author: Crane, J.

text:
    F. S. Royster Guano Company, Appellant, v. Globe and Rutgers Fire Insurance Company, Respondent.

      (Argued October 11, 1299;
    decided November 19, 1929.)

      Charles B. Hickox, Robert S. Erskine and Henry P. Elliott for appellant.
    The Appellate Division erred in its conclusion of law that the plaintiff had failed to sustain the burden of proving a performance of a condition precedent contained in the “ Weisbeck ” clauses of the open policy. (Valkenburgh v. Ins. Co., 70 N. Y. 605; Porter v. Traders’ Ins. Co., 164 N. Y. 504; Jones v. Brooklyn Life Ins. Co., 61 N. Y. 79; Murray v. N. Y. Life Ins. Co., 85 N. Y. 236; Piedmont, etc., Ins. Co. v. Ewing, etc., 91 U. S. 377; Sattler v. Hallock, 160 N. Y. 291; Jarvie v. Arbuckle, 163 App. Div. 199; Halperin v. McCrory Stores Corp., 207 App. Div. 448; Waddle v. Cabana, 220 N. Y. 18.) If there was any failure to obtain an approval of Captain Weisbeck within the intent of the provisions of the open policy, such failure as between the plaintiff and defendant was the failure of the agent of the defendant, and cannot be asserted by the defendant as a bar to the plaintiff’s recovery. (Ætna, Insurance Co. v. Willys-Overland, Inc., 288 Fed. Rep. 912; Young v. St. Paul, etc., Ins. Co., 204 App. Div. 807; Graham Brothers v. St. Paul F. & M. Ins. Co., 122 Misc. Rep. 581; Imperial Shale Co. v. Ins. Co., 169 N. Y. 143; Buck & Hickman, Ltd., v. Ellerman & Bucknall S. S. Co., Ltd., 212 App. Div. 836.)

      Robert Kelly Prentice, Myron T. Townsend and Erwin R. Lillard for respondent.
    The record establishes not only a breach of the warranty of Weisbeck’s approval of the trip, bat the absence of any approval of the barges required by the clause added in 1925, “ per approved barges.” These two requirements are not the same. (Rockwood v. Northwestern F. & M. Co., 26 Fed. Rep. [2d] 824; Hendricks v. Commercial Ins. Co., 8 Johns. 1; Northland Nav. Co., Inc., v. Am. Merchant M. Ins. Co., 214 App. Div. 571; Van Wickle v. Mechanics, etc., Ins. Co., 97 N. Y. 350; Phillips on Ins. § 2122; Carey v. Home Ins. Co., 235 N. Y. 296; Craig v. U. S. Ins. Co., 1 Peters C. C. 410; Young v. St. Paul Fire & Marine Ins. Co., 204 App. Div. 807; Smith v. Northwestern F. & M. Ins. Co., 246 N. Y. 349; Pier v. Finch, 24 Barb. 514; Kelly v. N. Y. C. Ry. Co., 192 N. Y. 97.) The conditions and warranties of the policy were binding on the plaintiff as upon W. E. Hedger Company, plaintiff’s assignor. (Conner v. Manchester. Assurance Co., 130 Fed. Rep. 743; The Tampico, 270 Fed. Rep. 537; Imperial Shale Brick Co. v. Ins. Co., 169 N. Y. 143.)
   Crane, J.

On April 16th, 1924, the Globe and Rutgers Fire Insurance Company issued an open policy of insurance to W. E. Hedger Co., Inc., insuring any and all goods or merchandise while being transported by barge or barges, owned and operated by the said W. E. Hedger Co., Inc. The plaintiff in this case, the F. S. Royster Guano Company, is a Virginia corporation, with its principal office in Norfolk, Va. In 1925 this plaintiff and the Hedger Company entered into a contract of transportation. The Hedger Company operated a freight forwarding service by means of barges. It contracted or arranged for taking phosphate rock from the steamer or steamers at New York, and transporting it on four barges through the Hudson river, New York State Canal, the Great Lakes, to plaintiff’s plant at Toledo, 0.

The phosphate rock was owned by the plaintiff. The barges were owned, or under the control of, the W. E. Hedger Co., Inc. By the open policy of insurance, above referred to, the W. E. Hedger Co., Inc., arranged for the insurance on the plaintiff’s property while in transportation. This was done by the issuance to the plaintiff of certificates by the Hedger Company with the authority of the defendant. This certificate of insurance, one for each of the four barges, certifies that W. E. Hedger Co., Inc., is insured under and subject to the conditions of open policy No. 377,173 of the Globe and Rutgers Fire Insurance Company, on an amount specified and on a specified number of tons of phosphate rock on board the named barge at and from New York to Toledo, Ohio.” Loss, if any, is payable to the insured, or its order, upon the surrender of the certificate. The following paragraph is contained in the certificate: It is understood and agreed that this certificate represents and takes the place of the policy and conveys all the rights of the original policy holder (for the purpose of collecting any loss or claim), as fully as if the property were covered by a special policy direct through the holder of this certificate, and free from any liability for unpaid premiums.”

It also contains some of the warranty clauses which are contained in the open policy, or the customary form of marine insurance policy. We also find a provision that the insurers are to be subrogated to all the rights of the assured under their bills of lading or other contracts of carriage.

Much might be said in favor of the claim that these certificates as to the owners of the cargo constituted the insurance agreement or contract with the insurance company free of any of the conditions or terms contained in the original or open policy issued to the Hedger Company. (De Monchy v. Phœnix Ins. Co., 44 Times L. R. 364, March 5th, 1928; Brandyce v. Globe & Rutgers Fire Ins. Co., 252 N. Y. 69.)

The words of the policy and the rider, however, will not stand this strain; such a construction becomes too attenuated. The insurer and the insured at the inception of the risk intended all the attached papers to be read together. Only after loss does the hope arise that the certificate may stand by itself. We must consider the conditions of the open policy as part of the certificates issued on the cargo, except as inconsistent therewith.

The four barges with the phosphate rock, on the 19th of October, 1925, left the port of New York, proceeded up the Hudson river in tow of a tug furnished by the W. E. Hedger Co., Inc. The destination of these barges was at all times Toledo, 0. On November 7th, 1925, the barges started from Buffalo to cross Lake Erie, and suffered damage and loss in a storm. The plaintiff has brought this action on its certificates of insurance to recover for the loss of its phosphate rock. The defendant has resisted payment under a clause of its open or original policy referring to an approval required of Captain Weisbeck. The point in this case is the meaning of the application of this approval. What was it that Captain Weisbeck was to approve, and whatever it was, did the captain do it?

The schedule of rates annexed to the policy refers to trips from New York to Buffalo, from New York to Hamilton, Ont., from New York to Cleveland, O. In other words, it was within the contemplation of the parties that the barges of the Hedger Company were to go to other places than Buffalo, after passing through the Hudson river and the canals. The trips on the lakes were to be made only between May 1st and November 1st. A provision of the special form attached to the policy provided: warranted all trips on Great Lakes approved by Captain Weisbeck, as to tug, barges, number of barges in tow, weather, etc.” On May 15, 1925, the Globe and Rutgers Fire Insurance Company, by another rider, referring to policy No. 377,173, provided that " trips on Great Lakes to be approved by Surveyor Weisbeck.”

Captain Weisbeck did not give his approval to this trip starting November 7th of the barges on the Great Lakes. The plaintiff does not claim that it obtained or that the Hedger Company obtained any such approval. How the approval of Captain Weisbeck was to be obtained and how it was to be given or recorded is not stated in the policy or any of the riders. Captain Weisbeck was stationed in Buffalo. No written approval was required; apparently it could have been given personally by word of mouth, or by a nod, by telephone or any other means indicating consent. The whole matter was left in a very vague and unsatisfactory condition. Apparently Weisbeck kept no record of his acts in this particular and never communicated any of his approvals or disapprovals to the insurance company. All we have in the case is the statement or warranty that trips on the Great Lakes are to be approved by Captain Weisbeck. The shippers of the phosphate rock, the F. S. Royster Guano Company, were in Norfolk, Va. The insurance was taken out by the defendant’s agent, the W. E. Hedger Co., Inc. The open policy issued by the defendant authorized the Hedger Company to issue these certificates of insurance to its customers. In placing the insurance the Hedger Company was, therefore, acting in behalf of the insurance company. There is no claim, however, that in placing the insurance the Hedger Company acted improperly or contrary to custom. The Virginia shipper might have insured the cargo for itself. It left the matter, however, to the owner of the barges or to the corporation,handling the transportation. We, therefore, are dealing with this policy of insurance, or this kind of insurance as contracted for by the parties. That it may have been foolish or reckless for the owners of the transported property to leave the fulfillment of future obligations, sometimes called promissory warranties, to the carrier, or, in other words, to make promissory warranties, the keeping of which was beyond their control, is a matter outside our field of discussion. This is a matter of business and not a matter of law. The insurance was taken out with the warranty that the insurance would terminate unless trips on the Great Lakes were approved by a certain selected individual named Captain Weisbeck. So long as shippers are willing to take these so-called certificates of insurance, binding them to conditions in open policies of which they know nothing, there will necessarily arise as a consequence losses which were never anticipated and could readily have been avoided. An insured is supposed to know the nature of his insurance contract. He cannot know it when he receives merely a certificate of insurance issued under an open policy and bound by the conditions of that policy, which policy never comes into his possession or is held in a place where he cannot readily read its contents. Such loose methods of doing business have given rise in this case to much discussion over the word “ trip ” and the word approval.”

