author: Thacher, J. Lewis, J.

text:
    James O’Flynn, a Taxpayer of the Village of East Rochester, Suing on Behalf of Himself and Other Taxpayers in Said Village Similarly Situated, Plaintiff; Rochester Gas & Electric Corporation et al., Plaintiffs, Interveners, Appellants, and Frank Flierl, Plaintiff, Intervener, v. Village of East Rochester et al., Respondents.
    Argued November 22, 1943;
    decided March 2, 1944.

      Earl L. Dey and George J. Nier for Rochester Gas & Electric Corporation, appellant.
    I. The admitted disregard by the village officials of the statutory commands with respect to the enactment of village ordinances renders the purported ordinance establishing a municipal electric plant for the Village of East Rochester void and of no effect. (Smith v. City of Newburgh, 77 N. Y. 130; In re The Petition of George Douglas, 46 N. Y. 42; City of Glens Falls v. Standard Oil Co., 127 Mise. 104; Matter of Tierney v. Cohen, 268 N. Y. 464; Town of Cort-landt v. Village of PeeksTcill, 281 N. Y. 490; Weeks v. City of Middletown, 107 App. Div. 587; McKuskie v. Hendrickson, 128 N. Y. 555; Matter of Collins v. City of Schenectady, 256 App. Div. -389; Case v. Los Angeles Lumber' Co., 308 U. S. 106; Perkins et al. v. Smith et al., 116 N. Y. 441; Moskowits v. Marrow, 251 N. Y. 380; United States v. Merriam, 263 IT. S. 179; People ex reí. N. Y. C. etc., B. B. Co. v. Woodbury, 208 N. Y. 421.) II. The failure of the village to include provisions for service to Despatch .Shops, Inc., constitutes an unlawful discrimination, and the subjection of that taxpayer to possible taxation without benefit is unconstitutional and renders the entire proposal illegal, void and of no effect. (People ex rel. W. U. Tel. Co. v. P. S. Comm., 230 N. Y. 95; New York & Queens Gas Co. v. McCall, 245 U. S. 345; Public Service Comm. v. Iroquois Natural Gas Co., 189 App. Div. 545, 229 N. Y. 592; Armour Packing Co. v. Edison El. Illuminating Co., 115 App. Div. 51; L. & W. B. B. Co. v. City of Buffalo, 115 N. Y. S. 657, 132 App. Div. 946; Gaynor v. Marohn, 268 N. Y. 417.)

      Paul Folger and Keith D. Poland for Despatch Shops, Inc., appellant.
    I. A municipality cannot initiate a proposed proprietary project designed to serve a portion only of the inhabitants thereof without pledging the faith and credit of the entire municipality behind the indebtedness to be incurred. Those excluded from service are thereby subjected to taxation out benefit. (N. T. Const., art. VIII, § 2; Matter of Tierney v. Cohen, 268 N. Y. 464; New York Edison Co. v. City of New York, 268 N. Y. 669.) II. The project proposed by the Village of East Rochester, which admittedly is incapable of supplying the needs of Despatch Shops, Inc., is discriminatory and hence void. III. The respondents did not follow the statutory directions leading up to the submission of the proposition for the construction of this municipal electric plant. Such omissions render the proceedings taken void. (Matter of Collins v. City of Schenectady, 256 App. Div. 389; City of Glens Falls v. Standard Oil Co., 127 Mise. 104; People v. 237 N. Y. 407; Perkins et al. v. Smith et al., 116 N. Y. 441.)

      Percival D. Oviatt and Carlton F. Broimi for respondents.
    I. It was not necessary either to give notice or to hold a hearing under section 90 of the Village Law, nor was it necessary to post and publish the ordinance under section-139 of the Village Law. (Burke v. Kern, 287 N. Y. 203; Scott v. Twombley, 20 App. Div. 535; People v. Averill, 124 Mise. 383.) II. The procedure required by the law was duly followed and the documents relating to the election were adequate and not misleading. III. The plan of the project is valid even though it might be said to involve service to all except Despatch Shops, Inc. (N. Y. State El. & Gas Corp. v. City of Plattsburgh, 281 N. Y. 450; Armour Packing Co. v. Edison El. Illuminating Co., 115 App. Div. 51; Neiv York & Queens Gas Co. v. McCall, 219 N. Y. 84, 245 IT. S. 345; A. T. & T. Co. -v. United States, 299 IT. S. 232; Matter of New Rochelle Water Co. v. Maltbie, 248 App. Div. 66.) IV. Rates, can and should be adjusted to prevent a loss and the action of the electorate in establishing a project which might involve high rates is conclusive. (Matter of Village of Boonville v. Maltbie, 156 Mise. 6, 245 App. Div. 468, 272 N. Y. 40.)
   Thacher, J.

This action was brought by a taxpayer against the Village of East Rochester, its Mayor and Trustees to enjoin the defendants from proceeding with the construction of a public utility service for the generation and transmission of electricity for light, heat and power to said Village and to its inhabitants, from expending Village funds and from borrowing money upon Village credit for such purposes.

The intervening plaintiff Rochester & Electric Corporation is engaged in the production, distribution and sale of electricity in the Village of East Rochester and in other neighboring places. It is a taxpayer of the Village and has a substantial capital investment in an electric plant and system which is presently used in serving the public in said Village and in contiguous territory. The intervening plaintiff Des-patch Shops, Inc. is also a taxpayer of thé Village and requires, in carrying on its business of manufacturing and repairing railroad cars, equipment and supplies, more than twice as much current as the rest of said Village uses for all purposes. It is presently served by Rochester & Electric Corporation.

Proceeding under the authority of article 14-A of the General Municipal Law, the Trustees of the Village on September 8, 1939, enacted an ordinance which set forth: a proposed method of constructing “ a plant and system for the generation, furnishing and transmission of electrical energy for municipal, domestic, residential, commercial and industrial uses the maximum cost, $360,000, and cost as estimated by the Board of Trustees, $350,000; a plan for financing the project with $360,000 of bonds, hearing interest not exceeding 6% per annum, to he issued on the faith and credit of the Village, to mature in annual installments of $18,000 each, and for the payment of the principal and interest of which taxes will be levied each year if funds are not available for such payment in revenues from the project. The ordinance also fixed the method of furnishing the public utility service to the community. .

The Village Clerk, with the advice of the Village Attorney, then prepared an abstract of the ordinance concisely stating its purpose and effect, and the Village Board of Trustees fixed December 8th for the holding of a special election at which the proposal was to be submitted for the approval or disapproval of the electors. The ordinance and notice of its submission were then published in a local newspaper, designated by the Board of Trustees, once each week for six consecutive weeks beginning October 27, 1939, A special election was held on December 8, 1939, and a majority of the qualified electors of the Village cast their votes in favor of the proposal.

Counties, cities, towns and villages were granted power to establish, own and operate public utility services by section 360 of article 14-A of the General Municipal Law in 1934 (L. 1934, ch. 281). Insofar as villages were concerned, the statute provides that the proposal to establish such services, including the method of constructing, leasing, purchasing and acquiring the plant and facilities, with maximum and estimated costs, the plan for financing the project and the method of furnishing the services shall be “ fixed ” by an “ ordinance ” enacted by the board of trustees of the village for submission to the electors of the village.

"When this statute was enacted in 1934, section 90 of the Village Law (L. 1927, ch. 650, § 7) in broad terms authorized the board of trustees of a village to enact, amend and repeal ordinances not inconsistent with existing law, for the government of the village, the management of its business, the preservation of good order, peace, health, safety and welfare of its inhabitants and the protection and security of their property, whether such authority was specifically granted by the Village Law or any other law or necessarily implied therefrom. It required no public hearing before such ordinances were enacted, amended or repealed. In 1936, section 90 of the Village Law was amended to read as follows: “The board of trustees after a public hearing shall have power to enact, amend and repeal ordinances ”, et cetera (L. 1936, ch. 701), and it is now claimed that this amendment of the Village Law became at once a procedural requirement of section 360 of the General Municipal Law. We do not agree with this conclusion. Section 360 prescribed a complete and detailed procedure for the establishment of municipal public utility services by popular referenda of specific plans formulated and proposed by village trustees. The Legislature as part of this procedure prescribed the enactment of a village ordinance containing the proposal of the trustees for submission to the electors. At that time there .was no requirement of a public hearing in the process of enacting an ordinance, and failure to require any such hearing in section 360 evidences the legislative intent that such hearings should not be required, full opportunity for public discussion, and consideration having been provided by weekly publications of the plan in all its essentials for six weeks prior to submission to the electorate. The subsequent amendment of the legislative process of enacting village laws should not be read in limitation of the authority granted by section 360.

The question whether one statute absorbing or incorporating by proper reference provisions of another will be affected by amendments made to the latter, is one of legislative intent and purpose. 'Here the special purpose of the ordinance and the inclusion of provisions which so adequately afford opportunities for public discussion lead to the conclusion that the Legislature did not contemplate the inclusion of procedural changes subsequently made in the general provisions for the enactment of ordinances. Accordingly, the subsequent amendment of the Village Law requiring a public hearing before enactment of ordinances is not to be read as having been incorporated as one of the procedural requirements of section 360 of article 14-A of the General Municipal Law. (Knapp v. City of Brooklyn, 97 N. Y. 520; Matter of Alter’g, etc., Main Street, Sing Sing, 98 N. Y. 454; Hassett v. Welch, 303 U. S. 303; cf. American Bank v. Goss, 236 N. Y. 488.)

