author: Lewis, J.

text:
    The People of the State of New York, Respondent, v. Merril May, Appellant.
    Argued February 25, 1943;
    decided April 22, 1943.

      Melvin F. Kinkley for appellant.

      Carl J. Hynes, District Attorney, for respondent.
   Lewis, J.

The appellant, Merril May, was indicted for murder in the second degree. The indictment charged that on July 21, 1939, in the town of Henderson, Jefferson county, he shot and fatally wounded with a shotgun one Joseph Sidor, without premeditation and deliberation but with a design to effect death. He stands convicted on circumstantial evidence.

"Upon the trial the proof of corpus delicti developed the following facts: On the night of July 30, 1939, two fishermen on Henderson Pond discovered floating face downward the body of a young man. No water was found in the lungs of the decedent although there is undisputed evidence by medical experts that the body had been immersed for a period of one or two weeks. The autopsy revealed a large, irregular cavity in the right side of the head from which had been removed a jagged-edged section of the skull which measured five inches in length and two inches wide. There were also found lodged in loose flesh which surrounded the head wound a number of shot gun pellets.” It is not disputed that the cause of death was the gun-shot wound.

The defense maintained throughout the trial that the identity of the decedent had not been established. For our present purposes however we may omit discussion of the vast amount of evidence presented by the prosecution upon that branch of the case, believing, as we do, that there was evidence sufficient in law to support a finding by the jury that the dead body was that of Joseph Sidor — a young man who had escaped from a state school for mental defectives and who for several months during the spring and early summer of 1939 had lived with the defendant in a shack on the Hall farm near Henderson Pond.

A closer question in the case is whether the circumstantial evidence presented by the prosecution was sufficient in law to warrant a finding by the jury that it was the defendant who shot and fatally wounded Joseph Sidor and that such act was committed without premeditation and deliberation but with a design to effect death (Penal Law, § 1046). If, as the jury has found, there is circumstantial evidence sufficient to support the defendant’s conviction, the record must leave us with no uncertainty as to those facts from which inferences were drawn which controlled the jury’s verdict. Stated otherwise, the facts from which the controlling inferences were drawn must themselves have been proved, not presumed. (People v. Razezicz, 206 N. Y. 249, 272; People v. Harris, 136 N. Y. 423, 429.)

It was the theory of the prosecution that the defendant shot Joseph Sidor with a shot gun on the evening of July 21, 1939, while they were together in a rowboat on Henderson Pond. No witness was called who saw Sidor meet his death; nor was there direct evidence of the time and place of its occurrence. Although the farm of the People’s witnesses Fitzgerald borders upon the small pond in which the body was found, there is no evidence that a shot was heard at any time by members of the Fitzgerald family or by any other persons. There is evidence that during the afternoon of July 21st, the date when it is charged the murder was committed and nine days before the body was found, Joseph Sidor was seen working near the shack on the Hall farm where he and the defendant were then living. There is also evidence that on that day the defendant arranged with Mrs. Fitzgerald to rent a rowboat. The arrangement called for the use of a boat which was moored at the Fitzgerald landing and was owned by an “ Italian ” who lived in Syracuse. When that rowboat was used by its owner a week later he found evidence of blood on the bottom boards and on the gunwales. The blood on the gunwales was later analyzed and found to be human blood. But Mrs. Fitzgerald, when called by the prosecution, did not recall having seen either the defendant or Sidor in that rowboat on July 21st. She did testify that about 4:30 o ’clock in the afternoon of that day she saw the defendant with a Mrs. Stone in the latter’s automobile but she did not see Joseph Sidor. The People also called Mrs. Fitzgerald’s husband who did not recall having seen either the defendant or Joseph Sidor on July 21st. Indeed there is no testimony by any witness that at any time on July 21st, the date when it is charged the murder occurred, the defendant was seen in a rowboat on Henderson Pond with Joseph Sidor. The only evidence which relates itself to this vital point in the case is that of a sergeant of the State Police who testified that while he was questioning the defendant on September 1, 1939, the defendant stated in substance that on July 21st, in company with Mrs. Stone and one Cecil Burns, he had used a boat “ owned by an Italian man * * * from Syracuse.” It should be said that “ Cecil Burns ” is the name of a young man who is claimed by the defense to have lived with the defendant at the shack on the Hall farm during the spring and early summer of 1939. In view of the testimony by members of the Hall family, who frequently saw a young man known to them as Joseph Sidor with the defendant at the shack, the People took the position throughout the trial that there never was a young man named “ Cecil Burns ” who lived with the defendant and that such a claim by the defense was so improbable that its falsity was. manifest. The People also stress a statement made by the defendant while he was being questioned by members of the State Police. He was asked whether it was not true that in a fit of anger he had shot the boy known as “ Sidor.” To that inquiry it is said the defendant answered — I won’t say no moré, but I want to think about it a couple of days and then I will come back and talk with you.” A month later, without being questioned further by the State Police, the defendant was placed under arrest.

Of course, the two statements by the defendant, quoted above, made to members of the State Police are by no means conclusive. Indeed, in considering their probative value and any inference fairly to be drawn from them we have in mind the word of caution often found in judicial writing and phrased as follows by Mr. Justice Crouch, later a member of this court: “ The weight and persuasive value of this inference varies in accordance with the amount and weight of the other evidence in the ease tending to show guilt, for it operates ordinarily only by way of lending strength to other and more tangible evidence.” (People v. Nowakowski, 221 App. Div. 521, 523; and see Commonwealth v. Webster, 5 Cush. 595, 317 [Shaw, Ch. J.].) The problem in the present case has been to find “ other and more tangible evidence.”

In addition to evidence already mentioned, it appears that during the period of nine days between the date when the People charge that the murder was committed and the date when the victim’s body was discovered, the defendant was at the shack on the Hall farm. During that period he met and talked with members of the Hall family and on July 25th went fishing on Henderson Pond. The prosecution places emphasis upon the testimony given by Mr. Hall and his son that when on August 1st they happened to mention to the defendant the fact that the body of a dead man had been found in the Pond, the defendant made some casual comment upon the fact but that as he did so his face bore a “ startled look.” The People contend that the defendant’s reaction, when word came to him of the gruesome discovery, was evidence of his consciousness of guilt.

Without analyzing further the record, which has been the subject of a searching examination by ns, it is enough to say that we regard the evidence as a whole of doubtful legal sufficiency to warrant a finding of the defendant’s guilt. Being unable by direct evidence to prove that the defendant shot and killed Joseph Sidor on July 21, 1939, and having failed to bring forward direct proof that they were seen together on that date at the small pond where the murder is claimed to have been committed, the prosecution resorted to circumstantial evidence to establish the defendant’s guilt. However, we do not find in the circumstantial evidence upon which the People rely that quality of certitude which the law requires as to those facts, bearing upon the defendant’s conduct on the date when it is claimed the murder was committed, from which the jury was permitted to draw controlling inferences and led to the finding of the defendant’s guilt. (People v. Giordano, 213 N. Y. 575, 580; People v. Harris, supra, p. 429.) And as to proof of a design by the defendant to effect the death of Joseph Sidor — a prerequisite to a conviction of murder in the second degree (Penal Law, § 1046; People v. Dinser, 192 N. Y. 80, 85) — the evidence was so remote in point of time and so insubstantial as to cast doubt upon that essential branch of the proof.

In this state of the record the verdict of the jury may well have been influenced by the following evidence which we believe was erroneously admitted: On the night of August 2nd or during the early hours of the following day — two days after the discovery of the body in Henderson Pond, and one day after the defendant had been told of that discovery — the shack in which it is claimed the defendant and Joseph Sidor had been living was destroyed by fire. There was no evidence that anyone was present when the structure burned. In fact, the destruction of the building was not known, in so far as the record discloses, until the following day. Upon the trial, however, the People charged that it was the defendant who set the fire, the contention being that it was done in an effort by the defendant to make it appear that Joseph Sidor had burned the shack and was still alive. But there is no evidence which would serve as a legal basis for such a theory. There is no direct evidence that the defendant had anything whatever to do with the fire. The witness Case testified that on the night before the fire, as he passed the shack in the company of his wife, he saw the defendant standing outside near Mrs. Stone’s automobile. Mrs. Case testified that she saw the automobile but did not see the defendant. It also appears that on the night before the fire the witness Hall, Sr., had been at the shack, but there is no evidence that he saw there anything which would have aroused suspicion. Notwithstanding the failure by the prosecution to prove who burned the shack, the District Attorney in his summation left with the jury the suggestion that the defendant set the fire in furtherance of a scheme by which he hoped to make it appear to those who might investigate the murder that Joseph Sidor was still alive and that it was he who burned the shack. In the absence of direct proof that the defendant set the fire, there was nothing more than an inference leading to that conclusion, which inference could have been drawn only from the evidence that the defendant had been seen at the shack the night before the fire. However the prosecution invoked not only that inference but a second inference based upon the first, vis: that the defendant intended to use the firing of the shack as a means to divert any suspicion which might be abroad that it was he (the defendant) who committed the murder. The admission of evidence of the fire, which was promptly challenged by counsel for the defendant, and the use to which that evidence was put by the District Attorney in his summary, were clearly within the condemnation of the long established rule that — where circumstantial evidence is relied upon, the facts upon which inferences must be drawn must themselves be satisfactorily established and must be of such a character as, if true, to exclude to a moral certainty every other hypothesis but that of the guilt of the accused * * (People v. Lewis, 275 N. Y. 33, 39; People v. Fitzgerald, 156 N. Y. 253, 258; Shepherd v. People, 19 N. Y. 537, 545.)