What was Captain Weisbeck to do? What was he to approve? When was the approval to be made andfiiow? What were the trips referred to? Did trips ” mean each individual trip or did it mean that, after an examination of the barges and equipment, one approval of the use of these upon the Great Lakes was sufficient for the season? The insured, as we read the policies and the riders, warranted that the trips upon the Great Lakes would be approved by Captain Weisbeck. Was this approval given?

The trial justice charged the jury that if at the beginning of the season, that is, in May or June, Captain Weisbeck had examined these barges and given his approval to their use upon the Great Lakes, the terms of the policy had been complied with. The question of fact arising upon this point was due to the oral testimony offered by the plaintiff to explain the meaning of the words “ approval ” and trips,” claiming an ambiguity arising from their use. William E. Hedger, in behalf of the plaintiff, testified that he had a conversation early in 1925 with Mr. Donovan, representing the defendant, in relation to this so-called Weisbeck clause. He said: “ I told him at that time that it was impracticable, as it said that Weisbeck must approve all trips on the Great Lakes. I told him that he knew that the breadth of our service was on Lake Ontario and Lake Erie, over a radius of 800 miles, and that it would be impossible — impracticable for us to wait for Mr. Weisbeck to jump from Toledo or Buffalo, or hold our tows in different ports waiting for him to approve the trip. He said he appreciated all that * * * that it was the idea to have the equipment inspected at the beginning of the season, so that he would know what we were starting out with, what kind of tugs we had, what ldnd of a main hawser, what kind of intermediate hawser. He said that was all that was required. * * * He said * * * go ahead with your inspection of the first trip.”

Michael Widener, in behalf of the plaintiff, testified that about June 13th, 1925, he telephoned Mr. Weisbeck to come down and inspect four barges and a tug and the equipment that they were to use that year. He (Weisbeck) said the equipment was A No. 1 and that he would approve the use of the equipment for the rest of the season.”

The trouble with the judge’s charge based upon this testimony has been clearly pointed out by the Appellate Division. The four barges examined by Captain Weisbeck and approved in June of 1925 were not the barges lost in the storm on Lake Erie in November. These latter barges were never approved by anybody. The Appellate Division was justified, therefore, in reversing the judgment for the plaintiff. The question remains whether that court was justified in dismissing the complaint.

If, by any reasonable interpretation, construing this open policy and the riders most favorably for the insured, there is any question of fact which may help the plaintiff, the complaint should not have been dismissed but a new trial should be granted. We have looked in vain for such an issue of fact, or for any interpretation which can be given the approval clause which would entitle the plaintiff to recover.

When the phosphate rock was taken from the ship in the harbor of New York and placed aboard the Hedger barges, its loss was insured against from that time until its arrival in Buffalo. No approval was required from Captain Weisbeck of the barges or the trip through the Hudson river, the canals or at Buffalo. When, however, these so-called boats of the “ harbor box type ” started across Lake Erie the plaintiff’s insurance terminated unless Captain Weisbeck, in some way, approved the trip, approved their going on the Great Lakes. Here was a promissory warranty which the plaintiffs were bound through Hedger Company to maintain in order to' keep the insurance. Assuming, as we well may, that the rider of May 15th, 1925, modified the special form attached to the policy of April 16th, 1924, so that trips on the Great Lakes were the only things to be approved, we are convinced that the meaning of this clause in this later rider applied to these barges which were to make the venture on the lakes in November. It might be a reasonable interpretation to say that if the barges had been previously approved for use upon the Great Lakes about the time that they made the trip, this would have been a fair compliance with the condition or warranty. The fact is, however, that these barges were never approved for such a use. But even then it seems to us that we should not strain at the meaning of words; we should give them their usual and customary meaning unless it clearly appears that another purpose or intention was in the minds of the parties. We have had occasion to say before that insurance policies are merely contracts to be interpreted like any other contract, bearing in mind the custom or nature of the business and the terminology receiving judicial sanction. (Kean v. National Surety Co., 241 N. Y. 252, at p. 258: “An insurance policy or bond is no different than any other contract, and comes within the same rules of construction. The purpose and attempt of the courts is to give to the language used by the parties its usual and ordinary meaning in the light of all the circumstances and conditions, having in mind, as did the parties, the nature of the transaction.”) “ Trip ” or “ trips ” is an ordinary word meaning “ a journey,” a going from one place to another. (Webster’s New Internat. Diet.) Considering the nature of this insurance, the difference in the risk between travel on the river or canal and on an inland sea, the meaning of the clause requiring the approval of Captain Weisbeck of trips of the Hedger barges on the Great Lakes, is that the craft were not to venture on the journey, in other words, to leave Buffalo until the trip had his approval. This seems reasonable, and is the contract obligation no matter how inconvenient of performance. We do not mean to say that each individual trip required the approval, but at the least, the approval of the particular barges leaving should have been so recently given as to come within the scope and purpose of the clause. There is no claim that this was ever done.

The present contention of the plaintiff that the approval by Captain Weisbeck was to be of the equipment and not the barges or the trips is not borne out" either by the terms of the policy or the oral testimony given at the trial. The witness Widener, above referred to, says that he asked Mr. Weisbeck to come down and inspect four barges and a tug “ and the equipment that we were to use that year.” The equipment referred to the barges as well as the tug, hawsers, etc. It is difficult to understand why an inspection should be made of hawsers, tugs, etc., and not the barges, when the barges carried the property insured.

We have not overlooked the case of Ætna Ins. Co. v. Willys-Overland, Inc. (288 Fed. Rep. 912.) That case likewise dealt with certificates of insurance issued under an open policy and the loss of a vessel carrying goods of the certificate holder. The insurance company paid the owner of the goods and then sued the original insured for loss sustained in failing to keep its obligations to the insurance company. The defense set up that the payment to the certificate holder was a voluntary payment for the reason that if the insurance company had any claim against the original insured, it had a like claim and could use it as a defense against the certificate holder. The court said “ no,” this was not so, for two reasons. The certificate holder was not bound by the acts of the one issuing the certificate, the person insured in the open policy, first, because the claim of the insurance company against the insured arose out of the custom of marine insurance, and second, the duty of reporting the name of the vessel on which the goods were shipped was a duty imposed upon the insured under the original policy as a part of the authority conferred to issue certificates of insurance; in other words, it was a duty which the insured owed to the insurer as its agent. As stated in the beginning of this opinion, there were certain things which the Hedger Company did as agents of the insurer; it procured the insurance of the plaintiff’s goods. It issued the certificate of insurance as the defendant’s agent and for every act and representation in connection with the inception of that contract it was acting as the defendant’s agent. Those matters, however, which were thereafter to be performed by the insured property owner, and in the nature of promissory warranties, were matters which the insured or its agent was to do, matters affecting the risk or a possible increase of risk. One of these was to procure the approval of trips on the Great Lakes, a greater risk than trips on rivers and canals. The approval in our judgment was not to be obtained by the Hedger Company as the agent of the insurer, but rather as part of the duty or obligation falling upon the insured.

For this reason the judgment of the Appellate Division should be affirmed, with costs.

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

Judgment affirmed.


source: Caselaw Access Project

author: Pound, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Earl L. Sutherland, Appellant.

      (Argued October 14, 1929;
    decided November 19, 1929.)

      Hamilton Ward, Attorney-General {John 0. Bates of counsel) for appellant.
    The testimony relating to the road involved herein does not constitute sufficient proof that such road was a public highway at the time of the alleged violation. (McCutcheon v. Terminal Station Comm., 88 Misc. Rep. 601; Ricketson v. Village of Saranac Lake, 73 Misc. Rep. 52; 151 App. Div. 911; Smith v. Smythe, 197 N. Y. 461; Matter of Mayor, etc., of New York, 135 N. Y. 253; People v. Kingman, 24 N. Y. 559; People v. Van Alstyne, 3 Keyes, 35; Saunders v. Townsend, 26 Hun, 308; Speir v. Town of New Utrecht, 121 N. Y. 420; People v. Underhill, 144 N. Y. 316; Niagara Falls Susp.

      Bridge Co. v. Bachman, 66 N. Y. 261; Tozer v. N. Y. Central, etc., R. R. Co., 105 N. Y. 659; Silverstein v. Houston, W. S. & P. F. R. R. Co., 117 N. Y. 293.)

