author: Hubbs, J. Crane, J.

text:
    Waxson Realty Corporation, Appellant, v. Samuel Rothschild, Respondent.
    (Argued December 2, 1930;
    decided January 6, 1931.)

      Leon J. Shapiro, Elliot W. Isaacson and Bernard D. Barnett for appellant.
    The administrator c. t. a. could not convey good title except pursuant to a court order of authorization or of confirmation. (Surr. Ct. Act, § 227; Murdock v. Kelly, 62 App. Div. 562.) The heirs of Adelaide Welch not having been cited, the proceedings in the Surrogate’s Court were insufficient to cut off their rights. (Title Guarantee & Trust Co. v. New York Juvenile Asylum, 133 App. Div. 529; People ex rel. Moscovitz v. O’Loughlin, 79 Misc. Rep. 650; Bascom v. Weed, 54 Misc. Rep. 54; Matter of Evans, 234 N. Y. 42; Matter of Kidder, 121 Misc. Rep. 285; Moore v. Little, 41 N. Y. 66; House v. Jackson, 50 N. Y. 161.) The will did'not illegally suspend the power of alienation. (Purdy v. Hayt, 92 N. Y. 445; La Farge v. Brown, 31 App. Div. 542; Matter of Abbey, 91 Misc. Rep. 506; Woodruff v. Cook, 61 N. Y. 638; United States Trust Co. v. Webb, 110 Misc. Rep. 683; Woodgate v. Fleet, 64 N. Y. 566; Bailey v. Bailey, 97 N. Y. 460; Fenton v. Fenton, 35 Misc. Rep. 479; Matter of Lolly, 136 App. Div. 781; 198 N. Y. 608; Matter of Hurlbut, 51 Misc. Rep. 263.) The title to the premises is so clothed in doubt as to render same unmarketable. (Fleming v. Burnham, 100 N. Y. 1; Cerf v. Diener, 210 N. Y. 156.)

      George B. Davenport and Howard C. Tracy for respondent.
    The proceeding taken by the administrator c. t. a. was unnecessary in order to convey a good title under the testatrix’s contract. The proceeding referred to was taken under Surrogate’s Court Act, section 227. (Rome v. Phillips, 27 N. Y. 357; Potter v. Ellice, 48 N. Y. 321; Thomas v. Smith, 63 N. Y. 301; Murdock v. Kelly, 62 App. Div. 562; Rockland-Lockport Lime Co. v. Leary, 133 App. Div. 379; Holly v. Hirsch, 135 N. Y. 590; Williams v. Haddock, 145 N. Y. 144; Bostwick v. Frankfield, 74 N. Y. 215.) The proceeding instituted by the administrator c. t. a. is not defective. (Miller v. Gilbert, 144 N. Y. 68; Steinway v. Steinway, 163 N. Y. 183; Eycle
      sheimer v. Hunter, 162 App. Div. 643; Matter of Evans, 234 N. Y. 42; Matter of Kidder, 121 Misc. Rep. 285.) The remainder to the heirs of Adelaide Welch, if the phrase “ or her heirs ” be held words of substitution, is invalid. (Purdy v. Hayt, 92 N. Y. 445; Matter of Terwilliger, 135 Misc. Rep. 170; Matter of Ryder, 41 App. Div. 247; Matter of Silsby, 229 N. Y. 396.) The title to the premises is not so involved in doubt as to render the same unmarketable. (Hellreigel v. Manning, 97 N. Y. 56; Bardes v. Herman, 144 App. Div. 772; Cambreleng v. Purton, 125 N. Y. 610; Ferry v. Sampson, 112 N. Y. 415; Norwegian Evangelical Church v. Milhauser, 252 N. Y. 186; Cerf v. Diener, 210 N. Y. 156; Fleming v. Burnham, 100 N. Y. 1.)
   Hubbs, J.

On October 3, 1925, Elizabeth Chase Welch died leaving a last will and testament which reads as follows:

I, Elizabeth Chase Welch, of Syracuse, N. Y., make this my last will and testament.
I leave everything both real and personal of which I may die possessed or anything which might come to me, were I living, to my sister, Margaret T. DeForest, to use for her natural life. Except my four large bronzes, Fairman’s oil painting & the fine French cabinet, now at Share’s in Boston. These are for my son, Proctor C. Welch. My United Shoe Machinery I leave to my son, Howard F. Welch. As my son, Proctor, is already provided for, I wish to make provision for my son Howard. In the event of my sister’s death (having perfect confidence in the integrity of my son, Proctor and Mr. Jacob Goettel, I leave everything to them in trust for my son, Howard, expecting them to take my place & use their own discretion when & how much shall be given him until he is sixty five years of age, when if thought best, the trust may end. In the event of Howard’s death, everything shall pass to Proctor & when he dies it goes to Adelaide Welch or her heirs.
“ Sept, tenth, nineteen hundred & Twenty.
“ ELIZABETH CHASE WELCH.
“ Helen A. Joyce
“Mary A. Joyce.”
“ Onondaga Hotel ” (In left margin of will)
“ If necessary — Mr. Latiff will act as a trustee.” (In right margin of will.)

It was admitted to probate and letters of administration with the will annexed were issued to Proctor C. Welch, a son of testatrix.

Before testatrix’s death she had entered into certain contracts for the sale of land. After her death the then owner of the vendee’s interest in those contracts desired to pay the balance unpaid thereon and receive a deed. Proctor C. Welch, as such administrator, filed in the Surrogate’s Court a petition praying that a citation issue to Margaret DeForest, Adelaide Welch, Howard F. Welch and Proctor C. Welch, the petitioner, directing them to show cause why a decree should not be made directing the said Proctor C. Welch as such administrator to execute a proper conveyance as provided in said land contracts.

All of said parties having been duly served, a decree as prayed for was made and entered. Thereupon said Proctor as such administrator delivered a deed of the land in question. It was duly recorded and the defendant became the owner thereof by mesne conveyances. He contracted to convey said premises to Herman K. Solomon who made a down payment of $1,000. On the law day the said vendee refused to complete the purchase upon the ground that the defendant did not have a marketable title. The complaint alleges: That there was and still is an outstanding interest in the aforesaid premises in the heirs of one Elizabeth C. Welch, one of the former owners of the premises, and * * * that the premises are otherwise unmarketable.” This action is to recover the down payment and to establish a lien therefor. The defendant counterclaimed for specific performance of the contracts. In the agreed statement of facts, the objection to the title made upon the closing day is stated to be That there were outstanding interests in the said premises in the heirs and devisees of Elizabeth Chase Welch and in the heirs of one Adelaide Welch.”

The basis of the objection was that the heirs of Elizabeth, the testatrix, and the heirs presumptive of Adelaide were not made parties to the Surrogate’s Court proceeding which authorized Proctor C. Welch, as such administrator, to execute and deliver the deed in question. The Special Term found in favor of the plaintiff, that the title was not marketable, and judgment was entered in his favor for the down payment and the attorney’s fees, the basis of the decision being that all necessary parties, as required by section 227 of the Surrogate’s Court. Act, which permits an administrator with the will annexed to execute and deliver a deed to premises contracted for sale by a testator, upon the order of a Surrogate to be granted after proceeding as therein directed, that is, after service of notice upon all persons interested, had not been complied with.

The Appellate Division reversed and directed judgment for the defendant for specific performance of the contract.

Upon the death of Elizabeth Chase Welch, the testatrix, the title to the land in question which she had contracted to convey vested in the devisees named in her will or, if not legally devised, in her heirs at law. No power to convey real estate was given by the will and no executor was named therein. The only authority that, Proctor C. Welch as administrator c. t. a. had to convey such real property was derived from a decree of ■ the Surrogate’s Court made under the authority of . section 227 of the Surrogate’s Court Act which requires that all persons interested” be cited in a proceeding for permission to make and deliver such deed or in a proceeding for a decree “ for the confirmation of the act of the executor or administrator in delivering the deed.” The will created certain life estates or trust estates for life, and then provided that the corpus of the estate should go to “ Adelaide Welch or her heirs.” If the devise to Adelaide is void because the will unlawfully suspends the power of alienation for more than two lives in being, the title to the land in question descends -under the statute to the heirs at law of Elizabeth Chase Welch, the testatrix, as the remainder attempted to be devised to Adelaide is contingent both as to the time of vesting and the persons in whom it may vest. (Matter of Silsby, 229 N. Y. 396.)

Under such a construction of the will, the heirs at law of Elizabeth take the legal title to the land and were necessary parties to the Surrogate’s Court proceeding. The record does not disclose that the heirs at law of the testatrix were cited or in fact who they were.

On the other hand, if the devise to Adelaide Welch or her heirs is a valid devise of a remainder and her heirs take under the will, the heirs presumptive of Adelaide should have been cited as they were “ persons interested.” (Kent v. Church of St. Michael, 136 N. Y. 10.)

We have reached the conclusion that the words or her heirs ” are words of substitution and that her heirs take under the will, provided the will does not unlawfully suspend the power of alienation. (Matter of Evans, 234 N. Y. 42.)

Under such construction Adelaide’s heirs presumptive would be parties in interest- and they should have been cited in the Surrogate’s Court proceeding.

If the will unlawfully suspends the power of alienation, then the ■ heirs at law of Elizabeth Chase Welch, the testatrix," were parties in interest. If the devise to Adelaide Welch or her heirs ” is valid, then her heirs presumptive were parties in interest. The record does not disclose that either the heirs of the testatrix or the heirs presumptive of Adelaide Welch were' cited 'in the Surrogate’s Court proceeding.

Under such circumstances the title tendered" was not one which a vendee should have been compelled to accept.

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

Crane, J.

(dissenting). It seems to me that sections 42 and 43 of the Real Property Law are to be taken together, and that the law prohibits creating of more than two successive life estates, whether they be in trust or' not. By this will, Margaret has a life estate; then on her death Howard has a life estate, or what is the same thing, the life interest held in trust; then at Howard’s death, Proctor has a life estate, and at his death the property passes to Adelaide or her heirs. This, I think, violates the statute. After Howard’s death there can be no more life interests. The gifts over to Adelaide or her heirs are stricken out and are of no effect. If the argument for the appellant be correct, there could have been a fourth estate, or Adelaide’s share held in trust for her life, and-the gift over on-her . death to a remainderman. The statute apparently prohibits this alternating between a life estate and one ,in trust so as to permit four of them. There could only be two life estates in trust under section 42, or two out and out life estates under section 43, and I do not believe we should combine them and make four life estates in the on,e. ¡will out of the same property. ' ,

If this be so, neither Adelaide nor her heirs were necessary parties to the Surrogate’s proceedings. In other words, Proctor’s life estate and the remainder to Adelaide or her heirs are stricken from the will by' law. The fee vests in the heirs of the testator. However, I do not see why this should lead to a reversal of the Appellate Division. The two sons of the testator, Proctor and Howard, were made parties to the proceeding, and there is no claim that Elizabeth had any other heirs. Why should we assume that she had, or raise any doubts about the question when counsel have assumed, and the case has proceeded upon the theory that the only possible persons whose existence made the title defective were the uncited heirs of Adelaide? This is the only objection raised, and I do not see why we should raise others. Title has been refused solely upon the ground of the defect-in this particular—• the omission of Adelaide’s heirs. We should not raise objections to a title which have not been raised below.

