author: Loughran, J. Crane, Ch. J.

text:
    Otto F. Eichhammer, Appellant, v. Helen D. Parsons, Respondent.
    Argued January 19, 1937;
    decided March 9, 1937.

      Franklin T. Voelker and Pierson R. Hildreth for appellant.
    The plaintiff was the owner of the dwelling house both before and after the foreclosure sale. (Hood v. Whitwell, 66 Misc. Rep. 49; 140 App. Div. 882; 200 N. Y. 566; Melton v. Fullerton Weaver Realty Co., 214 N. Y. 571; Lamb v. Cheney & Son, 227 N. Y. 418.) To permit the defendant to retain the dwelling would be unjust and inequitable to the plaintiff. (Greenslete v. Ferguson, 191 App. Div. 745; Buck v. Jones Bakery, Inc., 289 N. Y. Supp. 386; Banta v. Merchant, 173 N. Y. 292.) The complaint as drawn states a good cause of action. (Lamb v. Cheney & Son, 227 N. Y. 418; McCarthy v. Heiselman, 140 App. Div. 240.)

      Philip E. Barnard for respondent.
    The complaint is defective in that it fails to allege that the defendant ever had control or possession of the building. (Decker v. Mathews, 12 N. Y. 313; Graham v. Buffalo General Laundries Corp., 235 App. Div. 246; McCarthy v. Heiselman, 140 App. Div. 240.) It affirmatively appears from the complaint that the plaintiff was not the owner of the building at the time of the alleged conversion. (Mott v. Palmer, 1 N. Y. 564; Becker v. McCrea, 193 N. Y. 423; Holmes v. Gravenhorst, 263 N. Y. 148; Loughran v. Ross, 45 N. Y. 792; Ombony v. Jones, 19 N. Y. 234; Talbot v. Cruger, 151 N. Y. 117; Hilton & Dodge Lumber Co. v. Murray, 47 App. Div. 289; Melton v. Fullerton-Weaver Realty Co., 214 N. Y. 571; Heckscher Building Corp. v. Melton, 113 Misc. Rep. 184; Leonard v. Clough, 133 N. Y. 292; Sexton v. Breese, 135 N. Y. 387; Banta v. Merchant, 173 N. Y. 292.)
   Loughran, J.

This is a motion under Rule 106 of the Rules of Civil Practice for judgment dismissing the complaint for insufficiency on its face. The gravamen of the pleading is that the defendant converted a dwelling house ■ — ■ the property of the plaintiff ”— by refusing the plaintiff’s demand for permission to remove the structure from the land on which it stands. Judgment is demanded for the value of the house less the cost of removal and of a new foundation.

The allegations are that the defendant and her husband conveyed to the plaintiff real property therein described on which was a two-story frame dwelling; that in part payment of the consideration for this conveyance the •plaintiff gave to the grantors his bond secured by a purchase money mortgage containing this provision: “ It being understood and agreed that all buildings now located on premises described herein may be removed by the mortgagor and are not included in or affected by the lien of this mortgage;” that the defendant’s husband assigned to her all his interest in the mortgage; that she thereafter commenced its foreclosure by an action in which the plaintiff was served with the summons and complaint; that the provision above quoted from the mortgage was contained in the complaint, in the notice of sale and in the final judgment in the foreclosure action; that thereafter the plaintiff made demand upon the defendant to enter upon the premises hereinbefore referred to for the purpose of removing therefrom the buildings on said premises;” and that the defendant advised the plaintiff that she would not permit the plaintiff to enter upon the premises for the purpose of removing the buildings therefrom, and said defendant still refuses to permit the plaintiff to remove the said buildings from the said premises, and has converted the same to her own use.”

There is no averment that the mortgaged premises were sold in the foreclosure action. No fact is pleaded which suggests that the defendant ever had any possession, actual or constructive, of the property alleged to have been converted, or that she made any claim thereto.

It was the unanimous opinion of the Appellate Division, contrary to that of the Special Term, that the complaint is bad on its face. We agree that on the pleading as it is now framed the defendant cannot be held liable to the plaintiff. By a divided court the Appellate Division also ruled that the complaint is beyond saving by the addition of a statement that there had been a sale in the foreclosure action to the defendant who at the time of the plaintiff’s demand was in possession of the dwelling house. This angle of the controversy has been here presented without discussion of the form of the recovery sought and as involving only the question whether at the time of his demand the plaintiff had lost the right he demanded. We do not go beyond the argument that has been made tons.

It is admitted that the plaintiff’s right to sever the dwelling continued to exist untE the entry of final judgment in the foreclosure action. “ But where the land and the buEdings thereon belong to the same person, then the buEdings are a part of the real estate and pass with it upon any conveyance thereof.” (Leonard v. Clough, 133 N. Y. 292, 297.) So in this case, says the defendant, you are to assume that the dwelling went with the land to the purchaser on foreclosure with the result that the right of the plaintiff to take away the structure then came to an end. Without assenting to this conception of the extent of the plaintiff’s right, we will assume that he lost his interest in respect of the mortgaged premises by his default in the foreclosure action, unless it is to be held — and this was the point of difference in the AppeUate Division — that the dwelling was constructively severed from the land before the sale in foreclosure was consummated. In our opinion this complaint may by amendment be made to tender that issue.

By her pleading in the foreclosure action the defendant disclosed that the lien of the mortgage did not include or affect any building standing on the premises when the mortgage was given and that the mortgagor was entitled to remove such structures. Accordingly it was proper that in that action the conceded interest of the plaintiff should have been protected under the general power and authority of the court to define and describe in its judgment the property to be sold. (Brown v. Keeney Settlement Cheese Assn., 59 N. Y. 242.) The foregoing provision of the mortgage was incorporated into the judgment of foreclosure and sale. These are the words: “ It being understood and agreed that all buildings now located on premises described herein may be removed by the mortgagor and are not included in or affected by the lien of this mortgage.” That provision was repeated in the notice of sale.

We cannot accept the conclusion that a purchaser at foreclosure would understand that the interest of the plaintiff was put in jeopardy of extinguishment by being described in the judgment and in the notice of sale in the very words in which that interest was defined by the mortgage. In the absence of proof to the contrary, the sale must be presumed to have been conducted in accordance with the judgment directing it. (Hart v. Wandle, 50 N. Y. 381.) To our minds it follows, prima facie at least, that a constructive severance was effected and that the defendant could not have acquired the dwelling on the foreclosure sale. In all this the case differs from Banta v. Merchant (173 N. Y. 292). In that case neither the conditions of sale nor the judgment made any reference to the plaintiff’s interest in a crop of rye growing on the property sold, and the statement made by the referee to sell “ was at most a notice that there was a claim against the rye, of some indefinite character and extent, subject to which the premises would be sold.” (Id. 296.) All that was there decided was that the evidence was insufficient to establish a reservation of the rye at the sale by the referee.” (Id. 297.)

We express no opinion as to the measure of damages here adopted by the plaintiff. Perhaps in some historical sense he has no case in trover. Even so, it is not denied that hé can maintain this action if the defendant, being in a position to assent, refused to allow exercise of his right. (Cf. Melton v. Fullerton-Weaver Realty Co., 214 N. Y. 571.)

The judgment should be modified by providing that the plaintiff may have ten days in which to serve an amended complaint on payment of costs in all courts and as so modified affirmed. (See Al Raschid v. News Syndicate Co., 265 N. Y. 1.)

Crane, Ch. J.

(dissenting). I go further than Judge Loughran and hold that the defendant’s possession and refusal to give up possession are sufficiently alleged. I think the plaintiff is entitled to relief without formal amendment. All parties understood from the beginning the respective claims. The complaint as stated in the paper served on the defendant is not ambiguous or uncertain. Surely the defendant, is not entitled to a house she did not buy and had no intentions of buying.

Otherwise I agree with what Judge Loughran has said.

The judgment of the Appellate Division should be modified in accordance with the opinion of Loughran, J., and as so modified affirmed, with costs in all courts.

O’Brien, Hubbs, Finch and Rippey, JJ., concur with Loughran, J.; Crane, Ch. J., dissents in memorandum and votes to reverse; Lehman, J., dissents and votes to affirm.

Judgment accordingly.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. George Rides, Appellant.
    Submitted January 27, 1937;
    decided March 9, 1937.

      Stephen L. Hoffman for appellant.
    The evidence was insufficient to prove the guilt of the defendant beyond a reasonable doubt. (People v. Solomon, 248 App. Div. 476; People v. Bartholdi, 243 App. Div. 577; People v. Trimarchi, 231 N. Y. 263; People v. Razezicz, 206 N. Y. 249; People v. Fitzgerald, 156 N. Y. 253; People v. Mantin, 184 App. Div. 767; People v. Acerno, 184 App. Div. 541.) There is no legal obligation on the part of the defendant to prove himself innocent. (People v. Orr, 270 N. Y. 193.)

