text:
    In the Matter of the Claim of Dependents of Isadore Marks, Deceased, against Walter Gray et al., Appellants. The State Industrial Board, Respondent.
    (Submitted April 15, 1929;
    decided May 28, 1929.)

      Leo Waxman for appellants.
    The accident did not arise out of and in the course of any employment. (Ames v. N. Y. C. R. R. Co., 178 App. Div. 324; Devoe v. New York State Railways, 218 N. Y. 318; Kowalek v. N. Y. Constr. Co., 229 N. Y. 489; Coman v. Model Dairy Co., 210 App. Div. 583; New York Ind. Co. v. Industrial Acc. Commission, 261 Pac. Rep. 1106; London Guarantee & Acc. Co. v. Industrial Acc. Comm., 213 Pac. Rep. 977; Crawford v. State Industrial Comm., 239 Pac. Rep. 575; Foster v. Mallory Steamship Co., 217 App. Div. 870; 244 N. Y. 612; Johnson v. Faribault Bldg. Corp., 192 App. Div. 929; 229 N. Y. 626.)

      Hamilton Ward, Attorney-General (E. C. Aiken of counsel), for respondent.
    The accident arose out of and in the course of the employment. (Watson v. Daum, Rogers, Spritzer Co., 35 State Dept. Rep. 766; 219 App. Div. 753; 246 N. Y. 548; Faulkner v. Stratton-Amsterdam Corp., 217 App. Div. 806; 245 N. Y. 542; Grieb v. Hammerle, 222 N. Y. 382.)
   Cardozo, Ch. J.

Award has been made under the Workmen’s Compensation Law (Cons. Laws, ch. 67) to the dependents of Isadore Marks for benefits found to be due by reason of his death. Whether the injury was one arising out of and in the course of the employment ” (Workmen’s Compensation Law, § 2, subd. 7; § 10) is the question to be answered.

Marks was a helper in the service of a plumber. His home and his place of business were at Clifton Springs, New York. On April 16, 1927, his wife went to visit relatives at Shortsville, where her husband promised to call for her in the family car at the end of the day’s work. The employer hearing that he was to make this journey, asked him to take his tools and fix some faucets that were out of order at a dwelling house in Shortsville. The job was a trifling one, calling for fifteen or twenty minutes of work. There would have been no profit in doing it at the cost of a special trip. It would have been postponed till some other time when it could have been combined with other work, if Marks had not stated that he would make the trip anyhow. He did not use the employer’s truck, the vehicle set apart for travel in the course of business. He used his own or his father’s car, set aside, it would seem, for the convenience of the family. Nothing was said by the employer about paying him for the job. The expectation was, however, that for any work that he did, he would be paid at the usual rate for labor after working hours. On the way to Shortsville, when only about a mile from Clifton Springs, he was injured in a wreck and died.

We think the accident did not arise “ out of and in the course of ” any service that Marks had been employed to render. He was not maldng the journey to Shortsville at the request of his employer or for the purpose of doing his employer’s work. He was maldng it in fulfillment of a promise to call for his wife at the end of the day, and bring her home in the family car. If word had come to him before starting that the defective faucets were in order, he would have made the journey just the same. If word had come, on the other hand, that his wife had already returned, he would not have made the trip at all. The employment did not bring him on the journey or expose him to its risks. If that is so, it is not “ out of the employment ” that the injuries arose.

Many cases there are in which the perils of travel on a highway are so related to the employment as to lay the basis for an award. “ Street risks ” are so varied as to defy enumeration or prediction. The result at times has been that accidents the most bizarre have been held to be incidental to service in the line of duty (Katz v. Kadans & Co., 232 N. Y. 420; Roberts v. Newcomb & Co., 234 N. Y. 553). We have no thought to detract from these decisions or to whittle down by exceptions the principle beneath them. They do not touch the case at hand. Unquestionably injury through collision is a risk of travel on a highway. What concerns us here is whether the risks of travel are also risks of the employment. In that view 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. A servant in New York informs his master that he is going to spend a holiday in Philadelphia, or perhaps at a distant place, at San Francisco or at Paris. The master asks him while he is there to visit a delinquént debtor and demand payment of a debt. The trip to Philadelphia, the journey to San Francisco or to Paris, is not a part of the employment. A different question would arise if performance of the service were to occasion a detour, and in the course of such detour the injuries were suffered. So here, a different question would arise if Marks after making the trip to Shortsville had met with some accident while repairing the defective faucets (Grieb v. Hammerle, 222 N. Y. 382). The collision occurred while he was still upon the highway, a mile or less from home.

In such circumstances we think the perils of the highway were unrelated to the service. We do not say that service to the employer must be the sole cause of the journey, but at least it must be a concurrent cause. To establish liability, the inference must be permissible that the trip would have been made though the private errand had been canceled. We cannot draw that inference from the record now before us. On the contrary, the evidence is that a special trip would have been refused since the pay would be inadequate. The test in brief is this: If the work of the employee creates the necessity for travel, he is in the course of his employment, though he is serving at the same time some purpose of Ms own (Clawson v. Pierce-Arrow Co., 231 N. Y. 273). If, however, the work has had no part in creating the necessity for travel, if the journey would have gone forward though the business errand had been dropped, and would have been canceled upon failure of the private purpose though the business errand was undone, the travel is then personal, and personal the risk.

Applying this test, we hold that Marks was not placed upon the highway by force of any duty owing to his employer, and that the risk of travel was his own.

The order of the Appellate Division should be reversed, and the ■ award annulled, with costs against the State Industrial Board in tMs court and in the Appellate Division.

Crane, Lehman, Kellogg and O’Brien, JJ., concur; Pound and Hubbs, JJ., dissent.

Order reversed, etc.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Constantine Zambounis, Appellant.
    (Argued April 29, 1929;
    decided May 28, 1929.)

      Walter H. Poliak, Carol W. King and George C. Vournas for appellant.
    The information gave no definition of the crime charged, afforded no opportunity to the defendant to prepare for trial and was and is no bar to a second prosecution. A conviction resting upon such an information cannot stand. (Hodgson v. Vermont, 168 U. S. 262; Rosen v. United States, 161 U. S. 29; Bartell v. U. S., 227 U. S. 427; Floren v. U. S., 186 Fed. Rep. 961; Winters v. U. S., 201 Fed. Rep. 845; People v. Hollenbeck, 52 How. Pr. 502; Reyes v. State, 34 Fla. 181; McNair v. People, 89 111. 441; Com. v. McCance, 164 Mass. 162; Com. v. Wright, 139 Mass. 382.)

      Joab H. Banton, District Attorney (Felix C. Benvenga and Edwin B. McGuire of counsel), for respondent.
    The information is sufficient. (People v. Flack, 216 N. Y. 123; People v. Seidenshner, 210 N. Y. 341; People v. Zabor, 44 Misc. Rep. 633; People ex rel. Livingston v. Wyatt, 186 N. Y. 383; People v. Dillon, 197 N. Y. 254; People v. Pease & Elliman, Inc., 219 N. Y. 627; People v. Clayton, 185 App. Div. 887.)
   Crane, J.

Title II of part V of the Code of Criminal Procedure relates to proceedings in the Courts of Special Sessions in the city of New York. Criminal actions in the Courts of Special Sessions must be prosecuted by information made by the District Attorney on returns filed by a magistrate, or information filed by the District Attorney by the direction of a grand jury. Section 742 gives the form of the information; it must state the crime with which the accused is charged, and set forth the act charged as an offense. This is the same form required for an indictment (Section 276 of the Code of Criminal Procedure). Like provisions must mean the same thing. An information must set forth the acts constituting the crime with the same clarity as an indictment.

The District Attorney concedes in his brief and conceded on the argument that the information in this case would not be sufficient as an indictment. (Rosen v. U. S., 161 U. S. 29; Bartell v. U. S., 227 U. S. 427.) The defendant is accused of the crime of unlawfully possessing indecent printed matter, and the act constituting the offense is stated as follows:

“ The said defendant on the 15th day of January, 1927, and thence continuously to the day of the making and filing- of this information, at the City of New York, in the County of New York, with intent to sell and show, unlawfully possessed certain lewd, lascivious, indecent, obscene and disgusting printed matter, whereof a more particular description would be offensive to this court and improper to be spread upon the records thereof, wherefore such description is not here given; against the form of the statute in such case made and provided, and against the peace of the People of the State of New York and their dignity.”

This is insufficient. The name and nature of the publication is not given, neither a description" of the printed matter; the dates, even, of the publication of the article are not specified. It is not necessary to set forth in detail the obscene matter, but it is necessary to describe it or identify it with some exactness. The defendant should be informed of the nature of the charge against him and of the act constituting it, not only to enable him to prepare for trial, but also to prevent him from again being tried for the same offense. On the above information the defendant would have to resort to the testimony or the record of the evidence to show- the crime for which he was tried, whereas the indictment or the information alone must be sufficient to show this fact.

In this case the defendant well knew the acts constituting the offense with which he was charged. On the hearing in the Magistrates’ Court the affidavits had sufficiently stated those acts. The information, however, filed pursuant to section 742 of the Code of Criminal Procedure, supersedes proceedings in the Magistrates’ Court (People v. McCarthy, 250 N. Y. 358; People ex rel. Phillips v. Hanley, 164 App. Div. 150; People ex rel. Hertz v. Warden, 154 App. Div. 888; People v. Kalbfleisch Co., 174 App. Div. 108); and the information as a matter of practice must state, as we have already said, the crime and the acts constituting it with the same particularity as an indictment. The information cannot be supplemented or pieced out by the affidavits in the Magistrates’ Court.

The judgment of conviction must be reversed. Forms and procedure still have their place and purpose in the administration of the law; without them we would have chaos. Much impatience is being shown with the technicalities of the law, and at times it is justified. The requirement that an indictment and an information must state the crime with which a defendant is charged, and the particular acts constituting that crime is more than a technicality; it is a fundamental, a basic principle of justice and fair dealing, as well as a rule of law. The judgment of the. Appellate Division and that of the Court of Special Sessions should be reversed and the information dismissed.

