text:
    Lina Hoberg, Respondent, v. Abraham Sofranscy, Doing Business under the Name of H. Sofranscy Company, Appellant.
    Bills, notes and checks — corporations — indorsement — evidence — action on promissory note payable to corporation and indorsed by its treasurer — authority of treasurer to indorse must be shown.
    In an action to recover upon a promissory note, payable by defendant to a corporation and purporting to bear the corporation’s indorsement, by its name stamped on the back together with the signature of its treasurer, assuming that the stamp is that of the corporation and the signature that of its treasurer, proof of indorsement by the payee is deficient until evidence is produced that the treasurer was authorized by the corporation to indorse.

      Hoberg v. Sofranscy, 222 App. Div. 728, reversed.
    (Argued April 4, 1928;
    decided May 1, 1928.)
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 16, 1927, affirming a judgment in favor of plaintiff entered upon a verdict.

      Thomas H. Rothwell for appellant.
    The plaintiff was required to prove indorsement completed by delivery of the note by the definite payee named therein. (First Nat. Bank v. American Exchange Nat. Bank, 170 N. Y. 88; Donahue v. Bank of America, 161 N. Y. Supp. 232; G. N. Bank v. Bingham, 118 N. Y. 349; Manufacturers’ Commercial Co. v. Blitz, 131 App. Div. 17; Martz v. State Nat. Bank, 147 App. Div. 250; Farmers’ Nat. Bank v. Williams, 117 Misc. Rep. 567; Steinberger v. Hittelman, 93 Misc. Rep. 105; Gavone v. Russo-Iodice Realty Co., 164 N. Y. Supp. 135; Fidelity-International Trust Co. v. Canalizo, 211 App. Div. 325; Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191.) The payee of the note being a corporation, the plaintiff did not prove the authority of the treasurer to indorse or as she was required to do, the indorsement and delivery by the corporate payee. (Jacobus v. Jamestown Mantel Co.,
      211 N. Y. 154.) Aside from the failure to prove the authority of the corporate treasurer, the plaintiff failed to show that the note in suit was indorsed by the definite payee therein named. (Goshen Nat. Bank v. Bingham, 118 N. Y. Supp. 349; Donahue v. Bank of America, 161 N. Y. Supp. 232; Congress Trucking Co. v. Alton Dress & Waist Co., 154 N. Y. Supp. 156; Mayers v. McRimmon, 140 N. C. 640; Marks v. Munson, 59 Colo. 440; Amer. Trust Co. v. Neverbreak Range Co., 190 S. W. Rep. 1045.) The plaintiff failed to offer proof after the fraud had been proved to establish that she acquired title to the note as a holder in due course. (American Exch. Nat. Bank v. New York Belting, etc., Co., 148 N. Y. 698; Grant v. Walsh, 145 N. Y. 502; Joy v. Diefendorf, 130 N. Y. 6; Vosburgh v. Diefendorf, 119 N. Y. 357; Ocean Nat. Bank v. Carll, 55 N. Y. 440; Hurst v. Lee, 143 App. Div. 614; Eisenberg v. Lefkowitz, 142 App. Div. 569; Consolidated Nat. Bank v. Kirkland, 99 App. Div. 121.)

      Henry Epstein and Maurice Smith for respondent.
    Plaintiff, respondent, established conclusively that she is a holder in due course and a bona fide purchaser for value, entitled to recover upon this instrument against the defendant, upon the facts and upon the law. (Durland v. Durland, 153 N. Y. 67; Bringman v. Von Glahn, 71 App. Div. 537; Dutch v. McMahon, 219 App. Div. 203; Hegeman v. Moon, 131 N. Y. 462; Magee v. Badger, 34 N. Y. 247; Hurst v. Lee, 143 App. Div. 614; Oliner v. Goldenberg, 154 N. Y. Supp. 612; Cheever v. Pittsburg R. R. Co., 150 N. Y. 59.)
   O’Brien, J.

Plaintiff purchased from Max Hart a note for $4,185 payable by defendant to the Jeavons Company and purporting to bear that corporation’s indorsement by J. L. Huston as treasurer. Two issues of fact were submitted to the jury, first whether defendant gave the note by reason of a false representation of fact upon which he relied, and second whether plaintiff,, innocently and in good faith, paid valuable consideration for it. The judgment entered upon the verdict in plaintiff’s favor has been affirmed by a divided court. Our conclusion is that an error of law requires a new trial.

Defendant, residing at Allentown, Penn., fell among thieves in New York. A group of swindlers calling themselves the Julian Trade Finance Corporation arranged with him to give his note to a reputable and financially sound corporation, the Chicago Rubber Clothing Company of Racine, Wis., for $4,185 in return for notes payable to him by the rubber company in an equal amount. His credit was good, but he had already borrowed from his local bank and wished to raise additional funds for the conduct of his business. The band of swindlers represented to him that the rubber company was in the same condition and that an exchange of notes by two reputable business organizations would enable each to extend its credit. The evidence is that Huston and Hart were among those who operated under the name of the Julian Trade Finance Corporation. Upon Huston’s assurance that the name of the Chicago Rubber Clothing Company of Racine would be inserted as payee, defendant delivered to Huston his signed note for $4,185 with the payee’s name left blank. Instead, the name of the Jeavons Company was inserted and defendant received notes purporting to bear the signature of the Chicago Rubber Clothing Company. This corporation, bearing a name similar to that of the corporation located at Racine, was without credit and its notes were worthless. Hart, from whom plaintiff purchased defendant’s note to the Jeavons Company, had been convicted with a man named Fowler for fraud. Plaintiff and Hart had long maintained financial relations and she and Fowler had known each other for several years. It was Fowler who, testifying on the trial of this action, identified the signature of Huston as treasurer of the Jeavons Company purporting to indorse defendant’s note. Neither Hart nor Huston appeared as a witness.

Unless the note had been indorsed by the payee, the purchaser acquired no better title than that vested in the payee and no better than that possessed by Hart. (Negotiable Instruments Law [Cons. Laws, ch. 38], section 79; G. N. Bank v. Bingham, 118 N. Y. 349, 354, 355.) The Jeavons Company was, according to evidence in this case, a real corporation and Huston was its treasurer. No evidence shows that the corporation was a party to any fraud perpetrated against defendant. For all the record proves, it may have been an honest corporation with a dishonest treasurer. Without its knowledge, its treasurer, acting outside the scope of his authority and in direct contravention of its interests, may have utilized its name in order to promote his personal rascalities. On the other hand, - it cannot be assumed as matter of law that the note never was delivered to it in the course of some proper business transaction and that it was not later abstracted from its possession by its treasurer. The record is entirely silent on these subjects and so we are left to surmise. They require proof. No presumption exists that the treasurer of the Jeavons Company was empowered to indorse notes payable to it. (Jacobus v. Jamestown Mantel Co., 211 N. Y. 154, 161.) A swindler might use the name of the richest and most solid railroad or industrial corporation in the country as payee for the purpose of accomplishing fraud but an unindorsed note payable to its order would vest a purchaser with no better title than that of a thief. Assuming that the rubber stamp on the back of defendant’s note is proved to be that of the Jeavons Company and the signature purporting to be that of J. H. Huston, its treasurer, is proved to have been physically affixed by him, the proof of indorsement by the payee is deficient until evidence is produced which shows that the treasurer was authorized by the- corporation to indorse.

The judgments should be reversed and a new trial granted, with costs to abide the event.

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

Judgments reversed, etc.


source: Caselaw Access Project

author: Pound, J.

license: Public Domain

text:
    M. Morton Ansorge, Appellant and Respondent, v. Elizabeth Belfer, Respondent and Appellant, and Bank of the Manhattan Company, Respondent.
    Vendor and purchaser — real property — title — mortgage — covenants — easement to maintain telephone lines in street not a burden on land unless street is included in its boundaries — purchaser justified in refusing to take title to property subject to mortgage with unusual acceleration clauses where he had contracted for mortgage running absolutely for stated period — unusual covenants not implied — judicial notice cannot be taken of form of mortgage commonly used in locality — waiver of objection not established by refusal to consent to postponement of closing — plaintiff not entitled to equitable relief where he has made no effort to meet proper objection.
    1. An easement to maintain telephone lines in a street does not affect land contracted to be conveyed where the street is not included in its boundaries. An objection to the marketability of the title on that ground is, therefore, not well taken.
    2. An objection that unusual acceleration clauses in the purchase-money mortgage, given by plaintiff to his grantor, justified the defendant in refusing to take the property, subject thereto, must be sustained where, at the time the contract was made, defendant had no notice of the terms of the mortgage and contracted for a mortgage running absolutely for a stated period. Nor may acceptance of such covenants be implied, in the absence of proof of the intention of the parties, where they are not included in the statutory form of mortgages. (Real Prop. Law, § 258; Cons. Laws, eh. 50.)
    3. In the absence of evidence that the mortgage tendered is a standard one commonly used in the place where the property was located, judicial notice cannot be taken thereof.
    4. Waiver of objections to the terms of the mortgage is not established by defendant’s refusal to consent to a short postponement of the time for closing title. Her refusal to so consent was an assertion, not a waiver of her rights.
    5. Plaintiff is in no position to obtain equitable relief where he has had ample opportunity but has made no effort to meet defendant’s proper objection to the title.

