author: Desmond,

text:
    Thomas L. Taylor et al., Respondents, v. State of New York, Appellant. William Moltion et al., Respondents, v. State of New York, Appellant. Clifford B. Black et al., Respondents, v. State of New York, Appellant. Mary W. Harvey, Respondent, v. State of New York, Appellant.
    (Claim No. 28330.)
    (Claim No. 28266.)
    (Claim No. 28481.)
    (Claim No. 28509.)
    Argued January 5, 1951;
    decided January 18, 1951.

      Nathaniel L. Goldstein, Attorney-General (Henry 8. Manley and Wendell P. Brown of counsel), for appellant in first above-entitled action.
    I. The courts below erred in refusing to hold that the State had acquired a prescriptive right to maintain Caughdenoy Dam at its present height. The height of a dam measures the prescriptive right acquired by its maintenance. (Black v. State of New York, 195 Misc. 484; Hammond v. Zehner, 21 N. Y. 118; Marcly v. Shults, 29 N. Y. 346; Hall v. Augsbury, 46 N. Y. 622; Ely v. State of New York, 199 N. Y. 213; Smith & Powell Co. v. State, 11 N. Y. Ct. Cl. 87; Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Stewart v. State of New York, 105 N. Y. 254; Benedict v. State of New York, 120 N. Y. 228; Ferguson v. Village of Hamburg, 272 N. Y. 234; Olofson v. Malpede, 127 Misc. 813.) II. The State need not plead an affirmative defense, even that of prescriptive right. (Lyons v. State of New York, 274 App. Div. 1086; Neddo v. State of New York, 300 N. Y. 533.) III. The defense was not barred by failure to assert it against earlier claims. (House v. Lockwood, 137 N. Y. 259; Reynolds v. Ætna Life Ins. Co., 160 N. Y. 635; Rudd v. Cornell, 171 N. Y. 114; 2018 Seventh Ave., Inc., v. Nach-Haus Leasing Corp., 289 N. Y. 490; Gugel v. Hiscox, 216 N. Y. 145; Karameros v. Luther, 279 N. Y. 87; Pagano v. Arnstein, 292 N. Y. 326.)

      Albert Averbach for respondents in first above-entitled action.
    I. The State should have been precluded from introducing any evidence of prescription at the trial by reason of its failure to allege the same as an affirmative defense by answer. (Ehde v. State of New York, 260 App. Div. 511; Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Ostrander v. Bell, 199 App. Div. 304; Dulinak v. State of New York, 177 Misc. 372.) II. The affirmative defense of prescription, if available to the State in this case, was lost or waived by its failure to plead. (Foster v. Webster, 44 N. Y. S. 2d 153.) III. The defense of prescription was not available to the State in this case for the reason that the judgments secured by claimants following the 1936, 1940 and 1943 floodings were res judicata and stare decisis that the State had not acquired the right to flood by prescription. (Long Island R. R. Co. v. State of New York, 157 App. Div. 12; Pagano v. Arnstein, 266 App. Div. 1008, 292 N. Y. 326; Moore v. Harjo, 144 F. 2d 318; Reynolds v. Schmidt, 40 F. 2d 238.) IV. The State failed to meet the burden of proof required of it to establish the period of prescription, its continuity and duration commencing with the period when there was some appreciable injury done to claimants’ property. (Burt Olney Canning Co. v. State of New York, 230 N. Y. 351; Black v. State of New York, 195 Misc. 484; Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Gilford v. Winnipiseogee Lake Co., 52 N. H. 262; Betjemann v. Brooklyn Union Elevated R. R. Co., 127 App. Div. 83, 196 N. Y. 508; Hinkley v. State of New York, 234 N. Y. 309.)

      Nathaniel L. Goldstein, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for appellant in second above-entitled action.
    I. The courts below erred in refusing to hold that the State had acquired a prescriptive right to maintain Caughdenoy Dam at its present height. The height of a dam measures the prescriptive right acquired by its maintenance. (Hammond v. Zehner, 21 N. Y. 118; Marcly v. Shults, 29 N. Y. 346; Hall v. Augsbury, 46 N. Y. 622; Ely v. State of New York, 199 N. Y. 213; Smith & Powell Co. v. State, 11 N. Y. Ct. Cl. 87; Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Stewart v. State of New York, 105 N. Y. 254; Benedict v. State of New York, 120 N. Y. 228; Burt Olney Canning Co. v. State of New York, 230 N. Y. 351.) II. The courts below erred materially in their use of the Haskell case. (Haskell v. State of New York, 13 N. Y. S. 2d 192, 258 App. Div. 930.) III. This claim should have been dismissed because no claim or notice of intention was filed within the time limited by section 10 of the Court of Claims Act.

      Raymond M. Bush for respondents in second above-entitled action.
    I. No proof was introduced upon the trial to establish any rights of the State by prescription. II. The courts below did not err in their use of the Haskell case. (Haskell v. State of New York, 13 N. Y. S. 2d 192, 258 App. Div. 930.) III. Upon the evidence, the filing of the notice of intention by claimants was timely.

      "Nathaniel L. Goldstein, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for appellant in third and fourth above-entitled actions.
    I. The courts below erred in refusing to hold that the State had acquired a prescriptive right to maintain Caughdenoy Dam at its present height. The height of a dam measures the prescriptive right obtained by its maintenance. (Hammond v. Zehner, 21 N. Y. 118; Marcly v. Shults, 29 N. Y. 346; Hall v. Augsbury, 46 N. Y. 622; Ely v. State of New York, 199 N. Y. 213; Ely v. State, 11 N. Y. Ct. Cl. 65; Smith & Powell Co. v. State, 11 N. Y. Ct. Cl. 87; Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Stewart v. State of New York, 105 N. Y. 254; Benedict v. State of New York, 120 N. Y. 228; Ferguson v. Village of Hamburg, 272 N. Y. 234.) II. The defense was not barred by failure to assert it against the 1944 claim. (House v. Lockwood, 137 N. Y. 259; Reynolds v. Ætna Life Ins. Co., 160 N. Y. 635; Rudd v. Cornell, 171 N. Y. 114; 2018 Seventh Ave., Inc., v. Nach-Haus Leasing Corp., 289 N. Y. 490; Gugel v. Hiscox, 216 N. Y. 145.) III. The courts below erred materially in their use of the Haskell case. (Haskell v. State of New York, 13 N. Y. S. 2d 192, 258 App. Div. 930.)

      Albert Averbach and Irving S. Devorsets for respondents in third and fourth above-entitled actions.
    I. Claimants established by a fair preponderance of the evidence the proposition that the construction and maintenance of the dam during the flood period were negligent acts on the part of the State. (Galbraith v. Busch, 267 N. Y. 230.) II. The trial court committed no error in receiving the judgment in the Haskell case “ so far as applicable ” on the proposition of stare decisis.

      (Haskell v. State of New York, 13 N. Y. S. 2d 192, 258 App. Div. 930; Fish Farms, Inc., v. State of New York, 135 Misc. 188; Stone v. State of New York, 138 N. Y. 124; Starke-Belknap v. New York Central R. R. Co., 197 App. Div. 249, 234 N. Y. 630; Moore v. City of Albany, 98 N. Y. 396; Matter of Laudy, 161 N. Y. 429; Matter of Ordway, 196 N. Y. 95; Devine v. Melton, 170 App. Div. 280.) III. The State failed to meet the burden of proof required of it to establish the period of prescription, its continuity and duration commencing with the period when there was some appreciable injury done to claimants’ property. (Hammond v. Antwerp Light & Power Co., 132 Misc. 786; Sewall v. Fitz Gibbon, 233 App. Div. 70, 260 N. Y. 638.) IV. The State of New York was estopped from raising the defense of prescription as to claimant Black by reason of the prior judgment obtained by claimant Black. (Reich v. Cochran, 151 N. Y. 122; Canfield v. Harris & Co., 252 N. Y. 502; Crouse v. McVickar, 207 N. Y. 213.)
   Desmond,

J. All of the above-entitled claims against the State are for damages caused by the flooding of Oneida Lake, one of the Finger Lakes ” in central New York. The Taylor and Moltion claims relate to a flood in October, 1945, and the Black and Harvey cases to a flood in the spring of 1947. All the claimants own cottages on the* shore of the lake, which is some 20 miles long, 4 to 5 miles wide at places, and long known for its violent storms. The Black and Harvey claims were tried jointly, but there were separate trials as to Taylor and Moltion. The theory of each suit-is that the flood damage (undisputed as to kind and amount) to these houses, was caused by the wrongdoing of the State, in that the State maintained, at a place called Caughdenoy in the Oneida River, which is the outlet of Oneida Lake, a dam so dimensioned and located as to impound the waters of the lake at a level so high that in times of heavy rainfall the lands and houses of claimants, all of which are some miles away from the dam, were reached by floodwaters. Many years ago, the State incorporated Oneida Lake and part of Oneida River into its canal system and, apparently to improve navigation conditions, built during 1908 and 1909 a new dam in the Oneida River at Caughdenoy, to replace an old one. It is undisputed that the new dam had the effect of raising the surface level of Oneida Lake, permanently, from 368.75 feet (“ Barge Canal datum ”) to at least 370 feet. At the dam, as first constructed, there were no floodgates or other means of discharging surplus waters except into Oneida Lake. It is undisputed that, beginning soon after the erection of the new dam and continuing right down to the present, there have been filed against the State a great number of claims for flood damages to lakeside properties, that the State has paid or compromised many of these claims and that some of them have resulted in judgments against the State (see, for instance, Haskell v. State of New York, 13 N. Y. S. 2d 192, affd. 258 App. Div. 930, affd. 283 N. Y. 612). In the Haskell case and others which went through the courts and which had to do with Oneida Lake floods at various times, it has uniformly been held, and is now conceded, that the Caughdenoy Dam raised the waters of Oneida Lake above their natural level, and that this change of level was the cause of flood damage during rainy seasons. In 1914, the State attempted to improve the situation by installing a floodgate in the river, which gate, when opened, diverts some of the waters into a stream; other than Oneida Lake. In 1934-1935 the State made another attempt to ameliorate the condition, by means of a nearby guard gate which could be used as a floodgate also. However, the present claims, and others, show that the flood damages continued after those gates had been installed. It is shown in these present records that conditions at and near the dam are such that while the dam itself permanently raised the lake level by a foot and one-half, heavy rains bring to the dam a volume of water so great that the lake level is, for periods, raised considerably higher, hence the damage.

