text:
    The People of the State of New York, Respondent, v. Cashmir Kozzen, Appellant.
    (Submitted February 16, 1932;
    decided March 3, 1932.)

      Edward J. Reilly for appellant.

      William F. X. Geoghan, District Attorney (Henry J. Walsh of counsel), for respondent.
   Judgment affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Lehman, J.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    John A. Stirnweis, Respondent, v. Charles Cacioppo, Appellant.
    (Submitted February 15, 1932;
    decided March 3, 1932.)
   Per Curiam.

The plaintiff asks for a reargument upon the ground that the street closing act of 1895 (Laws of 1895, ch. 1006) applies only to public highways and not to private roads (Matter of Wallace Ave., 222 N. Y. 139).

Nothing to the contrary was intimated in the opinion of the court.

We said in that opinion (258 N. Y. 68, 71): Fresh Pond road was shown on this [i. e., the Drube] map, and became a highway by dedication, or so the record fairly indicates.”

If the fact was to the contrary, the plaintiff should have proved it.

The motion should be denied, with ten dollars costs and necessary printing disbursements.


text:
    In the Matter of the Probate of the Will of Catherine Schillinger, Deceased. George Hetzer, as Executor, et al., Respondents; Edward J. Schillinger et al., Appellants.
    (Submitted February 15, 1932;
    decided March 3, 1932.)
   This court directed a judgment in accordance with the stipulation and the stipulation must determine the form of any judgment to be entered in the court below.

Motion denied.


text:
    The People of the State of New York ex rel. The Board of Commissioners for Improvements on the Great Chazy River et al., Appellants, v. F. M. San comb et al., Assessors of the Town of Dannemora, Respondents.
    (Argued March 14, 1932;
    decided March 22, 1932.)

      Seth S. Allen for appellants.
    The lands assessed are within the limits of a public district as defined by chapter 470 of the Laws of 1926. (Matter of Floyd-Jones v. Town Board, 249 N. Y. 398; Demarest v. Mayor, 74 N. Y. 161; Holroyd v. Town of Indian Lake, 180 N. Y. 318; People ex rel. Dresden v. Connolly, 238 N. Y. 326; Matter of City of New York, 217 N. Y. 45; Matter of City of Rochester v. Holden, 224 N. Y. 386; Board of Black River Regulating District v. Ogsbury, 203 App. Div. 43; 235 N. Y. 600; Bradley v. Degnon Contracting Co., 224 N. Y. 60; Hudson River Regulating District v. F., J. & G. R. R. Co., 223 App. Div. 358; 249 N. Y. 445; Matter of Long Sault Development Co. v. Kennedy, 158 App. Div. 398; 212 N. Y. 1; Matter of Burns, 155 N. Y. 23; People v.
      Lockner, 177 N. Y. 145; Seeley v. Stevens, 190 N. Y. 158; People v. Bradley, 207 N. Y. 592; People ex rel. Henderson v. Board of Supervisors, 147 N. Y. 1; Brooklyn Park Ave. Commission v. Armstrong, 45 N. Y. 234; Knickerbocker Ice Co. v. 42nd St. R. R. Co., 39 Misc. Rep. 27; 85 App. Div. 530; 176 N. Y. 408; Matter of Wilder, 90 App. Div. 262.) Chapter 289 of the Laws of 1868 was enacted for the public purpose of checking freshets in the Great Chazy river. (Matter of Burns, 155 N. Y. 23; Matter of Tuthill, 163 N. Y. 133.)

      John J. Bennett, Jr., Attorney-General (Charles E. McManus of counsel), for State of New York.
    A public district was created by chapter 289 of the Laws of 1868. (Matter of Floyd-Jones v. Town Board, 249 N. Y. 398; Holroyd v. Town of Indian Lake, 180 N. Y. 318; People ex rel. Desiderio v. Conolly, 238 N. Y. 326; People v. Stoll, 242 N. Y. 453.) The exemption from taxation of the public district is constitutional. (Matter of City of New York, 217 N. Y. 45; Matter of City of Rochester v. Holden, 224 N. Y. 386; Board of Black River Regulating District v. Ogsbury, 203 App. Div. 43; 235 N. Y. 600; Board of Hudson River Regulating District v. F., J. & G. R. R. Co., 233 App. Div. 358; 249 N. Y. 445; Matter of Burns, 155 N. Y. 23; Matter of Rouge River, 266 Fed. Rep. 105; Alabama Power Co. v. Gulf Power Co., 283 Fed. Rep. 606.)

      Patrick J. Tierney and J. Edgar Downs for respondents.
    The property assessed is not exempt under section 4, subdivision 3-a, of the Tax Law, as it is not a public district. (Board of Black River Regulating District v. Ogsbury, 203 App. Div. 43; 235 N. Y. 600; Board of Hudson River Regulating District v. F., J. & G. R. R. Co., 127 Misc. Rep. 866; 233 App. Div. 358; 249 N. Y. 445; People v. Cameron, 140 App. Div. 76; Matter of Frances Estate, 121 App. Div. 129; Elks v. Purdy, 179 App. Div. 805.)
   Per Curiam.

Assuming that chapter 289, Laws of 1868, entitled “ An Act to provide for the improvement of the hydraulic power of the Great Chazy river, and to check freshets therein,” creates a “ public district ” within the definition contained in section 2, subdivision 1, chapter 470, Laws of 1926, the real property embraced therein is not exempt from taxation under section 4, subdivision 3-a, of the Tax Law (Cons. Laws, ch. 60), as such property is not used exclusively for the public purpose for which the district was established. The regulation of freshets in the Great Chazy river is a public purpose. (Board of Black River Regulating District v. Ogsbury, 203 App. Div. 43; affd., 235 N. Y. 600.) The improvement of hydraulic power in the aid of private owners is not. (Hay v. Cohoes Co., 3 Barb. 42, 47.)

The act (L. 1868, ch. 289) may be deemed constitutional (Board of Black River Regulating District v. Ogsbury, supra) without extending tax exemption to the property assessed.

The order should be affirmed with costs.

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

Order affirmed.


text:
    The People of the State of New York, Respondent, v. French Bottling Works, Inc., Appellant.

      (Argued March 16, 1932;
    decided March 29, 1932.)

      John C. Judge for appellant.
    Section 139-b of the Sanitary Code is inconsistent with the laws of the State of New York, and, therefore, embodies an invalid delegation of power. (People v. Excelsior Bottling Works, 184 App. Div. 45; People v. Cavo, 140 Misc. Rep. 40; People v. Henderson, 74 Misc. Rep. 577.) The provision of the Sanitary Code which requires the declaration of the use of saccharin is an unreasonable regulation. (People v. Ringe, 197 N. Y. 143; People ex rel. Wineburgh Advertising Co. v. Murphy, 195 N. Y. 126.)

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly and Henry J. Shields of counsel), for respondent.
    Section 139-b of the Sanitary Code in force in the city of New York is constitutional. (People v. Excelsior Bottling Works, 184 App. Div. 45; Polinsky v. People, 73 N. Y. 65; People ex rel. Knoblauch v. Warden, 216 N. Y. 154; People v. Jacobowitz, 224 App. Div. 111; People v. New York Edison Co., 159 App. Div. 786; United States v. Antikamnia Co., 231 U. S. 654.) Section 139-b of the Sanitary Code is not an unreasonable exercise of the police power. (People v. Biesecker, 169 N. Y. 53; People ex rel. Wineburgh Advertising Co. v. Murphy, 195 N. Y. 126.)
   Per Curiam.

This appeal calls into question the validity of the provision of the Sanitary Code (§ 139-b) in force in the city of New York relative to labeling bottled nonalcoholic carbonated beverages, which requires the dealer to indicate the presence of “ saccharin or other synthetic sweetening agent ” on the bottle or container or cap.

The Greater New York Charter (Laws of 1901, ch. 466, amd. by Laws of 1904, ch. 628, § 3) authorizes the Board of Health to embrace in the Sanitary Code all matters and subjects to which, and so far as, the power and authority of said department of health extends, not limiting their application to the subject of health only.” (§ 1172.) Reasonable regulations to prevent adulteration and misbranding of food products are within the legitimate exercise of the powers thus granted as being provisions for the security of life and health in the city of New York. People have a right to know what they are buying. (United States v. Antikamnia Chemical Co., 231 U. S. 654, 655; see Rules and Regulations for the Enforcement of the Federal Food & Drugs Act, 1922, Regulation 21, Substitution.”)

The appellant contends that the regulation is unreasonable as having no relation to the security of life and health. It contends that as there is no law requiring the use of sugar as a sweetening substance, a rule requiring soft drinks containing saccharin to be so labeled discriminates against a harmless sweetening substance when lawfully used. For proof that saccharin is a harmless Sweetening substance, counsel cites cases in the lower courts to that effect. (People v. Excelsior Bottling Works, Inc., 184 App. Div. 45; People v. Jacobowitz, 224 App. Div. 111.) Those cases are not controlling here. Moreover, they have to do with the prohibition of the use of saccharin while we are considering merely a labeling law.

In determining what saccharin is, the judge has a discretionary right to resort to standard dictionaries and encyclopædias to satisfy himself “ that he is justified in making the desired ruling for dispensing with evidence.” (5 Wigmore on Evidence [2d ed.], p. 574.)

In the Encyclopædia Americana (Vol. 24, p. 87) we find: “ Saccharin is used as a substitute for cane sugar in the treatment of diabetes, dyspepsia, obesity and in gastro-intestinal infections. According to some authorities the compound is rapidly absorbed and eliminated practically unchanged through the kidneys without producing digestive troubles or toxic effects. On account of its antiseptic properties saccharin has not found universal favor as an artificial sweetener in foods, confectionery and beverages. Saccharinated cake and pastry have been condemned as indigestible foods, and government regulations require that in liquors, syrups and the like the presence and amount of saccharin be plainly declared upon the label.”

Webster’s New International Dictionary says: “ It is manufactured on a large scale from the toluene of coal tar, and is used in many ways as a sugar substitute.”

The Oxford Dictionary defines “ Saccharin ” as: “An intensely sweet substance obtained from coal tar, used in minute quantities for sweetening the food or drink of persons to whom sugar is injurious.”

Thus we have it that saccharin is a coal tar product not to be used indiscriminately, but only in small quantities. The presence of such sweetening in soft drinks might properly be required to be made known to the public by a proper label if these definitions are correct.

While these definitions of saccharin are not conclusive on the fact, the People made out a prima facie case and the burden of going on passed to defendant to meet the evidence against it. As it offered no evidence, the conviction was proper.

The judgment should be affirmed.

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

Judgment affirmed.


text:
    The People of the State of New York, Respondent, v. Vincent Mummiani, Appellant.
    (Submitted March 14, 1932;
    decided March 31, 1932.)

      Michael F. Pinto, Samuel Backlar and John A. Mullen for motion.
   Per Curiam.

