author: O’Brien, J.

text:
    Howell, MacArthur & Wiggin, Inc., v. Maurice Weinberg et al., Appellants.

      (Argued October 28, 1932;
    decided November 22, 1932.)

      Harold W. Turner for appellants.
    Plaintiff by failing to disclose to defendants the nature of its agreement with the vendor was unable as a matter of law to act as agent of the defendants. (Carr v. National Bank & Loan Co., 167 N. Y. 365; Wendt v. Fischer, 243 N. Y. 439; Hecksher v. Edenborn, 203 N. Y. 210; Silberkraus v. Reinhaud, 221 App. Div. 615; Howard v. McCredie, 198 App. Div. 49; McMillan v. Arthur, 98 N. Y. 170; Meinhard v. Salmon, 249 N. Y. 458.)

      Daniel H. Prior and Milton B. Knox for respondent.
    The relationship of principal and agent existed at all times between defendants and plaintiff; plaintiff did not buy the stock for itself but bought in conformity to defendants’ order as agent for defendants and the defendants were the owners of the same at all times after plaintiff had purchased the stock for defendants’ account. (Knapp v. Simon, 96 N. Y. 284; Richardson v. Shaw, 209 U. S. 365; Crusins v. Louckheim, 132 Misc. Rep. 520; Bibb v. Allen, 149 U. S. 481; Clews v. Jamieson, 182 U. S. 461; Grunman v. Smith, 81 N. Y. 25; Horton v. Morgan, 19 N. Y. 170; Keller v. Halsey, 202 N. Y. 588; Hankinson v. Vantine, 152 N. Y. 20; Folinsbee v. Sawyer, 157 N. Y. 196; McMillan v. Arthur, 98 N. Y. 167.) Assuming that the 1% was a reduction in price and not a commission, that is, that plaintiff bought the stock at one price and confirmed it to the defendants at a higher price, the fact remains that plaintiff bought the stock for defendants’ account and risk and defendants, therefore, took title to the property. (Greenwood v. Schumacher, 82 N. Y. 614; McMillan v. Arthur, 98 N. Y. 167; Minneapolis Trust Co. v. Mather, 181 N. Y. 205.)
   O’Brien, J.

Plaintiff is a stockbroker and brought this action to recover the sum of $1,850 for twenty-five shares of United Founders Corporation common stock alleged to have been purchased by it as broker for and on account of defendants. By answer and motion to dismiss, defendants raise the point that no agency existed on the part of plaintiff to purchase for and on account of defendants but that the transaction constitutes a sale to defendants by plaintiff as agent for the owner. The issue as stated in the charge was whether plaintiff acted as broker or merely as agent of the owner. Defendants’ brief argues that the controlling question is whether plaintiff was the agent of the vendor and acted on its own behalf and was not as matter of law the agent of defendants. Plaintiff’s brief urges that the only essential issue is whether plaintiff made the purchase for and on account of defendants at their request and on their promise to pay. A verdict, which necessarily imports that plaintiff acted as broker and as agent for defendants, was rendered for $1,815.06. This amount, lower than the sum demanded in the complaint, is explained by the fact that the jury was warranted in finding that, without defendants’ knowledge, the seller allowed plaintiff a commission of $34.94. The sole question of law for the consideration of this court is whether this judgment, unanimously, affirmed, is. supported by any evidence from which the inference can be drawn that plaintiff acted as agent for defendants.

The evidence, according to plaintiff’s version and as credited by the jury, supports the verdict. Ernest E. Kellogg, manager for plaintiff in its branch office at Troy, informed defendant Maurice Weinberg on September 11, 1929, that United Founders common was selling around 74 ” and suggested that he buy some. Maurice directed plaintiff to purchase twenty-five shares for him and his brother Jerome who then carried a joint account with plaintiff. Kellogg thereupon telephoned the order to the main office of plaintiff at Albany. Its vice-president, Wiggin, according to regular custom, grouped this order with others received by plaintiff and telephoned a buying order for six hundred and fifty shares to the Founders General Corporation in New York at a price of 74. The six hundred and fifty shares were not delivered to plaintiff until November 1 and on that day it drew its check for $47,206.25 in payment therefor. Due to market conditions current during those months, brokerage houses were unable to keep abreast of their work. The certificates for the six hundred and fifty shares delivered to plaintiff by the Founders General were in large denominations. Some were returned to New York to be split up and a few days prior to December 1 plaintiff received one for twenty-five shares. When it tendered this certificate to defendants they refused to accept it. This evidence, credible on its face and believed by the jury, supports the allegations of the complaint. Plaintiff did not own the stock but purchased it for defendants’ account. It acted as defendants’ authorized agent and not as vendor.

Due to plaintiff’s undisclosed relationship with the owner of the stock, nothing except the actual purchase price of the stock can be recovered from defendants. No profit or commission can be allowed. Plaintiff as agent for defendants bought the stock from Founders General Corporation which was an organization for selling shares in the United Founders, American Founders and stocks in allied corporations. Plaintiff in turn acted with other brokers as distributors of stock for the Founders General and received from it a commission of one and three-eighths per cent. The broker charged the customer no other commission. The stock was ordered by plaintiff for defendants at 74 but the actual price paid was 72%. The amount of the judgment based upon plaintiff’s expenditure for twenty-five shares at 72% rather than 74 is correct. (McMillan v. Arthur, 98 N. Y. 167; Kinney v. Glenny, 231 App. Div. 311; affd., 257 N. Y. 560.)

The judgment should be affirmed, with costs.

Pound, Ch. J., Crane, Lehman, Kellogg, Hubbs and Crouch, JJ., concur.

Judgment affirmed.


source: Caselaw Access Project

author: O'Brien, J.

license: Public Domain

text:
    Ida Kurland et al., Appellants, v. Louis Chernobil, Defendant, and George Lehmann, Respondent.
    (Argued October 20, 1932;
    decided November 22, 1932.)

      Charles Glatzer, David Fink and Jacquin Fink for appellants.
    Section 52-a of the Vehicle and Traffic Law is a remedial statute affecting a mode of procedure and should be given a retroactive effect. (Lazarus v. Metropolitan Elevated Ry. Co., 145 N. Y. 585; Laird v. Carton, 196 N. Y. 169; Matter of Potter, 175 N. Y. Supp. 598; Davidoff v. Chipornoi, 166 N. Y. Supp. 999; Fairclough v. Southern Pac. Co., 157 N. Y. Supp. 862; Sackheim v. Pigueron, 215 N. Y. 62; Deuscher v. Cammerano, 256 N. Y. 328; Cahill v. Wissner, 170 N. Y. Supp. 1000; Christiano v. Christiano, 197 N. Y. Supp. 72; Berkowitz v. Arbib & Houlberg, Inc., 230 N. Y. 269.)

      Irving I. Goldsmith and Harry A. Talbot for respondent.
    The defendant-respondent was a non-resident of the State of New York when section 52-a of the Vehicle and Traffic Law became effective and service thereunder upon him does not constitute due process. (Pennoyer v. Neff, 95 U. S. 704; Flexner v. Farson, 248 U. S. 289.) Section 52-a of the Vehicle and Traffic Law is not retroactive and does not apply to an accident occurring before the enactment of the statute. (Jacobus v. Colgate, 217 N. Y. 235; Matter of Miller, 110 N. Y. 216; Matter of Beckford v. Cheshire, 128 Misc. Rep. 10; Hess v. Powlowski, 274 U. S. 352; Simon v. Southern Ry. Co., 236 U. S. 115; Bagdon v. Philadelphia & Reading C. & I. Co., 217 N. Y. 432; O’Tier v. Sell, 252 N. Y. 400; Gesell v. Wells, 229 App. Div. 11; Baris v. Fredericks, 148 N. E. Rep. 360; Rosenthal v. Liss, 169 N. E. Rep. 142.)
   O'Brien, J.

In September, 1929, plaintiffs were injured in a collision between automobiles operated in this State respectively by defendants Chernobil and Lehmann. Shortly thereafter this action was instituted and, although Lehmann was then a resident of this State, Chernobil was made sole party defendant. After Lehmann had become a resident of California, section 52-a of the Vehicle and Traffic Law (Cons. Laws, ch. 71) was enacted and on March 27, 1931, it became effective. A month later Lehmann was named as defendant in a supplemental summons and complaint and a copy was served upon the Secretary of State of New York as Lehmann’s assumed representative in attempted compliance with the new statute. The motion to set aside this process was denied at Special Term but the order of denial has been reversed. Unless the statute is retroactive it can have no application to the facts before us and the order of the Appellate Division is right. This is the language of section 52-a:

§ 52-a. Service of summons on residents, who remove from the state prior to the commencement of action against them. The operation by a resident of a motor cycle or a motor vehicle on a public highway in this state, or the operation on a public highway in this state of a motor vehicle or motor cycle owned by such resident, if operated by his consent or permission, either express or implied, shall, in all cases where such resident shall have removed from this state, prior to the service of legal process upon him in actions hereafter described, and shall have been absent therefrom for thirty days continuously, be deemed equivalent to an appointment by such resident of the secretary of state to be his true and lawful attorney upon whom may be served the summons in any action against him, growing out of any accident or collision in which such resident may be involved while operating a motor vehicle on such public highway, or in which such motor vehicle or motor cycle may be involved while being operated on such a highway with the consent, express or implied, of such resident owner; and such operation shall be deemed a signification of his agreement that vsuch summons against him which is so served shall be of the same legal force and validity as if served on him personally within the state. Service of such summons shall be made in the same manner, and with the same force and effect, as specified and set forth for the service of a summons upon a non-resident in section fifty-two of this chapter. The court in which the action is pending may order such extensions as may be necessary to afford the defendant reasonable opportunity to defend the action.”

