author: Loughran, Ch. J. Lewis, J.

text:
    In the Matter of National Cash Register Company, Appellant, against Lazarus Joseph, as Comptroller of the City of New York, Respondent.
    Argued March 2, 1949;
    decided May 19, 1949.

      Arnold E. Monetti for appellant.
    Petitioner is entitled to assert its claim for refund and to recoupment in the amount thereof though otherwise barred by the one-year provision for filing claims for refund contained in the local law where respondent has himself opened the question of petitioner’s tax liability by determining a deficiency against petitioner for the same tax period. (Bull v. United States, 295 U. S. 247; Stone v. White, 301 U. S. 532.)

      John P. McGrath, Corporation Counsel (Isaac C. Bonner, Bernard H. Sherris and Janet H. Lewin of counsel), for respondent.
    Petitioner is not entitled to credit for the amount of its refund claim against the tax assessment by way of recoupment or of setoff. Since petitioner has failed to comply with the conditions prescribed by the city sales tax laws and regulations for refund or credit in the precise situation presented by its refund claim, it is not entitled to credit therefor, and the comptroller is without authority to allow it. Since the transactions and events out of which the refund claim arose are entirely separate and distinct from those upon which the tax assessment is based, it cannot, in any event, claim recoupment, and setoff is barred by the Statute of Limitations. (Matter of Hoople, 179 N. Y. 308; People ex rel. Edison Elec. Illuminating Co. v. Wemple, 133 N. Y. 617; Buckles v. State of New York, 221 N. Y. 418; Winter v. City of Niagara Falls, 190 N. Y. 198; Matter of Parmelee Motor Fuel Co. v. McGoldrick, 185 Misc. 965, 269 App. Div. 683; People ex rel. Northchester Corp. v. Miller, 288 N. Y. 163; People ex rel. Huff v. Graves, 277 N. Y. 115; Matter of City of New York [Elm St.], 239 N. Y. 220; Rothensies v. Electric Storage Battery Co., 329 U. S. 296; Hall v. United States, 43 F. Supp. 130, 316 U. S. 664.)
   Loughran, Ch. J.

This proceeding in the nature of certiorari was brought under article 78 of the Civil Practice Act against the Comptroller of the City of New York by the National Cash Register Company, a foreign corporation which at the times here in question was doing in this State a business in the course of which it sold and delivered cash registers and other machines in the city of New York. For convenience, that company will be called the vendor.

Two causes of action are set forth in the petition. The first cause requests review of a determination of the comptroller, dated December 27, 1945, which assessed against the vendor a deficiency of city sales taxes in the sum of $45,728.20 for the period September 1, 1935, to December 31, 1940. The second cause requests review of another determination of the comptroller, dated January 24, 1946, which denied a claim made by the vendor for a refund of $11,576.70 of city sales taxes which it paid to the comptroller in the period April 1, 1936, to September 30,1940.

Applications for refunds of sales taxes erroneously, illegally or unconstitutionally collected by the City of New York must be lodged with the comptroller within one year from the payment thereof (Administrative Code of City of New York, § N41-8.0, subd. a). The refund claim here asserted by the vendor in its second cause of action was filed on January 29, 1943, which was more than three years after the one-year Statute of Limitations had run against that claim. Because of that delay, Special Term struck out the second cause of action for insufficiency in law (see Civ. Prac. Act, § 1293) and ordered that the petition of the vendor should thereafter consist only of the first cause of action alleged therein. The order of Special Term thus completely severed the second cause of action from the first cause. The Appellate Division affirmed, two Justices dissenting. Since the order of affirmance was a final determination of the insufficiency of the second cause of action and was made by a divided vote, the vendor has now properly appealed from that order to this court as of right (see Civ. Prac. Act, § 588). The dissenters in that court said: “ As respondent [comptroller] has opened the question of petitioner’s sales tax liability and determined a deficiency for past years, it seems to us that petitioner should be entitled to set off, against any deficiency finally determined, the amount of any overpayment of sales taxes made during the period under review, although petitioner did not file a timely refund claim.” (274 App. Div. 920.) We are of that opinion.

“ Recoupment ” means a deduction from a money claim through a process whereby cross demands arising out of the same transaction are allowed to compensate one another and the balance only to be recovered (Ives v. Van Epps, 22 Wend. 155,156-157; Peuser v. Marsh, 218 N. Y. 505). Of course, such a process does not allow one transaction to be offset against another, but only permits a transaction which is made the subject of suit by a plaintiff to be examined in all its aspects, and judgment to be rendered that does justice in view of the one transaction as a whole. (Rothensies v. Electric Storage Battery Co., 329 U. S. 296, 299; Village of Charlotte v. Keon, 207 N. Y. 346; see Bull v. United States, 295 U. S. 247; cf. Lewis v. Reynolds, 284 U. S. 281.)

Here the city reopened the matter of the sales tax liability of the vendor for the period September 1, 1935, to December 31, 1940, and assessed a tax deficiency against it for that period. The vendor, as we think, was thereby given an equitable right to plead against the city a recoupment claim for taxes of the same type which the vendor (as it alleges) had erroneously paid to the comptroller in the same period.

The orders should be reversed, with costs in all courts and the matter remitted to Special Term for further proceedings not inconsistent with this opinion.

Lewis, J.

(dissenting). My dissent is prompted by my belief that the decision about to be made herein will weaken the administration of those statutes by which the collection and refunding of taxes are governed.

The sales tax law of the city of New York, here involved, grants to the comptroller authority to refund taxes in those instances only where applications for refund have been made within one year from the date of payment (Administrative Code of City of New York, § N41-8.0, subd. a). The taxes here in suit were paid between April 1, 1936, and September 30, 1940. It is conceded however that the application to the comptroller for refund or credit was not made until January 29,1943. Indeed, a copy of the petitioner’s claim for refund annexed to the amended petition contains the following statement: “No claim was filed within the one year period, but taxpayer contends that since the City has conducted its audit to determine the true tax liability, it is entitled to a refund or a credit against awg proposed assessment ” (my emphasis). / '

This court has had occasion to hold that the right to a refund of a tax illegally assessed is not a vested right but a privilege, the extent and duration of which depends upon the language of the statute conferring it. (Matter of Hoople, 179 N. Y. 308, 312.) Knowing, as we do, that the power of the respondent comptroller to grant a refund of a tax collected or to offset the payment thereof is strictly limited by the local law mentioned above, I find it difficult to believe that fairness to the appellant taxpayer — even though its position may present a persuasive appeal in equity — should dictate recoupment where, as we have seen, the taxpayer concedes that it failed to comply with the statutory limitation of one year. Lacking statutory power to grant either a refund or offset of taxes paid more than a year prior to the application for refund, the comptroller’s denial of that application, as I view it, was proper (Matter of Hoople, supra, p. 312). Furthermore, I think the propriety of the comptroller’s refusal to grant a refund in this case is reinforced by the fact that the taxpayer’s claim for refund under its second alleged cause of action arose out of transactions which are not the same as those upon which is based the deficiency assessment which is the subject of the first cause of action. That circumstance, in my opinion, defeats the' appellant’s right to the recoupment it seeks (Rothensies v. Electric Storage Battery Co., 329 U. S. 296, 299-303).

Accordingly, I dissent and vote to affirm the order of the Appellate Division.

Conway, Desmond, Fuld and Bromley, JJ., concur with Loughran, Ch. J.; Lewis, J., dissents in opinion in which Dye, J., concurs.

Orders reversed, etc.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of Celia Wong, Appellant, against Maurice Finkelstein et al., Individually and Constituting the Temporary City Housing Rent Commission of the City of New York, Respondents.
    Argued April 4, 1949;
    decided May 19, 1949.

