author: Thacher, J.

text:
    Argued January 5, 1944;
    decided March 10, 1944.

      Charles H. Kriger and Henrietta Kriger for plaintiffs-appellants.
    I. The question of parity in this case is to be determined by the laws of the State of New York. (Prudence Corp. v. Qeist, 316 IJ. S. 89; Pink v. Thomas, 282 N. Y. 10; Matter of Title & Mortgage Guaranty Co., 275 N. Y. 347; Heivit v. Berlin Machine Works, 194 U. S. 296; Security Warehousing Co. v. Hand, 206 U. S. 415; Van Glider v. Barnes, 288 Mich. 492; Union Trust Co. v. Willsea, 275 N. Y. 164; Sherman v. Buckley, 119 F. 2d 280; Foust v. Munson S.S. Lines, 299 U. S. 77; Thompson v. Magnolia Co., 309 U. S. 478; Palmer v. Larchmont Manor Co., 284 N. Y. 288; Matter of Title & Mortgage G%t,aranty Co., 275 N. Y. 347; Chicot County Dist. v. Bank, 308 TJ. S. 371; People ex rel. C. P., etc., B. B. Co. v. Willcox, 194 N. Y. 383; Beck v. Bauman, 187 App. Div. 774.) II. The Burnside certificates held by Prudence are subordinate to those publicly held. (Pink v. Thomas, 282 N. Y. 10; Matter of Lawyer’s Title & Guaranty Co., 287 N. Y. 264; Matter of Title .& Mortgage Guaranty Co., 275 N. Y. 347; Title G. & T. Co. v. Mortgage Comm., 273 N.'Y. 415; Matter of People [Union Guar. & Mtg. Co.], 285 N. Y. 337.)

      Eugene Blanc, Jr., for defendants-appellants.
    I. Prudence Corp. v. Geist, 316 U. S. 89, requires subordination of the certificates acquired by the defaulting guarantor under the circumstances of the present case. (American Ins. Co. v. Avon Park, 311 II. S. 138; Matter of Prudence-Bonds Corporation, 102 F. 2d 531.) II. The reservations in the two reorganization plans require that the question of parity be now determined in accordance with the law applicable to the relations existing among the certificate holders and the guar-autor, as of a time just prior to the latter’s bankruptcy. (Matter of Title & Mortgage Guaranty Co., 275 N. Y. 347; Pink v. Thomas, 282 N. Y. 10; Matter of People [Union Guar. & Mtg. Go.'], 285 N. Y. 337; Matter of Lawyers Title & Guaranty Co., 287 N. Y. 264; Smith v. Chase Nat. Bank of City of New York, 84 F. 2d 608; Matter of Moose River Lumber Co., 251 F. 409; Hanlon v. Union Bank of Medina, 247 N. Y. 389; McGrath v. Carnegie Trust Co., 221 N. Y. 92; American Surety Company of New York v. Gerold, 255 App. Div. 285; New Jersey Equities Co. v. Mandel, 178 Mise. 783.) III. Subordination under the circumstances of this case will not violate the bankruptcy rule of equality of distribution. (Taylor v. Standard Gas Co., 306 U. S. 307; Pepper v. Litton, 308 IT. S. 295; Prudence Corp. v. Geist, 316 IT. S. 89; Bank of America Nat. Trust & Sav. Assn. y. Erickson, 117 F. 2d 796; Matter of Allied Properties Co., 118 F. 2d 773.)

      Irving L. Schanser for respondent.
    I. The question of parity of Prudence certificates is a Federal question as to which the Bankruptcy Act (IT. S. Code, tit. 11) and the Federal decisions are controlling. (Prudence Corp. v. Geist, 316 IT. S. 89; Matter of New York Title & Mortgage Co., 277 N. Y. 66; Ivanhoe Bldg. Assn. v. Orr, 295 IT. S. 243; Matter of New York Title & Mortgage Co., 160 Mise. 67; Bremen v. Dahlstrom Metallic Boor Co., 189 App. Div. 685; Frank v. Mercantile National Bank, 182 N. Y. 264; Cassedy v. Johnstown Bank, 246 App. Div. 337; Schneck v. Lewis, 121 Mise. 370, 210 App. Div. 845; Sturm v. Chatham & Phenix National Bank, 121 Mise. 47; Erie R. Co. v. Tompkins, 304 IT. S. 64; Awotin v. Atlas Exchange Bank, 295 IT. S. 209; Local Loan Co. v. Hunt, 292 IT. S. 234; Brooklyn Trust Co. v. Kelby, 134 F. 2d 105; Jennings v. Z7. S. F. & G. Co., 294 IT. S. 216.) II. No conflict exists between decisions of the Court of Appeals and the United States Supreme Court with respect to the issues here involved. (Matter of Title & Mortgage Guarantee Co., 275 N. Y. 347.) III. Assuming, arguendo, that the decision of the United States Supreme Court is not controlling, the certificates held by Prudence Realization Corporation are entitled to parity under the New York law.
   Thacher, J.

These consolidated actions arose under a plan for the reorganization in bankruptcy of guaranteed mortgage participation certificates known as the Burnside issue which ■was confirmed by the United States District Court for the Eastern District of New York on June 14, 1938, in proceedings for the reorganization in bankruptcy of Amalgamated Properties, Inc. (hereinafter called Amalgamated). Before the confirmation of the plan, these proceedings were on April 22, 1938, severed from similar proceedings for the reorganization of The Prudence Company, Inc. (hereinafter called Prudence). Under a plan for the reorganization of another issue of guaranteed mortgage participation certificates questions similar to those involved here were raised in the reorganization court and were ultimately decided by the Supreme Court of the United States in Prudence Corp. v. Geist (316 U. S. 89) and we are confronted at the outset by the contention that that case is controlling here. It is therefore necessary to consider the proceedings in the Federal courts in that case, the proceedings in bankruptcy with reference to the Burnside issue and the terms and conditions of the Burnside plan of reorganization pursuant to which these suits were brought in the Supreme Court of this State.

The decision of the United States Supreme Court in Prudence Corp. v. Geist (supra) was rendered in consolidated reorganization proceedings for the reorganization in bankruptcy of, Prudence and Amalgamated. The particular proceeding finder review in that case related to the reorganization of an issue of guaranteed mortgage participation certificates known as the Zo-Grale Bealty Co. issue. In connection with that issue Prudence, the guarantor of the certificates, claimed parity of payment of certificates purchased by it from the proceeds of assets received by Amalgamated on account of the mortgage1 debt. It was held that Prudence in bankruptcy reorganization was entitled to such parity of payment on the certificates purchased by it, notwithstanding the decisions of this court in Matter of Lawyers Title & Guaranty Co. (287 N. Y. 264); Matter of People (Union Guar. & Mtg. Co.), (285 N. Y. 337); Pink v. Thomas (282 N. Y. 10); Matter of Title & Mortgage Guaranty Co. (275 N. Y. 347); Title G. Co. v. Mortgage Comm. (273 N. Y. 415); Matter of Lawyers Mortgage Co. (545 West End Ave.) (272 N. Y. 554); Matter of New York Title & Mortgage Co. (272 N. Y. 556).

The Supreme Court held that there was no basis for the conclusion of the Circuit Court of Appeals that it was bound to apply, as “ a rule of construction of the guaranty in the certificates,” the rule announced in New York; that there was no evidence of actual intent to subordinate certificates owned by Prudence, and that, so far as the New York cases, without evidence of the actual intent of the parties, subordinate the guarantor on grounds of “ presumed intention ”, or the existence of special equities,” or the natural equities ” involved, the rule laid down is one of State law governing the relative rights of claimants in a State liquidation. (316 U. S. 93, 95.)