      Spencer F. Lincoln, District Attorney, for respondent.
    There is sufficient evidence that the road in question was a public highway. (Matter of Burns, 155 N. Y. 23; Lewis v. N. Y., L. & W. R. R. Co., 123 N. Y. 496; Spicer v. Town of New Utrecht, 121 N. Y. 420; Irving v. Town of Deerpark, 116 N. Y. 476.)
   Pound, J.

Defendant stands convicted in the Court of Special Sessions of the town of Jerusalem, Yates county, and sentenced to pay a fine of $50 or to be imprisoned for fifty days in the county jail, of a violation of Conservation Law (Cons. Laws, ch. 65), section 221, which reads as follows:

" § 221. Birds and quadrupeds shall not be taken on certain public lands. Birds and quadrupeds shall not be taken * * * on or from any public highway,

except public highways other than state or county highways within the forest preserve counties.”

The conviction was affirmed on appeal to the County Court of Yates county. A justice of the Appellate Division of the Fourth Judicial Department allowed an appeal to this court pursuant to the Code of Criminal Procedure, section 520.

Defendant was a State game protector and as such was defended by an Assistant Attorney-General appointed for that purpose by the Attorney-General pursuant to section 9 of' the Conservation Law. The case is thus magnified into the importance of a State trial.

The complainant, Simon Remington, and his son-in-law, Leonard Lerch, were hunters who were, on December 16, 1928, under observation by defendant while engaged in patrol work, suspected of some violation of the Conservation Law. He had asked them for. their licenses which they exhibited to him. Shortly thereafter he shot and killed a rabbit. Forthwith on December 20, 1928, they laid an information against him before the magistrate. The purpose of the statute, whether to protect birds and quadrupeds from molestation on the public highways or to protect the traveling public from the dangers incident to the use of the highway as a hunting ground, is not clear. Enough appears to suggest that the motives of complainants were not those of public spirited citizens intent on law enforcement. The defendant may not excuse himself for violation of law because he was the victim of witnesses swift and willing to expose his misdeeds; neither may the law be loosely construed to bring about his undoing. He is presumed to be innocent until the contrary is proved. (Code Grim. Proc. § 389.)

The evidence for the People establishes the fact that the rabbit was shot and taken by defendant in the middle of a dirt road about eighteen feet wide, which runs from Keuka College southerly along the shore of Keuka lake to Bluff Point in the town of Jerusalem in the county of Yates. The People must establish that this road was a public highway with established boundaries before it can be determined that the crime complained of was committed. (Talmage v. Huntting, 29 N. Y. 447.) The road was not a laid-out or dedicated highway of legal width. “ Dedication and acceptance may both concur in a single day.” (Matter of Hunter, 163 N. Y. 542, 548.) It was sought to establish that it had become a highway by user under section 209 of the Highway Law (Cons. Laws, ch. 25), which reads as follows:

§ 209. Highways by use. All lands which shall have been used by the public as a highway for the period of twenty years or more, shall be a highway, with the same force and effect as if it had been duly laid out and recorded as a highway, and the town superintendent shall open all such highways to the width of at least two rods.”

The evidence on the point of user was meager. The town superintendent of highways testified that he was thirty-nine years old; that he had been the town superintendent for three years; that he had been more or less familiar with the road all his lifetime; that the dirt road had been used generally by the public during that time; that it was one of his duties to work the road and that he had done so. He was permitted, over objection and exception, to characterize the road as a public highway. On this unsubstantial evidence it has been held that the road was a public highway by use. The question was one of fact to be established by proof of evidentiary facts and decided thereon by the trier of fact and not by the town superintendent of highways.

Obviously the town superintendent could not, on the evidence given by him, in the language of Highway Law, section 209, open such highway “ to the width of at least two rods,” for there was no evidence of user by the public for twenty years of a road two rods in width. In McCutcheon v. Terminal Station Comm. (88 Misc. Rep. 601) it was held that section 209 of the Highway Law should be construed to mean that land used as a highway by the public for twenty years shall become a public highway provided it complies with the law as to width. This holding is in conflict with the decision in Harlow v. Humision (6 Cow. 189), not referred to in the case cited, to the effect that although the statute then in force (2 R. L. 277) required public roads to be laid out four rods wide, yet, where they are claimed to exist by reason of a use of twenty years or more they may be less than four rods wide. This case we think, states the correct rule. If a road or way be established by prescription or user, the public use defines the extent of the easement. (Walker v. Caywood, 31 N. Y. 51.) A presumption of dedication and acceptance or of the laying out of a highway of legal width is not the basis of the establishment of a highway by user. Such rights rest on the statutory user itself and not on presumption, although no doubt an analogy between the statutory declaration and the common-law doctrine of prescriptive rights persists. (James v. Sammis, 132 N. Y. 239, 247.)

On the other hand, mere travel by the public over a country road not laid out or dedicated by the owner without more has never been held to be use of the road by the public as a highway, under section 209 of the Highway Law. Many private roads are thus used by the public without becoming public highways. The road must not only be traveled upon by the public but it must also be kept in repair or taken in charge and so adopted by the public authorities. “ We think all this is implied in the words used as public highways.’ ” (Speir v. Town of New Utrecht, 121 N. Y. 420.) Applying this test we do not regard the evidence as sufficient to justify a finding that the road in question had been used as a public highway for twenty years or more at the time when defendant shot the rabbit. It had been recognized as a public highway by the town authorities for three years and no more. (Palmer v. Palmer, 150 N. Y. 139; People v. Underhill, 144 N. Y. 316, 324.) The burden was on the People to establish that the road had been taken charge of by the public authorities and treated and regarded by them as a public highway like the town highways generally, for the period of twenty years or more, so that the town became responsible for its condition (Highway Law, § 74) and persons obstructing the same became subject to punishment under Penal Law, section 1530. This burden it failed to meet.

The judgment should be reversed and the information dismissed.

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

. Judgment reversed, etc.


author: O'Brien, J.

text:
    Philip Ganz, Appellant, v. Raymond S. Clark, Respondent.
    (Argued October 7, 1929;
    decided November 19, 1929.)

      Benjamin Machinist for appellant.
    Appellant’s knowledge of the existence of the mortgage is immaterial; his ouster was due to respondent’s fault. (Conley v.
      Schiller, 24 N. Y. Supp. 483; Degnario v. Sire, 68 N. Y. Supp. 789; Callahan v. Keenan, 224 N. Y. 503; Mason v. Lenderoth, 8 App. Div. 38; Marsh v. Johnston, 196 N. Y. 511; Mack v. Patchin, 42 N. Y. 167; Chysky v. Drake, 235 N. Y. 468.) Appellant has a good and substantial cause of action on the merits. (Matter of O’Donnell, 240 N. Y. 108; Conley v. Schiller, 24 N. Y. Supp. 473; Degnario v. Sire, 68 N. Y. Supp. 789; Mason v. Lenderoth, 84 N. Y. Supp. 740; Home v. Sherman, 46 N. Y. 370; Simmers v. Saltus, 3 Den. 214; T. G. & T. Co. v. 21st St. & Fifth Ave. Corp., 180 N. Y. Supp. 358; Dorb v. Modern Holding Co., 194 App. Div. 957; Matter of O’Donnell, 240 N. Y. 108; Mack v. Patchin, 42 N. Y. 167.)

      Stuart H. Benton for respondent.
    Unless a plaintiff proves that a defendant was guilty of bad faith or unfair dealing either in the making or in the breach of the covenant of quiet enjoyment, and no rent has been paid in advance, no damages may be recovered. (Thorley v. Pabst Brewing Co., 179 Fed. Rep. 338; Mack v. Patchin, 42 N. Y. 167; Matter of Strasburger, 132 N. Y. 128; Wagner v. Van Schaick Realty Co., 163 App. Div. 632; Jacobs v. Schulte, 153 App. Div. 693; Matter of Hunt, 120 Misc. Rep. 174; Kimbark v. Waldemar Co., 169 App. Div. 239; Cockroft v. N. Y. & N. H. R. R. Co., 69 N. Y. 201; Northridge v. Moore, 118 N. Y. 419; Walter v. Meeks, 120 N. Y. 79; Empire Realty Corp. v. Sayre, 197 App. Div. 422; Schwimmer v. Roth, 111 Misc. Rep. 654.) There was no fault or fraud committed by the defendant either in the making or in the breach of the covenant for quiet enjoyment. (Wagner v. Van Schaick Realty Co., 163 App. Div 632.)
   O'Brien, J.

The owner of premises in New York city mortgaged them and shortly thereafter conveyed to defendant. Plaintiff, with knowledge of the existence of the mortgage, leased part of the building from defendant for a term of five years with the right to a renewal for another five years. The lease contained a covenant for quiet enjoyment. Defendant, as long as he held title, paid the interest on the mortgage but, after conveyance to another to whom plaintiff paid rent for four months, the grantee defaulted. The mortgage was foreclosed and plaintiff was evicted. In this action for breach of the covenant, a verdict was directed against him and the judgment for defendant has been unanimously affirmed.

