text:
    John I. Sapinkopf, Respondent, v. The Cunard Steamship Company, Ltd., Appellant, Impleaded with Others.
    (Argued May 7, 1930;
    decided June 3, 1930.)

      George de Forest Lord and James S. Hemingway for appellant.
    The clause in appellant’s bill of lading is reasonable. (Interstate Commerce Act, § 25; Napier v. Atlantic Coast Line R. R. Co., 272 U. S. 605; Cleveland, C., C. & St. L. R. Co. v. United States, 275 U. S. 404; Louisville & Nashville R. R. Co. v. Garrett, 231 U. S. 298; Texas & Pac. Ry. v. American Tie & Timber Co., 234 U. S. 138.)

      George C. Sprague for Hunt, Hill and Betts, amici cwrice.

    The hmitation of suit clause is reasonable, is not contrary to our public policy and should be enforced. (Schnell v. U. S., 30 Fed. Rep. [2d] 676; Ikuno v. Morris, 22 Fed. Rep. [2d] 140; The Turret Crown, 284 Fed. Rep. 439; Matter of Bills of Lading, 66 I. C. C. 687; Cudahy Packing Co. v. Munson S. S. Line, 22 Fed. Rep. [2d] 898.)

      Wilson E. Tipple, Harry D. Thirkield and Adolph Hansen for respondent.
    The suit clause of one year is opposed to public policy. (South & Central America Comm. Co. v. Panama R. R. Co., 237 N. Y. 287; Adams Express Co. v. Croninger, 226 U. S. 491; Decker v. Director General, 55 I. C. C. 453.)

      Arthur W. Clement for Bigham, Englar, Jones and Houston, amici curice.

    The bill of lading provision limiting the time for suit to one year after delivery of the shipment is invalid. (South & Central America Comm. Co. v. Panama R. R. Co., 237 N. Y. 287; Pennsylvania R. R. Co. v. Hughes, 191 U. S. 477; Adams Express Co. v. Croninger, 226 U. S. 491; Barnet v. N. Y. C. R. R. Co., 222 N. Y. 195; Southern Ry. v. Prescott, 240 U. S. 632; Decker v. Director General, 55 I. C. C. 453; Corn Products Refining Co. v. Transmarine Corp., 220 App. Div. 731; Green Star S. S. Co. v. Nanyang Bros. Tobacco Co., 3 Fed. Rep. [2d] 369; Grace v. Panama R. R. Co., 12 Fed. Rep. [2d] 338; Cudahy Packing Co. v. Munson S. S. Line, 22 Fed. Rep. [2d] 898.)
   Per Curiam.

The bill of lading of a common carrier by water, considered in South & Central American Commercial Co. v. Panama R. R. Co. (237 N. Y. 287), provided that, in case of a loss occurring through shipment, a notice of claim must be given within sixty days after knowledge of the loss was acquired, and that action must be brought within sixty days thereafter. This court held that bills of lading, whether those of carriers by land or of carriers by water, must be just and reasonable; that, in determining the question of the reasonability of a provision limiting liability in the case of all water shipments, a Federal statute condemning the insertion in bills of lading for all rail, or part rail and part water shipments, of certain limitations upon the right to institute suit, though not strictly applicable, might be considered as furnishing a standard, to which there should be “ approximate or reasonable conformity.” The statute referred to banned all provisions' limiting the institution of actions against the carriers to a shorter period than two years after a loss. By comparison, the sixty and one hundred twenty day provisions then under consideration showed a flagrant ” departure from the statutory standard of reasonability. In this instance,' the bill of lading fixes the period of one year as the time within which actions must be brought. The provision does not of itself strike the mind as an unreasonable limitation, nor does it mark so wide a departure from statutory standards for analogous cases, as to seem flagrant ” or shocking. We think the provision has vigor and should be applied.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division, and the questions certified answered in the affirmative.

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

Ordered accordingly.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Louise G. Clarkson, Respondent, v. Harold Krieger, Appellant, Impleaded with Others.

      (Submitted May 8, 1930;
    decided June 3, 1930.)

      Raphael H. Weissrnan, Herman Berniker, Harold Kreiger and Philip Kreiger for appellant.
    There was no contract between the parties. (Peterson v. Pattberg, 248 N. Y. 86; Cook v. Caster, 87 App. Div. 8; Levin v. Dietz, 194 N. Y. 376.) There was no writing between the parties sufficient to comply with the Statute of Frauds. (300 West End Ave. Corp. v. Warner, 250 N. Y. 22; Ansorge v. Kane, 244 N. Y. 395; St. Regis Paper Co. v. Hubbs & Hastings Co., 235 N. Y. 30; Varney v. Ditmars, 217 N. Y. 223; United Press v. N. Y. Press Co., 164 N. Y. 406; Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 314; N. E. D. Holding Co. v. McKinley, 246 N. Y. 45.) The appellant to the knowledge of the plaintiff acted as agent and is not personally bound by the alleged contract. (Hernandez v. Brookdale Mills, Inc., 194 App. Div. 369.)

      Sidney A. Clarkson and Joseph E. Low for respondent.
    A valid contract existed between the plaintiff and appellant for the purchase and sale of real property. (No. 2 & 4 Roman Ave., Inc., v. Goddard, 220 App. Div. 138; Sanders v. Pottlitzer Bros. Fruit Co., 144 N. Y. 209; Marks v. Cowdin, 226 N. Y. 138; Civ. Prac. Act, § 589; Palmer v. Taylor, 235 N. Y. 367; Roskam-Scott Co. v. Thomas, 175 App. Div. 84; Brune v. Vomlehn, 112 Misc. Rep. 342.) Appellant cannot raise the question of agency for the first time on appeal. (De Remer v. Brown, 165 N. Y. 410; Ell-Dee Clothing Co. v. March, 247 N. Y. 392.)
   Per Curiam.

A contract for the sale of real estate, to be enforceable, whether by the buyer or the seller, must be expressed in a memorandum in writing, subscribed by the grantor or his agent and assented to by the grantee. (Real Property Law [Cons. Laws, ch. 50], § 259; 300 West End Ave. Corp. v. Warner, 250 N. Y. 221.) In this instance, the only writing signed by the grantor was a quitclaim deed purporting presently to make a conveyance. It records no contractual duty undertaken by either vendor or vendee; it fails to state the true consideration paid or to be paid. True it is, that the signed deed is identical, except that blanks have been filled in, with a draft deed forwarded by the defendant to the plaintiff for signature; true also, that a letter, whereby the defendant promised to forward a check for $2,500 by the Tuesday following, accompanied the deed. However, the letter is not referred to in the deed and cannot be regarded as incorporated, therein, so that a writing, stating a complete contract, may be said to have been subscribed by the grantor. Moreover, it is clear that the defendant promised neither in writing nor in words, to purchase or pay for the property. Concededly, in the oral conversations, the defendant was negotiating for others. The deed which the defendant forwarded for signature to the plaintiff named the Loyal Estates Co., Inc., as the grantee. The defendant thus disclosed to the plaintiff the name of the principal for whom he was acting. Since the defendant never promised himself to buy, since he disclosed the name of the purchaser he represented, on no theory may he be held liable to pay the purchase price agreed upon.

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

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

Judgments reversed, etc.


text:
    Otto A. Rosalsky, Appellant, v. The State of New York, Respondent.
    (Submitted May 8, 1930;
    decided June 3, 1930.)

      Jacob I. Berman for appellant.
    The enabling act is not violative of the constitutional prohibition against the gift or loan of the money of the State in aid of a private undertaking. (New York Const. art. 8, § 9; People v. Westchester Co. Nat. Bank, 231 N. Y. 465; Farrington v. State, 248 N. Y. 112; Matter of Stubbe v. Adamson, 220 N. Y. 459; Williamsburgh Sav. Bank v. State, 243 N. Y. 231; Munro v. State, 223 N. Y. 208; Lehigh Valley R. R. Co. v. Canal Board, 204 N. Y. 471; Silsby Mfg. Co. v. State, 104 N. Y. 562; Cuvillier v. State, 225 App. Div. 707; People v. Byrne, 99 Misc. Rep. 1; People ex rel. Nechamkus v. Warden, 144 N. Y. 529; Mannix v. Frost, 100 Misc. Rep. 36.) Where there is a moral obligation on the part of the State to reimburse one who has suffered loss, an enabling act permitting the Court of Claims to pass upon such a claim is constitutional. (Cuvillier v. State, 250 N. Y. 258; Farrington v. State, 248 N. Y. 112; Williamsburgh Sav. Bank v. State, 243 N. Y. 231; Munro v. State, 223 N. Y. 208; Alamango v. Supervisors of Albany Co., 25 Hun, 551; Ledwith v. Rosalsky, 244 N. Y. 406; Olmsted v. Meahl, 219 N. Y. 270; People ex rel. Sears v. Tobey, 153 N. Y. 381; McDonald v. Mayor, 102 N. Y. 728; Cahill v. Michaelis, 170 Fed. Rep. 66; Farrington v. State, 248 N. Y. 112; People v. Westchester Co. Nat. Bank, 231 N. Y. 465.)

      Hamilton Ward, Attorney-General (Frederick D. Colson of counsel), for respondent.
    The claim herein does not constitute either a moral or an equitable obligation against the State of New York. (People v. Westchester Co. Nat. Bank, 231 N. Y. 465; Farrington v. State, 248 N. Y. 112; Munro v. State, 223 N. Y. 208; Schieffelin v. Henry, 123 Misc. Rep. 792; Matter of Chapman v. City of New York, 168 N. Y. 80; Matter of Jensen, 44 App. Div. 509; Cuvillier
      v. State, 250 N. Y. 258; Matter of Kane v. McClellan, 110 App. Div. 44; Gavin v. Board of Supervisors, 221 N. Y. 222.) The enabling act under which the claim is filed is unconstitutional. (Lehigh Valley R. R. Co. v. Canal Board, 204 N. Y. 471; Munro v. State, 223 N. Y. 208; Babcock v. State, 190 App. Div. 147; 231 N. Y. 560; People v. Westchester Co. Nat. Bank, 231 N. Y. 465; Williamsburgh Sav. Bank v. State, 243 N. Y. 231; Farrington v. State, 248 N. Y. 112; Cuvillier v. State, 250 N. Y. 258; Matter of Jensen, 44 App. Div. 509.)
   Per Curiam.

The question to be determined is the validity under the State Constitution of chapter 772 of the Laws of 1928.

By that act, the Legislature attempted to clothe the Court of Claims with jurisdiction to audit and determine the claim of any judge or judges of the Court of General Sessions of the county of New York for counsel fees and expenses incurred by him or them in successfully defending any action or proceeding heretofore brought against him or them by reason of any act, decision or judgment arising out of his or their judicial duties since nineteen hundred and twenty.” Upon a finding that such an action or proceeding had been brought and had been finally determined in favor of the judge or judges, there was to be a judgment against the State for such sum as shall be just and equitable,” not exceeding, however, the sum of $15,000 in any one instance.

