author: Kellogg, J.

text:
    In the Matter of the Claim of Stephen Werenjchik et al., Respondents, against Ulen Contracting Corporation et al., Appellants. The State Industrial Board, Respondent.
    (Argued September 30, 1930;
    decided November 18, 1930.)

      Jeremiah F. Connor and William E. Lowther for appellants.
    There is no proof to show that the children of the deceased employee are actually alive. (Paola v. Porter Bros., 209 App. Div. 716; Grillo v. Sherman-Statler Co., 195 App. Div. 362; Di Ionna v. Terry & Tench Co., Inc., 203 App. Div. 270; Cooney v. Empire Construction Co., 210 App. Div. 816; Hall v. Hall, 139 App. Div. 120; Van Williams v. Elias, 106 App. Div. 288.)

      Aaron Benenson and William C. Stone for claimants, respondents.

      Hamilton Ward, Attorney-General (E. C. Aiken of counsel), for State Industrial Board., respondent.
   Kellogg, J.

The Industrial Board, on April 30, 1929, made an award of death benefits, on account of the death of Ignatz Werenjchik, who died in the course of his employment from causes resting therein, to the claimants, Stephen, Sophie and Olga, as children of Ignatz under the age of eighteen at the time of his death. In the instance of Sophie and Olga, alien non-residents supposedly still under the age of eighteen years, the Board made commutation of all installments which might become payable subsequently to the date of the award, and directed that as to them, in addition to the aggregate sums of unpaid weekly payments previously due, there be paid one-half of the future installments as commuted. (Workmen’s Compensation Law; Cons. Laws, ch. 67, § 17.)

The point is made that there was no legal proof that the claimants were the children of Ignatz Werenjchik; that they were under the age of eighteen years when Ignatz died; that they were of the determined ages when the Board fixed the commuted amount of future installments payable to the two younger children.

Certificates had been received in evidence by the Board which purport to have been made and signed by members of the “ White . Russian Soviet Socialistic Republic Executive Committee of the County of Cherven, Province of Minsk.” These writings purport to certify that the records of vital statistics for the Province disclose that Stephen, Sophie and Olga were born to Ignatz Werenjchik and his wife on certain specified dates. Appended thereto are certificates purporting to be signed by the People’s Commissar of Interior,” to the effect that the signatures of the members of the Executive Committee subscribed to the certificates are genuine; and certificates purporting to be signed by the “ People’s Commissar for Foreign Affairs ” asserting that the signatures of the People’s Commissar of Interior attached to the certificates are genuine. Aside from the question whether or not the certificates otherwise comply with statutory or common-law requirements in respect to the authentication of birth records kept in a foreign country, the question whether judicial notice that the persons named are the de facto officials of a government not recognized by the United States as a member of the family of nations, that the signatures subscribed are the genuine signatures of such officials, and that the seals attached are the genuine seals of the offices held by them, can be taken without proof, might prove troublesome. However, as we read the record, the relationship of the children to Ignatz Werenjchik and their respective ages were established otherwise than by the certificates, and the question suggested need not be determined.

An award was originally made to these claimants on March 5, 1924. All installments of weekly payments, whether future or past, were given a present value calculated from the date of the death of Ignatz Werenjchik; and the payment of one-half of the commuted amounts was directed to be made. At a hearing held on the same day an uncle of the children testified that Stephen, Sophie and Olga were children of his brother Ignatz; that they were living in the Province of Minsk in Soviet Russia, and that the boy, Stephen, was then sixteen years of age. On the same day there was filed with the Board a writing which bears the heading “ Request for Actuarial Computation, March 5, 1924.” A schedule of dependents ” is set forth in the writing which gives the ages and dates of birth of the “son,” daughter ” and “ daughter.” The commutations made in the award now appealed from are based upon figures thus given. The writing was signed by “ D. J. Mahoney.” An assertion, not disputed by the appellant, is made in the respondent’s brief as follows: “A request for commutation was made by D. J. Mahoney, representing the insurance carrier.” In making this statement the respondent refers by folio number to that page of the record which exhibits the writing to which we have referred. Moreover, section 17 provides that the Board may “ at its option ” or “ upon the application of the insurance carrier ” shall commute all future installments of compensation. No other application than that of the insurance carrier is recognized by the section. It seems to follow, therefore, that the request filed by D. J. Mahoney was an application for commutation made by the .insurance carrier. The writing so filed contained admissions by the carrier establishing all necessary facts to enable the Board to make an award and commute the same.

On December 7, 1926, the Board vacated the award of March 5, 1924; and, on the ground that there were “ no persons entitled to compensation ” ' (Workmen’s Compensation Law, § 15, subds. 8, 9), made an award to the State Treasurer. On April 30,1929, it vacated the award to the State Treasurer, and, after receiving in evidence the certificates to which we have referred, made the award now complained of. The Board had full power to vacate the original award to the children, and later to vacate the award to the State Treasurer. (Matter of Schaefer v. Buffalo Steel Car Co., 250 N. Y. 507.) In its original award, made on March 5, 1924, the Board had erroneously included, in its calculations of the commuted sums payable to the children, past-due unpaid installments of compensation as well as future installments of compensation. (Matter of Perino v. Lackawanna Steel Co., 241 N. Y. 312.) That case, decided subsequently to the original award, holds that the Board, acting at any given hearing, has power to commute only such installments as might accrue periodically thereafter.” It was not open to the Board, therefore, when considering the case made for the present award, to reinstate the award made on March 5, 1924. No other course was permissible than to direct payment in full to Stephen, who had become of age, of all weekly installments past due; to make the same directions in respect to Sophie and Olga; in addition to direct the payment to Sophie and Olga of one-half of all future installments, calculating the value of such installments from the date of the award and commuting the same accordingly. This course, which was pursued by it, was justified by the admitted facts contained in the record which the Board had before it.

The order should be affirmed, with costs.

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

Order affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Rebecca Schweitzer, as Executrix of Peter J. Schweitzer, Deceased, Appellant, v. James F. Fargo, as Treasurer of American Express Company, Respondent.

      (Argued October 6, 1930;
    decided November 18, 1930.)

      Arthur Levitt for appellant.
    The plaintiff’s testator was entitled to the return of the consideration which he paid to the defendant. (Bank of United States v. National City Bank, 123 Misc. Rep. 801; Kupfer Bros. Co. v. Chemical Nat. Bank, 126 Misc. Rep. 13; Safian v. Irving Nat. Bank, 202 App. Div. 459; 236 N. Y. 513; Chemical Nat. Bank v. Equitable Trust Co., 201 App. Div. 485; Gellert v. Bank of California, 107 Ore. 162.)

      Leslie D. Dawson and Sidney W. Davidson for respondent.
    The transaction on the part of defendant was an executed sale of a foreign bill of exchange. (Gravenhorst v. Zimmerman, 236 N. Y. 22; Moe v. Bank of United States, 211 App. Div. 519; Sakaloff v. National City Bank, 130 Misc. Rep. 66; 223 App. Div. 754; 250 N. Y. 69; American Express Co. v. Cosmopolitan Trust Co., 239 Mass. 249; Foreign Trade Banking Corp. v. Cosmopolitan Trust Co., 240 Mass. 413; Carmen v. Higginson, 245 Mass. 511; Paulink v. American Express Co., 163 N. E. Rep. 740; Matter of Bolognesi & Co., 254 Fed. Rep. 770; Matter of Pacat Finance Corp., 295 Fed. Rep. 394; Auerbach v. Barrett, 214 App. Div. 279.) The plaintiff has no right of action at common law upon the original contract. (Gellert v. Bank of California, 107 Ore. 162.) The plaintiff could have no rights except such as might be acquired by assignment from the payees subject to the provisions of the Negotiable Instruments Law. (Neg. Inst. Law, §§ 160, 183, 184, 260, 262, 264, 267; Auerbach v. Barrett, 214 App. Div. 279; Sokoloff v. National City Bank, 130 Misc. Rep. 66; 223 App. Div. 754; 250 N. Y. 69; Harden v. Boyce, 59 Barb. 425; Ferrari v. First Nat. Bank, 246 N. Y. 382; Reed v. Spear, 107 App. Div. 144; Paton Digest of Banking Laws, § 2000.) The plaintiff cannot maintain this action to recover back the money paid to defendant. (Suse v. Pompe, 8 C. B. [N. S.] 538; Auerbach v. Barrett, 214 App. Div. 279; American Express Co. v. Cosmopolitan Trust Co., 239 Mass. 249; Grossman v. Zaro, 119 Misc. Rep. 713; Krinsky v. Bank of United States, 123 Misc. Rep. 924; Bank of United States v. National City Bank, 123 Misc. Rep. 801; 214 App. Div. 716; Gross v. Mendel, 171 App. Div. 237; 225 N. Y. 633; Gelfand v. State Bank, 172 N. Y. Supp. 99; Simonoff v. Granite City Nat. Bank, 279 Ill. 248.)
   Kellogg, J.

Peter J. Schweitzer, of whose last will the plaintiff is executrix, on November 5, 1917, paid the defendant $2,059.74, and took from it two drafts, one for 10,000 rubles payable to his sister Lea Margolin, and the other for 5,000 rubles payable to his sister Gissia Garbowitzka. The drafts were drawn by the defendant on “Azow Don Commerz Bank, Petrograd, Russia,” in which the defendant then had on deposit more than 15,000,000 rubles. The drafts were intended by Schweitzer as gifts to his sisters, who lived at Ekaterinoslav, in southern Russia, about 1,000 miles distant from Petrograd. The drafts, forwarded by Schweitzer, were received by his sisters on or about December 1, 1917. At this time the Azow Don Commerz Bank at Petrograd had been closed and its assets seized by the Soviet government. The sisters made no presentment of the drafts at Petrograd for the reason that all rail connection between that city and Ekaterinoslav had been cut off, and neither travel nor mail communication between the two cities was possible. They made presentment at branch bank of the “Azow Don ” at Ekaterinoslav, but payment was refused. In December, 1921, the sisters returned the drafts to the plaintiff, as the executrix of the will of Peter Schweitzer, then deceased, by whom they were in due course received. They likewise notified the defendant to make payment to the plaintiff. This suit was thereupon brought, not to recover upon the drafts, as if the payees had transferred their interests therein to the plaintiff, but to obtain restoration of the moneys paid in procurement of the drafts, as upon a total failure of consideration.

