text:
    William F. Augustine, as Administrator of the Estate of John B. Augustine, Deceased, Appellant, v. Town of Brant, Respondent, Impleaded with Others.

      (Argued October 18, 1928;
    decided November 20, 1928.)

      Dana L. Spring for appellant.
    The town is liable for its negligent acts the same as a private corporation. (Van Dyke v. Utica, 203 App. Div. 26; Edinger v. City of Buffalo, 155 App. Div. 944; 213 N. Y. 674; Markey v. County of Queens, 154 N. Y. 675; Lorillard v. Town of Monroe, 11 N. Y. 392; Brothers v. Town of Leon, 198 App. Div. 144; Oaks Mfg. Co. v. New York, 206 N. Y. 221; Herman v. Board of Education, 234 N. Y. 196; Bigelow v. Inhabitants of Randolph, 80 Mass. 541; Woodward v. Water District, 116 Maine, 86; Rhobidas v. Concord, 70 N. H. 90; Sniverly v. Washington Township, 218 Penn. St. 249.) The fact that a town meeting was not held before the park was established does not affect the right of the plaintiff to recover in this action. (Hannon v. Siegel-Cooper Co., 167 N. Y. 244; Bissell v. M. S. R. R. Co., 22 N. Y. 258; Jewhurst v. City of Syracuse, 108 N. Y. 303; Sewell v. City of Cohoes, 75 N. Y. 45; Ivory v. Town of Deer Park, 116 N. Y. 476; Stoddard v. Saratoga Springs, 127 N. Y. 261; Munk v. City of Watertown, 67 Hun, 261; Nims v. City of Troy, 59 N. Y. 500; Salt Lake City v. Hollister. 118 U. S. 256; Langley v. Augusta, 118 Ga. 500; New York City v. Sheffield, 4 Wall. [U. S.] 189;
      Everson v. City of Syracuse, 100 N. Y. 577; Teall v. City of Syracuse, 120 N. Y. 184.)

      Willard H. Ticknor for respondent.
    The townships of this State are political and civil subdivisions thereof, and are immune from actions unless authorized by constitutional or statutory enactment. (Lorillard v. Town of Monroe, 11 N. Y. 392; People ex rel. Van Keuren v. Board of Town Auditors, 74 N. Y. 310; Markey v. County of Queens, 154 N. Y. 675; Smith v. State of New York, 227 N. Y 405.) Public parks are established and maintained to give those who visit them an opportunity to breathe unpolluted air, enjoy the benefits of sunshine and recreation and thus improve and preserve health. Municipalities should not be held liable for providing park accommodations at public expense. (Schloendorff v. New York Hospital, 211 N. Y. 125; People ex rel. Society of N. Y. Hospital v. Purdy, 58 Hun, 386; 126 N. Y. 679.) The powers of towns and of town officials are limited and defined by statutes under which they are created. The statute authorizing the establishment of town parks was wholly ignored. The signing of the lease, expending money and the employment of caretakers were unlawful and the defendant was in no-way bound thereby. (Acme Road Machinery Co. v. Town of Bridgewater, 185 N. Y. 1; People ex rel. Morey v. Town Board of Oyster Bay, 175 N. Y. 394; Brown v. Ward, 246 N. Y. 400.) A municipality cannot be rendered hable in actions on tort or otherwise by reason of unlawful acts of its officers or agents. The principle of estoppel or ratification cannot be invoked to legalize unlawful proceedings. (Wells v. Town of Salina, 119 N. Y. 280; Brown v. Wood, 246 N. Y. 400; La France Fire Engine Co. v. City of Syracuse, 33 Misc. Rep. 516; Delafield v. State of Illinois, 2 Hill, 159; 26 Wend. 192; Everson v. City of Syracuse, 100 N. Y. 577; Smith v. City of Newburgh, 77 N. Y. 130; Brady v. Mayor of New York, 20 N. Y. 312; City of New York v. Farrelly, 222 N. Y. 138.)
   Pound, J.

This is an action brought by the plaintiff against the town of Brant, Erie county, to recover damages for the death of his intestate by drowning by reason of the negligent act of defendant in maintaining a public park and bathing beach on the shore of Lake Erie without giving warning of its dangerous character and without providing proper means of protecting the safety of the bathers. The question is as to the liability of the town, as town, not as to the negligence of its servants and agents or as to the freedom of the deceased from contributory negligence. It is contended that the town is not hable (a) because maintenance of the park was an ultra vires act; and (b) because the maintenance of town parks according to law is the exercise of a governmental function.

The authority of a town to acquire lands for the purpose of establishing thereon a public park or playground and to equip the same with suitable buildings, structures and apparatus is contained in Town Law (Cons. Laws, ch. 62), art. 17-A. The town board may establish public parks and play-grounds “ when authorized by a special meeting of the taxpayers therein.” (§ 342.) No vote was had on the question whether the town board should be authorized to purchase the land in question for park purposes or to equip the same as provided in the Town Law. The town board leased the land without authority. But the town in fact holds a long term lease or leases of the park or pleasure grounds. Thé town board is authorized to provide for the care and maintenance of such parks and playgrounds and for the improvement thereof, and the cost thereof shall be a town charge.” (Town Law, § 346.) “ Such parks and playgrounds shall be under the care and control of the town board, and the town board may adopt * * * rules and regulations for the use of such public parks and playgrounds.” (Town Law, § 347.) The town board had for some eleven years maintained the place as a public park. It had constructed bath houses. It had fixed a charge for out-of-town people of fifty cents for each automobile entering the park.

The Appellate Division has held that because the land was not acquired under the provisions of the Town Law cited above, the town was not maintaining the park and was not hable for the negligence of the town board in relation thereto.

The want of original authority to establish the park is' not to be received as conclusive evidence that the town did not maintain it. Municipal corporations are not wholly exempt from liability for wrongful acts done with all the evidences of being acts of the corporation i¿o the injury of others. (Salt Lake City v. Hollister, 118 U. S. 256; Stoddard v. Village of Saratoga Springs, 127 N. Y. 261.) The town had the power, under the provisions of the Town Law, to establish a park. It held itself out to the public, through the action of the town board, as maintaining one. Plaintiff’s intestate came there as one of the public in good faith and with no means of protecting himself by scrutinizing the corporate powers of the town and the manner in which they had been exercised. By what good reason may the town avail itself of the defense of ultra vires? It is said that public officers are without power to contract except as directed by statute. (Wells v. Town of Salina, 119 N. Y. 280; Brown v. Ward, 246 N. Y. 400.) When one contracts with a municipal corporation he must examine the public law and determine for himself the powers conferred upon it. He deals on terms of equality with the municipality. A pleasure seeker cannot be expected to examine the law and the proceedings of the town board thereunder before he avails himself of the privileges held out to him. The distinction between contract liability and tort liability may readily be made.

If the negligent acts are ultra vires in such a sense as to be wholly without the scope of the corporate powers of the municipality, the municipality is not answerable for the consequences resulting from them, although the persons causing the work to be done were its officers and agents, and assuming to act as such in doing it. (Mayor, etc., of Albany v. Cunliff, 2 N. Y. 165; Stoddard v. Village of Saratoga Springs, supra.) But ultra vires is not in all times and places a defense to tort actions against a municipality. Otherwise a municipal corporation could never be held hable in tort, for no municipal corporation is authorized to do wrongful acts. It was legitimately within the corporate power of defendant to establish and maintain parks in accordance with the statute. It went beyond its powers in acquiring and equipping the park lands but it was not wholly without its powers in maintaining them after they had been acquired. They might have been acquired by gift or by dedication. Could it be argued that lands thus acquired could not be maintained by the town? A narrow and literal construction of the statute might limit the right to maintain parks and playgrounds to “ such parks and playgrounds ” as had been acquired pursuant to the statute but we have no difficulty in reaching the conclusion that irregularity in acquiring title should not reheve the town from its duty of using due care in the management of the park. It is of no concern to the public how the lands were acquired so long as the town was exercising its corporate functions in maintaining them. No just view of municipal exemption from the consequence of unauthorized and wrongful acts of the governing body should exempt the town from liability in this case. (Speir v. City of Brooklyn, 139 N. Y. 6, 13.)

Was the act of the town in maintaining the park done in the discharge of a governmental duty? Did the town, in maintaining the park, act as the agent of the State for the benefit of the people of the State so that the rule of non-liability for negligence may be applied? Or did it perform meve quasi-private duties for the peculiar advantage of the municipality and its inhabitants in the discharge of which it is held responsible for its negligent acts? Is the power governmental and public, or proprietary and private? The distinction is pointed out in Wilcox v. City of Rochester (190 N. Y. 137) and like cases. The proper application of the test may at times be difficult. The authorities elsewhere are conflicting. (McQuillan on Municipal Corporations [2d ed.], § 2850; Borchard, Government Liability in Tort, 34 Yale Law Journal, 229, 239. See, also, Warden v. City of Grafton, 99 W. Va. 249; 128 S. E. Rep. 375; 42 A. L. R. 375 and note; Hannon v. City of Waterbury, 106 Conn. 13; Burton v. Salt Lake City, 69 Utah, — ; 253 Pac. Rep. 443; 51 A. L. R. 364 and note.) It has, however, been applied by this court in a similar case. In Edinger v. City of Buffalo (213 N. Y. 674) it was held that an action would he against the city of Buffalo for negligence in the maintenance of a municipal playground established under a permissive statute. The unreported opinion of Lambert, J., at Special Term stated the ground of liability. He concluded that the establishment of municipal playgiounds is in no sense a governmental function. The establishment of town parks and playgrounds stands on the same footing. They are established for the pleasure and convenience of such towns as see fit to avail themselves of the legislative permission. We can draw no satisfactory distinction between a town park or playground and a city playground. The establishment of town parks is not a public duty imposed upon the town and the town does not act as an agent of the State when it avails itself of the privilege of maintaining them.