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

Judgments reversed, etc.


author: Cardozo, Ch. J.

text:
    Atlantic Fruit Company, Appellant, v. Hamilton Fire Insurance Company of the City of New York, Respondent. Atlantic Fruit Company, Appellant, v. Pacific Fire Insurance Company, Respondent. Atlantic Fruit Company, Appellant, v. Stuyvesant Insurance Company, Respondent.

      (Submitted April 30, 1929;
    decided May 28, 1929.)

      Robert M. McCormick and Ira L. Anderson for appellant.
    The plaintiff complied with all the terms of the policies. (Killeen v. General Accident, Fire & Life Assurance Corp., 131 Misc. Rep. 691; 224 App. Div. 719; Church v. Lafayette Fire Ins. Co., 66 N. Y. 222; Cornell v. Travelers' Insurance Co., 120 App. Div. 459; 192 N. Y. 587; Graham v. Home Insurance Co., 204 App. Div. 103; Coffaro v. Queens Ins. Co., 217 App. Div. 197; Rickerson v. Hartford Fire Ins. Co., 149 N. Y. 307; Michael
      v. Prussian National Ins. Co., 171 N. Y. 25; Atlantic Basin Iron Works v. American Insurance Co., 222 App. Div. 608; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Marcus v. United, States Casualty Co., 249 N. Y. 21; Globe & Rutgers Fire Ins. Co. v. Winter Garden Co., 9 Fed. Rep. [2d] 227.) Defendants waived the provisions of the policies as to making reports of the property at risk and other insurance. (Titus v. Glens Falls Ins. Co., 81 N. Y. 410; Walker v. Phoenix Ins. Co., 156 N. Y. 628; Armstrong v. Agricultural Ins. Co., 130 N. Y. 560; Gibson Electric Co. v. Liverpool, London & Globe Ins. Co., 159 N. Y. 418: Posnick- Nonas Co. v. U. S. Fidelity & Guaranty Co., 222 App. Div. 36; Home Insurance Co. v. Hightower, 22 Fed. Rep. [2d] 882.)

      Nicholas F. Lenssen and Martin A. Schenck for respondents.
    The sugar bags burned at Punta Gorda were not covered by the policy because they were not identified and located as at risk on records and in reports as required by the policy. (American Surety Co. v. Patriotic Assurance Co., 242 N. Y. 54; 243 N. Y. 35; Bryce v. Lorillard Fire Ins. Co., 55 N. Y. 240; Bahr v. National Fire Ins. Co., 80 Hun, 309.) The plaintiff breached the essential warranties of the. policy in regard to keeping daily records of values and locations and in regard to making monthly reports of the property at risk. Such breaches of warranty preclude recovery. (Pastene & Co. v. Irving National Bank, 249 N. Y. 272; Licht v. New York Indemnity Co., 250 N. Y. 211; Phillips-Jones Co. v. Fidelity & Deposit Co., 200 App. Div. 629; 235 N. Y. 524; Buckner v. Title Guarantee & Insurance Co., 144 App. Div. 326; 207 N. Y. 672; Pearlman v. Metropolitan Surety Co., 127 App. Div. 539; Harris v. General Accident F. & L. Assurance Corp., 187 N. Y. Supp. 291; Rosenberg v. People’s Surety Co., 140 App. Div. 436; Hunt v. Fidelity & Casualty Co., 99 Fed. Rep. 242; Royal Insurance Co. v. Kline Bros., 198 Fed. Rep. 468; Lozano v. Palatine Ins. Co., 78 Fed. Rep. 278; Home Ins. Co. v. Williams, 237 Fed. Rep. 171.)
   Cardozo, Ch. J.

The actions are on policies of fire insurance, issued in each case by a different insurer, but covering the same property and similar in form.

In each case the policy is described as an open policy floater.” The subject of the insurance is to be a fluctuating stock of merchandise,” as well as “ materials and supplies, store furniture, fixtures and appurtenances,” while contained in buildings and adjoining yards in the island of Cuba. The limit of liability for the contents of any one building and yard is to be $25,000. Specific insurance, if any, is first to be deducted.

The premium due to the insurer is subject to variation with variations in the coverage. A deposit premium of $250 paid at the beginning is to be adjusted thereafter according to the value of the property at risk from day to day. “ The insured shall keep a daily record of the total values and locations of the property at risk,” and of the “ specific or general insurance at the close of business every day,” and shall forward such reports monthly to W. Ward Smith, No. 1 Liberty Street, New York City.” Upon the termination of the policy “ the amounts at risk shall be averaged according to such reports and records,” and the premium due shall be figured on the average amount at risk so ascertained at the annual rate of. one per cent.” Provision is made, however, that any error or omission in rendering the monthly report of values shall not operate to the disadvantage of the assured hereunder.” If the premium due at the termination of the policy exceeds the deposit premium of $250, the assured is to pay the excess; if less, the insurer, is to return the difference.

The plaintiff is the owner of warehouses and mills in various provinces of Cuba. On March 18, 1922, a' fire in a warehouse at Punta Gorda destroyed over 79,000 empty sugar bags of the value approximately of $28,000. The .plaintiff sues to recover the amount of this loss. The defense is a breach of the covenant whereby records were to be kept and reports transmitted as to the property at risk.

The sugar bags destroyed arrived in Cuba about the end of December, 1921. They were not included in any ' of the monthly reports. Besides that omission there were many others, both in the reports and in the records. At first, the records were kept so as to show the daily averages, and the form of the reports was similar. Then, in July, 1921, the plaintiff came to the conclusion that this method was too burdensome. From that time on, without notice to the defendants, it made its reports upon a different basis. Instead of computing the daily average, it fixed the value on hand at the end of the month, added the purchases, deducted the sales, and reported the remainder as' the average. By concession, this method of calculation is inaccurate and inconsistent with the contract. There is testimony that records are in existence in Cuba from which a computation of the averages could be made, though only with great labor. No such records were exhibited upon the trial or upon a preliminary examination after full notice to produce them. Besides the failure to compute the averages truly, there were other defects as serious. Whole classes of material and merchandise were deliberately left out of the reports of values and locations. Thus, the plaintiff held in its warehouse large quantities of molasses, of petroleum and of cocoanuts. None of these was ever mentioned in any of the monthly statements. Sugar bags were at times mentioned, and at other times excluded. Indeed, the plaintiff’s secretary admits that his practice for the most part was to include only commissary stocks,” by which he meant the articles that the plaintiff held for sale as distinguished from material or other articles which it was using in the operations of its mills. Such articles equally with the commissary stocks were within the coverage of the policies, and as to all there should have been a record in the books and a report to the defendants. An insurer issuing such a policy has an interest in knowing the value and location of the property at risk to enable it to calculate the premium due from the insured, and to some extent for other purposes, as, for example, reinsurance (Union Ins. Soc. of Canton v. Wills & Co., [1916] 1 A. C. 281, 288). An intentional omission, if not itself a fraud, is at least such a departure from the contract as to supply an opportunity for fraud. Property so omitted will seldom be known to the insurer, and hence will seldom figure in the calculation of the premium. The insured, if there is no fire, saves the cost of the insurance, and in the event of a loss, rectifies the omission, and declares that what was lost was at the risk of the insurer. The effect of errors and omissions must be adjudged in the light of these and kindred possibilities. On the one side, the contention is that the only consequence of a failure to comply with the covenant in respect of records and reports is to give the insurer a claim for such additional premium as would be due if the records and reports were accurate. On the other, the contention is that flagrant disregard of the obligation of the covenant will vitiate the policy. The determination of this appeal involves a choice between the one view and the other.

We think a willful or persistent failure to make accurate records and reports of the values and locations of the property at risk is the breach of a promissory warranty defeating the insurance, though a forfeiture will not result from errors or omissions that are inadvertent and occasional. The effect of the covenant must be determined in the fight of the provision that “ any error or omission in rendering the monthly report of values shall not operate to the disadvantage of the assured hereunder.” We are to view this as a commentary or gloss upon the meaning of the covenant, restraining its operation as a warranty in the conditions thus excepted, but leaving it untouched in others. We do not hold with the defendants that errors or omissions, in order to be condoned, must have relation to the value of the property and not to the location. In our reading of the contract, the “ monthly report of values ” is merely a compendious reference to the covenant as a whole, the covenant whereby records are to be made and reports transmitted. It would be an over-strict construction of the policy that would vitiate the insurance if a stenographer through inadvertence had confused one mill with another, with the result that the values as reported would be right, but the locations wrong.- On the other hand, we do not read the proviso in respect of errors or omissions as excusing a willful and persistent failure to make reports or records in accordance with the covenant. What is excepted from the penalty of forfeiture is error or omission that is inadvertent or occasional. Thus read, the covenant and the proviso or exception are declaratory, taken together, of the existing rule of law. Already without the aid of an express exception, the courts had worked out a rule as to the effect of oversight or inattention in the preparation of reports where the coverage was open. The policies confirm what had been theretofore adjudged.