The application for an allowance for compensation must be denied for the reason that an application for the enlargement of time was not made upon notice served within the ninety-day period. (Code Crim. Pro. §§ 308-a, 535, 536; People v. Cowan, 245 N. Y. 532.)

The application for an allowance for disbursements is granted. (People v. Chapman, 225 N. Y. 700.)


author: Pound, Ch. J.

text:
    The Brooklyn Savings Bank, Respondent, v. The Joseph Wechsler Estate et al., Defendants, and Louis Wechsler, Individually and as Executor of Abram Wechsler, Deceased, and as Administrator of the Estate of Barbara Wechsler, Deceased, et al., Appellants.

      (Argued March 16, 1932;
    decided April 26, 1932.)

      Sidney Rossman and Henry K. Heyman for appellants.
    The payments of interest by the corporation are not chargeable to the legatees and did not toll the Statute of Limitations against them. The legatees are not to be charged by disregarding the corporate entity. Payments by the corporation are not the same as if made by the legatees. (Ulster County Sav. Inst. v. Deyo, 116 App. Div. 1; 191 N. Y. 505; Brock v. Poor, 216 N. Y. 387; Quaid v. Ratkowsky, 183 App. Div. 428; 224 N. Y. 624; Salvin v. Myles Realty Co., 227 N. Y. 51; Matter of Green, 231. N. Y. 237; Ultramar Co. v. Minerals Separation, Ltd., 126 Misc. Rep. 208; 204 App. Div. 795; 236 N. Y. 647; Elenkraig v. Siebrecht, 238 N. Y. 254; Matter of

      Vannier v. Anti-Saloon League, 238 N. Y. 457; Almirall & Co. v. McClement, 207 App. Div. 320; 239 N. Y. 630; Birkmire v. Campus Realty Co., 253 N. Y. 598; Jenkins v. Moyse, 254 N. Y. 310; Imar Mortgage Corp. v. Ticoli Realty Co., 232 App. Div. 635; 257 N. Y. 76; Klein v. Board of Supervisors, 282 U. S. 24.) Corporate entity is no more to be disregarded as to so-called “ family corporations ” than as to other corporations. (Elenkrieg v. Siebrecht, 238 N. Y. 254.)

      Ira L. Anderson for respondent.
    The action against the legatees and the personal representatives of such of the legatees as have died, is not barred by any Statute of Limitations. (Adams v. Fassett, 149 N. Y. 61; City Equity Co. v. Bodine, 141 App. Div. 907; Hill v. Moore, 131 App. Div. 365; 198 N. Y. 633; DeCrano v. Moore, 50 App. Div. 361; Colgan v. Dunne, 50 Hun, 443; Holly v. Gibbons, 176 N. Y. 520; Jakobson v. Lawrence, 93 Misc. Rep. 61; Hamlin v. Smith, 72 App. Div. 601; First Nat. Bank v. Ballou, 49 N. Y. 155; Clute v. Clute, 197 N. Y. 439; Matter of Hollenbeck, 119 App. Div. 757; 195 N. Y. 143; Hanover Nat. Bank v. American Dock Co., 148 N. Y. 612; Logan v. Fidelity-Phenix Fire Ins. Co., 161 App. Div. 404; 220 N. Y. 688; Goss & Co. v. Goss, 147 App. Div. 698; 207 N. Y. 742; Anthony v. American Glucose Co., 146 N. Y. 407; Komow v. Simplex Co., 109 Misc. Rep. 358; 191 App. Div. 884; Carney v. Penn Realty Co., 174 App. Div. 86; Remington & Son P. & P. Co. v. Caswell, 126 App. Div. 142; Seymour v. Spring Association, 144 N. Y. 333.) Payments of interest by legatees are sufficient to prevent the claim for deficiency judgment from being barred. (Colgan v. Dunne, 50 Hun, 443; Decedent Estate Law, § 170.)
   Pound, Ch. J.

On October 31, 1894, Joseph Wechsler gave a bond under seal for the payment of $100,000 on October 31, 1895. The bond was secured by the mortgage now in process of foreclosure, which was executed by him and his wife. He died October 21, 1896, leaving his estate to his widow and children. The will was probated, notice to creditors duly published, and on the death of the widow in 1906 the estate was distributed. On May 14, 1906, the surviving children of Joseph Wechsler organized a corporation known as “ The Joseph Wechsler Estate ” and conveyed to it all the real estate inherited by them from their father, including the mortgaged premises, in consideration of shares of stock in the corporation. The corporation remains the holder of the title of the real estate and the title to the corporate stock remains in the children of Joseph Wechsler who are the only directors and officers of the corporation. It is a “ family corporation ” in the truest sense.

Joseph Wechsler paid the interest on the mortgage until his death. His executors then paid it until the final administration of the estate in 1906. Thereafter, up to April 1, 1928, interest was paid by checks of the corporation out of corporate funds kept in a separate bank account. No payments were made by the stockholders individually.

This action was begun February 26, 1930, more than twenty-three years after the last payment of interest by the executors, which was on April 1, 1906.

It is sought to charge the legatees of the mortgagor with any deficiency which may arise on the mortgage foreclosure to the extent of the assets distributed to them under the provisions of Decedent Estate Law, section 170 (Cons. Laws, ch. 13), formerly section 1837, Code of Civil Procedure, which reads as follows:

§ 170. Action against legatees and others to enforce liability for decedent’s debt. An action may be maintained, as prescribed m this article, against the surviving husband or wife of a decedent, and the next of kin of an intestate, or the next of km or legatees of a testator to recover, to the extent of the assets paid or distributed to them, for a debt of the decedent, upon which an action might have been maintained, against the executor or administrator. The neglect of the creditor to present his claim to the executor or administrator, within the time prescribed by law for that purpose, does not impair his right to maintain such an action.”

The appellants rely on the twenty-year Statute of Limitations (Civ. Pr. Act, § 47) as a defense.

The first question is whether an action “ against the executor ” could be maintained if the executor had not been discharged and had made no payments on the bond but payments had been made thereon by legatees within twenty years from the time the foreclosure action was begun. To make payments effective against a party to save a claim from the Statute of Limitations they must have been made by him or for him by his authorized agent (McMullen v. Rafferty, 89 N. Y. 456, 459; Littlefield v. Littlefield, 91 N. Y. 203; Ulster Co. Savings Institution v. Deyo, 116 App. Div. 1; affd., 191 N. Y. 505), and it is argued therefrom that payments by legatees, the executor being undischarged, not being made by the executor or for him by his authorized agent, would not be payments by or for such executor so as to save the claim against the estate from the running of the statute.

If the cause of action were purely statutory much might be said for this argument, but the right to pursue the legatee for the debt of the testator exists independently of the statute. The statute regulates the procedure, but does not create the right.” (Colgan v. Dunne, 50 Hun, 443, 445.) In form the action is against the legatee; in substance it is against the property. Any payment to protect the property made by a legatee saves the claim from the statute as against him. So far as he acts as an authorized agent for the other legatees the payment saves the claim from the statute as against them.

It is, however, claimed that no payments have been made by any legatee or any authorized agent of a legatee within twenty years prior to the commencement of this action; that we may not disregard the corporate fiction and consider the corporation known as The Joseph Wechsler Estate ” either as a collection of the individual legatees or as the authorized agent of such individual legatees; that the corporate entity, owns the mortgaged property and pays interest to protect itself; that the legatees in creating such an entity relieved themselves wholly from responsibility for its acts. (Brock v. Poor, 216 N. Y. 387, 402,; Matter of Vannier v. Anti-Saloon League, 238 N. Y. 457, 463.)

As Mr. Justice Holmes has said in Klein v. Board of Supervisors (282 U. S. 19, 24): It leads nowhere to call a corporation a fiction. If it is a fiction it is a fiction created by law with intent that it should be acted on as if true. The corporation is a person and its ownership is a nonconductor that makes it impossible to attribute an interest in its property to its members.”

Professor Wormser has attempted a generalization from decided cases of the exception which disregards the corporate fiction. He says (The Disregard of the Corporate Fiction, etc., p. 84): When the conception of corporate entity is employed to defraud creditors, to evade an existing obligation, to circumvent a statute, to achieve or perpetuate monopoly, or to protect knavery or crime, the courts will draw aside the web of entity, will regard the corporate company as an association of. live, up-and-doing, men and women shareholders, and will do justice between real persons.”

No wrongdoing is obvious here. It is sought to revive an ancient liability by piercing the armor of corporate entity which was put on by the legatees to protect themselves from personal liability. If the mortgaged premises had been conveyed to a stranger, such stranger could not in the eyes of the law be more apart from the legatees than is their own corporation. The law legitimatizes the limitation of personal liability by the creation of corporations. Innocent parties acting in reliance thereon should not be lulled into a false security nor should sudden divagations be made from the path of the law in order to save old debts.

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.

Crane, Lehman, O’Brien and Hubbs, JJ., concur; Kellogg, J., not sitting.

Judgment accordingly.


author: O’Brien, J.

text:
    In the Matter of the Claim of Nathan Esbinsky, Respondent, against Betty Court Garage, Inc., et al., Appellants. The State Industrial Board, Respondent.

      (Argued March 15, 1932;
    decided April 26, 1932.)

      T. Carlyle Jones and Bernard J. Vincent for appellants.
    An executive officer of a corporation, no matter what his duties are, is not entitled to compensation at the time of the accident, unless there has been election to bring in such officer. (L. 1926, ch. 258, § 54, subd. 6; Skouitchi v. Chic Cloak & Suit Co., 230 N. Y. 296.) There was no election by the corporation to include its executive officers in the compensation insurance contract. The written policy expressed the contract, not the payroll. (Royal Indemnity Co. v. Heller, 256 N. Y. 322; Abrahams v. Charmant Specialty Co., 212 App. Div. 697; Lyle v. Lyle Cider & Vinegar Co., 243 N. Y. 257; Small v. Gibbs Press, Inc., 222 App. Div. 699.)

      Jacob Kirschenbaum for claimant-respondent.
    The claimant was not an executive officer within the meaning of section 54, subdivision 6, of the Workmen’s Compensation Law, as amended by chapter 258 of the Laws of 1926. (Small v. Gibbs Press, Inc., 222 App. Div. 699; 248 N. Y. 513.) The claimant was a workman within the meaning of the Workmen’s Compensation Law and as such was covered by the policy issued by the insurance carrier. (Skouitchi v. Chic Cloak & Suit Co., 230 N. Y. 296; Bowne v. Bowne Co., 221 N. Y. 28; Matter of Petrie, 215 N. Y. 335.)

      John J. Bennett, Jr., Attorney-General (Joseph A. McLaughlin and John R. O’Hanlon of counsel), for State Industrial Board, respondent.
    Claimant was covered by the insurance contract as a workman employee. (Skouitchi v. Chic Cloak & Suit Co., 230 N. Y. 296; Small v. Gibbs Press, Inc., 222 App. Div. 699; 248 N. Y. 513; Goldin v. Goldin Decorating Co., 222 App. Div. 780; 247 N. Y. 603; Moore v. Consolidated Steel Plate Construction Co., 221 App. Div. 813.)
   O’Brien, J.

