text:
    In the Matter of Max Lehman, Respondent, against Walter G. Ostrovsky, Defendant, and All-Asia Products Corporation, Appellant.
    (Submitted March 22, 1934;
    decided April 17, 1934.)

      David Bay Bernstein for appellant.
    The order directing arbitration was unwarranted as to appellant. (Pro
      ducers Mercantile Co. v. Palmer & Pierce, 195 App. Div. 523; Matter of Gresham & Co., 202 App. Div. 211; Matter of Universal Film Exchanges, Inc., v. King, 144 Misc. Rep. 708; Duffy Co. v. Todebush, 157 App. Div. 688; Catskill Nat. Bank v. Dumary, 206 N. Y. 550; Gates v. McKee, 13 N. Y. 232; Belloni v. Freeborn, 63 N. Y. 383; Smith v. Molleson, 148 N. Y. 241; Evansville Nat. Bank v. Kaufmann, 93 N. Y. 273; American Rattan Co. v. Cone, 190 N. Y. Supp. 782; Guardian Trust Co. v. Peabody, 122 App. Div. 648; 195 N. Y. 544; Hamilton Trust Co. v. Shevlin, 156 App. Div. 307; 215 N. Y. 735.)

      Charles C. Lamm for respondent.
    The construction placed by the trial court upon the contract was just and proper. (Matter of Marchant v. Mead-Morrison Mfg. Co., 226 App. Div. 397; 252 N. Y. 284.)
   Pound, Ch. J.

Petitioner trades in furs in New York city. All-Asia Products Corporation is a domestic corporation located in New - York city. A contract was entered into, for the account of Walter G. Ostrovsky, a foreign seller, between All-Asia Products Corporation, importers, and Max Lehman, buyer, for the purchase of 2,000 Raw Western Yellow Marmot skins to be shipped from China. The contract provides:

If merchandise is not up to description same is subject to New York Arbitration under the rules of the American Fur Merchants Association.”

All-Asia Products Corp. guarantees the award, if any.”

A dispute arose. Lehman requested arbitration. The All-Asia Products Corporation refused to arbitrate. Lehman applied to the court for an order compelling it to proceed to arbitration. The motion was granted. The justice granting the order said: “ The facts are not seriously disputed. The principals are a seller in a foreign land represented by an agent here and a buyer here. The arbitration clause is between the principals but f the award is guaranteed ’ by the agent. To construe the agreement as the agent urges would make it binding only on the buyer, for the seller cannot be brought into the jurisdiction without his consent. Taking into consideration all the circumstances the contract must be construed to mean that the agent would arbitrate and pay the award.”

The order was affirmed by a divided court, two justices dissenting.

Appellant contends that appellant never agreed to arbitrate; that the contract to arbitrate was made by the All-Asia Corporation for the account of Ostrovsky and that its agreement to guarantee the award is wrongly construed as an agreement on its part to arbitrate as to the amount of the award. Any other construction is at variance with plain language. No one is under a duty to resort to arbitration unless by clear language he has so agreed.

The orders should be reversed and the motion for arbitration denied, with costs in all courts and ten dollars costs of motion.

Crane, O’Brien, Hubbs and Crouch, JJ., concur; Lehman, J., dissents; Kellogg, J., not sitting.

Orders reversed, etc.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    Oak Hill Country Club, Respondent, v. The Town of Pittsford et al., Appellants.

      (Argued March 14, 1934;
    decided April 17, 1934.)

      Franklin H. Smith for The Town of Pittsford et ah, appellants.
    Section 9 of chapter 549 of the Laws of 1926, as amended, barred the action brought by the plaintiff. (N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165; Scudder v. Mayor, 146 N. Y. 245.) The street improvement proceeding could not be set aside until the proof established that the Town Board had no jurisdiction over all of the locus of the road, and the plaintiff was not entitled to judgment setting it aside as to itself and its land, in the absence of such proof. (Monroe County v. City of Rochester, 154 N. Y. 570; Porter v. Purdy, 29 N. Y. 106; Roderigas v. East River Sav. Institution, 63 N. Y. 460; Hoffeld v. Buffalo, 130 N. Y. 387; Orange County Traction Co. v. Newburgh, 86 Misc. Rep. 512; U. S. Trust Co. v. Mayor, 144 N. Y. 488; People v. Sutherland, 252 N. Y. 86; Hodds v. Inhabitants of Lowell, 19 Pick. 405; Johnson v. Niagara Falls, 230 N. Y. 77; Palmer v. East River Gas Co., 101 N. Y. Supp. 347; United States v. N. Y. & O. S. S. Co., 216 Fed. Rep. 61; Hunt v. Hunt, 72 N. Y. 217; Matter of Skinkle, 221 App. Div. 682.)

      Marvin R. Dye for Harry J. Bareham, as Treasurer of the county of Monroe, et ah, appellants.
    Jurisdiction having been obtained by the Town Board, all errors in the proceeding must be attacked directly by the methods and within the time prescribed by the statutes and cannot be questioned collaterally. (N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165.)

      Percival D. Oviatt for respondent.
    Chapter 549 of the Laws of 1926 gave to the Town Board no power or jurisdiction to improve any area except a street. (Theobold v. L., N. O. & T. Ry. Co., 66 Miss. 279; Sachs v. City of Sioux City, 109 Iowa, 224; Curtin v. Chicago, 262 Ill. 564; People ex rel. Williams v. Haines, 49 N. Y. 587; Tredwell v. Brooklyn, 11 App. Div. 224; Richter v. Mayor, 24 Misc. Rep. 613; Matter of Rhinelander, 68 N. Y. 105; Matter of Cheesebrough, 78 N. Y. 232; Copcutt v. City of Yonkers, 59 Hun, 212.) The area of the road owned by the plaintiff was never and is not now a public highway. (Flack v. Village of Green Island, 122 N. Y. 107; Matter of City of New York [West 172d Street], 171 App. Div. 242; Klug v. Jeffers, 88 App. Div. 246; Lehigh & H. R. R. Co. v. Village of Warwick, 164 App. Div. 55; Holdane v. Village of Cold Spring, 21 N. Y. 474; Niagara Falls Susp. Bridge Co. v. Bachman, 66 N. Y. 261; Newton v. Dunkirk, 121 App. Div. 296.) The Town Board not having acquired jurisdiction, its void proceedings may be attacked collaterally in equity. (National Bank of Chemung v. City of Elmira, 53 N. Y. 49; People ex rel.

      Erie R. R. Co. v. Tax Comm., 246 N. Y. 322; Jex v. Mayor, 103 N. Y. 536; Bruecher v. Village of Port Chester, 101 N. Y. 240; Dale v. City of New York, 71 App. Div. 227; Ross v. Supervisors of Cayuga County, 38 Hun, 20; Van Deventer v. Long Island City, 139 N. Y. 133; People ex rel. D. & H. C. Co. v. Parker, 117 N. Y. 86.) There is no Statute of Limitations which applies. (Ford v. Clendenin, 215 N. Y. 10; Schoener v. Lissauer, 107 N. Y. 111; Miner v. Beekman, 50 N. Y. 337; Galway v. M. E. R. Co., 128 N. Y. 132; N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165; Jex v. Mayor, 103 N. Y. 536; People ex rel. D. & H. C. Co. v. Parker, 117 N. Y. 86; Van Deventer v. Long Island City, 139 N. Y. 133; Diefenthaler v. Mayor, 111 N. Y. 331.)
   Crane, J.

East Avenue Estates, in so far as pertains to this proceeding, are bounded on the east by East avenue and on the other three sides by Kilbourn road, which surrounds them. The Oak Hill Country Club is to the west separated from the estates by the Kilbourn road. The East Avenue Estates is or was a land development in the town of Pittsford, Monroe county, laid out by Grafton Johnson. On October 6, 1922, he filed a subdivision map, called the Herschell map, of his lands, known as East Avenue Estates in the Monroe County Clerk’s office, upon which he designated Kilbourn road by appropriate lines and by name, including within the lines a strip of his land eighty feet wide from X on East avenue to point U, then forty feet wide on the easterly side of the center line, which is identified by the points U, V, S and N, and again eighty feet wide from point N to point B on East avenue. Thereafter Johnson sold lots fronting on said road to divers persons and sold them by reference to the map. This, together with bis acquiescence in the public improvement made in the street, amounted to a dedication thereof to street purposes. (People v. Underhill, 144 N. Y. 316.) The part of the road which narrowed to forty feet was in front of the Qak Hill Country Club. In other words, its property adjoined the Kilbourn road at the point where it was forty feet wide.

