author: Lehman, J.

text:
    Frederic A. Potts & Co., Inc., Respondent, v. Lafayette National Bank of Brooklyn, Appellant, Impleaded with Another.

      (Argued October 18, 1935;
    decided November 19, 1935.)

      Walter Jeffreys Carlin for appellant.
    No cause of action was proven. (Phelps v. People, 72 N. Y. 334; People v. Geyer, 196 N. Y. 364; People v. Barry, 132 App. Div. 231; 196 N. Y. 507; People v. Cummins, 209 N. Y. 283; McCormack v. Security Mut. Life Ins. Co., 220 N. Y. 447; Brooklyn Distilling Co. v. Standard Distilling & Distributing Co., 193 N. Y. 551; Havana C. R. R. Co. v. Knickerbocker T. Co., 198 N. Y. 422; First Denton Nat. Bank v. Kenny, 116 Md. 24; Wheeling City Bank v. Bryan, 72 W. Va. 29; Credit Alliance Corp, v. Sheridan

      Theatre Co., 241 N. Y. 216; Bienenstok v. Ammidown, 155 N. Y. 47; Benedict v. Arnoux, 154 N. Y. 715; Henry v. Allen, 151 N. Y. 1; New York v. Tenth Nat. Bank, 111 N. Y. 446; McConnell v. Hellwig, 190 App. Div. 244; Gunster v. Scranton Co., 181 Penn. St. 327; Central S. & I. Gory. v. Medomak Nat. Bank, 5 Fed. Supp. 252; Bank of Le Roy v. Purdy, 100 App. Div. 64; Merchants Nat. Bank v. Prescott & Son, Inc., 139 Misc. Rep. 603; First Nat. Bank v. Tisdale, 84 N. Y. 655; Geneva Nat. Bank v. O’Brien, 121 Misc. Rep. 282.) Plaintiff as depositor breached its duty hi failing to examine its monthly bank statements and such failure and negligence resulted in the losses. (Critten v. Chemical Nat. Bank, 171 N. Y. 219; McLaughlin, Inc., v. National City Bank, 228 App. Div. 337; Hammerschlag Mfg. Co. v. Importers & Traders Nat. Bank, 262 Fed. Rep. 266; Morgan v. U. S. Mortgage & Trust Co., 208 N. Y. 218; Prudential Ins. Co. v. National Bank of Commerce, 227 N. Y. 510; Leather Manufacturers Bank v. Morgan, 117 U. S. 96; Meyers v. Southwestern Nat. Bank, 193 Penn. St. 1; Union Tool Co. v. Farmers’ & Merchants’ Nat. Bank, 192 Cal. 40; Los Angeles Inv. Co. v. Home Sav. Bank, 180 Cal. 601; Brown v. Lynchburg Nat. Bank, 109 Va. 530; Breenhalgh v. Farmers’ Nat. Bank, 226 Penn. St. 184.) The monthly statements, sent by defendant to plaintiff and retained by it without objection constitute an account stated between them. (Rodkinson v. Haecker, 248 N. Y. 480; Liquidators v. Upton Printing Co., 152 La. 270; Hopwood Plays, Inc., v. Kemper, 263 N. Y. 380; Holden v. N. Y. & Erie Bank, 72 N. Y. 286; T. G. & T. Co. v. Pam, 232 N. Y. 441; Davis v. Bemis, 40 N. Y. 453; Garrigues Co. v. International Agricultural Corp., 159 App. Div. 877; Quaid v. Ratkowsky, 183 App. Div. 428; 224 N. Y. 624; Anthony v. American Glucose Co., 146 N. Y. 407.) Because of plaintiff’s silence after it had knowledge of its loss, defendant’s rights were prejudiced. (Modlin v. Light, 224 App. Div. 614; Greenwood v. Martins Bank, Ltd., [1933] App. Cas. 51; Prudential Ins. Co. v. National Bank of Commerce, 227 N. Y. 510.)

      Frederick J. Moses and Harold A. Scheminger for respondent.
    Plaintiff’s cause of action was conclusively established. (Sims v. U. S. Trust Co., 103 N. Y. 472; Wagner Trading Co. v. Battery Park Nat. Bank, 228 N. Y. 37; Hathaway v. County of Delaware, 185 N. Y. 368; Timpson v. Allen, 149 N. Y. 513.) There was no account stated between the plaintiff and the defendant. (Lockwood v. Thorne, 18 N. Y. 285; National Surety Co. v. Manhattan Co., 252 N. Y. 247.) The plaintiff is not estopped to maintain the action. (Critten v. Chemical Nat. Bank, 171 N. Y. 219.)
   Lehman, J.

In March, 1931, John Eckart, an employee of the plaintiff corporation, delivered, at the defendant bank, to W. Howard Wyatt, the cashier and vice-president of the bank, two checks payable to the plaintiff and indorsed by the plaintiff: “ Pay to the order of Lafayette National Bank of Brooklyn in New York.” The plaintiff corporation owned the checks. It had a deposit account in the defendant bank. Eckart, the plaintiff’s employee who delivered the checks to Wyatt, and Wyatt, the defendant’s officer who received the checks from Eckart, conspired to divert the proceeds of the checks to Eckart. Wyatt arranged for the collection of the checks in accordance with the usual business routine of the bank. Then he arranged that the proceeds should be placed in the individual deposit account of Eckart.

From time to time thereafter Eckart deposited in the defendant bank other checks payable to the order of the plaintiff and indorsed by the plaintiff: “ Pay to the order of Lafayette Bank of Brooklyn in New York.” The proceeds of these checks also were placed, through the instrumentality of Wyatt, in the individual deposit account of Eckart. In that manner, before March, 1932, Eckart had succeeded in diverting to his own use the proceeds of checks, aggregating over $50,000, which belonged to the plaintiff. Then the president of the plaintiff corporation discovered Eckart’s dishonesty. He gave no notice to the bank. In September, 1932, after the death of the president of the plaintiff corporation, the bank was notified of the true facts, and claim against it was made. The plaintiff has now recovered a judgment against the bank for the amount of the proceeds of its checks which were placed in the account of its dishonest employee.

The bank maintains that it is not liable for the diversion of the proceeds of the checks because its officer, Wyatt, did not receive the checks as its agent, acting in its behalf, but dishonestly and with the intent of defrauding not only the plaintiff corporation but also the bank. We may assume that Eckart, though an employee of the plaintiff corporation, was acting for himself, and not as agent of the plaintiff, when he delivered the checks at the bank with intent to appropriate the proceeds to his own use; and that Wyatt, though an officer of the defendant bank, was not acting as agent for the bank when he received the checks with intent to assist Eckart in the commission of a crime. That assumption might defeat a claim that the bank may be held responsible as principal for Wyatt’s wrongdoing. The plaintiff has pleaded a different cause of action, based upon a diversion by the bank of the proceeds of the checks which it collected. If the bank received the proceeds of the checks and was under a positive duty to disburse them only upon the order of the plaintiff, violation of that duty would give rise to a cause of action in favor of the plaintiff, even though such violation may have been induced by deception practiced by a stranger or by a dishonest employee.

After Wyatt received the checks, he placed them in the proper department of the bank for collection. The employees of that department received the checks as agents for the bank; they never acted or intended to act . as agents for Wyatt. The bank was then the holder of the checks, but the special indorsement upon them imported that ownership of the moneys represented by the checks was in the plaintiff corporation. The use of the defendant’s name as payee in the indorsement indicated the indorser’s intention to lodge the moneys in its custody and place them under its control.” The language of the indorsement “ making the funds payable only upon the order of the defendant imposed upon it the duty of seeing that they were not, through its agency, improperly disbursed after it had received them.” (Sims v. United States Trust Co., 103 N. Y. 472, 476.)

The defendant did unquestionably receive the checks and did unquestionably collect the proceeds. It received the proceeds, with notice that they belonged to the plaintiff, and it rested, then, under the duty of seeing that they were placed in the plaintiff’s deposit account. Instead of performing that duty, the employees of the defendant bank placed the moneys in the account of a thief. It cannot be questioned that in so doing they acted as agents of the bank, performing a duty to the bank. It is irrelevant that in so acting they were deceived by a dishonest officer of the bank. Though perhaps the bank may not be held responsible as principal for the acts of its dishonest officers, it gains no immunity for violation of its duty because a dishonest officer induced the violation.

If there were nothing more, the plaintiff’s right to recover the proceeds of all the checks would be clear. The difficulty arises from the fact that the defendant has proven that, after the plaintiff discovered, or by the exercise of reasonable care should have discovered, that the proceeds of its checks were not credited to its account, it failed to give notice of that fact to the defendant. No system has ever been devised by which a bank or other large business can secure perfect protection against the dishonesty of a trusted employee or officer. No audit of the books of the bank, however careful, would have disclosed, in this case, that the proceeds of the checks received from the plaintiff were not placed in the proper account. The dishonest cashier had provided against that. On the other hand, an examination by the plaintiff of the monthly statement of its account with the bank would have disclosed that the plaintiff had not received credit for checks which it had indorsed to the order of the bank. A depositor of a bank is under a duty to examine such statements of account, and to give notice of errors therein. The plaintiff, as we have said, failed to give such notice till September, 1932. If it had given notice earlier the defendant bank would not have continued to permit the diversion of the proceeds of the plaintiff’s checks, and could have claimed indemnity from a surety company, which was then solvent and meeting all its obligations, for loss previously sustained.

