author: Lewis, J. Conway, J.

text:
    In the Matter of Agnes L. Eagan, Respondent, against Paul Livoti, as Clerk of the County of Queens, et al., Appellants.

      Argued January 8, 1942;
    decided March 5, 1942.

      Mordecai Konowitz for Paul Livoti, as Clerk of Queens County, appellant.
    Petitioner was not entitled to-- ‘ be credited with her prior employment in the State' Department of Taxation and Finance. (Matter of Canfield v. Greene, 250 App. Div. 181; Chittenden v. Wurster, 152 N. Y. 345; People v. Dilliard, 252 App. Div. 125; Matter of Stehle v. McGoldrick, 259 App. Div. 874 ; 285 N. Y. 543; Matter of McCaffrey v. Howland, 241 App. Div. 624; 272 N. Y. 490; Matter of Miller v. State, 279 N. Y. 74; Matter of Coll v. Reavy, 173 Misc. Rep. 338; Matter of Nagelberg v. Finegan, 267 N. Y. 632; Orinoco Realty Co. v. Bandler, 233 N. Y. 24; Matter of Schaefer v. Rathmann, 237 App. Div. 491; 262 N. Y. 492; Matter of Kornbluth v. Reavy, 261 App. Div. 60; People ex rel. Perrine v. Connolly, 217 N. Y. 570.)

      William C. Chanler, Corporation Counsel (,Stanley Buchsbaum and George G. Gallantz of counsel), for Joseph D. McGoldrick, as Comptroller of the City of New York, appellant.
    Seniority under section 31 of the Civil Service Law (Cons. Laws, ch. 7) is to be computed on the basis of the date of original appointment in the service. Civil service positions in this state fall into one of three categories: state service, city service and service in other civil divisions of the state. Therefore, the petitioner’s state service cannot be considered in determining the date of her original appointment to the service of a civil division of the state, namely, the county of Queens. (Matter of Canfield v. Greene, 250 App. Div. 181; Matter of Schaefer v. Rathmann, 237 App. Div. 491; 262 N. Y. 492; Matter of Horn v. Gillespie, 267 N. Y. 333; Matter of Dieter v. Ryan, 267 N. Y. 594; Matter of Miller v. State of New York, 279 N. Y. 74; Matter of Stehle v. McGoldrick, 259 App. Div. 874; 285 N. Y. 543; Matter of Coll v. Reavy, 173 Misc. Rep. 338; Matter of Kornbluth v. Reavy, 261 App. Div. 60; People ex rel. Perrine v. Connolly, 217 N. Y. 570.)

      Abraham J. Feitelberg for respondent.
    Petitioner’s employment, commencing on May 17, 1926, in the service of the state, had continued unbroken and uninterrupted to April 9, 1938, in the same division of the civil service and in positions of the same general nature and character. On April 9, 1938, the date of her original appointment in the service pursuant to section 31 of the Civil Service Law was May 17, 1926. (Koso v. Greene, 260 N. Y. 491; Matter of Skrocki v. Greene, 242 App. Div. 226; Matter of Mullane v. McKenzie, 271 N. Y. 172; Matter of Canfield v. Greene, 250 App. Div. 181; McCaffrey v. Howland, 241 App. Div. 624.) The amendment to section 2 of the Civil Service Law effective April 9, 1938, removing employment by a civil division of the state from state service did not affect the petitioner’s seniority status as it existed prior to that date. (People ex rel. Lazenby v. Municipal Civil Service Comm., 116 App. Div. 135; 188 N. Y. 588; Jacobus v. Colgate, 217 N. Y. 235; Orinoco Realty Co. v. Bandler, 233 N. Y. 24; People v. Dilliard, 252 App. Div. 125.)
   Lewis, J.

In a proceeding under article 78 of the Civil Practice Act the question is presented whether, in determining the seniority right of a county employee under section 31 of the Civil Service Law (Cons. Laws, ch. 7), a period of prior service in state employment may be added to a subsequent period of county employment.

The petitioner was appointed to the position of graphotype operator in the Motor Vehicle Bureau of the State Department of Taxation and Finance on May 17, 1926. In June, 1928, she was appointed to the position of file clerk in the same state bureau. On October 1, 1929, she left her state employment and for the first time entered county employment, taking the position of messenger and clerk, grade 3, in the office of the Clerk of the County of Queens. The title of the position last mentioned was later changed to general clerk, grade 4. On December 31, 1939, the Board of Estimate of the City of New York, because of a statutory curtailment of functions assigned to the Clerk of Queens County, abolished certain positions in that office, including the positions of five general clerks, grade 4. The petitioner, who was one of the five persons holding positions thus abolished, was suspended in accord with section 31 of the Civil Service Law, which provides: Any person who while holding a position in the competitive class under the civil service law or rules, has been separated from the service through the abolition of a department, office or institution, or any section, bureau or division thereof, or through the consolidation of two or more departments, divisions, offices or bureaus, or whose position is abolished or made unnecessary, through no delinquency or misconduct on his part shall be deemed to be suspended without pay, which suspension shall be made in the inverse order of original appointment in the service, and shall have his name entered upon a preferred list for the position last held by him or any other position having the same or similar requirements for entrance * * (Emphasis supplied.)

At the time of the abolition of the five positions of general clerk, grade 4, and the consequent suspension of the petitioner, two of the incumbents of the abolished positions, Minnie Daly and Americo Serra, were retained in service. They had been appointed to positions in the office of the Clerk of Queens County in August, 1927, and May, 1928, respectively — dates earlier than the petitioner’s original appointment to county employment in that office in October, 1929. However, their original appointments in county employment were subsequent to the date of petitioner’s original appointment to a state position in May, 1926. •

Upon these facts the petitioner contends that, in determining her seniority under section 31 of the Civil Service Law, her rights were prejudiced by the fact that the period of her prior state employment was not added to her subsequent county employment — thereby depriving her of the right she now claims, viz., her retention in service in place of Minnie Daly or Americo Serra, either of whom had longer service for the county of Queens than the petitioner but shorter total service, if the petitioner’s prior state employment and her subsequent service for the county of Queens are combined.

The order of the Appellate Division reversed the order of Special Term dismissing the petition herein, and directed the reinstatement of the petitioner to the position of general clerk, grade 4, in the office of the Clerk of the County of Queens as of December 31, 1939, and payment of her salary from that date to the date of reinstatement.

In reaching the conclusion that the order before us is erroneous, we have examined the record in the light of the settled rule that The Civil Service Law does not create vested rights, preserved by the Constitution against legislative interference, in those who obtain positions under it.” (People ex rel. Perrine v. Connolly, 217 N. Y. 570, 576.) As no person has a vested interest in any rule of law or legislative policy which entitles him to have it remain unaltered for his benefit (Preston Co. v. Funkhouser, 261 N. Y. 140, 144; New York Central R. R. Co. v. White, 243 U. S. 188, 198; Chicago & Alton R. R. Co. v. Tranbarger, 238 U. S. 67, 76), so in the present case the petitioner’s right to tenure in civil service has been altered in the course of years-by statutory changes which the Legislature, as an arbiter of public policy, chose to make. By the adoption of section 6 of article V of the State Constitution the merit system as applied to civil sendee became a fundamental principle of the government of this state. The brief constitutional provision closes with the sentence, “ Laws shall be made to provide for the enforcement of this section.” To that end the Legislature, in extending the benefits of the Civil Service Law to employees of the state, cities and civil subdivisions has not established throughout the state a general, single class of unified civil service. For reasons which relate to matters of administration it has separated the various types of service according to the field of employment.

At the time the petitioner entered civil service in 1926, the Civil Service Law provided for a division of civil employment within the state into two services. State service ” then included “ all such offices and positions in the service of the state or of any of its civil divisions except a city;” city service ” included “ such positions in the service of any city.” (L. 1899, ch. 370, § 2, subds. 4 and 5.) In her position in the State Department of Taxation and Finance the petitioner’s salary was paid from state funds and her employment was in a department which functioned throughout the state. Clearly she was then in state service.” (Civil Service Law, § 2, subd. 4.) In 1938, however, the Civil Service Law was amended (L. 1938, ch. 603) by providing for the division of civil employment within the state into three services instead of two which formerly existed. The amendment provided in part.:

4. The state service ’ shall include all such offices and positions in the service of the state.

“ 5. The ‘ city service ’ shall include such positions in the service of any city.

“ 6. The service of a ‘ civil division ’ shall include all such offices and positions in any other subdivision of the state.”

The petitioner was not suspended until December 31, 1939, subsequent to the date (April 9, 1938) when chapter 603 of the Laws of 1938 became effective. On the date of her suspension and since October 1, 1929, the petitioner was employed in the Clerk’s office of the County of Queens. Her salary was paid from county funds. Her duties were those connected with county affairs. We think it clear that she was an employee of the County of Queens. Accordingly, under the statute effective on the date of her suspension the service ” in which the petitioner was employed was not state service,” nor was it city service ”— she was in a service separately designated by statute as the service of a ‘ civil division ’ * * * of the state.” (Civil Service Law, § 2, subds. 4, 5, 6.) Her employment from May 17, 1926, until October 1, 1929, in state service ” gave her no vested rights connected with her civil service status which survived the Legislature’s change in policy as declared by chapter 603 of the Laws of 1938. (People ex rel. Perrine v. Connolly, supra, p. 576.)

The petitioner’s seniority right under section 31 may not be established by adding together the periods of her state and county employment —• two divisions of civil service having features so distinctive that the Legislature chose to separate them as a matter of public policy. (L. 1938, ch. 603; Matter of Stehle v. McGoldrick, 285 N. Y. 543. See, also, Matter of Schaefer v. Rathmann, 237 App. Div. 491, 493, 495; affd., 262 N. Y. 492; Matter of Horn v. Gillespie, 267 N. Y. 333, 336, 338; Matter of Canfield v. Greene, 250 App. Div. 181, 183-186.)