On the 10th of August, 1926, a petition was presented to the Town Board of Pittsford, signed by Johnson and others, wherein the Board was asked to improve Kilbourn road by the construction thereon of a pavement thirty feet in width with curbs, culverts and other improvements under the authority of sections 1 to 14 of chapter 549 of the Laws of 1926. The Oak Hill Country Club was not one of the petitioners. The petition was granted, the improvement constructed at a cost of $185,650.52, the apportionment and assessment against the Oak Hill Country Club as an adjoining owner being $42,228.68. Upon due notice the Town Board held meetings to hear and determine all objections to the assessments. Bonds were issued payable over a period of years to meet the cost of this improvement, and as each year’s series became due a proportionate amount was charged up to the Oak Hill Country Club against its assessment and will continue to be charged with the maturity of the bonds.

The justice found as a fact that the petition for the improvement and map annexed thereto did not indicate by monument, description or otherwise, whether or not the area thereon designated as Kilbourn road is or is not entirely upon the lands lying to the east of the east" boundary line of the lands of the Oak Hill Country Club, i. e., it did not show that- it was on the club’s property. Another finding states that the club did not discover until September, 1928, that Kilbourn road had been laid out and improved as a public street beyond the line of Johnson’s dedication and partially on its own, the club’s, property.

This proceeding has been brought to remove this assessment as void for want of jurisdiction in the Town Board. The whole proceeding is not to be declared illegal, only that part which relates to the plaintiff’s assessment. In so far as jurisdiction to improve the other portions of Kilbourn road is concerned it is conceded. To the north and to the south Kilbourn road was legally improved under this act of 1926. So as to that portion of the road in front of the club’s property which was not part of it. However, as the club has now discovered that the highway extends partly over on its property it believes the town to have acted without jurisdiction and the assessment apportioned to it to be void. Should we consider for the moment that the Town Board did not have jurisdiction a remedy is provided by the statute for the correction of such an error. Laws of 1926, chapter 549 (McKinney’s Unconsolidated Laws, Supp. p. 175), is an act to provide for the improvement of streets in towns. The Town Board of any town may upon petition of the owners of taxable real property representing a majority of the linear feet of tangible real property fronting or abutting upon any street improve the same at the expense of the abutting owners. Hearings are to be held after notice to all such property owners. After the work is completed and the Town Board has ascertained the total cost, it shall apportion and assess the expenses thereof upon the property fronting or abutting upon the street as specified in the act. Notice of the assessment shall be given. The town board shall meet at the time and place specified in said notice, and shall hear and determine all objections made to said apportionment and proposed assessment.” (§ 9.) Within five days after said hearing the board shall make and file with the town clerk its final assessment. Section 9 (as amd. by Laws 1927, ch. 637) is the one to which we now give attention. “ No action or proceeding shall be maintained to set aside, vacate, cancel, annul, review, reduce or otherwise test or affect the legality or validity of any such assessment unless such action or proceeding shall be commenced within thirty days after the filing of said final assessment-roll with the town clerk.”

No words could be plainer. This action has been commenced to set aside and annul this assessment but not within the time limit. The respondent says that this provision does not apply because the Town Board did not have jurisdiction and that such fact may be shown collaterally at any time, citing People ex rel. Erie R. R. Co. v. Tax Commission (246 N. Y. 322). In the City of Yonkers case (N. Y. C. & H. R. R. R. Co. v. City of Yonkers, 238 N. Y. 165) we held that it was competent for the Legislature to provide a reasonable remedy even to review jurisdictional questions. On page 174 we take up the matter with the opening sentence: “However this may be, the plaintiff cannot succeed in an action like this even though the assessors were without jurisdiction.” We refer to the provisions of the Second Class Cities Law (Cons. Laws, ch. 53), quoting section 165 thereof, wherein the first sentence is approximately the same as that quoted from section 9 above of the act of 1926, chapter 549, as amended. A remedy is then provided to review the jurisdictional objections by application to the Supreme Court within twenty days after confirmation of the assessment. We held this provision binding upon one having notice of the proceeding. The reason for the decision need not be restated. This special reference to jurisdictional objections in section 165 of the Second Class Cities Law, however, was not the rationale of the decision, as the words, no action or proceeding shall be maintained to set aside, vacate, cancel, etc., the assessment or tax would have covered a jurisdictional objection as well as any other illegality. The point is that to a party to the proceeding, one having notice and knowing full well- what is going on, the Legislature has given a remedy to review all defects, even jurisdictional ones, but they must be presented within the time limited or not at all. The Erie Railroad Co. Case (supra), while holding that lack of jurisdiction made an assessment void, decided nothing regarding the requisite remedy to bring up the question. In fact, that case came up on an order of certiorari to review the assessments or a motion to quash the orders.

Note, however, should be taken of the nature of this limitation. It applies to an action or proceeding to set aside the assessment. Whether it would prevent the club from pleading all the facts as a defense in an action or proceeding to collect the tax, we will not consider. (See Loomis v. City of Little Falls, 176 N. Y. 31, p. 34.) Again, we must remember that this in no way affects the title to property. The assessment is on the property but the fee remains just where it always has been, in the Oak Hill Country Club. Property cannot be taken for a public road without an owner’s consent, except by power of eminent domain — condemnation and compensation.

However, we do not hold that the Town Board was without jurisdiction in this street improvement proceeding under the law to which reference has been made. Part of the road in front of the club’s property concededly was a public road. I say concededly, when it might be better to say that the evidence and findings justify the statement that part of Kilboum road in front of the plaintiff’s property had been dedicated by Johnson as a public road. All other portions of the road both to the north and south of East Avenue Estates were a public highway of the town of Pittsford. The town had jurisdiction to improve this road such as it was. The trouble has been caused not for lack of jurisdiction but from including part of the club property in the road. The whole proceeding was not irregular or void; the improvement took in too much road. The plaintiff had notice of the undertaking but apparently was not cognizant of the exact location of its eastern boundary. Because part of the road stretched over this line does not invalidate the action of the Board. These are the errors and mistakes which should be corrected at the hearings; for such a purpose owners receive notice. Even had objection been timely made and Kilbourn road kept off plaintiff’s property, yet this does not lead to the conclusion that the plaintiff’s property would not have been assessed. It fronted and abutted upon Kilboum road, wherever the road was, and thus could be assessed for the improvement of the road confined and located within its proper lines as a public street. The assessment, considering the extent of the improvement, might not have been much less.

The judgments below should, therefore, be reversed and the complaint dismissed, with costs in all courts. (See 264 N. Y. 672.)

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

Judgments reversed, etc.


author: Pound, Ch. J.

text:
    George W. Gass, Respondent, v. Agate Ice Cream, Inc., Appellant, Impleaded with Another.
    (Argued March 21, 1934;
    decided April 17, 1934.)

      Nicholas J. Weldgen for appellant.
    The ordinary measure of damages in tort actions, for unlawful injury to property, is the depreciation in value caused by the unlawful act. (Losei Realty Corp. v. City of New York, 254 N. Y. 41; Reis v. Long Island R. R. Co., 88 App. Div. 611; Hoffman v. Third Ave. Ry., 157 N. Y. Supp. 877; Colonial Motor Coach Corp. v. N. Y. C. R. R. Co., 131 Misc. Rep. 891; Howe v. Johnston, 220 App. Div. 170; Marcus v. Stein, 84 N. Y. Supp. 970; Miller v. Levy, 104 N. Y. Supp. 368; Dillon v. Mundet, 145 N. Y. Supp. 975.) The plaintiff did not show that the value of repairs did not exceed the value of the property at the time of the injury. (Hartshorn v. Chaddock, 135 N. Y. 116; Cashin v. City of New Rochelle, 256 N. Y. 190; Riley v. Continuous Rail Joint Co., 110 App. Div. 787; 193 N. Y. 643; Brooklyn Trust Co. v. City of New York, 109 Misc. Rep. 593; Hamilton Bldg. Co. v. Rapid Transit Subway Constr. Co., 190 App. Div. 363; Mencaccy v. Studebaker Corp., 202 N. Y. Supp. 718; Moore v. Metropolitan St. Ry., 84 App. Div. 613; Susswein v. Bradley Cont. Co., 184 App. Div. 852; Southern Ry. v. Kentucky Grocery Co., 166 Ky. 94.)

