text:
    Marcel Kovarsky, Respondent, v. Brooklyn Union Gas Company, Appellant.

      Argued October 4, 1938;
    decided December 9, 1938.
    The following question was certified:
    “ Does the complaint state facts sufficient to constitute a cause of action? ”

      Jackson A. Dykman and Dimitri G. S. Eristoff for appellant.
    A representative action does not lie for the relief demanded. (City of New York v. New York Edison Co., 196 App. Div. 644; Marsh v. Kaye, 168 N. Y. 196; Bouton v. Van Buren, 229 N. Y. 17.) The plaintiff has an adequate remedy at law. (Midland Realty Co. v. Kansas City Power Co., 300 U. S. 109; City of New York v. New York Edison Co., 196 App. Div. 644; City of New York v. Maltbie, 274 N. Y. 90; Matter of New York Edison Co. v. Maltbie, 244 App. Div. 685; 271 N. Y. 103; Public Service Comm. v. Pavilion Natural Gas Co., 232 N. Y. 146; Town of North Hempstead v. Public Service Corp., 231 N. Y. 447; Matter of Leitner v. New York Tel. Co., 277 N. Y. 180; People ex rel. Kings Co. Lighting Co. v. Willcox, 210 N. Y. 479; People ex rel. Town of Scarsdale v. Pub. Serv. Comm., 220 N. Y. 1; People ex rel. N. Y. C. & H. R. R. R. Co. v. Pub. Serv. Comm., 215 N. Y. 241; People ex rel. Village of South Glens Falls v. Pub. Serv. Comm., 225 N. Y. 216.) A reconnection charge does not come within the prohibition of subdivision 6 of section 65 of the Public Service Law (Cons. Laws, ch. 48). (City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39; Brooklyn Union Gas Co. v. City of New York, 50 Misc. Rep. 450; 115 App. Div. 69; 188 N. Y. 334; United States Light & Heat Corp. v. Niagara Falls Gas & Electric Light Co., 47 Fed. Rep. [2d] 567.)

      Gay H. Brown, Raymond J. McVeigh and George E. McVay for Public Service Commission of the State of New York, amicus curise.

    Jurisdiction over the subject-matter of rates and charges has been lodged in the Public Service Commission. (Matter of Village of Saratoga Springs v. Saratoga Gas, Electric Light & Power Co., 191 N. Y. 123; Purcell v. N. Y. C. R. R. Co., 268 N. Y. 164; 296 U. S. 545; Morrell v. Brooklyn Borough Gas Co., 231 N. Y. 398; City of New York v. Maltbie, 274 N. Y. 90; Matter of City of Long Beach v. Public Service Comm., 249 N. Y. 480.) A reconnection charge does not-come within the prohibition of subdivision 6 of section 65 of the Public Service Law. (City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39; McCormick v. Westchester Lighting Co., 141 Misc. Rep. 261; 238 App. Div. 845; U. S. Light & Heat Corp. v. Niagara Falls Gas & Electric Light Co., 23 Fed. Rep. [2d] 719; 47 Fed. Rep. [2d] 567; United States v. Chicago, North Shore & Milwaukee R. R. Co., 288 U. S. 1.) The plaintiff has an adequate remedy at law and cannot collaterally review all the action of the Public Service Commission. (City of New York v. New York Edison Co., 196 App. Div. 644; Purcell v. N. Y. C, R. R. Co., 268 N. Y, 164; Town of North Hempstead v. Public Service Corp., 199 App. Div. 189; New York State Electric & Gas Corp. v. Maltbie, 147 Misc. Rep. 560; 266 N. Y. 521; Murray v. New York Tel. Co., 170 App. Div. 17; 226 N. Y. 590; Matter of Carroll Realty Corp. v. New York Edison Co., 141 Misc. Rep. 266.)

      William L. Ransom, Wesley A. Sturges and P. M. Berkson for Consolidated Edison Company of New York, Inc., et al., amici curios.

    Upon such facts as are stated in the complaint, the reconnection charge is a payment authorized by the rate schedule to be required of such few customers as request the company to incur special expense in having their service temporarily discontinued for their individual saving and then restored. The court should not sustain the nullification of such a rate schedule provision in the absence of any showing or even allegations of facts which would tend to show that the reconnection charge is anything else or that it is a service charge prohibited as an additional charge for gas supplied. (Midland Realty Co. v. Kansas City Power Co., 300 U. S. 109; City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39.) A consumer may not maintain a representative action to obtain an adjudication of the invalidity, or an injunction against the uniform enforcement, of a rate schedule provision applying on equal terms to him and such other consumers as are similarly situated. (Purcell v. N. Y. C. R. R. Co., 268 N. Y. 164; City of New York v. New York Edison Co., 196 App. Div. 644; Matter of New York Edison Co. v. Maltbie, 244 App. Div. 685; 271 N. Y. 103; Pennsylvania R. R. Co. v. Puritan Coal Mining Co., 237 U. S. 121; Matter of Leitner v. New York Tel. Co., 277 N. Y. 180; Natural Gas Pipeline Co. v. Slattery, 302 U. S. 300; Myers v. Bethlehem Shipbuilding Corp., 303 U. S. 41; New York Lumber Trade Assn. v. Lacey, 245 App. Div. 262; 269 N. Y. 595; 298 U. S. 684; New York State Electric & Gas Corp. v. Maltbie, 241 App. Div. 780; 266 N. Y. 521; United States Navigation Co. v. Cunard S. S. Co., 284 U. S. 474; Matter of Carroll Realty Corp. v. New York Edison Co., 141 Misc. Rep. 266; Town of North Hempstead v. Public Service Corp., 199 App. Div. 189.)

      Edmund B. Naylon and George Foster, Jr., for New York State Electric and Gas Corporation, amicus curiae.

    The term “ service charge ” has a well-established meaning as applied to public utilities and does not embrace a reconnection charge. (City of Rochester v. Rochester Gas & Electric Corp., 24 St. Dept. Rep. 175; 233 N. Y. 39; State ex rel. City of St. Joseph v. Busby, 274 S. W. Rep. 1067; Rivelli v. Providence Gas Co., 44 R. I. 76; State v. Sloan, 139 La. 881; Grant v. Dept. of Public Utilities, 279 Mass. 38; Combs v. Prestonsburg Water Co., 260 Ky. 169; Columbus, Delaware & Marion Elec. Co. v. Public Utilities Comm., 123 Ohio St. 687.) The amendment prohibiting the imposition of “ service charges ” cannot be construed to outlaw a charge jmposed for reconnecting service, discontinued at the consumer’s instance. (Broderick v. Weinsier, 253 App. Div. 213; 278 N. Y. 419; Zajic v. Sikora Realty Corp., 252 App. Div. 343; People ex rel. Watson v. Lamphier, 104 Misc. Rep. 622; Knowlton v. Moore, 178 U. S. 41; People ex rel. Hunt v. Lane, 132 App. Div. 406; Long v. Ulmer Machinery Co., 77 Cal. App. 66; Metzler v. Thye, 163 Cal. 96; Bernstein v. Alcorn, 194 Iowa, 1109; King v. Elliot, 197 N. C. 93; United States v. Chicago, N. & M. R. R. Co., 288 U. S. 1.)

      EarlL. Dey for Rochester Gas and Electric Corporation, anicus curiae.

    A reconnection charge does not come within the prohibition of subdivision 6 of section 65 of the Public Service Law. (City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39.) The construction of subdivision 6 of section 65 of the Public Service Law by the Public Service Commission should be followed. (Grimmer v. Tenement House Dept., 205 N. Y. 549; United States v. Chicago, N. & M. R. R. Co., 288 U. S. 1.)

      Israel Beckhardt for respondent.
    The courts, and not the Public Service Commission, have exclusive jurisdiction to determine the question of law involved in the action. (Matter of Leitner v. New York Tel. Co., 277 N. Y. 180; People ex rel. Municipal Gas Co. v. Public Service Comm., 224 N. Y. 156; Matter of Village of Boonville v. Maltbie, 272 N. Y. 40; Great Northern Ry. Co. v.
      Merchants Elevator Co,, 259 U. S. 285; Brown Lumber Co. v. Louisville & Nashville R. R. Co., 299 U. S. 393; Siler v. Louisville & Nashville R. R. Co., 213 U. S. 175; City of New York v. Maltbie, 274 N. Y. 90; City of New York v. Brooklyn City R. R. Co., 232 N. Y. 463; People ex rel. New York Steam Co. v. Straus, 186 App. Div. 787; 226 N. Y. 704; McCormick v. Westchester Lighting Co., 141 Misc. Rep. 261; 238 App. Div. 845; Bronx Gas & Electric Co. v. Public Service Comm., 190 App. Div. 13; Pennsylvania R. R. Co. v. Puritan Coal Mining Co., 237 U. S. 121; City of New York v. Interborough R. T. Co., 257 N. Y. 20,) The so-called “ reconnection ” charge is in reality a fee for the service of installing gas apparatus, and clearly violates the law. (City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39; U. S. Light & Heat Corp. v. Niagara Falls Gas & Electric Light Co., 47 Fed. Rep. [2d] 567; Long v. Ulmer Machinery Co., 77 Cal. App. 66; McCormick v. Westchester Lighting Co., 141 Misc. Rep. 261; 238 App. Div. 845.) The representative form of action is proper. (Whitmore v. New York Inter Urban Water Co., 158 App. Div. 178; McKenzie v. L’Amoureaux, 11 Barb. 516; Greer v. Smith, 155 App. Div. 420; Tyndall v. Pinelawn Cemetery, 198 N. Y. 217; Atkins v. Trowbridge, 162 App. Div. 161; Clarke v. Clarke, 8 Misc. Rep. 339; 145 N. Y. 476; Hilton Bridge Construction Co. v. Foster, 26 Misc. Rep. 338; 42 App. Div. 630; Whiting v. Elmira Industrial Assn., 45 App. Div. 349; Brinckerhoff v. Bostwick, 99 N. Y. 185; Rhine v. N. Y. Life Ins. Co., 273 N. Y. 1.)
   Hubbs, J.

This is a representative action brought by the plaintiff in behalf of himself and all others similarly situated to restrain the defendant from making a charge which the plaintiff calls a service charge and claims is illegal.

