author: Crane, J.

text:
    J. Brooks Nichols et al., Respondents, v. Clark, MacMullen & Riley, Inc., et al., Respondents, and The Celotex Company, Appellant.

      (Argued January 11, 1933;
    decided February 28, 1933.)

      Hersey Egginton, Albert Stickney and Francis S. Bensel for appellant.
    Appellant has been improperly joined. (Civ. Pr. Act, § 193, subd. 2; May Co. v. Mott Avenue Corp., 201 N. Y. Supp. 189; Greenhouse v. Rochester Taxicab Co., 218 App. Div. 224; New Netherland Bank v. Goodman, 201 N. Y. Supp. 188; Neuss, Hesslein & Co. v. National Aniline & Chemical Co., 120 Misc. Rep. 164; Stern v. Ide & Co., 212 App. Div. 714; Fox v. Western New York Motor Lines, Inc., 257 N. Y. 305; Municipal Service R. E. Co. v. D. B. & M. Holding Corp., 257 N. Y. 423.)

      J. A. Stevenson, Jr., and William W. Lancaster for respondents.
    The claim of the defendants-respondents is properly interposed under section 193, subdivision 2, of the Civil Practice Act. (Municipal Service R. E. Co. v. D. B. & M. Holding Corp., 257 N. Y. 423; Travlos v. Commercial Union of America, 217 App. Div. 352; Hejza v. N. Y. C. R. R. Co., 246 N. Y. Supp. 34; Driscoll v. Corwin, 133 Misc. Rep. 788; Wichert v. Gallagher, 201 N. Y. Supp. 186; 206 App. Div. 756; Prescott & Son v. Nye, 223 App. Div. 356; Kuelling v. Roderick Lean Mfg. Co., 183 N. Y. 78; Statler v. Ray Mfg. Co., 195 N. Y. 478; Hruska v. Parke, Davis & Co., 6 Fed. Rep. [2d] 536; Marsh v. Usk Hardware Co., 73 Wash. 543; Peterson v. Standard Oil Co., 55 Ore. 511.)
   Crane, J.

The Appellate Division has certified to this court the following question: Should the court have vacated the order joining the defendant-appellant as an additional party pursuant to subdivision 2 of section 193 of the Civil Practice Act?”

The defendants made a motion to bring in The Celotex Company on the ground that that company would be hable to them for the claim of the plaintiffs; in other words, that The Celotex Company would be liable over on the judgment roll for any damages recovered by the plaintiffs on the cause of action set forth in the complaint. The motion was granted ex parte and thereafter The Celotex Company made application on affidavits and notice to vacate and set aside the order. The denial of this latter motion having been affirmed by the Appellate Division, the order is here for review upon the certification above quoted.

Two reasons move us to reverse these orders and dismiss The Celotex Company from the case. The complaint sets forth a cause of action against engineers for defective plans and work in connection with the reconstruction of a heating system in the plaintiffs’ house in Convent, Morris county, New Jersey, whereby a fire destroyed the house and contents. The defendants are consulting engineers. The charge against them in the complaint reads as follows:

Seventh. Defendant Clark, MacMullen & Riley, Inc., and defendants Charles W. MacMullen, Champlain L. Riley and Arthur B. Jones in preparing said plans and specifications and in rendering said opinions and recommdenations, negligently and wrongfully recommended and specified that the sheet metal hot air ducts or warm air distributing piping be installed, lagged or covered with a substance known as Celotex/ and said defendant Clark, MacMullen & Riley, Inc., and defendants Charles W. MacMullen, Champlain L. Riley and Arthur B. Jones negligently and wrongfully represented that said ‘ Celotex ’ was suitable and proper for use as a covering for said hot air ducts and warm air distributing piping and negligently and wrongfully represented that said' Celotex ’ was non-inflammable and Was, in fact, fireproof and adequate protection as an insulator for said hot air ducts and warm air distributing piping, whereas in fact, the said Celotex ’ was inflammable and inadequate, dangerous and unsafe for such use, all of which the defendant Clark, MacMullen & Riley, Inc., and defendants Charles W. MacMullen, Champlain L. Riley and Arthur B. Jones knew or should have known.”

As we are analyzing the charge against these defendants note must be taken at this point that the negligence here charged is in the use of Celotex.” The Celotex Company has been brought in by these defendants as it is the manufacturer of Celotex ” and in the defendants’ supplementary pleading or answer served upon The Celotex Company the charge is made that it represented the fire-proof qualities of this Celotex,” and, therefore, would be hable over to the defendant engineers, who recommended it to the plaintiffs on the strength of these representations. More will be said about these supplemental pleadings hereafter, but at this point we desire. to press the continuity of the complaint of the plaintiffs and the complaint of the supplemental answer against The Celotex Company, based upon the inadequacy of Celotex ” as a covering. Paragraph 7 of the complaint, which we have just, quoted, predicates the negligence of the engineers upon the use of " Celotex ” and the defendants have pleaded over against the manufacturer upon the ground that if they are mulcted in damages for using “ Celotex ” The Celotex Company would be liable to them on its representations regarding the merits of the covering. So far so good, and if this were all of the plaintiffs’ complaint we would have no occasion for this analytical statement.

The complaint, however, goes much further, and charges the defendants in the same cause of action with negligence, for which The Celotex Company can in no way be responsible. The eleventh paragraph says that the fire was not only caused through the recommendation of Celotex ” as a covering for the hot air ducts and warm air distributing piping, but continues, with this further allegation of negligence: Said fires were further caused by the negligent, improper and wrongful recommendations, plans and specifications, drawings and blue prints prepared by the defendant Clark, MacMullen & Riley, Inc., and defendants Charles W. MacMullen, Champlain L. Riley and Arthur B. Jones, in that the entire heating equipment or heating plant was so designed therein as to be unsafe and highly dangerous in the normal use thereof, all of which the defendant knew or should have known.” Surely The Celotex Company is not liable to the engineers because the fire was due to their improper plans showing that the entire heating equipment or heating plant was so designed as to be unsafe and highly dangerous. All these allegations are contained in one cause of action. Upon the trial, the proof may go in under any of the allegations, for some of which the “ Celotex ” might be responsible, and for some of which the engineers solely responsible. A judgment against these defendants, engineers, upon such allegations would not be binding upon The Celotex Company, or, to state it more accurately, The Celotex Corn-pant would not be liable over to the engineers on a judgment recovered against them based upon such proof. There is nothing in the record to show that a judgment will ever be entered solely for damages caused by the use of “ Celotex.” For this reason, if no other, The Celotex Company should not have been made a party defendant upon the motion of the principal defendants. Section 193, subdivision 2, relates to those causes of action wherein a person not a party to the action will be liable over to the defendant for the judgment or part of the judgment recovered by the plaintiff against him. The Celotex Company would not be liable over to these defendants for any part of a judgment recovered by the plaintiffs, as, under the allegations in the complaint, the judgment could be, or might be, based entirely or in part upon the sole negligence of the engineers, having nothing to do with “ Celotex.” (Fox v. Western New York Motor Lines, Inc., 257 N. Y. 305; Municipal Service Real Estate Co. v. D. B. & M. Holding Corp., 257 N. Y. 423; Stern v. Ide & Co., 212 App. Div. 714, 719; Greenhouse v. Rochester Taxicab Co., 218 App. Div. 224.)

Again, we do not find that the allegations of the complaint and the allegations of the supplemental answer match up so as to show that the causé of actions are, or will be the same in other particulars. The complaint states in paragraph 7, as we have quoted it above, that the defendants wrongfully recommended that the sheet metal hot air ducts or warm air distributing piping be covered with a substance known as Celotex ” and that they neghgently and wrongfully represented that Celotex ” was suitable for the purpose of covering said hot air ducts, and neghgently and wrongfully represented that said Celotex ” was non-inflammable and was in fact fireproof and an adequate protection as an insulator for said hot air ducts.

These defendants by their supplemental answer say that the use of Celotex was due to the recommendations of The Celotex Company and that it is liable for its false representations. What were the recommendations of The Celotex Company? They are stated to be these: that “ Celotex ” had been advertised by The Celotex Company for many uses in building and construction; and that it was sold as an insulating material for the covering of hot air and cold air ducts; the defendants say that The Celotex Company recommended to them the use of Celotex as an insulating material for the covering of hot air and cold air ducts, and stated that it was superior to other insulating materials. In other words, the only representations made by The Celotex Company were that Celotex ” was an insulating material fit for the covering of hot air and cold air ducts and was better than other insulating materials. The defendants do not say that Celotex was recommended to them as fit for insulating the ducts and pipes as designed and planned by these engineers. The complaint says that the engineers claimed that “ Celotex ” was not inflammable and was an adequate insulator for hot air ducts and pipes as planned and designed by them. The only representation of The Celotex Company was that Celotex was sold by the company and recommended by it as a proper covering for ducts and pipes generally. In other words, the representations made by, the defendants to the plaintiffs are not the same as those made by The Celotex Company to them. We recognize that this is rather a strict construction of the pleadings and yet under this section of the Civil Practice Act the liability of the, third party should clearly appear, for the reason that judgment is to go against the third party as well as against the principal defendants. The object is to prevent a circuity of action. The determination of the facts to be tried will settle both claims. The causes of action must, therefore, be the same, or, at least, based upon the same grounds, although arising, of course, out of different relationships.

