author: Loughran, J. Hubbs, J.

text:
    In the Matter of Kesbec, Inc., Respondent, against Joseph D. McGoldrick, as Comptroller of the City of New York, Appellant.
    Argued April 11,1938;
    decided July 7,1938.

      William, C. Charier, Corporation Counsel (Paxton Blair, Sol Charles Levine and Bernard H. Sherris of counsel), for appellant.
    The petitioner, having collected the taxes from its customers as agent for the Comptroller, was under a duty to surrender to its principal all. collections whether legal or illegal. Since the customers have a direct remedy against the Comptroller, remission to him fully protects the petitioner. (Matter of Atlas Television Co., 273 N. Y. 51; Matter of Merchants Refrigerating Co, v. Taylor, 275 N. Y. 113; Spencer v. Consumers Oil Co., 115 Conn. 554; Village of Olean v. King, 116 N. Y. 355; Ross v. Curtiss, 31 N. Y. 606; Wade v. State, 97 Col. 52; Tite v. State Tax Comm., 89 Utah, 404; State v. Matson Co., 182 Wash. 507; People ex rel. Martin v. Brown, 55 N. Y. 180; Chegaray v. Jenkins, 5 N. Y. 376; Woolsey v. Morris, 96 N. Y. 311; La Farge v. Kneeland, 7 Cow. 456; Carson v. Federal Reserve Bank, 254 N. Y. 218; Anniston Mfg. Co. v. Davis, 301 U. S. 337.)
    .Charles Pratt Healy and Robert H. Scholl for respondent.
    The Comptroller’s determination should be annulled. (Socony-Vacuum Oil Co. v. City of New York, 247 App. Div. 163; 272 N. Y. 668.) The Comptroller cannot base his claim to the fund on grounds of agency. {Matter of Atlas Television Co., 273 N. Y. 51; Matter of Merchants Refrigerating Co. v. Taylor, 275 N. Y. 113; Henry County v. Standard Oil Co., 167 Tenn. 485.) The Comptroller’s claim to the fund is based solely on his own ukase which has been judicially declared to be a nullity. {Matter of Dodge Bros., 241 Mich. 665; People ex rel. Farrington v. Mensching, 187 N. Y. 8; Norton v. Shelby County, 118 U. S. 425; Van Antwerp v. State, 218 N. Y. 422; People ex rel. Ferguson v. Vroman, 101 Misc. Rep. 233; Matter of O’Berry, 179 N. Y. 285; Matter of Brenner, 170. N. Y. 185.) The respondent is hable to its customers for the return of the invalid tax collected. Denial of the Comptroller’s claim to the fund gives rise to no “ unjust enrichment ” of the respondent. (Wayne County Produce Co. v. Duffy-Mott Co., 244 N. Y. 351; Friend v. Rosenwald, 124 App. Div. 226; Solomon Tobacco Co. v. Cohen, 184 N. Y. 308; Van Antwerp v. State, 218 N. Y. 422.)
   Loughran, J.

The petitioner, as vendor, collected from its vendees taxes upon sales of gasoline in accordance with Local Law No. 24 of 1934 (published as No. 25) of the city of New York and supplementary regulations promulgated by the Comptroller of the city. One of these regulations attempted to say that the city sales tax base should include State excise taxes on gasoline. In SoconyVacuum Oil Co. v. City of New York (247 App. Div. 163; 272 N. Y. 668), that regulation was declared null and void. This is a certiorari proceeding to review an assessment against the petitioner of the illegal tax thereby prescribed. The amount thereof was deposited with the Comptroller before the order of certiorari was granted, as the local law validly required. (§7; Matter of Western Electric Co. v. Taylor, 276 N. Y. 309.) The city appeals from an order of the Appellate Division which annulled the determination of the Comptroller and directed refund to the petitioner of the deposit.

The local law was enacted under the authority of enabling State legislation designed to provide revenue for unemployment relief. (New York Steam Corp. v. City of New York, 268 N. Y. 137.) It was by virtue of these enabling acts that the local laws were adopted, and the source of the imposition of these taxes is not to be found in the local laws themselves. The enabling acts were passed by the Legislature for a State purpose, public health and welfare. Both opinions in the New York Steam Carp, case emphasize this fact and that the city acted merely as agent of the State, and the concurring opinion stresses the proposition that the Legislature did not delegate its taxing powers to the extent of abdicating its constitutional function.” (John Hancock Mut. Life Ins. Co. v. Pink, 276 N. Y. 421, 426.) While in that aspect this controversy is one between the petitioner and the State, the court below had full power to adjust the rights of the parties upon principles' of equity. (Cf. People ex rel. Forest Commission v. Campbell, 156 N. Y. 64.) Accordingly the prayer of this petition is that any error committed in said determination and assessment may be reviewed and corrected according to law, and that your petitioner may have such other and further relief as to the court may seem just.”

The issue — as the petitioner states it — is merely one of power to lay the challenged assessment. On that basis it is argued that the city is out of court by force of the doctrine that so much of an act as is void neither confers rights nor imposes duties and " is, in legal contemplation, as inoperative as though it had never been passed.” (Norton v. Shelby County, 118 U. S. 425, 442. See Cooley, Constitutional Limitations [8th ed.], pp. 382-384.) So the Appellate Division held. We think the case is by no means so easy of disposition.

The fund was collected by the petitioner from its customers at one of its places of business. In accordance with section 14 of the local law, the petitioner there prominently displayed a Registration Certificate and Authority to collect City Sales Tax for Relief of Unemployed.” This certificate announced that the petitioner was empowered by the Comptroller “ to collect for the City of New York ” the tax known as the Sales Tax, the receipts from which are to be used exclusively for the purpose of relieving the people of the City of New York from the hardships and suffering caused by unemployment and the effects thereof on the public health and welfare.” The authority so asserted was valid and the collections made by the petitioner thereunder are not questioned, except for the minor fraction representing the Comptroller’s erroneous extension of the tax base. We think it is reasonably clear that when a validly designated functionary thus avowedly receives money for a sound public purpose, he may not keep it merely because a specific edict under which he acted was void. (See People ex rel. Martin v. Brown, 55 N. Y. 180; Spencer v. Consumers Oil Co., 115 Conn. 554.)

Indeed, the petitioner outspokenly disavows any interest of its own in the fund. With candor that does them credit, its counsel say that the many small sums involved rightfully belong to those by whom the payments were made. The Appellate Division was of opinion that whether the petitioner could or would restore the fund to its source was immaterial, and the record of the hearing accorded by the Comptroller to the petitioner leaves that matter in the dark. (Cf. Van Antwerp v. State, 218 N. Y. 422.) We are thus left with the question of the petitioner’s supposed liability to those from whom the sums were collected.

Petitioner got this fund on its declaration that its customers were paying a tax for transmittal to the city treasury for unemployment relief. The valid general authority to the petitioner to collect the city sales tax was disclosed. Petitioner was not bound to ascertain whether the Comptroller’s regulations went beyond the limitations of law. The sales tax was not imposed on the vendor. It fell upon the purchaser (Matter of Merchants Refrigerating Co. v. Taylor, 275 N. Y. 113, 124), and the purchaser had a direct remedy against the Comptroller for a refund under the local law (§10). In these circumstances, we think that the deposit with the Comptroller of the moneys illegally exacted should be held to have absolved the petitioner from liability to its payors.

Our conclusion is that the petitioner is not entitled to have returned to it this fund in which concededly it has no beneficial interest.

We express no opinion as to the date of accrual of the refund rights of any person upon whom the illegal tax was imposed.

The order of the Appellate Division should be modified by striking therefrom the direction for refund of the deposit to the petitioner, and, as so modified, affirmed, without costs.

Hubbs, J.

(dissenting). The city of New York illegally assessed a sales tax under Local Law No. 24 of 1934 (published as No. 25) against petitioner, growing out of sales by it of gasoline. (Socony-Vacuum Oil Co. v. City of New York, 247 App. Div. 163; 272 N. Y. 668.) In this certiorari proceeding petitioner has been awarded a refund of the tax illegally assessed. The Local Law, section 7, required petitioner to deposit the amount of the tax assessed before commencing the proceeding. Acting under compulsion of section 14 petitioner posted a notice to the effect that it was required by the city to collect the tax from its customers. The amount here involved was illegally collected by petitioner from its customers. No question is here involved in regard to regularity of the process under which petitioner acted. Petitioner’s contention is that the act itself in so far as it purported to assess the tax collected was void.

■ The only arguments urged by the city for reversal are equitable. Equitable considerations have no place in this proceeding. In the ordinary certiorari proceeding where one is assessed for a tax and pays it under protest he has the right to have the validity of the assessment tested and the equities are not considered. (People ex rel. Brisbane v. Zoll, 97 N. Y. 203; People ex rel. Citizens’ Gas Light Co. v. Board of Assessors, 39 N. Y. 81 at p. 88; Matter of Scott v. Titus, 131 Misc. Hep. 672.)

The only question in such proceedings is whether the tax is validly assessed. If the tax is not validly assessed •the court has the power to order the restitution of the money illegally collected. “ Where the determination reviewed is annulled or modified, the court may order and enforce restitution in like manner, with like effect and subject to the same conditions as where a judgment is reversed upon appeal.” (Civ. Prac. Act, former § 1306 .[repealed L. 1937, ch. 526].)

The questions in such certiorari proceedings are not merely academic as they would be if the court simply declared the tax void but refused a refund of the money. Nor is the party required to bring a separate action for the return of the money paid. (People ex rel. Town of Candor v. Board of Supervisors, 204 App. Div. 703. See, also, Haebler v. Myers, 132 N. Y. 363.)

The fact that equitable considerations have no part in the proceeding is especially true in this case since the tax law in question specifically provides a method of testing the validity of the tax in which equitable considerations are important. If the proceeding is brought under section 10 of the Local Tax Law the petitioner has to establish that he has returned the tax illegally collected to the purchaser. That section is undoubtedly provided to allow the courts to arrive at an equitable result. So also is it undoubted that proceedings under section 7 of the Local Tax Law were provided in the law to exclude equitable considerations. The only question here presented is whether the tax was validly assessed. If not, the court should order the return of the money paid, under former section 1306 of the Civil Practice Act.

Furthermore the tax was not paid by petitioner but was merely deposited under protest. The petitioner could not have brought a proceeding to test the validity of the assessment without such a deposit. (Local Law No. 24, § 7.) To say now that he cannot have it back even though the assessment is void is to make the certiorari proceeding a mere academic discussion and to make the law under which the money was deposited a mere trick and snare to deprive the petitioner of a refund, giving him a supposed remedy which is in fact only a gesture.