The General Municipal Law, section 360, subdivision 5, requires that the special election be called in the same manner as provided in the Village Law for the submission of a proposition at a special village election and, further, that the submission shall be in the manner provided by and in accordance with the provisions of the Village Law for the submission of any other question by referendum on petition 11 except that the referendum on the proposition provided for in this section shall be mandatory.” The Village Law, section 139, defines the acts or resolutions of the board of trustees that are subject to referendum on petition and, so that there may be opportunity for consideration and preparation of a petition, provides for the publication of a notice within ten days setting forth the adoption of any resolution by the board of trustees which is subject to permissive referendum. Concededly, no such notice was posted or published in this case. This we think was not necessary. The only purpose of the notice required to be posted and published by section 139 is to afford an opportunity for the circulation of a petition in accordance with the provisions of section 139-a which must be signed by at least twenty per cent of the electors of the village if there is to be any referendum. Neither the notice nor the petition has any possible relation to a mandatory referendum. It is therefore excluded from the requirements of subdivision 5 of section 360 which limits the requirement that “ submission ” shall be in the manner provided by the Village Law by the exception except that the referendum on the proposition provided for in this section shall be mandatory.” Plainly, a requirement relating exclusively to the opportunity to prepare a petition and procure the necessary signatures was within the intended operation of this exception.

j Before its amendment by Laws of 1943, chapter 710, General Municipal Law, section 362, required that u the amounts and terms ” of bonds to be used in financing the cost of village utility services should be included in the proposition submitted to the qualified voters of the village in the mandatory referendum. This language must be read in connection with Village Law, section 129, and General Municipal Law, section 9. The Village Law section prohibits the issuance of bonds at a rate of interest exceeding six per cent and also prohibits the issuance of bonds for less than their par value. The General Municipal Law section requires the issuance of village bonds by a public sale in which the premium and the interest rate are fixed by competitive bidding. These statutory provisions cannot be harmonized if the former section 362 is construed to require a statement of the interest rate in the proposition submitted to the voters, since the interest rate will not be fixed until the bonds are sold. Quite obviously the Legislature could not have contemplated0 as one of the terms of the bond to be published prior to the referendum the rate of interest, which can only be determined thereafter by competitive bidding on the sale of the bonds. We are therefore constrained to hold that this section did not require publication of the interest rate in the proposition submitted to the voters.

Despatch Shops, Inc., questions the constitutionality of the ordinance on the ground that it is subject to possible taxation for a municipal plant which “ is be built to serve the exclusive interests of others without any benefit whatsoever to the Despatch Shops.” We find no support for this contention in fact or in law.

Despatch Shops, Inc., is the largest single taxpayer in the Village. It has consumed very large quantities of electric current in its manufacturing business, fluctuating from 1,000,000 k. w. h. per annum to 6,000,540 k. w. h. per annum. The generating plant proposed to be constructed by the Village will not be of a capacity large enough to supply the demands of the Village and of its inhabitants, including the maximum demands of Despatch Shops, Inc. The estimated cost of constructing the public utility service, including the generating plant and distribution system, which has been approved by the voters of the Village is less than $360,000., The capacity of the proposed generating plant is 1,350 k. w. It would require the construction of a generating plant of about 5,000 k. w. capacity, at a cost of approximately $900,000, to generate sufficient electric current to supply the Village of East Rochester and its inhabitants, including Despatch Shops, Inc., with their full requirements for all uses.

The Village may borrow only $372,462.22 before reaching its debt limit and will reduce this margin to $12,462.22 by the proposed bond issue. It cannot build a plant of sufficient capacity to supply all of the requirements of the Village and its inhabitants, including the industrial uses of Despatch Shops, Inc.

All of these requirements are now being supplied by the plaintiff-intervener Rochester Gras & Electric Corporation, with which the proposed utility service will compete in the sale of electrical energy in the Village. From this source Despatch Shops, Inc., is procuring its electrical energy at a price considerably lower than the Village plant as” projected could afford to sell such power. Thus it was that, in preparing the plans and specifications for the plant, the trustees of the Village felt warranted in concluding that Despatch Shops, Inc., under present conditions would not be a customer of the local plant.

There is no suggestion either in the ordinance or in the proposition approved by the electors, or any legal requirement anywhere, that Despatch Shops, Inc., will not be permitted to purchase power from the municipal plant. The ordinance is open to constitutional attack on grounds of discrimination, unless it may be said that no municipality may build a municipal public utility unless the utility is of sufficient capacity to supply all of the needs of its inhabitants. Whatever the capacity of such a plant may be, the remedy for discrimination in its administration is to be found before the Public Service Commission sections 65 and 66 of the Public Service Law. The Commission has ample power to compel the continuance of existing service and the extension of additional service. (New York Tel. Co. v. Jamestown Tel. Corp., 282 N. Y. 365, 374; United Gas Co. v. R. R. Comm’n., 278 U. S. 300, 308.)

There remains only the contention that taxation without direct personal benefit is a deprivation of property without due process of law.

The proposition approved by the electors and the ordinance provide that a sufficient tax shall be levied each year to pay the principal of and interest on the bonds as the same shall become due, to such extent as funds are not available for the purpose in revenues of such project. There is no suggestion that this tax will not be assessed against all the village taxpayers; indeed, it is the complaint of Despatch Shops, Inc., that such taxes, if needed, will be levied against all taxable property within the Village upon an ad valorem basis. Taxes so levied are not arbitrary or discriminatory merely because they are spread over such property on an ad valorem basis; nor where the ad valorem tax is thus general does its validity depend on the receipt of some' special benefit as distinguished from the general benefit to the community. (Memphis & Charleston Ry. v. Pace, 282 U. S. 241, 246.) Moneys thus raised may constitutionally be applied to purposes from which the individual taxpayer receives no benefit, and indeed may suffer serious detriment. (Nashville, C. & St. L. Ry. v. Walters, 294 U. S. 405, 429-430.) Special assessments of real estate for improvements are in a different category, but even in such cases there is no unconstitutional discrimination because of the nonreceipt of direct benefits unless the facts are deemed sufficient to show action “ palpably arbitrary and a plain abuse ” of power. (Valley Farms Co. of Yonkers v. City of Yonkers, 231 N. Y. 558; affd. 261 U. S. 155; Houck Little River Drainage District, 239 U. S. 254, 262, 265; Miller & Lux v. Sacramento Drainage Dist., 256 U. S. 129; Missouri Pac. R. R. v. Road District, 266 U. S. 187, 190.) In Valley Farms Co. v. Westchester (261 U. S. 155, 164, affirming the decision of this conrt in the same case, 231 N. Y. 558) the rule was thns stated, and Myles Salt Co. v. Iberia Drainage Dist. (239 U. S. 478) and other decisions, were distinguished because such facts were present. Here no such situation is presented either by allegation or proof.

Nor are there any facts disclosed by this from which we may conclude that the Despatch Shops, Inc., will suffer any detriment whatsoever. The courts below have found that the proposed plant will operate upon a self-liquidating basis and that if losses should be incurred they may be met by an increase of rates.' Whether such prophecy has the certitude of fact may perhaps be open to question, but a contrary conclusion would be too speculative to support the claim of unconstitutional taking of property through illegal taxation.

The judgment should be affirmed, with costs.

Lewis, J.

(dissenting). My dissent from the decision about to be made has as its basis the fact to which the Appellate Division opinion refers — that “ There is no doubt that the project as passed on by the voters provides for a plant which will be sufficient to generate only power enough to furnish the same to those users in the village, other than Despatch Shops, Inc.” (262 App. Div. 556, 566.) (Emphasis supplied.) The ordinance adopted by the Village of East Rochester to erect a municipal, plant for the generation of electricity for light, heat and power, pledges the faith and credit of the village “ * * * for the payment of the principal of and interest on * * * bonds ’ ’ to be issued to meet the cost of the project. The ordinance also provides that —“A sufficient tax shall be levied each year to pay the principal of and interest on said bonds as the same shall become due to the extent, if any, that funds are not available for ,the purpose from revenues of the project.” As I view the problem, the fact that the proposed municipal plant will ‘ ‘ generate only power enough to furnish the same to those users in the village, other than Despatch Shops, Inc.”, when considered with the further conceded fact that Despatch Shops, Inc.— a local taxpayer — will be called upon to pay its pro rata share of principal and interest on the bonded debt tbns to be incurred, subjects that corporate taxpayer to an “ unreasonable prejudice or disadvantage ” in violation of section 65 subdivision 3 of the Public Service Law. (See Gaynor v. Marohn, 268 N. Y. 417, 430.)

In that connection it is to be noted that the statute (General Municipal Law, § 360, subd. 2), under which the respondent Village claims its power to undertake the project here involved, authorizes it to construct and operate the proposed public utility as an agency to furnish service “ to its inhabitants,” not to a portion thereof. The decision in effect construes the statutory phrase “ to its inhabitants ” as meaning that the service to be furnished may be “to its inhabitants ” except a single taxpayer. In this instance that single taxpayer — although denied special benefits to be afforded other inhabitants — concededly may be called upon to pay a large portion of the principal and interest of the bonded debt to be incurred. Insofar as the project will afford to other inhabitants of the Village special benefits which are denied to Despatch Shops, Inc. — although that corporation may be called upon as a taxpayer to meet its share of the cost and maintenance of the plant — I believe the plan as now formulated will result in an unconstitutional taking of property through illegal taxation. (See Myles Salt Co. v. Iberia Drainage Dist., 239 U. S. 478, 485.)

Judgment affirmed.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    Hilda B. Proctor, an Infant, by Hilda S. Proctor, Her Guardian ad Litem, Appellant, v. Mount Arena, Inc., Respondent.
    Submitted October 22, 1943;
    decided March 2, 1944.

      William T. Andrews for appellant.
    I. There was a complete absence of proof of the violation of section 484 of the Penal Law. Without such proof that statute obviously is inapplicable and cannot properly be urged as a defense to an admitted'violation of sections 40 and 41 of the Civil Eights Law. II. Assuming but not granting that the defendant may avail itself of section 484 of the Penal Law, the facts show that the statute has been complied with. (People v. Samioick, 127 App. Div. 209.) III. The infant plaintiff was excluded solely because of race, color, and creed and in violation of section 40 of the Civil Rights Law. (Springer v. McDermott, 173 N. T. S. 413; Norman v. City Island Beach Go., Inc., 126 Mise. 335.)

      Wolfango E. Gribari for respondent.
    I. The failure of the defendant to assign section 484 of the Penal Law, as grounds for its refusal to sell the infant plaintiff an admission ticket did not bar defendant from relying on said statute on the trial. (Getty v. Williams Silver Go., 221 N. T. 34; Hutchinson v. Washburn, 80 App. Div. 367; Kilian v. Ferrous Magnetic Gorp., 245 App. Div. 298.) II. The defendant was not required to prove .that it had knowledge, actual or constructive, that the infant plaintiff was under 16 years to justify its reliance on this defense at the trial. III. Infant plaintiff was not “ accompanied ” by her parent or guardian or authorized person when she sought admission to defendant’s skating arena.
   Conway, J.