The claimant, a judge of the Court of General Sessions of the County of New York, was sued for damages resulting from an official act, the commitment of a person charged to be insane in accordance with section 87 of the Insanity Law (Cons. Laws, ch. 27). He successfully defended the action, and in so doing incurred expenses for counsel fees and disbursements in the sum of $2,249.09. The Court of Claims has dismissed his claim for reimbursement on the ground that the enabling act (Laws of 1928, cli. 772) permits an unconstitutional gift of the pubhc moneys of the State.

There is now a settled rule of law that in the absence of legal liability, the Legislature may not permit the audit and allowance of a claim against the State unless it be in fulfillment of a moral obligation (People v. Westchester County Nat. Bank, 231 N. Y. 465; Williamsburgh Sav. Bank v. State of New York, 243 N. Y. 231; Farrington v. State of New York, 248 N. Y. 112, distinguishing Matter of Chapman, 168 N. Y. 80, and Matter of Jensen, 44 App. Div. 509).

We do not now determine whether particular equities may give rise to a moral obligation to reimburse a pubhc officer for expenses incurred in defending his official acts (cf. Cuvillier v. State of New York, 250 N. Y. 258). Assuming, without deciding, that such an - obligation may exist, we think the act before us is too broad to be upheld. The jurisdiction of the Court of Claims is not -limited by the statute to the allowance of claims rooted in morality and conscience. There is one requirement and only one: that a judge of a particular court, selected arbitrarily, it would seem, from among all the tribunals' of the State, shall have been a successful defendant in a litigation growing out of his official acts. If that requirement is satisfied, the State is to pay the bill. There is to be no consideration of the question whether the prosecution of the lawsuit was in good faith and upon grounds justifying a finding of probable cause. There is to be no consideration of the reasons for the dismissal of the action, the grounds of the defense. If a final determination has been rendered in favor of the judge, the claim must be allowed-, though the defense may have been one unrelated to the merits, as, for example, the Statute of Limitations, or even the defense that a judge of a superior court who has acted maliciously or oppressively, is immune from civil liability if he has kept within his jurisdiction (Lange v. Benedict. 73 N. Y. 12). A moral obligation, strong enough to sustain discrimination in favor of one group of judges among many similarly situated, imports a broader base of equity and justice.

We measure the validity of statutes, not by what has actually been done under cover of their provisions, but by what with reason may be done (Stuart v. Palmer, 74 N. Y. 183; Matter of Richardson, 247 N. Y. 401, 421). That being so, this statute is not saved because this particular claimant, a judge of high repute, may have been subjected to unjust expense through action for the public good. A statute allowing the gift of public moneys for the benefit of a chosen few may not be held to have its roots in the recognition and enforcement of a moral obligation when claims righteous and unrighteous, considered and unconsidered, known and unknown, are embraced within its terms (Williamsburgh Sav. Bank v. State, supra, at p. 241).

The judgment should be affirmed with costs.

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

Judgment affirmed.


author: Htjbbs, J.

text:
    R. I. Realty Company, Inc., Respondent, v. John R. Terrell, Appellant.

      (Argued May 5, 1930;
    decided June 3, 1930.)

      Reginald Condon Smith and Robert P. Criffing for appellant.
    The clause on which the plaintiff depends is insufficient to constitute an option to purchase. (Buckmaster v. Thompson, 36 N. Y. 558; Stanton v. Miller, 58 N. Y. 192; Davis v. Epoch Producing Corp., 91 Misc. Rep. 631; Baurman v. Binzin, 16 N. Y. Supp. 342; Geer v. Clark, 83 App. Div. 292; Crouse v. Frothingham, 97 N. Y. 105; Milliman v. Huntington, 68 Hun, 258; Burbach v. Sinram, 237 N. Y. 600; Sargent v. Vought, 194 App. Div. 807; Garcia v. Callender, 125 N. Y. 307; Wells v. Fisher, 237 N. Y. 79; Holloway v. Schmidt, 33 Misc. Rep. 747; Koppi v. Gallagher, 133 Misc. Rep. 79; 223 App. Div. 713.)

      Milton Pinkus and Thomas J. Cuff for respondent.
    The complaint states a cause of action. (Jurgensen v. Morris, 194 App. Div. 92; Bullock v. Cutting, 155 App. Div. 825; Burbach v. Sinram, 237 N. Y. 600; Stetler v. Transit Co., 258 Penn. St. 299; Cloverdale v. Littlefield, 240 Mass. 129; Tantum v. Keller, 123 Atl. Rep. 298; Willenbrock v. Latulippe, 125 Wash. 168; Wells v. Fisher, 237 N. Y. 79; American Aniline Prod. Co. v. Mitsui,
      190 App. Div. 485; Emmett v. Penoyer, 151 N. Y. 564; Smathers v. Standard Oil Co., 199 App. Div. 368; 233 N. Y. 617; Brimberg v. Herzig Co., 200 App. Div. 106; Sun Oil Co. v. Heller, 248 N. Y. 28; Levy v. Forster, 224 App. Div. 463; Liondale v. Gerver, 197 App. Div. 345; New York House Wrecking Co. v. O’Rourke, 92 App. Div. 217; 181 N. Y. 564; Mullen v. Washburn, 224 N. Y. 413; Trumbull v. Bombard, 171 App. Div. 700; 225 N. Y. 638; Sanberg v. Reilly, 250 N. Y. 547; Garelik v. Rennard, 116 Misc. Rep. 352; Grosso v. Spover, 123 Misc. Rep. 796; Farone v. Hall, 128 Misc. Rep. 794; Baltzen v. Nicolay, 53 N. Y. 467; Pumpelly v. Phelps, 40 N. Y. 59; Grosso v. Sporer, 123 Misc. Rep. 796; 220 App. Div. 807.)
   Htjbbs, J.

The complaint alleges that the defendant executed a lease to the plaintiff’s assignor who went into possession of the premises leased and thereafter assigned the lease to the plaintiff corporation. The lease contained a clause which reads: “ Said party of the second part is given first privilege to buy said property for the ■ sum of ($14,000.00) Fourteen thousand Dollars.” The plaintiff notified the defendant that it elected to exercise the option to purchase. The defendant refused to convey the premises. This action is to recover damages suffered by the plaintiff by reason of the defendant’s failure to convey.

Upon the motion to strike out the affirmative defenses contained in the answer, the appellant invoked the rule that such motion should be denied if the complaint fails to state a cause of action. (Baxter v. McDonnell, 154 N. Y. 432.)

The first question certified to this court requires us to determine whether the clause quoted from the lease constitutes a valid legal option requiring the lessor to convey the premises at any time during the term of the lease upon receiving from the lessee or her assignee the sum of $14,000. The complaint does not allege that the defendant conveyed the premises to any one else or that he desired to sell the premises.

The contention of the appellant is that the clause is imperfect and incomplete and does not contain an absolute agreement to sell the premises to the lessee for $14,000 and that it only obligated the lessor to convey to the lessee in case he wished to sell to another during the term of the lease for $14,000, in which event he was bound to give the lessee the “ first privilege to buy ” the premises for the price specified.

The respondent’s position is that the legal effect of the words is to give the lessee an absolute right to purchase the premises at the price named. If that position is correct, the lessor was deprived of the right to determine whether or not he wished to sell.

The use of the words “ first privilege ” indicates that the parties must have had in mind some other opportunity of the lessor to sell and that the lessor was not prevented from selling to another if he desired. It bound the lessor, however, not to sell to another for that price without first giving the lessee the opportunity or privilege ' to purchase the' property at the price specified, and, if the lessee did not exercise the privilege to purchase, the lessor was free to sell to any one else. The words “ first privilege ” did not grant an absolute option to the lessee to purchase the premises at any time during the term of the lease. The right of the lessee to purchase depended upon the lessor’s desire to sell. If the lessor desired to sell at the price named, then the lessee was to have the “ first privilege to buy ” at the figure specified.

In construing the clause in question the court is required to give some meaning to all the words used. To construe the clause in accordance with the contention of the respondent would require that the word first ” be eliminated. With that word eliminated, the privilege to buy would be absolute and enforceable. (Sandberg v. Reilly, 223 App. Div. 57; affd., 250 N. Y. 547.) Therefore, it must have been used to prevent the agreement from constituting an absolute option to sell. The phrase first privilege to buy ” and the words “ privilege to buy ” have an entirely different meaning; one is conditional and the other absolute. This court has decided in actions for specific performance that agreements substantially like the one in question could not be enforced in an action in equity. (Buckmaster v. Thompson, 36 N. Y. 558; Burbach v. Sinram, 237 N. Y. 600.) The same conclusion has been announced by other courts of the State. (Sargent v. Vought, 194 App. Div. 807; Koppi v. Gallagher, 133 Misc. Rep. 79; affd., 223 App. Div. 713; Holloway v. Schmidt, 33 Misc. Rep. 747.)

The same conclusion has been reached in law actions to recover damages.

In Cloverdale Company v. Littlefield (240 Mass. 129), an action to recover damages for breach of an agreement to re-lease, it was decided that the words “ ‘ first right to re-lease ’ in common use plainly imports not an absolute and unqualified right in the lessee to have a re-lease at the expiration of the existing lease, but merely a preferential right to have a re-lease at the option of the lessee in the event the lessors then desired to lease the property.” The same result was arrived at in the case of Garcia v. Callender (125 N. Y. 307), which was an action to recover damages for breach of a covenant giving a grantor the first right to repurchase.

The only case in this State which has been called to our attention where a different view has been expressed is in the case of Wells v. Fisher (205 App. Div. 212). In that case there were other terms of the lease which favored the construction placed by that court upon the words first privilege of purchasing.” That case was reversed in 237 N. Y. 79, upon another ground. In the opinion it was clearly pointed out that this court did not approve the decision of the Appellate Division upon the question involved in this case. Courts of other States have reached conclusions contrary to the decisions in this State and in Massachusetts. (Steller v. Transit Co., 258 Penn. St. 229; Tantum v. Keller, 95 N. J. Eq. 466; affd., 96 N. J. Eq. 672; Willenbrock v. Latulippe, 125 Wash. 168.)

After careful consideration of those decisions, we deem it advisable to adhere to the former decisions of this court.

The order of the Appellate Division and that of the Special Term should be reversed and the motion denied, with costs in all courts. The first question should be answered in the negative and the second question not answered.

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

Ordered accordingly.


author: Per Curiam,.

text:
    Guaranty Trust Company of New York, as Trustee, Appellant and Respondent, v. New York and Queens County Railway Company et al., Respondents, and Bankers Trust Company, as Trustee, Respondent and Appellant.
    (Submitted May 5, 1930;
    decided June 3, 1930.)
   Per Curiam,.

The plaintiff moves for a reargument upon the ground that the act of 1896 governing the merger of corporations (Laws of 1896, ch. 932) involves an unconstitutional impairment of the obligation of a contract (U. S. Const, art. I, § 10, subd. 1) if so construed •as to exempt the merging corporation from personal liability as upon a covenant of assumption.