There have been instances where persons, having paid over moneys and received in return promissory notes payable to third persons, who thereafter refused to accept and discount the notes, have had recoveries in suits upon the instruments brought in their own names. (Sutherland State Bank v. Dial, 103 Neb. 136; Spurrier v. Briggs, 17 Ind. 529; Ward v. Northern Bank of Kentucky, 14 Ky. 351; Hunt v. Aldrich, 27 N. H. 31; Barrick v. Austin, 21 Barb. 241.) It has been said that, in such a case, a holder for whose benefit the note is made, may treat the named payee as fictitious and recover in his own name as if the name given were a designation of himself. (Matter of Pendleton Hardware Co., 24 Ore. 330; Hunt v. Aldrich, supra.) The cases are not applicable here, for the sisters, named as payees in these drafts, were genuine persons, and the instruments had actually been delivered to them. Thus, the promises embodied in the drafts, purporting to run to them, having come to hand, were binding obligations to which they had exclusive title. Moreover, since presentment was impossible, the drafts had become unconditional obligations of the drawer, fully enforcible against it by the payees named therein. (Neg. Inst. Law,; Cons. Laws, ch. 38, § 142.) There is a case, also, where it was held that an administratrix of a person, who had procured a draft to be made payable to a third person and died before transmission of the draft to the named payee? without presentment to the drawee," was entitled to a recovery against the drawer." (Gellert v. Bank of California, 107 Ore. 162.) Whatever the theory of recovery may have been, the principle is not applicable here, since these drafts, having become perfected obligations in the hands of the payees named, were exclusively owned by them.

A person who pays moneys to a" bank and receives in return a draft drawn by it upon a correspondent bank, has frequently been termed a purchaser of the draft. (Gravenhorst v. Zimmerman, 236 N. Y. 22; Carmen v. Higginson, 245 Mass. 511; Gompertz v. Bartlett, 2 El. & Bl. 849.) In strictness he may not be a purchaser, since he receives for his money no obligation then in esse but causes, by his payment, the initiation of new promises. However, he makes an exchange, paying his money and receiving in return the promises of the drawer to make payment in accordance with the express or implied terms of the draft. If the promises are issued to him, they are integrated in the draft. If they are issued to third persons, as named payees, they are likewise integrated in the draft. In the latter case, generally speaking, the person paying is the recipient of no promises made to himself and, therefore, he is in no position to claim that, because of unperformed promises, he is entitled to a return of his moneys, as in an action for money had and received.

It has been said that Under this head may also properly be included the class of cases in which it has been held that the vendor who sells bills of exchange, notes, shares, certificates and other" securities, is bound, not by the collateral contract of warranty, but by the principal contract itself, to deliver as a condition precedent that which is genuine, not that which is false, counterfeit of not marketable by the name or denomination used in describing it.” (Benjamin on Sales [4th Am. ed.], § 607.) (See, also, Meyer v. Richards, 163 U. S. 385; Gompertz v. Bartlett, supra; Young v. Cole, 3 Bing. N. C. 724; Flynn v. Allen, 57 Penn. St. 482; Webb v. Odell, 49 N. Y. 583.) It may be that the defendant, in issuing the drafts in suit, represented them to be genuine drafts upon a presently existing bank and that they were in all other respects that which they purported to be. Even if these representations were made to Schweitzer, who paid for the drafts; even if Schweitzer might have had a remedy, were the representations false; the fact is that no representations which may have been made were otherwise than true. The drawee in each instance was a genuine bank; it was in existence to receive presentments when the drafts were drawn. It is not possible to discover a representation, express or implied, made to Schweitzer, which was not true; nor a promise made to him as promisee which can be said to have been unperformed. Therefore, the remedy of quasi-contract, and all remedies herein sought, must fail.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Lehman, J.

text:
    In the Matter of the Claim of Anna Simpkins, Respondent, against Paul Steffen, Jr., et al., Appellants. State Industrial Board, Respondent.

      (Argued September 30, 1930;
    decided November 18, 1930.)

      William Warren Dimmick for appellants.
    The insurance policy did not cover the premises in connection with the alleged accident sustained by the deceased. (Pettit v. Reges, 242 N. Y. 274; Neubeck v. Doscher, 204 App. Div. 617; Abrahams v. Charmant Specialty Co., 212 App. Div. 698; Gans v. Ætna Life Ins. Co., 214 N. Y. 330; Wood v. Papan, 193 App. Div. 530; Astrin v. East New York Woodworking Mfg. Co., 210 App. Div. 720; Levine v. New York Electric Corp., 210 App. Div. 731; Reed v. Mapstone Bros., 205 App. Div. 767; Matter of Wingen v. Fleischman, 252 N. Y. 114.) The incidentalness and relation of the plant in New York city to the plant at Buskirk are too remote to come within the coverage of the policy. The plant in New York city was a separate entity. (Pettit v. Reges, 242 N. Y. 272; McMahon v. Gretzula, 227 App. Div. 256; People v. Rosenberg, 138 N. Y. 410; Wood v. Erie R. R. Co., 72 N. Y. 196; Allied Mut. L. Ins. Co. v. Interstate Cork Co., 134 Misc. Rep. 505.)

      Hamilton Ward, Attorney-General {Roy Wiedersum and E. C. Aiken of counsel), for State Industrial Board, respondent.

      Nathaniel Greenbaum for claimant, respondent.
    The place where the employee was working and suffered the accident is not important as long as the particular work was incidental to the business of the employer. (Matter of Wingen v. Fleischman, 252 N. Y. 114; Cary Brick Co. v.
      Fidelity Co., 162 App. Div. 873; 220 N. Y. 224; Jaebeck v. Crane’s Sons Co., 238 N. Y. 314; Matter of Cameron v. Ellis Const. Co., 252 N. Y. 394.)
   Lehman, J.

The carrier issued an insurance policy whereby it agreed to pay promptly to any person entitled thereto any award made under the Workmen’s Compensation Law (Cons. Laws, ch. 67). By its terms the policy applies to injuries sustained by reason of the business operations described in the declarations, which are made part of the policy, “ which for the purpose of this insurance shall include all operations necessary, incidental or appurtenant thereto or connected therewith, whether such operations are conducted at the work places defined and described in said Declaration or elsewhere in connection with, or in relation to, such work places.”

The declarations describe the business operations as Creameries including the manufacture of Butter or Cheese.” They contain items stating: Locations of all factories, shops, yards, buildings, premises or other work places of this Employer, by Town or City, with Street and Number: Buskirk, N. Y.” and also: “ This Employer is conducting no other business operations at this or any other location not herewith disclosed — except as herein stated: No exceptions.”

The employer maintains a creamery at Buskirk, New York. He also maintains a small place of business in New York city from which he distributes products of the creamery. William 0. Simpkins was employed to operate a truck used in such distribution. He died as the result of injuries arising out of and in the course of his employment. The question presented upon this appeal is whether the injuries were sustained by reason of business operations “ necessary, incidental, appurtenant or connected with ” the operation of the creamery at Buskirk, New York, within the meaning of the policy.

These words must be given a liberal construction in accord with the understanding and the intention of the parties to the contract. They may not be stretched to include cases which patently were not intended to be covered by the policy. The field covered by the policy is defined by its particular exceptions and exclusions as well as by its general description. Doubtless the delivery of manufactured products is always, in some degree, incidental, appurtenant and connected with the business operation of manufacturing the products carried on at the factory. The question in each case is whether the relationship is so close that the operation of delivery may reasonably be included in the operation of manufacturing carried on at the factory.

At times the relationship between the operation of manufacturing and the operation of delivering the finished products may be so close that there can be no doubt that both operations are intended to be included by a policy which in terms describes only the business of manufacturing. So we held in Matter of Wingen v. Fleischman (252 N. Y. 114). There a workman regularly employed in the manufacture of “ art glass ” was occasionally called upon to deliver and install the glass in the place for which it was designed. The operations of manufacturing and delivering when performed by the same group of workmen, having but one regular place of business, are too closely related to leave doubt that they were both covered by the policy then under consideration.

In the present case the circumstances dictate a different conclusion. Under the terms of the declarations which are part of the policy, all the business operations of the employer intended to be covered by the policy are conducted at the creamery in Buskirk. The proof shows that the workman for whose death an award was made was employed exclusively in New York city to deliver milk and cream from a place of business maintained in New York city. The connection between delivery of dairy products after they are received in New York and the manufacture of these products at a creamery in the country is remote. The policy by its express terms excludes from its coverage injuries sustained in business operations carried on at a place of business other than the creamery in Busldrk. It is not open to the construction that the carrier would pay an award for injuries received in the course of an employment to deliver the products of the creamery from a place of business maintained in the city of New York.

We have examined the other ground urged to sustain the award against the carrier. We find that it is not supported by the evidence.

The order of the Appellate Division should be reversed and the claim dismissed against the appellant United States Fidelity and Guaranty Company, with costs in this court and in the Appellate Division against the State Industrial Board. The order of the Appellate Division in so far as it sustains the award against the employer Paul Steffen, Jr., should be affirmed, with costs.

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

Ordered accordingly.


text:
    S. & E. Motor Hire Corporation, Respondent, v. New York Indemnity Company, Appellant.

      (Argued October 13, 1930;
    decided November 18, 1930.)

