text:
    Patsy Gentilala, an Infant, by Michael Gentilala, His Guardian ad Litem, Appellant, v. Fay Taxicabs, Inc., Respondent.
    (Argued October 7, 1926;
    decided October 19, 1926.)
    Practice — pleading — defense of another action pending properly pleaded in answer — irregular discontinuance of prior action does not warrant reversal of judgment where case has been tried on the merits and Appellate Division finds no error on the trial and that evidence warrants the verdict.
    1. The defense of another action pending for the same cause is properly pleaded in the answer although defendant could have moved upon the complaint and affidavits to dismiss the complaint. (Rules Civ. Pr. 107.)
    2. Where the case has been tried out on the merits and a verdict entered in favor of plaintiff, the defense of a prior action pending having been avoided by entry during the trial of an order of the trial judge discontinuing the prior action, the fact that subsequently the trial judge reconsidered his ruling and denied the motion to discontinue, at the same time denying defendant’s motion for a new trial, on the erroneous theory that it should have moved under rule 107 for judgment, does not warrant a reversal of the judgment where the Appellate Division has found on review that there was no error on the trial and that the evidence justified the verdict. The irregular .discontinuance in no way touches the merits of the case or interferes with any rights of defendant resting in substance as distinguished from the right to orderly procedure.

      Gentilala v. Fay Taxicabs, Inc., 214 App. Div. 255, reversed.
    Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered December 4, 1925, reversing a judgment in favor of plaintiff entered upon a verdict and granting a new trial.

      Sol Boneparth, David M. Fink and Jacquin Frank for appellant.
    The orders of May 12, 1924, and of September 9, 1924, which denied plaintiff’s application to discontinue the prior action, are not necessary to support plaintiff’s judgment. Consequently their reversal does not impair plaintiff’s judgment. And in addition thereto, there being a valid and subsisting order of discontinuance in evidence, plaintiff’s judgment in the trial court should stand and be reinstated. (3 Cyc. 460; Ross v. Kernan, 31 Hun, 164; Woods v. Kernan, 57 Hun, 215; Hayden v. Florence, 54 N. Y. 221; Pack v. Gilbert, 124 N. Y. 612; King v. Harris, 30 Barb. 471; Cahill v. Lillienthal, 30 Misc. Rep. 429; Lerner v. Wagner, 36 Misc. Rep. 833; Hirsh v. Manhattan Railway Co., 84 App. Div. 374; Kramer v. Union & New Haven Trust Co., 181 N. Y. Supp. 672; Brody v. Madison Lunch, Inc., 199 App. Div. 840; Eagle-Picker Lead Co. v. Mansfield, 203 App. Div. 9; McKee v. Roberts, 197 App. Div. 842; Wood v. Duff-Gordon, 222 N. Y. 88.)

      Arthur K. Wing and James G. Purdy for respondent.
    The defendant properly pleaded and proved a prior action pending and the trial court erred in denying the defendant’s motion to dismiss the complaint by reason thereof and the Appellate Division properly reversed the judgment of the trial court. (Bedell v. Powell, 13 Barb. 183; Averill v. Paterson, 10 N. Y. 500; Bowker Fertilizer Co. v. Cox, 106 N. Y. 555; Swart v. Borst, 17 How. Pr. 69; Hirsch v. Manhattan Railway Co., 84 App. Div. 374.)
   Crane, J.

We agree fully with what the Appellate Division has stated regarding Civil Practice Rule 107 and section 278 of the Civil Practice Act. We do not think, however, that the attempt of the trial judge to misapply these provisions required as matter of law the reversal of the judgment.

The action, which is one for negligence, was tried out upon the merits and resulted in a verdict for the plaintiff which the Appellate Division has stated was fully justified by the evidence. The error, if it be error, which moved the Appellate Division to grant a new trial was a ruling of the trial judge which had nothing whatever to do with the merits of the case but related solely to procedure. The defendant had pleaded that another action was pending for. the same cause. This defense was properly pleaded in the answer although the defendant could have moved under Civil Practice Rule 1T7 upon the complaint and affidavits to dismiss the complaint for this reason. This is fully and correctly explained in the opinion of the Appellate Division.

Levy and Hartman were the attorneys for the plaintiff in the previous action. At the close of the trial of this case there was presented to the trial judge the affidavit of Mr. Levy asking for the discontinuance of the action brought by his firm and an order was thereupon signed by the judge discontinuing the action. The order was then offered in evidence by the plaintiff in this action and was a complete answer to the defense of a prior action pending. (Porter v. Kingsbury, 77 N. Y. 164, 167.) If the matter had rested here there would have been no difficulty. A party has a right to discontinue an action at any time upon payment of costs where the rights or interests of the adverse party are not affected. (Matter of Butler, 101 N. Y. 307.) The question of costs was not raised by the defendant on the application to discontinue, the objection to granting it being based upon a claim of surprise and the demand for the withdrawal of a juror. Taxable costs were awarded to the defendant in the order of discontinuance.

Up to this point, therefore, we have a case tried out on the merits, the defense of a previous action pending having been avoided by the entry of an order during the trial discontinuing that action. At the end of the trial or at the time of the verdict there was no prior action pending; it had been discontinued.

Subsequently the trial judge of his own motion reconsidered his ruling and denied the motion to discontinue the previous action. At the same time he denied the defendant’s motion for a new trial on the ground that it should have moved under Civil Practice Rule 107 for a judgment on the ground that another action was pending. In this the judge was wrong as is fully shown by the Appellate Division opinion. The order entered also stated: “ That the plaintiff’s motion to dismiss the action brought by Levy & Hartman, Esqs., on behalf of the plaintiff against the defendant is denied.” The previous order of discontinuance, however, was not vacated or set aside.

During the trial as above stated the previous action was discontinued by an order duly made and signed. Such was the state of the record at the.time the verdict of the jury was rendered. The Appellate Division has found upon review of all the facts that there was no error in the trial and that the evidence or weight of evidence justified the verdict. Shall this trial be nullified because the previous action may have been improperly discontinued when the plaintiff desired to discontinue it and the defendant has no reason for keeping it alive? So far as the record shows, it is purely a technical objection. Other than a question of costs the defendant could not oppose the discontinuance. What useful purpose can be served in sending this case back for a new trial when the merits have in no way been affected or touched by this procedure? The defendant does not claim that any of its rights have been affected, its sole plea being one of surprise. Assuming that the action of the trial judge was ill-advised and irregular, we cannot see that any harm has been done to the defendant. The previous action was discontinued by order duly made and entered and the subsequent ruling after the trial by the trial judge ought not to affect the verdict. Suppose that the order of discontinuance had been entered at Special Term during or before the trial and introduced in evidence, would the fact that the Special Term later and after the trial vacated the order of discontinuance require the granting of a new trial of the action in which the order of discontinuance had been introduced, in evidence? It might, but only upon a showing that some substantial right of the defendant was involved.

The irregular discontinuance in no way touches the merits of the case or interferes with any of the rights of the defendant, i. e., rights resting in substance as distinguished from the right to orderly procedure. We feel that the verdict of the jury should not have been disturbed by the Appellate Division. The order of the Appellate Division should, therefore, be reversed and the judgment of the Trial Term reinstated, with costs in this court and in the Appellate Division.

His cock, Ch. J., Cardozo, Pound, McLaughlin, Andrews and Lehman. JJ., concur.

Ordered accordingly.


source: Caselaw Access Project

author: Pound, J.

license: Public Domain

text:
    In the Matter of the Application of Frank J. McCabe, Appellant, against John R. Voorhis et al., Constituting the Board of Elections of the City of New York, Respondents.
    Constitutional law — New York city — elections — referendum — mandamus — legislation subject to approval of electors valid — citizen may by mandamus compel public officer to perform public duty — authority of board of elections of city of New York relative to submission on referendum of local law — must determine whether law is properly transmitted for submission — may by mandamus be compelled to perform that duty — proper for courts to consider whether proposed local law is in conflict with Constitution or controlling act of Legislature where it is far reaching in effect and test of its validity after approval would be difficult — test of validity of local law — defect in title • — objectionable as superseding State legislation without compliance with City Home Rule Law — when good may not be severed from bad — practical application of words of statute.
    1. The practice of adopting legislation to become operative only upon its approval by a majority of the qualified electors of the specified locality to which it, applies, has the sanction of this court.

      2. A citizen and elector has a sufficient interest to warrant him in making application for an order of mandamus to compel the performance by a public officer of a public duty. (People ex rel. Daley v. Bice, 129 N. Y. 449, followed; Schieffelin v. Komfort, 212 N. Y. 520, distinguished.)
    3. The authority of the board of elections of the city of New York, relative to the submission of a local law on referendum to the electors of the city, is limited to the submission of such laws as are adopted by the municipal assembly pursuant to the City Home Rule Law (L. 1924, ch. 363) and it must determine for itself whether the law is in form a local law and in fact properly transmitted to it for submission. If it is not such, on its face, the board may reject the proposition, and, if it disregards its duty and proceeds to submit a defective local law to be voted on by the electors, a citizen and elector may obtain a mandamus order requiring it to perform its duty.
    4. While, ordinarily, courts will not decide the abstract question whether a law, on its face adopted pursuant to the City Home Rule Law, is in conflict with the Constitution or some controlling act of the Legislature or in excess of the delegated powers of the municipal assembly, the rule is one of prudence rather than of power, and, where the consequences of its adoption are far reaching, involving public interests and vast investments and the bringing it to the test of validity in any actual controversy after its approval by the electors is involved in difficulty, it seems proper for the courts to consider the questions raised.
    5. Direct legislation in cities must always rest on some constitutional or statutory grant of power. The test of validity, therefore, of a local law of New York city is whether it has been adopted as such and comes within the powers delegated to the city by the City Home Rule Law.
    6. A local law, the purpose of which, as summarized in its title, is “ to prevent an increased fare on rapid transit or street surface railways without the approval of a majority of the electors of the city of New York,” but which, in fact, prohibits any change in any contract or franchise of any city railroad corporation with respect to preferentials, bonuses or subsidies or obligations to render public services, offends against section 13 of the Home Rule Law and section 16 of article 3 of the State Constitution, which provide that a local law shall embrace but one subject and that shall be expressed in its title.
    7. The law in question is also. objectionable in that it supersedes State legislation and takes from the board of estimate and apportionment the power conferred upon it by chapter 641 of the Laws of 1925 to give its consent and approval to contracts to effectuate plans of readjustment of transit in the city of New York, without complying with the requirements of the City Home Rule Law (§ 12, subd. 1) that a local law intended to supersede a provision of an act of the Legislature, which does not in terms and in effect apply to ah cities, shall specify the provision intended to be superseded by “ reference to chapter number, year of enactment, title of statute, section, subsection or subdivision.”
    (Argued October 19, 1926;
    decided October 22, 1926.)
    8. Though a portion of the local law might be saved as valid for the reason that the State plan for readjustment applies to subways and rapid transit railways and not to street surface railways, separation of the good from the bad would permit the submission to the voters of but a maimed and worthless thing.
    9. A contention that the local law is nothing more than a limitation placed on the mode and manner of giving consent by the local authorities cannot be sustained without disregarding the practical application of the language used.

