text:
    Blanche Hurley, Appellant, v. The Board of Education of the City of New York, et al., Respondents.

      (Argued January 23, 1936;
    decided March 3, 1936.)

      Harry A. Gordon and Eric C. Gordon for appellant.
    The old list had become tabula erasa; section 871-b of the Education Law (Cons. Laws, ch. 16) providing for its revival and extension is unconstitutional. (Matter of Ryan v. Kaplan, 213 App. Div. 131; Chittenden v. Wurster, 152 N. Y. 345; Hale v. Worstell, 185 N. Y. 247; People ex rel. McClelland v. Roberts, 148 N. Y. 360; People ex rel. Walter v. Kaplan, 117 Misc. Rep. 257; Brown v. Craig, 209 App. Div. 11; Schieffelin v. Kelliher, 125 Misc. Rep. 305; 215 App. Div. 770; Barlow v. Craig, 210 App. Div. 716.) The revival of the old list does not comply with the constitutional requirement for appointments according to merit and fitness ascertained by competitive examination. (Matter of Barthelmess v. Cukor, 231 N. Y. 435; People ex rel. Sprague v. Maxwell, 87 App. Div. 391.)

      Paul Windels, Corporation Counsel (Seymour B. Quel and Paxton Blair of counsel), for Board of Education of the city of New York, respondent.
    A person whose name is on an eligible list has no right which cannot be altered or destroyed by the Legislature. (People ex rel. Perrine v. Connolly, 217 N. Y. 570; Taylor v. Beckham, 178 U. S. 548; Smith v. Mayor, 37 N. Y. 518; People ex rel. Devery v. Coler, 173 N. Y. 103; Stetson v. Board of Education, 218 N. Y. 301; People ex rel. Balcom v. Mosher, 163 N. Y. 32.)

      Austin B. Mandel and Henry Ross for Rosemary Faase et al., respondents.
    The Legislature had full power to enact chapter 146 of the Laws of 1933, constituting section 871-b of the Education Law. (People v. Bradley, 207 N. Y. 592; Matter of 34th St. Ry. Co., 102 N. Y. 343; Hurlbert v. Clark, 128 N. Y. 295; Matter of Strang, 117 App. Div. 796; Hopkins v. Lincoln Trust Co., 233 N. Y. 213; Campbell v. Holt, 115 U. S. 620; House v. Carr, 185 N. Y. 453; Mattson v. Dept. of Labor, 293 U. S. 151; Matter of Stubbe v. Adamson, 220 N. Y. 459; Burch v. Newbury, 10 N. Y. 374; People ex rel. Perrine v. Connolly, 217 N. Y. 570; Stetson v. Board of Education, 218 N. Y. 301; Seymour v. Judd, 2 N. Y. 464; Hyatt v. Taylor, 42 N. Y. 258; People ex rel. Bolton v. Albertson, 55 N. Y. 50; Tompkins v. Hunter, 149 N. Y. 117; Matter of Hering, 196 N. Y. 218; People ex rel. Battista v. Christian, 131 Misc. Rep. 411; Matter of McAneny v. Board of Estimate, 232 N. Y. 377; People v. American Socialist Society, 202 App. Div. 640; Matter of Adams v. Flanagan, 201 App. Div. 735.) Chapter 146 of the Laws of 1933 is not discriminatory. It does not deprive plaintiff of any rights. (Stetson v. Board of Education, 218 N. Y. 301; People ex rel. Perrine v. Connolly, 217 N. Y. 570.)
   Lehman, J.

On May 25, 1928, an eligible list for the position of attendance officers of the Board of Education was prepared after competitive examination. The statute at that time provided that the list should not remain in force more than three years. In the interval other examinations for the same position might be held and eligible lists prepared whenever necessary, but eligible lists shall not be merged and one eligible list shall be exhausted before nominations are made from a list of subsequent date.” (Education Law, § 871; Cons. Laws, ch. 16.) In 1931, before the expiration of three years from the date when the eligible list was prepared, and while that list was still in force, the statute was amended (L. 1931, ch. 538) to provide-that the list should remain in force for another year.

In October, 1931, a new examination for the same position was held and a new eligible list, based on that examination, was prepared and published on July 8, 1932. The old list, prepared in May, 1928, had become inoperative in May, 1932, and the list published on July 8, 1932, was the only list then in force. In April, 1933 (L. 1933, ch. 146), the Legislature added a new section to the Education Law as follows:

§ 871-b. Notwithstanding any provision contained in this chapter to the contrary, in a city having a population of one million or more, the term of eligibility of the eligible list of candidates for appointment as member of the board of examiners which was in force on the fifteenth day of May, nineteen hundred and thirty-two, and the term of eligibility of all open competitive, and promotion eligible lists prepared by the board of examiners of the board of education of said city, (a) which were in force on the fifteenth day of May, nineteen hundred thirty-two, or (b) which are in force on the date this act becomes effective, shall be extended for a period of four years after the expiration of the term of eligibility which was fixed or is fixed for such eligible lists. This section shall not apply to a principal’s eligible fist.”

Prior thereto three appointments had been made from the list of July 8, 1932. Thereafter the Board of Education ruled that no further appointments may be made from that list until the eligible list of 1928 is exhausted.

The appellant challenges the construction which has been placed by the Board of Education upon the statute and also its constitutionality. The courts below have upheld the statute and the construction which has been placed upon it. We agree that if the Legislature had power to enact the new section of the Education Law, the construction placed upon the statute is clearly correct and that the list of 1928 must be exhausted before any new appointments can be made from the later list. We are constrained, however, to hold that the Legislature had no power to enact that statute.

The Constitution of the State (Art. Y, § 6) provides: “Appointments and promotions in the civil service of the State, and of all the civil divisions thereof * * * shall be made according to merit and fitness to be ascertained, so far as practicable, by examinations, which, so far as practicable, shall be competitive. * * * Laws shall be made to provide for the enforcement of this section.” The discretion of the Legislature is limited to the field of the^enforcement of that section of the Constitution. It may not enact a statute which violates its mandate. It is not disputed that it is practicable to ascertain merit and fitness for the position of attendance officer by competitive examination. The Legislature has so determined, and examinations have been held to ascertain such merit and fitness. The plaintiff successfully passed the test required. She did not thereby gain a vested right to appointment to the position, but so long as the eligible fist remained in force, no appointments could be made except from that list. The Legislature might in the exercise of its discretion provide for a new competitive examination whenever for any reason in its opinion a new examination would prove a better test. It could not, however, provide for appointment except upon the basis of merit and fitness determined, so far as practicable, by competitive examination.

It is said that the statute does not disregard this limitation upon the legislative power, since it permits appointments only from an eligible list previously prepared after a competitive examination. The argument is fallacious. Competitive examination, so far as practicable, is the sole test of merit and fitness permitted by the Constitution. Preference among those qualified for a position must be determined solely by relative standing upon the eligible list then in force. Favor must be excluded. It is not excluded when without a new examination the Legislature commands that appointments must be made from an eligible list then not in force before appointments can be made from a list which is in force. Then the Legislature destroys the preference which has been gained by competitive examination, and confers eligibility to office by favor.

A competitive examination may demonstrate merit and fitness, at the time of the examination. As time passes, its value as a test of merit and fitness diminishes. Others may, then, be better prepared and more fit to fill a position than those who are upon the list. The Legislature, or administrative boards or officers, to whom that function has been delegated under appropriate instructions, may determine how long an existing list shall remain in force and when a new examination shall be held. While the list, prepared in 1928, was still in force, the Legislature exercised that power, without challenge, by extending the'life of the list for one year. When that period had passed and a new eligible list was prepared and published, the Legislature was without power to revive the old list. Those on the old list were then no longer eligible for appointment, and the Legislature is without power to confer eligibility. That must be ascertained solely by competitive examination.

The judgments should be reversed and judgment granted in favor of the appellant, with costs in all courts.

Crane, Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgments reversed, etc.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    In the Matter of Joseph H. Sand, Appellant, v. Stanley Y. Beach, Respondent. Edward M. Meek, as Trustee for Stanley Y. Beach under the Will of Jennie B. Gasper, Deceased, Respondent.
    (Argued January 6, 1936;
    decided March 3, 1936.)

      Joseph H. Sand and William W. Lesselbaum for appellant.
    The income from a spendthrift trust is subject to garnishee execution under section 684 of the Civil Practice Act. (Brearley School v. Ward, 201 N. Y. 358; Matter of Ungrich, 201 N. Y. 415; Hamilton v. Drogo, 241 N. Y. 401.) The income from a spendthrift trust does not escape the lien of a garnishee execution by the use of the expedient of permitting the trustee himself to disburse the income for the benefit of the debtor or by permitting the trustee to pay the income into the hands of the debtor for the use of the debtor and his wife. (Hamilton v. Drogo, 241 N. Y. 401.)

      Randolph W. v.Till for Edward M. Meek, as trustee for Stanley Y. Beach under the will of Jennie B. Gasper, deceased, respondent.
    The trust created for the benefit of defendant-respondent and those dependent upon him is a spendthrift trust and is not subject to claims of creditors. (Hamilton v. Drogo, 241 N. Y. 401.)
   Lehman, J.

The appellant is a judgment creditor of Stanley Y. Beach. The judgment debtor is a beneficiary of a trust created by the will of his aunt, Jennie Beach Gasper, deceased. The judgment creditor has applied to the court for an order directing that an execution issue against- the income of the judgment debtor from the trust fund. The problem presented upon this appeal relates solely to the determination of what income from the trust fund is due and owing or will hereafter become due and owing to the judgment debtor. A percentage of such income may be reached through execution by a judgment creditor. (Civ. Prac. Act, § 684.)

Under the will of the testatrix the trustee appointed therein holds the trust fund “ for the following uses and purposes, to wit: To receive the rents, income and proceeds thereof and to pay the same either direct and in person to my nephew Stanley Y. Beach, or for the use and benefit of my said nephew and those dependent upon him, during bis lifetime, and in the manner and amounts, and at the times and for the purposes that said trustee, or his successor or successors, in his discretion may deem best, but not to any conservator or guardian appointed by a court, and my said nephew shall not have the right or power to assign or transfer the same, or any part of the same without the consent, in writing, of said trustee, his successor or successors, until it shall have actually reached my said nephew’s own hands; nor shall any creditor or other person have the right or power to subject the same by legal or equitable process, or in any way without the consent in writing of said trustee, his successor or successors.”