      Everett W. Bovard for appellant.
    The plaintiff failed to establish a waiver of the provision of the policy with respect to the chauffeur’s age. (Birdsall v. Russell, 29 N. Y. 220; Claflin v. Lenheim, 66 N. Y. 301.) Even if the defendant was put upon inquiry as to whether the chauffeur was employed in violation of the policy provision as to age, nevertheless having made due investigation without obtaining knowledge of the unlawful age of the chauffeur, defendant is not chargeable with notice. (Cambridge Valley Bank v. Delano, 48 N. Y. 326; Dutchess Co. M. Ins. Co. v. Hatchfield, 73 N. Y. 226; Acer v. Westcott, 46 N. Y. 384.)

      George H. Engelhard for respondent.
    The information obtained by the defendant’s agents was such as should have aroused, and actually did arouse, their suspicion as to the driver’s age, and it placed on them the duty of making further inquiry and of determining whether or not they should disclaim liability under the policy. (Titus v. Glens Falls Ins. Co., 81 N. Y. 410; Rosenwasser v. Globe Indemnity Co., 224 N. Y. 561; Gerka v. Fidelity & Casualty Co., 251 N. Y. 51; Glens Falls Cement Co. v. Travellers Ins. Co., 11 App. Div. 411; 162 N. Y. 399; Reynolds v. Commerce Fire Ins. Co., 47 N. Y. 597; Skinner v. Noerman, 165 N. Y. 565; Birdsall v. Russell, 29 N. Y. 220; Claflin v. Lenheim, 66 N. Y. 301; Fidelity Deposit Co. v. Queens Co. Trust Co., 226 N. Y. 225.)
   Lehman, J.

By the terms of a policy of insurance issued to the plaintiff, the defendant bound itself to indemnify the plaintiff against “ loss from the liability imposed by law upon the Assured on account of bodily injuries * * * suffered * * * by any person or persons by reason of the ownership, maintenance or use of the automobiles described in the policy,” and also “to defend in the name and on behalf of the Assured suits for damages * * * brought on account of such injuries.” From the coverage of the policy, loss occasioned by “ accidents occurring while the automobiles are being operated * * * by any person in violation of law as to age ” was expressly excluded.

An accident occurred while one of the automobiles described in the policy was being operated by an employee of the plaintiff who Was under eighteen years of age. Since under the statute (Highway Law; Cons. Laws, ch. 25, § 282, as then in force) no license might be granted to an operator under the age of eighteen, the defendant under the terms of the policy was not obligated to indemnify the plaintiff against liability for damages occasioned by the accident or to defend suits brought for such damages.

The defendant nevertheless did undertake to defend a suit brought by a party injured in the accident. When the case was called for trial, counsel for the injured party informed the defendant’s trial counsel that the chauffeur was under eighteen years of age at the time of the accident. Then the insurance company abandoned the defense. The suit for the injuries caused by the accident was settled by the assured for about $10,000, under a stipulation made with the insurance company that such settlement might be made without prejudice to the rights of either party. The insured now seeks reimbursement from the insurance company for the amount paid under the settlement.

The issue in the case is narrow. The plaintiff can recover only upon proof that the insurance company waived the benefit of the clause excluding from the coverage of the policy accidents which occur while an automobile is operated by a chauffeur under the age of eighteen. This court has frequently pointed out that waiver is an intentional rehnquishment of a right and ordinarily must be predicated upon full knowledge of all the facts upon which the existence of the right depends. (Kiernan v. Dutchess County Mutual Ins. Co., 150 N. Y. 190; Clark v. West, 193 N. Y. 349; 2 Williston on Contracts, § 697.) The trial court has decided that the insurance company by undertaking the defense of the suit did not waive its right to limit its contractual obligation in accordance with the terms of its contract, for at that time it had no knowledge of the fact that the chauffeur was under the age of eighteen. The Appellate Division reversed that decision and held as a matter of law that even if the insurance company did not have actual knowledge of the chauffeur’s age, it did have knowledge sufficient to put it on inquiry as to the chauffeur’s true age.

We may assume that when the insurance company undertook the defense it had notice of facts sufficient, at least, to arouse suspicions that the chauffeur might be under the lawful age. The chauffeur had never been granted a license to operate the car. He had in his possession a license granted to a person of different name, and he was employed under that assumed name. The insured furnished the insurance company with a statement made by the chauffeur in which he represented his age as eighteen. To the investigator for the company the chauffeur represented his age as twenty. The company accepted that statement and acted upon it until further information, received on the day the case was called for trial, showed its falsity. Perhaps even while acting upon it the insurance company may have harbored suspicions of its falsity. Even then, the question remains whether as matter of law it was bound to reject the statement furnished by the defendant and the subsequent statement made to it by the chauffeur, or at least to make further inquiries, before it acted upon them.

In the case of Skinner v. Norman (165 N. Y. 565, 570) this court, in an opinion by Cullen, J., said: “ Ordinarily the rule is stated that one will not be held to have waived his rights unless it is shown that he has acted with a full knowledge of the facts, but precision requires the qualification ‘ or where it was his bounden duty to know them/ ” citing Finley v. Lycoming County Mutual Ins. Co. (30 Penn. St. 311). Where a person is under a duty to inquire before he takes action, he may be said to be under a bounden duty to know those facts which a reasonable inquiry would disclose. Reference to where a fact can be ascertained may in such case be equally effective as a notice of the fact itself. So the court said in Reynolds v. Commerce Fire Ins. Co. of New York (47 N. Y. 597). There the agent of the insured, before a policy was issued, referred the insurance company to a third party for information as to the nature of the business carried on in the premises for which insurance was sought, and the insurance company chose to issue the policy without further inquiry. “ In such a case,” the court said, whatever is notice enough to excite attention, and put a party upon his guard and call for inquiry, is notice of everything to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he shall be deemed conversant with it.” (Italics are ours.) , What the court said, as well as what it decided, applied only to the particular case under consideration, where the insurance company chose to remain in ignorance of facts, though the applicant had a right to assume that inquiry would be made before action was taken.

We need not now define the entire field of application of the principles of constructive notice. Some limits were pointed out by the court in Skinner v. Norman (supra). “ We do not mean to suggest that the principles of constructive notice which obtain as to alleged bona fide purchasers of real estate, negotiable instruments or the like, equally apply in the negotiations between an insurance company and an applicant for .insurance. It is the duty of such applicant to comply with the conditions of the policy and to give the information requisite for its validity. The company may rely on the presumption that the insured has stated all the material facts and as a rule is not bound to make inquiries.”

So, here, the insurance company was bound by the policy to defend any suit for injuries caused by the automobile of the assured unless the accident occurred when the automobile was being operated “ by any person in violation of law as to age.” When the insurance company was called upon to defend the action which was brought against the assured, it was not bound to inquire whether the law was violated before it undertook the defense. Especially where the assured furnished the insurance company with an affidavit from the operator stating that he was eighteen years of age the insurance company might rely upon the information received and that the assured had not employed a chauffeur under the lawful age. Suspicion that the information given it might be untrue would perhaps be sufficient notice to require further inquiry if the insurance company were asserting rights against the assured based on ignorance of the true facts. Here the assured must show that the insurer has waived its rights, stipulated in the policy, by failure to assert them earlier. If the insurance company had known the facts upon which its rights depended, failure to assert them at the proper time might permit the inference that it intentionally waived its rights. The intention to waive those rights might even be inferred from deliberate disregard of a notice sufficient to excite attention and call for inquiry, but there are no circumstances in this case which require, as matter of law, the inference that the insurer intended to waive its contractual rights. Indeed, it is doubtful whether such an inference might have been drawn even by the trier of the facts. Upon the information furnished to the insurer it would have breached its contract if it had failed to defend the suit. It was not, at peril of losing its contractual rights, required to inquire whether the information so furnished was false before it undertook the defense.

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

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

Judgment reversed, etc.


text:
    Douglas S. Thropp, Respondent, v. J. Bradford Erb et al., Appellants.

      (Argued October 24, 1930;
    decided November 18, 1930.)

      J. B. Erb and Henry Amerman for appellants.
    Plaintiff having voluntarily entered his appearance in the action in which the warrant of attachment was issued, by filing his answer therein within seventeen days after the alleged service of the warrant, placed himself in the same position as any other party defendant in a similar action, who has had delivered to him in person a copy of the summons within the State; and it was incumbent on him to defend the action, regardless of any question of non-residency. (Civ. Prac. Act, §§ 218, 225, 237; Seventeenth Ave. v. Oscar Operating Corp., 215 App. Div. 106; Gardner v. Condon, 117 Misc. Rep. 97; Herman v. Apetz, 130 Misc. Rep. 618; Taylor v. Best, 14 C. B. 487; Reed v. Chilson, 142 N. Y. 152; Olcott v. MacLean, 73 N. Y. 223; Jones v. Jones, 108 N. Y. 415; DeSimone v. Trans. Maritimos, 200 App. Div. 82; Catlin v. Rick, 91 N. Y. 668; Pomeroy v. Ricketts, 34 Sup. Ct. Rep. 242; Fuller v. Beck, 53 Sup. Ct. Rep. 519; Northampton Nat. Bank v. Wylie, 52 Hun, 146.) Attorneys’ fees as an element of damage, in an action on a statutory undertaking, given to procure a warrant of attachment against the property of a non-resident, cannot be allowed where the defendant is shown to have entered his voluntary general appearance in the attachment suit, and where it appears that he was unable or had failed to legally establish any loss or injury as a result of the issuance of said warrant. (Balinsky v. Gross, 72 Misc. Rep. 7; Tyng v. American Surety Co., 174 N. Y. 166.)

      William H. Hall and Edward Ward McMahon for respondent.
    A non-resident is entitled to recover the cost of employing counsel to defend an action which is instituted by the levy of a warrant of attachment against his property where the attachment could not have been vacated by a motion in advance of the trial. (Balinsky v. Gross, 72 Misc. Rep. 7; Holly v. Rosenstein, 94 Misc. Rep. 292; Cook v. National Surety Co., 169 App. Div. 656; Northrup v. Garrett, 17 Hun, 497.)
   Lehman, J.

