text:
    City of Olean, Respondent, v. Pennsylvania Railroad Company et al., Appellants.
    (Argued October 9, 1928;
    decided November 20, 1928.)

      Ernest C. Hornburg for appellants.
    Plaintiff has mistaken its remedy. It should apply to the Public Service Commission for an alteration of the crossing, pursuant to section 91 of the Eailroad Law. (People v. N. Y., N. H. & H. R. R. Co., 89 N. Y. 266; City of Mount Vernon v. N. Y., N. H. & H. R. R. Co., 232 N. Y. 309; Matter of City of Mount Vernon, 119 Misc. Rep. 561.) The evidence was insufficient to establish the existence of the highway at the time of the construction of defendants’ overhead crossing. (People v. Underhill, 144 N. Y. 316.)

      Frederick W. Kruse for respondent.
    The evidence conclusively shows that Front street was a public highway at the time the railroad was constructed, and was such when the obstructions were made. (Spier v. Town of Utrecht, 121 N. Y. 420; James v. Sammis, 132 N. Y. 239; City of Cohoes v. D. & H. R. R. Co., 134 N. Y. 397; 37 Cyc. 40; Smith v. Ess, 125 N. Y. Supp. 450; 157 App. Div. 943; Cook v. Harris, 61 N. Y. 448; Matter of Hunter, 163 N. Y. 542; Wiggins v. Talmadge, 11 Barb. 457; Cleveland v. Cleveland, 12 Wend. 172.) The abutments and embankment are an unlawful obstruction of the highway. (People ex rel. Town of Colesville v. D. & H. R. R. Co., 177 N. Y. 337; Post v. West Shore R. R. Co., 123 N. Y. 581; D., L. & W. R. R. Co. v. City of Buffalo, 158 N. Y. 266; City of Mount Vernon v. N. Y., N. H. & H. R. R. Co., 232 N. Y. 309.) The abutments and embankments being an unlawful obstruction in the highway, section 91 of the Railroad Law, which provides for the alteration of crossings, has no application. (Mount Vernon v. N. Y., N. H. & H. R. R. Co., 232 N. Y. 309; Matter of City of Mount Vernon, 119 Misc. Rep. 561; People ex rel. Green v. D. & C. Co., 58 N. Y. 152; People ex rel. Bacon v. N. C. R. Co., 164 N. Y. 289.)
   Lehman, J.

In 1872 the Buffalo, New York and Philadelphia Railroad Company, the defendants’ predecessor in title, constructed its railroad above and across a country road in the town of Olean. The country road was narrow, little used and ill-constructed. It was used principally by drivers of milk wagons and others as a “ short cut.” Nevertheless the evidence establishes as matter of law that in 1872 and for some time prior to that date it was a public highway. It was included in road district No. 9 of the town of Olean as early as 1827. It was shown on public maps. There were some fences on either side, and the way was not a mere track made by passing vehicles but was constructed of logs and at times worked.” (Wiggins v. Talmadge, 11 Bart. 437; Cook v. Harris, 61 N. Y. 448; City of Cohoes v. D. & H. Canal Co., 134 N. Y. 397.)

At the time the railroad was constructed, the law enacted “ to authorize the formation of railroad corporations, and to regulate the same ” gave to every railroad corporation the power to construct their road across, along, or upon any * * * highway * * * but the company shall restore the * * * highway * * * to its former state, or to such state as not unnecessarily to have impaired its usefulness,” subject also to substantially the same proviso as is now contained in section 21 of the Railroad Law [Cons. Laws, ch. 49], that no corporation might construct its road upon or along any highway, without the order of the supreme court of the judicial district in which said highway is situated, made at a special term of said court, after at least ten days’ notice in writing of the intention to make application for said order shall have been given to the commissioners of highways of the town in which said highway -is situated.” (Section 28 of chapter 140 of the Laws of 1850, as amended by chapter 582 of the Laws of 1864.)

The railroad corporation in this case proceeded, without any application to the Supreme Court and without any order, to carry its road across the highway upon a trestle placed in the highway. There was, it is true, no interference with the traveled portion of the highway, and, in relation to the conditions of traffic, the then existing highway was left in such state as not unnecessarily to have impaired its usefulness;” but without order of the court the railroad corporation had no right to erect any structure upon the highway. Since then, these defendants have built a stone embankment on the highway in place of the trestle. The opening in the embankment is as wide as was the opening in the trestle, but the conditions of traffic have completely changed. The rural highway is now a city street, and the structure maintained by the railroads in the street concededly renders traffic thereon inconvenient and dangerous, and seriously impairs its usefulness.

The courts below have held that the railroad embankment constitutes an unlawful obstruction in the highway and have ordered its removal. The defendants admit that the structure does obstruct traffic in the highway and impairs its usefulness, but they claim that the remedy is not by action to compel removal of the structure, but by petition made under section 91 of the Railroad Law for alteration of existing crossing,” and that it should bear only one-half of the expense of the alteration.

In City of Mt. Vernon v. N. Y., N. H. & H. R. R. Co. (232 N. Y. 309) this court held that even where a railroad corporation had received permission from the proper authorities for the erection of a structure in the highway, it yet remained under a continuous duty to restore the highway to its former state of usefulness and to preserve it in such state, and that increase in population or business on the highway which renders the same inadequate for the needs and safety of the public requires the railroad company to make such changes as are reasonably necessary to provide for the needs of the public.” In that case an order to compel the railroad company to remove all obstructions in the highway was affirmed, but the court refused to consider the effect of section 91 of the Railroad Law, since its pertinent provisions had been adopted four years subsequent to the commencement of the action.

Under the statute occupation of any part of a highway by a railroad corporation is unlawful, unless authorized by order of the Supreme Court made after notice to the town officers. Such order does not reheve the railroad company of its continuing duty not unnecessarily to impair its usefulness. Prior to the enactment of section 91 of the Railroad Law, compliance with that duty might be . compelled by judgment of the Supreme Court that the company should remove encroachments upon the street which impair its usefulness. We cannot escape the conclusion that section 91 of the Eailroad Law was intended to include a case where a structure in the highway, lawful when erected, impairs the usefulness of the highway thereafter, and adversely affects the public safety. A construction which would limit its application to cases where the railroad has placed no physical obstruction in any portion of the highway, or to cases where the railroad was built after the passage of the act, would be contrary both to the language and spirit of the statute. The power given by statute to the railroad company to build its road upon or along a highway is still burdened with the obligation that the usefulness of the highway shall not be impaired by the structure, but the Legislature has now decreed that in cases where public safety requires an alteration of an existing crossing, compliance by the railroad with its obligation may be enforced only in the manner provided by section 91 of the Eailroad Law, and that the railroad corporation shall bear only one-half of the expense.

In this case, however, the railroad company’s occupation of the highway has been unlawful since its inception. Public safety requires alteration of the crossing, but the railroad structure in the highway would be unlawful even if the highway in its present condition were not unsafe. The Legislature has not decreed that the public may be compelled to bear any part of the expense for the elimination or alteration of a structure which the railroad corporation has erected and maintains without lawful right. The judgment does , not compel the alteration of a crossing; it requires the elimination from the highway of the structure placed therein without lawful authority.

The judgment should be affirmed, with costs.

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

judgment affirmed.


source: Caselaw Access Project

author: Lehman, J.

license: Public Domain

text:
    The People of the State of New York ex rel. D. W. Griffith, Inc., Respondent, v. Michael F. Loughman et al., Constituting the State Tax Commission, Appellants.

      (Argued October 3, 1928;
    decided November 20, 1928.)

      Albert Ottinger, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for appellants.
    The rate fixed by the amendment was applicable. (Home Ins. Co. v. City Council, 93 U. S. 116; Memphis Gas Co. Shelby County, 109 U. S. 398; Roberts & Schaeffer Co. v. Emmerson, 271 U. S. 50; Palmer v. Hickory Grove Cemetery, 84 App. Div. 600.) The provision of section 181 of the Tax Law, imposing a license fee upon foreign corporations issuing stock without par value, at the rate of six cents per share on such portion of the issued no-par value stock as is employed in this State, is a constitutional exercise of the taxing power of the State. (People ex rel. Elliott-Fisher Co. v. Sohmer, 148 App. Div. 514; 206 N. Y. 634; People v. Fire Ins. Co., 92 N. Y. 311; Doyle v. Continental Ins. Co., 94 U. S. 535; Security Mutual Life Ins. Co. v. Prewitt, 202 U. S. 246; Ashley v. Ryan, 153 U. S. 436; Hooper v. California, 155 U. S. 648; Hanover Fire Ins. Co. v. Carr, 272 U. S. 494;
      District of Columbia v. Brooks, 214 U. S. 138; Stebbins v. Riley, 268 U. S. 137; People ex rel. Hatch v. Reardon, 184 N. Y. 431; 204 U. S. 152; Roberts & Schaeffer Co. v. Emmerson, 271 U. S. 50.)