In the administration of section 31, which requires that suspension of an employee, such as the petitioner, whose position has been abolished, “ * * * shall be made in the inverse order of original appointment in the service,” the employee’s right of seniority depends upon the date of the original appointment in the particular service, defined by the Civil Service Law (§2, subds. 4, 5, 6, as amd. by L. 1938, ch. 603), in which the employee is engaged at the time of such suspension.

In construing the word service ” as employed in the statutory sentence last quoted above, Presiding Justice Sears, later a member of this court, stated: “ An interpretation of it [the word service ’] which would make it include any position in the competitive class of the civil service of the state and its civil divisions, including its cities, without reference to the position the employee finally occupied, would not bring about results apparently contemplated by the legislators in enacting the statute.” (Matter of Schaefer v. Rathmann, supra, p. 493.)

In the proceeding before us the employment in which the petitioner was engaged on the date of her suspension was for the county of Queens. That employment was in “ the service of a ‘ civil division.’ ” In determining her right of seniority under section 31 of the Civil Serivice Law she may not add to the term of her employment in the office of the Clerk of Queens County, the period of state employment previously served by her which the Legislature has expressly designated as a separate state service.” The petitioner’s original appointment on October 1, 1929, to a position in the office of the Clerk of Queens County was subsequent to the original appointment of either of the two employees who were retained in that employment after December 31, 1939, and whose place is now demanded by the petitioner. It follows that the petitioner’s suspension was made “ * * * in the inverse order of original appointment in the service ” in accord with the requirements of section 31 of the Civil Service Law.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, without costs.

Conway, J.

(dissenting). Section 31 of the Civil Service Law has been quoted and in part italicized, supra. For our purpose it is necessary to consider only the portion italicized, reading “ which suspension shall be made in the inverse order of original appointment in the service.” The service ” was the civil service, competitive class. When the petitioner entered it there were two divisions, defined in subdivisions 4 and 5 of section 2 of the Civil Service Law as follows:

4. The ‘ state service ’ shall include all such offices and positions in the service of the state or of any of its civil divisions except a city.

“ 5. The city service ’ shall include such positions in the service of any city.”

The following table shows the dates of appointment of and work rendered by the three persons involved:

Thus down to April 9, 1938, petitioner had approximately twelve years of state service;” Minnie Daly approximately eleven years and Americo Serra approximately ten years.

Clearly had there been any necessary suspension prior to that date the petitioner would have been the last of the three to be suspended or the first to be restored to service.

The petitioner had so acted up to that time that all her service was “ state service.” So was the service of Daly and Serra. The petitioner had undoubtedly been led to believe by the statute then in force that she was losing no rights by the transfer which she had made and in that it is conceded that she was correct. She had entered a service, our civil service, which offered security and incentive to advancement whether by promotion or transfer and she had been promoted and transferred in state service ” under legislative enactments.

In 1938 the Legislature (L. 1938, ch. 603) amended section 2 of the Civil Service Law, effective April 9, 1938, by making three instead of two classes in the civil service as follows:

4. The ' state service ’ shall include all such offices and positions in the service of the state.

“ 5. The ' city service shall include such positions in the service of any city.

“ 6. The service of a 'civil division shall include all such offices and positions in any other subdivision of the state.”

It will be noted that the Legislature used the word " shall ” in each of those subdivisions. No provision of the act (Ch. 603, supra) made any provision for retrospective effect and it is well settled that unless a statute provides clearly and expressly for a retroactive application the statute will be construed as prospective only. (Jacobus v. Colgate, [Cardozo, J.] 217 N. Y. 235, 240; Orinoco Realty Co. v. Bandler, [Hiscock, Ch. J.] 233 N. Y. 24.) In Jacobus v. Colgate, supra) we said: “ The general rule is that statutes are to be construed as prospective only (27 Balsbury’s Laws of England, p. 159). It takes a clear expression of the legislative purpose to justify a retroactive application (Isola v. Weber, 147 N. Y. 329; O’Reilly v. Utah, N. & C. Stage Co., 87 Hun, 406, 412; Matter of Protestant Episcopal Pub. School, 58 Barb. 161; United States v. Heth, 3 Cranch, 399, 413.) ”

In Orinoco Realty Co. v. Bandler (supra) we said: “ It is the general rule that statutes dealing with other matters than those of mere procedure will not be interpreted as retroactive unless such '.intent of the legislature clearly appears from their terms (Jacobus v. Colgate, 217 N. Y. 235; Union Pacific R. R. Co. v. Laramie Stock Yards Co., 231 U. S. 190); and we search the statute under review in vain for any language which fairly indicates the purpose of the legislature to adopt retroactive legislation. There are special reasons why the legislature may have hesitated to do this and why, on the other hand, if it did intend to do it it should have given very clear indication of such purpose ” (pp. 28, 29). (Italics supplied.)

The rule is well stated in Endlich on the Interpretation of Statutes as follows, "at page 367: It is chiefly where the enactment would prejudically affect vested rights, or the legal character of past transactions, that the rule in question prevails. Every statute, it has been said, which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past, must be presumed, out of respect to the legislature, to be intended not to have a retrospective operation.”

■ This, of course, should especially be the case where a continuance in a civil service position depends upon seniority status. In the absence of an expression of legislative intent we should not say that the Legislature intended that in a reclassification of the civil services the statute should be applied retroactively with the result that whatever hardship is produced shall necessarily fall on the older in the service and thus upon those least able to bear it.

Yet that is what we are doing. Turning again to the table, supra, we are holding that the service of petitioner from October 1, 1929, was not state service,” although the applicable statute said it was. We are going back into the state service ” of petitioner for a period of nearly nine years to say that it was civil division ” service although that service was not separately created as a division of service until April 9, 1938. If the Legislature intended such a concededly unfortunate result, it would have said so clearly and expressly.

We must distinguish between “ employment ” and service.” We made that clear in Matter of Miller v. State (Rippey, J.) (279 N. Y. 74 at p. 79), when we said: The term ' state service ’ as variously used in the State Civil Service Law covers all employees rendering public service, whether they are in the employ of the State or whether they are in the employ of some one of the civil divisions of the State, other than cities. It was not intended to cover and does not embrace within its meaning the employees of the State alone.”

The order of the Appellate Division should be affirmed, with costs.

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

Ordered accordingly.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    The People of the State of New York, Appellant, v. Henry Kravitz, Respondent.

      Submitted January 8, 1942;
    decided March 5, 1942.

      Charles P. Sullivan, District Attorney (Edmund C. Rowan of counsel), for appellant.
    The papers or slips in the defendant’s possession come within the scope of sections 974 and 975 of the Penal Law. (People v. Emerson, 6 N. Y. Crim. Rep. 157; Wilkinson v. Gill, 74 N. Y. 63.)

      Leo Karp for respondent.
    The papers found in the defendant’s possession were not shown to be used in the game or scheme commonly called policy and do not come within the scope of sections 974 and 975 of the Penal Law. (People v. Bloom, 248 N. Y. 582; People v. Nakamori, 256 N. Y. 62; People v. Edelstein, 247 N. Y. Supp. 549; People v. Hines, 6 N. Y. Supp. [2d] 2; 284 N. Y. 93; People v. Lyttle, 251 N. Y. 347; People v. Adams, 176 N. Y. 351; State v. Wilkinson, 70 S. W. Rep. 478; State v. Carpenter, 22 Atl. Rep. 497.)
   Conway, J.

The defendant is charged with the violation of sections 974 and 975 of the Penal Law. He was arrested after visiting several places in his automobile. He had in his possession a carton box containing twelve envelopes which in turn contained 395 slips which he said were “ treasury balance policy slips.” The defendant’s description was correct and the uncontradicted testimony of the expert witness called by the People confirmed it. The defendant said he distributed the slips on each Saturday to various customers and received sixty cents for each of them. Each slip contained a number and that number was to be used on the six days of the succeeding week in connection with the United States Treasury Balance or Statement published daily in a designated newspaper. The numbers to be used were the last three after excluding the figures representing cents. If the number ■ purchased corresponded with the last three dollar figures in the treasury balances during the six days of the week following the purchase in any one of thirty-two permitted arrangements of them, a so-called “ premium in amounts varying from one dollar to twenty-five dollars was to be paid to the holder of the number so purchased.

The slips were clearly writings representing and being a record of a chance, share and interest in numbers to be drawn and selected and in what is commonly called policy. It is true that the purchaser of a number did not think up that particular number in order to play it. A player of policy, however, may, under circumstances such a.s here presented, select a number by such method as he chooses whether by selecting it himself, determining to choose it from the next three numbers which he comes upon or by accepting a number selected or delivered to him by another. In each case he plays a number which he has selected although the means of selection may be by different methods. He has, however, determined to play the number which he selects by his own particular method and pays consideration for the opportunity of doing just that. What the player has, by reason of his possession of the slip with a number upon it, is a writing or paper representing or being a record of a chance, share and interest in numbers sold, drawn and selected. What the defendant had before the sale was a writing or paper representing or being a record of chance, share and interest in numbers to be drawn or selected. In effect the defendant urges that if .a player selected a number and wrote it on a slip of paper and delivered it to him (the seller), that that, under applicable circumstances, would be a policy slip but that it is not a policy slip when he (the seller) has it in his possession for sale to a customer who will not know the number he is to play until he has paid for it and ripped the threads with which the slip is sewn. The distinction is narrow and we think that the method of selection by the player of the number to be played should not be the conclusive factor in determining whether there is possession knowingly of a writing or paper representing an interest in numbers to be drawn or selected or in what is commonly called policy.

The order of the Appellate Division should be reversed and the judgment of the Court of Special Sessions affirmed.

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

Ordered accordingly.


text:
    The People of the State of New York ex rel. Angelo Natoli, Respondent, against Neil D. Lewis, as Sheriff of Chenango County, Appellant. The People of the State of New York, Appellant.

      Argued January 7, 1942;
    decided March 5, 1942.

