author: Kellogg, J. Cardozo, Ch. J.

text:
    Esther Moskowitz et al., as Executors of Fannie Manheimer, Deceased, Appellants and Respondents, v. Pearl H. Marrow, Respondent and Appellant.

      (Argued April 18, 1929;
    decided July 11, 1929.)

      Edward C. Weinrib and Milton Weiss for plaintiffs, appellants and respondents.
    Testatrix at the time of her death had the sole beneficial interest in the accounts in the Greenwich Savings Bank and Bank for Savings which were awarded to the estate by the Special Term. The mere fact that the two accounts stood at one time in the names of both testatrix and defendant did not entitle the defendant to them, for during her lifetime testatrix divested the defendant of any ownership or right to survivorship in the accounts. (Clary v. Fitzgerald, 155 App. Div. 659; 213 N. Y. 696; Scanlan v. Meehan, 216 App. Div. 591; Matter of Von Bernuth, 143 N. Y. Supp. 672; Havens v. Havens, 213 N. Y. Supp. 230; Matter of Kane, 246 N. Y. 298; 247 N. Y. 219.) The New Nether-land account belongs to the estate as a matter of law. (Crawford v. West Side Bank, 100 N. Y. 50; Martin v. Farnsworth, 49 N. Y. 555; McDonald v. Sargent, 201 N. Y. Supp. 129.) Testatrix at no time made a gift to the defendant of any of the savings bank accounts in this action. (Matter of Von Bernuth, 143 N. Y. Supp. 672; Thomson v. Bank of British North America, 82 N. Y. 1;
      Burnap v. National Bank of Potsdam, 96 N. Y. 125; Ostrom v. Greene, 161 N. Y. 353; Sherman v. Foster, 158 N. Y. 587; Helgar Corp. v. Warner’s Features, 222 N. Y. 449; Matter of Fonda, 206 App. Div. 61; Barstow v. Tetlow, 115 Me. 96.)

      Henry C. Burnstine for defendant, respondent and appellant.
    By putting the two savings bank accounts awarded plaintiffs in the names of herself and her granddaughter, payable to either or the survivor, in April, 1924, testatrix created joint tenancies therein pursuant to the provisions of Banking Law, section 249, subdivision 3. No fraud or undue influence having entered into their creation, defendant, having survived her grandmother, became the sole owner thereof, regardless of deceased’s later acts and declarations. (Matter of McKelway, 221 N. Y. 15; Soper v. Edmans, 204 App. Div. 223; Matter of Tilley, 166 App. Div. 240; 33 C. J. 907; Matter of Buchanan, 184 App. Div. 237; Hayes v. Claessens, 189 App. Div. 449; Heiner v. Greenwich Savings Bank, 118 Misc. Rep. 326; McNett v. Crandell, 172 App. Div. 375; McDonald v. Sargent, 121 Misc. Rep. 437; Scanlan v. Meehan, 216 App. Div. 591; Havens v. Havens, 126 Misc. Rep. 155; 215 App. Div. 756.) If the intent behind the creation of these accounts in the statutory joint form may be inquired into, it necessarily means the intent at the time of the creation of the accounts. In that event the question of intent would be open to evidence and the conclusion that a joint tenancy did or did not exist would necessarily flow from the finding- or non-finding of an intention to create one, but in no event could there be room for the finding of a revocable gift. (Kelly v. Beers, 194 N. Y. 49.)
   Kellogg, J.

Fannie Manheimer was the owner of substantial deposits, credited to her individual name, in New Netherland Bank, Excelsior Savings Bank, Bank for Savings and Greenwich Savings Bank, all of the city of New York. On April 28, 1924, each of the banks, at the express direction of Fannie Manheimer, made a transfer of the fund deposited with it to a new account wherein the deposit was credited jointly to Fannie Manheimer and Pearl Harris, her granddaughter, payable to “ either or the survivor of them.” On the same day her pass books in the several banks were delivered by Fannie Manheimer to Pearl Harris. Thereafter the money remained on deposit, credited to the joint account of the two women, until the 5th day of December, 1924. On that day, Fannie Manheimer delivered a writing to each of the four banks, notifying each that the privilege ” granted by her to Pearl Harris “ to withdraw any money or moneys from my account or joint account in your bank ” was revoked, and instructing each to honor no signature other than her own for any withdrawal. In January, 1925, Fannie Manheimer withdrew the-deposits in New Netherland Bank and Excelsior Savings Bank, and redeposited them therein to the credit of herself individually. In April, 1925, the accounts in these two banks, at the direction of Fannie Manheimer, were re-established in the joint names of herself and Pearl Harris, payable to either or the survivor.” On May 4th, 1925, Fannie Manheimer died. Shortly after her death, Pearl Harris, upon presentation of the appropriate pass books, withdrew from New Netherland Bank, Excelsior Savings Bank and Bank for Savings substantially all the moneys on deposit. She likewise presented the appropriate pass book to the Greenwich Savings Bank in an attempt to procure a withdrawal of the funds therein deposited. That bank refused to make payment, and still retains the moneys.

In this action brought by the executors of the last will and testament of Fannie Manheimer against Pearl Harris, now Pearl Harris Marrow, to recover the withdrawals, it has been held that the plaintiffs are entitled to a recovery of the sums of money withdrawn from Bank for Savings, to the pass book of such bank, and to the pass book of the Greenwich Savings Bank, wherein the moneys deposited remain credited to the joint account. The theory of the recovery was that the notices served by Fannie Manheimer upon these banks on the 5th day of December, 1924, to permit no withdrawals by any person other than herself, were effectual to revoke the transfers to the joint accounts, made at her instance. On the other hand, it was held that Pearl Harris was entitled to the moneys withdrawn from New Netherland Bank and Excelsior Bank. These were the moneys which had been credited, first, to Fannie Manheimer individually; secondly, to the joint account of the two women; thirdly, to the individual account of Fannie Manheimer, and fourthly, after the giving of the notice of December 5th, 1924, to the joint accounts of Fannie Manheimer and Pearl Harris “ payable to either or the survivor.” The theory upon which a recovery of these funds was denied to the plaintiffs was that the redeposits to the joint accounts in April, 1925, rendered ineffectual, as to such moneys, the notices of attempted revocation previously given in December, 1924.

Formerly, the deposits made by Fannie Manheimer to the joint accounts of herself and Pearl Harris would have been insufficient to establish a gift, by the former to the latter, of an interest in the funds deposited, to take effect either presently or in future. (Beaver v. Beaver, 117 N. Y. 421; Matter of Bolin, 136 N. Y. 177; Kelly v. Beers, 194 N. Y. 49.) In Beaver v. Beaver it was held that a deposit made by a father to the individual credit of his son did not operate to pass title to the son. The court said: We cannot close our eyes to the well-known practice of persons depositing in savings banks money to the credit of real or fictitious persons, with no intention of divesting themselves of ownership.” In Matter of Bolin it was held that a deposit made by Julia Cody in an account entitled Julia Cody or daughter, Bridget Bohn ” passed no title to Bridget Bolin. The court remarked that the only presumption from the form of the deposit would be that the depositor so arranged for the purposes of convenience.” It was also held that, even if a gift had been intended,- there was lacking a delivery of the subject of the gift, either actual or symbolic, since the delivery of the pass book was an equivocal act, in that it might have been made either to consummate a gift or merely to satisfy the purposes of convenience. In Kelly v. Beers the deposit made was to “ Kate V. Beers or Sarah E. Kelly, her daughter, or the survivor of them.” It was said that the form of the deposit alone, under the authorities, would not be sufficient to constitute the making of a gift. Therefore, independently of any statute, the deposits made by Fannie Manheimer to the credit of herself and Pearl Harris, “ payable to either or the survivor of them,” and the delivery of the pass books to Pearl Harris, would have been insufficient either to establish an intention to make a gift or to effectuate a delivery of the subject-matter of a gift.

In the year 1909 the Legislature enacted chapter 2 of the Consolidated Laws, entitled Banting Law ” (Laws of 1909, chap. 10). Section 144 of this law provided in part as follows: When a deposit shall be made by any person in the names of such depositor and another person and in form to be paid to either or the survivor of them, such deposit thereupon and any additions thereto made by either of such persons upon the mating thereof shall become the property of such persons as joint tenants and the same together with all interest thereon shall be held for the exclusive use of the persons so named and may be paid to either during the lifetime of both or to the survivor after the death of one of them, and such payment and the receipt or acquittance of the one to whom such payment is made shall be a,valid and sufficient release and discharge to said bank for all payments made on account of such deposit prior to the receipt by said bank of notice in writing not to pay such deposit in accordance with the terms thereof.”