      Matter of McCabe v. Voorhis, 218 App. Div. 702, reversed.
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered October 14, 1926, which affirmed an order of Special Term denying a motion for a peremptory order of mandamus to compel the board of elections of the city of New York to omit from the ballots for the November election a proposition for the submission of a local law under the purported referendum provisions of the City Home Rule Law.

      Louis Marshall for appellant.
    Exclusive’ power with respect to transit franchises resides- in the sovereignty of the State, and the city can exercise no power with respect thereto except such as may have been expressly delegated to it. (Matter of Sherrill v. O’Brien, 188 N. Y. 185; People ex rel. Simon v. Bradley, 207 N. Y. 592; Beekman v. Third Avenue R. R. Co., 153 N. Y. 144; People ex rel. N. Y. & N. S. T. Co. v. Pub. Serv. Com., 175 App. Div. 869; People ex rel. South Shore T. Co. v. Wilcox, 196 N. Y. 212; City of New York v. Bryan, 196 N. Y. 158; Wilcox, v. McClellan, 185 N. Y. 9.) The State has exercised its exclusive power in the provision by general statutes of comprehensive machinery for granting franchises, making contracts and regulating and controlling the whole field of transit, and only limited and specific functions have been delegated to the “ local authority.” (Matter of Forty-second St. Spur of Manhattan Ry. Co., 216 N. Y. Supp. 2; People ex rel. R. T. S. Const. Co. v. Craven, 210 N. Y. 443; Davis v. Mayor of New York, 14 N. Y. 506; Milhau v. Sharp, 27 N. Y. 611.) The limited and specific functions of the “ local authority ” were not enlarged, and no power with respect to transit was delegated to the city of New York by the Home Rule Amendment or the City Home Rule Law. (Brown v. City of New York, 241 N. Y. 96; Admiral Realty Co. v. City of New York, 206 N. Y. 110; Matter of McAneny v. Board of Estimate & Apportionment, 232 N. Y. 377; People ex rel. Einsfeld v. Murray, 149 N. Y. 367; McGrath v. Grout, 37 Misc. Rep. 64; 69 App. Div. 314; 171 N. Y. 7; Schieffelin v. Berry, 217 App. Div. 451; Halsey v. Jewett Dramatic Co., 114 App. Div. 423; Pulitzer v. City of New York, 48 App. Div. 6; People ex rel. Outwater v. Green, 56 N. Y. 466; Chase v. Lord, 77 N. Y. 1; People v. New York Catholic Protectory, 106 N. Y. 604; East v. Brooklyn Heights R. R. Co., 195 N. Y. 409.) Local Law No. 16 exceeds the power of the city and in subjecting every important transit adjustment to its provisions directly conflicts with the general statutes of the State. (Huff v. City of New York, 202 App. Div. 425; Beekman v. Third Avenue R. R. Co., 153 N. Y. 144; Wilcox v. McClellan, 185 N. Y. 9; Sanborn v. Carleton, 15 Gray, 399; Barto v. Himrod, 8 N. Y. 483; People ex rel. Unger v. Kennedy, 207 N. Y. 533; Cleveland v. City of Watertown, 222 N. Y. 159.) The local law exceeds specific limitations' on local legislation in that it bears a false and misleading title which is so framed as to conceal the true nature of its subject-matter. (Economic Power Co. v. Buffalo, 195 N. Y. 286; People v. Howe,
      177 N. Y. 499; Bohmer v. Haffen, 161 N. Y. 390; Parfitt v. Furguson, 159 N. Y. 111; New York Bridge Co. v. Smith, 148 N. Y. 540; Johnston v. Spicer, 107 N. Y. 185; Matter of Sackett Street, 74 N. Y. 95; Matter of Greene, 55 App. Div. 475; 166 N. Y. 485; First Construction Co. v. State of New York, 221 N. Y. 295; Matter of Dean, 230 N. Y. 1; Gaynor v. Village of Port Chester, 231 N. Y. 451.) Local Law No. 16 of 1925 is illegal on the further ground that it forbids the board of estimate and apportionment to consider any resolution having the purpose or effect specified in the law, unless and until the proposal of such resolution shall have been first submitted to the people of the city upon a referendum “ and approval by the affirmative vote of a majority of the qualified voters of such city,” whereas sections 15 and 16 of the City Home Rule Law, relating to approval by referendum, require only “ the affirmative vote of a majority of the qualified electors of such city voting upon the proposition.” (State ex rel. Quincy, M. & P. R. Co. v. Harris, 96 Mo. 29; Wells v. Ragsdale, 102 Ga. 53; Davis v. Brown, 46 W. Va. 716; Hogg v. Baker, 17 Ky. L. Rep. 577; State v. Cornell, 53 Neb. 556; State v. Anderson, 26 Neb. 517.) Mandamus requiring the defendants to disregard the proposition sought to be submitted to the electors of the city of New York at the general election to be held on November 2, 1926, is the proper remedy. (People ex rel. Conklin v. Boyle, 98 Misc. Rep. 364; 178 App. Div. 908; People ex rel. Lempp v. Board of Elections, 178 N. Y. Supp. 516; 185 App. Div. 939; 234 N. Y. 633; Trounstine v. Britt, 212 N. Y. 421; Matter of Noble, 34 App. Div. 55; People ex rel. Noyes v. Board of Canvassers, 126 N. Y. 392; People ex rel. Nichols v. Board of Canvassers, 129 N. Y. 395; People ex rel. Daley v. Rice, 129 N. Y. 449; People ex rel. Hotchkiss v. Smith, 206 N. Y. 231; Matter of Hopper v. Britt, 203 N. Y. 144; 204 N. Y. 525; People ex rel. Ferguson v. Vrornan, 101 Misc. Rep. 233; 188 App. Div. 914.) The relator, as a citizen, a resident of the city and State of New York, and a duly qualified and enrolled voter therein, is entitled to invoke the remedy of mandamus. (People ex rel. Case v. Collins, 19 Wend. 55; People v. Halsey, 37 N. Y. 346; Baird v. Supervisors, etc., 138 N. Y. 95; People ex rel. Bacon v. Northern Central Railway Co., 164 N. Y. 289; People ex rel. Pumpyansky v. Keating, 168 N. Y. 390; Southern Leasing Co. v. Ludwig, 217 N. Y. 100; People ex rel. Publicity Leasing Co. v. Ludwig, 218 N. Y. 540; People ex rel. Swan v. Doxsee, 136 App. Div. 400; 198 N. Y. 605; People v. Ahearn, 124 App. Div. 840; People v. Swanstrom, 79 App. Div. 94; People v. Manning, 37 App. Div. 141; People v. Meakim, 56 Hun, 626; 123 N. Y. 660.) There is no merit in the contention that, until there has been an election as proposed, the submission to the electorate for its approval or disapproval of Local Law No. 16 of 1925 cannot be interfered with. (People ex rel. Hotchkiss v. Smith, 206 N. Y. 201.)

      William D. Guthrie for appellant.
    Mandamus upon application of an inhabitant is a proper remedy and the present proceeding is not premature. (Baird v. Supervisors, etc., 138 N. Y. 95; People ex rel. Pumpyansky v. Keating, 168 N. Y. 390; McAneny v. Board of Estimate, etc., 232 N. Y. 377; People ex rel. Conklin v. Boyle, 98 Misc. Rep. 364; 178 App. Div. 908; People ex rel. Daley v. Rice, 129 N. Y. 449; Matter of Noble, 34 App. Div. 55; People ex rel. Lempp v. Board of Elections, 178 N. Y. Supp. 516; 185 App. Div. 939; 224 N. Y. 633; People ex rel. Ferguson v. Vroman, 101 Misc. Rep. 233.) Local Law 16, paragraph 1, attempts to supersede acts of the Legislature in violation of section 12 of the City Home Rule Law. (Maxmilian v. Mayor, etc., 62 N. Y. 160; New York & Brooklyn Saw-Mill & Lumber Co. v. City of Brooklyn, 71 N. Y. 580; Beekman v. Third Ave. R. R. Co., 153 N. Y. 144; Wilcox v. McClellan, 185 N. Y. 9; Slavin v. McGuire, 205 N. Y. 84; Olmsted v. Meahl,
      219 N. Y. 270; Brown v. City of New York, 241 N. Y. 96; Kittinger v. Buffalo Traction Co., 160 N. Y. 377; Admiral Realty Co. v. City of New York, 206 N. Y. 110; People ex rel. Plancon v. Prendergast, 219 N. Y. 252; Matter of Hirshfield v. Cook, 227 N. Y. 297; Matter of McAneny v. Board of Estimate, etc., 232 N. Y. 377; Gas & Electric S. Co. v. Manhattan & Queens Trac. Corp., 266 Fed. Rep. 625.) Local Law 16, paragraph 2, attempts to provide for an initiative proceeding not authorized by the City Home Rule Law, or any other law. (Mills v. Sweeney, 219 N. Y. 213; Dallas Railway v. Geller, 114 Tex. 484; Southwestern Tel. & Tel. Co. v. City of Dallas, 104 Tex. 114; Home Telephone Co. v. Los Angeles, 211 U. S. 265; Birdsall v. Clark, 73 N. Y. 73; Phelps v. Mayor of New York, 112 N. Y. 216; Ontario Knitting Company v. State of New York, 205 N. Y. 409.) Local Law 16 is also invalid because its title neither declares nor adequately suggests its several subject-matters. (Economic P. & C. Co. v. City of Buffalo, 195 N. Y. 286; Matter of Application of Paul, 94 N. Y. 497; People v. Allen, 42 N. Y. 404; Matter of City of Rochester v. Bloss, 77 App. Div. 28.)

      Leonard M. Wallstein for Citizens Union of the City of New York, amicus curios.