      John J. Bennett, Jr., Attorney-General (Henry Epstein, Everett D. Mereness and Patrick H. Clune of counsel), for appellants.
    A writ of habeas corpus cannot avail the respondent. (People ex rel. Bailey v. McCann, 222 App. Div. 465; People ex rel. Johnson v. Kidney, 185 App. Div. 769; People ex rel. Carr v. Martin, 286 N. Y. 27.) The appellate court was without power to direct relator’s release on bail. (People ex rel. Hubert v. Kaiser, 150 App. Div. 915; Matter of Donnelly, 168 Misc. Rep. 308.)

      William J. Gordon for respondent.
    The sole basis for the issuance of the parole warrant was the wrongful charge of robbery against relator. (Matter of Lewis v. Carter, 220 N. Y. 8.) The court has the power to review the issuance of a warrant by the board of parole. (Coffin v. United States, 156 U. S. 432; People v. Dillon, 197 N. Y. 254; People ex rel. Perkins v. Moss, 187 N. Y. 410; People ex rel. Conway v. Warden, 180 App. Div. 336; McKelvey v. Marsh, 63 App. Div. 396; People ex rel. Stabile v. Warden, 202 N. Y. 138.) The Appellate Division had the power to fix bail and to direct relator’s release on bail. (Matter of Donnelly, 168 Misc. Rep. 308; People ex rel. Meeker v. Baker, 139 App. Div. 471; People ex rel. LeCarta v. Warden, 118 Misc. Rep. 109.)
   Conway, J.

On the face of the facts disclosed by this proceeding, the applicable rules of law seem potentially harsh but are, nevertheless, so clear that they must be followed. The facts are these: In May of 1932 the relator was convicted of the crime of burglary in the third degree and was sentenced to Elmira Reformatory. The maximum term of imprisonment possible under that conviction was ten years. He was paroled in December, 1933, and continued to be on parole until August, 1940, when he was arrested, and subsequently indicted, for the crime of robbery in the first degree. Three months later a jury in the County Court of Chenango County rendered a verdict of not guilty upon his trial on the indictment.

In the meantime, and on the day following relator’s arrest, a warrant was issued for his retaking as a paroled prisoner by a member of the Board of Parole and was delivered to the Sheriff of Chenango county.

The warrant recited that the member of the Board of Parole had reasonable cause to believe that Angelo Natoli, a prisoner of the State of New York, conditionally paroled from Elmira Reformatory and now in the legal custody of the Warden or Superintendent thereof, has violated his parole and has lapsed or is probably about to lapse, into criminal ways or company * * * ” and ordered that the prisoner be retaken and returned to Elmira Reformatory and into the actual custody of the warden or superintendent.

The warrant was issued under the following circumstances: The Chief of Police of Norwich, N. Y., telephoned an employee of the Parolé Board in Binghamton, N. Y., and told him that the relator was being held on an information charging robbery in the first degree. The employee telephoned that fact to a member of the Board of Parole in Buffalo, N. Y., who signed and issued the warrant.

After the acquittal of relator, the present proceeding was instituted to obtain his release. No formal return to the writ was filed, the facts being undisputed, and the matter was heard summarily by consent upon those undisputed facts. The question presented to us involves the question of the power of the member of the Parole Board to issue the warrant.

It was issued pursuant to the provisions of Correction Law (Cons. Laws, ch. 43), section 216, which is mentioned therein. That section reads as follows:

“ Violation of parole. If the parole officer having charge of a paroled prisoner shall have reasonable cause to believe that such prisoner has lapsed, or is probably about to lapse, into criminal ways or company, or has violated the conditions of his parole in an important respect, such parole officer shall report such fact to a member of the board of parole who thereupon shall issue a warrant for the retaking of such prisoner and his return to the designated prison or the Elmira Reformatory.”

Clearly the arrest or indictment of a paroled prisoner may constitute reasonable cause in the mind of a parole officer having charge of a paroled prisoner for belief that he has lapsed or is probably about to lapse into criminal ways or company and if -such attitude of mind causes him to report such belief to a member of the Board of Parole there is no discretion vested in the latter by the statute but he must issue a warrant for the retaking of the prisoner. Certainly the average man would say that arrest upon such a serious charge as robbery in the first degree demonstrated reasonable cause. Jurisdiction once obtained cannot be lost by reason of a subsequent finding of a jury that guilt of the crime charged had not been established beyond a reasonable doubt. We cannot go behind the parole warrant, in considering this question of power, to determine whether the arrest on that charge should have constituted reasonable cause in the mind of the parole officer.

To appreciate the reason for the statutory provisions it must be borne in mind that the relator was a prisoner from the date of his conviction until the date of his arrest in 1940 for robbery. He was always in the legal custody of the superintendent of Elmira Reformatory. (Correction Law, § 213.) True it is that he was not always within the institution walls, for during his parole he was permitted to go abroad. Nevertheless he was always in constructive custody subject to be retaken and returned to actual custody. (People ex rel. Cecere v. Jennings, 250 N. Y. 239.) He was panoplied with a presumption of innocence as to the robbery charge but not as to the burglary charge for which he had been convicted and upon which his sentence had not expired.

We conclude, therefore, that the power to issue the warrant existed and that as a prisoner the relator might be returned on that warrant to the actual custody of the superintendent of Elmira Reformatory subject to the consideration of his case by a parole court as provided in Correction Law, section 218. That does not constitute a second jeopardy for the crime of robbery. The confinement is on the sentence for burglary. We must assume that the parole court will act promptly and justly upon the facts presented.

The order of the Appellate Division sustaining the writ of habeas corpus should be reversed and the order of Special Term dismissing such writ and remanding the relator to custody affirmed.

The appeal from the order of the Appellate Division fixing bail should be dismissed.

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

Ordered accordingly.


author: Lehman, Ch. J.

text:
    In the Matter of Banque de France, Appellant, against The Supreme Court of the State of New York et al., Respondents.
    Argued January 7, 1942;
    decided March 5, 1942.

      Mahlon B. Doing and Frederic R. Coudert for appellant.
    The courts of New York have not jurisdiction of the subject matter of the action. (Davis v. Farmers’ Co-operative Equity Co., 262 U. S. 312; N. V. Brood v. Aluminum Co., 231 App. Div. 693; Matter of Baltimore Mail S. S. Co. v. Fawcett, 269 N. Y. 379; Ball V; Canadian Pacific Steamships, Ltd., 6 N. Y. Supp. [2d] 877; 276 N. Y. 650; Jensen v. United Airlines Transp. Corp., 255 App. Div. 611; Miele v. Chicago, M., St. P., & P. R. R. Co., 151 Misc. Rep. 137; Jacobson v. Baltimore & Ohio R. R. Co., 161 Misc. Rep. 268; Trojan Engineering Corp. v. Green Mountain Power Corp., 200 N. E. Rep. 117; Steele v. Western Union Tel. Co., 173 S. E. Rep. 583; Atlantic Nat. Bank v. Hupp Motor Car Corp., 10 N. E. Rep. [2d] 131; L. & N. R. R. Co. v. Chatters, 279 U. S. 320; Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282; McCulloch v. Maryland, 17 U. S. [4 Wheat.] 315; Engel v. O’Malley, 219 U. S. 128.)

      John Foster Dulles, Robert E. Houston, Jr., and MacDonald Deming for Daniel De Gorter et al., respondents.
    The New York Supreme Court concededly has jurisdiction of the action pursuant to New York law unless the exercise of that jurisdiction would unduly burden interstate or foreign commerce in violation of the commerce clause of the Federal Constitution. But the record in the action does not show that the bank is in any degree engaged in interstate or foreign commerce. It is upon that record that the jurisdiction of the New York court must be determined. (Gregonis v. P. & R. Coal & Iron Co., 235 N. Y. 152; Matter of Baltimore Mail S. S. Co. v. Fawcett, 269 N. Y. 379; McCauley v. Georgia R. R. Bank, 239 N. Y. 514; Matter of Cooper, 143 U. S. 472.) The “ commerce clause ” of the Federal Constitution cuts across state attachment laws only to the extent necessary to prevent material interference with the interstate and foreign transportation of persons and goods. Only common carriers get the benefit of the rule. (Huron Holding Corp. v. Lincoln Mine Operating Co., 312 U. S. 183; Davis v. Farmers Co-operative Equity Co., 262 U. S. 312; B. & O. R. R. v. Kepner, 86 L. Ed. 37; Hoffman v. Foraker, 274 U. S. 21.)
   Lehman, Ch. J.

Banque de France is a corporation organized and existing under the laws of France. In France it conducts its business as the central bank of issue of France and as a commercial bank. Such business as it transacts here is purely incidental to its business in France, but .in the course of that business it customarily maintains large bank balances here. Daniel De Gorter and Henri Wild are residents of the State of New York. Claiming that Banque National de Belgique, a corporation organized and existing under the laws of Belgium, has a good cause of action against Banque de France for breach of contract and that Banque National de Belgique has assigned its cause of action to them, they obtained a warrant of attachment against the property here of Banque de France and levied upon the accounts and property of the Banque de France held by Federal Reserve Bank in New York. After a summons was served by publication upon Banque de France, it appeared specially in order to challenge the jurisdiction of the courts of the State of New York in the action which the assigneés of Banque National de Belgique seek to maintain in this state. Its challenge was rejected in the Supreme Court and the order was affirmed by the Appellate Division, which denied leave to appeal to this court. After Banque de France had thus unsuccessfully sought by every available means to induce the court in which the action was brought to refuse to exercise jurisdiction and to dismiss the complaint, it applied to the Appellate Division, pursuant to the provisions of article 78 of the Civil Practice Act, for an order prohibiting and restraining the Supreme Court or any justice of the court from entertaining or exercising jurisdiction of the action.