No such point was made in the briefs or in oral argument upon the principal appeal. Even so, we think that justice will be promoted if the point be now considered, since there is room for doubt whether the plaintiff should have foreseen that the application of the statute would be decisive of the controversy (Missouri ex rel. Missouri Ins. Co. v. Gehner, 281 U. S. 313).

The obligation of a contract is determined by the law in force when it is made (McCracken v. Hayward, 2 How. [U. S.] 608, 612; Edwards v. Kearzey, 96 U. S. 595; People ex rel. City of New York v. Nixon, 229 N. Y. 356, 361).

The Steinway deed of trust secures an authorized issue of bonds in the sum of $1,500,000, of which bonds in the sum of $600,000 were issued at once and the residue soon thereafter. The deed is dated April 1, 1892, and was recorded May 6.

At the date of execution and of record, the merger or consolidation of street railroads (as distinguished from railroads generally) was explicitly forbidden (Railroad Law of 1890, § 71, subd. 2; Laws of 1890, ch. 565, amended by Laws of 1892, ch. 676, but not till May 18, 1892; cf. Laws of 1869, ch. 917, § 7).

In that state of the law the plaintiff cannot have accepted the Steinway deed of trust on the assumption that either a merging or a consolidated corporation would be covered by the term successor,” for it had notice through the statute that such succession was impossible.

The act of 1896 (Laws of 1896, ch. 932, § 58) authorizes the merger of stock corporations irrespective of their nature, but provides in effect that in respect of prior contracts and liabilities the new corporation shall be in the position of a purchaser, taking subject to the obligation of the constituent corporations, but not assuming them itself (253 N. Y. 190, at p. 201).

No remedy or security that was attached to the mortgage contract at the execution of the deed of trust is impaired by this enlargement of the corporate powers of the debtor. The mortgagor corporation continues to exist in so far as its existence is necessary for the protection of its creditors (253 N. Y. at p. 201). All that the statute does is to exempt the merging corporation from a duty to subject a new and independent parcel, acquired through its own moneys, to the hen of a prior mortgage, except in circumstances where such a duty would rest upon a purchaser. If the merger act had never been passed there would be no improvements to quarrel about, for the new property, most of it beyond the Steinway line, was acquired through moneys supplied by the consolidated bondholders. The plaintiff seeks the benefit of accretions resulting from the merger, and rejects the conditions of the statute through which merger became possible.

The motion should be denied with ten dollars costs and necessary printing disbursements.


author: Pound, J.

text:
    York Mortgage Corporation, Respondent, v. Clotar Construction Corporation et al., Defendants, and Ocean Realty Company, Appellant. Ocean Realty Company, Appellant, v. Clotar Construction Corporation et al., Respondents. (Actions 1, 2, 3 and 4.)

      (Argued May 6, 1930;
    decided June 10, 1930.)

      William Godnick and A. A. Forman, Jr., for appellant.
    Respondent’s mortgage is not a building loan mortgage. (Strassberger v. Leerberger, 233 N. Y. 55; Sullivan v. Young, 159 N. Y. Supp. 791; Weaver Hardwood Co. v. Solmonowitz, 235 N. Y. 321; Lehnert v. Notlim Realty Corp., 251 N. Y. 340.) The trial court was justified in finding that a fraud had been perpetrated upon appellant by the respondent and its associates and the Appellate Division erred in reversing such finding. All the'facts and circumstances clearly establish it. (Malensky v. Helen, 223 N. Y. 19; Adams v. Gillig, 199 N. Y. 314; Hennequin v. Naylor, 24 N. Y. 139; Lewis v. Gallner, 129 N. Y. 227; Matter of Dorrity, 118 Misc. Rep. 725.)

      Arthur P. Hilton for respondent.
    The respondent’s agreement secured by the mortgage in suit was a valid building loan agreement, and the mortgage is entitled to priority under the terms of the subordination agreement in the appellant’s mortgages. (Dearstine v. Carpenter, 106 Misc. Rep. 102; Thomas on Mortgages, § 300; Paris v. Lawyers Title Co., 141 App. Div. 866; 206 N. Y. 637; Peters v. Meyers, 72 App. Div. 585; Kam v. Benjamin, 10 App. Div. 419; 158 N. Y. 725; Smith v. Pure Strain Farms Co., 180 App. Div. 703; Edison El. Ill. Co. v. Thacher, 229 N. Y. 172; People v. Marcut, 185 N. Y. 257; Lochner v. New York, 198 U. S. 95; People v. Schweiner Press, 214 N. Y. 395; Lowenfeld v. Wimple, 139 App. Div. 621; Brislin Co. v. Bossert, 177 App. Div. 893; Tripp v. Babcock, 195 Mass. 1; Penn. Steel Co. v. Title Guarantee & Trust Co., 193 N. Y. 37.) Respondent’s mortgage was a good and valid lien, and the advances thereon were proper. (Penn. Steel Co. v. Title Guarantee & Trust Co., 193 N. Y. 37; Lowenfeld v. Wimpie, 139 App. Div. 621; Brislin Co. v. Bossert, 177 App. Div. 893.) The respondent’s mortgage falls within the provisions of the subordination clause in appellant’s mortgages and is made superior in lien by force of the provisions of said clause.
      (Hull v. Littauer, 162 N. Y. 569; Eisenberg v. Lefkowitz, 142 App. Div. 569; Tripp v. Babcock, 195 Mass. 1; Penn. Steel Co. v. Title Guarantee & Trust Co., 193 N. Y. 37.) The fee charged by the respondent for making the loan in question did not constitute any reason for refusing judgment to the respondent and for holding that respondent’s mortgage was not a building loan mortgage. (Lehnert v. Notlim Realty Corp., 251 N. Y. 340.)
   Pound, J.

The Appellate Division modified the judgment of the County Court, Nassau county, upon the facts, made new findings and rendered final judgment thereon in favor of York Mortgage Corporation. This court must, therefore, review the facts. (Const, art. VI, § 7.) The question arises as to the scope of such a review. Before the adoption of the Constitution of 1894 it was the duty of this court, when there was a reversal upon the facts, to review the questions of fact as well as the questions of law. The question then arose as to the jurisdiction of the General Term to review findings of fact made by the trial court. It was held that the trial justice or referee was the best judge of the weight to be given to conflicting and doubtful testimony; that the appellate tribunal was not justified in reversing on the evidence solely because it would feel constrained to find the facts the other way but should reverse only when the decision below was clearly erroneous. (Baird v. Mayor, etc., 96 N. Y. 567, 576; Sanger v. French, 157 N. Y. 213, 224; cf. 4 C. J. pp. 892-899 for a full statement of the old rule.) This jurisdiction to review the facts was withdrawn by the Constitution of 1894. Review by the Court of Appeals in civil cases was thereby limited to questions of law. The last vestige of the right of this court to review the facts of a trial before a court or a referee was swept away. (National Harrow Co. v. Bement & Sons, 163 N. Y. 505, 508.) When Constitution, article VI, was amended generally in 1925, the right to review the facts was, to a limited extent, revived. It was provided: § 7. The jurisdiction of the Court of Appeals, except where the judgment is of death, or where the Appellate Division, on reversing or modifying a final judgment in an action or a final order in a special proceeding, makes new findings of fact and renders final judgment or a final order thereon, shall be limited to the review of questions of law.”

The grant of jurisdiction to review new findings was proposed by the Constitutional Convention of 1915 and was engrafted in the Constitution on the recommendation of the Judiciary Constitutional Convention of 1921 which said in its report to the Legislature (Legislative Document [1922] No. 37, at p. 19): The argument is that if the Appellate Division actually makes new findings of fact and thereupon renders final judgment, the litigant decided against ought to have a review of those findings in some appellate tribunal.” One appeal on the facts as found is thus allowed in all cases to the party aggrieved and the jurisdiction of the Appellate Division to make its own decisions on the weight of evidence is recognized.

Prior to the adoption of the new judiciary article the power of the Appellate Division to render final judgment had been materially enlarged by the Legislature. (Code Civ. Pro. § 1317; Civ. Prac. Act, § 584.) It might deal with the evidence in an equity suit just as a trial court ought to have dealt with it ” (Bonnette v. Molloy, 209 N. Y. 167, 171) and direct judgment accordingly, making such findings as might be necessary to support the judgment. (Bonnette v. Molloy, supra, p. 172; Lamport v. Smedley, 213 N. Y. 82, 85.) This provision is now incorporated in the Constitution. Article VI, section 8, reads as follows: Upon an appeal from a judgment or an order, any appellate court to which the appeal is taken which is authorized to review such judgment or order may reverse or affirm, wholly or in part, or may modify the judgment or order appealed from, and each interlocutory judgment or intermediate or other order which it is authorized to review, and as to any or all of the parties. It shall thereupon render judgment of affirmance, judgment of reversal and final judgment upon the right of any or all of the parties, or judgment of modification thereon according to law, except where it may be necessary or proper to grant a new trial or hearing, when it may grant a new trial or hearing.”

The mere reversal of findings made by a referee or judge, on the ground that they are against the weight of evidence, still leads to a new trial rather than a final judgment (Caldwell v. Nicolson, 235 N. Y. 209; McDougall v. Shoemaker, 236 N. Y. 127), unless accompanied by a contrary finding express or fairly to be implied. (Matter of Flagler, 248 N. Y. 415, 420.) To make the new practice effective, the Appellate Division, when it reverses or modifies, is permitted to make new findings of fact. (Rules Civ. Prac. rule 239.)

Prior to the change the appellate tribunal made no findings of fact. In equity causes, before the days of code practice, the appellate court was not constrained upon reversal to order a new trial, but might proceed to render whatever new decree the justice of the case required. * * * The Appellate Division has now been reinvested with that power.” (Lamport v. Smedley, supra, p. 85.) In the chancery practice the appellate tribunal proceeded to make a final determination of the controversy ” (Schenck v. Dart, 22 N. Y. 420, 423); now the Appellate Division makes a full and complete adjudication on the facts. (Lamport v. Smedley, supra.) It is now the appropriate function of an appellate court in equity cases to determine controverted questions of fact, and render final judgment thereon. The interests of improved procedure do not lead us to limit the power of reversal by the Appellate Division to cases where the decision of the trial court is “ clearly erroneous.” It renders the judgment which the facts warrant.

This court has full jurisdiction, in the class of cases provided for in section 7 (supra), to review the facts as “ found by the Appellate Division and their decision thereon.” (Forstmann v. Joray Holding Co., 244 N. Y. 22; Matter of Flagler, supra.) In close cases, the Appellate Division should and we may properly take into consideration, in passing on the credibility of conflicting evidence, the fact that the trial judge had the advantage of seeing the witnesses. In a case so dose as this, let the court of first instance decide.” (Boyd v. Boyd, 252 N. Y. 422, 429.) This court will sift all the evidence and, with due deference to the findings of fact by the trial judge, as thus indicated, ascertain whether the Appellate Division acted in accordance with the weight of evidence.

