author: Hiscock, Ch. J. McLaughlin, J. (dissenting in part):

text:
    Anna Byrnes, Appellant, v. Clifford H. Owen et al., Respondents, Impleaded with Others.
    Real property — dower ■— fraud — estoppel — pleading — inchoate right of dower protected from fraudulent destruction equally with perfected one —■ sufficiency of complaint alleging fraudulent deprivation of inchoate right of dower — judgment of foreclosure and sale as part of fraudulent scheme no bar to relief — that plaintiff was party to foreclosure action does not affect her right to maintain this — wife of husband’s agent who bid in property, but subsequently transferred same not a proper party to action — agent a proper but not necessary party.
    1. The right of dower is perhaps the most highly and widely cherished property right resulting from marriage and one which the courts have been alert to protect from fraudulent destruction. The protective attitude extends to an inchoate right of dower equally with a perfected one.
    2. A complaint states a cause of action which alleges that the defendant husband for the purpose of accomplishing his plan to deprive his wife of her dower right procured her to execute a small mortgage on premises worth much more than the amount of the incumbrance; that subsequently and for the purpose of accomplishing his unlawful purpose he refused, although able to do so, to pay the indebtedness secured by such mortgage and for which he was directly and primarily liable, actively urged and procured the mortgage to be foreclosed, and on the sale with money supplied by him procured one of the defendants, as his agent and attorney, to bid off the premises which were subsequently transferred without consideration to his sister who now holds the title.
    3. A contention that because a judgment of foreclosure and sale was one of the steps in the fraudulent scheme to deprive plaintiff of her dower right, the result is immune from attack and the plaintiff barred from any relief against the injury which has been perpetrated upon her, cannot be sustained. Under no principle or rule is a judgment procured on such facts, as a step in the accomplishment of a fraudulent purpose, a defense to the person fraudulently procuring it to be recovered or a bar to equitable relief either against him or those who acted as his agents and representatives in attempting to capture for his benefit the proceeds of the fraud.
    4. Nor is the problem affected by the fact that this plaintiff was a party to the foreclosure action. The facts which she now alleges would not have raised an issue or presented a defense in the foreclosure action. They were outside the issues in that action and it would have been no answer to the attempt of the mortgagee to collect his mortgage that the husband who was bound and able to pay his obligations was purposely refraining from so doing in order to fraudulently deprive his wife of her inchoate right of dower. (Gilson v. Hutchinson, 120 Mass. 27, 32; Brownell v. Briggs, 173 Mass. 529, 532; Munroe v. Crouse, 59 Hun, 248, approved; Phelps v. Phelps, 143 N. Y. 197; Melenlcy v. Helen, 233 N. Y. 19, distinguished.)
    5. The wife of the husband’s agent and attorney, who bid in the property, is not a proper party to the action. The only allegations against her are that she acquired an inchoate right of dower when the title to the premises in question passed to her husband, and this inchoate right has been entirely cut off by her joining in the conveyance subsequently executed by him.
    6. The agent and attorney, however, is a proper though not a necessary defendant. The complaint alleges in effect that he was a party to the conspiracy, buying in the property as agent and thereafter conveying it to the husband’s sister. If it should develop on the trial that the sister had afterwards conveyed to a purchaser in good faith, or was such a purchaser herself, the plaintiff might be entitled to some form of equitable relief against the intermediary who had fraudulently co-operated to despoil her of her dower. Furthermore, if he were not a party to the action, he might be heard to deny hereafter that his conveyance to the sister, whatever its form, was absolute in fact. He might claim that it was subject to a trust, or that it was security for a debt. The plaintiff is at liberty to join him to the end that such claims may be foreclosed.
    (Argued May 7, 1926;
    decided July 9, 1926.)

      Byrnes v. Owen, 213 App. Div. 352, modified.
    Appeal from a judgment entered July 23, 1925, upon an order of the Appellate Division of the Supreme Court in the second judicial department, which reversed an order of Special Term denying a motion for a dismissal of the complaint and granted said motion.

      Florence J. Sullivan and John F. Couts for appellant.
    The complaint states a good cause of action with respect to the damage plaintiff suffered by reason of the fraud committed by her husband and his agent, by which said husband in form disposed of his real estate by foreclosure of the mortgage thereon and having the title transferred to his agents, the immediate result of which was to deprive plaintiff of her dower right therein. (Youngs v. Carter, 10 Hun, 194; Melenky v. Melen, 233 N. Y. 22; Wright v. Douglass, 7 N. Y. 564; Murray v. Miller, 178 N. Y. 316; Monypeny v. Monypeny, 202 N. Y. 90; Wainwright v. Low, 132 N. Y. 313; Bookout v. Bookout, 150 Ind. 63; Walker v. Walker, 66 N. H. 390; Brownell v. Briggs, 173 Mass. 529; Coatsworth v. Lehigh Valley R. Co., 156 N. Y. 451; Wallace v. Jones, 182 N. Y. 37; National Contracting Co. v. Hudson R. W. P. Co., 170 N. Y. 439; Ellsworth v. Agricultural Society, 99 App. Div. 119; Miliken v. Western Union Tel. Co., 110 N. Y. 403; Barber v. Rowe, 200 App. Div. 295.) A further item of damage was suffered by plaintiff when her husband committed the fraud by which paper title was passed to his agents, to wit, it defeated her right to satisfy her judgment for alimony out of the real estate belonging to her husband, by execution or other process- Plaintiff is a judgment creditor of her husband. (National Tradesmen’s Bank v. Wetmore, 124 N. Y. 241.) The inchoate right of dower is a valid and subsisting right and the courts will protect it; this right is in the care of the law. (Clifford v. Kampfe, 147 N. Y. 383; Platt v. Brick, 35 Hun, 126; Babcock v. Babcock, 53 How. Pr. 97; Matter of Brooklyn Bridge, 75 Hun, 561; Wood v. Babe, 96 N. Y. 414; Garfield v. Hatmaker, 15 N. Y. 475; Kain v. Larkin, 141 N. Y. 144; Whittlesey v. Delaney, 73 N. Y. 575.) A debtor cannot defeat the rights of creditors by concealing his ownership of lands. Equity follows the law and avoids circuity of action. (Bowery National Bank v. Duncan, 12 Hun, 410; Picket v. Garrison, 76 Iowa, 347; Livermore v. Boutelle, 77 Mass. 217.) On the face of the allegations in the complaint, it appears that the plaintiff’s husband transferred bis real estate to his attorney, without consideration, to defeat the judgment for alimony held by appellant and her dower right. This transfer was void. (Ford v. Harrington, 16 N. Y. 293; Sloan v. Birdsall, 58 Hun, 321.)

      Clifford H. Owen for respondents.
    The complaint states no cause of action in fraud. (Albany County Savings Bank v. Bartow, 115 Misc. Rep. 233; 201 App. Div. 879.) The present interest of the defendant husband in the real estate involved is not one in which the plaintiff has a dowable estate.' (Gabler v. Gabler, 118 Misc. Rep. 534; Melenky v. Melen, 233 N. Y. 19; Nichols v. Park, 78 App. Div. 95; Rumsey v. Sullivan, 150 N. Y. Supp. 287; Phelps v. Phelps, 143 N. Y. 199.)
   Hiscock, Ch. J.

The Appellate Division, reversing .the Special Term, has granted respondents’ motion to dismiss the complaint as not stating a cause of action and the subject presented to us for consideration is the correctness of this decision. I shall pass for the moment the question whether the defendants Owen are proper parties and consider the more important questions involved in the appeal.

The plaintiff for several years has been the wife of the defendant Byrnes, and the object of her action is relief from what she alleges has been a fraudulent transfer of real estate of which her husband had the ownership and title during their marriage. The complaint makes some approach to the statement of a cause of action to set aside the transfer of this real estate because made with intent to defraud her as a creditor. This approach, however, is probably inadvertent because no attempt is made upon this appeal to sustain the complaint as setting forth such a cause of action. The effort to uphold its sufficiency is based rather upon the claim that it shows that the husband with the aid of other defendants caused himself to be divested of the legal title to his real estate for the purpose of fraudulently depriving plaintiff of- her dower right therein, while at the same time retaining for himself the beneficial ownership of the land, and I shall consider solely that claim. For the purpose of setting forth this latter cause of action the complaint by its material allegations in substance alleges the marriage of plaintiff and defendant Byrnes, and the ownership with legal title by the latter of the real estate; that with the object of effecting the alleged fraudulent destruction of plaintiff’s dower right the husband procured her to join with him in the execution of a mortgage upon the premises to secure the payment of a sum of money which he personally undertook to repay; that subsequently and in furtherance of his unlawful purpose he purposely refrained from paying his obligation although able to do so and caused to be instituted and prosecuted to judgment an action for the foreclosure of said mortgage; that on the sale under said judgment the respondent Owen, acting as agent and attorney for the husband and with money furnished by the latter, bid off and purchased the premises which he thereafter conveyed without any consideration to the defendant’s sister, who also acted as his agent in his fraudulent scheme and who now holds the title to the property; that the equity in the property above said mortgage was of substantial value. Thrown in with these allegations and of no particular importance except as they furnish the background against which stand out the alleged fraudulent acts of the defendant, are allegations that the plaintiff brought an action for a separation against her husband in which there was an allowance of alimony which, owing to the successful evasion by defendant of his obligations, has reached an accumulated unpaid amount of over $14,000. It has been held that this treatment by the defendant of his wife, if not faultless, is nevertheless beyond the corrective and relieving powers of a court of equity, but I am not able to take this view.

