text:
    Joseph P. McEvoy et al., Appellants, v. Central Hanover Bank and Trust Company, as Trustee, Respondent.

      Argued March 3, 1937;
    decided April 27, 1937.

      William J. Carr and Herbert A. Heerwagen for appellants.
    At the time of the attempted revocation appellants’ issue had no interest in the trust indenture, hence their consent to the revocation was unnecessary. Until the substitution of cash or securities for the bond and mortgages the appellants’ issue had no interest of any kind whatever in such indenture. (Central Union Trust Co. v. Trimble, 255 N. Y. 88; Whittemore v. Equitable Trust Co., 250 N. Y. 298; Doctor v. Hughes, 225 N. Y. 305; Davies v. City Bank Farmers Trust Co., 248 App. Div, 380; Beam v. Central Hanover Bank & Trust Co., 248 App. Div. 182; Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Livingston v. Ward, 247 N. Y. 97; Berlenbach v. Chemical Bank & Trust Co., 235 App. Div. 170; 260 N. Y. 539; Sun Printing & Pub. Assn. v. Remington Paper & Power Co., 235 N. Y. 338; Atterbury v. Bank of Washington Heights, 241 N. Y. 231; Gans v. Ætna Life Ins. Co., 214 N. Y. 326.) The trust indenture may be revoked on the consent of all persons beneficially interested at the time of the revocation. (Beam v. Central Hanover Bank & Trust Co., 248 App. Div. 182; Corbett v. Bank of New York & Trust Co., 229 App. Div. 570; Thatcher v. Empire Trust Co., 243 App. Div. 430; O’Leary v. Grant, 155 Misc. Rep. 98; Hussey v. City Bank Farmers Trust Co., 236 App. Div. 117; 261 N. Y. 533.) The indenture reveals no basis for the creation of a remainder interest in the grantor’s issue. (Doctor v. Hughes, 225 N. Y. 305; Whittemore v. Equitable Trust Co., 250 N. Y. 298; Davies v. City Bank Farmers Trust Co., 248 App. Div. 380; Beam v. Central Hanover Bank & Trust Co., 248 App. Div. 182; Franklin v. Chatham Phenix Nat. Bank & Trust Co., 234 App. Div. 369; Stella v. New York Trust Co., 224 App. Div. 50; Livingston v. Ward, 247 N. Y. 97; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519.) Since the issue sought to be joined as parties are not beneficially interested under the trust indenture, they are not necessary parties defendant. (O’Leary v. Grant, 155 Misc. Rep. 98.)

      Charles B. McGroddy, Jr., for respondent.
    Upon the execution of the trust indenture the issue of settlor became possessed of contingent remainders in the trust estate. (Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Matter of Rosenbaum, 169 N. Y. Supp. 687.) Even had appellant’s issue no technical estate in remainder they would still be persons beneficially interested in the trust within the meaning of section 23 of the Personal Property Law (Cons. Laws, ch. 41). (Schoellkopf v. Marine Trust Co., 267 N. Y. 358; Crowell v. Pryor, 288 N. Y. Supp. 998.) The settlor and his wife may not by modifying the separation agreement do by indirection what they could not lawfully do directly. (Guaranty Trust Co. v. Harris, 267 N. Y. 1; Whittemore v. Equitable Trust Co., 250 N. Y. 298; Crackanthorpe v. Sickles, 156 App. Div. 753; Hussey v. City Bank Farmers Trust Co., 236 App. Div. 117; 261 N. Y. 533; Court v. Bankers’ Trust Co., 160 N. Y. Supp. 477; 172 App. Div. 955.) The settlor’s issue are necessary parties to this action. (Ducas v. Ducas, 150 App. Div. 397.)
   Finch, J.

The plaintiffs were husband and wife. In 1931 they entered into a separation agreement. The husband agreed to pay the wife certain sums for maintenance, and to secure such payments to her he executed his bond in the sum of $50,000 and a mortgage oh certain realty owned by him in Ulster county, and a chattel mortgage on the personalty in the house on the property. The bond and mortgages were made to the defendant, The Central Hanover Bank, as trustee under a trust indenture. In 1932 the plaintiffs entered into a new separation agreement, which apparently did not affect the trust indenture, and shortly afterward they were divorced, the separation agreement being incorporated in the divorce decree. A new agreement was entered into in 1936, which provided that the husband should convey to his former wife the realty covered by the bond and mortgage, and that the bond and mortgage should be satisfied and canceled by the defendant bank. It also provided that all prior agreements were thereby superseded.

Joseph P. McEvoy and Eugenie McEvoy served a notice on defendant, pursuant to section 23 of the Personal Property Law (Cons. Laws, ch. 41), which notice recited that Joseph P. McEvoy and Eugenie McEvoy were the only persons beneficially interested in the trust indenture, and that they consented to its revocation by said Joseph P. McEvoy. The defendant refused to recognize the right of Joseph P. McEvoy to revoke and cancel the indenture. Thereupon McEvoy brought this action for its revocation. Defendant then made a motion to join as additional parties defendant Eugenie McEvoy and the two infant children of Joseph P. McEvoy. Before this motion was heard Eugenie McEvoy was joined as a party plaintiff by stipulation.

The defendant’s refusal to consent to revocation is based upon the contention that the trust indenture made the issue of Joseph P. McEvoy persons beneficially interested in the indenture and that, therefore, under section 23 of the Personal Property Law it cannot be revoked without their consent.

The trust indenture recited that whereas the husband and wife had entered into an agreement of separation, and the husband had agreed to give the wife a fixed monthly sum for her support and maintenance during her life, and had agreed to secure performance of this obligation by the execution of a bond and mortgages, the indenture was made to effectuate this purpose. It provided that the bond and mortgages were to be held in trust by the trustee, and that the trustee should receive from the husband and pay over to the wife the monthly installments during her fife, all sums received by the trustee from the husband operating as a payment, pro tanto, of the amount of interest payable upon the bond and mortgages. Upon the death of the wife, the trustee was to surrender to the husband, his executors, administrators or assigns, the bond and mortgages and to satisfy the same as of record. It further provided that the husband, or his executors, administrators or assigns, upon thirty days’ notice to the wife or the trustee, should have the right to substitute for the bond and mortgages $50,000 in cash or securities. If such substitution were made, payments to the wife should be made from the income. It then provided that in the event of the substitution of cash or securities, any excess income received therefrom by the trustee “ shall be paid by it annually to husband, or if dead, to his lawful issue then living per stirpes, or in default of such issue, to those who may be appointed by the Last Will and Testament of husband to receive the same.”

And in the event of the substitution of cash and securities and the death of the wife, the “ Trustee shall assign, transfer and deliver the trust fund to husband, or if dead, to his lawful issue then living, per stirpes, or in default of such issue, to those who may be appointed by the Last Will and Testament of husband to receive the same.”

Special Term denied the plaintiffs’ motion for judgment on the pleadings, and granted the defendant’s motion to direct the plaintiffs to serve an amended complaint, joining the two children as parties defendant. The Appellate Division affirmed and certified the following questions to this court.

1. Does the trust indenture herein give the issue of settlor herein any interest within the meaning of Section 23 of the Personal Property Law prior to any substitution for the original trust property herein?

2. Are the issue of settlor herein necessary parties defendant? ”

The answers to both questions depend upon whether the children had a beneficial interest in the trust at the time of its revocation. The indenture, as noted, provided for the execution of a bond and mortgages to the trustee, to secure payments by the husband of agreed monthly sums for the support and maintenance of the wife. It further provided, as noted, that upon the death of the wife, the bond and mortgages were to be surrendered to the husband or his executors, administrators or assigns. Up to this point there existed only an obligation owing from the husband which obligation was secured by a bond and mortgages as collateral. Certainly, these provisions created no beneficial interest in the children. In addition, the indenture provided that the husband had the right to substitute cash or securities for the bond and mortgages. If such substitution were made by the husband, and if the husband should predecease his wife, any surplus income went to his lawful issue. Upon the death of the wife, the principal of the trust fund passed to the issue. Thus, the children would have no beneficial interest, not even a contingent one, unless a substitution were made. A substitution was never made and, therefore, no beneficial interest in the children ever arose.

The entire trust agreement read as a whole also shows no intention to grant any interest to the children unless cash or securities were substituted by the husband for the bond and mortgages. The purpose of the agreement and the indenture was only to secure payments to the wife. Incidentally provision was made for a situation which would arise if the husband should decide to make a substitution. In the absence of such a substitution, no interest was granted, and no interest was intended to be granted to the children. Up to the time of revocation, the settlor had made no election to substitute cash or securities for the bond and mortgages. By the bringing of this action, the settlor renounced the power to do that which always depended upon his voluntary act. The language of Scott, J., in a somewhat similar case is applicable: “ No one is entitled to be appointed to receive the corpus, and no one ever can receive it under the terms of the trust deed unless the plaintiff of her own free will elects to appoint them to be the recipients. She certainly can renounce the power to do that which she is under no compulsion ever to do * * (Sperry v. Farmers’ Loan & Trust Co., 154 App. Div. 447, 452.)

The case of Schoellkopf v. Marine Trust Co. (267 N. Y. 358) is not in point. In that case the court held that the “ heirs of the settlor received a contingent remainder created by the trust indenture. In the case at bar the children had no interest unless the settlor created one by his voluntary act of substitution, which he was under no compulsion to make and which, by the bringing of his action for revocation, he finally renounced.

The children, having no beneficial interest, are not necessary parties defendant to this action.

The order of the Appellate Division and that of the Special Term should be reversed, and judgment on the pleadings, in favor of the plaintiffs, should be directed, with costs in all courts. Both certified questions should be answered in the negative.