The power of the Appellate Division to make new findings of fact and a final adjudication thereon is, of course, limited to cases triable by the court and does not extend to cases triable as of right by a jury. (Middleton v. Whitridge, 213 N. Y. 499, 506.)

Five mortgage foreclosure actions were consolidated and the proceedings thereafter had in the consolidated action. The appeal involves in each case the priority of two mortgages, one held by Ocean Realty Company, the other by York Mortgage Corporation. The mortgages of the Ocean Company are prior in point of time. The mortgage of the York Corporation claims priority by virtue of a subordination clause contained in the prior mortgages which reads as follows: This mortgage shall at all times be and remain subject and subordinate to the hen of any building loan bond and mortgage, and to any advances thereunder, and/or a first mortgage which may be obtained by the then owner of the property from any source, provided that the amount obtained by building and loan mortgage, or permanent first mortgage does not exceed sixty per cent, of the value of the land and buildings, said value to be determined by an appraiser in any bona fide reputable lending institution doing business in the State of New York.”

The mortgage of the Ocean Company is in each case a purchase-money mortgage on a separate group of lots included in a tract of land laid out in ninety vacant lots conveyed by it to Ledton Realty Corporation on October 18, 1926. The selling price was $103,500, of which $1,200 was paid in cash and $102,300 was secured by the purchase-money mortgages. Thereafter on December 6, 1926, Ledton Realty Corporation conveyed the same premises to Rednet Realty Corporation and it, in turn, on December 8, 1926, conveyed them to Clotar Construction Corporation, subject only to restrictive covenants imposed on the property by Ocean Realty Company and to the four purchase-money mortgages, with a warranty that except as aforesaid the premises were free and clear of all incumbrances. No reference is made therein to a purchase-money mortgage given by the Clotar Company.

The Clotar Company on February 3, 1927, made a purported building and loan agreement for $35,000 with the York Company for the alleged purpose of erecting on the premises twenty frame and stucco dwellings and garages and to build streets, sidewalks and curbs and gave a mortgage to the York Company for that amount, dated January 21, 1927, due April 1, 1927, a period of little more than two months, which is the mortgage here in question. The title was examined for this loan by Title Guarantee and Trust Company. Attention was called by the title company to the fact that a subordination agreement should be obtained from the holder of the purchase-money mortgages. The title company also certified that the property had been appraised and that an advance of $20,500 would not be in excess of sixty per cent of the value of the vacant property. The York Company claims that on the date when it received the mortgage it made the following advances and payments to or for the Clotar Company, totaling $20,849.50:

To the title company for recording fees, disbursements, etc......................... $350 00

To the title company as deposit for taxes.... 250 00

To * * * its attorneys, as a bonus for the loan of $35,500, which sum was thereafter returned by the said attorneys to itself.... 5,017 50

To the Rednet Realty Corporation to discharge an alleged unrecorded purchase-money mortgage claimed to have been made by the Clotar Construction Corporation to the Red-net Realty Coiporation, dated December 8, 1926 (the same date as the deed to the Clotar Company) and payable September 6, 1927, and claimed to have been lost and which the trial court found had never existed......... 15,232 00

Nothing was done thereafter in the way of improving the property. Not a dollar was advanced toward construction and if any purpose of the Clotar Company existed to erect the buildings mentioned in the building loan agreement, it was abandoned.

The question now arises whether the advances on the temporary mortgage were in fact advances under a building loan mortgage to which the purchase-money mortgages became subordinate. The Appellate Division has held, reversing the trial court, that, as the subordination agreement does not require that the building loan mortgage shall represent advances put into actual construction of buildings on the property, the advances were proper prior charges against the property. The rule thus stated holds good as against genuine advances made under a true building loan agreement. It is the ordinary and usual course of dealing where a party agrees to make a building loan on real estate that existing incumbrances and legitimate expenses attendant on the loan shall be paid out of the new loan unless the agreement limits the uses to which the loan shall be put. (Pennsylvania Steel Co. v. Title Guarantee & Trust Co., 193 N. Y. 37, 43, 45.) But a building loan agreement is an agreement by which one undertakes to advance to another money to be used primarily in the erection of a building and not merely to pay existing mortgages and bonuses to the lender for making the loan.

It was not contemplated as between the two mortgages that the building loan mortgage should be subject to a deduction of $5,000 to be returned to the mortgagee. (Lehnert v. Notlim Realty Corp., 251 N. Y. 340.) In the later case of Iser v. Marks Bldg. Corp. (253 N. Y. 499) we held that the holder of a second mortgage, subordinate to an existing mortgage, could not deny the validity of the prior mortgage in so far as it secured the payment of a bonus. The rule of the Lehnert case was limited to the facts presented but it is applicable here.

Other reasons suggest that the mortgage in question was not a building loan mortgage. The effort of the parties appears quite clearly to have been to give the transaction the form of a building loan mortgage in order to advance the priority of a land mortgage ahead of the Ocean purchase-money mortgages. It would be necessary to raise something like $330,000 to put up the buildings contemplated, yet the Clotar Company gave a mortgage for $35,000, handing back $5,000 thereof in the form of a bonus to the York Company; $15,000 was the only present advance made by the York Company. That went to pay off the lost unrecorded mortgage held by the Rednet Corporation, although it was not due for nine months. The result, as it now appears, is that the Clotar Company has paid a bonus of $5,000 for receiving $15,000, agreeing to pay $20,000 in three months, in order to discharge a $15,000 mortgage, the existence of which is at least doubtful.

Warned by the title company that an actual subordination agreement was required in order to give the mortgage priority, they preferred to let the holder of the purchase-money mortgages sleep in ignorance of their project and to rest on the existing subordination agreement. A formal covenant from the mortgagor that the buildings would be constructed was not required by the York Company. The parties contented themselves with a mere recital that such was the purpose of the mortgage. Obviously neither borrower nor lender had any great concern whether the buildings would be constructed on the vacant property or whether more advances would be called for. The advances were made in reliance on the value of the land only.

Suspicion that the York mortgage was not a genuine building loan mortgage ripens into conviction in the surrounding circumstances. The reasonable conclusion is that the York Company was willing to take a mortgage on the land and to speculate whether it might turn out to be a building loan mortgage entitled as such to priority rather than a second mortgage on the land, which in truth it turned out to be.

The decisions made by this court to uphold legitimate practices may not be turned from their beneficent purpose to sustain transactions which may have the form of fairness but which in fact are attempts to gain unfair advantages never contemplated by the parties. We may penetrate the disguise of form and see the substance beneath.

The claim that the York Company’s mortgage may be considered as a “ first mortgage ” within the meaning of the subordination clause and as such entitled to priority is contrary to the fair meaning of the clause relied on. Read as a whole, the subordination clause plainly contemplates either (a) a building loan mortgage to raise funds to erect buildings, or (b) a permanent first mortgage on the land and buildings when the buildings are erected or their erection has begun. Any other construction would leave the Ocean Company at the mercy of the subsequent owners of the property. The short term and the small amount of the York mortgage suggest anything but permanency. The language of the clause relied on may be ambiguous in the use of the words “ first mortgage ” but the ambiguity is resolved when the words permanent first mortgage ” are read in the light of their obvious purpose to retain the priority of the Ocean mortgage as against a permanent mortgage until the value of the land and buildings justifies subordination.

The judgment of the Appellate Division should be reversed and that of the County Court modified by striking out the provision that York Mortgage Corporation shall pay the deficiency on the foreclosure sale to Ocean Realty Company and by providing that Clotar Construction Corporation shall pay such deficiency, and as so modified affirmed, with costs in this court and in the Appellate Division to Ocean Realty Company.

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

Judgment accordingly.


author: O’Brien, J.

text:
    In the Matter of the Accounting of Florence B. Van Volkenburgh, as Administratrix of the Estate of Thomas S. Van Volkenburgh, Deceased, Respondent. Susie Van V. Huntington, Appellant.

      Argued May 8, 1930;
    decided June 10, 1930.)

      J. Ard Houghwout and Arthur G. H. Power, Jr., for appellant.
    The door was not opened by the contestant compelling the administratrix to produce the securities and to testify to her possession of them subsequent to decedent’s death. (Richardson v. Emmett, 170 N. Y. 412; Matter of Housman, 224 N. Y. 525; Stickney v. Stickney, 131 U. S. 227; Chapman v. Taylor, 136 N. Y. 663; Matter of Canfield, 176 App. Div. 554; Matter of Perry, 129 App. Div. 587; Grey v. Grey, 47 N. Y. 552; Jones v. Thomas, 90 App. Div. 608; N. Y. Central & H. R. R. R. Co. v. Moore, 137 App. Div. 461; Clift v. Moses, 112 N. Y. 426.) The administratrix should not have been allowed to prove that she had possession of the disputed securities immediately after decedent’s death under such circumstances that her possession of them prior to death was a necessary and unavoidable inference. (Clift v. Moses, 112 N. Y. 426; Kings County Trust Co. v. Hyams, 242 N. Y. 405; Wald v.
      Weilhamer, 82 Misc. Rep. 455; Van Vechten v. Van Vechten, 65 Hun, 415.) The door was not opened by the preliminary examination of the administratrix under section 263 of the Surrogate’s Court Act. (Matter of Sherman, 227 N. Y. 350; de Laurent v. Townsend, 243 N. Y. 130; Matter of Brommer, 105 Misc. Rep. 336; Matter of Heuser, 87 Hun, 262; Matter of Hart, 60 Hun, 516; Heaton Surrogates’ Courts [4th ed.], 1765; Boughton v. Flint, 74 N. Y. 476; Matter of Brady, 111 Misc. Rep. 492; Matter of Gilman, 26 N. Y. St. Repr. 944; Matter of Bielby, 91 Misc. Rep. 353; Myers Brief on Procedure in Surrogates’ Courts [2d ed.], 356; Matter of Yetter, 44 App. Div. 404; Westervelt v. Gregg, 1 Barb. Ch. 469.) The admission of the incompetent evidence presents reversible error, because without it the respondent had not succeeded. (Matter of Housman, 224 N. Y. 525; Matter of Booth, 215 App. Div. 516; Matter of Manhardt, 17 App. Div. 1; Matter of Schroeder, 113 App. Div. 204; Matter of Humphreys, 183 N. Y. Supp. 133; Vincent v. Rix, 248 N. Y. 76; Matter of Van Alstyne, 207 N. Y. 298; Beaver v. Beaver, 117 N. Y. 421; Devlin v. Greenwich Savings Bank, 125 N. Y. 756; Tilford v. Bank, 31 App. Div. 565; O’Connell v. Seymour, 33 App. Div. 483; Matter of Cofer, 121 Misc. Rep. 292.)

