text:
    In the Matter of Northwestern National Insurance Company, Respondent, against Louis H. Pink, as Superintendent of Insurance of the State of New York, Appellant.
    Argued March 11,1940;
    decided July 29, 1942.

      John J. Bennett, Jr., Attorney-General (Henry Epstein, William J. Cahill and M. Kaplan of counsel), for appellant.
    In denying petitioner’s license under the facts herein stated the Superintendent of Insurance has exercised his given powers within the area of discretion marked out by the Insurance Law. (German Alliance Ins. Co. v. Lewis, 233 U. S. 389; O’Gorman & Young, Inc., v.
      Hartford Fire Ins. Co., 282 U. S. 251; Buffalo Assn. of Fire Underwriters v. Noxsel-Dimick Co., 235 App. Div. 92; Matter of Importers & Exporters Ins. Co. v. Rhoades, 239 N. Y. 420.)

      Frederick T. Case for respondent.
    The statutes do not give the • Superintendent of Insurance any power to regulate or limit rates of commission to be paid to fire insurance brokers and he has only such powers as the law gives him. (Matter of N. J. Fidelity & Plate Glass Ins. Co. v. Van Schaick, 236 App. Div. 223; 261 N. Y. 521; Wallace & Co. v. Ferguson, 70 Ore. 306; Liverpool & London & Globe Ins. Co. v. Clunie, 88 Fed. Rep. 160; Matter of Continental Guaranty Corp. v. Craig, 240 N. Y. 354; People ex rel. Municipal Gas Co. v. Pub. Serv. Comm., 224 N. Y. 156; People ex rel. N. Y., N. H. & H. R. R. Co. v. Wilcox, 200 N. Y. 423.) The powers of the Superintendent of Insurance to supervise rates of premium do: not give him power to fix or regulate rates of commission for brokers. (Matter of Importers & Exporters Ins. Co. v. Rhoades, 239 N. Y. 420; Buffalo Assn. of Fire Underwriters v. Noxsel-Dimick Co., 235 App. Div. 92; People ex rel. N. Y. Fire Ins. Exchange v. Phillips, 237 N. Y. 167; Commercial Standard Ins. Co. v. Board of Ins. Commrs. of Texas, 34 S. W. Rep. [2d] 343.) The belief of the Superintendent of Insurance that so-called “ excess commissions ” are an evil cannot serve to extend his power beyond what the law gives him. (Matter of Smith v. Morgan, 253 App. Div. 239; Matter of New York Good Humor, Inc., v. Morgan, 171 Misc. Rep. 899; Matter of Levy v. Valentine, 172 Misc. Rep. 130.) The power of the Superintendent of Insurance to grant and revoke licenses does not authorize indirect control of matters not entrusted to his control. (Commercial Standard Ins. Co. v. Board of Insurance Commissioners, 34 S. W. Rep. [2d] 343; Matter of Factory Mutual Liability Ins. Co. v. Behan, 233 App. Div. 614; Homesteaders Life Ins. Co., 224 Iowa, 173; Matter of American Molasses Co. v. McGoldrick, 256 App. Div. 649; Matter of Small v. Moss, 255 App. Div. 1; 279 N. Y. 288; Matter of Picone v. Commissioner of Licenses, 241 N. Y. 157; Chicagoland Agencies v. Palmer, 364 Ill. 13; Green Point Sav. Bank v. Zoning Appeals Board, 281 N. Y. 534.)
   Loughran, J.

This is an appeal by the Superintendent of Insurance from an order directing him to issue to the petitioner a renewal of its foreign insurer’s license to do business in this State.

The Insurance Law (Cons. Laws, ch. 28) provides: “ The superintendent shall issue a renewal license to any “foreign or alien insurer if he shall be satisfied, by such proof as he may require, that such an insurer is not delinquent with respect to any requirement imposed by this chapter and that its continuance in business in this state will not be hazardous or prejudicial to the best interests of the people of this state ” (§ 42, subd. 2). The Superintendent found that the petitioner had paid “ excess commissions ” to brokers who brought in its local fire insurance business. He made also this finding: The payment of excess commissions is an evil in the business and reacts disadvantageously to the policyholders, companies, and producers. The interests of the people of this State will be best promoted by a discontinuance of the practice.”

This basis for the refusal to renew the petitioner’s license has been explained by the Superintendent in these words: The payment of excess commissions has been an abuse in the fire insurance business for many years. It goes back at least to 1898. Chaos in fire insurance rates followed the collapse of the Tariff Association ’ in that year. * * * Due to that chaos in 1898 a meeting was called which was attended by representatives of nearly every joint stock fire insurance company doing business in New York and which resulted in the formation of the New York Fire Insurance Exchange. Companies writing approximately ninety-eight per cent of the fire insurance premiums in the metropolitan area are members of the Exchange. The companies which are members and which write ninety-eight per cent of the business have voluntarily agreed upon a rate of commissions to be paid to brokers. The Northwestern National Insurance Company [this petitioner] is not a member, of the Exchange. * * * I might as well state we have no fault to find with the Northwestern insofar as its financial strength goes,1 or insofar as its practices go, excepting in this particular matter. * * * The company itself is financially sound and no question is raised except with regard to its practice of paying excess commissions.”

In other words, the determination of the Superintendent was to this effect: No foreign or alien insurer may do the business of fire insurance in this State unless it adopts for that purpose the rate of • brokerage commissions formulated by the voluntary agreement of the members of the New York Fire Insurance Exchange. We do not read the foregoing provision of the statute as an authorization to the Superintendent to construct a prohibition of that size.

Rate making is a governmental process which according to the accepted classification is legislative, not judicial (Norwegian Nitrogen Products Co. v. United States, 288 U. S. 294, 318). The Legislature, of course, can limit to a reasonable extent the rates of commissions to be paid to brokers of insurance and its competency in that regard can be committed to an administrative body. But the Superintendent here disavowed any delegation to him of such power. On that point, he said: “ I believe and have frequently stated that eventually it will probably be necessary for the Legislature to give the Department some direct control over commissions for the proper policing of the business. * * * I have also stated and again repeat that in view of the fact that the Legislature has not given such direct control to the Department I do not wish to fix commissions.” There is no denying, however, that the rate of commissions declared by the members of the New York Fire Insurance Exchange was fixed with the compulsion of a law against foreign insurers, in consequence of the departmental determination of which the petitioner complains.

Section 42 of the Insurance Law (supra) cannot be taken to have conferred such an equivalent of a power which the Legislature has refused to grant expressly. The regulation authorized by section 42 is obviously aimed at delinquencies or deficiencies of an individual concern. The pronouncement of general policy here attempted by the Superintendent was not justified by that section.

The order should be affirmed, with costs.

Finch, J.

(dissenting.) The Superintendent of Insurance, in refusing a license to this foreign insurer, is not attempting to regulate brokers’ commissions. He does not have and does not assume to have any such power (Matter of Importers & Exporters Ins. Co. v. Rhoades, 239 N. Y. 420). All that he is doing is to prohibit a foreign insurer from coming into this State and paying commissions in excess of those voluntarily fixed by the members of the New York Fire Insurance Exchange, which do about ninety-eight per cent of the fire insurance business transacted in the metropolitan areas of this State. That is a very different thing from prescribing rates. The Superintendent does not say what the rates shall be. He has no control over that. The members of the Exchange may raise or lower rates whenever and as often as they so decide.

The petitioner, a foreign insurance company, has failed to adhere to these rates. For this reason the Superintendent of Insurance has refused to renew its license to do business within this State. The Superintendent has based his refusal upon the discretion which he contends is vested in him by the provisions of section 42 (subd. 2) of the Insurance Law. This section provides that the Superintendent shall issue a renewal license to a foreign insurer provided the latter is not delinquent with respect to any requirements imposed by the Insurance Law, and provided further that the Superintendent shall be satisfied “ that its continuance in business in this state will not be hazardous or prejudicial to the best interest of the people of this state.”

Obviously, the Superintendent has been charged with a greater duty than merely to see to it that the specific directions found in the Insurance Law are observed. Here is a plain mandate by the Legislature that the Superintendent must do more than merely look to the letter of the statute; otherwise, the second criterion contained in subdivision 2 is meaningless.

The question here presented, therefore, is whether in this case the Superintendent of Insurance has lawfully exercised the powers conferred upon him under the Insurance Law. What he has done in effect in this case is to compel this foreign insurer to observe a reasonable regulation subscribed to by the vast majority of fire underwriters doing business in this State. He has undertaken this action only upon a finding that unless there is a limitation upon brokerage commissions paid by this foreign insurer, its continuance in business in this State will be hazardous and prejudicial to the best interest of the people of this State.

The above conclusion is based upon findings that the experience of fifty years in the insurance business has demonstrated that some restraint must be placed upon commissions paid to brokers. Unbridled competition among the insurers in this regard has in the past frequently resulted in an unhealthy competitive condition imperiling the public interest in preserving the financial soundness of the companies and the maintenance of low acquisition costs. Furthermore, a correlation between commissions and premiums has received legal recognition (O’Gorman & Young, Inc., v. Hartford Fire Ins. Co., 282 U. S. 251, 256; Buffalo Ass’n of Fire Underwriters v. Noxsel-Dimick Co., 235 App. Div. 92, affd., 260 N. Y. 678). The payment of commissions constitutes a substantial percentage of acquisition costs, which in turn determine premium rates. Payment of . unduly large commissions has in consequence an important bearing both upon the premium rates charged to the public and the profit realized by the company.

It will not do to say that conceding the Superintendent the power asserted by him in this casé would leave him free to coerce individual foreign insurers into observing all the standards adopted by domestic companies, even if these standards were devised for the sole purpose of placing foreign insurers at a competitive disadvantage. In reviewing the quasi-judicial acts of the Superintendent of Insurance under this section, the courts in the case at bar must determine first that there is reasonable basis for holding that the doing of business in this State by the foreign insurer will be hazardous and prejudicial to the best interest of the people of this State and, second, that there is adequate evidence to support this conclusion. It cannot be said that the basis for the finding of the Superintendent is unreasonable, or that it is unsupported by adequate evidence.