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

-Orders reversed, etc.


source: Caselaw Access Project

author: O’Brien, J.

license: Public Domain

text:
    In the Matter of Clarence F. Kaltenbach, Appellant, against The Board of Standards and Appeals of the City of New York et al., Respondents. Benisch Bros., Inc., et al., Interveners, Respondents.

      Argued March 4, 1937;
    decided April 27, 1937.

      Gustams A. Rogers for appellant.
    The illegal issuance of the permits by the Commissioner of Buildings conferred no vested rights upon the intervening respondents. (People ex rel. Rice v. Graves, 242 App. Div. 128.)

      Paul Windels, Corporation Counsel (William S. Gaud, Jr., and Paxton Blair of counsel) for Board of Standards and Appeals et al., respondents.
    Section 6 (b) of the Building Zone Resolution (New York Code of Ordinances, Appendix B) did not prohibit the issuance of the permits. (Matter of Monument Garage Corp. v. Levy, 266 N. Y. 339; People ex rel. Corn Hill Realty Co. v. Stroebel, 209 N. Y. 434.)

      John P. McGrath for Benisch Bros., Inc., et al., interveners, respondents.
    The permits and certificates of occupancy were properly issued. (Matter of Monument Garage Corp. v. Levy, 266 N. Y. 339; Matter of 1525 Myrtle Avenue Realty Co. v. Murdock, 245 App. Div. 749.) The interveners changed their position in reliance on the permits. They now1 have a vested right therein and the permits cannot be revoked. (City of New York v. Caulwal Construction Co., 235 App. Div. 682; 261 N. Y. 578; Breil v. City of Buffalo, 144 N. Y. 163; People ex rel. Evens v. Kleinert, 201 App. Div. 751.)
   O’Brien, J.

The intervening respondent Anna Benisch owns an extensive plot of land on the corner of Jamaica avenue and Autumn avenue in Brooklyn. It is designated on the tax map and is assessed as a single unit. For many years prior to 1916 this land was occupied by Benisch Bros., Inc., and its predecessor as a monument and stone-cutting establishment. After the adoption of the Zone Resolution, July 25, 1916, these premises were zoned in a business district but, although the monument and stone-cutting business is, under that resolution, a non-conforming use, its continuance was authorized by section 6 (a) of the resolution.

In December, 1933, Benisch Bros., Inc., made application to the Commissioner of Buildings to change the use of part of the property fronting on Jamaica avenue from a stone and monument plant to a gasoline station. A permit was issued in December, 1933, and a certificate of occupancy was issued July 6, 1934. Later an application was made for a permit for the erection of an office building ” and a four-car garage on the same plot. This application was approved in April, 1934, and a certificate of occupancy was issued August 2, 1934. The monument and stone-cutting business on this plot remained. Thereupon this appellant, a property owner in the vicinity, applied to the Commissioner of Buildings for a revocation of the permits and certificates of occupancy. His application was denied and his appeal to the Board of Standards and Appeals from the decision of the Commissioner of Buildings also was denied and the decision of the Commissioner was affirmed. On certiorari the determination of the Board of Standards and Appeals was confirmed, the order of certiorari was vacated ánd the Appellate Division unanimously affirmed the order of the Special Term.

The issue of law is presented whether the addition of the gasoline service station, the “ office building ” and the four-car garage to these premises constitutes such a change from one non-conforming use to another non-conforming use on the same premises as is authorized by the following provisions of the Building Zone Resolution: Sec. 4 (a), In a business district no building or premises shall be used, and no building shall be erected which is arranged, intended or designed to be used, for * * * stone or monumental works * * * gasoline service station.” Sec. 6 (b), Any use existing in any building or premises on July 25, 1916, and not conforming to the regulations of the use district in which it is maintained may be changed, and such use may be extended throughout the building, provided that in either case: (1) No structural alterations shall be made in the building, except as authorized by paragraph a of this section; and * * * (4) In a residence or business district no building or part thereof and no premises, unless devoted to one of the uses that is by paragraph a or b of section 4 prohibited in a business district, shall be changed to any of such uses.” (New York Code of Ordinances, Appendix B.) The structure described as an “ office building ” and the four-car garage were erected on these premises which constitute one plot in a single ownership (Beekwill Realty Corp. v. City of New York, 254 N. Y. 423, 427) and where the monument business is continued. That these buildings were arranged, intended and designed to be used for a gasoline service station clearly appears not only from the photographs in evidence and the testimony of witnesses but most emphatically from the report of the committee of the Board of Standards and Appeals which inspected the premises. That committee states, in reference to the office building and the four-car garage: The building is typical of the usual accessory building and office of a gasoline service station. The garage portion is used for greasing with a hydraulic lift installed, violation for which was issued in June, 1934. A supply of lubricating oils and grease is present. The arrangement of the building with the entrance * * * facing Jamaica Avenue indicates that the intent was to use it in conjunction with the Jamaica Avenue portion, where the gasoline pumps and driveways are installed. The presence of a gasoline vent pipe carried up on the easterly wall of the office and garage building and signs advertising the sale of gasoline as shown in photograph all indicate clearly that the entire area 95 ft. by 100 ft. is a gasoline service station.” Since the gasoline pumps and tanks, the garage and the office building constitute a single structural unit which was erected in violation of section 4 (a) of the Building Zone Resolution, the principle announced in City of Buffalo v. Chadeayne (134 N. Y. 163) does not apply. In that case the owner of the building acquired the right to build in conformity with a resolution of the Common Council. In this case, these respondents were granted permits, in disregard of the Zone Resolution and those permits should, therefore, have been revoked.

The order of the Appellate Division and that of the Special Term should be reversed and the order of certiorari sustained, with costs in all courts.

Crane, Ch. J., Lehman, Hubbs, Loughran, Pinch and Rippey, JJ., concur.

Ordered accordingly.


author: Finch, J.

text:
    William H. McCabe, Appellant, v. Louis H. Gross et al., Constituting the Board of Education of the City of Troy et al., Respondents.
    Argued March 10, 1937;
    decided April 27, 1937.

      John H. Broderick for appellant.
    Chapter 20 of the Laws of 1937 is unconstitutional and void, as it is in violation of the provisions of section 10 of article 8 of the Constitution of the State of New York. (Levy v. McClellan, 196 N. Y. 178; Bank for Savings v. Mayor, 102 N. Y. 313; Kenwell v. Lee, 261 N. Y. 113; Board of Education v. Van Zandt, 119 Misc. Rep. 124; 204 App. Div. 856; 234 N. Y. 644.)

      Frank S. Parmenter, Corporation Counsel (Edwin Vandewater and Frederick G. Clay of counsel), for respondents.
    Chapter 20 of the Laws of 1937 was enacted pursuant to the command of section 1 of article 9 of the Constitution to provide for the maintenance and support of a system of free common schools, and is not in conflict with section 10 of article 8 of the Constitution. (People v. Crane, 214 N. Y. 154; South Carolina v. United States, 199 U. S. 437; Bank of Chenango v. Brown, 26 N. Y. 467.) Article 9 of the Constitution is of equal dignity and force with other constitutional provisions and a law enacted pursuant to said article should not be held violative of any other provision of the Constitution. (Matter of Smith v. St. Lawrence County, 148 N. Y. 187; People ex rel. Balcom v. Mosher, 163 N. Y. 32; Fort v. Cummings, 90 Hun, 481; State v. Butler, 70 Fla. 102.) The Legislature may select such agents as it deems proper for carrying out the constitutional mandate to provide education, and chapter 20 of the Laws of 1937, establishing the city school district in Troy as its agent for school purposes in that city, is a proper exercise of such power. (Bullock v. Cooley, 225 N. Y. 566; Matter of Emerson v. Buck, 230 N. Y. 380.) In exercising the powers granted by chapter 20 of the Laws of 1937 to issue bonds of the city school district, the board of education does not act as agent of the city, but of the State. (People ex rel. Wells & Newton Co. v. Craig, 232 N. Y. 125; Herman v. Board of Education, 234 N. Y. 196; Browning v. Hooper, 269 U. S. 396.) The city school district of Troy is in effect a public benefit corporation and is the city of Troy school authority. (Robertson v. Zimmermann, 268 N. Y. 52; Gaynor v. Marohn, 268 N. Y. 417; Longken v. City of Long Beach, 268 N. Y. 532.) Bonds issued in the corporate name of the city school district of the city of Troy do not constitute “ debt ” of any “ portion or part of ” the city within the meaning of section 10 of article 8 of the Constitution of the State. (Longken, Inc., v. City of Long Beach, 268 N. Y. 532.) The limitations of indebtedness prescribed by section 10 of article 8 of the Constitution apply with reference to the indebtedness. incurred by the political subdivisions mentioned, not to indebtedness of independent taxing units authorized by law. (Adams v. E. R. S. Institution, 136 N. Y. 52; Attorney-General v. Thompson, 168 Mich. 511; Board of Education v. Upham, 191 N. E. Rep. 876; Follett v. Sheldon, 144 N. E. Rep. 867; Kelly v. Brunswick School District, 187 Atl. Rep. 703; Bassett v. Fish, 75 N. Y. 303; Waters & Co. v. Gerard,
      189 N. Y. 302; People ex rel. Sweet v. Lyman, 157 N. Y. 368.)
   Finch, J.

