text:
    Sylvan Levy, Respondent, v. Louis Leavitt, Appellant.

      (Argued October 23, 1931;
    decided November 17, 1931.)

      Herman Shulman, David L. Podell, Jacob J. Podell and J. Martin Seiler for appellant.
    Since the services rendered by the defendant were extraordinary, unusual and outside of the scope and course of the partnership business, he should be permitted to recover reasonable compensation therefor. (McGibbon v. Tarbox, 205 N. Y. 271; Maynard v. Richards, 166 Ill. 466; Matter of Zell, 136 Penn. St. 329; Royster v. Johnson, 73 N. C. 474; Bradford v. Kimberly, 3 Johns. Ch. 431; Mondamin Bank v. Reynolds, 165 Iowa, 711; Hoag v. Alderman, 184 Mass. 217; Hooker v. Williamson, 60 Tex. 524; Emerson v. Durand, 64 Wis. 111; Rains v. Weiler, 166 Pac. Rep. 235; Clement v. Ditterlin’s Administrators, 11 Ky. L. R. 294; Stidger v. Reynolds, 10 Ohio, 351; Rhein v. Peeso, 194 App. Div. 274; Thayer v. Badger, 171 Mass. 279; Baker v. McGrane, 224 N. W. Rep. 737; Forbes v. Butler, 66 Utah, 373; Wisner v. Field, 11 No. Dak. 257.) The defendant is entitled to charge the .venture with interest on moneys loaned by him to it or on loans obtained by him for the benefit of said venture. Century Bank v. Breitbart, 89 Misc. Rep. 308; Steward v. Hansen, 62 Utah, 281; Shever-Gillett Co. v. Long, 318 Ill. 432; Rodgers v. Clement, 162 N. Y. 422; Beach v. Collis, 85 N. Y. 511; Kraus v. Kraus, 250 N. Y. 63; Baker v. Mayo, 129 Mass. 517; Kaufman v. Catzen, 90 W. Va. 719; Lloyd v. Carrier, 2 Lans. 364; Morris v. Allen, 14 N. J. Eq. 44; Berry v. Folks, 60 Miss. 576.)

      Jacob W. Kahn for respondent.
    The defendant is not entitled to compensation, either for his services in managing the partnership affairs prior to dissolution, or in winding them up after dissolution, in the absence of agreement or statutory provision therefor,. and this is so whether the services rendered are ordinary or unusual. (McDermott v. Rossney Contracting Corp., 131 Misc. Rep. 759; 225 App. Div. 784; Transit Commission v. L. I. R. R. Co., 253 N. Y. 345; People v. Hagan, 138 Misc. Rep. 771; Graf v. Hope Building Corp., 254 N. Y. 1; Sun P. & P. Assn. v. Remington P. & P. Co., 235 N. Y. 338; Anthony v. Syracuse University, 224 App. Div. 487; City of Buffalo v. International Ry. Co., 135 Misc. Rep. 497; Whiteside v. North American Acc. Ins. Co., 200 N. Y. 320; Rhein v. Peeso, 194 App. Div. 274; Evans v. Warner, 20 App. Div. 230.) Under the agreement plaintiff was not required to contribute any additional money above his capital investment, and the referee properly disallowed defendant interest on the moneys which he supplied to finance the venture. (Rodgers v. Clement, 162 N. Y. 422; Grant v. Smith, 70 App. Div. 301; Clausen v. Puvogel, 114 App. Div. 455.)
   Lehman, J.

In June, 1919, the plaintiff agreed to assume a twenty pér cent interest in the purchase for resale of a large quantity of bacon which the United States government offered for sale. The plaintiff paid the defendant the sum of $50,000 and received a letter from the defendant stating: “This is to acknowledge receipt of your check for $50,000 as part payment on the purchase of approximately 2,500,000 pounds of bacon. It is understood that you are to receive twenty per cent, of the net profits or stand twenty per cent, of the net loss should there be any loss.” No formal contract was made. Indeed, the record does not show that the parties agreed as to how the purchase should be financed or how the joint venture should be conducted, but the evidence shows, and the trial court has, in effect, found, that the parties agreed that the joint venture should be managed by the defendant, and that the plaintiff was not obligated to perform any services or to make any further capital contributions.

The parties, undoubtedly, anticipated large profits to be derived from a quick resale of the bacon. Their anticipations were defeated through obstacles unexpectedly interposed by the United States government. Claiming that the defendant was violating the “Act to Provide for the National Security and Defense,” commonly known as the “ Lever Act,” it procured an indictment against the defendant and libeled the bacon purchased by the joint venture. The defendant could not deliver to purchasers the bacon which had been taken from his possession. By the time that the defendant succeeded in obtaining a judicial determination in his favor, the bacon had so deteriorated that it was no longer readily salable.

The defendant then made extraordinary efforts to sell the bacon. He traveled through Europe in the hope that there he might find a purchaser for bacon which was not merchantable here. His efforts were fruitless. The bacon had then become unfit for human consumption and was seized and destroyed by the public authorities.

Through the destruction of the bacon the joint venture had irretrievably lost the entire purchase price of the bacon, amounting to about $700,000, augmented by expenses incurred in the conduct of the venture and offset only by payments for the small proportion of the bacon which had already been sold and delivered. Indemnification for such loss might still be obtained from the United States government if its executive, legislative and judicial branches could all be convinced that the loss was occasioned by unfounded charges of the government, and that a moral duty rested on the government to make good such loss. The defendant succeeded in convincing the President and General Dawes, the Director of the Budget, that a favorable report should be made to Congress; he succeeded in convincing Congress that a statute should be enacted permitting the submission of the claim for indemnification to the Court of Claims, and his attorneys succeeded in convincing the court that the claim should be allowed with few deductions. For the plaintiff’s share of the moneys received or expended by the defendant in the joint venture, the defendant must now account.

Upon the accounting, the defendant has been denied the right to charge as an expense of the joint venture or partnership the reasonable value of any services rendered by the defendant, and interest on any moneys which he loaned or furnished to the venture in the conduct of its business. The rights and obligations of the partners as between themselves arise from and are fixed by their agreement. (Martin v. Peyton, 246 N. Y. 213; Corr v. Hoffman, 256 N. Y. 254.) Here the agreement was oral and informal. There is nothing to show that the parties considered or discussed whether the defendant should be entitled to compensation for his services or to any interest for moneys he might furnish. The question then is whether from the relations of the parties and the circumstances of the transaction, an implication of a promise of compensation for services rendered or of interest upon moneys paid arises.

We consider first whether a charge may be made for services rendered. In Bradford v. Kimberley (3 Johns. Ch. 431) Chancellor Kent stated the rule: “ In the case of joint partners, the general rule is, that one is not entitled to charge against another, a compensation for his more valuable or unequal services bestowed on the common concern, without a special agreement; for it is deemed a case of voluntary management.” The rule has been often stated in different form, but no authority, judicial or extra-judicial, has seriously questioned its substance. In the ordinary course of business affairs, services are usually rendered with expectation of reward, and silent acceptance of such services may justify, or at times, even dictate, the inference of an implied promise to pay the reasonable value of such services. The basis for such inference is lacking when circumstances point to the conclusion that the services were rendered voluntarily and without reasonable expectation of payment. (1 Willis-ton on Contracts, §§ 90-91, and cases there cited.) In the business of a partnership the services of a partner are rendered for the common benefit in the performance of an obligation created by the partnership agreement, and the resultant benefit is divided pro rata as provided in the partnership contract. Those profits constitute, in the absence of other agreement, the stipulated reward for services to be rendered, and there is no right.to other compensation based on the reasonable value of the services actually rendered. Inequality in the value of services rendered, even the fact that the services were extraordinary and that,^at the time the contract was made, the parties did not contemplate that such services would be required in the course of the partnership business, would not alone justify the award of compensation outside the share of profits accruing to the partner rendering the services. True, such circumstances, though insufficient alone to give rise to an implied promise to pay for the services rendered, may give significance and color to other evidence, tending to establish that the parties intended that special payment should be made for special services and expressed that intention — though perhaps somewhat equivocally, either in words or deeds.

So in spite of the rule that in the absence of a special contract a partner is not entitled to any remuneration for services performed in the partnership business, the courts have at times found such a special contract where the services were rendered under extraordinary circumstances. Perhaps the courts in some jurisdictions require less evidence of a special contract where the services were rendered after dissolution, and, indeed, at times awarded, without finding of special contract, compensation for services rendered by a surviving partner in the dissolution of the partnership. (See Consaul v. Cummings, 222 U. S. 262.) Such cases create at most an exception to the general rule. Under the general rule which is applicable here the defendant is entitled to special compensation for services only if the parties did in fact agree that such compensation should be allowed, and not otherwise.

Since the courts below have determined the question of fact otherwise, the question before us is not whether the circumstances are sufficient to justify an inference of fact that such a contract was made, but rather whether such an inference must be drawn as matter of law. Analysis of decisions in other jurisdictions made upon their peculiar facts would serve little purpose. None present a close analogy, and even where the analogy is remote and the circumstances point much more clearly to a special contract, the question was presented and passed upon as a question of fact and not of law. The only case in this State, cited by the defendant, where the court allowed compensation to a partner for services performed other than extraordinary services rendered by a surviving partner, is Bradford v. Kimberley (supra). There compensation was allowed for services performed by commission merchants in the sale of a cargo of which they were part owners, but it was not questioned that the services were performed under an employment or special agency conferred by all the owners upon the merchants, altogether distinct from their ordinary powers as part owners.” Thus the question presented was only whether in an unquestioned contract of special agency between copartners there is an implied obligation to pay for the services rendered by the special agent. No such question is here.

Though the evidence shows that unexpected obstacles called forth extraordinary exertions by the defendant in attempting to sell the bacon, nevertheless his services at that time were performed in compliance with the obligation he had assumed, when the partnership was formed, to devote his efforts to the resale of the bacon. There are no circumstances which would support an inference that the services were performed at the special request of his copartners or under a special agency or employment, or that the partners agreed to pay any compensation for such services. Certainly none which would require such an inference as a matter of law.

Perhaps the services performed after the bacon was destroyed and the partnership purpose of resale thwarted might be said to be outside the scope of the original partnership. Even so, their purpose was to diminish the loss already suffered by the partnership and under the ordinary powers as part owners ” in the claim created by the partnership loss. We may assume that in such case the inference of an implied promise to pay for such services might be drawn from evidence too slight to permit an inference of promise to pay special compensation for services rendered in the course of the original scope of the partnership, yet here too the evidence is clearly insufficient to establish such an implied contract as a matter of law. It does not appear that the plaintiff solicited such services or even that he could have prevented the defendant from performing them if he had objected. They were either wholly voluntary or performed as an obligation impliedly assumed when the copartnership was formed. It follows that the finding, that no obligation to pay was created, is supported by the evidence.