It follows that the order appealed from should be reversed and the detérmination of the Superintendent of Insurance affirmed.

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

Order affirmed.


source: Caselaw Access Project

author: Desmond, J.

license: Public Domain

text:
    Gustave S. Geiger, Appellant, v. James I. Bush et al., Respondents.
    Argued April 20, 1942;
    decided July 29, 1942.

      I. Maurice Wormser, Samuel Rubin and David J. Colton for appellant.
    The agreement between plaintiff and defendants was not void for indefiniteness or uncertainty but was clear and explicit in its terms. (Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112; Outlet Embroidery Co. v. Derwent Mills, 254 N. Y. 179; Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240; Rubin v. Dairymen’s League Co-Operative Assn., 284 N. Y. 32; Roberge v. Winne, 144 N. Y. 709; Weintraub v. Kruse, 234 N. Y. 575; Wertheimer v. Boehm, 241 N. Y. 575.)

      Frederick E. Crane, Robert L. Reed and Henry L. de Give for Thomas H. McKoy, Jr., et al., respondents.
    The variance between the pleadings and the proof was sufficient to justify the setting aside of the verdict and the dismissal of the complaint as against the defendants McKoy and Page. (Brocia v. Romeo & Co., 240 N. Y. 233; Northam v. Dutchess Co. Mut. Ins. Co., 177 N. Y. 73; Seavey v. Ansonia Mfg. Co., 111 N. Y. Supp. 661.) The failure of the plaintiff to prove due performance of the contract as pleaded was a proper ground for setting aside the verdict and for dismissing the complaint. (Pershall v. Elliott, 249 N. Y. 183; Sternberg v. Curie, 242 App. Div. 581; Meriden Gravure Co. v. Bedell, 232 App. Div. 454.) The trial court properly found that the alleged agreement to which the plaintiff testified was too vague, indefinite and uncertain to be enforced. (Strong v. Sheffield, 144 N. Y. 392; Smith v. Dotterweich, 132 App. Div. 489; Manufacturers Trust Co. v. Weldon, 267 N. Y. 488; Lally v. Cronen, 247 N. Y. 58; Royal Bank of Canada v. Williams, 220 App. Div. 603; Garcin v. Granville Iron Corp., 137 Misc. Rep. 648; Soma v. Handrulis, 277 N. Y. 223; Adair v. Brimmer, 74 N. Y. 539; Samuel v. Bastress, 267 N. Y. 279; Hutchinson v. Birdsong, 211 App. Div. 316.)

      Edward K. Hidalgo, Oleg Peter Petroff and John P. Moore for Cedric E. Fauntleroy, respondent.
    The variance between the contract alleged in the complaint and the contract testified to at the trial is fatal to the complaint. (Gallaudet v. Kellogg, 16 N. Y. Supp. 79; 133 N. Y. 671; Seavey v. Ansonia Mfg. Co., 111 N. Y. Supp. 661; Lansing v. M’ Killip, 3 Caines, 286; Sternberg v. Curie, 242 App. Div. 581; Meriden Gravure Co. v. Bedell, 232 App. Div. 454.) The testimony at the trial does not establish an enforceable contract. (Chiapparelli v. Baker, Kellogg & Co., 252 N. Y. 192; Varney v. Ditmars, 217 N. Y. 223; Strong v. Sheffield, 144 N. Y. 392; United Press v. New York Press Co., 164 N. Y. 406; Queensboro Farm Products, Inc., v. State of New York, 262 App. Div. 426; Flaherty v. Cary, 62 App. Div. 116; 174 N. Y. 550; Bluemner v. Garvin, 120 App. Div. 29; Canet v. Smith, 173 App. Div. 241; Royal Bank of Canada v. Williams, 220 App. Div. 603; O’Reilly v. Gerry, 249 App. Div. 850; Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240.) Assuming that appellant did establish an enforceable contract, the evidence fails to sustain ratification of the alleged contract by respondent Fauntleroy. (Hamlin v. Sears, 82 N. Y. 327; Redfield v. Norwalk & Co., 190 N. Y. Supp. 651; Pickel v. Conn, 209 App. Div. 410; Stanton v. Granger, 125 App. Div. 174.) The motion to dismiss for failure to prove a cause of action was properly granted upon the grounds specified in the trial court’s opinion. (Martin v. Home Bank, 160 N. Y. 190; People ex rel. Warschauer v. Dalton, 159 N. Y. 235; Haines v. N. Y. C. & H. R. R. R. Co., 145 N. Y. 235; Meltzer v. Flying Fame, Inc., 224 App. Div. 41; Troy Auto Exchange v. Home Ins. Co., 221 N. Y. 58; Pagnillo v. Mack Paving & Construction Co., 142 App. Div. 491; Bonny v. City of New York, 156 App. Div. 287; O’Brien v. Lehigh Valley R. R. Co., 176 Misc. Rep. 404.)

      John E. Mack for James I. Bush, respondent.
    The alleged contract was void for vagueness, indefiniteness and uncertainty. (Garcin v. Granville Iron Corp., 137 Misc. Rep. 648; Royal Bank of Canada v. Williams, 220 App. Div. 603; Lally v. Cronen, 247 N. Y. 58; Strong v. Sheffield, 144 N. Y. 392; Smith v. Dotterweich, 132 App. Div. 489.) The alleged contract is unenforceable because of the failure of the plaintiff to perform. (Pershall v. Elliott, 249 N. Y. 183; Sternberg v. Curie, 242 App. Div. 581; Meriden Gravure Co. v. Bedell, 232 App. Div. 454.)
   Desmond, J.

The substance of plaintiff’s claim is this: He says he was employed or commissioned by persons other than defendants, to reorganize the corporation which owned a certain race track in New Hampshire, that he was working on this project when defendants, wishing to buy the race track, induced plaintiff to discontinue his efforts, on defendants’ promise to pay him what he would have earned had he successfully worked out his original project of reorganizing the race track corporation through public financing. All the defendants admitted that they did buy the race track, but denied the making of any such contract with plaintiff; two of them, defendants Page and Fauntleroy, urged, besides, that if such an agreement was.made with plaintiff, it was not binding on them. Motions to dismiss were made at the close of plaintiff’s case and at the end of the whole case; the motion was granted as to defendant Norton, only. The court, charging the jury, submitted' really only this question of fact: as to whether defendants did make, (or ratify) the promise testified to by plaintiff. The jury’s verdict was for plaintiff in the amount sued for, $55,000. (Plaintiff in his complaint had demanded also fifteen per cent of the stock of the track corporation, but it had been stipulated that only the money claim would go to the jury, the other part of the claim to abide the verdict). During the jury’s deliberations it returned to the court room and asked the trial justice whether it could bring in a verdict for a lesser amount than $55,000, such as 8 per cent, of the $411,000, or $32,880.” ($411,000 was the price actually paid by defendants for the race track). The trial justice answered this: “ No.” Plaintiff’s counsel took an exception, defendants’ counsel did not. The motions to dismiss, above referred to, as well as a motion to set aside the verdict, were all reserved by the trial justice (except that he did dismiss during the trial as to defendant Norton). Later the motions were granted with an opinion. In his opinion the trial court held that the verdict could not stand, for three reasons: (1) that there was a variance between the contract as pleaded and as proven, (2) that plaintiff failed'to prove performance, and (3) that the contract is too vague, indefinite and uncertain to be'enforceable. The court thereupon made an order setting aside the verdict and dismissing the complaint. Appellate Division, First Department, unanimously affirmed, without opinion, and this court granted leave to appeal.

In the complaint plaintiff alleges that, up to 1935, the race track, owned by New Hampshire Breeders Association, Inc. was a profitable enterprise, with gross annual income for several years of over $1,000,000, and annual net income of over $275,000; that in 1935, said Association engaged plaintiff “ as financial broker ” to procure and assist in the refinancing, reorganization or recapitalization of the race track enterprise, and to procure underwriters or bankers to underwrite a first mortgage bond issue or other securities of a new corporation to be formed to own and operate the track, all with a view of making a public offering of such securities, that plaintiff assisted in devising plans for such purposes and procured to be entered into, an underwriting agreement between the Association and A. W. Porter, Inc. as underwriter, which underwriting agreement, according to the complaint, provided that the underwriter would take, at a discount, $750,000 mortgage bonds of a new corporation to be organized to take over the race track, that out of the net proceeds of $675,000, approximately $600,000 was to go to the old stockholders, plus sixty per cent of the stock of the new corporation. The eighth paragraph of the complaint alleges: “ Eighth: That in consideration of and as compensation for the services rendered by the plaintiff in obtaining an underwriter and procuring the agreement as more fully set forth in paragraphs Sixth ’ and ‘ Seventh ’ above, the plaintiff was to receive, out of the said sum of $675,000, the sum of $55,000 in cash and fifteen (15%) percent of the common stock of said new corporation.” The complaint goes on to allege that plaintiff induced and caused the old race track corporation and the underwriter Porter to agree that defendant Bush should be chairman of the new corporation’s board and executive vice-president, that defendant Bush agreed to serve as such and to assist in the underwriting and sale of bonds so that plaintiff would receive his cash and stock as agreed; that, later, defendants decided that it would be to their advantage to buy the old corporation’s stock privately and to organize a new corporation to be owned privately by them, all at a cash expenditure of less than the $675,000 involved in the Porter public financing project. The complaint alleges further that defendants requested plaintiff to discontinue his efforts to refinance the race track publicly for the old corporation, and that the defendants agreed with plaintiff that, in consideration of his abandoning those efforts and in consideration of plaintiff’s introducing defendants to the officers and directors of the old corporation defendants would pay to plaintiff the sum of $55,000 in cash and would deliver to plaintiff fifteen (15%) percent of the common stock of a new corporation to be formed by them ” to own and operate the track, provided that defendants acquired the track for an expenditure of $500,000, or less; relying upon this promise, plaintiff pleads, he brought his public financing activities to an end and introduced defendants to the old corporation’s managers, that defendants, or their corporation, did buy the track for less than $500,000, in 1936, but refused to pay plaintiff $55,000, or to deliver to him fifteen per cent of the new stock, as promised; a second cause of action pleads a conspiracy to deprive plaintiff of these earnings, etc.

