    The commissioner promulgated rule 6 in accordance with legislative authority. (Matter of Childs Co. [Murphy], 270 App. Div. 460, 296 N. Y. 948; Matter of Feinberg, 258 App. Div. 834; Matter of Model Taxi Corp., 263 App. Div. 776, 263 App. Div. 924, 287 N. Y. 854.) II. Rule 6 is not arbitrary or capricious. III. Failure of the employer to give notice of the rule to this claimant and of the privilege to certify the amount of gratuities received by her does not invalidate the rule. (People ex rel. New York & N. J. Tel. Co. v. Neff, 15 App. Div. 8, 156 N. Y. 701; City of New York v. Ferris, 91 App. Div. 223; People ex rel. Seelye v. Keefe, 119 App. Div. 713, 190 N. Y. 555; Gale v. Mead, 2 Denio 160; Harman v. Board of Educ. of City of N. Y., 196 Misc. 287.)
   Froessel, J.

The question presented to ns in this case is whether the Industrial Commissioner, in computing claimant’s unemployment benefits under article 18 of the Labor Law, should have credited her with $400 in gratuities concededly earned.

From May 18 to October 11, 1948, claimant was employed as a chambermaid at an Ulster County hotel which, like most of the numerous hotels in that county and adjoining Sullivan County, operates on the "American plan ”. In these American plan hotels, it is customary for guests to tip chambermaids. Claimant’s compensation for caring for twenty-eight rooms, seven days a week, during* the period in question, consisted of $75 dollars a month paid by her employer, room and board furnished by him, and tips from guests which aggregated $400.

Under section 517 of the Labor Law, gratuities are deemed to be part of the remuneration ” paid an employee by his employer. Moreover, that section places upon the commissioner the duty to determine the amount of such gratuities. The pertinent language is as follows (subd. 1): " Where gratuities are received by the employee in the course of his employment from a person other than his employer, the value of such gratuities shall be determined by the commissioner and be deemed and included as part of his remuneration paid by his employer.” (Emphasis supplied.)

The method adopted by the commissioner for determining the amount of chambermaids’ tips is set forth in his rule 6, promulgated pursuant to power allegedly granted him by subdivision 1 of section 530 of the Labor Law. This rule, so far as it applies to this case, provides (subd. b) that the value of gratuities received by a chambermaid shall be equal to the amount certified by her in a signed statement to her employer, and, if no such statement has been submitted, such gratuities shall be deemed to be “nil”. Subdivision d of the same rule further provides that employers “ shall give notice to each of their hotel service employees ” of this “ privilege ”, and of the consequences for failing to submit such statement. It is undisputed that claimant’s employer did not so notify her, thus avoiding payment of the tax thereon, and that she knew nothing about this rule.

When she applied for unemployment benefits in October, 1949, the referee determined that such gratuities may not be included as remuneration. The Unemployment Insurance Appeal Board reversed the referee, and was in turn reversed by the Appellate Division, which reinstated the referee’s decision.

We are of the opinion that, in computing claimant’s unemployment benefits, the Industrial Commissioner should have credited her with the $400 in gratuities. It is the commissioner’s statutory duty to determine the value of an employee’s gratuities (Labor Law, § 517). He has attempted to carry out this duty by promulgating rule 6. While this rule may be reasonable in the case of European plan hotels, where it is agreed gratuities are nil or very meager, and in which the majority of hotel chambermaids throughout the State are employed, there is no rational basis for presuming to be “ nil ” gratuities of the large number of chambermaids who work in American plan hotels, and whose earnings of that character are substantial. If the operation of this presumption is to reduce substantially a claimant’s statutory unemployment benefits, simple fairness requires that she have the notice prescribed by the commissioner of her opportunity to declare gratuities and of the consequences for failing to do so. Otherwise, application of the rule may result in an unreasonable, arbitrary and capricious determination by the commissioner of the total amount of claimant’s remuneratian — indeed in no determination at all. This would be in violation of the statute (§ 517), and in contravention of the authority given him by subdivision 1 of section 530 to make rules to administer ” the statute, not to disregard it (Matter of Federal Tel. & Radio Corp. [Corsi], 301 N. Y. 95, 99).

The commissioner’s argument that the notice requirement in paragraph d of rule 6 was “ merely a suggestion ” is without force, and his duty to determine the value of gratuities cannot be so easily satisfied. Under his own rule, it is only after the employee himself has been notified that the presumption may reasonably be invoked, and he has not met the fundamental demands of fairness by merely attempting to impose upon employers the duty of giving notice. This is especially so when one considers that the employer has a positive financial interest in neglecting to perform that duty. The employer gains when his employees fail to declare their gratuities, because, under the statute, it is he who is required to pay the additional payroll tax on whatever gratuities are declared. Moreover, it is the commissioner’s duty to see that this tax.is paid (Labor Law, §§ 570-573).

Thus, since claimant did not receive the notice prescribed by the commissioner in his own rule 6 (subd. d) that she must either declare her tips or forfeit unemployment benefits based thereon, the commissioner could not reasonably take advantage of his rule 6 presumption and deprive her of those benefits, in the face of his mandatory statutory duty under section 517.

The order of the Appellate Division should be reversed, and the determination of the Unemployment Insurance Appeal Board reinstated, with costs.

Lewis, Ch. J., Conway, Desmond, Dye and Fuld, JJ., concur; Van Voorhis, J., dissents and votes for affirmance.

Order reversed, etc.


text:
    General Electric Company, Respondent, v. Masters, Inc., Appellant. Lionel Corporation, Respondent, v. S. Klein on the Square, Inc., Appellant. Raxor Corporation et al., Respondents, v. Sam Goody, Appellant.
    Argued April 19, 1954;
    decided June 4, 1954.