We cannot say that the error was not prejudicial to the defendant’s rights. When it is considered cumulatively with other circumstantial evidence to which reference has already been made, which we regard as of doubtful probative value, we conclude that in justice to the defendant’s rights a new trial should be had.

Accordingly, the judgments should be reversed and a new trial ordered.

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

Judgments reversed, etc.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    Edward J. Fitzgerald et al., as Executors of Annie Fitzgerald, Deceased, Appellants, v. Title Guarantee and Trust Company, Respondent.
    Submitted January 5, 1943;
    decided April 22, 1943.

      Jacob W. Friedman and Theodore Berger for appellants.

      Flynn L. Andrew for respondent.
   Conway, J.

This is an appeal by plaintiffs pursuant to leave of this court from a unanimous judgment of the Appellate Division, Second Department, affirming the judgment and order of Special Term, granting defendant’s motion to dismiss the complaint on the ground that the action was barred by the Statute of Limitations.

The amended complaint alleges that the testatrix of plaintiffs agreed to purchase from defendant certain mortgage certificates; that the agreement was induced by false and fraudulent representations of itemized facts; that the representations were known to defendant to be false and were made with intent to deceive; that they were relied upon and acted upon to plaintiffs ’ damage; that by reason thereof the plaintiffs were entitled to rescind the purchase and that, upon discovery, the plaintiffs served notice of breach of warranty and of false and fraudulent representations and of their election to rescind the purchase and offered and tendered back the certificates together with a sum of money sufficient to cover all interest received by the plaintiffs or their decedent together with accrued interest thereon.

The motion for summary judgment is based entirely upon defendant’s first affirmative defense, viz., that the action is barred by the Statute of Limitations.

The certificates were purchased on or about April 1, 1930. The action was commenced on July 9, 1940. It is defendant’s claim that the six-year Statute of Limitations commenced to run from the date of the sale of the certificates.

Special Term, in granting the motion, pointed out that the action was one for money had and received and that the determinative date was that on which the purchase of the certificates was made. Permission was denied to plaintiffs to amend the complaint since the election of the plaintiffs to rescind, in 1937, was necessarily inconsistent with an action for damages for fraud based upon an affirmance of the contract. The Appellate Division affirmed Special Term upon the ground that the action was based upon an executed rescission and was barred by the statute (Civ. Prac. Act, § 48, subd. 1), but pointed out that the. plaintiffs might not be barred from the commencement of a new action for fraud.

In New York, a party who entered into a contract induced by fraudulent representations had three remedies open to him. 1). He might rescind the contract and sue in an action at law to recover the consideration with which he had parted. To maintain such action he was required to restore or offer to restore whatever he had received. 2). He might bring an action in equity to rescind the contract and in that action have full relief. (Allerton v. Allerton, 50 N. Y. 670.) That was an action for a rescission and it was sufficient for the plaintiff to offer in his complaint to return what he had received and make tender of it on the trial. (See also Gould v. Cayuga County Nat. Bank, 86 N. Y. 75, 83, 84.) 3.) He might retain what he had received and bring an action at law to recover the damages sustained. (Reno v. Bull, 226 N. Y. 546, 552, 553.)

In the instant case the plaintiffs elected the first remedy. When the action was commenced that remedy was barred by the six-year Statute of Limitations. (Civ. Prac. Act, § 48, subd. 1; Hamill v. Title Guarantee & Trust Co., 260 App. Div. 873, leave to appeal denied, 285 N. Y. 857; Steinert v. Title Guarantee & Trust Co., 258 App. Div. 927, affd. 283 N. Y. 636.) The cause of action pleaded had already been barred by the statute in 1937 when plaintiffs claim that the fraud was discovered. Thus at the time the action was brought the plaintiffs did not have three remedies among which to elect. That was clearly pointed out in Schenck v. State Line Telephone Co. (238 N. Y. 308, 311 [Cardozo, J.]), where we said: An election of remedies presupposes a right to elect * * *. It ‘ is simply what its name imports; a choice, shown by an overt act, between two inconsistent rights, either of which may be asserted at the will of the chooser alone ’ * * *. If in truth there is but one remedy, and not a choice between two, a fruitless recourse to a remedy withheld does not bar recourse thereafter to the remedy allowed. As to this, there is nothing of uncertainty in the decisions in New York * * *.

" The plaintiff thought he had a remedy at law, and so thinking sued for damages. In truth he had no such remedy, for, irrespective of his knowledge of the fraud, his right of action for damages had been barred by lapse of time. The defendants have blocked his recourse to a remedy which he had not. They now say that because of his mistake, he must be held to have renounced forever the remedy he had. ' There would be no sense or principle in such a rule. ’ ” In addition, the Legislature, upon the recommendation of the Law Revision Commission (see Law Revision Report, Legislative Document, 1941, No. 65), changed the rule enunciated in Weigel v. Cook (237 N. Y. 136) by enacting Civil Practice Act, section 112-e by Laws of 1941, chapter 315, effective September 1, 1941. That section reads as follows: § 112-e. Claim for damages and rescission not inconsistent; complete relief in one action. A claim for damages sustained as a result of fraud or misrepresentation in the inducement of a contract or other transaction, shall not be deemed inconsistent with a claim for rescission or based upon rescission. In an action for rescission or based upon rescission the aggrieved party shall be allowed to obtain complete relief in one action, including rescission, restitution of the benefits, if any, conferred by him as a result of the transaction, and damages to which he is entitled because of such fraud or misrepresentation ; but such complete relief shall not include duplication of items of recovery.”

The purpose of the amendment as outlined in the Law Revision Report was to enable an aggrieved party to obtain complete relief in a rescission action and to overcome the doctrine of election of remedies under which actions for or based upon rescission and those for damages based on fraud or misrepresentation in the inducement of a contract or other transaction were considered to be mutually exclusive.

Though we assume that the amendment, enacted subsequent to the entry of the judgment at Special Term, was not intended to apply to pending, litigation and did not revive the plaintiffs ’ cause of action based on a rescission which had previously been barred by the Statute of Limitations (Hopkins v. Lincoln Trust Co., 233 N. Y. 213; Robinson v. Robins Dry Dock & Repair Co., 238 N. Y. 271), yet the amendment is a legislative recognition of the injustice which is bound to arise whenever an unfortunate attempt to elect one remedy for fraud confers upon the wrongdoer immunity, in whole or in part, from liability for damages caused by the wrong or permits the wrongdoer to retain the fruits of his wrong.

For these reasons it is plain that, at the time when the motion for summary judgment was granted, the allegations of the complaint which we must assume are true, showed that the plaintiffs’ intestate had been wronged by the defendant’s fraud and that some remedy for the fraud was open to them even after they had mistakenly come into cpurt upon a cause of action which in theory at least was based upon a wrong in which the alleged fraud was only an incident. The alleged fraud has at all times been the wrong for which the plaintiffs have sought a remedy. In such case, though the defendant was entitled to judgment dismissing the complaint as pleaded, the court should look behind the form of the remedy sought and should grant the plaintiffs leave to amend their complaint upon proper terms. Indeed the judge at Special Term indicated that he would have granted such leave if he had not believed that the bar of the statute or other obstacle would make it impossible for the plaintiffs to allege a cause of action which would withstand a motion to dismiss.

The question remains whether this court may do so though it agrees with the courts below that the cause of action pleaded should be dismissed. The Legislature has in explicit terms conferred upon the Court of Appeals the power, upon the decision of a point of law, to grant to the plaintiff leave to “ plead anew or amend ” (Civ. Prac. Act, § 283). That power is, of course, subject to the limitations placed by the Constitution of the State upon the jurisdiction of the court to review facts. Without transgressing those limitations this court can rarely grant leave to amend where it affirms a judgment dismissing the complaint and leave has been denied by the courts below. We think that here is one of the rare cases where that power may and should be exercised.

