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    The People of the State of New York, Respondent, v. John Defore, Appellant.
    Crimes —■ constitutional law — arrest — search and seizure — unlawful possession of weapon — trial — evidence —■ arrest without warrant for misdemeanor not committed or attempted in presence of arrester unlawful —• search of premises as incident to such arrest a trespass — finding of contraband weapon in room does not justify search — homes may not be searched without process to discover fruits or implements of crime except as incident of lawful arrest made therein — trial of indictment for unlawful possession of weapon found upon illegal search — evidence of criminality procured by such trespass competent — motion to suppress evidence properly denied and objection to reception in evidence properly overruled— immunity from self-incrimination not infringed — general objection to admission in evidence of three articles fails if one is admissible —■ due process clause of Federal Constitution not applicable to use of evidence obtained upon illegal search.
    1. One who, acting without a warrant, arrests for a misdemeanor exceeds the bounds of privilege, whether he be a private person or an officer, unless the crime has been committed or attempted in his presence. (Code Grim. Pro. §§ 177, 183.) The arrest of defendant in the hall of his boarding house, by a police officer without a warrant, on a charge that he had previously stolen an overcoat, valued at not over fifty dollars, was, therefore, unlawful, and a search of defendant’s room as an incident to such arrest was unreasonable and constituted a trespass. ■.»»
    2. The fact that a contraband weapon, subject by law to destruction, was found in the room does not justify the search. Homes may not be ransacked without process to discover the fruits or implements of crime. To make such inquisitions lawful there must be the support of a search warrant issued upon probable cause, or a lawful arrest, when there may be search of the place where the arrest is made, as an incident thereto, to discover the fruits or evidences of the crime.
    3. Evidence of criminality, procured by an act of trespass, is, however, not to be rejected as incompetent for the misconduct of the trespasser, and there is nothing in the statute (Civil Rights Law, § 8) whereby official trespasses and private are differentiated in respect of the legal consequences to follow them. A motion, therefore, to suppress the evidence obtained through search without a warrant, made before trial of an indictment charging defendant with unlawful possession of a weapon so found (Penal Law, § 1897), was properly denied, and objection upon the trial, when articles found were offered in evidence by the prosecution, was properly overruled. (Authorities of State and Federal courts collated and discussed; People v. Adams, 176 N. Y. 351, followed.)
    4. Nor has defendant suffered any denial of his constitutional right to immunity from compulsory self-incrimination (N. Y. Const, art. 1, § 6), that immunity being limited to eases where incriminatory disclosure has been extorted by the constraint of legal process directed against a witness. Furthermore things outlawed or contraband, possessed without right and subject upon seizure to forfeiture or destruction, may be offered in evidence without trenching upon the privilege in respect of self-incrimination whether seizure has been made with warrant or without.
    5. A contention that though the weapon was contraband two other articles seized at the same time were not and that their admission in evidence constituted error is not presented for review where all three articles were offered in evidence together and the objection was a general one to all alike. If any were admissible, the objection fails.
    6. The “ due process ” clause of the Federal Constitution (Fourteenth Amendment) has no application to the immunity against search and seizure without warrant in so far as that immunity has relation to the use of evidence thereafter.

      People v. Defore, 213 App. Div. 643, affirmed.
    (Argued December 1, 1925;
    decided January 12, 1926.)

      Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered July 6, 1925, which affirmed a judgment of the Court of General Sessions of the Peace in the County of New York convicting the defendant of the crime of possessing a weapon in violation of section 1897 of the Penal Law.

      James Marshall for appellant.
    The search of defendant’s room and the seizure of the property therein were in contravention of appellant’s constitutional and legal rights and his immunity against search and seizure. The court erred in refusing to suppress evidence of the articles found and seized in defendant’s room and in admitting in evidence against him the articles so found and seized in his room and the information gained by search of his room, and appellant was thereby deprived of his liberty without due process of law. (Matter of Mohawk Overall Co., 210 N. Y. 474; People v. Jakire, 118 Misc. Rep. 303; People v. Cummins, 153 App. Div. 93; Federal Trade Comm. v. American Tobacco Co., 264 U. S. 298; People ex rel. Ferguson v. Reardon, 197 N. Y. 236; Matter of Both, 200 App. Div. 423; People ex rel. Travis v. Knott, 204 App. Div. 379; Ward Baking Co. v. W. U. Tel. Co., 205 App. Div. 723; Boyd v. United States, 116 U. S. 616; Entick v. Carrington, 19 Howell’s State Trials, 1029.) As a search warrant could not have been obtained directing the officer to search the defendant’s premises for the purpose of finding the blackjack, or other property seized, the search and seizure by the officer were unconstitutional and illegal. (People v. Chiagles, 237 N. Y. 193; Russell v. Hubbard, 6 Barb. 654; Johnson v. Comstock, 14 Hun, 238; People ex rel. Simpson Co. v. Kempner, 208 N. Y. 16; United States v. Slusser, 270 Fed. Rep. 818; Schencks v. United States, 2 Fed. Rep. [2d] 185; Bell v. Clapp, 10 Johns. 263; Matter of Tri-State Coal & Coke Co., 253 Fed. Rep. 605; Comfort v. Fulton, 39 Barb. 56; Matter

      of Blum, 9 Misc. Rep. 571; People ex rel. Livingston v. Wyatt, 186 N. Y. 383; Matter of Both, 200 App. Div. 423.) Even were the arrest of the defendant legal, which it was not, the police officer had no right to search his room and seize the property therein. (Gouled v. United States, 255 U. S. 298; Stearns v. Titus, 193 N. Y. 272; People v. Hochstim, 36 Misc. Rep. 562; Lauffer v. Downes, 181 App. Div. 327; 228 N. Y. 549; Hawkins v. Kuhne, 153 App. Div. 216.) The court erred in not suppressing the secondary evidence derived from the illegal search of defendant’s premises. (Carignano v. State, 238 Pac. Rep. 507.)

      Joab H. Banton, District Attorney {Felix C. Benvenga and Edwin B. McGuire of counsel), for respondent.
    As the defendant was under lawful arrest, none of his rights were violated by the search and seizure. (Stover v. People, 56 N. Y. 315; People v. Galbo, 218 N. Y. 283; People v. Chiagles, 237 N. Y. 193; Weeks v. United States, 232 U. S. 383; Carroll v. United States, 267 U. S. 132; Agnello v. United States, 46 Sup. Ct. Rep. 4.) Even assuming that the arrest was unlawful, none of the defendant’s rights were violated by the admission of the blackjack in evidence. (Adams v. New York, 192 U. S. 585; People v. Adams, 176 N. Y. 351; Weeks v. United States, 232 U. S. 383; Silverthorne Lumber Co. v. United States, 251 U. S. 385; Gouled v. United States, 255 U. S. 298; Amos v. United States, 255 U. S. 313; Burdeau v. McDowell, 256 U. S. 465; Hester v. United States, 265 U. S. 57; Carroll v. United States, 267 U. S. 132; Agnello v. United States, 46 Sup. Ct. Rep. 4.) The search for and seizure of contraband articles is legal and proper. (People v. Perse, 204 N. Y. 397; Boyd v. United States, 116 U. S. 616; United States v. O'Dowd, 273 Fed. Rep. 600; United States v. Kelly, 277 Fed. Rep. 485; United States v. Snyder, 278 Fed. Rep. 650; Carroll v. United States, 267 U. S. 132; Pasch v. People, 72 Colo. 92; Masantonio v. People, 236
      Pac. Rep. 1019; State v. Chuchola, 120 Atl. Rep. 212; State v. Johnson, 116 Kan. 58; Comm. v. Wilkins, 243 Mass. 356; Comm. v. Dana, 2 Met. 329.) A contention that the use of evidence obtained by an unreasonable search and seizure violates the due process clauses of the Fourteenth Amendment to the Federal Constitution and also section 6 of article 1 of the State Constitution is clearly untenable. (People v. Adams, 176 N. Y. 351; State v. Derry, 171 Ind. 18; Frost v. People, 193 Ill. 635; Mullen v. Mosely, 13 Ida. 457; McConnell v. McKillip, 71 Neb. 712; Collins v. Lean, 68 Cal. 284; Comm. v. Donnelly, 246 Mass. 507.)
   Cardozo, J.