Betty Court Garage, Inc., was a corporation. Its stock was held by two men named Esbinsky and Shapiro. The president was Shapiro and the person chosen as secretary of the corporation and selected as manager of the garage was Nathan Esbinsky, son of one and son-in-law of the other stockholder. According to his testimony, he took care of the books, took care of all bills, handled the insurance, signed checks, paid employees and bought supplies. The finding of fact that his office of secretary of the corporation was only nominal is not supported by any evidence. If Nathan Esbinsky was not its secretary, the corporation was without one and had no executive officer; in some mysterious manner, it must have operated without guidance. In addition to his duties as secretary, Esbinsky performed much manual labor. In return for all his services he received compensation at the rate of fifty dollars a week and, in the event of profits, he was promised a percentage of them. While he was engaged in inflating a tire he was injured, and the issue is whether he is covered by the provisions of the insurance policy which had been effected in behalf of the corporation. Its terms must be interpreted in the light of the statute existing at the time of its execution. The policy remained in force for one year from November 30, 1928. Nathan Esbinsky entered the service of the corporation in July, 1929, and was injured November 20, 1928.

Section 54, subdivision 6, of the Workmen’s Compensation Law (Cons. Laws, ch. 67, as amended by Laws of 1926, ch. 258), at the date of the writing of the contract of insurance and also at the date of claimant’s injury, provided: Employers or executive officers of corporations shall not be included in the compensation insurance contract unless they elect to be brought within the coverage of this chapter, in which case such policies shall insure to such employers or officers the same compensation provided for their employees, and at the same rates; provided, however, that the estimation of their wage values, respectively, shall be reasonable and separately stated in and added to the valuation of their payrolls upon which their premium is computed. The employer or officer so insured shall have the same rights and remedies given an employee by this chapter.” The statute as so amended became effective subsequent to the dates upon which were written the policies construed by us in Matter of Skouitchi v. Chic Cloak & Suit Co. (230 N. Y. 296); Matter of Goldin v. Goldin Decorating Co. (247 N. Y. 603), and Matter of Small v. Gibbs Press, Inc. (248 N. Y. 513). Obviously, therefore, these decisions do not control the facts at bar.

The form of policy issued November 30, 1928, and insuring the Betty Court Garage includes the president, any vice president, secretary or treasurer of this employer, if a corporation if actually performing such duties as are ordinarily undertaken by a superintendent, foreman or workman,” but the effect of this clause is radically modified by the following indorsement attached to the policy: The provisions of this Policy, including the Declarations forming a part thereof, relating to the liability of the Company as respects personal injuries, including death, sustained by the President, any Vice-President, Secretary or Treasurer of this Employer, if a corporation, and to the remuneration of such executive officers of the corporation, are not applicable to corporate employers in the State of New York. The words ' who perform duties of superintendent, foreman or workman ’ shall be eliminated from subdivision 1 (x) of Item 3 of the Declarations, which subdivision shall then be applicable to all individual employers, copartnership employers and executive officers of corporations (meaning those executives elected to their respective offices under the charter or by-laws of the corporation). All individual employers, copartnership employers or all executive officers of a corporation irrespective of their duties shall be included in all the undertakings of this Policy if election to accept the provisions of the Workmen’s Compensation Law and be so included is evidenced by the insertion of the estimated annual remuneration of such individual employer, members of copartnership employer or executive officers under subdivision 1 (x) of the Declarations as amended. If all are included, the remuneration shall be stated in one amount; if less than all, the remuneration of each included with name, shall be stated separately. The actual remuneration of all such individual employers, members of copartnership employers or executive officers, but not in excess of $100 per week for each, shall be disclosed and premium computed thereon in accordance with the method provided in the Policy as hereby amended. If said subdivision 1 (x) contains no estimate of the remuneration of individual employers, copartnership employers or executive officers as herein defined, all such are fully excluded from the operations of this Policy as respects any and all undertakings of the Company therein.”

The statute excludes executive officers of corporations from the compensation insurance contract unless they expressly elect to be brought within its coverage and it requires, in the event of such an election, that the estimation of their wage values shall be separately stated and added to the valuation of payrolls upon which the premium is computed. The indorsement on the policy stipulates for the inclusion of all executive officers, irrespective of their duties, if election to accept the provisions of the statute is evidenced by the insertion of the estimated annual remuneration of such officers in the declaration, but if the declaration embraces no such estimate, all executive officers are excluded. The statute and this policy with its indorsement, therefore, both presented an opportunity for insurance in respect to executive officers of corporations, but neither the corporation nor the claimant as secretary availed of the chance which was offered. Pursuant to the amendment by chapter 258 of the Laws of 1926, one who occupied a position as an executive officer, if he desired compensation in the event of injury, must have elected to be included within the contract of insurance at the time of its execution and in the manner described in the act and in the policy. This legislative scheme was reversed by section 5 of chapter 316 of the Laws of 1930, which provides that every executive officer shall be deemed to be included within the insurance contract unless he otherwise elects. If the election under the statute of 1926 were made and the estimated remuneration were included in the declaration, officers “ irrespective of their duties,” were to be covered. The statute, as it existed at that time, demanded that a bona fide executive officer, no matter what the nature of his additional manual services might be, should, if an election be made, be covered as an officer. He could not be covered as a workman. This rule apparently is not disputed by the courts below nor by counsel. It has been held to be inapplicable for the assigned reason that claimant’s office of secretary was merely nominal. The evidence, however, proves the contrary and renders the finding of fact on that issue entirely without support. Betty Court Garage, Inc., like every other corporation, must have had a secretary and claimant’s own testimony shows conclusively that he not only held that position but also performed substantial duties incident to it.

The order of the Appellate Division should be reversed, the determination of the State Industrial Board annulled and the claim dismissed, with costs in this court and in the Appellate Division against the State Industrial Board.

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

Order reversed, etc.


author: Crane, J.

text:
    Gabriele Perillo, Respondent, v. Giulio Zunino, Appellant.
    (Submitted March 17, 1932;
    decided April 26, 1932.)

      Samuel D. Cohen and Francis L. Valente for appellant.
    The Appellate Division was in error in reversing the order of the Special Term and in rendering judgment for the plaintiff and against the defendant in view of the allegations contained in the amended answer. (Lowenfeld v. Wimple, 139 App. Div. 617; 203 N. Y. 646; Clare v. New York Life Ins. Co., 178 App. Div. 877; State Bank v. Smith, 155 N. Y. 185; Thomas v. Zahka, 181 App. Div. 173.)

      Floyd Martin Sheffield for respondent.
    The complaint sets forth a cause of action for an accounting and plaintiff is entitled to an accounting. (Reading v. Haggin, 58 Hun, 450; Rice v. Peters, 128 App. Div. 776; Marvin v. Brooks, 84 N. Y. 71; Talmudic Literature Publishers, Inc., v. Lewin, 226 App. Div. 1; Snyder v. Parmalee, 80 Vt. 496; Morton v. Blades, 154 N. C. 336; Hubbell v. Blakeslee, 71 N. Y. 63.) The facts set forth in the amended answer do 'not constitute a defense. (Potts v. Lambrie, 138 App. Div. 144; Pope Mfg. Co. v. Rubber Goods Mfg. Co., 110 App. Div. 341; Speare’s Sons Co. v. Casein Co., 53 Misc. Rep. 58; Harrison v. Burlingame, 48 Hun, 212; Strever v. Earl, 60 Hun, 528; Irvin v. West, 50 Fed. Rep. 362; First Nat. Bank v. Radford, 80 Fed. Rep. 569.)
   Crane, J.

The Pollodoro Restaurant Co., Inc., was the owner of premises 163 West Forty-eighth street, in the borough of Manhattan, city of New York, which was subject to a first and second mortgage aggregating $115,000. For money loaned it executed and delivered to the defendant Giulio Zunino its bond, dated December 12, 1922, payable in one year for the sum of $23,000, secured by a third mortgage on said premises in the sum of $46,000, which third mortgage was subject to the said first and second mortgages aggregating $110,000 (sic). Thereafter, the defendant made and executed certificates of participation in and to the said $23,000 bond and $46,000 mortgage, one of which certificates he sold and delivered to Giavacchino Pieri for $2,770 on June 7, 1923. The sale or assignment was by a sealed instrument containing the above recitals and the following in reference to the $23,000 bond and the mortgage:

This bond and mortgage are held by the mortgagee [the defendant] in his own right and as depositary and agent for the holders of such certificates as he may issue, which certificates shall never aggregate more than the amount of principal remaining unpaid on said bond and mortgage, upon the following terms and conditions, which are agreed to by the holder of this certificate.

“ 1. The mortgagee holds and shall continue to hold said bond and mortgage and other instruments and evidences of title relating thereto for the benefit of himself and the holders of such certificate as he may issue.

“ 2. The mortgagee upon receipt of the interest and principal of said bond and mortgage shall distribute the same pro rata among the persons entitled thereto.

“3. The mortgagee shall have full power to take any action he may deem necessary or desirable in order to enforce the mortgage security.”

This certificate Pieri duly assigned to the plaintiff Gabriele Perillo.

The third mortgage having been satisfied and Perillo not having been paid, he commenced this action against Zunino, who set up the above facts in his answer, and further alleged that as it became necessary for the defendant to advance further moneys to the Pollodoro Restaurant Co., Inc., to continue it in business, he had satisfied the $23,000 mortgage or bond for that amount and the mortgage securing it and had taken other and additional mortgages without having paid the plaintiff his share. The corporation, he pleaded, executed and delivered to him its bond for $83,000, payable May 17, 1925, secured by its mortgage on the premises 163 West Forty-eighth street, for the sum of $41,500 and in accordance with the agreement discharged of record the mortgage made by the Pollodora Restaurant Co., Inc., for $23,000, dated December 12, 1922, and took in its place and stead the mortgage for $41,500, and the bond for $83,000, each made and executed by the Pollodora Restaurant Co., Inc., above described.”

Again the Pollodoro Restaurant Co., Inc,, needed financial assistance to save it from bankruptcy and avoid a loss to its stockholders, mortgagees and creditors, and it thereupon sold the premises to the Len Roy Realty Corporation for the sum of $150,000, subject to a first mortgage for $61,000 and to a purchase-money second bond and mortgage for $86,000, to mature November 1, 1935. Upon this sale the $41,500 mortgage, the substitute for the $23,000 mortgage, was canceled and discharged of record. This answer of the defendant alleges that although the $23,000 mortgage, in which he gave the plaintiff a participating certificate and its substitute, the $41,500 mortgage, had been satisfied of record, the bond of the Pollodoro Restaurant Co., Inc., to secure which the $23,000 mortgage was given, is still in full force and effect and being held by the defendant for the benefit of the plaintiff and others similarly situated.