The suits in the State court which are now before us are not proceedings in bankruptcy nor are they State liquidation proceedings. Each is brought to determine relative rights in property held for the satisfaction of a mortgage. Such rights, if not determined or defined by provisions of a plan of reorganization predicated upon the consents required by the Bankruptcy Act and approved by the bankruptcy Judge as fair and equitable ”, must be determined by the law of New York where the land is situated and where the bond and mortgage, the participation certificates and the agreement of guaranty were made and delivered. Accordingly, it becomes necessary for us to consider whether any provision of an approved plan of reorganization or any order of the bankruptcy court has determined or defined the relative rights of Prudence and other certificate holders to share in the security of the mortgage or in sums received on account of the mortgage debt. We find none in this record, which, so far as pertinent, may be summarized as follows':

Action No. 1 was brought by the trustees named in the declaration of trust required by the plan for the reorganization of the Burnside issue. This plan was confined to reorganization of the certificated bond and mortgage and the certificates. It did not embrace in its scope anything other than the mortgaged property,— 307 West 36th Street in the city of New personal property therein owned by Amalgamated, the certificated bond and mortgage, the certificates, and any other money or property to which the certificate holders were entitled. All rights of action against the obligor npon the bond and against Prudence, pursuant to its agreement of guaranty, were expressly reserved. With reference to the payment of certificates acquired by Prudence, the plan as amended contained the following reservation:

“ A question has arisen with respect to the rights of The Prudence Company, Inc., or its Trustees on account of the certificates held or claimed by them, including so-called ‘ unissued certificates/ Anything in the Plan to the contrary notwithstanding, the Trustees to be appointed hereunder shall make no distributions of cash or other property or securities which would be otherwise distributable on account of the certificates now held or claimed by The Prudence Company, Inc., or its Trustees, including said ‘ unissued certificates,’ unless and until it shall have been finally adjudicated by a Court of competent jurisdiction whether or not The Prudence Company, Inc., or its Trustees, or their successors or assigns, are entitled to receive such cash or other property or securities and to share in the proceeds of the property to be assigned to the Trustee pursuant to the Plan and on a parity with other certificate holders or otherwise. The actual distribution of such cash, securities or other property shall be made in accordance with such final adjudication. Pending such final adjudication the Trustee to be appointed pursuant to the Plan shall hold in escrow the share of any cash, property or other securities distributed under the Plan to which the certificates held by The Prudence Company, Inc., or its Trustees, including said ‘ unissued certificates,’ would be entitled if owned and held by persons other than The Prudence Company, Inc., or its Trustees.”

Among the defendants named were Prudence Realization Corporation (herein called Realization Corporation), which holds legal title to the assets formerly owned by Prudence, including certificates of the Burnside issue. The defendants other than Realization Corporation were sued as representatives of holders of Burnside certificates.

Plaintiffs acknowledged that they were holding as trustees the bond and mortgage, the title to the mortgaged premises 307-13 West 36th Street without merger of the mortgage with the fee and that the rights of the holders of mortgage participation certificates in and to the bond and mortgage and in and to the guarantee of Prudence were assigned to plaintiffs as trustees, who also hold the guarantee and the sum of $26,950.80 distributable to certificate holders when the relative rights of Prudence and of other certificate holders have been determined.

The relief sought was a judgment declaring the rights and interests of Realization Corporation and all other certificate holders in and to the corpus and income of the trust estate and an accounting by Realization Corporation for moneys distributed to or held by it or by Prudence on account of Burnside certificates.

Action No. 2 was brought by Kimmelman and Zauderer, a firm holding Burnside certificates, against Realization Corporation and Ferris et al., the plaintiffs in Action No. 1. The relief sought is similar to that prayed for in Action No. 1. Actions Nos. 1 and 2 were consolidated.

Special Term held that an issue of fact was presented and denied summary judgment. Realization Corporation, City Bank Farmers Trust Company and Lindgrove, as trustees, and plaintiffs in Action No. 1 appealed. The Appellate Division reversed on the law the order denying Realization Corporation’s motion for summary judgment and granted such judgment. It affirmed the order insofar as it denied judgment to City Bank and Lindgrove and to plaintiffs in Action No. 1.

control and supervision of this Court ⅝ ⅜ ⅜ and these proceedings shall hereafter he treated as dismissed for all purposes, except the determination of the questions raised in the pending motion of A. Joseph G-eist, the Trustee appointed by this Court pursuant to the plan of reorganization herein for the certificated mortgage on premises known as 202 Riverside Drive, Borough of Manhattan, City and State of New York (Zo-Gale Issue), for determination of the relative priorities in said certificated mortgage of the certificates held by Prudence Realization Corporation and the certificates held by the public.”

Shortly after the entry of this order the pending actions were commenced on February 26th and 25th, 1941, respectively.

Upon this record it appears without contradiction that the Burnside plan of reorganization did not attempt to define or determine the relative rights of Realization Corporation as the holder of certificates acquired by Prudence and of other holders of Burnside certificates, nor was any determination of these rights made in the Bankruptcy Court in the course of its administration or in connection with the distribution of any of the assets either of Prudence or of Amalgamated. The controversy, therefore, was brought to the State courts, as contemplated by the plan of reorganization, for determination of these relative rights unaffected by the reorganization consummated in the Federal court.

Corporate reorganization in the Federal courts is a process of adjustment and modification of legal rights frequently involving the impairment of contractual obligations under plans predicated upon the consent of security holders and creditors and upon the court’s approval of the plan as fair and equitable and therefore binding upon the minority. If neither the plan nor any order in the proceeding undertakes to modify the legal rights but leaves those rights to be determined by courts of competent jurisdiction, such courts have no power to impair the legal or equitable rights of the parties. The court below erroneously regarded the Geist case as establishing a rule. It was only effective in determining a question affecting the administration and distribution of assets in the particular reorganization before the court. To conclude that our decision is ruled by the decision of the Supreme Court in the Geist case, ■ we should have to modify the Burnside plan of reorganization, which did not undertake to determine, define or modify the relative rights of certificate holders under the Burnside mortgage.

It is therefore necessary for ns to determine for ourselves whether or not nnder the decisions of this State Prudence was entitled to parity of treatment for its certificates with the certificates held by others in this mortgage.

The certificates here in question were created and issued in the following manner: In June of 1927 Prudence was the owner of a bond and mortgage in the sum of $1,200,000, reduced by payments to $1,100,000, made by the Burnside Improvement Co., Inc. The mortgagor had agreed with Prudence to pay interest at six per cent and amortization of $12,000 payable semiannually. This bond and mortgage Prudence assigned to its wholly owned affiliate, Prudence-Bonds Corporation, in order that it might issue mortgage participation certificates therein bearing its guarantee as to principal and interest at five and one-half per cent. Prudence-Bonds Corporation entered into a deposit agreement with the Bank of America dated June 25, 1927, pursuant to which the bond and mortgage were assigned to the bank. Prudence in turn executed, acknowledged and delivered to the bank its agreement guaranteeing to each holder of participation certificates payment of interest when due and payment of principal when due or within eighteen months thereof. The deposit agreement contains the following provision :

11 The Bond and Mortgage, an appraisal showing the value of the real property covered by said mortgage to be at least fifty per centum more than the amount of said mortgage, the guarantee of The Prudence Company, Inc., guaranteeing to the holders of the certificates payment of principal and interest, and the insurance policies and other instruments and evidences of title relating thereto are and shall continue to be held by The Bank of America as Depositary for the benefit of all parties interested in said Bond and Mortgage, according as their interest may appear, it being understood and agreed between the parties hereto and by and with the persons who will from time to time be the holders of said certificates, that each certificate shall represent and be an evidence of the ownership of an undivided share or part to the extent of the princi-^ pal amount therein stated, in the aggregate principal of said Bond and Mortgage and the mortgage debt secured thereby (with interest at the rate specified in said certificate) and that each holder is entitled to a like proportion, right or benefit in said guarantees of payment, policy or policies of title insurance, insurance policies and other instruments and evidences of title relating thereto, accompanying the same, or which may at any time accompany or he collateral thereto, and held by the Depositary, each such share or part being owned by the holder thereof without priority of any share or part over any other, whether held by the Corporation or Depositary or by the holder of any other certificate to be issued hereunder, and each share or part not being subordinate to any other shares thereof and not subject to any prior interest in said bond and mortgage.” Prudence was not a party to'this agreement and the words Corporation” refer to Prudence-Bonds Corporation.

The certificates acknowledge payment for an undivided share or part in the bond and mortgage of Burnside Improvement Co., Inc., equal to the amount paid. The certificate provides:

The share or part in said bond, mortgage and extension agreement represented by this certificate, is not and shall not be subordinate to any other share or shares thereof, and is not and shall not be subject to any prior interest therein.”

