text:
    In the Matter of the Accounting of Margaret Moran, as Committee of the Estate of George Smith, an Incompetent Person, Appellant. United States Fidelity and Guaranty Company, Appellant; Frank T. Hines, as Administrator of Veterans’ Affairs, et al., Respondents.
    Argued November 21, 1938;
    decided January 10, 1939.

      C. Edward Scotti and S. Bertram Friedman for Margaret Moran, as committee, appellant.
    Investments made by the committee of an incompetent World war veteran in guaranteed mortgage participation certificates are legal and proper. (Matter of Stupack, 274 N. Y. 198; Sporza v. German Sav. Bank, 192 N. Y. 8; Matter of Andrews, 192 N. Y. 514; Hughes v. Jones, 116 N. Y. 67; Butler v. Jarvis, 51 Hun, 248; King v. Talbot, 40 N. Y. 76; Crabb v. Young, 92 N. Y. 56; Matter of McDonald, 162 Misc. Rep. 847; Matter of Adriance, 145 Misc. Rep. 345; Matter of Blake, 146 Misc. Rep. 780; Seligman v. Friedlander, 199 N. Y. 373; Delafield v. Barret, 270 N. Y. 43.) The investments were made under the authority of court orders and with the knowledge, consent and acquiescence of the Veterans’ Administration. (Matter of Levy [Traulko], 253 N. Y. 566; Crabb v. Young, 92 N. Y. 56; Mills v. Bluestein, 275 N. Y. 317.)

      C. 0. Donahue and William J. McArthur for United States Fidelity and Guaranty Company, appellant.
    The investments in the certificates were authorized investments in bonds and mortgages. (Matter of Union Trust Co. [Hoffman], 219 N. Y. 514; Barry v. Lambert, 98 N. Y. 300.) The committee exercised reasonable care and prudence in purchasing the mortgage certificates. She should not be surcharged for their purchase. (Mills v. Bluestein, 275 N. Y. 317.)

      William A. Gillcrist and James A. Clark for Frank T. Hines, as administrator of Veterans’ Affairs, respondent.
    It is the duty of a committee to invest the funds of the estate of an incompetent war veteran in securities authorized by law and she must exercise prudence and fidelity in the selection thereof within the permissible class of investments. (King v. Talbot, 40 N. Y. 76; Matter of McCafferty, 147 Misc. Rep. 179; Matter of Farina, 253 App. Div. 510; Costello v. Costello, 209 N. Y. 252.) Investments by a committee of an incompetent war veteran in the type of investments here involved are not permitted by section 1384-1 of the Civil Practice Act. (N. Y. C. & H. R. R. R. Co. v. Williams, 199 N. Y. 108; Matter of Erlandsen, 265 N. Y. 155; Delafield v. Barret, 270 N. Y. 43.) Investments by a committee of an incompetent war veteran subsequent to July 1, 1929, in the type of paper here involved are not investments in “ bonds and mortgages ” within the purview of section 1384-1 of the Civil Practice Act. (Matter of Farina, 253 App. Div. 510.) It rests entirely with the committee to safeguard the estate and to see that precise disposition of the funds of the estate are made and that duty reposes in the committee by law. (Matter of Hotaling, 294 N. Y. Supp. 953; Matter of Dillworth v. Steadman, 265 N. W. Rep. 596; White v. White, 162 So. Rep. 368; Louisville & Nashville R. R. Co. v. United States, 282 U. S. 740.) Due and unpaid real property taxes being a prior hen upon the property renders the investment in each instance illegal, and knowledge of the existence of these liens and incumbrances must be imputed to the committee at the time of the purchase. (Real Estate Corp. v. Harper, 174 N. Y. 123; Matter of Hotaling, 294 N. Y. Supp. 953.)

      Otto A. Rébhun, as special guardian of George Smith, an incompetent person, respondent.
    The participating mortgage certificates purchased by the committee were not proper, suitable or legal investments made pursuant to court orders for the incompetent war veteran’s trust funds, within the mandatory requirements of section 1384-1 of the Civil Practice Act and the court orders obtained therefor. (Delafield v. Barret, 270 N. Y. 43: National Surety Co., v. Manhattan Mortgage Co., 185 App. Div. 733; Matter of Dalsimer, 251 App. Div. 385; 277 N. Y. 717; Costello v. Costello, 209 N. Y. 252; Matter of Muller, 155 Misc. Rep. 748; Lewis v. Petersen, 241 N. Y. 268; Real Estate Corp. v. Harper, 174 N. Y. 123; Mills v. Bluestein, 275 N. Y. 317; Matter of Farina, 253 App. Div. 510.) Fiduciaries who carelessly, negligently, illegally or improperly invest trust funds in securities contrary to the statutes governing same should be surcharged when loss occurs. (Delafield v. Barret, 270 N. Y. 43; Matter of Jacobs, 152 Misc. Rep. 139; Matter of Dalsimer, 251 App. Div. 385; 277 N. Y. 717.)
   Lehman, J.

Margaret Moran was appointed in 1922 the committee of the estate of her brother George Smith, an incompetent, honorably discharged war veteran. In the course of her administration she received monthly disability compensation payments from the United States Veterans Bureau. In September, 1929, she invested the sum of $2,500 in a guaranteed certificate of participation in a mortgage upon improved real property in the borough of Manhattan, New York city. In 1931 she invested the sum of $1,000 in a similar certificate of participation in a mortgage upon real property in the borough of Queens. The committee has voluntarily petitioned the Supreme Court for leave to resign and for the settlement of her final account. Objections were filed to the investment by the committee of moneys received from the Veterans Bureau in these certificates of participation in mortgages, on the ground that such investments are not authorized by statute. The objections were overruled at Special Term but the Appellate Division has held that these investments are illegal and has directed that the committee be surcharged in the amount of $3,500.

“ Proceedings relative to incompetent veterans and infant wards of the United States Veterans Bureau ” are regulated by the provisions of article 81-A of the Civil Practice Act, added by chapter 340 of the Laws of 1929, in effect July 1, 1929. “ Every guardian shall invest the funds of the estate in the same kind of securities as those in which savings banks of this state are by law authorized to invest the money deposited therein, and the income derived therefrom, and in bonds and mortgages on unincumbered real property in this state worth fifty per centum, more than the amount loaned thereon.” (Art. 81-A, § 1384-1.) In the statute the Legislature has specified “ those types of investments which to the Legislature seem to afford a maximum of safety.” If a fiduciary “ invests in securities other than those of the permitted class, he cannot set up the statute as supporting either his good judgment or good faith. If loss results he must bear the loss.” (Delafield v. Barret, 270 N. Y. 43, 48, 49.) Upon this appeal we must determine whether the “ permitted class ” includes investments in certificates of participation in bonds and mortgages as well as investments in whole bonds and mortgages.”

The provisions of article 81-A are generally in accordance with the Uniform Veterans’ Guardianship Act ” proposed by the National Conference of Commissioners on Uniform State Laws. In section 1384-1 the Legislature, however, departed from the formula proposed by the Conference, which read: “ Every guardian shall invest.the funds of the estate in such manner or in such securities, in which the guardian has no interest, as allowed by law or approved by the court.” (See 1928 Handbook of the National Conference of Commissioners on Uniform State Laws, p. 538.) The Legislature defined specifically the “ permitted class ” of investments, instead of placing upon a committee the burden of searching through the statute books and judicial decisions of the State in order to determine what investments are allowed by law.” Its definition is binding upon the Supreme Court and upon a committee appointed by the court. In formulating that definition the Legislature adopted the language of section 21 of the Personal Property Law (Cons. Laws, ch. 41) and of section 111 of the Decedent Estate Law (Cons. Laws, ch. 13), in its original form prior to the amendment of these statutes by chapter 544 of the Laws of 1918. By that amendment, fiduciaries authorized to invest trust funds in bonds and mortgages on unincumbered real property in this State worth fifty per centum more than the amount loaned thereon, received for the first time in express terms authority to invest trust funds also in shares or parts of such bonds and mortgages.” No such authority is conferred in express terms upon a committee of an incompetent veteran by section 1384-1 of the Civil Practice Act. The question is whether it should be read into the statute by implication.

This court held in Matter of Union Trust Co. (219 N. Y. 514 [1916]) that a trustee even before the amendment of the statute in 1918 had power to combine several trust funds in an investment in a single bond and mortgage, held by the trustee in its own name, provided that the transaction was carried out in manner there described, which would adequately protect the rights and interests of_the beneficiary of the trust fund. We did not there hold that a trustee might purchase a certificate of participation in a bond and mortgage held and controlled by another person or trust company. Such an investment would have violated long-established rules governing the form of investments by trustees, and before the amendment of 1918 no trustee could safely disregard these rules. A court would not have been justified in reading into the statute by implication a power to invest trust funds in parts of shares of bonds and mortgages when such investment was not in accord with established practice or established rules.

The statute of 1918 changed not only the rule but the practice of investment by trustees. Guaranteed certificates of participation in bonds and mortgages became a very usual form of investment. Undoubtedly investments in such certificates were generally regarded as , mortgage investments.” The Legislature in statutory definitions of the words “ bonds and mortgages ” or “ mortgage investments ” has in unambiguous language indicated that at least for some purposes and in some statutes these terms are intended to include shares, parts or interests in bonds and mortgages. (Cf. General Construction Law [Cons. Laws, ch. 22], § 25-b [added by Laws of 1933, ch. 317]; also an “ Act to provide for the protection of holders of mortgage investments,” popularly known as the Schackno Act [Laws of 1933, ch. 745, § 2], and the Mortgage Commission Act [Laws of 1935, ch. 19, art. 3, § 3].) The courts have recognized that in common speech investments in bonds and mortgages ” would include investments in parts or shares of such bonds and mortgages evidenced by certificates of participation. So the courts have held that the authority given by a testator in his will to a trustee to invest in mortgages includes, by plain implication, authority to invest in guaranteed mortgage participation certificates. (Matter of Weinroth, 254 App. Div. 733.) By critical examination of the language of the statute and comparison with other statutes, a narrower construction has been given, in the case we are now reviewing, to the language of section 1384-1 of the Civil Practice Act.