In some of the present cases it is conceded by the State, as it was held in the Haskell case {supra) and others, and as held below in all the present cases, that the building of the new dam in 1909, at the higher level, was a wrong done by the State to the owners of properties on Oneida Lake. In some of the present cases, as will be indicated hereafter, there is a further claim that the State was, in specific instances, guilty of new negligent omissions in failing to make proper use of the floodgates above referred to. In all of these present suits, the State takes the position that there was no fault on its part except as to the original building and continuing maintenance of the dam at an improper level, and that as to that, it has, by lapse of time, acquired a prescriptive right or easement so to maintain the dam at such a height, and incidentally, to flood these properties. In all the suits judgment went for claimants and as to each there was a unanimous affirmance by the Appellate Division, the Taylor appeal having been decided by the Third Department, Appellate Division, and the others by the Fourth Department, Appellate Division. Since the proof, issues and findings differ as between the cases, it will be necessary to take them up separately herein.

1. The Taylor claim. The State, as to this claim, concedes that the construction of the dam in 1909 was an act of negligence on its part, violating the rights of claimants’ predecessors in title, and that this act was a cause of the 1945 flood damage. As to this claim there are no findings of negligent operation of the floodgates, so that issue is out of this case. It does appear, however, that these claimants Taylor, or their predecessors, have recovered judgments against the State for earlier flooding damage done in the years 1936, 1940 and 1943. The State’s position as to this Taylor claim, and all the others treated herein, is that, by uninterrupted use of the dam at its present height at least during the period 1914 to 1936 (the reason why the State selects that particular period is suggested in Presiding Judge Barrett’s opinion in Haskell v. State of New York, 13 N. Y. S. 2d 192, supra), the State acquired as against all the world a right to continue to so maintain and use the dam. Of course, that alleged defense would have been available to the State as against the earlier claims for damage to this very property, and it is undisputed that no such defense was asserted by the State against those earlier claims which went to judgment. Since that alleged right of the State, now asserted for the first time, was as available then as now, it must be held that those earlier judgments have concluded the State on this issue as to these claimants, according to the principle of res judicata, or, more accurately, estoppel by judgment, under the rule of Reich v. Cochran (151 N. Y. 122). There being no other defense, that disposes of the Taylor claim.

2. The Moltion claim. Claimants Moltion owned two cottages and both were damaged by the October, 1945, flood. There was no proof of any prior damage or awards, as to these Moltion properties. There was, however, testimony, which the courts below have credited, that there was at the time of the flood in question, a negligent failure of the State’s employees properly to operate the floodgates, and that this negligence was one of the causes of the inundation. Accordingly, the findings are not only that the permanent raising of the lake level by the dam was wrongful (as the State concedes), but also that the State, despite warnings, failed to open either of the gates until the flood had reached its crest. Since those findings of negligence as to the gates are sufficient to uphold the judgment, it is unnecessary, as to this Moltion claim, to consider whether or not the courts erred in rejecting the State’s alleged defense of prescriptive right since, of course, there could not under any circumstances be any right in the State to fail to exercise ordinary care as to the floodgates. As to this Moltion claim (but not as to any of the others here under consideration) the State asserts another defense: that no claim or notice of intention to file a claim was filed within the ninety days specified in section 10 of the Court of Claims Act. That time-limiting statutory provision has been construed, in a long line of cases (see, for instance Dufel v. State of New York, 198 App. Div. 97, and Di Laura v. State of New York, 169 Misc. 912), the authority of which cases the State apparently concedes, as meaning that, as to claims like these, the ninety days does not start to run until the extent of the damage can be ascertained. We agree with the Trial Judge that there was evidence here that ice resulting from this overflowing was frozen around these buildings, at least until January, 1946 (such testimony, apparently, was received as to this claim, although directly referring to other nearby damaged properties). Since claimants’ notice of intention was filed with the Clerk of the Court of Claims on February 13, 1946, it was timely.

3. The Black claim. Here again the State concedes that the original construction of the dam and its continued maintenance at the unlawful height was wrongful, but the State insists on its alleged prescriptive right as a defense. However, claimants Black had an earlier judgment against the State because of a flood in 1944, and, although the State, in that suit, did not defend on the ground of prescriptive right, the former judgment concludes the State on this point, just as in the Taylor case and for the reasons above stated as to the Taylor claim.

4. The Harvey claim. Here there was no prior award to the owner for other flood damage, and there are no findings of negligence in operating the gates. Consequently, the only wrong upon which this claimant can rely is the continuing one of the maintenance of the dam at a level which from time to time caused floods. Therefore, says the State, its defense of alleged prescriptive right is good at least as to this claim, since, as the State contends, it continuously kept the dam at the flood-causing level at least during the period 1914 toi 1936. The trial court, however, refused to find, as requested by the State, that this particular Harvey property had been flooded each year from 1914 to 1936, and this refusal was justified. Proof that the top dam was at a certain level during all those years, and even that some parts of the lake on various days through those years reached flood levels, would not conclusively establish that the floodwaters came onto these particular premises. All parties agree, and it is a matter of common observation, that water levels will vary at different parts of the same lake, particularly during storms. The State next argues, however, that, to establish its asserted prescriptive right, it did not have to prove that there was continuous flooding of this property from time to time during all these years. The State says that the height of a dam measures the prescriptive right obtained by its maintenance, that is, that the uninterrupted use of the dam for the prescriptive period to maintain water at levels determined by the height of the dam and the variations of the weather will establish the right against all the world so to use the dam. Even if that were the general law applicable, it would be at least doubtful if it could apply to a dam like this one, which includes gates which can be used to divert the excess water. In other words, the continued use of a dam would not seem to be an assertion of a right to impound such water as the dam will hold back, when as part of that very dam, there exist openings to take care of part of the water. Beyond that, we think that the law of this State is, and should be, that a prescriptive right to continue a dam at a certain height, and to divert the resulting floodwaters onto neighboring lands, can be established only by showing that, over the appropriate period (presumably fifteen years, see Civ. Prac. Act, § 34), there was more or less uninterrupted user of that claimed right, by successive floodings of the land as to which the right is claimed.

The State argues that there are two possibly applicable rules: one, the so-called “ height of the dam ” rule, and the other the “ flowage ” rule. We think there is one rule only in this State. Back in 1827, our predecessor, the Supreme Court, held in Stiles v. Hooker (7 Cow. 266) that it is not the height of the dam, but of the flooding waters, which determines whether a prescriptive right has been acquired. The court said (p. 268): And if for 20 years, the defendants have raised their water but 5 feet; and afterwards they raise it 6 feet, by the same dam; and the additional foot injures the plaintiffs, they are entitled to damages. The judge was right. It is not the height of the dam, but of the water which does the injury.” Stiles v. Hooker (supra) is cited in Gilford v. Winnipiseogee Lake Co. (52 N. H. 262) a leading authority in which, as summarized in the headnote, the rule is stated thus: ‘ ‘ Merely maintaining a dam for twenty years does not give a prescriptive right to flow land as high as it can be flowed by that dam. To acquire such right, the water must be actually raised on the adjacent owner’s land so often as to afford him reasonable notice, during the entire period of twenty years, that the right is being claimed against him. ’ ’ Since prescriptive rights over another’s land are measured by user, there must be clear proof of user. As we said in Prentice v. Geiger (74 N. Y. 341, 347): The right is supposed to have had its origin in a grant, and the grant being lost, the user is the only evidence of the right granted, and as the presumption of a grant only exists where there has been an adverse, continuous and uninterrupted user, according to the nature of the easement claimed, for the period of twenty years, the prescriptive right is confined to the right as exercised for that period of time.” We do not read Ely v. State of New York (199 N. Y. 213) or any other New York decision called to our attention, as changing the rule of Stiles v. Hooker. The rule has the merit not only of venerable age, but of fairness and justice. It has been followed elsewhere (see 56 Am. Jur., Waters, p. 632, and cases cited) and should be applied here.

To avoid any misunderstanding, it should be stated that our rejection of the State’s asserted defense of prescriptive right is not by reason of the failure of the State to plead such a defense. The State was not required to serve or file any answer at all, and loses no rights by its failure so to do (Court of Claims Act, § 9, subd. 9; Rules of Court of Claims, rule 13; Lyons v. State of New York, 274 App. Div. 1086, appeal dismissed 299 N. Y. 593).

In the Taylor and Moltion cases the judgments should be affirmed, with costs; in the Blaclt and Harvey cases the judgments should be affirmed, but without costs, as stipulated by the parties.

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

Judgments affirmed.


source: Caselaw Access Project

author: Lewis, J.

license: Public Domain

text:
    Raven Electric Co., Inc., Respondent, v. Nat Linzer et al., Appellants.
    Argued November 28, 1950;
    decided March 8, 1951.

      Herbert Skiff and Leo Hotter for appellants.
    The validity of the arbitration proceeding cannot be attacked by a plenary action and cannot be attacked more than three months after the arbitration award has been confirmed and filed. (Matter of Heidelberger [Cooper], 300 N. Y. 502; Feinberg v. Barry Equity Corp., 277 App. Div. 762; Matter of Bond [Shubert], 264 App. Div. 484, 290 N. Y. 901; Sweet v. Morrison, 116 N. Y. 19.)

      Alfred A. Rosen and Louis Schneider for respondent.
    I. The complaint states a cause of action. Respondent’s plenary action is the proper procedure to obtain the relief sought by it. (Sachs v. Cluett, Peabody & Co., 177 Misc. 695; Dick’s Restaurant & Bar, Inc., v. Rosenwasser, 195 Misc. 179, 275 App. Div. 832; Kristel v. Steinberg, 188 Misc. 500; Matter of Viro Realty Corp. [Belmont], 297 N. Y. 871.) II. Section 1463 of the Civil Practice Act is no bar to a plenary action to have declared null and raid the alleged arbitration proceedings and the award and order entered thereon. (Dick’s Restaurant & Bar, Inc., v. Rosenwasser, 86 N. Y. S. 2d 778; Matter of Manufacturers Chemical Co. [Caswell, Strauss & Co.], 259 App. Div. 321; Matter of Zimmerman [Cohen], 236 N. Y. 15.)
   Lewis, J.

Protracted litigation between the plaintiff as a tenant and the defendants as landlords has given rise to this action.