      William Copeland Dodge, District Attorney (Philip A. Donahue of counsel), for respondent.
    The People’s case was fully proved. (People v. Sugarman, 248 N. Y. 255; People v. Guadagnino, 233 N. Y. 344; People v. Van Bramer, 235 App. Div. 287; 261 N. Y. 505; Violette v. United States, 278 Fed. Rep. 163; 258 U. S. 626; Polley v. Commonwealth, 171 Ky. 307; People v. Conroy, 97 N. Y. 62; People v. Deitsch, 237 N. Y. 300; Gordon v. People, 33 N. Y. 501; People v. Hovey, 92 N. Y. 554; People v. Tuczkewitz, 149 N. Y. 240; People v. Atlas, 183 App. Div. 595; 230 N. Y. 629; People v. Branfman, 241 App. Div. 856; Simpson v. Commonwealth, 196 Ky. 4; Robata v. State, 106 Tex. Cr. 346; Jones v. State, 19 Ala. App. 600; Fletcher v. State, 12 Ala. App. 216; Jones v. State, 124 Tex. Cr. Rep. 355.)
   Finch, J.

The defendant appeals from a conviction of the misdemeanor of manufacturing for sale an alcoholic beverage without a license. (Alcoholic Beverage Control Law [Cons. Laws, ch. 3-B], § 100.) The defendant was sentenced to pay a fine of $200 or serve thirty days in the city prison.

The information against the defendant contained two counts, the first charging the sale of an alcoholic beverage without a license, and the second charging that the defendant “ unlawfully did manufacture for sale a certain alcoholic beverage without a license.”

The facts are not in dispute. A police department detective testified that, in response to a telephone call informing him that a still was being operated in the apartment of the defendant on the fourth floor of a six-story tenement building, he went there and was admitted by an elderly woman claimed by the defendant to be his mother. The detective found a ten-gallon still in operation in a back room, and nine one-gallon bottles of alcohol on the floor. A few minutes thereafter, the defendant came to the apartment and admitted that he lived there, and that he had put the still in operation. In response to a question as to the reason for having so much alcohol, he replied that his mother was ill, that a doctor had informed him that she was suffering from arthritis and that it was incurable or very difficult to cure, and that the only thing you can do if you have some good alcohol, rub her.” The detective did not know whether the defendant had ever sold any alcohol.

The defendant took the stand and denied that he had sold or intended to sell the alcohol. He accounted for the nine gallons by the explanation that his mother used at least a pint a day, and he stated that pure alcohol was so expensive that he decided to manufacture the amount needed for his mother. The wife of the defendant confirmed his testimony. The defendant did not call the doctor as a witness, nor did he call his mother.

On this evidence there was a total failure of proof on the part of the prosecution that the alcohol was sold or intended for sale by the defendant or by any other person.

The prosecution maintains that the circumstantial evidence is sufficient to take the place of the lacking proof.

In the first place, the prosecution urges that since the defendant was the proprietor of a candy store, and a man of small means, finding him manufacturing so much alcohol is sufficient to justify the conclusion that he planned to sell it. In further explanation of the amount, the defendant testified that the process of distillation was in its first stage, and that the amount of alcohol after redistillation would be reduced by exactly one-half. The manufacture of unusual quantities of alcohol under some circumstances may Justify the conclusion that there was an intention to sell (Simpson v. Commonwealth, 196 Ky. 4), but the manufacture of four and one-half gallons, or . even nine gallons, does not prove or tend to prove that the alcohol was sold or manufactured for sale by the defendant. Nor can such an inference be drawn from the fact that the explanation given by the defendant, concerning the reason for manufacturing the alcohol, appears to be false, or that the trial Justices disbelieved that explanation. Although the explanation of the defendant, that he was manufacturing alcohol to be used by his mother for relieving her arthritis, may be false, yet the falsity to this testimony would not take the place of affirmative proof that the alcohol was manufactured for sale. All this is equally consistent with the view that it might have been manufactured by the defendant for his own consumption. Nor does the failure of the defendant to call the doctor or his mother raise an inference which can be substituted for the necessary proof. Similarly, the denial by the defendant that he has ever been convicted of another crime, when he had been convicted on a slot machine charge five years earlier, does not replace the lacking proof.

It may not be necessary to prove a sale by direct proof, but it is necessaiy to prove facts which clearly and unequivocally raise at least an inference that the defendant manufactured the alcohol for the purposes of sale, as charged in the information. In all of the cases relied upon by the People, there was circumstantial evidence raising such an inference. In the case at bar there is none. The facts, while consistent with guilt, also are consistent with innocence.

Circumstantial evidence, to justify the inference of guilt, must exclude every other reasonable hypothesis. It is not enough that the hypothesis of guilt will account for all the facts proven. If the facts are consistent also with the hypothesis of innocence, they have no value as substituted for direct proof. (People v. Razezicz, 206 N. Y. 249, 273; People v. Suffern, 267 N. Y. 115, 127.)

Where, as in the case at bar, there is no evidence showing a sale, or that the alcohol was manufactured for sale as charged in the information, the conviction of the defendant, based neither upon direct proof nor circumstantial evidence unequivocally raising an inference of guilt but upon mere suspicion, cannot be sustained. (People v. Orr, 270 N. Y. 193.) An essential element of the crime charged has not been proven and conjecture cannot fill the gap left open by the evidence.

It follows that the judgments should be reversed and the information dismissed.

O’Brien, Loughran and Rippey, JJ., concur; Crane, Ch. J., and Lehman, J., dissent; Hubbs, J., taking no part.

Judgments reversed, etc.


author: Crane, Ch. J.

text:
    In the Matter of the Accounting of Otto Ruprecht et al., as Executors of Rudolph R. Noll, Deceased. Otto Ruprecht et al., Individually and as Executors and Trustees under the Will of Rudolph R. Noll, Deceased, et al., Appellants; Martin Neumann, as Special Guardian of Eleanor G. Noll, an Infant, et al., Respondents.
    Argued January 4, 1937;
    decided March 9, 1937.

      Edward F. Clark, Albert B. Gins and Edward A.

      Pfeffer for executors, appellants. The Appellate Division erred in surcharging the executors with the sum paid for debts incurred in the decedent’s business. (Matter of Neil, 238 N. Y. 138; Kahn v. Tierney, 135 App. Div. 897; 201 N. Y. 516; Robinson v. Martin, 138 App. Div. 310; 200 N. Y. 159; Matter of Silsby, 229 N. Y. 397; Matter of Hayes, 263 N. Y. 219; Matter of Buttner, 243 N. Y. 1; Matter of Watson, 262 N. Y. 284; Matter of Gary, 261 N. Y. 244; Matter of Martin, 255 N. Y. 248; United States Trust Co. v. Baes, 245 N. Y. 514; Matter of Fricke, 122 Misc. Rep. 427; Taylor v. Dodd, 58 N. Y. 335; Matter of Title Guarantee & Trust Co., 195 N. Y. 339; Roe v. Vingut, 117 N. Y. 204; Furniss v. Cruikshank, 230 N. Y. 495; Archer v. Timberlake, 63 Sol. Jo. 286; Bretell v. Holland, 2 Ch. 88; Oddie v. Woodford, 3 My. & Cr. 584.)

      Richard J. Mackey for Gerda Noll, appellant.
    The Appellate Division was correct in holding that the debts of the business should not have been paid exclusively out of the general assets of the estate. (Matter of Bruns, 143 Misc. Rep. 696; Matter of Lowe, 149 App. Div. 347; 206 N. Y. 671; Central Trust Co. v. Richards, 35 Misc. Rep. 247.)

      Martin Neumann, as special guardian of Eleanor G. Noll, an infant, respondent.
   Crane, Ch. J.

Rudolph R. Noll was the sole owner of a granite memorial business which he carried on in his individual capacity. He died on the 6th day of September, 1933, survived by his wife and minor daughter. His will was dated May 18, 1933, and in its pertinent provisions read:

“First. I direct my executors hereinafter named to pay all my just debts, and funeral expenses.

“ Second. I give and bequeath to my wife, Gerda, the sum of Two Thousand Five Hundred Dollars, all my household furniture, books, utensils, pictures, wearing apparel, and any automobile that I may own at the time of my death, that is not used for the purpose of my business.

“ Third. All savings accounts that I have opened in various banks, as trustee for my daughter, Eleanor G.,

, I hereby confirm.

“Fourth. I authorize and empower my executors to continue my business at 49-51 Conway St., in the Borough of Kings, City of New York, and I direct that as soon as convenient after my death said business be incorporated under the laws of the State of New York, under the name of ‘ Conrad Noll, Rudolph R. Noll, Successor,’ in such sum as my executors may deem desirable, and that my said executors transfer to said corporation all the assets of said business in exchange for an equivalent amount of the capital stock of said corporation, and that the total expense for incorporating said business shall be charged against my estate.

(a) I direct that Twenty Five per cent of the capital stock of said corporation be given to my friend and manager William Heinz; and it is my wish that he be retained as the manager of said business, as incorporated, and adequately compensated for his services as such manager, irrespective of his ownership of the said Twenty Five per cent of the capital stock of said corporation.

“(b) I direct that Seventy Five per cent of the capital stock of said corporation, be held by my executors, as hereinafter further provided,” that is, in trust one-half for the benefit of his wife and one-half for the benefit of his daughter.

