text:
    New York Life Insurance Company, Appellant, v. Fulton Development Corporation et al., Defendants, and The Klee Corporation, Respondent.
    (Argued October 3, 1934;
    decided November 20, 1934.)

      William F. Columbus and Harry H. Bottome for appellant.

      Francis D. Higson for respondent.
   Crane, J.

The plaintiff, appellant, is the owner and holder of a duly recorded first mortgage, and the defendant, respondent, is the owner and holder of a second mortgage on premises located at 1950 Andrews avenue, The Bronx, New York city, owned by the defendant, Fulton Development Corporation. The balance unpaid upon the first mortgage is $951,500. The mortgage contained the usual clause assigning the rents of the mortgaged premises to the mortgagee as further security in the event of any default. Prior to January 13, 1932, the respondent had instituted an action to foreclose its second mortgage and had obtained the appointment of a receiver of the rents and profits. On the same day the owner and respondent entered into a written agreement whereby the respondent agreed to forthwith dismiss the foreclosure action then pending on its second mortgage, obtain the discharge of the receiver, waive all its rights to the receivership fund and disburse it as rents collected under the agreement, and enter into possession of the property and manage and operate it under the terms of the said possession agreement.

On the date of the execution of said agreement the owner was in default to the appellant under its first mortgage, and the- respondent had notice and knowledge thereof. On July 27, 1933, the following defaults existed under the first mortgage: Installments of principal in the sum of $9,500 each which became due and payable April 1, 1932, October 1, 1932, and April 1, 1933, respectively; balance of installment of interest in the sum of $20,166.25 which became due and payable April 1, 1933; balance of taxes for year 1932 and the first half of taxes for the year 1933.

On that day in July an order was made and entered in this action of foreclosure appointing a receiver of the rents for the benefit of the plaintiff, appellant, and the receiver qualified thereunder. The order appointing the receiver provided, among other things, that “ said receiver be and he hereby is directed to demand, collect and receive from the tenant or tenants in possession of said premises * * * all the rents thereof now due and unpaid or hereafter to become due.” There remained arrears of rent amounting to $4,915.95, which were due and unpaid at the time of the appointment of this receiver, that is, they were previously due but had not been collected or reduced to possession by the second mortgagee in possession. Who is entitled to this sum of money — the receiver under the first mortgage appointed July 27, 1933, or the second mortgagee in possession under agreement dated January 13, 1932? This is the question in substance and meaning certified to us by the Appellate Division.

There are certain fundamental principles which are well recognized regarding the rights and privileges of mortgagees in foreclosure proceedings. An owner of property is entitled to the rents until there is a default under the mortgage, then the mortgagee has an equitable claim to the rents that are unpaid. (Lofsky v. Maujer, 3 Sandf. Ch. 69; Rider v. Bagley, 84 N. Y. 461, 465.) When a receiver of the rents has been appointed in the foreclosure proceeding because of a default in the payment of principal or interest, he has a right not only to the rents that become due after bis appointment but also to those that have accrued prior thereto and which have not been paid. (Lofsky v. Maujer, 3 Sandf. Ch. 69; Wyckoff v. Scofield, 98 N. Y. 475, 478.) In the latter case this court said: “ The lien of the mortgagee thereon dates only from the appointment of the receiver, and his right to collect rents extends only to such as are unpaid at the time of his appointment.” (See, also, Donlon & Miller Mfg. Co. v. Cannella, 89 Hun, 21.)

Do these rights and privileges come in conflict with similar rights and privileges possessed by a receiver first appointed under a junior mortgage? It has been settled that a receiver appointed in the action to foreclose a junior mortgage may keep and apply to that mortgage debt the rents which he has actually collected, as against a receiver subsequently appointed, in an action to foreclose a senior mortgage. (Sullivan v. Rosson, 223 N.Y. 217; Abrahams v. Berkowitz, 146 App. Div. 563; Madison Trust Co. v. Axt, 146 App. Div. 121.) The numerous cases establishing this right in the receiver under the junior mortgage all refer to the money or rents which he has actually reduced to possession and collected. When it comes to rents which are due but not collected he too has a lien upon them as security for the second or junior mortgage, but this hen on the rents, like the lien of' the junior mortgage, is subject to the hen of the senior mortgage, and the interest due thereon, which also includes the hen upon unpaid rents.

When the senior mortgagee has a receiver appointed, the hen of the senior mortgage immediately attaches not only to future rents but also to past rents due and uncollected. As between the equitable hens of the senior and the junior mortgagees that of the senior is superior. For this reason the receiver appointed in the plaintiff’s foreclosure action became entitled on July 27, 1933, to the rents due and uncollected at that time. (Harris v. Taylor, 35 App. Div. 462; Wiggins v. Freeman, 174 App. Div. 304; 357 East Seventy-sixth Street Corp. v. Knickerbocker Ice Co., 263 N. Y. 63.)

A mortgagor owner may collect the rents and apply them to his own use because the equitable hen given by a mortgage does not come into force and effect until the appointment of a receiver or the entry into possession of the mortgagee. (Sullivan v. Rosson, supra, and Wyckoff v. Scofield, supra.) However, the receiver appointed in foreclosure may be authorized to collect such rents as have theretofore accrued but not yet come to the hands of the owner of the equity of redemption. Whether, as claimed by the respondent in this case, the owner could assign rents to become due to third parties so as to deprive the mortgagee of this equitable hen upon uncollected rents need not be taken up at this time. (Harris v. Taylor, supra, as explained in Wiggins v. Freeman, supra, may bear upon the subject.) We have no such question here.

We have touched upon this subject as though the receiver under this junior mortgage remained in possession. The case for the respondent is not quite so strong. The receiver was discharged from possession and the order appointing him vacated on the day that the owner and the second mortgagee entered into the possession agreement, which was January 13, 1932. Thereafter the second mortgagee collected the rents, pursuant to the agreement and as agent of the owner, not by virtue of the law of receiverships or of mortgagees in possession. (Osinoff v. Gert Realty Corp., 260 N. Y. 36.) This agreement gave the possession of the property to the mortgagee to collect the rents, pay for repairs and necessary expenses, turning the balance over to the tax collector and the first mortgagee for installments due upon the first mortgage. This agreement was made, as above stated, January 13, 1932. An installment became due two and a half months thereafter, April 1, 1932, another one October 1, 1932, and still another April 1, 1933. These, it is said, have not been paid, together with a large amount of interest. The uncollected rents run up to July 27, 1933. If the respondent, the second mortgagee, had collected this unpaid rent, it could not keep it, but would be obliged to pay it over in accordance with the agreement, that is, after deducting expenses and taxes, give it to the first mortgagee on the installments due.

The question came into the courts on a motion of the respondent, The Klee Corporation, second mortgagee, to modify the order appointing the receiver in the foreclosure action of the first mortgage to the extent of vacating the direction to collect the rents due but unpaid and for a further modification directing the receiver to account for and turn over to the respondent any and all moneys representing rents which had accrued but were uncollected on July 27, 1933. The Special Term denied the application. The Appellate Division reversed, two of the justices dissenting.

For the reasons here stated we deem the Special Term order the correct one. and, therefore, the order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division. The question certified should be answered in the negative.

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

Ordered accordingly.


source: Caselaw Access Project

author: Hubbs, J.

license: Public Domain

text:
    Donald Honadle, an Infant, by Fred Honadle, His Guardian ad Litem, Appellant, v. Virgil Stafford, Respondent.
    (Argued October 3, 1934;
    decided November 20, 1934.)

      Boyce H. Butterfield, Esmond D. Murphy and William J. Fredel for appellant.

      Frank Gibbons for respondent.
   Hubbs, J.

In this action to recover damages for negligent injuries, a Supreme Court justice made an order permitting a settlement of the action upon the payment of $900 by the defendant to the guardian ad litem of the infant plaintiff. The order provided that upon payment of such sum, the guardian ad litem was authorized to settle and discontinue the action. It also provided that the guardian ad litem was authorized to retain for the services of his attorney, Philip Leichtentritt, the sum of $300 and the balance of $600 to be held by him as general guardian of the infant plaintiff.

On the same day that the order was granted and before he was appointed general guardian, the guardian ad litem at the request of his attorney, signed, executed, acknowledged and delivered to his attorney a general release. He also executed the papers necessary to secure his appointment as general guardian. All the papers were delivered to plaintiff’s attorney upon the understanding that the order provided for the payment of $900 to the guardian of the infant plaintiff and that upon receipt of such sum, $300 should be paid to the attorney for the plaintiff.

Three days after the order permitting a settlement was granted, plaintiff’s attorney presented to the attorneys for defendant a stipulation of settlement of the action, the order of settlement, a copy of a Surrogate’s Court order appointing the guardian ad litem as the general guardian of the infant plaintiff, and his letters of guardianship.

The attorneys for defendant thereupon tendered to the attorney for plaintiff a draft for $1,875, issued by an insurance company, payable to Philip Leichtentritt, attorney for such infant. The draft represented the $900 to be paid to the infant plaintiff according to the order of settlement and certain other sums to be paid to others injured in the same action and represented by the same attorney.

Plaintiff’s attorney stated that he would be unable to cash the draft and requested defendant’s attorneys to procure the cash for him. Thereupon, plaintiff’s attorney indorsed the draft and defendant’s attorneys also indorsed it, delivered it to a bank and secured the cash thereon, and delivered the money to plaintiff’s attorney who converted it to his own use. The Special Term denied the motion to compel the defendant to pay to the plaintiff the sum of $900 specified in the order of settlement, and that order has been affirmed by the Appellate Division by a divided court.

