author: Bromley, J. Conway, J.

text:
    In the Matter of the Arbitration between Utility Laundry Service, Inc., Appellant, and Sidney Sklar et al., Respondents.
    Submitted November 14, 1949;
    decided December 29, 1949.

      Herman Rosenfeld and Abraham L. Bowman for appellant.
    The award was within the jurisdiction of the arbitrator and was properly confirmed at Special Term. (Matter of Sperling v. Newtown Laundry Service, 264 App. Div. 878; Matter of Marchant v. Mead-Morrison Mfg. Co., 252 N. Y. 284; Matter of General Footwear Corp. v. Lawrence Leather Co., 252 N. Y. 577; Matter of Motor Haulage Co. [Teamsters’ Union], 272 App. Div. 382, 298 N. Y. 208; Matter of General Dry Cleaners, 75 N. Y. S. 2d 615.)

      Morton Singer and Louis A. Kass for respondents.
    I. No person is under a duty to arbitrate a dispute unless, by clear language, he has agreed to do so. (Matter of Lehman v. Ostrovsky, 264 N. Y. 130; Schafran & Finkel, Inc., v. Lowenstein & Sons, 280 N. Y. 164; Matter of Kelley, 240 N. Y. 74; Matter of Huxley, 294 N. Y. 146; Matter of Tanenbaum Textile Co. v. Schlanger, 287 N. Y. 400; Matter of Priore, 204 App. Div. 332; Matter of Amsterdam Dispatch, Inc., v. Devery, 254 App. Div. 233, 278 N. Y. 688; Matter of Eager Constr. Corp. v. Ward Foundation Corp., 255 App. Div. 291) Matter of General Silk Importing Co., 200 App. Div. 786, 234 N. Y. 513; Dodds v. Hakes, 114 N. Y. 260; Matter of Metro Plan, Inc., v. Miscione, 257 App. Div. 652; Matter of International Assn, of Machinists [Cutler-Hammer, Inc.], 271 App. Div. 917, 297 N. Y. 519.) II. Where one of the parties objects to the jurisdiction of the arbitrator and does not execute a submission in writing, the arbitrator has lost jurisdiction of the controversy and cannot act thereon. (People ex rel. Union Ins. Co. v. Nash, 111 N. Y. 310; Finucane Co. v. Board of Educ. of City of Rochester, 190 N. Y. 76; Matter of Morris White Fashions [Susquehanna Mills], 295 N. Y. 450; Matter of Hesslein & Co. v. Greenfield, 281 N. Y. 26; Finsilver, Still & Moss v. Goldberg, Maas & Co., 253 N. Y. 382; Matter of Buitoni Products v. Nappi, 275 App. Div. 215; Matter of Bullard v. Grace Co., 240 N. Y. 388.)
   Bromley, J.

The Appellate Division has reversed appellant’s judgment for damages, rendered in confirmation of an arbitratian award, upon the ground that the parties’ agreement to arbitrate did not afford the arbitrator power to assess damages.

Prior to November, 1945, respondents, Sklar and Shampaner, were employed by Utility Laundry Service, Inc., as salesmen and drivers. Each of their individual employment contracts contained a covenant binding the employee, during one year after termination of his employment, to refrain from soliciting any customer of the employer whose name had been learned through the employment. Each employee also deposited $200 with the laundry company and authorized the employer “ to deduct from the moneys so paid over such sum or sums as shall be necessary to fully reimburse said ‘ Company ’ for any damage or loss sustained by it occasioned by the ‘ Employee In respect of that remedy each agreement continued : — the remedy provided for by this paragraph shall not be construed as an exclusive remedy or waiver of the right of the Company ’ to apply to any court of competent jurisdiction for injunctive relief or otherwise, it being the intention of the parties hereto that the aforesaid provision and any remedy afforded by application to any court of competent jurisdiction for relief by way of injunction shall be independent remedies and that the denying or granting of either thereof upon application therefor, shall not prejudice or affect the other remedy or right.” Neither contract contains any reference to arbitration.

In November, 1945, the collective bargaining representative of the drivers entered an agreement with Utility covering their employment. All individual contracts with the employees were to remain “ in full force * * * except as to such provisions thereof as are inconsistent with the specific provisions of this agreement ”. The collective contract contains provision for appointment of an “ Impartial Chairman ”, and for arbitration before him of “ any and all matters in dispute between the parties hereto arising out of this agreement ”. Another provision of that contract reads as follows: ‘ ‘ The Impartial Chairman shall have jurisdiction to hear and determine (1) complaints by drivers of discriminatory treatment by the Employer resulting in an impairment of the drivers’ earnings; and (2) complaints by the Employer of breaches by drivers of the negative covenants of their individual agreements with the Employer. Such individual agreements shall be deemed modified accordingly.” (Emphasis supplied.)

The collective agreement also provides for a grievance procedure, whereby “ complaints ” are to be taken up first by the shop chairman and a representative of the employer. Upon their failure to adjust a “ complaint ”, a union representative is to discuss the matter with the employer, and continued failure to reach agreement shall cause the complaint to be referred to the impartial chairman. The precise character of such complaints is not defined.

Sklar and Shampaner left the employ of Utility on August 29, 1947, to establish a laundry business of their own, and later were accused by Utility of soliciting customers in violation of their covenants. In an arbitration proceeding subsequently held under the collective agreement both ex-employees conceded the unlawful solicitation and objected to determination of the damages suffered by Utility. Shampaner countered with a claim that Utility owed him his $200 deposit and $100 in accrued wages. The arbitrator found that Sklar and Shampaner had breached their covenants and thereby caused Utility to suffer a loss of business in the amount of $325 per week. His award enjoined further solicitation for one year from August 29,1947, ordered respondents to pay Utility $2,700 in damages, and denied Shampaner recovery of the $300. After the injunctive provision had expired the award was confirmed at Special Term, and a judgment entered for Utility in the amount of $2,700. Shampaner did not then challenge the denial of his counterclaim. That judgment has been vacated, after modification of the order of confirmation so as to strike therefrom all reference to damages, upon the ground that the issue was not within the scope of the parties’ agreement to arbitrate.

An agreement to arbitrate any and all controversies ” arising under a contract will be construed as affording authority to assess the damages against the party in default ”. (Matter of Marchant v. Mead-Morrison Mfg. Co., 252 N. Y. 284, 298, 299.) The issue must turn upon the intent of the parties as expressed in their agreement, and the general submission of “ ‘ any dispute ’ ” has been held to confer power to award damages (Matter of General Footwear Co. v. Lawrence Leather Co., 252 N. Y. 577).

Respondents had bound themselves, through the collective agreement, to submit any “ complaints ” concerning their covenants to the impartial chairman. No restriction of his authority can be inferred from that language. The provision stands by itself, unaffected by the section governing “ disputes ” between employer and union, or by the fact that a grievance procedure was established for complaints arising during the period of employment. Nor can we say that an award of damages would conflict with an implied limitation of the drivers’ liability on this head to the $200 deposited under their individual contracts. That remedy was “ not to be construed as exclusive ”, and the individual contracts were modified expressly by the arbitration agreement. Under the latter contract the award of damages was proper.

The judgment of the Appellate Division should be reversed, and that of Special Term affirmed, with costs in this court and in the Appellate Division.

Conway, J.

(dissenting). I am unable to agree with the opinion for reversal. It is quite clear, and the opinion is not to the contrary, that the respondent salesmen and drivers were bound by the negative covenants in the individual employment contracts and had deposited with the appellant laundry company $200 with authorization to the company “ to deduct from the moneys so paid over such sum or sums as shall be necessary to fully reimburse said * Company ’ for any damage or loss sustained by it occasioned by the Employee ’.” (Emphasis supplied.) That was to be the total of the damage possible, for the damage was to be deducted from that sum. That was to permit the employer to catch up with the derelictions of the employee and, if the employer then saw fit, to apply to the court for an injunction. That was the alternative remedy provided in the contract. It was specifically provided that the deduction was not to be an exclusive remedy, but that there was to be an additional independent remedy by way of injunction and that neither of those two alternative remedies was to be exclusive. The individual employment contracts did not provide for arbitration.

Then in November, 1945, a collective bargaining representative of the drivers entered into an agreement with the appellant company covering the employment of respondents. It was specifically provided that all the individual employee contracts were to remain in “ full force * * * except as to such provisions thereof as are inconsistent with the specific provisions of this agreement ”. Then followed the provision for the appointment of an “ Impartial Chairman ” and for arbitration before him of any disputed matters arising out of the collective bargaining agreement.

Then there is the provision of which we must construe the meaning. Insofar as material it reads: The Impartial Chairman shall have jurisdiction to hear and determine * * * (2) complaints by the Employer of breaches by drivers of the negative covenants of their individual agreements with the Employer. Such individual agreements shall he deemed modified accordingly.” (Emphasis supplied.)

"What that provision was intended to accomplish was to insert in the individual employment contracts the right of the employer to submit to the impartial chairman 6 ‘ breaches by drivers of the negative covenants of their individual agreements with the Employer. ’ ’ It must be remembered that the individual contracts were to remain in “ full force ” except insofar as their provisions were inconsistent with “ the specific provisions of this agreement ”. The provision quoted was a specific provision and to that degree only were the individual agreements modified. It was never intended, and the language is not capable of such construction, that by that provision employees who had deposited $200 each to “ fully reimburse ” their employer for breach of their agreements should find themselves obligated to pay damages, as in this case, of $2,700. The amount of damages recoverable under the individual contracts was not enlarged because under the collective agreement the dispute over such damages might be submitted to an impartial chairman rather than to a court. No one will argue that the employer could have obtained more than the $200 deposit under each individual contract. Where there was modification of the individual contracts by a provision as to an additional forum to which the employer might turn, the measure of damages specifically provided by the parties was not thereby altered or increased.

The order should be affirmed, with costs.

Loughran, Ch. J., Lewis, Desmond, Dye and Fuld, JJ., concur with Bromley, J.; Conway, J., dissents in opinion.

Judgment accordingly.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of the Arbitration between General Electric Company, Respondent, and United Electrical Radio and Machine Workers of America, C.I.O., Appellant.
    Argued November 28, 1949;
    decided December 29, 1949.

