text:
    Sparkill Realty Corporation et al., Respondents, v. The State of New York, Appellant.
    (Claim No. 19587.)
    (Argued May 29, 1935;
    decided July 11, 1935.)

      JohnJ. Bennett, Jr., Attorney-General (Walter H. Poliak, Henry Epstein, Carl S. Stern, Arthur H. Goldberg and Irving Birnbaum of counsel), for appellant.
    The award, disregarding all factual evidence, rests upon guesses as to the profits of a business that had never begun to operate. (TV. C. B. B. Co. v. Maloney, 234 N. Y. 208; Hamilton v. Bailroad Co., 190 Penn. St. 51; Forest Preserve District v. Caraher, 299 Ill. 11; Kossler v. Bail-way Co., 208 Penn. St. 50; Cramer v. Grand Bapids Show Case Co., 223 N. Y. 63; Central Coal & Coke Co. v. Hartman, 111 Fed. Rep. 96; Bliss Co. v. Buffalo Tin Can Co., 131 Fed. Rep. 51; 195 U. S. 630; City of Syracuse v. Stacey, 45 App. Div. 249; 169 N. Y. 231; Sauer v. Mayor, 44 App. Div. 305; Newton v. Armstrong, 63 Him, 628; Matter of Gilroy, 26 App. Div. 314; Matter of City of Bochester [Smith, St. Bridge], 234 App. Div. 583; Banner Milling Co. v. State, 240 N. Y. 533; Mitchell v. United States, 267 IT. S. 341.) The guesses as to future profits rest upon assumptions that were neither proved nor provable. (Bliss Co. v. Buffalo Tin Can Co., 131 Fed. Rep. 51; 195 U. S. 630; United Fuel Gas Co. v. Bailroad Comm., 278 IT. S. 300; Matter of New York,L. & W. B. Co., 33 Hun, 639; Blanchard Co. v. Borne Metallic Bedstead Co., 184 App. Div. 187; Hamilton v. Bailroad Co., 190 Penn. St. 51; San Diego Land Co. v. Neale, 88 Cal. 50; Cox v. Philadelphia B. B. Co., 215 Penn St. 506.)

      Jackson A. Dykman, Benjamin McClung and Henry J. Hemmens for respondents.
    The award is not excessive. Gosstol Bealty Corp. v. Gillman, 224 App. Div. 63; Johnson v. City of Lowell, 134 N. E. Rep. 627; Brooklyn Union Gas Co. v. Prendergast, 7 Fed. Rep. [2d] 628; Ottinger v. Brooklyn Union Gas Co., 272 IT. S. 579; Matter of Comrs. of Palisades Interstate Park, 164 App. Div. 957; Moore v. Eadie, 245 N. Y. 166; Matter of City of New York, 198 N. Y. 84; Balshan v. State, 230 App. Div. 142; 255 N. Y. 596.) There were no errors in the admission of evidence. (Dilleber v. Home Life Ins. Co., 87 N. Y. 79; Cole v. Fall Brook Coal Co., 159 N. Y. 59; Stearns v. Field, 90 N. Y. 640; Sparkill Bealty Corp. v. State, 238 App. Div. 656; Matter of City of Bochester [Smith St. Bridge], 234 App. Div. 583; Banner Milling Go. v. State, 240 N. Y. 533; Fowler v. State, 234 App. Div. 166; 259 N. Y. 594; Matter of Niagara, L. & O. P. Go. v. Horton, 231 App. Div. 402; Sauer v. Mayor, 44 App. Div. 305.) No rule of law forbids consideration, of profitable operation as one element in determining value. (Matter of Comrs. of Palisades Interstate Park, 164 App. Div. 957; Baumann v. City of New York, 227 N. Y. 25; People ex rel. Powers v. Kalbfleisch, 25 App. Div. 432; Beisert v. City of New York, 174 N. Y. 196; Bates v. Holbrook, 89 App. Div. 548; Barnes v. Midland B. B. Terminal Co., 218 N. Y. 91; Smith v. State, 145 Mise. Rep. 899; Matter of City of New York, 198 N. Y. 84.)
   This is a claim against the State for compensation for property at Piermont, Rockland county, New York, appropriated for an extension of the limits of the Palisades Interstate Park under article 16, part 9, of the Conservation Law (Cons. Laws, ch. 65). The Court of Claims found that the value of the property was $1,650,000. The claimants (owner and lessee respectively) were jointly awarded judgment for that amount with interest of $444,950 and a disbursement of $5,000 for an abstract of title, in all $2,099,950. On this appeal by the State from an affirmance by the Appellate Division the principal question is whether the award was made on an erroneous principle..

The property was taken October 11, 1928. It comprises 164 acres on the west shore of the Hudson river eighteen miles north of the city of New York. In 110 acres is a large deposit of trap rock. The remaining tract is marsh land lying between this deposit and deep water in the river. The unimproved land was acquired by the claimant owner in 1914. Its development as a quarry, first undertaken by the claimant lessee in 1927, was within five months of completion at the date of appropriation by the State. The cost of the interrupted exploitation was found to have been $584,260.65. The judgment thus implies an award for the site of more than $1,000,000. The claimant owner has not increased its original authorized capital of $30,000. In the period from 1923 to 1925 it offered to sell the undeveloped property for $50,000, for $100,000 and for $150,000. From 1925 to 1928 the land was ássessed for taxation at not more than $14,540. (See Court of Claims Act, § 22-a, subd. 2.) There was uncontradicted testimony that any increase of the value of stone lands in Rockland county between 1923 and 1929 did not exceed ten per cent. Two witnesses for the State who before this appropriation and after it had bought stone lands on the same trap ridge for then operating quarry companies appraised the land taken at $120,000 $750 to $1,000 an acre. These witnesses were not cross-examined. This background acutely invites consideration of the theory of the judgment against the State.

The claimants submitted no proof of the market value of the land as such. Instead they offered evidence that above mean high-water mark on the property are 15,314,221 cubic yards of quarriable trap rock which would yield 27,365,997 cubic yards of broken stone of a quality up to standards prescribed for customary uses of trap rock, and evidence that by an additional expenditure of $503,471.30 the plant of the claimant lessee could have been equipped to quarry, crush, store and load on scows 750,000 cubic yards of crushed stone annually. These facts were then assumed in a hypothetical question put to each of four expert witnesses for the claimants. The further form of the hypothesis was as follows: Assume the stone could be quarried, crushed and loaded on scows at the quarry at an average cost of 70 cents and at an average freight cost of 40 cents per cubic yard, or a total of $1.10 per cubic yard, delivered in scows alongside docks in the Metropolitan New York and New Jersey district, which cost includes maintenance, taxes, depreciation and depletion. Assume 750,000 cubic yards of broken stone at least from this quarry can be marketed in this district annually at an average price of $1.90 per cubic yard alongside docks in scows. What, in your opinion, was the market value of the property and existing improvements on the day of entry and appropriation, October 11, 1928, that is to say, the amount in cash which a willing purchaser would pay and a willing seller would take? ” The testimony so elicited appraised the value gí the property in figures ranging from $4,331,027.30 to $4,800,000.

This procedure in itself proved nothing. As long ago was said of similar testimony, All the witness has done is to establish by calculation, that such a stock, from such a time, will produce so much. He does not himself prove any fact, and the calculations he has made must therefore depend upon the facts which are proved by others.” (Erskine, L. C., in Lord Melville’s Trial, 29 How. St. Trials, 1066; 1 Wigmore on Evidence [2d ed.], § 672.) The hypothetical question, although in the end it called for testimony in the guise of opinions as to market value, could have been answered only on the fixed assumption that the property of the claimants was to have been operated for a generation at an annual profit of half a million dollars. Accordingly we are led to seek in the record some basis for that assumption.

There was no concrete proof that the market in the Metropolitan New York and New Jersey district would absorb an accession of 750,000 cubic yards of crushed trap rock annually. Indeed the Court of Claims refused to take an opinion from the experts for the claimants on that subject, because too many elements enter into the answer.” There was, of course, no proof of a production and transportation cost invariable at $1.10 per cubic yard for decades to come, nor of a market stabilized at $1.90 over an equal period in the future. These hypothesized profit factors had no reality and any conclusion thereby contrived was inadmissible. (New York Central R. R. Co. v. Maloney, 234 N. Y. 208; Matter of New York, L. & W. Ry. Co., 33 Hun, 639; Matter of Gilroy, 26 App. Div. 314; United Fuel Gas Co. v. Railroad Commission, 278 U. S. 300. See tbe authorities collected in a note in 7 A. L. R. 163.) This is not to say that one valid expert opinion may not be based on another (1 Wigmore on Evidence [2d ed.], § 682), but that opinion testimony may not be predicated of a sequence of conjectures. (Cf. Lamb v. Union Ry. Co., 195 N. Y. 260, 266.)

There was here no element of business good will, of going plant value, or of profit automatically produced by the property itself. (Cf. Banner Milling Co. v. State, 240 N. Y. 533; Matter of State Reservation at Niagara, 16 Abb. N. C. 159, 199; 7 A. L. R. supra, pp. 171-174.) This quarry had never been worked. Before the taking, a willing buyer could have acquired at best an unfinished plant and the opportunity to operate it after completion. To the full market value of that privilege the claimants were entitled, but to nothing more. (Jackson v. State, 213 N. Y. 34; New York Central R. R. Co. v. Maloney, supra, p. 218; Langdon v. Mayor, etc., of New York, 133 N. Y. 628, 631.)

We turn now to the decision of the Court of Claims for the rationale of its award. Formal recitals apart, the findings are, in substance, a recasting of the foregoing hypothesis which the claimants made the single vehicle of their proof of market value. The gist of the decision is as follows: The plant * * * was designed for crushing, conveying, storing and loading approximately 750,000 cubic yards of traprock from the quarry annually. ⅜ * ⅜ deposit of traprock * * * contains a minimum of 15,314,221 cubic yards * which, after crushing, would yield a minimum of 27,365,997 cubic yards of broken stone * * ⅝ sufficient * * * to permit of the operation of a quarry for a period of at least twenty-five years. * * * Crushed stone produced from this deposit would meet the requirements of the standard specifications in the State of New York and in the State of New Jersey * * * and could be loaded on scows at the plant and transported by water to the Metropolitan New York and New Jersey market. * * * At the time of the appropriation approximately 10,800,000 cubic yards of coarse aggregates were sold annually in said district of which quantity between 4,000,000 and 5,000,000 cubic yards was crushed stone. * * * Trap-rock is desirable as a crushed stone aggregate. * * * There is a market in this Metropolitan District in which crushed stone from the appropriated property could be * ⅜ * marketed at a profit.” The State requested a finding that success of the business of crushing and marketing trap rock depends upon the efficiency of the management of the quarry enterprise. This request the court refused.

From these premises was drawn the conclusion of a fair and reasonable market value of $1,650,000 for the “ entire property, plant and equipment.” The appraisals of the four experts for the claimants are cited in the opinion of the Court of Claims. The only other evidence of market value was that offered by the State. Tested by that evidence the award is grossly excessive. No award shall be made on any claim against the state except upon such legal evidence as would establish liability against an individual or corporation in a court of law or equity.” (Court of Claims Act, § 26.) ' It is apparent, we think, that this award was made upon a conclusion conjectured from data founded only in speculation.