There can, of course, be no question under the allegations of the complaint, that plaintiff’s husband was legally seized of the premises in question and that thereby the plaintiff acquired an inchoate right of dower therein of which she now stands deprived by means of the acts which are set forth. Neither is there any occasion to expect dispute of the proposition that such right of dower is perhaps the most highly and widely cherished property right resulting from marriage and one which the courts have been alert to protect from fraudulent destruction such as is alleged in this action. This protective attitude on the part of courts extends to an inchoate right of dower equally with a perfected one because it is well settled that an inchoate right during the life of the husband furnishes a basis for relief such as is here being sought. (Youngs v. Carter, 10 Hun, 194, 200; Douglas v. Douglas, 11 Hun, 406, 408.)

As I understand it there is no doubt of all this and there would be little or no question in this case of plaintiff’s right to be relieved from the fraudulent deprivation of her right of dower if such deprivation had been accomplished by ordinary steps which were not covered by the cloak of legal proceedings. But whether I am correct in this understanding or not there can be no real question that such is the law, for it is to be remembered that we are not at all dealing with a case where a husband in good faith and in the exercise of an honest judgment has refrained from paying a mortgage superior to his wife’s dower right, but with a case where the conduct of the husband exhibits no feature of honesty or good faith but is thoroughly saturated with a fraudulent purpose which subjects to condemnation acts which otherwise might have been justifiable. Under such conditions the action of the courts in protecting the rights of the wife has not been tinctured by any uncertainty. (Youngs v. Carter, supra; Bookout v. Bookout, 150 Ind. 63; Walker v. Walker, 66 N. H. 390; Brownell v. Briggs, 173 Mass. 529.)

It seems to be thought, however, that because a judgment of foreclosure and sale was one of the steps in the fraudulent scheme to deprive plaintiff of her dower right, the result is immune from attack and the plaintiff barred from any relief against the injury which has been perpetrated upon her. That is where the important difference of opinion seems to arise and, for the better analysis of the question the facts, as alleged in this immediate connection, will bear repetition. They are to the effect that the defendant husband for the purpose of accomplishing his plan to deprive his wife of dower right procured her to execute a small mortgage on premises worth much more than the amount of the incumbrance; that subsequently and for the purpose of accomplishing his unlawful purpose he refused, although able to do so, to pay the indebtedness secured by such mortgage and for which he was directly and primarily hable and actively urged and procured the mortgage to be foreclosed and on the sale with money supplied by him procured the defendant Owen as his agent and attorney to bid off the premises which were subsequently transferred without consideration to the sister who now holds the title.

Thus the real estate of which the husband was seized subject to plaintiff’s dower right has been worked around to a point where it is held for his benefit free from this right and I am aware of no principle or rule that a judgment procured on such facts as a step in the accomplishment of a fraudulent purpose is a defense to the person fraudulently procuring it to be recovered or a bar to equitable relief either against him or those who acted as his agents and representatives in attempting to capture for his benefit the proceeds of the fraud. I assume that the judgment was a valid and effective adjudication in behalf of the mortgagee that he was entitled to have foreclosure and collection of his mortgage by sale of the premises. I also assume that a Iona fide purchaser bidding off the premises on the sale would have acquired a title free of plaintiff’s rights. But those assumptions do not impair the strength of plaintiff’s claim. That claim involves consideration of the use which the defendant is attempting to make of the judgment and presents the question which I think must be answered in the negative whether a fraudulent scheme' like this can be any more successfully consummated by the use of a judgment forced by the fraudulent actor, than by the employment of some other means. No attack is made upon the decree so far as it decides the legitimate issues involved in the action leading up to it. It is only its use as a means of accomplishing an unlawful object which is assailed and, so far as that is concerned, I do not see that it is any more effective than would be a deed or other transaction which was made a fraudulent means to the accomplishment of a forbidden end. The fraudulent purpose affects and condemns the use and to that extent limits its effect.

Nor in my opinion is the problem at all affected by the fact that this plaintiff was a party to the foreclosure action. It is alleged that at that time she was ignorant of the fraud which was being perpetrated upon her. But independent of that the facts which she now alleges would not have raised an issue or presented a defense in the foreclosure action. They were outside the issues in that action and it would have been no answer to the attempt of the mortgagee to collect his mortgage that the husband who was bound and able to pay his obligations was purposely refraining from so doing in order to accomplish the result which has been pointed out. It was no valid defense or equitable offset to the mortgagee’s right to collect his debt that the husband fraudulently refrained from paying it. (Decker v. Decker, 108 N. Y. 128; Lilienthal v. Betz, 185 N. Y. 153, 158; Lynch v. Burt, 132 Fed. Rep. 417, 427; Turner v. Kuehnle, 70 N. J. Eq. 61.)

Fortunately, on this question, we are not compelled to rely on mere general principles as a basis for the views which have been stated, for decisions are at hand which recognize and quite directly affirm their correctness when applied to facts such as are here set forth, and hold that a wife’s dower right is not cut off by judgment in a foreclosure action to which she is a party when such foreclosure is wrongfully caused for that very purpose by refusal to pay the mortgage on the part of those who were bound to do so. (Gilson v. Hutchinson, 120 Mass. 27, 32; Brownell v. Briggs, 173 Mass. 529, 532; Munroe v. Crouse, 59 Hun, 248.) The latter case in its outstanding facts was strikingly similar to the present one and its authority, so far as I am aware, has never been questioned. The plaintiff had joined with her husband in executing a mortgage upon an undivided interest in real estate which subsequently became valuable. The defendants purchased such interest under circumstances' which imposed upon them. the primary duty of paying the mortgage. Instead of doing this they refused to pay the interest thereon for the purpose as stated in the opinion “ of compelling a foreclosure of the mortgage, intending thereby especially to cut off the plaintiff’s claim of dower [her husband having died in the meantime] and deprive her of any rights or interest she might have in said premises.” Their plan was consummated by foreclosure action •to which the wife was a party and they bid off the premises on the sale. In the action by plaintiff to assert her dower right notwithstanding such foreclosure and sale they claimed, as is asserted here, that the property had been purchased on a foreclosure sale and title obtained which divested plaintiff of her dower, and the court stated: “ The only real question * * * is whether the title acquired by the defendants by their purchase at the sale on the foreclosure of the mortgage was a bar to the plaintiff’s action for dower,” and it was held that it was not. It is not at all overlooked that in that case it was held that the defendants by reason of the terms of their original purchase whereby the amount of the mortgage was credited on the purchase price had become burdened with a duty to apply such amount to the payment of the mortgage for which they had become primarily liable. Those facts in my opinion, however, do not at all distinguish the principle of that case from the present one. Here the defendant husband was under a primary obligation to pay the mortgage and he fraudulently refrained from performing that act in order to deprive the plaintiff of her right of dower. In each case the principal actor refused to do what he should have done in order to accomplish the same purpose, and it makes no difference to equity whether the claim to its relief is based upon an allegation of breach of duty or upon an allegation of an attempt by affirmative fraud to accomplish an unrighteous result. Certainly this and the other cases cited are authority for the proposition that equity is not confronted by any insurmountable barrier to the relief which it would otherwise afford to the victim of a fraud, because somewhere in the scheme leading to this fraud there is found a judgment which was a well-defined step in. its attempted accomplishment.

The cases which are especially relied on as sustaining respondents’ view that this complaint does not state a cause of action, not only do not do this but one of them, in my opinion, indirectly sustains the contrary view. In the case of Phelps v. Phelps (143 N. Y. 197) the attempt was being made by a wife to establish a right of dower in lands whereof her husband had never been seized and this court, in its refusal to give her the relief which she desired based its decision solely upon such lack of seizin. It seems to me that that case was quite different than the present one in which the husband is seeking to deprive the wife of a right which she has already acquired, by fraudulent methods. In the case of Melenky v. Melen (233 N. Y. 19), and which is the last case in this court dealing with this general question, the plaintiff was seeking to establish a right of dower in lands conveyed by her husband in good faith before marriage to his son under a trust, and a fife estate wherein was subsequently reconveyed by the son to the father, one of the purposes of the limited conveyance being to prevent the wife from acquiring a dower right. This court refused to grant her the relief which was desired, holding amongst other things that the original transfer by the husband could not be a fraud upon the plaintiff because made before the marriage, that the plaintiff’s husband was the only one who had a right of action against the son for failure to comply with the trust and that so long as he was satisfied with what had been done the wife had no right of action such as she was trying to enforce. But Judge Cardozo, writing in behalf of the court, significantly added: “This is not a case where the grantor has attempted by a clandestine transfer of the title to modify the incidents of a marriage about to be contracted [referring to cases herein cited]. The transfer was made to promote his [the husband’s] business convenience, when no marriage was in view. He is not subject to the reproach of plotting a fraud upon his wife.” It would seem as though these latter sentences were a pretty definite indication that when the husband passed beyond the realm of legitimate and honest treatment of his wife and attempted to deprive her by a fraudulent scheme of that to which she was entitled in the way of dower right, the court would not dismiss her appeal to equitable powers for relief against the wrong which was being attempted.

