text:
    The Kirke La Shelle Company, Appellant, v. The Paul Armstrong Company et al., Respondents.

      (Argued October 9, 1933;
    decided November 21, 1933.)

      Reese D. Alsop for appellant.
    There should be implied in the settlement agreement a negative covenant on the part of the grantor that it will not use the ungranted portion of its estate in the play to the detriment of the interest assigned to the plaintiff. (Harper Bros. v. Klaw & Erlanger, 232 Fed. Rep. 609; Manners v. Morosco, 252 U. S. 317; Underhill v. Schenck, 238 N. Y. 7; Frohman v. Fitch, 164 App. Div. 231; Reade v. Bentley, 4 Kay & J. 656; Pulte v. Derby, 20 Fed. Cas. No. 11465; Sweet v. Carter, 11 Sim. 572; Stevens v. Benning, 1 Kay & J. 168.)

      Phelan Beale for respondents.
    Equity will not imply a negative covenant unless it is indispensable to carry the intention of the parties into effect. (Macloon v. Vitagraph, Inc., 30 Fed. Rep. [2d] 635; Fisher v. Hill, 212 App1. Div. 646; Klein v. Beach, 232 Fed. Rep. 240; Kahm Co. v. Harper Bros., 222 U. S. 55.)
   Hubbs, J.

This action was brought to recover one-half of the moneys received by respondents on a sale of the so-called “ talkie ” rights to the play or drama known as Alias Jimmy Valentine to the Metro-Goldwyn Mayer Corporation, on September 21, 1928.

“ Alias Jimmy Valentine ” is a dramatization by the late Paul Armstrong, playwright, of the novel, A Retrieved Reformation,” by the late 0. Henry. It was produced on the stage prior to 1914 in New York city and by road companies. It was thereafter let out to stock companies. Several years prior to September 21, 1928, the silent motion picture rights were assigned to the Peerless Features Producing Company, which rights, through subsequent assignments, had vested in Metro-Goldwyn Mayer Corporation before September 21, 1928, and silent motion pictures of the play had been exhibited throughout the United States by that corporation or its assignors.

Subsequent to September 21, 1928, Metro-Goldwyn Mayer Corporation used the play in “ talkies ” throughout the United States and Canada, and at the commencement of this action owned both the silent motion picture rights and the talkie ” rights.

In July, 1918, a judgment for $19,337.59, theretofore recovered by the appellant here against the playwright Paul Armstrong, was affirmed by this court (224 N. Y. 582). Just before the judgment was entered, Paul Armstrong died. Appellant attempted to recover from his estate and on finding it insolvent and that Armstrong had turned over practically all his plays and property to the respondent Paul Armstrong Company, brought suit against that respondent and Beale, who was Armstrong’s attorney, to set aside the transfer on the ground that it was in fraud of creditors. That action was settled and discontinued on December 8, 1921, in accordance with the terms of a certain letter, written by attorneys for the appellant and addressed to and accepted by the attorney for the respondents. That letter provides for the discontinuance of the action, for the withdrawal of certain objections filed by the appellant in the Armstrong estate, for the assignment of the $19,337.59 judgment to the corporate respondent, and further reads as follows:

We are to receive for our clients (all checks being drawn to our order) one half of all moneys you are entitled to receive from any revivals of ‘ Alias Jimmy Valentine,’ including productions in New York City, ' on the road ’ or in stock ’ from now on, throughout the United States and Canada.

“ In case the moneys we receive as one half of all the moneys; you are entitled to receive from revival production of ' Alias Jimmy Valentine ’ by George C. Tyler, opening this evening at the Gaity Theatre, here in New York City, shall not amount to $19,337.59 * * * then we are to receive one half of all moneys you are or may be entitled to receive from any revivals of Salomy Jane,’ including productions in New York City, ' on the road ’ and in stock ’ throughout the United States and Canada, from now on.

This settlement is made on the understanding that" all payments due us will be made direct to us from the producers or theatres under division orders ’ filed with the producers, that you agree to file such orders promptly in all cases, that you will file such an order with Mr. George C. Tyler not later than December 9, 1921, and that all remittances are to be" accompanied by box office statements.

In making this settlement we feel we should state that it is in reliance * * * on the distinct understanding that all contracts, sales, licenses, or other arrangements to be made in the future affecting the title to the dramatic rights (exclusive of motion picture rights) to the above two plays or the production of the said plays in New York City, ' on the road ’ or ‘ in stock ’ will be submitted to us before execution or delivery and shall be subject to our approval.”

The respondents, in accepting the terms of settlement in a letter to the appellant’s attorneys stated that the. agreement constituted an assignment of an interest in the plays. It appears that appellant received only about $1,000 from the revival at the Gaity Theatre of Alias .Timmy Valentine ” and that, consequently, the appellant became entitled to share in the profits of Salomy Jane.” The parties have agreed that the profits from Salomy Jane ” as to which “ talkie ” rights have.also been granted, shall be divided in the same way as that upon which the court shall finally decide for the division of the profits of “ Alias Jimmy Valentine.”

On September 21, 1928, the respondents granted to Metro-Goldwyn Mayer Corporation the exclusive “ talkie ” rights, so called, in the play, for which grant they received $15,000 less a commission of $1,500, to recover for one-half of which net amount this action was instituted.

The main question presented is whether, under the contract of settlement, appellant became entitled to share in the profits resulting from the grant of the talkie ” rights, so called, to the Metro-Goldwyn Mayer Corporation, either on the theory that they were included in the rights granted to appellant or on the theory that the sale was a direct violation of the covenant on the part of respondents to submit to the appellant for approval, before execution and delivery, all contracts to be made affecting the title to the dramatic rights of the play in question.

There is presented also the question as to whether there should be implied in the contract of settlement a covenant on the part of the respondents not to do anything to destroy or ignore appellant’s rights under the contract, for a breach of which implied covenant the respondents have incurred liability for the resulting damage to be measured by one-half of the profits received by them.

It is conceded that at the time when the settlement agreement was entered into, talkies ” were unknown commercially and were, therefore, not in contemplation of the parties. It is not seriously contended on the part of the respondents that the grant of “ talkie ” rights and the production of sound pictures pursuant to that grant did not affect to appellant’s damage the value of production of the play on the stage in New York city, on the road and in stock. It is contended by respondents that the grant to appellant was limited to the presentation of the play on the stage in New York city, on the road and in stock, and that in view of the limited grant all other rights were retained by the respondents and were subject to their disposal without liability to appellant.

The trial court determined that the contract between the parties did not contemplate the production of the play in talkies,” as they were then unknown; that the contract could not be extended so as to give to the appellant a participation in moneys received by the respondents from sources other than revivals of the play; that when the appellant was given the right of approval of all contracts, sales, licenses or other arrangements to be made in the future affecting the title to the dramatic rights exclusive of motion picture rights, it was with respect to revivals of the play as then known and understood; that a negative covenant on the part of respondents not to dispose of the sound and dialogue rights for talking movies without appellant’s approval is not to be implied, and that the agreement between the parties did not constitute them joint adventurers owing to each other a fiduciary duty because the relation of the parties was that of judgment creditor and judgment debtor.

We believe that this conclusion, though adopted by the Appellate Division, is erroneous. The parties to this action were not at any time in the relationship of judgment creditor and judgment debtor. It is true that the appellant, prior to the making of the contract, had a judgment against Armstrong, and that it was attempting to set aside a transfer of certain of his property to respondents on the ground that it was in fraud of creditors to the end that it might collect its judgment out of the property which it was asking to have returned to the judgment debtor’s estate. It never recovered a judgment in the action then pending. Its relationship with respondents is based on the contract in settlement of the pending action. Since talkies ” were unknown at the time when the contract was entered into, it cannot be said that “ talkie ” rights were within the contemplation of the parties either as a subject for the transfer of an interest therein to the appellant or as included in the motion picture rights specifically excepted.

There was granted, however, to the appellant the right to share in the profits resulting from the production of the play in question on the stage, on the road and in stock, and an express agreement on the part of the respondents not to enter into any contract affecting the title to the dramatic rights exclusive of motion picture rights or the production of the play in New York city, on the road or in stock without appellant’s approval. That the contract with Metro-Goldwyn Mayer Corporartion was a contract that would affect the production of the play; that it would diminish the value and affect the title to the interest in the dramatic rights contracted to the appellant is without question. To say that such covenant might be violated by the respondents without resulting liability to account to appellant would clearly be to acknowledge a right in appellant without obligation on the part of respondents to respond in damages for a breach of that right.

By entering into the contract and accepting and retaining the consideration therefor, the respondents assumed a fiduciary relationship which had its origin in the contract, and which imposed upon them the duty of utmost good faith. (Underhill v. Schenck, 238 N. Y. 7.)

From the inclusion in the contract of the express agreement on the part of the respondents not to enter into any contract affecting the title to the dramatic rights, exclusive of motion picture rights, or the production of the play in New York city, on the road or in stock, without appellant’s approval, may be implied the obligation to hold the profits resulting from such breach for the benefit of the parties to the agreement in accordance with their rights under the contract.

It seems to us that the principles applied in Harper Bros. v. Klaw & Erlanger (232 Fed. Rep. 609) and Manners v. Morosco (252 U. S. 317) are applicable here. In the first case, Harper Brothers was assignee of the author and owner of the copyright as was the respondent company in the instant case. It gave to the defendant the exclusive right to produce on the stage one particular dramatization of Ben Hur.” Movie rights were unknown to the parties at the time of the agreement. Both plaintiff and defendant claimed the right, when movies became known, to use the rights possessed under the contract in motion pictures. While the Harper Brothers were owners of the copyright and had granted to the defendants the right to stage only a particular dramatization of the play, the court found that the motion picture tended to destroy the market for the play on the stage and while in strictness of law the movie rights might be owned by the owners of the copyright, a negative covenant was implied on the part of the owner of the copyright not to use the ungranted portion of the copyright estate to the detriment of the particular rights granted. The agreement was limited in the right conferred on defendant and there was no provision in the contract for submission of future agreements affecting the title to the dramatic rights or the production of the play to the defendants for their approval, as in the case at bar.