We must examine into the proofs, to see whether in any view of it the case was for the jury'” (Hoose v. Drumm, 281 N. Y. 54, 57). The background of this whole story is that plaintiff claims there was a forty per cent stock interest in the old corporation, which it was thought advisable to eliminate. The other sixty per cent was represented in all negotiations by attorney Joseph Shalleck, officer, director, stockholder, attorney for the corporation and attorney for one Smith, track manager and stockholder. Plaintiff says that the Shalleck-Smith group wished to get rid of the forty per cent interest and get persons of “ stability and fine character ” like defendant Bush, the reputation of the new people to be such as to assure a renewal of the race track franchise.

Plaintiff testified that he had been for years a financial broker and consultant,” that he was consulted by attorney Shalleck in connection with the proposed public financing, and that he then went actively to work on the matter. Mr. Shalleck testified that, after this, an oral agreement, suggested and worked out to some extent by plaintiff, was made with underwriter Porter, by the terms of which the underwriter would buy a new issue of mortgage bonds, at a price of $675,000 which would be sufficient to pay off the minority stockholders, provide working capital for a new corporation and pay $55,000 cash to plaintiff Geiger and his group.” Besides this, under the Porter plan, there was to have been available for distribution, according to Mr. Shalleck, the stock in the reorganized corporation, some of which would have gone to the underwriters, sixty per cent of which would have been delivered to the Shalleck group and fifteen per cent of which would have gone to Geiger [plaintiff] and Bush or whoever Geiger’s associates were.” Plaintiff testified that after the Porter plan had been broached, he [plaintiff] approached defendant Bush, who was of high repute in sport promotion circles, and who evinced interest in the project, and that there was thereafter a meeting attended by Messrs. Bush and Shalleck and by plaintiff, at which it was agreed that Mr. Bush would interest himself in the reorganization and that, if the proposed bond issue could be sold on the (Porter) terms above described, eight per cent of the net cash proceeds, or about $54,000, would be plaintiff’s commission. Plaintiff says he then worked out in detail the underwriting agreement with Mr. Porter, which agreement, for reasons not to be charged against plaintiff, failed of performance. Plaintiff testified that this setback did not terminate his engagement or his efforts, that he looked for another distributor ” for the bonds, in the course of which search a banker suggested that private financing ” might be the better way to achieve the hoped-for reorganization. Thereupon, says plaintiff, he carried this thought to defendants Bush and McKoy, who agreed, or acquiesced in an oral agreement, that if plaintiff would desist and not show this property to anybody or discuss it with anybody, and if we can buy this property ourselves for $500,000 or less, we will give him [plaintiff] the same compensation that he was to get under the Porter deal.” This is the proof relied upon by plaintiff to charge defendants Bush and McKoy with liability for payment of the commission, in cash and stock. Plaintiff says that, agreeably to that oral understanding, he then discontinued his efforts to arrange a public offering of a new issue of bonds.

As to defendants Page and Fauntleroy, the testimony of plaintiff is that they were present later at a meeting where plaintiff, urging his own big stake in the deal,” inquired as to the progress of the proposed private financing, and gave the meeting the name of an attorney, who represented clients said to be interested in becoming part purchasers of the race track. Later still, according to plaintiff, he was notified that no help was needed from these newly suggested persons, because defendants had actually bought the race track for $411,000. ~

We hold that there was thus direct proof of an agreement by defendants Bush and McKoy to pay plaintiff the commission he would have gotten on the Porter deal, and, also, proof sufficient for a jury’s holding that defendants Page and Fauntleroy, after that agreement had been made, agreed to it, as joint adventurers with defendants Bush and McKoy. There was testimony, referred to above, that Messrs. Page and Fauntleroy, before defendants’ purchase of the race track, had been put on notice, by plaintiff, of his claims, and had not attempted to dispute those claims, or to repudiate the authority of defendants McKoy and Bush, to incur such a liability, on behalf of the “ group.” The trial justice referred to the jury the question of whether defendants Page and Fauntleroy had authorized defendants Bush and McKoy to agree on behalf of the two former, as to plaintiff’s commission, or whether the two former ratified the agreement. Possibly the question was not strictly one of authority or ratification, save as such a question is always closely bound up with the question of joint adventure (see Jones v. Gould, 209 N. Y. 419, 426, 427). But this part of the court’s charge was not questioned by anyone, and proof was in the record on which could be based a finding that defendants Page and Fauntleroy had become bound to plaintiff, by acquiescence. It was a question of fact, also, on this record, whether or not plaintiff, by bringing in the outside attorney and his clients as possible part purchasers, had, as defendants claim, breached his agreement to desist from further efforts to find new investors or underwriters.

As to indefiniteness and uncertainty, we do not think there was such indefiniteness as to forbid a recovery (see Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240, 251). As to plaintiff’s failure to prove performance of so much of this alleged agreement as required him to introduce defendants to the officers of the old corporation: There is evidence that the old corporation’s representative did not meet defendant Bush through plaintiff, and that they met the other defendants through defendant Bush. However, the jury could find from plaintiff’s testimony that plaintiff brought defendant Bush to Mr. Shalleck in connection with the race track, even though Messrs. Shalleck and Bush might have known each other before. The other defendants were brought into the picture and to the notice of the old corporation, if plaintiff is truthful, by plaintiff, through defendant Bush and others. Surely the jury could find that by these activities plaintiff did everything necessary and proper to introduce ” defendants to Mr. Shalleck as prospective purchasers,” as alleged in the complaint. It appears, too, that the promise to introduce the purchasers was not the important part of plaintiff’s undertaking.

' This analysis of the proof, especially plaintiff’s proof, shows that the whole matter was a question of fact (except as to defendant Norton) with the proof much stronger against defendants McKoy and Bush than against defendants Fauntleroy and Page, but legally sufficient as to all of them. To some extent, the two contracts have been confused, in the proceedings below. Plaintiff is suing defendants, not on the contract which he claims to have had with the old corporation through Mr. Shalleck; he is suing on the contract which he says he made with defendants Bush and McKoy and which, according to him, was ratified or assumed by defendants Page and Fauntleroy as joint adventurers. It may well be that there is some little variance between, on the one hand, plaintiff’s testimony of what Mr. Shalleck promised him, that is, eight per cent of $675,000, plus fifteen per cent of the stock, and, on the other hand, his allegations and proof as to what defendants promised him, that is, $55,000 and fifteen per cent of the stock. But as to the contract sued upon — the contract with defendants — there is no substantial variance between the allegations and the proofs. Even if the proof here shows that plaintiff at one time was talking about $55,000 and at another time_was talking about eight per cent of $675,000, which would be $54,000, there is enough from which the jury could say that the promise of defendants was to pay $55,000 and that the reference to eight per cent was not controlling, but was roughly explanatory of the way in which the $55,000 figure was arrived at.

It follows that the trial court properly submitted the case to the jury, as against all the defendants except defendant Norton, and that the jury’s verdict against the defendants, except defendant Norton, should not have been set aside.

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

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

Judgments reversed, etc.


author: Loughran, J.

text:
    Hebrew Publishing Company, Respondent, v. Asher Scharfstein, Appellant.
    Argued June 10, 1942;
    decided July 29, 1942.

      Arthur Garfield Hays, Oscar Stabiner and Henry L. Burkitt for appellant.
    Unfair competition cannot be predicated solely on copying of uncopyrighted books. (White Studio v. Dreyfoos, 221 N. Y. 46; Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U. S. 118; Germanow v. Standard Unbreakable W. C. Co., 283 N. Y. 1; Dixie Vortex Co. v. Lily-Tulip Corp., 19 Fed. Supp. 511; Butterfield & Co. v. Abraham & Straus, Inc., 212 App. Div. 384; Sinko v. Snow-Craggs Corp., 105 Fed. Rep. [2d] 450; Crescent Tool Co. v. Kilborn & Bishop Co., 247 Fed. Rep. 299; Neva-Wet Corp.
      v. Never Wet Processing Corp., 277 N. Y. 163; Lewis v. Vendome Bags, Inc., 108 Fed. Rep. [2d] 16.) Uncopyrighted books may be freely copied by any method, assuming there is no breach of trust, fraud or imposture. (Palmer v. De Witt, 47 N. Y. 532; Coliga v. Inter Ocean Newspaper Co., 215 U. S. 182; International News Service v. Associated Press, 248 U. S. 215; Bamforth v. Douglass Post Card & Machine Co., 158 Fed. Rep. 355; Cheney Bros. v. Doris Silk Corp., 35 Fed. Rep. [2d] 279; Tabor v. Hoffman, 118 N. Y. 30; Kaylon, Inc., v. Collegiate Mfg. Co., 255 App. Div. 209; Kellogg Co. v. National Biscuit Co., 305 U. S. 111; Keystone Type Foundry v. Portland Pub. Co., 186 Fed. Rep. 690.)

      Philip Wittenberg for respondent.
    The appropriation by the defendant of the plaintiff’s books by the sale of photographic reproductions thereof constitutes unfair competition. (Fisher v. Star Co., 231 N. Y. 414; Union Car Advertising Co. v. Collier, 232 App. Div. 591; Burrow v. Marceau, 124 App. Div. 665; Schechter Poultry Corp. v. United States, 295 U. S. 495; Chicago Bd. of Trade v. Christie Grain & Stock Co., 198 U. S. 236; Germanow v. Standard Unbreakable W. Crystals, Inc., 283 N. Y. 1; National Telephone Directory Co. v. Dawson Mfg. Co., 215 Mo. App. 683; Dutton & Co. v. Cupples, 117 App. Div. 172; Fonotipia v. Bradley, 171 Fed. Rep. 951.) The defendant had actual • knowledge of the plaintiff’s books. He was chargeable legally with notice that the photographic offset plates could not be lawfully used by him. (Williamson v. Brown, 15 N. Y. 354; Baker v. Bliss, 39 N. Y. 70; Fidelity & Deposit Co. v. Queens County Trust Co., 226 N. Y. 225; Rogers v. Adams, 119 Misc. Rep. 77; Nettles v. Childs, 100 Fed. Rep. [2d] 952; First Nat. Bank v. Pittsburgh F. W. & C. Ry. Co., 31 Fed, Supp. 381.)
   Loughran, J.