Just what the nature of the defendants’ claim against The Celotex Company may be we need not at this time consider. Their theory seems to be that of such cases as Statler v. Ray Mfg. Co. (195 N. Y. 478 [known as the Coffee Urn explosion .case]). These cases involve the doctrine of the sale of articles inherently dangerous, following the doctrine of Thomas v. Winchester (6 N. Y. 397); Devlin v. Smith (89 N. Y. 470), and MacPherson v. Buick Motor Co. (217 N. Y. 382). There is no claim in this complaint that the Celotex ” manufactured by the company was defective or improperly manufactured or inherently dangerous. The cause of action, if any, is rather based upon the recent doctrine of negligence in the spoken word and liability for carelessness in making statements upon which others were expected to rely and upon which they did act to their damage. A negligent statement may be the basis for recovery of damage. (International Products Co. v. Erie R. R. Co., 244 N. Y. 331; Glanzer v. Shepard, 233 N. Y. 236; Ultramares Corp. v. Touche, 255 N. Y. 170. See, also, 42 Harvard Law Review [1929], p. 733; 24 Harvard Law Review, 415; 14 Harvard Law Review, 184, and 36 Yale Law Journal, 1028; Doyle v. Chatham & Phenix Nat. Bank, 253 N. Y. 369.)

The recommendations relied upon by the defendants in this case do not amount to warranties, as there was no sale. No purchases were made of The Celotex Company by the defendants or their agents. Therefore, any express or implied warranty is not in the case. The utmost that has been pleaded are recommendations or representations, statements carelessly and negligently made, upon which recommendations the engineer defendants acted, it is said, to their loss. We think that if The Celotex Company recommended to the engineers Celotex ” as a fit and proper covering for the ducts and pipes as used and planned for the plaintiffs’ house in New Jersey, or for siich a like or similar use, and the defendants acted upon the representations and statements, and will suffer damage in consequence, that then The Celotex Company may be liable for its careless and negligent words and representations, if, in fact, they were false and untrue. The respondents are in error in thinking that the supplemental answer cannot be considered by us. To answer the certified question requires a determination of the sufficiency of the pleading. The prior decision of the Appellate Division on this point is not binding on us.

As above indicated, the pleadings do not set forth these matters sufficiently to bring this supplemental answer within the sections of the Civil Practice Act (§ 193, subd. 2), and the orders, therefore, should be reversed, and the motion to vacate the order making The Celotex Company a party, granted, with costs in all courts. The question certified is answered in the affirmative.

Pound, Ch. J., Lehman, Kellogg, O’Brien and Hubbs, JJ., concur; Crouch, J., concurs on the first ground stated in the opinion only.

Ordered, accordingly.


source: Caselaw Access Project

license: Public Domain

text:
    Bronislawa Laka, as Administratrix of the Estate of Frek Laka, Respondent, v. Jan Krystek, Appellant.

      (Argued January 20, 1933;
    decided February 28, 1933.)

      Thomas B. Lee and Sidney Otis for appellant.
    An action may later be prosecuted by husband against wife for contribution, no matter what the outcome of this action, and no subsequent action by plaintiff against wife is threatened or conceivable, no matter what the outcome of this action. Therefore, the wife is not interested in the event. (Nearpass v. Gilman, 104 N. Y. 506; Lecour v. Importers & Traders Nat. Bank, 61 App. Div. 163; Hoffman v. Union Dime Sav. Bank, 95 App. Div. 329; Glennan v. Rochester Trust & Safe Dep. Co., 152 App. Div. 316; 209 N. Y. 12; Podmore v. Seaman’s Bank,
      35 Misc. Rep. 379; Putnam v. Lincoln Safe Dep. Co., 87 App. Div. 13; Payne v. Kerr, 21 N. Y. Supp. 880; West End Brewing Co. v. Utica Trust & Deposit Co., 175 App. Div. 477; Kitchen & Co. v. Taylor, 14 N. Y. St. Repr. 398.) Neither the judgment nor the record will be evidence for or against the wife and the witness in a later action. (Wallace v. Straus, 113 N. Y. 238; Nearpass v. Gilman, 104 N. Y. 506; Franklin v. Kidd, 219 N. Y. 409; West End Brewing Co. v. Utica Trust & Deposit Co., 175 App. Div. 477; Van Nuys v. Terhune, 3 Johns. 82; Eisenlord v. Clum, 126 N. Y. 552; Hobart v. Hobart, 62 N. Y. 80; Connelly v. O’Connor, 117 N. Y. 91.)

      Thurman W. Stoner and Angelo F. Scalzo for respondent.
    A witness is disqualified when he is interested in the event as differentiated from an interest in the question. (Civ. Pr. Act, § 347; Eisenlord v. Clum, 126 N. Y. 552; Croker v. New York Trust Co., 245 N. Y. 17; Scheu v. Blum, 136 App. Div. 592.) A common-law action may be prosecuted by the plaintiff against the wife of the defendant for money had and received. (Miller v. Schloss, 218 N. Y. 400; Roberts v. Ely, 113 N. Y. 128; Dwelle-Kaiser Co. v. Ætna Casualty & Ins. Co., 211 App. Div. 369; New York Trust Co. v. Gleason, 77 N. Y. 400; Commercial Nat. Bank v. Sloman, 194 N. Y. 506; Town of Bleecker v. Balye, 138 App. Div. 706; La Forge v. Cornell, 127 N. Y. Supp. 453.) The wife of the defendant is interested in the event. (Croker v. New York Trust Co., 245 N. Y. 17; Franklin v. Kidd, 219 N. Y. 409; Albany County Sav. Bank v. McCarty, 149 N. Y. 71.)
   Crane, J.

This action on a promissory note, brought in the City Court of Niagara Falls, resulted in a judgment for the plaintiff in the sum of $500 which, on appeal, was reversed by the County Court, and the complaint dismissed. On appeal to the Appellate Division that court reversed the County Court and reinstated the judgment for the plaintiff while we, in turn, reviewing this case by permission of the Appellate Division, are about to reverse and reinstate the judgment for the defendant. With these vicissitudes it is apparent that a question is involved of more or less difficulty, and about which there may be a substantial difference of opinion. Whether the wife may testify in favor of her husband about the payment of a note made by him, when she may be interested in the result, is the question which has puzzled the courts. A statement of facts is necessary to appreciate the perplexities.

Jan Krystek, on December 8,1925, made his promissory note, payable on demand to the order of Frek Laka, for $500, at the Falls National Bank, Niagara Falls. The payee having died, his administratrix brought this action to recover the full amount thereof, with interest, as the instrument was found among his possessions at the time of his death. On the' trial in the City Court, Julia Krystek, the wife of the defendant, testified as to payment, and related the circumstances, which the city judge subsequently considered disqualified her, and in consequence of which he struck her testimony out and gave judgment for the plaintiff. The substance of her testimony was that she and her husband owned some lots on which there was a balance due. They borrowed the $500 from Frek Laka to make this payment. The money was given into the hands of the wife, as she always handled the money, but Frek Laka looked to the husband as the debtor for payment. It was his debt, for the wife says that when the note for the money was signed Laka said, “ It was sufficient to have the husband’s signature without mine.” Mrs. Krystek’s testimony regarding payment impressed the trial court so favorably that the judge said in his opinion, had her evidence been competent, he would have given judgment for the defendant. Thus we see the importance of determining the competency of thiS witness.

The Civil Practice Act, section 347, says, that upon the trial of an action, a person interested in the event shall not be examined as a witness in his own behalf against the administrator of a deceased person. The true test of the interest of a witness is that he will either gain or lose by the direct legal operation and effect of the judgment, or, that the record will be legal evidence for or against him in some other action. It must be a present, certain and vested interest and not an interest uncertain, remote or contingent. (Hobart v. Hobart, 62 N. Y. 80, 84.) In that case an action was brought by an heir at law of a deceased grantor to set aside deeds because of incompetency and for fraud and undue influence. Other heirs, not parties to the action, were called to testify as to the grantor’s mental condition, and although they, too, had received deeds not the subject of the litigation, the court held that they were not disqualified. The most that can be claimed is, that these persons were interested in the question involved, but such interest is not sufficient to disqualify.” This rule Was again applied in Nearpass v. Gilman (104 N. Y. 506, 509), where notes had been made by the defendant through his general agent, Arthur Gilman. Objection was made that the agent could not prove payment, as he was interested in the event, his interest being that, if he failed to establish payment, he Would be liable to his principal for misappropriation of funds or for negligence in permitting the creditor to retain the paid securities, and the court said: Assuming that a possible liability of the witness upon one or the other of these grounds might exist, it is obvious that it would find its origin in facts gaining no effect or potency from the event of the action or the judgment for the plaintiffs in which it might terminate. That judgment could not bind him directly by its own force, nor indirectly as evidence against him. It might prove to be the occasion or cause of a suit against him by his principal, but in defending that suit he would be utterly unaffected by the judgment against his principal and entirely at liberty to show a payment in fact made by him with his principal’s funds and explain the failure to take up the notes and checks. The judgment against his principal would not hamper or affect him in the least.” The witness was held to be qualified although he was deeply interested in the result, as, if payment of the notes had been established by his testimony that would end the matter and he could not be sued by his principal for misappropriation or neglect.

Eisenlord v. Clum (126 N. Y. 552, 558) followed, wherein it was held that a mother was not disqualified from testifying as to the legitimacy of her offspring on the ground that if her testimony established the son as heir at law she would be entitled to dower in the estate. This court then said (year 1891): “ All legislation on the subject has been in favor of greater liberality in the rules relating to the competency of witnesses.” And the same was held as to a husband, whose right to curtesy might result from his testimony in Albany County Sav. Bank v. McCarty (149 N. Y. 71, 84), wherein the rule was again stated in brief as follows: “An interest in the' question is not enough to disqualify, as that is not an interest in the event. Unless the witness will gain or lose by the event, either directly, as in money, or indirectly, because the record could be used as evidence for or against him, he is not disqualified.”

And finally, in Franklin v. Kidd (219 N. Y. 409, 412), it was held that the gain or loss must result to the witness from the judgment in its direct or immediate operation:

“ One is not a person interested in the event ’ under section 829 of the Code merely because the outcome may save him the trouble of another lawsuit. * * * To make out an interest in the event, the judgment must not merely leave open the possibility of another action. It must be evidence in the other action, and evidence adverse to the witness.” (See, also, Wallace v. Straus, 113 N. Y. 238, 242.)