There is force in the argument that in 1929, when the Legislature defined the class of securities in which a committee of an incompetent veteran is permitted to invest trust funds, it would not have used the language of the Personal Property Law in its original form before the amendment in 1918 if it had intended that the permitted class should include investments authorized for the first time by that amendment. On the other hand, we may not presume that in formulating a definition by which a committee should be guided, the Legislature intended to give to words a meaning which would become apparent only upon critical examination and by comparison with other statutes, nor may we presume that the Legislature intended to provide for incompetent veterans safeguards withheld from other incompetents and from infants and beneficiaries of trusts. We have said that the purpose of the statutes which regulate the investment of trust funds, even if not in mandatory form, would seem to be to specify those types of investments which to the Legislature seem to afford a maximum of safety.” Experience since 1929 has convinced the Legislature that certificates of participation in bonds and mortgages are not a type of investment for trust funds which affords a maximum of safety,” and by amendment to the Personal Property Law and the Decedent Estate Law, such investments are no longer permitted. They were expressly specified as investments permitted to trustees when the challenged investments were made in this case. A legislative intention to prohibit investment of the funds of an incompetent veteran in securities expressly specified in other statutes as a type of investment which affords a maximum of safety for funds held by other fiduciaries, including a committee of an incompetent other than a veteran, should be clearly expressed.

In determining whether the statute does prohibit such investments the court must consider whether a fiduciary reading the statute with reasonable care would so understand.” It must take into account the construction which officials, charged with the responsibility of advising or directing a committee, and which the general public placed upon the statute prior to and at the time when the challenged investments were made. A construction of the statute which would exclude an investment in a part or share of a bond and mortgage from the category of permitted investments would be unreasonable if careful fiduciaries and their legal advisers could not reasonably doubt that the language used by the Legislature in describing investments of trust funds which fiduciaries might lawfully make was intended to include ” such investments. So we said in Matter of Stupack (274 N. Y. 198, 206, 213), and what we said there applies with perhaps even greater force in this case.

The United States Veterans Bureau or its successor is vested, under the statute, with broad powers of supervision of the administration of the estates of incompetent veterans. It exercised these powers vigilantly in this case. The investment in 1929 of the sum of $2,500 was made pursuant to an order signed by a justice of the Supreme Court which authorized the committee to invest that sum in securities that are legal for trust funds, paying not less than 5|%.” The application to the court and the order were prepared by the legal division of the Veterans’ Administration, without charge, at the request of the committee. The investment of $1,000 in 1931 was made pursuant to a similar order, also prepared by the legal division of the Veterans’ Administration. The particular certificates of participation in bonds and mortgages in New York and Queens counties were selected by the committee upon the advice of an attorney of the Veterans’ Administration or of a representative of the American Legion to whom the attorney referred the committee and who was requested to assist the committee in the purchase of a legal investment proper for trust funds. Thus it appears without dispute that the legal division of the Veterans’ Administration construed section 1384-1 in manner which would permit the committee to invest the funds of an incompetent veteran in “ securities legal for trust funds,” and the Supreme Court adopted the same construction; yet when pursuant to the order of the court and the advice of all those to whom she might reasonably look for advice, the committee invested moneys in her hands in a certificate of participation in a bond and mortgage, it is said that she violated the plain mandate of the statute and wasted the estate of the incompetent by an investment not permitted to a committee of an incompetent veteran, though legal for trust funds.”

A court cannot authorize a committee to invest the moneys of an incompetent in securities not sanctioned by the statute, and a careless reading of the statute by counsel and by court cannot change the meaning of its language :or enlarge its scope. None the less, a construction adopted consistently and not casually by the legal department of an official agency and by the courts, and which has been accepted without challenge over a period of years by the public, may not be lightly rejected as unreasonable. It indicates plainly what a fiduciary reading the statute with reasonable care would understand from its language, and that is the way in which the courts should construe a legislative definition intended to guide the conduct of fiduciaries. We are advised by counsel that for several years after article 81-A of the Civil Practice Act was adopted, justices of the Supreme Court in all parts of the State signed orders authorizing or approving investments by committees of incompetent veterans in securities legal for trust funds ” including certificates of participation in bonds and mortgages, and that for years the legal department of the Veterans’ Administration prepared, or at least did not object to, such orders. We now know that such investments were unwise. The Legislature has acted upon this knowledge and has forbidden such investments in the future. Knowledge late gained cannot change retrospectively the reasonable and generally accepted construction of the statute. So long as the Legislature expressly permitted the investment by other fiduciaries in certificates of participation of bonds and mortgages, the authority conferred by statute upon a committee of an incompetent to invest the funds in his care in bonds and mortgages ” included, by fair intendment, authority to invest in parts or shares of such bonds and mortgages, evidenced by certificates of participation in such bonds and mortgages.

The committee’s investment is challenged in this case also on the ground that the mortgaged properties were incumbered by tax hens and were not worth fifty per centum more than the loans. Only a title search and an appraisal of the mortgaged premises would have disclosed such infirmities in the investment. A fiduciary may not escape liability for investments in securities of a .type not sanctioned by the statute, regardless of whether he used care and judgment in his choice. He acts at his peril when he disregards statutory limitations upon his power. (Delafield v. Barret, supra.) He may not, however, be charged with wrong and liability for consequent damage, when in spite of the exercise of care and prudence he fails to discover extraneous facts which render a particular investment — though of the type sanctioned by the statute — unsafe and improper for trust funds. In this case the committee appears to have used the care and prudence which a reasonably careful committee would, under the circumstances, have used. (Mills v. Bluestein, 275 N. Y. 317.)

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division, payable out of the estate of the incompetent.

Crane, Ch. J., O’Brien, Hubbs, Lotjghran and Finch, JJ., concur; Rippey, J., dissents on the ground that as the investment in parts of bonds and mortgages was illegal, advice cannot make it legal.

Ordered accordingly.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    Francis L. Hoff, Appellant, v. State of New York, Respondent.
    (Claim No. 24406.)
    Submitted December 2, 1938;
    decided January 10, 1939.

      A. Stanley Copeland for appellant.
    Claimant had a constitutional right, fortified by statute, to petition for a writ of habeas corpus. (State Const, art. 1, § 4; Cons. Laws, ch. 27, § 204.) The act complained of was an act of misfeasance and a tort, for which the State is responsible. (Court of Claims Act, § 12-a.)

      John J. Bennett, Jr., Attorney-General (Leon M. Layden, Henry Epstein and Paul Muscarella of counsel), for respondent.
    Even if the State were guilty of negligence in forwarding the petition to claimant’s wife, the claimant has failed to prove that he sustained any damages by reason thereof or that he was illegally detained. (Carter v. Beckwith, 128 N. Y. 312; 22 C. J. Evidence, § 29.)
   Lehman, J.

The claimant on March 6, 1936, while confined to Tonawanda State Hospital under an order of the court, signed and verified a petition for a writ of habeas corpus and placed it in a stamped envelope addressed to his attorney, A. Stanley Copeland. The claimant had been adjudged insane. It is the duty of an employee of the hospital, acting under the direction of the superintendent, to examine all the mail of patients confined in the hospital before the mail is sent out. The claimant, believing that he was sane, had written to many men in public fife asking their assistance. The claimant’s wife had been annoyed by inquiries from persons who have received such letters. She requested that all letters written by the claimant should be sent to her. The superintendent of the hospital acceded to her request and, by his directions, all mail, including the letter addressed to the claimant’s attorney and containing the petition for the writ of habeas corpus, was forwarded to claimant’s wife, who suppressed the letter. On March 25th Copeland presented a new petition verified by himself to the County Judge of Erie county.

The writ was made returnable on March 30th before a jury. On April 2, 1936, the claimant was discharged from custody after the jury had determined that he was sane. Our constitutional guarantees of liberty are merely empty words unless a person imprisoned or detained against his will may challenge the legality of his imprisonment and detention. The writ of habeas corpus is the process devised centuries ago for the. protection of free men. It has been cherished by generations of free men who had learned by experience that it furnished the only reliable protection of their freedom. The right of persons, deprived of liberty, to challenge in the courts the legality of their detention is safeguarded by the Constitution of the United States and by the Constitution of the State. The Legislature could not deprive any person within the State of the privilege of a writ of habeas corpus. (N. Y. Const, art. 1, § 4.) The superintendent of the hospital by diverting to claimant’s wife the letter and petition for a writ of habeas corpus obstructed the claimant’s right to test the legality of his imprisonment. Doubtless the superintendent acted in the honest belief that the claimant was insane. Nevertheless, his act delayed for a time a test of the claimant’s sanity which, when made, resulted in his discharge.

We can find no basis for any claim that the superintendent’s action was justifiable. The purpose of the claimant’s letter was disclosed to him and the purpose of the direction given by the superintendent to send all mail to claimant’s wife could only have been to give the wife the opportunity to suppress any communications from the claimant which in her opinion should not reach their intended destination.

The right of the superintendent in the exercise of a reasonable discretion to censor the ordinary mail written by a patient who has been adjudged insane is not challenged. The question is whether the superintendent of a State hospital for the insane may in the exercise of his discretion obstruct or delay a challenge of the legality of detention by a patient held under a court order. To that question one answer is clearly dictated. The State cannot under the Constitution withhold the privilege of the writ of habeas corpus. It has not attempted to do so. On the contrary, the Legislature has provided that any one in custody as an insane person, * * * is entitled to a writ of habeas corpus, upon a proper application made by him or some relative or friend in his behalf.” (Mental Hygiene Law [Cons. Laws, ch. 27], § 204.) An officer of the State who detains a man under command of the State may not by indirection accomplish what the Constitution forbids to the State. He may not lawfully withhold from a person so detained the opportunity to apply for a writ of habeas corpus. An interesting discussion upon an analogous question is to be found in People ex rel. Jacobs v. Worthing (167 Misc. Rep. 702).

The Legislature in the Civil Practice Act has made clear that under no circumstances may the grant of the writ of habeas corpus, or a hearing upon the writ when granted, be refused or delayed. A judge authorized to grant the writ “ must grant it without delay ” whenever a petition therefor is presented and for violation of that command a judge forfeits to the prisoner $1,000. (§ 1235.) It may not be disobeyed for any defect of form. It may be served even on a Sunday (§ 1242) and “ the court or judge before which or whom the prisoner is brought by virtue of a writ of habeas corpus * * * must examine, immediately after the return of the writ, into the facts alleged in the return and into the cause of the imprisonment or restraint of the prisoner.” (§ 1251.)