It is clear that the testatrix intended to provide for the support of her spendthrift nephew and those dependent upon him and to make the interest of her nephew in that fund exempt from execution or other process by which otherwise such interest or a part thereof could be applied in satisfaction of the debts of the beneficiary. The law attaches certain incidents to the tenure of property quite independent of the will of the owner. There is recognized in every civilized country the obligation of a man to pay his debts if he has property out of which they can be satisfied, and the failure to do so is moral dishonesty.” (Brearley School v. Ward, 201 N. Y. 358, 372.) The State may in proper ease make some forms of property alienable or inalienable. It may provide that some forms of property may be reached by creditors through execution or other process. The State has plenary power to regulate the tenure of real and personal property within its borders. It may say “ sic vola, sic jubeo.” (Brearley School v. Ward, supra.) The testatrix could not during her lifetime exempt her property from the power of the State to regulate the incidents of its tenure, nor could she by will confer such exemption upon the property which passed under her will. Here the intention of the testatrix is irrelevant. It may be considered only in the construction of the will, and hence in the definition of the property rights which passed thereunder. If the judgment debtor has received under the will the right to the income of the trust fund, the judgment creditor is entitled to an order directing that an execution issue against such income as is or may become due and owing to him.

The trustee under the will is clothed with discretion whether to pay the rents, income and profits to the judgment debtor or to apply them to the use or benefit of the judgment debtor and those dependent upon him during his lifetime. We may not interfere with the discretion which the testatrix has vested in the trustee. His discretion is limited, however, to the payment of the income direct to the judgment debtor or to its application for the benefit of the judgment debtor and those dependent upon him. If the trustee chooses the first alternative, then income from the trust fund will undoubtedly become due and owing to the judgment debtor and may be reached by execution. (Hamilton v. Drogo, 241 N. Y. 401.) So the courts below have decided, and to that extent their decision is not challenged. The question remains whether the judgment creditor may, by execution, reach the income of the fund in the event that the trustee, in the exercise of his discretion, chooses the second alternative and decides to apply the income of the trust fund for the use and benefit of the judgment debtor and his wife, who is dependent upon him.

If the discretion of the trustee were wide enough to permit the trustee to pay to or apply the income of the trust fund to the use or benefit of some person other than the judgment debtor, then to the extent of such payment or application the income of the trust fund would, in no sense, be due or owing to the judgment debtor. The income would then belong under the will to another person, and the judgment debtor would have no interest in it. So we decided in the case of Hamilton v. Drogo (supra). In that case the will of the testatrix provided that the trustee during the lifetime of her son apply the annual income of a trust fund “ for the maintenance and support or otherwise, for the benefit of all or any one or more exclusively of the other or others of him, my said son his wife and children or other issue as my * * * trustees in their sole * * * discretion * * * think fit.” Thus choice of the person for whose benefit the income of the fund should be applied rested solely with the trustee, and if the trustee chose to apply the income exclusively for the benefit of the wife or any one of the children of the judgment debtor, the judgment debtor would have no right to such income any more than if the trust had been originally established for the exclusive benefit of such wife or child.

Here the situation is quite different. The trustee cannot, in the exercise of his discretion, apply the income of the trust fund exclusively for the benefit of the wife of the judgment creditor. If he does not pay the income to the judgment debtor, the trustee must apply it for the use and benefit of the judgment debtor and his dependents. If the direction of the will had been to pay the income to the judgment debtor or to apply it for his support or benefit, the dependents of the beneficiary, though not mentioned in the will, could still have demanded that provision be made from the income for their support. (Cf. Wetmore v. Wetmore, 149 N. Y. 520; American Law Institute; Restatement of the Law of Trusts, § 157.) Thus the express addition in the will of the words “ and those dependent upon him ” does not detract from the right of the judgment debtor to require payment to him of the entire net income of the trust fund or its application for his use and benefit. They confer upon his wife no rights that she would not have otherwise enjoyed.

In the light of the history of the legislation permitting creditors of a beneficiary of a trust fund to reach a part of the income of the fund, it may hardly be doubted that the words income from trust funds * * * due and owing to the judgment debtor ” were intended to include income which must be applied to the use of the judgment debtor. (Civ. Prac. Act, § 684.) The courts have refused to draw any distinction between a trust to pay over income to a beneficiary and a trust to apply income for the use of a beneficiary. (Cf. Matter of Ungrich, 201 N. Y. 415.) The purpose of section 684 of the Civil Practice Act was to permit judgment creditors to reach a portion of the income derived from a trust fund enjoyed by the judgment debtor and to that extent destroy the immunity of the beneficiary of a spendthrift trust from claims of his creditors. That purpose cannot be thwarted by a testator or settlor through the use of meaningless formulas. No person can be given a right to the use of income free from claims of his creditors. The test is only whether the judgment debtor has a right to the use of the income.

Order should be modified, with costs to appellants, and motion for an order that execution issue against the income of the trust granted.

The orders should be modified in accordance with this opinion and as so modified affirmed, with costs to the appellant.

Crane, Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Ordered accordingly.


text:
    Frederick W. Schmidt, Appellant, v. The Merchants Despatch Transportation Company, Respondent. Giulio Felli, Appellant, v. United States Gypsum Company, Respondent. Anthony Labieko, Appellant, v. American Piano Company et al., Respondents.

      (Argued January 13, 1936;
    decided March 3, 1936.)

      Philip Halpern, Milton E. Friedman, Emil L. Cohen and William L. Clay for appellants.
    The Statute of Limitations did not commence to run until actual damage had been suffered by the plaintiff. Therefore, the action is not barred by the Statute of Limitations. (Comstock v. Wilson, 257 N. Y. 231; Reilly v. Sicilian Asphalt Paving Co., 170 N. Y. 40; Commercial Bank of Albany v. Ten Eyck, 48 N. Y. 305; Brusden v. Humphrey, 14 Q. B. Div. 141; Sullivan v. Old Colony Street Ry., 200 Mass. 303; Skipwirth v. Albemarle Soapstone Co., 185 Fed. Rep. 15; Darley v. Mitchell, 11 App. Cas. 127; Ludlow v. Hudson River R. R. Co., 6 Lans. 128; Marsh v. Industrial Accident Co., 18 Pac. Rep. [2d] 933; Michna v. Collins Co., 116 Conn. 193; Matter of Bergerois, 243 Mass. 366; Gilbert v. Ackerman, 159 N. Y. 118; Matter of City of New York [Grand Blvd.], 212 N. Y. 539.) The second count of the complaint states a valid cause of action for a personal injury due to the defendant’s positive wrong, and is governed by the six-year Statute of Limitations. (Dickinson v. Mayor, 92 N. Y. 584; Muller v. McKesson, 73 N. Y. 204; Jorgenson v. Church, 7 Misc. Rep. 1; Niehaus v. Caryfield, Inc., 240 App. Div. 144; Walrath v. Hanover Fire Ins. Co., 216 N. Y. 220; Keller v. Butler, 246 N. Y. 249; Herman v. City of Buffalo, 214 N. Y. 316; Swords v. Edgar, 59 N. Y. 28; Fox v. Buffalo Park, 21 App. Div. 321; 163 N. Y. 559; Junkermann v. Tilyou Realty Co., 213 N. Y. 404; McFarlane v. City of Niagara Falls, 247 N. Y. 340; Hoffman v. Bristol, 113 Conn. 386; Capozzi v. City of Waterbury, 160 Atl. Rep. 435; Hayes v. Brooklyn Heights R. R. Co., 200 N. Y. 183; Khoury v. County of Saratoga, 267 N. Y. 384.) The complaint alleges a good and sufficient cause of action for breach of contract and the action thereon was commenced within the time prescribed by law. (Busch v. Interboro R. T. Co., 87 N. Y. 388; Boyce v. Greeley Square Hotel Co., 228 N. Y. 106; Cortes v. Baltimore Insular Line, 53 Sup. Ct. Rep. 173; Frank v. Maliniak, 232 App. Div. 278; O’Neill v. Gray, 30 Fed. Rep. [2d] 776; Camp v. Reeves, 209 App. Div. 488; 240 N. Y. 672; Ward v. St. Vincent’s Hospital, 39 App. Div. 624; Thomas v. Buffalo Columbus Hospital, 199 App. Div. 905; Archibald v. Hill Sanatorium, 121 Misc. Rep. 193; Roche v. St. John's Riverside Hospital, 96 Misc. Rep. 289; Ganley v. Troy City Nat. Bank, 98 N. Y. 487; Marcy v. City of Syracuse, 199 App. Div. 246; Conklin v. Draper, 229 App. Div. 227; Monahan v. Devinny, 223 App. Div. 547.) The cause of action for fraud and misrepresentation is a valid cause of action and the action was commenced within the time prescribed by statute. (Kuelling v. Lean Mfg. Co., 183 N. Y. 78; Griffin v. Bles, 202 App. Div. 443; Ultramares Corp. v. Touche, 255 N. Y. 170.) The fifth count of the complaint states a good cause for violation of the Labor Law (Cons. Laws, ch. 31) and this cause of action is governed by the six-year Statute of Limitations. (Amberg v. Kinley, 214 N. Y. 531; Arnold v. National Starch Co., 194 N. Y. 42; Martin v. Herzog, 228 N. Y. 164; Ward v. Erie R. R. Co., 230 N. Y. 230; DeMilt v. Hart, 235 N. Y. 464; Ross v. D., L. & W. R. R. Co., 231 N. Y. 335; DiCaprio v. N. Y. C. R. R. Co., 231 N. Y. 94; Kelley v. New York State Railways, 207 N. Y. 342; Abounader v. Strohmeyer, 217 App. Div. 43; 243 N. Y. 458; Pine Grove Poultry Farm v. Newton By-Products Co., 248 N. Y. 293; Karpeles v. Heine, 227 N. Y. 74; Texas & Pacific Ry. Co. v. Rigsby, 241 U. S. 33; Marino v. Lehmaier, 173 N. Y. 530; Groves v. Wimborne, [1898] 2 Q. B. 402; Saxtonv. D. & H. Co., 256 N. Y. 363; Detmar v. Nussbaum, 149 Misc. Rep. 469; 241 App. Div. 720; Shepard v. Taylor Pub. Co., 234 N. Y. 465.)

