author: Lewis, J.

text:
    Max Cohen, Appellant, v. City Company of New York et al., Respondents.
    Argued April 8, 1940;
    decided May 28, 1940.

      Otto C. Sommerich and Raymond T. Heilpern for appellant.
    Although the form of the suit is quasi contractual for money had and received, the cause of action is grounded on fraud; therefore, the Statute of Limitations did not commence to run until the discovery of the fraud. (Hopkins v. Lincoln Trust Co., 233 N. Y. 213; Schenck v. State Line Tel. Co., 238 N. Y. 308; People v. Straus & Co., 158 Misc. Rep. 222; 248 App. Div. 785; MacDonald v. Reich & Lievre, 100 Cal. 736; Pickford Co. v. Bayly Bros., Inc., 12 Cal. [2d] 501; Hart v. Goadby, 72 Misc. Rep. 232; Parmely v. Boone, 99 Cal. App. 425; Adams v. Harrison, 98 Cal. App. 359; Stern v. National City Co., 25 Fed. Supp. 948; Shepard v. City Co., 24 Fed. Supp. 682; Miller v. Goff, 100 Col. 545; Herrington v. City of Dublin, 50 Ga. App. 769; Penobscot R. R. Co. v. Mayo, 67 Me. 470; Orozem v. McNeill, 103 Kan. 429.) The waiver of tort is a mere fiction and this fiction cannot change the real nature of the action and thus affect the statutory period applicable. (Byxbie v. Wood, 24 N. Y. 607; Miller v. Schloss, 218 N. Y. 400.) An action for money had and received does not lose its tortious nature by reason of the fact that in form it is an action on contract. (Miller v. Schloss, 218 N. Y. 400; Byxbie v. Wood, 24 N. Y. 607; Degraw v. Elmore, 50 N. Y. 1; Lehrer v. Nusbaum, 133 Misc. Rep. 710.)

      Arthur Butler Graham for Bennett C. Clark et al., constituting the Bolivian Bondholders Protective Committee, amicus curiæ.

      Max D. Steuer and Walter F. Pease for respondents.
    The action is one for money had and received and the applicable Statute of Limitations is section 48, subdivision 1, of the Civil Practice Act. (Rothschild v. Mack, 115 N. Y. 1; Byxbie v. Wood, 24 N. Y. 607; Harway v. Mayor, 1 Hun, 628; Carr v. Thompson, 87 N. Y. 160; Brick v. Cohn-Hall-Marx Co., 276 N. Y. 259; People v. Wood, 121 N. Y. 522; Heckscher v. Edenborn, 203 N. Y. 210; American Woolen Co. v. Samuelsohn, 226 N. Y. 61; Diefenthaler v. Mayor, 111 N. Y. 331; Mills v. Mills, 115 N. Y. 80; Strough v. Board of Supervisors, 119 N. Y. 212; Schochet v. Public Nat. Bank, 220 App. Div. 201; Potter v. Walker, 276 N. Y. 15; Cwerdinski v. Bent, 256 App. Div. 612; 281 N. Y. 782; Davis v. Cohn, 256 App. Div. 905.) The words “ an action to procure a judgment on the ground of fraud ” mean an action where fraud is essential to the cause of action and without it there can be no recovery. (Hart v. Goadby, 72 Misc. Rep. 232; Dougherty v. Burger, 133 Misc. Rep. 807; Glover v. National Bank of Commerce, 156 App. Div. 247; Lammer v. Stoddard, 103 N. Y. 672; Price v. Mulford, 107 N. Y. 303; Finnegan v. McGuffog, 203 N. Y. 342; Pitcher v. Sutton, 238 App. Div. 291; 264 N. Y. 638; Potter v. Walker, 276 N. Y. 15; Cwerdinski v. Beni, 256 App. Div. 612; 281 N. Y. 782; Davis v. Cohn, 256 App. Div. 905.)
   Lewis, J.

An affirmative plea by the defendants of the six-year Statute of Limitations (Civ. Prac. Act, § 48, subd. 1) has served as a basis for a summary judgment in their favor at Special Term where the plaintiff’s cause of action was treated as one for money had and received and the complaint dismissed. Appealing from a non-unanimous judgment of affirmance by the Appellate Division, the plaintiff asserts that his cause of action is not for money had and received but is one to procure a judgment on the ground of fraud arising from alleged misrepresentations by the defendants in December, 1928, but not discovered by him until March, 1938, thus making applicable the provisions of subdivision 5 of section 48 of the Civil Practice Act.

After appropriate jurisdictional allegations the complaint herein, which was served August 19, 1938, alleges:

III. That heretofore and on or about the 17th day of December, 1928, the defendants became indebted to the plaintiff in the sum of $15,500, for money had and received by the defendants to the use of the plaintiff.

IV. That although payment was duly demanded before the commencement of this action, no part of said sum has been paid, except the sum of $2,100, leaving a balance of $13,400.

Wherefore, plaintiff demands judgment against the defendants in the sum of Thirteen thousand, four hundred ($13,400) Dollars, with interest from the 17th day of December, 1928, together with the costs and disbursements of this action.”

Accepting the allegations of the complaint as “ a plain and concise statement of the material facts * * * on which the party [plaintiff] relies ” (Civ. Prac. Act, § 241), we read its allegations as stating a cause of action which the pleading itself characterizes as one “ for money had and received by the defendants to the use of the plaintiff.” It is still the law that“ Having money that rightfully belongs to another, creates a debt; and wherever a debt exists without an express promise to pay, the law implies a promise; * * *.” (Byxbie v. Wood, 24 N. Y. 607, 610.)

It was apparently under this rule that the plaintiff chose to frame his complaint, which contains no allegation remotely suggesting fraud as its basis. The complaint rests upon a constructive obligation by the defendants to repay a fixed sum alleged by the plaintiff to be due him — an obligation which, in the absence of an express agreement, is implied by law. By his pleading the plaintiff has made it clear that the money had and received by the defendants to the use of the plaintiff” is definite in amount; the date when the debt was incurred is stated; the demand for interest is for a period commencing on that date and the part payment received by the plaintiff upon the debt is admitted.

Although conceding that in form the cause of action, as alleged in the complaint, is quasi-contractual for money had and received, the plaintiff asserts that his action is grounded on fraud and that, accordingly, he is entitled to invoke the provisions of subdivision 5 of section 48 of the Civil Practice Act which provides in part:

“ The following actions must be commenced within six years after the cause of action has accrued: * * *
5. An action to procure a judgment on the ground of fraud. The cause of action in such a case is not deemed to have accrued -until the discovery by the plaintiff, or the person under whom he claims, of the facts constituting the fraud.”

In support of his position the plaintiff points to allegations in a bill of particulars furnished by him to the defendants. In respect to paragraphs III ” and “ IV ” of the complaint, the bill of particulars alleges that the defendants’ indebtedness to the plaintiff for moneys had and received is based upon his purchase of certain securities and his subsequent rescission of that purchase prior to the commencement of this action. These securities consisted of Chicago, Milwaukee, St. Paul and Pacific Railroad Company bonds of the face value of $20,000. They are alleged to have been purchased December 20, 1928, and tendered back to the defendants July 5,1938, on which date the plaintiff claims to have demanded from the defendants the purchase price paid by him, with interest. The sum of $2,100, mentioned in paragraph “ TV ” of the complaint as a payment made by the defendants, is alleged to represent interest received by the plaintiff on the securities from the date of purchase to the date when the plaintiff tendered them to the defendants. The grounds upon which the plaintiff claims the right to rescind such purchase are alleged to be “ misrepresentations made by, and the fraud of, the defendants in inducing the purchase of said securities.” There is no allegation in the bill of particulars which states the time when plaintiff discovered the facts which he now asserts constitute fraud by the defendants. (Civ. Prac. Act, § 48, subd. 5.) It was not until he served upon the defendants his affidavit in opposition to the defendants’ motion for summary judgment herein that the allegation appears that * * * the falsity of said representations and the wrongful concealment by defendants from [the plaintiff] of material facts which conclusively prove the instability and speculative character of the securities sold to [the plaintiff] were not discovered by [the plaintiff] until in or about and subsequent to March, 1938.”

By these supplementary allegations of fraud the plaintiff would have us disregard the quasi-contractual character of the complaint, in which any wrong by the defendants is only incidental to their unjust enrichment, and treat his cause of action as one in tort which, though restitutionary, is based primarily on alleged wrongdoing by the defendants. By thus treating the complaint we would disregard the different consequences which follow those two types of actions. (See American Law Institute, Restatement of the Law of Restitution, ch. 1, § 5, subd. b [p. 23]; ch. 7, introductory note [p. 523].) Pleadings and a distinct issue are essential to every system of jurisprudence, and there can be no orderly administration of justice without them. If a party can allege one cause of action and then recover upon another, his complaint would serve no useful purpose. * * *. ‘ The rule that judgment should be rendered in conformity with the allegations and proofs of the parties, secundum allegata et probata, is fundamental in the administration of justice. Any substantial departure from this rule is sure to produce surprise, confusion and injustice.' ” (Lamphere v. Lang, 213 N. Y. 585, 588.)

In the case at hand the allegations of fraud, supplementing the complaint herein, serve only to state the ground upon which the plaintiff rescinded, prior to the present suit, the purchase of securities from the defendants. The alleged fraud is not the gravamen of the cause of action pleaded by the plaintiff as a means of recouping any loss he sustained from the transaction; it is only incidental to that cause of action and, accordingly, will not enable the plaintiff to take advantage of the saving provisions of the Civil Practice Act, section 48, subdivision 5. (Carr v. Thompson, 87 N. Y. 160, 164, 165; Brick v. Cohn-Hall-Marx Co., 276 N. Y. 259, 263-265; Hart v. Goadby, 72 Misc. Rep. 232, 236.)