The action is one for an injunction against claimed unfair competition.

For a number of years, the plaintiff has published two religious tracts — The Five Books of Moses ” and a “ Daily Prayer Book.” Each consists of a traditional Hebrew text accompanied by an English translation. The contents have long been familiar to the defendant who handled both volumes in his book-selling business. He has now reproduced them by means of so-called offset plates made from photographs of the pages thereof. Sales by him of such typographically identical copies is the competition complained of.

The court at Special Term granted an injunction restraining the defendant from copying by photographic methods books published by the plaintiff or selling such copies. The Appellate Division affirmed by a divided vote. The case has now come here on a further appeal by the defendant.

No claim is made of any copyright or other exclusive privilege to publish the texts in question. There is no .finding of any passing off of the defendant’s books as the books of the plaintiff. There. is no finding of any fraud, breach of trust or imposture of the defendant. There is no finding of any actual interference by the defendant with the business or good will of the plaintiff.

Nor is there a showing that any result of ingenuity or artistic competence of the plaintiff or its predecessors has been appropriated by the defendant. Plaintiff’s The Five Books of Moses ” is itself a photographic reproduction of a Hebrew text which was originally set by missionaries either in Russia or in Eastern Europe many, many years ago.” One of the predecessors of the plaintiff got hold in .Europe of the matrices that were the source of the Hebrew type from which its Daily Prayer Book ” is printed. The English translations were copied by the plaintiff from similar works of an olden time and were set on a linotype machine.

The injunction rests on the following findings: “ That the plaintiff did a continuous business in selling these books and sold about 4,000 copies a year of the Daily Prayer Book and The Five Books of Moses. That the defendant, by means of such method of reproduction was enabled to manufacture books at a lower cost to the defendant than the price which the defendant would be required to pay for the manufacture of such books by the use of plaintiff’s plates and the defendant was thereby enabled to sell such books at a much lower price.”

On that basis the whole case for the plaintiff is the fact that the cost to the defendant of his offset plates was less than the expense of .making an identical type surface all over again. We think such a saving to the defendant did not without more entitle the plaintiff to this judgment for a permanent injunction as in a case of unfair competition. (Cf. Dutton & Co. v. Cupples, 117 App. Div. 172.)

The judgments should be reversed and the complaint dismissed, with costs in all courts.

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

Judgments reversed, etc.


author: Lewis, J.

text:
    In the Matter of the Claim of Lillian Lepow, Appellant, against Lepow Knitting Mills, Inc., et al., Respondents. State Industrial Board, Appellant.
    Argued May 26, 1942;
    decided July 29, 1942.

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum, Joseph A. McLaughlin and Henry Epstein of counsel), for State Industrial Board, appellant.
    The accidental injury arose out of and in the course of the employment. (Matter of Connelly v. Hunt Furniture Co., 240 N. Y. 83; Matter of Giliotti v. Hoffman Catering Co., 246 N. Y. 279; Matter of Katz v. Kadans & Co., 232 N. Y. 420; Matter of Hughes v. Trustees of St. Patrick’s Cathedral, 245 N. Y. 201; Matter of Heidemann v. American District Telegraph Co., 230 N. Y. 305; Matter of Leonbruno v. Champlain Silk Mills, 229 N. Y. 470; Matter of Marks v. Gray, 251 N. Y. 90; Matter of Schwimmer v. Kammerman & Kaminsky, 262 N. Y. 104; Corrina v. De Barbieri, 247 N. Y. 357; Matter of Crippen v. Press Co., 254 N. Y. 535; Matter of Tannenbaum v. Perfect Tailoring Co., 243 N. Y. 577; Matter of Bollard v. Engel, 278 N. Y. 463; Matter of Lief v. Wolzer & Son, 248 App. Div. 651; 272 N. Y. 542; Matter of McInerney v. B. & S. R. R. Corp., 225 N. Y. 130.)

      Frank L. Ward Tor respondents.
    The accident did not arise out of and in course of the employment. (Matter of Heitz v. Ruppert, 218 N. Y, 148; Matter of Davidson v. Pansy Waist Co., 240 N. Y. 584; Kass v. Hirschberg, Schutz & Co., 191 App. Div. 300; Matter of Daus v. Gunderman & Sons, Inc., 283 N. Y. 459; Matter of Kowalek v. N. Y. Consolidated R. R. Co., 229 N. Y. 489; Matter of McCarter v. LaRock, 240 N. Y. 282.)
   Lewis, J.

The claim filed by the appellant, the widow of David Lepow, for death benefits under the Workmen’s Compensation Law (Cons. Laws, ch. 67), has been denied upon the sole ground that the accidental injury which caused the decedent’s death did not arise out of and in the course of his employment. (Id. § 2, subd. 7; § 10.)

The decedent was employed as a salesman by Lepow Knitting Mills, Inc., — a wholesale dealer and importer of ladies’ frocks and “ ready-to-wear ” garments. Over a period of years prior to 1938 the employer had built up a considerable trade in South Africa. To retain that market for his employer’s merchandise the decedent, since 1934, had been sent on one or two trips each year to the several provinces in South Africa. On the last of these trips the decedent left New York on October 12, 1938, and arrived in Cape Town on November 4, 1938, prepared to call upon his employer’s customers, ninety in number, whose places of business were located in communities widely separated. The decedent’s mission, which was given over solely to business, led him through the provinces of Cape of Good Hope, Transvaal, Bechuanaland, Orange Free State and Southern Rhodesia. It met with a measure of success shown by the undisputed evidence that up to the time he was stricken the decedent had sent back by mail to his employer numerous orders from customers in those remote places. Then came the fatal illness which befell him on December 15, 1938 at Harrismith in Orange Free State, and from which he died on December 28, 1938 at Port Elizabeth in the Province of Cape of Good Hope. Concededly the cause of his death was malignant tertian malaria, a disease which is prevalent in the tropical regions of South Africa and which is caused by the sting of a mosquito of a specie found in those regions. The employer concedes that the mosquito sting which proved fatal to the decedent was an accidental injury. The single question is — did the fatal accident arise out of and in the course of the decedent’s employment?

The State Industrial Board answered that question in the affirmative and granted the claim for death benefits filed by the decedent’s widow. The Appellate Division, by a divided vote, reversed the ruling by the Industrial Board and has dismissed the claim upon the ground that there was a failure of proof that the accidental injury — the mosquito sting — occurred while the decedent was actually at work. (263 App. Div. 211.) The ruling is in fine with respondents’ argument that, inasmuch as we do not know whether the fatal sting suffered by the decedent occurred at night while he was asleep or in business hours while he was actually engaged in calling upon his employer’s customers, we cannot say that the accidental injuries arose out of and in the course of his employment.

In Matter of Marks v. Gray (251 N. Y. 90), where this court considered the question “ * * * whether the risks of travel are also risks of the employment,” it was said, per Chief Judge Cardozo (p. 93), “ * * * the decisive test must be whether it is the employment or something else that has sent the traveler forth upon the journey or brought exposure to its perils.”

We apply that test to the present record. Here the decedent’s death did not result from, encountering a risk commonly to be met by members of the public in the routine of daily Ufe. (Cf. Matter of Madura v. City of New York, 238 N. Y. 214, 216, 217; Matter of Hughes v. St. Patrick’s Cathedral, 245 N. Y. 201, 202, 203.) The journey upon which the decedent was sent was planned solely to promote the sale of his employer’s merchandise in a remote foreign market. That market had been developed by studied and persistent efforts by the employer, which required of the decedent in 1938, as in prior years, that he go to regions in South Africa where he was exposed to the peril of a disease which is peculiar to those regions and which ultimately caused his death. In pursuit of that business mission to the remote provinces already mentioned the risk to the decedent of being stung by an insect which caused the onset of the fatal disease was present day and night — a risk to which he would not have been exposed apart from his employment.

As to “ street risks,” this court has said (per Pound, J.) that If the work itself involves exposure to perils of the street, strange, unanticipated and infrequent though they may be, the employee passes along the streets when on his master’s occasions under the protection of the statute.” (Matter of Katz v. Kadans & Co., 232 N. Y. 420, 421.)

We hold in the present case that the decedent was sent to South Africa upon a mission arranged by his employer solely to promote its business interests, and that the risks incidental to his itinerary through regions infested by a death-bearing insect were special in character. Those risks related to his employment and were not his own. (Cf. Matter of Lief v. Walzer & Son, 248 App. Div. 651; affd., 272 N. Y. 542.)

The order of the Appellate Division should be reversed and the award of the State Industrial Board affirmed, with costs in this court and in the Appellate Division.

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

Order reversed, etc.


author:
Lewis, J.
      Loughran, J.

text:
    In the Matter of Martin E. Mercer, Appellant, against Thomas H. Dowd et al., Individually and as Commissioners of Allegany State Park, Respondents.

      Argued May 28, 1942;
    decided July 29, 1942.