A guardian ad litem is an officer of the court, and his powers and duties are strictly limited by law. He can only act in accordance with the instructions of the court and within the law under which appointed.

The general rules of agency are not applicable to his conduct. Persons dealing with him are bound at their peril to ascertain the extent of his authority. Unauthorized payments made to him or unauthorized agreements entered into with him do not bind the infant whom he was appointed to represent. Infants are wards of the court and subject to its care.

An attorney representing an infant plaintiff has no greater authority to compromise the cause of action or discharge a judgment than the guardian ad litem. (Greenburg v. N. Y. C. & H. R. R. R. Co., 210 N. Y. 505.) These principles firmly embedded in our law are salutary and should be strictly enforced. Applied to the facts in this case, they necessarily require the reversal of the order appealed from.

The plain wording of the order permitting a settlement required that the money paid in settlement should be paid to the guardian ad litem. The defendant was not authorized to pay it to the plaintiff’s attorney or to any one other than the guardian ad litem. The wisdom of providing in the order that the money to be paid on settlement shah be paid to the guardian ad litem is well illustrated by what has happened in this case. This is by no means the first case where payments have been made to one other than a guardian ad litem with the result that the infant was defrauded of the amount paid.

AE who have served as trial judges know that attorneys frequently present proposed orders permitting payment to be made to the guardian ad litem or to his attorney. Such orders should never be signed. Too much care cannot be exercised by trial judges to see that the infant wards of the court are protected as far as possible.

In the case at bar the attorneys for the defendant not only tendered to the attorney for the plaintiff a draft payable to bis order, but on being informed that he could not get the cash on it, voluntarily assisted him in getting the money by indorsing the draft, collecting the money on it and turning it over to him, thereby unintentionally assisting him in the violation of his duty and in the appropriation to his own use of the money which belonged to his infant client.

There can be no doubt that the attorneys for the defendant acted in good faith and that the decision which we feel bound to make will work a hardship on the defendant. That, however, is not the fault of the infant plaintiff.

The orders should be reversed, with costs in this court and in the Appellate Division, and the motion granted with ten dollars costs. The second question certified should be answered in the negative; the first question not answered.

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

Ordered accordingly.


author: O’Brien, J.

text:
    Alfred Arcuri, as Administrator of the Estate of Carmine Arcuri, Deceased, Respondent, v. Antoinette Arcuri, Appellant, Impleaded with Others.

      (Submitted October 3, 1934;
    decided November 20, 1934.)

      Sydney J. Schwartz and Louis Barnett for appellant.

      Charles Foley for respondent.
   O’Brien, J.

The certified question requires us to decide whether the complaint states a cause of action.

According to the allegations, plaintiff is administrator of Carmine Arcuri who died in 1932. The defendant ' Antoinette Arcuri was the wife of Archangel Viglione and on February 9, 1925, she procured a decree under section 7-a of the Domestic Relations Law (Cons. Laws, ch. 14) dissolving her marriage with him. That decree resulted from her perjury as a witness on the trial when she testified that she was not aware of the fact that her husband was living during the five preceding years and that she believed him to be dead. On February 17,1925, although she knew her husband to be alive, she entered into a marriage ceremony with the decedent Carmine Arcuri. He, in reliance upon her fraudulent representations that she was his lawful wife, was induced by her to take an assignment of a mortgage for $15,000 in the names of himself and defendant or the survivor. For relief, the complaint demands judgment decreeing among other things that defendant is not the widow of Carmine Arcuri and that she has no interest in the mortgage.

We agree with the Appellate Division that the question here presented is whether defendant’s judgment of annulment may be attacked collaterally in this action, but we cannot assent to the proposition that the court lacked jurisdiction in the annulment action or that the perjury practiced by the plaintiff on that trial constitutes fraud on the court of such a nature as to allow in this action a collateral attack upon that judgment.

The court’s jurisdiction to try the issues in the proceeding for annulment was complete. (Sleicher v. Sleicher, 251 N. Y. 366.) It was not lacking in respect to the subject matter or the persons. The life or death of the petitioner’s husband and her belief in his death were merely issues of fact to be determined on the trial. At most, an error of fact was committed by the court in accepting the credibility of a witness committing perjury. The statute authorizes the court, if satisfied of the truth, to make an order dissolving the marriage. So the central point in this case is whether the perjury of a party as a witness may form the basis for an oblique attack in another action or proceeding between other parties wherein different issues are involved. Of course a judgment may be set aside for fraud by an action brought for that purpose, but the plaintiff in such an action must be one whose rights have been directly invaded (Kinnier v, Kinnier, 45 N. Y. 535; Rugen v. Heckel, 85 N. Y. 483) and the fraud must be in some matter other than the issue in the action resulting in the judgment which is assailed. (United States v. Throckmorton, 98 U. S. 61, 66; Crouse v. McVickar, 207 N. Y. 213, 218.) The facts in this case do not come within the doctrine of those decisions which allow a collateral attack on a judgment obtained by fraud.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division, and the question certified answered in the negative.

Pound, Ch. J., Crane, Hubbs, Crouch and Loughran, JJ., concur; Lehman, J., dissents on the ground that the rule against collateral attack does not debar the plaintiff from proof of fraudulent representation made by the defendant that the marriage was lawful.

Ordered accordingly.


author: Loughran, J.

text:
    The People of the State of New York, Respondent, v. James Perry and Harry Curtis, Appellants, Impleaded with Another.
    (Submitted October 20, 1934;
    decided November 20, 1934.)

      Everett B. Holmes and George L. Bockes for appellants.

      Donald H. Grant, District Attorney, for respondent.
   Loughran, J.

The three defendants were tried in the City Court of Oneonta upon an information charging them with disorderly conduct in violation of Penal Law, section 722, subdivision 2, in that the accused did at the Empire Grill located on Broad Street within said City of Oneonta * * * strike, beat and assault one another with their hands and feet and did * * * act in such a manner by so fighting and assaulting each other, as to annoy and be offensive to others.”

The “ Empire Grill ” is a restaurant conducted by the defendant Perry on Broad street in Oneonta. The defendant Curtis was employed there. He and the defendant Lee were friends living in the same household. The People's proof is that at four o'clock in the morning on March 18, 1934, in Perry’s establishment, he and Curtis struck Lee with their fists; that Lee fell twice to the floor and was bruised and bleeding when the police arrived shortly thereafter. This evidence was given by three persons who attempted to enter the restaurant to get beer. The door was locked and they were waved away with the information that the place was closed. No inappropriate language was heard. The restaurant was not fully lighted. One employed as a cook was the only other person there. No one was in the adjacent street except the three witnesses for the People.

The undisputed testimony of the three defendants persuaded the trier of the fact that Lee was the aggressor in the transaction. It is conceded that the police were summoned by Perry.

All the defendants were found guilty, Lee as an invader whose admitted intoxication did not excuse him, the others because their resistance to his intrusion was adjudged to have been unsuitable in kind and excessive in degree. Each defendant was sentenced to one hundred days' imprisonment and directed to pay a fine of one hundred dollars. Upon appeal to the County Court of Otsego county, the judgment against the defendant Lee was reversed. The judgment against the defendant Perry and that against the defendant Curtis were modified by reduction of the fines imposed, and, as so modified, affirmed. The County Court held the defendant Tee to have been the blameless victim of treatment so brutal as to have tended to a criminal disturbance of the public order. The defendants Perry and Curtis now appeal to this court.

The ruling of the County Court rejects uncontradicted testimony which was credited by the trial judge, who saw and heard the witnesses. Strong argument could be made that the appellants have now been held to answer for an act not charged. The modified judgments are here attacked, however, upon the broader ground that upon this record the finding of guilt against the appellants is without justification in law. We think the attack must succeed.

The allegation is that the defendants transgressed Penal Taw, section 722, subdivision 2, That provision reads: Any person who with intent to provoke a breach of the peace, or whereby a breach of the peace may be occasioned, commits any of the following acts shall be deemed to have committed the offense of disorderly conduct: * * * (2) Acts in such a manner as to annoy, disturb, interfere with, obstruct, or be offensive to others.” Common law definitions, though not controlling, are aids in ascertaining the gist of the offense so defined. (People v. Most, 128 N. Y. 108.)

In the orthodox language of an indictment, any criminal act is against the peace and dignity of the People, but not every criminal act is a breach of the peace in the common law sense of that term. A breach of the peace is an offense well known to the common law. It is a disturbance of public order by an act of violence, or by any act likely to produce violence, or which, by causing consternation and alarm, disturbs the peace and quiet of the community.” (People v. Most, 171 N. Y. 423, 429.) Each case where the offense is charged must depend upon the time, place, and circumstances of the act.” (People v. Johnson, 86 Mich. 175, 177.) Fighting in a public place to the terror of his majesty’s subjects ” (4 Bl. Com. 145) is at common law an offense against the public peace, an affray, so called, because it affrighteth and maketh men affraid.” (3 Co. Inst. 158.) Fighting in a private place is at common .law no crime unless it amount to an assault. (1 Bishop on Criminal Law [8th ed.], p. 329.) At common law the appellants would have been guilty of no offense other than assault. We think that also is the extent of their culpability under our Penal Law.

Actually the defendants annoyed no one, disturbed no one, interfered with no one. Their conduct was not offensive to the People’s witnesses, who say they voluntarily looked on, to gratify curiosity or a desire for amusement. The only other observer of the event says that he thought he witnessed a justifiable defense of person and property. The act complained of must at least be one which reasonably does tend to a breach of the peace.” (People v. Nixon, 248 N. Y. 182, 186.) In our opinion, the acts of the appellants, as described by the People’s witnesses, cannot reasonably be held to have tended in the undisputed circumstances to such a disturbance of the tranquillity of the People of the State as to have constituted "disorderly conduct ” in violation of the Penal Law.