The lessor bound himself by solemn covenant that his lessee might “ peaceably and quietly have, hold and enjoy the said demised premises for the term aforesaid.” He promised that for five years, or, at plaintiff’s election, for ten years, the tenant should be free from disturbance in his possession of the premises. His promise was not conditional upon his retention of title, nor upon the lessee’s ignorance of the existence of the mortgage nor upon refusal to pay rent to the grantee. Without qualification the compact was made. Its obligation has not been fulfilled. Unless the weightiest reason be advanced whereby its breach may be condoned, the conclusion must follow that the agreement shall be enforced or a penalty paid for its violation. - When the owner of real estate pledges that for ten years his tenant shall be free from eviction, he assumes a heavy burden. Yet, on the other hand, the tenant, if he were put at the mercy of one who fails to perform acts necessary for the protection which he has undertaken to provide, would be compelled to support a load even more oppressive. By a short term lease the owner may keep his liability within narrow bounds. He will not be allowed to secure the benefit of a long term lease with a short term liability. Merely because he divests himself of title he cannot be heard to cast off his responsibility. Respondent rejects the application of a rule of such straightforward simplicity and argues that, unless the covenantee proves the covenantor guilty of bad faith or unfair dealing either in the making or in the breach of the covenant and also proves advance payment of rent, no damages may be recovered.

In Mack v. Patchin (42 N. Y. 167) the rule was recognized that where an implied covenant for quiet enjoyment is broken, the tenant is entitled to recover and that the only question in such an action relates to the measure of damage. The court conceded that, ordinarily, the lessee can recover only such rent as he has advanced and such mesne profits as he is hable to pay over, but both the judges who wrote opinions in that case added several conditions which qualify this ordinary rule. Among them is the failure of a lessor to remedy a defect in his title due to the existence of a mortgage hen and his refusal to incur expenses which would enable him to fulfill his contract. In that very case the lessor was cast in damages beyond the measure of the ordinary rule because he owned the real estate at the time he made the lease, was presumed to know of the existence of the mortgages and because he did not pay them and thus perfect his title and protect the lease which he had given. “ When he gave this lease,” declares Chief Judge Earl, if he acted in good faith, he must have intended, in some way, to have taken care of these mortgages; and, because he did not do so, having the .ability, so far as appears, to do so, he should be held hable to the damages recovered.” In Matter of Strasburger (132 N. Y. 128) this court cited Mack v. Patchin as its authority and stated that, if the breach of the covenants for quiet enjoyment had resulted from the fault of the lessor, the measure of damage would be the value of the unexpired leases less the rents reserved. That lessor had become insane and his breach, therefore, resulted not from his fault but from his misfortune. The court held that, if he had remained sane and had refused to protect his covenants, the damages for the breach would have been measured by the rule in Mack v. Patchin (supra). In Friedland v. Myers (139 N. Y. 432, 436) we proceeded to the point of imposing liability for breach of covenant even when the covenantor acted in good faith and we acknowledged additional exceptions to the usual rule as declared in Mack v. Patchin. “ But other damages,” states the opinion, “ may also be recovered, provided they are proximate in effect, and are not speculative or uncertain in character and were fairly within the contemplation of the parties when the lease was made, or might have been foreseen as a consequence of a breach of its covenants.” In Thorley v. Pabst Brewing Co. (179 Fed. Rep. 338) the Circuit Court of Appeals thoroughly reviewed all the New York decisions relating to the measure of damage on the breach of a covenant for quiet enjoyment and held that among the exceptions to the ancient rule is the one calling for compensatory damages when there is fault or what amounts to a fault on the part of the lessor. The precedent upon which the judgment at bar is founded and upon which respondent to a large extent relies is Wagner v. Van Schaick Realty Co. (163 App. Div. 632). Even if full approval were to be extended to the reasoning of the opinion in that case, the facts are quite different. A very special situation was there present.

When a lessor covenants for quiet enjoyment, he is bound to take such measures in relation to the mortgage as will enable him to accomplish the purpose of his covenant. His promise.survives bis divestment of title. If he is at fault in failing to provide payment of interest on the mortgage, even after he has ceased to hold title to the premises, he must answer for his fault. His interest in the lease continues to the extent of his covenant and he will not be allowed to abandon the obligations which he has assumed. He is hable for the loss of the bargain. (Mack v. Patchin, supra; Friedland v. Myers, supra.)

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

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

Judgment reversed, etc.


text:
    Michael Reinzi, Respondent, v. George C. Tilyou et al., Appellants. Frances Reinzi, Respondent, v. George C. Tilyou et al., Appellants.
    (Argued October 14, 1929;
    decided November 19, 1929.)

      William, Dike Reed and K. Courtenay Johnston for appellants.
    In the absence of any notice of a defective or dangerous condition of the defendant’s horse, the complaint should have been dismissed. (O’ Toole v. Thousand Island Park Assn., 206 App. Div. 31; Sherman v. Western Trans. Co., 62 Barb. 150; Schmidt v. City of New York, 179 App. Div. 667; Stelter v. Cordes, 146 App. Div. 300; Dunning v. Jacobs, 15 Misc. Rep. 85; Dwyer v. Hills Brothers Co., 79 App. Div. 45; Rankin v. Ittner Realty Co., Inc., 242 N. Y. 339; Beltz v. City of Yonkers, 148 N. Y. 67; Fox v. Village of Manchester, 183 N. Y. 141; Todd v. City of Troy, 61 N. Y. 506; Dougherty v. City of New York, 146 App. Div. 727.) The verdict was unsupported by any evidence. (McPherson v. City of New York, 204 N. Y. 430; Loftus v. Union Ferry Co. of Brooklyn, 84 N. Y. 455; O’Toole y. Thousand Island Park Assn., 206 App. Div. 31; Nelson v. Lehigh Valley R. R. Co., 25 App. Div. 535; Murphy v. Steeplechase Amusement Co., 250 N. Y. 479; Baffin v. Buffalo & Southwestern R. R. Co., 106 N. Y. 136; Lumsden v. Thompson Scenic R. Co., 130 App. Div. 209; Denver P. & A. Co. v. Pflug, 2 Fed. Rep. [2d] 961; Cleveland v. New Jersey Steamboat Co., 125 N. Y. 299.)

      Thomas J. O’ Neill and Charles D. Lewis for respondents.
   Pound, J.

The plaintiffs offered evidence from which the jury might find the following facts:

The plaintiff Michael Reinzi went with his wife, the plaintiff Frances Reinzi, on July 3, 1924, to seek recreation on the steeplechase horses at Steeplechase Park, Coney Island, operated by the defendant-appellant as an amusement park. The steeplechase horses are wooden horses constructed to carry two riders. They operate by gravity on an incline track 1,400 feet long and go up and down, straight away and around curves in sets of four horses each. A race is thus simulated, giving to the riders the thrill of competitive action on galloping horses but the riders have no control over the speed of their chargers. The horses are constructed so that the front rider has a bar of iron bolted to the horse resembling a set of bridle reins or an iron cross bar eleven inches wide connecting the reins to hold on with his hands and iron supports on each side resembling a stirrup in which to put his feet. The rear rider is left to hold on to the front rider. A bar of iron on either side furnishes' a support for his feet. Reinzi and his wife were in weight somewhat above the standard for their height. He weighed 230 pounds and his wife weighed 190. When they came to the place after having paid for the ride each wanted to ride a single horse because of their weight. But the horses were built for two and they were told to ride together on the back of one horse and that everything would be all right. They started off, riding astride, with Mrs. Reinzi in front and her husband mounted behind holding on to her waist. There was nothing else for him . to hold on to as he could not reach the bar in front of his wife. After reaching the top of an incline they coasted down and had gone around a curve near the finish when Mrs. Reinzi’s right stirrup broke and she and her husband fell off sustaining injuries. Reinzi says he had hold of his wife and they both fell off when she fell. The plaintiffs’ theory of the case is that the stirrup broke and that Mrs. Reinzi lost her balance and fell carrying her husband with her. The evidence sustains a finding to that effect and the question is whether defendant’s negligence has been established as the sole causé of the accident.

At the close of the case a motion to dismiss was made upon the ground, among others, that there was no proof of notice, actual or constructive, of the defect complained of which caused the accident, namely, the breaking of the stirrup. The motion was denied and an exception taken. This ruling was proper. Defendant’s witnesses testified that the horses were regularly inspected and that on the day of the accident everything appeared to be in good order and that thousands of people rode them in a-season and that only one other accident was known to the manager, the circumstances of which were not shown. The question was, however, one for the jury, for a presumption of negligence arose from the mere proof that the stirrup- broke in the surroundings of the accident. (Goldstein v. Pullman Co., 220 N. Y. 549, 554.) This presumption might be met by evidence of proper care and inspection but the credibility of the defendant’s employees was for the jury to pass upon.