The court, under that state of facts, restrained each party from releasing a movie except by bargain with the other.

Here the Armstrong Company had the right to produce the play on the stage but one-half of the proceeds became the property of appellant. Had the contract with Metro-Goldwyn Mayer Corporation been one in contemplation rather than an executed agreement, the parties in this case would have been in a similar position to that of the parties in Harper Brothers v. Klaw & Erlanger and, under that decision, the making of such a contract might have been restrained. The contract having been executed and a final benefit to respondents having resulted, appellant .is entitled to its proportion of those benefits upon the basis of its share of the proceeds of the production provided for in the agreement, which production has been damaged by the granting of rights in derogation of the rights contemplated by the agreement. (Underhill v. Schenck, supra.)

In Manners v. Morosco, plaintiff was the author of a play and defendant was the producer. Motion pictures were known at the time. By the terms of the contract, they were neither expressly granted nor expressly excluded. The plaintiff was entitled to royalties to the extent of one-half of the proceeds of the exhibition of the play in stock. The question of the defendant’s right to produce a motion picture version of the play having arisen, the plaintiff sought to enjoin the defendant. The court held that not only should the defendant be enjoined, but that the plaintiff was bound by an implied negative covenant not to give a moving picture of the play because to do so would tend to destroy the value of the rights he had granted to Morosco.

In the last analysis those cases only apply the principle that in every contract there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and fair dealing. (Wilson v. Mechanical Orguinnette Co., 170 N. Y. 542; Brassil v. Maryland Casualty Co., 210 N. Y. 235.)

Respondents seek to distinguish those cases on the ground that the courts were not construing a contract, but dealing with a question, "iof whether one without

authority could appropriate an essential part of a copyright. Those cases were decided not on copyright law, but on the law of contracts. In an attempt to distinguish those cases, we are referred to decisions such as Fisher v. Hill (212 App. Div. 646), where the production under consideration, and which it was contended violated the grant of a right of dramatic representation of caricatures copyrighted by the plaintiff, was the exhibition of animated cartoons, rather than living actors, which animated cartoons were not based upon the defendant’s plays and did not constitute a dramatic representation, and Klein v. Beach (232 Fed. Rep. 240; affd., 239 Fed. Rep. 108), where plaintiff was a dramatist and defendant an author and they contracted together for a dramatization of a novel, the two together thereafter granting to a producer the exclusive right to produce the particular dramatization upon the stage, which rights had reverted to the parties before the commencement of the suit. There it was held that a negative covenant would not be implied to prohibit the defendant from selling the movie rights without first obtaining Klein’s consent, the contract having been made at a time when movies were well known, and the decision preceding in point of time that in Manners v. Morosco (supra), in which later case a negative covenant was implied even though the contract was made at a time when movies were well known. Despite the refusal to imply a negative covenant, the court, in Klein v. Beach (supra), while holding that either party, their ownership of the drama being joint, could do with it what he pleased, also held that in the event of the licensing of Klein’s dramatic version for the screen by either party, the obligation to account to the other would remain.

We are also referred to Macloon v. Vilagraph, Inc. (30 Fed. Rep. [2d] 634, 635), where the contract provided that “ stock, motion picture and all other rights except the right of first class stage production limited to the territory above mentioned shall remain in the owner.” The action was not between the parties to the contract but between the assignee of the right of first class stage productions and the purchasers from the other party to the contract, which was not recorded, of the right to produce the play in talking moving pictures. There the court refused to imply a negative covenant on the part of the grantor not to use the ungranted portion of the copyright estate to the detriment if not destruction of the licensed estate because the defendant was an innocent purchaser for value without notice and the contract expressly reserved to the grantor not only the motion picture rights but also all other rights.

The court said: By express provision the parties have rendered inoperative the beneficial rights which the appellant might otherwise have gained from the implied negative covenant within the rule announced in the cited cases.”

While this court seems not to have passed upon a case involving substantially similar facts to those in the case at bar, the question has been before the Appellate Division in Frohman v. Fitch (164 App. Div. 231). In that case plaintiff was the producer of a play written by the defendant under exclusive grant of the right to produce the play in the United States and Canada. The contract was made at a time when moving pictures were unknown. The playright having died and his father having acquired his rights, the latter contracted with the American Play Company for a production of the play by means of moving pictures. The producer brought suit to enjoin the production of the play by moving pictures. The plaintiff contended that at the time the contract was entered into, neither of the parties contemplated production of the play by that means. The court held that even though it be conceded that neither of the parties had in mind the production of the play in that manner, it was a clear violation of the contract to permit the play to be so produced; that since science had made it possible to produce the play in a manner not contemplated when the contract was entered into, it did not follow that the defendant could destroy the plaintiff’s property or diminish the value • of what he purchased. The only difference in the facts between that case and the one at bar is that here plaintiff owns but a half interest in the stage rights and there the plaintiff owned the entire stage rights, and that this case involves talkies ” while the other involved silent motion pictures.

It seems to us clear that having granted to appellant one-half of the benefits of the production of the play in the manner specified in the contract, there was an implied obligation on the part of the respondents not to render valueless the right conferred by the contract,. especially in view of the fact that they breached the express covenant of the contract to refrain from making any agreement affecting the rights conveyed to appellant without its approval. Having breached the contract, they cannot be permitted to retain the full profits resulting from the wrong.

The judgment of the Appellate Division and that of the Trial Term should be reversed and judgment directed in favor of appellant against the respondents for one-half the net proceeds of the sale of the sound and dialogue rights together with interest thereon from the date of the sale, with costs in all courts.

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

Judgment accordingly.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    Nieman-Irving & Company, Inc., Respondent, v. John R. Lazenby, Appellant, and William A. Delano et al., Copartners under the Firm Name of Delano & Aldrich, Respondents.
    (Argued October 19, 1933;
    decided November 21, 1933.)

      George H. Engelhard and Hanns P. Kniepcamp for appellant.
    The failure of the trial court to make specific findings as to the items of work which it found defective or as to the cost of repairing them deprived the Appellate Division of any foundation upon which it could determine whether the plaintiff had performed substantially. Its affirmance of the finding of substantial performance must, therefore, be reversed and a new trial ordered so that proper findings on that subject may be made. (Kavanaugh v. Commonwealth Trust Co., 223 N. Y. 103; Olney Canning Co. v. State, 230 N. Y. 351; Spence v. Ham, 163 N. Y. 220; Villhauer v. Gros, 138 App. Div. 10.) On the basis of substantial performance, the judgment cannot be sustained because there is no proof upon which the allowance to appellant for the short-comings in the architects’ performance could be estimated. (Jacob & Youngs v. Kent, 230 N. Y. 239; Schieven v. Emerick, 220 App. Div. 468; Woodward v. Fuller, 80 N. Y. 312; Van Clief v. Van Vechten, 130 N. Y. 571; Spence v. Ham, 163 N. Y. 220.)

      Louis Selzer and Henry J. Luche for plaintiff, respondent.
    The appellant did not ask for findings as to the cost of repairing alleged defective work and is, therefore, in no position to complain of the failure to make such findings. (Crouch v. Moll, 55 Him, 603.)

      Edward C. McLean for defendants, respondents.
    There is evidence to sustain the finding of substantial performance on the part of the architects.- (Petersen v. Rawson, 34 N. Y. 370; Hubert v. Aitken, 2 N. Y. Supp. 711; 123 N. Y. 655; Gilman v. Stevens, 54 How. Pr. 197; Jacob & Youngs, Inc., v. Kent, 230 N. Y. 239.)
   Lehman, J.

The plaintiff agreed to perform the work and furnish the materials required for the reconstruction of the residence of the defendant Lazenby in accordance with plans prepared by the owner’s architects. The owner agreed to pay to the plaintiff the cost of the work and materials plus ten per cent. Additions and changes were authorized and directed by the defendant’s architects. The plaintiff filed a hen for the unpaid balance of the amount it claimed was due to it. The hen was discharged after the owner filed security approved by the court. Then this plaintiff began this action to estabhsh its hen.

The defendant owner denied that the plaintiff had performed its contract. He claimed that the plaintiff’s work was defective in substantial respects and that some of the work performed by the contractor had not been authorized by the owner. The trial justice found that the total cost to the plaintiff of the labor and materials employed and used in the performance of the contracts hereinabove set forth was $13,477.87.” This was the exact amount claimed by the plaintiff. The trial justice nevertheless did not allow a recovery to the plaintiff for the full amount claimed. There was a deduction of $2,500 from that amount claimed. There is a finding that the work and materials required were at least substantially performed and used upon the building,” but there are no findings which establish in what respect the plaintiff failed in complete performance or the cost of making good any deficiencies. Only the statement of the trial justice after the close of the evidence explains the reason for the deduction of $2,500: “ Believing the defendant to be entitled to a reduction in the amount charged, in order that defective work may be repaired, in order that allowance may be made for work not ordered and for extras done not only without his knowledge but against his desire, an allowance of $2,500 is made to defendant.” How this allowance was arrived at and how it should be apportioned nowhere appears.

A judgment cannot stand without findings which sustain the conclusions of law. A litigant is entitled to findings upon the issues of fact on which an asserted right depends. Without these the decision fails as a determination of the issues.” (Burt Olney Canning Co. v. State, 230 N. Y. 351, 356.) The plaintiff’s recovery is not based upon any finding of complete performance. The rule that recovery under a'contract can be had only upon proof of performance has been relaxed in actions upon building contracts.' It has not been abrogated. Though there be defects or omissions in the complete performance of the. contractor’s stipulated obligation, there may be a recovery upon proof of substantial performance where the omissions and defects are trivial and innocent and can be atoned for by the allowance of the resultant change. (Jacob & Youngs v. Kent, 230 N. Y. 239; Spence v. Ham, 163 N. Y. 220.) The contract price is the stipulated reward for a stipulated benefit. A contractor is not entitled to compensation from an owner even for improvements which benefit the owner unless that is the benefit for which an owner agreed to pay. There may be adjustment where the contractor shows that the variance is unimportant and innocent and can be remedied or atoned for. There can be no adjustment based upon the conjecture of judge or jury that a payment to the contractor of a sum substantially less than the stipulated price for stipulated work will be fair compensation for an accession of value to the real property, though not through performance of the stipulated work. (Steel Storage & Elevator Constr. Co. v. Stock, 225 N. Y. 173.) There must be both proof and finding of the nature of the omissions and defects and the cost of making such omissions and defects good, and the findings must establish that the defects and omissions are in truth unsubstantial. (Spence v. Ham, supra.) Both proof and findings are wanting here, and judgment must, therefore, be reversed.