The defendant’s right to charge against the plaintiff’s share in the partnership funds, interest on moneys furnished by the defendant, like his right to charge compensation for his services, depends upon the contract made between the parties. True, the Partnership Law (Cons. Laws, ch. 39), section 40, has provided statutory rules for determining the rights and duties of partners subject to any agreement between them.” These rules provide (subd. 3): “A partner, who in aid of the partnership makes any payment or advance beyond the amount of capital which he agreed to contribute, shall be paid interest from the date of the payment or advance; ’’and (subd. 6): “ No partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs.” Such rules, by the terms of the statute, are not intended to supersede or override an agreement, whether expressed in words or implied in fact. Like an analogous section embodied in the Partnership Act of Great Britain, “ this section declares the working rules implied by law in every partnership, except so far as excluded or varied by the consent of the parties in the particular case.” (Pollock, Digest of the Law of Partnership [12th ed.], § 24.) Under these “ working rules,” as at common law, where the express contract of partnership fails to provide for payment of special compensation for services rendered, the burden of proving that the parties intended such payment rests upon the person claiming such compensation. Where the express contract fails to provide for payment of interest on moneys furnished by a partner beyond the amount which he agreed to contribute, the burden of proving that the parties intended that no such interest should be paid rests upon the other partners. To that extent only, the question of the right to interest bears a different aspect.

The distinction is not created by the statute, but was recognized by this court before the statute was enacted. (Rodgers v. Clement, 162 N. Y. 422.) It rests upon an inherent difference between the obligation of a partner to render services in the partnership business and the obligation to provide capital. The first obligation arises from the partnership relation and is limited only by agreement, express or implied, of the parties. The second obligation exists only when it is created and defined by agreement, express or implied; yet to the extent that the partnership agreement fails to impose an obligation upon the partners to furnish capital requisite for the conduct of the business, the parties to the contract must intend that money will be borrowed to carry on the business and that interest will be paid on money borrowed. Therefore, where a partner pays money to the partnership beyond his partnership obligation, it is a reasonable inference that the parties intended that such payment should be a loan and should bear interest.

It is true that at times where the contract is silent as to the obligation of partners to contribute capital, the course of conduct of the parties may show that they intended that no interest should be paid. We do not now decide how far, if at all, the statutory rule affects such cases. Here the court has found that the plaintiff contributed $50,000 to the joint venture, of which $10,000 was returned at plaintiff’s request, and that “ there was no understanding that the plaintiff might be called upon to contribute additional funds.” There is no finding and no evidence that the defendant assumed any obligation to contribute to the partnership capital the remainder of the moneys necessary to pay the purchase price of the bacon, and other expenses. True, the trial court has found that the entire management of the venture was left to the defendant. How he was to finance the balance was never discussed;” but even though the defendant as managing partner may have anticipated that the venture would be financed without further contribution of capital from the plaintiff, it does not follow that he impliedly agreed to assume an obligation to contribute to the capital fund the moneys required to finance the venture. The trial judge has not so found, and the evidence does not support such an inference. Concededly the plaintiff’s contribution of $40,000 in part payment on the purchase ” of the bacon was much less than his proportionate share of the purchase price. He may have assumed that the defendant or such persons as might join in the venture would make a proportionate contribution. He had no ground for assuming that the defendant or other copartners would contribute without cost to him the entire remainder of the purchase price. The only reasonable inference is that the defendant, in behalf of the joint venture, might borrow the moneys necessary to finance the venture, and that the plaintiff’s twenty per cent interest in the venture could be charged with interest on a proportionate share after deducting the plaintiff’s contribution. Indeed, the plaintiff does not seriously contend otherwise, but insists that since the defendant borrowed the money in his own behalf and then furnished the borrowed money to the venture, it must be regarded as a capital contribution. There is no basis for that contention, since the defendant was under no obligation to contribute that money to the capital, but was at liberty to finance the venture by loans. Under the express terms of the statute, if not at common law, the defendant is entitled to interest upon the amount so contributed, and the plaintiff’s share in the venture must be charged with interest on the balance of his proportionate share of the moneys furnished after deducting the plaintiff’s capital contribution.

The judgment should be modified in accordance with this opinion and as modified affirmed, without costs.

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

Judgment accordingly.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. James J. O’Connor, Appellant.
    (Argued September 30, 1931;
    decided November 17, 1931.)

      W. D. Smith and H. E. Blodgett for appellant.
    There was no evidence to support the conviction. (People v. Defore, 242 N. Y. 13; People v. Shanley, 40 Hun, 477; Stearns v. Titus, 193 N. Y. 272; People v. Marendi, 213 N. Y. 600.)

      Roy W. Peters, District Attorney («7. W: Collamer of counsel), for respondent.
    Defendant was legally arrested. (People v. Webster, 75 Hun, 278.) The officer had a legal right to search defendant. (People v. Defore, 242 N. Y. 13.)
   Per Curiam.

The conviction was for the crime of resisting an officer while in the performance of his duty,” under section 1825 of the Penal Law. The arrest of the prisoner was for the commission of a misdemeanor. This crime had not been committed in the presence of the arresting officer; nor did the officer hold a warrant for the arrest. Therefore, the arrest was illegally made; the officer had no right to search the prisoner; the prisoner did not resist an officer in the performance of any duty; and no crime was committed.

The judgments should be reversed and the information dismissed.

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

Judgments reversed, etc.


text:
    The People of the State of New York, Respondent, v. Harry Travis, Appellant.
    (Argued October 12, 1931:
    decided November 17, 1931.)

      David Lavene and Harry S. Travis for appellant.
    The People failed to establish that the defendant was guilty of violating a valid and legal speed ordinance of the village of Port Dickinson. (People v. Miller, 38 Hun, 82; Porter v. Waring, 69 N. Y. 250; City of New York v. Seely-Taylor Co., 149 App. Div. 98; 208 N. Y. 548; People v. Cronin, 91 Misc. Rep. 342; Harket v. Mayor, 17 Wend. 199; People v. Traina, 92 Misc. Rep. 82; People v. McGaghey, 124 Misc. Rep. 108; People v. Chapman, 88 Misc. Rep. 469; People v. Averill, 124 Misc. Rep. 383; Matter of Borough of Verona, 108 Penn. St. 82; Schwartz v. City of Oshkosh, 55 Wis. 490; Pearis v. City of Des Moines, 196 Iowa, 222; Franklin v. Horton, 97 N. J. L. 22; Kneih v. People, 50 How. Pr. 140; Newport v. Newport Nat. Bank, 148 Ky. 213; People v. Read, 256 Ill. 408.)

      Frank L. Wooster, District Attorney (Walter H. Parker of counsel), for respondent.
    The People proved the existence of a valid speed ordinance of the village of Port Dickinson. (Chapman v. Selover, 225 N. Y. 417.)
   Per Curiam.

The ordinance adopted by the village of Port Dickinson on April 7, 1924, limiting the speed of motor vehicles to one mile in three minutes, did not take effect as law until an official copy had been on file thirty days with the State Tax Commission (Highway Law; Cons. Laws, ch. 25, § 288, as amd. by L. 1921, ch. 580).

The People were under a duty to establish the filing of such a copy in accordance with the statute, and their case against the defendant was insufficiently made out upon the trial in that evidence of filing was omitted, though the omission was brought to. the notice of the trial court

Even so, the People are at liberty in support of the judgment of conviction to supply record evidence which, if offered at the. trial, could not have been overcome (People v. Flack, 216 N. Y. 123).

This they have now done by submitting evidence to this court that a copy of the ordinance was filed in the Bureau of Motor Vehicles of the State Tax Commission on April 17, 1924.

The Bureau of Motor Vehicles became a branch of the State Tax Commission on March 16, 1921 (Tax Law; Cons. Laws, ch. 60, § 179-b; L. 1921, ch. 90, § 8; cf. Highway Law, § 288, as amd. by L. 1921, ch. 580, and Highway Law, § 280, as amd. by L. 1924, ch. 360, and L. 1927, ch. 458).

The offense complained of was committed on March 17, 1930.

The judgment should be affirmed.

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

Judgment affirmed.


text:
    Charles De Santis, an Infant, by Helen De Santis, His Guardian ad Litem, Appellant, v. Peter Luger, Respondent.

      (Argued October 22, 1931:
    decided November 17, 1931.)

      Milton M. Eisenberg and Ralph Weller for appellant.
    Whether trespasser or licensee the defendant owed the infant plaintiff the duty not to injure him by active negligence, gross negligence or assault. (Kiff v. Youmans, 86 N. Y. 324; Morrison v. Hotel Rutledge Co., 200 App. Div. 636; Dorsey v. Chautauqua Institution, 203 App. Div. 251; Noonan v. Luther, 206 N. Y. 105; Magar v. Hammond, 183 N. Y. 387; Lande v. L. & S. Construction Co., 191 App. Div. 497.)

      Daniel Mungall for respondent.
    Neither the complaint nor the proof made out a cause of action. (Meiers v. Koch Brewery, 229 N. Y. 10; Birch v. New York, 190 N. Y. 397; Walrath v. Hanover Fire Ins. Co., 216 N. Y. 220; Kiff v. Youmans, 86 N. Y. 324; Swartwood v. Walbridge, 57 Hun, 33; Conway v. Carpenter, 80 Hun, 428; Brendlin v. Beers, 144 App. Div. 403.)
   Per Curiam.

In an action to recover damages for two assaults and batteries, one closely following the other, the trial judge permitted the jury to give damages for the first, but refused to allow a recovery for the second.

Both parties appealed from a judgment for $500 and costs in favor of the plaintiff, and both appealed from an order denying a new trial.

The order of the Appellate Division is obscurely phrased, but we think it may fairly be read as meaning that the judgment is unanimously affirmed in so far as it is appealed from by the defendant, but that it is affirmed, two justices dissenting, in so far as it is appealed from by the plaintiff. In that view, the decision is not unanimous, and an appeal may be taken by the plaintiff as of right.

The testimony as to the second assault, if submitted to the jury, would sustain a finding that the door of the defendant’s dwelling was closed with sudden violence; that this was done with the design to strike the plaintiff who was peaceably approaching; that the force was unreasonable and dangerous; and that the plaintiff in trying to ward off the threatened blow struck his hand against the glass and was seriously injured.

The judgment, so far as appealed from by the plaintiff, should be reversed, the causes of action stated in the complaint should be deemed to be severed, and a new trial granted as to the second, with costs to abide the event.