      E. Crosby Kindleberger, M. E. Harby, Edward G. Zimmer and Albert H. T. Banzhaf for respondent.
    The relator having ten months previously procured authority to do business in the State of New York, the amendment of section 181 of the Tax Law, passed May 12, 1921, and not stated to be retroactive, did not apply. (Jacobus v. Colgate, 217 N. Y. 235; Campbell v. New York Evening Post, 245 N. Y. 320; People v. Cohen, 245 N. Y. 419; Blodgett v. Holden, 275 U. S. 142; Schwab v. Doyle, 258 U. S. 529; Lewellyn v. Frick, 268 U. S. 238; Standard Home Co. v. Davis, 217 Fed. Rep. 904; Power v. Calvert Mtge. Co., 112 Miss. 319; Untermyer v. Anderson, 48 Sup. Ct. 353; Matter of Maltbie v. Lobsitz Mills Co., 223 N. Y. 227; City of New York v. McLean, 170 N. Y. 374; State of Colorado v. Harbeck, 232 N. Y. 71.) Section 181 of the Tax Law, amended on May 12, 1921, fixing the license fee upon corporations having no par stock at an arbitrary sum of six cents per share, irrespective of the value of its property employed in the State, is unconstitutional. (State of Colorado v. Harbeck, 232 N. Y. 71; People ex rel. Farrington v. Mensching, 187 N. Y. 8; Air-Way Electric Appliance Corp. v. Day, 266 U. S. 71; Quaker City Cab Co. v. Commonwealth of Pennsylvania, 16 J. & S. 553; Wickersham on Stock without Par Value, 136, 138; Power Mfg. Co. v. Saunders, 274 U. S. 490; Louisville Gas & Electric Co. v. Coleman, 48 Sup. Ct. Rep. 423; Matter of Thermiodyne Radio Corp., 26 Fed. Rep. [2d] 713; Stebbins v. Riley, 268 U. S. 137; Hanover Fire Ins. Co. v. Carr, 272 U. S. 494; Southern R. R. v. Greene, 216 U. S. 400; American Smelting & Refining Co. v. Colorado, 204 U. S. 103; Looney v. Crane Co., 245 U. S. 178.)
   Lehman, J.

The relator, D. W. Griffith, Inc., is a corporation organized under the laws of the State of Maryland. In July, 1920, it applied to the Secretary of State of New York for permission to do business in this State. Its authorized capital stock consisted of 500,000 shares of no par value.

At the time the relator began to do business in this State, the Tax Law (Cons. Laws, ch. 60, section 181) provided: “ Every foreign corporation * * * doing business in this state, shall pay to the state treasurer, for the use of the state, a license fee of one-eighth of one per centum for the privilege of exercising its corporate franchises or carrying on its business ’* * * in this state, to be computed upon the basis of the capital stock employed by it within this state, during the first year of carrying on its business in this state; which first payment shall not be less than ten dollars; and if in any year thereafter any such corporation shall employ more than eight thousand dollars of its capital stock within this state on which a license fee has not been paid then a license fee at the rate of one-eighth of one per centum shall be due and payable upon any such increase. The measure of the amount of capital stock employed in this state shall be such a portion of the issued capital stock as the gross assets employed in any business within this state bear to the gross1 assets wherever employed in business. * * * No action shall be maintained or recovery had in any of the courts in this state by such foreign corporation after thirteen months from the time of beginning such business within the state, without obtaining a receipt for the payment of the license fee upon the capital stock * * *.”

In People ex rel. Elliott-Fisher Co. v. Sohmer (148 App. Div. 514; affd., 206 N. Y. 634) it was held that “ the clear intention of the Legislature was that this tax should be based upon the par value of the capital stock which is- employed in business in the State.” At the time the relator began to do business within the State, the statute did not expressly provide any measure for capital stock which had no par value. In People ex rel. Terminal & Town Taxi Corp. v. Walsh (202 App. Div. 651) the Appellate Division held that in such circumstances the tax must be based upon the actual capital of relator within this State.

The omission in the statute was supplied by an amendment to section 181 of the Tax Law which took effect on May 12, 1921, or about ten months after the relator began to do busines in this State. “ The issued capital stock of any corporation issuing shares without designated monetary value shall pay for the use of the state a license fee of six cents on each such share employed in this state, as hereinbefore provided.” At the close of the first year of carrying on business within this State, the tax or license fee payable by the' corporation has been fixed at six cents on each share of its capital stock employed in this State. The tax so fixed is much greater than it would have been if based upon the actual capital of the relator within this State in accordance with the practice which prevailed before the amendment of the statute; and the relator attacks the assessment on the ground that the amendment is unconstitutional, and that in any event it should not be construed as applying to corporations which had begun to do business in this State under certificate of permission issued by the Secretary of State before the amendment took effect.

There can be no doubt that the method of taxation embodied in the amended statute must result in some inequalities. Corporations with stock having no par value are taxed on a basis entirely different from the tax assessed against corporations which have issued- stock with a par value. The number of shares of capital stock having no par value bears no relation of any kind to the actual capital or business of the corporation. It can form, it is said, no legitimate basis for the imposition of a license tax upon a foreign corporation. Such considerations are clearly not without weight, and have led not only the court below but the Circuit Court of Appeals (Third Circuit) to hold the amendment unconstitutional, relying on the authority of Air-Way, etc., Corporation v. Day (266 U. S. 71). (Matter of Thermiodyne Radio Corp., 26 Fed. Rep. [2d] 713; affd., October 31, 1928, on opinion of Judge Morris below,” not yet reported. See, also, People ex rel. Terminal & Town Taxi Corporation v. Walsh, supra.) We have reached the opposite conclusion in spite of the inequalities that may be produced by the tax.

The relator is a foreign corporation. The Legislature might have excluded it from the State. It chose to admit it upon condition that it pay a license fee or tax, just as a domestic corporation must pay a similar organization tax before it receives corporate powers from the State. The power of the State to impose upon a foreign corporation a license fee or tax as a condition precedent to its entry into the State is, from its nature, less subject to constitutional limitations than the power to impose a franchise tax as payment or compensation for the privilege of continuing to do business here. Different tests must be applied to determine the validity of attempted exercise of such powers. (Hanover Fire Insurance Company v. Harding, 272 U. S. 494.) At least, in the former case, there need not be equality between domestic and foreign corporations.

Here, though the tax is called a “ license ” tax in the statute, it cannot be measured until one year after the corporation has received a certificate of authority to do business in the State, and payment is necessarily postponed until after that time. In strict sense, such payment is not a condition precedent to the entry of the corporation into the State. For that reason, in Matter of Thermiodyne Co. (supra), the court held that the validity of the tax must be tested as if it were a franchise ” rather than a license tax. The test of the validity of the tax must be determined by its substance — its essential and practical operation — rather than its form and local characterization.” (International Paper Company v. Massachusetts, 246 U. S. 135.) The State has admitted the relator subject to the condition that the corporation pay a license fee, just as a domestic corporation must pay an organization tax before it has any power to act. The measure of the tax adopted by the Legislature required postponement of the tax bill a year after the corporation began to do business. Only in that sense is such payment a condition subsequent. The obligation to pay arose when the corporation began to do business in the State, and the effect of failure to meet that obligation results not merely in the revocation of authority previously granted by the State to do business here, but acts as a bar to enforcement, within the State, of contracts made in the course of such business. Essentially the tax constitutes the payment exacted for the privilege of entering into the State, even though in some particulars it is analogous to a franchise tax.

We have analyzed the essentials of the tax and its practical operation to indicate the question presented in this case. Authority is not lacking that the Legislature might have adopted the same measure as a basis even for a franchise tax. We are not called upon to define the extent of the legislative power beyond the limits of its exercise in this case. We do not attempt to determine whether the Legislature might have gone further.

In Air-Way, etc., Corp. v. Day (supra) the Supreme Court of the United States held that the mere number of authorized non-par value shares is not a reasonable basis for the classification of foreign corporations for the purpose of determining the amount of such annual fees ” to be paid to a State for the privilege of doing business therein. The court pointed out several objections to the tax. The inevitable effect of the act is to tax and directly burden interstate commerce of foreign corporations permitted to do business in Ohio, and engaged in interstate commerce, wherever the number of shares authorized, subject to the charge of five cents each, exceeds the number of outstanding shares attributable to or represented by the corporation’s property and business in that State. * * * Plainly the fee, to the extent that it is based on a number of shares in excess of those outstanding, has no relation to what was paid in for the stock or to its value or to the amount of plaintiff’s capital, its property or its business, intrastate in Ohio or interstate. The act in its practical operation does not require like- fees for equal privileges held by foreign corporations in Ohio under the same circumstances.”

It is clear that neither of these objections can have any application in this case. The basis of the tax here is not the mere number of authorized shares of stock, but the number of issued shares of stock used in this State. There is, therefore, no direct burden on interstate commerce, even if such an objection could be raised to a tax exacted for the privilege accorded to a foreign corporation tó enter the State. (Hanover Insurance Company v. Harding, supra.) Though the court does advert in its opinion to the circumstance that the number of non-par value shares of a corporation constitute no representation as to, and has no relation to the amount of its capital, yet the fee of tax in that case was held unconstitutional, not because of that circumstance, but because it was based “ on a number of shares in excess of those outstanding.” The question of whether a State might impose a privilege tax on a corporation based, as here, upon the number of its issued shares of non-par stock or the proportion used in the State, was still left open.

That question was definitely decided in Roberts & Schaefer Co. v. Emmerson (271 U. S. 50). There the State of Illinois imposed a franchise tax, on domestic corporations having no par value stock, upon the basis of the number of authorized shares of its capital stock which the Legislature, declared “ shall be considered to be of the par value of $100 per share.” The court pointed out that the Air-Way case merely decided that such a tax imposed by the State of Ohio on a foreign corporation was invalid because the corporation’s “ authority to issue its capital stock was a privilege conferred by another State and bore no relation to any franchise granted to it by the State of Ohio or to its business and property within that State.” Those objections do not apply to a tax imposed by the State from which the corporation derives its authority to issue stock. It may impose a franchise tax based upon the authorized corporate stock, whether issued or not.