The Corporation and Prudence, the guarantor, are irrevocably authorized to collect moneys payable under the terms of the mortgage; to credit the bond, mortgage and extension agreement -with payments thereon; to satisfy or assign said mortgage upon payment thereof; to “ account to the holder of this certificate for his -share of the principal and for interest at the rate of five and one-half per cent per annum thereon, payable under the terms of this certificate and to retain any balance of moneys collected * * * The certificate also contains the following:

The Corporation, the Guarantor and The Bank of America, New York, for their respective corporate accounts, may be the holder or pledgee of similar shares in said bond and mortgage, as extended.”

On the reverse side of the certificate Prudence certifies its guarantee and further certifies and guarantees ‘ ‘ that the share or part of said bond, mortgage and extension agreement represented by the foregoing certificate is not subordinate to any other share or shares thereof, and is not subject to any prior interest therein.” The Bank of America also certifies on the back of the certificate ‘ ‘ that the share or part of said bond and mortgage, as extended, represented by the foregoing certificate, is not and shall not be subordinate to any other share or shares thereof, and is not and shall not be subject to any prior interest therein.”

"We are concerned only with the claim for parity on account of certificates acquired by Prudence after default by the mortgagor. Most of the acquisitions were either by exchange of outstanding certificates for other similar investments or in part for such investments and in part for cash. Certain certificates were purchased through a brokerage account at prices substantially below par and interest. As a result of all of these transactions, Prudence acquired certificates in the face amount of $425,212.86 at a cost to it of $418,372.66, or about one and six-tenths per cent below par on all of the certificates acquired. Although these certificates aggregating $425,212.86 face value were all acquired by Prudence prior to March 1, 1933 — and some as early as March 3, 1932 — they were on March 1, 1933, canceled and a new certificate for the entire amount was issued in the name of Reconstruction Finance Corporation. A month later, on April 4,1933, this certificate was in turn canceled and a new certificate for the same amount was issued in the name of Prudence.

The decisions of this court cited (supra) control decision here. In Matter of Title & Mortgage Guaranty Co. (275 N. Y. 347) the Title Company, which had issued and sold mortgage participation certificates and had guaranteed to purchasers payment of principal and interest due thereon, retained an unsold interest in the mortgage of $200. In proceedings for the rehabilitation of the Title Company, the Superintendent of Insurance as liquidator claimed, upon the judicial settlement of the accounts of the trustees, that it was entitled as holder of the $200 interest to share in the distribution of the amount collected upon the bond and mortgage pro rata with the holders of the guaranteed certificates. It was held that the holders of the guaranteed certificates had a prior right to payment out of the proceeds of the mortgage. In the opinion Title Guarantee & Trust Co. v. Mortgage Commission (273 N. Y. 415) was discussed and it was pointed out that in that case the certificates were not guaranteed the assignor nor was there any language in the certificate indicating that the interest retained by the assignor should be subordinated in any manner to the- interests assigned by holders of certificates. The opinion continued (at p. 352): “In earlier cases, to which the court referred with approval in its opinion in Title Guarantee & Trust Co. v. Mortgage Commission (supra), we had held that in the absence of contractual provisions to the contrary, a corporation which has issued and guaranteed participation certificates in bond and mortgage is not entitled, as owner of a retained portion of the bond and mortgage, for which no certificate had been issued, to share in insufficient proceeds of the securities, pro rata with the holders of the certificates which had been issued. (Matter of Lawyers Mortgage Co. [545 West End Ave.], 157 Misc. Rep. 813; affd., 248 App. 715; affd., 272 N. Y. 554; Matter of New York Title & Mortgage Co., 272 N. Y. 556).” Reaffirming these decisions, the court found them to be supported by the weight of authority in this and other jurisdictions, citing decisions from other states to the same effect, and continued: “ In other cases where the courts have reached the conclusion that an assignor of part of a debt may share in insufficient proceeds of the debt even though the assignor had guaranteed payment of the part assigned, the courts usually found such intention either expressed in the assignment or implied by silence in circumstances which create special'equities in favor of the guarantor.” Consideration was given to the question of insolvency of the guarantor in its relation to the theory of circuity of action, and conclusion was reached that, where the actual intent of the parties was that an assignee should have priority over an assignor who was also a guarantor, insolvency of the guarantor cannot deprive the assignee of his right to such priority, because, as the court said, enforcement of contractual rights granted by the guarantor would in such case not give rise to an inequitable preference over other creditors of the guarantor. The court continued: “That is true in this case. The right of the certificate holder to preference in the distribution of the proceeds rests not only upon presumption of intent derived from the guaranty of the assignor, hnt also upon actual intent clearly implied in the clause of the certificate which provides that upon the collection of the proceeds of the mortgage by the assignor it shall have the right ⅞ out of the proceeds of such collection to retain so much as may remain after paying to the holder hereof whatever may be due to such holder of principal and interest on this certificate as herein ” A similar clause was considered in Matter of People (Union Guar. & Mtg. Co.), (285 N. Y. 337, 344). The language in the certificate was that the Guaranty Company “* * * shall likewise have the right to retain, out of the proceeds of collection of said bond and mortgage, so much as may remain after paying whatever may be due to the assured of principal and interest on this or other certificates.” Of this provision it was said in the opinion: “ It is clear from the language used in the above-quoted portion of the certificates that such portion is sufficient evidence of an actual intent on the part of the contracting parties to grant priority to the certificate holders.” So far as that part of the opinion is concerned, it was unanimous.

In this case there is a similar provision in the certificate, quoted (supra). While there are verbal differences in these three clauses, they are all of the same effect and expressly provide that the guarantor, having collected the proceeds of the mortgage, shall pay these certificates and retain the surplus. Here, as in the other cases, there are other clauses which, standing alone, might be taken to indicate parity of treatment as between the guarantor and the other certificate holders. This was true in Matter of Title & Mortgage Guaranty Co. (supra) and in Matter of People (Union Guar. & Mtg. Co., supra). When there is ambiguity in the agreement relied upon by the guarantor in support of a claim of parity, the rule denying parity to the guarantor is enforced. (Pink v. Thomas, 282 N. Y. 10, 12.) In the latest decision of this court (Matter of Lawyers Title & Guaranty Co., 287 N. Y. 264) it was held that a certificate owned by the guarantor and pledged as collateral for a loan was subordinate to the interest of the owner of a certificate purchased by the holder.

Under the settled course of decisions in this State the guaranteed mortgage participation certificates held by the defendant, Prudence Realization Corporation, are not entitled to

The judgment of the Appellate Division, should accordingly be reversed, with directions to enter judgment declaring that the certificates held by the defendant, Prudence Realization Corporation, are subordinate to those held by others, and directing the defendant, Prudence Realization Corporation, to turn over to Joseph W. Perris, George L. Long and Henry Leifert, as trustees under the declaration of trust dated as of July 1, 1938, with respect to 307 West 36th Street (Burnside) first mortgage participation certificates, all moneys held by it on account of any of the Burnside participation certificates, with costs in this court and in the Appellate Division to the plaintiffs and defendants-appellants in Action No. 1.

The judgment of the Appellate Division should be reversed and judgment directed in accordance with this opinion, with costs in this court and in the Appellate Division to the plaintiffs-appellants and defendants-appellants in Action No. 1.

Ch. J., Rip'pet, Lewis, Cokwat and DesmoND, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of New York, Respondent, v. William M. Lamm, Appellant.
    Submitted January 19, 1944;
    decided March 10, 1944.

      Joseph F. Carlino for appellant.
    I. A fatal variance exists between the indictment and tbe proof which was not cured by tbe People’s motion to conform tbe indictment to tbe proof in relation to tbe ownership of tbe money alleged to have been extorted and the indictment should have been dismissed. (Peo-

      pie v. Kelley, 127 Mise. 300; People v. 'Dmnar, 106 N. Y. 502; People y. Corbalis, 178 N. Y. 516; People v. Grogan, 260 N. Y. 138; People v. Bloom, 263 App. Div. 821; People v. Mot ello, 157 App. Div. 510; People v. Bromwich, 200 N. Y. 385; People v. Faw Every, 222 N. Y. 74; PeopZe v. Mies, 289 N. Y. 360; People'v. Clurman, 290 N. Y. 242.) II. The conduct of the District Attorney in cross-examining character witnesses was highly prejudicial and improper and the defendant’s motion for a new trial itpon that ground should have been granted. (.People v. Callahan, 151 App. Div. 666.) III. The trial court failed to comply with the provisions of section 450 of the Code of Criminal Procedure and the defendant’s right to have the jury polled was impaired. IV. The defendant’s guilt was not established beyond a reasonable doubt as a matter of law.