      Leon Lauterstein, Joseph F. Ruggieri, Jacob L. Isaacs and Paul G. Guth for appellant in first above-entitled action.
    I. The Feld-Crawford Act constitutes a delegation of legislative power to private persons in violation of section 1 of article III of the State Constitution. (Doubleday, Doran & Co. v. Macy & Co., 269 N. Y. 272; Old Dearborn Co. v. Seagram Corp., 299 U. S. 183; Bourjois Sales Corp. v. Dorfman, 273 N. Y. 167; Sunbeam Corp. v. Wentling, 185 F. 2d 903; Schwegmann Bros. v. Calvert Corp., 341 U. S. 384; Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373; Sunbeam Corp. v. Wentling, 192 F. 2d 7.) II. The FeldCrawford Act deprives appellant of liberty and property and of the equal protection of the laws in violation of sections 6 and 11 of article I of the State Constitution and the Fourteenth Amendment of the Federal Constitution. (Good Humor Corp. v. City of New York, 290 N. Y. 312; Fisher Co. v. Woods, 187 N. Y. 90; Schnaier v. Navarre Hotel & Importation Co., 182 N. Y. 83; People ex rel. Tyroler v. Warden of City Prison, 157 N. Y. 116; People v. Marx, 99 N. Y. 377; New State Ice Co. v. Liebmann, 285 U. S. 262; Allgeyer v. Louisiana, 165 U. S. 578; People v. Budd, 117 N. Y. 1; Columbia Records v. Goody, 278 App. Div. 401.) III. Conceding, arguendo, that the Feld-Crawford Act is constitutional, General Electric’s fair trade contracts do not comply with the requirements of that act. (General Elec. Co. v. Macy & Co., 199 Misc. 87; Allen Bradley Co. v. Union, 325 U. S. 797; Masters, Inc., v. Sunbeam Corp., 112 F. Supp. 268; Roth

      baum v. Macy & Co., 280 App. Div. 530; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Kline, Inc., v. Davega-City Radio, 168 Misc. 185; Gillette Safety Razor Co. v. Green, 167 Misc. 251, 258 App. Div. 723.) IV. Assuming, arguendo, that the Feld-Crawford ' Act is constitutional, General Electric’s nationwide price-fixing system, which directly affects interstate commerce, is not authorized hy that statute. (United States v. Frankfort Distilleries, 324 U. S. 292; People v. Bootman, 180 N. Y. 1; People v. Buffalo Fish Co., 164 N. Y. 93; Matter of Rahrer, 140 U. S. 545.) V. The McGuire Act constitutes an unconstitutional delegation of congressional power over commerce to the States. (Henderson v. Mayor of New York, 92 U. S. 259; Simpson v. Shepard, 230 U. S. 352; Milk Bd. v. Eisenberg Co., 306 U. S. 346; Edwards v. California, 314 U. S. 160; Parker v. Brown, 317 U. S. 341; Southern Pacific Co. v. Arizona, 325 U. S. 761; Dean Milk Co. v. Madison, 340 U. S. 349; Sunbeam Corp. v. Wentling, 185 F. 2d 903.) VI. The McGuire Act delegates legislative power to private persons in violation of section 1 of article I of the Federal Constitution and contravenes the due process guarantees of the Fifth Amendment thereof. (Panama Refining Co. v. Ryan, 293 U. S. 388; Schechter Corp. v. United States, 295 U. S. 495.) VII. General Electric’s price-fixing system falls within the prohibitions of the Sherman Act. (Mandeville Farms v. Sugar Co., 334 U. S. 219; United States v. Women’s Sportswear Assn., 336 U. S. 460; United States v. General Motors Corp., 121 F. 2d 376, 314 U. S. 618; United States v. Chrysler Corp., 180 F. 2d 557.)

      Sidney A. Diamond for appellant in second above-entitled action.
    I. The Feld-Crawford Act is unconstitutional under the State and Federal Constitutions; the McGuire Act is unconstitutional under the Federal Constitution. (Fisher Co. v. Woods, 187 N. Y. 90; Near v. Minnesota, 283 U. S. 697; Wolff Co. v. Industrial Court, 262 U. S. 522; Coppage v. Kansas, 236 U. S. 1; Lawton v. Steele, 152 U. S. 133; Minnesota v. Barber, 136 U. S. 313; Schwegmann Bros. v. Louisiana Bd. of Alcoholic Beverage Control, 216 La. 148; Nebbia v. New York, 291 U. S. 502; Yakus v. United States, 321 U. S. 414; Schechter Corp. v. United States, 295 U. S. 495; Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373; Coty, Inc., of N. Y. v. Hearn Dept. Stores, 158 Misc. 516; Doubleday, Doran & Co. v. Macy & Co., 158 Misc. 267, 269 N. Y. 272; Seeck & Kade v. Tomshinsky, 269 N. Y. 613.) II. The purported price-fixing agreements made by the plaintiff fail to comply with the requirements of the Feld-Crawford Act and the McGuire Act. (Smith v. Rector of St. Philip’s Church of City of N. Y., 107 N. Y. 610.) III. Plaintiff is not entitled to injunctive relief on the facts in this ease. (Baumann v. Baumann, 250 N. Y. 382; Sunbeam Corp. v. Payless Drug Stores, 113 F. Supp. 31.)

      Abraham M. Lowenthal, Leon G. Telsey and Malcolm S. Mason for appellant in third above-entitled action.
    I. Coplaintiff who may have substantial rights to protect has never tried them; plaintiffs who tried their rights neither had nor have substantial rights to protect. II. Even as early as the time of the trial, plaintiffs Raxor and Soria had no such interest attached to good will in the trade-mark “ Cetra-Soria ” as would have justified injunctive relief under a “ Fair Trade ” act. (Old Dearborn Co. v. Seagram Corp., 299 U. S. 183; Doubleday, Doran & Co. v. Macy & Co., 269 N. Y. 272; Bourjois Sales Corp. v. Dorfman, 273 N. Y. 167; Eli Lilly & Co. v. Schwegmann Bros. Giant Super Markets, 109 F. Supp. 269, 205 F. 2d 788; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Calvert Distillers Corp. v. Nussbaum Liq. Store, 166 Misc. 342; Sunbeam Corp. v. Payless Drug Stores, 113 F. Supp. 31.) III. At all events, at the time of the decree neither Raxor nor Soria, then the only plaintiffs, had ownership of a trade-mark sufficient to support the judgment of injunction. (Continental Securities Co. v. Interborough R. T. Co., 207 F. 467, 221 F. 44; Van Allen v. New York Elevated R. R. Co., 144 N. Y. 174; Israel v. Metropolitan Elevated Ry. Co., 58 App. Div. 266; Champion Spark Plug Co. v. Reich, 121 F. 2d 769; General Elec. Co. v. Macy & Co., 199 Misc. 87; Edwards v. Steuben Oil Co., 264 App. Div. 983; Leewood Hills v. New Rochelle Water Co., 255 App. Div. 883, 282 N. Y. 548; Asserson v. City of New York, 195 App. Div. 12.) IV. The joinder of Capitol Records as coplaintiff after the entry of judgment of injunction gave it a standing to which it was not entitled and which was prejudicial to defendant. Y. Defendant’s mail-order sales and shipments which are directly interstate are not subject to resale price maintenance under the laws of the State of New York. The McGuire Act neither purports to confer nor does confer authority on the State of New York to regulate directly or by delegation this branch of defendant’s business. VI. Congress cannot constitutionally authorize the States to legislate regulation of directly interstate sales. (Gibbons v. Ogden, 9 Wheat. [U. S.] 1; South Carolina Hwy. Dept. v. Barnwell Bros., 303 U. S. 177; Southern Pacific Co. v. Arizona, 325 U. S. 761; Freeman v. Hewit, 329 U. S. 249; Edwards v. California, 314 U. S. 160; Milk Bd. v. Eisenberg Co., 306 U. S. 346; Di Santo v. Pennsylvania, 273 U. S. 34.)