      Ansorge v. Belfer, 220 App. Div. 731, reversed.
    (Argued April 4, 1928;
    decided May 1, 1928.)

      Cross-appeals from a judgment of the Appellate Division of the Supreme Court in the second judicial department, entered November 21, 1927, modifying and affirming as modified a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term.

      Julius Weiss and Herbert Pels for plaintiff, appellant and respondent.
    The defendant waived the objections to title now raised by her. (Imperator Realty Co. v. Tull, 228 N. Y. 447.) Apart fiom waiver the plaintiff tendered a marketable title within the terms of the contract. (Harris v. Shorall, 230 N. Y. 343.)

      Julius S. Belfer and Charles J. Belfer for defendant, respondent and appellant.
    Plaintiff was unable to deliver a deed free of all incumbrances, except as stated in the contract, on account of a legal incumbrance consisting of a telephone and telegraph easement. (Harley v. Eagle Ins. Co., 222 N. Y. 178; Falk v. Amer. West Indies Trad. Co., 180 N. Y. 455; Mahoney v. Carr, 175 N. Y. 451; Newberger v. American Surety Co., 242 N. Y. 134; Hartigan v. Casualty Co. of Amer., 227 N. Y. 175; Pool v. Brunswick-Balke-Collander Co., 216 N. Y. 310; Fossume v. Requa, 218 N. Y. 339; Israelsky v. Levine, 215 App. Div. 94; Wallach v. Riverside Bank, 206 N. Y. 434.) The plaintiff was unable to convey the property subject to the mortgage provided by the contract. (Adler v. Zimmerman, 233 N. Y. 431; Mawhinney v. Milbrook, 231 N. Y. 290; Bedlow v. N. Y. Float. Drydock, 112 N. Y. 263; Griggs v. Day, 158 N. Y. 1; Matter of Totten, 179 N. Y. 112; Schiff v. Bookmar Const. Co., Inc., 120 Misc. Rep. 169; Oppenheim v. McGovern, 115 App. Div. 135; 189 N. Y. 572; Feist v. Block, 100 N. Y. Supp. 843; Groden v. Jacobson, 129 App. Div. 508; Yokshas v. Damovich, 218 App. Div. 640.) The judgment is erroneously based on waiver and, therefore, must be reversed. (Clark v. West, 193 N. Y. 349; Alsens A. P. C. Works v. Degnon Cont. Co., 222 N. Y. 34; N. R. S. Realty Co. v. Forman, 222 N. Y. Supp. 172; Romeyn v. Sickels, 108 N. Y. 650; Lamphere v. Lang, 213 N. Y. 585; Walrath v. Hanover Fire Ins. Co., 216 N. Y. 220; Eddy v. Davis, 116 N. Y. 247.)
   Pound, J.

The action is for specific performance. Plaintiff agreed to sell and defendant agreed to buy lots in the borough of Queens known as lots 49 to 51 on Beach One Hundred and Fortieth street in block 61, according to a map of the property of the West Rockaway Land Company. The premises had a frontage of sixty feet and a depth of one hundred feet. The purchase price was $10,000, payable $750 on the signing of the contract; $2,000 by a check left in escrow with the Bank of the Manhattan Company “ to be delivered at the closing of the title pursuant to the terms of the contract, if seller can deliver good and marketable title; ” $2,250 in cash or certified check at the closing of the title; $3,750 by taking the premises subject to first mortgage for that amount at six per cent per annum, and to have three years to run; the balance in a purchase-money mortgage. The date of the contract was August 7, 1925. The deed was to be delivered upon receipt of the payments, etc., at the office of J. P. O’Bierne, 132 Nassau street, New York city, at 2 f. m. on September 2, 1925. The check for $2,000 was left with the defendant the Bank of the Manhattan Company, which holds it subject to the direction of the court and is not otherwise concerned with the merits of the litigation. The plaintiff was not the owner of the property at the time of making the contract but was under contract to purchase it from McCoy, the record owner. Title was to be closed concurrently on both deals. On September 2, 1925, the parties met in O’Bierne’s office. McCoy had then transferred title to plaintiff. Defendant was ready on her part to close title, but plaintiff’s deed lacked his wife’s signature. He suggested that all matters in connection with the title be passed upon and that the signature of his wife could be obtained later in the day. Defendant rejected title, refused to grant plaintiff’s request for an adjournment to the evening or the following morning, and left the office without further examining the title tendered by plaintiff. Plaintiff obtained his wife’s signature to the deed, tendered it to defendant at Belle Harbor, where she lived, in the evening of the same day, and demanded his money. He did not tender evidence of title nor the purchase-money mortgage. Defendant rejected the tender, suggesting that the matter be taken up with the lawyers in a business-like way. On the following day plaintiff began this action. The answer set up the defense that the title was defective in that it was subject to a right of way granted by the West Rockaway Land Company to the New York and New Jersey Telephone Company to maintain its lines in the streets laid out on the map above referred to: also that the purchase-money mortgage executed by plaintiff to his grantor McCoy was not payable in three years but was subject to certain unusual accelerative clauses; one clause, known as the Brundage clause, which gave the mortgagee the right to declare the mortgage due if any change was made in the Tax Law (Cons. Law's, ch. 60) of the State in the law for the taxation of mortgages; another clause which permits the mortgagee to declare the whole principal sum due after default for sixty days after notice and demand in the payment of any assessment for local improvements payable in annual installments, notwithstanding such installment is not due and payable at the time of such notice and demand; another clause which provides that the whole principal sum shall become due at the option of the mortgagee, for failure of the owner to comply with the requirements of any department of the State or city of New York wdthin three months after an order making such requirement has been issued by any State or city department; another clause which permits the mortgagee to declare the whole amount due if the mortgagor shall assign the rents of the mortgaged premises without first obtaining the written consent of the mortgagee to such assignment, or upon the actual or threatened demolition, or removal of any building erected or to be erected on the premises; and another clause which permits the mortgagee to declare the whole amount due if two fire insurance companies refuse to insure the property. Defendant demanded judgment for the return of $750 paid on the contract, with interest thereon and a vendee’s lien therefor, with $250 counsel fee and expenses of examination of title, and for judgment directing the defendant Bank of Manhattan Company to turn over the certified check for $2,000. The trial court granted judgment of- specific performance as of the closing day. It held that the defendant, by not raising objections to the title on the closing day, had waived such objections. The Appellate Division unanimously affirmed, except that it eliminated from the judgment a provision for sale and deficiency judgment and provided a time for compliance with the terms of the judgment. The trial court made a finding that the item for counsel fee and examination of title should be $195 instead of $250 as demanded. Both parties appealed to this court.

The objection to the marketability of the title is not well taken. The deed of conveyance describes the lands by the lines of the street as “ beginning at a point on the easterly side of Beach 140th street ” and as “ running along the easterly side of Beach 140th street ” and does not include the street. It was held in Fossume v. Requa (218 N. Y. 339, 342) that a telegraph or telephone franchise over land agreed to be conveyed free from incumbrances is an incumbrance of which the buyer may complain. But the easement in question does not affect the land to be conveyed. The street was necessarily excluded from the description. (Van Winkle v. Van Winkle, 184 N. Y. 193, 203.) It was not an incumbrance and should have been disregarded.

The acceleration clauses in the mortgage present another question. In Oppenheim, v. McGovern (115 App. Div. 135; affd., 189 N. Y. 572) the court held in a case involving the so-called Brundage clause, that the defendant was entirely justified in refusing to take the property subject to the mortgage tendered. When the mortgage is not recorded, not even in existence at the time the contract was made, so that the purchaser then had no notice of its terms, he may refuse to accept a deed and take title to property subject thereto when he has contracted for a mortgage running absolutely for the period of three years and when under the mortgage submitted the term thereof might be cut down to three months, sixty days or thirty days by unusual clauses therein. The statutory short form of mortgages (Real Property Law [Cons. Laws, ch. 50], § 258, schedule M, construed by Real Property Law, § 254) contains usual covenants to accelerate the due date for default in the payment of installments of principal or interest, taxes or insurance. Such covenants are well understood and may be implied as a part of the mortgage called for by the contract. The covenants in question are not included in the statute and may not be implied in the absence of proof of the intention of the parties. It is said that the mortgage tendered is a standard one employed by title companies and conveyancers generally in the city of New York and that the parties must have had this form in mind when the contract was executed, but no evidence is offered to sustain this contention and we cannot take judicial notice of it.