Let us apply these rules to Mrs. Krystek’s situation. In the first place, the promisee looked to the husband for payment even though the wife was interested in the loan and had a half interest in the property. A creditor can choose his debtor, and, in this instance, Laka chose the husband. He took his note for the loan and told the wife that the husband’s signature was sufficient without her assuming any obligation. The chances, therefore, of Laka or his administratrix suing the wife for this loan are indeed remote, if not impossible. Even if we consider the original transaction as binding both the husband and the wife to repay the loan, the giving of the note under the circumstances stated might materially affect the wife’s liability. In Massachusetts there would be the presumption of release or payment by her. (Thacher v. Dinsmore, 5 Mass. 299.) And in Wright v. First Crockery Ware Co. (1 N. H. 281) it was said to be even at that early day well settled that if a creditor agrees to accept a promissory note of his debtor or a third person in satisfaction of a simple contract debt, the debt is extinguished. Mrs. Krystek’s liability to Laka or his estate for the amount of the loan, or her share of it, is such an improbable possibility, in view of the circumstances, that she was not disqualified for this reason.

The judgment recovered against the husband, on the other hand, would not be binding upon her. As between Laka’s estate and the husband, the judgment would determine that the note had not been paid. But this judgment would not be evidence of the fact as against her. We have seen by what I have said above that Laka’s estate, in all likelihood, had no claim against her upon the debt. The husband, if he pays the note or the judgment recovered against him on the note, may have a claim against his wife to recover her half of the amount. He may bring action against her to recover her share of the debt. Naturally if the wife by her testimony can establish that the note, or the debt, has been paid by her, the husband will make no claim and can bring no suit. The debt will have been wiped out. To this extent the wife is interested in establishing that the note has been paid, and this interest may be considered as affecting her credibility as a witness. Under the authorities above cited, it does not establish her disqualification as a witness so as to prevent her from testifying. The judgment against her husband is not evidence in any litigation between him and her that the note has not been paid. She may still prove by her testimony or by other evidence not introduced in the payee’s action that payment had been made. The judgment, therefore, against the husband does not affect her legal rights. A ■ judgment in his favor would. But this contingency or possibility of being sued by the husband for her share of the amount of the note, if payment be not established, is not such an interest in the event as disqualifies her from testifying.

To repeat, the judgment against him is not binding upon her. She still has all the defenses and rights which she ever had to meet his claim for her share of the debt. A judgment in his favor establishing payment is naturally a matter of interest to her, but does not create such an interest in the event as precludes her as a witness merely because it removes the likelihood or possibility of his bringing any action.

We have assumed in the opinion thus far, by way of argument only, that the wife, by her testimony, had expressed some obligation to her husband to pay off the debt. We by no means intimate that the evidence proves this fact or even tends to prove it. Although Mrs. Krystek might have been willing to sign the note — and the $500 was used in paying for property taken in the name of both husband and wife — it by no means follows that these facts establish any debt or obligation upon her part to repay to the husband half the amount. It may be that the husband assumed; and intended to assume, the sole obligation to repay the loan, and intended that title taken in the name of his wife, or in their joint names, should create no legal debt upon her part to pay the promised consideration. As with Laka, so with the husband, the possibility of the husband pressing a claim against his wife for her share of the judgment or the note is, in view of the facts and circumstances of this case, very uncertain, remote and contingent. This is another reason for permitting her to testify.

For these reasons the judgment of the Appellate Division should be reversed, and that of the County Court affirmed, with costs in this court and in the Appellate Division.

Pound, Ch. J., Kellogg, O’Brien and Hubbs, JJ., concur; Lehman, J., concurs on first ground stated in opinion; Crouch, J., not sitting.

Judgment accordingly.


author: O’Brien, J.

text:
    Arthur P. Jackson, Appellant, v. State of New York, Respondent.

      (Argued January 24, 1933;
    decided February 28, 1933.)

      Charles L. Earl for appellant.
    The State, pursuant to law, took over the bridge and was liable for its maintenance on the day it collapsed. (Lendrum v. Village of Cobleskill, 192 App. Div. 828; Highway Law, § 19-a; Burrill v. Town of Russia, 230 App. Div. 774.) The State was negligent and is liable for damages accordingly. (Highway Law, §§ 19-a, 74, 176; James v. D., L. & W. Ry. Co., 233 App. Div. 617.)

      John J. Bennett, Jr., Attorney-General (Harold P. Burke of counsel), for respondent.
    The State is not liable for damages resulting from its failure to properly maintain, supervise, control and guard the bridge, even conceding that it had legally assumed the control, supervision and maintenance of said bridge. (Miller v. State, 231 App. Div. 367; Court of Claims Act, § 12-a; Highway Law, § 176; Paddleford v. State, 192 App. Div. 870; Deyoe v. State, 112 Misc. Rep. 426; Belair v. State, 212 App. Div. 209.) There was no negligence on the part of the State. (Mills v. City of Brooklyn, 32 N. Y. 489; Hines v. City of Lockport, 50 N. Y. 238; Urquhart v. City of Ogdensburg, 91 N. Y. 67; Monk v. Town of New Utrecht, 104 N. Y. 552.)
   O’Brien, J.

West Canada creek forms part of the boundary between Oneida and Herkimer counties and its waters are spanned by the Comstock bridge which divides sections of a State highway traversing territory in these counties. Pursuant to section 19-a of the Highway Law (Cons. Laws, ch. 25) the State Superintendent of Public Works condemned the bridge as unsafe for travel by vehicles weighing more than four and a half tons and propelled at a rate of speed in excess of ten miles per hour. Notice to that effect was posted by his order and under the statute the State thus assumed the obligation to supervise the maintenance of the bridge. During the time that the State was responsible for this maintenance and while claimant was driving a car which with its occupants weighed less than four and a half tons and which was proceeding at a rate of speed less than ten miles per hour, the bridge collapsed and plaintiff and the other passengers were injured. The Court of Claims and the Appellate Division have unanimously found on sufficient evidence that claimant’s injuries were caused without negligence by him and by the' sole negligence of employees of the State.

After the bridge was condemned and the notice was posted, no obligation to supervise its maintenance rested upon either county or upon either of the adjoining towns. (Burrill v. Town of Russia, 230 App. Div. 774; affd., 261 N. Y. 571.) By section 19-a of the Highway Law that duty devolved upon the State, but neither that section nor section 176 of the Highway Law confers upon the injured person any right to enforce his claim. Not until the bridge should be repaired would it become, by virtue of section 19-a, subdivision 6, a part of the highway for defects in which the State by section 176 assumes liability.

The question remains whether the Legislature intended by section 12-a of the Court of Claims Act, as added by chapter 467 of the Laws of 1929, to include this claim and others of a similar nature. It reads: “The state hereby waives its immunity from liability for the torts of its officers and employees and consents to have its liability for such torts determined in accordance with the same rules of law as apply to an action in the supreme court against an individual or a corporation, and the state hereby assumes liability for such acts, and jurisdiction is hereby conferred upon the court of claims to hear and determine all claims against the state to recover damages for injuries to property or for personal injury caused by' the misfeasance or negligence of the officers or employees of the state while acting as such officer or employee. * * * ” The State thus provides for four things wjiich shall result from the infliction of personal injuries due to the negligence of its officers and employees while acting as such officers or employees. It waives immunity from liability, it consents to have its liability determined in accordance with the rules of law applicable to individuals, it assumes liability and it confers jurisdiction upon the Court of Claims to hear and determine such claims of liability. The provisions of section 12 of the Court of Claims Act (Laws of 1920, ch. 922, formerly Code Civ. Pro. § 264) must, in view of the decisions, be deemed too narrow to cover claims of this character, but by section 12-a (as added by Laws of 1929, ch. 467) those provisions must be regarded as extended, supplemented and enlarged. The deficiencies pointed out in Smith v. State (227 N. Y. 405) have been supplied. Section 12-a goes beyond the point of a mere waiver of immunity from suit. It waives immunity not only from suit but also from liability. It is the positive and specific enactment, clearly expressed, which was suggested by Smith v. State (supra). By section 12 the- defense of sovereignty in an action was removed. Suit was allowed but liability was held not to have been waived. By section 12-a liability when proved by the rules of law applicable to individuals, has been affirmatively assumed and jurisdiction to determine whether such a liability has been proved is conferred upon the Court of Claims. In the assumption of liability and the creation of a remedy to enforce a liability, heretofore absent by reason of the sovereignty of the tort feasor, the sovereign has not generously dispensed charity. Section 12-a constitutes a recognition and acknowledgment of a moral duty demanded by the principles of equity and justice. It includes only claims which appear to the judicial mind and conscience to be such as the Legislature may declare to be affected by a moral obligation and which the State should satisfy. (Farrington v. State, 248 N. Y. 112, 115.) It declares that no longer will the State use the mantle of sovereignty to protect itself from such consequences as follow negligent acts of individuals. It admits that "in such negligence cases the sovereign ought to and promises that in future it will voluntarily discharge its moral obligations in the same manner as the citizen is forced to perform a duty which courts and Legislatures have so long held, as to him, to be a legal liability. It transforms an -unenforceable moral obligation, into an actionable legal right and applies to the State the rule respondeat superior.

The grant of a remedy where none was available is equivalent to the creation of a cause of action, but this court has never held, at least in respect to actions against the State, that, merely because the statute establishing it is retroactive, it is unconstitutional. (Jacobus v. Colgate, 217 N. Y. 235, 242.) On the contrary, we have recently decided that as to such a retroactive statute the State cannot be heard to complain on constitutional grounds. (Sweeney v. State, 251 N. Y. 417.) Numerous cases appear in the books interpreting statutes which confer upon individuals legal rights and their accompanying remedies based upon moral obligations of the State or its subdivisions and which have been enacted after the event. Nevertheless their validity has not been successfully assailed on that ground. (Cole v. State, 102 N. Y. 48; O’Hara v. State, 112 N. Y. 146; Wrought Iron Bridge Co. v. Town of Attica, 119 N. Y. 204; People ex rel. Dady v. Prendergast, 203 N. Y. 1; Monro v. State, 223 N. Y. 208; Farrington v. State, supra.)