The judgment of the Appellate Division and that of the Court of Claims should be reversed, and a new trial granted, with costs to abide the event. (See 268 N. Y. 632.)

Lehman, O’Brien and Finch, JJ., concur; Crane, Ch. J., Hubbs and Crouch, JJ., dissent.


source: Caselaw Access Project

author: Crouch, J.

license: Public Domain

text:
    John Byrne et al., Copartners, under the Firm Name of Byrne & Bowman, Appellants, v. Thomas F. Barrett, Respondent.

      (Argued April 18, 1935;
    decided July 11, 1935.)

      Joseph M. Proskauer, Joseph L. Young and Eugene Eisenmann for appellants.
    Defendant is liable to account to the plaintiffs for interfering with the plaintiffs’ contract wrongfully and in violation of his fiduciary obligations. (Gilder v. Davis, 137 N. Y. 504; Domini-cis, 251 N. Y. 305; Taneribaum v. Boehm, 202 N. Y. 289; Lloyd v. Matthews, 51 N. Y. 124; Meinhard v. Salmon, 249 N. Y. 458; Munson v. Syracuse, G. & C. B. R. Co., 103 N. Y. 58; Essex Trust Co. v. Enwright, 214 Mass. 507; Gower v. Andrew, 59 Cal. 119; David v. Hanley, 108 Ill. 39; Beatty v. Guggenheim Exploration Co., 225 N. Y. 380.) Resignation does not affect the disability of an agent from using special information and a special status acquired in the course of his employment adversely to his former employers. (Elco Shoe Manufacturers v. Sisk, 260 N. Y. 100; State v. Gautier, 108 Fla. 390; Robb v. Green, [1895] 2 Q. B. 315; Lamb v. Evans, [1893] 1 Ch. 218; Peoples Coat Supply Co. v. Light, 171 App. Div. 671; 224 N. Y. 727; Trice v. Comstock, 121 Fed. Rep. 620; Dennison v. Aldrich, 114 Mo. App. 700; Connelly v. Special Road & Bridge Dist. No. 5, 99 Fla. 450; Eoff v. Irvine, 108 Mo. 378; Ringo v. Binns, 10 Pet. [U. S.] 269; Garinger v. Palmer, 126 Fed. Rep. 906; Carson v. Fogg, 34 Wash. 448; Smith v. Brotherline, 62 Penn. St. 461; Davis v. Smith, 43 Vt. 269.) Defendant, having failed fully to disclose to his principals the progress of the negotiations, and having thereby misled them, could not take advantage of his own default. (Loog v. Bean, 26 Ch. 306; Blaunt v. Robson, 56 N. C. 73; Means v. Ross, 106 La. 175; Jensen v. Snow, 131 Me. 415; Visigraph Typewriter Mfg. Co. v. Spiro Mfg. Co., 122 Mise. Rep. 852; Selwyn v. Waller, 212 N. Y. 507.) Plaintiffs never waived any rights against defendant. (Fur & Wool Trading Co. v. Fox, Inc., 245 N. Y. 215.)

      Frank C. Laughlin, Joseph W. Kirkpatrick and Louis A. Tepper for respondent.
    The defendant incurred no liability to the plaintiffs for any part of the commissions he received, for a mere “ reasonable expectation ” of success in the transaction did not constitute an asset or property right of either the plaintiff or the defendant or of both. (Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520; Kavanaugh v. Commonwealth Trust Co., 223 N. Y. 103; Foreman v. Foreman, 251 N. Y. 237; Matter of Saxon v. Erie R. R. Co., 221 N. Y. 179; Lawrenceville Cement Co. v. Parker, 29 N. Y. St. Repr. 864; 60 Hun, 586; 133 N. Y. 622; Sibbald v. Bethelehem Iron Works, 83 N. Y. 378; Goodman v. Marcol, Inc., 261 N. Y. 188; Hirsh & Schofield, Inc., v. Gusmer, 179 App. Div. 347; Peters Mineral Land Co. v. Hooper, 208 Ala. 324; Meeks v. Miller, 214 Ala. 684; Welch v. Holmes, 220 Mich. 584; Poy v. Allan, 231 Mich. 472; Omega Inv. Co. v. Woolley, 72 Utah, 474; Abbott v. Bean, 189 N. E. Rep. 435; Carson v. Wiley, 98 Wash. 476; Irving Trust Co. v. Deutsch, 2 Fed. Supp. 971; Harris v. Morse, 54 Fed. Rep. [2d] 109.) An agent upon the termination of his employment is entitled to compete fairly with his former principal and use any skill or knowledge he acquired during that employment when in so competing he violates no confidences of his former principal and uses none of his trade secrets and may solicit the trade of the customers of his former employer. (Robertson v. Chapman, 152 U. S. 673; Clark Paper Mfg. Co. v. Stenacher, 236 N. Y. 312; Kaumagraph Co. v. Stampagraph Co., 235 IN’. Y. 1; Meeder v. Provident S. L. Assur. Society, 171 N. Y. 432; Boosing v. Dorman, 148 App. Div. 824; 210 N. Y. 529; Peerless Pattern Co. v. Pictorial Review Co., 147 App. Div. 715; Goldberg v. Goldberg, 205 App. Div. 435; Hirsh & Schofield, Inc., v. Gusmer, 179 App. Div. 347; 226 N. Y. 649; Levy v. Cosmos, 221 App. Div. 533; 248 N. Y. 622; Scott & Co. v. Scott, 186 App. Div. 518; American Stay Co. v. Delaney, 211 Mass. 229; Black v. Hunter, 169 Cal. 632.) Upon the termination of a fiduciary relationship, such as an agency or joint adventure, when there is no capital invested in the enterprise, the agent or any member of the joint adventure may thereafter recover and retain all commissions earned by him in consummating a transaction in which the former principal or former joint adventurer had been interested when the closing of the transaction is accomplished by his personal services rendered after the termination of the agency or joint adventure and he is not accountable to the former principal or joint adventurer in any respect for said commissions. {Mason v. Wing, 3 Abb. Dec. 210; Mitchell v. Reed, 61 N. Y. 123; Meinhard v. Salmon, 249 N. Y. 458; First Nat. Bank v. Oallaudet, 122 N. Y. 655; Cassidy v. Hall, 97 N. Y. 159; Gordon Co. v. Garcia Sugars Corp., 241 App. Div. 155; Byrne v. Blaker Advertising Agency, Inc., 239 App. Div. 395; Mariner, Inc., v. Hughes, 235 App. Div. 143; Hutchinson v. Birdsong, 211 App. Div. 316; Hammond Oil Co. v. Standard Oil Co., 259 N. Y. 312; Schantz v. Oakman, 163 N. Y. 148; Kennedy v. Porter, 109 N. Y. 526; Brady v. Powers, 112 App. Div. 845; 188 N. Y. 626; Scott v. Kevorkian, 222 App. Div. 177.) The unconditional acceptance of defendant’s resignation, containing no provision with respect to commissions that the defendant might thereafter earn, constituted a release of any possible claim that the plaintiffs might have had against the defendant for commissions thereafter earned by him in the lease transaction. (Coletti v. Knox Hat Co., 252 N. Y. 468; Eames Vacuum Brake Co. v. Prosser, 157 N. Y. 289; Worley v. Calculagraph Co., 87 Mise. Rep. 309; O’ Neill v. Howe, 9 N. Y. Supp. 746.) Plaintiffs are estopped by their unfair and inequitable conduct from now asserting any claim to the commissions recovered by the defendant. {City of Buffalo v. L. & W. R. R. Co., 190 N. Y. 84; Alsen A. P. C. Works v. Degnon Cont. Co., 222 N. Y. 34; Swedish-American Bank v. Koébernick, 136 Wis. 473; Champion Spark Plug Co. v. Automobile Sundries Co., 273 Fed. Rep. 74; Gafford v. Globe Transfer & Storage Co., 71 Wash. 204; Realty Construction Co. v. Kennedy, 234 Mich. 490; Pittsburgh Const. Co. v. West Side Belt R. Co., 227 Penn. St. 90; Rogers v. Whitney, 91 Yt. 79; Sibley v. Ross, 102 Mich. 158.) Plaintiffs, in the event of reversal, should only be awarded so much of the money paid into court as represents one-half of the net amount received in settlement of the judgment after deducting all amounts paid to attorneys and counsel and for the other expenses of conducting the litigation, with such interest thereon as the City Chamberlain is required to allow, and not six per cent, as erroneously awarded by the trial court. (Levy v. Louvre Realty Co., 222 N. Y. 14; Campbell v. Eckington Co., 229 U. S. 561; Anderson v. Weber, 162 App. Div. 725; Saunders v. McDonough, 210 Ala. 208; Knudson v. George, 157 Wis. 520; Davidas v. Bradford, 129 Wis. 524.)
   Crouch, J.

Defendant was employed as a salesman for plaintiffs, a firm of real estate brokers, his compensation being fifty per cent of commissions earned as a result of negotiations conducted by him in their behalf. His employment was oral and terminable at will. In February, 1929, he learned that the New York Trust Company was considering the erection of a bank and office building on premises occupied by it under a long term lease with privilege of renewals. A bank officer acquainted him generally with the bank’s requirements for such a building, and authorized him to find a purchaser willing to finance and erect it. The terms so outlined contemplated a nine-story building, with the bank floor on the second story, vault space in the basement, a private entrance to the bank, and the building to be known as the New York Trust Company Building. In exchange for the leasehold the bank’s occupancy of its quarters was to be rent free.

Defendant interested one Natanson in the project, and the latter submitted a written proposal to the bank on March 21, 1929, and a second one on the following day. This latter met all the bank’s conditions except in respect to free rent on renewals of the lease, which point was left open, with an indication that it also might be met.

On March 25 defendant dictated a resignation from plaintiffs’ employ, which, suggested that he continue working in association with them on one specified deal, and be released on all others, including the one here in question, and sought to have plaintiffs accept this in writing. They declined to do so but did accept a resignation without any reservations on March 26, 1929. A difference about an unrelated transaction was assigned by defendant as the reason for his resignation.

Up to this time all the negotiations had been carried on by the defendant without the participation of plaintiffs or other persons in their employ. Plaintiffs appear to have been given only casual and limited information of the status of the negotiations and evidently had little faith in their success. At the time of defendant’s resignation they were not further enlightened on this, but on the contrary were given to understand that nothing had been accomplished and that consummation of the transaction seemed impossible.

The day following, defendant informed both the bank and Natanson of his resignation and asked to continue with the matter on his own behalf. As he was then not a licensed broker he took steps to qualify, and was provisionally licensed April 4, 1929. On that day he secured from Natanson a written proposal covering all the terms the bank had laid down. The bank subsequently refused to go through with the transaction, and defendant sued it in his own behalf for the commissions involved, recovering a judgment of $71,457.85. Plaintiffs then brought this suit to impose a trust upon the proceeds of the judgment. While the commission case was on appeal it was settled for $66,213.37 after an application to the Supreme Court. A sufficient amount to cover the plaintiffs’ claim, after payment of attorneys’ fees in the commission action, was deposited with the City Chamberlain.