A police officer arrested the defendant on a charge that he had stolen an overcoat. The crime, if committed, was petit larceny, a misdemeanor, for the value of the coat was not over fifty dollars (Penal Law, §§ 1296, 1298; Cons. Laws, ch. 40). The defendant when taken into custody was in the hall of his boarding house. The officer after making the arrest entered the defendant’s room and searched it. The search produced a bag, and in the bag was a blackjack. The defendant after trial at Special Sessions was acquitted of the larceny. In the meantime he had been indicted as a second offender for the possession of the weapon (Penal Law, § 1897). He made a motion before trial to suppress the evidence obtained through search without a Warrant. The motion was denied. He made objection again upon the trial when the bag and the contents, i. e., the blackjack and a hat, were offered in evidence by the People. The objection was overruled. He contends that through these rulings he has suffered a denial of his rights under the statute against unreasonable search and seizure (Civil Rights Law, § 8; Cons. Laws, ch. 6); a denial of his rights under the provision of the State Constitution which gives immunity against compulsory self-incrimination (Constitution, article 1, § 6); and a denial of his rights under the due process clause of the Fourteenth Amendment to the Constitution of the United States.

The search was -unreasonable in the light of common law traditions ” (People v. Chiagles, 237 N. Y. 193). A different conclusion might be necessary if the defendant had been lawfully arrested. As an incident to such an arrest, his person might have been searched for the fruits or evidences of crime (People v. Chiagles, supra; Carroll v. U. S., 267 U. S. 132, 158). So, it seems, might the place where the arrest was made (Agnello v. U. S., 269 U. S. 20; People v. Cona, 180 Mich. 641). But the arrest was not lawful. One who, acting without a warrant, arrests for a misdemeanor, exceeds the bounds of privilege, whether he be a private person or an officer, unless the crime has been committed or attempted in his presence (Code Crim. Pro. §§ 177, 183). The defendant had neither committed the crime of petit larceny in the presence of the officer, nor there attempted to commit it. He had not committed nor attempted it anywhere. There was no lawful arrest to which the search could be an incident.

The People stress the fact that the weapon was contraband, a nuisance subject to destruction (Penal Law, § 1899). This might have justified the seizure, the abatement of the nuisance, if the weapon had been exposed to view. It might even have justified the refusal to return the weapon, though discovered by unlawful means. It did not justify the search. There is no rule that homes may be ransacked without process to discover the fruits or the implements of crime. To make such inquisitions lawful, there must be the support of a search warrant issued upon probable cause. Search even then is “ confined under our statute [Code Grim. Pro. § 792] to property stolen or embezzled, or used as the means of committing a felony, or held with the intent to use it as an instrument of crime ” (People v. Chiagles, supra, at p. 196; People ex rel. Simpson Co. v. Kempner, 208 N. Y. 16). The warrant does not issue for things of evidential value merely (People v. Chiagles, supra; cf. Gouled v. U. S., 255 U. S. 298; Matter of 191 Front Street, 5 Fed. Rep. [2nd] 282; Veeder v. U. S., 252 Fed. Rep. 414). What would be a wrong with a warrant is not innocent without one. To dispense with process in the pursuit of contraband is to dispense with it in the one case in which it may ever issue in the pursuit of anything. Means unlawful in their inception do not become lawful by relation when suspicion ripens into discovery.

We hold, then, with the defendant that the evidence against him was the outcome of a trespass. The officer might have been resisted, or sued for damages, or even prosecuted for oppression (Penal Law, §§ 1846, 1847). He was subject to removal or other discipline at the hands of his superiors. These consequences are undisputed. The defendant would add another.' We must determine whether evidence of criminality, procured by an act of trespass, is to be rejected as incompetent for the misconduct of the trespasser.

The question is not a new one. It was put to us more than twenty years ago in People v. Adams (176 N. Y. 351), and there deliberately answered. A search warrant had been issued against the proprietor of a gambling house for the seizure of gambling implements. The police did not confine themselves to the things stated in the warrant. Without authority of law, they seized the defendant’s books and papers. We held that the documents did not cease to be competent evidence against him though the seizure was unlawful. In support of that holding, we cited many authorities, and notably a series of decisions by the courts of Massachusetts. “A trespasser may testify to pertinent facts observed by him, or may put in evidence pertinent articles or papers found by him while trespassing. For the trespass, he may be held responsible civilly, and perhaps criminally, but his. testimony is not thereby incompetent ” (Comm. v. Tibbetts, 157 Mass. 519). On appeal to the Supreme Court, the judgment was affirmed (Adams v. N. Y., 192 U. S. 585).

The ruling thus broadly made is decisive, while it stands, of the case before us now. It is at variance, however, with later judgments of the Supreme Court of the United States. Those judgments do not bind us, for they construe provisions of the Federal Constitution, the Fourth and Fifth Amendments, not applicable to the States. Even though not binding, they merit our attentive scrutiny. Weeks v. U. S. (232 U. S. 383) held that articles wrongfully seized by agents of the Federal government should have been returned to the defendant or excluded as evidence if a timely motion to compel return had been made before the trial. Silverthorne Lumber Co. v. U. S. (251 U. S. 385) held that copies of the things so seized, in that case books and papers, must share the fate of the originals. Gouled v. U. S. (255 U. S. 298) and Amos v. U. S. (255 U. S. 313) held that a motion before trial was unnecessary if the defendant had no knowledge until the trial that an illegal seizure had been made. Burdeau v. McDowell (256 U. S. 465) held that a Federal prosecutor might make such use as he pleased of documents or other information acquired from a trespasser if persons other than Federal officers were guilty of the trespass. Hester v. U. S. (265 U. S. 57) and Carroll v. U. S. (267 U. S. 132) drew a distinction between search and seizure iñ a house and search and seizure in the fields or in automobiles or other vehicles. Finally Agnello v. U. S. (269 U. S. 20) held that the evidence must be excluded though the things seized were contraband and though there had been no motion before trial if the facts were undisputed. This means that the Supreme Court has overruled its own judgment in Adams v. New York, for the facts were undisputed there. The procedural condition of a preliminary motion has been substantially abandoned, or, if now enforced at all, is an exceptional requirement. There has been no blinking the consequences. {The criminal is to go free because the constable has blundered".!

The new doctrine has already met the scrutiny of courts of sister States. The decisions have been brought together for our guidance through the industry of counsel. In forty-five States (exclusive of our own) the subject has been considered. Fourteen States have adopted the rule of the Weeks case either as there laid down or as subsequently broadened. Thirty-one have rejected it. Typical among these are Massachusetts (Comm. v. Wilkins, 243 Mass. 356; Comm. v. Donnelly, 246 Mass. 507); California (People v. Mayen, 188 Cal. 237); Connecticut (State v. Reynolds, 101 Conn. 224); Ohio (Rosanski v. State, 106 Ohio St. 442); Kansas (State v. Johnson, 116 Kan. 58; 116 id. 179); Iowa (State v. Rowley, 197 Ia. 977, 979), and Virginia (Hall v. Comm., 138 Va. 727). To what is there written, little of value can be added. The controversy, starting with the courts, has been taken up by the commentators, and with them has been the theme of animated argument. For the most part, there has been adherence to the older doctrine (4 Wigmore on Evidence [2d ed.], §§ 2183, 2184; Harno, Evidence Obtained by Illegal Search & Seizure, 19 Ill. Law Rev. 303; Knox, Self-incrimination, 74 Penn. Law Rev. 139; Fraenkel, Concerning Searches and Seizures, 34 Harv. L. R. 361, 386; contra Chafee, The Progress of the Law, 35 Harv. L. R. 673, 694; Atkinson, Unreasonable Searches & Seizures, 25 Col. Law Rev. 11). With authority thus divided, it is only some overmastering consideration of principle or of policy that should move us to a change. The balance is not swayed until something more persuasive than uncertainty is added to the scales.

We find nothing in the statute (Civil Rights Law, § 8) whereby official trespasses and private are differentiated in respect of the legal consequences to follow them. All that the statute does is to place the two on an equality. In times gone by, officialdom had arrogated to itself a privilege of indiscriminate inquisition. The statute declares that the privilege shall not exist. Thereafter, all alike, whenever search is unreasonable, must answer to the law. For the high intruder and the low, the consequences become the same. Evidence is not excluded because the private litigant who offers it has gathered it by lawless force. By the same token, the State, when prosecuting an offender against the peace and order of society, incurs no heavier liability.

The Federal rule as it stands is either too strict or too lax. A Federal prosecutor may take no benefit from evidence collected through the trespass of a Federal officer. The thought is that in appropriating the results, he ratifies the means (Essgee Co. v. U. S., 262 U. S. 151, 156). He does not have to be so scrupulous about evidence brought to him by others. How finely the line is drawn is seen when we recall that marshals in the service of the nation are on one side of it, and police in the service of the States on the other. The nation may keep what the servants of the States supply (Weeks v. U. S., supra, p. 398; Schroeder v. U. S., 7 Fed. Rep. [2nd] 60; U. S. v. One Ford Coupe, 3 Fed. Rep. [2nd] 64). We must go farther or not so far. The professed object of the trespass rather than the official character of the trespasser should test the rights of government (Dempsey v. Chambers, 154 Mass. 330). The incongruity of other tests gains emphasis from the facts of the case before us. The complainant, the owner of the overcoat, co-operated with the officer in the arrest and the attendant search. Their powers were equal, since the charge was petit larceny, a misdemeanor (Code Crim. Pro. §§ 177, 183). If one spoke or acted for the State, so also did the other. A government would be disingenuous, if, in determining the use that should be made of evidence drawn from such a source, it drew a line between them. This would be true whether they had acted in concert or apart. We exalt form above substance when we hold that the use is made lawful because the intruder is without a badge of office. We break with precedent altogether when we press the prohibition farther.