It is undisputed that the tax was not validly assessed. If the city were to levy such an assessment now on a vendor which had not collected the money from purchasers of gasoline, it is undoubted that the assessment would be annulled. This only serves to make more clear how much a reversal in this case would depend upon equitable arguments. It is urged that We need not strain for a legal classification.” Yet we did seek for a legal classification in Matter of Atlas Television Co., (273 N. Y. 51). That case illustrates how important a legal classification is at times. It was urged in that case that the vendor of personal property, under the local law became a debtor to the city for the amount of the tax collected by it from its vendees. We expressly rejected that argument although it had been so decided in Matter of Lazaroff (84 Fed. Rep. [2d] 982). Thereafter the United States Supreme Court reversed that case placing its decision upon our decision in the Atlas case (299 U. S. 522). That reversal was squarely on the legal classification made in this court. Now we are asked to minimize a classification which we were at such pains to reach, when the result of such classification does not accord with our ideas of equity. The petitioner, we have decided, is a taxpayer and not an agent of the city. (Matter of Atlas Television Co., supra.) As such] it should be held to the duties and given the rights of a taxpayer. One of such rights is asserted here, the testing of the validity of a tax assessment. The principle that an agent cannot question the title of its principal has no application here as the plaintiff is not an agent.

Even were equitable considerations allowed in this case, the petitioner should be allowed to recover. The cases of Woolsey v. Morris (96 N. Y. 311) and Carson v. Federal Reserve Bank (254 N. Y. 218, 231) cited to establish that the petitioner would not be liable to the purchasers if it paid over the money to the city, are inapplicable because they are based on the principle of agency. Petitioner was not acting as agent of the city. On the other hand Wayne County Produce Co. v. Duffy-Mott Co. (244 N. Y. 351) and Van Antwerp v. State (218 N. Y. 422) are authority for allowing a refund here. In the latter case, in discussing whether the persons who were in the position of the purchasers of gasoline in the present case could recover from the taxpayer in the position of the petitioner here the court said, “ Even if the claim of the respondents is finally disallowed, the customers can, so far as anything appears in the record, recover from them the improper and unauthorized charges made against them.” (p. 428.) Willard Bartlett, Ch. J., wrote as a concurring opinion: “ I concur in the conclusion reached by Judge Chase, on the ground that the brokers who charged their customers with the cost of the stamps are liable to such customers for the amounts so charged, and that, therefore, the brokers must be deemed to have suffered loss within the meaning of the statute.” (p. 429.) See, also, Rickert Rice Mills, Inc., v. Fontenot (297 U. S. 110).

But there is even a stronger argument in favor of the petitioner having this money returned to it. The purchasers of the gasoline are the real parties interested in this money and a result should be reached which will enable them to secure the return of the money they paid. It may be that in the present case the petitioner cannot show in all instances to whom the money should go, nor does it appear likely that all the customers themselves know that they are entitled to the money. It does appear that the petitioner has records of some sales. But it must be remembered that there are other vendors and vendees of gasoline in New York city who may have better records of sales. Many sales are on charge accounts. Such vendors may be able to bring suit at any time for a refund. A reversal here would forever bar their right to recover in a proceeding against the city.

The refund provisions of the Local Law covering applications by purchasers as well as vendors, are found in section 10 which provides as follows: The comptroller shall refund any tax erroneously or illegally collected and paid to him if application therefor shall be made within one year from the payment thereof.” The date of the payment thereof ” from which the one year limitation runs is without doubt the payment to the vendor of the gasoline. It has been so interpreted by the comptroller and would be especially so if the vendor were the agent of the city. Whether the date is that date or that of the deposit by petitioner in order to bring this proceeding, the result is the same, that the purchasers are barred. The payments involved were made in the last four months of 1935. The Socony Case (supra) which declared this tax invalid was decided December 4, 1936 in this court. The deposit in the present case was made May 18, 1937. Considering either date, it is plain that the year has run. If then the city is allowed to keep the money the purchasers will not be able to recover it from the city and the persons really entitled to it will be deprived of it. If the purchasers have in fact a cause of action against the vendors, then the vendors are out of pocket. It would seem that if equitable arguments were allowed, they would weigh heaviest on the side of allowing the petitioner the return of the deposit.

To conclude, the only question in this case is whether the tax assessment was validly made. It is conceded that the assessment is invalid. There never was a payment of the tax but merely a deposit. The return of the deposit should be ordered. Equitable considerations have no place in this proceeding; but even if they had, the equities are in favor of petitioner. It still remains liable to the purchasers in an action for money had and received in which there is a six year statute of limitations. If the money is awarded to the city, the purchasers, who are really the persons entitled to the money, will have been barred from bringing an action against the city. If it is true that the vendor does not remain hable after payment to the city, then the purchasers are out of pocket. If, as seems likely, the vendors do remain hable, then the vendors are out of pocket.

The order of the Appellate Division should be affirmed.

Crane, Ch. J., O’Brien and Finch, JJ., concur with Loughran, J.; Hubbs, J., dissents in opinion in which Lehman and Bippey, JJ., concur.

Ordered accordingly. (See 278 N. Y. 716.)


source: Caselaw Access Project

author: Finch, J. Loughban, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Andrew J. Lunse and Richard Delaney, Appellants.

      Argued June 2, 1938;
    decided July 7, 1938.

      James D. C. Murray, George M. Carney and Saul Price for Andrew J. Lunse, appellant.
    The refusal of the trial court to charge the various degrees of homicide constituted error. (People v. Cummings, 274 N. Y. 336; People v. Schleiman, 197 N. Y. 383.) The court erroneously overruled the challenge to the panel of jurors. (People v. McQuade, 110 N. Y. 284; McCloskey v. People, 5 Park. 308; People v. Damron, 140 N. Y. Supp. 787; Cancemi v. People, 18 N. Y. 128; People v. Ebelt, 180 N. Y. 470; Ford v. O’Byrne, 225 N. Y; Supp. 1; People v. Dunn, 157 N. Y. 528; Wynehamer v. People, 13 N. Y. 378.) The court erroneously charged the jury with regard to their power to recommend life imprisonment. (Penal Law, § 21, p. 177.) The court erroneously charged the jury that the felony was in progress at the time of the homicide. (People v. Marwig, 227 N. Y. 382.) The court erroneously charged the jury on the question of abandonment. (People v. Nichols, 230 N. Y. 221; People v. Walsh, 262 N. Y. 140.)

      Vincent Gilroy for Richard Delaney, appellant.
    The rights of the defendant Delaney were prejudiced by the inflammatory and unwarranted remarks and improper matters introduced by the District Attorney. (People v. Follette 164 App. Div. 272; People v. Teiper, 186 App. Div. 830; People v. Fielding, 158 N. Y. 542; People v. Manganaro, 218 N. Y. 9; People v. Myer, 164 App. Div. 296; People v. Watson, 216 N. Y. 565; .People v. Conrow, 200 N. Y. 356; People v. Cascone, 185 N. Y. 317; People v. Mull, 167 N. Y. 247; People v. Corey, 157 1ST. Y. 332; Brooks v. Rochester Ry. Co., 156 N. Y. 244; People v. Hill, 37 App. Div. 327; Swan v. Keough, 35 App. Div. 80.) The court erred in refusing to charge that the killing of a person to escape is not a killing during the commission of a felony unless it is to escape with the loot or to enable another to escape with it. (People v. Marwig, 227 N. Y. 382; People v. Collins, 234 N. Y. 355.) The court erred in refusing to charge the degrees of murder and manslaughter in view of the evidence of intoxication. (People v. Cummings, 274 N. Y. 336; People v. Koerber, 244 N. Y. 147.)

      Thomas E. Dewey, District Attorney (Felix C. Benvenga, Jacob J. Rosenblum and Arnold Bauman of counsel), for respondent.
    The verdict is not against the evidence. (People v. Huter, 184 N. Y. 237; People v. Wagner, 245 N. Y. 143; People v. Moran, 246 N. Y. 100; People v. Lazar, 271 N. Y. 27; People v. Ryan, 263 N. Y. 298: People v. Walsh, 262 N. Y. 140; People v. Smith, 232 N. Y. 239; People v. Michalow, 229 N. Y. 325; People v. Marwig, 227 N. Y. 382; People v. Udwin, 254 N. Y. 255; People v. Friedman, 205 N. Y. 161; People v. Guisto, 206 N. Y. 67; People v. Chapman, 224 N. Y. 463; People v. Nichols, 230 N. Y. 221; People v. Stevens, 272 N. Y. 373.) The court did not err in submitting the case to the jury as one of felony murder and in refusing to charge the lower degrees of homicide. (People v. Seiler, 246 N. Y. 262; People v. Schleiman, 197 N. Y. 383; People
      v. Thompson, 198 N. Y. 396; People v. Koerber, 244 N. Y. 147; People v. Martone, 256 N. Y. 395; People v. Stevens, 272 N. Y. 373; People v. Cummings, 274 N. Y. 336; People v. Wilson, 145 N. Y. 628.) The trial judge charged properly and completely on the subject of abandonment. (People v. Chapman, 224 N. Y. 463; People v. Nichols, 230 N. Y. 221; People v. Harris, 136 N. Y. 423; People v. Pallister, 138 N. Y. 601; People v. Tobin, 176 N. Y. 278; People v. Boggiano, 179 N. Y. 267; People v. Walsh, 262 N. Y. 140; People v. Marwig, 227 N. Y. 382; People v. Stevens, 272 N. Y. 373.) The court’s charge on the power of the jury to recommend life imprisonment was proper. (People v. Flack, 216 N. Y. 123; People ex rel. Devoe v. Kelly, 97 N. Y. 212; People v. Nesce, 201 N. Y. 111; People v. Smith, 163 Misc. Rep. 469; People v. De Renna, 166 Misc. Rep. 582; People ex rel. Scharff v. .Frost, 198 N. Y. 110; People v. Cain, 206 N. Y. 202.) There was no misconduct by the District Attorney. (People v. Webster, 139 N. Y. 73; People v. DeGarmo, 179 N. Y. 130; People v. Johnston, 228 N. Y. 332; People v. Fiori, 123 App. Div. 174; Osborne v. Seligman, 39 Misc. Rep. 811; People v. Slover, 232 N. Y. 264; People v. Malkin, 250 N. Y. 185.) The action of the trial court in instructing the jury to disregard the District Attorney’s remarks amply safeguarded the interests of defendants. (People v. Priori, 164 N. Y. 459; People v. Manganaro, 218 N. Y. 9.) The court properly overruled the challenge of the defendants to the entire panel of special jurors. ((City of New York v. City Ry. Co., 193 N. Y. 543; People v. Katz, 154 App. Div. 44; 209 N. Y. 311.) The contention that the failure of the District Attorney to except to the challenge was an admission that “ it was sufficient as a matter of law ” is without merit. No exception is necessary where the challenge is insufficient on its face. (People v. Damron, 160 App. Div. 424; 212 N. Y. 256; Sam. v. State, 265 Pac. Rep. 609.)
   Finch, J.