      Michael H. Cardozo, Jr., for respondent.
    The securities to which objections were filed were all owned by respondent before her husband’s death. (Pastene & Co. v. Irving Nat. Bank, 249 N. Y. 272; Miller v. Silverman, 247 N. Y. 447; Matter of Brown, 252 N. Y. 366; Wheeler v. Wheeler, 43 Conn. 503; Stroher v. McFarland, 166 Mo. App. 364; Coulter v. Meining, 143 Minn. 104; Matter of Blumenthal, 236 N. Y. 448; Matter of Kane, 246 N. Y. 498; Matter of Kennedy, 186 App. Div. 188; Moskowitz v. Morrow, 251 N. Y. 380; Kelley v. Beers, 194 N. Y. 60; Matter of Dalsimer, 167 App. Div. 367; 217 N. Y. 608; West v. McCullough, 123 App. Div. 846; 194 N. Y. 518;
      Borst v. Spelman, 4 N. Y. 284; Sandford v. Sandford, 58 N. Y. 69; Matter of Larmon, 212 App. Div. 273; Matter of Kaupper, 141 App. Div. 54; 201 N. Y. 534.) Objection to the testimony of respondent under section 347 of the Civil Practice Act was waived. (Cole v. Sweet, 187 N. Y. 488; de Laureni v. Townsend, 243 N. Y. 130; Matter of De Forest, 119 App. Div. 782; 189 N. Y. 544; Matter of Glasgow, 121 Misc. Rep. 613; 209 App. Div. 884; Bambauer v. Schleider, 176 App. Div. 562; Farmers' Loan & Trust Co. v. Wagstaff, 194 App. Div. 757; Ess v. Griffith, 139 Mo. 322; Thomas v. Erwin, 90 Tenn. 512; Clark v. Clark, 83 Atl. Rep. 515; Lester v. Hutson, 167 S. W. Rep. 321; Cox v. Gettys, 53 Okla. 58; Neis v. Farquharson, 9 Wash. 508; Clifford v. Denver R. G. R. R. Co., 188 N. Y. 349.) The examination of respondent by the appellant before the referee opened the door as to all matters. (Lewis v. Merritt, 98 N. Y. 206; Clift v. Moses, 112 N. Y. 426.) The examination of respondent by appellant before the referee as to possession when examined, opened the door to her testimony as to possession at any time after death. (Nay v. Curley, 113 N. Y. 575; Cole v. Sweet, 187 N. Y. 488; Sweet v. Low, 28 Hun, 432; Richardson v. Emmett, 170 N. Y. 412; Matter of Cozine, 104 App. Div. 182; Mahoney v. Jones, 35 App. Div. 84; Matter of Woodbury, 40 Misc. Rep. 143; Davis v. Gallagher, 55 Hun, 593; 124 N. Y. 187.)
   O’Brien, J.

Respondent, the widow of Thomas S. Van Volkenburgh, was appointed administratrix of his estate and she filed her account. Appellant, who is the daughter of decedent by a former marriage and his sole heir and next of kin, obtained an order pursuant to section 263 of the Surrogate’s Court Act whereby the administratrix was directed to appear before the surrogate for examination. By virtue of that order, the administratrix was examined at length in respect to her personal possession of many bonds and certificates of stock over which she asserted individual ownership and the circumstances under which she claimed to have received them as gifts from her husband. The minutes of that examination were filed in the Surrogate’s office. Appellant later filed objections to the account and the issues arising on such objections were sent to a referee who decided substantially all of them in respondent’s favor. With very slight modification his report was confirmed and the order of confirmation has been affirmed by a divided Appellate Division.

On the hearing before the referee the widow was allowed to give testimony concerning personal transactions between herself and decedent. She testified that all the disputed securities had been given to her by her husband. Unless the door had been opened to the admission of this evidence by appellant’s act in producing substantially the same evidence on the examination under section 263 of the Surrogate’s Court Act, this testimony before the referee was rendered incompetent by the provisions of section 347 of the Civil Practice Act. The prohibition of this section, however, applies by its restrictive language only to the trial of an action and to a hearing upon the merits of a special proceeding. The rule as to waiver is to be found in this section and not elsewhere (de Laurent v. Townsend, 243 N. Y. 130) and, therefore, waiver can occur only on a trial or on a hearing upon the merits. Here there was no trial of an action. Was the examination under section 263 a hearing upon the merits of a special proceeding? If it was, then there was a second hearing upon the merits, for certainly the one before the referee was of such a character. We think that there was only one hearing upon the merits and that that was the one before the referee. The preliminary examination under section 263 consisted merely of an investigation of the conduct of a fiduciary for the purpose of ascertaining the existence of merits upon which objections could be based. The widow was not then examined in her own behalf or interest but in antagonism to her individual interest by a hostile party who sought to show that as administratrix she had been recreant to her trust. At that time no objections had been filed and consequently there could have been no hearing upon them. There were then no merits to hear. The issues tried by the referee arose upon later objections and the widow’s testimony on the previous examination was not given in evidence by appellant. Section 347 does not forbid a preliminary inquisition of a fiduciary in relation to transactions with a decedent and section 263 expressly authorizes it. Accordingly, the provisions of section 347 were not waived by one who later became a contestant and raised issues which were subsequently heard upon the merits. The widow’s testimony on the hearing before the referee was, therefore, incompetent.

The Surrogate and the majority at the Appellate Division have found, irrespective of this incompetent testimony, that the disputed securities were proved as gifts to the wife .during the lifetime of decedent. Much evidence supports this finding and small, if any, volume of evidence in the record would justify a contrary inference. For years, respondent had maintained safe deposit boxes for her exclusive use at the Fifth Avenue Bank and the National City Bank. Her husband never had access to them but he was fully aware of the fact that she was accustomed to store bonds and stock certificates in them. He was a director of the Fifth Avenue Bank and there kept his own securities in a box to which respondent never had access. The day of his death fell upon a bank holiday and common experience requires us, in the absence of proof, to assume that the Fifth Avenue vaults were not then open to respondent. Four days later, her husband’s box at the Fifth Avenue Bank was opened and the parties stipulate that neither on that day nor on the day of his death were any of the disputed securities in this box. There is no evidence that he kept any of them in any other place except a few with a trust company in Vermont. Intended transfers and actual transfers of many securities are established by decedent’s written declarations. In addition, one of the officers of the Fifth Avenue Bank testified that Mr. Van Volkenburgh on various occasions had ordered the purchase of securities and had stated at such times that he intended giving them to his wife. On at least one occasion this officer was present when decedent handed his wife some bonds, told her they were hers and to put them in her safe deposit box. Respondent’s sister testified that decedent told her that he had given a great many securities to his wife and that once she was present when he handed his wife several packages, told her that they were securities, that they belonged to her and to put them in her safe deposit box. A friend in whom decedent intimately confided during the last two months of his life testified that decedent had informed him of gifts of stock and bonds to his wife amounting in value to more than $225,000. A butler in decedent’s service testified that about a month prior to death his employer told him that he was going to die but that he had provided for his wife. No will was in existence. It is true that there is no direct proof that the securities which decedent intended to give and which he did give to his wife are, in each instance, the same as the subjects of this contest, but the conclusion must almost of necessity follow that they are identical. This man’s wide business experience refutes any reasonable suspicion that he would have negligently left $200,000 in securities unprotected in places where, without his consent, respondent or others could have taken possession of them. The affectionate relations between husband and wife render probable in the highest degree the fact of donation. Absolute certitude is not required. Not a word in the record suggests that respondent could by any possibility have acquired them except by gift. Everything points in the opposite direction. Neither is the value large in proportion to the size of the estate. The father did not deprive his daughter of such a share in his estate as he could have fairly believed to belong to her in a rightful distribution. The widow’s portion, even with these gifts, amounts to far less than the daughter’s interest. We conclude, therefore, that the finding by the courts below is supported by the evidence.

The order should be affirmed, with costs to respondent payable out of the estate.

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

Order affirmed, etc.


text:
    Charles W. Sommer & Bro., Inc., Respondent, v. Albert Lorsch & Company, Inc., Appellant.
    (Submitted June 2, 1930;
    decided June 10, 1930.)
   Per Curiam.

The question arises whether an appeal may be taken to this court as of right from a final judgment: “ Where one or more of the Justices of the Appellate Division * * * having sat in the case, refrains from participating in the decision of the court.” (Civ. Prac. Act, § 588, subd. 1.)

The amended judiciary article (Const, art. VI, § 7, subd. 1) provides as follows: (1) As of right, from a judgment or order entered upon the decision of an Appellate Division of the Supreme Court which finally determines an action or special proceeding wherein is directly involved the construction of the Constitution of the State or of the United States, or where one or more of the justices of the Appellate Division dissents from the decision of the court, or where the judgment or order is one of reversal or modification.”

The failure of a sitting justice to participate in the decision of the court is not a dissent.

While the Legislature may further restrict the jurisdiction of the Court of Appeals and the right of appeal thereto (Const, art. VI, § 7, subd. 5) it may not enlarge such right of appeal.

When the Constitution was amended the clause above quoted became unconstitutional and should have been eliminated from the Civil Practice Act. Prior to the adoption of the amended article, the Constitution did not limit the right of appeal from final judgments but such right was subject to legislative restriction. With the right of appeal now limited by the Constitution, the power of the Legislature is limited to further restrictions.

Four justices of the Appellate Division shall constitute a quorum (Const, art. VI, § 2) and the unanimous affirmance by a court of four judges requires leave to appeal under Constitution (Art. VI, § 7, subd. 1, supra).

On the merits, the motion for leave to appeal is denied, - with ten dollars costs and necessary printing disbursements.


text:
    Alfreda Schrader, as Administratrix of the Estate of Carl F. Schrader, Deceased, Appellant, v. New York, Chicago and St. Louis Railroad Company, Respondent.
    (Argued May 13, 1930;
    decided June 13, 1930.)

      Frank J. Fitzpatrick for appellant.
    The question of the defendant’s negligence was for the jury. (Richardson v. N. Y. C. R. R. Co., 45 N. Y. 846; Dyer v. Erie R. R.

      Co., 71 N. Y. 228; Petrie v. N. Y. C. R. R. Co., 63 App. Div. 473; 171 N. Y. 638; Cordell v. N. Y. C. R. R. Co., 70 N. Y. 119; Greany v. L. I. R. R. Co., 101 N. Y. 419; Ehrmann v. Nassau Electric R. R. Co., 23 App. Div. 21; Schron v. S. I. R. R. Co., 16 App. Div. 111; Schuster v. Erie R. R. Co., 145 App. Div. 71; 205 N. Y. 564; Heintz v. N. Y. C. R. R. Co., 149 App. Div. 217; Bohmiger v. Campbell, 154 App. Div. 879.) The question of the contributory negligence of the deceased should have been left to the jury. (Bowers v. N. Y. C. R. R. Co., 251 N. Y. 526; Chamberlain v. Lehigh Valley R. R. Co., 238 N. Y. 233; Horton v. N. Y. C. R. R. Co., 237 N. Y. 38; Elias v. Lehigh Valley R. R. Co., 226 N. Y. 154; Baker v. Lehigh Valley R. R. Co., 248 N. Y. 241; Carr v. Pennsylvania R. R. Co., 225 N. Y. 44; Hoffman v. N. Y. C. R. R. Co., 241 N. Y. 539.)