The truth indeed is that the statute says nothing about consequences. It does no more than deny a privilege. Denying this, it stops. Intrusion without privilege has certain liabilities and penalties. The statute does not assume to alter or increase them. No scrutiny of its text can ever evoke additional consequences by a mere process of construction. We must attach them, if at all, because some public policy, adequately revealed, would otherwise be thwarted. But adequate revelation of such a policy it is surely hard to see. This would have been true in the beginning before the courts had spoken. It is more plainly true to-day. In this State the immunity is the creature, not of constitution, but of statute (Civil Rights Law, § 8). The Legislature, which created it, has acquiesced in the ruling of this court that the prohibition of the search did not anathematize the evidence yielded through the search. If we had misread the statute or misconceived the public policy, a few words of amendment would have quickly set us right. The process of amendment is prompt and simple. It is without the delays or obstructions that clog the change of constitutions. In such circumstances silence itself is the declaration of a policy. We scan the statute in vain'for any token of intention that search by intruders wearing a badge qf office shall have any different consequences in respect of the law of evidence than search by intruders generally.

We are confirmed in this conclusion when we reflect how far-reaching in its effect upon society the new consequences would be. The pettiest peace officer would have it in his power through overzeal or indiscretion to confer immunity upon an offender for crimes the most flagitious. A room is searched against the law, and the body of a murdered man is found. If the place of discovery may not be proved, the other circumstances may be insufficient to connect the defendant with the crime. The privacy of the home has been infringed, and the murderer goes free. Another search, once more against the law, discloses counterfeit money or the implements of forgery. The absence of a warrant means the freedom of the forger. Like instances can be multiplied. We may not subject society to these dangers until the Legislature has spoken with a clearer voice. In so holding, we are not unmindful of the argyñafent that unless the evidence is excluded, the statute-bee^mes a form and its protection an illusion. This has a strange somid when the immunity is viewed in the light of its origin and history. The rule now embodied in the statute was received into English law as the outcome of the prosecution of Wilkes and Entick (People v. Chiagles, supra). Wilkes sued the messengers who had ransacked his papers, and recovered a verdict of £4,000 against one and £1,000 against the other. Entick, too, had a substantial verdict (Boyd v. U. S., 116 U. S. 616, at p. 626; Entick v. Carrington, 19 Howell State Trials, 1030; Fraenkel, Concerning Searches & Seizures, 34 Harv. L. R. 363, 364, and cases cited). We do not know whether the public, represented by its juries, is to-day more indifferent to its liberties than it-was when the immunity Was born. If so, the change of sentiment without more does not work a change of remedy. Other sanctions, penal and disciplinary, supplementing the right to damages, have already been enumerated. doubt the protection of the statute would be greater from the point of view of the individual whose privacy had been invaded if the government were required to ignore what it had learned through the invasion. /The question is whether protection for the individual would not be gained at a disproportionate loss of protection for society. the one side is the social need that crime shall be repressed. On the other, the social need that law shall not be flouted by the insolence of office. There are dangers in any choice. The rule of the Adams case strikes a balance between opposing interests. We must hold it to be the law until those organs of government by which a change of public policy is normally effected, shall give notice to the courts that the change has come to pass.

There remains a second claim of privilege. “No person shall be * * * compelled in any criminal case to be a witness against himself (New York Constitution, art. 1, § 6). This immunity, like the statutory one against unreasonable search and seizure, was considered in the Adams case (176 N. Y. 351, 359). We limited it to cases where incriminatory disclosure had been extorted by the constraint of legal process directed against a witness. The Supreme Court agreed with us (Adams v. N. Y., 192 U. S. 585, 597, 598). Other courts (e. g., State v. Flynn, 36 N. H. 64; Common v. Wilkins, supra) and learned commentators (4 Wigniore Evidence, §§ 2263, 2264) have taken the same ground. Unless that ruling is to be changed, the conclusion is not doubtful.

We put the question aside whether in some other situation differing from the one before us, there may be need to qualify or soften a ruling so comprehensive. In putting it aside, we would not be understood as expressing, even by indirection, a belief that change is called for. Enough for present purposes to decide the case at hand. The weapon discovered through this search was an implement of crime. It was not the kind of thing to be protected against prying inquisition. It was a thing to be ferreted out and brought to light and, when found, wrested from the holder (Code Crim. Pro. § 792). There is no relation in such circumstances between the absence of a search warrant and the constitutional immunity against involuntary disclosure. The production of the Weapon Would have been just as incriminatory and just as involuntary if a warrant had been issued. The law, in providing for the warrant, does not proceed upon the theory that the defendant will thereby be protected against disclosing his own crime. On the contrary, the very object of the warrant is to compel him to disclose it. Things outlawed or contraband, possessed without right and subject upon seizure to forfeiture or destruction, may be offered in evidence without trenching upon the privilege in respect of self-incrimination whether seizure has been made with warrant or without.

Federal decisions until Agnello v. U. S. (supra) kept the two immunities (those of the Fourth and Fifth Amendments) distinct, even though sometimes overlapping. The distinction was of diminishing importance, for evidence was excluded for violation of the one almost as much as for violation of the other. None the less, the seizure of things contraband as the outcome of an unlawful search was classified for many years as a violation of the Fourth Amendment only. The Fifth was not infringed unless the seizure had relation to things innocent in themselves, but supplying evidence of guilt, such as a defendant’s books and papers (Boyd v. U. S., supra; Gouled v. U. S., supra; of. U. S. v. Welsh, 247 Fed. Rep. 239). We are uncertain whether Agnello v. U. S. (supra) has abandoned this distinction. What was said as to the Fifth Amendment was not essential to the decision. The result would have been the same though the Fourth only had been applied. We must follow our own rule.

The defendant makes the point that though the blackjack was contraband, the bag and hat were not. Error in admitting these in evidence, even if error were found, might be disregarded as harmless. But in truth the question is not here. All three articles were offered in evidence together. The objection did not discriminate between them. It was a general one to all alike. If any were admissible, the objection fails.

In this state of the record, we are not required to determine the application of the constitutional privilege to things lawfully possessed. We know that there are times when such things, not contraband at all, may be seized and placed in evidence. In this very case, if the overcoat had been worth $51, instead of $50 only, the arrest (for all that appears) would have been lawful, since the officer might arrest the defendant if a felony had been committed and there was reasonable cause to believe that the defendant was the perpetrator. In that event, there might have been search of the place where the arrest was made td discover the fruits or even the evidences of larceny (Angello v. U. S., supra; People v. Cona, 180 Mich. 641). The use of things thus seized would be lawful in any ensuing prosecution (People v. Chiagles, supra), either for that crime or for another (Gouled v. U. S., supra, at p. 311), yet it would none the less be use against the will of the accused (cf. Carroll v. U. S., supra). Seizure, whether legitimate or a trespass, is not voluntary surrender. There is strong support in this for the ruling of the Adams case that force is not the test, but rather force accompanied by process aimed against a witness and compelling action on his part (cf. 35 Harv. L. R. at p. 698). In the words of Baker, J., writing for the Circuit Court of Appeals (Haywood v. U. S., 268 Fed. 795, 802): “ ‘ Witness ’ is the keyword.” A defendant is protected from producing his documents in response to- a subpoena duces tecum, for his production of them in court would be his voucher of their genuineness.” There would then be testimonial compulsion ” (Haywood v. U. S., supra.) The keyword is disregarded, however, when compulsion not testimonial is brought within the orbit of the privilege. People ex rel. Ferguson v. Reardon (197 N. Y. 236) went upon the theory that the inspection there permitted by a statute was in effect a proceeding for a discovery or an examination before trial. The distinctions are indeed close. But the line of division will not be drawn with finality till there is before us a record which requires us to trace it.

As a last resort, the defendant invokes the Fourteenth Amendment and the requirement of due process.”

The Fourteenth Amendment would not be violated though the privilege against self-incrimination were abolished altogether (Twining v. New Jersey, 211 U. S. 78; Banks v. State, 207 Ala. 179; certiorari denied, 260 U. S. 736). The like must be true of the immunity against search and seizure without warrant in so far as that immunity has relation to the use of evidence thereafter (Comm. v. Donnelly, 246 Mass. 507; Banks v. State, supra).

The judgment of conviction should be affirmed.

