text:
    Jessie Schubert, Respondent, v. August Schubert Wagon Company, Appellant.
    (Argued October 15, 1928;
    decided November 20, 1928.)

      Warnick J. Kernan, Edward J. Burns, Jr., and Willis D. Morgan for appellant.
    As against August Schubert individually, who is the husband of plaintiff and who was defendant’s servant, plaintiff has or can have no cause of action for personal injuries founded upon his negligence. (Freethy v. Freethy, 42 Barb. 641; Longendyke v. Longendyke, 44 Barb. 366; Schultz v. Schultz, 89 N. Y. 644; Abbe v. Abbe, 22 App. Div. 483; Perlman v. Brooklyn City R. R. Co., 117 Misc. Rep. 353; 202 App. Div. 822; Newton v. Weber, 119 Misc. Rep. 240; Allen v. Allen, 246 N. Y. 571.) Plaintiff’s cause of action against defendant being secondary to or derived from her cause of action, if any, against defendant’s servant who was driving the automobile, having no cause of action against the servant she can have no cause of action against defendant. (Webb’s Pollock on Torts, 99; Alabama Great Southern R. R. Co. v. Ensley T. & S. Co., 100 So. Rep. 342; Horgan v. Boston Elevated R. R. Co., 208 Mass. 287; Featherson v. President, etc., 24 N. Y. Supp. 603; Pangburn v. Buick Motor Co., 211 N. Y. 228; New Orleans, etc., R. R. Co. v. Jopes, 142 U. S. 18; Hein v. Sulzberger & Sons Co., 175 App. Div. 465; Maine v. Maine & Sons Co., 201 N. W. Rep. 20; Riser v. Riser, [Mich.] 215 N. W. Rep. 290.) To permit a recovery by plaintiff against the defendant master — having no right of action against the servant husband — would be to suffer, by indirection, a result to which a sound public policy is opposed. (Longendyke v. Longendyke, 44 Barb. 366; Newton v. Weber, 119 Misc. Rep. 240; Perkins v. Perkins, 62 Barb. 531; 2 S. & R. on Neg. [6th ed.] § 242; Cooley on Torts [3d ed.], 255; 2 Thomp. on Neg. 1061; Whart. on Neg. § 246; Oceanic, etc., Lid., v. Campania, 134 N. Y. 461; Emerson v. Weston Seed & Irrigation Co., 216 N. W. Rep. 297.)

      James T. Cross for respondent.
    A married woman has the right under the New York statute to recover damages from a corporation for the actionable negligence of its servant and employee while engaged in the performance of the business of the corporation, notwithstanding such servant and employee is the husband of the married woman. (Dom. Rel. Law, § 57.) The master’s liability arises directly from the negligent act of its servant when the master would be liable for the same act if done by itself. (Wright v. Wilcox, 19 Wend. 342.)
   Cardozo, Ch. J.

Plaintiff while in the highway was struck by the defendant’s car and injured. The car causing the hurt was driven by plaintiff’s husband, who was then in the defendant’s service. His negligence is not disputed. The employer would have been liable if the servant, the driver of the car, had been a stranger to the plaintiff. The question is whether the rule of liability is different where the servant is the husband.

We have held that a wife may not maintain an action against a husband, nor a husband against a wife, for personal injuries, whether negligent or willful (Schultz v. Schultz, 89 N. Y. 644; Allen v. Allen, 246 N. Y. 571; cf. Thompson v. Thompson, 218 U. S. 611). There is no doubt that this was the rule at common law. Schultz v. Schultz, decided in 1882, held that the rule had not been changed by the statutes then in force. The disability was reciprocal, affecting the man as well as the woman, and was based upon the common-law doctrine of the merger of their beings in the unity of marriage. The Legislature, confronted by that decision and by others of like tenor (Abbe v. Abbe, 22 App. Div. 483; Perlman v. Brooklyn City R. R. Co., 117 Misc. Rep. 353; 202 App. Div. 822), has left the applicable statutes unchanged in point of substance. We held very recently that in the absence of amendment the rule thus interpreted must be deemed to have survived (Allen v. Allen, supra).

The disability of wife or husband to maintain an action against the other for injuries to the person is not a disability to maintain a like action against the other’s principal or master. There are, indeed, decisions to the contrary by courts of other States (Maine v. Maine & Sons Co., 198 Ia. 1278; Riser v. Riser, 240 Mich. 402; Emerson v. Western Seed & Irrigation Co., [Mich.] 216 N. W. Rep. 277). We are unable to accept them. True, of course, it is that a master is not hable for the act of his servant under the rule of respondeat superior if the act itself was lawful (New Orleans & N. E. R. R. Co. v. Jopes, 142 U. S. 18; Pangburn v. Buick Motor Co., 211 N. Y. 228). A judgment to that effect in an action against the servant may be pleaded as a bar in an action against the master (Freeman on Judgments, vol. 1, p. 1031, and cases there cited). So, accord and satisfaction, or release, will have the same effect as they have upon joint tort feasors generally (Morgan v. Boston Elevated Ry. Co., 208 Mass. 287). But the master is not exonerated when the servant has had the benefit of a covenant not to sue (Gilbert v. Finch, 173 N. Y. 455; Walsh v. N. Y. C. & H. R. R. R. Co., 204 N. Y. 58), or has set up a discharge in bankruptcy, or has escaped liability upon grounds not inconsistent with the commission of a wrong unreleased and unrequited. No doubt one can gather pronouncements from treatise or decision which, taken from their setting, give color of support for an exemption even wider. They have no such effect when related to context and occasion. Few formulas are meant to serve as universals. A progeny deformed or vicious may be known as illegitimate. Here as elsewhere we are to be on our guard against the perils that are latent in “ a jurisprudence of conceptions ” (Hynes v. N. Y. C. R. R. Co., 231 N. Y. 229, 235).

An employer commits a trespass by the hand of his servant upon the person of another. The act, let it be assumed, is within the scope either of an express mandate or of an implied one. In either event, if the trespass is not justified, he is brought under a distinct and independent liability, a liability all his own. -The statement sometimes made that it is derivative and secondary (Pangburn v. Buick Motor Co., supra), means this and nothing more, that at times the fault of the actor will fix the quality of the act. Illegality established, liability ensues. The defendant, to make out a defense, is thus driven to maintain that the act, however negligent, was none the less lawful because committed by a husband upon the person of his wife. This is to pervert the meaning and effect of the disability that has its origin in marital identity. A trespass, negligent or willful, upon the person of a wife, does not cease to be an unlawful act though the law exempts the husband from liability for the damage. Others may not hide behind the skirts of his immunity. The trespass may be a crime for which even a husband may be punished, but whether criminal or not, unlawful it remains. As well might one argue that an employer commanding a husband to commit a battery on a wife, might justify the command by the victim’s disability. The employer must answer for the damage whether there is trespass by direct command or trespass incidental to the business committed to the servant’s keeping. In each case the maxim governs that he who acts through another, acts by himself. In all this there is nothing at war with the holding of some cases that the remedy against the husband is denied altogether, and not merely suspended during coverture (Phillips v. Barnet, 1 Q. B. D. 436). Unlawful the act remains, however shorn of a remedy (Bennett v. Bennett, 116 N. Y. 584).

We are told that in the long run the consequences of upholding an action against the master may be to cast the burden on the husband, since the master, if not personally at fault, has a remedy over (Oceanic Steam Nav. Co. v. Compania Transatlantica Espanola, 134 N. Y. 461; Wash. Gas Light Co. v. Dist. of Col., 161 U. S. 316, 327; Boston, etc., Co. v. Kendall, 178 Mass. 232). The consequence may be admitted without admitting its significance as a determining factor in the solution of the problem. The master who recovers over against the servant does not need to build his right upon any theory of subrogation to a cause of action once belonging to the victim of the injury. A sufficient basis for his recovery is the breach of an independent duty owing to himself. The servant owes the duty to the master to render faithful service, and must answer for the damage if the quality of the service is lower than the standard (Dun v. Uvalde Asphalt Paving Co., 175 N. Y. 214). Loss there must be, not merely liability, before indemnity is due (Dun v. Uvalde Asphalt Pav. Co., supra, at p. 218; Gilbert v. Wiman, 1 N. Y. 550; Brown v. Mechanics & Traders’ Bank, 16 App. Div. 207). The servant shall respond when the master shall have paid.

We find no collision between the principle of liability established in this case and the principle of exemption established in actions against a husband. If such collision, 0 however, could be found, with the result that one or other principle must yield, we agree with Hubbs, P. J., writing in the court below, that the exemption would have to give way as an exception, more or less anomalous, to a responsibility which today must be accepted as the general rule-. Domestic Relations Law (Cons. Laws, ch. 14), § 57, is explicit that a married woman has a right of action for an injury to her person, property or character * * * as if unmarried.” By authority and tradition, an exception has been engrafted upon this rule where the husband is defendant. We are not at liberty to extend it by dubious construction.

The judgment should be affirmed with costs.

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

Judgment affirmed.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    B. N. Exton & Co., Inc., Respondent, v. Home Fire and Marine Insurance Company et al., Appellants.

      (Argued October 16, 1928;
    decided November 20, 1928.)

      Edgar J. Nathan for appellants.
    Fire insurance is a contract essentially personal in its nature. It does not insure property but the interest of the insured named in the policy. (Brownell v. Board of Education, 239 N. Y. 369 )Lett v. Guardian Fire Ins. Co., 125 N. Y. 82; Richards on Ins. [3d ed.] § 60.) The trust and commission clause is essentially different from the clause “ on account of whom it may concern.” (Hooper v. Robinson, 98 U. S. 528; Hagan v. Robinson, 98 U. S. 528; Palmer v. Great Western Ins. Co., 10 Misc. Rep. 167.)