There remains the question of less general importance than those already discussed whether it was permissible, even though not necessary, to join as parties the defendants Owen. This question has not been discussed with any thoroughness by counsel and, therefore, we are without the benefit of any well-considered views on their part.

It is too clear to require debate that the defendant Ruth M. Owen is not a proper party. The only allegations against her are that she is the wife Clifford H. Owen and, therefore, acquired an inchoate right of dower when the title to the premises in question passed to him. But this inchoate right has been entirely cut off by her joining in the conveyance subsequently executed by him.

The question in the case of Clifford H. Owen is somewhat more difficult but -a majority of the court think that the defendant Clifford H. Owen is a proper though not a necessary defendant. The complaint alleges in effect that he was a party to the conspiracy, buying in the property as agent and thereafter conveying it to the husband’s sister. If it should develop on the trial that the sister had afterwards conveyed to a purchaser in good faith, or was such a purchaser herself, the plaintiff might be entitled to some form of equitable relief against the intermediary who had fraudulently co-operated to despoil her of her dower. (Mack v. Latta, 178 N. Y. 525, 529, and cases cited; Hedden v. Griffin, 136 Mass. 229; Valentine v. Richardt, 126 N. Y. 272.) It cannot be said in advance whether such relief will be appropriate and, therefore, the plaintiff is entitled to bring in as parties to the record all the participants in the conspiracy against whom in any contingency relief may be awarded.

It is thought that joinder of the intermediate grantee is permissible for still another reason. If he were not a party to the action, he might be heard to deny hereafter that his conveyance to the sister, whatever its form, was absolute in fact. He might claim that it was subject to a trust, or that it was security for a debt. The plaintiff is at liberty to join him to the end that such claims may be foreclosed. (Cook v. Lake, 50 App. Div. 92, 94; City Equity Company v. Elm Park Realty Company, 135 App. Div. 856, 859.)

In reaching these conclusions we do not pass upon the form of plaintiff’s prayer for relief. Independent of any other questions which may arise of course she will have no claim for rents and profits upon the complaint as now framed.

The judgment, therefore, in favor of the defendant Ruth M. Owen should be affirmed, with costs, and the judgment of the Appellate Division in favor of the defendant Clifford H. Owen reversed and the order of the Special Term should be affirmed, with costs in this court and the Appellate Division.

McLaughlin, J. (dissenting in part):

On the 2d of June, 1910, the plaintiff and the defendant Sylvester Byrnes were married. At the time of the marriage he was the owner of certain real estate described in the complaint. On the 19th of November, 1910, and while they were hving together as husband and. wife, Sylvester Byrnes and the plaintiff executed and delivered a mortgage to the Title Insurance Company of New York for $2,500 upon such real estate, which mortgage was accompanied by Sylvester Byrnes’ bond in which he promised to pay the amount at the time and in the manner specified in the mortgage. The mortgage was recorded, and on the 30th of November 1910, it and the bond accompanying the same were assigned to one Trowbridge, which assignment was also recorded. Default having been made in the payment of the principal and certain interest secured by the mortgage, Trowbridge, on the 6th of November, 1913, commenced an action to foreclose and in that action the plaintiff and said Byrnes were made defendants. The foreclosure action resulted in a- judgment of foreclosure and sale, and for the latter purpose one Cogswell was appointed referee to sell. In due time the property was sold and was purchased by the respondent Clifford H. Owen, to whom the referee gave a deed which was recorded on the 14th of March, 1914. Thereafter, and on or about the 21st of April, 1919, Owen and his wife, Ruth M., conveyed the premises to the defendant Margaret J. Byrnes, a sister of Sylvester Byrnes.

This action was commenced on the 24th of March, 1925, to procure a judgment that the defendant Sylvester Byrnes fraudulently, and with the intent and purpose of defrauding the plaintiff and depriving her of her inchoate right of dower in the real estate described, permitted and caused the said mortgage to be foreclosed notwithstanding the fact that he was at all times able and had the means to pay the amount due; that at the sale under the foreclosure judgment he induced the respondent Owen, as bis agent, to bid in the property and take the title thereto, Byrnes having furnished the purchase money; that Owen held the title to the premises as such agent until he conveyed the same to Margaret J. Byrnes, she also taking the title as the agent of Sylvester Byrnes, and paying no consideration for such conveyance; that the defendant Margaret J. Byrnes be directed to reconvey to Sylvester Byrnes; that she account for the rents and profits while she held the title and that Owen also be directed to account for the rents and profits while he held title; for an injunction preventing a transfer during the pend-ency of the action, and for the appointment of a receiver during such time.

The complaint sets up the facts above stated and, in addition thereto, alleges that the earnings of Sylvester Byrnes aggregated, during all the times specified in the complaint, at least $600 monthly. It also alleges that on the 11th of March, 1912, the plaintiff procured a judgment of separation from the defendant Byrnes upon the ground of abandonment, which judgment awarded her the sum of $150 per month alimony payable on the first day of each and every month during the life of said Byrnes, and that there is now due of such alimony upwards of $14,000 which Byrnes has neglected and refused to pay.

After the complaint had been served upon the respondents, they moved, pursuant to rule 106 of the Civil Practice Act, for an order dismissing the complaint upon the ground that the same did not state facts sufficient to constitute a cause of action against them. This motion was denied and they appealed to the Appellate Division, which reversed the order of the Special Term and granted the motion and dismissed the complaint as to them. The plaintiff appeals to this court.

The question presented by the appeal is, Do the facts alleged in the complaint, assuming as we must that such facts are true, constitute a cause of action against the Owens? I do not think they do. The plaintiff’s theory of her right to maintain the action apparently is that the husband’s fraudulent acts and those of the other defendants acting in his behalf have been to deprive her of her inchoate right of dower in the real estate in question. The statute provides that “A widow shall be endowed of the third part of all the lands whereof her husband was seized of an estate of inheritance, at any time during the marriage.” (Real Property Law, sec. 190; Cons. Laws, ch. 50.) The plaintiff’s husband is not seized of such an estate nor has he been since the mortgage was foreclosed and the sale made in pursuance thereof. The plaintiff joined in the mortgage and thereby, if the mortgage was not paid, extinguished her inchoate right of dower. It is not claimed, and could not well be according to the facts set forth, that she was induced to join in the execution of the mortgage by reason of any deception or fraud practiced upon her. It is not claimed, and could not well be, that she was misled or deceived as to the foreclosure, other than that Sylvester Byrnes had the means to pay the amount due and was obligated to do so under his bond, and that his failure in this respect was for the sole purpose of depriving plaintiff of her inchoate right of dower. I know of no authority, nor have I been able to find any, to support the contention that his failure to make the payment when he was able to do so and thus prevent a sale constituted a fraud which entitles the plaintiff to the equitable relief asked. Assume that Byrnes deliberately permitted the mortgage to be foreclosed, knowing that the result would be the destruction of plaintiff’s inchoate right of dower. Such action on his part did not constitute an infringement of her rights since he was under no duty to take affirmative steps for her protection. The plaintiff, as already indicated, voluntarily joined in the execution of the mortgage. She was made a party defendant in the foreclosure action. I do not understand that any fraud is alleged with reference to the proceedings of foreclosure, other than that the defendant Byrnes should have paid the amount due. Being a defendant in that action, if there was any fraud in the foreclosure proceedings, then it was her duty in such action to have alleged and proved the same. Having failed to do this, she cannot now in an action brought nearly twelve years afterwards be heard to say that the foreclosure action was not regularly maintained. (Albany County Savings Bank v. Bartow, 115 Misc. Rep. 233; affd., 201 App. Div. 879.) He was under no obligation, so far as she was concerned, to pay the mortgage if he did not see fit to do so. I know of no authority which enables a wife to compel her husband to use his personal property as she desires, except in the case of her support and the support of her children. (Phelps v. Phelps, 143 N. Y. 197; Melenky v. Melen, 233 N. Y. 19; Nichols v. Park, 78 App. Div. 95.)