This is an appeal from convictions of murder in the first degree.

In the early morning of January 6, 1938, at some time between twelve-thirty and one A. M., the defendants Andrew J. Lunse and Richard Delaney with one Kerwin hailed and entered a taxicab. Previously during the evening various “ jobs ” had been discussed, including McElroy’s Bar and Grill on Thirty-first street. Kerwin gave the driver directions, and shortly thereafter drew a revolver and ordered the driver and a companion who also occupied the front seat from the cab. Kerwin directed the driver not to report the theft for fifteen minutes, and Lunse gave him three dollars for his “ trouble.” Delaney then assumed the role of driver, but almost immediately was ordered by Kerwin to stop driving as he did not know how. He was then superseded by Lunse, who drove the cab to McElroy’s Bar and Grill on Thirty-first street between Broadway and Fifth avenue, New York city.

To clarify what occurred thereafter it is necessary to describe the bar and grill. The premises were about one hundred feet long and twenty-five feet wide, and consisted of a bar in front and a dance floor with booths and tables in the rear. A latticed partition partially separated the bar from the dance hall. There were two entrances to the premises: the main entrance leading directly to the front end of the bar, and a side entrance leading through a hallway, with a door at the middle of the bar. The bar itself was forty feet long. To go behind the bar it was necessary to walk to the end where the lattice work separated the front from the rear of the premises.

At the time the defendants entered there were five or six customers at the bar and one of the owners was behind the bar; in the rear were about ten people, including the hat-check girl, a waiter, a porter and two musicians. Kerwin entered with his gun drawn, followed by Lunse and Delaney. Kerwin ordered several of those at the bar to go to the rear room, brandished the gun, and shouted that it was a stick-up.” Lunse, although he had been instructed by Kerwin to rifle the cash register, started to help Kerwin herd those present into the rear room. Delaney, upon noting this, rushed around the bar and removed approximately twenty dollars from the cash register. Lunse, in addition to assisting Kerwin in forcing people to the rear room, went through the pockets of the man who had been behind the bar.

While this was going on three other men alighted from a cab in front of McElroy’s, intending to enter the place. They noticed a police officer, Frank Zaccor, walking toward the main entrance. At this time one of the men who had been forced behind the lattice work, but who could see the street through the openings in the lattice and the. front window, espied the police officer, and, with his hand raised above the lattice, signaled for him to come in. One of the three men, at the officer’s request, held the door while he entered with drawn revolver, and the' other two followed, but only went as far as a telephone booth near the front of the premises.

Someone, apparently Lunse, shouted ‘ ‘ Cop. ’ ’ Delaney, who had come from behind the bar, ran toward the front door. Lunse, who had been with Kerwin in the rear, ran toward the side door. Kerwin and Zaccor shot at each other almost simultaneously at close range while standing near the end of the bar. The police officer died almost immediately. Kerwin tried to stagger through the door, but the waiter struck him with a chair, and he collapsed. He died the following day. Delaney was arrested on the evening of the same day and Lunse was apprehended two days later.

The facts as related above are taken from the testimony of many of the witnesses, and are supported by the great weight of the evidence. For the most part they are substantiated by the testimony of Delaney, who took the witness stand. Some of the more controversial evidence will be discussed in connection with the legal points raised by the defendants.

There is testimony by Delaney and others that he and Lunse had been drinking all evening prior to the robbery and that they were intoxicated. On the other hand, there is testimony by the driver from whom they took the taxicab, and by a person in McElroy’s, that the defendants appeared to be sober. Both Delaney and Lunse drove the cab. Although Delaney claims that Lunse replaced him as driver because he was so intoxicated that despite his experience as a driver he was unable to drive properly, there is ample evidence that he had clarity of mind sufficient to form a criminal intent. He was sufficiently alert to notice that Lunse was engaged in forcing the woman at the bar to the rear of the room when, according to plans, Lunse should have been at the cash register, and Delaney assumed that task unto himself. Delaney admitted that while he was in the act of taking money from the cash register he realized what he was doing. All the other acts of the defendants during the robbery were performed in such maimer that there was ample evidence from which a jury could find that whether or not the defendants had been drinking they had the mental power to form a criminal intent. The charge of the court on the question of intoxication and criminal intent was clear, complete and without error.

Both defendants maintained, however, that the evidence of intoxication entitled them to have the court charge the various degrees of homicide. Instead the charge was to the effect that the defendants either were guilty of murder in the first degree or should be acquitted. The trial court pointed out that neither of the defendants was the actual killer, and that no ground existed for convicting the defendants unless they were guilty of felony murder.

The question of charging the degrees of homicide in a felony murder has always been troublesome. In People v. Schleiman (197 N. Y. 383) this court affirmed a conviction where the trial court refused to charge the various degrees of the crime of homicide, limiting the jury to. first degree verdict or acquittal. It was pointed out that under the evidence there were no facts proven which would warrant the jury finding the defendant guilty of any other degree of homicide. In.that case, and in many opinions subsequently written, we have said that it is only under unusual conditions that a full charge of the various degrees of homicide may be denied, and that such a charge should be made except where no possible view of the facts would justify any other result than a conviction of the crime charged or an acquittal. (People v. Cummings, 274 N. Y. 336; People v. Koerber, 244 N. Y. 147; People v. Van Norman, 231 N. Y. 454.) In People v. Seiler (246 N. Y. 262) we had a situation almost precisely the same as the one now presented. In that case the defendant and three others were involved in a holdup in the course of which a man was killed. The defendant did not fire the fatal shot or any other shot. He testified that before the killing he drank so much intoxicating liquor as to be unable to form the requisite criminal intent. The court refused to charge the jury on the various degrees of homicide and left to them only the question whether the defendant was guilty of murder in the first degree. We held that under the circumstances this charge was proper. We said that unless the killing was “ during the commission of a felony by the defendant, no evidence here presented would justify an affirmative finding which upon any logical theory would make the defendant share in the guilt of the slayer. The jury may not find the defendant guilty of a crime, he did not commit and the court was not required to charge the jury upon degrees of crime, of which the jury would not be justified in finding the defendant guilty under the evidence ” (p. 268).

In People v. Martone (256 N. Y. 395) we had an analogous situation, but in that case, over the objection of the defendant, a charge of all the degrees of homicide was given. Upon appeal by the defendant from an affirmance of a conviction of manslaughter in the first degree we reversed and granted a new trial. It was pointed out that “ the evidence, when accepted by the jury, justifies only one verdict. It is murder in the first degree committed in the course of a felony. * * * There is no possible view of the facts which can warrant any verdict except acquittal or murder in the first degree ” (p. 397).

In the case at bar there is no view of the facts which would justify a conviction of a crime other than murder in the first degree. The defendants were guilty of a felony murder or not guilty at all. If they were so intoxicated as to be unable to form a criminal intent they could not be convicted of murder in the first degree or any degree of homicide. No claim is made, nor is there evidence to support a claim of common law murder on the part of the defendants. Nor is there evidence to support a charge that they conspired with Kerwin to kill any one who interfered with the robbery or obstructed escape. (See People v. Emieleta, 238 N. Y. 158.) Under these circumstances the refusal to charge the lesser degrees of homicide was proper.

In the recent case of People v. Cummings (274 N. Y. 336) a majority of this court concluded that there was evidence which might warrant a conviction of a lesser degree of homicide. The defendant Cummings offered evidence that he was intoxicated at the time and there was evidence that although he did not do the shooting he did direct the other defendant to shoot the deceased. Thus, upon the evidence, the defendants might have been convicted of a homicide other than that of felony murder.

The facts upon which the defense of abandonment is based are in some dispute. Witnesses within the premises testified that following the cry of “ Cop,” and at the time the fatal shot was fired, Delaney had run towards the front door and Lunse had started for the side door. Delaney had, and Lunse probably had, passed the police officer, but both were still within the premises. The two late comers, who had followed the police officer into the premises, testified that no one came out of the front door before the shooting, and the third member of that group testified that no one left either the main entrance or the side entrance prior to the shooting. Mogulska, the proprietor, Callahan and Furey, employees, Gordon and Coleman, customers, also testified that Delaney and Lunse were in the premises at the time of the shooting. According to Delaney, he had actually reached the street before the shooting occurred. Lunse, as noted, did not take the stand. •

The weight of the evidence supports the conclusion that neither of the defendants started toward the doors until the police officer entered, and that both were on the premises at the time of the shooting. Delaney admittedly was attempting to escape with the loot. Even accepting Delaney’s statement that he had emerged from the premises prior to the shooting, the evidence sustains the finding of the jury that the defendants had not actually abandoned the criminal enterprise in such manner as to free them from responsibility for the murder. One may be guilty of a felony murder although at the time of the killing he is in another part of the premises (People v. Giusto, 206 N. Y. 67), or merely a lookout outside the premises (People v. Usefof, 227 N. Y. 622), or even where he is a distance from the scene of the crime. (See People v. Michalow, 229 N. Y. 325, 330.) The mere fact that the loot has been secured does not terminate the underlying crime (See People v. Michalow, supra), and the fact that one is attempting to get away with the loot may be evidence that the crime has not ended. (See People v. Walsh, 262 N. Y. 140, 148.) It is natural for criminals to cease looting and attempt to escape when a police officer appears on the scene, but it does not follow that from that moment the crime is terminated and that a subsequent homicide is not a felony murder.