What we have said as to the claim of the contractor applies with even greater force to the claim of the architects. Their compensation was promised for the exercise of skill and diligence. If they failed to exercise that they are entitled to no compensation. If in the performance of their work they did in general exercise skill and diligence but through an oversight or lapse caused some damage to the owner, then in proper case the damages may be offset against the recovery.

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

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

Judgments reversed, etc.


text:
    Charles F. Hollwedel, Respondent, v. Duffy-Mott Company, Inc., Appellant.

      (Argued October 18, 1933;
    decided November 21, 1933.)

      Louis S. Weiss and Myer D. Mermin for appellant.
    As matter of law, the agreement does not constitute a term employment contract; the complaint, therefore, fails to state a cause of action and should have been dismissed. (Rhinelander v. Farmers’ Loan & Trust Co., 172 N. Y. 519; Zorkowski v. Astor, 156 N. Y. 393; Hornhostel v. Kinney, 110 N. Y. 94; Hudson Canal Co. v. Penn. Coal Co., 8 Wall. [U. S.] 276; French & Co. v. Leeston Shipping Co., [1922] 1 A. C. 451; King v. Leighton, 100 N. Y. 386; Bruce v. Fulton Nat. Bank, 79 N. Y. 154; Assets Realization Co. v. Howard, 211 N. Y. 430; Booth v. Cleveland Mill Co., 74 N. Y. 15; Atwater & Co. v. Panama R. R. Co., 246 N. Y, 519; Paige v. Faure, 229 N. Y. 114; Watson v. Gugino, 204 N. Y, 535; Martin v. Ins. Co., 148 N. Y. 117; Higgins v. Applehaum, 186 App. Div. 682; Wightman v. New York Life Ins. Co., 119 App. Div. 496.) The verdict rendered by the jury was excessive in that, under erroneous instructions from the trial court, there was permitted to. be included in the amount of the verdict interest on the total principal of the damages found from the date of the alleged breach of contract to the alleged date of termination of the contract; the successive reductions in the verdict by the courts below have not eliminated the excess erroneously awarded. (Johnson v. Blaney, 198 N. Y. 312; Bishop v. Autographic Register Co., 19 App. Div. 268; 165 N. Y. 662; Denike v.
      Denike, 8 Misc. Rep. 604; 155 N. Y. 671; Crawford v. Mail & Express Pub. Co., 22 App. Div. 54; 163 N. Y. 404; Hoisting Machinery Co. v. Federal Terra Cotta Co., 179 App. Div. 653; 228 N. Y. 569; Bishop v. New York Times Co., 233 N. Y. 446; Hoffer v. Hooven, Owens, Rentschler Co., 192 App. Div. 138; Jones v. N. Y. C. & H. R. R. R. Co., 144 App. Div. 55; Mayaguez Drug Co. v. Globe & Rutgers Fire Ins. Co., 260 N. Y. 356; Webber v. Reynolds, 32 App. Div. 248; Biker v. Gwynne, 201 N. Y. 143; Duclos v. Kelley, 197 N. Y. 76; Dixon v. James, 181 N. Y. 129; Matter of Chapman, 162 N. Y. 456; Baer v. Durham Duplex Bazar Co., 228 App. Div. 350; 254 N. Y. 570; Bondy v. Harvey, 218 App. Div. 126; Nichols v. Scranton Steel Co., 137 N. Y. 471; Schell v. Plumb, 55 N. Y. 592; Goodsell v. Western Union Telegraph Co., 21 J. & S. 46; 109 N. Y. 147; People v. Security Life Ins. & Annuity Co., 78 N. Y. 114; Puller v. Royal Casualty Co., 271 Mo. 369; Yelland’s Case, L. R. 4 Eq. 350; Moore v. Central Foundry Co., 68 N. J. L. 14.)

      Gustave Lange, Jr., Charles B. Bechtold and Albert Von Wiegan for respondent.
    The contract was one of employment for a period of ten years. (Moran v. Standard Oil Co., 211 N. Y. 187; Grossman v. Schenker, 206 N. Y. 466; Wood v. Duff-Gordon, 222 N. Y. 88; McCall v. Wright, 133 App. Div. 62; 198 N. Y. 143; Vogel v. Pathe Exchange, Inc., 234 App. Div. 313; Madison Square Garden Corp. v. Canera, 52 Fed. Rep. [2d] 47; Studner v. H. & N. Carburetor Co., 185 App. Div. 131; 230 N. Y. 534; Griffin v. Brooklyn Ball Club, 68 App. Div. 566; 174 N. Y. 535; Gutner v. Success Magazine Corp., 136 Misc. Rep. 257; Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310.) The damages of a plaintiff in an action for wrongful discharge are prima facie the amount of wages or compensation stipulated to be paid, and the burden rests upon the defendant in such an action to establish by evidence of probative force any amount in mitigation of damages. (McClelland v. Climax Hosiery
      Mills, 252 N. Y. 347; 253 N. Y. 533; Milage v. Woodward, 186 N. Y. 252; Davis v. Dodge, 126 App. Div. 469; Allen v. Glen Creamery Co., 101 App. Div. 306; Howard v. Daly, 61 N. Y. 362; Ware Brothers Co. v. Cortland Cart & Carriage Co., 192 N. Y. 439; Griffin v. Brooklyn Ball Club, 68 App. Div. 566; 174 N. Y. 535; Carvill v. Mirror Films, Inc., 178 App. Div. 644; 226 N. Y. 683; Vogel v. Pathe Exchange, Inc., 234 App. Div. 313; Deniston v. Finnegan, 174 App. Div. 8; Cottone v. Murray’s, 138 App. Div. 874.)
   Lehman, J.

In September, 1929, the plaintiff entered the employment of the defendant corporation at an annual salary of $12,000. He was discharged in October, 1930. Claiming that the defendant had agreed in writing to retain him as manager for a period of ten years, the plaintiff brought this action to recover damages for his wrongful discharge.

The agreement fixing the terms and conditions of the plaintiff’s employment is embodied in a tripartite written contract whereby Standard Apple Products Co., Inc., agreed to sell its property, good will and business to the defendant corporation, and the plaintiff, who was the owner of substantially all the common stock, and had been the manager of the vendor corporation, covenanted that “ he will not, for the period of ten years from the date hereof, directly or indirectly * * * engage in any business * * * having to do with the purchase and sale of apples or of any apple products,” etc. The provisions for the plaintiff’s employment are intertwined with this covenant. In consideration of that covenant, the defendant corporation agreed that if it “ fails, without good and sufficient cause * * * during the term of this agreement, to retain the party of the second part (the plaintiff) as one of its managers * * * then this stipulation, covenant and agreement on the part of the party of the second part is to be of no further force and effect.”

Here there is no express agreement by the defendant to retain the plaintiff in its employ during the period of the contract. Literally the defendant has agreed only that if it fails to retain the plaintiff as manager, then the plaintiff’s agreement not to engage in a competing business should terminate. The defendant contends that the plaintiff’s employment was, subject to this condition, only at will, and might be terminated without a breach of contract.

If there were nothing else in the written contract the defendant’s contention would have great force. These provisions must, however, be read with the clauses immediately following. “ It being understood that it is the express intention of the parties hereto that the said party of the second part (the plaintiff) will become and remain a manager of the party of the first part, and that the party of the first part (the defendant) would not enter into the arrangement with Standard Apple Products, Inc., were it not for such expectation, and that the party of the second part would not enter into this covenant were he not assured that he would become and remain a manager of the party of the first part at a remuneration figured during the term of this agreement as above referred to.” That “ express intention ” might be frustrated and the assurance given to the plaintiff might be defeated unless the plaintiff bound himself to remain as manager and the defendant bound itself to retain him in that capacity for the period of the contract. An agreement that each should be so bound is implicit in these provisions read in the light of the circumstances surrounding the making of the contract. At least the trier of the fact might so hold.

The jury has determined all contested questions of fact in plaintiff’s favor and brought in a verdict for him in the sum of $118,762.53, which was reduced by the trial judge to the sum of $113,484.75 and further reduced by the Appellate Division to the sum of $88,752.78. Except for erroneous rulings which permitted the jury to find damages which are clearly excessive, we should be constrained to affirm the judgment.

The plaintiff is entitled to damages which will compensate him for the defendant’s breach of contract. Prima facie the measure of such damage is the wage that would be payable during the remainder of the term;” but this is only the prima facie measure. The actual damage is measured by the wage that would be payable during the remainder of the term reduced by the income which the discharged employee has earned, will earn, or could with reasonable diligence earn during the unexpired term. (McClelland v. Climax Hosiery Mills, 252 N. Y. 347, 358.)

The wage that would be payable under the contract of employment after the discharge, during the unexpired term, amounts to $106,900. At the time of the trial the plaintiff had concededly earned the sum of $5,800 which the trial judge properly charged must be deducted from the unpaid wages. Almost seven years of the term of the contract was still unexpired at that time and from the evidence presented at the trial the jury might well find with reasonable degree of certainty that the plaintiff would earn a substantial sum of money during that unexpired term. Under instructions from the trial judge the jury was permitted to fix the amount of such probable earnings. Though that amount could not be fixed with absolute certainty, the evidence was certainly sufficient to enable the jury to determine the sum that should be allowed as a deduction. Their verdict shows on its face that the damages were calculated on an erroneous basis, for the sum awarded is greater by about $12,000 than the total amount of unpaid wages, though some of those wages would not have been payable till nine years after the breach and though the plaintiff had earned a substantial sum of money before the date of the trial.