This is an action by an infant plaintiff to recover damages under Civil Rights Law, sections 40 and 41. The plaintiff is a colored girl who on the date upon which occurred the incident of which complaint is made, was fifteen years, eleven months and ten days of age — in other words she was twenty days less than sixteen years of age. She attended Gorton High School in Yonkers, N. Y., and was a member of the Tri Phi Club, composed of some fifty girls of the school. The members of the club decided to go roller skating at the rink of the defendant on Saturday, October 11, 1941. The infant plaintiff and her mother drove to the skating rink and arrived there a few minutes after eight o’clock in the evening. "While her mother sat in the automobile, the infant plaintiff went to the box office but the girl at the window told her that a dancing club had engaged the rink for the evening and that she could not obtain admittance. She returned to the automobile and then she and her mother explained to the girl at the window that the high school club was to be there. The infant and her mother then talked with the manager of defendant. While so engaged the infant plantiff saw some of the girls of the club skating, called them over and spoke with them. One of them, while approaching, called to her to come in but the manager said that she could not because she was colored. Later when she returned with her mother and a doctor to whom they had appealed, the denial of admittance was put upon the ground that she did not have a membership card hut when she sought one she was told that the ticket office was closed. The president of the Tri Phi Club testified that after the occurrence the manager of defendant asked her to sign a card and become a rink club member but that there had been no cards of admission theretofore.

At the conclusion of the plaintiff’s case the defendant rested without submitting any evidence. Suffice it to say that there can be no question of the fact that the infant plaintiff was refused admission because of her color. She had a yerdict from the learned trial court after both parties had moved for a direction thereof.

The earlier motion to dismiss was based upon Penal Law, section 484. That section provides that one who admits or allows to remain in a skating rink any child actually or apparently under the age of sixteen years, unless accompanied by its parent or guardian or by an adult person authorized by its parent or guardian # * Is guilty of a misdemeanor. ’ ’ "When the plaintiff sought admission to defendant’s skating rink she was under sixteen years of age. If that were all, the defendant clearly had the duty to exclude her. An action for a penalty may not be successfully prosecuted civilly against a defendant when, had he avoided the penalty, he would have committed a crime by so doing, even though he did not know at the time that he would have committed a crime. As the learned Appellate Division Justice phrased it in his opinion: “ No cause of action based upon a statutory right may be sustained when the granting of such right would result in the violation of a criminal statute.” (265 App. Div. 701, 703.) Here, however, it was proper, under the statute, for the defendant to admit the infant plaintiff when accompanied by her parent ‘ ‘ or guardian or by an adult person authorized by its (her) parent or guardian ’ ’. The infant plaintiff was accompanied by her mother and on her second visit by her mother and another adult person. It would be too narrow a construction of the statute to hold that the infant plaintiff was not accompanied by her parent or authorized guardian under these circumstances upon the ground that the mother or guardian did not seek admission with the infant plaintiff or offer payment therefor. They were present, and had the refusal of the defendant to sell plaintiff a ticket been put upon plaintiff’s age, the objection could have been met. Having been excluded solely because of her color, when so accompanied, plaintiff is entitled to recover. The refusal of the defendant, for the reason advanced, was a waiver of a formal offer by the adults to enter with the infant plaintiff and of a formal tender by them of the price of admission. (See Johnson v. Auburn & Syracuse Electric R. R. Co., 169 App. Div. 864, 869, revd. 222 N. Y. 443.)

The judgment of the Appellate Division should be reversed and that of the Trial Term affirmed, with costs in this court and in the Appellate* Division.

Lehman, Ch. J., Loughran, Eippey, Lewis, Desmond and Thacher, JJ., concur.

Judgment accordingly.


text:
    In the Matter of Columbian Protective Association, Appellant, against Joseph D. as Comptroller of the City of New York, Respondent.
    Argued January 3, 1944;
    decided March 2, 1944.

      Jolm A. Millener for appellant.
    The Local Laws enacted by the City of New York when they refer to insurance companies refer expressly to mutual or stock companies. The Act does not mention or refer to co-operative assessment associations. Therefore, it was not the intention of the City of New York to tax co-operative assessment associations. (Matter of Good Humor Corporation v. McGoldriclc, 289 N. Y. 452; Gould v. Gould, 245 TJ. S. 151; People ex rel. Mutual Trust Go. v. Miller, 177 N. Y. 51; Matter of Holmes Electric Protective Go. v. McGoldriclc, 262 App. Div. 514, 288 N. Y. 635.)

      Ignatius M. Wilkinson, Corporation Counsel (Samuel J. Warms, Arthur II. Goldberg, Edmund B. Hennefeld and Isaac C. Bonner of counsel), for respondent.
    Co-operative companies are mutual companies. (Pink v. Toicn Taxi Co., 138 Me. 44; Mygatt v. New York Protective Insurance Company, 21 N. Y. 52; Filley v. Illinois Life Ins. Co., 93 Kan. 193; State v. Willett, 171 Ind. 296; Fire Ins. Co. v. Surgett, 120 Ill. 36; Spruance v. Farmers & Merchants Ins. Co., 9 Col. 73; Penn Mutual Go. v. Lederer, 252 U. S. 523.)
   The petitioner was incorporated in 1883 pursuant to Laws of 1848, chapter 319. It is a co-operative assessment association. During the period involved in this proceeding it was governed by former article 6 of the Insurance Law entitled “Life or casualty insurance corporations upon the co-operative or assessment plan It was organized for the following purposes: “a. To Unite Fraternally all persons of good moral character and of sound bodily health between the ages of five and sixty-five years; b. To Give all moral and material aid to its members and those dependent upon them; c. To Establish a fund from which on satisfactory evidence of the sickness or death of a member of the Association who has complied with all its lawful requirements to pay a sum as pro rata of the weekly payments to his family, children or dependents as such member may direct.” No article 6 corporations may now be organized.

The question presented for our consideration is whether the petitioner is subject to a business tax under Local Laws No. 29 of 1936 and No. 22 of 1937 which were enacted pursuant to power granted to the City of New York by Laws of 1934,, chapter 873. The two Local Laws provided for the imposition of an excise tax for the privilege of carrying on business within the City of New York. In Local Law No. 29 of 1936 it was provided in section 2 (and a similar provision is found in Local Law No. 22 of 1937): “(b) For the purpose of determining receipts from the business of insurance, such receipts shall be taken to mean receipts from premiums received in New York city, lohether by mutual or stock companies, domestic or foreign. * * V’ (Italics supplied.)

The question presented is a narrow one. The Local Laws refer to mutual or stock companies Are. those words to be considered as including all insurance companies of whatever nature or description? Originally, with reference to a similar Local Law of 1934, the Comptroller of the City of New York issued a regulation under authority conferred upon him by the Local Law declaring that “ Fraternal, Insurance Societies or corporations organized for the purpose of transacting the business of life insurance upon a co-operative or assessment plan * * * ” were exempt. The Corporation Counsel of the City of New York rendered opinions 1934 and 1935 advising the Comptroller that “ corporations organized pursuant to Article 6 of the Insurance Laws of the State of New York ” were not subject to the tax. We think that, position was correct. The city legislative body derived its authority in enacting the applicable Local Laws from the State Legislature. The State Legislature had exempted fraternal benefit societies by Insurance Law, section 246 (present § 468). Those fraternal benefit societies are insurance corporations. The Legislature, in the Insurance Law of our State, has not classified all insurance corporations as either stock or mutual even though all insurance corporations must partake of the nature of either of those two forms. Prior to 1940, in addition to stock corporations under articles 2, 3, 4, 5, and 9A of the Insurance Law and conventional mutual corporations under articles 2, 5A, 10A and 10B, there were, for instance, fraternal benefit societies under article 7, article 6 corporations, such as petitioner, retirement systems and pensions under article 6B, co-operative fire insurance corporations under 'article 9, Lloyds and inter-insurers under article 10, and non-profit hospital service plans under article 14. The Legislature may create as many different kinds of insurance corporations as it desires. This it has done. Thus, impliedly under Insurance Law, section 117 prior to 1940, and now expressly by sections 314 and 342, stock casualty, surety, fire and marine insurance corporations may include in their charters provisions ‘ ‘ authorizing the board of directors to permit its [their] policyholders from time to time to participate in the profits of its [their] operations through the payment of dividends to policy holders.”

It can be argued that fraternal benefit societies are exempt from taxation because they are charitable institutions (Insurance Law, § 246, now § 468) and as such are specifically exempted by another provision of the Local Laws under consideration. That would make even more clear the fact that the words of the Local Laws ‘ ‘ whether by mutual or stock companies ” are not all inclusive. For whether fraternal benefit societies are exempt because of the Insurance Law or because they are charitable organizations under the Local Laws, they were not intended to be included under the term “ mutual ” in the Local Laws. So soon as it appears that “ mutual ” as used in the Local Laws does not include all types of insurance corporations other than stock corporations, it becomes apparent that “ mutual ” means that class of corporations specifically denominated mutual ’ ’ in our Insurance Law. The respondent City of New York argues: The term ‘ mutual ’ is used in the local laws in its general and broader sense as judicially defined, which includes co-operatives within its meaning. There is no rule which calls for ascribing to a term used by one legislative body, the meaning ascribed it by another legislative body or even a meaning ascribed to it by the same body in a wholly different law and context.” On the contrary, in this instance, we think that where one legislative body — the Legislature of the State — enacts an enabling statute permitting the legislative body of a city to pass a tax law, the latter legislative body acting for the city — which is but a creature of the State — must be held to have used definitive terms in its local laws with the meaning and definition given and ascribed to those terms by the State Legislature when it created, defined and used them.

The order of the Appellate Division should be reversed and the determination of the Comptroller of the City of New York annulled, with costs in all courts.

Rippey, Lewis and Desmond, JJ., concur,- Lehman, Ch. J., LougheaN and Thaoher, JJ., dissent.

Order reversed, etc.


author: Conwat, J.

text:
    Agnes H. Porter, Appellant, v. Commercial Casualty Insurance Company, Respondent.
    Argued January 4, 1944;
    decided March 2, 1944.