We thus reach the conclusion that the right to bring the present action for money had and received pleaded by the plaintiff has been extinguished by the six-year Statute of Limitations. (Civ. Prac. Act, § 48, subd. 1.) The question whether an action by the plaintiff for damages due to the defendants’ alleged fraud is barred by this present action for money had and received is not before us. (Schenck v. State Line Telephone Co., 238 N. Y. 308, 311, 313; Clark v. Kirby, 243 N. Y. 295, 303.)

The judgment should be affirmed, with costs.

Lehman, Ch. J., Lottghran, Finch, Rippey, Sears and Conway, JJ., concur.

Judgment affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Henry Vogel, Appellant, v. William C. Edwards, Jr., Individually and as Executor and Trustee under the Will of Marie R. Edwards, Deceased, Respondent.
    Submitted April 11, 1940;
    decided May 28, 1940.

      Meyer Kreeger for appellant.
    The provisions of section 1083-a of the Civil Practice Act are not applicable to the facts in this case. (Emigrant Industrial Sav. Bank v. Van Bokkelen, 269 N. Y. 110; Feiber Realty Cory. v. Abel, 265 N. Y. 94; Central Hanover Bank & Trust Co. v. Boccia, 244 App. Div. 106.)

      Henry W. Schober for respondent.
    Since judgment of foreclosure and sale was entered after August 28, 1933, defendant is entitled to relief under section 1083-a of the Civil Practice Act. (Emigrant Ind. Sav. Bank v. Van Bokkelen, 269 N. Y. 110; Mason v. Corbin, 29 App. Div. 602; Wegman v. Childs, 41 N. Y. 159; LoPorto v. Druiss Co., 241 App. Div. 419; 268 N. Y. 699.)
   Lewis, J.

The judgment of foreclosure and sale in this action contains the usual provisions directing the referee named therein to make and file a report of sale specifying the amount of a deficiency to be entered and that the plaintiff shall have execution therefor. It was signed by the justice at Special Term on August 25, 1933, but was not entered until August 29, 1933. Meantime on August 28, 1933, there became effective section 1083-a of the Civil Practice Act. (L. 1933, ch. 794.)

The Appellate Division has ruled that section 1083-a of the Civil Practice Act affords a valid basis for the order granted herein at Special Term July 22, 1935, upon the defendant’s motion, opening the deficiency judgment entered against the defendant for the purpose of ascertaining whether the amount thereof should be reduced or satisfied and naming a referee with respect thereto.

The following question is certified by the Appellate Division for our determination: “ On this record, should the motion to open the deficiency judgment, after foreclosure, have been granted?”

Following the Legislature’s declaration that a public emergency existed which prompted legislative intervention, the statute with which we are concerned provides:

“ § 1083-a. Limitation upon deficiency judgments during emergency period. No judgment shall be granted for any residue of the debt remaining unsatisfied as prescribed by the preceding section where the mortgaged property shall be sold during the emergency, except as herein provided. Simultaneously with the making of a motion for an order confirming the sale or in any event within ninety days after the date of the sale, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action. Such notice shall be served personally or in such other manner as the court may direct. Upon such motion the court, whether or not the respondent appears, shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date of sale or such nearest earlier date as there shall have been any market value thereof and shall make an order directing the entry of a deficiency judgment. Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the party hable as determined by the judgment with interest, plus the amount owing on ah prior hens and encumbrances with interest, plus costs and disbursements of the action including the referee’s fee and disbursements, less the market value as determined by the court or the sale price of the property whichever shall be the higher. If no motion for a deficiency judgment shall be made as herein prescribed the proceeds of the sale regardless of amount shall be deemed to be in full satisfaction of the mortgage debt and no right to recover any deficiency in any action or proceeding shall exist.”

Ruling that the statute quoted above applies only when a judgment of foreclosure and sale is granted after the statute became a law, we have said: “ The language used does not evidence an intent to affect judgments granted prior to the effective date of the section.” (Feiber Realty Corp. v. Abel, 265 N. Y. 94, 98.)

In the case at hand our decision turns upon the question whether a judgment of foreclosure and sale is to be regarded as granted as of the date of its rendition or the date of its entry. “ The act of rendering judgment by the justice is judicial; that of entering it in his docket is ministerial. The judicial functions of the justice are completed when he has rendered his judgment.” (Fish v. Emerson, 44 N. Y. 376, 378, 379. See Black on The Law of Judgments, § 106, pp. 149, 150; Freeman on The Law of Judgments [5th ed.], § 46, pp. 75, 76.) The entry may be important for certain purposes, as for example, the creation of a lien or fixing the date from which is computed the time to appeal.

The judgment herein which the defendant seeks to open was rendered August 25, 1933, on which date section 1083 of the Civil Practice Act provided the applicable law. The judgment was rendered in conformity with that law. The rights of the parties then became vested (Livingston v. Livingston, 173 N. Y. 377, 382, 383), and thereafter Special Term had no power to open the judgment and give effect to section 1083-a which, by its terms, applied only to judgments of foreclosure and sale granted after August 28, 1933, its effective date. The judgment here involved was granted before the effective date of that statute.

The relief granted by Special Term was not within its equitable powers. (Emigrant Industrial Sav. Bank v. Van Bokkelen, 269 N. Y. 110, 115, 116; Guaranteed Title & Mtg. Co. v. Scheffres, 275 N. Y. 30.)

The orders should be reversed, with costs, and the defendant’s motion at Special Term denied, with ten dollars costs. The question certified is answered in the negative.

Lehman, Ch. J., Loughran, Finch, Sears and Conway, JJ., concur; Rippet, J., taking no part.

Orders reversed, etc.


author: Per Curiam.

text:
    In the Matter of William Conway, Respondent, against William F. Carey, as Commissioner of Sanitation of the City of New York, et al., Appellants.
    Argued April 10, 1940;
    decided May 28, 1940.

      William G. Chanler, Corporation Counsel (James Hall Prothero, Paxton Blair and Charles F. Murphy of counsel), for appellants.
    The work formerly performed by petitioner as “ Superintendent of Final Disposition ” was turned over to defendant Zengerle, who was already in the department and thenceforth acted as “ Engineer of Final Disposition;” this substitution in the interest of economy gave petitioner no legal right to the relief sought. (People ex rel. Chappel v. Lindenthal, 173 N. Y. 524; Matter of Kiernan v. Ingersoll, 248 App. Div. 822; 272 N. Y. 677; People ex rel. Osterhout v. Williams, 91 Misc. Rep. 95; 173 App. Div. 981; 221 N. Y. 580; Spawn v. Fleming, 208 App. Div. 582; People ex rel. Davidson v. Williams, 213 N. Y. 130; People ex rel. Vineing v. Hayes, 135 App. Div. 19.) There is no proof that an employee of the department at any time performed any of the work formerly assigned to the petitioner; it follows that there was no question of a fraud of petitioner’s civil service rights for submission to a jury; the verdict is against the evidence and the weight of the evidence. (Matter of Griffin v. Williams, 168 App. Div. 63; 216 N. Y. 651.)

      Louis P. Brown for respondent.
   Per Curiam.

The petitioner in this proceeding seeks reinstatement to the position of Superintendent of Final Disposition in the Department of Sanitation of the City of New York which he had occupied prior to the 1st day of January, 1937. On that day his position was abolished. He was then relieved on his duties and his name was entered on a preferred list. The petitioner claims that his position was not in fact abolished but that the duties of his position were improperly transferred to a substantial extent to a man named Lizee who had not previously been an employee of 'the city in a permanent position. (Civil Service Law [Cons. Laws, ch. 7], § 31-b.)

An examination of the record convinces us that there is no substantial evidence to support the petitioner’s claim. The work of the petitioner as Superintendent of Final Disposition consisted of the supervision of the collection of refuse and its disposal at various riverside dumps about the city and particularly at Riker’s Island as well as the supervision of the truck and scow services which brought the refuse to these dumps. It is petitioner’s principal contention that Lizee took over his duties in connection with the disposal of the refuse at Hiker’s Island. On the island there was a district superintendent under the control and direction of the petitioner who attended to the disposition of the refuse within a bulkhead line formed by sunken scows. The petitioner had nothing to do with land fills.

On January 1, 1937, duties were assigned to Lizee relating to filling and grading on Hiker’s Island and to land filling operations extending over the five boroughs of the city of New York and to the installation and use of new equipment for these purposes. Prior to the abolition of petitioner’s position the district superintendent took orders from the petitioner; thereafter he .received his orders, not from Lizee, but from a superior of petitioner’s in the-Department of Sanitation. The facts stated and the further fact that Lizee went on inspection tours on Hiker’s Island with the district superintendent and conferred with him as to betterments in methods of disposal and as to economy of operation on the island, fall far short of proving any assumption by Lizee of the duties formerly performed by the petitioner.

The failure of proof in this respect makes it unnecessary to consider other substantial errors.

The orders should be reversed and the proceeding dismissed, without costs.

Lehman, Ch. J., Lotjghran, Finch, Rippet, Sears, Lewis and Conwat, JJ., concur.

Orders reversed, etc.


author: Lehman, Ch. J.

text:
    In the Matter of the Estate of John Gellatly, Deceased. Charlyne Gellatly, as Administratrix of the Estate of John Gellatly, Deceased, Appellant; United States of America, Respondent.
    Argued April 8, 1940;
    decided May 28, 1940.