We fail to see wherein the plaintiff has established any waiver of objections to the terms of the mortgage. Waiver has often been defined as the voluntary relinquishment of a known right. (Clark v. West, 193 N. Y. 349, 360.) Defendant’s right at the time of closing was to have a deed executed by plaintiff and his wife conveying good marketable title to the property, subject to a mortgage for three years. She should have consented, when requested, to a short postponement, even though the plaintiff was not instantly ready with complete performance on his part, but her refusal to consent was an assertion, not a waiver of her rights. Discourtesies and undue insistence on rights do not amount to a waiver. Failing to obtain such postponement, the plaintiff should have proceeded in an orderly way and notified the defendant that he would be ready on the following day to close title. The defendant would then have had an opportunity to object to the title tendered and the plaintiff would have had an opportunity to cure such objections. (Harris v. Shorall, 230 N. Y. 343, 347.) Instead, plaintiff chose to tender his deed and demand his money in the evening on the street and to begin his action on the following day. Defendant was thus put in a position to raise her objections by answer and compel plaintiff to meet them on the trial.

Plaintiff is in no position to obtain equitable relief. He pleads performance and he has not performed. The court has found waiver and waiver is neither pleaded nor proved. Defendant by her answer made a good objection to the terms of the mortgage as above indicated. Plaintiff made no effort to meet the objection. He has had ample opportunity to cure the defect, if it is curable, and has failed.

The judgment of the Appellate Division should be reversed, with costs in all courts against plaintiff and in favor of defendant Belfer. Complaint dismissed and judgment granted to appellant Belfer in accordance with opinion.

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

Judgment accordingly.


author: Andrews, J.

text:
    John J. Firmes, Appellant, v. Mount Hope Cemetery Association et al., Respondents.
    Cemetery associations — stocks and stockholders — dividends — trustees of rural cemetery association may distribute as dividends upon stock issued in 1888 entire surplus — complaint in action for declaratory judgment denying right to pay dividend out of surplus properly dismissed.
    Under the provisions of chapter 107 of the Laws of 1879, as amended by chapter 267 of the Laws of 1894, the trustees of a rural cemetery association may distribute as dividends, upon stock issued in 1888, the entire surplus, or net receipts of the corporation, including receipts from the sale of lots, less current expenses, which may be defined as including those reasonably necessary for the improvement, embellishment and preservation of the cemetery. The complaint, therefore, in an action for a declaratory judgment that the entire surplus or net receipts of such an association must be applied to the preservation, improvement and embellishment of the cemetery grounds and denying the right of the defendant or its trustees to declare and pay dividends out of its surplus, was properly dismissed.

      Firmes v. Mount Hope Cemetery Assn., 222 App. Div. 656, affirmed.
    (Argued April 5, 1928;
    decided May 1, 1928.)
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered November 11, 1927, unanimously affirming a judgment in favor of defendants entered upon an order of Special Term granting a motion by defendant for dismissal of the complaint in an action brought by a lot owner in Mount Hope Cemetery against the cemetery association and its directors and trustees. The complaint demands a declaratory judgment pursuant to section 473 of the Civil Practice Act adjudging that the entire surplus or net receipts of said association must be applied to the preservation, improvement and embellishment of the cemetery grounds and denying the right of said cemetery association to declare and pay dividends out of its surplus or net receipts to its stockholders.

      Austin T. Foster for appellant.
    The terms “ surplus ” and “ net receipts, ” as used in chapter 107, Laws of 1879, should be construed to exclude any portion of the proceeds of sale of cemetery lots. (People v. Ahearn, 196 N. Y. 221; Seligman v. Freidlander, 199 N. Y. 373; George v. Cypress Hill Cemetery Co., 32 App. Div. 281.) The phrase, “ their proportional part of the surplus or net receipts,” should be construed as meaning the proportion of the surplus or net receipts, as above defined, agreed upon between the corporation and the holders of stock at the time of issuance. (Laws of 1879, ch. 107.)

      J. M. Richardson Lyeth for respondents.
    Mount Hope Cemetery Association is authorized to pay to stockholders as dividends the entire surplus or net receipts of the corporation over and above current expenses. (Granara v. Italian Catholic Cemetery Assn., 218 Mass. 387; Grobe v. Erie County Mutual Ins. Co., 39 App. Div. 183; 169 N. Y. 613; Hinckley v. Schwarzschild, etc., Company, 107 App. Div. 470.) The defendant corporation may disburse as dividends its entire net receipts regardless of whether they are earnings or capital. (People v. Roberts, 156 N. Y. 585.) The defendant corporation may pay dividends even though it be classed as a membership corporation. (Bourland v. Springdale Cemetery Assn., 158 Ill. 458; Granara v. Italian Catholic Cemetery Assn., 218 Mass. 387; East Hill Cemetery Co. v. Thompson, 53 Ind. App. 417; Little Co. v. Woodward Avenue Cemetery Assn., 135 Mich. 248.)
   Andrews, J.

We have here again to consider, as we considered in Sullivan v. Mount Carmel Cemetery Association (244 N. Y. 294), a series of statutes relating to rural cemetery associations. We must endeavor to give a reasonable construction to somewhat conflicting provisions. The precise question before us is whether upon stock issued in 1888 the trustees may declare dividends to be paid from moneys received from the sale of lots.

Under chapter 133 of the Laws of 1847 and chapter 122 of the Laws of 1853, rural cemetery associations might acquire the land needed for their purposes in two ways. They might agree with the vendors that one-half or more of the proceeds of all sales of lots should be appropriated to the payment of the purchase price until all is paid. Any balance, received before or after such payment, is to be used solely to improve the cemetery and for incidental expenses. Obviously the agreement with the vendors is to be shown by some written document. Obviously too, before a lot is or can be sold some indebtedness must be incurred also for improvements, or such indebtedness may arise thereafter, and be similarly evidenced. But apparently these classes of indebtedness are to be paid from the balance remaining after the portion applicable to the payment of the purchase price has been met. It is said in chapter 163 of the Laws of 1860 that the evidence of any such indebtedness may take the form of certificates. But these certificates, representing as they may two classes of debts, payable from different funds are to be kept in separate accounts and they are to be redeemed, the ones from the agreed half or more received from the sale of lots and the others from the balance.

The second method of purchasing land gives the vendor a speculative interest in the success of the association. The agreement may be that he is to receive in perpetuity a specific share, not exceeding half, of the gross receipts from the sale of all lots. The balance is to be used for improving the cemetery and for incidental expenses. However such an agreement is evidenced, it is not by such a certificate of indebtedness as is referred to in the act of 1860. So the act of 1853 is of no immediate concern.

In the case before us all certificates, if such existed, for the payment of the land purchased have been paid and redeemed. There remained certificates for debts incurred in the administration of the cemetery. Their form does not appear. We may assume that they bore interest. Probably they provided for payment of the principal at some future time. Whether they did or not the defendant could not obligate itself to make payment at a fixed date. The only remedy of the certificate holder was an action in equity for an accounting and for the application to the payment thereof of the proceeds derived from the sale of lots. And not all the proceeds. Lot owners are also entitled to protection. The statute contemplates that such proceeds, so far. as reasonably and currently necessary, shall first be applied “ to the improvement, embellishment and preservation of such cemetery and for incidental expenses,” and only any balance to the payment of certificates. True it says that all receipts shall be applied to the purposes quoted “ and to no other purpose or object.” But the Legislature, recognizing the existence of certificates of indebtedness, recognizes that in some way they are to be paid. This is made clear by chapter .108 of the Laws of 1879, which adds to this phrase the words unless expressly authorized by law.”

The certificate holders, therefore, held an obligation of the defendant enforcible in equity. They were entitled to resort for payment to a certain fund. In this condition of affairs came chapter 107 of the Laws of 1879. It permitted the certificates to be changed into certificates of stock. The certificates were to be canceled. No interest was thereafter to be paid “ but in lieu of interest the holders of said stock shall be entitled to claim and receive semi-annually a dividend for their proportional part of the surplus or net receipts of the said cemetery, over and above current expenses.”

The expression proportional part of the surplus ” should be fairly interpreted to mean such part of the total dividend as each stockholder’s shares bear to the total shares issued. We can find no other reasonable meaning for it. But in spite of the words “ claim and receive ” the trustees need not declare a dividend semiannually of the whole sum divisible, whatever that sum may be. We refer to the general power of directors over the subject of dividends and say they have discretion in the matter.