The judgment should be affirmed without costs and with leave to the plaintiffs to serve an amended complaint within twenty days.

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

Judgment affirmed, etc.


author: Lehman, Ch. J.

text:
    Irving Trust Company, as Executor of Henry R. Burt, Deceased, Trustee, Respondent, v. Maggie Z. Horn Burt, Individually and as Successor Trustee, Appellant, and Henry R. Burt, Jr., et al., Respondents, et al., Defendants.
    Argued March 4, 1943;
    decided April 22, 1943.

      C. Murray Kavanagh and John Moncrief for appellant.

      William Weisman and Edward Schaeffer for Elizabeth Winslow et al., infants, respondents.

      Leon Leighton, guardian ad litem for Henry R. Burt, Jr., an infant, respondent.
   Lehman, Ch. J.

Henry R. Burt in 1935 executed a deed of trust transferring to himself as trustee specified personal property to have and to hold the said securities and property to the said trustee, its successors or assigns upon the * * * express trust and conditions and with the powers and limitations hereinafter conferred and set forth.” At the time the settlor executed the deed of trust he was married and had one child, Henry R. Burt, Jr., then about two weeks old. The “ express trust and conditions ” set forth in the deed of trust are designed to provide an income to the settlor’s wife during her lifetime and, after her death, to provide an income to their infant son Henry R. Burt, Jr. and any other children they might thereafter have, with contingent remainder in a share of the estate to the legatees or next of kin of each child upon the death of such child during the life of the trust. In no event could the trust continue longer than the lives of the settlor’s wife and of his son Henry R. Burt, Jr. and in no event could any person be interested in the income or principal of the trust fund except his wife and his son or after-born children or the legatees or next of kin of a deceased child. The “ powers and limitations * * * conferred and set forth ” in the deed of trust are designed to give the settlor almost unlimited control of the investment and reinvestment of the trust fund during his lifetime even should he retire as trustee; to assure that during his lifetime he should have power to designate any successor or substituted trustee ” and that after his death a majority in number of the adult beneficiaries ” of the trust or the guardians if any of the “ minor beneficiaries ” should have the same power.

The settlor died on January 1, 1937. The deed of trust provided that upon the death or resignation of the settlor as trustee “ the Grantor hereby nominates and appoints Irving Trust Company to be and act as Trustee hereunder.”

Irving Trust Company renounced the appointment and Margaret Z. Horn Burt, the widow of the settlor and the life beneficiary of the trust was appointed successor trustee. In an action brought by Irving Trust Company as executor of the last will and testament of the deceased settlor and trustee for the settlement of his account as trustee, the successor trustee has asked for a judicial construction of the trust agreement. The trust indenture provides that: The Trustee is given the widest discretion to use his judgment in such manner as he may deem best and specifically to vote and give proxies in respect of any shares of stock at any time forming a portion of the trust fund.

‘ ‘ The Trustee is expressly authorized and empowered, though not required, to retain any and all securities and property transferred to him hereunder or hereafter received by him and with full power and authority to change investments and to invest and reinvest the principal in such securities and properties (including common stocks) as he in his discretion may determine and whether or not the same be authorized by law for the investment of trust funds.”

The successor trustee contends that the power “ to invest and reinvest the principal in such securities * * * as he in his discretion may determine and whether or not the same be authorized by law for the investment of trust funds ” was conferred not only upon the original trustee but upon each “ successor trustee.” The guardian of the infant son contends that such power was limited to the lifetime of the settlor. The deed of trust provides that: The word ‘ trustee ’ where used herein shall be deemed to refer to one or more trustees and the word ‘ trustees shall be deemed to refer to one or more trustees.” There can be no doubt that the settlor intended that, in general, any reference to the powers and authority of “ the trustee ” should apply not only to the original trustee but to each successor trustee. Where, however, under a fair construction of the deed of trust it appears that the settlor used the words “ the trustee ” in a more restricted sense or limited the period during which a power conferred upon the trustee might be exercised, the court is bound to give effect to the testator’s intention.

In other paragraphs of the trust indenture which begin with the words “ During the lifetime of the Grantor ” the settlor has unmistakably indicated that the powers specified in those paragraphs are to be subject, while the settlor is alive and can control the administration of the trust fund, to the limitations therein specified. Those limitations, however, should not, in our opinion, be read by implication into the general grant of power to a trustee contained in the paragraph which we have quoted. In our opinion the trust indenture indicates no intention of the settlor to limit the discretionary power of the trustee appointed after his death to invest in securities “ authorized by law for the investment of trust funds.”

The judgments should be modified in accordance with this opinion and as so modified affirmed with costs to all parties filing separate briefs, payable out of the trust estate.

Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Judgment accordingly.


author:
Desmond, J.
      Conway, J.

text:
    The People of the State of New York, Respondent, v. Herman Rabinowitz, Appellant.
    Argued January 13, 1943;
    decided April 22, 1943.

      Jacob Shientag for appellant.

      Frank S. Hogan, District Attorney (Stanley H. Fuld and Charles H. McHugh of counsel), for respondent.
   Desmond, J.

Defendant was convicted of the crime of robbery in the first degree and sentenced to a state prison for a term of not less than ten nor more than fifteen years. The evidence for the prosecution consisted of the testimony of the victim of the alleged robbery and of two eye witnesses, all of whom identified the defendant as the man who had committed the robbery on August 27,1937 between 10:30 and 11:00 a. m. The only defense witness was the mother of defendant. The substance of her testimony was that during 1937,- the defendant had worked in her candy store between 6:00 a. m. and noon, every day. On cross-examination the mother conceded that defendant may have taken a week off to go somewhere. Concerning this testimony of defendant’s mother, the court charged the jury: “ The" defendant further states through the testimony of his mother that he was busy there in the candy store in the month of August, 1937.

“ Of course, as I told you before, alibi is a word that means elsewhere. It is the best defense an honest man can have — an honest man. If the alibi is false you may take the falsity of the alibi on the question of the defendant’s guilt. Then, of course, if you reject the alibi, you naturally, logically, accept the testimony of the State’s witnesses.”

Defendant says that the italicized language in the above quotation from the charge is an erroneous statement of the law, so. prejudicial to defendant’s rights as to require reversal. We find in the authorities cited by the District Attorney no justification whatever for such an instruction to a jury. The jury here was told that, if it should disbelieve the testimony of the defense witness that defendant was busy at his work every day at the hour of crime, then the jury should ‘ ‘ naturally, logically,” accept the testimony of the State’s witnesses identifying the defendant as the robber. Clearly this was error, and serious error. This court has many times discussed the defense of alibi. It has held that it is not essential that alibi be proven beyond a reasonable doubt (People v. Vaccaro, 288 N. Y. 170, 173; People v. Elmore, 277 N. Y. 397), that the alibi testimony need not be such as to show that it would have been impossible for the defendant to have committed the crime charg’ed (People v. Barbato, 254 N. Y. 170; People v. Perry, 277 N. Y. 460), that alibi is not an “ exculpatory defense upon which the defendant has the burden of proof,” but is evidence which may tend to cast doubt into the minds of the jury as to whether the defend.ant is guilty. (People v. Russell, 266 N. Y. 147, 152). In People v. Russell (supra) the Trial Court had told the jury in effect that if it did not believe defendant’s alibi witnesses, the jury might consider the alibi “ defense ” a fabrication, a corroboration of the testimony of the People’s witnesses and an admission of the truth of their testimony. If, said this court in that case (266 N. Y. at page 153), the jury did choose to accept as true the prosecution’s evidence, then rejection of the alibi testimony would necessarily result, but not vice versa. Disbelief of the ,,defendant’s witnesses could not, it was said, be corroboration of the People’s witnesses. Much less could it be, as the charge 'says here, that the rejection of defendant’s proof spells acceptance of the People’s proof. Jurors in a case like this, may, for any one or more of a variety of reasons, choose to disbelieve the alibi evidence. As triers of the facts they may doubt the accuracy of the witness’ memory, or may note the confusion or hesitation in her speech, or may consider the testimony inherently improbable or the witness herself generally unworthy of belief. If rejection of alibi testimony, for those or other reasons, must lead “ naturally ” and logically ” to an acceptance of the prosecution’s proof, then a defendant will have more to lose than to gain by proffering such evidence, except in the unusual case where the alibi proof is in itself so completely conclusive as to brook no disbelief. The charge above quoted can well mean (if indeed it is susceptible of any other meaning) that disbelief of the mother’s story leaves to the jury only the automatic and imperative duty of announcing a verdict of guilty.”