We agree with the courts below that this amended answer furnishes no defense to the action for an accounting, and that the defendant violated his agreement with the plaintiff’s assignor to hold the $23,000 mortgage for the benefit of himself and the holders of the certificates; and that the only power he had thereunder was to enforce the mortgage security for payment. But he had no power to satisfy it or any mortgage received with the acquiescence of the plaintiff in its place without payment, leaving as the only security the bond of the restaurant company. Upon an accounting he may be charged for the consequent damages of his breach of trust or required to hold the proceeds for the benefit of the plaintiff. The Appellate Division granted judgment on the pleadings for the face value of the plaintiff’s certificate, $2,770 and interest. The plaintiff is not entitled to this amount unless the certificate which he held was worth its face value. It might have been worth nothing; the defendant’s default or breach of the contract would not increase its value and all that the plaintiff would be entitled to as his damage would be his actual loss. The defendant alleges that the Pollodoro Restaurant Co., Inc., was on the verge of bankruptcy and could not pay its creditors. The third mortgage to secure $23,000 would be worth the value of the equity over and above the first and second mortgages, amounting to $110,000. The plaintiff’s certificate, at the face value of $2,770, would, of course, be worth the aliquot part of the value of this third mortgage. To ascertain this value calls for examination and proof.

The judgment of the Appellate Division should, therefore, be modified by granting an interlocutory judgment for an accounting in accordance with this opinion, and as so modified affirmed, with costs to abide the event.

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

Judgment accordingly.


author: Hubbs, J.

text:
    In the Matter of the Claim of Richard Anderson, Respondent, against Abbott-Cheney Paper Corporation, Respondent, and United States Casualty Company, Appellant. The State Industrial Board, Respondent.
    (Argued March 17, 1932;
    decided April 26, 1932.)

      Wallace H. Miller for appellant.
    The policy of workmen’s compensation insurance did not cover the claimant. (Simpkins v. Steffan, 255 N. Y. 65; Pettit v. Reges, 242 N. Y. 272; Ganns v. Ætna Life Ins. Co., 214 N. Y. 326; Levin v. East N. Y. Electric Corp., 210 App. Div. 730; Matter of Newman v. Newman, 218 N. Y. 325; Matter of Glatzi, 220 N. Y. 71.)

      George W. Jude for Abbott-Cheney Paper Corporation, respondent.
    The policy covers all operations incident or appurtenant to the business declared by the insured, whether such operations were conducted at or from the work-place defined in said declarations or elsewhere in connection with, or in relation to such work-place. (Matter of Wingen v. Fleischman, 252 N. Y. 114.) The operation of placing roofing material on a roof by claimant at the time of injury is fairly covered by the provision of the policy. (Matter of Wingen v. Fleischman, 226 App. Div. 827; 252 N. Y. 114.)
   Hubbs, J.

The employer is engaged in the wholesale and retail paper business at Jamestown. In that business it sells roofing. On particular occasions, at the request of persons purchasing roofing, the employer had hired a man and had the roofing put on for the purchasers. The claimant had on certain occasions put roofing on buildings for customers of the employer. A certain customer desired to have roofing purchased of the employer placed upon her building. The employer hired claimant to do the work. While doing it he was injured. The Board held the employer liable for compensation but released the carrier on the ground that the risk was not covered by the policy.

The Appellate Division reversed and held that the policy covered the risk, relying upon our decision in the case of Matter of Wingen v. Fleischman (252 N. Y. 114, 117). In that case the question was whether a servant of one who was in the business of manufacturing cathedral and art glass windows and who was injured outside of the factory while assisting the employer in installing glass fabricated in the factory was covered by the policy. We held that the clause of the policy “ all operations necessary, incident or appurtenant thereto, or connected therewith, whether such operations are conducted at the work-places defined * * * or elsewhere in connection with, or in relation to such work-places,” permitted a recovery in that case, on the theory that the incidental work of taking the glass to install it, in that particular case, was an incident of the employment in the factory which was covered by the policy.

Judge Lehman, writing for the court, said: Disclosure of remuneration of employees under divisions, showing separately operations on the premises and operations not on the premises, is not practical where all workers are employed and paid for work on the premises and are called on to work elsewhere only occasionally and in connection with their work on the premises ” (p. 120).

In that case the injured employee was in the service at the factory and left the factory as an incident of his employment therein.

In the case at bar the claimant was never an employee engaged in the employer’s place of business named in the policy. He did not work in the store where the paper was sold or in any way connected therewith. He was hired to do this particular job and it would be an unjustified stretching of the terms of the policy to hold that the work which he was doing while injured was incident to the business of selling paper and-roofing.

It would be quite different if he were an employee engaged in a store where linoleum was sold and a practice existed of laying the linoleum in the homes of the purchasers, and he had been injured doing that work; or if he were an employee engaged in the wholesale and retail paper business at the store and went out from the store for the purpose of placing the paper upon a roof. There might be doubt under those facts whether the policy in question covered, but such facts would have much greater similarity to those under consideration in the Wingen case.

In reference to the motion to dismiss the appeal upon the ground that a bond had not been filed, the papers show that the bond has now been filed and that failure to file a proper bond was through a misunderstanding of the attorney. He filed a bond issued by the carrier company. Later he filed a surety bond by another company and asks in his reply in the papers to be relieved of the default. The carrier should be relieved from such default.

The order of the Appellate Division should be reversed and the claim as against the carrier appellant dismissed, with costs in this court and in the Appellate Division against the employer, respondent.

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

Order reversed, etc.


text:
    The People of the State of New York ex rel. Fox Film Corporation, Respondent, v. M. Frank Loughman et al., Constituting the State Tax Commission of the State of New York, Appellants.
    (Submitted March 18, 1932;
    decided April 26, 1932.)

      John J. Bennett, Jr., Attorney-General (Wendell P. Brown of counsel), for appellants.
    The realty corporation was properly consolidated with the relator as it was not wholly engaged in the purchase and sale of, and holding title to, real estate for itself. (People ex rel. Tiffany & Co. v. Campbell, 144 N. Y. 166; People ex rel. Stokes Co. v. Roberts, 90 Hun, 533; People ex rel. W. E. Co. v. Campbell, 145 N. Y. 587; People ex rel. A. S. Fountain Co. v. Roberts, 158 N. Y. 168.) The creation of the Fox Film Realty Corporation and the vesting in it of title to the relator’s New York real estate and studio and laboratory equipment was a mere bookkeeping device and the Tax Commission was justified in ignoring the fiction of a separate corporate entity. (Chicago, Milwaukee & St. Paul Ry. Co. v. Minneapolis Civic Assn., 247 U. S. 490; McCaskill Co. v. United States, 216 U. S. 504; Southern Pacific Co. v. Lowe, 247 U. S. 330; United States v. Reading Co., 253 U. S. 26; Berkey v. Third Avenue Ry. Co., 244 N.Y. 84; United States v. United Shoe Machinery Co., 234 Fed. Rep. 127; Majestic Co. v. Orpheum Circuit, 21 Fed. Rep. [2d] 720; Industrial Research Corp. v. General Motors Corp., 29 Fed. Rep. [2d] 623; Palmolive Co. v. Conway, 43 Fed. Rep. [2d] 226.) The Tax Commission properly treated as dividends the moneys received by the relator from the earnings of its foreign subsidiaries. (Christopher v. Commissioner of Internal Revenue, 13 B. T. A. 729; Matter of Walle & Co., 113 T. A. 1064; McLoon Co. v. Commissioner of Internal Revenue, 11 B. T. A. 816; Matter of Bockius Realty Co., 1 B. T. A. 939; Chattanooga Savings Bank v. Brewer, 17 Fed. Rep. [2d] 79; Rockefeller v. United States, 257 U. S. 176; Southern Pacific Co. v. Lowe, 247 U. S. 330; Cass v. Realty Securities Co., 148 App. Div. 96; 206 N. Y. 649.)

      Henry Brill, Percy Heiliger and Saul E. Rogers for respondent.
    The consolidation by the Tax Commission of the assets of the realty corporation with those of the relator was illegal and without authority of the statute.
      (People ex rel. United Hotels Co. v. State Tax Commission, 208 App. Div. 754; 239 N. Y. 516; People ex rel. Studebaker Corp. v. Gilchrist, 244 N. Y. 114; People ex rel. Butterick v. Gilchrist, 213 App. Div. 533; People ex rel. Goodwin Sand & Gravel Co. v. Law, 207 App. Div. 567; 238 N. Y. 624; People ex rel. West F. I. Co. v. Davenport, 91 N. Y. 574; Newell v. People, 7 N. Y. 97.) The earnings of the foreign subsidiaries should not have been treated as income upon which the relator is taxable. (People ex rel. Alpha P. C. Co. v. Knapp, 230 N. Y. 48; Farmers Loan & T. Co. v. Minnesota, 74 L. ed. 190; People ex rel. Northern Finance Corp. v. Law, 236 N. Y. 286.)
   Pound, Ch. J.

Questions are presented on this appeal arising under article 9-A of the Tax Law (Cons. Laws, ch. 60) which imposes an annual franchise tax upon business corporations measured by entire net income ” (§ 209) which is defined (§ 208, subd. 3) as meaning the total net income.”

Section 210 exempts from the provisions of article 9-A corporations wholly engaged in the purchase and sale of, and holding title to, real estate for themselves.”

Section 211 regulates reports of corporations to the Tax Commission. The annual franchise tax on respondent’s net income for the calendar year 1922 is before us.

Subdivision 9 of section 211, as it existed in 1923 (Laws of 1922, ch. 507), provided:

9. Any corporation owning or controlling, either directly or indirectly, substantially all of the capital stock of another corporation, or of other corporations, liable to report under this article, may be required to make a consolidated report showing the combined net income, such assets of the corporations as are required for the purposes of this article, and such other information as the Tax Commission may require, but excluding inter-corporate stockholdings and intercorporate accounts.
“ The Tax Commission may permit or require the filing of a combined report where substantially all the capital stock of two of more corporations liable to taxation under this article is owned by the same interests. The Tax Commission may impose the tax provided by this article as though the combined entire net income and segregated assets were those of one corporation, or may, in such other manner as it shall determine, equitably adjust the tax.”

Relator is a New York corporation. Its business is renting motion picture films. It owns the entire capital stock of six domestic and seven foreign corporations. The Commission consolidated with the relator certain of its subsidiary corporations and included in the consolidation the wholly owned Fox Film Realty Corporation. It also included as net income the profits of seven foreign subsidiary corporations which had been taken over by the relator, the sole stockholder, under the guise of a loan account.

The Appellate Division has held (a) that the Fox Film Realty Corporation was wholly engaged in the purchase and sale of, and holding title to, real estate for itself and is not “ liable to report ” under article 9-A and must be omitted from the consolidated report under section 211, subdivision 9, as above quoted; (b) that the moneys received by the relator from the earnings of its foreign subsidiaries were not taxable as income as it appears that they were loans and not distributions of profits by way of dividends.