Under the facts alleged Sylvester Byrnes could undoubtedly maintain an action against the defendant Margaret J. Byrnes to compel her to reconvey to him the real estate in question, since she took and now holds the title as his agent and having paid no consideration therefor. This he does not see fit to do and it is not for the plaintiff to say that he should do so for her benefit. The fact is not disputed that the legal title has not been in the defendant Sylvester Byrnes since the foreclosure of the mortgage and the sale thereunder. In Melenky v. Melen (supra), one Reuben Melen conveyed certain land to his son Asher P. Melen under an agreement by which the son promised to reconvey to this father upon demand. Sometime thereafter the father married the plaintiff, telling her that he owned this real estate. After the marriage the son refused to comply with the demand to reconvey the premises. He did, however, give to his father a life lease which was accepted, and the father refused to bring an action to enforce the agreement to reconvey. The purpose of the son in refusing to reconvey, as well as the purpose of the father in refusing to bring an action to compel the son to carry out the agreement which he had made, was to deprive the plaintiff of her inchoate right of dower. The father’s wife (the stepmother of the son) thereupon brought an action to procure a judgment establishing her inchoate right of dower and for a reconveyance to the husband. The son demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. The demurrer was overruled by the Special Term and the Appellate Division, but on appeal to this court it was sustained and the complaint dismissed. The decision was placed squarely upon the ground that the husband’s interest in the real estate was not an estate of inheritance and as such subject to the wife’s dower interest. In the opinion delivered by this court, in which the other members concurred, Judge Cardozo said: “ This grantor has not attempted to enforce his chose in action. He has not asked a court of equity to undo the conveyance and re-establish the divested title. He is willing to let the transaction stand, or unwilling, at all events, to take active measures to annul it. We are now asked to say that the wife may reclaim what the husband would abandon. This means, of course, that the chose in action is not solely his, but is hers also, to the extent of the benefit that would come to her if he had chosen to enforce it. We find no adequate basis for such a conclusion either in principle or in precedent.” In the case just cited the plaintiff’s husband could have brought an action in equity to compel the son to reconvey,, This he did not do, taking instead a life lease. His purpose as well as the purpose of the son was obviously to deprive the wife of her inchoate right of dower.

In the case at bar the defendant Sylvester Byrnes is in a position to compel a reconveyance to him by Margaret J. Byrnes but, as in the case just cited, he does not do this and is satisfied to let the transaction stand as.it is. And this court is without power to compel him to act for the wife’s benefit.

In Phelps v. Phelps (supra) the husband purchased certain real estate and, for the purpose of depriving the wife of her inchoate right of dower therein, took title in a dummy, the husband, however, having the beneficial use as well as the management and control of such real estate. The wife there brought an action to establish her inchoate right of dower, alleging as the basis of such action the fraudulent acts of the husband in placing the title where her inchoate right of dower would not attach] that such action on his part was a fraud in that it deprived her of a right which she otherwise would have. This court held the action could not be maintained. (See, also, Nichols v. Park, supra; Leonard v. Leonard, 181 Mass. 458; Seaman v. Harmon, 192 Mass. 5.)

But irrespective of whether the action can be maintained against Sylvester Byrnes and Margaret J. Byrnes, I am unable to see how in any view it could be maintained against these respondents. Certainly the respondent Ruth M. Owen is neither a necessary nor a proper party to the action. There are no allegations in the complaint which connect or tend to connect her in any way with the transactions alleged to be fraudulent, other fchan that she joined with her husband, Clifford H. Owen, in the conveyance to Margaret J. Byrnes for the purpose of cutting off any dower interest in the property which she may have had because of the legal title having been vested in her husband. The complaint as to her, therefore, was properly dismissed. It is difficult for me to conceive upon what theory the husband, Clifford H. Owen, has been made a party to this action. The only connection which he is alleged to have had with the title to the real estate is that be held the legal title as the agent and dummy of the defendant Sylvester Byrnes. The complaint alleges that on the 21st of April, 1919, more than six years ago, he conveyed the title to the premises to Margaret J. Byrnes, thereby divesting himself of all interest in the same. Why should he be made a party? It is not claimed that he has any interest in the real estate. Whatever interest he may have once had, if any, he voluntarily passed to Margaret J. Byrnes. What more can the plaintiff ask, so far as he is concerned? What more could a judgment do if plaintiff obtained one? He makes no claim to the property. The complaint alleges that any title which he may once have had has passed to Margaret J. Byrnes. If plaintiff can obtain a judgment directing her to reconvey to Sylvester Byrnes, that is all she can ask and all to which she would be entitled.

But it is urged, that the complaint asked for an accounting by Clifford H. Owen of the rents and profits of the premises while he held the title. Accounting to wfiom? Certainly not to the plaintiff. She has no interest in the rents and profits. Nor is she in a position to ask for an accounting for and on behalf of Sylvester Byrnes. If Owen is indebted to Byrnes, he and not the plaintiff is the person to enforce his claim. Not only this but there are no allegations in the complaint to the effect that Owen ever agreed to pay to Sylvester Byrnes the rents and profits while he held the title. Nor is there any allegation that Owen ever went into occupation or possession of the premises, collected any rents, or realized any profits through the title which he held. Obviously, under such circumstances, the plaintiff is in no position to ask for an accounting from Owen.

Finally, it is suggested that the action can be maintained as a judgment creditor’s action. The complaint will be searched in vain to find the necessary facts alleged to permit the maintenance of such an action. Before a judgment creditor’s action can be maintained, the creditor •must exhaust his remedy at law. Here there is not a pretense that the plaintiff has exhausted her remedy at law. If Byrnes has been and is now receiving $600 per month, then there is a way in which she can reach at least a portion of it, in payment of her alimony. The issuance of an execution and the return of the same unsatisfied are the usual prerequisites to the maintenance of a judgment creditor’s action. If, as plaintiff alleges, Sylvester Byrnes is the real owner of the real estate in question, sequestration proceedings might possibly be resorted to or the property levied upon and sold under an execution. The action cannot be maintained as a judgment creditor’s action upon the facts set out in the complaint, without' violating every principle relating to such-actions of which I am aware.

The order and judgment appealed from, therefore, should be affirmed, with costs in this court and in the Appellate Division.

Cardozo, Pound and Andrews, JJ., concur with His cock, Ch. J.; McLaughlin, J., writes opinion dissenting in part, in which Crane, J., concurs; Lehman, J., not voting.

Judgment accordingly.


source: Caselaw Access Project

author: His cock, Ch. J.

license: Public Domain

text:
    Williamsburgh Savings Bank, Appellant, v. State of New York, Respondent.
    State —• moral obligation — jurisdiction of Court of Claims — Legislature may recognize moral obligation — • may not delegate to court determination of what its decision ought to be — duty of Legislature to ascertain facts — may confer upon courts duty of confirming its action — must submit to courts question whether facts as matter of law show moral obligation — also final duty of awarding or adjudging payment — sufficient indication in statute conferring jurisdiction upon Court of Claims of decision by Legislature that claims were moral obligations of State — provision that if court should find that claims were founded in right and justice the State should be liable not an evasion by the Legislature of its duties — sufficiency of act to recognize claim and authorize its allowance — decision of court that claim does not possess elements of moral obligation a determination of a question of law reviewable by Court of Appeals — purchase of improvement bonds and certificates and of a tax sale certificate on representation by officers of State that payment is secured by proposed assessments of benefited lands — collapse of plan — erroneous finding that facts do not establish moral obligation as to bonds and certificates — claim on tax sale certificate may be recognized as moral obligation — State not obliged to insist that remedy by assessment be pursued against small part of landowners not yet released.
    1. The State may voluntarily recognize just obligations which it fairly and honestly ought to pay even though they do not constitute purely legal claims. When a claim is presented which securely rests upon a foundation of equity and justice and which involves a moral obligation, it may be recognized without infringing upon constitutional provisions protecting taxpayers against waste and extravagance. But the decision to pursue this course is a privilege and not an obligation, and the State alone, through its Legislature, can decide which course it will pursue. It cannot delegate to the courts or some other agency the duty of determining what its decision ought to be.
    2. When proposing to turn a moral obligation into a valid claim, it is, therefore, the duty of the Legislature to ascertain the facts which are thought to give rise to the obligation, but it may confer upon the courts the duty of confirming its action and of determining what the facts actually are upon which such a claim rests and whether they are as the Legislature has decided them to be, in which event, the Legislature must, as incidental to audit and allowance, submit it to the courts to determine whether such facts do as a matter of law show forth a moral obligation within the principles of law which govern that subject. It is also incumbent upon the Legislature to avoid violation of the constitutional prohibition of audit or allowance by it of a private claim and the final duty of awarding or adjudging payment must be performed by some appropriate body after consideration of the facts and law, with full power to reject as well as to award.
    3. Chapter 830 of the Laws of 1923 by conferring jurisdiction “ upon the Court of Claims to hear and determine the claims [fully described in the statute] * * * in the amounts and with the interest herein set forth as claims founded in right and justice or in law and equity against the State of New York and in right and justice presently payable thereby,” sufficiently indicates a decision, so far as the Legislature was concerned, that the claims were moral obligations and ought to be paid, and when it specifically authorized the Court of Claims “ among other things ” to consider certain facts which were in the minds of the Legislature when the act was passed, this special authorization, with the general jurisdiction conferred upon and possessed by the Court of Claims, authorized that tribunal to develop and consider all the facts which might furnish a foundation for a moral obligation.
    4. A further provision that if the court should find that the claims were “ founded in right and justice or in law and equity against the State of New York and are in right and justice presently payable thereby ” the State should be deemed to be liable therefor and they should constitute legal and valid claims upon which judgments might be rendered against it, was nothing more than a recognition and statement of the rule that if the courts agreed with the Legislature in thinking that the claims did present the necessary characteristics, judgment could be rendered for them; otherwise not. It does not amount to a declaration by the Legislature that it had not reached any decision in respect of the character of the claims. It expressed a recognition of the limitations upon its power and not an evasion of the obligations of its duties. The act, therefore, was entirely appropriate and sufficient to recognize the claim and authorize its allowance.
    5. The decision by the Legislature that certain facts create a moral obligation is subject to review by the courts, but practically the sole power of the courts in this respect is to determine whether all of the facts established in a given case and presumably within the knowledge of the Legislature do establish such a foundation of equity and justice that 'the Legislature, within the rules established by the courts, was authorized, if it saw fit so to do, to recognize the justice of the claim. The decision of the courts, therefore, that a claim does not possess the elements of a moral obligation and that the Legislature could not acknowledge it, is the determination of a question of law and reviewable by this court.
    6. Where the undisputed facts show that the State in pursuance of an improvement project confided the same to one of its commissions and empowered it to issue bonds and certificates for the purpose of raising moneys with which to carry on the improvement, which should be paid as they became due by assessments levied upon individual properties within an “ improvement district ” to be defined by the commission, and the commission, acting under such authority, issued bonds and certificates, representing that the value of the benefited lands would be ample to sustain assessments to pay the obligations, and claimant, relying upon such representations, became the owner by purchase of a large amount of such bonds and certificates and also of a tax sale certificate issued to it upon a sale under an assessment for supposed improvements, the proceeds of which were paid to the State, which either still holds them or has expended them upon the improvement, but the plan as an entirety has collapsed and the sources of revenue which it was represented by agencies of the State would be ample for the payment of claimant’s securities have largely vanished so that but an infinitesimal part of the amount has been collected by assessment and if it were possible to enforce assessments against benefited land it would more than exhaust their entire value to pay outstanding claims, it cannot be said as matter of law that the State is without any moral responsibility for what has happened and that it must stand unresponsive when asked for relief. Such facts establish a moral obligation and it was error to hold otherwise.
    7. An argument that the amount paid by claimant for the tax sale certificate stands on a different basis and does not constitute an equitable obligation cannot be sustained. The claimant paid the amount on a tax sale represented by State officials to be based upon lawful and binding assessments on account of the improvement. Subsequently it was held that none of the tax liens were valid with the exception of a small amount assessed upon lands whose owners did not join in the attack thereon. The claim is covered by the same general principles as the other obligations and the State may recognize it as a moral obligation.
    (Argued May 25, 1926;
    decided July 9, 1926.)
    8. Nor was the State compelled to insist, as an excuse for refusing relief, that an effort should first be made by claimant to enforce assessments against such land as has not been released therefrom. It is conceded that the assessment of the total cost upon owners of such land would amount to confiscation and no way appears in which an assessment of an equitable amount may be made against them.