The judgments of the County Court of Otsego county and of the City Court of Oneonta should be reversed and the information dismissed.

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

Judgments reversed, etc.


author: O’Brien', J.

text:
    In the Matter of the Will of Michael Winburn, Deceased. Maurice Wineburgh et al., Appellants; Marie Winburn et al., Respondents.
    (Argued October 17, 1934;
    decided November 20, 1934.)

      Joseph M. Proskauer, Walter D. Yankauer, J. Alvin Van Bergh and Harry Silverman for appellants.

      J. Joseph Lilly for John Winburn et al., respondents.

      Stuart G. Gibboney for Marie Winburn, respondent.

      James F. Donnelly and Bert Cohen for City Bank Farmers Trust Company et al., as executors and trustees, et al., respondents.
   O’Brien', J.

Michael Winburn, who died in November, 1930, was survived by his wife, two sisters and numerous other relatives. His will makes particular provision for his wife and sisters and some of his other relatives, friends and many charitable organizations. One of his brothers, as an heir at law and next of kin, brought this proceeding for the construction of the forty-first paragraph of the will which deals with the residuary estate. By this paragraph the testator directs certain disposition in the event of the survival of his wife and also in the event of her predecease or her death simultaneous with him. This is his language:

“ I direct that all the rest, residue and remainder of my estate, real, personal or mixed, of whatsoever kind, nature and character, wheresoever the same may be or be situated at the time of my decease, be divided into three shares-or parts as hereinafter described and disposed of as follows:

“ One (1) share or part consisting of fifty per cent (50%) of my said residuary estate; the second (2nd) share or part consisting of twenty-five per cent (25%) thereof; the third (3rd) share or part consisting of twenty-five per cent (25%) thereof.

(a) I give devise and bequeath the first share or part consisting of fifty per cent (50%) of my residuary estate, to my Executors and Trustees hereinafter named, in trust nevertheless, for the following uses and purposes; to collect and receive the rents, interest, income and dividends therefrom (hereinafter referred to as income) and to pay the net income therefrom after deducting all proper charges and expenses to my beloved wife, Marie Winburn, in equal quarterly instalments, and upon the decease of my said wife, to pay over, grant and convey Two hundred and fifty thousand ($250,000) Dollars of the principal of said trust fund, to La Nouvelle Etoile des Petits Enfants de France as an endowment fund and the income therefrom shall be used solely for the benefit, support and maintenance of the ‘ Foundation Winburn ’ situated at Courbevoie (Seine) Republic of France.

“ (b) In the event that The Peoples Dispensary for Sick Animals of the Poor (Incorporated) of London, England, accept in writing the legacy left to this Society in paragraph 1 Twenty-second,’ of this my Last Will and Testament, I give, devise and bequeath to the People’s Dispensary for Sick Animals of the Poor (Incorporated) of London, England, the sum of Two hundred and fifty thousand ($250,000.) Dollars of the capital of said trust fund created for the benefit of my wife, Marie Winburn, during her life, as an endowment fund, the income therefrom to be used solely for the purposes of support, maintenance and upkeep' of the ‘ Foundation Winburn pour Animaux ’ situated in or near Paris, Republic of France. In the event that the People’s Dispensary for Sick Animals of the Poor, (Incorporated) of London, England, refuse the legacy mentioned in paragraph Twenty-second ’ of this my Last Will and Testament, then this bequest of Two hundred and fifty thousand ($250,000.) Dollars shall not go into effect, and same shall revert to my residuary estate.

“ (c) In case of the death of my wife, Marie Winburn, before me or simultaneously with me, the said trust estate herein created for her benefit, shall not go into existence and the principal thereof shall be disposed of as above indicated to wit: Two hundred and fifty thousand ($250,000.) Dollars to the Nouvelle Etoile des Petits Enfants de France as an endowment fund for the benefit of • the Foundation Winburn ’ situated at Courbevoie (Seine) Republic of France; and Two hundred and fifty thousand ($250,000.) Dollars to The People’s Dispensary for Sick Animals of the Poor, (Incorporated) of London, England, as an endowment fund for the benefit of the Foundation Winburn pour Animaux ’ in or near Paris, Republic of France. In the event that this latter Society does not comply with stipulations set forth in paragraph ‘ Twenty-second ’ of this my Last Will and Testament, then this said bequest shall not go into effect, and same, together with all the balance and remainder of the principal of the trust fund created for the benefit of my wife, Marie Winburn, shall revert to my residuary estate and become part of the trust estates created for the benefit of my sisters, Carrie Shelley and Ida Schnitzer, share and share alike, according to sections (d) and (e) of this paragraph as follows:

“ (d) I give, devise and bequeath the second share or part, consisting of twenty-five per cent (25%) of my residuary estate, to my Executors and Trustees hereinafter named, in trust nevertheless, for the following uses and purposes: to collect and receive the rents, interest, income and dividends therefrom (hereinafter referred to as income) and to pay the net income therefrom, after deducting all proper charges and expenses, to my sister, Carrie Shelley, in equal quarterly instalments during the term of her natural life, and upon her decease the said trust estate shall cease and determine, and the principal thereof I give and bequeath to my nephew, Harold M. Shelley, or in case of his prior death, to his issue, share and share alike, per stirpes and not per capita. In case of the death of my said sister, Carrie Shelley, before me, in such event the trust estate herein created for her benefit shall not go into effect, and I give and bequeath the said second share or part consisting of twenty-five per cent (25%) of my residuary estate to my nephew Harold M. Shelley, or in case of his prior death to his issue, share and share alike, per stirpes and not per capita.

“(e) I give, devise and bequeath the third share or part, consisting of twenty-five per cent (25%) of my residuary estate, to my Executors and Trustees hereinafter named, in trust nevertheless, for the following uses and purposes: To collect and receive the rents, interest, income and dividends therefrom (hereinafter referred to as income) and to pay the net income therefrom, after deducting all proper charges and expenses, to my sister, Ida Schnitzer, in equal quarterly instalments during the term of her natural life; and upon her decease the said trust estate shall cease and determine, and the principal thereof I give, devise and bequeath to my niece, Annette Evans, or in case of her prior death, to her issue, share and share alike, per stirpes and not per capita. In case of the death of my said sister, Ida Sehnitzer, before me, in such event the trust estate herein created for her benefit shall not go into effect and I give and bequeath the said third share or part consisting of twenty-five per cent (25%) of my residuary estate, to my niece, Annette Evans, or in case of her prior death to her issue, share and share alike per stirpes and not per capita The income from the trust created by subdivision (a) and consisting of one-half of the residuary estate is payable to the widow during her life, but, “ upon the decease of my said wife,” the sum of $250,000 of the principal of the trust fund shall be paid to an institution for children and a further sum of $250,000 paid, under conditions with which compliance has been had, to a society for the care of animals. By subdivisions (a) and (b) the testator thus indicates, in the event that his wife survives him, a partial disposition of one-half of the residuary, but in neither of these subdivisions nor elsewhere in the will does he express any intent respecting the disposition of the balance of this one-half of the residuary. The failure to dispose of this portion is in marked contrast to the disposal of all the principal of the trusts created under subdivisions (d). and (e) for the lives of the testator’s two sisters. Unless an intent to dispose in some definite way of all the principal of the widow’s trust, in the event of her survival, can be deemed implied by other parts of the will, no reasonable ground can be discovered for construing subdivisions (a) and (b) in any manner except as creating an intestacy as to part of it.

Respondents argue that by a reasonable interpretation of subdivision (c) partial intestacy can be avoided, We do not so construe the testator’s intent as implied by the language of this part of his will. Subdivisions (d) and (e) provide that in case of the death, before him, of the testator’s sisters therein respectively mentioned, “ in such event the trust estate herein created for her benefit shall not go into effect ” and in each instance bequeaths the sister’s share to a designated individual. Whether the sisters or either of them survive or predecease the testator, subdivisions (d) and (e) definitely dispose of two quarters of the residuary estate. If the widow dies before the testator or simultaneously with him, subdivision (c) makes an equally definite disposal of the other half. If she survives him, subdivisions (a) and (b) leave an hiatus which we think has not been filled by subdivision (c). We can infer from the language of (c) no intent except a purpose to cause its operation only in the event of the wife’s death prior to or with that of the testator. To reach a different conclusion would, in our opinion, require a more violent disregard of plain language than this court has ever sanctioned. (Matter of Schriever, 221 N. Y. 268; Close v. Farmers’ Loan & Trust Co., 195 N. Y. 92; First Nat. Bank & Trust Co. v. Palmer, 261 N. Y. 13.) Nothing can be clearer than this opening clause: (c) In case of the death of my wife, Marie Winburn, before me or simultaneously with me, the said trust estate herein created for her benefit, shall not go into existence and the principal thereof shall be disposed of as above indicated to wit.”