      Joseph A. McCabe and Samuel R. Rosen for appellant.
    I. Eeformation of a contract is improper where mistake is unilateral and no fraud exists. To warrant reformation mistake must be mutual. (Christopher St. B. Co. v. Si. B. Co., 149 Y. 51; Salomon v. North British & M. Ins. Co., 215 N. Y. 214; Metsger v. 2Etna Ins. Co., 227 N. Y. 411.) II. Evidence must be clear, positive and convincing before a contract can be rewritten by the court. Reformation is never granted upon a probability, nor even upon a mere preponderance evidence, but only upon a certainty of the error. (Salomon v. North British & M. Ins. Co., 215 N. Y. 214; Susquehanna S. S. Co. v. Andersen & Co., 239 N. Y. 285; Christopher St. R. Co. v. 23d St. R. Co., 149 N. Y. 51; Metropolitan Life Insurance Co. v. Tannen-baum, 156 Mise. 221; Pomeroy’s Equity Jurisprudence, 4th ed., § 859; People v. Rodaivald, 177 N. Y. 408.)

      James Conboy and J. Stanley Carter for respondent.
    I. The defendant is entitled to have the rider corrected so as to express the real intentions of the parties. (MacDonald v. Cris-sey, 215 N. Y. 609; Born v. Schrenkeisen, 110 N. Y. 55; Pitcher
      v. Hennessey, 48 N. Y. 415; Bacot v. Fessenden, 139 App. Div. 647; Ilaviland v. Willets, 141 N. Y. 35; Kilmer v. Smith, 77 N. Y. 226; Lewitt & Go., Inc., v. Jewelers’ Safety F. Soc., 249 N. Y. 217; Fleischman v. Furgueson, 223 N. Y. 235.) II. A reasonable construction of the language used in the rider and the history and background and intention of the parties in connection with the group plan of insurance does not justify a conclusion that the period of disability was to be extended beyond twelve months. (Clausen v. Title Guaranty & Surety Go., 168 App. Div. 569, 222 N. Y. 675; Evansville Nat. Bank v. Kaufman et al., 93 N. Y. 273; Insurance Go. v. Butcher, 95 U. S. 273; Woolsey v. Funke, 121 N. Y. 87; Furgueson, 223 N. Y. 235; B. E. S. R. R. Go. v. B. S. R. R. Go., Ill N. Y. 132; Mans on v. Curtis, 223 N. Y. 313.)
   Conwat, J.

The plaintiff was employed in 1936 as a dining room attendant in the Wassaic State School. After her employment she became a member of the New York State Civil Employee’s Association, hereinafter referred to as “ Association ”. The defendant, Commercial Casualty Insurance Co., hereinafter referred to as “ Company”, made an agreement under which, upon application of a member, it issued a policy of accident and health insurance under what is described in the record as a group plan as distinguished from a group insurance policy. The group plan was not introduced into evidence. Two members of the insurance committee of the Association and two employees of the Company testified to the substance of the plan. Under it there were two classifications of policies issued by the Company. Class A policies were issued to employees in nonhazardous occupations and provided coverage for all illnesses and accidents both occupational and nonoccupational. Class B policies were issued to employees engaged in hazardous occupations and provided coverage for all illnesses and for nonoccupational accidents.

There was introduced in evidence the application by plaintiff for the original policy issued to her. That policy was a Class A policy. On the back of the application there appeared a short “ Explanation Class A and Class B ”. That explanation showed that indemnity was paid for sickness and accident under policies of Class A and Class B “ for twelve months for any accident.” No reference there is made to a policy issued under a Class B-2 classification and it is abont a policy issued under that classification that the controversy here revolves. It arose in the following manner. The plaintiff ceased to be a dining’ room attendant and became a night cook and thus entered upon a hazardous rather than a nonhazardous employment. The policy in classification A which had been issued to plaintiff as a dining room attendant made no reference ,to any classification. It undertook to insure the plaintiff an attendant by occupation ” for a definite premium. Insofar as is here material, it insured against “ loss or disability resulting directly and exclusively of all other causes, from accidental Bodily injury sustained during the life of this policy ⅞ ⅜ ⅜ ” for a period not exceeding fifty-two consecutive weeks.

There was no requirement in policy under which a change in occupation from a nonhazardous to a hazardous one required reclassification of plaintiff’s policy from an A to a B policy. On the contrary, however, there was a provision among the ‘4 Standard Provisions ’’ which read as follows: “If the Insured shall at any time change his occupation to one classified by the Company as less hazardous than that stated in the policy, the Company, upon written request of the Insured and surrender of the policy, will cancel the same and will return to the Insured the unearned premium. ’ ’

It was necessarily conceded in testimony offered by the Company on the trial that under that “ Standard Provision ” the plaintiff could have changed her occupation to cook and still continued under the policy; that if she had suffered the injury, which is the subject of this litigation, she could have recovered under it; that the only difference between the original A policy and the present so-called B-2 policy is that disability under the former would entail payments by the Company for only twelve months.

At the time of the issuance of the Class A policy to plaintiff the Company had not conceived or formulated a Class B-2 policy. It was not until January 1939, that the Company made “ provision whereby an employee whose duties were hazardous could obtain the benefits of an A classification by paying an additional premium.” The principal sum of the policy was thereupon reduced to $500. There is testimony in the record that that latter was the sum provided for in a Class B policy but there is no basis for such statement in the application signed by plaintiff for the original policy nor in the explanation on the reverse side of it, to which reference has already been made.

When plaintiff became a night cook, in January, 1939, she spoke to a Mrs. Murtagh who handled the business of the group plan policies for those employed in the Wassaic State School although she was employed by the State and not by the Company. Plaintiff asked “ for a rider to the policy ” because “ the danger was very much greater working with the steam cooking, and the compensation which you get under accident is only' two-thirds of your original salary.” There was no conversation between the plaintiff and Mrs. Murtagh about any change or extension in the period of disability. There was no conversation about any reduction in death, dismemberment and loss of sight benefit. At the request of Mrs. Murtagh, who-wrote to the Company for a B-2 rider, the Company prepared and returned a rider by which the policy classification was changed from A to B, the premium increased and the accidental death benefit (sic) reduced to $500. Up to that point the change was from an A policy to a conventional B policy except for the reduction in accidental death benefit. Over and beyond that, however, in order to supply insurance coverage against occupational accident the rider contained the following paragraph: “It is also understood and agreed that in consideration of the payment of an additional premium of Ninety Five Cents ($.95) quarterly, this policy is hereby extended to cover any period of incapacity caused by accident only for which the employee is entitled to indemnity or compensation under any Workmen’s Compensation Act.” (Emphasis supplied.)

Thus the new policy as written was a Class B policy with an increase of premium because of the change from nonhazardous to hazardous occupation but in addition there was a second and further premium, increase and the additional coverage just quoted. There was no form of printed rider for this change; it was typed for this risk. There was a printed form of rider to change a policy from Class A to Class B which contained no reduction in accidental death, dismemberment and loss of sight benefit. The additional charge and the additional coverage beyond what was granted by the attachment of a so-called B rider to a Class A policy caused the rider to be termed a Class B-2 rider. It was a coverage beyond that contemplated by the Class A and Class B policies as explained on the back of plaintiffs application in 1937. ■

When the rider was returned Mrs. Murtagh told plaintiff that “ she didn’t understand it very much herself but she guessed it was all right ” and for plaintiff to read it very carefully before she accepted it. The latter testified that she read it carefully, understood its provisions and accepted them in writing. The rider was thereafter countersigned by the Company and forwarded to her.

In May, 1940, plaintiff suffered bodily injuries from an occupational accident. She has been disabled since. Concededly, within the terms of the policy as written, the Company is obligated to pay the sum sought in the complaint which includes payments for a period beyond the first year of disability. The Company concedes that the injury suffered was the result of an occupational accident and that plaintiff is “ entitled to indemnity or compensation ” under Compensation Law. When this action was brought, however, the Company counterclaimed for reformation upon the ground that there had been a mutual mistake of fact in that neither party to the insurance contract intended to increase the period for which the Company had contracted to make disability payments under the Class A policy originally issued. There is no question here of fraud. The Trial Justice and the Appellate Division rejected such a contention. must therefore depend upon clear and convincing proof that both parties to the contract sued upon entered into it through mistake. The burden of proving a mutual mistake was upon the Company and, since this was a written instrument, it was necessary for it to establish that the plaintiff was mistaken by evidence of the clearest and most satisfactory character. (Southard v. Curley, 134 N. Y. 148; Susquehanna S. S. Co. v. Andersen & Co., 239 N. Y. 285, 296, 297; Christopher St. R. Co. v. 23rd St. R. Co., 149 N. Y. 51, 58; Salomon v. North British & M. Ins. Co., 215 N. Y. 214, 217; Metzger v. Ætna Ins. Co., 227 N. Y. 411; 3 Pomeroy’s Eq. Juris. [5th. ecL] § 859a). In the Christopher St. R. R. Co. case, it was said: “ To enable the plaintiffs to maintain this action, it was incumbent upon them to show that there was a mistake, that it was mutual and one made by all the parties to the agreement, so that the intention of neither was expressed. * * * In an action for the reformation of a written instrument upon the ground of mistake, the party seeking reformation must prove that there was a mistake by evidence that is clear, positive and convincing. It is to be presumed that the written instrument was carefully and deliberately prepared and executed and, therefore, is evidence of the highest character and will be regarded as expressing the intention of the parties to it until the contrary appears in the most satisfactory manner. ’ ’ We shall assume that the agent of the Company made a mistake and that the Company did not intend to extend payments for disability due to occupational accident beyond fifty-two weeks. There is no evidence that the plaintiff was in any way mistaken in accepting a policy which gave her a more extended coverage. What the plaintiff sought, as is the case with the average insured, was the best and most extended coverage that she could obtain from the Company with which she was dealing. She was a night cook in a State institution and not one versed in insurance. She was not required under the terms of the Class A policy to change to a Class B policy by reason of her change to a hazardous occupation as we have indicated in the quotation from the “ Standard Provisions ” (supra). The plaintiff did not seek a reduction in accidental death benefit when she asked for insurance covering occupational accident. The Company simply reduced it without consulting plaintiff and she accepted that just as she accepted the extended coverage which the Company wrote for her also without consulting her as to phraseology. The Company made a mistake. The plaintiff made none.