We have not failed to note the language that immediately followed, in the court’s charge in this case, the above quoted excerpt. The court went on to say “ Never forget that there is no burden upon the defendant to prove his innocence — never.” Correct though this and other similar statements of law in the charge undoubtedly were, they were not suEcient, in our opinion, to overcome the error of the direct and specific command that acceptance of one side’s incriminating testimony must result at once from rejection of the other side’s alibi testimony. The only real issue in this case was as to the accuracy of the identification testimony. When the jury were told that this issue might be decided by determining whether defendant’s mother was falsifying or mistaken, the error was not one to be overlooked.

Claim is made that no proper exception to the erroneous instruction was taken. When asked for his exceptions or requests, defendant’s counsel said: “ * * * I also take exception to your Honor’s remarks about the mother testifying.” The only “ remarks about the mother testifying ” are in that part of the charge hereinabove quoted. We think the exception was suEciently stated. Defense counsel, finding it necessary to protect his client’s rights as against a prejudicial statement in the charge, should not be required to give added emphasis to the erroneous matter by repeating it at length.

The judgments should be reversed and a new trial ordered.

Conway, J.

(dissenting). Whether or not a judgment of conviction should be reversed is often a matter of judgment in view of the legislative command contained in Code of Criminal Procedure, section 542, and in this instance a reversal would not appear to be in the exercise of sound judgment.

The test of the correctness of a charge is " Whether the jury, hearing the whole charge, would gather from its language the correct rules which should be applied in arriving at decision.” (People v. Russell, 266 N. Y. 147, 153.) There is bttt a single sentence of the charge here of which complaint is made and we. do not think that the court’s attention was directed to it clearly so that, assuming that he had erred, he could have corrected it. (People v. Flanigan, 174 N. Y. 356, 372; Arnold v. People, 75 N. Y. 603.)

We shall quote now the portion of the charge containing the sentence in question: “ So I say, ladies and gentlemen, your problem here is to find who is telling the truth. The defendant claims through his attorney that the recollection of the State’s witnesses is such, that it should create a reasonable doubt in your minds. Is that correct, Mr. Kreindler? Mr. Kreindler: Yes. The Court: The defendant further states through the testimony of his mother that he was busy there in the candy store in the month of August, 1937. Of course, as I told you before, alibi is a word that means elsewhere. It is the best defense an honest man can have — an honest man. If the alibi is false you may take the falsity of the alibi on the question of the defendant’s guilt. Then, of course, if you reject the alibi, you naturally, logically, accept the testimony of the State’s witnesses. Never forget that there is no burden upon the defendant to prove his innocence — never. The burden in a criminal case never shifts; throughout the entire case it is on the State to prove the defendant’s guilt beyond a reasonable doubt from the beginning to the end.”

Let us look at the two sentences which have been italicized. In the first one the jurors were told that if the alibi were false, the falsity might be considered on the question of defendant’s guilt. Then,” said the court, of course, if you reject the alibi, you naturally, logically, accept the testimony of the State’s witnesses.” As I read those two sentences, the word “ then ” refers to a finding that the alibi was false. The words false ” and “ falsity ” had been used in the sentence preceding the use of the word “then.”

Now let us examine the facts. The victim of the hold-up was one who regularly obtained the pay-roll money for his employer. On the day in question he drew the money, some $1300, from the bank and returned to his place of business. The defendant followed him into the building, pressed a pistol against his body and announced, “ This is a stick-up.” The defendant asked for “ the envelope ” which the victim had in his pocket. When given an envelope containing bank-books, the defendant looked at it, handed it back and said, “ Give me the other envelope if you want to see your mother again.” The money was then given to defendant. There was positive identification of defendant by the victim and two other witnesses.

As Judge Desmond points out the only defense witness was the mother of defendant. On direct examination she testified that the defendant had been in her store every day during 1937 from " six in the morning until twelve afternoon. ’ ’ The robbery occurred in August, 1937 between 10:30 a. m. and 11 a. m.

It would be difficult to credit testimony that defendant opened the store at six “ Every single day ” in 1937 and invariably remained until noon. However, we need not speculate on the improbability of the testimony, for on cross-examination Mrs. Babinowitz acknowledged that her son was not always in the store. She said: “ Maybe he took some time, a week off to go out to some place.”

Is not this just the kind of testimony — quite evidently concocted and almost transparently false — which as a matter of judgment caused our courts to lay down the doctrine charged by the trial judge that the jury might consider or ‘ ‘ take the falsity of the alibi on the question of the defendant’s guilt”? See the quotations from Colby’s Criminal Law (vol. 2, p. 201) and from Rex v. Brennan (30 Howell’s State Trials, 58, at p. 79) in People v. Trombino (238 App. Div. 61, 63, affd. 262 N. Y. 689.)

The fabrication or utter failure to prove an alibi is a factor for consideration by a jury in passing upon the guilt of a defendant. (See People v. Croes, 285 N. Y. 279, 282, 283; People v. Pignataro, 263 N. Y. 229, 234; People v. Deitsch, 237 N. Y. 300, 303; People v. Trombino, supra.)

It is defendant’s contention that, by the portion of the charge which has been quoted, the court “ advised that the defendant had to be convicted if the alibi was not accepted ” and further that it “relieved the jury of the necessity of determining the credibility of the People’s witnesses and placed the burden of establishing innocence upon the defendant.” That is very far fetched. When the sentence under attack is read in its context, the jury could not possibly have been led to believe that nonacceptance of the mother’s testimony justified a verdict of guilty without regard to evidence of identification.

The court had charged that the defendant was “ presumed to be innocent * * * until his guilt is established beyond a reasonable doubt,” and that the existence of a doubt entitled the defendant to an acquittal. The court had charged that “ evidence on that question [identification] should be as far certain as human recollection under the most favorable circumstances will permit.” He had charged that it was for the jury to say whether the People’s witnesses who identified the defendant were telling the truth. He had charged: “It is for you to say whether or not this witness [Weissman] under those circumstances, both physical and direct — under the circumstances of this robbery, if you so find — would remember the man who held him up four years afterwards.”

The defendant’s argument really is that the jurors were so mislead by one sentence in the charge that they believed that “ if the alibi was not accepted ” by them it was their duty to convict the defendant of committing a robbery while armed with a pistol. We do not think that any jury, and certainly not a jury composed of six men and six women as in this case, were or could have been so misled.

The guilt of the defendant was clearly established and the judgments should be affirmed.

Lehman, Ch. J., Loughran, and Rippey, JJ., concur with Desmond, J.; Conway, J., dissents in opinion in which Finch and Lewis, JJ., concur.

Judgments reversed, etc.


author: Desmond, J.

text:
    The People of the State of New York ex rel. Carl Shapiro, Appellant, v. Keeper of the City Prison (Tombs, New York County), Defendant. The People of the State of New York, Respondent.
    Argued March 10, 1943;
    decided April 22, 1943.

      I. Maurice Wormser, Charles Tolleris and Irving R. Kass for appellant.

      Frank S. Hogan, District Attorney (Stanley H. Fuld and Charles H. McHugh of counsel), for respondent.
   Desmond, J.

There are here presented questions of importance concerning the right of a citizen to bail before trial and the power of a court, on the return of a writ of habeas corpus, to review the prior denial of bail by another court of coordinate jurisdiction.

One Jacob Shapiro (brother of the relator) stands charged, by two indictments (forty seven counts), with having committed various acts of extortion, involving large sums of money. These indictments were found in 1937 and 1940 but Jacob Shapiro was not arraigned thereon until 1942. On his arraignment in the Court of General Sessions, he asked that he be released on bail but the District Attorney opposed the application and the judge thereupon held a hearing. It developed that Shapiro had, over a period of twenty-three years, been- convicted of seven crimes, four times in the State courts and thrice in the courts of the United States. As to one of the latter convictions, there was a showing that in 1937, Shapiro, free on bail pending an appeal, had failed to appear after the affirmance of that conviction and had remained a fugitive from justice for about a year, on account of which default his bail had been declared forfeited. On these showings, the General Sessions Judge denied the application and refused to admit the defendant to bail. The judge made a notation on the records, pointing to Shapiro’s past crimes, to his 1937 abscondence, and to the fact that he would, if convicted on the pending charges, be a “ fourth felony offender,” subject to a sentence of life imprisonment. This order denying bail was not appealable. (Code Grim. Pro., §§ 517, 566.)