Upon a motion to set aside the verdict the defendant presented an affidavit of a juror showing how the jury calculated the damages. The trial judge ruled that this affidavit was incompetent. We need not consider whether that ruling was correct, for even without the affidavit it is quite apparent how the calculation was made. At the trial the plaintiff was permitted, over defendant’s objection and exception, to show that interest at six per cent on the unpaid wage, calculated to the date of the expiration of the contract seven years after the trial, would amount to the sum of $52,662.53. Of course under no possible theory could the plaintiff be entitled to an acceleration of the date when payment of wage would have become due and interest for the unexpired term. Doubtless the ruling of the trial judge was made through inadvertence, but the error was not corrected at the trial and was emphasized by the charge, in which the jury was informed that the plaintiff’s claim was for salary of $106,900 due him under the contract, less the sum of $5,800 which he had earned up to the date of the trial, to which interest in the amount of $52,662.53 should be added, making a total claim of $153,762.53. These figures were fixed and could not be varied, except that, as the trial judge charged, the amount that the plaintiff may reasonably be expected to earn during the balance of this term of employment ” must be deducted in fixing the damages. That was the only uncertain factor in the measure of damages as charged by the trial court, and when the jury brought in a verdict for $118,762.53, exactly $35,000 less than the $153,762.53 claimed by the. plaintiff, it is evident that the jury fixed the plaintiff’s prospective earnings at $35,000.

Upon the motion to set aside the verdict, the trial judge recognized that the calculation of interest was entirely erroneous, and he reduced the damages to the amount claimed by the plaintiff for unpaid salary of $106,900 less the sum of $5,800 concededly earned to the date of the trial. These constituted, so he held, the damages suffered by the plaintiff, and to this was added interest from the date of the breach to the date of trial, in accordance with the provisions of section 480 of the Civil Practice Act, making a total of $113,484.75. The plaintiff, to avoid a new trial, stipulated to reduce the judgment to that amount. The judgment entered on that consent makes no allowance for future earnings and no allowance for the element of futurity in the installments of salary which under the contract were payable after the breach.

The discharge of the plaintiff, though wrongful, did not accelerate the due date of the salary payable during the remainder of the contract term. The defendant’s breach did not give the plaintiff a right of action to recover the unpaid installments before they were payable, but only a right of action for such damages as would have arisen from the nonperformance of the contract at the prescribed time.” (Frost v. Knight, 26 L. T. Rep. 77, 79; cited with approval in Howard v. Daly, 61 N. Y. 362, 377, where it was said that the plaintiff’s “ action was for damages for not being permitted to work, and not for wages.”) True, in that case, as in other similar cases, it was said that in the absence of affirmative proof that the discharged employee could have obtained employment elsewhere, she was entitled to recover the full amount stipulated in the contract,” but there the term of employment was brief and had expired before the trial. Qúite evidently a discharged employee obtains more than compensatory damages for not being permitted to work,” if he receives the full compensation which would have been payable only in installments over a long period of years, and in addition interest on such installments from the date of the breach in accordance with section 480 of the Civil Practice Act.

In determining the damages suffered through repudiation by the vendee of a contract of purchase and sale, this court has said; “ The plaintiff docs not recover the moneys as being the contract price strictly and technically, but as damages for the breach of the contract by the defendant. And those damages would be the present worth of the moneys payable under the contract at the time therein provided. Thus if the moneys were to be due at the end of four months from the time when the iron was, by the terms of the contract, to be delivered, the measure of damages would be, in such case, the present worth of an obligation to pay money due at such a certain time.” (Nichols v. Scranton Steel Co., 137 N. Y. 471, 487.) The same rule must, in principle, apply to damages for breach of contract of employment. The discharged employee’s damages may be measured prima facie by the unpaid wage, but it is the present worth of the obligation to pay the wages at a time in the future that fixes the damages. Indeed, in the case of breach of contract of employment, not only time but the uncertainty of human life may be taken into consideration in fixing the present worth of an obligation to pay money due at some time in the future, after the trial.

Such factors have been of .little consequence in most of the cases for breach of contract of employment for a fixed term, and ordinarily have, therefore, been disregarded. Usually the period of employment has expired before trial. Until interest was added to unliquidated damages from the date of breach to the time of trial (Civ. Prac. Act, § 480), error in allowing as damages the full amount of an obligation to pay wages due between the date of breach and the date of trial, rather than its value at the time of the breach, was not so readily apparent and, indeed, ordinarily was not unjust. Though, perhaps for that reason, this court has never heretofore directly passed upon the point, the rule that future payments should be appraised at present value has been applied in determining damages for breach of contracts of employment in other jurisdictions. (Cf. Yelland’s Case, L. R. 4 Eq. 350; Puller v. Royal Casualty Co., 271 Mo. 369; Ransome Concrete Machinery Co. v. Moody, 282 Fed. Rep. 29.)

At times, of course, practical difficulties must arise in the application of the rule. Damages caused by loss of opportunity to earn wages payable at a future time are from their nature uncertain. Where the trial is held after the expiration of the term of employment, what was uncertain at the time of the breach may have become capable of accurate calculation. The uncertainties still remain as to the part of the term, unexpired at the time of the trial. The jury should make such allowance as the proof in each case justifies, for probable future earnings of the discharged employee, and for contingencies affecting the employment. Their task would become almost impossibly difficult if they were required to determine the present value of each future payment after fixing the uncertain deductions to be made from each payment. Though they must make due allowance for the difference between the value of future payments, they cannot be required to make apportionment of uncertain deductions against each payment or to apply with exactitude tables of six per cent discount to uncertain sums. All that can be required of them is to pass upon the evidence and to make reasonable allowance for each factor entering into the determination of the entire damage.

The Appellate Division has held that the future payments should be discounted to their value at the time of the breach. From that value they deducted only the amount concededly earned by the plaintiff and on condition that plaintiff stipulate to accept the modification, they affirmed the judgment as modified. In that they erred. The damages thus recovered were, so the Appellate Division said, “ the maximum, amount of the damages recoverable under the evidence.” (238 App. Div. 468, 471.) Thus they eliminated the allowance of $35,000 which the jury might have found, and, as appears, did find, upon the evidence, represented the probable earnings of the plaintiff during the part of the term which had not expired at the time of the trial. An appellate court may correct errors due to erroneous rulings, but it cannot usurp the province of a jury nor upon the consent of the plaintiff reduce a judgment to the “ maximum ” amount recoverable by the plaintiff under the evidence, unless the jury verdict has established such amount.

The only erroneous ruling of the trial judge to which exception was duly taken consisted, as we have said, in permitting the jury to include in their verdict interest upon installments of salary to the amount of $52,662.53. The court was bound to correct the effect of that error and grant a new trial, unless the plaintiff stipulated to consent to the entry of a judgment modified by the excision of the interest erroneously included. The Appellate Division might also in the exercise of its discretion under its power to pass upon the facts have, even without exception, passed upon the correct measure of damages. Having done so, we have considered its ruling upon that question. The result is that upon a new trial in accordance with the rules stated in the opinions of the Appellate Division and in this opinion, the plaintiff might recover an amount materially less than that fixed by the judgment as modified by the Appellate Division. No new trial is, however, necessary in order to determine the amount of the judgment to which the plaintiff would be entitled, for the jury has passed upon all substantial questions of fact.

The jury has fixed the amount of the probable future earnings of the plaintiff at the sum of $35,000. That sum, together with the amount concededly earned by the plaintiff, must be deducted from the salary payable under the contract of employment. Then allowance must be made for discount of salary less the amount of actual or prospective earnings. If the earnings were equally apportioned against monthly salary, the amount of the discount would be only a matter of mathematical calculation. At six per cent discount, the damages to which the plaintiff would then be entitled as of the date of the breach would be $53,665.82, which with interest to the date of trial would amount to $60,364.45. They might be a little greater if. the apportionment were made differently or if a lower rate of discount were adopted. They could not be substantially larger. Thus the rights of both parties are fully protected if we grant a new trial, unless the plaintiff stipulates to reduce the verdict as of the date of rendition to the sum of $60,364.45.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event, unless the plaintiff shall stipulate, within ten days, to reduce the verdict to the sum of $60,364.45, in which event the judgment should be modified accordingly, and as so modified affirmed, without costs.

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

Judgment accordingly.


author: Per Curiam.

text:
    In the Matter of the Estate of Robert Weiden, Deceased. State Tax Commission, Appellant; Charles R. Weiden et al., as Executors of Robert Weiden, Deceased, Respondents.
    (Argued October 2, 1933;
    decided November 21, 1933.)

      Seth T. Cole for appellant.
    The statute is constitutional. (Matter of French, 148 Misc. Rep. 313; Tyler v. United States, 281 U. S. 497; Phillips v. Dime Trust & Safe Deposit Co., 284 U. S. 160; Third Nat. Bank & Trust Co. v. White, 287 U. S. 577; Gwinn v. Commissioner of Internal Revenue, 287 U. S. 224; United States v. Provident Trust Co., 281 U. S. 497; Lucas v. Girard Trust Co., 281 U. S. 497; Whitelock v. Whitelock, 156 Md. 115; Masterman v. Masterman, 129 Md. 167; Marburg v. Cole, 49 Md. 402; O’Malley v. O’Malley, 272 Penn. St. 528; Schroeder v. Gulf Refining Co., 300 Penn. St. 397; Gasner v. Pierce, 286 Penn. St. 529; Palmer v. Treasurer & Receiver General, 222 Mass. 263; Dicker v. Gluskin, 265 Mass. 403; Hiles v. Fisher, 144 N. Y. 306; Stelz v. Shreck, 128 N. Y. 263; Yax v. Yax, 125 Misc. Rep. 851; 211 App. Div. 872.)

      Benjamin Greenspan and Nathan Kogan for respondents.
    A taxing statute cannot be given retoractive effect, so as to diminish a vested interest. (Matter of Lyon, 233 N. Y. 208; Matter of Pell, 171 N. Y. 48; Germania Sav. Bank v. Village of Suspension Bridge, 159 N. Y. 362; Matter of McKelway, 221 N. Y. 15; Nichols v. Coolidge, 274 N. S, 531; Reinecke v. Northern Trust Co., 278 N. S. 339; Coolidge y. Long, 282 N. S. 582.) Estates by the entirety created prior to 1916 are not subject to tax in New York State. (Matter of Lyon, 233 N. Y. 208.)
   Per Curiam.