It was sought by the Company to probe the recesses of plaintiff’s mind so as to establish that she must have known that the Company, despite its preparation of written words to the contrary, never intended to increase tlie number of payments it would make in the event of her disability due to occupational accident beyond those provided for in the A policy. That was attempted by showing that plaintiff was present at the school when the plan was discussed before it went into effect; that she knew that her policy was issued under the group plan to members of the Association; that the original policy was in the A classification; that thereunder payments of disability were limited to a period of fifty-two weeks; that after the group plan was adopted, the Association published the plan in the April, 1937, and the September, 1937, issues of the monthly magazine. There is nothing in the record to show that plaintiff had any knowledge that the policies issued under the plan were all limited to a period of fifty-two weeks. She testified that at the time the original policy was issued she knew nothing about the B classification. Even assuming that she did, there is nothing in the record to show that she could have known in 1937 what a B-2 classification, mistakenly worked out in 1939 in the office of an agent of the Company, was to be or was to mean.

That is important because we have here a written agreement prepared by one party to it and accepted by the other. It was prepared by the one seelcing its reformation. The Company assented to that agreement only after plaintiff had accepted in writing its offered phrasing and terms. That was the written statement of the Company’s intent. What is in the mind of parties to a contract is evidenced by word or deed and must be We find in the Tear Books: “ It is a trite learning that the thought of man is not triable, for the devil himself knows not the thought of man.” (Brian, in YB 17 Edw. IV, 2.) We quoted with approval in Sokoloff v. National City Bank (Cardozo, J.), 239 N. Y. 158, 170, the following from Holmes, J., in O’Donnell v. Clinton (145 Mass. 461) : “ Assent, in the sense of the law, is a matter of overt acts, not of inward unanimity in motives, design, or the interpretation of words.” (See to the same effect Williston on Contracts, Yol. 1, §§ 22, 94; Yol. V, § 1535-7.) In 1 Williston, section 22, it is said: “ It is customarily said that mutual assent is essential to the formation of informal contracts, but it should further be stated that the mutual assent must be manifested by one party to the other, and except as so. manifested is unimportant. In some branches of the law, especially in the criminal law, a person’s secret intent is important, but in the formation of contracts it was long ago settled that secret intent was immaterial, only overt acts being considered in tbe determination of such mntnal assent as that branch of the law requires.” In Hotchkiss v. National City Bank of New York (L. Hand, J.), (200 F. 287, 293, affd. S. 50), it was said: “ A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort. Of course, if it appear by other words, or acts, of the parties, that they attribute a peculiar meaning to such words as they use in the contract, will prevail, but only by virtue of the other words, and not because of their unexpressed intent.”

So here the plaintiff carefully read, as she was told to do, the language used by defendant in preparing its contract.- She knew what was in the mind and what was the intention of the Company because that was evidenced in words used by the Company in preparing the contract. The Company told her the content of its mind and the limits of its intention. The plaintiff could determine the Company’s intent in no other manner. She was making no mistake. She knew what was offered and she accepted. She accepted the additional benefit, she undertook to pay an increased and an additional premium and' consented to the halving of her accidental death benefit.

The judgment of the Appellate Division should be reversed and that of thev.Special Term affirmed, with costs in this court and in the Appellate Division. (See 292 N. Y. 717.)

Lehman, Ch. J.,' Loughran, Bippey, Lewis, Desmond and Thacher, JJ., concur.

Judgment accordingly.


author: DesmoND, J. Lehman, Ch. J.

text:
    The People of the State of New York, Respondent, v. Gordon Cooke and Winston A. Sealy, Appellants.
    Argued November 23, 1943;
    decided March 2, 1944.

      Harry G. Anderson for Gordon Cooke, appellant.
    I. The trial court committed reversible error in failing to answer a pertinent inquiry of tbe jurors relating to tbe necessity of intent to kill as an element of murder in tbe first degree. (Code Crim. Pro. § 427; People v. Weiss, 290 N. Y. 160; People v. Flynn, 290 N. Y. 220.) II. It was error for tbe trial court to deny a request of counsel for a sequestration of tbe witnesses. III. Tbe verdict is against tbe weight of tbe evidence. . (People v. Paige, 283 N. Y. 479.)

      Walter B. Hart and G. Joseph Banahy for Winston A. Sealy, appellant.
    I. Tbe verdict of murder in tbe first degree is against tbe weight of tbe evidence. (Stokes v. People of the State of N. Y., 53 N. Y. 164; People v. Hawhins, 109 N. Y. 408; People v. Guadagnino, 233 N. Y. 344; People v. Baffo, 180 N. Y. 434; People v. Florentino, 197 N. Y. 560; People v. Becker, 210 Y. 247.) II. Tbe trial court committed reversible errors of law in bis charge to tbe jury. (Stokes v. People of the State of N. Y., 53 N. Y. 164; People v. Weiss, 290 N. Y. 160; People v. Flynn, 290 N. Y. 220.)

      Thomas Gradock Hughes, Acting District Attorney (Henry J, Walsh of counsel), for respondent.
    I. Tbe trial court committed no error in its manner of complying with tbe jury’s request for further instructions. (People v. Baizen, 211 App. Div. 446; People v. Wansker, 191 App. Div. 875; Thomas v. People, 67 N. Y. 218; People v. Ferraro, 161 N. Y. 365; People v. Flynn, 290 N. Y. 220; People v. Johnson, 185 N. Y. 219; People v. Taylor, 138 N. Y. 398; People v. Koenig, 180 N. Y. 155.) II. Tbe defendants’ guilt was proved beyond a reasonable doubt and they were accorded a fair trial. (People v. Bimieri, 180 N. Y. 163; People v. Smith, 180 N. Y. 125.)
   DesmoND, J.

About midnight on July 25, 1942, McKinley Kettles, seventeen years old, was stabbed to death by two young men on tbe stoop of Kettles’ home on Gates Avenue in Brooklyn. On tbe stoop with Kettles when be received tbe two knife wounds were bis mother, pleading for bis life, and bis sweetheart. Viewing tbe affray from a window were two visitors at tbe Kettles borne. All four identified these two defendants as the stabbers. On tbe question of identity it was for tbe jury to decide whether to believe the assertions of those four witnesses or the denials of the defendants. There was another question of fact as to intent to kill. The knifing came as the climax of a long, confused gang fight, or series of gang fights, which had raged through the neighboring streets for about two hours. The feud began when two youths quarreled over a girl. Fighting broke out between those youths and their adherents. Defendant Sealy, a partisan of one of the quarreling youths, was at that time cut in the face, perhaps accidentally, by Kettles, who had espoused the cause of the other. Sealy, who was about twenty years old at the time, then went with some of his friends to a nearby drug store where bis cuts were bandaged. Sealy testified that be was not with the crowd of youths who later pursued Kettles and the latter’s young woman friend to the Kettles home, and that he had nothing to do with Kettles ’ death. He admitted a knife in his possession at some time during the evening but said he had given it to his brother to take home. Defendant Cooke, about eighteen years old on the night of the killing, testified that he had been at the scene of the first encounter when Sealy was cut by Kettles’ knife. Cooke told the jury that he had met Kettles again that evening, after thé cutting of Sealy, had chided Kettles for fighting, had warned him of danger from a pursuing crowd that was even then in sight, and had urged Kettles to go home. When the pursuing crowd came close to Kettles, Kettles ran into a nearby police station for help and police officers dispersed the crowd. Defendant Cooke, according to his testimony, stood in a hallway until the police had sent the troublemakers away. The police station was on Gates Avenue about a quarter-mile from the Kettles home. Defendant Cooke testified that he then took a walk through nearby streets, finally arriving at the corner of Summer Street and Gates Avenue, some 500 feet from the scene of the killing. He insisted at the trial that he came no nearer than that to the Kettles home. However, he, like defendant Sealy, was positively identified, by the four eyewitnesses above mentioned, as one of the killers. Two of those witnesses swore that defendant Sealy, when Kettles’ mother sought to protect her son, announced that he was going to kill Kettles. All four witnesses heard defendant Cooke, as he lunged at Kettles, tell Mrs. Kettles to get out of the way. "We conclude that there was enough before the jury to justify affirmative answers to the two important questions of fact submitted to them, that is, as to whether these defendants were the slayers and as to whether their intent was homicidal.

The principal question of law presented by this record arises from the County Judge’s answer to, or failure to answer, a question from the jury. The jury’s communication was handed up to the Judge after the jury had been deliberating for several hours. It read as follows:

“ Your Honor: In your charge, did you state it was a point of law, that if a premeditated act to cause serious injury but uot necessarily to cause actual death, but which, however, results in actual death, that this premeditated act is the intent to kill?

“We would appreciate your reading the parts of your charge dealing with intent ’ relative to the act. ’ ’

effect and meaning of the farther instructions given by the Trial Judge when, though declining to answer the first question, he proceeded to answer the second, after expressing his belief that his answer to the second would give the jury all the desired information.

In his main charge the County Judge had charged, with fullness and clarity, as to deliberation, premeditation and intent. Discussing intent, he had told the jury that intent was “ a mental function whereby a person aims or purports to attain the natural consequences of his act and like any other mental function it is a secret and silent operation of the mind, not visible to the human eye but which can be ascertained, however, from the actions and conduct of the individual whose intent is the subject of inquiry.” Paraphrasing somewhat the language of Chief Judge Btjgeb in People v. Conroy (97 N. Y. 62, 77), the Trial Judge in his main charge had told this jury that a man is presumed to intend the natural and necessary consequences of his act and that unless the act has been done under circumstances precluding the existence of such an intent, a jury has the right to find from the results produced an intention to effect it. He had told the jurors that in deciding as to intent they might consider the circumstances leading up to the alleged assault, the motive if any, and the nature, number and location of the wounds inflicted on the body of the victim.

After that original charge and before the jury tendered the question above quoted, the jury had come in to the courtroom to have repeated to them the charge as to murder first degree and manslaughter first degree, “ with particular emphasis ”, jury, on the word “ intent ”. In response the court redefined those crimes, repeating his earlier instructions as to intent.