He appointed Otto Ruprecht and Frederick A. Albrecht as executors and trustees of his will, giving them full power to sell and dispose of his estate on such terms and conditions as to them seemed best, and also requesting them to employ Otto Ruprecht to take charge of his books of account and income tax returns, and also to continue in their employ his attorney, a resident of Floral Park, Long Island,,

These rather unusual details in the will indicate that it was carefully drawn and thought out by the testator. He wanted his directions regarding his debts and his business and his employees understood and executed. Putting ourselves in the place of the testator at the time that he executed this will, in order to ascertain morel fully his intent, we appreciate at once that his business was a family affair. It was not a corporation nor a partnership; it was his own business, carried on by him personally. The debts of the business were his own debts the same as were his living expenses. The deceased had a monument business, and the stones in his yard constituted the main part of his assets.

William Heinz was his manager. The business presumably could not continue after Noll’s death without Heinz. This the testator recognized, and by his will made it an inducement for him to continue, so that his wife and daughter might have the income from the business, or such portion of it as was not given to Heinz. The business had been running down, from a profitable one, to one without profit. The annual net income of approximately $14,000 in 1929 and 1930 dwindled each year and, in the first eight months of 1933, the business was operating at a loss. It was during this last year that the will was drawn. The merchandise was of a kind not easily salable, yet no doubt the testator had hopes that with the improvement in financial conditions the business would improve. He counted on Heinz. The criticism, therefore, of the gift of stock to William Heinz, no relative, is unjustifiable. The income, as the testator knew, for his relatives would depend upon Heinz, the manager, after he, the owner, had passed away.

The decedent’s gross estate was appraised for transfer tax purposes at $152,000. The value of his business was fixed at the sum of $42,925.31, of which $16,000 represented good will, and over $19,000 merchandise. At the time of his death the business books showed a cash balance of $2,274.78, and the debts due, the sum of $5,470.15. In addition to this, his personal debts, as distinguished from those of his business, amounted to $1,225.62.

As we go along let us bear in mind that the debts, so far as the creditors were concerned, were the debts of the deceased, Eudolph E. Noll. The creditors were not obliged to look to any particular asset for payment. Payment came out of the estate of the deceased, of which there was more than sufficient to pay the debts, and the estate consisted of everything the deceased owned — his business assets, his real estate or any other property.

The executors paid all of the debts owed by the decedent out of the general funds of the estate. This they were bound to do, for all of the debts were owed by the decedent personally. No objection has been raised as to the validity of any claim paid. Then the executors, following the directions of the will, duly organized a corporation with a capital stock of $44,000, consisting of 440 shares, The certificate of incorporation was filed in December. 1933, and the corporation began business on January 1, 1934. All of the assets of the business, including the cash on hand of $2,274.78, were transferred to the new corporation. The business debts were paid by the estate, and the corporation received all the assets, free from the liabilities. When we speak of the corporation, however, we must remember that it was mostly owned by Noll’s wife and daughter; that the estate merely took a different form. The wife and daughter owned three-quarters, or seventy-five per cent of the capital stock.

On the accounting proceedings before the Surrogate he decided that the business debts, should have been paid out of the business assets, and surcharged the executors with all the debts listed in Schedule D-l as the business debts, amounting to $5,865.05. Of these business debts the widow and child would have had to pay seventy-five per cent, as they owned seventy-five per cent of the stock; and yet this decree of the Surrogate has relieved them of this liability and surcharged the executors personally with these debts.

We do not see that the executors improperly disposed of these funds. They were called upon first to settle the estate of Rudolph R. Noll. His estate, whether it constituted business or other assets, owed $7,090.67. This amount was paid, as it should have been, out of the assets of the estate. After the debts were paid the executors were then free to carry out the other provisions of the will. They could not deal with assets for incorporation purposes or any other purpose until the creditors were satisfied. The incorporation of the business, as we have said, was to carry out the will of the testator in behalf of his daughter and his wife. They were to have seventy-five per cent of the stock, and the twenty-five per cent was merely payment to a manager to carry on the business for them. The testator knew his circumstances; his will indicates a desire to provide solely for his wife and daughter, and no doubt he used the best means to accomplish the purpose by keeping Heinz in the business. He knew what he was doing when he told his executors, in the very first clause of his will, to pay “ all my just debts, and funeral expenses.” All his debts included those of the business as well as others. They paid them all ■ — ■ the very first thing they did — and cannot be surcharged for having carried out his instructions.

The assets were turned over to the business after it was incorporated, as we have said, also in accordance with the terms of the will, for the benefit of the wife and daughter. Matter of Lowe (206 N. Y. 671), so much relied upon, simply turned upon the question of the testator’s intent. A case more in point is Archer v. Timberlake (63 Sol. J. & R. 286). It was there said, regarding a similar provision: “ The question here is whether the gifts of the shares in the business carried with them the obligation on the part of the legatees to discharge the trade liabilities which the testator had incurred in connection with the business. Having regard to the terms of the will, I am of opinion they do not. These liabilities are debts incurred by the testator like any other debts, and must be discharged in the same way. The result is that they must in the first instance be discharged out of the residuary personal estate and to the extent that it is insufficient must be borne rateably by the specific legatees and devisees.” (See, also, Brettell v. Holland, [1907] 2 Ch. 88; 76 L. J. Ch. 449; 97 L. T. 49.)

For the reasons here stated the order of the Appellate Division, and the decree of the Surrogate, in so far as they have surcharged the executors with the sum of $5,865.05, are modified, and the amount allowed to the executors as a proper payment. The reduction in the pay of the attorneys to the sum of $3,000 and the disallowance to the guardian of the sum of $275 for a certified public accountant, are matters resting in discretion, which we do not review.

The order of the Appellate Division should be modified in accordance with this opinion, and as thus modified, affirmed, with costs to all parties payable out of the estate.

O’Brien, Htjbbs, Loughran and Rippey, JJ., concur; Lehman and Finch, JJ., taking no part.

Ordered accordingly.


author: O’Brien, J.

text:
    John Piwowarski, an Infant, by Anthony Piwowarski, His Guardian ad Litem, Appellant, v. Altamont Cornwell, Respondent, Inpleaded with Another. Anthony Piwowarski, Appellant, v. Altamont Cornwell, Respondent, Impleaded with Another.
    Argued January 7, 1937;
    decided March 9, 1937.

      Roland Crangle and Carlton P. O’Connor for appellants.
    The testimony of the defendant and his son, and of the borrower of the car, bore the marks of self-interest testimony and its credibility was properly submitted to the jury. The plaintiffs fully established a prima facie case as to the liability of the defendant when the personal injuries were proven and the defendant had stipulated that he owned the car and that its operation on the occasion of the accident was negligent. That presumption of liability was not destroyed, as a matter of law, by the testimony of the defendant, his son and the borrower of the car who were all interested in the outcome of the case. (Stein v. Mendetz, 125 App. Div. 561; Hull v. Littauer, 162 N. Y. 569; Ferris v. Sterling, 214 N. Y. 249; Fallon v. Swackhamer, 226 N. Y. 444; Moore v. Rosenmond, 238 N. Y. 356; Orlando v. Pioneer B. T. S. Co., 239 N. Y. 342; Schultze v. McGuire, 241 N. Y. 460; Chaika v. Vandenberg, 252 N. Y. 101; Jorgensen v. Jæger & Klein, 257 N. Y. 171; Zuckerman v. Parton, 260 N. Y. 446; Gordon v. Ashley, 191 N. Y. 186; Wiemers, Inc., v. American Fidelity Co., 181 App. Div. 774; Glasgow v. Weldt, 218 App. Div. 749; Cunningham v. Castle, 127 App. Div. 580; Powers v. Wilson, 203 App. Div. 232.)

      Peter A. Schultz and Gordon Steele for respondent.
    Plaintiffs failed to establish, by a fair preponderance of the evidence, that the borrower of the car at the time of the accident operated it with the express or implied permission of the owner. (St. Andrassy v. Mooney, 262 N. Y. 368.)
   O’Brien, J.

The infant plaintiff was injured in a collision with an automobile owned by defendant Cornwell and driven by defendant Gallup. A verdict was rendered for plaintiff but the judgment was reversed on the law and the complaint was dismissed. If an issue of fact is present, the judgment at Trial Term should not have been reversed on the law.

The parties stipulated on the trial that defendant Cornwell was the owner of the car and that its operation at the time of the collision was negligent. Without objection, the trial justice stated the sole question to be whether at the time of the injury to plaintiff the car was operated with the express or implied permission of the owner.

Gallup, the driver of the car, was a friend of Cornwell and for several months had been accustomed, gratuitously, to drive Cornwell. On the day of the accident he drove Cornwell from Portageville, where both resided, to the home of Cornwell’s son at Blasdell. While Cornwell was visiting his son, Gallup obtained permission to use the car and then he drove away. Several hours later the collision with plaintiff’s car occurred in Buffalo at a point more than three miles distant from the younger Cornwell’s house at Blasdell.