This case must be decided in accordance with our interpretation whether section 12-a on its face evinces a retrospective purpose. The question before us relates to intent rather than power. The injury upon which this claim is founded occurred July 7, 1928, and this claim was filed December 19, 1928. Section 12-a did not become a law until April 10,1929, to take effect September 1, 1929. The hearing was begun September 15, 1930, and was concluded by the Court of Claims September 18, 1930. The decision was rendered May 27, 1931. The purpose of this statute, as we read it, is to declare that in the conduct of trials held subsequent to September 1, 1929, the State assumes liability, if the evidence warrants a finding of negligence by its officers or employees, and that subsequent to September 1, 1929, the Court of Claims shall possess jurisdiction to determine the facts and the law in accordance with the same rules as apply to actions in the Supreme Court against individuals. The act deals with claims which are based upon events occurring not only subsequent but also prior to its passage, and its language requires that, in relation to the date of the negligent act and of the filing of the claim, it be interpreted as retrospective.

The judgment of the Appellate Division should be reversed and that of the Court of Claims affirmed, with costs in this court and in the Appellate Division. (See 261 N. Y. 637.)

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

Judgment accordingly.


author: Pound, Ch. J.

text:
    J. B. Preston Company, Inc., Appellant and Respondent, v. Raymond J. Funkhouser et al., Doing Business under the Firm Name of R. J. Funkhouser & Company, Respondents and Appellants.

      (Argued January 25, 1933;
    decided February 28, 1933.)

      Jeremiah A. O’Leary for plaintiff, appellant and respondent.
    The court below erred in striking from plaintiff’s judgment interest allowed by the trial court as of the end of each contract year. (Civ. Pr. Act, § 480; Sweeney v. State of New York, 225 App. Div. 606; 251 N. Y. 417; Conkey v. Hart, 14 N. Y. 22; Matter of Berkovitz v. Arbib, 230 N. Y. 261; Matter of Barker, 230 N. Y. 364; National Surety Co. v. Architectural Decorating Co., 226 U. S. 276; Sliosberg v. N. Y. Life Ins. Co., 244 N. Y. 482; Supreme Ruler of the F. M. C. v. Snyder, 227 U. S. 497; Rosenplanter v. Provident Sav. Loan Assn., 96 Fed. Rep. 721; Salter v. Utica & Black River R. R. Co., 86 N. Y. 401; First Nat. Bank v. Fourth Nat. Bank, 89 N. Y. 412; Lee v. Texas, 184 U. S. 156; Bernheimer v. Converse, 206 U. S. 516; Truax v. Corrigan, 257 U. S. 312; Brainard v. Jones, 18 N. Y. 35; Prager v. N. J. Fidelity Co., 245 N. Y. 6; People ex rel. Central Trust Co. v. Prendergast, 202 N. Y. 196; Matter of Anderson, 178 N. Y. 416; White v. Miller, 78 N. Y. 392.)

      George Link, Jr., for defendants, respondents and appellants.
    The claim did not represent a pecuniary loss which could be ascertained with reasonable certainty as of a fixed day, and, therefore, plaintiff was not entitled to interest. (Horst Co. v. Breidt, 109 Atl. Rep. 727; Gray v. Central R. R. Co. of New Jersey, 157 N. Y. 483; Faber v. City of New York, 222 N. Y. 255.) The amendment of section 480 of the Civil Practice Act, in its application to the facts of this case, contravenes the provisions of section 10, article I, and section 1, article XIV, of the United States Constitution, and of section 6, article I, of the New York State Constitution. (Close v. Potter, 2 Misc. Rep. 1; Town of Cherry Creek v. Becker, 123 N. Y. 161; Chicago Great Western R. R. Co. v. State of New York, 197 App. Div. 742; 233 N. Y. 661; Sweeney v. State of New York, 225 App. Div. 605; 251 N. Y. 417.)
   Pound, Ch. J.

The question arises in this case of the effect of section 480 of the Civil Practice Act, as amended by chapter 623 of the Laws of 1927, in effect April 4, 1927, on contracts entered into prior to that date, when at the time of the trial the principal sum is unliquidated.

The section now reads as follows:

§ 480. Interest to be included in recovery. Where in any action final judgment is rendered for a sum of money awarded by a verdict, report or decision, interest upon the total amount awarded, from the time when the verdict was rendered or the report or decision was made to the time of entering judgment, must be computed by the clerk, added to the total amount awarded, and included in the amount of the judgment. In every action now pending or hereafter brought wherein any sum of money shall be awarded by verdict, report or decision upon a cause of action for the enforcement of or based upon breach of performance of a contract, express or implied, other than a contract to marry, interest shall be recovered upon the principal sum whether theretofore liquidated or unliquidated and shall be added to and be a part of the total sum awarded.”

The court below has held that so much of the .statute as makes it compulsory to allow .interest on unliquidated claims cannot apply to a claim for unliquidated damages on a contract entered into before April 4, 1927, as the obligation of such contract would be thereby impaired. (Cf. Sweeney v. State, 251 N. Y. 417, modifying 225 App. Div. 606.)

“ No state shall * * * pass any * * * law impairing the obligation of contracts.” (U. S. Const. art. I, § 10.) “A contract is * * * an agreement in which a party undertakes to do, or not to do, a particular thing.” (Odgen v. Saunders, 12 Wheat. [U. S.] 213, 316, 317.) By the obligation of a contract is meant the legal obligation of the parties to adhere to the agreement which at the time of contracting the law recognized and made enforceable. (Odgen v. Saunders, supra.) The question thus resolves itself into this: When the parties enter into a contract the breach of which results in a claim for unliquidated damages, do the parties make an agreement that no interest shall be charged on the principal sum found due in an action thereon which agreement would be impaired by a later statute which permits the recovery of interest? (Coombes v. Getz, 285 U. S. 434.)

Earl, J., writing for the court in 1879 in White v. Miller (78 N. Y. 393, 397), discussing the allowance of interest in common-law actions, concluded that it was difficult to deduce from the decided cases any certain rule and suggested that “ a statute could probably be framed which would produce more certain, if not juster results.” The rule had not been made certain in 1922 (Blackwell v. Finlay, 233 N. Y. 361), nor has it since been clarified. (Prager v. N. J. Fidelity & Plate Glass Ins. Co., 245 N. Y. 1, 7.) A rule of uniformity must be found to enable justice to be done. The tendency is to make interest an incident of the recovery.

In Faber v. New York (222 N. Y. 255, 262) the court said: The question of the allowance of interest on unliquidated damages has been a difficult one. The rule on this subject has been in evolution. Today, however, • it may be said that if a claim for damages represents a pecuniary loss, which may be ascertained with reasonable certainty as of a fixed day, then interest is allowed from that day. The test is not whether the demand is liquidated. Was the plaintiff entitled to a certain sum? Should the defendant have paid it? Could the latter have determined what was due, either by computations alone or by computation in connection with established market values, or other generally recognized standards?”

When the contract in suit was entered into, this was the somewhat vague and indefinite law of the State of New York. It has never been held to be a part of the obligation of the contract that no interest should be allowed on unliquidated demands. (Missouri & Arkansas L. & M. Co. v. Sebastian County, 249 U. S. 170, 173.) Interest has been added where the demand has been greatly in excess of the amount determined to be due. (deCarricarti v. Blanco, 121 N. Y. 230; cf. Prager v. N. J. Fidelity & Plate Glass Ins. Co., supra, p. 5.)

The mere fact that the statute is retroactive does not bring it in conflict with the Federal Constitution. (League v. Texas, 184 U. S. 156, 161, 162.) Nor has a person a vested interest in any rule of law entitling him to have the rule remain unaltered. (Truax v. Corrigan, 257 U. S. 312, 348.) Interest is the ordinary incident for the nonpayment of obligations and compensation is a fundamental principle of damages. (Prager v. N. J. Fidelity & Plate Glass Ins. Co., supra, p. 6.) Interest must be allowed as an incident to just compensation ” where property has been taken by eminent domain. (United States v. Rogers, 255 U. S. 163.) The obligation is the same as to contracts. (Prager v. N. J. Fidelity & Plate Glass Ins. Co., supra.) The party not performing should not deprive the party not in fault of the use of his money without paying therefor. (Prager v. N. J. Fidelity & Plate Glass Ins. Co., supra.)

The amendment to section 480 of the Civil Practice Act changes a rule of the common law but it conflicts with no constitutional guaranty. It prevents an escape through procedural difficulties from the real obligation to make full compensation for breach of contract. A claim for damages represents a pecuniary loss which should include interest. The obligation of the contract includes interest. The rule of law was that if the defendant could not determine on any fixed day what was due, no interest could be recoverable because defendant knew not what, if anything, he should pay. That was a rule of convenience, not an agreement to forego interest. The implied obligation of the contract was to pay interest in accordance with the rules of law existing when the case was tried.

Every change in the remedies open to parties to a contract does not constitute an impairment of its obligation. Where the statute deals only with the remedy, the creation of a new and more adequate remedy does not impair the obligation of the contract. (Sackheim v. Pigueron, 215 N. Y. 62.) A debtor has no substantial right to avoid the payment of interest in full. Courts have always had jurisdiction over claims for interest as an incident to damages. It follows that section 480 is a remedial statute to be construed, according to its literal meaning, to apply to all actions brought after it went into effect, irrespective of the time when the cause of action arose. It changes an existing right of action rather than creates a new right. It vindicates a preexisting right to compensation for breach of contract (Jacobus v. Colgate, 217 N. Y. 235) which the courts have found it impossible to recognize by reason of difficulties in the way of computing interest.