The regularity of the proceedings in the Surrogate’s Court must be presumed until the contrary appears. The petition in that court of Proctor C. Welch alleges that- the persons there named are the parties interested in the proceeding. This is the same as stating that Proctor and Howard are the only heirs of Elizabeth. The plaintiff has failed to prove that this is not so; the burden is on the plaintiff to prove the allegations of its complaint. The down payment of the purchase price is demanded because of a defect in parties to the proceeding in the Surrogate’s Court. The plaintiff has failed to prove any such defect. It has offered no evidence whatever to show that there are any other parties interested in the proceeding, or that Elizabeth, the testator, had any heirs except those named in the petition, the interested parties. No oral testimony was offered; we have merely the records and an agreed statement of facts. The burden was on the plaintiff to prove that Elizabeth had other heirs than Howard and Proctor; in other words, to prove the defect which it alleged, especially as nothing in the record shows that she had other heirs, but in fact shows the contrary. The petition alleges, as already stated, that all the parties interested are cited in the Surrogate’s Court. The burden was upon the plaintiff to prove the defect of title in this case, the same as it would be to prove an incumbrance or an outstanding title in any other case. The fact is, the point now raised by Judge Hubbs was never thought of, and is not mentioned in the briefs. The whole claim has been that the heirs of Adelaide mentioned in the will, not the heirs of Elizabeth, were not made parties to the Surrogate’s proceeding. I, therefore, think we should affirm the Appellate Division.

Cardozo, Ch. J., Pound, Lehman, Kellogg and O’Brien, JJ., concur with Hubbs, J.; Crane, J., dissents in opinion.

Judgment accordingly.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    Donald Friedman & Company, Inc., Respondent, v. Leo Newman, Appellant.

      (Argued November 18, 1930;
    decided January 6, 1931.)

      II. H. Nordlinger, David Haar and H. Louis Jacobson for appellant.
    The Statute of Frauds is a complete defense to this action. (WiUiston on Contracts, § 1555.)

      Aaron H. Marx and Walter E. Godfrey for respondent.
    The Statute of Frauds is no defense to the action. The reformation of a written contract is not prevented by reason of the statute. (Porter v. Wormser, 94 N. Y. 431; Baird v. Erie Railroad Co., 148 App. Div. 453; Rider v. Powell, 28 N. Y. 310; Beardsley v. Dantley, 69 N. Y. 577.)
   Lehman, J.

The plaintiff corporation is a dealer in bank and insurance company stock. As the result of negotiations conducted over the telephone, it agreed to sell to the defendant ten shares of Chase National Bank. Then, in accordance with the usual custom in its business, it prepared a paper known as a “ Confirmation of Sale.” The confirmation ” was written on the business stationery of the plaintiff, signed by the plaintiff, addressed to the defendant, and thereafter signed by the defendant. At the top appears the word “ Confirmation,” and it reads as follows:

“ We beg to confirm our Sale to you to-day of 10 shares Chase National Bank at 1060 —10600
“Accepted. L. Newman (signed)
“ Delivery
“ Bank of U. S.
“ Pitkin Avenue
“ Yours truly,
“ DONALD FRIEDMAN & CO., INC.
“ (signed) by B. WilluNg.”

■ The plaintiff refused to deliver the stock in accordance with the terms stated in the “ confirmation.” It claims that in the telephone conversation the parties agreed to a sale at $1,160 per share, and that in the “ confirmation ” the price of 1060 per share was inserted by mistake. It insisted upon performance by the defendant in accordance with the terms of the alleged oral agreement. The defendant denied the mistake and insisted upon performance of the contract in accordance with the terms contained in the written memorandum or confirmation.

The defendant brought an action in the Municipal Court for damages caused by the refusal to deliver the stock at the price stated in the written confirmation. The plaintiff brought an action in the Supreme Court for reformation of the paper writing, purporting to confirm the sale, and asked damages for the refusal to accept and pay for the stock in accordance with the contract of sale. By order of the Supreme Court the two actions were consolidated and were tried together at Special Term. At the trial the defendant was permitted to amend his answer by inserting a plea of the Statute of Frauds. There was conflicting testimony as to the price at which the parties- agreed the sale should be made. The trial judge resolved this conflict in favor of the defendant. The Appellate Division reversed the finding and gave judgment in favor of the plaintiff, decreeing that “ the said Confirmation of Sale setting forth the purchase price as $1060 per share for 10 shares Chase National Bank be reformed and corrected so as to express the true agreement between plaintiff and defendant as regards the said purchase price,” and awarding to the plaintiff damages for the defendant’s failure to accept and pay for the stock at that price.

The contract between the parties was oral. The paper executed thereafter, denominated confirmation of sale” was, as its name and form clearly indicate, merely intended as a memorandum of the oral contract. It is evidence of an oral contract previously made. The oral contract is unenforceable unless a note or memorandum thereof be in writing.” (Pers. Prop. Law; Cons. Laws, ch. 41, §§ 31, 85.) Neither party may recover damages for the breach of the oral contract unless the paper writing signed by the' parties sufficiently evidences the contract actually made.

“ It is not sufficient that the note or memorandum may express the terms of a contract. It' is essential that it shall completely evidence the contract which the párties made. If instead of proving the existence of that contract, it establishes that there was * * *■ a contract in terms and conditions different from that which the parties entered into, it fails to comply with the statute.’-’ (Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310; Berman Stores Co. v. Hirsch, 240 N. Y. 209.) The memorandum is hot subject to the parol evidence rule, for it does not integrate, but merely evidences, the oral agreement. It “ may be shown by parol to be inaccurate or incomplete.” (Mesibov, Clinert & Levy v. Cohen Bros. Mfg. Co., 245 N. Y. 305, 313.)

The Statute of Frauds merely declares void ” or unenforceable ” a contract not in writing or evidenced by a note or memorandum in writing. It does not declare expressly or by implication that a written note or memorandum of an oral contract is conclusive evidence of the terms of the contract. Doubtless a note or memorandum may constitute an admission of the making of the oral contract and of its terms, but neither the parol evidence rule nor the statute prevents the introduction of evidence contradicting the admission. Except as evidence of the oral contract, the memorandum has no force or effect unless and until the oral contract has been established by a preponderance of evidence. Then, if accurate and complete, it prevents the interposition of the Statute of Frauds as a bar to the enforcement of the oral contract.

Here the Appellate Division has found that the plaintiff sold to the defendant ten shares of Chase National Bank stock for which the defendant agreed to pay to the plaintiff the sum of $11,600. We cannot say that this finding is not in accordance with the weight of evidence. The defendant’s cause of action was based upon the allegation that the sale was made at a lower price. He failed to establish that allegation to the satisfaction of the ultimate trier of the fact. The court was not called upon to exercise such equitable powers as it might have to defeat an unconscionable assertion by the defendant of a legal right. Proof that the plaintiff’s admission contained in the memorandum was made through mistake justified the court in rejecting the admission. It could not by its fiat change the plaintiff’s admission into an affirmation by the defendant of the contrary. Nor was such change necessary to defeat the defendant’s cause of action. That cause of action failed when the court rejected the proof intended to establish it.

The court did, however, go further. It assumed a power to “ reform ” the paper writing so that it might constitute an accurate memorandum of the oral contract of sale, as actually made, and thus enable the plaintiff to assert a right to damages for breach of a contract, which would be “ void ” or “unenforceable” under the provisions of the Statute of Frauds. It is fair to say that neither party seriously challenged the existence of such a power. The attention of the court and litigants was directed to the question of fact litigated at the trial, rather than to questions of law. The questions of fact involved more serious practical consequences to the litigants than the questions of law. Decision on the questions of law may have more far-reaching consequence.

Long before any Statute of Frauds was enacted, the jurisdiction of the courts of equity to rescind or reform written instruments which, because of mistake or fraud, did not embody the intention of the parties, was well established. Even then the extent of that jurisdiction was not free from doubt. In the early cases, equitable powers were freely exercised to relieve a defendant from obligations which were showm by parol evidence to have been inserted in a written instrument by mistake. Such powers were, at first, exercised hesitantly and doubtfully to enable a plaintiff to enforce disputed obligations in accordance with the intention of the parties, when parol proof showed that, by mistake, the written contract did not embody the true intention of the parties. In his luminous opinion in the case of Gillespie v. Moon (2 Johns. Ch. 585) Chancellor Kent vindicated the equitable power of the court to correct mistakes in bonds, deeds of settlements, in all contracts and agreements, and then to decree performance of the instrument in its corrected form.

In that case the court permitted the plaintiff to show by parol that a deed which in terms conveyed a tract of 250 acres was not intended to include a 50-acre farm which constituted part of the tract, and a decree was entered compelling the grantee to reconvey the 50-acre tract. The effect of the decree was to enforce the written instrument according to its true intent, rather than its written form, though the Statute of Frauds requires deeds of conveyance and instruments for the sale of land to be in writing. The effect of the Statute of Frauds as a possible limitation upon the exercise of equitable power of the court was not considered by the court in its opinion; but the decision has been generally accepted as authority for the rule that the Statute of Frauds constitutes no bar to the exercise of the equitable powers of the court in similar circumstances. o

To that extent, at least, the American courts have generally, perhaps universally, followed the decision in Gillespie v. Moon. The theory upon which the courts have justified the exercise of their equitable powers has been variously formulated in different jurisdictions and oftentimes the formulation of the theory has restricted or enlarged the field in which it might be exercised. Some courts have denied the power to enlarge the obligations of a contract, executed or executory, beyond the written terms, though they assert the right to correct mistakes by limiting the obligation as written to the actual intent of the parties. We do not now attempt to analyse the decisions of' the various jurisdictions or to determine how far under the decisions of this State the courts have power to correct mistakes in written instruments and, in spite of the Statute of Frauds, to compel performance according to the intent of the parties rather than the form of the writing. It is sufficient to point out that in all these cases the question was whether the courts might exercise their well-established equitable power to correct mistake in a written instrument constituting a jural act, which at law could not be varied by parol, and then to give effect to the instrument as corrected, in spite of the provisions of the Statute of Frauds. The judgment now under review decrees the reformation of a written memorandum which was intended to evidence an oral contract. By such reformation, the memorandum has been given an evidentiary force which in its actual form it did not have, and validity has been given to an oral contract which the Statute of Frauds declares “ void ” or “ unenforceable.”

Under any theory of the equitable powers of the court to rescind or reform a written instrument because of mistake lies the basic fact that the written instrument has in itself a legal force which cannot be denied, though by mistake it has been given a form and effect not intended when the instrument was made. “ Unless the mistake precludes the existence of a contract at law, it should not be denied that the writing correctly states the actual contract or conveyance which has been made, but as it is inequitable to allow the enforcement of it, and (where reformation is appropriate) as justice requires the substitution of another in its place, equity gives relief; and to that end necessarily admits any relevant parol evidence.” (Williston on Law of Contracts, vol. 3, § 1552.)