      Robert Kelly Prentice for respondent.
    A policy on goods held in trust or on commission will cover all the goods with which the party procuring the policy is intrusted, and is not confined to goods held in trust, in .the strict technical sense, but extends to ordinary bailments. (De Forest v. Fulton Fire Ins. Co., 1 Hall, 84; Lee v. Adsit, 37 N. Y. 90; Stillwell v. Staples, 19 N. Y. 401; Waring v. Indemnity Fire Ins. Co., 45 N. Y. 606; Burke v. Continental Ins. Co., 184 N. Y. 77; Home Ins. Co. v. Baltimore Warehouse Co., 93 U. S. 527; Munich Assurance Co. v. Dodwell, 128 Fed. Rep. 410; Home Ins. Co. v. Minn.,

      St. Paul, etc., R. R., 71 Minn. 296; Herkimer v. Rice, 27 N. Y. 163; Symmers v. Carroll, 207 N. Y. 632.)
   Crane, J.

In October of 1922, Miller, Tompkins & Co. ordered nineteen rolls of paper from thé Brown Company. The former company was a domestic corporation, manufacturing paper bags and sacks; the latter a foreign corporation manufacturing paper. The rolls of paper were delivered at 485-487 Washington street, Manhattan borough, New York city, the purchaser’s place of business. The paper was rejected as not of the quality ordered and by agreement the purchase was canceled. Brown Company, however, requested Miller, Tompkins & Co. to hold the merchandise in its place of business for further instructions. The paper remained in the premises of Miller, Tompkins & Co. until it was destroyed by fire on January 13, 1923.

The defendants had insured Miller, Tompkins & Co. against loss by fire, the policies covering on stock, materials and supplies, including labor performed thereon in all stages, including packages and labels, contained in said premises No. 485-487 Washington Street, New York City, the property of the assured or held in trust or on commission, or sold but not delivered or held on joint account with others and also the property of others for which the assured may be or agree to become liable in case of loss or damage by fire.”

The insured had not agreed to become liable for the property of the Brown Company in case of loss or damage by fire, and was not liable for any negligence in causing the fire.

Miller, Tompkins & Co. refused to include any claim for such merchandise belonging to the Brown Company in its proof of loss.

The property of Miller, Tompkins & Co. was also damaged and destroyed to the amount of $55,049.69, the total amount of the insurance under the policies issued by the defendants being $61,000. There was insurance sufficient to cover all losses.

With notice of the claims and the loss of the Brown Company, the defendants settled with Miller, Tompkins & Co., but failed and refused to pay the loss of the Brown Company, denying all and any liability to it under the policies. ' The defense is that the policies covered only the property of Miller, Tompkins & Co. and not that which it held as bailee. The Brown Company, on the other hand, claim that under the trust and commission ” clause, so called, the policies covered its nineteen rolls of paper which the Miller, Tompkins Co. was holding in its place of business.

The plaintiff in this action is an assignee of the Brown Company’s claim.

We are of the opinion that the policies in this case covered the Brown Company’s paper. It was property held in trust ” by the Miller, Tompkins Co. for the Brown Company, within the meaning which has been given to these words in the insurance business and insurance law.

The words ‘ in trust ’ may, with entire propriety, be applied to any case of bailment, where goods belonging to one person are entrusted to the custody or care of another, and for which the bailee is responsible to the owner.” (Stillwell v. Staples, 19 N. Y. 401.)

“ The phrases describing property as held in trust,’ or ‘ on commission,’ and kindred terms, in a policy to an agent, factor or the like, have been held as giving to the owner of the property a right to take the place of the insured, to adopt the contract, and to enforce it in his own name or that of his agent.” (Waring v. Indemnity Fire Ins. Co., 45 N. Y. 606, p. 610, p. 612. See, also, Lewis v. Home Insurance Co., 199 App. Div. 556; affd., without opinion, 234 N. Y. 498; and Home Insurance Co. v. Baltimore Warehouse Co., 93 U. S. 527, where it was said that the phrase “ held in trust ” is to be understood in its mercantile sense.)

Utica Canning Co. v. Home Insurance Co. (132 App. Div. 420) was decided upon facts similar to these before us now. While that case did not come to this court, we see no reason for departing from the principles and the result there stated. True, the presiding justice in his opinion included a quotation which said that this form of trust or commission ” policy is similar in its legal effect to the policy for whom it may concern,” and arises in much the same way. Even though the latter clause, generally found in marine policies, is much broader than the former phrase used in fire insurance policies (Hooper v. Robinson, 98 U. S. 528, 537), the reasoning of the opinion is correct and would not be affected by omitting the comparison.

The Brown Company’s paper was, therefore, covered by the defendant’s policies. Yet it will do the company little good unless this action can be maintained. Miller, Tompkins Co. refused to include the loss in its proof of claim; it settled for the damage to its own property, leaving out the Brown Company, and of course refused to maintain any action on the policies in behalf of the latter company. Its position was and is that the policies did not cover the Brown Company’s damage. The insurance companies took a like position and settled with the Miller, Tompkins Co., knowing of the Brown Company’s loss and claim. Unless this action lies, the Brown Company and its assignee are without remedy. Such lapses the law seeks to avoid.

What would be the procedure if an insured included in his proof of loss the damage suffered to his bailor’s property and was willing to undertake its collection, we are not called upon to decide upon the facts here presented.

The judgment should be affirmed, with costs.

Cardozo, Ch. J., Pound, Andrews, Kellogg and O’Brien, JJ., concur; Lehman, J., not sitting.

Judgment affirmed.


author: Andrews, J.

text:
    Alexander B. Enoch, Respondent, v. John R. Brandon et al., Appellants.
    (Argued October 18, 1928;
    decided November 20, 1928.)

      Charles F. Blair for appellants.
    The bond, when accurately construed, contains an absolute promise to pay on a definite date. This promise is not qualified by reference to the mortgage contained in the bond. (Lisman v. Michigan Peninsular Car Co., 50 App. Div. 311; Old Colony Trust Co. v. Stumpel, 126 Misc. Rep. 375; 247 N. Y. 538; King Cattle Co. v. Joseph, 199 N. W. Rep. 437; Bank of Manhattan Company v. Morgan, 242 N. Y. 38.)

      Samuel Zinman, Harold Schwarzberg and Nathan B. Bernstein for Saul Solomon et al., amici curice.

    The promise to pay contained on the face of the bonds is absolute and unconditional. The references to the mortgage serve merely to indicate the source of and the conditions attached to the rights of the bondholders in relation to the security underlying the primary obligation and to such further rights as are conferred upon the bondholders 'by the mortgage provisions which supplement but do not qualify the rights arising out of the absolute promise to pay. (Hibbs v. Brown, 112 App. Div. 214; 190 N. Y. 167; Higgins v. Hocking Valley Railway Co., 188 App. Div. 684; Old Colony Trust Co. v. Stumpel, 247 N. Y. 538; Batchelder v. Council Grove Water Co., 131 N. Y. 42; Watson v. Chicago, R. I. & P. R. R. Co., 169 App. Div. 663; McClelland v. Norfolk Southern Ry. Co., 110 N. Y. 469.)

      Alfred H. Martin for respondent.
    The clauses referring to the mortgage ipso facto render the bonds non-negotiable and no examination of the terms of the mortgage is necessary. (Old Colony Trust Co. v. Stumpel, 247 N. Y. 22; Hull v. Angus, 118 Pac. Rep. 284; King Cattle Co. v. Joseph, 199 N. W. Rep. 437; Bank of Manhattan Co. v. Morgan, 242 N. Y. 38; Verner v. White, 108 So. Rep. 368; Central National Bank v. Hubbel, 154 N. E. Rep. 551; American Exchange Bank v. Blanchard, 89 Mass. 333; Dilley v. Van Wie, 6 Wis. 209; Gushing v. Field, 70 Me. 50; McComas v. Haas, 8 N. E. Rep. 579.) The bonds recite on their face that they are subject to the terms of the mortgage which latter are wholly inconsistent with the requirements of negotiability. (McClelland v. Norfolk &

      Southern Ry. Co., 110 N. Y. 469; Union Nat. Bank v. Chapman, 169 N. Y. 538; International Text Book Co. v. Connelly, 206 N. Y. 188.)

      Augustus L. Richards and Alanson W. Willcox for Ulster and Delaware Railroad Company, amicus curice.

    The bonds incorporate by reference the provisions of the mortgage, and subject every holder to the restrictions therein contained. (Old Colony Trust Co. v. Stumpel, 247 N. Y. 538; McClelland v. Norfolk Southern Railroad Co., 110 N. Y. 469; Watson v. Chicago, R. I. & P. R. R. Co., 169 App. Div. 663; Rothschild v. Rio Grande Western Ry. Co., 84 Hun, 103; 164 N. Y. 594; McClure v. Township of Oxford, 94 U. S. 429; Crosthwaite v. Moline Plow Co., 298 Fed. Rep. 466; Allan v. Moline Plow Co., 14 Fed. Rep. [2d] 912; Babbitt v. Read, 236 Fed. Rep. 42; Klois Throwing Co. v. Manufacturers’ Commercial Co., 179 Fed. Rep. 813; Muren v. Southern Coal & Mining Co., 177 Mo. App. 600; Boley v. Lake Street El. R. Co., 64 111. App. 305; Kohn v. Sacramento Electric, Gas & Ry. Co., 168 Cal. 1; Hull v. Angus, 60 Ore. 95; American Exchange Bank v. Blanchard, 7 Allen [Mass.], 333.) The provisions incorporated into the bonds are such as to destroy negotiability. (McClelland v. Norfolk Southern R. R. Co., 110 N. Y. 469; Hibbs v. Brown, 190 N. Y. 167; Higgins v. Hocking Valley Ry. Co., 188 App. Div. 684; Title Guarantee & Trust Co. v. Pam, 232 N. Y. 441; Tradesmen’s Nat. Bank v. Curtis, 167 N. Y. 194; Klots Throwing Co. v. Manufacturers’ Commercial Co., 179 Fed. Rep. 813; Central National Bank v. Hubbel, 258 Mass. 124.)
   Andrews, J.