      Milo O. Bennett for appellant.
    I. The facts sustain the movant’s claim that exercise of legislative power on private rights, in the matter of rent and eviction controls, has imposed the involuntary servitude proscribed by the Thirteenth Amendment of the Constitution of the United States. (People ex rel. Durham Realty Corp. v. La Fetra, 230 N. Y. 429; Plessy v. Ferguson, 163 U. S. 537; Clyatt v. United States, 197 U. S. 207.) II. By omission of a clause to relieve property owners from compulsory renting, the local law and regulations are rendered violative of the Fifth Amendment of the Constitution in that appellant’s property is taken for public use without just compensation; and of the Fourteenth Amendment, in that she is deprived of her property without due process of law. (Escanaba Co. v. Chicago, 107 U. S. 678; Mondou v. New York, N. H. & H. R. R. Co., 223 U. S. 1; Matter of Tartaglia v. McLaughlin, 297 N. Y. 419; Munn v. Illinois, 94 U. S. 113; Budd v. New York, 143 U. S. 517; Taylor v. Bowles, 145 F. 2d 833; Yakus v. United States, 321 U. S. 414.) III. Under the supremacy clause of the Constitution, Local Law 66, being in irreconcilable conflict with the Housing and Bent Act of 1948, is void. It does not supplement the Federal prescription; rather, it infringes upon it. (Quaker Oats Co. v. City of New York, 295 N. Y. 527; Hill v. Florida ex rel. Watson, 325 U. S. 538; Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U. S. 761; Rice v. Santa Fe Elevator Corp., 331 U. S. 218; Dickson v. Uhlmann Grain Co., 288 U. S. 188; First Iowa Hydro-Elec. Coop. v. Federal Power Comm., 328 U. S. 152; Hamilton v. Kentucky Distilleries Co., 251 U. S. 146; Home Bldg. & Loan Assn. v. Blaisdell, 290 U. S. 398; Bowles v. Willingham, 321 U. S. 503; Matter of Molnar v. Curtin, 273 App. Div. 322, 297 N. Y. 967.)

      Alfred Weinstein, Nathan W. Math, Joseph Jay and Stanley Buchsbaum for respondents.
    I. Since the proceeding was in the nature of mandamus, it was properly dismissed because the respondents did not have the power to do what was demanded of them. (Matter of Economy Holding Corp., 234 App. Div. 214; Matter of Hart, 161 N. Y. 507; People ex rel. Pardee v. Coggey, 132 App. Div. 268; Matter of Pardee v. Finkelstein, 193 Misc. 269, 275 App. Div. 659.) II. There is no conflict between the Federal statute and the local law, (Cuyahoga Power Co. v. Akron, 240 U. S. 462; Sinnot v. Davenport, 22 How. [U. S.] 227; Missouri, K. & T. Ry. Co. v. Haber, 169 U. S. 613; Missouri, K. & T. Ry. Co. v. Harris, 234 U. S. 412; Dickson v. Uhlmann Grain Co., 288 U. S. 188; Allen-Bradley Local v. Wisconsin Employment Relations Bd., 315 U. S. 740; Woods v. Durr, 170 F. 2d 976.) III. The local laws do not violate the Thirteenth Amendment. (Marcus Brown Co. v. Feldman, 256 U. S. 170.) IV. The enactment of Local Law 41 was a valid exercise of the police power. (Block v. Hirsh, 256 U. S. 135; Marcus Brown Co. v. Feldman, 256 U. S. 170; Ullmann Realty Co. v. Tamur, 113 Misc. 538.) V. The local law does not effect a deprivation of property without due process of law and without just compensation. (Wilson v. Brown, 137 F. 2d 348; Bowles v. Willingham, 321 U. S. 503; Taylor v. Bowles, 145 F. 2d 833; Stahl v. Finkelstein, 189 Misc. 870.)
   Per Curiam.

A public body cannot be commanded in an article 78 proceeding to perform an act not authorized by the statute from which it derives its power. (See, e.g., Matter of Burr v. Voorhis, 229 N. Y. 382, 387; Matter of Hart, 161 N. Y. 507; Matter of Economy Holding Corp. v. Berry, 234 App. Div. 214, 217.) In this case, the defendant commission is not empowered by the applicable local law to issue a certificate of eviction upon the ground that the landlord desires to withdraw the property from the rental market (Local Laws, 1949, No. 7 of City of New York; Administrative Code of City of New York, § U41-7.0, subd. c). To grant the order sought by the landlord in this article 78 proceeding would be to require the commission to exceed its statutory powers. That may not be done.

We neither reach nor pass upon the constitutional questions advanced by appellant. .

The order of the Appellate Division should be affirmed, with costs.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Bromley, JJ., concur.

Order affirmed.


author: Fuld, J.

text:
    Sterling Novelty Corporation, Respondent, v. Frank & Hirsch Distributing Co. (Pty.) Ltd., Appearing Specially, Appellant.
    Submitted April 20, 1949;
    decided May 26, 1949.

      Herman Keller and Harry Balterman for appellant.
    I. Plaintiff has failed to sustain the burden of proof resting upon it to show the validity of the attempted service. (Gursky v. Blair, 218 N. Y. 41; Wollman v. Newark Star Pub. Co., 190 App. Div. 933, 229 N. Y. 590; Kowalchek v. Buck Bun Coal Co., 173 App. Div. 653; Scheinman v. Bonwit Teller & Co., 132 Misc. 311; Eastern Products Corp. v. Tennessee Coal, Iron & R. R. Co., 102 Misc. 557; Coler v. Pittsburgh Bridge Co., 146 N. Y. 281; McKeon v. McGowan & Sons, 229 App. Div. 568; Josephy v. Kansas City, Mexico & Orient Ry., 180 App. Div. 313.) II. Defendant corporation was not doing business within the State of New York. (Tauza v. Susquehanna Coal Co., 220 N. Y. 259; Yeckes-Eichenbaum v. McCarthy, 290 N. Y. 437; Holzer, v. Dodge Bros., 233 N. Y. 216; Lillibridge, Inc., v. Johnson Bronze Co., 247 N. Y. 548; Hamlin v. Barrett & Co., 246 N. Y. 554; J. C. F. Holding Corp. v. General Gas & Elec. Corp., 181 Misc. 283, 267 App. Div. 863; Farmers & Mechanics’ Nat. Bank v. Logan, 74 N. Y. 568; Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S. 333; International Shoe Co. v. Washington, 326 U. S. 310.)

      Maxwell A. Bubin for respondent.
    Defendant’s local activities through a firm and corporation in this State with which defendant is intimately associated and which defendant dominates and controls with officers and directors of one acting for the other in the conduct of defendant’s business constitutes “ doing business ” so that our court has jurisdiction over defendant. (Rosario v. Public Service Co-ordinated Transport, 270 App. Div. 169; Mas v. Orange-Crush Co., 99 F. 2d 675; Pine & Co. v. McConnell, 273 App. Div. 218, 298 N. Y. 27; Chaplin v. Selznick, 293 N. Y. 529; Tauza v. Susquehanna Coal Co., 220 N. Y. 259; Society Milion Athena v. National Bank of Greece, 166 Misc. 190, 254 App. Div. 728; Bomze v. Nardis Sportswear, 165 F. 2d 33; United States v. Scophony Corp., 333 U. S. 795; International Shoe Co. v. Washington, 326 U. S. 310.)
   Fuld, J.

Whether or not defendant, a foreign corporation, was doing business in this State so as to be subject to the jurisdiction of our courts is the question certified for our determination.

The defendant is a South African importing corporation which does much of its buying in New York, but is concededly not qualified to do business here and has no branch office in this State. Plaintiff began the present action for breach of contract by serving a summons' and complaint upon an officer of a New York corporation which makes purchases for defendant. Urging that such service was not effective, defendant moved to dismiss the complaint for want of jurisdiction. The motion was denied at Special Term and the Appellate Division unanimously affirmed, granting defendant leave to prosecute this appeal on the question certified.

There is, of course, no precise measure of the nature or extent of local purchasing activities which will render a foreign corporation amenable to process in this State. Each case must be decided on its own particular facts. (See Tauza v. Susquehanna Coal Co., 220 N. Y. 259, 267; Society Milion Athena v. National Bank of Greece, 166 Misc. 190, 197, affd. 254 App. Div. 728; Stark v. Howe Sound Co., 141 Misc. 148, affd. 234 App. Div. 904.) Insofar as general criteria are helpful, they are the same as those applicable to selling activities within the State. Continuity of action from a permanent locale is essential. The foreign corporate defendant must be “ here * * * not occasionally or casually, but with a fair measure of permanence and continuity ”. (Tauza v. Susquehanna Coal Co., supra, p. 267; see, also, Chaplin v. Selznick, 293 N. Y. 529.) The circumstance that the foreign corporate defendant is represented in its local activities by a separate individual or by a separate corporation and not by a directly controlled subsidiary or branch office is not in itself determinative. As long as the resident buyer is acting here as agent of the foreign corporation, the absence of a local office of the foreign defendant will not deprive our courts of jurisdiction. (See Society Milion Athena v. National Bank of Greece, 166 Misc. 190, 197, affd. 254 App. Div. 728, supra; American Tri-Ergon Corp. v. Ton-Bild Syndikat, 145 Misc. 344, affd. 236 App. Div. 792; Henriques v. Gauthiod Marine Ins. Co., 205 App. Div. 8; Littman v. Sachs, Inc., 65 N. Y. S. 2d 754, 756; see, also, Pine & Co. v. McConnell, 298 N. Y. 27.)