The power thus conferred to effect lawful service of process, in an action in. personam, upon a public officer designated as agent for one who may become a nonresident rests solely on an implied consent that the operation of a motor vehicle on a highway of this State shall constitute an agreement that the service of such process shall possess the same validity as personal service upon defendant within the State. This agreement of course is not actual, it is merely constructive and in the absence of the statute creating the implication no consent could be deemed to exist. When this defendant operated his car on our highways, certainly he did not in fact agree to vest the Secretary of State with any power of agency for the receipt of service of process. At that time no presumption had been established, for the presumption exists only by reason of statutory enactment and no statute applicable to persons of his class was then effective. Section 52-a must, therefore, be held to operate only prospectively and to relate exclusively to those who as residents use the highways of this State subsequent to the passage of the act and who later become nonresidents.

The order should be affirmed, with costs, and the question certified answered, No.”

Pound, Ch. J., Crane, Lehman, Kellogg, Hubbs and Crouch, JJ., concur.

Order affirmed, etc.


author: Per Curiam.

text:
      330 Bleecker Street Corporation, Respondent, v. Mutual Tile Corporation, Appellant, Impleaded with Others.
    (Argued October 26, 1932;
    decided November 22, 1932.)

      Albert P. Singman and Leo J. Linder for appellant.
    All persons interested in the subject of the suit and its result should be made parties, for the reason that it is the aim of equity to do complete justice and to settle the rights of all persons interested in the subject of the suit, thereby preventing further litigation between them. (Sherman v. Parrish, 53 N. Y. 483; Hubbard v. Eames, 22 Barb. 597; Turner v. Conant, 18 Abb. N. Cas. 160; Reid v. Vanderheyden, 5 Cow. 719; Hallett v. Hallett, 2 Paige, 15; Williams v. Bankhead, 19 Wall. 563; Tonnelle v. Hall, 3 Abb. Pr. 205; Waring v. Waring, 3 Abb. Pr. 246; Osterhoudt v. Supervisors of Ulster, 98 N. Y. 239.) . Unless the first mortgagee is made a party to the second mortgage foreclosure action the mechanic’s lienor will lose a substantial property right. (McDermott v. Lawyers Mortgage Co., 232 N. Y. 336.)

      Marcus Klein and Benjamin A. Hartstein for respondent.
    New parties must be brought in only when a complete determination of the controversy cannot be had without their presence. (Chapman v. Forbes, 123 N. Y. 532; Walsh v. National Broadway Bank, 11 Misc. Rep. 249; 13 Misc. Rep. 3; Lester v. Seilliere, 50 App. Div. 239; Reimers v. Schmitt, 68 App. Div. 299.)
   Per Curiam.

As between the appellant, Mutual Tile Company, and the New York Title and Mortgage Company rights and priorities must obviously be ascertained and settled. Since its rights and interests are or may be involved in that settlement respondent should have an opportunity to be heard in the matter. The proper forum for the determination of all these equities and priorities is in this action. (McDermott v. Lawyers Mortgage Co., 232 N. Y. 336, 349.)

The order should be reversed, with costs in all courts, and the motion granted, with ten dollars costs. Question No. 1 is not answered. Question No. 2 is answered in the affirmative.

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

Order reversed, etc.


author: Kellogg, J.

text:
    In the Matter of Societa Principessa Iolanda Margherita Di Savoia (fondata dai Bonitesi), Inc., Respondent, against Joseph A. Broderick, as Superintendent of Banks of the State of New York, Appellant.

      (Submitted October 3, 1932;
    decided November 22, 1932.)

      Michael N. Slotnick for appellant.
    Petitioner’s motion should have been denied because the petition does not state facts sufficient to constitute a cause of action under section 76 of the Banking Law and the proceeding instituted by respondent is likewise barred by the Statute of Limitations set forth in section 76. (Baldwin’s Bank v. Smith, 215 N. Y. 76; Matter of International Milling Co. [Broderick], 259 N. Y. 77; Matter of Egan, 258 N. Y. 334; Matter of Bond v. Broderick, 232 App. Div. 468; Matter of Horowitz, 235 App. Div. 248; Sun Holding Corp. v. 14 West Seventy-second St. Corp., 140 Misc. Rep. 566; Reining v. City of Buffalo, 102 N. Y. 308; Curry v. City of Buffalo, 135 N. Y. 366; Gilbert v. City of New York, 173 App. Div. 359; Bernreither v. City of New York, 123 App. Div. 291; Watts v. City of New York, 133 App. Div. 400; Smith v. City of New York, 88 App. Div. 606; Wellsbach Co. v. Norwich Gas & Electric Co., 96 App. Div. 52; 180 N. Y. 533.) There is no jurisdiction under the Banking Law for the issuance of a peremptory order of mandamus in the case at bar. (Isaac v. Marcus, 258 N. Y. 257; Matter of Horowitz, 235 App. Div. 248; Van Tuyl v. Scharmann, 208 N. Y. 53; Matter of Carnegie Trust Co., 162 App. Div. 76; Matter of Union Bank of Brooklyn, 176 App. Div. 477.) The determination of the Appellate Division would nullify the legislative design for the orderly liquidation of a bank under sections 72 to 78, inclusive, of the Banking Law. (Matter of Egan, 258 N. Y. 334; Matter of Bond v.' Broderick, 232 App. Div. 468; Matter of Horowitz, 235 App. Div. 248; Van Tuyl v. Scharmann, 208 N. Y. 53; Matter of Harmony Fire & Marine Ins. Co., 45 N. Y. 310; People v. Security Life Ins. & Annuity Co., 78 N. Y. 114; Attorney-General v. Continental Life Ins. Co., 88 N. Y. 77.)

      F. R. Serri for respondent.
    When the Superintendent of Banks fails to mail notice, the court may properly act to prevent the forfeiture of the rights of depositor. (Matter of Egan, 258 N. Y. 334.) The right of the petitioner being clear and there being no genuine controversy about any material fact, peremptory mandamus is the proper remedy. (People ex rel. E. C. T. Club v. State R. Comm., 190 N. Y. 31.)
   Kellogg, J.

The Banking Law [Cons. Laws, ch. 2] provides that the Superintendent of Banks, after taking possession of the business and assets of a delinquent banking corporation, shall notify all creditors to present their claims to him within four months from the date of such notice, at a specified time and place. (Banking Law, § 72.) He shall cause said notice to be mailed to all persons whose names appear as creditors upon the books of the corporation, banker or broker.” (Id.) He shall cause such notice to be inserted in such newspapers as he may direct for three consecutive months. (Id.) “After the date specified in such notice as the last date for presenting proofs of claims the superintendent shall have no power to accept any claim.” (Id.) Within ten days after the last day specified in said notice for filing claims, the Superintendent shall make and file a complete list of all claims duly presented. (§ 73.) Within thirty days after the date thus specified in the notice, objections to any claim filed, made by any interested party, may be filed with the Superintendent. (§ 74.) Not later than thirty days after the time for filing objections has expired, he shall accept or reject every claim filed. (§ 75.) Within thirty days after the acceptance or rejection, the Superintendent shall list all claims accepted or rejected and file the same. (Id.) When a claim has been accepted and so indorsed by the Superintendent, the claimant, unless entitled to a priority, shall be entitled to share ratably with other general creditors in the distribution of the assets of the corporation. (§ 76.) When the time for acceptance or rejection has expired, and “ at any time within six months thereafter,” a claimant whose filed claim has been rejected “ may institute and maintain an action thereon ” against the banking corporation, fid.) No action shall be maintained against such corporation unless brought within the period of limitation specified in the section. (Id.) In all actions or proceedings, instituted against the banking corporation, while the Superintendent is in possession, “ the plaintiff shall be required to allege and prove that the claim upon which the action is instituted was duly filed and that sixty days have elapsed since the expiration of time for filing said claim and that said claim has not been accepted.” (Id.) No lien shall attach to the assets of the corporation, while in the possession of the Superintendent, by virtue of any judgment recovered against it. (§77.)

These sections provide a comprehensive and exclusive means for the ascertainment of all claims against a delinquent corporation which is in liquidation; for then acceptance or rejection by the Superintendent; for the institution of actions to determine the validity of rejected claims; for the ratable distribution of assets among general creditors. No actions or proceedings may be taken for the enforcement of claims not filed within the time prescribed; no suit upon a filed claim may be brought unless instituted within six months from the expiration of the time within which the Superintendent must have accepted or rejected the same; no suit upon an unfiled claim may ever be brought. Necessary is it that all claims be filed with the Superintendent for the reason that irntil all such claims are made known to him, a ratable distribution of corporate assets among general creditors cannot be made. Necessary, also, are the provisions strictly limiting the time within which actions may be brought to enforce rejected claims; otherwise prompt distribution to depositors and other creditors of their ratable shares would prove impossible. Thus is provided a scheme whereby all the assets of a debtor are impounded, and held for proportionate distribution among general creditors; thus is prevented the unequal distribution, which otherwise would follow, if general creditors were permitted to recover accordingly as the liens acquired by them might have priority in time. No unfairness to creditors may result, for all must receive notice by publication of the proceedings, and a special class, such as depositors, an additional notice by mail; and all will have an opportunity to present and prove their claims for a proportionate interest in the fund.