      Thomas Eiernan, Edgar Barton and Howard J. Aibel for respondent in first above-entitled action.
    I. The constitutionality of the Feld-Crawford Act has been conclusively established. (Old Dearborn Co. v. Seagram Corp., 299 U. S. 183; Bourjois Sales Corp. v. Dorfman, 273 N. Y. 167; Eli Lilly & Co. v. Schwegmann Bros. Giant Super Markets, 109 F. Supp. 269, 205 F. 2d 788, 346 U. S. 856, 346 U. S. 905; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Guerlain, Inc., v. Woolworth Co., 297 N. Y. 11; Port Chester Wine & Liq. Shop v. Miller Bros. Fruiterers, 281 N. Y. 101; Perlmutter v. Greene, 259 N. Y. 327; Matter of Wulfsohn v. Burden, 241 N. Y. 288; Klein v. Maravelas, 219 N. Y. 383.) II. General Electric’s fair trade contracts comply with the requirements of the Feld-Crawford Act. (Calvert Distillers Corp. v. Nussbaum Liq. Store, 166 Misc. 342; Schwegmann Bros. v. Calvert Corp., 341 U. S. 384; Gillette Safety Razor Co. v. Green, 167 Misc. 251, 258 App. Div. 723.) III. Despite the fact that General Electric’s resale price maintenance activities affect interstate commerce, the fair trade contracts entered into in New York by General Electric are within the Feld-Crawford Act. (United States v. Frankfort Distilleries, 324 U. S. 293; Duckworth v. Arkansas, 314 U. S. 390; California v. Zook, 336 U. S. 725; People v. Bootman, 180 N. Y. 1; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Matter of Rahrer, 140 U. S. 545; Prudential Ins. Co. v. Benjamin, 328 U. S. 408; United States v. Underwriters Assn., 322 U. S. 533.) IV. The McGuire Act is constitutional. (Southern Pacific Co. v. Arizona, 325 U. S. 761; Dean Milk Co. v. Madison, 340 U. S. 349; Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 205 F. 2d 788, 346 U. S. 856, 346 U. S. 905; Clark Distilling Co. v. Western Md. Ry. Co., 242 U. S. 311.)

      Matthew L. Salonger and Emil Greenberg for New York State Pharmaceutical Association, amicus curiae in support of respondent’s position in first above-entitled action.
    I. The question of the constitutionality of the Feld-Crawford Act was presented to this court on several occasions and this court upheld the constitutionality of the Feld-Crawford Act. (Bourjois Sales Corp. v. Dorfman, 237 N. Y. 167; Port Chester Wine & Liq. Shop v. Miller Bros. Fruiterers, 281 N. Y. 101; Calamia v. Goldsmith Bros., 299 N. Y. 636; Bristol-Myers Co. v. Picker, 302 N. Y. 61.) II. The Fair Trade Law of this State is a valid exercise of legislative function, both under the New York Constitution and the Constitution of the United States. III. Neither the State nor the Federal Constitution prohibits resale price maintenance. IV. Congress had the power to exempt from the provisions of the Federal antitrust laws activities which Congress decided should be left to the States. (North Little Rock Transp. Co. v. Casualty Reciprocal Exch., 181 F. 2d 174, 340 U. S. 823; Old Dearborn Co. v. Seagram Corp., 299 U. S. 183; Joseph Triner Corp. v. McNeil, 363 Ill. 559; Eli Lilly & Co. v. Saunders, 216 N. C. 163; Weco Products Co. v. Reed Drug Co., 225 Wis. 474; Goldsmith v. Mead Johnson & Co., 176 Md. 682; Johnson & Johnson v. Weissbard, 121 N. J. Eq. 585.)

      Harry A. Gottlieb and N. H. Elman for respondent in second above-entitled action.
    I. The constitutionality of the statutes involved is no longer open to question. (Old Dearborn Co. v. Seagram Corp., 299 U. S. 183; Eli Lilly & Co. v. Schwegmann Bros. Giant Super Markets, 109 F. Supp. 269, 205 F. 2d 788; Bourjois Sales Corp. v. Dorfman, 273 N. Y. 167; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Columbia Records v. Goody, 278 App. Div. 401; Port Chester Wine & Liq. Shop v. Miller Bros. Fruiterers, 253 App. Div. 188, 281 N. Y. 101; Nebbia v. New York, 291 U. S. 502.) II. Plaintiff’s retail price maintenance agreement complies with the requirements of the Feld-Crawford Act and the McGuire Act. (Rubin v. Dairymen’s League Co-op. Assn., 284 N. Y. 32.) III. Plaintiff is entitled to an injunction. Defendant has willfully and knowingly advertised, offered for sale and sold Lionel trains and products and is continuing to do so in reckless disregard of the Feld-Crawford Act. (Columbia Records v. Goody, 278 App. Div. 401.)