Defendant was held to a high degree of care, having in mind the possibility of peril from unstable equilibrium, and the jury, having that degree of care in mind, might have found that the defect was one that could have been discovered by taking proper care to ascertain the danger and to guard against injury resulting therefrom and that such care was lacking. Obviously, the danger inherent to the sport was serious enough to justify the belief that proper precautions should be taken to avert it. (Tantillo v. Goldstein Bros. Amusement Co., 248 N. Y. 286; Murphy v. Steeplechase Amusement Co., Inc., 250 N. Y. 479.) The horses could be ridden in safety only if the supports provided by the defendant were proper and adequate. Defendant was bound to exercise proper care to see that they were fit for their purpose. Notice of the danger was enough to charge defendant with notice of the defect in the absence of proper inspection.

When the case was submitted to the jury no question of notice was presented for their consideration and no request was made for instructions on the subject. The question is not in the' case except as presented by defendant’s motion to dismiss.

So much for the case of Mrs. Reinzi. In the case of her husband the evidence is sufficient to present a question of fact whether the supports furnished him were adequate. As he was secure only as his wife was secure and the rest for his feet adequate, the question would be whether in the exercise of proper care he should not have been furnished with handhold and foothold sufficient to enable him to keep his balance. He was unable to reach about his wife to get a hold on the bar which was provided as a grip iron for the rider in front. It may be that no rear rider was expected to reach beyond his lady friend when he could reach around her. His footing was also precarious. The fall of his wife caused his fall. He was left dependent upon her for support and she in turn was dependent upon the stirrups; This is not a case where the fun came from being thrown off the horses. That was not a part of the sport.

The dangers were not so obvious as to charge plaintiffs with contributory negligence as matter of law. They saw others riding in safety and were assured that the appliance was safe.

The judgment in each action should be affirmed, with costs.

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

Judgments affirmed.


author: Lehman, J.

text:
    Dmytro Chaika, Respondent, v. Cornelius Vandenberg, Appellant.

      (Argued October 4, 1929;
    decided November 19, 1929.)

      Theodore H. Lord, Daniel Miner, William S. O’Connor and James B. Henney for appellant.
    The trial court erred in holding that, under section 282-e of the Highway Law, it was no defense that the defendant, in giving his consent to his son using his car, had prohibited him from going to New York city. (Psota v. L. I. R. R. Co., 246 N. Y. 388; Benevento v. Poertner Motor Car Co., 235 N. Y. 125; Fiocco v. Carver, 234 N. Y. 219; O’Brien v. Stern Bros., 223 N. Y. 290; Coyne v. Kennedy, 229 N. Y. 550; Rolfe v. Hewett, 227 N. Y. 486.)

      Harry Hartman for respondent.
    The defendant is liable for the negligence of the operator of the automobile under section 282-e of the Highway Law (now section 59 of the Vehicle and Traffic Law). (Cohen v. Neustadter, 247 N. Y. 207; Amann v. Thurston, 133 Misc. Rep. 293; 224 App. Div. 874; Plaumbo v. Ryan, 213 App. Div. 517; Brooks v. McNutt Delivery Co., 126 Misc. Rep. 730.)
   Lehman, J.

The plaintiff was struck and injured in the city of New York by an automobile owned by the defendant and operated at the time of the accident by the defendant’s son. The evidence sufficiently shows that the injuries were the result solely of the negligence of the operator of the car. The defendant claimed that at the time of the accident his son was not operating his car in his business nor with his permission and that he was, therefore, not responsible for any negligence of his son.

At the trial the parties stipulated that they would waive a jury and that the court may direct a verdict with the same force and effect as if a jury were present.” The defendant admitted that he owned the car. He testified that his son, a young man over twenty-one years of age, resided with him at Floral Park, Long Island. Whenever the son desired to use the car for a trip on Long Island, the defendant gave his son permission to do so, but he would not allow his son to use the car to go to New York city. On the evening of the accident the son, according to the defendant’s testimony, asked permission to use the car to go to Westbury, Long Island, to visit some friends.” In answer to the question, “ What did you tell him about using the car? ” the defendant testified: I told him that he could use the car for a trip to Long Island, because it is very hard to travel there, but I would not allow him to take the car into the city and he promised he would not do that, so I let him, have the car for Long Island.”

If the defendant’s testimony is true, then the son must have disregarded the defendant’s limitation upon the use to which he might put the car, for the accident occurred in New York city. Upon that ground the defendant moved to dismiss the complaint. The trial judge reserved decision upon that motion, and thereafter directed a verdict in favor of the plaintiff in the sum of $1,000. In his opinion directing the verdict, the court expressly stated that “ The evidence with respect to the circumstances under which the car was taken out on the particular occasion is not very satisfactory, but I do not consider it material. * * * Where the owner intrusts the car to another to be used in the business or for the pleasure of the driver, I do not think that violation of restrictions put upon the route to be taken should relieve the owner from liability under the statute.”

The statute (section 282-e of the Highway Law [Cons. Laws, ch. 25], now section 59 of the Vehicle and Traffic Law [Cons. Laws, ch. 71]) provides that: “ Every owner of a motor vehicle operated upon a public highway shall be hable and responsible for death or injuries to person or property resulting from negligence in the operation of such motor vehicle in the business of such owner or otherwise, by any person legally using or operating the same with the permission, express or implied, of such owner.”

Even before that statute was enacted, presumptively the owner of a motor vehicle was responsible for the manner in which it was driven. (Ferris v. Sterling, 214 N. Y. 249; Potts v. Pardee, 220 N. Y. 431.) In the latter case it. was said: “ The presumption growing out of a prima facie case, however, remains only so long as there is no substantial evidence to the contrary. When that is offered the presumption disappears, and unless met by further proof there is nothing to justify a finding based solely upon it.” Here the only evidence offered to meet the prima facie proof of control by the defendant is the defendant’s own testimony in regard to the restricted permission given to his son. It is not corroborated in any way, and the interest of the witness and the character of the evidence might, .not unreasonably, lead to doubt of its truth, even though not contradicted. A trier of the fact might resolve this doubt against the defendant. If this evidence is discarded, the prima facie proof of the defendant’s control remains unrebutted. This evidence was not sufficient in law to destroy the presumption of control, although it might have been in fact.” (Moore v. Rosenmond, 238 N. Y. 356.) (See, also, Ferris v. Sterling, supra; Fallon v. Swackhamer, 226 N. Y. 444; Der Ohannessian v. Elliott, 233 N. Y. 326.)

The plaintiff now urges that since the trial judge in directing the verdict had power to pass upon all disputed questions of fact, we must presume that the question of the control of the automobile was resolved by him against the defendant and that the judgment must be affirmed upon that ground even though we should be of the opinion that the trial judge erred in holding that the defendant would still be liable under section 282-e of the Highway Law, if at the time of the accident he had in fact parted with control. The ruling of the trial judge in directing the verdict is embodied in the opinion. It expressly states that the trial judge did not pass upon the truth of the defendant’s testimony. That question of fact was not resolved either way because the trial judge held that it was not material. If the trial judge was in error in his construction of section 282-e of the Highway Law, then the question of fact upon which the trial judge refused to pass becomes decisive. No fiction can deprive the defendant of his right to a trial upon a decisive question of fact which the record shows was never decided. So we have held under similar circumstances in Ferrari v. First National Bank of Connellsville (246 N. Y. 382).

We have said that section 282-e made the owner of a motor vehicle liable for the negligence of a driver who operated it for his own purposes with the assent of the owner.” (Cohen v. Neustadter, 247 N. Y. 207.) Assent must exist at the time of the negligence. Only where the automobile is operated by a person legally using the same with the permission of the owner is the owner fiable. Here, according to the testimony of the defendant, he had given his son permission to use the automobile only on Long Island. When the accident occurred the son was operating the car in New York city. The restricted permission did not cover such use. At that time the son was operating the car illegally and without the assent of the owner.

A different question would arise if the son had received permission to use the car but had deviated from the owner’s instructions as to the manner in which the car was to be used or the route to be taken. Deviation by an employee from the strict line of his employer’s business or from his directions may not put the employee’s act outside of the scope of his employment; so deviation even from the terms of permission to use the car might conceivably be insufficient, of its own force, to terminate the permission and render the use of the car illegal. The testimony of the defendant, if accepted, presents a question of law capable of clear definition. The son for his own purpose took the car to New York city, though the defendant had not only given no permission to use the car for that purpose but had expressly forbidden such use. The restricted permission to use the car for a trip to Westbury was disregarded after the son obtained possession of the car. That permission by its terms excluded the use of the car by the son at the time and place of the accident. Then the use of the car by the son was clearly unlawful and not only without the permission of the owner but contrary to his commands. The statute imposes liability upon the owner of a motor vehicle for the negligence of “ any person legally using or operating the same with the permission, express or implied, of such owner.” The question before us is whether that language may be construed to include a case where injuries are caused by a person who, at the time of the accident, was using the motor vehicle unlawfully, without permission of the owner and even contrary to his orders, merely because the owner had given the person operating the vehicle permission to use the vehicle for another purpose at another place. We have already indicated that the statute can receive no such construction by our decisions in Fluegel v. Coudert (244 N. Y. 393) and Psota v. Long Island R. R. Co. (246 N. Y. 388).