In Tyler v. United States (281 U. S. 497); Gwinn v. Commissioner (287 U. S. 224); Third National Bank & Trust Co. v. White (287 U. S. 577) the Supreme Court has indicated that the tax does not violate the provisions of-the United States Constitution. We will apply the same rules in determining the effect of similar provisions of the Constitution of this State, for the purpose of maintaining the uniformity of administration of the Tax Law (Cons. Laws, ch. 60) which the Legislature has sought to achieve.

The orders of the Appellate Division and of the Surrogate should be reversed, without costs, and the matter remitted to the Surrogate for the purpose of including in the transfer tax the estates by the entirety.

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

Ordered accordingly.


text:
    Adah M. Laventall et al., Respondents, v. Harry Pomerantz et al., Defendants, and Louis Danzig et al., Appellants.

      (Argued October 5, 1933;
    decided November 21, 1933.)

      Avrom M. Jacobs, Daniel J. Dugan and Isadore Book-stein for appellants.
    Defendants-appellants are entitled to be subrogated to the lien of the county of Albany for taxes and water rents discharged by them. (Sidenberg v. Ely, 90 N. Y. 257; Gerseta Corp. v. Equitable Trust Co., 241 N. Y. 418; Title Guarantee & Trust Co. v. Haven, 196 N. Y. 487; Dunlap v. James, 174 N. Y. 411; Leavitt v. Waldemar Co., 88 Misc. Rep. 285; Fiacre v. Chapman, 32 N. J. Eq. 463; Fisher v. Woodruff, 25 Wash. 67; Weadock v. Noeker, 119 Mich. 626; Bingo v. Woodruff, 43 Ark. 469.) Defendants-appellants are entitled to subrogation despite the fact that the first mortgagees were not liable for payment of taxes. (Kmetz v. De Ronde, 231 N. Y. 641; Howard v. Robbins, 170 N. Y. 498; Cole v. Malcolm, 66 N. Y. 363; Title Guarantee & Trust

      Co. v. Haven, 196 N. Y. 487; Taylor v. Wilcox, 167 Mass. 672.)

      Bertram M. Aufsesser for respondents.
    Taxes and assessments, upon payment, become discharged and extinguished, and a subordinate mortgagee can, therefore, acquire no lien superior to that of a prior mortgagee by such payment. (Sperry v. Butler, 75 Conn. 369; McNamara v. City of Rochester, 124 Misc. Rep. 229; Hinchman v. Morris, 29 W. Va. 673; McInerney v. Reed, 23 Iowa, 411; Preston v. Wright, 81 Me. 306.) A subordinate mortgagee can acquire no lien superior to that of a prior mortgagee by the voluntary payment of taxes to safeguard his own security. (Magilton v. Holbert, 52 Hun, 444; Sidenberg v. Ely, 90 N. Y. 257; Permain v. Mass. Hospital Life Ins. Co., 206 Mass. 377; Suppinger v. Garrels, 20 Ill. App. 265; Stone v. Tilley, 101 S. W. Rep. 201; Lawyers’ Title & Guaranty Co. v. Claren, 237 App. Div. 188.) A subordinate mortgagee upon the payment of taxes may add the same on the foreclosure of his own mortgage, but no separate claim can be made for its collection. (Sidenberg v. Ely, 90 N. Y. 257; Magilton v. Holbert, 52 Hun, 444; Cons. Laws, ch. 41, § 254, subd. 6; Stone v. Tilley, 101 S. W. Rep. 201; Vincent v. Moore, 51 Mich. 618; Hourigan v. Wellmuth, 77 Mo. 542; Johnson v. Payne, 11 Neb. 269; Hitchcock v. Merrick,, 18 Wis. 357.)
   Lehman, J.

In their answer to the complaint, in an action for the foreclosure of a mortgage upon real property in the city of Albany, the defendants Louis Danzig and Charlotte Sattler have alleged, as a separate defense and counterclaim, that they are owners of a subordinate mortgage on the same property and that the holders of the subordinate mortgage, in order to protect their interest in the real property, have paid taxes and water rents which were a lien on the property. They claim that, in consequence, these holders of the subordinate mortgage l< were and are equitably subrogated to the rights and remedies of the City of Albany on account of said taxes and water rents in the amount so advanced by them.” Upon the plaintiff’s motion, the so-called “ defense and counterclaim ” has been stricken out as insufficient on its face.

Upon a sale in foreclosure the lien of both mortgages will attach to the proceeds of the sale of the mortgaged property in the same order of priority as the original liens upon the property. So too the lien of unpaid taxes or water rents, if any, will attach to the same proceeds, but in priority to the lien of the mortgages, and thus would reduce pro tanto the amount which could be applied in payment of the mortgage. Payment of the taxes by these defendants has discharged the prior lien of the city. The defendants are entitled to an allowance for the amount they have paid, as part of their mortgage debt, upon the foreclosure of the mortgage. (Sidenberg v. Ely, 90 N. Y. 257.) An allowance to them of the amount so paid as part of their mortgage debt ” may be of no use, if after payment of the plaintiffs’ prior mortgage no proceeds of the sale remain. Therefore, they ask that, to the extent that their payment of the taxes and the consequent discharge of the city’s prior lien has increased the proceeds of sale which will become available for payment of the plaintiffs’ mortgage, they should be subrogated to the lien of the city in priority to the lien of the plaintiffs’ mortgage.

It is well established that the lien of the city for unpaid taxes, though terminated as to the city by payment of the taxes, can be regarded, in equity, as still existent for the purpose of doing justice between a party who has paid the taxes and a party who was under an obligation to pay them or who has through such payment obtained an unfair benefit at the expense of another. (Title Guarantee & Trust Co. v. Haven, 196 N. Y. 487.) The doctrine of equitable subrogation will be applied <l to compel the ultimate payment of a debt by one who in justice, equity, and good conscience ought to pay it ” (Pittsburg-Westmoreland Coal Co. v. Kerr, 220 N. Y. 137, 144), and a court of equity having in its custody a fund for distribution can divide the fund in accordance with that doctrine in proper case.

As between the mortgagees and the owner of the mortgaged property the latter was unquestionably one who in justice, equity, and good conscience ” ought to pay the taxes. Indeed, the mortgages contain provisions which give to the holders the right to foreclose their mortgage upon default in payment of taxes, and also give them the right to pay the taxes and to add the payments to the mortgage debt. When the defendants as holders of the subordinate mortgage paid the taxes which were a hen on the property and thus acquired the right to add the taxes to the debt secured by their mortgage, they at the same time terminated any right which these plaintiffs, as holders of the prior mortgage, would have had to foreclose their mortgage upon default by the owner of the property in payment of taxes. Payment by the defendants thus protected,” as they have alleged in their answer, their interest in said real estate ” against the accrual of penalties which would be a prior lien on their real estate and against the menace that at some time in the still remote future the property might be sold to satisfy that hen; but it also “ protected ” their interest in the real estate against the present menace of foreclosure by the holders of the first mortgage.

Doubtless, as a general rule, where a junior mortgagee incurs expense to prevent damage to or destruction of the mortgaged premises, it is just and equitable that to the extent that he thereby has increased the proceeds of the property which can be applied in payment of the mortgage debts, the junior mortgagee should be reimbursed out of such proceeds before they are applied in payment of the prior mortgage. (Fiacre v. Chapman, 32 N. J. Eq. 463.) There is no room for the application of that rule where non-payment of taxes is a, ground for foreclosure proceedings by the prior mortgagee, and payment by the junior mortgagee is calculated to destroy that ground to the possible detriment of the prior mortgagee. There may be situations where it might be said that the unreasonable refusal or delay of a prior mortgagee to act for the protection of his own interest compels a junior mortgagee to act for the protection of both. We do not here deal with such a situation. The owners of the second mortgage have by the payment of taxes availed themselves of rights conferred by their mortgage, and they may look to the stipulated remedies to secure reimbursement. The rights and remedies stipulated in the plaintiffs’ prior mortgage could not, without the plaintiffs’ consent, be diminished by any provisions of the subordinate mortgage or by any acts performed by owner or subordinate mortgagee in accordance with such provisions. The right to foreclose upon default in payment of taxes was intended as a means to compel the payment of such taxes, or to provide a remedy, in case of nonpayment, for consequent diminution in the plaintiffs’ security. When the defendants paid the taxes, they met an obligation which the owner owed both to the prior mortgagees and to the city. Because the obligation had been met, thére was no longer room for invoking the plaintiffs’ stipulated remedy against default. The defendants, having knowingly produced that result, may not thereafter claim that equity should still regard the lien of the taxes as existent and the owners’ obligation towards the prior mortgagee still unperformed. The payment of taxes must be given effect according to the stipulations of the mortgages, and the intentions of the parties. It discharged the lien of the city and discharged at the same time the obligation of the owner towards the prior mortgagee. The defendants are entitled to add the amount of the payment to their mortgage debt. They are not entitled to any relief at the expense of the prior mortgagee. No rule of law or dictate of justice, equity or good conscience would justify a court of equity in regarding as still existent the hen of the taxes in priority to the plaintiffs’ mortgage. The price that the defendants expected and received for their payment was the extinguishment of the plaintiffs’ right to foreclose for the owner’s default in paying the taxes. They may not repudiate the legal effect of their act after they have received the price. (Cf. Warranty Building & Loan Assn. v. Cimerro Constr. Co., 111 N. J. Eq. 8; Pearmain v. Massachusetts Hospital Life Ins. Co., 206 Mass. 377.)

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

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

Ordered accordingly.


author: Pound, Ch. J.

text:
    George Lutz, Respondent, v. Frank S. Houck et al., Constituting the New York State Board of Pharmacy, Appellants.

      (Argued November 21, 1933;
    decided November 28, 1933.)