      Ambrose Doskow, Howard Kaplan and Gerald D. Roth for Capitol Records, Inc., respondent in third above-entitled action.
    I. The transfer of the trade-mark does not relieve defendant from liability for his admitted violations of the statute. The original plaintiffs proved their case at the trial, and judgment was properly entered thereon. The order joining Capitol as a party plaintiff Is not before this court for review; in any event, that order was entirely proper. (Bristol-Myers Co. v. Picker, 302 N. Y. 61; Columbia Records v. Goody, 278 App. Div. 401; Calvert Distillers Corp. v. Nussbaum Liq. Store, 166 Misc. 342; Guerlain, Inc., v. Woolworth Co., 297 N. Y. 11; Hawkins v. Mapes-Reeve Constr. Co., 178 N. Y. 236; Phillips v. West Rockaway Land Co., 203 App. Div. 202; Dunlop v. Sweet Bros. Paper Mfg. Co., 211 App. Div. 363; Buck Ridge Coal Min. Co. v. Rosoff Engineering Co., 215 App. Div. 441; Hirshfeld v. Fitzgerald, 157 N. Y. 166.) II. The judgment below correctly applies to defendant’s sales and shipments of records to other States. There is no basis for limiting the Feld-Crawford Act to local sales. This application of the statute is authorized by the McGuire Act. III. The Feld-Crawford Act is an exercise of the complete power of the State and applies to all sales made in the State. (Sunbeam Corp v. MacMillan, 110 F. Supp. 836; Calamia v. Goldsmith Bros., 299 N. Y. 636; Emerson Radio & Phonograph Corp. v. Standard Appliances, 201 Misc. 821; Leader Theatre Corp. v. Randforce Amusement Corp., 186 Misc. 280, 273 App. Div. 844; Matter of Attorney-General, 32 Misc. 1.) IV. The McGuire Act is constitutional. (Prudential Ins. Co. v. Benjamin, 328 U. S. 408; Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 205 F. 2d 788, 346 U. S. 856.)
   Froessel, J.

We are again confronted with an attack upon the so-called Feld-Crawford Fair Trade Law ” (General Business Law § 369-a et seq., L. 1935, ch. 976, re-enacted L. 1940, ch. 195). This statute first came before us for review in Doubleday, Doran & Co. v. Macy & Co. (269 N. Y. 272), decided January 7, 1936, wherein plaintiff Doubleday sought to enjoin Macy, a nonsigner of its fair trade agreements, from selling three of plaintiff’s books at less than their stipulated fair trade prices. We held that the non-signer ” provision was unconstitutional, because by its means the Legislature was indirectly fixing prices, a result which it could not, absent special circumstances, accomplish directly.

Exactly eleven months later, the Supreme Court of the United States reviewed a similar statute enacted in Illinois, the validity of which was attacked “ upon the grounds that it denies due process of law and the equal protection of the laws in violation of the Fourteenth Amendment ”. Rejecting these contentions, the Supreme Court held that the statute was not ‘ ‘ so arbitrary, unfair or wanting in reason as to result in a denial of due process ”, that it did not constitute an unlawful delegation of legislative power, and that it satisfied the test of equal protection of the laws guaranteed by the Fourteenth Amendment (Old Dearborn Co. v. Seagram Corp., 299 U. S. 183).

Almost immediately thereafter, the New York statute was again before us in Bourjois Sales Corp. v. Dorfman (273 N. Y. 167). This time, relying on the Old Dearborn decision, we upheld the statute against claims that it violated the New York State Constitution. Indeed, Chief Judge Crane, who wrote for the court in Doubleday as well as the Bourjois case, said in the latter (p. 172) : Had the Seagram [Old Dearborn] case been decided before argument in the Doubleday ease we certainly would have followed the Supreme Court’s ruling on the Federal Constitution. We do so now”. The statute has since been considered and applied by us in at least four cases (Port Chester Wine & Liquor Shop v. Miller Bros. Fruiterers, 281 N. Y. 101 [retailer’s right of action]; Guerlain, Inc., v. Woolworth Co., 297 N. Y. 11, certiorari denied 332 U. S. 837 [rebottling of perfumes]; Calamia v. Goldsmith Bros., 299 N. Y. 636, remittitur amended 299 N. Y. 795 [cigars in interstate commerce]; and Bristol-Myers Co. v. Picker, 302 N. Y. 61 [trading stamps as price cutting]), in all of which invalidity of the law under the New York State Constitution was urged upon us by the parties, but rejected.

In each of the three cases now before us, the defendant, a nonsigner of the plaintiff’s fair trade agreements, has been enjoined from selling plaintiff’s fair traded products at less than their stipulated minimum prices. All of the transactions in issue involve interstate commerce either directly or indirectly, and, since in large measure the issues presented by the three cases are identical, they shall be discussed together, insofar as possible.

Defendants’ principal attack is directed toward the constitutionality of the Feld-Crawford Act. They argue that the statute constitutes an unlawful delegation of legislative powers to private persons in violation of section 1 of article III of the New York State Constitution, a deprivation of property without due process of law and a denial of equal protection of the laws in violation of both the New York State and Federal Constitutions, particularly the former.

Seventeen years ago we disposed of the delegation of power and due process arguments in the Bourjois case (supra). Even though our opinion did not separately and specifically discuss those issues as arising under the State Constitution, they were actually presented and argued to our court, were necessarily disposed of by our decision there, and are therefore no longer open to question.

Defendants’ economic and policy arguments concerning the doubtful wisdom of fair trade laws have been urged before the courts over and over again. They were reviewed in the Old Dearborn case (supra, pp. 195-196), and, as was there said, “ Where the question of what the facts establish is a fairly debatable one, we accept and carry into effect the opinion of the legislature its determination is conclusive so far as this court is concerned ” (p. 196). Such contentions are properly addressed to the Legislature; they do not alone provide sufficient reason for us to reopen settled constitutional issues.

Nor is there merit to defendants’ contention that the statute denies equal protection of the laws. In the Old Dearborn case (supra) the equal protection argument which was there raised against the Illinois fair trade statute was summarily rejected by the Supreme Court in its holding (p. 197): “ Clearly, the challenged section of the Illinois act satisfies this test ” (emphasis supplied). In the present case, moreover, the statute creates no unreasonable or arbitrary discrimination against low cost, minimum service retailers, as defendants contend. The statute itself does not purport to create any such distinction or classification. Its provisions are wholly inapplicable to unmarked goods. As to marked goods, it merely permits a manufacturer, whose trade-mark or brand name may represent a large advertising investment and a carefully nurtured good will, to prevent retailers, over whom he would otherwise have little control, from seriously impairing the value of that trade-mark and good will by reselling his identified products at unreasonably low prices. Finally, we have already held that this statute constitutes a reasonable regulation under the police power (Bourjois case, supra).