The business and assets of the City Trust Company of New York city, on February 11, 1929, pursuant to the provisions of section 57 of the Banking Law, were taken over by the Superintendent of Banks, for the purposes of liquidation. Following the method prescribed by the statute, on or about November 9, 1929, the Superintendent mailed notices to all depositors and creditors whose names and addresses appeared upon the books of the corporation. The notices provided that all creditors must present their claims to the Superintendent on or before March 9, 1930. As that day would be a Sunday, the notices must be read as calling for presentation on the following day, March 10, 1930. Similar notices were published in four newspapers, selected by the Superintendent, for a period of three months. Thereafter, the Superintendent, on or before March 10, received numerous claims; gave the necessary notices to file objections; accepted and rejected the claims presented, and caused them, with appropriate markings, to be listed and the fists to be filed; took all other steps prescribed to be taken by the statute.

The petitioner herein, who claims to have been a depositor in the City Trust Company, never presented any claim to the Superintendent on or before March 10, 1930. On the face of things, therefore, under the strict wording of section 72, the claimant was debarred from subsequently fifing a claim, and lost all interest in the fund. Again, after November 10, 1930, under the provisions of section 76, it had lost all rights of action against the corporation to establish its claim. Nevertheless, the petitioner, on the 28th day of November, 1931, obtained an order at Special Term directing the Superintendent of Banks to accept its claim as duly filed on or before March 10, 1930, and this order has been affirmed.

The petitioner claims, and it has been held, that the provisions of the statute, which otherwise would debar presentation of its claim, and make it uncollectible, do not apply to it, since the Superintendent of Banks never sent to it by mail the notice to present claims on or before March 10, 1930, sent to other creditors. The name of the petitioner is “ Societa Principessa Iolanda Margherita di Savioa (fondata dai Bonitesi), Inc.” No such name- appeared upon the books of the City Trust Company when the Superintendent took possession. There did appear upon the books the name “ Yolando Margherita M. S. Fondo Mortuario ” as a depositor, credited with a deposit of $2,271.60. The petitioner claims to be the society so named. We perceive no similarity in the two names. If, indeed, the petitioner is the depositor, nevertheless, the name appearing on the books was a fictitious designation identifying no person, corporation or society. Only to “ persons whose names appear as creditors upon the books of the corporation ” must a notice be mailed. All other creditors must be satisfied with the warning afforded by the publication of the notice. Since the name of the petitioner, “ Societa Principessa Iolanda Margherita di Savoia (fondata dai Bonitesi) Inc.,” did not appear on the books of the corporation, no notice by mail was required to be given. Again, even the name which did appear was unaccompanied by any statement of address, whether city, street or State. Careful investigation by the Superintendent, including the telephone directory and the city directory, revealed no such name as that of the named depositor, and, of course, disclosed no address for mailing purposes. When the statute says that the Superintendent “ shall cause said notice to be mailed ” to all creditors “ whose names appear * * * upon the books,” we think the intent clear that the notice must be “ mailed ” with an appropriate address upon the envelope; that since the books furnished no such address and the Superintendent was not aware thereof, the requirement of mailing did not apply.

The statute is explicit: “After the date specified in such notice as the last date for presenting proofs of claims the superintendent shall have no power to accept any claim.” No exception is made of a creditor entitled to notice by mail to whom such a notice has not been given. Obviously, the Legislature, in making provision for the institution of liquidation proceedings by the Superintendent of Banks, might have omitted any requirement as to the mailing of a notice to creditors whose names might appear upon the corporate books, providing only for the publication of a notice to all creditors; yet the giving of a notice in that manner would have been sufficient to provide the Superintendent with all power and jurisdiction necessary to conduct the proceedings. This being so, the lesser power must be conceded, that the Legislature, although enjoining that notice by mailing be given to creditors of a particular class, might lawfully provide that even such creditors, though receiving no such notice, would sacrifice their claims unless the same were filed with the Superintendent prior to the date specified in the published notice. It might well be argued that the Legislature, in enacting the explicit provision which we have quoted, intended to provide for that result, and that the petitioner, though entitled to a notice which it did not receive, was forever cut off from proving its claim. That point, however, need not be decided, for here it is clear that the petitioner, since neither its name nor its address appeared on the corporate books, was not entitled to a notice by mail. Here we have a clear case in which the statutory mandate is operative to forbid the Superintendent to accept a claim, and yet the Supreme Court, in spite thereof, has issued its mandate that the claim must be received and accepted. Clearly the order made was not sanctioned by law.

The order of the Appellate Division and that of the Special Term should be reversed and the petition dismissed, with costs in all the courts.

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

Orders reversed, etc.

       Sections 72 to 77 of the Banking Law (Cons. Laws, eh. 2), referred to in the preceding paragraph, have been amended since the inception of this proceeding by L. 1930, chs. 664, 678; L. 1931, ehs. 191, 310; L. 1932, ch. 399.


text:
    In the Matter of Anthony Buehler, Appellant, against The Board of Supervisors of Rensselaer County et al., Respondents.
    (Argued October 5, 1932;
    decided November 22, 1932.)

      Herbert F. Roy for appellant.
    The two-year service provisions of the local law apply only to those purely exempt positions or legislative positions as are set forth in the local statutes, and other similar positions which the Board of Supervisors may desire to create, or the earlier special acts and later general civil service act are so much in conflict that the general act, being the last expression of the legislative will, must govern, and, hence, repeal by implication the conflicting provisions of the earlier special acts. (McVay v. New York, 116 N. Y. Supp. 908; Waters v. City of New York, 43 Mise. Rep. 154; Leet v. Keller, 157 N. Y. 90; People ex rel. Fleming v. Dalton, 158 N. Y. 175; People ex rel. Tate v. Dalton, 158 N. Y. 204; People ex rel. Reilly v. Hoffman, 98 App. Div. 5; Matter of Fish v. Woodin, 205 App. Div. 452; Peoph ex rel. O’Connor v. Brady, 49 App. Div. 238; Thain v. ConstoMe, 65 App. Div. 176; Matter of Kenison v. White, 220 App. Div. 247; Matter of Phillips, 138 App. Div. 365; 200 N. Y. 521; Matter of Crowley v. Fowler, 217 App. Div. 18; Peoph ex rel. Van Tine v. Purdy, 221 N. Y. 399.)

      T. Stewart Hubbard for respondent.
    Petitioner was appointed for a definite term and the Civil Service Law has no application after his stated term has expired. (Matter of Tiffany, 179 1ST. Y. 455; Williams v. Darling, 67 Mise. Rep. 205.)
   Kellogg, J.

The petitioner, Anthony Buehler, on the 12th day of January, 1926, was appointed by the Board of Supervisors of Rensselaer county to the position of engineer and fireman in the county court house of that county. On the 14th day of January, 1930, the Board of Supervisors passed a resolution in terms reappointing him.. On the 15th of January, 1932, the Board passed a resolution ostensibly appointing the respondent, John Oeffler, to the position previously held by Buehler, the petitioner. Buehler was an honorably-discharged soldier of the United States who had been engaged in the World War. If the position held by him was' of' a permanent character, he could not be removed therefrom except after the presentment of charges of incompetency or misconduct and their determination against him after a hearing thereupon. (Civil Service Law [Cons. Laws, ch. 7], § 22.) In that event the appointment of Oeffler, since it involved the displacement of Buehler without charges, would have been invalid. On the other hand, if the position was for a definite term, and that term had expired on January 15, 1932, then the appointment of Oeffler on that day, since it did not involve the removal of Buehler, would have been entirely valid as a designation to fill an unoccupied office at the beginning of a new term. (Matter of Tiffany, 179 N. Y. 455, 458.) The court there remarked: “ The Civil Service Act was not intended to prevent an office from becoming vacant by operation of law through expiration of the term fixed by statute. When his term expires the officer is not removed, for removal requires affirmative action.” The question here, therefore, is this: Was Buehler’s position held for a definite term, and had that term expired when Oeffler was appointed?

Chapter 217 of the Laws of 1904 is a special act which relates to the proceedings of the Board of Supervisors of Rensselaer county. The act prescribes that the Board of Supervisors of that county, at a meeting to be held on the second Tuesday of January next after the election of the supervisors, shall “ organize itself by electing a chairman from among its members, and a clerk.” It then provides: “ Such board shall also appoint an attorney, and also a clerk to the building and supply committee of said board.” It provides further: “The chairman, the clerk and all other appointees of the board shall serve for two years from the date when their appointment takes effect, and until a successor has been appointed and has duly qualified.”;- The argument made by the appellant is that the phrase “ all other appointees,” contained in the provision last cited, relates to none other than the attorney ” and the “ clerk to the building and supply committee,” referred to in the preceding sentence. The meaning of the phrase cannot be thus restricted for the reason that the identical provision, prescribing a two-year term for all appointees of the Board, appeared in chapter 124 of the Laws of 1901, which was amended by chapter 217 of the Laws of 1904, at which time no provision was contained in the act whereby the Board was required to appoint an attorney and a building committee clerk. No appointments having then been prescribed, but only the election of a chairman and clerk, the expression all other appointees ” must then have meant any appointees generally whom the Board might then or thereafter, in its discretion, choose to name. The same words, set in a sentence identically worded, though contained in a subsequent statute dealing with the same subject, must have had the same meaning. This would lead to the conclusion that the petitioner, on January 14, 1930, was appointed to the position of engineer and fireman for a, term of two years; that on January 15, 1932, his term had expired; that OefEer, when named on January 15, 1932, was appointed to succeed the petitioner at the beginning of a new term in the position; that the new appointment involved no removal, and was legally made.