Testing the record before us by those criteria, we find ample support for the conclusion of the courts below that defendant was, for jurisdictional purposes, doing business in this State.

Organized in July, 1944, to carry on a diversified business of importing, exporting, trading and distributing manufactured goods, and to actas “ Manufacturers’Representatives ’^defendant became closely associated in its activities with a South African partnership, “ F & H Agencies ”, formed two months later. Defendant’s two majority directors and stockholders were the founders of the partnership and its majority members. In addition to interlocking control, the corporation and the partnership had intertwining physical setups. Thus, defendant, styled Frank & Hirsch Distributing Co. (Pty.) Ltd.”, and the partnership, called “ F & H Agencies ”, had the identical mailing address, P. 0. Box 1803, Johannesburg the same “ Head Office ” — Johannesburg; the same “ branch offices ” — Cape Town, Port Elizabeth, East London, Durban, Bulawayo; the same cable address — “Frahirsch”; and the same telephone numbers, shipping marks and stationery insignia.

This virtual identity assumes great significance when we turn our attention to the activities of the New York corporation upon which service was effected. That corporation, “ F & H Agencies New York, Inc.”, was organized shortly after the formation of the two South African companies, with Walter 'Frank, brother of one of defendant’s directors, as secretary-treasurer. It was avowedly and officially the agent of the partnership, being described as its “ American Office ” on letterheads and business cards. In addition, the New York corporation likewise negotiated purchases for defendant, and, understandably, not only plaintiff’s officers but the trade generally accepted it as defendant’s local representative.

Unavoidable is the conclusion that the New York corporation acted as defendant’s exclusive buying agent. There is no indication that anyone else, save defendant itself, ever negotiated any of defendant’s local purchases or that the New York corporation represented any organization other than defendant and defendant’s alter ego, the- South African partnership. Obviously, defendant’s unsubstantiated denials of its close connection with the domestic corporation — containing no details though these were peculiarly within its own knowledge — cast little doubt upon their actual relationship.- (See Society Milion Athena v. National Bank of Greece, 166 Misc. 190, 198, affd. 254 App. Div. 728, supra; Industrial Research Corp. v.. General Motors Corp., 29 F. 2d 623.)

We deem it worth remarking that this is not a case in which the foreign corporation’s only ties with this State were through an independent resident buyer who acted for many other purchasers at the samé time (see, e.g., Greenberg v. Lamson Bros. Co., 273 App. Div. 57); nor one in which the foreign corporation came but intermittently or sporadically into New York on buying missions and had no fixed local headquarters. (See, e.g., Rosenberg Bros. & Co. v. Brown Co., 260 U. S. 516; Hamlin v. Barrett & Co., 246 N. Y. 554.) Bather is it controlled by those cases which hold a foreign corporation subject to the jurisdiction of our courts if it buys merchandise, in a systematic and continuing fashion, through an exclusive purchasing agent with an established and permanent place of business in New York. (See Meinhard, Greeff & Co. v. Higginbotham-Bailey-Logan Co., 262 App. Div. 122; National Furniture Co. v. Spiegelman & Co., 198 App. Div. 672; Fleischmann Constr. Co. v. Blauner’s, 190 App. Div. 95; Littman v. Sachs, Inc., 65 N. Y. S. 2d 754, 755, supra.)

The order of the Appellate Division should be affirmed, with costs, and the question certified answered in the affirmative.

Lottghran, Oh. J., Lewis, Conway, Desmond, Dye and' Bromley, JJ., concur.

Order affirmed, etc.


author: Desmond, J.

text:
    In the Matter of the Claims of Fred Baird et al., Respondents, against New York Central Railroad Company, Appellant. Workmen’s Compensation Board, Respondent. In the Matter of the Claims of Louis Christo et al., Respondents, against New York Central Railroad Company, Appellant. Workmen’s Compensation Board, Respondent.
    Argued April 20, 1949;
    decided May 26, 1949.

      Sherman A. Murphy, Jr., for appellant.
    I. Claimants’ duties were in furtherance of interstate commerce and the Workmen’s Compensation Board, therefore, had no jurisdiction of their claims. (Matter of Assmann v. Long Island R. R. Co., 269 App. Div. 871; Shelton v. Thomson, 148 F. 2d 1; Great Northern v. Industrial Comm., 245 Wis. 375.) II. Claimants were engaged in work in furtherance of interstate commerce because a great majority of the locomotives repaired at West Albany come out of and return to interstate service. (Matter of Wright v. New York Central R. R. Co., 263 App. Div. 461, 288 N. Y. 719, 317 U. S. 668; Matter of McGowan v. New York Central R. R. Co., 265 App. Div. 272, 290 N. Y. 889; Edwards v. Baltimore & Ohio R. R. Co., 131 F. 2d 366; Bretsky v. Lehigh Valley R. R. Co., 156 F. 2d 594; Shelton v. Thomson, 148 F. 2d 1; Zimmerman v. Scandrett, 57 F. Supp. 799; Ermin v. Pennsylvania R. R. Co., 36 F. Supp. 936; Trucco v. Erie R. R. Co., 353 Pa. 320, 328 U. S. 843.) III. The Federal act alone determines the rights and liabilities of the parties. (New York Central R. R. Co. v. Winfield, 244 U. S. 147; Erie R. R. Co. v. Winfield, 244 U. S. 170.)

      Nathaniel L. Goldstein, Attorney-General (Roy Wiedersum, Wendell P. Brown and Harry Pastor of counsel), for Workmen’s Compensation Board, respondent.
    Jurisdiction over the claims of the three employees was vested in the Workmen’s Compensation Board. The provisions of the 1939 amendment of the Employers’ Liability Act were inapplicable. (Shanks v. Delaware, L. & W. R. R. Co., 239 U. S. 556; Matter of McGowan v. New York Central R. R. Co., 290 N. Y. 889; New York, N. H. & H. R. R. Co. v. Benzue, 284 U. S. 415; Matter of Zmuda v. Delaware, L. & W. R. R. Co., 268 N. Y. 659, 297 U. S. 707; Matter of White v. Lehigh Valley R. R. Co., 251 App. Div. 507; Leslie v. Long Island R. R. Co., 248 N. Y. 511; Matter of La Point v. New York Central R. R. Co., 254 App. Div. 711; Chicago & North Western Ry. Co. v. Bolle, 284 U. S. 74; Fluitt v. New Orleans T. & M. Ry. Co., 169 So. 803 [La.].)
   Desmond, J.

Each of the above-named claimants-respondents has been awarded workmen’s compensation under the New York act, by reason of accidental injuries sustained in the course of employment (claimant Mrs. Derwing succeeds to the right of her husband, now dead). The sole question on this appeal is: did the work of these men when injured bring them under the New York Workmen’s Compensation Law, or, as appellant argues, under the Federal Employers ’ Liability Act, as amended in 1939 (U. S. Code, tit. 45, § 51) ? Jurisdiction is, of course, exclusively in one or the other (New York Central R. R. Co. v. Winfield, 244 U. S. 147).

Each of the injured men, at the time of his accidental injury, was employed as a repairman at the “ West Albany shops ” of appellant New York Central Railroad. New York Central is a common carrier by rail, operating both interstate and intrastate trains, its lines extending into various States of the Union and into parts of Canada. So much of the New York Central system as is east of Buffalo is referred to as “ the lines east ”, and these lines provide service to and from four States, including New York, and two provinces of the Dominion of Canada. The only facility which the railroad has for servicing and repairing steam engines on its “ lines east ” is its “ West Albany shops ” and it was there that each of these men received his injury. All sorts of repairs are there made to locomotives and cranes. All of the locomotives, which from time to time come to the West Albany shops for repair, are engaged at some time or other in interstate commerce, and most of them come into the shop from interstate transportation, and, eventually, return thereto. While awaiting repairs, while undergoing repairs, and while awaiting reassignment after repairs, the locomotives are completely disabled, unassigned and without power, for periods varying from fifteen days to two months or more, in some instances being stored in the shops for weeks or months before being put back into service. All this amounts to what is called 16 back shop repairs ” and all these men were back shop workers ” — that is, their jobs had to do with instrumentalities completely withdrawn from service. All the injured employees were craftsmen working at their respective trades, on the locomotives themselves or their tenders, except Baird who ran, and kept in repair, a forging machine for turning out small parts for locomotives, and Lester, who was a maintenance man on the shop’s electrical equipment. These workmen’s compensation awards cannot, of course, stand if the claimants were, at the time, employed in interstate commerce within the meaning of the appropriate Federal statute (New York Central R. R. Co. v. Winfield, supra).