      Williamsburgh Savings Bank v. State, 213 App. Div. 737, reversed.
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the third judicial department, entered September 9, 1925, unanimously affirming a judgment of the Court of Claims dismissing plaintiff’s claim upon the merits.

      E. J. Dimock, John C. Loud and Alfred Gregory for appellant.
    The State should pay an amount equal to principal and interest on the $170,000 of bonds held by the claimant. (Quayle v. State, 192 N. Y. 47; Munro v. State, 181 App. Div. 30; Cayuga County v. State, 153 N. Y. 279; People v. Westchester County National Bank, 231 N. Y. 465; Trustees of Exempt Firemen’s Fund v. Roome, 93 N. Y. 313; Sipple v. State, 99 N. Y. 284; Cole v. State, 102 N. Y. 48; O’Hara v. State, 112 N. Y. 146; Coxe v. State, 144 N. Y. 396; Roberts v. State, 160 N. Y. 217.) The State should pay an amount equal to principal and interest on the $31,750 of river improvement certificates held by claimant. (Horton v. Andrews, 191 N. Y. 231.)

      Albert Ottinger, Attorney-General {James Gibson of counsel), for respondent.
    The Legislature is without authority to delegate to the Court of Claims the power to convert a moral obligation into a legal obligation. (Sherlock v. State, 198 App. Div. 494; Munro v. State, 223 N. Y. 208; Babcock v. State, 190 App. Div. 147; Lewis v. State, 197 App. Div. 712; Lehigh Valley R. R. Co. v. State, 204 N. Y. 471.) The State, through its officers and agents, made no representations nor performed any unlawful acts from which arose any obligation, either legal or moral, to assume payment of the indebtedness of the Canaseraga River Improvement District. (Weaver v. Devendorf, 3 Denio, 120; Williams v. Weaver, 75 N. Y. 33; Rochester White Lead Co. v. City of Rochester, 3 N. Y. 466; People v. Westchester County National Bank, 231 N. Y. 465; Gordon v. State, 223 N. Y. 1.)
   His cock, Ch. J.

The appellant is seelcing to establish a claim against the State which is alleged to be supported by a moral consideration. In this attempt it has been confronted by two objections, the first being that there is no such consideration and the second that even if there is the State has never exercised its right to recognize the claim and authorize its allowance. The first objection seems to have been potential with the Court of Claims; the second one with the Appellate Division. There is no dispute concerning the decisive facts and we shall take these as they are presented by the findings of the Court of Claims or by inescapable requests to find.

The State entertained consideration of a scheme to improve Canaseraga creek to the end that there might be a better flowage of its waters and protection to adjacent lands from floods and other damaging conditions. It did not itself undertake primarily to pass upon the feasibility of, and directly to carry out such a project with adequate appropriation for the expenses thereof as it undoubtedly might have done. On the contrary, it confided these duties first of approval of the project subject to its confirmation, and then consummation of it to one of its agencies which was successively the State Water Supply Commission, the River Improvement Commission and the Conservation Commission, the identity of the particular Commission under which various steps were subsequently taken being of no consequence. Without reciting prior voluminous preliminary and tentative details it may be stated that the State eventually by proper legislation approved the determination of the Commission that this project should be undertaken and to that end it enacted that the Commission should define a district which was to be benefited by the improvement and that the expenses of the latter should be assessed in appropriate proportions against- the lands situated in such district, except as the same might be charged in the manner prescribed against counties, towns, cities and villages and the State, and that the Commission should have power to issue bonds and certificates for the purpose of raising money with which to carry on the improvement and which should be paid as they became due by assessments levied upon individual properties within the improvement district and collected from municipalities and the State. Assessments and charges against municipalities or the State were eliminated by the Commission and, therefore, those sources of revenue from which to pay bonds and certificates may be dropped from consideration.

In course of time the Commission which had entered upon the prosecution of the work in accordance with the authority conferred upon it began issuing bonds, and later certificates whereof the proceeds were wholly or largely used to pay installments and interest coming due upon the bonds. These bonds were originally available for investment by savings banks but later this characteristic was eliminated by the State with consequential impairment of their value. They and the certificates by their terms and by statute were withheld from the status of legal claims against the State and were to be paid from assessments upon the lands supposed to be benefited as above stated. Nevertheless officers and representatives of the State did make various statements and representations, of course in good faith, which tended to the standing and appreciation of the securities. For instance the Commission issued a circular, preliminary to floating the bonds, to the effect that they were issued by authority of the State and under proceedings duly taken, that there were included in the improvement area about 11,000 acres of land of a present value of $448,375 and of a potential value when improved of nearly twice that sum less a possible deduction of land worth only about $30,000 and which lands would be subject to assessment for the payment of the bonds. Also as an inducement to the purchase of certificates the Commission furnished claimant’s assignor with an opinion of the Attorney-General to the effect that the certificates purchased by it would be proper investments for a savings bank and an engineer’s report showing the progress which had been made in carrying out the project. Plaintiff became the owner at a premium of bonds of the par value of $200,000, of which subsequently by direct appropriations from the State Treasury $30,000 were paid, and also of certificates of the par value of $72,750 reduced by payments to $31,750, and also of a tax sale certificate for $27,964.47 issued to it upon a sale under an assessment for supposed improvements. The moneys collected on the sale of the bonds were paid to the State and by it disbursed in payment of the cost and expenses of the project, and the proceeds of the certificates and tax sale certificate were received in like manner and to a large extent applied to the payment of installments and interest becoming due upon the bonds and certificates.

The improvement project as an entirety proved a failure and with the exception of a comparatively small number of acres in the improvement district as originally mapped out, the lands were not at all benefited even if they were not actually injured. The result has been that either by the voluntary action of the Commission in withdrawing lands from the improvement district as originally defined by it, or by action of the courts, a large portion of the lands constituting the original district have been placed beyond the reach of assessment for the purpose of raising money with which to pay claimant’s bonds and certificates as it was originally contemplated and represented would be done. Although the Commission took proper proceedings to secure an assessment in the years 1918, 1919 and 1920 for the amounts respectively of $27,039.22, $27,846.45 and $47,092.21 necessary to pay installments of principal and interest due on the obligations issued in connection with this improvement, no proceedings have ever been taken for the collection of such assessments, but such amounts were paid directly by the State out of moneys appropriated for that purpose. The utter collapse of the plan to raise money to pay claimant’s bonds and certificates is sufficiently indicated by the fact that less than $100 has ever been collected by assessment and that the aggregate value is so small of lands held to have received some benefit or whose owners have not yet procured immunity by legal proceedings that if it were possible to enforce assessments against them it would more than exhaust their entire value to pay outstanding claims.