Public duties properly styled governmental in character include, among others, the functions of fire and police protection, the protection of health and the administration of public charities. Within this field the rule of non-liability prevails. Towns and counties have been held to be merely divisions of the State organized for the convenient exercise of portions of the political power of the State (Lorillard v. Town of Monroe, 11 N. Y. 392), and as such exempt from liability for the negligent exercise of such power. A distinction has been drawn for this reason between the liability of counties and towns and the liability of cities for highway negligence. In the absence of a specific statute, it has been decided that such distinction has not been abrogated by general provisions of the County Law (Cons. Laws, ch. 11, §§ 3, 4) and the Town Law (§§ 2, 11) declaring a county or a town “ a municipal corporation ” and providing that an action for any liability of the town for any act or omission of its town officers, shall be in the name óf the town.” (Markey v. County of Queens, 154 N. Y. 675.) The distinction rests on the difference between the exercise by the town of political powers and the exercise by the city of powers assumed by or imposed upon it which are more immediately performed in the interest of the corporation itself.” (Missano v. Mayor, etc., 160 N. Y. 123, 128.) When the town assumes the authority to owm and maintain parks, it goes outside the political power of a local subdivision of the State to engage in a quasi private undertaking. No substantial difference exists between towns and cities as to the theory of corporate liability for negligence in this regard. The distinction is stated by Gray, J., in Markey v. County of Queens (supra, p. 687), as follows: “ I do not think it is consonant with the reason of the rule of law, which concedes to the sovereign power in government an exemption from Lability, that a private individual may have a right of action against those who have but exercised a lawful power which was vested in them by the legislative body for the public convenience and welfare and not for any private benefit of the corporate body.”

The modern tendency is against the rule of non-liability. (Borchard, Government Liability in Tort, supra, p. 258.) Liability for highway negligence has been imposed by statute upon towns (Highway Law [Cons. Laws, ch. 25], § 75) and counties (County Law, §6).

The establishment of a town park may incidentally benefit the public health but that fact does not make the acts of the town in maintaining the park the exercise of a governmental function. (Missano v. Mayor, etc., supra, p. 129.)

A wise public policy forbids us to recognize the town of Brant as acting as a sovereign when it maintains its park. It acts as a legal individual voluntarily assuming a duty, not imposed upon it, for the benefit of a locality rather than the general public. When it assumes such a duty it also assumes the burdens incident thereto.

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.

Cardozo, Ch. J., Crane, Andrews, Lehman, Kellogg and O'Brien, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    Topken, Loring & Schwartz, Inc., Respondent, v. Julius L. Schwartz, Appellant.

      (Argued October 1, 1928;
    decided November 20, 1928.)

      Jonas J. Shapiro and Alexander Lindey for appellant.
    The agreement to resell the stock to the plaintiff is wholly without consideration. (Commercial Wood & Cement Co. v. Northampton P. C. Co., 115 App. Div. 388; Vanderbilt v. Schreyer, 91 N. Y. 392.)

      Albert A. Friedlander for respondent.
    The adequacy of the consideration was a matter purely of agreement between the plaintiff and the defendant with which the court should not interfere. (Godine v. Kidd, 64 Hun, 585; Parsons v. Teller, 111 App. Div. 637; Worth v. Case, 42 N. Y. 362; Cowee v. Cornell, 75 N. Y. 91; Earl v. Peck, 64 N. Y. 596.)
   Crane, J.

The plaintiff has brought action on a contract for the repurchase of stock. It is .a sales contract, not a contract of employment, although there be an intimation that the defendant had been an employee of the plaintiff. Without repeating all the allegations of the formal instrument made the first day of June, 1922, between the Loring Glove Co., Inc., a domestic corporation, and Julius L. Schwartz of the city of New York, it will meet our purposes to state that' the Loring Glove Co. sells and transfers to said Schwartz 114 shares of its capital stock for $11,400, with the privilege of purchasing more under certain conditions. The purchase is made subject to the terms and conditions of another agreement dated June 30, 1921, but as no copy of this agreement is contained or referred to in the record, we must disregard this statement or recital. Paragraph 4 of the agreement sued upon reads as follows: “ The party of the first part does hereby agree to purchase from the party of the second part, and the party of the second part does hereby agree to sell to the party of the first part, any and all shares of the capital stock of the party of the first part which may be held by the party of the second part at the end of the period of employment of the party of the second part by the party of the first part under agreement dated the 1st day of June, 1922, or any other due and proper termination thereof, at the actual book value of the said shares at the time of purchase and sale under the terms of this paragraph, exclusive of any good will.”

The complaint sets forth the agreement as an exhibit and states that the Loring Glove Co. has changed its name to Topken, Loring & Schwartz, Inc. Also it is alleged that the employment of the defendant terminated June 1, 1927, and that he has refused to transfer and resell the 152 shares of capital stock held by him to the plaintiff. No money is offered in the pleading to the defendant for this stock which is said to have no actual book value and no market value. The plaintiff, desiring the stock because it is a close corporation having only four stockholders, its business being wholly of a private' nature, has asked that equity decree it to be the owner of the 152 shares and compel the defendant to transfer them accordingly.

Does this complaint state a good cause of action? Is the agreement alleged matter for specific performance?

Section 664 of the Penal Law enacts:

“A director of a stock corporation, who concurs in any vote or act of the directors of such corporation, or any of them, by which it is intended: * * *

(5) To apply any portion of the funds of such corporation, except surplus, directly or indirectly, to the purchase of shares of its own stock, is guilty of a misdemeanor.”

No corporation, therefore, can buy its own shares of stock out of its capital without making the officers voting such purchase violators of this law.

This provision of the Penal Law of course has application only to the State of New York, but it has generally been held that no corporation can purchase its stock with its capital to the injury of its creditors. The capital of a corporation is held in trust for its creditors, so that any agreement to purchase stock from a stockholder, which may result in the impairment of capital, will not be enforced, or will be considered illegal if the rights of creditors are affected. (McIntyre v. Bement’s Sons, 146 Mich. 74; Hoover Steel Ball Co. v. Schaefer Ball Bearing Co., 90 N. J. Eq. 164; Fremont Carriage Mfg. Co. v. Thomsen, 65 Neb. 370; West Penn Chemical & Mfg. Co. v. Prentice, 236 Fed. Rep. 891; Tierney v. Butler, 144 Ia. 553; Cook on Corporations, vol. II, sec. 311, p. 1040; Boley v. Sonora Development Co., 126 Mo. App. (116.) The stock of a corporation is its only basis of credit, and it is of vital importance that it be rigidly guarded and protected. Courts have conceived it to be their duty to detect and defeat any scheme or device calculated in any way to place this fund beyond the reach of the creditors.” (Matter of Fechheimer Fishel Co., 212 Fed. Rep. 357, 365; Grasselli Chemical Co. v. Ætna Explosives Co., Inc., 258 Fed. Rep. 66; White on Corporations, pp. 712, 713; Strodl v. Farish-Stafford Co., 145 App. Div. 406.)

This contract, therefore, in question would have been impossible of performance under certain conditions. The defendant Schwartz it is said was bound to sell and convey his stock at book value at the end of his employment. How about the corporation? What were its obligations? If it had no surplus, it could not legally perform the purported contract; it could not make the purchase. Under our statute it would have been illegal; without our statute it would have been unenforceable as against the corporation, if there were creditors and no surplus. (Hoover Steel Ball Co. v. Schaefer Ball Bearing Co., supra.) Whichever way we look at it there were certain conditions under which the corporation would be unable to perform its promise to purchase the stock and under which the courts would declare its contract so to do illegal. If, therefore, we consider the contract in question, as we must, one dependent upon mutual promises for the consideration, we have the defendant promising that at a certain time he will sell at a certain price and the plaintiff promising to buy. The promise is binding upon the defendant but may or may not be binding upon the plaintiff. It is as if the plaintiff had a choice to buy or not as it pleased. By “ binding ” I mean that the corporation could execute the contract by purchasing the stock out of its surplus, but could not, without violating the law, purchase its stock when it had no surplus. Under these circumstances, we have a contract not mutually binding, and, therefore, lacking in consideration. (Schlegel Mfg. Co. v. Cooper’s Glue Factory, 231 N. Y. 459, 462.) “ The principle is ordinarily stated in the axiom that in a bilateral agreement both promises must be binding or neither is binding.” (Williston on Contracts, sec. 103-e.)

Richards v. Wiener Co. (207 N. Y. 59) contains some statements in the opinion which would be very apt .to lead one to take the other view and to hold that this contract was good unless it appeared that the corporation were insolvent. The statements to this effect in the opinion are not necessary for the decision of the case as the court considered the contract an option to purchase and a contract of employment. (See Matter of Tichenor-Grand Co., 203 Fed. Rep. 720.) If in the case before us the- defendant had been given employment and the employment had furnished the price or the consideration for his agreement to return the stock at the end of his employment, we would then have a contract resting not on a mutuality of promises, but upon a consideration given and paid in part by the corporation. (Hoover Steel Ball Co. v. Schaefer Ball Bearing Co., supra [last paragraph, p. 171]; vol. 1, Williston on Contracts, sec. 13; Strait v. Northwestern Steel & Iron Works, 148 Wis. 254.) The contract then would be good unless it appeared that the stock would be purchased out of capital. This would be a matter of defense. The situation here, however, is as above stated; the contract for its consideration rests upon mutual promises. One of the promises may or may not be good, the same as if a discretion were left to one of the parties to perform or not perform. Under such circumstances there is no consideration and the contract cannot be enforced. Specific performance under such circumstances will not be decreed.

For these reasons the order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division. The first question certified should be answered “ No,” the second question certified not answered.

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

Ordered accordingly.


author: Cardozo, Ch. J.

text:
    William H. Baldwin et al., Copartners under the Name of Woodward, Baldwin & Company, Appellants, v. Harris S. Childs et al., Copartners under the Firm Name of Childs & Joseph et al., Defendants, and Skeffington S. Norton et al., Copartners under the Name of Norton, Lilly & Company, Respondents.
    (Argued October 4, 1928;
    decided November 20, 1928.)