The Appellate Division reversed findings of the trial court that deliberate concealment or fraud had been practiced by defendant, and made a new finding that he did not resign in bad faith. The finding remains that the negotiations prior to defendant’s resignation, and consummated thereafter, constituted a continuous transaction; and on the undisputed facts it could not well be otherwise. It is argued, however, that in the absence of a finding of actual bad faith, the non-exclusive employment of plaintiffs as brokers gave them no enforceable rights in an incompleted transaction, in view of the fact that defendant’s contract of employment included no covenant not to compete with plaintiffs after leaving their employ.

This is by no means a solution of the case. The essential point to be borne in mind is that the duty of an agent or employee not to use confidential knowledge acquired in his employment in competition with his principal is implicit in the relation. (Kaumagraph Co. v. Stampagraph Co., 235 N. Y. 1, 6; Little v. Gallus, 4 App. Div. 569.) It exists as well after the employment is terminated as during its continuance. It is an absolute and not a relative duty. The question then is whether the defendant’s knowledge of the status and the details of these negotiations is to be considered a confidential matter or merely a matter of general business knowledge and experience of competitive conditions gained from his calling.

It does not follow because plaintiffs’ employment as brokers was not exclusive, or because no contractual meeting of the minds had taken place between the parties to the pending negotiations, that the matter was public property as far as defendant was concerned. Good will, the expectancy of continued business from an indefinite clientele, is far more nebulous from a strictly contractual point of view, yet its protection from acts of unfair competition is a common subject of equity jurisdiction. The possibility of renewal of a partnership lease is a less frequent illustration of a non-contractual matter of the same sort. Exact legal classifications are not always adequate in determining the boundaries of fairness and loyalty.

It is clear enough that the defendant’s knowledge of the status of negotiations was acquired solely in the course of his agency and that it was confidential and special rather than public or general; “ something known only to one or a few and kept from others.” (Kaumagraph Co. v. Stampagraph Co., supra, 7.) So little was it known, that plaintiffs themselves seem to have been informed only of tentative proposals which they were left to believe were and would be unfruitful. In this, it seems to us, there was not only a breach of confidence after the employment terminated, but a failure by defendant to five up to his duties before that time. His position was not simply that of plaintiffs’ deputy with respect to this transaction; his knowledge of it was superior to theirs. He was the managing partner in the venture, and he was for this reason under an active duty of full disclosure tó them, not simply of refraining from deceiving them. (Meinhard v. Salmon, 249 N. Y. 458.) It is true that, unlike an ordinary employee, defendant had a potential interest in the outcome of the negotiations which he may have been entitled to continue. He might have offered to continue in association with them on this transaction, as he did on another; but his own testimony establishes that he did not. He might have acquainted them fully with the status of the matter and given them an informed choice of whether they wished to surrender the matter to him or to compete with on even terms. This he did not do. Under these circumstances a finding of actual fraud or bad faith is unessential. He may be held liable even though not guilty of a conscious purpose to defraud.” (Meinhard v. Salmon, supra, 467, 468.)

We find no merit in the contention that plaintiffs waived any valid claim to the commission recovered in the action against the trust company. The findings are to the contrary. Nor do we think the alleged inequitable conduct of the plaintiffs creates an estoppel. The elements of reliance and change of position are lacking. The amount of the judgment as determined by the trial court was, under all the facts, correct except that the interest should be at the rate allowed by the Chamberlain. The fund was impounded at the instance of the plaintiffs for their own protection. The defendant has not enjoyed the use of the money.

The judgment of the Appellate Division should be reversed and the judgment of the Special Term modified in accordance with this opinion and as so modified affirmed, with costs in this court and in the Appellate Division to appellants. (See 268 N. Y. 630.)

Crane, Ch. J., Lehman, O’Brien, Hubbs and Lough-ran, JJ., concur; Finch, J., not sitting.

Judgment accordingly.


author: O’Brien, J.

text:
    Jacob Budnitzky, Appellant, v. K. Arakelian, Inc., Respondent, Impleaded with Others.
    (Argued May 29, 1935;
    decided July 11, 1935.)

      Julius HaUheimer, William L. Brody and John Marx for appellant.
    The plaintiff is not concluded by the judgment in the former action. (Borgos v. Price, 140 Mise. Rep. 287; Griff en v. Keese, 187 N. Y. 454; Frenkel & Go. v. U Urbaine Fire Ins. Co., 225 App. Div. 332; Kessler v. Fligel, 240 App. Div. 232; Brooklyn Nat. Bank v. Werblow, 235 App. Div. 625; Fulton v. Viane, 232 App. Div. 680; Robinson v. N. Y., L. E. & W. R. R. Co., 64 Hun, 41; Bell v. Merrifield, 109 N. Y. 202; Schuykill Fuel Cory. v. Nieberg Realty Cory., 250 N. Y. 304.)

      Jesse Herbert Finkler and Frank I. Finkier for respondent.
    The judgment in the California action is res adjudicóla as to the present action. (Southern Pacific R. R. Co. v. United States, 168 U. S. 263; Eissing Chemical Co. v. Peoyle’s Nat. Bank, 205 App. Div. 89; 237 N. Y. 532; Schuylkill Fuel Cory. v. Nieberg Realty Cory., 250 N. Y. 304; Pray v. Hegeman, 98 N. Y. 351; Baltimore S. S. Co. v. Philliys, 274 U. S. 316; Sielcken-Schwars v. American Factors, Ltd., 265 N. Y. 239; Craig v. Ward, 36 Barb. 377; 3 Keyes, 387; McTighue v. Arctic Ice Cream Suyyly Co., 20 Cal. App. 708.)
   O’Brien, J.

The question presented on this appeal is whether a California judgment entered in September, 1933, constitutes a bar to the action now pending in this State.

In May, 1929, in the Superior Court of California, Jacob Budnitzky, plaintiff in the present action, brought an action against K. Arakelian and Ben H. Arakelian who are two of the five defendants in this action. In his complaint he alleged a partnership by written agreement dated October 1, 1922, among himself and K. Arakelian and Ben H. Arakelian and violation of that agreement during the two years immediately preceding May, 1929. For relief he demanded judgment dissolving the partnership and for an accounting. The answer admitted the agreement of October 1, 1922, but alleged that the partnership formed by that agreement was dissolved by mutual consent on December 5, 1927. The final judgment decreed that the partnership was terminated December 5, 1927, and that the defendants K. Arakelian and Ben H. Arakelian recover from plaintiff the sum of $34,409.

The complaint in this action, begun in New York October 25, 1932, names as parties defendant the two individuals who were defendants in the California action and, in addition, K. Arakelian, Inc., a corporation, as well as Dirán Arakelian and Eddie K. Arakelian. Only the corporate defendant was served. The complaint alleges an agreement of a different date, October 31, 1922, and in two causes of action demands judgment for $1,500,000 for profits converted by defendants during the years 1927 and 1928.

The corporation and two of the individual defendants were not parties to the California action. Are the issues in the present action res adjudícala? The corporate defendant moved to dismiss the complaint on that ground and its motion was granted at Special Term and the order affirmed by a divided court at the Appellate Division.

Although two of the defendants are the same in both actions and privity exists between them and the others, the purposes and objectives of the two actions are dissimilar, the foundations are laid in agreements different in date and to some extent unlike in character and the issues sought to be litigated in the present action cannot be held to have been capable of full adjudication in the California suit. The transactions alleged to have arisen only during the years 1927 and 1928 from an agreement dated October 31, 1922, among five individuals and a corporation were not within the scope of the issues relating to transactions alleged to have occurred from May, 1927, to May, 1929, arising from a written agreement of partnership dated October 1, 1922, among three individuals which the court decided was dissolved in December, 1927. We think, therefore, that the former judgment may not be held to be conclusive in respect to the issues in this action. The two actions have not such a measure of identity that a different judgment in the second will destroy or impair the rights or interests established by the first. (Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304, 306, 307.)

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

Crane, Ch. J., Htjbbs, Crouch and Loughran, JJ., concur; Lehman, J., dissents; Finch, J., not sitting.

Judgments reversed, etc.


text:
    Floyd L. Carlisle, Respondent, v. John J. Bennett, Jr., Individually and as Attorney-General of the State of New York, Appellant.

      (Argued May 21, 1935;
    decided July 11, 1935.)

      John J. Bennett, Jr., Attorney-General (John F. X. McGohey, Ambrose V. McCall and John R. O’Hanlon of counsel), for appellant.
    The courts will not grant an injunction to restrain a public officer from performing an executive duty involving his discretion. (Dunham v. Ottinger, 243 N. Y. 423; Enterprise Sav. Assn. v. Zumstein, 67 Fed. Rep. 1000; Matter of Mac Ñamara, 128 Mise. Rep. 84; Matter of Kenney, 129 Mise. Rep. 708; Britton v. Ottinger, 222 App. Div. 663; People v. Holmes, 227 App. Div. 734; Matter of Hoyt, 233 App. Div. 826; 258 N. Y. 569; Commonwealth Management Corp., v. Bennett, 242 App. Div. 784; Royal Development Co. v. Bennett, 241 App. Div. 791.) The complaint fails to state facts sufficient to entitle the plaintiff to the relief sought. (Matter of Hirschfield v. Craig, 209 App. Div. 555; 239 N. Y. 98; Matter of Edge Ho Holding Corp., 231 App. Div. 595; 256 N. Y. 374; Davis v. American Society, 75 N. Y. 362; Buffalo Gravel Corp. v. Moore, 201 App. Div. 242; 234 N. Y. 542; Biddles, Inc., v. Enright, 239 N. Y. 354; Bach-man v. Harrington, 184 N. Y. 458; Goldman v. Corn, 111 App. Div. 674; Uppercu v. Stevens, 160 App. Div. 918; Brighton-by-the-Sea, Inc., v. Rivkin, 201 App. Div. 726.)