His cock, Ch. J., Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgment affirmed.


source: Caselaw Access Project

author: Cardozo, J.

license: Public Domain

text:
    Harry Kottler, Respondent, v. New York Bargain House, Inc., Appellant.
    Landlord and tenant — lease — • assumption by assignee of sublease of all obligations thereof- — lessor may enforce promise —■ surrender of premises and reletting at lower rental — action to recover the deficiency — objection that action was for damages and premature because brought before expiration of lease, overruled — agreement by plaintiff to accept surrender does not end term where he expressly reserved right to proceed against tenant for deficiency in rent from reletting — election of receiver in bankruptcy of tenant not to accept lease as asset did not divest bankrupt of title to estate —• error to permit plaintiff to recover deficiency accruing after he surrendered his own lease — deposit as security allowed as credit on debt — objection that oral assumption of obligations was void under Statute of Frauds too late when not taken by answer or at trial.
    1. Where the plaintiff, lessee of a building, has sublet the same and the sublease has been assigned to defendant and in an action for rent there is evidence that defendant, in consideration of the assignment, assumed the debts and liabilities and a finding, unanimously affirmed, that it expressly assumed all of the obligations of the lease, the plaintiff may enforce the promise.
    2. Defendant having become bankrupt, a receiver took possession of and then vacated the premises, whereupon plaintiff, assuming to act in accordance with authority conferred by a covenant in the lease, relet the premises for a term of years at a lower rental. In this action to recover the rent reserved to the date of reletting and for the deficiency up to the time of commencing the action, a contention that the action was premature, in so far as it includes a claim for deficiency, for the reason that such a claim is in truth one for damages which cannot be known until expiration of the lease, cannot be sustained. The covenant covers a single situation. If the premises become vacant “ during the term ” the landlord is empowered to re-enter and relet. In so doing he is not forfeiting the lease or putting an end to its existence. The claim for a deficiency under the provisions of the covenant is, therefore, not for damages but for rent. (Matter of Hevenor, 144 N. Y. 271, limited.)
    3. An agreement between the plaintiff and the receiver, whereby the latter agreed to surrender possession of the premises and plaintiff accepted the surrender, cannot be construed as a surrender of the estate, •thus ending the term before the reletting was attempted, where the plaintiff expressly reserved the right to prove against the bankrupt for any deficiency in rent that might be incurred by reletting as his agent and there was a provision that nothing contained in the agreement “ shall be construed in prejudice or relinquishment ” of the landlord’s rights against the tenant or the tenant’s assignors. The election of the receiver not to accept the lease as an asset for the benefit of creditors did not divest the bankrupt’s title to the estate for years, which remained where it had been before.
    4. It was error, however, to permit the plaintiff to recover a deficiency accruing after he surrendered his own lease to the owner of the fee, he having no cause of action against defendant for rent so subsequently accruing.
    6. A deposit as security which was to be applied to the payment of rent for the last two months of the lease if the covenants of the lease had then been fully performed should be allowed as a credit on the debt. There is no suggestion that any covenant has been broken except the one for rent, and while the plaintiff might have held the deposit as security against defaults affecting him thereafter, so long as there was a possibility that such defaults could occur, the possibility ceased when he surrendered his own lease to the owner of the fee. So far as the subleases were concerned, the effect of this surrender was equivalent to a transfer of the reversion and by a fair reading of the covenant the parties did not contemplate that the deposit should be retained after the need for security had ended.
    6. An objection that defendant’s oral agreement to assume the obligations of the lease was void under the Statute of Frauds comes too late when not presented by the answer or even upon the trial by objection to the evidence when offered.

      Kottler v. New York Bargain House, Inc., 213 App. Div. 862, modified.
    (Submitted December 9, 1925;
    decided January 12, 1926.)
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered May 26,1925, modifying and affirming as modified a judgment in favor of plaintiff entered upon a decision of the court at a Trial Term, a jury having been waived.

      Alfred B. Nathan for appellant.
    The trial court erred in allowing any damages to plaintiff that accrued after December 14, 1923. (McCready v. Lindenborn, 172 N. Y. 400; Hall v. Gould, 13 N. Y. 127; Salomon v. Gleichenhaus, 131 N. Y. Supp. 599; Seidlitz v. Auerbach, 230 N. Y. 167.) The trial court should have deducted the $1,200 deposit made by the defendant with the plaintiff from any recovery allowed to the plaintiff. (Seidlitz v. Auerbach, 230 N. Y. 167.) The plaintiff landlord re-entered under the clause in his lease allowing him so to do, and to relet the premises, holding the tenant for any difference in rents so received. This re-entry by the plaintiff ended the relation of the landlord and tenant, and no further rent as such could thereafter accrue. (McCready v. Lindenborn, 172 N. Y. 400; Hall v. Gould, 13 N. Y. 127; Harding v. Austin, 93 App. Div. 564; Matter of Hevenor, 144 N. Y. 271.)

      David Podell and Louis B. Davidson for respondent.
    The court properly awarded damages that accrued after the sale on December 14, 1923. (McKyring v. Bull, 16 N. Y. 297; Harrison v. Hall, 239 N. Y. 53; Wilbur v. Collin, 4 App. Div. 417; Linton v. U. F. Co., 124 N. Y. 533; Commercial Exchange Bank v. Woodward, 198 App. Div. 769; Baylies v. Ingram, 84 App. Div. 360.) The trial court rightfully refused to deduct the $1,200 deposit made by the defendant with the plaintiff. (Mauro v. Alvino, 90 Misc. Rep. 328; Shenk v. Brewster, 189 App. Div. 608; Halpern v. Manhattan Ave. Corp., 173 App. Div. 610; Blumberg v. Corday, 171 App. Div. 906.) An action may be maintained by the landlord after re-entry and before the expiration of the term of the lease, to recover the stipulated rent or the amount of deficiency. (Mann v. Munch Brewery Co., 225 N. Y. 189; Darnstadt v. Knickerbocker Chandelier Co., 188 App. Div. 129; McCready v. Lindenborn, 172 N. Y. 400.) Assuming that the assumption agreement came within the Statute of Frauds, defendant having failed to plead it as a defense, has waived such defense. (Matthew v. Matthew, 154 N. Y. 288; Flannigan v. Flannigan, 209 App. Div. 190; Norton v. Ritter, 121 App. Div. 497; Banta v. Banta, 84 App. Div. 138; Lasher v. McDermott, 173 App. Div. 79; 219 N. Y. 534.)
   Cardozo, J.

The plaintiff, the lessee of a building in the city of New York, made a sublease, beginning May 1, 1920, and ending January 31, 1925, to S. Kleinman & Co., a partnership. Almost at once, S. Kleinman &' Co. assigned all their assets, including the lease, to New York Bargain House, Inc., the defendant, which went into possession. There is evidence that the defendant in consideration of the assignment assumed the debts and liabilities. There is a finding, unanimously affirmed by the Appellate Division, that it expressly assumed all the obligations of the lease. Under the rule of Lawrence v. Fox (20 N. Y. 268) the plaintiff may enforce the promise (Thorp v. Keokuk Coal Co., 48 N. Y. 253; Vrooman v. Turner, 69 N. Y. 280, 285).

The defendant became bankrupt on May 12, 1922, with rent for five months already in arrears. A receiver in bankruptcy took possession, but went out a few days later. In going out, he made a written agreement with the plaintiff, which we shall have occasion to summarize hereafter. The building being vacant, the plaintiff placed upon it a sign “ to let,” but did not resume possession otherwise. As agent for the defendant, he relet the premises on August 15, 1922, for a term of years. The reletting was at a lower rental, and, after collections had been credited, there Was a deficiency month by month.

In thus diminishing the loss, the plaintiff acted or assumed to act in accordance with authority conferred by one of the covenants of the lease. This covenant provides that if the said premises, or any part thereof, shall become vacant during the said term, the landlord or his representatives may re-enter the same, either by force or otherwise, without being liable to prosecution therefor; and relet the said premises as 'the agents of the said tenants, and receive the rent thereof; applying the same, first to the payment of such expenses as they may be put to in re-entering, and then to the payment of the rent due by these presents; the balance, if any, to be paid over to the tenants, who shall remain liable for any deficiency.”

Plaintiff, having thus relet, collected rent from the new tenants till December 1, 1923. On December 14, 1923, he surrendered his own lease, and the surrender was accepted. Since then the new tenants have made payment to the owner of the fee. There is no contention by either party that they should have made it to any one else.

This action is for rent at the rate reserved in the defendant’s lease from June 1, 1922, to August 15, 1922, the date of the reletting, and thereafter for the monthly deficiency up to March. 31, 1924, when the action was begun. The trial judge gave judgment for the full amount claimed, adding by amendment an item of rent accruing later. The item thus added was struck out by the Appellate Division as well as an allowance for expense incurred for commissions to a broker. As so modified, the judgment was unanimously affirmed.