The question before us is whether certain bonds are negotiable instruments. If so, the purchaser in due course from a thief may retain them.

The Manitoba Power Company issued a series of bonds. It promised to pay the bearer of each on November 1,1941, a certain sum at a certain place, with interest. They are said to be “ all equally secured by and entitled to the benefits and subject to the provisions ” of a trust mortgage. They may be redeemed at 105 per cent and interest at certain dates. The obligor must create a sinking fund to provide for their purchase or redemption and the principal may become due in advance of maturity in case of default under the mortgage; all as provided in the mortgage “ to which reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds with respect thereto, the manner in which notice may be given to such holders, and the terms and conditions upon which said bonds are issued and secured.” The bonds may be registered in the usual way and except where registered “ they are to be treated as negotiable and all persons are invited by the Company to act accordingly.”

At times this last provision might aid in the construction of doubtful clauses contained in the instrument before the court. It at least shows that the parties intended to omit anything that might impair negotiability. But no such statement will make negotiable a bond not in the form provided by our statute. Whether the result was or was not fortunate it is too late to argue that the Legislature did not refer to bonds in its all-inclusive definitions of negotiable paper. True, to become negotiable an instrument need not follow .any precise language. (Negotiable Instruments Law [Cons. Laws, ch. 38], sec. 29.) But it “must conform” to the definition specified in section 20. In the face of a command so explicit we must adhere to the design of the Legislature (Amer. Nat. Bank v. Sommerville, 191 Cal. 364.) At times .contract rights may be enforced or some theory of estoppel adopted, but no intention, no agreement, may make negotiable an instrument which the statute declares to be non-negotiable.

We turn, therefore, to the more serious question. The statute deals with the form of the instrument — with what a mere inspection of its face should disclose. It must contain an unconditional promise to pay a fixed sum, on demand, or at a fixed or determinable future time, to order or to bearer. Only if it fulfills these requirements is it negotiable. If it does, no collateral agreement affects its character.

If in the bond or note anything appears requiring reference to another document to determine whether in fact the unconditional promise to pay a fixed sum at a future date is modified or subject to some contingency, then the promise is no longer unconditional. What that document may provide is immaterial. Reference to the paper itself said to be negotiable determines its character. (Old Colony Trust Company v. Stumpel, 247 N. Y. 538.)

Provisions other than those required by section 20 may be contained in a bond or note without impairing its negotiability. There may be included, among other things, a statement of the transaction giving rise to the instrument (sec. 22) or a statement as to collateral security. (Sec. 24.) And it may refer to a trust mortgage, or to an agreement as to the collateral which fixes the remedies of the parties with respect thereto. (Chelsea Bank v. Warner, 202 App. Div. 499.)

The rule itself is not a difficult one. The trouble, as often happens, lies in its application to particular facts. There is no infallible test as to whether there is a modification of the promise. Because of differences in the words used, or in the arrangement of paragraphs, sentences or clauses, each instrument must be interpreted by itself. Only then may we solve the question as to its character.

Three cases in this State will serve as an illustration. In McClelland v. Norfolk Southern R. R. Co. (110 N. Y. 469) the bond itself showed that the promise to pay was a conditional one. It was to become payable upon the terms and with the effect mentioned in the trust mortgage. In Hibbs v. Brown (190 N. Y. 167) the precise form of the bond involved does not appear in the printed case and exceptions. It did, however, contain a clause referring to the deed of trust for a statement of the rights of the bondholders and of the securities and property securing the payment of. the bonds,” and we said that this clause had only to do with procedure under the trust indenture. In Old Colony Trust Company v. Stumpel (247 N. Y. 538) the note stated that it was “ subject to the terms ” of a conditional sales agreement. Here by no possibility did the clause relate to security. Necessarily it had to do with the terms of payment.

Do then the references in these particular bonds to the trust mortgage modify the promise to pay; do they subject it to some possible condition or contingency described elsewhere, or do they merely determine the rights and remedies of the holder under the mortgage? We must consider the instrument as a whole, not wresting any one phrase from its context and concentrating our attention upon it alone. Further, where the meaning is doubtful, we must adopt the construction most favorable to the bondholder.

The bonds are part of an issue of $7,500,000, all equally secured by and entitled to the benefits and subject to the provisions ” of the trust mortgage. Then, speaking of possible redemption, of acceleration of payment, of a sinking fund and of notice, it continues all as provided ” in the trust mortgage to which reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds with respect thereto, the manner in which notice may be given to such holders, and the terms and conditions under which said bonds are issued and secured.”

We hold that here there is no modification of the promise to pay, made in explicit terms. The provisions all have to do with the trust mortgage. They refer to the rights conferred by it upon the bondholders and limit and explain those rights. They are so linked together as to indicate that the obligor was speaking solely of the security. A purchaser scanning the bonds would have the same thought. It would never occur to him that when November 1, 1941, arrived, because of something contained in the mortgage he might be unable to collect the amount due him. He would interpret the statement that the bonds were secured by and entitled to the benefits and subject to the provisions of the mortgage, as meaning that a foreclosure or other relief might be had thereunder only subject to its provisions. He would see that reference to it is also made to determine the terms and conditions under which the bonds are issued and secured. Again it would mean to him as it means to us, that only by turning to the mortgage might he discover the precise nature of the lien he is to obtain. He would see that the bonds were to be issued not only upon the general credit of the corporation, but upon the faith of some collateral mortgage. To it he must go if further knowledge as to this security is desired.

Some minor matters are also to be considered. There is the possibility of the- acceleration of the date when the bonds are due if there is default under the mortgage. Such a possibility does not make them non-negotiable. (Higgins v. Hocking Valley Ry. Co., 188 App. Div. 684; Chicago Railway Equipment Company v. Merchants’ Bank, 136 U. S. 268, 284; Mackintosh v. Gibbs, 81 N. J. L. 577; Schmidt v. Pegg, 172 Mich. 159; White v. Hatcher, 135 Term. 609.) A note is payable at a determinable future time if payable on or before a fixed date. (Sec. 23.) And in one case acceleration of payment in case of default is expressly recognized. (Sec. 21.) The same thing is true of the privilege given the obligor to redeem at 105 per cent before the bonds became due. That does not limit its absolute promise to pay on November 1, 1941. The bonds are payable to bearer or if registered to the registered holder. This does not affect their negotiability. (Dickerman v. Northern Trust Company, 176 U. S. 181.) Nor does the provision requiring the obligor to create a sinking fund.

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

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

Judgment accordingly.


author: Per Curiam.

text:
    In the Matter of the Claim of Joseph Aioss, Respondent, against John Sardo et al., Defendants. Maryland Casualty Company, Appellant; State Industrial Board, Respondent.
    (Argued October 2, 1928;
    decided November 20, 1928.)

      George J. Stacy, James J. Mahoney and William S. Sinclair for appellant.
    There was no insurance by the Maryland Casualty Company covering the accident; the purported policy never had any inception as a policy, and the Maryland Casualty Company was not an insurance carrier for Sardo & Fiorentine. (Satz v. Massachusetts Bonding & Ins. Co., 243 N. Y. 385; Kwiakowski v. Brotherhood of Am. Yeomen, 243 N. Y. 394; Metzger v. Ætna Ins. Co., 227 N. Y. 411; Feinstein v. Massachusetts Bonding & Ins. Co., 184 App. Div. 233; 230 N. Y. 621; Wolowitch v. National Surety Co., 152 App. Div. 14; Sabatelli v. De Robertis, 192 App. Div. 873; 230 N. Y. 592; Streat Coal Co. v. Frankfort Gen. Ins. Co., 237 N. Y. 60; Lansing v. Hayes, 196 App. Div. 671; 233 N. Y. 614; Astrin v. East New York Woodwork Manufacturing Co., 210 App. Div. 720; Levine v. East New York Electric Corp., 210 App. Div. 730; Matter of Jennings v. Visscher, 217 App. Div. 417.)

      Harry L. Wechsler for John Sardo et al., respondents.
    Since the record contains no evidence of fraud or falsity of warranty, or that any warranties were made to the appellant by the employers, the failure of the employers to notice the inclusion in the policy of erroneous and unauthorized declarations will not justify avoidance of the policy by the appellant. Compensation policies, involving the rights of employees as well as those of employer and carrier, can be terminated only in the manner provided by the act. There is no legal precedent for the avoidance of such a policy ab initio, when once issued, and more particularly after an employee has been injured. (Satz v. Massachusetts Bonding & Ins. Co., 243 N. Y. 385; Post v. Burger, 216 N. Y. 544.)

      Albert Ottinger, Attorney-General (E. C. Aiken of counsel), for State Industrial Board, respondent.
    The policy issued by the Maryland Casualty Company was in force until properly canceled. (Skoczlois v. Vinocoure, 221 N. Y. 276; Satz v. Massachusetts Bonding & Ins. Co., 243 N. Y. 385.)
   Per Curiam.

There is here a distinct and independent contract with the employee. (Workmen’s Compensation Law [Cons. Laws, ch. 67], sections 10, 25, 50, 54.) So the policy itself provides. It adds the obligations and promises of the company as set forth in this paragraph shall not be affected by the failure of the employer to do or refrain from doing any act required by the policy,” and further that the company shall be bound by any award rendered against the employer. Under these circumstances, as between the insurance carrier and the employee the fact that a policy is issued upon untrue statements made by the employer is no defense. (Hastings v. Westchester Fire Ins. Co., 73 N. Y. 141.) To relieve the carrier of liability there must, be a cancellation as provided in section 54.