On June 5,1936, the plaintiff requested the defendant to discontinue the gas service at his home, and the defendant sent a man who shut off the gas by locking the meter. At plaintiff’s request, the defendant on September 9, 1936, turned on the gas and charged him one dollar for the re-connection.

Section 65 of the Public Service Law (Cons. Laws, ch. 48), subdivision 6, provides:

6. Service charges prohibited. Every gas corporation shall charge for gas supplied a fair and reasonable price. No such corporation shall make or impose an additional charge or fee for service or for the installation of apparatus or the use of apparatus installed.”

In his complaint herein plaintiff asks for an injunction restraining the defendant from collecting the charge made as above stated; that the defendant be required to account to all those from whom it has collected a like charge; for a declaration of the rights of the parties; and for such other and further relief as may be just and proper. Plaintiff has not paid the charge but the defendant continues to bill him for it and threatens to turn off the gas unless it is paid.

The Special Term dismissed the complaint on the ground that the plaintiff should have proceeded under section 71 of the Public Service Law. The Appellate Division reversed on the law, holding that a representative action is proper and that the charge comes within the prohibition of the statute, being a service charge. The Appellate Division certified to this court the question: “ Does the complaint state facts sufficient to constitute a cause of action? ”

We are required to determine whether the plaintiff has sought the proper remedy, whether in any case he can bring a representative action and whether the charge is a service charge ” within the prohibition of the statute.

There is no doubt that the usual practice, and the one to be encouraged, is to file a complaint with the Public Service Commission and, if its order be deemed improper, to cause the order to be reviewed_by cértiorari. In the instant case the plaintiff with others similarly situated to the total number of twenty-five might have instituted a proceeding before the Commission for investigation of the charge made by the defendant, which would have required action by the Commission. Public Service Law, § 71.) Plaintiff states in the complaint that he has requested the Commission to make an investigation but that the request has been refused. We are required to decide whether the proceeding before the Commission, provided for by section 71, is exclusive, or whether it is permissible to seek relief in other ways and for other remedies.

In a number of similar cases the courts reviewed by certiorari the questions of law involved. None of them, however, is authority for holding certiorari to be the exclusive remedy.

In Matter of Leitner v. New York Telephone Co. (277 N. Y. 180, 189) it was claimed that the defendant, acting on a rule which it had adopted, unreasonably refused to install a public telephone. It was decided that in order to determine the reasonableness of the rule resort must first be had to the Commission. Plaintiff contended that the rule adopted had been unreasonably applied. The court stated: “ As to whether rules of a public utility duly promulgated were by it so [unreasonably] applied is open for decision in the courts, but the question of the reasonableness of the rule can be attacked only before the Public Service Commission.” (See, also, People ex rel. Linton v. Brooklyn Heights R. R. Co., 172 N. Y. 90.) Those cases, which involved an application for an order of mandamus, do not hold that certiorari is the exclusive remedy. They go no farther than to hold that where the reasonableness of a rule is questioned, or where there is claimed to exist an abuse of discretion by railroad directors, or where other remedies are adequate, mandamus will be denied. In the Leitner case, however, the court intimated that where the only question is whether a rule admittedly reasonable was applied in a discriminatory manner equity will take jurisdiction. This is another way of saying that where only questions of law are involved direct application for relief may be made to the court.

In Murray v. New York Telephone Co. (170 App. Div. 17; affd., 226 N. Y. 590) the plaintiff sought an injunction which was denied. The court in its opinion placed its decision on the ground that where there was no strictly contractual right to be enforced resort should be had to the Commission. It stated: The trend of the decisions is well evidenced in the case of Pennsylvania Railroad v. Puritan Coal Co. (237 U. S. 121, 131). There the court pointed out that where attack was made upon the tariff filed, the Commission had the exclusive jurisdiction. While, when the attack is made upon the manner of the application of the tariff, as where it is charged that it is applied in a discriminatory manner, then the matter is for the courts to adjudicate rather than the Commission (p.25)._

An injunction was denied in New York State Electric & Gas Corp. v. Maltbie (266 N. Y. 521), where the company sought to prevent the enforcement of an order of the Public Service Commission on the ground that the plaintiff should have applied for a review by certiorari of the order of the Public Service Commission. That case is distinguishable from the present case, as in that pose there was an order in a proceeding before the Commission to which the company was a party, and it could have reviewed the order by certiorari, the usual practice, instead of instituting a new action. In the present action the plaintiff was not a party to the order fixing the rate, and thus he has not abandoned one method of review by seeking another.

Where the only question "involved is the power of the .Public Service Commission to fix rates relief will be granted in the form of a writ of prohibition. (Matter of City of Niagara Falls v. Public Service Commission, 229 N. Y. 333.) Various other remedies have been granted. In Pennsylvania R. R. Co. v. Puritan Coal Mining Co. (237 U. S. 121, 131) the action was for damages for failure to furnish cars to plaintiff during a strike. The company had adopted a rule providing that it would furnish cars on the basis of mine capacity. The court held that the plaintiff had properly brought an action at law without resoit to the Interstate Commerce Commission because it was not attacking the rule. It admitted the reasonableness of the rule but attacked the discriminatory manner in which defendant had applied it to the plaintiff. That was a question of law and it was not necessary to have the Commission pass upon it first. The court said: “ In a suit where the rule of practice itself is attacked as unfair or discriminatory, a question is raised which calls for the exercise of the judgment and discretion of the administrative power which has been vested by Congress in the Commission.” (See, also, Great Northern Ry. Co. v. Merchants Elevator Co., 259 U. S. 285; Hollis v. Kutz, 255 U. S. 452.)

In City of New York v. Maltbie (248 App. Div. 39; affd., 274 N. Y. 90) this court heldVhat the Public Service Commission had jurisdiction to fix rates.

In the present case the plaintiff seeks an injunction, a declaratory judgment and an accounting. The above cases indicate that the court may entertain jurisdiction. Although it may not be clear whether the term service charge ” as used in the statute covers a charge for turning on gas after it has been turned off for the summer, that being a question of law there is no necessity of sending the plaintiff back to the Commission to get its interpretation of the term as used in the statute, as the Commission has only such judicial power as is incidental to the exercise of its other powers. Plaintiff’s legal remedy is inadequate. He cannot sue for the return of the charge as he has not paid. His legal remedy is to unite with twenty-four others similarly situated and ask the Commission to consider the question. That would seem a useless procedure, such as was condemned by Justice Holmes in Hollis v. Kutz (supra), in view of the fact that the Commission, by its practice over a fifteen-year period of approving rate schedules including the charge in question, has clearly indicated the interpretation it places upon the statute.

We next consider whether a representative action is proper. Plaintiff sues for the benefit of nimself and all other consumers of gas who may be similarly situated, asking for an accounting to those who have paid the charge, for an injunction against charging those the company threatens to charge, and for a declaratory judgment for the benefit of those who may be subject to the charge in the future. It is proper here to allow the representative action for the injunction and the declaratory judgment, but not for the accounting. To maintain a representative action the plaintiff must show that he has a cause of action and that he is representative of a common or general interest. (Bouton v. Van Buren, 229 N. Y. 17.) This plaintiff has no cause of action for an accounting. He has not paid the charge. Even if he did have a cause of action for an accounting a representative action would not be proper since it appears that the defendant is able to respond in damages, and there is no allegation that there is threatened a multiplicity of suits. To allow a representative action to require an accounting without the allegation that a multiplicity of suits is threatened, it must appear that there is a fund for the benefit of all creditors. (Tyndall v. Pinelawn Cemetery, 198 N. Y. 217; Bouton v. Van Buren, supra) Here there is no fund. The liability of the defendant is general and there is no threat of bankruptcy.

On the other hand, plaintiff not only has a cause of action for an injunction, since he is threatened with the collection of the charge, but in that respect he is representative of all those similarly situated. That is also true as to his application for a declaratory judgment. All consumers are interested in a declaration of the law. All consumers, as is this plaintiff, are hable in the future to be subjected to the charge in question.

The important question here is the interpretation to be placed on the term “ service charge ” as used in the statute in its application to the particular charge here in question. In spite of the fifteen-year interpretation placed upon the statute with reference to the particular charge by the Public Service Commission, the wording of the statute is so broad that it is difficult to see how this charge can be distinguished from the service charge under consideration in City of Rochester v. Rochester Gas & Electric Corp. (233 N. Y. 39), which was a flat charge of forty cents per month made to each consumer in addition to the price per thousand cubic feet for gas consumed. It is urged that the law prohibiting service charges was passed after the decision in that case in an evident attempt to prevent that particular charge. It may be that was the intention of the Legislature, but such a presumed intention must give way to the plain language used. If that was the intention of the Legislature all that was necessary to be said was that “ service charges ” were prohibited] yet it went further and said not only that additional charges for service were prohibited, but also charges “ for the installation of apparatus or the use of apparatus installed.” The additional prohibition seems to indicate that the Legislature intended a broad use of the term “ service charge,” the other two designations being merely indicative of its breadth. If, in the instant case, the defendant had discovered, when it attempted to turn off the gas at the request of the plaintiff, that locking of the meter would not prevent use of gas and that removal of the meter was necessary, clearly a charge for reinstalling the meter when turning on the gas would fall within the prohibition against a charge for the installation of apparatus.” The cost to the company would undoubtedly be greater than if it merely turned off the gas, yet if the construction contended for by the appellant were to be placed upon the statute it would follow that whether a charge may be made depends upon whether the.company chooses to turn off the meter or to remove it and reinstall it.

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

Crane, Ch. J., Lehman, O’Brien, Lotjghran, Finch and Rippet, JJ., concur.

Order affirmed, etc.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of the Estate of Hilda Westberg, Deceased. Selma V. Westberg et al., Appellants; Clara L. Gruntal, Respondent.

      Submitted October 24, 1938;
    decided December 9, 1938.

      Emil Goldmark and Alfred A. Cook for motion.