There is no question, but on the other hand it is expressly found, that the claimant in purchasing bonds, certificates and tax sale certificate relied upon the facts that this improvement project had been initiated by the State, that it had been approved by a commission acting as an agency of the State and also by the State itself and that as represented by the Commission there were lands of a value of nearly half a million dollars in their unimproved condition which would be benefited by the project to the amount of nearly $400,000 and which would stand as the security for the payment of the obligations issued to cover the cost of the project, that it [the improvement plan] was in essence if not in legal technicality a State project and that the State was in right and justice obligated and bound to make sure that the securities issued by the State officers to provide funds for carrying out the project would be paid even though technically the State was not primarily hable therefor.”

Under conditions and upon facts which have thus been stated the Legislature adopted an act (L. 1923, ch. 830) under the provisions of which plaintiff is prosecuting its claim for the recovery of the amount of bonds, certificates and tax certificate referred to on the ground that they are claims based upon a moral consideration which has been recognized by the State. It is necessary to quote only a small part of this act. It provides: “Jurisdiction is hereby conferred upon the court of claims to hear and determine the claims of the holders and purchasers of the following described certificates of indebtedness, bonds and tax sale certificate issued in connection with Canaseraga Creek Improvement District (and which are enumerated in the act and have already been referred to) in the amounts and with the interest herein set forth as claims founded in right and justice or in law and equity against the State of New York and in right and justice presently payable thereby.” In hearing said claims the court was expressly authorized to consider amongst other things many of the facts in connection -with this improvement project and the investment by plaintiff of its moneys in the various securities already referred to and it was then further and finally provided “ If the court finds that such claims or any of them were founded in right or justice or in law and equity against the State of New York, and are in right and justice presently payable thereby, the State shall be deemed to have been hable therefor and they shall constitute legal and valid, claims against the State, and the court may award and render judgments for the claimants as shall be just and equitable.” With this necessarily rather detailed statement of the facts we come to a consideration of the principles of law which determine their force and effect as a basis for plaintiff’s claim.

Fortunately, and creditably to them, our courts have firmly established the proposition that the State as well as an individual may be honorable and may voluntarily recognize just obligations which it fairly and honestly ought to pay even though they do not constitute purely legal claims such as in the case of an individual could be enforced under the compulsion of judgment and execution. By appropriate constitutional provisions taxpayers are protected against waste and extravagance which might result from some passing or mistaken impulse upon the part of the Legislature to make gifts. But when a claim is presented which securely rests upon a foundation of equity and justice and which involves what we have come to define as a moral obligation, it may be recognized without infringing upon these provisions and the State may pursue the same course of honorable conduct as would an individual. But the decision to pursue this course is a privilege and not an obligation. The State may, if it prefers, reject the calls of justice, equity and fair dealing, stand upon its legal rights and leave the claimant without remedy, and the State alone, through its Legislature, can decide which course it will pursue. It cannot delegate to the courts or some other agency the duty of determining what its decision ought to be and if the interpretation by the Appellate Division is correct that the statute now before us does attempt to pass along to the courts the duty of deciding for the State whether the obligations held by claimant constitute moral liabilities which ought to be recognized, the conclusion is inevitable that it has failed of any purpose and that claimant cannot recover under it in this action. We think, however, that the interpretation placed by the Appellate Division upon the act is too narrow and that it is not subject to the condemnation which has been visited upon it.

We ought to approach the interpretation of the statute with a consideration of the general principles which the Legislature may or must observe when proposing to turn a moral obligation into a valid claim. In the first place, of course, it is necessary to ascertain the facts which are thought to give rise to this kind of an obligation and while undoubtedly the duty rests upon the Legislature itself of attempting to determine what these facts are, it has a perfect right to confer upon the courts the duty of confirming this action and of determining by that searching examination which is more incidental to judicial processes than to legislative examinations, what the facts actually are upon which such a claim rests and whether they are as the Legislature has decided them to be. Then assuming that the facts are as assumed by the Legislature that body may, and indeed it must as incidental to audit and allowance, submit it to the courts to determine whether such facts do as a matter of lav/ show forth a moral obligation within the principles of law which govern that subject. The decision by the Legislature that such an obligation exists upon given facts is subject to review just as much as is its decision that the facts before it warrant the exercise of the police power by laws which would otherwise be unconstitutional. The decision by the Legislature that certain facts create a moral obligation, even if those facts exist, is not conclusive. The courts will still be called upon to decide whether its judgment was correct. And lastly it is incumbent upon the Legislature to avoid violation of the constitutional prohibition of audit or allowance by it of a private claim, and the final duty of awarding or adjudging payment must be performed by some appropriate body after consideration of the facts and law with full power to reject as well as to award.

We state these undoubted principles somewhat at length because, when we consider them, it seems to us that the Legislature followed a course in the present statute which was strictly correct and lawful. We think that when it conferred jurisdiction upon the Court of Claims to hear and determine the claims [fully described in the statute] * * * in the amounts and with the interest herein set forth as claims founded in right and justice or in law and equity against the State of New York and in right and justice presently payable thereby ” it sufficiently indicated a decision, so far as it was concerned, that the claims were moral obligations and ought to be paid. It would seem to be pretty unreasonable to assume that the Legislature conferred upon the courts power to pass upon and give judgment for claims unless it itself had considered and approved their equitable nature. But recognizing the principles to which we have referred it specifically authorized the Court of Claims among other things to consider certain facts which were in the minds of the Legislature when the act was passed. This special authorization, with the general jurisdiction conferred upon and possessed by the Court of Claims, authorized that tribunal to develop and consider all the facts which might furnish a foundation for a moral obligation. And then after all this was done, if the court should find that the claims were founded in right and justice or in law and 'equity against the State of New York and in right and justice presently payable thereby the State should be deemed to be liable therefor and they should constitute legal and valid claims upon which judgment might be rendered against it. This latter provision, especially considered by the Appellate Division as indicating a failure of the State to recognize the meritorious nature of the claims, in our opinion was nothing more than a recognition and statement of the rule that if the courts agreed with the Legislature in thinking that the claims did present the necessary characteristics judgment could be rendered for them; otherwise not. This express bestowal of power upon the courts to decide a question of law which they undoubtedly possessed without any express authorization does not in our opinion amount to a declaration by the Legislature that it had not reached any decision in respect of the character of the claims. It expressed a recognition of the limitations upon its power and not an evasion of the obligations of its duties.

The act, in our opinion, was entirely appropriate and sufficient when tested by the language employed in other similar acts under which judgments against the State have been awarded and affirmed by this court and which have been thoroughly reviewed and analysed in the admirable brief filed in behalf of the appellant. (Cole v. State, 102 N. Y. 48; O’Hara v. State, 112 N. Y. 146; Cayuga County v. State, 153 N. Y. 279,287,293; Munro v. State, 223 N. Y., 208; Babcock v. State, 190 App. Div. 147; affd., 231 N. Y. 560.) I shall only refer to the details, and that briefly, of three of these cases.

In the Cayuga County case the act (L. 1885, ch. 428) simply authorized the presentation of a claim to the State Board of Claims for moneys expended by said county and then provided “ and the said Board of Claims is hereby authorized and required to hear and adjust each of said claims * * * and award the amounts thereof or such sums as said Board shall consider equitable and just.” It was written, The point that the act * * * did not validate the claim, but referred it to the Board of Claims to pass upon its validity, is, in view of * * * the language of the act, untenable. By necessary implication the Legislature by the act assumed liability * * * and it was left to the Board of Claims to fix the amount as should appear on the hearing to be equitable and just.”

In the Babcock case the act (L. 1918, ch. 608) provided: Jurisdiction is hereby conferred upon the Court of Claims to hear, audit and determine an alleged claim of Dudley P. Babcock * * * against the State, on account of the following alleged facts [which were then set forth in the act]. * * * If such facts be proven to the satisfaction of the court, and the court deem it just and equitable that the claimant should be compensated by the State for such injuries, it may determine the extent of the injuries and allow such claim and such sum as it deems to be just and reasonable and render judgment therefor against the State.” It was never thought in this case that the State had abdicated its duty by passing along to the Court of Claims the task of deciding for it whether a claim was just and equitable or that it had done more than was constitutionally required in the way of leaving to that court the right to audit and allow the claim if it should decide that the facts did indeed make it a just and equitable one.

In the Munro case the important argument made against the award of judgment in favor of the claimant was that the Legislature had gone farther than it was permitted to in the way of allowing a claim and had not left to the Court of Claims the power to pass upon its merits as a moral obligation. Although this contention was oven ruled it doubtless suggested a danger which has been in the minds of the Legislature in passing subsequent statutes and has found expression in such language as is used in the present statute and whereby this power of auditing and allowing is in unambiguous terms left to a tribunal other than the legislative body.