      Judson B. Glen for respondent.
    The estimated cost of repairs is the proper measure of damages. (Howe v. Johnston, 220 App. Div. 170; Patane v. State, 114 Misc. Rep. 713; Weiner v. Liberty Bell Ins. Co., 137 Misc. Rep. 43; Lafayette v. Gaffney, 47 Hun, 583; Brooklyn Heights R. R. Co. v. Brooklyn City R. R. Co., 124 App. Div. 896; People ex rel. Third Ave. R. R. Co. v. Tax Comrs., 212 N. Y. 472; Tubiola v. Baker, 225 App. Div. 420; Adirondack Power & Light Corp. v. Evans, 226 App. Div. 490; Matter of City of Rochester [Smith St. Bridge], 234 App. Div. 583; Goodovitch v. Reiss, 129 Misc. Rep. 152.)
   Pound, Ch. J.

The action was brought to recover for damage to plaintiff’s automobile caused by defendants’ negligence. The jury rendered a verdict in plaintiff’s favor for $224. The only question here involved is the proper measure of damage to be applied in this case. We concern ourselves with no other question.

The accident happened in 1932. Plaintiff’s car was a Velie of the year 1925. At the time of the trial the company which manufactured the car had gone out of business. The only evidence of damages offered by the plaintiff consisted of the estimated reasonable cost of repairs. This was objected to as not the proper rule of damages and because it was not shown that the repairs had actually been made. The plaintiff’s proof showed that such estimated cost would be $224, which was the amount of the jury’s verdict. On behalf of the defendant an expert testified that the market value of the car just before the accident was only $100. The jury was not bound to believe the evidence of the appellant’s expert, but no other evidence of value was produced. The amount of the verdict exceeded the value of the car so far as shown by $124. The anomaly is thus presented of a recovery for the estimated cost of repairs in excess of the amount of a recovery in case of a total loss. A rule of damages which produces such a result is obviously unfair.

The damages sustained by an automobile in a collision may be established by showing the reasonable cost of the repairs necessary to restore it to its former condition, although the general rule is that the measure of damages to personal property is the difference between its market value immediately before and immediately after the injury. This rule is subject to the limitation, first, that the cost of repairs must be less than the diminution in market value due to the injury, and secondly, that the repairs must never exceed the value of the automobile itself as it was before the injury. The plaintiff should not benefit by the loss. (Hartshorn v. Chaddock, 135 N. Y. 116; Hintz v. Roberts, 98 N. J. L. 768; Miller v. Pathe Freres, 81 N. J. L. 341; Coffin v. Laskau, 89 Conn. 325, 330; Southern Ry. in Kentucky v. Kentucky Grocery Co., 166 Ky. 94; Robson v. Zumstein Taxicab Co., 198 Ky. 365; Bader v. Marlin, 160 Wash. 460; 78 A. L. R. 914.) Where the automobile is totally destroyed the measure of damages is its reasonable market value immediately before destruction. There can be no recovery beyond such value for mere repairs.

The judgments should be reversed and a new trial granted, with costs to the appellant to abide the event.

Crane, Lehman, O’Brien, Hubbs and Crouch, JJ., concur; Kellogg, J., not sitting.

Judgments reversed, etc.


text:
    Armetta M. Klinke, Respondent, v. Charles Samuels, Appellant.

      (Argued March 2, 1934;
    decided April 17, 1934.)

      Charles Burston for appellant.
    An action upon an absolute guaranty of payment of a bond and mortgage is clearly embraced within the letter as well as the spirit of section 1083-b of the Civil Practice Act. (Vanderbilt v. Schreyer, 91 N. Y. 392; Hochstein v. Schlanger, 150 App. Div. 124; 208 N. Y. 513; Robert v. Kidansky, 111 App. Div. 475; 188 N. Y. 638.) The provisions of section 1083-b of the Civil Practice Act do not impair the obligations of the contract between the plaintiff and the defendant in violation of section 10 of article I of „ the Constitution of the United States. (Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398; Sliosberg v. N. Y. Life Ins. Co., 244 N. Y. 482; People ex rel. Durham Realty Corp. v. La Fetra, 230 N. Y. 429; Sturges v. Crowinshield, 4 Wheat. [U. S.] 122; 810 West End Ave., Inc., v. Stern, 230 N. Y. 652; 258 U. S. 242; Levy Leasing Co. v. Siegel, 230 N. Y. 634; 258 U. S. 242; Clemilt Realty Co. v. Wood, 230 N. Y. 646; Guttag v. Schatzkin, 230 N. Y. 647; People ex rel. Brixton Operating Corp. v. La Fetra, 230 N. Y. 429; Block v. Hirsh, 256 U. S. 135.)

      Winston E. Barrow for respondent.
    An action upon an absolute guaranty of payment of a bond and mortgage given by an independent obligor for a separate consideration is not within the provisions of section 1083-b of the Civil Practice Act. (Vanderbilt v. Schreyer, 91 N. Y. 392; Allen v. Rightmere, 20 Johns. 365; Winchell v. Doty, 15 Hun, 1; Barhydt v. Ellis, 45 N. Y. 107; Wood v. Tunnicliff, 74 N. Y. 38.) To extend the provisions of section 1083-b of the Civil Practice Act to an action of the nature here involved would be an impairment of the obligations of the contract between the plaintiff and defendant, and violative of the provisions of article I, section 10, of the Constitution of the United States. (Barnitz v. Beverly, 163 U. S. 118; Edwards v. Kearzey, 96 U. S. 595; Satterlee v. Matthewson, 2 Pet. 380; Bronson v. Kinsie, 1 How. [U. S.] 311; Dobbins v. Los Angeles, 195 U. S. 223; Lawton v. Steele, 152 U. S. 133; Connolly v. Union Sewer Pipe Co., 184 U. S. 540.)
   Crane, J.

The Appellate Division has certified to us the two following questions:

“1. Is an action upon an absolute guaranty of payment of a bond and mortgage given by an independent obligor for a separate consideration within the provisions of Civil Practice Act, section 1083-b?

“ 2. Do the provisions of Civil Practice Act, section 1083-b impair the obligations of the contract between the plaintiff and the defendant in violation of article I, section 10, of the Constitution of the United States?”

Last year the Legislature passed chapters 793 and 794 of the Laws of 1933 to meet conditions which had arisen in the mortgage field due to financial stringency and depression. In effect these stayed temporarily foreclosure and legal action to recover the indebtedness, provided interest and taxes were paid. Section 1077-a, added to the Civil Practice Act, related to the mortgage foreclosure, and section 1077-b to an action on the debt. The stay was to be effective until July 1, 1934, and not longer. Foreclosure was not stayed or in any way prevented where default occurred in payment of interest or taxes, but by chapter 794 abuses growing out of the recovery of deficiency judgments were alleviated. Section 1083-a, added to the Civil Practice Act, reads in part: Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the party liable as determined by the judgment with interest, plus the amount owing on all prior liens and encumbrances with interest, plus costs and disbursements of the action including the referee’s fee and disbursements, less the market value as determined by the court or the sale price of the property whichever shall be the higher.” Section 1083-b relates to actions at law on the indebtedness. It reads in part: “ In any action * * * commenced * * * to recover a judgment for any indebtedness secured by a mortgage on real property and which originated simultaneously with such mortgage and which is secured solely by such mortgage, against any person or corporation directly or indirectly or contingently liable therefor, any party against whom a money judgment is demanded, shall be entitled to set off the fair and reasonable market value of the mortgaged property less the amounts owing on prior liens and encumbrances.”

This last section is the one now before us. The 127th Street Building Corporation executed and delivered its bond and mortgage to the plaintiff in the sum of $10,500 on June 11, 1926, the amount becoming due June 11, 1929. On the same day that these instruments were given, the defendant guaranteed in writing the payment of the principal and interest, stipulating, In the event that the-principal and interest of the mortgage is paid by me in full, the said mortgage is to be assigned to me.” The indebtedness was the bond of the mortgagor, the security was the mortgage, and the guaranty was a liability contingent on the debtor’s default. This was all one transaction.

The default having occurred, this action has been brought against the guarantor who desires to plead the relief given him by section 1083-b of the Civil Practice Act, which is, that judgment be limited to the difference between the amount due and the value of the mortgaged property. The Special Term granted the motion of the defendant to plead this defense but the Appellate Division has denied it on the ground that this section does not cover the case.