Even so, the objection still remained that a “ flat rate per share on no-par value stock, regardless of its value,” may produce such inequalities as to result in “ an unreasonable and discriminatory classification in which no-par value stock is placed in one class and taxed at an arbitrary valuation * * * while par value stock is placed in another class and taxed at the value at which it is authorized to be issued.” ' The court held that in spite of such inequalities the classification was reasonable. It pointed out that because of the essential differences between the two kinds of stock, it is difficult to conceive of any other method of assessing the tax which would save the character of no-par value stock and not result in similar inequalities ” unless the State should choose to abandon entirely its system of measuring the franchise tax payable by the par value of authorized corporate stock.

It would seem that for the same reasons a similar classification is reasonable where a tax on foreign corporations is measured by the number of issued shares of their capital stock or the proportion used in the State, and in the case of Margay Oil Corporation v. Applegate (273 U. S. 666) the court so held without opinion “ on authority of Roberts and Schaefer Co. v. Emmerson, 271 U. S. 50.” The facts in that case are stated in the opinion of the State court in the same case (269 S. W. Rep. 66). We find no distinction in principle between the classification adopted by the State of Arkansas and there sustained, and the classification which is challenged in the case now under consideration. For these reasons we hold that the statute is not unconstitutional, at least as applied to foreign corporations who after it became effective have entered the State and begun to do business here.

The question of whether the Legislature intended to make the amendment apply to corporations which had already begun to do business under certificate of authority issued by the Secretary of State, and, perhaps even whether the Legislature could give effect to such intention, if it had it, is not free from doubt. We hold that under a fair construction of the amendment, the Legislature intended the amendment to apply only to corporations which thereafter began to do business or which became obligated to pay an additional tax because in any year after the amendment became effective it employed additional taxable capital stock in the State.

We have pointed out that the payment of the tax is imposed for the privilege of entering into the State. Though it is lawful to begin to do business in the State without its payment, the Legislature has declared in effect that non-payment of the tax thereafter shall result in the withdrawal of the sanction previously given to do business here, even in so far as concerns business already done. The foreign corporation, having begun to do business, may not escape its obligation to pay the tax by subsequent withdrawal from the State. Though we assume that the Legislature has power to change the tax at any time before the tax is assessed, yet a change in the tax might result in placing the foreign corporation, which has acted upon the sanction conditionally given, in so unfair a position that the intention to make a change apply to such corporations should not be imputed to the Legislature. We may disregard inequality in the incidence of a tax between corporations having stock with a par value and those having stock without par value, and even among corporations having stock without par value where that inequality is the result of a reasonable classification. If we construe the statute as intended to apply to corporations which had already obtained a conditional sanction to do business in the State, then this relator is subjected to inequality by reason of an unexpected change in conditions under which such sanction was offered and accepted. The measure of the obligation is changed after the obligation has been assumed. The circumstance that liability to pay an increased tax is based upon a transaction already completed might, indeed, raise doubt as to the power of the State to impose such liability. The statute should be construed in such manner as to free it from such doubt. The State should not be subjected to a justified charge of unfairness. “ The general principle ' that the laws are not to be considered as applying to cases which arose before their passage ’ is preserved, when to disregard it would be to impose an unexpected liability that if known might have induced those concerned to avoid it and to use their money in other ways.” (Lewellyn v. Frick, 268 U. S. 238. See, also, Blodgett v. Holden, 275 U. S. 142; Untermyer v. Anderson, 48 Supreme Court Reporter, 353.)

It is said that if we exclude from, the scope of the amendment the obligation of the relator to pay a tax “ to be computed upon the basis of the capital stock employed by it * * * during the first year of carrying on its business in this State ” we must likewise exclude from the scope of the amendment the additional tax which a foreign corporation abeady doing business in the State must pay “if in any year thereafter any such corporation shall employ more than eight thousand dollars of its capital stock within this State on which a license fee has not been paid.” That, we think, does not follow.

The obligation to pay the additional license fee or tax will arise only when and if the foreign corporation chooses to employ additional capital in the State in any year after the amendment became effective. It is a future obligation dependent upon future acts within the power of the corporation to control, and as to that tax all foreign corporations which have received authority to do business here, and which have stock without par value, are treated in the same way. It is, too, essentially a different kind of tax from the tax payable at the end of the first year, in which the corporation has done business here. Payment of the additional tax is, perhaps, like payment of a franchise tax, a condition subsequent to continuing to do business here; but non-payment does not render contracts previously made in the course of business unenforceable in our courts. None of the arguments which lead to the conclusion that the Legislature did not intend to change, even if it could, the measure of a tax where the obligation to pay has already arisen though the time for its measurement and payment has not arrived, apply with force to an additional tax or fee which becomes payable, because in any year after the amendment became effective, the corporation chooses to employ within the State additional capital.

For these reasons the order should be affirmed, with costs.

Crane, Andrews, Kellogg and O’Brien, JJ., concur; Cardozo, Ch. J., and Pound, J., concur, expressing no opinion, however, as to the application of the statute in the event additional capital is employed in future years.

Order affirmed.


author: Crane, J. Cardozo, Ch. J.

text:
    Michael Halloran et al., Appellants, v. N. & C. Contracting Company, Respondent.
    (Argued October 26, 1928;
    decided November 27, 1928.)

      Lemuel Skidmore for appellants.
    Section 861 of the Penal Law does not apply to the contract in suit. (People v. Hewson, 224 N. Y. 136; People v. Duplan Silk Corporation, 208 App. Div. 435; People v. Sturgis, 121 App. Div. 407; Woolcott v. Shubert, 217 N. Y. 212; People v. Ericson, 147 N. Y. Supp. 226.) Evidence of the oral agreement was properly before the court and jury. (Mitchill v. Lath, 247 N. Y. 377; Chapin v. Dobson, 78 N. Y. 74; Routledge v. Worthington Co., 119 N. Y. 592; Sire v. Rumbold, 14 N. Y. Supp. 925; Tobey v. Mattimore, 54 Misc. Rep. 231; Schweig v. Manhattan Leasing Co., 54 Misc. Rep. 233; Brady v. Nally, 151 N. Y. 258; Quinzburg v. Blustein, 121 Misc. Rep. 784; Karpf v. Borgenicht, 65 Misc. Rep. 592.)

      Irving Schneider for respondent.
    Assuming for the purposes of argument that the contract was not illegal, the appellants could nevertheless have had no recovery upon the theory of their complaint, and the evidence as to damages received by the court below was entirely improper. (Dodds v. Hakes, 114 N. Y. 260; Mack v. Patchin, 42 N. Y. 169; Lieberman v. Graf Realty Holding Co., Inc., 174 App. Div. 774; Schwartz v. Minsker Realty Co., 166 App. Div. 681; Friedland v. Myers, 139 N. Y. 432; Academy of Music v. Hackett, 2 Hilt. 217; Marsh v. McNair, 99 N. Y. 174; Collander v. Dinsmore, 55 N. Y. 200; Interstate Chemical Corporation v. Duke, 176 App. Div. 684; Leavitt v. De Vries, 127 App. Div. 721.)
   Crane, J.

On the 21st day of November, 1922, the defendant leased to the plaintiffs a space twelve feet by ten feet on the northeast corner of premises located at Grand Concourse and Miriam street, in the bprough of The Bronx, city of New York, for the term of five years, at a rental of $500 payable in equal monthly installments. The buildings were then in the course of construction so that the rent was to commence when the buildings were completed and ready for occupancy. The rented space was to be used as an office and for the sale and distribution by the plaintiffs of ice in their business as retail ice dealers. The lease is in the usual form with the usual covenants upon the part of landlord and tenant. Nothing whatever is contained in the lease with reference to any privilege given to the plaintiffs to solicit customers in the building. There were four or five apartment buildings going up at this time, in one of which the plaintiffs were to have this corner office. The plaintiffs claim that at the time of the making of this lease the defendant made an oral agreement with them to give them the exclusive privilege for five years of soliciting ice from the many tenants of these apartment houses.

The defendant sold the property and the plaintiffs were not given possession of the rented space. The lease was not recorded. They have brought this action to recover the loss of profits which would have been made out of the oral contract of an exclusive privilege for the sale of ice.

On the trial the plaintiffs were awarded a verdict of $4,000, which the trial justice set aside, granting a new trial. The Appellate Division, upon reargument, affirmed this action of the trial judge, and the case comes here under the provision of the Civil Practice Act, as of right, where the appeal is from an order of the Appellate Division, granting a new trial, the appellants having stipulated that upon affirmance judgment absolute shall be rendered against them. The order of the Appellate Division states that the affirmance is upon questions of law only, the facts having been examined and no error found therein. The affirmance by the Appellate Division of the order of the trial judge setting aside the verdict and granting a new trial is considered by this court the same as if the Appellate Division had granted a new trial, pursuant to section 588 of the Civil Practice Act.

Upon the trial, the trial justice did two things. He excluded all evidence offered by the plaintiffs to prove the oral agreement above mentioned, and then permitted evidence as to the value of the contract or exclusive privilege. The plaintiffs upon this question of damage offered testimony as to the number of tenants in the building; the likelihood of their taking ice, - and the value .of their trade.

The judge was right in excluding the oral testimony. The alleged contract to grant the exclusive privilege to solicit customers in the apartment houses was not a contract separate and distinct from the lease; it was part and parcel of the lease. To permit the oral testimony of any such agreement would have been adding to or varying the terms of a written instrument. The lease contains no reference to the privilege and yet the testimony is that the lease would not have been made if the privilege had not been given; that the oral contract was part of the consideration. A covenant of a lessor to furnish heat or elevator service, or to make repairs, is no more a part of the lease than would be his covenant to permit a lessee an exclusive privilege in the premises. All would form part and parcel of one transaction, and part of the consideration. To prove such a contract by oral testimony comes within the condemnation of Mitchill v. Lath (247 N. Y. 377).

Having excluded proof of the oral contract, the judge should not have taken any proof of damages based upon the contract. Having done so, the defendant' cross-examined the witnesses regarding the ice business and the sale of ice to tenants, and in so doing brought out much that the plaintiffs tried to prove. The appellants’ claim now is that the defendant in cross-examination proved the oral contract. I do not think so. The extent of the proof on cross-examination was that there was an understanding and agreement b.y the lessor, that no other retail ice dealers were to be permitted to enter said premises to solicit business, and that the lessor was to advise said tenants that the plaintiffs were the ice dealers recognized by the management. This does not prove a contract. It is too indefinite. It fails to state the length of time such a privilege was to continue. The appellants do not claim that it was to continue for a reasonable time, but for a period of five years. This was not proved even on cross-examination. Neither was there any proof as to what a reasonable time would be. The cross-examination fails to establish the plaintiffs’ alleged oral contract, as stated in the complaint.

The oral contract or agreement, if to continue for a period of five years as alleged in the complaint, was within the Statute of Frauds (Personal Property Law, chap. 31; Cons. Laws, ch. 41), which requires that a contract not to be performed within a year from the making thereof must be in writing. (See, also, McGirr v. Campbell, 71 App. Div. 83.) The Statute of Frauds was not pleaded in the answer and not raised upon the trial, so that I suppose we are obliged to disregard the question. I mentioned the fact, however, to indicate that the plaintiffs are attempting to succeed, not upon the merits of their cause, but upon the errors of their opponent; attempting to establish the oral contract out of a cross-examination and rescue it from the Statute of Frauds, through a failure in pleading.

The order of the Appellate Division should be affirmed and judgment absolute ordered against appellants on the stipulation, with costs in all courts.

Cardozo, Ch. J.

(concurring in result). If it be assumed that parol evidence of a promise to give the plaintiffs an exclusive privilege was properly received, the record is silent as to the existence of a consideration therefor.

There is nothing to show when the promise was made, whether before the execution of the lease or afterwards. For all that appears, it was merely a voluntary concession, granted as a favor to one who was an actual or prospective tenant, and thus subject to recall.

In such circumstances I find it unnecessary to consider the validity of Penal Law (§ 861) or its application to the case before us.

Pound, Andrews, Lehman, Kellogg and O’Brien, JJ., concur with Crane, J.; Cardozo, Ch. J., concurs in result in memorandum in which all concur.

Ordered accordingly.


author: Pound, J.

text:
    Frieda C. Wachtel, Appellant, v. Zara B. Rosen et al., as Executors of Arthur Wachtel, Deceased, Respondents.
    (Submitted October 26, 1928;
    decided November 27, 1928.)

      George P. Halperin and Daniel Katz for appellant.
    The refusal of the drawee bank to certify the check herein sued upon, upon due presentment of said check to it by the payee for certification, constituted a dishonor of the instrument and afforded an immediate right of action to the payee as against the drawer, upon due notice of such dishonor to the drawer. (Casper v. Kuhne, 140 N. Y. Supp. 86; 159 App. Div. 389; State Bank v. Weiss, 46 Misc. Rep. 93; Riddel v. Bank of Montreal, 145 App. Div. 207; Harris v. Clark, 3 N. Y. 93; Kuflick v. Vaccaro, 103 Misc. Rep. 239; Schlesinger v. Kurzrock, 47 Misc. Rep. 634; National Park Bank v. Saitta, 127 App. Div. 624; 196 N. Y. 548; Allen v. Suydam, 20 Wend. 321; Bachelor v. Priest, 12 Pick. [Mass.] 399; Oxford Bank v. Davis, 4 Cush. [Mass.] 188; Feigelman v. Lefrak, 184 N. Y. Supp. 582; Ewald v. Faulhaber Stable Co., 105 N. Y. Supp. 114; Cassel v. Regierer, 114 N. Y. Supp. 601; Kuflick v. Glasser, 114 N. Y. Supp. 870.)

      Sidney W. Davidson and William D. H. Stanley for respondents.
    The complaint does not allege facts constituting dishonor and, therefore, does not state a cause of action. (Judd v. Smith, 3 Hun, 190; Goodwin v. Cobe, 24 Misc. Rep. 389; Barker v. Anderson, 21 Wend. 372; Lipten v. Columbia Trust Co., 194 App. Div. 384; Davenport v. Palmer, 152 App. Div. 761; Minot v. Russ, 156 Mass. 458; Union Bank of Canada v. Nettleton, 55 Ont. L. R. 643.) The Negotiable Instruments Law does not provide that a check is dishonored by a refusal to certify it at the payee’s request. (People ex rel. Municipal

      Gas Co. v. Rice, 138 N. Y. 151; People ex rel. Municipal Gas Co. v. P. S. Comm., 224 N. Y. 156; People v. Frudenberg, 209 N. Y. 218; Commonwealth v. Wright, 55 Mass. 46; Randolph National Bank v. Hornblower, 160 Mass. 401; Farmers & Mechanics Bank v. Butchers & Drovers Bank, 16 N. Y. 125; Haddock, Blanchard & Co. v. Haddock, 192 N. Y. 499; Chapman v. White, 6 N. Y. 412; Raesser v. National Exchange Bank, 112 Wis. 591; Columbia Nat. Bank v. German Nat. Bank, 56 Neb. 803; Glennan v. Rochester Trust & S. D. Co., 209 N. Y. 12.)
   Pound, J.

The complaint herein alleges that Arthur Wachtel, defendants’ testator, gave his check to plaintiff, drawn on the National Park Bank and that such check was duly presented by such holder for certification and 'certification refused. The complaint has been dismissed for failure to state facts sufficient to constitute a cause of action. An appeal to this court has been allowed on a certified question: “ Does the complaint herein state facts sufficient to constitute a cause of action? ”

The basic question is whether the refusal by a drawee bank to certify a check at the request of the holder amounts to dishonor of the instrument, the same as the refusal of acceptance' of a bill of exchange other than a check, so that the holder may sue the drawer as if the check had been presented for payment and payment had been refused.

The general rule is that a check is of right presentable only for payment and that the bank is under no obligation to certify, although it may do so (Bradford v. Fox, 39 Barb. 203; revd. on other grounds in 38 N. Y. 289; Minot v. Russ, 156 Mass. 458), but it is urged that the Negotiable Instruments Law has made a contrary statutory rule on the subject. No controlling decision on the point has been cited.

Section 321 of the Negotiable Instruments Law (Cons. Laws, ch. 38), provides:

“A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided the provisions of this chapter applicable to a bill of exchange payable on demand apply to a check.”

Section 111 provides:

“ The drawer [of a bill] by drawing the instrument admits the existence of the payee and his then capacity to endorse; and engages that on due presentment the instrument will be accepted and paid, or both, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent endorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder.”

From these two sections it is argued that the drawer of a bill of exchange known as a check engages that, on due presentment, the instrument will be accepted, or certified, although it is not questioned that a check is, generally speaking, presented only for payment and not for acceptance.

If the Negotiable Instruments Law, in connection with the certification of checks, makes other provisions than those contained in section 111 which impliedly exclude the construction which places upon the drawer of a check the undertaking that the bank will on demand certify the check, the rule of the common law has not been changed.

Section 323 of the Negotiable Instruments Law provides:

“ Where a check is certified by the bank on which it is drawn the certification is equivalent to an acceptance.”

Section 324 provides:

Where the holder of a check procures it to be accepted or certified the drawer and all endorsers are discharged from liability thereon.”

Section 325 provides:

“A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check.”

These provisions indicate that the common law of checks has not been changed by the statute. When the bank certifies a check at the request of the holder, a new obligation is created. The drawer and all the indorsers are discharged from liability thereon. When a bill of exchange is accepted the drawer is not discharged. (Neg. Inst. Law, § 111, supra.) In section 324 we find the herein-otherwise-provided ” which qualifies section 321. Section 111 does not apply to a certified check and section 324 does not apply to the drawer of a bill of exchange other than a check, so far as the engagement of the drawer to pay is concerned. Certification differs in effect from mere acceptance of bills other than checks in that it is not an added obligation but a substituted obligation. Although section 323 provides that “ certification is equivalent to an acceptance,” the meaning is merely that certification is a synonym of acceptance. It does not mean that the same effect is to be given to certification as is given to the acceptance of an ordinary bill of exchange. The certification of a check by the bank is equivalent to payment. When the holder of a check sees fit, instead of receiving the money, to take the obligation of the bank for payment, the transaction is of the same effect as if he drew the money and then bought the bank’s obligation with it.

I am unable to discover any justification or necessity for reading into the Negotiable Instruments Law any change of the existing rule. It would have been simple to provide, if such had been the legislative purpose, that the refusal of a bank to certify a check when presented by the holder amounted to the dishonor of the check, or that it should be the duty of a bank to pay or certify a check on presentment. The engagement of the drawer of a check is that it will be paid on presentment. Nothing in the Negotiable Instruments Law necessarily alters this rule.

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

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

Order affirmed, etc.


text:
    The Bath National Bank, Appellant, v. Ely N. Sonnenstrahl, Inc., Respondent.
    (Argued October 25, 1928;
    decided November 27, 1928.)

      James McCall for appellant.
    The court erred in denying the request of plaintiff that the justice modify or amplify his charge by adding that if after the bank credited the amount of the drafts to the Bath Produce Company, the produce company drew on it by checks, then value was passed for the bills of lading, and so title passed to plaintiff. (Heinrich v. First Nat. Bank, 219 N. Y. 1; National Revere Bank v. Nat. Bk. of Republic, 172 N. Y. 102; Commercial Savings Bank v. Mann, 206 App. Div. 297; 238 N. Y. 559; American Trust & Savings Bank v. Austin, 25 Misc. Rep. 454.)

      W. Earl Costello for respondent.
    No error was made by the trial judge in his refusal to charge as requested by plaintiff’s counsel. (Pollock v. Pennsylvania Iron Works, 157 N. Y. 699; Trenkman v. Schneider, 31 Misc. Rep. 741.)
   Lehman, J.

Early in February, 1926, the Bath Produce Company shipped by rail two lots of beans. In each case it received a uniform order bill of lading showing that the beans were consigned to its order at New York, with instructions to notify the defendant. It then drew two drafts on the broker, payable at sight or on arrival of shipments to the order of the plaintiff, and attached thereto the bills of lading indorsed without restriction. These were deposited to its credit in the plaintiff’s bank and duly credited to the Produce Company which subsequently drew checks against this credit and these checks were paid.

The plaintiff promptly sent the drafts with bills of lading attached to a New York bank for collection, but when presented to defendant payment was refused. On learning this fact the plaintiff sent an agent to New York to make the collection or if he could not do so to sell the beans on its account. This agent, however, was also one of the principal officers of the Produce Company. He delivered the bills of lading to the defendant — whether saying that he represented the plaintiff or claiming to act for the Produce Company is disputed. The beans were then delivered to the defendant and it sold them. If at the time the bills of lading were delivered to the defendant the plaintiff bank was a holder for value of the drafts and bills of lading, then the defendant must account to it.

We assume that the plaintiff received the drafts merely for collection, and did not become the owner of the drafts at the time the deposit was made. The plaintiff by failure to move for the direction of a verdict or to except to the portions of the charge in which such question of fact was submitted to the jury is not in a position to urge now that there is no evidence to sustain the finding of the jury in that regard. The trial judge erred, however, in his refusal to charge that: “If the Bath National Bank, after crediting the amqunt of the drafts to the account of the Bath Produce Company, the Bath Produce Company drew on it by checks, then value was passed for the bills of lading.” That request, even if inartificially drawn, was clearly intended and understood to mean that if the bank, though merely an agent for collection, advanced the amount of the drafts to its customer before the collection was made, then it became a holder for value of such drafts and the accompanying bills of lading. That proposition of law is established by an overwhelming mass of authority in this country, both judicial and extra-judicial.

Even where a depositor delivers to a bank a negotiable instrument without restrictive indorsement and the amount of the face value of the instrument is placed to the depositor’s credit without special contract that the credit is only provisional, the bank does not become a holder for value until the depositor has actually availed himself of the credit so given by draft upon it. (Citizens’ State Bank v. Cowles, 180 N. Y. 346; Shawmut National Bank v. Manson, 168 Mass. 425.) The beneficial title of a bank receiving an instrument for collection only may be more restricted. That we need not now decide. None the less, the bank becomes a holder for value when it makes advances upon the instrument in advance of collection. At least it may then hold the instrument as collateral security.

Though title to a draft left by a depositor with the bank for collection does not pass absolutely to the bank where the full amount of the draft was credited to the depositor, for convenience and in anticipation of its payment,” and “ the bank could have cancelled the credit, as it clearly accepted no risk on the paper,” yet if the depositor had overdrawn, and this draft had been credited to cover the overdraft, or if the company had drawn against the draft, the bank could hold the paper until the account was squared.” It would then be a holder for value., (St. Louis & San Francisco Railway Co. v. Johnston, 133 U. S. 566.)

Direct authority for this rule of law may be found in Old National Bank of Spokane v. Gibson (105 Wash. 578; see annotations to same case, 6 A. L. R. 247); Jefferson Bank v. Merchants Refrigerating Co. (236 Mo. 407); Scott v. McIntyre Co. (93 Kans. 508); Bank of Gulfport v. Smith (132 Miss. 63). (See, also, Amalgamated Sugar Co. v. U. S. National Bank of Portland, 187 Fed. Rep. 746; Miller v. Norton, 114 Va. 609; National Bank of Commerce v. Morgan, 207 Ala. 65, and notes on that case 24 A. L. R. 897 et seq. Article, Crediting an Account as Value,” 2 Wisconsin Law Review, 408; Morse on Banking [6th ed.], sections 585 and 586.) The case of First National Bank v. Stengel (227 N. Y. 659) holds nothing contrary, for in that case the bank knew “ the draft would not be paid at a time when the depositor’s account was sufficient to have charged back the amount of the draft.” (See opinion of Special Term, 169 N. Y. Supp. 217.)

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

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

Judgments reversed, etc.


author: Crane, J.

text:
    In the Matter of the Claim of Regina Cooley, Respondent, against P. J. Heaney Co., Inc., et al., Appellants. The State Industrial Board, Respondent.
    (Argued November 20, 1928;
    decided November 27, 1928.)

      T. Carlyle Jones and Bernard J. Vincent for appellants.
    Death herein did not arise out of and in the course of the deceased’s employment. (Kowalek v. N. Y. Consolidated R. R. Co., 229 N. Y. 489; Schultz v. Champion Welding & Mfg. Co., 230 N. Y. 309; Tallon v. Interborough Rapid Transit Co., 232 N. Y. 410; Johnson v. Faribault Bldg. Corp., 192 App. Div. 929; 229 N. Y. 626; Sabatelli v. DeRobertis, 192 App. Div. 873; 230 N. Y. 592.)

      Albert Ottinger, Attorney-General (E. C. Aiken of counsel), for respondent.
    There is a presumption that the accident arose out of and in the course of employment under section 21 of the Workmen’s Compensation Law. (O’Brien v. Todd Salt Co., 215 App. Div. 738; Jennings v. Fillmore Building Corp., 216 App. Div. 775; Rahn v. Rochester, L. & R. R. R. Co., 217 App. Div. 711; Harrigan v. Conklin, 217 App. Div. 799; De Bourg v. Eastern G. & M. Elevator Corp., 211 App. Div. 828; Norris v. New York Central R. R. Co., 246 N. Y. 307.)
   Crane, J.

P. J. Heaney Co., Inc., was in the building material business, having a big yard and freight siding and a boat landing on the Bronx river or Westchester creek. At the end of the dock or boat landing was a stringpiece along the water front about a city block long and a foot and one-half high.

A young man, John Cooley, about 28 years of age, was employed as a bag cleaner. He worked in a shed on the place about one hundred feet from the dock cleaning bags. He had no other work to do. This was his job. John Cooley owned a second-hand Overland car which he used to take his family, wife and two children, out on pleasure drives. He did not use it in his work or going to and from his wr>rk; nothing that he did for his employer required him to use the car. To save garage expense he stored the car in the yard of the company. It was last seen on the day of the accident in the yard facing the dock about fifteen feet from the water.

On the 16th day of August, 1927, Cooley was at work cleaning bags and was told to work overtime until eight o’clock in the evening. The usual time of ceasing work was five o’clock in the afternoon. At seven-thirty o’clock that evening John Cooley and his Overland car were found in the river and fished out by the police. Cooley was dead; he had been drowned. He was in his working clothes at the time. The foreman says that Cooley always changed his clothes before going home. Mrs. Cooley says that he always came back home in his •working clothes.

Do these facts show that the accident, whatever it was, arose out of and in the course of Cooley’s employment? I think not. The automobile was only used for pleasure riding and in no way connected with Cooley’s employment. He stored it in the yard for his own personal convenience. His work up to eight o’clock on the day of August 16th required him to clean bags in a shed one hundred feet away from the dock. No inference can be drawn from these circumstances that Cooley while in and driving his car was doing anything for his employer in the course of his employment. The reasonable inference is that he was engaged on purposes of his own.

The accident is a sad and unfortunate one, resulting in serious loss to the widow and children, but the same consequences would have arisen if Cooley had been killed while driving in the public streets. Compensation can only be allowed under this Workmen’s Compensation Law [Cons. Laws, ch. 67] for those accidents arising out of and in the course of the employment. We are not justified in extending these words beyond their natural meaning by our natural feeling of sympathy.

The order of the Appellate Division should be reversed and the claim dismissed, with costs against the State Industrial Board in this court and in the Appellate Division.

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

Order reversed, etc.


text:
    In the Matter of Edward H. Floyd-Jones et al., Appellants, v. Town Board of the Town of Oyster Bay et al., Respondents.

      (Argued October 24, 1928;
    decided November 27, 1928.)

      Russell H. Robbins, Clinton H. Blake, Knowlton Durham, Otis S. Carroll and Louis H. Pink "for appellants.
    The action of the town board in reducing the territory to be embraced within the proposed district was illegal and without authority in law. (Matter of New York & Brooklyn Bridge, 72 N. Y. 527.) The town board was without jurisdiction to create the proposed water district since there was no competent proof before it that the petition was signed as required by law. (People ex rel. McNeile v. Glynn, 128 App. Div. 257; Tompkins v. Hunter, 149 N. Y. 117; Benton v. Wickwire, 54 N. Y. 226; McCluskey v. Cromwell, 11 N. Y. 593; Matter of Village of Middletown, 82 N. Y. 196; Matter of Miller, 110 N. Y. 216; People v. Long Island Railroad Co., 194 N. Y. 130; Johnson v. Hudson River Railroad Co., 49 N. Y. 455.) Section 282 of the Town Law is unconstitutional and repugnant to the due process clause of the Fourteenth Amendment. (Browning v. Hooper, 269 U. S. 396; Matter of N. Y. & Q. Gas Co. v. McCall, 219 N. Y. 84.)

      Charles I. Wood, George Morton Levy and Leo Fishel for respondents.
    There was evidence before the town board to sustain its determination that the petition was in fact executed in compliance with section 282 of the Town Law. (People ex rel. McGrath v. Weiss, 216 App. Div. 505; 245 N. Y. 518; Ludlum v. Town Board of Town of Oyster Bay, 219 App. Div. 188; Doyle v. Town of Diana, 203 App. Div. 239; People v. Flack, 216 N. Y. 123; Stemmler v. Mayor, 179 N. Y. 473; Dunham v. Townsend, 118 N. Y. 281; Tiffany v. Town of Oyster Bay, 141 App. Div. 720; 209 N. Y. 1.) The action of the town board in reducing, in its discretion, the territory to be included in the district, was legal and proper. (Matter of Syracuse v. Van Amburgh, 223 App. Div. 485.)
   Pound, J.

The question is whether the action of the town board of Oyster Bay in the county of Nassau, in establishing the so-called Massapequa Water District in that town, complied with the provisions of law.

Jurisdiction to establish a water district in a town in the county of Nassau is obtained by filing a petition under the provisions of section 282 of the Town Law (Cons. Laws, ch. 62), as amended by chapter 711, Laws of 1926, which, so far as applicable, reads as follows:

“ § 282. 3. Town board may establish water district; petition. The town board * * °* in any town in the counties of Nassau and Westchester upon the petition of a majority of the resident owners of taxable real property in a proposed district, as appears by the last preceding completed assessment roll of such town, may establish a water district outside of an incorporated city or village and wholly within such town. The petition must describe the proposed district; and, if a water system is to be constructed therein, state the maximum, amount proposed to be expended in the construction of such water system. The petition must be signed by the petitioners and acknowledged in the same manner as a deed to be recorded.”

A petition was presented to the town board purporting to be signed by a majority of the resident owners of taxable property in the proposed district therein described (as appears by the last preceding completed assessment roll of said town) which described by metes ' and bounds a proposed water district and a hearing was had upon notice given pursuant to the Town Law.

On the threshold a practical difficulty presented itself. Resident owners of taxable property in a proposed district are not indicated as such on the assessment rolls of the town. The draftsman must have forgotten this fact. No distinction is made between resident and non-resident owners. In towns outside of Nassau and Westchester no distinction as to the right to petition for the creation of a water district is drawn between resident and non-resident owners. The list of owners of taxable real property is readily obtained from the assessment roll, but resort must be had to other sources to ascertain what property on the assessment roll is owned by petitioning resident owners. As the question of fact could not be ascertained as provided by statute, other methods of proof were resorted to by both sides and a finding was made thereon that the petition was properly signed. This was permissible, for the Legislature was not attempting to prohibit the creation of water districts in Nassau county by requiring impossibilities. The town board might reject the meaningless words of the statute as surplusage. “ It is, however, a very serious matter to hold that when the main object of a statute is clear, it shall be reduced to a nullity by the draftsman’s unskilfulness or ignorance of law.” (Salmon v. Duncombe, [1886] 11 App. Cas. 627, 634.) Either side was free to refer to the assessment roll for the purpose of ascertaining what real property in the proposed district was assessed and, having obtained this information, it was free to call witnesses or present affidavits as to the resident ownership of such property.

The procedure before the town board is defined by Town Law (§ 285), as amended by chapter 711, Laws of 1926, which provides for action on the petition as follows:

First. “ If said town board shall determine that the petition is properly signed and proved or acknowledged in the manner above provided and that it otherwise complies with the provisions of said section two hundred eighty-two hereof, they shall make a written order to that effect, which order shall be signed by the members of the town board present at such hearing and also entered in the minutes of said meeting.”

Secondly. “ After the town board has made such order, they shall then publicly hear the allegations of all persons appearing upon said hearing as to all matters specified in such notice of hearing and upon any other matters affecting or relating to the establishment of said proposed district and the construction of said proposed improvement therein, as they may deem just and equitable, and shall thereupon make such order therein.”

The town board proceeded to make an order, first, to the efféct that the petition was properly signed, and secondly, that a water district should be created, excluding, however, a portion of the territory described in the original petition on the ground that it would not be benefited by the creation of the proposed district. The words as they may deem just and equitable, and shall thereupon make such order therein,” at the end of the part of section 285 quoted above, are meaningless unless transposed so as to read and shall thereupon make such order therein as they shall deexn just and equitable.” As so transposed, it is argued that the board thereby is givexi power not only to grant or refuse to establish the water district asked for but also to modify and reduce the boundaries of such district. It is patent that the Legislature intended to change the rule applied under the old law which gave the board no discretion to deny the application or modify the relief prayed for as well as to grant the petition. Whatever its intent, the mandatory part of the section remains and read literally imposes upon the board the duty to make “ such order,” i. e., the order establishing the water district petitioned for. This it failed to do. The true meaning is obvious, and it might be given to the statute by the court if it were necessary to the proper disposition of the case. (People ex rel. Wood v. Lacombe, 99 N. Y., 43, 49, 50.)

Respondents rely further on the provisions of General District Law (L. 1926, ch. 470), entitled: “An Act in relation to the creation, financing and activities of certain public districts.” This is a general statute which by its terms is broad enough to apply to the powers of a town board to grant relief and, on proper application, to create a water district. Section 3 reads as follows:

“ § 3. Procedure; notice and hearing. Whenever it is desired to create or finance a public district, or to perform some function thereunder upon action by any interested persons, the board, commission or officer with whom the petition necessary to initiate such action is filed shall grant a public hearing before taking any action on the petition, at which time full opportunity to be heard shall be granted to all interested persons. Notice of the time, place and purpose of such hearing, containing a description of the district or proposed district, shall be given by such board, commission or officer, at petitioner’s expense, by posting such notice in four of the most public places within the district or proposed district at least twenty-one days prior thereto and by publishing a notice once in each of the three weeks immediately preceding the week in which the hearing is to be held in a newspaper published within the district or proposed district, or, if there be no such newspaper, then in a newspaper having general circulation in the district or proposed district and published in the county in which a part or all of the district or proposed district is located or in an adjoining county.”

Section 4 reads as follows:

§ 4. Powers. After a hearing held upon notice as provided herein, and upon the evidence given thereat, the board, commission or officer with whom the petition is filed shall determine whether it is in the public interest to grant in whole or in part the relief sought. If it is determined that it be not in the public interest to grant in whole or in part the relief sought, it shall deny the petition, but if it is determined that it be in the public interest, it may grant the relief sought by the petition or may modify the same. The said board, commission or officer at the same time shall determine whether all the property, property owners and interested persons within the public district as proposed, are benefited thereby and whether all property or property owners benefited are included therein and it shall so alter the boundaries of the district, prior to granting the relief sought by the petition so that all property and property owners and only such property and property owners as are benefited shall be included within its limits. In the event, however, that it is found that any property, property owners or any interested persons not included in the public district, as originally proposed, will be benefited thereby, a further . notice shall be posted and published and a hearing held as provided in section three hereof, unless all said additional property owners or interested persons execute and file a written consent to be included in such district.”

Section 6 reads as follows:

§ 6. Effect of this article. The requirements of this article shall be deemed to be in addition to any procedure specified in any district statute, provided, however, that where such district statute calls for the giving of any notice, the holding of any hearing or the taking of any action substantially as hereby required, then the notice may be given, hearing held, or action taken under the provisions of the district statute or under the provisions of this article.”

The action herein taken was under the provisions of the Town Law, which provides for the giving of notice, the holding of a hearing and the taking of action. To the Town Law, therefore, this General District Law unquestionably adds the power to grant the relief sought in part and to alter the boundaries of the water district as petitioned for so that “ all property and property owners and only such property and property owners as are benefited shall be included within its limits.” The petition necessary to initiate such action ” must be the petition specified in the Town Law. It must, in this case, be “ the petition of a majority of the resident owners of taxable real property in a proposed district.” In this case, the town board made an order determining that the petition was properly signed. It then cut down the boundaries of the district. It has never determined that a majority of the resident owners of taxable real property in the modified district has petitioned for such improvement, nor is such finding necessary to enable it to act.

On the filing of the petition and the publication of the notice of the hearing as required by law, the town board acquired jurisdiction to act. (People ex rel. McGrath v. Weiss, 216 App. Div. 505; affd., 245 N. Y. 518.)

When the Legislature does not establish the boundaries of a taxing district but delegates the authority as in this case, it is essential to due process that the owners of land affected by the improvement be accorded an opportunity to be heard as to the location of the boundaries and the creation of the district. (Stuart v. Palmer, 74 N. Y. 183; Browning v. Hooper, 269 U. S. 396, 405.) All such owners were given notice and an opportunity to be heard on the question whether their property would be benefited by the proposed improvement. The matter being properly brought before the board, it was free to grant such relief as the General District Law provided. The Legislature might have permitted the town board to institute the proceeding without a petition. No constitutional rights are violated either by limiting the right of petition to resident landowners or by extending the power of the town board to grant relief. If property not included in the district as originally proposed is found to be benefited notice of consent is necessary to bring it into the modified district. (General District Law, § 4, supra.) The main jurisdictional fact is notice and a hearing to all whose property is said to be benefited. That such notice has been given is not questioned.

- The order should be affirmed, with costs.

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

Order affirmed.


author: Per Curiam.

text:
    Felix Keskal et al., Respondents, v. Roman L. Modrakowski, Appellant.
    (Submitted October 26, 1928;
    decided November 27, 1928.)

      H. Louis Jacobson and Maurice D. Isenbergh for appellant.
    As plaintiffs failed to establish any fraud, and no amendment of the complaint having been asked or ordered, the trial court did not err in dismissing the complaint. (Wright v. Delafield, 25 N. Y. 266; McNeil v. Cobb, 186 App. Div. 177; Brightson v. Claflin, 180 N. Y. 81; Wolrath v. Hanover Fire Ins. Co., 216 N. Y. 225; Pryor v. Foster, 130 N. Y. 171; Kountze v. Kennedy, 147 N. Y. 124; Achs v. Woods, 221 N. Y. 335; Morris v. Talcott, 96 N. Y. 100.)

      Donald S. Taylor for respondents.
    The trial court erred in dismissing the plaintiffs’ complaint upon the merits. (Lennan v. Hamburg-American Steamship Co., 73 App. Div. 357; McDonald v. Metropolitan Street Ry. Co., 167 N. Y. 66; Lawrence v. Wilson, 64 App. Div. 562; Rakowitz v. Berheimer & S. B. Co., 148 N. Y. Supp. 258; Maxwell v. Peters Co., 219 N. Y. 597; Ducas v. Loonen, 158 App. Div. 915; Rothchild v. Harris, 125 N. Y. Supp. 41; Lalor v. New York, 208 N. Y. 431; Kraus v. Birnbaum, 200 N. Y. 130; Nicolls v. Lyons, 144 N. Y. Supp. 19; Heine v. Lange, 161 N. Y. Supp. 287; Ross v. Terry, 63 N. Y. 613; Conaughty v. Nichols, 42 N. Y. 83; Ledwich v. McKim, 53 N. Y. 308.)-
   Per Curiam.

The testimony is too vague to justify a finding of a promise by the defendant personally to restore the bonds or their value if the plaintiffs became dissatisfied with their subscription to the shares. The promise as the plaintiffs count upon it in their complaint was coupled with one to release them, in case of dissatisfaction, from the obligation to make further payments under their contract of subscription. Certainly that part of the agreement must have been understood to bind the corporation and not the defendant personally. There is no adequate basis for a holding that one branch of the agreement was representative, and another branch personal. The bonds when received by the defendant belonged to the corporation, not to him. By fair implication, the duty to make restitution, if the subscription was thereafter canceled, would rest upon the owner, unless assumed by some one else with reasonable clarity (Hall v. Lauderdale, 46 N. Y. 70, 74; Ferris v. Kilmer, 48 N. Y. 300; Whitney v. Wyman, 101 U. S. 392; 1 Williston, Contracts, § 281; 2 Mechem, Agency, § 1422). “ When the agency is disclosed, and the contract relates to the matter of the agency, and is within the authority conferred, the agent will not be personally bound, unless upon clear and explicit evidence, of an intention to substitute, or to superadd his personal liability for, or to, that of the principal” (Hall v. Lauderdale, supra). The statement by the plaintiffs in response to leading questions that “ he ” (meaning the defendant) promised to return the bonds is of little, if any; significance when the setting of the occasion shows that he was acting in a representative capacity, and when other statements by the same witnesses put the promise in a form that bespeaks a corporate engagement.

If the theory of the plaintiffs’ action were fraud instead of contract, the defendant on proof of the fraud might be subject to a duty, equally with the corporation, to make restitution to subscribers (Mack v. Latta, 178 N. Y. 525). The complaint is equivocal. The plaintiffs do not contend, however, that fraud has been proved, and stand upon their complaint as one for the repudiation of a contract.

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

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

Ordered accordingly.


author: Cbane, J.

text:
    The People of the State of New York ex rel. Central Union Trust Company et al., as Executors of Oscar J. Brand, Deceased, Appellants, v. M. Frank Loughman et al., Constituting the State Tax Commission, Respondents.
    (Submitted November 19, 1928;
    decided November 27, 1928.)

      Henry S. Hooker and Raymond D. Thurber for appellants.
    Waddell’s obligation was a “ debt ” charged off as worthless in 1925; not a “loss” sustained in 1920. (Henry v. Commissioner, 8 B. T. A. 1089; Stern v. Commissioner, 5 B. T. A. 89; Bentley v. Commissioner, 5 B. T. A. 314; National Sash & Door Co. v. Commissioner, 5 B. T. A. 931; Parker Wire Goods Co. v. Commissioner, 8 B. T. A. 448; 1 Cumulative Bulletin, 125; 3 B. T. A. 156; 5 B. T. A. 139; Lewellyn v. Electric Reduction Co., 275 U. S. 243; Royal Packing Co. v. Commissioner, 22 Fed. Rep. [2d] 536; Porter v. United States, 20 Fed. Rep. [2d] 935.) The Waddell debt was “ ascertained to be worthless and charged off ” in the year 1925. (Appeal of Alemite Casting & Mfg. Co., 1 B. T. A. 548; Appeal of Egan & Hausman Co., Inc., 1 B. T. A. 556; Avery v. Commissioner, 5 B. T. A. 872; Houck Co., Inc., v. Commissioner, 7 B. T. A. 670.)

      Albert Ottinger, Attorney-General (Henry S. Manley of counsel), for respondents.
    The record fails to prove appellants’ claim that the Waddell irregularities resulted in a “ debt ” rather than a “ loss ” as those words are used in section 360 of the Tax Law. (Lewellyn v. Elec. Reduction Co., 275 U. S. 243; Porter v. United States, 20 Fed. Rep. [2d] 935; Parker Wire Goods Co. v. Commissioner, 8 B. T. A. 448.)
   Cbane, J.

O. J. Brand & Company in 1920 was a stock brokerage firm doing business at 74 Broadway, New York city. The partners were Oscar J. Brand, Wallace M. Waddell and W. Richardson Thurston. In August of 1920, Brand, the Stock Exchange member, discovered that his two younger partners had overdrawn their accounts. The firm was dissolved, Brand taking over all the assets and assuming all the liabilities. Henry F. Boissevain, the cashier of the firm, made a thorough examination of the books of the firm in order that a report might be made to the New York Stock Exchange authorities. Mr. Waddell had at this time an individual trading account with the firm under which he bought and sold securities in the same manner as any customer of the firm. This account was in the name of his wife but was in fact his individual account. On October 8, 1920, the loss in this account was $115,852.08. This sum represented the individual personal loss of Waddell in his trading account with the firm and does not include his share of the loss sustained by the firm under the partnership agreement. This indebtedness of Waddell passed from the firm to O. J. Brand upon and under the dissolution agreement. Waddell gave Brand his demand note and a confession of judgment on which judgment was entered in the Supreme Court of Kings county on November 16, 1920. Thereafter Brand made numerous efforts to collect this judgment, down to the time that execution was issued and returned unsatisfied in 1925. He was always hopeful that Waddell would pay at least some part of his indebtedness as he had a good position and would have been taken into another firm in 1925 if the governing board of the Stock Exchange had not refused its permission.

Discovering at last that the debt of Wallace M. Waddell was worthless Brand charged it off his books as a bad debt in the taxable year of 1925. Of the $115,852.08, the amount of the debt, $20,200 represented an actual embezzlement or theft of funds of 0. J. Brand & Co., committed in 1919, and consequently deductible in that year as a loss as distinguished from a bad debt, under the provisions of the Tax Law (Cons. Laws, ch. 60). This was so treated by the Federal government which allowed this loss for the year 1919. Deducting this amount from the indebtedness leaves $95,652.08 which O. J. Brand claims as a deduction from his tax for the year 1925. He also claimed interest on this amount but now concedes that this item is not allowable.

The statute (Tax Law, sec. 360, subds. 4, 5 and 6) permits deductions of losses sustained during the taxable year,” and also of debts ascertained to be worthless and charged off within the taxable year ” (subd. 7). The State Tax Commission determined that Waddell’s overdrawn account was a loss in 1920 and not a debt ascertained to be worthless and charged off within the taxable year of 1925. The Appellate Division determined on the authority of People ex rel. Kohlman & Co. v. Law (239 N. Y. 346) that the relator had not presented the facts sufficiently to sustain his contention. As the testimony shows the facts as here recited this authority has no application. We are of the opinion that the Waddell indebtedness was not a loss but a bad debt within subdivision 7 of section 360. The authorities support this conclusion. (Lewellyn v. Electric Reduction Company, 275 U. S. 243; Royal Packing Co. v. Commissioner, 22 Fed. Rep. [2d] 536; Porter v. United States, 20 Fed. Rep. [2d] 935.)

Who is to determine what debts are worthless and who is to charge them off? Section 360 of the Tax Law says: In computing net income there shall be allowed as deductions * * * debts ascertained to be worthless and charged off within the taxable year.” (subd. 7.) The taxpayer or creditor is the one to determine the worth of the debt and to charge it off, if it be worthless, provided of course he acts in good faith. Waddell’s debt to Brand was not worthless merely because he gave demand notes and confessed judgment. Brand so far as this record shows was in hopes of collecting it. The correspondence in the record shows that Brand was putting pressure upon Waddell even to the extent of threatening to garnishee his salary. It was not until 1925 when an execution was returned unsatisfied, the governing board of the Stock Exchange had refused permission to Waddell to enter a stock brokerage firm and Brand was closing up his business affairs, that he charged this indebtedness off as worthless. As stated by the Tax Commission the facts are not disputed. Waddell’s debt, therefore, charged off in the tax year of 1925, came within this subdivision 7 of section 360 and was a proper item of deduction.

The interest on this amount of $95,652.08 is eliminated.

The three other notes given on December 22, 1920, by Waddell, aggregating about $24,000, were not made part of the income tax return or any amended return, and cannot be considered here as a deduction. The tax is figured upon the returns.

With the deduction which we have here allowed the tax which would have been payable by Oscar J. Brand for the year 1925 would be reduced to $53.55. This is the amount conceded by both sides to be due if the premises are correct. We modify the orders below by reducing the tax to this amount.

Through this opinion we have spoken of Oscar J. Brand as though he were living. Since the commencement of . this proceeding he has died and the Central Union Trust Company of New York and Henry S. Hooker have been substituted as executors of his last will.

The order of the Appellate Division and the determination of the State Tax Commissioners should be modified by reducing the tax to the sum of $53.55, and as modified affirmed, with costs to the appellants.

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

Ordered accordingly.


text:
    In the Matter of Timothy D. Poucher, as President of the Federation of Teachers’ Associations of the City of New York, Respondent, against Teachers’ Retirement Board, Appellant.
    (Argued November 19, 1928;
    decided November 27, 1928.)

      George P. Nicholson, Corporation Counsel (J. Joseph Lilly, Willard S. Allen and William E. C. Mayer of counsel), for appellant.
    The mere mailing of Mr. Memmott’s form of application for retirement was not a compliance with the requirements of subdivision K, paragraph 1 of section 1092 of the New York charter. (Rees v. Teachers’ Retirement Board, 274 N. Y. 372; Cockey v. Hurd, 4 J. & S. 42; Henry v. Francestown Soap Stone Co., 2 Fed. Rep. 78; C. P. I. Co. v. Ætna Ins. Co., 127 N. Y. 608; Matter of Meyer, 100 Misc. Rep. 587; Whipple v. Prudential Ins. Co., 222 N. Y. 39; Thorp v. Keokuk Coal Co., 48 N. Y. 253; Lesser v. De Loynes, 150 App. Div. 868; Evans v. People, 49 N. Y. 86; People v. Roper, 35 N. Y. 629; Pennie v. Reiss, 132 U. S. 464; People v. Board of Assessors of Brooklyn, 84 N. Y. 610; Peabody v. Satterlee, 166 N. Y. 174; Davis & Son, Ltd., v. Russian Transport & Ins. Co., 182 App. Div. 668.) Even though the paper which Mr. Memmott’s son deposited in the mail be regarded merely as a notice, its delivery to the Teachers’ Retirement Board after Mr. Memmott’s death did not accomplish his retirement. (Steinhardt v. Bingham, 182 N. Y. 326; McDermott v. Board of Police, 5 Abb. Pr. 422; Rathbun v. Acker, 18 Barb. 393; Matter of Sullivan, 31 Misc. Rep. 1; 53 App. Div. 637; U. S. v. Foote, 25 Fed. Cas. No. 15, 128, p. 1141; Matter of Farmers Supply Co., 170 Fed. Rep. 502; Jones v. Van Zandl, 13 Fed. Cas. No. 7,502, p. 1049; Lolly v. Cronin, 247 N. Y. 58.)

      J. M. Cohen for respondent.
    The contention that the application for retirement must be received by and filed with the Retirement Board prior to the death of the teacher is untenable. (McCluskey v. Cromwell, 11 N. Y. 593; Cathcart v. Fire Department, 26 N. Y. 529; Matter of Starbuck, 137 App. Div. 866; Matter of Second Avenue M. E. Church, 66 N. Y. 395; Campbell v. Hallihan, 46 Misc. Rep. 409; People v. Dalton, 158 N. Y. 175; Peck v. Baldwin, 58 Hun, 308; Assets Realization Co. v. Howard, 211 N. Y. 430; Bull v. N. Y. City R. R. Co., 192 N. Y. 361; Wiley v. Solvay Process Co., 215 N. Y. 584; Woollcott v. Schubert, 217 N. Y. 212.) Pension laws should be construed liberally and favorably toward applicants. (Walter v. Cotton, 60 U. S. 355; Y. C. N. Bank v. Carpenter, 119 N. Y. 550; Buckendorf v. Minneapolis Fire Dept. R. Assn., 112 Minn. 298; O’Dea v. Cook, 176 Cal. 659; Stevens v. Minneapolis F. D. R. Assn., 124 Minn. 381; Hurley v. Sykes, 69 Cal. App. 310.) Subdivision K is a continuing offer to the teacher who has had thirty-five or more years of service that he may retire at any time and receive the benefits specified by the Retirement Law. (Buckbee v. Board of Education, 115 App. Div. 366; 187 N. Y. 544; Stetson v. Board of Education, 218 N. Y. 301; Chesebrough v. Western Union Tel. Co., 76 Misc. Rep. 516; Tayloe v. Merchants Fire Ins. Co., 9 How. [U. S.] 402; Household Fire & Carriage Accident Ins. Co. v. Grant, 41 L. T. [N. S.] 301; Trevor v. Wood, 36 N. Y. 307; Vassar v. Camp, 11 N. Y. 441.) Upon the arrival of the application at the office of the Retirement Board, said application, pursuant to the provisions of subdivision K and also under the doctrine of “ relation back,” ipso facto retired Mr. Memmott as of the date specified in the application. (Williams v. Wheeler, 1 Barb. 50; Reese v. Teachers’ Retirement Board, 247 N. Y. 372; Bradford v. Avery, 16 Ida. 769; Perryman’s Case, 3 Coke, pt. 5, p. 85.) The application prescribed by subdivision K is merely a notification to the Retirement Board that Mr. Memmott had retired as of the time specified therein. (Fitzpatrick v. Greene, 181 N. Y. 308; Rees v. Teachers’ Retirement Board, 247 N. Y. 372.)
   Per Curiam.

' An application by a teacher for service retirement under Greater New York charter (Sec. 1092, subd. K) is not effective until delivered, and such delivery does not result from a mere deposit in the mails (Crown Point Iron Co. v. Ætna Insurance Co., 127 N. Y. 608; Peabody v. Satterlee, 166 N. Y. 174).

The order of the Appellate Division and that of the Special Term should be reversed and the application denied with costs in all courts.

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

Orders reversed, etc.


text:
    Erit Realty Corporation, Appellant, v. Sea Gate Association, Respondent.
    (Submitted October 1, 1928;
    decided November 27, 1928.)

      I. Maurice Wormser, Harry L. Kreeger and Charles Eno ‘for motion.

      Meier Steinbrink and Harold M. Kennedy opposed.
   Per Curiam.

The appellant mistakenly assumes that it possessed easements in the private streets of Sea Gate, enjoyable without restrictions other than those imposed by an obstructing fence, maintained for many years upon the easterly boundary line of the Sea Gate tract. Upon this assumption, it reasons that, when a section of the fence, formerly bounding the plaintiff’s land, was removed with the consent of the defendant, the owner of the streets, all restrictions impliedly imposed were released. The appellant has misconceived our opinion (249 N. Y. 52). In our judgment, the existence of the fence, prior to the creation of the easements, coupled with the practice of maintaining guards at the gates, was a circumstance inducing the conclusion that the easements were subordinated to a right, reserved by the owner of the streets, to adopt reasonable measures whereby lawful entrants might be admitted, while those without rights might be excluded. Doubtless the consent to the removal of the section, given by the defendant, debarred the defendant from longer maintaining the entire fence upon its old location. However, the easements claimed by the plaintiff were not thereby enlarged or freed from restriction. The right of the defendant to employ reasonable measures for the identification and admission of persons having rights and the exclusion of all others continued. The defendant, after the removal of the fence section, adopted the only means left open whereby the invasion of the tract by trespassing mobs could be prevented. It relocated its fences to exclude the plaintiff’s tract from the private inclosure of Sea Gate. That this resulted in a loss to the plaintiff’s tenants of direct access to the Sea Gate streets is a fact for which none but the plaintiff or its predecessor is to blame. Its predecessor needed not to have required the removal of a section of the old fence. He insisted upon so doing. The plaintiff was given the option to permit the re-erection of the fence as formerly maintained. It failed to exercise the option. Thus, either the plaintiff or its predecessor has been the author of the injuries complained of. The measures adopted by the defendant were reasonably necessary to secure itself against a street user by others than those having rights connected with the use of the lands to which the easements had originally been made appurtenant. We thought before, and now think, that the measures used by the defendant were rightfully employed to the end that their rights might be preserved.

The motion for reargument should be denied, without costs.

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

Motion denied.