      J. Alfred Anderson opposed.
   Per Curiam.

The appellant may appeal to this court as of right from a judgment or order entered upon the decision of an appellate division of the supreme court which finally determines an action or special proceeding * * * where the judgment or order is one of reversal.” (Civ. Prac. Act, § 588, subd. 1.) The appeal must be taken within sixty days after service upon the attorney for the appellant of a copy of the judgment or order appealed from and a written notice of the entry thereof.” (Civ. Prac. Act, § 592.) In this case the Appellate Division, on June 24, 1938, made an order resettling an order made on June 10th, reversing a decree of the Surrogate’s Court of New York county which vacated a decree of probate by the same court. The order of the appellate division made upon an appeal must be entered in the office of the clerk of the appellate division.” (Civ. Prac. Act, § 621.) On June 25th a copy of the order of the Appellate Division, with notice of entry, was served upon the attorneys for the appellants. Until September 2d, more than sixty days thereafter, no notice of appeal was served.

A certified copy of the order of the Appellate Division, entered in the office of the Clerk of the Appellate Division, was transmitted to the Clerk of the Surrogate’s Court of New York county and, by direction of the Surrogate, an order was made and entered there, on July 5, 1938, which provided that “ the order of the Appellate Division, made and entered on June 24th, 1938, be and the same hereby is made the order of this court.” (Italics are ours.) A copy of the order entered in the Surrogate’s Court, with notice of entry, was served on the attorneys on July 7th. Within sixty days thereafter, and on September 2d, the appellant served a notice of appeal from the order, judgment and decree of the Appellate Division of the Supreme Court, First Judicial Department, dated July 5th, 1938, and filed and entered in the office of the clerk of the Surrogate’s Court, County of New York, on the 7th day of July, 1938, by direction and order of the Appellate Division of the Supreme Court, First Judicial Department, * * * reversing, in all things, the decree of the Surrogate’s Court, County of New York * * * vacating the decree of probate of the will of Hilda Westberg.” The respondent has moved to dismiss the appeal on the ground that the notice was served more than sixty days after notice of entry of the order of the Appellate Division in the office of the Clerk of the Appellate Division.

The statute requires that after an order of the Appellate Division, made upon an appeal, has been entered in the office of the Appellate Division, a certified copy of the order, together with the original case or papers upon which the appeal has been heard, must be transmitted to the Clerk of the court where the judgment or order appealed from was entered if the appeal was from a judgment or order of the Supreme Court, or to the Clerk of the Surrogate’s Court if the appeal was from a judgment or order of that court. The judgment, if any, rendered or directed, pursuant to any such order, shall be entered by the clerk to whom the order and the case and papers were transmitted.” (Civ. Prac. Act, § 621.) An order of the Appellate Division which directs judgment is simply an authority for the entry of judgment by the clerk to whom the order_has been transmitted. (Dwight v. Gibb, 208 N. Y. 153.) There is no provision for the entry of a second order when no judgment is rendered or directed pursuant to the order of the Appellate Division.

These provisions of section 621 create an unfortunate distinction confusing to members of the bar. Since the judgment entered by the Clerk to whom the order of the Appellate Division is transmitted is the .only “ judgment * * * entered upon the decision of an appellate division,” the appeal from a “ judgment ” which is authorized by section 588 of the Civil Practice Act, must be taken from the judgment so entered and the time in which such an appeal may be taken runs from the date of notice of entry of that judgment. On the other hand, since the same section of the Civil Practice Act provides for the entry of the order of the Appellate Division in the office of tfie Clerk of the Appellate Division and does not provide for the entry of any other order upon the decision of the Appellate Division, when no judgment is rendered or directed, an appeal from an “ order entered upon the decision of an appellate division ” must be from the order so entered in the office of the Clerk of the Appellate Division and the time to appeal runs from notice of entry of that order even though the Clerk to whom that order has been transmitted may thereafter enter another order in his own office. The distinction, though unfortunate, is created by the statute and is firmly established by a long line of decisions running from Kilmer v. Bradley (80 N. Y. 630) to Moller v. Peoples’ Nat. Bank (258 N. Y. 575). No “ judgment ” is directed by the order of the Appellate Division in this case. The statute required that the order ” of the Appellate Division should be transmitted to the Clerk of the Surrogate’s Court, but it did not require the Clerk of that court to enter a new order upon the decision of the Appellate Division. No judgment ” was entered in the Surrogate’s Court and the only order ” entered upon the decision of the Appellate Division from which an appeal may be taken is the order entered in the office of the Clerk of the Appellate Division pursuant to the statute. (Matter of Union Trust Co., 172 N. Y. 494.) This court in Dwight v. Gibb (208 N. Y. 153) pointed out this distinction in plain language and reiterated the rule formulated in Matter of Union Trust Co. (supra) and there applied to an appeal to this court from a determination of the Appellate Division made upon an appeal from the decree of a Surrogate.

In the cases cited the court construed the provisions of the Code of Civil Procedure and based distinction upon the language of those provisions. In the Code the provisions governing appeals from orders and judgments of the Supreme Court were contained in sections 1324, 1325, 1345, 1355 and related sections, while appeals from orders or decrees of the Surrogate’s Court were governed by different sections. (Cf. § 2585.) In the Civil Practice Act the entire field of appeals to this court is covered by section 621 and related sections. The change is one of form rather than substance. Both the Code of Civil Procedure and the Civil Practice Act provide for the entry of the order of the Appellate Division in the office of the Clerk of the Appellate Division; both require that the order so entered be transmitted to the Clerk of the county in which the judgment or order appealed from was entered, if the appeal was from an order or judgment of the Supreme Court, or to the Clerk of the Surrogate’s Court if the appeal was from a decree of that court; both require the entry of a “ judgment ” by the Clerk to whom the order of the Appellate Division was transmitted where a judgment is rendered or directed; neither require or authorize the entry by that Clerk of an “ order ” or decree ” where no judgment ” is rendered or directed. The distinction between appeals from judgments ” and appeals from orders ” entered upon the decision of an Appellate Division is not obliterated, but, on the contrary, seems to be made clearer by the inclusion of all relevant provisions in a single section of the Civil Practice Act.

Where an order or judgment has been properly entered upon a decision of the Appellate Division, and an appeal may be taken from the order or judgment so entered, a misdescription in the notice of appeal affects no substantial right. In such case “ the notice of appeal may be amended or the mistake disregarded as immaterial under section 105 of the Civil Practice Act.” (Rosenberg v. General Realty Service, Inc., 259 N. Y. 123.) The court may, in proper case, disregard technical distinctions which impede the assertion of rights conferred by law. It may not disregard any provision of law upon which the jurisdiction of the court is made dependent. It may not extend the time during which an appeal must be taken. (Low v. Bankers Trust Co., 265 N. Y. 264.) Since, in this case, the time to appeal from the order entered upon the decision of the Appellate Division had expired when the notice of appeal was served, the appeal must be dismissed.

The motion should be granted and the appeal dismissed, without costs.

Crane, Ch. J., Lehman, O’Brien, Htjbbs, Loughran, Finch and Rippey, JJ., concur.

Motion granted, etc.


author: Rippey, J.

text:
    The Nevins, Inc., Appellant, v. Elias Kasmach, as President of the Waiters and Waitresses Union, Local No. 2 of Brooklyn and Queens, Respondent.
    Argued November 28, 1938;
    decided December 9, 1938.

      Robert E. Whalen, Ralph Weller, Edwin M. Shultes, 3rd, and Milton M. Eisenberg for appellant.

      Louis B. Boudin and Murray R. Paris for respondent.
    The complaint must be tested by the strict rules applicable to actions for specific performance and for injunctions in labor disputes. (Dudley v. Congregation, 138 N. Y. 451; Sadlier v. City of New York, 185 N. Y. 408; Loeb v. Supreme Lodge, 198 N. Y. 180; Jackson v. Strong, 222 N. Y. 149; Wise Shoe Co. v. Lowenthal, 266 N. Y. 264.) The complaint is insufficient for the reason that it fails to allege certain facts, the pleading and proof of which is made a clear prerequisite to the granting of injunctive relief by section 876-a to the Civil Practice Act. (Halbe v. Adams, 172 App. Div. 186; Maylender v. Fulton County Gas & Electric Co., 131 Misc. Rep. 514; Union Trust Co. v. Main & South Streets Holding Corp., 245 App. Div. 369.) The complaint fails to state a cause of action under the general rules governing actions for specific performance. (Tousey v. Hastings, 127 App. Div. 94; Mahaney v. Carr, 175 N. Y. 454; Hamlin v. Stevens, 177 N. Y. 39; Ansorge v. Kane, 244 N. Y. 395; Gall v. Gall, 64 Hun, 600; Doctor v. Reiss, 180 App. Div. 62.)
   Rippey, J.

Defendant moved at Special Term, under rule 106 of the Rules of Civil Practice, to dismiss the complaint on the grounds (1) that the complaint, upon its face, did not state facts sufficient to constitute a cause of action, and (2) that the complaint was insufficient in law on the face thereof in that it failed to set forth facts showing compliance with the provisions of section 876-a of the Civil Practice Act. The motion was denied. Upon appeal, the Appellate Division reversed the order of the Special Term and directed the entry of judgment dismissing the complaint. Upon this appeal, defendant must be deemed to admit the truth of every material allegation of fact contained in the complaint and of any inference that may be legitimately drawn therefrom (Lamb v. Cheney & Son, 227 N. Y. 418, 420).

The complaint in this action shows that the parties entered into a collective bargaining agreement in January, 1937, by which their differences were settled and, supposedly, to remain settled. It was provided that their amicable relations were to continue under the terms of the contract and that the parties were to be governed by its provisions until December 31, 1937, during which period there should be no strike or lockout. There is no allegation that the contract contained any provision for settlement of disputes which might arise between the parties during the term of the contract.

A dispute arose in July, 1937, concerning the employment of waiters arising out of alleged seniority of service and, when negotiations for settlement failed, the defendant called and put into effect a strike. Plaintiff further alleges that it performed all the terms and conditions of the contract on its part to be performed, that the strike was called without cause and in violation of the terms of the contract and that it had no adequate remedy at law. Among other relief, it asked for the specific enforcement of the contract. We find it unnecessary at this time to consider or pass upon any of the various questions which have been argued concerning the validity and enforceability of the contract or its applicability to the facts in this case.