That the mortgagor-maker of the bond comes within the section is not questioned, so likewise do those “ directly or indirectly or contingently liable therefor.” To this latter class belongs the defendant. This action is brought to recover a judgment for an indebtedness secured by a mortgage on real property. So reads the statute. It is brought against one contingently liable therefor, the guarantor, whose liability, called indebtedness, originated simultaneously with the mortgage. Only by so reading the section could it ever apply to a person contingently liable for such a mortgage indebtedness. That section 1077-b uses the words, “ upon a guaranty of any obligation secured by such mortgage,” whereas section 1083-b says, any person or corporation directly or indirectly or contingently hable therefor,” does not indicate an intention of the Legislature to exclude a guarantor from the benefit of the latter section.

Any other interpretation would lead to strange results. Should the defendant pay in full he could not, although subrogated to the mortgagee’s rights, recover from the mortgagor either in foreclosure or on the bond more of a deficiency than that provided in sections 1083-a and 1083-b. Again, if he had been made a party defendant in an action to foreclose the mortgage as he might have been (Civ. Prac. Act, § 1079, subd. 1, par. 7) any deficiency judgment entered up against him as it could have been (Vanderbilt v. Schreyer, 91 N. Y. 392; Hochstein v. Schlanger, 150 App. Div. 124; affd., 208 N. Y. 513), would have been limited to the equities as stated in section 1083-a of the amendment. The deficiency judgment by this section is not limited to one against the mortgagor on his bond but includes the party against whom such judgment is sought.”

Whatever inaccuracies in language there may be, we are of the opinion that the Legislature intended to stay actions against guarantors by section 1077-b and to limit deficiency judgments against them by section 1083-b.

As to the constitutionality of these provisions we must remember that the limitation upon the remedy in both or all instances is until July 1, 1934. There being no market for real estate of any kind, and the banks refusing to loan money on the best of real estate security, owners were caught, as it were, in a trap due to conditions over which no one had control and for which no relief was at hand. Value was in the property but the value could not be obtained nor anything like it. To prevent worse and more extensive evils and suffering, the Legislature had asked through these laws, for security holders to wait a reasonable time for universal economic conditions to improve, provided interest and taxes are paid.

After next July all remedies, so far as these present laws apply, will again be open to the mortgage creditors.

That such legislation, reasonably seeking only temporary relief, is not unconstitutional, we may refer to our recent decision in Matter of People (Title & Mortgage Guarantee Co. of Buffalo) (264 N. Y. 69), and Home Building & Loan Assn. v. Blaisdell (290 U. S. 398).

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

The first question certified should be answered “ Yes,” and the second question “ No.”

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

Ordered accordingly.


author: Pound, Ch. J. Crane, J. O’Brien, J.

text:
    George M. Bakker, an Infant, by Simon Bakker, His Guardian ad Litem, et al., Respondents, v. Ætna Life Insurance Company of Hartford, Connecticut, Appellant.
    (Argued March 19, 1934;
    decided April 17, 1934.)

      Daniel Miner and James B. Henney for appellant.
    The endorsement on defendant’s policy was not forbidden by section 109 of the Insurance Law (Cons. Laws, ch. 28). (Brustein v. New Amsterdam Casualty Co., 255 N. Y. 137; Lavine v. Indemnity Ins. Co., 260 N. Y. 399; Hopkins v. Connecticut General Life Ins. Co., 225 N. Y. 76; Matter of Metropolitan Life Ins. Co. v. Conway, 252 N. Y. 449; Dileo v. Eagle Indemnity Co., 263 N. Y. 646.)

      Leo Levy for respondents.
    Section 109 of the Insurance Law expressly prohibits the evasion of liability sought to be accomplished by the defendant. (Weinberg & Holman, Inc., v. Providence Washington Ins. Co., 254 N. Y. 387; Elco Shoe Mfgrs. v. Sisk, 260 N. Y. 100; Coutts v. Kraft & Bros. Co., 119 Misc. Rep. 260; General Investment Co. v. Interborough R. T. Co., 200 App. Div. 794; German Alliance Ins. Co. v. Hale, 219 U. S. 307; Matter of Bean v. Stoddard, 207 App. Div. 276; Atkins v. Hertz Drivurself Stations, Inc., 261 N. Y. 353; Brustein v. New Amsterdam Casualty Co., 255 N. Y. 137; Lavine v. Indemnity Ins. Co., 260 N. Y. 399; Hopkins v. Connecticut General Life Ins. Co., 225 N. Y. 76; Merchants Mut. Automobile Liability Ins. Co. v. Smart, 267 U. S. 126; Kocak v. Metropolitan Life Ins. Co., 144 Misc. Rep. 422.)
   Pound, Ch. J.

I agree with Judge O’Brien that owners of private motor vehicles are free to remain uninsured and that the contract of insurance may restrict its coverage as to time and place and use and as to injuries covered.

However, the owner did not go uninsured. A liability policy was issued and delivered, not limited as above indicated, but limited as to liability. Section 109 of the Insurance Law (Cons. Laws, ch. 28) provides: No such policy shall be issued or delivered in this state on or after July first, nineteen hundred and twenty-four, to the owner of a motor vehicle, by any corporation or other insurer authorized to do business in this state, unless there shall be contained within such policy a provision insuring such owner against liability for damages for death or injuries to person or property resulting from negligence in the operation of such motor vehicle, in the business of such owner or otherwise, by any person legally using or operating the same with the permission, express or implied, of such owner.

" A policy issued in violation of this section shall, nevertheless, be held valid but be deemed to include the provisions required by this section, and when any provision in such policy or rider is in conflict with the provisions required to be contained by this section, the rights, duties and obligations of the insurer; the policyholder and the injured person shall be governed by the provisions of this section.”

The car was driven at the time of the accident with the consent of the owner. The rights, duties and obligations of the insured, the policyholder and the injured person shall be governed by the provisions of this section.”

As we said in Brustein v. New Amsterdam Casualty Co. (255 N. Y. 137, 142): “ The third is an ' additional interest ’ clause aimed to protect the public against the operation of a car by others than the owner, provided they have the owner’s consent, express or implied. The primary purpose of this requirement is to meet the defense in an action on the policy that the owner was not at the time of the accident operating the car personally or by his agent, although it was being operated by a member of his family or another with his consent express or implied.”

The policy attempts to nullify the “ additional interest ” clause as above quoted. When the owner takes out a liability policy, no matter how limited as to coverage, the provisions of section 109 are a part of the contract.

The judgment should be affirmed, with costs.

Crane, J.

(concurring). The Insurance Law, in section 109, among other things provides as follows, with reference to policies of insurance against loss or damage resulting from an accident caused by an automobile: “No such policy shall be issued or delivered in this state on or after July first, nineteen hundred and twenty-four, to the owner of a motor vehicle, by any corporation or other insurer authorized to do business in this state, unless there shall be contained within such policy a provision insuring such owner against liability for damages for death or injuries to person or property resulting from negligence in the operation of such motor vehicle, in the business of such owner or otherwise, by any person legally using or operating the same with the permission, express or implied, of such owner.”

This law is mandatory, and any insurance company which issues a policy without this provision violates the law. Should the provision be omitted, the courts will read into the policy this provision in order to give effect to this salutary regulation. When the contract of insurance is made and the policy is issued it is made in contemplation of this law, which immediately becomes part of it. If this be not so the door is open for fraud, subterfuge and deception. The insurance company may refuse the risk, refuse to issue its policy, but, once having done so, section 109 attaches to it, and the mere failure to recite this provision in the policy will not obviate its effect. If this be so it stands to reason that no agreement between the insurance company and the insured can modify the law. The purpose of t-he provision is apparent. It is made for the benefit of persons injured or suffering damage and not solely for the benefit of the insured. The latter may be one of the reckless impecunious kind, as is so often the case, indifferent to a judgment against him. and execution-proof. In other words, he may have no property to respond to money damage. The Legislature has sought to meet this difficulty by providing that when the insurance company insures an owner of an automobile it must also assume the risk of damage caused by one operating the car with the owner’s consent.

If the insurance policy in this case had contained a clause exempting the insurance company from liability for any damage caused by an automobile driven by the owner’s servant or by a person using it with his consent, clearly it would have been illegal; it would have rendered the statute nugatory and useless. Any agreement which limits the full force and effect of this statute is illegal. To say that the insurance does not cover the instance of the automobile being driven with the owner’s consent unless he also be present, is such an illegal limitation. It is directly contrary to the mandate of the statute. It has the same effect as a provision that the insurance does not cover the instance of any person driving the car with the owner’s consent. This law cannot thus be limited by the agreement of the parties.