The Realty Corporation leased to the relator in connection with the real estate occupied by it for the purpose of renting motion picture films a large amount of personal property, consisting of laboratory and studio equipment, motion picture machines, printing machines and development machinery. The value' of this personal property was considerable, both relatively and in the abstract. The Realty Corporation supplied the requirements of the parent corporation not only for the real estate used in its business but also for a fully equipped motion .picture plant. Thus it was not confined to the exclusive business of holding real estate. It held personal property as well. It was, therefore, not exempted under the provisions of the Tax Law. (People ex rel. Tiffany & Co. v. Campbell, 144 N. Y. 166, 172; People ex rel. Western Electric Co. v. Campbell, 145 N. Y. 587, 589; People ex rel. A. S. Fountain Co. v. Roberts, 158 N. Y. 168.) That a relatively small part of its holdings consists of personal property used with the real estate does not render it less liable to the tax. (Cf. People ex rel. Stokes Co. v. Roberts, 90 Hun, 533.)

We hold also that the money received by the relator from its seven foreign subsidiaries was properly included by the Tax Commission as income although the amount was carried on its books as loans made to it by them. The sums were paid by the subsidiaries to their sole stockholder out of earnings or profits. The evidence supported a finding that they were properly considered as “ dividends received on stocks.” (Tax Law, § 208, subd. 3.) The so-called loans were not represented by notes or other evidences of indebtedness; they bore no interest and they were payable at no definite time. It was a fair assumption that they would never be called and that no distribution of such earnings as dividends would ever be made. No formal declaration of dividends is necessary to make the distribution of corporate profits income for the purpose of taxation. (Southern Pacific Co. v. Lowe, 247 U. S. 330.) The purpose and intent of the taxing power may not be evaded by mere bookkeeping devices. A loan made with no intention that it be repaid cannot be converted into an asset when it is in fact a distribution of profits. (Rockefeller v. United States, 257 U. S. 176; Chattanooga Sav. Bank v. Brewer, 17 Fed. Rep. [2d] 79.)

The identity of a sole stockholder with his company need not be considered. The Tax Commission did not have to pass over subsidiaries as mere devices to escape taxation in order to arrive at its conclusions. (People ex rel. Studebaker Corp. v. Gilchrist, 244 N. Y. 114, 120-123.) If the corporate persona is not ignored the result must be the same.

The order of the Appellate Division should be reversed and the determination of the State Tax Commission confirmed, with costs in this court and in the Appellate Division.

Crane, Lehman, O’Brien and Hubbs, JJ., concur; Kellogg, J., not sitting.

Order reversed, etc.


text:
    Land Filling and Improvement Company, Respondent, v. Henry Steers, Inc., Appellant.

      (Argued March 21, 1932;
    decided April 26, 1932.)

      Charles L. Woody, Raymond M. White and Herbert P. Carter for appellant.
    At the time plaintiff claims that payments were due and payable, plaintiff could not perform its part of the contract because it was not in possession of all of the fill which it had sold to defendant. (Wigand v. Bachmann Bechtel Brewing Co., 222 N. Y. 272; Eddy v. Davis, 116 N. Y. 247.) Plaintiff failed to prove that the contract was in existence during the eight months for which plaintiff claims that defendant owes. The undisputed proof is that the contract was not in existence because it had been terminated by notice. (Delaware Trust Co. v. Calm, 195 N. Y. 231; Fulton v. Varney, 117 App. Div. 572; Bogardus v. New York Life Ins. Co., 101 N. Y. 328.) Plaintiff received actual notice of the termination of the contract. (Lomer v. Meeker, 25 N. Y. 361; Kelly v. Burroughs, 102 N. Y. 93; Plyer v. German American Ins. Co., 121 N. Y. 689; Claflin v. Lenheim, 66 N. Y. 301.)

      Thomas Cradock Hughes for respondent.
    The contract was not terminated by defendant. (Moran v. Standard Oil Co., 211 N. Y. 196; Schoellkopf v. Coatsworth, 166 N. Y. 77; Helgar Corp. v. Warner’s Features, Inc., 222 N. Y. 449; Ferguson v. Chuck, 236 N. Y. 149; Losei Realty Corp. v. City of New York, 254 N. Y. 41.) Plaintiff did not breach the contract by failing to prevent the removal by others of some of the fill subsequent to the making of the contract. (Robertson v. Ongley Electric Co., 146 N. Y. 20; Becker v. Frasse & Co., 255 N. Y. 10.)
   Crane, J.

The appeal in this case is determined by the meaning of two agreements. The plaintiff, a New Jersey corporation, on September 24, 1918, entered into a written contract with the defendant, a New York corporation, providing for the sale by the plaintiff to the defendant of all the fill above the grade of the adjoining streets on the premises of the plaintiff at a price of twelve cents per cubic foot, the fill to be removed by the defendant and paid for monthly in cash; The fill was material consisting principally of ashes dumped for a number of years on the premises of the plaintiff at the Newark meadows on Newark bay, New Jersey, for the purpose of reclaiming the swamp land and marsh.

At the outset certain things must be emphasized about this original agreement. It is the paragraph reading as follows:

“In order to determine the quantity of the fill covered by this contract, it is agreed that before any of it is removed, the same shall be measured as it is now in place, by two persons, one appointed by the vendor and the other by the vendee, and if they cannot agree, these two shall appoint a third competent person, and the measurements of the majority shall determine the quantity. Thereafter the monthly payments hereinbefore mentioned, shall be made in accordance with the measurements of the quantities removed during the month by the U. S. Government Engineers, according to their certificate, the said fill being designed to be used by the vendee for U. S. Government work, unless the entire quantity shall not be required for such work, in which event the measurements shall be determined in the same manner as hereinbefore provided for determining the quantity of the material as it is now in place before any part thereof is removed under this contract.”

On November 21, 1919, the parties entered into a new or modified contract reading in part as follows:

I. For the extension of time to take said fill, the vendee herewith pays the vendor the sum of Two Thousand Five Hundred ($2,500) Dollars, the receipt whereof is hereby acknowledged, and agrees to pay to the order of the vendor One Thousand ($1,000) Dollars on the first day of each and every month beginning November 1, 1919,. for at least twelve (12) consecutive months, and thereafter on the first day of each month until the termination of the contract. If the vendee shall commence to take the fill as provided in said contract of September 24, 1918, it shall receive credit for said Twenty Five Hundred ($2,500) Dollars against the price of fill taken by it, and it shall also receive credit for the said One Thousand ($1,000) Dollars paid by it for any month against the price of fill taken by it in the month in which it makes payment of said One Thousand ($1,000) Dollars, arid it shall pay the vendor the balance of the price as provided in said contract.
II. If the vendee shall notify the vendor on or after November 1st, 1920, that it cancels this contract, thereupon the vendee’s obligation to make said payments of One Thousand ($1,000) Dollars a month as well as the vendee’s right to take fill shall cease and terminate.”

The vendee took no fill, but, commencing with November, the date of the amended agreement, paid besides the $2,500 therein mentioned, the $1,000 every month for twenty-two months, up to and including August of 1921, making a total amount of $24,500, At the time of the last payment the plaintiff was informed through its representative that as the defendant could not use the fill for the purpose for which it had been purchased, the defendant would have to terminate the contract. This notice was given to Mr. Ivins, the treasurer of the plaintiff, by Steers, the vice-president and treasurer of the defendant, and is not in any way contradicted by the plaintiff’s testimony. By letter dated April 3, 1922, the plaintiff notified the defendant that for failure to pay installments it canceled the contract and thereupon sued for $8,000, the amount due for the months since the last payment of August 1, 1921, to wit, September, 1921, to April, 1922, inclusive.

The Appellate Division by a divided court has affirmed a judgment for the plaintiff, but we find a number of reasons why this cannot stand. In the first place, it was agreed that before any fill should be removed it was to be measured in the place where it was by two persons, one approved by the vendor and the other by the vendee. There was never any measurement made and no attempt made by the vendor to carry out this condition precedent. In the second place, the amended contract provided that the vendee could cancel it by notifying the vendor after November 1, 1920. No form of ■ notice was required. It could be by parol or in writing. Sufficient that the plaintiff was notified of the defendant’s determination to cancel. Steers, the officer of the defendant at the time of the last payment, notified Ivins, the treasurer of the plaintiff, that the defendant canceled the contract as it could not use the fill. This evidence is uncontradicted. In the third place, the plaintiff could not perform, as more than one-quarter of the fill had been removed and carted away by others than the defendant and without the defendant’s knowledge and consent. The contract on which the plaintiff sues sold all the fill to the defendant and not a part.

The other objection raised by the appellant, that the plaintiff being a foreign corporation, was doing business in this State without procuring the certificate required by section 218 of article 13 of the General Corporation Law (Cons. Laws, ch. 23), and, therefore, could not sue, we need not pass upon, as the evidence is somewhat slim and contradicting regarding the nature of the plaintiff’s business and the extent to which it was conducted in this State. (International Fuel & Iron Corp. v. Donner Steel Co., 242 N. Y. 224.)

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

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

Judgments reversed, etc.


text:
    Jeremiah P. Healy, as Administrator of the Estate of Raymond B. Healy, Deceased, Appellant, v. The Erie Railroad Company, Respondent.

      (Argued March 22, 1932;
    decided April 26, 1932.)

      Francis E. Cullen for appellant.
    The Appellate Division erred in holding as matter of law that there was no evidence of causative negligence on the part of the defendant in connection with its failure to promulgate proper rules and to instruct and warn the plaintiff’s intestate. (Jorgensen v. Jaeger, 257 N. Y. 171; Gates v. State of New York, 128 N. Y. 221; Eastland v. Clark, 165 N. Y. 420; Southern Ry. Co. v. Hobbs, 35 Fed. Rep. [2d] 298; Marland v. Philadelphia & R. Ry. Co., 246 Fed. Rep. 91; Norton v. Maine Central R. R. Co., 116 Me. 147.) The Appellate Division erred in holding as matter of law that there was no evidence of causative negligence on the part of the conductor of the yard crew. The question of his negligence was for the jury under the evidence which gives the verdict a substantial basis. (White v. Lehigh Valley R. R. Co., 220 N. Y. 131; Central Vermont R. R.