      Edward A. Alexander for appellant.
    The Surrogate’s Court Act neither in letter nor in spirit contemplates a limited jurisdiction over the petitioner in a compulsory accounting proceeding; and a petitioner for a compulsory accounting submits to the jurisdiction of the court for all purposes encompassed by the accounting. (Matter of Raymond v. Davis, 248 N. Y. 67; Matter of Haigh, 125 Misc. Rep. 365; Matter of Gurevitch, 166 Misc. Rep. 439; Matter of Robinson, 131 Misc. Rep. 21; Matter of Bird, 166 Misc. Rep. 786; Matter of Haber, 151 Misc. Rep. 82; Matter of Winslow, 151 Misc. Rep. 298; Matter of Cook, 244 N. Y. 63: Matter of Lockwood, 154 Misc. Rep. 233; Matter of Folmsbee, 149 Misc. Rep. 426; Matter of Donnelly, 157 Misc. Rep. 319; Matter of Seaman, 205 App. Div. 681.) The Surrogate’s Court has complete jurisdiction over the United States government, which completely waived its right of sovereignty since it voluntarily commenced the accounting proceeding in said court and demanded affirmative relief. (Matter of Raymond v. Davis, 248 N. Y. 67; Matter of Gurevitch, 166 Misc. Rep. 439; Walker v. United States, 139 Fed. Rep. 409; 148 Fed. Rep. 1022; American Propeller & Mfg. Co. v. United States, 300 U. S. 475; United States v. The Thekla, 266 U. S. 328; People v. Canal Board of New York, 55 N. Y. 390; Brundage v. Knox, 277 Ill. 450; Texas Channel & Dock Co. v. State, 104 Tex. 168; Port Royal & A. R. F. Co. v. So. Carolina, 60 Fed. Rep. 552; State v. Portsmouth,
      106 Ind. 435; McClandish v. Com., 76 Va. 1002; Com. v. Barker, 126 Ky. 200; State v. Schurz, 143 Minn. 218.)

      John T. Cahill, United States Attorney (William L. Lynch and Edward J. Ennis of counsel), for respondent.
    The United States may not be subjected in any court to a counterclaim which might result in an affirmative judgment against it. (United States v. Nipissing Mines Co., 206 Fed. Rep. 431; Reeside v. Walker, 11 How. [U. S.] 271; People v. Dennison, 84 N. Y. 272; People v. Corner, 59 Hun, 299; 128 N. Y. 640; People v. Greylock Construction Co. 213 App. Div. 21; People v. C. & W. Construction Co., 256 App. Div. 17; Second Employers’ Liability Cases, 223 U. S. 1; Guaranty Trust Co. v. United States, 304 U. S. 126; Swearingen v. United States, 11 Gill & J. 373; McNamee v. United States, 11 Ark. 148.) The claim of the estate being in tort may not be asserted against the United States in any court, Federal or State. (Gibbons v. United States, 8 Wall. 269; Schillinger v. United States, 155 U. S. 163; Basso v. United States, 239 U. S. 602; Pearson v. United States, 267 U. S. 423; Nassau Smelting & Refining Works, Ltd., v. United States, 266 U. S. 101; Keifer & Keifer v. Reconstruction Finance Corp. 306 U. S. 381.)
   Lehman, Ch. J.

John Gellatly died on November 9, 1931. Letters of administration upon his estate were issued on February 1, 1932. In May, 1938, the United States of America presented a petition in accordance with the provisions of sections 259 and 260 of the Surrogate’s Court Act, praying for the judicial settlement of the accounts of the administratrix. The petition states that the petitioner’s claim “is on account of income tax owing by decedent for the year 1930 in the amount of $7,044.53.”

The right of the United States government to bring proceedings for the settlement of the accounts of the representative of a decedent in order to obtain payment of a claim for unpaid taxes or other indebtedness of the decedent is not disputed, but the administratrix, in answering the petition, has pleaded, in varying form, as thirteen separate setoffs and counterclaims, allegations that the United States government wrongfully took and wrongfully retains a collection of paintings, valued at $4,000,000, which belonged to the decedent and which constitutes the principal asset of the estate of the decedent. The administratrix asked in the answer that the petition of the United States government be dismissed and that the United States government be directed to account for the paintings it holds. The Surrogate granted the application of the United States of America to compel the administratrix to account and denied the cross-application of the administratrix for the determination of her claim against the United States on the ground that the courts have no jurisdiction of such a claim against the United States. His order was unanimously affirmed by the Appellate Division. _ - . j

The order entered upon the decision of the Appellate Division establishes the right of the United States of America to compel the administratrix to account. Until the accounting has been had and a decree entered upon the accounting there is no final adjudication of the right of the United States to compel the administratrix to pay its claim. The order entered upon the decision of the Appellate Division does, however, finally determine that the cross-application of the administratrix for affirmative relief against the United States must be dismissed. No adjudication upon the merits of the counterclaim or cross-application of the administratrix against the United States can be made upon the accounting and the decree entered upon the accounting will embody the adjudication only upon the right of the United States to compel payment of its claim. The decree of the Surrogate and the order of the Appellate Division effectually sever the cross-application of the administratrix from the application of the United States. Since the proceeding initiated by the United States has not yet been finally determined, no appeal to this court from the decision of the Appellate Division ordering the administratrix to account may be taken without leave of the Appellate Division. The cross-application of the administratrix has been determined as effectually as if a separate order had been entered and the administratrix has properly appealed by permission of this court from the order of the Appellate Division dismissing the cross-application. (Reichel v. Standard Rice Co., 254 N. Y. 86; Cohen, Powers of New York Court of Appeals, § 12.)

After the decision of the Appellate Division in this case was rendered the Supreme Court of the United States authoritatively decided that the United States does not, by filing a claim in a State probate court, subject itself to allowance by the- State court of a cross-claim against itself. (United States v. Shaw, 309 U. S. 495, decided March 25, 1940. Cf. United States v. U. S. Fidelity & Guaranty Co., 309 U. S. 506, decided the same day.) The administratrix does not challenge the authority of those cases but ruges that even though the Surrogate properly dismissed her cross-application for affirmative relief, the facts alleged in the application may be shown as an offset or credit due from the United States government.

Doubtless in some cases counter demands may be asserted against the United States by way of defense and credit even through no independent action could be brought against the United States. (Cf. Bull v. United States, 295 U. S. 247; People v. Dennison, 84 N. Y. 272.) We cannot, upon this appeal from the order dismissing the counter application for affirmative relief, determine whether the facts alleged would, if proven, upon the accounting, defeat or diminish the claim of the United States. As we have said, the proceedings for the enforcement of the claim of the United States are still pending and any decision of the courts below upon issues of fact or law in that proceeding are interlocutory only and are not subject to review now. The severance of the cross-application is complete and our power of review extends no further than the dismissal of the cross-application for affirmative relief.

The order of the Appellate Division should be affirmed, without costs.

Loughran, Finch, Rippey, Sears, Lewis and Conway, JJ., concur.

Order affirmed.


author: Sears, J.

text:
    Lorean Pharm et al., Respondents, v. Rose Lituchy et al., Defendants, and Emigrant Industrial Savings Bank, Appellant.
    Argued April 15, 1940;
    decided May 28, 1940.

      Ralph H. Terhune and E. C. Sherwood for appellant.
    The grantor of property, in the absence of fraud, is not hable for injuries sustained by persons thereon because of defective conditions existing at the time of transfer. (Appel v. Muller, 262 N. Y. 278; Potter v. N. Y., O. & W. Ry. Co., 261 N. Y. 489; Kilmer v. White, 254 N. Y. 64; Wilks v. N. Y. Tel. Co., 243 N. Y. 351; Trustees of Canandaigua v. Foster, 156 N. Y. 354; Jaffe v. Harteau, 56 N. Y. 398; Palmore v. Morris, T. & Co., 182 Penn. St. 82; Smith v. Tucker, 151 Tenn. 347; Releg v. Vermillion Boat Co., 181 Minn. 92; Stone v. Hegman Bros., 124 Cal. App. 777; Cuttings v. Goetz, 256 N. Y. 287; Lafredo v. Bush Terminal Co., 261 N. Y. 323.) The Multiple Dwelling Law (Cons. Laws, ch. 61-a) does not govern the liability of the appellant. (Weiner v. Leroco Realty Corp., 279 N. Y. 127; Dean v. Metropolitan Elevated Ry. Co., 119 N. Y. 540; Glennie v. Falls Equipment Co., 238 App. Div. 7; Liddell v. Novak, 246 App. Div. 848; Matter of O’Donnell, 240 N. Y. 99; Comstock v. Wilson, 257 N. Y. 231; Kushes v. Ginsberg, 99 App. Div. 417; 188 N. Y. 630; Hirsch v. Radt, 228 N. Y. 100; Klepper v. Seymour House Corp., 246 N. Y. 85; McFarlane v. City of Niagara Falls, 247 N. Y. 340; Wilks v. New York Tel. Co., 243 N. Y. 351; Zolezzi v. Bruce-Brown, 243 N. Y. 490; Campbell v. Holding Co., 251 N. Y. 446; Sacks v. Sunset Hill Realty Corp., 250 App. Div. 778; 276 N. Y. 668.)

      Samuel T. Baker and Bert Harmon for respondents.
    Appellant was properly held liable in negligence. (Wiener v. Leroco Realty Corp., 279 N. Y. 127; Altz v. Leiberson, 233 N. Y. 16; Tenement House Dept. v. Weil, 76 Misc. Rep. 273; Morris v. New York City, 146 Misc. Rep. 36; Kilmer v. White, 254 N. Y. 64; Junkerman v. Tilyou Realty Co., 213 N. Y. 404; Jaffe v. Harteau, 56 N. Y. 398; Ahearn v. Steele, 115 N. Y. 203.) Appellant was also hable upon the theory of nuisance. (Ahearn v. Steele, 115 N. Y. 203; Conhocton Stone Road v. Buffalo, New York & Erie R. R. Co., 51 N. Y. 573.)
   Sears, J.

The defendant-appellant is the former owner of a multiple dwelling in the city of New York. On March 18, 1938, it conveyed the premises. The plaintiffs were tenants of an apartment in the multiple dwelling. On March 14,1938, the ceiling of a room in plaintiffs’ apartment was in a dangerous condition and notice of the condition was given to the agent of the defendant-appellant, who promised to repair. When defendant-appellant conveyed the premises it did not notify the grantee of the dangerous condition of the ceiling in plaintiffs’ apartment. On March 19th the ceiling fell and injured the plaintiff Lorean Pharm, and for the damages resulting from the injuries, plaintiffs have recovered a judgment against the defendant-appellant.