      Randall J. LeBoeuf, Jr., William A. Winston and Thomas F. Fennell, II, for respondent.
    No unlimited power of examination of all of a citizen’s personal and business affairs is conferred upon the Attorney General by article 23-A of the General Business Law (Cons. Laws, ch. 29). (Dunham v. Ottinger, 243 N. Y. 423; Matter of Davies, 168 N. Y. 89; Matter of Foster, 139 App. Div. 769; People v. American Ice Co., 120 App. Div. 234; People v. Foster, 204 App. Div. 295; 236 N. Y. 610; Hirschfield v. Hanley, 228 N. Y. 346; Matter of Hirschfield v. Craig, 239 N. Y. 98; Boyd v. United States, 116 U. S. 616; Interstate Commerce Comm. v. Brimson, 154 U. S. 447; Hale v. Henkel, 201 U. S. 43; Harriman v. Interstate Commerce Comm., 211 U. S. 407; Sinclair v. United States, 279 U. S. 263; Silverthorne Dumber Co. v. United States, 251 U. S. 385; Coastwise Dumber & Supply Co. v. United States, 259 Fed. Rep. 847; Federal Trade Comm. v. American Tobacco Co., 264 U. S. 298.) The courts may prevent by injunction an administrative or executive officer from acting in excess of his authority to the injury of the individual. (People v. Canal Board, 55 N. Y. 390; Matter of Young, 209 U. S. 123; American School of Magnetic Healing v. McAnnuliy, 187 U. S. 94; Santa Fe Pacific Co. v. Lane, 244 U. S. 492; Matter of Barnes, 204 N. Y. 108.) The complaint states a cause of action for an injunction. (Gilbert Paper Co. v. Prankard, 204 App. Div. 83; Moore v. Bonbright & Co., 202 App. Div. 281; Royle v. McLaughlin, 195 App. Div. 413; Sage v. Culver, 147 N. Y. 241; People v. Canal Board, 55 N. Y. 390; Swift & Co. v. United States, 276 U. S. 311; Pierce v. Society of Sisters, 268 U. S. 510; Terrace v. Thompson, 263 U. S. 197; Interstate Commerce Comm. v. Brimson, 154 U. S. 447; Matter of Pacific Ry. Comm., 32 Fed. Rep. 241; Entick v. Carrington, 19 Howell’s State Trials, 1029; Matter of Marcus, 139 Mise. Rep. 675; 255 N. Y. 630; People v. Pecoi, 239 App. Div. 772; 262 N. Y. 681; People v.- Horvatt, 142 Mise. Rep. 803.)
   Crouch, J.

The Attorney-General, in the course of an investigation pursuant to the provisions of the Martin Act (General Business Law [Cons. Laws, ch. 20], art. 23-A), caused four subpoenas to be served upon Floyd L. Carlisle. Each subpoena commanded him to appear and attend before the Attorney-General at a specified time and place to testify and to produce certain specified written data and information, which the Attorney-General deems relevant and material to the inquiry.” Thereupon, this action was commenced for an injunction restraining the Attorney-General (1) from examining the plaintiff or his books, papers or documents; (2) from requiring the production of the specified data and information; and (3) from taking any steps to punish plaintiff for failure to obey the command of the subpoenas. A motion by the defendant for judgment dismissing the complaint on the ground that it did not state facts sufficient to constitute a cause of action was denied below. The question of sufficiency has been certified to this court.

The complaint, apart from formalities, alleges that on August 27, 1934, defendant caused to be served upon plaintiff subpoenas requiring plaintiff to appear at a certain time and place to testify regarding the practices of Niagara Share Corporation of Maryland and Floyd L. Carlisle and others not named in said papers in the issue, negotiation and sale of securities in and from the State of New York, and to produce at such time and place the following:

A transcript of all loan accounts of Floyd L. Carlisle from 1925 to date, whether in his own name or in the name of another, giving name in which held, names of all corporations, companies, or individuals, with addresses, from whom he borrowed or to whom he loaned, directly or indirectly, money, securities, or other things of value, with itemized list of collateral pledged, if any.
A complete list of all bank and brokerage accounts of Floyd L. Carlisle from January 1, 1925, to date, with dates of accounts, whether in his own name or in another’s, and if in another name, the name and address of the company or individual holding it.
A complete list from January, 1925, to date of all of the corporations or companies of which Floyd L. Carlisle has been an officer, director, or stockholder or with which he has been connected in any way, directly or indirectly, or from which he has received any remuneration, with dates and details of transactions.
Transcript from January, 1925, to date of all purchases, sales, deals, options and/or contracts concerning securities of Niagara Share Corporation of Maryland and /or Niagara Share Corporation (of Delaware) and /or Buffalo, Niagara & Eastern Power Corp. and/or of Niagara Hudson Power Corp., entered into by Floyd L. Carlisle for his account or for the account of any partnership, corporation, company, trust or association with which he has been connected as officer, director, partner, trustee or otherwise.”

It then alleges that from the year 1925 to date and also for a long period of time prior thereto plaintiff has been and now is engaged in numerous and varied business and corporate activities other than the issue, negotiation or sale of securities in or from the State of New York, to wit, the manufacture of paper and paper products, of rayon (artificial silk) products, of bags and other containers, and banking and other activities; that in connection with such other business activities and in connection with his own personal affairs, plaintiff has loaned and borrowed money, has maintained bank accounts and has received remuneration and income in the form of salaries, fees, dividends and interest from various corporations, for purposes 'having no relationship to the issue, negotiation or sale of securities in or from the State of New York by the plaintiff or by Niagara Shares Corporation of Maryland, or by any other individual, corporation or association. The complaint then charges, in substance, that the requirement of production by plaintiff of the information and data specified in the subpoenas is arbitrary and unreasonable, and beyond the powers of defendant to require, so far as it relates to these other activities; and that the proposed examination of plaintiff and the required production of data and information without limitation to matters connected with the subject of the investigation will cause plaintiff irreparable injury and will deprive plaintiff of his liberty and property without due process of law; and, finally, that plaintiff has no adequate remedy at law.

In making an investigation under the power granted to him by section 352 of the General Business Law, the Attorney-General acts as an executive official performing an administrative duty. (Dunham v. Ottinger, 243 N. Y. 423, 433.) The statute says he may require the production of any books and papers which he deems relevant or material to the inquiry.” The contention-of the Attorney-General is that the exercise of a discretion reposed in him as an executive official by the Legislature cannot be supervised or controlled by the courts. (Cf. Enterprise Savings Assn. v. Zumstein, 67 Fed. Rep. 1000.) To the extent that the Legislature itself has power to confer discretion upon an executive, the general rule, as stated, may be accepted. But there are limits to the power of the Legislature. It could not confer upon an executive an arbitrary and unbridled discretion as to the scope of his investigation. However broad the statutory language may be, the discretion must be exercised within bounds circumscribed by a reasonable relation to the subject-matter under investigation and to the public purpose to be achieved. So we have said that the statute does not commission the Attorney-General to embark upon any roving course for the purpose of generally prying into the affairs of any person.” (Dunham v. Ottinger, supra, 433.) The power to require a witness to produce books and papers is necessarily limited to a proper case,” even though those words are not expressly used in the statute here as they were in the statute considered in Matter of Hirshfield v. Craig (239 N. Y. 98). A proper case is ordinarily one where the books and papers called for have some relevancy and materiality to the matter under investigation. (Matter of Davies, 168 Y. 89; Matter of Hirshfield v. Craig, supra, 118; Dunham v. Ottinger, supra.)

Since there is a limit to the exercise of the Attorney-General’s discretion, the witness subpoenaed has the right to secure an adjudication as to whether that limit has been exceeded. To secure such an adjudication is the purpose of this action. If we were to pass upon the sufficiency of the complaint on its merits, it would be difficult to say that it should be dismissed. Even in the face of our own warning against prophecy at a preliminary stage of a contest (Matter of Edge Ho Holding Corp., 256 N. Y. 374, 381, 382) the facts alleged, which we must take as true, seem to envisage forbidden pastures. The motion, however, challenges the pleading at all points. We think it insufficient, since, upon the facts alleged, there is an adequate remedy at law by motion to quash, vacate or modify the subpoenas. That remedy is not only adequate ; We have said that it was the proper remedy.” (Matter of Hirshfield v. Craig, supra, p. 118. Cf., also, Matter of Hoyt, 233 App. Div. 826; affd., 258 N. Y. 569; People v. Holmes, 227 App. Div. 734; Matter of Kenney, 129 Misc Rep. 708; Matter of MacNamara, 128 Misc.Rep. 84; affd. 218 App. Div. 822.)

The orders should be reversed, with costs in this court and in the Appellate Division, and the motion granted. The question certified should be answered in the negative.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Loughran and Finch, JJ., concur.

Ordered accordingly.


author: Loughran, J.

text:
    Theodore Garrett, Respondent, v. City of Schenectady, Appellant.
    (Argued May 24, 1935;
    decided July 11, 1935.)

      Thomas W. Wallace, Corporation Counsel (Arlen T. St. Louis of counsel), for appellant.
    Statutory provisions as. to speed and traffic signal lights have no application to fire apparatus when on the way to a fire. (Hubert v. Granzo, 155 N. W. Rep. 204; Balthaser v. Pacific Electric Ry. Co., 202 Pac. Rep. 37; Geary v. Metropolitan St. Ry. Co., 84 App. Div. 514; 177 N. Y. 535; City of New York v. Metropolitan St. Ry. Co., 90 App. Div. 66; 182 N. Y. 536; Farley v. Mayor, 152 N. Y. 222; Miner v. Rembt, 178 App. Div. 173.) There is no evidence establishing negligence. (DiCaprio v. N. Y. C. R. R. Co., 231 N. Y. 94; Racine v. Morris, 201 N. Y. 240; Karpeles v. Heine, 227 N. Y. 74; Clark v. Doolittle, 205 App. Div. 697; Martin v. Herzog, 228 N. Y. 164; Corbett v. Scott, 243 N. Y. 66; Rider v. Syracuse R. T. R. Co., 171 N. Y. 139; Rexter v. Starin, 73 N. Y. 601; Voak v. North Central R. R. Co., 75 N. Y. 320; Austin v. N. J. Steamboat Co., 43 N. Y. 75; Eckert v. Long Island R. R. Co., 43 N. Y. 502.)

      Walter A. Fullerton for respondent.
    Defendant was negligent. (Woodruff v. Germansky, 233 N. Y. 365; Muhs v. Fire Ins. Salvage Corps, 89 App. Div. 389; Burd v. Bleischer, 208 App. Div. 499; Ferris v. Sterling, 214 N. Y. 249; Orlando v. Pioneer B. T. Supply Co., 239 N. Y. 342; Leonard v. Brooklyn Heights R. R. Co., 57 App. Div. 125; Cons. Laws, ch. 71, § 82, subd. 1; MacGregor v. Regitano & Kroon, 263 N. Y. 534; Van Ingen v. Jewish Hospital, 182 App. Div. 10; 227 N. Y. 665; Farrell v. Fire Ins. Salvage Corps, 189 App. Div. 795; Miller v. City of New York, 235 App. Div. 259; Sharp v. Erie R. R. Co., 184 N. Y. 100; Edgerley v. Long Island R. R. Co., 44 App. Div. 476; Luther v. Fonda, J. & G. R. R. Co., 160 App. Div. 366; Shea v. United States Trucking Corp., 200 App. Div. 821; Matter of Evans v. Berry, 262 N. Y. 61.) Plaintiff was not negligent. (Lewis v. Long Island R. R. Co., 162 N. Y. 52; Wagner
      v. International Ry. Co., 232 N. Y. 176; Perrotta v. Richmond Brick Co., 123 App. Div. 626; Baker v. Close, 204 Y. 92; Poulsen v. Nassau Electric R. R. Co., 30 App. Div. 246; Burd v. Bleischer, 208 App. Div. 499; Horten v. N. Y. C. R. R. Co., 237 N. Y. 38; Ward v. Clark, 232 Y. 195; Surace v. Danna, 248 N. Y. 18; Railroad Co. v. Stout, 17 Wail. 657; Texas & Pacific Ry. Co. v. Harvey, 228 U. S. 319; Kettle v. Turl, 162 N. Y. 255; Henavie v. N. Y. C. & H. R. R. R. Co., 166 N. Y. 280; Smith v. N. Y. C. & H. R. R. R. Co., 177 N. Y. 224; Dunston v. Greenberger, 205 App. Div. 778; Hart v. Ruduk, 233 App. Div. 453; Miller v. City of New York, 235 App. Div. 259.)
   Loughran, J.