■ Immediately after the denial of bail, and on December 17, 1942, Carl Shapiro, brother of Jacob, sought and obtained, from a justice of the Supreme Court, a writ of habeas corpus. The petition on which that writ was granted asserted that the prisoner, unless released, would be unable to prepare his defense, that he had offered, and was still offering, to post a surety company bail bond in the amount of $50,000 and that the prosecutor had stated that the trial could not be held until February or March of 1943. On the return of the writ before a Special Term for motions in the Supreme Court, counsel for relator argued the unfairness of keeping the prisoner confined while awaiting trial, and the prosecutor, pointing to the prisoner’s record and the enormity of his alleged crimes, urged that bail should not be allowed, or, at least, should not be fixed in any amount less than $200,000. The prosecutor argued there, as he does here, that the Supreme Court had no power to fix bail in the habeas corpus proceeding, after another court, having jurisdiction of a (felony) case, had refused to allow the release on bail. No testimony was taken at this habeas corpus hearing, the argument there being based on facts that had been presented to the judge at General Sessions, that is, the facts |as to the prisoner’s criminal record and the pending-indictments. Special Term thereupon made its order that Jacob Shapiro should be admitted to bail upon his entering into a recognizance as provided by law in the sum of $100,000. The Special Term Justice was of the opinion that bail in such cases was a matter of right and not of discretion.

By a divided court the Appellate Division reversed that order, dismissed the writ and remanded the prisoner. The majority of that court were of the opinion that the Supreme Court had jurisdiction in a habeas corpus proceeding to inquire into the prior denial of bail by the Court of General Sessions, but that, in this instance, the latter Court had denied bail in the exercise of a sound discretion and that Special Term had erred in interfering with that discretion. The Appellate Division, citing People ex rel. Fraser v. Britt (289 N. Y. 614), ruled also against the relator’s contention that the denial of all bail in a non-capital felony case is unconstitutional.

Taking up the last-mentioned question first, we held in People ex rel. Fraser v. Britt (supra), that the prohibition against excessive bail ” in article 1, section 5, of our State Constitution, does not make mandatory the release of a defendant on bail in all cases. By statute in this State, admission to bail before conviction is a matter of right in misdemeanor cases and a matter of discretion in all other cases. (Code Crim. Pro., §§ 552, 553.) Most of the states have constitutional provisions making bail a matter of right in all except capital cases (see vol. 3, Amer. & Eng. Encyc. Law [2d ed.], p. 665) but in the States like New York, whose Constitutions follow the Federal model in this respect (see United States Constitution, 8th Amendt.) by prohibiting “ excessive bail,” such a constitutional declaration as to bail accords no accused any right to bail, but serves only to forbid excessiveness. The first and second Constitutions of New York State contained no Bill of Rights and no reference to bail; in the third (1846) Constitution there was inserted the clause protecting citizens against “ excessive bail.” (Lincoln’s Constitutional History of New York, vol. 1, pp. 715-743, vol. 4, pp. 65-68.) Thus it has been left to the Legislature to determine in what cases bail is to be allowed as of right and in what cases the matter of grant or refusal is to be confided to the court’s discretion. The result is that a statute which makes it discretionary with a court to allow or refuse bail does not in itself offend against the Constitutional ban against the requiring of excessive bail. (People ex rel Fraser v. Britt, supra, Vanderford v. Brand, 126 Ga. 67.) As a matter of logic it might seem that a prohibition against excessive bail should imply a right to bail in appropriate amount in all cases, but the history of the law of bail negatives such an implication. At common law the courts had discretion in all cases after indictment, to grant or deny the application, although they ordinarily did grant it in all except capital cases (1 Chitty’s Criminal Law, p. 129, People v. Goodwin, 1 Wheel. Cr. Cas. 443, Matter of Tayloe, 5 Cowen 39.) The reference in our Constitution to “ excessive bail,” therefore, referred only to amount of bail. The Legislature acted within its powers in dealing as it did not with amount of bail but with the associated question of when bail is to be allowed or denied.

We are by no means holding that this grant by the Legislature to the courts of discretionary power to deny bail in felony cases, can be exercised arbitrarily. Denial of bail is no light matter, and needs to be buttressed by a real showing of reasons therefor (including such reasons as were here advanced at the Court of General Sessions). But- an order denying bail is non-appealable, (Code Crim. Pro., §§ 517, 566, supra) and so any attack on such a denial of bail must be by other means. The method is by resort to the prisoner’s separate and different right to test, by the ancient remedy of habeas corpus, the legality of Ms detention. (People ex rel. Tweed v. Liscomb, 60 N. Y. 559.) A person imprisoned or restrained in his liberty, witMn the state, for any cause or upon any pretence, is entitled * * * to a writ of habeas corpus ” (Civ. Prac. Act, § 1230) and the high privilege of that writ shall not be suspended.” (N. Y. State Const., art. I, § 4.) Jacob Shapiro had a right to be heard in the Supreme Court on the return of his writ, and so the Special Term was not wholly without jurisdiction or power in the premises. But its inquiry was only as to the legality of the denial of bail, as to whether or not the denying Court has abused its discretion by denying bail without reason or for reasons insufficient in law. (1 Bailey on Habeas Corpus, p. 486.) There was, we hold, ample reason here for the denial of bail at General Sessions, but the lack of any statutory right of appeal from the General Sessions order made it doubly important that habeas corpus be made available to a prisoner forced to lie in jail without an adjudication of guilt. It does not follow, however, that the court which entertained the writ could exercise an independent discretion as to bail. The Legislature which forbade any appeal from an order denying bail, did not intend, in a backhanded way and under other forms, to permit the equivalent of an appeal, as to matters of discretion as well as matters of law. The traditional status and purpose of a writ of habeas corpus can be maintained in cases like this without making it a device for obtaining a new trial of a discretionary matter. If this petition for habeas corpus was, as clearly appears, an effort to get such a new trial, then it had to be denied, under section 566 of the Code of Criminal Procedure, which makes “ final ” a decision as to bail rendered by a “ judge presiding in the court in which the crime is triable.” Being no more than a second application to a different judge for the fixation of bail in a case where the first judge had, on the same facts, used his discretionary power to deny bail, the second application was properly denied not only because the first was “ final ” under the statute (§ 566) but also because such successive applications offend against orderly procedure.

This does not deny to the Supreme Court its own jurisdiction to let to bail any person committed, before and after indictment found upon any criminal charge whatever.” (Code Crim. Pro., § 22, subd. 8.) That jurisdiction is full and complete and can be exercised as to criminal causes pending in the Court of General Sessions. (People ex rel. McManus v. Warden, 226 App. Div. 364.) But it is an original jurisdiction to grant or refuse bail in the first instance, not to review the prior exercise of similar jurisdiction by the Court of General Sessions.

The order of the Appellate Division should be affirmed.

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

Order affirmed.


author: Lehman, Ch. J. Conway, J.

text:
    Morton S. Wolf, Appellant, v. George E. Roosevelt et al., Respondents.
    Argued March 3, 1943;
    decided April 22, 1943.

      John Gerdes, W. Randolph Montgomery and Irving T. Bush for appellant.

      Milton M. Bergerman, Herman Jervis and Joseph Cohen for respondents.
   Lehman, Ch. J.

In October, 1935, the United States District Court for the Southern District of New York approved and confirmed a plan of reorganization of 59th Street & Fifth Avenue Corporation in reorganization proceedings brought under section 77-B of the Bankruptcy Act (See U. S. Code, tit. 11, § 207) in which the corporation was the debtor. The plan so approved provided that the debtor corporation should transfer its property to Sherneth Corporation, that all the capital stock of Sherneth Corporation be deposited under a voting trust agreement and that the voting trust certificates be distributed among those entitled thereto under the reorganization plan. The plan was carried out. The voting trust agreement was executed on May 19,1936, but dated January 2,1936. It provided that it was made for a term of ten years beginning January 2, 1936, and ending January 2,1946, unless terminated sooner by unanimous vote of the voting trustees.

The voting trust was, it is undisputed, valid at the time it was made. The term for which it is made has not expired and it has not been terminated by vote of the trustees. The plaintiff, a stockholder, challenges the present validity of the voting trust agreement solely on the ground that after this agreement was made the Legislature in section 130-c of the Real Property Law (L. 1936, ch. 900, effective June 8, 1936) provided that No agreement appointing trustees to vote the stock of any corporation formed or used under a plan of reorganization of property shall be valid, for a longer term then five years and unless it has been submitted to and approved by the court * * The primary question here presented is whether the Legislature intended that the statute should apply to voting trust agreements valid when made for a term longer than five years.