      Joseph Rowan for appellants.
    Assuming that_ Childs & Joseph’s deliveries of cotton cloth on December 20, 23 and 26,1921, were to fulfill the requirements of the bills of lading issued on November 29 and December 5, 1921, the plaintiffs-appellants Woodward, Baldwin & Co. were entitled to require the return of the cotton cloth from the defendants-respondents Norton, Lilly & Co. or a money judgment for the market value thereof on January 5, 1922. (Whitten v. Fitzwater, 129 N. Y. 626; Gillespie v. Piles Co., 178 Fed. Rep. 486; Donaldson v. Farewell, 93 U. S. 631; Hull v. Naylor, 18 N. Y. 588; Nichols v. Michael, 23 N. Y. 264; Converse v. Sickles, 146 N. Y. 200; Matter of Hunt, Rand Co., 241 Fed. Rep. 175; Stevens v. Rose, 69 Mich. 259; Walker v. Sawyer, 13 N. H, 191; St. Paul Second Nat. Bank v. Lasson, 80 Wis. 469; Barnard v. Campbell, 58 N. Y. 78; Friedlander v. Texas Pac. R. R. Co., 130 U. S. 416; Parker v. Baxter, 86 N. Y. 586; Goodwin v. Wertheimer, 99 N. Y. 149; A. S. R. Co. v. Fancher, 145 N. Y. 552.) Plaintiffs-appellants had nothing to do with the issuance of the bills of lading; had no knowledge of their existence and are not chargeable with any obligation under their terms. (10 Corpus Juris, 205, 206, §§ 267, 272.)

      Cletus Keating and James H. Herbert for respondents.
    Assuming plaintiffs proved an intention on the part of Childs & Joseph not to pay for the goods, the order of the Appellate Division and the judgment entered thereon reversing the prior judgment in favor of the plaintiffs on the law was correct. (The Idaho, 93 U. S. 575; The Capitaine Faure, 10 Fed. Rep. [2d] 950; Pyle v. Texas Transport & Terminal Co., 238 U. S. 90; Robinson v. Memphis & C. R. Co., 16 Fed. Rep. 57; Voorhis v. Olmstead, 66 N. Y. 113; Knights v. Wiffin, L. R. 5 Q. B. 660.)
   Cardozo, Ch. J.

Plaintiffs, manufacturers, made contracts in October, 1921, for the sale to Childs & Joseph of 574 bales of cotton goods, to be marked and numbered in a stated way, payment to be made within seventy days following delivery. The buyers were then hopelessly insolvent, their liabilities being $2,518,000 in excess of their assets.

The goods were not delivered till December 20, 23 and 26. Before that date, however, negotiable bills of lading, identifying the goods by marks and numbers and calling for their transportation to a foreign country, had been issued to the buyers by the defendants Norton, Lilly & Co., agents for a steamship company. These ■ bills of lading, dated November 29 and December 5, were issued in violation of law (U. S. Code, title 49, § 121; Penal Law, § 360; Pers. Prop. Law [Cons. Laws, ch. 41], § 230), since the goods they represented were not aboard the vessel and were not even in existence. The bills were at once negotiated to banks, who took them in good faith and in return for present value.

Upon the delivery of the bales in the latter part of December, the buyers promptly sent them to the defendants Norton, Lilly & Co., the agents for the steamship line, who held them as bailees for the account of the holders of the outstanding bills of lading. By this time the financial condition of Childs & Joseph had become more desperate than ever. A few days later, on December 29, a committee of creditors began an examination of their books. The plaintiffs gave notice of rescission on January 5, 1922, and demanded back the goods, then in the possession of Norton, Lilly & Co., as bailees for the banks, the holders of the bills of lading. This action of replevin followed. A judgment in favor of the plaintiffs was reversed by the Appellate Division and the complaint dismissed upon two grounds, first, that the evidence was insufficient to justify a finding that the goods were bought and accepted with fraudulent intent; and, second, that even though fraud had been made out, the holders of the bills of lading had gained the better title.

We think a jury might fairly find, not merely that Childs & Joseph were insolvent, but that they, bought the goods, and accepted delivery with the. preconceived intent to refuse payment when due (Whitten v. Fitzwater, 129 N. Y. 626; Hotchkin v. T. N. Bank, 127 N. Y. 329; Hennequin v. Naylor, 24 N. Y. 139; Matter of Hunter, Rand Co., 241 Fed. Rep. 175; Williston, Sales, pp. 1585, 1586, 1608). As to this we content ourselves with stating our conclusion. No useful end would be promoted by an analysis of the evidence, for we agree with the Appellate Division that the effect of the delivery of the goods to the agents of the steamship company before notice of rescission was to validate the bills of lading and con- ■ firm the title of the banks as purchasers for value.

The bills of lading, when issued, did not pass the title to the goods, for the goods, as we have seen, were not aboard the vessel nor even manufactured (Armour v. M. C. R. R. Co., 65 N. Y. 111; Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 106 N. Y. 195; Pollard v. Vinton, 105 U. S. 7). Even so, the effect of delivery when subsequently made was to give vitality to the bills by relation and estoppel, and confirm the title of the holders (The Idaho, 93 U. S. 575, 582; Pyle v. Texas, etc., Co., 238 U. S. 90; Holliday v. Hamilton, 11 Wall. [U. S.] 560, 565; The Capitaine Faure, 10 Fed. Rep. [2d] 950). The case would be different if between the making of the bills and the delivery at the steamship, another lien or title had intervened (Cook v. Tullis, 18 Wall. [U. S.] 332; Holliday v. Hamilton, supra). The sale by the plaintiffs to Childs & Joseph was voidable, not void, and delivery was made upon the vessel, to feed the bills of lading, before notice of rescission had given birth to hostile rights (Wise v. Grant, 140 N. Y. 593).

We think the banks did not cease to be purchasers for present value because, when value was thus given, the bills that they bought and paid for were not yet united to the goods. Their standing as such purchasers may have added nothing to their title until the union was effected. Once it was effected, title to the goods was theirs perforce of title to the bills, and for the bills they had paid cash. Their rights would be no less, however, if the bills of lading were to be taken as coming into being when the goods were on the vessel, and till then as empty simulacra. The cash paid by the banks was then an antecedent debt, but the continuing duty rested on the carrier to validate the existing documents or to issue new ones as a substitute. The transportation was to a foreign country, with the result that the bills of lading were subject to the Federal statute (U. S. Code, title 49, §§ 81, 111; Federal Uniform Bills of Lading Act of August 29, 1916, ch. 415; 39 Stat. 538). An antecedent debt is value within the ruling of the Federal courts (Pere Marquette Ry. Co. v. French & Co., 254 U. S. 538, 542, 543; Swift v. Tyson, 16 Pet. [U. S.] 1; Brooklyn City & N. R. R. Co. v. Nat. Bank of Republic, 102 U. S. 14).

Nothing to the contrary was held in Barnard v. Campbell (55 N. Y. 456; 58 N. Y. 73). No bill of lading or other document of title had been issued in that case. The situation was the same as it would be here if the banks had paid their money, not in the purchase of bills of lading, but in return for a promise by a manufacturer or a customer to deliver goods thereafter when manufacture was completed. How far the rule in this State as to the meaning of “ value ” has been changed by the revision of the statutes in cases not affected by the Federal rule, we do not now consider. If it survives, it has been subjected to many inroads (Turnbull v. Longacre Bank, 249 N. Y. 159; Kelso & Co. v. Ellis, 224 N. Y. 528; Neg. Inst. Law [Cons. Laws, ch. 38], § 51; Pers. Prop. Law, §§ 156, 166, 183, 239; Gen. Bus. Law [Cons. Laws, ch. 20], § 142). We are not ready to extend it to a case where bills of lading issued without the goods, but bought for present value, are thereafter made effective by union with the goods described.

The judgment should be affirmed with costs.

Pound, Crane, Andrews and O’Brien, JJ., concur; Lehman and Kellogg, JJ., dissent.

Judgment affirmed.


author: Kellogg, J.

text:
    L. Lewitt & Co., Inc., Appellant, v. The Jewelers’ Safety Fund Society, Respondent.
    (Argued October 4, 1928;
    decided November 20, 1928.)

      W. N. Seligsberg and Donald Marks for appellant.
    Defendant knew or should have known that Strauss was to be included in the renewed policy. (Hay v. Star Fire

      Ins. Co., 77 N. Y. 235; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Paskusz v. Philadelphia Casualty Co., 213 N. Y. 22; Equitable Ins. Co. v. Hearne, 20 Wall. 494; Garrison v. Farmers Mutual Fire Ins. Co., 56 N. J. L. 235; Browne v. City of New York, 241 N. Y. 96; Nellis v. Western Life Indemnity Co., 207 N. Y. 320; Reynolds v. Commerce Fire Ins. Co., 47 N. Y. 597.) The argument that the mistake was due to inexcusable neglect on plaintiff’s part is untenable. (Albany City Savings Institution v. Burdick, 87 N. Y. 40; Hay v. Star Fire Ins. Co., 77 N. Y. 235; Fort v. Globe & Rutgers Fire Ins. Co., 102 Misc. Rep. 584; 186 App. Div. 185; 227 N. Y. 581; Kilmer v. Smith, 77 N. Y. 226; Andrews v. Gillespie, 47 N. Y. 487; Bidwell v. Astor Ins. Co., 16 N. Y. 263.)