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

Judgment accordingly.


text:
    Willard A. Walsh, on Behalf of Himself and All Other Stockholders of Morana Incorporated, Appellant, v. Van Ameringen-Haebler, Inc., et al., Defendants, and Arnold L. Van Ameringen et al., Respondents.
    (Argued October 15, 1931;
    decided November 17, 1931.)

      John Marx for appellant.
    The wrongful acts of the defendants are sufficiently pleaded to sustain a cause of action. (Velsor v. Freeman, 118 Misc. Rep. 276; Bay Court Estates v. Dickinson, 194 N. Y. Supp. 190; Deutsch v. Textile Waste Mfg. Co., 212 App. Div. 681; Young v. Equitable Life Assurance Society, 112 App. Div. 760; German-American Coffee Co. v. O’ Neil, 167 App. Div. 928; 216 N. Y. 726; Brennan v. Barnes, 133 Misc. Rep. 340; Continental Securities Co. v. Belmont, 75 Misc. Rep. 237; Bosworth v. Allen, 168 N. Y. 157; Fitchett v. Murphy, 46 App. Div. 185; Carr v. Kimball, 153 App. Div. 825; Sage v. Culver, 147 N. Y. 245; Lozier Motor Co. v. Ball, 53 Misc. Rep. 382; Billings v. Shaw, 279 N. Y. 279; Scharf v. Warren-Scharf Paving Co., 15 App. Div. 481.)

      JohnF. Condon, Jr., and Spier Whitaker for respondents.
    The complaint fails to state facts sufficient to constitute a cause of action. (Kavanaugh v. Commonwealth Trust Co., 181 N. Y. 121; Bingler v. Jetter, 206 App. Div. 478; Continental Securities Co. v. Belmont, 206 N. Y. 7; O’Connor v. Virginia Passenger & Power Co., 184 N. Y. 46; Fleitmann v. United Gas Improvement Co., 174 App. Div. 781; Hart v. Mead, 186 App. Div. 962; Page v. St. Lawrence Condensed Milk Corp., 213 App. Div. 336; Beatty v. McCutcheon, 200 App. Div. 869; Meisel v. Central Trust Co., 179 App. Div. 795; DeJonge v. Behrman Co., 148 App. Div. 37; Nauss v. Nauss Brothers Co., 195 App. Div. 318; Peabody Co. v. Insurance Co., 210 App. Div. 261; Ellis v. Keeler, 126 App. Div. 343; Pollitz v. Wabash R. R. Co., 207 N. Y. 113; Holmes v. St. Joseph Lead Co., 168 App. Div. 688; 217 N. Y. 619; Holmes v. Crane, 191 App. Div. 820; 232 N. Y. 571; People v.
      Equitable Life Assurance Society, 124 App. Div. 714; Flynn v. Brooklyn City R. R. Co., 158 N. Y. 493.)
   Per Curiam.

The allegation that the directors voted themselves excessive salaries is sufficient to call upon the defendants to answer the complaint, even if the other allegations be disregarded as indefinite.

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

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

Judgment accordingly.


author: O’Brien, J.

text:
    C. Ludwig Baumann, Appellant, v. De Witt Stetten et al., as Trustees, et al., Appellants, and Berenice L. Baumann et al., Respondents.

      (Argued October 21, 1931;
    decided November 24, 1931.)

      Brison Howie for plaintiff-appellant.
    Even if the word “ dividends ” be disregarded the plaintiff is nevertheless entitled to all “ income ” from the deposited assets and thus to his share of the stock dividend, regardless of whether the separation agreement created a trust or a pledge. (Equitable Trust Co. v. Prentice, 250 N. Y. 1; Sturgis v. Roche, 247 N. Y. 585; Matter of Bird, 241 N. Y. 184; Bourne v. Bourne, 240 N. Y. 172; Macy v. Ladd, 227 N. Y. 670; U. S. Trust Co. v. Heye, 224 N. Y. 242; Matter of Osborne, 209 N. Y. 450.) The plaintiff is entitled to the whole of the dividend under the express terms of the agreement. (Brainard v. N. Y. C. R. R. Co., 225 N. Y. 125.) During plaintiff’s lifetime the individual defendants-appellants held the securities as pledgees only, and no trust was created until after his death. (Wehrle v. Mercantile Nat. Bank, 221 Mass. 585; Real Prop. Law, § 96; Pers. Prop. Law, § 11; Robinson v. Adams, 81 App. Div. 20; 179 N. Y. 558; Garvey v. McDevitt, 72 N. Y. 556; Cooke v. Platt, 98 N. Y. 35; Embury v. Sheldon, 68 N. Y. 227; Doctor v. Hughes, 225 N. Y. 305; National Bank of Commerce v. Allen, 90 Fed. Rep. 545; Winfrey v. Strother, 145 Mo. App. 115; Robertson v. Sully, 2 App. Div. 152; 157 N. Y. 624; Lawrence v. Maxwell, 53 N. Y. 19; Wilson v. Little, 2 N. Y. 443; Booth v. Consolidated Fruit Jar Co., 62 Misc. Rep. 252; Stock Corp. Law, § 47; Elyea v. Lehigh Salt Mining Co., 45 App. Div. 231; 169 N. Y. 29; Knox v. Eden Musee Co., 148 N. Y. 441; McNeil v. Tenth Nat. Bank, 46 N. Y. 325; Hale v. West Porto Rico Sugar Co., 200 App. Div. 577.)

      Jonas J. Shapiro, Benjamin L. Blauvelt, Adolph Bloch and Henry Bloch for defendants-appellants.
    The agreement being one to hold choses in action as security constituted the individual defendants-appellants pledgees thereof, and not trustees. (Markham v. Jaudon, 41 N. Y. 235; Winfrey v. Strother, 145 Mo. App. 115; Robertson v. Sully, 2 App. Div. 152; 157 N. Y. 624; National Bank of Commerce v. Allen, 90 Fed. Rep. 545; Lawrence v. Maxwell, 53 N. Y. 19; Smith v. Craig, 211 N. Y. 456; Strong v. National Mech. Bkg. Assn., 45 N. Y. 717; Wehrle v. Mercantile Nat. Bank, 221 Mass. 585; Denison v. Denison, 185 N. Y. 438; Barber v. Hathaway, 47 App. Div. 165; 169 N. Y. 575.) It follows that the individual defendants-appellants have no power to vote the stock, and have no title to the stock. (Stock Corp. Law, § 47; National Bank of Commerce v. Allen, 90 Fed. Rep. 545; Wentworth Co. v. French, 176 Mass. 442; Masury v. Arkansas Nat. Bank, 93 Fed. Rep. 603; Lawrence v. Maxwell, 53 N. Y. 19; Murray v. Miller, 178 N. Y. 316; Real Prop. Law, § 93; Jacoby v. Jacoby, 188 N. Y. 124.)

      Herbert R. Limburg and Joseph L. Weiner for Berenice L. Baumann, respondent.
    Plaintiff is not entitled by virtue of the terms of the separation agreement to any part of the shares declared as a stock dividend upon the shares deposited by him under the agreement. (Insurance Co. v. Dutcher, 95 U. S. 269; Nicoll v. Sands, 131 N. Y. 19; City of New York v. New York City Ry. Co., 193 N. Y. 543; Carthage T. P. Mills v. Village of Carthage, 200 N. Y. 1; Story v. Craig, 231 N. Y. 33; Matter of City of New York, 217 N. Y. 1; Porter v. Denny, 170 App. Div. 546.) The agreement does not award stock dividends to the plaintiff, but requires that they shall be retained by the trustees. (Matter of Osborne, 209 N. Y. 450; Equitable Trust Co. v. Prentice, 250 N. Y. 1.) The separation agreement created a trust and not merely a pledge. (Brightson v. Chaflin, 225 N. Y. 469; Bank of Waterloo v. Exchange Bank, 226 N. Y. 633.) The trustees were required to transfer the stock to their own names and to vote the stock, both by law and by the express terms of the agreement. (Green v. Title Guarantee & Trust Co., 223 App. Div. 12; 248 N. Y. 627; Miles v. Vivian, 79 Fed. Rep. 848; Cooper v. Day, 1 Rich Eq. [S. C.] 26; Cogbill v. Boyd, 77 Va. 450.)

      Henry F. Miller for Elizabeth Baumann et ah, respondents.
    Under the separation agreement the plaintiff did not become entitled to the stock dividend or any part thereof. (Insurance Co. v. Dutcher, 95 U. S. 269; Wolsey v. Funke, 121 N. Y. 87.)
   O’Brien, J.

A separation agreement between Charles Ludwig Baumann and his wife, the defendant Berenice L. Baumann, contracted for an annual payment by him to her and provision for their children. In order to guarantee against default of these payments the husband agreed to deliver certain insurance policies and stock certificates into the possession of third persons. Among these certificates was one for four hundred shares of the common stock of C. Ludwig Baumann & Co. owned by the husband. Only five hundred shares of common stock of that corporation had been authorized and issued. The wife owned the remaining hundred shares. These policies and the certificates owned by plaintiff were to be delivered to the third parties solely for the purpose of guaranteeing the performance of the terms of this agreement,” and it was understood, in the language of the agreement, that until default in payment should be made by the husband “ all dividends or other income ” should continue to be paid to him. DeWitt Stetten and Lawrence S. Greenbaum, acting as stakeholders or pledgees of the policies and certificates, accepted their custody and now retain them. Later, the corporation declared a stock dividend of six hundred per cent and increased the common shares of its capital stock to three thousand five hundred shares. The question is whether, within a fair contemplation of the agreement and its fundamental purpose, plaintiff’s interest in this stock dividend is such a dividend or income as the parties to the agreement expected would be put in his possession. In this action plaintiff seeks physical possession of the new certificate.

The essence of that part of the agreement dealing with the disposition of the stock certificates was the creation of some collateral security which in the possession of others than the plaintiff would be sufficient to enforce his promise to make provision for his wife and children. When plaintiff parted with the physical control of four-fifths of the capital shares of his corporation, which possessed voting rights, he gave an adequate guaranty that he would perform his agreement and make the required payments. If the collateral security should continue to consist not of four-fifths but only of one-eighth of the voting shares of the capital stock, the value of the security contemplated by the agreement would become so substantially reduced as to afford less probability of coercion against the pledgor. Immediately prior to the declaration of the stock dividend, plaintiff’s four hundred shares possessed a book value in excess of $450,000, while after the declaration and the issue of three thousand new shares the value shrank to less than $65,000. Of course no such reduction in value of the pledge ever was contemplated. The purpose of the agreement was to put into the possession of the pledgees all of plaintiff’s holdings of common stock in the corporation which he controlled. The yield on the new shares representing plaintiff’s proportion of the stock dividend must, in accordance with the terms of the agreement, be paid to him. This is the kind of dividend or income within the intention of the parties. The stakeholders are entitled to retain possession of the certificates for the new stock. No such principle as was involved in Matter of Osborne (209 N. Y. 450); United States Trust Co. v. Heye (224 N. Y. 242); Equitable Trust Co. v. Prentice (250 N. Y. 1) and kindred decisions is present in this case. On the facts before us we are not required to go farther than merely to hold that within the purview of this separation agreement, such dividends as are physically manifested by certificates of new stock are not such dividends or other income ” as the parties intended should be tangibly held by plaintiff rather than by the pledgees.