      Edward J. Neary, District Attorney (Philip Huntington of counsel), for respondent.
    I. The evidence is sufficient to sustain the verdict, as a matter of law. II. The alleged variance between the indictment and the proof was not material and the granting of the motion to conform was not prejudicial to the defendant. (People v. Geyer, 196 N. Y. 364; People v. Hagan, 37 St. Rep. 660; People v. Herman, 45 People v. Dunn, 53 Hun 381; People v. Johnson, 104 N. Y. 213; People v. Kellogg, 105 App. Div. 505; People v. Fleming, 60 Hun 576; People v. Barondess, 133 N. Y. 649.) III. The cross-examination of the character witnesses was proper. (People v. Laudiero, 192 N. Y. 304; 71 A. L. R. 1504; People v. Saul, 188 App. Div. 25.) IY. No claim of error may be predicated upon the manner in which the jury was polled. (Green v. Bliss, 12 How. Pr. 428.)
   Thacher, J.

Defendant appeals from a judgment unanimously affirming a judgment of conviction for attempted extortion. The indictment charged the defendant with having-attempted to obtain from one Joseph O’Rourke $225 with O’Rourke’s consent, induced by a threat unlawfully to injure the business and property of 0 ’Rourke.

Defendant, a special organizer of a local union of the Brotherhood of Painters, Decorators and Paperhangers of America, is alleged to have threatened to prevent O’Rourke from obtaining the services of union men needed, to carry on his business. The indictment, as well as .the District Attorney’s opening to the jury, refers to the business as O’Rourke’s. It appeared on the trial, however, that- the business in question and the money paid were owned by Joseph O’Rourke, Inc.

At the close of the People’s case the District Attorney moved “ to conform the indictment to the proof in so far as the ownership of the money is concerned, there being some question here as to whether the ownership was in the corporation or in the individual ”. Defendant objected on the ground that in an extortion case “ The money must be personal The court granted the motion.

The only questions of law presented for our consideration are whether the amendment of the indictment was authorized and, if it was, whether there was any evidence to support the verdict of guilt.

The crime charged is defined by section 850 of the Penal Law, which provides: “ § 850. Extortion defined. Extortion is the obtaining of property from another, or the obtaining the property of a corporation from an officer, agent or employee thereof, with the consent, induced by a wrongful use of force or fear, or under color of official right.” Section 851 of the Penal Law provides: “ § 851. What threats may constitute extortion. Fear, such as will constitute extortion, may be induced by an oral or written threat: 1. To do an unlawful injury to the person or property of the individual threatened, or to any relative of his or to any member of his family or to a corporation of which he shall be an officer, stockholder, employee or agent; * ⅜ *

It will be noted that obtaining money from an individual who is an officer of a corporation, with his consent induced by a wrongful use of fear, is a crime, whether the money is the property of the individual or of the corporation and whether the threat is unlawfully to injure the property of the individual or the property of the corporation of which he is an officer.

■Here the threats were to injure a business carried on by O’Rourke by preventing the employment of union men whose services were necessary if the business was to be carried on, and by preventing the continuance of the business and the completion of existing contracts. The business described in the indictment as O’Rourke’s was managed by bim and was intimately known to the defendant, who not only represented the union in its relation to the business, hut was an intimate of O’Bourke and was active in persuading responsible concerns to do business with him. The relations of the union to this business in the supervision of which the defendant was engaged was evidenced by written agreements in the name of Joseph O’Bourke, Inc., which were executed by Joseph O’Bourke as president. The defendant procured an advertisement of the business, for which O’Bourke paid him fifty dollars. This advertisement described the business as:

The motion to conform the indictment to the proof insofar as the ownership of the money was concerned was allowed by the trial court, who stated: “ I shall allow the amendment. I do not think that you have been surprised by this situation at all.” The record confirms beyond question the truth of that statement and no prejudice of any kind was claimed. Sections 281, 293 and 684 of the Code of Criminal Procedure afford ample support for this ruling.

“■§ 281. Statement as to person injured or intended to be injured. "When an offense involves the commission of, or an attempt to commit a private injury, and is described with sufficient certainty in other respects to identify the act, an erroneous allegation as to the person injured, or intended to be injured, is not material. ’ ’

“ § 293. When amendment allowed. Upon the trial of an indictment, when a variance between the allegation therein and' the proof, in respect to time, or in the name or description of any place, person or thing, shall appear, the court may, in its judgment, if the defendant cannot be thereby prejudiced in his defense on the merits, direct the indictment to be amended, according to the proof, on such terms as to the postponement of the trial, to be had before the same or another jury, as the court may"deem reasonable.”

§ 684. Errors, etc., when not material. Neither a departure from the form or mode prescribed by this Code, in respect to any pleadings or proceedings, nor an error or mistake therein, renders it invalid, unless it have actually prejudiced the defendant, or tend to his prejudice, in respect to a substantial right.”

The record discloses evidence amply sufficient to sustain the verdict.

On December 19th Lamm and O’Rourke met in Lynbrook, where O’Rourke gave to the defendant, Lamm, $225 in bills which had previously been marked for - identification. O’Rourke’s testimony, if believed, shows that this transaction was the culmination of a series of demands which Lamm had made upon him for the payment of the money, with assurances that if the money was paid lie would have no labor trouble, but that if it was not paid he would be put out of business by the ■ refusal of union painters to work in his employ. Lamm was a special organizer for District Council 28 of Painters, Decorators and Paperhangers of America and O’Rourke was engaged in the painting and decorating business in the territory over which Lamm had jurisdiction. The defendant vigorously denied making any threats and claimed that $210 of the money was paid to him for forty-two tickets for a. labor union dinner in Westchester and that fourteen dollars was paid to him to cover seven months’ union dues of O’Rourke’s brother-in-law, John Duffy. The defendant does not account for the additional dollar.

The issue presented was clearly one of credibility, and, since we may not consider the weight of the evidence, we may not set the verdict aside.

The other points raised by the appellant,— one relating to the cross-examination of character witnesses and the other to an informality in the polling of the jury,— are not supported by objections or exceptions.

The judgment should be affirmed.

Lehman, Ch. J., Loughran, Rxppey, Lewis, Conway and Desmond, JJ., concur.

Judgment affirmed.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v. Jacob Bernoff, Thomas McAdam, Murray Gabaeff, Edward Taylor, Abraham Lichtenstein, Charles Green, Jeremiah Buckley, George Blume and John Murphy, Appellants.
    Argued December 6, 1943;
    decided March 10, 1944.

      I. Maurice Wormser and Jacob W. Friedman for Jacob Bernoff and others, appellants.
    I. The court erred in admitting much unconnected and irrelevant evidence of a fatally prejudicial character, over defendants’ objections and exceptions and motions to strike and for the declaration of a mistrial. Though this evidence -ultimately was stricken at the end of the trial before the case was submitted to the jury, it constituted such prejudice that defendants, in consequence, did not have the fair and impartial trial to which they were entitled. (People v. Robinson, 273 N. Y. 438; People v. Gonrow, 200 N. Y. 356; People v. Posner, 273 N. Y. 184; People v. Greasy, 236 N. Y. 205; People v. Fielding, 158 N. Y. 542; People v. 'Davey, 179 N. Y. 345; People v. Cohen, 148 App. Div. 205, 211 N. Y. 607; People v. Guardino, 286 N. Y. 132.) II. Reversible error was committed by improperly receiving in evidence, and refusing to strike, the 'irrelevant and damaging testimony of defendants’ alleged acts of violence in connection with an inter-union controversy for control of the employees of Lincoln Farms —- entirely unrelated to any claimed extortion or conspiracy to extort. (People v. Zackowits, 254 N. Y. 192; People v. Richardson, 222 N. Y. 103; People v. Malkin, 250 N. Y. 185; People v. Molineucc, 168 N. Y. 264.) III. Reversible error was committed by the improper and prejudicial reception of evidence from an agent for the New York State Tax Commission, who testified that two of the defendants, who did not take the witness stand, failed to file their State income tax returns for 1938-40. (People v. Richardson, 222 N. Y. 103; People v. Zackowits, 254 N. Y. 192; People v. Freeman, 203 N. Y. 267; Lamb v. Union Ry. Go., 195 N. Y. 260.) IV. The court erred in its procedure in determining the competency of the People’s main witness, Kennedy. {Rider v. Miller, 86 N. Y. 507; People v. Farrell, 31 Cal. 576; Matter of Raker, 176 Cal. 430; Ellarson v. Ellarson, 198 App. Div. 103; People v. Enright, 356 Ill. 221.)