Such in effect are the illegal provisions of the policy in question. They have limited this policy to cover cases only where the owner himself is driving the car or he is present in the car with the person who is driving it. What becomes of the law which requires the insurance company to insure against damage caused by one operating the car with the owner’s consent, even when he is not present? It is wiped out by this agreement; the insurance company has undertaken not only to violate the law but to qualify it. The owner is not obliged to insure in all instances nor is any insurance company obliged to issue a policy to everybody making application, but when the policy is once issued and the risk assumed, section 109 of the Insurance Law states specifically what this risk shall be.

An owner may have many cars and may legally take insurance on only one. He may be in business and seek insurance for Ms busmess veMeles and not for Ms pleasure cars. He may be in business in different places and insure a car only when it is used in a particular place or in a particular business. Many are the limitations wMch may be placed upon a risk without violating the law. His consent, even, may have its limitations, for the statute speaks of consent express or implied, and if there be neither of these, then the owner and the insurance company are not hable. Such are the legal limitations found in cases like Lavine v. Indemnity Ins. Co. (260 N. Y. 399); Brustein v. New Amsterdam Casualty Co. (255 N. Y. 137); Coleman v. New Amsterdam Casualty Co. (247 N. Y. 271).

Where, however, the policy is issued to cover the operation of the automobile doing damage there is one specific instance upon wMch no limitation can be placed by agreement, and that is, the operation of the car with the express or implied consent of the owner. If he has consented to the operation of the car at the time and place the insurance company must pay the damage if the owner cannot. TMs mandate of the Legislature takes effect in spite of all exceptions or even in the absence of a recital in the policy of the provisions of section 109.

To my mind the distinction is quite clear between an insurance wMch is limited to car, to place or to business and one which seeks to escape full force and effect of section 109 by excepting the risk on the insured car when operated with the owner’s consent but in his absence.

For these reasons I am for affirmance.

O’Brien, J.

(dissenting). The infant plaintiff, George M. Bakker, was injured through the negligence of the driver of a car belonging to and used with the permission of James D. Ryan and recovered judgment against Ryan for $30,000. The father, Simon Bakker, recovered judgment for $4,000 for loss of services. Ryan is insolvent and, the executions having been returned unsatisfied, this action is brought under section 109 of the Insurance Law against the present defendant as insurer of the car. ■Summary judgment for $10,172.35 in favor of the infant- and $4,000 in favor of his father has been unanimously affirmed and the appeal comes here by leave of this court.

An endorsement on the policy provides: New York State Endorsement. * * * Pursuant to the requirements of Chapters 639 and 534 of the Laws of 1924, State of New York, the insurance provided by this policy against liability for personal injuries or death shall cover the liability of the owner of the motor vehicle therein described for negligence in its operation, in the business of such owner or otherwise, by any person legally using or operating the same with his permission, express or implied, to the extent that liability is imposed upon him by said laws.” By another endorsement on the policy “ it is agreed that the automobiles described herein shall be personally driven only by James D. Ryan or by any person within the age limit provided by the policy when accompanied by such named driver. ’ ’ A third endorsement reads: “ It is further provided that the assured or any other person covered by the policy shall reimburse the company for payments made on account of any accident, claim or suit involving a breach of the terms, provisions or conditions of the policy, which payments the company would not have been obligated to make under the provisions of the policy independently of this endorsement or of the provisions of said article.”

The accident occurred while the car was driven with Ryan's consent, but the person driving it was not accompanied by him. Clearly, therefore, the condition of the second endorsement above quoted was violated. Reading together the three endorsements, the effect is that, under' the circumstances, operation of this car was not covered. The owner is liable without recourse. Unless this agreement is contrary to the law of this State, no redress under section 109 of the Insurance Law is available to plaintiff against this defendant.

We think that the conditions in the endorsements do not violate section 109 of the Insurance Law nor, as far as we can see, any other law of this State. In New York owners of motor vehicles, except those used for hire, are free to remain uninsured. Our Legislature has not yet provided for compulsory insurance. If an owner voluntarily secures indemnity for himself against liability for damages for injuries to person or property, the policy must contain a provision covering negligence by a person operating the vehicle with the owner’s permission. But this provision need not be unrestricted or unqualified. The parties may agree upon the amount and the coverage. They are not obliged to include all personal injuries. (Brustein v. New Amsterdam Casualty Co., 255 N. Y. 137.) There is no reason to infer that the legislative purpose was to compel the insertion in the policy of stricter protection against negligent acts of a driver than of an owner. Under section 109 an injured claimant can obtain from the insurer only such relief as would be due from the insurer to a solvent principal who had satisfied a judgment. (Coleman v. New Amsterdam Casualty Co., 247 N. Y. 271.) Surely Ryan, if he had paid these plaintiffs’ judgments against him, could have no cause of action against this defendant for, under the facts of this case, the policy did not cover him. There was a breach of condition. The conditions and limitations concerning a driver may be reduced to as narrow a compass as those covering the named assured. The parties may restrict coverage in many ways, for example, when the owner’s consent extends only to the use of the car by another in the owner’s business at a particular location or for pleasure. (Lavine v. Indemnity Ins. Co., 260 N. Y. 399.) The owner of an automobile for hire may, by his contract of insurance, restrict its coverage to the use of the car in connection with social functions, shopping trips, touring and similar work and may exclude coverage for operation for hire at stands, hotels, stations, on public highways or other public resorts and provide that the car shall not be used in short haul and trip work at standard fares. In an action under section 109 of the Insurance Law the insurer is not liable for a judgment obtained against the insured for negligence by one driving the car even with the permission of the assured when, in violation of these conditions, he is carrying a passenger picked off the street. (Dileo v. Eagle Indemnity Co., 263 N. Y. 646.) Since these things may be done, we can see no violation of the statute when the consent is limiter! to a time when the owner accompanies the driver. When a car is insured for use only in a limited territory there is no insurance covering its use elsewhere and the owner is not bound by section 109 to provide for indemnity against negligence of one using the car with his permission in another locality. In the case before us the car is covered only when it is occupied by the owner. By the endorsement herein “ the insurance provided by this policy ” covers both the owner and the driver but only when the owner occupies the car. Otherwise no insurance is provided. In his absence, it covers neither one. Both are treated alike. The policy must be deemed limited in amount and coverage as set forth in the contract agreement.” (Lavine v. Indemnity Ins. Co., 260 N. Y. 399, 407.) Under section 109 it is only when insurance exists that the policy must also cover negligence of one driving with the owner’s permission. If a broader policy is desirable it is the function of the Legislature to devise it.

The third endorsement above quoted does not in our opinion constitute an attempt to evade the New York statute. The parties, while recognizing the limited scope of the coverage, apparently were unable to satisfy themselves as matter of law that the courts of this State would exempt the insurer from liability to a third party, even in the event of a breach of condition by the assured and by one driving with the consent of the assured. Therefore, if the insurer shall be compelled to pay a third party when the assured breaches the conditions of the policy, this endorsement constitutes nothing more than an agreement for reimbursement to the insurer.

The judgments should be reversed and the motion denied, with costs in all courts.

Lehman and Crouch, JJ., concur with Pound, Ch. J.; Crane, J., concurs in separate opinion; O’Brien, J., dissents in opinion in which Hubbs, J., concurs; Kellogg, J., not sitting.

Judgment affirmed.


text:
    Scarsdale National Bank and Trust Company, Appellant and Respondent, v. United States Fidelity and Guaranty Company, Respondent and Appellant.

      (Argued March 19, 1934;
    decided April 17, 1934.)

      James H. Hoffnagle and Alexander M. Crane for plain-, tiff, appellant and respondent.
    The Lien Law (Cons. Laws, ch. 33) plainly contemplates that payments upon public works contracts shall be allocated to him whose labor, material or money was used for that particular part of the contract. (Schaghticoke Powder Co. v. G. & J. Ry. Co., 183 N. Y. 306; Giant Portland Cement Co. v. State, 232 N. Y. 395; Anderson v. Hayes Constr. Co., 243 N. Y. 140.) Earned moneys presently payable should go to the assignee bank whose advances earned the funds, and this principle should logically be extended to include all earned moneys. (Arrow Iron Works, Inc., v. Greene, 260 N. Y. 330; Anderson v. Hayes Constr. Co., 243 N. Y. 140; American Radiator Co. v. City of New York, 223 N. Y. 193; Foshay v. Robinson, 137 N. Y. 134; Laski v. State, 217 App. Div. 420; 246 N. Y. 569.)