      Arthur Kinoy and David Scribner for appellant.
    • I. Special Term was correct in deciding that the issue directed to be arbitrated is clearly arbitrable under the agreement between the parties. (Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261; Davis v. Rochester Can Co., 124 Misc. 123; Matter of Wenger & Co. v. Propper Silk Hosiery Mills, 239 N. Y. 199; Matter of Lipman [Haeuser Shellac Co.], 263 App. Div. 880, 289 N. Y. IQ; Matter of Kahn [Nat. City Bank], 284 N. Y. 515; Matter of Frankie [Petzold, Ltd. Fur Dyeing Corp.], 180 Misc. 88; Matter of Aqua Mfg. Co. [Warshow & Sons], 179 Misc. 949; Reader Mail, Inc., v. Fishko, N. Y. L. J., Sept. 28, 1943, 266 App. Div. 962, 291 N. Y. 752; Matter of Local 474, Nat. Food Chain Store Employees [Safeway Stores], 79 N. Y. S. 2d 493, 274 App. Div. 779; Matter of MacLaren [Phelps-Dodge Copper Products Corp.], 70 N. Y. S. 2d 330, 272 App. Div. 880.) II. Special Term was correct in deciding that the settlement of economic issues does not bar an arbitration as to the interpretation of the contract. III. Special Term was correct in deciding that nothing in prior negotiations regarding the pension plan bars the arbitrability of this dispute. (Matter of Local 474, Nat. Food Chain Store Employees [Safeway Stores], 79 N. Y. S. 2d 493, 274 App. Div. 779.)

      J. Edward Lumbard, Jr., Granville Whittlesey, Jr., William J. Barron and Paul J. Quinn for respondent.
    I. It is for the court to determine whether there is a bona fide dispute as to the meaning or application of the discrimination provision of the contract. (Matter of International Assn, of Machinists [Cutler-Hammer, Inc.], 271 App. Div. 917, 297 N. Y. 519.) II. Since all employees receive pension credit on exactly the same basis, there can be no discrimination and no bona fide claim of discrimination. (Inland Steel Co. v. National Labor Relations Bd., 170 F. 2d 247, 336 U. S. 960.)
   Per Curiam.

A collective bargaining agreement between the union and the company provides for arbitration of disputes over the application or interpretation of any of its provisions. The contract also contains the usual prohibition of company discrimination against an employee because of union activity. Under another collective agreement the company pays each employee who serves as a union representative in adjusting grievances or negotiating with management for a maximum of eight hours per week. For all time spent upon union activity beyond that maximum the union pays the employee at his normal rate. In 1946, the company voluntarily established an employee’s pension plan whereby each employee receives pension credits based upon the time for which he is paid by the company. The collective agreement is silent on the subject of pensions, and the union has failed by negotiation to induce the company to make any commitment in that respect. The union now asserts that it is entitled to arbitrate its claim that the company is violating the antidiscrimination provision of the collective bargaining agreement by failure to afford pension credits for time spent in union activities beyond those hours for which the company has agreed to pay.

If, under the unambiguous terms of an agreement calling for arbitration, there has been no default, the court may not make an order compelling a party to proceed to arbitration (Matter of International Assn, of Machinists [Cutler-Hammer, Inc.], 271 App. Div. 917, affd. 297 N. Y. 519). Whether or not a bona fide dispute exists is a question of law (Matter of Wenger & Co. v. Propper Silk Hosiery Mills, 239 N. Y. 199, 202-203). If there is no real ground of claim, the court may refuse to allow arbitration, although the alleged dispute may fall within the literal language of the arbitration agreement. Such is the situation here. The antidiscrimination clause of the collective bargaining agreement cannot be invoked, in the circumstances of this case, to compel a change in the second collective agreement. Neither compensation nor pension credits are given by the company for time spent in union activity beyond the maximum number of hours per week for which the company has agreed to pay. To do so would be to discriminate in favor of the union representatives. The company has no such obligation. The pension plan is administered on the basis of compensation paid to all of its employees. There is no possible basis for a charge of discrimination, and by that token, no possible ground for arbitration.

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

Lottghran, Oh. J., Lewis, Conway, Desmond, Dye, Fuld and Bromley, JJ., concur.

Order affirmed.


author: Fuld, J.

text:
    In the Matter of the City of New York, Respondent, Relative to Acquiring Title to Real Property Required for the Brooklyn-Queens Connecting Highway and Parks and Park Additions in the Borough of Brooklyn, City of New York. New York Dock Company, Appellant. New York Dock Company, Respondent, v. City of New York, Appellant.
    Argued November 29, 1949;
    decided December 29, 1949.

      Martin A. Schenck, Kenneth W. Greenawalt, Edwin Guest and Philip 8. Agar for appellant in proceeding.
    I. The court erred as a matter of law in holding that the city was free from liability to New York Dock Company, that the elevated roadway constituted a street use, and that there had been no taking of easements. (United States v. Cress, 243 U. S. 316; Story v. New York Elevated R. R. Co., 90 N. Y. 122; Matter of City of New York [East Div. Drive], 264 App. Div. 555, 273 App. Div. 884, 298 N. Y. 843; Muhlker v. New York & Harlem R. R. Co., 197 U. S. 544.) II. The taking by the city of claimant’s easements of light, air and access without compensation violates claimant’s rights under the contract clause of the United States Constitution and the Fourteenth Amendment thereto. (Kane v. New York Elevated R. R. Co., 125 N. Y. 164.)

      John P. McGrath, Corporation Counsel (Harry E. O’Donnell, Beuben Levy, Benjamin Offner and Bernard H. Friedman of counsel), for respondent in proceeding.
    I. The evidence amply supports the trial court’s finding that the highway improvement will not damage appellant’s property. (Matter of City of New York, 190 N. Y. 350; Matter of City of New York [Circumferential Parkway], 265 App. Div. 968, 290 N. Y. 929; Matter of City of New York [Upper N. Y. Bay], 219 App. Div. 382, 246 N. Y. 1; Licht v. State of New York, 277 N. Y. 216.) II. The Brooklyn-Queens Connecting Highway is being constructed in part in the bed of Furman Street and in part on newly acquired property to the east, no part of which newly acquired property belonged to appellant. This highway is a public highway, and therefore a permissible street use. Accordingly, any impairment of appellant’s property (which abuts on the west side of Furman Street) resulting from the construction and use of the highway is damnum absque injuria. (Story v. New York Elevated R. R. Co., 90 N. Y. 122; Lahr v. Metropolitan Elevated Ry. Co., 104 N. Y. 268; Pappenheim v. Metropolitan Elevated Ry. Co., 128 N. Y. 436; Bohm v. Metropolitan Elevated Ry. Co., 129 N. Y. 576; Sauer v. City of New York, 180 N. Y. 27, 206 U. S. 536.)

      John P. McGrath, Corporation Counsel (Harry E. O’Donnell, Beuben Levy, Benjamin Offner and Bernard II. Friedman of counsel), for appellant in action.
    I. Respondent’s cause of action rests on allegations that the Brooklyn-Queens Connecting Highway, constructed in the bed of Furman Street, a legally opened public street, is not a permissible street use. Inasmuch as the highway is a street use as a matter of law, the complaint is legally insufficient. (Story v. New York Elevated R. R. Co., 90 N. Y. 122; Lahr v. Metropolitan Elevated Ry. Co., 104 N. Y. 268; Pappenheim v. Metropolitan Elevated Ry. Co., 128 N. Y. 436; Bohm v. Metropolitan Elevated Ry. Co., 129 N. Y. 576; Sauer v. City of New York, 180 N. Y. 27, 206 U. S. 536; City of Buffalo v. New York Central R. R. Co., 125 Misc. 801, 218 App. Div. 810; Park & Sons Co. v. National Druggists’ Assn., 175 N. Y. 1.) II. Every issue raised in the instant complaint was proffered by respondent to the condemnation court and decided on the merits by that court in a proceeding brought by the city for the purpose of carrying out the Brooklyn-Queens Connecting Highway improvement. The final decree in the condemnation proceeding is therefore determinative of the issues raised in the instant action and is accordingly a complete bar to such action. (Matter of City of New York [Ely Ave.], 217 N. Y. 45; Matter of City of New York [New St.], 215 N. Y. 109; Matter of City of New York [Northern Blvd.], 281 N. Y. 48; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Hellstern v. Hellstern, 279 N. Y. 327; Slote v. Cascade Holding Corp., 276 N. Y. 239; Furman v. Furman, 178 Misc. 582, 262 App. Div. 512, 287 N. Y. 772.)

      Kenneth W. Greenmvalt, Martin A. Schenck and Philip S. Agar for respondent in action.
    I. The complaint states a cause of action. The courts below properly denied defendant’s motion to dismiss for insufficiency. (Locke v. Pembroke, 280 N. Y. 430; Scholen v. Guaranty Trust Co., 288 N. Y. 249; Matter of City of New York [East Riv. Drive], 264 App. Div. 555, 273 App. Div. 884, 298 N. Y. 843.) II. The condemnation order of dismissal is not res judicata herein. The courts below properly denied defendant’s motion to dismiss on that ground. (Sielcken-Schwarz v. American Factors, Ltd., 265 N. Y. 239.)
   Fuld, J.

The City of New York in 1946 instituted condemnation proceedings in the Supreme Court of the State of New York, Kings County, seeking to acquire real property on the east side of Furman Street in Brooklyn. This property was needed for the construction of a link in the Brooklyn-Queens Connecting Highway which, at this point, is elevated and cantilevered over the bed of Furman Street. The New York Dock Company, owner of almost all of the land between the west side of Furman Street and the East River, filed a claim for damages in those proceedings, asserting that construction of the structure would constitute an “ interference ” with “ easements of light, air, and access ” appurtenant to its land.

The court entertained the Dock Company’s claim, took extensive testimony, which fills four volumes of over 1,800 printed pages, viewed the property and received a large number of exhibits. After all the proof had been heard and weighed, the claim was dismissed on the merits upon two grounds: first, the improvements were for street purposes and the city had the right to use the bed of Furman Street ” for such purposes “ without incurring any liability to the New York Dock Com-pony ” and, second, in any event, “ the improvement * * * not only does not damage claimant’s properties hut will confer a distinct benefit.”