When the Trial Judge, in response to the jury’s double-barreled question, above quoted, again, and now for the third time, defined intent, he substantially repeated what he had said in his main charge and recharge, but made certain additions. Striking his desk with his gavel, the Court told the jury that the resulting noise was a natural consequence of the blow on the wooden desk and that there is a “ presumption ” that a person striking such a blow intends the noise. Then, elaborating on the idea that a man’s actions may “ belie his words ”, the court suggested, as an example thereof, a suppositious case of a man professing friendship for another hut at the same time plunging a dagger into the other’s heart. The natural consequences of a man’s act, who with a dagger sticks another man’s heart, are that he wants to kill him, isn’t that so? ” the court said. He then went on to say that it is a well known fact that a puncture of the heart is fatal, so a knife blow to the heart justifies an assumption of an intent to kill. The court’s illustrations were not too well chosen. As to the striking of the gavel on the wood, the noise that followed was a necessary consequence just as a wound, serious or slight, is an immediate and inevitable result of any cutting of the human body, but a gavel blow on a wooden surface may or may not have, besides the noise, another result also, such as damage to the wood. So an incision of the human body with a dagger, certain as it is to cause some wounding, may have a further and possibly unintended result, death. The other illustration used by the County Judge, that of the man professing friendship for another but plunging his dagger into the other’s heart, was a little too apt since one of the actual knife wounds in Kettles’ body (not the fatal wound) was at the left nipple, near the yictim’s heart. Conceding that the hypothetical situations, used by the court to illustrate his thrice-given definition and explanation of “ intent ”, were not the happiest possible choices for that purpose, we cannot see that any serious harm was done. The use of such explanatory matter was not uncalled for, especially when the jurors, or some of them, showed their inability to understand clear and plain definitions. It would have been better to make the unequivocal statement that the jury was not bound to presume an intent to kill from the intentional stabbing (see Stokes v. People of the State of N. Y., 53 N. Y. 164, 179; People v. Weiss, 290 N. Y. 160, 171) but the thrice-delivered charge in this case, on the question of intent, was not incorrect in substance or in any important part thereof.

We cannot allow to pass unnoticed the court’s denial of the motion of appellant Sealy, made at the opening of the trial, for the exclusion of the witnesses from the courtroom. We have noticed such rulings in other criminal appeals recently argued before us. It is hard for us to understand what reason there is, or could be, for such a ruling, or why such a motion should not be granted as ©f course, especially in a capital case. Wigmore (3rd ed. Yol. 6, eh. 63) says that the separation of witnesses is a matter of right like the right of cross-examination, but in New York it seems always to have been considered a matter of discretion. (People v. Green, 1 Park Cr. Cas. 11, 14; Philpot v. Fifth Avenue Coach Co., 142 App. Div. 811.) Unlike some other states-, New York has no statute on the subject (except Code Crim. Pro. § 202 dealing with certain proceedings before magistrates). We do not think that the court’s refusal to “ put the witnesses • under the rule ” was reversible error in this case, but we repeat that we see no reason for such a ruling.

We have examined the supplemental record containing the proceedings on the. motion of appellant Cooke for a new trial on the ground of newly discovered evidence. We find no error in the denial of that motion.

The judgments of conviction should be affirmed.

Lehman, Ch. J.

(dissenting). The defendants have been found guilty of killing McKinley Kettles from a deliberate and premeditated design to effect his death. On the night of the killing, Kettles, a youth of seventeen, was chased by a crowd of other youths and, in front of his home, some of them stabbed him and the wounds caused his death. The People produced evidence, which, though contradicted, the jury could accept as true, that Cooke, then eighteen years old, and Sealy, twenty years old, inflicted the wounds. Upon this appeal no sufficient ground is shown for disturbing the finding of the jury that the defendants were the slayers. Perhaps the most serious question to be decided upon this appeal is whether the charge of the Trial Judge adequately instructed the jury upon the question of intent to kill.

Judge DesmoNd in his opinion has concisely stated the events which led to the killing. Earlier in the evening Sealy’s eye had been cut by a 3-outh who did not belong to Sealy’s “ crowd ” or “ gang ”. There is little doubt that Sealy’s “ crowd ” resented the cutting as an indignity inflicted upon one of their own and were intent upon wiping out the indignity by inflicting injury, perhaps more serious, upon the assailant or upon an adherent of the assailant. The result was a fight or series of fights between rival neighborhood gangs. The intent to inflict serions injury may reasonably be inferred from the manner in which Kettles was chased and brutally stabbed with knives. Intent to kill is an essential element of murder in the first degree; intent to inflict serious injury- does not suffice. Though perhaps it cannot be said that as matter of law the evidence is insufficient to justify a finding of intent to kill, I find it difficult to believe that all the crowd who chased Kettles, or even the youths who actually inflicted the wounds, had such an intent. The attack was made with knives, not pistols. Death was the result of a wound in the armpit which severed the axillary artery. It took place on the public street in the presence of the mother and sweetheart of the victim. There was no attempt at concealment. Men who have formed a deliberate and premeditated design to kill do not, ordinarily, pursue their intent in such manner, and a cut with a knife in the armpit does not ordinarily cause death. In such circumstances it was very important that adequate instruction be given to assist the jurors in their consideration of the question whether the wounds were inflicted with intent to effect death.

Correct general instructions relating to deliberation, premeditation and intent, were, I agree, given by the Trial Judge in his main charge. True, he did not point out that an intent to inflict serious injury would not suffice, but he had charged that intent to kill was necessary and he was justified at that time in assuming that the jury would understand his instructions and apply them properly to the evidence, especially since he was not requested to amplify his instructions.

After the jury had deliberated several hours it requested that the stenographer read again your Honor’s charge to the jury defining Murder 1st degree and Manslaughter 1st •degree ”. The foreman added: “ Would you make it easy, Judge, with particular emphasis on the word ‘ intent ’ in both cases.” In answer to the request the Trial Judge in effect reiterated to the jury his original charge relating to intent to kill as an element in the crime of murder, but apparently the trial court did not succeed in making it so “ easy ” that all could understand it, for later in the evening he received the communication quoted in the prevailing opinion.

I agree with my associates that “the first question was clear enough ” and it cannot be disputed that the question whether “ a premeditated act to cause serious injury but not necessarily to cause actual death, but which, however, results in actual death, * * is the intent to kill ” relates to a point of law which is decisive upon the issue whether these defendants are guilty of murder. The Code of Criminal Procedure, section 427, leaves to the trial court no discretion whether or not to give the information. The court must give the information requested, and where the court fails to give information requested upon a vital point no appellate court may disregard the error under section 542 of the Code of Criminal Procedure. Since intent to kill is an essential element in the crime of murder, and the question plainly showed that the jurors or some of them did not understand from the charge as previously given that intent to cause serious injury is not an intent to kill, it can certainly not be said that failure to give the information would not “ affect the substantial rights ” of the defendants. The only question which remains is whether the jury must have gleaned the required information from the charge as given, though the question was not answered unequivocally.

I concur in the conclusion that “ it would have been better to make the unequivocal statement that the jury was not bound presume an intent to kill from the intentional stabbing ⅝ ⅜ ⅜ but the * thrice-delivered charge in this case, on the (question of intent, was not incorrect in substance or in any ¡important part thereof.” The fact remains that after hearing ■.the charge delivered twice the jurors asked further information. 'There is no reason to believe that delivery of the charge a third ¡time removed any confusion or misunderstanding left after the charge had been delivered twice. At no place in that charge is there any statement, unequivocal or otherwise, that intent to inflict serious damage without intent to effect death is not the specific intent to kill which is an essential element of murder. True it is that the Judge read the statutory definition of murder and pointed out that design or intent to effect death is an essential element of that crime. Doubtless it follows logically that the killing of a human being with intent to cause serious injury but not to cause death would not constitute murder as defined in tlie statute — yet the jury asked specifically whether it would satisfy the statutory definition, and nowhere is that question answered, directly or indirectly.

The illustrations used by the court for his thrice-given definition and explanation of “ intent ” are not only far from the “ happiest possible choices for that purpose but indeed suggest that the inference of intent to effect death arises whenever death results from a premeditated act to cause serious injury. It is indisputable that in reply to the question propounded by the jurors the Trial Judge gave no instruction which he had not given before and which might even by implication answer the question asked by the jury or remove the doubt which still remained in the minds of the jurors or some of them. That was error which this court may not disregard.

Judgment should be reversed and a new trial ordered.


author: Lehman, Ch. J.

text:
    Maryland Casualty Company, Appellant, Edward A. Grace Defendant, and Alfred P. Burroughs et al., Defendants Respondents.
    Argued December 7, 1943;
    decided March 2, 1944.

      Daniel Combs and William Richards for appellant.
    I. The appellant was liable for the claims it paid. (Bischoff v. York-ville Bank, 218 N. Y. 106; Grace v. Corn Exchange Bank Trust Co., 287 N. Y. 94; ¿Etna Casualty & Surety Co. v. Catskill Nat. Bank Trust Co., 102 F. 2d 527; Maryland Casualty Co. v. City Nat. Bank, 29 F. 2d 662.) II. The only way respondents could attack the payment made by appellant was by pleading and proving that the payment was made in bad faith with intent to injure respondents. (Halstead Lumber Co. v. Hartford Acc. & Ins. Co., 298 Pac. 925; National Surety Co. v. Casner, 253 S. W. 1057; Fidelity & Deposit Co. of Maryland v. TJiieme, 193 So. 496; Guarantee Co. v. Pitts, 78 Miss. 837; Illinois Surety Co.
      v. McGuire, 145 N. W. 768; United States Fidelity & Guaranty Go. v. Jones, 87 F. 2d. 346; Continental Gas. Go. v. Nat. Slovak Sokol, 269 N. T. 283; American Bonding Go. of Baltimore v. Alcatraz G. Go., 202 F. 483; National Surety Go. v. Fulton, 192 App. Div. 645 j City of Neio York v. Baird, 176 N. Y. 269.)

      Arthur Stryker for respondents.
    I. Appellant was required but failed to prove that it was compelled to pay the claim of Trans-Atlantic Passenger Conference or that it acted in good faith in paying said claim. (Lissner v. Haynes Automobile Go., 105 Mise. 359; Bridgeport Insurance Go. v. Wilson, 34 N. Y. 275; Village of Port Jervis v. First National Bk., 96 N. Y. 550; Taylor v. Barnes et al., 69 N. Y. 430; Smith v. Columbia Casualty Co., 225 App. Div. 223; Brescia Construction Go. v. Walart Construction Go., 245 App. Div. 105; Wheeler et al. v. Sweet et al., 137 N. Y. 435; City of New York v. Baird, 176 N. Y. 269; Watterson v. Tremaine, 24 N. Y. S. 2d 830; Hilleary v. Skookum B,oot Hair Grower Go., 4 Mise. 127.) II. The agency agreement required Grace to keep the trust funds separate and apart from all other funds and moneys in his hands. (Bischoff v. Yorkville Bank, 218 N. Y. 106; Grace v. Corn Exchange Bank Trust Go., 287 N. Y. 94.)
   Lehman, Ch. J.