A single constitutional question is presented. The city of Troy was successful in obtaining Federal aid for a Public Works Administration project, involving the construction and equipping of a new high school building, provided the city would itself find some $786,000 as its share. The debt limit of the city still permitted some margin of borrowing power under the restriction of the State Constitution (N. Y. Const. art. 8, § 10), but not sufficient to embrace the above amount. Application was made to the Legislature, which enacted a law providing that the Board of Education of the city school district of the city of Troy (which comprised all the territory of the city except that within the boundaries of Union Free School District No. 1 of the town of Lansingburg) was empowered to construct and equip a new high school for the city school district, and to issue and negotiate bonds of the city school district for the purpose of paying that portion of the cost to be borne by the city school district. Said bonds shall be general obligations of said city school district and shall not be reckoned as part of the debt of the city of Troy, and the full faith, credit and taxing power of said city school district shall be pledged for the punctual payment of the principal of and interest on said bonds.” (Laws of 1937, ch. 20.) The bonds are not to be issued unless the city of Troy, through the Common Council (by ordinance adopted by not less than two-thirds of all the members of the Common Council), shall approve both the project and the amount of bonds to be issued by the city school district, and such ordinance shall also be approved by the Board of Estimate and Apportionment of the city. The total amount of bonds to be issued by the school district for this purpose shall not exceed one and one-half per cent of the assessed valuation of the real estate in the city school district. A sum sufficient to pay the principal and interest of the bonds, which shall mature in annual installments varying from two years to thirty-five years, shall be levied and collected and disbursed by the same officers, and pursuant to the same procedure as is provided by law for the raising, collection and disbursement of other school moneys of the city school district, which are performed by the proper city officials. The carrying out of such project and the issuance of such bonds shall not be subject to any referendum vote * *

The plaintiff brought a taxpayers’ action (Gen. Mun. Law [Cons. Laws, ch. 24], § 51) for an injunction to restrain the Board of Education from issuing the bonds. From a judgment granted at Special Term dismissing the complaint upon the ground that it did not state facts sufficient to constitute a cause of action, an appeal was taken directly to this court (Civ. Prac. Act, § 588, subd. 3) to test the validity of this legislation (Laws of 1937, ch. 20) under the provisions of the Constitution of the State (Art. 8, § 10). Do these bonds fall within the restriction of the State Constitution setting up a debt limit? If so, their issuance is prohibited and they are void.

The question involved is one of importance and has not been passed upon by the courts of New York. Decisions in other States, because of differing conditions, are of little, if any, assistance.

The Education Law (Cons. Laws, ch. 16) provides for a general system of school districts which are under the legislative direction of the Regents and the executive direction of the Commissioner of Education (Education Law, § 20). The types of school district include (a) common school districts, the trustee or trustees of which constitute separate corporate bodies, with very broad powers, including the power to assess and collect school district taxes (Education Law, §§ 270, 275, 410, 432); (b) union free school districts, governed by boards of education, the limits of which may or may not correspond to those of an incorporated village or city (Education Law, §§ 141, 301, 302,) (The boards of education are separate corporate bodies [Education Law, § 300] with many of the powers and privileges, and subject to substantially the same duties as trustees of common school districts [Education Law, §§ 310, 317]), and (c) city school districts, of which the case at bar is an example, where there is a separation in functions only between the boards of education and municipal officers, but where the Board of Education is a department of the city government. (Matter of Fleischmann v. Graves, 235 N. Y. 84.)

A history of the school districts of the city of Troy is as follows: In 1816 the city was incorporated. Prior to the year 1900 the boundaries of the city and the city school district were coterminous. In 1900 portions of certain towns were annexed to the city, including the territory in Union Free School District No. 1 of the town of Lansingburg. The Union Free School District No. 1 has since operated independently as a union free school district, and issues its own bonds in the corporate name of the Union Free School District. The territory in this Union Free School District is now, as noted, a part of the city of Troy. Heretofore the city has issued bonds on behalf of the city school district in the corporate name of the city. Such bonds are payable, however, primarily from taxes from the city school district, and, secondarily, from all taxable property of the city. (Laws of 1873, ch. 126; Troy School Commissioners Act, Laws of 1892, ch. 80; the City Charter, Laws of 1892, ch. 670, as amended; Second Class Cities Law [Cons. Laws, ch. 53], and amendments; Education Law, § 879; Second Class Cities Law, § 60.)

We have, therefore, entirely within the city of Troy two. separate ■ school districts, one a city school district and the other a union free school district, which, together, constitute all the territory of the city. The assessed valuation of the taxable real estate of the whole city is $74,071,817, and of the city school district $62,788,847.

The portion of the Constitution involved reads as follows (Art. 8, § 10): " * * * No county or city shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city * * * “ * * * and any debt hereafter incurred by any portion or part of a city, if there shall be any such debt, shall be included in ascertaining the power of the city to become otherwise indebted.”

It is to be noted that we are dealing in the case at bar with a city school district, as distinguished from a union free school district or a common school district.

If we should ignore all historical considerations, including the facts which gave rise to this provision of the State Constitution and the practical results, and read with strict literalness the constitutional provision (Art. 8, § 10), an argument could be made that the bonds in question should not be included within the constitutional prohibition, since nominally the city does not appear as the debtor on the bonds. Some support for this view may be found in Adams v. East River Savings Institution (136 N. Y. 52), where it was held that the debts of the county and of the city must be taken distributively and not collectively and, therefore, that the power of the county and of the city to borrow was restricted as to each only by the amount of its own debt. The situation as between the county and city is not the counterpart of the situation as between a city and a city school district. Moreover, so to construe this constitutional provision would be to place emphasis on form rather than substance, since the burden of the taxes, both of the city school district and of the city, falls upon the same real property. The name on the bond, therefore, assumes a minor importance, and we are left free to ascertain the real intention expressed by the language used in this constitutional provision. . This intention appears unmistakably clear if we consider the evil which the constitutional provision was drawn to remedy, the facts to which it was to be applied, and its own wording. While constitutional and statutory restrictions against borrowing by States appeared much earlier, it was from the economic crisis of 1873-74 that the movement had its inception to restrict the borrowing power of municipalities. The economic disasters to many municipalities resulting from reckless aid to railroads, coupled with excess optimism and demand for local improvements, and hastened by waste, extravagance and corruption, furnished the basis for the restriction on the debt-borrowing capacity of counties and cities if the constructive forces were to be in the majority and prevail over those leading to disintegration. The mischief to be prevented was the creation of an excessive debt, the carrying charges of which would fall upon current revenues, and the principal upon posterity. (Matter of Fleischmann v. Graves, 235 N. Y. 84. Cf. Bank for Savings v. Grace, 102 N. Y. 313; Levy v. McClellan, 196 N. Y. 178.) In November, 1884, this constitutional provision was applied at first to cities of over 100,000 population and limited their debt-incurring capacity for any purpose to ten per cent of the assessed valuation of the real property within the city limits. This, then, applied only to the three cities of New York, Buffalo and Rochester, in each of which all the debts incurred for the city school district were incurred in the name of the city. There could be no doubt, then, in the minds of the framers of this constitutional provision, and of those voting in its favor, that the language “ No * * * city, shall be allowed to become indebted for any purpose * * * which * * * shall exceed ten per centum of the assessed valuation ” applied to the debts incurred on behalf of the city school district as well as those incurred on behalf of the city for any other purpose. Thus the intent was clear. No doubt remained that the constitutional restriction was intended to include the debts of the city school district. Also in 1894, when this provision was extended so as to apply to all cities without regard to size, the limited time at our disposal for research has not revealed any city school districts the debts of which were not incurred as city debts. Certainly this was the general rule. The same language, the intent of which had been fixed by its earlier use, was extended by the amendment of this section in 1894 to all cities, and no exception to exclude the debts of city school districts was incorporated in the provision. Thus it was clear that the intent was to include debts of the city school district within the constitutional prohibition. In Board of Education v. Van Zandt (119 Misc. Rep. 124; affd., 204 App. Div. 856; affd., 234 N. Y. 644), which was an analogous case construing the provision of the same section which limits the amount to be raised by tax for city purposes, “ * * * in addition to providing for the principal and interest of the county or city debt, shall not in the aggregate exceed in any one year two per centum of the assessed valuation of the real and personal estate of such county or city,” it was held that the term “ city purposes” included money raised for educational purposes, a State function, as well as money raised for purely local purposes. The foregoing case was stronger in favor of the appellant than is the case at bar, for the term “ city purposes ” is not as inclusive as the term “ to become indebted for any purpose or in any manner.” Respondents seek to place the decision in Board of Education v. Van Zandt (supra) upon the ground that the debt for the educational purpose was the debt of the city, but the decision went on no such slender ground, the court saying: “The adoption in the final sentence of the meaning of the phrase city purposes ’ as used in the first sentence is supported by the practical construction that has been put upon it in its actual application. Por nearly forty years the cities of the State have construed this section to include taxes levied for educational as well as for other State functions. Education is a State function, but so is fire, police and health protection and public charity. No question has been heretofore raised as to the inclusion of taxes for any of those purposes in the two per cent limitation. On the contrary, it has been assumed for nearly four decades by those having the power to levy taxes in cities that city purposes ’ as used in the section includes all taxes which the city may legally impose ” (p. 126).

In Gaynor v. Marohn (268 N. Y. 417) we held an act creating a light, heat and power district for the purpose of purchasing or establishing fighting and power plants whereby the inhabitants of the district may be furnished with fight, heat and power through privately-owned and operated utilities, and the bonds of which are payable out of funds to be raised in the district by proper assessment upon the lands benefited, does not create an indebtedness within the constitutional prohibition (Art. 8, § 10).