      Paul Folger and Harlan F. Calkins for The Merchants Despatch Transportation Company, respondent.
    The Statute of Limitations commenced running against the causes of action of the complaint on or before the last date of employment of the appellant by the respondent. (Capucci v. Barone, 266 Mass. 578; Whalen v. Strong, 230 App. Div. 617; Covey v. England, 233 App. Div. 332; Luce v. N. Y. C. & St. L. Ry. Co., 124 Misc. Rep. 590; 213 App. Div. 374; 242 N. Y. 519; Payne v. N. Y.,

      S. & W. R. R. Co., 201 N. Y. 436; Conklin v. Draper, 229 App. Div. 227; 254 N. Y. 620; Horowitz v. Bogart, 218 App. Div. 158; Taylor v. Manhattan Ry. Co., 53 Hun, 305; Model Building & Loan Assn. v. Reeves, 114 Misc. Rep. 137; Spallholz v. Sheldon, 158 App. Div. 367; 216 N. Y. 205; Morales v. Klopsch, 158 App. Div. 824; Lightfoot v. Davis, 132 App. Div. 452; 198 N. Y. 261; Hopkins v. Lincoln Trust Co., 233 N. Y. 213; Pierson v. McCurdy, 33 Hun, 520; 100 N. Y. 608; Palsgraf v. L. I. R. R. Co., 248 N. Y. 339; Albert v. Sherman, 167 Tenn. 133.) The three-year Statute of Limitations provided by section 49 of the Civil Practice Act is a complete bar to all of the causes of action alleged in the complaint. (Smith v. Village of Victor, 134 Misc. Rep. 888; McCluskey v. Wile, 144 App. Div. 470; McFarlane v. City of Niagara Falls, 247 N. Y. 340; Giannavola v. General Railway Signal Co., 244 App. Div. 65; Woernley v. Electromatic Typewriters, Inc., 244 App. Div. 679; Heeg v. Licht, 80 N. Y. 579; Kavanagh v. Barber, 131 N. Y. 211; Swords v. Edgar, 59 N. Y. 28; Callanan v. Gilman, 107 N. Y. 360; Sullivan v. Dunham, 161 N. Y. 290; Leonard v. Spencer, 108 N. Y. 338; Francis v. Schoellkopf, 53 N. Y. 152; Hine v. N. Y. & E. R. R. Co., 128 N. Y. 571; Bly v. Edison Electric Illuminating Co., 172 N. Y. 1; Miller v. Edison Electric Illuminating Co., 184 N. Y 17; Hughes v. City of Auburn, 161 N. Y. 96; Gordon v. Village of Silver Creek, 127 App. Div. 888; McCarty v. Natural Carbonic Gas Co., 189 N. Y. 40; Pritchard v. Edison Electric Illuminating Co., 179 N. Y. 364; Campbell v. Seaman, 63 N. Y. 568; Davis v. Niagara Falls Tower Co., 171 N. Y. 336; Gibson v. Denton, 4 App. Div. 198; Chapman v. City of Rochester, 110 N. Y. 273; Strobel v. Kerr Salt Co., 164 N. Y. 303; Horowitz v. Bogart, 218 App. Div. 158; Frankel v. Wolper, 181 App. Div. 485; Hurlburt v. Gillette, 96 Misc. Rep. 585; 176 App. Div. 893; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Payne v. N. Y., S. & W. R. R. Co., 201 N. Y. 436; Luce v. N. Y.

      C. & St. L. Ry. Co., 124 Misc. Rep. 590; 213 App. Div. 374; 242 N. Y. 519; Mautsewich v. U. S. Gypsum Co., 217 N. Y. 593; Scott v. International Paper Co., 204 N. Y. 49; Michalski v. American M. & F. Co., 225 N. Y. 294; Karpeles v. Heine, 227 N. Y. 74.)

      T. Carl Nixon and Casper Baltensperger for United States Gypsum Company, respondent.
    The first alleged cause of action is barred by the Statute of Limitations. (Patie v. Union Carbide Co., 244 App. Div. 606; Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115; Conklin v. Draper, 229 App. Div. 227; 254 N. Y. 620; Capucci v. Barone, 266 Mass. 578; Maloney v. Brackett, 275 Mass. 479; Bartlett v. Hall, 193 N. E. Rep. 360; Calhoun v. Washington Veneer Co., 170 Wash. 152; Piukkula v. Pillsbury Astoria Flouring Mills Co., 42 Pac. Rep. [2d] 921; Brown v. Tennessee Consolidated Coal Co., 83 S. W. Rep. [2d] 568.) The second cause of action, if it states facts sufficient to constitute a cause of action, sounds in negligence and is barred by the Statute of Limitations. (Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716; Woernley v. Electromatic Typewriters, Inc., 244 App. Div. 679; Giannavola v. General Railway Signal Co., 244 App. Div. 65; McFarlane v. City of Niagara Falls, 247 N. Y. 340; McCluskey v. Wile, 144 App. Div. 470; Kavanagh v. Barber, 131 N. Y. 211; Hughes v. City of Auburn, 161 N. Y. 96; Kilts v. Board of Supervisors, 162 Mich. 646; Hayes v. Brooklyn Heights R. R. Co., 200 N. Y. 183; Smith v. Village of Victor, 134 Misc. Rep. 888; Dickinson v. Mayor, 92 N. Y. 584.) The third cause of action does not set forth facts sufficient to constitute a cause of action. (Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Obanhein v. Arbuckle, 80 App. Div. 465; Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Carroll v. S. I. R. R. Co., 58 N. Y. 126; Woernley v. Electromatic Typewriters, Inc., 244 App. Div. 679.) The third or so-called contract cause of action is barred by the Statute of Limitations. (Aplington v. Pullman Co., 110 App. Div. 250; Webber v. Herkimer R. R. Co., 109 N. Y. 311; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Hulbert v. Gillett, 96 Misc. Rep. 585; 176 App. Div. 893; Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115.) The fourth cause of action if it states facts sufficient to constitute a cause of action sounds in negligence and is barred by the Statute of Limitations. (Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716.) The fifth cause of action sounds in negligence and is barred by the Statute of Limitations. (Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115; Giannavola v. General Railway Signal Co., 244 App Div. 65; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716; Glens Falls Portland Cement Co. v. Travelers Ins. Co., 162 N. Y. 399; Mautsewich v. United States Gypsum Co., 217 N. Y. 593; Scott v. International Paper Co., 204 N. Y. 49; Michalski v. American M. & F. Co., 225 N. Y. 294; Basel v. Ansonia Clock Co., 216 N. Y. 356; Wynkoop v. Ludlow Valve Mfg. Co., 196 N. Y. 324; Moskewict v. Allen’s Sons’ Rope Co., 153 App. Div. 376; Koester v. Rochester Candy Works, 194 N. Y. 92; Marino v. Lehmaier, 173 N. Y. 530; Weisthal v. Arena Building Corp., 232 App. Div. 694; 257 N. Y. 537 ; McRickard v. Flint, 114 N. Y. 222.; Kircher v. Iron Clad Mfg. Co., 134 App. Div. 144; 200 N. Y. 587; Gilvary v. Cuyahoga Valley R. Co., 292 U. S. 57.)

      Perdval D. Oviatt for American Piano Company et al., respondents.
    Regardless of how the causes of action may be classified, or what statutes of limitations are applicable, the complaint states but a single cause of action. (Payne v. N. Y., S. & W. R. R. Co., 201 N. Y. 436; Marion v. Coon Construction Co., 216 N. Y. 178; Covey v. England & McCaffrey, Inc., 233 App. Div. 332; Whalen v. Strong, 230 App. Div. 617; Luce v. N. Y. C. & St. L. R. R. Co., 213 App. Div. 374; Lyons v. McNulty Brothers, 77 Misc. Rep. 176; Acardo v. N. Y. Contracting & Trucking Co., 116 App. Div. 793; Flynn v. McLoughlin, 173 App. Div. 368; Chrosciel v. N. Y. C. R. R. Co., 174 App. Div. 175; Kinney v. Hudson River R. R. Co., 98 Misc. Rep. 11; 177 App. Div. 948; Koester v. Rochester Candy Works, 194 N. Y. 92; Valenti v. Messinger, 175 App. Div. 398; Smith v. Atlantic Coast Line R. Co., 210 Fed. Rep. 761; Michalek v. U. S. Gypsum Co., 76 Fed. Rep. [2d] 115; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716; Mautsewich v. U. S. Gypsum Co., 217 N. Y. 593; Armenti v. Brooklyn Union Gas Co., 157 App. Div. 276; Shields v. Pugh & Co., 122 App. Div. 586; Baltimore Steamship Co. v. Phillips, 274 U. S. 316; Giannavola v. General Ry. Signal Co., 244 App. Div. 65.) The Statute of Limitations began to run at the time of the cessation of employment. (Conklin v. Draper, 229 App. Div. 227; 254 N. Y. 620; Wiersycki v. Pratt & Letchworth Co., 151 Misc. Rep. 207; Taylor v. Manhattan Ry. Co., 53 Hun, 305; Michalek v. U. S. Gypsum Co., 76 Fed. Rep. [2d] 115; Field v. Gazette, 59 S. W. Rep. [2d] 19; Calhoun v. Washington, 170 Wash. 152; Cappuci v. Barone, 195 N. E. Rep. 653; Tulloch v. Haselo, 218 App. Div. 313; Dumbadze v. Dignante, 216 App. Div. 554; Engel v. Fischer, 102 N. Y. 400.) The three-year statute has run against all of the causes of action because all after the first are merely repetitious and are verbal distortions of the first cause of action for negligence. (Giannavola v. General Ry. Signal Co., 244 App. Div. 65; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716; Wiersycki v. Pratt & Letch-worth Co., 151 Misc. Rep. 207; Michalek v. U. S. Gypsum Co., 76 Fed. Rep. [2d] 115; Belmont v. City of New York, 191 App. Div. 717; McCluskey v. Wile, 144 App. Div. 470; Heeg v. Licht, 80 N. Y. 579; People v. Transit

      Development Co., 131 App. Div. 174; Kavanagh v. Barber, 131 N. Y. 211; Obanheim v. Arbuckle, 80 App. Div. 465; Carron v. Standard Refrigerator Co., 138 App. Div. 723; Webber v. Herkimer R. R. Co., 109 N. Y. 311; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Griffin v. Bles, 202 App. Div. 443.)