Defendants now present a new constitutional challenge by attacking the Maguire Act (66 U. S. Stat. 632, U. S. Code, tit. 15, § 45), which was enacted following the recent decision in Schwegmann Bros. v. Calvert Corp. (341 U. S. 384). That act exempts from the Federal antitrust laws fair trade agreements made pursuant to existing or future State laws, and permits their enforcement against nonsigners as well as signers who are engaged in interstate commerce. Defendants argue that this enactment gives to the States power over interstate commerce which is denied them under the Federal Constitution.

Beginning with the familiar distinction between commerce which, while primarily local, indirectly affects interstate commerce, and that which is directly of national concern, defendants claim that the latter type of commerce is, by virtue of the Constitution, exclusively within the power of Congress, and cannot under any circumstances be regulated by the States. However, this basic distinction is drawn merely to determine the extent of State power in those areas where Congress by its silence has permitted its own power to remain dormant. The distinction does not, as defendants contend, restrict the power of a State acting, as here, under an express grant by Congress (Prudential Ins. Co. v. Benjamin, 328 U. S. 408, 421-423). As the Supreme Court said in Southern Pacific Ry. Co. v. Arizona (325 U. S. 761, 769): Congress has undoubted power to redefine the distribution of power over interstate commerce. It may * * * permit the states to regulate the commerce in a manner which would otherwise not be permissible [citations] ”.

It is true that in Schwegmann Bros. v. Calvert Corp. (supra) the Supreme Court held that by the Miller-Tydings amendment (50 U. S. Stat. 693, U. S. Code, tit. 15, § 1), which exempted from the Sherman Antitrust Act only contracts or agreements ”. Congress did not demonstrate an intent to permit fair trade “ compulsion ” against nonsigners of those agreements. However, the court did not in its opinion indicate that such ‘ ‘ compulsion ”, if expressly authorized by Congress, would transgress any constitutional prohibition; indeed, the decision contains clear implications to the contrary. The Maguire Act now authorizes such “ compulsion ”, and its constitutionality has been upheld by the United States Court of Appeals for the Fifth Circuit in Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co. (205 F. 2d 788), a decision which the Supreme Court twice refused to review (certiorari denied 346 U. S. 856, rehearing denied 346 U. S. 905).

Nor should we for this purpose distinguish between transactions affecting interstate commerce, as in the General Electric and Lionel cases herein, and those directly in interstate commerce, such as the mail-order sales of the Raxor case. Just as in the Feld-Crawford Act, where no distinction is drawn between interstate and local commerce, so the language of the Maguire Act makes no discrimination between sales of goods affecting, and sales directly in, interstate commerce. On the contrary, the purpose of that Federal statute, as expressed by Congress in its preamble thereto, was to permit State fair trade laws to apply to commodities, contracts and activities “in or affecting ’ ’ interstate commerce. Furthermore, the case of Sunbeam Corp. v. Wentling (185 F. 2d 903, revd. 341 U. S. 944, mod. 192 F. 2d 7), on which defendants rely so heavily in this connection, was decided prior to the Maguire Act’s enactment. That the statute was designed to alter the Wentling rule so as to open all interstate commerce to the operation of State fair trade acts, appears from the statutory language as aforesaid, from its legislative history and from judicial decision (Sunbeam Corp. v. MacMillan, 110 F. Supp. 836).

Defendants further contend that the Feld-Crawford Act was never originally intended by our Legislature to apply to resale price maintenance as against nonsignatories engaged in interstate commerce, and that without re-enactment after passage of the Maguire Act it cannot be so applied. But the case of People v. Bootman (180 N. Y. 1), on which defendants rest this argument, is inapplicable here. True, we there held that without re-enactment after passage of the Congressional enabling statute, our State Fish and Game Law was not applicable to interstate game. But there, we had previously held that the statute in question was intended to apply only to local game (People v. Buffalo Fish Co., 164 N. Y. 93).

In the instant cases, however, instead of having, by prior decision, limited the Feld-Crawford Act to local commerce, we have squarely held that the statute applies to nonsignatories in interstate commerce (Calamia v. Goldsmith Bros., supra). Although such application was later declared unconstitutional in Schwegmann Bros. v. Calvert Corp. (supra), passage of the Maguire Act in 1952 removed the final barrier to complete interstate application of the New York statute. Under such circumstances it has long been well established that the Constitution does not require a State statute to be re-enacted in order to be effective (Matter of Rahrer, 140 U. S. 545; Central Pacific R. R. Co. v. Nevada, 162 U. S. 512; Tua v. Carriere, 117 U. S. 201; 1 Sutherland on Statutory Construction [3d ed.], § 2027).

Each of the defendants contends that its plaintiff’s fair trade contracts do not comply with the provisions of section 369-a of the General Business Law. We have examined these contracts separately, and find on the records before us that in each case there were in existence fair trade contracts which did comply with that part of the statute which sanctions such contracts between vendor ” and buyer ”.

Numerous other contentions have been raised by one or more of the defendants. We have carefully considered each of them and find them to be without merit.

The judgment in each case should be affirmed, with costs.

Lewis, Ch. J., Conway, Desmond, Dye and Fuld, JJ., concur; Van Voorhis, J., taking no part.

In each action: Judgment affirmed.


author: Conway, J. Froessel, J.

text:
    In the Matter of the Estate of Albert Pepper, Deceased. Arnold M. Grant, as Executor of Albert Pepper, Deceased, Respondent; Sylvia Glantz et al., Appellants.
    Argued April 8, 1954;
    decided June 4, 1954.