Here the parties made their contract by parol. There is dispute as to the terms of the contract. The parol evidence rule does not preclude either party from showing the actual agreement of the parties. A court of law might receive all the relevant testimony and determine what .contract was made. No court of equity could change the contract made by the parties or reduce to writing what rested in parol. The parol contract is “ void ” or “ unenforceable ” under the provisions of the Statute of Frauds, unless a “note or memorandum thereof be in writing.” The parties intended to make a note or memorandum of the contract they had made. By mistake the writing is a memorandum of a contract which in fact • was never made. No note or memorandum of the contract which the plaintiff seeks to enforce was ever made. Therefore, that contract is “ unenforceable ” and no court of equity, by reforming ” the memorandum can give it an effect forbidden by the statute. Mistake by the parties resulting in failure to comply with the statute does not confer upon a court of equity the power to substitute for what they have done that which they should have done. Equity has at times power to reform an instrument which conclusively embodies the intent of the parties; it has no power to reconstitute' an evidentiary writing. Though at times the Statute of Frauds may present no bar to the exercise of the court’s equitable power to relieve against fraud or mistake, there is no equitable power to enforce a contract which the statute declares void merely because through mistake of the parties their intention to make a valid contract was frustrated.

The judgment of the Appellate Division and that of the' Special Term should be reversed and the complaint and counterclaim dismissed, without costs.

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

Judgments reversed, etc.


author: O’Brien, J.

text:
    Jacques Gilbert, Appellant, v. Henry C. Burnstine et al., Individually and as Copartners under the Firm Name of Burnstine & Geist, Respondents.
    (Argued October 21, 1930;
    decided January 13, 1931.)

      Eugene Untermyer, Laurence A. Steinhardt and Herbert B. Claster for appellant.
    The defendants have voluntarily agreed to be governed by the British law and to submit the differences in controversy to the British arbitration tribunal. The defendants are, therefore, bound by the award rendered thereon as in any other instance of a judgment or award rendered by default. (Norske Atlas Ins. Co. v. London General Ins. Co., 43 Times Law Rep. 541; Oppenheim & Co. v. Haneef Sahib, [1922] 1 App. Cas. 482; Matter of Berkowitz v. Arbib, 230 N. Y. 261; Mitsubishi Goshi Kaishi v. Carstens Packing Co., 200 Pac. Rep. 327; Matter of Bullard v. Grace Co., 240 N. Y. 388; Finsilver v. Goldberg, 253 N. Y. 382; Miller v. Smith, L. R. [1916] K. B. Div. 419; Hamlyn v. Bettely, 6 Q. B. 63.) Ample personal jurisdiction was secured over the defendants by service in the State of New York because the defendants agreed in advance to that method of service. (Finsilver v. Goldberg, 253 N. Y. 387; Elmendorf v. Harris, 23 Wend. 628; Wilson v. Seligman, 144 U. S. 41; Pennoyer v. Neff, 95 U. S. 714; Kerr v. Tagliavia, 101 Misc. Rep. 614; 186 App. Div. 893; 229 N. Y. 542; 254 U. S. 645; Feyerick v. Hubbard, 71 L. J. [N. S.] K. B. Div. 509; Copin v. Adamson, L. R. 9 Exch. 345; Roussillon v. Roussillon, 14 Ch. Div. 351; Teel v. Yost, 128 N. Y. 387; Tatum v. Maloney, 226 App. Div. 62; Guggenheim v. Wahl, 203 N. Y. 390; Vose v. Cockcroft, 44 N. Y. 415; Conde v. Schenectady, 164 N. Y. 258; Murdock v. Cincinnati, 44 Fed. Rep. 726; Matter of Teannakopoulos, 195 App. Div. 261.)

      Julius Henry Cohen, Kenneth Dayton, Burton A. Zorn and George H. Kenny for Corporation of the Chamber of Commerce of the State of New York et al., amid curice.

    Although the notices from the plaintiff and arbitrator, and a summons from an English court relating to the appointment of an arbitrator were served upon defendants only in New York, but in full compliance with the provisions of English law, they are binding on defendants. (Matter of Berkovitz v. Arbib, 230 N. Y. 261; Schibsby v. Westenholz, L. R. 6 Q. B. 155; Rousillon v. Rousillon, 49 L. J. R. [N. S.] Eq. 338; Feyerick v. Hubbard, 71 L. J. R. [N. S.] K. B. 509; Vallee v. Dumergue, 4 Exch. 290; Teel v. Yost, 128 N. Y. 387; Mayer v. Raudenbush, 217 N. Y. 633; Albert Building & Loan Assn. v. Newman, 130 Misc. Rep. 624; Grover & Baker Sewing Machine Co. v. Radcliffe, 137 U. S. 287; Finsilver v. Goldberg, 253 N. Y. 382; Liverpool M. & G. Ins. Co. v. Bankers & Shippers Ins. Co., 24 LI. L. Rep. 85; Copin v. Adamson, L. R. 9 Exch. 345; 45 L. J. R. [N. S.] Exch. 15; Merrifield, Ziegler & Co. v. Liverpool Cotton Assn., 105 T. L. R. 97; Norske Atlas Ins. Co. v. London General Ins. Co., 43 T. L. R. 541; Hamlyn & Co. v. Talisker Distillery, L. R. [1894] A. C. 202; Law v. Garrett, L. R. [1878] 8 Ch. Div. 26; Kirchner & Co. v. Gruban, L. R. [1909] 1 Ch. Div. 413; Austrian Lloyd S. S. Co. v. Gresham Life Assur. Soc., L. R. [1903] 1 K. B. 249; The Cap Blanco, L. R. [1913] Prob. Div. 130; Penn Copper Mines v. Rio Tinto Co., 105 T. L. R. 846; The Dawlish, [1910] Prob. Div. 339.) The defendants agreed that the process of the English court necessary to the effectuation of the arbitration agreement might be served upon them in New York and that they would thereby come within the jurisdiction of the English court. (Grover & Baker Sewing Machine Co. v. Radcliffe, 137 U. S. 287; Willesford v. Watson, L. R. 8 Ch. 473; Matter of Wenger & Co. v. Propper Silk Hosiery Mills, 239 N. Y. 199; Matter of American Eagle Fire Ins. Co. v. N. J. Ins. Co., 240 N. Y. 398; Matter of Interocean Mercantile Corp., 204 App. Div. 284.) The public policy of the State should support the effectuation of this agreement. (Atlantic Fruit Co. v. Red Cross Line, 5 Fed. Rep. [2d] 218.)

      Henry C. Burnstine for respondents.
    A party is bound by the result of an arbitration not because he agrees to arbitrate but because he does arbitrate, either actually, whether voluntarily or involuntarily, or in legal effect, because ordered so to do by a power to which he is amenable. His refusal to arbitrate is final, unless changed by the compelling force of such power as alone can compel him because of his amenability to it, and its proper exercise to that end. (Matter of Bullard v. Grace Co., 240 N. Y. 388; Wilson v. Winchester & P. R. Co., 82 Fed. Rep. 15; Ackerman v. Berriman, 61 Misc. Rep. 165; Matter of Berkovitz v. Arbib, 230 N. Y. 261; Mitsubishi Goshi Kaishi v. Carstens Packing Co., 200 Pac. Rep. 327; Norske Atlas Ins. Co. v. London General Ins. Co., 43 Times Law Rep. 541; Oppenheim & Co. v. Haneef Sahib, 1 App. Cas. 482; Matter of Eyre & Leicester Corp., [1892] 1 Q. B. 136; Hamlyn v. Betterly, 6 Q. B. 63; Matter of Smith & Service & Nelson & Sons, [1890] 25 Q. B. D. 545; Doleman v. Ossett Corp., 3 K. B. 257; People ex rel. Union Ins. Co. v. Nash, 111 N. Y. 310; Finucane Co. v. Board of Education, 190 N. Y. 76; Matter of Zimmerman v. Cohen, 236 N. Y. 19.) No jurisdiction of defendants was secured by delivery to them in New York of what within British territory was British process, nor did defendants agree in advance that such method should constitute service upon them, and it could not have given jurisdiction had they so agreed. (British Wagon Co. v. Gray, [1896] 1 Q. B. 35; Queen v. Justice of Essex, [1895] 1 Q. B. 38; Jones v. Owen, 5 Dowl. & Lowndes, 669; Foster v. Usherwood, 37 L. T. 389; Pennoyer v. Neff, 95 U. S. 714; D’Arcy v. Ketchum, 11 How. 165; Wilson v. Seligman, 144 U. S. 41; Teel v. Yost, 128 N. Y. 387; Schibsby v. Westenholz, L. R. [6 Q. B.] 155; Sudbury v. Ambi, 213 App. Div. 98; Kerr v. Tagliavia, 101 Misc. Rep. 614; 186 App. Div. 893; 229 N. Y. 542; 254 U. S. 645.) Agreements of our citizens to submit future disputes to foreign tribunals of all kinds are still against our public policy and void. (Hilton v. Guyot, 159 U. S. 113; Johnston v. Compagnie Generale Trans-Atlantique, 242 N. Y. 387; Ritchie v. McMullen, 159 U. S. 235; Dunston v. Higgins, 138 N. Y. 70; Cowens v. Ticonderoga Pulp & Paper Co., 219 App. Div. 120; 246 N. Y. 603; Loucks v. Standard Oil Co., 224 N. Y. 199; Meacham v. Jamestown, F. & C. R. R. Co., 211 N. Y. 346; Matter of Berkovitz v. Arbib, 230 N. Y. 261; Matter of Inter-Ocean Food Products, 206 App. Div. 426; Kelvin Engineering Co. v. Blanco, 125 Misc. Rep. 728.)
   O’Brien, J.

The complaint was dismissed on the merits and the judgment has been affirmed.