      Thomas L. J. Corcoran and Arthur A. Elots for Abraham Lichtenstein, appellant.
    I. The evidence dealing with Lichtenstein was insufficient as matter of law to warrant the submission of his case to the jury. (People v. Bearden, 290 N. Y. 478.) II. Kennedy’s testimony regarding Lichtenstein was not corroborated as required by law. {People v. Kress, 284 N. Y. 452; People v. Cohen, 223 N. Y. 406; People v. Courtney, 28 Hun 589; Ormsby v. People of the State of N. Y., 53 N. Y. 472; People v. Yannicola, 133 App. Div. 885; People v. O’Farrell, 175 N. Y. 323.)

      Frank S. Kogan, District Attorney {Stanley H. Fuld, Alan J. Elliot .and Harold Roland Shapiro of counsel), for respondent.

      I. The guilt of the appellants was established beyond a reasonable doubt. (People v. O’Farrell, 175 N. Y. 323; People v. Cohen, 223 N. Y. 406.) II. The testimony, subsequently stricken, was, except for a small portion, competent and admissible; in any event, that evidence was cumulative in nature and the court’s action in striking it from the record and directing the jury to disregard it effaced all possible prejudice. (People v. Warder, 231 App. Div. 215; People v. Barnes, 202 N. Y. 77.) III. The evidence concerning the assault at Lincoln Farms, constituting an integral part of the conspiracy, was property admitted. IY. The evidence that . Taylor and failed to file State income tax returns from 1938 through 1940 was properly received. (People v. O’Neill, 112 N. Y. 355; People v. Gallagher, 288 N. Y. 674; People v. Buchalter, 289 N. Y. 181; People v. Molineux, 168 N. Y. 264; People v. Doty, 175 N. Y. 164; People v. Peahens, 153 N. Y. 576.) Y. The procedure adopted by the court in determining the competency of the witness Kennedy was proper. (Barher v. Washburn, 200 N. Y. 280; Fritsch v. Central Trust Co., 262 App. Div. 551; Ellarson v. Ellarson, 198 App. Div. 103; New York Evening Post Co. v. Chaloner, 265 F. 204.)
   Per Curiam.

All of the appellants above named were found guilty of conspiracy to extort and of various separate crimes of extortion. We conclude that as to appellants Bernoff, McAdam, Gabaeff, Taylor, Green, Blume and Murphy, the evidence is sufficient on all the counts on which they were found guilty and that there were no serious errors on the trial. As to appellants Lichtenstein and Buckley, however, we come to a different conclusion. As to appellant Lichtenstein there was no sufficient corroboration of the testimony of the' accomplice Kennedy and as to appellant Buckley there is no . sufficient showing that he knowingly joined the conspiracy or knowingly did anything to further it, or that he was guilty of any of the alleged acts of extortion.

As to the defendants Abraham Lichtenstein and Jeremiah Buckley the judgment should be reversed and the indictment dismissed as to them; as to the other defendants, the judgment should be affirmed. (See 292 N. Y. 642.)

Ch. J., LoughkaN, Bippey, Lewis, DesmoNd and Thacher, JJ., concur. ;

Judgment accordingly.


text:
    In the Matter of Maurice Tishman, Appellant and Respondent, against J. Russel Sprague, as Chairman of the Board of Supervisors of Nassau County, et al., Respondents and Appellants. In the Matter of Asa A. Trenchard, Respondent, against J. Russel Sprague, as County Executive of Nassau County, et al., Appellants and Respondents. In the Matter of Frank G. Van Der Veer, Appellant and Respondent. J. Russel Sprague, as County Executive and Chairman of the Board of Supervisors of Nassau County, et al., Respondents and Appellants.
    Argued February 21, 1944;
    decided March 10, 1944.

      Joseph, F. Garlino for Maurice Tishman, appellant and respondent.
    I. The order of the court below, insofar' as it directs the election of two assemblymen at large from one Assembly district, is unconstitutional and erroneous. (Matter of Burns v. Flym%, 155 Mise. 742, 245 App. Div. 799, 268 N. Y. 601.) II. The ordinance adopted violates the mandatory prohibition against the division of á town and is therefore a nullity. (Baird et al. v. Supervisors, etc., 138 N. Y. 95; Matter of Baird, 142 N. Y. 523; Matter of Sherrill v. O’Brien, 188 N. Y. 185.) III. The only possible means of constitutional apportionment is that advocated in the petition.

      Marcus Q. Christ, County Attorney (John J. Knob and G. Burchard Smith of counsel), for J. Bussel Sprague et al., constituting the Board of Supervisors of Nassau County, appellants and respondents.
    I. The whole purpose of the Beap-portionment Act (L. 1943, ch. 359) was to give greater representation to counties whose population had grown since the last legislative apportionment. Nassau County was one of these, and accordingly its assemblymen have been increased from two to four. Nassau County should not be deprived of this increased representation. II. The proposal that the town of North Hemp-stead constitute one district, the town of Oyster Bay with Glen Cove, a second district, the town of Hempstead a third district, and the city of Long Beach a fourth would result in gross inequality in the citizen population between the Long Beach district and the town of Hempstead district. One district would total population, the other 9,036. III. The Constitution must he construed in its entirety and where two provisions are in conflict, both mandatory as they are here, the one which accomplishes the fundamental purposes of the law must prevail. IY. The proposal adopted by the lower court that the town of North Hempstead constitute one district, the town of Oyster Bay with the city of Glen Cove a second district, and that the town of Hempstead with the city of Long Beach be treated as a single district from which there should be elected two assemblymen is in disharmony with the Constitutional provisions. V. The prohibition against the division of the town should give way in favor of the election of assemblymen by single districts. (Koenig v. Flynn, 258 N. Y. 292, 285 U. S. 375; Matter of Burns v. Flynn, 155 Mise. 742, 245 App. Div. 799, 268 N. Y. 601.) VI. The proposal that the town of North Hempstead constitute one district, the town of Oyster Bay with the city of Glen Cove a second district; that part of the town of Hempstead should constitute a third district and part of the town of Hempstead with the city of Long Beach should constitute a fourth district is the fairest and most nearly in the spirit of representative government. It meets in principle the constitutional purpose, but it appears to offend the single provision against the division of a town. (Matter of O’Brien v. Boyle, 219 N. Y. 195; Matter of Dowling, 219 N. Y. 44.) VII. This court must say whether the action of the Board of Supervisors so violates the fundamental law that it should be set aside. If it is unreasonable, it must, of course, he set aside, hut if no other rule for a division can be found which produces so sound a result as this, the Board of Supervisors’ action should be sustained.

      Ferdinand I. Haber for Frank G. Van Der Veer, appellant and respondent.
    I. The ordinance is void in toto. II. Election of two assemblymen at large from the second Senate district would contravene mandatory constitutional provisions. (Gar-roll v. Becker, 285. U. S. 380; Koenig v. Flynn, 258 N. Y. 292, 285 U. S. 375.) III. The Tishman plan is less objectionable than either the ordinance or the Tronchará plan. IV. The apportionment statute which requires unconstitutional action with respect to the county should be set aside. (Matter of Sherrill v. O’Brien, 188 N. T. 185; Matter of Dowling, 219 N. Y. 44; People ex rel. Henderson v. Supervisors, 147 N. Y. 1; Baird et al., v. Supervisors, etc., 138 N. Y. 95; People ex rel. Garter v. Bice, 135 N. Y. 473.)