      Lemuel Skidmore and Clarence C. Fowler for respondent.
    There was no agreement on the part of defendant to issue a policy for the term commencing May 1, 1925, to cover any goods in the custody of Ernest E. Strauss. There was, therefore, no basis for reformation of the policy. (Curtis v. Albee, 167 N. Y. 360; Metzger v. Ætna Ins. Co., 227 N. Y. 411; Salomon v. North British & M. Ins. Co., 215 N. Y. 214; Kenyon Paper Co. v. Nederlandsche Lloyds, 124 App. Div. 886; Exchange Bakery, Inc., v. Rifkin, 245 N. Y. 260.) The mistake, if any, on the part of plaintiff was due to inexcusable neglect on its part in failing to read the acknowledgment of its application mailed April seventeenth, and in failing to read the policy. (Metzger v. Ætna Ins. Co., 227 N. Y. 411; 154 West 14th Street Company, Inc., v. Schulte, Inc., 121 Misc. Rep. 853; 210 App. Div. 851; Wright v. American Equitable Assur. Co., 131 Misc. Rep. 215; Williams v. Eldred Refining Co., 130 Misc. Rep. 721; Anderson v. Fidelity Co-operative Fire Ins. Co., 116 Misc. Rep. 679.) To support a claim for reformation of an insurance policy on the ground of an alleged mutual mistake very clear, positive and convincing evidence of a mutual mistake must be presented. There is no such evidence in this case. (Ford v. Joyce, 78 N. Y. 618; Mead v. Westchester Fire Ins. Co., 64 N. Y. 453; Weed v. Whitehead, 1 App. Div. 192; Voci v. Page, 123 Misc. Rep. 766; Susquehanna S. S. Co. v. Anderson & Co., 239 N. Y. 285; Christopher St. R. Co. v. 23rd St. R. Co., 149 N. Y. 51; Kues v. Foran Foundry & Mfg. Co., 191 App. Div. 25; Fitzgerald v. Arcade Theatre Co., 153 N. Y. Supp. 618; 172 App. Div. 932.)
   Kellogg, J.

The plaintiff, a corporation engaged in the wholesale jewelry business, employed agents to exhibit and sell its jewelry to the retail trade. On May 8th, 1925, the defendant, a corporation engaged in writing burglary insurance, issued to the plaintiff a policy, expiring May 1st, 1926, insuring the plaintiff in the sum of $50,000.00 against loss through theft of any jewelry belonging to it, while the same was without the stores of the plaintiff, in the custody of its salesmen Jack Lewitt and William G. Grimes. On May 10th, 1925, a trunk of jewelry" belonging to the plaintiff, in the custody of a salesman of the plaintiff named Ernest E. Strauss, was stolen. The plaintiff thereupon brought this action for a reformation of the policy and for the recovery of its damages sustained through the theft. It asserted that prior to the issuance of the policy an agreement had been entered into between the parties whereby the defendant agreed to insure its merchandise while in the custody of its salesmen Ernest E. Strauss, Jack Lewitt, and William G. Grimes; that through mistake or inadvertence the policy was so drawn that the name of Ernest E. Strauss was omitted. The trial court determined that the plaintiff was entitled to reformation as demanded, and directed judgment for the plaintiff for the damages sustained. The Appellate Division reversed the judgment entered upon the direction, disapproved the findings made by the trial court, made new findings, and directed judgment for the defendant dismissing the complaint.

The plaintiff had for many years maintained with the defendant policies of insurance against theft. On April 10th, 1925, it was the holder of a policy, issued by the defendant, insuring it in the sum of $50,000.00, until May 1st, 1925, against any loss of its jewelry by theft while such jewelry was in the possession of its salesmen Lewitt and Grimes. On or about the date named, the defendant sent to the plaintiff a document, upon the face of which there appeared a notice of renewal, and upon the back of which there appeared a blank form of application for the issuance of a new policy. The notice read as follows: “ Your insurance in Class A (Salesmen’s Stocks), policy number 45047 for $50,000 expires May 1, 1925, at noon. To renew the above mentioned insurance- please fill in the application form on the reverse side and return it promptly to the office of the Secretary-Treasurer so that renewal may be mailed to you before the present policy expires,” The plaintiff filled out the blank and returned it to the defendant on April 13th, 1925. The form, as filled out, expressed an application for a policy insuring the plaintiff, from May 1st, 1925, to May 1st, 1926, against the loss by theft of its jewelry while the same was in the custody of Lewitt and Grimes. The application, in expressing the amount of insurance which the plaintiff desired, employed the following words: “ Total amount of insurance, $50,000.00. {Renewed.) ” On April 17th, 1925, the defendant wrote the plaintiff as follows: “ Your applications for renewed insurance covering merchandise in the custody of: 2 salesmen or agents, amounting to $50,000.00, registered mail and express in packages amounting to $2,000.00, have been received and accepted and the policies will be issued to date from May 1st, 1925. Also your remittance of $......, accompanying your application, will be placed to your credit and a receipted bill for the amount sent with the policies.” Meanwhile, on April 15th, 1925, the plaintiff had written the defendant requesting that a rider be issued, to amend its policy, so that coverage of its merchandise would be provided for while such merchandise, to the extent of $25,000.00, was in the custody of William G. Grimes; to the extent of $15,000.00, in the custody of Ernest E. Strauss; and to the extent of $10,000.00, in .the custody of Jack Lewitt. The plaintiff was entitled, as a matter of right, to have its policy altered, whenever it saw fit, to provide for coverage of goods while in the custody of other or additional salesmen than those named in the policy, provided the sum total of insurance was not increased. Complying with the plaintiff’s request, the defendant, on April 20th, 1925, issued a rider to be attached to plaintiff’s policy, providing for the coverage of plaintiff’s merchandise in the custody of Grimes, Strauss and Lewitt. The old policy having expired on May 1st, 1925, the defendant, on May 8th, 1925, sent to the plaintiff the policy sought herein to be reformed, wherein it insured merchandise of the plaintiff while in the custody of William G. Grimes and Jack Lewitt. The policy omitted the name of Ernest E. Strauss. A clerk of the plaintiff received the new policy through the mail and, without making an examination to learn its terms, placed it in a safe belonging to the plaintiff. Two days later, as already stated, certain jewelry, in the custody of the plaintiff’s salesman Ernest E. Strauss, was stolen from the plaintiff, and for the damage sustained by the plaintiff, through such theft, this action was then brought.

“ The province of reformation is to make a writing express the bargain which the parties desired to put in writing.” (Williston on Contracts, sec. 1549.) “ There must have been a meeting of the minds of the contracting parties concerning the agreement, or agreements, which the court is asked to declare existent.” (Collin, J., in Metzger v. Ætna Ins. Co., 227 N. Y. 411, at p. 417.) An agreement for the making and delivery of a policy of insurance, even though resting in spoken words, is a binding contract of insurance. (Trustees of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305; Commercial Mutual Marine Ins. Co. v. Union Mutual Ins. Co., 19 How. [U. S.] 318; International Ferry Co. v. American Fidelity Co., 207 N. Y. 350; Struzewski v. Farmers’ Fire Ins. Co., 226 N. Y. 338.) In our case, the defendant notified the plaintiff to make prompt application “ to renew ” its expiring policy, so that defendant might forward a renewal ” before the expiration date; the plaintiff applied for “ Total amount of insurance $50,000.00. (Renewed.); ” the defendant acknowledged receipt of the application for “ renewed insurance,” stated that it “ accepted ” same and would issue a policy to date from May 1st, 1925. There can be no doubt that the plaintiff and the defendant, through these interchanges of written words, had entered into a binding contract for renewal insurance. There can be no doubt that in the interim between May 1st and May 8th, 1925, during which no policy was outstanding, the plaintiff was nevertheless insured by the defendant under conditions and terms which continued the prior policy. Clearly, a policy which renews an old policy must renew the terms of that policy as they stood at the moment of its expiration. “An agreement to renew a policy, implies that the terms of the existing policy are to be continued, and this would be so of any instrument, in the absence of evidence, that a change was intended.” (Hay v. Star Fire Ins. Co. 77 N. Y. 235, at p. 239.) In this instance, the terms of the old policy, at the moment of its expiration, provided for a coverage of the plaintiff’s merchandise while in the custody of Ernest E. Strauss as well as while in the custody of Jack Lewitt and William G. Grimes. Therefore, the new policy of May 8th, 1925, which provided for coverage only while the merchandise was in the custody of Lewitt and Grimes, incorrectly, expressed the contract previously entered into between the parties.

It is immaterial that the agents of the plaintiff, during the two days elapsing between the receipt of the new policy and the theft, failed to read the policy and to note the error in draftsmanship which had been made. It has certainly never been announced as the law in this State that the mere omission to read or know the contents of a written instrument should bar any relief by way of a reformation of the instrument on account of mistake or fraud. It is the general rule that where a written instrument fails to conform to the agreement between the parties in consequence of the mutual mistake of the parties however induced, or the mistake of one party and fraud of the other, a court will reform the instrument so as to make it conform to the actual agreement between the parties.” (Earl, J., in Albany City Savings Inst. v. Burdick, 87 N. Y. 40, at p. 46. See, to the same effect, Bidwell v. Astor Mutual Ins. Co., 16 N. Y. 263; Welles v. Yates, 44 N. Y. 525, at p. 531; First National Bank v. Morgan, 73 N. Y. 593, at p. 594.) “ In view of the general rule that the renewal is on the same terms as the original policy, the.insured is justified in presuming that the conditions of the renewal will be the same as those of the original policy, in the absence of notice to the contrary. * * * If the conditions are not the same, a reformation of the contract may be had.” (Cooley’s Briefs on Insurance, vol. 2, p. 1409.)

The case of Bidwell v. Astor Mutual Ins. Co. (supra) is very much in point. There, the plaintiffs had constructed a steamboat for one Crooker. Crooker, in order to secure his indebtedness to the plaintiffs for the work done, executed a mortgage upon the vessel and delivered it to them. The plaintiffs applied to an agent of the defendant for marine insurance upon the vessel in the sum of $7,000. The agent agreed to deliver to the plaintiffs such a policy, with a stipulation to be contained therein permitting a total insurance of $50,000. A policy was subsequently delivered to the plaintiffs, by the defendant, which contained a provision fixing a limit of $40,000 for total permitted insurance. The policy was received by the plaintiffs and not read by them for more than a year, when the vessel had been lost or destroyed. It then appeared that the terms of the policy had been violated by the taking out of more than $40,000 of insurance. The court granted reformation of the policy, to correspond with the terms of the bargain entered into, notwithstanding the failure of the plaintiffs promptly to make discovery of the terms of the policy, and thereafter to return the policy to the defendant.

We think that the plaintiff was entitled to a reformation of the terms of the policy, and to a judgment as directed by the Special Term.

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

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

Judgment accordingly.


author: O’Brien, J.

text:
    Kohler Co., Inc., Respondent, v. William Brasun, Appellant.