A question not dissimilar came before this court in Arnold v. Pacific Mutual Insurance Company (78 N. Y. 7), where the subject of the action was an open policy of marine insurance. The insurance was to cover goods consigned to the plaintiffs upon vessels “ from Santos, in Brazil, ‘ to New York, Baltimore or Boston direct, or via Hampton Roads for orders.’ ” There was a provision that risks applicable hereto ” were to be reported to this company for indorsement on the policy as soon as known to the assured.” A vessel that was lost had been reported as sailing on a direct voyage from Santos to New York. By oversight the report failed to state that the voyage was “ via Hampton Roads for orders.” The court held that the error, being wholly inadvertent, did not vitiate the policy. If the assured willfully or

fraudulently refused to report a risk, they could not claim that it was yet covered by the policy.” But “ if by accident or mistake, or some unavoidable necessity,” the risk was not reported before loss, the declaration would be effectual if made thereafter. There are decisions in the English courts that lay down a like rule as to the effect of inadvertent error (Stephens v. Ins. Co., L. R. 8 C. P. 18, 23; Arnould on Marine Ins., vol. 1, §§ 187, 188). Indeed, for them the subject is now covered by the provisions of a declaratory statute (Marine Ins. Law of 1906). Section 29, which has to do with floating policies, is to the effect that declarations of shipment shall be made to the insurer. These declarations “ must, in the case of goods, comprise all consignments within the terms of the policy, and the value of the goods or other property must be honestly stated, but an omission or erroneous declaration may be rectified even after loss or arrival, provided the omission or declaration was made in good faith ” (See Arnould on Marine Ins., vol. 1, § 186). On the other hand, the rule has been laid down that a failure to send any report at all, as distinguished from a mere error or omission in the contents of a report, is the breach of a promissory warranty, entailing, like the breach of warranties generally, the penalty of forfeiture ( Union Ins. Soc. of Canton v. Wills & Co. [1916], 1 A. C. 281). To such a situation the statute with its rule of condonation, has been thought to be inapplicable. Lord Parmoor, speaking for the Judicial Committee of the Privy Council, defines the principle of division. “It is not,” he says, “ a case of omission or error in a declaration ” but “ a case in which no declaration has been made within the terms of the contract.” The application of the statute in such conditions would be “to deprive the insurers of the benefits of an express warranty ” and to abrogate the principle that they “ are not liable unless the warranty has been exactly complied with.” We do not need to consider whether there would be a like ruling in this court if the failure to make a report were found to be the result of excusable mistake. Dicta in the Arnold Case {supra, at p. 13) give color of support for a less rigorous conclusion. We cannot doubt, however, that forfeiture must follow where the failure to report has been persistent and deliberate.

Such, we think, was in this instance the departure from the covenant to be charged to this insured. By its own showing, it calculated averages in a manner inconsistent with the contract, and this because compliance with the contract had been found to be troublesome. The breach is not excused by saying that it was the act of subordinates in Cuba. If the plaintiff left to subordinates the supervision of its records and the preparation of data for its reports, it must abide by what they did (Critten v. Chemical Nat. Bank, 171 N. Y. 219, 230). Again, by its own showing, it excluded from its reports property of great value, on which a premium was due, and this because it preferred, at least in advance of any loss, to confine its reports for the most part to commissary stocks.” Part of the property thus omitted was the very property destroyed. A breach of. covenant so willful, so substantial and persistent, puts an end to the insurance. It is like the failure to keep books of account or to preserve them in a fireproof safe in cases where a duty of that order is laid upon an insured for the protection of an insurer (Licht v. N. Y. Ind. Co., 250 N. Y. 211; Royal Ins. Co. v. Klein, 198 Fed. Rep. 468; Wright v. Union Ins. Co., 13 Fed. Rep. [2d] 613). The policy is forfeited if the warranty is breached.

The defendants make the additional point that the reports were defective in failing to enumerate the specific and general insurance as required by the contract. The amount of such insurance was known, however, to Mr. Smith, who was designated in the policies as the man to whom the reports were to be forwarded, and in his own reports to the defendants he apprised them of the facts, supplying them with a list of policies general and specific. The failure to state the insurance in the reports authenticated by the plaintiff was apparent on the face of the reports themselves, which were received without objection. There was thus a course of dealing, which was substituted by tacit consent for literal performance. As to that requirement of the warranty, there has been a waiver of the forfeiture.

In each action tho judgment should be affirmed with costs.

Pound, Crane, Lehman, Kellogg, O’Brien and Herbs, JJ., concur.

Judgments affirmed.


author: Kellogg, J.

text:
    The People of the State of New York, Respondent, v. Frank Shaken, Appellant.

      (Submitted April 16, 1929;
    decided May 28, 1929.)

      John T. Loughran and Philip Wolinsky for appellant.
    The chattels in question were machinery or fixtures ■ — ■ instrumentalities that are not “ tools or implements of trade.” (Danforth v. Woodward, 10 Pick. 423; Buchanan v. Exchange Fire Ins. Co., 61 N. Y. 28; Brewer v. Ford, 59 Hun, 17; Lord v. Johnson, 34 Barb. 364; Seeley v. Gwillim, 40 Conn. 103; Knox v. Chadbourne, 28 Me. 160; Doty v. Oriental Print Works Co., 28 R. I. 372; Peyton v. Farmers’ Nat. Bank, 261 Fed. Rep. 326; Webber v. Franklin Brewing Co., 123 App. Div. 465; 198 N. Y. 509; Camardella v. Holmes, 97 App. Div. 120.) The transaction in question is not within the spirit of section 2400 of the Penal Law. (Rosa v. Butterfield, 33 N. Y. 665; People v. Warden, 176 N. Y. 577; London Realty Co. v. Riordan, 148 App. Div. 854; 207 N. Y. 264; People v. Schultz, 149 App. Div. 844; 206 N. Y. 627.) Section 2400 of the Penal Law must be strictly construed. So construed, it has here no application. (People v. Phyfe, 136 N. Y. 554.)

      Joab H. Banton, District Attorney (Archibald Firestone of counsel), for respondent.
    The chattels in question were such tools and implements of trade as to come within the purview of section 2400 of the Penal Law. (Patten v. Smith, 4 Conn. 450; Davidson v. Hannon, 67 Conn. 312; St. Louis Type Foundry v. Taylor, 35 S. W. Rep. 691; Green v. Raymond, 58 Tex. 80; Bliss v. Vedder, 7 Pac. Rep. 599; Jenkins v. Mc Nall, 27 Kans. 532; Prather v. Bobo, 15 La. Ann. 524; Louis Type Foundry v. International Live Stock, etc., Co., 74 Tex. 651; Harris v. Townley, 161 S. W. Rep. 5.) This transaction comes squarely within the spirit of section 2400 of the Penal Law. (Bliss v. Vedder, 7 Pac. Rep. 599; Sally v. Watters, 17 Ala. 482.) Section 2400 of the Penal Law need not be strictly construed. (People v. Clougher, 246 N. Y. 106; Cooper Snell v. State of New York, 230 N. Y. 249.)
   Kellogg, J.

The defendant loaned a sum of money, in excess of $200, at a usurious rate of interest, to Charles W. Megonegal, who has described himself as the owner of a “ print shop.” For the better security of the loan, the defendant took from Megonegal a chattel mortgage upon certain articles contained in the print shop, which are described in the instrument as follows: “ One 10 x 15 C. & P. Printing Press with motor & equipment; One 30" C. & P. Power Paper Cutter; Two City Stands with all type; One Hamilton Cabinet with all type; One Vecto Heater Furnace; Two Electric Fans; All furniture, fixtures, chattels and supplies.” Section 2400 of the Penal Law provides: “A person who takes security, upon any household furniture, sewing machines, plate or silverware in actual use, tools or implements of trade, wearing apparel or jewelry, for a loan or forbearance of money, * * * conditioned upon the payment of a greater rate than six per centum per annum * * * is guilty of a misdemeanor. ’ ’ The defendant was convicted of a violation of the section upon the theory that, in accepting the mortgage from Megonegal, he had taken security, for a usurious loan, upon “ tools or implements of trade.”

The section incorporates the provisions of Penal Code, section 378, as amended by chapter 72, section 1, of the Laws of 1895, and chapter 661, section 1, of the Laws of 1904. Prior to the year 1895, section 378 made the mere taking of usury, irrespective of the giving of any pledge, a criminal offense. (Cook’s Criminal & Penal Codes, 1894.) The amendment of 1895 added a provision making criminal the loaning of personal credit at a usurious rate, where certain named articles were taken in pledge therefor. The amendment of 1904 eliminated, in their entirety, the provisions which declared the taking of usury to be a crime, and substituted therefor provisions in respect to the taking of security upon certain named property for the protection of an usurious loan. These identical provisions, under the heading “ Taking security upon certain property for usurious loans,” instead of the heading “ Taking security for usurious loans,” now constitute section 2400 of the Penal Law (Cons. Laws, ch. 40). In the year 1895 the Legislature had passed an act making criminal the exaction of a greater interest rate than six per cent, upon any loan of a less sum than two hundred dollars, made by any person or corporation, other than a corporation specifically empowered by the act to make such minor loans at a higher rate. (Laws of 1895, ch. 326.) These provisions, in substantially the same form, now appear in section 368 of the Banking Law (Cons. Laws, ch. 2). Thus, although the taking of usury generally has ceased to be criminal, through the amendment of 1904, its taking, without security given, in the instance of certain minor loans, has remained an offense.

Evidently, the Legislature has conceived that, in the practice of exacting usury from large borrowers, there lay no evil to be corrected. Likewise, was there none in taking security, for the protection of a usurious loan, upon personal property other than chattels necessary to the maintenance of life. On the other hand, persons, so necessitous that they must borrow paltry sums; persons, impelled by actual want to pledge the bare necessities of life; these must be protected from oppression by the usurer. Accordingly, it was made a crime to take usury upon loans of sums less than two hundred dollars. So, also, it was rendered criminal for the usurer to take in pledge a borrower’s “ household furniture,” his “ plate or silverware in actual use,” his “ wearing apparel,” his tools or implements of trade.” It was the legislative concept that, for the public good, there must be preserved to the needy borrower, free from the risk of mortgage seizure, such articles as a bed in which to sleep, a stove at which to cook, a table and utensils with which to eat, and clothes to cover his nakedness. Likewise, the borrower should similarly be protected in the possession of the tools of his trade. They are “ necessary for upholding life ” (Henry v. Sheldon, 35 Vt. 427); they “ enable the debtor to obtain a livelihood for himself and family.” (Martin v. Buswell, 108 Me. 263.) The legislative thought in respect to the evil inhering in the pledge of an artisan’s tools finds apt expression in the familiar quotation: “No man shall take the nether or the upper millstone to pledge: for he taketh a man’s life to pledge.” (Deuteronomy, ch. 24, verse 6.) Self-evidently, legislative protection, through these criminal statutes, against the taking of usury, was intended to be cast about none other than the poor and necessitous. There was no thought to protect the opulent. Equally, it was the legislative intent narrowly to restrict the class of articles which might not be pledged in usury. There was no thought to save to the manufacturer or trader his accumulated assets. The costly machinery of an extensive business was not entitled to protection; only the tools by which an artisan earned a livelihood should be secured from seizure. These were the clear legislative purposes; in the light of them must the phrase “ tools or implements of trade,” contained in the section, be interpreted.