That the purpose and effect of the enactment was to reverse the common-law rule and to make a deposit in the statutory form presumptive evidence of an intent to make a gift presently to take effect was definitely determined in Clary v. Fitzgerald (155 App. Div. 659). That case was decided in the year 1913; the decision was affirmed by this court in 213 New York, 696. There, Katherine Connelly, the aunt of Kate Fitzgerald, made a deposit in a savings bank to the credit of “ Mrs. Kate Connelly or Mrs. Kate A. Fitzgerald, either or survivor, may draw.” After the death of Mrs. Connelly the major part of the moneys deposited was withdrawn by Mrs. Fitzgerald. The action was brought by the administratrix of the estate of Mrs. Connelly to recover from Mrs. Fitzgerald the withdrawals. It was held that the form of the deposit had the effect, under section 144, of transferring title in the fund to Mrs. Fitzgerald, and the complaint was dismissed. The court said: “ The deposit was one within the classification of the statute, made by the intestate in the names of herself1 and another person and in form to be paid to either or the survivor of them.’ It would seem, therefore, if any effect is to be given to the direct and explicit language of the statute, this deposit, as the statute provides, thereupon, presumptively at least, became the property of the designated depositors ‘ as joint tenants; ’ i. e., as joint owners.”

The court quoted with approval a statement from Brady on Bank Deposits, page 46: “It must be added that, under a New York statute, a deposit.of this character would, today, create an estate in joint tenancy, even without the delivery of the pass book. But, under that statute, once the deposit is opened, and the estate in joint tenancy created, the depositor cannot revoke the gift or take it back. If he draws the money and uses it he is accountable to the donee as any other joint tenant of personal property would be.”

The provisions of section 144 were carried over into section 249 when the present Banking Law was enacted by chapter 369 of the Laws of 1914. Certain word changes were made necessary by the fact that the former section dealt .with banks in general, while the new section was made applicable to none other than savings banks. Otherwise, in all matters of substance, the provisions of section 144 were re-enacted to form a part of section 249. There was added, also, at the foot of the old provisions, as re-enacted, a sentence containing a new provision which reads as follows: “ The making of the deposit in such form shall, in the absence of fraud or undue influence, be conclusive evidence, in any action or proceeding to which either such savings bank or the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in such survivor.” The plaintiffs lay great stress upon the wording of the added provision. They reason in this wise: A deposit in the statutory form will constitute evidence of an intent to give, but this evidence will be available only in an action to which either a savings bank or the “ surviving depositor ” may be a party. The intent which it will evidence in any action is an intention of the depositors to vest title to such deposit and the additions thereto in such survivor.” The form of the deposit, in an action between the depositors themselves, will have no probative value; it will not evidence, in any action, or for any purpose, an intent of the original depositor presently to vest title in his joint depositor. From these premises results the conclusion that the deposits are ineffective to transfer title until the death of the original depositor; that meanwhile the deposits are revocable at will by such depositor. If it were a fact that all the provisions of section 249, as they now appear therein, were enacted as a completed whole at one and the same time, there might be force in the argument. Then it might with some justice be said that the Legislature, having stated the particular intention, to establish which the form of the deposit should constitute evidence, thereby negatived its value as proof of any other intent. Even then, the argument would render purposeless all the other provisions of the section. However, as we have seen, section 249 was not enacted as a completed whole, at one and the same time. Long before the added provision, relied upon by the plaintiffs, became a law, other provisions, now contained in section 249, were present in former section 144. These provisions, standing alone, sanctioned a presumption from a deposit in the statutory form, although not a conclusive presumption, that a transfer of an interest in the funds deposited was intended and had been effectuated. It was so held in Clary v. Fitzgerald (supra), a case decided before the added provision was enacted. That case, since it dealt with substantially identical provisions, is a definite authority that the provisions of section 249, other than the added provision, are effective to establish a transfer.

Laying aside the additional provision, we find that section 249 in terms declares that, where a deposit is made by one person in his name and that of another person, payable to either or the survivor, the deposit and any additions thereto “ shall become the property of such persons as joint tenants;” that they “shall be held for the exclusive use of such persons;” that they “ may be paid to either during the lifetime of both or to the survivor after the death of one of them.”

When the Legislature has used a term having a well-defined legal meaning, such as the term joint tenants,” we must assume that it has advisedly employed it to express the meaning commonly attributed thereto. “ Joint tenants, by reason of the combination of entirety of interest with the power of transferring in equal shares, are said to be seized per my et per tout, or by the half and the whole, but tenants by the entirety are seized per tout et non per my, and the conveyance by either husband or wife will have no effect against the other if survivor.” (Per Pound, J., in Matter of McKelway, 221 N. Y. 15, 19.) It was there held that a surviving joint tenant, as to at least one-half of the joint property, was its owner from the date of the creation of the tenancy. It is the fundamental principle of a joint tenancy, that while the parties constitute but one person, so to speak, as far as the rest of the world is concerned, with regard to themselves each is entitled to an equal share of the rents, income, and profits, so long as he lives.” (Schouler Pers. Prop. [5th ed.] 224.) Not merely did the Legislature use the term “ joint tenants; ” it provided that after the creation of the deposit, the funds deposited, together with all dividends thereon, should be held for the exclusive use of the joint depositors. It could not better have indicated that the term joint tenants,” as used by it, was intended to possess that technical meaning which is accorded to it by the legal profession. Assuming that, upon the making of the deposits by Fannie Manheimer, in the joint names of herself and Pearl Harris, the two become joint tenants,” it is immaterial whether Pearl Harris then acquired an interest in a moiety or an interest in the whole of the funds deposited. If she received the former, rather than the latter, to that extent at least the deposit was irrevocable, since she had acquired a vested property interest. Even if Fannie Manheimer possessed the power, by transferring her interest to another, thereby to sever the joint tenancy, and prevent survivorship, in fact this was never done, so that the title to the balance would have passed to Pearl Harris, as survivor.

The plaintiffs reason that even though the deposits in the joint account, to the credit of Fannie Manheimer and Pearl Harris, payable to either or the survivor, constituted a joint tenancy, the transfer possessed a tentative character and, not being completed until survivorship ensued, was meanwhile revocable by the original depositor. In support of this proposition they cite Matter of Totten (179 N. Y. 112); Matter of Albrecht (136 N. Y. 91), and Matter of Kane (246 N. Y. 498). These cases are wholly beside the point. In the Totten case the court dealt with a deposit made by one person of moneys owned by him to the credit of himself as trustee for another. It was held that the deposit created a tentative trust, revocable by the depositor before his death, but, if unrevoked, taking effect at his death to vest title in the surviving beneficiary. The case with which we are dealing has no similarity to the Totten case. Fannie Manheimer never declared herself to be a trustee for Pearl Harris or any other person. Therefore, no trust was created by her. (Young v. Young, 80 N. Y. 422.) In the other two cases the subject considered was either the purchase of securities by a husband with moneys of his own, or the deposit of such moneys, in the joint names of himself and wife. It was held that such a transfer possessed all the essential qualities of a gift causa mortis, and was revocable by the husband before his death. This rule presents an exception if not an anomaly in the law of property, and is applicable only in the case of a gift by a husband to. his wife of property or moneys belonging solely to himself. (West v. McCullough, 123 App. Div. 846; 194 N. Y. 518; Matter of Kane, supra.) In such an instance the husband and wife never become joint tenants in the true sense. Thus, in Matter of Kane it was said: The cases hold, it is true, that a husband who puts the title to a chose in action in the name of himself and his wife jointly does not create a joint tenancy in the strict sense.” In our case, by force of the statutory presumption, if not rebutted, Fannie Manheimer and Pearl Harris became true “ joint tenants.” To say that they became joint tenants through survivorship only is to state an absurdity. Certainly the law has never indulged in the fiction that a joint tenancy between two persons may arise after the death of one person, when only one survives.

The case of Matter of Tilley (166 App. Div. 240; affd., 215 N. Y. 702) is a definite authority to the effect that a true joint tenancy, between Fannie Manheimer and Pearl Harris, arose at the moment when the deposits were made. In that case moneys had been deposited in a savings bank to the joint credit of the depositor and another person “ payable to either of them, or to the survivor.” It was held that on the death of the original depositor no transfer to the survivor took place which was taxable, under an amendment to the Tax Law (Cons. Laws, ch. 60) which made taxable any transfer “ made in contemplation of the death of the grantor, vendor or donor or intended to take effect in possession or enjoyment at or after such death.” (Laws of 1911, chap. 732, § 220, par. 4.) The court held that, under the provisions of section 144 of the Banking Law, which were then in force, the depositor, when he made the deposit, “ vested the ownership of such funds in joint tenancy in himself ” and the other person. It further said: “ The possession is given upon the creation of the estate; the rights are absolutely and conclusively fixed, and the only question which is contingent is which of two or more joint tenants shall eventually own the entire estate. But each is in full possession, each has full ownership as against all the world, with the exception of the equal right of the others, and the transfer which becomes fully determined at the death of one of two joint owners relates back to the creation of the estate. It was then that the rights vested, and the death only determines which shall be the gainer by the transaction.”