      Samuel M. Levy for Asa A. respondent.
    I. The fundamental objective of the constitutional provisions concerning apportionment is to secure to the people just and fair representation in the Legislature. (Matter of Sherrill v. O’Brien, 188 N. Y. 185; People ex rel. Alpha P. G. Co. v. Knapp, 230 N. Y. 48; The People v. Fancher, 50 N. Y. 288.) The court below, finding that it is impossible within the limits of the Constitution to divide the second Senate district into Assembly districts, was right in its order directing that until a division of said Senate district shall be legally and constitutionally possible, two members of Assembly should be elected at large from the territory comprising the second Senate district. (The People ex rel. Jackson v. Potter, 47 N. Y. 375; Oppenheim v. Kridel, 236 N. Y. 156; People ex rel. Henderson v. Supervisors, 147 N. Y. 1; Koenig v. Flynn, 258 N. Y. 292, 285 U. S. 355.)
   Per Curiam.

The Board of Supervisors of Nassau County, assuming to act pursuant to section 124 of the Reapportionment Act of 1943 (L. 1943, ch. 359), adopted Ordinance No. 83-A which divided the county into four Assembly districts. The constitutionality of that ordinance was thereafter challenged by each of the three proceedings now before' us. At Special Term the ordinance was declared unconstitutional insofar as it purports to divide the town of Hempstead into two Assembly districts. The order of Special Term contains the recital that in the opinion of the court u it is impossible within the limitations of the Constitution to divide the second senate district into assembly districts ”, which recital is followed by provisions designed to carry into effect the election of two members of Assembly at large from the territory comprising the second Senate district “ until a division of said senate district shall be legally and constitutionally possible.”

Direct appeals to this court from the order of Special Term were taken by the Board of Supervisors of Nassau County and by the petitioners Tishman and Van Der Veer pursuant to section 588, subdivision 4, of the Civil Practice Act. That statute empowers this court on a direct appeal to determine only “ the validity of a statutory provision.of the state or of the United States under the constitution of the state or of the United States ” and directs that “ on any such [direct] appeal only the constitutional question shall be considered and determined by the court.”

Each of the appellants now before us concedes that Ordinance No. 83-A violates article III section 5 of the State Constitution by dividing the town of Hempstead into two Assembly districts. Upon its direct appeal it is the position of the Board of Supervisors that — “if no other rule for a division can be found which produces so sound a result as this, the Board of Supervisors’ action should be sustained.” The petitioners Tishman and Van Der Veer ask us to consider and determine the constitutionality of different plan's — not adopted by the Board of Supervisors — for dividing Nassau County into Assembly districts. We are also asked to determine the constitutionality of the order of Special Term insofar as it directs the election at large of two members of the Assembly until a division of the second Senate district shall be legally and constitutionally possible.

The narrow scope of our jurisdiction on direct appeal — defined by article VI, section 7, subdivision 3, of the Constitution and section 588, subdivision 4, of the Civil Practice Act will not permit us to pursue the inquiries demanded by the notices of appeal served by the several appellants. Each of the direct appeals now before us involves questions other than the single question of ‘ the validity of a statutory provision of the state or of the United States under the constitution of the state or of the United States ” (Const, art. VI, § 7, subd. 2; Civ. Prac. Act, § 588, subd. 4).

The appeals should be dismissed, without costs.

Ch. J., Loughran, Lewis, Conway, Desmond and Thacher, JJ., concur.

Appeals dismissed.


author: LehmaN, Ch. J.

text:
    Robert J. Blum, as Assignee for the Benefit of Creditors of Frey & Horgan Corporation, Respondent, v. Fresh Grown Preserve Corporation, Appellant.
    Argued January 6, 1944;
    decided March 10, 1944.

      Isador Goetz for appellant.
    I. That the trial court had the right, in his discretion, to set aside the verdict of the jury and grant a new trial, as against the weight of the evidence, is not now disputed; hut for him to determine all questions of fact adversely to the defendant and deprive the defendant of a trial, is contrary to the constitutional provision'. It is only where the evidence is insufficient in law, or where it is incredible because opposed to natural laws, that the court may make a decision. (N. Y. Const., art. 1, § 2; Imbrey v. Prudential Insurance Go., 286 N. Y. 434; Caldwell v. Nicolson, 235 N. Y. 209; Fox v. Le Comte, 2 App. Div. 61, 153 N. Y. 680; Slomka v. Nassau Electric Railroad Go., 191 App. Div. 727; Fealey v. Bull, 163 N. Y. 397; Galloway v. United States, 63 Sup. Ct. Rep. 1092; Gunning v. Cooley, 281 U. S. 94; Tarter v. United States. 17 F. Supp. 691; Ridgely v. Taylor & Co., 126 App. Div. 303; Callanan v. Shaw, 24 Iowa 441; Getty v. Williams Silver Co., 221 N. Y. 34; Hedeman v.. Fairbanks, Morse & Co., 286 N. Y. 240; McDonald v. Metropolitan St. Ry. Co., 167 N. Y. 66.) II. The provisions of section 457-a of the Civil Practice Act, as enacted in 1940, did not abrogate the constitutional right to a trial by jury. {Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240; Imbrey v. Prudential Insurance Co., 286 N. Y. 434; Thomas v. City of New York, 285 N. Y. 496.)

      Robert J. Blum and Irving I. Brandwein for respondent.
    I. Defendant failed to prove the cause of action alleged in its answer and hill of particulars. The testimony of its sole witness is utterly incredible. The trial court properly directed a: verdict. (Civ. Prac. Act, § 457-a; Weigand v. United Traction Co., 221 N. Y. 39; Matter of Bennett, 238'N. Y. 583; Graley
      v. American Eagle Fire Ins. Co., 235 App. Div. 490; Linkhauf et al. v. Lombard et al., 137 N. Y. 417; Bank of U. S. v. Man-heim, 264 N. Y. 45; State Bank v. Siff, 228 App. Div. 2, 254 N. Y. 627.) II. Section 457-a of tlie Civil Practice Act is only a codification of previous law. (Bank of United States v. Mannheim, 264 N. Y. 45.) III. Section 457-a of the Civil Practice Act is constitutional. The United States courts, and the courts of certain other states, have upheld the legality of a direction of a verdict by a jury in cases where a contrary verdict would be set aside as against the weight of evidence. (4 Carmody’s N. Y. Practice, § 1358; Small Co. v. Lamborn & Co., 267 U. S. 248; Delaware Railroad v. Converse, 139 U. S. 469 Bowditch v. Boston, 101 U. S. 16; Pleasants v. Fant, 89 U. S. 116; Denny v. Williams, 87 Mass. 1; Davis v. Maxwell, 53 Mass. 286; Conner v. Giles, 76 Me. 132; Ketterman v. R. R. Co., 48 West Ya. 606.)
   LehmaN, Ch. J.

The defendant, it is conceded, was indebted to plaintiff’s assignor in the sum of $22,047.12 upon the causes of action pleaded in the complaint, but the defendant has pleaded as set-offs several alleged causes of action against the plaintiff’s assignor arising before the assignment. At the close of the trial the plaintiff moved for a directed verdict in the sum of $22,047.12. The motion w.as denied and the Trial Judge submitted to the jury the question whether the defendant was entitled to recover upon its fourth and fifth counterclaims. He charged the jury in effect that it must weigh the evidence produced by the defendant and that if it believed the testimony of the defendant’s witnesses it must find in favor of the defendant. The jury brought in a verdict in favor of the defendant.

The plaintiff moved to set aside the verdict and for the direction of a verdict in his favor in the sum of $14,502.72, conceding for that purpose that the defendant had established its fourth counterclaim and is entitled to set off the sum of $7,544.40 against the indebtedness due to the plaintiff. The motion was granted on the ground that the testimony of the defendant’s witnesses intended to establish the fifth counterclaim is incredible as matter of law. The Appellate Division affirmed the judgment in favor of the plaintiff entered upon the directed verdict, one justice dissenting and voting for a new trial.