      Evan Hollister for respondent.
    The court was right in directing a verdict for the defendant on the ground that the plaintiff’s intestate was guilty of contributory negligence as a matter of law in failing to look or slow down while driving over the last fifty feet, where his view of the approaching train was clear and unobstructed. (Allen v. Erie R. R. Co., 244 N. Y. 542; Cassidy v. Fonda, Johnston & Gloversville R. R. Co., 234 N. Y. 599; Barnasky v. N. Y., O. & W. Ry. Co., 226 N. Y. 435; Fitch v. N. Y. C. R. R. Co., 233 N. Y. 356; La Goy v. Director General of Railroads, 231 N. Y. 191; Raymer v. Rutland R. R. Co., 204 App. Div. 135; Bowers v. N. Y. C. R. R. Co., 251 N. Y. 526; Chamberlain v. Lehigh Valley R. R. Co., 238 N. Y. 233.) The unimpeached testimony of the disinterested witness Cusick, coupled with the unobstructed view within fifty feet of the crossing, established the contributory negligence of the plaintiff’s intestate as a matter of law. (Abbot’s Civil Jury Trials [3d ed.], 614; Elwood v. Western Union, 45 N. Y. 549; Dolan v. Delaware & Hudson Canal Co., 71 N. Y. 285.)
   Per Curiam.

This is an action for causing death by negligence at a railroad crossing. Deceased, traveling on the highway, approached the crossing in a Chevrolet automobile at a slow rate of speed, and drove onto the tracks without looking in either direction. Taking the credible evidence most favorable to plaintiff, deceased could not, within the range of safety, have an unobstructed view of the tracks for any considerable distance to the east until he came within .twelve to fifteen feet of the rails when he would have to look over his shoulder to see them. He was struck by a west-bound train which gave no signal warning of its coming. The complaint has been dismissed on the ground that deceased was guilty of contributory negligence as matter of law.

The burden of proof of contributory negligence in death cases is and has been since September 1, 1913 (Sackheim v. Pigueron, 215 N. Y. 62), upon the defendant. (Civ. Pr. Act, § 265.) The question is ordinarily one for the jury (Chamberlain v. Lehigh Valley R. R. Co., 238 N. Y. 233) but not invariably. (Castle v. Director-General of Railroads, 232 N. Y. 430; Allen v. Erie R. R. Co., 244 N. Y. 542.) The change in the rule as to the burden of proof is not a change in the substantive law and does not alter the measure or duty of proper care. If it does not appear whether or not the deceased exercised proper care when approaching the crossing, or if the proofs are equally balanced, the defendant fails to bear the burden of proof imposed upon it. Such is the substance of the statutory change in the common-law rule. Except for the shifting of the burden of proof, the rule is the same as in cases of personal injury not resulting in death.

As a person approaches a railroad crossing in a vehicle he must reduce his speed to a limit which is reasonably safe under the circumstances and conditions and then proceed cautiously and carefully with the vehicle under complete control; and he must employ his senses of hearing and sight to avoid danger. (Horton v. N. Y. C. R. R. Co., 237 N. Y. 38, 47; Fitch v. N. Y. C. R. R. Co., 233 N. Y. 356.) If no warning is given of the approach of the train, silence may at times suggest some relaxation of vigilance but not an entire absence thereof, as where a traveler has looked where he could see from a proper viewpoint, and is not required to look again immediately before proceeding onto the tracks. (Carr v. Pennsylvania R. R. Co., 225 N. Y. 44, 47.) These are circumstances which may make it proper to submit the case to the consideration of the jury. But when one, familiar with the crossing, as deceased was, is heedless of ordinary precautions in a place which he knows to be dangerous, no question remains for a jury to pass on. The evidence in this case points conclusively to a total lack of care on the part of the deceased. If he had looked at a proper viewpoint he would have seen the approaching train in time to avoid the accident. (Miller v. N. Y. C. R. R. Co., 226 App. Div. 205; affd., 252 N. Y. 546; Barnasky v. N. Y., O. & W. Ry. Co., 226 N. Y. 435.)

Each case is governed by its own conditions and circumstances. No two crossing accidents are identical. In the Chamberlain Case (supra) the driver was unfamiliar with the crossing and the angle of approach on the highway made it difficult for him to look for trains in both directions on two double-tracked roads. He was held only to the duty of doing the best he could and he was looking and hstening. In other cases, deceased looked as best he could and could see but a short distance. (Horton v. N. Y. C. R. R. Co., supra.) No change in the law was made but well-understood principles were applied in these cases.

This court has never adopted or been influenced by the stop, look and listen ” rule which was carried to such an extreme in B. & O. R. R. Co. v. Goodman (275 U. S. 66, 70) as to suggest a duty to stop and get out of one’s vehicle to look up and down the tracks at a dangerous crossing before proceeding. Our rule of conduct is not standardized but it has been stated repeatedly, as in the Horton Case (supra). One who approaches any crossing, at any time, or under any circumstances, without taking any precautions for his safety, is guilty of contributory negligence as matter of law.

Deceased plainly took no precautions adequate for his protection at the crossing where he was struck.

The judgment should be affirmed, with costs.

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


author: Crane, J.

text:
    Anita B. White, Respondent, v. Knickerbocker Ice Company et al., Appellants.
    (Argued June 11, 1930;
    decided July 8, 1930.)

      Allan B. Campbell and Frank B. Bruce for appellants.
    In accordance with public policy, a deed will be held not to separate the upland from the adjoining land under water unless that land is expressly and clearly reserved. (Luce v. Carley, 24 Wend. 451; Seneca Nation v. Knight, 23 N. Y. 498; Gouverneur v. National Ice Co., 134 N. Y. 355; Smith v. Bartlett, 180 N. Y. 360; Fulton L., H. & P. Co. v. State, 200 N. Y. 400; Matter of City of New York, 212 N. Y. 325; Matter of Ladue, 118 N. Y. 213.) As the land under water was not expressly and clearly reserved, it passed by the deed. (Calkins v. Hart, 219 N. Y. 145; Clark v. Durland, 35 App. Div. 312; 104 App. Div. 615; 187 N. Y. 560; Luce v. Carley, 24 Wend. 451; Seneca Nation v. Knight, 23 N. Y. 498; Matter of City of New York, 212 N. Y. 325; White’s Bank v. Nichols, 64 N. Y. 65; Boston v. Richardson, 13 Allen, 146; Freeman v. Bellegarde, 108 Cal. 179; Land & Lake Assn. v. Beardsley, 182 App. Div. 550; Winslow v. Cooper, 104 Ill. 235; Smith v. Bartlett, 180 N. Y. 360; Holloway v. Southmayd, 139 N. Y. 390.) In cases of disputed title to land under water, the conduct of the parties, showing their own practical construction of the title documents, is a competent consideration in determining the legal effect of the documents. (Trustees of Brookhaven v. Strong, 60 N. Y. 56; Trustees of East Hampton v. Vail, 151 N. Y. 463; Stewart v. Turney, 237 N. Y. 117.)

      David Paine, J. Du Pratt White and Graham D. Mattison for respondent.
    The conveyance by William Smith did not carry the land under water. (Fulton Light, Heat & Power Co. v. State of New York, 200 N. Y. 400;
      Gouverneur v. National Ice Co., 134 N. Y. 355; Commonwealth Water Co. v. Brunner, 175 App. Div. 153; Bradley v. Rice, 13 Me. 198.) A way of necessity was reserved by operation of law. (Empire Bridge Co. v. Larkin Soap Co., 59 Misc. Rep. 46; Voorhees v. Burchard, 55 N. Y. 98; Valentine v. Schrieber, 3 App. Div. 235.)
   Crane, J.

William Smith of the town of Clarkstown, Rockland county, on the first day of May, 1841, conveyed to George E. Felter of the same place, certain lands adjoining the southern shore of Rockland lake, by description reading as follows: “ Beginning at the south east corner of said lot in the middle of the public road that runs along the south side of the Rockland Lake it being also the south west corner of the land of Garret Henion thence running northerly along the land of said Garret Henion to the Rockland Lake thence westerly along the south side of the Rockland Lake to the land of the heirs of John Smith deceased thence running southerly along the land of the said heirs of John Smith deceased to the middle of the public road aforesaid thence easterly along the middle of the said road to the place of beginning containing about two acres of land be the same more or less with the appurtenances and all the estate title and interest of the said party of the first part therein.”

Through mesne conveyances the Knickerbocker Ice Company became the owner of a sixteen-foot strip running along the edge of the lake, which on the plaintiff’s Exhibit No. 1 is designated by the numeral II. The plaintiff, through similar conveyances, is now the owner of the remaining portion of the upland, designated on said exhibit by the numeral I. She has no means of reaching the lake except to pass over the property of the Knickerbocker Ice Company.

In 1926 plaintiff also took a deed from Smith’s heirs to at least an undivided two-thirds interest of the land under water adjacent to the shore, which under the rulings in Calkins v. Hart (219 N. Y. 145) is a triangular gore formed by the lines running at right angles to the shore and center line of the lake. As William Smith at the time of his conveyance to Felter in 1841 did not own any other land contiguous to the said land under water in front of the premises conveyed to Felter, it is the claim of the plaintiff in this action that there was reserved in him as a way of necessity an easement over Fetter’s land to the public road, which was described as running along the south side of Rockland lake. Under present conditions this easement would give to the plaintiff the right of access over the land of the Knickerbocker Ice Company from her upland to the lake, or this portion of Rockland lake in front of her property, and designated on plaintiff’s Exhibit No. 1 by numeral III.

Rockland lake is about one mile long and three-quarters of a mile wide. The defendants apparently concede that if William Smith had reserved by his deed the land under water in front of the property conveyed to Felter, the plaintiff is entitled to an easement by way of necessity, so we shall not pause to consider the nature of such an easement as applicable to the facts in this case.

The rights of the respective parties, therefore, depend upon the interpretation to be given to the Smith deed. Both sides rely upon Gouverneur v. National Ice Co. (134 N. Y. 355).

The legal effect of a conveyance is determined by the terms employed. (Smith v. Bartlett, 180 N. Y. 360.) Each case, however, depends largely on its own facts. By the above description, did the words, thence westerly along the south side of the Rockland Lake,” exclude the land under water in front of and adjacent to land conveyed to Felter? Upon the determination of this question rest the rights of the parties to this litigation.