The law of abandonment was well defined by Chief Judge Hiscock in People v. Nichols (230 N. Y. 221, at p. 229): Whatever may be the other requirements of an effective abandonment of a criminal enterprise it is certain both as a matter of law and of common sense that there must be some appreciable interval between the alleged abandonment and the act from responsibility for which escape is sought. It must be possible for a jury to say that the accused had wholly and effectively detached himself from the criminal enterprise before the act with which he is charged is in the process of consummation or has become so inevitable that it cannot reasonably be stayed. The process of detachment must be such as to show not only a determination upon the part of the accused to go no farther but also such as to give his co-conspirators a reasonable opportunity, if they desire, to follow his example and refrain from further action before the act in question is committed. A conspirator cannot escape responsibility for an act which is the natural result of a criminal scheme which he has helped to devise and carry forward because as the result either of fear or even of a better motive he concludes to run away at the very instant when the act in question is about to be committed and when the transaction which immediately begets it has actually been commenced, as in this case. While it may make no difference whether mere fear or actual repentance is the moving cause, one or the other must lead to an actual and effective retirement before the act in question has become so imminent that its avoidance is practically out of the question.”

The evidence preponderates in sustaining the finding of the jury that at the time of the commission of the homicide neither of the defendants had effectively abandoned the common enterprise under such circumstances as would permit Kerwin to take similar action if so inclined. The underlying felony was still in progress when Officer Zaccor was shot and killed. It was merely interrupted when he entered. It was not abandoned since death was then imminent and the natural and probable consequence of the common enterprise. At the least the jury were justified in so finding. (People v. Chapman, 224 N. Y. 463, 475, 478; People v. Nichols, 230 N. Y. 221, 229, 230.) The charge given to the jury was in accordance with these principles, and the example cited to the jury for the purpose of clarification could not lead the jury to believe that only under such circumstances could a defense of abandonment be sustained. It may be noted that in the case of People v. Nichols (supra), where the facts were somewhat analogous to those in the case at bar, it was held that as a matter of law the defendants had not abandoned the crime.

The point raised concerning the court’s charge as to the power of the jury to recommend life imprisonment is without merit. The charge accurately and adequately described the power of the jury under the law, and in no way prejudiced the defendants. All proper requests to charge on this subject were granted.

The defendants also asserted that the trial court erred in overruling their challenge to the entire panel of special jurors. The challenge was based upon the ground that the list from which the special jurors were drawn did not contain the names of women. At the time of the trial of this case the new special jury law (Judiciary Law [Cons. Laws, ch. 30], art. 18-B; County Law [Cons. Laws, ch. 11], art. 9-A, added by Laws of 1938, ch. 552) was not yet in effect and hence need not be considered even though it may not have changed the applicable provisions. The applicable law in effect at the time of the trial provided that “No person shall be selected as such special juror who is by law disqualified or exempt from service as a trial juror * * *.” (See McKinney’s, Book 65, Unconsolidated Laws, 1937 supp., § 1695 h-2; L. 1901, ch. 602, § 3, as amd. [repealed L. 1938, § 552, § 27].) The Judiciary Law provided that among others entitled to exemption from service as trial jurors were women. (Judiciary Law, § 546.) Thus, since no person is to be selected as a special juror who is exempt from service as a trial juror, and women have such exemption, the Commissioner of Jurors was without power to include them on the special jury list. The contention that the failure of the District Attorney to except to this challenge was an admission that it was sufficient as a matter of law, is without merit. Exceptions are unnecessary where the challenge is insufficient on its face. (People v. Damron, 160 App. Div. 424, 431; affd., 212 N. Y. 256.)

Nor is there merit in the contention that the defendants were prejudiced by alleged misconduct on the part of the District Attorney in his cross-examination and in summation. Assuming that the District Attorney went too far, any prejudice was remedied by the instructions given by the court to the jury.

As to each defendant, the. judgment of conviction should be affirmed.

Loughban, J.

(dissenting). I think the degrees of homicide should have been submitted to the jury.

The defendants conspired with Kerwin to commit the robbery and they knew he had the gun. There is no reasonable explanation of their going armed, other than that they intended to shoot any person who should obstruct the accomplishment of their crime or at least anyone who might seek to apprehend them or prevent their escape.” (People v. Sullivan, 173 N. Y. 122, 132, 133.) As in that case, the deliberation and premeditation necessary to make out the crime of true murder in the first degree could well be found to have commenced “ when the defendants started out on their predatory excursion.” If, as the jury could also have found, Kerwin shot the police officer in fulfillment of his concert with the defendants to kill should killing be necessary to the attainment of their end, his willful act was theirs as well.

Hence, I cannot assent to the District Attorney’s proposition that while the three planned the robbery and acted in concert in the prosecution of that common enterprise, there was no concert of action in the commission of the homicide.”

In People v. Cummings (274 N. Y. 336) the codefendant Lewis did the shooting, yet it was held that there should have been submission of the degrees of homicide in the case of Cummings. It is true that Cummings told Lewis to shoot, whereas in the present case we have only the inference of concert of all three to have Kerwin shoot their way out if necessary. I had supposed, however, that the purpose of the opinion in the Cummings case was to end the vexations resulting from appellate stress upon such fact distinctions, and I think we should adhere to that purpose in the interest of uniform administration of the law in capital cases.

The judgments should be reversed and a new trial granted.

Crane, Ch. J., Lehman, O’Brien and Hubbs, JJ., concur with Finch, J.; Loughran, J., dissents in opinion in which Rippey, J., concurs.

Judgments of conviction affirmed.


author: Hubbs, J.

text:
    Robert C. Brown, Respondent, v. Manufacturers Trust Company et al., Appellants, Impleaded with Others.

      Argued May 27, 1938;
    decided July 7, 1938.

      Leonard P. Moore and Charles Pickett for appellants.
    The stock subscription agreement is unambiguous, and the trial court erred in admitting paroi evidence to explain its meaning. (Brainard v. N. Y. C. R. R. Co., 242 N. Y. 125; Halsted v. Globe Indemnity Co., 258 N. Y. 176; Rosenbaum v. Schatia, 272 N. Y. 67; Matter of Stone, 272 N. Y. 121; Lossing v. Cushman, 195 N. Y. 386; Gray v. Shepard, 147 N. Y. 177; Mecca Realty Co. v. Kellogg Toasted Corn Flakes Co., 166 App. Div. 74; McConnell v. Allen, 193 N. Y. 318; Talmage v. Third Nat. Bank, 91 N. Y. 531; People ex rel. Comstock v. City of Syracuse, 59 Hun, 258; 128 N. Y. 632; Williams v. People, 24 N. Y. 405; Matter of Goddard, 94 N. Y. 544; United States v. Thoman, 156 U. S. 353; Cooke v. State Nat. Bank, 52 N. Y. 96.) An undertaking by a national bank to return installments paid on account of the purchase price of stock purchased from it would have been ultra vires, unenforcible and void. (Duncomb v. N. Y., H. & N. R. R. Co., 84 N. Y. 190; Awotin v. Atlas Exchange Bank, 295 U. S. 209; Brown v. Fourth & First Nat. Bank, 171 Term. 371; Plumlee’s Admx. v. Citizens Nat. Bank, 271 Ky. 226; Kimen v. Atlas Exchange Nat. Bank, 92 Fed. Rep. [2d] 615; Goess v. Ehret, 13 Fed. Supp. 630; Oppenheimer v. Harriman Nat. Bank & T. Co., 301 U. S. 206;
      Adams v. Cribbis, 17 Fed. Supp. 723; Second Russian Ins. Co. v. Miller, 268 U. S. 552; St. Louis R. R. Co. v. Terre Haute R. R. Co., 145 U. S. 393; Thomas v. City of Richmond, 12 Wall. 349; Smith v. Brady, 17 N. Y. 173; Fokine v. Shubert, 210 App. Div. 468; D’ Ugo v. Cirenza, 131 App. Div. 145.) Plaintiff cannot recover on any theory that the contract required refund of the payments. (Heller v. Pope, 250 N. Y. 132; Rosenthal v. American Bonding Co., 207 N. Y. 162; Windmuller v. Pope, 107 N. Y. 674; DeForest Radio Telephone & Telegraph Co. v. Triangle Radio Supply Co., 243 N. Y. 283; Ressig v. Waldorf-Astoria Hotel Co., 185 App. Div. 4; 229 N. Y. 553; Nieman-Irving & Co. v. Lazenby, 263 N. Y. 91; Bowen v. Horgan, 259 N. Y. 267; Rosenthal Paper Co. v. National Folding Box & Paper Co., 226 N. Y. 313; Saperstein v. Mechanics & Farmers Sav. Bank, 228 N. Y. 257; City National Bank v. McCann, 193 Ark. 967; Atwater v. Stromberg, 75 Minn. 277.) Plaintiff cannot recover on any theory that the subscription agreement was ultra vires. (National Bank v. Stewart, 107 U. S. 676; Thompson v. Saint Nicholas Nat. Bank, 146 U. S. 240; Lantry v. Wallace, 182 U. S. 536; Walden Nat. Bank v. Birch, 130 N. Y. 221; Harriman Nat. Bank & Trust Co. v. Perry, 86 Fed. Rep. [2d] 641; Lantry v. Wallace, 97 Fed. Rep. 865; Singleton v. Harriman, 152 Misc. Rep. 323 ; 241 App. Div. 857; Union National Bank v. Hunt, 76 Mo. 439; Oppenheimer v. Harriman Nat. Bank & Trust Co., 301 U. S. 206; Walden Nat. Bank v. Birch, 130 N. Y. 221; Longley v. Coons, 244 App. Div. 391; 268 N. Y. 712.) The merger was not an anticipatory breach of contract entitling plaintiff to recover past payments. (Merry Realty Co. v. Shamokin & Hollis Real Estate Co., 230 N. Y. 316; Nugent v. Supervisors, 19 Wall. [U. S.] 241; Town of East Lincoln v. Davenport, 94 U. S. 801; Bates County v. Winters, 112 U. S. 325; Pope v. Board of Commissioners, 51 Fed. Rep. 769; Sprague v. Illinois R. R. Co., 19 111. 173; Mayfield v. Alton Ry., Gas & Electric Co., 198 Ill. 528; Bish v. Johnson,
      21 Ind. 299; Atchison, C. & P. Rd. Co. v. Board of Commissioners, 25 Kan. 261; Union Hotel Co. v. Hersee, 79 N. Y. 454; Myers v. Sturgis, 123 App. Div. 470, 197 N. Y. 526.)