    The present proceeding is not premature. (People ex rel. Unger v. Kennedy, 207 N. Y. 533; Brawner v. Supervisors of Elections, 141 Md. 586; Elliot v. City of Detroit, 121 Mich. 611.) There is a clear legal right to mandamus if the statute under which the officials propose to act is unconstitutional. (People ex rel. Hotchkiss v. Smith, 206 N. Y. 231; People ex rel. Hopper v. Britt, 203 N. Y. 144; People ex rel. Howard v. Board, 42 App. Div. 510; 160 N. Y. 687.) This local law is beyond the local legislative power in that, introducing the electorate as a body clothed with municipal administrative powers, it purports to change the organization of the city government, a duty (and a corresponding power) vested solely in the State Legislature by article XII, section 1, of the Constitution. Local Law No. 16 of 1925 is beyond local legislative power, because not within the grant of article XII, section 3. (Schieffelin v. Mills, 241 N. Y. 96; Admiral Realty Co. v. City of New York, 206 N. Y. 110; McAneny v. Board of Estimate, 232 N. Y. 377; Gubner v. McClellan, 130 App. Div. 716; People ex rel. Einsfeld v. Murray, 149 N. Y. 367; People ex rel. Outwater v. Green, 56 N. Y. 466; People v. Richards, 108 N. Y. 137; Matter of Rochester E. R. Co., 123 N. Y. 351; Pulitzer v. City of New York, 48 App. Div. 6; Halsey v. Dramatic Co., 114 App. Div. 420; Louisville & N. R. Co. v. Mattley, 219 U. S. 467; Texas, etc., R. Co. v. Miller, 221 U. S. 408; Buffalo, etc., R. Co. v. Buffalo, etc., R. Co., 111 N. Y. 132.)

      George P. Nicholson, Corporation Counsel (Charles L. Craig, Edgar J. Kohler, Arthur J. W. Hilly, Russell Lord Tarbox and William E. C. Mayer of counsel), for respondents.
    The court has no jurisdiction to entertain the proceeding. (Matter of Bonnaffe, 23 N. Y. 169; Wallace v. Swinton, 64 N. Y. 188; Pratt v. Short, 79 N. Y. 437; N. Y. Central & H. R. R. R. Co. v. Reusens, 151 App. Div. 458; Aultman & Taylor Co. v. Syme Co., 163 N. Y. 54; People ex rel. Conklin v. Boyle, 98 Misc. Rep. 364;: 178 App. Div. 908; People ex rel. Bast v. Voorhis, 227 N. Y. 167; Matter of Sherrill v. O’Brien, 188 N. Y. 185; Matter of Reynolds, 202 N. Y. 403; Spies v. Byers, 287 Ill. 627.) The local law is a valid enactment under the authority of the City Home Rule Law and the Home Rule Amendment of the Constitution. (Sun Printing & Publishing Assn. v. Mayor, etc., 152 N. Y. 257; Browne v. City of New York, 241 N. Y. 96; Matter of International Railway Co. v. Rann, 224 N. Y. 83; Quinby v. Public Service Commission, 223 N. Y. 244.) The contention that the title of the local law is defective is without force. (Economic Power, etc., Co. v. Buffalo, 195 N. Y. 286; People v. Howe, 177 N. Y. 499; People v. Banks, 67 N. Y. 568; People v. Comrs., 47 N. Y. 501; Prentice v. Weston, 47 Hun, 121; Wrought Iron Bridge Co. v. Attica, 119 N. Y. 204; Devlin v. Yew For&, 63 N. Y. 8; Matter of Department of Public Parks, 86 N. Y. 437.) The local law does not purport to amend the Rapid Transit Act, the Public Service Commission Law or any other statute than the Greater New York charter. (International Ry. Co. v. Rann, 224 N. Y. 83; Quinby v. Public Service Commission, 223 N. Y. 244; People ex rel. Garrison v. Nixon, 229 N. Y. 575; 229 N. Y. 645; Admiral Realty Co. v. City of N. Y., 206 N. Y. 110.)

      John Godfrey Saxe, John F. Collins and Edward S. Dore for Democratic County Committee.
    McCabe has no grievance; the courts do not decide moot questions. (Schieffelin v. Komfort, 212 N. Y. 529.) The courts are without jurisdiction to entertain this proceeding for the reason that it is one to supervise and inhibit the regular process of legislation. (Spies v. Byers, 287 Ill. 627; 122 N. E. Rep. 841.)
   Pound, J.

The relator, a resident of the city of New York, instituted this proceeding for a peremptory order of mandamus as a duly qualified and enrolled voter or elector therein, to compel the defendants, the board of elections of the city, to omit from the special ballot for the general election on November 2, 1926, a proposition for the submission on referendum to the electors of the city of a local law adopted by the municipal assembly known as Local Law No. 16. The purpose of the law as summarized in the title is “to prevent an increased fare on rapid transit or street surface railways, without the approval of a majority of the electors of the city of New York.” The law itself is much broader in its terms and makes it unlawful for the board of estimate and apportionment “ to adopt any resolution authorizing, or purporting to authorize any change in any contract or franchise for the operation of any subway, or rapid transit railway, or street surface railway in the city of New York, the purpose or effect of which is to increase the fare of five (5) cents now provided by law, or which grants to any operating company any preferential or bonus, or subsidy, or releases it from any of its obligations to render the service to the public required by any contract or franchise whatsoever * * * unless and until the proposal for the adoption of any such resolution shall have been first submitted to the people of the city upon a referendum, and approved by the affirmative vote of a majority of the qualified voters of such city, such referendum to be had at the first general election, after there has been filed with the city clerk at least ninety days prior thereto, a petition signed and acknowledged by qualified voters of such city in number equal to at least fifteen per centum of the total number of votes cast for Governor at the last Gubernatorial election in such city.” The act became a law on September 17, 1925, but under the provisions of section 15 of the City Home Rule Law (L. 1924, ch. 363), a local law which abolishes transfers or curtails any power of an elective city officer,” with exceptions immaterial in this connection, becomes operative only when approved by the affirmative vote of a majority of the qualified electors of such city voting on such proposition. A non-operative law is an anomaly but the practice of adopting such legislation has the sanction of the court. (Barto v. Himrod, 8 N. Y. 483; People ex rel. Unger v. Kennedy, 207 N. Y. 533, 545.)

Pursuant to the provisions of section 18 of the City Home Rule Law the' proposition has been transmitted to the board of elections which is charged with the ministerial duty of submitting local laws to the vote of the people.

The relator challenges the validity of this local law on various grounds hereafter considered. The defendants at the beginning question the right of the relator to maintain the proceeding. They rely on some expressions in the opinion in Schieffelin v. Komfort (212 N. Y. 520) to sustain their position. The ruling there was, however, that a citizen and taxpayer might not bring before the court for review in an action in equity the acts of another department of the State government simply because he is one of many such citizens and taxpayers. People ex rel. Daley v. Rice (129 N. Y. 449) and other cases which may be taken as typical, hold that a citizen and elector has a sufficient interest to make the application for an order of mandamus to compel the performance by a public officer of a public duty. This distinction is recognized in the Komfort case and is not disturbed thereby.

The question next arises as to the public duty of the board of elections. Unquestionably it must determine for itself whether the law is in form a local law and in fact properly transmitted to the board. It acts, not under the provisions of the local law itself, but under the provisions of the City Home Rule Law. Its authority is limited to the submission of such local laws as are adopted pursuant to that act by the municipal assembly. If what purports to be a local law has not been adopted sixty days before the election; if it appears to have no relation to the “ property, affairs or government of the city, as defined and limited by section 11 of the law; if it is not on its face such a local law as shall be submitted for the approval of the electors under the provisions of section 15 of the law, the board may reject the proposition transmitted to it and the courts will not compel it to perform an illegal act. A citizen and elector might obtain a mandamus order requiring it to perform its duty in such a case if it disregarded its duty and proceeded to submit such a defective local law to be voted on by the electors. Ordinarily the courts would go no farther. They would not decide the abstract question whether a law which on its face was adopted pursuant to the provisions of the City Home Rule Law was in conflict with the Constitution or some controlling act of the Legislature or in excess of the powers delegated to the municipal assembly. The decision of such questions might properly await an actual controversy between parties litigant over some action thereafter taken or refused. To nip all invalid local legislation in the bud would be a short and summary way of disposing of it, but the hazardous and inconvenient nature of such action, • taken in' the necessary haste of disposing of pre-election contests, makes it wise and expedient for the courts to refuse to intervene in advance of some threatened action. The rule is, however, one of prudence rather than one of power. Exceptional and extraordinary circumstances of a public nature may exist which would prevent such controversy from arising. So here the board of estimate and apportionment if the local law were approved at the.election might refuse to permit a controversy to arise by refusing its consent to any change in the contracts or franchises affected in the exercise of discretion merely which could not be judicially reviewed. If this proceeding is not entertained the question may never arise. In People ex rel. Hotchkiss v. Smith (206 N. Y. 231) the court decided the then abstract and academic question whether certain amendments to the Election Law relative to independent nominations were constitutional although no certificates of nomination had been tendered. The court held in advance of any actual controversy that the amendments were unconstitutional. Why? Because to do otherwise might prevent independent nominations.

Williams v. Boynton (147 N. Y. 426) was a case where the board of supervisors illegally adopted a resolution changing a county seat. The illegality consisted in the fact that the resolution was carried by illegal votes. The court restrained the county clerk from submitting the resolution to the people.

Taking into consideration the far-reaching consequences of the adoption of the local law in question, the public interests and vast investments, and the difficulty involved of bringing it to the test of validity in any actual controversy after its approval by the electors, it seems proper for the court to consider the questions of validity raised by the relator. The power to provide for a referendum must be found in the City Home Rule Act. (Mills v. Sweeney, 219 N. Y. 213.) Otherwise- it is unauthorized. Direct legislation in cities must always rest on some constitutional or statutory grant of power. Government by representation is still the rule. Direct action by the people is the exception. The test of validity, therefore, is whether Local Law No. 16 has been adopted as a local law coming within the powers delegated to the city by such law. The power asserted by the city must fail unless the local law squares itself with the restrictions therein contained. (Browne v. City of New York, 241 N. Y. 96.)

1. Objection is made that the title of the local law is defective. Section 13 of the Home Rule Law provides: “ Every such local law shall embrace only one subject. The title shall briefly refer to the subject matter.” The State Constitution (Art. Ill, § 16) reads as follows: “ No private or local bill, which may be passed by the Legislature, shall embrace more than one subject, and that shall.be expressed in its title.” In passing on the latter provision this court has said: “ The title of an act should not be misleading and wholly insufficient as an expression of the subject of the act. It should not give afalse idea as to the subject and nature of the legislation.” (Economic P. & C. Co. v. City of Buffalo, 195 N. Y. 286.) This local law refers in its title only to the increased fare feature, but it is not so limited. It prohibits any change in any contract or franchise of any city railroad corporation with respect to preferentials, bonuses or subsidies or obligations to render public services. Contracts might be modified without affecting the five-cent fare feature. The five-cent fare referendum has a catching note of popular appeal. The voter might easily gain from this title the idea that the subject and nature of the legislation was thus limited, whereas the hands- of the board of estimate and apportionment are effectively tied as to all modifications of the contracts or franchises. Everything is to be settled by popular vote including those problems which are to be solved by experts after study and hearings. (Matter of Continental Guaranty Corp. v. Craig, 240 N. Y. 354.)