We have considered the question in relation to the disposition of the cash dividends on the hundred shares of stock formerly belonging to Mrs. Baumann and we agree with the courts below.

Notwithstanding the phraseology of the separation agreement with respect to the words trust ” and trustees ” we think that defendants Stetten and Greenbaum never were expected, during the life of plaintiff and prior to default by him, to be burdened with all the responsibilities of trustees. Rather the implication from the acts of all the parties is that the main purpose was to clothe these two defendants during the fife of plaintiff with the usual powers of stakeholders or pledgees with authority, if necessary, to enforce the payment provisions of the separation agreement in the event of plaintiff’s default, to sell the stock and to realize on the other securities. The agreement recites that the transfer of such assets to the trustees shall be solely for the purpose of guaranteeing the performance of the terms of this agreement by the party of the second part,” and provides: The parties hereto authorize said trustees to sell said securities at public or private sale, without notice, upon proof satisfactory to them that a default has been made by the party of the second part.” Plaintiff is still alive and has not suffered default in payment. The complaint alleges that the insurance policies and the stock certificates are to be held by the trustees during the lifetime of plaintiff as security for the full and faithful performance by him of all the terms of the agreement. It also alleges and the evidence proves that he has duly performed. Real trusts are not created except by that part of the agreement which begins: Upon the death of the party of the second part, the trustees shall hold said property for the following trusts and uses.” Until these two defendants may be forced into some activity contemplated by the agreement, they act merely as pledgees and stakeholders. Up to the present time they are at most nothing except trustees of a passive trust with no right to vote the stock. (Denison v. Denison, 185 N. Y. 438, 443; Barber v. Hathaway, 47 App. Div. 165; affd., 169 N. Y. 575; Markham v. Jaudon, 41 N. Y. 235; National Bank of Commerce v. Allen, 90 Fed. Rep. 545; Stock Corp. Law; Cons. Laws, ch. 59, § 47.)

The judgment should be modified in accordance with this opinion as to the defendants Stetten and Greenbaum, and as modified affirmed, without costs.

Cardozo, Ch. J., Pound, Crane, Kellogg and Hubbs, JJ., concur; Lehman, J., dissents as to the disposition of the cash dividends upon the one hundred shares of stock.

Judgment accordingly.


author: Hubbs, J.

text:
    In the Matter of Kerwin H. Fulton, as Substituted Trustee under the Will of Alexander Clark, Deceased, Respondent. Van Beuren and New York Billposting Company, Appellant.

      (Argued September 28, 1931;
    decided November 24, 1931.)

      Richard T. Greene, Daniel S. Murphy and Edward E. Weadock for appellant.
    Surplus of gains or profits beyond what would be necessary to keep good the liability to capital stock which has been issued, may in the discretion of a board of directors, be distributed amongst its stockholders as dividends and returns on their investment. The appraisers erred in adding to the value of petitioner’s preferred stock the sum representing an aliquot part of the surplus, consisting solely of undistributed earnings, all of which on distribution must go to the common stock. (Hartley v. Pioneer Iron Works, 181 N. Y. 73; Rorke v. Thomas, 56 N. Y. 559; Equitable L. A. Soc. v. U. P. R. R. Co., 212 N. Y. 360; Matter of Bridgewater Navigation Co., L. R. [1891] 2 Ch. Div. 317; Birch v. Cropper, 14 App. Cas. 549; Lloyd v. Pennsylvania Electric Vehicle Co., 75 N. J. Eq. 263; Niles v. Ludlow Valve Mfg. Co., 196 Fed. Rep. 994; 202 Fed. Rep. 141; 231 U. S. 748; Continental Ins. Co. v. United States, 259 U. S. 156.) There were no special circumstances to justify the appraisers in including the surplus in their appraisal. (Russell v. American Gas & Electric Co., 152 App. Div. 136; Stone v. U. S. Envelope Co., 111 Atl. Rep. 536; Lyman v. Southern Ry. Co., 141 S. E. Rep. 240; Brock v. Poor, 216 N. Y. 387; Butler v. New Keystone. Copper Co., 93 Atl. Rep. 380; Matter of Timmis, 200 N. Y. 177; H. & G. M. Co. v. H. & W. M. Co., 127 N. Y. 252; Equitable L. A. Soc. v. U. P. R. R. Co., 212 N. Y. 360; Matter of London India Rubber Co., L. R. 5 Eq. 519; Gifford v. Thompson, 115 Mass. 478; People v. N. Y. Building Loan & Banking Co., 50 Mass. 23.)

      Lester L. Callan for respondent.
    The petitioner is entitled to have as the value of his shares his aliquot or proportionate part of the net worth of the appellant corporation on the day of the dissent. (Murrin v. Archbald Consolidated Coal Co., 196 App. Div. 107; 232 N. Y. 541; Cole v. Wells, 224 Mass. 504; Matter of Erlanger, 206 App. Div. 148; 237 N. Y. 159; Continental Ins. Co. v. United States, 259 U. S. 156.) In appraising the stock of a stockholder who dissents from a resolution to sell all the corporate assets, the stock should be valued as if the corporation were .dissolved with respect to the shares of the dissenting stockholder. (Matter of Timmis, 200 N. Y. 177; Matter of Drosness, 187 App. Div. 425; People
      v. Ballard, 134 N. Y. 269; Murrin v. Archbald Consolidated Coal Co., 232 N. Y. 541; Elyton Land Co. v. Dowell, 113 Ala. 177.) On the dissolution of a corporation the net assets are distributed to the preferred and common shareholders alike in accordance with their holdings unless there is an express provision in the certificate to the contrary. (Continental Ins. Co. v. United States, 259 U. S. 156; Matter of London India Rubber Co., L. R. 5 Eq. 519; Gifford v. Thompson, 115 Mass. 478; People v. New York Building Loan Banking Co., 50 Misc. Rep. 23.)
   Hubbs, J.

This is a proceeding to appraise the value of four hundred eighty-one shares of the preferred stock of Van Beuren and New York Billposting Company, under section 21 of the Stock Corporation Law (Cons. Laws, ch. 59).

All of the stockholders of the appellant corporation, except respondent, voted to sell and transfer all of its assets, including its good will, to another corporation. The respondent, who owned four hundred eighty-one shares of preferred stock, did not vote in favor of such sale. He commenced this proceeding under section 21 of the Stock Corporation Law to have the value of his stock appraised. The par value of his stock was one hundred dollars per share and it had never sold above par.

At the date of the respondent’s dissent, there were outstanding two thousand four hundred seventy-one shares of six per cent preferred and two thousand four hundred seventy-one shares of common stock, all of the par value of one hundred dollars per share. The corporation had, therefore, capital stock outstanding totaling $494,200, all of which had been issued at par. It also had an accumulated surplus arising from undivided profits totaling $682,757.95. The appraisers fixed the value of the preferred stock at $238.15 per share. That figure was arrived at by dividing the sum of the surplus and capital stock issued, $1,176,957.95, by 4,942, the total number of shares issued, common and preferred. Thus one-half of the surplus was allotted to the preferred stock.

If the method adopted by the appraisers was correct, it is quite apparent that the respondent, by dissenting and requiring an appraisal of his stock, thereby more than doubled the value of his stock which had never sold for more than par.

The method adopted by the appraisers was the method approved for the appraisal of preferred stock after a dissolution of a corporation in the case of Continental Ins. Co. v. United States (259 U. S. 156). We do not pass upon the question of the proper rule to be applied upon the distribution of surplus between common and preferred stock upon the dissolution of a corporation. The determination of that question is not involved in this case.

Under section 21 of the Stock Corporation Law, the duty of the appraisers is to estimate and certify the value of such stock at the time of such dissent.” We are required to determine the proper method of computing the “ value ” of each share of preferred stock on April 13, 1926, “ the time of such dissent.”

Proceedings to dissolve a stock corporation in this State are carefully regulated by statute, which prescribes in great detail all of the various steps in such proceeding. Article 7 of chapter 28, Laws of 1909, the General Corporation Law (Cons. Laws, ch. 23), regulates the proceedings for an involuntary dissolution and article 9 thereof applies to a voluntary dissolution. Section 185 of the statute, as amended (L. 1929, ch. 650), provides for the division of the surplus among the stockholders, after the payment of claims, in accordance with their respective interests.” Manifestly, their “ respective interests ” will depend upon the provisions of the certificate of incorporation and the wording of the stock certificates. In the absence of any provision giving a preference in the surplus to ¡a particular class of stock, it has been decided that such surplus shall be distributed "upon principles of equal justice and equity among all the stockholders.” (James v. Woodruff, 10 Paige, 541, 546; affd., 2 Den. 574.)

At the time of the distribution of a surplus upon dissolution, the directors of' a corporation have ceased to function. The title to the surplus has vested in a receiver. The statute requires him to distribute it to the stockholders “ in accordance with their respective interests.”

This proceeding has no resemblance to an action or proceeding to dissolve a corporation. It is a purely statutory proceeding. The statute expressly provides for the fixing of the value of the stock of a going concern, as of the time of the dissent.

It has been said that a sale, not in the ordinary course of business, by a corporation of a substantial part of its business, “ so integral as to be essential for the transaction of its ordinary business ” (Matter of Timmis, 200 N. Y. 177, 181), entitles dissenting stockholders to have their stock appraised and paid for by the corporation. The statement that such a sale constitutes a practical dissolution ” of a corporation has been used, not to indicate that the corporation as such had ceased to exist but as a justification for holding that such a sale could not be made over the protest of dissenting stockholders without giving them the right to have their stock appraised.

While the sale of the assets of a corporation changes the character of the business of the vendor corporation, and establishes the right of a dissenting stockholder to have his stock appraised, it does not amount to an actual dissolution.

Matter of Timmis (200 N. Y. 177) is a typical case. In that case a substantial branch of the corporation’s business was sold, not in the ordinary course of business, and this court decided that the dissenting stockholder was entitled to have his stock appraised, not because the corporation was dissolved, but because the stockholder could not be compelled to continue as a stockholder in a. substantially different business. A reading of the opinion in that cai=>e discloses that the corporation was not in fact dissolved or its business discontinued. It only discontinued one branch of its business and continued to carry on its other branches.