The defendant argues that the action, in so far as it includes a claim for a deficiency upon reletting, was premature when begun and even when decided (July 15, 1924). The claim for the deficiency, it is said, is in truth a claim for damages, and the damages, it is said, could not be known until January 31, 1925, when the lease to the defendant was to expire by its terms (citing Harding v. Austin, 93 App. Div. 564, and Darmstadt v. Knickerbocker C. & El. Supply Co., 104 Misc. Rep. 547; reversed, 188 App. Div. 129, and distinguishing Mann v. Munch Brewery, 225 N. Y. 189). We think the claim for a deficiency under the provisions of this covenant is not for damages, but for rent. There is a distinction between a reletting by a landlord after the expiration of a term, and a reletting as agent for the tenant during the existence of the term. In the one case, the tenant, even though chargeable by force of covenant with a subsequent deficiency, is liable for damages (Hall v. Gould, 13 N. Y. 127). The term is at an end. In the other, he is liable for rent, what is received through a reletting being merely a payment on account. The term is still in being (Underhill v. Collins, 132 N. Y. 269, 272; Jones v. Rushmore, 67 N. J. L. 157; 3 Williston on Contracts, § 1403).

The covenant in this lease does not say that the tenant is to be chargeable with a deficiency after the lease shall be terminated by re-entry for condition broken (compare the covenants in Darmstadt v. Knickerbocker C. & El. Supply Co. and Hall v. Gould, supra). It covers a single situation. If the premises become vacant during the term,” the landlord is empowered to re-enter and relet (Fleisher v. Friob, 97 Misc. Rep. 343, 346, 350; affd., 177 App. Div. 921; Wolf v. Rudinsky, 135 App. Div. 172; Chaude v.

3 Shepard, 122 N. Y. 397, 402, 403). In so doing, he is not forfeiting the lease or putting an end to its existence. There is no provision that vacancy, the mere abandonment of possession, shall be the breach of a condition. He acts when so reletting as agent for the tenant, who is liable for any deficiency, and gets the benefit of any surplus. We are not to confuse a vacancy thus occasioned with a vacancy arising after the term is at an end. Premises do not become vacant “ during the term ” when they are made vacant because a tenant had been ejected after a forfeiture of the term. The landlord’s rights in that contingency are defined in another subdivision (Fleisher v. Friob, supra). If default has been made in the performance of a covenant, he is privileged to re-enter the said premises, and the same to have again, repossess and enjoy.” The privilege goes no further. Upon re-entry for condition broken, he is without authority to relet for the account of the lessee. The lease might, of course, have made provision for a reletting even then. We take its covenants as we find them. The lessee is chargeable with a deficiency in one event only, and then the term is kept alive. As long as it remains alive, there is a liability for rent (Underhill v. Collins, supra).

Óur decision in Matter of Hevenor (144 N. Y. 271) is pressed upon us by counsel to uphold a different ruling. The covenant in that case was ambiguous. The vacancy was described as one arising during the term, and at the' same time as a vacancy existing because of nonpayment of rent (p. 272). There was here the implication of a forfeiture. A vacancy could not exist because rent was overdue unless the term had been ended because of the default. The word term,” unless qualified, will commonly be taken to mean interest ” or “ estate ” (Black Comm., bk. 2, ch. 9, p. 144), yet the context may show that it is synonymous with “ time ” (Finkelmeier v. Bates, 92 N. Y. 172, 178; 1 Washburn Real Prop. [6th ed.] § 609). But aside from these differences, the Hevenor case does not exact of us a ruling that the claim is one for damages. What was said in that opinion as to the effect of a reletting was unnecessary to the decision (cf. Gray v. Kaufman Dairy & Ice Cream Co., 9 App. Div. 115, 118; reversed, but on other grounds, in 162 N. Y. 388). The controversy was one between a landlord and an assignee for the benefit of creditors. The landlord claimed the right to participate in the assets by reason of a deficiency of rents accruing after the assignment. In such circumstances, it was immaterial whether he proved for rent or for damages. His claim must have been rejected whether classified one way or the other. Rent due at the date of the assignment must be paid with other debts and liabilities out of the assets of the estate. Not so, however, of rent falling due thereafter (Matter of Roth, 181 Fed. Rep. 667; Watson v. Merrill, 136 Fed. Rep. 359; Matter of Link, 14 Daly, 148; Deane v. Caldwell, 127 Mass. 242). Even the actual ruling in Matter of Hevenor, not to speak of the dicta, has been kept within narrow limits (People v. St. Nicholas Bank, 151 N. Y. 592). The dicta have not destroyed the authority of Underhill v. Collins.

The question remains whether by force of agreement between the landlord and the bankruptcy receiver, the term had been ended before the reletting was attempted, with the result that what was done thereafter was of no effect against the tenant. There are provisions in that agreement which read by themselves and without reference to the context would give support to that conclusion. The receiver agrees to surrender possession of the premises to the landlord, and the landlord accepts the surrender so made by the receiver. But a surrender of possession ” is not always a surrender of a “ lease ” or of the estate ” thereby created (2 Tiffany Landlord & Tenant, p. 1307). A surrender of possession, if accepted, is evidence indeed from which a surrender of the estate may be inferred, yet it will not have that effect if the parties otherwise agree (Jones v. Rushmore, 67 N. J. L. 157). We think it plain from other provisions of the agreement between the landlord and the receiver that they did otherwise agree. What they were bargaining for was a surrender of possession, and no more. The landlord expressly reserves the right to prove against the bankrupt for any deficiency in rent that may be incurred by reletting as his agent. This is coupled with a provision that nothing contained in the agreement “ shall be construed in prejudice or relinquishment ” of the landlord’s rights against the tenant or the tenant’s assignors. These provisions would be frustrated by a holding that the lease was at an end. All that the receiver did was to evidence an election that the lease was not accepted as an asset for the benefit of creditors (Dushane v. Beall, 161 U. S. 513). The election did not divest the bankrupt's title to the estate for years, which remained where it had been before. So, indeed, the defendant itself interpreted the transaction. It made an assignment of the Tease a few days later, and thereby indicated its understanding that the lease was still in force. The landlord, it is true, was in possession, but not because the estate was at an end. He was in possession because the premises had become vacant, and the tenant had consented that he should have power to relet.

The defendant objects because the plaintiff has been permitted to recover a deficiency accruing after December 14, 1923, when the plaintiff surrendered his own lease to the owner of the fee. The objection points to error which modification can correct. The plaintiff after such surrender had no longer a cause of action against the defendant for rent subsequently accruing. His position was no better than it would have been if his interest or estate had been divested by assignment. The deficiency for January, February and March, 1924, $549.99, with interest, $12.74, must be deducted from the judgment.

The defendant also objects to the omission to deduct from the recovery $1,200 deposited as security. This deposit was to be applied to the payment of rent for the last two months of the lease if the covenants of the lease had then been fully performed. If they had not been performed, it was to be applied upon account of any damages sustained. There is no suggestion that any covenant has been broken except the one for rent.

We think the deposit should be allowed as a credit on the debt. Undoubtedly, the plaintiff might have held it as security against defaults affecting him thereafter so long as there was a possibility that such defaults could occur. We think the possibility ceased when he surrendered his own lease to the owner of the fee. So far as the subleases were concerned, the effect of this surrender was equivalent to a transfer of the reversion (Eten v. Luyster, 60 N. Y. 252, 259; 2 Tiffany on Landlord & Tenant, pp. 1348, 1351). Undoubtedly by apt words, the parties might have agreed that the deposit should be retained until the expiration of the term though the landlord by assignment or otherwise had no longer an interest in the enforcement of the covenants (Mauro v. Alvino, 90 Misc. Rep. 328). Such an agreement will not readily be gathered from words of doubtful meaning. By a fair reading of this covenant, the parties did not contemplate that the deposit should be retained after the need for security had ended. There is no occasion to dwell upon the pleadings, or possible defects in them. Defects, if there were any, were waived, for the facts were proved without objection, and are established by the findings. The judgment must be reduced accordingly.

The defendant makes a point that its oral agreement to assume the obligations of the lease was void under the Statute of Frauds for the reason that by its terms it could not be performed within a year. We do not need to inquire whether the defense would have been good if seasonably urged (Durand v. Curtis, 57 N. Y. 7, 11; Kellogg v. Clark, 23 Hun, 393; Marcy v. Marcy, 9 Allen, 8; Kelley v. Thompson, 175 Mass. 427). The defense of the Statute of Frauds was not presented by the answer. It was not even presented upon the trial by objection to the evidence when offered. The objection came too late when the agreement was established and the trial was at an end.

The judgment should be modified by deducting therefrom the sum of $1,762.73, and, as so modified, affirmed, without costs to either party.