      Henry E. Stohldrier and Walter W. Westall for defendant, respondent and appellant.
    The surety company’s right of subrogation attaches immediately upon the filing of its bond guaranteeing performance. (Exchange State Bank v. Federal Surety Co., 28 Fed. Rep. [2d] 485.) The surety is first entitled to recoup any losses sustained from retained percentages and money earned before an assignee is entitled to participation. (Prairie State Bank v. United States, 164 U. S. 227; Arrow Iron Works, Inc., v. Greene, 260 N. Y. 330; Maryland Casualty Co. v. Board of Water Commissioners, 66 Fed. Rep. [2d] 730.)
   Crane, J.

On December 2, 1930, the Cook Contracting Company, a partnership, entered into a contract with the Parkway Commission, as a representative of the State, for the construction of a portion of a road in Westchester county. On December 8, 1930, the defendant executed a bond, as surety, to the State, in the sum of $179,000, guaranteeing the completion of the contract by the Cook Contracting Company. Four months later, and ■ on April 8, 1931, the Cook Contracting Company executed an assignment of all moneys due and to become due, under the contract, to the plaintiff. On July 10, 1931, the Cook Contracting Company defaulted on its contract, and on July 28, 1931, the State called upon the defendant, as surety, to complete the contract. At the time of the default the contractor had earned, in addition to the moneys theretofore paid to the assignee, the sum of $10,746.29. The State, through the Comptroller, also had in its possession retained percentages amounting to $3,092.86.

The defendant, pursuant to the demand of the State, completed the contract at a loss of $55,783.59. Is the assignee, the plaintiff, or the bonding company¿ the defendant, entitled to this sum of $10,746.29, the money earned at the time of the default? The courts below have awarded to the defendant the retained percentages, but the Appellate Division, reversing the Special Term, has given the earned moneys to the plaintiff.

The plaintiff, as assignee, could not receive any more money than the contractor was entitled to. In other words, the assignment carried with it all his rights, but nothing more. The contractor and the assignee were both bound by the terms of the contract. The contract entered into between the State and the contractor specifically sets forth by its terms the rights of the parties in the event of a default. It states as follows:

“ Article XXII. If the work to be done under this contract shall be abandoned by the contractor * * * the commission shall thereupon have the power to complete or contract for the completion of the work * * *. The expenses, losses or damages so charged shall in addition to any other indemnification provided for elsewhere in this contract, be deducted and paid by the commission out of such moneys as may be due or may at any time thereafter grow due to the contractor under and by virtue of this contract, or any part thereof.”

After July 10, 1931, when the Cook Contracting Company defaulted, the State could have completed the work and retained all money due to the contractor at the time of the default and apply it to the cost of completion. The deficiency, or loss sustained by the State, would have been an obligation of the bonding company and could have been collected from it by the State. Under these circumstances the assignee would not have been entitled to this sum of $10,746.29. It had no better rights under the contract than the contractor and, if the State, as against the contractor, could apply these earned moneys to the cost of completion, it could do the same thing as against the assignee. In other words, the moneys due at the time of the default, called the earned moneys, could and would be applied by the State in reducing the amount due on the defendant’s bond.

Does it make any difference in the application of these earned moneys that the surety company complied with the demand of the State and completed the job at its own expense? Upon what principle, or, according to what reasoning, would the earned moneys in one instance inure to the benefit of the defendant and not in the other? The answer attempted to be made is, that the assigneebank’s money went into the work and left just so much less to be completed.

The same answer could be made to the State’s claim to the money, had it finished the work. The unsoundness of this answer is apparent when we remember that the bank, or assignee, is bound by the contract with the State and has no superior rights to those given under the contract to the contractor. It is this contract which provides that the State may apply the earned moneys to the cost of completing the work after default. The bank, assignee, takes its assignment subject to this right. Therefore, it is no answer to say as against the State that the money of the bank went into the work and thus reduced the cost of completion. Of course it did, and it became entitled to all moneys due to the contractor at the time of the default, subject to the superior right of the State by its contract with the contractor to apply all earned moneys to the cost of completion.

The bonding company succeeded to all these rights of the .State, under the principle of subrogation. Having completed the work in behalf of the State, it was subrogated to all the rights of the State as against the contractor. This was not a right given to it by the judgment of the court, or arising at the time of the default. It was implicit in its undertaking and agreement with the State. This equitable right of subrogation was created on December 8, 1930, at the time the defendant executed its bond as surety to the State months before the assignment to the bank. The bond was linked up to the contractor’s contract. The performance, which was guaranteed, was the performance of this contract, which had in it the right of the State to apply earned moneys toward completion. Probably the same rights would have existed if article XXII, above quoted, had not been in the contract. However, we are here dealing with the contract which contained the right to retain earned moneys and apply them on the cost of any completed work. To all rights under this contract the bonding company was subrogated. The equity in favor of the surety company arose at the time of the giving of its bond. The right became available when the surety company' completed the work at a loss. (Prairie State Bank v. United States, 164 U. S. 227, at pp. 232, 237, 240.) The equitable lien arose at the time of the execution of the bond and was thus superior to the assignment. (Exchange State Bank v. Federal Surety Co., 28 Fed. Rep. [2d] 485, 488.) This is the reasoning and the rule adopted by the weight of authority. (Maryland Casualty Co. v. Board of Water Comrs., 66 Fed. Rep. [2d] 730, and Lacy v. Maryland Casualty Co., 32 Fed. Rep. [2d] 48; as well as the case of Prairie State Bank v. United States, 164 U. S. 227; Henningsen v. U. S. Fidelity & Guarantee Co., 208 U. S. 404; Hardaway v. National Surety Co., 211 U. S. 552.) We held nothing to the contrary in Arrow Iron Works, Inc., v. Greene (260 N. Y. 330) and Laski v. State (217 App. Div. 420; affd., 246 N. Y. 569).

' For these reasons the judgment of the Appellate Division should be reversed and that of the Special Term affirmed, without costs in this court and in the Appellate Division.

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

Judgment accordingly.


author: Hubbs, J.

text:
    Irving Trust Company, as Trustee in Bankruptcy of Cliffoyd Manufacturing Company, Respondent, v. B. Lindner & Bro., Inc., Appellant.

      (Argued March 23, 1934;
    decided April 17, 1934.)

      Eugene L. Bondy for appellant.
    Where there is a contract to pledge personal property as security for a debt, delivery of the chattel to the creditor at any time before other intervening rights attach thereto validates the pledge as of the time of the agreement to pledge, (Parshall v. Eggert, 54 N. Y. 18; Greeff v. Dieckerhoff, 5 N. Y. Supp. 16; 123 N. Y. 658; Sexton v. Kessler & Co., 225 U. S. 90; Cartwright v. Wilmerding, 24 N. Y. 521; Goldstein v. Busch, 56 Fed. Rep. [2d] 10.) Section 45 of the Personal Property Law (Cons. Laws, ch. 41), as amended by chapter 766 of the Laws of 1931, cannot be construed as destroying a common-law pledge; its intendment is clearly to afford protection to a pledgee not in possession, upon the performance of certain conditions, and not to subtract from the rights of a pledgee in possession. (Psota v. Long Island R. R. Co., 246 N. Y. 388; Transit Commission v. Long Island R. R. Co., 253 N. Y. 345; Heyman v. Kevorkian, 193 App. Div. 859; Woollcott v. Shubert, 217 N. Y. 212.)

      Daniel Levy for respondent.
    Under section 45 of the Personal Property Law, as amended, defendant had no factor’s hen on and after the date of the amendment to the statute. (Matter of Brigham v. City of New York, 227 N. Y. 575; People v. Metropolitan Surety Co,, 211 N. Y. 107; Lemnos Broad Silk Mills, Inc., v. Spiegelberg, 127 Misc. Rep. 855; Freeman v. Freeman, 126 App. Div. 601; Clary v. Fitzgerald, 155 App. Div. 659; Loewy v. Gordon, 129 App. Div. 459; Shoyer v. Wright-Ginsberg Co., 240 N. Y. 223; Hyatt v. Taylor, 42 N. Y. 258.)
   Hubbs, J.