      William I. Hart and Joseph B. Truesdale for respondent.
    The subscription agreement was ultra vires. The plaintiff may recover his subscription payments with interest. (Langley v. Coons, 244 App. Div. 391; Jackman v. Continental Nat. Bank, 16 Fed. Rep. [2d] 728; Wallace v. Hood, 89 Fed. Rep. 11; Logan County Nat. Bank v. Townsend, 139 U. S. 67; Citizens Central Nat. Bank v. Appleton, 190 N. Y. 417; 216 U. S. 196; Rankin v. Emigh, 218 U. S. 27; Aldrich v. Chemical Nat. Bank, 176 U. S. 618; White V. President of Franklin Bank, 22 Pick. [Mass.] 181; Coyne v. Chatham Phenix Nat. Bank & Trust Co., 155 Misc. Rep. 656.) Even though the contract were not ultra vires the plaintiff would be entitled to recover. (Fleischman v. Furgueson, 223 N. Y. 235; Schoelkopf v. Coatsworth, 166 N. Y. 77; Heller v. Kalisch, 141 App. Div. 205; Sanford v. Brown Bros. Co., 208 N. Y. 90; American Aniline Products, Inc., v. Mitsui & Co., 190 App. Div. 485; Liondale Mercantile Co. v. Gerber, 197 App. Div. 345; Rogers v. Straub, 75 Hun, 264.) Upon the merger it became impossible for the bank to perform its agreement with the plaintiff. This constituted an anticipatory breach of contract giving the plaintiff an immediate right of action to recover the sums paid to the bank under the agreement. (Goebbel v. Gross, 153 Misc. Rep. 637; Choate v. Beebe, 143 App. Div. 683; Markowitz v. Mayer, 232 App. Div. 68; Ga Nun v. Palmer, 202 N. Y. 483; Wood v. Fisk, 156 App. Div. 497; 215 N. Y. 233.)
   Hubbs, J.

Respondent, on August 21, 1929, was in the employ of the appellant Chatham Phenix National Bank and Trust Company at a salary of $18,000 per annum. On that date he entered into a written contract with the bank for the purchase of fifty shares of the bank stock, pursuant to an employees’ purchase plan. That plan was set forth in a notice signed by a vice-president of the bank, which stated, in substance, that the president and a director of the bank had offered to officers and employees 2,000 shares, with rights to subscribe to new stock attached, at $772 per share; that the management committee had arranged a loan to carry the stock and another to take up the rights, and to offer the new stock instead of the old, so that there would be 12,000 shares at $144; that on October first the bank would start paying dividends on the new stock at four dollars; that the offer was open only to officers and employees; that payments were to be made one dollar and fifty cents per share each pay day (three dollars per month) for four years, the amount to be deducted by the payroll department; that the stock could not be sold prior to September 1, 1933, though previously paid for; that no stock would be delivered prior to that date except by special permission of the management committee; that the interest would be charged at cost; dividends would be credited to the purchaser; that

“ 8. In the event of resignation or discharge of the subscriber the management committee shall have the right to refund all payments made with interest at 6% and may sell the stock of the party in question as its discretion may dictate.

“ 9. In the event of death, the estate of the subscribing decedent may complete the payments due and sell the stock forthwith. * * * The estate has the option to ask the management committee to refund payments made, plus 6%, if the estate is unable to complete the payments; the stock to be returned to the committee.”

Respondent’s agreement referred to the notice or plan in question, and provided specifically as follows: “It is understood that in the event my employment with the bank is terminated either voluntarily or involuntarily before September 1, 1933, you may refund to me the payments I have made in full, plus 6% interest, whereupon my right and interest in and to the stock subscribed for shall cease.” It also provided, referring to the notice or plan: “ in any matter or matters arising in connection with this subscription not covered therein I agree to be bound by the decision of your committee.”

After two payments, or $150, had been deducted from respondent’s salary, he was made vice-president of Empire State, Inc., in which officers and directors of the bank were financially interested, at a salary of $30,000 per annum, but did not resign as vice-president of the bank, being re-elected from year to year at a salary of one dollar per annum, until February 9, 1932, when the bank merged with the Manufacturers Trust Company. Upon the merger he was not elected as an officer of the trust company nor was he employed thereby.

In the meantime he continued to pay at the rate of $150 a month on account of his subscription until November 4, 1931, the total amount paid being $3,900. At or about the time of the merger he orally demanded a refund of his payments, with interest, which demand was followed by a written demand dated March 1, 1932. His demand not having been complied with, on or about July 23, 1936, he instituted this action to recover of the bank and of the trust company, as well as three of the former officers of the bank, the amount paid, with interest. He alleged that he entered into the contract relying upon the written instrument of the defendants to the effect that the stock could be paid for in installments out of salary from the bank and that the bank would refund any sums paid by an employee whose connections with the bank should be terminated prior to September 1, 1933.

¡ The answers admitted the written offer and acceptance and denied liability for repayment. The complaint was dismissed on the merits as against defendants Earle and Johnston, and without prejudice as against defendant Kaufman, he not having been served with process and not having appeared, and findings having been waived, the court rendered judgment in favor of plaintiff and against the defendants bank and trust company. The Appellate Division affirmed, two of the justices dissenting. The trial court based its decision upon a decision of the Appellate Term in Coyne v. Chatham Phenix Nat. Bank & Trust Co. (155 Misc. Rep. 656), involving the same stock offering. There the trial court found lack of mutuality. That finding was approved on appeal and the appellate court said that the agreement was illegal and unenforcible because the bank, being a national bank, could not enter into an agreement to sell its own stock or buy it back. No such question is presented here as the complaint alleges a valid contract fully performed by plaintiff.

Briefly, the complaint alleges breach of an alleged valid contract wherein the bank agreed to refund ail payments made by plaintiff on his stock subscription on the termination of his employment by the bank, and that plaintiff duly performed the agreement on his part. The trial was conducted on the theory set out in the complaint. Concededly the proof did not sustain the allegations of the complaint. The plaintiff did not make monthly payments up till the time of his discharge, February 9, 1932, but defaulted in November, 1931. He did not after such default offer to pay. The bank never refused to accept payments and plaintiff was not ready and willing to complete the payments. Contrary to the allegations of the complaint the evidence discloses a complete breach of the contract by the plaintiff. In the face of such breach he cannot recover on the contract.

In any event, the contract merely reserved an option in the bank to refund or not as it saw fit, in the event that an employee left its employment. The statement that “ It is understood that in the event my employment with the bank is terminated * * * you may refund to me * * * ” cannot be construed, as urged by plaintiff, into a promise by the bank that it bound itself to so refund. It merely reserved the right to choose between letting him continue with the contract, and wiping out his interest by a refund. In this case may ” does not mean “ must.” The substance of plaintiff’s complaint is that the bank bound itself to refund. Therefore, it would make no difference if plaintiff was not in default, as he has misconstrued the meaning of the contract. The courts will not make a new contract for the parties under the guise of interpreting the writing.” (Heller v. Page, 250 N. Y. 132,135.)

We do not reach the question of the ultra vires character of the contract (U. S. Code, tit. 12, § 83;R. S. § 5201; U. S. Code, tit. 12, § 24;R. S. § 5136; Awotin v. Atlas Exchange Nat. Bank, 295 U. S. 209), as plaintiff both in the complaint and at the trial relied on the validity of the contract. He cannot now argue its invalidity. One cannot rely on a contract as valid and seek to recover because of its breach, which constitutes an affirmance of the contract, and then have a recovery on the ground that the contract is void, which constitutes a disaffirmance of the same contract. That is what the plaintiff is attempting to do here. '(Merry Realty Co. v. Shamokin & Hollis R.E.Co., 230 N. Y. 316.)

Plaintiff claims that there was an anticipatory breach of the contract by the defendant when in the fall of 1931 plaintiff heard that there might be a merger and that he might not be continued as an employee. Here again plaintiff is attempting to sustain a recovery on a ground directly contrary to the theory of the complaint and trial. In any event there was no right to rely on an anticipatory breach here as it was still possible that something would occur between November, 1931, the time of plaintiff’s default, and February 9, 1932, to prevent the merger, or at least to change the mind of the management as to continuing the plaintiff as an employee. None of the grounds upon which to base an anticipatory breach are here disclosed. (American Law Institute, Restatement of the Law of Contracts, § 318.)

The judgments should be reversed and the complaint dismissed, with costs in all courts. (See 278 N. Y. 733.)

Lehman, O’Brien, Loughran, Bench and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Judgments reversed, etc.


author: O’Brien, J.

text:
    In the Matter of Mercantile Properties, Inc., Appellant, against State Tax Commission, Respondent.
    Argued May 16, 1938;
    decided July 7, 1938.

      J. G. Fink, Harry N. French and Robert J. Farrington for appellant.
    The bonds are not debenture bonds. The additional tax measured by the interest paid thereon is erroneous. (Montgomery, Financial Handbook; Gerstenberg on Principles of Business; Dewing on Corporation Finance; Grange on Corporation Law for Officers and Directors; Prentice-Hall, Corporation Service; McClelland & Fisher on Law of Corporate.Mortgage Bond Issues; Stetson on Preparation of Corporate Bonds, Mortgages, Collateral Trusts and Debenture Indentures; People ex rel. Cohn & Co. v. Miller, 180 N. Y. 16; Barton Nat. Bank v. Atkins, 72 Vt. 33; Crayton v. Larabee, 220 N. Y. 493; People v. City of Buffalo, 57 Hun, 577; Johnson v. Southern Pacific Co., 117 Fed. Rep. 462; Aultman & Taylor Co. v. Syme, 163 N. Y. 54; Matter of Aylesworth v. Phœnix Cheese Co., 170 App. Div. 34; Matter of Fechheimer Fishel Co. v. Dellevie, 212 Fed. Rep. 357; 234 U. S. 760; Cass v. Realty Securities Co., 148 App. Div. 96; 206 N. Y. 649; People ex rel. Adams Elec. Light Co. v. Graves, 272 N. Y. 77.)

      John J. Bennett, Jr., Attorney-General (Wendell P. Brown of counsel), for respondent.
    The bonds issued by the petitioner, the interest upon which has been treated as a- dividend, were debenture bonds within the meaning of that term as used in the statute. (Jones on Corporate Bonds and Mortgages, 3d ed. § 32; 3 Thompson on Corporations, 2d ed. § 2266; Dewing on Corporation Securities, p. 213; Lorimer v. McGreevy, 229 Mo. App. 970; Waterman Trust Co. v. Vicars, 28 How. 232; American Loan & Trust Co. v. Northwestern Guaranty Loan Co., 166 Mass. 337; Smith v. New Hampshire Trust Co., 68 N. H. 424; Bank Comm. v. New Hampshire Trust Co., 69 N. H. 621; Anthony v. Campbell, 112 Fed. Rep. 212; Girard Trust Co. v. M’Kinley-Lanning Loan & Trust Co., 135 Fed. Rep. 180.)
   O’Brien, J.