      Glenn W. Woodin for appellant.
    The power of respondents to remove the petitioner was limited by the provisions of section 22 of the Civil Service Law (Cons. Laws, ch. 7). Matter of Seeley v. Stevens, 190 N. Y. 158; People ex rel. Kenny v. Folks, 89 App. Div. 171; Matter of Hoefle v. Cahill, 188 N. Y. 489; Matter of Morris v. Neider, 259 App. Div. 49; Matter of Fornara v. Schroeder, 261 N. Y. 363; Matter of Byrnes v. Windels, 265 N. Y. 403.) The petitioner, denominated executive secretary by the respondents, was superintendent of Allegany State Park and his reinstatement is required. (Matter of Mafera v. Pasta, 265 N. Y. 552; Matter of Morton, 284 N. Y. 167; Matter of Byrnes v. Windels, 265 N. Y. 403; People ex rel. Weaver v. Farley, 72 Misc. Rep. 438; 147 App. Div. 420; 204 N. Y. 676; People ex rel. Tate v. Dalton, 158 N. Y. 204; People ex rel. Kenny v. Folks, 89 App. Div. 171; People ex rel. Gilson v. Gibbons, 231 N. Y. 171; Matter of Naughton v. Boyle, 129 Misc. Rep. 867.) The petitioner was not a private secretary within the fair meaning of the words of exception in section 22 of the Civil Service Law. (Matter of Mylod v. Graves, 274 N. Y. 381; Lamborn v. Lake Shore Banking & Trust Co., 231 N. Y. 631; Bank of Italy v. Merchants Nat. Bank, 236 N. Y. 106; Matter of Seeley v. Stevens, 190 N. Y. 158; Howitt v. S. S. Publications, Inc., 276 N. Y. 345; Matter of Thomas, 216 N. Y. 426; People v. Dethloff, 283 N. Y. 309; Sexauer & Lemke v. Burke & Sons Co., 228 N. Y. 341; Matter of Picone v. Commr. of Licenses, 241 N. Y. 157;
      Matter of Schwab v. McElligott, 282 N. Y. 182; People ex rel. Hoefle v. Cahill, 188 N. Y. 489.) The petitioner held a subordinate position and is not an independent public officer. (Matter of Byrnes v. Windels, 265 N. Y. 403; Matter of Mylod v. Graves, 274 N. Y. 381; Matter of Christey v. Cochrane, 211 N. Y. 333; People ex rel. Jacobus v. Van Wyck, 157 N. Y. 495; People ex rel. McKnight v. Glynn, 56 Misc. Rep. 35; People ex rel. Hoefle v. Cahill, 188 N. Y. 489; Matter of Mafera v. Pasta, 265 N. Y. 552.)

      John J. Bennett, Jr., Attorney-General (Vincent Kiebala, Henry Epstein and James P. Cotter of counsel), for respondents.
    The Commission was not required to give petitioner a hearing upon stated charges prior to his removal. (Matter of Neary v. O’Connor, 173 Misc. Rep. 696; Matter of Meehan v. Flaherty, 119 App. Div. 128; People ex rel. Garvey v. Prendergast, 148 App. Div. 129; Matter of Fornara v. Schroeder, 261 N. Y. 363; Matter of Mylod v. Graves, 274 N. Y, 381; Matter of Rooney v. Rice, 274 N. Y. 347.) Petitioner’s position was that of a secretary within subdivision 2 of section 13 of the Civil Service Law. (Matter of Neary v. O’Connor, 173 Misc. Rep. 696; Matter of Meehan v. Flaherty, 119 App. Div. 128; People ex rel. Jussen v. Scanned, 51 App. Div. 360; People ex rel. Murphy v. Prendergast, 165 App. Div. 186; People ex rel. Hoefle v. Cahill, 188 N. Y. 489; Matter of Byrnes v. Windels, 265 N. Y. 403; Matter of Rohr v. Kenngott, 288 N. Y. 97.) The exception contained in subdivision 2 of section 22 of the Civil Service Law embraces the position of secretary under subdivision 2 of section 13. (Matter of Glassman v. Fries, 271 N. Y. 116.) Petitioner was not a subordinate employee. (People ex rel. Jacobus v. Van Wyck, 157 N. Y. 495; Matter of Christey v. Cochrane, 211 N. Y. 333; Matter of Mylod v. Graves, 274 N. Y. 381; People ex rel. McKnight v. Glynn, 56 Misc. Rep. 35.)
   Lewis, J.

The petitioner-appellant, Martin E. Mercer, is an honorably discharged soldier of the first World War. In 1933 the Commissioners of Allegany State Park appointed him executive secretary of that commission. On December 28, 1940, he received notice of his discharge, effective January 31, 1941. No notice stating the cause for such action was ever served upon the appellant, nor was a hearing ever held on stated charges of incompetency or misconduct by him in the position he had held for seven years.

Although it is conceded that the position formerly held by the petitioner had been placed in the exempt class of the classified State civil service, and that the Commissioners of Allegany State Park have the power to remove employees at pleasure (Conservation Law, § 692 [Cons. Laws, ch. 65]), such civil service classification and such power of removal are subject to the provisions of the Civil'Service Law (Cons. Laws, ch. 7). They do not preclude assertion by the appellant of his rights as a veteran under section 22 (id.), (Matter of Seeley v. Stevens, 190 N. Y. 158, 165, 166; Matter of Fomara v. Schroeder, 261 N. Y. 363, 367; Matter of Byrnes v. Windels, 265 N. Y. 403, 406; Matter of Mylod v. Graves, 274 N. Y. 381, 383.)

Asserting his right as a veteran under section 22 (id.), the petitioner instituted the present proceeding in which is demanded an order directing his reinstatement to his former position and the payment of his salary since January 31, 1941, upon the ground that his employers directed his discharge without giving him notice of the cause for such action and without affording him a héaring on stated charges of incompetency or misconduct on his part.

The order of Special Term granting the petition has been reversed by the Appellate Division, two justices dissenting. The proceeding is here upon appeal by the petitioner as of right.

After directing that no veteran of the World War, among others, shall be removed from State employment except for incompetency or misconduct shown after a hearing upon due notice upon stated charges,” and after affording such veterans and others in civil service certain prerogatives, section 22 of the Civil Service Law, as effective on January 31,1941, provided: “ * * * Nothing in this section shall be construed to apply to the position of private secretary, cashier or deputy of any official or department or change the provisions of section thirteen of the civil service law.” (Subd. 2.)

The respondents, as Commissioners of Allegany State Park, assert that their action in removing the appellant from his position without affording him a hearing on stated charges of incompetency or misconduct, was not in violation of his legal rights. They maintain that the exception contained in subdivision 2 of section 22 of the Civil Service Law embraces the position of secretary under subdivision 2 of section 13, which provides in part: “ The following positions shall be included in the exempt class: * * * 2. One secretary of each state department or division, temporary state commission, or other state officer * * Reliance is also placed upon the statement by this court in Matter of Glassman v. Fries (271 N. Y. 116, at p. 119): * * * the words of exception in section 22 embrace every person holding the position of secretary under section 13.”

We think the respondents’ argument disregards the duties assigned to the appellant as executive secretary. It is not the title which the position bears but the character of duties required of its incumbent which must control our decision. The Legislature did not intend that rights of tenure to a position in [civil service] should be determined by the name given to the position. The duties of the position, as defined by some statute or by an ordinance or resolution of a body duly authorized by statute, not its name, determine the status of the position.” (Emphasis supplied.) (Matter of Bohr v. Kenngott, 288 N. Y. 97, 105; Matter of Byrnes v. Windels, supra, pp. 406, 407.)

The record at hand makes it clear that the duties of the position from which the appellant was removed were not within the class excepted by the Civil Service Law (§ 22, subd. 2, or § 13, subd. 2). The Allegany State Park Commission has control of three State parks and a network of parkways. Allegany State Park alone comprises 65,000 acres of land in Cattaraugus county. Within its boundaries are more than forty-nine miles of main public highways, forty miles of secondary roads, sixty miles of hiking trails, ski runs and ski trails. In addition to outdoor bathing pools there are located throughout the park more than three hundred cabins and eleven group camps which are available for rental by the public. The estimated annual attendance at this park is in excess of a million persons. Cuba Reservation is a small park comprising 650 acres of land in Allegany county. Within that reservation is Cuba lake around which is marginal State land which may be leased and upon which more than 200 cottages have been built. Lake Erie State Park, comprising 240 acres of land in Chautauqua county, affords the public a_ bathing beach with commodious bathhouse facilities.

In his former position the appellant, in addition to certain clerical work, had supervision and direction of the work of all employees in the three parks, including forest rangers, patrolmen, forest supervisors, camp directors, truck drivers, automobile repairmen, carpenters, life guards, nurses, bathhouse attendants, office clerks and other temporary employees. He fixed the hours of service of all employees and determined their particular work. He purchased all supplies, supervised the repair of structures and equipment and leased all land, cottages and buildings available for rental.

These duties, which concededly were assigned to the appellant by the respondents, do not impress us as those connoted by the terms “ secretary ” or “ private secretary.” Bather are they the duties of a superintendent of the three parks over which the respondents have control. (Matter of Mafera v. Pasta, 265 N. Y. 552.)

The immediate jurisdiction and control of the three parks described above is vested by statute in the respondents. (Conservation Law, § 672.) In the performance of its duty of control and management and by further statutory authority (§ 692 id.) the Commission created the position from which the appellant has been removed, and determined the duties thereof. By like authority the respondents adopted by-laws, one of which defined the functions of the appellant’s former position as: * * * such duties as the Commission may from time to time direct.” To that end the Commission assigned to the appellant the duties outlined above. In the performance of those duties the appellant was not a “ private secretary,” within the exceptions to be found in subdivision 2 of section 22 of the Civil Service Law, or a “ secretary,” under subdivision 2 of section 13 (id.), as now claimed by the respondents; nor was he an independent officer. He was the incumbent, by appointment, of a position which was under the control of and subordinate to the respondents. (People ex rel. Jacobus v. Van Wyck, 157 N. Y. 495, 506.)

When the appellant was removed by the respondent from his position as a subordinate employee of the Commission, without notice of the cause of his removal and without being granted a hearing on stated charges of incompetency or misconduct, he was entitled to invoke the protective provisions of section 22 of the Civil Service Law which the Legislature has accorded to veterans.

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

Loughran, J.