The following facts are alleged in the complaint and admitted in the reply: In the year 1925, at New York, defendants, who are citizens and residents of this State, contracted in writing for the sale and delivery to plaintiff within the United States of a quantity of zinc concentrates. By a clause in the contract the parties agreed that all differences arising thereunder should be “ arbitrated at London pursuant to the Arbitration Law of Great Britain.” Differences arose concerning an alleged failure to deliver in accordance with the terms of the contract and plaintiff served notice upon defendants at New York requesting them to concur in the nomination of a certain named individual or of some other resident of London as sole arbitrator. The notice also stated that in the event of defendants’ failure to concur in the nomination of an arbitrator, plaintiff would apply to the High Court of Justice of England for such an appointment pursuant to the provisions of the Arbitration Act of 1889 (52 and 53 Viet., ch. 49). On defendants’ failure to comply with this notice, plaintiff obtained from the King’s Bench Division an order permitting him to issue a form of process which is described in the complaint as an originating summons. This process was served upon defendants at New York and it directed them to appear at a certain time and place in London before a master in chambers so that an arbitrator might be appointed. Defendants again failed to comply and thereupon the master appointed an arbitrator. He issued a notice which was served upon defendants at New York requiring them to furnish him at a specified time and place in London with all documents relevant to the matters in dispute. This notice, like the others, was ignored by defendants. The arbitrator, after causing a peremptory notice to be served upon them, also at New York, proceeded with the arbitration at London and made an award for £46,000 against them. The complaint alleges that all these proceedings were duly had in accordance with the English Arbitration Act of 1889 and demands judgment for the amount of the award. Defendants admit their execution of the arbitration clause in the contract but deny that they ever made submission to arbitration and deny also that the proceedings were had in accordance with the English law. They defend this action on the ground that their agreement is contrary to public policy, that the service of the notices and the originating summons is void, that no court of England ever acquired jurisdiction of their persons or property, that the award was obtained without due process of law and that its enforcement would deprive them of property without due process of law. They argue that the sole question in the case is whether the British court acquired personal jurisdiction in the absence of personal service upon them within British territory.

Settlements of disputes by arbitration are no longer deemed contrary to our public policy. Indeed, our statute encourages them. Contracts directed to that end are now declared valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract. (Arbitration Law; Cons. Laws, ch. 72, §2; Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261; Matter of Zimmerman v. Cohen, 236 N. Y. 15.) Defendants’ agreement without reservation to arbitrate in London according to the English statute necessarily implied a submission to the procedure whereby that law is there enforced. Otherwise the inference must be drawn that they never intended to abide by their pledge. They contracted that the machinery by which their arbitration might proceed would be foreign machinery operating from the foreign court. No other fair conclusion can be drawn from their language. Their contract constitutes something more than a simple executory one subject to breach. Not only under the foreign statute but also under our own arbitration law, it has become irrevocable in the sense that one of the parties without the consent of the other cannot deprive it of its enforcibility. (Matter of Zimmerman v. Cohen, supra.) In order, therefore, to determine the issue asserted by defendants that jurisdiction never was acquired, the question must be decided whether their agreement to submit to that jurisdiction is contrary to our public policy.

Generally, extraterritorial jurisdiction of alien tribunals, however vigorously asserted, is denied by us. Of its own force, process issued from the court of a foreign state against our citizen and served upon him here is void. Without his consent he cannot be made subject to it, but whenever he agrees to be bound by its service, his conduct presents a problem. Contracts made by mature men who are not wards of the court should, in the absence of potent objection, be enforced. Pretexts to evade them should not be sought. Few arguments can exist based on reason or justice or common morality which can be invoked for the interference with the compulsory performance of agreements which have been freely made. Courts should endeavor to keep the law at a grade at least as high as the standards of ordinary ethics. Unless individuals run foul of constitutions, statutes, decisions or the rules of public morality, why should they not be allowed to contract as they please? Our government is not so paternalistic as to prevent them. Unless their stipulations have a tendency to entangle national or state affairs, their contracts in advance to submit to the process of foreign tribunals partake of their strictly private business. Our courts are not interested except to the extent of preserving the right to prevent repudiation. In many instances problems not dissimilar from the one presented by this case have been solved. Vigor has been infused into process otherwise impotent. Consent is the factor which imparts power. Text writers have discussed the subject and have concluded from the authorities that non-resident parties may in advance agree to submit to foreign jurisdiction. (Beale, The Jurisdiction of Courts over Foreigners, 26 Harvard Law Review, 193; Freeman on Judgments [5th ed.], vol. 3, p. 3053; Goodrich Conflict of Law, p. 141; Scott, Fundamentals' of Procedure, pp. 39-41.) The last named author, speaking of non-residents, states: Jurisdiction over the person of the defendant may be acquired by his consent. This consent may be given either before or after action has been brought. Jurisdiction is conferred when the defendant enters a general appearance in an action, that is, an appearance for some .purpose other than that of raising the objection of lack of jurisdiction over him. A stipulation waiving service has the same effect. The defendant may, before suit is brought, give a power of attorney to confess judgment or appoint an agent to accept service, or agree that service by any other method shall be sufficient. The defendant in all these cases has submitted to the control of the state and of the court over him.” These principles have long been announced by the courts. In Pennoyer v. Neff (95 U. S. 714, 735) the Supreme Court quoted with approval this language from Vallee v. Dumergue (4 Exch. 290): “ It is not contrary to natural justice that a man who has agreed to receive a particular mode of notification of legal proceedings should be bound by a judgment in which that particular mode of notification has been followed, even though he may not have actual notice of them.” In Grover & Baker Sewing Machine Co. v. Radcliffe (137 U. S. 287, 298) the same court recognized its duty in a proper case to enforce such contracts. There defendant, a citizen of Maryland, before the beginning of any action, had authorized any attorney of any court of record in any State to confess judgment. Judgment by confession was entered against him in Pennsylvania by a prothonotary. The Supreme Court’s refusal to sustain that judgment was based upon the fact that it had not been entered in accordance with the contract. Defendant had authorized attorneys, not prothonotaries, to represent him and he was held to have the right to insist upon the letter of the authority conferred by him. It was necessary that he be brought within the jurisdiction of Pennsylvania either by service of process, or by his voluntary appearance, or, as the court significantly added, the fact must appear that he had in some manner authorized the proceeding.” Wilson v. Seligman (144 U. S. 41, 44) follows the general rule that where a written notice is required it must be served personally upon a defendant within the territorial jurisdiction of the court by whose order or judgment personal liability is to be fixed, “ unless he has agreed in advance to accept, or does in fact accept, some other form of service as sufficient.” In Hess v. Pawloski (274 U. S. 352) the Massachusetts statute authorizing the service of process other than personal service within the State upon a non-resident was sustained. The statute required that a copy of the process should be mailed by plaintiff to defendant without the State and that defendant’s return receipt should be filed. In commenting upon this decision the Supreme Court in a later case (Wuchter v. Pizzutti, 276 U. S. 13, 19) emphasized that part of the statute which made necessary the written admission by defendant of the service of process outside the State. This court in O’Tier v. Sell (252 N. Y. 400, 404) has accepted that doctrine.

Public policy, therefore, would not forbid defendants to appoint an agent to accept service or to confess judgment in their behalf, nor does it after service forbid them in person to acknowledge receipt of it. If the fact be clear that in advance of any form of litigation or arbitration they actually intended to contract that in the event of such a proceeding they would render themselves subject to foreign process, the same policy ought to prevail. That such was their clear intent has been assumed at Special Term and the Appellate Division and the same conclusion now reached by us is plainly supported by the language of the agreement. We will not entertain the theorjr that, when they agreed to arbitrate at London according to the English Arbitration Act, they contracted with a reservation to refuse to place themselves on English soil and to resist the English law outside that territory. The complaint, after alleging the essential facts, further avers that all proceedings were duly had in accordance with the Arbitration Act of 1889. Merely as a pleading, it states a good cause of action and at this stage it should not be dismissed. Whether its allegations can be sustained must be determined on the trial of the action. The serious problem is whether the proceedings were in fact conducted according to the English statute as interpreted by the English courts. As so interpreted, was the extraterritorial service regularly effected? What is the practice in the English courts? What construction has been put upon the various rules of procedure? These questions raised by the answer must be decided to some extent as issues of fact, for in the ascertainment of foreign law such issues are involved. (Croker v. Croker, 252 N. Y. 24.) After evidence of the facts has been produced then it will be timely for the court to determine (Fitzpatrick v. International Ry. Co., 252 N. Y. 127, 138) whether the English Arbitration Act, taken in connection with the foreign rules of procedure, conforms or conflicts with our public policy.

We do not say that the defendants in subjecting themselves to arbitration in accordance with the British Arbitration Act became bound to submit, not only to the requirements of that act, but to the entire corpus juris as developed by the British courts. We do say that there was an implied submission to the terms of the act itself, and to any rules or procedural machinery adopted by competent authority in aid of its provisions. If the arbitration contract had provided that an arbitrator might be named by the London Chamber of Commerce upon notice to the parties, there would be little doubt that notice would be adequate though the defendants were not in Great Britain at the time of its transmission. We cannot say upon this record that any different conclusion ought to follow from notice and nomination at the instance of a judge. The case does not involve the question whether the defendants, staying out of the arbitration, may still challenge in this State the existence of a contract to arbitrate, or the breach of such a contract, unaffected by any adjudication pronounced by the British courts. The case involves no more than this, whether staying out of the arbitration, they are bound by an award, made after due compliance with the requirements of the procedural machinery established by the British statute, unless they are able to show that no contract has been made or broken.

The judgment of the Appellate Division and that of the Special Term should be reversed and defendant’s motion for judgment on the pleadings denied, with costs in all courts.

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

Judgments reversed, etc.


author: Cardozo, Ch. J.

text:
    In the Matter of the Accounting of Livingston Platt, as Executor of Alice C. Martin, Deceased, Respondent. The State of Connecticut, Appellant; Joseph D. Nunan, Jr., as Special Guardian, Respondent.
    (Argued January 12, 1931;
    decided February 10, 1931.)

      Benjamin W. Ailing, Attorney-General of State of Connecticut (T. Ludlow Chrystie, Farwell Knapp and Thomas Witter Chrystie of counsel), for appellant.
    The surrogate must refuse complete administration under the circumstances. (Sultan of Turkey v. Tiryakian, 162 App. Div. 613; 213 N. Y. 429; Despard v. Churchill, 53 N. Y. 192; Wilkins v. Ellett, 9 Wall. 740; Dammert v. Osborn, 141 N. Y. 564; Iowa v. Slimmer, 248 U. S. 115; Matter of Cooley, 186 N. Y. 220.) The State of Connecticut acquired a right to a share of the estate upon the death of testatrix. (Frick v. Pennsylvania, 268 U. S. 473; Blodgett v. Silberman, 277 U. S. 1; Matter of Swift, 137 N. Y. 77; Matter of Merriam, 141 N. Y. 479; United States v. Perkins, 163 U. S. 625; Matter of White, 208 N. Y. 64; Matter of Penfold, 216 N. Y. 163; Matter of Chane, 227 App. Div. 554; Matter of Watson, 226 N. Y. 384; Watson v. State Comptroller, 254 U. S. 122; Bankers Trust Co. v. Blodgett, 260 U. S. 647; Blodgett v. New Britain Trust Co., 108 Conn. 715.) In comity courts should not aid foreign estates which seek to deprive the State of the domicile of property rights. (Loucks v. Standard Oil Co., 224 N. Y. 99.)

      Seth T. Cole for Tax Commission of State of New York et al., amici curiae.