      William De Graff and John D. Sullivan for American Laundry Machinery Company et al., amici curiæ. An action brought by a factory or foundry employee against his employer for personal injuries, alleging the same to have been caused by violation of duty imposed by the common law or Labor Law, is a negligence action, and, if not commenced within three years from the time the injuries were received, is barred by the Statute of Limitations. (Payne v. N. Y., S. & W. R. R. Co., 201 N. Y. 436; McFarlane v. City of Niagara Falls, 247 N. Y. 340; Glens Falls Portland Cement Co. v. Travelers Ins. Co., 162 N. Y. 399; Koester v. Rochester Candy Works, 194 N. Y. 92; Marion v. Coon Construction Co., 216 N. Y. 178; Luce v. N. Y. C. & St. L. R. R. Co., 213 App. Div. 374; 242 N. Y. 519; Dieboldt v. United States Baking Co., 81 Hun, 195; Goetz v. Duffy, 215 N. Y. 53; Maleeny v. Standard Shipbuilding Corp., 237 N. Y. 250; Schumer v. Caplin, 241 N. Y. 346; Weisthal v. Arena Building Corp., 232 App. Div. 694; 257 N. Y. 537; Webber v. Herkimer & Mohawk St. R. R. Co., 109 N. Y. 311; Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Kindga v. Noyes Co., 260 N. Y. 521; Rix v. Siegel, 235 App. Div. 499; 261 N. Y. 583.) The cause of action for negligence, if any, accrued during plaintiff’s employment and not after the employment ceased. (Engel v. Fischer, 102 N. Y. 400; Tulloch v. Haselo, 218 App. Div. 313; Conklin v. Draper, 229 App. Div. 227; 254 N. Y. 620; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Frankel v. Wolper, 181 App. Div. 485; 228 N. Y. 582; Horowitz v. Bogart, 218 App. Div. 158; Lightfoot v. Davis, 198 N. Y. 268; Troup v. Smith, 20 Johns. 33; Leonard v. Pitney, 5 Wend. 30; Ball v. Gerard, 160 App. Div. 619; 221 N. Y. 665; Smith v. Staten Island Land Co., 175 App. Div. 588; McKay v. Coolidge, 218 Mass. ,65; Miller v. Adams, 16 Mass. 456.) The alleged nuisance action is also governed by the three-year Statute of Limitations. (Belmont v. City of New York, 191 App. Div. 717; McFarlane v. City of Niagara Falls, 247 N. Y. 340; McCluskey v. Wile, 144 App. Div. 470; Heeg v. Licht, 80 N. Y. 579; Kavanagh v. Barber, 131 N. Y. 211; Swords v. Edgar, 59 N. Y. 28; Gordon v. Village of Silver Creek, 127 App. Div. 888; McCarty v. Nat. Carbpnic Gas Co., 189 N. Y. 40; Pritchard v. Edison Electric Illuminating Co., 179 N. Y. 364; Campbell v. Seaman, 63 N. Y. 568; Davis v. Niagara Falls Tower Co., 171 N. Y. 336; Gibson v. Denton, 4 App. Div. 198; Chapman v. City of Rochester, 110 N. Y. 273; Strobel v. Kerr Salt Co., 164 N. Y. 303.) The other causes of action, being really negligence, actions, though called something else, are governed by the three-year limitation. (Frankel v. Wolper, 181 App. Div. 485; 228 N. Y. 582; Horowitz v. Bogart, 218 App. Div. 158; Conklin v. Draper, 229 App. Div. 227 ; 254 N. Y. 620; Hermes v. Westchester Racing Assn., 213 App. Div. 147; Webber v. Herkimer & Mohawk St. R. R. Co., 109 N. Y. 311; Maxson v. D., L. & W. R. R. Co., 112 N. Y. 559; Allen v. Mille, 17 Wend. 202; Troup v. Smith, 20 Johns. 33; Leonard v. Pitney, 5 Wend. 30; Lightfoot v. Davis, 198 N. Y. 268; Tulloch v. Haselo, 218 App. Div. 313; Daurizio v. Merchants Despatch Transportation Co., 152 Misc. Rep. 716.)

      Lathrop D. Marsland for Flower City Charcoal Company, amicus curiæ. The plaintiff had a cause of action when through the defendant’s negligence his right to bodily security was. invaded, when violence was done to his body by the introduction into his lungs and other organs of the harmful dust. The last of such acts of violence must necessarily have occurred on the last day .of his employment. His cause or causes of action were then complete. The subsequent progress > and development of the disease of silicosis or pneumoconiosis was but an aggravation of the damage then done. (Conklin v. Draper, 229 App. Div. 227 ; 254 N. Y. 620; Northrop v. Hill, 57 N. Y. 351.)

      Eugene Raines for Cutler Mail Chute Company, amicus curiæ.

   Lehman, J.

The plaintiff in his complaint alleges that, while in the employ of the defendant, he inhaled foreign substances in the form of dust, and, as a result, contracted a disease of the lungs known as pneumoconiosis. In various forms and in separate and distinct causes of action the complaint alleges that the plaintiff’s exposure to such a risk constituted the breach of a duty which the defendant, as employer, owed to the plaintiff as employee. The wrongful act of the defendant, however, alleged in these separate causes of action, remains the same.' The alleged injury to the plaintiff is a single injury. The failure of the defendant to give adequate protection to the plaintiff, against a danger which arises in the course of the plaintiff’s employment, and the injury arising therefrom constitute the basis of each “ cause of action.” That duty, as alleged in one “ cause of action,” arises from the general rule that every person must exercise reasonable care to avoid causing injury to the person or property of another. That duty, as alleged in other causes of action, arises from contract or from express representation by the defendant that the work which the plaintiff was employed to do was safe; or finally that duty is imposed by statute. None the less, the act of the defendant in exposing the plaintiff to the effect of the inhalation of a dust causing an incurable lung disease, remains a single wrong and the personal injuries which, it is alleged, the plaintiff has suffered arise from that single wrong.

“An action to recover damages for a personal injury resulting from negligence ” must be commenced within three years after the cause of action has accrued. (Civ. Prac. Act, § 49.) The defendant maintains that the breach of duty owed to the plaintiff by the defendant as employer constitutes negligence and that the plaintiff has only a single cause of action for damages for a personal injury resulting from such negligence. It is not disputed that the plaintiff's employment ceased more than three years before this action was commenced. Any breach of duty owed by the defendant as employer must, then, have been completed before that time. For that reason, the complaint has been dismissed upon the defendant’s motion.

Since the defendant has committed but a single wrong and the plaintiff has suffered but a single injury, the plaintiff has in one sense only a single cause of action. (Payne v. N. Y., S. & W. R. R. Co., 201 N. Y. 436; Luce v. N. Y., C. & St. L. R. R. Co., 213 App. Div. 374; affd., 242 N. Y. 519.) However, “ a cause of action ’ may mean one thing for one purpose and something different for another.” (United States v. Memphis Cotton Oil Co., 288 U. S. 62, 67, 68.) Judicial decision cannot be based soundly upon dialectical distinctions or rigid application of purely formal concepts. An allegation that a single act or default constitutes a breach of a duty imposed upon common law principles and, at the same time, the breach of a duty imposed by statute, may be immune from attack, on the ground that it embodies two causes of action which should be separately stated and numbered. So, too, a successful defense of an action brought to recover upon one ground of liability for an alleged wrongful act or default may constitute a conclusive adjudication against a plaintiff who seeks to assert another cause of action based upon a different ground of liability but for the same alleged wrong. In such cases a division of a single injury caused by a single wrong into separate causes of action would ignore the essential fact that, in truth, there has been but a single wrong and a single injury. The problem is different when the defendant claims that the Statute of Limitations bars recovery for the single injury.

We assume that the allegations in the complaint of five separate and distinct ” causes of action, set forth, in different forms, only a single wrong for which there may be but one recovery. That must be true, for evidently there can be but one satisfaction awarded for a single injury. None the less the Legislature may, if it chooses, impose one period of limitation for a cause of action to recover damages for a personal injury arising from negligence and different periods of limitation for a cause of action for the same injury where liability may arise on other grounds; and, in determining which period of limitation applies to a particular cause of action, the criterion is the origin and nature of the liability asserted. The single wrongful act which is asserted as the basis of recovery may constitute the breach of a number of obligations of diverse nature and origin. Then it may rest with the plaintiff whether he will assert as the basis of his right to damages the breach of one or more of such obligations; and the single right to recover such damages may then be alleged in different forms, each asserting as a basis of liability the breach of some duty or obligation. Each so-called “ separate and distinct cause of action ” becomes in effect a “ count ” in the allegation of a single wrong; and whether the statute bars recovery under any count depends upon the nature and origin of the liability asserted in that count. In that sense a single wrong may give rise to different causes of action.

The wrong alleged in the first cause of action is unquestionably the negligence of the defendant. Failure to comply with statutory safeguards, commanded by the State for the purpose of protecting employees from injury through inhalation of dust, is alleged only as a specification of defendant’s negligence. That cause of action is barred three years from the date it accrued. As to that cause of action the only question presented upon this appeal is when it accrued.

We have said that in actions of negligence damage is of the very gist and essence of the plaintiff’s cause.” (Comstock v. Wilson, 257 N. Y. 231, 235.) Accordingly, the plaintiff claims that his cause of action accrued, not at the time he inhaled the dust — more than three years before the action was commenced -— but at the time when the dust, so inhaled, resulted in a disease of the lungs and that date, it is said, can be determined only by medical testimony.

Though negligence may endanger the person or property of another, no actionable wrong is committed if the danger is averted. It is only the injury to person or property arising from negligence which constitutes an invasion of a personal right, protected by law, and, therefore, an actionable wrong. (Cf. The Duty to Take Care,” by W. W. Buckland, 51 Law Quarterly Review, p. 637; Pollock on The Law of Torts [12th ed.], p. 186.) Through lack of care a person may set in motion forces which touch the person or property of another only after a long interval of time (Cf. Ehret v. Village of Scarsdale, 269 N. Y. 198); and then only through new, fortuitous conditions. There can be no doubt that a cause of action accrues only when the forces wrongfully put in motion produce injury. Otherwise, in extreme cases, a cause of action might be barred before liability arose. .

That does not mean that the cause of action accrues only when the injured person knows or should know that the injury has occurred. The injury occurs when there is a •wrongful invasion of personal or property rights and then the cause of action accrues. Except in cases of fraud where the statute expressly provides otherwise, the statutory period of limitations begins to run from the time when liability for wrong has arisen even though the injured party may be ignorant of the existence of the wrong or injury. Consequential damages may flow later from an injury too slight to be noticed at the time it is inflicted. No new cause of action accrues when such consequential damages arise. So far as such consequential damages may be reasonably anticipated, they may be included in a recovery for the original injury, though even at the time of the trial they may not yet exist. When substantial damage may result from any wrong affecting the person or property of another, a cause of action for such wrong immediately accrues. (Conklin v. Draper, 229 App. Div. 227; affd., 254 N. Y. 620; Wiener v. Ellrodt, 268 N. Y. 646; Capucci v. Barone, 266 Mass. 578.)

We must apply that rule here. The injury to the plaintiff was complete when the alleged negligence of the defendant caused the plaintiff to inhale the deleterious dust. For that injury, including all resulting damages the defendant was then liable. The disease of the lungs was a consequence of that injury. Its result might be delayed or, perhaps, even by good fortune averted; nevertheless, the disease resulted naturally, if not inevitably, from a condition created in the plaintiff’s body through the defendant’s alleged wrong. It cannot be doubted that the plaintiff might have begun an action against the defendant immediately after he inhaled the dust which caused the disease. No successful challenge could have been interposed on the ground that the action was prematurely brought because at the time it was commenced no serious damage to the plaintiff had yet developed. In that action the plaintiff could recover all damages which he could show had resulted or would result therefrom. In effect, the plaintiff is asking this court to hold that the statutory period of limitation begins only from the time that the plaintiff had reasonable assurance that serious damage had resulted or would result from past injury. The statute provides in unambiguous language that the period of limitation begins to run at the moment when right to begin an action accrues. The same test must be applied to a challenge that the action is stale as to a challenge that the action has been brought prematurely.