Transatlantic Passenger Conference was, at all times referred to in this opinion, an association of steamship lines. Each person authorized to act as agent of any of these lines and to sell its passenger tickets was required to enter into an agency contract which defined the obligations of the parties. In May, 1928, the plaintiff company executed and delivered its surety bond to the Secretary of the Transatlantic Passenger Conference, hereinafter called “ Conference,” as trustee for the steamship lines, therein named, which were members of the Conference. Tinder the terms of the bond! the plaintiff surety company agreed to pay the loss any of' the lines may sustain of money or other personal property by any act of Personal Dishonesty, Forgery, Theft, Larceny;, Embezzlement, Wrongful Conversion, Abstraction or Misapplication, directly or through connivance with others, by any Agent named in the schedule hereto' attached # * #, Provided, that the Obligee shall have notified the Surety within > thirty (30) days after becoming aware of such act of any Agent * ⅜

In 1933 Edward A. Grace sought appointment as a steamship agent, hut conld not obtain an agency contract unless he furnished a fidelity bond. Upon his application his name was added by the plaintiff in December, 1933, to the list of names in the schedule attached .to the bond which had been executed and delivered by the plaintiff to the Conference as trustee. Grace was a member of the firm of Henderson & Grace, steamship agents. The plaintiff had previously 11 bonded ” that firm as such agents, but had canceled its bond after it had received notice that the agents had failed to remit promptly to the lines moneys collected by the agents upon the sale of steamship tickets. The firm had subsequently paid to the lines the amount of all remittances for which it had been in default. Nevertheless, the plaintiff refused to add the name of Grace to the schedule of agents included in its fidelity bond unless Grace furnished the plaintiff indemnity against any loss which the plaintiff might be compelled to pay by reason of inclusion of the name of Edward A. Grace in the list of agents covered by its fidelity bond to the Conference.

Accordingly, Grace furnished to the plaintiff indemnity agreements executed by the defendants Knight and Burroughs, respectively, on October 26, 1933, and December 5,1933. These indemnity agreements provided, among other things, that the surety company executing the fidelity bond “ shall have the right, and such surety or sureties are hereby authorized, but not required: (a) to adjust, settle or compromise any plaim, demand, suit or judgment upon said bond, unless the Indemni-tors shall request such surety or sureties to litigate such claim or demand, or to defend such suit, or to appeal from such judgment, and shall deposit with such surety or sureties collateral satisfactory to such surety or sureties sufficient in its or their sole judgment to pay any judgment or judgments, rendered or that may be rendered, with interest, cost, expenses and attorneys’ fees ”. The agreement further provided that the indemnitors would “ pay promptly, from time to time, upon demand unto the surety or sureties executing said bond, the full amount of any and all moneys paid by the said surety or sureties in settlement or compromise of any claims, suits and judgments thereupon, under the belief that it or they were liable therefor, whether liable or not

In September, 1934, Grace defaulted in payment of moneys which he had received as agent for some of the lines. The lines gave notice promptly of the default. The plaintiff informed the defendants, its indemnitors, of the default. They did not request the plaintiff surety company to litigate these claims. The plaintiff paid them. It then demanded that the indemnitors reimburse it for the amount it paid in settlement of these claims. Upon the refusal of the defendant indemnitors to repay the plaintiff, the plaintiff brought this action to recover from them the amount it had paid.

They also alleged in that defense, and at introduced proof to sustain their allegations, that by the terms of the agency contract between Grace as agent and the steamship lines, executed in accordance with the rules of the Conference in December, 1933, when Grace was appointed an agent, he agreed to hold the moneys collected by him as agent in trust for the lines and “ separate and apart from all other-funds and moneys in his hands.” With the knowledge of the steamship lines Grace deposited moneys collected as agent in his general bank account and in other respects disregarded the terms of his agreement. The steamship lines did not for such breaches of the agency contract cancel the contract, though the contract provided that “ any violation of this requirement with respect to any one of the above-mentioned Lines will result in the cancellation of the agency by all of such Lines which it represents ”, and also provided that “ the agent who is at any time in default to any of the above-mentioned Lines will be immediately disqualified and his agency will be promptly can-celled by all of tbe above-mentioned Lines ” and that “ the agent, immediately npon disqualification, is prohibited from selling tickets * * * or from transacting any other business of the agency ’

Doubtless any of the lines having notice of the agent’s breach of contract could have canceled the contract, and if it had done so promptly, the lines would not thereafter have sustained losses for which the plaintiff could be held under its bond. None of the lines availed itself of contractual right to cancel the contract and to disqualify the agent, and so far as appears, none of the lines insisted that the agent should, in the future, observe the rules provided in the contract for the conduct of his business. The surety received notice of the agent’s acts of dishonesty which caused loss to the lines. It received no notice of earlier breaches of contract by the agent in regard to the manner in which the moneys collected by the agent should be held and thereafter remitted to his principals. It is not disputed that the lines did suffer loss as claimed by the agent’s dishonesty, and when the surety company received proof of such loss it paid the amount of the loss without other investigation which might have disclosed earlier breaches of the agency contract.

At the close of the trial the plaintiff moved for the direction of a verdict in its favor for the amount demanded in the complaint. The motion for the direction of a verdict was denied. The Trial Judge held in effect that the plaintiff should not have paid the claims without investigation to determine whether the agency contract had been breached previously, and that before settlement of the claims the plaintiff company was bound to inform the indemnitors of all the facts which would have been discovered upon such an investigation. He submitted to the jury a number of questions of fact based upon such obligation to investigate, including the question whether the settlement of the claim had been made in good faith.

not affect the obligation of tbe surety under its bond. Tbe plaintiff was not a party to tbe contract and tbe principal assumed no obligation to tbe plaintiff under that contract. Tbe provisions of tbe agency contract imposing upon tbe agent an obligation to conduct tbe business of tbe agency in tbe manner set forth in tbe agency contract, including tbe obligation to bold tbe moneys received by him as agent in trust for tbe principal, and separate and apart from bis own moneys, did not result in automatic cancelation of tbe agency for breach of such obligation, nor did it impose upon tbe principal any obligation to exercise tbe right to cancel tbe contract as stipulated in tbe contract. Tbe principal bad choice whether to waive such breaches or to cancel tbe agency. It was under no obligation to tbe surety to insist upon compliance by tbe agent with tbe provisions of tbe agency contract, or to notify tbe surety of a breach by tbe agent unless tbe agent’s breach caused a loss for which tbe surety bond was intended to furnish indemnification. Investigation by tbe surety company in regard to possible prior defaults of tbe agent under tbe agency contract would not, so far as appears, have disclosed any ground of defense to tbe claims made against tbe surety company.

Even if that were not true, tbe indemnitors would still have been liable under tbe indemnity agreement, since they bad authorized tbe plaintiff to settle claims and bad agreed to pay to tbe plaintiff tbe full amount paid by it as surety in settlement of any claims “ under tbe belief that it ” or was “ liable therefor, whether liable or not.” In this case no evidence was produced which impugns in any manner tbe good faith of tbe plaintiff in making tbe payment, and there can be no doubt that it paid tbe claims in tbe honest belief that it was liable for such claims. It bad promised payment to tbe principal of any loss caused by tbe agent’s acts of dishonesty, provided it received notice of such loss in manner stipulated by tbe contract. It received such notice, and it received proof that tbe loss bad been suffered. In paying tbe claim tbe plaintiff performed its contractual obligation to tbe lines in accordance with tbe letter of its bond. It may insist that tbe defendants also perform their obligation in accordance with tbe letter of their bonds.

The judgments should he reversed and judgment directed in favor of the plaintiff, with costs in all courts.

LoxjghRAN, Rippey, Lewis, CoNWay, DesmoND and Thacher,-JJ., concur.

Judgments reversed, etc.


author: Per Curiam:

text:
    Rosario Zuco et al., Appellants, v. Isidore Funt et al., Respondents, et al., Defendants.
    Argued January 6, 1944;
    decided March 2, 1944.

      Pawl 0*Dwyer for appellants.
    I. The plaintiff established a prima facie cause of action against each respondent. (Labor Law, § 241; McNamara v. Eastman Kodak Go., 220 N. Y. 180; Berla v. Zambetti, 235 App. Div. 464; DeEaen v. Bockwood Sprinkler Go., 258 N. Y. 350; Gaminiti v. Mattheios Construction Go., Inc., 241 App. Div. 879; McBickard v. Flint, 114 N. Y. 222; Flanagan v. Carlin Construction Go., 134 App. Div. 236; Meyers v. Barrett, 167 App. Div. 170; Lyles v. Terry & Tench Go., 227 N. Y. 361; Rooney v. Brogan Construction Go., 194 N. Y. 32; Employers’ Liability A. Gorp. v. Post & McCord, 286 N. Y. 254; Sweet Y.Perkins, 196 N. Y. 482.) II. The Appellate Division was in error in holding that the testimony of the plaintiffs’ witness Marino was incredible as a matter of law. (Tarter v. Z7. S., 17 F. Supp. 691; Schramme v. Lewinson, 126 App. Div. 279.)

      Sidney J. Loeb, Charles E. Lane and Leo F. Potts for Isidore Funt, respondent.
    I. Defendant Funt conformed with all obligations resting upon him under the law. (Gaspersen v. La Sola Bros., 253 N. Y. 491; Ithaca Trust Go. v. Driscoll Brothers &
      Co., 169 App. Div. 377.) II. The trial court was justified in dismissing the complaint as a verdict for plaintiffs would have had to he set aside. (Bank, of United States v. Manheim, 264 N. Y. 45; Serina v. New York Railways Corporation, 238 App. Div. 302; Matter of Case, 214 N. Y. 199; Drummond v. Norton, 156 App. Div. 126.)

      William L. Shumate for Sunrise Iron Works, Inc., respondent.
    I. The evidence," considered as a whole, established so clearly and convincingly that no steel work was in fact being-erected above the tier of steel beams that any verdict based on a contrary finding must necessarily have been set aside. (Matter of Case, 214 N. Y. 199.) II. Sunrise Iron Works, Inc., was not constructing the building. (Lotocka v. Elevator Supplies Co., 246 N. Y. 295.)