Plaintiff’s automobile was struck by a motorized pumper fire truck of the defendant city of Schenectady at the intersection of Erie boulevard and Union street in that city. Plaintiff’s car was going north on Erie boulevard. Defendant’s vehicle, responding to an alarm of fire on Union street, was being driven west on that thoroughfare. The supports of a railroad bridge which spanned Union street at the east side of the intersection obscured in some degree at that point the view along either highway from the other. Both drivers knew the locality. The day was clear, the roadways dry.

A traffic control signal stood in the center of the intersection. When plaintiff was seventy-five feet south of it this fight turned green for him and red against traffic on Union street. At that time plaintiff heard the sound of sirens and in a mirror before him saw a hook and ladder carriage moving north behind him about four hundred feet to the south on Erie boulevard. A fire whistle located at the northwest corner of the intersection was then in operation.

On the approach of fire apparatus, as evidenced by suitable and continuous warning or by street signals, visible or audible one to another, indicating the route of the apparatus, the driver of a vehicle must immediately draw up such vehicle as near as practicable to the right-hand curb and parallel thereto, and bring it to a standstill.” (Vehicle & Traffic Law [Cons. Laws, ch. 71], § 82, subd. 6.) To plaintiff’s right automobiles were parked solidly along the east curb of Erie boulevard south from Union street. There was a parking space at that curb north of the intersection. An automobile had stopped on the north side of Union street facing west just east of Erie boulevard.

“ I went across on the green light,” plaintiff says, “ and tried to get in the space which was the only space left on the other side, * * * the northeast corner.” His testimony is that when he was in the center of Union street, he saw the pumper truck about twenty-five feet back of the automobile that stood facing west on Union street at that corner. It [the truck] swerved to the left to go around a car, then it turned to the right and right into me; * * ⅜ when it turned to the left to avoid that car, I thought it was going to make a left turn.”

The jury, absolving plaintiff of fault, found that negligent operation of defendant’s apparatus caused the collision. Judgment for plaintiff’s damages followed (Highway Law [Cons. Laws, ch. 25], § 282-g) and has been affirmed by the Appellate Division.

We can discover no sufficient foundation for the verdict of the jury.

The pumper truck weighed seven tons. It was equipped with eight hundred feet of hose, and a number of chemical ■tanks and ladders. We accept plaintiff’s estimate of its speed on Union street — thirty to forty miles an hour. Its coming was announced by a siren connected with its flywheel and a Buckeye ” whistle attached to the exhaust. Foot brakes were applied as it neared the intersection. The driver thereafter shut off the motor and used the emergency brake in an effort to avoid the impact. All.other things being equal, his was the right of way. (Vehicle & Traffic Law, § 82, subd. 1.) It was the rule of defendant’s fire department that members should use all speed consistent with safety.” This regulation was warranted. (Farley v. Mayor, etc., of City of New York, 152 N. Y. 222, 227; Coots v. City of Detroit, 75 Mich. 628, 630, 631.)

On cross-examination defendant’s driver admitted that as he entered the intersection he looked to his right before looking to his left. Traffic on his right would be on the west or farther side of Erie boulevard, but he looked there first because that is the most dangerous side.” Upon this item of evidence plaintiff rests his case. His counsel say in their brief: “He almost reached safety. * * * If the driver of the defendant’s pumper had first looked to the left as he approached the intersection, he would have slackened his speed a little, and the accident would never have occurred.” But it is at least as fair to argue that had plaintiff not lessened his speed while he was within the intersection there would have been no collision. He first saw the pumper truck when it was about fifty feet away. Asked whether he then accelerated the movement of his automobile, he answered: “ Well, I slowed down because I was almost into that space there, and I thought he was going to make a left turn.”

Traffic on the highways, whether by land or sea, cannot be conducted without exposing those whose persons or property are near it to some inevitable risk; and that being so, those who go on the highway * * * may well be held to do so subject to their taking upon themselves the risk of injury from that inevitable danger.” (Blackburn, J., in Fletcher v. Rylands, [1866] L. R. 1 Ex. 265, 286.) We do not say that in the first instance plaintiff accepted a chance that no prudent man would have taken. No more can it be said that defendant’s driver, doing a lawful act, was at fault because of his want of prevision of what was in plaintiff’s mind. It is not claimed that there was such an emergency as deprived either of judgment. Undeniably plaintiff had the better knowledge of his peril. We need not consider whether he omitted extra precautions that in ordinary prudence were demanded by the known danger of his position. In the aspect of the facts least unfavorable to him, he shows at most a pure accident.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts. (See 268 N. Y. 708.)

Ceane, Ch. J., Lehman, O’Beien, Hubbs, Ceottch and Finch, JJ., concur.

Judgments leversed, etc.


author: Ceane, Ch. J.

text:
    Corn Exchange Bank Trust Company, as Trustee, Appellant, v. Bankers Trust Company et al., as Executors of Marcus Daly, Deceased, et al., Respondents, Impleaded with Others.
    (Argued June 3, 1935;
    decided July 11, 1935.)

      Frank C. Laughlin, Spotswood D. Bowers and Stewart W. Bowers for appellant.
    A trustee is entitled to be reimbursed for necessary legal expenses and disbursements and it is immaterial that there are no provisions for such expenses in the instrument of trust. (Wood-ruff v. N. Y., L. E. & W. B. R. Co., 129 N. Y. 27; Matter of Maxwell, 218 N. Y. 88; Schoenherr v. Van Meter, 215 N. Y. 548; Downing v. Marshall, 37 N. Y. 380; Rensselaer & S. R. R. Co. v. Miller, 47 Yt. 146; Bissell v. Butterworth, 118 Atl. Rep. 50; Collier v. Munn, 41 N. Y. 143.) There is nothing in the language of the deed of trust to take the case out of the general rule, or to indicate any intent that the trustee was required to pay necessary expenses of the trust out of its own pocket, and to imply such an agreement would be against public policy. (Matter of Arkenburgh, 38 App. Div. 473; Matter of Barney, 148 Mise. Rep. 871; Cause v. Commonwealth Trust Co., 196 N. Y. 134; Matter of Wallach, 164 App. Div. 600; 215 N. Y. 622; People v. Chapman, 225 N. Y. 700; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Genet v. Delaware Canal Co., 163 N. Y. 173; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519.)
    No appearance for respondents.
   Ceane, Ch. J.

On the 9th day of May, 1929, Margaret P. Daly, of Hamilton, Montana, by instrument, duly executed, made the Corn Exchange Bank, doing business in the city and State of New York, a trustee of certain personal property, consisting of stock and bonds, to pay the income thereof to her son, Marcus Daly, during his life, and upon his death to apply the same to the use, maintenance and support of his son, Marcus Daly, 3d, being the grandson of the settlor. Upon the death of the grandson, the principal is to go in equal shares to his children, or in the absence of any such children, to the then living children of the settlor.

When Marcus Daly, the son, died, the trust company accounted in the Supreme Court, citing all parties interested, and showing the principal of the trust in its hands to be $445,190 and the accumulation to be over $60,000. The infant son, Marcus Daly, 3d, having received a large income under the will of his father, the income under this trust has not been fully paid to him since the death of his father, but it has accumulated in the hands of the trustee.

Upon this accounting the trustee employed, as attorneys, Laughlin, Gerard, Bowers & Halpin whose services have been found to. be reasonably worth $2,750. The trial judge also found in passing upon the account that the trustee “ has made or necessarily incurred taxable disbursements in the above-entitled action in the amount of $304.70 and that said sum is reasonable and proper in amount.” However, he disallowed these charges, holding that the trustee was obliged to pay them, if at all, out of its commissions because of a provision in the trust agreement reading as follows:

“ 8. It is further agreed that the compensation of the party of the second part for acting as Trustee hereunder shall be one-half (f) of one per cent (1%) of the value of the securities turned over to it to form the corpus of this trust or of any cash so turned over and shall be one per cent of the value of the securities and cash paid over, transferred and assigned to whomever may be entitled thereto at the death of the life beneficiary and that the compensation of the party of the second part for collecting and paying over the income of this trust fund shall be two per cent.”

do not find that this word “ compensation ” includes the necessary expenses of the trustee upon an accounting proceeding such as this. It was obliged to be represented in court by an attorney and the charges have been found to be reasonable and necessary. The money which an executor or trustee pays out of his own funds and gets back as reimbursements is in no sense compensation, and such has been the application of the word by the cases. The law finds expression in these words; acting en autre droit, as executors, administrators, trustees, guardians, receivers, etc., are, upon a faithful execution of their trusts, to be indemnified out of the trust property, for all expenses necessarily incurred in the faithful performance of their duties ” (Matter of Maxwell, 218 N. Y. 88, 90), and expenses in a proper case may include allowance for counsel fee and legal services. (Woodruff v. York, L. E. & W. R. Co., 129 N. Y. 27; Downing v. Marshall, 37 N. Y. 380; Bogert on the Law of Trusts, § 106, p. 404.)

We decide that the word “ compensation ” in that instrument does not include expenses and disbursements incurred upon this accounting.

Therefore, the judgments of the Appellate Division and of the Special Term in so far as they direct the payment of $2,750, lawyers’ fees, and $304.70, expenses, by the plaintiff individually, should be reversed and judgment directed for the plaintiff for these amounts payable out of the estate, without costs.

Lehman, O’Bkien, Crouch, Loughran and Finch, JJ., concur; Hubbs, J., not sitting.

Judgment accordingly.


author: Ckouch, J.

text:
    William D. Roddy, Respondent, v. Lewis J. Valentine, as Police Commissioner of the City of New York, Appellant.
    (Argued June 3, 1935;
    decided July 11, 1935.)

      Paul Windels, Corporation Counsel (Paxton Blair and Seymour B. Quel of counsel), for appellant.
    The plaintiff’s acceptance of his new office having occurred after the effective date of chapter 78 of the Laws of 1932, the statute may be applied to him without contravening the rule against retroactive constructions. Public policy favors the liberal construction of statutes aimed to prevent double payments from public funds in times of depression. (Matter of McKinney v. McGoldrick, 266 N. Y. 665; Peterson v. Martino, 210 N. Y. 412; Heckmann v. Pinck-ney, 81 N. Y. 211; People ex rel. Devery v. Coler, 173 N. Y. 103; Matter of Friel, 101 App. Div. 155; 181 N. Y. 558; New York Central R. R. Co. v. White, 243 U. S. 188; People ex rel. Donovan v. Retirement Board, 326 Ill. 579; McCann v. Retirement Board, 331 Ill. 193; Gibbs v. Minneapolis Fire Department Relief Assn., 125 Minn. 174; Head v. Jacobs, 150 Ky. 290; Matter of Price v. Farley, 22 Ohio Cir. Ct. 48; State ex rel. King v. Board of Trustees, 192 Mo. App. 583; State ex rel. Risch v. Board of Trustees, 121 Wis. 44; Lynch v. United States, 292 U. S. 571; Matter of Goodwin, 57 Fed. Rep. [2d] 31.)