The judgment should have included the interest allowed by the trial court. Otherwise the decision below seems supported by the evidence and free from legal error.

The judgment of the Appellate Division should be modified by restoring the interest disallowed, and as so modified affirmed, with costs to plaintiff-appellant in this court. (See 261 N. Y. 639.)

Crane, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur; Lehman, J., dissents.

Judgment accordingly.


author: Hubbs, J.

text:
    Benjamin Kaufman, Respondent, v. Simons Motor Sales Co., Inc., Appellant.

      (Argued January 12, 1933;
    decided February 28, 1933.)

      Walter G. Schelker, Jr., and Duane R. Dills for appellant.
    There is no evidence of property in plaintiff on which to give or sustain a judgment in conversion. (Johnson v. Blaney, 198 N. Y. 312.) Any conversion shown was in the detinet, and not in the cepit; thus a plea and proof of title in a third party superior to that of plaintiff must exonerate defendant from actionable blame. (Griffin v. Long Island R. R. Co., 101 N. Y. 348; Schreyer v. Fenton, 44 N. Y. Supp. 203.)

      Stuart M. Miller, Isaac Miller and Abraham Miller for respondent.
    Defendant, having failed to renew its motion to dismiss the complaint at the close of all the evidence, conceded that plaintiff established a cause of action, and the only question to be determined was a question of fact. (Luechinger v. Eichhammer, 236 N. Y. 556; Seeman v. Levine, 205 N. Y. 514; 206 N. Y. 672; Spencer v. State of New York, 187 N. Y. 484; Hopkins v. Clark, 158 N. Y. 299; Bail v. N. Y., N. H. & H. R. R. Co., 201 N. Y. 355; Murtha v. Ridley, 232 N. Y. 488; McAleenan v. Mass. Bonding & Ins. Co., 232 N. Y. 199.) Plaintiff has sustained the burden of establishing his property in the converted chattel at the time of the conversion. (McAleenan v. Mass. Bonding & Ins. Co., 232 N. Y. 199; Hare & Chase, Inc., v. Volansky, 127 Misc. Rep. 26; Johnson v. Blaney, 198 N. Y. 312.) There is no proof of title in a third party superior to that of plaintiff and defendant is not exonerated by its delivery of the car to" the credit corporation. (Hare & Chase, Inc., v. Volansky, 127 Misc. Rep. 26; Manhattan T. S. Corp. v. Checker C. M. Corp., 253 N. Y. 455.)
   Hubbs, J.

The plaintiff purchased an automobile of the defendant under a contract of conditional sale which provided that title to the automobile should remain in the vendor or its assignee until the automobile should be paid for according to the terms of the contract of sale. The plaintiff, while in default in paying two of the installments due, delivered the automobile to the defendant for the purpose of having the tires changed. While the automobile was in the possession of the defendant, the Commercial Credit Corporation, to which the conditional contract of sale had been assigned by the defendant, demanded the surrender of the automobile from the defendant, and it was surrendered pursuant to the demand.

In this action in conversion the plaintiff has recovered a judgment against the defendant for the value of the chattel. The defendant in its answer, as an affirmative defense, alleged that the plaintiff was in default under the contract of sale and that the Commercial Credit Corporation was entitled to possession and that before plaintiff demanded the return of the automobile, the Commercial Credit Corporation demanded that defendant deliver possession thereof to it, and that defendant delivered possession to it pursuant to the demand.

Thereafter the automobile was sold at auction by the Commercial Credit Corporation and the plaintiff paid it $175.in settlement of the deficiency.

At the trial there was no material dispute as to the facts. The conversion alleged was in the detinet. The plaintiff voluntarily delivered possession of the automobile to the defendant. Under such circumstances, the defendant was entitled to plead and prove as a defense, that the title to the automobile was in a third party. (Griffin v. Long Island R. R. Co., 101 N. Y. 348; Siedenbach v. Riley, 111 N. Y. 560.)

In order to recover in an action in conversion, a plaintiff must establish, first, that he has title, or, second, that he has the right to possession, or, third, that he has some property in the chattel in question.

“ But, even if the defendant had no right to the property as against the plaintiff, still no one can recover or the conversion of chattels unless he had the title thereto, general or special, or was entitled to the possession thereof when they were taken from him. Unless he has title or right to possession he must fail, even if the defendant has neither.” (Johnson v. Blaney, 198 N. Y. 312, 316.)

At the trial it was conceded that plaintiff was in default under the conditional contract of sale and that the Commercial Credit Corporation had title to the automobile and was entitled to the possession thereof. The seller could take possession without legal process. (Pers. Prop. Law; Cons. Laws, ch. 41, § 76.)

The Commercial Credit Corporation as assignee of the seller was the legal successor in interest ” of the seller “ and thereafter was the ' seller ’ within the meaning of the statute.” (Manhattan Taxi Service Corp. v. Checker Cab Mfg. Corp., 253 N. Y. 455, 460.)

Plaintiff completely failed to establish a cause of action for conversion, and his complaint should have been dismissed.

Sections 77 and 78 of the Personal Property Law have no application under the facts of this case.

The exception taken by the defendant to the refusal of the trial justice to dismiss the complaint was taken in time. Before the defendant’s attorney announced that the defendant’s evidence was closed, the trial justice announced his decision in favor of the plaintiff, without giving the defendant’s attorney an opportunity to renew the motion made at the close of the plaintiff’s case. Immediately after the announcement of the decision, the counsel for defendant renewed the motion for a dismissal. The motion was entertained and denied and defendant’s counsel noted an exception. The motion was made at the first opportunity, and an exception taken to its denial.

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

Pound, Ch. J., Crane, Lehman, Kellogg, O’Brien and Crouch, JJ., concur.

Judgments reversed, etc.


text:
    The Anglo-South American Trust Company, Respondent, v. George Uhe, Appellant, Impleaded with Another.

      (Argued January 18, 1933;
    decided February 28, 1933.)

      Carl E. Peterson for appellant.
    The plaintiff pleaded and tried the action upon the theory of full performance as to the first draft, while the proof established that the documents accompanying it were defective. The complaint should, therefore, be dismissed as to this draft. (LaChicotte v. Richmond Ry. & Elec. Co., 15 App. Div. 380; Stern v. McKee, 70 App. Div. 142; Claflins, Inc., v. Gerber, 214 App. Div. 245; Beals v. Hirsch, 214 App. Div. 86; Jankowitz v. Manhattan Swiss Embroidery Co., 196 App. Div. 22; Fischer v. Schram, 173 App. Div. 147; Brandt v. City of New York, 110 App. Div. 396; 186 N. Y. 599; McEntyre v. Tucker, 36 App. Div. 53; MacKnight Flintic Stone Co. v. Mayor, 21 App. Div. 472.) A bank which honors a draft drawn against a letter of credit but in violation of its terms, has no recourse against the buyer who requested the credit. (Courteen Seed Co. v. Hong Kong & S. B. Corp., 216 App. Div. 495; 245 N. Y. 377; Bank of Montreal v. Recknagel, 109 N. Y. 482; Banco Nacional Ultramarine v. First Nat. Bank, 289 Fed. Rep. 169; Germania Bank v. Taaks, 101 N. Y. 442; Frey & Son, Inc., v. Sherburne Co., 193 App. Div. 849; Lamborn v. Lake Shore Banking & Tr. Co., 196 App. Div. 504; 231 N. Y. 616; Portugese American Bank v. Atlantic Nat. Bank, 200 App. Div. 575; Bank of Italy v. Merchants Nat. Bank, 236 N. Y. 106; Laudisi v. American Exchange Nat. Bank, 239 N. Y. 234.) The documents accompanying the second draft were also defective and the complaint must, therefore, be dismissed as to this transaction. (Alsens A. P. C. Works v. Degnon Construction Co., 222 N. Y. 34; Lord Constr. Co. v. Edison P. C. Co., 234 N. Y. 411.)

      Charles F. Bailey and Donald K. Miller for respondent.
    There is ample evidence to support the finding that the first set of documents fully complied with the requirements of the application for letter of credit. (Littlejohn v. Shaw, 159 N. Y. 188; Strasbourger v. Leerburger, 233 N. Y. 55; Cawley v. Weiner, 236 N. Y. 357.) There was ample evidence to support the finding that appellant waived all irregularities in the second set of documents. (Alsens A. P. C. Works v. Degnon Constr. Co., 222 N. Y. 34; Lord Constr. Co. v. Edison P. C. Co., 234 N. Y. 411; Hevenor v. Union Ry. Co., 204 App. Div. 535; North Side News Co. v. Cypress, 75 Misc. Rep. 129; Post v. Frank, 75 Misc. Rep. 130; Clark v. West, 193 N. Y. 349; Stone v. Cohen, 4 App. Div. 175.)
   Crane, J.