      Eli J. Blair for respondent.
    The decree of the surrogate was discretionary. (Harvey v. Richards, 1 Mason, 381; Matter of Hughes, 95 N. Y. 55; Matter of Bliss, 121 Misc. Rep. 773; Matter of James, 172 App. Div. 800;
      U. S. Trust Co. v. Wood, 146 App. Div. 751; Matter of Eaton, 125 Misc. Rep. 629; 217 App. Div. 704; Matter of Braithwaite, 19 Abb. N. C. 113; Matter of Lorillard, 2 Chan. 638; Equitable Trust Co. v. Plume, 92 Conn. 649; Matter of Dunn, 39 App. Div. 510; Despard v. Churchill, 53 N. Y. 192; White v. Benjamin, 150 N. Y. 258; Matter of Halsey, 93 N. Y. 48.) The surrogate had jurisdiction to entertain probate and to fully administer the estate. (Decedent Estate Law, § 23, Surrogate’s Court Act, §§ 45, 144; Matter of Connell, 221 N. Y. 190; Matter of McCullough, 129 Misc. Rep. 113; Matter of Brown, 131 Misc. Rep. 859; Higgins v. Eaton, 202 Fed. Rep. 75; 229 U. S. 622; Matter of Eaton, 159 App. Div. 7; Matter of Le Fevre, 137 Misc. Rep. 270; Matter of Leonori, 223 N. Y. Supp. 777; Matter of Hughes, 95 N. Y. 55; Farmers’ Loan & Trust Co. v. Lake St. Rd. Co., 177 U. S. 51; Schuehle v. Reiman, 86 N. Y. 270; Matter of Farrell, 125 App. Div. 702; Flatauer v. Loser, 211 N. Y. 15; Garlock v. Vandevort, 128 N. Y. 374; Purdy v. Hayt, 92 N. Y. 446; Matter of Verplanck, 91 N. Y. 439; Richmond v. Consolidated Gas Co., 114 App. Div. 216; 186 N. Y. 209; Matter of Gould, 123 Misc. Rep. 14; Matter of Farmers’ Loan & Trust Co., 123 Misc. Rep. 600; Matter of DeSaulles, 101 Misc. Rep. 447.)

      Joseph D. Nunan, Jr. and John Ewen for Joseph D. Nunan, Jr., as special guardian, respondent.
    The surrogate’s power, if any, to direct hat the assets of the estate be transmitted to the Cor ;cticut administrator rested within his discretion. (Parsons v. Lyman, 20 N. Y. 103; Despard v. Churchill, 53 N. Y. 192; Matter of Hughes, 95 N. Y. 55; Surrogate’s Court Act, § 309; Civ. Prac. Act, § 589; People ex rel. McGinnis v. McAneny, 211 N. Y. 535; People ex rel. Legget v. Fetherston, 223 N. Y. 679.) Comity does not require trans-missal of assets to the State of domicile merely in order that distribution may be there made. (Parsons v.
      Lyman, 20 N. Y. 103; Despard v. Churchill, 53 N. Y. 192; Matter of Rubens, 128 App. Div. 626; 195 N. Y. 527; Higgins v. Eaton, 202 Fed. Rep. 75; 229 U. S. 622.)
   Cardozo, Ch. J.

The State of Connecticut has petitioned the Surrogate’s Court of the county of New York to direct the executor of a will to remit the assets of the estate to an administrator c. t. a., apnointed in Connecticut, the domicile of the testatrix. The return is requested for a single purpose. The purpose is to permit the assessment and collection in Connecticut of a tax upon the transfer effected by the will.

The Surrogate in denying the petition placed his ruling upon two grounds. He held that to return the assets for such a purpose would be equivalent to the enforcement by one State of the tax laws of another (Colorado v. Harbeck, 232 N. Y. 71). He held, apart from that principle, that the relief should be refused in the exercise of a sound discretion, since compliance with the demand would result in a depletion of the assets by the unnecessary expenses of a double administration. The Appellate Division unanimously affirmed.

We are not required to determine whether the return of assets to another State with a view to the imposition of a tax by the taxing officers of the domicile is the enforcement of a foreign tax law within Colorado, v. Harbeck (supra). (Cf. Moore v. Mitchell, 30 Fed. Rep. [2d] 600; 281 U. S. 18). If the contrary be assumed, the appellant is not greatly helped. Return, even though not forbidden by a hard and fast rule, is certainly not relief to be demanded as of right. At most it is to be granted or refused in the exercise of a discretion that will give heed to all the facts (Matter of Hughes, 95 N. Y. 55, 60; cf. Matter of Rogers, 225 App. Div. 286; 254 N. Y. 592). The executor in New York conveyed repeated offers to the taxing officers in Connecticut to make payment of any tax found owing at the domicile. What he refused was a wasteful duplication of administrations and accountings. In the review of such an order the jurisdiction of this court is limited to a determination of the law. Discretion is not revised except for manifest abuse.

Other questions suggested on the argument are mentioned only to exclude them from the scope of our decision.

We do not attempt to say whether Connecticut has jurisdiction by proceedings in her own courts to impress a lien upon choses in action which had a situs in that State at the death of the testatrix, though the documentary evidences are present in New York. No such question is before us.

For like reasons, we do not attempt to say whether a lien for taxes, duly laid by Connecticut either by statute or by judgment upon assets with a situs in that State at the death of the testatrix, will be recognized and enforced in the courts of New York on the same basis as any other charge or proprietary interest. Colorado v. Harbeck (supra) was a case of an attempted collection of a tax on the basis of a debt through an action in personam (232 N. Y. 71, at p. 83; cf. Wisconsin v. Pelican Ins. Co., 127 U. S. 265, at p. 291). What was said by way of dictum as to the existence of a lien was in precise accordance with the ruling of the Supreme Court in Blackstone v. Miller (188 U. S. 189) and other leading judgments. Since then, Blackstone v. Miller and the judgments that followed it have been overruled by the Supreme Court, and no longer have the force of law (Farmers Loan & Trust Co. v. Minnesota, 280 U. S. 204; Baldvñn v. Missouri, 281 U. S. 586; Beidler v. South Carolina Tax Comm., 282 U. S. 1). We leave the question open whether a consequence of their disappearance is to require some revision of the dictum of Colorado v. Harbeck as to the lien and its enforcement. In saying this we do not suggest by indirection a belief as to the answer that would be proper if the question were before us. The reservation is wholly neutral. Here there was no assessment and no claim of any lien that was pres ntly enforcible (cf. Heymann v. Viane, 252 N. Y. 159). We take the record as we find it.

The order should be affirmed.

Pound, Crane, Kellogg, O’Beien and Hubbs, JJ., concur; Lehman, J., not sitting.

Order affirmed.


author: Crane, J.

text:
    In the Matter of John C. Creveling, as Executor of Charlotte L. Gulick, Deceased, Respondent, against Teachers’ Retirement Board, Appellant.
    (Argued December 4, 1930;
    decided February 10, 1931.)

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly, Willard S. Allen and William E. C. Mayer of counsel), for appellant.
    There was no compliance with the provisions of subdivision 0 of section 1092 of the New York City Charter. (Albany B. S. Co. v. Eastern B. & S. Co., 235 N. Y. 432; Sweeney v. City of New York, 225 N. Y. 271; Matter of Yakel, 118 Misc. Rep. 641; Matter of Becker v. Lunn, 200 App. Div. 178; Barkin Construction Co. v. Goodman, 221 N. Y. 156; Hastings v. Brooklyn L. I. Co., 138 N. Y. 473; Rees v. Teachers’ Retirement Board, 247 N. Y. 372; Matter of Stenstrom v. Hartnett, 131 Misc. Rep. 75; 224 App. Div. 127; 249 N. Y. 606; United States v. Louisville & Nashville R. R. Co., 236 U. S. 318; Matter of Huyck, 49 Misc. Rep. 391; Deshong v. City of New York, 176 N. Y. 475; Jamestown W. & N. R. R. Co. v. City of Jamestown, 116 Misc. Rep. 747; Matter of Kuehn, 170 N. Y. Supp. 900; Morrill v. Lovett, 95 Me. 165; Stetler v. McFarlane, 230 N. Y. 400; Boyd v. Gorman, 157 N. Y. 365; Evans v. People, 49 N. Y. 86; Morton v. W. U. Tel. Co., 130 N. C. 299; State v. Frear, 144 Wis. 79.) There was no compliance with the provisions of subdivision K of section 1092 of the New York City Charter. (Angle v. N. W. Mutual L. I. Co., 92 U. S. 330; Matter of O’Brien v. N. Y. State Teachers’ Retirement Bd., 215 App. Div. 220; 244 N. Y. 530; Tompkins v. Hunter, 149 N. Y. 117; Matter of Poucher v. Teachers’ Retirement Bd., 249 N. Y. 414; Roschen v. Ward, 279 U. S. 337; People ex rel. Twenty-third St. R. R. Co. v. Commrs. of Taxes, 95 N. Y. 554; Coxson v. Doland, 2 Daly, 66; People v. Henries, 136 Misc. Rep. 224; Ponsrok v. City of Yonkers, 254 N. Y. 91; Allen v. Stevens, 161 N. Y. 122; Matter of New York & Brooklyn Bridge, 72 N. Y. 527; Matter of Hering, 196 N. Y. 218; Daly v. Haight, 170 App. Div. 469; 224 N. Y. 726; People v. Long Island R. R. Co., 194 N. Y. 130; Lamport v. Smedley, 213 N. Y. 82.) The resolution did not relieve the petitioner’s testatrix of the obligation of filing her application for retirement in the office of the defendant board. (Rees v. Teachers’ Retirement Board, 247 N. Y. 372; Matter of Poucher v. Teachers’ Retirement Board, 249 N. Y. 414; Albany B. S. Co. v. Eastern B. & S. Co., 235 N. Y. 432; Coler v. Corn Exchange Bank, 253 N. Y. 136; Matter of La Due v. Van Keuren, 127 Misc. Rep. 886; People ex rel. Banks v. Board of Education, 2 Abb. Pr. [N. S.] 177; Matter of Sloane v. Walsh, 245 N. Y. 208; Sweeney v. City of New York, 225 N. Y. 271; Clark v. Utica Gas & Electric Co., 224 App. Div. 448; St. John of Vizzini v. Cavallo, 134 Misc. Rep. 152; 227 App. Div. 782.)

      Ralph Stout and 'Cari S. Heidenreich for respondent.
    Petitioner’s testatrix duly filed with the Teachers’ Retirement Board her election under subdivision 0 of section 1092 of the New York City Charter. (Flandrow v. Hammond, 148 N. Y. 129; Bank of Charleston v. Emeric, 2 Sandf. 718; Matter of City of New York [Newport Avenue], 218 N. Y. 274.) Delivery of the application for retirement to a teacher member of the Teachers’ Retirement Board was authorized and proper. (Matter of Poucher v. Teachers’ Retirement Bd., 249 N. Y. 414; Crown Point Iron Co. v. Ætna Ins. Co., 127 N. Y. 608; Peabody v. Satterlee, 166 N. Y. 174; Fink v. Wallach, 109 App. Div. 718; Colton v. Trustees of Pension Fund, 287 Ill. 56; Walton v. Cotton, 60 U. S. 355; Matter of O’Brien v. N. Y. State Teachers’ Retirement Board, 215 App. Div. 220; 244 N. Y. 530; Matter of Ward v. Teachers’ Retirement Board, 137 Misc. Rep. 170; Yates County Nat. Bank v. Carpenter, 119 N. Y. 550; Gremmer v. Tenement House Dept., 205 N. Y. 549; City of New York v. N. Y. City Ry. Co., 193 N. Y. 543.) The application for service retirement was valid. (Rees v. Teachers’ Retirement Bd., 247 N. Y. 372; Matter of O’Brien v. N. Y. State Teachers’ Retirement Bd., 215 App. Div. 220; 244 N. Y. 530.)
   Crane, J.