      Isidor Neuwirth and Edmund J. Pickup for respondent.
    Section 32, added to the Civil Service Law (Cons. Laws, ch. 7), cannot by retroactive interpretation affect the rights of the plaintiff. (Isola v. Weber, 147 N. Y. 329; O’Reilly v. Utah Co., 87 Hun, 406; Town of Cherry Creek v. Becker, 123 N. Y. 161; Bronk v. Barckley, 13 App. Div. 72; Matter of Griffiths, 16 Mise. Rep. 128; Wingate v. Flynn, 139 Mise. Rep. 779; 233 App. Div. 785; Addis v. Selig,
      264 N. Y. 274; McCann v. City of New York, 52 App. Div. 358.)
   Ckouch, J.

The Greater New York Charter (Laws of 1901, ch. 466, as amd.) by sections 351 et seq. makes provision for the creation and administration of a police pension The fund (§ 353) consists of moneys recruited from various sources, for the most part public, but includes two per centum of the monthly pay of each member of the police force deducted from his salary by the Comptroller and by him paid into the fund. Section 355 provides, among other things, that any member of the force may upon his own written application and by order of the police commissioner, be retired from service and be granted an annual pension, to be paid from the fund, provided he is fifty-five years old and has served twenty years; and pensions granted under this section shall be for the natural life of the pensioner, and shall not be revoked, repealed or diminished.” (Amd. L. 1919, ch. 518; L. 1920, ch. 508; L. 1921, ch. 685.) By the provisions of section 1560 of the charter, however, the payment of the pension may be suspended temporarily if the pensioner takes office, employment or position under the state or city of New York or any of the counties included within said city.” (Amd. L. 1923, ch. 266.)

On August 24, 1924, the plaintiff upon his own application was retired and was awarded a pension of $1,250 per annum.

The Laws of 1932, chapter 78, added to the Civil Service Law (Cons. Laws. ch. 7) a new section (§ 32) which provides that if any person subsequent to his retirement from the civil service of the State or of any municipal corporation or political subdivision of the State, shall accept any office, position or employment on and after July 1, 1932, to which any salary or emolument is attached in the civil service of the State or of any municipal corporation or political subdivision of the State (with certain exceptions not material here), any pension awarded to him upon retirement shall be suspended during such employment.

From August 7, 1932, to December 31, 1933, the plaintiff was employed as chief of police of the city of Long Beach, New York. During that period payment of the plaintiff’s pension was suspended. This action was brought to recover the unpaid amount. The sole question is whether section 32 of the Civil Service Law affects the plaintiff’s right to his pension during the time he was employed by the city of Long Beach.

The concept embodied in the word pension has developed far beyond the original idea of a bounty or gratuity, “ springing from the appreciation and graciousness of the sovereign,” granted in recognition of meritorious past services. One has but to examine the statutes of our own State (e. Civil Service Law, arts. 4, 5 and 6; Education Law [Cons. Laws, ch. 16], art. 43-B) to appreciate the extent of the development. Necessarily there has come with that development changed theories relating to the nature of the rights and obligations under pension statutes both of civil servants and of the government. In an attempt at legal classification of the relation, the courts have come to widely varying results. (Cf. Ball v. Board of Trustees, 71 N. J. L. 64; State ex rel. Risch v. Board of Trustees, 121 Wis. 44.) Where the statutory scheme creates a fund wholly or largely out of public moneys, the interest of the member down to the point where there has been compliance with all precedent conditions and the award has been or as of right should have been made, can hardly be deemed contractual. There has been a suggestion that it is quasi-contractual. (40 Harvard Law Review, 504, 505.) In Pennie v. Reis (132 U. S. 464, 471) it is called a mere expectancy created by the law.” But whatever its legal nature may be, there seems to be no doubt that it is subject to change or even to revocation at the will of the Legislature. (People ex rel. Devery

Where, however, the statutory conditions for retirement existing when application is made have been met and the award of the pension or benefit has been made, or as of right should have been made (Matter of O’Brien v. New York State Teachers’ Retirement Board, 215 App. Div. 220; affd., 244 N. Y. 530), the interest becomes vested and takes on the attributes of a contract, which in the absence of statutory reservations, may not legally be diminished or otherwise adversely affected by subsequent legislation. (Pennie v. Reis, supra; People ex rel. Mulvey v. York, 41 App. Div. 419; Klench v. Board of Pension Fund Comrs., 79 Cal. App. 171, and cases therein cited.) All the reasons of policy which underlie and justify pension legislation in general — the efficiency and morale of departmental service, social protection and social justice — support the conclusion of the last cited and many other similar cases and afford adequate ground for the decisions. We need not strain for a legal classification.

We may concede an incongruity in plaintiff’s drawing a pension as a retired policeman and at the same time a salary as an active policeman in a neighboring city. That, however, was a right granted, or at least not denied to him under section 1560 of the charter, when he retired. We take the statute as we find it.

The judgment should be affirmed, with costs.

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

Judgment affirmed, etc.


author: Lotjghran, J.

text:
    In the Matter of Social Investigator Eligibles Association, Respondent, against Frank J. Taylor, as Comptroller of the City of New York, et al., Appellants.
    (Argued June 3, 1935;
    decided July 11, 1935.)

      Paul Windels, Corporation Counsel (William C. Chanler, Paxton Blair and Edmund L. Palmieri of counsel), for appellants.
    The services of the persons complained of by the petitioner are legally utilized. (New York Constitution, art. 5, § 6.)

      Albert De Boode for respondent.
    A mandamus order directing discontinuance of the performance of an illegal practice or act by public officials is proper. (Matter of Reynolds, 202 N. Y. 430; People ex rel. Lempps v. Voorhis, 178 N. Y. Supp. 516; 185 App. Div. 939;-224 N. Y. 633; People ex rel. Conklin v. Boyle, 98 Mise. Rep. 364; 178 App. Div. 908; People ex rel. Daley v. Rice, 129 N. Y. 449; People ex rel. Russell v. Board of Canvassers, 46 Hun, 390; Matter of Lewis v. Board of Parole, 220 N. Y. 8; Oren v. Secretary of State, 171 Mich. 590; Levering v. Board of Supervisors, 112 Atl. Rep. 301; People ex rel. Akin v. Loeffler, 175 Ill. 585; Matter of McAdams, 260 N. Y. 559; Matter of Plattsburg Pub. Co. v. Looby, 124 Mise. Rep. 761.)
   Lotjghran, J.

On December 8, 1932, the Municipal Civil Service Commission of the city of New York, by open competitive examination, established a list of persons eligible for appointment to the position of Social Investigator — To make field investigation of persons applying for charitable relief from the city of New York.” The petitioner is an unincorporated association consisting of two hundred and fifty eligibles now on that list. It alleges that two hundred persons employed by the Department of Public Welfare of the city as social investigators have neither passed nor been exempted from civil service examination, and receive compensation out of funds deposited to the credit of the city. The petition demands that the defendant Commissioner of Public Welfare of the city be directed forthwith to desist from utilizing the services as social investigator of any person not selected or appointed in accordance with the Civil Service Law (Cons. Laws. ch. 7) and rules, and that the defendant Comptroller of the city be directed not to make payment for such services of any person not so selected or appointed.

No member of the petitioner has ever been employed by the city. (Cf. Matter of Danker v. Department of Health, 266 N. Y. 365.) Concededly lack of appropriation prevents any additional appointment from the civil service eligible list upon which the names of its members appear.

The answer of the defendant Commissioner of Public Welfare is that the Works Division of the Emergency Relief Bureau of the city, the local agency then administering unemployment relief (Laws of 1931, ch. 798, § 7), sent to his department the persons mentioned in the petition with a request that the department avail itself of their services; that the services of these persons had been utilized in connection with phases of the work of our regular force of civil service investigators;” and that such relief is paid from moneys provided in part by the City, the State and the Federal Government.” No claim is made that this course was followed otherwise than in good faith.

The Appellate Division has affirmed a peremptory-order of mandamus granted by the Special Term in accordance with the prayer of the petition. Because of the importance of the conflict of interests presented, we allowed this appeal by the defendants. For the same reason we now put aside an argument that the status of the petitioner does not entitle it to a hearing on the merits. (Cf. Matter of Jaffe v. Board of Education, 265 N. Y. 160.)

Appointments and promotions in the civil service of the State, and of all the civil divisions thereof, including cities and villages, shall be made according to merit and fitness to be ascertained, so far as practicable, by examinations, which, so far as practicable, shall be competitive.” (Const, art. Y, § 6.) Attachment to the principle of this command of the Constitution constrained the courts below to proscribe the practice challenged by the petitioner. We have come to the conclusion that nothing shown by this record is offensive to that principle or calls for its vindication.

Since September 23, 1931, it has been the declared public policy of the State that the hardships and suffering caused by unemployment of a considerable number of its inhabitants is a condition that requires the furnishing of public aid to individuals as a measure for the public health and safety occasioned by an existing emergency. (Laws of 1931, ch. 798; Laws of 1932, ch. 567; Laws of 1933, chs. 2, 9, 34, 69, 259; Laws of 1934, chs. 15, 65; Laws of 1935, ch. 25.) Pursuant to this legislation the services of the persons mentioned in the petition are used by the Department of Public Welfare of the city of New York. As persons who are unemployed or whose employment is inadequate to provide the necessaries of life they receive work relief,” i. e., wages from moneys specifically appropriated or contributed for that purpose, for services or labor in work undertaken by the city independently of work under a contract or for which an annual appropriation has been made. For such employment they have been selected on the basis of their needs as determined by investigation. The statute (Laws of 1931, ch. 798) provides that no person so employed shall be subject to the provisions of the Civil Service Law.

This procedure (admittedly followed in good faith) does not, we think, trench upon the right of any member of the petitioner under article V, section 6, of the Constitution. The command of that section is addressed to conventional and stable duties of the functionaries of civil government. Its aim was to supplant by a merit system a spoils system of office holding. (Rogers v. Common Council of Buffalo, 123 N. Y. 173; People ex rel. Sweet v. Lyman, 157 N. Y. 368, 375.) When this policy was inaugurated there was no purpose to check “ an expanding consciousness in the modern state that relief against both after the event and before it, is part of the state’s function ” (People v. Crane, 214 N. Y. 154, 165.) That consciousness is not without attestation in the Constitution (Art. VIII, § 10). The fundamental law is to be read as a whole and every relevant provision of statute is to be construed, if possible, so as to give effect to every other provision. (People ex rel. McClelland v. Roberts, 148 N. Y. 360, 367; Matter of Danker v. Department of Health, supra, 369.)