The Tax Law, as presently written, in section 220, subdivision 5, provides that where moneys are deposited in banks “ in the joint names of two or more persons and payable to either or the survivor,” upon the death of one of such persons the right of the surviving joint tenant to the -immediate ownership or possession and enjoyment of such property, shall be deemed a transfer taxable under the provisions of this article ” in the same manner as though a fractional part of the property to be determined by dividing the value of the entire property by the number of joint tenants ” belonged absolutely to the deceased joint tenant ” and “ had been bequeathed to the surviving tenant.” It will be observed that a tax may be imposed only upon the additional sum which comes to the joint tenant through his survivorship; none may be imposed upon his remaining share. Here is express legislative recognition of the fact that where a deposit is made in the joint names of two persons, payable to either or the survivor, there is, under the provisions of section 249 of the Banking Law, an immediate transfer of an interest in the fund, so that at the death of one of the tenants the survivor is taxable, not for the moiety which came to him on the creation of the joint tenancy, but only for the moiety received from his joint tenant through survivorship.

In O’Connor v. Dunnigan (158 App. Div. 334; affd., 213 N. Y. 676) the facts were that a man and bis wife, Mary Guilfoyle and Joseph Guilfoyle, deposited moneys in a bank to an account which read “ Mary Guilfoyle or Joseph Guilfoyle. Pay to either or the survivor of either.” Mary withdrew all the moneys and deposited them in a bank to her individual credit. Three days afterwards Mary died. This action was brought by Joseph against the executors of the will of Mary Guilfoyle to recover the moneys withdrawn. A recovery of all the moneys was decreed. It was not shown to what extent the original deposits had been made by Joseph and to what extent by Mary. If the plaintiffs’ contention that the form of the account, in which the two made deposits, evidenced a tentative transfer only, which was subject to revocation by the one making the deposit, was correct, then the recovery should have been limited to the amounts deposited by Joseph Guilfoyle. The court held otherwise, saying: “ It cannot matter whether the moneys originally came from Joseph Guilfoyle or Mary Guilfoyle. The form of the deposit indicated an intent thereby to create a joint ownership with the right of survivorship.” It further said: “It would be preposterous to claim that an appropriation of personal property by one joint owner to his personal use could divest the interest of the other joint owner.” This case dealt with deposits made long before the adoption of former section 144 of the Banking Law. It was decided upon common-law principles without reference to the provisions of that section which had been enacted prior to the decision. It is important upon this issue, however, as a holding that a joint tenancy, which may result from a deposit in joint account, is a true joint tenancy, the transfers involved in the creation of which are irrevocable at the instance of either depositor, to the extent of the funds by him deposited. If this be true of common-law deposits to joint account, it must be equally true of deposits made under the provisions of the statute.

One more argument of the plaintiffs, favoring revocability, must be considered. They call attention to that provision of section 249 which exempts a savings bank from liability for all payments made from the joint account • “ prior to the receipt by said savings bank of notice in writing not to pay such deposit in accordance with the terms thereof.” This provision was borrowed from former section 144 which, with the exception that “ savings bank ” there appeared as “ bank,” employed the identical words quoted. The plaintiffs reason that the giving of a “ notice ” thereby sanctioned is the giving of a notice of cancellation or revocation by the original depositor. The provisions of former section 144, including the provision in question, were distributed, by the new Banking Law of 1914, not only to section 249, but to new sections 148 and 198 as well. In these new sections, the particular provision of section 144, the reproduction of which in section 249 is now .relied upon, reappears as a provision for exemption of a bank ” or “ trust company,” for payments made prior to the receipt of notice in writing signed by any one of such' joint tenants, not to pay such deposit in accordance with the terms thereof.” Thus, in the instances of a “ bank ” and a trust company,” the notice might be given either by the original depositor or by the person who became joint tenant of the fund through the transfer involved in the making of the deposit. Clearly, a notice of revocation of the transfer could not be made by a person other than the transferror. It must be concluded, therefore, that the notice provided for in these sections is not a notice of revocation or cancellation. If that be true, it must be equally true of the notice provided for in section 249. Certainly, it cannot be supposed that the Legislature intended that deposits made under sections 148 and 198 should be irrevocable, and those made under section 249 should be revocable. Indeed, the provisions of the last section are less restrictive than those of the former. In the one the notice may be given by any person; in the other two it must be given by one of the joint tenants. Self-evidently, the notice provided for was merely one the effect of which should be to withdraw from the bank of deposit the immunity granted by the statute, so that thereafter all payments made by it would be subject to the risk that the person paid was not entitled thereto.

It is said that if we interpret the provisions of section 249, other than the added provision, to work an irrevocable transfer, we deprive the added provision of any force whatever. The retort might be made that the converse would result, if to the added provision alone such a transfer were made attributable; the other and earlier provisions would then be meaningless. But there is a better answer. The other provisions may be regarded as creating a rebuttable presumption of the making of a transfer; the added provision as creating an irrebuttable presumption, or “ conclusive evidence,” as the provision itself states, of an effective transfer, in cases of survivor-ship only. By so' interpreting the section all its parts would be given force and effect. We think that is the interpretation properly to be given.

We think, for all these reasons, that /Fannie Manheimer, in originally making the joint deposits, transferred to Pearl Harris a present property interest in the moneys deposited, which was not subject to cancellation, at the instance of Fannie Manheimer, and was not destroyed or in the least affected by the notice not to pay which Fannie Manheimer served upon the banks.

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

Cardozo, Ch. J.

(concurring). The case hinges upon the meaning of a section of the Banking Law (§ 249, subd. 3), which, though often considered in other courts, has not yet been construed by this court in an authoritative way.

The statute, as I view it; does not mean that between the persons named as depositors a joint tenancy ensues at once and automatically, as an irrebuttable presumption, with the result that neither will be permitted even during the joint lives to prove against the other that the deposit was made with a contrary intention. For the bank which has paid, the form of the account is,, indeed, an absolute protection, unless written notice has. been given by either one of the depositors (cf. Banking: Law, §§ 148, 198) “ not to pay such deposit in accordance with the terms thereof.” For the depositors themselves, the form is not conclusive in any contest during their1 joint lives as to the title to the moneys, nor conclusive after the death of either as to moneys then withdrawn.

The final sentence of the section, added by amendment in 1914, is a gloss upon its meaning. The making of the deposit in such form shall, in the absence of fraud or undue influence, be conclusive evidence, in any action or proceeding to which either such savings bank or the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in such survivor.” The sentence is as significant for what it omits as for what it says. There is no statement that the form is to be taken as conclusive evidence in any action or proceeding to which either depositor is a party. It is to be conclusive evidence only in an action or proceeding in which the bank or the surviving depositor is a party. Even then it is to be conclusive in favor of the survivor, not in respect of any moneys withdrawn by either during life, but as to succession by survivorship in respect of any moneys forming part of the deposit after one of them is dead. The plain implication is that as between the depositors themselves, the form of the deposit gives rise to a presumption and nothing more, but that after the death of either leaving a deposit then subsisting, the presumption becomes conclusive as to the title of the survivor.

A reading of the statute that would make the presumption irrebuttable except within these limits would do violence to intention and foster litigation. It would do violence to intention, for those who open such accounts have seldom any thought of restricting their enjoyment of the fund, their right to draw and spend, by the shacldes of a formula (cf. Beaver v. Beaver, 117 N. Y. 421). It would foster litigation, for each of the two depositors, the one opening the deposit as fully as the other, would be subject to an accounting for moneys afterwards withdrawn, and forced to make division on the footing of equality. An irrebuttable presumption would close the door to testimony, direct or circumstantial, that in opening the deposit the incidents of a joint tenancy had been varied by agreement. Many a family settlement, made in the informal fashion to be expected among relatives, would be opened up for scrutiny after years of acquiescence.