The rule that it rests solely with the State through its Legislature to determine whether it will recognize a claim even though founded upon equity and justice and allow it to be developed into a legal demand and that the exercise of this choice cannot be delegated to any one else, quite necessarily leads to the other rule that the exercise of this discretionary power • by the State is seldom subject to review by the courts. (Oswego & Syracuse R. R. Co. v. State, 226 N. Y. 351; U. S. v. Realty Co., 163 U. S. 427, 444.) Except under the most extreme circumstances, the courts are not allowed to set up their judgment against that of the State and say that the decision of the latter that it will give recognition to such a claim ought to have been different. Practically the sole power of the courts in this respect is to determine whether all of the facts established in a given case and presumably within the knowledge of the Legislature do establish such a foundation of equity and justice that the Legislature within the rules established by the courts was authorized, if it saw fit so to do, to recognize the justice of the claim. This rule is necessarily to be implied from all of the decisions on this subject and recognition of it is especially perceptible in the decisions rendered in the cases of People v. Westchester County National Bank (231 N. Y. 465) and Babcock v. State of New York (supra). The decision of the courts, therefore, that a claim does not possess the elements of a moral obligation and that the Legislature could not acknowledge it is the determination of a question of law and reviewable and we pass to the question whether the facts in this case did establish such a claim and. justify recognition by the State of the obligations held by plaintiff. We think that they did and that it was error to hold otherwise.

The State approved and started on its disastrous course the improvement plan which has become the source of so much trouble. It did not as it might have done proceed itself to carry out the plan and provide for its expenses by direct appropriation. It committed the duty of prosecution to an agency composed of State officials and authorized this body to procure money by the sale of bonds and certificates. The legislation provided for the promised payment of these obligations by proposed assessments on the area which was to be benefited. The agency of the State acting under its authority and in a manner which was fairly incidental to the powers conferred upon it represented that the value of the benefited lands would be ample to sustain assessments with which to pay the obligations which were issued. The State authorized itself to be charged with such sums as might not be assessable against individual owners and municipalities, but the Commission erroneously refrained from making such charge on the theory that the other sources of revenue would be sufficient to pay the obligations which they were issuing and selling to the public. The proceeds of- the obligations were paid to the State, which either still holds them or has expended them upon this project. The plan as an entirety has collapsed and the sources of revenue which it was represented by officers and agencies of the State would be ample for the payment of plaintiff’s obligations have largely vanished. It is not necessary to say that as between private individuals the one purchasing these . obligations would have a cause of action to recover his moneys as procured from him by reason of misrepresentation nor to say that in some other form of contract it would be held that there had been such an utter lack of consideration that the person paying his money would be legally entitled to recover it back. It is sufficient, in connection with the other facts, that the State has permitted one of its agencies to gather into its treasury moneys of its citizens with assurance of repayment under a plan indorsed and put forth by it, but which, owing to its inherent defects, has lamentably failed with threat of resultant loss of the" moneys which were thus invested. Those facts in our opinion within the principles of cases already cited do not permit it to be said, as matter of law, that the State is without any moral responsibility for what has happened and that it must stand unresponsive when asked to relieve those whom indirectly at least it has brought into an unhappy predicament, by retiring obligations which in essence and equity are its own. We find it quite difficult to believe that an honorable business man would not suffer considerable moral discomfort if he should refuse to recognize claims to reparation for losses for which he was so substantially responsible as is the State for the present claims and, in such a matter, standards of good conduct ought not to be less conscientious in the case of the Commonwealth than in that of one of its citizens.

Of course it is unnecessary to consider at length the suggestion now made that these bonds are not a legal obligation of the State. If they were there would be no need for this controversy. The very fact that they are not such legal obligations brings into play the theory of moral obligation which is being invoked by the plaintiff and which has been recognized by the State.

Holding that the bonds and certificates owned by claimant are based upon a moral consideration we come to the special argument that the amount of $27,964.47 paid by claimant on the tax sale of premises supposed to be subject to tax liens on account of this improvement stands on a different basis and does not constitute an equitable obligation. We think that it is covered by the same general principles as the other obligations and constitutes a claim which the State could recognize as a moral obligation. The claimant paid this amount on a tax sale which was supposed to .be based upon lawful and binding assessments on account of this improvement. It was so represented by State officials and the claimant acted on their advice in bidding off the property and a large portion of the money was applied to the payment of bonds or certificates. Subsequently it was held that none of the purported tax liens were valid with the exception of a small sum of $813.21 assessed upon lands whose owners' did not join in the attack upon the assessment and thus there was a breakdown of the entire assessment scheme upon which, as a purportedly valid one, the State had taken the claimant’s money. Certainly, under those circumstances, the State could say that equitably and fairly it ought to return the moneys for which no substantial consideration had been received and not insist upon compelling claimant to attempt to enforce its certificate for an insignificant amount against landowners who, so far as appears, are still free to attack the assessment. The suggestion by the Court of Claims that if such repayment is made claimant then will have both the moneys which it paid and the tax certificate which was issued to it is sufficiently answered by the fact that this certificate has been tendered to the State and is now subject to recapture by it and that on repayment of claimant’s bid the State presumably will be invested with and welcome to any of the illusory rights which it has been thought the claimant secured.

And finally it seems to be reasoned by the Court of Claims in its findings that because owners of a certain amount of land of an aggregate value less than the amount of outstanding obligations on account of this improvement and held to have received an aggregate benefit of $41,479.45 have not been released by any decision of the courts from liability for such benefits, some equitable amount should be collected from time to time on account of such benefits before recourse to any obligation of the State and that, therefore, a judgment for plaintiff’s claims should not now be awarded. While there may be some justice in this theory it seems to us that there would be much legal difficulty in an attempted application of it. It was the duty of the Commission, failing to charge any cost of the improvement against municipalities or the State, to assess the total cost upon individual owners. It is conceded that the assessment of the total cost upon the landowners last mentioned would amount to confiscation and ought not to be made and I see no way in which an assessment of an equitable amount may be made against a few owners who have still been left in the plan. It seems to be a case of all or nothing.” But without attempting to decide the various questions which might arise under the theory mentioned, we again do not think that the State was compelled to adopt it and insist, as an excuse for refusing relief, that an effort should first be made by claimant to enforce this imperfect and discredited plan adopted under its authority against a few out of many property owners who have been less agile than their neighbors in making an escape from its inequitable obligations but who, it is fair to assume, would not now submit to the visitations of the tax collector without appropriate resentment and litigious resistance.

These views, of course, lead to the conclusion that the judgments dismissing the claim herein should be reversed and, since there is no dispute concerning the amount of such claim, and claimant’s bonds, certificates and tax certificate have been deposited in escrow to become the property of the State on entry of a judgment in favor of claimant for the amount thereof, judgment should be directed in favor of claimant for the amount of its claim including interest upon the amount paid upon the sale represented by the tax certificate from the date of payment, with costs in all courts.

Cardozo, Pound, Crane, Andrews and Lehman, JJ., concur; McLaughlin, J., concurs in result.

Judgment accordingly.


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    Mary E. Neuman, as Executrix of Stephen F. Neuman, Deceased, Respondent, v. Union Railway Company of New York City, Appellant.
    Negligence — railroads — action to recover for death of plaintiff’s intestate through being struck by street railway car • — • contributory negligence of deceased — when negligence of railway may not be predicated solely on facts that car was running fast and no warning was sounded.
    1. In an action to recover for the death of plaintiff’s intestate, through his being struck by one of defendant’s trolley cars, where a fair inference from the evidence is that the intestate, who, owing to snow banks in the street, had stopped his automobile on the northbound track of defendant’s railway, in getting down from his truck either because he was moving backwards, or otherwise, failed to see the approaching trolley ear on the adjacent track until it was within a few feet of him and then when it was too late attempted to escape from his position of danger by climbing back on the truck, he was chargeable with contributory negligence. If he backed down upon the track in front of the ear without looking he was oblivious of his duties. If he looked and saw and still placed himself in a position of danger he was, if anything, still more oblivious because then intention took the place of inadvertence.
    (Argued May 13, 1926;
    decided July 9, 1926.)
    2. Another theory, that decedent had started to cross, and when he saw the car coming at a fast rate of speed and not slowing up, made a frantic effort to get back on the truck, also clearly subjects him to the charge of contributory negligence, because even though the street conditions might subject the defendant to additional obligations of caution in some situations there is nothing which changed the rule as between it and a foot passenger who, with free and unimpeded movements, proposed to cross one of its tracks in the middle of a block. The rights of such a person are subordinate to the rights of the car and do not permit him to gamble with the chance of accidents by going in front of a rapidly approaching car.
    3. In any event, under the circumstances, negligence on the part of defendant may not be predicated solely on the facts that the ear was running at a rapid rate of speed and that no gong was sounded. Daylight made the ear easily if not inevitably visible to intestate if he looked before going upon the track and, therefore, a gong was not necessary. The car was going at the rate of twenty miles an hour but this was between street intersections, in violation of no ordinance and left the ear under ready and quick control, for the evidence is that it was stopped in its own length after the accident. There is no rule which called upon the motorman to anticipate unusual or careless movemen us.upon the part of a foot passenger who was in full control of his movements until something happened which reasonably lod to such anticipation, and there is no suggestion that the motorman did not do everything that he could to bring his car to a stop when the signal of danger was given by the impending accident.