The Appellate Division, upon motion of the respondents, dismissed the petition of Banque de France as matter of law and not in the exercise of discretion.” The petitioner seeks an extraordinary remedy to halt threatened action by a court or judge which the petitioner contends would be a usurpation of power. The General Corporation Law (Cons. Laws, ch. 23) provides that an action against a foreign corporation may be maintained by a resident of the state, or by a. domestic corporation, for any cause of action.” (§ 224.) Transitory causes of action arising outside of the state are within the general jurisdiction of the courts of the state when brought by a resident of the state even though the defendant be a foreign corporation and the plaintiff be the assignee of a person not himself a resident of the state. There are nevertheless limitations upon the general jurisdiction of the courts of this state imposed by the Constitution of the United States. A state may not encroach upon the field where the power of the federal government is exclusive and the general jurisdiction of the courts of a state is confined to the field from which the state itself is not excluded.” (Matter of Baltimore Mail S. S. Co. v. Fawcett, 269 N. Y. 379, 385.) In that case this court held that in circumstances where compulsion by a state upon a foreign corporation, engaged in foreign or interstate commerce, to submit to suit in its courts upon a transitory cause of action arising in a different jurisdiction would constitute ah unreasonable burden and an obstruction of commerce forbidden by the Constitution of the United States, the carrier may be entitled to an order prohibiting the state court from attempting to exercise jurisdiction of the suit. The Banque de France asserts that on that ground it is entitled to such an order for the necessary protection of its constitutional rights.

In all the cases where it has been held that such compulsion is beyond the power of a state and a violation of rights or immunities guaranteed by the Constitution, the foreign corporation has been engaged in commerce as a carrier. The Banque de France asserts that the principle applies wherever such compulsion casts an unreasonable burden upon a foreign corporation engaged in foreign or interstate commerce in any form and is not confined to obstruction of transportation of passengers or goods. Doubtless the power of the Congress of the United States to regulate Commerce with foreign Nations, and among the several States ” (U. S. Const., art. I, § 8, cl. 3) extends to foreign and interstate commerce of every kind and is not confined to transportation. Though a foreign corporation engaged in foreign or interstate commerce as carrier or otherwise is not immune from the ordinary process of the courts of a State,” yet no state may intrude upon the field assigned by the Constitution to the federal government. At least in theory, state laws which unreasonably obstruct and unduly burden interstate commerce in any form may violate the commerce clause of the Constitution. (Davis v. Farmers Cooperative Equity Co., 262 U. S. 312, 316.) The principle upon which the petitioner relies is general; yet when that principle is invoked to support the contention that in a particular case a law of the State of New York is obnoxious to the commerce clause of the Constitution, then the nature of the function which the foreign corporation performs in foreign or interstate commerce may be the decisive factor in applying the test whether the assertion of jurisdiction casts a serious and unreasonable burden ” upon the corporation, a burden which unduly obstructs interstate commerce. It is significant that no case can be found where the general principle has led to the conclusion that the assertion of plenary jurisdiction by a state court in any transitory action against a foreign corporation is obnoxious to the commerce clause .where such a foreign corporation has not been engaged in the business of a carrier. In every case beginning with Davis v. Farmers Cooperative Equity Co. (supra), the court has based its decision upon the effect which compulsion upon a carrier to submit to suit upon causes of action arising in other states would have upon the business of a carrier in view of the nature of that business. (See Matter of Baltimore Mail S. S. Co. v. Fawcett, supra, and especially International Milling Co. v. Columbia Transportation Co., 292 U. S. 511, and cases there cited.) The contention of the Banque de France finds little support in those cases.

We assume that Banque de France, the central bank of issue of France, does business and exercises functions' connected with commerce with the United States and which tend to promote such commerce. Even upon that assumption the question here presented is not, as the petitioner contends, “ Are the principles of immunity under the Commerce Clause which are applied in the decision of this Court in the case of Baltimore Mail S. S. Co. v. Fawcett, 269 N. Y. 389, and in the decisions of the United States Supreme Court therein followed, applicable only in favor of corporate common carriers, or do they extend equally to all other foreign corporations engaged in interstate or foreign commerce?” The question which must be decided upon this appeal is whether under the principles of immunity under the commerce clause (U. S. Const, art. I, § 8), applied in the case of Matter of Baltimore Mail S. S. Co. v. Fawcett (supra), the exercise of jurisdiction by the Supreme Court of the state in this suit which these plaintiffs have attempted to bring against this defendant in accordance with the laws of this state, is obnoxious to the commerce clause.

The test which dictates a negative answer in this case has been authoritatively stated by the Supreme Court of the United States. Even a foreign corporation is not immune from the ordinary processes of the courts of a State where its business is entirely interstate in character. International Harvester Co. v. Kentucky, 234 U. S. 579. It must subroit, if there is jurisdiction, to the requirements of orderly, effective administration of justice, although thereby interstate commerce is incidentally burdened.” (Hoffman v. Foraker, 274 U. S. 21, 23.) In the cases upon which the petitioners rely the courts gave weight to the disruption in the performance by interstate carriers of their function of transportation which might follow from the application and enforcement of the law of a state which would compel foreign corporations to submit to suit there in a case where the foreign corporation is an interstate carrier engaged in business in that state only incidentally connected with its business as a carrier in other states, where the cause of action arose outside of the jurisdiction in favor of a person not then a resident of the state and where “ the suit might more conveniently be litigated in another forum available equally to both parties.” (Cf. B. & O. R. R. v. Keener, 314 U. S. 44, decided by the Supreme Court of the United States November 10, 1941.)

In this case the opposing considerations to be weighed are quite different. Banque de France customarily maintains here large balances which it uses in the course of its business. It has sent here gold of the value of hundreds of millions of dollars. It alleges that the accounts here upon which the plaintiff has levied are' worth over seven hundred million dollars. If we sustain its contention that its property here is immune from process of the courts of this state in an action brought here by persons claiming to be assignees of the foreign owner of a cause of action for conversion of gold in France or for breach of contract made in either France or Belgium, these plaintiffs, though residents of this state, must resort to the courts in Belgium or in Paris, jurisdictions occupied by Germany, a power with which this country is at war, or at best to the courts in unoccupied France, a country which accepts as law the decrees of the group of men who claim under the aegis of Germany to be authorized to act as the government of Belgium, though the United States recognizes as the only legitimate government of Belgium the group of exiles who are exercising in a country not subject to the domination of Belgium’s conquerors governmental power entrusted to them by the laws of Belgium. To relegate the plaintiffs, though residents of New York, to the courts of a country which refuses to recognize the government of Belgium or to enforce decrees upon which the title of the plaintiffs depends is, in effect, to deny to them any right to litigate in any tribunal their rights under the laws of Belgium as promulgated by its legitimate government.

Nothing that we have said should be construed as indicating that in our opinion the plaintiffs’ assignment is valid in fact or in law or that the plaintiffs are entitled to recover if they prove all the allegations of the complaint. These are matters which rirnst be determined by the court in which the action is brought and which we may not consider upon this appeal. We decide only that the defendant is not immune from suit in the courts of this state; the assertion of jurisdiction in this case by the courts of this state tends to promote orderly, effective administration of justice and casts no undue burden upon the performance by the defendant of any function in interstate commerce which may be incidental to its banking business.

The order should be affirmed, with costs.

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

Order affirmed.


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    In the Matter of Dictaphone Corporation, Appellant, against Joseph V. O’Leary, as Commissioner of Standards and Purchase of the State of New York, et al., Respondents.

      Argued January 12, 1942;
    decided March 5, 1942.

      Charles H. Tuttle and Thomas E. Kerwin for appellant.
    The Appellate Division was right in its finding that Thomas A. Edison, Incorporated, was not the lowest responsible bidder, but it was wrong in its further conclusion that notwithstanding the mandatory provisions of section 174 of the State Finance Law (Cons., Laws, ch. 56) the Commissioner could give to the Edison Company an exclusive award of the entire requirements of the state for dictating machines and equipment. (Standard Oil Co. v. Morris, 151 Misc. Rep. 345.) The action of the Commissioner was void as arbitrary and unreasonable. (People ex rel. E. C. T. Club v. State Racing Comm., 190 N. Y. 31; People ex rel. Coughlin v. Gleason, 121 N. Y. 631; Grace v. Forbes, 64 Misc. Rep. 130; Matter of Small v. Moss, 277 N. Y. 501; Burland Printing Co. v. LaGuardia, 9 N. Y. Supp. [2d] 616.)

      John J. Bennett, Jr., Attorney-General (Henry Epstein and Isaac Marks of counsel), for Joseph V. O’Leary, as Commissioner of Standards and Purchase, respondent.
    The power to award contracts in the event of tie bids is a practical necessity and a reasonable regulation. (Cons. Laws, ch. 56, §§ 163, 164, 174.)

      Ellis J. Staley, Roger Hinds and William J. Cahill for Thomas A. Edison, Incorporated, respondent.
    The award to Thomas A. Edison, Incorporated, was made pursuant to the legal power of the Commissioner, and was valid. (Matter of Saratoga Springs v. Saratoga G., E. L. & P. Co., 191 N. Y. 123; Schumer v. Caplin, 241 N. Y. 346; People ex rel. Emigrant Industrial Sav. Bank v. Sexton, 259 App. Div. 566; Darweger v. Staats, 267 N. Y. 290; United States v. Grimaud, 220 U. S. 506; Maryland Casualty Co. v. United States, 251 U. S. 342; Niagara Falls P. Co. v. Water P. & C. Comm., 267 N. Y. 265.) The Commissioner did not abuse his discretion or act arbitrarily. (Matter of Coombs v. Edwards, 280 N. Y. 361; Matter of Durr v. Paragon Trading Corp., 270 N. Y. 464; Matter of Pruzan v. Valentine, 282 N. Y. 498; Matter of Stracquadanio v. Department of Health, 285 N. Y. 93.)
   Lehman, Ch. J.