In the States of Massachusetts and Vermont it has been held that the printing presses, types and cases of a printer are not “ tools ” within the meaning of statutory provisions exempting from attachment and execution the tools of any debtor. (Danforth v. Woodward, 10 Pick. 423; Buckingham v. Billings, 13 Mass. 81; Spooner v. Fletcher, 3 Vt. 133.) In Buckingham v. Billings (supra) the court said that it was led to the conclusion that the term tools was used in the exempting statute to designate those implements which are commonly used by the hand of one man, in some manual labor necessary for his subsistence. In Spooner v. Fletcher (supra) the court said that the word tools implied instruments of small value, used with the direct application of manual strength; that it was not to be supposed that the Legislature ever intended to grant privileges or advantages for the amelioration of the condition of the poor and yet have the opulent turn those same grants to the enhancing of their wealth. On the other hand, in the States of Connecticut, Kansas and Louisiana it has been held that the printing presses of a printer are tools within the meaning of exempting statutes. (Patten v. Smith, 4 Conn. 450; Jenkins v. Mc Nall, 27 Kans. 532; Prather v. Bobo, 15 La. Ann. 524.)

A reason for the divergence in decision will be found in a difference of judicial opinion as to whether the exempting statutes should be construed strictly or liberally. Thus, the Massachusetts court said of the exempting statute under consideration: “ This statute, as it is in derogation of the common rights of creditors to secure their debts out of the property of their debtors, ought to have a strict construction; according to the true intent and meaning of the legislature, if that can be ascertained.” (Buckingham v. Billings, supra.) On the other hand, the Connecticut court said: “As a general legal truth, a statute in derogation of the common rights of creditors, ought to receive a strict construction; but if it concern the public good, it should be construed liberally. (Alexander Powlter’s Case, 11 Co. Rep. 17; The King v. The Archbishop of Armagh, 1 Stra. 517.) Now, the public has a deep interest in the prosperity of mechanical employments, and a sufficient corrective is interposed by the prescribed enquiry, whether the articles claimed to be exempted are necessary.” (Patten v. Smith, supra.)

In Ford v. Johnson (34 Barb. 364) a statute then in force, exempting from levy and sale on execution “ necessary household furniture and working tools,” was under consideration. The court said: “And it is undoubtedly the duty of the court, since these acts concern the public good,’ to give them an enlarged and liberal construction.” Our pi’esent statute exempts from execution the tools and implements of a mechanic, necessary to the carrying on of his trade, not exceeding in value one hundred dollars.” (Civ. Prac. Act, sec. 665, subd. 6.) Even if, in an appropriate case, we should hold that a power-driven printing press and paper cutter were within these provisions for exemption, it does not follow that we ought to hold that the articles named are “ tools or implements of trade ” within the meaning of the statute presently considered. In the supposed case we would be dealing with a civil statute which might “ concern the public good,” and, therefore, should be liberally construed; whereas we are now dealing with a criminal statute which ought narrowly to be interpreted. Moreover, the civil statute exempts the tools and implements of a mechanic " not exceeding in value one hundred dollars ” and'none other. Thus the class of tools exempted is narrowly limited to implements of minor value, and the danger that an opulent debtor might employ the statutory exemptions to increase the capital of a business is avoided; whereas in the statute under consideration, no limiting value is placed upon the tools and implements of a trade, to receive a pledge of which is forbidden. For a limitation of the class, we may rely upon no qualifying words; we must depend upon the restrictive qualities which the words “ tools or implements of trade ” may themselves import.

It is well settled that a criminal statute should narrowly be construed; that acts otherwise innocent and lawful, do not become crimes, unless there is a clear and positive expression of the legislative intent to make them criminal. (People v. Phyfe, 136 N. Y. 554; Burks v. Bosso, 180 N. Y. 341.) In People v. Phyfe the court said: The citizen is entitled to an unequivocal warning before conduct on his part, which is not malum in se, can be made the occasion of a deprivation of his liberty or property.” In construing a statute such as this, so that it will have presented unequivocal warning ” to a citizen that his intended act is criminal, we must hold that those articles which may not be accepted in pledge for a usurious loan are the “ tools or implements of trade ” which in popular usage are commonly regarded as such. In that usage a “ tool ” is an “ instrument of manual operation ” (Oxford Dictionary; Webster’s International Dictionary); it is an implement commonly used by the hand of one man in some manual labor, necessary for his subsistence.” (Bouvier’s Law Dictionary.) “ We are to give words their common and ordinary meaning, unless it is obvious from the statute, that the evil to be suppressed, or remedy to be advanced, requires the construction should be limited or enlarged; and the word tool, by our best lexicographers, is defined any instrument of manual operation.” (Spooner v. Fletcher, supra.) We think that it was in this restricted sense that the Legislature used the words “ tools or implements of trade ” in the statute under consideration.

The record contains no testimony describing the nature of the mortgaged printing press and the mortgaged paper cutter, nor describing their characteristic use. The one is a “ printing press with motor & equipment; ” the other is a power paper cutter.” Evidently, they are machines which are power driven. Whether the mechanism is simple or complicated; whether the machines are operated by one or by many; whether they were at any time operated by the mortgagor; as to these matters we are not informed. The other articles mentioned, such as types and shop furniture, are clearly employed as auxiliaries to the use of the press and the cutter, and by that use must be judged. We think that,. under the proof given in this case, none of the articles were “ tools or implements of trade.” Therefore, in taking a mortgage thereupon, the defendant was not guilty of a violation of section 2400 of the Penal Law.

The judgment of the Appellate Division and that of the Court of Special Sessions should be reversed and the information dismissed.

Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ., concur.

Judgments reversed, etc.


text:
    In the Matter of the Accounting of Morton Rosenberg et al., as Executors and Trustees under the Will of Charles Rosenberg, Deceased. Ethel Mayer et al., Appellants and Respondents; Morton Rosenberg, Respondent and Appellant; Barbara Rosenberg, Respondent.

      (Argued April 25, 1929;
    decided May 28, 1929.)

      Abel E. Blackmar, Harold R. Thorn and Carl D. Isaacs for Ethel Mayer et al., appellants and respondents.
    The executor, Morton Rosenberg, is not entitled to compensation in excess of executor’s and trustee’s commissions for carrying on the business after his father’s death. (Matter of Hayden, 54 Hun, 197; 125 N. Y. 776; Matter of Froelich, 122 App. Div. 440; 192 N. Y. 566; Matter of Popp, 123 App. Div. 2; Clausen v. Puvogel, 114 App. Div. 455; Collier v. Munn, 41 N. Y. 143; Matter of Dummett, 38 Misc. Rep. 477.) Morton Rosenberg was not a partner with his father, the testator, in the business carried on under the name of Model Knitwear Manufacturing Company. (National Cash Register Co. v. Remington Arms Co., 242 N. Y. 99; Ely v. Holton, 15 N. Y. 595; Benton v. Wickwire, 54 N. Y. 226; Matter of Prime, 136 N. Y. 347; Homnyack v. Ins. Co., 194 N. Y. 456.)

      George W. Wickersham, Edward A. Niles and Henry A. Blumenthal for Morton Rosenberg, respondent and appellant.
    The surrogate’s finding of partnership was correct and should be reinstated. (Stewart v. Robinson, 115 N. Y. 328; Bell v. Hepworth, 134 N. Y. 442; Cahill v. Haff, 248 N. Y. 377.) The referee and the Appellate Division properly awarded compensation for Morton Rosenberg’s services outside of his official duties. (Matter of Hayden, 54 Hun, 197; Matter of Froelich, 122 App. Div. 440; Collier v. Munn, 41 N. Y. 143; Matter of Popp, 123 App. Div. 2; Clausen v. Puvogel, 114 App. Div. 455; Matter of Dummett, 38 Misc. Rep. 477.)

      C. Alexander Capron for Barbara Rosenberg, respondent.
   Kellogg, J.

Charles Rosenberg, prior to February, 1916, was engaged in the business of merchandising knit goods, which he conducted under the name of Model Manufacturing Company. Morton Rosenberg, his son, was employed in the business as a traveling salesman. In the years 1913, 1914 and 1915 the business was conducted at a net loss, which, in 1915, exceedei ,25,000. On February 1st, 1916, Morton Rosenberg was installed as business manager and thereafter, until the death of his father on July 4th, 1917, had exclusive charge of the affairs of the company. During these seventeen months the business showed a net profit of $33,559.35. With the knowledge and consent of Charles Rosenberg, one-half of the profits thus earned, or $16,779.67, was credited, on the books of the company, to Morton Rosenberg. Charles Rosenberg left a will in which he named as executors his wife, Barbara Rosenberg; his son, Morton Rosenberg; and his daughter, Dorothy R. Hyams. He made express provision that they might continue the business as long as they deemed it expedient so to do. The executors determined to go on with the business, and Morton Rosenberg continued in the exclusive management thereof. The business expanded greatly, and was very successful. From July 4, 1917, to February 1, 1918, the profits exceeded $23,000; from February 1, 1918, to December 31, 1918, $39,000; for the year 1919, $60,000; for the year 1920, $29,000; for the year 1921, $38,000; for the year 1922, $35,000; and for the year 1923, $23,000. During all these years one-half of the profits earned was credited to the account of Morton Rosenberg.