“ Trial by jury in all eases in which it has been heretofore used ” was declared “ inviolate ” by the Constitution of 1846. The source of the constitutional right to a trial by jury in appropriate cases may be traced to earlier Constitutions. The guarantee of that right has been renewed in each Constitution thereafter adopted. The defendant challenges the right of the trial court to direct a verdict in this case, claiming that only the jury may decide whether the testimony of the defendant’s witnesses is credible and that its rejection as ‘ ‘ incredible ’ ’ by the court is an invasion of the defendant’s right to a trial by jury.

The measure of the right of trial by jury preserved by the State Constitution (Art. 1, section 2) * # * is the right to a jury trial in such cases as it existed at the time of the adoption of the Constitution of 1846.” (Moot v. Moot, 214 N. Y. 204, 207.) The right of the defendant to a trial by jury of any question of fact presented by the evidence in this case cannot be successfully challenged. We must determine whether measured by the rules of law applied ill 1846 the evidence produced by the defendant was sufficient to raise such a question.

In 1842 the Court of Errors, then the court of final appeal in this State, formulated, in an opinion by the Chancellor, the rule then applied: “ Although the jury is the constitutional tribunal to decide disputed facts, it does not follow that the court must submit every question of fact to their decision as a matter of course, although the party holding the affirmative has failed to introduce sufficient evidence in point of law to authorize the jury to give a verdict in his favor. Hence it is the duty of the court, if requested by the defendant to do so, to non suit the plaintiff, where the testimony is all on his side, and where it is wholly insufficient to sustain the suit. And it is insufficient in point of law to sustain the suit where it loould be the duty of the court to set aside the verdict and grant a new trial, if the jury find a verdict in favor of the complainant. But where the testimony is sufficient to sustain a verdict in favor of the plaintiff, if the jury should find one in his favor, the questions of fact should be submitted their decision; although the judge who tries the cause may think the evidence leaves the case in so much doubt that the jury would be fully justified in finding a verdict for the defendant.” (Italics are ours.) (Brown v. The Mohawk and Hudson Rail Road Company, 1 How Cas. 52 at p. 66.) We have said that section 457-a of the Civil Practice Act, is “ merely declaratory of the existing law.” (Bank of United States v. Manheim, 264 N. Y. 45, 51.) The Legislature could not have changed the rule even if it had wished to do so, without violating the right to a trial by jury which must remain “ inviolate forever.”

Under the rule of law.as formulated in the cited case and as applied in 1846 and still applied in 1921 when section 457-a, of the Civil Practice Act was adopted, the plaintiff was entitled to the direction of a verdict if the evidence was “ wholly insufficient in point of law to sustain ” the counterclaim of the defendant and the evidence in this case is insufficient if in truth it is incredible as matter of law. Where the court, in the exercise of its discretion, sets aside a verdict of the jury because the court is of the opinion that m weighing the evidence the jury has not appraised correctly its relative persuasiveness and probative force, a new trial must follow. (Imbrey v. Prudential Insurance Co., 286 N. Y. 434.) Where conflicting inferences may not unreasonably be drawn ” it cannot be said that solely a question of law is presented for decision by the court (Matter of Case, 214 Y. 199, 203); but an inference is “ unreasonably drawn ” unless supported by sufficient evidence. Thus, the question whether a verdict of a jury is “ unsupported by sufficient evidence ” is always one of law for the Trial Judge. He must set aside such a verdict and in appropriate case he may then direct a contrary verdict. (Getty v. Williams Silver Co., 221 N. Y. 34.) The court is justified in directing a verdict in such case “ not because it would have authority to set aside an .opposite one, but because there was an actual defect of proof, and, hence, as a matter of law, the party was not entitled to recover.” (McDonald v. Metropolitan St. Ry. Co., 167 N. Y. 66, 70.)

The courts below have not mistaken their power. They have found that by no rational process could the trier of the facts base a finding in favor of the defendant upon the evidence here presented. This court has frequently pointed out that insufficient evidence is, in the eye of the law, no evidence.” In Matter of Case (supra, p. 204), opinion by Caedozo, J., it reiteradded: “ In the words of Maule, J., in Jewell v. Parr (13 C. B. 916), ‘ When we say that there is no evidence to go to a jury, we do not mean that there is literally none, hut that there is none that ought reasonably to satisfy a jury that the fact sought to be proved is ”

The sufficiency of evidence “ reasonably to satisfy a jury ” cannot be mechanically measured. It is “ incredible as matter of law ” only where no reasonable man could accept it and base an inference upon it. That depends upon considerations which vary in accordance with the circumstances of the particular case. It would serve no purpose here to analyze the evidence produced by the defendant. When considered in its setting of facts which are undisputed it lacks, we conclude, the substance which is required reasonably to support the finding of the jury.

The judgment should be affirmed, with costs.

Rippey, Lewis, CoNway and Thacher, JJ., concur; LoughraN and DesmoNd, JJ., dissent on the ground that the evidence presented an actual issue of fact.

Judgment affirmed.


author: J.

text:
    Graybar Electric Company, Inc., Respondent, New Amsterdam Casualty Company, Appellant.
    Argued October 18, 1943;
    decided March 10, 1944.

      G. Arthur Blanchet and Arthur W. Clement for appellant.
    I. The bond is a Tennessee contract and the liability thereunder must be determined according to the law of Tennessee. The bond involved in this case has been held to be a statutory bond by the Tennessee court. (United States Fidelity & Guaranty Co.v. Vermont Marble Co., 16 F. 2d 83; City of Knoxville v. Melvin F. Burgess, Chancery Court for Knox County, Tennessee, decided January 8, 1943, by Chancellor A. E. Mitchell. [Aff’d. after filing briefs herein, 175 S. W. 2d 548 (Tenn.)] — Rep. ; Cass v. Smith, 146 Tenn. 218; City of Bristol v. Bostwick, 139 Tenn. 304; Maryland Casualty Co. v. Cldrk’s Creek Drainage Dist. No. 6, 4 Tenn. App. 380.) II. The refusal to apply the law of Tennessee, the place of execution and performance of the contract, was violative of the fnll faith and credit clause and the due process clause of the Constitution of the United States. (John Hancock Ins. Co. v. Yates, 299 U. S. 178; Hartford Ind. Co. v. Delta Co.,.292 U. S. 143; Fidelity Trust Co. v. Field, 311 U. S. 169; Six Companies v. Highway Dist., 311U. §>. 180; West et al. v. A. T. & T. Co., 311 U. S. 223; Home Ins. Co. v. Dick, 281 U. S. 397.) III. The hond here involved is the statutory bond which section 7955 of the Tennessee Code required to he given for the performance of the construction contract. (Rhea County v. Sneed, 105 Tenn. 581; Cass v. Smith, 146 Tenn. 218; Maryland Casualty Co. v. Clark’s Creek Drainage'Dist. No. 6, 4 Tenn. App. 380; Hardison v. Yeaman, 115 Tenn. 639; Massachusetts Bonding and Insurance Co. v. Farmers and Merchants State Bank et al., 162 S. W. 2d 657; Alleva v.,Maryland Casualty Co., 248 App. Div. 599.) IY. The construction contract, incorporated in the bond, requires that the hond shall he in full accordance with statutory requirements and further provides that if State statutes contain additional or conflicting provisions, the hond shall he amended to conform to the State statutes and expressly recites that the bond here involved was the hond so required. (Sherman v. Cate, 159 Tenn. 69; Van Clief & Sons, Inc., v. City of New York, 141 Mise. 216.) Y. Further evidence that the hond is a statutory hond is found in the fact that it conforms to the terms of the Tennessee Statute. (Clark Plastering Co. v. Seaboard Surety Co., 237 App. Div. 274; Sherman v. Cate, 159 Tenn. 69; Cass v. Smith, 146 Tenn. 218; City of Bristol v. Bostwick, 139 Tenn. 304; Maryland Casualty Co. v. Clark’s Creek Drainage Dist. No. 6, 4 Tenn. App. 380; Metropolitan Pipe & Supply Co. v. D’Amore Construction Co., 309 Mass. 380.) YI. Defendant is entitled to summary judgment because plaintiff has not proved compliance with the various conditions precedent prescribed by the Tennessee Statutes. (Cass v. Smith, 146 Tenn. 222; City of Bristol Bostwick, 146 Tenn. 205; Maryland Casualty Co. v. Clark’s Creek Drainage Dist. No. 6, 4 Tenn. App. 380; Zeidler Concrete Pipe Co. v. Ryan S Fuller, 215 N. W. 801.)