It is clear that the awards here appealed from would have been proper before the Federal Employers’ Liability Act was amended in 1939 (see Matter of McGowan v. New York Central R. R. Co., 290 N. Y. 889, decided in this court in 1943, but involving an occurrence in 1930). Before 1939, the Federal act (U. S. Code, tit. 45, § 51) stated its own coverage as follows: “ Every common carrier * * * while engaging in commerce between any of the several States * * * shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce ”. While the statute contained that language, the courts evolved and applied the so-called pin-point rule ”, holding that, to recover under the Federal law, an employee had to be engaged at the very time of the accident in interstate commerce, that is, he must have been at the time of the injury engaged in interstate transportation or in work so closely related to it as to be practically a part of it ” (Shanks v. Delaware, Lackawanna & Western R. R. Co., 239 U. S. 556, 558, affg. 214 N. Y. 413). The requirement that there had to be proven either actual interstate transportation, or work most closely connected with it', resulted in the further holding (before 1939) that one who was hurt on a locomotive withdrawn from service for repairs, could not recover under the Federal Employers’ Liability Act, since the instrumentality on which the work was being done had nothing to do, at the time, with interstate transportation (Matter of McGowan v. New York Central R. R. Co., supra; Matter of Zmuda v. Delaware, Lackawanna & Western R. R. Co., 268 N. Y. 659, certiorari denied 297 U. S. 707; New York, New Haven & Hartford R. R. Co. v. Bezue, 284 U. S. 415).

In 1939, however, Congress added this new second paragraph to the statute, in the form of a definition of a covered employee Any employee of a carrier, any part of whose duties as such employee shall be the furtherance of interstate or foreign commerce; or shall, in any way directly or closely and substantially, affect such commerce as above set forth shall, for the purposes of this chapter, be considered as being employed by such carrier in such commerce and shall be considered as entitled to the benefits of this chapter.” Paraphrased, that says that the act’s coverage is now to include all an interstate carrier’s employees, any part of whose duties further ” interstate commerce or “ directly ” or “ closely and substantially ” affect such commerce. If we had nothing before us but the (quite clear and unambiguous) language of that 1939 amendment, our problem here would not be a difficult one. Reading that language apart from legislative and judicial history, we would have to say that the activities of each of the workers whose claims are here involved did “ further ” interstate commerce, and certainly affected it “ closely and substantially ”, since it is undisputed that the everyday operation of this railroad requires that these car repair shops be busy repairing appellant’s locomotives. But the new 1939 language cannot, of course, be read off by itself. We know, from the decisions above cited and many others, that the amendment was enacted in the light of two limiting rules of the cases: one, the so-called “ pin-point rule ” forbidding recovery unless the work was interstate transportation or very closely connected therewith at the very time of the accident, and, second, the so-called ‘‘ back shop ” rule which said that “ dead engines ” in the course of repair were not instrumentalities of interstate transportation. What we must now discover is whether the Congress, by its 1939 enactment, did deal with both of those rules, and if so, to what extent. It is clear enough that the pin-point rule ” was completely wiped out, and so we have held in Matter of Wright v. New York Central R. R. Co. (288 N. Y. 719, certiorari denied 317 U. S. 668). Wright’s duties were such that for five days each week he was a boiler repairman and on the» sixth day he was a boiler inspector; it was conceded that his boiler inspection work was performed in furtherance of interstate commerce, but he was hurt on one of the days when he was repairing boilers. We held that the abolition of the pin-point rule ”, by the 1939 statutory change, had made immaterial what Wright was doing at the particular time of his mishap. Accordingly, it was not necessary in the Wright case (supra) for us to decide the question we have before us here, that is, whether the repair of a locomotive ■ ordinarily used in, but presently withdrawn from, interstate transportation brings the worker under the amended law.

The report of the Senate Judiciary Committee recommending the 1939 amendment (Senate Reports, 76th Cong., 1st Sess., Report No. 661), stated plainly: “ This amendment is intended to broaden the scope of the Employers’ Liability Act so as to include within its provisions employees of common carriers who, while ordinarily engaged in the transportation of interstate commerce, may be, at the time of injury, temporarily divorced therefrom and engaged in intrastate operations. ’ ’ That Senate report cited the Shanks case (supra), and described the difficulties which had been previously encountered in answering the. then controlling question as to whether an injured man, at the particular moment when hurt was or was not in interstate commerce. The report referred to the well known fact that railroad men were frequently injured while working on cars or engines temporarily withdrawn from interstate commerce and which were, just before or after the occurrence, used in such commerce. The committee noted that the preponderance of service performed by railroad employees is interstate commerce, and included in its report the following statement: “ The adoption of the proposed amendment will, to a very large extent, eliminate the necessity of determining whether an employee, at the very instant of his injury or death was actually engaged in the movement of interstate traffic. If any part of the employee’s duties (at the time of his injury or death) directly, closely, or substantially affected interstate or foreign commerce, the claimant would be considered entitled to the benefits of the act.” That is a plain statement that the “ pin-point rule ’’was being thrown into the discard, but there is no equally plain indication as to whether other borderline cases, such as those of “ back shop employees ”, were being considered and dealt with. Our own conclusion is that Congress did two things: first, it abolished the requirement of proof that at the instant of injury the worker was engaged in interstate transportation or work so closely connected therewith as to be practically part of it, but, in addition it did something further. We think the amendment broadened the whole concept of interstate transportation as covered by the Federal Employers’ Liability Act. Having determined that it should not thereafter be necessary, for coverage under the Federal act, to prove interstate transportation or closely related work as of the particular time of the injury, Congress stated a new, much broader test of what should thereafter be considered to be interstate commerce within the act. It extended the protection of the act not only to every one of an interstate carrier’s employees any part of whose duties consisted of a furthering of interstate commerce, but it used this significantly sweeping language: “or shall, in any way directly or closely and substantially, affect such commerce as above set forth ”.

The exact question as to whether the “ back shop ” rule was wiped out along with the “ pin-point ” rule has not been answered in any controlling case but, as to the clear trend of decision in the Federal courts of appeal and State courts of last resort, see Shelton v. Thomson (148 F. 2d 1); Bretsky v. Lehigh Valley R. R. Co. (156 F. 2d 594); Skidmore v. Baltimore & Ohio R. R. Co. (167 F. 2d 54); Trucco v. Erie R. R. Co. (353 Pa. 320); Great Northern Ry. Co. v. Industrial Comm. (245 Wis. 375); Maxie v. Gulf, Mobile & Ohio R. R. Co. (356 Mo. 633); Harris v. Missouri Pacific R. R. Co. (158 Kan. 679). The usual aids to construction are not here helpful. As a practical matter we are left with nothing but the language of the amendment itself. That language, at the point where it makes it sufficient for coverage that any part of the employee’s duties shall be the furtherance of interstate commerce or shall “ in any way directly or closely and substantially, affect such commerce ’ ’ necessarily, we conclude, covers the situations of each of employees of appellant whose claims for New York State compensation are here before us. It follows, as we believe, that Congress, within its powers, has enacted that the sole remedy of each of those respondents is under the Federal Employers’ Liability Act. We agree, therefore, with the dissenting opinion in the Appellate Division, that the conclusion of the Workmen’s Compensation Board, that no part of the duties of any of these claimants was in furtherance of interstate commerce, was as matter of law, erroneous as to each such claimant. Consequently, the awards cannot stand.

In each case the order of the Appellate Division should be reversed and the claims dismissed, without costs.

Lottghran, Ch. J., Lewis, Conway, Dye, Fuld and Bromley, JJ., concur.

Orders reversed, etc.


author: Lewis, J.

text:
    In the Matter of the Claim of Michael Di Bari, Respondent, against James J. Reilly, Doing Business as Reilly’s Bar & Grill, Respondent, and National Casualty Company, Appellant. Workmen’s Compensation Board, Respondent.
    Submitted April 5, 1949;
    decided May 26, 1949.

      W. Gerard Ryan for appellant.
    The Appellate Division erred in affirming the board’s decision, .since the insurance policy is limited to one specified location and does not include the premises where claimant was injured. (Matter of Pettit v. Reges, 242 N. Y. 272; Matter of Lent v. 850 Seventh Ave. Corp., 259 N. Y. 616; Matter of Simpkins v. Steffen, 255 N. Y. 65; Matter of Wedemeier v. Mavis Bottling Co. of N. Y., 261 N. Y. 548.)