The Statute of Limitations is a statute of repose. At times, it may bar the assertion of a just claim. Then its application causes hardship. The Legislature has found that such occasional hardship is outweighed by the advantage of outlawing stale claims. The problem created by the slow onset of the disease of pneumoconiosis or silicosis has been considered by the courts of other jurisdictions. They have given to statutes of limitation their intended effect as statutes of repose and have held that a cause of action sounding in negligence accrues at the time when through lack of care by an employer, deleterious substances enter the lungs of an employee though the development of consequential damages may be long delayed. (Brown v. Tennessee Consolidated Coal Co., 83 S. W. Rep. [2d] 568; Scott v. Rinehart & Dennis Co., 180 S. E. Rep. 276; Piukkula v. Pillsbury Astoria Flouring Mills Co., 150 Ore. 304; Michalek v. United States Gypsum Co., 76 Fed. Rep. [2d] 115.) The problem is different when it is presented upon a claim for compensation for disability arising from an occupational disease or in an action to enforce a statutory liability for similar disability. (Cf. Marsh v. Industrial Accident Commission, 217 Cal. 338; Michna v. Collins Co., 116 Conn. 193; Madison v. Wedron Silica Co., 352 Ill. 60.) We agree that any cause of action which must be commenced within three years after it accrues is for these reasons barred. There are four “ causes of action ” pleaded in the complaint to which, the plaintiff claims, a six-year period of hmitation rather than the three-year period applies. The gist of the wrong alleged in the second, third and fourth causes of action is an injury resulting from negligence although the pleader has attempted to set forth causes of action which in form are for damages caused by nuisance, breach of contract and fraudulent misrepresentation. In the Appellate Division the judges, who on other grounds dissented from the decision, agreed with the majority that these causes of action are all subject to the three-year period of hmitation, just as if, in form as well as in substance, recovery were sought for damages arising from an injury caused by negligence. In Michalek v. United States Gypsum Co. (supra), too, all the judges again agreed that these causes of action are barred. We reach the same conclusion. “ The form of the action, whether ex contractu, as claimed to be the case here by the appellant’s counsel, or ex delicto, does not affect the case under this statute..” ( Webber v. Herkimer & Mohawk St. R. R. Co., 109 N. Y. 311, 314.) The nature and origin of the liability asserted is, regardless of form, a liability for damages caused by negligence.

^ There remains only the last cause of action in which the plaintiff charges that the defendant failed to provide the safeguards required by the Labor Law (Cons. Laws, ch. 31). Here two justices in the Appellate Division maintained in a vigorous and persuasive dissenting opinion that in this cause of action recovery was sought “ upon a liability created by statute ” to which the six-year period applied. (Civ. Prac. Act, § 48, subd. 2.) (See, also, dissenting opinion of Augustus Hand, J., in Michalek v. United States Gypsum Co., supra.) The Labor Law (§ 299) provides among other things that “ all machinery creating dust or impurities shall be equipped with proper hoods and pipes connected to an exhaust fan of sufficient capacity and power to remove such dust or impurities,” (subd. 2), and also that if dust, gases, fumes, vapors, fibers or other impurities are generated or released in the course of the business carried on in any workroom of a factory, in quantities tending to injure the health of the employees, suction devices shall be provided which shall remove such impurities from the workroom, at their point of origin where practicable, by means of proper hoods connected to conduits and exhaust fans ’ ’ (subd. 3). The Legislature has cast upon the defendant a duty not measured by the usual norm of what a reasonably prudent man would do under the same circumstances. The duty is imposed for the special benefit and protection of employees. The problem here presented is whether the Legislature at the same time that it commanded that safeguards be installed for the benefit of employees also “ created ” a liability for damages caused, by disregard of that command or whether the Legislature merely created a new standard of care to be applied in actions where lack of care is charged as a basis of liability.

The duty imposed by statute is absolute and proof of disregard of a duty created by statute for the protection of a special class establishes, it has been said, negligence as a matter of law. The usual standard of care is superseded by the standard enacted by the Legislature. Ordinarily it is not a matter of consequence whether in such case the liability arising from breach of a statutory duty be regarded as a liability created by statute or a liability for negligence for which the statute creates a new standard or norm. Nevertheless the existence of such a distinction has been pointed out by this court: “ In a suit upon a cause of' action thus given by statute, it is not necessary for the plaintiff to prove negligence on the part of the defendant, because the failure to observe the statute creates a liability per se, or, as is otherwise and with less accuracy sometimes said, is conclusive evidence of negligence.” (Amberg v. Kinley, 214 N. Y. 531, 535.) For some purposes, negligence and breach of a statutory duty “ must be kept distinct in speech and thought.” (Martin v. Herzog, 228 N. Y. 164, 168.) The distinction may be decisive here upon the question whether the fifth cause of action, alleged in the complaint, is to be treated as “an action to recover upon a liability created by statute ” which is subject to the six-year period of hmitation.

We may assume that a “ liability ” is not “ created ” by statuté in every case where the statute imposes a new duty or a standard of care different' from that required by custom and common law. The statute may be general in character and the statutory duty may be imposed for the general welfare rather than for the benefit of a person or group of persons. A statute " creates ” no liability unless it discloses an intention express or implied that from disregard of a statutory command a liability for resultant damages shall arise which would not exist but for the statute.” (Shepard v. Taylor Pub. Co., 234 N. Y. 465, 468.) The statute may in express terms give to an injured person a cause of action for such damages. Difficulty arises only where the statute does not, in express terms, make any provision for such a cause of action. Then the problem is whether such a provision should be implied. That depends, at least in great measure, upon whether the duty is imposed for the special benefit of a particular group or class of persons. Only in such case can it be said that the statute creates a liability per se. When the statute merely defines, in the interest of the general public, the degree of care which shall be exercised under specified circumstances, it does not create ” a new liability; it merely changes the standard which must be applied in an action to recover damages caused by lack of care.

“A disregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover the damages from the party in default is implied, according to a doctrine of the common law expressed in 1 Com. Dig., tit., Action upon Statute (F), in these words: ‘ So, in every case, where a statute enacts, or prohibits a thing for the benefit of a person, he shall have a remedy upon the same statute for the thing enacted for his advantage or for the recompense of a wrong done to him contrary to the said law.’ ” (Texas & Pacific Ry. Co. v. Rigsby, 241 U. S. 33, 39.) It is urged by the defendant that what was said there has been restricted by what was said later by the same court in Gilvary v. Cuyahoga Val. Ry. Co. (292 U. S. 57). We do not so construe the later case. It holds only that where Congress, fails to provide expressly a statutory cause of action for breach of a statutory duty, the right to recover damages which is implied according to the doctrine of the common law ” is not entirely immune from interference by the State. It does not touch the question whether such right ” to recover damages is upon a liability created by statute.”

Upon that question this court has already indicated its opinion: Where a statutory duty is imposed upon one for the direct benefit or protection of another and the latter is damaged because this duty is not performed a cause of action arises in his favor based upon the statute. (Amberg v. Kinley, 214 N. Y. 531.) * * * On the other hand, a statute or a city ordinance may be general in its character and may define the degree of care which one shall exercise in his calling or occupation. Failure to use such care is evidence more or less conclusive of negligence as to everyone.” (Di Caprio v. N. Y. C. R. R. Co., 231 N. Y. 94, 97.) Here it is plain that the safeguards have been commanded for the protection of the health of those employed in a particular occupation. The statute does not merely define the degree of care required in that occupation. It imposes an absolute duty upon employers to provide adequate and proper safeguards. In the performance of that duty there may be some room for discretion as to what safeguards may be proper and adequate. There are perhaps some gaps to be filled in by administrative regulations. Nevertheless liability for disregard of the statutory duty regardless of negligence is implied, according to the doctrine of the common law, and since such liability would not exist except for the statute, the liability is “ created ” by statute.

For these reasons the judgments of the courts below should be modified in accordance with this opinion and as so modified affirmed, without costs.

Crane, Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgment accordingly.


author: Crane, Ch. J.

text:
    James R. Bramley et al., Respondents, v. Thomas W. Miller et al., Acting as a Board of Education of Central School District Number Two of the Towns of Andes, Delhi and Bovina, et al., Appellants.

      (Argued January 31, 1936;
    decided March 10, 1936.)

      Livingston S. Lathrop and Charles B. Johnson for Thomas W. Miller et al., acting as a Board of Education of Central School District Number Two of the Towns of Andes, Delhi and Bovina, appellants.
    The irregularity in the petition filed in the town clerk’s office does not invalidate the action of the voters at an election subsequently held. (Matter of Hurley v. Cheshire, 234 App. Div. 464; 259 N. Y. 582; People ex rel. Hirsch v. Wood, 148 N. Y. 142; Matter of Eggleston, 51 App. Div. 38; Matter of Krieger, 59 App. Div. 348; People ex rel. Crane v. Chandler, 41 App. Div. 178; Matter of Clement, 29 Misc. Rep. 29; Salducco v. Etkin, 268 N. Y. 606.)

      Ernest E. Cole, Charles A. Brind, Jr., and Joseph Lipsky for Frank P. Graves, as Commissioner of Education of the State of New York, appellant.
    The filing of the request with the town clerks as provided in section 181 of the Education Law (Cons. Laws, ch. 16) is procedural and not jurisdictional. (Lair v. Grant, 137 Misc. Rep. 470; Gardiner v. Ginther, 232 App. Div. 296; State v. Young, 84 Mo. 90; State v. Lester, 50 S. W. Rep. [2d] 386; Scarborough v. Eubank, 93 Tex. 106.) Every statutory provision relating to the organization of the central district has been reasonably complied with. (Salducco v. Etkin, 268 N. Y. 606.)