At common law, the assets of a corporation could not be sold without the consent of all stockholders. The right of two-thirds of the stockholders to require a sale is a privilege conferred by the Legislature. That privilege cannot be exercised to the detriment of the dissenting stockholders. To require them to accept less than a fair market price for their stock would be a distinct injury. It is true that there may be cases where the stock has a fictitious market price. To require the corporation in such cases to pay the market price of the stock owned by dissenting stockholders would work a hardship on the corporation and its remaining stockholders.

Under such circumstances the market quotations should be considered but not accepted as decisive of a fair market price. The market quotations at the time of the dissent may, in certain instances, reflect an expectation of increased value as a result of the proposed sale. A dissenting stockholder is not entitled to share in an enhanced value of stock due to the sale which he has opposed and from which he dissents. Market quotations are, therefore, to be considered only in so far as they reflect a reasonable basis for estimating market quotations which would probably have continued if a sale had not been made. The appraisers should consider the elements that tend to affect market quotations: the rate of dividends; the regularity with which they have been paid; the management and reputation of the company; its prospects for the future and all other circumstances which will aid them in estimating the future course of the stock in the market. After such consideration it may be reasonable to decide that the true market price of the stock, i. e., the quotations that would probably prevail in the future, is not less than the quotations at the time of the dissent, and an award may be made based on such market quotations even though it would be greater than the book value or the value as estimated by experts.

The consideration of market quotations when they have been artificially enhanced will seldom be required upon an appraisal, for if there is an open unrestricted market in which dissenting stockholders can sell their stock at more than its actual value, they will, no doubt, do so. If, however, the directors of the corporation have so managed it as to depress the price of the stock in the open market, dissenting stockholders will naturally desire to secure for their stock its actual value by requiring an appraisal. (Petry v. Harwood Electric Co., 280 Penn. St. 158.)

The payment of such actual value, even if more than the market quotation, is the price that must be paid by the corporation for the privilege of requiring a sale over the protest of the dissenting stockholders who in effect are being ousted from the corporation.

The purpose of the statute- being to save the dissenting stockholder from loss by reason of the change in the nature of the business, he is entitled to receive the value of his stock for sale or its value for investment.

No rule can be laid down for determining the actual or true value of stock of a given class except one of a very general nature and which may, in a particular case, be inapplicable because of varying provisions contained in the charter or by-laws of the corporation or because of the existence of a state of facts peculiar to the situation involved in the particular case.

In addition to the aliquot value of the share of the applicable assets, which is the only factor to consider under the facts in this case, and market quotations, other elements should be considered by the appraisers. Those elements will necessarily vary in different cases and it is not practical to attempt to state every circumstance which may properly influence appraisers in fixing the value of such stock.

It will be readily appreciated that the appraisers should have considered the investment value of the stock which is largely determined by the rate of return, the security afforded that the dividends will be regularly paid, the possibility that dividends will be increased or diminished, the selling price of stocks of like character, the amount of preferred stock in comparison with the common stock, the size of the accumulated surplus applicable to the payment of dividends, the record of the corporation and its prospects for the future.

The appraisers in estimating the fair value of the stock being appraised should give such consideration as to them seems proper to each factor which might enter into such value, and their report as to value should be reasonable and in accordance with the facts proven.

In the case at bar the directors had not ceased to function. The corporation was a going concern. The surplus, consisting of accumulated profits, was still subject to distribution among the common stockholders. True, the corporation had voted to go out of the active business in which it had been engaged and to turn over its assets to another corporation, and to receive therefor stock in the purchasing company, but the relation of the non-dissenting stockholders to the vendor corporation remained unchanged. Under the proposed transfer, the stock of the purchasing company received in exchange was to become assets of the selling company and held by its directors in place of the assets which had been transferred. There is no apparent reason why the directors could not vote that part of the stock acquired in exchange for the surplus profits of the corporation as a stock dividend to the holders of the common stock, or sell such stock and distribute the proceeds as a cash dividend to the common stockholders. The holders of the preferred stock had no interest in such surplus except the preference given by the terms of the certificate of incorporation, which gives a preference as to dividends only.

The appraisers were mistaken in assuming that the dissenting stockholder was entitled to an aliquot part of the surplus earnings of the company and in apportioning the same to his preferred stock. The result was to give an unreal and fanciful value to his preferred stock, and to work an injustice to the common stockholders and to the holders of the remaining preferred stock. As there was no established market for the preferred stock, the respondent was entitled to receive the actual value of his stock. The figures used by the appellant showing the condition of the corporation were all taken from its last balance sheet and are conceded to be correct. The correct method of computing the value of the preferred stock under the conceded facts is comparatively simple. The capital stock account was made up of the amount paid for the stock when issued at par, i. e., $494,200. That amount divided by the number of shares issued equals the value of each share of preferred stock, the value at which it should have been appraised under the facts in this case. It happens to be the exact amount paid for the stock when issued.

The result that the dissenting preferred stockholder is entitled to receive for his preferred stock the exact amount paid occurs because the corporation commenced business without any surplus and each stockholder paid par for his stock when issued.

The cases relied upon by the respondent do not hold anything contra to the conclusion which we have reached. Continental Ins. Co. v. United States (supra) involved the construction of a certificate of incorporation which by its terms defined the rights of holders of preferred stock. The court decided that the holders of such stock were entitled to share in the surplus at the conclusion of an action to dissolve the corporation. The dicta contained in the case of Cole v. Wells (224 Mass. 504) states the rule applicable upon the distribution of a surplus among owners of common stock, and has no application to a case where a surplus is to be distributed in a statutory proceeding where there is outstanding stock, both common and preferred.

It will be unnecessary to remit the proceeding for a reappraisal as the parties are in substantial agreement that the value of the preferred stock is its par value of $100 per share provided the dissenting holder of preferred stock is not entitled to share in the surplus.

The order should be modified by reducing the amount to be paid by the appellant for the four hundred eighty-one shares of preferred stock owned by the respondent from the sum of $114,515.50 to $48,100, and as modified, affirmed, without costs.

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

Ordered accordingly.


text:
    Virginia D. Glenn et al., Respondents, v. Oakdale Contracting Company, Inc., Appellant, Impleaded with Another.

      (Argued October 20, 1931;
    decided November 24, 1931.)

      James I. Cuff, Harold V. Angevine and Grattan B. Shults for appellant.
    The plaintiff failed to establish any negligence on the part of the defendant-appellant and the complaint should have been dismissed. (Fithian Contracting Co. v. Degnon Contracting Co., 175 App. Div. 386; Schmidt v. City of New York, 179 App. Div. 667; 228 N. Y. 572; Dwyer v. Neckerman Co., 223 App. Div. 39; Derby v. Degnon-McLean Contracting Co., 112 App. Div. 324; 188 N. Y. 631; Maloney v. Bradley Contracting Co., 84 Misc. Rep. 452; McHugh v. Consolidated Gaslight Co., 86 Misc. Rep. 327; Carr v. Degnon Contracting Co., 48 Misc. Rep. 531; Beltz v. City of Yonkers, 148 N. Y. 67.) The trial court erred in its charge to the jury that the defendant was not entitled to notice of the defect complained of, and in denying defendant’s requests for instructions on the question of notice. (Fithian v. Degnon Contracting Co., 175 App. Div. 386; Schmidt v. City of New York, 179 App. Div. 667; 228 N. Y. 572.)

      D. Francis Searle and James J. Sullivan for respondents.
    There is no error in the charge that appellant had knowledge of the condition it created. (Becker v. Liscio, 223 App. Div. 698; Brown v. G. R. Co., 236 N. Y. 271; Mar

      mur v. R. G. Co., 167 N. Y. Supp. 850.) There was no prejudicial error in the qualification that the degree of care was the same as that of the city if it, instead of the defendant-appellant, were doing the work. (Minton v. City of Syracuse, 172 App. Div. 44; Jones v. City of Binghamton, 198 App. Div. 183; Stedman v. City of Rome, 88 Hun, 279; Tabor v. City of Buffalo, 136 App. Div. 260; Riddle v. Village of Westfield, 65 Hun, 432; Loreto v. City of New York, 148 App. Div. 721; Brusso v. City of Buffalo, 90 N. Y. 679.)
   O’Brien, J.

Defendant Oakdale Contracting Company, under contract with the city of New York, constructed a section of subway railroad beneath Seventh avenue. Above the excavation and flush with the surface of the street it built a temporary roadway consisting of heavy planks fastened by long spikes to transverse joists. On conflicting evidence the jury found that plaintiff Virginia Dyer Glenn in crossing this planking caught her foot on one of these spikes which protruded above the surface and that she received injuries to her person. The evidence was such as to warrant the jury in finding that the decking was built in accordance with approved methods of subway work and that the entire structure including the spikes and nails was pátroled and inspected by two employees of defendant. The court charged that the jury was not to consider any question in relation to the sufficiency of the construction of the planking and, over objection and exception, that the only issue in the case was whether the nail or the cluster of nails was protruding in such a way as to cause the accident. No testimony tends to prove the length of time previous to plaintiff’s injury during which the spike protruded, but the court refused to instruct that, before plaintiff could recover, evidence of the existence of the defect for a sufficient length of time to charge defendant with actual or constructive notice was necessary. We think the refusal to charge this request, when considered in relation to the issue as narrowed by the court, constitutes error and requires a reversal.

This temporary planking, if adequately constructed, is not a nuisance. For failure properly to maintain it, the city of New York, in the absence of notice of some defect, would not be hable for negligence. The same rule applies to the contractor. (Schmidt v. City of New York, 179 App. Div. 667; affd., 228 N. Y. 572.) Respondents invoke the principle represented in such decisions as Storrs v. City of Utica (17 N. Y. 104); Brusso v. City of Buffalo (90 N. Y. 679) and Wilson v. City of Troy (135 N. Y. 96). Those cases govern facts where a municipality has created an unsafe condition, usually an unguarded excavation, but they do not control a situation where the act in locating a bridge for pedestrians as a temporary substitute for a sidewalk or, as in this case, planking in lieu of a permanent pavement does not in itself cause a deviation from a reasonably safe condition. The planking, if strongly and prudently constructed, is not required to equal in safety and convenience the pavement which had been removed. (Nolan v. King, 97 N. Y. 565, 571.) The evidence before us tends to prove that the decking was built according to approved methods and that the ordinary wear and tear to the street by the passage of heavy trucks caused the spike to protrude.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

Cardozo, Ch. J., Lehman and Kellogg, JJ., concur; Pound, Crane and Hubbs, JJ., dissent.