The act of the superintendent was an act of misfeasance, and the State may be held liable for any damages caused by that act. (Martindale v. State, 269 N. Y. 554.) In this case the damages were probably very small but there can be no doubt that the claimant's challenge, ultimately successful, was delayed for approximately two weeks; There is finding “ that the mental condition of claimant was substantially the same on March 6th, 1936, as it was upon March 30th, 1936, when brought into Erie County Court and on April 2nd, 1936, when discharged from custody.” The determination of the jury on April 2nd is a conclusive adjudication that at that time the claimant was sane. We must assume that if his condition was the same earlier, a trial, whether before judge or jury, would have resulted in the same way, and there is evidence, which has not been substantially challenged, which supports the finding of the court.

The presumption of continuance of insanity as to all dealings after the inquisition until it has been superseded ” (Carter v. Beckwith, 128 N. Y. 312, 316) applies only where the question concerns the validity of dealings ” and where there has been an inquisition,” that is, a judicial determination that a committee of the alleged insane person should be-appointed. It has no application where as in this case there has been only an order of commitment by the County Court to a State hospital. (Finch v. Goldstein, 245 N. Y. 300.)

The judgments of the Appellate Division and of the Court of Claims should be reversed and a new trial granted, with costs to abide the event.

Crane, Ch. J., O'Brien, Hubbs, Lotjghran, Finch and Bippey, JJ., concur.

Judgments reversed, etc.


author: O’Brien, J. Finch, J.

text:
    Zurich General Accident & Liability Insurance Company, Ltd., Appellant, v. Bethlehem Steel Company, Respondent.
    Argued October 10, 1938;
    decided January 11, 1939.

      Nathan L. Miller, W. W. Miller and Redmond F. Kernan, Jr., for appellant.
    The joint resolution does not apply to the obligation to pay Swiss francs in Switzerland. (Anglo-Continentale Treuhand, A. G., v. St. Louis Southwestern Ry. Co., 81 Fed. Rep. [2d] 11; Ingram v. Mandler, 56 Fed. Rep. [2d] 994.) The resolution struck down only those provisions which the Congress determined to be an obstruction to its power over money and which it declared to be against public policy. (Norman v. Baltimore & Ohio R. R. Co., 294 U. S. 240; Feist v. Societe Intercommunale Beige d’Electricite, [1934] A. C. 161.) The joint resolution did not relieve obligors from the consequences of the devaluation of the dollar in respect to foreign currency obligations. (Deutsche Bank v. Humphrey, 272 U. S. 517; Anglo-Continentale Treuhand, A. G., v. St. Louis Southwestern Ry. Co., 81 Fed. Rep. [2d] 11.)

      Frederick H. Wood, Hoyt A. Moore, Wm. D. Whitney and Robert D. Blasier for respondent.
    By the express terms of the joint resolution the coupons are discharged upon payment dollar for dollar. (Norman v. Baltimore & Ohio R. R. Co., 265 N. Y. 37; 294 U. S. 240; Compania de Inversiones Internacionales v. Industrial Mortgage Bank, 269 N. Y. 22; 297 U. S. 705; Holyoke Water Power Co. v. American Writing Paper Co., 300 U. S. 324; Munzinger v. United Press, 52 App. Div. 338; Exchange Bank v. Ford, 7 Col. 314; Karasik v. People’s Trust Co., 252 Fed. Rep. 324; 252 Fed. Rep. 337; Saratoga County Bank v. King, 44 N. Y. 87; Butterick Pub. Co. v. Mistrot-Munn Co., 167 App. Div. 632; 217 N. Y. 678; Hart v.
      City Theatres Co., 215 N. Y. 322; DeBeerski v. Paige, 36 N. Y. 537; Cooke v. Millard, 65 N. Y. 352; Johnson v. Joyce, 90 Minn. 377.) The intent of the Congress was to strike down all obstructions to its currency policy, whether gold clause provisions or any other provisions of like effect. (Atchison Ry. Co. v. United States, 284 U. S. 248; Norman v. Baltimore & Ohio R. R. Co., 294 U. S. 240; Compania Inversiones Internacionales v. Industrial Mortgage Bank, 269 N. Y. 22; Perry v. United States, 294 U. S. 330; Nortz v. United States, 294 U. S. 317; Holyoke Water Power Co. v. American Writing Paper Co., 300 U. S. 324; Spencer v. Myers, 150 N. Y. 269; City Bank Farmers Trust Co. v. N. Y. C. R. R. Co., 253 N. Y. 49; Surace v. Danna, 248 N. Y. 18; Riggs v. Palmer, 115 N. Y. 506; Helvering v. New York Trust Co., 292 U. S. 455; Sorrells v. United States, 287 U. S. 435.)
   O’Brien, J.

March 1, 1910, Lackawanna Steel Company, predecessor of defendant Bethlehem Steel Company, issued a series of gold bonds payable March 1, 1950, in United States gold in the sum of $1,000 and also in pound sterling at £205.15.2, guilders at 2,480, marks at 4,200 and francs. If paid in francs in France, Belgium or Switzerland, the corporation promised to pay 5,180 francs and interest in the respective currencies. Each coupon contained a promise that, if paid in France, Belgium or Switzerland, the corporation would pay 129.50 francs for each six months’ interest, and that they were payable not only at New York, but at London, Frankfort, Amsterdam, Basel and Zurich at Schweizerische Kreditanstalt.

Plaintiff, a Swiss corporation having its principal place of business in Switzerland, purchased 323 of these bonds. On July 16, 1936, it presented 1,132 coupons at Schweizerische Kreditanstalt at Zurich and demanded payment at the rate of 129.50 Swiss francs or an aggregate of 146,594 Swiss francs, and on September 7, 1936, it presented at the same place 323 coupons for payment at the same rate, or an aggregate of 41,828.50 Swiss francs. On both occasions payment in these amounts of Swiss francs was refused. The allegations in the complaint are that on July 15, 1936, the market value of 146,594 Swiss francs in Zurich was $48,009.54 in lawful money of the United States and that on September 7, 1936, the value of 41,828.50 francs was $13,631.90. The relief demanded in the complaint is judgment for $61,766.04 with interest. Judgment has been rendered in favor of plaintiff only for the sum of $36,375 and its complaint was dismissed in respect to its claim of right to receive 129.50 Swiss francs for each coupon. Such judgment resulted upon the theory that plaintiff is not entitled to receive more than the value in United States currency of present legal tender reduced by reason of the Joint Resolution of Congress June 5, 1933 (U. S. Code, tit. 31, § 463).

The question is whether, on the facts of this case, the Joint Resolution is applicable to this obligation to pay foreign currency to a foreign corporation in a foreign country. The courts below have held that it is. We are convinced of the correctness of the contrary result flowing from the decision of the Circuit Court of Appeals, Second Circuit, in Anglo-Continentale Treuhand, A. G., v. St. Louis Southwestern Ry. Co. (81 Fed. Rep. [2d] 11 [1936]) wherein the facts were the same as at bar except that payment was made in guilders at Amsterdam instead of francs at Zurich. That court decided that damages recoverable in dollars were required to be calculated at gold par of the guilder and not at the rate of exchange prevailing in New York at the time of the judgment.

On the facts of this case, the obligation was not payable in “ money of the United States ” but in foreign currency, and, therefore, the Joint Resolution is not applicable. The obligation might have become payable at New York in United States money, but the fact is that it did become payable in Switzerland in Swiss currency.

The judgments should be reversed and plaintiff’s motion for summary judgment granted, with costs in all courts.

Finch, J.

(dissenting). To restrict the phrase obligation payable.in money of the United States” so as to exclude a bond, if in addition, for convenience of foreign bondholders, it also provides for payment in what was meant to be an equivalent amount in Swiss francs, guilders or other foreign currency, would seem to be unduly narrowing a resolution which by its language indicated that it was of the broadest scope. A reading of the Joint Resolution shows it to be a resolution not only broad in scope, but one referring to an obligation as a whole rather than to any particular provisions contained therein. (Norman v. Baltimore & Ohio R. R. Co., 294 U. S. 240; Perry v. United States, 294 U. S. 330.)

Furthermore, a detailed analysis of the language used would seem to show that the ordinary meaning of the language would reach and apply to every obligation issued before or after the 5th of June, 1933, capable of being paid in the United States. Every such obligation shall be discharged upon payment dollar for dollar in any coin or currency which at the time of payment is legal tender for public and private debts. While the first sentence of the resolution considers the obligation as a whole, and strikes down the gold clause, the next sentence provides in the most sweeping language for every obligation which is capable of being paid or may be paid in money of the United States. This language of the Joint Resolution does not exclude a bond payable in money of the United States because such a bond also contains a provision as a matter of convenience for the payment of the same amounts in foreign currencies. An obligation which is payable in money of the United States is no whit less such an obligation because it also gives the obligee the right to receive the equivalent of this money in foreign currency.

The obligations in suit are certainly capable of being paid in money of the United States, which brings them within the terms of the Joint Resolution. As such they are dischargeable, dollar for dollar in legal tender.

When we consider that the Joint Resolution precludes a court of the United States from enforcing a gold clause provision, we are forced to the conclusion that such courts may not enforce similar provisions of coupons having the same effect.

The intent of Congress being manifest, to strike down gold clause provisions and any other obstructions to its currency policy, it would seem to follow that all similar provisions contained in the principal obligation should be likewise invalid, to the end that a uniform parity should exist as to all obligations which are capable of being paid in dollars.

The judgment appealed from should be affirmed, with costs.

Crane, Ch. J., Lehman, Loughran and Rippey, JJ., concur with O’Brien, J.; Finch, J., dissents in opinion in which Hubbs, J., concurs.

Judgment accordingly.


author: Per Curiam.

text:
    Louis De Stasio, Appellant, v. Janssen Dairy Corporation, Respondent.
    Argued December 6, 1938;
    decided January 11, 1939.