The plaintiff seeks to excuse its failure to object to the monthly statements of its account with the bank during the period prior to March, 1932, by proof that, until that time, no one except Eckart, its dishonest employee, received the statements or knew that the statements did not show a credit for all checks which it had indorsed to the order of the bank. That proof explains the plaintiff’s failure to object to the statement of its accounts, but it does not excuse such failure. The plaintiff owed to the defendant a positive duty to examine the monthly statements of its accounts. It intrusted performance of that duty to its dishonest employee, Eckart, who alone knew that he was diverting the proceeds of the plaintiff’s checks received by the bank. The plaintiff cannot be charged with the knowledge which the dishonest employee had gained while he was stealing from the plaintiff, but it is chargeable, of course, with the knowledge that it had indorsed certain checks to the order of the bank, and an examination of the statements of account by an honest employee would have disclosed that these checks were not credited to its account. What was said in Critten v. Chemical Nat. Bank (171 N. Y. 219, 230), in regard to a similar situation, applies here, with change only of the name of the dishonest employee: The plaintiff’s position may be no worse because they entrusted the examination to [Eckart] instead of to a third person; but they can be no better off on that account. If they would have been chargeable with the negligence or failure of another clerk in the verification of the accounts, they must be equally so for the default of [Eckart], so far as the examination itself would have disclosed the facts.”

It is said by the plaintiff that an examination by an honest employee would not have disclosed that there was error in the statements of the account. The evidence shows that these statements purported only to give a list of the credits and debits which have been entered on the bank’s books during the month to that particular account ” and it is argued by the plaintiff that the statement did show these entries accurately. The purpose of an examination of the statement of the account is not to determine whether it correctly shows the entries on the books of account of the bank. Those books are in the control of the bank, and a depositor can have no knowledge of their contents. The purpose of an examination by a depositor of a statement of his account with a bank is to verify the correctness of the debits and credits shown in the statements. Acquiescence in the account with full knowledge of the facts, makes out an account stated. (Harley v. Eleventh Ward Bank, 76 N. Y. 618.) Here there was no fraud in the preparation of the accounts by the bank. Though Wyatt knew that the account did not show the failure of the bank to credit to the account of the plaintiff the proceeds of the checks, the bank did not know that, for Wyatt’s knowledge gained through his own wrong is not chargeable to the bank. On the other hand, the plaintiff did know what checks had been indorsed to the order of the bank. Any employee who examined the statements of account would have discovered that the proceeds of the checks so indorsed were not properly credited to the plaintiff. The failure to report that error made possible the diversions thereafter.

It is true that, by Wyatt’s direction, the monthly statements were held at the bank until called for by Eckart, the dishonest employee. Quite possibly his purpose was to prevent the disclosure of Eckart’s delinquency. Even though that be true, yet through delivery to Eckart, the statements did come into the possession of the plaintiff, just as plaintiff’s checks, through delivery to Wyatt, came into the possession of the defendant bank, and the trial court properly found that “ on the first day of each month, beginning June 1, 1929, and ending March 1, 1933, pursuant * * * to the custom of banking, which custom was well known to plaintiff, there was delivered to plaintiff a full and complete monthly statement of its account,” and that said statements' were duly received by plaintiff and retained by it.” The plaintiff acquiesced in those statements, though it knew that it rested under a duty to examine them and that failure to object would be accepted as an admission of the correctness of the statements, at least in so far as the plaintiff had knowledge sufficient to verify the correctness of the account and was not misled by fraud.

In the cases in which a depositor in spite of failure to object to a statement of his account was permitted to recover upon proof that the statement of account was erroneous, the error was one which could not have been discovered by a depositor, even by the exercise of reasonable care (Shipman v. Bank of State of New York, 126 N. Y. 318; National Surety Co. v. Manhattan Co., 252 N. Y. 247), or where apparent acquiescence was induced by fraud or mistake (McIntire v. National Nassau Bank, 215 N. Y. 662). Here, acquiescence was due solely to the negligence or wrong of the plaintiff’s own agent, and for such negligence or wrong the plaintiff was responsible. (Critten v. Chemical Nat. Bank, supra; National Surety Co. v. Manhattan Co., supra.) Thus the same evidence which the plaintiff produced to impeach the account stated, establishes the plaintiff’s negligence or wrong in failing to give notice of error in the account, and subjects the plaintiff to liability for damages caused thereby. Those damages are the exact amount of the diversions of the proceeds of the plaintiff’s checks; for the failure to give notice prejudiced the defendant’s rights to obtain restitution or indemnity in respect to loss previously suffered, and enabled the two dishonest employees to continue their fraud.

Moreover, the plaintiff would certainly be liable- for damages caused by its failure to give notice after- March, 1932. Then its president, who was also its controlling stockholder, discovered Eckart’s guilt. Then, undoubtedly, a duty existed to give the defendant notice of the loss sustained. It is said that in failing to give such notice the president was not acting as agent of the plaintiff, but was acting in disregard of the interests of the plaintiff corporation to protect his private interests, because he feared that if claim were made against the bank it would insist upon payment of some loans which were due by him personally to the bank. While, if that be true, the plaintiff might not be responsible as principal for a wrong of its president, it is clear that the plaintiff may not profit by the dereliction of its president. (Cf. Critten v. Chemical Nat. Bank, supra.) The president obtained knowledge of Eckart’s crime, in the course of his duties as president. The plaintiff is chargeable with the knowledge so obtained. At that moment the plaintiff was under a duty to give notice to the bank. It failed to perform that duty. It would not be excused if its failure had been due to the negligence of an officer or agent. Its situation is no better because if was due to the bad faith of its agent, or the abandonment of his agency. Its fault lies in failure to act when it had a positive duty to act.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts. (See 269 N. Y. 613.)

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

Judgments reversed, etc.


source: Caselaw Access Project

license: Public Domain

text:
    John R. Ditmars, Jr., Respondent, v. Adrian W. Renz, Defendant, and Midtown Bank of New York, Appellant.
    (Argued October 15, 1935; decided
    November 19, 1935.)

      Sidney 0. Raphael for appellant.
    Error of law was committed in permitting testimony as to the retention of the plaintiff to act as a broker based upon authority allegedly given by the codefendant when at the time of the alleged hiring the codefendant was neither officer, director or agent of the defendant-appellant, and was in fact merely acting for his own personal gain and profit. (Francis Oil & Refining Co. v. Manville Co., 296 Fed. Rep. 349; 264 U. S. 592; Matter of Continental Engine Co., 234 Fed. Rep. 58; Copper King Mining Co. v. Hanson, 176 Pac. Rep. 623; Bank v. American Dock & Trust Co., 143 N. Y. 559; Rochester & C. T. Road Co. v. Paviour, 164 N. Y. 281; Tifft v. Quaker City Nat. Bank, 8 Pa. Co. 606; 141 Penn. St. 550; First Nat. Bank v. Hoch, 89 Penn. St. 324; Twelfth St. Market Co. v. Jackson, 102 Penn. St. 269; Demarest v. Spiral Riveted Tube Co., 71 N. J. L. 14; Crystal Copper Co. v. Gaido, 5 Fed. Rep. [2d] 881.) Error was committed in permitting the jury to consider the case when as a matter of law the plaintiff wholly failed to sustain the burden of proof by a fair preponderance of the evidence and prove a sale. (Slater v. American Palace Co., 146 App. Div. 859; Noyes v. Caldwell, 104 N. E. Rep. 495; Simes v. Rockwell, 31 N. E. Rep. 484; Jaeger v. Kelley, 52 N. Y. 274; Blaikie v. Post, 137 App. Div. 648.) Error was committed in denying the motions of the appellant to dismiss the complaint when as a matter of law the preponderance of the evidence indicates, at most, the negotiation of a loan by the financial corporation to the codefendant individually, and not to the bank. (Second Nat. Bank v. Weston, 172 N. Y. 250.)' The plaintiff failed to prove his case by a preponderance of the evidence as a matter of law. (Baulec v. Railroad, 59 N. Y. 356; Pollock v. Pollock, 71 N. Y. 137; Clapp v.
      Schaus, 156 App. Div. 681; Hull v. Littauer, 162 N. Y. 569; Johnson v. N. Y. C. & H. R. R. R. Co., 173 N. Y. 79; Morganstown Nat. Bank v. Weston, 172 N. Y. 250.)

      Spencer Pinkham for respondent.
    The appellant assumed and later ratified a binding contract whereby the respondent was hired as broker to sell the stock. Such contract was completely performed by the respondent. (Patterson v. Ongley Electric Co., 87 Him, 462; 155 N. Y. 674; Lyon v. West Side Transfer Co., 132 App. Div. 777; Patterson v. Robinson, 116 N. Y. 193.)
   Lehman, J.

The plaintiff alleges in his amended complaint that in September, 1929, the defendant Midtown Bank of New York retained the plaintiff as a broker for the purpose of negotiating the sale of certain shares of stock of said Midtown Bank of New York;” that thereafter the defendant sold to Ungerleider Financial Corporation 3,600 shares of its stock for a total sum of $288,000, and that such sale was brought about by the plaintiff and resulted solely from his services.” The verdict of the jury was in favor of the plaintiff in the sum of $2,880. Upon this appeal the defendant urges that the plaintiff, as matter of law, failed to establish a cause of action.

To establish his. cause of action, the plaintiff must show that he was employed as a broker under a contract which is binding upon the defendant, and that he performed the services stipulated in that contract. In regard to both elements, the plaintiff’s evidence is vague, and even though, upon this appeal, the plaintiff is entitled to the benefit of the most favorable inference that may reasonably be drawn from the evidence, his proof is insufficient. The gaps in the plaintiff’s evidence cannot be bridged by any inferences' which can reasonably be drawn from the evidence produced.

It appears that early in October, 1929, the Prudential Bank, of which the defendant Renz was then president, was about to become merged in the defendant bank. The plaintiff testified that Renz asked him whether he knew the Ungerleider people, and whether he thought that they would take over a block of stock of the bank. At that time,” so the plaintiff testified, “ Mr. Renz told me that there was a block of 1,600 units, divided into 1,600 of bank stock and 1,600 of Mid-Pru stock, a security affiliate, and that one of the directors of the bank had died, and his executors could not legally subscribe to the stock, and that was holding up a merger by which the Prudential Bank was taking over a bank called the Midtown Bank of New York, and changing its name. * * * I asked him who oVned the stock * * * and he told me this executor; he mentioned no names; and asked me if I thought I could get the Ungerleider people to take it over. It would have to be done immediately, because the merger was being held up until this stock was subscribed for.” Thereafter plaintiff discussed the matter with an officer of the Ungerleider Financial Corporation, and at the request of that corporation he obtained assurance from the chairman of the board of directors of the bank and from its counsel that Renz had authority to make the proposed sale. Then he introduced Renz to the Ungerleider Financial Corporation as broker and took part in no negotiations with the Ungerleider Financial Corporation.