      George Nattanson and M. Theodore Chester for appellants.
    I. The language under construction is a valid direction against apportionment. (Matter of Duryea, 277 N. Y. 310; Matter of Halle, 270 App. Div. 619; Simon v. Hoey, 88 F. Supp. 754, 180 F. 2d 354; 339 U. S. 966; Matter of Harbord, 197 Misc. 760; Matter of James, 180 Misc. 441, 267 App. Div. 761; Matter of Hund, 266 App. Div. 379; Matter of Lemmerman, 199 Misc. 49; Matter of Aldrich, 259 App. Div. 162; Matter of Reid, 193 Misc. 154.) II. The construction under review can be sustained only by completely ignoring paragraph Third of the will. Such a result violates a fundamental rule of will construction. (Matter of Jaycox, 233 App. Div. 67, 258 N. Y. 587; Matter of Kingsley, 194 Misc. 590; Matter of Durand, 250 N. Y. 45.) III. There is no ambiguity in the will. (Matter of Hamlin, 185 App. Div. 153.)

      Wolfe R. Gharney and Arnold M. Grant for respondent.
    I. As a matter of law paragraph Third of the will does not contain a direction against apportionment of estate taxes within the respective residuary trusts. (Matter of Blumenthal, 182 Misc. 137, 267 App. Div. 949, 293 N. Y. 707; Matter of Stanfield, 170 Misc. 447, 257 App. Div. 932.) II. Paragraph Third of the will does not negate section 124 of the Decedent Estate Law since it does not contain a clear and unambiguous stipulation against tax apportionment. (Matter of Kaufman, 170 Misc. 436; Matter of Dettmer, 179 Misc. 844; Matter of Mills, 189 Misc. 136, 272 App. Div. 229, 297 N. Y. 1012; Matter of Duryea, 277 N. Y. 310.) III. Testator’s intention not to impose on the widow taxes not attributable to her trust is clear. (Matter of Durand, 250 N. Y. 45; Matter of Sliter, 286 N. Y. 117.)
   Conway, J.

This is an appeal by leave of this court from an order of’the Appellate Division, First Department, affirming, unanimously, a decree of the Surrogate’s Court, New York County (Frankenthaler, S.), which adjudged that paragraph Third of testator’s will was not a direction against estate tax apportionment within the meaning of section 124 of the Decedent Estate Law.

Testator died on June 12,1949, survived by his wife and two sisters.

Paragraph First of the will revokes all earlier wills and codicils.

Paragraph Second directs the payment of debts and funeral expenses.

Paragraph Third — which is in dispute here — provides: “ Third: All of the bequests hereinafter made shall be paid over and all of the trusts hereinafter created shall be set up by the executors and trustees, freed from all deductions for inheritance, transfer, estate, or any other tax imposed by any Commonwealth or State of the United States or Government of the United States for the inheritance or transfer of interest in a decedent’s estate, which tax, including any tax payable by virtue of insurance on my life or any gifts or disposition of assets which I may have made during my life, I will and direct shall be paid out of my residuary estate.” (Emphasis supplied.)

Paragraph Fourth nominates the executor and trustee and together with paragraphs Eighth through Fifteenth provides for limited invasion of the trust corpus, guardianship of infants and extensive executorial powers.

All of the dispositive provisions of the will are found in paragraphs Fifth, Sixth and Seventh.

Paragraph Fifth gives the widow, Geraldine Pepper, the income for her life from a trust of $50,000 plus one half of the residuary estate and grants her a power of appointment over the corpus. It further provides that if the widow should predecease the testator or should fail validly to exercise the power of appointment, the corpus is to he divided between the appellants Sylvia Glantz and Gertrude Levi.

Paragraph Sixth of the will creates a trust of one fourth of the residuary estate with income to appellant Sylvia Glantz for her life and remainder to her issue.

Paragraph Seventh creates a trust of the final one fourth of the residuary estate with income to appellant Gertrude Levi for her life and the remainder to her issue.

Prior to the enaction of section 124 of the Decedent Estate Law (1930) estate taxes were, generally speaking, payable out of the residuary estate (see 5 Jessup-Redfield on Surrogates’ Law and Practice, p. 398). This resulted in hardship and injustice in many cases. The natural objects of a testator’s bounty are generally those who are bequeathed the residuary estate and under the rule stated they were saddled with the entire tax while other beneficiaries — more distantly related or not at all related to testator — would pay no taxes (5 Jessup-Redfield on Surrogates' Law and Practice, p. 398). This unsatisfactory situation prompted the enactment by the Legislature in 1930 of section 124 of the Decedent Estate Law (amended in 1940) which lays down the rule that estate taxes imposed by State or Federal authority are, in the absence of a contrary direction in the will, to be prorated by the Surrogate among the distributees in proportion to the values of their gifts, except that in maJcing such proration allowances are to be made for such exemptions and deductions as may be allowed the distributees by law. Insofar as pertinent section 124, as amended in 1940, reads: “1. Whenever it appears upon any accounting, or in any appropriate action or proceeding, that an executor, administrator, temporary administrator, trustee or other person acting in a fiduciary capacity, has paid a death tax levied or assessed under the provisions of article ten-c of the tax law, or under the provisions of the United States revenue act of nineteen hundred twenty-six, as amended by the United States revenue act of nineteen hundred twenty-eight, or under any death tax law of the United States hereafter enacted, upon or with respect to any property required to be included in the gross estate of a decedent under the provisions of any such law, the amount of the tax so paid, except in a case where a testator otherwise directs in his will * * * shall be equitably prorated among the persons interested in the estate to whom such property is or may be transferred or to whom any benefit accrues. Such proration shall be made by the surrogate in the proportion, as near as may be, that the value of the property, interest or benefit of each such person bears to the total value of the property, interests and benefits received by all such persons interested in the estate, except that in making such pro-ration allowances shall be made for any exemptions granted by the act imposing the tax and for any deductions allowed by such act for the purpose of arriving at the value of the net estate * * V’

Section 124 has been characterized as remedial in nature and its direction that there be an apportionment of taxes in accordance with the formula therein prescribed is to be carried out unless there is a clearly expressed intention to the contrary in the will. (Matter of Durkee, 183 Misc. 382; Matter of Mills, 189 Misc. 136, 141, affd. 272 App. Div. 229, affd. 297 N. Y. 1012; see, also, Matter of Vanderbilt, 295 N. Y. 964.)