There is more than ample evidence in the record before us to support the court’s findings, and, since the Appellate Division has upheld them, they are decisive, and an affirmance in this court necessarily follows.

In view of that disposition, and since the Supreme Court had unquestioned jurisdiction to entertain the condemnation proceedings and to dispose of the Dock Company’s claim upon the merits (see, e.g., Matter of City of New York [East Riv. Drive], 298 N. Y. 843, affg. 273 App. Div. 884, 264 App. Div. 555; cf. Sauer v. City of New York, 180 N. Y. 27, 30-31, affid. 206 U. S. 536; Matter of Board of R. T. R. R. Comrs., 197 N. Y. 80, 99), the decree in condemnation is conclusive upon all points at issue between the parties. Consequently, the equity suit which the Dock Company later instituted for an injunction against the construction or use of the roadways above Furman Street or, in the alternative, for money damages, was barred under settled principles of res judicata. (See, e.g., Slote v. Cascade Holding Corp., 276 N. Y. 239, 244-245; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304, 307; see, also, 2 Lewis on Eminent Domain [1909], § 893.) The motion by the city to dismiss the complaint upon that ground should therefore have been granted.

The order of the Appellate Division in the condemnation proceeding should be affirmed, with costs in this court.

The orders in the equity suit should be reversed and the complaint dismissed, with costs to the city in all courts, the first question certified answered in the negative and the second question certified not answered.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye and Bromley, JJ., concur.

In proceeding: order affirmed.

In action: orders reversed, etc.


text:
    In the Matter of the Claim of Leah Kleid, Respondent, against Carr Brothers et al., Appellants. Workmen’s Compensation Board, Respondent.
    Argued December 1, 1949;
    decided December 29, 1949.

      Philip J. Caputo for appellants.
    I. There is no evidence that decedent at the time of his death was performing some duty for which he was employed or which was a natural incident thereto. (Matter of Lorchitsky v. Gotham Folding Box Co., 230 N. Y. 8.) II. The board erroneously applied the presumption under section 21 of the Workmen’s Compensation Law that an accident arose out of and in the course of employment. (Matter of Daus v. Gunderman & Sons, 283 N. Y. 459; Matter of Eldridge v. Endicott, Johnson & Co., 228 N. Y. 21; Markowitz v. National Headwear Co., 210 N. Y. S. 673.) IH. Decedent did not sustain an accidental injury arising out of and in the course of his employment.

      Nathaniel L. Goldstein, Attorney-General (Gilbert M. Landy, Wendell P. Brown and Boy Wiedersum of counsel), for Workmen’s Compensation Board, respondent.
    Ample evidence supported the finding of the Workmen’s Compensation Board that decedent died as a result of accidental injuries which arose out of and in the course of employment. (Matter of Bollard v. Engel, 278 N. Y. 463; Matter of Miles v. Gibbs & Hill, Inc., 250 N. Y. 590; Matter of Franck v. Allen, 270 App. Div. 960; Matter of Norris v. New York Central R. R. Co., 246 N. Y. 307; Matter of Smith v. Osterheld & Son, 189 App. Div. 384, 229 N. Y. 525; Matter of Greco v. Curtiss-Wright Corp., 269 App. Div. 915; Matter of Tushinsky v. National Broadcasting Co., 265 App. Div. 301, 292 N. Y. 595; Matter of Hoffman v. New York Central R. R. Co., 290 N. Y. 277; Matter of Welz v. Market Service, Inc., 270 App. Div. 15, 296 N. Y. 640; Matter of Lorchitsky v. Gotham Folding Box Co., 230 N. Y. 8; Matter of Eldridge v. Endicott, Johnson & Co., 228 N. Y. 21; Matter of Bans v. Gunderman & Sons, 283 N. Y. 459.)
   Per Curiam.

Since this unwitnessed accident took place during working hours in a place where Kleid’s work commonly took him, the section 21 presumption justified the board’s finding that the accident arose out of and in the course of employment, even though Kleid’s presence at the exact spot was unexplained (Matter of Department of Taxation & Finance v. Cohen, 298 N. Y. 825; Matter of Welz v. Markel Service, 296 N. Y. 640; Matter of Mayer v. Faber Pencil Co., 274 App. Div. 1079, motion for leave to appeal denied 298 N. Y. 935; Matter of Boehm v. Sokol Hall Holding Corp., 274 App. Div. 954, motion for leave to appeal denied 298 N. Y. 931; Matter of Wolmetz v. Wall, 272 App. Div. 982, motion for leave to appeal denied 297 N. Y. 1042).

Furthermore, employer-appellant’s first report of injury, filed with the board, contained an admission that Kleid was working at his regular occupation when injured, which admission was competent evidence of that fact (Matter of Bollard v. Engel, 278 N. Y. 463).

The order should be affirmed, with costs.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Bromley, JJ., concur.

Order affirmed.


author: Desmond, J. Conway, J. Bromley, J.

text:
    The People of the State of New York, Respondent, v. Carl Jacob Kunz, Appellant.
    Argued October 5, 1949;
    decided December 29, 1949.

      Osmond K. Fraenkel and Mercedes Hoffman for appellant.
    I. Section 435-7.0 of the Administrative Code of the City of New York is unconstitutional on its face since it prohibits the use of the streets altogether to all persons who would preach, exhort or expound on religious or anti-religious topics who do not fit into certain specified categories. (Jamison v. Texas, 318 U. S. 413; Schneider v. State, 308 U. S. 147.) II.. The section sets up no proper standards for the exercise of official discretion. (Lovell v. City of Griffin, 303 U. S. 444; Saia v. New York, 334 U. S. 558; Hague v. C. I. O., 307 U. S. 496.) III. The section requires and enables the police commissioner to determine as a censor who may address the public on the streets. (Cantwell v. Connecticut, 310 U. S. 296; Largent v. Texas, 318 U. S. 418; Jamison v. Texas, 318 U. S. 413; Thomas v. Collins, 323 U. S. 516; Lovell v. City of Griffin, 303 U. S. 444; Schneider v. State, 308 U. S. 147; Hague v. C. I. O., 307 U. S. 496; Saia v. New York, 334 U. S. 558.) IV. The section infringes upon freedom of speech and religion by the use of broad and vague prohibitions upon the content of a speaker’s remarks. (Cantwell v. Connecticut, 310 U. S. 296; Thomas v. Collins, 323 U. S. 516; Terminiello v. Chicago, 337 U. S. 1.) V. The section requires previous registration and identification as a condition to exercising the right to make a public speech. (Thomas v. Collins, 323 U. S. 516.) VI. The unconstitutional features of the section apparent on its face are confirmed and emphasized by the rules and regulations and official practice and procedure of the police department and the police commissioner. (People v. Nahman, 298 N. Y. 95; Cox v. New Hampshire, 312 U. S. 569.) VII. The section as applied to defendant is unconstitutional and an abridgement of his freedom of speech and religion. (Saia v. New York, 334 U. S. 558; Murdock v. Pennsylvania, 319 U. S. 105; Sellers v. Johnson, 163 F. 2d 877, 332 U. S. 851; West Virginia State Bd. of Educ. v. Barnette, 319 U. S. 624.) VIII. The unconstitutional features of the section are not cured by the possibility of judicial review of administrative acts. IX. People v. Smith (263 N. Y. 255), relied on by the court below, does not represent the law at the present time and should not be followed in this case.

      John P. McGrath, Corporation Counsel (Joseph J. Lucchi and Seymour B. Quel of counsel), for respondent.
    I. A virtually identical statute was upheld in People v. Smith (263 N. Y. 255), which has not been overruled. II. Ordinances similar to section 435-7.0 have been found valid by the Court of Appeals and by the United States Supreme Court. (Cox v. New Hampshire, 312 U. S. 569; Prince v. Massachusetts, 321 U. S. 158; Chaplinsky v. New Hampshire, 315 U. S. 568; People v. Nahman, 298 N. Y. 95; People v. Hass, 299 N. Y. 190; People v. Lewis, 295 N. Y. 42; Kovacs v. Cooper, 336 U. S. 77.)
   Desmond, J.

Defendant, a clergyman, was convicted and fined $10, after a trial before a New York City Magistrate, for violating section 435-7.0 of that City’s Administrative Code. The material parts of that statute (which is set out in full at the beginning of Judge Conway’s opinion in this case) may be summarized as follows:

1. It shall be unlawful in any New York City street, for anyone to collect a crowd for public worship or exhortation, or to ridicule or denounce any religious belief, or to preach atheism or agnosticism;

2. However, any clergyman or authorized representative of any religious group, or of any atheistic or agnostic society, may preach or expound his cause, in any public place specified in a permit which may be granted him by the police commissioner;

3. Any violation is punishable by a fine of not more than $25, or thirty days’ imprisonment, or both.

Appellant insists that this law is unconstitutional on its face, for a number of reasons, principally because, as defendant thinks, it allows the police commissioner, uncontrolled by any proper standards, ‘1 to determine as a censor who may address the public on the streets ”, and because it prohibits any ridicule or denunciation of religion by anyone. We do not think that the statute, as administratively construed by the New York City Police Department and as applied here, is invalid for either of those asserted reasons.

Although this section says in its first paragraph that a street-preaching permit “ may be granted and issued ” by the police commissioner, to any of the persons listed, this record shows that such a permit is granted to any such person, on mere application therefor. Each such permit is for a calendar year and specifies no time or place for speaking, but, on the face of the permit there is printed a police department regulation requiring the permittee to notify the commander of the police precinct concerned, of the proposed time and place of any street meeting, whereupon The Commanding Officer will approve of the location providing it does not interfere with Traffic or other local conditions.” Beading those regulations into the ordinance, as we can and should (see People v. Nahman, 298 N. Y. 95, and People v. Hass, 299 N. Y. 190, appeal dismissed 338 U. S. 803, rehearing denied 338 U. S. 881), we construe the ordinance as requiring the commissioner to give an annual permit for street preaching, to anyone who, like defendant, is a minister of religion, and as allowing police control of meetings only to the extent of requiring advance notice to a police captain who must approve of the location, unless traffic conditions there make it inexpedient to use that site for such purposes. Thus read, the law is no more than a necessary and reasonable regulation of the use, for public meetings, of the crowded streets of the world’s greatest city, “ general and non-discriminatory legislation [regulating] the times, the places, and the manner of ” holding street meetings (Cantwell v. Connecticut, 310 U. S. 296, 304; see Cox v. New Hampshire, 312 U. S. 569). The possible unconstitutionality of this permit procedure, as curtailing the rights of those who are not clergymen, like defendant, is not for defendant to argue or for us to consider in this case (O’Kane v. State of New Torh, 283 N. Y. 439, 449). Thus, that part of the statute which deals with permits is clearly not unconstitutional. The other part, forbidding the denunciation or ridicule of religion, will be dealt with herein after we have summarized the additional facts of this case.