      John J. Bennett, Jr., Attorney-General (Henry Epstein and Harold Qreenstein of counsel), for appellants.
    Section 1354 of the Education Law is a valid and constitutional exercise of the police power of the State, (State Board of Pharmacy v. Matthews, 197 N. Y. 353; People v. Roemer, 168 App. Div. 377; State v. Donaldson, 41 Minn. 74; Green v. State, 49 Tex. Crim. Rep. 380; State v. Evans, 130 Wis. 381; People ex rel. Lieberman v. Van De Carr, 199 U. S. 552; Beer Co. v. Massachusetts, 97 U, S. 25; New Orleans Gas Co. v. Louisiana Light Co., 115 U. S, 650; People v. Havnor, 1 App. Div. 459.)

      Maxwell M. Wallach for respondent.
    Sections 1354 and 1362 of the Education Law are unjustly discriminatory, unconstitutional and void. (Pratter v. Lascoff, 261 N. Y. 509; Liggett Co. v. Baldridge, 278 U. S. 105.)
   Pound, Ch. J.

Plaintiff is a licensed druggist, not a licensed pharmacist. He seeks and has obtained a declaratory judgment adjudging that he is entitled as a licensed druggist to work independently in a pharmacy in the State of New York, notwithstanding the provisions of paragraph 4 of section 1354 of the Education Law (Cons. Laws, ch. 16), which reads as follows:

Drug stores. It shall be lawful for a druggist in conformity with the rules to take, use, and exhibit the titles druggist and registered drug store, and to have charge of, engage in, conduct or carry on for himself or for another the dispensing, compounding or retailing of drugs, chemicals, medicines, prescriptions or poisons anywhere within the state, in a place of not more than one thousand inhabitants, but he shall have charge of not more than one drug store at the same time. He may be employed for the purpose of dispensing or retailing drugs, chemicals, medicines, prescriptions and poisons in a registered pharmacy under the management and personal supervision of a licensed pharmacist; he may also perform such duties during the temporary absence of the pharmacist, except in cities of more than one million inhabitants.”

The Education Law (Cons. Laws, ch. 16, § 1353) provides separately for the licensing of pharmacists and for the licensing of druggists. No question is raised as to the power of the Legislature reasonably to regulate the sale of drugs or the practice of pharmacy. (State Board of Pharmacy v. Matthews, 197 N. Y. 353; Liggett Co. v. Baldridge, 278 U. S. 105, 112.)

Paragraph 4 (supra) permits a licensed druggist to carry on -the calling of a pharmacist independently “ in a place of not more than one thousand inhabitants.” This, it has been held, is an unreasonable regulation because it permits druggists to carry on the business of pharmacists independently in places of less than one thousand inhabitants but not elsewhere within the State. This restriction, it is said, is an arbitrary distinction, unwarranted by reason and not demanded by any necessity. But the Legislature, dealing with the question practically, having in view the convenience of the public, may permit a druggist to carry on the business of pharmacist in a small place while it extends special protection to the larger centers of population where such protection is most needed. Such a distinction is not unreasonable. (State Board of Pharmacy v. Matthews, supra.)

The limitations of paragraph 4 further restrict the licensed druggist. In cities of more than a million inhabitants he may not be employed for the purpose of dispensing or retailing drugs, chemicals, medicines, prescriptions and poisons in a registered pharmacy, even under the management and personal supervision of a licensed pharmacist. Such a distinction is not unreasonable. It applies to all persons as a class under the same conditions and environments. (People v. Havnor, 149 N. Y. 195, 205; State v. Evans, 130 Wis. 381.)

A great distinction exists between the qualifications required of a licensed pharmacist and those required of a licensed druggist. (Education Law, § 1353.) Pharmacy is a professional calling. Pharmacology is the science that treats of drugs and medicines; their nature, preparation, administration and effect. (Education Law, § 1350, subd. 11.) Keeping a drug store is a trade or business in which medicines and other articles are sold. Druggists who have had experience in a drug store or pharmacy may sell drugs but a pharmacist must undergo an arduous course of preparation, not unlike in length and thoroughness that of the physician or lawyer. The Legislature has ample power to regulate the calling of druggists and pharmacists by saying what acts in various parts of the State, grouped according to population, should be prohibited so as effectively to accomplish the purpose of such regulation, and by giving special advantages to the highly trained man when, in its wisdom, it deems it practicable to do so. The regulations in question are not to be condemned as unreasonable and unnecessary restrictions, arbitrarily interfering with private business under the pretext of protecting the public.

The courts below appear to have been led by the case of Pratter v. Lascoff (261 N. Y. 509; petition for certiorari denied, 289 U. S. 754), decided on the authority of Liggett Co. v. Baldridge (supra), to reach an opposite conclusion. It was there held that the mere ownership of a drug store can have no real or substantial relation to the public health which would justify the Legislature in limiting the ownership of such stores to licensed pharmacists. The question there decided is not the question presented here.

The judgment so far as appealed from should be reversed and the complaint as to paragraph 4 of section 1354 of the Education Law dismissed, without costs.

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

Judgment accordingly.


author: Crane, J.

text:
    Rinehart and Dennis Company, Inc., Appellant, v. The City of New York, Respondent.

      (Argued October 17, 1933;
    decided November 28, 1933.)

      Chase Mellen for appellant.
    The action is for breach of contract, so that plaintiff’s claim is not subject to article XII of the contract. (Faber v. City of New York, 222 N. Y. 255; Ingraham v. Golden Co., 65 Pac. Rep. 549; McGovern v. City of New York, 202 App. Div. 317; 235 N. Y. 275; Borough Constr. Co. v. City of New York, 200 N. Y. 149; Mansfield v. N. Y. C. & H. R. R. R. Co., 102 N. Y. 205; United States v. Behan, 110 U. S. 338; Del Genovese v. Third Ave. R. R. Co., 13 App. Div. 412; Clarke Contracting Co. v. City of New York, 229 N. Y. 413; Pilkington v. City of New York, 211 App, Div. 558; Johnson Construction Co. v. State of New

      York, 211 App. Div. 512; Allamon v. Mayor, 43 Barb. 33; Weisberg v. Art Work Shop, 226 App. Div. 532.) The court erred in dismissing the first cause of action and should have granted plaintiff’s motion for the direction of a verdict for the damages proved. (MacKnight Flintic Stone Co. v. Mayor, 160 N. Y. 72; City of New York v. Penn. Steel Co., 206 Fed. Rep. 454; Gearty v. Mayor, 171 N. Y. 61; Bush v. Jones, 144 Fed. Rep. 942; United States v. Spearin, 248 U. S. 132; Kuhs v. Flower City Tissue Mills Co., 104 Misc. Rep. 243; Dwyer v. Mayor, 77 App. Div. 224.)

      Arthur J. W. Hilly, Corporation Counsel {J. Joseph Lilly, Henry J. Shields and Matthew Troy of counsel), for respondent.
    The first cause of action was properly dismissed. (Campbell v. City of New York, 244 N. Y. 317.) There was no waiver by the defendant of the provisions of article XII of the contract. (Alsens A. P. C. Works v. Degnon Contr. Co., 222 N. Y. 34; Granger Co. v. Universal Machinery Corp., 193 App. Div. 234; Newburger v. Lubell, 257 N. Y. 383; Lord & Burnham Co. v. City of New York, 251 N. Y. 198; Nissen v. McCafferty, 202 App. Div. 528.) The plaintiff is precluded from claiming damages because of its neglect to make written demands as required under the contract provisions. (Odell v. City of New York, 206 App. Div. 68) Degnon Contr. Co. v. City of New York, 202 App. Div. 390; Ryan v. City of New York, 179 App. Div. 181.)
   Crane, J.

The plaintiff and the defendant entered into a contract whereby the plaintiff, on a unit price basis, undertook to construct a section, nine miles long, of the so-called Catskill Aqueduct. After the completion of the work by the plaintiff, and its acceptance by the defendant, the plaintiff brought this action to recover damages caused by alleged breaches of the contract made by the defendant. The appeal relates to three causes of action of that nature which were dismissed by the Trial Term.

The disposition below of the third cause of action, known as the Reynolds Hill claim, and the fifth cause of action, referred to as the Pumping claim, must be affirmed. The first cause of action, however, referred to as the Bronze claim, was not barred by article XII of the contract.

Section 82.2 of the contract read as follows: Bronze for ladders shall be rolled metal, but bronze for valve-stem guides and other purposes may be cast. All bronze shall be equal to Hyde or Parsons bronze, and shall have a tensile strength of not less than 55,000 pounds per square inch, an elastic limit of 50 per cent of the tensile strength, and an elongation of not less than 25 per cent in 2 inches, unless for designated purposes a different bronze be required or accepted.”

The bronze furnished by the plaintiff met these requirements in every particular. Upon the argument in this court it was conceded by the Corporation Counsel that the specifications had been complied with. The Engineer of the Board of Water Supply was present at the factories and inspected the material while in the course of manufacture and in the laboratory tests. He found it to comply with the specifications and stamped it with initials, indicating that it met with all requirements. The bronze ladders were installed and accepted by the city. They were in use for over a year before it was discovered that bronze was not the proper material for the purpose intended. The ladders were exposed to the weather and deteriorated in quality. Like bronze used elsewhere manifested the same defects. These were winter or weather cracks. The city claimed that the bronze was drawn too hard. Nothing in the specifications refers to the rolling, whether the metal should be rolled hot or cold, hard or not hard. The experts conceded that it had been properly rolled and in a workmanlike manner. As before stated, the Board’s Engineer inspected the work and approved it.

We start, therefore, with the fact that the contractor had furnished bronze ladders in full compliance with its contract and should have been paid therefor. Instead the city ordered new ladders. The objection to paying for this additional bronze is that the contractor failed to ask for its money in time. Such a defense cannot be expected to be received with sympathy or encouragement.

Article XV of the contract reads as follows: “ The inspection of the work shall not relieve the contractor of any of his obligations to fulfill his contract as herein prescribed, and defective work shall be made good, and unsuitable materials may be rejected, notwithstanding that such work and materials have been previously overlooked by the Engineer and accepted or estimated for payment. If the work, or any part thereof, shall be found defective before the final acceptance of the whole work, the contractor shall forthwith make good such defect, in a manner satisfactory to the Engineer, and if any material brought upon the ground for use in the work, or selected for the same, shall be condemned by the Engineer as unsuitable or not in conformity with the specifications, the contractor shall forthwith remove such materials to a satisfactory distance from the vicinity of the work.”