The order should be affirmed, with costs.

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

Order affirmed.


author: O’Brien, J.

text:
    P. Pastene & Co., Inc., et al., Respondents, v. Irving National Bank, Appellant.

      (Argued October 16, 1928;
    decided November 20, 1928.)

      Joseph S. Buhler and Arthur B. King for appellant.
    The complaint should have been dismissed at the close of respondents’ case. (Schupp & Sons, Inc., v. Barnett, 210 App. Div. 546.) "

      Max M. Hirson for respondents.
    The basic question was whether the transaction between Economopoulos and the Greek bank was a sale of the drafts or a deposit for collection. The testimony being of a conflicting nature and susceptible of several inferences favorable to the plaintiff’s contention, this question was properly submitted to the jury, and their determination is amply supported by the evidence and should not be disturbed. The plaintiff is not bound by the testimony of the defendant’s witnesses, offered by the plaintiff in support of its cause of action, as said witnesses are hostile and adverse to the plaintiff and as such their credibility is a matter for the jury. (Becker v. Koch, 104 N. Y. 394; Prest v. Phillips, 109 N. Y. 383; Cross v. Cross, 108 N. Y. 629; Sharp v. Erie Ry. Co., 184 N. Y. 100; Carlisle v. Norris, 215 N. Y. 400; Velleman v. Sidney, 172 App. Div. 331.)
   O’Brien, J.

Before this action was begun, plaintiff, in this State, had sued Aristides C. Economopoulos & Co., fruit merchants of Patras, Greece, and had recovered judgment. In that action a warrant of attachment had been issued against a deposit which was then with the Irving National Bank in New York. The warrant had been granted upon allegations that such deposit was the property of Economopoulos. The Irving refused to deliver the fund to plaintiff but, pursuant to instructions received from the Banque D’Economie Nationale, its correspondent in Patras, it transmitted the moneys to London to the credit of that bank. This was done upon the theory that the Patras bank rather than the Patras merchant had title to the deposit. Pastene and the sheriff now sue the Irving for the damage alleged to have been suffered by Pastene on account of the disregard of the warrant by the Irving and its refusal to deliver the property to them. The underlying issue is whether the Greek bank or the Greek merchant had title to the fund, and the specific question presented by this appeal is whether plaintiff, by introducing certain evidence favorable to defendant, is foreclosed from asserting the existence of a question of fact at the close of its case and is bound by. such evidence. The essential transactions which preceded the deposit with defendant must be stated and considered as they were presented at the close of plaintiff’s case.

Plaintiff proved on the trial of this action that Economopoulos at Patras sold a thousand cases of currants to Yohalem & Diamond in New York. He drew two sterling sight drafts amounting approximately to £1,521 against the consignees payable to his own order and, with the bill of lading and the invoice delivered them to the Banque D’Economie at Patras. He indorsed the drafts in English, “Value Received.” The bank indorsed in French, “ Valeur en l’encaissement,” and forwarded all these documents to the Irving at New York. The letter accompanying them, written by the Greek bank in French, is thus translated: “ We send you enclosed by registered mail in two drafts one thousand five hundred and twenty-one sterling nine shillings and seven pence payable at the current rate of exchange at London as per statement below, for which we beg you to credit us with the London Joint City and Midland Bank Limited in London under advice to us.” Plaintiff also introduced, in a deposition taken before an American consul in Greece, certain testimony given by the chief bookkeeper in the bank at Patras. This witness testified that the Banque D’Economie Nationale paid cash to Economopoulos for his drafts on Yohalem & Diamond and, because they were sight drafts, no discount was charged. The evidence so produced by plaintiff, unless inherently improbable or materially contradicted by other evidence, is binding upon plaintiff (Carlisle v. Norris, 215 N. Y. 400, 410) and proves that the proceeds of the drafts were the property of the Banque D’Economie Nationale, that they were the result of a sale rather than a deposit for collection, and consequently were not subject to the warrant of attachment against property in this State owned by Economopoulos.

This evidence is not inherently improbable. On the contrary, it seems entirely reasonable. The indorsements on the drafts and the bill of lading considered alone, strongly imply, if indeed they do not conclusively prove, that the Greek bank was the owner of these documents. The drawer of the drafts indorsed them and the bill of lading to the Banque D’Economie “ for value received,” and that bank, indorsing them for collection, sent them with the invoice to its New York correspondent with instructions to credit us ” with a London bank. Such proof, by itself, raises a presumption of ownership by the bank rather than by the consignor. (Comm. Bank v. Pfeiffer, 108 N. Y. 242; Nat. Revere Bank v. Nat. Bank of Republic, 172 N. Y. 102; Douglas v. Fed. Reserve Bank, 271 U. S. 489.) When we add sworn testimony that the bank paid cash for the drafts, this presumption becomes stronger and increases the probability of all the evidence.It is so powerful as to be difficult to resist. However, respondent urges that no bank without imposing some service charge, would purchase, at face value, unaccepted drafts directed to individuals in a foreign country.. This Idnd of transaction may, perhaps, be "unusual. We cannot hold, as matter of law, that business affairs of this character do not occur. Without offering any evidence of custom, respondent asks us, in effect, to take judicial notice of banking practice and especially Greek banking practice. The record does not tell us that Economopoulos was unknown to" his local bank at-Patras nor that he had never previously dealt with it. We know as mattereof law that it could hold him liable on his indorsement. Many reasons, unj’evealed by the record, may exist tending to stimulate a desire by the bank to accommodate this merchant. We cannot perceive any inherent improbability in the documentary and oral evidence upon which plaintiff rested its case.

Nor do we find any material contradiction in the evidence arising from the documents and from the testimony of Papapavleu, the bookkeeper in the Greek bank. Viewing the case most favorably to plaintiff, nothing tends to contradict the conclusion that the Greek bank owned the drafts. The deposition of Economopoulos was -introduced, in part by plaintiff and in part, by way of cross-examination, by defendant. He corroborated plaintiff’s witness Papapavleu and testified that one of his associates, Karalis, received for him from the bank cash in the form of drachmas and that, after the delivery of the drafts and bill of lading to the bank and his receipt of the drachmas, he no longer had any financial interest in the drafts or their proceeds. The activity of his New York agents in their adjustment of the difficulty which arose from the defective condition of some of the currants cannot fairly tend to create an inference that their principal retained property in the goods or in the drafts or their proceeds. Naturally the seller was eager to satisfy customers who might again trade with him. Ordinary business prudence would impel him to protect drafts upon which he was liable as indorser. Since there is no material contradiction and no inherent improbability in the evidence which plaintiff tendered in support of its case, plaintiff is bound by it. When it introduced the indorsements and the statements that the bank had purchased the drafts for cash it vouched for the veracity of its own witnesses. Their evidence, deemed by us to be reasonable on its face, disproves the allegation that the deposit with defendant was the property of Economopoulos and as such was subject to attachment and, therefore, it requires a dismissal of the complaint.

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

Cardozo, Ch. J., Pound, Crane, Andrews and Kellogg, JJ., concur; Lehman, J., not sitting.

Judgment reversed, etc.


author: Pound, J.

text:
    Isidore Scheinberg et al., Respondents, v. Beatrice Scheinberg, Appellant, Impleaded with Another.

      (Argued October 16, 1928;
    decided November 20, 1928.)

      Jay Leo Rothschild and Louis Rivkin for appellant.
    Equity should not grant specific performance to plaintiffs who come with unclean hands and seek to reap the fruits of an unfair, unconscientious, sharp and illegal bargain. (Michigan Pipe Co. v. Fremont Ditch, 111 Fed. Rep. 284; Unckles v. Colgate, 148 N. Y. 529; Warren v. Banning, 67 Hun, 649; 140 N. Y. 227; Bascomb v. Beckwith, L. R. 8 Eq. 100; York v. Searles, 97 App. Div. 331; 189 N. Y. 573; Champlain Stone & Sand Co. v. State, 66 Misc. Rep. 434; 142 App. Div. 94; Dempsey v. O’Rourke, 156 N. Y. Supp. 925; Stokes v. Stokes, 155 N. Y. 581; Peters v. Delaplaine, 49 N. Y. 362; Gotthelf v. Stranahan, 138 N. Y. 345; Carpenter v. Carpenter, 10 N. Y. Supp. 486; Margraf v. Muir, 57 N. Y. 155.) If a contract be infected and induced by-fraud it is sufficient that there was fraud as to a material fact, although it may not have been the sole inducement to the agreement. (Morgan v. Skiddy, 62 N. Y. 319; Delano v. Rice, 23 App. Div. 327; Smith v. Countryman, 30 N. Y. 656; Stuart v. Lester, 49 Hun, 58.)

      Maurice Z. Bungard and Hyman Grill for respondents.
    The doctrine of unclean hands has no application in this case. (Swartzlander v. Swartzlander, 219 App. Div. 682; Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N. Y. 435; Dunham v. Griswold, 100 N. Y. 24; Wehrum v. Kuhn, 61 N. Y. 623.)
   Pound, J.

Plaintiff Louis Scheinberg is the husband of defendant Beatrice Scheinberg. The other plaintiffs are brother and sisters of Louis. In March, 1923, Beatrice Scheinberg obtained a judgment of separation from her husband for cruel and inhuman treatment. At that time she was the owner of the real estate involved in this action. Her equity therein is now of the value of $84,000. She had received title thereto from her husband in 1913 as a gift.

Prior to the judgment of separation, an action had been brought by the mother of Louis Scheinberg to impress a trust upon the real property. She died and the action was continued by her heirs at law. On the trial, Louis Scheinberg was a witness for the plaintiffs. The complaint was dismissed. Judgment of the Trial Term was affirmed by the Appellate Division and an appeal was taken to the Court of Appeals, which was pending at the time the compromise agreement which is the subject of this litigation was entered into.