      Frederick W. Youmans and Hamilton J. Hewitt for respondents.
    The petition filed was invalid. Fifteen taxable inhabitants did not sign the request for a meeting of the inhabitants to establish the central school. (Wither-head v. Ort, 223 App. Div. 626; 249 N. Y. 567; Matter of Donner-Hanna Coke Carp., 212 App. Div. 338; 241 N. Y. 530; Chapman v. City of Brooklyn, 40 N. Y. 372; Miller v. City of Oneida, 153 Misc. Rep. 438; Matter of Annexation v. Chester, 174 Penn. St. 180; Elkin v. Deshler, 25 N. J. L. 180.) The defect was jurisdictional and goes to the very foundation of the proceedings for the formation of the proposed central rural school district. (Matter of Lerner v. Cohen, 262 N. Y. 450; Matter of Brownell, 239 App. Div. 153; Matter of Burgin, 267 N. Y. Supp. 919; Matter of Swarthout, 76 Misc. Rep. 24; Matter of Booth, 119 Misc. Rep. 243; Matter of Murphy, 189 App. Div. 135; Kennedy v. Warren, 100 N. Y. Supp. 616; Jarl Co. v. Village of Croton-on-Hudson, 258 N. Y. 303; State, v. Superior Court, 191 Pac. Rep. 622; Brooker v. Ludlow, 179 N. W. Rep. 145; Maddox v. Gilbert, 140 S. E. Rep. 358; Yeager v. Merritt, 120 So. Rep. 832; People v. Board of Education, 140 N. E. Rep. 22; Logue v. Batterton, 247 Ill. 605; People v. Town of Oldtown, 88 Ill. 202.) Plaintiffs are not estopped from raising the question of the sufficiency of the petition. (Gwynne v. Board of Education, 259 N. Y. 191.)
   Crane, Ch. J.

We are of the opinion that the provisions of article 6-B of the Education Law (Cons. Laws, ch. 16) relating to central rural schools have been substantially complied with and, even if they have not, it is too late for the plaintiffs to raise any objection.

On October 5, 1933, Frank P. Graves, Commissioner of Education, pursuant to section 180 of the Education Law, laid out a central school district in the towns of Andes, Delhi and Bovina, in the county of Delaware. The legality and existence of this central school district are not questioned. It has been created and exists pursuant to the statutes of this State. Whether or not it shall be governed by a board of education, pursuant to the other provisions of article 6-B, is the question before us. If no meeting of the voters in this central school district is called, the schools in the existing districts named in the order of the Commissioner of Education continue to be maintained and operated just as if no central district had been established. If, however, a meeting of the voters of the district were called in the manner prescribed in section 181, and a resolution were adopted to establish a central school in said district, then a board of education would be elected and the schools of the central school district would be maintained and operated in conformity with the remaining provisions of the article. A meeting of the voters in the district was called. A petition was filed by sixteen alleged residents and taxable inhabitants requesting a meeting of the inhabitants of the central school district be called to vote upon the question, Shall a Central School District be organized as laid out by the Commissioner of Education and a Central School District be established therein under the provision of Article 6-B of the Education Law? ”

The formalities were taken, pursuant to the provisions of section 181 of the Education Law, which reads: Whenever fifteen persons who are residents and taxable inhabitants in any such district shall unite in a request for a meeting of the inhabitants of such district to determine whether such school shall be established, and file the same in writing with the town clerk of the town in which such district is located, or if located in more than one town, with the town clerk of each town in which any part of such district is, it shall be the duty of each town clerk with whom such notice is filed to post a notice of such meeting, not less than five or more than ten days after the same is filed in his office * * *. If a weekly or daily newspaper be published within such school district the notice shall be published therein by the clerk preparing the notice, at least three days before the meeting.” Section 182 provides that a meeting held, pursuant to such notice, shall be organized by the election of a chairman and clerk and, if fifteen qualified voters of the district be present, they may by an affirmative vote of a majority adopt a resolution to establish a central school in said district.

After receiving such petition the Town Clerk of the town of Andes called a meeting of the voters of the central district in accordance with the law, which meeting was held on the 26th day of October, 1933, and the following resolution was adopted by a vote of 290 to 218:

“Resolved, that a Central School District be organized as laid out by the Commissioner of Education and a Central School be established under the provisions of Article 6-B of the Education Law of the State of New York, comprising Union Free School District No. 2 of the Town of Andes, Common School Districts Nos. 4, 5, 7, 9, 14, 15, 17, 18, 19, 20, 21 and 23 of the Town of Andes, Common School District No. 12 of the Towns of Andes and Delhi, and Common School Districts Nos. 7 and 8 of the Towns of Bovina and Andes, all of said Union Free and Common School Districts being in the County of Delaware and State of New York.”

The voters at said meeting elected also a Board of Education composed of five members which, after November 13, 1933, pursuant to the order of the Commissioner of Education designating the Central School District No. 2, commenced to function under the above provisions of the Education Law.

Certain irregularities appeared in these petitions as filed with the Town Clerk. Jennie McCune was not a taxable inhabitant, which left the petition with fifteen names. The petition as filed in the town of Delhi through inadvertence did not contain the name of Charles B. Johnson. One of the signers, Austin Ingram, was a farmer living with his wife upon the farm. The title actually stood in her name although he worked the farm. These matters were known to the petitioners, or could easily have been ascertained by them if it were possible for the town clerks or other authorities to have discovered them. No objections were made to the holding of the meeting as called, and no statements or claims of any kind were pressed at the meeting or before it was called to the effect that it had not been properly and legally called or that the request as filed was in any way defective. All sides prepared for the meeting, determined no doubt to abide by the result. As stated, two hundred and ninety voted in behalf of the resolution, two hundred and eighteen against. The defeated faction then resorted to technicalities, having been beaten on the merits, and appealed to the Commissioner of Education.

On or about December 23, 1933, nearly sixty days after the establishment of the central school district, certain residents of that district appealed to the Commissioner of Education, pursuant to section 890 of the Education Law, from the order of the Commissioner laying out the central school district and the proceedings had thereunder. On the 16th day of January, 1934, the said Commissioner, after a full hearing and argument, dismissed the case. This action was then commenced on the 10th day of February, 1934, for a declaratory judgment stating the rights of the respective parties and school districts and enjoining the Board of Education of the Central Rural School District No. 2 from taking any action, pursuant to article 6-B of the Education Law, and asking that the orders of the Commissioner of Education of October and of November, 1933, be canceled and annulled; in other words, that the proceedings of the Commissioner and the Board of Education be declared null and void.

The provisions of the Education Law were substantially complied with, and the minor defects appearing in the petition calling for the meeting of October 26, 1933, could not and did not affect the legality of that meeting after it had been acquiesced and participated in by the inhabitants of the district without any objection or protest.

No claim is made in this action that sufficient notice was not given of the meeting called for October 26, 1933. The Town Clerk gave and published the notice as required by law, and all these people knew about it. So the trial court found. As stated, they appeared at the meeting and voted upon the proposition; in fact, over five hundred voted. The result of this election is sought to be set aside, not because of insufficient notice or because the electors had no opportunity to vote, but solely because the call for the meeting may have lacked one signature. This is not within the spirit of the principle which governs elections generally. The result of a vote taken on election day is not rendered void because of the irregularity of a nominating convention or nominating petitions. Whatever objection there may be to the questions to be submitted or to the nominations as made must be raised and disposed of before election day. The result of the election is final and wipes out all these prior irregularities, if there be any.

And this rule regarding elections on the general election day throughout the State applies to the elections on other days in cities or villages or towns which may occur during other portions of the year. Conceding that the proposition has been fairly submitted in accordance with law; that the electors have had the notice required by law; and that they have participated without hindrance so that the election is a fair and properly conducted election, all minor irregularities and defects in working the machinery or procedure whereby the election is brought about are insufficient to avoid the result.

The minor irregularity of the omission of one qualified voter from the request for the call of such a meeting in no way affects the election held in accordance with law. There were fifteen names to the request, all of whom were taxable inhabitants of the district with the exception of one whose farm stood in his wife’s name instead of his own. Both were living together on the farm. Such a minor, immaterial defect or omission, not discovered by any of the parties, apparently, before the election duly held, should not be used by the courts for the purpose of wiping out and destroying the Central School District Board of Education established and in operation since November 13, 1933.

Again, the inconvenience and the danger which would result in applying any such strict rule of construction is quite apparent. Whether or not a district meeting properly called after due notice by the Town Clerk may vote upon a proposition to establish a central school district, although the call of the meeting has not been requested by fifteen taxable residents, is not here for decision. The statute says that it shall be the duty of the Town Clerk when fifteen inhabitants request it, to call a meeting. Surely a meeting held by all the residents of a district voting unanimously for a central school district would not render the proceedings void because there had not been the previous request. In other words, after a meeting has actually been held and notice given to every one in accordance with law, and the statute complied with in every particular, any defect in the request for the call of the meeting not objected to by any of the participating parties or taxable inhabitants of the school district, cannot have and should not have any effect upon the result of the proceedings taken at that meeting.

The plain purpose of section 181 is to give the inhabitants of the proposed school district the opportunity to express their will at a meeting of which proper notice has been given. The duty of giving such notice is placed upon the town clerks. The requirement that the town clerks shall act upon the request of fifteen persons who are residents and taxable inhabitants in any such district ” is merely the means provided to set the town clerks in motion. In the words of the statute, “ it shall be the duty of each town clerk with whom such notice is filed to post a notice of such meeting,” etc. The request is, as the statute indicates, a notice that fifteen taxable inhabitants desire such a meeting. It has no other function. The statute there confers upon a specified number of taxable inhabitants the right to compel the town clerks to act. It places upon the town clerks the responsibility of determining whether the formal requirements for the assertion of that right have been complied with. If by error a town clerk accords that right to a lesser number, the call of the meeting may be irregular, but the Legislature could not, reasonably, have intended that, for such error, the will of the inhabitants of the district expressed at a meeting held upon the notice specified in the statute, should be void. (Cf. State ex rel. Schmutzler v. Young, 84 Mo. 90; State ex rel, Thompson v. Lester, 50 S. W. Rep. [2d] 386.)

Jarl Co. v. Village of Croton-on-Hudson (258 N. Y. 303) is not in point. That case involved the annexation of territory to a village and the petition had to be signed by residents or landowners of the territory to be annexed. A majority of those in the annexed territory had to sign. It was the majority who signed the petition which determined their consent. Thereafter the village took a vote for its consent. Of course these two cases are entirely dissimilar. No such election was held in the Jarl case as in this case.

It follows that the judgment of the Appellate Division and that of Special Term should be reversed and the complaint dismissed, with costs in all courts.

Lehman, O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgments reversed, etc.


author: O’Brien, J.

text:
    The People of the State of New York ex rel. Bankers Trust Company et al., as Executors of and Trustees under the Will of Ephraim L. Corning, Deceased, Appellants, against Mark Graves et al., Constituting the State Tax Commission, Respondents.
    (Argued January 30, 1936;
    decided March 10, 1936.)