In December, 1923, the defendant J. Bradford Erb obtained a warrant of attachment in an action in which he was the plaintiff and this plaintiff was a defendant. At that time this plaintiff was a resident of Pennsylvania. He had bank accounts in the Guaranty Trust Company in New York city and he had deposited with that bank securities, as ■ collateral for a loan made to him. A levy under the warrant of attachment was made upon the bank accounts and securities. The bank sent,to the plaintiff, by mail, notice of the levy and a copy of the summons and complaint which had been served upon it. No summons was ever served upon this plaintiff personally, and no order was obtained for service by publication. More than ten days before the expiration of the period within which service of the summons by publication might have been commenced (Civ. Prac. Act, § 905), this plaintiff entered a general appearance in the attachment suit.

The plaintiff made no motion before trial to vacate the attachment. He was correctly advised by his counsel that such a motion would be futile for the warrant was valid on its face and the plaintiff was in fact a non-resident. True, the securities deposited with the bank as collateral for a loan to the plaintiff were subsequently released from the levy, upon proof that these securities were the property of the plaintiff’s mother and were to be returned to her after the loan was paid; but the plaintiff’s own property remained subject to the levy until he successfully defended the action on the merits and judgment was entered in his favor after a trial of the issues.

Then the plaintiff brought this action to recover, from the surety on the statutory undertaking and from the plaintiff in the attachment action, the damages he sustained by reason of the attachment. The plaintiff paid his attorneys in the attachment action the sum of $1,000. He claims, as damages, reimbursement for that sum. The jury included other items of alleged damage in its verdict, but on appeal the judgment entered on the verdict was modified by the excision of all such items. Upon this appeal the only question presented is whether the legal expenses incurred by the defendant in his successful defense of the action are damages sustained by reason of the attachment,” recoverable in an action upon the statutory undertaking to pay such damages.

No trial of the merits of the cause of action is necessary to release property from the hen of a levy of a warrant of attachment invalid on its face. Such a.warrant might be vacated on proper motion. If a defendant instead of making such a motion chooses to appear generally in an action and to defend it on the merits, his appearance may be for the dual purpose of getting rid of the attachment and of disposing of the issues; but he can hardly assert that his defense on the merits was for the purpose of disposing of the attachment and that expenses incurred in such defense were “ damages sustained by reason of the attachment ” where the defendant might have rid himself of the attachment without such defense and without incurring such expenses. So this court decided in Olsen v. U. S. Fidelity & Guaranty Co. (230 N. Y. 31).

The decision in that case is expressly confined to actions where a defendant was entitled as matter of law to have the warrant vacated upon the papers upon which it was granted.” Then a motion to vacate must be made in order to entitle a defendant in an attachment action to recover legal expenses as damages sustained by reason of the attachment. The court stated that it was unnecessary to consider under just what circumstances importing only a reasonable chance of success it may be necessary for a defendant in an attachment action.to make a motion to have the warrant vacated as a condition precedent to recovering under a bond for expenses incurred in defending the action.”

Without proof that a defendant has used every remedy open to him to dispose of an attachment without a trial on the merits, the chain of causation from the warrant of attachment to the expenses incurred in a trial on the merits may at times be incomplete. In the present case there would have been no " reasonable chance of success ” if a motion had been made to vacate the warrant. No contention can be seriously raised that this plaintiff could have rid himself of the warrant of attachment except by a trial on the merits. No futile motion to vacate was necessary to complete the chain of causation between the warrant of attachment and the expenses incurred in the successful defense. Our decision in the case of Northampton Nat. Bank v. Wylie (52 Hun, 146; affd., 123 N. Y. 663) is not authority to the contrary. There, it is true, a motion to vacate the warrant would probably have been ineffectual, for the courts of this State had decided that under the law as it then stood, an attachment might validly issue against a National bank located in another State; but after the trial of the attachment action, the Supreme Court of the United States held otherwise (Pacific Nat. Bank v. Mixter, 124 U. S. 721). Under that decision, if the National bank, against which the attachment had issued, had chosen not to defend the action, no judgment could have bound the property seized under the void warrant of attachment and the courts held that the National bank’s appearance and defense on the merits was to meet and dispose of the claim made against it rather than to dispose of the void attachment.

In each case the question of whether the defense on the merits was the result of the warrant of attachment must depend upon the circumstances of that case. Where that is established the expenses of the defense on the merits may be recovered in an action upon the statutory undertaking as damages sustained by reason of the attachment. This court has reached a similar conclusion in actions brought upon injunction bonds and in the present case by analogy of reasoning, cases arising upon undertakings given upon the granting of injunctions are applicable.” (Tyng v. American Surety Co., 174 N. Y. 166; Olsen v. U. S. Fidelity & Guaranty Co., supra.)

Here the defendant in the attachment action was a non-resident. Unless he chose to come into the State personally or by general appearance, the courts of this State could acquire no jurisdiction over his person. By attachment proceedings the court could acquire jurisdiction over property within this State. The attachment proceedings in this case were valid. If service of the summons by publication were commenced within thirty days and completed in accordance with the statute, the defendant could dispose of the attachment only by a defense of the action on the merits. Delay in entering an appearance would delay release of his property. The evidence in this case is sufficient to sustain a finding that the owner of the property entered an appearance for the sole purpose of releasing his property. He was not bound to await service of the summons by publication. Such service, if completed, could not compel a personal appearance in the action, and even before such service, the levy under the warrant was valid and would remain valid unless the action was abandoned or defeated. The levy in the attachment action was the cause which induced the defendant in that action to appear and defend on the merits, though no summons was served upon him. Since it was the inducing cause of that appearance and defense, the expenses properly incurred in the defense constitute damages sustained by reason of the attachment ” within the intent and meaning of the undertaking.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Per Curiam.

text:
    Frank Mironchik, Respondent, v. Sagadahoc Steamship Corporation, Appellant.
    (Argued October 9, 1930;
    decided November 18, 1930.)

      Dix W. Noel and Cleland R. Neal for appellant.
    The trial court erred in rejecting and instructing the jury to disregard any and all evidence as to the condition of the winch as demonstrated by its inspection and operation after the accident. (Laut v. City of Albany, 191 App. Div. 753; Wigmore on Evidence [2d ed.], § 283.)

      Harold R. Medina and Charles Winkelman for respondent.
   Per Curiam.

Evidence that the steam winch was in proper condition after the accident and before any repairs were made was erroneously excluded. Though other testimony of similar nature was admitted without objection, we must regard the error as prejudicial, in view of the fact that the trial judge instructed the jury that even though you hear this testimony your duty would require you to absolutely disregard it because anything done after the accident is no indication or legal testimony or of any value concerning its condition before or at the time of the accident.”

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, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgments reversed, etc.


author: Cardozo, Ch. J.

text:
    Oscar Levy, Respondent, v. Schnurmacher Construction Corporation, Appellant.
    (Submitted October 24, 1930;
    decided November 19, 1930.)

      John F. Gleason for appellant.
    The covenant is entirely personal and does not run with the land nor bind subsequent grantees. (Guaranty Trust Co. v. New York & Queens Co. Ry. Co., 253 N. Y. 190; Bristol v. Woodward, 251 N. Y. 275; Riverview Manor Assn. v. Bruckner, 223 N. Y. 526; Miller v. Clary, 210 N. Y. 127; Greenfarb v. R. S. K. Realty Co., 229 App. Div. 250; Rochelle Park Assn. v. Ensinger, 138 App. Div. 81; Sheehan v. Spring Valley Wood Pro. Co., 194 App. Div. 119.) The language of the covenant excludes the lot in suit from its operation. (Uihlein v. Matthews, 172 N. Y. 154; Real Prop. Law, §§ 240, 242; Parsons v. Johnson, 68 N. Y. 69; Paine v. Chandler, 134 N. Y. 385; Staples v. Cornwall, 114 App. Div. 596; 190 N. Y. 506; Franklin v. Brown, 118 N. Y. 110; Ryan v. Pistone, 89 Hun, 78; 157 N. Y. 705; Cox v. James, 45 N. Y. 557; King v. Hudson River Realty Co., 210 N. Y. 470; Webb v. Russell, 3 F. R. 393; Spencer's Case, 5 Coke, 16; Miller v. Clary, 210 N. Y. 127; Thayer v. Finton, 108 N. Y. 394; City of Springfield v. Green, 120 Ill. 269; Holt v. City of Somerville, 127 Mass. 408; Kneebs v. Sioux City, 137 N. W. Rep. 944; Kane v. N. Y. C. R. R. Co., 125 N. Y. 164.)

      Douglass Newman and Charles C. Weinstein for respondent.
    The covenant touches or concerns the land and constitutes a charge or burden thereon. (Booth v. Knipe, 225 N. Y. 390; Lawrence Park Realty Co. v. Crichton, 218 App. Div. 374; Morehouse v. Woodruff, 218 N. Y. 494; Guaranty Trust Co. v. N. Y. & Q. C. Ry. Co., 253 N. Y. 204; Denman v. Prince, 40 Barb. 213; Van Rensselaer v. Hays, 19 N. Y. 68; Trustees of Columbia College v. Lynch, 70 N. Y. 440.) The covenant applies to the land sought to be conveyed. (Morehouse v. Woodruff, 218 N. Y. 494.) The title to the real property was not good. (Greenblatt v. Hermann, 144 N. Y. 13.)
   Cardozo, Ch. J.

Plaintiff, the vendee under a contract for the sale of real estate, brings this action against the vendor to recover the down payment and expenses, and to charge them on the land. The defendant counterclaims for specific performance. By the judgment of the trial court, the title is declared to be unmarketable. It is said that a covenant running with the land attaches to the ownership a continuing obligation to keep a driveway in repair. The Appellate Division has affirmed by a divided court.