The case of Matter of McNeles v. Board of Supervisors (173 App. Div. 411; affd., 219 N. Y. 578) does not militate against this view. In that case the appellant, on the 14th day of November, 1914, was appointed by the Board of Supervisors of Rensselaer county to a position as laborer on a free bridge, maintained by the county. In January, 1916, less than two years later, the Board appointed another person to fill the position. It was held that a removal, other than upon charges, in violation of the Civil Service Law, was involved, and that the appointment was void. It is true that Justice Cochrane, at the Appellate Division, said: The position is in fact a permanent one. And it is doubtful whether the board of supervisors could defeat the purposes of the Civil Service Law by the subterfuge of a temporary appointment to a permanent position.” The special acts, with which we are dealing, were not mentioned in the briefs of counsel before the Appellate Division, nor were they referred to in the opinion of the court. Indeed, there was no reason why they should have been, for the removal in that case was within fourteen months of the appointment, so that even under the special acts, providing for terms limited to two years, the appointment attempted to be made involved a removal of an appointee before the expiration of his term. Doubtless, if the acts had been called to the attention of Justice Cochrane, he would not have made the broad statement that the position is in fact a permanent one.” That he did so, when in complete ignorance of the special acts, is not surprising. The statement made, however, was not necessary to the decision and is not binding upon this court, which merely affirmed the judgment rendered, vouchsafing no opinion of its own, and giving no approval of the opinion written in the court below.

The order should be affirmed, with costs.

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

Order affirmed.


text:
    Francis E. deRaismes, Respondent, v. Harold L. R. Thomas et al., Appellants.

      (Argued October 6, 1932;
    decided November 22, 1932.)

      Avel B. Silverman and George L. Naught for appellants.
    Counsel fees are not recoverable under the bond in suit. (Cook v. Gross, 60 App. Div. 446; Sinskie v. Brust, 66 App. Div. 34; Hampton & Branchville R. R. & Lumber Co. v. Sizer, 35 Mise. Rep. 391.) The item of costs and disbursements cannot be recovered. (Loweree v. Toll-man, 30 App. Div. 225; Southerland v. Sheffield, 2 Wend. 293.)

      Eugene Morgan Hawkins and William L. Tierney for respondent.
    The judgment is sustained by the evidence. (Long Island Contracting Co. v. City of New York, 142 App. Div.. 1; Katz v." Atfield, 3 Mise. Rep. 621; Souhami v. Brownstone, 108 Mise. Rep. 382; Kametz v. DeRonde, 231 N. Y. 255; Davidson v. Bulkley, 202 N. Y. Supp. 922; Sacks v. American Surety Co., 72 App. Div. 60; Corcoran v. Judson, 24 N. Y. 106; Andrews v. Glenvüle, 50 N. Y. 282; Tying v. American Surety Co., 174 N. Y. 166; Meyer v. Best, 120 U. S. 206; Belloni v. Freeborn, 63 N. Y. 383; Warner v. Ross, 9 Abb. N. C. 385; Kent v. Sibley, 15 Daly, 298; United Surety Co. v. Meehan, 211 N. Y. 39;
      Ten Eyck v. Sayer, 76 Hun, 37; DeCamp v. Burns, 33 App. Div. 517; Bennett v. Brown, 20 N. Y. 99; Perlman v. Bernstein, 93 App. Div. 335; 179 N. Y. 531; Browning v. Stillwell, 42 Mise. Rep. 346; 87 N. Y. Supp. 1129; McElroy v. Mumford, 128 N. Y. 307; Beeves v. Sullivan, 117 App. Div. 814.)
   Kellogg, J.

In summary proceedings, instituted by the plaintiff landlord against the defendant tenant, Harold Thomas, a final order dispossessing the tenant and awarding to the landlord the possession of the rented premises was obtained. The tenant appealed to the Appellate Division, and procured an order staying the execution of the order of dispossession until the determination of the appeal, upon the filing of an undertaking, conditioned upon terms prescribed by that tribunal. Such an undertaking, executed by the defendant Harold Thomas as principal, and the defendant American Surety Company of New York as surety, was subsequently filed. By this instrument the defendants undertook, in a sum not to exceed $5,000, that “ if said appeal be dismissed or determination is rendered against the appellant, he will pay any costs and damages and any damages or loss which may * * * have been occasioned through or because of the petitioner herein being kept out of possession and the value of the use and occupation of the premises subsequent to the institution of the special proceeding.” The order of dispossession was affirmed on the appeal and this action was then brought upon the undertaking. After a trial of the issues at Special Term, that court made a decision, finding that the damages suffered by the plaintiff and recoverable by him aggregated the sum of $1,500, and judgment followed accord-. ingly. The items, entering into the total damages found, though not separately determined, were three in number. Item One. This was a charge for the value of the use and occupation of the said premises subsequent to the institution of the special proceedings.” The value was conceded to be $50 per month and the total sum was readily calculable. Item Two. This consisted of “ the damages and costs of the plaintiff.” As we conceive it, the undertaking in providing for the recovery of such an item made provision for none other than the payment of taxable costs and disbursements. As no proof was given that costs had been taxed in any particular sum, this item should not have entered into the recovery. Item Three. This consisted of damages or loss which were occasioned through or because of the plaintiff being kept out of possession.” The only proof given in support of this item was that the plaintiff had employed counsel in the dispossession proceedings and that their services were of a value in excess of $3,000. We do not think that the charges for counsel fees constituted damages which have been occasioned “ because of the petitioner herein being kept out of possession,” within the meaning of the undertaking. They did not arise from the fact that the plaintiff was temporarily deprived of possession; rather, they resulted from the legal steps resorted to by the plaintiff to regain possession. We think that the undertaking was intended to secure the plaintiff only against a natural loss which might have accrued through non-possession; not against a loss resulting from an artificial means resorted to in order to replace him in possession. The trial judge was clearly in error when he incorporated in the total damages found the item for costs and disbursements which had not been taxed, and the item for counsel fees.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event. (See 260 N. Y. 698.)

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

Judgments reversed, etc.


text:
    In the Matter of the Claim of Mabel Kretchmer et al., Respondents, against Monroe Union Oil Company, Inc.; Guardian Casualty Company, Respondent, and London Guarantee & Accident Company, Ltd., Appellant. The State Industrial Board, Respondent. In the Matter of the Claim of Ella Rowitz et al., Respondents, against Monroe Union Oil Company, Inc.; Guardian Casualty Company, Respondent, and London Guarantee & Accident Company, Ltd., Appellant. The State Industrial Board, Respondent.
    (Argued October 10, 1932;
    decided November 22, 1932.)

      Charles J. O’Brien and Eugene Baines for appellant.
    The assignment of interest in the appellant’s policy transferred no greater coverage than existed at the time of such assignment. (Hanna v. Florence Iron Co., 222 N. Y. 290; Sanders v. Soutter, 136 N. Y. 97; Arents v. Long Island R. R. Co., 36 App. Div. 379; 171 N. Y. 663; Klingbeil v. Public Bank, 71 Mise. Rep. 408.) The liability of the carrier is limited by the coverage expressed in the policy and that coverage is limited to the specified locations .agreed in the policy to be covered. (Neubeck v. Doscher, 204 App. Div. 617; Matter of Pettit v. Regis, 242 N. Y. 272; Simpkins v. Steffen, 255 N. Y. 65; Levine v. East New York Electric Corp., 210 App. Div. 730; Astrin v. East New York Woodworking Mfg. Co., 210 App. Div. 720; Cans v. Mtna Life Ins. Co., 214 N. Y. 326.)

      Harlan W. Rippey and Milton L. Baier for Guardian Casualty Company, respondent.
    The assignment of the appellant’s policy with the written consent of appellant has the effect of extending general coverage to the newly-organized company. The question whether the appellant’s policy covered the business operations of the employer including those in which the deceaseds were engaged was a question of fact, the findings of the Industrial Board thereon are amply supported by evidence and as such were properly regarded as conclusive and binding upon the Appellate Division. (Jaabeck v. Crane’s Sons Co., 238 N. Y. 314; Skoozlois v. Vinocour, 221 N. Y. 276.) ,
   Kellogg, J.

These are claims for death benefits arising out of the deaths of William R. Kretchmer and Henry Rowitz, who were killed, while engaged in work for their employer, Monroe Union Oil Company, Inc., through an accident concededly arising out of and in the course of their employment. The awards made run against two insurers, the Guardian Casualty Company, Inc., and the London Guarantee & Accident Company, Ltd. The only question presented is whether the policy of the latter company covered the risks.

Monroe Union Oil Company, Inc., the employer, did an extensive business, in selling oil and gasoline, at 22 Wright street in Rochester, N. Y. On the day of the accident it held a policy in the Guardian Casualty Company, indemnifying it against loss by reason of any liability imposed upon it by law for injuries which might be sustained by its employees. The policy provided: This agreement shall apply to such injuries so sustained by reason of the business operations described in said Declarations which, for the purpose of this insurance, shall include all operations necessary, incident or appurtenant thereto, or connected therewith, whether such operations are conducted at the work places defined a,nd described in said Declarations, or elsewhere in connection with, or in relation to, such work places.” The Declarations contained this: “Locations of all factories, shops, yards, buildings, premises or other work places of this employer, by town or city, with street and number. 22 Wright St. and 19 Spring St., Rochester, N. Y., and Buell Ave., Town of Gates.” Concededly, this policy covered the losses in question, for Kretchmer and Rowitz met their deaths while engaged in operations conducted in connection with the declared work place at 22 Wright street, Rochester, N. Y.