The complaint contains all the allegations required by section 876-a of the Civil Practice Act prerequisite to the granting of equitable relief. It otherwise sets up facts sufficient to state a cause of action in equity. There are allegations that the defendant union and its members, as an incident to the strike, intimidated and coerced the non-striking employees of plaintiff; that they molested, insulted, annoyed and harassed plaintiff’s customers; that they performed various acts of violence; that they spread false rumors concerning the circumstances of the strike and made false statements to the public; that they conducted illegal picketing; and that they, in other ways, illegally interfered with plaintiff and its business.

The question of the right of a trial court, at this time, to grant injunctive relief is said to be academic inasmuch as the strike is ended and it is urged that the plaintiff should be relegated to an action at law for damages. On this appeal, we have nothing in the record before us to indicate that the time for injunctive relief, upon a proper showing of facts by plaintiff, has expired. Since the plaintiff rightfully invoked the jurisdiction of equity to apply for an injunction, the complaint must be sustained and plaintiff may have any incidental relief by way of damages or otherwise to which it may be entitled so that complete disposition of the controversy between the parties, arising in equity, may be obtained (McGean v. Metropolitan Electric Ry. Co., 133 N. Y. 9, 16, 17; Sadlier v. City of New York, 185 N. Y. 408, 414, 415).

The judgment of the Appellate Division should be reversed and the order of the Special Term denying defendant’s motion to dismiss the complaint affirmed, with costs to appellant in this court and in the Appellate Division.

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

Judgment accordingly...


author: Hubbs, J.

text:
    Mary Hellstern, Respondent, v. Hugo Hellstern, Jr., et al., Appellants.

      Submitted November 22, 1938;
    decided December 9, 1938.

      Louis R. Pagano for appellants.
    The existing equity judgment in plaintiff’s favor against defendants is a bar to the maintenance of this action. (Russell v. McCall, 141 N. Y. 437; Harrison v. Union Trust Co., 144 N. Y. 326; Caylus v. N. Y., K. & S. R. R. Co., 76 N. Y. 609; Keller v. Feldman, 81 Hun, 593; Embury v. Conner, 3 N. Y. 511; Smith v. Smith, 79 N. Y. 634; Shuman v. Strauss, 52 N. Y. 404; Lynch v. M. E. R. Co., 129 N. Y. 274; Pray v. Hegeman, 98 N. Y. 351; Hahl v. Sugo, 169 N. Y. 109; Bracken v. Atlantic Trust Co., 167 N. Y. 510; Maasch v. Grauer, 123 App. Div. 670.) The existing final decree of the Surrogate’s Court in defendants’ favor is a bar to this action. (Corcoran v. Chesapeake & Ohio Canal Co., 94 U. S. 741; Pray v. Hegeman, 98 N. Y. 352; House v. Lockwood, 137 N. Y. 259; Stokes v. Stokes, 155 N. Y. 581; Hughes v. U. P. Lines, 119 N. Y. 423; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Hicks v. Pearsall, 164 App. Div. 721; Riggs v. Pursell, 74 N. Y. 370; Steuben County Bank v. Alberger, 83 N. Y. 274; Smith v. McCluskey, 45 Barb. 610.)

      David Weinstein for respondent.
    The decree of the Surrogate cannot be res judicata of the issues in the instant case because there were different parties involved in the proceeding before the Surrogate. (Sears, Roebuck & Co. v. 9 Avenue-31 St. Corp., 274 N. Y. 388; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Collins v. Hydorn, 135 N. Y. 320; Helme v. Buckelew, 229 N. Y. 363; Richards v. Gill, 138 App. Div. 75; First Nat. Bank v. Shuler, 153 N. Y. 163.) The prior judgment cannot be res judicata of the issues in the instant case because different issues are involved in the two actions. (Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Cromwell v. County of Sac, 94 U. S. 351; Sielcken-Schwarz v. American Factors, Ltd., 265 N. Y. 239; Rose v. Hawley, 133 N. Y. 315; Hughes v. U. P. Lines, 119 N. Y. 423.)
   Hubbs, J.

The Appellate Division has certified to this court the question “ Should the complaint have been dismissed on the ground that there is an existing final judgment or decree of a court of competent jurisdiction rendered on the merits determining the same cause of action between the parties? ”

The plaintiff is the widow of Hugo Hellstern, deceased. She was duly appointed administratrix of his estate. Thereafter she, as administratrix, brought a proceeding in Surrogate’s Court to discover assets. A decree was duly entered in that proceeding deciding that certain savings bank accounts of her husband which he had, in his lifetime, transferred to the name of the deceased as trustee for his children did not constitute assets of the estate, also that such bank accounts belonged to the children who were parties in that proceeding.

While the proceeding was in the name of the plaintiff as administratrix it was contended upon the hearing that the money was placed in the bank accounts by her deceased husband in bis name as trustee for his children in order to defraud her out of any interest therein as his widow.

Thereafter" the plaintiff brought an action in the Supreme Court in her individual capacity against the children who were parties in the Surrogate’s Court proceeding, alleging that the same bank accounts were placed in her deceased husband’s name as trustee for his children for the propose of defrauding her of her marital rights in her husband’s estate. The defendants in that action, who are the same as the defendants here, interposed the defense of res judicata, claiming that the Surrogate’s Court decree constituted a bar to that action. Upon motion that defense was stricken from the answer. That order was not reviewed on appeal. The plaintiff was successful in that'equity action and a judgment was entered in her favor, adjudging that the transfer of such bank accounts into the name of her husband as trustee was void and that she was entitled to one-third of the amount on deposit in such accounts as the surviving spouse of Hugo Hellstern, deceased; that the defendant children, who are the same children who are defendants here, should account for any money withdrawn from the bank accounts, and that they hold such money, amounting to $3,791.99 and interest, as trustees for plaintiff, and that execution issue therefor against defendants. Thereafter the plaintiff in that action, who is the plaintiff in the action at bar, caused an execution to be issued on that judgment against the defendants who are the same defendants as in the pending action. Supplementary proceedings were instituted, also contempt proceedings, and the wages of one of the defendants were garnisheed.

Having been unsuccessful in collecting the judgment, the plaintiff thereafter commenced this action in conversion against the same defendants, alleging that they had converted the money, amounting to $3,792, awarded to the plaintiff in the prior action in which it was determined that they held the same as trustees.

A motion was made by defendants under rule 107, subdivision 5, to dismiss the complaint on the ground that the former Surrogate’s Court decree and the former judgment in the equity action were res judicata. The motion was denied by the Special Term and the order was affirmed by the Appellate Division by a divided court.

Undoubtedly the general rule is as stated in Collins v. Hydorn (135 N. Y. 320, 324), “ that a judgment against a party, sued as an individual, is not an estoppel in a subsequent action in which he sues or is sued in another capacity or character.” (Cf. First Nat. Bank v. Shuler, 153 N. Y. 163.) That rule is applicable to the decree of the Surrogate’s Court. It does not constitute a bar to the present action as the plaintiff in that proceeding was acting as administratrix and in the present action is suing individually.

However, the judgment in the equity action between the same parties constitutes a bar to the present action. In that action the title to the identical fund was litigated between the same parties. The judgment awarded the fund to the plaintiff and execution was directed to issue in favor of the plaintiff for the identical amount claimed in this action. The very conversion alleged in this action was established by the proof and findings in the prior action. In the equity action the plaintiff was not content with a decree which merely established her title to the fund but she secured a judgment which directed execution in favor of plaintiff for the amount involved. She caused an execution to be issued and took the proceedings heretofore referred to in an effort to collect the judgment. She cannot now maintain another suit to recover the same fund. She cannot have two judgments against the same defendants to indemnify against the same loss. (Caylus v. N. Y., K. & S. R. R. Co., 76 N. Y. 609; Russell v. McCall, 141 N. Y. 437.)

It is the contention of the plaintiff that two independent causes of action existed to recover the same sum of money, the first, in equity, to set aside transfers of the money in question as invalid, and, second, at law, to recover damages for conversion.

The facts necessary to establish the second cause, if not essential to establish the first, were in fact established in the first action. While the plaintiff contends that the facts upon which the alleged conversion was based occurred after the facts alleged as the basis of the first cause of action, it is plain from the findings in the first action that they were known to the plaintiff before the judgment was rendered in the first action, and that they were the subject of proof there. It being an equity action it was within the power of the court to render any judgment to which the plaintiff might be found to be entitled.