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

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

Judgment reversed, etc.


text:
    New Era Electric Range Company, Appellant, Lemuel W. Serrell et al., Respondents.

      (Argued October 8, 1929;
    decided November 19, 1929.)

      Eugene S. Bibb for appellant.
    The State court has jurisdiction of the subject-matter of this action. (Allison v. Hart, 56 Hun, 282; Annin v. Wren, 44 Hun, 352; Wittemann Bros. v. Wittemann Co., 151 N. Y. Supp. 816; Wise v. Tube Bending Machine Co., 194 N. Y. 272; Hartell v. Tilghman, 99 U. S. 547; Wilson v. Sandforth, 10 How. [U. S.] 99; Brown v. Shannon, 20 How. [U. S.] 56; Albright v. Teas, 16 Otto, 613; Blanchard v. Sprague, 1 Cliff. 288; New Marshall Engine Co. v. Marshall Engine Co., 223 U. S. 473; Merserole v. Union Paper Collar Co., Fed. Cas. No. 9,488; Pratt v. Paris Gas Light & Coke Co., 168 U. S. 255.) The complaint states a cause of action against all of the other defendants. (Farmers Loan & Trust Co. v. Meyers, 222 App. Div. 123; Matter of Boone, 83 Fed. Rep. 944.)

      Andrew F. Murray and Junius Pendleton Wilson for Arthur H. Serrell et al., respondents.
    The State court has no jurisdiction of the subject-matter of this action. (Wise v. Tube Bending Machine Co., 194 N. Y. 272; Pratt v. Paris Gas Light & Coke Co., 168 U. S. 255; Standard. Scale & Foundry Co. v. McDonald, 127 Fed. Rep. 709; Kennedy v. Hazelton, 128 U. S. 667; Brewer-Titchener Corp. v. American Forging & Socket Co., 300 Fed. Rep. 335; Hat Sweat Mfg. Co. v. Reinoehl, 102 N. Y. 167; Excelsior W. P. Co. v. Pacific Bridge Co., 185 U. S. 282; Luckett v. Delpark, 270 U. S. 496.) The complaint does not state a cause of action against other defendants. (Townsend v. Bogert, 126 N. Y. 307; Simar v. Canaday, 53 N. Y. 298; Kelly v. Gould, 141 N Y. 596; Comstock v. Aimes, 1 Abb. Ct. App. Dec. 416.)

      H. Howard Babcock for Lemuel W. Serrell, respondent, and Frank W. Harris for Serelco, Inc., respondent.
    The State court has no jurisdiction of the subject-matter of this suit. (Wise v. Tube Bending Machine Co., 194 N. Y. 278; Pratt v. Paris Gas Light & Coke Co., 168 U. S. 255.)
   Lehman, J.

The complaint alleges that on December 29, 1925, the defendant Lemuel W. Serrell obtained a patent upon a device invented by him and that he is now about to offer or is offering for sale commercially the said invention and device. The plaintiff claims that it is the owner of the device invented by Lemuel W. Serrell, and seeks a judgment directing the defendants to assign to it all their rights or interests in and to the patent and the invention and device covered thereby. It also seeks an injunction against the defendants’ manufacturing, causing to be manufactured, using, dealing in, offering for sale or selling said invention and device or any part thereof.”

The defendants moved to dismiss the complaint on the ground that it appears on the face of the complaint that it does not state facts sufficient to constitute a cause of action and on the ground that it appears on the face of the complaint that the court has no jurisdiction of the subject of the action.” The motion was granted on the ground that the courts of the United States have sole jurisdiction of the subject of the action.

The plaintiff’s cause of action is based upon the allegations that in July, 1924, the defendant Lemuel W. Serrell filed an application for letters patent upon the device invented by him, and simultaneously with the execution by him of that application, he, “ for a valuable consideration, assigned unconditionally, his entire right, title and interest in and to said device and invention and patent application * * * to Serrell Electric Appliance Corporation, a Delaware corporation.” . While that application was still pending, the corporation was adjudicated a bankrupt. On the 18th day of June, 1926, “ said invention, device and said patent application * * * was duly sold to the plaintiff by the owner thereof, said Lloyd Garrison, as Trustee in Bankruptcy of Serrell Electric Appliance Corporation.” At that time the original application had lapsed and upon a new application for letters patent upon the same identical device and invention Lemuel W. Serrell obtained the patent, which the plaintiff seeks to have assigned to it, and he is now offering the said invention and device for sale.

The complaint contains many additional allegations intended to show that after the original application was assigned to Serrell Electric Appliance Corporation, its subsequent abandonment or lapse was caused by the fault of Lemuel W. Serrell; that Serrell’s second application was fraudulent and based upon a false affidavit; that when the plaintiff, upon petition to the Commissioner of Patents, attempted to revive the original patent application, the petition was rejected because it conflicted with the patent granted to the defendant Lemuel W. Serrell. We may for the moment disregard these allegations as surplusage; for even without them the complaint contains a complete cause of action against Lemuel W. Serrell.

If the plaintiff can establish his allegations that Lemuel W. Serrell invented a device and assigned the device and invention to a corporation; that thereafter the plaintiff became the owner of the device and invention by assignment from the trustee in bankruptcy of the corporation, and that Serrell wrongfully obtained a patent upon the same device and invention which he had previously assigned, and is now offering said invention and device for sale, then the plaintiff will establish a cause of action, at least against Lemuel W. Serrell. The plaintiff’s title to a device invented by Lemuel W. Serrell is derived from an assignment by the inventor made before the invention was patented. Upon principles well established in the common law an inventor has, independent of letters patent, an exclusive property in his invention, until by publication it becomes the property of the public. Courts of common-law jurisdiction protect that property. (Tabor v. Hoffman, 118 N. Y. 30.) Like other property rights, it is assignable, and since an assignment as effectively divests the inventor of his rights as though the invention were a chattel, he is bound to leave the assignee free to deal with the invention as he wills.” (Per Learned Hand, J., in Garfield v. Western Electric Co., Inc., 298 Fed. Rep. 659.) Here, according to the allegations of the complaint, the assignor has not left “ the assignee free to deal with the invention as he wills.” Not only has he wrongfully obtained for himself a patent upon the invention but he is offering said invention and device for sale. No party seriously contends that, if these allegations are true, such acts by the inventor in derogation of the property rights which he assigned are not wrongful, or that a wronged assignee may not find a remedy in a court of competent jurisdiction.

We are told that only the courts of the United States have jurisdiction over the subject-matter of the action. The courts of the United States have jurisdiction, exclusive of the courts of the several States, of all cases arising under the patent right, or copyright laws of the United States.” (Judicial Code, section 256.) Here the plaintiff seeks protection for a property right, which it has received by assignment, against wrongful acts of the assignor. The complaint discloses that the assignor has obtained a patent upon a device which the plaintiff claims is the device assigned to it. Doubtless if, at the trial, it appears that the defendants’ patent is not upon the same identical invention or device which the plaintiff owns and that the defendant is offering for sale only the invention and device covered by the patent, then the plaintiff’s cause of action must fall. We may surmise that when the issues are defined by the answer of defendants, the result of the trial will be dependent upon the question of the identity of the device patented and the device covered by the first application which was assigned by the defendant. Intricate questions similar to those which arise in actions under the patent rights law may be involved, and it is argued that only the Federal courts may determine such questions.

The jurisdiction of the State courts is not so circumscribed that it may not determine questions arising under the patent rights law when merely incidental to cases which do not arise under that law. There is a clear distinction between a case and a question arising under the patent laws. The former arises when the plaintiff in his opening pleading — be it a bill, complaint or declaration — sets up a right under the patent laws as ground for a recovery. Of such the State courts h&ve no jurisdiction. The latter may appear in the plea or answer or in the testimony. The determination of such question is not beyond the competency of the State tribunals.” (Pratt v. Paris Gas Light & Coke Co., 168 U. S. 255.)

Here the plaintiff’s alleged title is to the device or invention assigned by the inventor. It does' not arise through the patent rights law, nor can it be defeated, by any construction of the patent law. If the patent issued to the defendant Lemuel W. Serrell after the assignment is valid, then by reason of the prior assignment of the invention and device, the plaintiff claims that, on general principles of equity, the patent belongs to it. If the patent subsequently issued to the defendant is invalid, then the void patent can afford no protection to the defendants for any invasion of the plaintiff’s property in the invention and device assigned to it. The courts of this State are not asked to revise any action of the Commissioner of Patents. They are asked to pass upon the plaintiff’s alleged title to a device or invention based solely upon an assignment, and questions of title to an invention or device based upon assignment or upon general equitable principles are within the jurisdiction of the courts of the State, even when the invention is covered by a patent. (Marsh v. Nichols, Shepard & Co., 140 U. S. 344; New Marshall Engine Co. v. Marshall Engine Co., 223 U. S. 473; Binney v. Annan, 107 Mass. 94.) The recent decision of the Supreme Court of the United States in Becher v. Contoure Laboratories, Inc. (279 U. S. 388) is in principle direct authority for the plaintiff’s contentions. (See, also, same case reported in 29 Fed. Rep. [2d] 31.)