When defendant Cornwell conceded ownership of the car, plaintiff’s case prima facie was proved. The question is whether substantial evidence was produced by defendant to rebut the presumption that the car was in use with defendant’s consent at the time of the accident. (St. Andrassy v. Mooney, 262 N. Y. 368.) If the jury was bound as matter of law to credit the testimony of defendant’s witnesses, there was such substantial evidence to overcome the presumption. That evidence consists of testimony to the effect that Gallup, the driver, was granted permission to use the car for a time variously stated as half an hour to two hours to visit a friend in Blasdell and Gallup, failing to find his friend, decided, in view of the fact that he had two or three hours to wait, to drive to Buffalo and see a ball game. This testimony was not contradicted. No one was in a position to deny it. When Gallup drove away from the home of the younger Cornwell, no one was present who could testify in relation to the purpose for which the car was to be used except the defendant Gallup, the defendant Cornwell and his son. No court has power to determine the truth or falsity of the evidence of these interested witnesses. Their credibility, even though their testimony be uncontradicted, when contradiction is impossible and its truthfulness or accuracy is open to a reasonable doubt, was exclusively for the jury. (Elwood v. Western Union Tel. Co., 45 N. Y. 549, 554; Hull v. Littauer, 162 N. Y. 569, 572; Orlando v. Pioneer B. T. S. Co., 239 N. Y. 342; Mattar v. Cesari, 266 N. Y. 650; Nee v. Sloboda, 270 N. Y. 571.)

In each case, the judgment of the Appellate Division should be reversed and that of the Trial Term affirmed, with costs in this court and in the Appellate Division.

Crane, Ch. J., Hubbs, Loughran and Rippey, JJ., concur; Lehman and Finch, JJ., taking no part.

Judgment accordingly.


text:
    Anna R. Traynor, Respondent, v. John Hancock Mutual Life Insurance Company of Boston, Massachusetts, Appellant.
    Submitted January 25, 1937;
    decided March 9, 1937.

      William B. Moore for appellant.
    The evidence offered by the plaintiff as to the manner and time of premium payments wholly failed to prove a waiver or estoppel. (Conway v. Phœnix Life Ins. Co., 140 N. Y. 79; Home

      Beneficial Assn. v. Lomax, 4 Fed. Rep. [2d] 292; Crosby v. Vermont Accident Ins. Co. 80 Atl. Rep. 817; Kœhler v. Modern Brotherhood of America, 125 N. W. Rep. 49; Thompson v. Knickerbocker Life Ins. Co., 104 U. S. 252; Curtin v. John Hancock Mut. Life Ins. Co., 167 N. Y. Supp. 1041; Thompson v. Fidelity Mut. Life Ins. Co., 92 S. W. Rep. 1098; Marvin v. Universal Life Ins. Co., 85 N. Y. 278.)

      James F. Conway and Jonathan A. Hendrie for respondent.
    The waiver by the defendant of the provisions of the policy concerning the prompt payment of premiums being established as a matter of fact it follows as a matter of law that the waiver existed. (Westchester Fire Ins. Co. v. Earle, 33 Mich. 143; Pechner v. Phœnix Ins. Co., 65 N. Y. 195; Solomon v. Vallette, 152 N. Y. 147; F. F. Ins. Co. v. Norwood, 69 Fed. Rep. 71; McElroy v. B. A. Assur. Co., 94 Fed. Rep. 990; Beatty v. Guggenheim Exploration Co., 225 N. Y. 380; Whipple v. Prudential Ins. Co., 222 N. Y. 39; Syracuse Lighting Co. v. Maryland Casualty Co., 226 N. Y. 25; Bible v. John Hancock M. L. Ins. Co., 256 N. Y. 458; Heffron v. Ætna Life Ins. Co., 233 App. Div. 534; Cornell v. Travelers Ins. Co., 120 App. Div. 459; 192 N. Y. 587; Knickerbocker Life v. Norton, 96 U. S. 234; Thomas v. Baker, 60 Fed. Rep. [2d] 1057.) By the date of the last payment under the custom of dealing an equitable estoppel existed which prevented forfeiture'for breach of the “ payment on the due date ” condition with respect to subsequent due payments. (Met. Life Ins. Co. v. Childs, 230 N. Y. 285; Rothchild v. Title Guarantee & Trust Co., 204 N. Y. 458; DeFrece v. National Life Ins. Co., 136 N. Y. 144; Kenyon v. K. T. M. M. A. Assn., 122 N. Y. 247; Kadelburg v. Hartford Accident & Indemnity Co., 223 App. Div. 169; 248 N. Y. 654.) Whether or not the premiums were tendered before the death of the insured is immaterial if the period established by the parties for the payment of premiums had not expired. (McKenna v. Metropolitan Life Ins.
      Co., 220 App. Div. 53; Durnin v. Ætna Life Ins. Co., 228 App. Div. 428; Majestic Life Assur. Co. v. Tuttle, 107 N. E. Rep. 22.)
   Crane, Ch. J.

On March 6, 1929, the defendant issued a policy of insurance in the industrial form upon the life of Edward L. Traynor, in which the plaintiff was named beneficiary. The policy was in the face amount of $430 and contained a provision for the payment of double indemnity in the event that the death of the insured should result from bodily injuries, sustained through external, violent and accidental means.

The insured died on December 26, 1930, as a result of injuries sustained in an automobile accident. The plaintiff sued to recover the sum of $860, representing the face amount, and double indemnity, under the policy. The defendant has resisted payment on the ground that at the death of the insured there was no insurance in existence, as the deceased had failed to comply with his contract. The policy reads: “ The John Hancock Mutual Life Insurance Company of Boston, Massachusetts in Consideration of the payment of the premium, stipulated herein on or before each Wednesday during the continuance of this policy until premium payments cease by the terms hereof, grants this Endowment insurance with the privileges and benefits and subject to the conditions and provisions on this and the three following pages which are hereby made a part of this contract and constitute the entire contract between the parties hereto.”

The age of Edward L. Traynor, the insured, was twenty-one years, the weekly premium fifty cents; the beneficiary was his mother, Anna R. Traynor. Upon the payment of the premiums for a period of twenty years the company agreed to pay the amount due as an endowment, which was $430, or to pay the same amount if the insured died before twenty years, and the premiums had been duly paid until death.

On the second page of the policy are found the following conditions: “ Reinstatement. At any time within one year from default in payment of premiums, if the cash surrender value has not been paid or the extension term expired, this policy may be reinstated upon production of evidence of insurability satisfactory to the Company and approved at its Home Office, and upon payment of arrears of premiums and payment or reinstatement of any indebtedness hereon or secured hereby.

Period of Grace. This policy will be paid subject to its conditions if the Insured die while premiums are in arrears not more than four weeks, but neither this concession nor the acceptance of any overdue premium shall create an obligation on the part of the Company to receive premiums which are in arrears, nor shall it be a waiver of their payment on Wednesday of each week in advance.”

The insured died on December 26, 1930. The last premium paid was on October 29, 1930. The four weeks’ period of grace extended the insurance to November 26th when, according to the terms of the policy, the insurance expired and the policy terminated or was out of benefit. This is conceded. These facts are admitted by the plaintiff for she bases her right to recover upon a theory of waiver or estoppel. We, therefore, start the discussion of this case with the statement that the insured agreed to pay fifty cents a week every week for the benefit under the insurance policy. By its terms he had four weeks’ period of grace within which to pay his delayed premium, but after that period benefits ceased and there could be no recovery. The insured died on December 26, 1930, or thirty days after the expiration of the period of grace and the termination of the policy.

The claim of the plaintiff, which she has successfully pressed in the courts below, is that the company, by previously accepting payments of premiums beyond the days of grace, had waived the provisions of the policy regarding payment of premiums and, therefore, was obliged to accept past-due premiums even after the death of the insured.

In this case, as we have stated, the period of grace for the payment of the due premiums had expired; four weeks had gone by. The insured died, and the beneficiary, after his death, tendered the amount of the premiums due, and insists that this reinstates or keeps alive the policy or, in other words, that the company was obliged by reason of its course of conduct to accept these past-due premiums after the death of the insured without the benefit of a physical examination or any assurance of continued health.

What is this course of conduct which nullifies the provisions of the policy in favor of the insurance company? It is that on January 29, 1930, the insurance company accepted the premiums due for the previous seven weeks; that on April 3, 1930, it accepted payment of premiums due for the previous eight weeks; that on June 6, 1930, it received payment of premiums due for the previous eight weeks, including an advance premium for June 11th; that the payment of June 24th took care of two weeks; and that the last payment, October 29th, was accepted in payment of premiums previously due for ten weeks; in other words, the company did not insist upon the premiums being paid every week on the day due. It did not terminate the policy with the non-payment of premium on the due date; it exercised its privilege which it had of continuing or restoring the policy when the back premiums were paid up. I cannot find, however, any evidence that the company by so doing agreed, or impliedly agreed, that it would thereafter let a policy ride or continue until the beneficiary felt inclined to pay the premiums. At any time it could refuse to take past-due premiums and insist that the four weeks’ grace period ended all benefits unless the premiums were paid within that time.

By the reinstatement clause, above quoted, the company might within one year after default reinstate the policy upon production of evidence of insurability satisfactory to the Company and approved at its Home Office.” The company could reinstate the policy without requiring this evidence, and such it had done, but this did not indicate to the insured that it would always be done without evidence of insurability. In the plainest language the insured had agreed with the company, in the period of grace ” clause, that neither the concession of four weeks’ grace period in which to pay past-due premiums nor the acceptance of any over-due premium shall create an obligation on the part of the Company to receive premiums which are in arrears, nor shall it be a waiver of their payment on Wednesday of each week in advance.” Are we to eliminate this provision altogether which was made to cover the very facts of this case? It is as if the company had said to the insured on Octqber 29, 1930, or on any of the other days when it received back payments, “ We will accept these past-due premiums, but you agree that our doing so will create no obligation on the part of the company to hereafter receive premiums which are in arrears, nor shall it be a waiver for the future of the requirements as to premium payments.” What else could this clause possibly mean?