In any event it was. unnecessary that in the first action matters sought to be litigated in the present action and alleged to have occurred subsequent to those which formed the basis of the judgment in the first action should have been actually litigated in the first action. Under the circumstances here presented, it was enough, to make the judgment in the first action an effective bar to the present action, that such matters might have been litigated in the first action. The applicable rule was stated by Judge Cabdozo in Schuylkill Fuel Corp. v. Nieberg Realty Corp. (250 N. Y. 304, 306) in the following language: “ A judgment in one action is conclusive in a later one not only as to any matters actually litigated therein, but also as to any that might have been so litigated, when the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first * * *.” The judgment in the first action established that moneys in certain bank accounts belonged to the plaintiff and that defendants had withdrawn such moneys. To hold in the present action that defendants did not convert such moneys would be entirely inconsistent with the former judgment. Indeed, the prior judgment would clearly be res judicata upon the question of the ownership of the funds. It being apparent from the findings in the prior action that the fact of the conversion was known to the plaintiff when that action was before the court, it was clearly a question which might have been litigated. Therefore, the factual situation brings the effectiveness of the former judgment as a bar to.the bringing of the present action squarely within the rule above quoted. The plaintiff might, in the former action, have established all that she now seeks to establish as the basis for a judgment pursuant to which a body execution could have been obtained. Because she failed to establish all such facts, or having established them failed to take a judgment in the form she now seeks, does not make the judgment taken less a bar to the present action. The judgment in the first action declaring the transfers void in effect established a conversion as of the time of first transfer. With that situation existing, the plaintiff . chose to treat the defendants as her debtors, proceeded to enter a judgment in form such that execution could issue thereon, and thereafter to pursue other remedies appropriate to the enforcement of the judgment which she caused to be entered. Thereby the original cause of action became merged in the judgment. A cause of action is merged in a judgment rendered upon it, not only for the reason that a judgment is of a higher nature, but because it would be vexatious to the one party and of no benefit to the other to permit the recovery of two judgments against the same person for one debt.” (Gray v. Richmond Bicycle Co., 167 N. Y. 348, 354.) The principie in question has been applied where an action was prosecuted to judgment against one of several wrongdoers who were joint and several tort feasors and a subsequent action was brought against all; While there the judgment in the first action was held not to bar a second action against those not originally proceeded against, it was held a bar as to the one against whom the first judgment was entered. The court said: hence, when, subsequent to the first action, the plaintiff commences one against all of the wrongdoers, he has not lost the right to maintain it by reason of an election to waive such a remedy, but he has lost it only as against those whom he has already sued, and he has lost it in their case only for the reason that he has no right to vex them twice for the same cause of action * * *. I think the objection to maintaining the joint action ought to be held personal to the one who has already been sued and against whom judgment has already been obtained. His objection is pertinent, he has once already been proceeded against and judgment has gone against him, and he ought not to be again vexed for the same cause.” (Russell v. McCall, supra, p. 453.) In Harrison v. Union Trust Co. (144 N. Y. 326) a prior decree of foreclosure of a trust mortgage required the trustee to convey the property to the purchaser. The trustee refused to do so. The second action was brought in which it was sought, among other things, to compel a conveyance. The court said: nor can the action be sustained as one to compel a conveyance merely. The plaintiffs have already recovered one judgment which explicitly awards that relief, and a court does not sit to repeat over again the identical decree which it has already rendered and which simply needs to be enforced ” (p. 330). This rule has long been recognized. Early it was determined that an action of trespass quare clausum fregit could not be maintained after judgment in an action of trespass on the case between the same parties upon the same cause of action. (Johnson v. Smith, 8 Johns. 383.) In Goodrich v. Dunbar (17 Barb. 644) the plaintiff recovered a judgment in California against the defendant for a sum of money found to be due plaintiff under an agreement whereby defendant took charge of a ship, sold it, paid operating, sale and other expenses and became entitled to commissions. Subsequently defendant was arrested in this State under a statute giving a right to arrest in an action for money received by an agent in a fiduciary capacity. The court held there was a merger of the cause of action for money had and received by an agent in a fiduciary capacity in the judgment rendered. The court said: “ the law of the state is that a judgment merges the original cause of action. In this case no action can be sustained for money received by the defendant as agent; it can only be sustained on the judgment. If the plaintiffs had accepted a bond alone, or a bond and mortgage, for their debt, they could not have sued for the original cause of action, nor held the defendant to bail. The judgment obtained by them _was as much a voluntary act of theirs as the acceptance of a bond would be. They chose to sue the defendant; he did not compel them against their will to bring him into court in California, or to take judgment against him. They have all the advantages of the judgment, and should take it with such inconveniences as necessarily attach to it. The defendant might perhaps (if the. whole case were opened to him) show that the items of payment before disallowed to him should be allowed to him, and if he should succeed in this he would nearly discharge the plaintiffs’ claim. But he is precluded from doing this, on account of the high character of the evidence of his indebtedness contained in the record of the judgment, and its merger of the original contract; and he should therefore be protected from having that judgment regarded as unimportant, when the question is whether he should be imprisoned or not. * * * If judgment were obtained in an action for a fine or penalty, or on a promise to marry, or for a tort, or in an action for the recovery of personal property, and a suit were brought on such judgment, this last suit could not be called an action for a fine, penalty, or promise to marry, or for a tort, &c.; and so the defendant could not be arrested. Neither can the defendant be lawfully arrested in this case ” (p. 647). While the rule there laid down was thereafter held to have been changed in so far as applicable to a judgment of a foreign State by the enactment of section 552 of the Code of Civil Procedure, now section 828 of the Civil Practice Act (Baxter v. Drake, 85 N. Y. 502), such enactment did not affect the general rule as to the merger of causes of action in judgments of the courts of this State. (See note to Gutta Percha, etc., Co. v. Mayor, 20 Abb. N. C. 218, New York Court of Appeals.) The reasoning of the court in Goodrich v. Dunbar (supra) remains unaffected by that statutory change in so far as applicable to judgments of the courts of our own jurisdiction.

The order of the Appellate Division and that of the Special Term should be reversed, with costs in all courts, and the motion to dismiss the complaint granted, with ten dollars costs. The question certified should be answered in the affirmative.

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

Ordered accordingly.


author: Crane, Ch. J.

text:
    Pauline H. Garlock, Respondent, v. Olin J. Garlock, Appellant.
    Argued December 2¡ 1938;
    decided January 3, 1939.
    The following question was certified:

      “ Upon the record in this case was the defendant entitled to a dismissal of the complaint as matter of law?”

      Paul Folger and Keith D. Poland for appellant.
    The agreement is contrary to public policy and void. (Mirizio v. Mirizio, 242 N. Y. 74; Kershner v. Kershner, 244 App. Div. 34; 269 N. Y. 655; Gregg v. Gregg, 133 Misc. Rep. 109; Miller v. Miller, 132 Misc. Rep. 121; Aufiero v. Aufiero, 222 App. Div. 479; Winter v. Winter, 191 N. Y. 464; Clark v. Fosdick, 118 N. Y. 7; Tirrell v. Tirrell, 232 N. Y. 224; Gray v. Butler, 116 App. Div. 816; Matter of Hughes, 225 App. Div. 29; 251 N. Y. 529; Whedon v. Whedon, 247 App. Div. 463; Dowie v. DeWinter, 203 App. Div. 302; Kaufman v. Kaufman, 158 App. Div. 892; Galusha v. Galusha, 116 N. Y. 635.)

      Robert T. Hwyer and David H. Shearer for respondent.
    The agreement is not prohibited by section 51 of the Domestic Relations Law (Cons. Laws, ch. 14) and is not against public policy. (Winter v. Winter, 191 N. Y. 464; Pettit v. Pettit, 107 N. Y. 677; Matter of Burridge, 261 N. Y. 225; Rodgers v. Rodgers, 229 N. Y. 255; Brooklyn Trust Co. v. Lester, 239 App. Div. 422; Werner v. Werner, 169 App. Div. 9; Holihan v. Holihan, 79 App. Div. 475; Chamberlain v. Cuming, 99 App. Div. 561; 184 N. Y. 526; Lehmann v. Lehmann, 137 Misc. Rep. 9; Vallee v. Vallee, 154 Misc. Rep. 620.)
   Crane, Ch. J.

The parties to this action are husband and wife, living in Palmyra, New York. Without any thought or idea of separation they entered into the following agreement:

“ This Agreement made and entered into this 2nd day of April, 1935, by and between Olin J. Garlock/of Palmyra, New York, party of the first part, and Pauline Harvey Garlock, of Palmyra, New York, party of. the second part,

Whereas, party of the first part and party of the second part are husband and wife, and reside together as such in the village of Palmyra, New York,

“ Witnesseth:

“ That for and in consideration of the premises and of the mutual covenants hereinafter contained, and of the obligations of the party of the first part to support and maintain party of the second part as his lawful wife,

“ Now, therefore, the parties do agree as follows:

“ That party of the first part hereby covenants and agrees that he will pay over to party of the second part the sum of Fifteen Thousand Dollars ($15,000.00) per annum for and during the term of the natural life of party of the second part, the said sum to be paid over by him in equal monthly installments of Twelve Hundred and Fifty Dollars ($1250.00) each in advance on the first day of each and every month for and during said term.

It is expressly covenanted and agreed by party of the second part that the sum and/or sums paid to her as aforesaid by party of the first part shall be used by her for her support and maintenance, and that the same sum and/or sums received by her under this agreement shall be in lieu of and in release of any and all obligations which the party of the first part otherwise has or shall . have to support and maintain party of the second part.

It is expressly covenanted by the parties that any and all expenses necessarily incurred by party of the second part because of sickness or accident to her person, shall not be included in the sum and/or sums to be paid to her by party of the first part and that the same shall remain the obligation of the party of the first part.

It is expressly covenanted and agreed by the party of the first part that this agreement and all the obligations and conditions hereof shall be binding upon his heirs, executors, administrators and assigns.

In witness whereof, the parties have hereunto set their hands and seals the day and year first above written.

“ (Signed) OLIN J. GARLOCK [l. s.]

“ (Signed) PAULINE HARVEY GARLOCK [l. s.] ”

The husband, having failed to meet the monthly installment of $1,250 due the 1st day of March, 1938, the wife has brought this action to recover the sum. The answer sets up many defenses, including the plea of undue influence, duress and mistake. On motion for summary judgment the reply affidavit of the wife’s attorney states that the agreement was drawn after a conversation with the husband, who stated that, while the parties were most happily married, they desired to reduce to a stated sum “ the amount which Mr. Garlock should provide her yearly for her support and maintenance.” The Special Term dismissed the complaint on the ground that the contract was void under section 51 of the Domestic Relations Law (Cons. Laws, ch. 14), but the Appellate Division reinstated it, by a divided court, two of the justices dissenting.

By reason of the marriage relation there is imposed cn the husband the duty to support and maintain his wife in conformity with bis condition and station in life. (Keller v. Phillips, 39 N. Y. 351, 354; De Brauwere v. De Brauwere, 203 N. Y. 460; Rodgers v. Rodgers, 229 N. Y. 255.) Marriage is frequently referred to as a contract entered into by the parties, but it is more than a contract; it is a relationship established according to law, with certain duties and responsibilities arising out of it which the law itself imposes. The marriage establishes a status which it is the policy of the State to maintain. Out of this relationship, and not by reason of any terms of the marriage contract, the duty rests upon the husband to support his wife and his family, not merely to keep them from the poorhouse, but to support them in accordance with his station and position in life. This works both ways. When he is prosperous, they prosper; when financial misfortune befalls him, the wife and family are also obliged to receive less. The duty of the husband, however, as matter of policy and as an obligation imposed by law, cannot be contracted away. This court, in Tirrell v. Tirrell (232 N. Y. 224, 229), said: “ In the public interest the State has ever deemed it essential that certain obligations should attach to a marriage contract, amongst which is the duty of a husband to support bis wife. Defendant was, therefore, shorn of power to enter into any arrangement or contract which would relieve him of such obligation.” Section 51 of the Domestic Relations Law enacts that a husband and wife cannot contract to alter or dissolve the marriage or to relieve the husband from his liability to support his wife.