The draftsmen of this will in unmistakable language provides that in case of the wife’s death prior to or simultaneously with the testator’s death the trust created for her benefit shall not go into existence and employs the expression “ as above indicated to wit ” and proceeds to use language by which $250,000 is bequeathed to the children’s home and $250,000 to the institution for animals with the same conditions attached as those prescribed in the preceding subdivision and provides that in the event of failure of compliance with conditions the “ said bequest shall not go into effect ” and the same,” together with all the balance of the wife’s trust fund, shall revert to the residuary estate, and become part of the trusts created for the benefit of the sisters, The predominant thought in paragraph (c) is the determination to prevent the existence of a trust for the wife’s benefit, if she dies before or at the same time as the testator and transfer of all the funds of the trust created under subdivision (a) to the trusts created under (d) and (e). There are two subordinate ideas; whether the wife survives or predeceases the testator, the provision in (c) for the two institutions is the same as in (a) and (b). In any event, Nouvelle Etoile des Petits Enfants de France is to receive the bequest of $250,000 and in the event of compliance with conditions, the Peoples Dispensary for Sick Animals is to receive an equal sum. The words “ this said bequest ” and “ same ” must necessarily refer to the bequest for the Peoples Dispensary. Under (c) the trusts created under (d) and (e) shall be augmented by the fund created for the wife under (a) minus the sum of $250,000 in any event or the sum of $500,000 depending upon the animal society’s compliance with conditions. A careful reading of subdivision (c) cannot, in our opinion, justify any reasonable inference from the expressions used by the draftsmen except the inference that the principal of the trust created for the wife, with the deduction of the two bequests to the institutions, was intended to become part of the trust estates created for the sisters only in the event of the wife’s death before or simultaneously with the death of the testator.

Conceivably the testator did not intend the result which we are bound to infer from the omission in (a) and (b) and his words as expressed in (c) but we cannot hold from his language that his purpose in reference to the disposal of his residuary was the same whether his wife should survive him or should die with him or before him. It is not unreasonable to suppose that, if his wife should survive, he would rest content that, after she had enjoyed the income of half the residuary as long as she might live, part of that half should later be devoted to all those entitled to share in its distribution under the statute. His preference could be based upon logic or he could act without regard for it. The will is his and cannot be redrafted, by this court. Whatever the probabilities may be, we cannot indulge in speculation relating to his intent but must be controlled by the language of the entire will considered in relation to each part. When the intent derived from the whole instrument is certain or inevitable, courts can readily perceive an implication in the absence of direct expression and we should strive to prevent intestacy and to give effect to intent as we conceive it not only from expressed language but also from omissions. This purpose will not be obstructed by the use of awkward or inapposite words inadvertently employed. The purpose of this testator is, however, obscure and we would not be justified in straining to recognize an implication which we cannot find.

The order of the Appellate Division and the decree of the Surrogate’s Court should be reversed and the matter remitted to the Surrogate to proceed in accordance with this opinion, with costs in all courts to all parties payable out of the estate.

Pound, Ch. J., Crouch and Loughran, JJ., concur; Crane and Hubbs, JJ., dissent; Lehman, J., not sitting.

Ordered accordingly.


author: Pound, Ch. J.

text:
    Frances P. Anderson, Respondent, v. Ætna Life Insurance Company, Appellant.
    (Argued October 25, 1934;
    decided November 20, 1934.)

      H. Douglass Van Duser and Charles S. Wilcox for appellant.

      Percival D. Oviatt, Harold H. Barnsdale and Homer E. A. Dick for respondent.
   Pound, Ch. J.

On November 29, 1929, defendant issued to Charles E. Anderson, the husband of the plaintiff, who was named therein as beneficiary, a fife insurance policy in the amount of $10,000. On February 3, 1930, a second policy in the same amount was issued. These actions for the amounts of the policies were brought within the contestable period. The assured died April 27, 1931.

In obtaining the policies the assured signed an application which contained, among other things, the following questions and answers:

9. Have you consulted a physician, specialist, or other practitioner for or suffered from any ailment or disease of: c. Stomach, intestines, liver, kidneys or bladder? *$» •!» 4* 4* 4* 4» ¿¡i sfi .j, *|* v f. Any other disease or illness or any injury not mentioned above? ”

To all of these questions the applicant answered No,” except to 9-f which he answered as follows: “ Yes. Name of disease, pneumonia. Number of attacks, one. Began, February, 1929. Recovered, April, 1929. Results (if within five years name and address of every physician consulted), complete recovery. Dr. Hague, Rochester, N. Y.”

In the application for the second policy of insurance signed February 3, 1930, the applicant reaffirmed the answers in his application of November, 1929. He further declared that at the time of making the applications he was in sound health, that the statements contained in his applications were true, and that he had withheld no material allegation concerning his health.

The proofs of death consisted of the claimant’s statement signed by the plaintiff and the attending physician’s statement. The cause of death is given as stricture of oesophagus.”

The Appellate Division expressed the opinion that the word “ any ” as used in the application for insurance referred to all diseases, illnesses or injuries for which the assured had consulted a physician within a certain period. It certainly referred to any serious physical ailment for which he was treated by a physician, if Dot to trifling ailments not affecting good health in general, such as colds or constipation (Nowak v. Brotherhood of American Yeomen, 249 N. Y. 78; S. C., 252 N. Y. 465), which might not be regarded as being in the same class with the enumerated diseases. The court concluded, however, that it was constrained to hold that under the ruling in Dilleber v. Home Life Ins. Co. (69 N. Y. 256) there was a question of fact to be submitted to the jury whether the answer of the assured as to the physicians employed or consulted was honestly and fairly made or whether a portion of the truth was fraudulently and intentionally suppressed or withheld. It affirmed the judgment below and allowed an appeal to this court.

It is undisputed that Dr. Sol C. Davidson treated insured in a professional capacity, making four visits from April 19 to April 21, 1927; that the insured was sent to him by Dr. Nathan Soble, insured’s general physician, to make an X-ray examination and to take X-ray photographs. Dr. Davidson was not allowed to state what, if any, disease, illness or ailment he found the insured suffering from but it did at least appear that he had been consulted by insured for medical advice. Cases calling for an X-ray examination can scarcely be presumed to be mere temporary disorders, having no bearing upon general health. The inquiry was not to be passed over as trivial. It was made material to the risk. (Jenkins v. John Hancock Mutual Life Ins. Co., 257 N. Y. 289.)

In. Dilleber v. Home Life Ins. Co. (supra) the court said that fraud may be predicated upon the suppression of truth, but breach of warranty must be based upon the affirmation of something not true.

Prior to 1906 (when section 58 of the Insurance Law [Cons. Laws, ch. 28] was enacted) a breach of warranty contained in an application for insurance constituted a defense to a claim upon the policy, although the warranty related to an immaterial matter. A misrepresentation contained in the application on the other hand only became a defense if it related to a material matter. * * * A misstatement, even though stated in the form of a warranty, if made in good faith and without this element of fraud passed into the same class as an ordinary representation and became a defense to the policy only if it was material. On the other hand, the effect of a misrepresentation was left unchanged by the statute. If material it constituted a defense although made innocently and without any feature of fraud; it was sufficient that it was material as an inducement for the issue of the policy, and was untrue.” (Hiscock, Ch. J., in E. D. P. Dye Works v. Travelers Ins. Co., 234 N. Y. 441, 449.)

The statutory rule has superseded the court made rule. False representations will vitiate the policy if material to the risk. (Minsker v. John Hancock Mut. Life Ins. Co., 254 N. Y. 333.) A representation as to one’s health and as to physicians employed ordinarily is material. A truthful answer might have been followed with a medical examination or further inquiry.” (Jenkins v. John Hancock Mut. Life Ins. Co., supra, 293.)

The answer to 9-f of the application mentioning pneumonia only as a disease for which insured had been trea ted, although apparently complete, is in fact evasive. Pneumonia was not the only case for which medical advice had been sought. The holding of the Dilléber case that there was no breach of warranty because the answer was true as far as it went no longer, carries any legal consequences. Such omissions have generally been held to amount to a false answer. (Penn Mut. Life Ins. Co. v. Mechanics’ Sav. Bank & Trust Co., 72 Fed. Rep. 413, 421.)

Even in the Lilleber case it was held that the policy was void unless the answer was honestly and fairly made and no “ portion of the truth was fraudulently and intentionally suppressed or withheld ” (p. 264). In that case this court found that under the evidence there was a question of fact whether the answer constituted a false representation. Here there is no such question. .

As a representation it was material to the risk, even though it was made in good faith. The false representations were made a part of the policy. Good faith requires fair dealing from both parties. In Stanulevich v. St. Lawrence Life Assn. (228 N. Y. 586) we held that the application being a part of the policy the insurer and assured are bound by its terms as a part of the contract of insurance.

In Keck v. Metropolitan Life Ins. Co. (238 App. Div. 538; affd., 264 N. Y. 422) the insured in his application for a policy made a statement that he had not been attended by a physician during the past five years. He had been attended by a physician on three occasions in that period. It was held that the misrepresentation was material to the risk as matter of law and that the policy was void.

Here the learned trial justice left it to the jury to say whether or not deceased consulted the doctors for some illness. In view of the undisputed evidence it seems fanciful to urge that he may have consulted physicians without being ill or without being treated- Under the circumstances, it was for the defendant to know and judge what the consultation was about and to determine whether it was in reference to a material matter. (Saad v. New York Life Ins. Co., 201 App. Div. 544, 546; affd., 235 N. Y. 550.)

Reliance is placed by the plaintiff on the case of Murphy v. Union Central Life Ins. Co. (decided without opinion in 255 N. Y. 617). That case has but a superficial resemblance to this case. There was on the evidence a question of fact as to whether the visits to a physician were professional or social. The Dilleber Case (supra) was not considered by the court as material to the decision.

The judgments should be reversed and the complaint dismissed, with costs in all courts.

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

Judgments reversed, etc.


author: Crouch, J.

text:
    Harry Sherman, as President of the Moving Picture Machine Operators Union, Local 306 of International Alliance of Theatrical Stage Employees and Moving Picture Operators of the United States and Canada, et al., Respondents, v. Arthur Abeles et al., Defendants, and Independent Theatre Owners Association, Inc., et al., Appellants.