The defendant Serrell urges that even if the State courts have jurisdiction of the subject of the action, the complaint is defective, since it shows on its face that Serrell’s patent is invalid and the courts cannot decree the assignment of a void patent. (Kennedy v. Hazelton, 128 U. S. 667.)

The complaint does contain allegations that Serrell’s patent was issued upon an application containing statements that are false. We do not pass upon the question of whether these allegations show that the patent is void. If the patent is void, then an assignment of the void patent, would be vain. Even if we assume that the patent is void, the court could still grant relief against the defendants’ alleged interference with any device or invention owned by the plaintiff, by manufacture or sale of the device.

We are not concerned now with any argument that the plaintiff’s claim of the identity of the device assigned by Lemuel W. Serrell and the device upon which a patent has been issued subsequently is negatived by certain allegations of the complaint. At most it may be said that the nature of these allegations may raise doubt as to whether the plaintiff can prove its cause of action. We are concerned only with the sufficiency of the complaint.

So far we have considered only the sufficiency of the complaint against Lemuel W. Serrell. It is not clear that the complaint alleges a complete cause of action against some of the other defendants. The complaint does, however, state that such defendants claim interest in said patent and device, the nature and details of which has not been disclosed to the plaintiff.” These defendants are, therefore, proper parties to an equitable action. (Delcambre v. Delcambre, 210 N. Y. 460.)

The judgment of the Appellate Division and of the Special Term should be reversed, with costs to the appellant in all courts and the motion to dismiss the complaint denied, with ten dollars costs.

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

Judgments reversed, etc.


text:
    In the Matter of the Claim of Reinhold Wingen, against B. Fleischman et al., Respondents. The State Industrial Board, Appellant.

      (Argued October 1, 1929;
    decided November 19, 1929.)

      Hamilton Ward, Attorney-General (E. C. Aiken of counsel), for appellant.
    The place where the employee was working and suffered the accident is not important as long as it was incident to the business of the employer. (Post v. Burger & Gohlke, 216 N. Y. 545.) Where an employee is engaged at some work which is incidental to the business of the employer he is covered. (Dose v. Moehle Lithographing Co., 221 N. Y. 441; Alterman v. Namm & Son, 190 App. Div. 76; 229 N. Y. 640; Jaabeck v. Crane’s Sons Co., 238 N. Y. 314.)

      Edward P. Mowton for respondents.
    The injuries sustained by claimant did not arise out of and in the course of any employment that was included within the terms of the compensation policy. (Jennings v. Visscher, 217 App. Div. 417; Matter of Pettit v. Reges, 242 N. Y. 272.) The work at which claimant was engaged when injured was not incidental to the work for which the policy was issued. (Newman v. Newman, 218 N. Y. 325; Glatzl v. Stumpp, 220 N. Y. 71; Bargey v. Massaro Macaroni Co., 218 N. Y. 410.)
   Lehman, J.

The claimant’s employer in January, 1927, was engaged in the business of fabricating art and cathedral window glass. His shop was situated at 503 East Seventy-third street. There the claimant had been employed for two years. The employer worked almost exclusively for the trade.” After orders placed with him had been completed, the persons who had given the orders usually would call for the finished work and place it in position in the building for which it was designed. The employees of the defendant were, it seems, not members of the particular union which claimed exclusive right to set glass in its place in buildings under construction. Occasionally, though seldom, the employer delivered a glass window or. door and even placed it in position.

In January, 1927, the employer received an order for a glass dome to be placed in a moving picture theatre. When the shop work was completed, the employer carried the glass to the theatre in his own automobile. He told the claimant to come along to assist him. Never, previously, had the claimant been called upon to work outside of the shop. The employer intended to put the glass in its place at the theatre with the claimant's assistance. No puttying was required for that work. The glass was merely to be laid down in the place for which it had been prepared. At the theatre other work was being carried on at that time. A workman caused a fighting fixture to strike the claimant on his head, causing very severe injury.

It is clear that the injury arose out of and in the course of the claimant’s employment. The award made by the State Industrial Board against the employer has been affirmed by the Appellate Division, and no appeal from that determination has been taken by the employer. The award was reversed and claim dismissed as to the insurance carrier on the ground of lack of coverage.” (226 App. Div. 829.) It is said that, by the terms of the policy of insurance, injuries suffered'by the employee while delivering or installing glass are excluded.

The policy provides that the carrier “ does hereby agree with the Employer, named and described as such in the Declarations forming a part hereof, as respects personal injuries sustained by employees, * * * as follows: * * * Employees Covered. Five: This agreement shall apply to such injuries sustained by any person or persons employed by this Employer whose entire remuneration shall be included in the total actual remuneration for which provision is hereinafter made, * * * Business Operations Covered. Six: 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 and described in said Declarations or elsewhere in connection with, or in relation to such work-places.”

Concededly the declarations described the business operations of the employer as “ Cathedral and Art Glass Window Manufacturing,” and stated that the factory or shop was located at 502 East Seventy-third street. The claimant’s entire remuneration was included in the total actual remuneration upon which the premium for the policy was computed and adjusted. Though the claimant, until the day of the accident, worked solely in the shop and in the declarations, of the policy his work is so classified, yet the delivery and installation of glass fabricated in the shop, even though seldom required, was “incident ” or “ appurtenant ” to or “connected” with the operations conducted at the workplace defined and described in the declarations. The policy, by its express terms quoted above, clearly seems to apply to the injuries suffered by the claimant.

It is said, however, that other terms of, the policy limit its application and exclude the injuries suffered by the claimant. Item 3 of the declarations provides for a classification of all business operations “ as declared in each instance by a disclosure of estimated remuneration of employees under such of the following Divisions as are undertaken by this Employer. (1) All industrial operations upon the premises. (2) All office forces. (3) All repairs or alterations to premises. (4) Specially rated operations on the premises. (5) Operations not on the premises.” Then follow blanks for the insertion of the estimated remuneration under each division of operations conducted by the employer. In these blanks under division 5 of “ Operations not on the premises ” there is a further subdivision including (a) “ Erection, installation, repair, or demonstration of Employer’s product.” The employer classified his operations only under divisions 1 and 2 and included the claimant’s remuneration exactly where it belonged under division 1 of industrial operations on the premises. In addition the employer stated under item 5 of the declarations that he is “ conducting no other business operations at this or any other location not herein disclosed.”

The insurance company now urges that these declarations are representations that the employer conducts no operations outside of his shop, and, specifically, that he does not erect, install, repair or demonstrate his product off the premises, and consequently that injuries suffered by an employee while delivering or installing the manufactured product are expressly excluded from coverage. The policy must be read as a whole, and so read its language is not capable of such construction. The stipulated protection which employer and employee were to receive was to cover completely not merely the operations described in the declarations but also all operations * * * connected therewith, whether such operations are conducted at the work-places defined and described in said Declarations or elsewhere.” Intention to include all injuries suffered by employees engaged in the operation of the shop described in the declarations, even though the injury occurs while an employee is working elsewhere in an operation connected with his shop work, is clear. That intention may not be defeated by any forced construction of other clauses of the policy.

There is, indeed, here no room for any construction of the clauses of the policy, upon which the carrier relies, which would defeat the intent of the policy as expressed in its general clauses. It recites that the premium is based upon the entire remuneration earned, during the policy period, by all employees * * * engaged in the business operations described in said Declarations together with all operations necessary, incident, or appurtenant thereto, or connected therewith, whether conducted at such work-places or elsewhere in connection therewith or in relation thereto.” Thus we have not only an agreement by the carrier to insure against all injuries sustained by the employee in the operations described in the declarations and all operations connected therewith conducted elsewhere, but an agreement on the part of the employer to pay a premium based on the remuneration of the employees for work conducted in the shop and work conducted elsewhere in connection therewith. The classification of the operations in the declarations was, by the terms of the policy, only to be made in connection with the disclosure of estimated remuneration * * . * under such of the following Divisions as are undertaken by this Employer.” That classification into divisions was not intended to limit either the coverage of the policy or the premium to be paid thereunder. It was intended merely to facilitate computation of the agreed premium. That appears not only from the language of the declarations already quoted but also from the language of the following item of the declarations that: The foregoing enumeration and description of employees include all persons employed in the service of this Employer in connection with the business operations above described to whom remuneration of any nature in consideration of service is paid, allowed, or due. * * * The foregoing estimates of remuneration are offered for the purpose of computing the advance premium.” (Italics are ours.).