This contract is void for the reason that it violates this provision which continues what has always been the policy of the law regarding marriage and its incidents, If this be a valid contract it must work both ways; both parties must be bound by it. In this instance the parties, apparently living in affluence, have made ample provision fa)r the support of the wife; but suppose we turn it about, and the husband were trying to enforce such a contract, where the amount provided for the wife was trivial in comparison with his income. Out of the goodness of her heart and in reliance upon his good nature she may have signed such a contract of her own free will, and yet no court would hold her bound by it, especially if she became in need through sickness or other misfortune. Such was the Tirrell case (supra). If such contracts as these were held to be legal it would open the door to all kinds of imposition and hardships because a change in the financial circumstances of the husband would not alter the limit of his obligation. The husband is obliged to support his wife in accordance with his condition in life as long as they are living together as husband and wife, and contracts made which place any limitations upon the obligations imposed by law are illegal and of no effect. Where the parties have separated we have a different situation altogether, and contracts similar to this are then held to be legal. (Winter v. Winter, 191 N. Y. 462; Galusha v. Galusha, 116 N. Y. 635.)

For the reasons here stated, the order of the Appellate Division should be reversed and the judgment of the Special Term affirmed, with costs in this court and in the Appellate Division. The question certified should be answered in the affirmative.

Lehman, O'Bbien, Hubbs, Loughban, FiNcn_and Rippey, JJ., concur.

Ordered accordingly.


author: Crane, Ch. J. Finch, J.

text:
    Jamaica Water Supply Company, Appellant, v. City of New York, Respondent.

      Argued October 20, 1938;
    decided January 10, 1939.

      The following question was certified:

      “ Should the plaintiff have had summary judgment as prayed for in the notice of motion?”

      Jackson A. Dykman and Jules Haberman for appellant.
    In the absence of a contract between a municipality and a waterworks corporation, the Public Service Commission has complete jurisdiction to regulate rates for water supplied to a municipality. (City of New York v. Maltbie, 159 Misc. Rep. 276; 248 App. Div. 39; 274 N. Y. 90.) A tariff schedule filed in accordance with the Public Service Law (Cons. Laws, ch. 48) and not suspended becomes effective upon the expiration of thirty days with the same force and effect as if the rates contained in it had been directly prescribed by the Legislature. (Town of North Hempstead v. P. S. Corp., 231 N. Y. 447; Public Serv. Comm. v. Pavilion Nat. Gas Co., 232 N. Y. 146; Midland Realty Co. v. K. C. Power & Light Co., 300 U. S. 109; People ex rel. N. Y. Steam Co. v. Straus, 186 App. Div. 787; 226 N. Y. 704; People ex rel. Village of S. Glens Falls v. P. S. Comm., 225 N. Y. 216; Public Service Comm. v. Iroquois Nat. Gas Co., 184 App. Div. 285; 226 N. Y. 580.) No contract existed for the supply of water between plaintiff and defendant at the time of filing: its tariff schedules nor at any time thereafter. (Staten Island Water Supply Co. v. City of New York, 144 App. Div. 318; Harlem Gas Co. v. Mayor, 33 N. Y. 309; City of New York v. Citizens Water Supply Co., 199 App. Div. 169; 235 N. Y. 584; Silberberg v. Citizens Water Supply Co., 116 Misc. Rep. 595; 208 App. Div. 818; City of New York v. Maltbie, 274 N. Y. 90.)

      William, C. Chanter, Corporation Counsel (.Herman Horowitz and Davidson Sommers of counsel), for respondent.
    Prior to January 1, 1934, the Public Service Commission had no jurisdiction to fix rates for hydrant services furnished to the city. (City of New York v. Maltbie, 274 N. Y. 90; Staten Island Water Supply Co. v. City of New York, 144 App. Div. 318.) Even if the Public Service Commission had jurisdiction to fix the hydrant rates, the filing of plaintiff’s schedules did not have the effect of estabhshing a legal hydrant rate. (City of New York v. Maltbie, 274 N. Y. 90; Matter of Dry Dock, E. B. & B. R. R. Co., 254 N. Y. 305; City of New York v. New York Edison Co., 196 App. Div. 644.)
   Crane, Ch. J.

Article 4-B of the Public Service Law (Cons. Laws, ch. 48), added by the Laws of 1931, chapter 715, section 3, places water works and water companies under the jurisdiction of the Public Service Commission. The method of procedure is the same as that applicable to other rate-fixing bodies. The company files schedules of its rates, which become effective unless they are reduced or modified by the Commission. Subdivision 10 of section 89-c, concerning the powers of the Commission, reads: " Shall have power to require every water-works corporation to file with the commission and to print and keep open to public inspectian schedules showing all rates and charges made, established or enforced or to be charged or enforced, all forms of contract or agreement and all rules and regulations relating to rates, charges or service used or - to be used, and all general privileges and facilities granted or allowed by such corporation; but this subdivision shall not apply to state, municipal or federal contracts. Unless the commission otherwise orders, no change shall be made in any rate or charge, * * * except after thirty days’ notice to the commission and publication of a notice to the public of such proposed change once in each week for four successive weeks in a newspaper having general circulation in the county or counties containing territory affected by the proposed change, which notice shall plainly state the changes proposed to be made in the schedule then in force and the time when the change will go into effect. * * * No such corporation shall charge, demand, collect or receive a greater or less or different compensation for any service rendered or to be rendered than the rates and charges applicable to such service as specified in its schedule filed and in effect at the time; * *

The plaintiff filed schedules with the Commission in 1933. The rates therein stated became effective unless disapproved by the Commission. To ascertain whether such charges were fair and reasonable or should be disapproved, that body could hold hearings and make investigations. The Commission held hearings and a schedule rate of $45 was approved as taking effect in November, 1933. Its record reads (Exhibit E), “ Issued: September 25, 1933 — Effective: November 1, 1933.” If there had been a contract with the city regarding rates, or the parties so understood, the hearing and approval of the Public Service Commission would not have been given, as the statute did not so require. In fact, there was no contract.

In 1929 the Commissioner of Water Supply, Gas and Electricity wrote a letter in the form of an order fixing rates:

“ Letterhead of Commissioner of Water Supply, Gas and Electricity

“ New York, December 20,1929.

Jamaica Water Supply Company

Fire Hydrant Rental

“ The Jamaica Water Supply company having filed claim with the Department of Finance for the payment of additional hydrant rental for the eight-year period ending December 31,1928, continues its demand for payment for hydrant rental service at the rate of forty-five dollars ($45.) per annum per hydrant.

“ Therefore, acting under authority of Section 472 of the Charter, on the basis of reports submitted by the Chief Engineer and filed with the Comptroller, and being advised by the Engineer that_the hydrant rental asked by the company for the current year is the_fair and reasonable value for hydrant rental service rendered by the Jamaica Water Supply company, I hereby fix and establish the rate of forty-five dollars ($45.) per annum per hydrant, effective as of January 1, 1929.

“ (Signed) JOHN J. DIETZ,

Commissioner.”

This was not a contract. He had no authority to make a contract, and the fact that it was acted upon and the water furnished at such rates did not create a contract.

The parties appeared before the Public Service Commission after a schedule was filed and produced evidence. At first one of the schedules was rejected; a later schedule was approved and became the rate per hydrant which this company could charge the city. To repeat: The Public Service Commission had no power to conduct these proceedings or to approve or reject any rates fixed by contract. The words are, “ but this subdivision shall not apply to state, municipal or federal contracts.” No schedules, therefore, could be required to be filed when the matter was covered by city contract. The plaintiff complied with this law because there was no contract; filed its schedules, which became effective until disapproved. They were approved, as above stated: However, it is immaterial whether the parties thought there was a contract or not or whether they were in doubt about it. The schedules were filed stating the rate; they became effective by statute, unless there were a contract, a real contract, between the city and the water company. No such contract existed. The company is, therefore, entitled to recover the rate approved by the Public Service Commission, and in effect from January 1, 1934, to February 29, 1936.

The only answer or claim of the city is that the order of December 20, 1929, of the Water Commissioner constituted a contract. It is not such a contract as the city was authorized to make, and the Commissioner had no power to enter into a contract; neither was the order in the form of a contract, or considered to be a contract. It has none of the elements of a contract and is not such in fact. The city then takes the position, as does the dissenting opinion, that this might have been a contract by acquiescence or by acknowledgment. This may be very true so far as it has been executed and the water paid for, but it is not true for any period after the Public Service Commission took hold of the matter and the plaintiff filed its schedules as required by subdivision 10 of section 89-c of the Public Service Law. Whatever informal arrangement may have theretofore existed, whatever order of the Water Commissioner the plaintiff may have obeyed, these all terminated when the plaintiff complied with the Public Service Law and its water schedules were approved as of November, 1933. The plaintiff’s proceedings have been regular and_in_ accordanee with law. In no particular has the city pointed out wherein it has failed to comply with the provisions of the Public Service Law for the fixing of rates; whereas, on the other hand, the city failed to make a contract for the supply of water, as it could have done, and is seeking to transform an informal letter of a commissioner into a formal, binding contract.

There are no questions of fact to be determined, and the motion of the plaintiff for summary judgment for the period in question should be granted.

The orders should be reversed and the motion granted, with costs in all courts. The question certified is answered in the affirmative.

Finch, J.

(dissenting). This action was brought against the city of New York by plaintiff to recover payment at the rate of forty-five dollars per hydrant for services for water supplied by the plaintiff during the_ years 1934, 1935 and 1936. Upon the argument • of the motion defendant conceded its liability for the amount sought to be recovered for the period from March 1, 1936, to December 31,1936, at the rate of forty dollars per hydrant, and took no appeal from that portion of the order which granted summary judgment for that amount for that period. Thus the only question remaining upon this appeal is whether plaintiff is entitled to partial summary judgment for the period from January 1, 1934, to February 29, 1936. Both the Special Term and the Appellate Division denied the motion for summary judgment, the latter upon the ground that there are issues of fact which compel the denial of summary judgment and relegate the parties to a trial, so that the facts arising from the dealings of the plaintiff with the defendant may be there put in evidence.