Respondent is the trustee in bankruptcy of the Cliffoyd Manufacturing Company, herein referred to as the bankrupt. Prior to March 3, 1930, the bankrupt conducted the business of selling textile merchandise. On that day it entered into a contract whereby it agreed to give to appellant a lien upon all merchandise manufactured or acquired by it and to assign to appellant its accounts receivable. The contract, in form a letter addressed by appellant to the - bankrupt, referred to appellant as the bankrupt’s “ sole factors.” The bankrupt’s sales were to be made through the “ medium ” of defendant but not by it, the contract specifying that appellant should “at no time be responsible for the making of any contracts- for the sale and purchase ” of the bankrupt’s merchandise “ nor for the prices obtained, nor for the performance of any contracts whatsoever.”

Customers’ credits were to be approved before delivery of merchandise and upon such approval and final acceptance of the merchandise by the customer, appellant was to assume the credit risk for seventy days. Appellant reserved the right to withdraw its approval of orders taken, should the customer become insolvent or bankrupt before the physical delivery of the merchandise and to withdraw its guaranty of the accounts in cases where disputes as to goods, prices, delivery, etc., should not be promptly adjusted by the bankrupt. Appellant was to send out invoices and statements to customers, the accounts were to be payable to it, and it was to receive from the bankrupt payments made to the bankrupt. Appellant was to do the bookkeeping for the bankrupt, render monthly accounts of sales and collections, and pay over to the bankrupt its collections after deducting its expenses and a stipulated commission. Appellant was further to advance upon request of the bankrupt not exceeding seventy-five per cent of the assigned accounts approved by it, less charges. A supplemental agreement was entered into which did not materially change the original. Neither were ever filed nor was any notice of lien as to the merchandise involved ever given as specified in section 45 of the Personal Property Law (Cons. Laws, ch. 41).

Between January 3, 1930, and June 9, 1931, appellant made loans and advancements to the bankrupt. On or about the 10th day of June, 1931, the Cliffoyd Manufacturing Company was adjudicated a bankrupt.

The respondent trustee, under a complaint setting forth thirteen causes of action, seeks to recover of appellant for the value of certain merchandise sold at public auction under a stipulation that the sale should be without prejudice to the rights of the parties and also for the value of merchandise delivered to the appellant within four months prior to the adjudication and subsequent to April 25, 1931, the effective date of an amendment to section 45 of the Personal Property Law. The respondent also seeks to recover collections made by appellant on certain assigned accounts within the four months’ period; also for the credit balance due to the bankrupt by reason of transactions under the contract.

No question is raised on this appeal as to the sufficiency of the first three causes of action set forth in the complaint. The causes of action numbered Fourth ” to “ Eighth,” inclusive, involve merchandise delivered to the appellant and present the question as to whether section 45 of the Personal Property Law, as amended by chapter 766 of the Laws of 1931, which became effective April 25, 1931, prevented the acquisition by the appellant of a lien on that merchandise in view of the fact that it did not file and post the notice required by the statute. The answer to that question depends upon whether the appellant occupied to the bankrupt the relationship which was occupied by a factor to his principal under the common law.

Taking up the question presented by causes of action Fourth ” to “ Eighth ” inclusive, we should first examine section 45 of the Personal Property Law, prior to its amendment by chapter 766 of the Laws of 1931. By that section, prior to the amendment, “ liens upon merchandise or the proceeds thereof created for the purpose of securing the repayment of loans or advances made or to be made upon the security of said merchandise and the payment of commissions or other charges provided for by such agreement ” were not void by reason of want of delivery to or possession on the part of the lienor ” if a notice giving the name of the lienor, the place of business of the lienor, the name of the person creating the lien, the character of the merchandise and the period of ■ time during which loans or advances might be made under the agreement, be posted at the place where the merchandise was located and also filed.

Under that state of the law, the appellant, as to goods not in its possession, would have been protected only by filing and posting the required notice. As to goods in its possession delivered as security for a debt four months prior to an adjudication in bankruptcy, it would have been protected, since it would have occupied the position of a creditor in possession of merchandise of the debtor as security, and such a creditor would have had a common-law lien. (Nagle v. McFeeters, 97 N. Y. 196.)

There is authority also for the conclusion that appellant, as to goods which came into its possession during four months prior to the adjudication in bankruptcy, since it - had, under the agreement, the right to possession, could | have successfully defended its possession as against a trustee in bankruptcy. (Sexton v. Kessler & Co., 225 U. S. 90, citing Parshall v. Eggert, 54 N. Y. 18.)

The respondent, while contending that the appellant is not a common-law factor, but rather a new type of factor for which liens have been created by legislative sanction, concedes that “ the old section by positive inference recognized the validity of a lien upon merchandise in the possession .of this new type of factor without requiring the filing of a notice in the form prescribed.”

Lien rights similar to those contended for by the appellant were clearly recognized by statute and judicial interpretation prior to the enactment of the amendment to section 45. ’■ Whether that amendment imposed upon • appellant a new condition is - the precise question- for , determination.

The amendment does not initiate the procedure for the protection of a lien on merchandise or the proceeds thereof created "by agreement for the securing of loans where the merchandise is not in' the possession of the lienor. Such procedure was set forth in.the act before its amendment and the provisions for" posting and filing have not been changed in any material particular. . The amendment does set forth "with particularity when the notice specified shall have the effect of protecting the lien. Factors may, under the amendment, secure protection by giving the specified notice as to goods pledged with them, whether in their constructive, ■ actual or exclusive occupancy or possession or not.” The term factor, “ wherever used in this section,” that is, the amended section, is defined as including any consignee or consignees, pledgee or pledgees who advance money on goods consigned to, and /or pledged with, them, whether or not such consignees or pledgees are employed to sell such goods.” The section is, by its terms, “ to be construed liberally to secure the beneficial interest and purposes thereof.” It further provides that nothing in this section shall be construed as an abrogation of the lien of a factor at common" law.”

" The amendment as a whole was clearly -intended to amplify and particularize the applicability of the lien created by the original act without taking away common-law rights or rights expressly given by the act before its amendment. It does not follow, however, that the amendment did not have the effect of terminating the value as precedents of decisions by the courts interpreting the original statute as conferring by necessary implication rights not expressly given. The amendment, so far as it indicates the purpose of the Legislature to particularize and amplify the subject covered by the original act, must be construed in the light of the language used, regardless of the fact that because of the absence of such particularization in the original statute, the courts may have implied a contrary intent from the prior expression of the Legislature as evidenced by the original act.

The amendment gives to factors, in cases where the written agreement with the principal so provides, a continuing general lien upon all goods and merchandise pledged with them whether in their possession or not, provided the prescribed notice is given. Section 45, before amendment, dealt only with merchandise not in the factor’s possession, upon which a hen was given provided the notice was posted and the agreement was filed. The amendment gives a hen to factors both upon merchandise in the factor’s possession and merchandise not in the factor’s possession, but only in case the notice is posted and the agreement is filed. The- amendment does not warrant the interpretation that as to the particular hen given, a factor is to have a hen where the goods are in his possession, without giving the prescribed notice,-and unless he would have had a hen at common law, which latter hen, if possessed, is not the hen provided by the amendment.

The appellant, concededly, did not give the notice as prescribed by the statute as to goods which came into its possession after the amendment became effective. The appellant contends that since the act says that the term factor, wherever used in the amendment, shall include a pledgee who advances money on goods pledged with it, whether or not it be employed to sell the goods, and that nothing in the section shah be construed as an abrogation of'the lien of a factor at common law, and since a factor at common law had a hen upon goods in its possession, it must be held that these goods being in its possession and it being a factor within the definition used in the ^section, it must have a common-law lien.

The hen of a factor at common law,” within the meaning of the last clause of the amendment, whether emphasis be placed on the word lien ” or on the word factor,” and without regard to the definition of the word factor ” as including a pledgee who advances money on goods pledged though not employed to sell them, when reasonably interpreted, can only be understood to mean a lien which did not come into existence through statutory enactment, the lien not of a factor who becomes such by legislative nomenclature and definition but of the “ ordinary factor ” as known to the common law. “ The standard, presumptive meaning of the word ' factor does include and denote a selling agent.” (Shoyer v. Wright-Ginsberg Co., 240 N. Y. 223, 230, 232; Duguid v. Edwards, 50 Barb. 288, 295; Howland v. Woodruff, 60 N. Y. 73, 80.)