      Co. v. White, 238 U. S. 507; Grand Trunk Western R. R. Co. v. Lindsay, 233 U. S. 42; Chicago, Rock Island & Pacific Ry. Co. v. Ward, 252 U. S. 18; Davis v. Dowling, 284 Fed. Rep. 670; Illinois Central R. R. Co. v. Skaggs, 240 U. S. 66; Union Pacific R. R. Co. v. Hadley, 266 U. S. 330; Reynolds v. Great Northern Ry. Co., 159 Minn. 370; Hocking Valley Ry. Co. v. Kontner, 114 Ohio St. 157.) The Appellate Division erred in holding as matter of law that the intestate had assumed the risk. (Reed v. Director General of Railroads, 258 U. S. 92; C., R. I. & P. R. R. Co. v. Ward, 252 U. S. 18; Chesapeake & Ohio Ry. Co. v. DeAtley, 241 U. S. 310; Gila Valley R. R. Co. v. Hull, 232 U. S. 94; Fitzwater v. Warren, 206 N. Y. 355; Chicago & Northwestern Ry. Co. v. Bower, 241 U. S. 470; Eastland v. Clark, 165 N. Y. 420; Sink v. Sikes Co., 134 Fed. Rep. 144; Pelow v. Oil Well Supply Co., 194 N. Y. 64; Western Union Tel. Co. v. Burgess, 108 Fed. Rep. 26; Anderson v. Illinois Central R. R. Co., 109 Iowa, 324; Yazoo & Mississippi Valley R. R. Co. v. Wright, 235 U. S. 376.)

      George D. Newton for respondent.
    The Appellate Division properly held no actionable negligence was established against the defendant. (Pheasant v. Director General of Railroads, 285 Fed. Rep. 342; Davis v. Kennedy, 266 U. S. 147; Unadilla Valley Ry. Co. v. Caldine, 278 U. S. 139; Heck v. Lehigh Valley R. R. Co., 241 N. Y. 212; Toledo, St. Louis & Western R. R. Co. v. Allen, 276 Fed. Rep. 165; Atlantic Coast Line R. R. Co. v. Driggers, 279 U. S. 787; White v. Lehigh Valley R. R. Co., 220 N. Y. 131; Mendou v. N. Y., N. H. & H. R. R. Co., 223 U. S. 1; Southern Railway Co. v. Gray, 241 U. S. 333; Woods v. Chicago, B. & Q. R. R. Co., 306 Ill. 217.) There was no negligence on the part of the conductor in cutting off the car. (Mattingly v. Broderick, 36 S. W. Rep. [2d] 415; Austin v. M. & O. R. R. Co., 134 Miss. 226; Gulf & M. & N. R. R. Co. v. Wells, 275 U. S. 455; Ingram, v. Mobile & O. R. Co., 30 S. W. Rep. [2d] 989.) There is no causal relation between the alleged fact of delinquency and the injury. (Heck v. Lehigh Valley R. R. Co., 241 N. Y. 212; Atchison, T. & S. F. R. R. Co. v. Toops, 281 U. S. 351; Lang v. N. Y. C. R. R. Co., 227 N. Y. 507; 255 U. S. 455; Davis v. Hand, 290 Fed. Rep. 73; 263 U. S. 705; Phillips v. Pennsylvania R. R. Co., 283 Fed. Rep. 381; Illinois State Trust Co. v. Missouri Pac. R. R. Co., 219 Mo. 608; Martin v. St. Louis Ry. Co., 323 Mo. 450; St. Louis v. San Francisco R. R. Co., 238 U. S. 243; Gregory v. Director General of Railroads, 242 S. W. Rep. 373; St. Louis-San Francisco Ry. Co. v. Smith, 19 S. W. Rep. [2d] 1102; Peters v. Wabash R. R. Co., 42 S. W. Rep. [2d] 588; Patton v. Texas & Pacific Ry. Co., 179 U. S. 658; C., M. & St. P. Ry. Co. v. Coogan, 271 U. S. 472; N. Y. C. R. R. Co. v. Ambrose, 280 U. S. 486.) The accident was solely and directly caused by the negligent act of plaintiffs intestate. (Great Northern R. R. Co. v. Wiles, 240 U. S. 444; Virginia Ry. Co. v. Linkous, 230 Fed. Rep. 88; 242 U. S. 630; Davis v. Kennedy, 266 U. S. 147; Atlantic Coast Line R. R. Co. v. Driggers, 279 U. S. 787.) The accident was a risk which plaintiff’s intestate assumed. (James v. Cranford, 123 App. Div. 558; Crown v. Orr, 140 N. Y. 450; Haskin v. N. Y. C. R. R. Co., 65 Barb. 129; 56 N. Y. 508; Kennedy v. Manhattan, 145 N. Y. 288; Collelli v. Turner, 154 App. Div. 218; Odell v. N. Y. C. R. R. Co., 120 N. Y. 323; Drake v. Auburn City R. R. Co., 173 N. Y. 466; Eastland v. Clark, 165 N. Y. 472; Benzing v. Steinway & Sons, 101 N. Y. 552; Davidson v. Cornell, 132 N. Y. 228; Booth v. B. & A. R. R. Co., 73 N. Y. 40; Pantzar v. Foster I. M. Co., 99 N. Y. 368; Maltbie v. Beldin, 167 N. Y. 312; Seaboard Air Line Ry. Co. v. Norton, 233 U. S. 492; N. Y. C. R. R. Co. v. Salkaukus, 238 Fed. Rep. 778; Jacobs v. Southern Ry. Co., 249 U. S. 240; Vaughan v. N. Y., P. & N. R. R. Co., 241 U. S. 237; Chesapeake & Ohio Ry. Co. v. DeAtley, 241 U. S. 310.)
   Pound, Ch. J.

This action is brought under the Federal Employers’ Liability Act (U. S. Code, title 45, ch. 2, § 51). The death of plaintiff’s intestate Healy was the result of an accident which occurred in the Erie freight yards in the city of Rochester on November 8, 1924. Healy was a young man, twenty-three years of age, inexperienced as a yard brakeman. He had been on duty three nights before he met his death.

The Appellate Division has held that Healy’s death was due solely to his own negligence and has reversed the judgment on the law. The opinion states the circumstances and cause of the accident with substantial accuracy as follows:

In its Rochester yards one of defendant’s tracks, called the ' lead track,’ ran north and south near the river, Track No. 5 lay immediately alongside and west of it and came into it southerly at switch No. 5. On November 8, 1924, late enough in the afternoon so that it was dark, a train of about nine cars was on track 5, the northernmost car of which was loaded with grapes. The train crew consisted of Barrett, yard conductor, plaintiff’s intestate Raymond B. Healy, rear brakeman, and others. A car movement was to be carried on thus: A locomotive hitched on the south end of this string of cars was to pull it south till the grape car cleared switch No. 5 some distance. The next operation was to get the train under motion toward the north, cut off the grape car, stop the rest of the train, allow the grape car to run past the switch, turn the switch and run the rest of the cars back on track No. 5.
“ From switchpoint 5 it was slightly up grade for about two car lengths to a pinnacle which was called the ' hump.’ The idea was to ‘ kick ’ this grape car far enough north so that the northernmost car on the train would clear the grape car when the train was pushed back north on track No. 5. The forward movement was started, the grape car cleared the switch, Healy shifted the switch, signalled Barrett, the conductor, 'All right,’ and climbed up the easterly side of the then northernmost car at its north corner. The grape car was not kicked far enough, and when the car upon which Healy was riding reached it their corners collided and Healy was caught in between and crushed so that he died shortly. * * * ” (233 App. Div. 147.)

The learned court has held that Healy should not have signalled the conductor, "All right ” until he had ascertained for himself by personal inspection and tests that the car of grapes had gone far enough on the lead track so that his cars would clear it and that his failure to do so was the sole cause of his death. Thus is placed upon an inexperienced brakeman the burden of actually ascertaining, on a dark night and in unfamiliar surroundings, when the kicked car was out of the way so that he could safely move his car past it. Although he might, with reasonable caution for a yard brakeman, assume that the car of grapes had been kicked into a position of safety,, the jury might not say that he was free from negligence. Was it necessary as matter of law for him to make the test indicated by Barrett, the conductor, to ascertain whether a car was in the clear or not by standing on the outside of the rail and putting out his hand? If his hand does not touch the car then it is in the clear, we are told. He had been so instructed but he had not been instructed as to the hidden dangers of the switching operations and of the hump. The test may be proper when the brakeman should have doubts, but does the law require that he should have had doubts?

The car was kicked for the purpose of getting it out of the way on the lead track. Healy was to give the signal when he saw that it had passed on to the lead track. It was for the jury to say whether he should, in the absence of instructions, have known that the car would not, or might not, go to or over the hump, or whether he should, before he could be charged with negligence, have been warned of the danger that cars might stop on the lead track and told to make sure where they were before he gave the signal “ all right.”

In Davis v. Kennedy (266 U. S. 147) it was the personal duty of the engineer positively to ascertain whether a train had passed before he moved his train. His duty was primary as he had physical control of his engine and was managing its course. So in Frese v. C., B. & Q. R. R. Co. (263 U. S. 1) it was held that neglect of the engineer’s primary personal duty to stop his train and positively to ascertain that the way was clear before proceeding prevented a recovery on his part.

These decisions have to do with neglect of a well-defined primary duty to act, well understood and neglected without excuse in the face of known dangers. They do not control this case where the question is as to the duty of the track brakeman in the circumstances. The situation created dangers which to the jury might seem to call for more definite warnings than Healy received. Thus in Marland v. Philadelphia & R. Ry. Co. (246 Fed. Rep. 91) it was held that it could not be said as matter of law that telltales were sufficient notice of the lowness of a bridge. In Southern Ry. Co. v. Hobbs (35 Fed. Rep. [2d] 298) the switchman was not advised of dangers due to riding -unusually high cars under light fixtures above the tracks. It was held that a question for the jury was presented. Instructions must be given before duty is defined, if duty is not clear.

One who claims under the act must, however, establish negligence of the railroad company and causal connection between such negligence and the injury. (Atchison, Topeka & Santa Fe Ry. Co. v. Saxon, 284 U. S. 458.) It seems that the jury might have found the conductor Barrett, co-employee of deceased, negligent and found a causal connection between his negligence and the injury. The carrier must in that event answer for the conductor’s negligence under the act. (Boldt v. Penn sylvania R. R. Co., 245 U. S. 441.) He was required by the rules of the company to use the utmost care to avoid injury to the men from * * * the movement of either trains or cars.” He made no attempt himself to ascertain whether the car was clear but relied solely on Healy’s signal. He was responsible for placing the car, for kicking it back without a rider, for exercising some degree of care to observe how fast it went and when and where it stopped rolling. Had he a right to assume that Healy would protect himself without instructions as to the latent danger due to the presence of the hump? The particular cause of the accident was a question for the jury from all the facts and circumstances. (White v. Lehigh Valley R. R. Co., 220 N. Y. 131, 136.)

Even if Healy was negligent in giving the signal to come ahead, his negligence does not bar plaintiff’s recovery. It would serve only to diminish it if the defendant were negligent. (Illinois Central R. R. Co. v. Skaggs, 240 U. S. 66, 70.)

It cannot be said that Healy assumed the risk of the insufficient clearance. If he did not know the latent danger he could not be said to have assumed the risk as matter of law. (Yazoo & Mississippi R. R. Co. v. Wright, 235 U. S. 376, 380.)