The sole question to be answered in this case is: Does the testator’s will contain a clear and unambiguous direction against apportionment of taxes as prescribed by section 124 of the Decedent Estate Law? If it does contain such a direction, the statutory formula will not apply and the residuary estate must bear all of the taxes. Since the widow is entitled to one half of the residuary in trust and the sisters one quarter each, the widow will be called upon to pay one half of the entire tax and the sisters mil each bear one quarter thereof. On the other hand, if the will does not contain a clear and unambiguous direction against apportionment, the statutory formula for apportionment found in section 124 will be utilized, and, in prorating the tax among the three distributees, the widow will be given an allowance for the marital deduction authorized by law.

The executor maintains that the determination of the Surrogate and the Appellate Division effectuates testator’s purpose of obtaining for his widow the maximum marital deduction and that a contrary determination would work inequity upon the wife. Some preliminary discussion of the marital deduction is necessary before analyzing this contention of the executor.

The Federal Revenue Act of 1948 has effected a revolutionary change in the theory of estate taxation. By means of a marital deduction ’ ’ it seeks to extend to the estates of decedents domiciled in noncommunity property States the tax advantages theretofore enjoyed only by estates of persons who were residents of community property States. Thus, under the act certain property interests, described in the act and regulations as “ deductible interests ” are relieved from the burden of Federal estate taxation in the estate of the spouse first to die. These “ deductible interests ”, whether passing to the surviving spouse by will, or outside of the will, are thus deductible, to the extent of one half of the adjusted gross estate ”, in calculating the estate tax. The adjusted gross estate ” is arrived at by deducting from the total value of the gross taxable estate the aggregate of allowable debts (exclusive of any estate, legacy or inheritance tax), and funeral and administration expenses as provided in section 812 (subd. [b]) of the Internal Revenue Code (U. S. Code, tit. 26). If the value of the deductible assets passing to the surviving spouse amounts to less than one half of the adjusted gross estate ” the deduction will be limited to the aggregate value of the qualifying assets so passing. If the value of the deductible assets passing to the surviving spouse amounts to more than one half of the “ adjusted gross estate ”, the deduction will, of course, be limited to one half of the adjusted gross estate ”. (See Fingar & Bookstaver on New York Wills, §§ 199, 199C.)

Among those property interests which may qualify for the marital deduction is property passing under a testamentary trust, all of the income of which is payable to or applicable to the exclusive use of the surviving spouse for life, and which is so payable or applicable at least annually, with an unqualified power of appointment over the corpus (Internal Revenue Code, U. S. Code, tit. 26, § 812, subd. [e]).

The trust created by testator for his wife had all of those characteristics and, so, that property interest qualified for a marital deduction up to 50% of the adjusted gross estate.

Of course, it must be remembered that the marital deduction under both Federal and State law (Tax Law, § 249-s, was modeled after the Federal law and enacted in 1950) is a deduction to be made from the value of the adjusted gross estate in arriving at the value of the net estate for the purpose of computing estate taxes. It is a deduction allowed to the estate, as such.

The executor argues that the trust for the wife was expressly created by testator to take full advantage of the marital deduction provisions of the Federal estate tax law and that he intended the full benefit of the deduction to inure to his widow. That is, testator not only intended to obtain the maximum marital deduction in computing the value of the estate for tax purposes, but he also intended that the benefit of that deduction be passed on to his widow by means of apportionment of the taxes pursuant to the statutory formula of section 124 of the Decedent Estate Law. As mentioned earlier, that section provides that the taxes are to be prorated among the persons interested in the estate in the proportion that the value of the interest passing to each such person bears to the total value of the interests passing to all such persons, except that, in making such proration, allowances are to be made for any exemptions granted by the act imposing the tax and for any deductions allowed by such act for the purpose of arriving at the value of the net estate.

The record does not reveal the value of the testator’s estate, or the value of the interests passing to the widow and the sisters. However, we are informed by counsel that the estate taxes amount to about $46,000. We are also told that if the taxes were apportioned and prorated pursuant to the statutory formula prescribed by section 124 of the Decedent Estate Law, among the widow and testator’s sisters, the widow would receive the full benefit of the marital deduction and the sisters’ shares would be charged with payment of about $23,000 each. On the other hand, by charging the taxes as the sister-appellants urge, i.e., entirely against the residuary estate, the widow’s share of the estate would be subjected to a tax of about $23,000 and that of the sisters to a tax of some $11,500 apiece.

The fact that a testator may have disposed of his property in a manner which seems not to be in accord with the ideas of some as to fairness and equity is not a basis for disregarding the testator’s express wishes by rewriting his will. The privilege of disposition does not belong to the courts but to the testator alone and as long as he possesses testamentary capacity and makes such provision for his spouse as the law requires, his wishes as to the disposition of his property must govern. Testator is privileged to cause a shift of the tax burden of his estate from the sisters to the widow, thus imposing a burden upon the widow which the law would not have imposed, if he sees fit to do so. However, to accomplish that result the direction in testator’s will must be clear and unambiguous.

Doubtless, standing by itself, paragraph Third is a clear direction against the use of the tax apportionment formula prescribed in section 124 of the Decedent Estate Law. The bequests made and the trusts created were, the testator declared in so many words, to be ‘ freed from all deductions ’ ’ for taxes, and he went on to direct that such taxes shall be paid out of my residuary estate ”. The meaning of residuary estate ” is also clear; it consisted of all of testator’s properties less debts and the sum of $50,000 that went into the trust for the wife.

That leaves us with the question of whether ambiguity results when the will is read in its entirety.

The executor contends that paragraph Third of the will when read in conjunction with paragraphs Fifth, Sixth and Seventh is replete with ambiguity, contradicts itself and is a complete paradox. He asserts: “ The paradox is self-evident. The testator first directed, in Paragraph Third, that all bequests and trusts in the will be set up free of the tax; directed the trusts to be created out of the residuary estate in Paragraphs Fifth, Sixth and Seventh, but also directed in Paragraph Third that all taxes be paid out of the same residuary estate out of which the trusts were to be created. The inherent contradiction in the will renders Paragraph Third meaningless. ’ ’

In our judgment the executor’s conclusion is well founded.