The rent to be paid by the plaintiff-tenant to the defendants-landlords for the use of commercial space at 889 Broadway, Manhattan Borough, New York City, was fixed in 1948 by an arbitration proceeding at a sum in excess of rent otherwise permissible under the emergency rent control laws. By the action now before us the plaintiff-tenant seeks a judgment declaring that the arbitration proceeding was a mere sham; that the order made at Special Term confirming the arbitration award be vacated, and that plaintiff be required to pay the emergency rent fixed by statute rather than the amount set by the arbitrators. The plaintiff also seeks to recover what is alleged to be excessive rent paid to defendants.

From the record it appears that on two prior occasions when the tenant had failed to pay the rent fixed by arbitration, the defendants-landlords procured final orders in their favor in summary proceedings brought in Municipal Court. Subsequently, in June, 1949, when the plaintiff again declined to pay a monthly installment of rent then due, the defendants commenced a third summary proceeding in Municipal Court. Thereupon the plaintiff instituted in Supreme Court the present action for a declaratory judgment and moved for an order consolidating the pending third summary proceeding with the tenant’s present action. Thereafter the defendants moved to dismiss the complaint in the present action for a declaratory judgment upon the grounds (1) that the complaint does not state a cause of action; (2) that, as to the validity of the arbitration proceeding, the orders in the two summary proceedings are res judicata; and (3) that the action is barred because it was commenced more than three months after the entry of the Special Term order confirming the arbitration award.

The defendants-landlords succeeded at Special Term where the complaint was dismissed and the plaintiff’s motion for consolidation was denied. At the Appellate Division the order granting the defendants’ motion to dismiss the complaint was reversed on the law and plaintiff’s motion to consolidate the summary proceeding with the action now before us was granted. Thereafter, the Appellate Division granted a motion by the defendants for leave to appeal to this court and certified the following questions:

“ 1. Whether, on the facts shown by the record herein, the final order dated March 7, 1949, in the summary proceeding for non-payment of rent entered in favor of the defendant (landlord) is res adjudicata with respect to the validity of the arbitration agreement fixing the reasonable rent pursuant to Section 8554 of the Business Emergency Rent Control Law.

“ 2. Whether, on the facts shown by the record herein, the final order in the summary proceeding, dated May 31, 1949, for non-payment of rent, entered on consent in favor of the defendants (landlord) is res adjudicata with respect to the validity of the arbitration agreement fixing the reasonable rent pursuant to Section 8554 of the Business Emergency Rent Control Law,

“3. On the facts shown by the record herein, may the validity of the arbitration proceedings be attacked in a plenary action?

“4. On the facts shown by the record herein, if the validity of the arbitration proceedings can be attacked by plenary action, can the said plenary action be commenced more than three months after the award was confirmed and filed? ”

As long ago as 1902 this court, in Matter of Wilkins (169 N. Y. 494) had occasion to consider' a problem similar to the one now before us. After examining statutory provisions then controlling procedure in arbitration proceedings, the court stated at page 498: This examination of the various provisions of the statute relating to this subject, and the decisions of the courts of this state as to the conclusiveness of an award upon the merits, discloses that the only method of attacking or reviewing an award, is by motion to vacate, modify or correct it for the reasons mentioned in the statute.” (Emphasis supplied.)

By subsequent enactments governing arbitration proceedings and procedure applicable thereto, now assembled as article 84 of the Civil Practice Act, the Legislature has made it clear that, except as otherwise provided therein, any application to the court or to a judge thereof under the provisions of article 84 — including the vacatur of an arbitration award — shall be “ * * * made and heard in the manner provided by law for the making and hearing of motions ”. (Civ. Prac. Act, § 1459; emphasis supplied.) (And see L. 1920, ch. 275, § 6; L. 1937, ch. 341, § 13.) Within procedure now prescribed by article 84 are the following requirements: Under subdivision 5 of section 1462 — if it shall appear that there was no valid submission or contract, and objection has been raised under conditions set forth in section 1458, the court upon motion made by a party to the controversy “ must make an order vacating the award ”. Such a motion to vacate an award, under section 1463, must be made upon notice served upon the adverse party or his attorney “ within three months after the award is filed or delivered * * * ”. (Emphasis supplied.) (See Matter of Heidelberger [Cooper], 275 App. Div. 158, revd. 300 N. Y. 502.)

In the arbitration proceeding here involved the plaintiff corporation nominated one of the two arbitrators and appeared by counsel in the arbitration proceeding; its president was present and testified at the hearing and thereafter both he and plaintiff’s counsel signed a written consent to the order made at Special Term confirming the award now challenged. The plaintiff did not, however, at any time apply by motion for a court order vacating the award, as required by section 1463 of the Civil Practice Act. Instead, on a date more than three months after the award was personally delivered by the arbitrators to each party to the arbitration, the plaintiff instituted the present action whereby the. relief sought is a judgment declaring the arbitration proceeding null and void, vacating the order of Special Term which confirmed the award therein, and demanding recovery of what is alleged to be excessive rent paid to the defendants.

Those circumstances, disclosed by the record, which establish plaintiff’s nonconformance with the statutory procedure mentioned above (Civ. Prac. Act, §§ 1459, 1462, 1463), afford the basis for our disagreement with the order of the Appellate Division herein and our agreement with the ruling made at Special Term.

The order of the Appellate Division should be reversed and that of Special Term affirmed, with costs in this court and in the Appellate Division. The third question certified is answered in the negative. The first, second and fourth questions certified are not answered.

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

Ordered accordingly.


author: Ftjld, J.

text:
    Lillian Lynn, Respondent, v. Jay J. Lynn, Appellant.
    Argued October 12, 1950;
    decided March 8, 1951.

      Herman A. Benjamin and Robert Satter for appellant.
    I. Under the law of New York a valid divorce, whether foreign or domestic, granted in an action in which both parties appeared, terminates the legal effectiveness of a prior separate maintenance decree. (Tonjes v. Tonjes, 14 App. Div. 542.) II. An ex parte divorce does not necessarily terminate the provisions for support in a prior separation decree. (Estin v. Estin, 296 N. Y. 308; Matthews v. Matthews, 247 N. Y. 32; “ Kurski ” v. “ Kurski ”, 185 Misc. 97; Franklin v. Franklin, 189 Misc. 442; Esenwein v. Commonwealth, 325 U. S. 279; Security Trust Co. of Rochester v. Woodward, 73 F. Supp. 667.) III. A divorce, foreign or domestic, granted on appearance of both parties, terminates the legal effectiveness of a prior separation decree. (Burton v. Burton, 150 App. Div. 790; Holmes v. Holmes, 155 F. 2d 737; Scheinwald v. Scheinwald, 231 App. Div. 757; Richards v. Richards, 87 Misc. 134,167 App. Div. 922; Helman v. Helman, 191 Misc. 201; Verbeck v. Verbeck, 187 Misc. 750.) IV. The effect of a divorce, granted on the appearance of both parties, in terminating a prior separate maintenance order is not dependent on whether or not the question of alimony was actually litigated. (Richards v. Richards, 87 Misc. 134, 167 App. Div. 922; Verbeck v. Verbeck, 187 Misc. 750; Bloedorn v. Bloedorn, 76 F. 2d 812; Jones v. Jones, 249 Ala. 386; Rosa v. Rosa, 296 Mass. 271; Fein v. Fein, 261 N. Y. 441; Johnson v. Johnson, 206 N. Y. 561; Stokes v. Footes, 172 N. Y. 327; Sherrer v. Sherrer, 334 U. S. 343.) V. The full faith and credit clause of the United States Constitution requires the courts of this State to give to the valid Nevada decree the effect of terminating the support provisions of the prior separation decree, (Herrick v. Herrick, 25 P. 2d 378 [Nev.]; Durlacher v. Durlacher, 123 F. 2d 70; Bassett v. Bassett, 51 F. Supp. 545; Halvey v. Halvey, 330 U. S. 610; Davis v. Davis, 305 U. S. 32; Williams v. North Carolina, 317 U. S. 287.) VI. A New York divorce granted on appearance of both parties supersedes a support order and our courts must not discriminate against the Nevada divorce by denying it the same effect. (Scheinwald v. Scheinwald, 231 App. Div. 757; Richards v. Richards, 87 Misc. 134,167 App. Div. 922.) VII. The Estin case does not permit this court to evade the requirements of the full faith and credit clause, because in the instant case the Nevada court had full jurisdiction over the parties and as a result over the divorce and all the incidents of marriage. (Estin v. Estin, 296 N. Y. 308, 334 U. S. 541; Kreiger v. Kreiger, 334 U. S. 555; Security Trust Co. of Rochester v. Woodward, 73 F. Supp. 667; Helman v. Helman, 191 Misc. 201; Ravaud v. Ravaud, 273 App. Div. 507.) VIII. The Nevada divorce is immune from collateral attack and must be recognized as valid by the New York courts. (Davis v. Davis, 305 U. S. 32; Sherrer v. Sherrer, 334 U. S. 343; Coe v. Coe, 334 U. S. 378; Kinnier v. Kinnier, 45 N. Y. 535; Glaser v. Glaser, 276 N. Y. 296; Schacht v. Schacht, 295 N. Y. 439.) IX. The Nevada court did not fail to give full faith and credit to the prior New York separation decree and, even if it did, New York cannot for that reason refuse to give full faith and credit to the Nevada divorce decree. (Durlacher v. Durlacher, 123 F. 2d 70; Bassett v. Bassett, 51 F. Supp. 545; Herrick v. Herrick, 25 P. 2d 378 [Nev.]; Fauntleroy v. Lum, 210 U. S. 230; Hoyt v. Hoyt, 265 App. Div. 223; Hunt v. Hunt, 72 N. Y. 217; Field v. Chronik, 190 App. Div. 501.) X. The Nevada divorce decree is res judicata on the issue of alimony and appellant is not estopped from asserting this defense. (Sweeney v. Sweeney, 179 P. 638 [Nev.]; Galusha v. Galusha, 138 N. Y. 272; Cain v. Cain, 188 App. Div. 780; Bell v. Bell, 171 Misc. 605.) XI. Appellant is not estopped from asserting the res judicata effect of the Nevada divorce on the matter of alimony. (Hartford Accident & Ind. Co. v. Oles, 152 Misc. 876; Thompson v. Simpson, 128 N. Y. 270; Deering v. Schreyer, 110 App. Div. 200.) XII. The law of New York has confined the doctrine of divisible divorce strictly to an ex parte divorce. That law should not be changed. (Matthews v. Matthews, 247 N. Y. 32.)