Then what of the expression surplus or net receipts of the said cemetery, over and above current expenses?” The Legislature in a much later act (L. 1894, chap. 267) explains its meaning. Stockholders in lieu of interest, it says, may claim dividends if, after deducting all current expenses incurred by said trustees from the total receipts from all sources of said cemetery, there shall remain a surplus.” This act speaks of a dividend agreed upon when the stock was issued. Perhaps such an agreement may be necessary thereafter. It was not required when the stock we have to consider was issued.

The “ total receipts from all sources ” include receipts from the sale of lots. The “ surplus ” is stated to be those receipts less current expenses. We define current expenses ” as including those reasonably necessary for the improvement, embellishment and preservation of the cemetery.

If this is so, the decision reached below was right. It is admitted that the directors intend to distribute as dividends “ the entire surplus or net receipts of the corporation, over and above current expenses.” They may do so if they define “ current expenses ” as we have done. The answer, whose truth is admitted, says they do.

The judgment appealed from should be affirmed, with costs.

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and O'Brien, JJ., concur.

Judgment affirmed.


author: Per Curiam.

text:
    The People of the State of New York, Appellant, v. Roy O. Sampsell, Respondent.
    Municipal corporations — Dunkirk (city of) — streets — railroads — validity of city ordinance prohibiting blocking of railroad crossing by train for more than three minutes — insufficiency of evidence to warrant conviction for violation of ordinance.
    1. Section 3 of chapter 5 of the Dunkirk City Ordinances, which prohibits the blocking of street railroad crossings by trains for more than three minutes, is valid, and is not rendered unlawful by section 1985 of the Penal Law.
    2. The evidence upon the trial of defendant charged with violating such ordinance examined and held insufficient to establish that the locomotive was intentionally suffered to remain standing upon the crossing.

      People v. Sampsell, Chautauqua Co. Ct., Nov. 4, 1927, affirmed.
    (Argued April 4, 1928;
    decided May 1, 1928.)
    Appeal, by permission, from a judgment of the Chautauqua County Court, entered November 4, 1927, which reversed a judgment of the Municipal Court of the city of Dunkirk convicting the defendant of violating section 3 of chapter 5 of the Dunkirk city ordinances which prohibits the blocking of street railroad crossings by trains for more than three minutes.

      Glenn W. Woodin, District Attorney, for appellant.
    The provisions of section 3 of chapter 5 of the Dunkirk city ordinances are not in contravention of section 1985 of the Penal Law of the State of New York or any other statute. (Bishop on Statutory Crimes, §§ 20, 23; Polinsky v. People, 11 Hun, 390; 73 N. Y. 65; Roger v. Jones, 1 Wend. 237; Rhode Island v. Palmer, 253 U. S. 350; Safee v. Buffalo, 204 App. Div. 561.) Section 3 of article 5 of the Dunkirk city ordinances is not an unreasonable and improper exercise of power under the general powers given to the city of Dunkirk by chapter 538 of the Laws of 1909 and the other applicable statutes of this State. (Safee v. Buffalo, 204 App. Div. 561; People ex rel. Ogden v. McGowan, 118 Misc. Rep. 828; Cronin v. People, 82 N. Y. 318; Kurt v. L. S. & M. S. R. Co., 127 App. Div. 838; 194 N. Y. 598; Penn. R. R. Co. v. Jersey City, 47 N. J. L. 286; Long v. Jersey City, 37 N. J. L. 348; Birmingham v. Ala. R. R. Co., 98 Ala. 134; Matter of Stubbe v. Adamson, 220 N. Y. 459; Commissioners v. Lent, 240 N. Y. 1; People v. Persee, 204 N. Y. 397; People ex rel. Hegeman v. Corrigan, 195 N. Y. 1; People v. Abeel, 182 N. Y. 415; People v. Wernes, 174 N. Y. 132; People v. D’Antonio, 150 App. Div. 109; People v. Friedman, 138 App. Div. 29; Sturges Co. v. Beauchamp, 231 U. S. 320.)

      Edmund S. Brown and Harold J. Adams for respondent.
    The provisions of section 3 of chapter 5 of the Dunkirk city ordinances are in contravention of section 1985 of the Penal Law of the State of New York and other statutes. (People v. Harrison, 238 N. Y. 348; Anderson v. How, 116 N. Y. 336; Burns v. Delaware & Hudson Co., 116 App. Div. 111; People v. Potter, 112 N. Y. Supp. 298; People v. Gillies, 57 Misc. Rep. 568; McMorris v. Howell, 89 App. Div. 272.) Section 3 of article 5 of the city of Dunkirk ordinances is an unreasonable and improper exercise of power under the general powers given to the city of Dunkirk by chapter 538 of the Laws of 1909 and other applicable statutes of this State. (People v. Gilbert, 68 Misc. Rep. 48; Dillon on Municipal Corporations, § 368; Cooley, Constitutional Limitations [7th ed.], 279; Mayor, etc., v. Hussey, 21 Ga. 80; Penn. R. R. Co. v. Jersey City, 47 N. J. L. 286; Long v. Jersey City, 37 N. J. L. 348; Birmingham v. Ala. R. R. Co., 13 So. Rep. 141.)
   Per Curiam.

We hold that the ordinance of the city of Dunkirk (Dunkirk City Ordinances, chap. 5, § 3) is valid, and is not rendered unlawful by Penal Law, section 1985.

We think, however, that the evidence fails to establish that the locomotive was intentionally suffered-to remain standing upon the crossing.

The judgment should be affirmed.

Cabdozo, Ch. J., Pound, Ceane, Andeews, Lehman and Kellogg, JJ., concur; O’Bbien, J., not sitting.

Judgment affirmed.


author: Crane, J.

text:
    The People of the State of New York, Respondent, v. Canadian Fur Trappers Corporation, Appellant.
    Crimes — larceny — corporation can commit larceny — liable to prosecution for larceny only for acts authorized by or done with acquiescence of its officers — insufficient proof of larceny by corporation — question for jury whether title to goods sold had passed.
    1. A corporation can commit the crime of larceny, but there must be an intent to steal, to misappropriate, to apply the property of another to the use of the corporation, to constitute the crime. It is liable in a prosecution for larceny only for acts which it authorizes through action of its officers or which is done with the acquiescence of its officers.
    2. Proof that officers of defendant, a corporation, had instructed its employees to resell coats held on deposit and that when a coat was purchased and the deposit paid, instead of keeping the coat for the purchaser until the balance was paid, the course of business was to resell the coat many times and deliver it. to whomever first paid the full purchase price, would establish larceny by the corporation. Where, however, such proof is excluded and stricken out, even though erroneously, and the charge of larceny is supported only by proof of a sale to complainant on deposit and upon her paying the balance and demanding her coat, the attempted delivery to her of a coat that had been sold to another, and there is no evidence that this was done by authority of an officer of the corporation, such proof is insufficient to sustain a conviction for larceny.
    3. Whether title to the coat had passed to the complainant was a question for the jury where the evidence showed that coats were sold upon a small down payment, marked with a “ will call ticket,” indicating the purchaser’s name and address, who was given a purchase slip reading, “ Fields free storage for a period of three years including insurance against fire and burglary,” and defendant’s officers denied that coats were ever resold but claimed to hold such for the customers as the customer’s property.

      People v. Canadian Fur Trappers Corp., 222 App. Div. 791, reversed.
    (Argued April 9, 1921;
    decided May 1, 1928.)
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered December 30, 1927, which affirmed a judgment of the Erie County Court rendered upon a verdict convicting the defendant of the crime of grand larceny in the second degree.

      Frank H. Hiscock, I. Maurice Wormser and Abraham J. Halprin for appellant.
    The judgment convicting defendant of the crime of larceny is contrary to law. A corporation cannot be convicted of a crime whereof an essential element is a specific, evil intent. Such an intent cannot be properly charged to a corporation and there is no appellate decision in this State holding, on consideration of the question, that a corporation can be convicted of such a crime as is charged here. (Thorne v. Truck, 94 N. Y. 90; Foulke v. New York, etc., R. R. Co., 180 App. Div. 848; 228 N. Y. 269; People v. Moore, 37 Hun, 84; People v. Seldner, 62 App. Div. 357; People v. Bosworth, 64 Hun, 72; People v. Pollock, 51 Hun, 613; People v. Scudder, 177 App. Div. 225; 221 N. Y. 670; U. S. v. Kelso Co., 86 Fed. Rep. 304; U. S. v. Freight Assn., 166 U. S. 290; Telegram Newspaper Co. v. Commonwealth, 172 Mass. 294; Franklin Union v. People, 220 Ill. 355.) Title to the coat which was the subject of the alleged larceny did not pass from defendant to the complaining witness on the date when she selected it and paid her first installment on the purchase price as the People claim and as the trial judge permitted the jury to find. Therefore, defendant could not commit larceny as charged.
      (Empire State Type Founding Co. v. Grant, 114 N. Y. 40; Schoyer v. Fentons, 15 App. Div. 158; Dows v. Kidder, 84 N. Y. 121; Adams v. Roscoe Lumber Co., 159 N. Y. 176; Osborn v. Gantz, 60 N. Y. 540; Hammett v. Linneman, 48 N. Y. 399; Lange v. Pisch, 9 Misc. Rep. 475; Scher v. Roher, 34 Misc. Rep. 792; Daly v. Crawford, 72 Misc. Rep. 272; Smith v. Lynes, 5 N. Y. 44; E. S. I. F. Co. v. Grant, 114 N. Y. 40; Sanitary Carpet Cleaner Co. v. Reed Mfg. Co., 159 App. Div. 587.)