      (Argued October 8, 1928;
    decided November 20, 1928.)

      Warnick J. Kernan for appellant.
    The plaintiff to recover back its chattel from this defendant should have complied with section 67 of the Personal Property Law, by filing its conditional sales contract or a copy thereof, together with a statement briefly describing the realty and stating that the plant was affixed thereto, in the county clerk’s office of the county of Herkimer. (Price v. Case, 10 Conn. 375; Hopewell Mills v. Taunton Savings Bank, 150 Mass. 519; Jenks v. Colwell, 66 Mich. 420; Beeman v. Douglas, 1 App. Div. 169; Tibbitts v. Horn, 65 N. H. 243; Powers v. Dennison, 30 Vt. 752; Hunt v. Bay State I. Co., 97 Mass. 279; Haven v. Emery, 33 N. H. 658; Cross v. Marston, 17 Vt. 540.) The defendant herein is a subsequent purchaser of the realty for value and without notice of the conditional seller’s title. (Wood v. Chapin, 13 N. Y. 519; Weaver v. Borden, 49 N. Y. 291; Ten Eyck v. Whitbeck, 135 N. Y. 49; Central Union Gas Co. v. Browning, 210 N. Y. 10.)

      Fred J. O’Donnell for respondent.
    The defendant, who purchased at a foreclosure sale, foreclosing a prior land contract, is not a “ purchaser for value and without notice of the conditional seller’s title.” (Central Union Gas Co. v. Browning, 210 N. Y. 10; McCloskey v. Henderson, 231 N. Y. 130; Craine Silo v. Alden State Bank, 218 App. Div. 263; Davis v. Bliss, 187 N. Y. 77; De-

      Bevoise v. Maple Ave. Const. Co., 228 N. Y. 496.) Even though defendant were a subsequent purchaser for value without notice, the lighting plant was not affixed to the real property in such a manner as to become a part thereof in view of the manner of annexation and of the intention of the parties that it should remain personal property. (East New York Electric v. Pelmaland Realty Co., 243 N. Y. 477.)
   O’Brien, J.

William R. Slaughter owned a small hotel in Herkimer county. He contracted to sell it to Tony Wieliezki, but the contract was assigned by Wieliezki to others and eventually to Joseph Jurewiez. While in possession, Jurewiez purchased a power and light plant from plaintiff upon a conditional sale contract. By its terms, the bill provided that title to this plant should not pass to the buyer or to others until full payment in cash should be made and that no matter in what manner .the plant might be attached to the realty it should not become a fixture or part of real estate. The courts below have found that this plant was so affixed to the realty as to become a part of it but was easily severable without material injury to the freehold. Jurewiez defaulted in payments due for the light and power plant and also on his bontract for the purchase of the real estate. Slaughter foreclosed on the land contract and defendant purchased the premises at the judgment sale. The sheriff’s deed to him conveyed the real estate together with the personal property on the premises. Under that deed, defendant took not only Jurewiez’s interest in the contract but also that of Slaughter the holder of the fee. The whole title in the realty passed to him. The purchaser of the real estate never had actual knowledge of the existence of the conditional sale contract for the light and power plant nor was that document ever filed in the county clerk’s office. Plaintiff and defendant each claim title to this plant, one by virtue of the reservation in the conditional bill of sale, the other by virtue of the conveyance by the sheriff.

The rights of the parties must be determined in accordance with the provisions of section 67 of the Personal Property Law (Cons. Laws, ch. 41), as added by chapter 642 of the Laws of 1922. The part of that section applicable to the facts found in this action is: If the goods are so affixed to realty at the time of a conditional sale or subsequently as to become part thereof but to be severable without material injury to the freehold, the reservation of property shall be void after the goods are so affixed as against subsequent purchasers of the realty for value and without notice of the conditional seller’s title, unless the conditional sale contract, or a copy thereof, together with a statement signed by the seller briefly describing the realty and stating that the goods are or are to be affixed thereto, shall be filed before such purchase in the office where a deed of the realty would be recorded or registered to affect such realty.” This section is designed for a double purpose. It protects buyers of real estate upon which some types of property are attached in such a manner as to render uncertain their character as realty or personalty. Equally, it operates as a protection to the conditional vendor of a fixture. A stove, a pump, a dynamo may be a chattel belonging to the owner of the realty or it may be so firmly fastened to the freehold as to constitute a part of it and yet, by reason of some agreement, may conditionally belong to its original owner. Such doubts respecting the character of this kind of property and its ownership can reasonably be entertained as may require prolonged litigation for their solution. The thing may be realty belonging to the vendor of the land or it may be personalty to which a reserved title may reside in a stranger. The statute informs the vendee of the land concerning his rights and duties. If he searches the office where land titles are recorded, he may find documents describing the fixture, its conditional owner and the circumstances under which it happens to be attached to the realty. If no such documents have been placed on file, the statute assures him that he may confidently purchase the fixture either as part of the realty or as a chattel belonging to the vendor of the realty. If the seller of this personal property files a copy of the conditional bill of sale and the brief statement as directed by the statute, his rights, likewise, are fully guarded. Section 67 provides a fair method for protection to all.

The facts found by the trial court and affirmed by the Appellate Division bring this case within the operation of section 67. The goods were affixed to the realty so as to become a part of it but were severable without material injury to the freehold; defendant purchased the realty for value and without notice of the conditional seller’s title; neither was the conditional sale contract or a copy nor a statement describing the realty filed in the office where deeds of realty would be recorded. Not a single element of fact is lacking to satisfy the statute and thus to render void the reservation of title in the conditional bill of salé. The evident intent as between the buyer and the seller of the chattel that it should retain its character as personalty cannot foreclose the third party who purchased without actual knowledge and without that constructive notice for which the statute provides. The principle of such decisions as Davis v. Bliss (187 N. Y. 77) and Central Union Gas Co. v. Browning (210 N. Y. 10), invoked by respondent, do not affect our interpretation of the statute as it now exists. Those and similar decisions were rendered prior to the enactment of section 67.

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.

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

Judgment accordingly.


text:
    In the Matter of Proving the Will of Wilhelmina Staiger, Deceased. Frank V. Baldwin et al., Appellants; Julia Stretz et al., Respondents.

      (Argued October 3, 1928;
    decided November 20, 1928.)

      Victor E. Whitlock for Frank V. Baldwin, appellant.
    The Surrogate’s allowances for counsel fees, commissions and disbursements were made in the exercise of a proper discretion, pursuant to the express terms of the statute, and there is no finding in the lower court that this discretion was abused. (Surrogate’s Court Act, § 278; Matter of Marshall, 189 App. Div. 477.) The decision of the Appellate Division holding as matter of law that the will was not legally established and that no executor was appointed and all of his acts were null and void, was erroneous. (Matter of Selleck, 111 N. Y. 290.) It was a proper exercise of discretion for the Surrogate to direct that the costs awarded to Julia Stretz should be paid out of the estate, and there is no finding in the lower court that this discretion was abused. (Surrogate’s Court Act, § 283.)

      Maurice Bloch, appellant, in person.
    The allowance to the special guardian was not unreasonable. (Livingston v. Ward, 248 N. Y. 193.)

      Henry Schoenherr for respondents.
    The reduction by the Appellate Division of the allowance to Maurice Bloch for his services as special guardian being discretionary, the decision is final and cannot be reviewed by this court. (Matter of Stevens, 99 N. Y. Supp. 1070.) The alleged lost or destroyed will not having been legally established there was no will, there was no executor, and all acts of the putative executor were null and void. (Dodd v. Anderson, 197 N. Y. 466; Benjamin v. Ver Nooy, 168 N. Y. 578.) The Surrogate erred in directing that the costs awarded to Julia Stretz be paid out of the estate. (First Nat. Bank v. Fourth Nat. Bank, 84 N. Y. 469; Mossein v. Empire State Surety Co., 117 App. Div. 782; Franey v. Smith, 126 N. Y. 658; Trustees of the Presbytery, etc., v. Westminster Presbyterian Church, 223 N. Y. 586.) The commissions allowed were not authorized by the statute. (Fowler v. Bowery Savings Bank, 113 N. Y. 450; Matter of Hurst, 111 App. Div. 460.) The Surrogate’s allowance for counsel fees, commissions and disbursements in view of the decision of the Court of Appeals, constituted a gross abuse of discretion. (Matter of Westerfeld, 61 App. Div. 413; Matter of Jackson, 215 N. Y. Supp. 230.)
   Cardozo, Ch. J.

Wilhelmina Staiger made her will in May, 1923, disinheriting her daughter, and leaving her whole estate, with the exception of some trifling gifts of money, to her two grandchildren. The will could not be found after her death, but a copy was in existence and in the possession of her attorney. The executor there named offered the will for probate under Surrogate’s Court Act, section 143, charging that the will was in existence at the death of the testatrix and had thereafter been fraudulently destroyed. The declarations of the testatrix made only a few days before her death gave ample support for the charge if they were admissible as evidence. The probate proceedings led to a decree establishing the lost will and admitting it to probate. The decree was affirmed at the Appellate Division, but reversed in this court on the ground that the declarations of the testatrix had been erroneously admitted, and that without them the evidence was insufficient to justify a finding of fraudulent destruction. The proceeding was remitted to the Surrogate with costs in all courts to abide the event (Matter of Staiger, 243 N. Y. 468).

The proceeding coming on for a new trial, there was a concession by the proponent that no other evidence was available, and probate of the lost will was accordingly refused. The Surrogate awarded to the executor the expenses incurred in support of the attempted probate and in the later discharge of his duties as executor, and also his commissions. Included in the expenses were the fees of counsel, past and present, and disbursements for bond premiums and the service of an accountant. Costs were awarded to the contestant, but were made payable out of the estate, which passed to the contestant as the sole heir and next of kin. An allowance was also granted to the Special Guardian acting for the grandchildren.