The possibilities of injustice inherent in a changeless formula have illustration in the case before us. In April, 1924, at the opening of the joint accounts-, the depositor, Fannie Manheimer, was blind and infirm. Her disability is at least a circumstance pointing to the inference that she was to have the right during her life to use the money as she pleased. She became a little later a sufferer from cancer. If at once and automatically a joint tenancy arose as an irrebuttable presumption, she would have been subject to a suit by her granddaughter if she had drawn and spent more than half of the deposits in an attempt to mitigate her agony. The court must have declined to listen to her protest that in opening the accounts she had reserved to herself the privilege of user. Every joint depositor in that view must keep the drafts for his own use within the limits of his moiety, though dominion was retained at the time of the successive deposits by agreement the most explicit. The agreement, will avail for nothing if he is summoned to account.

I am persuaded that the statute did not envisage that result. There had been a ruling by this court in Kelly v. Beers (194 N. Y. 49) that a deposit by one in the name of himself and another or the survivor, was unavailing in and of itself to give to the other any interest whatever, either conclusive or presumptive. The intention thus revealed was thought to be abortive in default of evidence of the delivery essential to a gift. The aim of the statute superseding that decision was not to cramp intention, but to give it power to prevail. Capacity was to be liberated, not cabined or confined. Bank accounts in this form are opened not infrequently by the simple and the humble. The last thing that was in view was to encompass them with new embarrassments, to penalize their ignorance. What was sought and what was needed was to let them carry out their will. There was to be flexibility and simplicity, not rigidity and formalism, in an adjustment between means and ends. A presumption, to be sure, there is that the form of the deposit, unqualified by agreement, is an accurate expression of the realities of title. The presumption is no longer subject to be rebutted — the form, in the words of the statute, becomes conclusive evidence ” of the intention — when one of the depositors dies with the deposit still intact. But except after death, or in circumstances where prejudice would result to a bank acting without written notice of a countervailing interest, the true agreement may be proved, though in proving it there is a departure from the terms of the presumption. Even the bank is not protected in its payments to the same extent or in the same circumstances that protection would result if the deposit were a joint tenancy in every sense and for every purpose. It is protected in the absence of written notice that it is not to pay such deposit in accordance with the terms thereof.” When such a notice is given and a contest in the courts ensues during the joint lives of the depositors, distribution is to be determined, not solely by the terms of the deposit, which then cease to be conclusive, but by the realities of ownership.

Nothing in our decisions is in conflict with these views. Clary v. Fitzgerald (155 App. Div. 659; 213 N. Y. 696) was a case where the deposit was intact at the death of a depositor. The survivor had the benefit of the statutory presumption, there being nothing to rebut it. The case was decided without opinion in this court. The opinion at the Appellate Division has a pointed statement to the effect that for anything there held the form of the deposit, though conclusive as to the bank, is not conclusive as between the depositors-who may litigate inter se the nature of the tenancy (155 App. Div. 664). The provision of the statute whereby the form has been made conclusive as to the right of the survivor was added to the section later. Matter of Tilley (166 App. Div. 240; affd., without opinion, 215 N. Y. 702) was a case under the Tax Law. There, as in Clary v. Fitzgerald, the presumption was untouched by any evidence that tended to destroy it. O’Connor v. Dunnigan (158 App. Div. 334; affd., without opinion, 213 N. Y. 676) was a case at common law, the deposit having been made before the statute was enacted. A later judgment in the Fourth Department (Scanlan v. Meehan, 216 App. Div. 591) sustains the right of the depositors to litigate the incidents of the tenancy in suits between themselves.

The foregoing statement of the effect of a deposit in the statutory form during the joint lives of the depositors has been necessary to avoid misapprehension as to the scope of our decision. The controversy at hand, however, is one where the depositor opening the account has died, with the account in the joint names still open and intact, and the only question to be determined is the title of the survivor. In such a case the statute says that the form shall be conclusive, and not merely presumptive, evidence of the intention of each that the survivor is to have the whole. The tenancy, if joint in its creation, was not destroyed by revocation (cf. Kelly v. Beers, supra, at p. 58). If the form of the deposit was an expression of the true agreement, there could be no change of ownership thereafter by an ex parte declaration. As to what the true agreement was, the door to controversy was open during the joint lives of the depositors. It was closed upon the death of either. The question is not here whether a like result would follow if a suit to establish an agreement at war with the presumption had then been pending undetermined. A notice of revocation is not a notice of lis pendens.

I have said that the joint account, if created with the usual incidents, was not destroyed by the announcement of an intention to revoke it. Whatever quality the deposit had, it had from the beginning. So long as the creation of a joint tenancy was a presumption and nothing more, the incidents of the tenancy might be varied by evidence, direct or circumstantial, of intention or agreement. The intention of one of the two depositors might bring about the variance if only one of the two was a party to the transaction. The assent of each might be essential if the deposit was so made as to be equivalent to the act of both. In either event, notice of revocation was effective only to the extent that it was consistent with rights theretofore reserved. It was evidence only to the extent that it cast light upon the past. To put it differently, title to the accounts was unaffected by the notice of withdrawal in the absence of a showing that by implication, if not otherwise, the privilege of withdrawal was one of the terms of the deposit. Such a showing was permissible during the joint fives, for it was then opposed by nothing except a presumption to the contrary. It was no longer permissible after either depositor was dead, for it was then opposed by a presumption declared to be conclusive.

The result thus reached makes it needless to consider whether the evidence sustains a finding that by intention or agreement the incidents of a joint tenancy were to be lacking altogether. The fact that Mrs. Manheimer was blind and infirm gives color of support to the inference that she was not depriving herself of the right to make use of the money as she might need it for maintenance or cure. On the other hand, there is little, if anything, to indicate that in opening the accounts she did so with the understanding that as to moneys left there at her death, the right of succession by survivorship was to be lost to the survivor. Elaboration is unnecessary, for the statute gives the rule.

What is true of the accounts as to which notice of revocation was outstanding at the time of death is true the more plainly of those where the notice was withdrawn, and the deposits re-established in accordance with the statute.

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

Pound, Crane, Lehman, O’Brien and Hubbs, JJ., concur in opinions of Kellogg, J., and Cardozo, Ch. J.

Judgments reversed, etc.


source: Caselaw Access Project

author: Kellogg, J.

license: Public Domain

text:
    Fidelia S. Losch, as Administratrix de Bonis Non of the Estate of George B. Ongley, Deceased, Appellant and Respondent, v. Max Margin et al., Respondents and Appellants.

      (Argued June 4, 1929;
    decided July 11, 1929.)

      Martin W. Littleton for plaintiff, appellant and respondent.
    The order of the Appellate Division appealed from erroneously allowed to Marcin compensation to be paid by the estate of Ongley alone because of services rendered by Marcin after Ongley’s death. (Greenslete v. Ferguson, 191 App. Div. 745; Consaul v. Cummings, 222 U. S. 262.)

      Max Levy for Max Marcin, defendant, respondent and appellant.
    The basic finding that the contract had not terminated was substantial legal error. (Spalding v. Rosa, 71 N. Y. 40; Sargent v. McLeod, 209 N. Y. 360.) The refusal to find repudiation and abandonment are basic and substantial errors of law. (Cahill v. Haff, 248 N. Y. 377; King v. Leighton, 100 N. Y. 386; Stem v. Warren, 227 N. Y. 538; Stewart v. Robinson, 115 N. Y. 328; Conn. Bank v. Weldon, 148 Cal. 601.)

      William S. Andrews and Nathan Burkan for Al. H. Woods, defendant, respondent and appellant.
    The findings do not support the interlocutory judgment. (Sargent v. McLeod, 209 N. Y. 360; Burnell v. Chown, 69 Fed. Rep. 993; De Witt v. Manufacturing Co., 66 N. Y. 459; Nillson v. Lawrence, 148 App. Div. 678; Klein v. Beach, 232 Fed. Rep. 240; Osborn v. Schenck, 83 N. Y. 201; Meinhard v. Salmon, 249 N. Y. 458; Williams v. Whedon, 109 N. Y. 333; Costello v. Costello, 209 N. Y. 252; Matter of Nesersmith, 140 N. Y. 609; Stem v. Warren, 227 N. Y. 538; Smith v. Ogilvie, 127 N. Y. 143.) As a partner Marcin was entitled to reasonable compensation for winding up the affairs of the firm. (Cahill v. Haff, 248 N. Y. 377.)
   Kellogg, J.

The plaintiff is the administratrix of the estate of George Booth Ongley, a playwright. The defendant Marcin is a playwright, while the defendant Al. H. Woods is a theatrical producer. The recovery sought is chiefly an accounting- for a share of the profits received by the defendants from the production of a theatrical play, alleged to have been written, in whole or in part, by George Booth Ongley, and to have been owned by him.