In order to focus our attention upon the facts it is well to state again some of the old and well-settled rules. Where a grant is so framed as to touch the water of a

river, and the parties do not expressly except the river, one-half of the bed of the stream is included by construction of law. The value, such as they have, of small non-navigable lakes and ponds, as a general rule, is mainly in their relation to adjacent lands. If the parties mean to exclude the land under water, they should do so by express exception; the restriction ought to be framed in very plain and express words. (Gouverneur v. National Ice Co., supra; Seneca Nation of Indians v. Knight, 23 N. Y. 498, p. 500.) The rule which has been continuously followed is best expressed by Cowen, J., in Luce v. Carley (24 Wend. 451): “ Where the grant is so framed as to touch the water of the river, and the parties do not expressly except the river, if it be above tide, one-half the bed of the stream is included by construction of law. If the parties mean to exclude it, they should do so by express exception. Without adhering rigidly to such a construction, water gores would be multiplied by thousands along our inland streams small and great,, the intention of parties would be continually violated, and litigation become interminable.” A description carrying the boundary by the shore ” is such an express restriction (Child v. Starr, 4 Hill, 369, 375); likewise, to the bank ” (Halsey v. McCormick, 13 N. Y. 296). On the other hand, along said pond,” was held in the Gouverneur case not to be such a restriction, and carried title to the center of the pond.

The Court of Errors in Child v. Starr (supra, at p. 373) said: “ Where the grant to the riparian proprietor has no other boundary on the side thereof which is adjacent to the river but the stream itself, the legal presumption is that his grantor intended to convey to the middle of such stream. * *. * Running to a monument standing on the bank, and from thence running by the river or along the river, etc., does not restrict the grant to the bank of the stream.”

These principles of law as settled by the courts of this State, were summarized by Gray, J., in Fulton Light, Heat & Power Co., v. State of New York (200 N. Y. 400, p. 417), and the rule that if the grantor desires to retain his title to the land under water, he must do so by express words or by such a description as clearly excludes it from the land conveyed, was reiterated by Andrews, J., in Stewart v. Turney (237 N. Y. 117, 121).

The description which runs the boundary by the river or pond, or which is so framed as to touch the water of the river or pond, carries title to the center thereof. It is not a clear and express restriction of the title to the upland. (Luce v. Carley, supra; Gouverneur v. National Ice Co., supra.) The description in Hardin v. Jordan (140 U. S. 371, p. 374), which carried title to the land under water was, along the margin of the lake.”

The conclusion to be drawn from these cases appears to be that if the description runs the title along dry land such as the bank or the shore, there is an express restriction which excludes or reserves title in the river or pond; whereas, if the boundary touches the water or is along the water or by the water, and not dry land, the presumption remains that title is carried to the center of the river or pond.

The Smith deed carried the boundary to the Rock-land Lake ”— all of it — not to the shore or to the bank or to the edge, or even to the side of the lake. It then ran along “ the south side of the Rockland Lake.” The point, therefore, ran from the lake as a body of water, along the side of that water, which must be the same in point of contact as the water itself. We cannot imagine the minutest distance between a point which is by the lake, and one the side of the lake; both points touch the water. The imaginary line drawn from a point which is designated as the Rocldand Lake ” along the side of the lake is the same as saying, “ by the lake.” Any attempted distinction would be so highly artificial and mythical as to render the above rules of interpretation useless, as well as meaningless. The rule reiterated in all the eases is that a grant of land adjacent to a small lake carries title to the center thereof, unless the presumption is negatived by express words or by such a description as clearly excludes it from the land conveyed.

The Supreme Court of Maine, in Lowell v. Robinson (16 Me. 357), held that a description commencing at a stake by the side of a mill pond, and from thence running to another stake by the side of the river or mill pond,” extended the grant to the thread of the river.

The deed itself, moreover, is so phrased as to indicate the intention of the grantor to include the land under water, not to exclude it. The word “ side ” has many meanings. It may not always refer to the border or edge of the water of a lake; it may refer to any part or position viewed as opposite to or contrasted with another, as the south side or north side of the pond or lake. (Webster’s New International Dictionary.) Whether the one meaning or the other be intended depends entirely upon the context. (Winslow v. Cooper, 104 Ill. 235, p. 243.) The deed of William Smith indicates that the word side ” was used in this latter sense. The point of beginning is at the southeast corner in the middle of the public road that runs along the south side of Rockland lake. “ Side,” as used at this point, means the southerly portion of the lake. The road did not touch the lake, although it came very near to it. The road was on the South side or portion of the lake. There can be no uncertainty of the meaning of the word side ” as used in connection with the word “ road.” Why should it not have the same meaning when used a few lines below? The description continues: running northerly along the land of said Garret Henion to the Rockland Lake.” If the grantor had intended to go no further, the most natural thing to say would have been, “ to the edge or margin of the lake.” Apparently he had no such intent in mind. Continuing, the description reads: thence westerly along the south side of the Rockland Lake to the land of the heirs of John Smith.” This has reference to the extent or distance of the westerly line on the south side of the lake, and side ” here likewise means the southerly portion, of the lake. Transposed, the description would read, running northerly along the land of said Garret Henion to the Rockland Lake, thence westerly along the lake on the south side to the land of the heirs of John Smith.” In other words, when we find that side ” has been used by the grantor with one meaning, we should give it a similar meaning, when used again, unless the context indicates a different intention. The south side of Rockland lake, as used in the deed, is the same as Rockland lake on the south side.

That this was and is the meaning of the description in this deed is apparent from the circumstances of the property at the time Smith conveyed it to Felter. The conveyance carried all the upland down to the water, and under the presumptive rule, carried title to the center of the lake. If Smith, by the words of the deed, reserved title to the triangular gore in front of this property, he was completely shut off on all sides. The trial court found that at the time of the conveyance to Felter, William Smith did not own any land contiguous to said land under water, and that there existed no ingress to said land under the waters of said Rockland Lake — being the land marked III on plaintiff’s Exhibit 1, except over the land so conveyed by him to said Felter, being land marked I and II on said exhibit. The land under water surrounding him was private to the same extent as other real estate (Halsey v. McCormick, 13 N. Y. 296, 298), and user of it without permission would make him a trespasser. (Calkins v. Hart, 219 N. Y. 145.) Reserving to himself this gore of water, the only access he would have to the upland would be a way of necessity over Felter’s property. Naturally one asks what purpose or use could be made of such an anomalous reservation. Smith, so far as this record shows, and his family never claimed to have any such title, and the claim, if it ever existed, has been raised for the first time in this litigation. The mere failure to assert a right is no indication that it does not exist, especially in connection with real estate titles, but when there may be a question as to the meaning of words having more than one significance, the action of the parties has some bearing on the case. The ice company for years cut ice upon this triangular gore, and the public have used it without objection from Smith or his heirs.

This meaning of the word “ side,” as used in descriptions of this nature, finds support in Land & Lake Assn. v. Beardsley (182 App. Div. 550, p. 554, 555), where the words used were, “ along the road and North side the Lake to a Birch.” The court said: “This objection calls for a consideration of the sense in which the word ‘ side ’ is used. Assuming that the portion of the lake in question is its northerly side, that side would extend to the center of the lake. That is a common meaning of the word side. Such meaning of the word would give the expression in this description precisely the same effect as though the conveyancer had used the language ' along the road and the lake ’ or ' along the road and the lake, north side/ ” See a like meaning of the word “ side ” in Koerner v. Deuther (143 Fed. Rep. 544, 545).

The distinction between the rule as applicable to rivers and lakes and that relating to the conveyances of land adjacent to highways is referred to in the Gouverneur case. Another difference, not there mentioned, is the easement which a property owner has in the street as a highway. Even if the grantee of land adjacent to the highway takes no fee in the street, he may use it as a public highway and may not be deprived of the easements of light, air and access without compensation. (Holloway v. Southmayd, 139 N. Y. 390, 401.) Such easements, however, do not follow the grant of land adjacent to streams and lakes. If the grantee does not get the land under water, he gets no rights to go on it for any purpose. (Calkins v. Hart, 219 N. Y. 145.)

For the reasons stated, the deed of Smith to Felter carried the land under water in the lake to the center thereof. The complaint should have been dismissed.

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

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


author: Cardozo, Ch. J.

text:
    Evangelical Lutheran Church of the Ascension, of Snyder, New York, Respondent, v. Phillip Sahlem et al., Appellants.

      (Argued June 3, 1930;
    decided July 8, 1930.)

      Gottfried H. Wende for appellants.
    The trial court erred in decreeing that property might be taken without compensation and that in some other lawsuit or action the question as to damages might be tried out and determined. (Rockwell v. Nearing, 35 N. Y. 302; Matter of Tuthill, 163 N. Y. 133; Trustees v. Lynch, 70 N. Y. 441; Morrow v. Hasselman, 69 N. J. Eq. 612; 62 N. J. Eq. 276; Bridgewater v. Ocean City R. Co., 63 N. J. Eq. 798; Skillman v. Mathehurst, 57 N. J. Eq. 1; Levy v. Schreyer, 177 N. Y. 293; Kitching v. Brown, 87 N. Y. Supp. 75; 73 N. E. Rep. 241.) The parties’ intention in restrictive covenants should be carried out. (Cook v. Murlin, 195 N. Y. Supp. 793; Nissen v. McCafferty, 195 N. Y. Supp. 549; Cromwell v. American Bible Society, 195 N. Y. Supp. 217; Kempner v. Simon, 195 N. Y. Supp. 333.)

      Wartley B. Paul and John G. Lesswing for respondent.
    The restrictions must be most strongly construed against the grantors and the persons seeking to enforce them. (Reformed P. D. Church v. M. A. Bldg. Corp., 214 N. Y. 269; Kitching v. Brown, 180 N. Y. 414; Blackman v.
      Striker, 142 N. Y. 555; Schoonmaker v. Heckscher, 171 App. Div. 148; Cook v. Murlin, 202 App. Div. 552.) The language of the restrictions invoked in the case at bar does not in terms prohibit the use of the premises for church purposes and it should not be interpreted so as to effect such prohibition. (Hurley v. Brown, 44 App. Div. 480; Smith v. Scovill, 205 App. Div. 112; Kitching v. Brown, 180 N. Y. 414; Clark v. De Voe, 124 N. Y. 120; Paul v. Travelers Ins. Co., 112 N. Y. 472; Cromwell v. American Bible Society, 202 App. Div. 625; Bennett v. Petrino, 235 N. Y. 474; Smith v. Graham, 161 App. Div. 803.) The restrictions in this case are unenforceable for lack of mutuality. (Davidson v. Dunham, 159 App. Div. 207; Korn v. Campbell, 192 N. Y. 490; Bimson v. Bultman, 3 App. Div. 200; Equitable Life Ins. Co. v. Brennan, 148 N. Y. 661; Trustees v. Lynch, 70 N. Y. 440; Schmerrer v. Leo, 39 Misc. Rep. 507; Black v. Jenkins, 174 App. Div. 813; Moore v. Henderson, 99 Misc. Rep. 344; McDougall v. Schneider, 134 App. Div. 208; Iselin v. Flynn, 90 Misc. Rep. 164; McLean v. Woolworth Co., 204 App. Div. 118.) There has been a substantial change in the character of the neighborhood of this tract sufficient to prevent the literal enforcement of these restrictions in the discretion of a court of equity. (Batchelor v. Hinkle, 210 N. Y. 243; Trustees v. Lynch, 70 N. Y. 440; Forstmann v. Joray Holding Co., Inc., 244 N. Y. 22; Roth v. Jung, 79 App. Div. 1; Dewes v. Constable, 87 App. Div. 352; McClure v. Leaycraft, 183 N. Y. 36; Trustees v. Thatcher, 87 N. Y. 311; Schwarz v. Duhul, 118 App. Div. 105; Walluck Const. Co. v. Smallwich Realty Co., 201 App. Div. 133; Ammerman v. Deaul, 132 N. Y. 355.) The court of equity properly did not enjoin the plaintiff from the use proposed to be made of its premises but left the defendant to his remedy at law for damages. (Erit Realty Corp. v. Sea Gate Assn., 223 App. Div. 768; 249 N. Y. 52; Batchelor v. Hinkle, 210 N. Y. 243; Goodhue v. Cameron, 142 App. Div. 470; Trustees v. Lynch, 70 N. Y. 440; Forstmann v.
      Joray Holding Co., Inc., 244 N. Y. 22; McClure v. Leaycraft, 183 N. Y. 36; McCann v. Chasm Power Co., 211 N. Y. 301; Andrews v. Cohen, 163 App. Div. 580; Ammerman v. Deaul, 132 N. Y. 355.)
   Cardozo, Ch. J.