Soon after the commencement of the litigation last above mentioned an action was brought against Beatrice Scheinberg by a man named Lipset to foreclose a mortgage for $8,000 on a portion of her real property involved herein. It was defended on the ground that the mortgage was given for record purposes for the convenience of the husband and that Lipset was conspiring with him to enforce the mortgage. The complaint was dismissed on plaintiff’s default.

In December, 1921, a petition in bankruptcy was filed against Beatrice Scheinberg. The proceedings were resisted on the ground that the claims of creditors were fictitious and were controlled by her husband. The trial judge in this action said in his opinion that many if not all of the alleged loans were inventions of the husband and those under his control, but held that the question was not directly before him. That the. husband did control all these proceedings is evident from the settlement agreement that followed.

On and before July 9, 1924, Beatrice Scheinberg was in danger of losing her property in one or all of these proceedings. The income therefrom was in the hands of receivers in the foreclosure proceedings and in the bankruptcy proceedings. Although she had thus far been successful in the legal battle the end was not in sight. She was without funds to support herself and pay lawyers. Her husband had proved himself to be a relentless and formidable antagonist. Overtures had been made to her for a settlement. Her own lawyers were advising her that the risk was serious. Under these circumstances, she entered into a contract of settlement with plaintiffs. The agreement recites the pending appeal in the action to impress a trust on the real property and an agreement to settle and discontinue that action. It provides for the payment of $40,000 to Beatrice Scheinberg, $10,000 on the execution of the agreement and $30,000 on or before September 2, 1924 (but the funds in the hands of the receiver were to be applied to this payment). Beatrice Scheinberg agrees to convey the real property in suit to the plaintiffs herein, or to their nominees, and the agreement recites that the deed thereof is deposited in escrow with defendant Max Monfried to be delivered by him when the plaintiffs perform the agreement on their part. Plaintiffs agree to obtain releases from the creditors or alleged creditors of Beatrice Scheinberg and to cause the bankruptcy proceedings to be discontinued. Beatrice Scheinberg agrees to surrender her claim for alimony under the decree of separation and to assign to the plaintiffs or their nominees all money in the hands of the receiver upon compliance by the plaintiffs with the terms of the compromise agreement.

Some delay in performance followed. Beatrice Scheinberg had meanwhile become satisfied that she had been coerced into an inequitable contract and refused to proceed with the settlement. This action for specific performance was then begun. Defendant answered the complaint alleging duress and undue influence and counterclaimed for rescission. The theory of the trial justice was that as Beatrice Scheinberg knew what she was doing when she entered into the settlement agreement and was represented by experienced counsel she was not “ in a legalistic sense ” overreached and on this theory he made his findings in favor of plaintiffs without passing on the requests of counsel to find in substance that the agreement was, by reason of the background of duress by circumstances, in fact unfair, unconscionable and inequitable and not to be specifically enforced. The court reached the conclusion that the settlement was proper as matter of law.

The Appellate Division modified the judgment by striking out the provision of the settlement agreement waiving alimony and as thus modified, affirmed it.

This is an action in equity for the discretionary remedy of specific performance of a contract. In 1903 in Beasley v. T. & P. Ry. Co. (191 U. S. 492, 497) Holmes, J., said. “ To compel the specific performance of contracts still is the exception, not the rule.” Courts of equity refuse to enforce harsh and unfair bargains. If moral coercion produces a contract; if it is executed under practical compulsion; if one party acts unfairly and the other yields to the pressure of circumstances, equity will refuse specific performance even though in law the contract would be enforced.

The facts of each particular case of this character should be considered and dealt with on the merits. If the court is of the opinion that it is unconscientious for a person to avail himself of his legal advantage, equity will not attach its sanction to the transaction. (Forstmann v. Joray Holding Co., 244 N. Y. 22.) It has often been said in substance: While a court of equity exercises a discretion regulated upon judicial grounds, it is not compelled, and it will refuse, to aid one whose appeal to it offends its conscience.” (Unckles v. Colgate, 148 N. Y. 529, 532.)

While the literal application of maxims of equity may not be pushed to extremes and while a court of equity, rhetorically styled one of conscience and righteousness, is governed by fixed principles, established doctrines and well-settled rules rather than by the chancellor’s own sense of right conduct (Roberson v. Rochester Folding Box Co., 171 N. Y. 538, 546; Jacobs v. Morange, 47 N. Y. 57), this case is brought well within the principles established for the guidance of the so-called judicial conscience, if the facts are as alleged by the defendant.

Fraud, undue influence and duress have legal definitions which are applied in the common-law courts (Adams v. Irving National Bank, 116 N. Y. 606), but the use of these terms in equity is wider and less precise. Did the husband deal conscientiously, i. e., justly and fairly, with the wife if he set in motion legal proceedings against her without foundation, deprived her of the means to defend herself and then proposed to take advantage of her necessities by offering to settle with her by taking her property worth $84,000 for $20,000 or even for $40,000 and the discontinuance of the legal proceedings? Even though she knew what she was doing and sought to buy her peace; even though respectable counsel advised her that it was to her best advantage to make such settlement, she was not wholly a free agent. She was the victim of a conspiracy to defraud her of her property. She could not exercise her independent judgment except to her own disadvantage, for it would be a disadvantage to her to be compelled to defend herself in the courts. The taint of coercion and fraud infects the whole transaction.

The respondents stand, in part at least, on the proposition that the unconscionable conduct charged against Louis Scheinberg may be admitted without affecting the right of the plaintiffs to equitable relief because it is not connected with the actual execution of the agreement of settlement. They invoke the proposition that a contract of settlement if valid in itself is final and is to be sustained by the court without regard to the validity of the original claim (Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N. Y. 435), but a contract of settlement is not valid in itself, as the basis of an action for specific performance, if it is unfair and was executed under the coercion of moral pressure improperly exercised, even though it is executed with full knowledge of its effect upon the rights of the parties.

The judgment of the Appellate Division and that of the Special Term should be reversed and a new trial granted, with costs to abide the event.

Cardozo, Ch. J., Crane, Andrews, Kellogg and O’Brien, JJ., concur; Lehman, J., not sitting.

Judgments reversed, etc.


author: Kellogg, J.

text:
    The People of the State of New York ex rel. Frederick Loeser & Co., Inc., Respondent, v. Henry M. Goldfogle et al., as Commissioners of Taxes and Assessments of the City of New York, Appellants.
    (Argued October 17, 1928;
    decided November 20, 1928.)

      George P. Nicholson, Corporation Counsel (William H. King and Harry S. Lucia of counsel), for appellants.
    The Appellate Division erred in holding that plottage value did not exist where the lots were adequately improved and in reducing the assessments by eliminating the valuation for plottage included by the defendants in fixing the assessed valuation of the land. (People ex rel. Penn., N. Y. & L. I. R. R. Co. v. O’Donnel, 130 App. Div. 734.) The elimination of valuation for plottage because plots are adequately improved, is contrary to reason, the common custom of real estate appraisers and the decisions of the courts. (People ex rel. Pennsyl

      vania, N. Y. & L. I. R. R. Co. v. O’Donnel, 130 App. Div. 734; Matter of Erlanger, 206 App. Div. 148; People ex rel. Abrast Realty Co. v. Cantor, 211 App. Div. 870.)

      Edward M. Grout, Charles B. La Voe and Paul Grout for respondents.
    It is error to allow plottage value where the land is adequately improved and where the improvements are also assessed at full value, when there is no evidence that the property, as improved, can be more advantageously disposed of or sold, because of its size. (Matter of Armory Board, 73 App. Div. 152; People ex rel. Penn., N. Y. & L. I. R. R. Co. v. O’Donnel, 130 App. Div. 734; Matter of Erlanger, 206 App. Div. 148; 237 N. Y. 159; People ex rel. Abrast Realty Co. v. Cantor, 211 App. Div. 870.)
   Kellogg, J.

The relator occupies, as owner or tenant under a long lease, a parcel of land in the borough of Brooklyn. The parcel consists of two separate but contiguous lots. Upon them, occupying almost an entire city block, stands a department store building in which the relator conducts a large mercantile business. In the years 1922 and 1923 the defendants made assessments of the two lots separately, stating, as required by law, the value of each lot exclusive of buildings, and its value inclusive of buildings. In making their valuations of the land in each lot exclusive of improvements the defendants, Commissioners of Taxes and Assessments, included a plottage ” value of ten per cent upon the total footage value of the lot. Where two or more contiguous lots are held in one ownership, real estate men frequently accord to them, as a group, a greater value than the aggregate value of the lots separately considered, on the ground that they admit of a larger and more advantageous disposition or improvement than a single lot. (People ex rel. P., N. Y. & L. I. R. R. Co. v. O’Donnel, 130 App. Div. 734.) This added value is called “ plottage ” and is determined by a percentage calculation upon valuation figures otherwise ascertained. All the parties to these proceedings agree that the lots in question, if they had been unimproved, would have had a plottage ” value of ten per cent. The relator contends, however, and with this contention the Appellate Division has agreed, that the lots, not having been unimproved, were not possessed of a “ plottage ” value for the purposes of assessment. The relator reasons that the land itself, having already been adequately improved, was not adapted to any plan of advantageous development as a large unit and, therefore, was without “ plottage ” value. This is the equivalent of saying that where a parcel of land, having a special value because of its adaptability to a particular building plan, is actually built upon in accordance with that plan, there is a definite loss of value, since the realization of the project makes impossible the attainment in future of the same project. In other words, there is a loss of value when adaptability ” becomes “ adaptation.” To such reasoning we cannot give our assent. According to the concession of the parties the parcel in question had been adequately improved. The peculiar value, attaching to a large development, which in prospect may once have belonged to the land itself, is now actually present as an attribute of the improved real estate owned by the relator. It is immaterial whether this value now appertains to the land itself or to the buildings upon the land. It is clearly present in the relator’s property as a completed whole. While the Tax Law (Cons. Laws, ch. 60) requires that land be assessed to indicate its value inclusive as well as exclusive of buildings, it nevertheless provides: “ The total assessment only can be reviewed.” (Tax Law, sec. 21, subd. 3.) The relator has attacked the® total assessment in .this instance only as it has attacked the land valuation proper because of its inclusion of plottage.” We aré content to hold that, as plottage ” is properly included in the total assessment, the assessment was correctly made.