      (Argued April 17, 1934;
    decided November 20, 1934.)

      Milton C. Weisman and Melvin A. Albert for appellants.

      Charles H. Tuttle, Copal Mintz and Samuel M. Birnbaum for respondents.
   Crouch, J.

This action is brought by (1) a union of moving picture machine operators in New York city (hereinafter called Local 306), and (2) by an individual member thereof against (1) Independent Theatre Owners Association, Inc. (hereinafter called Owners Association), (2) the several theatre owners (hereinafter called exhibitors) who are members of owners association; and (3) Allied Motion Picture Producers Union (hereinafter called Allied) with which the owners association is said to have entered into a ten-year contract for the employment of its members as operators to the exclusion of the members of Local 306. The complaint alleges a conspiracy on the part of the exhibitors to boycott Local 306, to discharge its members and refuse to re-employ them, to abrogate collective bargaining with operators, to reduce the number employed and the wages paid to them, to increase their hours of work, to thwart any effective labor organization by the operators, to foment dissension among them, to involve them in costly litigation, and generally to discredit and destroy Local 306, and to induce other exhibitors to do likewise.

It is alleged that on May 4, 1933, the said exhibitors organized and became members of the owners association, pursuant to and for the purpose of achieving the objects of the conspiracy. The enactment of the National Industrial Recovery Act on June 16, 1933 ([48 Stat. 195] hereinafter called the Recovery Act), the promulgation of the President’s Re-employment Agreement on July 27, 1933 (hereinafter called PRA), the enactment on August 26, 1933, of the New York State law (Laws of 1933, ch. 781, hereinafter called the State law), are then set forth; and it is alleged that the defendant exhibitors signed and delivered agreements pursuant to the PRA, publicly professed their accord with the policies therein set forth, and exhibited to the public the insignia of the Blue Eagle. Thereupon, the complaint alleges a concerted commission by defendants of various acts illegal under the provisions of section 7(a) of the Recovery Act, which provisions were incorporated both in the PRA and in the Code subsequently formulated. It is alleged that the owners association and the exhibitors organized Allied, a company-controlled company union, with which it then entered into a ten-year agreement, providing, among other things, that motion picture booths should be manned by fewer operators than had been previously required, and that said operators should work longer hours and receive less compensation. It is alleged further that the exhibitors between certain dates discharged and otherwise discriminated against various members of Local 306 because of their membership therein; that they required membership in Allied as a condition of employment or of continuance in employment, and that they otherwise breached the law — all to the damage of Local 306 and of each and every member thereof. In short, the complaint alleges a conspiracy to wrong the plaintiffs, carried into effect by means of illegal acts which are injurious not only to the public but directly to plaintiffs. An injunction is demanded restraining all such illegal acts and requiring defendants to re-employ those who were discharged upon the terms which prevailed at the time of the discharge, or upon such other terms and conditions as may be prescribed under the Recovery Act by any code or agreement thereafter entered into pursuant to such act.

Simultaneously with the commencement of the action, the plaintiffs moved for a temporary injunction. The motion was heard on affidavits, and the Special Term granted an order which restrained the defendants from doing various acts illegal under each of the three subdivisions of section 7(a) of the Recovery Act, as incorporated and elaborated in the Code for the Motion Picture Industry. The order was unanimously affirmed by the Appellate Division which granted leave to appeal to this court and certified for answer certain questions of law.

The essential and controlling question certified is this: “2. Was the injunction pendente lite properly 'granted? ” In answering that question we are limited to a consideration of the facts as they were found at Special Term and unanimously affirmed on appeal. While the Code for the Motion Picture Industry was not approved by the President until November 27, 1933, four days after the complaint herein was verified, it was in effect when the hearing on the motion was had. It was properly before the court since it was an instrumentality contemplated by the Recovery Act, and defined the rights of the parties under the act at that time. In the absence of a formal decision, resort may be had to the opinion at Special Term for the findings of fact and refusals to find. It was found that there had been violations of the Recovery Act, of the PRA and of the Code as to wages, horns of employment and increase of duties of employees so as to decrease the number of such employees. It was further found that Allied was a company-controlled company union; but there was a refusal to find that any one seeking employment from exhibitors had been required “as a condition of employment ” to join Allied or “to refrain from joining, organizing or assisting a labor organization of his own choosing.” There was also a refusal to find “ the charges of conspiracy and the discharge of Local 306 projectionists by association members in violation of existing contracts.” The matters so refused were left to be settled upon common-law evidence at the trial.

1. Neither the complaint nor the evidence is concerned with any specific matter relating to the right of the plaintiffs to bargain collectively. Many of the exhibitors had entered into contract with Local 306 for the year expiring August 31,1933. The contract is not in evidence. Under it, however, the exhibitors were apparently bound to employ members of that union during the existence of the contract. They did so; or at least the court has refused to find that there was any breach. With the expiration on August 31, 1933, of the contract with Local 306, its members were discharged and their places were taken by members of Allied. There was no dispute between the exhibitors and Local 306 about hours, wages or conditions of employment. Those matters were fixed by the terms of the contract until its expiration, and thereafter by . all the implications of the Recovery Act and the PRA. For reasons which seemed good to them, the exhibitors simply refused to hire members of Local 306. Unless prevented by some valid law or by an existing contract, employers may discharge and hire employees at will. Until the enactment of the Recovery Act, there was no doubt at all that employers might discriminate against union men or against members of any particular union. (Adair v. United States, 208 U. S. 161; Coppage v. Kansas, 236 U. S. 1; People v. Marcus, 185 N. Y. 257; Interborough Rapid Transit Co. v. Lavin, 247 N. Y. 65, 74, 77; Opinion of Justices, [N. H. 1933] 166 Atl. Rep. 640; Opinion of Justices, 275 Mass. 580.) Here the exhibitors were free from contract obligations, and the only statutory obstacles to complete freedom of contract were the provisions of section 7 (a) of the Recovery Act. That subdivision 1 was not aimed at the immemorial right to hire and discharge at will but at something quite different, is shown by the opinion of the Supreme Court of the United States in Texas & N. O. R. R. Co. v. Brotherhood of Ry. & S. S. Clerks (281 U. S. 548, 556, 570). The provisions of the statute there under consideration were, in substance, the same as those of subdivision 1 of section 7(a). The chief justice said: The petitioners invoke the principle declared in Adair v. United States, 208 U. S. 161, and Coppage v. Kansas, 236 U. S. 1, but these decisions are inapplicable. The Railway Labor Act of 1926 does not interfere with the normal exercise of the right of the carrier to select its employees or to discharge them. The statute is not aimed at this right of the employers but at the interference with the right of employees to have representatives of their own choosing.”

So far as the plaintiffs here are concerned, that right is in no way involved. The organization and existence of Allied as a company-controlled company union may have various legal consequences apart from this case; but the only relevancy of that fact here is'in connection with the alleged violation of subdivision 2. That part of the injunction order relating to acts illegal under section 7(a) subdivision 1, is, therefore, without support.

2. Since the proof was held insufficient to show that any one seeking employment from the defendant exhibitors had been required “as a condition of employment ” to join Allied or “ refrain from joining, organizing or assisting a labor organization of his own choosing,” that part of the injunction order relating to illegal acts under section 7(a), subdivision 2, is likewise without support.

3. Apart from the organization of Allied as a company-controlled company union, the only acts shown to be illegal under the Recovery Act and Code are broadly those relating to the matters covered by section 7 (a) subdivision 3, that is, wages, hours of employment and increase of duties so as to decrease the number of employees. None of those acts, however illegal they may be, affects either of the plaintiffs otherwise than remotely. From the nature of the complaint made, we assume that none of the members of Local 306 is an employee of defendants. Local 306 occupies the status of an outside union.” We have said that such a union may be as interested in the wages of those not members, or in the conditions under which they work as in its own members because of the influence of the one upon the other.” (Exchange Bakery & Restaurant, Inc., v. Rifkin, 245 N. Y. 260, 263.) But in that case and in the case of Stillwell Theatre, Inc., v. Kaplan (259 N. Y. 405) we were dealing with a privilege and . an immunity, arising out of social and industrial conditions, granted by law to such a union. The conduct of the unions in those cases was held to be justifiable nd not tortious. The implication of malice was rebutted by the existence of the privilege. It does not follow that such a union has an affirmative right of action, under the Recovery Act or the State Law, solely because of its economic and social interests. Nor do we think the word interests ” as used in section 3 of the State law was intended to have so broad a meaning. If it were otherwise, there is a possibility that organized labor might find its hard won extra-judicial remedies of strike, boycott and picketing imperilled.

The case, then, upon the facts, comes down to this: Public wrong may have been done by the defendants. Private wrong to the plaintiffs has not been shown. There is, therefore, no basis for the injunction order and it must be reversed. Reaching that conclusion on the grounds stated above, all the questions certified save only No. 2 become academic in the decision of the appeal.

The orders should be reversed, with costs in all courts, and certified question No. 2 answered in the negative. All other questions certified unanswered as not necessary to the decision.

Pound, Ch. J., Crane, Lehman, O’Brien and Hubbs, JJ., concur.

Orders reversed, etc.


text:
    Morris S. Nelkin, Respondent, v. Provident Loan Society of New York, Appellant.

      (Argued October 5, 1934;
    decided November 20, 1934.)

      Neil P. Cullom and Frederick M. Schlater for appellant.

      David Davidoff for respondent.
   Crouch, J.