The State Finance Law (Cons. Laws, ch. 56) provides that “ in the manner provided by this article and the rules adopted pursuant thereto the commissioner of standards and purchase shall have jurisdiction and control of the standardization and purchase of materials, equipment and supplies required by or for the state or any state department, board, commission, office, or institution, * * *. Except as provided in this article, any or all materials, equipment, and supplies needed by or for one or more departments, boards, commissions, offices, or institutions of the state may be directly purchased or contracted for by the commissioner of standards and purchase, as may be determined from time to time by rules adopted pursuant to this article; and materials, equipment and supplies so required shall be so directly purchased or contracted for by such commissioner except in cases wheie, by rule or order, he authorizes the purchase of such materials directly by the department, board, commission, office or institution requiring them.” (Art. XI, § 161.)

In the letting of contracts there must be compliance with the provisions of the statute. Section 174 provided in 1940 that Contracts with the commissioner of standards and purchase or with a state department or institution, or other agency of a department, shall be let to the lowest responsible bidder, taking into consideration.the qualities of the articles proposed to be supplied, their conformity with the specifications, the purposes for which required and the terms of delivery. * * * The commissioner may purchase materials, equipment and supplies to an amount not exceeding one thousand dollars without competitive bidding, and may by rule prescribing the amount, not exceeding five hundred dollars, authorize purchases, without competitive bidding, of specified materials, equipment and supplies by any state department or institution or other agency of a department.”

In 1940 the Commissioner requested submission of bids for supplying “ office machinery (dictating, transcribing and shaving machines and accessories).” Bids were, submitted by the Dictaphone Corporation and by Thomas A. Edison, Inc. The bidders offered to supply the various articles described in the specifications at exactly the same prices. Apparently the submission of such bids by these two corporations had become a custom, if not a habit; for similar identical bids had been submitted by them each year since 1934, and in each year the Commissioner of Standards and Purchase then in office had ruled that the equipment of both firms is similar ” and that the results obtained from each are “ substantially ” the same, and for that reason had accepted both bids and had left the head of any department, requiring any of such business machines, free to choose the machine supplied by either corporation. Dissatisfied with that method of purchasing needed supplies, the Commissioner inserted in the specifications upon which bids were solicited in 1940 a clause that “ award shall be made to the lowest responsible bidder conforming to specifications. In the event of tie bids, the decision of the Commissioner of Standards and Purchase shall be final.” After receipt of the bids, the Commissioner awarded the contract to Thomas A. Edison, Inc.

Dictaphone Corporation then brought proceedings under article 78 of the Civil Practice Act, challenging the power of the Commissioner to award an exclusive contract to Thomas A. Edison, Inc. The Appellate Division has sustained the determination of the Commissioner, holding that he had power to choose between the two bidders who had .submitted identical bids; that the clause inserted in the specifications constituted an appropriate rule or method to give effect in such case to the provisions of the statute; and that, in any event, the appellant, having submitted a bid upon specifications which provided that the Commissioner might in the case of tied bids make final decision, could not in this proceeding challenge an adverse decision by the Commissioner.

Where equally responsible bidders offer to provide articles described in the specifications for exactly the same price the Commissioner in deciding which of the bidders should be accepted as the lowest bidder, may give consideration to “ the qualities of the articles proposed to be supplied, their conformity with the specifications, the purposes for which required and the terms of delivery,” and upon these factors he may base his decision of which bid should be accepted. He may not decide to award the contract to both bidders and thus relieve himself of the duty of determining which of two similar bids is lowest. The language of the statute is not open to the construction that two or more bidders submitting identical bids may be considered “ the lowest bidder.” Such construction would, indeed, tend to thwart rather than to promote the purpose of the statute. It would tend to make ineffective the statutory barriers against collusive bidding and to make the choice of equipment used by the state depend on sale pressure exercised upon departmental heads rather than upon price and quality which the Legislature has decreed shall be the factors which must determine choice. The Commissioner’s ruling in 1940 that the practice previously adopted must be abandoned is correct. Under the provisions of the statute, where two bids are tendered at the same price the Commissioner must decide which of the two bids is lowest or must reject both bids.

His decision, however, must be based upon the considerations specified in the statute. Here the Commissioner claims the right to base decision upon other considerations. It may be that a broader power of choice should be given to the Commissioner, but such arguments must be addressed to the Legislature. We are told that it may be impossible to choose in this case between the two lowest bidders if only the quality of the articles and their conformity to the specifications may be considered. In that case, new bids must be asked, or the supplies required must be purchased in amounts not exceeding $1,000. We recognize that such purchases may work to the disadvantage of the state. The Commissioner must find the remedy within the powers granted to him by the statute, or ask the Legislature for increase of such powers.

He cannot by establishing rules enlarge the powers conferred by the Legislature. He derives his authority to make rules from section 163 of the statute, and that authority is limited to the administrative field defined in the first nine subdivisions of the section and to such other matters as may be necessary to give effect to the foregoing rules and the provisions of this article.” The clause which the Commissioner inserted in the “ specifications ” upon which he invited bids may not be given effect as a rule established in accordance with section. 163, if it is intended to confer upon the Commissioner a1 discretion wider than the discretion vested in him under the statute. Even if the Legislature could delegate to the Commissioner legislative power to extend the scope of a provision contained in the statute, it has not attempted to do so. We need not now decide whether the petitioner by submission of a bid upon specifications which contained the clause that in the event of tie bids, the decision of the Commissioner of Standards and Purchase shall be final ” has acquired any right to challenge the decision thereafter made; for even if the petitioner has no such right the courts may not sanction the award of a contract made upon the decision of the Commissioner which is not in accord with the statute, though made with an eye directed solely to the best interests of the state.

The orders of the Appellate Division should be reversed, and the matter remitted to the Commissioner to determine if possible the lowest bidder, in accordance with the provisions of section 174 of the State Finance Law.

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

Ordered accordingly.


text:
    In the Matter of the Claim of Margaret H. Fischer. Frieda S. Miller, as Industrial Commissioner, Appellant; Lili Saportas, Inc., Respondent.
    Submitted January 8, 1942;
    decided March 5, 1942.

      John J. Bennett, Jr., Attorney-General (W. Gerard Ryan and Henry Epstein of counsel), for appellant.
    The claimant was an employee of the respondent. (Cons. Laws, ch. 31, § 502, subd. 3, ¶ [3] [b]; Cons. Laws, ch. 67, § 56.)
    No appearance for respondent.
   Lehman, Ch. J.

The claimant was employed as an alteration finisher of dresses in the shop in which Lili Saportas, Inc., conducts its business of selling “ ready-to-wear ” dresses. There customers may have dresses which have been sold to them altered and fitted. An additional charge is made for that service and is included in bills sent to customers. Lili Saportas, Inc., does not hire the fitters or seamstresses who make these alterations for its customers. It has engaged one Lillian E. Epstein to perform that work through her own employees, for the convenience of the customers. Lillian E. Epstein employed the claimant and directed and supervised her work. The question presented upon this appeal is whether Lili Saportas, Inc., is liable for contributions to the unemployment insurance fund in accordance with the provisions of the unemployment insurance law (Labor Law, art. 18; Cons. Laws, ch. 31; L. 1935, ch. 468).

. The unemployment insurance appeal board of the Department of Labor has found that Lillian E. Epstein is an independent contractor and that employees, like the claimant, of the independent contractor may not be deemed employees of Lili Saportas, Inc. The independent contractor indicated to the customer what alterations were necessary and arranged with the customer the amount of the charge for such alterations. Though the contractor performed her work in the shop, she alone directed and supervised the work and hired and discharged those engaged in it. She paid for all the materials and supplies in connection with the work. At the end of each week she delivered to the appropriate person in the shop a statement of the work that was done and the charges agreed upon with the customer. She was paid by the shop the amount of such charges and the shop thereafter collected those charges from the customers. Certainly it cannot be said that as matter of law the conventional relationship of employer and employee existed between the claimant and the proprietor of the shop where her work was done.

Liability for contributions to the unemployment insurance fund, in accordance with the provisions of article 18 of the Labor Law, does not, however, in all cases depend upon the existence of the conventional relation of employer and employee. In that statute it is provided that In determining whether an employer is subject to this article, and in determining for what contributions he is hable hereunder, such employer shall, whenever he contracts with any person for any work which is part of such employer’s usual trade, occupation, profession or enterprise be deemed to employ all employees employed by such person for such work, and he alone shah be hable for the contributions hereunder with respect to wages paid to such employees for such work, unless such person performs work or is in fact actually available to perform work for anyone who may wish to contract with him and is also found to be engaged in an independently estabhshed trade, business, profession or enterprise.” (§ 502, subd. 3, par. [3] [b].) It has been held that this provision does not impose liability upon the respondent Lili Saportas, Inc., in this case and the Industrial Commissioner asks this court to review that holding.

Upon this record the conclusion seems inescapable that alteration of “ ready-to-wear ” dresses in the shop of Lili Saportas, ■ Inc., is part of the usual “ trade, occupation, profession or enterprise ” conducted by it. The undisputed evidence shows that the independent contractor does not perform work and is not, in fact, actually available to perform work for anyone who may wish to contract with [her] ” and is not engaged “in an independently estabhshed trade, business, profession or enterprise.” The respondent Lili Saportas, Inc., has not appeared in this court to point out the ground upon which it might be held that under the provisions of the statute it is not to be “ deemed to employ ” all persons employed by the independent contractor. In our opinion the respondent must, as matter of law, be deemed such employer.

The order of the Appellate Division should be reversed, the decision of the unemployment insurance appeal board annulled, with costs in this court and in the Appellate. Division, and the matter remitted to the board to enter a decision in accordance with this opinion.

Loughran, Finch, Rippey, Lewis, Conway and Des-, mond, JJ., concur.

Ordered accordingly.


text:
    Celestine S. Smith, Respondent, v. Title Guarantee and Trust Company, as Trustee, Appellant, and Irene M. H. Farrell et al., Respondents.

      Argued January 22, 1942;
    decided March 5, 1942.