In Robertson v. Zimmermann (268 N. Y. 52) the Legislature created a body corporate to be known as Buffalo Sewer Authority,” whose corporate liabilities were limited to five years and thereafter until all its liabilities had been met and its bonds paid in full, or such liabilities and bonds otherwise discharged. This authority was given complete jurisdiction over the existing sewer system and all facilities for the disposal of sewage for the city of Buffalo, and upon completion of the project, to establish sewer rents, to be collected from all the real property served by its facilities. These rents were to constitute a lien upon the real property served, and to have the same priority as the lien of a general tax of the city, which lien might be foreclosed in the same manner as a tax lien. This authority, moreover, was empowered to issue bonds which were not to constitute a debt of the State or city, but were to be payable only from the funds of the sewer authority. Since the authority could not pledge the credit of the city in any way, and since its bonds were to be payable wholly from the revenues of the authority for service benefit rendered, this court held that the indebtedness created by the authority should not be reckoned as a part of the debt limit provided by the State Constitution (Art. 8, § 10). In Longken v. City of Long Beach (268 N. Y. 532) this court held also that there the amount involved was not within the debt limit of the city. In that case an act of the Legislature authorized the city of Long Beach to accept and use any.moneys which might be donated to the city by any agency of the Federal government for the construction, reconstruction or improvement or protection of the ocean beach lying within the city or adjoining the lands within the city, and also giving power to the city to borrow additional sums necessary for such improvement. The requisite funds to pay the bonds were not to pledge the credit of the city but were to be raised by the levy of assessments upon the real property specially benefited by the improvement.

So not only is the intention unmistakable that this restriction covers school debts of city school districts, but this result is somewhat confirmed by the fact that until the adoption of the present act (Laws of 1937, ch. 20) there has been no legal recognition of the so-called city school district as an entity separate and apart from the municipal corporation. Furthermore, this particular act does not purport to give to the so-called city school district general power to issue bonds for the purpose of erecting school buildings, but only authorizes this so-called city school district to issue bonds for this one high school. In other words, in order to meet this situation, this act is adopted to apply only to this specific case. If this city school district can be created as an entity, separate and apart from the municipal corporation, upon the theory that the State is thus making the city school district its agent, because education is a State purpose, so also may special districts be created in the same way by police, fire and health districts, since police, fire and health can likewise be considered on occasion as State purposes, in the same way as education. Thus not only will the debt-borrowing capacity of cities be allowed to expand, but these separate districts will be able to incur indebtedness without any constitutional limitation whatsoever.

The respondents point to that section of the Constitution reading: “The Legislature shall provide for the maintenance and support of a system of free common schools, wherein all the children of this State may be educated ” (Art. 9, § 1), and claim that this section excludes debts arising on account of city school districts from the restriction in article 8, section 10. If this article were omitted entirely from the Constitution, the Legislature would still have power to create and maintain a school system, unless this was prohibited by the Constitution. Moreover, nothing is found in article 9, section 1, which provides that, in carrying out this system of free schools, the Legislature shall disregard the prohibition in article 8, section 10, but, on the contrary, historical considerations show unmistakably an intention to include in the constitutional restriction school debts of city school districts, which intention has been confirmed by acquiescence in such intention for many decades by the cities of the State.

It follows that the judgment should be reversed, without costs, and the motion denied. (See 274 N. Y. 611.)

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

Judgment reversed, etc.


text:
    Anna O. Cordua et al., as Executors of Elizabeth O. S. Andrews, Deceased, et al., Appellants, v. Aimee S. Guggenheim et al., Respondents, Impleaded with Others.

      Argued March 15, 1937;
    decided April 27, 1937.

      Frank C. Laughlin, Stewart W. Bowers and E. W. Simms for appellants.
    The plaintiffs’ testator was led to suppose by the representations of the seller that the express easement of adjacent roads or streets referred to the strip in question as indicated on the map or plan of development. (Spinner. v. Bergen Associates, Inc., 237 App. Div. 610; 262 N. Y. 615; Barnes v. Midland R. R. Terminal Co., 193 N. Y. 378; Wyman v. Mayor, 11 Wend. 486.) As paroi evidence is admissible on the trial to explain the meaning of the words, “ any road or street, opened or proposed, in front of or adjacent to the above described premises ” in the second clause of the grant and “ roads and streets adjacent to the premises,” as used in the third clause granting an easement in the deed, the allegation of fact in the complaint that these words refer to the strip in question, as indicated on the map or plan of development, cannot be questioned.(Fleischman v. Fergueson, 223 N. Y. 235; Matter of Eleventh Avenue, 81 N. Y. 436; Coleman v. Manhattan Beach Imp. Co., 94 N. Y. 229; Mullen v. Washburn, 224 N. Y. 413; Browne v. Paterson, 165 N. Y. 460; Wood v. Duff-Gordon, 222 N. Y. 88; Crocker v. Cotting, 166 Mass. 183; People ex rel. de Martini v. McLaughlin, 243 N. Y. 417; Utica City Nat. Bank v. Gunn, 222 N. Y. 204; Coyne v. Weaver, 84 N. Y. 386; Glanzer v. Shepard, 233 N. Y. 236; Atterbury v. Bank of Washington Heights, 241 N. Y. 231; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519; Matter of Shaddock v. Schwartz, 246 N. Y. 288.) The self-serving statements in the letter are not binding on the plaintiffs. (Mott v. Consumers’ Ice Co., 73 N. Y. 543.)

      Abraham L. Bienstock, Richard Reiss and Max D. Steuer for Aimee S. Guggenheim et al., respondents.
    The tentative plan cannot be relied upon to establish the easement, since the law, in such cases, limits private easements tó abutting streets only. (Matter of Twenty-ninth Street, 1 Hill, 189; Nichols Copper Co. v. Connolly, 208 App. Div. 667; 240 N. Y. 596; Matter of City of New York [E. 177th St.], 239 N. Y. 119.) The right and privilege of using any and all roads or streets adjacent to the demised premises for the purposes of ingress and egress did not include the right to use the respondent Guggenheim's property for access to and from Long Island Sound. (Matter of City of New York [E. 177th St.], 239 N. Y. 119; Burnett v.
      Wadsworth, 57 N. Y. 634; Clarke Estate v. City of New York, 165 App. Div. 873.) The deed is complete and unambiguous on its face and the appellants may not look to extrinsic evidence to explain it. (Thomas v. Scutt, 127 N. Y. 133; Parsons v. Johnson, 68 N. Y. 62; Uihlein v. Matthews, 172 N. Y. 154; Herman v. Roberts, 119 N. Y. 37.) No easement of ingress and egress over the respondent Guggenheim’s land to Long Island Sound may be implied. (Potter v. Iselin, 31 Hun, 134; Williamson v. Salmon, 105 Misc. Rep. 485; 196 App. Div. 922; 233 N. Y. 657; Sweeney v. St. John, 28 Hun, 634; 100 N. Y. 634; White v. Manhattan Ry. Co., 139 N. Y. 19; Heyman v. Biggs, 223 N. Y. 118; Moore v. Day, 199 App. Div. 76; 235 N. Y. 554; Goerke Co. v. Wadsworth, 73 N. J. Eq. 448; Bosch v. Hoffman, 42 Penn. Super. Ct. 313; Baldwin Lumber Co. v. Todd, 124 La. 543.)

      Paul A. Crouch for William A. Harriman, respondent.
    The map attached to the preliminary contract establishes no easement. (Mitchill v. Lath, 247 N. Y. 377; Matter of City of New York, 145 App. Div. 918; 203 N. Y. 570; Matter of City of New York [Varian Ave.], 242 App. Div. 378.) The general grant of using roads and streets is not referable to a single easement to the shore, which is neither. (Parsons v. Johnson, 68 N. Y. 62; Mitchill v. Lath, 247 N. Y. 377.)
   Finch, J.

This is an action for a declaratory judgment and a permanent injunction to preserve a right of way from the property of the plaintiffs to the shore of Long Island Sound. Special Term dismissed the complaint without leave to amend, upon a motion based only on the complaint and the bill of particulars. It was not contended that the allegations of the complaint were insufficient, but that as a matter of law they were shown to be untrue by the documents attached thereto and the bill of particulars. The Appellate Division has unanimously affirmed. The appeal is by permission of this court.

The complaint alleges that the North Shore-Sands Point Corporation, being the owner in fee of certain property shown on a map entitled “ Plan of Development,” contracted to sell to the plaintiff’s testatrix, Elizabeth Andrews, a plot of land described as being that portion of plot No. 5 shown on the plan, lying south of an existing roadway running through the plot. The contract of sale had physically attached to it the map or Plan of Development,” and contained the same express easements as will be later quoted from the deed. It also contained the following: “ all references herein to said tentative plan being made solely for the purpose of identifying the location of said plot, said plan being preliminary only and subject to alteration in whole or in any part thereof by the party of the first part without the consent of the party of the second part or of any other person whomsoever, the party of the first part making no representations as to said plan or as to the development of the property of the party of the first part in accordance with said plan or any part thereof.”

Subsequently this property was conveyed to the plaintiff’s testatrix. It is alleged that the easement and appurtenances granted to the testatrix included a right to use a certain strip of land as a means of ingress and egress from the property to the high-water mark of Long Island Sound. The complaint further alleges that at the time of the execution of the contract of sale and the delivery of the deed, the plan of development had been projected as a real estate development which was to afford access to the beach of Long Island Sound by means of a right of way or easement over the strip of land, and that such use has been denied to the present owners of the property, ingress and egress being blocked by the erection of a barrier.