For upwards of twenty years prior to 1929 the rate for this hydrant service furnished by the plaintiff to the city was eighteen dollars per hydrant per annum, as fixed in the year 1908. For a time previous to 1929 plaintiff had been urging a higher rate. In the latter part of 1929 the then Commissioner of Water Supply retroactively fixed forty-five dollars as the hydrant rate to be paid to plaintiff, effective as of January 1, 1929. The action of the Commissioner was promulgated by the following:

Letterhead of Commissioner of Water Supply, Gas and Electricity

“ New York, December 20, 1929

“ Jamaica Water Supply Company

Fire Hydrant Rental

“ The Jamaica Water Supply Company having filed claim with the Department of Finance for the payment of additional hydrant rental for the eight-year period ending December 31, 1928, continues its demand for payment for hydrant rental service at the rate of forty-five dollars ($45.) per annum per hydrant.

Therefore, acting under authority of Section 472 of the Charter, on the basis of reports submitted by the Chief Engineer and filed with the Comptroller, and being advised by the Engineer that the hydrant rental asked by the company for the current year is the fair and reasonable value for hydrant rental service rendered by the Jamaica Water Supply company, I hereby fix and establish the rate of forty-five dollars ($45.) per annum per hydrant, effective as of January 1, 1929.

“ (Signed) JOHN J. DIETZ,

Commissioner.”

The above fixed an annual rate and, though stating the date of beginning, specifies no date of termination. The rate so fixed was acted on by both parties for the succeeding four years. On January 10, 1934, the then Commissioner suspended the previously fixed rate as of January 1, 1934. Subsequently the Commissioner attempted to fix a rate of eighteen dollars and fifty cents per hydrant, effective January 1, 1934. This offer, in contrast with the forty-five dollar rate fixed in December, 1929, was not accepted by the plaintiff and never became effective. After January 1, 1934, plaintiff continued to supply the city with water but without any agreement as to price, unless certain proceedings before the Public Service Commission entitle it as a matter of law to have judgment for the claimed rate. We now consider these proceedings. In 1931, pursuant to the enactment of article 4-B of the Public Service Law, plaintiff filed with the Commission two tariff schedules, P. S. C. No. 1 and P. S. C. No. 2. P. S. C. No. 1 was to be effective until November first, at which time P. S. C. No. 2 was to take effect. P. S. C. No. 2 was suspended by the Public Service Commission and never became effective. On September 25, 1933, plaintiff filed a third schedule, P. S. C.'TSTo. 3, to be effective November 1, 1933, then superseding P. S. C. No. 1. This P. S. C. No. 3 the Commission approved without prejudice to an investigation.

The question which is presented for decision is whether we may say, as a matter of law, that the plaintiff intended to file these schedules for the purpose only of fixing a rate for the future, or whether the plaintiff filed these schedules solely for the purpose of the information of the Commission and as showing that the plaintiff was not relying on establishing a new rate schedule, but was relying upon and merely filing the order of the Commissioner of December 20, 1929. Did these schedules fairly give notice to the city that they would have the effect of establishing a new rate pursuant to the Public Service Law? Or were these schedules filed solely for the purpose of giving information to the Commission that plaintiff was relying on the order of the Commissioner, made December 20, Í929, pursuant to which they were still supplying water, and which order had never in any way been revoked nor had the city made any dissent to the carrying out of this order. The schedule, in fixing the rate of forty-five dollars per hydrant, refers to it as a rate fixed by order of the Commissioner of Department of Water Supply, Gas and Electricity, dated January 1, 1929, and had appended thereto and as_a part thereof a copy of this order of the Commissioner. Furthermore, the schedule refers to this order as a contract. Also, this order was listed in the table of contents under the heading “ contracts ” and was grouped with plaintiff’s contracts with other municipalities. Furthermore, these schedules nowhere invoked the authority of the Commission. Also, in this connection, it is important to note the contrasting language used by the plaintiff in its schedule P. S. C. No. 4, which was filed in 1936 after the Public Service Commission had investigated and fixed a hydrant rate of forty dollars. No reference is made in P. S. C. No. 4, as there was in all the other schedules, either to contracts or to a rate fixed by order of the Commissioner of Department of Water Supply, Gas and Electricity of New York, dated January 1, 1929. In addition, this latter schedule, P. S. C. No. 4, is not based on the 1929 order of the Commissioner but is issued in compliance with order of the Public Service Commission made in case No. 8356.” The foregoing would seem to leave little doubt that P. S. C. Nos. 1, 2 and 3 were filed solely for the information of the Commission. It does not negative such construction to consider that if these schedules were filed solely for the information_of the Commission there was less likelihood of an investigation by the Public Service Commission than if they had been filed by the plaintiff for the purpose of establishing a rate. And apparently that was the effect, for it was not until three years later, or January, 1934, when the city, by revoking the rate of forty-five dollars, which had been established by common consent, compelled the filing of a schedule, and started an investigation with the result of fixing the rate at forty dollars.

On the foregoing facts there is little doubt but that we might hold, as a matter of law, that these schedules were filed solely for the purpose of informing the Commission that the plaintiff was relying on the rate fixed by common consent, based upon the order of the Commissioner, which was appended to such schedules. As the opinion at Special Term well said, True, the schedules filed by the plaintiff from time to time (PSC No. 1, water; PSC No. 2, water, and PSC No. 3, water) contained the rates to be charged to the defendant, but those rates were therein referred to as fixed by order of the Commissioner of Department of Water Supply/ etc., and that order was appended to such schedule.” (167 Misc. Rep. 863, 866.)

It is not necessary, however, for us to go so far as to hold that these schedules were filed as a matter of law for the information of the Public Service Commission that the plaintiff was relying on the 1929 order of the Commissioner fixing the rate at forty-five dollars. It appears in the record that subsequent to the filing of these schedules certain proceedings took place between the plaintiff, the City of New York and the Commission. The Commission directed a hearing. A hearing was had before the Public Service Commission, on notice to the Acting Commissioner of Water Supply and plaintiff attended this hearing. Apparently the city appeared but asserted that it would not be bound by any valuations approved in the proceeding. On December 20, 1932, the Public Service Commission rejected Schedule No. 2 without prejudice to an application for a review of the rates and charges by the plaintiff. It may be that out of the appearance of the plaintiff and defendant before the Public Service Commission and the action of the Commission in -connection therewith, that it will be found as a fact that these schedules were filed not solely for the purpose of the information of the Commission, in the hope of continuing to supply water pursuant to the 1929 order of the Commissioner, but for the purpose of establishing a rate under the Public Service Law, wholly apart from the rate fixed by the order of the Commissioner.

If the trial court reaches the conclusion that these schedules were filed merely to inform the Public Service Commission that the plaintiff was relying upon the 1929 order of the Commission then there remains another issue of fact, namely, the reasonable value of the. water supplied, which also must await the trial. If, on the other hand, it is found that the plaintiff by these schedules intended to disregard the 1929 order of the Commissioner of Water Supply and attempt to fix a new rate, then the plaintiff will be entitled to judgment for the period in question at the rate of forty-five dollars per hydrant.

It follows that the order appealed from should be affirmed, with costs, and the question certified answered ■ in the negative.^

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

Orders reversed, etc.


author: Finch, J.

text:
    Martin Rothschild, Respondent, v. Manufacturers Trust Company, Appellant.

      Argued November 22, 1938;
    decided January 10, 1939.
    The following question was certified:

      “ Does the complaint herein state facts sufficient to constitute a cause of action?”

      Leonard G. Bisco, William J. Granger and George B. Balamut iox appellant.
    The agreement is void as being against the public policy of the State. (Matter of Morse [Bank of America], 247 N. Y. 290; Gause v. Commonwealth Trust Co., 196 N. Y. 134; Dyer v. Broadway Central Bank, 252 N. Y. 430; Mt. Vernon Trust Co. v. Bergoff, 272 N. Y. 192; Knass v. Madison & Kedzie State Bank, 354 Ill. 553; Westchester Trust Co. v. Harrison, 249 App. Div. 828; Bay Parkway Nat. Bank v. Shalom, 270 N. Y. 192; Brown v. Union Banking Co., 274 Mich. 499; German Baptist Orphans’ Home v. Union Banking Co., 13 Fed. Supp. 814; Manufacturers Trust Co. v. Grossman, 247 App. Div. 199; 272 N. Y. 471; Awotin v. Atlas Exchange Bank, 295 U. S. 209; Hawkins Realty Co. v. Hawkins State Bank, 205 Wis. 406; Farmers & Mechanics’ Sav. Bank v. Crookston State Bank, 169 Minn. 249.) Section 185, subdivision 9, of the Banking Law (Cons. Laws, ch. 2), in force at the time the agreement was made, did not empower trust companies to make repurchase agreements. (O’Connor v. Bankers Trust Co., 159 Misc. Rep. 920; 253 App. Div. 714; 278 N. Y. 649; Gause v. Commonwealth Trust Co., 196 N. Y. 134; Block v. Pennsylvania Exchange Bank, 253 N. Y. 227; Sistare v. Best, 88 N. Y. 527; Knass v. Kedzie & Madison State Bank, 354 Ill. 554; Kimen v. Atlas Exchange Nat. Bank, 92 Fed. Rep. [2d] 615; Bay Parkway Nat. Bank v. Shalom, 270 N. Y. 172; Mount Vernon Trust Co. v. Bergoff, 272 N. Y. 192; Scherer v. East Side Nat. Bank, 263 N. Y. 190; County Trust Co. v. Mara, 242 App. Div. 206; 266 N. Y. 540; Manufacturers Trust Co. v. Grossman, 247 App. Div. 199; 272 N. Y. 471; Tarrytown Nat. Bank & Trust Co. v. McMahon, 250 App. Div. 739; Lawrence-Cedarhurst Bank v. Ruth, 162 Misc. Rep. 82.)