      Nathaniel L. Goldstein, Attorney-General (Roy Wiedersum and Wendell P. Brown of counsel), for Workmen’s Compensation Board, respondent.
    The policy issued by appellant covered the claimant and his injuries. The provisions of subdivision 4 of section 54 of the Workmen’s Compensation Law have application. (Matter of Simpkins v. Steffen, 255 N. Y. 65; Matter of Lamb v. Slote, 268 App. Div. 946; Matter of Schultz v. Allanson, 258 App. Div. 1010, 284 N. Y. 611; Matter of Gaffney v. Kerslake, 268 App. Div. 841; Matter of Keller v. Sherwood, 259 N. Y. 640; Matter of Jaabeck v. Crane’s Sons Co., 238 N. Y. 314; Matter of Collier v. Dangard, 256 N. Y. 561; Matter of Lind v. Roberts, 261 N. Y. 626; Matter of MacDonald v. Grand Battery & Ignition Service, 254 N. Y. 605; Matter of Caputa v. Voges Mfg. Co., 257 App. Div. 871; Matter of Nelson v. Meseck Towing Lines, 265 App. Div. 899.)
   Lewis, J.

Upon this appeal the single question for our decision is whether the coverage of a workmen’s compensation insurance policy issued by the appellant insurance carrier extends to work being done by the claimant respondent at the location where his injuries occurred.

For a period of thirteen years prior to the date of the accident which befell the claimant, the respondent Reilly — to whom reference will be made as the employer — had operated a bar and grill in a building which he leased at 1103 Manhattan Avenue in Brooklyn. When the lease expired in March, 1945, he continued in possession of those premises as a month-to-month tenant until December, 1946, when the building was sold and the new owner demanded possession. Thereupon the employer arranged to take possession of space in a building across the street at 1102 Manhattan Avenue under a lease which required him to make such renovations and do such interior decorating as might be necessary to accommodate the business of his bar and grill.

The claimant was engaged by the employer to do whatever plastering was required at 1102 Manhattan Avenue. On December 30, 1946, while working in the building at that location the claimant fell from a ladder and sustained injuries for which he has been awarded compensation by the Workmen’s Compensation Board. That award was unanimously affirmed by an order of the Appellate Division which we now review upon appeal by the insurance carrier taken with our permission. No appeal was taken by the employer.

The evidence is not disputed that prior to his being hired to do plastering work at 1102 Manhattan Avenue the claimant had never before done work for the employer. It also appears that at the time of the accident the employer had not yet moved.his bar and grill across the street from 1103 to 1102 Manhattan Avenue but was still conducting that business as usual at the former address.

Upon the question whether the standard policy of workmen’s compensation insurance issued to the employer by the appellant covered work being done at 1102 Manhattan Avenue where claimant’s injuries occurred, the Workmen’s Compensation Board found: “6. At the time of the accident of December 30, 1946, the employer was not conducting a business at 1102 Manhattan Avenue, Brooklyn, N. Y. However, whatever work was performed at this latter address, including the work performed by the claimant therein, was done in and in connection with and incidental to the bar and grill business carried on by the employer at 1103 Manhattan Avenue, Brooklyn, N. Y. Therefore, the workmen’s compensation insurance policy hereinafter referred to, covered the risk in this case and the insurance carrier under said policy was liable to the claimant for compensation.”

We think the policy coverage set forth in the finding quoted above transcends limits defined by subdivision 4 -of section 54 of the Workmen’s Compensation Law and by the policy in suit. Subdivision 4 of section 54 (id.) provides in part: 4. Limitation of indemnity agreements. * * * Every such contract or agreement of insurance issued by an insurance carrier covering the liability of an employer for the payment of the compensation and for the payment into the special funds provided by this chapter shall be deemed to include all employees of the employer employed at or in connection with the business of the employer carried on, maintained, or operated at the location or locations set forth in such contract or agreement and employees for whose injuries a contractor may become liable under the provisions of section fifty-six of this chapter.” (Emphasis supplied.)

The standard policy issued by the appellant insurance carrier included the following provision: Six. This agreement shall apply to such injuries so sustained by reason of the business operations described in said Declarations which, for the purpose of this insurance, shall include all operations necessary, incident or appurtenant thereto, or connected therewith, whether such operations are conducted at the work places defined and described in said Declarations or elsewhere in connection with, or in relation to, such work places.”

The policy was subject to express “ Conditions ” one of which was in part as follows: “A. The premium is based upon the entire remuneration earned, during the Policy Period, by all employees of this Employer engaged in the business operations described in said Declarations together with all operations necessary, incident or appurtenant thereto, or connected therewith whether conducted at such work places or elsewhere in connection therewith or in relation thereto ”.

It also appears from “ Conditions ” written into the insurance contract that the policy was issued by the carrier upon statements, designated as Declarations ” which form a part of the policy, and in consideration of statements made in those declarations respecting the policy’s premium and the payment thereof. Among those declarations are the following:

Item 1. Name of this Employer — JAMES J. REILLY D/B/AS REILLY’S BAR & GRILL
P. 0. Address —1103 MANHATTAN AVENUE, BROOKLYN, NEW YORK # * *
Item 3. Locations of all factories, shops, yards, buildings, premises or other workplaces of this Employer, by Town or City, with Street and Number — 1103 MANHATTAN AVENUE, BROOKLYN, N. Y. All business operations, including the operative management and superintendence thereof, conducted at or from the location and premises defined above as declared in each instance by a disclosure of estimated remuneration of employees under such of the following Divisions as are undertaken by this Employer. 1. All industrial operations upon the premises. 2. All office forces. 3. All repairs or alterations to premises. 4. Specially rated operations on the premises. 5. Operations not on the premises.
Classification of Operations 1(a) RESTAURANT INCLUDING CLERICAL OFFICE EMPLOYEES — (MUSICIANS, ENTERTAINERS OR PLAYERS TO BE SEPARATELY RATED) . . #9079 * * *
Item 4. The foregoing enumeration and description of employees include all persons employed in the service of this Employer in connection with the business operations above described to whom remuneration of any nature in consideration of service is paid, allowed or due together with an estimate for the Policy Period of all such remuneration. * * * The foregoing estimates of remuneration are offered for the purpose of computing the advance premium. * * *
Item 5. This Employer is conducting no other business operations at this or any other location not herein disclosed — except as herein stated: NO EXCEPTIONS ”.

In the circumstances disclosed by this record we cannot agree with the argument advanced in support of the award — that at the time and place of the accident the claimant was performing labor in connection with the business of the employer carried on, maintained, or operated at the location set forth' in the policy contract within the meaning of subdivision 4 of section 54 of the Workmen’s Compensation Law; nor can we agree that claimant should be deemed by operation of law to be included within the coverage of the policy contract.

The employer had knowledge not only of the “ Classification of Operations. ” and their “Location”, as set forth in the “ Declarations ” which form a part of the insurance policy, but he also learned from the policy that the items of information disclosed by those “ Declarations ” were controlling factors in the computation of the premium paid for the coverage. He knew, too, that by accepting the policy he was assured of contractual indemnity by the appellant insurance carrier based upon the statement in the policy’s “ Declarations ” as to the location of the single “ workplace ” covered by the insurance and the ‘ ‘ Classification of Operations ’ ’ which did not specify the operation of plastering subsequently done by the claimant at 1102 Manhattan Avenue. That the employer had a clear understanding of the limited coverage of the policy is indicated by his testimony: ‘ ‘ My men were working in 1103 — the men I have — the bartenders, etc. How could I have them insured at 1102 until I moved over there ? ”

Upon this phase of the case there also came into the record, without objection, the following significant testimony by the claimant given on direct examination: “ Q. What happened before you were taken to the hospital? A. Well, this Enoch — Mr. Enoch — he seen I got hurt — he picked me up. He says, I am going to tell Reilly that you got hurt,’ so I says, All right.’ He went to Reilly — he went to Mr. Reilly — Mr. Reilly told him — he says, 1 Take him up in the room. ’ He .says, 1 Don’t call the ambulance because I haven’t got any insurance.’ ”

We read the policy as a contract which limited the insurance coverage to those employed at or in connection with the business of the employer carried on at the location set forth in the policy including all operations necessary or incident thereto, whether conducted at the workplace described in the declarations or elsewhere in connection with such workplace. We have seen that there is specified in the policy declaration only one location— “ 1103 Manhattan Avenue, Brooklyn, New York ”. In that connection it also appears that although Item 3 of the declarations refers to “ Operations not on the premises ” and — for the purpose of computing premium — requires the employer to give an estimate of annual remuneration paid to employees engaged in such operations, the employer declared the remuneration for outside operations to be “None ”. Furthermore, there appears under the subsequent Item 5 the statement ‘ ‘ This Employer is conducting no other business operations at this or any other location not herein disclosed ”.