In 1946, defendant applied to the commissioner for, and received, a permit for street preaching. The meetings he held during that year brought to the commissioner’s desk a flood of complaints from citizens who charged that defendant had, in violent words, denounced two great religions, each of which has very large membership in New York City. The commissioner thereupon, on notice to defendant, scheduled a hearing on such charges, before a deputy commissioner. A two-day hearing followed, at which defendant and eighteen complainants appeared and gave testimony. The complaints were amply proven, and the commissioner wrote defendant that his permit was revoked, because he had “ contrary to the provisions of law under which the permit was issued, ridiculed and denounced religion ”. Later defendant, successively, applied for permits for 1947 and 1948, but in each instance he was notified of disapproval. On September 11, 1948, without a permit, he held a religious meeting at Columbus Circle, in Manhattan, and again delivered himself of violent diatribes against the same religions he had castigated before. He was arrested and charged with street preaching without a permit. On the trial he admitted that, while there was no trouble at his exhortations when a police officer was present, trouble there was when the police were absent.

While the ordinance does not specifically mention revocation of licenses, for cause, we think such power is fairly implied, and, in any case, the alleged illegality of a revocation is reviewable by appropriate civil proceedings in the nature of certiorari (Civ. Prac. Act, art. 78). Since the licensing law was valid, one who preached without a license was guilty of a violation, and any impropriety of the revocation of a former license was no defense. We think, too, that once the 1946 permit was revoked for good reasons, the commissioner was not bound to issue further permits. The commissioner had no reason to assume, and no promise was made, that defendant wanted a new permit for any uses different from the disorderly ones he had been guilty of before. The police regulations, printed on the permit and mentioned above, say that “ all meetings must be conducted in an orderly manner ’ ’ — surely a modest requirement — and defendant had shown that his utterances were of the kind that usually do, and in defendant’s case, did, result in disorder, except when the police provided protection. As the Magistrate pointed out at the close of this trial: “ in á large city like this City of New York, bearing in mind that religion is a very tender emotion amongst most human oeings, that this statute is not only constitutional but desirable, extremely desirable, that for the protection of the people who are going to do the speaking themselves it is necessary in a big city like ours where people become so emotional and might very well inflict serious bodily harm.” Actually, what defendant here insists on as his constitutional right is not only a permit irrevocable for any cause, but the regular attendance at his meetings of a cordon of policemen to curb the wrath of those whose deepest feelings he wantonly wounds. He claims a constitutional right to incite riots, and a constitutional right to the services of policemen to quell those riots. It seems to us that if a community can bar from its streets all raucously noisy advertising devices (Kovacs v. Cooper, 336 U. S. 77) it may stop defendant from starting religious wars on New York’s teeming thoroughfares.

It may be that the first sentence of this ordinance, making it unlawful for anyone “ to ridicule or denounce any form of religious belief, service or reverence ”, if read off by itself, and without relation to the rest of the ordinance, or of these facts, might be thought unconstitutional. But we have no such question here. This man got his permit with no questions asked as to what he would preach. But he used that permit to spew out insults and epithets; public order and decency required that he be stopped (Chaplinsky v. New Hampshire, 315 U. S. 568, 572), and after due hearing and full proof, he was stopped. As the Supreme Court said in the Chaplinshy case (supra) no constitutional problem is raised by the prevention and punishment of 11 insulting or 1 fighting ’ words — those which by their very utterance inflict injury or tend to incite an immediate breach of the peace ” (315 U. S. at p. 572). It is the duty of the police to end such disorder.

In arriving at these conclusions we have not relied on People v. Smith (263 N. Y. 255, appeal dismissed 292 U. S. 606) which held valid and constitutional this very statute, but have considered the question anew, on the facts of this particular case. The judgment should be affirmed.

Conway, J.

(dissenting). Defendant has been convicted of unlawfully conducting a religious meeting without a permit in violation of section 435-7.0 of chapter 18 of the Administrative Code of the City of New York. The conviction has been affirmed by the Appellate Part of the Court of Special Sessions and the case is here by permission of a Judge of this court.

Section 435-7.0 reads, in full, as follows:

a. Public worship.— It shall be unlawful for any person to be concerned or instrumental in collecting or promoting any assemblage of persons for public worship or exhortation,.or to ridicule or denounce any form of religious belief, service or reverence, or to preach or expound atheism or agnosticism, or under any pretense therefor, in any street. A clergyman or minister of any denomination, however, or any person responsible to or regularly associated with any church or incorporated missionary society, or any lay-preacher, or lay-reader may conduct religious services, or any authorized representative of a duly incorporated organization devoted to the advancement of the principles of atheism or agnosticism may preach or expound such cause, in any public place or places specified in a permit therefor which may be granted and issued by the police commissioner. This section shall not be construed to prevent any congregation of the Baptist denomination from assembling in a proper place for the purpose of performing the rites of baptism, according to the ceremonies of that church.

“ b. Interference with street services.— It shall be unlawful for any person to disturb, molest or interrupt any clergyman, minister, missionary, lay-preacher or lay-reader, who shall be conducting religious services by authority of a permit, issued hereunder, or any minister or people who shall be performing the rite of baptism as permitted herein, nor shall any person commit any riot or disorder in any such assembly.

c. Violations.— Any person who shall violate any provision of this section, upon conviction thereof, shall be punished by a fine of not more than twenty-five dollars, or imprisonment for thirty days, or both.”

The police commissioner, in compliance with the second sentence of subdivision a {supra) has adopted certain implementing administrative procedure. Applications for a permit are made at the division of licenses of the police department. Permits are issued for a year, expiring on December 31st of the year of issuance. No fee is charged for the permit. The questions on the application blank for the permit are designed to elicit information as to whether the applicant is one of tho persons specified as eligible for a permit. No inquiry is made in the application blank as to the proposed time and place of the religious meetings to be held by the applicant, but the pertinent regulations of the police department, which are printed on the permit itself, provide in part that the holder of the permit will be required to notify the commanding officer of the precinct of the time and location of any street meeting he or she intends to hold, and that the commanding officer “ will approve ” of the location provided it does not interfere with traffic or other local conditions.

Defendant describes himself as a preacher who goes out on the highways and byways and preaches the word of God. He speaks under the auspices of Outdoor Gospel Work ” of which he is the director. He has had no formal training beyond grammar school — Just the Word ”— but was ordained to the work of the Gospel Ministry ” in 1946 by a “ counsel of pastors ” in Brooklyn and has been preaching for about six years.

In 1946, defendant applied for and received a public worship permit. The police department soon received numerous complaints that he had ridiculed and denounced certain religious beliefs while conducting his meetings. Hearings at which eighteen complainants appeared and testified were held by a deputy police commissioner on two days in October and November of 1946. The deputy police commissioner determined that the complaints were substantiated and revoked defendant’s permit. The letter so advising defendant read in part as follows: 61 The complaints, in my opinion, have been fully substantiated. My determination in the matter is that you have, contrary to the provisions of law under which the permit was issued, ridiculed and denounced religion, and I am, therefore, in the exercise of discretion, as provided by law, revoking your permit effective forthwith. ’ ’ Defendant applied for another permit the next year, 1947, and again in 1948. Bach time he received a notice that his application had been Disapproved ”.

On September 11,1948, commencing about 9:00 p.m., defendant conducted a religious meeting at Columbus Circle, between 58th and 59th Streets, in New York City. He was standing on a box or platform addressing a group of approximately twenty people. According to the testimony of the arresting officer and two members of the street audience, a major portion of defendant’s address was devoted to attacks upon the Roman Catholic Church, and upon the Jewish people and Jewish faith. As to the Roman Catholic Church, for instance, he said that it made merchandise out of souls; that it is a religion of the devil. As to the Jewish people and their faith, he said “ All the garbage that didn’t believe in Christ should have been burnt in the incinerators. It’s a shame they all weren’t.”' Before he ascended the platform, another speaker, apparently arranged for by defendant, had been speaking about the Jewish people and when some in the audience objected, the defendant spoke of the latter as “ Christ-killers.” Defendant did not deny the attacks but sought to justify them. There is no evidence of any disorder or breach of the peace in connection with this particular meeting, but defendant testified, generally, that while he had “ no trouble at all ” at his meetings when a police officer was present, he did have trouble in the absence of an officer. About 10:45 p.m., after he had been conducting the meeting for nearly two hours, a police officer approached defendant and asked him for his permit to conduct the meeting. Defendant, of course, did not have one and was served with a summons for violation of the Administrative Code.

At the close of the People’s case in the Magistrate’s Court, counsel for defendant moved to dismiss the complaint on the ground that the statute upon which it was based was unconstitutional on its face as an abridgement of the freedoms of religion and speech guaranteed by the Federal and State Constitutions. At the close of the case, defendant’s counsel renewed the motion on the ground that the statute as applied was unconstitutional.

The First Amendment to the Constitution of the United States guarantees the rights of freedom of speech, press, religion and assembly against abridgement by congressional action, and the due process clause of the Fourteenth Amendment protects those rights against invasion by State or municipal action. (Lovell v. City of Griffin, 303 U. S. 444, 450, and cases there cited.) Beyond that, however, our own State Constitution is explicit in assuring those rights within our borders. (N. Y. Const., art. I, §§ 3, 8, 9.) But freedom of speech, press, religion, and assembly, often denominated our “ civil liberties ”, are not absolute rights to be indiscriminately exercised under all circumstances and under all conditions. Social welfare requires, in certain instances, reasonable regulation of such activities which, unrestrained, would produce calamitous or undesirable results — not only for the locality and public order but also, in the long run, for the individual involved.