(dissenting). The executive functions discharged by the petitioner are fully described in the opinion of the court. In the course thereof he expended the appropriations made by the Park Commission out of its annual budget of approximately $100,000. This budget was prepared by him. He also took care of the collection of annual revenues of approximately $50,000 and made remittance thereof to the Treasurer of the State. ' All these things, the court says, were the work of a “ subordinate employee.” This characterization, I believe, surpasses the power of stretching language.

Only the Park Commission was superior to the petitioner as its superintendent. Its members visit the parks within its jurisdiction at infrequent intervals. They serve without compensation. The annual salary of the petitioner was $3,500. He was the clerk of the Park Commission. He prepared its official documents and kept its public records. Moreover, he was possessed of much of its official information in the first instance. He was thus a species of secretary. While it may be true that his complementary managerial service was more than secretarial, this certainly does not signify that his station was an inferior one. On the whole I am not prepared to say that the Civil Service Commission abused its powers when it classified the position held by the petitioner as Executive Secretary in the office of the Allegany State Park Commission.”

Matter of Mafera v. Pasta (265 N. Y. 552) is not in point. Section 13 of the Civil Service Law provides: “ The following positions shall be included in the exempt class: 1. The deputies of principal executive officers authorized by law to act generally for and in place of their principals; * * *.” In the Mafera case we held that the Superintendent of Parks of the borough of Queens was not such a deputy of the Commissioner of Parks of that borough.

The order of the Appellate Division should be affirmed, without costs.

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

Ordered accordingly.


text:
    In the Matter of the Accounting of Robert E. Bergman, as Guardian of George R. Bunting, an Infant. Emma J. Bergman, as Administratrix of the Estate of Robert E. Bergman, Deceased, et al., Appellants; George R. Bunting, Respondent. In the Matter of the Accounting of Robert E. Bergman, as Executor of Katherine L. Bunting, Deceased. Emma J. Bergman, as Administratrix of the Estate of Robert E. Bergman, Deceased, Appellant; George R. Bunting, Respondent. In the Matter of the Accounting of Robert E. Bergman, as Trustee under the Will of Harry F. L. Bunting, Deceased. Emma J. Bergman, as Administratrix of the Estate of Robert E. Bergman, Deceased, Appellant; George R. Bunting, Respondent.

      Argued May 28, 1942;
    decided July 29, 1942.

      Hartwell Cabell and William Richards for Maryland Casualty Company, appellant.
    The decision of the Appellate Division in holding Bergman hable as guardian for moneys which he failed to account for as trustee under the wills of the uncle and grandmother is erroneous. (Matter of Noll, 10 App. Div. 356; Matter of Fardette v. U. S. Fed. & Guar. Co., 86 App. Div. 50; Power

      v. Speckman, 126 N. Y. 354; Potter v. Ogden, 136 N. Y. 384; Hinckley v. Probate Judge, 45 Mich. 343; Livermore v. Bemis, 2 Allen [Mass.], 394; Swope v. Chambers, 2 Grat. [Va.] 319.) Where the rights of third parties such as sureties are concerned, the burden is on the objectant to show some act or election on the part of an executor or trustee to hold the property in a different capacity from that in which it was received. (Pratt v. Northam, 5 Mason, 95; Burton v. Tunnell, 4 Harrington [Del.], 424; Johnson v. Fuquay, 1 Dana [Ky.], 514.)

      Vincent J. La Gamma for Emma J. Bergman, as administratrix, appellant.
    Section 112 of the Surrogate’s Court Act does not apply where the duty to pay and the right to receive are not united in the same person. (Matter of Wentworth, 230 N. Y. 176; Johnson v. Ayres, 18 App. Div. 495; Power v. Speckman, 126 N. Y. 354; Matter of Noll, 10 App. Div. 356; 154 N. Y. 765; Matter of Brintnall, 40 Misc. Rep. 67; Matter of Fardette, 86 App. Div. 50.) If compound interest should be allowed it should not go beyond the day on which Bergman was removed as guardian. For the subsequent period simple interest only is chargeable. (Cruce v. Cruce, 81 Mo. 676; Clay v. Clay, 33 Metcalf [Ky.], 548; Tanner v. Skinner, 11 Bush. [Ky.] 120; Armstrong v. Walkup, 12 Gratt. [Va.] 608; Payne v. King, 38 Mo. 502; Micou v. Lamar, 7 Fed. Rep. 180.)

      Hugo Wintner, Robert J. Fox, John G. Markey and Walter A. Donnelly for respondent.
    The decision of the Appellate Division that the general guardian’s account should be charged with all moneys to which the infant is entitled from the three estates is justified by the law and facts and is an equitable disposition under which justice to the infant was done. (White v. Rankin, 18 App. Div. 293; 162 N. Y. 622; Belden v. Belden, 139 App. Div. 437; Warren v. Union Bank of Rochester, 157 N. Y. 259; Harbeck v. Pupin, 123 N. Y. 115; Matter of Noll, 10 App. Div. 356; 154 N. Y. 765; Warren v. Union Bank, 157 N. Y. 279; Howell v. Mills, 53 N. Y. 322; Matter of Niles, 113 N. Y. 547; Wilmerding v. McKesson, 103 N. Y. 329; National Surety Co. v. Manhattan Mortgage Co., 185 App. Div. 733; 230 N. Y. 545; Matter of Auditors, 249 N. Y. 335.) The Appellate Division properly held that compound interest must be charged on moneys which were undeposited, converted and retained for Bergman’s use. (Matter of Grube, 160 Misc. Rep. 718; Schieffelin v. Stewart, 1 Johns. Ch. 620; Cook v. Lowry, 95 N. Y. 103; Matter of Kernochan, 104 N. Y. 618; Walker v. Walker, 76 U. S. 743; King v. Talbot, 40 N. Y. 76; Matter of Pruyne, 68 App. Div. 584; Hook v. Payne, 81 U. S. 252; Gould v. Gould, 126 Misc. Rep. 54.)
   Loughran, J.

We have here before us three various accounts by a multiform fiduciary respecting his handling of the separate estates of five members of one family.

The first apposite fact is the birth of George Robert Bunting in 1917. It will be convenient to call him the infant. His father, his mother and one of his uncles died in that order during the month of October, 1918. The father left a will which divided his estate between the infant and the mother. The mother died intestate leaving the infant as her sole distributee. The uncle left a will which divided his estate into three parts: one part was given to the infant’s father who had predeceased the uncle; another part was to be held in trust for the infant during his minority and was to be turned over to him on his coming of age; with the third part we have no concern.

One Bergman was executor of the father’s will, administrator of the mother’s estate, executor of the uncle’s will and trustee under the trust thereby created for the infant. In December, 1918, this same Bergman was appointed guardian of the property of the infant. The paternal grandmother of the infant died in 1929. Her will named the self-same Bergman as her executor. He was thereby directed to hold her residuary estate in trust for the infant until he reached his majority and to make delivery thereof to him at that time.

After the infant became twenty-one in 1938 he filed objections (1) to the account of Bergman as trustee under the will of the uncle; (2) to the account of Bergman as trustee under the will of the grandmother; (3) to the account of Bergman as guardian. The three resulting accounting proceedings were consolidated by the Surrogate for purposes of trial. Each proceeding was determined, however, by a separate decree. (1) As trustee under the will of the uncle, Bergman was surcharged with $10,001.37; (2) as trustee under the will of the grandmother he was surcharged with $4,889.32; (3) as-guardian he was surcharged with $8,576.65.

These decrees were reviewed on cross-appeals taken by the respective parties in interest. Disagreeing with the Surrogate, the Appellate Division said: “ It is unnecessary to lay one’s finger on the particular estates which this infant was entitled to for the purpose of surcharging Bergman as general guardian with the different funds which should have been turned over to the infant when he became of age. All the money that he received in his different capacities in these estates belonged to the infant and eventually should have been charged to his account as general guardian. While it is true that the corpus of the trust which the uncle, Harry F. L. Bunting, set up and álso the corpus of the trust provided for by the grandmother, Katherine L. Bunting, were not to be turned over to the infant until he became of age, still the fact remains that the corpus in each estate was depleted -and the moneys stolen therefrom by the. accountant during the minority of the infant.” (261 App. Div. 32, 35, 36.) This meant that the surcharge against Bergman as trustee under the will of the uncle, and the surcharge against him as trustee under the will of the grandmother were to be added to the surcharge against him as guardian of the property of the infant. The Appellate Division also held that Bergman should be further surcharged with compound interest on so much of the respective estates as he had converted to his own use.

On remission of the case to the Surrogate the decrees were accordingly recast with the result that the surcharge against Bergman as guardian rose from $8,576.65 to $48,403.17. Cross-appeals to the Appellate Division followed once more. This time the base of the compound interest item was enlarged, but in all other respects the revised decrees were affirmed. (263 App. Div. 976.) As calculated by the Appellate Division, the total surcharge is $48,886.32.

The form in which the case has now come here requires us to deal first with a question in respect of our jurisdiction.

By his will the uncle directed that Bergman might serve as executor-trustee without being bonded. The will of the grandmother contained a like direction. Consequently there was no underwriting of any fiduciary responsibility committed to Bergman by either of those wills. On Bergman’s appointment as guardian in 1918 Maryland Casualty Company became surety for him in that capacity through two bonds for an aggregate sum of $60,100. As such surety, that company has appealed to this court from the last final decree made by the Surrogate in the proceeding for judicial settlement of the account of Bergman as guardian. An appeal of that type does not lie. (Matter of Westberg, 279 N. Y. 316.) The notice of appeal specifies, however, the intent of the appellant to bring up for review both orders of modification made by the Appellate Division. An appeal from, the second of these orders could have been taken as of right within sixty days after service upon the appellant’s attorney of a; copy thereof with written notice of entry. The appeal of Maryland Casualty Company was taken within that sixty-day period. We treat the second order of the Appellate Division as the order appealed from and go on to the merits.