Having fully complied with the contract regarding the bronze ladders, the City Engineer one year after the acceptance and use of them, directed the contractor to take them out and replace them with others, pursuant to the provisions of this article XV. This resulted in protest and in correspondence,

On September 26,1913, the plaintiff wrote the Engineer: “ Your letter of Sept. 25th to hand and in reply to same will say, that it is a very late day to condemn bronze specified in your letter. Our manufacturer used the proper mixture or ingredients that your inspector specified for making the bronze in question. In other words all instructions were carried out to the fullest extent and the bronze was accepted at the factory, it was also accepted here on the work and part payment made at the time of arrival on the job. At the same time becoming the property of the City of New York in accordance with Article 16 of the Contract. * * * Any additional bronze that will have to be bought to replace any bronze that is now on the work, we will expect our contract price for same. Please advise if we may order the bronze as specified in your letter of Sept. 25th, and receive contract price for same.”

Again, on October 21, 1913, the plaintiff wrote the Chief Engineer: “ We are willing, under protest, to comply with your demand, and remove any installed material condemned by you since its installation, and to replace same * * * reserving our right to collect from the city of New York for the reasonable value of such replaced material.”

The Chief Engineer replied, and this is his reply:
October 27, 1913.
It would seem that the question here involved is fully covered by the provisions of Article XT on page 57 of your contract. However, in view of the unusual conditions which are presented, we are entirely willing to treat the matter of any claim for additional compensation which you may present, so far as we have the legal power to do so, in a spirit of fairness and equity. This, as you must realize, will of course take time, and in the meanwhile, I am glad to know that you will proceed with the replacement of the material.”

We are not told in this case what the " unusual conditions ” are. Neither are we informed why a contractor who has failed to comply with the specifications should have additional compensation. As we have already stated, the Engineer felt himself to be in the wrong or, at least, partially in the wrong and was doing the best he could to correct the mistakes of the city or its servants.

On this assurance, that the claim for additional compensation would be treated in the spirit of fairness and equity, although it would take time, the plaintiff proceeded with the work of replacement.

The equity ” consisted, as before stated, in compelling a contractor who had performed its contract, to do the work over again in accordance with details not theretofore specified. In view of this correspondence and of the work done by the contractor, in reliance thereon, it is said that it cannot recover anything because of article XII. This required the contractor to make a written statement of any damage sustained by reason of the acts of the Board to the Engineer within five days after sustaining the damage. The Engineer had a written statement. He was told in the letter above quoted that the replacement would be made under protest and at the contract price. He induced the replacement by stating in writing that the claim for additional compensation would be treated in a spirit of fairness and equity and suggesting that payment therefor would of course' take time. After the work was done, the Board of Water Supply suggested that the claims be filed with the Comptroller, which was done more than thirty days before the commencement of this action.

The provisions of article XII were substantially complied with; the Engineer had due and timely notice. He ordered the replacement, knowing the details and the cost. The five days’ notice was never contemplated or ' expected. If ever there was a waiver of a useless formality this is one. No claim has ever been made, until the argument of this case, that the Engineer did not have proper notice of the plaintiff’s claim or should have received a statement within five days after damage done. I doubt whether the clause refers to such facts as we have here.

As to all matters relating to the performance of the contract, the Chief Engineer was the authorized agent of the city. The contractor could have said, I shall not replace this bronze because it complies in all respects with the specifications. Obviously the Engineer and the city wanted to have the work promptly attended to, and it was within the scope of his duties to do whatever would forward the work. The work would be forwarded by having the contractor replace the material, leaving the compensation to be settled later.

Article III of the contract provides as follows: “To prevent disputes and litigations, the engineer * * * shall determine all questions in relation to said work and the construction thereof, and shall in all cases decide every question which may arise relative to the fulfillment of this contract on the part of the contractor.”

This case cannot be distinguished from McGovern v. City of New York (202 App. Div. 317; affd., 235 N. Y. 275, in a per curiam opinion). Article XLIII of that contract was the same as article XII here in question, with the exception that the word “ shall ” is now used in place of the word may ” — without the five days’ notice the claim for compensation shall ” be forfeited, instead of “ may ” be forfeited. Waiver, however, applies as much to a provision containing the word “ shall ” as one containing the word may.” A contractor, led by correspondence to believe that a useless step or procedure need not be taken, is not to be penalized because the word “ shall ” is used instead of “ may.” This distinction is entirely too tenuous for the working man whose time, material and labor the city of New York desires to have and to hold without any compensation.

The judgment should be modified by reversing so much thereof as dismisses the first cause of action and granting a new trial thereon with costs to the appellant to abide the event; otherwise judgment should be affirmed without costs.

Pound, Ch. J., Lehman, Hubbs and Crouch, JJ., concur; Kellogg and O’Brien, JJ., dissent as to modification and vote to affirm.

Judgment accordingly.


author: O’Brien, J.

text:
    Fanny Kupchinsky, as Administratrix of the Estate of Gloria Kupchinsky, Deceased, Respondent, v. Vacuum Oil Company, Appellant, Impleaded with Another.
    (Argued October 25, 1933';
    decided November 28, 1933.)

      Bertrand L. Pettigrew for appellant.
    The deceased infant being non sui juris, and having been intrusted by her parents to the custody of her uncle, was chargeable with the negligence of the custodian. (Ihl v. 42nd St. R. R. Co., 47 N. Y. 317; Wallace v. Casey Co., 132 App. Div. 35; Hennessey v. Brooklyn City R. R. Co., 6 App. Div. 206; Hartfield v. Roper, 21 Wend. 615; Thurber v. Harlem B., M. & F. R. R. Co., 60 N. Y. 326; Doran v. City of Troy, 22 N. Y. Wkly. Dig. 230; 104 N. Y. 684; Camardo v. New York State Rys., 247 N. Y. 111; Holly v. Boston Gas-Light Co., 74 Mass. 123; Casey v. Smith, 152 Mass. 294; Waite v. Northeastern Ry. Co., 120 Eng. Rep. 679; Leslie v. Lewiston, 62 Me. 468.)

      Robert X. Kuzmier and Richard C. Cotter for respondent.
    The negligence of the defendant driver was not imputable to the deceased infant. (Schubert v. Schubert Wagon Co., 249 N. Y. 253; Hennessey v. Brooklyn City R. R. Co., 6 App. Div. 206; Lewin v. Lehigh Valley R. R. Co., 52 App. Div. 69; Regan v. International Ry. Co., 205 App. Div. 425; Zarzana v. Neve Drug Co., 180 Cal. 32.)
   O’Brien, J.

Plaintiff’s intestate, a child nearly three years of age, was killed in a collision between motor vehicles driven by defendant Lesser and an employee of defendant Vacuum Oil Company. With her mother’s consent the child was riding on the seat of a truck beside her brother, eleven years of age, and their uncle, Lesser, twenty-one years old, one of the drivers who was held to be negligent. Recovery was had against both defendants. No appeal is taken from the judgment in favor of the boy, who also was injured, but defendant Vacuum Oil Company appeals from the judgment for the death of the girl and raises the point that the negligence of Lesser, her custodian, must be imputed to this infant, who was non sui juris.

Strong support for appellant’s argument is to be found in other jurisdictions (Delaware, L. & W. R. R. Co. v. Devore, 114 Fed. Rep. 155; Holly v. Boston Gas Light Co., 74 Mass. 123; Casey v. Smith, 152 Mass. 294; Gallagher v. Johnson, 237 Mass. 455; Leslie v. City of Lewiston, 62 Me. 468; Waite v. N. E. Ry., 120 Eng. Rep. [Full Reprint] 679, 682 [El. Bl. & El. 728]), and in decisions by the trial and intermediate courts of this State, of which Metcalfe v. Rochester Ry. Co. (12 App. Div. 147) is an example, but the law which we accept is such as is declared by Mr. Justice Cullen, in this excerpt from his opinion in Hennessey v. Brooklyn City R. R. Co. (6 App. Div. 206, 208), a case in which a baby was injured while held by its mother on the seat of a carriage beside its father who was guilty of negligence in driving: The general rule, well settled by authority, is that in the case of an infant non sui juris, the negligence of his custodians, whether parents or persons to whose care the child has been intrusted, is to be imputed to the child. (Hartfield v. Roper, 21 Wend. 615; Mangam v. Brooklyn R. R. Co., 38 N. Y. 456.) But it is equally settled law that to make this rule applicable the infant must have done something which in the case of an adult would have constituted negligence. (Ihl v. Forty-second Street, etc., R. R. Co., 47 N. Y. 317; Cumming v. Brooklyn City R. R. Co., 104 id. 669.) ” In the Cumming case (104 N. Y. 669, 671) Judge Peckham wrote that the negligence of a mother in allowing her child non sui juris to go alone upon a city street is entirely immaterial if the child herself was guilty of none,” and cited the Ihl case as authority. In McGarry v. Loomis (63 N. Y. 104, 107) this court through Chief Judge Church had stated this rule: If a child, though non sui juris, has not committed or omitted an act which would constitute contributory negligence in a person of years of discretion, an injury by the negligence of another cannot be defended upon- the alleged negligence of the parents (47 N. Y. 317).” The decision in Doran v. City of Troy (104 N. Y. 684), rendered without opinion by this court, and the opinion in Lewin v. Lehigh Valley R. R. Co. (165 N. Y. 667) are indecisive concerning this point. If Morrison v. Erie Ry. Co. (56 N. Y. 302) be deemed to rest upon a contrary doctrine, it must be considered as overruled by the later eases.

Applying the rule as stated in the Ihl, McGarry, Cumming and Hennessey cases, the burden rested upon defendants in this death case to produce evidence tending to show acts or omissions by the infant which if attributed to an adult would constitute contributory negligence. No effort is made to prove that this infant, in any way different from her brother who sat beside her, or any other mature passenger who might have been in the truck, could have done anything to avert the injury to herself or that in any way she brought it to pass. This infant’s legal status is the same as would be that of any other passenger who was rightfully on the truck. (McGarry v. Loomis, supra.)