Hiscock, Ch. J., Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgment accordingly.


text:
    The President and Directors of the Manhattan Company, Appellant, v. J. Pierpont Morgan et al., Copartners under the Firm Name of J. P. Morgan & Co., et al., Respondents.
    Negotiable instruments — banks and banking — certificates of bankers stating that bearer is entitled to receive government bonds “ when, as and if delivered ” and to be paid interest when money is supplied for that purpose, are not negotiable — certificates not temporary or provisional bonds of government but personal obligation of bankers — law merchant not applicable — negotiability by contract or estoppel not found — evidence insufficient to prove custom to deal with certificates as negotiable.
    1. Temporary certificates issued and signed by defendants, bankers in the city of New York, whereby the bearer was stated to be entitled to receive bonds of the Kingdom of Belgium, “ when, as and if delivered ” by the Belgian government to defendants, to which certificates were affixed warrants for interest, payable to bearer, subject, however, to the condition that moneys for such payment were supplied by the government of Belgium, are not negotiable instruments. They are not the temporary or provisional bonds of the government of Belgium but are the obligations of defendants personally, the executory contracts of bankers, who have underwritten an issue of securities, binding them to make delivery and payment when they get the documents and the money. (Goodwin v. Robarts~ L. R. 10 Ex. 76, 337; 1 App. Gas. 476, distinguished.)
    2. In an action by one who took stolen certificates for value and in good faith, to recover from defendants the value of the bonds, demanded and refused, plaintiffs’ case is not helped by section 7 of the Negotiable Instruments Law (Cons. Laws, ch. 38) to the effect that “ in any case not provided for in this chapter the rules of the law merchant shall govern.” By section 20 of the Negotiable Instruments Law, an instrument to be negotiable must, among other requirements, “ contain an unconditional promise or order to pay a sum certain in money ” and “ must be payable on demand, or at a fixed or determinable future time.” By section 23, “ an instrument payable upon a contingency is not negotiable and the happening of the event does not cure the defect,” and by section 24 there is a like declaration as to the non-negotiable character of any “ instrument which contains an order or promise to do any act in addition to the payment of money.” Tested by these requirements the certificates are not negotiable and the law merchant cannot prevail against prohibitions so specific.
    3. Assuming that new forms of negotiability may be created by
    contract or by estoppel, such a contract cannot be found in a provision, without more, that a certificate, non-negotiable in form, shall be payable to bearer. Nor can it be found in the provision that the bankers “ may treat the bearer * * * as the absolute owner * * * for all purposes,” and “ shall not be affected by any notice to the contrary.” The object of that provision was obviously the protection of the bankers rather than the change or enlargement of the title of the holder. Nor is there any element of estoppel. The owner of these certificates did not intrust them to the possession of the thief. He did not even negligently leave them where they would be likely to be stolen. He kept them in a safe from which they were abstracted by a burglar.
    4. A custom to deal with the certificates as negotiable is not proved by the evidence.

      Manhattan Co. v. Morgan, 213 App. Div. 201, affirmed.
    (Argued December 15, 1925;
    decided January 12, 1926.)
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered June 19, 1925, affirming a judgment in favor of defendants entered upon a dismissal of the complaint by the court on trial at Special Term.

      George W. Wickersham, Paul Van Anda and John J. Kirby for appellant.
    The interim certificates were not merely agreements of the bankers but were the obligations of the Belgian government for which they were issued by the bankers as agents. (Goodwin v. Robarts, L. R. 10 Ex. 76; 1 App. Cas. 476.) The interim certificates issued for the Belgian government by the bankers conform substantially to the requirements of section 20 of the Negotiable Instruments Law by virtue of being, both on their face and by the usage of the financial world, the temporary equivalents of the bonds which conformed literally thereto. (Gorgier v. Mieville, 3 B. & C. 45; Union Trust Co. v. Oliver, 214 N. Y. 517; Delafield v. Illinois, 2 Hill, 159; 26 Wend. 192; Mercer County v. Racket, 1 Wall. 83; Hibbs v. Brown, 190 N. Y. 167; Higgins v. Hocking Valley R. R. Co., 188 App. Div. 684; Chemical National Bank v. Kellogg, 183 N. Y. 92; Manhattan Savings Institution v. N. Y. National Exchange Bank, 170 N. Y. 58; Seybel v. Nat. Currency Bank, 54 N. Y. 288; Welch v. Sage, 47 N. Y. 143; Murray v. Lardner, 2 Wall. 110.) The interim certificates are negotiable by virtue of sections 7 and 29 of the Negotiable Instruments Law. (Goodwin v. Robarts, L. R. 10 Ex. 337, 346; Gorgier v. Mieville, 3 B. & C. 45; Commercial Nat. Bank v. Zimmerman, 185 N. Y. 210; Chemical Nat. Bank v. Kellogg, 183 N. Y. 92; Brannan on Neg. Inst. Law [3d ed.], 475; Brown v. Perera, 176 N. Y. Supp. 215; Strickland v. National Salt Co., 79 N. J. Eq. 182.) The interim certificates are negotiable by custom and usage, independently of statute. (Lickbarrow v. Mason, 6 East, 21; N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y. 30; Hibbs v. Brown, 190 N. Y. 167; Zander v. American S. & T. Co., 178 N. Y. 208; American Ex. Nat. Bank v. Woodlawn Cemetery, 194 N. Y. 116; Reynolds v. Title G. & T. Co., 240 N. Y. 257; Kenicott v. Supervisors, 16 Wall. 452; Belden v. Burke, 147 N. Y. 542; 4 Cook on Corp. [8th ed.] 3495; Rockmuhl v. Pittsburgh, Fed. Cas. No. 11,982.)

      Otto C. Sommerich and Maxwell C. Katz for respondents.
    The Negotiable Instruments Law defining what is a negotiable instrument, and these interim certificates calling for delivery of definitive bonds when, as and if delivered and not unconditionally for money, and, therefore, not complying with the definition of the Negotiable Instruments Law, and having been stolen prior to plaintiff’s acquisition thereof, plaintiff acquired no title. (Commercial National Bank v. Zimmerman, 185 N. Y. 210; Borough of Montvale v. People’s Bank, 74 N. J. L. 464; King Cattle Co. v. Joseph, 199 N. W. Rep. 437; International Finance Co. v. Northwestern Drug Co., 282 Fed. Rep. 920; Cellers v. Meachem, 49 Ore. 186; Ogden’s Neg. Inst. 253; First State Bank v. Williams, 164 Ky. 143; Union Trust Co. v. McGinty, 212 Mass. 205; Hibbs v. Brown, 190 N. Y. 167.) Custom and usage cannot render instruments negotiable not complying with the statute. (Montvale v. People’s Bank, 74 N. J. L. 464; King Cattle Co. v. Joseph, 199 N. W. Rep. 437; International Finance Co. v. Northwestern Drug Co., 282 Fed. Rep. 920; Kohn v. Sacramento Electric, Gas & Ry. Co., 168 Cal. 1; Dunham v. Dey, 13 Johns. 40; Dunham v. Gould, 16 Johns. 367; Markham v. Jaudon, 41 N. Y. 235; Content v. Banner, 184 N. Y. 121; Eccles Co. v. Munn, 210 S. W. Rep. 626.) The mere fact that the certificates in suit are bearer certificates does not render these certificates negotiable. (Chicago, etc., v. Howard, 7 Wall. 392; Dixon v. Bovill, 3 Macq. 1; American Nat. Bank v. Somerville, 191 Cal. 364.)
   Cardozo, J.

Bankers in the city of New York issued temporary certificates whereby the bearer was stated to be entitled to bonds of the Kingdom of Belgium when delivered in definitive form. Three of these certificates; each of the par value of $1,000, were stolen from the owner. By the thief or by some one who got them from the thief, they were delivered to the plaintiff, a bank in the city of New York, which took them for value and in good faith. The bank upon proper tender made demand of the bankers that the certificates be exchanged for bonds. The bankers refused to make the exchange because of notice of the theft. In this action the bank seeks judgment against the bankers for the value of the bonds demanded and refused. The question is whether the certificates are negotiable instruments.

The “ obligor,” the Kingdom of Belgium, and the “ bankers,” J. P. Morgan & Company and Guaranty Trust Company of New York, defined in a written contract their respective rights and duties. The obligor was to issue its bonds in the aggregate principal amount of $50,000,000, dated June 1, 1920, and payable June 1, 1945. Until bonds in definitive form were engraved and ready for delivery, two temporary or provisional bonds for the aggregate amount of $50,000,000 were to be delivered to the bankers. The bankers were to endeavor to form a syndicate which would offer the bonds on stated terms for public subscription. If the syndicate was formed and the two temporary or provisional bonds were received, the bankers agreed to credit to the account of the obligor on June 7, 1920, the net proceeds of $11,000,000, and on June 18, 1920, the net proceeds of $39,000,000, the residue of the issue. This meant that the bankers were underwriting the entire amount. Pending the delivery of the definitive bonds, the bankers were to be at liberty to deliver to subscribers for such bonds a receipt or other writing in the names of both or either of them, evidencing* the right of the holder to receive an amount of such bonds specified in such receipt or writing.” Other provisions are unimportant for the controversy before us.

The certificates prepared by the bankers and issued to subscribers were in the following form:

“ This is to certify, that the bearer is entitled to receive a Bond for One Thousand Dollars principal amount, of the Kingdom of Belgium Twenty-five Year External Gold Loan 7-1 ¡2% Sinking Fund Redeemable Bonds (more fully described in the circular issued under date of June 1, 1920), with coupons due December 1, 1920, and subsequently, attached, when as and if delivered to us in definitive form by the Obligor, and upon surrender of and in exchange for this certificate and the annexed interest warrant, subject, however, to the provisions following:
“ If the Bond deliverable hereunder be not delivered prior to December 1, 1920, the interest thereon due on that date, will be paid upon presentation and surrender of the annexed warrant, provided moneys for the payment of interest on the Bonds of the issue shall have been received by the undersigned from the Obligor. If the interest due December 1, 1920, be so paid by the undersigned, the Bond will be deliverable without the coupon maturing on that date, and this certificate will be received without the interest warrant.
Every taker and holder of this certificate and the attached warrant hereby agrees that the undersigned may treat the bearer of this certificate and the attached warrant as the absolute owner hereof and thereof, as the case may be, for all purposes, and that the undersigned shall not be affected by any notice to the contrary.
In Witness Whereof, the undersigned have caused this certificate to be subscribed and the annexed interest warrant to be hereunto attached bearing the facsimile signature of J. P. Morgan & Co.
“ Dated, June 18, 1920. J. P. MORGAN & CO.
“ GUARANTY TRUST COMPANY OF NEW YORK,
“ By J. P. Morgan &. Co.”

There was also annexed to each certificate an interest warrant as follows:

Warrant for interest due December 1, 1920, upon $1,000 principal amount of Bonds of above issue, specified in the certificate No, M 19349 issued by the undersigned under date of June 18, 1920, payable to bearer at the offices of the undersigned, but only after the receipt by the undersigned from the Kingdom of Belgium of moneys for the payment of such interest and also only in case the said Certificate be not surrendered before December 1, 1920. The holder of this warrant is bound by the provisions in respect thereof contained in said certificate.
“ J. P. MORGAN & CO.
“ GUARANTY TRUST COMPANY OF NEW YORK,
“ By J. P. Morgan & Co.”

Testimony is in the record that interim certificates for government and corporate bonds pass freely from hand to hand without other evidence of title than the possession of the mstruments. Testimony is also in the record that the particular form of certificate adopted by the bankers did not come into general use till 1920, the year of the transaction out of which this controversy arises. The trial judge refused to find the existence of a general custom whereby mstruments of like tenor are treated as negotiable.

The holding was, upon these facts, that title to the certificates stolen from the owner was not divested by the later purchase for value without notice. Upon appeal to the Appellate Division, the judgment was affirmed.

The plaintiff attempts to bring the case within the well-known case of Goodwin v. Robarts (L. R. 10 Ex. 76; L. R. 10 Ex. 337; 1 App. Cas. 476). The facts are widely different. There the Russian government, intending to issue bonds or government stock, delivered to subscribers mstruments described as scrip ” which were signed by bankers, the house of Rothschild, with the descriptive word “ agent's.” The scrip was merely a temporary bond, abbreviated and indeed fragmentary in form, but evidencing, none the less, the obligation of the government, authenticated by its agents, and exchangeable for formal bonds thereafter. There was an unequivocal engagement that in the meantime interest would be paid at designated dates. “ This scrip is as much a Russian instrument as the bond itself would be ” (Bramwell, B., L. R., 10 Ex. at p. 83). It is plain on the face of the document that the Messrs, de Rothschild only profess to be acting as the agents of the foreign governments ” (Cockburn, C. J., p. 344). Doubt, if there was any, as to the meaning of the abbreviated promise was removed by evidence of the custom of the market. “ The usage of the money market has solved the question whether scrip should be considered security for, and the representative of, money, by treating it as such ” (Cockburn, C. J., p. 353).

We do not need to determine whether everything that was said in the many opinions rendered while that case was in the courts, would be accepted as law here. Even under our statute, however, “ the instrument need not follow the language of this chapter, but any terms are sufficient which clearly indicate an intention to conform to the requirements thereof ” (Negotiable Instruments Law, § 29 [Cons. Laws, ch. 38]; Nelson v. Citizens’ Bank, 191 App. Div. 19; 232 N. Y. 581). We leave the question open whether custom may write into scrip ” or other abbreviated forms of contract (as into the “ binder ” of insurance) the terms and incidents of the definitive instruments to be delivered in exchange. If limits are to be set, even in such conditions, to the range of implication, there is no occasion to define them now. By hypothesis, the obligations of both instruments, informal and definitive alike, however loosely expressed, are in reality the same.

We are dealing in the case at hand with instruments of a different order. The certificates and warrants put out upon the market by the defendants are not the temporary or provisional bonds of the government of Belgium. Temporary or provisional bonds had already been issued, and were already in the bankers’ hands. The certificates and warrants are not the obligations of the government of Belgium at all. They are the obligations of the defendants personally. The Belgian government does not undertake by these certificates to deliver bonds to the subscribers. The defendants, the bankers, undertake to deliver bonds “ when, as and if delivered ” by the Belgian government to them. The Belgian government does not undertake by the warrant annexed to the certificates to pay interest thereon at the next due date or thereafter. The defendants undertake that payment of interest will be made by them, “ but only after the receipt by the undersigned from the Kingdom of Belgium of moneys ” adequate therefor. The documents are not informal equivalents for the definitive documents that are to take their place thereafter. They are the executory contract of bankers who have already underwritten an issue of securities, binding them to make delivery and payment when they get the documents and the money.

We do not say that authority was lacking to issue certificates in some other form that Would have imposed a different obligation. Very likely the bankers might have put forth participation certificates or trust receipts whereby the temporary or provisional bonds would have been charged with a trust or subjected to an equitable assignment for the benefit of subscribers. There would be a question even then whether such instruments, if' issued, would have had the effect of a negotiation of a part interest in the bonds. The statute provides that negotiation may be effected only by delivery or by indorsement (Neg. Inst. Law, § 60), and that indorsement to be effective must be an indorsement of the entire instrument, and not merely a transfer or attempted transfer of a part interest therein (§62). There is no occasion to determine the application of those sections, for the instruments issued were not participation receipts giving a present equitable interest in the existing temporary bonds. They were executory promises. The underwriters of the issue, holding the temporary or provisional bonds as security for the underwriting, became bound to the subscribers for the delivery of definitive bonds when, as and if ” received from the government of Belgium.

We do not mean to suggest that if the definitive bonds had been wrongfully withheld or had never been prepared, the subscribers would have been unable to establish an equitable interest in the temporary or provisional bonds already delivered to the bankers. A court of equity would decree such an interest if it was a fair inference from all the circumstances that effect would thus be given to the intention of the parties. As bearing upon that intention, there would be significance in a circular issued by the bankers to announce the coming issue. In that circular, we find the statement: “ Trust receipts will be delivered pending the preparation of the definitive bonds.” From the aggregate of circumstances, the inference might be drawn that a trust was to attach to something until the definitive bonds were issued, though whether to the subscription moneys or to the provisional bonds, which were not mentioned in the circular at all, it would be difficult to know. The important thing for present purposes is that the equitable interest, if any, would have its origin, not in any contract expressed in the certificate itself, but in facts dehors the certificate which might lead equity to hold that justice would be defeated unless a trust should be implied.

This analysis of the contract impels us to the conclusion that the law denies negotiability to instruments so phrased. Negotiable instruments may fall within one or other of two classes. They may represent interests in property, in which event they will give rise to rights in rem, or they may be promissory and executory, creating rights in personam. Negotiability was once determined by the rules of the law merchant. In this State, a statute, the Negotiable Instruments Law, has codified those rules either wholly or in part. We assume, though there is no occasion to determine, that" negotiable instruments of the first class, i. e., those representing interests in property, are not within the purview of the statute, however broad its title. Other acts, more restricted in scope, deal with bills of lading, warehouse receipts, and certificates of stock, instruments quasi-negotiable, if not negotiable altogether. Our concern at the moment is with instruments of the-second class, where the words, in effect at least, are those of promise merely. We do not now decide that even as to instruments of this order, the creative force of the law merchant has been extinguished altogether. Opportunities for growth may exist along lines and in directions which can hardly be charted in advan.ce. We are- satisfied, however, that the law merchant is without capacity to make instruments negotiable against the express prohibition of a statute which says that they are not negotiable.