Prior to the accident, another oil company, known as Union Oil Works, did an extensive business in the sale of oil and gasoline in the city of Rochester, N. Y., having its principal work place at 171 East avenue in that city. This company had a policy in the London Guarantee .and Accident Company, Ltd., the appellant, insuring it against loss through liability for injuries to workmen imposed by the Workmen’s Compensation Law (Cons. Laws, ch. 67). The policy provided that its coverage would include all injuries received througlToperations conducted at the work places specified in the Declarations, or in connection therewith. The work places specified were those located at 171 East avenue, Rochester, N. Y.

On April 9, 1929, about one month before the accident, the Monroe Union Oil Company, Inc., purchased all the places of business and assets of the Union Oil Works. The latter company then assigned to the former all its interest in the policy held by it in the London Guarantee and Accident Company, Ltd., the appellant. The assignment read as follows: For value received the interest of Union Oil Works in policy No. U. S. 136000 is hereby assigned as of 12:01 a. m. of the 10th day of April, 1929, to Monroe-Union Oil Co., Inc., of 22 Wright Street, Rochester, New York, subject to the consent of the London Guarantee & Accident Co., Ltd., of London, England.” The consent obtained was in the following terms: The London Guarantee & Accident Co., Ltd., hereby consents that the interest of Union Oil Works in the said policy No. U. S. 136000 be assigned as of 12:01 A. m. of the date of the assignment to Monroe-Union Oil Co., Inc., subject to the terms and conditions of the said policy.”

Self-evidently, a policy which indemnifies against loss through operations conducted at 171 East avenue, Rochester, N. Y., or in connection therewith, does not insure against loss through operations conducted at 22 Wright street, Rochester, N. Y., or in connection therewith. To create such coverage the terms of the policy must have been modified by agreement between insurer and insured. Certainly, such an agreement is not found where the insured merely assigns its interest in the policy, and the insurer does nought else than to consent thereto. Especially must this be true, where, as here, the insurer’s consent is expressly made " subject to the terms and conditions of the said policy.” The terms of the policy in question remained identically the same after the assignment as before. As they did not previously provide coverage for injuries received through operations at 22 Wright street, or in connection therewith, they did not subsequently so provide; therefore, they did not cover the accidental injuries and deaths for which these awards were made.

The orders of the Appellate Division and the awards of the State Industrial Board should be modified by dismissing the claim against the London Guarantee and Accident Company, Ltd., and providing for an award against the Guardian Casualty Company, Inc., for the total death benefits recoverable, and as so modified affirmed, with costs in all the courts in favor of the former against the latter.

Pound, Ch. ‘J., Crane, Lehman, O’Brien and Hubbs, JJ., concur; Crouch, J., dissents.

Ordered accordingly.


text:
    The AEtna Casualty and Surety Company, Respondent, v. Tramley, Inc., et al., Appellants.

      (Argued October 13, 1932;
    decided November 22, 1932.)

      Alfred B. Nathan for appellants.
    The judgment is not only erroneous but void, because it attempts to interfere with and abrogate a transfer of the property of an alleged bankrupt, which was made pursuant to the order of the Bankruptcy Court having jurisdiction thereof. (Stellwagen v. Clum, 245 U. S. 605; Matter of Watts, 190 U. S. 1; Taubel v. Fox, 264 U. S. 426; Brenen v. Dahlstrom, 189 App. Div. 685; Conner v. Long, 104 U. S. 228.) The jurisdiction of the Bankruptcy Court, when properly invoked, is exclusive and its administration of the affairs of a bankrupt and its distribution of his property in the actual possession of the bankrupt, to the bankrupt’s creditors, cannot be questioned or interfered with by any State court. (Straton v. New, 283 U. S. 318; Robertson v. Howard, 229 U. S. 254; Isaacs v. Hobbs, 282 U. S. 734; Matter of Yary an Co., 214 Fed. Rep. 563; Matter of Watts, 190 U. S. 1; Skilton v. Coddington, 185 N. Y. 80.) The Bankruptcy Court acquired jurisdiction by the filing of the bankruptcy petition, and the composition with the bankruptcy creditors which was made was not only an integral part of the bankruptcy proceedings, but, when approved by order of the Bankruptcy Court, was final and conclusive, and the transfer of assets made pursuant to that composition could neither be attacked nor indirectly set aside as fraudulent by any State court. (Reed v. Thornton, 43 Fed. Rep. [2d] 813; Straton v. New, 283 U. S. 318; Cameron v. United States, 231 U. S. 710; Harris v. Steinwax, 205 App. Div. 317; N. Y. Institution v. Crockett, 117 App. Div. 269; Whittlesey v. Becker, 142 App. Div. 313; Bank v. St. Louis Coke Co., 29 Fed. Rep. [2d] 506; Matter of Klein, 22 Fed. Rep. [2d] 906; Myers v. Trust Co., 273 U. S. 380; Matter of Vandeweghe, 49 Fed. Rep. [2d] 939; Matter of Bickmore, 263 Fed. Rep. 926; Nassau Works v. Brightwood, 265 U. S. 269; Kobre v. Baker, 178 App. Div. 62; 221 N. Y. 616; Matter of Finkelstein, 298 Fed. Rep. 11; Matter of Wayne Realty Co., 275 Fed. Rep. 955; Matter of Englander’s, Inc., 267 Fed. Rep. 1012.) The judgment giving a lien to plaintiff upon the transferred assets and also upon the other assets in place of such portion of the transferred assets as was sold, was unauthorized and the court below was without power to make the same. (Home Bank v. Brewster, 15 App. Div. 338; Easton Bank v. Buffalo Chemical Works, 48 Hun, 557; Creteau v. Foote, 54 App. Div. 168; Lemberger v. Kaner, 227 App. Div. 816; 255 N. Y. 601.)

      Vincent A. O’Connor for respondent.
    The assets of a corporation constitute a trust fund for the payment of its debts and are impressed with an equitable lien therefor. {Hurd v. New York & Commercial Steam Laundry Co., 167 N. Y. 89; Bartlett v. Drew, 57 N. Y. 589; Trotter v. Lisman, 209 N. Y. 174.) It is only provable claims that are ever discharged by bankruptcy, and all others continue as valid and subsisting liabilities against the alleged bankrupt. {Matter of Cushman, 3 Fed. Rep. [2d] 494; Matter of Frischknecht, 223 Fed. Rep. 417; Matter of Roth & Appel, 191 Fed. Rep. 667; Schneck v. Lewis, 121 Mise. Rep. 370; 210 App. Div. 845; Scott v. Demarest, 75 Mise. Rep. 289; Meyers v. International Trust Co., 273 U. S. 380; Nassau Works v. Brightwood Co., 265 U. S. 269; Friend v. Talcott, 228 U. S. 27.) Plaintiff’s claim was unaffected by the bankruptcy proceeding, the composition agreement or the order. (Bankruptcy Act, § 14-c; American Can Co. v. Schenkel, 110 Mise. Rep. 345; Wood & Sellick v. Vandeveer, 55 App. Div. 549; Matter of Frischknecht, 223 Fed. Rep. 417.) The transfer of assets was fraudulent as to the plaintiff. (Liebowitz v. Arrow Roofing Co., 259 N. Y. 391; Booth v. Bunce, 33 N. Y. 139; Wabash Ry. Co. v. American Ref. Transit Co., 7 Fed. Rep. [2d] 335; Matter of Reeger, Kaspir & Altmark, 157 Fed. Rep. 609.)
   Kellogg, J.

The complaint alleges an indebtedness of the defendant Lucy Lou Shops, Inc., to the plaintiff; the recovery of a judgment against such defendant in favor of the plaintiff on the 11th day of August, 1930; the issue and return unsatisfied of an execution upon the judgment; the institution of proceedings .supplementary to execution. It asserts that in these proceedings Irving H. Yogel, the president of Lucy Lou Shops, Inc., appeared as a witness and made certain statements, some of which are quoted in full. These statements were to the effect that on some occasion, the date of which is not given, Lucy Lou Shops, Inc., transferred all its assets to the defendant, Tramley, Inc., of which Vogel was likewise president; that the transfer was without consideration. Nowhere does it appear, either as a fact asserted by the complaint, or as a 'fact stated by Vogel, that Lucy Lou Shops, Inc., at the time of the transfer to Tramley, Inc., was indebted to the plaintiff in any sum whatever; that Lucy Lou Shops, Inc., was then insolvent; that the transfer was made with the intent to hinder, delay and defraud creditors. Nowhere is it asserted in the complaint, as it was subsequently proven upon the trial, that when the transfer from Lucy Lou Shops, Inc., to Tramley, Inc., was made, the former corporation was in bankruptcy; that the transfer was authorized by a composition agreement among the creditors in bankruptcy of Lucy Lou Shops, Inc., and was made to carry out its terms; that the composition was made in -compliance with the provisions of section 12 of the Bankruptcy Act; that the composition had been approved by the Federal court. No attack is made upon the composition or the order approving it, as having been obtained by fraud. Yet upon this wholly inadequate complaint, which asserts no fact material to the statement of any cause of action whatever the Special Term, after a trial, found that “ the purported transfer of all of the assets of Lucy Lou Shops, Inc., to Tramley, Inc., was in fraud of the plaintiff;” that the transfer is void, set aside and cancelled as to the plaintiff herein.” Having so found, the court proceeded to sign a judgment, wherein it is decreed, not that the transaction be rescinded, but that the plaintiff is entitled to a lien upon all the assets of Lucy Lou Shops, Inc., now in the possession of the defendant Tramley, Inc., to the extent of the judgment previously obtained by the plaintiff. There are many reasons, however, other than the inadequacy of the complaint or the inconsistencies of the decision, why the judgment must be reversed.