Since our streets and public places are traditionally and sometimes the only available forum for the dissemination and propagation of ideas, the widest possible latitude must be permitted thereon for free expression and communication, however unpopular or misguided such ideas may seem to be. Municipalities, however, have a deep and legitimate interest in the manner in which their streets and public places are used. Specifically, municipalities have the power and are charged with the duty of maintaining safety and order upon streets and in public places for the comfort and convenience of the community. It is a matter of common knowledge that “ collecting and promoting ” assemblages of persons by street speakers sometimes occasions altercations and breaches of the peace. Particularly may that be so when the assemblage on the street is for public worship or exhortation. Likewise, it is common knowledge that such assemblages may disrupt traffic, both pedestrian and vehicular, and destroy the primary purpose of the streets as a means of travel and transportation from place to place. These are evils with which the municipality must.cope and which the courts, subject to the constitutional guarantees, must recognize. In dealing with the problem, all branches of government must try to accommodate fairly the twin goals of unlimited freedom of speech, religion and assembly for all and the vigilant protection of the comfort, safety and convenience of all. This problem was well analyzed by Chief Justice Hughes in Cox v. New Hampshire (312 U. S. 569, 574, quoted hereafter at pp. 288-289 of this opinion).

The statute before us is said to be unconstitutional on its face, i.e., that under no circumstances may it be constitutionally applied. That contention is predicated, however, upon certain assumptions as to the question before the court and as to the scope and operation of the statute, which in our view are incorrect. We must first construe and interpret a statute so that its exact meaning may be clear before an attempt is made to determine whether it is violative of the Constitution. In approaching that primary task, we must adopt the basic principle that, when possible, a statute will be construed and interpreted in such manner as to avoid not only a finding of unconstitutionality but also to avoid any serious doubt upon that score. The cogent reason behind that principle is that legislative bodies, no less than the courts, are presumed to be imbued with respect for our constitutional provisions and to be unwilling to destroy a right guaranteed by the Constitution. (People v. Barber, 289 N. Y. 378, 385.) Thus, if there be any possibility that an enactment may be read in such manner as to avoid objections as to its constitutionality, that construction is to be preferred.

Since defendant is concededly within the group of persons specified in the second sentence of subdivision a, and has not been convicted of ridiculing or denouncing any form of religious belief, service or reverence, the sole issue before us, in considering whether the statute is void on its face, is whether that portion, applicable to a person so situated as the defendant, can be constitutionally applied under any circumstances. (Marbury v. Madison, 1 Cranch [U. S.] 137; Rescue Army v. Municipal Court of Los Angeles, 331 U. S. 549, 568 et seq., and cases there cited; Headley v. City of Rochester, 272 N. Y. 197, 204; O’Kane v. State of New York, 283 N. Y. 439, 449.) In deciding that issue we must read the requirements of the statute in the light of administrative procedures set up by the police department to implement it. Thus, we find, it provided that certain persons, of whom defendant is one, may obtain permits from the police commissioner to conduct religious services in any public place or places specified in the permit. The police commissioner obviously sought to lighten the burden of continuous daily or weekly applications for such permits by adopting regulations authorizing the issuance of a blanket permit, effective for the applicant for a year, and requiring the permittee merely to notify the local precinct commander of the time and place of any street meeting he or she might intend to hold. In ultimate effect, the commissioner issues a permit permanently to those persons specified in subdivision a, merely requiring a new application each year as a current administrative measure, thus assuring for himself an up-to-date list of living, practicing individuals who intend to conduct religious services on the public streets. The regulations further provide that said precinct commander will approve ” the location provided it does not interfere with traffic or other local conditions.

Beading the statute and the administrative machinery together, and mindful of the constitutional prohibition against antecedent censorship, we read it to provide that the police commissioner is under a duty to issue the permit as a matter of course upon application by a person eligible therefor. This construction of the statute is warranted hy its terms and obviates constitutional objections.

There is no doubt that the statute was enacted with a twofold purpose. One objective was to lessen the possibility of disorder or breaches of the peace reasonably to be foreseen as a result of unregulated collection of assemblages in the streets for the espousal of, or attacks upon, religion in general or some particular practice or form of religious belief. The second aim was to insure to the general public, -without undue interruption or impairment, the normal use of the streets as a means of travel and transportation.

The first objective is sufficiently satisfied by the permit requirement itself, for, once put on notice that such a meeting will be held, the police may take such precautions as appear necessary. We see no warrant in the statute for the exercise of discretion by the police commissioner as to whether or not a particular applicant for a permit is likely to discuss matters which would have a tendency to provoke dispute and disorder. The statute does not give the commissioner any such express power and, since such discretion would confer upon him a power of antecedent administrative censorship, we certainly should not read it into the statute by construction. To allow the commissioner to refuse a permit whenever, in his discretion, he thought that the applicant might by his utterances provoke disorder or a breach of the peace would undoubtedly be extremely effective in preventing such occurrences, but by the same token such a discretion would make the commissioner a censor over what might and what might not be discussed on the streets of the city. That the socially desirable end of prevention of disorder may not thus be attained by infringement upon the freedom of speech and assemblage is firmly established. (See Hague v. C. I. O., 307 U. S. 496, 514-517; Terminiello v. Chicago, 337 U. S. 1.) Of course, this does not mean that a street speaker may, with impunity, provoke or incite a riot or breach of the peace. Such conduct is properly declared unlawful by our Penal Law (see, e.g., art. 70, “ Disorderly Conduct ”, and art. 188, “ Riots and Unlawful Assemblies ”) and may be punished by appropriate action. The constitutional guarantee requires only that a municipality may not adopt unconstitutional means, i.e., censorship or previous restraint to prevent disorder.

Moreover, in view of the existing permit procedure, the second evident purpose of the ordinance is satisfied by the requirement that a holder of a permit notify the precinct commander of the time and location of any meeting he or she intends to conduct. The commissioner does not purport to make any determination as to the public convenience of the time and place of the proposed meeting in advance of the issuance of the permit. That determination is made only after the permit is granted. Accordingly, the proper construction of the second sentence of subdivision a, and we so read it, is that the commissioner must issue a permit as a matter of course upon application therefor by an eligible person. At that point the commissioner’s power is merely ministerial and not discretionary.

Thus viewed, the permit procedure set up in compliance with the ordinance grants no right of censorship or previous restraint to the commissioner and does not unconstitutionally infringe upon the freedoms of speech, religion and assembly. The permit procedure is substantially identical with that authorized by the park department regulation we unanimously sustained in People v. Nahman (298 N. Y. 95) and People v. Hass (299 N. Y. 190) and the language there used is by analogy appropriate here, substituting the words public streets ” for public parks ”. In the Nahman case (supra) we said (pp. 102-103): The regulation, we repeat, confers no power to suppress the publication of facts or opinions. On the contrary, as we have tried to demonstrate, it is in essence a nondiscriminatory provision which has for its sole objective the safety, comfort and convenience of the people of the city in their appropriate uses of its public parks. To our minds, the regulation — so read — is a reasonable measure of local control which affects civil liberties only in an allowable minor degree.

The Nahman and Hass cases (supra) it should be noted, do not proceed upon the broad theory that the State, or a municipality thereof, has plenary power over the use of its streets and public places and may limit or prohibit, in whole or in part, their use for speeches or meetings. Indeed, those decisions strongly indicate the contrary and, to that extent, would seem to qualify our previous decision in People v. Smith (263 N. Y. 255). In the Smith case (supra) we said in part (p. 257): “ The legislative power might forbid public meetings and speaking in the streets entirely. It may limit the use of the streets to certain purposes.” Such a theory had been previously expressed by such eminent authorities as Justice Holmes in Commonwealth v. Davis (162 Mass. 510) and Justice White, on the affirmance by the Supreme Court, sub nomine Davis v. Massachusetts (167 U. S. 43, 48). The “ plenary power ” theory, however, has been specifically repudiated by the Supreme Court in subsequent cases (see Hague v. C. I. O., supra, at p. 515; Jamison v. Texas, 318 U. S. 413,417; De Jonge v. Oregon, 299 U. S. 353, 364) and by the Massachusetts court itself (Commonwealth v. Gilfedder, 321 Mass. 335, 340). Thus, in the Hague case (supra) Justice Roberts stated (p. 515): * * * Wherever the title of streets and parks may rest, they have immemorially been held in trust for the use of the public and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions. Such use of the streets and public places has, from ancient times, been a part of the privileges, immunities, rights, and liberties of citizens. # * *'>> ]3y refusing to place our decisions in the Nahmcm and Hass cases {supra), upon any such broad ground, we have recognized this development.

The permit procedure which implements the second sentence of subdivision a of the ordinance also satisfies the standards of permissible State police power approved by the Supreme Court of the United States. That court has not categorically condemned legislation which requires a permit as a condition to the use of the streets or public places for purposes of discussion, assembly or expression. The court has been careful to acknowledge the direct and legitimate interest of States and municipalities in the preservation of the safety, order and peace of the community. In a series of cases, the Supreme Court has struck down legislation which absolutely prohibits or levies a tax upon persons desiring the use of the streets for the expression or communication of ideas through the medium of handbills or pamphlets or for canvassing. (See Schneider v. State, 308 U. S. 147; Jamison v. Texas, 318 U. S. 413, supra; Murdock v. Pennsylvania, 319 U. S. 105; cf. Lovell v. City of Griffin, 303 U. S. 444, supra.) The court has also declared unconstitutional ordinances which require permits, the issuance of which is left to the undefined and uncontrolled discretion of a local official, for such activities on the public streets as solicitation for religious causes (Cantwell v. Connecticut, 310 U. S. 296), distribution of religious publications (Largent v. Texas, 318 U. S. 418; cf. Lovell v. City of Griffin, supra) or operation of a sound truck. (Saia v. New York, 334 U. S. 558; but cf. Kovacs v. Cooper, 336 U. S. 77.) The court has invalidated an ordinance which required a permit for public assembly on public streets and places, although the ordinance specifically provided that “ said permit shall only be refused for the purpose of preventing riots, disturbances or disorderly assemblage.” (Hague v. C. I. O., 307 U. S. 496, supra.) The court there noted that “ uncontrolled official suppression of the privilege cannot be made a substitute for the duty to maintain order in connection with the exercise of the right.” (P. 516.) The vice of the ordinance in the Hague case was explained by Chief Justice Hughes in Cox v. New Hampshire (312 U. S. 569, 577, supra): “ * * * it did not make comfort or convenience in the use of streets the standard of official action but enabled the local

official absolutely to refuse a permit on his mere opinion that such refusal would prevent ‘ riots, disturbances or disorderly assemblage. ’ ”