Under the provisions of the Multiple Dwelling Law (Cons. Laws, ch. 61-a; L. 1929, ch. 713, as amd.) the owner of a multiple dwelling is liable for damages resulting from failure to keep the dwelling in good repair. (Weiner v. Leroco Realty Corp., 279 N. Y. 127; Multiple Dwelling Law, § 78.) At common law it is the general rule that an owner of land ceases to be liable in negligence for its condition when the premises pass out of his control before injury results. (Kilmer v. White, 254 N. Y. 64; Cullings v. Goetz, 256 N. Y. 287; Kushes v. Ginsberg, 188 N. Y. 630, affg. 99 App. Div. 417.) However, at common law there are exceptions and one of these is where a nuisance exists on the premises. The Multiple Dwelling Law has broadened the concept of nuisance. The act provides, in subdivision 30 of section 4: “ Whatever is dangerous to human life or detrimental' to health, and whatever dwelling is overcrowded with occupants * * * are also severally, in contemplation of this law, nuisances.”

The jury has found that the ceiling was in a dangerous condition. The law makes this a nuisance, and liability of the owner in such case persists beyond conveyance at least until the new owner has had reasonable opportunity to discover the condition on prompt inspection and to make necessary repairs. So far, liability must extend, and that includes this case. We need not determine its limits more precisely. Nor, in view of what we have said, need we now consider the application of another exception to the general rule of liability of a landlord ceasing with conveyance, namely, when the landlord in making the transfer is guilty of conscious deception by concealing or failing to disclose a known dangerous condition. (Kilmer v. White, supra.)

The judgment should be affirmed, with costs.

Lehman, Ch. J., Loughrah, Finch, Rippey, Lewis and Coeway, JJ., concur.

Judgment affirmed.


text:
    Abou S. Baillis et al., Doing Business as Baillis Bros., Respondents, v. George Fuchs, as President of Local Union No. 23 of the International Union of United Brewery, Flour, Cereal and Soft Drink Workers of America, et al., Appellants.

      Argued April 24, 1940;
    decided May 28, 1940.

      William, Karlin and Leo Greenfield for appellants.
    The Appellate Division erred in affirming the broad judgment of injunction granted by the trial court. (Exchange Bakery & Restaurant, Inc., v. Rifkin, 245 N. Y. 260; Interborough Rapid Transit Co. v. Lavin, 247 N. Y. 65; Stillwell Theatre, Inc., v. Kaplan, 259 N. Y. 405; J. H. & S. Theatres v. Fay, 260 N. Y. 315; Goldfinger v. Feintuch, 276 N. Y. 281; Iron Molders’ Union v. Allis-Chalmers Co., 166 Fed. Rep. 45; Opera on Tour, Inc., v. Weber, 17 N. Y. Supp. [2d] 144; Senn v. Tile Layers’ Protective Union, 301 U. S. 468; Luft v. Flove, 270 N. Y. 640.) The Special Term erred in ruling that plaintiffs could maintain this action in equity for a permanent injunction regardless of the provisions of section 876-a of the Civil Practice Act. Had the Special Term followed the statute it would have been required to dismiss the complaint. (Goldfinger v. Feintuch, 276 N. Y. 281; Mays Furs & Ready-to-Wear, Inc., v. Bauer, 282 N. Y. 331; Boro Park Sanitary Live Poultry Market, Inc., v. Heller, 280 N. Y. 481.) The Special Term erred in ruling that the asserted violence caused a complete forfeiture of the right to picket. (May’s Furs & Ready-to-Wear, Inc., v. Bauer, 282 N. Y. 331; Wise Shoe Co. v. Lowenthal, 266 N. Y. 264; Steinkritz Amusement Corp. v. Kaplan, 257 N. Y. 294;
      Willson & Adams Co. v. Pearce, 240 App. Div. 718; 264 N. Y. 521; New York Lumber Trade Assn. v. Lacey, 269 N. Y. 595.)

      Milton D. Jacobs for respondents.
    Section 876-a of the Civil Practice Act has no application. (Thompson v. Boekhout, 273 N. Y. 390; Yablonowitz v. Korn, 205 App. Div. 440; Luft v. Flove, 270 N. Y. 640; Paul v. Mencher, 169 Misc. Rep. 657; 254 App. Div. 851; Boro Park Sanitary Live Poultry Market, Inc., v. Heller, 280 N. Y. 481; Wishny v. Jones, 169 Misc. Rep. 459; Gips v. Osman, 170 Misc. Rep. 53; Miller v. Fishworkers Union, 170 Misc. Rep. 713.) An action in equity for a permanent injunction may be maintained without compliance with section 876-a of the Civil Practice Act. (Busch Jewelry Co. v. United Retail Employees Union, 281 N. Y. 150; Micamold Radio Corp. v. Beedie, 156 Misc. Rep. 390.) The evidence is clear and convincing that the defendants deliberately inspired the use of illegal, violent, coercive and disorderly acts and approved of them. The trial justice was correct in finding that such conduct would continue and was justified in eujoining all picketing. (Smith v. Smith, 273 N. Y. 380; Stuhmer & Co. v. Korman, 241 App. Div. 702; 265 N. Y. 481.)
   Sears, J.

Plaintiffs are copartners engaged in the business of distributing beer and soft drinks, some of which they also bottle, in the city of New York and neighboring territory. Prior to March 1, 1939, they had in their employ thirteen drivers who had designated the defendant union, Local No, 23, as their bargaining agent. On that date a strike was called by the union, after the plaintiffs had refused to enter into a collective labor agreement to increase the drivers’ wages from the variable rate of seventeen dollars to thirty-two dollars per week for an indefinite number of working hours to the union scale of forty-five dollars a week for forty working hours. All thirteen employees of the plaintiffs responded to the call to strike and are still on strike. Since then the plaintiffs, four brothers, have hired no other employees but have themselves carried on the business without other employees. This practice was concededly adopted to avoid a “ labor dispute.” The plaintiffs claim that they do not intend to hire any new employees, and there is proof that they would have been willing to continue to employ their former drivers at the old wage scale.

To accomplish the purpose of the strike, that is, to force the plaintiffs to negotiate an agreement for higher wages and regular hours, the defendant union, under the direction of the defendant Sickles, has caused the place of business of the plaintiffs to be picketed and also the places of business of plaintiffs’ customers. The picketing has run the gamut from peaceful persuasion to assault of a criminal character. The union rented the premises adjoining the plaintiffs’ place of business and from there directed the activities of the strikers and picketing force. These activities have included the display of placards in front of the plaintiffs’ premises and in front of stores where merchandise distributed by the plaintiffs was dealt in, pursuit of plaintiffs’ trucks by unionists in motor cars, interference with the driving and parking of plaintiffs’ trucks, threatening, intimidating and villifying plaintiffs, their families and their customers. Since the strike started two pickets have been convicted of disorderly conduct and a third of assault in the third degree. These illegal acts continued until the time of the trial, three months after the strike was called. As a consequence the plaintiffs’ business has been practically ruined. The trial justice concluded that the appellants “ no longer serve the interest of organized labor; they continue but to harass and destroy. ’ ’ A strong case was thus made out for equitable relief if the necessary prerequisites to such relief were established. We are thus brought to the question whether there was here a “ labor dispute ” as defined in the Civil Practice Act, section 876-a, subdivision 10-, and whether section 876-a was, therefore, applicable to this action.

The question of what constitutes a “ labor dispute,” even under the statutory definition, admits of no generally applicable and definitive answer. Of necessity the answer must depend upon the circumstances in the individual case. The Legislature has said: “The term ‘ labor dispute ’ includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of employment, or concerning employment relations, or any other controversy arising out of the respective interests of employer and employee, regardless of whether or not the disputants stand in the relation of employer and employee.” (L. 1935, ch. 477; Civ. Prac. Act, § 876-a, subd. 10 [c].) Thus, it is clear that the first essential for a labor dispute ” is employment. In Thompson v. Boekhout (273 N. Y. 390), where the proprietor of a small picture theater employing only one man discharged his single employee before a strike was called, there was no employment existing at the time of the strike, hence no “ labor dispute.” A somewhat similar situation was presented in Luft v. Flove (270 N. Y. 640). On the other hand, in May’s Furs & Ready-to-Wear, Inc., v. Bauer (282 N. Y. 331), where a strike was called by a union against a business house which employed no members of the union, the purpose of the strike being to unionize the employees of the house, there was “ employment ” in the general trade at the time the strike was called, and a labor dispute ” existed.

In the present case the drivers were in the plaintiffs’ employ when the strike was called, and the strike related to the terms of employment. There can be no question, therefore, of the existence of a “ labor dispute ” and the application of section 876-a of the Civil Practice Act.

The section cited requires certain matters to be alleged and proved before there can be granted either a temporary or a permanent injunction. Here the complaint was amended to conform to the proof and the statutory requirement for pleading was met as to everything contained in the proof. In this case, as in' the May’s Furs case (supra), the situation was such that further negotiations may well have been impossible. Each side stood unwaveringly on its demands and under the peculiar circumstances disclosed by the record, a basis for negotiation appears to have been wholly wanting.

There remains a basic difficulty against affirming the provision for an injunction against all picketing. The statute (Civ. Prac. Act, § 876-a) is explicit in its provisions in support of the right of picketing. This guaranty of the employees’ right cannot, however, be made a shield for violence, disorder and crime. The power of the courts to enjoin violence in a “ labor dispute ” is beyond question, and, when necessary, this power may even authorize a prohibition of all picketing. Such was the case in Busch Jewelry Co. v. United Retail Employees’ Union (281 N. Y. 150). The obstacle which prevents our applying that authority to the present appeal is that here we have no finding by the trial court that peaceful picketing is impossible. In the absence of such a finding or one establishing the necessity of injunctive refief against all picketing as the only practical method of assuring the continuance of order, we are under the command of the statute so to formulate relief as to permit to the unionists their unquestioned rights to picket peacefully. Although six months have now passed since the granting of the judgment containing the injunction and it has now spent its force (Civ. Prac. Act, § 876-a, subd. 8) we have determined to modify the judgment, as was done in the May’s Furs case (supra) inasmuch as an application for an extension of the injunction may be sought under the provisions of subdivision 8 of section 876-a of the Civil Practice Act. We do not pass upon the question whether such an application is permissible after the expiration of the original injunction by limitation of time as that question is not now before us.