Judgments reversed, etc.


text:
    Evelyn Building Corporation, Appellant and Respondent, v. The City of New York, Respondent and Appellant, and La Rocca Construction Corporation, Respondent.

      (Argued October 15, 1931;
    decided November 24, 1931.)

      Harry B. Chambers, Joseph B. Kenny and Harry H. Chambers for plaintiff, appellant and respondent.
    In holding that the city is regarded as the owner from the time of entry, the courts below disregarded settled law and thereby deprived plaintiff of a substantial item of damage. (Matter of Van Etten v. City of New York, 226 N. Y. 483; Amerman v. Dean, 132 N. Y. 355; Coventry v. McCreery, 144 App. Div. 68; Hay v. Hubbell, 125 App. Div. 60; Fisher v. Hall, 41 N. Y. 416; Mitchell v. Bartlett, 51 N. Y. 447; Satterly v. Dewick, 129 App. Div. 701; 197 N. Y. 590; Pappenhein v. M. E. R. Co., 128 N. Y. 436; McGean v. M. E. R. Co., 133 N. Y. 9; Mitchell v. Village of White Plains, 91 Hun, 189; Bunke v. New York Telephone Co., 110 App. Div. 241; 188 N. Y. 600; De Camp v. Bullard, 159 N. Y. 450; Hellenberg v. Schmidt, 81 Misc. Rep. 157; Lamb v. Lamb, 146 N. Y. 317; City of New York v. Fink, 130 Misc. Rep. 620.) The trial court and the Appellate Division erred in holding that the buttresses and piers might lawfully be used as a foundation, and in refusing to allow plaintiff damages for excess foundation cost. (Greater New York Charter, § 71; City of Mt. Vernon v. N. Y., N. H. & H. R. Co., 232 N. Y. 309; Kahabka v. Schwab, 205 App. Div. 368; 236 N. Y. 595; Acme Realty Co. v. Schinasi, 154 App. Div. 397; 215 N. Y. 495; Hayman v. Steich, 114 N. Y. Supp. 603; 118 N. Y. Supp. 1113; 201 N. Y. 578; Jennings v. Baumann, 214 App. Div. 361; 243 N. Y. 532; Matter

      of Rapid Transit R. R. Commrs., 197 N. Y. 81; Strohm v. N. Y., L. E. & W. R. R. Co., 96 N. Y. 305; Brooklyn Trust Co. v. City of New York, 109 Misc. Rep. 593; 198 App. Div. 595; 243 N. Y. 520.) The Board of Transportation, is the agent of the city of New York in the construction of subways in the city of New York, and the defendant city is liable for the acts of the Board of Transportation, its agents, servants and employees within the scope of their duties. (Litchfield Construction Co. v. City of New York, 244 N. Y. 251; Sun Printing & Publishing Assn. v. Mayor, 152 N. Y. 257; Augustine v. Town of Brandt, 249 N. Y. 198; Stoddard v. Village of Saratoga Springs, 127 N. Y. 261; Buffalo & Hamburgh Turnpike Co. v. City of Buffalo, 58 N. Y. 639; Lee v. Village of Sandy Hill, 40 N. Y. 442; Seeley v. City of Amsterdam, 54 App. Div. 9; Jewhurst v. City of Syracuse, 108 N. Y. 303; Munk v. City of Watertown, 67 Hun, 261; Spier v. City of Brooklyn, 139 N. Y. 6; Teall v. City of Syracuse, 120 N. Y. 184; Salt Lake City v. Hollister, 118 U. S. 256; New York City v. Sheffield, 4 Wall. [U. S.] 189.) The liability of the city of New York for depriving property abutting the street of lateral support in the course of subway construction is absolute. (Matter of Rapid Transit R. R. Commrs., 197 N. Y. 81; Susswein v. Bradley Contracting Co., 184 App. Div. 852; Bergen v. Morton Amusement Co., 178 App. Div. 400; 226 N. Y. 665; Riley v. Continuous Rail-Joint Co., 110 App. Div. 787; 193 N. Y. 643; Gillies v. Eckerson, 97 App. Div. 153.) In the construction and operation of a subway, the city of New York is not using the street for a street purpose, and is acting in a proprietary and not a governmental capacity. (Matter of Rapid Transit R. R. Commrs., 197 N. Y. 81; Litchfield Construction Co. v. City of New York, 244 N. Y. 251; Bradley v. Degnon Contracting Co., 157 App. Div. 237; Sinsheimer v. Underpinning & Foundation Co., 178 App. Div. 495; 226 N. Y. 646; Peck v. Schenectady Ry. Co., 170 N. Y. 298.)

      Arthur J. W. Hilly, Corporation Counsel (Frank R. Rubel, Charles V. Nellany and Charles Blandy of counsel), for defendant, respondent and appellant.
    The city of New York is not liable for the acts of the Board of Transportation in the commission of a tort. (Matter of McAneny v. Board of Estimate & Apportionment, 232 N. Y. 377; Degnon Construction Co. v. City of New York, 202 App. Div. 390; People ex rel. New York Dock Co. v. Delaney, 192 App. Div. 734; Haller an v. City of New York, 132 Misc. Rep. 73; 226 App. Div. 785; Litchfield Construction Co. v. City of New York, 216 App. Div. 517; Heim v. McCall, 239 U. S. 175; Maximilian v. Mayor, 62 N. Y. 160.) The statutes vest the construction of the railways in the Board of Transportation as the administrative agent of the State. (O’Brien v. City of New York, 182 App. Div. 810; Tone v. Mayor, 70 N. Y. 157; Halleran v. City of New York, 132 Misc. Rep. 73; 226 App. Div. 785.) If the court finds there was an agreement that the Board of Transportation would pay and had authority to pay, so as to bind the city of New York under the Transit Act, then any damages accruing to plaintiff are to be paid by the defendant-respondent under its contract for indemnification, as the contractor constructing the subway is absolutely liable to the city of New York and to the plaintiff for such damages as it has caused to plaintiff by the acts described in the complaint, and which may have been proved on the trial. (Schnaier v. Bradley Contracting Co., 181 App. Div. 538; 8th & 9th Avenues Rys. Co. v. City of New York, 223 App. Div. 316.) The plaintiff cannot recover upon the theory of trespass, as consent was given by plaintiff to the Board of Transportation and the contractor, to enter upon its land and construct the buttresses and piers in the manner in which they were constructed, with acquiescence and knowledge of the plaintiff. (Crosdale v. Lanigan, 129 N. Y. 604; Selden v. Delaware & Hudson Canal Co., 29 N. Y. 634; Ketchum v. Newman, 116 N. Y. 422.)

      James F. Dealy and Enos Throop Geer for defendant-respondent.
    The city, having ordered the contractor to construct unnecessary buttresses upon plaintiff’s land, cannot now hold the contractor on the claim of the plaintiff against it for damages by reason of the construction of such buttresses. (Callanan v. K., C. & L. C. R. R. Co., 199 N. Y. 268; Ogden v. Alexander, 140 N. Y. 356; First Nat. Bank v. Chalmers, 144 N. Y. 432; Meyer v. Lathrop, 73 N. Y. 315; Galle v. Tode, 148 N. Y. 270; Helgar Corp. v. Warner Features, 222 N. Y. 449; Newman v. Frost, 52 N. Y. 422; Meyer v. Amidon, 45 N. Y. 169; Borough Const. Co. v. City of New York, 200 N. Y. 149; Sundstrom v. State of New York, 213 N. Y. 68; Horgan v. Mayor, 160 N. Y. 516; Brainard v. N. Y. C. R. R. Co., 242 N. Y. 125; Hartigan v. Casualty Co., 227 N. Y. 175.) The defendant-respondent is not liable to the city for any excess foundation costs which the city may have to pay to the plaintiff for the reason that such costs are excluded under the contract from the liability of the contractor. (Brooklyn Trust Co. v. City of New York, 198 App. Div. 595.) The contractor is not liable to the city in any event either for the value of an easement to maintain the buttresses or for excess foundation costs, as the damage did not result from any fault, negligence or lack of skill on its part in the performance of its contract. (Matter of Rapid Transit Commrs., 197 N. Y. 81; Blockman v. Spreckles, 135 Cal. 662; Inge v. Bd. of Public Works, 135 Ala. 187; People ex rel. North v. Featherstonhaugh, 172 N. Y. 112; City of New York v. Bklyn. Alcatraz Asphalt Co., 84 Misc. Rep. 572; Smyth v. City of New York, 203 N. Y. 106; Rigney v. N. Y. C. & H. R. R. R. Co., 217 N. Y. 31; Wilson v. Costich Co., 231 App. Div. 346; 256 N. Y. 629; New York Pneumatic Service Co. v. Cox Contracting Co., 201 App. Div. 33; 235 N. Y. 567; Hale v. Ripton, 197 App. Div. 926; 234 N. Y. 631.) The city is bound by the acts of the Board of Transportation. (Litchfield Construction Co. v. City

      of New York, 244 N. Y. 251; Degnon Contracting Co. v. City of New York, 202 App. Div. 390; 235 N. Y. 481; O’Brien v. City of New York, 182 App. Div. 810; Halleran v. City of New York, 132 Misc. Rep. 73; 226 App. Div. 785; Matter of Rapid Transit Commrs., 197 N. Y. 81; Borough Const. Co. v. City of New York, 200 N. Y. 149.)
   Hubbs, J.

This is an action for an injunction to restrain a continuing trespass upon plaintiff’s real property, to compel its restoration to its former condition and for damages. At the commencement of the action the city of New York was the sole defendant. Subsequently, the construction corporation was brought in as a party pursuant to subdivision 2 of section 193 of the Civil Practice Act, upon motion of the city, so that in the event of a recovery by the plaintiff the city might have a judgment over against the construction corporation under an indemnity clause in its contract with the city.

The city was engaged in constructing a subway railroad under the surface of St. Nicholas avenue in front of plaintiff’s real property. The work was being done by the defendant construction corporation (hereinafter referred to as the contractor) under a contract entered into between it and the city, acting through the Board of Transportation (hereinafter called the Board).

On May 24, 1928, when the subway had been excavated to a depth of sixty feet in front of plaintiff’s premises, a rock slide occurred which precipitated the front of plaintiff’s premises for a distance of 130 feet, comprising a square foot area of 1,760 feet, into the subway. It was wedge shaped, varying in width at the surface from 7 to 22 feet, and 60 feet deep. The slide occurred by reason of the excavation, which removed the lateral support from the rock and caused it to slip into the subway. At the place where the slide started there was a mud seam in the rock.