The complaint alleges that on the 20th day of January, 1915, Ongley and the defendant Woods entered into a contract in writing, a true copy of which is set forth in Exhibit A, attached to the complaint. That document recites that Ongley is about to write a play entitled “ Birds of a Feather,” and that Woods desires to secure a license to produce it. Ongley grants to Woods the exclusive right to produce the play in the United States and Canada. Woods agrees to pay to Ongley, upon the signing of the contract, the sum of $500 on account of royalties to accrue. Ongley agrees to deliver the play to Woods not later than April 1, 1915. Woods agrees that the initial performance will occur not later than April 1, 1916. Royalties are to be paid by Woods to Ongley upon all gross weekly receipts. The name of Ongley is to appear on all advertisements, announcements and programs as the author thereof. Other engagements, not material here, are entered into.

Continuing, the complaint alleges that in accordance with the terms of the contract, Woods paid to Ongley the sum of $500; that thereafter, on the 29th day of January, 1915, Ongley and the defendant Marcin entered into a contract in writing, a true copy of which is set forth in Exhibit B attached to the complaint. That document recites that Ongley is about to write an original play entitled Birds of a Feather; ” that he has granted to the defendant Woods the exclusive right to produce it; that Ongley desires to secure the services of Marcin as collaborator; that Marcin is desirous of becoming thus associated. The parties agree to become associated “ in the originating and writing and ownership of an original play ” entitled Birds of a Feather,” and to devote their best efforts to the attainment of that end. Ongley transfers to Marcin a one-half interest in the contract between himself and the defendant Woods, and agrees to secure the written consent of Woods to the association of Marcin with himself in originating and writing the play. Other engagements not material here are entered into.

Continuing, the complaint alleges as follows: In satisfaction of the terms of the contract, Ongley paid to Marcin $250, one-half the sum received from Woods; the defendant Woods had full knowledge of the contents of Exhibit B at the time of the making thereof; Ongley procured the consent of Woods that Marcin should be associated with himself; Ongley and Marcin collaborated in writing the play referred to in Exhibits A and B; Ongley died on the 23d day of October, 1915; the play had not at the time been entirely completed; thereafter Marcin or some other person unknown .to the plaintiff, completed the play referred to in Exhibits A and B; the defendant Woods on or about the 1st day of August, 1916, produced the play referred to in such exhibits under the title “ Cheating Cheaters; ” he has continued the production and presentation thereof at all times; he has advertised the defendant Marcin as the. sole author; the defendants, since the initial production of the play, have received gross receipts therefrom in excess of $350,000; they are continuing to receive substantial sums on such account; Cheating Cheaters ” is the same play as the one referred to in Exhibits A and B as “ Birds of a Feather; ” the plaintiff after the death of Ongley was duly appointed administratrix of his estate; the plaintiff, prior to the first production of Cheating Cheaters,” notified the defendants not to produce it without advertising Ongley as the author; the plaintiff demanded an accounting from the defendants; the demand was refused.

The complaint demands judgment'that plaintiff is the owmer of Cheating Cheaters; ” that the defendants account for the moneys received from its production; that defendant Woods be enjoined from paying any profits to the defendant Marcin; that the defendant Marcin be enjoined from receiving any of the profits; that the defendants be enjoined from claiming authorship or ownership of the play.

The defendants, by their answers, admit that the contracts A and B were entered into; that Woods consented that Marcin collaborate with Ongley in writing Birds of a Feather; ” that Woods produced a play entitled Cheating Cheaters; ” that he advertised Marcin as the sole author thereof. Otherwise, except as to minor matters, they deny the allegations of the complaint, and particularly the allegation that Ongley conceived the plot of Cheating Cheaters ” or had any part in its writing.

The' issues drawn were tried before a referee who made a decision finding all the facts to be as alleged in the complaint. In addition, the referee found the following: Ongley and Marcin, acting in collaboration, had reduced to writing, prior to the death of Ongley, the first act and one-half of the second act of “ Birds of a Feather; ” the defendant Marcin, in April or May, 1916, after the death of Ongley, delivered to the defendant Woods the manuscript of a completed play called Birds of a Feather; ” the plot of this play was the plot and idea conceived and originated by Ongley; Woods accepted the completed manuscript from Marcin with full knowledge that its central idea and plot were the same as that of the play which Ongley had agreed to write; the defendants changed the title from “ Birds of a Feather ” to Cheating Cheaters; ” the defendants “ connived and co-operated in producing the play ” as the original conception of the defendant Marcin, and as the result of his individual labor; the defendants Marcin and Woods entered into a written agreement on May 4th, 1916. The agreement is set forth in the findings and recites that Marcin is the sole author of Cheating Cheaters; ” that Woods desires to acquire from Marcin the exclusive right to produce it; that Marcin is desirous that Woods should have this exclusive right. It grants to Woods the exclusive right to produce Cheating Cheaters.” Woods is to pay upon the signing of the contract $500 and thereafter royalties upon all gross weekly receipts arising from the production, payable in the same amounts and on the same terms and conditions as had been agreed upon in the contract between Ongley and Woods. Marcin covenants and warrants that the play has been originated, created and written by himself; that he is the sole and exclusive owner of the same; that no other person has any right therein. Other stipulations, not material here, were contained in the contract. The findings also set up another agreement entered into by Marcin and Woods on May 16, 1916. Marcin again recites that he is the sole and absolute owner and author of “ Cheating Cheaters.” He assigns to Woods, for a sum stated, an undivided one-half interest in and to all royalties to be paid for the use of the play. He also transfers to Woods a seventy-five per cent interest in the motion picture rights to said play. Later Marcin sells to Woods all his share in the moving picture rights of the play.

The referee found as conclusions of law that the contract between Ongley and Woods, dated January 20, 1915, was “ not a contract for the personal service of said Ongley, but is a contract to write and deliver a play and it was not abrogated by the death of said Ongley; ” that “ time was not of the essence of the contract ” between Ongley and Woods; that Woods, “ by accepting and producing the play ' Birds of a Feather,’ after the expiration of the time expressed in the contract for its delivery, waived the limitation as to the time of delivery; ” that Ongley and Marcin “ became and were engaged in a joint adventure in the writing of the play referred to;” that Marcin “appropriated the play 'Birds of a Feather,’ claiming sole authorship thereof;” that Woods “ with full notice and knowledge of the rights and interests of the plaintiff,” in violation thereof “ connived and co-operated with the defendant Max Marcin in appropriating and producing the play ' Birds of a Feather ’ as ‘ Cheating Cheaters ’ and as the sole creation and literary work of the defendant, Max Marcin, and in advertising said Max Marcin as sole author of said play and paying him all the royalty accruing from the production thereof; ” that “ the defendant Max Marcin had no right, title or authority to sell, transfer or assign to the defendant, Al. EL Woods, the play Birds of a Feather,’ or any interest therein and exclude the plaintiff from participation therein as the representative of the deceased Ongley.”

There followed, on the heels of the decision by the referee, several interlocutory judgments. Pursuant to these judgments accountings were had between the parties. Subsequently, there was entered a final judgment, which, as modified by the Appellate Division, adjudged that the defendants pay to the plaintiff, on account of royalties arising from the production of the play “ Cheating Cheaters ” the sum of $29,165.72, with interest, less $9,721.91, with interest, allowed to defendant Marcin for additional services performed by him in completing the original play Birds of a Feather.” The judgment enjoined the defendant Woods from paying to the defendant Marcin any royalties from future productions of the play, and from advertising the name of Marcin as the sole author of the play. It required Woods in all advertisements of future productions to name both Ongley and Marcin as the authors.

It appears from Exhibit B, attached to the complaint, is found and not disputed that Marcin and Ongley became joint adventurers in originating and writing the play entitled “ Birds of a Feather.” As partners, they became the joint owners of the contract, Exhibit A, which had been executed by Ongley and Woods, as well as joint owners of the manuscript of “ Birds of a Feather,” so far as the same had been written prior to the death of Ongley. When Ongley died, Marcin, as surviving partner, took title to the contract and to the incomplete manuscript. Towards all the world, except the estate of Ongley, Marcin became the absolute owner thereof; had full power of disposition, by sale or otherwise, over either document; and became empowered to receive all payments which might be made under the Woods contract, or might be owing from a sale of the manuscript, whether completed by him or remaining incomplete, or from a letting of any rights for the production of the play. (Daby v. Ericsson, 45 N. Y. 786; Williams v. Whedon, 109 N. Y. 333; Costello v. Costello, 209 N. Y. 252.) Nevertheless, in a court of equity, Marcin, when he became surviving partner, assumed the character of a trustee for the estate of his dead partner (Case v. Abeel, 1 Paige, 393; Joseph v. Herzig, 198 N. Y. 456); and, at the instance of the estate, was subject to an accounting for all the partnership assets received by him. (Russell v. McCall, 141 N. Y. 437; Simpson v. Simpson, 197 N. Y. 586.) Therefore, in whatever aspect the complaint is viewed, since the allegation is made and the fact found that Marcin, as surviving partner, received from partnership assets certain moneys, either in satisfaction of the Woods-Ongley contract or in payment of an independent letting of the firm manuscript, it is clear that the plaintiff, representing the estate of the deceased partner, was entitled to an accounting, and to the recovery, upon such an accounting, of the moneys which have been adjudged her due. We think also that Marcin was entitled to the allowance made to him for his labor in completing the play and no more.