The judgment should be modified so as to strike out all provisions, except those restraining violence and breach of the peace and by adding a provision limiting the duration of the injunction in accordance with subdivision 8 of section 876-a of the Civil Practice Act, all in accordance with this opinion, and, as so modified, affirmed, without costs.

Lehman, Ch. J., Loughran, Finch, Rippey, Lewis and Conway, JJ., concur.

Judgment accordingly.


author: Finch, J.

text:
    Hearn 45 St. Corporation, Appellant, v. Moe Jano et al., Respondents.

      Submitted April 8, 1940;
    decided May 28, 1940.

      M. Emanuel Balt for appellant.
    The complaint sets up a cause of action under article X of the Debtor and Creditor Law (Cons. Laws, ch. 12) to which the ten-year Statute of Limitations applies. (Buttles v. Smith, 281 N. Y. 226; Carr v. Thompson, 87 N. Y. 160; Brick v. Cohn-Hall-Marx Co., 276 N. Y. 259.)

      Joseph H. Sand for respondents.
    The complaint attempts to set up a cause of action to procure a judgment on the ground of actual fraud, against which the six-year Statute of Limitations is a bar. (Spallholz v. Sheldon, 158 App. Div. 367; 216 N. Y. 205; Decker v. Decker, 108 N. Y. 128; Pitcher v. Sutton, 238 App. Div. 291.) The complaint was properly dismissed as barred by the six-year Statute of Limitations, under subdivision 5 of section 48 of the Civil Practice Act. (Ectore Realty Co. v. Manufacturers Trust Co., 250 App. Div. 314; Sielcken-Schwarz v. American Factors, Ltd., 265 N. Y. 239; Buttles v. Smith, 281 N. Y. 226; American Surety Co. v. Conner, 251 N. Y. 1.) Where a complete remedy at law was available, as here, the six-year Statute of Limitations for such action at law applies to the instant case. (American Surety Co. v. Conner, 251 N. Y. 1; Keys v. Leopold, 241 N. Y. 189; Schmidt v. Merchants Dispatch Transp. Co., 270 N. Y. 287; Brick v. Cohn-Hall-Marx Co., 276 N. Y. 259; Engel v. Fischer, 102 N. Y. 400; Hanover Fire Ins. Co. v. Morse D. D. & R. Co., 270 N. Y. 86.)
   Finch, J.

This is a judgment creditor’s action to set aside transfers and to follow the assets of a corporate judgment debtor, which were transferred through alleged judicial proceedings so as to be beyond the reach of execution.

The issues arise upon a motion to dismiss the complaint and present the question whether the cause of action is governed by the six- or the ten-year periods of limitations. If the former, then the action is already barred.

The complaint alleges three wholly unsatisfied judgments recovered by plaintiff against the corporate judgment debtor under a written lease on the business premises of the latter. The judgment debtor was stripped of its assets and rendered insolvent by a series of transactions occurring from October to December, 1931. In brief, these transactions consisted of the entry of fictitious judgments and the giving of a gratuitous chattel mortgage, all without consideration, whereby, under a sale pursuant to execution and a foreclosure sale, there was effected a complete capture of the assets of the corporation by its directors and officers, to the consequent insolvency of the debtor. A new corporation was organized and these assets transferred to the new corporation. The prayer for relief is the vacatur of these transactions, a receivership and an injunction, an accounting, and personal judgment for dissipated assets.

The major question presented is whether the gravamen of the cause of action is the right of the creditor to follow and levy upon assets of the debtor when title thereto has been vested in others in violation of the statutes protecting creditors (Debtor and Creditor Law [Cons. Laws, ch. 12], art. 10) or whether the gravamen of the cause of action is the right of the plaintiff to recover judgment compensating him for injury sustained as a result of fraud. In the case of the former, the ten-year period would apply (Civ. Prac. Act, § 53), whereas in the latter event, the period of limitation would be six years after the discovery of the fraud. (Civ. Prac. Act, § 48, subd. 5.)

It is well settled that section 48, subdivision 5, applies only to cases of actual fraud, express or implied. All other types of fraud, where actual fraud, express or implied, is not the gravamen, which are collectively grouped in the category of constructive fraud,” are within the provisions of section 53. (Buttles v. Smith, 281 N. Y. 226; Spallholz v. Sheldon, 216 N. Y. 205, 209; Carr v. Thompson, 87 N. Y. 160; Kountze v. Kennedy, 147 N. Y. 124, 129.) With that in mind we may examine the complaint to determine whether it seeks relief upon the ground of actual fraud.

The whole structure of the complaint shows that the recovery sought by the plaintiff is to levy in satisfaction of his debt upon property which he is entitled to treat as belonging to the debtor, albeit the title is ostensibly lodged elsewhere. Article 10 of the Debtor and Creditor Law is the enactment of the Uniform Fraudulent Conveyance Act, a codification of previous statutes on this subject which had their origin in the statute of 13 Eliz. ch. 5. The object of this legislation is to enable a creditor to obtain his due despite efforts on the part of a debtor to elude payment. To that end the statute declares as of no effect in so far as the creditor is concerned, certain kinds of transfers on the part of the debtor. These transfers are generally of two kinds: those made by the debtor with the actual intent thereby to impede or altogether defeat the efforts of the creditor and those which, regardless of the intention of the debtor, in fact operate to make the debtor insolvent and so defeat the claims of the creditor. The latter are transfers made without consideration or without fair consideration, which render the debtor insolvent. As to those, it is the policy of the law that the debtor be just before he be generous. By the terms of the statute, either kind of transfer is declared fraudulent as to creditors, i. e., the transfer is in violation of the creditor’s rights.

The complaint in the case at bar states a cause of action to "set aside a transfer which, regardless of the intent of the debtor, is forbidden by the statute to the extent that there are claims by creditors. In this case the complaint does not rest upon the facts that the transfers were without consideration and rendered the debtor insolvent, but also alleges an actual intent on the part of the debtor to evade the creditor. The complaint would have been sufficient without such additional allegation. But the gravamen of the complaint is not thereby transformed into an action to recover judgment on the ground of actual fraud. Surely the action is not one for actual fraud where a complete cause of action may be stated by a showing of the bare facts of a voluntary conveyance resulting in insolvency. Such a conveyance is but one of the two kinds which are deemed fraudulent by the operation of the statute. Both kinds are simply acts which are voidable at the behest of the creditor as a result of the statutory declaration. Whichever pattern the debtor may choose, the relief sought by the creditor is the same; to -undo the transfer of title so as to bring within the ambit of execution those assets upon which the creditor is rightly entitledjto levy. The fraud, such as it is, is only incidental to the right of the creditor to follow the assets of the debtor and obtain satisfaction of the debt. The gravamen of the cause of action in the case at bar is the ordinary right of a creditor to receive payment; this right has been implemented by the protection of legislation concerning the circumstances under which the creditor may avail himself of assets which the debtor has transferred to others. No deceptive or fraudulent act of the individual defendants, no wrongful co-operation of theirs in the acts by which the judgment debtor’s property was transferred, lends weight to the plaintiff’s cause of action. The plaintiff’s right is complete without reference to the quality or character of the acts of the individual defendants. The gravamen of the action is the right of the creditor to be paid out of assets to which he is actually entitled and to set aside the indicia of ownership which apparently contradict that right.

In Buttles v. Smith (281 N. Y. 226, 236) this court said, in referring to a complaint under article 10 of the Debtor and Creditor Law: The complaint sets up constructive fraud, not actual fraud, and under such conditions the ten-year Statute of Limitations applies and commences to run from the date when the act or omission constituting it occurred.”

The action at bar is in equity, since plaintiff seeks to set aside the fraudulent transfers accomplished through judicial proceedings valid on their face. Only in equity can adequate relief be had whereby the decree may be molded to the exigencies of the action by canceling of record the spurious judgments, the fictitious chattel mortgage, and the foreclosure sale thereunder, by appointing a receiver to take over the assets of the judgment debtor fraudulently conveyed, and by ordering an accounting with direction to pay over. The ten-year Statute of Limitations reads as follows:

§ 53. Limitation where none specially prescribed. An action, the limitation of which is not specifically prescribed in this article, must be commenced within ten years after the cause of action accrues.” (Civ. Prac. Act, § 53.)

Since, as has been shown, the action is not one to recover damages for fraud (Civ. Prac. Act, § 48, subd. 5), nor an action at law (Civ. Prac. Act, § 48, subd. 1), but one in equity for a rescission, the ten-year Statute of Limitations applies.