What was said in Matter of Pettit v. Reges (242 N. Y. 272, 275, 276) —where the problem involved the coverage of similar provisions of a workmen’s compensation insurance policy — applies here with equal force: “ When in accordance with these provisions we turn to the provisions of the ‘ declarations ’ which are made a part of the policy it seems to us that they clearly indicate that the policy was intended to furnish insurance for operations upon and in connection with certain enumerated premises and was not intended, as claimed by respondent, to furnish insurance for the general business of altering, removing or repairing buildings wherever they might be situated. * * # It was appreciated that a workman who was engaged in the operation of these specific pieces of real estate might have occasion in connection therewith to discharge some duty which was not upon the premises but which nevertheless would be connected with and related to his work there being performed and we think that the expression ‘ Operations not on the premises ’ is to be interpreted in the light of all of these provisions and is to be construed as meaning an operation which although not on the premises was still connected with the work there being performed.” (See, also, Matter of Davis v. Block & Smith, 297 N. Y. 20; Matter of Lent v. 850 Seventh Ave. Corp., 259 N. Y. 616.)

We do not regard Matter of Schultz v. Allanson (258 App. Div. 1010, affd. 284 N. Y. 611) as a case in point which favors respondent ’s position upon the present appeal. In that case not only was the claimant performing work in a building which at the time of his injuries was owned by his employers and used by them for storage of caskets in connection with their business as undertakers, but the statement in the insurance policy — under “ Declarations * * * Item 3. Locations of all * * * buildings * * * or other work-places of this Employer ’ ’ — was “ Canal St., Phoenix, New York, and elsewhere in State of New York.” (Emphasis supplied.)

Upon the record before us we cannot say that the work the claimant was doing at 1102 Manhattan Avenue when he was injured was connected with or incidental to the maintenance and operation of the bar and grill which the employer carried on, as a business, at the location —1103 Manhattan Avenue — specified in the declarations of the policy.

The order of the Appellate Division should be reversed and the claim dismissed as to the appellant, National Casualty Company, with costs in this court and in the Appellate Division against the Workmen’s Compensation Board.

Loughran, Ch. J., Conway, Desmond, Dye, Fuld and Bromley, JJ., concur.

Order reversed, etc.


text:
    In the Matter of James J. Donahue, Respondent, against Clifford J. Fletcher, as Commissioner of Motor Vehicles of the State of New York, Appellant.
    Argued April 4, 1949;
    decided May 26, 1949.

      Nathaniel L. Goldstein, Attorney-General (Wortley B. Paul and Wendell P. Brown of counsel), for appellant.
    I. The annulment of the commissioner’s order of revocation, made by the Appellate Division, is erroneous since that court attempted to review the evidence on the basis of its weight and preponderance and did not, as required by section 1296 of the Civil Practice Act, review the evidence on the question whether there was substantial evidence to support the commissioner’s determination. (Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327 ; Matter of Miller v. Kling, 291 N. Y. 65.) II. The determination of appellant, that the manner in which petitioner drove his automobile constituted “ reckless driving ” within the provisions of the Vehicle and Traffic Law, has substantial evidence to support it as a matter of law and should be confirmed. (People v.
      Grogan, 260 N. Y. 138; People v. McKeon, 134 Misc. 697; People v. Gorman, 133 Misc. 161; Shea v. Judson, 283 N. Y. 393; People v. Kosik, 144 Misc. 403; Matter of Cohn v. Fletcher, 272 App. Div. 1080, 297 N. Y. 851; O’Reilly v. Davis, 136 App. Div. 386; Farrell v. Fire Ins. Salvage Corps, 189 App. Div. 795; Dolfini v. Erie R. R. Co., 178 N. Y. 1; Hagglund v. Erie R. R. Co., 210 N. Y. 46; Weigand v. United Traction Co., 221 N. Y. 39.)

      John R. Normile for respondent.
    I. Assuming that the, statement in the Appellate Division order that its annulment of the order of the commisioner “ on the law and on the facts ” is erroneous, nevertheless the Appellate Division examined the record to ascertain if there is “ substantial evidence ” to justify the determination. (Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327; Matter of Weinstein v. Board of Regents, 292 N. Y. 682; Matter of Miller v. Kling, 291 N. Y. 65.) II. The determination of appellant in revoking petitioner’s motor vehicle operator’s license on the ground of reckless driving is not supported by substantial evidence. (Matter of Sheridan v. Fletcher, 270 App. Div. 29; People v. Grogan, 260 N. Y. 138; People v. Bearden, 290 N. Y. 478; Matter of Hart v. Mealey, 287 N. Y. 39; Matter of Lipschitz v. Mealey, 259 App. Div. 640.)
   Lewis, J.

The Commissioner of Motor Vehicles, or any person deputized by him, are among those authorized by statute to revoke a motor vehicle operator’s license. (Vehicle and Traffic Law, § 71, subd. 1). Such revocation is “ an administrative act reviewable by the supreme court ”. (Vehicle and Traffic Law, § 71, subd. 6.)

In the present proceeding under article 78 of the Civil Practice Act we review a nonunanimous order of the Appellate Division which annulled upon the law and facts a determination.made — after a hearing — by the appellant, the Commissioner of Motor Vehicles, revoking the petitioner-respondent’s motor vehicle operator’s license.

In those circumstances the scope of our review is limited to the inquiry whether there was substantial evidence to justify the administrative determination made by the commissioner. (Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327, 331-332; Matter of Friedel v. Board of Regents, 296 N. Y. 347, 352; Matter of Miller v. Kling, 291 N. Y. 65, 69.)

The stated basis of the revocation was reckless driving on 11/7/47 in Binghamton, N. Y.” in violation of section 58 of the Vehicle and Traffic Law. That statute provides in part: § 58. Reckless driving. Beckless driving shall mean driving or using any motor vehicle or motor cycle or any appliance or accessory thereof in a manner which unreasonably interferes with the free and proper use of the public highway, or unreasonably endangers users of the public highway. Beckless driving is prohibited.”

From evidence taken at a formal hearing before a referee, whose authority is not questioned, the following facts were adduced: Hawley Street in the city of Binghamton is an east-west paved thoroughfare which intersects Carroll Street at right angles. At about midnight on November 7,1947, when the traffic control signal at that intersection was not operating, two automobiles approached that intersection. From the east, moving westerly along Hawley Street, was a car driven by the petitioner-respondent Donahue with whom two passengers were riding on the front seat. From the north, moving southerly along Carroll Street, was a car in which its driver — the witness Bartholomew — was its only occupant. Those two cars collided at a point within the intersection causing death to the two passengers in the Donahue car, property damage to both cars and the subsequent revocation of each driver’s operator’s license.

Limiting our examination of the record to the question “ whether there is 1 substantial evidence ’ to justify the administrative determination ” by which the license of the respondent Donahue was revoked (Matter of Humphrey v. State Ins. Fund, supra, p. 332) — we find evidence that as the respondent Donahue drove westerly along Hawley Street and approached the intersection mentioned above, he failed to conform with the statutory mandate which requires that Every driver of a vehicle approaching an intersection shall grant the right of way at such intersection to any vehicle approaching from his right, except where otherwise directed by a peace officer or as otherwise provided by this chapter with respect to intersections where traffic is controlled by traffic control signals. ’ ’ (Vehicle and Traffic Law, § 82, subd. 4.)

It also appears from respondent’s own testimony that when he had reached a point on Hawley Street two car lengths from the intersection he looked to his left and then to his right from which point he had a view northerly along Carroll Street for a distance of four or five houses ”. However, without applying the brakes of his car he entered the intersection where, upon his first sight of the Bartholomew car — approaching three car lengths to the north and moving southerly along Carroll Street — he “ attempted to accelerate ” his own car but failed to avoid collision with the Bartholomew car coming from the right. According to the respondent’s testimony the collision occurred when his car was Over the center, probably nearly out of the intersection.”

When the respondent was questioned as to why, at that midnight hour, he did not see the approach of the car from his right, his testimony was as follows:

‘ ‘ Q. Was there anything to prevent your seeing Mr. Bartholomew’s car before you reached the center of the intersection? A. No, I could see him before he reached the center if 1 had seen him.
“ Q. But you didn’t look, is that it? A. I looked, yes, I looked.
“ Q. How is it you didn’t see him then? A. Well, the lights were rather poor.
“ Q. What? A. His lights were poor on his car.”
As to the condition of lights on the Bartholomew car its driver testified:
“ Q. Were your lights on? A. Yes.
“ Q. Dim or bright? A. Bright lights.
Q. Upper or lower beam? A. I think lower but I wouldn’t be sure.
11 Q. Was that because of approaching traffic? A. Well, city driving, always drive with the lights on the lower beam.
Q. Could you see a substantial object ahead three hundred fifty feet? A. I think so.”