Charlotte L. Gulick, on the 21st day of October, 1928, was a teacher in the public schools of the city of New York, and entitled to all the rights and privileges of the Teachers’ Retirement Fund, being a holder of a certificate for prior service issued to her as a present-teacher,” under the provisions of subdivision 8 of section 1092 of the Greater New York Charter (L. 1917, ch. 303). Prior thereto and on July 9, 1925, Charlotte L. Gulick had filed an election that the reserve on the retirement allowance payable to her upon the date of retirement, as provided in “ Option I ” of subdivision “ O ” of section 1092, or the balance of such reserve in excess of the total amount of the monthly installments received by her, be paid to her estate. This election was on a form provided by the Teachers’ Retirement Board, and was filed in the office of the Board. That an office was maintained by the Board, with a secretary in charge, appears from the records. Apparently there is no branch office in the various boroughs. '

For thirty-five years and over, Charlotte L. Gulick had been a teacher in the public schools of the city of New York, and was in active service as assistant principal in Glenmore Junior High School, No. 84, Brooklyn, N. Y., up to the time of her death, or attempted retirement. On October 21, 1928, shortly after midnight on Saturday night, or, to be exact, at 1:30 a. m. on Sunday morning, there was handed to Anna E. Lawson, one of the teacher members of this said Retirement Board, the application of Charlotte L. Gulick for retirement. Later that Sunday morning, at about half-past ten, Charlotte Gulick died.

The balance of the reserve to which her estate was entitled, if at the time of her death she was a retired teacher, amounted to $22,859.31, for which the petitioner herein, John C. Creveling, as the executor of the last will and testament of Charlotte L. Gulick, has made demand and brought this proceeding. The facts are not disputed, but the Teachers’ Retirement Board has resisted the payment, claiming that at the time when the teacher died, she had not applied for retirement in accordance with the provisions of the charter; and that the allowances coming to her estate were not those of Option I ” .of subdivision “0,” but the allowances provided in subdivision N,” where death of a contributor occurs before retirement. This is the sole question.

Subdivision “ K ” of section 1092 provides the method for service retirement, which is as follows:

“ 1. Any contributor may retire for service upon written application to the retirement board setting forth at what time subsequent to the execution of said application he desires to be retired. Said application shall11 retire said contributor at the time so specified, provided * * *

“ (b) If a present-teacher, he has a total-service of thirty-five years or more.”

Certain things are to be noted as we pass, regarding this retirement method. For Charlotte L. Gulick, she having served thirty-five years and more, the written application for retirement was self-executory; it alone accomplished the purpose, and effectuated the retirement. (Rees v. Teachers’ Retirement Board, 247 N. Y. 372.) The application had to be in writing, and it had to be made to the Retirement Board, setting forth the time, subsequent to the execution of the application, when the retirement was to take effect. These requisites being complied with, the application itself retired the teacher at the time so specified. Any action upon the part of the Board was unnecessary.

The application signed by Charlotte L. Gulick failed to state the time the retirement was to take effect. The blank form provided by the Teachers’ Retirement system was used by the teacher, but the part referring to the time of retirement was left as follows:

“ I request that my retirement become effective the ..........day of..........192....”

The Special Term was of the opinion that the teacher had failed to comply with the above provisions of subdivision “ K,” in that there was no time stated for retirement subsequent to the execution of the application, and denied the application for a peremptory writ of mandamus. The Appellate Division took a more liberal view, and considered that the application took effect at the time of delivery to the teacher member, Anna E. Lawson, at 1:30 a. m., Sunday morning. Matter of O’Brien v. New York State Teachers’ Retirement Board (215 App. Div. 220; affd., 244 N. Y. 530) was cited and followed by the Appellate Division in reaching this conclusion. A peremptory writ was thereupon directed to be issued.

Even if the application were proper in form, the question still remains whether there has been a delivery or ah application presented within the meaning and purpose of the charter provisions. An application, meeting all the requirements in and of itself, is not sufficient. It must pass from the teacher to the Board. “Any contributor may retire for service upon written application to the retirement board * * The written paper signed by the applicant must be given to, or presented to the Board. Now what does this mean? Would handing the paper to a member of the Board at midnight be a compliance with this provision of the law?

By subdivision “ C-l,” the Retirement Board consists of seven members: the president of the Board of Education, the Comptroller of the city of New York, two members appointed by the Mayor of the city of New York, and three members of the retirement association elected by the contributing teachers. This Board shall possess the powers and privileges of a corporation, and as such may sue and be sued. (Subd._ “ D.”) It shall elect from its membership a chairman, and shall appoint a secretary, and shall keep a record of all its proceedings open to public inspection. (Subd. C, 3-12.) It necessarily follows that these records, must be kept somewhere convenient for inspection; in other words, that there must be an office. As before stated, there now is and has been an office of the Board in charge of its secretary for the handling of all the papers and records in connection with the retirement system. Many are the provisions contained in section 1092 requiring the filing of papers with the Board or at its office. Under subdivision “ H,” each teacher shall file with the Retirement Board a detailed statement of all service rendered by him. A contributor resigning shall execute and file a statement in writing. (Subd. I.”) The options permitted under subdivision O ” necessitate the filing of an election of one or the other. The phraseology used is not that the filing shall be in an office or with the secretary; the words used in this connection are that these various papers or executed instruments are to be filed with the Retirement Board. The Board, under the charter, is a corporation having a chairman and a secretary. It does not act through any individual member of the Board, but acts as a body. The presentation, therefore, of any applications to the Board does not mean a presentation to the president or to the Comp-roller or to a teacher member. If we take the charter as it reads, giving it the most liberal interpretation, we would be obliged to hold that a written application to be made to the Retirement Board required that it be handed to or delivered at the official office of the Board to its secretary or other person in charge where, immediately upon its filing or presentation, it would be open for inspection as a public record. The application, when made to the Board, has dynamic power; the very act of presenting the written application retires the teacher and awards allowances which must be met by a warrant signed by the chairman, and countersigned by the secretary of the Retirement Board, requiring payment by the Comptroller from the fund (Subd. E-3). When the application is presented the main duty of the Board is to file and record it for reference and public inspection. (Rees v. Teachers’ Retirement Board, supra.) The whole scheme and purpose of the retirement fund machinery is to create a body acting as a corporation through its officers, and at a place of business or an office in the city where its records shall be kept open to the public and its business transacted. This is the requirement of the statute law of the State creating, through section 1092 of the Greater New York Charter, the Teachers’ Retirement Fund. Delivery of the application to or at the office where the papers and records of the Board are kept would constitute an application to the Board. (Albany B. S. Co. v. Eastern B. & S. Co., 235 N. Y. 432; Matter of Poucher v. Teachers’ Retirement Board, 249 N. Y. 414.)

Under subdivision " C-5 ” the Board, it is said, adopted a resolution allowing a departure from this required method of doing business. Subdivision “ C-5 ” reads: “ Subject to the limitations of this act and of law, the retirement board shall from time to time establish rules and regulations for the administration of the funds created by this act and for the transaction of its business.”

The parties to this litigation have stipulated that on March 2, 1923, the Board passed a resolution authorizing a teacher member of the Retirement Board to receive notice of application for retirement and that delivery to such teacher member shall be regarded as having been filed in the office of the Teachers’ Retirement Board. The exact wording of this resolution has not been furnished to us, and we are confined to the stipulation in the record. If this be correct, the Board has passed a resolution inconsistent with the other provisions of the retirement law. It has said that an application to a member of the Board shall be the same as an application to the Board, and that the handing of a notice to a teacher member at any time or place shall be the same as the filing in the office or with the Board or with its secretary. The application may be presented to a teacher member anywhere, on the street, in a place of - amusement, in his home, and at any time of day or night. If the teacher • member receiving the application should lose it, mislay .it, and forget to take it to the office or give it to the Board, the' application, nevertheless, has been filed with the Board. Even if the Board should never see it, because the paper had become lost, yet the application takes effect because the resolution substitutes the teacher member in place of the Board. No doubt this resolution was adopted for convenience and, generally speaking, works well, as the teacher member immediately files it with the Board, so that it takes effect from the date of filing, but we have here ■ the exception, which necessarily tests the validity of the resolution. The applying teacher died before her application was filed with or presented to the Board. ■She died Sunday, October 21, 1928, at half-past ten in the morning,- and her application, which had been handed to the teacher member, Anna E. Lawson, was not filed or presented • to the Board until Monday, October 22, ■1928, at twenty minutes to eleven in the morning.

Subdivision “ C-5,” as quoted above, distinctly states that the established rules and regulations must be subject ;to the limitations of the retirement act. An application made to a single member of the corporate body is contrary to the provisions of the act requiring an application to be made to the Board or the corporation itself. That the Teachers’ Retirement Fund Board may establish branch offices in the various boroughs is not within the purview- or limitations of this decision. We are here dealing with the resolution as stated.

We are not at all unmindful of the beneficent purpose ■of the Teachers’ Retirement Fund and of the liberality with which the provisions of that law must be construed in order to give it effect. (Matter of O’Brien v. New York State Teachers’ Retirement Bd., 215 App. Div. 220; 244 N. Y. 530; Yates County Nat. Bank v. Carpenter, 119 N. Y. 550.) It, indeed, would be unfortunate if any teacher should lose the rewards of long and faithful service ■through a failure to comply with some mere technical rule of procedure. But on the other hand, it would be equally unfortunate for all the others interested in the retirement fund if the fundamental requirements of the law were not enforced, or the teachers themselves through resolutions of the Board, and not through acts of the Legislature, should seek to amend or supplement the charter as written. The only safe and sure way to proceed with and maintain the retirement system is to follow the law which brought it into being and which has prescribed its limitations.

Sudden death through accident as well as through disease may overtake any teacher, and in such a case, subdivision “ N ” of the retirement system provides the allowances which are to be made to the estate of such an one. Teachers may get sick, with death hovering near by. Retirement may be deemed wise or unwise, according to conditions and circumstances, but the very purpose of the retirement system and the provisions of the act creating it, never contemplated that retirement should become a mere gamble and a chance. Uncertainty there always is in every element of human life, but as far as possible, we seek to eliminate it from the law. The more substantial benefits to be derived on retirement under the options allowed by subdivision “ 0 ” are not to be dependent upon the ability to find a member teacher somewhere about, a few hours before death. Where one would succeed in the search, another, equally worthy, might fail. The retirement, as now provided for by law, is accomplished by that orderly procedure of filing the application in a case like this, with the Retirement Board during the lifetime of the teacher.