      Robert R. Bauman and Arthur L. Obre for appellant.
    The trial court committed reversible error by permitting an inquiry as to previous convictions of plaintiff for traffic infractions as allegedly affecting the plaintiff’s credibility. (Civ. Prac. Act, § 355; See v. Wormser, 129 App. Div. 596.) The trial court permitted violations of the well-known rule that the character of a party in a civil cause of action cannot be looked to as evidence that he did, or did not, act carefully as of the time in issue. (Zucker v. Whitridge, 205 N. Y. 50; Noonan v. Luther, 206 N. Y. 105; Morningstar v. Lafayette Hotel Co., 211 N. Y. 465; Taylor v. Heft, 150 App. Div. 509; Eppendorf v. Brooklyn City & Newton R. R. Co., 69 N. Y. 195; Wooster v. Broadway & 7th Ave. R. R. Co., 72 Hun, 197; Hovell v. The Evergreens, 242 N. Y. 216.) Where issues are sharply litigated, errors in the admission of incompetent evidence may not be disregarded as harmless. (Hanrahan v. N. Y. Edison Co., 238 N. Y. 194; Moore v. Rosenmond, 238 N. Y. 356; Wurtzman v. Kalinowski, 233 App. Div. 187; Trombly v. Deso, 235 App. Div. 15; Creasy v. Eastern Greyhound Lines, Inc., 249 App. Div. 59.)

      B. G. Barton for respondent.
    The trial court’s ruling, even if error, was harmless. (Jacobs v. Jacobs, 252 App. Div. 794; Gotham Const. Corp. v. City of New York, 233 App. Div. 699; Von Au v. Magenheimer, 126 App. Div. 257; 196 N. Y. 510.)
   Per Curiam.

Evidence that a plaintiff, in an action for negligence growing out of the operation of an automobile, has been previously convicted for a traffic infraction as defined by the Vehicle and Traffic Law (Cons. Laws, ch. 71), shall not be received to affect his credibility when a witness in an action or proceeding, and he may not be required to disclose a conviction therefor (Civ. Prac. Act, § 355).

Plaintiff was repeatedly required to disclose such previous convictions. In a case as close as this such error cannot be disregarded.

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

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

Judgments reversed, etc.


author:
Cbane, Ch. J.
      Finch, J.

text:
    Interborough Rapid Transit Company, Appellant, v. New York Rapid Transit Corporation, Respondent.

      Argued October 13, 1938;
    decided January 17, 1939.

      Louis S. Carpenter, James L. Quackenbush and Smith L. Mutter for appellant.
    The lengthy deliberations resulting in the rapid transit contracts, the exactness of their terms, and the certainty of the rights and obligations thereunder should be given great weight. (City of New York v. Interborough R. T. Co., 257 N. Y. 20; City of New York v. New York Tel. Co., 278 N. Y. 9; Matter of Rapid Transit R. R. Commrs., 197 N. Y. 81; Admiral Realty Co. v. City of New York, 206 N. Y. 110; Gilchrist v. Interborough Co., 279 U. S. 159; New York R. T. Corp. v. City of New York, 275 N. Y. 258; 58 Sup. Ct. Rep. 721.) The agreement for trackage rights was a business arrangement as to a special and unique situation, wherein the Brooklyn Company became joint operator of a railroad in which it had no investment, and the plaintiff, by agreement with the city, had a just priority of claim to all revenues or rental from railroads constructed under contract No. 3, including the Steinway Tunnel Line, to safeguard the plaintiff's large investment in city-owned subways. (Schweinburg v. Altman, 145 App. Div. 377; 207 N. Y. 681; Matter of People ex rel. Delaney v. Interborough R. T. Co., 192 App. Div. 450; 230 N. Y. 558.) The proviso in question, which, by deferring contingently immediate payment of rental otherwise payable unconditionally upon specified dates, is a concession to the Brooklyn Company, presumed to have been inserted at its request, and is, therefore, subject to a strict construction as against the Brooklyn Company. (2 Parsons on Contracts [9th ed.], p. 664; 13 C. J. p. 546; Evelyn Bldg. Corp. v. City of New York, 257 N. Y. 501; Mason Co. v. City of New York, 249 App. Div. 538; 275 N. Y. 514; Mutual Life Ins. Co. v. Hill, 193 U. S. 551.) The judgment of the court below is based upon contract No. 3. Contract No. 4 and the supplementary agreement are not one contract. The trackage rights agreement of the parties is set forth completely in the supplementary agreement; portions of contract No. 4, specifically mentioned therein, serve the exclusive purpose of a statement of specifications. (Admiral Realty Co. v. City of New York, 206 N. Y. 110; City of New York v. Interborough R. T. Co., 257 N. Y. 20; Hutchison v. Ross, 233 App. Div. 626; 262 N. Y. 381; Williams v. Barkley, 165 N. Y. 48; Caruthers v. Donahue, 85 Conn. 629.)

      Harold L. Warner and George D. Yeomans for respondent.
    The supplementary agreement must be read in conjunction with all of contracts Nos. 3 and 4 and the intention of the parties derived from a reading of all three contracts together must govern the interpretation of the paragraph of the supplementary agreement in question. (Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519; Meriden Britannia Co. v. Zingsen, 48 N. Y. 247; Baird v. Erie R. R. Co., 210 N. Y. 225; Peterson v. Miller Rubber Co., 24 Fed. Rep. [2d] 59; Metropolitan Securities Co. v. Ladd, 173 Fed. Rep. 269; Bailey v. Hannibal & St. Joseph R. R. Co., 84 U. S. 96.)
   Cbane, Ch. J.

The Supplementary Agreement ” was executed at the same time as Contracts Nos. 3 and 4. It refers specifically to both contracts “ as if the same were herein fully set forth.” This supplemental contract related to the Steinway Tunnel Line and fixed the terms on which the New York Municipal Railway Corporation (defendant’s predecessor and referred to as the Brooklyn Company) could use it to the extent of one-half its capacity.

Contracts 3 and 4 provide for the construction of certain railroads to be owned by the city of New York. The plaintiff (called the Interborough) and the Brooklyn Company were required to furnish the equipment for and contribute toward the cost of construction of the new railroads to be built and operated. Out of the revenue derived from the operation of its system each railroad was to receive certain preferential payments, which were to be cumulative and all deficits therein were to be paid in full before the city should receive any return on the money put up by it. This is the dominant idea expressed and running through all these contracts, viz., out of revenues the railroads were to receive first payments of certain amounts before the city received anything. The years were divided into quarters for accounting purposes but any deficits were carried over and had to be made up before the city got its share. These preferential contracts are much alike, this dominant purpose being in all three. Thus by article XLIX of Contract 4 “ the gross receipts from whatever source derived directly or indirectly by the lessee [Brooklyn Company] or on its behalf in any manner from, out of or in connection with the operation of the Railroad and the Existing Railroads (hereinafter referred to as the ‘ revenue ’) shall be combined during the term of this contract and the city shall receive for the use of the Railroad at the intervals provided a specified part or proportion of the income, earnings and profits of the Railroad and the Existing Railroads. The amount of such income, earnings and profits shall be determined as follows: From the revenue the Lessee shall at the end of each quarter year ending December 31, March 31, June 30 and September 30, deduct in the order named: ” 1. Certain rentals as specified. 2. Taxes and assessments. 3. All expenses, exclusive of maintenance, actually and necessarily incurred by the Lessee in the operation of the Railroad and the Existing Railroads.” 4. An amount equal to twelve per centum (12%) of the revenue for the maintenance,” etc. 5. An amount for depreciation. 6. “ One-quarter Q/Q of the sum of three million five hundred thousand dollars ($3,500,000) to be retained by the Lessee for each quarter year of the term of the lease,” etc, 7. “ One-quarter (%) of an amount equal to six percentum (6%) of (1) the Lessee’s contribution toward the cost of construction of the Railroads,” etc. 8. An amount to be retained equal to one-fourth of the annual interest payable by the lessee on the cost of additional equipment as defined in the contract. Then and then only does the city come in for anything. In subdivision 9 for each quarter year the city is to be paid one-quarter Q/Q of the annual interest payable by the city upon its share of the cost of construction, together with one-quarter of one per cent of the city’s share of the cost of construction. Subdivisions 10 and 11 specify other payments to the city after which comes the prophetic section 12, “ The amount remaining after making all such deductions shall be deemed to be the income, earnings and profits of the Railroad and the Existing Railroads,” to be divided fifty, fifty.

These items are important here merely to show that the “ preferential ” consists in the eight items which the railroad is to receive each quarter before the city comes in under item 9. And to make sure that the quarter years ” are not confusing, article LI is inserted, reading: “If in any quarter year the revenue shall be insufficient to meet the various obligations and deductions referred to in Article XLIX, the deficits shall be cumulative and payments of such deficits shall be thereafter made in full before deducting the amounts required in the paragraph of such article, succeeding the paragraph providing for the payment of the obligations or deductions as to which there has been such deficit.”

The supplementary agreement must be read in harmony with the underlying specifications of the main contracts, referred to as “ if the same were herein fully set forth.” For the use of the Steinway Tunnel Line certain payments are to be made which are not in dispute. The contract is between the city through the Public Service Commission, the plaintiff, and the New York Municipal Railway Corporation (The Brooklyn Company). The pertinent part is here quoted:

“ Article Eighth: The Railway Corporation, after the commencement of joint operation and during the continuance of this agreement, shall pay to the Interborough Company at quarter-yearly intervals for the quarter years ending March 31, June 30, September 30 and December 31 as rental an amount (for interest and amortization) equal to one-quarter of six per centum Qzi of 6%) on one-half the cost of the line equipment (as defined in paragraph (c) of Article Sixth) of Subdivisions III, IV and V of the Steinway Tunnel Line. The cost of such line equipment-shall be determined in the manner provided in the Interborough Contract for determining the cost of Equipment. - '

Article Ninth: The Railway Corporation, after the commencement of joint operation and during the continuance of this agreement, shall also pay to the Interborough Company at quarter-yearly intervals for the quarter years ending March 31, June 30, September 30 and December 31 as rental an amount (for interest and amortization) equal to one-quarter of six per centum (% of 6%) on one-quarter of the cost of construction of Subdivisions III, IV and V of the Steinway Tunnel Line. Such cost of construction shall be determined in the manner provided in the Interborough Contract.