      Samuel Gottlieb, Walter P. Arenwald and Louis P. Neustein for respondent.
    I. Plaintiff’s New York decree of separate maintenance survived defendant’s Nevada divorce decree. (Estin v. Estin, 296 N. Y. 308, 334 U. S. 541; Kreiger v. Kreiger, 297 N. Y. 530, 334 U. S. 555; Gittelman v. Gittelman, 192 Misc. 334; Coe v. Coe, 334 U. S. 378; Sherrer v. Sherrer, 334 U. S. 343; Matthews v. Matthews, 247 N. Y. 32.) II. The Nevada court in the instant case made the matter of the termination of the marital status her dominant concern and since no issue of support was tendered or litigated, expressly refused to terminate the support obligations on the part of the husband. (Flood v. Theising, 273 App. Div. 548, 298 N. Y. 700.) III. Since the issue of support was not tendered in the Nevada divorce proceedings, no binding adjudication on that issue could be or, in fact, was made. The husband, therefore, may not invoke the doctrine of res judicata with respect thereto. (Estin v. Estin, 334 U. S. 541; Kreiger v. Kreiger, 334 U. S. 555; Cotrone v. Iervolino, 269 App. Div. 101; Karameros v. Luther, 279 N. Y. 87.) IV. It is the traditional policy of this State to preserve the support obligations, notwithstanding dissolution of the marital status. (Johnson v. Johnson, 295 N. Y. 477; Jacob & Youngs, Inc., v. Kent, 230 N. Y. 239; Matter of Fowles, 222 N. Y. 222; Roth v. Roth, 77 Misc. 673; Carpenter v. Osborn, 102 N. Y. 552; Galusha v. Galusha, 116 N. Y. 635; Randolph v. Field, 165 App. Div. 279.) V. In order to prevent its citizens from becoming public charges, our courts may constitutionally hold that a domestic decree of separation survives a foreign decree of divorce. (Senor v. Senor, 272 App. Div. 306, 297 N. Y. 800.) VI. Defendant by his conduct is estopped from challenging the validity of the decree of separation herein. (Daine v. Commissioner of Internal Revenue, 168 F. 2d 449; Smith v. Commissioner of Internal Revenue, 168 F. 2d 446; Commissioner of Internal Revenue v. Murray, 174 F. 2d 816.) VII. The substantial tax benefits that accrued to defendant and the detriment suffered by plaintiff may be concretely illustrated. (Rothschild v. Title Guar. & Trust Co., 204 N. Y. 458.) VIII. Plaintiff’s decree of separation should and must be accorded full faith and credit. The Nevada court improperly split the husband’s alleged cause of action for cruelty in order to circumvent the effect of such decree. (Sistare v. Sistare, 218 U. S. 1; Barber v. Barber, 323 U. S. 77; Griffin v. Griffin, 327 U. S. 220; Fox v. Fox, 263 N. Y. 68; Bassett v. Bassett, 141 F. 2d 954.) IX. The Nevada decree obtained by defendant is open to challenge because of his fraud, which resulted in a denial to the wife of a full opportunity to contest the issue of domicile. (Texas v. Florida, 306 U. S. 398.)
   Ftjld, J.

The primary question posed is whether the doctrine of “ divisible divorce ”, heretofore enunciated and applied in cases where the out-of-state divorce decree was granted to the husband ex parte, is to be extended to cover situations where the wife appeared in the divorce proceedings.

Plaintiff and defendant, married in New York City in 1926, were separated by a decree of the Supreme Court of this state rendered in favor of plaintiff wife in January of 1942, upon findings that defendant had willfully abandoned her without cause or justification. The judgment also awarded plaintiff custody of the parties’ only child, a girl then fourteen years old, and granted an allowance of $85 a week, subject to modification upon a showing of changed circumstances, for the support of plaintiff and the child.

Some fifteen months later, in April, 1943, the husband filed suit in Nevada for divorce on the ground of extreme cruelty. The wife appeared in the action both personally and by attorney, disputing not only his claim to a bona fide domicile in Nevada but contesting the suit on the merits. Following a trial, the court granted the husband a decree of divorce, upon findings that he was, and for more than six weeks had been, a bona fide resident of Reno, Nevada, and that the wife had been guilty of a course of conduct amounting to extreme cruelty subsequent to. the date of the earlier New York separation judgment. The decree of the Nevada court made no provision for the support of the wife or child, and both its decision and decree recited that the wife had made no claim for alimony or support. The court, however, refused the husband’s requests for a finding that the wife had waived all claim for such relief and for a conclusion of law that it be denied to her.

Shortly after the granting of the Nevada divorce, the husband returned to New York City and married another woman. He nevertheless continued to pay plaintiff the $85 a week called for by the earlier New York judgment, and for such amounts took the benefit of tax deductions in connection with his federal and state income taxes.

In June of 1948, plaintiff, by motion entitled in the New York suit, applied for an order amending the final judgment of separation. Claiming that defendant’s income had substantially increased since 1942, she sought to have the alimony increased from $85 to $200 a week. Defendant opposed the application on the ground, among others, that the Nevada divorce decree operated to deprive plaintiff of any right to alimony.

The court at Special Term denied plaintiff’s application, holding that the Nevada divorce terminated the obligation to pay alimony imposed by the New York judgment. The Appellate Division, by a three to two vote, reversed, holding that the New York alimony judgment continued valid, upon the grounds (1) that the New York courts were not required to give full faith and credit to the Nevada decree because the Nevada court had failed to give full faith .and credit to the New York judgment; (2) that, by expressly refraining from passing on the matter of the husband’s obligation of support, the Nevada court left in full force and effect the alimony provisions of the New York judgment; and (3) that the husband was estopped from pleading the Nevada decree as res judicata on the question of alimony.

The Appellate Division granted defendant leave to appeal to this court and certified two questions of law: the first asks whether plaintiff’s New York separation judgment survived defendant’s Nevada decree of divorce, and the second — as we interpret it (see Hession v. Sari Corp., 283 N. Y. 262, 264; see, also, Cohen, The Powers of the New York Court of Appeals, § 82) —whether the court at Special Term had the power to grant plaintiff’s application to amend her separation decree so as to provide for an increase in alimony. Since the appeal presents questions affecting the rights of plaintiff wife alone, we neither consider nor treat the rights of the child of the parties, who has apparently attained her majority. (Cf. Johnson v. Muelberger, 340 U. S. 581.)

The divisible divorce ”, anomalous though it may at first appear, has become a recognized concept; it is now familiar law that a divorce decree may be completely effective to dissolve a marriage and yet completely ineffectual to alter certain legal and economic incidents of that marriage. (See Estin v. Estin, 296 N. Y. 308, affd. 334 U. S. 541; Kreiger v. Kreiger, 297 N. Y. 530, affd. 334 U. S. 555; Barber v. Barber, 21 How. [U. S.] 582.) With that in mind, we turn to the case before us.

The Nevada decree rendered in favor of the husband unquestionably and validly put an end to the parties’ marital status; since plaintiff appeared and participated in the Nevada action, she may not in this state relitigate the issue of domicile or the jurisdiction of the Nevada court to grant the divorce. (See Johnson v. Muelberger, supra, 340 U. S. 581; Sherrer v. Sherrer, 334 U. S. 343; Coe v. Coe, 334 U. S. 378; Davis v. Davis, 305 U. S. 32; Senor v. Senor, 297 N. Y. 800; Matter of Rhinelander, 290 N. Y. 31, 36-37; Glaser v. Glaser, 276 N. Y. 296.) And even if we were to accept the view of the Appellate Division that the Nevada court, in decreeing the divorce, failed to give appropriate effect to the adjudication made in the New York action, the courts of this state would still be required to accord full faith and credit to the’Nevada decree. Nevada’s asserted denial of full faith does not justify or permit retaliation by any other state. As the decisions make plain, plaintiff’s only remedy to correct the alleged error whs by direct appeal from the Nevada judgment through the Nevada courts and, if necessary, to the Supreme Court of the United States. (See Morris v. Jones, 329 U. S. 545, 552; Treinies v. Sunshine Mining Co., 308 U. S. 66, 77; Roche v. McDonald, 275 U. S. 449, 455; Fauntleroy v. Lum, 210 U. S. 230, 237; see, also, Estin v. Estin, supra, 296 N. Y. 308, 312, affd. 334 U. S. 541; Restatement, Judgments, § 42, Comment a, p. 165.)

The question, however, remains whether the Nevada decree also effectively ended the obligation of support imposed upon the husband by the earlier New York judgment of separation.

In both Estin v. Estin (supra, 296 N. Y. 308) and Kreiger v. Kreiger (supra, 297 N. Y. 530), we held that a divorce decree granted in Nevada against a wife, not domiciled in that state, who was not served with process there and who did not appear in the action, was ineffectual to cancel the alimony provision of a prior New York judgment of separation. Although the Nevada court had jurisdiction to grant the husband a decree of dissolution of the marriage, and its judgment was entitled to recognition to that extent, we held that, since it lacked jurisdiction of the person of the wife, it was without power to adjudicate upon, or interfere with, her right to alimony under the New York judgment. That was also the basis of the subsequent affirmance by the Supreme Court. (Estin v. Estin, supra, 334 U. S. 541; Kreiger v. Kreiger, supra, 334 U. S. 555; see, also, Griffin v. Griffin, 327 U. S. 220, 228-229.) In the Estin ease, Chief Judge Loughban, writing for a unanimous court, analyzed the law on the subject in this way (296 N. Y., at pp. 312-313): A divorce decree (whether foreign or domestic) granted by a court having jurisdiction of the persons of both parties may very well be held to override any incongruous alimony provision of an earlier domestic judgment of separation. (See Scheinwald v. Scheinwald, 231 App. Div. 757; Richards v. Richards, 87 Misc. 134, affd. 167 App. Div. 922; Holmes v. Holmes, 155 F. 2d 737.) But the res judicata principle of the cases just cited — that as between two conflicting adjudications the last must control — has no application where, as in the present case, the court which granted the last judgment was without jurisdiction of the person of the defendant (cf. Miller v. Miller, 200 Iowa 1193; Wagster v. Wagster, 193 Ark. 902; 2 Freeman on Judgments [5th ed.], § 629).”