True it is, as claimed by the respondent Donahue that near the west curb of Carroll Street about twenty-five feet north of the intersection there was a “ stop ” sign facing southbound traffic. There is undisputed evidence, however, that as the Bartholomew car moved southerly along Carroll Street an automobile was parked at the curb in front of the “ stop ” sign in such a position as to interfere with a view of the sign by southbound traffic. In this case we are not called upon to determine the duty which was impressed upon Bartholomew by the “ stop ” sign which — under conditions there existing — was invisible to him as he moved southerly on Carroll Street and approached the intersection of Hawley Street. Whatever that duty may have been in the circumstances it did not relieve the respondent Donahue from obeying the statutory rule prescribed by subdivision 4 of section 82 of the Vehicle and Traffic Law, ¡quoted (supra). (Cf. Shea v. Judson, 283 N. Y. 393, 398.)

The record in this proceeding discloses evidence of reckless driving by the respondent Donahue which we regard as substantial in character and sufficient in law to justify the administrative determination by which the Commissioner of Motor Vehicles revoked the respondent’s motor vehicle operator’s license. (Matter of Humphrey v. State Ins. Fund, supra, pp. 331-332.)

The order of the Appellate Division should be reversed and the determination of the Commissioner of Motor Vehicles confirmed, with costs in this court and in the Appellate Division.

Loughran, Ch. J., Conway, Desmond, Dye, Ftjld and Bromley. JJ., concur.

Order reversed, etc.

       For definition of the nse of the phrase “ Traffic control signals ” see Vehicle and Traffic Law, § 2, subd. 24.


author: Bromley, J.

text:
    In the Matter of the Claim of Joseph N. Mallia, Claimant. Edward Corsi, as Industrial Commissioner, Respondent; P. S. Thorsen & Co., Inc., Appellant.
    Argued February 25, 1949;
    decided May 26, 1949.

      Joseph R. Kelley and William H. West, Jr., for appellant.
    I. The coverage of article 18 of the Labor Law does not include claimant’s service performed in New Jersey in the first quarter of 1944 because that service was localized in New Jersey. II. The coverage of article 18 of the Labor Law does not include claimant’s service performed in New Jersey in the first quarter of 1944 because the base of operations for that service was in New Jersey. III. The coverage of article 18 of the Labor Law does not include claimant’s service performed in New Jersey in the first quarter of 1944 because the place of direction or control of that service was in that State. IV. The construction of subdivision 3 of section 511 of the Labor Law enunciated by the court below is not supported by any authorized administrative interpretation, whereas the decision of the Appeal Board was in accord with actual administrative practice. (Matter of Stupack, 274 N. Y. 198.) Y. The statute as construed by the court below is repugnant to section 8 of article I of the Constitution of the United States. (International Shoe Co. v. Washington, 326 U. S. 310; Joseph v. Carter & Weekes Stevedoring Co., 330 U. S. 422; Puget Sound Stevedoring Co. v. Tax Comm., 302 U. S. 90; Southern Pacific Co. v. Arizona, 325 U. S. 761; Morgan v. Virginia, 328 U. S. 373; Freeman v. Hewit, 329 U. S. 249; Richfield Oil Corp. v. State Board of Equalization, 329 U. S. 69.)

      Charles A. Malloy and Herman D. Ringle for Division of Employment Security of the Department of Labor and Industry of New Jersey, amicus curia, in support of appellant’s position. The services performed by claimant are governed by the provisions of subdivision 4 of section 511 of the Unemployment Insurance Law.

      Nathaniel L. Goldstein, Attorney-General (Francis R. Curran and Wendell P. Brown of counsel), for respondent.
    I. Claimant is entitled to be credited with his wages received during 1944, for services rendered to appellant in New York and New Jersey, as a basis for unemployment insurance benefits. His entire service, both within and without the State of New York, constituted “ employment ” as defined by the New York statute. II. The statute, as construed by the Appellate Division is not repugnant to section 8 of article I of the Constitution of the United States. (Steward Machine Co. v. Davis, 301 U. S. 548; Carmichael v. Southern Coal & Coke Co., 301 U. S. 495; McGoldrick v. Berwind-White Coal Mining Co., 309 U. S. 33; Western Live Stock v. Bureau of Revenue, 303 U. S. 250; Chamberlin, Inc., v. Andrews, 271 N. Y. 1, 299 U. S. 515; Matter of Burke, 267 App. Div. 127; Standard Dredging Corp. v. Murphy, 319 U. S. 306; Western Union Tel. Co. v. Texas, 105 U. S. 460; Ohio Riv. & Western Ry. Co. v. Dittey, 232 U. S. 576; Shaffer v. Carter, 252 U. S. 37; Arrowsmith v. Harmoning, 118 U. S. 194; Walling v. Jacksonville Paper Co., 317 U. S. 564.)
   Bromley, J.

To claimant the question herein is whether he was entitled to receive unemployment insurance benefits from the State of New York at the rate of $17 per week or $21 per week. Stated more broadly, the question presented is, whether in the circumstances of this case, which are common in industry, the claimant is entitled to be credited with his wages received during 1944, for services rendered for appellant within New Jersey as well as within New York in determining the amount of his weekly benefit rate under the New York Unemployment Insurance Law (Labor Law, art. 18). The answer to that question is said to be of importance to employers and employees generally and to the administration of the unemployment insurance statutes throughout the nation.

Appellant is a New York corporation, licensed to do business in New Jersey, with its principal office at Brooklyn, New York. Its business is insulating pipes and mechanical equipment on ships, which is accomplished on board the ships at various places in New York and New Jersey. During 1944, the period with which we are concerned, operations within New York were under the supervision of a superintendent whose office was in Brooklyn. The company had three offices in New Jersey, at Hoboken, Kearney and Port Newark, each under a superintendent in charge of operations in those areas. All operations were under the direction of a general supervisor who had an office in Brooklyn and visited the areas where- the work was done. In the Kearney and Port Newark offices, some of the material used in the work in New Jersey was stored. Each of the New Jersey superintendents had the power to hire and fire personnel.

Men working on jobs in New Jersey reported directly to the Kearney and Port Newark offices, or at Hoboken to the ships, and their time cards were turned in at the end of each week and sent to Brooklyn where the payrolls were made up. Most of the employees were hired in Brooklyn, and were shifted from job to job upon request of the various superintendents.

Claimant, Mallia, was hired in Brooklyn on January 28, 1943, as a pipe coverer’s helper, worked for this employer until March, 1944, and from September, 1944, until November 9, 1945. Although the record is not clear upon this point, the board in effect found that all of Mallia’s services were performed under a single contract of hire. During the period January-March, 1944, he received $318.13 for services performed in New York and $355 for services performed in New Jersey. The record indicates that Mallia worked intermittently in New Jersey and New York, thirty-nine days in New Jersey and thirty days in New York. During the period September-December, 1944, all of his wages ($628.14) were received for work done in New York. The employer reported Mallia’s earnings in New York to the State of New York, and his earnings in New Jersey to the State of New Jersey, and paid unemployment insurance contributions upon the respective wages to each State.

Mallia’s claim for unemployment insurance benefits was filed in New York on November 20,1945, and his base year was 1944 (Labor Law, §§ 520, 521, 590). The Appellate Division has held that his rate of benefit should be based upon his wages for service performed in both New York and New Jersey during that year.

In determining his rate of benefits, claimant is entitled to credit for wages paid him for the services performed in New Jersey during the first quarter of 1944 if that work was ‘ ‘ employment ” in New York within section 511 of the Labor Law. The pertinent portions of that statute are:

1. General definition. ‘ Employment ’ means any service under any contract of employment for hire, express or implied, written, or oral.
2. Work localized in state. The term employment ’ includes a person’s entire service performed within or both within and without this state if the service is localized in this state. Service is deemed localized within the state if it is performed entirely within the state or is performed both within and without the state but that performed without the state is incidental to the person’s service within the state, for example, is temporary or transitory in nature or consists of isolated transactions.
“ 3. Work within and without the state. The term ‘ employment ’ includes a person’s entire service performed both within and without this state provided it is not localized in any state but some of the service is performed in this state, and (a) the person’s base, of operations is in this state; or (b) if there is no base of operations in any state in which some part of the service is performed, the place from which such service is directed or controlled is in this state; or “ (c) if the base of operations or place from which such service is directed or controlled is not in any state in which some part of the service is performed, the person’s residence is in this state.
“ 4. Work within the state. Service performed within this state bnt not otherwise within the provisions of this section is employment if contributions are not required with respect to such service under an unemployment compensation law of any other state or the federal government.”