Upon application of the appellant George Uhe, of New York city and Hempstead, Long Island, the respondent, The Anglo-South American Trust Company, issued its letter of credit, dated at New York, February 6, 1926, reading as follows:

“ THE ANGLO-SOUTH AMERICAN TRUST COMPANY
Number 4/133 Expiration date March 31st, 1926
Commercial Letter op Credit
New York, February 6th, 1926.
Mr. George Uhe, Managua, Nicaragua, is hereby authorized to value upon The Anglo-South American Trust Co., New York, N. Y., for account of Mr. George Uhe, New York, N. Y., at sixty days’ sight for any sum or sums not exceeding in all Eight Thousand Dollars U. S. Currency ($8,000.00 USC) for full invoice value of Ten (10) Long Tons of India Rubber, 3 Tons at 32c and 7 tons at 35c per pound from Nicaragua to New York, N. Y., in one or more lots.
The drafts are to be negotiated on or before March 31st, 1926. The ' on board ’ Bills of Lading to bear a date not later than March 31st, 1926, and unless specified in this credit, two copies of the Bills of Lading with Commercial Invoice, Weight Note, Inspection Certificate, and Consular Invoice to be forwarded to this Company by the Bank or Bankers negotiating the draft attached to the first via of the draft. All other documents to accompany the second via of the draft.
“ Bills of Lading to be made out to the order of The Anglo-South American Trust Co., New York, N. Y.
“ Insurance to be effected by Mr. George Uhe, New York, N. Y.
All drafts drawn under this credit are to contain the clause:
“ ‘ Drawn under Letter of Credit of The Anglo-South American Trust Company, New York, No. 4/133, dated February 6th, 1926— ’ and the amount of the drafts to be noted on the back hereof by the negotiating Bank or Bankers.
The Anglo-South American Trust Company hereby engages with the drawers, endorsers and bona fide holders of drafts drawn in compliance with the tei;ms of this credit that the same shall be duly honored upon presentation.
“ THE ANGLO-SOUTH AMERICAN TRUST COMPANY
(Signed) Cecil Platt
“ Vice President
u (Signed) J. M. Tinsley,
“ Assistant Sec’y.’

The appEcatlon for this letter of credit took the form of an agreement between Uhe and the bank, «wherein it was stated that the trust company was to open a commercial letter of credit by cable for the account of George Uhe in favor of himself, at Managua, Nicaragua, for a sum not exceeding $8,000, “ available by drafts at 60 days sight on your agents or correspondents who are to be advised of the terms of the credit by cable. The drafts to be drawn and negotiated on or before March 31st, 1926, for 100 per cent invoice value of the goods and be accompanied by such documents as are indicated by the answers of the applicants to the printed questions hereunder, such documents purporting to evidence shipment, in one or more lots, of goods described in the Commercial Invoice as shown hereunder from Nicaragua direct or indirect to New York on or before March 31st, 1926.” The documents to accompany the draft were stated to be bills of lading to the order of The Anglo-South American Trust Company commercial invoice, consular invoice, net weights and inspection certificate.

The rubber ‘was shipped in two lots and the first draft was presented to the respondent on April 20, 1926, for $3,909.50, dated March 23, 1926, drawn upon the respondent by George Uhe, at Managua, payable 60 days from date. Accompanying the draft were bills of lading, weight notes and commercial and consular invoices covering ninety-five bags of rubber. One important document was missing so that the terms of the letter of credit were not complied with. This document was the inspection certificate. As the drafts were to be payable by the trust company 60 days after sight, or acceptance, to wit, June 20, 1926, the appellant, by the terms of his agreement, had until the day before the twentieth to furnish the bank with the money to meet the drafts. This was contained in the following provision: “ If the drafts drawn under the credit are payable in United States currency, to pay to the Company at its said office, on demand, but in any event not later than one business day prior to the maturity of the drafts under the credit, the face amount of said drafts.”

Another provision of the agreement apparently provided for a custom of the trade permitting the purchaser of the letter of credit to assume possession of the documents for the purpose of sale or resale of the goods before the maturity of the drafts. This provision is couched in this language: “The applicants hereby recognize and admit the ownership of the Company in and its right to the possession and disposal of all goods and the proceeds thereof for which the Company or the drawees named in said credit may come under any engagement in virtue of said credit, as also to the possession of all bills of lading or other documents for and policies or certificates of insurance on said goods until such times as any and every indebtedness or liability of the Applicants, now due to or hereafter accruing in favor of the Company under said credit or otherwise, shall have been fully paid and discharged, and in the event of the Company hereafter entrusting the said goods to the Applicants for the purpose of sale or otherwise, the Applicants hereby consent that the right of the Company to repossess itself of the same or of the proceeds hereof may be, at any time, exercised at the option or discretion of the Company.”

Accordingly, on the 21st of April, or the day after the acceptance of the draft by the trust company, George Uhe, in New York, was notified of the arrival of the documents with the acceptance of the draft; they were tendered to him by the trust company, but he refused to receive them because there was no inspection certificate attached to the draft, and he so notified the trust company. Thereupon, the trust company undertook to procure from the parties at Managua, Nicaragua, the omitted document. Whether or not the paper thereafter received was a proper and sufficient inspection certificate is immaterial, because of the subsequent action of the trust company. On May 18, 1926, the missing inspection certificate arrived in New York and respondent so informed the appellant. It did not, however, tender to him again all the documents called for in the letter of credit, including this inspection certificate or make demand upon him. The appellant, therefore, had until June 19, 1926, to pay the face of the draft, plus expenses, and take up the documents. Before that day arrived, and on May 20, 1926, the trust company sold the merchandise and now seeks to hold the defendant for the draft which it accepted and has been obliged to pay.

From the enumeration of these facts it is evident that the trust company has failed to comply with its agreement and cannot recover. We have heretofore held that these letters of credit are to be strictly complied with, which means that the papers, documents and shipping descriptions must be followed as stated in the letter. There is no discretion in the bank or trust company to waive any of these requirements. The terms of the letter constitute an agreement between the purchaser and the bank. (Laudisi v. American Exchange Nat. Bank, 239 N. Y. 234.) The respondent in this case should not have accepted the draft without the inspection certificate. This was to accompany the draft, for reasons which are quite apparent. The application for the letter of credit recognized the right to sell and dispose of documents representing the shipments before the arrival of the goods or, at least, before the due date of the drafts. The documents accepted by the trust company were defective. The fact that it later received the inspection certificate did not compel Uhe to take up the documents until tender and demand before June the 19th. The bank, after the arrival of the certificate of inspection, did not retender all of the documents to Uhe. Instead of holding the perfected papers until the due date, when, if the trust company had fulfilled its contract, Uhe would be obliged to take up the documents and pay the drafts, the company sold the goods at a loss. In two particulars it has failed to keep its contract: First, in accepting the draft without the inspection certificate, and, second, after obtaining this paper, selling the goods before Uhe’s due date or before complete tender and demand.

There was a second shipment. On April 26, 1926, the respondent accepted a draft for $3,284.10, dated April 8, 1926, drawn upon it by George ‘Uhe at Managua, payable 60 days from date. The letter of credit stated that the drafts were to be negotiated on or before March 31, 1926. The trust company recognizes that it had no right to accept this draft, as it was negotiated after the date specified, but it says that Uhe waived this breach. The goods actually arrived in New York on April 20, 1926, or before the documents were received by the trust company. As Uhe wished to remove the goods from the dock immediately on their arrival, without producing the necessary shipping documents, in order to avoid the accrual of storage charges, the trust company undertook to accomplish this by providing security to the carrier and to the Collector of Customs. A letter was addressed by the appellant to the respondent on April 20, 1926, which stated, after describing this shipment, the following: In consideration of your advising the Collector of Customs at the Port of New York that you agree to our giving bond for the production of the Bills of Lading and your also indemnifying the Agents of the Grace Line against any loss by reason of their delivering the merchandise to us, we hereby undertake to sign your usual Trust Receipt with the clause 1 no variation from the terms of Letter of Credit No. 4/133 shall limit, abridge or release my liability to the Trust Company hereunder ’ stamped thereon and to indemnify and hold you harmless against any loss, cost, damage and expenses caused or brought about by reason of your having furnished such letter and indemnity and to pay you any such loss, cost, damage and expenses on demand. Please deliver the letter and indemnity to our custom house brokers, A. J. Bracher & Co. issuing them in their name.”

The trust company prepared these letters and sent them to Uhe who returned them the next day with the communication, stating: “ We prefer not to disturb these 87 packages of rubber until we see the documents.”

The Collector of the Customs of the Port of New York was not advised of the giving of any bond for the production of the bills of lading and no bond was given. Neither were the agents of the Grace line indemnified against any loss, nor was the merchandise delivered. The trust receipt referred to was not signed. As stated, the initial papers were returned to the trust company. The shipping documents, when they did arrive later, and on April 26,1926, were rejected by Uhe because defective, and not in compliance with the terms of the letter of credit. We find nothing in these facts showing any waiver by Uhe of the conditions of his letter of credit. Before any binding act upon the part of the trust company regarding the delivery of the arrived goods Uhe changed his mind, as he had a right to do, and refused to accept the goods until the documents arrived.

The Anglo-South American Trust Company made a contract with George Uhe in the form of a letter of credit. The courts are to enforce it as written, unless by subsequent action the parties have waived their rights thereunder. The trust company having accepted drafts unauthorized by the terms of the letter of credit, and Uhe having waived none of the conditions, the judgment against him for the amount of the acceptance must be reversed and the complaint dismissed.

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

Pound, Ch. J., Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Judgments reversed, etc.


text:
    Mary Neenan, Plaintiff, v. Woodside Astoria Transportation Co., Inc., Respondent, and John J. Huppmann, Appellant.

      (Argued January 13, 1933;
    decided February 28, 1933.)

      Daniel Mungall for appellant.
    It was error for the trial court to exclude the judgment roll in appellant’s suit against defendant-respondent. (Duignan v. Pawlikowski, 134 Misc. Rep. 22; Civ. Pr. Act, § 264; Pratt v. Johnston, 59 App. Div. 52; 167 N. Y. 612; House v. Lockwood, 137 N. Y. 259.) The adjudication in the action between the owners of the vehicles was an adjudication that the defendant-respondent was solely responsible for the collision and is a bar to its motion for contribution. (House v. Lockwood, 137 N. Y. 259.)

      Arthur N. Seiff and Frederick J. Groehl for respondent.
    The trial court properly excluded from evidence the judgment roll in the former action between the appellant and defendant-respondent. (Glaser v. Huette, 232 App. Div. 119; 256 N. Y. 686; Murray v. Mastroeni, 137 Misc. Rep. 708; St. John v. Fowler, 229 N. Y. 270; Connell v. N. Y. C. & H. R. R. R. Co., 144 App. Div. 664; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Erie R. R. Co. v. International Ry. Co., 209 App. Div. 380; 239 N. Y. 598.)
   Crane, J.