Upon appeal to the Appellate Division the decree was modified by denying to the executor any allowance for expenses or commissions, by substituting a direction that the costs be paid by him personally in place of the Surrogate’s direction that they be paid from the estate, and by reducing the Special Guardian’s allowance to $1,000. There were other modifications, less important, by which appellants are not aggrieved. The ruling was that since the alleged lost or destroyed will was not legally established, there was no executor appointed, and that all acts of the putative executor were null and void.” For this, Dodd v. Anderson (197 N. Y. 466) was cited as authority.

We held in the case cited that one who offers a will for probate may not charge the estate with the costs of the proceeding if probate is refused. There can be no executor where there is no will.” Unless a will is admitted to probate there can be no letters testamentary.” Until letters testamentary or of administration are issued upon the estate of a decedent there is no legal representative of the estate ” (197 N. Y. 470, 471). From these premises, the conclusion was thought to follow that when the will is never established and the letters are never issued, he who assumes to act as executor is merely a volunteer who has assumed the risk of having his acts repudiated by the courts of competent jurisdiction.” We did not go into the question whether the result would be different if probate had been granted and letters issued, but thereafter vacated or reversed.

Promptly following that decision came an amendment of the statute (Code Civil Procedure, § 2746; Surrogate’s Court Act, § 278): When the decree is made upon a contested application for probate of a will, costs, payable out of the estate or otherwise, shall not be awarded to an unsuccessful contestant of the will, unless he is a special guardian for an infant or incompetent, appointed by the surrogate, or is named as an executor in a paper propounded by him in good faith as the last will of the decedent; but where a person named as the executor in a will propounds the will for probate, such person so named as executor may, whether successful or not, in the discretion of the surrogate, be awarded costs and all necessary disbursements made by him and all expenses incurred in the attempt to sustain the will.” This amendment, though invoked by the Surrogate, was ignored by the Appellate Division in reversing his award. It supplies the guiding rule for the expenses of the contest.

We think the evidence sustains a finding that a paper had in good faith been propounded for probate as a will by one named as an executor. If that is so, compensation for the proponent’s expenses might be allowed in the discretion of the Surrogate. Plainly the statute would apply if the paper supposed to be a will was still in existence when propounded by the putative executor. We think it does not cease to apply when the paper has been lost, if .probate, though denied, has been demanded in good faith. Not the outcome of the contest, but the good faith of the proponent is the statutory standard. Here the evidence is ample that what was done by the proponent was done in good faith and upon reasonable grounds. There can be no distinction in such circumstances between propounding a lost will and propounding any other. The statute must be read with an eye to the mischief to be remedied. We hold with the Surrogate that expenses incurred by the executor for the services of counsel are a charge on the estate.

We think a like ruling must be made as to the payments made by the executor for premiums on the bond, for the services of accountants, and also as to his own commissions. These items are not governed by the statute (Surrogate’s Court Act, § 278), for they were not expenses of the contest. They have to do with payments made and services rendered after probate had been allowed and letters testamentary granted, at times, in other words, when the proponent was acting as executor under a decree valid till reversed. To such a situation, our ruling in Dodd v. Anderson, relating as it did to expenses incurred by one who had never succeeded in establishing his title as executor, may not fairly be extended. The decree, even though erroneous, was not void, and the executor, while it stood, might rest on its authority. He is entitled, like a receiver, to be paid for services and disbursements while protecting the estate under the mandate of the court (Matter of Hurst, 111 App. Div. 460, 462; Wood’s Admr. v. Nelson’s Executor, 10 B. Mon. [Ky.] 229, 231; Hernandez v. Brookdale Mills, Inc., 232 N. Y. 552; Pittsfield Nat. Bank v. Bayne, 140 N. Y. 321, 330; People v. Oriental Bank, 129 App. Div. 865; Clark v. Brown, 119 Fed. Rep. 130). No doubt the Appellate Division might have reduced the award if found to be excessive. That is not what it did. It reversed upon the law, and held that there was a lack of jurisdiction to make an award at all.

We think there was error also in disturbing the determination of the Surrogate that the costs of the proceeding including the appeal to this court should be paid out of the estate. It is true that in reversing the decree of probate we directed that costs in all courts should abide the event. This did not deprive the Surrogate of the discretionary power to determine whether they should be charged upon the estate or paid by the proponent personally. Surrogate’s Court Act, section 283, provides: The appellate court may award to the successful party the costs of the appeal; or it may direct that they abide the event of a new trial; or of the subsequent proceedings in the surrogate’s court. In either case, the costs may be made payable out of the estate or fund, or personally by the unsuccessful party, as directed by the appellate court; or, if such direction is not given, as directed by the surrogate.” The discretion so exercised is not subject to review upon appeal unless so manifestly wrong as to indicate an abuse of power (Matter of Selleck, 111 N. Y. 284).

We pass from the appeal by the executor to the appeal by the Special Guardian. The Appellate Division did not question his right to an allowance from the estate (Livingston v. Ward, 248 N. Y. 193). It reduced the amount, and he complains of the reduction. At what figure the value of his services should be reckoned was a question of fact. Under Surrogate’s Court Act, section 309 (formerly Code Civil Procedure, § 2586, until the revision of 1914, and then § 2763), the Appellate Division had the same power to decide that question as the Surrogate had (cf. Matter of Stewart, 135 N. Y. 413, 416). Such cases as Matter of Selleck (111 N. Y. 284); Matter of Alder (60 Hun, 481, 483), and Matter of Eisner (6 App. Div. 563), do not apply. They deal, not with the determination of question of facts in a true sense, but with the award of a discretionary remedy after the facts have been ascertained. The estate here in controversy is small, and one of the two grandchildren was already of age when the guardian was appointed by an ex parte order. The record does not justify us in disturbing the estimate of value.

Upon the appeal by the executor the order of the Appellate Division should be modified in accordance with this opinion, and as modified affirmed, with costs to the appellant in the Appellate Division and in this court payable out of the estate.

Upon the appeal by the special guardian, the order should be affirmed without costs to either party.

Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Ordered accordingly.


text:
    Minnie Sandler, Respondent, v. Lindley M. Garrison, as Receiver of the New York Consolidated Railroad Company, Appellant.

      (Argued October 9, 1928;
    decided November 20, 1928.)

      Harold L. Warner and George D. Yeomans for appellant.
    Upon the circumstances disclosed by the evidence the rule of res ipsa loquitur cannot properly be invoked to raise a presumption of negligence on the part of the defendant. (Wolf v. American Tract Society, 164 N. Y. 30; Stremble v. B. H. R. R. Co., 110 App. Div. 231; Wetsell v. Reilly, 159 App. Div. 688; White v. Lehigh Valley R. R. Co., 220 N. Y. 131; Moscato v. Prince Line, Ltd., 164 App. Div. 412; Searles v. Manhattan Railway Co., 101 N. Y. 661; Duhme v. Hamburg American Packet Co., 184 N. Y. 409; Robinson v. New York Consolidated Gas Co., 194 N. Y. 37.)

      Nathan B. L. Cosel for respondent.
    The law governing the instant case clearly confirms the jury’s findings.' (Marceau v. Rutland R. R. Co., 211 N. Y. 208; Hogan v. Manhattan Ry. Co., 149 N. Y. 23.)
   Kellogg, J.

This action was brought to recover damages for personal injuries alleged to have been sustained through the negligence of the defendant. The plaintiff, in support of her charge of negligence, gave no further proof than as follows: She was standing on a sidewalk in a public street nearby an elevated railway structure, maintained in the street by the defendant. A train was passing upon the structure, when a metal object struck the plaintiff on the head. The object was seen while falling through the air, but whether it proceeded from the structure itself, or from the passing train, was not observed. The object, which was identified and exhibited to the jury, proved to be an iron door lock. With this proof given the plaintiff rested. The defendant then summoned an employee as a witness, who testified as follows: The iron lock was similar to locks used on the doors of inside cabs of defendant’s cars. Soon after the accident the witness examined the cars contained in the train which passed the plaintiff. A lock was missing from oné of the cab doors; it had been torn from its fastenings. The cab was inside the body of the car and the door had been folded back into the cab, where it was securely fastened. When in place, the lock had been thirty-three inches from the floor of the car. The window opening of the cab, at its lowest point, was fifty-four inches above the floor. Notwithstanding the proof thus given, the case was sent to the jury, which returned a verdict for the plaintiff.

The plaintiff, relying on the principle res ipsa loquitur, asserts that, when she had given evidence indicating that the lock had fallen from a passing train, the inference that its fall was due to the negligence of the defendant was permissible. The difficulty is that the principle has application only in a case where the object which produces the injury has been in the custody and under the control of the person charged with fault. (Griffen v. Manice, 166 N. Y. 188; Slater v. Barnes, 241 N. Y. 284; Goldman & Freiman Bottling Co. v. Sindell, 140 Md. 488; Sullivan v. Minneapolis Street Railway Co., 161 Minn. 45; Sylvia v. Newport Gaslight Co., 124 Atl. Rep. 289.) Both inspection and user must have been at the time of the injury in the control of the party charged.” (Wigmore on Evidence, sec. 2509.) Finally, the agency causing the injury must have been under the defendant’s control both at the time of the injury and at the time of the negligent acts which it is presumed caused the injury.” (Res Ipsa Loquitur, XXII Illinois Law Review, at p. 726.) To the same effect is Goldman v. Sindell {supra). Two cases involving falling missiles from elevated railway structures, wherein the maxim res ipsa loquitur was given effect, are cited by the plaintiff. (Volkmar v. Manhattan Railway Co., 134 N. Y. 418; Hogan v. Manhattan Railway Co., 149 N. Y. 23.) Those cases, however, do not aid her. In the one case, the missile was a heavy bolt which had been used to hold together the elevated structure of which it was a part. In the other, the missile was an iron bar similar to those being used by the defendant’s employees upon the structure at the site of the accident. In each, the missile came from the custody and control of the defendant. In our case, when the plaintiff rested, there was no proof that the metal lock was ever possessed or controlled by the defendant. So far as the proof then showed, the lock may have been one which a passenger, traveling upon the train, was carrying, and had accidentally or purposely dropped from a car window. When the plaintiff had finished her proof, therefore, no evidence had been presented which made even a prima facie case of negligence on the part of the defendant.