2. A weightier objection is that the local law supersedes State legislation and takes from the board of estimate and apportionment the powers and duties which have been conferred on it by such legislation. Rapid transit in cities is a legitimate object of local interest and concern. (.Matter of International Ry. Co. v. Rann, 224 N. Y. 83.) It is a city purpose. (Sun Printing & Publishing Assn. v. Mayor, 152 N. Y. 257.) It is, however, subject to regulation at all times by the power of the State except as the State has divested itself of such power. The limitations on the power of the city under the City Home Rule Law are stated in Browne v. City of New York (supra). The cities have not been wholly emancipated from the power of the Legislature in respect to transportation. While it is contended that rapid transit in the city of New York is a State affair (Matter of McAneny v. Bd. of Estimate, etc., 232 N. Y. 377, 393) and that legislation thereon is not included in any grant of authority to the local legislative body of a city to adopt such laws in relation to the property, affairs or government of a city ” as are described in section 11 of the act it is unnecessary for us at this time to decide whether the local law in question is invalid because it relates to matters other than the property, affairs or government of cities.” (City Home Rule Law, § 12, subd. 2.) The effect of local law on acts of the Legislature is defined (§ 12, subd. 1) in substance as follows: If it is intended to supersede by a local law a provision of an act of the Legislature which does not in terms and in effect apply alike to all cities, such local law shall specify any provision of such act of the Legislature by chapter number, year of enactment, title of statute, section, subsection or subdivision which it is intended to supersede by a local law. The legislation in question while not in the form prescribed by the City Home Rule Law is intended to supersede and if operative does supersede the Public Service Commissions Law (Cons. Laws, cb. 48) in relation to the powers of the Transit Commission to prepare and put in operation a plan of readjustment for the improvement of transit in the city of New York. Such law, as amended in 1921, was held in the McAneny Case (supra) to be not a special city law relating to the property, affairs or government of cities, but a general law enacted for the benefit of the public at large. Chapter 641 of the Laws of 1925 amends this law as follows:

§ 112. Approval of contracts to effectuate plans of readjustment. Anything contained in this chapter to the contrary notwithstanding, the transit commission shall nok execute and deliver any contract or contracts to effectuate any plan of readjustment therein provided for without obtaining the consent and approval of the board of estimate and apportionment, or other local authority of such city.”

The local law takes from the board of estimate and apportionment the power given to it by the law of 1925 to give its consent and approval to contracts to effectuate any plan of readjustment therein provided for, or even to consider any resolution having such purpose, until the board is so empowered to act by the electors of the city. In other words, it transfers the power go give such consent and approval from the board where the State has placed it to the electors of the city. The electors are not a local authority of the city. The statute of the State does not contemplate a transfer of power from the local authorities to direct action by the public. While it is doubtless true that street surface railway contracts and franchises exist which are not included in the plan of readjustment referred to in the law quoted and that this limitation does not exist as to them (See Matter of Quinby v. Public Service Comm., 223 N. Y. 244), the plan does include the subways and rapid transit railways. But the regulation of the street surface railways is a mere incident to the general provisions of the law. Even as to them it is questionable whether the constitutional power of the local authorities may be delegated back to the electors by the city itself. By the local law in question the local authorities have no power to exercise their independent judgment on matters calling for expert knowledge. They become a mere register to record the will of the voters. They may not even consider the proposition until the voters have acted upon it. The local law either applies only to the street surface railroads or else it attempts to supersede the State law without complying with the requirements of the City Home Rule Law. If it does not repeal the provision of the State law above referred to, that provision remains in force. If it is inifefided to supersede the State law, it is ineffective in that regard.

The purpose of the local law is plain. If an inconsequential portion may be saved as valid the question remains whether that part may be so separated from the invalid portions as to save it from the condemnation of invalidity. To separate the good from the bad and permit the submission to the voters of a maimed and worthless thing would be folly. Hoping for bread they would receive a stone. (Fougera & Co. v. City of New York, 224 N. Y. 269, 282, 283.)

Limitations may be placed on the power of the local authorities to give their consent (Quinby Case, supra, 260, 261) and it is urged that the local law is nothing more than such a limitation upon the mode and manner of acting. To so hold would be to regard words and disregard their practical application. Common sense teaches us the local authorities are in effect forbidden to act. The limitation upon action is intended as a prohibition of all action as to all intents and purposes it is. Self sacrifice so extreme by the electorate might be hoped for in the ideal State where the voters are philosophers but not in a modern municipality. The legislative scheme of readjustment is thus effectively thwarted.

The orders appealed from should be reversed and the motion for peremptory mandamus granted, without costs.

His cock, Ch. J., Cardozo, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Orders reversed, etc.


author: Per Curiam.

text:
    The People of the State of New York ex rel. Felix de Martini, Appellant, v. George V. McLaughlin, as Police Commissioner of the City of New York, Respondent.
    (Argued October 20, 1926;
    decided October 22, 1926.)
    Crimes — extradition — practice — affidavits closely scrutinized when sole basis for application for extradition — insufficient charge of crime to warrant extradition.
    1. When extradition is sought on the basis of an indictment, the forms of pleading established in the demanding State will be accepted as sufficient by the courts of the State in which the fugitive is seized, but when extradition is sought on the basis of an affidavit there is need for closer scrutiny.
    2. Where the affidavits in support of an application for extradition, when read together, are seen to proceed upon information and belief, and where also the charges are vague, indefinite and general, and are made without specification of the sources of information or the grounds of belief, and, if accepted at their face value, omit a basic element of guilt, in that the prisoner, prosecuted as an accessory after the fact, is not stated to have had knowledge of the guilt of the principal offenders, the conclusion follows that neither formally nor substantially is there a sufficient charge of crime to warrant extradition.

      People ex rel. de Martini v. McLaughlin, 218 App. Div. 738, reversed.

      Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the second judicial department, entered October 15, 1926, which affirmed two orders of Special Term dismissing writs of habeas corpus in extradition proceedings.

      John Me Kim Minton, Jr., and William L. F. Gardiner for appellant.
    The affidavit does not charge the relator with the commission of a crime. (People ex rel. Lawrence v. Brady, 56 N. Y. 186; The Queen v. Butterfield, 1 Cox’s Cr. Cases, 39; Commonwealth v. Filburn, 119 Mass. 297; State v. Naughton, 221 Mo. 398; People v. Dunn, 53 Hun, 381; People ex rel. Draper v. Pinkerton, 77 N. Y. 245; People ex rel. Nubell v. Byrnes, 33 Hun, 98; People ex rel. Himmelstein v. Baker, 137 App. Div. 824; People ex rel. MacSherry v. Enright, 112 Misc. Rep. 568; 196 App. Div. 964; Davis’ Case, 122 Mass. 324; Matter of Greenough, 31 Vt. 278.)

      Charles J. Dodd, District Attorney {Harry S. Sullivan of counsel), for respondent.
    The sufficiency of an affidavit accompanying an extradition warrant may not be determined by the courts of this State, but is to be decided solely by the courts of the demanding State. (2 Moore on Extradition, § 638; Hogan v. O’Neill, 255 U. S. 52; Biddinger v. Commissioner of Police, 245 U. S. 134; Pierce v. Creecy, 210 U. S. 387; People ex rel. McNichols v. Pease, 207 U. S. 100; People ex rel. Marshall v. Moore, 167 App. Div. 479; 217 N. Y. 632; People ex rel. Meeker v. Baker, 142 App. Div. 598; Ex Parte Pearce, 32 Tex. App. 301; 155 U. S. 311; Matter of Roberts, 24 Fed. Rep. 132; 116 U. S. 80; Davis’ Case, 122 Mass. 324; Matter of Greenough, 31 Vt. 279; State v. Clough, 71 N. H. 594; 196 U. S. 364; State v. O’Connor, 38 Minn. 243; Ex Parte Swearingen, 13 S. C. 74; Leary’s Case, 6 Abb. N. C. 43.) The affidavit or information is sufficient in law upon which to base extradition proceedings. (People ex rel.

      Sandman v. Tuthill, 79 App. Div. 24; People ex rel. Perkins v. Moss, 113 App. Div. 329; 187 N. Y. 410; Matter of Manchester, 5 Cal. 237; Ex Parte Power, 20 Fla. 806; Matter of Keller, 36 Fed. Rep. 681; Kurtz v. State, 22 Fla. 36.)
   Per Curiam.

We think the affidavits submitted in support of the requisition fail to charge the appellant with the commission of a crime. (People ex rel. Lawrence v. Brady, 56 N. Y. 182; People ex rel. Jourdan v. Donohue, 84 N. Y. 438; People ex rel. Corkran v. Hyatt, 172 N. Y. 176, 191, 195.)

When extradition is sought on the basis of an indictment, the forms of pleading established in the demanding State will be accepted as sufficient by the courts of the State in which the fugitive is seized (Hogan v. O’Neill, 255 U. S. 52; Pierce v. Creecy, 210 U. S. 387; Peoplex rel. Marshall v. Moore, 167 App. Div. 479; affd., 217 N. Y. 632). The finding of an indictment presupposes the testimony of witnesses before a grand jury, and is thus a safeguard against a removal that is ignorant or wanton (Matter of Strauss, 197 U. S. 324, 332). When extradition is sought on the basis of an affidavit, there is need for closer scrutiny (People ex rel. Lawrence v. Brady, supra; People ex rel. Himmelstein v. Baker, 137 App. Div. 824; Davis’ Case, 122 Mass. 324, 327, 330). The affidavits in this case, when read together, are seen to proceed upon information and belief, though one of them, if read alone, suggests a profession of knowledge that is erroneous and unwarranted. The charges are vague, indefinite and general. They are made without specification of the sources of information or the grounds of belief (People ex rel. Livingston v. Wyatt, 186 N. Y. 383, 391). If they are accepted at their face value, they still omit a basic element of guilt, in that the prisoner, prosecuted as an accessory after the fact, is not stated to have had knowledge of the guilt of the principal offenders (Wharton Crim. Law [11th ed.], § 282). There is room for argument that any one of these grounds of criticism, standing alone, would be inadequate. Our duty is to weigh them in their cumulative significance. We think the danger of a removal that is merely ignorant or wanton would be extended beyond precedent if affidavits so defective were to be accepted as a basis of extradition. Neither formally nor substantially is there a sufficient charge of crime.

The orders of the Appellate Division and of the Special Term should be reversed, and the discharge of the relator ordered.