For the reasons here stated, the order of the Appellate Division should be reversed, and that of Special Term affirmed, with costs in this court and in the Appellate Division.

Cardozo, Ch.- J., Pound, Lehman and O’Brien, JJ., concur ; Kellogg and Hubbs, JJ., dissent.

Ordered accordingly.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v. Peter Arata, Appellant.
    (Argued June 5, 1930;
    reargued January 8, 1931;
    decided February 10, 1931.)

      Leo H. Klugherz, Alexander I. Borke, Joseph D. Edelson and Samuel Feldman for appellant.
    There was no corroboration of the testimony of the accomplices. (People v. O’Farrell, 175 N. Y. 323; People v. Becker, 210 N. Y. 274; People v. Patrick, 182 N. Y. 132; People
      v. Dixon, 231 N. Y. 111; People v. Courtney, 28 Hun, 589; People v. Josephs, 128 N. Y. Supp. 257; People v. Parretti, 234 N. Y. 98.) The motion for a new trial on the ground of newly-discovered evidence should have been granted. (People v. Priori, 164 N. Y. 456; People v. Shilitano, 218 N. Y. 161.)

      Thomas C. T. Crain, District Attorney (.Robert C. Taylor of counsel), for respondent.
    There was adequate corroboration of the accomplices. (People v. Dixon, 231 N. Y. 111; People v. De Martini, 213 N. Y. 203; People v. Minsky, 227 N. Y. 94; People v. Carnevalle, 202 App. Div. 156; 236 N. Y. 534; Scheinberg v. Scheinberg, 249 N. Y. 272; Matter of People [Norske Lloyd Ins. Co.], 249 N. Y. 139.) The motion for a new trial was properly denied. (People v. Shilitano, 218 N. Y. 161; People v. Buchanan, 145 N. Y. 1; People v. Priori, 164 N. Y. 459; People v. Koepping, 178 N. Y. 247; People v. Patrick, 182 N. Y. 131; People v. Bonifacio, 190 N. Y. 150; People v. Sprague, 217 N. Y. 373.)
   Per Curiam.

The conviction in this case rests upon the testimony of two accomplices, corroborated to some extent by other witnesses and by inconsistencies in the defendant’s narrative, which was designed to prove an alibi. The corroborating witnesses for the most part are persons of degraded life. Judges confined to the printed record must have a lingering sense of uncertainty when reviewing a conviction proceeding from these tainted sources. Even so, there can be no reversal of the judgment without breaking down the barriers that separate the functions of a jury from those of an appellate court (People v. Taylor, 138 N. Y. 398; People v. Cohen, 223 N. Y. 406).

The lingering sense of uncertainty is emphasized in some degree by the testimony adduced for the defendant upon a motion for a new trial. The accomplices were exhibited upon the trial as self-confessed bandits. They are revealed upon the motion as telling contradictory tales to their prison associates and others, asserting the defendant’s innocence out of court while denouncing him upon the stand. One of the accomplices, the witness Wood-bury, was examined and cross-examined by the judge in accordance with the intimation of this court that such a course should be pursued (People v. Arata, 254 N. Y. 565). He reaffirmed the testimony given before the jury. The other accomplice, Rossi, who upon the trial had been called as a witness for the defendant but had ended by giving evidence of guilt, refused to open his mouth when called to testify upon the motion. After a full and patient hearing, the judge who listened to the witnesses arrived at the conclusion that the newly-discovered evidence was insufficient to exact another trial. There was no probability in his judgment that the verdict would be different if the new evidence were heard. We find ourselves unable to say, in opposition to his judgment, that the probability exists (People v. Shilitano, 218 N. Y. 161).

Contradictions and polluted sources do not avail without more to vitiate the judgment or to induce a belief that the defendant should go free, for the polluted sources were as obvious to the jury as they are to an appellate court and the newly-discovered contradictions are significant chiefly as impeaching the credibility of witnesses who were gravely impeached already by participation in the crime. None the less, the weaknesses thus revealed are circumstances which in the cautious administration of criminal justice the State should deeply .ponder before putting into execution the irretrievable penalty of death. Contradictions and polluted sources might conceivably be insufficient to exact a mitigation of the penalty, if they were unaccompanied by anything else. When, however, we add the fact that two accomplices, whose guilt was no less than the defendant’s, are serving terms for manslaughter, the plea for one, if not for both, having,been accepted by the People as the reward to be paid for the inculpatory testimony, we think a case exists where the penalty to be suffered by the defendant should be reduced to some measure of equality with the penalty suffered by his partners in the crime. A recommendation to the Governor will be made to that effect.

The judgment of conviction should be affirmed. Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment affirmed.


text:
    Mary Apfelberg, Appellant, v. Annie Lax, as Executrix of Harry Lax, Deceased, et al., Respondents.
    (Submitted January 8, 1931;
    decided February 10, 1931.)

      Abraham Rotwein and Marvin Leibowitz for appellant.
    The pleadings raise issues of fact and hence judgment on the pleadings cannot be granted. (Electro-Tint Engraving Co. v. American Handkerchief Co., 130 App. Div. 561; Strodl v. Farrish-Strafford Co., 145 App. Div. 406; Wolski v. Booth & Flinn, 93 Misc. Rep. 651; Fish v. Delaware, L. & W. R. R. Co., 158 App. Div. 92; Fidelity & Casualty Co. v. Wells, 49 App. Div. 171; Hanna v. Lichtenhein, 225 N. Y. 579; Van Tassell v. Manhattan Electrical Supply Co., 83 Misc. Rep. 126; Kirschbaum v. Eschmann, 205 N. Y. 127; Harley v. Plant, 210 N. Y. 405.) The New Jersey statute set up in defendants’ answer is purely remedial and procedural and has no extraterritorial effect. (Scudder v. Union Nat. Bank, 91 U. S. 406; Pritchard v. Norton, 106 U. S. 134; Downer v. Chesebrough, 36 Conn. 39; Conn. Valley v. Maine R. R. Co., 78 N. H. 553; Hinckly v. Freich, 86 N. J. L. 281; Reiley v. Steinhardt, 217 N. Y. 549; New York Life Ins. Co. v. Aitkin, 125 N. Y. 660; Story on Conflict of Laws [8th ed.], § 358; Marshal v. Sherman, 148 N. Y. 9; Knickerbocker Trust Co. v. Iselin, 185 N. Y. 54; Purvis v. Purvis, 167 App. Div. 717; Neu v. Rogge, 88 N. J. L. 335; Callan v. Bodine, 81 N. J. L. 240; Maxwell v. Ricks, 294 Fed. Rep. 255.)

      Edward D. Newman and Platt K. Wiggins for respondents.
    The denial by the plaintiff in her reply of any knowledge or information sufficient to form a belief as to the provisions of the public laws of the State of New Jersey is insufficient in law. (Olsen v. Singer Mfg. Co., 143 App. Div. 142; Koczenasz v. Lehigh Portland Cement Co., 182 App. Div. 287; Kirschbaum v. Eschmann, 205 N. Y. 127; Schnibbe v. Gleny, 245 N. Y. 388; Dahlstrom v. Gemunder, 198 N. Y. 449; Van Tassell v. Manhattan Electric Supply Co., 83 Misc. Rep. 126; Weyand v. Park

      Terrace Co., 202 N. Y. 231.) The law of the State of New Jersey set forth in the defendants’ answers is applicable to the contract in suit. (Stumpf v. Hallahan, 101 App. Div. 383; 185 N. Y. 550; Hutchinson v. Ward, 192 N. Y. 375; Smith v. Compania, 127 Misc. Rep. 508; 220 App. Div. 782; Richardson v. Draper, 23 Hun, 188; Westchester Mortgage Co. v. Grand Rapids & I. R. Co., 246 N. Y. 194; Gillet v. Bank of America, 160 N. Y. 549; Harnickell v. Omaha Water Co., 146 App. Div. 693; 208 N. Y. 520; De Clow v. Haverkamp, 198 App. Div. 83; Pennsylvania Steel Co. v. Title Guaranty & Trust Co., 193 N. Y. 37; Eastman v. Horne, 205 N. Y. 486; Livingston v. Spero, 18 Misc. Rep. 243; Thompson v. Lakewood City Development Co., 105 Misc. Rep. 680; Weyand v. Park Terrace Co., 202 N. Y. 231.) The plaintiff cannot maintain this action because she failed to file a notice of intention to commence this action, as required by the statutes of the State of New Jersey. (Neu v. Rogge, 88 N. J. L. 335; Eckel v. Brehm, 103 Atl. Rep. 187; The Harrisburg, 119 U. S. 199; Davis v. Mills, 194 U. S. 451.)
   Crane, J.

Harry Lax, deceased, and the other individual defendants executed and delivered to the plaintiff’s assignor a bond in the penal sum of $29,000, secured by a mortgage on real property in the city of Paterson, State of New Jersey. The mortgage was foreclosed, leaving a deficiency due upon the bond. Action at law has been brought in this State on the bond to collect this balance from the obligors. The appeal is on the pleadings.

The answers set up as a defense the New Jersey law, which provides as follows:

“ Sec. 2. That in all cases where a bond and mortgage has or may hereafter be given for the same debt, all proceedings to collect said debt shall be, first, to foreclose the mortgage, and if at the sale of the mortgaged premises under said foreclosure proceedings the said premises should not sell for a sum sufficient to satisfy said debt, interest and costs, then and in such case it shall be lawful to proceed on the bond for the deficiency, and that all suits on said bond shall be commenced within six months from the date of the sale of said mortgaged premises, and judgment shall be rendered and execution issue only for the balance of the debt and costs of suit. (P. L. 1880, p. 225, as amended P. L. 1881, p. 184.) ” And another provision, which is:

“ Sec. 1. No judgment shall be entered by confession on any bond where a mortgage has or may hereafter be given for the same debt or in any action on said bond unless prior to the entry of such judgment, if the same shall be by confession, or prior to the beginning of such action, if the proceeding be by action, there shall be filed in the office of the Clerk of Common Pleas, except in counties where there is a Register of Deeds and Mortgages, then in the office of the Register of Deeds and Mortgages of the County in which the lands described in the mortgage given with such bonds are situate, a written notice of the proposed judgment or action setting forth the court in which it is proposed to enter said judgment or begin such action, the names of the parties to such bond and to such judgment or action, the books and page of the record of the said mortgage, together with a description of the lands or real estate described therein. (P. L. 1907, p. 563.) ”

This court held in Hutchinson v. Ward (192 N. Y. 375) that while an action could be brought in the courts of this State upon the bond after foreclosure in New Jersey, the suit must be commenced within the six months from the date of the sale of the mortgaged premises; that the New Jersey statute affected the cause of action and not the remedy. The answers allege that this action was not commenced by the plaintiff within six months, as required. In her reply the plaintiff denies that the action was not commenced within the time limit. As the summons is not printed in the case, we find nothing to inform the court when the action was commenced. Here, therefore, we have an- issue which must be tried. If the action was not commenced within the six months it cannot be maintained. A motion for judgment on the pleadings would have been proper, if it appeared by the summons itself or by any uncontradicted affidavit that the statute was in fact a bar. As it is, we have not the summons and the courts have not had before them any affidavit showing the date when the action was commenced.