This is the policy of insurance and its conditions which, as we have said in many cases, must be read like any other contract and agreement. The company received overdue payments, but such acts created no obligation to receive future overdue payments. This is a clear and concise part of the insured’s agreement. Therefore, when the payments due October 29, 1930, were not paid within the four weeks’ period of grace there was no obligation upon the part of the company to accept them after death.

A case somewhat like this is Thompson v. Insurance Co., (104 U. S. 252, 259), wherein Mr. Justice Bradley said, regarding the receipt of default payments, the following: “ The last replication sets up and declares that it was the usage and custom of the defendants, practised by them before and after the making of said note, not to demand punctual payment thereof at the day, but to give days of grace, to wit, for thirty days thereafter; and they had repeatedly so done with Thompson and others, which led Thompson to rely on such leniency in this case. This was a mere matter of voluntary indulgence on the part of the company, or, as the plaintiff herself calls it, an act of ‘ leniency.’ It cannot be justly construed as a permanent waiver of the clause of forfeiture, or as implying any agreement to waive it, or to continue the same indulgence for the time to come. As long as the assured continued in good health, it is not surprising, and should not be drawn to the company’s prejudice, that they were willing to accept the premium after maturity, and waive the forfeiture which they might have insisted upon. This was for the mutual benefit of themselves and the assured, at the time; and in each instance in which it happened it had respect only to that particular instance, without involving any waiver of the terms of the contract in reference to their future conduct. The assured had no right, without some agreement to that effect, to rest on such voluntary indulgence shown on one occasion, or on a number of occasions, as a ground for claiming it on all occasions. If it were otherwise, an insurance company could never waive a forfeiture on occasion of a particular lapse without endangering its right to enforce it on occasion of a subsequent lapse. Such a consequence would be injurious to them and injurious to the public.”

The weakness of the plaintiff’s contention is obvious when we inquire as to the nature of this new obligation to receive default payments. For how long a time could the insured delay his payments and yet keep alive his insurance? For how long a time could the beneficiary delay payment of past-due premiums after the insured’s death? In other words, what was the limit to the obligation? The past delays were not always of the same length of time. One was two weeks, another six, one eight, and still another ten. Can we say that the obligation continued for ten weeks after default because in one instance the company had not considered the policy terminated? Again, if we say it were a reasonable time, what would constitute a reasonable time under these circumstances? This is not a case like many cited by the respondent, where strict compliance with the time of payment has not been insisted upon and the insured was thereby led to believe that payment within a reasonable time would be satisfactory, especially as it had been so considered in the past. (De Frece v. National Life Ins. Co., 136 N. Y. 144; Kadelburg v. Hartford Accident & Indemnity Co., 223 App. Div. 169; affd., 248 N. Y. 654.) This is a case where the policy specifically provides that such indulgence shall not bind the company to like indulgence in the future, and that any subsequent delay in payment after the period of grace gives the company the right to consider the insurance terminated.

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

Lehman, O’Brien, Loughran, Finch and Rippey, JJ., concur; Htjbbs, J., taking no part.

Judgments reversed, etc.


author: Crane, Ch. J. Rippey, J.

text:
    Howard Converters, Inc., Appellant, v. French Art Mills, Inc., Respondent.
    Argued January 5, 1937;
    decided March 9, 1937.

      Milton H. Spiero for appellant.
    The service made was valid. (Dollar Co. v. Canadian C. & F. Co., 220 N. Y. 270; Dimmerling v. Andrews, 236 N. Y. 43; Thropp v. Erb, 255 N. Y. 75; McCarthy v. Culkin, 254 N. Y. 328; Garfein v. McInnis, 248 N. Y. 261; Pennoyer v. Neff, 95 U. S. 714; Gilbert v. Burnstine, 255 N. Y. 348; Penn. Fire Ins. Co. v. Gold Issue Min. & Mill. Co., 243 U. S. 93; Miller v. Lautenburg, 239 N. Y. 132; Shuba v. Greendonner, 271 N. Y. 189; Bagdon v. Philadelphia & Reading C. & I. Co., 217 N. Y. 432; McCoy v. Erie Forge & Steel Co., 118 Misc. Rep. 851; 201 App. Div. 570; 234 N. Y. 545; McCoy v. Erie Forge & Steel Co., 210 App. Div. 570; Martin v. Atlas Estates, 72 N. J. Eq. 416.)

      Emanuel Wexler and Irving Gordon, appearing specially, for respondent.
    The service, not having been made on a person designated by statute, is invalid. (Korn v. Lipman, 201 N. Y. 404; McCoy v. Erie Forge & Steel Co., 201 App. Div. 570; 234 N. Y. 545; Valz v. Sheepshead Bay Bungalow Corp., 249 N. Y. 122; Fair v. Kenny, 103 Misc. Rep. 412; Cohnfeld v. Bliss, 174 App. Div. 434; 220 N. Y. 681; Kieley v. Manufacturing Co., 147 N. Y. 620; Bagdon v. Philadelphia & Reading C. & I. Co., 217 N. Y. 432.)
   Crane, Ch. J.

The plaintiff is a New York corporation. The defendant is a foreign corporation, a New Jersey corporation. The defendant is not licensed by New York to do business here.

On February 26, 1936, the plaintiff, claiming that the defendant had breached its contract theretofore made, obtained a warrant of attachment and levied on the defendant's property here. On March 18, 1936, twenty-one days after warrant of attachment was granted, one Filbert L. Rosenstein, the designated agent of the defendant, was personally served without the State with the summons and complaint, without an order, pursuant to section 235 of the Civil Practice Act. Rosenstein was served at the registered principal office of the defendant at its domicile, Paterson, New Jersey. He was and is the duly appointed, selected and registered agent of the defendant, authorized by the defendant in its charter (certificate of incorporation) and by the laws of the State of New Jersey to receive service of all process. The Corporations Act of the State of New Jersey, Compiled Statutes (47), section 28d (1) provides:

Every corporation heretofore or hereafter organized under the laws of this State, and every foreign corporation authorized to transact business in this State, shall maintain a principal office within the State of New Jersey, and an agent in charge of said principal office upon whom process against the corporation may be served.” (L. 1916, ch. 243, p. 507.)

Pursuant, therefore, to this act of New Jersey, the French Art Mills, Inc., had designated Filbert L. Rosenstein as the person to be served with a process in litigation against it. Service, therefore, of process, at least within New Jersey, was as good when made personally upon Rosenstein as upon any officer of the company.

The question before us is: “ Was it good service, in order to preserve a warrant of attachment in this State, to serve Rosenstein personally without the State, pursuant to section 235 of the Civil Practice Act?” We must of course distinguish between the cases, where jurisdiction is sought to be obtained over a foreign corporation, and where jurisdiction is sought to be obtained over property attached and being within the State of New York. No jurisdiction over the person of the corporation can be obtained by serving an officer of a foreign corporation without the State. Jurisdiction, however, may be obtained over the res within the State, attached or sequestered, provided our practice gives the foreign corporation sufficient notice by service out of the State or other process so that it may defend its title to that property. (Matthews v. Matthews, 240 N. Y. 28, and Geary v. Geary, 272 N. Y. 390.)

We, therefore, turn to our statutes. Section 235 provides: “ Where the complaint demands judgment that the defendant be excluded from a vested or contingent interest in or lien upon a specific real or personal property within the state or that such an interest or Hen in favor of either party be enforced, regulated, defined or limited, or otherwise affecting the title to such property * * * or where it appears by affidavit filed in the action or as part of the judgment roH in such action that a warrant of attachment, granted in the action, has been levied upon property of the defendant within the state, the summons may be served without an order, upon a defendant without the state in the same manner as if such service were made within the state, * * The language of this section is the same, with additions, as contained in section 443, subdivision 3, of the Code of Civil Procedure.

The decision of this case turns upon the words “ as if such service were made within the state.” Does this mean service upon a domestic corporation within the State, or a foreign corporation within the State? The defendant to be served is a foreign corporation. It is a person without the State who is to be served. The section is not dealing with persons within the State or with domestic corporations. The proper and full reading of the section would be: “ The summons may be served without an order upon the defendant (foreign corporation) without the State in the same manner as if such service were made upon the defendant (foreign corporation) within the state.” In fact I do not see how it could refer to anything else, nor do I see any reason for restricting it to domestic corporations within the State. Such interpretation is contrary to the very intention as weff as language of the statute.

How, then, is a foreign corporation served within the ' State? Section 229 teUs us how:

“ § 229. Personal service of summons upon foreign corporation. Personal service of summons upon a foreign corporation must be made by delivering a copy thereof, within the state, as follows:

“1. To the president, vice-president, treasurer, assistant treasurer, secretary or assistant secretary; or, if the corporation lack either of those officers, to the officer performing corresponding functions under another name.

“ 2. To a person or public officer designated for the purpose pursuant to law by certificate filed in the department of state, the department of banks or department of insurance, whose designation is in force, or if a designee, other than a public officer, has died, resigned or removed from the state, to the secretary of state as provided by the general corporation law.