In November, 1908, the Gem Realty Company, being then the owner of a tract of land at Far Rockaway, Queens county, filed a map in the office of the County Clerk which exhibited the land divided into lots. The tract, which was triangular in shape, was bisected by a driveway. Of the twelve lots into which the land was divided, some abutted on this driveway, either in the front or in the rear. Others did not touch it. The owner sold the lots by reference to the numbers on the map, and inserted in the deeds after the description by lot numbers and metes and bounds a grant of an easement and a covenant in the following form: Together with the right and privilege in common with other owners of lands abutting on the driveway shown on said map and hereinbefore referred to to use said driveway as and for a driveway and carriageway only, which right and privilege however is and shall be subject to the regulations and agreements that may be made by all the owners of lands abutting on the said driveway with respect to the use of the same and is and shall be subject also to the right of all of such abutting owners at their own several cost and expense to lay and maintain sewers and make sewer connections in said driveway provided that such owner shall restore said driveway to its then condition, it being however understood and agreed that the party of the second part hereto, his heirs and assigns shall join with all other of such abutting owners in maintaining and keeping the said driveway in repair and that this covenant with respect to the repair of said driveway shall be inserted in all deeds that may hereafter be delivered by the party of the first part granting and conveying any of the plots of land shown on said map and abutting on said driveway and giving the grantees the right and privileges in said driveway hereinbefore mentioned.”

A like covenant to maintain the driveway and keep it in repair was inserted thereafter in conveyances of abutting lots and in particular in conveyances of abutting lot No. 2. This lot as laid out on the map is 100 feet wide and 180 feet deep, the rear abutting on the driveway and the front on Broadway. The first break in the continuity of the covenants came in 1925, when Berlin, the owner of lot No. 2, carved out of the lot a section which he conveyed to the defendant. The section so conveyed is 80 feet wide by 100 feet deep, with a frontage on Broadway. No part of it abuts upon the driveway or has any contact or means of contact therewith. This plot, separated from the driveway by a space of 80 feet, is the subject of the suit at bar..

■ We assume in favor of the plaintiff that a covenant to repair may be made by apt words to attach itself to the land with the result that the burden of compliance will be charged upon successive owners. Such a covenant is a recognized exception to the general rule that covenants running with the land do not bind to the performance of affirmative acts (Miller v. Clary, 210 N. Y; 127; Morehouse v. Woodruff, 218 N. Y. 494, 501; Guaranty Trust Co. v. New York & Queens County Ry. Co., 253 N. Y. 190, 204). The trouble with the plaintiff’s case is that apt words are lacking in the covenant in suit. By unequivocal restriction the duty to repair is limited to those owners whose lots abut upon the driveway. The land now owned by the defendant and contracted to be purchased by the plaintiff is not such a lot. The driveway does not serve it and is not capable of serving it. We see no adequate reason in such circumstances for laying upon ownership the burden of the cost of maintenance. The covenant does not mean that the burden shall survive the benefit.

The argument is made that the cost of repair is a charge upon the land to be conveyed, because the land is part of a lot which did abut upon the driveway when form and dimensions were as mapped in the beginning. The burden of maintenance is cast, we are told, upon every foot of the lot abutting at that time, though later subdivisions have brought about the result that part of it abuts no longer. Such a construction puts too great a strain upon the language of the covenant. The class of abutting owners was not determined immutably upon the filing of the map. It was to be subject to variation according to the physical conditions existing from time to time at the delivery of the deeds. The covenant does not say that the form or size of lots shall remain unchanged in perpetuity. On the contrary, it calls for a repetition of its terms in those deeds of later date that convey an easement in the driveway and not in any others. The fact is significant that in the deed from Berlin to the defendant which conveyed for the first time a section of a lot without connection with the driveway, the covenant was omitted. Burden and benefit were understood to be coextensive and reciprocal. There is no duty running with the land to maintain a right of way where an interest in the way is not appurtenant to the enjoyment of the land (Morehouse v. Woodruff, supra; Allen v. Culver, 3 Den. 284, 297).

The judgment of the Appellate Division and that of the Special Term should be reversed, and judgment on the counterclaim directed in favor of the defendant, with costs in all courts.

Pound, Crane, Lehman, Kellogg, O'Brien and Hubbs, JJ., concur.

Judgment accordingly.


author: Pound, J.

text:
    Central Union Trust Company of New York, as Trustee, Respondent, v. Rufus J. Trimble et al., as Ancillary Executors of Edward R. Thomas, Deceased, et al., Respondents, and Elisabeth R. Thomas, Individually and as General Guardian of Samuel F. Thomas, an Infant, et al., Appellants.
    (Submitted October 24, 1930;
    decided November 19, 1930.)

      Alice B. Baldridge for appellants.
    The annual net income of the trust fund in excess of $50,000, being undisposed of after the death of the settlor and before the death of the cestui que trust, and no valid direction for its accumulation being given, belongs to the person presumptively entitled to the next eventual estate, as provided by section 63 of the Real Property Law. (Pers. Prop. Law, § 11; Matter of Kohler, 193 App. Div. 8; 231 N. Y. 353; Matter of Cronk, 109 Misc. Rep. 516; Matter of Armstrong, 100 Misc. Rep. 472; Matter of Harteau, 142 App. Div. 904; 204 N. Y. 292; Matter of Ossman v. Von Roemer, 221 N. Y. 381; Matter of Tompkins, 154 N. Y. 634; Cochrane v. Schell, 140 N. Y. 516; Delafield v. Shipman, 103 N. Y. 463; Manice v. Manice, 43 N. Y. 303; Scheuter v. Smith, 41 N. Y. 328; Kilpatrick v. Johnson, 15 N. Y. 322; Staples v. Mead, 152 App. Div. 745; Young v. Barker, 141 App. Div. 801.) There is no merit in the contention that though the trust agreement may not in express words dispose of the excess income after the death of the settlor, the intent is to be gleaned from the whole instrument. (Union Trust Co. v. Boardman, 215 App. Div. 73; Street v. Post, 197 App. Div. 304; 232 N. Y. 563; Wright v. Miller, 8 N. Y, 9; Patterson v. Guardian Trust Co., 144 App. Div. 863; Matter of Harteau, 204 N. Y. 292; Matter of Kohler, 96 Misc. Rep. 433; 231 N. Y. 353; Dana v. Seibert, 105 Misc. Rep. 68; Bumpus v. Bumpus, 79 Hun, 526; Matter of Russell, 168 N. Y. 169; Phelps’ Executor v. Pond, 23 N. Y. 69; Manice v. Manice, 43 N. Y. 303.) If the intent of the settlor as to the surplus income may be implied, it is to be presumed that the settlor intended to make a legal disposition rather than ah illegal disposition or no disposition of said excess income. (Spencer v. Spencer, 38 App. Div. 403; Matter of Kohler, 96 Misc. Rep. 433; 193 App. Div. 8; 231 N. Y. 353; Gould v. Rutherford, 79 Hun, 280.)

      Albert B. Maginnes for plaintiff-respondent.
    If the agreement does not validly dispose of surplus income of the trust estate it belongs to the persons presumptively entitled to the next eventual estate. (Real Prop. Law, § 63; Manice v. Manice, 43 N. Y. 385; Ossman v. Yon Roemer, 221 N. Y. 381; Matter of Harteau, 204 N. Y. 292; St. John v. Andrew Institute for Girls, 191 N. Y. 254; Matter of Sayre, 179 App. Div. 269.) The intention of the settlor of the trust governs the provisions thereof. In order to ascertain that intent the court will look to the instrument in its entirety and will so interpret it as to give effect to all of the clauses embodied therein. (Union Trust Co. v. Boardman, 215 App. Div. 73; Street v. Post, 197 App. Div. 304; 232 N. Y. 563; Wright v. Miller, 8 N. Y. 9; Patterson v. Guardian Trust Co., 144 App. Div. 863.)

      Edward L. Blackman for defendants-respondents.
    The intention of the settlor of the trust must be ascertained and effect given thereto. In ascertaining that intent the court will look at the entire instrument and will interpret it so as to make the whole harmonious and reasonable. (Real Prop. Law, § 63; Union Trust Co. v. Boardman, 215 App. Div. 73; Street v. Post, 197 App. Div. 304; 232 N. Y. 563; Wright v. Miller, 8 N. Y. 9; Patterson v. Guardian Trust Co., 144 App. Div. 863.) The settlor parted only with such property in the securities placed in the hands pf the trustee as would be sufficient to carry out his purpose and yield an income to the cestui que trust of $50,000 annually. The remaining property therein was never parted with by the settlor and upon his death passed to his executors. (Townshend v. Fromer, 125 N. Y. 446; Street v. Post, 197 App. Div. 304; 232 N. Y. 565; Matter of Clark, 251 N. Y. 458.)
   Pound, J.

Edward R. Thomas made a deed of trust in January, 1922, in which he recited that he had previously agreed to establish a trust fund for the benefit of Robert Livingston Beeckman, and in which he established such a fund as follows: He transferred to a trustee securities of the par value of $647,000, yielding at that time an annual income of $50,000, with directions to pay the income to Beeckman quarterly during life. If said annual income shall exceed said sum of $50,000, the excess shall be paid to the settlor.” Upon the death of Beeckman the whole income was to be paid to the' settlor during life. No express provision was made as to the disposition of any excess income if the settlor died first. Upon the death of both, i. e., Beeckman and the settlor, the trust was to end and the principal was to be paid to the issue of the settlor, if any, and in default of issue was to pass under his will and, failing a will, to the heirs and next of kin. There was an undertaking on the part of the settlor, if the income fell below $50,000 annually, to make good the yearly deficiency to the extent of $6,000. The trust was afterwards modified by consent and by a court decree. Samuel Finley Thomas, son, was substituted as remainderman, if he should be living at the time of the death of the settlor and Beeckman.

The settlor died July 6, 1926, leaving issue a son, Samuel F. Thomas, and a daughter, Lucy Cotton Thomas, and also a will disposing of his estate. The beneficiary Beeckman survives. There is an annual surplus income. The question is what shall be done with it.