That part of the New Jersey law which requires the filing, in the office of the clerk of Common Pleas, of a written notice of the action upon the bond has also been denied by the plaintiff’s reply. Foreign law is generally a fact which must be proved. We have here a statement of that law in the answer, and a denial of it in the reply. The pleadings in this particular make an issue of fact. It may be that occasionally the law of another State may be established on a motion for' judgment on the pleadings, when there is and can be no dispute as to its existence at the time of the transaction. The court, however, on this motion had only the pleadings before it.

By paragraph 4 ” of the reply, the plaintiff admits that she did not file 'the notice referred to in the answers. The Appellate Division, in its memorandum decision, considered this admission fatal. Even if we assume that the New Jersey statute is correctly pleaded in the answers, we are of the opinion that the filing of the notice is a part of the remedy peculiarly adaptable to actions commenced in the State of New Jersey, and having no extension to the courts in New York State. The notice is to be filed with the clerk of Common Pleas in the county where the mortgaged property is located. It must state the court in which it is proposed to enter the judgment or bring the action, the names of the parties to the bond, together with a description of the mortgaged lands. Holding as we do, that an action upon this transitory instrument, the bond, cannot be brought in this State except for the deficiency after a foreclosure sale, and within six months of that sale in accordance with the statute, we think that we have annexed to the cause of action all those incidents intended to affect the right of recovery, and that the provision relating to the notice of action applies to the courts in New Jersey, and not to the relief sought outside that State. The requirement that the notice shall state ■ the court in which the judgment is to be confessed, or the action brought, indicates that the courts of the State of New Jersey were alone referred to; otherwise, there would have been some reference to naming the State also in which the action was to be brought.

The motion for judgment on the pleadings was properly denied by the Special Term, so that the judgments of the Appellate Division should be reversed, and the orders of . the Special Term affirmed, with costs in this court and in the Appellate Division.

Cardozo, Ch. J., Pound, Lehman, O’Brien and Hubbs, JJ., concur; Kellogg, J., not sitting.

Judgment accordingly.


text:
    James O. Sebring, Respondent, v. Fidelity-Phenix Fire Insurance Company of New York, Appellant.

      (Argued January 9, 1931;
    decided February 10, 1931.)

      W. Earle Costello for appellant.
    Plaintiff’s failure to disclose the facts relative to the criminal record of his tenant was a concealment of material facts and voided the policy. (American Credit Co. v. Wimpfheimer, 14 App. Div. 498; Rothmiller v. Stein, 143 N. Y. 581; 3 Cooley’s Briefs on Insurance [2d ed.], 1961; Clark v. Ins. Co., 40 N. Y. 333; New York Bowery Ins. Co. v. New York Fire Ins. Co., 17 Wend. 359; Smith v. Home Ins. Co., 47 Hun, 30; People v. Liverpool, London & Globe Ins. Co., 2 Thomp. & Cook, 268.)

      James 0. Sebring for respondent.
    Evidence regarding the moral character of the tenant was wholly immaterial and properly excluded. (Sebring v. Firemen’s Ins. Co., 227 App. Div. 103; Ampersand Hotel Co. v. Home Ins. Co., 198 N. Y. 495.)
   O’Brien, J.

Plaintiff owns a farm in Tioga county situated a few miles from the village of Owego. He testified that during the year 1921 or 1922 he purchased it for the sum of $11,500 and within a year or two improved it by the erection of a large barn costing $10,000. In the year 1926 the land with all improvements was assessed at $4,800, and defendant’s real estate experts estimated its market value in that year at $8,000. Since its purchase by plaintiff, the farm has never earned. a profit. Not since the barn was built has any stock been kept on the farm. The principal produce was hay. Until July, 1926, the buildings were insured for only $1,600. Sometime during that year William H. Hubbard came to occupy the farm as a tenant. He had been a farmer in Ontario county and had kept a restaurant. Plaintiff, who is an attorney at law, testified that he had known Hubbard for years and had represented him in litigation. In July the insurance was increased by $2,050, in August by the same amount and in January, 1927, $12,400 more was added. A small proportion of this new insurance covered household property, farm produce and machines. Plaintiff testified that in March, 1927, he entered into a written contract of sale to Hubbard. On April 4, 1927, defendant, at plaintiff’s request, made the following indorsement on its policy: Title to property insured under the policy is now vested in James O. Sebring, owner and William H. Hubbard, purchaser under land contract as interest may appear.” On the night of May 23, 1927, fire destroyed the farm house, the large barn, the toolhouse and the woodhouse. In the proof of loss prepared by plaintiff and Hubbard the origin of the fire is stated to be lightning. There is no competent evidence in behalf of plaintiff that lightning had occurred in the vicinity of the farm on the night of the fire, but for defendant two witnesses testified that there was no lightning. One year later, Hubbard assigned to plaintiff all his.right in and to the loss under the policy. He was present at the trial but did not testify. The jury rendered a verdict in plaintiff’s favor for $3,950. The judgment has been unanimously affirmed and leave to appeal to this court granted by the Appellate Division.

The standard form policy includes this provision: Fraud, misrepresentation, etc. This entire policy shall be void if the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof.” In its pleading, as well as at the trial by exceptions, and in this court defendant raised the point that plaintiff’s failure to disclose the facts known to him in respect to Hubbard’s record, when he caused the indorsement to be made on the policy in April, 1927, constitutes a concealment of material facts and voided the policy. It offered to prove that plaintiff, as attorney, had represented Hubbard in various actions against insurance companies involving insurance losses, that Hubbard had been convicted in Pennsylvania of conspiracy to defraud insurance companies and that plaintiff had defended him on his trial for that crime. Objections to the questions were sustained and the exemplified copy of the record of conviction was excluded. We think reversible error was thereby committed. Defendant was entitled to prove, if it could, that the facts relating to Hubbard were material, that they were concealed and that the concealment was fraudulent.

The question of the materiality of a representation or concealment is ordinarily for the jury. (Penn Mut. Life Ins. Co. v. Mechanics S. B. & T. Co., 72 Fed. Rep. 413.) The usual test relates to the effect which knowledge of the fact would have on the making of the contract. That test is complete if such knowledge would influence the parties in making it. If the underwriter, with full information, would have refused to accept the risk, then the concealment is material. The undisclosed fact need not be of such a nature as to have increased the risk or contributed to any loss or damage. (Vance on Insurance [2d ed.], p. 347; Jefferson Ins. Co. v. Cotheal, 7 Wend. 72.) The fact that an owner had placed upon premises,, about to become the subject of an insurance contract, a pyromaniac or even a sane person whose chief activity consisted in the commission of arson for the purpose of collecting insurance would present such a perfect illustration of materiality that no jury could fail to recognize it. In a lesser degree, the occupation of the premises by one who had been convicted of such an offense only on a single occasion would constitute sufficient evidence for the consideration of a jury and might form a solid basis for a verdict holding that concealment of that fact is material. As far as materiality is concerned, no different principle exists in marine, fire and life insurance.

Duty to disclose a material fact manifestly is not the same thing as materiality itself. Concealment is the designed and intentional withholding of any fact material to the risk which the assured in honesty and good faith ought to communicate to the underwriter. (Daniels v. Ins. Co., 12 Cush. 416, 425.) A fact may be material yet, under certain circumstances, courts have held that no obligation rests upon the assured voluntarily to reveal it. Some conditions may be so patent that they can be recognized without inquiry. Information relating to many can be readily ascertained from inspection or from persons other than the applicant. If fraud be absent, the assured may remain silent in respect to many matters concerning which the underwriter fails to question him. These are the rules so frequently enforced in actions in which fire and life policies are involved. In this State they do not govern marine risks, for here as well as in England the rule of utmost good faith in that kind of insurance has been applied. The English courts have extended that doctrine into all branches of insurance. Decisions in our State and Federal courts have not carried it so far, but even in cases construing life and fire policies the rule has been formulated which requires good faith and fair dealing by both insurer and insured. (Mutual Life Ins. Co. v. Hilton-Green, 241 U. S. 613.) Unless non-disclosure of a fact, concerning which he has not been asked, be fraudulent, the applicant’s omission to state it will not avoid a fire or life policy. (Valton v. National Fund Life Assur. Co., 20 N. Y. 32; Smith v. Countryman, 30 N. Y. 655, 671; Mallory v. Travelers’ Ins. Co., 47 N. Y. 52; Browning v. Home Ins. Co., 71 N. Y. 508.) If fraudulent intent be present, of course, the opposite result will follow. In order to constitute fraud, there must be suppression in bad faith with intent to mislead the insurer. (Penn Mut. Life Ins. Co. v. Mechanics’ S. B. & T. Co., 72 Fed. Rep. 413.) There must be a willful intent to defraud, and not a mere mistake or oversight. (Collins v. Iowa M. Ins. Co., 184 Iowa, 747, 753.) If the applicant is aware of the existence of some circumstance which he knows would influence the insurer in acting upon his application, good faith requires bim to disclose that circumstance, though unasked. (Vance on Insurance [2d ed.], p. 343.) An early decision in this State (New York Bowery Ins. Co. v. New York Fire Ins. Co., 17 Wend. 359) closely approaches the principle of the case now before us. There an insurer had executed a contract of fire insurance with an individual who, as it was later informed by an officer of another fire insurance company, possessed a bad character, had previously been insured by other companies, had twice been burned out, was in bad repute with -underwriters and would not be insured by informant’s company. With such information in its possession and without disclosure, the insurer shortly thereafter effected a contract of reinsurance with another company. The court held that the duty existed to disclose this information and failure to do so rendered void the policy of reinsurance. Ampersand Hotel Co. v. Home Ins. Co. (198 N. Y. 495), decided by a bare majority of this court, deals with issues different from the one before us. There one of the questions was whether an uncompleted conspiracy to burn, which had been entered into subsequent to the writing of the policy, constituted fraud within the meaning of that contract. The majority held that the contract was unaffected, the subject of the insurance remained the same and no liability of the insurer was increased. Another issue related to the question whether the hazard had been increased by the formation of the conspiracy and again the majority held that, in the absence of some overt act, there was no increase of hazard. In this case is involved the question whether plaintiff’s failure to disclose important events alleged to have occurred in Hubbard’s career previous to the execution of the amended contract affected the making of that contract and whether his reticence on that subject resulted from a fraudulent intent to induce the making of a contract from which defendant, in the exercise of ordinary business prudence, would have remained aloof.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

Cardozo, Ch. J., Pound, Crane, Lehman and Hubbs, JJ., concur; Kellogg, J., not sitting.

Judgments reversed, etc.