The judgment should be affirmed with costs.

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

Judgment affirmed.


text:
    Elsie Lefferts, Appellant, v. Harry M. Lefferts, Respondent.

      (Argued October 26, 1933;
    decided November 28, 1933.)

      I. Maurice Wormser and Solon Rosenthal for appellant.
    The evidence proves that plaintiff established a bona fide domicile in Nevada. All the factual elements were shown by an abundance of proof, documentary as well as oral. (Matter of Newcomb, 192 N. Y. 238.) The Nevada decree must be given full faith and credit, and is entitled to recognition in our courts. The wife having been abandoned by her first husband, was able to, and did, in fact, establish a matrimonial domicile in Nevada, and the proceedings in that State were in full compliance with its laws. (Hunt v. Hunt, 72 N. Y. 217; Dean v. Dean, 213 App. Div. 360; 241 N. Y. 240; Wacker v. Wacker, 154 App. Div. 495; Post v. Post, 149 App. Div. 452; 210 N. Y. 607; Matter of Thorne, 240 N. Y. 444; Haddock v. Haddock, 201 U. S. 562; Williamson v. Osenton, 232 U. S. 619; Perkins v. Perkins, 225 Mass. 82; Hatch, v. Hatch, 187 N. Y. Supp. 568; Ransom v. Ransom, 54 Misc. Rep. 410.)

      Julius Schwartz and Hamilton Lieb for respondent.
    The evidence proves conclusively that plaintiff did not establish a bona fide domicile in Nevada. She established only a colorable residence for the sole and only purpose of invoking the aid of the Nevada courts to secure a divorce. (Fischer v. Fischer, 254 N. Y. 463.) Plaintiff’s Nevada decree of divorce is void in this State and she was, therefore, incapable of entering into the legal relationship of husband and wife with defendant. (Atherton v. Atherton, 181 U. S. 155; Haddock v. Haddock, 201 U. S. 562; Fischer v. Fischer, 254 N. Y. 463; Bell v. Bell, 181 U. S. 175; Streitwolf v. Streitwolf, 181 U. S. 179; Cross v. Cross, 108 N. Y. 628; deMeli v. deMeli, 120 N. Y. 485; Andrews v. Andrews, 188 U. S. 14; Kaiser v. Kaiser, 192 App. Div. 400; 233 N. Y. 524.)
   Crane, J.

On June 15, 1902, the plaintiff married one Julius Oppenheimer of the city and State of New York, and thereafter lived with him until the year 1915. Oppenheimer left his wife without support, but apparently did not leave the city of New York, where he continued to live during all the times hereinafter mentioned. In February of 1916, the wife, then Mrs. Oppenheimer, went to Reno, Nev., with her two children, the issue of said marriage. She remained there until December of the same year, when she came back to Brooklyn to live with her mother. In Reno Mrs. Oppenheimer took an apartment of three rooms, kept house for herself and children, sent her children to school, and voted in the September elections of 1916. Six months’ residence was necessary in Nevada in order to bring an action for divorce. An action for divorce against Oppenheimer was commenced, he being served without the State and by publication. He did not appear in the action and at all times remained a resident and citizen of the State of New York. A decree for absolute divorce, upon the ground of cruelty and desertion, having been granted by the Nevada courts, the wife, a month later, returned with her children to Brooklyn, N. Y., and did not again leave the State of New York, except on temporary visits. In January of 1917 she commenced a proceeding in the Domestic Relations Court of Brooklyn, N. Y., to compel her divorced husband to support the children, in which proceeding she made an affidavit stating that she was a resident of Brooklyn.

Before going to Nevada, Mrs. Oppenheimer had become acquainted, in New York, with a Dr. Lefferts. He had advised her about going west and wrote her while she was in Reno. At one time she stated that he had advised her to get a divorce in Reno. Subsequently, in 1917, she married Dr. Lefferts in Indiana, while he was temporarily sojourning there as a soldier at the outbreak of the war. Neither Dr. Lefferts nor his wife was a resident of Indiana. After his return from the army they took up their residence in New York and continued to live together as husband and wife until 1930, when they separated.

In this action, which she has brought against her husband, Dr. Lefferts, for separation and support and maintenance, he has pleaded that their marriage in 1917 was void, as Mrs. Lefferts had not been legally divorced in Nevada from her then husband, Julius Oppenheimer.

The trial court, having found as a fact that the then Mrs. Oppenheimer had established a domicile in the State of Nevada, held that the decree of divorce was valid everywhere, and so, binding upon the husband, a resident of New York. The Appellate Division reversed these findings and made new findings to the effect that the plaintiff’s residence in the State of Nevada was merely a temporary residence for the sole purpose of giving a colorable right to the plaintiff to maintain the suit intended to be brought by her in the State of Nevada against her husband, Julius Oppenheimer. On these new findings the Appellate Division reversed the Special Term, holding the decree of divorce ineffectual to dissolve the Oppenheimer marriage, and that, therefore, Dr. and Mrs. Lefferts, the parties to this action, were not legally man and wife.

The appeal has been argued in this court as though the question was solely one of fact regarding the plaintiff’s domicile in Nevada. The Appellate Division, having reversed the facts, and made new findings, this court reviews the evidence, pursuant to subdivision 2 of section 589 of the Civil Practice Act. The conclusion reached by the Appellate Division is not, in our judgment, contrary to the weight of the evidence. The suggestion having been made to the plaintiff that she go to Reno to get a divorce, the fact that, within a month after obtaining her decree, she returned to her mother in Brooklyn, together with the additional fact that, within a month after that, she made an affidavit stating that she was a resident of Brooklyn, sustains the inference drawn by the Appellate Division that the wife went to Nevada with no intention of making it her permanent abode or changing her domicile. (Fischer v. Fischer, 254 N. Y. 463; Williamson v. Osenton, 232 U. S. 619.) To decide this case we do not need to go further.

The effect of the plaintiff’s Nevada divorce upon the non-appearing husband, resident in New York, had she been domiciled in Nevada, we will not now discuss or decide.

The judgment should be affirmed without costs.

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

Judgment affirmed.


text:
    James J. Walsh, Respondent, v. Charles A. Judge et al., Defendants, and Alex Kelso et al., Appellants.
    (Argued October 16, 1933;
    decided November 28, 1933.)

      Edgar B. Bronson, Jeremiah T. Mahoney and Charles Maitland Beattie for appellants.
    The rulings of the trial court on the admission of the hearsay and ex parte declarations were erroneous, conflicting and confusing, and the alleged conspiracy was not established by competent evidence, certainly not as against all of the appellants. (People v. McKane, 143 N. Y. 455; People v. Becker, 215 N. Y. 126; People v. McQuade, 110 N. Y. 284; People v. Storrs, 207 N. Y. 147; People v. Peckens, 153 N. Y. 576; Lent v. Shear, 160 N. Y. 462; Rutherford v. Schattman, 119 N. Y. 604; Place v. Minster, 65 N. Y. 89; Voorhees v. Unger, 151 App. Div. 35; Cohen v. Toole, 184 App. Div. 70; Garnsey v. Rhodes, 138 N. Y. 461.)

      Donald Marks for respondent.
    The existence of a conspiracy against plaintiff, and the connection of each of appellants therewith, was established by competent evidence. (National Cash Register Co. v. Remington Arms Co., 242 N. Y. 99; Race v. Krum, 222 N. Y. 410; Chainless Cycle Mfg. Co. v. Security Ins. Co., 169 N. Y. 304; Godley v. Crandall & Godley Co., 212 N. Y. 121; Place v. Minster, 65 N. Y. 89; People v. Van Tassel, 156 N. Y. 561; Heughes v. Bd. of Education, 37 App. Div. 180; Finnegan v. Butler, 112 Misc. Rep. 280.) There was no prejudicial error committed in rulings upon evidence. (Place v. Minster, 65 N. Y. 89; People v. Storrs, 207 N. Y. 147; People v. Peckens, 153 N. Y. 576; Loos v. Wilkinson, 110 N. Y. 195; Apthorp v. Comstock, 2 Paige, 482; Swinnerton v. Columbian Ins. Co., 37 N. Y. 174; Wesp v. Muckle, 136 App. Div. 241; 201 N. Y. 527; Francis v. Perry, 82 Misc. Rep. 271.)
   Per Curiam.

Plaintiff sued for damages during the time extending from March 24, 1925, to May 17, 1926, for his expulsion from a labor union resulting from a conspiracy alleged to have been formed during the months of October, November and December, 1924. This conspiracy was consummated by plaintiff’s expulsion on or prior to March 24, 1925.

An issue of fact is presented relating to the falsity of the charges preferred against plaintiff and the verdict in his favor on this issue is supported by evidence.

The action has abated as to defendant Judge and we can find no evidence tending to connect defendants Moncur, Jose and Fessler with any conspiracy resulting in damage to plaintiff during the time alleged in the complaint.

Sufficient evidence was produced to take the case to the jury on the issue of the participation by defendants Halkett, Kelso and Quigley in the conspiracy which resulted in damage to plaintiff during the time alleged in the complaint. Hearsay and other incompetent testimony of a highly prejudicial character was admitted against them. Plaintiff’s witness McAdam was allowed to state to the jury that a member of the union had informed him that that member had received orders from defendants Judge and Kelso to exclude plaintiff; his witness Cavanaugh testified that in the summer of 1926 another member had asked this witness to start a movement to get rid of plaintiff; his witness. McGee gave evidence that in November, 1926, a member, other than a defendant herein, had called plaintiff vile names and that another such member had advocated his expulsion. This testimony, in addition to the introduction of the excerpts from the official journal of the organization published in September, 1926, was incompetent and, from the size of the verdict against defendants, must be deemed to have inflamed the jury.

The judgment should be reversed and the complaint dismissed as to the defendants Moncur, Jose and Fessler with costs; a new trial granted as to the defendants Halkett, Kelso and Quigley with costs to such appellants to abide the event. (See 263 N. Y. 670.)

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

Judgment accordingly.