      William T. Griffin and Joseph V. McKee for appellant.
    Persons not in being may have a “ beneficial interest,” as that term is used in section 23 of the Personal Property Law (Cons. Laws, ch. 41). (Schmidt v. Jewett, 195 N. Y. 486; Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Williams v. Sage, 180 App. Div. 1.) The gift over to settlor’s “ legal representatives ” is a contingent remainder and the trust is irrevocable. (Engel v. Guaranty Trust Co., 280 N. Y. 43; Griswold v. Sawyer, 125 N. Y. 411; Greenwood v. Holbrook, 111 N. Y. 465; City Bank Farmers Trust Co. v. Miller, 278 N. Y. 134.)

      Sidney A. Clarkson and Benjamin R. Raphael for plaintiff, respondent.
    Persons not in being are not persons “ beneficially interested ” in the trust. (Cram v. Walker, 173 App. Div. 804; Aranyi v. Bankers Trust Co., 201 App. Div. 706; Kuntze v. Guaranty Trust Co., 248 App. Div. 871; Thatcher v. Empire Trust Co., 243 App. Div. 430; Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Guaranty

      Trust Co. v. Harris, 267 N. Y. 1; Engel v. Guaranty Trust Co., 280 N. Y. 43; McKnight v. Bank of New York & Trust Co., 254 N. Y. 417; Beam v. Central Hanover Bank & Trust Co., 248 App. Div. 182.)

      Thomas A. Dwyer and Luke A. Mercadante for defendants, respondents.
    Only the consent of persons in being who are beneficially interested is required for a valid revocation by the creator of a trust in personal property. (Cram v. Walker, 173 App. Div. 804; Aranyi v. Bankers Trust Co., 201 App. Div. 706.)
   Lehman, Ch. J.

In January, 1929, the plaintiff executed a deed of trust and delivered the deed with the property described therein to Title Guarantee and Trust Company, the trustee named in the deed. The trustee thereafter entered upon the discharge of its duties. The deed of trust provided that the income should be applied for the benefit of the daughter of the settlor, Irene M. Hanlon, or paid over to her during her minority, and that the principal was to be .paid to the daughter upon the death of the settlor. In the event that the daughter should predecease the settlor, then, the deed provided, that upon the death of the settlor the principal should be paid over to P. Edward Hanlon, the settlor’s son, if living, but if dead, then to the lawful issue of said P. Edward Hanlon, if any, and if there shall be no such issue, then to the legal representatives of the party of the first part [the settlor]. ”

The plaintiff now seeks to revoke the trust which she has created. Since the settlor did not in the deed of trust reserve a power to revoke, she can do so only “ upon the written consent of all the persons beneficially interested,” as provided in section 23 of the Personal Property Law (Cons. Laws, ch. 41). The settlor’s daughter and son, Irene M. Hanlon and P. Edward Hanlon, have executed written consents. If they had children now living, such children would have a contingent interest in the trust fund and the settlor could not revoke the trust without their consent. (Schoellkopf v. Marine Trust Co., 267 N. Y. 358.) Here neither son nor daughter has any children. If in the future children should be born to the son, such children would under the trust deed have a contingent interest in the fund. The question here presented is whether unborn children who at birth would, under a deed of trust, be entitled to a contingent remainder in the trust fund if their father should die before his sister and mother, are persons “ beneficially interested ” in the fund within the meaning of the statute. That question was expressly left open in Schoellkopf v. Marine Trust Co. (supra), and in Engel v. Guaranty Trust Co. (280 N. Y. 43).

By a divided court the Appellate Division has held that the unborn children who at birth would be entitled to a contingent interest are not persons beneficially interested. The same court had so held in Cram v. Walker (173 App. Div. 804), and in other cases since then had applied the same rule. The parent, it is said, may in such circumstances represent his unborn children and by his consent bind them. The case of Kent v. Church of St. Michael (136 N. Y. 10, 15, 16) is cited as authority for the rule. In that case the court said: Under the will of Mrs. Stewart, her grandchildren took vested remainders in the shares of their parents, liable, however, to open and let in after-born grandchildren. Thus the trustees, children and living grandchildren represented the entire estate of Mrs. Stewart, subject, however, to the contingency that there might be after-born grandchildren; and it was upon this contingency that the defendant based its objection to the title tendered to it, the claim being that after-born grandchildren would not be concluded by the judgment which had been rendered, and that their rights would not be affected by the deed given in pursuance of that judgment. The sole question for our determination is whether that claim is well founded.” Similar decisions are cited with approval in Hess v. Hess (233 N. Y. 164).

There can be no doubt that at times living persons may in litigation represent unborn children in defense of rights in which the living and the unborn have a common interest. Here the living claim the right by voluntary deed to destroy the contingent estate of unborn children. In the case of Kent v. Church of St. Michael (supra, p. 17) the court expressly denied to them such right, saying, The trustees, children and grandchildren of Mrs. Stewart could not cut off or affect the title in the land of unborn grandchildren by any conveyance in pais.” Here the contingent estate of the unborn grandchildren is created by deed of the settlor. If the contingency should arise upon which an estate would vest in them they would take as purchasers and not by representation through their parent. It is clear that in the absence of statute the written consent of the parent cannot bind his unborn children.

The question remains whether consent of the unborn children, who in some contingency might become entitled to an estate or interest in the trust fund, is required by the statute in order to permit a settlor to revoke a trust deed and destroy the unborn child’s contingent estate created by the deed. The words “ persons beneficially interested ” must be strained beyond then usual and natural meaning if construed to include those not in being who might in some contingency be entitled to an estate. If the Legislature intended to permit a trust deed to be revoked only where every person now living who has a beneficial interest, vested or contingent, consents and no person born thereafter could in any possibility become entitled to an estate, then the Legislature has used words which conceal rather than make manifest that purpose.

In the stipulation of agreed facts it is stated or contended that the trust deed “ provides for contingent remainders to the lawful issue of defendants Irene Marie Hanlon Farrell and P. Edward Hanlon.” There is no statement that either party contends that the trust deed provides for a contingent remainder to the “ legal representatives ” of the settlor. We think that no such remainder was created. It is at times difficult to draw the line which marks the distinction between the reservation by a settlor of a reversion and the creation by the settlor of a contingent remainder to the settlor’s personal representatives or heirs. (Doctor v. Hughes, 225 N. Y. 305; Whittemore v. Equitable Trust Co., 250 N. Y. 298.) Here the parties were justified in assuming that the settlor, intended to reserve a reversion.

The judgment should be affirmed, without costs.

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

Judgment affirmed.


text:
    Eugene Edkins, an Infant, by Thomas H. Edkins, His Guardian ad Litem, et al., Appellants, v. Board of Education of the City of New York, Respondent, Impleaded with Others.

      Argued October 20, 1941;
    decided March 5, 1942.

      Francis P. Heffernan and Solomon R. Agar for appellants.
    There was sufficient evidence to warrant a finding by the jury that the board of education was negligent in failing to provide the. infant plaintiff with an apron, coverall or other protective clothing, and for such dereliction of duty the. board is directly liable by statute. (Cons. Laws, ch. 16; § 868, subd. 4; Matter of Sherrill v. O’Brien, 188 N. Y. 185, Anglo American Prov. Co. v. Davis Prov. Co., 169 N. Y. 506; Doyle v. Troy, 138 App. Div. 650; 202 N. Y. 625; Bradley v. Huber, 146 App. Div. 630; 210 N. Y. 627; People ex rel. Commrs. v. Oneida, 170 N. Y. 105; Matter of Thomas, 216 N. Y. 426; O’Brien v. East River Bridge Co., 161 N. Y. 539; Lessin v. Board of Education, 247 N. Y. 503; Herman v. Board of Education, 234 N. Y. 196; Wahrman v. Board of Education, 187 N. Y. 331; Gardner v. State of New York, 281 N. Y. 212; Miele v. Rosenblatt, 164 App. Div. 604; 221 N. Y. 567.)

      William C. Chanler, Corporation Counsel (Paxton Blair and William T. Maday of counsel), for respondent.
    Negligence on the part of the board in furnishing proper equipment was not shown, for it was conceded that the machine itself was equipped with all proper and reasonable safety devices. Safe clothing is not within the category of equipment which it was the duty of the board to provide. (Lessin v. Board of Education, 247 N. Y. 503; Graff v. Board of Education, 283 N. Y. 574; Bullock v. Cooley, 225 N. Y. 566.)
   Conway, J.

Appeal by plaintiffs-appellants from a resettled order of reversal of the Appellate Division, second department, whereby a judgment entered upon a verdict of a jury in the Supreme Court, Richmond county, in favor of Thomas H. Edkins, the individual plaintiff, and in favor of the infant plaintiff, was unanimously reversed on the law and the complaint dismissed on the law. The appeal is also from the amended judgment of reversal of the Appellate Division, whereby that court unanimously reversed the judgment of the Supreme Court on the law and dismissed the complaint on the law.

The action was brought by the infant plaintiff to recover for personal injuries and by his father for loss of services. The sole question is whether there is any evidence that the board of education of the city of New York was guilty of negligence. The accident occurred in the machine shop classroom of the McKee Vocational High School. The infant plaintiff, a boy of fifteen, was assigned to work at a power driven lathe during the morning on which the accident occurred. He was wearing a light slipover sweater. He testified that as he was operating the machine, he “reached down to get a tool, and * * *, as I [he] was coming up, my sweater got caught in the lead screw and started pulling me in, and it pulled me in against the machine; so I grabbed the sweater to hold myself back, and I couldn’t reach the button — it was too far away.” He reached for the button to stop the machine. In attempting further to protect himself as he was being pulled against the machine, his right thumb was amputated.

It was conceded at the trial that no aprons, coveralls or tight fitting garments of any type were supplied by the defendant board for use by the students in the machine shop.