The State Tax Commission affirmed corporate franchise taxes assessed against petitioner, which is a corporation engaged in the real estate business, for the years 1931, 1932 and 1933, and its determination has been confirmed by the Appellate Division. This determination is based upon the provisions of section 182 of the Tax Law (Cons. Laws, ch. 60) applicable to real estate corporations, which read, prior to its amendment by chapter 541 of the Laws of 1938, as follows: Every such corporation, joint stock company or association taxable under this section shall be subject to and pay an additional tax at the rate of two per centum on such a portion of the amount of all dividends paid during the year ending December thirty-one last preceding, as its gross assets employed or situate within this state bears to its gross assets wherever employed or situate. Interest paid on debenture bonds and/or certificates of indebtedness * * * and/or promissory notes or other indebtedness to stockholders, the proceeds of which are used to acquire assets, shall, for the purposes of this section, be treated as dividends and taxed accordingly.”

In December, 1925, petitioner entered into a trust agreement with the Central Union Trust Company, in which is recited the determination of petitioner to issue in the amount of $4,25Q,000 bonds to be known as “ Secured Sinking Fund 5f% Gold Bonds.” By this agreement, petitioner assigned and pledged to the trustee specific rents from designated property owned by petitioner. The proceeds of the sale of these secured sinking fund bonds were used to acquire additional real estate now held by petitioner. Some of these bonds were purchased by stockholders of petitioner and interest was paid to them. If the bonds are debenture bonds, the assessment is valid, otherwise the order must be reversed. Among authors of legal text books and writers on finance, formidable opinion exists to the effect that debenture bonds are such as are issued without specific security. (Montgomery, Financial Handbook; Gerstenberg, Principles of Business; Dewing, Corporation Finance; Grange, Corporation Law for Officers and Directors; Prentice-Hall, Corporation Service; McClelland & Fisher, Law of Corporate Mortgage Bond Issues; Stetson, on Preparation of Corporate Bonds, Mortgages, Collateral Trusts and Debenture Indentures [Some Legal Phases of Corporate Financing, Reorganization & Regulation].) These sinking fund bonds, being secured by assignment, transfer and pledge of rents payable from designated parcels of realty, ought not to be regarded as debentures within the meaning of section 182 of the Tax Law and the impressive aggregate of opinion among lawyers and financiers.

The order of the Appellate Division should be reversed, and the determination of the State Tax Commission annulled, with costs in this court and in the Appellate Division.

Lehman, Hubbs, Loughran, Finch and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Order reversed, etc.


author: O’Bbien, J.

text:
    P. Delany and Company, Respondent, v. Rosanna Duvou et al., Defendants; Frances M. Labes, Appellant, and Louis Argenio et al., Respondents.

      Submitted May 25, 1938;
    decided July 7, 1938.

      Isidore Japan, Sol Feder, Frederick E. Goldsmith and Louis E. Felix for appellant.
    The interest of a vendor under an executory contract of sale where the vendee is in possession is not subject to a lien for materials and labor furnished without the express consent of such vendor. (Beck v. Catholic University of America, 172 N. Y. 387; Schuldt v. Chuckrow, 222 App. Div. 441; Kolkman v. Eshelman, 132 Misc. Rep. 428; Jewett Refrigerator Co. v. Lawless, 120 Misc. Rep. 443; Brigham v. Duany, 241 N. Y. 435; Moore v. McLaughlin, 11 App. Div. 477; Vosseller v. Slater, 25 App. Div. 368; National Wall Paper Co. v. Sire, 163 N. Y. 122; Rice v. Culver, 172 N. Y. 60; Gates & Co. v. National Fair & Exposition Assn., 225 N. Y. 142.)

      Charles W. U. Sneed and J. Townsend Cassedy for respondents.
    The plaintiff and the defendant lienors furnished materials and performed labor with the consent of the owner or her agent and have proved valid liens against the property improved thereby. (Rice v. Culver, 172 N. Y. 60; National Wall Paper Co. v. Sire, 163 N. Y. 122; Hankinson v. Vantine, 152 N. Y. 20; Gates & Co. v. National Fair & Exposition Assn., 225 N. Y. 142; Cowen
      v. Paddock, 137 N. Y. 188; Kealey v. Murray, 40 N. Y. St. Repr. 23; Butler v. Flynn, 51 App. Div. 225.)
   O’Bbien, J.

Defendant Frances M. Labes was the owner of real property with buildings thereon known as Pine Point in Orange county. In September, 1932, she executed an instrument with defendants Brennan and Nunzio Salamone whereby she agreed to convey the property with an option to them to take title within a year, with provisions that until the taking of title they were to pay, after the first two months, a fixed monthly rent and that if title were not taken within a year, the agreement to convey was to become void. In this agreement no reference is made to any contemplated improvements by way of construction or alteration. The conditional vendees were by this instrument also given immediate possession. By assignment, Brennan transferred his interest to defendants Nunzio Salamone and Samuel Salamone. While defendant Labes remained the owner of record and the conditional vendees as tenants had entered into possession, the conditional vendees, prior to August, 1933, made certain alterations and new construction on the premises. Plaintiff, P. Delany & Co., and defendants Argenio and Newburgh Planing Mill Company were employed by the tenants in possession and they furnished labor and materials in effecting the alterations and additions. The defendants Salamone having defaulted in their payments due under their agreement with defendant Labes, they assigned to her all their interest and in October, 1933, she conveyed the property to Rosanna Duvoli, the wife of defendant Nunzio Salamone, taking back two purchase-money mortgages aggregating $10,600.

In this action to foreclose a mechanic’s lien the courts below have awarded judgment determining that plaintiff and the defendants Argenio and Newburgh Planing Mill Company have valid liens against the property, decreeing that the property be sold and that defendant Labes and the other defendants, except the lienors, be barred of all interest in the premises. Mrs. Labes is the only party appealing.

The question of law is whether there is any evidence of such a consent by defendant Labes, the record owner of the premises, to the improvements by the tenants in possession as satisfies the provisions of section 3 of the Lien Law (Cons. Laws, ch. 33). This section provides: A contractor, subcontractor, laborer or material man, who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof, or of his agent * * * shall have a hen for the principal and interest, of the value, or the agreed price, of such labor or materials upon the real property improved or to be improved and upon such improvement, from the time of filing a notice of such hen as prescribed in this chapter.” The consent required by this section is not a mere acquiescence by the owner to improvements by a lessee in possession at his own expense. There must be some affirmative act by the owner. (Beck v. Catholic University, 172 N. Y. 387, 392, 393; Brigham v. Duany, 241 N. Y. 435, 440.) Here there has been no compliance with the statutory requirements. The most that can be said in favor of respondents is that the owner did not object to improvements by the tenants at their own expense. That the henors never dealt with the record owner or her agent in respect to those improvements cannot be doubted. The evidence demonstrates that the credit accorded by the henors was to the tenants and not to the owner, that ah the transactions relating to the improvements occurred between the henors and defendants Samuel Salamone and Nunzio Salamone, the tenants in possession, and that the tenants assured the owner that the improvements were to be effected at their own expense.

The judgments should be reversed and the complaint dismissed, with costs in all courts. (See 278 N. Y. 715.)

Lehman, Hubbs, Lotjghran, Finch and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Judgments reversed, etc.


author: Finch, J.

text:
    Wladyslaw Zebrowski, Respondent, v. Maxim Bobinski, Appellant. (Action No. 2.)
    Argued May 24,1938;
    decided July 7, 1938.

      J. Harry Saxstein and Isidore Scheinberg for appellant.
    The complaint should have been dismissed because the criminal prosecution complained of was terminated by an agreement of compromise. (Follender v. Merl, 242 App. Div. 650; 266 N. Y. 534; Levy’s Store, Inc., v. Endicott Johnson Corp. 272 N. Y. 155; Halberstadt v. N. Y. Life Ins. Co., 194 N. Y. 1.).

      Harold Ashare and John R. Vunk for respondent.
    The determination of the issue of the manner of the termination of the criminal prosecution was decided by the jury in favor of the plaintiff. The jury, upon evidence to that effect, found that the complainant withdrew the charge. This was after the complainant had received payment of his bill. Complainant accomplished this by criminal proceedings. (People v. Clougher, 246 N. Y. 106; Tousey v. Hastings, 194 N. Y. 79; Matter of Totten, 179 N. Y. 112.)
   Finch, J.

Whether there is proof that criminal proceedings against the plaintiff were terminated on the merits in his favor, or at the sole request of the complainant, so as to permit the maintenance of an action for malicious prosecution, is the question to be determined.

The defendant Maxim Bobinski, who had a chattel mortgage or mortgages on a maturing crop of the plaintiff, had him arrested and arraigned before a justice of the peace for an alleged violation of section 940 of the Penal Law. That section makes it a misdemeanor for a person who has executed a mortgage on personal property to sell, assign or otherwise dispose of any part of the property covered by the mortgage with intent thereby to defraud the mortgagee or the purchaser. This action for malicious prosecution arises out of the arrest.

A malicious prosecution is one that is begun in malice, without probable cause to believe it can succeed, and which finally ends in failure.” (Burt v. Smith, 181 N. Y. 1, 5.)

The one question on this appeal is the disposition of the criminal proceeding. The plaintiff cannot succeed if the criminal proceeding has been terminated without regard to its merits or propriety by agreement or settlement of the parties.” (Halberstadt v. New York Life Ins. Co., 194 N. Y. 1, 11. See Levy’s Stores, Inc., v. Endicott-Johnson Corp., 272 N. Y. 155; Atwood v. Beirne, 73 Hun, 547.