On February 7, 1929, at the corner of Seventeenth avenue and Jamaica avenue, in the borough of Queens, New York City, a collision occurred between the automobile owned and operated by John J. Huppmann and a bus of the Woodside Astoria Transportation Co., Inc. Huppmann sued the transportation company for damages and proved that the collision was due solely to the negligence of its driver to which no carelessness on his part contributed. He recovered a judgment of $2,153.75 against the company.

Later, a passenger in the bus, Mary Neenan, sued both Huppmann and the Woodside Astoria Transportation Co., Inc., for the damages due to personal injuries received in the collision and, strange as it may seem, recovered a judgment of $1,500 against both defendants. Huppmann sought to introduce the judgment roll in his action against the transportation company, but of course it was not res judicata as to the passenger, Mary Neenan, as she was not a party to that action. She was free to prove that Huppmann was also negligent. If this were not so a responsible party might by collusion shift the liability upon an irresponsible person who cared little about a judgment against him. A plaintiff may hold all joint tort feasors. There was no error in excluding the judgment roll in the action of Mary Neenan.

Another question arises on the motion of the Woodside Astoria Transportation Co., Inc., for contribution, under section 211-a of the Civil Practice Act. That company quickly stepped forward and paid the lesser of the two judgments, the Mary Neenan judgment of $1,500, and then under this section asked the court for an order to compel Huppmann to pay his half, $750. The undisputed facts then were that Huppmann had a judgment against the company for $2,153.75, based upon its sole negligence and his freedom from contributory negligence, while the company, having paid a later judgment, recovered by its passenger hurt in the same accident, seeks to make Huppmann pay half of it because of his negligence.

Inconsistencies are not always avoidable in the law, arising as they do out of different trials between different parties, conducted by lawyers of varying ability. Some things, however, must be considered before the transportation company can have contribution.

Section 211-a of the Civil Practice Act reads as follows:

§ 211-a. Action by one joint tort-feasor against another. Where a money judgment has been recovered jointly against two or more defendants in an action for a personal injury or for property damage, and such judgment has been paid in part or in full by one or more of such defendants, each defendant who has paid more than his own pro rata share shall be entitled to contribution from the other defendants with respect to the excess so paid over and above the pro rata share of the defendant or defendants making such payment; provided, however, that no defendant shall be compelled to pay to any other such defendant an amount greater than his pro rata share of the entire judgment." Such recovery may be had in a separate action; or where the parties have appeared in the original action, a judgment' may be entered by one such defendant against the other by motion on notice.”

There are two remedies provided. An action may be brought against the joint defendant to recover his proportionate part of the payment. If the transportation company had brought such an action Huppmann could have set up his prior judgment against it as a counterclaim or a setoff. Equity has long recognized the right of setting off one judgment against another. (Beecher v. Vogt Manufacturing Co., 227 N. Y. 468.) The result would have been that the Huppmann judgment would have more than met the company’s claim and contribution would have been denied except as the offset accomplished it. When, however, the other remedy provided by the section is taken, and a judgment for contribution is sought by motion, the same defenses and offsets are available. What could be pleaded as a defense in the action can also be set up on the motion. The action or the motion is a mere procedural step. The relief for either party is the same in both. No advantage is gained by seeking the action rather than the motion, although the former may be more appropriate where the facts are complicated or require evidence to establish the equities.

To set off one judgment against another by motion is a procedure recognized by the text books and the authorities. The satisfaction of a judgment may be wholly or partially produced by compelling the judgment creditor to accept in payment a judgment against him in favor of the judgment debtor or, in other words, by setting off one judgment against another. This is usually brought about by a motion in behalf of the party who desires to have his judgment credited upon, or set off against, a judgment against him. The court in a proper case will grant the motion. (2 Freeman on Judgments, § 1142; Simson v. Hart, 14 Johns. 63; Ewen v. Terry, 8 Cow. 126.)

The right to set off judgments is a matter of equitable jurisdiction, and rests in the legal discretion of the court, constrained and regulated by certain established rules. It is true that the power is often exercised by motion in the action in which one of the judgments has been recovered, but only when the right to the desired setoff is clear.” (Scott, J., in Kretsch v. Denofrio, 137 App. Div. 617, 619. See Matter of Steele, 165 App. Div. 683; Beecher v. Vogt Manufacturing Co., 227 N. Y. 468.)

On this application of the Woodside Astoria Transportation Co., Inc., for contribution under section 211-a of the Civil Practice Act from John J. Huppmann, the Special Term denied the motion, when it appeared that Huppmann had a judgment against the company, as above stated. The papers and briefs assume that this Huppmann judgment has not been paid, that both judgments are outstanding obligations. The cases have been argued upon this theory. If this be so the Special Term was right in denying the motion and refusing to grant a judgment against Huppmann for $750. What the court should have done, however, was to credit this amount on Huppmann’s larger judgment of $2,153.75, and thus partially to have set off one against the other. On the other hand, if the Huppmann judgment, by any chance not appearing in the record, has been paid, then the motion should have been granted. While it seems inconsistent that Huppmann should share with the other defendant damages to a third person arising out of an accident for which, as between themselves, the courts have decided that Huppmann was in no way to blame, yet the inconsistency is more apparent than real. Mary Neenan was not interested in the action between Huppmann and the transportation company; the result was a matter of indifference to her. She could have sued Huppmann alone and could have collected her full recovery out of Mm. She chose to sue both, and the judgment against both gives to the one paying it the right to collect from the other Ms share. No such right existed prior to section 211-a of the Civil Practice Act. The theory of this amendment is to give to the paying defendant the plaintiff’s right of execution against the other defendant, up to and no further than his aliquot share of the judgment. The paying defendant thus recovers on the theory of subrogation and partially enforces a right always existing in the plaintiff. This does not, however, affect other rules of law, such as the right to setoff, heretofore spoken of.

With this explanation of the respective rights and remedies of these defendants, the order of the Appellate Division should be reversed and the matter remitted to the Special Term to dispose of in accordance with this opinion.

The judgment in favor of Mary Neenan against Wood-side Astoria Transportation Co., Inc., should be affirmed, with costs.

Pound, Ch. J., Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Judgment accordingly.


text:
    Lloyd S. Graham, Appellant, v. Buffalo General Laundries Corporation et al., Respondents.
    (Argued January 20, 1933;
    dated February 28, 1933.)

      Harry J. Kelly for appellant.
    The complaint states facts sufficient to constitute a cause of action for malicious prosecution. (Neuowich v. Cohn, 172 App. Div. 411; Fowler v. Stewart, 197 App. Div. 736; Beall v. Dadirrian, 62 Misc. Rep. 125; 132 App. Div. 943.)

      J. C. Randal and Frank G. Raichle for respondents.
    The complaint fails to state á cause of action. (Schultz v. Greenwood Cemetery, 190 N. Y. 276; Hopkinson v. Lehigh Valley R. R. Co., 249 N. Y. 296; Wilkinson v. McGee, 265 Mo. 574; Calvo v. Davies, 73 N. Y. 211; Ranger v. Thalmann, 65 App. Div. 5; Reynolds v. Kennedy, Wilson, 232; Sutton v. Johnstone, 1 D. & E. 269; Burt v. Place, 4 Wend. 591; Boogher v. Hough, 99 Mo. 183; Saunders v. Baldwin, 112 Va. 431; Kennedy v. Burbidge, 54 Utah, 497; Giusti v. Del Papa, 19 R. I. 338; King v. Estabrooks, 77 Vt. 371; Dunn v. Gray Co., 254 Mass. 202.)
   Pound, Ch. J.

The question is whether in an action for malicious prosecution a bare allegation in the complaint of want of probable cause is sufficient when the complaint shows on its face the presence of probable cause, i. e., that on a preliminary hearing before a magistrate on a charge of felony the magistrate held the plaintiff to await the action of the- grand jury which failed to indict. The holding of the accused by a magistrate after an examination into the facts establishes prima facie probable cause for the prosecution. (Hopkinson v. Lehigh Valley R. R. Co., 249 N. Y. 296, 300.)

The complaint must state facts sufficient to constitute a cause of action. When all the. facts stated, if admitted, would not allow a recovery, the complaint is bad. The holding of the accused by the magistrate shows probability of guilt and thus rebuts and overcomes the general averment of want of probable cause which is usually sufficient as an allegation of fact but here becomes a mere “opprobious epithet.” (Dunn v. Gray Co., 254 Mass. 202.)

This is the almost universal rule. (Giusti v. Del Papa, 19 R. I. 338; Saunders v. Baldwin, 112 Va. 431; Kennedy v. Burbidge, 54 Utah, 497; Boogher v. Hough, 99 Mo. 183; Wilkinson v. McGee, 265 Mo. 574; Dunn v. Gray Co., supra; Spring v. Besore, 12 B. Mon. [Ky.] 551; Henderson v. McGruder, 49 Ind. App. 682; King v. Estabrooks, 77 Vt. 371.)

It would scarcely be necessary to write on this point were it not for the case of Beall v. Dadirrian (62 Misc. Rep. 125; affd. on opinion below, 133 App. Div. 943). It was there held that in an action for malicious prosecution, the holding of a plaintiff by a magistrate after examination into the facts is prima facie evidence of probable cause only; and the general allegation that the arrest was without probable cause is sufficient to enable the plaintiff upon the trial to show that, upon all the facts in the case, there was no probable cause for the defendant’s action in procuring his arrest. This rule has support in a few jurisdictions. (Ross v. Hixon, 46 Kan. 550; Stainer v. San Luis Valley Land & Mining Co., 166 Fed. Rep. 220.)

The distinction is based on the theory that on a trial where both parties have presented their proofs, the effect of a judgment is to establish probable cause with finality, unless the plaintiff alleges in his complaint that the judgment was improperly obtained and was the result of acts of malice, fraud and oppression on the part of the defendant, which had the effect of depriving plaintiff of an opportunity to be heard in his own behalf, while the magistrate’s ruling is only prima facie proof on the question of probable cause and may be overcome by evidence offered under the general allegation.