No operations were regularly conducted by the employer elsewhere than in the shop, though on rare occasions the employees were called upon to do elsewhere some work connected with their shop work. Such occasional outside operations were so closely connected with the operations conducted in the shop that they naturally fall within the scope of the employment of the shop workers. The remuneration of the shop workers covered also their rare work performed elsewhere. Disclosure of remuneration of employees under divisions, showing separately operations on the premises and operations not on the premises, is not practical where all workers are employed and paid for work on the premises and are called on to work elsewhere only occasionally and in connection with their work on the premises. Failure to attempt such division in the employer’s disclosure of the estimated remuneration of his employee shows no intent to limit the application of the policy so as to exclude the stipulated, coverage for injuries, wherever sustained, in work connected with the operations conducted at the shop.

It follows that the order of the Appellate Division should be reversed and the award of the State Industrial Board reinstated, with costs against the insurance carrier in the Appellate Division and in this court.

Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Htjbbs, JJ., concur.

Order reversed, etc.


text:
    In the Matter of the Accounting of Joanna R. Cleary, as Executrix of Anna Fitzpatrick, Appellant. T. George Hodges, as Administrator of the Estate of Sarah Fitzpatrick, Deceased, Respondent.

      (Argued October 18, 1929;
    decided November 19, 1929.)

      Edward H. Pattison and Joseph F. McCloy for appellant.
    Anna had the right and power under the will, as life tenant, to convey real property of Sarah’s estate for any consideration satisfactory to her. It was not necessary that the estate of Sarah receive any consideration. (Matter of Davies, 242 N. Y. 196; Matter of Briggs, 101 Misc. Rep. 191; 223 N. Y. 677; Matter of Ithaca Trust Co., 220 N. Y. 437.) The Surrogate failed to distinguish between the acts of Anna Fitzpatrick as executrix and her acts as an individual, that is, as fife tenant with power to invade principal. (Matter of Davies, 242 N. Y. 196; Matter of Trelease, 115 App. Div. 654.) The Surrogate committed reversible error in ruling upon the inclusion and exclusion of evidence. (Stevens v. Stevens, 225 App. Div. 892.)

      Frank Pedlow and Joseph C. Behan, Jr., for respondent.
    The Surrogate committed no error in excluding or rejecting evidence. (Moller v. Paulovico, 190 App. Div. 1.)
   Lehman, J.

The will of Sarah Fitzpatrick provided: “ First. I give, devise and bequeath all of my estate, both real and personal, whatsoever and wheresoever situate, unto my sister Anna Fitzpatrick, of the City of Watervliet, New York, To Have and To Hold the same for and during the term of her natural life, but with full power to use all or any part of the principal or income therefrom. Second. Upon the death of my said sister Anna Fitzpatrick, I give and bequeath the principal and income thereof which has not been used then remaining in the hands of my said sister Anna as followsetc. The testatrix also appointed her sister one of her executors. The estate consisted of some personal property and a half interest in a house in Watervliet which the two sisters had owned in common.

Anna Fitzpatrick conveyed her individual half interest in the house to her cousin, Joanna R. Cleary, in May, 1926. Thereafter she moved from her home in Watervliet to New York city and there lived with Miss Cleary and her family. Miss Fitzpatrick was old and somewhat infirm. Miss Cleary took care of her. In July, 1927, Miss Fitzpatrick executed and delivered to Miss Cleary a conveyance of the undivided half interest in the Watervliet house which had been part of the estate of Sarah Fitzpatrick. The conveyance was not a gift. She received in return a written agreement from Miss Cleary to support and maintain her for the period of the remainder of her fife or for a period not to exceed thirty months, whichever was the shorter period. The half interest in the property conveyed was worth $4,000, a sum not on its face disproportionate to the value of the promise of Miss Cleary for which it constituted consideration. As security for the performance of the contract for the support and maintenance of the grantor, the grantee executed a mortgage on the property conveyed in the sum of $4,000.

In November, 1927, the grantor died. Miss Cleary was appointed as the executrix of her will. As such executrix she filed an account of the proceedings of Anna Fitzpatrick, deceased, as executrix under the last will and testament of Sarah E. Fitzpatrick. The account stated that Anna Fitzpatrick, as executrix of her sister, had received a half interest in the house in Watervhet valued at $4,000, and that she had transferred that interest to Joanna It. Cleary in consideration of the above-described agreement for her support. Objection was filed to the account on the ground that the conveyance made by Anna Fitzpatrick was obtained by undue influence and constituted a violation of her duty as executrix under the will of her sister.

Doubtless Anna Fitzpatrick had power to make the conveyance of the real property. She received under the will " full power to use all or any part of principal or income ” of the property in which she had a fife estate. A conveyance made for the purpose of securing a contract for her support for a fixed time, if she should live that long, was within the scope of that power. Even though the estate might have profited if she had used the principal of the personal property to provide for her needs as they might arise from month to month instead of conveying the real property of the estate as she did, the testatrix had made her the sole judge of what property she should use and how she should use it. (Vincent v. Rix, 248 N. Y. 76.) The courts below have charged the estate of Anna Fitzpatrick with the value of the property conveyed and have ordered her grantee to return the property to the estate of Sarah E. Fitzpatrick, not on the ground that Anna did not have power to make the conveyance, but on the ground that she was induced to exercise that power by undue influence.

There is some evidence that the conveyance was the result of overpowering influence exercised by the grantee rather than of the volition of the grantor. That evidence is largely circumstantial. Perhaps to us it might not seem very convincing; it did convince the trier of the facts. Three persons took direct part in the transaction; the grantor, the grantee and the lawyer who prepared the papers and advised the grant. The lips of the grantor are sealed by death. The Surrogate refused to permit the grantee to be examined concerning personal transactions with the deceased because the grantee is interested in the event of the proceeding. He excluded testimony of the lawyer as to conversations held with the deceased when no one else was present on the ground that such communications were confidential.

If the grantee had been examined concerning her personal transactions with the decedent, the courts below might have reached a different conclusion. The Legislature has placed certain limitations upon the competency, as a witness, of a party or person interested in the event of an action or special proceedings. Otherwise, interest does not affect the competency, though it may affect the credibility, of a witness. A party or a person interested in the event * * * shall not be examined * * * in his own behalf or interest * * * against the executor, administrator or survivor of a deceased person * * * concerning a personal transaction or communication between the witness and the deceased person.” (Civ. Prac. Act, § 347.) The personal transaction concerning which the witness was questioned was between the witness and Anna Fitzpatrick, now deceased. The controversy is in form between the estate of Sarah E. Fitzpatrick and the estate of Anna Fitzpatrick. The witness is the executrix of Anna Fitzpatrick and as such executrix she is a party to the controversy. She was a witness, not against the estate of Anna Fitzpatrick, of which she was executrix, but in behalf of that estate. As such witness she might be examined even concerning personal transactions with the deceased.

The witness was not individually a party to the proceeding. She was interested in its event because an adjudication that the conveyance made by Anna Fitzpatrick was void and that Anna Fitzpatrick, as executrix of Sarah E. Fitzpatrick, must account for that property, might carry with it the consequence that the witness would be compelled to return the property to the estate of Sarah Fitzpatrick of which it had originally been a part. As executrix of Anna Fitzpatrick she was called upon to oppose an adjudication that Anna Fitzpatrick must account to the estate of Sarah Fitzpatrick for the property conveyed. Otherwise the estate of Anna Fitzpatrick had no interest in the proceeding.

Doubtless the error is due to confusion created by the fact that the parties presented to the Surrogate for decision upon the accounting of Anna Fitzpatrick, as executrix of Sarah Fitzpatrick, a controversy as to acts and doings ” of Anna Fitzpatrick as an individual and not as executrix. For such acts neither Anna Fitzpatrick nor her estate was answerable to the estate of her sister Sarah Fitzpatrick. The real property of Sarah Fitzpatrick was not devised by the testatrix, upon her death, to her executors. It was devised for life to Anna Fitzpatrick and came into her possession as a life tenant and not as executrix. We are not called upon to decide whether at the death of the life tenant there might not be an equitable conversion of any real property remaining in her hands at that time. Certainly until that time the executors of the estate had no present interest in, or right of possession to, any real property. (Barber v. Terry, 224 N. Y. 334.) The life tenant in possession of the property had power to convey it. If the conveyance was not effectively executed, then upon her death the property passed as provided in Sarah Fitzpatrick’s will. If it was effective, then nothing remained which could pass to the remaindermen. In either case, since the property never came into the possession of Anna Fitzpatrick, as executrix, since she never disposed of it as executrix and is not accused of any wrongdoing as executrix or as an individual, her accounts as executrix should not be charged with the real property or its value. The appellant apparently was content to permit the Surrogate to determine the controversy. Upon proper motion the Surrogate would have been bound to dismiss the objections, and approve the accounts. The persons interested in the controversy are the grantee of the life tenant and those entitled to property remaining in the life tenant’s hands at her death. The estate of Anna Fitzpatrick has no interest in it.

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

Cardozo, Ch. J., Pound, Crane, Kellogg, O’Brien and Hutbbs, JJ., concur.

Order reversed, etc.