      Guy B. Moore, District Attorney (William L. Marcy, Jr., of counsel), for respondent.
    A corporation can be lawfully indicted and convicted of the crime of grand larceny. (People v. Hudson Valley Constr. Co., 217 N. Y. 172; People v. Rochester Ry. Co., 195 N. Y. 102; People v. Dunbar Contr. Co., 165 App. Div. 59; People v. Star Co., 135 App. Div. 517; U. S. v. Union Supply Co., 215 U. S. 50; U. S. v. MacAndrews & Forbes Co., 149 Fed. Rep. 823; U. S. v. American Socialist Society, 260 Fed. Rep. 885; Spencer Kellog & Sons v. U. S., 20 Fed. Rep. [2d] 459; Telegram Newspaper Co. v. Commonwealth, 172 Mass. 294; State v. Rowland Lumber Co., 153 N. C. 610.) Title passed to the complaining witness at the time she purchased her coat. (Proctor & Gamble Co. v. Peters, White & Co., 233 N. Y. 97; Standard Casing Co. v. California Casing Co., 233 N. Y. 413; Porter v. Pennsylvania R. R. Co., 217 App. Div. 49; Matter of Wenger Co. v. Propper S. H. Mills, 239 N. Y. 199; Groat v. Gile, 51 N. Y. 431; Boiko v. Atlantic Woolen Mills, Inc., 195 App. Div. 207; 234 N. Y. 583; Groves v. Warren, 226 N. Y. 459; Sanitary Carpet Cleaner v. Reed Mfg. Co., 159 App. Div. 587.)
   Crane, J.

The defendant, a corporation, has been found guilty of grand larceny, second degree, and fined $5,000. The argument presented here is that a corporation cannot commit the crime of larceny as it is impossible for a corporation as such to have intent to steal or misappropriate property.

We think this question has been fairly well settled to the contrary. (Penal Law, secs. 1290 and 1932; General Construction Law [Cons. Laws, ch. 22], sec. 30; People v. Hudson Valley Construction Co., 217 N. Y. 172; People v. Rochester Ry. & Light Co., 195 N. Y. 102; People v. Dunbar Contracting Co., 165 App. Div. 59; 215 N. Y. 416; U. S. v. Union Supply Co., 215 U. S. 50; U. S. v. MacAndrews & Forbes Co., 149 Fed. Rep. 823, 835; Telegram Newspaper Co. v. Commonwealth, 172 Mass. 294; State v. Rowland Lumber Co., 153 N. C. 610; State v. Passaic County Agricultural Society, 54 N. J. L. 260; State v. B. & O. R. R. Co., 15 W. Va. 362, 388. See the authorities reviewed in 2 British Ruling Cases, p. 238, note.) There are some cases to the contrary. (Androscoggin Water Power Co. v. Bethel Steam Mill Co., 64 Me. 441; Kentucky v. Ill. Cent. R. R. Co., 152 Ky. 320; Washington v. Seattle Nat. Bank, 226 Pac. Rep. 259 [May, 1924].)

It has long been the law that a corporation may be liable criminally for the acts of its agents in doing things prohibited by statute. (New York Central R. R. Co. v. United States, 212 U. S. 481.) The railroad company in that case was charged with rebating in violation of an act of Congress, and the court said: “We see no valid objection in law, and every reason in public policy, why the corporation which profits by the transaction, and can only act through its agents and officers, shall be held punishable by fine because of the knowledge and intent of its agents to whom it has intrusted authority to act in the subject-matter of making and fixing rates of transportation, and whose knowledge and purposes may well be attributed to the corporation for which the agents act. While the law should have regard to the rights of all, and to those of corporations no less than to those of individuals, it cannot shut its eyes to the fact that the great majority of business transactions in modem times are conducted through these bodies, and particularly that interstate commerce is almost entirely in their hands, and to give them immunity from all punishment because of the old and exploded doctrine that a corporation cannot commit a crime would virtually take away the only means of effectually controlling the subject-matter and correcting the abuses aimed at.”

This is the law for corporations whose servants violate positive prohibitions or commands of statutes regarding corporate acts. Such offenses do not necessarily embody the element of intent to commit a crime. The corporation would be guilty of the violation in many instances irrespective of intent or knowledge. (Overland Cotton Mill Co. v. People, 32 Colo. 263.)

When it comes, however, to such crimes as larceny, there enters as a necessary element the intent accompanying the act. There must be the intent to steal, to misappropriate, to apply the property of another to the use of the corporation to constitute the crime. The mere knowledge and intent of the agent of the servant to steal would not be sufficient in and of itself to make the corporation guilty. While a corporation may be guilty of larceny, may be guilty of the intent to steal, the evidence must go further than in the cases involving solely the violation of prohibitive statutes. The intent must be the intent of the corporation and not merely that of the agent. How this intent may be proved or in what cases it becomes evident depends entirely upon the circumstances of each case. Probably no general rule applicable to all situations could be stated. It has been said that the same evidence which in a civil case would be sufficient to prove a specific or malicious intention upon the part of a corporation defendant would be sufficient to show a like intention upon the part of a corporation charged criminally with the doing of an act prohibited by law (U. S. v. Kelso Co., 86 Fed. Rep. 304), and Judge Hough in U. S. v. New York Herald Co. (159 Fed. Rep. 296) said: “ To fasten this species of knowledge upon a corporation requires no other or different kind of legal inference than has long been used to justify punitive damages in cases of tort against an incorporated defendant.” See, also, People v. Star Co. (135 App. Div. 517), where the malicious intent of the agents in writing a libel was attributable to the corporation. See, also, Grant Bros. Construction Co. v. U. S. (114 Pac. Rep. 955), and State v. Salisbury Ice & Fuel Co. (166 N. C. 366), involving false pretenses. Also Standard Oil Co. v. State (117 Tenn. 618), where the intent of the officers became the intent of the corporation. Sufficient to say that in this case the law was correctly laid down to the jury by the trial judge when he said: “ The defendant is liable in a prosecution for larceny only for acts which it authorizes through action of its officers or which is done with the acquiescence of its officers, and unless the jury find beyond a reasonable doubt such authority or acquiescence, there must be an acquittal.” This in my judgment was a correct statement of the law for this case and follows the intimation contained in People v. Hudson Valley Construction Co. (supra), where this court said: The proof permitted the jury to find that the wrongful acts attributed to the employees and agents of the defendant were performed in its service so methodically and continuously as to indicate the sanction of the corporation. The court properly charged that the corporation could act only through its officers and agents and was amenable to the law for the acts of its officers and those of its employees of which it had knowledge.” And in State v. Baltimore & Ohio R. R. Co. (supra) it was stated: “ It is but a reasonable inference that acts which are habitually done by the authorized agents of a corporation are done with their approval; and this is indeed almost the only manner in which the approval by the corporation of the acts of its agents can ever be proven. The tacit appropriation by a corporation of the benefits of the acts of its agents, repeatedly occurring, is full and satisfactory proof of the assent of the corporation to the "doing of such acts.”

There may be cases where the single act of an officer will constitute larceny by a corporation, but we are not dealing with such a case here, and as I have stated, it would probably be unwise to attempt to place limits upon corporate criminal liability. The rule is, however, that the acts must be corporate acts authorized by it. As before stated, this may be proved in many different ways.

In this case the able assistant district attorney, Mr. Marcy, recognized the rule and attempted to bring his evidence within it. He sought to prove that one of the officers of the corporation had given instructions to do the acts constituting larceny and he also sought to prove that there had been such a long-continued user of felonious practices as to prove knowledge or intent upon the part of the corporation. In his attempt to substantiate these elements of the crime, he was largely frustrated by the rulings of the trial judge.