Hiscock, Ch. J., Caedozo, Pound, McLaughlin, Ceane, Andeews and Lehman, JJ., concur.

Ordered accordingly.


text:
    The People of the State of New York ex rel. Mary B. Peaks, Appellant, v. John R. Voorhis et al., Constituting the Board of Elections of the City of New York, Respondents.
    (Argued October 20, 1926;
    decided October 22, 1926.)
    Mandamus •— jurisdiction •— appeal — constitutional law — Court of Appeals without power to review order denying motion for mandamus unless it appears denial was not in exercise of discretion — Legislature may direct submission to electors of question whether Congress should modify Federal statute.
    1. The Court of Appeals has no power to review an order of the Appellate Division affirming an order of Special Term, which denied a motion for an order of mandamus, where the undisputed facts do not exclude the exercise of some discretion, and neither the order of the Special Term nor that of the Appellate Division shows on its face that the denial of the relief prayed for was based upon lack of power rather than the exercise of discretion.
    2. Except for restrictions or prohibitions expressly placed by the Constitution thereon the legislative power of the Legislature is plenary and includes the right to enact a statute directing submission to the electors at a general election of a question as. to whether Congress should modify a Federal act.

      Matter of Peaks v. Voorhis, 218 App. Div. 702, affirmed.

      Appeal from, an order of the Appellate Division of the Supreme Court in the first judicial department, entered October 13, 1926, which affirmed an order of Special Term denying a motion for a peremptory order of mandamus against the Board of Elections of the city of New York.

      Bertha Rembaugh, Irving Albert and Frances K. Marlatt for appellant.
    The act in question is an invalid exercise of the powers of the State Legislature. That body has all legislative, but only legislative, powers. (Wynehamer v. People, 13 N. Y. 378; Cooley on Const. Lim. [7th ed.] chap. V, p. 124; Matter of 34th Street R. R. Co., 102 N. Y. 343; Lawton v. Steele, 119 N. Y. 226; People v. Bradley, 207 N. Y. 592; People ex rel. McDonald v. Keeler, 99 N. Y. 463.) The act in question is invalid :as an improper attempted delegation of power by the .Legislature. (Barto v. Himrod, 8 N. Y. 483; Thorne v. Cramer, 15 Barb. 112; People ex rel. Unger v. Kennedy, 207 N. Y. 533; Smith v. Smith, 174 App. Div. 473; Clarke v. Rochester, 28 N. Y. 605; Stanton v. Board of Supervisors, 191 N. Y. 428; Bank of Rome v. Rome, 18 N. Y. 38; Starin v. Genoa, 23 N. Y. 439; Bank of Chenango v. Brown, 26 N. Y. 467; Cleveland v. Watertown, 99 Misc. Rep. 66; 222 N. Y. 159: Santo v. Iowa, 2 Iowa, 164; Opin. of Justices, 160 Mass. 587.) This act may not be justified as an advisory referendum. (Mills v. Sweeney, 219 N. Y. 213; International Ry. v. Rann, 224 N. Y. 83.)

      George P. Nicholson, Corporation Counsel (Elliot S. JBenedict, John F. O’Brien and William E. C. Mayer of ,counsel), for respondents.
    The Legislature was acting ’within its constitutional powers of legislation in enacting ;the statute, Laws of 1926, chapter 850. (Matter of McAneny v. Board of Estimate, 232 N. Y. 377; People ex rel. Central Trust Co. v. Prendergast, 202 N. Y. 188;
      Lawson v. Steele, 119 N. Y. 221; Bank of Chenango v. Brown, 26 N. Y. 467; People v. Flagg, 46 N. Y. 401; Clark v. State, 142 N. Y. 101; O’ Neil v. Amer. Fire Ins. Co., 166 Penn. St. 72; People ex rel. C. T. Co. v. Prendergast, 202 N. Y. 188; People v. Fire Association of Philadelphia, 92 N. Y. 311; Cleveland v. City of Watertown, 222 N. Y. 159; People ex rel. Unger v. Kennedy, 207 N. Y. 533; Clark v. State, 142 N. Y. 101.)
   Per Curiam.

The Supreme Court has denied the relator’s petition for an order of mandamus directing the board of elections of the city of New York not to comply with the directions of the Legislature, contained in chapter 850 of the Laws of 1926, to submit to the electors at the general election to be held this year the question: “ Should the Congress of the United States modify the federal act to enforce the eighteenth amendment so that the same shall not prohibit the manufacture, sale, transportation, importation or exportation of beverages which are not in fact intoxicating as determined in accordance with the laws of the respective states? ” Neither the order of Special Term nor the order of the Appellate Division shows on its face that the denial of the relief prayed for was based upon lack of power rather than the exercise of discretion. The undisputed facts do not exclude the exercise of some discretion. Under the circumstances disclosed the court might, if it saw fit, withhold its writ of mandamus to nullify at this time attempted legislative action which does not interfere with private rights and which does not seriously invade a public right. A question of law which this court can review would arise only if the undisputed facts permit but one inference. (People ex rel. Van Tine v. Purdy, 221 N. Y. 396.)

These considerations require that we affirm the order of the Appellate Division, but even if we could disregard them, we are of the opinion that the petitioner has failed to show that the action of the Legislature is beyond the powers conferred upon it under the Constitution of the State. The petitioner insists that public officers disregard a statute which in terms imposes upon them a public duty. The action of the Legislature does not constitute an attempted exercise of powers exclusively granted to the executive or judicial branches of the government. It is not claimed, and no facts are shown, that could lead to the conclusion, that the statute is within any restrictions or prohibitions expressly placed by the Constitution upon the exercise of the legislative power. Except for such restrictions or prohibitions the legislative power granted to the Legislature is plenary and that power includes the right to enact the statute under consideration.

The order of the Appellate Division should be affirmed, without costs.

Hiscock, Ch. J., Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Order affirmed, etc.


author: Hiscock, Ch. J.

text:
    Ernest F. Dunham, Appellant, v. Albert Ottinger, Individually and as Attorney-General of the State of New York, Respondent.
    Constitutional law — Attorney-General — stockbrokers — fraud — provision of General Business Law for examination by Attorney-General as to fraudulent practices in respect to stocks and other securities and commodities valid— duty of Attorney-General under statute executive, not judicial — no unreasonable search and seizure — “due process” clauses of Federal and State Constitutions not applicable • — ■ grant by State of immunity from criminal prosecution in its own courts sufficient to satisfy constitutional requirement that no person shall be compelled in any criminal case to be a witness against himself.
    1. Article 23-A of the General Business Law (Cons. Laws, ch. 20), entitled “ Fraudulent Practices in Respect to Stocks, Bonds, Other Securities and Commodities,” providing that the Attorney-General, when it shall appear to him that such fraudulent practices have been or are about to be employed, may make investigation and require the person or partnership so charged to file a statement in writing under oath and attend and be examined and produce books or papers for examination (§ 352), and if satisfied that fraud has been or is about to be employed may bring an action to restrain the continuance thereof or the engaging therein (§ 353) and in addition institute criminal proceedings for any violation of the laws of the State applicable thereto, is constitutional and valid and the complaint in an action by a stockbroker engaged in selling various kinds of negotiable securities, to restrain the Attorney-General from examining him and his bopks under a subpoena and order issued pursuant to the statute, is properly dismissed.
    2. An objection that the statute confers upon the Attorney-General judicial powers in violation of the constitutional provisions which confer such powers solely upon the courts, cannot be sustained. The Attorney-General decides nothing in a judicial way. He passes upon no question of civil violation or of criminal guilt. The ultimate and only end to which he can proceed is by action or criminal prosecution to submit to the courts the question whether a person has been guilty of such unlawful practices that he should be enjoined from farther pursuing them or should be subjected to a criminal prosecution. Everything which he does leading up to this point is the performance of an executive or administrative power and whatever judicial decision follows is made by the courts. It is the performance of administrative duties by an executive official and in no sense the decision of justiciable questions exclusively delegated to the jurisdiction of judicial tribunals.
    3. Nor can it be successfully argued that the provisions of the statute authorize unreasonable search and seizure. The examinations authorized are to enable the Attorney-General to determine whether a situation exists which calls upon him for action under the other provisions of the statute and it is to be assumed that he will proceed in good faith and with knowledge of and regard for the principles which govern the relevancy of evidence. Whether a person has refused to appear or answer without “ reasonable cause ” is a question which, if presented, wall in the end be subject to the adjudication of the courts.
    4. Before the “ due process ” clauses of the Federal and State Cbnstitutions can be successfully appealed to it must appear that some substantial right of the person invoking them is about to be violated by an exercise of governmental powers which run counter to the spirit of our institutions and processes as they have been established by custom and settled maxims of law and it is impossible to find any basis for the claim that this statute proposes such a violation. (Matter of Davies,-168-N. -Y. 89; War.dSa.king Co- v. Western Union

      Tel. Co., 205 App. Div. 723; People ex rel. Ferguson v. Reardon, 197 N. Y. 236, distinguished.)
    (Argued October 4, 1926;
    decided November 16, 1926.)
    5. A contention that the statute is invalid because it authorizes the Attorney-General to compel a person to give incriminating evidence that might be used against him in a criminal proceeding instituted by the Federal government cannot be sustained. All that the State is required to or can do is to give immunity against its" own processes and, if it has done that, as this statute does, it has satisfied the requirements of the Constitution.

      Dunham v. Ottinger, 127 Misc. Rep. 683, affirmed.
    Appeal from a judgment of the Supreme Court, entered August 6, 1926, upon a dismissal of the complaint herein by the court at Special Term to which had been submitted, upon an agreed statement of facts, the question of the validity of article 23-A of the General Business Law under the State and Federal Constitutions.