“ 3. To the cashier, a director or a managing agent of the corporation, within the state, if service cannot be effected under subdivision two of this section, or an officer of the corporation specified in subdivision one of this section, with due diligence, cannot be found within the state.”

Service made upon a person designated for the purpose, pursuant to law, by certificate filed in the Department of State, would be good service of a foreign corporation within this State. Such a person occupying such a position without the State may be thus served to accomplish the purposes of section 235 of the Civil Practice Act. Rosenstein was the person designated by the foreign corporation to receive service of papers, and the certificate stating that he was so selected as such agent was filed with the secretary of state in New Jersey, pursuant to the laws of that State. Neither the officers nor this agent were in the State of New York nor were they expected to be. Section 235 refers to officers and agents without the State, persons and corporations over whom the State of New York can obtain no jurisdiction. Outlaw says that in attachment cases where we have seized the property, the summons and complaint may be served upon the officers of foreign corporations or their agents without the State, that is, served in the State of New Jersey upon such an officer or agent who would correspond to the officer or agent to be served within New York State. A president in New Jersey could be served there because a president (not the president) could be served here. An agent designated in New Jersey could be served there because such an agent (not the agent) could be served here if designated in the same way here.

Can there be any doubt — in fact the respondent suggests none — that if the president of a corporation had been served in Paterson, New Jersey, instead of the certified agent, the service would have been good, pursuant to section 235, for the purposes of this attachment? The same concession must be made as to the vice-president and treasurer, assistant treasurer, secretary or assistant secretary. These officers are not in the State of New York, but they are properly served without the State, pursuant to section 229. They are not officers of the corporation by reason of any laws of the State of New York, or by reason of any designation within the State of New York. They are officers solely under the Laws of the State of New Jersey. The same thing applies to the person designated for the purpose of receiving service by certificate filed in the New Jersey Department of State. He is such an agent by reason of the laws of the State of New Jersey just as the president and treasurer are agents for accepting service. (Bagdon v. Philadelphia & Reading C. & I. Co., 217 N. Y. 432, 438.)

Our law says, section 229 of the Civil Practice Act, that such a president, treasurer or certified agent (certificate filed in New York) may be served within the State to obtain jurisdiction over the foreign corporation. Section 235 of the Civil Practice Act says such a person, namely, president, treasurer or certified agent (certificate filed in New Jersey) may be served without the State to preserve and enforce an attachment within this State. McCoy v. Erie Forge & Steel Co. (201 App. Div. 570; affd., 234 N. Y. 545) is not applicable, as section 233 of the Civil Practice Act was the governing provision in that case and did not prescribe the manner of service which was to be made thereunder.

It has been suggested that the certificate of designation required by subdivision 2 of section 229 and section 235 has reference to a certificate filed with the New York Secretary of State. If this were so, section 235 was entirely unnecessary, because it would then always be possible to obtain jurisdiction over the corporation, attachment or no attachment.

We construe the sections of our Civil Practice Act as giving force and effect to this service upon Rosenstein for the purpose of giving jurisdiction to the courts of this State over the property attached. We are construing section 235 in conjunction with section 229 of the Civil Practice Act. Therefore, cases like Gilbert v. Burnstine (255 N. Y. 348) and Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co. (243 U. S. 93, at p. 95) are not strictly in point. Surely under these statutes service which would be good in New Jersey for a judgment in personam (Martin v. Atlas Estate Co., 72 N. J. Eq. 416), should be held good for the notice necessary under our Constitution to be given the defendant in attachment proceedings. (See Geary v. Geary, supra.)

The orders below should be reversed and the motion denied, with costs in this court and in the Appellate Division. The question certified is answered “ Yes.”

Rippey, J.

(dissenting). This action is brought to recover damages for breach of contract. Plaintiff is a domestic corporation. Defendant is incorporated under the laws of the State of New Jersey. It is engaged in the business of the manufacture of silk and rayon fabrics at 53 Ann street, Clifton, N. J., where it has its office. It has no other office or place of business. It does no business within the State of New York and has made no designation with the Secretary of State of New York of a person upon whom process may be served in this State. On February 26, 1936, a warrant of attachment was granted and levied on defendant’s property located at 1441 Broadway, New York city. On March 18, 1936, plaintiff’s attorney personally served a copy of the summons and complaint on Filbert L. Rosenstein at room 14, First National Bank Building, Paterson, N. J. Service was set aside by the Special Term on the ground that service on Rosenstein did not constitute good personal service outside the State on the foreign corporation under the laws of the State of New York. The order of the Special Term was unanimously affirmed, without opinion, by the Appellate Division, but an appeal to this court was allowed and the following question was certified: Was valid service of the summons and complaint herein made upon the respondent?”

In an attachment suit, service of the summons without the State may be made either by publication (Civ. Prac. Act, § 232), or personally (Civ. Prac. Act, § 229). When personal service is the method adopted, the warrant having previously been granted, it must he made as prescribed by law (Civ. Prac. Act, § 905). This means, as prescribed by the statutes of the State of New York. There is no other authority for bringing foreign corporations under the jurisdiction of our courts. Previous to the personal service of the summons without the State and as a condition precedent to valid service, an affidavit must be filed in the action showing that a warrant of attachment, granted in the action, has been levied on property of the defendant within the State (Civ. Prac. Act, § 235). There is no evidence that such an affidavit was filed.

When an affidavit such as required by section 235 has been filed, the service may be made without the State on the foreign corporation “ in the same manner as if such service were made within the state, except that a copy of the complaint must be *, * * served with the summons, and that such service must be made by a person or officer authorized under section two hundred and thirty-three of this act to make service without the state,” etc. (Civ. Prac. Act, § 235.) If personal service were made within the State on a foreign corporation, it must be made by delivering and leaving a copy of the summons and complaint (1) with definitely designated officers of the corporation, or (2) to a person or public officer designated for the purpose pursuant to law by certificate filed in the department of state, the department of banks or department of insurance, whose designation is in force, or if a designee, other than a public officer, has died, resigned or removed from the state, to the secretary of state as provided by the general corporation law,” or (3) “ to the cashier, a director or a managing agent of the corporation, within the state, if service cannot be effected under ” the foregoing provisions. (Civ. Prac. Act, § 229.)

Attempt was here made to make service under (2) above. Service was made by a citizen and resident of the State of New York and by an attorney which presumptively establishes he was over eighteen years of age. Defendant has made no designation in the State of New York upon whom process in actions pending within the courts of the State of New York may be served. Rosenstein was not an officer of the defendant' corporation as provided in subdivision (1) above, or the cashier, a director or managing agent referred to in (3) above. He was designated, as required by the laws of the State of New Jersey, in defendant’s certificate of incorporation, as a person upon whom process issuing out of the courts of the State of New Jersey could be served. (Laws of New Jersey, 1898, p. 410; Laws of New Jersey, 1900, p. 313.) The argument advanced that the defendant by making such designation must be deemed to have consented to the service of process in foreign actions within the meaning of such authorities as Gilbert v. Burnstine (255 N. Y. 348) can have no weight. The designation was compulsory for the purpose of service in New Jersey actions, not voluntary, even as to service of process in actions pending in New Jersey, much less as to actions pending in foreign courts.

Subdivision (2) above clearly reads and means that service may be made on a person designated pursuant to our law by certificate filed in our Department of State or our Department of Banks or our Department of Insurance, or to our Secretary of State as provided by our General Corporation Law (Cons. Laws, ch. 23). What other meaning could it have? It is in this State that we must look for such a certificate. It was never intended that we must search the files of departments of the government of a foreign State to find whether such a certificate was there filed and then search the foreign law to learn whether the certificate was filed in accordance with the provisions of the foreign law and whether the foreign law authorized the filing of the certificate to aid our courts to secure jurisdiction over the citizens of the foreign State.

Our Legislature has laid down the method by which a foreign corporation may be brought within the jurisdiction of our courts in an attachment suit for the purposes of adjudicating the rights of the parties, to the end that the thing attached may be applied to the satisfaction of the judgment rendered to the extent of the value of the res attached. The statute must be strictly followed and the courts have no power to import something into the statute not intended by the Legislature. (Valz v. Sheepshead Bay Bungalow Corp., 249 N. Y. 122; Korn v. Lipman, 201 N. Y. 404; Cohnfeld v. Bliss, 174 App. Div. 434; affd., 220 N. Y. 681; Kieley v. Central C. C. Mfg. Co., 147 N. Y. 620, 622.) The statute here has reference to persons designated by our own laws (General Corporation Law, § 217; Banking Law [Cons. Laws, ch. 2], § 28; Insurance Law [Cons. Laws, ch. 28], § 30), and the object is to facilitate service of process within the State in actions pending within the State against foreign corporations. (Bagdon v. Philadelphia & Reading C. & I. Co., 217 N. Y. 432.) With the same purpose and intent, the Legislature of New Jersey had made its provision for service of process in suits pending in its courts on a person designated in the certificate of incorporation of its own corporations. (Kane v. Essanay Film Mfg. Co., 98 N. J. L. 363.) It cannot be held that our Legislature intended to or did provide for service of process in a foreign State in actions pending in our courts upon persons designated by the foreign State to receive process in actions there pending. Nor did it have power to do so.