At this point it may be well to state the facts in order to elucidate our meaning. The defendant was a domestic corporation known as Canadian Fur Trappers Corporation, carrying on the business of selling fur coats on the installment plan in Buffalo, N. Y., under the name of Fields.” Four brothers, named Dornfeldt, constituted the corporation and were its only officers. It advertised attractive sales during the summer of 1926. The prosecuting witness, Mrs. Ella Stanley, bought a coat at one of these sales for $295, paying a deposit of $25, the coat to be delivered to her upon payment of the balance. There was no time fixed in which the balance was to be paid. The evidence fairly shows that the defendant agreed to keep the coat in storage or on deposit for Mrs. Stanley until the balance was paid. Later in the fall when she paid the balance the coat was gone. It had been disposed of and there was evidence which would justify the jury in believing that some one in the defendant’s employ had resold the coat. The defendant’s, employees and officers attempted to deliver to Mrs. Stanley another coat which they said was the one she had selected. In this they were evidently mistaken, if not willfully falsifying, as the coat was of a different size and make. The evidence is quite conclusive upon this point. There is also evidence to show that the coat which this defendant through its employees attempted to deliver to Mrs. Stanley as the oüe purchased had been theretofore sold to Vera M. Owen. Whatever became of Mrs. Stanley’s coat no one apparently knows. The fact is she did not receive it when she paid the balance of her money, and the coat which was offered to her was not the one she had selected. The evidence sustains this conclusion. Of course upon these facts alone, these two transactions, the defendant could not be found guilty of larceny as defined by our penal law. It is at this point the People, therefore, attempted to prove that the officers of the corporation had instructed the employees to resell the coats held on deposit and that this was the method of doing business. When a coat was purchased and the deposit paid, instead of keeping the coat for the purchaser, as the defendant promised to do, until the balance was paid, the course of business was to resell the coat many times and deliver it to whomever first paid the full purchase price. Such facts, if proved, would no doubt establish larceny by the corporation. The difficulty arises over the failure of this proof.

Two witnesses apparently knew the custom and method of doing business carried on by the defendant in its Buffalo store. Mrs. Stella Nowicki was the saleslady through whom Mrs. Stanley purchased the fur coat, and Alexander H. Shack was the general manager of the store, who knew about the instructions which had been given to the salesladies and others regarding sales. Both were witnesses for the People, and attempted to testify to the instructions given by or in the presence of Mr. Morris Dornfeldt, one of the officers of the company. Morris Dornfeldt was the officer in charge at this time of the Buffalo store. The district attorney fully appreciated the importance and necessity of the testimony of these two witnesses. He repeatedly tried to bring out from them the fact that coats purchased and put aside with a “ will call ticket ” on them, were resold under the instructions of the Dornfeldts and that such was the regular and customary way of doing business. In these attempts he was frustrated by the rulings of the trial judge. He not only sustained objections to such line of testimony and struck out evidence of this nature when it was introduced, but ruled that the People must confine their evidence to specific instances and to a very limited time in the summer of 1926. Although these rulings were erroneous, yet we cannot consider the evidence stricken out as evidence in the case simply because the nature of it appears in the printed record. One or two illustrations will bear out these statements. The witness Nowicki was asked:

Q. Did Mr. Dornfeldt, Mr. Fish, or Mr. Johnson or any manager or any man in the head of the firm with relation to the Fields Store ever instruct you in regard to the selling or reselling of coats on which there had been made a deposit? A. Yes, sir.
“ Q. Who gave you those instructions or this one you are referring to? A. There would be Mr. Fish —
Q. Just tell what Mr. Fish told you in that regard. A. Mr. Fish said that the coats were in stock we should try to sell, and if there is any coats we couldn’t satisfy a customer, with small deposits, we should go and get those coats and not mention anything that the coat was a deposit, and take the ticket off, and show the customer, and if the customer should say, ‘ Why wasn’t the coat in here? ’ we should say, ' The coat just came in and hasn’t been in stock,’ where the coat was already sold perhaps two or three times, and two or three tickets on it.”

The court struck out the part of the answer, where the coat had been sold,” which of course was the part important to the case. With this part stricken out the answer simply means that the customer was shown a coat which had been set aside as sold. This is no evidence of wrongdoing. The only other evidence she gives regarding instructions is as follows: Mr. Dornfeldt, the night just before the opening, he said: ‘ Girls, you got the instructions from Mr. Shack, and I wish you would all understand and try your best tomorrow and see how many coats you can sell with Mr. Shack’s instruction, and if you can’t do anything I will be on the floor tomorrow, and also Mr. Shack, Mr. Johnson and Mr. Fish, and if you can’t do any sale, if you can’t sell the coats in the stock, if you can’t sell the coats with deposits, call one of us men, and we will see what we can do to the customer.”

Mr. Alexander H. Shack also attempted to testify to the above instructions and customs. His line of testimony ran something as follows: Q. Did you ever give instructions to the saleswomen in your capacity as superintendent or to Mr. Fish or Mr. Johnson in regard to the re-sale of coats on which there had been made a deposit? A. No; it was sort of an unwritten law without instructions.” This also was stricken out by the court. “ Q. Were you ever present at any time during the months of July and October, 1926, when you heard any of the Mr. Dornfeldts or Mr. Johnson or Mr. Fish instruct the sales women in regard to the re-sale of coats on which there had been made a deposit? A. I was, yes.” He was asked what the conversation was, and this is his answer: * * * in the month of August I heard Mr. Johnson at one time advise, instruct and I heard Mr. Fish at another time in.August on another coat. But this particular coat, Mr. Johnson instructed the saleswoman to go to the sold coats and get the size to show to her.”

It is reasoned by the People that the defendant could not have carried on business by keeping many $300 coats in storage upon which only a deposit of $25 or less had been made — the capital invested would be too great to do a profitable business. This may be so and yet such reasoning may not supplant proof of the felonious method of doing business. Standing alone and by itself, such reasoning would be insufficient to prove larceny. Naturally we can infer from the evidence stricken out by the court that the defendant resold' the deposit coats many times but the jury were not justified in considering such evidence. It was not part of the case against the defendant although printed in this record on appeal. We must strip the case of all such evidence.

This leaves the charge against the defendant resting upon the sale to Mrs. Stanley and the evidence of the resale or attempted resale later of Mrs. Owen’s coat to Mrs. Stanley. The defendant’s officers and employees denied that they had resold Mrs. Stanley’s coat or that such was their method of doing business.

Under the law as correctly charged in this case by the trial judge, the defendant corporation was criminally liable only for such felonious acts as it had authorized through the Dornfeldts, the officers of the corporation, or for such acts as through a course of business must have been known to the corporation and its officers, and thus authorized by them. The People failed to prove that the officers or any one acting as manager of the Buffalo store, in the place and stead of the officers had authorized a resale of the complainant’s coat; and further, that if the complainant’s coat was resold, the resale of purchased coats was a continuous and established practice in the defendant’s establishment.

The appellant insists that there was no evidence to show that title to the coat had ever passed to Mrs. Stanley. We think, that this was a question of fact properly submitted to the jury. The evidence was that such coats were sold upon a small down payment, then set aside and held for the customer, marked with a ticket, called a will call ticket,” indicating the purchaser’s name and address. The defendant’s officers denied that these coats were ever resold but claimed to hold such goods for the customers as the customers’ property. Such meaning we think could be given to the guaranty contained upon the back of the purchase slip handed to Mrs. Stanley. This reads, Fields Free Storage for a period of three years including insurance against fire and burglary.” The insurance would only be interesting to the purchaser in case the title to the property was in her. Taken in connection with section 100 of the Personal Property Law (Cons. Laws, ch. 41), we think it was at least a question for the jury to determine whether title to this fur coat had passed or was intended to pass to Mrs. Stanley at the time of her purchase. Of course if no title had passed there could be no larceny by the defendant.

There are other rulings which we think were not quite correct, but it is unnecessary to refer to them, as in view of what is here said the judgment of the Appellate Division and that of the County Court should be reversed and a new trial ordered.

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

Judgments reversed, etc.


author: Cardozo, Ch. J.

text:
    In the Matter of Roxy C. Trainer, Respondent. Thomas B. Scott, Individually and as Executor of Millicent D. Scott, Appellant.
    Will — decedent’s estate — transfer tax — provision in will for payment out of residue of all transfer taxes “ payable by my estate” or on “ the legacies given herein” — exercise by testatrix of power of appointment given her by will of nonresident — transfer tax imposed by law of foreign State upon vesting of transfer by donor of power not payable from estate of donee.
    Where a resident of a foreign State, by his will, directs that the principal of a trust fund be paid as his daughter “ by her last will and testament may appoint ” and it is the law of that State that the transfer is complete as soon as the will takes effect but the transfer tax, under such circumstances, is not payable until the appointee comes into possession, and the daughter by her will exercises the power of appointment in favor of a resident of that State and further provides that all transfer taxes “ payable by my estate or payable on the legacies given herein shall be paid out of the residue of my estate,” a direction that the transfer tax upon the vesting of the remainder, in accordance with such appointment, be paid out of the residuary estate of the daughter is erroneous. The taxes payable under her will are those laid upon her act and not upon that of another. The act of the donor of the power, not the act of the donee, has been made the subject of the tax by the State in which he resided and it cannot be said that the daughter meant the residue of her estate to bear the burden of a tax imposed in a foreign jurisdiction upon a transfer by her father. {Isham v. N. Y. Assn., for the Poor, 177 N. Y: 218, distinguished.)