Samuel F. Thomas, the son, an infant under the age of fourteen years, claims that the surplus, not being otherwise disposed of by the deed, goes to him as the person presumptively entitled to the next eventual estate. (Real Prop. Law; Cons. Laws, ch. 50, § 63; Pers. Prop. Law; Cons. Laws, ch. 41, § 11; Matter of Kohler, 231 N. Y. 353, 375.) That he is the person presumptively so entitled is not denied. The courts below have held, however, that the deed of trust contains by implication a provision disposing of the income otherwise. The argument is that by the true construction of the deed the surplus income is to go to the executors of the settlor, if the settlor dies while Beeckman is still in being.

There is no claim that any such direction has been given in so many words. The question is whether it may be found in the deed through any process of construction.

The learned referee before whom the case was tried says in his opinion: No express provision is found in the trust indenture for the payment of such excess after the death of the settlor.” He also says: the excess income passes to the person presumptively entitled to the next eventual estate only in case where there is' no valid disposition thereof by the terms of the trust deed.”

After having correctly stated the terms of the deed and the law applicable thereto, he finds, not in the language of the deed, but in the circumstances surrounding the creation of the trust, an intention to substitute the settlor’s executors for the settlor himself after his death, and makes his decision accordingly. To defeat the application of the statute, we must find within the terms of the deed a valid direction for the disposition of income not otherwise disposed of. A mere inference in the abstract is not enough to supply an obvious omission. It is little better than a good guess. It would have been a simple matter for the settlor to have provided for the disposition of the excess income in case he died before the beneficiary. This he failed to do. How may we infer the intent of the settlor from his silence? It may well be that if his attention had been called to the omission .he would have directed that the excess income should be paid to his executors. It may equally well be that he would have provided that the excess income should go to his issue. In truth, we have no means of knowing what he would have done. The deed provided that upon the death of both Beeckman and the settlor the principal is to be paid to the estate only when the settlor left no issue. The trust and the estate were thus kept separate. If language or the absence of language means anything, the settlor left the surplus income to be disposed of, not in accordance with any intention which can be ascertained from the deed, but in accordance with the laws of the State. After his death, his interest in the surplus income ceased and, no other disposition having been made thereof, such income became payable to the person presumptively entitled to the next eventual estate. (Matter of Ossman v. Von Roemer, 221 N. Y. 381.)

Processes of construction may not be resorted to for the purpose of reading into the trust deed an intention not expressed or legitimately to be implied from the language used when construed in the light of the surrounding circumstances. We are to search, not for the probable intention of the settlor merely, but for the intention which the trust deed itself, either expressly or by implication, declares. We are to ascertain the intention from the words used and give effect to the legal consequences of that intention when ascertained. (Matter of Silsby, 229 N. Y. 396, 402.)

The inference may be that from the general scheme of the trust deed the settlor’s mind did not so operate that he consciously provided that the surplus income should be paid to the son, to the exclusion of the estate. But that is an inconsequential matter. Statutes are made to fill such gaps and to supply that for which the testator has not lawfully provided.

In a controversy between the son of the settlor and the settlor’s estate in which the son is a chief participant, it would be a dangerous doctrine which would permit us to write into the trust deed, after the word settlor,” the words “ his executors and administrators ” in order to reconstruct, rather than construe the deed and to improve upon the language thereof in order to reach a result deemed more equitable than that which the law indicates. It is a trite saying that rules of construction are to be applied only to interpret language of ambiguous or doubtful meaning. Here the omission is obvious and the legal implication therefrom inevitable.

The judgment, so far as appealed from, should be reversed and the judgment modified accordingly, with costs in all courts payable out of the estate.

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

.Judgment accordingly.


author: Crane, J.

text:
    David L. Keller, Appellant, v. American Chain Company, Inc., Respondent.

      (Submitted October 24, 1930;
    decided November 19, 1930.)

      Raymond T. Heilpern, William D. Cunningham and Otto C. Sommerich for appellant.
    The fact that the employer of plaintiff’s assignor was under a duty to repay to the defendant the refunds collected °by it did not impose an obligation on it to disclose the information upon the basis of which the refunds had been collected, nor did it deprive plaintiff’s assignor of the right to protect by contract the disclosure to the defendant of the knowledge known to him and not known to the defendant. (Mechem on Law of Agency [2d ed.], §§ 62, 63, 210, 251; Allegheny College v. National Chautauqua Co. Bank, 246 N. Y. 369; Hamer v. Sidway, 124 N. Y. 538; Home Ins. Co. v. Watson, 59 N. Y. 390.) The giving of information is sufficient valuable consideration to support a promise to pay therefor. (Bristol v. Equitable Life Assurance Soc., 132 N. Y. 264; Haskins v. Ryan, 75 N. J. Eq. 330; Parsons v. Robinson, 15 N. Y. Supp. 138; McLaughlin v. Barnard, 2 E. D. Smith, 372; Green v. Brooks, 81 Cal. 328; Lucas v. Pico, 55 Cal. 126; Cobb v. Cowdery, 40 Vt. 25; Chandler v. Mason, 2 Vt. 193; Reed v. Golden, 28 Kans. 632.)

      LeRoy B. Iserman for respondent.
    The employer of plaintiff’s assignor was the fiduciary of the defendant and as such owed it a duty of full disclosure of ah essential facts. It was not permissible for plaintiff’s assignor to exact a price for the performance of a clear duty and hence the alleged contract was contra bonos mores and without consideration. (Teele v. Mayer, 173 App. Div. 869; 1 Clark New York Law of Contracts, § 336; 1 Mechem on Agency, §§ 1223, 1224; Ingalls & Stockman v. Morgan, 10 N. Y. 178; Bennett v. Buchan, 76 N. Y. 386; Crooks v. People’s Nat. Bank, 72 App. Div. 331; 177 N. Y. 68; Meinhard v. Salmon, 249 N. Y. 458.) The contract was lacking in consideration. After plaintiff’s assignor disclosed his information to his employer he had nothing left to sell to the defendant. (Soule v. Bon Ami Co., 201 App. Div. 794; Masiline v. N. Y., N. H. & H. R. R. Co., 95 Conn. 702.)
   Crane, J.

The Archenhold Automobile Supply Company of Waco, Texas, is a jobber in automobile supplies. Gus P. Rosenthal, who is the real party in interest, and, therefore, will be referred to as the plaintiff, was its merchandise and traffic clerk, handling all matters of freight rates and traffic problems for the company. The supply company bought tire chains from the American Chain Company, Inc., a domestic corporation, under arrangements whereby the supply company paid the freight on shipments of chains to it from the defendant and deducted the charges from the amount of the invoices. The seller paid the freight through, and by means of, the purchaser. Whatever the charge happened to be, the purchaser deducted it from its bill and remitted the balance to the seller. Rosenthal discovered the freight charges were too high and that instead of $1.66% per hundred on minimum car loads of 30,000 pounds, the railroads should have charged $1.19% per hundred. In corresponding with the railroads as well as by an examination of the tariff schedules, he ascertained this mistake.

William T. Morris was vice-president and general manager of the defendant. Rosenthal met him in Colorado Springs, Colorado, and made him a proposition to impart certain valuable information for a consideration, whereby the defendant would save money annually in its shipments to the Texas district. He presented a written contract which was not signed. He, however, told Morris that he wanted one-third of the savings and refunds for a period of twenty years, payable monthly. To this Morris assented, according to Rosenthal, who thereupon imparted the information which he had regarding excessive freight rates.

The defendant refusing to recognize any such contract, Rosenthal, through the plaintiff as his assignee, brought this action in the State of New York, claiming one-third of the refunds which the defendant had received, and also one-third of what it was likely to receive in the balance of the twenty years. It appeared upon the trial that the defendant had obtained refunds of $3,384.33, of which one-third was $1,128.11. The jury gave the plaintiff this item, adding $6,000 “ for future years, making a total of $7,128.11.” The judge set aside the verdict and dismissed the complaint.

On appeal the Appellate Division affirmed the judgment, for reasons hereafter stated.

Counsel in this court has argued that the case for the plaintiff, even if true, did not constitute a valid contract, relying upon Soule v. Bon Ami Co. (201 App. Div. 794; 235 N. Y. 609) and Masline v. N. Y., N. H. & H. R. R. Co. (95 Conn. 702). In both these cases it was determined that the plaintiffs’ imparted information was nothing new, being an idea open and apparent to every one, and well known for years. The Soule case was affirmed in this court on the ground that the plaintiff failed to prove profits as the basis for his recovery. The facts appearing in the present case are much more favorable to the plaintiff than those of these cited cases. The freight rates and groupings upon shipments into various districts were more or less intricate. A book of some size, known as Sedgman’s Tariff Classifications, was studied by Rosenthal, wherein he ascertained that a lower freight rate could be obtained by a different classification of auto chains. He communicated with the railroads and received replies from all but one that the lower rate was correct. This other railroad adhered to the higher rate. Up to the time of Rosenthal’s investigation, the defendant had been paying $1.66^ per hundred, or the higher rate. Morris was advised by the plaintiff of all the facts and information which he had obtained, and the correspondence with the railroads was turned over to him. Apparently acting on this information, at least according to the plaintiff’s version, the defendant received rebates thereafter of over $3,384.33. Here was sufficient consideration for the promise of Morris in behalf of the defendant to pay one-third of the refunds when obtained and for the contract alleged to have been made. That information may be a valuable consideration for a promise to pay for it finds support in Bristol v. Equitable Life Assur. Soc. (132 N. Y. 264); Haskins v. Ryan (75 N. J. Eq. 330); McLaughlin v. Barnard (2 E. D. Smith, 372); Green v. Brooks (81 Cal. 328); Cobb v. Cowdery (40 Vt. 25) ; Reed v. Golden (28 Kans. 451).

The difficulty in the plaintiff’s case is that his information, although by its nature a sufficient consideration for a contract, failed to be such because of the relation which the plaintiff bore to the defendant. If the information which Rosenthal possessed was such that he should have imparted it to the defendant in .the course of their business transactions, there was then no consideration for the contract, and the plaintiff cannot recover. The Appellate Division gave this reason for their affirmance of the dismissal of the complaint.