As against the defendant Woods, there is difficulty in determining whether the case attempted to be stated is grounded in contract or in tort. Assuming it to be the former, we think the complaint is insufficient. The contract, Exhibit A, entered into by Ongley and Woods, engaged Ongley to write a play entitled “ Birds of a Feather.” Undoubtedly, the undertaking of a particular author to write and deliver a certain dramatic piece, be the author George Bernard Shaw or George Booth Ongley, will not be satisfied by the delivery of a writing composed by the litigious but illiterate Richard Roe. (Sargent v. McLeod, 209 N. Y. 360.) True, in this instance, the contract was modified to permit Marcin to collaborate with Ongley in writing the piece. Yet, a play to be written by Ongley and Marcin is not a play which Richard Roe may have written. The complaint does not allege that “ Birds of a Feather,” as a completed play, was written by Ongley, or by Ongley and Marcin. It alleges that it was not entirely completed at Ongley’s death; that thereafter Marcin or some other person completed the play; ” that a play so completed was produced by the defendant Woods. Moreover, the play to be written by Ongley, or by Ongley and Marcin, was to be delivered to Woods on or before April 1st, 1915. It is not alleged that it was so delivered; in fact, no play was delivered until more than one year after the date agreed upon. It is said that the defendant Woods, in accepting Cheating Cheaters,” waived the point that it may not have been written by Ongley or Ongley and Marcin, or that it had not been delivered on the contract date. The burden rested upon the plaintiff to allege performance by Ongley of the obligations cast upon him by the Woods contract, or an excuse for non-performance, in order that a recovery upon the obligations entered into by Woods might rightfully be asserted. The plaintiff did neither. She did not assert that “ Cheating Cheaters ”' was written by Ongley and Marcin, or delivered on or before April 1st, 1915. Neither did she assert that the manuscript of that play was accepted by Woods in satisfaction of his contract with Ongley. Again, the complaint fails to assert that Woods was ever guilty of a breach of his contract with. Ongley in failing to pay royalties to him or his estate. In fact, by implication, it asserts the very converse. Thus it appears from the complaint that Ongley and Marcin were partners; that Marcin became the surviving partner of Ongley and as such' entitled to receive all royalties payable under the contract with Woods. It is asserted that Marcin and Woods have received all the profits from the play's production. Presumably then Marcin has received the royalties due him, and the contract obligation has been satisfied. Moreover, if Woods has indeed broken his contract with Ongley, in no event would the plaintiff have been entitled to an accounting against him. He was not an agent of Ongley or the plaintiff, nor was he a trustee of property held in trust. At most, he was a simple debtor and as such not liable to an accounting. (Schantz v. Oakman, 163 N. Y. 148.) We think that a right of action, grounded upon a breach of the Ongley-Woods contract, has not been stated.

If we assume that the case attempted to be stated against" Woods is grounded in tort, we think that the complaint is likewise insufficient, in that the commission of no wrong by the defendant Woods has been alleged. The nearest approach to the statement of such a wrong is made by paragraph IX. It is there asserted that Marcin, or some other person unknown to this plaintiff, completed the dialogue of the play; that the defendant produced the play under the title Cheating Cheaters; ” that he has advertised Marcin as the sole author of the play. It is inferable from these allegations that Woods produced the play, after obtaining the right so to do from Marcin. There is no charge that Woods appropriated the play to his own use, misappropriated, converted, or wrongfully produced it. Now, Marcin, as we have seen, had the sole right, as surviving partner of Ongley, to sell or license the play to Woods. If Woods became the owner' or licensee through a transaction with Marcin, he was under no obligation, unless Marcin so stipulated, to advertise Ongley as the author, in part or in whole, of the manuscript of the play. Marcin had the right, within reason, to name the terms of the sale or lease to Woods, and if he did not stipulate that Ongley should be advertised, that omission did not constitute a wrong, either on his part or the part of Woods. In passing upon the sufficiency of the complaint the Appellate Division has said that Woods in conjunction with the defendant Marcin has appropriated the play.” (180 App. Div. 685, 690.) This phrase has been many times repeated in court opinions which have dealt with the subject. True, Marcin and Woods appropriated the play. Why not? Marcin had the title; Woods took title from Marcin. They had the right to “ appropriate ” the play, to take it to themselves. The word has no sinister meaning. Moreover, neither the word appropriate ” nor misappropriate ” is employed in the complaint. Perhaps Marcin did misappropriate the proceeds of the play. Neither he nor Woods would have been guilty of a wrong if expressly charged with having “ appropriated ” the play itself.

We have seen that Marcin, upon his survivorship of Ongley, became the owner of the incomplete manuscript of “ Birds of a Feather; ” that, in a sense, he was a trustee of this asset of the partnership for the benefit of the estate of Ongley, his deceased partner. There are cases which hold that where a trustee vested with full power to sell, makes a sale of trust property with the intention of misappropriating the proceeds of the transaction, a buyer, having knowledge of the intended conversion, is equally liable with the trustee for the wrong subsequently committed. (Field v. Schieffelin, 7 Johns. Ch. 150, 155; Colt v. Lasnier, 9 Cow. 320; Sacia v. Berthoud, 17 Barb. 15.) If such were the facts alleged, and found in this instance, we might hesitate to say that the plaintiff was without a cause of action against Woods for an accounting in reference to the trust property received by him. We have already shown that no such case has been alleged. We think it has not been found.

. The contracts entered into between Marcin and Woods and the transactions between them were not set up in the complaint. They first appear in the findings. It is found therein that Woods accepted the play “ Birds of a Feather ” from Marcin, with full knowledge that its central idea or plot was the same as that of the play which George Booth Ongley had contracted to write and deliver to him.” Even so, Woods had the right to buy the play from Marcin as surviving partner. It is further found that Woods with full notice and knowledge of the rights and interests of plaintiff and her intestate, wrongfully and in violation of said rights and interests, connived and co-operated with the defendant, Max Marcin, in appropriating and producing the play.” Even here there is no charge that Woods purchased or leased the play knowing that Marcin would misappropriate the proceeds received, or with the purpose of enabling Marcin to accomplish that wrongful result. Moreover, there is no support for the finding that Woods then knew of the rights of the plaintiff. In January, 1915, he had known that Ongley was to write a play “ Birds of a Feather,” and that Marcin was to collaborate with him in its composition. But that play had not been completed on contract time. More than a year elapsed before the play was offered him by Marcin and Marcin guaranteed that the play was his own property. Woods may have thought that Marcin had bought from the Ongley estate its rights to the incomplete manuscript, or he may well have thought that Marcin, having written two-thirds of the manuscript in order to complete it, as a matter of law was entitled to claim ownership of a property which, without Martin's labor, as an incomplete play, would have been wholly valueless. In this view Woods did not knowingly participate in a wrong intended to be committed by Marcin after selling or leasing the play. If Woods, in making the purchase or lease, was entirely within his rights, he was entitled to stand upon the terms of his bargain with Marcin, and thereafter to make payments of all royalties to him.

We think that under the complaint the plaintiff was not entitled to an accounting from Woods; that a case for an accounting was not made by the findings; that judgment for a sum of money or any other relief should not have been entered against him.

The judgment of the Appellate Division and that of the Special Term should be affirmed, without costs as to the defendant Martin and reversed as to the defendant Woods, and the complaint, as to him, dismissed, with costs in all courts.

Cardozo, Ch. J., Pound, Lehman and O’Brien, JJ., concur; Crane and Hubbs, JJ., concur except as to the reversal, as to which they dissent.

Judgment accordingly.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v. Lester Bedell, Appellant.
    (Argued May 31, 1929;
    decided July 11, 1929.)