It is said that the defendant supplied the missing proof of its ownership and control of the lock. The defendant’s witness did not testify generally that locks, similar to the one involved, were used on defendant’s cars. His statement had reference to a specific lock on a particular door and no other. That door was designed to cover the opening of a cab entirely within a railway car. The lock, which had been torn from the door, had occupied .a position nearly two feet lower than the window opening of the cab. If, through the negligence of the defendant, the fastenings of the lock had become insecure and the lock had fallen, nevertheless it could not have fallen on the plaintiff to cause the injuries of which she complains. The very evidence, therefore, which furnished proof that the defendant at one time possessed and controlled the lock, negatived every possible inference that negligence on the part of the defendant was the proximate cause of the accident. After the witness had finished, the case stood in this wise: If the testimony of the witness was to be discarded, there was no proof whatsoever that the defendant ever possessed or controlled the lock. If the evidence was to be credited, the negligence of the defendant, in reference to making the lock secure, could not have caused the accident. In either event the case was devoid of proof that the defendant. possessed and controlled a lock which, when detached from its fastenings, might have fallen by gravity upon the plaintiff. Such being the situation, the lock must have been propelled through a window, or other car opening, by some human agency, to fall upon plaintiff’s head. That agency equally well may have been a passenger upon the train or a workman of the defendant, and no inference lay that it was the latter rather than the former. In Wolf v. American Tract Society (164 N. Y. 30) a brick fell from a building and injured a pedestrian. The building was' in process of construction and many workmen, under the control of numerous contractors, were engaged in work thereupon. It was held that the circumstances of the accident gave rise to a presumption that someone had been negligent, but not to a presumption that the owner of the building, or a particular contractor, had been guilty of negligence. The complaint was accordingly dismissed. So here, while the circumstances of thé acci- . dent may have shown negligence, they failed to show that' the defendant had been negligent. No facts have been shown either giving rise to a presumption, or justly-permitting an inference, that the defendant’s negligence proximately caused the injuries of which the plaintiff complains.

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

Cardozo, Ch. J., Lehman and O’Brien, JJ., concur; Pound, Crane and Andrews, JJ., dissent.

Judgment reversed, etc.


author: Crane, J. Lehman, J.

text:
    Erie Railroad Company, Respondent, v. H. Rosenstein, Inc., Appellant.
    (Argued October 10, 1928;
    decided November 20, 1928.)

      Isaac N. Jacobson for appellant.
    One who receives goods solely as an agent for sale, does not thereby render himself liable for the freight charges unless he was the consignor, or consignee, or beneficial owner, or expressly promised to pay the freight. (N. Y. C. & H. R. R. R. Co. v. York & Whitney Co., 230 Mass. 206; 256 U. S. 406; N. Y. C. R. R. Co. v. Ross Lumber Co., 234 N. Y. 261; Penn. R. R. Co. v. Titus, 156 App. Div. 830; 216 N. Y. 17; Pitts., C., C. & St. L. Ry. Co. v. Fink, 250 U. S. 577; Davison v. City Bank, 57 N. Y. 81; Farrar v. Perkins, 122 Kans. 141; Elwell v. Skiddy, 77 N. Y. 282; Union Pacific Railroad Co. v. Stickel Lumber Co., 99 Neb. 564.)

      Theodore Kiendl and A. Sylvester Edmonds for respondent.
    Under the Interstate Commerce Act the obligation of the appellant to pay the unpaid balance of the full amount of the lawful transportation charges accruing under the duly published and filed tariffs is clear. (Texas & P. R. Co. v. Mugg, 202 U. S. 242; Texas & P. R. Co. v. Abilene Cotton Co., 204 U. S. 426; Chicago & A. R. Co. v. Kirby, 225 U. S. 155; Kansas City So. Ry. Co. v. Carl, 227 U. S. 639; Boston & Maine R. Co. v. Hooker, 233 U. S. 97; Southern Ry. Co. v. Prescott, 240 U. S. 632; Pittsburgh, etc., Ry. Co. v. Fink, 250 U. S. 577; Dayton Coal & Iron Co. v. Cincinnati, etc., Ry. Co., 239 U. S. 446; Louisville & Nashville R. Co. v. Maxwell, 237 U. S. 94; Armour Packing Co. v. U. S., 209 U. S. 56.)
   Crane, J.

On April 17,1923, at Grandfield, Oldahoma, Oklahoma Hide & Produce Co. delivered to Wichita Falls & North Western Railway Co. a carload of live poultry consigned to itself, Oklohoma Hide & Produce Co., New York, N. Y., to be transported by the said railroad and connecting carriers, including the plaintiff, the Erie Railroad Co. The bill of lading, known as a straight bill of lading, contained the following provision: “ The owner or consignee shall pay the freight and all other lawful charges accruing on said property.” During the course of transportation in interstate commerce, the Oldahoma Hide & Produce Co. ordered the car of live poultry to be delivered to H. Rosenstein, Inc., the defendant. Delivery was made and accepted by the defendant on May 1, 1923, the defendant paying to the plaintiff the freight and other lawful charges on the car then demanded by the plaintiff. Subsequently, it was found that $52.20 more should have been collected in accordance with the published tariffs.

The consignor was also the consignee. It shipped goods to be delivered to itself. While the poultry was in transit, the consignor-consignee directed delivery to another corporation, H. Rosenstein, Inc. No information was given to the railroad company as to who H. Rosenstein, Inc., was, whether it was the owner or agent. The railroad company, acting upon orders from both the consignor and the consignee, delivered the goods as directed. The party receiving the goods acted in the same way as any owner would act. It received the car of poultry and paid to the plaintiff “ freight and all other lawful charges ” on the car. It subsequently developed that the defendant was a commission merchant which had received the poultry for the owner, sold it, and remitted the proceeds to the consignor-consignee, less commissions and freight charges. The defendant, however, did not notify the railroad of these facts, gave no notice that it acted as agent or commission merchant, and was not the owner of the poultry. The plaintiff had no knowledge of these facts until after the delivery and the discovery of the undercharge. The defendant in thus silently receiving delivery under orders from the consignor-consignee, undertook to pay all the lawful charges due upon the shipment. It paid less. The railroad company could not accept less. It has brought this action to recover the balance of the freight, $52.20. The defendant resists payment upon the plea that as it was not the owner in fact, only an agent, it is not liable for this amount.

Whether it were owner or agent depended upon veiled facts; an understanding between the receiver and the shipper. If H. Rosenstein, Inc., had been the owner instead of the agent, the transaction would have had exactly the same aspect and coloring and have taken the same form so far as the railroad company was concerned. How could it possibly tell the capacity in which H. Rosenstein, Inc., acted? That company alone knew, and did not tell. If the Oklahoma Hide & Produce Co. consigning the goods to itself, apparently for sale in the New York market, had sold the carload of poultry to H. Rosenstein, Inc., and had given the same instructions to the railroad company, that is, to deliver the goods to that company, the railroad company would have acted no differently than it did in this case and would have had no more knowledge. Yet under such circumstances it is conceded that H. Rosenstein, Inc., would be liable. The liability, it is said, would depend upon its being owner in fact. If it should turn out not to be owner in fact, but only in appearance, then it would not be liable for the freight. Under the Uniform Sales Act, now adopted in most of the States, the ownership of goods depends upon many uncertain elements. When title passes has become almost a mystery. In some cases it is uncertain until the final court having jurisdiction has spoken. Does liability for freight charges depend upon such uncertain ground? The railroad carrier charged with a duty of collecting freight rates fixed by law, and not permitted under any circumstances which might show partiality or favoritism, to vary those rates, should not be compelled to hunt around to find out who is the real owner of goods. (Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink, 250 U. S. 577.) It is justified in acting upbn appearances and the action of the parties. The consequences should fall upon the one who could easily make clear the situation and has failed to do so. The Interstate Commerce Act deals with practical matters of daily application. As far as possible it should be simplified; at least not rendered unnecessarily intricate. The number of daily shipments by railroad is enormous. Litigation involving the collection of rates indicates that the exact amount of freight charges cannot always be ascertained at the time of delivery. An audit or re-audit is required to determine the right figure. Is the railroad company under such circumstances expected to collect part of the charges from the receiver of the goods and the balance from the shipper, when it had no knowledge of their relationship? If it has knowledge that the person to whom it delivers is not the owner, this is another matter, but where it is called upon to deliver, as in this case, to one who acts as an owner would act without divulging an agency, the railroad company is justified, in my judgment, in treating him as consignee or as the owner.

It is further conceded that under the cases, a consignee will be liable for the freight even though he be an agent in fact — if the agency be not known to the railroad. Liability is not dependent upon the use of the word consignee.” One may be liable for the freight rates though not named in the bill as consignee.

The situation presented by this case was evidently foreseen by the amendment to the Interstate Commerce Act, the statute of March 4, 1927, chapter 510, section 1, which reads in part as follows: “ Where carriers by railroad are instructed by a shipper or consignor to deliver property transported by such carriers to a consignee other than the shipper or consignor, such consignee shall not be legally liable for transportation charges in respect of the transportation of such property * * * which may be found to be due after the property has been delivered to him, if the consignee (a) is an agent only and has no beneficial title in the property, and (b) prior to defivery of the property has notified the delivering carrier in writing of the fact of such agency and absence of beneficial title,” etc. While this amendment is not applicable to the facts of this case, yet it recognizes that consignees were liable where the railroad company was ignorant of the lack of ownership. They are liable now unless the proper notice is given.

I see no reason why H. Rosenstein, Inc., was not a consignee within this interpretation of the law. The shipper was himself the first consignee. It directed defivery to another party. (Hutchinson on Carriers, sec. 193; Blanchard v. Page, 8 Gray [Mass.], 281.) There was a straight bill of lading. It made no difference whether H. Rosenstein, Inc.’s, name appeared in the bill or not. Defivery was not dependent upon the production of the ■bill of lading. By reason of the defivery order H. Rosenstein, Inc., became the consignee, and became liable for the freight charges as though in name consignee. Even under the amended statute it would be liable for the freight charges, as it failed to give notice therein required.