■ The defendants claim that the Legislature did not intend that the statute should impair the obligation created by existing agreements and that under the Constitution of the United States could not do so, especially where the agreement was made pursuant to a plan approved by a Court of Bankruptcy in bankruptcy proceedings. We may not consider or determine the scope of the limitations placed by the Constitution upon" the legislative power to nullify in whole or in part existing voting trust agreements unless we determine first that the Legislature intended to exercise such power.

Even within the narrow • field where legislative power to nullify or change an existing agreement is unchallenged, a statute restricting the power of individuals to create or define their rights and obligations should not be construed in manner which would affect existing agreements unless the Legislature so provided in express terms or by plain implication. The Legislature has not so provided in section 130-c of the Real Property Law. It seems plain that the condition, imposed by the Legislature to voting trust agreements,— that they shall not be valid unless “ approved by the court,” could not be applied to contracts made at a time when no such approval Vas required by law unless it was the intent of the Legislature to terminate all existing voting trust agreements. Even the plaintiff does not contend that the Legislature so intended, nor does the plaintiff contend that the Legislature intended that agreements valid when made for a term of more than five years should be invalid when five years of the stipulated term had passed. The plaintiff contends only that the Legislature intended that by force of the statute voting trust agreements should become invalid when five years had passed after the statute became effective. The Legislature certainly did not say that. The language of the statute is at least inept if the Legislature intended that it should retroactively restrict the power of stockholders to enter into voting trust agreements.

The Legislature has not decreed that in the future voting trust agreements shall not be valid. It has attempted in the statute only to restrict the power of holders of securities to make such agreements in manner intended to safeguard them against dangers inherent at times in such agreements*. In the future holders of securities have the choice of entering into voting trust agreements, subject to such restrictions, for a limited time or of refraining entirely from entering into any voting trust agreement. If the statute is intended to apply to agreements already made those who entered into the agreement would be bound by limitations to which they did not agree, although they might never have consented to the plan of reorganization or the voting trust agreement if the agreement had been limited to five years from June, 1936.

The judgment should be affirmed, with costs.

Conway, J.

(dissenting). In a reorganization under section 77-b of the Bankruptcy Act, in which 59th Street & Fifth Avenue Corporation was the debtor, a plan of reorganization was approved and confirmed by order of the U. S. District Court for the Southern District of New York under date of October 25, 1935. The property of the debtor was transferred under the plan to the Sherneth Corporation, a New York corporation. The plan provided, among other things, for a voting trust of all of the capital stock of Sherneth Corporation and all of said capital stock was deposited with voting trustees under a voting trust agreement dated January 2, 1936. That agreement was made for a term of ten years ending January 2, 1946, unless sooner terminated. It has not been renewed or extended.

The plaintiff is the owner of voting trust certificates representing shares of stock in Sherneth Corporation. He brings this action seeking a declaratory judgment that the voting trust agreement has ceased to be enforceable by virtue of the provisions of section 130-c, subdivision 2, of the Real Property Law. He also seeks a direction to the voting trustees to issue and deliver to him the shares of stock represented by his voting trust certificates. That latter direction would he too broad. Plaintiff would he entitled to that, as we shall see, only if the defendants were unable to rally fifty-one per cent of the stockholders of Sherneth Corporation to support of the continuance of the voting trust agreement or to the execution of a new one.

Plaintiff moved for judgment on the pleadings at Special Term. The motion was denied and judgment entered dismissing the complaint. That judgment was unanimously affirmed by the Appellate Division and an appeal therefrom is here by our permission.

There are two statutes which must be considered by us. The first is section 50 of the Stock Corporation Law which provides in part as follows: § 50. Voting trust agreements. A stockholder, by agreement in writing, may transfer his stock to a voting trustee or trustees for the purpose of conferring the right to vote thereon for a period not exceeding ten years upon the terms and conditions therein stated.”

The other statute is section 130-c, subdivision 2, of article 4-A of the Real Property Law, chapter 900 of the Laws of 1936, effective June 8, 1936. It reads as follows: § 130-c. Voting trustees and voting trust agreements

•fc 3F 9P w *<p sv
2. No agreement appointing trustees to vote the stock of any corporation formed or used under a plan of reorganization of property shall be valid for a longer term than five years and unless it has been submitted to and approved by the court and no trustees appointed by such agreement shall continue to act thereunder after the expiration of its term, unless and until a new or an extension agreement has been entered into and received the affirmative approval of the holders of at least fifty-one per centum of the stock.”

The questions we must determine are whether the enactment of section 130-c, subdivision 2, limited the unexpired term of voting trust agreements which were still executory in part to a five year period of validity or enforceability running from the effective date of the statute, June 8,1936, when such agreements were executed prior to that effective date. A second question which we must determine is whether the granting of the relief sought by this action would interfere with provisions of the State or Federal Constitution.

Concededly, section 130-c, subdivision 2, is applicable to agreements made after the effective date of the statute. The question whether the Legislature intended it to apply only to agreements made after such effective date and not to executory agreements then existing is one of legislative intent and not legislative power. Under its reserved power, the legislature has power to limit the enforceability of, or to terminate, existing voting trust agreements affecting stock of New York corporations. (Matter of Morse [Bank of America], 247 N. Y. 290, 304; N. Y. Const., art. X, § 1; General Corporation Law, § 5.) When the Legislature grants the privilege of severing the voting right from the beneficial ownership of shares of stock of a New York corporation, the grant is subject to the reserved right of the Legislature to withdraw or modify that privilege at any time. When the Legislature takes it away or imposes conditions upon the continuance of that privilege, there is no interference with vested contract right or property right. There was in the voting trust agreement an implied provision that the privilege should terminate when the Legislature saw fit to terminate it. When the Legislature announces by an enactment a change in the public policy of the State and withdraws or imposes conditions upon the continuance of the privilege, the parties to the agreement are considered to have contemplated such an occurrence. Nor can it be said that the trustees have acquired any property interest under the voting trust agreement of which they are deprived by the statute. The trustees exercise certain voting powers, not for their own benefit, but for the benefit of the stockholders and the corporation. They have no beneficial interest in the stock and thus their right or interest lacks those elements of ownership which are so associated in our minds with the idea of property as to be beyond the legislative power or control. (Metcalfe v. Union Trust Co., 181 N. Y. 39, 44.) ” (Matter of Morse [Bank of America], 247 N. Y. 290, 304.)

Jt is true that in the Morse case banking was affected and, as was there said, banking is a business affected with a public interest but that cannot affect the fact that all voting trusts “ are recognized and regulated by statute. Whether they would be valid at common law in the absence of a statute defining and regulating them is immaterial. Public policy in regard thereto is defined by the Legislature. Between the conflicting rules of the common law, a choice has been made. No voting trust not within the terms of the statute is legal and any such trust, so long as its purpose is legitimate, coming within its terms is legal. The test of validity is the rule of the statute. When the field was entered by the Legislature it was fully occupied and no place was left for other voting trusts. (Matter of Morse [Bank of America], 247 N. Y. 290, 298.) The amendment we are considering merely regulates the manner in which the stock of a corporation formed or used under a plan of reorganization of real property shall be voted by voting trustees and since it “ does not affect the property of the corporation or its objects, it comes within the reserved power to amend corporate charters so as to regulate methods of administration and details of procedure in the interest of the public and of all concerned. (Lord v. Equitable Life Assur. Society, 194 N. Y. 212.)” (Matter of Morse [Bank of America], supra, p. 304.)

The Legislature was of the opinion, at the time of the enactment of section 130-c, subdivision 2, that corporations formed or used under a plan of reorganization of real property were also affected with a public interest. Article 4-A of the Real Property Law of which section 130-c, subdivision 2, forms a part was enacted immediately following an investigation by a sub-committee of the New York Legislature known as the Streit Committee (N. Y. Leg. Doc. [1936] No. 66). The article was popularly known as the “ Streit Act ” and was intended to remedy what the Legislature considered to be abuses, as described in the Committee Report, in the use of voting trusts. The remedy adopted by the Legislature was a simple and reasonable one. It was a provision that a voting trust agreement involving the stock of a corporation used in the reorganization of real property (permitted for a ten year period under Stock Corporation Law, § 50) could not be enforced for more than five years, unless at the end of that time at least fifty-one per cent of the stockholders affirmatively approved a continuance of the voting trust agreement or made a new one. It is difficult to conceive of the Legislature’s not intending that such a remedy should be applicable to the executory provisions of existing agreements. The article provides a complete statutory scheme designed to protect * mortgage investments (Bakers Share Corp. v. London Terrace, Inc., 130 F. 2d 157, 160.)