This testimony falls far short of showing an employment by either the Prudential Bank or the Midtown Bank. Renz did not say that he was acting in behalf of either bank, or that either bank owned the stock. On the contrary, he did tell the plaintiff that the stock was owned by “an executor,” and the only reasonable inference that can be drawn from the conversation between the plaintiff and Renz is, that Renz was acting either for himself or for the owner of the stock in employing the plaintiff.

The testimony that the chairman of the board of directors and the counsel of the Prudential Bank assured the plaintiff that Eenz had authority to make the sale,” even if it were admissible in an action against the bank, is not inconsistent with such employment. It follows that the plaintiff is entitled to compensation from the defendant bank only if there is further proof that as a result of the introduction by the plaintiff, TJngerleider Financial Corporation purchased stock which belonged to the bank and that the bank ratified the employment of the plaintiff who brought about the sale.

The plaintiff has no personal knowledge of any arrangement between Eenz and "TJngerleider Financial Corporation which resulted from his introduction. He relies for proof that the Financial Corporation purchased stock from the defendant bank upon the deposition before trial of Carl Sherman, who testified that he is a director, chairman of the executive committee, and one of the attorneys for the bank. The significant portions of Mr. Sherman’s deposition read as follows:

“ Q. Do you recall the merger between Midtown Bank of New York and the Prudential Bank? A. Yes.
“ Q. "What was the merger plan with reference to the increased capital as approved by the State Superintendent of Banks? A. The merger plan provided for 16,100 shares of increased capital stock at $65 per share.
“ Q. Was "all of this increased capital stock subscribed and paid for before the State Superintendent of Banks issued a charter? A. No. Some 1,400 or 1,500 shares were not paid for. The merger plan, howevér, had been substantially carried out.
“ Q. How much of the increased capital stock did Eenz subscribe for? A. I think 1,600 or 1,700 shares.
Q. Did he pay for them in full? A. Yes.
Q. Did the Midtown Bank of New York have any transaction or transactions with "TJngerleider Financial Corporation, as a result of which Ungerleider Financial Corporation gave to the Midtown Bank of New York $288,000 or any part thereof in exchange for 3,600 shares of the capital stock of Midtown Bank of New York? A. No.
Q. Did Ungerleider Financial Corporation pay to the Midtown Bank of New York for 1,600 shares at $65 a share? A. Yes.
“ Q. Did Ungerleider Financial Corporation pay to the Midtown Bank of New York for 2,000 shares at $65 a share? A. Yes; either Ungerleider Financial Corporation or one of its nominees.
Q. Did the Mid-Prud Corporation receive from the Ungerleider Financial Corporation or its nominees payment for 3,600 shares of its stock at $15 a share? A. Yes. * * *.
Q. Will you tell us whose checks the bank received for the said 3,600 shares of stock, and in what amounts? A. One check from Ungerleider Financial Corporation or Samuel Ungerleider for $130,000, and one check from Ungerleider Financial Corporation or Samuel Ungerleider for $104,000. * * *.
Q. In whose name were the said 3,600 shares of bank stock issued? A. I believe they were issued to one Eder, a nominee of Ungerleider Financial Corporation. * * *
Q. When the stock was issued to Eder, was the same paid for? A. The stock was probably paid for simultaneously with its issuance.”

The questions which plaintiff’s counsel failed to ask Mr. Sherman are as significant as Mr. Sherman’s answers to the questions that were asked. Mr. Sherman was not asked whether Ungerleider Financial Corporation had subscribed for any stock in the defendant bank or had bought any stock from it. His testimony that Ungerleider Financial Corporation paid by its check for 3,600 shares of stock in the defendant bank, and that simultaneously with that payment the bank issued 3,600 shares in the name of a nominee of the corporation, does not prove that the financial corporation had bought the stock from the bank or had subscribed to the stock at the request of the bank. Such payment may have been m$de by the financial corporation in accordance with a previous arrangement made, not with the bank, but with a subscriber to stock of the bank, for the purpose of meeting the obligation of such subscriber upon his subscription.

The questions put to Mr. Sherman call for conclusions. They seem designed to elicit only part of the truth. It is true that where conflicting inferences can be drawn from testimony, a question of fact is presented for the jury; and it is also true that a party who proves facts from which an inference in his favor may be drawn, is not called upon to go further and exclude all possible explanation which might negative such inference. The difficulty here is that no inference, either in the plaintiff’s favor or in the defendant’s favor, can be drawn from the equivocal evidence produced by the plaintiff. For that reason the plaintiff’s complaint should have been dismissed at the close of his evidence.

The burden of explaining his equivocal testimony so elicited was erroneously placed upon Mr. Sherman. He met that burden fully by oral and documentai proofs that in fact payment to the bank for stock issued by it to a nominee of Ungerleider Financial Corporation was pursuant to an agreement made for a loan upon the security of stock for which Mr. Renz had subscribed or for a conditional sale of such stock. It is immaterial whether the agreement was for a loan to Renz or for a purchase of his stock. It is clear, at least, that no stock was purchased from either the Prudential Bank or the defendant bank, that the plaintiff was not employed to negotiate a sale of stock owned by either, and that the defendant bank did not ratify any contract of employment made with the plaintiff.

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

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

Judgments reversed, etc.


text:
    Annabelle A. Ehret, as Administratrix of the Estate of John W. Ehret, Deceased, Respondent, v. The Village of Scarsdale et al., Appellants, Impleaded with Another.

      (Argued October 8, 1935;
    decided November 19, 1935.)

      Thorne Baker for Village of Scarsdale, appellant.
    The trial court should have granted the defendant’s motion to dismiss the complaint as to the village of Scarsdale at the close of the plaintiff’s evidence. (Levy v. Mayor, 3 N. Y. Super. Ct. 465; Howard v. City of Brooklyn, 30 App. Div. 217; Leonard v. City of Hornellsville, 41 App. Div. 106; Rogers v. City of Binghamton, 101 App. Div. 352; 186 N. Y. 595; Whittaker v. Village of Franklinville, 265 N. Y. 11; Stubley v. Allison Realty Co., 124 App. Div. 162; Melker v. City of New York, 190 N. Y. 481; Cohen v. Mayor, 113 N. Y. 532; Von Lengerke v. City of New York, 150 App. Div. 98; Masterson v. Village of Mt. Vernon, 58 N. Y. 391; Hyman v. Barrett, 224 N. Y. 436; Dorr v. Town of Oyster Bay, 84 Hun, 510; 158 N. Y. 731; Fox v. Village of Manchester, 183 N. Y. 141.) The trial court erred in admitting incompetent prejudicial testimony. (Dudley v. Perkins, 235 N. Y. 448; Howard v. Norton, 65 Barb. 161; Edwards v. Dooley, 120 N. Y. 540; Stringham v. St. Nicholas Ins. Co., 37 How. Pr. 365; Joseph v. Struller, 25 Misc. Rep. 173; Flannery v. 15 West 44th St. Co., 193 App. Div. 63; Herschcowitz v. Kleinman, 227 App. Div. 62; Mitchell v. Gennis, 124 N. Y. Supp. 996; Clark v. Salinger, 153 N. Y. Supp. 219; Sanford v. Fountain, 49 Misc. Rep. 301; Stubley v. Allison Realty Co., 124 App. Div. 162.)

      Daniel Miner, William S. O’Connor, Clyde Dart and James B. Henney for Westchester County Small Estates Corporation, appellant.
    Plaintiff’s intestate was a trespasser or bare licensee, without right of recovery even though the alleged negligence of appellant was in a public highway. (Fairchild v. Leo, 149 App. Div. 31; Barker v. Gibraltar Credit Corp., 234 App. Div. 773; Bolden v. Independent Order of Oddfellows, 133 Wash. 270; Panken v. Holly, 146 App. Div. 947; Minnelli v. Marotta, 212 App. Div. 834; Mott v. Consumers’ Ice Co., 73 N. Y. 543; Timpson v. Allen, 149 N. Y. 513; Edwards v. Dooley, 120 N. Y. 540; Ridley v. National Casket Co., 161 N. Y. Supp. 444; Berlin Mills Co. v. Croteau, 88 Fed. Rep. 860; La Porta v. N. F. Cent. R. R. Co., 224 Mass. 100; Lar

      more v. Crown Point Iron Co., 101 N. Y. 391; Poock v. Strahl, 237 App. Div. 842; Fabisiak v. Empire Steel Partition Co., 228 App. Div. 665; Mendelowitz v. Neisner, 258 N. Y. 181; Davenport v. Oceanic Amusement Co., 132 App. Div. 368; Palsgraf v. Long Island R. R. Co., 248 N. Y. 339; Alabama Fuel Co. v. Bush, 204 Ala. 658.) No actionable negligence on the part of the Small Estates Corporation was shown. (Palsgraf v. Long Island R. R. Co., 248 N. Y. 339; Garbard v. B. & M. R. R. Co., 76 N. H. 556; Brenner v. L. E. & W. R. R. Co., 318 Ill. 11; Akers v. Chicago Ry., 58 Minn. 540; Murphy v. City of New York, 89 App. Div. 93; Morrison v. Hotel Butledge Co., 200 App. Div. 636; Walsh v. Fitchburg R. R. Co., 145 N. Y. 301; Woodruff v. Fisher, 17 Barb. 224; Giles v. Walker, 24 Q. B. Div. 656; Phalen v. Rae, 168 N. Y. Supp. 139; 184 App. Div. 922; United Transportation Co. v. Hass, 171 App. Div. 971; 222 N. Y. 623.)