Clearly, none of those situations is presented by the permit procedure here involved in view of our construction of the commissioner’s power over issuances of the permits. As we have already indicated, the permit procedure vests no uncontrolled discretion in the commissioner. Instead, he must issue the annual permit as a matter of course upon application therefor by an eligible person. Subsequently, it is true, the precinct commander must determine whether the proposed time and place of the meeting will interfere with traffic or other local conditions. While this power of the precinct commander enables him to exercise a certain restraint upon freedom of speech, the restraint is so small as compared with the obvious social utility and necessity of regulation that it does not violate the constitution. It “ is a reasonable measure of local control which affects civil liberties only in an allowable minor degree.” (People v. Nahman, 298 N. Y. 95, 103, supra.) The existence of and the reason for that State power to impose slight limitations upon civil liberites in such situations was well stated by Chief Justice Hughes in the Coco case (supra). There, the Supreme Court upheld a conviction based upon an ordinance prohibiting an unlicensed parade or procession upon any public street or way. He said in part (p. 574): Civil liberties, as guaranteed by the Constitution, imply the existence of an organized society maintaining public order without which liberty itself would be lost in the excesses of unrestrained abuses. The authority of a municipality to impose regulations in order to assure the safety and convenience of the people in the use of public highways has never been regarded as inconsistent with civil liberties but rather as one of the means of safeguarding the good order upon which they ultimately depend. The control of travel on the streets of cities is the most familiar illustration of this recognition of social need. Where a restriction of the use of highways in that relation is designed to promote the public convenience in the interest of all, it cannot be disregarded by the attempted exercise of some civil right which in other circumstances would be entitled to protection. One would not be justified in ignoring the familiar red traffic light because he thought it his religious duty to disobey the municipal command or sought by that means to direct public attention to an announcement of his opinions. As regulation of the use of the streets for parades and processions is a traditional exercise of control by local government, the question in a particular case is whether that control is exerted so as not to deny or unwarrantedly abridge the right of assembly and the opportunities for the communication of thought and the discussion of public questions immemorially associated with resort to public places.” Finally, it is important to note that the present Supreme Court in October of this year refused to review our decision in People v. Hass (supra), on the ground that it did not present a Federal question, and thus that a permit requirement is not, in and of itself, an unconstitutional procedure.

Nor does the fact that the permit procedure is limited to the collection of assemblages by speakers on topics pertaining to religion and does not apply to topics unrelated to religion render it invalid. The local legislative body, in its wisdom, may determine that street meetings for discussions of matters or religion are fraught with such potentialities of disorder and violence that some regulation is imperative in the interest of public tranquillity. (For instance, here the defendant quite frankly stated that he had no trouble during his discussions if there were an officer beside him, but that he customarily did Avhen an officer was not present.) Such determination results in a classification founded upon reason, and, as such, is not invalid. This point was squarely decided by us in People v. Smith (263 N. Y. 255, supra), where we said, per Pound, Ch. J. (p. 257): “ * * * The passion, rancor and malice sometimes aroused by sectarian religious controversies and attacks on religion seem to justify especial supervision over those who would conduct such meetings on the public streets. That the ordinance does not cover all street meetings is no objection to a reasonable classification. Practical exigencies and common experience may permit the recognition of degrees of harm and the limitation of regulation to classes where the need is deemed to be clearest.” Defendant’s appeal to the Supreme Court in that case was dismissed for want of a substantial Federal question (292 U. S. 606 [1933]), the three cases cited by that court indicating that the reasonableness of the classification was deemed the question sought to be reviewed. Thus, on the point of whether the municipality may constitutionally regulate religious street meetings and not others, the Smith case (supra) is controlling.

"While the relevant portions of the statute and the implementing administrative procedure are not in violation of the Constitution, we think it clear that the application of the permit procedure to this defendant constituted a violation of his right of freedom of speech and assembly. As previously stated, a permit, effective for a year, had been duly issued to defendant in 1946. In the fall of that year, however, the permit was revoked by the police commissioner, in his discretion, on the ground that defendant had ridiculed and denounced religion. Applications by defendant for a permit in 1947 and 1948 were disapproved. Manifestly, the reason for such disapproval was the commissioner’s determination that defendant, if permitted to speak, would again ridicule and denounce religion.

This conduct on the part of the commissioner was not justified in law and amounted to administrative censorship. It was a previous restraint upon defendant’s right to speak. Unlike the application of the permit procedure we approved in the Nahman and Hass cases (supra), the commissioner here utilized the permit procedure to prevent the publication of facts or opinions whatever one may think of them. No such authority is granted to him by the statute itself and, as stated above, it cannot be constitutionally read into it by construction. Assuming that the prohibition against ridiculing or denouncing religion is constitutional, the sole means of enforcement is through a criminal action charging its violation or in a proper case charging disorderly conduct under section 722 of the Penal Law; section 1458 of the New York City Consolidation Act (L. 1882, ch. 410); People v. Galpern (259 N. Y. 279, 282), and People v. Hipple (263 N. Y. 242), (See, also, New York City Charter, § 435.) It cannot be enforced by a trial of the alleged offender before an administrative officer, nor can an administrative finding of guilt thereof be made the basis for a refusal to grant a permit.

Police protection may well be necessary to secure for this defendant his constitutional right to speak freely as an ordained Baptist clergyman. The Constitution does not discriminate between those whose ideas are popular and those whose views arouse hatred and animosity — guarantying the right of freedom of speech to the former and withholding it from the latter. This defendant has the right to express himself concerning religious beliefs, no matter how misguided and unpopular they may be and if his exercise of that right arouses passion in the community and requires the attendance of police officers, that is a small cost which must be paid by us for our continued freedom. We may expect from his past actions that the defendant will in the future go beyond the mere expression of ideas, and so speak as to incite disturbances and breaches of the péace. When and if he does, he may be punished therefor in an appropriate criminal action but justifiable expectations do not authorize the commissioner to refuse to permit the defendant to speak about religion in the future on the streets of the city of New York.

Since the permit requirement in the second sentence of subdivision a of section 435-7.0 of the Administrative Code was thus unconstitutionally applied to the defendant, his conviction, based upon his failure to possess a permit which he has demonstrated is impossible of procurement, cannot stand. It is not an answer to say that defendant, after exhausting his administrative remedies, should then have retained counsel to institute an expensive and lengthy article 78 proceeding, in order to enjoy his elementary constitutional rights.

The order of the Appellate Part of the Court of Special Sessions should be reversed and the complaint dismissed.

Bromley, J.

(dissenting). By its terms section 435-7.0 of the Administrative Code of New York City prohibits the public discussion of religious topics in “ any street ” of that city by anyone who is not, at least, a member of “ any church or incorporated missionary society ”, or an “ authorized representative of a duly incorporated organization devoted to the advancement of the principles of atheism or agnosticism ”. One who is a membér of a group permitted to discuss religion may do so “ in any public place or places specified in a permit therefor which may be granted and issued by the police commissioner.” The statute also makes it unlawful for any person “ to ridicule or denounce any form of religious belief ” in a street or public place.

As construed by the police commissioner the statute gives him discretion to deny a permit to one whose past conduct has indicated that, if permitted to speak, he will ridicule and denounce religion, or a particular faith, so as to provoke disorder. Appellant Kunz received a permit to speak during the year 1946. The police commissioner has exercised his discretion to revoke that permit, and to deny Kunz annual permits for 1947 and 1948. The revocation, and presumably the denials, rested upon an administrative finding that Kunz had ‘ ‘ ridiculed and denounced religion ’ ’ upon several occasions in 1946. Kunz has been convicted for conducting a religious meeting without a permit on September 11, 1948, at Columbus Circle in New York City.

Unless the prohibition against ridicule and denunciation of religion shall be read as indicating a criterion to be employed by the police commissioner in determining whether to grant or withhold a permit, the statute provides no limit to his discretion. The law has been so construed by that officer, and his construction accords with the fair import of its terms. It is here immaterial that the police commissioner has followed a practice of granting automatically a permit to any of the persons described in the statute on first application therefor. Moreover, it should be noted that the police commissioner apparently is to determine whether or not an applicant for a permit falls within one of those groups whose speech is tolerated.

Numerous decisions of the Supreme Court of the' United States, since this ordinance was sustained by us in 1934 (People v. Smith, 263 N. Y. 255), indicate clearly that the requirement of a permit for the exercise of the rights of speech, assembly or religion in public places is invalid under the Fourteenth Amendment if the licensing official is afforded discretion to grant or withhold a permit upon criteria so broad as these (Saia v. New York, 334 U. S. 558; Largent v. Texas, 318 U. S. 418; Cantwell v. Connecticut, 310 U. S. 296; Schneider v. State, 308 U. S. 147; Hague v. C. I. O., 307 U. S. 496). In each case wherein such statutes have been sustained it was plain that the permit requirement served only two legitimate ends — to permit determination of the appropriate place and time for a proposed assembly with respect to the convenience of others, and to afford notice to the authorities of an assembly which might provoke disorder — without regard to the content of proposed speech (Cox v. New Hampshire, 312 N. Y. 569; People v. Hass, 299 N. Y. 190; Peo ple v. Nahman, 298 N. Y. 95). Although a State may venture beyond those purposes in a legitimate effort to avert serious threat of disorder by a statute “ narrowly drawn to prevent the supposed evil ” (Cantwell v. Connecticut, supra, at p. 307), no such attempt is apparent in this law.

We are asked to construe the ordinance as precisely analogous to the provisions considered in People v. Nahman and People v. Hass (supra). The courts have been “ inclined to adopt that reasonable interpretation of a statute which removes it farthest from possible constitutional infirmity ” (Kovacs v. Cooper, 336 U. S. 77, 85). However, a limitation inheres in that doctrine; strained and unnatural interpretation should not be employed to preserve a law so vulnerable as section 435-7.0 (see Yu Cong Eng v. Trinidad, 271 U. S. 500, 519-521).