It is urged, however, that a complete remedy at law is available since, under the Debtor and Creditor Law (Art. 10, § 278, subd. b), plaintiff may disregard the fraudulent transfers and attach or levy execution upon the property conveyed. If plaintiff had pursued a legal remedy, then the rule might be applicable that where a legal and an equitable remedy are equally adequate, the Statute of Limitations provided in the legal remedy prevails. (Keys v. Leopold, 241 N. Y. 189; Hanover Fire Ins. Co. v. Morse D. D. & R. Co., 270 N. Y. 86.) It is true there may have existed for plaintiff an option to disregard the transfers which had taken place through judicial proceedings, and levy an execution on the property. The difficulties in such an attempt, however, loom large. The transfers of the property of the corporate judgment debtor have here been completed through judicial proceedings which, upon their face, are valid. Attempts to sell the property pursuant to such an execution would be greatly aggravated by the fact that title to the property was apparently in another through these judicial proceedings. Plaintiff was not forced to take such action, but could instead adopt the action which it did, namely, come into equity and ask for a rescission which would set aside the fictitious judicial proceedings and allow plaintiff to realize the full value of the assets so far as a forced sale would permit without the existence of a dispute as to title. Furthermore, in the action at bar, plaintiff seeks to attach not only the property which was originally transferred and is still in existence, but also the value of such as may have been dissipated, and the profits which may have accrued from the use of such property. In addition, plaintiff asks a receiver, and for an accounting. Thus there is clearly no remedy at law comparable to that available in equity (Holland v. Grote, 193 N. Y. 262), and, therefore, the period of limitation which would bar an action at law does not reduce the period which ordinarily limits a suit in equity. (Hanover Fire Ins. Co. v. Morse D. D. & R. Co., 270 N. Y. 86.)

It follows that the ten-year Statute of Limitations provided for in section 53 of the Civil Practice Act is controlling, and that the commencement of the action is timely.

The judgments should be reversed and the motion denied, with costs.

Loughran, Sears, Lewis and Conway, JJ., concur; Rippey, J., dissents; Lehman, Ch. J., taking no part.

Judgments reversed, etc.


author: Sears, J. Loughran, J. Conway, J.

text:
    Victoria W. Goldstein, Respondent, v. Edward Goldstein, Appellant.
    Submitted April 9, 1940;
    decided May 28, 1940.

      Mortimer J. Levie and Jerome A. Strauss for appellant.
    The complaint fails to state a cause of action. (Baumann v. Baumann, 250 N. Y. 382; Somberg v. Somberg, 263 N. Y. 1; Lowe v. Lowe, 265 N. Y. 197; DeRaay v. DeRaay, 280 N. Y. 822; United Cigar Stores Co. v. Levin, 198 App. Div. 268; Paramount Pictures, Inc., v. Blumenthal, 256 App. Div. 756; 281 N. Y. 682; McHenry v. Jewett, 90 N. Y. 58; Brass v. Rathbone, 153 N. Y. 435.)

      Harold Green and Simon S. Hamburger for respondent.
    The complaint states a good cause of action for injunctive relief. (Dyer v. Broadway Central Bank, 252 N. Y. 430; Hurwitz v. Hurwitz, 216 App. Div. 362; Webster v. Columbian Nat. Life Ins. Co., 131 App. Div. 837; 196 N. Y. 523; N. & N. B. Hosiery Co. v. Arnold, 143 N. Y. 265; Pond v. Harwood, 139 N. Y. 111; Claflin & Co. v. Hamlin, 62 How. Pr. 284; N. Y. & N. H. R. R. Co. v. Schuyler, 17 How. Pr. 464; Hayes v. Ward, 4 Johns. Ch. 123; Forrest v. Forrest, 2 Edm. Rep. 180; Moran v. Sturges, 154 U. S. 256; Cole v. Cunningham, 133 U. S. 107; Greenberg v. Greenberg, 218 App. Div. 104; Johnson v. Johnson, 146 Misc. Rep. 93; Jeffe v. Jeffe, 168 Misc. Rep. 123; Dublin v. Dublin, 150 Misc. Rep. 694; Richman v. Richman, 148 Misc. Rep. 387; Gold v. Gold, 154 Misc. Rep. 93; 243 App. Div. 666; Gwathmey v. Gwathmey, 116 Misc. Rep. 85; 201 App. Div. 843.)
   Sears, J.

The parties to this action are husband and wife. The wife, who is the plaintiff, seeks a judgment permanently restraining the defendant and his agent from prosecuting or going forward with an action against her for divorce in a Florida court. On her complaint and affidavit she moved and obtained at the Special Term a temporary injunction which has been affirmed on appeal. The Appellate Division has allowed an appeal to this court and has certified the question “ Does the complaint herein state facts sufficient to constitute a cause of action for injunctive relief? ” It is alleged in the complaint that the parties were married in this State, have lived here as husband and wife for over twelve years and are both still residents of this State, and that the defendant is engaged in business in this State; that the defendant, without provocation or excuse, abandoned the plaintiff in 1932 and since then has refused to reside with her and has kept apart from her; that since the defendant’s abandonment of her, he has on occasions attempted to induce her to bring an action against him for an absolute divorce, which the plaintiff has, however, refused to do; that the plaintiff has received by mail a notice from the Circuit Court, Eleventh Judicial Circuit, Dade county, Florida, in chancery, ordering that the plaintiff be required to appear to the bill of complaint filed in the action Edward Goldstein against Victoria W. Goldstein on or before the 5th day of June, 1939, otherwise the allegations of the bill would be taken as confessed.

On these facts the courts of the State of Florida are wholly without jurisdiction to render a valid divorce against the plaintiff. Florida is not their matrimonial domicile. (Haddock v. Haddock, 201 U. S. 562; Dean v. Dean, 241 N. Y. 240; Ball v. Cross, 231 N. Y. 329.) Neither of the parties is a resident of that State. The plaintiff has nothing to fear from the action which her husband has sought to bring against her in Florida for on her statement a judgment entered therein would be a nullity. She might be annoyed thereby. It is possible that by production of evidence contrary to what the plaintiff alleges to be the truth, the courts of Florida might be induced to grant a judgment, and, on the strength of this judgment, the defendant might remarry and thus bring it about that another woman would bear the name to which she herself is entitled. Such considerations are not sufficient to warrant the interposition of the equity powers of our court. In Baumann v. Baumann (250 N. Y. 382) a wife was refused an injunction against another woman using her husband’s surname where her husband had obtained in a foreign country a divorce and on the strength of this void judgment had married the woman against whom the wife sought injunctive relief. The prevailing opinion contains the following: In the last analysis the only injury alleged is an injury to plaintiff’s feelings. For such an injury an injunction will not be granted (p. 388). To the same general effect are Somberg v. Somberg (263 N. Y. 1) and Lowe v. Lowe (265 N. Y. 197). In DeRaay v. DeRaay (280 N. Y. 822) the facts were similar to those in the instant case, except that in that case no action had been brought against the plaintiff in a foreign State although it had been threatened. It is true that in the Appellate Division in that case the fact that no action had been instituted in the foreign jurisdiction was stressed. This, however, is of little importance. The foreign court would be manifestly wanting in jurisdiction and its pronouncements without weight. The bringing of an action in a court having no jurisdiction is not an injury when the threat to do so is not. It is scarcely a greater annoyance.

The orders should be reversed and the complaint dismissed, without costs. The question certified is answered in the negative.

Loughran, J.

(dissenting). A husband and wife have their matrimonial domicile in this State. He has commenced against her in the State of Florida a suit for divorce. She has received through the mails official notice that her failure to appear in answer to that suit will be taken to be a confession by her of the allegations of her husband’s bill of complaint therein. Her lack of means will compel her to let this notice go unheeded.

These are the material facts alleged by the wife in her complaint in the present action for an injunction against the prosecution by the husband of his suit in Florida. Whether her complaint states a cause of action sufficient to warrant the granting of that kind of injunctive relief is the question to be determined. By his motion to dismiss her complaint, the husband constructively admits the material allegations of the pleading.

We must suppose, then* that the Florida court has no jurisdiction of the husband’s suit and that his institution thereof was fraudulent. It may very well be, however, that the threatened “ void ” judgment of the Florida court will genuinely prejudice the wife in the maintenance of her objective rights. If the husband make another marriage on the strength of such a judgment, his second wife will have tangible and practical grosi-matrimonial claims upon him which the courts of this State will now recognize. (Krause v. Krause, 282 N. Y. 355.)

The inherent power of equity in a proper case to enjoin the prosecution of a foreign suit is undoubted (The relevant authorities have been compiled by Chaffee and_ Simpson in volume I of their Cases on Equity Jurisdiction, p. 165 et seq.) Hardship and injustice to this wife are to be weighed against the policy that the court should not be precipitate in interference with legal proceedings in sister States. My judgment is that the present complaint states a case wherein the court below may fittingly say to the husband as a citizen of New York that he must stop the prosecution of his false Florida suit.

In that view, the order of the Appellate Division should be affirmed and the question certified answered in the affirmative.

Conway, J.

(dissenting). There has been certified the following question: Does the complaint herein state facts sufficient to constitute a cause of action for injunctive relief? The complaint alleges in substance that plaintiff and defendant were married and resided as husband and wife in the city, county and State of New York; that at the time of the commencement of this action and for many years prior thereto both the plaintiff and defendant were residents of the city, county and State of New York and that defendant now has his place of business in the county of New York; that defendant deserted and abandoned plaintiff -but has continued to reside in the city of New York; that since said abandonment defendant has sought to induce plaintiff to bring an action against him for absolute divorce and has stated that he desired to be freed from the bonds of matrimony; that plaintiff has refused to comply with defendant’s request; that in May, 1939, plaintiff received through the mail, a notice consisting of an order for publication that the defendant herein had instituted an action for a divorce against this plaintiff in the Circuit Court, Eleventh Judicial Circuit, Dade County, State of Florida;” that defendant “ has not and has not had even a colorable residence or domicile in the State of Florida;” that plaintiff is financially unable to bear the expense of defending the action brought against her in the Florida court and cannot bear the expense of employing counsel of such standing and prominence to be competent “ to cope with counsel employed by defendant who is a man of considerable income and fortune;” that plaintiff is not in a “ position to stand the additional expenses necessary to defend such action on her behalf including the expense of bringing witnesses from New York and necessarily maintaining them while in the State of Florida;” that all of the witnesses for the plaintiff and defendant are residents of the State of New York; that all of the acts alleged by the defendant in his complaint in the Florida action must necessarily have occurred in the State of New York; “ that plaintiff will be irreparably damaged and will be apparently deposed of her status as the wife of the defendant herein and of her property rights if the defendant be permitted to prosecute the action for divorce instituted by him in the state of Florida;” and “ that plaintiff has no adequate remedy at law.”