Passing the question whether this was a Colorado contract, we come to the evidence regarding the duty which Rosenthal owed to the defendant.

As above stated, the American Chain Company, Inc., intrusted the Archenhold Automobile Supply Company with the money to pay freight charges. When the goods were shipped, the seller did not pay the freight charges in advance, but left it for the consignee or purchaser to settle with the railroad. Performing this duty, the supply company was acting for and on behalf of the shipper. It was an agent of the shipper for this purpose. The amount of the freight bill was taken off of the invoices sent to the supply company by the shipper and the balance remitted in payment for the chains. If there were a reduction or lowering in the freight rate, the defendant was entitled to it; it paid the freight charges through the supply company, and in accordance with statements sent to it by that company. That the relationship was one of trust and confidence, or at least one requiring fair, straightforward and open dealing, is apparent at once, when we ascertain from the evidence that after Rosenthal made his discovery of the overcharge in the freight rates, the Archenhold Automobile Supply Company made a demand upon the railroads for rebates on shipments for the two years then last past. It received these rebates, and failed to turn them over to the defendant. The knowledge of Rosenthal, of course, was the knowledge of his company. He was the freight agent charged with the duty of studying and investigating, routing, and railroad rates. As to these matters, he and his company were one, and he could not take or assume a position antagonistic to his employer’s interest or duties. What the supply company was bound to do, he also was obligated to perform. Although he may not have been personally under any duty to communicate with the defendant the information he had acquired regarding the freight rates, neither he nor his employer could make a secret profit out of the defendant by reason of this knowledge. When the supply company received the rebates from the railroad companies, the money belonged to the defendant, and should have been turned over to it at once. In so doing, the supply company would in the natural course of business have informed the defendant of the source from which the money came, and the reason why it was paid back. The supply company had received rebates from the railroads six to eight months before Rosenthal attempted to bargain with Morris in Colorado Springs. His employer at that time still had the rebates belonging to the defendant. The information which Rosenthal imparted to Morris was none other than the defendant should have had months before from its customer and agent. Under these circumstances Rosenthal could not profit through his employer's default or bind the defendant to a promise based upon a consideration of receiving that to which it was legally entitled.

The judgment should, therefore, be affirmed, with costs.

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

Judgment affirmed.


author: O’Brien, J.

text:
    Emma M. Stock et al., Appellants, v. William D. Mann et al., Defendants, and Henry B. Newhall, as Committee of the Estate of Edith Kimball, Appellant, Nathan Richman, Respondent.

      (Argued October 24, 1930,
    decided November 19, 1930,)

      George H. Witbeck for plaintiffs-appellants.
    Jurisdiction has been acquired over the non-resident incompetent. (Genet v. D. & H. Co., 163 N. Y. 177; Wheeler v. Scully, 50 N. Y. 688; McKenzie v. Woodward, 101 Misc. Rep. 47; Rogers v. McLean, 34 N. Y. 536; Dean v. Halliburton, 241 N. Y. 354; Crouter v. Crouter, 133 N. Y. 62; O’Donaghue v. Smith, 184 N. Y. 377.) The purchaser’s- title is not affected by a transfer tax lien. (Midurban Corp. v. F. D. Corp., 247 N. Y. 311; Carey v. Keith, 250 N. Y. 219.)

      James L. Nesbit, Lewis R. Conklin and William A. Montross for Henry B. Newhall, as committee, appellant.
    The rights of the incompetent have been protected and the committee of her property has sought to secure to her the benefits of that action and she is bound by the determination therein. (Rogers v. McLean, 34 N. Y. 536; Dean v. Halliburton, 241 N. Y. 354; Crouter v. Crouter, 133 N. Y. 55; Henderson v. Henderson, 247 N. Y. 428; Beaumont Construction Co. v. Higdon Elevator Co., Inc.,
      203 App. Div. 819; Seitz Estates, Inc., v. Seitz, 226 App. Div. 373; Partola Mfg. Co. v. Gen. Chemical Co., 234 N. Y. 320; Caldwell v. Nicholson, 235 N. Y. 209; Batchelor v. Batchelor, 244 N. Y. 274; Schuebbe v. Glenz, 252 N. Y. 7; Ciccolini v. Vocafilm Corp., 253 N. Y. 76.)

      John J. McManus for respondent.
    No jurisdiction was obtained of the non-resident incompetent person. (Vilas v. P. & M. R. Co., 123 N. Y. 440; Matter of Stephani, 75 Hun, 188; Nordlinger v. De Mier, 54 Hun, 276; Myers v. Prefontaine, 40 App. Div. 603; Freeman v. Alderson, 119 U. S. 187; Civ. Prac. Act, § 236; Petrie v. Shoemaker, 24 Wend. 85; Gorham v. Gorham, 3 Barb. 25; Burnet v. Bookstaver, 10 Hun, 97; Lane v. Schermerhorn, 1 Hill, 97; Matter of Perkins, 2 Johns. Ch. 124; Matter of Ganse, 9 Paige, 416; Matter of Neally, 26 How. Pr. 402; Matter of Curtis, 134 App. Div. 547; 197 N. Y. 564; Ferguson v. Crawford, 70 N. Y. 253; U. S. Life Ins. Co. v. Hellinger, 130 App. Div. 415; Smith v. Keteltas, 27 App. Div. 279; Crouter v. Crouter, 133 N. Y. 55; Banker v. Banker, 63 N. Y. 409; Gruner v. Ruffner, 134 App. Div. 837; Darrow v. Calkins, 154 N. Y. 503; Van Williams v. Elas, 106 App. Div. 288; Smith v. Reid, 134 N. Y. 568; Sonn v. Kennedy, 51 Misc. Rep. 234.) An unfixed and unpaid transfer tax is an. incumbrance justifying the rejection of the title on the ground that it is unmarketable. (Midurban Realty Corp. v. F. D. & L. R. Corp., 247 N. Y. 307; Carey v. Keith, Inc., 250 N. Y. 216; Kitching v. Shear, 26 Misc. Rep. 436.)
   O’Brien, J.

Sarah A. Kimball died seized of a life estate in certain real property in Albany. In this action for partition an interlocutory judgment of sale was entered and respondent Richman was the purchaser. He refused to accept the deed tendered by the referee and his motions to be relieved of his purchase on the ground that a marketable title cannot be given were denied. The orders denying them were reversed on the law. By the practice of this court such an order is deemed final and, therefore, appealable. (Smith v. Secor, 157 N. Y. 402; Kingsland v. Fuller, 157 N. Y. 507; Merges v. Ringler, 158 N. Y. 701; Matter of Young, 242 N. Y. 237; Kassin v. M. & L. Building Corp., 243 N. Y. 376, 379; Batchelar v. Batchelar, 244 N. Y. 274.)

Among the fifty-eight named defendants alleged in the complaint to possess rights in this real property as heirs at law is Edith Kimball to whom is assigned a one-thirty-first interest. She is an incompetent residing in Rhode Island. She was never served in this action nor did she authorize an attorney to appear for her. Henry B. Newhall was acting as the conservator of her estate in Rhode Island by appointment of an appropriate court of that State, but at the time of the entry of the interlocutory judgment of sale no committee had been appointed in this State. Nevertheless, he assumed to authorize an attorney to appear for her in this action. After the entry of the judgment of sale he was appointed in this State as committee of her property here by an order nunc pro tunc, as of September 30, 1924, and with the same force and effect as if entered on or before that date.

A foreign conservator, as such, has no power to authorize in this State the appearance of one who has been adjudged an incompetent elsewhere but not here. His attempt to do so is a nullity and later action cannot ratify an act which was originally bare of all power to confer jurisdiction. An order may not be made nunc pro tunc which will supply a jurisdictional defect by requiring something to be done which has not been done. (Mishkind-Feinherg Realty Co. v. Sidorsky, 111 App. Div. 578, 583; affd., 189 N. Y. 402.) Authority resides in our courts to appoint a committee of the property in this State of an incompetent residing elsewhere. An appointment so made may, in the discretion of the court, relate to the individual who acts as conservator in a foreign State (Civ. Prac. Act, § 1363; Matter of Curtiss, 199 N. Y. 36), but it must precede the appearance of the incompetent. By section 225, subdivision 2, of the Civil Practice Act a copy of the summons is required to be delivered to the committee and, in the discretion of the court, even to defendant in person. Otherwise no jurisdiction attaches. The summons in this action has never been served upon either one and the court has never obtained jurisdiction over Edith Kimball. (Vilas v. Plattsburgh & Montreal R. R. Co., 123 N. Y. 440, 453, 455.) Accordingly the judgment is not binding upon her.

We agree also with the reasoning of the Appellate Division that the unpaid transfer tax on the interest of Helen Kimball, one of Sarah A. Kimball’s surviving heirs at law, remains a lien on the property and renders it unmarketable. (Midurban Realty Corp. v. F. Dee & L. R. Corp., 247 N. Y. 307; Carey v. Keith, Inc., 250 N. Y. 216.)

The order should be affirmed, with costs.

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

Order affirmed.


text:
    Josephine B. Higgins, as Administratrix of the Estate of Robert R. Higgins, Deceased, Appellant, v. George Mason, Jr., Respondent.

      (Argued October 3, 1930;
    decided November 25, 1930.)

      Lawrence B. McKelvey and Wyllys A. Dunham for appellant.
    Defendant was guilty of actionable negligence. He did not exercise that degree of care required of him. (MacPherson v. Buick Motor Co., 217 N. Y. 382; Heskell v. Auburn L., H. & P. Co., 209 N. Y. 86; Meirs v. Koch Brewery, 229 N. Y. 10; Clark v. Traver, 205 App. Div. 206; 237 N. Y. 544; Grimshaw v. Lake Shore Ry. Co., 205 N. Y. 371; Lowell v. Williams, 183 App. Div. 701; 228 N. Y. 592; Adams v. Tozer, 163 App. Div. 751; Kane v. Sperry, 175 App. Div. 948; Royal Indemnity Co. v. P. & W. Refining Co., 98 Misc. Rep. 631; Marino v. Farrell, 201 App. Div. 367; Patnode v. Foote, 153 App. Div. 494; Birch v. City of New York, 190 N. Y. 397.)