The creditors of Lucy Lou Shops, Inc., on October 10, 1929, filed a petition in bankruptcy court to have that corporation adjudged a bankrupt. Thereafter claims of creditors were presented to the referee in bankruptcy and allowed or rejected by him. At that time the plaintiff was surety upon several bonds, given to secure the payment of rent upon various leases of real property, held by Lucy Lou Shops, Inc. All rents had been paid by the tenant to the date of the filing of the bankruptcy petition, so that, at the time thereof, the plaintiff was not an actual creditor, although, in certain contingencies, it might become such. Claims presented by the plaintiff to the bankruptcy court, since they did not represent a fixed liability ” (Bankruptcy Act, § 63) were, therefore, rejected by the referee.

Subsequently to the happening of these events, the defendant Lucy Lou Shops, Inc., made an offer of composition to all its creditors in bankruptcy, as provided by section 12 of the Bankruptcy Act. The offer was to pay, in settlement of all provable claims, the sum of fifty per cent thereof, payable as follows: Fifteen per cent in cash; fifteen per cent in notes guaranteed by its president, Irving H. Vogel; and twenty per cent in preferred stock of a corporation to be organized and known as Tramley, Inc., in consideration of the issue of which to creditors, Lucy Lou Shops, Inc., was to transfer its assets to Tramley, Inc. On December 23, 1929, at a meeting of creditors held before the referee, the creditors having proven claims accepted the composition offered. The composition was finally confirmed, on January 13, 1930, by an order of the United States District Court.

The order of confirmation recites the terms of the composition offer; the acceptance in writing of the offer by a majority of creditors having proven claims. It declares that said composition is for the best interest of creditors;” that the offer and its acceptance “ are made in good faith and have not been made or procured by any means, averments or acts contrary to the Acts of Congress relating to Bankruptcy.” It decrees that the said composition be and the same hereby is confirmed;” that the moneys deposited, in pursuance of the composition, to the credit of the Judges of this Court,” be distributed by checks drawn by the referee to the various creditors in a specified order; that Nat. J. Neuman, as comptroller of the alleged bankrupt ” shall turn over all the assets or property in his possession to the alleged bankrupt or its designee.” Pursuant to the terms of the composition agreement there was organized the corporation the defendant Tramley, Inc.; there were transferred to Tramley, Inc., all the assets of Lucy Lou Shops, Inc.; there were paid over to the creditors of Lucy Lou Shops, Inc., all the cash, the notes guaranteed by Vogel and the preferred stock of Tramley, Inc., as provided in the agreement; and all things were done as provided in the composition and the order approving the same.

On the merits, not a fact may be adduced which impugns the good faith of the composition or the transfer provided for therein. The filing of the petition in bankruptcy was an assertion of the exclusive jurisdiction of the Federal court over the status of the bankrupt, and the settlement and distribution of its estate. “ This jurisdiction is exclusive within the field defined by the law, and is so far in rem that the estate is regarded as in custodia legis from the filing of the petition.” (Straton v. New, 283 U. S. 318, 321.) In contemplation of law, all the assets of Lucy Lou Shops, Inc., from the date of the filing of the petition, were in the possession of the Federal court, awaiting disposal thereof and a distribution among creditors having provable claims. The plaintiff not then having a provable claim, had no interest, legal or equitable, in the assets of Lucy Lou Shops, Inc. The court directed a transfer of these assets, possessed by it, to Tramley, Inc., in consideration, among other things, that Tramley, Inc., would deliver twenty per cent of its preferred stock to the creditors of Lucy Lou Shops, Inc., and that cash and notes would likewise be paid over by others. The benefit accruing to the latter corporation through the transfer was a discharge from all the debts provable against it in bankruptcy. The transfer, made in compliance with the composition, could have defrauded no creditor, since only those creditors entitled to share in the transferred assets, of whom the plaintiff was not one, were the sole beneficiaries thereof, and expressly gave their consent thereto. It could not have been fraudulent, unless we are prepared to say that the District Court, which approved it, was a participant in the fraud. Moreover, the plaintiff was in no wise aggrieved thereby, for if the composition had failed of approval, the assets of Lucy Lou Shops, Inc., would have been administered in bankruptcy and the plaintiff would have had no share therein. Whenever a composition is not confirmed, the estate shall be administered in bankruptcy as herein provided.” (Bankruptcy Act, § 12.) The suggestion made that the plaintiff, since it was not a party to the composition, was not bound by the order approving the composition has no merit. The plaintiff was a party to the bankruptcy proceedings through the notices published to all creditors. These proceedings were in rem (Straton v. New, supra), and, of course, the District Court had adequate and exclusive power to make disposal of the res committed to its control by the filing of the bankruptcy petition, and to pass unassailable title to such assets.

The Special Term had no jurisdiction to declare the transfer fraudulent. The Bankruptcy Act makes an exclusive provision whereby a composition may be set aside as follows: “ The judge may, upon the application of parties in interest filed at any time within six months after a composition has been confirmed, set the same aside and reinstate the case if it shall be made to appear upon a trial that fraud was practiced in the procuring of such composition, and that the knowledge thereof has come to the petitioners since the confirmation of such composition.” (§ 13.) It has been said that when bankruptcy takes effect all State laws are suspended ” (Stellwagen v. Clum, 245 U. S. 605, 613); that in “ matters relating to bankruptcy ” the power of the Federal court is paramount ” (Taubel-Scott- Kitzmiller Co. v. Fox, 264 U. S. 426, 430); that the power of that court ” is essentially exclusive.” (Matter of Watts, 190 U. S. 1, 27.) No other court can set aside a composition except the court of bankruptcy which confirmed the composition. An order of confirmation of a composition cannot be assailed collaterally in any other court, even for fraud in procuring it.” (2 Loveland on Bankruptcy [4th ed.], p. 1285.) To the same effect are Brandenburg on Bankruptcy (4th ed. p. 923); Black on Bankruptcy (2d ed. p. 661); Collier on Bankruptcy [Gilbert’s] (p. 290). Collier says that a composition if attacked for fraud must be so attacked in a court of bankruptcy.” Black says: “ A composition confirmed by the court of bankruptcy cannot be impeached in any collateral proceeding in a state court.”

The Special Term, although finding that the transfer authorized by the composition, and approved by the Federal court, was fraudulent and void, made no provision for the restoration of the status quo before the transfer, the ordinary result flowing from a rescission for fraud. Instead, it provided that the assets of Lucy Lou Shops, Inc., remaining in the hands of Tramley, Inc., be and remain subject to a hen in favor of the plaintiff for the security of its judgment. Under the composition agreement, the creditors were to receive satisfaction of their claims to the extent of twenty per cent thereof in the form of preferred stock of Tramley, Inc. The preferred stock to be paid over was stock in a corporation the assets of which were unincumbered by any lien. Thus, it is apparent that when the Special Term declared the assets of Tramley, Inc., subject to a lien in favor of the plaintiff, it made an attempt not only to alter the terms of an agreement, as made between the parties, but as well to amend the terms of an order of the Federal court confirming the agreement. If valid, this strange result would have followed: The plaintiff, not having in bankruptcy a provable claim, even as a general creditor, through a composition arising in bankruptcy, but modified by the Special Term, would have become a preferred creditor, having a right to distribution superior to all creditors whose claims had been allowed by the bankruptcy court. It is self-evident that the Special Term had neither power nor jurisdiction to grant the judgment rendered.

The judgment of the Appellate Division and that of the Special Term should be reversed and the complaint dismissed with costs in all courts.

Pound, Ch. J., Crane, O’Brien, Hubbs and Crouch, JJ., concur with Kellogg, J.; Lehman, J., concurs in result.

Judgments reversed, etc.


text:
    Harry Bijur et al., Copartners, under the Firm Name of Bijur & Herts, Respondents, v. Aaron L. Jacoby, Appellant, Impleaded with Others.

      (Argued October 24, 1932;
    decided November 22, 1932.)

      Reginald S. Hardy, Gardiner Conroy and Joseph A. Solovei for appellant.
    The defendant-appellant properly released the prisoner at the expiration of six months’ imprisonment. (People ex rel. Post v. Grant, 50 Hun, 243; People ex rel. Dean v. Marhell, 72 Mise. Rep. 427; Stewart v. Smith, 186 App. Div. 755; Matter of Reid, 188 N. Y. Supp. 336.)

      Harry Bijur for respondents.
    The maintenance of the action by the plaintiffs against the defendant-appellant for the recovery of the damages demanded is clearly prescribed by section 514 of the Correction Law. (Matter of Leggat, 162 N. Y. 437; People ex rel. Asmus v. Melody, 91 App. Div. 569; Dunford v. Weaver, 84 N. Y. 445.) The imprisonment of the offender was not limited to six months, nor was he entitled to be released at the expiration thereof. (Judiciary Law, §§ 753, 774'; Surrogate’s Court Act, §§ 79, 84; Civil Rights Law, § 72; People ex rel. Lawyers’ Surety Co. v. Anthony, 7 App. Div. 132; 151 N. Y. 620; Matter of Leggat, 162 N. Y. 437; People ex rel. Dean v. Markell, 72 Mise. Rep. 427; Stewart v. Smith, 186 App. Div. 755; Clark v. Bininger, 75 N. Y. 344; Matter of Strong, 111 App. Div. 281; 186 N. Y. 584; Forstman v. Schulting, 108 N. Y. 112; Newall v. Hall, 74 App. Div. 278.) The warrant complied with the provisions of section 774 of the Judiciary Law in respect to specifying the act or duty to be performed and the duration of the imprisonment. (People ex rel. Lawyers’ Surety Co. v. Anthony, 7 App. Div. 132; 151 N. Y. 620.)
   Kellogg, J.