The relief prayed for is that defendant and his agents and attorneys be permanently and perpetually enjoined from prosecuting the Florida action for divorce and that he be similarly enjoined pendente lite.

We find no case in this.court where the facts are precisely similar. Defendant relies on Baumann v. Baumann (250 N. Y. 382); Somberg v. Somberg (263 N. Y. 1); Lowe v. Lowe (265 N.Y. 197) and DeRaay v. DeRaay (280 N.Y. 822). These cases may be readily distinguished. In the Baumann case there was a document which purported to grant a divorce; in the Lowe case the foreign divorce action had resulted in judgment; in the Somberg case no action in a foreign State had been brought, and in the DeRaay case such action was threatened but had not been commenced.

The text writers have stated the applicable rule as follows:

“ Accordingly, proceedings in another state may be enjoined when the claim is entirely invalid and it would work an injustice to compel the defendant at law to resort to the courts of the foreign jurisdiction. It would seem that the true basis of the jurisdiction in such a case is that the foreign court cannot do as complete justice as the domestic court. Thus, in divorce suits, where the plaintiff has obtained a mere colorable residence in another state for the purposes of the action, the defendant may obtain an injunction in the state of residence, the hardship of making a long journey to present her defense appealing to the court.” (5 Pomeroy’s Equity Jurisprudence [2d ed.], § 2091.)

Where a husband or wife leaves the state of their domicile and goes to a foreign state and there secures a mere nominal or colorable residence for the purpose of bringing divorce proceedings, such a case of injustice and irreparable injury is made out as to entitle the aggrieved spouse to an injunction restraining the other from prosecuting divorce proceedings in that state based upon such pretended domicile.” (2 High on The Law of Injunctions [4th ed.], § 1401-a.)

Equity does not grant the injunction in such cases by way of administering “ paternal relief in domestic affairs.” (Baumann v. Baumann, supra, p. 389.) There is no similarity here to the Baumann case. There the document purporting to grant a divorce had been issued. There was nothing in connection with the obtaining of it to be restrained. Equity exercises jurisdiction on behalf of one party to a status created in and by this State in order to prevent a threatened wrong by the other party to the status, in thisjcase the husband, in continuing an action for divorce in another' jurisdiction and in consummating that which is on its face a patent fraud. (Greenberg v. Greenberg, 218 App. Div. 104 at p. 116.) Equity has never hesitated to restrain fraudulent and vexatious litigation in a foreign jurisdiction by one resident against another, involving a status created in the actual domicile and residence of both. (Gwathmey v. Gwathmey, 116 Misc. Rep. 85; affd., 201 App. Div. 843; Greenberg v. Greenberg, 218 App. Div. 104; Forrest v. Forrest, 2 Edmonds’ Rep. 180; Kittle v. Kittle, 8 Daly’s Rep. 72; Kempson v. Kempson, 58 N. J. Eq. 94; von Bernuth v. von Bernuth, 76 N. J. Eq. 177; Knapp v. Knapp, 12 N. J. Misc. 599; Moore v. Moore, 12 Times Law Reports, 221. See, also, 2 Joyce on Injunctions, § 968-a; American Law Institute, Restatement of the Law of Conflict of Laws, New York Annotations, § 96; 19 Corpus Juris, Divorce, § 263.)

So clear is the rule and so necessary its application that injunctions in similar cases have been issued following well- ' considered opinions in every department of the State.

In Greenberg v. Greenberg, in the First Department (supra, at pp. 115, 116), the court said:

“ Nor is it an answer to this application for relief to say that the decree of divorce sought to be obtained in Mexico will be invalid in this State and, therefore, plaintiff needs no injunction to prevent its issuance. The defendant cannot be presumed to have gone to the expense and trouble of placing himself under the jurisdiction of the courts of Mexico as a mere gesture of protest or spite. He is endeavoring not merely in that forum to obtain a decree of divorce but to question the legitimate birth of his child and to settle the amount he is to pay for the maintenance of wife and child here. He says he is now advised by his counsel (presumably his New York counsel) that a decree obtained in Mexico under the circumstances present in his case there, is absolutely null and void so far as this plaintiff is concerned. Why then does he object to his useless action being enjoined and why does he fail to abandon it, but on the contrary resist any attempt to halt its progress? If he were allowed to prosecute his Mexican action to judgment, undoubtedly he would then find Mexican counsel to advise him that his divorce obtained there was valid in Mexico, and that he was free to contract a second marriage in that country. Thus plaintiff would be in danger of having her status assailed and her rights invaded by having a husband with one wife in New York and another in Mexico.

“ Furthermore, the mere fact that a husband has secured a divorce from his wife gives ground for suspicion at least of the virtue and fidelity of the latter, on the part of the general public, in the domicile of both parties, who are unacquainted with the infinite variety of causes for which divorces may be granted in other jurisdictions and have heard only of the usual statutory ground for divorce in this State. A wife who has given no ground for divorce in this State where she and her husband have always lived during their married life, should not be exposed to the humiliation and doubt as to her status raised by a judgment of divorce in another State, even if fraudulently obtained and invalid f here.

“ There are many conceivablé uses to which such a judgment of divorce could be put, causing plaintiff expense, litigation, worry, annoyance and misrepresentation. It is no answer to say that she must ultimately succeed against I any attack made upon her, under the judgment, as it is invalid. The true answer is, that as a citizen of this State she is entitled to the aid of its courts to prevent the commis-! sion of a threatened wrong by her husband, also a citizen ¡ of this State, by bis obtaining a decree of divorce in another jurisdiction, in evasion of the laws of this State, in violation j of her rights and in consummation of a patent fraud.”

In Gwathmey v. Gwathmey, in the First Department (supra, at p. 88), the court said: It appears from the proof submitted that the defendant cannot obtain a judgment in the Florida suit which will be binding on the plaintiff.' She should not therefore be subjected to the trouble of appearing in the Florida court to resist her husband’s claim or of attacking such a decree as he might obtain when it is attempted to be enforced in this State. This court has ¡ power to restrain him from carrying on an inequitable,, harassing and vexatious suit in another jurisdiction. This power is not predicated on the right to interfere with and control the course of proceedings in other tribunals, but the jurisdiction is founded on the authority vested in courts of equity over persons within the limits of their jurisdiction and amenable to process to restrain them from doing acts which will work an injury to others, and are therefore contrary to equity and good conscience. (Claflin & Co. v. Hamlin, 62 How. Pr. 284; Dehon v. Foster, 4 Allen, 545; Locomobile Co. v. American Bridge Co., 80 App. Div. 44, and other cases above cited.)”

In the Second Department, in Jeffe v. Jeffe (168 Misc. Rep. 123).

In the Third Department, in Johnson v. Johnson (146 Misc. Rep. 93) and Richman v. Richman (148 Misc. Rep. 387).

In the Fourth Department, in Dublin v. Dublin (150 Misc. Rep. 694).

In the Restatement of the Law of Conflict of Laws, section 96, the rule is stated as follows:

§ 96. Enjoining acts in another state. A state can exercise through its courts jurisdiction to forbid a party, who is subject to its jurisdiction, to do an act in another state.

“ Comment: a. In the exercise of their discretion courts frequently forbid individuals subject to their jurisdiction to perform acts in another state. Since such a decree can be carried out without disturbing the physical status quo in another state and since the defendant may ordinarily obey the injunction by remaining in the state which issues the decree, such orders are not uncommon. Whether a decree of this character will be rendered depends upon the principles of equity jurisprudence as understood and developed by the courts of the forum and is no part of the Restatement of this Subject. It may be stated, however, that when acts are threatened which subject the plaintiff to irreparable damage or when the balance of convenience and fairness require, such a decree will readily be issued” (Italics added.)

In the New York Annotations to the foregoing it is stated, section 96: “ The section is in accord with the law of New York.”

It is urged that there exists in the moving party no substantial legal right to be protected and that, therefore, in view of the case of Baumann v. Baumann (supra), the plaintiff is not entitled to injunctive relief. Here again the facts in the instant case are clearly distinguishable from the facts in the Baumann case. The plaintiff here has pleaded that she will be deprived of her property rights if the defendant be permitted to continue the prosecution of the action for divorce instituted by him in the State of Florida. This is a pleading of ultimate fact. (3 Carmody's New York Practice, § 913; Cleminshaw v. Coon, 136 App. Div. 160; People ex rel. Crane v. Ryder, 12 N. Y. 433.) A bill of particulars will disclose what those property rights are. In addition the plaintiff is entitled to maintenance and support. There has been no separation agreement and no release of any property rights. In the Baumann case there was a separation agreement based upon which there had been a release of dower rights and the complaint did not allege that any of plaintiff’s property rights were affected or endangered by the conduct of her husband or his so-called second wife.

It is further urged that a divorce obtained under these circumstances by defendant is void in this State and can do no harm to plaintiff but will be merely an annoyance of which equity will not take cognizance by the issuance of an injunction. It will be potentially more than that since our decision in Krause v. Krause (282 N. Y. 355). If the defendant marry again after obtaining his Florida divorce and return with his so-called second wife to this State, a situation of more than annoyance will result. If he be sued by the so-called second wife for separation and support, he will not be permitted to deny that she is his wife, since he sought and obtained the decree of divorce in Florida. He must support two wives and the amount of support for the plaintiff here may well be affected by the support necessary for the so-called second wife. That is indeed a situation which equity should envision and against which it should guard one of our residents. All the circumstances justifying the interposition of a court of equity exist and the question should be answered in the affirmative.

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

Lehman, Ch. J., Finch, Rippey and Lewis, JJ., concur with Sears, J.; Loughran and Conway, JJ., dissent in separate opinions.

Orders reversed, etc.


author: Conway, J.

text:
    In the Matter of Fleetwood Bank. Fleetwood Bank et al., Appellants; Henry E. Stohldreier et al., Respondents.