If the vice of this law were not apparent in its terms, the impact of its administration upon Kunz should demonstrate beyond cavil that he has suffered an invalid and absolute previous restraint upon his right to discuss religion in public. His case affords a striking parallel to Near v. Minnesota. (283 U. S. 697). There the future publication of a newspaper had been enjoined upon the ground that it had offended in the past through publishing “ malicious, scandalous and defamatory articles ” (p. 703). The evil of the injunction inhered in the censorship it established, for Near could have resumed publication under threat of a contempt penalty for matter found invidious by the court. The absolute and previous restraint upon the speech of Kunz surely can stand upon no stronger ground than the decree condemned in Near v. Minnesota (supra).

Section 435-7.0 of the Administrative Code of New York City should be held invalid upon its face under the Fourteenth Amendment to the United States Constitution and under those provisions of the New York Constitution which guarantee freedom of speech and religion (art. I, §§ 3, 8). The judgment should be reversed and the complaint dismissed.

Loughean, Ch. J., Lewis and Dye, JJ., concur with Desmond, J.; Conway, J., dissents in opinion; Bbomley, J., dissents in separate opinion in which Fuld, J., concurs.

Judgment affirmed.


author: Conway, J.

text:
    Stephen Ward et al., Appellants, v. Myrtle Strobel, Respondent.
    Argued November 15, 1949;
    decided December 29, 1949.

      Salem, G. Mansour and Nicholas B. Critelli for appellants.
    I. As a matter of law, plaintiff was not a “ guest while being transported without payment therefor ” within the meaning of the Indiana statute. (Smith v. Clute, 277 N. Y. 407; Fortuna v. Sangster, 269 App. Div. 1060; Liberty Mut. Ins. Co. v. Stitzle, 220 Ind. 180; McGann Securities Co. v. Coen, 114 Ind. App. 60; Ott v. Perrin, 116 Ind. App. 315; Long v. Archer, 221 Ind. 186.) II. Upon the record, there was a question of fact for the jury as to whether defendant’s acts and omissions, causing plaintiff’s injuries, constituted “ wanton or wilful misconduct ”. (Swinney v. Roller, 113 Ind. App. 637; Bedwell v. De Bolt, 221 Ind. 600; Matter of Margulies v. Garwood, 178 Misc. 970.)

      Boy P. Ohlin and Merrill G. Windelberg for respondent.
    I. Plaintiff was a guest within the meaning of the Indiana statute and the trial court was not in error in so ruling as a matter of law. (Liberty Mut. Ins. Co. v. Stitzle, 220 Ind. 180; Lee Bros. v. Jones, 114 Ind. App. 688; McGann Securities Co. v. Coen, 114 Ind. App. 60.) IT. The uncontroverted facts indicate that defendant was not chargeable with “ wanton or wilful misconduct ”. (Coconower v. Stoddard, 96 Ind. App. 287; Becker v. Strater, 117 Ind. App. 504; Hoesel v. Cain, 222 Ind. 330; Bedwell v. De Bolt, 221 Ind. 600.)
   Conway, J.

This is an action brought by one Eliza Ann Ward (hereinafter called plaintiff) for personal injuries suffered in an automobile accident in Indiana. Her husband also sues for loss of services and medical expenses.

Plaintiff is an elderly woman residing in Niagara Falls, N. Y. In 1947, she made arrangements to obtain treatment for diabetes in a clinic in South Whitley, Indiana. She was not then acquainted with the defendant, also a diabetic, but they were later brought together by defendant’s mother-in-law, who was plaintiff’s neighbor. As a consequence, plaintiff and defendant arranged to go together, in defendant’s automobile, to the clinic where defendant would also obtain treatment. It was agreed that the cost of the gas and oil used on the trip would be paid by plaintiff. When they reached their destination in Indiana, the defendant, who had kept note of the items purchased, received payment from plaintiff covering the gas and oil used on the trip thus far and to be used on the return journey. An overpayment was made by plaintiff which was later refunded to her.

Near Columbia City, Indiana, on the trip back to Niagara Falls, the defendant drove through a stop sign and into a road intersection without either stopping or slackening speed. As a result a collision with another automobile occurred and plaintiff was injured. Thereafter defendant pleaded guilty to a charge of reckless driving in the City Court of Columbia City, Indiana. Specifically, the charge was that she did unlawfully drive an automobile with reckless disregard for the rights, safety and property of others ” by entering an intersection without first bringing her automobile to a stop in obedience to a stop sign and by driving into another automobile lawfully proceeding along the intersecting road, which was a preferential highway ”. The Indiana statute permits a conviction for reckless driving for driving in any other specified manner in which the driver is heedless of probable injury to the safety, the property or the rights of others.” (8 Burns Indiana Stat., § 47-2001, pp. 853-854.)

At the close of the entire case, the court directed a verdict in favor of defendant as a matter of law upon the ground that the guest ” statute of Indiana, the lex loci delicti, precluded recovery. That statute (Indiana Motor Vehicle Law, ch. 10; 8 Burns Indiana Stat., § 47-1021) reads as follows: The owner, operator, or person responsible for the operation of a motor vehicle shall not be liable for loss or damage arising from injuries to or death of a guest, while being transported without payment therefor, in or upon such motor vehicle, resulting from the operation thereof, unless such injuries or death are caused by the wanton or wilful misconduct of such operator, owner, or person responsible for the operation of such motor vehicle.”

We think that questions of fact were presented which should have been submitted to the jury. They were, first, whether plaintiff was injured “ while being transported without payment therefor ” (Liberty Mut. Ins. Co. v. Stitzle, 220 Ind. 180 [1942]; Smith v. Clute, 277 N. Y. 407), and second, whether, even if that question were answered in the aErmative, the injuries were “ caused by the wanton or wilful misconduct ” of defendant.

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

Lotjghban, Ch. J., Lewis, Desmond, Dye, Fuld and Bbomley, JJ., concur.

Judgments reversed, etc.


author: Conway, J. Fijld, J.

text:
    Mallory Associates, Inc., Appellant, v. Barving Realty Co., Inc., et al., Respondents.
    Argued December 1, 1949;
    decided December 29, 1949.

      Jules E. Gilbert and Harold Gilbert for appellant.
    I. Section 233 of the Real Property Law applies. (Demarest v. Wynkoop, 3 Johns. Ch. 129; Settle v. Van Evrea, 49 N. Y. 280; Matter of Meyer, 209 N. Y. 386; Town of Putnam Valley v. Slutzky, 283 N. Y. 334; Flynn v. Prudential Ins. Co., 207 N. Y. 315; Furey v. Town of Gravesend, 104 N. Y. 405; Archer v. Equitable Life Assur. Soc., 218 N. Y. 18; Matter of Hamlin, 226 N. Y. 407; Matter of Clark, 168 N. Y. 427.) II. The law of leases compels the application of section 233 in this instance. Applying the section does not give it extraterritorial effect. (Selover, Bates & Co. v. Walsh, 226 U. S. 112; Matter of Barnett, 12 F. 2d 73; Poison v. Stewart, 167 Mass. 211; Atwood v. Walker, 179 Mass. 514.)

      Nathan Frankel for respondents.
    I. Section 233 of the Real Property Law does not apply inasmuch as no moneys were deposited or advanced. (Sternaman v. Metropolitan Life Ins. Co., 170 N. Y. 13; Dorman v. Gannon, 4 App. Div. 458; People ex rel. Heermance v. Dederick, 35 App. Div. 29; People v. Gluck, 188 N. Y. 167; Planetary Recreations, Inc., v. Kerns, Inc., 54 N. Y. S. 2d 418.) II. Plaintiff has no causé of action for conversion either at common law or under the provisions of section 233 of the Real Property Law since these provisions have no extraterritorial effect. (Mertz v. Mertz, 271 N. Y. 466; Ewen v. Thompson-Starrett Co., 208 N. Y. 245; Whitford v. Panama R. R. Co., 23 N. Y. 465; Catt v. Catt, 118 App. Div. 742; White v. Howard, 46 N. Y. 144; Muck v. Hitchcock, 212 N. Y. 283; Adler v. Deegan, 251 N. Y. 467; Jacobus v. Colgate, 217 N. Y. 235; Ehrsam v. City of Utica, 37 App. Div. 272.)
   Conway, J.

In November, 1946, the plaintiff, Mallory Associates Inc., leased from defendant, Barving Realty Co., Inc., the Atlantic Hotel, located in Norfolk, Virginia, for a period of fifteen years. The lease provided: “ The Tenant has this date deposited with the Landlord the sum of SixtydFiye Thousand ($65,000.) Dollars, receipt of which is hereby acknowledged, without interest as security for the full and faithful performance by the Tenant of all the terms, covenants and conditions of this lease upon the Tenant’s part to be performed, ■its being understood that the Landlord shall have the right to use said moneys toward the purchase of the Leased Premises, The Landlord shall return to the Tenant upon condition that the Tenant shall be in no wise in default under any of the terms of this lease, the sum of Three Thousand ($3,00.0.) Dollars on December 1st of each year commencing with December 1, 1950, until the expiration of this lease, at which time the unpaid balance of the security will be returned to the Tenant provided the Tenant has fully and faithfully carried out all of the terms, covenants and conditions on the Tenant’s part to be performed, less any amount to cover all damages sustained by the Landlord by reason of any breach by the Tenant of any of the terms or conditions of this lease. * * * ” Both the landlord and the tenant are New York corporations with offices in New York. The individual defendants are officers and directors of defendant Barving Realty Co., Inc. The lease was executed in the city of New York and, pursuant to it, the $65,000 deposit of security was paid over to defendant Barving Realty Co., Inc., in the city of New York on November 15, 1946.

Alleging that the defendants did on or about the said 15th day of November, 1946, in the City and State of New York, mingle and cause to be mingled ” the $65,000 security deposit “ with the personal moneys of the said defendant Barving Realty Co., Inc.” and that they did “ wrongfully and unlawfully, convert and appropriate the said sum * * * to the use of the defendant Barving Realty Co., Inc.”, the plaintiff-tenant commenced this action to recover the security deposit, with interest from November 15, 1946.