      Matter of Trainer, 222 App. Div. 824, reversed.
    (Argued April 11, 1928;
    decided May 1, 1928.)
    Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the second judicial department, entered January 13, 1928, which affirmed an order of the Suffolk County Surrogate’s Court directing payment of a transfer tax out of the residuary estate.

      William G. Murphy for appellant.
    The petitioner-respondent has not brought herself within the strict meaning of the words used by testatrix in her will. (Dana v. Murray, 122 N. Y. 604; Hillen v. Iselin, 144 N. Y. 365; Fargo v. Squiers, 154 N. Y. 250; Barr v. Howell, 85 Misc. Rep. 330; Farmers Loan & Trust Co. v. Shaw, 127 App. Div. 656; Lord v. Lord, 44 Misc. Rep. 530.) There was no intention on the part of testatrix to burden her residuary estate with the payment of any taxes that Pennsylvania might levy on the estate of her father. (Farmers Loan & Trust Co. v. Winthrop, 238 N. Y. 488.)

      Ewing R. Philbin and Garrett A. Brownback for respondent.
    The exercise by the testatrix of the power of appointment constituted a legacy. (Isham v. N. Y. Assn. for Poor, 177 N. Y. 218; Matter of Dows, 167 N. Y. 227.) It was the intention of the testatrix that the legatee should take the appointed fund without. diminution through the imposition of any tax, including the Pennsylvania tax in question, upon the transfer thereof to the legatee, and such intention is clearly expressed in the will. (Matter of Delano, 176 N. Y. 486; Loring v. Gardner, 221 Mass. 571.)
   Cardozo, Ch. J.

Louis Dreka, a resident of Pennsylvania, died in 1922, leaving a will proved in that State whereby he gave to trustees $150,000 to pay the income to his daughter, Millicent D. Scott, during her life, and to pay the principal upon her death to such persons and institutions as she by her last will and testament may appoint, and in default of any appointment to those of my daughter’s next of kin who would be entitled thereto under the intestate laws of Pennsylvania.”

A statute of Pennsylvania provides that where there is a taxable transfer to take effect in possession or to come into actual enjoyment after the expiration of any one or more life estates ■ * * *, the tax on such estate shall not be payable * * * until the person liable for the same shall come into actual possession of such estate by the termination of the estates for life.” The rate varies according to the relationship, being two per cent for husband or wife, parents or lineal descendants, and ten per cent for others.

The beneficiary of the trust, Mrs. Scott, died in Suffolk county, New York, in 1926. The question before us involves the construction of a provision of her will. In exercise of the power of appointment she gives and bequeaths ” the principal of the trust fund of $150,000 created under the will of her father to Roxy Corlies Trainer of Media, Pennsylvania, her heirs and assigns forever.” There are three legacies of $10,000. There is a gift to the husband of the residuary estate. There is then the following provision as to taxes: “ All estate, inheritance, transfer, succession and legacy taxes payable by my estate or payable on the legacies given herein shall be paid out of the residue of my estate.”

Upon the death of Mrs. Scott, the trustees of the Dreka will brought proceedings in Pennsylvania to determine the tax payable upon the interest in remainder. This tax, being assessed at $11,672.22, was paid by the trustees out of the principal of the fund. The residue of the fund they paid to Mrs. Trainer, the appointee of the remainder. She has petitioned the Surrogate’s Court for an order directing the executor of the Scott estate to reimburse her out of that estate for the tax thus deducted. An order for such payment has been unanimously affirmed.

Any tax laid upon a transfer made by Mrs. Scott was payable under her will out of her residuary estate. A State is privileged to say that the exercise of a power of appointment shall be treated as equivalent to a transfer by the donee of the power, and shall be taxed upon that basis (Matter of Dows, 167 N. Y. 227; Orr v. Gilman, 183 U. S. 278; Matter of Delano, 176 N. Y. 486; Chanler v. Kelsey, 205 U. S. 466; Matter of Burgess, 204 N. Y. 265). This is what the Legislature of New York has done where the appointment relates to property within its jurisdiction (Tax Law [Cons. Laws, ch. 60], § 220, subd. 4; Frick v. Pennsylvania, 268 U. S. 473; Matter of Fearing, 200 N. Y. 340). If a tax had been assessed under the authority of that provision, the exercise of the power being treated as equivalent to a transfer, we assume that any payment made might be reclaimed by the appointee out of the residuary estate. But the fact is that no tax has been authorized or assessed upon that basis. The State of Pennsylvania has not treated the exercise of the power of appointment as a transfer to be taxed, nor imposed a tax upon the theory that a transfer was then made. All that Pennsylvania has undertaken to tax is the original creation of an interest in remainder, the transfer subject to taxation being viewed as complete as soon as the will took effect, but payment being postponed until the enjoyment of possession. In fact, there was a payment on account to the extent of two per cent while the life estate continued, prepayment being permitted at the pleasure of the owner. The appointee of the power is not asking reimbursement for a tax laid upon a transfer made by Mrs. Scott. She is asking reimbursement for a tax upon a transfer made by Mr. Dreka. The act of the donor of the power, not the act of the donee, has been made the subject of the burden.

We think the taxes payable under the will of Mrs. Scott are those laid upon her act, and not upon another’s. If any act of hers, whether it be styled a gift or an appointment, is to be taxed as a transfer, the burden of the tax thus laid upon that act is to be borne by the residue. This is far from saying that she meant the residue to bear the burden of a tax imposed in a foreign jurisdiction upon a transfer by another (cf. F. L. & T. Co. v. Winthrop, 238 N. Y. 488, 493). The petitioner builds her argument on Isham v. N. Y. Assn. for the Poor (177 N. Y. 218). There the tax was laid upon the very act of appointment, conceived of by the statute as the equivalent of a transfer, and taxed upon that basis. Here the act and the assessment are separate and alien.

Our appraisal of intention is reinforced by the surrounding circumstances. The value of Mrs. Scott’s estate after allowance of debts and expenses was about $143,000. Deducting the three legacies to friends, there was left a residuary estate of $113,000 for the husband. Mrs. Trainer, the appointee of the $150,000 trust fund, was a second cousin. The mind balks at the conclusion that a tax of $11,000, not chargeable upon any transfer effected by the will, was to augment the gift to the cousin, and reduce the modest residue transmitted to the husband.

The order of the Appellate Division and that of the Surrogate’s Court should be reversed, and the petition dismissed, with costs in all courts.

Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Orders reversed, etc.


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    Fannie Mirizio, Appellant, v. Cosmo Mirizio, Respondent.
    Husband and wife — separation — abandonment — former adjudication — separation of husband and wife pending law suit, brought upon reasonable grounds, to determine whether it shall continue not a definitive abandonment as matter of law — marriage by civil ceremony — refusal of wife to live with husband without additional religious ceremony, until in action for separation she was adjudged in the wrong, not such abandonment as to bar her return — plea of former adjudication without basis.
    1. A term of separation of husband and wife may not be said to constitute, as a matter of law, a definitive abandonment when it is bounded by a law suit, maintained upon reasonable grounds and with sincerity of conviction for the very purpose of determining whether the separation shall continue.
    2. Where, therefore, husband and wife were married by a civil ceremony, with the understanding that a religious ceremony would follow, but the husband refusing to join therein, the wife refused to live with him and brought an action against him for a separation, but immediately she was advised of a final decision in that action to the effect that it was her duty to live and cohabit with her husband, she notified him that she would submit to the law and offered to five with him as a wife in every sense, which he refused, it cannot be said, in a second action for separation and support, that the wife was wrong in such a sense or in such a degree as to betoken defiance of duty, and abandonment so definitive as to be unaffected by repentance.
    3. A plea of former adjudication has no basis in the record where there was no holding in the former suit that the plaintiff’s conduct toward her husband had the force of an abandonment, or that she had refused to make her home with him, but the holding was merely that in refusing him the privilege of sexual intercourse she was guilty of such misconduct as to bar her claim for support while the misconduct continued, and the defendant had not counterclaimed for a separation.

      Mirizio v. Mirizio, 222 App. Div. 239, reversed.
    (Argued April 12, 1928;
    decided May 1, 1928.)
    Appeal from a judgment, entered January 28, 1928, upon an order of the Appellate Division of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term and directing a dismissal of the complaint.