In the present case, however, the Nevada court had jurisdiction of the wife’s person by reason of her appearance and, consequently, it did have power to determine her right to alimony. If that tribunal had expressly passed upon the matter of alimony and had either denied an allowance to the wife or awarded her a sum less than that fixed in the New York judgment, there would be no doubt that the Nevada decree would be controlling over the inconsistent provision of the New York judgment. Since that would be the effect given in Nevada to such a judgment when rendered by a court having jurisdiction of the wife’s person (see Herrick v. Herrick, 55 Nev. 59, 68; Lagemann v. Lagemann, 65 Nev. 373, rehearing denied 65 Nev. 385, appeal dismissed 336 U. S. 932; see, also, Estin v. Estin, supra, 334 U. S. 541, 547), the command of the full faith and credit clause, as implemented by congressional legislation, would require us to give it like effect in this state. (U. S. Const., art. IV, § 1; U. S. Code, tit. 28, § 1738; see Magnolia Petroleum Co. v. Hunt, 320 U. S. 430, 438; see, also, Scheinwald v. Scheinwald, 231 App. Div. 757; Burton v. Burton, 150 App. Div. 790; Davis v. Davis, 114 F. 2d 492.)

Controlling effect must likewise be given to the Nevada decree in this case insofar as the matter of alimony is concerned, even though it makes no provision for alimony and even though the wife made no claim for any support in the action. Study of the few relevant Nevada decisions establishes the law of that state to be not only that a divorce decree overrides a prior support judgment or order (see Herrick v. Herrick, supra, 55 Nev. 59, 68), but that the question of alimony is one of the issues to be disposed of in the divorce action itself, and that, in the absence of an alimony award in the decree, or a reservation of jurisdiction, “ there can be no grant of alimony after such a divorce ”. (Sweeney v. Sweeney, 42 Nev. 431, 438.) In the latter respect, the Nevada law is in accord both with the law of this state (see Hoops v. Hoops, 292 N. Y. 428; Kamp v. Kamp, 59 N. Y. 212; see, also, Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304, 306) and with the general current of authority. (See 2 Freeman on Judgments [5th ed.], § 911, pp. 1915-1916.) The underlying rationale is that the divorce judgment breaks the marriage tie and thereby “ cuts off and forbids in the future ” any rights or obligations having their root in the marriage relation (Matter of Ensign, 103 N. Y. 284, 289); by that token, no right of support can survive except as awarded by the final decree of divorce or by an authorized amendment to such decree. (See Hoops v. Hoops, supra, 292 N. Y. 428; Wilson v. Hinman, 182 N. Y. 408, 411; Livingston v. Livingston, 173 N. Y. 377, 381.) In that view, it is immaterial that the wife made no claim for alimony in the divorce suit. (See Howell v. Howell, 104 Cal. 45; Spain v. Spain, 177 Iowa 249; Herbert v. Herbert, 221 Mo. App. 201; Kelkenney v. Getsey, 137 Neb. 416; Weidman v. Weidman, 57 Ohio St. 101.)

As long as the court in the divorce action had personal jurisdiction of both parties, its decree, as rendered or as subsequently modified, must be taken to determine the husband’s obligation of support, and the failure to grant alimony is properly treated as the equivalent of a denial of such relief. (See, e.g., Holmes v. Holmes, 155 F. 2d 737.) It follows, then, that the alimony provisions of a prior judgment of separation must yield to the overriding effect of the divorce decree. (See Harris v. Harris, 197 App. Div. 646; Richards v. Richards, 87 Misc. 134, affd. 167 App. Div. 922; Gibson v. Gibson, 81 Misc. 508; Cohen v. Cohen, 319 Mass. 31.)

In the light of reason and authority, therefore, we deem it clear that the recitals in the Nevada decision and decree that the wife sought no alimony do not serve to keep alive the New York alimony judgment. Those recitals may perhaps serve as a basis for concluding that the Nevada court impliedly reserved jurisdiction to adjudicate upon the question of alimony at a future time. In that event, the Nevada court would be empowered to amend its decree, so as to provide for payment of alimony, at any time after its rendition, without regard to the usual limitations period prescribed by the rules of that court (Rules of Nevada District Court, rule XLV) for securing amendments or modifications of its judgments or orders. (See Aseltine v. Second Judicial Dist. Ct., 57 Nev. 269; Schneider v. Second, Judicial Dist. Ct., 64 Nev. 26.) However, whether jurisdiction has thus been reserved by implication, whether the wife should be given an allowance for support by way of modification of the divorce decree, are, of course, matters for the Nevada court alone to decide. (See Schacht v. Schacht, 295 N. Y. 439; Hoyt v. Hoyt, 265 App. Div. 223.) At any rate, a reservation of jurisdiction, if one there was, neither keeps alive the alimony provisions of the New York separation decree nor furnishes basis for inferring that the Nevada court intended to leave the matter of support for decision by the court of some other jurisdiction.

Flood v. Thiesing (273 App. Div. 548, affd. 298 N. Y. 700), upon which reliance is placed, neither states nor suggests any contrary rule or conclusion; it is enough to note — though other grounds of distinction are present — that that case involved a separation agreement, which, it is settled, may survive divorce. (See Goldman v. Goldman, 282 N. Y. 296, 305; Galusha v. Galusha, 116 N. Y. 635, 138 N. Y. 272; Van Horn v. Van Horn, 196 App. Div. 472.)

We consider, finally, whether defendant is estopped from denying the subsistence of the New York alimony judgment.

An estoppel, it has been said, 1 ‘ rests upon the word or deed of one party upon which another rightfully relies and so relying changes his position to his injury.” (Metropolitan Life Ins. Co. v. Childs Co., 230 N. Y. 285, 292.) The Appellate Division held defendant estopped because his continued payments of alimony caused plaintiff to change her position to her injury, by inducing her not to apply to the Nevada court — • within the time allegedly allowed by that court’s rules — for a modification so as to include a provision for alimony. It is dubious whether plaintiff could, under any circumstances, rightfully ” rely upon the continued payments as an interpretation of the Nevada decree by defendant. But, -quite apart from that, there is no evidence that plaintiff was either misled by such conduct of defendant or that she relied upon it, and, as a matter of fact, plaintiff made no such claim of reliance in the courts below. Manifestly, an essential element of estoppel was lacking. (See Byrne v. Barrett, 268 N. Y. 199, 208; Wills v. Investors Bankstocks Corp., 257 N. Y. 451, 458; Metropolitan Life Ins. Co. v. Childs Co., supra, 230 N. Y. 285, 292-293.) Plaintiff did, though, assert an estoppel upon the ground that defendant, in filing income tax returns, deducted the alimony payments made by him after the Nevada decree had been granted. Since such deductions are allowed only for payments made pursuant to a decree (Internal Revenue Code, § 22, subd. [k]; § 23, subd. [u]; U. S. Code, tit. 26; Tax Law, § 359, subd. 8; § 360, subd. 17), it is urged that defendant must be taken to have conclusively acknowledged the continued effectiveness of the New York alimony judgment. Here, too, however, is lacking any adequate showing that plaintiff was prejudiced by defendant’s conduct. (See Rothschild v. Title Guar. & Trust Co., 204 N. Y. 458, 464.) Her contention that injury stemmed from the fact that the payments deducted from defendant’s income as alimony payments thereby became taxable as income to her will not stand analysis. In the first place, plaintiff was not concluded by defendant’s characterization of the payments in his tax returns, and, in the second place, she cannot possibly complain if defendant made payments to her, which he was not obligated to make, either gratuitously or under a mistake of law.

That we reach a result in the case before us different from that in Estin v. Estin and Kreiger v. Kreiger merely because of the added circumstance that Mrs. Lynn chose to appear and participate in the proceedings in Nevada, may seem to some inequitable. The explanation, though, is clear and decisive. The additional factor present in this case operated to give the Nevada court jurisdiction of the wife’s person and, by that token, vested that tribunal with power to adjudicate the wife’s right of support as well as the parties’ marital status. That being so, our conclusion is here compelled by the command of the full faith and credit clause, for, as the Supreme Court has recently declared (Sherrer v. Sherrer, supra, 334 U. S. 343, 355), If in its application local policy must at times be required to give- way, such is part of the price of our federal system.’ Williams v. North Carolina, 317 U. S. 287, 302 ”.

The order of the Appellate Division should be reversed, and that of Special Term affirmed, without costs. The first question certified should be answered in the negative and the second question, read as we interpret it (supra, p. 200), should also be answered in the negative.

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

Ordered accordingly.


author: Froessel, J.

text:
    In the Matter of the General Assignment for the Benefit of Creditors of Pavone Textile Corp., Assignor, to Harold Bloom, Assignee, Appellant. United States of America et al., Claimants, Respondents.
    Argued November 16, 1950;
    decided March 8, 1951.

      Gustave A. de Lemos for appellant.
    I. As a general rule, after property has passed into the hands of an assignee for the benefit of creditors, creditors of the estate are not entitled to post-assignment interest on their claims. (Thomas v. Western Car Co., 149 U. S. 95; Matter of People [Norske Lloyd Ins. Co.], 249 N. Y. 139; People v. American Loan & Trust Co., 172 N. Y. 371; City of New York v. Saper, 336 U. S. 328.) II. The general rule is applicable not only as to general creditors, but as to preferred creditors as well, in the absence of a specific exception created by statute. (People v. American Loan & Trust Co., 172 N. Y. 371; United States Fidelity & Guar. Co. v. Carnegie Trust Co., 161 App. Div. 429; Leach v. Sanborn, 231 N. W. 497 [Iowa]; Boston & A. R. Co. v. Mercantile Trust & D. Co., 82 Md. 535; Attorney General v. Supreme Council, A. L. H., 206 Mass. 131; Fordyce v. Kansas City & N. Connecting R. Co., 145 F. 566; Atlanta Nat. Bank v. Four-States Grocer Co., 135 S. W. 1135 [Tex.] ; Cutler v. Horgen, 213 Iowa 983.) III. The statutes invoked by respondents do not create an exception to the general rule. (City of New York v. Saper, 336 U. S. 328; Matter of Kallak, 147 F. 276; Carmichael v. Southern Coal & Coke Co., 301 U. S. 495; Standard Dredging Corp. v. Murphy, 319 U. S. 306; W. H. H. Chamberlin, Inc., v. Andrews, 271 N. Y. 1, 299 U. S. 515.) IV. The court below erred in deciding that section 3466 of the Bevised Statutes (U. S. Code, tit. 31, § 191) has been construed in the State of New York as entitling the United States of America to post-assignment interest. (Matter of Lincoln Chair & Novelty Co., 274 N. Y. 353; Matter of Kupshire Coats, Inc., 272 N. Y. 221; Matter of T. J. Simpson, Inc., v. United States, 258 App. Div. 148.) V. The court below erred in deciding that until the State Legislature limits claims of the State of New York in general assignment proceedings such claims must receive priority inclusive of interest until the date of payment. VI. The measure of preference under both the Federal and State law is limited to the payment of principal. (People v. American Loan & Trust Co., 172 N. Y. 371; Matter of People [First Russian Ins. Co.], 253 N. Y. 365; Hammer v. Tuffy, 145 F. 2d 447.)