In Simon v. Southern Railway Co. (236 U. S. 115) the court says (at p. 130): “ Subject to exceptions, not material here, every State has the undoubted right to provide for service of process upon any foreign corporations doing business therein; to require such companies to name agents upon whom service may be made; and also to provide that in case of the company’s failure to appoint such agent, service, in proper cases, maybe made upon an officer designated by law. Mutual Reserve Assn. v. Phelps, 190 U. S. 147: Mutual Life Ins. Co. v. Spratley, 172 U. S. 603. But this power to designate by statute the officer upon whom service in suits against foreign corporations may be made relates to business and transactions within the jurisdiction of the State enacting the law. Otherwise, claims on contracts wherever made and suits for torts wherever committed might by virtue of such compulsory statute be drawn to the jurisdiction of any State in which the foreign corporation might at any time be carrying on business. The manifest inconvenience and hardship arising from such extraterritorial extension of jurisdiction, by virtue of the power to make such compulsory appointments, could not defeat the power if in law it could be rightfully exerted. But these possible inconveniences serve to emphasize the importance of the principle laid down in Old Wayne Life Association v. McDonough, 204 U. S. 22, that the statutory consent of a foreign corporation to be sued does not extend to causes of action arising in other states.”

Suggestion has been made that all purposes are served if notice is given ” of the action pending in our courts. If so, telephone or letter would sufficiently serve the purpose. The Legislature has not so enacted. It definitely stated in clear and unequivocal language and with an intent for which no search need be made beyond the words of the applicable statutes what must be done, what steps must be taken, in what order these steps must proceed before personal service may be made without the State on a foreign corporation. The courts may neither vary the order of the steps nor substitute other or “ what may be just as good ” for those requirements. (Cohnfeld v. Bliss, supra.) It seems to me clear that plaintiff failed here to follow the requirements of the statute and that attempted service accomplished nothing.

For the reasons above, the orders appealed from should be affirmed, with costs, and the question certified answered in the negative.

O’Brien, Hubbs and Loughran, JJ., concur with Crane, Ch. J.; Rippey, J., dissents in opinion; Lehman and Finch, JJ., taking no part.

Orders reversed, etc.-


author: Lehman, J.

text:
    John B. Adamec, Appellant, v. Langdon W. Post, as Tenement House Commissioner of the City of New York, Respondent.

      Argued January 19, 1937;
    decided March 9, 1937.

      Theodore Ornstein, Edward Elman and Henry H. Silverman for appellant.
    The mere declaration by the Legislature that the act promotes the general welfare is not conclusive. It is for the court to determine whether the law constitutes a reasonable exercise of the police power. (Matter of People v. Gillson, 109 N. Y. 389; Matter of Jacobs, 98 N. Y. 98; New York City Housing Authority v. Muller, 270 N. Y. 333; People ex rel. Durham R. Corp. v. LaFetra, 230 N. Y. 29; Pennsylvania Coal Co. v. Mahon, 260 U. S. 393.) In determining whether an act constitutes a proper exercise of the police power, the courts must determine whether such exercise is reasonable; and whether the cost, inconvenience and injury which will result from compliance therewith bears some reasonable relation to the ends sought to be attained. (Wright v. Hart, 182 N. Y. 330; Matter of Jacobs, 98 N. Y. 98; People ex rel. Rodgers v. Coler, 166 N. Y. 1; Forster v. Scott, 136 N. Y. 577; Ives v. South Buffalo R. Co., 201 N. Y. 271; People v. Budd, 117 N. Y. 1; People ex rel. Standard v. Hastings, 207 N. Y. 763; People ex rel. Wineburg Adv. Co. v. Murphy, 129 App. Div. 260; People v. Martin, 203 App. Div. 423; 235 N. Y. 550; Health Dept. v. Rector, 145 N. Y. 32.) The Multiple Dwelling Law (Cons. Laws, ch. 61-a), as amended, imposes upon owners of old-law tenements an unreasonable and oppressive burden, unjustified by the public benefits sought to be attained. (Health Dept. v. Rector, 145 N. Y. 32; Tenement House Dept. v. Moescher, 179 N. Y. 325.) The object sought to be accomplished by the Legislature by means of the Multiple Dwelling Law can legally only be effectuated through public housing, the exercise of the power of eminent domain and the payment of adequate compensation for property condemned. (Matter of New York City Housing Authority v. Muller, 270 N. Y. 333; People ex rel. Durham R. Corp. v. LaFetra, 230 N. Y. 445; Pennsylvania Coal Co. v. Mahon, 260 U. S. 393; Wright v. Hart, 182 N. Y. 330.)

      Paul Windels, Corporation Counsel (William S. Gaud, Jr., Paxton Blair and Francis J. Bloustein of counsel), for respondent.
    The securing for dwellers in tenement houses of more adequate light and air, greater protection from fire hazards and improved sanitation are proper subjects for the exercise of the police power. (Tenement House Department v. Moeschen, 179 N. Y. 325; 203 U. S. 583; Adler v. Deegan, 251 N. Y. 467.) The regulations contained in the sections of the Multiple Dwelling Law which are applicable to the plaintiff’s building are reasonable. (People v. Schweinler Press, 214 N. Y. 395; Cockcroft v. Mitchell, 187 App. Div. 189; 230 N. Y. 630; Matter of McIntosh v. Johnson, 211 N. Y. 265; Tenement House Department v. Moeschen, 179 N. Y. 325; People ex rel. Durham R. Corp. v. LaFetra, 230 N. Y. 429; Matter of New York City Housing Authority v. Muller, 270 N. Y. 333.)

      John J. Bennett, Jr., Attorney-General (Henry Epstein and John C. Crary of counsel), for State of New York.
    The provisions of the Multiple Dwelling Law with respect to existing “ old law ” tenement houses are reasonably adapted to a proper public purpose. (Tenement House Department v. Moeschen, 179 N. Y. 325; Cockcroft v. Mitchell, 187 App. Div. 189; 230 N. Y. 630; Nebbia v.
      New York, 291 U. S. 502; Adler v. Deegan, 251 N. Y. 467; Jacobson v. Massachusetts, 197 U. S. 11.) It is unnecessary to invoke the power of eminent domain to accomplish a proper police power object. (Cockcroft v. Mitchell, 187 App. Div. 189; 230 N. Y. 630; Hegeman Farms Corp. v. Baldwin, 293 U. S. 163; Mugler v. Kansas, 123 U. S. 623; Matter of New York City Housing Authority v. Muller, 270 N. Y. 333.)
   Lehman, J.

The plaintiff is the owner of a plot of land in the city of New York, twenty-five feet in width and one hundred feet in depth, with a four-story brick building erected upon it prior to 1901, and still used as an apartment or tenement.house. It contains eight five-room apartments, two on each floor, and also two two-room apartments in the basement.

Under the provisions of the Multiple Dwelling Law (Cons. Laws, ch. 61-a; Laws of 1929, ch. 713, as amended by Laws of 1930, ohs. 839, 840, 841, 842, 843, 844, 845, 846, 847, 861, 863, 864; Laws of 1931, ohs. 129, 213, 228, 229, 681, 765; Laws of 1932, ch. 626; Laws of 1933, ohs. 210 and 398; Laws of 1934, ohs. 526, 527, 528, 529, 530, 531, 532, 552, 719, 742; and Laws of 1935, ohs. 335, 336, 863, 864, 865, 866, 904 and 941), buildings used as multiple dwellings, though erected prior to 1901 in accordance with the requirements of the laws of the State which were then in force, must now comply with new requirements and higher standards enacted by the Legislature, for the protection of the safety and health of those who may five in these houses and, indirectly, of the people of the State. The plaintiff, claiming that the statute as amended is arbitrary and unreasonable and deprives him and others similarly situated of their property without due process of law, has brought this action, praying that the court declare the statute null and void in so far as it applies to buildings erected before 1901 and that an injunction issue against the Tenement House Commissioner restraining him from taking any steps to enforce the statute.

The plaintiff moved at Special Term for an injunction ;pendente lite. The defendant moved for judgment dismissing the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. The defendant’s motion was granted and from the judgment of dismissal the plaintiff has appealed directly to this court pursuant to the provisions of the Civil Practice Act, section 588, subdivision 3. The scope of the plaintiff’s appeal is limited to the constitutional question of the validity of the statute. No procedural question survives. The appellant can succeed in the court only if from the allegations of the complaint the conclusion must be drawn that the legislative command arbitrarily deprives the plaintiff of his property.

The complaint alleges that the plaintiff’s building is “ one of many thousands of similar buildings in the city of New York, commonly known as ' old law ’ tenements, having been constructed prior to January 1st, 1901.” The State has prohibited the use of any building, erected since that time, as a “ tenement house ” or multiple dwelling ” unless such building complies with requirements exacted and standards prescribed from time to time for the protection of the health and lives of those living there. During the last thirty-five years there have been improvements in sanitation; new devices have been invented which provide added comfort or safety; noncombustible or slow burning materials have been perfected. During these years, too, there has come a general recognition that dwellings which are unsafe or unsanitary or which fail to provide the amenities essential to decent living may work injury not only to those who five there, but to the general welfare. Economic self interest — the incentive to obtain the higher rentals which might be exacted of those able and willing to pay adequately for increased comfort and safety — would, doubtless, be a force sufficient, even without legislative compulsion, to induce the erection of some buildings which would embody the latest improvements and the most advanced ideas in safety and construction. In steadily descending scale, less conveniences, less space, less light, less air, less safeguards of health and safety, will be provided for lower rentals. At the point where economic self-interest ceases to be a sufficiently potent force for the promotion of the general welfare, or, indeed, becomes a force which may actually injure the general welfare, the Legislature may intervene and require that buildings intended for use as tenement houses or multiple dwellings shall conform to minimum standards which may reasonably be regarded as essential for safe, decent and sanitary dwelling places.