      Thomas F. J. Connolly, William D. Sporborg, Jr., and Melville Ehrlich for respondent.
    The trespasser rule invoked by the Small Estates Corporation has no application. (Beck v. Carter, 68 N. Y. 283; Walsh v. Fitchburg R. R. Co., 145 N. Y. 301; Constantino v. Watson Contracting Co., 219 N. Y. 443; Ferrari v. N. Y. C. R. R. Co., 224 App. Div. 182; 250 N. Y. 527; Parnell v. Holland Furnace Co., 234 App. Div. 567; 260 N. Y. 604; Cavanaugh v. Peoples Gas & Electric Co., 234 App. Div. 402; Cleve v. Craven Chemical Co., 18 Fed. Rep. [2d] 711; Moore v. Dresden Investment Co., 162 Wash. 289; Hynes v. N. Y. C. R. R. Co., 231 N. Y. 229; Wittleder v. Citizens El. Ill. Co., 50 App. Div. 478.) A municipal corporation is liable for injuries sustained by reason of a public nuisance, the creation of which it- authorized, permitted or approved. (Melker v. City of New York, 190 N. Y. 481; McNulty v. Ludwig & Co., 153 App. Div. 206; Waldron v. City of Utica, 228 App. Div. 37.) The village of Scars-dale is liable to the plaintiff. (Schumacher v. City of New York, 40 App. Div. 320; 166 N. Y. 103; Lobravico v. City of New York, 155 App. Div. 184.)
   Lehman, J.

On the morning of December 17, 1931, the

dead body of the plaintiff’s intestate was found in a vacant house, which had been erected and was still owned by the Westchester County Small Estates Corporation. The dead body of the night watchman, employed by the owner, was found there at the same time. Both had been asphyxiated by illuminating gas. The gas did not escape from pipes on the premises. It must have come there from a leak outside. The evidence permits, if, indeed, it does not dictate, the inference that the gas escaped from a leak in a gas main at a point under a village street more than four hundred feet from the house. The gas main belonged to the Westchester Lighting Company and had been placed in the street by it. In January, 1931, Westchester County Small Estates Corporation, for the purpose of draining the basements and foundations of houses built by it in that neighborhood, obtained a permit to place a twelve-inch tile pipe drain under the surface of the street. At the point in the street where the tile pipe drain crossed the gas main, the Westchester County Small Estates Corporation encased the gas main in its pipe drain. During the night of December 16. it became evident that at that point there was a leak in the gas main. Inevitably gas escaping from the gas main into .the pipe drain would find exit into any sewer or drain connected with the pipe drain. After the discovery of the leak, the gas in the gas main was turned off but too late to prevent escape of the gas from such sewer or drain into the house where the dead bodies of the plaintiff’s intestate and of the watchman were found, the next day. An explosion wrecked another house near the same street. Upon a finding by the jury that the death of the plaintiff’s intestate was due to the negligence of the defendants, Village of Scarsdale and Westchester County Small Estates Corporation, in the construction of the tile pipe drain, judgment for the consequent damages has been entered against both.

The village of Scarsdale maintains and controls its streets. To the public using those streets it owes a duty to exercise care to keep them safe. It knows that, when it grants a permit to excavate the street, it sanctions the creation of a condition which may become a nuisance if the excavation is not properly guarded. If it authorizes or permits the creation of a nuisance, it is hable to a member of the public or to an abutting owner who thereby sustains damage. In issuing a permit for the opening of the village street and the construction of a pipe drain under its surface, the village of Scarsdale did not authorize the creation of a nuisance. The village acted within its rights, for the public benefit, in granting a permit for work which, if performed carefully and properly, would create no unreasonable danger to any person. Such danger arose only through the manner in which the work was performed, and the damage of which the plaintiff complains was not a result of the nature of the work which the village authorized, but flowed rather from the manner of its performance. The village did not perform the work, and any liability of the village must be based upon a finding that the village failed to perform some duty which the law imposes upon a municipal corporation charged with responsibility for the maintenance of streets and highways.

The cases in which liability of a municipal corporation has been sustained, for damages caused by the acts of a third party, in a public street, performed with the permission of the municipal corporation, may be divided into two groups. In the first group those cases fall in which the municipal corporation has joined in the creation of a nuisance by its attempted authorization of an act which is unlawful, regardless of the maimer of its performance, or an act which, though otherwise lawful, has a natural tendency to create such danger of injury to person or property that it might properly be found a nuisance either as matter of fact or matter of law. (Melker v. City of New York, 190 N. Y. 481.) ■ In such cases, liability may be sustained even though the damages were, in fact, caused by the negligence of the person who received the permit, and the municipal corporation had no notice or knowledge of such negligence. There the primary wrong was the permission to create a nuisance, which the municipal corporation had no power to authorize, and all the damages may be regarded as the consequences of that primary wrong.

In the second group those cases fall in which the municipal corporation granted a permit for work in its streets which was lawful, when authorized by the municipal corporation, and by its nature created no unreasonable danger of injury to person or property; but which became a nuisance thereafter or otherwise caused injury to person or property through the negligent manner in which the work was performed, and the city had knowledge or was charged with notice of the existence of the dangerous condition or of the negligent manner in which the work was performed. (Parks v. City of New York, 111 App. Div. 836; affd., 187 N. Y. 555; Saulsbury v. Braun, 223 App. Div. 555; affd., 249 N. Y. 618.) There the municipal corporation commits no wrong in granting the permit, and it is not responsible for the negligent acts of the person who has received the permit. It is responsible only for its own negligence in the maintenance of the street after it has notice of the existence of a danger therein. (Masterton v. Vil. of Mt. Vernon, 58 N. Y. 391.)

These distinctions are well established and run through all the cases. They are not challenged here. The permit of the village of Scarsdale to open the street and lay the drain under its surface was not, in itself, a wrong. The village is not hable unless it is charged with notice of negligence in the manner in which the work was performed or of danger arising therefrom. The village, when it gave the permit, had notice of the nature of the work to be performed. It could not close its eyes to the fact that an excavation in its street, unless properly guarded, creates a danger to the wayfarers. To that extent, a duty to inspect the work and to see that the public is properly protected, may reasonably be imposed upon the village. Here the death of the plaintiff’s intestate occurred many months after the excavation was closed. It was due to interference with the gas main laid under the surface of the street, rather than to the excavation in the street. The village was under no duty to assure itself by inspection that the gas mains were properly laid originally, or that thereafter the mains were not negligently disturbed. There liability of the municipality exists only where it has notice of the negligence, or the condition is apparent and the danger obvious.” (Fox v. Village of Manchester, 183 N. Y. 141, 148.)

It is said that here the village did, nevertheless, actually inspect the work, and that its inspector had notice that the work was negligently performed. It is true that the building inspector of the village did at times inspect the work, and there is evidence that he was told that the employees of Westchester County Small Estates Corporation intended to encase the gas main in its drain pipe at the point where the line of drain pipe crossed the gas main. It is also true that there is testimony that such construction is not in accord with good engineering practice because its obvious result is to reduce the capacity of the drain pipe. We assume, though that is disputed, that the building inspector was authorized to inspect and approve this method of construction. Even upon that assumption it does not follow that the village would be responsible for error made by him. The village was, as we have said, under no duty to the public to see that the gas mains are properly constructed. Notice to the building inspector of the manner in which the gas main would be encased at one point in the drain pipe was not notice of a condition which would create an obvious danger. The undisputed testimony is that such construction, though not in accord with good engineering practice, was not unsafe. The danger arose only from a leak in the gas main at that point, and the village had no notice that the gas main had been previously injured by careless handling or that there was any reasonable probability that a leak would develop at that point thereafter. It may be charged with notice' of conditions which would have been apparent upon such inspection as it actually made or which it should have made in the performance of its duty to maintain the street in a reasonably safe condition (Schumacher v. City of New York, 40 App. Div. 320; affd., 166 N. Y. 103), but here the village did not inspect the gas main to discover possible leaks, and was under no duty to make such inspection. It follows that the complaint against the village should have been dismissed.

The situation of the Westchester County Small Estates Corporation is different. It undertook to do the work of constructing the' drain, and it is responsible for the negligence of its servants and employees in the performance of that work. There is evidence that in the course of the work a laborer struck the gas main, and thereafter, without taking any steps to repair the consequent injury, the - defendant’s workmen encased the injured main within the drain pipe, although they had notice that the gas main had been injured. The evidence justified a finding by the jury that the leak in the gas main within the drain pipe was caused by the careless acts of the workmen, and that the death of the plaintiff’s intestate was the result of that leak. If the Westchester County Small Estates Corporation owed any duty of care to the plaintiff’s intestate, then it is liable to the plaintiff for the damage resulting from its negligence.

In applying for the permit to open the street and lay a pipe drain under its surface, the defendant voluntarily assumed the duty to exercise reasonable care in the performance of its work. Even if that duty were not voluntarily assumed, the law would impose it upon the defendant. Where, through the exercise of foresight, a reasonably careful person might anticipate danger to person or property, such danger may not be disregarded with impunity. The orbit of the danger as disclosed to the eye of reasonable vigilance would be the orbit of . the duty.” (Palsgraf v. Long Island R. R. Co., 248 N. Y. 339, 343.) The duty is owed to all who come within the zone of the danger, and for damages suffered through disregard of the duty, the injured person is entitled to compensation.

In this case it is plain that by the exercise of reasonable vigilance, the defendant might have anticipated that gas might leak from a break in the injured gas main at the point where it was encased in the pipe drain, and that the escaping gas might find its way into a public sewer or a farm drain in the street and from there into houses along the street, and endanger fife or property in such houses. Ordinary foresight would suffice for that, but no foresight, however extraordinary, would have enabled the defendant to determine when, where or how such injury would occur. The orbit of danger was undefined, both in time and space. In fact, no damage .resulted from the negligent act for almost a year, and then the damage occurred almost simultaneously in two separate houses at considerable distance from each other and from the point of the leak. None the less, the damage was the result of a danger which could have been anticipated by the exercise of reasonable foresight.