Opinion testimony was submitted by plaintiffs through an instructor and lecturer for forty-six years at the Technical Institute in New York city to the effect that a general and accepted custom existed in schools in that city whereby students operating machines such as the one involved here were protected by either an apron of a strong denim material, which is placed on the body with a loop over the neck, and strings tied in the back, so that any moving part touching it has no place to grip; or, may be in the form of coveralls, which is a form of overalls reaching like a union suit, over the entire body.” As to this testimony, the Corporation Counsel very frankly states in his brief: “ A fairly general practice of wearing aprons was, we concede, established.”

It is clear from this record that the school authorities recognized the danger to the students if, in the operation of the machines, the student-operator wore loose clothing of any kind. Testimony was offered by the board as to a warning contained in a lecture in which the students were advised to “ wear a suitable working uniform, preferably overalls and jumper, with jumper inside overalls ” and that loose clothing, * * *, is quickly caught in running gears and thereby may draw in and crush the fingers, the hand or the arm, or cause injury to the body. Running gears are among the most dangerous of mechanisms.” The teacher of the machine shop course admitted that some of the boys in the shop wore aprons, those who could afford to buy an apron;” that those aprons were purchased in the school; that the sewing class made aprons “as a project ” and sold them for twenty-five cents — apparently the cost of the material.

Was there imposed upon the defendant board any obligation to furnish aprons, coveralls or other similar protective clothing to students in connection with machine shop work similar to that in which plaintiff was engaged?

An examination and comparison of Education Law (Cons. Laws, ch. 16), section 868, subdivision 4, and Labor Law (Cons. Laws, ch. 31) section 256, may be helpful in reaching a conclusion. Section 868 is as follows:

“ Powers and duties of board of education: Subject to the provisions of this chapter, the board of education in a city shall have the power and it shall be its duty * * *
“4. To purchase and furnish such apparatus, maps, globes, books, furniture and other equipment and supplies as may be necessary for the proper and efficient management of the schools and other educational * * * activities and interests under its management and controL,,

Labor Law, section 256, is as follows:

“ Guarding of machinery.
“1. In every factory all machinery * * * shall be properly guarded * * *. Whenever necessary for the safety of employees, special clothing or guards to be worn upon the person shall be provided and used. * *

Shop work with the use of machinery by students in a vocational school is quite evidently an educational activity and interest under the management and control of the defendant board. It is the statutory duty of the board to furnish such equipment as may be necessary for the proper and efficient management of its activities and interests. Where concededly a general and accepted custom in schools indicates the propriety if not necessity of the wearing of an apron or coverall by a student working at a Hendey machine, certainly a jury could well find that failure of the board to furnish such equipment was some evidence of its failure to live up to its statutory duty. We think that the word “ equipment ” in the statute includes not only books and pencils but protective clothing for child students similar to that necessarily furnished by employers to men performing the same machine shop operations in industry. We must bear in mind that acquiring the knowledge necessary to become familiar with the machines and tools of a trade exposes infant students to dangers to which those taking the non-vocational courses are not subject and at the ages when inattention is the rule rather than the exception. It seems clear that the Legislature did not intend that children in schools should be subjected to the danger of serious injury because of lack of equipment which it was requiring employers to furnish to men. (Herman v. Board of Education, 234 N. Y. 196; Lessin v. Board of Education, 247 N. Y. 503, 511, 512; Bradley v. Board of Education, 274 N. Y. 473; Wahrman v. Board of Education, 187 N. Y. 331; Gardner v. State of New York, 281 N. Y. 212.)

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

Loughran, Finch, Rippey, Lewis and Desmond, JJ., concur; Lehman, Ch. J., dissents on the ground that a protective apron is not equipment ” within the meaning of the statute.

Judgment accordingly.


text:
    Frederick Brown, Respondent, v. Louis N. Rosenbaum, Appellant.

      Submitted December 9, 1941;
    decided March 5, 1942.

      Charles H. Tuttle for appellant.
    The suit was properly dismissed because there was no debt or privity of contract between plaintiff’s assignor and the defendant. (Spencer v. Ashworth, Partington & Co., [1925] 1 K. B. 589; Kellock v. Enthoven, 9 Q. B. 241; Broderick v. Aaron, 264 N. Y. 368; Broderick v. Adamson, 148 Misc. Rep. 353; 270 N. Y. 228; Richards v. Robin, 175 App. Div. 296; 225 N. Y. 719; Gaffney v. People’s Trust Co., 191 App. Div. 697; 231 N. Y. 577; Broderick v. Alexander, 268 N. Y. 306.) A person who acquires bank stock after the bank has ceased to do a regular banking business under a mandate of the state is not subject to liability for assessment or indemnity, so long as the bank remains closed. (Broderick v. Aaron [Kornberg], 268 N. Y. 260; People v. Merchants Trust Co., 116 App. Div. 41; 187 N. Y. 293; Broderick v. Adamson [Greif], 270 N. Y. 260; Richards v. Scharmann, 97 Misc. Rep. 143.) Under the proclamations and by reason of its insolvency the suspension of the bank was permanent. It could not and did not obtain a license to reopen. (Broderick v. Aaron [Kornberg], 268 N. Y. 260.) Where a bank was insolvent as of the date of the proclamation and in consequence never reopened, that date must be accepted as the official date of closing, fixing the rights of creditors and debtors and terminating the assessment period as regards stockholders. (Oppenheimer v. Harriman Nat. Bank & Trust Co., 301 U. S. 206; Goess v. A. D. H. Holding Corp., 85 Fed. Rep. [2d] 72; Gimble v. Harriman Nat. Bank & Trust Co., 11 Fed. Supp. 836; Goess v. Ehret, 85 Fed. Rep. [2d] 109; State v. Harris, 59 Ohio App. 165; 135 Ohio St. 449; Smith v. Witherow, 102 Fed. Rep. [2d] 638; Dehne v. Mine Safety Appliance Co., 94 Fed. Rep. [2d] 956.)

      Alfred A. Cook, Kenneth E. Walser and Henry Cohen for respondent.
    Plaintiff’s assignor paid the assessment in behalf of the defendant, the owner of the shares, and plaintiff is entitled to reimbursement. (Commercial Nat. Bank v. Sloman, 121 App. Div. 874; 194 N. Y. 506; Maule v. Garrett, L. R. 7 Exch. 101; Brinkley v. Hambelton & Co., 67 Md. 169; Rogers v. Toland, 43 Pa. Super. Ct. 248; Laurent v. Anderson, 70 Fed. Rep. [2d] 819; Ward v. Simon, 23 Fed. Supp. 117; Way v. Mooers, 135 Minn. 339; Poston v. Hull, 75 Ohio St. 502; Early v. Richardson, 280 U. S. 496.) The failure of the bank to meet its obligations occurred when a conservator was appointed on March 13, 1933. (Pyne v. Jackman, 12 Fed. Supp. 653; Schram v. Clair, 28 Fed. Supp. 422; Ward v. Simon, 23 Fed. Supp. 117; Munro v. Post, 23 Fed. Supp. 308; Sadlier v. Lay, 222 Wis. 641; Goess v. Myers, 134 Pa. Super. Ct. 272; Steele v. Randall, 19 Fed. Rep. [2d] 40.)
   Lehman, Ch. J.

Plaintiff’s assignor, George Blumenthal, paid a judgment for the sum of $10,263.28 recovered against him as owner of 92 shares of stock of the Harriman National Bank and Trust Company of the city of New York, in an action brought by the receiver of the bank to enforce the liability imposed by federal statute (U. S. Code, tit. 12, § 64) upon the stockholders of an insolvent national banking association. Blumenthal had transferred shares in the bank within sixty days prior to Monday, March 13, 1933, when a conservator was appointed for the bank. The buyers had in turn transferred the same shares before that date. Blumenthal’s liability under the provisions of the statute is clear beyond dispute. Claiming that at the time the bank failed to meet its obligations the defendant was the owner of the shares of stock which Blumenthal had transferred within sixty days before that time, the plaintiff, as Blumenthal’s assignee, brought an action to compel the defendant to repay the amount which Blumenthal, as the prior owner of the shares, had been compelled to pay. He has recovered a judgment against the defendant for the par value of eighty-six shares of such stock with interest. The defendant has appealed from that judgment,

The statute which imposes liability upon stockholders of national banking associations provides.

" Individual liability of shareholders; transfer of shares.

“ The stockholders of every national banking association shall be held individually responsible for all contracts, debts, and engagements of such association, each to the amount of his stock therein, at the par value thereof in addition to the amount invested in such stock. The stockholders in any national banking association who shall have transferred their shares or registered the transfer thereof within sixty days next before the date of the failure of such association to meet its obligations, or with knowledge of such impending failure, shall be liable to the same extent as if they had made no such transfer, to the extent that the subsequent transferee fails to meet such liability; but this provision shall not be construed to affect in any way any recourse which such shareholders might otherwise have against those in whose names such shares are registered at the time of such failure. (Dec. 23, 1913, c. 6, § 23, 38 Stat. 273.) ” (U. S. Code, tit. 12, § 64.)

The defendant on Monday, March 6, 1933, agreed to purchase ninety-two shares of stock in the bank. No bank in the State of New York was open for business on that date for the Governor of the State, shortly before midnight on March third, had by proclamation set apart, Saturday, March 4th, and Monday, March 6th, as holidays on which all banking institutions will be closed.” By subsequent proclamation of the President and the Governor, all banks remained closed and were prohibited from carrying on their banking business, except as authorized by the Secretary of the Treasury, until March 13th. Then banks which were solvent were permitted to resume business in accordance with regulations of the Secretary of the Treasury. The Harriman National Bank and Trust Company was, it is conceded, insolvent by a large sum ” on March 3d when, like all other banks in New York, it was compelled to close by proclamation of the Governor. Until that time it had carried on its usual banking business and had not failed to meet its obligations. When solvent banks were thereafter permitted to reopen a conservator was appointed for the Harriman National Bank and it was forbidden to pay its depositors. When its hopeless insolvency was revealed, its business was liquidated.