The applicable statute is section 112 of the Surrogate’s Court Act. It is thereby provided: “ A person to whom letters are issued is liable for money or other personal property of the estate which was in his hands, or under his control, when his letters were issued, in whatever capacity it was received by him, or came under his control. Where it was received by him, or came under his control, by virtue of letters previously issued to him in the same or another capacity, an action to recover the money, or damages for failure to deliver the property, may be maintained upon both official bonds; but, as between the sureties upon the official bond given upon the issue of the prior letters, and those upon the official bond given upon the issue of the subsequent letters, the latter are liable over to the former.” (The emphasis is ours.)

As executor of the father and as administrator of the mother Bergman was in duty bound to bring about transfers of the assets to himself as guardian. Hence those assets were money or other personal property of the guardianship estate in his hands or under his control when his letters of guardianship were issued. Hence he was here chargeable as guardian with the shortage in the estate of the father (including the one-third part of the estate of the uncle that went through the father to the infant) and with the shortage in the estate of the mother.

As regards the fund held by Bergman as trustee of the uncle and the fund held by him as trustee of the grandmother, the situation is fundamentally different. If it had ever been intended that the infant should somehow become entitled to either of those funds during his minority there would possibly be ground for a presumption that Bergman had brought about a transfer thereof to the guardianship estate. But Bergman was at no time to have any right to forward either of those funds. On the contrary, his plain duty in that aspect was always to be the holding of either fund until the infant became of age. This was the explicit requirement of the uncle, whose will said Bergman need not be bonded. This was the explicit requirement of the grandmother, whose will said Bergman need not be bonded. Bergman was removed as guardian in 1936. The infant did not reach his majority until 1938. These facts confine us to the conclusion that neither of the funds that were so to have been kept by Bergman as trustee was chargeable to him as guardian.

Matter of Noll (10 App. Div. 356; 154 N. Y. 765) was cited by the Appellate Division. The considerations which shaped that decision are absent here. At the time of his appointment as guardian, Noll was administrator of the estate of the father of his wards. On his final accounting as such administrator, the amount * * * to which his wards were respectively entitled was adjudged, and he was directed to hold it in his relation as guardian.” As contestants on his final accounting as guardian, his sureties objected that “ before bis appointment as guardian Noll had misappropriated and converted to his own use the funds and, therefore, he, as guardian, received none from himself as administrator.” The objections were summarily overruled by the Surrogate, who was affirmed for reasons stated in this manner: It may be assumed that if the administrator and the guardian had been different persons the objections of the contestants would not have been summarily overruled. But where the obligation as administrator to pay, and the right and duty to receive as guardian are united in the same person, as in the present case, he becomes charged in the latter capacity. This was the situation that arose when the Surrogate’s decree [on the administrator’s accounting] was perfected. And it is no objection available to the sureties on his official bond as guardian, for them to allege that prior to that time or to the time of his appointment as guardian he had misappropriated and converted to his own use the fund which came to him as administrator, and to which his wards were entitled. As he had receive'd such fund and had not disposed of it in the administration of the estate, he, in legal contemplation, had it in his custody at the time the decree was made. And, for the purpose of the effectiveness of the obligation assumed by the sureties in his official bond as guardian) his liability to account for it conclusively charges him with having «the requisite fund.” (10 App. Div. 358, 359, 360.) The Noll case thus stands for this proposition: Where on settlement of the final account of an administrator, he is directed to make payments to himself as guardian, he is chargeable therewith as guardian, despite the fact that he had theretofore misappropriated the funds he was so ordered to pay. (Cf. Rouse v. Payne, 120 App. Div. 667; 15 Amer. & Eng. Encyc. of Law, [2d ed.] 94; 111 A. L. R. 303; Matter of Van Bokkelen, 285 N. Y. 189.)

Bergman died in 1939. His administratrix has inexactly appealed to this court from both modifications by the Appellate Division of each of the three decrees of the Surrogate. We think she is right in her contention that Bergman should not be surcharged, as guardian, with compound interest for any period after his guardianship was terminated by his removal therefrom in 1936. None of her other contentions calls for any addition to what we have said above.

The orders of the Appellate Division should be reversed and the decrees of the Surrogate’s Court modified in accordance with this opinion and the matter remitted to the Surrogate’s Court for further proceedings not inconsistent with this opinion, without costs.

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

Ordered accordingly.


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    Chittenden Lumber Company, Inc., Appellant, v. Silberblatt & Lasker, Inc., et al., Respondents, and Summers Lumber and Supply Corporation et al., Appellants, Impleaded with Others.

      Argued May 29, 1942;
    decided July 29, 1942.

      Sidney Jarcho for plaintiff-appellant.
    The establishment of mechanic’s liens is not a prerequisite to liability on the labor and material bond. (Chase Nat. Bank v. Guardian Realties, Inc., 283 N. Y. 350; Wiley v. Solvay Process Co., 215 N. Y. 584; McClare v. Mass. Bonding & Ins. Co., 266 N. Y. 371; Johnson Service Co. v. Monin, Inc., 253 N. Y. 417; Fosmire v. National Surety Co., 229 N. Y. 44; Devitt v. Schottin, 274 N. Y. 188; French v. Bauer, 134 N. Y. 548; Herrmann & Grace v. City of New York, 130 App. Div. 531; 199 N. Y. 600; Sexauer & Lemke v. Burke & Sons Co., 228 N. Y. 341; Seaboard Surety Co. v. Standard Acc. Ins. Co., 277 N. Y. 429.)

      George Simon, Maxwell Berman and James H. Barrett for defendants-appellants.
    Laborers and materialmen who furnish labor or material for a public improvement to a subcontractor may recover upon a bond posted by the general contractor, pursuant to section 137 of the State Finance Law (Cons. Laws, ch. 56), regardless of whether anything is due from the general contractor to the subcontractor. (Devitt v. Schottin, 274 N. Y. 188; Schuessler v. Met. Casualty Ins. Co., 240 App. Div. 499 ; 265 N. Y. 648; Herrmann v. Hillman, 203 N. Y. 435; Upson v. United Engineering & Contracting Co., 72 Misc. Rep. 541; Powers v. City of Yonkers, 114 N. Y. 145; Fosmire v. National Surety Co., 104 Misc. Rep. 166; Stanton v. Babor-Comeau & Co., 168 Misc. Rep. 190; 260 App. Div. 831; Hill v. American Surety Co., 200 U. S. 197; Mankin v. Ludowici-Celadon Co., 215 U. S. 533; Strong v. American Fence Constr. Co., 245 N. Y. 48; Seaboard Surety Co. v. Standard Accident Ins. Co., 277 N. Y. 429.)

      W. Randolph Montgomery and Irving T. Bush for New York Credit Men’s Association, amicus curiæ.

    Section 137 of the State Finance Law was enacted to provide protection to laborers and materialmen in cases where the protection afforded by the Lien Law is inadequate. ( Upson v. United Engineering & Contracting Co., 72 Misc. Rep. 541; Devitt v. Schottin, 274 N. Y. 188.)

      George M. Simon and Edward C. McLean for McClung, Peters & Simon and Hatch, McLean, Root & Hinch, amici curiæ.

    Laborers and materialmen who furnish labor or material for a public improvement to a sub-contractor may recover upon a bond posted by the general contractor, pursuant to section 137 of the State Finance Law, regardless of whether anything is due from the general contractor to the sub-contractor. (Devitt v. Schottin, 274 N. Y. 188; Schuessler v. Met. Casualty Ins. Co., 240 App. Div. 499; 265 N. Y. 648; Herrmann & Grace v. Hillman, 203 N. Y. 435; Fosmire v. National Surety Co., 104 Misc. Rep. 170; Maryland Casualty Co. v. Dunkirk, 66 Fed. Rep. [2d] 730; Stanton v. Babor-Comeau & Co., 168 Misc. Rep. 190; 260 App. Div. 831; Strong v. American Fence Constr. Co., 245 N. Y. 48.)

      Max E. Greenberg for respondents.
    Claimants may not recover on the bond since they cannot enforce a mechanic’s lien. (Davidson v. Gaston, 16 Minn. 230; Ticknor v. Kennedy, 3 Abb. Prac. [N. S.] 387; Acme Brick Co. v. Swim, 168 Ark. 185; Stewart-McGhee Const. Co. v. Brewster Co., 171 Ark. 197; Hub Oil Co. v. Jodomar, Inc., 176 Misc. Rep. 320.) The bond covers claims for labor or material only and not for equipment rentals, the price of equipment, tolls or labor, etc., connected with the transportation or erection of equipment rented. (Hub Oil Co. v. Jodomar, Inc., 176 Misc. Rep. 320; Troy Public Works Co. v. City of Yonkers, 68 Misc. Rep. 372; 145 App. Div. 527; Black Co. v. Surdam Holding Corp., 140 Misc. Rep. 113; Nehr Culvert & Mfg. Co. v. Freeman, 197 Iowa, 720; McAuliffe v. Jorgensen, 107 Wis. 132.)
   Lewis, J.

In the construction of a public improvement at Kings Park State Hospital the defendant-respondent, Silberblatt & Lasker, Inc., was the general contractor. Dixon Concrete Construction Co. Inc., held a subcontract for certain concrete work required under the general contract. When Dixon defaulted on its subcontract the work was completed by the general contractor at a cost exceeding any balance due the sub-contractor. The plaintiff-appellant and each of the defendants-appellants had supplied the sub-contractor with building materials or the use of construction equipment employed in carrying out the contract with the State. Each of the appellants, as an unpaid creditor of the sub-contractor, filed a notice of lien and each has sued to foreclose its lien. As no money was due from the general contractor to the subcontractor following the completion of the defaulted subcontract the efforts by the creditor-lienors to recover under the Lien Law were futile. (Lien Law, § 5; Cons. Laws, ch. 33; Devitt v. Schottin, 274 N. Y. 188, 194; Schuessler v. Metropolitan Casualty Ins. Co., 240 App. Div. 449; affd., 265 N. Y. 48; Herrmann & Grace v. Hillman, 203 N. Y. 435, 440, 441.)