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

Crane, Lehman and Hubbs, JJ., concur; O’Brien and Crouch, JJ., dissent; Kellogg, J., not sitting.

Ordered accordingly.


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    The People of the State of New York, Respondent, v. Charles Smith, Appellant.
    (Argued March 23, 1932;
    decided April 26, 1932.)

      Albert E. Kane for appellant.
    It is not a violation of the ordinance to discuss atheism on the streets. (Matter of Walker, 200 Ill. 566; Butts v. Swarthwood, 2 Cow. 431; Gibson v. American Life Ins. Co., 37 N. Y. 580; People v. Stoll, 242 N. Y. 453; People v. Schmidt, 222 N. Y. Supp. 647; People v. Conti, 216 N. Y. Supp. 442; Kirby v. State, 125 N. Y. Supp. 742; People v. Swasey, 180 N. Y. Supp., 630.)

      Thomas C. T. Crain, District Attorney (Joshua Egelson of counsel), for respondent.
    The defendant violated the ordinance. (Cline v. State, 130 Pac. Rep. 510; Matter of Hinckley, 58 Cal. 457; State v. Amana Society, 109 N. W. Rep. 894.)
   Crane, J.

The defendant is an atheist and has been convicted of talking atheism on the public streets of the city of New York. He is president of the American Association for the Advancement of Atheism, and on the 20th day of October, 1931, was trying to advance it to a select group at Columbus Circle and Fifty-ninth street. He was arrested, tried and convicted of doing the very thing he was denouncing — of conducting public worship in violation of the city ordinance.

Section 20 of chapter 23 of article 3 of the Ordinances of the City of New York is headed " Public Worship,” and reads as follows: “ No person shall be concerned or instrumental in collecting or promoting any assemblage of persons for public worship or exhortation, or under any pretense therefor, in any park, street, or other public place; provided, that a clergyman or minister of any denomination, or any person responsible to or regularly associated with any church or incorporated missionary society, or any lay-preacher, or lay-reader may conduct religious services in any public place or places specified in a permit therefor, which may be granted and issued by the police commissioner. This section shall not be construed to prevent any congregation of the Baptist denomination from assembling in a proper place for the purpose of performing the rites of baptism, according to the ceremonies of that church.”

The thing prohibited by this ordinance is the collecting of persons for public worship or exhortation to worship on the public streets without a permit. Worship has a well-known and well-defined meaning in common use among the people of this community. It means any form of religious service showing reverence for the Divine Being, or exhortation to obedience to or the following of the mandates of such Being. Many are the ways of approach, and varied are the methods of showing this reverence, but even the societies for the advancement of social welfare find incentive in carrying out what is interpreted' as a divine purpose or will. All this the défendant ridiculed and denounced as being a superstition. According to him and his society, there is no Divine Being. Instead of gathering an assembly for public worship or exhortation to public worship, he was doing just the reverse; he was denouncing worship in any form and calling upon his hearers to desert such a practice. The ordinance did not apply to him.

He was arrested — not having a permit. But those to whom a permit may be issued indicates that this ordinance had reference to religious services and assemblies of some kind. Thus, permits may be issued to clergymen or ministers of any denomination or a person responsible to or regularly associated with any church or incorporated missionary society, or any lay preacher or lay reader. These persons may receive a permit from the Police Commissioner. The defendant could not qualify for any of these callings; therefore, it is clear that the section relating to public worship upon the streets had reference to religious services of some kind and did not include the attempt of the defendant to show that for centuries the majority of us have been wrong. It is conceded that for political meetings and others of like nature no permit is necessary. Such gatherings violate no law unless they become a public nuisance or interfere with traffic and the like. Even the assembly gathered by the defendant may subject him to such a prosecution should it become disorderly. (Penal Law, § 722, “ Disorderly Conduct; ” Penal Law, § 2092, Unlawful Assemblies.”) Should it be that all other persons except the defendant were permitted to address others in the public streets, a very serious question might arise as to the violation of the Fourteenth Amendment of the Federal Constitution, which guarantees the equal protection of the law. We need not dwell upon the subject, as we find that the defendant has not violated this provision of the New York City Ordinances, and, therefore, reverse his conviction and direct his discharge.

The judgment of the Appellate Part of the Court of Special Sessions and that of the Magistrates’ Court should be reversed and the complaint dismissed.

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

Judgments reversed, etc.


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    Mary Rocco, as Executrix of Joseph Rocco, Deceased, Respondent, v. Lehigh Valley Railroad Company, Appellant.
    (Argued March 23, 1932;
    decided April 26, 1932.)

      Harold E. Simpson for appellant,
    The decedent was guilty of contributory negligence as a matter of law. (Sacco v. D. & H. Co., 213 App. Div. 471; Davis v. Kennedy, 266 U. S. 147; Great Northern Ry. Co. v. Wiles, 240 U. S. 444; Southern Ry. Co. v. Gray, 241 U. S. 333; Frese v. C., B. & Q. R. R. Co., 263 U. S. 1; Unadilla Valley Ry. Co. v. Caldine, 278 U. S. 139; Unadilla Valley Ry. Co. v. Dibble, 31 Fed. Rep. [2d] 239; Norfolk & Western R. R. Co. v. Smith, 152 Va. 165; Davis v. Powell, 142 Va. 711.)

      Daniel Crowley and Louis K. Thaler for respondent.
   O’Brien, J.

On the single-track branch of defendant’s railroad extending northerly from Ithaca to Auburn, Joseph Rocco was employed as a track inspector. His duties required him to ride a tricycle speeder fitted to the rails and propelled by hand and foot. Each day he was scheduled to leave Ithaca at 3:30 p. m., inspect the track to Auburn and return. On December 8, 1927, many washouts and landslides had occurred on this track and the south-bound train due at Ithaca at 12:17 p. m. 'was running more than three hours behind time. Without inquiry relative to the location of this train, Rocco left Ithaca for the north on his schedule and within a few minutes encountered the south-bound train head-on and was killed. The jury, as in the case of Kawacz v. D., L. & W. R. R. Co. (259 N. Y. 166), herewith decided, held that decedent’s negligence contributed to his death but under the Federal Employers’ Liability Act apportioned the damage. Our opinion is that the negligence of deceased was the sole and proximate cause of his death.

The train with which Rocco collided had left Ludlowville, the last reporting station north of Ithaca and eight miles distant therefrom, at 3:14. Inquiry by him, previous to his departure from Ithaca, would have revealed to him the fact that somewhere on that eight-mile stretch of track, which he was about to traverse, was this belated train. His failure to discover this fact constitutes in itself not only the negligence which the verdict imputes to him but also a violation of a rule of the road which had existed for more than seven years and of which he had knowledge. It provided that before track inspectors should occupy the track with speeders they should ascertain from the telegraph operators the locations of approaching trains in all directions. This rule had not been reduced to writing but had been promulgated by the division engineer and decedent was well aware of its existence. Usually he obeyed it, but on two occasions he had disregarded it and the telegraph operator at Ithaca had warned him to observe it and had reported these omissions to his superior. On the day of this collision he made no inquiry from the operator. If he had asked, he could have been informed that the southbound train had left the station only eight miles distant and would surely be encountered between Ithaca and Ludlowville. The duty to watch alertly for trains rested on the deceased (Chesapeake & Ohio R. R. Co. v. Nixon, 271 U. S. 218), and his violation of the rule was the primary cause of the accident. (Davis v. Kennedy, 266 U. S. 147; Unadilla Valley Ry. Co. v. Caldine, 278 U. S. 139; Unadilla Valley Ry. Co. v. Dibble, 31 Fed. Rep. [2d] 239.)

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

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

Judgments reversed, etc.


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    New York Foundation, Respondent, v. The People of the State of New York, Appellant.
    (Argued March 23, 1932;
    decided April 26, 1932.)

      John J. Bennett, Jr., Attorney-General (Arthur J. Stern and Hugh Reilly of counsel), for appellant.
    When the conditions precedent are complied with, and only then, does the grantee acquire any rights of a permanent character under the grant. (Trustees of Southampton v. Jessup, 102 N. Y. 122; First Construction Co. v. State, 221 N. Y. 295; New York Electric Line Co. v. Empire City Subway Co., 235 U. S. 179.) The performance of the conditions precedent was necessary, and the complaint was fatally defective in failing to allege the performance of the conditions precedent by the plaintiff or its predecessors in title. (Rochester Ry. Co. v. Robinson, 133 N. Y. 242; Clark v. West, 193 N. Y. 349; Eppley v. Kennedy, 198 N. Y. 348; Coatsworth v. Lehigh Valley R. R. Co., 156 N. Y. 451; Sultan of Turkey v. Tiryakian, 213 N. Y. 428.)

      Charles J. Nehrbas for respondent.
    It was neither necessary nor proper for plaintiff to allege compliance with the condition contained in the grant. (Best Renting Co. v. City of New York, 248 N. Y. 491; Dunkum v. Maceck Bldg. Corp., 227 App. Div. 230.) The grant conveyed the fee with condition subsequent. (Matter of City of New York [ Upper New York Bay], 246 N. Y. 1; People v. Wainwright, 237 N. Y. 407.)
   Hubbs, J.

This action was brought by the New York Foundation, a domestic corporation, against the State to compel the determination of a claim to real property pursuant to article XV, sections 500-512, of the Real Property Law (Cons. Laws, ch. 50). The relief asked is that the defendant and each and every person claiming "under it be forever barred from, any claim to any estate or interest in the real property described in the complaint.

The complaint contains all the allegations required by section 501 of the act in question; it includes allegations to the effect that the plaintiff is the owner in fee simple of the land; that it had been in its possession for one year next preceding the commencement of the action, and that the plaintiff acquired the same under the last will and testament of Lionel T. Salomon. As required by subdivision 3 of that section, it sets forth that the property was granted to Edward Bridge, the plaintiff’s predecessor in title, by the Commissioners of the Land Office by letters patent; that the patent contained certain conditions and reservations and that a copy of the patent is annexed to the complaint. The patent reads in part as follows: “ * * * pursuant to a resolution of the Commissoners of our Land Office, for the purpose of promoting the commerce of our said State, and for no other object or purpose whatsoever, and with the reservations and upon the conditions hereinafter mentioned, we have given and granted and by these presents do give and grant unto Edward Bridge his heirs and assigns, the land under water and between high and low water mark, described as follows, * * * [being the land described in the complaint herein] excepting and reserving to all and every the said people, the full and free right, liberty and privilege of entering upon and using all and every part of the above described premises, in as ample a manner as they might have done had this power and authority not been given, until the same shall have been actually appropriated and applied to the purposes of commerce, by erecting a Dock or Docks thereon; and these presents are upon the Express Condition that if the said Edward Bridge his assigns shall not within five years from the date hereof actually appropriate and apply the above described premises to the purposes of Commerce, by erecting a Dock or Docks thereon and filling in the same, then these presents and everything herein contained shall cease, determine and become void.”