No person mentioned in the petition has received appointment to any office or position of trust or employment in the civil service of the State or of the city of New York in the sense of the Constitution or of the Civil Service Law. (People ex rel. Balcom v. Mosher, 163 N. Y. 32, 39-41.) The positions in which they are said to be employed never actually existed. (Cf. Matter of Danker v. Department of Health, supra, 370.) These persons are among those selected by a unit of the Temporary Emergency Relief Administration for the bounty of work needed to sustain life. At the request of that body their services have been used in conformity with the statutory machinery devised for warfare with unemployment. It may be, as the petitioner so strongly maintains, that this must stop somewhere. We decide only the case before us. No clear and substantial conflict between the practice here followed under the Emergency Relief Act and the constitutional provision invoked by the petitioner justifies the interference of the courts below. (People v. Gillson, 109 N. Y. 389, 397, 398.)

The order of the Appellate Division and that of the Special Term should be reversed, and the proceeding dismissed, without costs.

Lehman, O’Brien, Hubbs, Crouch and Finch, JJ., concur; Crane, Ch. J., dissents.

Orders reversed, etc.


text:
    Beatrice A. Griffin, Respondent, v. Town of Harrison, Appellant. William F. Griffin, Respondent, v. Town of Harrison, Appellant.

      (Argued June 6, 1935;
    decided July 11, 1935.)

      Winfred C. Allen for appellant.
    The sidewalk depression was of an insufficient depth to charge the defendant with negligence. (Eger v. City of New York, 206 App. Div. 718; 239 N. Y. 561; Butler v. Village of Oxford, 186 N. Y. 444; Smith v. City of Albany, 261 N. Y. 240; Stakel v. City of Batavia, 260 N. Y. 628; Bryant v. Village of Potsdam, 253 N. Y. 524; Lalor v. City of New York, 208 N. Y. 431; Terry v. Village of Perry,- 199 N. Y. 79; Gastel v. City of New York, 194 N. Y. 15; Moroney v. City of New York, 190 N. Y. 560; Hamüton v. City of Buffalo, 173 N. Y. 72; Beltz v. City of Yonkers, 148 N. Y. 67; DePledge v. City of New York, 208 App. Div. 10.) Inasmuch as there was no sidewalk defect for which the defendant could be held hable, the defendant was under no duty to illuminate the sidewalk. (Daly v. Rector of Trinity Church, 188 App. Div. 280; O’Rourke v. Mayor of City of New York, 17 App. Div. 349; Andrews v. City of Elmira, 128 App. Div. 699; Van Wie v. City of Mount

      Vernon, 26 App. Div. 330; Eger y. City of New York, 206 App. Div. 718; 239 N. Y. 561; Vanderborg v. City of New York, 158 App. Div. 297.)

      Sidney A. Clarkson for respondents.
    The evidence presented questions of fact for the jury to determine. {Fordr-ham v. Gouverneur Village, 160 N. Y. 541; Terry v. Village of Perry, 199 N. Y. 79; Mullins v. Siegel-Cooper Co., 183 N. Y. 129; Durr v. N. Y. C. & H. R. R. R. Co., 184 N. Y. 320; Weis v. Long Island R. R. Co., 235 App. Div. 253; 262 N. Y. 352; McFarlane v. City of Niagara Falls, 247 N. Y. 340.)
   O’Brien, J.

The plaintiff Beatrice A. Griffin fell and was injured at the junction of a concrete sidewalk and the wooden planking of a railroad bridge in the town of Harrison. This location is part of a highway reserved for the use of pedestrians and in respect to it the town was under a duty of reasonably safe maintenance. The inequality was abrupt and had existed for three years. Its greatest variance was two and three-quarters inches. Such a condition is common in all the cities, towns and villages in the State and does not constitute negligent maintenance for which the municipality is liable in damages. (Butler v. Village of Oxford, 186 N. Y. 444; Stakel v. City of Batavia, 260 N. Y. 628; Smith v. City of Albany, 261 N. Y. 240.) The court charged without exception: The attorney for the plaintiff, with commendable frankness, has said that he does not claim and his client does not claim that the mere variation between the concrete walk and the wooden walk is sufficient to entitle the plaintiff to recover anything here. His claim is that it is that condition coupled with the fighting conditions there which give rise to this cause of action. * * * plaintiff’s counsel concedes that, standing alone, the variation between the concrete and the wood walk, for such a situation as this, would not lead any ordinarily careful and reasonably prudent official to anticipate that anybody would probably be hurt by it, but he says when you take that situation, coupled with the corrugated iron fence and the girder, that then a reasonably careful and prudent public official should have anticipated that somebody might be hurt.”

At the time of injury, an evening in November between six and seven o’clock, the place was poorly lighted. A fence more than six feet in height cast a shadow over the spot where plaintiff fell. It is for this reason that the judgment for plaintiff at Trial Term was affirmed at the Appellate Division. That court held that the two and three-quarters inches abrupt elevation, when coupled with the lack of adequate light at the place of the accident, created a dangerous condition which might cause an injury at night, and this the officers of the defendant should have anticipated.” (243 App. Div. 571) The implications of this decision are most extensive. The judgment means that all the hundreds of thousands, perhaps millions, of miles of sidewalks in this State must be kept in such condition that, at night, no careful pedestrian can be injured. Such a rule closely approaches, if it does not include, the liability of an insurer, and conflicts with the principle announced in Eger v. City of New York (206 App. Div. 718; affd., 239 N. Y. 561). There the plaintiff stepped into a hole at ten-thirty o’clock at night. We held that it was error for the trial court to charge that if the hole was less than four inches deep but was obscured by shadows a question of fact as to the liability of the city was presented. The decisions of this court (Fordham v. Gouverneur Village, 160 N. Y. 541; Mullins v. Siegel-Cooper Co., 183 N. Y. 129, and Durr v. N. Y. C. & H. R. R. R. Co., 184 N. Y. 320) which are cited by the Appellate Division in support of the judgment at bar are not controlling. The Fordham case deals with a situation where, during the course of alteration of a bridge, the sidewalk was obstructed by a plank; the Mullins case, in which a private corporation rather than a municipality was defendant, deals with a situation where the inequality in the sidewalk was due not to original construction, as in Smith v. City of Albany (supra) and the case at bar, but to breakage by independent contractors engaged in work for the abutting owner which work itself created the danger. As this court observed in the Butler Case (supra, p. 447): “ It is a matter entitled to some consideration that the situation complained of was not the result of breakage or wear which had impaired the original condition of the walk, and which fact of itself sometimes quite strongly suggests the inference of negligence.” The Durr case, like the Mullins case, concerns a private corporation and in it is involved not such a construction as would reheve a municipality from the charge of negligence but rather a depression extending under a plank and constituting a trap for pedestrians. Likewise, in Moshier v. City of New York (190 App. Div. 111) the hole was formed in such a way as to cause the plaintiff to catch her foot under the edge of a concrete pavement.

In each case the judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts.

Crane, Ch. J., Hubbs, Crouch, Loughran and Finch, JJ., concur; Lehman, J., dissents.

Judgments reversed, etc.


author: Lehman, J.

text:
    Dorothy Ford, as Administratrix of the Estate of Dennis Ford, Deceased, Despondent, v. The Grand Union Company, Appellant.

      (Argued May 1, 1935;
    decided July 11, 1935.)

      Philip L. Miller and Patrick J. Tierney for appellant.
    act of the manager was not in the scope of his employment, and had no connection whatever therewith. (Oakes v. Marshall-W ells Hardware Co., 158 Wis. 165; Fiocco v. Carver, 234 N. Y. 219; Joel v. Morrison, 6 C. & P. 501; Rodgers v. Tobias, 225 S. W. Rep. 804; Smith v. Peach, 200 Mass. 504; Hough v. Leech, 187 Ark. 731; Smith v. N. Y. C. & H. R. R. R. Co., 78 Hun, 524; Haack v. Fearing, 4 Abb. Pr. IN. S.] 297; Buchanan v. Western Union Tel. Co., 115 S. C. 433; Stone v. Eisen Co., 219 N. Y. 205.) The defendant cannot be held liable by reason of any non-delegable duty on its part as owner of the premises on which the shooting took place. The fact that the manager was in charge of the premises is immaterial. (Sandies v. Levenson, 78 App. Div. 306; 176 N. Y. 610; Grimes v. Young, 51 App. Div. 239; Evers ■v. Krouse, 70 N. J. L. 653; Van Leet v. Kilmer, 252 N. Y. 454.)

      B. Loyal O’Connell for respondent.
    The trial court was warranted in submitting to the jury the question of negligence and the responsibility of the defendant therefor. (Palsgraf v.Long R. Co., 2481ST. Y. 339; Kirby v. Newman, 239 N. Y. 470; Trustees of Canandaigua v. Foster, 156 N. Y. 354; Appel v. Muller, 262 N. Y. 278; Klepper v. Seymour House Corp., 246 N. Y. 85; Ward v. Trauts Realty Corp., 232 App. Div. 768; Haywood v. N. Y. C. & H. R. R. R. Co., 128 N. Y. 596; Weller v. McCormick, 52 N. J. L. 470; Murray v. Nelson, 97 Yt. 101; Ruceo v. United Advertising Corp., 98 Conn. 241; Kron v. Brock, 144 Mass. 516; Stranahan Bros. Catering Co. v. 55 Ohio St. 398; Chapman v. N. Y. C. R. R. Co., 33 N. Y. 369; Buchanan v. Western Union Tel. Co., 115 S. C. 433; Stone v. Eisen Co., 219 N. Y. 205; Hogle v. Franklin Mfg. Co., 199 N. Y. 388; Fletcher v. Baltimore & Potomac R. R. Co., 168 U. S. 135; Einhorn & Singer Dev. Corp., 232 App. Div. 144; 258 N. Y. 549; Rosenholz v. Shattuck Co., 112 Mise. Rep. 468.)
   Lehman, J.

The defendant operates a chain of stores for the sale of groceries and meats. One of these stores is in the village of Dannemora. There, five men were employed by the defendant. Two employees conducted a department for the sale of meats. Three employees conducted a department for the sale of groceries. The manager of the grocery department had general charge of the store, at least so far as concerns matters that did not relate solely to the conduct of the meat department. He was designated as “ manager ” on one of the defendant’s cards which was hung up in the store. He had the keys to the store and the combination of the safe. He kept the accounts of the store; dealt with customers who wished to have credit extended to them, and signed reports as manager.” He was, it fairly appears, charged with the general duty of seeing that the business of the store was conducted in an orderly manner. In so far as the defendant owed a duty to the customers of the store or to the public, to use reasonable care to guard them against danger of bodily injury, the defendant intrusted performance of that duty to this employee, whom we shall hereinafter refer to as the “ manager.”