      Charles Wesley and Edgar L. Ryder for appellant.
    The village of Ossining had no power to pass the ordinance in question. (Bradley v. Degnan Con. Co., 224 N. Y. 60; N. Y. C. & H. R. R. R. Co. v. City of New York, 202 N. Y. 212; Hinman v. Clarke, 121 App. Div. 105; 193 N. Y. 640; Western N. Y. & P. T. Co. v. Stillman, 68 Misc. Rep. 456; 143 App. Div. 718.)

      Frank H. Coyne, District Attorney (A. W. Hendrickson of counsel), for respondent.
    The board of trustees of the village of Ossining had power to pass such ordinances. (L. 1910, ch. 667; Village Law, §§ 89, 90 and 380.)
   Per Curiam.

The information charged that the defendant did commit the crime of violating section 18 of the ordinances of the village of Ossining by unlawfully moving, between the hours of twelve o’clock midnight and five o’clock a. m., a tractor and shovel, which were more than eight feet in width, along a street of the village. The proof showed that the defendant, between the hours named, was operating along a village street a Mack truck having in tow a trailer loaded with a trench digger machine which was in excess of eight feet in width. Article 11 of the Highway Law (Cons. Laws, ch. 25), in section 281, provides that the article shall be exclusively controlling upon the registration, numbering and regulation of motor vehicles, and the licensing and regulation of chauffeurs and operators and “ on their use of public highways.” Section 282-a of the same article provides: “No person shall operate or drive or cause to be operated or driven upon a public highway or bridge thereon, in any county not wholly included within a city, a motor vehicle or trailer having,

“ 1. A width of body, inclusive of load, of more than eight feet, * * It further provides: “ In cases of emergency, the state commissioner of highways, may grant permission, in writing, to exceed the limits prescribed herein.” Within the meaning of the section a village street is a “ public highway.” (§ 281.) In moving a trailer which, “ inclusive of load,” was more than eight feet wide, along a street of the village of Ossining, the defendant was performing an act, concerning which the Highway Law made exclusive provision. Therefore, no ordinance of the village had force to render criminal the act of the defendant.

The judgment of the County Court and that of the Court of Special Sessions should be reversed and the information dismissed.

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and O’Brien, JJ., concur; Hubbs, J., not sitting. Judgments reversed, etc.


text:
    Michael E. Sweeney et al., Appellants, v. State of New York, Respondent.
    (Argued June 13, 1929;
    decided July 11, 1929.)

      Carlos C. Alden for appellants.
    Section 480 of the Civil Practice Act, as amended by chapter 623 of the Laws of 1927, is not unconstitutional as an ex post facto law. (J. C. League v. Texas, 184 U. S. 156; Brearley School v. Ward, 201 N. Y. 358.) A legislative enactment which is intended to be retroactive is within the legislative power and when not offending against fundamental principles of right and justice is not invalid merely because it is retroactive. (J. C. League v. Texas,
      184 U. S. 156; Matter of Berkovitz v. Arbib, 230 N. Y. 261; Matter of Barker, 230 N. Y. 364; National Surety Co. v. Architectural Decorating Co., 226 U. S. 276; Lennon v. New York, 55 N. Y. 361; Sliosberg v. N. Y. Life Ins. Co., 244 N. Y. 482; Conkey v. Hart, 14 N. Y. 22; Cuyahoga Falls Real Estate Assn. v. Caughy, 2 Ohio St. 152; Truax v. Corrigan, 257 U. S. 312; Mills v. Geer, 111 Ga. 275; Fee v. Cowdry, 45 Ark. 410.) Section 480 of the Civil Practice Act, as amended by chapter 623 of the Laws of 1927, is not unconstitutional as violating any provision of the United States Constitution or of the Constitution of the State of New York. (Metcalfe v. Union Trust Co., 181 N. Y. 39; National Surety Co. v. Architectural Decorating Co., 266 U. S. 276; Lennon v. New York, 55 N. Y. 361; Sliosberg v. New York Life Ins. Co., 244 N. Y. 482; Conkey v. Hart, 14 N. Y. 22; Phinney v. Phinney, 81 Me. 450; Owen v. Roberts, 81 Me. 439; National Bond & Security Co. v. Krahmer, 105 Minn. 422; Rosenplanter v. Provident Savings Loan Assn., 96 Fed. Rep. 721; Supreme Ruling of the F. M. C. v. Snyder, 227 U. S. 497; Matter of Barker, 230 N. Y. 364.)

      Hamilton Ward, Attorney-General (Albert J. Danaher of counsel), for respondent.
    The claim herein did not represent a pecuniary loss which could be ascertained with reasonable certainty as of a fixed day and, therefore, claimants were not entitled to the interest awarded by the Court of Claims. (Faber v. City of New York, 222 N. Y. 255.) The amendment of 1927 as construed by the Court of Claims contravenes the provisions of article 1, section 10, and article 16, section 1, of the United States Constitution, and of article 1, section 6, of the New York State Constitution. (Sliosberg v. New York Life Ins. Co., 244 N. Y. 482; Excelsior Terra Cotta Co. v. Harde, 90 App. Div. 4; Smith v. Board of Education, 208 N. Y. 84; Williamsburg Savings Bank v. State, 243 N. Y. 231.)

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly and Denis B. O'Brien of counsel), for city of New York, amicus curice.

    So far, at least, as actions pending on April 4, 1927, are concerned, section 480 of the Civil Practice Act, as amended by chapter 623 of the Laws of 1927, is unconstitutional. (Close v. Potter, 2 Misc. Rep. 1; Town of Cherry Creek v. Becker, 123 N. Y. 161; Chicago Great Western R. R. Co. v. State of New York, 197 App. Div. 742; 233 N. Y. 661; Faber v. City of New York, 222 N. Y. 255; Metcalf Co., Ltd., v. Mayer, No. 1, 213 App. Div. 607.)
   Per Curiam.

The Court of Claims, holding that the defendant, the State of New York, had failed to perform its contract with the claimants, gave judgment in claimants’ favor for the damages resulting from the breach. These damages were unliquidated when the action was begun, but interest upon the amount recovered was included in the judgment. This was done pursuant to Civil Practice Act, section 480, as amended by Laws of 1927, chapter 623, which provides that in every action then pending or thereafter brought wherein any sum of money shall be awarded by verdict, report or decision upon a cause of action for the enforcement of or based upon breach of performance of a contract, express or implied, other than a contract to marry, interest shall be recovered upon the principal sum whether theretofore liquidated or unliquidated and shall be added to and be a part of the total sum awarded.”

The Appellate Division held the statute unconstitutional in its retroactive operation on the ground that the effect was to deprive the State of property without due process of law.

There is no occasion to consider at this time whether the statute, in so far as retroactive, may be sustained against persons other than the State itself. Certain it is that the State which enacted it may not be heard to complain that the enactment is void as a violation of “ due process ” (City of Trenton v. New Jersey, 262 U. S. 182, 188; Hatch v. Reardon, 204 U. S. 152, 160). The award of interest is not in any prohibited sense a charity or bounty. It has its roots in a reasonable conception of the demands of equity and justice (Williams-burgh Sav. Bank v. State, 243 N. Y. 231; Farrington v. State, 248 N. Y. 112, 115).

There was a concession by appellants upon the argument that interest should have been computed from June 15, 1922, instead of October 15, 1921, with a resulting reduction of the judgment by the sum of $129.80.

The judgment of the Appellate Division in so far as appealed from should be reversed, and that of the Court of Claims modified by deducting therefrom the sum of $129.80, and as modified affirmed, with costs in the Appellate Division and in this court.

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

Judgment accordingly.


author: Lehman, J.

text:
    Jesse J. Moore, Respondent, v. Edward S. Maddock, Appellant.

      (Argued April 15, 1929;
    decided July 11, 1929.)