      Schuyler M. Meyer, H. Maynard Kidder and Gove B. Harrington for appellants.
    The application for the modifying order was brought under section 230 of the Tax Law (Cons. Laws, ch. 60). (Matter of Thompson, 148 Misc. Rep. 122; Douglass v. County of Pike, 101 U. S. 677.) The modifying order was made under section 230. (Matter of Hoople, 179 N. Y. 308; Matter of Muir, 139 Misc. Rep. 434; Matter of Sack, 236 App. Div. 543.) Chapter 434 of the Laws of 1934, as applied to the case at bar, is unconstitutional.. (Forbes Pioneer Boat Dine v. Board of Commissioners, 258 U. S. 338; Fisk v. Jefferson Police Jury, 116 U. S. 131.)

      John J. Bennett, Jr., Attorney-General (Seth T. Cole and Mortimer M. Kassell of counsel), for respondents.
    The State Tax Commission has no equitable power^or control over funds of the State and can only disburse such funds pursuant to statute. No statute authorizes the making of a refund in this case. (Matter of Sack, 138 Misc. Rep. 806; 232 App. Div. 433; 257 N. Y. 534; 234 App. Div. 696; 259 N. Y. 563; 236 App. Div. 543; Matter of Furey v. Graves, 241 App. Div. 897; 266 N. Y. 415; People ex rel. International Salt Co. v. Graves, 267 N. Y. 149.) If any right to a refund exists, it is barred by the Statute of Limitations. (Matter of Furey v. Graves, 148 Misc. Rep. 785; 241 App. Div. 897; 266 N. Y. 415; Matter of Hoople, 179 N. Y. 308; Stuart v. Grattan, 217 App. Div. 336; Civ. Prac. Act, § 48.)
   O’Brien, J.

In the year 1924, Ephraim L. Corning died a resident of Connecticut. His will established trust funds for the benefit of designated individuals with remainders to others under certain contingencies. His estate included stocks and bonds of New York corporations and, pursuant to section 230 of the Tax Law (Cons. Laws, ch. 60), a tax was assessed in this State upon them, including a tax of $31,405.65 upon the contingent remainders at the highest rate possible under any contingency that might affect the vesting of those remainders. The tax was paid December 1, 1924. That assessment was made pursuant to an order of a Surrogate of New York county dated November 17, 1924, which determined the amount of the tax and also provided: Further Ordered that upon the falling in of each of the remainders hereinabove mentioned, application may be made for an order modifying this order to provide for the final assessment and determination of the tax upon the transfer of each such remainder in accordance with the ultimate transfer or devolution thereof.” Under date of January 3, 1934, the Surrogate’s order of November 17, 1924, was modified and the following provision "added: “ Ordered that the remainders contingently taxed by the temporary order of this court dated November 17,1924, at the highest possible rate, be, and the same hereby are exempt from the tax imposed by the provisions of the Act relating to taxable transfers.” Following the entry of this order, application was made to the State Tax Commission by the executors and trustees of Ephraim L. Corning for a refund, the application was refused and in the proceeding before us the courts below have denied a motion for mandamus to compel the Commission to refund the $31,405.65, with interest from November 17, 1924. The Comptroller is not a party.

Intermediate the dates of the Surrogate’s order of November 17, 1924, and the order of January 3, 1934, the Supreme Court of the United States decided in Farmers Loan & Trust Co. v. Minnesota (280 U. S. 204) and First Nat. Bank v. Maine (284 U. S. 312) that a State is without jurisdiction to lay a tax upon the transfer of securities of corporations organized under its own laws but owned by decedents domiciled elsewhere.

Appellants assert a right to a refund under section 230 of the Tax Law. That section provided in 1924 that when the rights, interest or estate of the transferees of property in trust are dependent upon contingencies, the Surrogate shall enter a temporary order determining the amount of the tax, “ provided, however, that on the happening of any contingency whereby the said property, or any part thereof, is transferred to a person or corporation exempt from taxation under the provisions of this article, or to any person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this article; and the executor or trustee of each estate * * * shall immediately upon the happening of said contingencies or conditions apply to the surrogate * * * for an order modifying the temporary taxing order of said surrogate so as to provide for the final assessment and determination of the tax in accordance with the ultimate transfer or devolution of said property. Such return of over payment shall be made in the manner provided by section two hundred and twenty five of this chapter.”

The order of November 17, 1924, was made in accordance with this statute. It determined the amount of the tax and authorized, “ upon the falling in of each of the remainders,” an application for a modifying order for the final assessment on the transfer of each remainder in accordance with the ultimate transfer or devolution thereof.” Before any contingencies had happened and consequently before the ultimate transfer or devolution of the property had occurred, application was made for a modifying order. This application was premature and contrary to section 230, and the order of January 3, 1934 does not conform with the requirements of the original order. Without reference to the happening of any contingency or ultimate transfer or devolution of any remainder, the second order simply decrees that the remainders are exempt from the tax imposed by the provisions of the Act relating to taxable transfers.” Assuming, in view of the decisions in the Farmers Loan Case (280 U. S. 204) and the National Bank Case (284 U. S. 312), that the remainders are exempt under the interpretation of the law as it now stands, the conclusion does not follow that appellants are entitled to a refund. This right must depend upon some statute expressly conferring such a right. Section 230 provided that the return of an overpayment shall be made in the manner provided by section 225 of the Tax Law, but, unless a taxpayer is entitled to a refund under section 230, the provisions of section 225 can have no application. Section 230 conferred the right to a refund only upon the happening of contingencies which have not yet occurred. These petitioners were not exempt under the provisions of the Tax Law; their exemption was effected not by the statute but by the decisions of the Supreme Court of the United States which rendered invalid that part of the statute which in terms sought to authorize the assessment of a tax. Until the happening of the contingencies whereby there was an ultimate transfer or devolution of the remainders, the Surrogate was without jurisdiction to enter the modifying order of January 3, 1934. The Appellate Division was correct when it held that the order of November 17, 1924, although designated a temporary order, was final, except under the contingencies enumerated in section 225 and section 230 of the Tax Law and that under our decision in People ex rel. International Salt Co. v. Graves (267 N. Y. 149, 154) the error of law upon which that order was based cannot affect its finality. The contingencies enumerated in section 225 and section 230 never occurred. Moreover, even if section 225, as amended by chapter 434 of the Laws of 1934, were to be deemed otherwise applicable, the approval of the Comptroller, which that statute requires, was never obtained. Neither was the payment of this tax, which was made prior to March, 1928, made before the entry of a taxing order. The taxing order was entered November 17, 1924, and payment was not made until December 1, 1924. The State is not hable unless it provides for its liability. These petitioners do not bring themselves within the scope of any such statutory provision.

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Order affirmed.


author: Per Curiam.

text:
    George A. Titterington, as Executor of Morris M. Titterington, Deceased, Appellant, v. Charles H. Colvin et al., Respondents.
    (Submitted March 2, 1936;
    decided March 10, 1936.)
   Per Curiam.

This court affirmed without opinion upon the ground that, since the action was one at law for damages and not in equity and, therefore, proof was required of actual fraud, the Appellate Division had correctly reversed and granted a new trial. The appellant having stipulated for judgment absolute the only question presented for decision was the correctness of the reversal by the Appellate Division and that having been shown, an affirmance by this court followed. We do not approve the ruling below that the contract was void under Topken, Loring & Schwartz, Inc., v. Schwartz (249 N. Y. 206). The motion for reargument should be denied.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Motion denied.


text:
    Monroe Weill et al., Respondents, v. Title Guarantee and Trust Company, Appellant, Impleaded with Others.
    (Argued January 20, 1936;
    decided March 17, 1936.)

      C. Elmer Spedick and Henry M. Bellinger for appellant.
    The Appellate Division erred in reversing findings of fact, on the ground that they are against the weight of evidence to the effect that defendant-appellant did not aid in defaulting creditors. (Feuer v. Schaller, 115 Misc. Rep. 229; Wilmerding v. Jarmulowsky, 85 Hun, 285; Warren v. Wilder, 114 N. Y. 209; Truesdell v. Sarles, 104 N. Y. 164; Greenough v. Greenough, 21 Misc. Rep. 727; 32 App. Div. 631; Mallouk v. American Exchange Nat. Bank, 157 App. Div. 711; Wasey v. Holbrook, 141 App. Div. 336; 206 N. Y. 708; Porter v. Conner, 93 N. Y. 118; Anderson v. Blood, 152 N. Y. 285; Bernheimer v. Rindskopf, 116 N. Y. 428; Galle v. Tode, 148 N. Y. 270; Smith v. Wise, 132 N. Y. 172; Murphy v. Briggs, 89 N. Y. 446; Pond v. Comstock, 20 Hun, 492.)

      Irving Lemov and William Brooks for respondents.
    The title company was a participant in the fraudulent transfer and is chargeable with knowledge of the fraudulent intent of the previous grant. (Berlenbach v. Bischoff, 137 Misc. Rep. 719; Ga Nun v. Palmer, 216 N. Y. 603; Feuer v.
      Schaller, 115 Misc. Rep. 229.) Having participated, in the fraudulent transfer, the title company is forbidden to appropriate to its own use any part of the consideration brought within its control by virtue of the transfer. (Frank v. Von Bayer, 236 N. Y. 473.)
   Crane, Ch. J.

In 1930 the Woodrich Engineering Co., Inc., was the owner of two hundred vacant lots at Bellaire, borough of Queens; The property was incumbered by a first mortgage held by the Title Guarantee and Trust Company, or the Bond and Mortgage Guarantee Company, of $108,450 which had been a lien upon the property since March 28, 1925. There was a second mortgage of $60,000 which had been a lien since February 15, 1927. There is little, if anything, to show that the value of these two hundred lots was much more than the face of these mortgages. Taxes, which of course were a first lien upon the premises, were unpaid. They amounted to $9,279.73. Interest on the first mortgage had accumulated to the amount of $9,583, which remained unpaid. On the second mortgage there was due $2,441.69. The first mortgage had gone to foreclosure and sale was imminent.

Monroe Weill, Animated Color Advertising, Inc., East New York Stair Building Company and Sidney M. Spero in 1930 had recovered judgments in comparatively small amounts against the Woodrich Engineering Co., Inc., all of which were subordinate to the two mortgages mentioned, the interest due thereon and the taxes. The Appellate Division has erroneously given these judgment creditors priority over the interest on these mortgages which, as above stated, were prior liens.

■ The Title Guarantee and Trust Company, or the Bond and Mortgage Company, were not strangers to this property nor did they intermeddle illegally with the affairs of Woodrich Engineering Co., Inc., when they tried to collect the interest due in behalf of mortgage certificate holders. A mortgagee is naturally interested in getting his interest, and he is entitled to it when a first lienor, in preference to later judgment creditors. The Woodrich Engineering Co., Inc., on January 8, 1930, conveyed the lots in question to Geridans Realtors, Inc., without consideration. For the purposes of this transaction Isabelle S. Fajans, the intermediary, and Geridans Realtors, Inc., were dummies for the Woodrich Engineering Co., Inc. Whatever they did was done for the latter company, and was its act.