      Neuman v. Union Railway Co., 215 App. Div. 765, reversed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 24, 1925, affirming a judgment in favor of plaintiff entered,upon a verdict.
    Alfred. T. Davison, Addison B. Scoville and A. C. Mayo for appellant.
    The plaintiff failed to prove any negligence on the part of the defendant, and the complaint should have been dismissed. (Byrnes v. Brooklyn Heights R. R. Co., 148 App. Div. 794; Bittner v. Crosstown Ry. Co., 153 N. Y. 76; Reid Ice Cream Co. v. New York City Ry. Co., 97 App. Div. 303; Fullerton v. Met. St. Ry. Co., 37 App. Div. 386; Goldstein v. Union Ry. Co., 180 App. Div. 417; 230 N. Y. 570; Barney v. Met. St. Ry. Co., 94 App. Div. 388; Jackson v. Union Ry. Co., 77 App. Div. 161; Albrecht v. Rochester, S. & E. R. R. Co., 205 N. Y. 230.) The plaintiff’s intestate was guilty of contributory negligence as matter of law. (Sackheim v. Pigueron, 215 N. Y. 62; Goldstein v. Union Ry. Co., 180 App. Div. 417; 230 N. Y. 570; Cavo v. Kalbach, 186 App. Div. 728; Zenner v. Brooklyn Heights R. R. Co., 173 App. Div. 194; 225 N. Y. 710.)

      Thomas J. O’ Neill and Leonard F. Fish for respondent.
    The defendant has failed to establish any contributory negligence upon the part of the deceased but on the contrary the evidence affirmatively establishes freedom from contributory negligence. (Kettle v. Turl, 162 N. Y. 266; Copeland v. Met. St. Ry. Co., 67 App. Div. 443.)
   His cock, Ch. J.

This action was brought to recovei damages caused by the death of plaintiff’s husband and intestate and which, it is claimed, was the result of the negligent conduct of defendant in hitting him with one of its trolley cars. The intestate was engaged in the business of supplying towels to barber shops. The routine of his business was to deliver fresh towels to such a shop and take up the soiled ones and have them laundered and repeat this operation from time to time and for the purposes of his business he used a covered automobile. At the time of the accident, which happened in the daytime, the defendant was operating a double-track railroad in Boston road in the borough of The Bronx and which ran substantially north and south. Intestate desired to deliver some towels at a shop situated between street intersections on the west side of Boston road and, as there had been heavy falls of snow resulting in banks on each side of the street between the railroad tracks and the curb it was justifiable for him to use the space occupied by the tracks for approach to the place of business of his customer and he traveled north on the north-bound track until he reached a point opposite the desired location and there stopped his automobile astride the west rail. At this moment there was approaching a south-bound car going, according to plaintiff’s evidence, at the rate of twenty miles an hour and giving no signals and which in some manner struck the intestate and caused his death. The only one of plaintiff’s witnesses who claims to have seen the accident was a discharged employee of defendant’s and his evidence constantly shifts in its attempts to describe the movements of intestate immediately preceding the accident. His first statement was to the effect that as the trolley car passed him he looked to the south and seen a truck standing there on the north-bound track. I also seen a man moving fast and trying to get out of his — front seat of bis truck.” Upon the inaccurate statement of plaintiff’s counsel that he had not so testified the court struck out this evidence and allowed the witness to begin again. His evidence then became to the effect in substance that he saw the intestate starting either from the south-bound track or from a point near thereto attempting to climb up on his truck. His last version was: “ He was in motion * * * from the south-bound track. He dropped his towels and tried to make a grap for the * * * made a grab for his seat, his handle bar, the handle of something to get on there. As he put his left foot on the running board the car came along and struck him on the left side.” The witness places the car about forty feet from the intestate when he first saw him and gives it a speed, as already stated, of about twenty miles an hour. In his last version it will be noticed that this witness gives no description of how the intestate got to the point, whether on the southbound track or near it, whence he was hurrying to climb back onto his car.

His first version is suggestive of what really happened. But independent of this, a witness who formerly had been in the employ of defendant but who had nothing to do with the operation of the car in question and at the time of the trial had ceased to be in the employ of defendant and who, therefore, was a disinterested witness, did state how the intestate got in the way of harm. This witness, one Ward, stated that the intestate was stepping backward from his automobile and in that manner came in contact with the car.

In view of the fact that this accident happened between street intersections the rule of law ordinarily would be that the trolley car had the right of way and that the obligation rested upon the intestate to regulate his movements in subordination to such right. In view of the unusual conditions caused by the snow banks on each side of the street it may be argued that the defendant was bound to exercise a degree of care and caution to the end of preventing collisions which would not ordinarily apply between street intersections and I shall assume, for the moment, that there was evidence which permitted the jury to say that it did not live up to its obligations but was guilty of negligence, and first take up the other question whether as matter of law intestate was shown to be so careless of his obligations that he must be regarded as having contributed to the accident in a manner which bars plaintiff from a right to recover.

In order to pass from his automobile to his customer’s place of business it would have been necessary for intestate to cross the south-bound track upon which the car approached. The evidence, however, in my opinion does not indicate that he had reached that point in his movements. According to the evidence of plaintiff’s witness we simply see him when the car was within forty feet of him and approaching at a rate of twenty miles an hour, hurrying from a point either on or beside the south-bound track and attempting to climb upon his automobile. There is no suggestion in the evidence, favorable to the plaintiff, of the movements by which intestate reached that point, but the evidence first given by this same witness and also the evidence of the disinterested witness Ward indicates that the intestate was getting down backwards from his truck when he was struck by the car. It seems to me that the fair inference from all of this evidence is that the intestate took from his automobile an armful of towels to be delivered to his customer; that in getting down from his truck either because he was moving backwards or otherwise .he failed to see the approaching trolley car until it was within a few feet of him and then when it was too late attempted to escape from his position of danger by climbing back on the truck. This would seem to be at times the view of plaintiff's counsel, for his brief states: In the first place the deceased in the case at bar was not' crossing the street * * *. He was at all times either selecting the proper towels or upon the south-bound track. It was, therefore, totally unlike a case in which the motorman had the right to assume that the pedestrian would stop before going upon the track.” If this is the correct theory, that intestate backed or stepped from a position of safety upon his automobile in front of a car in plain sight, moving at the rate of twenty miles an hour and distant only a few feet, it appears to be too clear to be debatable that he was negligent. He was presumably familiar with car and track conditions at the point of the accideiit and knew the direction from which a car was to be expected on the track where he was struck. If he backed down upon the track in front of the car without looking he was oblivious of his duties. If he looked and saw and still placed himself in a position of danger he was, if anything, still more oblivious because then, intention took the place of inadvertence. But in another portion of the brief plaintiff’s counsel seems to change his theory and argue that decedent was crossing the track. He says the length of time which elapsed after the truck came to a stop makes it well nigh certain that he [the decedent] had started to cross with the towels in his arms when he saw the car coming at a fast rate of speed and was not slowing up and he then dropped the * * * towels and made a frantic effort to get back on the truck.” This theory clearly subjects decedent to the charge of contributory negligence, because even though the street conditions might subject the defendant to additional obligations of caution in some situations we see nothing which changed the rule as between it and a foot passenger who, with free and unimpeded movements, proposed to cross one of its tracks in the middle of a block. The rights of- such a person are, of course, subordinate, to the rights of the car and do not permit him to gamble with the chance of accidents by going in front of a car approaching as this car was. Plaintiff’s counsel seems almost to concede this by his attempt in the passage first, quoted from bis brief to differentiate this from an ordinary crossing case of a foot passenger.

For the purposes of discussion we assumed for the moment that there was evidence upon which might be based the conclusion that defendant was guilty of negligence. When we consider that question, however, and substitute final conclusion for prehminary assumption, we do not think that there was such evidence. Questions of negligence and contributory negligence in such cases as this frequently run closely together and the same facts are decisive of each. That is true of this case. The insistent claims by plaintiff of negligence are predicated on the facts that defendant’s car was running at a rapid rate of speed and that no gong was sounded. Under all of the conditions we do not regard either of these facts or both of them together as establishing negligence. Daylight made the car easily if not inevitably visible to intestate if he looked before going upon the track and, therefore, a gong was not necessary. The car was going at the rate of twenty miles an hour but this was between street intersections in violation of no ordinance and. left the car under ready and quick control, for the evidence is that it was stopped within its own length after the accident. While as has been suggested it may have been incumbent upon the defendant to use extra precautions to guard against collisions in certain conditions, as for instance where an automobile was forced by street conditions into an unusual or awkward position, there was no rule which called upon the motorman to anticipate unusual or careless movements upon the part of a foot passenger who was in full control of his movements until something happened which reasonably led to such anticipation. As we have already pointed out we do not think that tho conduct of decedent furnished any such warning until it was too late for the motorman to avert the accident. Whether he inadvertently backed or stepped from his automobile upon the track in the face of the approaching car or stepped upon the track for the purpose of crossing it when the car was practically upon him, his conduct was not to have been anticipated in advance by the motor» man and there is no suggestion that the latter did not do everything that he could to bring his car to a stop when the signal of danger was given by the impending accident.

We think that at least one error was committed by the trial justice in refusing to charge as requested by the defendant, but the view which we have taken of the merits of the case makes it unnecessary for us to consider that question.

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

Pound, McLaughlin, Crane and Lehman, JJ., concur; Cardozo, J., concurs on second ground stated in opinion; Andrews, J., absent.

Judgment accordingly.