In the proceedings affecting blocks 158 and 159, the orders of the Appellate Division should be reversed and those of the Special Term affirmed, with costs in this court and in the Appellate Division.

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

Ordered accordingly.


text:
    Robert Goelet et al., Appellants, v. National Surety Company, Respondent. Mary R. Goelet, Appellant, v. National Surety Company, Respondent.

      (Argued October 19, 1928;
    decided November 20, 1928.)

      Edward F. Clark, Leonard J. Reynolds, Roger Hinds and Oscar B. Lowman for appellants,
    The'language of the bonds, especially in view of the conceded surrounding circumstances, must be construed as covering the loss of income from the restaurant property sustained by the plaintiffs. (Utica City Nat. Bank v. Gunn, 222 N. Y. 204; Richardson v. County of Steuben, 226 N. Y. 13; Ulster Co. Savings Inst. v. Young, 161 N. Y. 23; U. S. Rubber Co. v. Silverstein, 229 N. Y. 168; Comey v. United Surety Co., 217 N. Y. 268; St. Johns College v. Ætna Indemnity Co., 201 N. Y. 335; Town of Whitestone v. Title Guaranty & S. Co., 72 Misc. Rep. 498; 148 App. Div. 900; 209 N. Y. 512; American Surety Co. v. Pauly, 170 U. S. 133; Underwood v. Globe Indemnity Co., 245 N. Y. 111.) The defendant was estopped by its acquiescence in plaintiffs’ repeated notices to the effect that they would suffer loss and damage if the restaurant was padlocked and hold the defendant responsible therefor to deny that its bonds covered such loss and damage. The trial court erred in overlooking and disregarding the plaintiff’s damages consequent upon the loss of their right to relet the premises. (Smith v. Mollison, 148 N. Y. 241; Stogop Realty Co., Inc., v. National Surety Co., 216 App. Div. 198; Watson v. Muskegon Steamship Corporation, 208 App. Div. 158; American Surety Company
      v. Thurber, 56 N. Y. Super. Ct. 338; 121 N. Y. 655; Southern Pacific Co. v. Globe Indemnity Co., 21 Fed. Rep. [2d] 288; People’s Gas & Elec. Co. v. State of New York, 189 App. Div. 421; 231 N. Y. 520; Hamilton v. McPherson, 28 N. Y. 72; Milage v. Woodward, 186 N. Y. 252; Strong v. American Fence Const. Co., 245 N. Y. 48.)

      Bertram L. Marks and Samuel D. Cohen for respondent.
    The bonds sued upon were not bonds guaranteeing the payment of rent. They were given for the purpose of guaranteeing the landlords against payment of any fines or counsel fees which the landlords were compelled to pay by reason of the violation of the National Prohibition Act. (Francis v. Ferguson, 246 N. Y. 516; Kean v. National Surety Co., 241 N. Y. 258; Maine Lumber Co., Ltd., v. Maryland Casualty Co., 216 App. Div. 35; 244 N. Y. 537; Underwood v. Globe Indemnity Co., 245 N. Y. 111; Manufacturers Nat. Bank of Troy v. United States Fidelity & Guaranty Co., 245 N. Y. 55; DeCamp v. Bullard, 159 N. Y. 450.) The general terms of the paragraph of the lease under which the bonds in suit were furnished are limited and narrowed by the special and specific provisions providing for rent insurance and by the other specific terms of the lease. (Dady v. O’Rourke, 172 N. Y. 447; Holmes v. Hubbard, 60 N. Y. 184; First Nat. Bank v. Story, 140 N. Y. Supp. 31; 222 N. Y. 562.)
   Crane, J.

This appeal involves the construction of two certain bonds given by the National Surety Co., pursuant to the terms of two leases. The premises leased were 7 and 9 East Fifty-second street. Both leases and both bonds are alike, with the exception that in the one, Robert Goelet, individually, and Mary R. Goelet and others, as trustees under the last will and testament of Ogden Goelet, deceased, are the lessors, and Mary R. Goelet is the lessor in the other. Two judgments have been entered, but as the appeals are consolidated, I will refer to the plaintiffs as the landlord or lessor. The tenant, or lessee, is the Eldar Restaurant Co., Inc. The lease of the premises is for ten years and four months, commencing on the 1st day of January, 1921, and ending the 30th day of April, 1931. The rent reserved is $8,000 a year till May 1, 1926, and $10,000 thereafter. The lessee also covenants to alter and improve the buildings at an expense of not less than $17,500. These alterations and improvements are to be such as are required to fit.the premises for the transaction of the business of the lessee.

As the name of the defendant indicates, a high-class restaurant was to be conducted in the premises after the improvements were completed. Consequently, with a view, no doubt, to the temptation which the proprietor of such a place is under, to make profits by selling intoxicants to patrons; and the risks incurred from such a violation of the law, another clause was added to the lease to protect the landlord from the consequences of the tenant’s illegal acts. Paragraph 18 of the lease says that the lessee agrees to indemnify and save harmless the lessor from all loss, damage or liability growing out of its failure or default in the observance of and compliance with any and all laws, orders, ordinances and statutes of the United States, * * * prohibiting the sale of any beverage containing a higher percentage of alcohol than expressly authorized by controlling statutes.” The lease then recites that simultaneously with its execution the lessee has caused to be executed and delivered to the lessor a bond of the National Surety Company conditioned for the payment of any such loss sustained by the lessor.

The National Surety Company executed the bond referred to in the lease and annually thereafter up to and including the year 1924.

The tenant failed to keep the covenants of its lease. It sold liquor in violation of the National Prohibition Act, which resulted in proceedings being instituted against it, of which both the landlord and the National Surety Company had notice. On the 18th day of February, 1924, a decree was entered in the District Court for the Southern District of New York, enjoining the Eldar Restaurant Co., Inc., from selling, keeping or storing any liquor containing one-half of one per cent or more alcohol by volume in premises 7 and 9 East Fifty-second street. The decree further gave a warning to all parties in these words:

“ That at any time during said period of one year the complainant on proof that there has been any violation of any of the terms of this decree or of the injunction hereby directed to issue or any violation of the National Prohibition Act upon said premises may apply to this Court on two days’ notice to the attorneys for defendants for a summary modification of this decree and of the injunction hereby directed to issue so that said decree and injunction shall provide that the premises herein described be closed for a period of one year.”

The lessee did not heed this warning, for on May 14, 1924, an amended decree was entered by the District Court, reading as follows:

It is Further Ordered, Adjudged and Decreed that the said restaurant or club, located as aforesaid, be not occupied or used for one year from May 14, 1924; and, subject to such instructions as may be given by the United States Attorney for the Southern District of New York, the United States Marshal for the Southern District of New York is directed forthwith to lock and seal all of the entrances and exits to and from the said restaurant or club and to prevent, for a period of one year from the date hereof, the occupation or use of the said premises for any purpose whatsoever.”

This decree was carried out. The lessor’s premises were locked up for a year. He could not rent them or lease them for restaurant purposes. The surety company had notice of all these various steps and proceedings as well as the landlord and tenant.

These decrees of the United States court did not absolve the lessee from its covenants to pay rent. At the time of the proceedings, however, the tenant was hopelessly insolvent, and shortly thereafter went into bankruptcy. This financial condition, no doubt, accounted for its indifference to the con sequences of selling liquor to patrons. Its financial loss was nothing in comparison with that which might fall and did fall upon the landlord. This conceded insolvency of the tenant made it useless for the landlord to sue it for the rent. A judgment would have no value. The landlord might have dispossessed the tenant, but it was virtually out under the decrees of the United States court which had closed the place for the year and by reason of the bankruptcy proceedings which shortly followed. The tenant was through, and any proceedings taken by the landlord to dispossess it or to collect-the rent due under the lease would have been mere waste of time and money. The law looks to the facts and seldom requires empty formalities for the establishment of rights, in the absence of statutory requirements. And the facts here are that the lessee violated its covenant to obey the Prohibition Law, in consequence of which the premises of the lessor were padlocked and empty for one year, during which time the actual loss to the lessor was the rental value of those premises.

Did the bond of the National Surety Company cover this loss? In making the lease and in giving the bond, all three parties had in mind the National Prohibition Act, its requirements and its penalties. Section 33 of that act among other things provides that any person who maintains a place to sell intoxicating liquor shall be guilty of a misdemeanor and shall be fined not more than $1,000 or imprisoned for not more than a year. A person who has knowledge that his house or building is used for such purpose, and suffers the same to be so occupied and used, subjects the house or place to a lien to pay all fines and costs assessed against the person guilty of maintaining the nuisance. Section 34 provides for the remedy by injunction and contains the following:

“ And upon judgment of the court ordering such nuisance to be abated, the court may order that the room, house, building, structure, boat, vehicle, or place shall not be occupied or used for one year thereafter; but the court may, in its discretion, permit it to be occupied or used if the owner, lessee, tenant, or occupant thereof shall give bond with sufficient surety, to be approved by the court mailing the order, in the penal and liquidated sum of not less than $500 nor more than $1,000, payable to the United States, and conditioned that intoxicating liquor will not thereafter be manufactured.”