On July 15, 1931, Geridans Realtors, Inc., contracted to sell to the Parkcrest Housing Corporation of Jamaica, for good and valuable consideration, the property in question, subject to the first mortgage of $108,450, with interest at six per cent, payable semi-annually, and subject to a $70,000 second mortgage, the previous second mortgage to be increased from $60,000 to $70,000 by having this additional $10,000 added to it, all at six per cent. In other words, the $10,000 increase became a third mortgage and, further, the Parkcrest Housing Corporation was to pay $10,000 upon the signing of the contract and $11,500 on the delivery of the deed, as therein provided. The transaction was put through and the matter closed on September 10, 1931.

It is right here at this point that the mistake below has occurred. The Parkcrest Housing Corporation, the bona fide purchaser for value, did not agree in its contract of sale to pay $21,500 in cash to the Woodrich Engineering Co., Inc., or to its dummy, Geridans Realtors, Inc. It was not going to take the property subject to the accumulation of interest on these two mortgages. This interest had to be paid off and it made no difference whether the interest was paid to the title company, the bond and mortgage company, Geridans or Woodrich; the contract was that this past interest had to be paid. Therefore, we find the contract providing the conditions upon which the $21,500 is to be paid, and the purpose for the payment. The contract reads: “which sum [$10,000] shall be paid to the Title Guarantee and Trust Company and by them applied * * * on account of interest on mortgages, taxes and assessments covering these premises.” The same applied to the payment of $11,500 on the delivery of the deed, which sum shall be paid to the Title Guarantee and Trust Company and by them applied * * * on account of interest on mortgages, taxes and assessments covering these premises.”

The Parkcrest Housing Corporation was not obliged to purchase these lots and it could enter into such agreement as to price and terms as it pleased. It agreed to take the property subject to the two mortgages, and also agreed to put up $21,500 to pay off the taxes and past interest charges. Likewise it agreed to increase the incumbrance of the second mortgage from $60,000 to $70,000, or to give an additional $10,000 mortgage, as it has been called. All of these amounts of interest and taxes were prior liens to the plaintiffs, respondents’ judgments. By what process of reasoning are priorities exchanged so that the judgments are given precedence?

On September 10,1931, the Parkcrest Housing Corporation took title and paid the money. There is no evidence as to the value of these lots, or any attempt to show that the Parkcrest Housing Corporation did not pay a fair value. There is no evidence that these properties in 1930 were of much more value than the amounts of the mortgages. The defaults in interest and taxes are some indication of the financial condition. When the title company received the $21,500 it paid $9,279.73 taxes due, $9,583.09 accrued interest on the first mortgage, $2,441.69 accrued interest on the second mortgage, and $194.40 costs upon the discontinuance of the foreclosure action which had almost gone to sale. This disposed of the money it had received, every penny of which these judgment creditors would have had to pay before they could have had any advantages from their liens out of the property in question.

By no possibility or by any law known to us could any of these amounts be made subservient to the judgments of the plaintiffs upon the facts in this case. The title company was entitled to its interest on the first and second mortgages which, as we have said, was a lien superior to that of the judgment creditors, and the taxes of course were superior to all.

The counsel for the respondents in his brief admits that if the Woodrich Company had kept the property it could have paid these interest charges and the taxes, and no possible claim of fraud would have arisen. To quote him, he says, “ Having been apprised of the interest that the Woodrich ’ had in the real property from the very provisions of the contract, why did not the ' Title Company ’ procure an authorization from the board of directors of the ‘ Woodrich ’ to apply the proceeds in that manner? ” This is just what the Woodrich Company did do. The contract made by Geridans Realtors, Inc., was in reality the contract of Woodrich Engineering Co., Inc.; the former was a mere dummy for the latter, and this contract thus made by and for Woodrich provided, as we have seen above, for the payment of these past items of interest and taxes. As before stated, whether Woodrich paid these items or the Title Guarantee and Trust Company paid them, they had to be paid by somebody, for they came out of the property before the judgment creditors had any right to it. The tax and interest liens being superior remained such to the end.

This being so, the title company can be charged with no fraud in taking these moneys and paying prior liens. In view of these facts any finding of fraud on the par-t of the title company is clearly against the weight of evidence.

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

Lehman, O’Brien, Hubbs, Loughran and Finch, JJ., concur; Crouch, J., dissents.

Judgment accordingly.


text:
    In the Matter of Crowley’s Milk Co., Inc., Appellant, against Peter G. Ten Eyck, as Commissioner of the Department of Agriculture and Markets of the State of New York, et al., Respondents.
    (Argued March 2, 1936;
    decided March 17, 1936.)

      Lloyd C. Anderson for appellant.
    The order of the Commissioner is arbitrary, discriminatory and not supported by the evidence. (People ex rel. N. Y. C. & H. R. R. R. Co. v. P. S. Comm., 159 App. Div. 546; 215 N. Y. 241; Federal Trade Comm. v. Gratz, 253 U. S. 421; People ex rel. Dawley v. Wilson, 232 N. Y. 12; Matter of Andes Co-operative Dairy Co. v. Baldwin, 238 App. Div. 726; 263 N. Y. 578.)

      Henry S. Manley for respondents.
    The order of the Commissioner is supported by evidence and is not arbitrary or discriminatory. (People ex rel. Kohlman & Co. v. Law, 239 N. Y. 346; Nekoosa-Edwards Paper Co. v. R. R. Comm., 193 Wis. 538; Briggs Mfg. Co. v. United States, 30 Fed. Rep. [2d] 962; State ex rel. Knight v. Cave, 20 Mont. 468; State v. Johnson, 20 Mont. 367.)
   O’Brien, J.

In this certiorari proceeding appellant seeks a declaration condemning as unconstitutional those parts of sections 258 and 258-c of the Agriculture and Markets Law (Cons. Laws, ch. 69) which relate to the legislative grant of power to the Commissioner of Agriculture and Markets to limit licenses to conduct the milk business to certain localities and his assumed power in respect to the extension of an existing business.

Appellant is a corporation licensed to conduct the business of distributing milk at wholesale and retail. April I, 1935, in compliance with the provisions of section 258, it applied for a renewal of its license. This section provides: “Application for license. An applicant for a license to operate as a milk dealer shall file an application upon a blank prepared under authority of the commissioner. An applicant shall state such facts concerning his circumstances and the nature of the business to be conducted as in the opinion of the commissioner are necessary for the administration of this chapter. Such application shall be accompanied by the license fee required to be paid. The commissioner may classify licenses and may issue licenses to milk dealers to carry on a certain kind of business only, or limited to a particular city or village or to a particular market or markets in the state, and may specify the place or places where milk may be received from producers.”

The license application blank prepared by the Commissioner and filled in by appellant in conformity with section 258 is not in this record, but from a partial quotation in respondents’ brief and in the minutes of a hearing conducted by a departmental official, the fact appears that it included this requirement: “ Give below the name of each city and village wherein you sell milk and wherein you hold an unrevoked Health Permit.” Appellant thus filled in this part of the blank: “ Binghamton, Johnson City, Endicott, Newburgh and others.” There is no evidence that appellant applied for a license to conduct its business in any specified territory. The license issued to and accepted by appellant authorized it “to buy milk from producers at the place or places named in the licensee’s application, to buy milk from other milk dealers, and to sell or distribute milk in the place or places named in the licensee’s application.” Although the city of Beacon is not a place named in the application nor in the license, appellant proceeded to distribute milk in that city, where for part of the time during some of the previous years it had operated as a retail dealer, and asserts that it has a license to distribute its product without limitation. Without making application to operate in Beacon or any other definite locality and without obtaining a license to operate anywhere except in certain specified cities, late in May, 1935, it resumed its interrupted retail distribution in Beacon and, thereupon, after such resumption, the Commissioner of Agriculture and Markets

served notice upon it that it would be given an opportunity to be heard on a certain date as to whether its license should be amended to permit it to operate in the city of Beacon. In this notice, dated June 26, 1935, the Commissioner stated: “It is alleged that the extension of your license permitting you to operate in the City of Beacon, N. Y., at this time will tend to destructive competition in a market already adequately served and will be incumbent upon you to present evidence showing that the granting of such extension will be in the public interest.” The Commissioner had in mind the following provisions of section 258-c of the Agriculture and Markets Law applicable to the extension of an existing business: “ Granting and revoking licenses. No license shall be granted to a person not now engaged in business as a milk dealer except for the continuation of a now existing business, and no license shall be granted to authorize the extension of an existing business by the operation of an additional plant or other new or additional facility, unless the commissioner is satisfied that the applicant is qualified by character, experience, financial responsibility and equipment to properly conduct the proposed business, that the issuance of the license will not tend to a destructive competition in a market already adequately served, and that the issuance of the license is in the public interest. * *

Appellant’s representatives appeared at the hearing and its counsel thus stated its position: “ I would like to have it appear on the record that Crowley has not made any application for an extension of their license to do any business in Beacon, it being Crowley’s contention that their license already issued permits of such activities as they are engaged in and have been for many years, in the City of Beacon.” After the close of the hearing the Commissioner issued an order “ that the license heretofore issued to Crowley’s Milk Co., Inc., be and the same is hereby extended to permit the delivery of milk by the licensee at wholesale to Alps Sweet Shop, Boston Candy Kitchen and Walcher’s Pharmacy in the city of Beacon, for the use of such customers; and it is hereby further ordered that the licensee be and it is hereby directed to discontinue forthwith the operation of the retail route in the city of Beacon.” In so far as the Commissioner granted an extension of appellant’s license to conduct a wholesale business in Beacon, an extension for which appellant insists it never asked, appellant cannot complain either on constitutional or other grounds. In so far as he ordered the discontinuance of appellant’s retail route in Beacon the rights of the parties, as presented by this record, depend not upon the constitutionality of sections 258 or 258-c but upon the interpretation to be given to appellant’s application for its license and the license issued to it.

The license is not in terms sufficiently broad to authorize appellant to operate elsewhere than in Binghamton, Johnson City, Endicott and Newburgh. The alleged absence of the Commissioner’s right to limit appellant’s license to those localities cannot be determined on this record. An applicant, without applying for a license in a more extensive territory, who accepts a license which by its terms is limited to a restricted territory, disregards the limitations in that license and places upon it an interpretation which its language does not warrant, has not laid the proper ground work for an attack upon the Commissioner’s constitutional power under section 258 to limit the license to particular cities or villages. Certainly appellant’s contention that its license, as issued, allowed it to distribute milk in Beacon is wholly untenable. Appellant made no demand for an unlimited license or for one less limited in its scope. It merely disobeyed the provisions of the license which it accepted and incorrectly interpreted it.

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Order affirmed.