The complaint contained all necessary allegations within the rule stated in Best Renting Co. v. City of New York (248 N. Y. 491).

The defendant moved to dismiss the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. The motion was granted by the Special Term. The Appellate Division reversed unanimously but certified that in its opinion a question of law was involved which ought to be reviewed by this court, to wit, Does the complaint state a cause of action? ” and granted leave to appeal.

It is the contention of the defendant that the complaint fails to state facts sufficient to constitute a cause of action because it fails to allege that either plaintiff or its predecessors in title have complied with all the terms and conditions of the grant; that is, that it has failed to comply with rule 92 of the Rules of Civil Practice, requiring that performance of conditions precedent be pleaded. If the reservations and conditions set forth in the patent are to be construed as conditions precedent, the complaint, while technically complying with all the requirements of article XV of the Real Property Law, does not comply with rule 92 and must be held to fail to state facts sufficient to constitute a cause of action.

This court has held in Matter of City of New York (Upper N. Y. Bay) (246 N. Y. 1, 16, 22) that grants apparently identical in form conveyed a fee and that the conditions were conditions subsequent. Crane, J., said: It is true that the Simonson grants, made in 1860 and 1861, did not contain these words [for the beneficial enjoyment of the patentee], but the grant was made for the purpose of promoting the commerce of the State, and granted to Jeremiah Simonson, as executor, certain land under water, described as beginning at high-water mark, reserving the right in the People to enter upon and use the lands until the same have been actually appropriated and applied to the purposes of commerce by erecting a dock thereon, and that if the dock is not erected within three years, the grant shall cease and determine and become void. * * *

“ Some of these grants, as above stated, were made on condition that the grantee would build docks, fill in the land and construct piers within a certain number of stated years; otherwise, the grants were to be void. The State alone could enforce these conditions; the fee title remained in the grantee until divested by action of the State. (Matter of Benedict v. Lunn, 244 N. Y. 373.) If there has been a breach of the conditions subsequent to the grant the city is not at liberty to take advantage of that omission. The State only can claim the right to vacate the patent for breach of condition subsequent, and then only in a direct action or proceeding for that purpose. (Archibald v. N. Y. C. & H. R. R. R. Co., 157 N. Y. 574, 581.) ”

The appellant seeks to distinguish the decision in Matter of City of New York (supra) upon the ground that it was a condemnation case in which the State of New York was not a party, whereas in the instant case a party interested in the title is seeking to say, without any allegation in its complaint that it has performed all the terms and conditions set forth in its own grant, that this court should adjudge that it has a fee title free and clear of any rights of the State whether it has performed the conditions of the grant or not.

It, however, points out no difference between the patent in this case and the patents to Simonson in Matter of City of New York, and if the conditions in the Simonson patents were conditions subsequent, those in this patent are within the same class. Since no rule of pleading requires an allegation of performance of conditions subsequent, plaintiff has apparently complied both with the requirements of article XV of the Real Property Law and rule 92 of the Rules of Civil Practice.

It is unfortunate, in so far as the People are concerned, if, in cases where grants are so drawn that they must be held to contain conditions subsequent, the State, if it desires to assert an affirmative defense of title in itself, may be required in an action of this kind to both allege and prove failure to comply with the terms and conditions of such grants, yet violence should not be done to established rules of pleading in order to defeat a right of a citizen. If the State desired to vacate and set aside a grant containing conditions subsequent, it might bring an action for that purpose but it would be required to both plead and prove failure to comply with such conditions subsequent and the only difference in result is that this statute operates to permit the State to proceed by way of defense when it might not otherwise be inclined to take such action.

It is also true that these old grants upon condition constitute clouds upon titles and some way should exist so that the titles may be determined.

.It may be a hardship on the State to come in and defend but it is also a hardship upon the owners of such lands not to be able to clear their titles. That conditions like the one in question constitute a condition subsequent and that such a grant conveys a fee has been held in People v. Wainwright (237 N. Y. 407).

The order should be affirmed, with costs; the question certified answered in the affirmative and permission granted to the defendant to plead within twenty days

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

Order affirmed, etc.


text:
    J. Louis Fleischer, Respondent, v. Sally W. Terker, Appellant, Impleaded with Another.
    (Submitted March 21, 1932;
    decided April 26, 1932.)

      Jules R. Teitler, I. J. Ginsberg and N. J. Ginsberg for appellant.
    Where there are denials in the answer of any material allegation of the complaint, a motion for judgment on the pleadings in favor of the plaintiff for the relief demanded in the complaint cannot be granted. (People v. McCumber, 18 N. Y. 315; Alexander v. Aronson, 65 App. Div. 174.) The separate, special and distinct defense interposed is sufficient in law. (Burk v. Stewig, 21 Tex. 418; Thayer v. Leggett, 229 N. Y. 152; Carpenter v. Carpenter, 131 N. Y. 101; Knolls v. Barnett, 71 N. Y. 474; Peck v. Peck, 110 N. Y. 64.)

      George J. Rudnick for respondent.
    The assignment of the mortgage to plaintiff did not add or detract from the rights of defendant-appellant. Plaintiff’s motive in taking an assignment is wholly immaterial. It was the defendants’ defaults that were the cause of the foreclosure and not the assignment of the mortgage to plaintiff. (Morris v. Tuthill, 72 N. Y. 575; Hirschfield v. Craig, 209 App. Div. 559; Beardsley v. Kilmer, 200 App. Div. 378; 236 N. Y. 80; Carroll Building Corp. v. Greenberg Plumbing Supplies, Inc., 216 App. Div. 270.)
   Pound, Ch. J.

Plaintiff brings this action to foreclose a mortgage. The defendants are tenants in common of the mortgaged property. The answer of defendant-appellant contains denials and a defense consisting of new matter. The courts below have held that the denials on their face do not present a question of fact to be tried (Rules Civ. Prac. rule 112) and that the defense should be stricken out on the ground that it is insufficient in law on the face thereof. (Rules Civ. Prac., rule 109, subd. 6.) Judgment on the pleadings has been awarded to plaintiff pursuant to rule 112 of the Rules of Civil Practice.

The seventh paragraph of the complaint alleges that the defendants have failed to comply with the conditions of the bond and mortgage by omitting to make payments of installments of principal and interest thereon and that plaintiff has elected that the whole principal sum be immediately due and payable; and by omitting to pay water rates and assessments. The answer denies these allegations. They are material to plaintiff’s cause of action. The action Could not be maintained without an allegation of defendants’ default which is here met by a positive denial.

Were the denials on their face sufficient to present an issue for trial? Sham matter contained in a pleading • — ■ i. e., matter false in fact although good in form — may be stricken out under rule 103. If the entire answer is sham the court may treat the pleading as a nullity and give judgment accordingly under rule 104. The question which arises is when may a denial be stricken out as sham or when may an answer containing such a denial be treated as a nullity? Obviously no one can tell by inspection of the denial of a material allegation of the complaint whether it is interposed in good faith. The frivolous character of a pleading may be determined on inspection and it may be disregarded, but a denial, sufficient on its face, does not reveal its own worthlessness and may not be treated as a nullity. The' question of its sufficiency may be determined only on the trial, unless a sham denial may be disposed of on motion. If it is to be disposed of on motion, its falsity must be determined by affidavits. Under the new rules, pleadings are taken at their real value to be ascertained before trial by affidavits on motion if necessary. No affidavits were read on this motion. It was improper to ignore the denial.

Some confusion has arisen in adjusting the new practice to the old. Under the old practice (Code Civ. Pro. § 538) it had been held that no denial may be considered as struck out as sham. (Wayland v. Tysen, 45 N. Y. 281; General Investment Co. v. Interborough R. T. Co., 235 N. Y. 133, 137; Rochkind v. Perlman, 123 App. Div. 808.) The reason given was that the party pleading a general denial was entitled to a trial by jury and could not be deprived thereof on a motion to strike out his denials as sham on affidavits. It has been held that under the new practice affidavits should not be used on a motion under rule 104 to treat any sham pleading as a nullity and for judgment accordingly. (Monica Realty Corp. v. Bleecker, 229 App. Div. 184, 186.) Under rule 112 a party is not entitled to judgment on the pleadings if on their face an issue remains to be tried. Under rule 103 any matter contained in a pleading, whether sham, frivolous, redundant, repetitious, unnecessary, impertinent or scandalous, or tending to prejudice, embarrass or delay the fair trial of the action, may be stricken out on motion before trial.

In the words of Crouch, J., in King Motor Sales Corp. v. Allen (209 App. Div. 281, 282): “ It was no doubt the object of the Civil Practice Act and Rules of Civil Practice * * * to simplify the issues to be tried by eliminating before trial defenses without merit. Express authority to that end is given not only where the defect appears upon the face of the pleading, hut also where it does not and where affidavits may he used.” If the rules are followed, the practice may be simplified, technicalities and delays avoided, but parties must still be given their day in court when they present substantial denials or defenses either in form or in substance.

It does not follow that a general denial may be stricken out as sham on affidavits. (Cf. Hanna v. Mitchell, 202 App. Div. 504, 514; affd., 235 N. Y. 534.) Without passing on that point we hold that general denials may not be disregarded as sham on mere inspection as was done in this case.

The answer sets up a separate defense. Appellant Terker alleges that she and the defendant Runes acquired title to the property as tenants in common, and that they executed the mortgage in question; that it became due and the balance was extended for a period of three years; that she (appellant) has paid her proportionate share of the installment of principal and interest due. She then alleges that plaintiff procured the assignment of the mortgage to him as the nominee, designee and appointee of the co-owner of the property, the defendant Reba Runes, and for her benefit and that defendant Runes had willfully caused a default in the payment of the sums due, in order that she might defraud the defendant Terker out of her equity in the property. This answer has been stricken out as insufficient in law on its face. (Rule 109, subd. 6.)

On its face, this is an allegation that one co-tenant has instigated a foreclosure so as to obtain the property for herself (Peck v. Peck, 110 N. Y. 64, 75; Thayer v. Leggett, 229 N. Y. 152, 158), and that plaintiff is an active participant in the scheme. In form it is sufficient as a defense. Each tenant in common is bound not to make any assault, direct or indirect, upon the interest of his co-tenant. (Meinhard v. Salmon, 249 N. Y. 458.) While the holder of a mortgage may assign it with malice and for the express purpose of wiping out the equity of the owner of the land on a mortgage foreclosure (Morris v. Tuthill, 72 N. Y. 575), this rule has never been applied where one co-tenant inspired a foreclosure action by a dummy to prejudice the rights of the other.

The judgments should be reversed, with costs in all courts, and the motion to strike out the affirmative defense and for judgment on the pleadings denied, with ten dollars costs.

Crane, Lehman, O’Brien and Hubbs, JJ., concur; Kellogg, J., not sitting.

Judgment accordingly.