      Irving H. Saypol, United States Attorney for the Southern District of New York (John D. Kelly of counsel), for United States of America, respondent.
    I. The Government’s priority to the payment of its claim in a general assignment proceeding is, by virtue of the supremacy clause of the Constitution, a Federal question to be decided under the laws of the United States, without regard to the law of any State. (Matter of T. J. Simpson, Inc., v. United States, 258 App. Div. 148; Matter of Kupshire Coats, Inc., 272 N. Y. 221; Matter of Lincoln Chair & Novelty Co., 274 N. Y. 353; United States v. Waddill, Holland & Flinn, Inc., 323 U. S. 353; Matter of Ryan, 294 N. Y. 85.) II. The word “ debts ” contained in section 3466 of the Revised Statutes (U. S. Code, tit. 31, § 191) is to be construed liberally and includes the payment of post-assignment interest on a delinquent tax claim of the United States. (United States v. Waddill, Holland & Flinn, Inc., 323 U. S. 353; United States v. Texas, 314 U. S. 480; New York v. Maclay, 288 U. S. 290; Stripe v. United States, 269 U. S. 503; County of Spokane v. United States, 279 U. S. 80; Price v. United States, 269 U. S. 492; Billings v. United States, 232 U. S. 261; Owens v. Commissioner of Internal Revenue, 125 F. 2d 210, 316 U. S. 704; United States v. Childs, 266 U. S. 304; Rodgers v. United States, 332 U. S. 371; Massachusetts v. United States, 333 U. S. 611.) III. In receivership proceedings over which section 3466 of the Revised Statutes governs, Federal tax claims have always drawn interest to the date of payment. (United States v. Waddill, Holland & Flinn, Inc., 323 U. S. 353; Matter of Lincoln Chair & Novelty Co., 274 N. Y. 353; Matter of Kupshire Coats, Inc., 272 N. Y. 221; American Iron & Steel Mfg. Co. v. Seaboard Air Line Ry., 233 U. S. 261.)

      Nathaniel L. Goldstein, Attorney-General (Samuel Stern, Wendell P. Brown and Francis R. Curran of counsel), for State of New York, respondent.
    I. Subdivision 4 of section 570 and section 574 of the New York Unemployment Insurance Law make absolute and mandatory the payment of post-assignment interest,, and such payment is not dependent upon a rule of court, nor upon the varying equities of particular cases. (Matter of Moskowitz v. La Guardia, 183 Misc. 33, 268 App. Div. 918, 294 N. Y. 830; Marshall v. New York, 254 U. S. 380; Matter of Lehrer-Howard, Inc., 181 Misc. 683.) II. Neither the law with respect to interest in a straight bankruptcy proceeding nor the general rule of distribution in an insolvency proceeding is applicable to or decisive of the issue involved. (Matter of De Rario, Inc., 182 Misc. 427; Matter of Jamaica Concrete Corp. [Wedeen], 185 Misc. 655; Thomas v. Western Car Co., 149 U. S. 95; People v. American Loan & Trust Co., 172 N. Y. 371; Matter of Empire State Sur. Co., 125 Misc. 806; American Iron & Steel Mfg. Co. v. Seaboard Air Line Ry., 233 U. S. 261; Pennsylvania Steel Co. v. New York City Ry. Co., 216 F. 458; Richmond & I. Constr. Co. v. Richmond, N., I. & B. R. Co., 68 F. 105.)
   Froessel, J.

In this proceeding, in which the assignor made a general assignment for the benefit of creditors, the only issue presented to us for determination is whether the respondents, the United States of America and the State of New York, are entitled to interest on their tax claims to the date on which the assignment was filed or to the date of payment of such claims. The claim of the United States is for social security and withholding taxes, and that of New York for unemployment insurance taxes.

The general rule is well settled that creditors are not entitled to post-assignment interest where the proceeds are insufficient to pay all creditors in full, because the “ delay in distribution is the act of the law; it is a necessary incident to the settlement of the estate ”; this general rule applies as between preferred and unpreferred creditors (Thomas v. Western Car Co., 149 U. S. 95, 116-117; People v. American Loan & Trust Co., 172 N. Y. 371, 379, motion for reargument denied 177 N. Y. 467; Matter of People [Norske Lloyd Ins. Co.], 249 N. Y. 139, 146-148; United States Fidelity & Guar. Co. v. Carnegie Trust Co., 161 App. Div. 429, affd. 213 N. Y. 629; Matter of Murray, 6 Paige Ch. 204).

In bankruptcy proceedings, the Supreme Court of the United States, despite earlier decisions in the lower Federal courts to the contrary, has definitely ruled that, under existing statutes, post-bankruptcy interest does not accrue on tax claims, pointing out that the rule stopping interest at bankruptcy is a fundamental principle of the English bankruptcy system which we copied more than two centuries ago (City of New York v. Saper, 336 U. S. 328; Sexton v. Dreyfus, 219 U. S. 339, 344; 2 Blackstone’s Comm., p. 488). As long ago as Ex parte Bennet (2 Atk. 527, 528 [1743]), Lord Hardwicks said: “ Commissioners, after a man becomes a bankrupt, compute interest upon debts no lower than the date of the commission, because it is a dead fund, and in such a shipwreck, if there is a salvage of part to each person, in this general loss, it is as much as can be expected.”

In view of these decisions, we conclude that post-assignment interest is not recoverable in the case at bar. We are reinforced in this conclusion by the language of the Federal priority statute, which clearly has application here (Matter of Kupshire Coats, Inc., 272 N. Y. 221, 224; Matter of Lincoln Chair & Novelty Co., 274 N. Y. 353, 356; Matter of Gruner, 295 N. Y. 510, 520-521, motion for reargument denied 296 N. Y. 668): Whenever any person indebted to the United States is insolvent * * * the debts due to the United States shall be first satisfied; and the priority established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof * * * as to cases in which an act of bankruptcy is committed.” (U. S. Rev. Stat., § 3466; U. S. Code, tit. 31, § 191; emphasis supplied.) The word debts ” in this statute has been held to include taxes (United States v. Waddill, Holland & Flinn, Inc., 323 U. S. 353). The statute clearly extends the Federal priority in bankruptcy proceedings to assignment proceedings, and, inasmuch as the priority in bankruptcy does not include post-bankruptcy interest (City of New York v. Saper, supra), so the priority in assignment proceedings does not include post-assignment interest.

A similar disposition must be made of the New York claim. We have already referred to the general common-law rule, which stops interest at the date of the assignment. Moreover, a comparison of the related New York assignment statutes and the Federal Bankruptcy Act indicates that they are closely parallel. Under the Bankruptcy Act the United States, as well as a State or political subdivision thereof, is given priority among creditors after payment of costs, expenses and wage claims (U. S. Code, tit. 11, § 104), and under the New York statutes, the State enjoys an analogous priority but after the United States (Debtor and Creditor Law, §§ 22, 23; Labor Law, § 574). The similarity of the Federal and State statutes as to provable debts may also be notéd (U. S. Code, tit. 11, § 103; Debtor and Creditor Law, § 13). Precisely as did the United States with respect to bankruptcy, as indicated in the Saper case (supra), so has New York indicated that as to post-assignment interest it is to be treated on a par with other creditors. (See United States Fidelity & Guar. Co. v. Carnegie Trust Co., supra; People v. American Loan & Trust Co., supra; Matter of People [Norske Lloyd Ins. Co.], supra.)

The argument of the respondent State of New York that section 574 of the Labor Law makes absolute and mandatory the payment of post-assignment interest is not persuasive. This statute does not allow post-assignment interest; it simply provides that the State’s priority as to unemployment insurance contributions includes “ any ” interest on said contributions to which the State may be entitled. As to contributions due up to the date of the filing of the assignment, the State is entitled to interest to the time of filing; as to contributions thereafter due ”, no interest is allowable. The use of the words “ any interest * * * thereon ” is clear recognition that all of the contributions referred to in section 574 do not bear interest, as, for example, contributions which have accrued in part before the filing of the assignment but are not due until after such filing. Finally, statutes making interest a part of the “tax (such as Labor Law, § 570, where interest at 9% is allowed; U. S. Code, tit. 26, § 1420, subd. [b]; § 1627) are given due effect by-allowing interest to the time of filing the assignment; thereafter the general rule as to post-assignment interest prevails' in the absence of any statute expressly providing for such interest.

The rationale of the authorities hereinbefore cited is sound; they follow the long-established common-law rule, since no statute provides for the payment of post-bankruptcy or post-assignment interest; they harmonize the rules in bankruptcy and assignment proceedings; and they achieve a result that is just, fair and equitable. To allow post-assignment interest on tax claims at variable and substantial rates to run on throughout the course of a lengthy assignment proceeding, and thereby consume all or much of the funds available, to the detriment of the other creditors, is in accord with neither law nor equity.

Accordingly, the order of the Appellate Division should be reversed, and the orders of Special Term affirmed, with costs in this court and in the Appellate Division.

Loughbaw, Ch. J., Lewis, Cowway, Desmowd, Dye and Fuld, JJ., concur.

Ordered accordingly.


author: Loughran, Ch. J.

text:
    Thomas J. Bata et al., Appellants, v. Jan A. Bata, Respondent.
    Submitted January 15, 1951;
    decided March 8, 1951.
   Loughran, Ch. J.

In this action, the plaintiffs demand judgment (1) directing the defendant to turn over to them a rather large number of written instruments each of which apparently evidences a proportionate interest in the assets of one or more of an assemblage of companies located in foreign countries; and (2) directing the defendant to account to the plaintiffs for dividends, income and profits produced by such securities. The documents so demanded are said to have been owned in his lifetime by Thomas Bata whose sole heirs the plaintiffs claim to be. None of the parties to this litigation resides in the United States.