Such, I think, is the result we reach after consulting the cases upon this point. The latest is Louisville & Nashville Railroad Co. v. Central Iron & Coal Co. (265 U. S. 59). The facts are that the Central Iron & Coal Co. sold Tutwiler & Brooks ten carloads of coke to be delivered at the seller’s plant in Holt, Alabama. Before defivery, the purchaser sold the coke to the Great Western Smelters Corp. of Mayer, Arizona. Under instructions from Tutwiler & Brooks, the Central Co. delivered the cars of coke to the Louisville & Nashville Railroad, directing shipment to Mayer, Arizona. The bills of lading were delivered to Tutwiler & Brooks, which were sent forward with drafts. Upon payment of the drafts, the surrender of the bills of lading and the payment of the freight charges, the Smelters Corp. got the coke. There was a balance due of freight charges and demand made upon the Central Co. for the amount. The bills of lading stated that the coke was “ consigned to the order of Tutwiler & Brooks, destination, Mayer, Arizona * * * Notify Great Western Smelters Corporation.” As in this case, the bill of lading contained the provision: “ The owner or consignee shall pay the freight, and average, if any, * * * before delivery.” Here we have a bill of lading with Tutwiler & Brooks the consignee and directions to notify the Smelters Corp. The court held that the shipper was not hable for the freight under all circumstances; there might be a contract placing liability for the freight elsewhere. The contract was to be gathered from the bills of lading and the circumstances known to the carrier. The Central Co. in this case did not assume the primary obligation to pay the freight charges. The court said: “It is urged that, if the Central Company was not under a primary obligation to pay the freight charges, it was secondarily hable, because collection from the Smelters Corporation of the balance remaining due had become impossible before the undercharge was discovered. But the trial judge was not compelled so to find. There was evidence that such collection had not become impossible. Confessedly no effort was made to collect from it. Nor was any effort made to collect from Tutwiler & Brooks. Moreover, if a secondary obhgation of the Central Company was to be implied from the fact of its causing the coke to be received for transportation, the promise was not necessarily one-to pay at any time any freight charges which the carrier might find it impossible to cohect from the consignee or his assign. The court might have concluded that it guaranteed merely that the consignee or his assign would accept the shipment. For, under the rule of the Fink case, if a shipment is accepted, the Consignee becomes liable, as a matter of law, for the full amount of the freight charges, whether they are demanded at the time of delivery, or not until later. His liability satisfies the requirements of the Interstate Commerce Act.”

Applying this decision to the facts of the case before us, we have the H. Rosenstein, Inc., in the same position as the. Smelters Co. in the Louisville case. The Smelters Co. was the “ notify party; ” Tutwiler & Brooks the “ consignee.” Here the consignor was also the consignee and H. Rosenstein, Inc., the notify party or the party to whom the railroad was notified to deliver the goods. It was the “ assignee ” in this respect of the consignee. If the Smelter Co. would have been liable for the balance of the freight charges in the one case, H. Rosenstein, Inc., should be liable in the other.

To the same effect is the case of New York Central & Hudson River Railroad Co. v. York & Whitney Co. (256 U. S. 406). Cars were originally waybilled to Chicago, and the consignee was O. E. Spooner, destination, Boston, Mass. At the request of the shipper, the railroad at Chicago made the defendant consignee of all the cars, and wrote Boston in place of Chicago on the waybills. York & Whitney Co. were commission merchants. The suit was over the balance due for freight charges on nine carloads of melons. York & Whitney Co. accepted the cars, paid the charges, and remitted the balance after sale of the goods to the owners. As in the case before us, York & Whitney Co. refused to pay the balance found due after an audit of the charges. The court said: “We think the doctrine announced in Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink (supra), is controlling, and that the liability of York & Whitney Company was a question of law. The transaction between the parties amounted to an assumption by the consignee to pay the only lawful rate it had the right to pay or the carrier the right to charge. The consignee could not escape the liability imposed by law through any contract with the carrier.” (See, also, Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink, supra; Dare v. N. Y. Central R. R. Co., 20 Fed. Rep. [2d] p. 379.)

In this court we have N. Y. C. R. R. Co. v. Ross Lumber Co. (234 N. Y. 261). Ross Lumber Co. was named as consignee in a bill of lading, but had given directions for delivery to Schieck-Johnson Co. upon payment of the freight charges. The railroad delivered without collecting freight charges and sued Ross Lumber Co. for the amount thereof. This court held the company liable not alone because it was named as consignee but for its acts as consignee, and said: “But the consignee may also become liable for such charges by its own act. While no contractual relation arises between carrier and consignee by the mere designation of the latter as consignee, the consignee becomes liable for the freight charges when an obligation arises on his part from presumptive ownership, acceptance of the goods and the services rendered and the benefits conferred by the plaintiff for such charges.”

There is, therefore, no finality in the use of the word “ consignee.” When the consignor-consignee has given directions to deliver goods to a third party, that party may be liable for the freight rates, although not named in the bill of lading. If the goods have been shipped under a straight bill of lading, the “ consignee ” named therein or the “ notify party,” or the “ delivery party ” may never see the bill of lading. It is not necessary to produce it in order to get the goods. A shipment under such a bill of lading with directions from the named consignee and also the consignor to deliver the goods to another named party who receives the goods and undertakes the payment of the lawful rate charges for those goods makes him liable for the balance of the charges, just as though he were a consignee named in the bill. He is an assignee or a notify party, but whatever we may call him, he exercises the same authority over the goods so far as the carrier is concerned as would an owner. Under such circumstances, lacking any other information, the railroad company is justified in treating him as owner. New York Central R. R. Co. v. Federal Sugar Refining Co. (235 N. Y. 182) has little or no bearing upon the case.

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

Lehman, J.

(dissenting). An owner of poultry in Oklahoma consigned its own property to itself in New York. While the goods were in transit it directed delivery of its property to this defendant. The defendant was a commission merchant and did not own the poultry, The real owner clothed the defendant with no appearance of title. It did not transfer to the defendant the bill of lading. The owner’s direction to deliver was merely the exercise of dominion over his own property.

The railroad company delivered the poultry bo the defendant. The defendant paid the transportation charges, then demanded, and accepted delivery of the poultry. After defendant sold the poultry and accounted to the owner for the proceeds, the railroad company discovered that through error on its part it had failed to demand the full lawful charges before it delivered the goods. The defendant has been held liable for the unpaid charges.

At common law the defendant would not have been liable for the unpaid charges. (Elwell v. Skiddy, 77 N. Y. 282, 289; Dart v. Ensign, 47 N. Y. 619; Davison v. City Bank, 57 N. Y. 81.) The bill of lading provides that “ the owner or consignee shall pay the freight and all other lawful charges accruing on said property.” Such provision becomes binding upon the owner or consignee who adopts the provision of the contract of carriage by accepting delivery of the goods and the benefit of the carriage. (Merian v. Funck, 4 Den. 110; Hinsdell v. Weed, 5 Den. 172, 178; Davison v. City Bank, supra, 86; Penn. R. R. Co. v. Titus, 216 N. Y. 17.) Here the defendant was not, however, the owner, nor was he the consignee named in the bill of lading.

Under the United States statutes regulating interstate commerce, the liability of a consignee for the payment of freight charges rests upon a broader basis than at common law. (Pittsburgh, etc., Ry. Co. v. Fink, 250 U. S. 577.) Until the recent amendment of the Interstate Commerce Act (Statute of March 4, 1927, chapter 510, sec. 1), even though the carrier had notice that the consignee was in fact only the agent of the owner, yet acceptance of the goods amounted to an assumption by the consignee to pay the only lawful rate it had the right to pay or the carrier the right to charge.” (New York Central & Hudson River Railroad Co. v. York & Whitney Co., 256 U. S. 406.) The question still remains whether the defendant is a consignee ” within the meaning of the Interstate Commerce Act, or the decisions of the Supreme Court defining liability thereunder.

In New York Central & Hudson River Railroad Company v. York & Whitney Co. (supra) the defendant who by accepting the goods “ assumed ” the obligation to pay all lawful charges was, it is true, not named as consignee under the bill of lading, which constituted the original contract of carriage. The defendant was, however, thereafter named as consignee by the shipper and the waybills were so marked. The original bill of lading then was superseded. If the original consignee had any rights to the goods, the railroad company no longer recognized them. The carrier agreed with the shipper to transport the goods to the defendant named as consignee in the waybills. The defendant could demand and receive delivery of the goods under the terms of the contract of carriage. The defendant’s rights there flowed directly from the carrier’s contract to transport the goods to it. They were in no sense different from what they would have been if the defendant had been named as consignee in the original contract. When the defendant received delivery of the goods under the carrier’s contract, it adopted the terms of the contract. There was no room for distinction between the defendant in that case and a consignee named as such in a bill of lading, and the court was not even urged by counsel to attempt such a distinction.

Here the facts are different. Under the contract of carriage the consignor maintained full dominion over the goods. The defendant obtained no rights under that contract and asserted none. The owner exercising the dominion with which it had never parted directed delivery to the defendant. The defendant was not the' apparent owner. Its position was equivocal, and at least as consistent with the view that in accepting delivery it was acting merely as agent for the' owner as that it was the owner itself. To obtain the release of the carrier’s lien, the defendant paid the charges demanded. The owner or consignee under the bill of lading still remained liable for any lawful charges not demanded at that time. (New York Central R. R. Co. v. Ross Lumber Co., 234 N. Y. 261.) The owner or consignee, until the moment of delivery to this defendant, might have exercised its right of dominion by changing the direction to deliver to the defendant. The rights of the defendant were derived from and subordinate to the rights of the consignee named in the contract, and the analogy between them seems to me illusory. The consignee receiving the goods under a right created by the contract of carriage must be held to assume all the obligations of the contract of the carriage from which his rights are derived. The defendant, acting in equivocal or undisclosed capacity and receiving the goods solely by the direction to deliver of the person who had reserved dominion over the goods, assumes no personal obligation under the contract of carriage when in fact he acted only as agent for the owner or consignee.

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

Judgment affirmed.