“ The Railway Corporation shall also pay to the Inter-borough Company at such quarter-yearly intervals, after the commencement of joint operation and during the continuance of this agreement, for such quarter years as additional rental, an amount (for interest and amortization) equal to one-quarter of six per centum (% of 6%) on one-quarter of such cost of construction, provided, however, that such additional rental shall only be immediately payable for such quarter years as the revenue of the Railway Corporation as defined in Article XLIX of the Railway Contract shall exceed the amount of the deductions specified in Paragraphs 1 to 8 inclusive of said Article XLIX, and then only up to the amount of such excess; but any deficits in the payment of such additional rental under this paragraph shall be cumulative and shall bear simple interest and shall be paid to the Interborough Company before any payment is made to the City under Paragraph 9 of said Article XLIX of theRailway contract.”

Article 8 refers to cost of line equipment; article 9 to cost of construction, the first paragraph relating to the one-half of the one-half amount of the cost of construction expended by the Interborough. The second paragraph — the provisional payments — relates no doubt to the other half of the cost of construction contributed by the city. Anyhow this is only paid in any event out of surplus — What surplus? — “as the revenue of the Railway Corporation as defined in Article XLIX of the Railway Contract shall exceed the amount of the deductions specified in Paragraphs 1 to 8 inclusive of said Article XLIX.”

We have given the eight deductions above. Until there is such a surplus no money is due under this last paragraph of article 9 of the Supplementary Agreement — the con - ditional payment. When will there be a surplus after such deductions as specified in article XLIX? Only after all deficits are made up as stated in article LI.

The appellant says that when the revenue in any quarter year exceeds the deductions the additional rental is due, irrespective of deficits in past quarter years. We would expect this contract to be more specific if such a change were to be made in the meaning and application of “ quarter years ” and “ deficits,” especially as the main contracts using these terms were made a part of or referred to in this Supplementary Agreement. We^consider the words “ for such quarter years as the revenue of the Railway Corporation as defined in Article XLIX of the Railway Contract shall exceed the amount of the deductions specified in Paragraphs 1 to 8 inclusive of said Article XLIX ” to have the same effect as the contract containing said article, i. e., there is no excess until past deficits are made up, for so says that contract in article LI.

The judgment should be affirmed, with costs.

Finch, J.

(dissenting). The action is brought to recover certain rentals claimed to be due under a written contract whereby the plaintiff, hereinafter referred to as the Interborough, leased certain trackage rights over its Steinway Tunnel Line to the New York Municipal Railway Corporation, the predecessor of the defendant, both defendant and its predecessor being hereinafter referred to as the Brooklyn Company. As to the facts no controversy exists. The Brooklyn Company contends that under its interpretation of a provision of the contract, hereinafter called the Supplementary Agreement, the rental in dispute has not become due and payable.

Prior to 1913, the Interborough operated the only municipally owned subway in the city of New York, pursuant to Contracts Nos. 1 and 2. In 1913 the city of New York, acting through the Public Service Commission for the First District, entered into three contracts for the construction, maintenance and operation of rapid transit lines in New York city. One contract was with the Interborough and is known as Contract No. 3; another was with the Brookyn Company and is known as Contract No. 4; the third contract was made by the city with the Interborough and the Brooklyn Company, and is known as the Supplementary Contract.

Contract No. 3 and Contract No. 4 are similar. Each provides for the construction of certain railroads, to be owned by the city and operated by the railroad company under a long term lease in conjunction with certain existing railroads which they respectively own. The railroad companies are required to furnish equipment and contribute towards the cost of construction of the new railroads to be built. The plan of both contracts was that, out of the revenues derived from each railroad system, the railroads should retain certain rentals, taxes, costs of operation and maintenance, an amount for depreciation, an amount each year equal to the average annual income from the operation of the already existing railroad (which amount was fixed), and an amount equal to six per centum per annum on all moneys contributed by the railroad towards the construction and equipment of the new city-owned railroad. These preferential payments were to be cumulative and deficits therein were to be paid before the city should receive any return on the money it had invested. The investment of Interborough under Contract No. 3 was to be not less than $80,000,000. The investment of the Brooklyn Company under Contract No. 4 was to be not more than $13,500,000.

In Contract No. 3 the city reserved the right, and in Contract No. 4 the city agreed to provide the Brooklyn Company with trackage rights over the Steinway Tunnel Line for at least half the capacity thereof, if required by the Brooklyn Company.

This Steinway Tunnel Line was to be built, one-half by the Interborough and one-half by the city, and to be equipped by the Interborough. The Brooklyn Company had no investment in this line. Contracts Nos. 3 and 4 provided that the precise terms and conditions for such trackage rights ” should be embodied in a written agreement. It is admitted that the precise terms and conditions thereof were embodied in a written agreement known as the Supplementary Agreement.” This Supplementary Agreement consists of fifteen articles. The 8th and 9th articles prescribe the rental to be paid by the Brooklyn Company to the Interborough. In substance, these two articles, 8th and 9th, together provide that after the commencement of joint operation and during the continuation of this agreement, the Brooklyn Company shall pay to the Interborough, in quarterly payments, a rental amounting annually to six per cent on one-half of the costs of line equipment and on one-half the cost of construction', of the Steinway Tunnel Line. The portion of the rental computed upon the basis of six per cent on one-half of the cost of line equipment is made payable unconditionally. The portion of the rental computed upon the basis of six per cent on one-half the cost of construction is divided into two equal parts, one-half of which (amounting to one-quarter of the whole) is made payable unconditionally at quarterly intervals, and the remaining half, called “ additional rental ” is made payable at the same quarterly intervals, but the obligation to pay this “ additional rental ” is qualified by a proviso. The decision of this appeal depends upon the interpretation of that proviso.

The second paragraph of article Ninth, dealing therewith, reads as follows: “ The Railway Corporation shall also pay to the Interborough Company at such quarter-yearly intervals, after the commencement of joint operation and during the continuance of this agreement, for such quarter years as additional rental, an amount (for interest and amortization) equal to one-quarter of six per centum (% of 6%) on one-quarter of such cost of construction, provided, however, that such additional rental shall only be immediately payable for such quarter years as the revenue of the Railway Corporation as defined in Article XLIX of the Railway Contract shall exceed the amount of the deductions specified in paragraphs 1 to 8 inclusive of said Article XLIX, and then only up to the amount of such excess; but any deficits in the payment of such additional rental under this paragraph shall be cumulative and shall bear simple interest and shall be paid to the Interborough Company before any payment is made to the City under Paragraph 9 of said Article XLIX of the Railway Contract.”

In 1923 the Brooklyn Company commenced joint operation of the Steinway Tunnel. Prom 1923 to 1929, the time when this action was commenced, in all except five quarters the quarterly revenues were in excess of the quarterly deductions specified in article XLIX of Contract No. 4. In all except those five quarters the excess revenues have been in excess of from five to forty times the amount of the additional rental,” and these deficits were made up in the immediately succeeding quarters. For the entire period, current revenues have exceeded current deductions by an amount estimated at between three and four million dollars.

Between 1913 and 1923, however, the revenue of the Brooklyn Company had been inadequate to meet the deductions, and there had accumulated a deficit of more than $14,000,000. The Brooklyn Company contends that this entire deficit must be met before there may be any payments of the so-called additional rental ” under article 9 of the Suppementary Agreement. Thus the Brooklyn Company seeks to construe the Supplementary Agreement to cover this large deficit arising before the joint operation of the Steinway Tunnel. The Inter-borough on the other hand, contends that this additional rental ” is immediately payable in so far as there is sufficient current excess revenue out of which to make the payment.

All courts which have had before them for consideration these subway contracts are unanimous in agreeing that they must be read in the same manner as that in which they were drawn, namely, phrase by phrase and word by word. This does not permit of alteration or modification by implication.

As the Supreme Court of the United States said in New York Rapid Transit Corp. v. City of New York (303 U. S. 573, 592, affg. 275 N. Y. 258): " There is no reason to limit the ordinary meaning of words used in a contract by men prepared to invest under its terms. ' * * * a business proposition involving the outlay of very large sums cannot be and is not taken by the parties concerned according to offhand impressions; it is scrutinized phrase by phrase and word by word.’ ” And as this court said in City of New York v. Interborough R. T. Co. (257 N. Y. 20, 35) (which, though referring to Contract No. 3, has equal reference to the Supplementary Agreement) : The terms of the new contract were drafted in such form as deliberately to exclude any possibility of modification by implication.”

In Gilchrist v. Interborough R. T. Co. (279 U. S. 159) reference was made to the “ great detail ” with which one of the contracts was drawn, and the carefully specified conditions ” of the elevated contracts.

From this approach we consider the language used in the second paragraph of article Ninth.

In the first place, it is to be noted that as to each of these rental provisions we must place ourselves at the commencement of the period specifically referred to, namely, “ after the commencement of joint operation.” When the period is to commence is emphasized because it appears once in the 8th article, is repeated at the beginning of each paragraph of the 9th article, and in substance again in the 10th article which provides for the rental to be paid in case joint operation should begin before completion of the line. Starting then and reading this second paragraph of article Ninth, to ascertain when additional rental is payable without regard to a deficit, the paragraph would seem to state as clearly as the English language can indicate the intention of the parties, that the Brooklyn Company shall pay immediately to the Interborough, at quarter-yearly intervals after the commencement of joint operation, this fixed rental, if permitted by reason of an excess of revenue over definite deductions. The revenue is specifically defined, and the deductions are specifically defined. A more detailed analysis confirms the reading as a whole. Starting at a period after the commencement of joint operation, the Brooklyn Company is directed to pay to the Interborough this additional rental at such quarter-yearly intervals for such quarter years. This phrase, for such quarter years,” occurring twice in this second paragraph, refers plainly to the same quarter years which are mentioned in the first paragraph of article Ninth, namely, the quarter years ending March 31st, June 30th, September 30th and December 31st, after the commencement of joint operation and during the continuation of this agreement. Moreover, this phrase for such quarter years ” thus repeated in the proviso, qualifies with certainty, and as specifically as concise language can, both the words revenue ” and deductions ” as used in the proviso. In other words, this proviso in certain terms prescribes a formula, namely, that the quarterly installments of the additional rental ” theretofore provided for, were to be immediately payable ” out of excess “ revenue ” over specified deductions ” for such “ quarter years.” Furthermore, the “ deductions ” specified in paragraphs 1 to 8, inclusive, of said article XLIX of the Brooklyn Contract No. 4 are quarter-yearly deductions, and. only quarter-yearly deductions. This article XLIX defines the revenue and provides for quarterly deductions at the end of each quarter. The deductions are current deductions. No deductions other than quarterly current deductions are mentioned in article XLIX for the same quarter years as are mentioned in article Ninth of the Supplementary Agreement. Article XLIX, therefore, was utilized to determine from quarter to quarter, as additional rental became due under the Supplementary Agreement, what was the operating revenue of the Brooklyn Company for the corresponding quarter, and its excess over quarterly deductions. Article Ninth referred to article XLIX for the purpose of determining revenue and deductions, as used in article Ninth, for “ such quarter years ” mentioned in article Ninth.