The deed which was attached to the complaint contains the following express easements, which for convenience will be numbered 1,2 and 3:

1. Together with a right of way for ingress and egress over the private lane adjacent to the above-described premises on the north, in a westerly direction out to Middle Neck Road.”

2. “ Together with all the right, title and interest of the party of the first part in, and to any land lying in the bed of any road or street, opened or proposed, in front of or adjoining the above described premises to the center line of said road or street, subject, however, to rights of other parties to the use thereof for highway purposes.”

3. Together with the right and privilege of using any and all roads or streets adjacent to the above described premises for the purpose of ingress and egress; subject, however, to such rules and regulations as the North Shore-Sands Point Corporation, the party of the first part herein, or the owner or owners for the time being (including the North Shore-Sands Point Corporation as to acreage owned by it) of fifty one per cent. (51%) in acreage, in the aggregate, of the entire tract which was conveyed by Aimee S. Guggenheim to North Shore-Sands Point Corporation by deed dated January 31st, 1929, recorded in the office of the Clerk of the County of Nassau on February 20, 1929, in Liber 1384 of Deeds, page 460, and of the two certain parcels of land which were conveyed by Aimee S. Guggenheim to William Averell Harriman by deed dated January 31st, 1929, recorded in the office of the Clerk of the County of Nassau on February 20, 1929, in Liber 1409 of Deeds, page 333, shall from time to time make, establish and prescribe.”

The first express easement grants right of way over the private lane which bounds the property purchased on the north, and runs to the public road known as Middle Neck road. The second and third grant a right of way over roads and streets, open or proposed, in front of or adjacent to the premises.

The deed also provides that the North Shore-Sands Point Corporation may levy certain assessments for the purpose of paying maintenance charges for Lighting, improving and maintaining roads, streets, waterways, parks, and other places maintained for the common use of the property owners * * *."

The defendants contend that the deed is unambiguous, and that, therefore, in this action extrinsic evidence is not admissible to vary or to show the meaning of the terms of the instrument. They assert that no reference can be made to the physical aspects of the property so as to show an open and notorious lane running from the property to the shore, nor to the map or the contract itself, nor can any one be permitted to testify that the vendee was informed that she would have a right of way over the strip of land.

Prior negotiations or agreements are not admissible to vary the terms of the written instrument. There is a conclusive presumption that the parties intended to integrate in the deed every agreement relating to the nature or extent of the property to be conveyed. (Herman v. Roberts, 119 N. Y. 37, 42.) Where the language of the deed is ambiguous, however, paroi evidence is admissible to show the intent of the parties. (Wilson v. Ford, 209 N. Y. 186, 196.) Similarly, although on the face of the deed there be no ambiguity in the language employed, nevertheless, paroi evidence is admissible to show the particular property to which the words of general description were intended to apply. (Coleman v. Manhattan Beach Improvement Co., 94 N. Y. 229; Mullen v. Washburn, 224 N. Y. 413.) Such oral evidence does not vary the terms of the deed. It merely identifies the premises intended to be conveyed. Parol evidence is always admissible to apply a writing to its subject. The general description of property in the deed is often vague, uncertain and general. Oral evidence is admissible to enable the court to determine the application of the general language of the deed to the particular land to which it was intended to refer.

In the case at bar the deed grants rights of way over roads or streets, opened or proposed,” in addition to the specific mention of “ a certain existing lane ” leading to Middle Neck road. This differentiates this lane from the roads or streets, open or proposed. The respondents contend that the only right of way granted was the one leading to the Middle Neck road, and that the other clauses granting rights of way over roads and streets were meaningless, that they were merely printed provisions of a form deed which had not been stricken out. It might be that such was the intention of the grantor, but the grantee or her heirs or assigns should have the right to show that such was not the intention as she was led reasonably to understand the matter and that there are roads or streets, opened or proposed ” in addition to the lane leading to Middle Neck road to which the language of the deed was intended to apply. The terms “ roads or. streets ” are not conclusively presumed to apply only to an open or proposed thoroughfare which leads to a public highway. Evidence may be introduced to show that the parties intended, or the defendants led the plaintiff’s testatrix reasonably to believe, that the phrase roads or streets ” included a right of way in common with others over a strip of land leading to Long Island Sound. Such evidence does not vary the written instrument. It merely reveals its meaning. (Mullen v. Washburn, supra; Coleman v. Manhattan Beach Improvement Co., supra.)

For the purpose of showing the meaning of the words used in the deed, as applied to the physical characteristics of the land conveyed, the contract to sell, the map or Plan of Development ” and oral testimony were all admissible. Judged by the documents annexed to the complaint and revealed by the bill of particulars, alone, the complaint should not have been dismissed. The bill of particulars asserts that “ representations and promises were made both in writing and orally that Elizabeth O. S. Andrews and her heirs and assigns would have access to the beach of Long Island Sound by means of a right of way or easement over the strip or plot * * *." At the least it cannot be said even that the contract and map conclusively show as a matter of law that no right of way over the strip was intended. The complaint contains the allegation of fact that the words in the second and third clauses, which grant easements, refer to the way leading to Long Island Sound. The plaintiffs must be afforded an opportunity at a trial to prove this allegation.

It is true that the contract stated that all references to the tentative plan were made solely for the purpose of identifying the location of the plot, and that the plan was preliminary and subject to alteration without the consent of the grantee; but that does not mean that the grantor could show the grantee a strip on the map, tell her that this was to be a right of way which she could use for going to and coming from the sound, subsequently describe the strip in the deed as a “ road or street,” and then turn around and say that the strip was not actually a road or street and that, therefore, the grantee had not obtained a right of way to the sound. A right reserved to alter the tentative plan does not include the power to abrogate entirely.

The plan clearly indicates a strip of land immediately adjacent to the plot conveyed and running therefrom to Long Island Sound, which is shown not only by the usual markings on the map, but is also indicated by a double row of trees or hedges. Moreover, this was a narrow strip between plots which usually would signify a road or street. Furthermore, that this strip of land was laid out as a way or lane to Long Island Sound does not seem to be disputed seriously by the defendants. They admit that the fifty-foot strip ran past the plot conveyed to the testatrix, and leads to the sound, but they contend that this strip and other similar strips were intended only to give the owners of three large upland plots a way to the waterfront, and that the testatrix was to be excluded from the use of these strips. In support of this, they introduce a letter from them to the testatrix, tending to show that she had acquired an option to purchase outright the title to a fifty-foot strip running froto the westerly side of her plot as originally located. They maintain that because the testatrix contemplated obtaining sole title to a fifty-foot strip running to the sound, it was evident that she had no right to use the strip laid out on the map in common with others, although such strip of land was intended as a way by which other property owners could go to and come from the sound. The plaintiffs do not contend for an exclusive use of this way to the sound, but only for the right to use it in common with others. If exclusive title to a fifty-foot strip running from the land to the sound had been obtained, the testatrix would have had the right to construct thereon the usual harbor, boathouse and other buildings.

Prom all this it is clear that the “ Plan of Development ” or map shows a strip of land which might be proven to be a road or street, opened or proposed, in front of or adjoining the property of the plaintiffs. This map, together with evidence showing that the strip was a road or street, or was of such nature that the grantee reasonably understood it to be a road or street ” within the meaning of those terms as used in the deed, are admissible to- show the physical terrain to which the deed referred.

In their brief the appellants state that they can show that upon this strip a road had been laid out and was in actual use as a road or gravel path at the time of the conveyance, and that it was used by pedestrians and for the purpose of hauling boats to and from the property now held by the plaintiffs. Such evidence identifying the road should not be excluded.

The plaintiffs have a right to introduce evidence to identify the “ roads or streets ” referred to on the map. Therefore, any evidence showing that there is a strip of land between the property of the plaintiffs and that of their neighbor, and that this strip of land is a road or street, or of such nature that it reasonably was regarded as a road or street, or that the grantor informed the grantee that it was the road or street referred to in the deed, is admissible. The complaint should not have been dismissed on the pleadings.

It follows that the judgments should be reversed, and the motion for judgment on the pleadings denied, with costs in all courts.

Crane, Ch. J., O’Brien, Hubbs, Lottghran and Rippey, JJ., concur; Lehman, J., concurs in result. Judgments reversed, etc.


author: Per Curiam.

text:
    In the Matter of the Claim of Clyde H. Whitmyre et al., Respondents, against International Business Machines Corporation et al., Appellants. State Industrial Board, Respondent.
    Argued March 15, 1937;
    decided April 27, 1937.

      Morris Gitlitz for appellants.
    The Industrial Board was without jurisdiction to excuse the failure to give notice of disablement and reinstate the award after the decision of the Court of Appeals dismissing the claim. (Matter of Westerfield, 61 App. Div. 413; Marshall v. Boyer, 52 Hun, 181; Meldon v. Devlin, 39 App. Div. 581;
      Kirkpatrick Home v. Kenyon, 209 App. Div. 179; Matter of Jerome Ave., 78 App. Div. 631; Matter of Herkimer, 29 App. Div. 69; Hewitt v. Ballard, 16 App. Div. 466; Metcalf v. Firth Carpet Co., 196 App. Div. 790; Matter of Anderson v. Johnson Lighterage Co., 214 App. Div. 743; 241 N. Y. 523.) The Industrial Board is estopped to excuse the failure to give notice on the record in the case. (Royal Indemnity Co. v. Heller, 256 N. Y. 322; Matter of Joyce v. Eastman Kodak Co., 238 N. Y. 142.) The evidence in the record does not justify the action of the Board in excusing the failure to give notice, nor does it support the ground upon which such action was based. (Andrews v. Butler Mfg. Co., 184 App. Div. 698; Matter of Smith v. Nash Motor Corp., 233 App. Div. 296; Bellanca v. Spencer Lens Co., 214 App. Div. 824.)