As suggested in Shoyer v. Wright-Ginsberg Co. (supra), under a particular contract, the definition of factor may have to yield to commercial and trade usages and understanding at least in the locality ” where the contract was made, and in accordance with such usages the word factor ” may no longer, under the circumstances involved in a particular litigation, indicate “ a person enjoying the powers and bearing the responsibilities of a selling agent.” All common-law lien rights existing by reason of a relationship of factor to principal are based upon the continuance of the duty and obligation resting upon an “ ordinary factor ” intrusted with the possession of goods and charged with the duty of selling them, and not by reason of the creation by the agreement of a relationship whereby the person termed a factor becomes a mere commercial banker.”

The contract here involved expressly negatives the idea that the parties ever intended that appellant was to assume the duties and obligations imposed upon an ordinary factor.” It must be held, therefore, that the j appellant did not acquire the lien of a factor at common1 law as to goods which came into its possession subsequent to the effective date of the amendment to section 45 of the Personal Property Law, and inasmuch as it did not file and post the notice required by that amendment, it failed to acquire the statutory lien provided thereby.

Cogent reason existed why the Legislature should have . desired to accomplish the result which we believe the amendment did accomplish. Prior to the amendment an owner who had an agreement with a factor could, by ' transferring possession of merchandise to the factor within four months before bankruptcy, put the property transferred beyond the reach of his creditors, as the transfer was held to relate back to the date of the agreement (Parshall v. Eggert, supra), although creditors may have granted credit in the belief that the merchandise belonged to the person in whose possession it was free from any lien. The amendment has the effect of preventing the evasion of the Bankruptcy Law (30 Stat. 544; U. S. Code, tit. 11), in that manner by requiring that notice shall be posted and the agreement filed so that prospective creditors may have notice of the rights of the factor.

It follows that refusal to dismiss the “ Fourth ” to Eighth ” causes of action, inclusive, must be sustained since each is based upon a theory upon which the trustee might be entitled to recover the merchandise referred to in the absence of a common-law lien.

The Ninth ” to Twelfth ” causes of action, inclusive, are -based upon the contention that appellant is liable for collections made by it within four months prior to the adjudication in bankruptcy on certain accounts which appellant contends were assigned to it. The contract provides that “ all accounts are assigned to us in absolute ownership subject to our obligation to account, and we have the right to institute and maintain actions and proceedings to collect the same.”

The original section 45 provides in substance that if the -agreement creating a hen upon merchandise shah also give the, Henor a right or Hen upon accounts receivable resulting from a sale of the merchandise subject to the Hen, such rights shall not be void by reason of want of possession of the accounts on the part ■ of the Henor or by reason of failure to make or deHver a further assignment of such accounts, provided an invoice or notice shall be given to the person owing such account receivable, stating that the account is payable to the Henor.

The amended section provides in substance that if any agreement provides for a right to or Hen upon accounts receivable or other proceeds, resulting from a sale of merchandise, whether or not the merchandise is. subject to the Ken, such Hen upon accounts receivable or the proceeds shall not be void, provided a similar statement or notice is given to the person owing each such account receivable.

Thus, while under the original section the Hen on the ,-accounts receivable was dependent upon a Hen on the , merchandise, under the section as amended no Hen on - the merchandise is required to support the Hen on the ¡accounts receivable and creditors are bound, provided notice "that the amount due on the account is payable to the Henor be given to the person owing the account.

The question of notice to the persons who owed the accounts involved in causes of action Ninth ” to Twelfth,” inclusive, does not seem to be raised. The contract provides that appellant was to send out invoices in the name of the bankrupt, payable only to appellant at its", office. It was to do the bookkeeping and it seems to" be assumed that the accounts were in the possession of the appellant. .' .

While, under the contract, the appellant was to guarantee. accounts which it approved, it reserved the right to withdraw its guaranty as to any account where a dispute as to goods, prices, dehvery, etc., should not be promptly adjusted by the bankrupt. Where merchandise was returned by a customer, it was to be appellant’s property unless released to the bankrupt and upon adjustment with the appellant returned merchandise was to be charged back and released to the bankrupt.

The theory of the trustee as set forth in the Ninth ” to Twelfth ” paragraphs of the complaint, inclusive, is that because the appellant was permitted from time to time to withdraw its guaranty as to certain accounts, it was obligated to and did charge back to the bankrupt’s account the amount of such accounts receivable upon withdrawing its guaranty and the collections which respondent seeks to recover are collections on accounts thus charged back to the bankrupt. The respondent argues that if the bankrupt made an adjustment with his customer but was nevertheless charged back by the appellant with the amount of the account receivable, the charging back of the account would operate to give the bankrupt the ownership of the account.

The intent of the whole agreement seems to be that the appellant was to have and retain a hen upon all of the accounts of the bankrupt, whether or not guaranteed and whether or not advances were made thereon. Its compensation was based upon total sales of at least $175,000 per annum, upon which amount its factoring commission was to be based as a minimum.

While it undertook to guarantee, for a period of seventy days, all accounts approved by it, and the bankrupt, before delivering merchandise, was to have its customers’ credits approved, the guaranty did not extend beyond the seventy-day period and might be withdrawn in the event of a dispute not properly adjusted. The obligation on the part of the appellant to make collections, to keep the books, to send out statements and to include such accounts in its monthly accounts to the bankrupt is not in terms stated to cease upon the cessation of its guaranty, and the contract specifically provides that all accounts receivable are assigned in absolute ownership. There is no specific provision for the charging back of any such account to the bankrupt. It seems that the reasonable interpretation of the contract is that merchandise was not to be sold except to customers whose credit was approved; that upon the total of such approved sales the appellant’s commission was based; that once it assumed obligations with respect to any such account, the account was assigned to it and its obligations and rights with respect thereto continued except as its obligations were specifically limited by the agreement — that is, the expiration of its guaranty after the prescribed period and its right to withdraw the guaranty in the event of an unadjusted dispute.

In this view of the contract it would not seem that the respondent has stated a cause of action in alleging that as appears in Exhibit A and Exhibit B annexed hereto, the defendant was permitted from time to time to charge the bankrupt with the amount of accounts receivable upon which it had not assumed the credit risk as defined in said exhibits. * * * that from time to time the defendant duly charged back to the bankrupt and debited the bankrupt’s account in connection with various accounts receivable, and thereby surrendered to the bankrupt any and all hen upon or claim to any and ah proceeds which might thereafter arise from the collection, partial or entire, of any such accounts receivable so charged back to the account of the bankrupt by the defendant,” and in further alleging, based upon such allegations, specific collections made on accounts charged back.

The theory of these causes of action is that by the terms of the contract the appellant did something whereby it lost its hen. If the contract be interpreted as giving to it a hen and as not providing for its loss or surrender in the manner claimed in the complaint, the foundation of the causes of action, so attempted to be based upon the contract, fails. We believe the contract must be so interpreted and that respondent has failed to state a cause of action as to any of the causes attempted to be stated and numbered Ninth ” to Twelfth,” inclusive.

Under the Thirteenth ” cause of action the respondent seeks to recover a credit balance, claimed to be due on an alleged accounting made by the appellant to the respondent, in excess of the balance shown to be due by that account. Of that cause of action, the appellant complains because respondent has alleged a sum of $19,305.41 to have been improperly charged against the account of the bankrupt and because the complaint does not set forth the items which make up that amount. Appellant says that this cause of action alleges no ultimate facts capable of presenting an issue. The respondent says that the ultimate fact is the total amount which it says has been improperly charged against the bankrupt and that if the appellant wants to know the details, that is the office of a bill of particulars which it should have demanded. In that we believe the respondent is correct. Obviously, in a complaint based upon a long account, to attempt to set up each particular charge claimed to have been erroneously made, where the facts with regard to the account as a whole are in the possession of the defendant, would make an unnecessarily long pleading, and if a complaint is not sufficiently informative, the defendant has the right to require a bill of particulars which would furnish the same information.

The Thirteenth ” cause of action stated is sufficient and the order in that respect should be sustained; and also as to the causes of action numbered Fourth ” to “ Eighth,” inclusive. As to the causes of action numbered Ninth ” to “ Twelfth,” inclusive, the order should be reversed and those causes of action stricken from the complaint.

The order should be modified in accordance with this opinion, and as so modified affirmed, without costs. The 1st, 2d, 3d, 4th, 5th and 10th questions certified should be answered in the affirmative, and the 6th, 7th, 8th and 9th in the negative. (See 264 N. Y. 675.)

Pound, Ch. J., Crane, Lehman, O’Brien and Crouch, JJ., concur;' Kellogg, J., not sitting.

Ordered accordingly.