Without securing from plaintiff a right so to do, the engineers of the Board directed the contractor to erect piers on plaintiff’s land according to plans prepared therefor by the Board. In accordance with such instructions, the contractor constructed on plaintiff’s land eight concrete buttresses, 3 feet in width, extending from the face of the rock to the face of the subway, a distance varying from 8 to 15 feet and extending up, on an average, from the subgrade of the subway to within about 24| feet of the surface. A pier 3 feet square was constructed on the top of each buttress. These piers averaged about 9 feet in height. The average distance of the top of the piers from the surface of the street was about 15% feet. The buttresses were from 10 to 15 feet apart and the intervening space was filled.

It has been found that the buttresses and piers are permanent structures and that they were erected in order to secure the work and safeguard the subway structure as completed.” Testimony was introduced to the effect that the owner of the land contemplated the erection of an apartment house thereon; also that the slide would make it necessary to excavate to a depth of sixty feet in order to secure a safe and sufficient foundation for such a building, whereas, if the slide had not occurred, it would have only been necessary to excavate ten feet of top soil down to the rock, which would have constituted a safe and secure foundation. There was also testimony to the effect that the presence of the piers would interfere with the use of a sub-basement in any building thereafter erected.

The plaintiff sought to recover, as items of damage, the value of the easement of maintaining the buttresses and piers, the value of use and occupation of which he had been deprived, the value of the sub-basement space of which he would be deprived, and the amount of the increased cost of digging for foundations for any building to be erected on the lot. The learned trial court allowed the plaintiff $5,967.50 on account of the easement and $2,500 for the expense of placing I-beams from the top of the piers to make a foundation for the building to be placed on the premises, and disallowed all other claims.

The proper measure of damages which should have been applied is stated in Matter of Rapid Transit Railroad Commissioners (Joralemon Street) (197 N. Y. 81), as follows: “We think that the proper measure of damages is the full value of the fee taken, subject to the public easement of passage, and, both as to naked abutters and those who own the fee, the amount, measured in money, of the physical injuries inflicted and those which with reasonable certainty will be inflicted upon the abutting property by interference with lateral support through the proper construction and operation of the road, including the rental value of the premises during the period, if any, while they are actually untenantable ” (p. 107).

In determining the amount of damages caused by the trespass, the court should have considered the testimony in regard to the various items which go to make up such loss, such as the loss of the use of the property, the necessity of increased expense in excavating for foundations, the loss of sub-basement space on account of the presence of the buttresses and piers, and the value of the easement for maintaining buttresses and piers to be awarded in lieu of a mandatory injunction to remove the same, as it was found as a fact that they could not be removed. Finally, the amount allowed as damages should be the diminution in the market value of the whole property by reason of the injury.

The learned trial court failed to apply the proper measure of damages. It treated the case as one to condemn an easement and awarded damages on that basis, treating the city as the owner from the time of entry, and refused to consider the claim of the plaintiff that he had been deprived of the use of the property.

It also refused to consider the testimony as to increased cost of foundations for a new structure, made necessary by the taking of the easement. It placed its refusal on the ground that the piers could be used as a support for I-beams, which might be used as a foundation and installed at an expense of $2,500, which amount was allowed as an item of damage.

The plaintiff was entitled to recover his loss, if any, because of deprivation of the use of his land up to the time of the trial. It was, therefore, error to treat the city as owner from the date of the slide. (Matter of Rapid Transit Railroad Commissioners [Joralemon Street], supra.)

It was also error to attempt to minimize plaintiff’s damage growing out of the loss of lateral support by assuming that the piers could be used for the purpose of supporting I-beams which might be used as a foundation for a building. The city by removing the lateral support to plaintiff’s land caused plaintiff damage. It cannot escape paying such damage by requiring plaintiff to use the piers in the manner indicated for a foundation to a building.

We do not mean to intimate that the plaintiff’s damage should include all of the items mentioned. Consideration of the testimony offered in regard to them may present questions of fact.

It is urged by the city that it is not liable for the damage resulting from the slide since it was caused by the Board, in which, it alleges, the Rapid Transit Act (Laws 1891, ch. 4, as amended) vests the authority to construct the subway railroad as agent of the State. The act by subdivision 8 of section 23 provides: The State of New York shall not be hable for injuries to persons or property in connection • with any railroad or other construction which may be authorized under the provisions of this act, nor shall the state of New York be hable for any damages in any event for any act or omission of the pubhc service commission.” (Laws 1909, ch. 498, § 6.)

We deem the decision in the case of Matter of Rapid Transit Railroad Commissioners (Joralemon Street) (supra) a complete answer to such contention. It was decided in that case that an owner of land abutting the street in which the subway was and who did not own any part of the street had a legal right to the support of the land in the street; that the city in constructing the subway and the railroad occupied the position of a mere railroad company and its liability was that of a railroad company doing the same work in the same way; that the city was liable for all lawful damage to the abutting property caused by the proper conduct of the work, whether caused by the city directly “ or indirectly by contracting with someone to do it ” (p. 106). It would be strange, indeed, if the city could avail itself of the use of plaintiff’s land to maintain its structures upon, after depriving the land of its lateral support, without being hable for the damage suffered. Private property cannot be so taken for a public use without just compensation. A city “ cannot permanently appropriate private property either as a municipal government or as a railroad corporation without paying for it.” (Matter of Rapid Transit Railroad Commissioners [Joralemon Street], supra, p. 97.) (State Const, art. I, § 6.)

The judgment in favor of the plaintiff must be reversed and a new trial had.

The city has appealed from that part of the judgment which dismissed its claim for judgment over against the contractor. The contract between the city and the contractor provided:

“Article XLV. The Contractor expressly admits and covenants that the drawings and specifications and other provisions of this contract, if the work be done without any fault or negligence on the part of the Contractor, do not involve any danger to the foundations, walls or other parts of adjacent, abutting or overhead buildings or structures or surfaces and the Contractor will at his own
expense make good any damage that shall, in the course of construction, be done to any such foundations, walls, or other parts of adjacent, abutting or overhead buildings or structures or surfaces. * * *
“It is the intention of the parties to this contract * * * that in addition to indemnifying the City against all claims for damages', the Contractor shall also be hable to the owners of adjacent, abutting or overhead property. * * *
“Article XLVII. The Contractor shall be solely responsible for all physical injuries to person or property occurring on account of the work hereunder, and shall * * * indemnify and save harmless the city from liability upon any and all claims for damages on account of such injuries to person or property * * * and from all costs and expenses in suits which may be brought against the city on account of any such neglect, fault or default. * * * ”

Relying upon those terms of the contract, the city contends that the contractor is hable over to it upon any judgment that may be recovered in this action.

Section 29 of the Rapid Transit Act reads in part:

“1. Every contract for the construction or operation of such road or roads shah provide by proper stipulations and covenants on the part of the said city, that the said city shall secure and assure to the contractor, so long as the contractor shah perform the stipulations of the contract, the right to construct or to operate the road as prescribed in the contract, free of all right, claim or other interference, whether by injunction, suit for damages or otherwise, on the part of the owner, abutting owner, or other person.” (Laws 1906, ch. 472, § 6, amd. Laws 1909, ch. 498, § 12.) '

Pursuant to that provision of the Transit Act, the city embodied in the contract the following provision:

“Article LI. The City hereby stipulates and covenants to and with the Contractor that the City will secure and assure to the Contractor so long as the Contractor shall perform the stipulations of this contract, the right to construct the railroad as prescribed in this contract free of all right, claim or otherwise interference, whether by injunction, suit for damages or otherwise, on the part of any owner, abutting owner, or other person; but not including any interference, legal or otherwise, by patentees or persons claiming to be patentees of tools, methods or appliances.”

We are called upon to construe those provisions.

Primarily the burden rests upon the city to secure, by condemnation or otherwise, the right to use any particular property for subway purposes. In constructing the subway and railroad the city acts “as a proprietor, not as a sovereign.” (Matter of Rapid Transit Railroad Commissioners [Joralemon Street], supra, p. 96.) It is legally bound to pay full and just compensation for any land or easement which it takes, including the destruction of the easement of lateral support. The contract in question was prepared by the city and in case of doubt or ambiguity must be construed most strongly against it. A fair reading of the contract indicates that the duty rested .upon the city to provide a right of way. The city, as between itself and the plaintiff, had no legal right to remove the lateral support to the land and place permanent structures thereon. It did have the legal right to excavate in the street, as the adjoining owners did not own the fee. It furnished that right of way to the contractor and the contractor expressly covenanted that in using that right of way if the work be done without fault or negligence on the part of the contractor,” it will “ not involve any danger to the foundations, walls * * * structures or surfaces.”

In doing the work damage did result, and that damage was within the contemplation of the parties when entering into the contract and was clearly and specifically assumed by the contractor.

In giving this effect to the contract, we do not hold of necessity that the city may recover from the contractor the full amount which the plaintiff may recover from the city. The evidence is consistent with the conclusion that even after the slide, there might have been adequate protection by reinforcing the walls of the subway or by other devices without acquiring an easement for piers and buttresses outside of the line of the road. The trial court refused to decide whether the easement was in truth necessary for the safety of the subway or of the adjacent property. If the city’s insistence that an easement be acquired was wholly unnecessary, then the difference between the cost of such an easement and the cost to the contractor if the subway had been protected in some other way was not in truth damage resulting from the slide, and ought to be borne by the city instead of by the contractor personally.

It is possible that upon a new trial it may be found that the city engineer, acting as arbiter and in good faith, decided that the protection to be supplied required the contractor to do the work as it was done. If so, his determination would be binding upon the contractor. That question was not determined upon the trial.

Upon the appeal by the plaintiff the judgment should be reversed and a new trial granted, with costs to plaintiff to abide the event. Upon the appeal by the city of New York the judgment in favor of the defendant La Rocca Construction Corporation should be reversed and a new trial granted, with costs in favor of the city of New York against the construction corporation to abide the event.

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

Judgment accordingly.


author: Cardozo, Ch. J.

text:
    Millfield Realty Company, Respondent, v. Eugene P. Catena et al., Defendants, and Joseph P. Day, Inc., Appellant.
    (Submitted November 16, 1931;
    decided November 24, 1931.)
    (See 256 N. Y. 435.)

      William Harvey Smith for motion.

      Sol L. Youngentob opposed.
   Cardozo, Ch. J.

The plaintiff, the successful bidder at an auction sale, brought this action against Joseph P. Day, Inc., the auctioneer, and Eugene Catena and wife, the owners, to recover the down payment and expenses.

The trial judge dismissed the complaint, and incorporated in his judgment a direction that the auctioneer be permitted to retain its commissions ($881.25) and expenses ($134), and that it turn over to the sellers $2,534.75, the amount of the deposit after making; these deductions.