The plaintiffs, by the allegations of their complaint, have sought to state a cause of action against the defendant-appellant, the Sheriff of Kings county. A Sheriff who suffers a person, committed to jail for contempt of court, to go at large, until he is discharged by due course of law,” is hable to “ the party aggrieved ” for his damages sustained thereby. If the commitment was for the non-payment of a sum of money, the amount thereof, with interest, is the measure of damages.” (Correction Law [Cons. Laws, ch. 43], § 514.) Admittedly, the plaintiffs have stated a cause of action, and were entitled to the summary judgment accorded them, provided the defendant discharged the prisoner named in the complaint before the end of the term for which he was incarcerated.

Joseph S. Alberti was one of the executors of the estate of his mother. In proceedings for a judicial settlement of the accounts of the executors, duly had before the Surrogate of Kings county, the Surrogate determined that the executors had received divers sums of money, and directed that from the moneys so received they make payments to various persons, of sums of money, aggregating $16,979.10, which sum included the sum of $6,454.70 directed to be paid to these plaintiffs. The executors defaulted in payment, and thereafter, upon due notice given, the Surrogate adjudged the executors, including the executor Joseph S. Alberti, to be in contempt of court, and directed that a warrant should issue for the commitment of Joseph S. Alberti to the common jail of the county of Kings, there to remain until he had complied with the order and made the payments. A warrant was issued accordingly to the defendant, as Sheriff of Kings county, who made the arrest and commitment, as provided for, on November 7, 1930. On May 7, 1931, six months after the beginning of his imprisonment, Joseph S. Alberti was discharged from custody by the Sheriff, without having made the prescribed payments.

If an actual loss has been produced to a party to the proceedings by reason of the misconduct of a person adjudged guilty of contempt of court a fine, sufficient to indemnify the aggrieved party, must be imposed upon the offender, and collected, and paid over to the aggrieved party, under the direction of the court.” (Judiciary Law [Cons. Laws, ch. 30], § 773.) The Surrogate definitely determined that Joseph S. Alberti was guilty of a contempt of court in not making the prescribed payments; that such misconduct did produce loss to the persons directed to be paid in the sum of $16,979.10, including a loss to these plaintiffs of $6,454.70; “ that the said Joseph S. Alberti for said misconduct is hereby fined the sum of $16,979.10.” In these respects the order was in strict compliance with the provisions of section 773. “ Where the misconduct proved consists of an omission to perform an act or duty, which is yet in the power of the offender to perform, he shall be imprisoned only until he has performed it, and paid the fine imposed * * *.” (Judiciary Law, § 774.) The Surrogate complied strictly with these provisions, for he directed the issuance of a warrant to the Sheriff of Kings county directing him to commit Joseph S. Alberti to the common jail of Kings county and to keep him therein under his close custody until he shall pay the said sum and fine of $16,979.10,” the said sum to be paid by the said Joseph S. Alberti to the Sheriff of Kings County for and on account of ” the various persons to whom Alberti had originally been ordered to make payment, in the amounts named in such order. In making payment to the Sheriff of the sum specified Joseph S. Alberti would have performed the act or duty which he had omitted to perform, and which he had the power still to perform, since the moneys would have been received for the benefit of those whom he previously had failed to pay, and their claims would thereby be extinguished. He would at the same time have paid the fine imposed,” since that fine “ under the direction of the court,” was payable to the Sheriff for the benefit of the aggrieved ” parties. It is said, however, that the order and commitment did not comply with the provisions contained in the second sentence of section 774 of the Judiciary Law. That sentence, following the sentence referred to, which provides that if the misconduct is an omission to perform a duty which the offender may still perform, the imprisonment shall only be “ until he has performed it,” and paid the fine imposed, reads in this wise: In such case, the order, and the warrant of commitment, if one is issued, must specify the act or duty to be performed, and the sum to be paid.” Wherein the warrant fails to comply with these provisions we are unable to perceive. It specifies the duty which Alberti was required to perform and his failure to perform it. That duty was to pay over $16,979.10 to the persons named in the original order, a failure to perform which constituted the contempt of court, on account of which Alberti was subjected to the fine imposed, and to the imprisonment which followed. In directing the Sheriff to hold Alberti until he had paid the amount named to the sheriff, on account of persons entitled thereto, the warrant sufficiently specified “ the act or duty to be performed, and the sum to be paid.” The Sheriff having discharged the prisoner before the payment had been made, was liable to the plaintiffs for $6,454.70> and interest, that being the amount of their damages accruing through the escape.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Crouch, J.

text:
    Leon Weinberger, an Infant, by Mitzi Weinberger, His Guardian ad Litem, Respondent, v. Louis Van Hessen, Appellant.

      (Argued October 3, 1932;
    decided November 22, 1932.)

      Jacob J. Alexander and Emanuel Schwach for appellant.
    The complaint does not state facts sufficient to constitute a cause of action in equity. (Mahaney v. Carr, 175 N. Y. 454; Hayden v. Hayden, 8 App. Div. 547; Todd v. Weber, 95JNT. Y. 181.)

      Abraham Reiss and Harold Greenberg for respondent.
    The doctrine that mutuality of remedy must exist at the time of the consummation of a contract as a condition precedent to the granting of equitable relief, to one of the parties has been repudiated. (Epstein v. Gluckin, 233 N. Y. 490.)! The contract in suit is an agreement' based on a valuable consideration and enforeible as such. It is also a valid contract for the sole benefit of a third party. (Winne v. Winne, 166 N. Y. 263; Healy v. Healy, 31 Mise. Rep. 636; The Rector v. Teed, 120 N. Y. 583; Pierson v. March, 82 N. Y. 503; Jones v. Phoenix Bank, 8 N. Y. 228; Williams v. Cowardine, 4 Barn. & Aid. 621; Ryer v. Storkwell, 14 Cal. 134; Freeman v. City of Boston, 4 Mete. 56; Gilmore v. Lewis, 12 Ohio, 281; Thatcher v. England, 3 C. B. 254.) Where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon it. (Searve v. Ransom, 224 N. Y. 233; Lawrence v. Fox, 20 N. Y. 268; Schermerhorn v. Vanderheyden, 1 Johns. 140; Brewer v. Dyer, 7 Cush. 337; Dutton v. Poole, 2 Lev. 210; Todd v. Weber, 95 N.'Y. 193; Vwoman v. Turner, 69 N. Y. 280; Barlow v. Myers, 64 N. Y. 41; Coster v. Albany, 43 N. Y. 399; Secor v. Lord, 3 Keyes, 525; Hamilton v. Hamilton, 127 App. Div. 871.) The infant plaintiff may maintain an action on the contract made for his benefit since he is a child of the promisee. (Buchanan v. Tilden, 158 N. Y. 109; Babcock v. Chase, 92 Hun, 264; Knowles v. Erwin, 43 Hun, 150; 124 N. Y. 633; Daily v. Mimmick, 117 Iowa, 563.)
   Crouch, J.

The complaint alleged, in substance, the following facts: On September 3d, 1929, the infant plaintiff. was being supported in Holland by an uncle, in whose custody and care he then was. On that day the defendant entered into an agreement with the plaintiff’s mother to the effect that if she would go to Holland, induce her brother to surrender the custody of the infant, bring the infant to New York and permit the defendant thereafter during the natural life of the infant to direct his education and control his religious and moral upbringing, the defendant would, during his natural life, support him and direct his moral education and training — the defendant at all times to have access to the infant so that he might enjoy his companionship and society. The mother did go to Holland and induced her brother to surrender the care, custody and control of the infant, thereby depriving him of the support and maintenance which he was receiving from his uncle. She brought the child to New York in November, 1929, and placed him in the care of the defendant. Thereafter the defendant attended to the religious training and education of the child, and had his companionship and society, contributing to his care, maintenance and education $6,000 per annum. Since September 15th, 1931, defendant has failed and refused to perform the terms of the agreement. The infant plaintiff and his mother have performed all the terms of the agreement on their part, and are ready, able and willing to continue performance. It is then alleged that the plaintiff has no adequate remedy at law.

Defendant moved to dismiss the complaint for insufficiency. The motion was denied, and the order of denial was affirmed by a divided court in the Appellate Division, which has certified to this court the following question: Does the complaint state facts sufficient to constitute a cause of action in equity? ”

The difference of opinion in the Appellate Division was over the question of mutuality of remedy. There was no promise, it is said, by the child or his mother, under which defendant could have an enforceable right to direct the child’s education and to control his. religious and moral upbringing. Whether there was a promise or not may be debatable. (Wood v. Duff-Gordon, 222 N. Y. 88.) But even though there was none, the contract has been performed up to the present; and the child and his guardian have assumed the duty of performance by invoking the aid of equity. Their continued performance may be made a condition of the decree, if a decree be entered. (Epstein v. Gluckin, 233 N. Y. 490; Codding v. Wamsley, 1 Hun, 585; affd., 60 N. Y. 644.) The contract does not differ essentially from those considered in Winne v. Winne (166 N. Y. 263); Healy v. Healy (166 N. Y. 624) and Ketcham v. Wilbur (241 N. Y. 516). The fact that the agreement here is still partly executory does not serve to distinguish this case from those. (Q. R. S. Co. v. Phillips-Jones Corp., 194 App. Div. 170; affd.,.233 N. Y. 626.) Suit may be maintained under the contract by plaintiff. It is sufficient that there is a close relationship between the promisee and the beneficiary, without the necessity of relationship between the promisor and beneficiary. (Seaver v. Ransom, 224 N. Y. 233; DeCicco v. Schweizer, 221 N. Y. 431.)