The facts pleaded should, however, make out a prima facie case. The allegations of the complaint that the plaintiff was held after a hearing by the magistrate, unexplained and uncontradicted, establish probable cause for plaintiff’s arrest. The pleader should be required by appropriate allegations to overcome the effect of his admissions of the existence of probable cause. Pleadings must be construed with a view to substantial justice between the parties. (Civ. Pr. Act, § 275.) The defendants should be informed as to the charges they must meet. (Clark on Code Pleading, pp. 168, 169.) They are here informed that they must meet a charge of malicious prosecution when the complaint on its face shows probable cause.

The order should be affirmed, with costs, and the question certified answered in the negative.

Crane, Lehman, Kellogg, O’Brien, Hubbs and Crouch, JJ., concur.

Order affirmed, etc.


text:
    Harvard Financial Corporation, Respondent, v. Greenblatt Construction Co., Inc., et al., Defendants; Staley Elevator Co., Inc., Appellant, and The Bowery Savings Bank, Respondent.

      (Argued January 19, 1933;
    decided February 28, 1933.)

      Paul L. Corwin and Leon E. Chernis for appellant.
    The finding that the elevators are so affixed to the realty as not to be severable therefrom without material injury to the freehold is without support in the evidence, and the conclusions of law based thereon are erroneous. (Madfes v. Beverly Development Corp., 251 N. Y. 12; Cosgrove v. Troescher, 62 App. Div. 123; Central Union Gas Co. v. Browning, 210 N. Y. 10; Greater New York Development Co. v. Ka-Ro Building Corp., 232 App. Div. 696; 256 N. Y. 657; Hirsch v. Graves Elevator Co., 24 Misc. Rep. 472; Lowett v. Birmingham, 192 Mich. 372; Palm v. Bachrach, 5 Fed. Rep. [2d] 125; Wheat v. Otis Elevator Co., 23 Fed. Rep. [2d] 152; Kings v. Blickfeldt, 111 Wash. 508; General Electric Co. v. Transit Corp., 57 N. J. Eq. 460; Blake McFall Co. v. Wilson, 98 Ore. 626; Graves Elec. Co. v. Callanan, 11 App. Div. 301; De Bevoise v. Maple Avenue Constr. Co., 228 N. Y. 496; Crocker-Wheeler Co. v. Genesee Recreation Co., 221 N. Y. 565; Ratchford v. Cayuga Co., 217 N. Y. 565; Davis v. Bliss, 187 N. Y. 77; Sisson v. Hibbard, 75 N. Y. 542;
      Tifft v. Horton, 53 N. Y. 377.) The defendant-respondent is not a bona fide purchaser in that it had constructive notice of appellant’s title by reason of the due and proper filing of the conditional bill of sale prior to the execution, delivery and filing of the mortgage. (Greater New York Development Co. v. Ka-Ro Building Corp., 232 App. Div. 696; 256 N. Y. 657.)

      Henry M. Bellinger, Homer A. Stebbins and Joseph B. Shaughnessy for respondents.
    Elevators when installed in a building become a part thereof and must be regarded as part of the realty. (Cohoes Iron Foundry & Mach. Co. v. Glavin, 190 App. Div. 87; Condit v. Goodwin, 44 Misc. Rep. 312; East N. Y. El. Co. v. Petmaland Realty Co., 243 N. Y. 477; DeBevoise v. Maple Avenue Constr. Co., 228 N. Y. 496; Cohen v. 1165 Fulton Ave. Corp., 251 N. Y. 24.)
   O’Brien, J.

Defendant Greenblatt Construction Co., Inc., is the owner of an apartment house at Hartsdale, Westchester county, and defendant Staley Elevator Co., Inc., under a conditional bill of sale sold to it and installed three elevators upon which is due the sum of $13,600. The bill of sale, in which the seller reserved title to the goods until payment of the purchase price, was executed June 12, 1928, and recorded March 8, 1929, but the elevators had been installed prior to its filing. They are affixed to the realty so as to become a part of it. Subsequent to the filing of this bill of sale, the owner of the realty, Greenblatt Company, on March 28,1929, executed a mortgage to plaintiff for $30,000, and recorded it April 8, 1929. By its terms it covers all fixtures and articles of personal property then or thereafter attached to or used in connection with the mortgaged premises. At the same time Greenblatt Company executed another mortgage to the Bowery Savings Bank, embracing the same clause, for $45,000, and recorded it also on April 8, 1929. This mortgage was consolidated with a prior one held by the bank so as to constitute a lien for $435,000.

In this action to foreclose plaintiff’s mortgage the courts below have held that the elevators are not severable from the realty wholly or in any portion without material injury to the freehold and that the Staley Company’s claim under its conditional bill of sale is subordinate to the lien of plaintiff’s mortgage and also to the lien of the consolidated mortgage, of which the $45,000 mortgage is a part, held by the Bowery Savings Bank.

The principal issue of fact litigated at the trial and in the Appellate Division relates to the question whether the dismantling of the elevators and their severance from the realty would result in material injury to the freehold. Examination of the record convinces us that no evidence supports the finding that their removal would inflict such injury as can be classed as material within the meaning of section 67 of the Personal Property Law (Cons. Laws, ch. 41), which is based upon the definition of that expression as found in the decisions. (Tifft v. Horton, 53 N. Y. 377, 384; Sisson v. Hibbard, 75 N. Y. 542, 544, 545; Davis v. Bliss, 187 N. Y. 77, 83; DeBevoise v. Maple Ave. Constr. Co., 228 N. Y. 496, 500; Holt v. Henley, 232 U. S. 637, 640, 641; Detroit Steel Cooperage Co. v. Sistersville Brewing Co., 233 U. S. 712, 717, 718.) This elevator system consists of electrical wiring, a motor, a control board, a car or cage, cables, steel guide rails, cable wheels and steel beams across the top of the shaft for support of the cable wheels. The evidence by witnesses for both, parties is so closely in harmony as to raise no substantial issue of fact. With the exception of the beams, each part of this system can readily be disconnected without disturbing the structure and indeed without leaving more than trivial holes in the brick work of the shaft. The beams, if allowed to remain, could be utilized as part of a new system to be installed. Section 67 of the Personal Property Law deals with goods severable wholly or in any portion ” and the evidence here shows that, except for an extremely small portion of the elevator system, the goods are severable without material injury to the freehold. Defendant’s testimony, except as to the beams, is virtually as undisputed as in Greater New York Devel. Co. v. Ka-Ro Bldg. Corp. (232 App. Div. 696; affd., 256 N. Y. 657).

This is a case where, subsequent to the time of a conditional sale, the goods are affixed to the realty so as to become a part of it but severable without material injury to the freehold and, therefore, the seller’s reservation of proper by in the goods is valid as against subsequent purchasers, including mortgagees (Pers. Prop. Law, § 61), if the bill of sale was, prior to the taking of the mortgage, filed as required by section 67 of the Personal Property Law. That part of section 67 which deals with subsequent purchasers, rather than with owners of the realty at the time of the conditional sale, read in 1929, when this action was commenced: “ * * * If the goods are so affixed to realty at the time of a conditional sale or subsequently as to become part thereof but to be severable without material injury to the freehold, the reservation of property shall be void after the goods are so affixed as against subsequent purchasers of the realty for value and without notice of the conditional seller’s title, unless the conditional sale contract, or a copy thereof, together with a statement signed by the seller briefly describing the realty and stating that the goods are or are to be affixed thereto, shall be filed before such purchase in the office where a deed of the realty would be recorded or registered to affect such realty * * The last part of this section has reference only to the owner of realty and has no application to the facts in this case. If the conditional sale contract is not filed as required by this statute, even when the goods are severable without material injury, the reservation of property as against a subsequent purchaser for value and without notice is void. (Kohler Co. v. Brasun, 249 N. Y. 224.)

The courts below have held that the Staley Company’s conditional bill of sale does not comply with the provisions of the statute in respect to form, contents and filing. We think it does. It was executed June 12, 1928, and is addressed to the owner of the realty, Greenblatt Construction Company, is signed by fche seller of the goods, it briefly describes the realty, it expressly reserves title in the goods until the full purchase price shall be paid in cash and it states that the goods are attached to the realty in the building “ west side of Central Avenue, north of Hartsdale Road, Hartsdale, N. Y., known as Hartsdale Gardens.” It was filed in the office of the register of Westchester county March 8, 1929, three weeks before the execution of the mortgage to plaintiff and the $45,000 mortgage to defendant bank. These mortgagees as subsequent purchasers of the realty can, therefore, in no sense be regarded as purchasers without notice of the conditional seller’s title. In respect to cutting off rights of subsequent purchasers, including mortgagees, the goods may be affixed to the realty after the time of the conditional sale. It is only in respect to an owner of realty at the time of the purchase of the goods that the sale contract must be filed before the goods are affixed. The finding of fact that the elevators were installed prior to the date of the filing of the conditional sale contract with the register is, therefore, immaterial. After we reach the conclusion that no evidence supports the finding that the goods, except the beams, cannot be severed without material injury, then the finding that the Bowery Savings Bank did not expressly assent to the Staley Company’s reservation of title also becomes immaterial, except in relation to the beams. Defendant Staley Elevator Company’s property reserved by the filing of its conditional bill of sale, except the value of the beams, is, therefore, superior to the hen of plaintiff’s mortgage and the hen of defendant Bowery Savings Bank’s $45,000 mortgage.

The judgments should be reversed and a new trial granted, with costs to appellant in all courts. (See 261 N. Y. 694.)

Pound, Ch. J., Crane, Lehman, Kellogg, Hubbs and Crouch, JJ., concur.

Judgments reversed, etc.