      Joseph W. Spencer for appellant.
    The attempt to give the Attorney-General power to issue subpoenas requiring attendance and examination before him violates the provisions of article VI of the State Constitution relating to courts. (Matter of Davies, 168 N. Y. 89; People ex rel. McDonald v. Keeler, 99 N. Y. 463; Matter of Hertle, 120 App. Div. 717; Kilbourn v. Thompson, 103 U. S. 168; Matter of Attorney-General, 21 Misc. Rep. 101; Ward Baking Co. v. Western Union Tel. Co., 205 App. Div. 723; Matter of Union Bank, 147 App. Div. 593; People ex rel. Ferguson v. Reardon, 197 N. Y. 236; Matter of Hirschfield v. Cook, 227 N. Y. 298.) The proposed examination is a deprivation of liberty without due process of law within the meaning of section 5 of article I of the State Constitution and the Fourteenth Amendment' of the Federal Constitution. (Matter of Davies, 168 N. Y. 89; Matter of Both, 200 App. Div. 423.) The demand that books and papers be produced for examination violates the provisions of section 8 of the Civil Rights Law relating to search and seizure. (People v. Glennon, 37 Misc. Rep. 1; Boyd v.
      U. S., 116 U. S. 616; Matter of Foster, 139 App. Div. 766.) The statute does not give immunity. (People ex rel. Ferguson v. Reardon, 197 N. Y. 236; People ex rel. Morse v. Nussbaum, 55 App. Div. 245; Jack v. Kansas, 199 U. S. 372.) The proceeding is a criminal proceeding and the plaintiff retains all the rights of a defendant in a criminal case. (City of Rochester v. Gutberlett, 211 N. Y. 309.) To require the attendance of the plaintiff pursuant to the subpoena would compel him to be a witness against himself in a criminal case contrary to the provisions of section 6 of article I of the State Constitution. (People v. Ferola, 215 N. Y. 285; People v. Molineux, 168 N. Y. 264; People v. Mondon, 103 N. Y. 211; Yamato Trading Co. v. Brown, 27 Hun, 248.) To require the plaintiff to produce his books pursuant to the subpoena would compel him to be a witness against himself in a criminal case contrary to the provisions of section 6 of article I of the State Constitution. (Matter of Foster, 139 App. Div. 769; Riddle v. Blackburn, 125 App. Div. 893; Matter of Phillips, 143 App. Div. 522.) The Martin Law is not a license law and denies the equal protection of laws. (Buffalo Fertilizer Co. v. Town of Cheektowaga, 61 Misc. Rep. 404.)

      Louis Marshall and James Marshall, amici curice.'

    Section 352 of the General Business Law, pursuant to which the subpoena was issued requiring the plaintiff to appear before the Attorney-General, is violative of section 6, article I, and article VI of the Constitution of the State of New York and of section 1 of the Fourteenth Amendment to the Constitution of the United States, and, in so far as it authorized such subpoena, it is unconstitutional and void. (Matter of Davies, 168 N. Y. 89; Matter of Attorney-General, 32 Misc. Rep. 1; People ex rel. Lewisohn v. O’Brien, 176 N. Y. 253; Counselman v. Hitchcock, 142 U. S. 547; People v. O’Brien, 111 N. Y. 61; Ward Baking Co. v. Western Union Tel. Co., 205 App. Div. 727; Matter of Union Bank, No. 2, 147 App. Div. 593; 204 N. Y. 313; Matter of Both, 200 App. Div. 423: People ex rel. Travis v. Knott, 204 App. Div. 379; Boyd v. United States, 116 U. S. 616; People ex rel. Livingston v. Wyatt, 186 N. Y. 383; Watkins’ Case, 120 Mass. 118.)

      Albert Ottinger, Attorney-General (Keyes Winter, Amos Moscrip, George A. Lewis and Borden Mills of counsel), for respondent.
    The power to issue subpoena, examine witnesses under oath, and require the production of books, is a power that since 1790 has been frequently delegated by the Legislature of this State to administrative or executive officers and this subpoena power is thoroughly imbedded in our practice and its constitutionality has been invariably upheld, to the extent that the power is essential to the performance of the official’s 'duty. (Matter of McAdam, 54 Hun, 637; Matter of Hirschfield v. Hanley, 228 N. Y. 346; Matter of Hirshfield v. Cook, 227 N. Y. 297; Matter of Hertle, 120 App. Div. 717; Matter of Fenton, 58 Misc. Rep. 303; People ex rel. Bender v. Milliken, 110 App. Div. 579; 185 N. Y. 35; Matter of McAneny, 215 App. Div. 797; People v. Ellenbogen, 114 App. Div. 182; 186 N. Y. 603.) No unlawful search and seizure is authorized by the statute or proposed by the Attorney-General. The Attorney-General’s subpoena and order commanding the attendance and examination of the appellant with regard to his practices in the sale of securities does not constitute a criminal charge against the appellant which he is forced to answer and be examined about. (Matter of Fenton, 58 Misc. Rep. 303; People v. Strollo, 191 N. Y. 42.) Section 359 of the Martin Act, entitled “ Immunity,” affords the appellant full protection against any prosecution on account of any testimony given by him that might tend to incriminate him within the meaning of article I, section 6, of the Constitution of the State of New York. (People ex rel. Lewisohn v. General Sessions, 96 App. Div. 201; 179 N. Y. 594; People
      v. Rosenheimer, 209 N. Y. 115; People v. Cahill, 193 N. Y. 232.) Articles É and 14 of the amendments to the Federal Constitution are not applicable to actions and proceedings in State courts involving violations of State laws but regulate only actions and proceedings under the Federal Constitution and Federal statutes. The Constitution of the State of New York does not extend its protection against prosecution to the appellant in the Federal court or in the courts of other States. (Ensign v. Pennsylvania, 227 U. S. 592; Baron v. Baltimore, 7 Pet. 243; Spies v. Illinois, 123 U. S. 131; Brown v. New Jersey, 175 U. S. 172; Barrington v. Missouri, 205 U. S. 483; Twinning v. New Jersey, 211 U. S. 78; Hale v. Henkle, 201 U. S. 43; Brown v. Walker, 161 U. S. 591; Jack v. Kansas, 199 U. S. 33.)
   Hiscock, Ch. J.

The plaintiff, who is a stockbroker engaged in selling various kinds of negotiable securities, has brought this action to restrain the defendant, as Attorney-General of the State, from examining him and his books under a subpoena and order which had been issued under the provisions of article 23-A of the General Business Law (Cons. Laws, chap. 20), sometimes known as the Martin Law and popularly described as the Blue Sky Law.” The demand for this relief is based on the theory that the statute is unconstitutional and void and this question of its validity is the one which is presented to us upon this appeal, réndering it necessary to summarize as briefly as possible the provisions which are material to the inquiry. For the purpose of presenting what seems a somewhat more logical view of the purposes of the statute, I shall summarize various provisions in a somewhat different order than they are found in the statute.

The statute is entitled “ Fraudulent Practices in Respect to Stocks, Bonds, Other Securities, and Comjnodities,” By section 353 it is provided; “ Whenever the Attorney-General shall believe from evidence satisfactory to him that any person, partnership, * * * has engaged in, is engaged or is about to engage in any of the practices or transactions heretofore referred to as and declared to be fraudulent practices, he may bring an action in the name and on behalf of the People of the State of New York against such person, partnership * * * and any other person or persons heretofore concerned in or in any why participating in or about to participate in such fraudulent practices, to enjoin such person, partnership, * * * and such other person or persons from continuing such fraudulent practices or engaging therein or doing any act or acts in furtherance thereof.”

Section 352 defines the fraudulent practices referred to in the foregoing section as, amongst other things, “ any device, scheme or artifice to defraud or for obtaining money or property by means of any false pretense, representation or promise,” “ fictitious or pretended purchases or sales of securities or commodities” and “any practice or transaction or course of business relating to the purchase or sale of securities or commodities which is fraudulent or in violation of law and which has operated or which would operate as a fraud upon the purchaser.”

Then by section 352 it is provided that “ Whenever it shall appear to the Attorney-General, either upon complaint or otherwise, that in the advertisement, purchase or sale within this State for future delivery of any commodity * * * or that in the issuance, sale, promotion negotiation, advertisement or distribution within this State, of any stocks, bonds, notes, evidences of interest or indebtedness or other securities, or negotiable documents of title * * * any person, partnership * * * shall have employed, or employs, or is about to employ ” any of the fraudulent devices and practices above described or “he believes it to be in the public interest that an investigation be made, he may in his discretion ” require such person or partnership to file a statement in writing under oath “as to all the facts and circumstances concerning the subject matter which he believes it is to the public interest to investigate ” and also by subpoena and order may compel and order such person to attend and be examined before him or a magistrate or court and also produce any books or papers for examination “ which he deems relevant or material to the inquiry.” If a person so subpoenaed or ordered refuses without “ reasonable cause ” to obey the command of the subpoena or tobe sworn, examined and interrogated or to produce the book or paper required he is made guilty of a misdemeanor.

In addition to these civil proceedings provision is made for the institution by the Attorney-General of criminal proceedings for any “ violation of the laws of this State, applicable to or in respect of the practices or transactions which in this article are referred to as fraudulent practices.” (Section 358.) •

The statute safeguards the proceeding of examination or production of books by providing that any officer who participates in it who shall disclose to any person other than the Attorney-General the name of any witness examined or any other information shall be guilty of a misdemeanor; also that if any person shall ask to be excused from testifying or producing a book or paper on the ground “ that the testimony or evidence, documentary or otherwise required of him may tend to incriminate him or to convict him of a crime or to subject him to a penalty or forfeiture, and shall notwithstanding be directed by the court, referee, magistrate or officer conducting the inquiry to testify or to produce such book, paper or document, he must none the less comply with such direction but in such event he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may testify or produce evidence, documentary or otherwise, pursuant thereto and no testimony so given or produced shall be received against him upon any criminal action, suit or proceeding, investigation, inquisition or inquiry.” (Section 359.)

Many objections are urged to the validity of the law. But eliminating those which do not seem to require serious consideration there are left as the more important ones the claims that the statute

1. Confers upon the Attorney-General judicial powers and, therefore, is in violation of the provisions of our Constitution which confer such powers solely upon the courts.

2. Denies to a person subjected to subpoena or order the benefit of that due process of law which is conferred by the Federal and State Constitutions and subjects him to unreasonable and unlawful “ search and seizure.”

3. Compels a person to be a witness against himself for purposes of a criminal prosecution because he is not protected from the effects of the evidence which he may give by any proper provision for immunity.

I am not able to see that the statute when fairly interpreted furnishes a basis upon which may be successfully rested any of these contentions and some pertinent general considerations may properly be taken into account in passing upon them. It is a matter of general knowledge that dishonest members of the business of dealing in securities such as are described in the statute have been accustomed to pursue fraudulent practices whereby the rights of their customers were violated and on occasions the public widely victimized. Of course, it was not only the privilege but the duty of the Legislature if possible to prevent these fraudulent practices. This was not only a duty which it owed to the public but incidentally it was for the benefit of those honestly carrying on this business and who were more or less discredited by the evil practices of a comparatively small number that the latter should be punished and stopped. In the attempt to discharge this obligation the Legislature adopted various laws such as those making it a criminal offen o for a broker to “ bucket ” a customer’s orders or to unlawfully pledge or use his securities and now, in addition, has enacted the statute which is before us. Honest brokers, as well as intended victims are interested in its enforcement if constitutional and limited by an administration which is reasonable and fair.