In the state of the law prior to 1938, the courts, and apparently the Legislature, recognized the fact that “if [as in the case at bar] the contractor, owes no money to the subcontractor, then laborers employed by the subcontractor, like persons furnishing materials to the subcontractor, may go unpaid.” (Devitt v. Schottin, supra, p. 194; and see Report of the Joint Legislative Committee on State Fiscal Policies [Leg. Doc. No. 41, 161st Session] at p. 158.) In an apparent effort to afford greater protection to laborers and materialmen on public improvement contracts with the State, the Legislature by chapter 707 of the Laws of 1938, added to the State Finance Law (Cons. Laws, ch. 56) a new section (38a) which was later renumbered section 137 (L. 1940, ch. 593) and provides as follows:

“ 137. Bond to secure laborers and materialmen. In addition to other bond or bonds, if any, required by law for the completion of a work specified in a contract for the prosecution of a public improvement for the state of New York, or in the absence of any such requirement, the comptroller may nevertheless require prior to the approval of any such contract a bond guaranteeing prompt payment of moneys due to all persons supplying the contractor or a sub-contractor with labor and materials employed and used in carrying out the contract, which bond shall inure to the benefit of the persons supplying such labor and materials. In order to secure any rights and benefits conferred herein, laborers having claims for unpaid wages shall file and enforce a wage claim as provided by the labor law or shall file and enforce a mechanic’s lien pursuant to the provisions of the lien law, and a materialman, in order to secure any such rights and benefits, shall file and enforce a mechanic’s lien pursuant to the provisions of the lien law.” (Emphasis supplied.)

In the present case the Comptroller exercised the right given him by section 137 and accordingly, prior to his approval of the public improvement contract involved herein, he required of, and was furnished by the general contractor a“ bond to secure laborers and materialmen,” as provided by the statute. Upon that bond the respondent Silberblatt & Lasker Inc., the general contractor, is principal and the respondent insurance company is surety. The bond provides: “ Whereas, the Comptroller of the State of New York, under the terms of Chapter 707 of the Laws of 1938, has required this bond guaranteeing prompt payment of moneys due to all persons supplying the contractor or a sub-contractor with labor and materials employed and used in carrying out the contract, which bond shall inure to. the benefit of the persons supplying such labor and materials. Now, therefore, the condition of the foregoing obligation is such, that if the said Principal shall promptly pay all moneys due to all persons supplying the contractor or a sub-contractor with labor and materials employed and used in carrying out the contract, then this obligation shall be null and void, otherwise, to remain in full force and virtue.” (Emphasis supplied.)

In the complaint now before us the first cause of action is for the foreclosure of a mechanic’s lien filed by the plaintiff-appellant as a materialman. The other appellants served answers containing counterclaims for the foreclosure of mechanics’ liens duly filed by each of them. There being no fund to which the appellants’ liens could attach it follows that, although the appellants as lienors have pursued their remedies under the Lien Law, judgment in their favor on the first cause of action must be denied. (Lien Law, § 5; Dewitt v. Schottin, supra, p. 194.)

As to the second cause of action, which is brought as a class action in behalf of the plaintiff and all others similarly situated (see Bleimeyer v. Public Service M. C. Ins. Corp., 250 N. Y. 264, 269) the plaintiff-appellant, and the defendants-appellants by counterclaims in their answers, demand payment of sums due to them respectively from the sub-contractor, which demands are based upon obligations incurred by the principal and surety when the labor and material-bond, quoted in part above, was executed.

Following the service of answers by the present respondents and the appellant lienors, Special Term denied the plaintiff’s application, under rule 113 of the Rules of Civil Practice, for an order striking out the answer of the general contractor and its surety and for judgment in favor of the plaintiff and the defendant lienors. By the same order Special Term granted a cross-motion by the general contractor and its surety under rule 113 (id) for an order dismissing the complaint of the plaintiff and the counterclaims of the defendant lienors. The judgment entered upon the order of Special Term was thereafter affirmed by the Appellate Division, one justice dissenting. The case comes before us on appeal by the plaintiff and defendant lienors as of right.

The interpretation of section 137 of the State Finance Law for which the general contractor and its surety contend, would deny recovery herein to the appellant lienors because there is no fund due the sub-contractor to which their liens may attach. The respondents’ argument runs as follows: It is conceded that following default by the sub-contractor the cost of completion of the subcontract by the general contractor exceeded any balance due thereupon and left no fund to which liens filed by the appellant lienors could attach. That fact, it is said, serves to defeat the appellant lienors’ right to recover on the labor and material bond, executed by the general contractor and its surety, because section 137 of the State" Finance Law provides that in order to secure the rights and benefits afforded by that statute, a materialman * * * shall file and enforce a mechanic’s lien pursuant to the provisions of the lien law.”

We think that an interpretation so literal as the one urged upon us by the respondents is not to be applied to section 137 of the State Finance Law which manifestly had for its purpose to give protection to laborers and materialmen in situations of which the one here involved is typical. In construing a statute — “ Adherence to the letter will not be suffered to defeat the general purpose and manifest policy intended to be promoted.’ ” (Surace v. Danna, 248 N. Y. 18, 21; People v. Ryan, 274 N. Y. 149, 152; Hill v. American Surety Co., 200 U. S. 197, 202, 203.)

Here “ * * * we view the parts of the statute without reference to verbal niceties, but rather in their logical relation as means directed to an end.” (City Bank Farmers’ Trust Co. v. N. Y. C. R. R. Co., 253 N. Y. 49, 55.) The end sought to be accomplished by section 137 was foreshadowed by the Report of the Joint Legislative Committee on State Fiscal Policies (Leg. Doc. No. 41, 1938) which was filed with the Legislature at the session at which the statute was enacted. That report drew attention to the lack of protection given by the Lien Law to those who furnish materials in connection with State contracts. It emphasized the need of additional statutory protection for material-men in those cases where the contractor defaults. Promptly after the filing of the Legislative Committee report mentioned above there followed the enactment of the statute we are now called upon to interpret.

The construction of section 137 for which the respondents contend would give to those who furnish labor and materials on State contracts no greater assurance that they would be paid what is due them, than they had before the enactment of the statute here involved. The respondents disregard the significance of the first sentence of the statute which provides that the bond authorized by the act is “In addition to other bond or bonds * * * required by law for the completion of a work specified in a [public improvement] contract.” They give no weight to the precise language by which the Legislature described the function of the bond which was required by the Comptroller in the present case, viz — a “bond guaranteeing prompt payment of moneys due to all persons supplying the contractor or a sub-contractor with labor and materials employed and used in carrying out the contract * * *.” Nor do the respondents consider the care with which the Legislature identified those for whom the additional protection was intended —“ * * * which bond shall inure to the benefit of the persons supplying such labor and materials.”

The language of the bond itself, which the Comptroller has approved, gives no indication of the limitation upon the respondents’ obligation thereunder which they now assert. The statement of that obligation follows the language of the statute and guarantees prompt payment by the general contractor of “ all moneys due to all persons supplying the contractor or a sub-contractor with labor and materials employed and used in carrying out the contract.”

If, as claimed by the respondents, the appellants as materialmen may recover the sums due to them from the sub-contractor only in the event there is a fund payable to the sub-contractor to which the appellants’ liens will attach, there would be no necessity for the bond here in suit. Liability on a bond required by the Comptroller under section 137 was not intended to be contingent upon the existence of a lienable fund. The benefits ” which the Legislature, by the enactment of section 137, intended to grant to laborers and materialmen, are found in the guarantee of payment afforded by the bond in those instances where there is no fund, or an insufficient fund, due the contractor or sub-contractor on a State public improvement, against which the enforcement of valid and existing liens may lead to the payment thereof. Thus construed section 137 supplements the Lien Law and Labor Law (Cons. Laws, chapters 33 and 31) and affords to laborers and materialmen on State public improvements the added protection which the Legislature recognized as needful.

The language to be found in the last sentence of section 137 — which we think has been erroneously interpreted by the respondents to defeat the appellants’ claim against the bond here in suit — was intended to limit claims against such a bond to those who have furnished labor or materials in connection with a State public improvement and who, after compliance with the provisions of the Lien Law or the Labor Law, as the case may be, have failed in their efforts to enforce payment of their claims by reason of there being no funds, or a lack of sufficient funds, due the contractor or subcontractor from which such payments can be made.

There remain for consideration claims against the bond by those appellant-lienors who filed liens for the use of construction equipment supplied to the sub-contractor in carrying out the contract. Those liens would have been enforceable under the Lien Law had there been a fund due the sub-contractor sufficient in amount to make payment thereupon, and provided the proof in support of such liens established a “ reasonable rental value for the period of actual use of machinery, tools and equipment [or] the value of compressed gases furnished for welding or cutting.” [Lien Law, § 2 [as amd. by L. 1937, ch. 535] and § 5.) It was the lack of funds due the sub-contractor at the time of its default which defeated the enforcement of payment by such lienors. (Dewitt v. Schottin, supra, p. 194.) By the enactment of section 137 of the State Finance Law the Legislature intended, as we have seen, to supplement those provisions of the Lien Law and Labor Law which facilitated payment for labor and materials furnished for a State public improvement. To that end we find employed by the Legislature in section 137, language which relates that statute to provisions of the Lien Law dealing with the enforcement of a mechanic’s lien. That correlation indicates the Legislature’s intention by section 137 of the State Finance Law to afford additional assurance of payment to laborers and to materialmen as defined by section 2 of the Lien Law, prior to July 1, 1937, and to materialmen as defined by the amendment to that section effective on that date. (L. 1937, ch. 535, effective July 1,1937.)

The judgments should be reversed; the motion by the plaintiff-appellant under rule 113 of the Rules of Civil Practice for an order striking out the answer of the general contractor and its surety and for judgment in favor of the plaintiff and the defendant-lienors should be granted; the cross-motion by the defendants-respondents Silberblatt & Lasker, Inc., the general contractor, and Standard Accident Insurance Company, its surety, under rule 113 (id.) for an order dismissing the complaint of the plaintiff and the counterclaims of the defendant-lienors should be denied, with costs in all courts.

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

Judgments reversed, etc.