The utmost that could happen to the landlord under section 33, would be a lien upon his premises for $1,000 and costs. A bond in the sum of $10,000 would not have been required to cover so small a liability. The bond required by the lease was to be in the sum of $10,000, and this was the amount of the yearly bonds. The parties must have had section 34 in mind as well as section 33 — all the consequences which might result in loss by a violation of the National Prohibition Act. Such a loss under section 34 of the act would arise from the padlocking of the premises. Neither the landlord nor the tenant could use the premises for a year. If financially responsible, the loss would fall upon the tenant; if insolvent, the loss would fall upon the landlord. The loss in this case has concededly fallen upon the landlord, and, therefore, comes within the promise and undertaking of the surety company. Its bond reads:

Now, Therefore, the Condition of this Obligation is Such, that if the Principal and Lessee shall pay to the said Obligee and Lessor such loss as she may sustain, not exceeding however, the sum of Ten Thousand ($10,000) Dollars, by reason of any failure or default by or on behalf of the Principal and Lessee or any person acting for or under the Principal or Lessee in the observance of or compliance with any and all laws, ordinances and statutes of the United States, or the State of New York, and of the City of New York, or any of its subdivisions or departments, prohibiting the sale of any beverage containing a higher percentage of alcohol than expressly authorized by controlling statutes, then this obligation to be void, otherwise to be and remain in full force and effect.”

No explanation has been given why this bond should cover fines and costs under section 33 of the act, and not loss occasioned under section 34 of the act. The obligation is to pay the lessor such loss as he may sustain by reason of the lessee’s violation of the United States statute.

The court below directed a verdict for the plaintiff for $250 and interest, the amount of counsel fee, on the theory that this bond or undertaking covered the expenses of the landlord in the District Court proceedings and nothing 'more. The court said that the bond was not a bond for the payment of rent. This is so. If after the injunction decree, the tenant had become insolvent and unable to pay the rent, the lessor could not have recovered it from the surety company. The bond did not cover the non-payment of rent. Loss of rent was not one of the penalties of the Prohibition Act, nor one of the consequences of its injunction decree within the contemplation of law. The padlocking decree, however, operated directly upon the lessor; it closed his property for a year; it spoke to him forbidding the leasing of his property to anybody. This was a loss to him as a direct consequence of the decree unless he could collect the rentable value from the lessee. Being insolvent, the lessee could not pay. The loss is substantial, not imaginary. This loss the National Surety Company by its bond undertook to pay.

The suggestion is made in the briefs that the landlord might have applied to the District Court for a modification of the decree and for the permission to use the premises for other purposes, or upon giving a bond. We must take the decree as it is. The court had this discretion at the time of the hearing in May of 1924; all the parties had notice of the application for the padlocking order. The judge failed to exercise any such discretion, but entered a decree for a year’s suspension of user. The National Surety Company had notice of these proceedings as well as the landlord and apparently took no action in the matter. We, therefore, cannot speculate at the lessor’s expense and for the benefit of the National Sure y Company as to what the Federal court might or might not have done on any subsequent application. T' dse bonds must be given a fair and reasonable inter-p itation to cover the situation and circumstances which t í parties intended. As we have had occasion to say 1 fore, these bonds are ordinary contracts and to be con- ; rued as such. (Marcus v. United States Casualty Co., 49 N. Y. 21.)

The clause in the lease referring to rent insurance applies only to the loss of rent due to destruction by fire, and has so been acted upon by the parties.

The damage which the landlord has sustained in this case does not necessarily mean the rent reserved in the lease; it means the rental value of the premises for the year in question, what they would have been worth in the market if the lessor had been free and able to rent them. The rent reserved may be some evidence of that value. (De Camp v. Bullard, 159 N. Y. 450.)

The judgments of the Appellate Division and those of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

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

Judgments reversed, etc.


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    Harold Hopkinson, Respondent, v. Lehigh Valley Railroad Company, Appellant.
    (Argued October 22, 1928;
    decided November 20, 1928.)

      Clifton P. Williamson and Herbert S. Ogden for appellant.
    The undisputed facts require a finding of probable cause as matter of law. (Halsey v. N. Y. Society, 234 N. Y. 1; Burt v. Smith, 181 N. Y. 1; Besson v. Southard, 10 N. Y. 236; McCarthy v. Barrett, 144 App. Div. 727; Penal Law, § 1290; People v. Sherman, 133 N. Y. 349; Bawson v. Leggett, 184 N. Y. 504; Zucker v. Zarambowitz, 181 App. Div. 289; Carl v. Ayers, 53 N. Y. 14; Macauley v. Starr, Inc., 194 App. Div. 643; 233 N. Y. 601.)

      Isador Goetz for respondent.
    The question of probable cause was a question for the jury. (Grew v. Newton Home Tel. Co., 192 App. Div. 863; 233 N. Y. 560; Halsey v. N. Y. Society, 234 N. Y. 1; Hyman v. N. Y. Central R. R. Co., 240 N. Y. 137; Rolnick v. Borden, 214 App. Div. 259; Burl v. Smith, 181 N. Y. 1.)
   Crane, J.

Plaintiff for sixteen years had been in the employ of the defendant and at the times here in question was the agent in charge of the freight station, pier 44, East river, where the principal commodity handled was flour. He had been in charge of that pier from the time it was opened in 1917, until his discharge or resignation on August 5, 1922. Rumors of irregularities in the delivery of flour coming to the attention of the plaintiff’s superior, the matter was investigated, and it was found that there was an unusual shortage in bags of flour unaccounted for.

La Rosa & Di Fiore were consignees of a car of flour containing 350 sacks of “ Red Ball ” brand, which arrived at pier 44, East river. They received notice that these sacks of flour were on the pier ready for delivery. Later 161 sacks of this flour were missing and delivery refused. Both members of the firm saw the agent, Mr. Hopkinson, who stated that someone else must have overdrawn on another car, and that he would make up the loss to them. Thereupon, at a later day, 161 bags of other flour were delivered to Di Fiore. The flour delivered belonged to another customer, named Morris Breiner. Hopkinson claimed and stated that Breiner had sold or authorized delivery of this flour to La Rosa & Di Fiore. This Breiner denied and made claim upon the railroad company for its delivery to him. In a letter of August 17, 1922, he wrote to the freight claim agent, Mr. H. E. Snyder, in reference to the 161 bags of flour, as follows:

“ I want to go on record with you that one day we went to the pier and the flour was there, and the next day it was gone, so there is no reason in the world why the L-V-R-R, should not get the guilty party ’ immediately.”

He also made an affidavit for the company to the same effect, stating that he had at no time either personally or by representative authorized Harold Hopkinson to deliver 161 bags of his flour to the La Rosa & Di Fiore Company, or any one else.

Another shortage of 35 bags, belonging to a man named Seflinger, was also discovered. Hopkinson also made false statements about this delivery. Other claimants pressed for missing flour, and their shortages could not be accounted for. Harry Lannon, who was a checker on the dock, reported that after some deliveries had been made on the verbal instructions of Hopkinson, although written delivery orders were required, he, Hopkinson, had given money to him, saying that he had sold the flour. Upon an examination of the cash book and the cash at the pier, there was found a check to the order of the Lehigh Valley Railroad Company for $275, made by Sam Held, a friend of the agent. Hopkinson explained this by saying that he had drawn $265.88 for legitimate expenses, but that he had put the money back in the form of this check, rather than have any trouble about it. The balance, which was the difference between the amount of the check and the amount drawn by Hopkinson, $9.12, was found in currency in an envelope in the back of the cash drawer. It also appeared that some of the receipts for the delivery of flour were forged.

I shall not attempt to detail all the evidence given in this case bearing upon the conditions at the pier regarding the delivery of flour, the methods of business or all the facts revealed upon the investigation conducted by the railroad company beginning in June and lasting until the 1st of September, 1922, for the reason that the above facts furnish the groundwork for the law of malicious nrosecution applicable to this case.

The railroad company presented all the facts which it had thus gathered to the District Attorney of New York county. Mr. John F. O’Neil was the Assistant District Attorney in the office of Mr. Banton, having charge of this case. After looking over the papers submitted, he sent for all the witnesses and examined them himself before presenting the matter to the grand jury. He did not rely upon the affidavits or the information which the company had collected on its investigation. He desired to see the witnesses personally, which he did. He testifies in this case as follows: “After satisfying myself that the evidence produced, both personal and documentary, justified me in presenting the evidence to the Grand Jury, I so presented it and the Grand Jury returned an indictment against Hopkinson, charging him with stealing a certain number of bags of flour belonging to the. Lehigh Valley.” The witnesses who were called and examined before the grand jury included Jack Di Fiore, Morris Breiner, Harry Lannon and others. After hearing these witnesses, the grand jury found an indictment, charging Hopkinson with grand larceny, in having stolen the 161 bags of flour, above referred to. The case coming on for trial in the General Sessions, the indictment was dismissed. Breiner, it is stated, went back on his testimony before the grand jury; but whatever the cause, it is now immaterial.

The plaintiff has brought this action for malicious prosecution and has recovered a judgment which has been affirmed by the Appellate Division, the court dividing three to two. The appeal requires us to say what effect the indictment had upon the plaintiff’s right to recover. This point does not seem to have been heretofore clearly passed upon by this court, although raised in Rawson v. Leggett (184 N. Y. 504).

Section 258 of the Code of Criminal Procedure says that a grand jury ought to find an indictment when all the evidence before them is such as in their judgment would if unexplained warrant a conviction by the trial jury. An indictment, therefore, when brought into a civil case, necessarily implies, until the contrary appears, that there was such evidence. A similar provision relates to the duty of the committing magistrate. (Sec. 208.) If from the examination before him, there is sufficient cause to believe the defendant guilty of the crime charged, he must so certify and hold the prisoner. The holding of the accused by" a magistrate after an examination into the facts is prima facie evidence of probable cause for the prosecution. (Schultz v. Greenwood Cemetery, 190 N. Y. 276, p. 280; Burt v. Smith, 181 N. Y. 1, p. 7; Pearsall v. Macbeth, 180 App. Div. 851; Dachs v. DeLite Realty Co., 210 App. Div, 230, p. 234.) ' An indictment by the grand jury is also prima facie evidence of probable cause. (Casey v. Dorr, 94 Ark. 433, reviewed in note Amer. & Eng. Anno. Cases, vol. 21, pp. 1046, 1047, 1048, and Schott v. Indiana National Life Insurance Co., 160 Ky. 533.)