Its general plan and scope seem to be perfectly plain. The Attorney-General as an executive official of the State is given the power by appropriate injunctive action to restrain any person who is engaged or who is about to engage in the business of selling the securities and commodities designated in the statute by means and aid of fraudulent methods and practices which likewise are therein defined. He is also given the power through appropriate procedure to institute criminal prosecutions against such a person. And while the language of the statute confers upon him a permissive privilege to do these things there is no doubt that it imposes upon him the mandatory duty to perform them and thus protect the public. But the attempt to discharge the duty in a given case without any adequate and accurate knowledge of the facts might result either in an ineffective and abortive attempt or in the unjust prosecution of persons' who were guilty of no offense or violation. Therefore, the Attorney-General as an administrative official charged with the duty of enforcing the statute is given the power to secure from a person whom he suspects of violation of the statute by means of questionnaire, oral examination and inspection of books, under conditions of absolute secrecy, the information which will enable him to determine whether the foundation does exist for further proceedings and which information, subject to the immunity hereinafter to be referred to, may be utilized in the prosecution authorized by the statute. And it is in the light of such features as these that we come to a consideration of the objections which have been mentioned.

I find no bestowal upon the Attorney-General of any of those judicial powhrs which by our Constitution are lodged with the courts. He decides nothing in a judicial way. He passes upon no question of civil violation or of criminal guilt. The ultimate and only end to which he can proceed is by action or criminal prosecution to submit to the courts the question whether a person has been guilty of such unlawful practices that he should be enjoined from farther pursuing them or should be subjected to a criminal prosecution. Everything which he does leading up to this point is the performance of an executive or administrative power such as has long been recognized as perfectly appropriate and valid and whatever judicial decision follows is made by the courts. It is the performance of administrative duties by an executive official and in no sense the decision of justiciable questions exclusively delegated to the jurisdiction of judicial tribunals.

Neither can I find any viewpoint from which it can be successfully argued that the provisions of the statute authorize unreasonable search and seizure, deprive any one of due process of law or compel him to furnish incriminating evidence against himself for the purposes of a criminal prosecution.

The statute does not commission the Attorney-General to embark upon any roving course for -the purpose of generally prying into the affairs of any person. Having authorized him to institute proceedings to prevent or punish violations of the statute it authorizes him to acquire information, make investigations and conduct examinations “as to all the facts and circumstances concerning the subject matter which he believes it is to the public interest to investigate.” Or again, to examine witnesses under oath and require the production of any books or papers “ which he deems relevant or material to the inquiry.” This all to the end of enabling the Attorney-General to determine whether a situation exists which calls upon him for action under the other provisions of the statute and it is to be assumed that he will proceed in good faith and with knowledge of and regard for the principles which govern the relevancy of evidence. If through ignorance or intention he transgresses these principles the victim of his illegitimate and oppressive attempt not only will be immune under the statute from punishment for refusing to submit to his unreasonable requests or questions but can always appeal to the courts for protection. (Matter of Hirschfield v. Hanley, 228 N. Y. 346.) The question whether a person has refused to appear or answer without “ reasonable cause ” is thus one which if presented will in the end be subject to the adjudication of the courts.

It would be tedious and is unnecessary to consider at length the meaning of the “ due process clauses of the Federal and State Constitutions as they are invoked against the statute." Certainly before they can be successfully appealed to it must appear that some substantial right of the person invoking them is about to be violated by an exercise of governmental powers which run counter to the spirit of our institutions and processes as they have been established by custom and settled maxims of law. It is impossible to find any basis for the claim that this statute proposes such a violation.

The power to investigate and examine witnesses to the end of a better discharge of their duties has been conferred upon administrative boards and officials without successful challenge by so many statutes that it is undesirable to refer to them all. Perhaps there may be properly selected as more or less analogous to the present one the statute conferring upon the Superintendent of Banks the power to investigate the affairs of banks to the end of a proper supervision of their affairs; upon the Commissioner of Agriculture the power to investigate and examine witnesses in order better to discharge the duties conferred upon him; upon the Commissioner of Accounts of the city of New York to subpoena and examine witnesses and require the production of material books as he may deem for the best interests of the city. These and other similar statutes have been upheld as constitutional and valid. (Matter of Hertle, 120 App. Div. 717; affd., 190 N. Y. 531; Matter of Hirshfield, 227 N. Y. 297; Matter of Hirschfield v. Hanley, 228 N. Y. 346; People ex rel. Bender v. Milliken, 185 N. Y. 35; People v. Ellenbogen, 114 App. Div. 182; affd., 186 N. Y. 603; Matter of Union Bank, 204 N. Y. 313.)

The power here attacked is akin to that right of thé Legislature to investigate and to subpoena and examine witnesses to the end of safeguarding public interests by appropriate legislation and which is so well established as to have" passed beyond the realm of controversy. (People ex rel. McDonald v. Keeler, 99 N. Y. 463.)

And finally the powers conferred upon the Attorney-General by this statute are not substantially different than and certainly are not in excess of the powers conferred by statutes of other States which have proceeded upon the theory that the business of dealing in and selling securities to the public is one of such public concern and subject to such widespread abuses that it is clearly subject to regulation by license and supervision. The constitutionality of such laws has been upheld not only by the highest courts of many States but also by the United States Supreme Court. Some of these decisions are: Hall v. Geiger-Jones Co. (242 U. S. 539); Caldwell, Attorney-General, v. Sioux Falls, etc., Co. (242 U. S. 559); Merrick v. Halsey & Co. (242 U. S. 568); People v. Lee (311 Ill. 552); King v. Commonwealth (246 S. W. Rep. 162); Biddle v. Smith (148 Tenn. 489); Standard Home Co. v. Davis (217 Fed. Rep. 904). We have no trouble in assenting to the proposition that a license may be required of those proposing to engage in this manner of business. There would seem to be even more chance for deception and fraud and, therefore, more ground for such a requirement in their cases than in the case of an ordinary real estate broker where we held that a license might be required. (Roman v. Lobe, 243 N. Y, 51.)

But our Legislature chose not to follow this course of licensing. In our opinion it went a shorter and perhaps a safer distance than the Legislatures of some other States by simply requiring the Attorney-General to be on the lookout for fraudulent practices and when he saw what seemed to him to be the appearance of such practices, whether existent or threatened, to investigate and if investigation confirmed appearances to take steps to halt the evil. Certainly no fundamental rights were impaired by an investigation and examination authorized in this course of supervision milder than is prevalent elsewhere within the principles of the authorities which have been cited. If our Legislature might have required licenses issued only upon full disclosure of details and revocable upon disclosure of prohibited acts disclosed by searching supervision, it must have the power to go only part of this way and authorize its Attorney-General to appeal to the courts to enjoin unlawful practices disclosed by an examination of those who either are or threaten to become the fraudulent actors. It seems quite impossible to hold that it might require a full disclosure of facts as a condition to a license, and may not authorize examination and investigation to determine whether a person is engaged in practices forbidden by the statute to the end that the courts may stop him in his prohibited course before he has victimized the public.

I do not find anything in the cases of Matter of Davies (168 N. Y. 89), of Ward Baking Co. v. Western Union Tel. Co. (205 App. Div. 723) or of People ex rel. Ferguson v. Reardon (197 N. Y. 236) which is opposed to these views. In the Davies case it is true that the court held that the powers conferred upon justices of the Supreme Court by the particular provisions under review to grant orders for the examination of witnesses involved the exercise of judicial powers and were not purely administrative. The accepted provisions of the Civil Practice Act providing for the granting of similar orders in actions is a practical demonstration of that proposition. That, however, is by no means a legal negation of the other proposition that the Legislature may grant to an administrative official the mem power to investigate and examine for the purpose of enabling him to discharge the duties imposed upon him and the affirmation of which legislative power by binding authorities has already been discussed. In the Ward case in a very elaborate and carefully considered opinion by Mr. Justice Kellogg, the court simply-reached the conclusion that a fair interpretation of the Executive Law (Cons. Laws, chap. 18), which it was attempted to utilize for purposes of a widespread investigation to ascertain whether a crime had been committed, did not authorize such a proceeding. In the Reardon case where a statute was being considered which provided for a general examination and overhauling of all of a broker’s books including those which contained the record of confidential transactions with customers, it was held that the statute gave no protection against the use in criminal proceedings against the broker of the information which was thus obtained and without considering any other ground it was decided that such a statute was in conflict with the provisions of the Constitution against self-incrimination.

In this discussion I have of course been considering the power of the Legislature to empower the Attorney-General to conduct compulsory investigations and examinations of witnesses to the end that he might be better able to protect the public by enjoining fraudulent practices through the process of civil proceedings authorized by the statute. What has been said would not be applicable if the statute attempted to authorize the Attorney-General to compel a person to give incriminating evidence which might be used against him in a criminal proceeding and so I am led to a brief consideration of the final contention of the relator that this statute does attempt to do this because it does not afford immunity to a witness against such use of the testimony which he may give. While some insubstantial criticism is made of the manner in which a witness is compelled to claim immunity under the statute, the main claim is that the statute does not properly safeguard him by precluding the use of his testimony in criminal proceedings which might be instituted by the Federal government. This is true. The statute does not purport to give and could not give protection against such a prosecution. It does give ample protection against the use of such testimony in our own tribunals and it is perfectly well established that this is a sufficient immunity; that all that the State is required to or can do is to give immunity against its own processes and, if it has done that, as this statute does it, it has satisfied the requirements of the Constitution. (Hale v. Henkel, 201 U. S. 43; Brown v. Walker, 161 U. S. 591.)

In conclusion, it may be admitted as it already has been in substance that this statute confers upon the Attorney-General great and far-reaching powers which might be made a means of persecution and injury of perfectly honorable members of the business in question by an unwise or unscrupulous official. It is one of the privileges of the people in our form of government to be misled into electing such an one. But as we have often said the question of the extent of authority which shall be conferred by the Legislature, invested with power, is for it and not for the courts. We are not to assume that such an official as the Attorney-General of the State will be oblivious of his duties, and this statute is by no means lacking in substantial provisions by which to safeguard its execution. Any inquiry under it must be relevant to the purposes proposed by it; any person of whom examination is sought is immune from punishment for a refusal to answer unreasonable questions or to comply with unreasonable requests; he is protected, if he asks the privilege, from the use of any testimony which he may give in criminal proceedings; and lastly any official conducting an investigation or examination who gives publicity to the information which has been obtained is himself guilty of a misdemeanor. Then, when we consider that in addition to these specific means of protection the courts will always be open for any appeal by one who is being persecuted, I think that it may be fairly expected that none of the dire predictions of the evils to flow from the statute will be realized and that, on the other hand, it may be a very substantial protection to the public from those widespread evils which have been perpetrated upon it through lack of adequate safeguards.

For these reasons I think that the judgment appealed from should be affirmed, with costs.

Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgment affirmed, etc.


author: Cardozo, J.

text:
    Edmund C. Wendt, Respondent, v. Paul Fischer et al., Appellants.
    Principal and agent — brokers — vendor and purchaser — sale of real property through brokers to corporation, of which one of the brokers was an officer and owned all stock, voidable by seller in absence of disclosure — sale may not be upheld on theory that broker’s ownership of stock was nominal and profits benefited another — case not viewed as if equitable owner of shares had taken title in her own name — conflict of interest not sufficiently revealed by information that sale was made to client of office — contention that brokers acted in good faith, that terms were best obtainable at the time and that no damage resulted, no sufficient answer by trustee for breach of duty — title of corporation subject to trust and it must account for profits of resale — brokers accountable for pioneys received as commission but not for profits.
    1. A sale of real property to a corporation, the president, treasurer and manager of which was a member of a firm of real estate brokers employed by the seller to find a buyer is voidable at the option of the seller, in the absence of a full and frank disclosure of the broker’s relation to the purchase.
    A The sale may no u oe upborn on the uhouiy im.wiL unv moLoi .. ownership of the stock was nominal and the profits of the transaction benefited another, for even so, the conflict was not reconciled between divided maims to fealty.

      (Argued September 28, 1926;
    decided November 16, 1926.)
    3. ' Nor may the case be viewed as if the equitable owner of the shares who supplied the corporation with the money for the purchase had taken title in her own name. She preferred for reasons sufficient to herself to vest the title in another and the courts are not at liberty to nullify her choice, and remake the transaction into something other than it was.
    4. Nor was the conflict of interest sufficiently revealed when the brokers informed the plaintiff that the sale was to be made to a client of their office. Disclosure so indefinite and equivocal does not set the agent free to bargain for his own account or for the account of a corporation which acts through him alone.
    5. A contention that the brokers acted in good faith, that the terms procured were the best obtainable at the moment, and that the wrong, if any, was unaccompanied by damage is no sufficient answer by a trustee forgetful of his duty. The law does not stop to inquire whether the contract or transaction was fair or unfair.
    6. The corporation, in the acceptance of its title, acted through the trustee and obtained no title except one subject to a trust which was impressed on the proceeds when the property was resold. It must account, therefore, for the profits of the resale. The brokers are accountable for the moneys paid to them for commissions but are not accountable for profits in which they had no share. As to the increment of value the corporation alone is to be charged as trustee.

      Wendt v. Fischer, 215 App. Div. 196, modified.
    Appeal, by permission, from an interlocutory judgment entered February 27, 1926, upon an order of the Appellate Division of the Supreme Court in the first judicial department reversing a judgment in favor of defendants, entered upon a dismissal of the complaint by the court on trial at Special Term and directing judgment in favor of plaintiff. The following question was certified; •

      “ Upon the facts as contained in the decision of the court at Special Term, as modified by the order of this court entered herein on the 15th day of February, 1926, did the failure and omission of the firm of brokers, Fischer, Hammond & Heinrich, to disclose to the plaintiff that the real purchaser of the plaintiff’s property was the defendant Hosmer Realty Corporation and that the defendant Edward H. Hammond was the president, treasurer and manager of said corporation constitute as a matter of law such a failure of disclosure or concealment as to amount to a breach of duty on the part of said .firm under their employment as brokers by the plaintiff justifying the interlocutory judgment of this court herein? ”

      I. Maurice Wormser and Ralph B. Ittelson for appellants.
    The judgment of the Special Term was clearly correct, and the Appellate Division erred in reversing it. (Witherton v. Nickerson, 152 N. E. Rep. 707; Hayes v. Hall, 188 Mass. 510.)

      Edward K. Hanlon, Henry B. Hodge and William W. Wilson for respondent.
    The brokers, having omitted to disclose to their principal, the plaintiff, circumstances which naturally would tend to influence their conduct adversely to the interests of their principal in dealing with the subject of their employment, thereby forfeited any right to compensation, and their conduct constituted fraud in law. (Murray v. Beard, 102 N. Y. 505; Jacobs v. Beyer, 141 App. Div. 49; Everhart v. Searle, 71 Penn. St. 256; Reis v. Volck, 151 App. Div. 613.) The brokers were required to disclose to the plaintiff that the purchaser of the property was a corporation of which one of the firm of brokers was president, treasurer and manager. (Carr v. National Bank & Loan Co., 167 N. Y. 375; 189 U. S. 426; Nekarda v. Presberger, 123 App. Div. 418.) The fact that the brokers stated to the plaintiff that the offer for the property was made on behalf of a client of their firm, without disclosing to the plaintiff the name of said client, did not constitute a sufficient disclosure by these fiduciaries to their principal. (Lent-Agnew Realty Co., Inc., v. Frebert, 212 App. Div. 460.) The merits of the transaction themselves or the motives of the brokers are not material, (Morrison v. Ogdensburgh & Lake

      Champlain R. R. Co., 52 Barb. 173; Dutton v. Willner, 52 N. Y. 312; Guidetti v. Tuoti, 102 N. Y. Supp. 499; Carruthers v. Diefendorf, 66 App. Div. 31; 174 N. Y. 375.) The brokers having failed to reveal the circumstances to their principal, and the vendee corporation having taken with knowledge, the brokers and the corporation must account to the plaintiff for all rents and profits received or realized. (Carruthers v. Diefendorf, 66 App. Div. 31; Dutton v. Willner, 52 N. Y. 312; Bain v. Brown, 56 N. Y. 285; Waterbury v. Barry, 145 App. Div. 773; Garvey v. Baldino, 189 Ill. App. 466.)
   Cardozo, J.

Plaintiff, the owner of a parcel of real estate in the city of New York, employed the defendants Fischer, Hammond & Heinrich, real estate brokers, to find a buyer. He told them that he was willing to sell for $75,000, of which not less than $10,000 was to be paid in cash. They brought him an offer of $80,000, but only $7,500 cash. This offer he accepted. The contract was made and the title closed in the name of a dummy,” but the real purchaser was the defendant Hosmer Realty Corporation. The president, treasurer and manager of this corporation was the defendant Hammond, a member of the firm of brokers. He was also the record owner of the entire capital stock, though the beneficial interest was in Florence E. Pelletreau, to whom he was engaged to be married. Hammond did not inform the plaintiff that he was an officer of the Hosmer Realty Corporation, the buyer, or that he was connected with it in any way. All that he said was that the offer to buy the property had been made by a client of the firm. The truth came out a few weeks after the conveyance, when the property was resold by the Hosmer Realty Corporation for $87,500, an increase of $7,500 above the price paid to the plaintiff. This action for an accounting followed. The Special Term dismissed the complaint. The Appellate Division reversed, and certified a question for answer here.

We think the sale was voidable at the option of the seller. Hammond employed to sell was under a disability to buy without full and frank disclosure of his relation to the purchase (Carr v. Nat. Bank & Loan Co., 167 N. Y. 375; 189 U. S. 426; Nekarda v. Presberger, 123 App. Div. 418). We are told that the sale may be upheld because his ownership of the stock was nominal and the profits of the transaction would benefit another. Even so, the conflict was not reconciled between divided claims to fealty. As broker for the seller, the duty of this fiduciary was to make the terms as favorable to his employer and the price as high as possible. As president and manager of the buyer corporation, its sole representative in the transaction, his duty was just the opposite (Munson v. Syracuse, etc., R. R. Co., 103 N. Y. 58). We are told that the corporation is to be blotted out of the picture, and the case viewed as if the equitable owner of the shares who supplied the corporation with the money for the purchase, had taken title in her own name. The difficulty is that she preferred for reasons sufficient to herself to vest the title in another. The courts are not at liberty to nullify her choice, and remake the transaction into something other than it was. We are told that the conflict of interest was sufficiently revealed when the brokers informed the plaintiff that the sale was to be made to a client of their office. Disclosure so indefinite and equivocal does not set the agent free to bargain for his own account or for the account of a corporation which acts through him alone. If dual interests are to be served, the disclosure to be effective must lay bare the truth, without ambiguity or reservation, in all its stark significance (Dunne v. English, L. R. 18 Eq. 524; Imperial Merc. Credit Assn. v. Coleman, L. R. 6 H. L. 189). Finally we are told that the brokers acted in good faith, that the terms procured were the best obtainable at the moment, and that the wrong, if any, was unaccompanied by damage. This is no sufficient answer by a trustee forgetful of his duty. The law “ does not stop to inquire whether the contract or transaction was fair or unfair. It stops the inquiry when the relation is disclosed, and sets aside' the transaction or refuses to enforce it, at the instance of the party whom the fiduciary undertook to represent, without undertaking to deal with the question of abstract justice in the particular case ” (Munson v. Syracuse, etc., R. R. Co., supra, at p. 74; cf. Dutton v. Willner, 52 N. Y. 312, 319). Only by this uncompromising rigidity has the rule of undivided loyalty been maintained against disintegrating erosion.

A question remains as to the remedy available. The defendant Hosmer Realty Corporation must account for the profits of the resale (Falk v. Hoffman, 233 N. Y. 199, 201; Hammond v. Pennock, 61 N. Y. 145, 156). It got no title to the property "except one that was subject to a trust, for in the acceptance of its title it was acting through the trustee and no one else (Nat. Bank & Loan Co. v. Petrie, 189 U. S. 423; Carr v. Nat. Bank & Loan Co., supra). When the property was resold, the trust was impressed upon the proceeds. The defendants Fischer, Hammond & Heinrich, the brokers, are accountable for the moneys paid to them for commissions (Mack v. Latta, 178 N. Y. 525). Commissions were not earned unless duty had been done (Murray v. Beard, 102 N. Y. 505). We think the judgment goes too far, however, in declaring the brokers to be accountable for profits. We do not need to consider what their liability would be if the plaintiff were limiting his claim of recovery to the reasonable value (Mack v. Latta, supra). That is not the theory of the action or the judgment. The plaintiff elects to charge the Hosmer Realty Corporation with the profits that have come to it as upon a sale for his account (Hammond v. Pennock, supra; Ferris v. Van Vechten, 73 N. Y. 113). The brokers took no part in effecting the resale, and had no share in the profits realized therefrom. The corporation resold, and collected and enjoyed the proceeds. It, and no one else, as to this increment of value, is to be charged as a trustee.

The judgment should be modified by providing that the defendants Fischer, Hammond & Heinrich shall be accountable only for their commissions, and as modified affirmed, with costs against the defendant Hosmer Realty Corporation, and subject to the foregoing modification the question certified is answered in the affirmative.

His cock, Ch. J., Pound, McLaughlin, Crane and Andrews, JJ., concur; Lehman, J., absent.

Judgment accordingly.