Prior to the enactment of section 233 of the Real Property Law (L. 1935, ch. 581), and in the absence of facts from which a contrary intention could be inferred (Matter of Atlas, 217 App. Div, 38), it was uniformly held that a deposit of security by a tenant under a lease created a debtor-creditor relationship and that the landlord had the right to use such moneys until the date specified for repayment. (Mendelson-Silverman, Inc., v. Maleo Trading Corp., 262 N. Y. 621; Malco Trading Corp. v. Mendelson-Silverman, Inc., 240 App. Div. 322; Rambach v. Heights Theatres, 239 App. Div. 203; Jahmes Co. v. Propper, 238 App. Div. 326; Levinson v. Shapiro, 238 App. Div. 158.)

The Legislature changed that rule in 1935 by adding a new section 233 to the Real Property Law, which reads as follows:

“ Whenever money shall be deposited or advanced on a contract for the use or rental of real property as security for performance of the contract or to be applied to payments upon such contract when due, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same, but may be disposed of as provided in section thirteen hundred and two-a of the penal law. Any provision of such a contract whereby a person who so deposits or advances money waives any provision of this section is absolutely void.”

Defendants moved to dismiss the instant complaint on the ground that it did not state facts sufficient to constitute a cause of action. Special Term indicated that the complaint did state a cause of action in conversion under the above-quoted provisions of section 233, but held that the statute was inapplicable because the deposit of security in the case at bar was made under a lease relating to real property located outside of the State of New York. The court stated that, during the depression, the financial standing of many landlords became impaired or destroyed, that in the resulting insolvencies, the tenant frequently suffered not only the loss of his leasehold but also the loss of his security deposit, that this evil was one of great gravity, particularly in the city of New York, and that the Legislature, in enacting section 233 to remedy this evil, was concerned solely with conditions existing here and not elsewhere.

The provision in the lease for the deposit of security is a personal covenant between the contracting parties, creating rights in personam. It is not concerned with the creation or transfer of any interest in real property. The question presented by the instant case relates solely to the rights and liabilities of the parties as a matter of contractual obligation. Accordingly, it is to be determined by the law governing the contract, even though the subject matter of the contract may be land in another: State. ■

Thus, in Matter of Barnett (12 F. 2d 73, certiorari denied sub nom. United Cigar Stores Co. v. Rayher, 273 U. S. 699) the court said (pp. 76-77):

‘ ‘ But the term ‘ lease ’ is commonly used as including something more than the mere legal act by which a tenancy is created, and embraces what are described as the ‘ covenants of the lease,’ which create rights in personam, as distinguished from rights in rem. In so far as it creates rights in personam, the question arises whether the contract ’ into which the parties have entered is to be governed by the lex loci rel sitse, or by the lex loci contractus.

“ The lease in this case, as already stated, was made in the city of New York, where both parties to the lease maintained offices and were engaged in business. It must be admitted that the lease, in so far as it affects the creation of an interest in real estate, is governed by the law of the situs. But although a lease relates to an interest in real property, and in so far as it so relates is governed by the lex loci rel sitae, the personal covenants between the contracting parties, though contained in a contract affecting realty are governed by the lex loci contractus; and as the contract of lease was made in New York, and the deposit was delivered to the lessor in New York, and rent was payable in New York, the law of New York governs as to the purely personal covenants.” (See, also, 2 Beale on Conflict of Law, § 340.1, which quotes from the Barnett case, supra; Goodrich on Conflict of Laws, § 145; Restatement, Conflict of Laws, § 341, subd. [1] ; United States v. Warren R. R. Co., 127 F. 2d 134, 136.) (See, also, Walsh v. Selover, Bates & Co., 109 Minn. 136, affd. sub nom. Selover, Bates & Co. v. Walsh, 226 U. S. 112; Poison v. Stewart, 167 Mass. 211, 214.)

In enacting section 233, the Legislature was attempting to prevent the depletion of funds deposited with the lessor. The method used was to transform the usual debtor-creditor relationship between the lessor and the lessee into one of trust relationship, by operation of law. The security deposit paid over and held in this State was the thing to be protected. The lessee, resident in this State, was the person to be protected. The need for protection is obviously no less, but rather more, when the land to which the lease relates is situated outside of this State. The Legislature did not expressly limit the statute to deposits made under a contract for the use or rental of real property situated in New York, and we do not think it should be thus limited by judicial construction. The protection afforded by section 233 should apply to funds deposited in New York as security under a contract of lease made in New York between corporations created by New York, even though the real property which is the subject matter of the contract is located elsewhere. In so holding, we are not giving extraterritorial operation to the statute, but, on the contrary, in accordance with the evident legislative intent, we are permitting it to govern the rights and liabilities of corporations created by New York, under a New York contract, with respect to a New York subject matter, viz., the security deposit.

Defendants further assert that the statute is inapplicable because no m°neys were deposited or advanced by plaintiff since the so-called security deposit was really a loan by plaintiff to defendants to enable them to purchase the property from plaintiff. It is a sufficient answer to this contention that the facts upon which it is based do not appear in the complaint and that is the only document with which we are here concerned. As noted, the complaint clearly states that plaintiff *£ did pay over the said sum of security to defendant ” and in the lease, defendant acknowledged receipt. Furthermore, even though defendants may have had the right to use said moneys toward the purchase price of the leased premises, section 283, by its terms, requires that the funds be held in trust t( until repaid or so applied ”. (Emphasis supplied.)

We need not consider on this motion to dismiss the complaint, the extent of • plaintiff’s possible recovery, and the situation of the parties thereafter if plaintiff should prevail. Those questions are not in any way argued here, nor were they discussed below. It is enough now to decide that the complaint states a cause of action and that the case should go to trial.

The judgments should be reversed and the motion to dismiss the complaint denied, with costs in all courts.

Fijld, J.

(dissenting). Plaintiff brought this action to recover $65,000 upon the ground that it had been converted by defendants. The conversion, the complaint alleges, was committed on the very day that defendants received the moneys in question “ as security ” for a lease, by their act of causing them “to be mingled ”. The lease itself recited that it was “ understood that the Landlord shall have the right to use said moneys toward the purchase of the Leased Premises ”, and, upon the oral argument before us, it was acknowledged that the moneys were so used.

To recover in the action, it was incumbent upon plaintiff to establish, first, that section 233 of the Real Property Law of this state was applicable and operative where the lease covered land in jurisdictions other than New York and, second, that the $65,000 which plaintiff paid to defendants was a trust fund which was to be held separate and apart from the landlord’s funds and not mingled with them. The court at Special Term dismissed the complaint for insufficiency, and the Appellate Division unanimously affirmed its order.

I agree with the determination that has been made. In the first place, the lease between the parties unequivocally demonstrates that the fund was not to be held in trust, and, in the second place, it is manifest that section 233 of the Real Property Law operates only upon moneys deposited as security under leases for land located in New York.

We may start with the proposition that the legislature of this state, in enacting the Real Property Law and in adding provisions to it, was only interested in, and concerned with, property located within this jurisdiction. The court at Special Term analyzed the situation that prompted the legislature to enact section 233 and came to the conclusion — properly, I venture— that the legislature gave thought solely to deposits of security under leases relating to real estate in New York.

If the legislature had intended to deal with real property-situated outside of New York, it could easily have done so. An examination of the other provisions in the Real Property Law discloses that, on those few occasions, when the legislature purposed to deal with such property, it said so explicitly. In section 536, for instance, express and plain is the reference to real estate “ situate without the state (Emphasis supplied.)

I suggest, therefore, that, on the basis of need, of reason and of language, the legislature, in enacting section 233, did not intend to protect security deposits under leases relating to real property in other states. And we cannot expand the scope of the statute beyond that contemplated by the legislature by characterizing the security provision in a lease as a “ personal covenant.”

In any event, even if section 233 were to be held applicable to leases relating to land outside of New York, the agreement itself establishes that that section is not applicable. Neither plaintiff nor defendant ever expected that the $65,000 was to be held intact as security or inviolate as a trust. As noted above, after reciting that the tenant deposited the $65,000 “ as security ”, the parties expressly stated that it was “ understood that the Landlord shall have the right to use said moneys toward the purchase of the Leased Premises ”. In the light of such a provision, it is difficult, nay impossible, to see how the landlord was under the duty of treating and holding those moneys as a trust fund. Permission to use the funds, to purchase the very property which is the subject of the leasehold decisively proves that it was not intended that the landlord hold the fund as,a trust throughout the leasehold period. Certainly, where the tenant depositor expressly sanctions a use of the moneys deposited ” for the purchase of the subject property, it is highly unreasonable to say that the landlord is guilty either of a conversion or — by reason of section 1302-a of the Penal Law — of a larceny if he does not hold them intact throughout the entire period of the lease, but, as is here the case, uses them to purchase the leased premises.

It is true that section 233 forbids a lease provision ” that waives ” any of the statute’s provisions relating to the inviolability of a fund deposited as security. But the provision in this lease which expressly authorizes the landlord to use the amount deposited for the very purpose of buying the property to be leased cannot be said to be a waiver within the meaning of the statute. The legislature merely wanted to prevent a landlord from insisting that he should be able to deal with a fund given to him as security for rent in any way he chose. Here, the situation is entirely different from that envisaged by the legislature. The lease indicates that there would never have been a leasehold of this Virginia property, that there would never have been a landlord-tenant relationship, had the tenant not empowered the landlord to employ the money to buy the premsies. That authorization in the lease makes it clear that the deposit was not to be held intact and inviolate — as deposits for security would be — throughout the term of the lease and then returned. In short, the “ deposit ” was not of the type which the legislature intended to come within the ambit or compass of section 233. The paragraph of the lease in question must be read as a whole; we may not emphasize or isolate a particular phrase or clause, particularly when, in doing so, we effect an unreasonable result.

I do not mean to suggest that section 233 may be avoided by subterfuge; if some device is attempted simply to circumvent the nonwaiver provision of the statute, the courts will quickly strike it down. Where the so-called “ deposit ” is given to the landlord, however, for the very purpose of enabling him to bring the leasehold into existence, it cannot be said that resort was had to a subterfuge.

In my view, the courts below were correct in ruling that the complaint does not state a cause of action; the judgment should be affirmed, with costs.

Loughran, Oh. J., Lewis and Dye, JJ., concur with Conway, J.; Fuld, J., dissents in opinion in which Desmond and Bromley, JJ., concur.

Judgments reversed, etc. [See 300 N. Y. 680.]