      Clarence B. Kilmer, W. P. Butler and C. L. Hoey for respondent.
    Deceased was a licensee and his representative can recover only for active negligence on defendant’s part. (Patnode v. Foote, 153 App. Div. 494; Pigeon v. Lane, 80 Conn. 237; O'Shea v. Lavoy, 175 Wis. 456; Carroll v. City of Yonkers, 193 App. Div. 655.)
   Kellogg, J.

The plaintiff, Josephine B. Higgins, her husband, Robert Higgins, and the defendant’s wife, Grace Mason, were the guests of the defendant, George Mason, Jr., on an automobile trip from Corinth, N. Y., to Gravesville, a village near Utica, N. Y., and return, and rode with the defendant in an automobile owned and furnished by him. On the return journey, when about twenty miles from Corinth, the car, then driven by the plaintiff, Josephine B. Higgins, suddenly turned to the left, crossed the road on a sharp angle, entered the left-hand ditch and overturned. The occurrence caused the death of Robert Higgins. The plaintiff brings this action, as his administratrix, to recover damages for the death, charging that it was caused by the defendant’s negligence.

Shortly after the occurrence, a piece of rounded metal, three-fourths of an inch in diameter and one and a half inches long, was found near the center of the highway. It proved to be the upper end of a “ spindle pin ” or pivot pin,” a metal bolt' ór pin about seven inches long, which had served to attach the right-hand forward running wheel to the frame of the car, and furnished a pivot upon which there might be made to turn, by the steering mechanism, the running wheel, a short axle, upon which it revolved, and the spindle body, to which the axle was firmly attached. The pin, when in place, passed through the upper and lower arms of the stationary axle of the car, between which the spindle body was made fast, and likewise through the spindle body. With the pin entirely gone, the spindle body and running wheel would have dropped away from the car. With the pin in place, but broken, the upper part might rise with the motion of the car, thereby permitting the lower part, secured only at the bottom, as well as the spindle body and its attachments, to bend outward, in turn causing the running wheel to “ toe in,” whereby the direct forward motion of the car would be affected. The pin, however, while the upper part rested firmly on the lower, might have served to keep the running wheel in alignment, and the car motion true. At times a break in the pin might cause a shimmying in the steering wheel; while at other times this would not be noticeable. A car might travel a great distance with a broken pin without overturning. In this instance the right forward running wheel and spindle housing were found to be detached from the axle arms after the accident had occurred. It could reasonably be found that a broken spindle pin was the cause, not the result, of the overturning of the car.

In our sister States, where the rule generally prevails that an owner in operating an automobile owes to a guest the duty of ordinary care, the application of the rule has been expressly limited to instances where the violation of an obligation imposed, “ not to increase the danger to the guest or to create any new danger,” has been the subject of the claimed omission. (Beard v. Klusmeier, 158 Ky. 153; Perkins v. Galloway, 194 Ala. 265; Spring v. McCabe, 200 Pac. Rep. 41 [Cal.]; Bauer v. Griess, 105 Neb. 381; Fitzjarrell v. Boyd, 123 Md. 497; Tennessee Central R. R. Co. v. Vanhoy, 143 Tenn. 312; Dickerson v. Connecticut Co., 98 Conn. 87; Hemington v. Hemington, 221 Mich. 206; Munson v. Rupker, 148 N. E. Rep. 169 [Ind. App.]; Moorefield v. Lewis, 96 W. Va. 112; Mitchell v. Raymond, 181 Wis. 591.) It is true that in Massachusetts and Georgia the host is liable to the guest only where gross negligence is found (Massaletti v. Fitzroy, 228 Mass. 487; Burke v. Cook, 246 Mass. 518; Epps v. Parish, 26 Ga. App. 399); and in New Jersey'only where the host has been guilty of willful negligence. (Faggioni v. Weiss, 99 N. J. L. 157.) These decisions, however, are opposed to the general current of authority, and to the rule laid down in a case which came to this court (Clark v. Traver, 205 App. Div. 206; 237 N. Y. 544), where it was said: "It is well established that the duty which the defendant owed to the plaintiff as a licensee was to exercise ordinary and reasonable care, not to increase the danger of the plaintiff while thus in defendant’s car, or to create any new danger.” In Connecticut, where the standard of “ active negligence ” prevails, it has been said that fast, improper or inattentive driving would constitute such negligence. (Pigeon v. Lane, 80 Conn. 237.) It would seem, therefore, that, in respect to all acts or omissions, strictly relating to the operation of an automobile, the duty of the host toward his guests is to exercise ordinary care for their protection. The limitation, placed by the authorities upon the rule of ordinary care, that it applies in instances only where there is involved an increase of an existing hazard, or the creation of a new peril, is significant in its implication that as to existing risks,. such as might inhere in the mechanism of the car or the host’s lack of mechanical knowledge, the rule is inapplicable.

In Patnode v. Foote (153 App. Div. 494), a case frequently cited with approval (as in Beard v. Klusmeier, supra, and Cleary v. Eckart, 191 Wis. 114), the duty of a host, in reference to the condition of the vehicle furnished by him for the entertainment of his guest, was stated to be as follows: “ Under the above principles, therefore, one who invites another to ride is not bound to furnish a sound vehicle or a safe horse.” The case was cited in Dickerson v. Connecticut Co. (supra, p. 90) as authority for this proposition: “ The guest on entering the automobile takes it and the driver as they then are, and accepts the dangers incident to that mode of conveyance.” In many of the authorities the relationship between an automobile owner and a gratuitous passenger is likened to the relationship between a landowner and his guest, and the obligations arising therefrom are said to be the same. (Patnode v. Foote, supra; Greenfield v. Miller, 173 Wis. 184; Mitchell v. Raymond, supra.) The guest must take such premises or vehicle as he finds them and as it pleases the owner, in the exercise of bis right of dominion over his own property, to maintain the same.” (Mitchell v. Raymond, supra, p. 599.)

The rule that a guest, in accepting an invitation to his host’s premises for purposes of entertainment, or an invitation to drive, for similar purposes, accepts the premises, the vehicle, or the host, as they are, is subject to the proviso that such owner does not fail in the duty of informing or warning the guest of that which must be considered a trap or concealed defect or by no act of his creates a new danger.” (Mitchell v. Raymond, supra, p. 599.) “ If he should have knowledge that the vehicle was unfit for transportation or the horse unsafe to drive, another element would arise, andhe might be liable for recklessly inducing another to enter upon danger.” (Patnode v. Foote, supra.) The guest “ cannot hold the owner or occupant to any duty of care or diligence beyond giving notice of any danger of which he is aware.” (Bigelow on Torts [8th ed.], p. 161.) The duty of an owner of premises to a gratuitous licensee has been clearly stated in the Restatement of the Law of Torts, Tentative Draft No. 4, American Law Institute. The owner is hable for injuries to guests caused by a defective condition of the premises only if he “ knows of the condition and realizes that it involves an unreasonable risk to them and has reason to believe that they will not discover the condition or realize the risk ” and fails to use reasonable care to make the premises safe or “to warn them of the condition and the risk involvéd therein.” (§ 212.) If a host invites a guest to dine with him at his country place and the road to his house has been dangerously undermined, the host is not hable to his guest for an injury caused by a collapse of the road, if he did not have actual knowledge that the road was undermined, although he could have discovered it had he paid attention to the condition of his road.” (Id. Illustrations,- p. 165.)

Under the authorities, the defendant host, George Mason, was not liable for the death of his guest, Robert Higgins, because of a mechanical defect in his car, although Mason, by inspection, might have discovered the fault, since Higgins, in accepting the invitation to ride, must have taken the car as he found it and no duty of inspection rested upon Mason. Mason would be liable only if he knew of the dangerous condition; realized that it involved an unreasonable risk; believed that the guests would not discover the condition or realize the risk; and failed to warn them of the condition and the risk involved. Does the record show that these conditions, upon which liability depends, have been complied with?

On the return journey, near Utica, seventy miles before its arrival at the place of the accident, the automobile, driven by the defendant Mason, had taken a swerve ” or slew ” from the right side to the left edge of the macadam roadway. All concede that it had been raining and the road was wet. The defendant Mason says that the car slewed because he applied the brakes to the car while on a slippery road. There is testimony to the effect that Mason, several days after the accident, said in reference to the swerve that “ he knew there was something wrong with the car but he did not know what; ” that he “ thought there was something wrong ” but thought they would be able to get home; ” that Grace Mason, his wife, while driving after the swerve, called out to him, Papa, there is something wrong with the car.” This evidence may be sufficient to justify the inference that the spindle pin, at or prior to the “ swerve,” had broken, and that the break caused the swerve. It is insufficient, we think, to warrant the inference that there was actual knowledge on Mason’s part that the car was in a dangerous condition, or actual realization that there was an unreasonable risk to his guests involved in a continuance of the journey. Even if Mason knew that something was wrong with the car, that it was logy ” on hills, that it did not steer well, this was far from being realization of the fact that a serious mechanical defect, making further travel dangerous, was involved. Mason’s own conduct in exposing his wife and himself to the peril of traveling farther in the car indicates that he was not conscious of the peril. If Mason thought the car safe for himself he could not have realized that it was unsafe for his guests. Then, also, if Mason’s failure to realize that the something ” which was wrong with the automobile constituted a dangerous condition was due to bis lack of mechanical knowledge, that was a risk assumed, by the guests when they accepted the invitation to take the trip. Moreover, all of the guests were drivers of automobiles, so that if Mason did realize the danger indicated by the swerve, he could not have thought that his guests were unaware of it. Therefore, we think no obligation rested upon Mason to warn his guests of a peril involved in a continuance of the journey.

The judgment should be affirmed, with costs.

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

Judgment affirmed.