A proceeding was begun in Surrogate’s Court, in June, 1920, by one of the children of Charles Rosenberg, to compel an accounting by the executors. Thereupon the executors petitioned for a voluntary accounting, and filed their accounts in Surrogate’s Court. Objections to the account were filed by several of the children of Charles Rosenberg. Particular objection was made to the allowanee to Morton Rosenberg of credits for one-half the profits of the business, from the date of the death of Charles Rosenberg to the date of the filing of the account. The surrogate determined that Morton Rosenberg, at the time of the death of his father, Charles Rosenberg, was an equal partner in the business; that, after the death of his father, he continued to be the owner of one-half of the business; that the estate was the owner of the other half; that each was entitled to one-half of the profits. In December, 1923, the Appellate Division, on an appeal to it, made an intermediate order appointing a referee to take further proof upon the issue of partnership. In April, 1925, the Appellate Division, upon a report to it by the referee, made a further order adjudging that Morton Rosenberg and his father, Charles Rosenberg, had not been partners; that the relationship between them had been that of master and servant; that Morton Rosenberg was not entitled to one-half the net profits arising from the business during the administration of the estate. It referred the matter back to the referee to take further proof as to the reasonable value of the services performed by Morton Rosenberg in managing the business of the company for the estate. In June, 1927, the Appellate Division, upon a further report from the referee, made a final order adjudging that Morton Rosenberg and Charles Rosenberg had not been partners, and that Morton .Rosenberg was not entitled to one-half of the profits arising from the business after the death of Charles Rosenberg. However, it determined that Morton Rosenberg, in addition to his commissions as executor, for his services in managing the business, was entitled to the sum of $7,500 per year throughout the period since the death of his father. It modified the decree of the surrogate accordingly. From this order Morton Rosenberg appeals, asserting that he is entitled to be credited with one-half of the profits of the business since the death of Charles Rosenberg. The contesting children appeal, asserting that Morton Rosenberg was not entitled to be paid for his services at the rate of $7,500 a year, or otherwise than through an award of commissions to him as executor.

There is ample testimony that Morton Rosenberg, during the period from February 1st, 1916, to July 4th, 1917, was the partner of Charles Rosenberg. Samuel Blaufeld testified to a conversation with Charles Rosenberg in the latter part of the year 1915. Charles said that he was having difficulty in holding Morton, who wished to branch out for himself; that he would like to have Morton and the witness take over the business. Later, on the refusal by the witness to enter a partnership with Morton, Charles said that he would himself form a partnership with his son. In the latter part of 1916 Charles told the witness that he and Morton had had a wonderful year; that they had made about $25,000 the first year they were in business; that it would not be long before Morton would have his partnership paid for. Moriz Glauber testified that Charles had told him of his offer to the witness Blaufeld; that he had later changed his mind and taken Morton into business; that he had concluded to give Morton, as partner, a one-half interest in the business; that the partnership was to begin on February 1st, 1916! In the latter part of 1916 Charles told the witness that he and Morton had each made during the year a profit of $12,000. Harry Hammel, for many years a bookkeeper of the Model Manufacturing Company, testified that Charles Rosenberg had on many occasions told him that Morton was his partner. John J. Clark, an attorney, testified that in 1916 Charles Rosenberg told him that he had given Morton a half interest in the business; that Morton had p-ut life into the thing; that Morton’s share for the year was more than $12,000. Alvin Schwartz testified that in 1915 Charles Rosenberg had told him that he intended to make Morton a partner; that in 1916 Charles told him that Morton was then his partner.

In corroboration of the admissions thus made by Charles Rosenberg, there is the undisputed fact that from February 1st, 1916, to July 4th, 1917, Morton Rosenberg, with the knowledge of Charles Rosenberg, and by his direction, was credited, on the books of the Model Manufacturing Company, with one-half of the net profits of the business, earned by the company during that period. The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment: * * * as wages of an employee or rent to a landlord.” (Partnership Law [Cons. Laws, ch. 39], § 11, subd. 4.) There is no evidence that the profits credited to Morton Rosenberg were received as wages. On the contrary, the evidence indicates that the profits were received by Morton Rosenberg as partnership profits precisely as they were received by Charles Rosenberg. There is corroborative proof of the admissions, also, in the fact that on the first day of February, 1916, at the direction of Charles Rosenberg, an entirely new set of books was opened for the Model Manufacturing Company; that thereafter, in contrast with the previous usage, no items relating to the private matters of Charles Rosenberg were entered in the books; that no items except those relating to the conduct of the business of the company were entered. The proof seems amply sufficient, therefore, to raise the statutory presumption, arising from the sharing of profits, that the relationship of partners existed between Charles Rosenberg and Morton Rosenberg.

There is, also, strong proof that there was an agreement between Charles Rosenberg and Morton Rosenberg that they would bear equally the losses of the business. The witness Blaufeld testified that in his conversation with Charles Rosenberg at the end of the year 1916, the latter said that Morton, while receiving one-half the profits, was not to draw thereupon except for necessary personal expenses. The witness stated: “ But he did say, also,— he was very firm about this; he said the balance of the money would have to remain in the business in order, should there be any losses of any kind, that Morton was to stand his part of the losses just the same.” The witness Alvin Schwartz heard a conversation between Charles' and Morton, in relation to the traveling expenses of salesmen, in which the following statement was made by Charles: “ Whatever you say goes, you lose half the same as I do.” The witness Harry Hammel related a conversation with Charles in which the latter said that “ Morton Rosenberg could not withdraw the amount to his credit; ” that it. had to be left there at the risk of the business.”

That there was an agreement between Charles Rosenberg and Morton Rosenberg that the latter would leave in the business his share of the profits as security for the payment by him of one-half the losses, is corroborated by the entries in the company books. On February 1st, 1916, when the partnership originated, if ever, the newly opened books of the company credited Charles Rosenberg with $18,239.93, the amount of capital left by him in the business. Morton Rosenberg was credited with $182.60, then owed him by the company. On February 1st, 1917, the profits earned by each had been $12,995.94. Of his share Morton had withdrawn during the year the sum of $2,416.92. The balance of his profits had not been withdrawn. Accordingly the books show, under the heading “ Capital Liabilities,” as of January 31, 1917, an item Charles Rosenberg $36,102.95,” and immediately thereunder the item Morton Rosenberg $10,761.62.” From February 1st, 1917, to July 4th, 1917, the date of the death of Charles Rosenberg, one-half the net earnings was $3,783.73. Morton’s withdrawals had been $1,509.40. Again, under “ Capital Liabilities ” Charles Rosenberg is credited with $49,890.10 and Morton Rosenberg with $13,035.95. These entries were made under the personal supervision and direction of Charles Rosenberg.

For several years after the death of Charles Rosenberg the annual net profits of Morton Rosenberg received similar bookkeeping treatment. From July 4th, 1917, to January 31st, 1918, the net profits to Morton, less withdrawals, were such that, on the latter date, his accumulated savings remaining in the business were $28,188.37. Accordingly, on the balance sheet for January 31st, 1918, appearing in the books of the company, Morton Rosenberg, under the item Capital,” is credited with $28,188.37. From January 31st, 1918, to December 31st, 1918, the net profits to Morton, less withdrawals, were such that on the latter date his accumulated savings remaining in the business were $50,841.98. Accordingly, on the balance sheet for December 31st, 1918, under the item “ Capital,” Morton is credited with $50,841.98. From December 31st, 1918, to December 31st, 1919, the net profits to Morton, less withdrawals, were such that, on the latter date, his accumulated savings remaining in the business were $53,543.24. Accordingly, on the balance sheet for December 31st, 1919, under the item Capital,” Morton is credited with $53,543.24.

What could have persuaded Morton to leave in the business this large sum of money? It was not a loan; it earned no interest. Why were his annual net profits, both during the period from February 1st, 1916, to July 4th, 1917, when his father was alive, and during the subsequent period from the latter date to December 31st, 1919, credited under the legend Capital ” or “ Capital Liabilities? ” If his earnings became Capital ” by his consent, and with the assent of his father, as clearly appears, then Morton was complying with that term of the agreement between the two, disclosed by the witness Blaufeld, which required Morton to leave his profits in the business “ to stand his part of the losses.” Indeed, without the testimony of any of the witnesses as to the express admissions made by Charles Rosenberg, the entries made during the first period, with the consent of both the father and the son, are virtually conclusive to establish that the two were partners. How else could Morton Rosenberg have become a creditor for a Capital ” asset than as a full partner in the firm of the Model Manufacturing Company? Equally, the entries made during the second period conclusively establish that Morton continued to furnish capital to the business in the character of a partner with the estate of his father.

It is said that the two could not have been partners, because they did not equally contribute and own the capital. Thus, at the outset, the contributions of Morton were $182.60; the contributions of Charles, $18,239.93. It is not necessary to the constitution of a general partnership that the partners should be proportionate joint owners of its assets. The capital may vest and remain in one or more of the partners who have furnished it. (Brigham v. Dana, 29 Vt. 1, 10; Orvis v. Curtis, 157 N. Y. 657, 662; Moore v. Huntington, 7 Hun, 425.) Nor is it singular that Charles Rosenberg should have consented to an equal partnership with Morton. The business had been a failure for three years. Charles took little interest therein and could not make it a success. His one chance, not to lose all the money invested, was to join Morton as his partner and contribute to the joint venture the moneys already invested. How well Charles Rosenberg budded in making the arrangements the event has proven.