      Martin A. Crean for Sunset Gardens, Inc., respondent.
   Per Curiam:

The evidence presented an issue of fact as to whether, in the construction of the building in which the plaintiff Rosario Zuco was injured, the proximate cause of his injuries was the defendants’ failure to perform a statutory duty (Labor Law, § 241, subd. 4) which required them thoroughly to plank over steel beams on which structural steel work was being erected above the place where the plaintiff was working. (See Lyles v. Terry & Tench Co., 227 N. Y. 361, 363-365.) Upon this record we cannot say, as did the Appellate Division (266 App. Div. 802), that the testimony of the witness Marino was incredible as a matter of law.

The judgments should be reversed and a new trial granted, with costs to abide the event.

LehmaN, Ch. J., LotjgiíRAN, Uippey, Lewis, Couway, DesmoND and Thacher, JJ. concur.

Judgments reversed, etc.


text:
    Theodore Drivas, Appellant, v. Nicholas C. Lekas et al., Respondents, et al., Defendants. Theodore Drivas, Individually and on Behalf of All Other Stockholders of Lekas & Drivas, Inc., Similarly Situated, Appellant, v. Nicholas C. Lekas et al., Respondents.
    Argued November 30, 1943;
    decided March 10, 1944.

      Benjamin Beass, Julien W. Newman and Irving Moldauer for appellant.
    I. Upon the found and approved facts and because of the malicious acts of the defendants Lekas and Katsoris that frustrated and destroyed the voting trust plan, plaintiff is entitled to have the voting trust provisions of the settlement agreements nullified and his stock returned to him, or Lekas & Drivas, Inc. dissolved or both. (Harrington v. Harrington, 290 N. T. 126; Kroger v. Jaburg, 231 App. Div. 641; Kavanaugh v. Kavanaugh Knitting Go., 226 N. Y. 185; Matter of Kaufman Circle Express Go., Inc., 177 Mise. 106; Tower Hill Gonnellsville Coke Go. v. Piedmont Goal Go., 64 F. 2d 817, 290 U. S. 675; Henry v. Ide, 208 Ala. 33; Red Bud Realty Go. v. South, 153 Ark. 380; Salts Bros., Inc. v. Salts Bros., 84 F. 2d 246, 299 U. S. 567; Nashville Packet Go. v. Neville, 144 Tenn. 698.) ' II. Upon the undisputed facts, the corporation’s breach of plaintiff’s employment contract with it, brought about intentionally and unjustifiably by the malicious acts of the defendants Lekas and Katsoris, entitles the plaintiff to judgment against said defendants and renders them personally liable for damages. (Kirke La Shelle Go. v. Armstrong Go., 263 N. Y. 79; O’Neil Supply Go. v. Petroleum H. & P. Co., 280 N. Y. 50; Matter of Casualty Go. [Bliss Go. claim], 250 N. Y. 410; Berger v. Urban Motion Picture Industries,• Inc., 206 App. Div. 379; McClelland v. Climax Hosiery Mills, 252 N. Y. 347; Nau v. Vulcan Rail & Construction Go., 286 N. Y. 188; Lamb v. Cheney & Son, 181 App. Div. 960, 227 N. Y. 418; Campbell v. Gates, 206 App. Div. 684, 236 N. Y. 457; Horn-stein v. Podwits, 254 N. Y. 443.) III. Upon the findings unanimously affirmed by the Appellate Division and the uncontro-verted facts, plaintiff as a matter of law is entitled to recover of the defendants Lekas and Katsoris, for the benefit of the corporation, the sum of $5,650 fraudulently diverted to themselves under the guise of salary increases and bonuses. Plaintiff is entitled to a judgment against the corporation for the full balance of his salary for 1935,1936, and the first two months of 1937, aggregating the sum of $6,583.33. (8chalí v. Althaus, 208 App. Div. 103.) IV. The courts below erred in failing to direct the defendants Lekas and Katsoris to account for several items. V. The trial court’s award of $1,214.57 damages in favor of the corporation should be reinstated. The trial court’s award to the plaintiff of $600 damages should be reinstated. VI. The assessment of $3,000 damages was proper, except that the amount was inadequate. The application for additional allowances should have been granted. VII. The voting trust provisions are illegal and void as a matter of law. (Elyea v. Lehigh Salt Mining Co., 169 N. Y. 29; Matter of Petition of Argus Co. et al., 138 N. Y. 557; Wylie v. Adcloms, 268 N. Y. 160; Matter of Morse [Bank of America'], 247 N. Y. 290; McQuade v. Stone-ham, 263 N. Y. 323; Manson v. Curtis, 223 N. Y. 313; Morel v. Iloge, 130 G-a. 625; Venner v. Chicago City Railway Co., 258 Ill. 523.)

      Brison Howie, Aristotle Souval and Samuel Kaufman for Nicholas Katsoris and another, respondents.
    I. No facts have been found by the lower courts to warrant rescission of the voting trust or dissolution of the corporation. (Callanan v. K., A. C. & L. C. R. R. Co., 199 N. Y. 268; Rosemvasser v. Blyn Shoes, Inc., 246 N. Y. 340; Clarke Contracting Co. v. City of New York, 229 N. Y. 413; Brofsky v. Hempstead Surgical Co., Inc., N. Y. L. J., December 3, 1942.) II. Appellant’s claim that upon the undisputed facts the corporation’s breach of his employment contract was brought about intentionally and unjustifiably by malicious acts of the respondents is unjustified; the individual defendants cannot be personally charged with the alleged breach of his employment contract. (Hornstein v. Podwits, 254 N. Y. 443.) III. The salary increases received by Lekas and Katsoris were not improper, and no fraudulent diversion of any moneys resulted. Appellant’s salary for 1935 and 1936 and for the first two months of 1937 has been fixed by the lower courts, and there can be no review of that fact question. (Gallin v. National City Banlc of New York, 152 Mise. 679.) IT. In the absence of any proof of loss or detriment to the corporation, the lower courts properly refused to direct any accounting as to miscellaneous petty cash items.. V. The reversal by the Appellate Division of the Trial Court’s, determination on the question of the employment by the corporation of a detective, was properly made. The refusal to permit appellant to audit books which resulted in the mandamus action was a corporate act, and the reversal of the award1 against respondent Lekas was proper. VI. The Appellate Division properly reversed the trial court’s assessment of appellant’s legal expenses against the individual respondents.. (Marvin v. Prentice, 94 N. Y. 295; Bishop v. Hendrick, 82 Hun 323, 146 N. Y. 398; Bollin v. Grand Store Fixture Go., Inc., 231 App. Div. 47; Winthrop Chemical Go., Inc. v. Blackman, 159 Mise. 451.) VII. The voting trust agreement is valid. (Kitting er v. Churchill Evangelistic Association, Inc., 151 Mise. 350, 244 App. Div. 876.)

      Louis Schack, James Madison Blackwell and Louis S. Lewis for Lekas & Drivas, Inc., respondent.
    I. Plaintiff’s employment under the 1937 agreement was justifiably terminated. The Appellate Division properly reversed the judgment insofar as it provided for plaintiff’s re-employment. II. The plaintiff is not entitled to any salary in addition to the $750 awarded for the period up to June 30,1935. ■

      Louis Schack, Louis S. Lewis and Ediuin A. Lewis for James M. Blackwell and others, respondents.
    I. The voting trust agreement is valid. (Matter of Morse [Bank of America], 247 N. Y. 290; Kittinger v. Churchill Evangelistic Association, Inc., 151 Mise. 350, 244 App. Div. 876.) II. The plaintiff, by his own conduct, has ratified and affirmed the voting trust agreement. (Brennan v. Nat. Equitable Investment Co., 247 N. Y. 486.) III. The voting trust plan has not been frustrated and destroyed. It has operated to the benefit of the plaintiff as well as the other stockholders.
   Per Curiam:

Where the record contains substantial evidence supporting findings made at Special Term and which are unreversed by the Appellate Division, those findings are conclusive in this court. (Harrington v. Harrington, 290 N. Y. 126, 130.) In the record before ns are unreversed findings, supported by substantial evidence, that the plaintiff’s employment contract dated March 1, 1937, has not been terminated by the defendant Lekas & Drivas, Inc.; that at a meeting of the corporation’s board of directors held on May 20, 1938, formal action was taken, which has not been rescinded, with respect to the plaintiff’s employment contract dated March 1, 1937, which action directed the plaintiff to remain in the United .States. We conclude that the plaintiff’s employment contract of March 1, 1937, remains effective and that plaintiff is entitled to his salary to the date of final judgment in the present consolidated action, after which date his services under his employment contract shall continue to be subject to direction by the board of directors or by. a duly authorized representative of the corporation.

There are also unreversed findings, supported by substantial evidence, that without authority of the board of directors the individual defendants Lekas and Katsoris arranged for payment to themselves, from corporate funds, of increased salaries for the years 1935 and 1936, and of to Michael Kat-soris of an amount in excess of the salary to which he was entitled for the year 1935. These salary increases, which aggregated $5,650, were an unauthorized diversion of corporate funds which should be returned by the defendants Lekas and Katsoris to the corporation.

We think the Appellate Division erred in striking from the resettled judgment of Special Term paragraphs 4 and 5 (a) which awarded to the plaintiff against the defendant Lekas the sum of $600. The weight of evidence favors the finding by Special Term that a counsel fee in that amount was reasonable and that the plaintiff was justified in expending that amount in the successful prosecution against the corporation of a mandamus proceeding which would not have been prosecuted except for false statements made by Lekas to the directors of the corporation.

The judgment entered upon the order of the Appellate Division should be modified in the following particulars and otherwise affirmed, without costs:

(1) Decretal paragraph “2 (c) ” should be reversed and the case remitted to Special Term to determine the amount due the plaintiff, from the defendant Lekas & Drivas, Inc., under his employment contract dated March 1, 1937;

(2) Judgment should he directed against the individual defendants Lekas and Katsoris in favor of the plaintiff in behalf of the defendant Lekas & Drivas, Inc., in the amount of $5,650, with interest;

(3) Insofar as it fails to include therein paragraphs 4 and 5 (a) of the resettled judgment of Special Term, the judgment entered upon the order of the Appellate Division should be reversed and paragraphs 4 and 5 (a) of the resettled judgment at Special Term should be affirmed.

The judgment of the Appellate Division should be modified in accordance with this opinion, and as so modified affirmed, without costs. (See 292 N. Y. 718.)

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

Judgment accordingly.