The plaintiff in his malicious prosecution case must, therefore, meet this prima facie evidence of probable cause by showing that the defendant did not make a full and complete statement of the facts either to the magistrate or to the District Attorney; has misrepresented or falsified the evidence, or else has kept back information or facts which might have affected the result. When the Lehigh Valley Railroad Company presented all its information to the public prosecutor, who himself conducted an independent investigation, and presented the matter to the grand jury, which found an indictment against the plaintiff, to succeed in an action for malicious prosecution, the plaintiff must show that the defendant or its agents did not make a full and complete statement of the facts to the prosecuting officer, or kept back information which in all fairness should have been submitted to him.

If a person disclose fairly and truthfully to an officer whose duty it is to prosecute crime, all matters within his knowledge, which- as a man of ordinary intelligence he is bound to suppose would have a material bearing upon the question of the innocence or guilt of the persons suspected, and leaves it to the prosecutor to act entirely upon Ms own judgment and responsibility as a public officer, and does no more, he cannot be held answerable in an action for malicious prosecution, even if the officer comes to a wrong conclusion and prosecutes when he ought not to do so. Such a person does no more than Ms duty. (Burnham v. Collateral Loan Co., 179 Mass. 268.)

The District Attorney of New York county in tMs case, after examimng the facts, acted upon Ms own judgment and indicted the plaintiff.

There is in this case no evidence whatever to prove that the defendant or its agents did not make a full and complete statement to the District Attorney of all the facts and information witMn their possession. There is no claim that the agents of the defendant falsified. In fact, the testimony before the grand jury was mainly given by flour merchants and persons not in the employ of the defendant.

The effect of the action by the District Attorney and the indictment by the grand jury seem to have been pushed aside at the trial and little or no point made of it in the charge of the trial court. The exception, however, taken to the motion to dismiss, made at the end of the case, raises the question.

In Burns v. Wilkinson (228 N. Y. 113) the defendant was himself the witness. On the accuracy of Ms own statements and testimony regarding the occurrence, the public prosecutor and grand jury were called upon to act. The fairness and the completeness of Ms own statements were the subject of attack. See the difference as expressed in Schott v. Indiana Nat. Life Ins. Co. (160 Ky. 533). The case, therefore, did not call for tMs statement of the law.

For this failure in the evidence to show the want of good faith, or a full and fair statement of the facts to the District Attorney, the judgment of the Appellate Division and that of the Trial Term should be reversed, and the complaint dismissed, with costs in all courts.

Cardozo, Ch. J.; Pound, Andrews, Lehman and Kellogg, JJ., concur; O’Brien, J., not sitting.

Judgment reversed, etc.


text:
    The People of the State of New York, Respondent, v. Francesco Caruso, Appellant.
    (Argued October 15, 1928;
    decided November 20, 1928.)

      Walter H. Pollak, Howard Hilton Spellman, Lewis A. Pinussohn and Charles A. Schneider for appellant.
    The court erred in imposing an additional penalty under section 1944 of the Penal Law. (People v. Caruso, 246 N. Y. 437; People v. Kevlon, 221 App. Div. 224; People v. Barberi, 149 N. Y. 256.) The refusal of the court to grant a trial on the fundamental question whether the defendant was armed — a fact neither admitted by olea nor permitted to be litigated throughout the progress of this cause — constituted a denial of due process of law as well as of the benefit of the law of the land. (People v. Priest, 206 N. Y. 274; Stuart v. Palmer, 74 N. Y. 183; People v. Rosen, 208 N. Y. 169; People ex rel. Barone v. Fox, 144 App. Div. 611; 202 N. Y. 616; People ex rel. Berger v. Warden, 176 App. Div. 602.) The court erred in denying the defendant the privilege of confrontation by adverse witnesses and the right to “ appear and defend in person.” (People v. Hartnett, 124 Misc. Rep. 418; People v. Bromwich, 200 N. Y. 385.)

      Charles J. Dodd, District Attorney (Henry J. Walsh of counsel), for respondent.
    The sentence to additional punishment under section 1944 of the Penal Law was a lawful sentence. (People v. Cricuoli, 157 App. Div. 201; People v. Criscuoli, 164 App. Div. 119.) The appellant was not entitled to an independent trial of the issue whether he was a person who had committed a felony while armed, within the contemplation of section 1944 of the Penal Law. (People v. Walker, 198 N. Y. 329; Stemmier v. Mayor, etc., of New York, 179 N. Y. 473; People v. Seidenshner, 210 N. Y. 341; Pecue v. Collins, 204 App. Div. 142; People ex rel. Barone v. Fox, 144 App. Div. 611; 202 N. Y. 616; People v. Dean, 94 Misc. Rep. 502.)
   Crane, J.

Francesco Caruso was indicted for murder in the first degree. His conviction was reversed by this court. (246 N. Y. 437.) Our opinion stated briefly the facts of the killing. Caruso’s child was sick; Dr. Péndola was in attendance; the child died; Caruso killed the doctor. “ Caruso attacked him in anger, choked him until he fell to the floor, then went to a closet ten or twelve feet away, took a knife and stabbed him twice in the throat, so killing him.”

When the case was called for retrial, Caruso pleaded guilty of manslaughter in the first degree and was sentenced by the county judge to an indeterminate sentence, the minimum to be five years and the maximum to be ten years, and an additional five to ten years under section 1944 of the Penal Law.

The appeal is here on the additional sentence. The defendant says it is illegal for two reasons: First, because section 1944 does not apply; second, because there must be a jury trial of the facts requiring the increased penalty.

Section 1944 reads:

“ Committing felony while armed.
“ If any person while in the act of committing a felony, or attempting to commit a felony, shall be armed with a pistol or any of the weapons or instruments specified in sections eighteen hundred and ninety-six, eighteen hundred and ninety-seven or eighteen hundred and ninety-seven-a, the punishment elsewhere prescribed in this law for the felony of which he is convicted shall be increased by imprisonment in state’s prison for not less than five nor for more than ten years.”

The contention is that the words “ shall be armed with a pistol or any of the weapons,” etc., means coming to the scene of the crime with the possession of such an instrument of violence intending to use it in the commission of crime; that the words were not meant to include the case where in the heat of passion, a weapon is seized from a nearby closet or table. That is to say, “ being armed ” implies or expresses the carrying of the weapon with intent to use it. The difficulty with this interpretation is that the statute speaks of the present not the past — “ any person while in the act of committing a felony, * * * shall be armed.” This is something more than arming oneself with a weapon and then starting out to commit the felony. It covers such a case as this. Caruso when committing manslaughter was armed with a dangerous knife, an instrument specified in section 1897. Sections 1896, 1897 and 1897-a are only referred to in order to determine the kind of instruments or weapons the person must have to bring him within the provisions of section 1944.

A person who has in his hand a dangerous weapon with which he makes an assault is certainly armed with a dangerous weapon. (Words & Phrases Judicially Defined, vol. 1, p. 496; State v. Lynch, 88 Me. 195.)

We find the same words used with like meaning in defining “ Burglary in the first degree ” (Sec. 402) and Robbery in the first degree ” (Sec. 2124).

Having fixed the penalty for burglary and robbery committed when armed with a dangerous weapon, it may be said that the Legislature did not intend to increase the penalty by reason of this element. But that we think is just what the Legislature intended to do. (People v. Paradiso, 248 N. Y. 123.) Burglary and robbery in the first degree may be committed in four or five different ways, but when committed while being armed with a dangerous weapon, the defendant must receive the additional punishment stated in section 1944. So if in the act of committing any felony the defendant be armed with a dangerous weapon, his punishment is increased. Not the user necessarily, but the having of such an instrument, is the determining factor. Additional light is thrown upon the meaning of these words by section 2188 of the Penal Law relating to suspended sentences. No suspension is allowed “(c) if the person is convicted of a felony committed while armed with a weapon as provided in section nineteen hundred and forty-four.”

The record in this case made at the time of imposing sentence proved conclusively that the defendant was armed with a dangerous weapon, a carving knife. Defendant’s counsel admitted the facts as they appeared in the court’s opinion on reversal. Counsel then read from the opinion the words which I have quoted above. The knife even was offered in evidence by the defendant’s counsel, although excluded. The point was never made that Caruso did not have a knife or did not kill the doctor with the knife; the point raised was that seizing & bread knife was not being armed within the meaning of the statute. Of course, before a court can impose the additional sentence under section 1944, it must have before it on the record facts to sustain such action. There must be a record made which can be reviewed. If the case has been tried out the facts no doubt will appear upon which the jury find the verdict of guilt. Where a plea has been taken the fact that the prisoner was armed may not so clearly appear or may be denied. The judge should then conduct an inquiry and take testimony, if necessary. Many circumstances affect the judgment of the court. Age is one (Penal Law, sec. 2185); sex is another (Penal Law, sec. 2187); previous conviction (Penal Law, sec. 2185) another. These matters do n t relate to the guilt of the prisoner but to the matter of punishment (place and time) and can be decided on a hearing before the judge. (People v. Rosen, 208 N. Y. 169, p. 175.) Neither is a jury trial required to determine these facts unless required by the Code of Criminal Procedure. (People v. Gowasky, 244 N. Y. 451; Graham v. West Virginia, 224 U. S. 616.)

The judgment should be affirmed.

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

Judgment affirmed.