The plaintiff, a dealer engaged in buying and selling jewelry and precious stones, delivered to one Moskowitz, another dealer in the same business, a diamond ring. At the time of such delivery Moskowitz signed the following memorandum: These goods are sent for your inspection and remain our property and are to be returned to us on demand. Sale takes effect only from date of our approval of your selection.”

Thereafter Moskowitz pledged the ring with the defendant as security for a loan of $125. The defendant acted in good faith and without notice of the plaintiff’s claim of ownership. When demand was made by the plaintiff for the surrender of the ring, the defendant refused to give it up, unless paid the amount of its lien with legal interest. Thereupon this action was begun by a submission upon an agreed statement of facts to the Appellate Division. The plaintiff had judgment.

The decision of the case turns upon the question of whether the defendant may show by paroi evidence that the diamond ring was in truth delivered to Moskowitz for the purpose of sale to such customer as he might find; that he might sell it to such customer; and that he was obligated merely to return the goods or the sum of money set forth in the memorandum. That such was the contract is stipulated in the agreed statement, subject to an objection by the plaintiff that the facts are inadmissible under the paroi evidence rule.

If the true contract may be proved, it is clear enough that Moskowitz was an agent intrusted with the possession of merchandise for the purpose of sale, within the intendment of the Factors’ Act (Pers. Prop. Law, § 43; Cons. Laws, ch. 41), and, therefore, that though he had no authority from his principal to pledge the merchandise (1 Williston on Sales [2d ed.], p. 728), his act is so far validated by the statute that the principal may reclaim it only upon payment to the pledgee of the sum advanced. (Freudenheim v. Gütter, 201 N. Y. 94.)

The claim of the defendant rests not at all upon any authority to pledge- given to Moskowitz by his contract with the plaintiff, but solely upon the protection afforded it by the statute. It takes nothing under the contract either as party or as privy. In such case it is well settled that the paroi evidence rule does not apply. (Brown v. Thurber, 77 N. Y. 613; Folinsbee v. Sawyer, 157 N. Y. 196.)

The decision of this court in Green v. Wachs (254 N. Y. 437) is pressed to our attention as holding to the contrary. The distinction between that case and this is clear. No claim to protection under the Factors’ Act was made in that case. The defendant asserted full title and the benefit of his bargain on the theory that the agent under his contract with the principal had complete authority to sell and pass title. That was the only issue at the trial. Concededly the defendant was claiming in privity with the agent. The offer of paroi evidence was based solely on the contention that the contract under which the defendant asserted title was ambiguous. The court found no ambiguity. The offer was necessarily rejected under the general rule.

The further contention is made that Moskowitz obtained possession of the ring by common law larceny, and hence that the Factors’ Act does not apply. The contention is without the shadow of support in the facts as stated.

The judgment should be reversed and judgment directed in favor of plaintiff, without costs, subject to the lien of defendant for $125, with interest thereon at six per cent from January 16, 1933.

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

Judgment accordingly.


text:
    The Equitable Life Assurance Society of the United States, Appellant, v. Winter Leasing Corporation, Respondent, Impleaded with Others. John J. Cavanagh, as Receiver, Respondent.
    (Submitted October 1, 1934;
    decided November 20, 1934.)

      William H. P. Oliver for appellant.

      Max M. Hirson and Max L. Rothenberg for John J. Cavanagh, as receiver, respondent.

      Jerome T. Nolan for Winter Leasing Corporation, respondent.
   Crouch, J.

We are called upon to answer the following certified question: Is the lessee of the mortgaged premises, which are the subject of this action entitled, as against the receiver of rents appointed herein, to collect from sub-tenants of the lessee or from other occupants prior to sale herein, rents payable after the appointment of the receiver? ”

The action is to foreclose a first mortgage made in 1923. The defendants Solomon and Goldstein are the owners of the mortgaged premises. On October 1, 1925, they leased the premises for a period ending September 30, 1946, at an annual net rental of $95,000. The defendant Winter Leasing Corporation by mesne assignments became the lessee. Apparently its obligations under the lease grew too burdensome to carry, for under date of January 10, 1933, it entered into an agreement with the owners, which purports to modify and as modified to continue the lease. A determination of the status and rights of the Winter Leasing Corporation under that agreement will afford an answer to the question certified.

The agreement in substance provides that the annual “ rental, income and profits received or derived from said demised premises ” shall be paid out, disbursed or distributed ” as follows: The first $23,000 shall be “ retained or allowed ” to Winter out of which ” Winter shall pay all repairs and maintenance and all housekeeping and management charges.” The next $82,000, so far as collected,” shall be paid to the owners. All sums in excess of those two amounts shall at the end of each year be divided equally between the owners and Winter. If leases are effected through brokers, their commissions are to be paid in addition to the $23,000, and before the owners shall receive anything. All taxes and assessments (except water charges which are included in the $23,000) are to be paid by the owners. The agreement then provides that the security deposit under the original lease is assigned to the owners and they are released from any obligation to repay it; and, on the other hand, Winter is released and discharged from all claims arising from any defaults in performance under the terms of the original lease. Finally, all existing or future subleases and all rents due or to become due thereunder are assigned and transferred to the owners as security “ for the payment of the amounts above provided for.” Except ás modified, the original lease is ratified and confirmed.

Less than three months after that agreement was made there was default in the payment of interest and taxes under the mortgage, followed by the commencement of this action and the appointment of a receiver. By the order appointing him, the receiver was authorized to lease any part of the premises and to collect rents from the subtenants; while Winter was restrained from collecting from the subtenants, and the subtenants were restrained from paying such rents to Winter. A motion by Winter to modify the order by striking out those provisions was denied at Special Term, but was granted by the Appellate Division. That court was of the opinion that the case turned upon a determination of the relation between the owners and Winter. If the relation was that of landlord and tenant, it was thought that the receiver had no right to collect the rents from the subtenants; otherwise, if the relation was that of principal and agent.

If we accept the alternative as exclusive and decisive, we are yet disposed to think that as matter of law Winter, under the agreement of January 10, 1933, became merely an operating agent. To say that Winter retained an interest or estate in the premises, seems to us to disregard the substance of the agreement and to give effect to mere characterizations. The original lease is not in the record and all we know of its provisions is that the lessee was obligated to pay an annual rent of $95,000. The first thing one notes under the new agreement is that Winter is entirely relieved of any obligation to pay rent. Presumably Winter is to make subleases, so called, collect rents and then pay out, disburse or distribute what it collects. But until collection is made, it is under no obligation to pay. That is not conclusive, but it is significant, since the duty is precisely the same as that of an agent. For its activities there is the possibility of reward contingent upon the extent of disbursements made for the specified purposes out of the $23,000, and upon receipts in excess of $105,000. Relieved of all burdens for the future except that of management, it was also released for all defaults in the past in exchange, perhaps, for the surrender of its rights in the money deposited under the original lease. Finally, all the subleases and all rents thereunder are assigned to the owners as collateral security ” for the performance of Winter’s sole obligation which is to pay out, disburse and distribute whatever rents are collected. Except that the existing agreement has an historical background in the original lease, nobody reading it would discover in it anything but an agency contract. Whatever is left of the lease is vestigial.

While it is not necessary to decide the point, it may be suggested that the interest of the owners under the collateral assignment is sufficient to enable them to collect and apply all rents. If that be so, then the receiver would step into the shoes of the owners and the rights of Winter, even though he were a lessee, would remain untouched.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division and the question certified answered in the negative.

Pound, Ch. J., Crane, Lehman, O’Brien and Hubbs, JJ., concur; Loughran, J., not voting.

Ordered accordingly.


author: Crane, J. Crouch, J.

text:
    In the Matter of Walter A. Byrnes, Appellant, against Paul Windels, as Corporation Counsel of the City of New York, Respondent.
    (Argued October 4, 1934;
    decided November 20, 1934.)

      Roy P. Monahan and S. Bertram, Friedman for appellant.

      Paul Windels, Corporation Counsel (Paxton Blair of counsel), for respondent.
   Crane, J.

The Civil Service Law of the State was

enacted pursuant to directions contained in the Constitution (Art. V, § 9, Const. 1894). That law, being chapter 7 of the Consolidated Laws (Laws of 1909, ch. 15), divides the civil service of the State into the unclassified and the classified service. The unclassified service (§9) comprises all elective offices, all offices filled by election or appointment by the Legislature, all persons appointed by name in any statute, all legislative officers and employees and offices filled by appointment by the Governor, except the employees in the executive offices, all election officers, the head or heads of any department of the government, and school officials. Outside of these specified places, all other positions in the State or city are within the classified service. The so-called veterans’ acts, now sections 21 and 22 of the Civil Service Law, apply only to the classified service. (Matter of Flaherty v. Milliken, 193 N. Y. 564; Matter of McEneny v. McKee, 236 App. Div. 140.)

Taking up the classified service, we find that it contains four divisions: the exempt, the competitive, the noncompetitive and the labor class (§ 12), and then proceeds to state what positions are included in the exempt class (§ 13). The purpose of the exempt class is to permit an appointment without civil service examination. The positions which are exempted are (1): the deputies of principal executive offices authorized by law to act generally for and in place of their principals.” This does not necessarily mean that every deputy is put in the exempt class. Only those deputies are thus exempted by the statute itself who are authorized by law to act generally for and in place of their principals. It may be that other deputies could be exempted under subdivision 4 of section 13, which provides that there may be included in the exempt class all other subordinate offices for the filling of which competitive or non-competitive examination may be found to be not practicable. Neither must the inference be drawn that deputies are only those authorized by law to act generally for and in place of their principals. Sections 21 and 22 of the Civil Service Law are the veteran provisions, 21 providing for preference in appointment, and 22 preventing removals except for cause after notice and hearing. This court held in Matter of Fornara v. Schroeder (261 N. Y. 363) that section 22 applied as well to the exempt class as to the competitive, so that a person, serving in a position placed in the exempt class by the civil service, could not be removed without compliance with the provisions of section 22, were he a veteran within its specifications. The Fornara case expressed the rule as it had been recognized in the prior cases of Matter of Eisle v. Woodin, (205 App Div. 452) and Matter of Seeley v. Stevens (190 N. Y. 158).