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum of counsel), for State Industrial Board, respondent.
    The Industrial Board was vested with jurisdiction to excuse the failure to give notice of disablement after the determination of the Court of Appeals. (McMahon v. Gretzula, 238 App. Div. 877; 242 App. Div. 742; 267 N. Y. 573; Matter of Joyce v. Eastman Kodak Co., 238 N. Y. 142.) The Industrial Board may in a proper case excuse at any time the failure to give written notice. (Cons. Laws, ch. 67, §§ 22, 23, 25 and 123.) The evidence justifies and amply supports the finding of the Industrial Board excusing the failure to give notice of disablement. (Matter of Johnson v. Dahlstrom Metallic Door Co., 255 N. Y. 610; Talbot v. Kress, 248 App. Div. 652; Matter of Haight v. Wolff, 236 App. Div. 762; Amatrano v. Ide Co., 244 App. Div. 852; Matter of Murphy v. Bedford, 247 App. Div. 830; Woodhead v. Renison, 242 App. Div. 882; Burke v. Connors, 241 App. Div. 898; Lillis v. Great Atlantic & Pacific Tea Co., 241 App. Div. 646; Macin v. Harvard Auto Body Co., 231 App. Div. 775; 236 App. Div. 770.)
   Per Curiam.

Because notice of disablement way not given pursuant to section 45 of the Workmen’s Compensation Law (Cons. Laws, ch. 67), this court in Matter of Whitmyre v. International B. M. Corp. (267 N. Y. 28) reversed the award and dismissed the claim. Thereafter the State Industrial Board reconsidered the case, making a new finding that written notice of disablement was not given to the employer within the time prescribed by sections 18 and 45 of the Workmen’s Compensation Law, but such notice could not have been given for the reason that the cause of disablement was not known until after the death and autopsy. The finding further stated that the employer was not prejudiced- by the failure to give such written notice. On these new findings, another award was made which has been affirmed by the Appellate Division.

Continuing jurisdiction over workmen’s compensation cases is given to the State Industrial Board by sections 22, 23 and 123 of the Workmen’s Compensation Law. The power and jurisdiction of the Board to reopen a claim after a reversal and dismissal; to take new evidence and make new findings, have been approved by this court in Matter of McMahon v. Gretzula (267 N. Y. 573, affg. 242 App. Div. 742); Matter of DiDonato v. Rosenberg (256 N. Y. 412).

There being evidence to sustain the new findings of the Board, we affirm the order of the Appellate Division and the award of the Industrial Board.

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, O’Brien, Htjbbs, Lotjghran, Finch and Rippey, JJ., concur.

Order affirmed.


author: Hubbs, J.

text:
    In the Matter of the Claim of Samuel Garelick, Respondent, against Hyman Rosen et al., Appellants. Zach Fishkin et al., Respondents; State Industrial Board, Respondent.
    Argued March 4, 1937;
    decided April 27,1937.

      William S. Sinclair and James J. Mahoney for appellants.
    By indorsement for which it accepted and retained the premium, the respondent guaranty company extended its insurance to cover the entire day of December 11, 1934, and is estopped from denying liability. The language of the indorsement is clear and unambiguous, and construction may not be resorted to. (Ludwig v. Jersey City Ins. Co., 48 N. Y. 379; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Driggs v. Albany Ins. Co., 10 Barb. 440; New York & P. R. S. S. Co. v. Ætna Ins. Co., 204 Fed. Rep. 255; Matter of Orto v. Poggioni, 245 App. Div. 782; 271 N. Y. 551; Hawkeye Clay Works v. Globe & Rutgers Fire Ins. Co., 202 Iowa, 1270; Schmith v. Union Mut. Casualty Co., 216 Iowa, 936; Silverstein v. Metropolitan Life Ins. Co., 254 N. Y. 81; Malin v. Netherlands Ins. Co., 203 Mo. App. 153; Metzger v. Ætna Ins. Co., 229 App. Div. 26; Aschenbrenner v. United States Fidelity & Guaranty Co., 292 U. S. 80; Howell v. Globe & Rutgers Fire Ins. Co., 133 Misc. Rep. 193; Swift v. Zurich General Accident & Liability Ins. Co., 112 Cal. App. 709; Matter of Jaabeck v. Crane’s Sons Co., 238 N. Y. 314; Taylor v. United States Casualty Co., 269 N. Y. 360.)

      William Warren Dimmick for Zach Fishkin et aL, respondents.
    The findings of the Industrial Board on policy coverage should be affirmed. There is presented a question of fact conclusive with the Industrial Board. (Rhyner v. Hueber Building Co., 171 App. Div. 56; Seligson v. Fireman’s Fund Indemnity Co., 267 N. Y. 624; Matter of Simpkins v. Steffen, 255 N. Y. 65; Matter of Lyle v. Lyle Cider & Vinegar Co., 243 N. Y. 259; Matter of Rosen v. Ostrofsky, 264 N. Y. 494; Weydman v. Niagara Boiler Works, 264 N. Y. 503; Malten v. Spencer, 180 N. W. Rep. 261; Bohles v. Prudential Ins. Co., 88 N. J. L. 315; Sovereign Camp v. Reed, 208 Ala. 457.)

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum of counsel), for State Industrial Board, respondent.
   Hubbs, J.

The claimant in this compensation case was employed by Fishkin, a subcontractor of Rosen, the appellant. Rosen was insured by the Maryland Casualty Company. Fishkin, the subcontractor, was insured by the United States Fidelity and Guaranty Company. His policy, by its terms, expired on November 11, 1934, at 12:01 A. M. Prior to the date of its expiration, he applied to the United States Company for an extension for one month. An indorsement was attached to the policy extending it for one month to expire on December 11th.” On December 11, in the afternoon, the claimant was injured. The referee found that the policy covered for the entire day of December 11. The Board reversed the referee and found that the policy expired at 12:01 A. m. on December 11. The Appellate Division has affirmed.

The indorsement attached to the policy extending it reads as follows:

“ In consideration of an Additional Premium of $20.30 it is hereby understood and agreed that the undermentioned Policy is extended for a period of One (1) Month, to expire on December 11th, 1934. * * * * * * *

Subject otherwise to all the terms, limits and conditions of the policy to which this endorsement is attached.”

It is perfectly clear that if the last quoted sentence had not appeared upon the indorsement, the indorsement would have had the effect of extending the policy for the full day of December 11. An insurance policy which, by its terms, is to expire on a certain day, covers for the full day upon which it expires. (Richards on the Law of Insurance [4th ed.], p. 325, and note 27 on pp. 324, 325; Vance on the Law of Insurance, p. 268, note 32, and cases cited; Supreme Council American Leyion of Honor v. Gootee, 89 Fed. Rep. 941; General Construction Law [Cons. Laws, ch. 22], § 19.)

The question is whether that last sentence carries into the indorsement the provision of the policy which provides that the original policy shall expire on November the 11th at 12:01 A. m. standard time, and makes the policy as extended by the indorsement expire at 12:01 A. M. on December 11th.

A reasonable construction of the sentence requires that the word otherwise ” be construed as referring back to the time to which the original policy would expire by its terms. Otherwise, the terms, limitations and conditions of the policy apply during the extended term, but the term of the original policy as issued came to an end and the new term to expire on December 11th ” became effective. The words at twelve and one minute o’clock a. M., standard time,” simply applied to the time of the expiration of the policy itself, and while those words constitute a term and limit of the policy, they do not constitute a term and limit of the indorsement. If it was the purpose of the insurance company to limit the time for which the policy was extended by the indorsement to 12:01 a. m. December 11th, it should have included a statement to that effect on the indorsement. Because the original policy by its terms expired at 12:01 a. m. is not a controlling reason why an extension of that policy by an indorsement must necessarily expire at 12:01 A. M. Both parties agree that the coverage expired on December 11. The indorsement so reads: “ to expire on December 11th, 1934.” How can ifc be said that because the original policy expired at 12:01 a. m., that the indorsement indicated that the extension granted by it should expire at 12:01 a. m. unless it was so stated thereon?

True it is that the indorsement was made subject to all the terms, limits and conditions of the policy. One of the terms and limits of the policy as originally written was that it should expire at 12:01 A. m., but the indorsement and the policy constituted a new contract, which, according to its terms, did not expire at 12:01 a. m. The typewritten indorsement attached to the policy constituted a new agreement extending the original policy for the period stated thereon and the terms and conditions of the original policy remained in force except as modified by the terms of the indorsement. (Ludwig v. Jersey City Ins. Co., 48 N. Y. 379.)

No question of fact is involved. The construction placed upon the policy and indorsement by the lower court was one of law. Under the familiar rule for the construction of contracts prepared by an insurance company, it must be construed favorably to the insured and all ambiguities, if any, resolved in his favor. The question is what would an ordinary person in reading the indorsement understand having in mind that he had applied for an extension of the policy for one month. (Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Stroehmann v. Mutual Life Ins. Co., 300 U. S. 435.)

We believe that it is a matter of common knowledge as well as a principle of law that a contract which, by its terms, expires on a certain day, remains in force for the whole of that day unless by its express wording it is limited to a certain time of the day upon which it expires. In the absence of an express limitation, the law does not take notice of a fraction of a day. (General Construction Law, § 19.)

The appellants, the contractor and his insurance carrier, have been held hable because the subcontractor did not have any insurance coverage. As we hold that the policy of the respondent subcontractor was in force, it follows that the appellants are not hable.