The plaintiffs applied ex parte for an order of arrest pursuant to section 827 of the Civil Practice Act. Special Term granted that motion and thereafter the defendant was imprisoned in the New York County Civil Jail. He then moved under section 844 of the Civil Practice Act for an order vacating the order of arrest and, after denial of that motion, he appealed to the Appellate Division where (1) the order of denial was reversed “ on the law and the facts and in the exercise of discretion ”; (2) the order of arrest was vacated; and (3) the plaintiffs were granted leave to appeal to this court upon the following questions certified:

1. Does the Court of Appeals have jurisdiction to review the order of this Court reversing upon the facts and the law and in the exercise of discretion, the order of Special Term denying defendant’s motion to vacate the ex parte order of arrest made by Special Term and granting said motion?

“2. If the answer to question No. 1 is Yes ’, then did the Appellate Division err in reversing the order of Special Term denying defendant’s motion to vacate the ex parte order for his arrest and in granting the motion? ”

The order whereby the Appellate Division vacated the arrest is not a final determination. Hence this appeal to us is authorized only by the order permitting it and only within the limits of the two questions therein certified (Civ. Prac. Act, § 589; Holmes v. McCrory, 234 N. Y. 532; Morris Plan Ind. Bank of N. Y. v. Gunning, 295 N. Y. 640).

The first question certified — whether this court has jurisdiction to review the order whereby the Appellate Division vacated the arrest — could not possibly have been decisive of the correctness of the determination of that court. Hence we cannot answer the first question certified (Civ. Prac. Act, § 589, subd. 3, par. [b]).

The second question certified is so fashioned as to make an answer thereto turn on an antecedent affirmative answer to the now unavailing first question. Even so, the second question, we think, can be interpreted as posing only the separate issue whether the Appellate Division here had power to deny the provisional remedy of arrest to the plaintiffs. As so interpreted, however, the second question may be answered by us only if that question determines as matter of law whether the remedy of arrest should be granted or denied (Braunworth v. Braunworth, 285 N. Y. 151, 154). But in an equity case the remedy of arrest is discretionary (Civ. Prac. Act, § 827) and, as the present order of the Appellate Division makes plain, its refusal of that remedy rested upon a permissible exercise of discretion.

Thus we find ourselves without power to answer either of the two questions certified and consequently we dismiss this appeal upon the defendant’s motion for that relief. Motion granted and appeal dismissed, with costs and $10 costs of motion.

Lewis, Conway, Desmond, Dye, Fuld and Froessel, JJ., concur.


text:
    In the Matter of Jule Fink, Appellant, against Ashley T. Cole et al., Constituting the Racing Commission of the State of New York, et al., Respondents. In the Matter of Jule Fink, Appellant, against The Jockey Club, Respondent. Ashley T. Cole et al., Constituting the Racing Commission of the State of New York, Interveners, Respondents.
    Argued January 16, 1951;
    decided March 8, 1951.

      Charles H. Tuttle and Bernard Segal for appellant.
    I. Section 7512 of the Unconsolidated Laws, in purporting to delegate to The Jockey Club the power to act as a public officer and to exercise the licensing and taxing power of the State, including the power to forbid the use and enjoyment of property, occupation and liberty, violates the State and Federal Constitutions because government and its licensing power cannot be delegated to The Jockey Club, a private corporation. Moreover, as a private corporation, the club cannot constitutionally be constituted a public officer. (Fox v. Mohawk & Hudson Riv. Humane Soc., 25 App. Div. 26, 165 N. Y. 517; Carter v. Carter Coal Co., 298 U. S. 239; Schechter Poultry Corp. v. United States, 295 U. S. 495; State v. Crawford, 104 Kan. 141; Ames v.
      Port Huron Log Driving & Booming Co., 11 Mich. 139.) II. Section 7512 is also unconstitutional because it empowers The Jockey Club, a private corporation, to exact taxes and excises in unstated amounts from the applicant owners, trainers and jockeys, and to use proceeds therefrom for its own purposes. It also is unconstitutional as a delegation of the power to “ fix ” the rates of taxes or excises on owners, trainers and jockeys, and therefore also to fix the taxing policy of the State. It also is unconstitutional as an appropriation of an annual “ contribution ” of $15,000 to The Jockey Club for a longer period than two years. (Gautier v. Ditmar, 204 N. Y. 20; Fox v. Mohawk & Hudson Riv. Humane Soc., 25 App. Div. 26, 165 N. Y. 517; People ex rel. Einsfeld v. Murray, 149 N. Y. 367; Matter of Mollenhauer, 257 App. Div. 286; Franc v. Davidson, 155 Misc. 382; N. Y. Const., art. VII, §§ 7, 8.) III. As an attempted delegation of legislative power, the provision in section 7512 of the Unconsolidated Laws that “ for the purpose of maintaining a proper control over race meetings ”, The Jockey Club may grant or refuse licenses to owners, is void, illegal and unconstitutional in that it prescribes no conditions at all for the granting or refusal of such licenses, and in that it prescribes no stated, clear and ascertainable standards and requirements for controlling the action and determination of this private corporation, or for protecting the civil rights and property rights of the owner. Moreover, since this plenary delegation is to a private corporation which has, and the members and officers of which also have, private and pecuniary interests, nonclub members are thereby denied due process of law and the equal protection of the laws. (Matter of Merritt v. Swope, 267 App. Div. 519; Darweger v. Staats, 267 N. Y. 290; People v. Klinck Packing Co., 214 N. Y. 121; Panama Refining Co. v. Ryan, 293 U. S. 388; Matter of Levine v. O’Connell, 275 App. Div. 217, 300 N. Y. 658; Matter of Lyons v. Prince, 281 N. Y. 557; Matter of Small v. Moss, 279 N. Y. 288; Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184; Brown v. University of State of N. Y., 242 App. Div. 85, 266 N. Y. 598.)

      Martin A. Schenck, Harold G. McGollom, John W. Burke, Jr., and John H. Barber for The Jockey Club, respondent in both proceeding’s.
    I. Petitioner has no constitutional right to run race horses, or to have a license to run race horses, for purses and on the tracks of others, particularly where there has been a unanimously confirmed factual finding of disqualification. (Corrigan v. Coney Is. Jockey Club, 2 Misc. 512; People ex rel. Sturgis v. Fallon, 152 N. Y. 1; Grannan v. Westchester Racing Assn., 153 N. Y. 449; Madden v. Queens Co. Jockey Club, 296 N. Y. 249.) II. Appellant is estopped from attacking section 7512 of the Unconsolidated Laws in regard to his hearing before the Joint Board (as to 1949) and in regard to the denial of his license (as to 1950) by The Jockey Club. Furthermore, the questions urged are not within the limits of either article 78 proceeding. (Grannan v. Westchester Racing Assn., 153 N. Y. 449; Molloy & Co. v. Berkshire, 143 F. 2d 218; Atkins v. Hertz Drivurself Stations, Inc., 237 App. Div. 31; United Fuel Gas Co. v. Railroad Comm, of Ky., 278 U. S. 300.) III. Section 7512 of the Unconsolidated Laws was validly enacted pursuant to the constitutional mandate and is appropriate to prevent such offenses as appellant’s against section 9 of article I of the Constitution. (People ex rel. Sturgis v. Fallon, 152 N. Y. 1; People ex rel. Lawrence v. Fallon, 152 N. Y. 12; Grannan v. Westchester Racing Assn., 153 N. Y. 449; Matter of Trosk v. Cohen, 262 N. Y. 430; Nebbia v. New York, 291 U. S. 502.) IV. Section 7512 is not invalid as failing to prescribe standards for granting licenses to horse owners or as improperly delegating legislative functions to a private corporation; nor is Rule of Racing 34 (a) vague or invalid in its application to appellant’s book-making and gambling connections. (Grannan v. Westchester Racing Assn., 153 N. Y. 449; Matter of Bell v. Board of Regents of Univ. of State of N. Y., 295 N. Y. 101; Interstate Commerce Comm. v. Illinois Central R. R. Co., 215 U. S. 452; Douglas v. Noble, 261 U. S. 165; Bourjois, Inc., v. Chapman, 301 U. S. 183; People ex rel. Lieberman v. Vandecarr, 175 N. Y. 440, 199 U. S. 552; Matter of Mandel v. Board of Regents of Univ. of State of N. Y., 250 N. Y. 173; Matter of Elite Dairy Products v. Ten Eyck, 271 N. Y. 488.)

      Nathaniel L. Goldstein, Attorney-General (John P. Powers and Wendell P. Brown of counsel), for Joint Board and another, respondents.
    I. The utilization by the Legislature of The Jockey Club as a part of the administrative scheme for the regulation of horse racing in this State was appropriate and involved no violation of the State or Federal Constitutions. (Madden v. Queens Co. Jockey Club, 296 N. Y. 249; Grannan v. Westchester Racing Assn., 153 N. Y. 449; People v. Nicchia, 224 N. Y. 637, 254 U. S. 228; People ex rel. State Bd. of Charities v. New York Soc. for Prevention of Cruelty to Children, 161 N. Y. 233; People ex rel. Westbay v. Delaney, 73 Misc. 5, 146 App. Div. 957.) II. The statutory command that the reviewing body, the Joint Board, be composed of three members of the Racing Commission and two disinterested stewards of The Jockey Club deprived appellant of no constitutional rights. (Matter of Merritt v. Swope, 267 App. Div. 519; Hirabayashi v. United States, 320 U. S. 81; People ex rel. Lieberman v. Vandecarr, 175 N. Y. 440, 199 U. S. 552; Dennis v. United States, 339 U. S. 162; United States v. Wood, 299 U. S. 123; National League of Comm. Merchants v. Hornung, 148 App. Div. 355.)
   Lewis, J.

An appeal in each of the two proceedings captioned above presents for our decision a challenge to the constitutionality of section 7512 of McKinney’s Unconsolidated Laws (L. 1926, ch. 440, § 9-b, added by L. 1934, ch. 310, § 5, as amd.) which purports to delegate to The Jockey Club, a private corporation, certain powers which the appellant asserts the Legislature may not delegate within the framework of the Federal and State Constitutions. The statute challenged reads as follows:

“ § 7512. Licenses for participants and employees at race meetings.