      Harry Loeb Mostow and Samuel G. Litwin for appellant.
    The judgment of dismissal in the former action is no bar to the plaintiff’s right of recovery in this new action. (Williams v. Williams, 130 N. Y. 193; People v. Crause, 86 App. Div. 353; Silberstein v. Silberstein, 218 N. Y. 525.) Assuming for the purpose of argument that the plaintiff’s refusal to cohabit with the defendant as man and wife was not legally justified, the refusal was not an abandonment and did not forever debar the plaintiff from the benefits of her matrimonial contract. (Bohmert v. Bohmert, 241 N. Y. 445; Williams v. Williams, 130 N. Y. 193.) The plaintiff’s offer to cohabit with the defendant on April 8, 1924, and her repeated offers' thereafter, restored defendant’s obligations owing by a husband to his wife and he was under a duty to take her back and bis rejection of her offers justified the granting of a legal separation at Special Term. (Gilbert v. Gilbert, 5 Misc. Rep. 555.)

      Sylvester Ryan and John J. Ryan for respondent.
    The plaintiff wife, by a continuous refusal to cohabit with her husband, from the date of the marriage, September 23, 1921, down to January 28, 1926, has been guilty of an abandonment and cannot succeed in an action for separate maintenance. (Bohmert v. Bohmert, 241 N. Y. 447.)
   Cardozo, Ch. J.

Plaintiff and defendant were joined in wedlock by a civil ceremony in September, 1921. Both were members of the Roman Catholic Church. The understanding was that a religious ceremony would follow. The ceremony did not follow, for the husband refused to join in it. The wife sued him for a decree of separation alleging non-support. The husband answered that she had refused to five with him as his wife. He did not deny that he could have had her for the asking by adhering to his promise to be married according to the doctrines of the church. He took the ground that she must yield her body to him anyhow, however ruthless his refusal to have it on her terms. A judgment dismissing the complaint was affirmed by the Appellate Division and later by this court (242 N. Y. 74).

Our decision was announced on January 26, 1926. The following day, plaintiff wrote a letter to defendant offering to live with him as a wife in every sense. The defendant answered that he would once have greeted the offer with joy, but that the .love he once felt had vanished with the years. The plaintiff renewed her offer, but met with no response.

There followed a second action, the one before us now. Plaintiff says in her complaint that she had been advised by her attorney that she had the right “ to refuse to live with the defendant ” until he consented to a religious ceremony in accordance with the doctrines of her church. She says that, acting on that advice, she insisted upon such a ceremony, “ and refused to live and cohabit with defendant until then.” She then avers her change of heart upon learning from this court of her duty as a wife, and prays that the defendant be required to make provision for her support. There was judgment in her favor upon the trial at Special Term. The refusal to live and cohabit with the defendant ” was held to lack the quality of a permanent abandonment.” It was “ a temporary one pending the determination of her legal rights, and did not forfeit her right to separate maintenance and support.” The Appellate Division reversed and dismissed the complaint.

The law has been settled- by the judgment of this court that the refusal of a religious ceremony did not justify the plaintiff’s failure to fulfill her duty as a wife. There was some question upon the first record whether the plaintiff had refused to five with the defendant, or only to have intercourse with him. Upon the record now before us, that question is no longer open. The plaintiff says in her complaint that acting on the advice of counsel she took the ground that as long as the defendant declined to join in a religious ceremony she would not five with him at all. She makes no pretense that she offered to live with him as a virgin. For people in their social station, dwelling in one or two rooms, such an offer, if made, would .have the aspect of a subterfuge. She resorts to no such evasion, at least in her complaint. Later, in her testimony, she hints at something of the kind, but the court paid no heed to it, and held her to her pleading. When the defendant tried to go into the subject, he was checked with the remark that there was no need of testifying to anything back of the date of our decision, and that no matter how the plaintiff might have testified, the complaint with its admissions against interest would be accepted as the truth. The findings follow the admissions.

The question, therefore, is whether the refusal to cohabit with the defendant upon the grounds and in the conditions stated is an abandonment so definitive as to be unaffected by repentance. The plaintiff- acted on advice of counsel and under a claim of legal right. She believed that she was not recreant to her duty as a wife when she declined to live with a husband who had shamelessly repudiated a promise to appease her conscience and his own by sanctifying the marriage with the blessing of the church. She had probable cause for that belief, as is sufficiently attested by the close division in this court. It turns out that she was in error. The moment she was so advised, she gave notice to the defendant that she would yield submission to the law. We are told that her error has barred his door to her forever.

Not every separation is an abandonment beyond annulment or recall. One must look to all the circumstances. Of these, time will commonly be the weightiest, yet not always so decisive that it cannot be neutralized by others (Bowlby v. Bowlby, 25 N. J. Eq. 406; Cornish v. Cornish, 23 N. J. Eq. 208). We have refused to compress within a formula the extenuating possibilities of behavior in all its myriad diversities (Bohmert v. Bohmert, 241 N. Y. 446). What is reasonable will depend on the circumstances of the case and the conduct of the parties ” (Bohmert v. Bohmert, supra, at p. 453). Lawless repudiation of duty, an attitude and spirit of mere rebellion or defiance, maintained without repentance after cooling time has passed, may exact a finding of definitive abandonment though the interval is short. Mistake and provocation and hardship and reservations will permit another finding though the interval is long. There are duties too for the deserted spouse as well as the deserter. One who is chargeable with fault contributing to the breach, paUiating and explaining it though not excusing it altogether, may not stand back indifferent, refusing the concessions to be expected of gentleness and honor (1 Schouler, Mar., Div. & Sep. § 1663; Hall v. Hall, 60 N. J. Eq. 469, 470; 65 id. 709; Wood v. Wood, 63 N. J. Eq. 688; Bowlby v. Bowlby, supra; Bradley v. Bradley, 160 Mass. 258; cf. as to the wife’s duty, Wilson v. Wilson, 66 N. J. Eq. 237). Separation to be abandonment must be obstinate and hardened (cf. 1 Bishop, New Comm. on Mar., Div. & Sep. § 1665).

We are to measure the plaintiff’s conduct by these and cognate tests of right dealing and humanity. She was the victim of mistake. She acted, as wé have seen, in accordance with the advice of counsel and with probable cause. She was the victim, besides, of provocation and oppression. The defendant had treated her with indifference to her feelings and in wanton disregard of his solemn word of honor. His refusal to fulfill the promise that would have made her his at once, gives color to the belief that he was scheming to be rid of her (cf. Thorpe v. Thorpe, 9 R. I. 57). He could not have acted differently if he had been seeking from the beginning to provoke her to a course of conduct that would free him from the performance of his duty as her husband. With all these affronts, she maintained her wifely station. In declining to live with him, she did so with reservations and conditions: she would live apart till he kept faith with her, and then she would be his. We have said that she was wrong (242 N. Y. 75). The adjudication then made binds us, however emphatic the dissent. We have no thought to depart from it. Plainly, however, she was not wrong in such a sense or in such a degree as to betoken defiance of duty, a “ rebellious and unrepentant ” spirit (Bohmert v. Bohmert, supra, p. 452), a will to five apart whether the law approved or frowned. She invoked the law to aid her. The moment it condemned her, she bowed to its command.

We think a term of separation may not be said to constitute as a matter of law a definitive abandonment when it is bounded by a law suit, maintained upon reasonable grounds and with sincerity of conviction for the very purpose of determining whether the separation shall continue. No doubt the interval has been a long one, nearly five and a half years, between marriage and submission. At first the husband was the plaintiff in an unfounded action for annulment. The wife postponed, it seems, her suit for separation until his had been dismissed. But if the time has been long, the defendant could have made it short. There has never been a day in all these years when he might not have had the plaintiff as his own if he had done what a man of honor and a gentleman should have been prompt and glad to do. One is not aggrieved by a separation thus fostered and prolonged.

A plea of former judgment has been urged. It has no basis in the record. There was no holding in the former suit that the plaintiff’s conduct toward her husband had the force of an abandonment. There was not even a holding that she had refused to make her home with him. The holding was merely this, that in refusing him the privilege of sexual intercourse she was guilty of such misconduct as to bar her claim for support while the misconduct continued (242 N. Y. 74). The defendant did not counterclaim for a separation either on the ground of abandonment or on any other. If a decree for separation had been given him, another question would be here (Silberstein v. Silberstein, 218 N. Y. 525).

Whatever her errors may have been, the plaintiff is the defendant’s wife. He has never offered her a home, nor paid a dollar to maintain her. Not yet has the law released him from the duty of support.

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

Pound, Crane, Andrews and Lehman, JJ., concur; Kellogg and O’Brien, JJ., dissent.

Judgment accordingly.