Following the clause of the proviso which we have been considering, we come to the clause which relates exclusively to deficits in additional rental and which provides that these deficits in the immediate payment thereof shall be cumulative and each bear simple interest, and be paid to the Interborough before any payment is made to the city under the ninth paragraph of article XLIX. When these deficits are payable would seem to present the only arguable question in the case. As already noted, during the period involved in this action, the revenues of the Brooklyn Company, in excess of deductions under paragraphs 1 to 8 of article XLIX, were sufficient to pay the additional rental in all quarters except five. The major part of the additional rental is, therefore, unaffected by the above-mentioned clause. No quarterly deficits accrued after the last quarter of 1924, and excess earnings over current deductions in the succeeding quarter, namely, the first quarter of 1925, were more than sufficient to pay not only current additional rental, but the deficits for the two preceding quarters then outstanding. Since this additional rental was immediately payable ” out of these earnings, and since, by reason of the provision for interest (showing that they are a past due obligation of the Brooklyn Company), they should be paid out of the first succeeding quarter when excess was sufficient not only to pay the current additional rental but also to permit the same to be applied upon the payment of the deficits for the preceding quarters. This conclusion is strengthened by the fact that if such construction is not adopted, interest accumulating on these unpaid deficits would delay a return to the city upon its investment in railroads constructed under Contract No. 4.

The Brooklyn Company urges that article Ninth of the Supplementary Agreement is not clear, and that the intention of the parties must be ascertained from what it calls the entire instrument, consisting not only of the Supplementary Agreement, but all of the Contracts Nos. 3 and 4. It points to the fact that the Supplementary Agreement contains a recital referring to Contracts 3 and 4 as if set forth at length therein. As against this, however, it is to be noted that the final recital before the beginning of the agreement in the Supplementary Agreement provides that “ the Commission, the Interborough Company and the Railway Corporation have agreed upon such terms and conditions as are hereinafter embodied in this agreement.” The chief reliance of the Brooklyn Company, however, is upon its contention that the additional rental was only payable for such quarters as the revenue, as defined in article XLIX, should exceed the deductions specified in paragraphs 1 to 8 of article XLIX as modified by article LI. Article LI provides that “ if in any quarter year the revenue shall be insufficient to meet the various obligations and deductions referred to in Article XLIX the deficits shall be cumulative and payments of such deficits shall be thereafter made in full before deducting the amounts ” specified in the next succeeding paragraph.

The Brooklyn Company maintains that article LI is applicable, since it applies to article XLIX, and article XLIX is referred to in article Ninth of the Supplementary Agreement. From this the respondent urges that it need not pay any additional rental under article Ninth until all its cumulative deficits incurred prior to the commencement of joint operations shall have been met. It, therefore, becomes necessary for the Brooklyn Company to urge, in order to be successful, that the constructions which it contends for should be as if there had been written in, at the end of each of the numbered paragraphs, 1 to 8, of article XLIX, the following: If in any quarter the revenue shall be insufficient to meet this deduction, the deficits shall be cumulative and payment of such deficits shall thereafter be made in full before deducting the amount specified in the next succeeding paragraph.” In the same way the Brooklyn Company urges that if its construction is adopted, the effect of the second paragraph of article Ninth of the Supplementary Agreement must be considered as if a new paragraph, which we may designate as paragraph 8-a, were inserted between paragraph 8 and paragraph 9 of article XLIX of Contract No. 4, such new paragraph providing for the payment of the additional rental, including deficits therein, with interest, as a deduction to be made from revenue after those specified in paragraph 8 and before those specified in paragraph 9.” None of the revenue would be applicable to the payment of this additional rental under the new paragraph 8-a, until all deductions under paragraphs 1-8 had been made in full, and none of the revenue could be used to make any payment to the city under paragraph Ninth until the additional rental provided for in said paragraph 8-a had been paid in full, including deficits and interest thereon.

It is a complete answer to this contention of respondent that article Ninth of the Supplementary Agreement does not provide the right to set off cumulative deficits. Moreover, it only incorporates by reference paragraphs 1-8 of article XLIX of Contract No. 4. It does not, however, either incorporate or refer to any more of article XLIX of Contract No. 4. We, therefore, have an agreement which provides for additional rentals whenever the quarterly revenue exceeds certain specified deductions, and neither the agreement nor the specified deductions makes any mention of cumulative deficits or deficits accumulated before any rent was due. Article Ninth, as already noted, provides for immediate payment out of current revenues to the extent that such current revenues exceed current deductions. And the only reference in article Ninth to article XLIX is for the purpose of indicating the revenue and specific deductions which are to be made. If the argument of the Brooklyn Company, that deficits, accumulated before the commencement of joint operation, are to be deducted, then it would be equally logical to deduct deficits arising on other parts of the line, concerning which it is provided that if the revenue is insufficient to pay the charges, the company shall be entitled to deduct the amount of such deficit from the revenue of the Brooklyn Company prior to making •payments to the city. This furnishes an additional reason for excluding any deficit arising from the operations of the Brooklyn Company at any time prior to the beginning of joint operations over the Steinway Tunnel Line.

Any other construction than that contended for by the Interborough would disregard the precision with which the parties drafted this Supplementary Agreement.

It follows that the judgment appealed from should be reversed, and judgment ordered in favor of the plaintiff for the several amounts of unpaid rental accruing during the period beginning April 8, 1923, and ending April 30, 1929, totaling $603,202.08, as set forth in the complaint, together with interest upon the said separate amounts from their respective due dates, with the costs of this action.

Lehman, O’Brien and Hubbs, JJ., concur with Crane, Ch. J.; Finch, J., dissents in opinion in which Loughran and Rippey, JJ., concur.

Judgment affirmed.


author: Crane, Ch. J. Lehman, J.

text:
    The People of the State of New York, Respondent, v. Charles Sandstrom and Hilda Sandstrom, Appellants.

      Argued December 5, 1938;
    decided January 17, 1939.

      Arthur Garfield Hays, O. R. Moyle, Percy S. Straus, Jr., and Bernard Katz for appellants.
    The trial court erred in not holding that section 712 of the Education Law (Cons. Laws, ch. 16), as interpreted by the school' board, is unconstitutional and void under the due process clause of the Fourteenth Amendment to the Constitution of the United States. The appellants’ right to religious liberty and freedom of worship included in the Fourteenth Amendment is unlawfully restricted and denied. (Gitlow v. New York, 268 U. S. 652; Grasjean v. American Press Co., 297 U. S. 233; Whitney v. California, 274 U. S. 357; King Mfg. Co. v. Augusta, 277 U. S. 100; Watson v. Jones, 80 U. S. 679; Davis v. Beason, 133 U. S. 333; Knowles v. United States, 170 Fed. Rep. 409; Reynolds v. United States, 98 U. S. 145.) The appellants are denied the right guaranteed by the Fourteenth Amendment to have their children attend the free public schools and acquire an education by conditioning the exercise of that right upon compliance with a / condition which violates the Fourteenth Amendment. (Allgeyer v. Louisiana, 165 U. S. 578; Meyer v. Nebraska, 262 U. S. 390; Pierce v. Society of Sisters, 268 U. S. 510; Terral v. Burke Construction Co., 257 U. S. 529; People v. Stanley, 81 Col. 76; Frost v. Railroad Comm., 271 U. S. 583; Hanover Ins. Co. v. Harding, 272 U. S. 494.) The trial court erred in not holding that section 712, as interpreted by the school board, is unconstitutional and void under article 1 of section 3 of the State Constitution and in not holding that the appellants are deprived of their right of religious liberty and freedom of worship. (Smith v. Donahue, 202 App. Div. 656; People v. Ruggles, 8 Johns. 290; Hardwick v. Board of School Trustees, 54 Cal. App. 696.) The County Court erred in not holding that the compulsory flag saluting requirement was unconstitutional and void under article IX of section 1 of the State Constitution and in not holding that the appellants are unlawfully denied their right to have their children attend the free public schools. (O’Connor v. Hendrick, 109 App. Div. 361; Smith v. Donahue, 202 App. Div. 656.) The question involved in this case is new. Compulsory flag saluting requirements are invalid. (Gabrielli v. Knickerbocker, 74 Pac. Rep. [2d] 290; Gobitis v. Minersville School District, 21 Fed. Supp. 581.)

      Joseph F. Rutherford for Jehovah’s Witnesses, amicus curios.

    The regulation as applied is invalid because it infringes upon the free exercise and enjoyment of religious profession and worship without justification therefor. (Gobitis v. Minersville School District, 21 Fed. Supp. 581.) The regulation is invalid because no purpose of action against Christianity may be imputed to any statute, ordinance or regulation. (Holy Trinity Church v. United States, 143 U. S. 457; People v. Board of Education, 245 Ill. 234.)

      Fred J. Munder, District Attorney (Harry C. Brenner of counsel), for respondent.
    Section 627 of the Education Law does not violate the State Constitution. (Hamilton v. Regents, 293 U. S. 245; Reynolds v. United States, 98 U. S. 145; Davis v. Beason, 133 U. S. 333; Nicholls v. Mayor, 7 N. E. Rep. [2d] 577; Leoles v. Landers, 184 Ga. 586; Hering v. Board of Education, 117 N. J. L. 455; 118 N. J. L. 566; Gabrielli v. Knickerbocker, 82 Pac. Rep. [2d] 391; Butler v. United States, 297 U. S. 1.) A statute of the State requiring flag saluting exercises in the public schools does not violate the Constitution of the United States. (Hamilton v. Regents, 293 U. S. 245; Hering v. State Board of Education, 303 U. S. 624; Leoles v. Landers, 82 L. Ed. 257.)
   Crane, Ch. J.