1. For the purpose of maintaining a proper control over race meetings conducted pursuant to section seven of this act [Unconsol. Laws, § 7508], the Jockey Club shall license owners, trainers and jockeys at running races and the National Steeplechase Association shall license owners, trainers and jockeys at steeplechases and hunts. They shall also license such other persons exercising their occupations or employed at race meetings held pursuant to this act as the state racing commission may, by rule or regulation, determine. The state racing commission shall fix the license fees to be paid by,persons or corporations so licensed, which fees shall be paid to the Jockey Club or National Steeplechase Association upon the issuance of each such license, and no such license shall be valid until the receipt of such fee shall be endorsed thereon by the Jockey Club or National Steeplechase Association. Each such license unless revoked by the Jockey Club or National Steeplechase Association for cause shall be for the period of one year from April first of the year in which the same shall be issued. From the proceeds of such license fees, the Jockey Club and National Steeplechase Association together shall be entitled to retain annually the sum of fifteen thousand dollars for the payment of reasonable expenses in issuing such licenses and collecting such fees, and for contribution toward the expenses of the breeding bureau of the Jockey Club. On or before December first, annually, they shall file with the state racing commission a detailed statement of all such license fees indicating the amount thereof and from whom collected, and shall pay to the commission for the use of the state the balance, if any, in excess of the amount which they are authorized by this section to retain for the purposes specified herein. All officials connected with the actual conduct of racing, appointed by the Jockey Club, National Steeplechase Association or the associations or corporations licensed by the commission, shall be approved by the state racing commission.

2. No such license shall be revoked unless such revocation is made at a meeting of the Jockey Club or National Steeplechase Association or of the stewards thereof. The failure of the Jockey Club or National Steeplechase Association to act upon an application for a license within fifteen days shall be deemed a refusal of the license. Upon the application to the state racing commission of a person whose license has been refused or revoked, made within thirty days after service by mail on such person of a notice of such refusal or revocation, such person shall be entitled to a prompt hearing before a joint session of the state racing commission and two stewards of the Jockey Club or National Steeplechase Association who did not participate in the refusal or revocation of such license by such Club or Association, which joint session, acting as a board, shall take final action thereon.

“ 3. The state racing commission and two stewards of the jockey club or national steeplechase association, at a joint session and, acting as a board, shall have the power to suspend and/or revoke any license granted under this section after giving the licensee a reasonable opportunity to be heard.” (Emphasis supplied.)

Insofar as appears from the records before us The Jockey Club’s corporate charter has at no time empowered it to grant licenses of any kind. The only authority for the licensing power exercised by The Jockey Club came with the enactment of section 5 of chapter 310 of the Laws of 1934, which added to chapter 440 of the Laws of 1926, a new section 9-b which (as amd. by L. 1935, ch. 613; L. 1939, ch. 837, and L. 1947, ch. 196) is now section 7512 of the Unconsolidated Laws (quoted supra). Under authority which had its origin in that statute (L. 1934, ch. 310, § 5, as amd.), The Jockey Club, a private corporation, for the purpose ■— as declared by the Legislature — of “ * * * maintaining a proper control over race meetings conducted pursuant to section seven of this act [Uneonsol. Laws, § 7508] ” was authorized to “ license owners, trainers and jockeys at running races * * *.” Under section 7508 id. the Legislature provided further that “ Every such license shall contain a condition that all running races or race meetings conducted thereunder shall be subject to the reasonable rules and regulations from time to time 'prescribed by the Jockey Club, a corporation organised under the laws of the state of New York * * *.” (Emphasis supplied.) The rules prescribed by The Jockey Club are known as the “ Rules of Racing ” of which Rule 34 ”, bearing the caption “ Powers of the Stewards of The Jockey Club ”, provides in part as follows:

(< 34.(a) The Stewards of The Jockey Club shall have power, at their discretion, to grant licenses to Owners, Trainers and Jockeys and to such other persons, exercising their occupations or employed at race meetings as the State Racing Commission may determine to require a license from The Jackey Club; and such Stewards may revoke or suspend such licenses in accordance with the then existing laws of the State of New York. Every such license issued by The Jockey Club shall provide that the licensee shall comply with the Rules and Regulations of the Commission and these Rules of Racing, and that violation thereof may be punished by fine, suspension of the privileges accorded thereby, or revocation of the license. No license shall be issued by said Stewards to a person shown to the satisfaction of said Stewards to he engaged, or to have been engaged in practices detrimental to the best interests of racing, including hook-making or pool-selling, or to anyone so shown to be or to have been connected with any such person in any such practice, provided that, in cases in which the Stewards shall find that such occupation or connection has ceased for a sufficiently long period of time, they may, in their discretion, issue such license. Nor shall a license be issued by said Stewards to a person so shown to be undesirable or financially irresponsible or otherwise unqualified.

(b) Upon application to the State Racing Commission of a person whose license has been refused or revoked, made within such period as may be prescribed by the then existing laws of the State of New York, such person shall be entitled to a prompt hearing before a joint session of the State Racing Commission and two Stewards of The Jockey Club in accordance with said laws, which joint session, acting as a board, shall take final action thereon.

“ The State Racing Commission and two Stewards of The Jockey Club at a joint session, and acting as a board, shall have the power to suspend and/or revoke any license granted under Rule 34(a) after giving a licensee a reasonable opportunity to be heard * * (Emphasis supplied.)

It thus appears that for the declared purpose of maintaining a proper control over race meetings within the State, the Legislature by sections 7512 and 7508 of the Unconsolidated Laws (supra) has delegated to The Jockey Club the power to license horse owners, trainers and jockeys at running races and, as an incident to that licensing power and under subdivision (a) of rule 34 of The Jockey Club’s “ Rules of Racing ”, the stewards of that club are authorized to grant such licenses “ at their discretion ”. In fact, in the exercise of the broad discretion vested in them in the issuance of licenses — essentially a sovereign power — the stewards are officers of The Jockey Club who are neither chosen by, nor responsible to the State government. They are not sworn as public officers, nor are they removable as such.

The respondents rely chiefly upon Grannan v. Westchester Racing Assn. (153 N. Y. 449). There this court ruled that the Westchester Racing Association could lawfully exclude from its track the plaintiff who admitted he had bribed a jockey and had thereby violated one of the association’s rules. In that case, however, the Westchester Racing Association was licensed pursuant to statute (L. 1895, ch. 570) by the State Racing Commission — a governmental administrative body — rather than by a private corporation such as The Jockey Club. Accordingly, that case can hardly be invoked as authority for a view contrary to that indicated herein.

We are told that benefits of great worth to the maintenance of proper control over race meetings and to the improvement of the breed of horses have been derived from action by The Jockey Club. Even assuming that fact we are mindful that * * * nothing is more certain than that beneficent aims, however great or well directed, can never serve in lieu of constitutional power.” (Carter v. Carter Coal Co., 298 U. S. 238, 291.)

In our view the delegation by the Legislature of its licensing power to The Jockey Club, a private corporation, is such an abdication as to be patently an unconstitutional relinquishment of legislative power in violation of section 1 of article III of the Constitution of this State which provides: The legislative power of this State shall be vested in the Senate and Assembly.” (See Fox v. Mohawk & Hudson Riv. Humane Soc., 25 App. Div. 26, 33, affd. 165 N. Y. 517, 524, 528; Carter v. Carter Coal Co., supra, p. 311; Schechter Poultry Corp. v. United States, 295 U. S. 495, 537; Rouse v. Thompson, 228 Ill. 522, 536; State v. Crawford, 104 Kan. 141,143; Baughn v. Gorrel & Riley, 311 Ky. 537; Wagner v. City of Milwaukee, 177 Wis. 410, 418.)

Even if the Legislature’s power to license had been delegated to a governmental agency, the statute now challenged would have to be stricken down for lack of guides and proper standards. (Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184, 191-192; Matter of Small v. Moss, 279 N. Y. 288, 299.)

The order of the Appellate Division confirming the determination by respondents refusing the petitioner’s application for an owner’s license for the year beginning April 1, 1949, should be reversed and the determination of the Joint Board annulled, with costs in this court and in the Appellate Division. The order of the Appellate Division dismissing the petitioner’s application for the annulment of a determination by the stewards of The Jockey Club made March 9,1950, should be reversed and the determination of The Jockey Club annulled, without costs.

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

Ordered accordingly.

         Appellant Fink instituted under article 78 of the Civil Practice Act the two proceedings which are the subject of the present appeals: The proceeding first captioned above is concerned with a determination by a “joint board” ■— comprising two members of The Jockey Club and three members of the State Racing Commission — made during 1949, which upheld the refusal of The Jockey Club to issue to appellant a license to run his horses at race meetings in this State during that year. The second proceeding concerns the subsequent refusal of The Jockey Club to consider appellant’s application for a similar license for the year 1950 pending the determination of the first ease. The parties stipulated that both proceedings were to he transferred to the Appellate Division, which court unanimously confirmed without opinion the decision of the Joint Board in the first proceeding and dismissed the petition in the second proceeding on the law. The appeals to this court are taken as of right on constitutional grounds.

       “ The Jockey Club ” was incorporated in 1894, pursuant to chapter 213 of the Laws of 1891. That statute provides:
      “An Act to provide for the formation of corporations for improving the breeds of domestic animals. * * *
      “ Section 1. Five or more persons of full age, citizens of the United States and a majority of them residents of this state, may become a corporation for the purposes of investigating, ascertaining and keeping a record of the pedigrees of any kind of domestic animals, and of instituting, maintaining, controlling and publishing a stud book, herd book or book of registry of such kind of domestic animals, in the United States of America and Canada, and of promoting and holding exhibitions of such animals, and generally for the purposes of improving the breed thereof; by making, acknowledging and filing a written certificate, stating the name by which the corporation shall be known, its particular objects and purposes, which shall be one or more of the purposes hereinbefore specified, the number of directors not less [sic] three nor more than twenty-one who shall manage its affairs * * *.
      “2. Such corporation may, by its by-laws not inconsistent with law, define the terms and qualifications upon which entries shall be made in such book of registry, stud book or herd book, and of controlling, passing upon and admitting or rejecting all applications for the making of entries therein, for the admission, suspension and expulsion of members, for the number and election of its officers and the defining of their duties, the time and place for the election thereof, and the manner in which any vacancy in any office of the corporation shall be filled, and generally for carrying out its corporate purposes. Such corporation may from time to time, alter, modify or change such by-laws, but not so as to be inconsistent with law.
      “3. This act shall take effect immediately.”