The contestants cite the fact that for two years after the death of Charles Rosenberg, Morton was credited on the books of the company with an annual salary of $7,500 for managing the business. It is argued that this indicates that Morton was an employee, not a partner. The premise of the argument is faulty. It omits to note that during these two years Morton was also credited with profits to the extent of more than $30,000. With that fact remembered, the salary credit greatly helps Morton Rosenberg’s case: It shows that he was credited as part owner with half the profits, and as manager of the estate, for his services thereto, with the sum of $7,500 annually as salary. It may be remarked in passing that the salary credit was subsequently canceled and the amounts named have never been withdrawn.

It would seem to be conclusive that Morton Rosenberg and Charles Rosenberg entered into an agreement whereby each was to share equally the benefit of profits and the burden of losses, and that the agreement created a partnership between them. Nothing tends to refute this conclusion except some of the acts of Morton himself. After the death of his father, Morton made income tax reports in which he failed to indicate certain moneys received by him as partnership income. Also, on August 23d, 1919, Morton, together with his co-executors, signed a certificate that the business of the Model Manufacturing Company was owned by the estate of Charles Rosenberg, and filed the same as required by section 440 of the Penal Law. In regard to the first it may be said that the reports were made up by the company bookkeeper, and Morton signed, relying upon his information and knowledge of the subject. As to the certificate, as well as the reports, it may be said that whether or not there was a partnership was in great part a legal question; that as to this question Morton relied upon an attorney who seems to have had no just convictions upon the subject. Thus, the contestants’ witness Lipschitz relates a conversation which he overheard between Morton Rosenberg and Sam Hyams. Hyams asked Morton what the lawyer said. Morton replied: He said, I am no partner, but I should claim 50%.” Upon a hearing before the surrogate, held as late as January, 1921, after an entire volume of testimony had been taken, Morton’s attorney was still uncertain whether there was a partnership or not. He then said to the court: “ I am not certain in my own mind now just the position to take on that proposition — whether it is a salary or a partnership or what it is. It is a close question.” If a counselor at law could not recognize in the proof the definite tokens of partnership, viz., an equal sharing of profits and of losses, it does not seem fair to decide against his client because his view of the law governing his relationship with his father was mistaken.

We think that the Appellate Division was in error in finding that there was no partnership and that Morton Rosenberg was not entitled to be credited with one-half the profits of the business after the death of Charles Rosenberg until its affairs were liquidated. We think also that the Appellate Division was in error in finding that Morton Rosenberg, for his services in managing the interest of the estate in the company business, was entitled to an allowance in addition to commissions as executor. (Matter of Hayden, 54 Hun, 197; affd., 125 N. Y. 776, on opinion of Barker, P. J., below; Matter of Froelich, 122 App. Div. 440; affd., 192 N. Y. 566.)

The order of the Appellate Division dated June 10, 1927, should be modified accordingly and, as modified, affirmed, with costs to appellant Morton Rosenberg in this court and in the Appellate Division, payable out of the estate.

Cardozo, Ch. J., Pound, Crane, Lehman, O’Brien and Hubbs, JJ., concur.

Ordered accordingly.


author: Htjbbs, J. Lehman, J.

text:
    Phoenix Indemnity Company, Respondent, v. The Staten Island Rapid Transit Railway Company, Appellant.

      (Argued April 30, 1929;
    decided May 28, 1929.)

      Frederick E. Wood for appellant.
    That portion of section 29 of the Workmen’s Compensation Act which gives to an employer or insurance carrier a cause of action against a third party who has wrongfully caused the death of an employee is in.contravention of the due process clause of the State and Federal Constitutions. (Exchange M. I. Ins. Co. v. C. H. Gas & Elec. Co., 243 N. Y. 75; Matter of Brennan, 160 App. Div. 401; Wagner v. Clausen, 146 App. Div. 70; Wethers v. N. Y. Central R. R. Co., 120 Misc. Rep. 830; Insurance Co. v. Brame, 95 U. S. 754; Interstate T. & T. Co. v. P. S. E. Co., 90 Atl. Rep. 1082; Ives v. South Buffalo Ry. Co., 201 N. Y. 271.) The provision is also unconstitutional in that it denies appellant the equal protection of the law. (Quaker City Cab Co. v. Commonwealth, 277 U. S. 389; Gulf, Colorado & Santa Fe Railway Co. v. Ellis, 165 U. S. 150; Cotting v. Kansas City Stock Yards Co., 183 U. S. 79; Atchinson, Topeka & Santa Fe Ry. Co. v. Vosburgh, 238 U. S. 56; Connolly v. Union Sewer Pipe Co., 184 U. S. 540; Yick Wo v. Hopkins, 118 U. S. 356; Barbier v. Connolly, 113 U. S. 27; Matter of City of Rochester v. Holden, 224 N. Y. 386; People v. Beakes Dairy Co., 222 N. Y. 416; Barns v. Dairymen’s League Co-operative Association, Inc., 220 App. Div. 624.)

      Jeremiah F. Connor for respondent.
    The portion of section 29 of the Workmen’s Compensation Law, under which the plaintiff has recovered the judgment herein against the defendant, does not contravene the due process clauses of the State and Federal Constitutions. (Matter of McNamara v. New York State Railways, 233 N. Y. 681; New York State Railways v. Schuler, 265 U. S. 379; Travelers Insurance Co. v. Padula Co., 224 N. Y. 397; Matter of Zirpola v. Casselman, Inc., 237 N. Y. 367; Travelers Ins. Co. v. Post & McCord, 128 Misc. Rep. 626; Rhodes' v. Sperry & Hutchinson Co., 193 N. Y. 223; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514; Noble State Bank v. Haskell, 219 U. S. 104.) The provision of section 29 is not unconstitutional because of any denial of the equal protection of the law. (People v. Braunstein, 248 N. Y. 308; Jeffrey Manufacturing Co. v. Blagg, 235 U. S. 571.)
   Htjbbs, J.

In 1927 Joseph Perroth was an employee of one Anderson, who had insured himself with the plaintiff insurance company against liability in compliance with the provisions of the Workmen’s Compensation Law (Cons. Laws, ch. 67, as amended). Perroth, while acting within the scope of his employment, was killed through the negligence of the defendant, without any negligence on his part. He left him surviving a dependent, his widow. The administratrix of Perroth commenced an action against the defendant to recover damages because of the negligence of the defendant in causing Perroth’s death. That action was settled by the defendant paying to the administratrix the sum of fifteen thousand dollars and receiving a general release. The amount paid by the defendant was in excess of the amount which said dependent widow, Perroth, would have been entitled to receive as compensation under the provisions of the Workmen’s Compensation Law.

Thereafter, and prior to the commencement of this action, two awards of five hundred dollars each were made in favor of the State Treasurer against Anderson and the plaintiff, his insurer, jointly, under subdivisions 8 and 9 of section 15 of the Workmen’s Compensation Law. The awards were paid to the State Treasurer by the insurer, the plaintiff herein.

This action is brought pursuant to section 29 of the Workmen’s Compensation Law, as amended by chapter 615 of the Laws of 1922, to recover from the defendant the sum so paid by the plaintiff to the State Treasurer. In an agreed statement of facts two questions were submitted to the Appellate Division for decision:

First. Was the State Treasurer entitled to the awards made in his favor and paid by the plaintiff?

Second. If the first question is answered in the affirmative, is the plaintiff entitled to recover the amount of said awards from the defendant by reason of section 29 of the Workmen’s Compensation Law?

The Appellate Division answered both questions in the affirmative and judgment was entered in favor of the plaintiff.

At the time of said employee’s death, the sections of the Workmen’s Compensation Law in question read as follows:

§ 15. Schedule in case of disability. The following schedule of compensation is hereby established: * * *
8. Permanent total disability after permanent partial disability. If an employee who has previously incurred permanent partial disability through the loss of one hand, one arm, one foot, one leg, or one eye, incurs permanent total disability through the loss of another member or organ, he shall be paid, in addition to the compensation for permanent partial disability provided in this section and after the cessation of the payments for the prescribed period of weeks special additional compensation for the remainder of his life to the amount of sixty-six and two-thirds per centum of the average weekly wage earned by him at the time the total permanent disability was incurred. Such additional compensation shall be paid out of a special fund created for such purpose in the following manner: The insurance carrier shall pay to the state treasurer for every case of injury causing death in which there are no persons entitled to compensation the sum of five hundred dollars. The state treasurer shall be the custodian of this special fund, and the commissioner shall direct the distribution thereof.”
9. (Provides for the expenses of rehabilitating injured employees and requires the insurance carrier to pay to the State Treasurer the sum of five hundred dollars under the same terms as contained in subdivision 8 above.)
§ 29. Subrogation to remedies of employees. * * * In case of the payment of an award to the state treasurer in accordance with subdivisions eight and nine of section fifteen such payment shall operate to give to the employer or insurance carrier liable for the award a cause of action for the amount of such payment together with the reasonable funeral expenses and the expense of medical treatment which shall be in addition to any cause of action by the legal representatives of the deceased.”

The contention of the appellant that the deceased left a dependent widow surviving him who would have been entitled to compensation under the statute if she had so elected and that, therefore, no awards should have been made to the State Treasurer under subdivisions 8 and 9 of section 15 has been conclusively decided by this court contrary to the contention of the appellant. (Matter of State Treasurer v. West Side Trucking Co., 233 N. Y. 202; Matter of State Treasurer v. Niagara Falls Power Co., 241 N. Y. 521; Matter of Chrystal v. United States Trucking Corp., 250 N. Y. 566.)

It is urged by the appellant that the Legislature did not have the power to create, by the amendment of section 29 in 1922, a cause of action against a third person through whose negligence an employee covered by the Workmen’s Compensation Law met his death, because said amendment is in contravention of the due process clause of the State and Federal Constitutions and also denies to the appellant the equal protection of the law.