The unemployment insurance laws of the various States, most of which were enacted during the decade of the depression, originally contained varying definitions of “ employment ” by which the scope of the several laws was to be determined. (See L. 1935, ch. 468, § 1.) This led to uncertainty of application of those laws, as to the payment of benefits and assessment of taxes upon employers, where a worker had performed services for a single employer in a number of States.

In 1937, after conferences among representatives of the various States and representatives of the national Social Security Board, a proposed uniform definition of employment ” was drafted for submission to the State Legislatures in order to eliminate such uncertainty. The purpose of that definition was stated by the Social Security Board as follows: This definition is based on two principles: (1) All the employment of an individual should be allocated to one State and not divided among the several States in which he might perform services, and such State should, of course, be solely responsible for benefits payable to him; (2) the State to which his employment is allocated should be the one in which it is most likely that the individual will become unemployed and seek work.” (Social Security Board, Employment Security Memorandum No. 13, 1937.)

That provision was adopted by New York (L. 1939, ch. 662, as amd. by L. 1940, ch. 217) and a large number of other States (see Compton, The Social Security Payroll Taxes, 245 et seq.), substantially as it appears in the present New Jersey statute, which had been enacted in 1936 (N. J. L. 1936, ch. 270, § 19; N. J. Stat. Ann., tit. 43, § 21-19). In 1944, New York amended its statute to read as set forth above in section 511, without substantial change in its effect (L. 1944, ch. 705).

The purpose of the Legislature is manifest upon the face of the statute and in the history of its adoption. It is to bring within the scope of the New York act those employees who work both in New York and one or more other States when the most substantial contacts of the employment are in New York. That end is to be effected by applying to their services a number of tests — localization, location of base of operations, source of direction or control, and finally residence of the employee (§ 511, subds. 2, 3). It is clear that the statutory tests are to be applied in succession to the entire service, both “ within and without this state and only if that entire service so considered is not employment in New York may a portion of it be considered separately as employment in one or more other States. Only if the statute is so construed will it serve as a useful instrument for the accomplishment of its dominant purpose, and it is a misconception of that necessity which has led to much of the confusion in this case. It seems plain that the statute is addressed to specialists in the field of unemployment insurance and, as Mr. Justice Frankfurter has said, it ‘ must be read by judges with the minds of the specialists.”

The Unemployment Insurance Appeal Board held that the localization test could not control since the New Jersey services were so substantial that they might not be characterized as incidental to his services in New York, and then held that the base of operations for that work was in New Jersey, so that it was not covered by the New York statute. The Appellate Division held that the law permits use of the base of operations as a determining factor only when there is a single base of operations in one State where part of the work is performed, and that where there are bases within each of two or more States the source of direction or control must be considered. Mallia’s service was held to have been directed from the employer’s office in Brooklyn.

The Appeal Board and the Appellate Division concluded correctly that Mallia’s service during the first quarter of 1944 was not localized in New York, for subdivision 2 is determinative only if the employee’s “ entire service ” is localized in one Staj;e.

The Appeal Board erred in holding that Mallia’s New Jersey service was not employment in New York, because his base of operations for that service was in New Jersey. Clause (a) of subdivision 3 also contemplates consideration of a person’s “ entire service # * * both within and without this state ”, and the test is operative only if a single base of operations for the entire service is within a State where some of the service is performed. Although the language of the statute might tolerate the board’s construction, the purpose of the law, and the explicit direction to consider the entire service, indicate that the issue cannot be resolved by holding that there are several bases of operation.

Since the entire service was not localized in either State, nor was there a single base of operations in either State, we must resort to the test set forth in clause (b) of subdivision 3 — the location of “ the place from which such service is directed or controlled ”. What does the statute mean by “ directed or controlled ”? While working in New Jersey, Mallia was under the direct supervision of a superintendent who possessed the power to discharge, and customarily he would remain on such a job until it was completed. The New Jersey superintendents were supervised from the Brooklyn office, and the basic authority in the concern emanated from that point. Requests for manpower were cleared through the Brooklyn office, and payrolls were made up there. To which of these sources of authority does the statute refer, the immediate or the general?

A similar question was considered in Matter of Burke (267 App. Div. 127 [3d Dept., 1943]), the only case in either State which has considered this section of the law. There the employee had been an electrician with an opera troupe, which traveled through fifteen States. On tour the company was directed by a manager, who arranged transportation, collected proceeds, paid expenses and salaries, and possessed “ plenary powers to handle situations on the road ” (p. 129). However, when problems arose he customarily called the New York office, which had planned the tour, arranged the bookings and given the traveling manager detailed instructions before the tour began. In holding the New York company liable for unemployment insurance contributions based upon the earnings of the electrician, the court ruled that the source of direction or control was within New York, and said (p. 130): “ The legal right to direct and control from New York determines. This, the corporation had the right to do.”

The language of the court in the Burke case (supra) was too broad, for the power to direct or control will always remain with the principal executive officers of a corporation. The statute refers to a power which is exercised. The Appellate Division here held that the activities of the general supervisor, emanating as they did from the Brooklyn office, the preparation of payrolls, the control over Mallia’s transfer from job to job, constituted such an exercise of the power to direct or control. That conclusion is sound and accords with the purpose of the act.

If it should be held that Mallia’s service in New Jersey was directed or- controlled from that State, the same considerations which prevail in construing the base of operations test would here compel the conclusion that the statute refers to a single source of direction or control for the entire service. Where there is no single base of operations or source of control in one of the States in which the work is performed, the residence of the employee is to be determinative and the result here would be unchanged.

Since section 511 determines the incidence of the tax upon the employer, as well as the availability of benefits for the employee, appellant urges that an assessment measured in part by Mallia’s New Jersey wages will place an undue burden upon interstate and foreign commerce. That burden is described as multiple taxation of the employer upon its payroll for services performed in New Jersey, and appellant relies upon the long line of cases in which the Supreme Court of the United States has condemned unapportioned taxes upon the gross receipts from interstate transactions as repugnant to the Commerce Clause (U. S. Const., art. I, § 8, cl. 3; Joseph v. Carter & Weekes Stevedoring Co., 330 U. S. 422, and cases cited therein at p. 427, n. 6). That contention must fail at the outset since appellant is not engaged in either interstate or foreign commerce, within the meaning of the Constitution. That its business is carried on in two States, that its employees cross State lines in traveling from one job to another, or that interstate systems of communication are used in directing its operations, cannot transform a local activity into interstate commerce (cf. Federal Baseball Club v. National League, 259 U. S. 200; and see Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 253). That the vessels were to be employed in interstate or foreign commerce is immaterial since appellant’s activity had no direct connection with that use (cf. General Ry. Signal Co. v. Virginia, 246 U. S. 500).

In any event those cases condemning State taxation of interstate commerce are inapposite here, for they rest upon long-continued judicial interpretation that, without congressional action, the words themselves of the Commerce Clause forbid undue interferences by the states with interstate commerce ” (Joseph v. Carter & Weekes Stevedoring Co., supra, p. 427). Yet in respect of unemployment insurance taxes Congress has said (U. S. Code, tit. 26, § 1606, subd. [a]): No person required under a State law to make payments to an unemployment fund shall be relieved from compliance therewith on the ground that he is engaged in interstate or foreign commerce, or that the State law does not distinguish between employees engaged in interstate or foreign commerce and those engaged in intrastate commerce.” That statute can be read fairly to express a Congressional intent that nondiscriminatory unemployment insurance taxes may be assessed and collected free of objection based upon the Commerce Clause. (See International Shoe Co. v. Washington, 326 U. S. 310, 315; Standard Dredging Corp. v. Murphy, 319 U. S. 306, 308.)

To reject appellant’s contention is not to concede that the statute has been construed so as to permit multiple taxation of the same employment. The purpose of section 511, and of the uniform legislation, is too clearly opposed to such a result. Appellant has paid taxes to New Jersey based upon Mallia’s services, under an administrative interpretation of the New Jersey statute, and now it must contribute to the New York fund. The New Jersey act has not been construed by the courts of that State, nor is New Jersey the only other State with a similar statute (cf. Pa. Stat. Ann., tit. 43, § 753; Conn. Gen. Stat. [1949 Rev.], § 7495). To depart from the manifest purpose of the law in this ease, in order to resolve a conflict between administrative construction of the uniform provisions in New York and New Jersey, would not promote uniformity of application by all of the States which have similar statutes.

The order of the Appellate Division should be affirmed, with costs.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye and Fuld. JJ., concur.

Order affirmed.

        “ Some Reflections on the Reading of Statutes ”, Felix Frankfurter, 1947 Assn. of Bar of City of New York, pp. 213, 225.