The Negotiable Instruments Law o.f New York is much broader than its English model. The English act is expressly limited to bills of exchange, checks and promissory notes. It does not cover bonds or other- classes of securities (Chalmers, Bills of Exchange, p. 362). The argument has been made that bonds are excluded from our statute also. The provisions of section 332, directed as they are to bonds, municipal and corporate, leave no support for that position. The statute of New York does not confine itself, moreover, to an enumeration of certain qualities which, if found, will make instruments negotiable. It enumerates others which will make them non-negotiable. By section 20, “ an instrument to be negotiable must conform to the following requirements.” Of the five requirements that follow, we quote the second and the third. It must contain an unconditional promise or order to pay a sum certain in money.” It must be payable on demand, or at a fixed or determinable future time.” By section 23, “ an instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect,” and by section 24 there is a like declaration as to the non-negotiable character of any instrument which contains an order or promise to do any act in addition to the payment of money,” with enumerated exceptions not important for the case at hand.

These are the tests to which the instrument in suit must be subjected. It is promissory in all its features, yet its promises are of a two-fold order. There is a promise for the payment of money, subject to specified conditions, and welded into this there is another promise, again subject to conditions, for the delivery of bonds. So far as the instrument is one for the payment of money, it is open to the objection that it is payable not absolutely nor at a fixed or determinable time, but subject to a contingency. The holder is to receive interest on presentation of the annexed warrant, subject, however, to the condition that moneys for such payment have been supplied by the government of Belgium. So far as the instrument is one for the delivery of bonds, it is open to the same objection, and to the additional one that it is a promise to make payment not “ in money,” but in something else (§§ 20, 24; Hosstatter v. Wilson, 36 Barb, 307; Brown v. Richardson, 20 N. Y. 472; Hodges v. Shuler, 22 N. Y. 114; Dinsmore v. Duncan, 57 N. Y. 573, 580). The statute says that instruments are not negotiable ” when they embody such provisions.

The law merchant cannot prevail against prohibitions so specific. In holding otherwise, we should do more than supplement the statute. We should disregard and contradict it. The plaintiff’s case is not helped by section 7 to the effect that “ in any case not provided for in this chapter the rules of the law merchant shall govern.” The difficulty is that the case is provided for. Unforeseen situations may reveal gaps in the statutory rules. In such circumstances the law merchant is competent to fill them. It is without power to annul what the statute has ordained.

We do not mean to cast doubt through anything here written upon the capacity of merchants to create new forms of negotiability by contract or by estoppel. One may suppose a certificate whereby any and all holders forego and renounce their equities in favor of later holders for value and without notice. We do not pass upon the effect of provisions, however phrased, that aim at that result. A right conferred by statute will not be lost to the holder of an instrument at the conflicting behest of a rival, but inferior, body of law, e. g., the law merchant (5 Holdsworth, History of English Law, 144; Aigler, Recognition of New Types of Negotiable Instruments, 24 Col. L. R. 563, 564). The conclusion does not follow that it may nob be qualified or extinguished by the provisions of a contract (see, however, Am. Nat. Bank v. Sommerville, 191 Cal. 364; and cf. 33 Yale L. J. 302).

Such a contract cannot be found, however, in a provision without more that a certificate, non-negotiable in form, shall be payable to bearer (Railroad Co. v. Howard, 7 Wall. 392, 415). It cannot even be found in the provision that the bankers may treat the bearer * * * as the absolute owner * * * f0r all purposes,” and “ shall not be affected by any notice to the contrary.” The object of that provision was obviously the protection of the bankers rather than the change or enlargement of the title of the holder. The bankers are not to be hable if they yield to the demand of the holder though they have notice of the adverse claim. This does not mean that they shall be under a duty to yield if they find it prudent to resist. There is no equivalence between a provision so phrased and one that stamps upon an instrument the quality of negotiability by consent renewed expressly or impliedly with each successive act of transfer. Equities are cut off upon a transfer of negotiable paper in favor of holders for value and in good faith. The provision in this certificate, if it were extended from the bankers to the holders, would give protection and title to purchasers with notice. Nothing of the sort was meant.

Just as instruments not otherwise negotiable may (for anything now decided) become negotiable by contract, it is also true, of course, that they may become so by estoppel (Union Trust Co. v. Oliver, 214 N. Y. 517). The plaintiff does not contend that any element of estoppel is discoverable here. The owner of these certificates did not intrust them to the possession of the thief. He did not even negligently leave them where they would be likely to be stolen (Hudson Trust Co. v. Am. Linseed Co., 232 N. Y. 350; People’s Trust Co. v. Smith, 215 N. Y. 488). He kept them in a safe from which they were abstracted by a burglar. We find nothing in the situation that would enlarge the plaintiff’s rights beyond the measure of the statute.

The conclusion thus reached finds support in judgments in other jurisdictions (Crocker Nat. Bank v. Byrne, 178 Cal. 329, 334; Bowie v. Nat. City Bank, 122 Wash, 269; Hearne v. Gillette, 151 La. 79; King Cattle Co. v. Joseph, 158 Minn. 481; International Finance Co. v. Northwestern Drug Co., 282 Fed. Rep. 920), though we would not be understood as approving everything there said or even everything there decided. If the English cases go farther than our own, the difference may be explained by the restricted scope of their codifying statute. A Word as to some of them may be helpful. Bechuanaland Co. v. London Trading Co. (1898, 2 Q. B. 658) involved a transfer of bonds, payable subject to conditions, but negotiable by custom. There was no contention that the statute governing bills and notes applied to such securities. Edelstein v. Schuler & Co. (1902, 2 K. B. 144) did not differ in essentials from Bechuanaland Co. v. London Trading Co. On the other hand, Rumball v. Met. Bank (L. R. 2 Q. B. D. 194) went so far as to hold that scrip calling for future delivery of certificates of stock, was negotiable, if so treated in the market, though in England, as with us, in the absence of statute, the certificates of stock themselves would be only quasi-negotiable when ultimately issued (Knox v. Eden Musee Co., 148 N. Y. 441; Union Trust Co. v. Oliver, supra; Colonial Bk. v. Cady, 15 A. C. 267; Chalmers, Bills of Exchange, p. 376). Webb, Hale & Co. v. Alexandria Water Co. (21 T. L. R. 572, 573) followed Rumball v. Met. Bank in deference to its authority, Alverstone, L. C. J., doubting whether in the absence of authority the rule of Goodwin v. Robarts should be extended so as to make the provisional securities negotiable when the final ones were not. We.think there is no case, even in the English courts, in which the law merchant with its customs has effectively contravened the prohibition of a statute (cf. Byles on Bills, chap. XIX).

We do not underrate the importance of permitting business to originate for itself the methods and instrumentalities that may be found by experience to be helpful to its free development (Aigler, Recognition of New Types of Negotiable Instruments, 24 Col. L. Rev. 563; Holdsworth, Origins and Early History of Negotiable Instruments, 32 L. Q. R. 20, 36). There is force in the argument that wider freedom of choice through the spontaneous flowerings of custom would work a social gain. One of the debit items to be charged against codifying statutes is the possibility of interference with evolutionary growth. It is the ancient conflict between flexibility and certainty. So far as the Negotiable Instruments Law is concerned, the remedy for the evil, if it be one, is an amendment of the statute that will add to the negotiable instruments there enumerated or described such other classes as the law merchant or the custom of the market may from time to time establish. Until such an amendment shall be adopted, the courts in their decisions must take for granted that the Legislature is content with the law as it is written.

We have assumed in the foregoing discussion that a custom to deal with the certificates as negotiable was adequately proved. The fact is that the assumption is unsupported by the record. The trial judge did not find the existence of the custom, though such a finding was requested. The evidence is too vague and general to make the refusal error, even if custom were material. All that we have is the testimony of a banker, one of the defendants, that temporary certificates, issued by governments and- corporations in advance of a final issue of bonds, pass freely from hand to hand according to the practice of financial houses. This tells us nothing unless the certificates are described. There are many temporary certificates that are merely provisional bonds. As to this particular form of certificate, the testimony is that it was not adopted till 1920, simultaneously, it would seem, with the issue of the certificates in controversy. The time might be found to be too short for custom to develop. A custom relied upon to take the place of a settled principle of law, and therefore to have the force of law, ought to be as definite and specific in negativing the principle as the law which it assumes to supplant is in affirming it ” (Fed. Reserve Bank v. Malloy, 264 U. S. 160, 171).

The judgment should be affirmed with costs.

Hiscock, Ch. J., Pound, McLaughlin, Andrews and Lehman, JJ., concur; Crane, J., not sitting.

Judgment affirmed.