The reasons for the enactment of the Workmen’s Compensation Law and the humanitarian purpose which it was enacted to further have been stated by this court and the United States Supreme Court. It has been treated as an enlightened forward movement, based upon social experience, enacted to do away with the harsh and often unjust rule of the common law that there could be no liability for injury without fault and to substitute in its place the more just and equitable rule making injuries received by employees without fault on the part of the employer a liability of the industry and adding the expenses,, which are first sustained by the employer, to the cost of production to be ultimately borne by the public at large. (New York Central R. R. Co. v. White, 243 U. S. 188; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514.) Those cases established that the Workmen's Compensation Law is constitutional.

At the time they were decided the amendment of 1922 to section 29, which provides for an action by the employer or insurance carrier against one who has negligently caused the death of an employee to recover the sums paid to the State Treasurer, had not been enacted.

The constitutionality of subdivisions 8 and 9 of section 15 was passed upon in an action by the State Treasurer against the employer and the carrier in State Treasurer v. Sheehan Co. (236 N. Y. 579; affd., sub nom. Sheehan Co. v. Shuler, 265 U. S. 371) and in New York State Railways v. Shuler (265 U. S. 379) before the amendment of 1922 to section 29, in question here.

In those cases it was urged, as it is in this, that subdivisions 8 and 9 of section 15, or the provisions of the statute to like effect in existence at the time of the decisions in those cases, were in conflict with the due process and equal protection clauses of the Fourteenth Amendment to the Federal Constitution. In the case of Sheehan Company v. Shuler (supra) the United States Supreme Court, referring to subdivisions 8 and 9 of section 15, said: “ The substance of these two provisions is that when an injury causes the death of an employee leaving no beneficiaries, the employer or other insurance carrier shall pay the state treasurer the sum of $500 for each of two special funds: one to be used in paying additional compensation to employees incurring permanent total disability after permanent partial disabilities; and the other, in the vocational education of employees so injured as .to need rehabilitation. The use of such special funds for such purposes is an additional compensation to the employees thus injured, over and above that prescribed as the payments to be made by their immediate employers. Such additional compensation is neither unjust nor unreasonable. Thus, an employee who, having lost one hand in a previous accident, thereafter loses the second hand, is, obviously, not adequately compensated by the provision requiring his employer to make payment for the loss of the second hand, ‘independently considered; the total incapacity finally resulting from the loss of both hands working much more than double the injury resulting from the loss of each separate hand considered by itself. In such a case, however, as in the case of an injury requiring vocational rehabilitation, it is the theory of the law that such additional compensation to the injured employee should not be required of the particular employer in whose service the injury occurred, but should be provided out of general funds created by payments required of all employers when injuries resulting in the death of their own employees leaving no beneficiaries, do not otherwise create any liability under the Compensation Law.”

The Legislature, in carrying out the benevolent purpose of the statute, by its amendment adding subdivisions 8 and 9 of section 15, furnished additional protection to the class of employees specified therein engaged in hazardous occupations and provided that the fund for furnishing such additional protection should be contributed by employers coming under the act, or their insurance carriers, in cases where they were not hable to pay directly to dependent survivors of the deceased employees. The same principles which inspired the enactment of the Workmen’s Compensation Law, and have animated the courts in construing it, were cogent reasons for holding the amendments embodied in subdivisions 8 and 9 of section 15 to be constitutional.

The State has adopted a policy which provides that the unfortunate employees who have suffered the injuries described are entitled to the compensation provided, in order that they may become rehabilitated and not become dependent, or wards of the State. In the first instance, the burden of furnishing funds to carry out the purposes of the statute was placed upon the employers engaged in hazardous occupations, without regard to fault on their part or whether the fund contributed by a particular employer was to be used for the benefit of employees injured in his business.

Thereafter the Legislature, in 1922, amended section 29, to provide, in substance, that where an employer or his insurance carrier has been obliged to contribute to such funds, he may recover from the wrongdoer who, by his wrongful act, has made such contribution necessary, the amount so contributed. It is an attempt to remove the burden from one who has not committed a wrong and to place it upon one who, by his wrongful act, has made the payment into the funds necessary.

If it be conceded that the State, in establishing the funds for the benefit of the class of employees referred to in order that they may not become dependent and a burden on the State, has acted within its constitutional jurisdiction, then it seems to us that it must follow that placing the burden of supplying such funds upon the wrongdoers who make the contribution to the funds necessary is clearly within the constitutional power of the Legislature.

The Supreme Court, in the case of New York Central R. R. Co. v. White (supra) said: “ One of the grounds of its (the public’s) concern with the continued life and earning power of the individual is its interest in the prevention of pauperism, with its concomitants of vice and crime.” And in Mountain Timber Co. v. Washington (243 U. S. 219) the same court said: It hardly would be questioned that the State might expend public moneys to provide hospital treatment, artificial limbs, or other like aid to persons injured in industry, and homes or support for the widows and orphans of those killed.” The argument that the State cannot lawfully place that burden upon those who are directly and wrongfully responsible for it is not convincing. Where the death of an employee covered by the Workmen’s Compensation Law is wrongfully caused by a third person, and the deceased leaves dependents who recover compensation from the employer or his insurance carrier, the employer or his insurance carrier who has paid such compensation may, under the provisions of section 29, recover over against the wrongdoer the damages caused by his wrongful act, even though the recovery exceeds the amount of compensation paid to the dependents of the deceased employee. (Travelers Insurance Co. v. Padula Co., 224 N. Y. 397; Matter of Zirpola v. Casselman, Inc., 237 N. Y. 367; Travelers Insurance Co. v. Brass Goods Mfg. Co., 239 N. Y. 273.) The right to recover over against the wrongdoer, under the amendment of said section involved in this case, creates merely an additional liability against the wrongdoer for the amount paid to the State Treasurer under subdivisions 8 and 9 of section 15.

Section 130 of the Decedent Estate Law (Cons. Laws, ch. 13), and the statutes which it superseded conferring the right to recover damages for wrongful death, created a right of action unknown to the common law. (Whitford v. Panama R. R. Co., 23 N. Y. 465.) States having similar statutes “ differ as to who may sue, for whose benefit, and the measure of damages.” (New York Central R. R. Co. v. White, supra.)

In Travelers Insurance Co. v. Padula Co. (supra) this court said: “A civil liability and the right to recover damages for a wrongful act or neglect causing death are created solely by statute. At common law no civil action would he for causing the death of a human being. Legislative enactment is the exclusive source and boundary of the liability and the remedy. It may create the cause of action, define the period of its existence, and the party by whom and the method in which it shall be enforced and prescribe the measure of damages and the beneficiaries.” All persons are under an obligation to the State not to wrongfully cause the death of one of its citizens, and the State may lawfully enact that if that obligation is violated the one so violating it shall pay to the State a sum not unjust or unreasonable to enable it to carry out the provisions of the Workmen’s Compensation Law. The fact that the obligation is made to rest first upon the employer or his insurance carrier does not affect the right, but only provides for the manner in which the sum is ultimately to be collected from the wrongdoer. That practice has been adopted in many different actions for penalties, where the proceeds, in part, go to the State.

The manner of collecting penalties and the disposition of the sums collected are matters which rest in the discretion of the Legislature, and it may lawfully make such disposition thereof as it determines may best carry out the purpose of a particular statute. (Missouri Pacific Ry. Co. v. Humes, 115 U. S. 512; Miami Copper Co. v. State, 7 Ariz. 179; Boyd v. Missouri Pacific Ry. Co., 249 Mo. 110.) The State of Alabama enacted a statute allowing punitive damages to be assessed against an employer for the mere negligence of an employee, resulting in death. In Pizitz Dry Goods Co. v. Yeldell (274 U. S. 112) the statute was held to be constitutional and the court said: “ Lord Campbell’s Act and its successors, establishing liability for wrongful death where none existed before, the various Workmen’s Compensation Acts, imposing new types of liability, are familiar examples of the legislative creation of new rights and duties for the prevention of wrong or for satisfying social and economic needs. Their constitutionality may not be successfully challenged merely because a change in the common law is effected. As interpreted by the state court, the aim of the present statute is to strike at the evil of the negligent destruction of human life by imposing liability, regardless of fault, upon those who are in some substantial measure in a position to prevent it. We cannot say that it is beyond the power of a legislature, in effecting such a change in common law rules, to attempt to preserve human life by making homicide expensive. It may impose an extraordinary liability such as the present, not only upon those at fault but upon those who, although not directly culpable, are able nevertheless, in the management of their affairs, to guard substantially against the evil to be prevented.” In some States the statutes giving a right of action for wrongful death impose a penalty, which may be recovered for the benefit of the survivors named in the statutes. (Boyd v. Missouri Pacific Ry. Co., supra; Raisor v. Chicago, etc., R. R. Co., 215 Ill. 47, and cases cited in 8 Ruling Case Law, title Death, § 118.) If the State may lawfully impose a penalty payable to the survivors of the deceased, it may impose an additional penalty, payable to the State itself, to enable it to carry on a State function. The fact that the statute limits the liability of one wrongfully causing the death of another to the payment of a penalty only in case the one wrongfully killed is an employee under the Workmen’s Compensation Law cannot be complained of by the defendant. That the liability of the defendant might legally have been made greater is not a reason why its legality as enacted should not be maintained. (People v. Braunstein, 248 N. Y. 308; Jeffrey Mfg. Co. v. Blagg, 235 U. S. 571.)

It is urged by the appellant that the desirability of estabhshing the funds under subdivisions 8 and 9 of section 15 does not justify a statute which compels it to pay one thousand dollars into the funds, because neither it nor the one it injured will benefit from such funds. It is a sufficient answer that the State will be benefited by such payment and that the defendant’s wrongful act placed upon the employer or his carrier the burden, in the first instance, of making the payment into the funds. (Sheehan Co. v. Shuler, supra.)