The judgment against the defendant is based upon a finding of fact that on March 11, 1933, while all banks remained closed in accordance with the proclamations of the President and Governor, eighty-six shares of stock, identified as shares which plaintiff’s assignor had transferred a few weeks earlier, were delivered to the agent of the defendant upon the contract of purchase and sale made in behalf of the defendant on March 6th. The defendant challenges that finding. It is fully supported by the evidence. Two questions of law remain, which must be decided upon this appeal: First. Was the date of the bank’s failure to meet its obligations,” at which time the statutory liability of stockholders attached, March 3, 1933, before the defendant purchased his stock, or March 13th, after the stock was delivered to defendant? Second. May a stockholder who has transferred his stock within sixty days before the date of the failure of the bank to meet its obligations and who, for that reason, has been compelled to pay a judgment recovered against him in an action brought to enforce the statutory liability imposed on stockholders of banking associations, maintain an action for reimbursement against the stockholder who had become the owner of the stock at the date of such failure through delivery from persons to whom it had been previously transferred?

It is clear that a bank has not failed to meet its obligations within the meaning of the statute so long as it pays its obligations at the time and place its obligations are payable. While all banks remained closed by command of the government, the date when payment of the obligations of each and all banks became due and could be demanded was postponed. Certainly no solvent bank which resumed business and paid its- obligations when permitted by the government was in default in any payment for which it would have been liable in the interval if the date for payment had not been postponed. The appellant, of course, does not claim otherwise. His claim is that where a bank was insolvent at the time it was closed by governmental authority and for that reason was not thereafter permitted to reopen, the date on which it was compelled to close under proclamation of the President or of the Governor fixes the time when rights of creditors and the responsibility of stockholders for the debts of the bank became fixed.

Under the National Banking Act the rights of creditors against a national bank attach when an act of insolvency ” is committed. (See U. S. Code, tit. 12, § 91.) The directors have no power after that date to change or defeat such rights by preferential payments or other devices. Under ordinary circumstances the date of insolvency is fixed when the assets of a bank are surrendered by its directors to the Comptroller for administration or when the Comptroller exercises administrative authority to conserve or liquidate bank assets. During the banking holiday when all banks were closed by governmental authority and payment of any banking obligations was prohibited, there was no occasion for the Comptroller to take possession of the assets of an insolvent banking association in order to conserve them or to prohibit the insolvent banking association from continuing to conduct its banking business. When an insolvent bank was denied permission to reopen for regular business after the end of the banking holiday, though solvent banks then resumed their usual banking operations, the date when the rights of creditors attached was properly fixed at- the time when “ the facts indicated that the bank would not be able to pay its depositors in due course ” though at that time the banking holiday was not completely at an end. (Downey v. City of Yonkers, 106 Fed. Rep. [2d] 69, 74; affd., 309 U. S. 590. See, also, Bryce v. National City Bank, 17 Fed. Supp. 792; affd., 93 Fed. Rep. [2d] 300.)

Congress has not, however, provided that the liability of stockholders like the rights of creditors against an insolvent bank, attaches at the date of an “ act of insolvency.” Congress has expressly provided that liability of stockholders of an insolvent banking association attaches and becomes fixed upon “ the date of the failure of such association to meet its obligations.” The time when it appears that insolvency makes it impossible for a bank to meet all its obligations as they mature has been chosen by Congress as the appropriate date upon which the rights of creditors against the bank attach; the time when a bank is actually in default in meeting its obligations as they become due has been decreed by Congress as the appropriate date upon which the liability of stockholders of the bank attaches. Often, perhaps usually, the dates will coincide — not always.

Where, while other banks remain open, a bank is closed or is placed upon a restricted basis or is prohibited or prevented from paying its debts as they become due in order to conserve its assets pending determination whether it is insolvent or whether its capital has been impaired and if impaired whether the impairment can be corrected, there is a “ failure ” of the bank to meet its obligations.” In such case the closing of the bank may determine both the date when the rights of creditors and the liability of stockholders attach. That is true even though at that time it is hoped that the closing may be only temporary. (See Broderick v. Aaron [Kornberg], 268 N. Y. 260; State ex rel. Squire v. Harris, 59 Ohio App. 165; affd., 135 Ohio St. 449; Willing v. Jensen, 17 Fed. Supp. 596; Willing v. Pennsylvania Co., 21 Fed. Supp. 233.) When, however, by proclamation of the President and Governor, made pursuant to authority vested in them, the date upon which banking obligations became due and may be paid is postponed, there is, as we have already pointed out, no “ failure ” by any bank to meet its obligations.” That is the case here. The date of such failure arrives only when a bank fails to open or refuses to meet its obligations which then have matured though other banks are open and carrying on their business without restriction. The Comptroller of the Currency is not charged with responsibility to fix that date. It is fixed according to statute by an act of default, not by an act of insolvency, and the courts must determine when such an act has occurred. Here, it is shown, as matter of law, the act of default occurred on March 13, 1933, and that date cannot be altered by any administrative ruling.

Though on that date the defendant was the owner of eighty-six shares of stock in the bank and subject to the statutory liability imposed upon stockholders to the amount of the par value of the stock each owned, the payment by the plaintiff’s assignor of the assessment levied upon the stock owned by the defendant satisfied the defendant’s statutory liability and relieved him of further payment upon it. The plaintiff’s assignor, having transferred the same stock within sixty days of the date when the statutory liability of stockholders attached, remained subject to a stockholder’s statutory liability as if he had made no transfer but only “ to the extent that the subsequent transferee fails to meet such liability.” When the statutory liability of the subsequent transferee ” is extinguished by the payment made by the stockholder who had transferred his stock, no right of action for the failure of the transferee to meet such liability is created by the statute in favor of the stockholder who made the transfer. Recourse, if any, against the transferee must be by common law action. Here the plaintiff asserts a right of action based on a contract implied in law for moneys which his assignor was compelled to pay though it was the duty primarily of the defendant to make the payment.

The general rule which must be applied where such a right of action is asserted has. been firmly established by an almost unbroken line of judicial decisions and by academic authority. “ A person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity from the other, * * *.” (American Law Institute, Restatement of the Law of Restitution, § 76.) Where payment by one person is compelled, which another should have made or which redounds solely to the benefit of another, a contract to reimburse or indemnify is implied by law. The defendant does not seriously dispute the rule but he maintains that the obligation to pay was imposed upon both the plaintiff and the defendant, that no privity of contract or estate existed between them and that the defendant was under no greater duty to pay and derived no greater benefit from the payment than the plaintiff.

This court has in many cases been called upon to define rights and liabilities arising under analogous provisions of the statute in this state which formerly imposed a similar liability upon stockholders of banks organized under the law of New York. (Banking Law [Cons. Laws, ch. 2], §§80 and 120 [113-a], now partially repealed and renumbered by L. 1938, ch. 684.) In the statute “ stockholders ” upon whom liability for the debts of an insolvent bank was imposed were defined as “1. Such persons as appear by the books of the bank to be stockholders; 2. Every owner of stock, legal or equitable, although the same may be on such books in the name of another person * * Under that definition only a stockholder of record and the legal or equitable owner of stock standing in the name of another at the time when the stockholder’s liability attached were subject to the statutory liability. The record owner may have sold and transferred his stock; the buyer may have in turn sold his stock to another; the record holder may not even know that the buyer has transferred the stock to another. None the less the law makes the holder of the record title to stock a quasi trustee for the actual owner, and the law implies * * * an obligation on the part of the actual owner to indemnify the record holder against liabilities.” Thus, whenever under the New York statute a record holder who had parted with legal and beneficial ownership was compelled to pay the assessment, he was a quasi trustee for the actual owner and had a right of action under a contract implied by law to compel the actual owner to indemnify him. (Broderick v. Aaron [Rice], 264 N. Y. 368, 378.)

In that case the record owner sought, however, to hold not the actual owner who also was subject to the statutory liabilitjr, but the person to whom the record owner had sold his stock and who in turn had sold it to the person who was the actual owner when the statutory liability attached. The person sought to be charged with the obligation to indemnify the record owner was under no statutory liability and gained no benefit from the payment by the record owner to meet a duty which the record owner owed to the state. In deciding that in such circumstances the law did not imply a contract by the intermediate buyer to reimburse the seller of the stock since the obligation to indemnify arises only where one person has discharged a duty which is owed by him, but which as between himself and another should have been discharged by the other, we pointed out “ no cases have been cited to us from any American jurisdiction where the obligation to indemnify a seller of stock has been extended beyond the time when the quasi trust relation between seller and buyer ceased; and again that it is “ difficult then to find any sound basis for the implication of an obligation by the buyer to indemnify the seller which continues after the buyer has'terminated the quasi trust relationship between himself and the seller ” (pp. 377, 378). (Italics are new.)

The defendant upon this appeal leans heavily upon what we said and decided in that case, but here the plaintiff does not assert that a buyer is under an obligation to indemnify the seller after the buyer has terminated the quasi trust relationship between himself and the seller. Unlike the New York statute the federal statute imposes liability for the same obligation upon persons between whom there may be neither privity of contract nor privity of estate, and here the plaintiff asserts that as between these persons the beneficial owner of the stock at the date when liability attached should have discharged the obligation. Nothing said or decided in the case of Broderick v. Aaron (Rice) (supra) can lead to the conclusion that as between the persons who were subject to the same liability the primary duty to discharge it does not rest upon the beneficial owner. The statute clearly indicates that Congress intended that the ultimate transferee should be under a primary duty to meet the liability, for all other persons were made subject to the liability only to the extent that such transferee failed to meet it. More important, however, is the fact, as we pointed out in the Broderick case, that upon well-established equitable principles beneficial ownership of stock gives rise not only to the right to receive all the benefits of ownership, but also the obligation to meet all the burdens of ownership.

Analysis in this opinion of other objections urged by the appellant and rejected by the court would serve no useful purpose.

The judgment should be affirmed, with costs.

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

Judgment affirmed.