The plaintiff, a religious corporation, has sued the owner of a parcel of real property in the village of Snyder, the owner’s wife being joined with him as a defendant, to procure a declaratory judgment adjudging that restrictive covenants affecting the use of a parcel belonging to the plaintiff are no longer in effect, with a prayer for general relief.

The Supreme Court at Special Term refused to declare that the covenants had spent their force, adjudged, on the contrary, that they were valid and subsisting, but coupled that adjudication with one to the effect that the defendants were not entitled to hinder the projected use through the aid of an injunction, and were to be limited in respect of remedies to an action for damages at law.

The Appellate Division unanimously affirmed, but certified the case for the judgment of this court.

In September, 1923, a tract of land in the village of Snyder, divided into 128 lots, was subjected to restrictive covenants whereby the only building to be erected on any of the lots was to be “ one single-family dwelling with its usual private barns, garages or other out-buildings to be used only for private residential purposes.” The covenants were so framed as to run with the land in respect of benefit and burden (Bristol v. Woodward, 251 N. Y. 275, 285), and were to continue in force for a term of twenty years.

The defendant Philip Sahlem, who will hereafter be referred to as the defendant, became the owner of two of these lots, and placed upon them a private dwelling in which he made his home. The dwelling had been standing there for years when the plaintiff, a Lutheran church, conceived the plan of building a church edifice upon part of the restricted tract. Before purchasing its lots, which are directly opposite to those owned by the defendant, the plaintiff, knowing of the covenants, made application to the lot owners to vary the restrictions. The defendant, though a member of the same religious communion, would not consent to the variance. He took the position that he had bought his lots for the purpose of a home, and that his peace and comfort would be disturbed by a meeting house across the way with the parking of cars, .the tooting of horns, and the invasions of privacy attendant upon crowds. All the other lot owners were willing to modify the covenants by permitting the church to be erected, and signed consents accordingly.

The plaintiff, armed with these consents, decided to take title to the land and bid defiance to its neighbor. It signed a contract of purchase in February, 1928, and gave written notice to the defendant that the church would be erected. The defendant retorted with a warning that the builder would go forward at its peril. A deed of conveyance was accepted the next month. It recited the restrictions, and stated that the title'to be conveyed to the grantee was subject thereto. The grantee promptly thereafter caused plans to be made for a parish house and church, made a contract with a builder for the construction of the parish house, and began the work of excavation. At this point, apparently, its courage began to fail. Once more it wrote to the defendant, insisting that with all the other lot owners compliant, the defendant ought not to have the right to hinder the progress of an institution attempting to do humanitarian work.” Once more the defendant stood his ground. Self-help was succeeded at this stage by combat in the courts. The plaintiff, renouncing its attitude of defiance, checked the progress of the work, and invoked the aid of the judicial process for a declaration of its rights.

The judgment rendered in its favor eviscerates the restrictive covenants while declaring them alive. It does this on the ground that the damages occasioned to . the defendant by the building of a church will be slight and inconsequential ” in comparison to those occasioned to the plaintiff if the use shall be enjoined. There is neither finding nor proof that the character of the neighborhood has so changed as to defeat the object and purposes for which the restrictions were imposed. Business has moved to some extent into blocks not far away which once were used for dwellings. The tract subj ected to' these covenants remains, however, what it has been since the restrictions were established, a place for homes exclusively (Evans v. Foss, 194 Mass. 513, 518; Bacon v. Onset Bay Grove Assn., 241 Mass. 417, 426; Allen v. Massachusetts Bonding & Ins. Co., 248 Mass. 378, 385; Pagenstecher v. Carlson, 146 App. Div. 738, 740). Indeed, there is no claim by any one that the plaintiff is at liberty, ignoring the covenants altogether, to devote the land in its ownership to business uses generally. By concession, its immunity will end if its building is not a church. The basis of this judgment, denying to the defendant owner the aid of equitable remedies, is not the presence of changed conditions extracting from the covenants their original vitality and reducing them to barren archaisms. The covenants are as useful in preserving to this tract the quality of a home section as they were at the beginning. The basis of this judgment is a holding that an owner anxious to improve his land in knowing violation of a covenant still subsisting, may have the judgment of a court of equity advising him in advance that, so far as equity is concerned, he may go forward with impunity if only on a balancing of losses the loss to the wrongdoer appears to be greater than his victim’s.

By the settled doctrine of equity, restrictive covenants in respect of land will be enforced by preventive remedies while the violation is still in prospect, unless the attitude of the complaining owner in standing on his covenant is unconscionable or oppressive. Relief is not withheld because the money damage is unsubstantial or even none at all (Trustees of Columbia College v. Lynch, 70 N. Y. 440, 453; Trustees of Columbia College v. Thacher, 87 N. Y. 311, 316; Rowland v. Miller, 139 N. Y. 93, 103; Forstmann v. Joray Holding Co., Inc., 244 N. Y. 22, 31; Star Brewery Co. v. Primas, 163 Ill. 652; Lord Manners v. Johnson, L. R. 1 Ch. Div. 673). If the construction of the instrument be clear, and the breach clear, then it is not a question of damage, but the mere circumstance of a breach of covenant affords sufficient ground for the court to interfere by injunction ” (Tipping v. Eckersley, 2 K. & J. 264, 270, quoted in Trustees of Columbia College v. Thacher, supra).The parties had the right to determine for themselves in what way and for what purposes their lands should be occupied irrespective of pecuniary gain or loss, or the effect on the market value of the lots ” (Trustees of Columbia College v. Lynch, supra). Inequity there may be in standing on the letter of a covenant when the neighborhood has so altered that the ends to be attained by the restriction have been frustrated by the years (Trustees of Columbia College v. Thacher, supra; McClure v. Leaycraft, 183 N. Y. 36; Batchelor v. Hinkle, 210 N. Y. 243). Inequity there may be in a demand for a mandatory injunction that will tear a completed building down, when the builder has acted in good faith, the covenant is presently to expire, and the havoc wrought by demolition will be disproportionate, in a degree shocking to the consicence, to any corresponding benefit (Forstmann v. Joray Holding Co., Inc., supra). Few formulas are so absolute as not to bend before the blast of extraordinary circumstances. In the award of equitable remedies there is often an element of discretion, but never a discretion that is absolute or arbitrary. In equity as at law there are signposts for the traveler. “ Discretion * * * ' must be regulated upon grounds that will make it judicial ’ ” (Haberman v. Baker, 128 N. Y. 253, 256, quoting White v. Damon, 7 Ves. 35; Rosenberg v. Haggerty, 189 N. Y. 481; McClure v. Leaycraft, supra; cf. Clark, Covenants & Interests Running with Land, p. 164).

Here, in the case at hand, no process of balancing the equities can make the plaintiff’s the greater when compared with the defendant’s, or even place the two in equipoise. The defendant, the owner, has done nothing but insist upon adherence to a covenant which is now as valid and binding as at the hour of its. making. His neighbors are wiEng to modify the restriction and forego a portion of their rights. He refuses to go with them. Rightly or wrongly he believes that the comfort of Es dweEng will be imperilled by the change, and so he chooses to abide by the covenant as framed. The choice is for Em oEy. Neither at law nor m eqmty is it written that a license has been granted to religious corporations, by reason of the Egh purpose of their being, to set covenants at naught. Indeed, if in such matters there can be degrees of obligation, one would suppose that a more sensitive adherence to the demands of plighted faith might be expected of them than would be looked for of the world at large. Other owners may consent. One owner, the defendant, satisfied with the existEg state of tEngs, refuses to disturb it. He wE be protected E his refusal by all the power of the law.

If there is notEng in the defendant’s conduct that shoEd serve to banish him from eqEty, the question must still be met whether sometEng in the plaintiff’s conduct, some element of mistake or misadventure or even Etolerable hardship, may work a like result. Noth-Eg of the kind appears. Before taking a deed and even before sigmng the preliminary contract, the plaintiff knew of the restriction and knew that the defendant would not consent to any variance. It decided to ignore him. In the face of a covenant too plain to be misread, with conditions in the restricted tract the same as they had been when the covenant was made, it signed a contract with a builder for the construction of a parish house, reserving for the future the contract for the church, and dug some spadefuls of earth as a sign that building had begun. At this point it prudently desisted and invoked the blessing of the law. With the building still a project, it induced a court of equity to advise it that there would be no hindrance by injunction if operations were resumed. Destruction of the defendant’s easements, or rights analogous to easements, would proceed with safety and in order.

Neither principle nor precedent supports the decree of absolution thus granted to a, wrongdoer. Here is no case of irreparable hardship, shocking to the conscience, as where a mandatory injunction would destroy a finished building to vindicate a doubtful right (Forstmann v. Joray Holding Co., Inc., supra; cf. Brande v. Grace, 154 Mass. 210; Lynch v. Union Inst. for Savings, 159 Mass. 306). Here is a case where the building is yet a plan, the work on it preliminary, the outlay unsubstantial, the act to be absolved still waiting for the doer. His path has been made easy by a judicial declaration that the wrong may go on without annoying interference.

The judgments of the Appellate Division and the Special Term should be reversed, and judgment rendered in favor of the defendants declaring the restrictive covenants described in the complaint to be enforcible at law and in equity, with costs in all courts.

Pound, Crane, Lehman, Kellogg and Hubbs, JJ., concur; O’Brien, J., dissents and votes for affirmance.

Judgment accordingly.