The plaintiff appealed from that judgment to the Appellate Division. The auctioneer did not appeal, but surrendered the deposit, deducting only the items for which its own lien had been declared. On the appeal by the plaintiff the Appellate Division reversed the judgment altogether, and gave judgment against the Day corporation and the owners for the full amount of the deposit ($3,525), and the expenses and damages incidental to the sale.

The auctioneer, but not the owners, appealed to this court. On that appeal the judgment of the Appellate Division was modified by striking out $441.50, the expenses of the sale and damages, and as modified affirmed (256 N. Y. 435).

The motion before us is by the auctioneer for an order of restitution, directed to the co-defendants Catena and calling for the refund of the part of the deposit received to their use. The motion prays for like relief against the attorney for Catena, it appearing that the owners paid to the attorney the entire amount received by them, less $500 only, in payment for professional services in this and other litigations.

So far as the defendants Catena are concerned, a case for restitution is made out (Civ. Prac. Act, § 587). The action in its inception was one to recover a personal judgment against the Day corporation for the collection of a debt, and as against the defendants Catena to impress a hen upon the land. Without opposition from any one, the trial judge treated the action, in response to a prayer for relief in the auctioneer’s answer, as an action in equity to distribute a specific fund. The judgment of the Appellate Division, affirmed by this court, directed the auctioneer, who avowed himself a stakeholder, to pay this fund to the buyer after the judgment of the trial court had directed him to pay the greater part of it to the owners. To the extent that the effect of the reversal has been to impose conflicting duties with the result of a double payment, there should be reparation for the loss (Manee, Inc., v. Bittar, 257 N. Y. 240).

So far as the attorney is concerned, no case is made out for restitution either on motion or by action.

Upon payment of the deposit the title to the money became vested in the sellers, and a creditor to whom they disbursed it afterwards may keep it as his own (Langley v. Warner, 3 N. Y. 327; LeGros v. Chain Shirt Shops, Inc., 187 App. Div. 371).

The motion should be granted as to the defendants Catena, and denied as to their attorney.

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


text:
    Joseph S. Vampa, Respondent, v. Erie Railroad Company, Inc., Appellant.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Russell S. Coutant, Theodore Kiendl and L. Ray Glass for appellant.

      Joseph Sterling, Nathan H. Elman and Henry A. Strongman for respondent.
   Order affirmed and judgment absolute ordered against appellant on the stipulation, with costs in all courts; no opinion.

Concur: Pound, Crane, O’Brien and Hubbs, JJ. Dissenting: Cardozo, Ch. J., Lehman and Kellogg, JJ,


text:
    The People of the State of New York ex rel. Lee McCanliss, Appellant, v. Irene McCanliss, Respondent.
    (Argued May 21, 1931;
    decided July 15, 1931.)

      Harold W. Bissell for appellant.

      Frederick C. McLaughlin, John Reynolds and Wilder Goodwin for respondent.
   Order affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    Sallie V. Kilroy, Respondent, v. United States Fire Insurance Company of New York, Appellant.
    (Argued June 3, 1931;
    decided July 15, 1931.)

      Hugo Wintner, Robert J. Fox and Robert P. Schur for appellant.

      Clinton T. Taylor and James B. Stillson for respondent.
   Judgment of the Appellate Division and that of the Trial Term reversed, and a new trial granted, with costs to abide the event, on the ground that there was error in excluding testimony as to the cost of other pictures claimed .to be the property of the plaintiff and that if such testimony had been admitted, there would have been a question of fact for the jury as to a fraudulent overvaluation of the subject of the policy; no opinion. (See 257 N. Y. 580.)

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    International-Madison Bank and Trust Company, Appellant, v. Eagle Indemnity Company et al., Respondents.
    (Argued June 3, 1931;
    decided July 15, 1931.)

      Morris Hillquit for appellant.

      Selden Bacon, Howard Myers and Saul S. Myers for respondents.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    Thau & Trupin Construction Company, Inc., Appellant, v. McBride Realty Company, Inc., Respondent.
    (Argued June 3, 1931;
    decided July 15, 1931.)

      Abraham B. Hertz, James H. Garmesey and Murray J. Lefcourt for appellant.

      Almet R. Latson, Jr., for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cakdozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    James W. Hine, Suing for Himself and Others, Appellant, v. William H. Lausterer, as Executor of William J. Lausterer, Deceased, et al., Respondents.
    (Argued June 3, 1931;
    decided July 15, 1931.)

      Charles Van Voorhis, Frank H. Mott, Frank Keiper and Leslie E. Briggs for appellant.

      John S. Leonard and Charles F. Blair for respondents.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    Arthur A. Seidman, Appellant, v. Mount Hope Finishing Company, Respondent.
    (Argued June 4, 1931;
    decided July 15, 1931.)

      George Horowitz for appellant.

      Howard P. Nash for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    The People of the State of New York, Respondent, v. John R. Shea, Appellant.
    (Argued June 5, 1931;
    decided July 15, 1931.)

      Robert L. Callahan, Peter P. Smith and James J. McLoughlin for appellant.

      James T. Hallinan, District Attorney (Mordecai Konowitz of counsel), for respondent.
   Judgment affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    The People of the State of New York, Respondent, v. Maurice Seaton and William Davis, Appellants.
    (Argued June 8, 1931;
    decided July 15, 1931.)

      Gustave Hartman, Alfred E. Smith, Jr., and Bernard Reiss for Maurice Seaton, appellant.

      Israel G. Ornstein, Elmer'A. Rogers, Joseph D. Edelson and Edward J. McDonald for William Davis, appellant.

      Thomas C. T. Crain, District Attorney (Robert C- Taylor of counsel), for respondent.
   Judgment of conviction as to each defendant affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    The People of the State of New York, Respondent, v. Harry Lipschitz, Appellant.
    (Argued June 8, 1931;
    decided July 15, 1931.)

      Arthur Rowland for appellant.

      Frank H. Coyne, District Attorney, for respondent.
   Judgment of conviction affirmed; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    Jacob Freed, Respondent, v. Max Leff et al., Appellants.
    (Argued June 8, 1931;
    decided July 15, 1931.)

      John W. Bonney for appellant.

      I. Montefiore Levy for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    James H. Cassidy, Respondent, v. Dairy Products Service Station, Inc., Appellant.
    (Argued June 9, 1931;
    decided July 15, 1931.)

      Robert N. Errington and Thomas B. Fenlon for appellant.

      G. Everett Hunt and D. S. Fowler for respondent.
   Judgment of the Appellate Division and that of the Trial Term reversed and complaint dismissed, with costs in all courts, on the ground that the evidence is insufficient to sustain a finding of defendant’s negligence; no opinion. (See 257 N. Y. 548.)

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    Gerard P. Tameling et al., Respondents, v. Caroline H. Prichitt, as Executrix of Hugh K. Prichitt, Deceased, Appellant.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Monroe L. Friedman and Herbert H. Maass for appellant.

      Joseph M. Dreyer and Louis O. Van Doren for respondents.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    Ormiston B. Fyfe, Appellant, v. Hanton Realty Company, Inc., Respondent.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Charles Meyers, Jacob Manne and Joel M. Lieberman for appellant.

      Frederick N. Van Zandt and James H. Marsh for respondent.
   Judgment affirmed, with costs; n®.opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    Michael Dorochuk, as Administrator of the Estates of Ignatz Copatzkevitch and Tony Krawczak, Deceased, Respondent, Impleaded with Another, v. Michael Skrobot, Appellant, Impleaded with Another.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      George J. Stacy, James J. Mahoney and Robert B. Livingston for appellant.

      Edgar J. Treacy for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    Morris Bender, Respondent, v. Fink Baking Corporation, Appellant, Impleaded with Another.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      James G. Purdy and John H. Brogan for appellant.

      Edward G. Griffin, Moses Feltenstein and 'Samuel N. Leiterman for respondent.
   Judgment of the Appellate Division and that of the Trial Term reversed as to the defendant Fink Baking Corporation on the ground that the trial court erroneously instructed the jury, particularly in stating that to drive on the left-hand side of a one-way street may constitute negligence, and a new trial granted, with costs to abide the event; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    In the Matter of Vincent J. Gianatasio, Appellant, v. Abraham Kaplan et al., Composing the Municipal Civil Service Commission of the City of New York, Respondents.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      H. Eliot Kaplan for appellant.

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly, Arthur Sweeny and Cornelius Bregoff of counsel), for Municipal Civil Service Commission of the City of New York, respondent.

      Frederick A. Keck for James C. A. Hennessey, respondent.

      John J. Bennett, Jr., Attorney-General (Patrick H. Clune of counsel), for the State of New York, respondent.
   Order affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    Minna Nieman et al., Appellants, v. The City of New York, Respondent.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Sidney J. Feltenstein for appellants.

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly, Willard S. Allen and Edward A. Gobel of counsel), for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    Joseph Hunt, an Infant, by John F. Hunt, His Guardian ad Litem, Respondent, v. The City of New York, Appellant.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly, Charles E. Ramsgate and Charles C. Marrin of counsel), for appellant.

      Lester M. Emmett and Jeremiah A. O’Leary for respondent.
   Judgment affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ. Not sitting: Crane, J.


text:
    In the Matter of the Transfer Tax upon the Estate of A. Albert Sack, Deceased. Industrial Trust Company of Providence, Rhode Island, as Executor, Appellant; State Tax Commission, Respondent.
    (Argued June 10, 1931;
    decided July 15, 1931.)

      Joseph F. McCloy, Francis H. Warland, John L. McMaster and Leo Brady for appellant.

      Seth T. Cole and William Dale O’Brien for respondent.

      Marion H. Fisher for the Estate of James W. Packard, deceased, amicus curice.

      John J. Bennett, Jr., Attorney-General (Harold P. Burke of counsel), amicus curice.

   Appeal dismissed, with costs, on the ground that the order appealed from is not a final order in a special proceeding; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.


text:
    In the Matter of Harley Realty Corporation against William E. Walsh et al., Constituting the Board of Standards and Appeals of the City of New York, et al., Defendants. Clemons Realty Company, Inc., Appellant. In the Matter of Charles Brady, as Superintendent of Buildings for the Borough of Manhattan, et al., Respondents, v. The Board of Standards and Appeals of the City of New York et al., Defendants. Clemons Realty Company, Inc., Appellant.
    (Argued June 11, 1931;
    decided July 15, 1931.)

      Charles L. Craig for appellant.

      John F. Keating and John Caldwell Myers for Harley Realty Corporation, respondent.

      John F. Collins for Superintendent of Buildings et al., respondents.

      Arthur J. W. Hilly, Corporation Counsel (Vine H. Smith and J. Joseph Lilly of counsel), for Board of Standards and Appeals, defendants.
   Order affirmed, with costs; no opinion.

Concur: Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ.