author:
Conway, J.
      Fuld, J.

text:
    In the Matter of the Claim of Gertrude S. Ahern, Respondent, against South Buffalo Railway Company, Appellant. Workmen’s Compensation Board, Respondent.
    Argued December 4, 1951;
    decided March 13, 1952.

      Albert R. Connelly, Hoyt A. Moore, Jack W. Robbins and Joseph W. Marlow for appellant.
    I. Congress has pre-empted the entire field of liability in respect of injury to or the death of railroad employees while they are engaged in interstate commerce, and any action which interferes in that field must fail. (New York Central R. R. Co. v. Winfield, 244 U. S. 147; Erie R. R. Co. v. Winfield, 244 U. S. 170; United States v. South Buffalo R. Co., 69 F. Supp. 456, 333 U. S. 771; Matter of Wright v. New York Central R. R. Co., 288 N. Y. 719; Industrial Bd. of State of N. Y. v. New York Central R. R. Co., 317 U. S. 668; Matter of Baird v. New York Central R. R. Co., 299 N. Y. 213.) II. The decision of the Appellate Division is in conflict with decisions of the Court of Appeals that jurisdiction over the subject matter of a claim which is subject to the paramount provisions of Federal law may not be conferred upon the Workmen’s Compensation Board by waiver, consent or estoppel. (Scott v. McNeal, 154 U. S. 34; Matter of City of Buffalo, 139 N. Y. 422; Matter of Doey v. Howland Co., 224 N. Y. 30, 248 U. S. 574; Matter of Newham v. Chile Exploration Co., 232 N. Y. 37; Matter of National Sur. Co. [Laughlin], 283 N. Y. 68; Matter of Sampson v. Cole, 265 App. Div. 259.) III. Payment by the railway company of interlocutory awards did not, and constitutionally could not, constitute a waiver of its right to question the jurisdiction of the Workmen’s Compensation Board over the subject matter of the claim. (Fitzgerald v. Harbor Lighterage Co., 244 N. Y. 132; Brassel v. Electric Welding Co., 239 N. Y. 78; Matter of Kane v. Morse Dry Dock & Repair Co.,
      250 App. Div. 888, 277 N. Y. 533.) IV. The jurisdictional issue was adequately raised below. (Matter of Newham, v. Chile Exploration Co., 232 N. Y. 37.)

      Nathaniel L. Goldstein, Attorney-General (Daniel Polansky, Wendell P. Brown and Roy Wiedersum of counsel), for Workmen’s Compensation Board, respondent.
    I. The record before the referee at the time of the rendition of the award was devoid of any proof establishing that either decedent or the employer was engaged in interstate commerce. (Matter of McGuirk v. Harrington & Co., 262 App. Div. 980, 287 N. Y. 854; Matter of Foerg v. Sackett & Wilhelms Corp., 249 App. Div. 900; Matter of Mittiga v. United States Aluminum Co., 227 App. Div. 680; Matter of Waterman v. Jamaica Hosp., 262 App. Div. 978; Matter of Strand v. Harris Structural Steel Co., 234 App. Div. 341.) II. No substantial constitutional or Federal question is here involved. (Matter of Yeannelis v. Menides, 259 N. Y. 513; Valley S. S. Co. v. Wattawa, 244 U. S. 202; Matter of Kane v. Morse Dry Dock & Repair Co., 250 App. Div. 888, 277 N. Y. 533; Heagney v. Brooklyn Eastern Dist. Terminal, 190 F. 2d 976.) III. The employer has waived its right to raise the issues of jurisdiction and interstate commerce. It is estopped from raising these questions because of gross loches and conduct prejudicial to decedent’s widow. (Heagney v. Brooklyn Eastern Dist. Terminal, 190 F. 2d 976; Matter of Haglund v. Morse Dry Dock & Repair Co., 255 App. Div. 895; Matter of Kane v. Morse Dry Dock & Repair Co., 250 App. Div. 888, 277 N. Y. 533; Fitzgerald v. Harbor Lighterage Co., 244 N. Y. 132; Matter of Agne v. Morse Dry Dock & Repair Co., 255 App. Div. 897; Holland v. Atlantic Stevedoring Co., 210 App. Div. 129, 239 N. Y. 605; Matter of McEntee v. City of New York, 207 App. Div. 878, 237 N. Y. 523; Davis v. Wakelee, 156 U. S. 680; People v. Gowasky, 244 N. Y. 451; Vose v. Cockcroft, 44 N. Y. 415; Phyfe v. Eimer, 45 N. Y. 102.)
   Conway, J.

This is an appeal by the self-insured employer from an order of the Appellate Division of the Supreme Court, Third Department, entered November 27, 1950, unanimously affirming a decision made by the Workmen’s Compensation Board, pursuant to the provisions of the Workmen’s Compensatian Law, which denied the employer’s application for a review or rehearing of a referee’s decision allowing disability compensation to the widow of Thomas J. Ahern, the deceased employee, for a period up to and including the date of the employee’s death. The case was continued for the preparation of a death claim by the widow of the decedent.

A motion for permission to appeal to this court was denied upon the ground that an appeal therefrom to this court lies as of right. (302 N. Y. 877.)

In January, 1945, Thomas J. Ahern, the decedent, who had been employed as a switchman by the South Buffalo Railway Company (hereinafter called the Railway Company) at Lackawanna, New York, where the employer had its principal place of business, filed a claim for disability compensation with the board. The claim was based upon a coronary occlusion which the decedent suffered on July 1, 1944. It was the decedent’s claim that he was engaged in the regular course of his employment while attempting to throw a switch which had become stuck, and was compelled to use extra exertion which brought about the occlusion, with resultant disability. In its notice to the board dated February 1,1945, the Railway Company controverted the claim on the grounds of accident and causal relation, expressly reserving the right to controvert the claim for such other reasons as might later appear. Several hearings were held between March and July, 1945.

An award of compensation was rendered in favor of the decedent in September, 1945, for disability compensation in respect of temporary total disability from July 1,1944, to June 5, 1945. The case was continued for consideration of the extent and length of disability subsequent to June 5,1945.

The employer paid this initial award in the sum of $1,353.33.

A second award was made in favor of the decedent on January 10,1946, for the period from June 5,1945, to January 8,1946.

A third award was rendered on February 5, 1947, for the period from January 8,1946, to February 4,1947, and payments were directed to be continued by the employer.

The employer paid all of the awards and continued to pay compensation to December 20, 1948, in accordance with the order of the board.

The total amount of compensation paid by the employer to the decedent, for the four and one-half-year period amounted to the sum of $5,528.66.

On January 3,1949, the decedent died as a result of his heart condition. On January 18, 1949, a hearing was held before the referee at which the decedent’s widow was requested to file a death, claim. At that hearing, the question of the widow’s right to an award for disability compensation for the unpaid two-week period up to the time of decedent’s death arose. It was at that hearing that the employer, for the first time, challenged the jurisdiction of the board and thus sought to controvert the disability claim. The employer sought to raise the same objection to any claim for death benefits. The referee then rendered the award now on appeal for disability compensation for the final two-week period preceding death, to which reference has been made.

Thereafter in February, 1949, the Railway Company filed with the board an application for review or rehearing of the decision and award of the referee on the ground that at the time of the accident the decedent was employed by the Railway Company in interstate commerce; that under these circumstances the case came within the provisions of the Federal Employers ’ Liability Act; and that, therefore, the board was without jurisdiction of the claim. The board denied that application.

On appeal the Appellate Division confirmed the board’s determination.

On the oral argument before us counsel for the Railway Company stated that it is not seeking to recover the payments covering disability from July 1, 1944 (the date of the accident) until December 20,1948 (the date of the last payment made), but that it is attacking the award of two weeks compensation ($56) made to the decedent’s widow for the period from December 20, 1948, until the decedent’s death. The Railway Company contends that the determinations of the board and the Appellate Division were improper and should be reversed and that the proceeding should be remanded to the board for submission of proof as to jurisdiction of the board over the subject matter of the proceeding.

It is well established that Congress, by enacting the Federal Employers’ Liability Act, has pre-empted the entire field of liability in respect of personal injuries to railroad employees whose duties “ further ” or “ directly ” or “ closely * * * affect ” interstate commerce, and that no room exists for State regulation or action in that field. (Federal Employers’ Liability Act, § 1; U. S. Code, tit. 45, § 51; Matter of Baird v. New York Central R. R. Co., 299 N. Y. 213, 215-216; New York Central R. R. Co. v. Winfield, 244 U. S. 147, 152, 153; Matter of Wright v. New York Central R. R. Co., 288 N. Y. 719; Erie R. R. Co. v. Winfield, 244 U. S. 170, 172.) This is true even as to injuries occurring without fault, as to which the Federal Employers’ Liability Act provides no remedy. (New York Central R. R. Co. v. Winfield, supra.)

In Matter of Newham v. Chile Exploration Co. (232 N. Y. 37, 42), and Matter of Doey v. Howland Co. (224 N. Y. 30), we have had occasion to consider the question of waiver of lack of jurisdiction of the board.

In the Newham case (supra) we held that the fact that an employer had agreed to bring before the appellate courts of this State solely the question of the claimant’s employment did not operate as a waiver of his right to question the jurisdiction of the board thereafter; and in the Doey case (supra) we held that an employer, who had recognized the validity of a board award and made payments thereon, was not precluded from moving to vacate the award on the ground of lack of jurisdiction, where subsequent to the payments under such award the United States Supreme Court determined that the New York State Workmen’s Compensation Law was void insofar as it applied to persons engaged in maritime work, such as the employee. In this latter case we concluded that since the board lacked jurisdiction to render the award, any award in fact made by the board was a nullity and would be so treated at any time the parties saw fit to question it by either a direct or collateral attack.

The foregoing cases establish unequivocally that the State is powerless to invade the field of liability as to injuries to railroad employees engaged in interstate commerce. There is another avenue of approach to the problem which bears exploration, however.

The Federal Employers’ Liability Act (Act, § 5; U. S. Code, tit. 45, § 55), makes void any “ contract, rule, regulation, or device whatsoever ’ ’ to exempt a carrier from liability. Notwithstanding that provision, the right of the employee to dispose of a claim he may have against his employer by entering into a compromise of his dispute is a right of contract which Congress did not intend to impugn. The employee may adjust ‘ ‘ his own affairs in his own way after a cause of action has arisen in his favor, so long as such adjustment is fair and violates neither public policy nor some proper and enforceable statutory provision.” (Anderson v. Oregon Short Line R. Co., 47 Utah 614, 620.) That section forbids only contracts before injury exempting the master from liability and has no application to a contract of settlement. (Ballenger v. Southern Ry. Co., 106 S. C. 200, 203.) Thus, the Supreme Court of the United States has held that that provision does not operate to prevent an otherwise valid release of a claim by an individual engaged in interstate commerce since “ a release is not a device to exempt from liability but is a means of compromising a claimed liability and to that ex‘tent recognizing its possibility.” (Callen v. Pennsylvania R. Co., 332 U. S. 625, 631.) In the more recent case of Boyd v. Grand Trunk W. R. Co. (338 U. S. 263, 266), an agreement which sought to limit the venue of an action that might thereafter be brought by an employee under the Federal Employers’ Liability Act was held invalid as contravening the act, but the court reaffirmed the ruling in the Callen case characterizing the agreement therein as a “ full compromise enabling the parties to settle their dispute without litigation, which * * * did not contravene the Act ”.

Prior to the decision in the Callen case (supra) we held in Brassel v. Electric Welding Co. (239 N. Y. 78), that where an employee engaged in maritime work had accepted a final award of the New York State Workmen’s Compensation Board, his cause of action for damages growing out of the same injuries, though based upon maritime law, was extinguished. At page 80 we declared: We think the acceptance of the payment has destroyed the right of action. The question is not whether the award has the effect of a binding adjudication. We may assume that it is void, and that, at least while unpaid, it might have been set aside or disregarded (Matter of Doey v. Howland Co., Inc., 224 N. Y. 30). The question is whether a right of action has survived the collection of the award and the retention of the proceeds.”

On the other hand, in Larscy v. Hogan & Sons, Inc. (239 N. Y. 298, 301-302), where an employee entered into an agreement with his employer, the employee to receive and the employer to pay, a sum which might be awarded the employee as compensation for injuries received in an accident while engaged in maritime work, and thereafter received part payment, although no award had been made by the board, but refused to receive the balance and commenced an action to recover damages for negligence, we held that “ The agreement may have amounted to an accord but payment only would amount to a satisfaction. Until there were an accord and satisfaction of plaintiff’s claim by full and complete payment, the plaintiff was not barred from maintaining his action for negligence.” Of course, the cause of action for damages was held to be subject to a setoff to the extent of partial payment.

The Brassel and Larscy cases (supra), although decided in 1924 and 1925, represent the state of the law as it existed prior to 1922 when the injuries in those cases took place. At that time section 114 of the New York Workmen’s Compensation Law declared that the act applied to persons engaged in intrastate commerce and interstate or foreign commerce only to the extent that their mutual connection with intrastate work was clearly separable from interstate or foreign commerce. In 1922 (L. 1922, ch. 615), section 114 of the Compensation Law was renumbered section 113 and the following addition was made by the Legislature: “ awards according to the provisions of this chapter may be made by the board in respect of injuries subject to the admiralty or other federal laws in case the claimant, the employer and the insurance carrier waive their admiralty or interstate commerce rights and remedies, and the state insurance fund or other insurance carrier may assume liability for the payment of such awards under this chapter.”

In 1926, in Fitzgerald v. Harbor Lighterage Co. (244 N. Y. 132, Cardozo, J.), we considered, for the first time, the statutory addition to section 113. It is interesting to note that "we have not had occasion to consider that addition since the Fitzgerald case. There the plaintiff was injured on a vessel while working as a stevedore in navigable waters. He filed a claim for compensation for the resultant disability. The employer submitted to the jurisdiction of the board. Two awards were made and paid and the ease was placed “ on the final adjustment calendar ”. Thereafter the plaintiff commenced a suit for damages. We discussed the Brassel and Larscy cases (supra) and made the following observation (pp. 135, 136): “ The decision in Larscy v. Hogan & Sons, Inc., is decisive of the case at bar, unless an amendment of the statute, which took effect June 1, 1922 [the addition to § 113], after Larscy had been injured, has changed the previously existing rule. * * * We find it unnecessary to determine whether waiver in accordance with this section would supersede the remedy in admiralty. Construing our own statute, we hold that the waiver which it contemplates has never been announced.” (Emphasis supplied.) In construing the amendment to section 113 we wrote at page 137: “ In. the setting of .the context, it imports a concurrent evidence of intention having the force of an agreement to forego one set of remedies and abide by another. Until that intention is announced by all who must participate, a waiver by any one of them is inchoate and revocable.”

Here, it is clear, that we must construe the addition to section 113, in the words of Judge Cardozo, “ In the setting of the context, ’ ’ and it is equally clear that there is present in the facts already detailed “ a concurrent evidence of intention having the force of an agreement to forego one set of remedies and abide by another ”, and that such intention has been announced by all who must participate in such an agreement.

In the Report of the Joint Legislative Committee (N. Y. Legis. Doc., 1922, No. 55) which recommended the enactment of the above-quoted addition to the New York Workmen’s Compensation Law, the following statement appears (p. 12): “The proposed amendment will permit those who choose to elect to accept the provisions of our law to so elect, and the one to pay [and] the other to accept compensation thereunder.”

In the light of the wording of the addition to section 113 providing for waiver and the statement of legislative intent above quoted, it cannot be urged that the statute was intended simply to codify the rule that only a final award of the board, made and paid, precludes an individual from asserting his Federal rights. If that were so, section 113 would be meaningless. It provides that if the parties waive their Federal rights and remedies the board may act. If the payment of a final award be deemed the waiver, then there is nothing further for the board to do, and no reason for it to act. Obviously then, section 113 means to do more than codify the rule which is laid down in the early cases. To our mind, the language of the section and that of the legislative committee which recommended its enactment plainly indicates that is a permissive statute intended to empower the board to make awards of compensation if all of the parties elect to settle their dispute in that fashion, and forego their Federal rights and remedies. It is not to be imposed upon them in the absence of a joint waiver or agreement evidencing an intention to be bound by its terms. In thus construing that section, we have been guided by the familiar principle of our jurisprudence that the courts are reluctant, and it is only as a last resort, that they will strike down a solemn legislative enactment on the ground that it is unconstitutional. We believe that the interpretation above given to section 113 of our Workmen’s Compensation Law, is clearly the proper interpretation, and that as so construed section 113 does not conflict with the fundamental law of the land.

There is nothing contained in the Constitution of the United States which prohibits, nor has the United States Supreme Court held, that, after an accident, all interested parties may not dispose of their controversy as they themselves see fit, provided that the means whereby such dispute is settled or adjusted does not violate public policy. If all of the parties agree that the employer and carrier will pay and the employee will accept compensation, in the amounts and manner provided by the workmen’s compensation statute of a State, rather than resort to litigation and the State has permitted its compensation board to make awards under such circumstances, we can conceive of no valid objection to such an arrangement. If the parties agree on a sum of money to be paid in discharge of the claim for personal injuries, such agreement, if there has been no overreaching or fraud, does not violate any constitutional provision, Federal legislation or announced public policy. Neither is there any sound reason why the parties may not designate an impartial third person or group of persons to determine the amount to be paid in extinguishment of the claim. To our mind that is all that section 113 of the Workmen’s Compensation Law purports to accomplish.

Clearly the State of New York cannot circumvent by statute the ruling that Congress has pre-empted the entire field of liability in respect of personal injuries to persons engaged in interstate commerce and no room exists for State regulation in that field. (New York Central R. R. Co. v. Winfield, 244 U. S. 147, supra.) Thus if the Legislature were to declare arbitrarily that certain conduct constitutes a waiver or agreement to forego Federal rights and remedies where, as a matter of fact such conduct does not evidence a compromise agreement, the statute would be violative of the Federal Constitution. In Erie R. R. Co. v. Winfield (244 U. S. 170, supra), the United States Supreme Court construed such a statute. In that case the claimant, employed by a railroad engaged in both interstate and intrastate commerce, was struck by an engine and received injuries from which he died. No causal negligence was alleged or proved and both parties assumed there was none. The Trial Judge held that the employee ivas not employed in interstate commerce at the time of the accident and that compensation should be made to the widow under the State (New Jersey) statute. A judgment in her favor was entered, but reversed by the Supreme Court of the State on the ground that the employee was engaged in interstate commerce at the time of the accident and that the case was controlled by the Federal Employers’ Liability Act. That judgment was in turn reversed by the Court of Errors and Appeals on the ground that the Federal act was inapplicable in the absence of causal negligence. The United States Supreme Court declared that three questions were presented for decision: (1) whether the Federal act was regulative of the carrier’s liability even where no negligence is shown, (2) whether the facts established that the deceased was engaged in interstate commerce at the time of the accident, and (3) whether by reason of the state statute the carrier became bound contractually to make compensation in this instance, even though it came within the federal act.” (P. 172.)

The court answered the first two questions in the affirmative. In determining the third question the court pointed out that the New Jersey statute in question consisted of two parts. One part dealt with liability founded upon negligence and the other liability in the absence of negligence if the injury to the employee was an incident of the service in which he was employed. The latter part was described as “ elective ” and not to be applied unless the employer and employee, expressly or impliedly, agreed to be bound thereby and surrender their rights to any other form of compensation.

With respect to the means by which such agreement was to be manifested the statute provided that every contract of hiring “ shall be presumed to have been made ” with reference to that part of the statute and unless the contract or a notice from one party to the other contain an express statement in writing ” to the contrary, it “ shall be presumed ” that the parties “ have agreed to be bound ” by that part of the statute. (Emphasis supplied.) The court stated at pages 173-174: ‘ There was no express agreement in this instance and there is no basis for regarding the carrier as in any way bound by this part of the statute, save as it provides that an agreement to be bound by it shall be presumed in the absence of a declaration to the contrary. But such a presumption cannot be indulged here * * (Emphasis supplied.) The court held that it was beyond the power of a State to interfere with the operation of the Federal Employers’ Liability Act “ by putting the carriers and their employees to an election between its provisions .and those of a state statute or by imputing such an election to them by means of a statutory presumption.” (Emphasis supplied.)

It will be seen that the court did not declare that it is beyond the power of a State to enact a statute conferring upon the employer, employee and insurance carrier the privilege of compromising their dispute by submitting it to the board. Moreover, the language of the Supreme Court in the Erie case (supra) above quoted, indicates that the court would have reached a different result had the parties actually agreed to forego their Federal rights and remedies.

Section 113 of the New York Workmen’s Compensation Law, unlike the New Jersey statute, does not require the parties to choose between the Federal act and the State Workmen’s Compensation Law, nor does it impute such an election to them by means of a presumption as did the New Jersey statute. Section 113 merely offers the parties a means whereby they may compromise their. dispute, if they are mutually desirous of so doing.

No constitutional provision, Federal statute or Federal court holding has been called to our attention, which prohibits a State Legislature from giving effect to the lawful words and/or acts of the parties. The Legislature of the State of New York has said, through section 113 of the Workmen’s Compensation Law, that when the words and/or acts of the parties clearly establish that the parties desire to have the State Compensation Board award compensation rather than be compelled to litigate their differences, the board may award compensation. We do not think that any fault may be found with such a statute.

The United States Court of Appeals for the Second Circuit has recently considered, in the case of Heagney v. Brooklyn Eastern Dist. Terminal (190 F. 2d 976, certiorari denied 342 U. S. 920), section 113 of our Compensation Law, and the conclusion of that court that the section is valid and that the agreement of the parties to abide by the awards of the State board, plus payment of a substantial number of such awards, constitute a release or compromise of the parties’ rights under the Federal act, is in agreement with the position that we have outlined above.

In that case the plaintiff, a hostler working atop one of the defendant’s locomotives, brought an action in a Federal District Court pursuant to the provisions of the Federal Employers’ Liability Act, to recover damages for injuries sustained when he slipped on some grease and fell to the ground. Two years prior to the commencement of the suit the plaintiff had signed a statement for the employer describing the accident and said: “I have no intention of suing my employer but going to take voluntary compensation.” The employer began to pay compensation on February 17, 1947, at the maximum rate allowed by New York law. Thereafter, a clerk of the New York State Workmen’s Compensation Board informed the defendant that a hearing was to be held, the purpose of which was “ Question of Jurisdiction.” At the hearing the defendant’s representative' declared that it was waiving the question of jurisdiction and paying compensation. The referee then prepared a record entitled “ Notice of Decision and Award ”. Under the section designated Decision ” the record stated: “ Accident, notice, causal relation established. Case continued.” Several hearings were held thereafter and compensation payments were continued. On January 6, 1949, almost two years after the accident, the plaintiff notified the defendant that he was “ making claim under the federal law and had the case closed ‘ without prejudice ’ before the Board ” (p. 977). The employer asserted its willingness to make further compensation payments in accordance with the order of the State board. As a defense to the claim for damages the employer pleaded waiver under section 113 of the New York Compensation Law. The employer then moved for summary judgment dismissing plaintiff’s action on the ground that he had waived Federal remedies by the acceptance of awards of the board. The United States District Court for the Eastern District of New York granted the motion and dismissed the complaint. The United States Court of Appeals for the Second Circuit affirmed, holding that the employee had waived, under the provisions of section 113 of the New York Workmen’s Compensation Law, his Federal rights and remedies, and that section 113 was valid and binding upon the employee.

It is to be noted that in that case the employee expressly declared that he had no intention of suing his employer but wished to receive voluntary compensation. The employer, in turn, expressly declared that it was waiving the “ Question of Jurisdiction.” The parties submitted to the jurisdiction of the board and pursuant to the direction of that board the employer-tendered and the employee accepted a number of interlocutory awards.

It was the employee’s contention that “ waiver is insufficient; there must be an accord and satisfaction,’ meaning thereby a £ final award ’ by the Board duly paid and accepted.” (P. 978.)

The United States Court of Appeals concluded, to use the words of Judge Frank who dissented, that ££ His [plaintiff’s] agreement, plus payment by defendant of a substantial portion of those partial awards, constituted a release or £ full compromise ’ of whatever he might otherwise have recovered by suit under the federal statutes, and thus constituted a complete defense to plaintiff’s present suit.” (P. 980.)

Several of the statements of the majority of the court bear repetition here. At page 978 it was said: “When counsel came into the case and conducted its prosecution over many months, with obvious success signalized by increased or additional awards, only to raise this issue at a late date when the end of state compensation was apparently approaching, there should no longer be any possible doubt as to the waiver.” The court continued: “ Hence there was no genuine issue as to the fact of waiver, and the only question which remains is as to its validity.”

The court then considered the employee ?s claim that ‘ ‘ waiver is insufficient ”, and that “ there must be an 1 accord and satisfaction ’ ”. In discussing that question the court recognized the general rule that a claim is not discharged until the accord executory or agreement is satisfied or performed but pointed out that the phrase “ executory accord ” is a confusing one, and that the test to be applied in determining whether the parties have given up their Federal rights is as follows: ‘ ‘ What we must look for, therefore, is a fair compromise whereby the parties settle their dispute in substitution for the litigation permitted by the Federal Acts; there is no mystic significance to be accorded a ‘ satisfaction ’ upon some assumed ‘ final award. ’ When a state procedure accomplishes just that by agreement of all concerned, it should therefore be at least as valid as a formal release secured on payment of a few hundred dollars. And certainly no invidious distinction should be made so that only a purely temporary injury can be settled in this way, and that any permanent injury is excluded from settlement just because the state process requires continuing payments for the good of the injured employee.” (P. 979.)

In the Heagney case (supra), the employee — the one seeking to escape from his declared intention and to question jurisdiction of the board — made his agreement in words. In the case now before us the employer which made its agreement by conduct rather than declared intention, must be held to be equally bound since in the law there is no distinction between agreements made by words and those made by conduct. There was an equal disclosure of intention to settle the dispute through the board “ in substitution for the litigation permitted by the Federal Acts ”. It is elementary that there can be no agreement unless all of the parties involved intended to enter into one. Moreover, it is well-established contract law that in determining whether the parties possessed the necessary intention to contract, an objective test is generally to be applied. That means, simply, that the manifestation of a party’s intention rather than the actual or real intention is ordinarily controlling. Thus, in Hotchkiss v. National City Bank of New York (200 F. 287, 293, L. Hand, J., affd. 201 F. 664, affd. sub nom. National City Bank v. Hotchkiss, 231 U. S. 50), it was said: A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation, attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort.” (See, also, Amend v. Hurley, 293 N. Y. 587, 596; Porter v. Commercial Cas. Ins. Co., 292 N. Y. 176, 183-184.) An agreement by conduct does not differ from an express agreement, except in the manner by which its existence is established.

In the case now before us it is clear that there was no agreement between the parties when the initial hearings were held. At that time the employer had not agreed with the employee as to the amount the deceased was to receive, nor did it agree to have the board determine the sum to be paid. At the initial hearings held between March 6, 1945, and July 3, 1946, the employer indicated its unwillingness to have the board act by controverting the claim on the issues of accident and causal relation. Furthermore, we do not think that it may be said that the employee was then disposed to declare that, in filing a claim, he was prepared to abide by the ruling of the board, so as to be foreclosed from claiming his Federal rights should the board deny him compensation. However, it is clear that the conduct of the parties subsequent to the board’s ruling on the questions of accident and causal relation and its decree that compensation be paid, establishes, as conclusively as the evidence in the Heagney case (supra), that it was the mutual desire of the parties that the board, acting as an impartial third person, should determine the amount to be paid in discharge of the claim by the deceased.

On the oral argument counsel for the employer asserted that its conduct in denying accident and causal relation on the initial hearings establishes that the payments of compensation made by the employer thereafter were involuntary payments, and that its acquiescence or submission to the determinations of the board should not be construed as a joint waiver or accord and satisfaction.

The employer, in thus arguing, overlooks the fact that its other conduct belies its protestations of lack of intent and does evince the intention to enter into a compromise whereby the dispute in question might be settled without litigation: First: No appeal was ever taken by the employer from any of the awards made except that herein which has to do with the award covering the last two weeks of the decedent’s life, and second: From the outset the employer was represented by counsel and is chargeable with the knowledge that the board was powerless to require it to pay compensation unless it waived its Federal rights and remedies. The records in our court commencing with Ives v. South Buffalo Ry. Co. (201 N. Y. 271), and continuing through Herke v. South Buffalo Ry. Co. (227 N. Y. 618) and Keogh v. South Buffalo Ry. Co. (233 N. Y. 31) indicate clearly that the various counsel for the Railway Company, and thus the Railway Company, over the last forty years have been cognizant of the nature of its liability to its employees, and the remedies of the latter both under the Compensation Law and the Federal Employers’ Liability Act. Nevertheless, the employer made payments for four and one-half years in accordance with the directions of the board, choosing not to assert that the hoard lacked jurisdiction. The payments of awards by and silence of the employer is significant in this case. An individual’s silence may not be construed as the acceptance of an offer unless there is a duty to speak imposed on that person. However, we think that such a duty rested on the employer here. The Federal Employers’ Liability Act (Act, § 6; U. S. Code, tit. 45, § 56) provides that no action may be maintained under its terms “ unless commenced, within three years from the day the cause of action accrued.” The employer herein was aware that the employee desired to have the board determine the payments to be made in discharge of his claim rather than resort to litigation, and with this knowledge it continued to make payments beyond the time when the Statute of Limitations had run on the plaintiff’s claim for negligence under the Federal act — indeed, it has run as to the death claim, too. The employer cannot validly urge that it should be permitted to malee payments beyond the period of the Statute of Limitations, thus leading the employee to believe that it was equally agreeable to the employer that the board act, without having its silence construed as an acceptance of the employee’s offer to compromise the claim by having the amount of the claim fixed by the board. It may not be said that the employer would be estopped from asserting the Statute of Limitations on the ground that, by its conduct, it had misled the decedent and his widow to their detriment. The Federal and State courts have said that the Statute of Limitations in the Federal Employers’ Liability Act is a limitation on the right and that if the action is not commenced in time, the right, not merely the remedy, is lost. (See, e.g., American R. Co. of Porto Rico v. Coronas, 230 F. 545, 546; Taylor v. Southern Ry. Co., 6 F. Supp. 259, 260; Bement v. Grand Rapids & Ind. Ry. Co., 194 Mich. 64, 66-68; Gauthier v. Atchison T. & S. F. Ry. Co., 176 Wis. 245, 247-249.)

The employee’s intention to thus settle the dispute is equally clear. The employee filed his claim for workmen’s compensation six months after the accident. At the first hearing, held less than two months thereafter, he was represented by counsel. We must assume that at that time he was fully aware of any Federal rights that he might possess. Furthermore, he A\ras bound to know, whether in fact he did know, that the Ngay York Workmen’s Compensation Board was poAverless to award him compensation unless he waived his Federal rights and remedies. With this knoAvledge he Avas content to submit his claim to that board. At no time did the deceased indicate a desire to enforce his Federal rights. In the Heagney case (supra) it was said at page 978: 11 If there is ever to be any settlement of legal claims we feel that it must be in a case such as this where a claimant before an administrative board is adequately represented by counsel over a long period, during which the rights, potential and actual, of the client are perfectly obvipus to anyone with the slightest legal training, and where there is no suggestion of fraud or concealment from the lawyer on the part of the employer.”

That language is equally applicable here. When the acts of the decedent and the employer are viewed in the light of what reasonably intelligent persons would naturally have intended by them, we think the inference, fairly to be drawn, is that both the employer and employee intended that the board’s determinations be taken “ in substitution of the litigation permitted by the Federal Acts ”. Thai being true, we can conceive of no sound reason why the employer should be permitted to urge his Federal rights at this late date.

The Fitzgerald case (supra) is not to the contrary. It is essential to note that in that case (1) the employee asserted his lack of intention of waiving his Federal rights, (2) the employer in its answer declared that in making payments it had acted under mistake of fact and law and asked for repayment, and (3) there was no evidence that the carrier supplied the moneys with which the provisional awards were paid. Certainly those being the facts it could not be held that all of the parties had waived or agreed to forego their Federal rights and remedies. Here (1) the employee has indicated his willingness to forego his Federal rights and remedies, (2) the employer has not asked for repayment of the awards on the ground that it acted under mistake of fact and law in paying them and there is no question about the agreement of an insurance carrier since the employer is self-insured.

The Newham and Doey cases (supra) decided prior to the enactment of the addition to section 113, which held that the lack of jurisdiction in the board had not been waived, are distinguishable. In neither of those cases could it be said that the facts established that the parties with full knowledge of their Federal rights jointly waived or agreed to relinquish them and resort to compensation as a substitute for litigation and since then the statute has been amended.

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

Fuld, J.

(dissenting). The self-insured employer herein, South Buffalo Railway Company, contests the jurisdiction of the Workmen’s Compensation Board to make an award of compensation for the benefit of the injured employee, on the ground that at the time of the accident the employee was a railroad worker engaged in duties directly affecting interstate commerce, and that the exclusive remedy for any injuries sustained by him was an action under the Federal Employers’ Liability Act (Act, § 1; U. S. Code, tit. 45, § 51). The employer was denied an opportunity before the Board to present evidence in support of its jurisdictional objection, and the issue on this appeal is the validity of that objection on the facts asserted by the employer.

If the Railway Company had challenged the jurisdiction of the Board prior to the making of any award, that challenge, it is indisputable, would have been sustained, since, on the facts posited, the Federal Employers’ Liability Act provides the exclusive remedy. The Board’s jurisdiction in this case is being upheld by this court solely because of the fact that three prior temporary awards of compensation were made by the Board and paid by the employer without any jurisdictional objection being raised and that the employer continued to make payments of compensation — without the compulsion of any award — at the rate previously awarded until shortly before the hearing at which the final award of disability compensation now challenged was made. The employee died about two weeks after the employer ceased making payments.

On the strength of the employer’s acquiescence in, and payment of, the three temporary awards, and its continuation of payments subsequent to the third temporary award, the Workmen’s Compensation Board made a finding of fact that the employer had waived ” its jurisdictional objection and was further precluded from asserting such objection by reason of loches and estoppel. The Appellate Division similarly relied on the doctrines of waiver, loches and estoppel in affirming the Board’s determination.

It is not entirely clear whether the decision of this court is predicated on the theory of waiver or on the view that the facts establish a binding executory accord between the parties. Whichever be the basis of the decision, I am constrained to dissent.

We all agree that Congress, by enacting the Federal Employers’ Liability Act, pre-empted the field of liability for injuries to railroad employees whose duties are in furtherance of, or “ directly ” or “ closely * * * affect ” interstate commerce, to the exclusion of regulation by the states. (See New York Central R. R. Co. v. Winfield, 244 U. S. 147, 152, 153; Erie R. R. Co. v. Winfield, 244 U. S. 170, 172; Matter of Baird v. New York Central R. R. Co., 299 N. Y. 213, 215, 216; Matter of Wright v. New York Central R. R. Co., 288 N. Y. 719, certiorari denied 317 U. S. 668.) If the duties of the injured employee in this case were in furtherance of interstate commerce or directly or closely affected it, then obviously the state agency had no jurisdiction of the subject matter of his claim. (See Matter of Baird v. New York Central R. R. Co., supra, 299 N. Y. 213, 216; Matter of Newham v. Chile Exploration Co., 232 N. Y. 37, 42; Matter of Doey v. Howland Co., 224 N. Y. 30, 38, certiorari denied 248 U. S. 574.)

We are all further agreed upon the fundamental principle' that a determination made by a tribunal that is without jurisdiction of the subject matter is a nullity, and that the lack of jurisdiction cannot be waived or overcome by the consent or agreement of the parties. (See Matter of Doey v. Howland Co., supra, 224 N. Y. 30, 39; Matter of Newham v. Chile Exploration Co., supra, 232 N. Y. 37, 42; cf. Mitchell v. Maurer, 293 U. S. 237, 244; United States v. Corrick, 298 U. S. 435, 440.) In such circumstances, this court has held, ‘ ‘ it is elementary that no agreement, waiver or stipulation could confer upon the state of New York or its courts or commissions, jurisdiction which it does not and cannot possess.” (Matter of Newham v. Chile Exploration Co., supra, 232 N. Y. 37, 42.)

The court, however, reaches the result it does herein in reliance upon an amendment to section 113 of the Workmen’s Compensation Law enacted in 1922, subsequent to the Doey and Newham decisions (supra), authorizing awards to be made by the Workmen’s Compensation Board of this state in respect of injuries subject to the admiralty or other federal laws in case the claimant, the employer and the insurance carrier waive their admiralty or interstate commerce rights and remedies ”. The constitutionality of this statutory provision has, strangely enough, never been passed upon by this court.

In Fitzgerald v. Harbor Lighterage Co. (244 N. Y. 132), the only case in which we have heretofore had occasion to consider the amended statute, we found it unnecessary to determine whether waiver in accordance with this section [§ 113] would supersede the remedy in admirality ”, since we concluded that the facts did not establish a “ waiver ” of the kind required by the statute (244 N. Y., p. 136).

Considered purely as a matter of ‘ waiver ’ ’, I am unable to see how the mere declaration by the state legislature that the parties may “ waive ” the state’s lack of jurisdiction of the subject matter, can have any added force, when the acts of the parties, relied upon as constituting the waiver, would, in the absence of the statutory declaration, be entirely ineffectual to confer jurisdiction. If the state is excluded from the particular sphere of action, it follows that the state is powerless by its own fiat to confer jurisdiction on itself or on its tribunals.

The parties may, of course, enter into a valid agreement for a release or a compromise or an accord and satisfaction of the employee’s claims under the Federal Employers’ Liability Act. The binding effect of such an agreement would ordinarily be determined by our local law of contracts. The state would undoubtedly have power to legislate with respect to the requisites and binding effect of such an agreement, as it has, for example, done in the case of executory accords generally (Personal Property Law, §§ 33-a, 33-b). It is, however, clear that the facts in this case do not suffice to establish either a release or a compromise or an accord or satisfaction effectual under our common law of contracts or under section 33-a of the Personal Property Law.

The court is apparently interpreting section 113 as giving binding effect, as an executory accord, to an express or even implied agreement by the parties to accept any award that might thereafter he made by the state tribunal in lieu of a determination of the employee’s claim in accordance with the federal statute. I cannot subscribe to such a strained reading of the language of that section, which speaks, and unequivocally, only in terms of “ waiver ”, and which, indeed, has already been construed by this court as a statute relating to “ waiver ”. (See Fitzgerald v. Harbor Lighterage Co., supra, 244 N. Y. 132, 136-137.) Moreover, the effect of such an interpretation is so far-reaching as to permit any express or implied agreement between the parties to submit to the jurisdiction of the Board to serve as a device for circumventing the jurisdictional limitations on the powers of the state and its tribunals.

If we put aside section 113, it is plain that under our settled course of decision nothing short of an actual accord and satisfaction, evidenced either by express agreement of the parties or by the payment by the employer or insurance carrier, and the acceptance by the employee, of a final award of the Workmen’s Compensation Board would operate to extinguish the employee’s claims under the federal statute and thereby supplant the federal remedy. (See, e.g., Brassel v. Electric Welding Co., 239 N. Y. 78.) Thus, we have squarely held that the acceptance of an award not final is at most an accord, and not a satisfaction, with the result that the cause of action for damages continues unextinguished, though subject to a set off to the extent of partial payments ”. (Fitzgerald v. Harbor Lighterage Co., supra, 244 N. Y. 132, 135; see, also, Larscy v. Hogan & Sons, 239 N. Y. 298.)

Whether or not any special significance is to be assigned to section 113 in this regard, Fitzgerald v. Harbor Lighterage Co. (supra, 244 N. Y. 132) impresses me as decisive of the issue now presented. That case involved a stevedore who, injured while working on a vessel in navigable waters, filed a claim for disability compensation with the state compensation tribunal. Two awards were made and paid, covering a period of almost a year, and the case was then placed on the “ final adjustment calendar ”. Before a final award was made, the employee commenced a suit for damages under the federal act. The court, in an opinion written by Judge Cardozo, held that, since no final award had been made, the acceptance of the temporary awards constituted “ at most an accord, and not a satisfaction,” with the result that the employee’s claim under the federal act was not extinguished as a matter of contract law, and that there was likewise no sufficient basis for a finding of a waiver within section 113, even if that section were valid.

Section 33-a of the Personal Property Law, enacted in 1937 (L. 1937, ch. 77), subsequent to the Fitzgerald decision (supra), gives effect to an executory accord ££ to accept at some future time a stipulated performance in satisfaction or discharge in whole or in part of any present claim, cause of action, contract, obligation, or lease, or any mortgage or other security interest in personal or real property,” ££ provided the promise of the party against whom it is sought to enforce the accord is in writing and signed by such party or by his agent.” (Emphasis supplied.) Broad as its provisions are, however, that section is plainly not applicable in the present case, since there is no promise in writing signed by either of the parties involved, or by an agent, agreeing that payment of any award to be made by the Board shall be in satisfaction or discharge of the employee’s claims under the federal act.

In enacting section 33-a, the legislature altered the law with respect to executory accords only to the extent that such an accord will be recognized as valid if embodied in a writing-signed by the party against whom it is sought to be enforced, or his agent. Notwithstanding that explicit restriction, the court is apparently effecting an extension of the law beyond the limitations deliberately fixed by the legislature. If such a further change in the law is deemed desirable, the remedy lies with the legislature. Certainly, no basis is to be found in section 113 of the Workmen’s Compensation Law for imputing to the legislature an intention to extend the pertinent rule in this regard in the field of compensation claims by employees subject to the Federal Employers’ Liability Act.

Moreover, the court’s decision seems necessarily to be grounded on an implied finding as to the existence of an agreement between the parties in the nature of a binding executory accord. Even assuming that the court has the power — which I very much doubt (cf. Murray Co. v. Lidgerwood Mfg. Co., 241 N. Y. 455, 458; Shohfi v. Shohfi, 303 N. Y. 370; Matter of McGrinder v. Sullivan, 290 N. Y. 11; Cohen and Karger, Powers of the New York Court of Appeals [1952], pp. 496-497) — to imply such a finding, when the Board, which alone has jurisdiction to pass upon any issues of fact in proceedings before it, did not make any such finding, but based its decision solely on a finding of waiver, loches and estoppel on the part of the employer, the decision in essence means that the almost invariable consequence of acceptance and payment of a temporary award is that the court will thereupon imply an agreement to supplant the federal with the state remedy. All the factors which are stressed in the majority opinion as predicates for implying such an agreement in this case are in essence to be found in almost any case in which one or more temporary awards of compensation have been paid and accepted. In other words, the mere fact that even one temporary award has been paid and accepted without protest is apparently now to be invested with the force of a binding commitment by the parties to, submit themselves to the aegis of a tribunal completely without jurisdiction in contravention of the settled principle that neither waiver nor the consent or agreement of the parties can serve to confer jurisdiction where none exists.

I go further. Even if section 113 were to be given full effect in this case, the facts do not establish the requisite elements of the “ waiver ” envisaged by that section.

In Fitzgerald v. Harbor Lighterage Co. (supra, 244 N. Y. 132), as noted above, though the employee accepted payments under two temporary compensation awards covering a period of almost a year, and though no jurisdictional objection was voiced by any of the parties at the time of the making of such awards, this court held that section 113, even if valid, did not operate to extinguish the employee’s right of action under the federal act, since “ the waiver which it contemplates has never been announced.” Thus, the court (per Cardozo, J.), declared (pp. 136-137): “ Claimant, employer and insurance carrier must unite in foregoing their admiralty remedies before the statute will be operative, if its validity be assumed. * * * We put aside the question whether waiver by the claimant within the meaning of this section is sufficiently established by the election to file a el aim, unaccompanied by express disclaimer of admiralty remedies. Even if this be assumed, the defendant is not helped unless employer and Insurance carrier by some definitive expression have renounced their remedies as well. We see no basis for a finding that renunciation was effective when this action was begun. The employer had paid provisional or interlocutory awards for temporary disability. It may have been moved to this course by charity or by indifference or by dislike of litigation. Its acquiescence would not have barred it from appearing at the final hearing and contesting the claim for any sufficient cause including lack of jurisdiction. * * * In the setting of the context, it [§ 113] imports a concurrent evidence of intention having the force of an agreement to forego one set of remedies and abide by another. Until that intention is announced by all who must participate, a waiver by any one of them is inchoate and revocable.”

The mere payment and acceptance of temporary awards can no more be given the effect of a “ renunciation ” of the federal remedy herein, than they were in the Fitzgerald case (supra), notwithstanding the longer period covered by the payments in this case. The court’s opinion in Fitzgerald cannot be read as assigning controlling importance to any one of the factors urged by Judge Conway (supra, pp. 553-554), and to distinguish that case on the grounds suggested is to ignore its basic rationale that the mere payment of temporary awards, amounting to 1 ‘ acquiescence ”, does not constitute a waiver or a renunciation by the employer of the right to challenge the unauthorized assumption of jurisdiction by the Board.

The order of the Appellate Division and the decision of the Workmen’s Compensation Board should be reversed and the proceeding remitted to the Board for consideration of the objections raised by the employer to the Board’s jurisdiction over the subject matter of this claim.

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

Order affirmed.

      . This appeal does not involve any claim for death benefits, though I note that the employer did announce that it would contest the Board’s jurisdiction to entertain such a claim if any were filed by the employee’s widow. And I also note that the employer does not seek the return of any payments already made.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Charles C. O’Boyle et al., Appellants and Respondents, v. Edward C. Brenner, Respondent and Appellant.
    Argued January 15, 1952;
    decided March 13, 1952.

      Frederick M. Schlater for plaintiffs, appellants and respondents.
    I. Defendant must make restitution to the children of all that he obtained from his wife on the faith of his promise. (Matter of Buehler, 186 Misc. 306, 272 App. Div. 757; Foreman v. Foreman, 251 N. Y. 237; Sinclair v. Purdy, 235 N. Y. 245; Harrington v. Schiller, 231 N. Y. 278; Seaver v. Ransom, 224 N. Y. 233; Phalen v. United States Trust Co., 186 N. Y. 178; Trustees of Amherst Coll. v. Ritch, 151 N. Y. 282; Keystone Hardware Corp. v. Tague, 246 N. Y. 79; Ryan v. Dox, 34 N. Y. 307.) II. All carrying charges on the Ridgefield estate are chargeable to defendant as life tenant. (Stevens v. Melcher, 152 N. Y. 551; Matter of Albertson, 113 N. Y. 434; Clarke v. Clarke, 145 N. Y. 476; Matter of Tracy, 179 N. Y. 501; Matter of Appell, 199 App. Div. 580, 234 N. Y. 600; Matter of Eckenroth, 167 Misc. 632; Burchell v. Helvering, 115 F. 2d 681.)

      Menahem Stim, Francis J. Mahoney and Joseph D. Stim for defendant, respondent and appellant.
    I. Assuming that the contents of deceased’s notes were in the form found by the trial court, there is no clear and convincing evidence that defendant ever made any such promise. (Steere v. Steere, 5 Johns. Ch. 1; Aumack v. Jackson, 79 N. J. Eq. 599; Wallace v. Wallace, 158 App. Div. 273, 216 N. Y. 28; Tracy v. Danzinger, 253 App. Div. 418, 279 N. Y. 679; Strype v. Lewis, 352 Mo. 1004; Rutherford v. Carpenter, 202 N. Y. 532; Roberts v. Fulmer, 301 N. Y. 277.) II. The contents of the notes as found by the trial court were not proved by the “ clear and convincing evidence ” requisite for a constructive trust, especially where, as here, very slight differences in recollection make the difference between a “ solemn promise ” upon which parties may rely for legally binding action and a “ hope and expectation ”. (Updike v. Mace, 194 F. 1001.) III. There is no evidence or finding by the trial court of reliance on the alleged promise or intention to impose an enforcible obligation. (McCormick v. Grogan, L. R. 4 H. L. 82; Miller v. Hill, 64 Misc. 199, 137 App. Div. 378, 203 N. Y. 646; McCahill v. McCahill, 71 Hun 221.) IV. The absence of evidence as to “ clear and-convincing proof ” should have resulted in the complete reversal of the judgment and dismissal of the complaint by the Appellate Division.
   Per Curiam.

The record strongly supports the conclusion that decedent willed her estate to defendant with the understanding, and upon his agreement, that, upon his death, he would leave all the property which he received from her to her children, and, accordingly, the constructive trust declared and created by the Appellate Division was proper.

Nothing in the record, however, indicates that defendant was to have the ‘ ‘ free use ’ ’ of the Bidgefield estate and, that being so, the court at Special Term correctly charged defendant with the sum of $15,952.57, representing expenses in connection with that property, including those for its ordinary maintenance and upkeep, and with the amount of $743.76, constituting the real estate taxes for the years 1946 and 1947. Insofar, though, as the real estate taxes for the year 1945, amounting to $650.19, are concerned, they became a lien on the property on the assessment date, October 1, 1944 (1939 Supp. to Conn. Gen. Stats. [1930 rev.], § 337e, subd. [b]), which was prior to decedent’s death, and were properly charged against the corpus of the estate.

The judgment of the Appellate Division should be modified in accordance with the opinion herein, and, as so modified, affirmed, with costs to the plaintiffs.

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

Judgment accordingly.


text:
    In the Matter of A. Freeman Gray et al., Appellants, against Town Board of the Town of North Hempstead, Nassau County, et al., Respondents.
    Argued January 25, 1952;
    decided March 14, 1952.

      Charles Kingsley and Joseph P. Kissling for appellants.
    I. The town board did not have jurisdiction ■ of the subject matter of the petition at the time of issuing'the notice of public hearing. (Stillman v. City of Olean, 228 N. Y. 322; Suburban Elec. Light Co. v. Town of Hempstead, 38 App. Div. 355; Matter of Neuendorffer, 169 Misc. 233; Matter of Floyd-Jones v. Town Bd. of Oyster Bay, 249 N. Y. 398.) II. The town board determined contrary to fact that all the property and property owners within the proposed extension are benefited thereby. (People ex rel. Delaware, L. & W. R. R. Co. v. Wildy, 262 N. Y. 109.) III. The determination of the town board that all of the property and property owners benefited are included within the limitation of the proposed extension is contrary to the evidence and states a proposition which is an impossibility as a matter of law. (People ex rel. Delaware, L. & W. R. R. Co. v. Wildy, 262 N. Y. 109; Eastman Kodak Co. v. Richards, 123 Misc. 83.)

      James L. Dowsey, Jr., Town Attorney (Bertram B. Daiker of counsel), for respondents.
    Attempted revocation of signatures does not destroy the town board’s jurisdiction of the subject matter of the petition. (People ex rel. McGrath v. Weiss, 216 App. Div. 505, 245 N. Y. 518; Matter of Neuendorffer, 169 Misc. 233.)
   Per Curiam.

We hold that any signer of a petition described in section" 191 of the Town Law has a right, up to the time such petition is acted on by the town board by the publication or posting of a notice of hearing (Town Law, § 194), to withdraw and revoke his signature by filing with the town clerk a duly acknowledged statement of such withdrawal and revocation (see People ex rel. Irwin v. Sawyer, 52 N. Y. 296; People ex rel. Yawger v. Allen, 52 N. Y. 538). Nothing to the contrary was held in People ex rel. McGrath v. Weiss (216 App. Div. 505, affd. 245 N. Y. 518) since in that instance the attempted withdrawal of signatures was by a petition which was not presented to the town board until the time of its hearing, and thus a considerable time after the town board had taken jurisdiction of the original petition by publishing and posting notice of such hearing (see Matter of Floyd-Jones v. Town Bd. of Oyster Bay, 249 N. Y. 398, 405).

The orders should be reversed, with costs in all courts, and the determination of the town board annulled.

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

Orders reversed, etc.


author: Fuld, J. Dye, J.

text:
    Nathan Steinberg et al., Appellants and Respondents, v. Forest Hills Golf Range, Inc., et al., Respondents and Appellants.
    Submitted January 10, 1952;
    decided March 13, 1952.

      Harry J. Halperin and Samuel L. Scholer for plaintiffs, appellants and respondents.
    I. A public golf driving range is a sports arena and a place of public assembly within the meaning of the Business Rent Law. H. The agreement for termination of the lease on 180 days’ notice is enforcible under the Business Rent Law. (City Bank Farmers Trust Co. v. Rival Shoe Co., 198 Misc. 1002; Lask v. Spitzer, 102 N. Y. S. 2d 857; Wood v. Duff-Gordon, 222 N. Y. 88; Myers v. Hussenbuth, 32 Misc. 717; Du Bois & Son v. Goldsmith Bros., 273 App. Div. 306.) III. The increase in rent by the Appellate Division was correct as a matter of law. (Matter of Autumn Corp. [Lederman], 197 Misc. 12; Matter of Dworman [Milgrim-Christie], 270 App. Div. 568; Schack v. Handel, 271 App. Div. 1; Matter of Harborne Realty Corp. [Gottlieb], 275 App. Div. 828; Matter of Appleby [Walsh Paper Co.], 301 N. Y. 643; Chamberlain v. Feldman, 300 N. Y. 135; Matter of Zellner [Brooklyn Trust Co.], 299 N. Y. 243.) IV. The amount of rent fixed by the Appellate Division is not unreasonable.

      William R. Distasio for defendants, respondents and appellants.
    I. The Appellate Division erred in modifying the trial court’s decision by increasing the annual rent. (Schack v. Handel, 271 App. Div. 1; Matter of 76 Crown St. Corp [Carl & Sons], 271 App. Div. 1030; Matter of Barry Equity Corp. [Marcia Hat Co.], 276 App. Div. 685; Matter of Autumn Corp. [Lederman], 197 Misc. 12; Matter of Murphy [Blasio], 278 App. Div. 814; Matter of Fifth Madison Corp. [New York Tel. Co.], 297 N. Y. 155; 207-17 W. 25th St. Co. v. Blu-Strike Safety R. B. Co., 277 App. Div. 93.) II. Respondents’ occupancy of the premises herein is protected by the provisions of the Business Rent Law. (1481 Broadway Corp. v. Maiden Lane Ballroom, 277 App. Div. 870; Playland Holding Corp. v. Nunley, 186 Misc. 864; Hardwood Sawdust Co. v. Metro Export Packers, 187 Misc. 450; 259 Green St. Corp. v. Fehlhaber Pile Co., 186 Misc. 867.) III. The letter extending the time of cancellation is not an agreement to terminate respondents ’ occupancy under the Business Rent Law. (Stern v. Equitable Trust Co., 238 N. Y. 267; Morris Plan Corp. of America v. Freidus, 81 N. Y. S. 2d 574; Monahan Express Co. Realty Dept. v. Schneider Press, 192 Misc. 960; Beach v. Nixon, 9 N. Y. 35; Murray Realty Co. v. Regal Shoe Co., 265 N. Y. 332; Miller v. Levi, 44 N. Y. 489; Matter of 507 Madison Ave. Realty Co. v. Martin, 200 App. Div. 146, 233 N. Y. 683; Du Bois & Son v. Goldsmith Bros., 273 App. Div. 306.) IV. The Appellate Division’s modification of the trial court’s determination was erroneous.

      . Since the enactment of those amendments, the rent laws have been held to cover unimproved land used (1) as a parking lot (Matter of Appleby [Walsh Paper Co.], 301 N. Y. 643; Matter of Rose [Williams Auction Sales Corp.], 297 N. Y. 978); (2) for the sale of used cars (Matter of Rose [Williams Auction Sales Corp.], supra, 297 N. Y. 978; (3) for storage (259 Green St. Corp. v. Fehlhaber Pile Co., 186 Misc. 867); or (4) as a railroad siding (Hardwood Sawdust Co. v. Metro Export Packers, 187 Misc. 450).

   Fuld, J.

Plaintiffs own a plot of land, substantially unimproved, in the County of Queens, New York City, consisting of about ten acres, with an abandoned gas station on one corner. In 1947, one of plaintiffs’ predecessors in title (and we hereafter refer to plaintiffs or their predecessors as “ the landlord ”) leased the property to the individual defendant for use as a golf driving range at a rental of $4,000 a year. The lease, later assigned to defendant corporation, was for a five-year term, but contained a provision granting the landlord an option to cancel, upon 90 days’ notice, in the event, inter alla, of a bona fide sale. The tenant filled in and graded the land and has been using the area — and, with the landlord’s permission, the building on the gas station plot — as a golf range. In addition, the tenant sells golf equipment and refreshments and furnishes a golf professional to instruct its patrons in the techniques of the sport.

In October, 1948, at the tenant’s request, the provision permitting the landlord to cancel was amended, through an exchange of letters, by increasing the notice requirement to 180 days. About ten months later, such notice was given; the landlord informed the tenant that, having entered into a contract for the property’s sale, it elected to terminate the lease on February 22, 1950, and demanded possession of the premises as of that date. When the tenant failed to vacate, the landlord instituted the present action, seeking a judgment (1) declaring that the lease had been cancelled, and that it is entitled to possession of the property or, in the alternative — should the court conclude that the tenancy is within the orbit of the emergency rent legislation— (2) fixing a reasonable rent in accordance with the statute.

The court at Special Term held that, while the lease had been validly terminated through the exercise of the landlord’s option to cancel, the tenant had the right to continue in possession under and subject to the Business Rent Law (L. 1945, ch. 314, as amd.; McKinney’s Unconsol. Laws, § 8551 et seq.). And, proceeding to the alternative relief demanded, Special Term found that the fair value of the property — assessed for the year 1950-1951 at $137,650 — was $220,000 and that a net annual return of 3%% (i.e., $7,700) was reasonable under the circumstances in this case. Since the sole expense of operation was real estate taxes, which amounted to $4,501.15, the court fixed the reasonable rent at $12,201.15 a year. On appeal — by the landlord alone — the Appellate Division agreed with Special Term except as to the rent to be allowed. Concluding that the facts disclosed by the record failed to rebut1 ‘ the statutory presumption that a net annual return of 8 per centum is a reasonable return,” the Appellate Division set the' rental, based upon such 8% rate, at $22,101.15. (278 App. Div. 856, 857.) Both parties now appeal to this court from the judgment of modification — the landlord from so much thereof as affirms Special Term’s determination that the tenant’s possession is protected by the emergency rent legislation and the tenant from that portion which increases the rent from $12,201.15 to $22,101.15 a year.

Considering first the landlord’s appeal, we are initially called upon to decide whether the property in suit is ‘1 business space. ’ ’ Subdivision (a) of section 2 of the Business Rent Law (McKinney’s Unconsol. Laws, § 8552, subd. [a]) defines such space as All rental space * * * other than (1) commercial space * * * ; (2) dwelling space and meeting rooms in hotels, and dwelling space in rooming houses, apartment houses, dwelling and other housing accommodations; (3) piers, docks and wharf properties; and (4) places of public assembly.” There can be no question that unimproved or inadequately improved land falls within this broad definition. To dispel any doubt on the subject, the Joint Legislative Committee to Study Rents, in recommending the adoption of amendments to the Business and Commercial Rent Laws — amendments enacted into law by chapters 272 and 273 of the Laws of 1946 — declared that *1 It was the intention of the Committee to include parking lots and other outdoor space in the original enactment ” (N. Y. Legis. Doc., 1946, No. 46, p. 12).

The landlord does not, indeed, dispute that the emergency legislation applies to unimproved land, but it contends that the use of its plottage as a golf driving range brings it within the exception, “ place of public assembly.” That phrase is defined in subdivision (b) of section 2 of the Business Rent Law (McKinney’s Unconsol. Laws, § 8552, subd. [b]) as “ A theatre, motion picture house or theatre, sports arena or stadium, meeting room or exhibition hall” — and, since hitting a golf ball is widely regarded as a sport, decision herein hinges on the meaning to be given the words 1 ‘ sports arena or stadium ’ ’, as used in the statute. Quite obviously, a golf driving range is not a stadium,” for the basic element of seating facilities for spectators is totally absent. (Cf. Webster’s New International Dictionary [2d ed., 1948], p. 2450; 21 Encyclopedia Brittanica [1946], p. 272.) And, just as clearly, it is not an ££ arena ”. Generally defined as £ £ The central part of an amphitheatre, in which the combats or spectacular displays take place ’ ’ (1 Oxford English Dictionary [1933], p. 439) or as “ Any place of public contest or exertion ” (Webster’s New International Dictionary, op. cit., p. 145), the term necessarily implies an effort before spectators, and, where sports events are involved, the element of a public contest between competitors. That the word is so employed in the statute is apparent, not only from its use in the disjunctive with ££ stadium,” but also from the fact that it is part of the definition of £ £ place of public assembly. ’ ’ As our recent holding with respect to dance halls demonstrates, mere physical exertion in public does not constitute the locale a ££ place of public assembly.” (See 1481 Broadway Corp. v. Maiden Lane Ballroom, 302 N. Y. 850.)

Since, then, a golf driving range is not excepted from the statute’s coverage of ££ business space ”, defendant was privileged to remain in possession as a statutory tenant after the lease had been cancelled by the landlord (Business Rent Law, § 8; McKinney’s Unconsol. Laws, § 8558; see Du Bois & Son v. Goldsmith Bros., 273 App. Div. 306, 310) — unless there is merit to the landlord’s further argument that the tenant had previously entered into an agreement, binding upon him under subdivision (g) of section 8, to <£ terminate his occupancy ” at that time (McKinney’s Unconsol. Laws, § 8558, subd. [g]). Relied on as constituting the alleged agreement is the correspondence between the parties in .October, 1948, whereby the lease was amended to extend from 90 to 180 days the quantum of notice required to be given by the landlord upon exercising the option to cancel.

The effect of section 8 of the Business Bent Law, which in broad terms prohibits the eviction or dispossession of any rent-paying tenant of business space, “ notwithstanding that such tenant has no lease or that his lease or other rental agreement has expired or otherwise terminated ” and regardless of any contract, lease, agreement or obligation heretofore or hereafter entered into which is inconsistent with any of the provisions of this act,” is to neutralize and render unenforcible, during the period of the emergency, any agreement or covenant binding a tenant to surrender possession of the premises occupied by him. The exceptional provisions of subdivision (g) were enacted in 1949 (L. 1949, ch. 535) to validate specific types of agreements not entered into under the compulsion of the emergency. By virtue of the portion of that subdivision here relied upon, the anti-eviction provisions of the statute are not to apply if “ a tenant in possession under a lease not yet expired agrees in writing, by agreement executed not less than three months after the commencement of the term thereof, to terminate his occupancy at any time before or after expiration of the term of such lease. ’ ’

The letters which are said to satisfy the requirements of the quoted clause were written more than three months after the commencement of the term, but they will be searched in vain for an agreement or covenant by the tenant to “ terminate his occupancy ” at any time. The parties, it is clear from a perusal of the correspondence, intended to accomplish no more than an amendment of the option provision solely in regard to the period of notice to be given to effect the exercise of the option to cancel. And, as a matter of fact, the landlord expressly stipulated that in all other respects the terms, covenants and conditions of said lease shall remain unchanged.” Manifestly, any obligation on the part of the tenant to surrender possession stemmed from the covenants in the lease as originally executed —- covenants rendered unenforcible by section 8 — and not from any subsequently executed agreement by the tenant to terminate his occupancy. (Cf. City Bank Farmers Trust Co. v. Rival Shoe Co., 198 Misc. 1002; Monahan Express Co. Realty Dept. v. Schneider Press, 192 Misc. 960.) The remaining question presented for decision is whether the reasonable rental in this case should be computed on the basis of a net annual return of 3%%, as found at Special Term, or of 8%, as found by the Appellate Division. We are called upon to determine which of those findings more nearly accords with the weight of the evidence. (See People ex rel. MacCracken v. Miller, 291 N. Y. 55, 61.)

Our review of the evidence of the property’s present use and its other economically feasible uses persuades us that the Appellate Division was in error in reversing Special Term and adopting the statute’s presumptively reasonable rate of 8%. The legislature, by providing that A net annual return of eight per centum on the fair value of the entire property including the land shall be presumed to be a reasonable return” (§ 4, subd. 1; McKinney’s Unconsol. Laws, § 8554, subd. 1), has declared its finding as to the return to which a landlord is normally entitled. But that statute, merely creating a presumption, is not a mandate to employ an 8% factor in every case. Obviously, the owner of an unimproved parcel of land found to be valuable because of its availability for development cannot expect to receive the same rate of return upon its value as he would if it were appropriately improved. (See, e.g., Matter of Appleby [Walsh Paper Co.], 301 N. Y. 643; Matter of Rose [Williams Auction Sales Corp.], 297 N. Y. 978; Schack v. Handel, 271 App. Div. 1; Matter of Murphy [Blasio], 278 App. Div. 814; Matter of Autumn Corp. [Lederman], 197 Misc. 12; Matter of City Bank Farmers Trust Co. [Harvey’s Garages], 201 Misc. 31.)

To ascertain the “ fair value ” of an unimproved parcel of land (Business Rent Law, § 4; McKinney’s Unconsol. Laws, § 8554), it is proper to take into consideration the uses to which the land may be put and evaluate it in the light of its best economic use. If the highest profitable use of the land is as a site for a large housing development, the owner would neither be entitled nor expect to receive as high a return therefrom while leased and occupied as a golf driving range. An owner of inadequately improved property, whose immediate purpose is to demolish the building or other rental area ” and to construct “ a new building,” is not prevented by the emergency rent legislation from making such a utilization of his property. (Business Rent Law, § 8, subd. [c]; McKinney’s Unconsol. Laws, § 8558, subd. [c]; Commercial Rent Law, § 8, subd. [c]; L. 1945, ch. 3, as amd.; McKinney’s Unconsol Laws, § 8528, subd. [c].) In such, circumstances, the statutory tenant in occupancy of the property may be subject to eviction. However, while in possession, he may not be required, on the strength of the presumption alone, to pay a rental which will yield an 8% return on a land value based upon its highest economic use.

In the case before us, the land is not wholly unimproved, but the testimony is emphatic — from the expert witness for the landlord himself — that the present use of the property as a golf range was not its best use and that it was suitable for development by the erection of ‘ ‘ high-class apartments ’ ’ similar to those being constructed in the area. The court at Special Term was warranted, on the basis of such evidence, in concluding that the statute’s presumption had been rebutted.

To urge that the rent fixed at Special Term must, nevertheless, be stamped as not reasonable because the aggregate of the taxes and the mortgage interest exceed the rental allowed, not only misconceives the objectives of the rent control legislation, but actually disregards its express provision directing that amortization or interest paid or accrued on any incumbrances ” should be excluded in the determination of “ a reasonable rent ” (Business Rent Law, § 4, subd. 1; McKinney’s Unconsol. Laws, § 8554, subd. 1).

For upwards of fifteen years, the subject property remained vacant and unrented, producing no income whatsoever for its owner, who, in common with other owners of unimproved property, had to pay real estate taxes out of pocket. When finally rented in 1947 — but two years before this proceeding was instituted — landlord and tenant agreed upon a rent of $4,000 a year, a figure some $8,000 less than that allowed at Special Term. When the present owner purchased the property, he knew the facts — that the property was unimproved and that it produced a rental of $4,000 a year. However, he bought the plot for $220,000, of which" $40,000 was paid in cash, the balance being represented by a purchase-money mortgage of $180,000, upon which interest amounted to $8,100 a year. If the amount of interest payable on a mortgage were permitted to determine the reasonableness of the return, a property mortgaged up to its full value, reducing to zero the investment by the owner, would produce the highest rent — a manifestly absurd result.

The emergency rent laws were enacted to control rent, to protect tenants and to assure to landlords a return that was — having in mind the type and character of the property and all other relevant circumstances — reasonable, and not to guarantee to investors in real estate a net annual return or to indemnify any particular landlord against loss on his investment or speculation. The emergency rent legislation was never designed to give to a landlord a higher return under rent control than he could have obtained in its absence and in a free market.

The judgment of the Appellate Division should be modified by reducing the reasonable rental from $22,101.15 to $12,201.15 a year, and, except as so modified, affirmed, with costs to defendants in this court and in the Appellate Division.

Dye, J.

(dissenting). We all agree that since the subject property has been “ filled in and graded ” and is being used as a “ golf driving range ”, it comes within the meaning of the Emergency Rent Laws and that the defendants-respondents are entitled to continue in possession as a statutory tenant during the emergency (Commercial Rent Law, § 1; L. 1945, ch. 3, as amd.; McKinney’s Unconsol. Laws, § 8521 et seq.; Business Rent Law, § 1; L. 1945, ch. 314, as amd.; McKinney’s Unconsol. Laws, § 8551 et seq.). We disagree as to what constitutes the reasonable rent to be charged.

When the Legislature authorized a holdover tenant to continue in possession of the premises as a statutory tenant during the emergency, it also contemplated that the holdover tenant should pay a reasonable rent. When circumstances in a given case require the fixing of a reasonable rent the statute provides that ‘‘ A net annual return of eight per centum- on the fair value of the entire property including the land shall be presumed to be a reasonable return.” (Commercial Rent Law, § 4, subd. 1; McKinney’s Unconsol. Laws, § 8524, subd. 1; Business Rent Law, § 4, subd. 1; McKinney’s Unconsol. Laws, § 8554, subd. 1.)

Here, on conflicting proof, the fair value of the property has been fixed at $220,000 which value having been affirmed in the Appellate Division is conclusive here. A majority here are about to adopt the rental as fixed at Special Term as the reasonable rent to be charged, viz., 3%% of the fair value plus taxes which will yield a return of $12,201.15, although the proof shows that the interest on the mortgage and the taxes aloné amount to $12,601.15 resulting in an annual cash loss to the owner of $400 without taking into consideration the mortgage amortization payments of $10,000 per year. The Legislature, as we see it, never contemplated such a result and to avoid its happening presumed that a net annual return of 8% on the fair value including the land was a reasonable return.

It seems manifestly inconsistent to deal with the subject property as business space in order to justify a holdover tenancy and at the same time reject the statutory presumption on the theory that it is inapplicable because the property is not being devoted to its best available use.

Best available use is an element of value and as we view the record, such use, as well as the actual use, was taken into consideration in fixing the fair value of the property. Here no proof was presented by the defendants relating to the rental value of the premises, such as proof of rental value of similar space, receipts by the tenant from the operation of the activities at the premises, nor indeed any proof whatsoever tending to rebut the presumption which the statute establishes, as was done in Matter of Appleby (Walsh Paper Co.) (301 N. Y. 643), and Matter of Rose (Williams Auction Sales Corp.) (297 N. Y. 978). Thus the statutory presumption - as to reasonable return on the fair value as found remains wholly unrebutted. The rental of $4,000, fixed in a lease made in 1947, with a 90-day (later increased to 180-day) termination clause, and under altogether different conditions, cannot outweigh the statutory presumption. The determination of Special Term gives the landlord no reasonable return, indeed no return at all, but a deficit. In the absence of rebutting proof well-recognized principles require that the legislative presumption be given effect. We may not assume that the legislative pronouncement on this subject was meaningless. When so viewed, the rental return as fixed by the Appellate Division at a statutory rate of 8% of the fair value of the property plus taxes is the reasonable rent.

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

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

Judgment accordingly. [See 303 N. Y. 1006.]

      . Section 4 in part reads as follows: “ In the determination of the amount of such reasonable rent: (a) due consideration shall be given to the cost of maintenance and operation of the entire property (including land and building or other rental area in which such business space is located) including amount paid for taxes assessed against such property, and to the kind, quality and quantity of services furnished, but excluding amortization or interest paid or accrued on any incumbrances thereon”. (Emphasis supplied,)


author: Froessel, J.

text:
    Elmore A. G. Chesher, Respondent, v. United States Casualty Company, Appellant.
    Argued January 18, 1952;
    decided March 14, 1952.

      Stephen V. Lines and John C. Osborn for appellant.
    I. Mc-Perran is not, by the terms of the policies of insurance issued to Central States Transportation Company, an ‘ ‘ insured ’ ’ of defendant United States Casualty Company. (Wallace v. Smith, 238 App. Div. 599.) II. The definition of the word “ owner ” in the Vehicle and Traffic Law is not applicable to the policy of insurance. (Vehicle and Traffic Law, § 2, subd. 18; Kuhn v. Auto Cab Mut. Ind. Co., 244 App. Div. 272, 270 N. Y. 587.). I'll. The New York financial responsibility law is not applicable to the policy of insurance in the case at bar. (Cohen v. Metropolitan Cas. Ins. Co. of N. Y., 233 App. Div. 340.)

      Charles P. Maloney for respondent. I. McPerran is an insured under the policies issued by defendant.

      (Gridley v. Home Ins. Co., 226 App. Div. 596, 254 N. Y. 635; Young v. Masci, 289 U. S. 253; Stonborough v. Preferred Accident Ins. Co., 180 Misc. 339.) II. McPerran is an insured by virtue of applicability of the New York financial responsibility law to the policy sued on. (Cohen v. Metropolitan Cas. Ins. Co. of N. Y., 233 App. Div. 340; Franklin v. John Hancock Mut. Life Ins. Co., 298 N. Y. 81.) III. The conflict or ambiguity in the policy provisions must be resolved against defendant. (Killian v. Metropolitan Life Ins. Co., 251 N. Y. 44; Kocak v. Metropolitan Life Ins. Co., 237 App. Div. 780, 263 N. Y. 518; Gridley v. Home Ins. Co., 226 App. Div. 596, 254 N. Y. 635; Stonborough v. Preferred Accident Ins. Co., 180 Misc. 339.)
   Froessel, J.

In an action in the United States District Court for the Western District of New York, plaintiff recovered a judgment against one McPerran, a citizen of Ohio, for damages arising out of an automobile accident which occurred in the State of New York. At the time of the accident the truck was being operated by McPerran, but in the business of Central States Transportation Co., Inc., a Massachusetts corporation, pursuant to a one-year lease from McPerran, the registered owner of the truck. Central States was originally named as a party defendant in the Federal court action, but service of process on it was subsequently vacated.

Defendant herein is the insurer of Central States, and, the judgment against McFerran being unsatisfied, plaintiff brought this action under paragraph (b) of subdivision 1 of section 167 of the Insurance Law on the theory that he was an insured under said policy at the time of the accident. The answer, in addition to admissions and denials, sets up two defenses: (1) that its policy CAL-308767 was limited in its application to the State of Massachusetts, and (2) that, while its policy AP-28683 0 was applicable to the State of New York, defendant owed no duty to defend or indemnify McFerran, since he was not an insured thereunder. At Special Term plaintiff moved for summary judgment under rule 113 of the Rules of Civil Practice, and for judgment on the pleadings. Summary judgment was granted and unanimously affirmed in the Appellate Division.

We are of the opinion that the defenses have merit. Inasmuch as policy CAL-308767 is limited to the “ ways oe the Commonwealth oe Massachusetts ”, it has no application in the State of New York. Policy AP-286810, applicable in New York, provides as follows: “ definition oe insured.’ The unqualified word insured ’ wherever used * * * includes the named insured and, except where specifically stated to the contrary, also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is with the permission of the named insured.” There was attached to the policy, however, a Hired Automobiles ” indorsement, which extended the policy coverage to hired automobiles used under contract in behalf of the named insured ”, and provided as follows: “ The Definition of 1 Insured ’ agreement of the policy applies to the insurance afforded under this endorsement except to the owner of the automobile or any employee of such owner.” (Emphasis supplied.)

The basic question before us is whether defendant may exclude and has legally excluded the lessor (McFerran) from coverage to defend and indemnify. In our view, the indorsement quite clearly excludes as an insured the owner of a hired automobile and would be so understood by the average businessman. There is no ambiguity but merely an express variation of the provision contained in the body of the policy. We disagree with the courts below that the “ Hired Automobiles ” indorsement was not meant to remove from coverage an owner who had transferred to another the ordinary attributes of ownership ” (200 Misc. 92, 94), since then Central States as owner by way of such transfer would not be covered under this indorsement, though it is the named insured, has procured the policy for its benefit, and paid the premium. As the policy is written, it did not insure McFerran at the time of the accident.

It is said that certain statutory provisions (Vehicle and Traffic Law, § 2, subd. 18; §§ 59, 94-q; Public Service Law, § 63-r) require the policy to be read as insuring McFerran. As we see it, these statutes dictate no other or different result than do the express provisions of the policy. Section 59 of the Vehicle and Traffic Law imposes liability upon the owner for the negligence of the operator of a motor vehicle as provided in said statute, and requires owners’ insurance policies to contain a provision for indemnity against the liability provided therein. Under subdivision 18 of section 2, Central States as lessee may be deemed such an owner, and amenable to service of process under section 52. It does not follow, however, that the benefit of the policy inures directly to the operator of the vehicle as an insured, in order to support an action permitted under section 167 of the Insurance Law, particularly where the policy provides otherwise. Such liability may only be fixed in an action against Central States (Kuhn v. Auto Cab Mut. Ind. Co., 244 App. Div. 272, affd. 270 N. Y. 587).

Nor do the provisions of the Public Service Law and the Safety-Responsibility Act (Vehicle and Traffic Law, art. 6-A) require that the policy in suit be construed as insuring McFerran. The policy provides that the insured thereunder “ shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable * * ” to the extent of the coverage and limits of liability required by such law ” (emphasis supplied). Section 63-r of the Public Service Law merely requires that the carrier shall furnish proof of responsibility by way of policies of insurance in such reasonable amount as the commission may require, conditioned to pay * * * any final judgment recovered against such motor carrier ” (emphasis supplied) for negligent operation of vehicles resulting in injury or damages. Moreover, the major provisions of article 6-A of the Vehicle and Traffic Law are not applicable to vehicles operated under permits or certificates issued under the Public Service Law (Vehicle and Traffic Law, § 94-ff). Thus the financial responsibility law is not applicable here, and the Public Service Law does not require that financial responsibility be established for other than a judgment against the carrier itself.

If there were any doubt about this, such doubt would be dispelled by other statutory provisions. Section 94-ee of the Vehicle and Traffic Law does apply to vehicles operated under a certificate of convenience and necessity (Vehicle and Traffic Law, § 94-ff); in that section (94-ee), the word “ owner ” is defined, for purposes of that article, as follows: “ (g) Owner. A person who holds the legal title of a motor vehicle * * * [or a conditional vendee or a mortgagor in possession] ”. Central States was not an owner within the meaning of that definition. Moreover, although section 94-q (subd. [b], par. [2]) does require that an owner’s policy of liability insurance must insure besides the person named therein any other person operating the vehicle with permission, respondent has overlooked section 94-t (subd. [b]), which provides: “ This article shall not be held to apply to or affect policies insuring solely the insured named in the policy against liability resulting from the maintenance, or use by persons in the insured’s employ or in his behalf of motor vehicles not owned by the insured. ’ ’

It therefore appears that the policy as written is in complete harmony with the law and policy of this State. There is no valid reason for distorting its plain words, by a strained construction, to mean other than what they simply say.

The courts below have held that there is no dispute concerning the provisions of these policies or the facts involved in the relationship between McFerran and Central States,, and that the liability of defendant to plaintiff therefore resolves itself into a question of law. Inasmuch as rule 113 of the Rules of Civil Practice provides that summary judgment may be awarded, to an opposing party even in the absence of any cross motion therefor, and we may do so under section 584 of the Civil Practice Act, the judgments should be .reversed and summary judgment granted in favor of defendant, with costs in all courts.

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

Judgments reversed, etc.