The petitioner, Walter A. Byrnes, is an Assistant Corporation Counsel of the city of New York, whose position has been classified as exempt, pursuant to section 13. It is conceded that he is a veteran, and that he was removed summarily, without cause, that is, he was not removed for incompetency or misconduct after a hearing upon due notice upon stated charges. He is entitled to reinstatement, unless his position comes within the exception stated in section 22, which is: Nothing in this section shall be construed to apply to the position of private secretary, cashier or deputy of any official, or department.” In the early veterans’ acts (Laws of 1888, ch. 119; Laws of 1894, ch. 716) the exception was: “ The provisions of this act shall not be construed to apply to the position of private secretary or deputy of any official or department, or to any other person holding a strictly confidential position.” (People ex rel. Ostrander v. Morton, 12 Misc. Rep. 476; affd., 146 N. Y. 404.) The latter clause is no longer in the law. We are, therefore, called upon to determine whether the relator was a deputy, with corresponding duties, and designated as such by statutory provision. Merely calling him a deputy is not alone sufficient unless the duties of deputy apply to his office and are specified by some act of the Legislature.

In People ex rel. Hoefle v. Cahill (188 N. Y. 489, and at p. 497) it was stated: “ We think that when the statute excepted from the limitations upon the power to remove certain persons like relator the office of deputy, cashier or private secretary, it contemplates only positions brought within these excepted classes by the terms of the laws which created or authorized and defined them, or at the most positions which under some sufficient authority at the discretion of the appointing or superior power have been invested with the duties and character of one of the excepted positions.”

The mere use of the word deputy ” may not in and of itself create the exception. Thus, in People ex rel. Ryan v. Wells (178 N. Y. 135) a Deputy Tax Commissioner was held not to be a deputy, but a subordinate official. (See, also, People ex rel. Conway v. Barker, 14 Misc. Rep. 360.) In People ex rel. Jacobus v. Van Wyck (157 N. Y. 495) it was held that the veterans’ provisions only applied to subordinate positions and do not include an assessor in New York city who is a public officer vested with discretion in the performance of his duties and not subject to the direction and control of a superior officer. If People ex rel. Griffin v. Lathrop (142 N. Y. 113), relating to the keeper in a prison, appears to be a ruling somewhat at variance with these other cases, it must be noticed that a special act of the Legislature authorized the removal. In other words, the position cannot be classed as a deputyship by the head of the department by the mere use of the word.

A “ deputy ” has been defined by the Standard Dictionary (Funk & Wagnalls Co.) as “ One authorized to act for or in place of another, especially in official relations. A deputy may be general, as empowered to act with the full authority of his principal, or special, as limited to certain duties.” In Words and Phrases Judicially Defined,” “ the term deputy means ‘ one who is appointed, designated, or deputed to act for another.’ (Willis v. Melvin, 53 N. C. 62, 63.)"”

We turn to the charter of the city of New York (Laws of 1901, ch. 466; amd. Laws 1917, ch. 602) and find the powers of the Corporation Counsel in reference to appointments, contained in section 256, and they are these: The corporation counsel may appoint and at pleasure remove as many assistants to the corporation counsel as are necessary to the discharge of the duties of the law department. * * * The corporation counsel may also appoint and at pleasure remove a first assistant corporation counsel who shall during the absence or disability of the corporation counsel possess all the powers and perform all the duties of the corporation counsel. In the event of the death of the corporation counsel, or a vacancy in that office, said first assistant shall act as corporation counsel until the appointment and qualification of a corporation counsel. Any assistant corporation counsel shall, in addition to his other powers, possess every power and perform all and every duty belonging to the office of the corporation counsel, or so much of such duties as the corporation counsel shall deem it necessary to delegate whenever so empowered by said corporation counsel by written authority, designating therein a period of time, not extending beyond three months, nor beyond the term of office of said corporation counsel, during which such power and authority may be exercised; such designation and authority must be duly filed and remain on record in the law department, and may be revoked at any time.” Note in passing that the First Assistant Corporation Counsel is within the exempt class by direct statutory provision (Civil Service Law, § 13, subd. 1), and it is conceded that the position of the petitioner has been placed within the exempt class, no doubt in compliance with subdivision 4 of the same section. We are of the opinion that these Assistant Corporation Counsels, given by the charter additional powers, to wit, “ every power and perform all and every duty belonging to the office of the corporation counsel or so much of such duties as the corporation counsel shall deem it necessary to delegate,” became deputies within the meaning of the exception to the provisions of section 22. The provisions of the charter, above quoted, specifically define what may be the duties of an Assistant Corporation Counsel when specially delegated or authorized by the head of the department. Here is the statutory authority given to the appointing or superior officer to invest these Assistant Corporation Counsels with the duties and character of the Corporation Counsel himself. They are deputized to act for him and to possess every power and perform all and every duty belonging to the office. The Corporation Counsel may appoint an assistant but, when once appointed, that assistant may have the power and authority which is thus given him by statute. In other words, he may become a deputy. That the classification of “ deputy ” in section 13, subdivision 1, is not intended to be a definition or hmitation upon the use of the word throughout the entire act, is quite evident, when we see that the position of cashier or private secretary, if there be more than one, is not included in section 13, but is included in the exception to section 22. In other words, deputy,” in this exception, may be broader in meaning than when used in subdivision 1 of section 13.

The necessity for this provision in the charter is quite apparent when we remember the duties devolving upon the Corporation Counsel of a great city like New York, and which must be delegated to other lawyers. He is the law officer of the city and must appear in courts to defend or prosecute the city’s litigation. He cannot do this work himself. It is a physical impossibility to be done by one deputy. There must be numerous lawyers to handle this work, not merely for the Corporation Counsel, but for the city, and while doing it they act very largely upon their own responsibility. Such at least must be the case when appearing in court. Discretion also very largely rests with these assistant lawyers in the proper disposition of the case outside of court. Upon them rests as much responsibility in the individual cause submitted to them as upon the head of the department or an attorney representing a private client. Thus, the charter from necessity says that in addition to their other duties they “ possess every power and perform all and every duty belonging to the office of the corporation counsel, * . * * whenever so empowered.”

We, therefore, consider the position of this petitioner different from that of the other applicants who appeared before this court at the last session, in that they were not deputies, but held subordinate offices. (Matter of Mafera v. Pasta, 265 N. Y. 552; Matter of Kiernan v. Ingersoll, 265 N. Y. 553; Matter of Murray v. Blanshard, 265 N. Y. 554; Matter of MacMaster v. Harvey, 265 N. Y. 555.)

For this reason, the ruling of the courts below has been correct, and the order should be affirmed, with costs.

Crouch, J.

(dissenting). I dissent upon the ground that until an Assistant Corporation Counsel has been empowered by the written authority of the Corporation Counsel delegating to such assistant all or some part of the authority which is vested by law in the Corporation Counsel alone, such assistant can by no stretch of language be fitly called a deputy. The meaning and intent of section 256 of the charter seem to me to be unmistakably to that effect. •

Pound, Ch. J., Lehman, O’Brien and Hubbs, JJ., concur with Crane, J.; Crouch, J., dissents in memorandum in which Loughran, J., concurs.

Order affirmed.


text:
    Walter W. Cox et al., Appellants and Respondents, v. The City of New York, Respondent, and The New York Central Railroad Company, Respondent and Appellant.
    (Argued October 8, 1934;
    decided November 20, 1934.)

      John Jay McKelvey for plaintiffs, appellants and respondents.

      Kenneth O. Mott-Smith, Frederick L. Wheeler and Clive C. Handy for New York Central Railroad Company, respondent and appellant.

      Paul Windels, Corporation Counsel (Alfred D. Jahr and Anson Getman of counsel), for City of New York, respondent.
   Loughran, J.

This is an action for a mandatory injunction against the disturbance of easements of the plaintiffs in a public highway, with damages to the time of trial. The cause of action has been established only against the defendant railroad company, and the controversy between that defendant and the plaintiffs is, in substance, now reduced to the question whether the trial court, after denying an injunction, was warranted in directing that, in exchange for their property rights, the plaintiffs have judgment for a sum of money only.

The act complained of is the removal by the defendant railroad company of two bridges which carried the highway over its tracks. That defendant in good faith supposed that it owned the easements in question under a conveyance from the defendant city of New York. The cost of restoration of the bridges would largely exceed the value of the rights invaded. Over their exception, the easements of the plaintiffs have been extinguished by the judgment for damages against the defendant railroad company. To the form of the judgment, the defendant railroad company expressly assented.

The result is challenged as transcending the equity jurisdiction of the court. The plaintiffs urge that, without their consent, they may not be made to accept relief which they did not and could not ask. They contend that they had no adequate opportunity to litigate an issue introduced by the court. A wrong has been sanctioned, so it is argued, because the wrongdoer is able and ready to pay money for the injury inflicted.

On the contrary, as we think, the judicial discretion committed to the court was soundly exercised in the exceptional circumstances.