      Argued April 11, 1940;
    decided May 28, 1940.

      Frank H. Connelly, Jr., for Fleetwood Bank et al., appellants.
    The number of directors to be elected was properly fixed at eight, and no specific advance notice was required to be incorporated in the notice convoking the meeting. (Matter of Lawrence-Cedarhurst Bank, 247 App. Div. 528; Matter of George v. Holstein-Friesian Assn., 238 N. Y. 513; Matter of S., C. & N. Y. R. R. Co., 91 N. Y. 1.) The establishment of the number to be elected, even if viewed as an amendment to the existing by-laws, was properly adopted without prior notice. (Matter of American Fibre Chair Seat Corp., 241 App. Div. 535; 265 N. Y. 416; Matter of Lawrence-Cedarhurst Bank, 247 App. Div. 528; McQuade v. Stoneham, 263 N. Y. 323; Shepherd v. Mt. Vernon Trust Co., 269 N. Y. 234; Ripin v. U. S. Woven Label Co., 205 N. Y. 442.) Toomey, Pape and Hubei are de jure directors. (Matter of Ringler & Co., 204 N. Y. 30; United Growers Co. v. Eisner, 22 App. Div. 1; Greenough v. Alabama Great Southern R. R. Co., 64 Fed. Rep. 22; Lippman v. Kehoe Stenograph Co., 102 Atl. Rep. 988.)

      Samuel Maride for interveners, appellants.

      Henry E. Stohldreier for respondents.
    Stockholders cannot be deprived of their statutory vested right to vote for any number of directors from five to fifteen, as provided by the Banking Law (Cons. Laws, ch. 2). (Matter of Lawrence-Cedarhurst Bank, 247 App. Div. 528; Matter of George v. Holstein-Friesian Assn., 238 N. Y. 513; Lord v. Equitable Life Assur. Society, 47 Misc. Rep. 187; 126 App. Div. 937; 194 N. Y. 212; Stokes v. Continental Trust Co., 186 N. Y. 285; Witherbee v. Bowles, 201 N. Y. 427; Matter of Jamaica Consumers Ice Co., 190 App. Div. 739; 229 N. Y. 516; Millspaugh v. Cassedy, 191 App. Div. 221; Page v. American & British Mfg. Co., 129 App. Div. 346.)
   Conway, J.

On January 15, 1940, the annual meeting of the stockholders of the Fleetwood Bank was held. On December 20, 1939, the notice of such annual meeting was sent to the stockholders. The notice stated that the meeting was for the election of directors and for the transaction of such other business as might properly come before the meeting. It contained a further provision as follows: Notice is also given that an amendment to the by-laws of the bank fixes twelve noon, December 30th, 1939, as the time as of which stockholders of the bank entitled to notice of and to vote at the meeting shall be determined.”

Section 47 of the Stock Corporation Law (Cons. Laws, ch. 59) provides either for the determination of the time as of which stockholders shall be entitled to vote, in the manner set out in the above notice or that the directors may prescribe a period during which no transfer of stock on the books of the corporation may be made. The former method was adopted.

On January 10th, 12th and 13th, 1940, three individuals named Toomey, Hubei and Pape presented to the vice-president and treasurer of the bank a stock certificate so indorsed by a stockholder as to transfer ten shares to each of them. Change of ownership on the books of the bank was refused on the ground that the demand was made less than fifteen days before the annual stockholders’ meeting. There was no justification for the refusal of the transfer in view of the alternative provision of section 47 of the Stock Corporation Law, which had been adopted.

Subdivision 1 of section 116 of the Banking Law (Cons. Laws, ch. 2) provides that in a bank such as the Fleetwood, the board of directors shall number not less than five nor more than fifteen. The by-laws of the bank contained a similar provision. The board of directors elected for the bank for the previous year had consisted of six and in other years the number had varied from seven to thirteen. At this stockholders’ meeting a resolution was adopted that the number of directors for the ensuing year should be eight. There were eleven persons put in nomination and the eight receiving the highest number of votes were declared elected. Among the first eight were Toomey, Hubei and Pape. After the stockholders’ meeting the new board of directors held a meeting and elected the officers for the ensuing year. At that meeting six were present and of those six, three were Toomey, Hubei and Pape. On the following morning, January 16th, the stock of Toomey, Hubei and Pape was transferred on the books of the bank. On January 19th an adjourned meeting of the board was held. Before holding the meeting each of the board took the director’s oath. At that meeting a resolution was adopted which ratified, confirmed and approved the election and appointment of the officers on January 15, 1940.

Thereupon this proceeding under section 25 of the General Corporation Law (Cons. Laws, ch. 23) was commenced for the purpose of setting aside the elections of the directors and of the officers whom those directors in turn elected and appointed. The petitioners represent 2|% of the stock of the bank. A majority of the stockholders intervened, representing 58|% of the stock of the bank, expressing . their satisfaction, ratification and approval of the elections.

The first questions presented are whether the number of directors could be limited to eight for the year 1940, as was done, and if so, could that be done at the annual meeting without notice of such proposed action to the stockholders, since it is claimed that such limitation constituted amendment of the by-laws. The notice of the annual meeting stated the purpose to be the election of directors. The by-laws of the bank provided that the board of directors should number not less than five nor more than fifteen. It would seem to have been incidental to the election that the stockholders should first determine how many directors they wished to have for the ensuing year. That would not be a change or amendment of the by-laws. However, even if it were an amendment, no notice of intention to amend was necessary. Article XX of the by-laws provided: These by-laws may be altered or amended by a majority vote of all shares of stock outstanding, at any annual meeting of the stockholders, or at any special meeting when proper notice has been given, * *

It is stated in the petition that section 1 of article XV of the by-laws reads as follows: “ The stockholders at any annual meeting, provided notice of the proposed change be given in the notice of such meeting may, by a majority of all the votes of the stockholders of the bank, change by resolution the number of its directors to such number not less than five nor more than thirty, * * That provision, however, was not in effect at the time of the meeting, since the by-laws had been amended on January 16, 1939, so as to read as follows: “ The board of directors shall hereafter be constituted of not less than five nor more than fifteen in number with certain exceptions governed by capitalization * * This change clearly indicated that it was the desire of the stockholders to make notice of intention to change the number of directors unnecessary at an annual meeting.

Whether it was conduct incidental to the meeting or an amendment to the by-laws, it was quite proper for the stockholders to determine thereat the number of directors for the year following. When so determined that was the number for the year and death or resignation of one or more of the eight would constitute a vacancy or vacancies to be filled.

The other question is whether Toomey, Hubei and Pape were lawfully elected directors at a time when they were not stockholders of record although stockholders in fact. As pointed out supra, if proper action had been taken by the officers óf the bank in accordance with section 47 of the Stock Corporation Law, this question would not be presented. It might well be said that they could be considered stockholders of record since equity regards that as done which ought to be done and this proceeding is equitable in character. However, the question will be considered apart from that.

Subdivision 4 of section 116 of the Banking Law provides as follows: All directors of a bank or trust company except one must be citizens of the United States, and at least a majority of the directors must be citizens and residents of this state, and at least three-fourths of the directors must be citizens and residents of this state or a contiguous state, at the time of their election and during their continuance in office. * * * Every director of a bank or trust company sha.11 be a stockholder of the bank or trust company owning in his .own right free from pledge, lien or charge shares of its capital stock at least ten in number and having an aggregate par value of at least one thousand dollars; * 3 M

It will be noted that the requirement as to citizenship and residence of directors is “at the time of their election.” That provision is omitted from the portion of the section requiring that the director be a stockholder. It is true that when the statute speaks of a stockholder it means a stockholder of record (Banking Law, § 3, subd. 9), but Toomey, Hubei and Pape did not become directors until they took their oaths of office and at that time they were stockholders of record. That the statute does not require a director to be a stockholder of record prior to his election is indicated by the amendments made thereto. Section 50 of the Banking Law of 1892 (L. 1892, ch. 689) provided that no person should be eligible to election as a director unless he were a stockholder. In 1909 that provision became a part of section 69 of the Banking Law (L. 1909, ch. 10; Cons. Laws, ch. 2). By chapter 369 of the Laws of 1914 some provisions of former section 69 were incorporated in section 123. The requirement of eligibility, however, was removed and the section changed to read, in substance, as subdivision 4 of section 116 now does in that respect.

So also section 117 of the Banking Law provides: “ Each director, when appointed or elected, shall take an oath that he will ” perform his duties as director “ and that he is the owner in good faith and in his own right, of shares of stock of the number and value required by this article, subscribed by him or standing in his name on the books of the bank or trust company * * *.” The words “ when appointed or elected ” can only mean after his election as it is clear that it is not until after his election that he can take his oath as director. When he takes that oath he is required to swear that he is then a stockholder and not that he was a stockholder at the time of his election.

This question has been passed upon in Lippman v. Kehoe Stenograph Co. (102 Atl. Rep. 988, 992) and Greenough v. Alabama Great Southern R. R. Co. (64 Fed. Rep. 22).

In Lippman v. Kehoe Stenograph Co. (supra) the court said:

“ The better and prevailing opinion on this question, in the absence of express statutory provision, is, that a director need not be a holder of any shares at the time of his election, but that it will be sufficient if he qualifies himself by becoming a holder of the requisite number of shares before he enters upon the office of director.”

The statute in force at that time, 21 Delaware Laws, chapter 273, section 20 (but since amended, Revised Code 1915, section 1923) provides that: ‘ The business of every corporation organized under the provisions of this chapter shall be managed by a board of not less than three directors, except as hereinafter provided; each of whom shall own in his own right not less than three shares of capital stock.’ ”

The orders should be reversed and the petition dismissed, with costs in all courts.

Loughran, Finch, Sears and Lewis, JJ., concur; Lehman, Ch. J., dissents; Rippey, J., taking no part.

Orders reversed, etc.