Curiously enough an amendment to section 130-c, subdivision 2, was proposed in the 1942 session of the Legislature by which the following would have been added: “ The provisions of this subdivision shall not be retroactive and shall not be construed to apply to agreements entered into prior to June 8, 1936, the effective date of Chapter 900 of the Laws of 1936.”

In reporting its disapproval of the amendment (which failed of passage), the Committee on State Legislation of the Association of the Bar of the City of New York said:

“ If subdivision 2 of section 130-c is desirable legislation — which it seems to be since it is aimed at preventing voting trustees from entrenching, themselves too long in control — it is hard to see why an exception should be made of voting trusts set up prior to the date when the section was originally adopted. As "such adoption took place more than five years ago, any such voting trust must now have been in existence for more than the five-year period limited by the section as the term during which voting trustees may remain in control without a new mandate from the stockholders whom they represent.
While it is undoubtedly true that voting trusts for ten years were set up in good faith before the passage of subdivision 2 of Section 130-c in 1936, and that the voting trust agreements in some, if not in all, eases, contained no machinery for such a referendum as the bill contemplates, this would seem to be no reason why the change in legislative policy embodied in the subdivision should not be applied to such situations. That change was made as the result of a legislative investigation which revealed serious abuses; and although some of the preexisting voting trusts have no doubt been well administered, a statute forcing voting trustees generally to make a report of their stewardship and seek a new authorization from their cestuis que trust ent would seem to be in the best interests of the latter, who are the persons entitled to the primary protection of the law.
An application of the requirements of subdivision 2 of Section 130-c to a pre-existing voting trust may in some cases be productive of hardship. In the main, however, the advantages of having the voting trustees accountable at an earlier date to the stockholders for whom they are acting, would seem to offset the possible expense and confusion incident to a referendum. The preservation of something in the nature of democratic control is worth the possible loss of efficiency that may in some cases ensue.”

There can be no question, therefore, that agreements appointing trustees to vote the stock of a corporation formed or used under a plan of reorganization of real property were affected with a public interest and were so considered at the time of the enactment of section 130-c, subdivision 2, and at the time of the execution of the voting trust agreement we are considering (its execution took place between the passage of the Act and the signing of it by the Governor.)

The question then, to repeat it, is this: Did the Legislature intend that section 130-c, subdivision 2, should be applicable to the unexpired executory period of voting trust agreements where such agreements continued for more than five years after the effective date of the statute. That question would appear to require an affirmative answer by reason: a. of the express language of the statute; b. of the absence of any statement in the statute that it should not be applicable to then existing agreements although there was such statement in another section of the same article enacted simultaneously.

a. Let us take the language of the statute. It provides that: “No agreement * * * shall be valid for a longer term than five years.” It is all inclusive. It applies to all agreements which would be valid for a term of more than five years were it not for the statute.

b. There is no provision that section 130-c, subdivision 2, shall not be applicable to existing voting trust agreements. Yet in section 127 of the Real Property Law passed at the same time there is this provision: The provisions of this section shall only apply to trust indentures or mortgages hereafter entered into. ’ ’

“ Regulatory laws, reasonable in character, designed to accomplish a legitimate public purpose, and enacted to promote the public welfare apply even to private contract rights when the public policy is appropriately declared and defined and the two conflict. (People ex rel. Durham R. Corp. v. La Fetra, 230 N. Y. 429, 448.) ” (Matter of Morse [Bank of America], 247 N. Y. 290, 303, 304. See, also, Dillingham v. McLaughlin, 264 U. S. 370, 374 and cases cited.)

Our interpretation of the legislative intent as expressed in section 130-c, subdivision 2, gives immediate prospective effect to the public policy expressed therein. It violates no rule of statutory construction. It gives effect to the legislative command that it ‘ ‘ shall be construed liberally to effectuate its purpose.” (Real Property Law, § 130-h.) Such interpretation does not require a holding that all voting trust agreements made prior to the enactment of section 130-c, subdivision 2, which had not received court approval are void. It should be sufficient to point out that that question is not here presented since the agreement in the instant case had court approval. Apart from that fact, however, a reasonable interpretation is that the requirement of court approval is also prospective. Such an agreement is not effective for any purpose if made after the effective date of the statute without the approval of a court. The statute does not retroactively cancel agreements already in effect before its enactment because they had not received court approval at a time when none was required. As a remedial statute, section 130-c, subdivision 2, “ should receive that interpretation which will best and most effectually carry out the intent of the Legislature, as indicated by its terms; and in construing it, so far. as there is any ambiguity in its frame-work, respect should be had to the law as it existed prior to its enactment, and the evils intended to be remedied. Such construction should be given as will redress the evils and advance the remedies which were in the minds of the legislators in the enactment" of the law.” (Johnson v. Oppenheim, 55 N. Y. 280, 289.)

Another question remains. Does the New York Legislature retain control over voting trusts of New York corporations even if such trusts were originally created under a plan of reorganization in a proceeding under the Federal Bankruptcy Act? To state the question is to answer it. No reorganization plan whether approved by State or Federal court can by reason of such approval confer corporate powers denied by statutes of the state in which the corporation was organized. Nor can such court by such approval prevent the state from exercising in the future the power of control which it has reserved to itself over corporations of its own creation.

Contentions to the contrary have been so well answered in two opinions by the Circuit Court of Appeals (2d Circuit), involving section 130-c, subdivision 2, that we quote from them.

In Bakers Share Corporation v. London Terrace, Inc. (130 F. 2d 157, 159), Judge Learned Hand wrote for the court:

The ‘ Streit Law ’ was no doubt primarily meant * * * to protect unguaranteed bondholders, not only before and during foreclosure, but at and after any reorganization which should follow under section 122; but there is no antecedent reason why the protection given to the shareholders of a new corporation organized in aid of such a reorganization should not be given to those of a similar corporation organized in aid of a reorganization under section 77-b. No limitations upon the powers of such a corporation would in any sense invade the functions of the bankruptcy court; that court is not obliged to use a state corporation as its instrument at all; it may leave the debtor in possession of its property; but if it does choose to use one, it must take it with such powers as the state law sees fit to give it.”

In the case of Matter of Ambassador Hotel Corp. (124 F. 2d 435, 436, 437), Judge Swan wrote for the court: ‘ ‘ Sharp concedes that the voting trust certificates were validly issued pursuant to the confirmed plan of reorganization, and the issue he tenders for decision by the state court is: What is the legal effect of a subsequently enacted state statute upon the rights created by the federal decree in holders of voting trust certificates. Obviously, this question had not been passed upon by the reorganization court. Nor was it one over which the court could reserve jurisdiction to itself. When the "court confirmed a plan of reorganization which set up a New York corporation with stock issued to voting trustees, it used a tool created under and subject to state laws. The future fate of the corporation was not within the control of the bankruptcy court, nor could that court reserve power to adjudicate controversies in which it might become involved — whether they should arise from a change in state law or from the corporation’s own conduct, as for example, negligent injury to some guest of the hotel or failure to pay current bills. The appellants argue that a retroactive application of the statute under discussion will ‘ modify ’ the plan of reorganization. We are not here concerned with how the statute is to be construed ; but if the voting trust provisions shall be applied retroactively, it will be merely a consequence of having incorporated under the laws of New York the company which was to carry on the debtor’s reorganized business. In selecting such a corporation as an instrumentality of reorganization, the bankruptcy court sent it out into the state as fully subject to state law as though the court had had nothing to do with its creation.”

The judgment of Appellate Division should be reversed with costs, and the matter remitted to Special Term for proceedings not inconsistent with this opinion.

Loughran, Rippey and Desmond, JJ., concur with Lehman, Ch. J.; Conway, J., dissents in opinion in which Finch and Lewis, JJ., concur.

Judgment affirmed.


text:
    Harry Semanchuck, Respondent, v. Fifth Avenue and 37th Street Corporation, Appellant and Respondent; Gotham Construction Corporation, Appellant, and Aetna Fireproofing Company, Respondent.
    Argued March 2, 1943;
    decided April 22, 1943.

      William L. Shumate for Gotham Construction Corporation, appellant.

      Raymond D. O’Connell and Edmond B. Butler for Fifth Avenue and 37th Street Corporation, appellant and respondent.

      Samuel Saline for plaintiff, respondent.

      Charles F. Bachmann, Thomas F. Keane and John P. Smith for Aetna Fireproofing Company, respondent.
   Lehman, Ch. J.