The record reveals no evidence even tending to show that the criminal proceeding was terminated in favor of the accused, or discontinued solely at the request of the complainant. All the evidence is to the effect that it was discontinued as the result of an agreement or compromise between the plaintiff and the defendant. When arraigned before the justice of the peace on August 17, 1936, the plaintiff pleaded not guilty, and refused to proceed without the aid of counsel. After it was learned that the plaintiff’s counsel could not appear that evening, the plaintiff and the defendant reached an agreement which was reduced to writing. It provided in substance that the plaintiff agreed to allow the defendant for a period of one week commencing August 18th to send as much help as was necessary to the plaintiff’s farm to remove the crops to an extent sufficient to satisfy all claims and debts owed by the plaintiff to the defendant. It further provided that a constable was to be furnished at the plaintiff’s expense to see that all of the crop was delivered to the defendant. After entering into the agreement the criminal proceeding was adjourned to August 26th. On that day it was further adjourned to August 28th at the request of counsel for the plaintiff. On August 28th the parties appeared again before the justice of the peace, but counsel for the plaintiff failed to appear and, after waiting an hour, the justice of the peace suggested that the parties discuss the matter in an attempt to arrive at a settlement. An agreement was discussed, but the plaintiff, who is illiterate, refused to sign any written agreement. This agreement apparently was never reduced to writing. All the evidence, however, is to the effect that the parties did arrive at an oral agreement. The justice of the peace, the attorney for the complainant Bobinski, and Bobinski himself, all testified that an oral agreement was reached with the plaintiff in accordance with which the plaintiff was to have until November 1st to satisfy the chattel mortgage, and that he was to do this by the sale of the mortgaged crop and any other produce. It was further agreed that whatever the plaintiff should sell during the two months’ period should be sold to the defendant or the proceeds of sale to others should be turned over to the defendant; and that if the plaintiff needed any money to pay help or current expenses, the defendant would advance such money. The justice of the peace testified that it was on the basis of this agreement that the criminal proceeding was discontinued. There is an entry in the docket of the justice of the peace, which was made within a week after August 28th, which reads, “ Agreement reached between plaintiff and def. Case discontinued.”

There is no evidence in the record in conflict with this testimony concerning the oral agreement. There is no denial by the plaintiff that such an agreement was reached on August 28th. The plaintiff, although illiterate, had served as a juror and he apparently had little difficulty answering most questions. When interrogated concerning the oral agreement, he at first replied that he did not remember, and was confused as to the date. Finally, when asked whether he remembered having a talk in which it was stated that he was to have until November to complete payment on the mortgage, he replied that he remembered that they had given him two weeks to deliver the crop, but that the time given to him was two weeks and not two months.

Thus all the evidence in the case shows that the criminal proceeding was dismissed on the basis of an agreement between the parties. Under such circumstances the plaintiff is not entitled to maintain an action for malicious prosecution.

The judgments should be reversed and complaint dismissed, with costs in all courts.

Lehman, O’Brien, Hubbs, Loughran and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Judgments reversed, etc.


text:
    In the Matter of the Estate of Esther A. Rechtschaffen, Deceased. Nathan Zucker, Appellant; Louis Rechtschaffen, Respondent.
    Argued May 27, 1938;
    decided July 7, 1938. '

      David Morgulas and M. Carl Levine for appellant.
    Error was committed in excluding the records of the Magistrate’s Court finding the respondent guilty of being a disorderly person. (Schindler v. Royal Ins. Co., 258 N. Y. 310; People v. Schenkel, 258 N. Y. 224; People v. Dimitry, 163 Misc. Rep. 279; Matter of Vogel, 251 App. Div. 741.) The records of conviction in the Magistrate’s Court constitute findings of abandonment and failure to support. (People ex rel. Demos v. Demos, 115 App. Div. 410.)

      David Getzoff for respondent.
    The motion to strike the records of the convictions from the record was properly determined. (Collins v. Hydorn, 135 N. Y. 320; Rathbone v. Hooney, 58 N. Y. 463; Green v. Altenkirch, 176 App. Div. 320; People v. Houtman, 197 App. Div. 84; People ex rel. Commissioner of Public Charities v. Duffin, 68 Misc. Rep. 290; People v. Crouse, 86 App. Div. 352; Chandler v. Chandler, 272 N. Y. Supp. 306; Costa v. Costa, 286 N. Y. Supp. 585.) The proceedings in the Family Court did not establish an abandonment or failure or neglect to provide. (Aronowitz v. Aronowitz, 287 N. Y. Supp. 130; People ex rel. Commissioners of Charities v. Cullen, 153 N. Y. 629; People v. Paaschen, 105 Misc. Rep. 417; People ex rel. Feeney v. Dersche, 78 App. Div. 626; People v. Pettit, 74 N. Y. 320; People v. Schenkel, 258 N. Y. 224; People ex rel. Commissioner of Public Charities v. Duffin, 68 Misc. Rep. 290; Matter of Sadowski, 284 N. Y. Supp. 521.) The respondent did not abandon or neglect or fail to provide for the decedent. (Bohmert v. Bohmert, 241 N. Y. 446; McKee v. McKee, 271 N. Y. Supp. 384; Fein v. Fein, 261 N. Y. 441; Davis v. Davis, 75 N. Y. 221; People v. Schenkel, 258 N. Y. 224; People ex rel. Demos v. Demos, 115 App. Div. 410; People v. McCarthy, 139 Misc. Rep. 746; 257 N. Y. 567; Matter of Hess, 143 Misc. Rep. 335; City of New York v. Kaiser, 125 Misc. Rep. 637. The burden of proving an abandonment by a surviving spouse is upon those who assert it and who thereby hope to establish the right or privilege to take the intestate’s property free of any claim of either spouse. (Matter of Wheeler, 156 Misc. Rep. 830; Matter of Green, 280 N. Y. Supp. 692; Matter of Lawson, 287 N. Y. Supp. 9.
   O’Brien, J.

Esther Annie Rechtschaffen died intestate a resident of New York county in September, 1936, leaving as survivors her husband, this respondent, Louis Rechtschaffen, a nephew, this appellant, Nathan Zucker, and other collateral relatives. Upon petition by the nephew and cross-petition by the husband, the Surrogate issued letters of administration to the husband, this respondent.

The question is whether the husband, by refusing or neglecting to provide for his wife, or by abandoning her, has forfeited his interest in the estate and thus lost his right to appointment as administrator. If he has not so forfeited his right, and is entitled to share in the estate, he takes precedence over all others in appointment as administrator. (Surr. Ct. Act, § 118.) Section 87 of the Decedent Estate Law (Cons. Laws, ch. 13) provides: “No distributive share of the estate of a decedent shall be allowed under the provisions of this article * * * (c) * * * to a husband who has neglected or refused to provide for his wife, or has abandoned her.” The appellant in his petition alleges that respondent abandoned his wife twenty years prior to her death and has neglected and refused to provide for her and to contribute to her support. The burden is upon him to establish these allegations. The Surrogate held that the preponderance of the evidence on the issues of abandonment and failure to provide is in favor of the husband but, in reaching this conclusion, he struck from the record certain records of the Magistrate’s Court and Domestic Relations Court which we deem relevant. The decree adjudges that appellant has failed to prove that the respondent husband abandoned, neglected and failed to provide for decedent.

Decedent, while employed as a cook, in the year 1908 married respondent. From that date until 1917, decedent and her husband were engaged in the laundry business when, as the witnessess, court and counsel state, they separated.” The capital for this business had been supplied by the wife. The circumstances under which they ceased to live together are thus described by the daughter of respondent who is the stepdaughter of decedent: “ One day we came home — I came home from the store and I found the apartment empty. I ran back to the store and told Papa that I couldn’t get into the apartment. * * * And he went to the apartment and everything was empty. * * * Q. Was the furniture in the apartment? A. No. Q. Did you see this decedent at the time? A. No. * * * Q. Did you see her after that? A. I have seen her when she summoned Papa to court. * * * Q. After, as you testified, your father came to the apartment and found it empty, what did you and your father do? A. We had to stay in the store. * * * Q. You mean, you slept in.the store? A. Yes, on the floor. * * * My brother left — went to Baltimore at the time, when my stepmother broke up house.” In addition to this testimony, the Surrogate evidently gave consideration to testimony by the decedent in a proceeding, in which she charged her husband with failure to support, before a city magistrate February 8, 1917, which is embodied in respondent’s Exhibit 2. This exhibit was admitted without objection but apparently by consent. In that proceeding, decedent as complainant admitted that she had sold the furniture, that she did not intend to live in the apartment, that if her husband came back, she would not stay with him and that “ I can’t live with him. He make me sick. I have the key.” After this separation, decedent returned to her former employer. The husband did not know where she lived after the separation in 1917. Respondent testified in this proceeding before the Surrogate that, pursuant to orders of court, he paid his wife three dollars and fifty cents a week and four dollars a week until he became ill in December, 1935.

The Surrogate admitted in evidence and later struck out records in Magistrate’s Court and Domestic Relations Court adjudging respondent husband to be a disorderly person by reason of the fact that his wife was in danger of becoming a burden upon the public and ordering him to pay three dollars and fifty cents per week for her support from November 2, 1917, the date of the first order, the same sum from November 26, 1918, the date of the second order, and other records indicating delinquency in payments.

The proceedings in the Domestic Relations Court and ¡ the Magistrate’s Court which resulted in judgments | that defendant was a disorderly person necessarily | included the issues whether this respondent husband f had abandoned his wife without adequate support or ! left her in danger of becoming a burden upon the public ¡ or neglected to provide for her according to his means. 1 A disorderly person is defined as one who is guilty of ! these acts or omissions (Code Crim. Proc. § 899, ; subd. 1), and proof of the judgments of the Domestic ; Relations Court and the Magistrate’s Court that respondent was a disorderly person is prima fade evidence in ’ the present proceeding that he neglected to provide for his wife according to his means. (Schindler v. Royal Ins. Co., 258 N. Y. 310, 314.) The husband’s obligation ' of support continues so long as the marriage relation is not dissolved or limited by a decree of divorce or separation. (People v. Schenkel, 258 N. Y. 224, 226.) Therefore, in deciding the issue in this proceeding whether respondent neglected or refused to provide for his wife within the meaning of section 87 of the Decedent Estate Law, the effect of these quasi-criminal proceedings in the inferior courts should be considered in relation to all the other evidence in the case. They do not as matter of law establish abandonment or failure to provide, but cannot be regarded as wholly irrelevant. We think, therefore, that error was committed in striking from this record the records in the inferior courts.

The orders should be reversed and the matter remitted to the Surrogate’s Court to proceed in accordance with this opinion, with costs to abide the event payable out of the estate.

Lehman, Httbbs, Loughran, Finch and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Ordered accordingly.


author: Per Curiam.

text:
    Jennie Weingarten et al., Appellants, v. Henry M. Rinder et al., Respondents.
    Argued June 2, 1938;
    decided July 7, 1938.