Originally the Court of Chancery, although it might exact an account of the profits of a wrong, could not award damages. The Supreme Court is vested with both legal and equitable powers, but this fusion of administration did not abolish “ the essential and permanent difference between legal and equitable relief. For the distinction between a judgment that the plaintiff recover land, chattels or money, and a judgment that the defendant do or refrain from doing a certain thing, is as vital and far-reaching as ever.” (Ames, Lectures on Legal History and Legal Essays, 311. So, Reubens v. Joel, 13 N. Y. 488, 493; Stevens v. Mayor, 84 N. Y. 296, 304, 305; Gould v. Cayuga County Nat. Bank, 86 N. Y. 75, 83; Sadlier v. City of New York, 185 N. Y. 408, 414; Jackson v. Strong, 222 N. Y. 149, 154; City of Syracuse v. Hogan, 234 N. Y. 457.)

The practice here adopted has no exact precedent in this court. “We have been referred to no case in this State where an equity court has assumed the authority to render judgment for prospective damages against a wrong-doer, and, we think, in the nature of the jurisdiction of such courts, a suit brought for such a purpose alone is not authorized. To say, therefore, that an action in which the plaintiff has no legal right to demand permanent damages, and the court owes no legal duty to award them, affords the owner an adequate remedy for such damages, is to pervert the plain character of the action. While equity courts have frequently suspended the remedy, as they did in this case, by injunction upon conditions, as for a specified time, or until the wrong-doer has been afforded an opportunity to condemn the property invaded, or has satisfied the owner’s damages, they have never, to our knowledge, rendered judgment for such damages or authorized the collection thereof by the owner.” (Galway v. Metropolitan Elevated Ry. Co., 128 N. Y. 132, 149.) When that language was written the Supreme Court lacked competency to determine the compensation to be made for private property taken for public use. The power now exists except when such compensation is to be made by the State. (Const. art. 1, § 7.) It is not disputed that the easements of the plaintiffs could have been acquired by the defendant railroad company through condemnation. The rule of injunction and alternative damages established by the elevated railroad cases (Galway v. Metropolitan Elevated Ry. Co., supra) was declared in part upon the authority of English decisions which applied Lord Cairns’ Act (21 & 22 Vict. ch. 27), authorizing an award of damages in substitution for an injunction. (Henderson v. N. Y. C. R. R. Co., 78 N. Y. 423. The authorities are collated in a note in 20 L. R. A. 752.) Lord Cairns’ Act has been repealed (46 & 47 Vict. ch. 49), but the jurisdiction to give damages in lieu of an injunction continues in England. (Gale on Easements [11th ed.], pp. 552-557; Goddard on The Law of Easements [7th ed.], pp. 458-470.) So in this State, an action like the present is, in practical effect, a substitute for condemnation proceedings. (American Bank Note Co. v. New York Elevated R. R. Co., 129 N. Y. 252, 270; O'Reilly v. New York Elevated R. R. Co., 148 N. Y. 347, 357.)

An injunction with its alternative damages would have been as unacceptable to the plaintiffs as the present judgment. They took the position that they would be content with nothing less than the unconditional injunction demanded by them. Certainly they have not been aggrieved by the acceleration of receipt of their damages. The Special Term was of opinion that proof had been supplied of all factors upon which full compensation for the easements of the plaintiffs was to be fixed. It is true that the plaintiffs asserted the contrary. There was, however, no request by them for the chance to present additional evidence. It was perhaps going too far to direct that the mere entry of judgment should put an end to their rights, but the judgment is not questioned in that particular.

The judicial discretion of the Special Term was, we repeat, validly exercised in the state of the record.

The Appellate Division modified the judgment upon new findings, by reducing the damages awarded. We think that the new findings follow the weight of the evidence. The property to which the easements of the plaintiffs were appurtenant is situated in the county of Bronx, city of New York. The land is a mile distant from principal traffic arteries. It is vacant and unimproved, and has never been used for any purpose. Destruction of the easements in question leaves the property accessible over other thoroughfares. Upon a new trial of the issue of the amount of damages, the plaintiffs could add nothing to this record but further real estate expert testimony. That such proof would produce a substantially different result is quite unlikely.

The judgment dismissing the complaint against the defendant City of New York and the award to the plaintiff of $1,150 damages against the defendant railroad company should be affirmed, without costs. The appeal of the New York Central Railroad Company has been marked withdrawn in accordance with the concession of that defendant.

Pound, Ch. J., Crane, O’Brien and Hubbs, JJ., concur; Lehman and Crouch, JJ., dissent.

Judgment accordingly.


author: Lehman, J.

text:
    In the Matter of American Fibre Chair Seat Corporation. William Daum et al., Appellants; Arthur J. Kinsman, Respondent.
    (Argued October 5, 1934;
    decided November 20, 1934.)

      James J. Armstrong and Isidore I. Haber for appellants.

      Isaac N. Jacobson for respondent.
   Lehman, J.

The certificate of incorporation, filed in the office of the Secretary of State in 1915, contains no provision for cumulative voting by the stockholders of the corporation. In 1921 the capital stock of the corporation was increased to 350 shares of the par value of $100 each. The entire increased capital stock, with the exception of one share, was issued to three stockholders. Each received and still held 116| shares until the dispute arose which gave rise to this proceeding. Prior to 1921 Arthur J. Kinsman had directed the corporate business. He took into the business his two brothers-in-law, but he stipulated that provision must be made which would protect him against loss of control of the business. Accordingly, new by-laws were adopted in 1921 by the unanimous vote of the stockholders. These by-laws provided for cumulative voting for directors. The by-laws also required a unanimous vote of the directors or a vote of eighty-five per cent of the stockholders to amend the by-laws or to remove an officer. If these by-laws are valid and enforceable, Kinsman, through the ownership of one-third of the capital stock of the corporation, could elect a director and prevent important change in the policies or administration. The stockholders went further. By unanimous vote, a resolution was adopted for the amendment of the certificate of incorporation by adding the following additional provisions:

“ (a) That at all elections of directors of said corporation, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit.

(b) That the number of directors shall not be changed, except by unanimous consent of all the stockholders.” The president and secretary of the corporation were directed to execute and file the proper certificates as provided by law to carry out and effectuate the purpose of the resolution. No amended certificate was filed by them.

For many years the three stockholders jointly directed the affairs of the corporation and elected its directors. Then dissension arose. At a meeting held on March 3, 1934, an election of four directors was held. Two of the stockholders cast one vote for each share of stock which they owned in favor of four candidates. Kinsman cast his votes cumulatively for another candidate, multiplying the number of bis shares by the number of directors to be elected. His right to cast more than one vote for each share of his stock has been denied by the other stockholders, and he has brought proceedings under section 25 of the General Corporation Law (Cons. Laws, ch. 23) and has asked the court to confirm the election of the candidate for whom he voted.

Unless otherwise provided in the certificate of incorporation or other certificate filed pursuant to law, every stockholder of record of a stock corporation shall be entitled at every meeting of the corporation to one vote for every share of stock standing in his name on the books of the corporation.” (Stock Corporation Law, § 47; Cons. Laws, ch. 59.) The certificate of incorporation of any stock corporation or other certificate filed pursuant to law may provide that at all elections of directors of such corporation each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit, which right, when exercised, shall be termed cumulative voting.” (Stock Corporation Law, § 49.)

We find in these sections of the statute a legislative declaration that provision for cumulative voting is not against public policy, but such provision can be made only by the certificate of incorporation or amendment thereto filed pursuant to law. A corporation is a purely artificial body created by law. It can act only in accordance with the law of its creation. The stockholders of a corporation may be the real owners of the corporation, but their right to control the corporation is governed by the law of its creation. Once the stockholders’ rights are fixed they cannot be changed except in the manner provided by law. In some matters the statute permits change by amendment to the by-laws. Then a stockholder takes his stock subject to the possibility of change of rights in that manner. In other matters the law may forbid any change or permit change only through amendment of the certificate of incorporation. It is plain that the voting rights of stockholders fixed by the corporate charter are immune from change except by amendment of the certificate of incorporation.

Here, however, all the stockholders have agreed to a provision, for cumulative voting. They had the power by unanimous vote to authorize and direct their appropriate officers to prepare and file an amendment to the certificate of incorporation which would embody such provision in accordance with law. Concededly their agreement was lawful, and the resolution directing the officers of the corporation was also lawful. Then they had exhausted then powers as stockholders. All that remained to be done in order to effectuate their agreement was the formal preparation and filing of the required certificate by the officers of the corporation in accordance with the unanimous resolution and lawful command of the stockholders.

The question presented on this appeal is whether the failure of the officers to obey the command of the corporate stockholders precludes Kinsman from exercising a right of cumulative voting. The other stockholders cannot complain, for they voluntarily and for a sufficient consideration agreed that each stockholder should have such right. The corporation cannot complain, .for its stockholders have unanimously passed the necessary corporate resolutions and the corporate officers are under a duty to take the steps necessary to carry the resolutions into effect. The rights of no purchaser of stock or creditor or other third party is involved and the State has no interest in the controversy.

Thus the objection to the validity of the by-law is purely technical. If the stockholders had not directed the officers to file the amended certificate they could have been compelled to do so by decree of specific performance unless damages would have afforded a sufficient remedy for the repudiation of their agreement. After the resolution was adopted, the officers could have been compelled to perform their duty. Where no rights of third parties are involved and no public policy of the State violated, the courts will give effect to the agreement of the stockholders and the corporate resolution. (Cf. Fitzsimmons v. Lindsay, 205 Penn. St. 79; Weiland v. Hogan, 177 Mich. 626.)

The order should be affirmed with costs.

Pound, Ch. J., O’Brien,. Hubbs, Crouch and Loughran, JJ., concur; Crane, J., dissents.

Order affirmed.