      James Marshall and R. J. Schosberg for respondent.
    The agreement was not ultra vires but was sanctioned by section 185, subdivision 9, of the Banking Law, and was not against public policy. (Kelly v. Middlesex Title Guarantee & Trust Co., 115 N. J. Eq. 369; McCauley v. Ridgewood Trust Co., 81 N. J. L. 186; McFerson v. Kepner, 76 Col. 523; Matter of Adair Realty & Trust Co., 35 Fed. Rep. [2d] 531; Hawkeye S. F. Ins. Co. v. Central Trust Co., 210 Iowa, 284; Enid Bank & Trust Co. v. Yandell, 176 Okla. 550; Osterling v. Commonwealth Trust Co., 320 Penn. St. 67; Matter of Roberts, 316 Penn. St. 545; State Bank of Commerce v. Stone, 261 N. Y. 175; Block v. Pennsylvania Exchange Bank, 253 N. Y. 227; Dyer v. Broadway Central Bank, 252 N. Y. 430; Talman v. Rochester City Bank, 18 Barb. 123; Bank of Genesee v. Patchin Bank, 13 N. Y. 309; O’Connor v. Bankers Trust Co., 159 Misc. Rep. 920; Wooster v. Sage, 67 N. Y. 67; Fitzpatrick v. Woodruff, 96 N. Y. 561; Emerson v. Associated Gas & Electric Co., 148 Misc. Rep. 636.) The court is bound by the public policy expressed in the legislative enactments in force at the time the agreement in suit was made and which continued in force subsequent to the institution of the action. (S. & C. A. Commercial Co. v. Panama R. R. Co., 237 N. Y. 287; Straus & Co. v. Canadian Pacific Ry. Co., 254 N. Y. 407; Mertz v. Mertz, 271 N. Y. 466.)
   Finch, J.

This action was instituted by the plaintiff in 1934 to recover the sum of $42,865, with interest, as alleged damages for_the failure of the defendant bank to repurchase from him at their full purchase price various stocks and bonds bought by him from the bank during the years between 1924 and 1929. The cause of action is based upon an alleged oral repurchase agreement stated to have been made by the plaintiff with the bank in the year 1924. The complaint asserts that the defendant sought to induce the plaintiff to purchase various securities which the bank then owned or might thereafter acquire by promising to repurchase the securities thus purchased by the plaintiff, upon his demand at any time during the lifetime of said securities, at the price paid therefor by the plaintiff. The bill of particulars states that the agreement was made orally with a vice-president of the bank who has since severed his connection with the bank. During the five-year period between 1924 and 1929 the plaintiff purchased about $65,000 worth of “ unlisted or “ over the counter securities from the bank. In 1929 plaintiff called upon defendant to repurchase certain of these stocks pursuant to the agreement. Defendant did so, and shortly thereafter sold plaintiff four additional stocks. In the year 1930 the plaintiff again called upon the defendant to repurchase the securities involved herein. The defendant refused, denying the existence of a repurchase agreement or the authority of any one to make such an agreement. In 1934 the plaintiff tendered the securities to the defendant and instituted this action.

The defendant, after putting in its answer and obtaining a bill of particulars, made a motion for judgment on the pleadings on the ground that the repurchase agreement is unenforcible because contrary to public policy. Special Term denied this motion and the Appellate Division affirmed the denial, one justice dissenting. The Appellate Division certified that in its opinion a question of law is involved which ought to be reviewed by this court, as follows: Does the complaint herein state facts sufficient to constitute a cause of action?”

A banking -corporation occupies a different relation to the public than do ordinary corporations, and its transactions frequently are subjected to a closer scrutiny and tested by a higher standard than that applied to ordinary commercial affairs. (See Gause v. Commonwealth Trust Co., 196 N. Y. 134, 153.) Banking is a business affected with a public interest. (Noble State Bank v. Haskell, 219 U. S. 104.) Its nature makes it peculiarly an object of legislative solicitude in order that depositors and stockholders may be protected and proper management by those responsible therefor secured according to legislative theories of public welfare.” (Matter of Morse, 247 N. Y. 290, 303.) An agreement, valid and enforcible if made by an ordinary corporation or business, may, by reason of public policy, be void and unenforcible against a banking institution. Thus, where a bank brings suit on a promissory note, the defendant may not plead lack of consideration and an agreement not to enforce the instrument, since the defendant knows or was chargeable with knowledge that the note might be used to conceal the actual transaction. (Bay Parkway Nat. Bank v. Shalom, 270 N. Y. 172; Mount Vernon Trust Co. v. Bergoff, 272 N. Y. 192.) The public policy behind these rulings is that the stability of banks is a matter of such public concern that the State should not sanction any device intended to give a false appearance to a transaction or increase the apparent stability as contrasted with the true condition of a bank. It may be noted here that this rule of public policy in no wise depends upon the solvency or insolvency of the bank. (Mount Vernon Trust Co. v. Bergoff, supra; Manufacturers Trust Co. v. Grossman, 247 App. Div. 199; affd., 272 N. Y. 471.)

The agreement in the case at bar violates this public policy. The sale of the securities, apparently valid and complete, increased the liquid assets of the bank. Seemingly the bank had disposed of the securities and had received in return, cash or valuable commercial paper. Yet if the agreement of repurchase were upheld, the bank, at the same time that it apparently made an absolute sale and improved its financial stability, would have burdened itself with a contingent liability in the same amount as the sales price. The contingent liability is of such nature that it cannot be measured in advance and can be determined day by day only by checking on the market value of the securities sold subject to the repurchase agreement. Neither the depositors nor public officials could determine with certainty the stability of a bank which had made a number of such agreements. These agreements are not enforced .ordinarily during periods of normal business and financial conditions. It is not until there is a financial depression, and market prices go down, that repurchase agreements will be enforced. They impose a loss upon the bank and deplete its assets at a time when it is most in need of such assets to meet the demands of ordinary banking business. Such contracts are “ forms of contingent liability inimical to sound banking and perilous to the interest of depositors and the public.” (Awotin v. Atlas Exchange Nat. Bank, 295 U. S. 209, 211.)

It is asserted that, while all this may be true, the situation created by the repurchase agreements is no different from that resulting from the sale of bills or notes with the bank’s guaranty by indorsement. Differences between the effect of the repurchase agreement and the liability of an indorser of a bill or note, however, are substantial. In the one case the loss suffered by the bank depends entirely upon market conditions and the determination of the purchaser to enforce the agreement. In the other, liability does not arise until there is default on the part ofJhe maker, and such default, while it may be influenced by, is not dependent upon market conditions, but upon the financial stability of the maker of the bill or note, which the bank had an opportunity to judge before it sold the commercial paper with its indorsement. In addition to this great difference between the effect of the two agreements there is another reason why the analogy, between a repurchase of securities agreement and the indorsement of commercial paper is far from being a valid one. In the business world it is taken for granted that negotiable instruments will be indorsed when they are negotiated. This is true whether the negotiation is by a bank or by a private individual or corporation. Agreements to repurchase(securities at the purchase price on the other hand, are far from being a common practice. They are the exception rather than the rule. An excerpt from a Minnesota case, quoted by Judge (now Chief Judge) Crane, in State Bank of Commerce v. Stone (261 N. Y. 175, 181), while involving a somewhat different question, is particularly apt: “ The former is clearly necessary, usual and incidental, whereas the latter is neither necessary, usual or incidental, but is positively dangerous.” (Farmers & Merchants State Bank v. Cosolidated School District, 174 Minn. 286, 292.)

What has been said in answer to the argument that repurchase agreements are no more violative of public policy than the indorsement of commercial paper applies with equal if not greater force to the attempted analogy between repurchase agreements and the sale of real estate by deed of general warranty.

Finally, we consider section 185 (subd. 9) of the Banking Laws (Cons. Laws, ch. 2) (since repealed, L. 1937, ch. 619 [3]), upon which the respondent places so much reliance. From the fact that this section granted the power to banks to purchase, invest in and sell stocks, bills of exchange, bonds and mortgages and other securities,” it does not follow that repurchase agreements may be made or that such agreements accord with public policy. The grant of the power to buy and sell carries with it the appropriate powers which are incidental and reasonably requisite for the effective exercise of such power. It has already been pointed out that the power to agree to repurchase is not incidental to the power to purchase and sell; nor does the lack of such power substantially destroy the power to buy and sell. As noted, sales of securities subject to repurchase agreements are the exception rather than the rule. The fact, as stated by one of the text authorities relied upon by the respondent, that such a practice “ is not unknown ” among bond houses, obviously does not lead to the conclusion that the power to buy and sell necessarily carries with it. the power , to agree to repurchase. (Westerfield on Banking Principles and Practice, p. 166.)

The undesirability of the existence of such a power from the public point of view is brought out in clear contrast by the facts in the case at bar. Here we have an. oral agreement entered into in 1924 by a vice-president, no longer with the bank — an agreement which never appeared on the books of the bank and which an officer of the bank had deliberately refused to place thereon, “ as it would then appear as a contingent liability of the bank.” In 1930, six years after the oral agreement was made, the demand to repurchase is made. During all this time the public and public officials who examined the books and financial statements of the bank were unaware of the existence of this contingent liability. It was not until a serious business and financial depression had brought about a great decline in security prices that the demand to repurchase was made and the existence of the agreement made public. Ordinarily it will not be, until a time when a bank is having difficulty meeting its regular obligations that this additional burden will be saddled upon it. Such agreements imperil the stability of a bank and the security of its depositors. They are against public policy, and nothing contained in the Banking Law brings them within public policy. Respondent urges in this court the view taken by the learned court at Special Term that the bank’s loss is attributable to its original investment rather than the buy-back agreement. Such contention, even if true, is beside the point, since the vice of the transaction lies in giving a misleading appearance to the financial condition of the bank which deludes banking examiners, depositors and stockholders.

Cases in other jurisdictions are in conflict on this subject, and those cited are for the most part distinguishable. While a uniform view in other States carries weight where a question is doubtful, the public policy here is clear, and there is no reason for hesitance merely because a few jurisdictions have reached a contrary result.

The orders should be reversed, with costs in all courts, and the motion granted, with costs, and ten dollars costs of motion. The certified question is answered in the negative.

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

Orders reversed, etc.