We must have before us the pertinent provisions of the Education Law (Cons. Laws, ch. 16) to understand this case. Section 712 of that law, as found in book 16 of McKinney’s Consolidated Laws of New York (Annotated), makes it the duty of the Commissioner of Education to prepare, for the use of public schools of the State, a program providing for a salute to the flag, for instruction in its correct use and display and such other patriotic exercises as may be deemed by him to be expedient.

In each school district of the State, each minor from seven to sixteen years of age shall attend upon full time day instruction (§ 621). Persons in parental relationship to such a minor “ shall cause such minor to attend upon instruction as hereinbefore required ” (§ 627, subd. B [2]). A minor under seventeen years of age required to attend upon instruction, who is irregular in such attendance or insubordinate or disorderly during such attendance, is a school delinquent and may be required, pursuant to the provisions of section 628, to attend a special day school or attend upon instruction under confinement at a parental school or elsewhere. Subdivision F (a) provides that the school authorities may suspend a minor from required attendance upon instruction, who is insubordinate or disorderly, that is, may expel such a scholar.

In section 627 we find this exception: A person in parental relation to a minor shall not be subject to the provisions of this section requiring the minor to attend upon instruction if it can be shown that he is unable to control the minor.

Any violation of these provisions shall be punishable for the first offense by a fine not exceeding ten dollars, or ten days_ in prison, or for each subsequent offense by a fine' not exceeding fifty dollars, or by imprisonment not exceeding thirty days, or both by such fine and imprisonment (§ 641).

These provisions spell out the following procedure for recalcitrant scholars: If the parent refuses to send the minor to school or refuses to cause him to attend upon instruction, the parent can be punished as provided by the law. The minor himself who is insubordinate or disorderly and refuses to obey regulations may be expelled or, for continued insubordination or non-attendance, may be sent upon proper notice to a parental school.

Under the above provisions of the law the district school at Lake Ronkonkoma, town of Brookhaven, county of Suffolk, pursuant to the regulations of the Commissioner of Education, as required by section 712, had a simple ceremony of saluting the flag. Grace Sandstrom, a young girl thirteen years of age, refused to take part in these ceremonies and refused to make the salute with the other scholars. She was repeatedly requested to do so by her teacher and principal, and still refused. The teachers were not at fault. Every time she was sent home she was sent back by her parents. She never refused to attend the school; she always came back, and yet she refused to comply with the regulations or take part in the ceremony. As soon as she was sent home the truant officer was notified and she was immediately sent back by her parents. There is no evidence in the case that she ever was kept home or was refused attendance upon instruction or that she desired to stay away from school or attempted to do so. In fact, she persisted upon coming as well as being steadfast in her refusal to salute the flag. Two o^her children, younger than herself, of the same family, were also students in the school, but there seems to have been no trouble with them.

This proceeding was then taken before the justice of the peace to punish the parents under section 627, subdivision 2, of the Education Law, the information stating that they wrongfully and unlawfully and maliciously did keep one Grace Sandstrom from attending upon full time instruction in the public school, she being a minor between seven and sixteen years of age. The fact is, as is evidenced throughout the entire record, that the parents did nothing of the kind. They repeatedly sent the child back and the child always came back to school after being sent home. I can see no justification for this proceeding against the parents. If the young girl was insubordinate and disobedient to all the proper orders and regulations of the school, she is the one that should have been dealt with under the provisions of the Education Law. In like cases where this same question has arisen, the procedure has always been to expel the student, not to punish the parents unless they in some way have disobeyed the law.

Before suggesting, however, that this young girl be summarily dealt with, let us consider the case a step further.

The defendants are members of, or associated with, the religious order known as Jehovah’s Witnesses. Part of their belief is that allegiance is due only to God, and that the salute or recognition of the national flag is placing this symbol above the Almighty. The young girl Grace, upon the stand in this case, explained her actions by saying, Mr. Terry [the principal of the school] went up to the front of the room and he said he did not want to see anybody not saluting the flag. * * * I told him that saluting the flag is like worshiping an image, and that in the Bible in the twentieth chapter of Exodus it says, ‘ Thou shalt not make unto thee any graven image of anything in heaven above or in the earth beneath; thou shalt not bow down to them nor serve them.’ * * * He sent me home.”

Q. Did your parents ever keep you from going to school? A. No. I came to school one day. Mr. Terry asked me if I would salute the flag and I said 1 No.’ He said I should put my books in my desk and go home.

Q. People who write the pamphlets and papers for your religion, do you know if they ever said anything whether Jehovah’s Witnesses should salute the flag or not? A. In the Loyalty ’ booklet it told about other school children who had refused and that they were expelled.

Q. What do you think would happen to you if you salute the flag contrary to your conscience? A. When the battle of Armageddon comes, I would be slain. Because the flag is an image and it says in the Bible not to bow down to images.”

The appellants claim that to compel Grace to salute the flag contrary to her religious convictions or conscience is contrary to the provisions of the State Constitution (Art. 1, § 3), which reads: “ The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed in this State to all mankind; and no person shall be rendered incompetent to be a witness on account of his opinions on matters of religious belief; but the liberty of conscience .hereby secured shall not be so construed as to excuse acts of licentiousness, or justify practices inconsistent with the peace or safety of this State.”

Saluting the flag in no sense is an act of worship or a species of idolatry, nor does it constitute any approach to a religious observance. The flag has nothing to do with religion, and in all the history of this country it has stood for just the contrary, namely, the principle that people may worship as they please or need not worship at all. On the other hand, our Constitution, both Federal and State, recognizes that a religious belief, whatever it is, cannot interfere with the laws which the State enacts for its preservation, safety or welfare. In time of war the government may seize property and take liberty for its self protection. We are all familiar with the draft which called our young men to arms and to service for the nation. For the preservation of peace and for the prevention of war, the State may take measures which may lead the youth of the country to respect law and order, and to value the protection and the blessings afforded by those fundamental principles, of which the flag is a mere representative.

The State cannot reasonably be required to defer the adoption of measures for its own peace and safety until revolutionary utterance and acts lead to actual disturbance of the public peace or imminent and immediate danger of its own destruction; but it may, in the exercise of its judgment, seek to prevent evil in its incipiency. (Gitlow v. New York, 268 U. S. 652, 669.)

While legislation for the establishment of religion is forbidden, and its free exercise permitted, it does not follow that everything which may be so called can be tolerated. * (Davis v. Beason, 133 U. S. 333, p. 345.)

The States, like Congress, are free to reach actions which are in violation of social duties or subversive of good order. (Reynolds v. United States, 98 U. S. 145, 164.)

In Pierce v. Society of Sisters (268 U. S. 510, p. 534) the court said: “ No question is raised concerning the power of the State reasonably to regulate all schools, * * * to require * * * that certain studies plainly essential to good citizenship must be taught, and that nothing be taught which is manifestly inimical to the public welfare.”

The recent case of Hamilton v. Regents (293 U. S. 245) related to the action of the University of California in expelling students who refused to take the required course of military training. The students objected to taking this course of training because of conscientious convictions and the teachings of the Methodist Episcopal Church and of the Epworth League in reference to war and the preparations for war. The court, treating the action of the University of California as being that of the State itself, said: “ Appellants assert — unquestionably in good faith — that all war, preparation for war, and the training required by the university, are repugnant to. the tenets and discipline of their church, to their religion and to their consciences. * * * Government, federal and state, each in its own sphere owes a duty to the people within its jurisdiction to preserve itself in adequate strength to maintain peace and order and to assure the just enforcement of law. And every citizen owes the reciprocal duty, according to his capacity, to support and defend government against all enemies ” (p. 261).

Quoting from United States v. Schwimmer (279 U. S. 644), the court continued: “ Whatever tends to lessen the willingness of citizens to discharge their duty to bear arms in the country’s defense detracts from the strength and safety of the Government ” (p. 263).

There is another strength which is necessary to preserve the government besides military force, and that is the moral strength, or public opinion of its citizens. Public opinion is as vital to the maintenance of good government as an army or a navy; in fact these latter can be destroyed quicker by public opinion than by the attacks of an enemy. Many a nation has succumbed to the breakdown of the morale of its people. The State, therefore, is justified in taking such measures as will engender and maintain patriotism in the young.

Provisions in other States similar to our own, requiring salute to the flag, have been held legal, and the expulsion of pupils for disobedience sustained. (Nicholls v. Mayor, 7 N. E. Rep. [2d] 577, not yet officially reported, decided April 1, 1937, by the Supreme Judicial Court of Massachusetts; Leoles v. Landers, 184 Ga. 580; Hering v. State Board of Education, 117 N. J. L. 455.)

These are ponderous truths to flash upon this, little girl who in all conscientiousness cannot, at her time of life, grasp them. Let us re-examine this statute which the Legislature has adopted. Surely from the reading of it we can gather that it was never intended to force patriotism upon children by a militaristic order. It seeks to teach, to enlighten, to reveal, to lead the mind, to understand and appreciate what our government, really is and what the flag stands for. This young girl is deep in her reverence for the commands of the Old Testament. We hope, and so evidently did the Legislature, that by a course of instruction in our public schools, the children will see that that justice, that mercy and that humility which is the burden of Holy Writ, is also the aim and object of the things the American flag stands for.

The Education Law says that the Commissioner shall prepare a program, not merely for the salute to the flag, but for instruction in its correct use, and for such other patriotic exercises as may be deemed by him to be expedient. The emphasis here, I am sure, must be placed more upon instruction than mere blind obedience. We require the children to go to school to be instructed, among other things, in patriotism, which means to acquire some knowledge of the history and struggle of man to devise a government which will protect and develop the best in life. Surely, saluting a flag, even an American flag, is of little vital force to the nation unless behind it there is a love and reverence for the tilings it represents.