The plaintiff, an employee of ¿Etna Fireproofing Company, was injured while working in a building then in course of construction. Defendant, Fifth Avenue and 37th Street Corporation, is the owner of the real property. The owner made a contract with Gotham Construction Corp., hereinafter called the “ contractor,” for the masonry, lathing, plastering, carpentry and other work in the erection of the building. The owner supervised all the work and was, in effect, the general contractor for the construction of the building. The Labor Law, in section 241, places upon “ all contractors and owners, when constructing * * * buildings ” direct and positive duties for the protection of employees on building construction * * * work,” including the duty thoroughly to plank over floor beams of iron and steel (subd. 4) and the duty to enclose and fence in by barriers the sides of a shaft or opening in the floor of a building under construction. The plaintiff, claiming that his injuries were the result of a fall through a shaft or opening not enclosed or fenced in by barriers as required by statute, brought this action to recover the consequent damages.

The jury found that both the owner and the contractor were negligent in failing to provide the barriers and guards required by section 241 of the Labor Law. The finding is sustained by the evidence. The statutory duty imposed upon both the owner and contractor was positive and could not be delegated and the provision in the contract between the owner and the contractor, whereby the contractor agreed to “ erect and maintain all such temporary work as may be required for the protection of the public and those' employed in or about the building, including guards and barricades around openings ” confers upon the owner no immunity for damages to another, Tesulting from the failure of the owner to perform the duty imposed upon the owner, as well as upon the contractor, by statute. So the Appellate Division held and all the judges of this court agree that the judgment in favor of the plaintiff against both owner and contractor should be affirmed. The question remains whether the contractor has made a valid agreement to indemnify the owner against liability for damages resulting from the failure of both to perform their statutory duty.

In its contract with the owner the contractor agreed: “ Article 28 — Indemnity: In addition to the liability imposed upon the contractor by law, and by article 27, which liability is not impaired or otherwise affected hereby, the Contractor hereby assumes the obligation to save the Owner harmless and indemnify him from every expense, liability or payment, by reason of any injury to any person or persons, including death, resulting from any action or operation under this contract.” The owner made a cross-claim against the contractor for indemnity. The trial court rejected the cross-claim, but the Appellate Division sustained the cross-claim and granted judgment accordingly.

In the case of Walters v. Rao Electrical Equipment Co. (289 N. Y. 57) a workman employed by a subcontractor upon the construction of a building negligently dropped a piece of pipe which fell through a space between the floor beams and caused serious injuries to a workman of a different subcontractor who was working one floor below. The accident would not have happened, at least so the jury found, if the general contractor had performed the statutory duty imposed upon him by subdivision 4 of section 241 of the Labor Law to plank over the floor beams thoroughly. It would not have occurred if the workman of a subcontractor had exercised reasonable care in his work. A jury found that the negligence of the general contractor and the negligence of the employee of the subcontractor were concurring causes of the accident and upon its finding the plaintiff was entitled to judgment against both the general contractor and the subcontractor. The general contractor by cross-complaint sought, in that action, indemnity from the subcontractor under a clause in their contract which provided the subcontractor will indemnify the contractor from claims for negligence in the course of the performance of the work. This court held that the agreement should not be construed to indemnify the general contractor against its own negligence and rejected the general contractor’s claim for indemnity. We are told now that the decision in that case requires the rejection of the claim for indemnity, made under a similar clause, by the general contractor in this case against a subcontractor.

Three judges, including the writer of this opinion, dissented from the decision in the earlier case, insofar as it held that the general contractor was not, under the contract, entitled to indemnity from the subcontractor. The controversy over the applicable rule to be followed in the construction of the indemnity agreement has been resolved by that decision. The authoritative force of a decision as a precedent in succeeding cases is not determined by the unanimity or division in the court. The controversy settled by a decision in which a majority concur should not be renewed without sound reasons, not existing here. All the judges of the court accept the decision in the Walters case and the rules which form the basis for that decision as guides in analogous cases.

The rules which form the basis for the decision are tersely and plainly stated in the opinion of Conway, J. “ The failure of the general contractor thoroughly to plank over the steel beams was a breach of a primary nondelegable duty ” and “ it was the active duty of the general contractor, if the space required covering, to cover over the floors. * * * The general contractor and the subcontractor,” it is said, “ were joint active tort feasors.” Analyzing the language of the indemnity agreement, the court found that it revealed ” no intention to extend the liability of the subcontractor beyond indemnification for the acts of persons employed by the subcontractor and that certainly no such intention was “ unequivocally expressed.” From these premises it necessarily followed that the indemnity agreement of the subcontractor did not extend to liability for the wrong of the general contractor. The dissenting judges challenged the premises not the conclusion which must be drawn from these premises if they are sound. The contention of the dissenting judges was that the active misconduct ” of the subcontractor was the affirmative cause ” of plaintiff’s injury while the dereliction of the general contractor was only the “ omission of its secondary duty to protect the plaintiff from such violence,” and that from these premises the conclusion followed that the " active ” wrongdoer owed indemnity to the wrongdoer whose negligence was only passive. The conclusion of the dissenting judges was rejected on the ground that when the Legislature in section 241 of the Labor Law imposed upon both the owner and contractor the positive command to provide the protection deemed appropriate by the Legislature in building and construction work, the purpose of the command and the nature of the duty created indicated a legislative intent that the general standards of “ active ” and passive ” negligence and the correlative obligations of wrongdoers based upon such distinctions which antedated the statute, should not be applicable within the field covered by the statute, to an omission to obey the statutory command.

In the case which we are now considering, as in the case of Walters v. Rao Electrical Equipment Co. (supra), it is plain that the owner and the contractor are liable to the plaintiff for their failure of duty which both owed to the plaintiff. As in the earlier case, a defendant, liable to the plaintiff for failure to furnish protection to workmen employed in constructing a building in accordance with the primary, nondelegable active duty imposed by section 241 of the Labor Law, seeks indemnity from a “ joint active ” tort feasor. Again the problem presented is whether the intention is “ unequivocally expressed ” in the indemnity agreement that one tort feasor should provide to a partner in the wrong, indemnity against liability arising from failure of the other tort feasor to perform a positive active duty imposed by statute. The language of the indemnity agreement is not exactly the same as the language of the agreement the court construed in the earlier case, but the difference is not significant and, in applying the same rule of construction to the indemnity agreement, the conclusion seems again to follow that the owner or general contractor is not, under its terms, entitled to indemnity from the other joint active tort feasor.”

Our recent decision in Schwartz v. Merola Bros. Construction Corp. (290 N. Y. 145) is pressed upon us as authority for a contrary conclusion. In that case, as in the Walters case, and in the case now under consideration, the defendant seeking indemnity was itself subject to liability to the plaintiff for failure to perform a nondelegable duty imposed by law; but the nondelegable duty was not a “ positive duty ” imposed by section 241 of the Labor Law. The primary question thus presented was whether the rules and standards formulated in the prevailing opinion in the Walters case, applicable within the field covered by section 241 of the Labor Law, should be extended to other fields or whether the rules and standards which antedated that statute should continue to be applied in the field not included within its scope. The judges who concurred in the prevailing opinion in the Walters case dissented from the decision in the Schwartz case. We are agreed that, nonetheless, in the Schwartz case the court decided that the rule applied in the Walters case should not be extended into the field where indemnity is claimed against liability arising from failure to perform a nondelegable duty not arising under the Labor Law, in construction and demolition work.

That problem could not be presented in the Walters case and was not discussed in the prevailing opinion in the Walters case. The court, in the Walters case, was considering only the nature of the dereliction in the performance of a statutory duty under the Labor Law and it held that in the Labor Law the Legislature obliterated the old common-law distinction between passive and active negligence where negligence was from failure to exercise, in construction and demolition projects, the standard of care imposed by statute as a positive duty. The authority of the opinion and decision in the Walters case remains unimpaired by the decision in the Schwarts case and, we think, is decisive in the present case. The rule is now firmly established that the duty imposed upon both the owner and the contractor under the provisions of section 241 of the Labor Law is an active primary duty and any agreement to provide indemnity for failure to perform such active primary duty must be unequivocally expressed. Accordingly, the judgment of the Appellate Division, insofar as it holds that the owner and general contractor in this case is entitled to indemnity under the indemnity agreement made by the subcontractor, Gotham Construction Corporation, must be reversed.

The judgment of the Appellate Division insofar as it sustains the cross-claim of Fifth Avenue and 37th Street Corporation against Gotham Construction Corporation, should be reversed with costs in all courts to Gotham Construction Corporation against Fifth Avenue and 37th Street Corporation, and in other respects affirmed, with costs.

Loughran, Finch, Rippey, Lewis, Conway and Desmond, JJ.. concur.

Judgment accordingly.