The defendant claims that even though all this be true, the plaintiff cannot recover, because the decedent was a trespasser and, therefore, outside the range of any duty which the defendant may have owed to others. The plaintiff has produced no evidence to explain the presence of the decedent in the defendant’s house. Though the trial judge submitted to the jury a question of whether the decedent was there upon the implied invitation of the defendant, the evidence fails to show any facts which would support an inference that the decedent was there upon the invitation of the defendant, or even with the knowledge or permission of the defendant. We assume upon this appeal that the plaintiff’s intestate’s death occurred while he was technically a trespasser upon the defendant’s property. The question then arises whether through that fact the defendant gains immunity for damages resulting from its lack of care.

Doubtless, at times, the relationship of parties may determine both the duty of one to the other and liability or immunity for wrong done. So an occupier or owner of land owes varying duties to trespassers, to licensees, and to persons upon the land on bis invitation. “ Toward mere trespassers or bare licensees the rule is well settled that the only duty owing to them by the owner or occupier of land is to abstain from inflicting intentional, wanton or willful injuries.” (Mendelowitz v. Neisner, 258 N. Y. 181, 184.) That was said in a case where a trespasser was injured through the dangerous condition of the premises on which the plaintiff had entered without permission. That condition could cause injury only to those who come upon the land. An owner of land has a right to use his land as he sees fit, at least provided such use causes no danger to others. He may at his pleasure invite or exclude others. If without permission or exclusion, a stranger unlawfully intrudes upon the land, he voluntarily exposes himself to the risk of unsafe conditions existing thereon or of dangerous activities conducted there. (Cf. Pollock on The Law of Torts [13th ed.], p. 182. ^ In the present case the death of the plaintiff’s intestate was due to a wrongful act of the owner of the land performed in a public street many months before the decedent trespassed upon the land. The rule that an owner of land is not liable to a trespasser upon his land for failure to exercise ordinary care should not be extended so far as to confer immunity upon the defendant for damages caused by his wrong under the circumstances shown here.

The rule of immunity of an owner of land for damages suffered by a trespasser has not been extended to cases where the injured person was a trespasser upon land of a person other than the wrongdoer. It has been confined. at least in this State, to cases where a trespasser sought to enforce liability upon a landowner or occupier of land for an act or omission by him upon his own land which causes danger to persons coming upon his own land. Any ordinary use of land by its owner is lawful, except in so far as it causes danger or injury to persons present upon the land, and no person by unlawfully intruding upon the land of another, can, by his own wrong, change an act which would otherwise have been lawful into a wrong towards himself.

The question is not before us whether an owner of land is liable to a trespasser for an injury resulting immediately and directly from an act carelessly performed in a public street or other place, where the zone of danger is confined to persons then upon his land. (Cf. Alabama Fuel & Iron Co. v. Bush, 204 Ala. 658.) In this case, as we have said, the zone of danger was undefined both in time and space. Injury followed many months after the defendant’s act was completed. Then the result was not only the death of plaintiff’s intestate in a house owned by the defendant, but also the damage to a house not owned by the defendant. If the death of plaintiff’s intestate had occurred while he was trespassing there, the plaintiff’s right to recover would have been clear. The circumstance that at the time when the defendant’s lack of care caused the death óf plaintiff’s intestate, the vacant house in which he was a trespasser would still be unsold and unoccupied, could not have been known to the defendant when it was working in the street. It did not affect the duty which the defendant then owed to all who might thereafter come within the zone of danger. The act was wrongful at the time it was performed. Liability for the wrong, it is urged, is escaped because accidentally it produced injury at a particular point in the zone of danger, and at a particular time, though liability for the same wrong would have been inevitable if injury had been produced at a different place or time. In a similar case we have said that “ rights and duties in systems of living law are not built upon such quicksands.” (Hynes v. N. Y. Central R. R. Co., 231 N. Y. 229, 233. The construction of a pipe drain in a public street in a manner which created danger to person or property in nearby houses, constituted a wrong. For injury resulting at any time to any person within the zone of danger, the law gives redress. A trespasser in a house belonging to the defendant may have assumed the risk that the defendant’s use of its land might endanger persons thereon. He did not assume the risk that such danger would arise from a condition existing several hundred feet away in the public street, heedlessly created by the defendant or any other person.

— As to the village of Scarsdale the judgment of the Appellate Division and that of the Trial Term should be reversed and the complaint dismissed, with costs in all courts, and as to Westchester County Small Estates Corporation the judgment should be affirmed, with costs.

Crane, Ch. J., O’Brien, Hubbs, Loughran and Finch, JJ.,' concur; Crouch, J., concurs as to the village of Scarsdale, but dissents as to affirmance of judgment against Westchester County Small Estates Corporation, on the ground that the creation of the sewer was part of its activities intimately connected with the erection and ownership of the house "and, therefore, that the mere location of the negligent construction away from but connected with the premises, where its effect was bomid to be manifested, was not sufficient to change the general rule of liability to trespassers. (American Law Institute, Restatement of the Law of Torts, § 333.)

Judgment accordingly.


author: Crane, Ch. J.

text:
    Senwald Holding Corporation, Respondent, v. Rosoff Subway Construction Company, Inc., Appellant, Impleaded with Another.
    (Submitted October 22, 1935;
    decided November 20, 1935.)

      Jacob I. Goodstein for appellant.
    The plaintiff failed, as a matter of law, to establish any facts which would vitiate the release. (Ochs v. Woods, 221 N. Y. 335;
      Ressler v. Samphimore Holding Corp., 201 App. Div. 344; Brackett v. Griswold, 112 N. Y. 454; Arthur v. Griswold, 55 N. Y. 400; Trowbridge v. Oehmsen, 207 App. Div. 740; 241 N. Y. 564; Renard v. Grenthal, 81 Misc. Rep. 135; Adams v. Clark, 239 N. Y. 403; Crossways Apartments Corp. v. Amante, 213 App. Div. 430; Benedict Co. v. McKeage, 201 App. Div. 161; Barbrick v. Carrero, 184 App. Div. 160; Taylor v. Commercial Bank, 174 N. Y. 181; Gotteberg v. Park Terrace Co., 168 App. Div. 800; 222 N. Y. 600.) Plaintiff did not rely upon the representations, nor was it induced thereby to execute the release. (Brackett v. Griswold, 112 N. Y. 454; McNamara v. Eastman Kodak Co., 232 N. Y. 18.) There was no proof of any concealment by the appellant. (Hogan v. Producers1 Development Co., 200 App. Div. 29.)

      Josiah A. Stover for respondent.
    The statements of the defendant-appellant’s engineer were not mere expressions of opinion but representations made by an expert in building construction upon which the plaintiff’s officers had a right to rely. (Drake v. Grant, 4 N. Y. Supp. 899; Indianapolis, Peru & C. Ry. Co. v. Tyng, 63 N. Y. 653; Simpson v. Case Threshing Mach. Co., 170 N. Y. Supp. 166; Morgan v. Skiddy, 62 N. Y. 319; State ex rel. St. Louis & S. F. R. Co. v. Danes, 290 S. W. Rep. 425; Conlon v. Roemer, 52 N. J. L. 53.) The plaintiff’s officers were ignorant of the fact at the time of the execution of the general release that substantial damage had been done to the plaintiff’s building. (People v. Townsend, 133 Misc. Rep. 843; Ladd v. Chicago & R. I. R. R. Co., 155 Pac. Rep. 943; Parrott v. Atchison R. R. Co., 207 Pac. Rep. 777; Madison Trust Co. v. Hetlekson, 257 Wis. 691.) It is not material whether the defendant-appellant’s engineer knew the representations made by him to the plaintiff’s officers to be false. (Abel v. Paterno, 281 N. Y. Supp. 58; First Nat. Bank v. Level Club, 241 App. Div. 433; Brackett v. Griswold, 112 N. Y. 454; Bennett v. Judson, 21 N. Y. 238; Brown v. Post, 1 Hun, 303; 62 N. Y. 651; Baker v. Lever, 67 N. Y. 304; Delano v. Rice, 23 App. Div. 327; Dambmann v. Schulting, 75 N. Y. 55; Hudson Iron Co. v. Mershon, 149 App. Div. 556; Kirchner v. N. H. S. M. Co., 135 N. Y. 182; Albany City Sav. Inst. v. Burdick, 87 N. Y. 39.)
   Crane, Ch. J.

The plaintiff respondent owned a three-story building on the northeast corner of West Broadway and Lispenard street, borough of Manhattan, city of New York. The defendant appellant in 1927 contracted with the city to construct a subway along Sixth avenue, Church street, West Broadway and other streets, including West Broadway at its intersection of Lispenard street. The subway was built and one of the retaining walls ran near to the plaintiff’s site. Some damage was done to the building, the walls cracked or bulged in places and the building itself encroached upon West Broadway a few inches. This action has been brought against the contractor to recover this damage which has been fixed by the judgment below in the sum of $1,750. The defendant’s contract with the city provided that the contractor at his own expense will make good any damage that shall in the course of construction be done to any foundations, walls or other parts of adjacent buildings.

The question presented on this appeal is the effect of the general release which the plaintiff gave to the defendant. The answer of the defendant pleaded this release as a separate and distinct defense, to which the plaintiff replied that it executed the release upon the false and fraudulent representation of the defendant’s engineer, that no damage had been done to the premises, and that he failed to state to the plaintiff that the building had moved westerly, becoming an encroachment upon the public highway. The giving of the general release is conceded. The false representation which procured it is alleged to be the statement of the engineer that the building or premises had not been damaged, and the failure to disclose to the plaintiff that the building had become an encroachment in the street. There is no evidence in the record upon which a court is justified in setting aside this release for false representations. The reverse appears by the testimony of the plaintiff and its witnesses. The release was given for a consideration for the settlement of the damage which the plaintiff knew had been caused the building. A brief review of the evidence will show the plaintiff’s knowledge and the plaintiff’s settlement of all claims against the defendant.