On the afternoon of March 8th, 1932, a high school boy, after school closed, brought a .22 calibre Remington rifle to the store. He displayed the rifle to some of the defendant’s employees. Three of them and the school boy, to amuse themselves, took the rifle to the basement of the premises leased by the defendant, which was used ordinarily by the defendant for the storage of merchandise, and for heating the store. There, they nailed a piece of an orange box against a door, opening upon the street, and used it as a target. Each of them fired at least one shot at the target. Some of these shots penetrated the door. One of them struck and killed Dennis Ford, who was walking past the store. In this action against the defendant, judgment has been rendered against the defendant, placing upon the defendant the responsibility for his death,

j Quite evidently the jury could, upon this evidence, find that four persons, three of them employees of the defendant, indulged in a frolic which unreasonably endangered the fives of persons lawfully using the street. They might be charged with negligence, and held responsible for the results of such negligence. Their employer may be held responsible for their acts, when performed in the course of their employment; but, concededly, the use of the basement of the store as a shooting gallery, by the defendant’s employees, was not' in the course of their employment. Temporarily, at least, they had abandoned their employment for the sole purpose of indulging own desires. Their employment gave them access to the defendant’s premises, otherwise it had no connection with their wrongful acts. Since the employees of the defendant were not then acting as the defendant’s agents, the defendant cannot be charged, as principal, with responsibility for tbeir acts. The trial judge so ruled. The defendant has been held responsible for the death of plaintiff’s intestate, not upon any theory that the defendant, acting through its agent or agents, has negligently caused such death, but upon the theory that the defendant negligently failed to control its employees and prevent them from using the defendant’s premises in a manner which unreasonably endangered the public in the use of the street, upon which the defendant’s premises abutted. If such a duty is placed by law upon the occupier of premises or upon an employer, he cannot, by attempted delegation to an employee or agent, escape responsibility for its defective performance or for complete failure to perform. The question, then, which must be decided upon this appeal is whether the law does impose such a duty upon an employer or upon the occupier of property abutting upon a public street and, if so, whether that duty is broad enough to cover the situation presented here.

The occupier of property abutting on a highway is under a positive duty to keep his property from being a cause of danger to the public by reason of any defect, either in structure, repair, or use and management which reasonable care and skill can guard against.” (Pollock on the Law of Torts [13th ed.], p. 542.) A person who erects or maintains an artificial structure upon his property may be charged with knowledge of defects in such structure, causing danger to the public, which reasonable inspection would disclose. There the law imposes upon those responsible for the existence of an artificial condition from which danger to the public may flow, the duty of exercising reasonable care and skill to guard against such danger. (Cf. American Law Institute, Restatement of the Law of Torts, § 368.) Again, each person in the use and management of his property, either in person or through agents, is, of course, bound to use reasonable care and skill, to guard against dangers to the public arising from such use or management. (Cf. American Law Institute, Restatement of the Law of Torts, § 371.) That duty arises from the general rule that no one shall use his property in manner which trespasses upon the rights of others.

Here it cannot be said that the death of the plaintiff’s intestate was due to defects in the structure, repair or physical maintenance, or to fault in its use or management by the defendant. The defendant used the property for. the purpose of conducting there a grocery and meat store. It intrusted the management of the business to its employees. The use of the basement as a shooting gallery was no part of the use to 'which the defendant put the property, and was no part of the defendant’s management of the property in connection with such use. The danger to the public from the use of the basement door as a target in shooting thus did not constitute a “ defect ” in defendant’s use or management of its premises and did not arise from an activity carried on there by the defendant.

We then come to the question whether the defendant was under any positive duty to guard the public from dangers flowing from a use of the property, not authorized by the defendant, by visitors to the property or employees acting outside the scope of their employment. Ordinarily a person owes no duty to members of the public at large except to avoid injury to them by forces set in motion by such person or those acting as his agents. Even the duty to exercise reasonable care in the maintenance of the physical condition of structures upon the property and in its use and management may be brought within the general rifle. Here it is asserted that the duty may go further and extend to the control of others, where such control can be effectively exercised. There is some authority for the assertion that, at least in some circumstances, such a duty exists, but no such duty has been precisely defined in any judicial decision called to our attention. (Cf. Harper and Kime, The Duty to Control the Conduct of Another,” 43 Yale Law Journal, 886, esp. pp. 896 and 897.) The duty, if any, is certainly not absolute. The owner of property not inherently dangerous, who does not knowingly permit others to put the property to a dangerous use, is not subject to any absolute duty to prevent unauthorized persons from putting it to a dangerous use. Here there must be at least notice that a dangerous use is threatened, and perhaps acquiescence in such use. Again, where there is no notice that an employee is in the habit of acting in a manner dangerous to others, there is no duty to control the actions of the employee outside the scope of his employment. Such limitations, at least, are dictated by fundamental principles of tort liability. Without them there would be no room for the doctrine that a person is responsible only for the result of his own fault or the fault of his servants, acting within the scope of their employment.

In some cases, nevertheless, the possessor of property used for business has been held hable for failure to control his servants, though acting outside the scope of their employment, or other persons permitted to come upon or use such property. It is to be noted, however, that even in these cases, the courts held that the duty was not absolute, but relative. It arises only where, from the nature of the authorized use of property or from a course of conduct of visitors or of employees employed upon or in connection with the property, the possessor has notice that the use of his property, by persons acting without his authority but whom he could control, may cause danger to members of the general public. When such duty exists, it is limited to the exercise of skill and care commensurate to the danger which may reasonably be anticipated.

So it was said in Fletcher v. Baltimore & Potomac R. R. Co. (168 U. S. 135, 138, 139, 140) that a railroad company is bound to use ordinary care and caution to avoid injuring persons or property which may be near its track. This is elementary. (Shearman & Redfield on Negligence [3d ed.], § 477, and cases cited in notes.) The duty to use ordinary care and caution is imposed, as we think, upon the company to the extent of requiring from it the use of reasonable diligence in the conduct and management of its trains, so that persons or property on the public highway shall not be injured by a negligent or dangerous act performed by any one on the train, either a passenger or an employee acting outside and beyond the scope of his employment. * * * Negligence on the part of the company is the basis of its liability, and the mere failure to prevent a single and dangerous act, as above stated, would not prove its existence. * * * It is not a question of scope of employment or that the. act of the individual is performed by one who has ceased for the time being to be in the employment of the company. The question is, does the company owe any duty whatever to the general public, or, in other words, to individuals who may be in the streets through which its railroad tracks are laid, to use reasonable diligence to see to it that those who are on its trains shall not be guilty of any act which might reasonably be called dangerous and hable to result in injuries to persons on the street, where such act could by the exercise of reasonable diligence on the part of the company have been prevented. We think the company does owe such a duty.”

The duty upon an employer who occupies property for a business use to use reasonable care to prevent injury to others by negligent or dangerous acts performed upon the employer’s premises, by employees acting outside and beyond the scope of their employment is not confined to railroad companies. In Hogle v. Franklin Mfg. Co. (199 N. Y. 388) the rule formulated in Fletcher v. Baltimore & Potomac R. R. Co. (supra) was applied by this court to a manufacturer. There it was held that responsibility rests upon an employer to take reasonable precautions to prevent missiles from being thrown from the employer’s premises by employees, though acting against the employer’s orders, where the employer knows that it was the custom of his employees to disregard such orders.

The rule has been formulated in the Restatement of the Law of Torts as follows:

A master is under a duty to exercise reasonable care so to control bis servant while acting outside the course of his employment as to prevent him from intentionally harming others or from so conducting himself as to create an unreasonable risk of bodily harm to them, if
“ (a) the servant
(i) is upon, the premises in possession of the master or upon which the servant is privileged to enter only as his servant, or
(i) knows or has reason to know that he has the ability to control his servant, and
(ii) knows or should know of the necessity and opportunity for exercising such control.” ( § 317.)

Notice to an agent while acting within the scope of his duties constitutes notice to a principal. Indeed, in the case of a corporation, which can act only through agents, notice can be conveyed in no other way. So, too, acquiescence by an agent in a wrong may constitute acquiescence by a principal if such acquiescence falls within the general scope of his duties. Both in Fletcher v. Baltimore & Potomac R. R. Co. (supra) and in Hogle v. Franklin Mfg. Co. (supra) the defendants were corporations, upon whom responsibility was cast for injuries resulting from acts of their employees, outside of and beyond the scope of their employment, because, after the corporate agents in charge of the property and business of the corporations had notice of a course of conduct of employees which, if permitted to continue, would cause danger to others, they failed to exercise reasonable care to stop such course of conduct.

In the case at bar the defendant’s employees did not customarily amuse themselves by shooting a rifle upon the premises, and, so far as appears, had never previously indulged in other dangerous play. Thus, until the moment when preparations for the shooting began, on the afternoon of the fatal accident, the defendant and the manager of its store had no notice that the store employees might so conduct themselves as to create an unreasonable risk of injury to others; and were under no duty to use any care to obviate a danger of which they had no notice or knowledge. Then, however, the store manager did obtain knowledge that the employees were conducting themselves so as to create an unreasonable risk of injury to others, and then, if ever, the duty arose to use reasonable care to stop such conduct. The manager of the store not only failed to use such care but, regardless of his duties to his employer, joined with the other employees in their dangerous conduct.

Here there was more than acquiescence by the manager in such conduct; there was actual participation therein, but the beginning of participation in the frolic constituted temporary abandonment of employment. From that moment the manager was acting as an individual and not as agent of the defendant. Thus, even though we assume that knowledge was conveyed to the manager, and through him to the defendant, that danger to the public might ensue unless reasonable care were exercised to prevent such danger, at the same moment when duty to use reasonable care arose, the defendant, without fault of its own, was left without a representative or agent who could perform that duty. No reasonable care would have enabled the defendant to foresee such a contingency, and after it occurred even the highest degree of care would not have enabled the defendant to prevent the injury which followed. In such circumstances, we think, the defendant cannot be said to have failed in the exercise of reasonable care.

True, if the fault of the defendant’s manager had been less; if, instead of abandoning the defendant’s employment and joining in the frolic, he had continued his duties as manager and then with knowledge of danger had failed to exercise any power of control over the other employees, perhaps the defendant might have been held liable for his negligence. That we do not decide; but if such liability would then exist, it would be upon the ground that after knowledge of the danger to be anticipated and duty to úse reasonable care to prevent such danger, the defendant, acting through its agent, failed to perform such duty. Then the defendant would, through its agent, have been present and the agent’s negligence would have been the defendant’s negligence. Even though the fault of the manager would then perhaps have been less, it would have been the fault of the principal, acting through the agent. It is just because here the manager abandoned his agency that the principal cannot be held hable.

We recognize that a duty imposed by law upon an employer in regard to the control of his employees or premises cannot be delegated. None the less, where that duty is only to exercise reasonable care, it must be measured by the opportunity afforded under particular conditions to prevent injury after knowledge or notice of danger is brought home to the employer. Where danger cannot reasonably be anticipated there is no duty to guard against it; after knowledge or notice of danger is present there must be reasonable opportunity to guard against the danger. Here no want of care by the defendant is shown, for at the moment when duty arose, opportunity to use care disappeared.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts. (See 268 N. Y. 664.)

Crane, Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgments reversed, etc.