The order of the Appellate Division and the award of the State Industrial Board should be reversed, with costs, and the matter remitted to the State Industrial Board to proceed in accordance with this opinion.

Lotjghran, Finch and Rippey, JJ., concur; Crane, Ch. J., Lehman and O'Brien, JJ., dissent.

Ordered accordingly.


author: Loughran, J.

text:
    Banca Commerciale Italiana Trust Company, Appellant, v. Frederick H. Clarkson et al., Individually and as Copartners Doing Business as Clark Williams & Co., Respondents.

      Argued March 16, 1937;
    decided April 27,1937.

      David S. Konheim and William Lurie for appellant.
    The trial court did not properly charge the jury on the question of constructive notice. (Wen Kroy Realty Co. v. Public Nat. Bank, 260 N. Y. 84; Fidelity & Deposit Co. v. Queens County Trust Co., 226 N. Y. 225; C. N. Bank v. Diefendorf, 123 N. Y. 191; Rochester v. Paviour, 164 N. Y. 281; Heig v. Caspary, 191 App. Div. 560; 232 N. Y. 574; U. S. Fidelity & Guaranty Co. v. Barry, 236 App. Div. 464; 262 N. Y. 471; Harter v. Peoples Bank, 221 App. Div. 122; Gerard v. McCormick, 130 N. Y. 261; Huie v. Allen, 87 Hun, 516; 156 N. Y. 658.) If a drawee bank, on checks bearing the forged signature of the drawer and the forged indorsement of the name of the payee thereon, pays the amount thereof to one who is not a bona fide holder, the drawee bank, on discovering the existence of these forgeries, can recover its funds from the party who received the same. (Price v. Neal, 3 Burr. 1354; Title Guarantee & Trust Co. v. Haven, 196 N. Y. 487; Bergstrom v. Ritz Carlton Restaurant & Hotel, 171 App. Div. 776.) The certification of the three checks did not excuse the defendants from investigating their right to those checks where they were received under circumstances of a suspicious character which called for an inquiry on the part of the defendants. (Greenberg v. World Exchange Bank, 227 App. Div. 413; National City Bank v. Waggoner, 230 App. Div. 88; 255 N. Y. 527; Goshen Nat. Bank v. Bingham, 118 N. Y. 349; Claflin v. Farmers & Citizens Bank, 25 N. Y. 293.) Plaintiff was the real party in interest. (Gillan v. O’Larry, 124 App. Div. 498; Schweinburg v. Altman, 145 App. Div. 377; 207 N. Y. 681; Matter of Carpenter, 131 N. Y. 86; Hoffman House v. Foote, 172 N. Y. 348.)

      Stewart Maurice for respondents.
    The defendants acted in good faith, and the trial court did not err in charging the jury as to alleged constructive notice of the wrongdoing. (Deyo v. Hudson, 225 N. Y. 602; Bosak v. Parrish, 252 N. Y. 212; Hirsch v. Deschler, 231 App. Div. 237; 257 N. Y. 570; Rosen v. Harde, 238 App. Div. 622; New England Trust Co. v. Farr, 57 Fed. Rep. [2d] 103; 287 U. S. 612; Gordon v. Diffenderffer, 177 Atl. Rep. 21; Cheever v. Pittsburg R. R. Co., 150 N. Y. 59; Gruntal v. United States Fidelity & Guaranty Co., 254 N. Y. 468; Oliner v. Goldenberg, 168 App. Div. 874; Dutch v. McMahon, 219 App. Div. 203; Gerseta Corp. v. WessexCampbell Silk Co., 3 Fed. Rep. [2d] 236; Price v. Neal, 3 Burr. 1354; United States v. Chase Nat. Bank, 252 U. S. 485; Critten.v. Chemical Nat. Bank, 171 N. Y. 219; Morgan v. United States Mortgage & Trust Co., 208 N. Y. 218; Potts & Co. v. Lafayette Nat. Bank, 269 N. Y. 181.) It is clear that the surety company and not the plaintiff is the real party in interest in the action. (Whiting v. Glass, 217 N. Y. 333; Spencer v. Standard C. & M. Corp., 237 N. Y. 479; Ocean Accident & Guarantee Corp. v. Hooker Electrochemical Co., 240 N. Y. 37; National Surety Co. v. National City Bank, 184 App. Div. 771; Henderson v. Park Central Motors Service, Inc., 225 App. Div. 788; Reddington v. Elco Merchandising Corp., 236 App. Div. 64; Britton v. Scognamillo, 238 N. Y. 375.)
   Loughran, J.

The action is in form one to recover for the conversion of six checks.

Plaintiff is a domestic banking corporation. One Priola was the assistant manager of a branch office of its bank. The defendants are a firm of stockbrokers. One McCann was a customers’ man ” in their employ. In July, 1929, Priola, through McCann, opened a speculative trading account with the defendants in the maiden name of his wife (Irma Schafflin). The proceeds of the checks in suit were credited on that account which was handled by McCann who received the checks from Priola.

Three of the instruments were genuine in inception. These had been validly indorsed in blank by the respective payees for deposit in the plaintiff’s bank. Priola stole them from the plaintiff. The name of Irma Schafflin was indorsed by him thereon.

The other three checks were forgeries of Priola. These purported to have been drawn on the plaintiff bank by Nicosia Brothers Company (a corporate depositor) to the order of Irma Schafflin, were indorsed in that name by Priola, and at the behest of McCann were certified by the plaintiff before payment thereof to the defendants.

The fact of its ownership of the genuine checks was not stressed by the plaintiff in its conduct of the trial. Nor was any point made by the defendants respecting the inappropriateness of a recovery for the conversion of the forged paper as to which title was non-existent. The parties took for granted that there was liability on all the causes of action or liability on none. No claim was made of personal knowledge by any of the defendants of the wrongdoing of Priola. In substance, the jury were charged that what McCann did was in law done by the defendants, and that the plaintiff was to recover the aggregate of the amounts of all six checks unless its fault was greater than the fault of the defendants. The verdict was against the plaintiff and judgment thereon for the defendants has been affirmed.

Some of the rulings assigned as error by the plaintiff appear to us to be so substantial that they must be deemed to have affected the result.

1. That McCann in his dealings with Priola acted in bad faith was on the evidence a fact that could fairly have been found by reasonable minds. There was evidence from which the jury might have inferred that McCann suspected forgery, or should have suspected it, at the time he received the forged checks from Priola and had them certified. The trial judge refused the request of the plaintiff for an instruction “ that certification by the bank of the three checks does not excuse the party receiving those checks from investigating the right to those checks, where there are circumstances of a suspicious character which call for an inquiry on its part.” At the request of the defendants, he charged “ that the plaintiff bank by certifying the three checks * * * represented and warranted that the signatures of Nicosia Brothers Company were genuine signatures.” We think this was error which, in the light of the whole record, is not to be dismissed as immaterial.

In the letter of the Negotiable Instruments Law (Cons. Laws, ch. 38), plaintiff’s certification of the three forged checks was an admission of the genuineness of the signatures of the drawer (§§ 112, 323). But what is there declared is a common law exception to the principle that money paid under a mistake of fact may ordinarily be recovered back. As originally laid down the exception sanctions retention of the payment by a party only when he has once received it upon a bill of exchange indorsed to him for a fair and valuable consideration, which he had bona fide paid, without the least privity or suspicion of any forgery.” (Lord Mansfield in Price v. Neal, 3 Burr. 1354, 1357.) Whatever differences of opinion there may be in respect of the true basis or scope of that celebrated decision, it is reasonably clear that the protection of the doctrine should not be extended to a holder whose competent agent dishonestly procures an acceptance while suspecting the forgery. (See National Bank of Commerce v. National Mechanics’ Banking Assn., 55 N. Y. 211; Title Guarantee & Trust Co. v. Haven, 196 N. Y. 487; First Nat. Bank v. Ricker, 71 Ill. 439; Germania Bank v. Boutell, 60 Minn. 189, 193, 194; National Bank of North America v. Bangs, 106 Mass. 441, 444, 445; Dedham Nat. Bank v. Everett Nat. Bank, 177 Mass. 392, 395. Cf. Negotiable Instruments Law, §§ 91, 95; Williamsburgh Trust Co. v. Tum Suden, 120 App. Div. 318; Woodward on The Law of Quasi Contracts, pp. 142, 143.)

2. Plaintiff’s loss was made good by a surety company. This action was brought pursuant to an agreement between them that any recovery would be paid to the surety company. The question whether the plaintiff was the real party in interest was left to the jury. This was error, as was the refusal to strike out the defense which tendered that issue. As the trustee of an express trust, plaintiff was entitled to sue in its own name. (Civ. Prac. Act, § 210.)

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.

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

Judgments reversed, etc.


text:
    In the Matter of Harry N. Reeves, Respondent, against Charles A. Crownshield, Appellant, Impleaded with Another.

      Submitted March 5, 1937;
    decided April 27, 1937.

      Emanuel Redfield for appellant.
    A State law which in its operation interferes with a Federal instrumentality is void to that effect. (McCullough v. Maryland, 4 Wheat. 316; Collector v. Day, 11 Wall. 113; Dobbins v. Commissioners, 16 Pet. 435.) The statute in effect provides for imprisonment for debt and, therefore, deprives appellant of his liberty and property without due process of law. (O’Gara v. Kearney, 77 N. Y. 423.)