      Sidney S. Bobbé for appellants.
    There was a failure to show compliance with the provisions of the Lien Law (Cons. Laws, ch. 33), and the purchasers of the stock did not show good title in themselves. (Mowry v. Sanborn, 68 N. Y. 153; Weir v. Birdsall, 27 App. Div. 404; Van Vleck v. Enos, 88 Hun, 348; Wehrum v. Wehrum, 179 App. Div. 814; 227 N. Y. 611; Deutsch v. Haab, 135 App. Div. 756.) It was error to refuse to strike out the testimony as to the conference between the attorneys, and, in any event, there was no evidence to justify the conclusion that the plaintiffs were estopped by reason of that conference. (Lewis v. Duane, 141 N. Y. 302; Sherman & Sons Co. v. Princess Shirt Waist Mfg. Co., 213 App. Div. 140; Barrett v. Third Ave. R. R. Co., 45 N. Y. 628.) The Statute of Limitations is not a bar.
      (Roberts v. Berdell, 61 Barb. 37; 62 N. Y. 644; Ganley v. Troy City Nat. Bank, 98 N. Y. 487; Hanover Fire Ins. Co. v. Morse D. & R. Co., 270 N. Y. 86.) Appellants established a cause of action against the purchaser on the first sale. (Mullen v. Quinlan & Co., 195 N. Y. 109; Pease v. Smith, 61 N. Y. 477; Marine Bank v. Fiske, 71 N. Y. 353.)

      A. Michael Katz, Max Horowitz and Milton A. Herman for Henry M. Hinder et al., respondents.
    Appellants failed to prove a prima facie case for the return of the securities. (Griffin v. Long Island R. R. Co., 101 N. Y. 348; Thorer & Hollander, Inc., v. Fuchs, 241 App. Div. 359; McCurdy v. Brown, 1 Duer, 101.) The agreement was properly received in evidence regardless of whether or not it was executed by the specified amount of creditors. Furthermore, the burden was on the appellants to prove that it was not so executed. (Western R. R. Co. v. Bayne, 75 N. Y. 1; Adams v. Roscoe Lumber Co., 159 N. Y. 176; Levkoff v. Gutterman, 215 App. Div. 828; Lawrence v. Simons & Taft, 4 Barb. 354; Wheeler v. Board, 12 Johns. 363; Duer v. Twelfth St. Reformed Church, 31 N. Y. St. Repr. 975.) The agreement which was held to estop appellants was within the implied, if not express, authority of their attorney. (Cox v. N. Y. C. & H. R. R. R. Co., 63 N. Y. 414; Poucher v. Blanchard, 86 N. Y. 256.) The appellants are barred by the six-year Statute of Limitations, which commenced to run in May, 1929, when the securities were delivered to the trustees. (Bachmann-Bechtel Brewing Co. v. Gelh, 154 App. Div. 849; Kram v. Manufacturers Trust Co., 238 App. Div. 680; Clinton Trust Co. v. 142-144 Joralemon St. Corp., 237 App. Div. 789; Susquehanna Silk Mills v. Rebora, 238 App. Div. 100; Slater v. Slater, 208 App. Div. 567; 240 N. Y. 557; Public Service Comm. v. Brooklyn Borough Gas Co., 189 App. Div. 62; Diefenthaler v. Mayor, 111 N. Y. 331; Keys v. Leopold, 241 N. Y. 189; Matter of Deitz, 134 Misc. Rep. 393; Hammerstein v. Equitable Trust Co., 209 N. Y. 429;
      Brown v. Bronson, 93 App. Div. 312; Matter of Furey v. Graves, 148 Misc. Rep. 785; 241 App. Div. 897; 266 N. Y. 415.)

      Harry Kerner for Morris Wachtel et al., respondents.
    Appellants failed to prove a cause of action. (Thompson v. Blanchard, 4 N. Y. 303; Hubbard v. Briggs, 31 N. Y. 518; Gillet v. Roberts, 57 N. Y. 28; Goebel v. Clark, 242 App. Div. 408; Tompkins v. Morton Trust Co., 91 App. Div. 274;, Matter of Petrosemolo, 152 Misc. Rep. 419; Parmely v. Showdy, 86 Misc. Rep. 634; Rothschild v. Title Guar. & Trust Co., 204 N. Y. 458; Bopp v. New York Electric Vehicle Transp. Co., 177 N. Y. 33; Ward v. Iroquois Gas Corp., 233 App. Div. 127; Lindemann v. Wolf, 234 App. Div. 291; Moshier v. City of New York, 190 App. Div. 111; Thomas v. Nassau Electric R. R. Co., 185 App. Div. 326; Lopp v. Lopp, 191 App. Div. 500; Hurwitz v. Calvin Realty Corp., 195 App. Div. 416; Caruso v. N. Y. C. R. R. Co., 222 App. Div. 371.)
   Per Curiam.

Plaintiffs alleged and proved facts sufficient to show that the defendant trustees came rightfully into possession of the personal property in question and that title to the personalty and real estate was rightfully transferred into their names. As against those trustees, to maintain the first cause of action set up in the complaint it was essential for the plaintiffs to prove, as they alleged, that the instrument under which possession of the securities was given and the transfers were made was not executed by creditors holding seventy-five per cent in amount of the claims against the debtor or to show that the transfers were voidable for other reasons. This evidence was lacking.

The defendant purchasers acquired upon the attempted sale of a part of the securities no better title than that held by the trustees in view of the notice which the plaintiffs gave to such purchasers prior to the sale. Upon the record in the instant case, to sustain the purported sale such purchasers were required to establish that conditions precedent to the trustees’ acquiring a lien and power to transfer good title had been complied with. There is no evidence of waiver or estoppel by or against plaintiffs. The essential findings upon which the decree in favor of the defendants upon the merits was based were without evidence to support them.

Upon the question as to whether the causes of action set up in the complaint were subject to the provisions of the six-year Statute of Limitations we do not pass. These causes of action did not arise until after the expiration of a reasonable time subsequent to the date of the creditors’ agreement within which a majority of creditors of the debtor in amount must sign, the discovery by plaintiffs of their failure to sign, and a demand for a reassignment and return of the shares of stock and for the execution and delivery by the trustees of a deed to the realty and their refusal to comply with the demand. The date when such a demand was made and refused has been found to be July 12, 1935. The action was commenced on October 9,1935.

The judgments should be modified by striking therefrom the words upon the merits ” from the clause thereof dismissing the complaint, and as so modified should be affirmed, without costs.

Lehman, O’Brien, Hubbs, Loughran, Finch and Rippey, JJ., concur; Crane, Ch. J., taking no part.

Judgment accordingly.


text:
    In the Matter of the Claim of Edward Foster, Respondent, against Gillinder Bros., Inc., et al., Appellants. State Industrial Board, Respondent.
    Argued May 18, 1938;
    decided July 7, 1938.

      Clarence B. Tippett for appellants.
    It is error to charge the employer and carrier with an award for left inguinal hernia as an occupational disease since it is not such as was intended for inclusion within the intent and meaning of paragraph 28 of subdivision 2 of section 3 of the Workmen’s Compensation Law (Cons. Laws, ch. 67), and the findings and conclusions of the State Industrial Board are not competently sustained in fact or in law. (Matter of Goldberg v. 954 Marcy Corp., 267 N. Y. 313; Matter of Nielsen v. Firemen’s Fund Indemnity Co., 239 App. Div. 239; Matter of Aylesworth v. Phoenix Cheese Co., 170 App. Div. 34; Matter of Wilson v. Dorflinger & Sons, 218 N. Y. 84; Matter of Stoerzer v. City of New York, 267 N. Y. 339; Pardy v. Boomhower Grocery

      Co., 178 App. Div. 347; Matter of Sickles v. Ballston R. S. Co., 171 App. Div. 108; Madeo v. Dibner & Bro., Inc., 186 Atl. Rep. 616; Matter of Lerner v. Rump Bros., 241 N. Y. 153; Matter of Alpert v. Powers, 223 N. Y. 97.)

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum of counsel), for State Industrial Board, respondent.
    The disability of the claimant was due to an occupational disease within the meaning of the Workmen’s Compensation Law. (Goldberg v. 954 Marcy Ave. Corp., 276 N. Y. 313; Matter of Alpert v. Powers, 233 N. Y. 97; Matter of Bishop v. Comer & Pollack, Inc., 251 App. Div. 492; Travelers Ins. Co. v. Locke, 56 Fed. Rep. [2d] 443; Marathon Paper Mills Co. v. Industrial Comm., 203 Wis. 17.)
   Per Curiam.

Respondent was employed as a glass gatherer and used an implement known as a punny,” weighing about ten pounds. The finding, supported by evidence, is that the continuous gathering and lifting of glass from a furnace involved a constant twisting and straining of the body. This process, from gradual stretching, resulted in a hernia which is a disease. (Matter of Alpert v. Powers, 223 N. Y. 97,101.) There is medical testimony that claimant’s occupation would produce this disease and there are judicial decisions in other jurisdictions holding that hernia is an occupational disease. (Marathon Paper Mills Co. v. Industrial Comm., 203 Wis. 17; Travellers’ Ins. Co. v. Locke, 56 Fed. Rep. [2d] 443, 444.)

'The order should be affirmed, with costs.

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

• Order affirmed.


text:
    In the Matter of Patrick Cosgrove, Respondent, against William F. Carey, as Commissioner of Sanitation of the City of New York, Appellant.
    Argued May 17, 1938;
    decided July 7, 1938.

      William C. Chanler, Corporation Counsel (Paxton Blair, Henry J. Shields and Charles E. Hirsimaki of counsel), for appellant.

      Martin N. Whyman for respondent.
    Petitioner is entitled to the payment of a pension pursuant to section 552 of the former Charter of the City of New York (L. 1901, ch. 466, as amd.) (Matter of Beach v. Traveler’s Ins. Co., 263 N. Y. 676; Matter of Heitz v. Ruppert, 218 N. Y. 148; Bylow v. St. Regis Paper Co., 179 App. Div. 555.)
   Per Curiam.

Petitioner, a fireman in the Department of Sanitation, was a member of the relief and pension fund of the former Department of Street Cleaning. He became permanently physically disabled and for that reason, upon the certificate of a majority of the medical examiners of the Department of Sanitation, he was discharged from the department. This proceeding was begun to compel payment to him of a pension of fifty dollars per month, in pursuance of former section 552 of the Greater New York Charter (L. 1901, ch. 466, as amd.), upon the theory that his disability occurred while in the actual performance of duty.” The Special Term denied his application, but the Appellate Division, by a divided court, reversed the order. At the time of his discharge he was suffering from Osteo arthritis of spine, arterio sclerosis, hypertension, senility and defective vision.” Osteo arthritis of the spine is an inflammation of the bone and joints and the evidence is that petitioner’s disabilities bear no relationship to any injuries which he sustained in line of duty and are not in any way connected with service in the department.

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

Lehman, O’Brien, Hubbs, Loughran, Finch and JRippey, JJ., concur; Crane, Ch. J., taking no part.

Ordered accordingly.