On April 13, 1929, the Board of Transportation of the city of New York wrote to Dr. Bernard Waldman, secretary of the plaintiff, as follows: Receipt is acknowledged of your letter of March 29th, 1929, enclosing a copy of your letter of December 18th, 1928, addressed to the Rosoff Construction Co. relative to the alleged dangerous condition of premises 1 Lispenard Street and 281 West Broadway.”

Extracts from the engineer’s report regarding the damage to the building were set forth in the letter. It said in part: “ On account of the proximity of the subway excavation some protection was necessary, and the Contractor therefore constructed a retaining wall between the buildings and the subway neat line. While this work was in progress there was considerable settlement, varying from a total of 5" at the corner of Lispenard Street and West Broadway to 1" at the north lot fine of #281 West Broadway. As a result of this settlement there was some cracking of the walls of both buildings, although very much less than usually takes place when a settlement is as great as there was in this case. * * * As stated above, both buildings are very old and the damages done to them by the subway work is, on account of their originally poor condition, relatively small.’ ”

It thus appears that two years before the giving of the general release the plaintiff knew that its buildings were damaged. The date of the general release is May 25, 1931, signed by this secretary, Bernard Waldman, and Philip Sencer, president. On the 5th of April, 1930, the plaintiff, by Waldman, wrote to the Board of Transportation asking when it would be convenient to make a re-examination of the buildings, and on the same day wrote to the Rosoff Subway Construction Company, Inc., agreeing to pay forty dollars for the removal of cellar doors extending from the West Broadway building line. The cellar area is to be filled in; built up and covered with new sidewalk, to conform with the adjacent sidewalk.”

The plaintiff placed the matter in the hands of Attorneys Tolins & Jakobson, who wrote the defendant on July 25, 1930, the following letter: “ The owners of premises 1 Lispenard Street, and 281 West Broadway, New York City, have requested us to take up with you their claim for damages to their respective buildings at said addresses, caused by your subway operations.

“ If you feel disposed to discuss this matter with us, looking toward an amicable adjustment, we should be pleased to see your representative by appointment with us.”

Later a plumber, Frederick Fruiesen, was employed by the plaintiff to do plumbing work in these buildings for which he presented a bill to the owner for $305.85. The plaintiff refused to pay it and the plumber threatened suit. The plaintiff believed that some of the work was due to the subway construction, and the president, Philip Sencer, and Waldman took it up with the defendant. At a meeting in conference then held it was agreed that the plaintiff should pay $125 of this bill and that Rosoff Subway Construction Company, Inc., would pay the balance and have the suit discontinued which Fruiesen had brought.

A letter of July 2, 1931, to the attorney for the defendant, written by Bernard Waldman, shows that the plumber’s action was to be defended in accordance with arrangements made with the officials of the Rosoff Construction Company. As a result of these conferences the whole damage to the building was taken up for a consideration for both Sencer and Waldman testified that the defendant’s chief engineer, Stiefel, examined the building with them and was told of the cracks and bulging. Sencer’s testimony is as follows:

“ I said, ‘ By the way, Mr. Stiefel, let us go around the corner, and look at the building.’ He said, ‘ There is nothing to that building.’ They took me back to Canal Street, and showed me the building across the street. He said, ‘ Do you see the crack? That crack is in there thirty years, that building will outlive me and outlive you, the same as the crack around your building; there is nothing to worry about. Forget about it.’
Q. Well, did he say anything to you as to whether or not the building had moved? . A. No.”

Dr. Waldman testified that at the conference in reference to the plumber’s bill there was a discussion as to the condition of the building: “ Mr. Sencer discussed the condition of the building and Mr. Stiefel said everything was O. K., everything had been taken care of, and if at any future date he found there was anything-wrong with the building, the Eosoff people were a reputable organization, that they would take care of it.”

Thereafter the general release was given, dated May 25, 1931, for whichfthe plaintiff received a check dated May 18, 1931, for $152.93. This check, payable to the Senwald Holding Corporation, passed through the clearing house on the payee’s indorsement May 27, 1931. This check had nothing to do with the plumber’s bill. The defendant in its testimony says that the figure agreed upon in these conferences for the settlement of all damage was this figure of $152.93 which was paid at the time the release was given and the cancellation of the forty dollar bill which the defendant had against the plaintiff for fixing the cellar doors as per the letter of April 5, 1930, above quoted. Sencer and Waldman failed to explain the receipt of this check. Sencer testifies in reference to the execution of the release that a gentleman brought it to him and that he called up Dr. Waldman and said: So I told him that this party wants me to sign it, and he will straighten out the plumber’s bill. He said, ' Go ahead and sign it.’ * * * I signed it. * * * He (the gentleman) said to me, £ This is a thing we want to get straightened out with everybody downtown here.’ I said, £A11 right.’ The only thing that could be straightened out with everybody downtown was the damage done adjoining buildings by the subway construction.”

I have said that this check received by the plaintiff at the time the release was given, of $152.93, had nothing whatever to do with the plumbing bill. It was paid for the release. All through the testimony Sencer and Waldman testify that they agreed that the plaintiff corporation would pay $125 on the plumber’s bill and that the defendant would take care of the rest. Of this there is not the least dispute, and their arrangement was carried out. On July 20, 1931, or two months after the giving of the general release and the receipt of the check for $152.93, the plaintiff mailed its check for $125 to the defendant or its attorney in payment of its portion of the plumbing bill, and on the same day wrote a letter to the attorney, signed by Waldman, in which it was stated, ££ Enclosed you will find check for the sum of One Hundred and Twenty Five Dollars, for which you will please send me a release in the action of Fruiesen vs. Senwald Realty Corp.”

To summarize: Fruiesen, the plumber, had a bill against the plaintiff. The defendant agreed to pay part, and the plaintiff agreed to pay $125 of the bill. This transaction was carried out by the plaintiff paying this amount on July 20, 1931. Prior thereto, and on May 25, 1931, the plaintiff had received from the defendant a check for $152.93, and had given a general release wherein it released the defendant from any and all causes of action on claims of whatsoever nature and kind ££ which it or its successors hereinafter can, shall or may have for, upon or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of these presents, and particularly on account of any damage to premises No. 1 Lispenard Street and /or No. 281 West Broadway, Borough of Manhattan, City of New York, or any damage whatsoever in connection with, on account of, or as a result of the construction of Route 101, Sections 3 and 4 of the Independent System of Municipal Rapid Transit Railroad.” This release, as above stated, was signed by Bernard Waldman, secretary and treasurer, Philip Sencer, president.

That there can be no mistake regarding these facts appears from the testimony of Dr. Waldman:

“ Q. What became of the $152.93? A. That was deposited in the account of the Senwald Holding Corporation, when Mr. Sencer signed the release on May the 18th, 1931.
“ Q. Well, did you ever pay out any of it? A. One-hundred twenty-five dollars.
Q. Then you did not pay half [of plumber’s bill], you only paid the difference between $125 and $152.93? A. Yes, sir.”

I, therefore, return to what was stated at the beginning of this opinion: The charge of fraud and want of consideration is not made out. The plaintiff was not deceived into believing that no damage had been done to its building. There was money consideration for the release; that paid at the time the release was given, the cancellation of the forty dollars due the defendant from the plaintiff, to say nothing of the part payment made by the defendant on the plumber’s bill. That Stiefel failed to tell Sencer or Waldman that the building had moved a few inches over the sidewalk constitutes no fraud. He was under no duty to inform the plaintiff of all the particulars in which the building was damaged or to make a survey for it. Besides, there is no evidence that Stiefel knew this fact.

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

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

Judgments reversed, etc.


author: Htjbbs, J.

text:
    William Ramsey, Appellant, v. New York Central Railroad Company, Respondent.
    (Argued October 23, 1935;
    decided November 20, 1935.)

      William J. Flynn for appellant.
    The defendant could not by its deliberate violation of the Interstate Commerce Commission order change its status and thrust a new master upon its operator, so as to shield itself from liability to the plaintiff. (Murray v. Union R. R. Co., 229 N. Y. 110; Doran v. N. Y. C. I. R. R. Co., 239 N. Y. 448; Costigan v. N. Y. & S. R. R. Co., 160 App. Div. 597; Miller v. International Harvester Co., 193 App. Div. 258; Miller v. City of Rochester, 196 App. Div. 853; Wyllie v. Palmer, 137 N. Y. 248; Hallett v. N. Y. C. & H. R. R. R. Co., 167 N. Y. 516; Wolfe v. Mosler Safe Co., 139 App. Div. 848; Wirth v. General R. Signal Co., 136 App. Div. 536; Muldoon v. City Fireproofing Co., 134 App. Div. 453; Reed v. Met. St. R. R. Co., 58 App. Div. 88; Baldwin v. Abraham, 57 App. Div. 67; Standard Oil Co. v. Anderson, 212 U. S. 215; Higgins v. W. U. Tel. Co., 156 N. Y. 75; Cowell v. Saperston, 149 App. Div. 373 ; 208 N. Y. 619; Ford v. Arbuckle, 107 App. Div. 221; Wright Steam Engine Works v. Lawrence Cement Co., 167 N. Y. 440; Casey v. Davis & Ferber Machine Co., 209 N. Y. 24; Genovesia v. Pelham Operating Co., 130 App. Div. 200; McNamara v. Leipzig, 227 N. Y. 291; Charles v. Barrett, 233 N. Y. 127; Meade v. Motor Haulage Co., 233 N. Y. 527; Cannon v. Fargo, 222 N. Y. 321.)