      Leopold Freidin for respondent.
    Section 793 of the Civil Practice Act, which permits the court to make an order directing, the judgment debtor to make payments in installments on account of the judgment, is constitutional, although affecting a Federal employee. (Bool Floral Co. v. Coyne, 284 N. Y. Supp. 960; Kaplan v. Peyser, 247 App. Div. 660; Bramhall v. Ferris, 14 N. Y. 41; Tolles v. Wood, 99 N. Y. 616; Zinke v. Hipkins, 233 N. Y. 516; Herts Bros. v. Tiffany, 118 App. Div. 215; Brearley School v. Ward, 20 N. Y. 358; Dibner v. Cousminer, 283 N. Y. Supp. 369; Wyman v. Mitchell, 1 Cow. 316; McCoun v. N. Y. C. & H. R. R. R. Co., 50 N. Y. 176; Ridder v. Ridder, 246 App. Div. 577; National City Bank v. Clarke, 246 App. Div. 636; Williamson v. Drogaris, 288 N. Y. Supp. 179; Loma v. Cripple, 265 N. Y. Supp. 125.) The order of contempt made pursuant to section 801 of the Civil Practice Act and other sections applicable thereto is constitutional. (Williamson v. Drogaris, 288 N. Y. Supp. 179; Matter of Consumers Poultry Dealers v. Podberesky Bros., Inc., 244 App. Div. 754; Fall Brook Coal Co. v. Hecksher, 42 Hun, 534; Moffat v. Herman, 116 N. Y. 131; Ives v. South Buffalo Ry. Co., 201 N. Y. 271.)
   Finch, J.

The uncollectibility of money judgments has ever been a subject of concern to bench and bar. A large part of the statute law of this State is designed to enable a judgment creditor to obtain satisfaction upon his money judgment. That a large percentage of these money judgments have remained uncollectible has been confirmed by statistical surveys. (Study of Civil Justice in New York [Survey of Litigation in New York], Johns Hopkins University Institute of Law [1931].) Many debtors who were in a position to pay have evaded their legal obligations by unlawful and technical means. Discontent with this situation resulted in agitation for reform in collection procedure. (Levien, The Collection of Money Judgments, New York Legislative Document, No. 50 F [1934].) Finally, in 1935, upon the recommendation of the Judicial Council, a law was enacted creating a new mode of enforcing the payment.-of judgments (Laws of 1935, ch. 630).

Section 793 of the Civil Practice Act now provides that, in addition to the garnishee provisions of the old law, the court may make an order directing a judgment debtor to make payments in installments out of the income which he receives. Such orders must be made upon notice to the judgment debtor and after he has had an opportunity to show inability to pay, and with due regard to the reasonable requirements of the judgment debtor and his family, as well as of payments required to be made by him to other creditors. Section 801 of the Civil Practice Act provides that refusal to pay after such an order of the court is punishable as a contempt. Statutes somewhat similar are to be found in Massachusetts, England and Nova Scotia (General Laws, Mass., ch. 224, § 16; Debtor’s Act, 1869, § 5 [32 & 33 Victoria, ch. 62], see Annual Practice [1937], p. 764; Nova Scotia Rev. Stat. [1923, vol. 2] ch. 232, § 29.)

This new procedure was invoked against the appellant, in an attempt to collect a judgment for approximately $400. The examination in supplementary proceedings disclosed that he was employed by the Federal government as a steamship inspector at a salary of $230 per month, less a small pension deduction. He has no children, and the whereabouts of his wife are unknown. Aside from $48 a month paid as rent and hie living expenses, he has no financial obligations. The court ordered the appellant to pay installments of $20 per month until the judgment was satisfied. Upon his failure to pay, he was held in contempt and fined the sum of $20, commitment being provided for in default of payment.

An appeal was taken directly to this court from the City Court of New York city on the ground that a constitutional question was involved.

By stipulation it was provided that the appeals from the order directing payment, and the order adjudging the appellant in contempt, were to be consolidated and treated as one appeal. A final order in supplementary proceedings is appealable to this court, since it is a final order in a special proceeding. (Civ. Prac. Act, §§ 773, 774.) The order in the case at bar is a final order in a special proceeding. (Civ. Prac. Act, § 801.)

The judgment debtor challenges the constitutionality of section 793 and section 801 on the ground that in effect they provide for imprisonment for debt. It is admitted that neither the State nor the Federal Constitutions contain provisions expressly prohibiting imprisonment for debt, and that the statutory provision forbidding imprisonment for debt found in section 21 of the New York Civil Rights Law (Cons. Laws, ch. 6) excepts cases otherwise specially prescribed by law. It is asserted, however, that imprisonment for debt is barred by the due process clauses of the State and Federal Constitutions. No cases so holding are cited, but reliance is had upon vague dicta found in Bailey v. Alabama (219 U. S. 219, 244) and Henderson v. Mayor (92 U. S. 259, 268). Whatever doubt there may exist as to whether imprisonment for debt without regard to ability to pay may be treated as a deprivation of liberty without due process of law (Eikenberry & Co. v. Edwards, 67 Iowa, 619), there can be no doubt that imprisonment for failure to obey an order of a court to make payment out of income, which order is made with due regard to the needs of the debtor and his family, is not violative of the due process clause.

“ In one form or another prohibitions against imprisonment for debt are found in most, if not all,(of our state constitutions. Usually these prohibitions allow exceptions in casesiof fraud, willful injury to persons or property, or of fines or penalties imposed by law. Courts, in construing such provisions, have frequently been called upon to determine to what extent they invalidated statutes authorizing civil executions against the body of a judgment debtor. Their manifest intent is to exempt from imprisonment the honest debtor who is poor, and in good faith unable to pay his debts- This shield of protection should not, therefore, be allowed to be interposed for the benefit of debtors who, being able to pay, yet seek to avoid doing so by assigning or concealing their effects, or by eluding judicial process. Consequently, courts have generally, and quite properly, upheld the validity of statutes authorizing the imprisonment of a- debtor after the return of an execution unsatisfied and proof that he has property legally applicable to the discharge of his liabilities. The imprisonment in such a case is not for debt, but for the neglect and refusal to perform a moral and legal duty, the performance resting in the ability of the debtor. * * * * * *

“ The amelioration of the condition of poor debtors has also proceeded through the enactment of insolvency laws. But in construing legislation having this end in view, courts cannot keep too constantly in mind the fundamental theory upon which it is based, namely, that none of the exemptions thereby afforded debtors should enable them to avoid the payment of debts when able to pay them.” (3 Freeman on The Law of Executions [3d ed.], p. 2394 et seq.)

In the ease at bar the judgment debtor has not complained that the order directing the payment of $20 per month is unjust, inequitable or harsh. His position is an arbitrary refusal to pay. It is based upon the ground that the courts are powerless to compel him to pay out of his income an amount fixed after deducting the sum necessary for his reasonable needs.

The Legislature has seen fit to provide a creditor with a direct remedy for the collection of his just debts. A refusal to recognize such an order by the judgment debtor entitles the creditor to move to have him punished for contempt. Without this right, there would be no power in the court to enforce its order. To compel the judgment debtor to obey the order of the court is not imprisonment for debt, but only imprisonment for disobedience of an order with which he is able to comply. His refusal is contumacious conduct, the same as a refusal to obey any other lawful order of the court.

It also is asserted that the application of this law to the appellant is unconstitutional, since it interferes with the operation of a Federal instrumentality. To sustain this contention, reference is made to the cases declaring State laws taxing the salaries of Federal officers unconstitutional. (Collector v. Day, 11 Wall. [U. S.] 113; Dobbins v. Commissioners of Erie County, 41 U. S. [16 Pet.] 435.) Analysis shows that these cases are not in point. The true basis for declaring a State tax on the salaries of Federal officers unconstitutional is that since the Federal government presumably finds it necessary to pay its officers a salary based upon the value of their services, the State should not be permitted to tax the salaries thereby reducing the compensation and making it necessary for the Federal government to increase the salaries paid by it.

Thus in Dobbins v. Commissioners of Erie County (41 U. S. [16 Pet.] 435, at p. 448) the Supreme Court of the United States said: Is not compensation the means by which his services are procured and retained? It is true it becomes his when he has earned it. If it can be taxed by a state as compensation, will not Congress have to graduate its amount, with reference to its reduction by the tax? * * * It would destroy also all uniformity of compensation * * *. The powers of the national government can only be executed by officers whose services must be compensated by Congress. The allowance is in its discretion. The presumption is that the compensation given by law is no more than the services are worth, and only such in amount as will secure from the officer the diligent performance of his duties.” (See, also, Evans v. Gore, 253 U. S. 245, 254.)

It is true that the wages of a Federal employee cannot be garnisheed but once his wáge has been paid to him a State is not prohibited from ordering him to apply a portion of such income towards the payment of his just debts. The moment the salary is received it becomes a part of the general income of the owner. If he should therewith pinchase property the property could be taken under execution for the payment of a judgment against the owner. No reason appears for exempting the income while still held as money and not exempting it when it has been converted into property. Thus it has been held that a tax on the property of a Federal employee may be applied to his salary which he has deposited in a bank account. (Dyer v. City of Melrose, 215 U. S. 594.) Similarly a statute barring the attachment of pension due or to become due has been held not to exempt property purchased with the pension money. (McIntosh v. Aubrey, 185 U. S. 122.)

The argument that the imprisonment of the debtor for failure to comply with the order to pay will result in interference with the Federal agency which employs him cannot be sustained. Certainly his Federal position does not exempt him from imprisonment for crimes which he may commit. It is equally clear that it does not give him the privilege to disobey with impunity the orders of a State court.

It follows that the orders appealed from should be affirmed, with costs.

Crane, Ch. J., Lehman,'O’Brien, Hubbs, Loughran and Rippey, JJ., concur.'

Orders affirmed.