Someone is obligated to pay the estate taxes. The testator did not direct that his wife was to pay them out of the $50,000 which was to go into a trust for her and no one contends that testator intended that result. Bather, he directed that they were to come out of the residuary estate, i.e., all of testator’s properties less debts and the sum of $50,000 bequeathed in trust for the wife. But earlier in the same paragraph Third, he directed that the trusts to be created — by directions in paragraphs Fifth, Sixth and Seventh out of the residuary estate ■— were to be set up freed from all deductions for inheritance, transfer, estate or other tax. Phrased differently, he directed in one and the same paragraph that the trusts were not to be charged with a tax but that the residuary estate, which by directions in paragraphs Fifth, Sixth and Seventh was to be divided into three shares to malee up those trusts, was to be taxed. If the latter direction be followed, viz., that the taxes be paid out of the residuary estate, the result is that the trusts created are not set up freed of taxes as he directed in the opening portion of paragraph Third, but are set up each having borne a share of the taxes. If the early direction be followed, viz., that the trusts be set up freed from all deductions for inheritance, transfer, estate or any other tax, then the direction that the taxes be paid out of the residuary estate is meaningless for the property going* into the trusts comprises the entire residuary estate and after the trusts are set up freed from taxes no residuary remains from which taxes can be paid. The first clause directing the trusts to be set up free of tax and the last clause directing all taxes to be paid out of the residuary estate cancel out or neutralize each other. The net result is that this will does not contain a direction against statutory apportionment. However, in deciding this case we need not go that far. We need only hold that it does not contain a clear and unambiguous direction to that effect. There is a strong* policy in favor of statutory apportionment. Those who contend against apportionment must bear the burden of proof (Matter of Kaufman, 170 Misc. 436; Matter of Dettmer, 179 Misc. 844) and the direction in testator’s will must be clear and unambiguous. As was said in Matter of Mills (189 Misc. 136, 141, affd. 272 App. Div. 229, affd. 297 N. Y. 1012, supra): In case of doubt as to what the will means on the subject of taxes the statutory direction to apportion is absolute.” In our opinion the executor has shown the existence of an ambiguity as to what the will means on the subject of taxes.

Wills are made up of words and to each word, clause and paragraph a proper meaning and weight, as well as a proper relation to all other words, clauses and paragraphs, must be attached. Otherwise, omissions would have been made by the testator. We do not say here that if paragraph Third was read alone and we stopped there it would not bear the construction put upon it by Judge Froessel. We do say, however, that when one reads on and includes in the reading paragraphs Fifth, Sixth and Seventh, then paragraph Third becomes unclear and since the direction against statutory apportionment must be clear to be effective, we must conclude that the construction adopted by the Surrogate and the Appellate Division is the correct one.

The order of the Appellate Division should be affirmed, with costs to both parties payable out of the estate.

Froessel, J.

(dissenting). Prior to 1930, when section 124 of the Decedent Estate Law was enacted, estate taxes were ordinarily payable “ before determination and computation of the shares payable to individual legatees ” (Matter of del Drago, 287 N. Y. 61, 71, revd. on other grounds 317 U. S. 95). By virtue of said statute, equitable proration of Federal and State estate taxes among the beneficiaries of the estate is now required, except in a case where a testator otherwise directs in his will ”.

In this case the testator, who died on June 12, 1949, leaving him surviving his widow and two sisters, directed in paragraph Third of his will that all estate taxes ‘‘ shall be paid out of my residuary estate ”. The full text of this paragraph and the substance of the remaining paragraphs of his will are set forth in the prevailing opinion.

Paragraph Third of the will is now before us for construction, and we are all agreed that, standing by itself, it is a clear direction against the use of the tax apportionment formula prescribed in section 124 of the Decedent Estate Law. But, say the majority, there is an inconsistency between this paragraph and the later paragraphs Fifth, Sixth and Seventh, with resultant ambiguity.

I cannot follow this reasoning. The testator had a perfect right to direct that all estate taxes be paid out of his residuary estate, both before and after the enactment of section 124. That statute provides for equitable proration only where a testator does not otherwise direct in his will. Here he has made such direction in the clearest possible language. To say that such direction may not be heeded here is virtually to hold that no language can be safely framed to come within the exception of section 124.

Its application to the disposition of his estate under the terms of his will is unmistakably plain. After providing for the payment of his debts and expenses, and before making any dis-positive provisions, he wills and directs that all estate taxes be paid out of his residuary estate. At the same time he makes it clear that the “ bequests hereinafter made shall be paid over ” and “ the trusts hereinafter created shall be set up * * * freed from all ” estate taxes. He next gives $50,000, free of taxes, as part of the trust for the benefit of his wife. Only then, after providing for the payment of (1) debts and expenses, (2) estate taxes, and (3) said specific sum, may the trusts be set up out of “ all the rest, residue and remainder of my estate ” for the widow and two sisters, and when the trusts are set up they are free of taxes, which have already been provided for in the prior paragraph Third of the will. It is manifest that he did not wish to disturb the precise proportions of his trust plan in giving $50,000 plus one half to his wife, and an equal one half to his sisters.

The widow thus receives substantially more than either her elective share under section 18 of the Decedent Estate Law (one half of the estate), or her intestate share under section 83 (subd. 4) of the Decedent Estate Law (one half of the estate plus $10,000), to wit: $50,000 in addition to one half (properly in trust) of the remaining residuary estate. The portion of the taxes which she seeks to avoid, and which we are told will amount to $23,000, will as directed first come out of the residuary estate, and, though she will not receive the life income on said $23,000 which she would have had if it were not for paragraph Third, that is so because the husband directed otherwise in his will.

Thus there is neither inconsistency, paradox, ambiguity nor inequity in this will, and the testator’s clear intention should not be struck down and utterly disregarded. We have no right to speculate as to any alleged ambiguity concerning his motive. “ The intention of a will-maker is to be found in the words used in the will, and when these are clear and definite there is no power to change them ” (Matter of Watson, 262 N. Y. 284, 293; Matter of Roth, 291 N. Y. 1, 6). When a testator’s intent is manifest, “ it is quite unnecessary to discuss the decisions made in other eases ” (Matter of Pulis, 220 N. Y. 196, 202).

I would reverse, and heed the testator’s will.

Lewis, Ch. J., Desmond, Dye, Fuld and Van Voobhis, JJ., concur with Conway, J.; Fboessel, J., dissents in opinion.

Order affirmed.