      William L. Hanaway and George W. Morgan, Jr., for respondent.
    I. The hond is a voluntary common law hond, not a statutory bond. Hence the rights of the parties are to be determined by the express provisions of the bond, not by reference to the Tennessee statutes. (2 "Williston on Contracts, [Eev. ed.], p. 1088; Clark Plastering Co. v. Seaboard Surety Co., 237 App. Div. 274; Chemvien v. Geiter, 272 N. Y. 165; Weiss-man v. Banque De Bruxelles, 254 N. Y. 488; MeClare v. Mass. Bonding & Ins. Co., 266 N. Y. 371; American Surety Co. v. Wells Water District, 253 App. Div. 19, 280 N. Y. 528; Cambria Coal Co. v. National Surety Co., 141 Tenn. 270; Holmes v. Elder, 170 Tenn. 257; City of Mount Vernon v. Brett, 193 N. Y. 276; Rhea County v. Sneed, 105 Tenn. 581; AEtna Casualty & Surety Co. v. Independent Bridge Co., 55 F. 2d 79, 286 IJ. S. 548; Sherman v. Cate, 159 Tenn. 69.) II. The mere fact that the general provisions of the bond are more than sufficient to satisfy the mandatory requirements of the Tennessee statute does not lead to the conclusion that there must be read into the bond certain limiting provisions of the Tennessee statute as to notice and suit, the inclusion of which the Tennessee statute does not require. {Clark Plastering Co. v. Seaboard Surety Co., 237 App. Div. 274; Sherman v. Cate, 159 Tenn. 69; Rhea County v. Sneed, 58 S. W. 1064; State American Surety Co., 22 Tenn. App. 197; U. S. Fidelity & Guaranty Co. v. Rainey, 120 Tenn. 357; Standard Oil Co. of Louisiama v. Jamison Bros., Inc., 166 Tenn. 53.) III. The provisions of the Tennessee statute requiring notice and limiting the time to sue apply only to actions predicated upon the right to sue given by the statute, not to an action based upon a right to sue expressly given by the bond itself. {Rhea Comity v. Sneed, 58 S. W. 1064; City of Bristol v. Bostwick, 240 S. W. 776; Standard Oil Co. of Louisiana v. Jamison Bros., Inc., 166 Tenn. 357; Sherman v. Cate, 16 S. W. 2d 26; Equitable Surety Co. v. Indiana Fuel Co., 70 Ind. App. 75; Concrete Steel Ins. Co. v. Metropolitan Casualty Ins. Co., 95 Ind. App. 649.) IY. Defendant-appellant makes the unwarranted assumption that the Appellate Division “ refused ” to follow Tennessee law because it did not follow the decision of an inferior Tennessee court. Decisions of the Tennessee Supreme Court, expressly enforce provisions of a bond that exceed statutory requirements and, consequently,, we have no question involving full faith and credit or due process. {Clark Plastering Co. v. Seaboard Surety

      Go., 259 N. T. 424; State v. American Surety Go. of New York, 22 Term. App. 197; U. S. Fidelity & Guaranty Go. v. Rainey, 120 Term. 357.)
   J.

Plaintiff supplied to a contractor materials for the performance of public work at Knoxville, Tennessee, and upon default in payment therefor began this action on a performance bond whereby the defendant surety company undertook with the local public authorities to make good the claims of laborers and materialmen. The answer of the surety company sets forth provisions of a Tennessee statute which authorizes a bond of that type. The substance of the several defenses is that the plaintiff failed to comply with conditions laid down by this statute as necessary to the recovery demanded in the complaint.

On motion .by the plaintiff, Special Term held the defenses to be invalid and awarded to the plaintiff a summary judgment for the price of the materials in question — $39,889.23. A cross motion by the defendant for summary dismissal of the complaint was denied. The Appellate affirmed and granted leave to the defendant to present the case to this court for review.

The ground of the decision at Special Term was that the bond in suit is a common-law bond. After that decision had been affirmed at the Appellate Division, the highest court of Tennessee in the case of City of Knoxville v. Melvin F. Burgess (175 S. W. 2d 548 [Tenn.]) pronounced this same bond to be a statutory bond insofar as the rights of laborers and materialmen are concerned. The bond was made and delivered in Tennessee and was there to be performed. Hence the character of the obligation of the instrument is to be determined in accordance with the relevant law of that State whether declared as common law or by statute. (Teel v. Yost, 128 N. Y. 387, 394.) We have been licensed to take judicial notice of foreign law (Civ. Prac. Act, § 344-a). Accordingly, we now acknowledge the authority of City of Knoxville v. Melvin F. Burgess (supra) and we recognize the statutory nature of the bond in suit. (Whether section 344-a is to be applied in cases triable as of right by jury we need not now consider.)

The statute of Tennessee on which.the surety company relies for its defenses makes these provisions: Such furnisher of labor or material, or such laborer, to secure the advantage of the two foregoing sections [permitting them to sue on the statutory bond] shall, after such labor or material is furnished, or such labor is done, and within ninety days after the completion of such public work, give written notice by return-receipt registered mail, or by personal delivery, either to the contractor who executed the bond, or to the public official who had charge of the letting or awarding of the contract; such written notice to sét forth the nature, and itemized account of the material furnished or labor done, and balance due therefor; and a description of the property improved; provided, that in the case of public work undertaken by a municipality, or any of its commissions, notice, or statement herein required, so mailed or delivered to the mayor thereof, shall be deemed 'sufficient * * ”. (Tennessee Code, § 7956.) 11 Several persons entitled may join in one suit on such bond, or one may file a bill in equity in behalf of all such, who may, upon execution of a bond for costs, by petition assert their rights in the proceeding; provided, that action shall be brought or claims so filed within six months following the completion of such public work, or of the furnishing of such labor or materials.” (Tennessee Code, § 7959.)

Inasmuch as the bond in suit was given pursuant to this statute, the statutory text is to be read into the instrument. The notice so prescribed was never served by this materialman nor was this action commenced within the six months period so defined. In that state of the controversy, the decision now to be passed will determine this question: Do the provisions of the Tennessee statute pertain to the substance of the obligation of the bond in suit, with the result that the plaintiff has no case; or do these provisions go merely to the remedy for a breach of that obligation, with the result that they are immaterial, since the law that governs the remedy is the law of New York. (See Reilly v. Steinhart, 217 N. Y. 549.)

In City of Knoxville v. Melvin F. Burgess (supra, pp. 551-552), the highest Court of Tennessee said: “ The statute does not prescribe any form in which the bond for the protection of laborers and materialmen is to follow. If this bond had contained a provision for no.tice and a provision limiting the time for suit, such provisions would only he effective in so far as they coincided with the statutory requirements as to notice and time of suit. It has been held in a number of cases where the statute was silent as to the terms of the that in case of a conflict between provisions of the bond and provisions of the statute as to the time limits prescribed by the statute, the statutory limits would prevail. Smith & W. Co. v. Carlsted, 165 Minn. 313; Lawson v. County Board of Pub. Instruction, 118 Fla. 246; United States Fidelity & G. Co. v. Tafel Electric Co., 262 Ky. 792. The Kentucky case grew out of a Tennessee contract. The court held that it was governed by the Tennessee statute and that although the bond provided a longer time in which suit might be brought than did the statute, nevertheless the short limitation of the Tennessee statute controlled and barred the suit.”

To our minds, these words mean that the provisions of the statute of Tennessee were limitations of the liability undertaken upon the bond in suit and not limitations of the rights of action thereby conferred upon laborers and materialmen. (Cf. National Surety Co. v. Architectural Co., 226 U. S. 276; Home Ins. Co. v. Dick, 281 U. S. 397, 407; Clark Plastering Co. v. Seaboard Surety Co., 259 N. Y. 424.) The Tennessee statute (as so construed by the highest court of that State) must here be accorded the full faith and credit which is enjoined by the Federal Constitution in respect of the “ public acts ” of a sister State. (John Hancock Ins. Co. v. Yates, 299 U. S. 178.)

■ Ch. J., Lewis, CoNway, and Thacher, JJ., «concur; Rippey, J., dissents and votes to

.Judgments reversed, etc.