      Mark N. Turner and Raymond C. Vaughan for respondent.
    At the time of the accident the crane operator was a servant of the consignee and was not a servant or employee of the defendant. (Denton v. Yazoo & M. V. R. Co., 284 U. S. 305; Standard Oil Co. v. Anderson, 212 U. S. 215; Columbus & G. Ry. Co. v. Owens, 121 So. Rep. 265; Linstead v. Chesapeake & Ohio Ry. Co., 276 U. S. 28; Rockwell v. Grand Trunk Western Ry. Co., 250 N. W. Rep. 515; Rau v. Wilkes Barre & E. R. Co., 311 Penn. St. 510; Harrell v. Atlas Portland Cement Co., 250 Fed. Rep. 83; The Elton, 142 Fed. Rep. 367; The Maude, 169 Fed. Rep. 487; The Joseph John, 86 Fed. Rep. 471; The Commandant, 23 Fed. Rep. [2d] 100.) The rules and regulations of the tariff have the force and effect of Federal statutes and a judgment cannot be rendered against the defendant contrary to such rules and regulations without imposing an undue burden upon interstate commerce in violation of the commerce clause of the Constitution of the United States and without denying defendant the equal protection of the laws in violation of the Fourteenth Amendment to the Constitution of the United States. (N. Y. C. & H. R. R. R. Co. v. York & Whitney, 256 U. S. 406; P., C., C. & St. L. Ry. Co. v. Fink, 250 U. S. 577; Great Northern Ry. Co. v. Hyder, 279 Fed. Rep. 783; N. Y. C. R. R. Co. v. Federal Sugar Refining Co., 235 N. Y. 182; N. Y. C. R. R. Co. v. Warren Ross Lumber Co., 234 N. Y. 261; Penn. R. R. Co. v. Titus, 216 N. Y. 17; N. Y. C. R. R. Co. v. Sharp, 124 Misc. Rep. 265; Burke v. Union Pacific R. R. Co., 226 N. Y. 534; Metz Co. v. B. & M. R. R. Co., 227 Mass. 307; Georgia, F. & A. R. R. Co. v. Blish Milling Co., 241 U. S. 190; Minturn v. N. Y. C. R. R. Co., 220 App. Div. 222.)
   Htjbbs, J.

This is an action to recover damages because of a personal injury. Appellant was an employee of the Kenmore Construction Company which was engaged in the construction of a prison at Attica, New York. At the time of his injury, appellant was engaged with two other employees of the Kenmore Company in transferring from the respondent’s yard at Attica certain fabricated steel backs for prison cells, which measured about nine by six feet and weighed between six and seven hundred pounds each.

The cell backs were shipped to Attica by freight and were loaded on a gondola car located on one of the respondent’s side tracks. Respondent owned a crane which was placed on a flat car and was in charge of and operated by one of its servants. The crane was the ordinary railroad crane with a boom about thirty feet long. A cable ran from the drum up over the end of the boom and at the end of the cable a shackle was attached. The method employed in unloading the cell backs was to fasten the shackle on to the cell backs one at a time as they rested on the car, to then raise them until they reached a position higher than the side of the car, swing the boom so that the cell backs would swing free of the side of the car and lower them to the ground. At the time appellant was injured, one cell back had been unloaded and placed on the ground. He was on the ground leveling it up so that the next one to be unloaded could be placed on top of it. He was on his knees leaning over and in that position could not see the movement of the crane or its operator. While he was in that position, a cell back was lifted from the car higher than its side. The operator started to lower the cell back to the ground. In coming down the end of the cell back hit a lug on the side of the car which released it from the shackle and it fell and seriously injured appellant. He was in full view of the crane operator but he did not receive any warning. It was the duty of the crane operator to swing the boom out from the side of the car so that the cell back would clear the side of the car. The evidence raised a question of fact as to the negligence of the operator of the crane.

The learned trial court decided as a matter of law that the operator of the crane was not at the time a servant of the respondent but that he and the crane had been loaned to the Kenmore Company, appellant’s employer, and that the operator was at the time a special servant of that company. A verdict was directed in favor of respondent and the judgment based thereon has been affirmed by the Appellate Division by a divided court.

The shipment of cell backs was an interstate shipment, shipped at the carload lots rate. A tariff provision of the Interstate Commerce Commission, section 1 of rule 27 of the official classification in effect at the date of the shipment, reads: “ Owners are required to load into or on cars freight for forwarding by rail carriers, and to unload from cars freight received by rail carriers, carried at carload ratings.”

The contention of respondent which has thus far been sustained is that the tariff provision had the effect, as a matter of law, to change the status of the crane operator, respondent’s servant, and make him for the time the special servant of the Kenmore Company.

Prior to the day of the accident over forty cars of cell backs had been unloaded from cars by the use of the same crane and operator. The crane and its operator were furnished by respondent, the Kenmore Company having nothing to do with the crane or its operator or with the shifting of cars. Respondent’s local agent notified the Kenmore Company where the cars were to be placed for unloading. The crane operator told the men when to stop work. The Kenmore Company did not pay or agree to pay any part of the crane operator’s wages or share in any way the expense of operating the crane. The crane operator was a regular employee of respondent and his wages were paid by it.

The liability of an employer for damages caused by the negligence of a servant rests upon the doctrine of respondeat superior, which makes a master liable for injuries resulting from the negligent acts of a servant done within the scope of his employment in the master’s service. If, at the time of an injury, the servant negligently causing the injury, is not in the service of his employer, the principle is not applicable and the employer is not liable, but a special master, one in whose service the servant at the time is engaged, may be hable.

The question presented in the case at bar is, who was the master at the time of the injury, the respondent railroad company or the Kenmore Company? The determination of the question of who -was the master at a particular time is sometimes a question of law. More often it presents a question of fact to be decided by a jury under instructions from the court upon the legal principles applicable. The test for determining who is liable for the negligent acts of a servant, the general master or one to whom the servant has been loaned or hired, has been stated in various ways. The general principles applicable are comparatively simple. The trouble comes in applying those principles to the varying facts of particular cases.

This court, in Wyllie v. Palmer (137 N. Y. 248, 257), quoted with approval from Shearman and Redfield on The Law of Negligence as follows: “ He is to be deemed the master who has the supreme choice, control and direction of the servant, and whose will the servant represents, not merely in the ultimate result of his work but in all its details.” (Cf. Cannon v. Fargo, 222 N. Y. 321; McNamara v. Leipzig, 227 N. Y. 291; Bartolomeo v. Bennett Contracting Co., 245 N. Y. 66.)

The ad hoc principle has been applied in many cases by this court. An examination of those cases will disclose that the court has consistently enforced the rule that the servant of one master to become, for the time being, the servant of another must pass out of the direction and control of the former into that of the latter.” (Cannon v. Fargo, supra, p. 328.)

Applying those principles to the facts in this case it seems clear that the crane operator at the time of the accident was the servant of the respondent and not the servant of the Kenmore Company. The direction and control remained with the respondent. It had the supreme choice.” The operator of the crane represented its will in the ultimate result of his work and in all of its details. The fact that the employees of the construction company helped in the work and gave directions from time to time as to details did not change the relationship and make the operator of the crane the special servant of the construction company. (Bartolomeo v. Bennett Contracting Co., supra; Standard Oil Co. v. Anderson, 212 U. S. 215.)

While the general principles of law applicable are not seriously questioned by respondent, it is earnestly contended that they are not applicable to the facts in this case as the tariff provision of the Interstate Commerce Commission above quoted, which has the force of law, made the construction company the master of the crane operator at the time and as the duty rested upon the construction company to unload the car, the operator of the crane was engaged in the work of the construction company and not in that of the railroad company.

It is pointed out that the tariff provision made it illegal for the respondent railroad company to do the work of unloading the car and that it must be presumed that it was not engaged in doing an illegal act. It is hard to see the distinction. So far as the legality of its act is concerned, what difference does it make whether we say it was unloading the car itself or that it loaned the crane and its operator to the construction company to do the work? In either case, it retained the absolute control of its machinery and its operator.

The fact is undisputed that the respondent’s crane was being operated by its servant over whom it retained complete control. The rule of the Commission cannot change the facts. It would be strange indeed if the respondent, by violating the rule of the Commission could by such violation or by loaning its servant to the construction company change its relation to the employee and make such employee the servant of the construction company without the consent of the servant or of the construction company, either expressed or implied. (Murray v. Union Ry. Co., 229 N. Y. 110; Doran v. New York City Interborough Ry. Co., 239 N. Y. 448.)

The respondent places its principal reliance upon the case of Denton v. Yazoo & M. V. R. R. Co. (284 U. S. 305). We do not find anything in that case in conflict with the view which we have expressed. In that case a government postal clerk was injured through the negligence of a railroad employee while assisting in handling mail. At the time of the accident, the railroad employee was assisting in transferring mail under the direction of a United States postal transfer clerk and was not under the direction or control of the railroad company. A statute and regulation of the Postmaster General required the railroad to furnish men to transfer mail “ under the direction of the transfer clerk.” The court decided that the work being done at the time was not the work of the railroad company, but the work of the government being done under the supervision and control of the transfer clerk who- had power to supervise and control.

The case of Linstead v. Chesapeake & Ohio Ry. Co. (276 U. S. 28) is to the same effect. The case of Rockwell v. Grand Trunk Western Ry. Co. (264 Mich. 626) in its facts is very much like the case at bar. In that case a majority of the court reached the conclusion that the servant of the railroad company operating the crane which was being used in unloading steel from a car had become the servant of the consignee of the freight. The decision was based squarely upon the rule of the Interstate Commerce Commission above quoted. The court decided that the defendant railroad company was not unloading the car in violation of the rule of the Commission but that it had loaned its crane and operator to the consignee of the freight. There was a vigorous dissenting opinion, the reasoning of which impresses us as stating the rule more in accord with our own decisions.

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

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

Judgments reversed, etc.


text:
    The General Accident, Fire and Life Assurance Corporation, Ltd., of Perth, Scotland, et al., Respondents, v. The Zerbe Construction Company, Inc., Appellant.