Conformity to such standards may cause additional expense to owners of land and result in increased rentals and thus cause incidental hardship to tenants who have small incomes. Nevertheless the Legislature has power to prohibit the use of land for the erection of buildings, to be used for housing, which provide accomodations below such standards. The power of the State to place reasonable restrictions upon the use of property for the. promotion of the general welfare is no longer subject to challenge and regulations governing the erection or use of buildings as multiple dwellings which are reasonably calculated to safeguard the public health and safety constitute a proper exercise of that power. (Cf. Adler v. Deegan, 251 N. Y. 467.)

This court has said that there is no difference of principle but only of circumstance ” between a legislative enactment of conditions upon complying with which the owner might be permitted to erect a structure within the limits of a city or village or for certain purposes, and the enactment of provisions which would necessitate the alteration of structures already in existence.” In both cases the enactment is an attempted exercise of the police power in order to secure the general comfort and health of the public ” and in both cases the use of his property by the owner is circumscribed and limited, what might otherwise be called his rights are plainly interfered with, and the justification therefor can only be found in this police power.” (Health Department v. Rector, etc., of Trinity Church, 145 N. Y. 32, 45.)

Difference “ of circumstance ” may, nevertheless, be an important factor in determining whether a particular regulation is reasonable. A small additional cost in erecting a new building in conformity with a regulation calculated to secure the general comfort and health of the public ” even in a matter, perhaps, not of vital importance, may be reasonably justified by the result to be attained, while the cost of alteration of an old building to conform to such a regulation may be too great to be reasonably required for a doubtful or slight public benefit. Then, too, costly alterations may be economically impractical for old buildings, perhaps deteriorated by years of use, perhaps obsolescent, perhaps in neighborhoods no longer suitable for dwellings. In such case a requirement of such alterations may result in discontinuance of the use of such buildings with consequent loss of revenue to the owner of the building, and perhaps hardship to the tenants who must move out and find other quarters, where, in return for better dwellings, they may be compelled to pay higher rents.

These are matters which are primarily the concern of the Legislature and must reasonably affect its judgment as to what differentiation should be made between regulations for the construction of buildings presently to be erected and provisions necessitating alterations in old buildings constructed in accordance with standards formerly approved but now discarded as inadequate. Even so, as the court pointed out in Health Department v. Rector, etc. (supra, p. 41), the discretion of the Legislature is not absolute. “ The improvement or work must in itself be a reasonable, proper and fair exaction when considered with reference to the object to be attained. If the expense to the individual under such circumstances would amount to a very large and unreasonable sum, that fact would be a most material one in deciding whether the method or means adopted for the attainment of the main object were or were not an unreasonable demand upon the individual for the benefit of the public.” In the same case the court quoted with approval from the opinion of Mr. Justice Holmes, speaking for the Supreme Court of Massachusetts in Rideout v. Knox (148 Mass. 368): “ It may be said that the difference is only one of degree, most differences are when nicely analyzed. At any rate, difference of degree is one of the distinctions by which the right of the legislature to exercise police power is determined. Some small limitations of previously existing rights incident to property may be imposed for the sake of preventing a manifest evil; larger ones could not be except by the exercise of the right of eminent domain.”

General statements in judicial opinions can be understood only when read in their context. In Health Department v. Rector, etc. (supra), this court sustained on broad grounds a statute requiring owners of tenement houses at their own cost to make alterations which would promote the comfort and health of their tenants. The court held, too, that, at the trial, evidence of the probable cost of such alterations was properly excluded when it appeared that the cost even as claimed by the owner of the tenement would not be an unreasonable exaction for the resulting benefit. Lest the decision might be construed as a holding that the Legislature had power to require landlords to make improvements at their own expense for purposes other than the public health and welfare or to require unreasonable expenditures even for such a purpose, the court in the sentences above quoted from its opinion gave warning that it was not discarding the well-recognized limitations imposed by the Constitution upon the power of the Legislature.

The attack of the plaintiff in this case upon the validity of the statute which requires the alteration of existing buildings, which do not conform to the minimum standards prescribed in the statute, is based upon the claim that the cost of alterations, required to make “ old law tenements ” conform to the new standards prescribed by the Multiple Dwelling Law and the amendmants thereto would be prohibitive and unreasonable. The plaintiff leans heavily upon these extracts from the opinion in Health Department v. Rector, etc. (supra). It is said in imposing such an expense the Legislature has transscended the constitutional limitations upon its power. The statute maintains the differentiation recognized in all earlier statutes between the standards which should be prescribed for buildings to be erected thereafter and the standards which should be required in existing buildings which had been erected in conformity with the standards prescribed in earlier statutes. Article 7 of the statute which formulates the requirements for existing buildings, prescribes higher standards for buildings erected prior to 1901 than had been prescribed at the time the buildings were erected, but less than the Legislature prescribed for buildings to be erected thereafter.

The plaintiff in his complaint set forth sixteen “ changes, additions, eliminations and alterations ” in his building which will be required to meet the new standards prescribed in the statute as amended. These requirements are not challenged on the ground that they are not calculated to promote in some degree the public health, safety and welfare. They are challenged solely on the ground that the cost of conforming to them would be unreasonable.

The complaint alleges that the expense of all these changes, additions, eliminations and alterations ” would be “ upwards of $5,000,” although the plaintiff’s property is assessed only in the total sum of $13,500.00; the land being assessed at the sum of $5,000 and the building being assessed at the sum of $8,500.00.” Until now, the Tenement House Commissioner, charged with the duty of enforcing the statute, has served upon the plaintiff an order requiring the plaintiff to conform to the statute only in two particulars and the plaintiff does not attempt to show that the cost of complying with that order would be excessive or unreasonable. Even though we should assume for the purpose of this appeal that the plaintiff may complain of the cost of other alterations, required by" the statute, before he has been ordered to make such alterations by the officer charged with the duty of enforcing the statute, yet we should be constrained to hold that the complaint fails to state facts from which the conclusion follows that the Legislature has sought to impose unreasonable restrictions upon the use of the plaintiff’s property and that the statute is, therefore, invalid.

The imposition of the cost of the required alterations as a condition of the continued use of antiquated buildings for multiple dwellings may cause hardship to the plaintiff and other owners of old law tenements ” but, in proper case, the Legislature has the power to enact provisions reasonably calculated to promote the common good even though the result be hardship to the individual. It is not the hardship of the individual case that determines the question, but rather the general scope and effect of the legislation as an exercise of the police power in protecting health and promoting the welfare of the community at large. It is a well-recognized principle in the decisions of the State and Federal courts'that the citizen holds his property subject not only to the exercise of the right of eminent domain by the State, but also subject to the lawful exercise of the police power by the Legislature; in the one case property is taken by condemnation and due compensation; in the other the necessary and reasonable expenses and loss of property in making reasonable changes in existing structures, or in erecting additions thereto, are damnum absque injuria.” (Tenement House Dept. v. Moeschen, 179 N. Y. 325, 330.)

Certainly the proportion of cost of the alteration to the assessed or even the market value of the old law tenement can be no criterion of whether the Legislature has acted reasonably in requiring the alteration. The value of a tenement house decreases as year by year it becomes more antiquated, less suited to its purpose and departs further from the reasonable standards prescribed by the State for such buildings; yet the same reasons which cause such decline in value may present most cogent argument that the Legislature as a condition of the continued use of these old buildings as dwellings should require alterations which will make them reasonably fit for use as dwellings according to modern standards of health, safety and decency and thus prevent them from becoming a source of danger to the community.

The improvement or work must in itself be a reasonable, proper and fair exaction when considered with reference to the object to be attained.” (Health Department v. Rector, etc., supra, 41.) The object to be attained here is greater safety from fire and more sanitary conditions in tenement houses erected prior to 1901 and which do not even at this date conform to the standards set for all buildings erected since 1901. It does not appear and it is not claimed that the alterations are not reasonably calculated to attain their object and it can hardly be argued that the imposition of a cost of $5,000 to attain that result in a tenement house containing forty rooms is unreasonable even though it may cause hardship in an individual case. Because the State has tolerated slum dwellings in the past it is not precluded from taking appropriate steps to end them in the future. When a building used as a dwelling house is unfit for that use and a source of danger to the community the Legislature in order to promote the general welfare may require its alteration or require that its use for a purpose which injures the public be discontinued; and, subject to reasonable limitation, the Legislature may determine what alterations should be required and what conditions may constitute a menace to the public welfare and call for remedy. The result, as we have said, may be the closing of many tenement houses and the eviction of the tenants. Argument may be made that before the Legislature causes the closing of tenement houses because they are unfit for habitation, provision should be made for better housing elsewhere for the evicted tenants. Such arguments must be addressed to the Legislature. The plaintiff cannot complain to the courts because the Legislature has decided otherwise.

The judgment should be affirmed, with costs.

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

Judgment affirmed.