The program of the Commissioner of Education was in accordance with the Education Law, not contrary to any rights preserved by the Constitution. Grace, in attending this school, provided by the State for her .education, should have participated in the ceremony with the other scholars. We must say, as judges interpreting the law, that if she is to stay in school she must be obedient. May there not be, however, a better way for accomplishing the purposes of this law than immediate resort to disciplinary measures? Faith in our fine educational system and its corps of efficient teachers leads one to believe that with a little more patience and some tact, as the child grows in knowledge a reverence for our flag will develop, and she will be glad that it is still here to salute. This section 712 of the Education Law relating to the salute to the flag has in substance been upon the statute books since 1898, a period of forty years. This is the first time that any trouble has arisen regarding its enforcement, which is some indication of its universal observance.

The conviction of the defendant parents should be reversed, and the information dismissed, for the reasons which we have stated at the beginning of this opinion, and if it is thought necessary to carry the matter further, the action must be against the scholar, not the parents.

In each case, the judgment should be reversed and the information dismissed.

Lehman, J.

(concurring in result). I concur in the decision and in all that is said in the opinion except in so far as it indicates that the defendants’ daughter may, on pain of expulsion, be compelled to salute the flag though such salute be contrary to her religious convictions and her conscience.

The American flag is the symbol of our country; the symbol of the ideals which are embodied in our Constitution; the symbol of the spirit which should animate our institutions. In the noble words of Charles Sumner, it is “ to be cherished by all our hearts, to be upheld by all our hands.” I do not doubt that our schools will utterly fail in their purpose if they do not teach the children those great principles of liberty and democracy for which the founders of the Republic fought, which they formulated in the Declaration of Independence and which by the Bill of Rights, in our Constitution, were made inviolate. The schools, I agree, should not only teach these principles to the children but the teachers should also inspire the children with a love of country so deep and so understanding that when they grow up, they will be ready to defend it against attack by enemies from without and against attack by enemies within who would undermine its principles and destroy its Constitution. The State may require that “ studies plainly essential to good citizenship ” should be taught in the schools. (Pierce v. Society of Sisters, 268 U. S. 510.)

The statutory directions to the Commissioner of Education “ to prepare, for the use of the public schools of the state, a program providing for a salute to the flag, for instruction in its correct use and display and such other patriotic exercises as may be deemed by him to be expedient * * * ” (Education Law, § 712), may be regarded as a legislative determination that such a program will tend to inculcate a love of country in the children and should be part of the school exercises. I do not differ with my associates when they say that saluting the flag in no sense is an act of worship or a species of idolatry, nor does it constitute any approach to a religious observance. The flag has nothing to do with religion, and in all the history of this country it has stood for just the contrary, namely, the principle that people may worship as they please or need not worship at all.” Like my associates, I believe that the Legislature may properly direct the preparation of a “ program providing for a salute to the flag, as part of the regular exercises of every school.” Like my associates, I find it difficult to understand how any reasonable and well-disposed person can object to such a salute on religious or other grounds. The question remains whether the Legislature intended to direct or could, under our Constitution, direct that a child may be compelled to join in the exercises in those rare cases where such exercises are contrary to the religious principles and doctrines of the child and its parents.

Religious freedom guaranteed by the Constitution is broader than the principle that people may worship as they please or need not worship at all.” It includes the right of the individual to carry out every obligation which he believes has a divine sanction, “ to practice any religious principle, and to teach any religious doctrine which does not violate the laws of morality and property, and which does not infringe personal rights.” (Watson v. Jones, 80 U. S. 679, at 728.) (Italics here and throughout this opinion are mine.) “ The term ‘ religion ’ has reference to one’s views of his relations to his Creator, and to the obligations they impose of reverence for his being and character, and of obedience to his will. * * * With man’s relations to his Maker and the obligations he may think they impose, and the maimer in which an expression shall be made by him of his belief on those subjects, no interference can be permitted, provided always the laws of society, designed to secure its peace and prosperity, and the morals of its people, are not interfered with.” (Davis v. Beason, 133 U. S. 333, at 342.) There are many acts which are not acts of worship and which for most men have no religious significance and are entirely unrelated to the practice of any religious principle or tenet but which may involve a violation of an obligation which other men may think is imposed upon them by divine command or religious authority. To use a homely illustration, partaking of food is ordinarily in no sense “ any approach to a religious observance.” It is purely mundane, with no religious significance, and yet ordinances establishing fast days or prohibiting the use of certain kinds of food are a part of the religion of many people. Interference by the State .with such religious ordinances; commands by the State or its officers to violate these ordinances, can be justified only where observance of the religious ordinances obstructs the laws of society designed to secure its peace and prosperity, and the morals of its people.” The right of the principal of the school to command the little child 'of the defendants to join in the salute.of the flag must be tested by the same standards.

When the Legislature directed the Commissioner of Education to prepare a program providing for a salute to the flag, it did not in terms provide that all the school children must join in the salute. Perhaps the Legislature assumed that because the salute to the flag is not a religious act, no person would object to the program on religious grounds. Perhaps it assumed that no well-disposed person could object to the salute on any reasonable ground and that a principal of a school might in the exercise of a reasonable discretion and without offending the religious convictions' of any person, direct all the children of the school to join in the patriotic exercises. None the less, I can find in the statute no fair implication that every child must take part in such exercises, even though some children might be taught by their parents or religious instructors that a salute to the flag would be disobedience to the command of God. A command of the State to such a child, whether given by the Legislature or by a school principal deriving authority from the statute would, I think, transcend the limitations imposed by the Constitution upon the powers of government.

Episcopalians and Methodists and Presbyterians and Baptists, Catholics and Jews, may all agree that a salute to the flag cannot be disobedience to the will of the Creator; all the judges of the State may agree that no well-intentioned person could reasonably object to such a salute; but this little child has been taught to believe otherwise. She must choose between obedience to the command of the principal of the school, and obedience to what she has been taught and believes is the command of God. She has chosen to obey what she believes to be the command of God. I cannot assent to the dictum of the prevailing opinion that she must obey the command of the principal, though trembling lest she incur the righteous wrath of her Maker and be slain “ when the battle of Armageddon comes.”

The Constitution of the State in guaranteeing liberty of conscience has expressly imposed the same limitations upon its exercise which are implied in the guaranty contained in the Federal Constitution. It shall not be so construed as to excuse acts of licentiousness, or justify practices inconsistent with the peace or safety of this State.” (Art. 1, § 3.) The words “ inconsistent with the peace or safety of this State ” should not, I agree, be limited too closely. It has been said by Chief Justice Hughes, with the concurrence of Mr. Justice Holmes, Mr. Justice Brandies and Mr. Justice Stone, that The battle for religious liberty has been fought and won with respect to religious beliefs and practices, which are not in conflict with good order, upon the very ground of the supremacy of conscience within its proper field. What that field is, under our system of government, presents in part a question of constitutional law and also, in part, one of legislative policy in avoiding unnecessary clashes with the dictates of conscience.” (United States v. Macintosh, 283 U. S. 605, at 634.) There is no need here to attempt to mark the exact limits of governmental powers in constraint of conscience. Certainly such governmental powers may not at their widest be asserted to prohibit beliefs and practices which are not in conflict with good order or to compel acts which have no reasonable relation to the peace or safety or even the general welfare of the State or Nation.

It is true, as the prevailing opinion points out, that in other States where such question has been presented the courts have accepted the argument that the State may attach reasonable conditions to the right of a child to attend school and have held that the school authorities may expel a child for refusal to join in school exercises which include a salute to the flag. In this State the Constitution (Art. IX, § 1) provides that all the children of this State may be educated ” in the free common schools of the State. A right guaranteed by the Constitution to all children of the State may not be abridged and invaded by the Legislature or by any administrative officer of the State. This court has called it a “ legal right.” (People ex rel. Cisco v. School Board, 161 N. Y. 598.) The right to attend school is, from its nature, subject to the condition that each child will conduct itself in orderly manner and will obey the orders of the teachers and administrative officers of the school acting within the limits of their authority and the constitutional guaranty is not invaded by a statute enacted by the State in the exercise of its police power. Such statute must, however, have adequate connection with the common good.” To justify exclusion of a child from the common schools it must tend in a degree that is perceptible and clear towards the preservation of the * * * health * * * or welfare of the community, as those words have been used and construed in the many cases heretofore decided.” (Matter of Viemeister, 179 N. Y. 235, 238.) The Legislature cannot authorize the school authorities to give an order which outrages the religious conscience of a child at least unless such order does in reasonable degree tend to promote the general health or welfare or is required for the orderly conduct of the school.

An act of disrespect to the flag by child or parent may be punished, but there is no disrespect to the flag in refusal to salute the flag by a child who has been taught that it is a moral wrong to show respect in the form of a salute. The legitimate purpose of the salute to the flag is, as Chief Judge Crane points out, to inculcate love of country and reverence for the things which the flag represents; it may be an aid in teaching good citizenship — but surely not where a little child is compelled in fear and trembling to join in an act which her conscience tells her is wrong. She does not insist upon doing an act which might harm herself or others; she does not refuse to do an act which might promote the peace, safety, strength or welfare of her country. She does not ask to stay away from any courses of instruction offered by the school. She does not refuse to show love and respect for the flag. She refuses only to show her love and respect in manner which she believes her God has forbidden. She asks only that she be not compelled to incur the wrath of her God by disobedience to His commands. The flag salute would lose no dignity or worth if she were permitted to refrain from joining in it. On the contrary, that would be an impressive lesson for her and the other children that the flag stands for absolute freedom of conscience except where freedom of conscience is asserted “ to justify practices inconsistent with the peace or safety of this State.”

The salute of the flag is a gesture of love and respect — fine when there is real love and respect back of the gesture. The flag is dishonored by a salute by a child in reluctant and terrified obedience to a command of secular authority which clashes with the dictates of conscience. The flag “ cherished by all our hearts ” should not be soiled by the tears of a little child. The Constitution does not permit, and the Legislature never intended, that the flag should be so soiled and dishonored.

O’Brien, Hubbs, Loughran, Finch and Rippey, JJ., concur with Crane, Ch. J.; Lehman, J., concurs in separate opinion.

Judgments reversed, etc./