      (Submitted October 25, 1935;
    decided November 20, 1935.)

      Everett W. Bovard and Leo Potts for appellant.
    The cause of action of the insurance company alleged in the complaint cannot be maintained in the courts of this State. (United States F. & G. Co. v. Graham & Norton Co., 254 N. Y. 50; Lang v. Brooklyn City R. R. Co., 217 App. Div. 501; 247 N. Y. 551; Travelers Ins. Co. v. Brass Goods Mfg. Co., 239 N. Y. 273; Matter of Zirpola v. Casselman, Inc., 237 N. Y. 367; Matter of Proper v. Polley, 259 N. Y. 516; Matter of Cameron v. Ellis Const. Co., 252 N. Y. 394; Matter of Whitmire v. Blaw-Knox Const. Co., 263 N. Y. 675; Schubert v. Finkelstein, 244 N. Y. 583; Miller v. N. Y. Railways Co., 171 App. Div. 316; Baeringer v. City of N. Y., 212 App. Div. 857; Herzog v. Stern, 264 N. Y. 379; Fitzpatrick v. International Ry. Co., 252 N. Y. 127; Hartford Accident & Indemnity Co. v. Chartrand, 239 N. Y. 36; Jensen v. Southern Pacific Co., 244 U. S. 205; International Stevedoring Co. v. Haverty, 272 U. S. 50; Dahl v. Robbins Dry Dock & Repair Co., 266 U. S. 449; Globe Indemnity Co. v. Atlantic Lighterage Corp., 244 App. Div. 97; Ætna Life Ins. Co. v. Moses, 287 U. S. 530; Travelers Ins. Co. v. Lee & Simmons, Inc., 241 App. Div. 835.) If the plaintiffs are entitled to the benefits of the Connecticut statutes, then the defendant is also entitled to the benefits of the same statutes. (Massolini v. Driscoll, 114 Conn. 546; Pascoal v. Mortensen, 109 Conn. 39; Fox v. Fafnir Bearing Co., 107 Conn. 189; Crane v. Peach Bros., 106 Conn. 110; Bello v. Notkins, 101 Conn. 34; Bogoratt v. Pratt & Whitney, 114 Conn. 126; Palumbo v. Fuller, 99 Conn. 353.) Plaintiffs failed to establish any liability of the defendant. (Quigley v. Thatcher, 207 N. Y. 66.)

      Daniel Mungall, Ralph O. L. Fay and James A. Nooney for respondents.
    The appeal as to the respondent insurance company should be dismissed because of the unanimous affirmance rule. (De Santis v. Lager, 255 N. Y. 562; 257 N. Y. 476.) The proof established one cause of action with an equitable interest in the insurer in the workman’s recovery. (Phœnix Indemnity Co. v. Staten Island R. T. Ry. Co., 251 N. Y. 127; 281 U. S. 98;
      Travelers Ins. Co. v. Padula Co., 224 N. Y. 397; Casualty Co. v. Swett Electric Light & Power Co., 174 App. Div. 825; Travelers Ins. Co. v. Brass Goods Mfg. Co., 239 N. Y. 273; Roecklein v. American Sugar Ref. Co., 222 App. Div. 540; Travelers Ins. Co. v. Peet & Powers, 212 App. Div. 814; 241 N. Y. 617; U. S. Casualty Co. v. Chiefetz, 232 App. Div. 155; Royal Indemnity Co. v. White Eng. Corp., 120 Misc. Rep. 332; Lumber Mut. Cas. Ins. Co. v. Thompson, Inc., 134 Misc. Rep. 370; Matter of Hertell, 135 Misc. Rep. 36; Loucks v. Standard Oil Co., 224 N. Y. 99; Hartford Accident & Indemnity Co. v. Chartrand, 239 N. Y. 36; Lassell v. City of Gloversville, 217 App. Div. 323; Drinkwater v. Dinsmore, 80 N. Y. 390.) The common law liability of the defendant was fully established by the undisputed proof. (Maleeny v. Standard Shipbuilding Corp., 237 N. Y. 250; Huston v. Dobson, 138 App. Div. 810; Fuller v. Mulcahy & Gibson, 164 App. Div. 829; Lyons v. McNulty Bros., 77 Misc. Rep. 176; Ross y. Delaware, L. & W. R. R. Co., 231 N. Y. 335.)
   Lehman, J.

The plaintiff Joe Yanish, a resident of the State of Connecticut, hired in Connecticut by an employer resident there, was injured in an accident while temporarily working for his employer in the State of New York. Because the accident arose out of and in the course of his Connecticut employment, the injured workman filed a claim in that State under its Workmen’s Compensation Law and received an award there for his injuries. The award was paid by the insurance carrier, General Accident Fire and Life Assurance Corporation, Ltd. Then the injured workman and the insurance carrier, claiming that the injuries to Joe Yanish were caused by the negligence of the defendant, who is not the employer of Yanish, joined as plaintiffs in bringing this action against the defendants. In the complaint they set up, first, a cause of action in favor of the insurance carrier for the amount of the award against it, and second, a cause of action in favor of the injured workman, and they demand separate judgments on each cause of action. A judgment against the defendant in favor of the plaintiff General Accident Fire and Life Assurance Corporation, Ltd., in the sum of $843, and in favor of Joe Yanish in the sum of $1,500, was modified by the Appellate Division by reducing the amount of the recovery of the plaintiff Joe Yanish to the sum of $1,172.50.”

Under the Workmen’s Compensation Law of the State of Connecticut, where an employee sustains injuries, an employer or an insurance carrier may bring an action against a person, other than the employer, who is under a legal liability to pay damages in respect to such injuries. Recovery is limited to the compensation paid by the employer or insurance carrier, or which by an award the employer or carrier is obligated to pay. The employee also has a right of action, but the statute contemplates and makes provision for the joinder of an employee and employer in a single action in which the damages should be apportioned. If the Connecticut statute can be given effect outside of that State and is applicable in an action brought in this State, then the two plaintiffs properly pleaded separate causes of action and joined them in a single complaint.

The accident occurred here. The action has been brought here, and the right of the plaintiffs to maintain this action must be determined under the law of this State. (Cf. American Law Institute, Restatement of the Law of Conflict of Laws, §§ 378 and 588; Herzog v. Stern, 264 N. Y. 379.) Under the law of this State, a cause of action to recover damages for a personal injury cannot be transferred (Pers. Prop. Law [Cons. Laws, ch. 41], § 41), and cannot be split up. ( United, States F. & G. Co. v. Graham & Norton Co., 254 N. Y. 50.) The common law right of the injured employee to bring an action for the recovery of all the damages for personal injuries caused by the defendant remains unimpaired by the Connecticut statute, and the insurance carrier has no independent cause of action. For that reason the defendant urges upon this appeal that the judgment in favor of the insurance carrier should be reversed.

In form the complaint is defective, and a judgment in favor of the insurance carrier upon a divided cause of action is erroneous. The question remains whether the defendant is aggrieved by the error and may complain of it. If the action had been brought by the injured workman as sole plaintiff, he would have been entitled to recover all the damages which have been recovered by the two plaintiffs upon a division of the common law cause of action, Acceptance of the award by the injured workman did not divest him of title to his common law cause of action against the party causing the injury; it did not diminish the damages resulting from the injury or increase the liability of the wrongdoer. The wrongdoer could not claim the benefit of the compensation paid under the statute for those injuries, but the insurance carrier, which was obligated to pay such compensation under the provisions of the statute and of the contract of insurance, would in equity be subrogated to a portion of the injured workman’s cause of action, or at least to a portion of any recovery upon that cause of action. (Cf. Ocean Accident & Guarantee Corp. v. Hooker Electrochemical Co., 240 N. Y. 37.) The statute in effect decrees the division of a common law cause of action in a case where even in the absence of a statute, a court of equity might decree a division of the recovery. Thus the defendant cannot claim that the judgment in favor of the two plaintiffs upon a divided cause of action is larger than the judgment to which the single plaintiff, who originally owned the entire cause of action, would have been entitled, if the action had been brought upon the undivided cause of action.

“ The rule against splitting causes of action is a salutary one. In the absence of some statutory mandate to the contrary, the alleged wrongdoer should not be put twice to his defense on the same cause of action.” (United States F. & G. Co. v. Graham & Norton Co., supra, p. 55.) That does not mean that the courts will not recognize and protect the rights of one who is equitably entitled to a part of the recovery. (Cf. Ocean A. & G. Corp. v. Hooker Electrochemical Co., supra.) Ordinarily, indeed, a party equitably entitled to a portion of a recovery should be made a party to an action brought upon an indivisible cause of action in order to afford the defendant full protection against a subsequent claim, and the defendant is not aggrieved by a provision in the judgment apportioning the recovery among all those who have a legal or equitable right to share therein. Our decision in Lang v. Brooklyn City R. R. Co. (247 N. Y. 551) is not inconsistent with what we have said here. The circumstances were different there, and a majority of the court indicated that under similar circumstances the court would permit a person equitably entitled to a portion of a recovery to be joined as a party plaintiff in an action at law upon an indivisible cause of action.

Though the defendant may properly urge that the insurance carrier has under the law of the State no independent cause of action against it, the defendant cannot successfully urge that where the insurance carrier is made a party to an action brought by the injured workman, the court may not apportion the recovery. The owner of the entire cause of action is in court; the judgment is for the damages which are properly recoverable upon that cause of action, and the defendant, by a division of that recovery, is not subjected to the burden of being put to his defense twice upon the same cause of action. The defendant is in no wise aggrieved by, or interested in, the division of the recovery.

Since the judgments in favor of the two plaintiffs, though separate in form, are recovered upon a single cause of action, the modification of the judgment in favor of one plaintiff permits an appeal from the entire judgment without permission. Upon that appeal we have examined the whole record and find that the cause of action for negligence has been sustained.

The judgment should be affirmed, with costs.

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

Judgment affirmed.