It is further said that specific performance will not lie under the facts pleaded since the contract calls only for payments of money and those payments are to continue over a lifetime. The point is not without difficulty. The mere fact of infancy does not serve as a ground for suit in equity. But while the contract does not deal with the full custody of the child, it is concerned not only with the material matter of physical maintenance, but also with the mental, moral and religious training of the child. Any decree made herein must to some extent regulate the intercourse between plaintiff and defendant. While the court will not take the question of a child’s religious education into its own hands, short of circumstances amounting to unfitness of the custodian, it must on occasion decree partial custody, including the right of religious education according to the views of the custodian. No question of public policy arises out of this phase of the contract. Agreements between parents for a particular sort of religious upbringing have in general been held valid in this country. (See 29 Harvard Law Rev. 485; Denton v. James, 107 Kan. 729.) We have then a case probably falling within the traditional jurisdiction of the chancery (3 Pomeroy on Equity Jurisprudence [4th eel.], §§ 1303-1310), although the defendant is not a relative of the child.

The order should be affirmed, with costs, and the question certified answered in the affirmative.

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

Order affirmed, etc.


author: Lehman, J.

text:
    Benjamin Benenson, Respondent, v. National Surety Company, Appellant, Impleaded with Others.

      (Argued October 19, 1932;
    decided November 22, 1932.)

      George de-Forest Lord, Sherman Baldwin and Ernest D. North for appellant.
    The alleged negligence of the defendant-appellant was not the proximate cause of the damage; the intervening criminal acts of the strangers who purloined the authenticating documents and forged the bond broke the chain of legal causation. (Knox v. Eden Musee Co., 148 N. Y.- 441; Hulburt v. Walker, 258 N. Y. 8; People’s Trust Co. v. Smith, 215 N. Y. 488; Saugerties Bank v. Delaware & Hudson Co., 236 N. Y. .425; Mairs v. Baltimore & Ohio R. R. Co., 175 N. Y. 409; Lowery v. Western Union Tel. Co., 60 N. Y. 198; Laidlaw v. Sage, 158 N. Y. 73; National Exchange Bank v. Lester, 194 N. Y. 461; Perry v. Rochester Lime Co., 219 N. Y. 60; Nash v. Moore, 165 App. Div. 67; 219 N. Y. 601; Hudson Trust Co. v. American Linseed Co., 232 N. Y. 350; Ehrich v. Guaranty Trust Co., 194 App. Div. 658; 233 N, Y. 637;
      Exchange Nat. Bank v. Bank of Little Rock, 58 Fed. Rep. 140; The Lusitania, 251 Fed. Rep. 715.) The defendant-appellant violated no duty owing to the plaintiff’s assignor. (Bogardus v. New York Life Ins. Co., 101 N. Y. 328; Greef v. Equitable Life Assur. Soc., 160 N. Y. 19; Pcerot v. Mount Morris Bank, 120 App. Div. 247; Palsgraf v. Long Island R. R. Co., 248 N. Y. 339; Hulburt v. Walker, 258 N. Y. 8; People’s Trust Co. v. Smith, 215 N. Y. 488; Courteen Seed Co. v. Hong Kong & Shanghai Banking Corp., 245 N. Y. 377; Ultramares Corp. v. Touche, Niven & Co., 255 N. Y. 170; Jaillet v. Cashman, 115 Mise. Rep. 383; 202 App. Div. 805; 235 N. Y. 511; National Sav. Bank v. Ward, 100 TJ. S. 195; Robins Dry Dock & Repair Co. v. Flint, 275 U. S. 303; Marsh v. Falker, 40 N. Y. 562; Landell v. Lybrand, 264 Penn. St. 406; Baxendale v. Bennett, 3 Q. B. D. 525; Linick v. Nutting & Co., 140 App. Div. 265; Holzman, Cohen & Co. v. Teaque, 172 App. Div. 75.)
    ■ Harold R. Medina, Eugene A. Sherpick and William Gilbert for respondent.
    Carelessness in the use of authenticating documents imports the risk of forgery. In such a situation forgery is in no sense an intervening cause; it _is a direct immediate result of the negligence complained of. The negligence alleged in the third cause of action •herein was clearly the proximate cause of the injury sustained by the plaintiff’s assignor. (Saugerties Bank v. Delaware & Hudson Co., 236 N. Y. 425; Fifth Ave. Bank v. I$d St. R. R. Co., 137 N. Y. 231; Jarvis v. Manhattan Beach Co., 148 N. Y. 652; Moch v. Bryant Park. Bank, 197 App. Div. 78.) The defendant-appellant’s contention that it was guilty of no breach of duty owing to the plaintiff’s assignor is untenable. (Glanzer v. Shepard, 233 N. Y. 236; People’s Trust Co. v. Smith, 215 N. Y. 488; Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 106 N. Y. 195; International Products Co. v. Erie R. R. Co., 244 N. Y. 331; Doyle v. Chatham & Phenix Nat.

      Bank, 253 N. Y. 369; Cole v. Vincent, 229 App. Div. 520; Rhinelander v. Farmers’ Loan & Trust Co., 172 N. Y. 519; MacPherson v. Buick Motor Co., 217 N. Y. 382; Bush. Terminal Co. v. Globe & Rutgers Ins. Co., 182 Apo. Div. 748; 228 N. Y. 575; Michaelyan, Inc., v. N. J. Fidelity & P. G. Ins. Co., 229 App. Div. 123.)
   Lehman, J.

The complaint in its third cause of action alleges the breach of the condition of a bond “ purporting ” to be executed by the defendant National Surety Company, and having “ the semblance and appearance of being a properly executed and duly authenticated instrument of the defendant. The plaintiff after examination accepted the bond, relying upon its “ appearance of authenticity.” The plaintiff now seeks to hold the defendant for his consequent damage, upon an allegation that it was the result of the carelessness and negligence of the defendant in permitting “ fully executed forms and documents by which its bonds and undertakings are customarily authenticated to lie about and be exposed in its offices thereby rendering such forms and documents available to strangers and to those having no authority to make use of the same * * * and by affixing the same to instruments bearing the title or designation of said defendant National Surety Company, to give to said instruments the semblance and appearance of being properly executed and duly authenticated instruments of said defendant.” The defendant has moved to strike out the cause of action. The motion has been denied in the courts below.

The. plaintiff “ might claim to be protected against unintentional invasion by conduct involving in the thought of reasonable men an unreasonable hazard that such invasion would ensue ” (Palsgraf v. Long Island R. R. Co., 248 N. Y. 339, 341), but the defendant was under no duty to the world at large to safeguard its own property from theft at least, unless the possibility that the property would be stolen and then used by the thief to injure another constituted a hazard which a reasonable man would have foreseen and guarded against. Under ordinary circumstances no one is chargeable with damages because he has not anticipated the commission of a crime by some third party.” (Saugerties Bank v. Delaware & Hudson Co., 236 N. Y. 425, 431.) Even where certificates of stock, signed in blank by duly authorized officers, were stolen from the corporation by a servant who had access to them, and sold to innocent purchasers, no recovery has been permitted against the corporation for its failure to safeguard the public from the hazard of being defrauded in such manner. (Hudson Trust Co. v. American Linseed Co., 232 N. Y. 350; Ehrich v. Guaranty Trust Co., 194 App. Div. 658; affd., 233 N. Y. 637; Knox v. Eden Musee Co., 148 N. Y. 441.) The rule that the mere intervention of a crime does not break the sequence of cause and effect if the crime might reasonably have been foreseen when the original default occurred ” (Dissenting opinion of Andrews, J., Saugerties Bank v. Delaware & Hudson Co., 236 N. Y. 425, 435) has no application here. The only act complained of is the" defendant’s failure to guard its executed forms and documents against theft. Even if stolen they could be used to the damage of others only if thereby they came into the possession of some person who could profit by inducing another to accept a surety bond, and who forged such a bond and attached the stolen documents in order to give the bond the appearance of authenticity. A hazard for strangers arising from two crimes committed by one of the small class who could profit by such crimes is too remote to place upon a reasonable man a duty to foresee and guard against.

It is true that in some cases a person or corporation may be held liable upon a forged or stolen certificate or other instrument where such instrument is actually authenticated and delivered by a person clothed with authority to issue or deliver such instruments and to make representations as to their authenticity. (Fifth Avenue Bank v. Forty-second Street & G. S. F. R. R. Co., 137 N. Y. 231; Jarvis v. Manhattan Beach Co., 148 N. Y. 652.) The plaintiff relies upon those cases as authority for the sufficiency of the allegations in his third cause of action. In those cases liability has not been predicated upon negligence in failing to safeguard others from the hazard of a crime but upon the responsibility of a principal for the act of his agent acting within the scope of his actual or apparent authority. There action is upon the instrument itself.

The second cause of action pleaded in the complaint seeks recovery on the instrument itself on such grounds. That cause of action has not been attacked and we do not consider its sufficiency or scope. If any negligence on the part of the defendant has so clothed others with apparent authority to act for it that the defendant is estopped from denying their authority (see Gutfreund v. East River Nat. Bank, 251 N. Y. 58), proof of such facts may be given under that cause of action and consideration of its effect must await the trial.

The order should be reversed, with costs in all courts, and the motion to strike out the third cause of action granted. The certified question should be answered in the negative.

Pound, Ch. J., Crane, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Ordered accordingly.