The statute does not contemplate the taking of property without due process of law. The defendant may avail itself of any defense which it has or ever had. It has a right to establish, if it can, that there could have been no recovery in the negligence action which it settled, and may test the validity of the awards against the insurance carrier by any defense which the carrier could have interposed, as it was not a party to that proceeding and is not bound thereby. "

Subdivisions 8 and 9 of section 15 and section 29, construed together, and in connection with the other provisions of the Workmen’s Compensation Law, are component parts of a single scheme ” and constitute a valid constitutional statute. The wrongdoer is made responsible for his wrongful act, the statute promotes the public welfare, and lawfully imposes a penalty upon the wrongdoer. It is uniform, in that it gives a right of action against all who wrongfully cause the death of an employee specified in the statute.

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

Lehman, J.

(dissenting). The Workmen’s Compensation Law was enacted by the Legislature, pursuant to authority expressly conferred by the Constitution of the State, article 1, section 19. Every employer subject to its terms must secure compensation to his employees and pay or provide compensation for their disability or death arising out of and in the course of the employment. The industrial relations created by the employment justified the Legislature in substituting a more complete and equitable system of compensation for the inadequate remedy afforded at common law or by earlier statute for injury or death caused by an employer. Because of these industrial relations a new form of liability, though constituting a new burden, might be imposed_ upon the employer, perhaps to be borne ultimately by_the public at large as an expense of the industry. (N. Y. Central R. R. Co. v. White, 243 U. S. 188; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514.)

The Legislature, instead of imposing upon each employer the entire responsibility for losses occurring in his own plant or work, might impose the burden upon the industry through a system of occupational taxes or enforced payments to an industrial fund required of persons connected with the industry. (Mountain Timber Co. v. Washington, 243 U. S. 219.) In this State the Legislature has provided that for certain disabilities payment of compensation or extra compensation should be made out of special funds creatéd for that purpose, rather than by the individual employer. (Workmen’s • Compensation Law, § 15, subds. 8 and 9.) Into each of such funds “ the insurance carrier shall pay to the State Treasurer for every case of injury causing death in which there are no persons entitled to compensation the sum of five hundred dollars.” Under identical conditions all employers are required to contribute to these special funds and “ the payments thus required are not unfair and unreasonable in amount. The aggregate for the two funds is one thousand dollars. This is much less than the maximum payment which may be required according to the scales in case the employee leaves survivors entitled to death benefits, and seems not to exceed, if it equals, the average amount of the payments required in such cases.” For these reasons the constitutionality of these provisions has been sustained both in this court and in the Supreme Court of the United States. (Sheehan Co. v. Shuler, 265 U. S. 371, affg. State Treasurer v. Sheehan Co., 236 N. Y. 579; Matter of State Industrial Commission v. Newman, 222 N. Y. 363; N. Y. State Railways v. Shuler, 265 U. S. 379.)

Where the employee’s disability or death resulted from the wrongful act of a party not in the same employ the liability of such party remained substantially unchanged. The injured employee or, in case of his death, his dependents, might elect to pursue any remedy afforded by law against such party. If the employee, or his dependents, elect to take compensation under the Workmen’s Compensation Law, then it is provided that the awarding of compensation shall operate as an assignment of the cause of action against such other party “ to the state for the benefit of the state insurance fund, if compensation be payable therefrom, and otherwise to the person, association, corporation, or insurance carrier liable for the payment of such compensation, and if he elect to proceed against such other, the state insurance fund, person, association, corporation, or insurance carrier, as the case may be, shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by this chapter for such case.” (Workmen’s Compensation Law, § 29.)

It is true that, as we have construed the section, it provides “ that a party who negligently kills an employee under the act shall be liable to the dependents of the employee, * * * and not to his next of kin,” and to that extent creates a new action in substitution for the action for causing death by negligence as defined by section 1902 of the Code of Civil Procedure. Since, however, the Legislature might have originally created a cause of action for the death of an employee in favor of the dependents rather than the next of kin of the deceased, the wrongdoer has no substantial ground for complaint. (Travelers Insurance Co. v. Padula Co., 224 N. Y. 397.) There the Legislature exercised its undoubted power to create and define the liability and the remedy for causing the death of a human being. That power is not based upon its right to provide compensation for the disability or death of an employee as a liability on the part of his employer or a burden upon the industry. The considerations which have led the courts to sustain the legislation creating such a right to compensation have no application to legislation creating a liability against a wrongdoer, not in the same employ as the employee who has been injured or killed.

In 1922 the Legislature amended section 29 of the Workmen’s Compensation Law by providing that “ In case of the payment of an award to the state treasurer in accordance with subdivisions nine and ten of section fifteen such payment shall operate to give to the employer or insurance carrier hable for the award a cause of action for the amount of such payment together with the reasonable funeral expenses and the expense of medical treatment which shall be in addition to any cause of action by the legal representatives of the deceased.” As stated in the majority opinion, it is an attempt to remove the burden from one who has not committed a wrong and to place it upon one who, by his wrongful act, has made the payment into the funds necessary.”

. That statement seems, as a matter of first impression, persuasive that the Legislature must have power to place ultimate liability upon the person but for whose wrongful act no payment would have been required of the employer. Analysis, however, demonstrates, I think, that its persuasive force is. illusory. The defendant has already paid to the dependent of the deceased more than the compensation provided by the Workmen’s Compensation Law. If recovery or settlement had been less the dependent would have been entitled to receive payment of the deficiency from the employer or insurance carrier. In such case the employer or insurance carrier would not have been entitled to any repayment of the deficiency from the wrongdoer nor would such employer or insurance carrier have been compelled to make any payment to the State insurance fund. The wrongful act of the defendant has not caused any depletion of the insurance fund.

The employer or insurance carrier is compelled to make a payment to such a fund only because the Legislature has so decreed as part of its scheme of making payment of compensation to employees a burden on the industry as a whole. The defendant is not in the same employ as the deceased or as the persons who may subsequently be entitled to receive compensation from the fund for other injuries. The liability of the employer to make payments to such a fund is not in any true sense a damage flowing from the defendant’s wrongful act. It is a payment in the nature of an industrial tax which the Legislature has imposed upon employers for the purpose of creating an industrial fund for the benefit of those who are part of the industry. The contingency upon which such liability is imposed is an injury of an employee causing death in which there are no persons entitled to compensation.” The defendant’s wrong has caused the death. It has paid to the dependents and next of kin of the deceased the full compensation or damages allowed to them by statute for such death. Only because that payment was adequate to meet all claims for compensation which would otherwise have been a Lability of the employer has the employer become subject to the tax, the required payment into the insurance fund. The question before us is not whether the Legislature may compel a wrongdoer to make good all damages caused by his wrongful act, but whether the Legislature may shift to the defendant the ultimate liability for the payment, in the nature of an industrial tax, imposed upon the employer.

Since the defendant stands in no industrial relation to the deceased or to the employee or to those who may receive compensation from the insurance fund, it seems to me quite clear that the liability which the Legislature has attempted to impose may not be sustained upon analogy to an industrial tax. The additional cause of action in favor of an employer who has been compelled to make a payment into the insurance fund may be sustained, if at all, only as the result of the exercise of a legislative power to create a new cause of action for a penalty or damages • for causing death by negligence. These powers are undoubtedly broad, yet they are not, I think, unlimited. Some reasonable basis must be found, I think, for the imposition of the penalty, or for the creation of a cause of action for damages and there must be some reasonable basis for the classification upon which the creation of the new cause of action for damages or penalty is based. I fail to find such a basis in the present case.

The cause of action for a penalty or damages which the Legislature has attempted to create, arises not in every case where death is caused by wrongful act, nor even in ■ every case where death is so caused and the deceased left no dependents or next of kin entitled to damages. Indeed in this case a dependent survived but the surviving dependent is not entitled to compensation under the Workmen’s Compensation Act because she has already received adequate payment from the defendant. In other words, here a cause of action for a penalty or damages has been created by the Legislature because the defendant has paid to the surviving dependent full compensation for the injury caused by its wrong. If the defendant had failed to pay such damages and consequently the dependent had been entitled to the compensation from the employer, the defendant would not have been liable for any penalty or damages beyond those which the dependent or next of kin might have recovered in an action against the defendant.

It is true that in such case the employer also would have been compelled only to pay compensation to the surviving dependent and would not have been compelled to pay an additional sum into the State insurance fund. If this factor were absent I assume that no one would seriously contend that the Legislature ever would or could have created an additional liability against a wrongdoer causing death in the contingency that the wrongdoer had already made full payment in damages to the dependents or next of kin of the person killed.

As I. have already pointed out, the provision of the statute for payment by the employer into the insurance fund has been sustained on the ground that it is in the nature of an industrial tax imposed on all employers in the contingency of the death of an employee where the employer cannot be called upon to make any payment of compensation to any dependent of the person killed. It bears equally upon all employers under the same circumstances and is reasonable in amount, since it seems not to exceed, if it equals, the average amount of the payments required ” if a deceased left surviving dependents entitled to death benefit. Here, on the contrary, the additional liability does not bear equally upon all wrongdoers causing death where no dependent or next of kin survive, and it is not reasonable in amount, for it is imposed in those cases where the damages already paid by a defendant exceed the rate of compensation to which a dependent survivor would be entitled under the statute. It seems to me that the Legislature could not, after such payment, impose upon the defendant an additional liability in order to shift to the wrongdoer the ultimate burden of repaying to the employer the amount which the employer was required to pay into the insurance fund. None of the grounds upon which the courts have sustained the statute requiring such payment from the employer applies to the liability for repayment imposed upon this defendant. The Legislature could not have imposed upon the defendant a liability to make a direct payment into the insurance fund in the contingency that it had fully paid compensation to all survivors of the person whose death defendant caused. Such a classification would be so clearly unreasonable that it would not even bear any analogy to any reported cases. The Legislature has, I think, attempted to do by indirection what it could not do directly. That, I think, is equally beyond its powers.

For these reasons the judgment should be reversed and the complaint dismissed.

Cardozo, Ch. J., Pound, Crane and O’Brien, JJ., concur with Hubbs, J.; Lehman, J., dissents in opinion in which Kellogg, J., concurs.

Judgment affirmed.