      Frank H. Towsley for appellant.
    . The cause of action, if any, set forth in the complaint is not one for fraud or deceit and the statutory rule that the cause of action begins to run from the time of discovery of the fraud does not apply. (Rucker v. Hagar, 230 Pac. Rep. 70; Glover v. National Bank of Commerce of New York, 156 App. Div. 247; Price v. Mulford, 107 N. Y. 303; Model Building & Loan Assn. v. Reeves, 114 Misc. Rep. 137; Spallholz v. Sheldon, 216 N. Y. 205; Hart v. Goadby, 129 N. Y. Supp. 892; Oakes v. Howell, 27 How. Pr. 145.) There can be no question under the New York law but that the liability of the agent, if any, under a contract purporting to be made in the name of a principal is on the implied warranty of authority and is not on the contract itself. (White v. Madison, 26 N. Y. 117; Baltzen v. Nicolay, 53 N. Y. 467; Dung v. Parker, 52 N. Y. 494; Simons v. Moore, 100 N. Y. 140; Taylor v. Nostrand, 134 N. Y. 108.) The position of the defendant is that the cause of action, if any, is on the breach of the implied warranty of authority, that the warranty is broken when made, and that the cause of action accrued immediately. (Allen v. Todd, 6 Lans. 222; Louisville Silo & Tank Co. v. Thweatt, 295 S. W. Rep. 710; Motley v. Montgomery, 18 S. C. Law, 554; Woodland Oil Co. v. Byers & Co., 223 Penn. St. 241; Tremaine v. Canada Pressed Brick Co., 21 Ont. Wkly. Notes, 110; Lehigh Coal & Nav. Co. v. Blakeslee, 189 Penn. St. 13; Boston Tow Boat Co. v. Medford Nat. Bank, 121 N. E. Rep. 491; Chancellor v. Wiggins, 43 Ky. 201; Blethen v. Lovering, 58 Me. 437; National Bank v. Spates, 41 W. Va. 27; Brackett v. Martens, 87 Pac. Rep. 410; Fairbanks, Morse & Co. v. Smith, 99 S. W. Rep. 705.)

      A. Furman Greene for respondent.
    The allegations of the amended complaint, as amplified by plaintiff’s answering affidavit, justify the conclusion that defendant fraudulently concealed his lack of authority. The presence of the element of fraud prevents the operation of the Statute of Limitations until the discovery by plaintiff of the facts constituting fraud. (Polhill v. Walter, 3 B. & Ad. 114; White v. Madison, 26 N. Y. 117; New Georgia Nat. Bank v. Lippmann, 249 N. Y. 307; Hopkins v. Lincoln Trust Co., 233 N. Y. 213.) Even conceding that defendant’s liability rests upon his implied warranty of authority, the plaintiff’s cause of action did not accrue the instant the representation of authority was made but not until plaintiff learned of defendant’s lack of authority. (Cherry v. Colonial Bank, [1869] L. R. 3 P. C. 24; Yonge v.
      Toynbee, [1910] 1 K. B. 215; Letellier v. Boivin, 16 Que. Super. Ct. 428; Anderson v. Adams, 43 Ore. 621; Sheffield Corp. v. Barclay, [1905] App. Cas. 392.)
   Lehman, J.

The complaint herein alleges that in August, 1921, the plaintiff was in the employ of the Continental Guaranty Corporation. The defendant was the president of the corporation. He represented to the plaintiff that he was authorized as president to act as agent and representative of the corporation, and on behalf of the corporation he entered into a contract with the plaintiff for the organization and promotion of a similar corporation to engage in the same line of business, either as a subsidiary of, or in co-operation with, the said Continental Guaranty Corporation, and agreed that in consideration of the services to be rendered by the plaintiff, the plaintiff should receive a large block of stock in the new corporation and a substantial payment in money. In pursuance of the agreement, and in reliance upon the defendant’s representation that the defendant was duly authorized to act as the agent of the said Continental Guaranty Corporation in the making of the contract, the plaintiff rendered services as required by the contract. Subsequently the Continental Guaranty Corporation asserted that the defendant had no authority to act as agent for it, as president or otherwise, in the making of the above-mentioned agreement. On or about February 17th the defendant repudiated the said agreement and notified the plaintiff that the plans for the development of the project thereunder had been abandoned by the defendant and by the said Continental Guaranty Corporation. The plaintiff has never received the agreed compensation.

The complaint is undoubtedly based upon the theory that the plaintiff has a cause of action for damages caused by the breach of defendant’s alleged warranty of authority to enter into a contract binding upon the corporation. The contract was, it is alleged, made in August, 1921. The action was commenced by service of the summons on the 17th day of February, 1928. The defendant thereupon moved for an order dismissing the complaint on the ground that the cause of action did not accrue within the time limited by law for the commencement of the action. On the hearing of the motion, the plaintiff presented affidavits in accordance with the provisions of the Rules of Civil Practice, and the motion of the defendant has been denied.

The affidavits presented by the. plaintiff, read with the complaint, sufficiently establish that the plaintiff believed that the defendant had authority to enter into the contract on behalf of the corporation, and that, in performing services under his contract, he acted in co-operation with the defendant, the president of the corporation. The defendant wrote to the plaintiff a letter dated February 17th, 1922, terminating the plaintiff’s services, in which he stated: We have made up our minds to drop the International Equipment Corporation as a separate enterprise, and if we use that Corporation at all it will be merely to clear merchandise transactions beyond our charter power.” The letter was written on the corporate letter-head and was signed E. S. Maddock, President.” It was received a few days after its date and within six years of the bringing of this action. In March, 1923, the plaintiff brought an action against the corporation in Pennsylvania. The corporation filed an answer stating that the defendant Maddock had no authority to represent it or to enter into said contract in its behalf. Until that time the plaintiff had no knowledge or notice that defendant’s representation of authority to act for the corporation was untrue.

The complaint contains no allegations of fraud. The action is not brought to procure a judgment on the ground of fraud. Section 48, subdivision 5, of the Civil Practice Act has no apphcation. An action for breach of warranty rests upon a contract which the law implies. The cause of action accrued when the wrong to the plaintiff was complete, not, as in an action for fraud, when the wrong was discovered. The cause of action is not upon the contract itself, made in the name of his principal, but upon the defendant’s imphed warranty or promise. (New Georgia Nat. Bank v. Lippmann, 249 N. Y. 307.) Breach of the impEed promise or warranty of the defendant, rather than the repudiation or breach of the agreement which the defendant purported to make as agent of a corporate principal, should, on principle, fix the time when the plaintiff’s cause of action against the defendant must be deemed to have accrued. We have found no judicial decision opposed to the principle.

The defendant maintains that since at the time when, as the plaintiff aUeges, the defendant represented and warranted that he had authority to enter into a contract binding upon the corporation, the representation was false, the warranty was broken as soon as made and only when made. That does not foUow. Before we can determine when a warranty or promise is broken, the terms of the warranty or promise must be formulated. The defendant did not, in fact, make any promise or warranty. No inference can be drawn from the allegations of the complaint or affidavits that he intended to make any promise or warranty. The only promise or warranty on the part of the defendant, aEeged in the complaint, is impEed by the law regardless of the defendant’s actual intent. If the defendant attempted to make a contract on behalf of the corporation without authority, then according to a long Ene of judicial decisions, it is but just that the loss occasioned by there being no contract with the principal, should be borne by the agent who acted without authority. As a device by which that loss may be placed upon the agent, the courts have held that a promise or warranty must be impEed. (Balizen v. Nicolay, 53 N. Y. 467; Hall v. Lauderdale, 46 N. Y. 70; Halbot v. Lens, [1901] 1 Ch. Div. 344.) The purpose for which the device of an implied promise has been created must dictate the terms of the promise when the courts are called upon to formulate it.

Sometimes the courts seem to have treated the implied promise as if it were one of indemnity for damages caused by reliance upon the assertion of authority. (Bank of England v. Cutler, [1908] 2 K. B. 208; Anderson v. Adams, 43 Ore. 621; White v. Madison, 26 N. Y. 117; Taylor v. Nostrand, 134 N. Y. 108; Collen v. Wright, 7 El. & B. 308; 8 El. & B. 647; Starkey v. Bank of England, [1903] A. C. 114, affg. sub nom. Oliver v. Bank of England, [1902] 1 Ch. Div. 610.) In these cases, it is true, the courts were called upon to determine the damages which might be recovered in an action for breach of warranty, rather than the time when the action accrued, and, in most cases, it may be said that the courts assumed, rather than determined, that the promise was one of indemnity, so that all damages which flowed naturally from continued reliance on the warranty of authority might be recovered. Perhaps, indeed, analysis might show that some of the decisions rest on other grounds. In Sheffield Corp. v. Barclay ([1905] A. C. 392), however, the court not only held that the implied contract was one of indemnity, but made that holding the basis of its decision that the Statute of Limitations begins to run only when the damages have actually been suffered.

In other cases, the courts have treated the implied warranty of authority as one which continued as long as the assertion of authority was acted upon. (Yonge v. Toynbee, [1910] 1 K. B. 215.) At times, indeed, the two theories of the nature of the promise or warranty coalesce; for a distinction between a promise of indemnity for damages caused by continued reliance on assertion of authority, and a warranty of authority which continues as long as it is relied on, has few if any practical consequences.

We do not from such decisions seek to formulate the promise which in all cases the courts of this State should hold is implied in law from the assertion of authority to bind a principal where such authority is, in fact, lacking. The doctrine of an implied warranty is based upon a fiction, and there is need of caution in determining the final consequences of a fiction. Much might be said both in favor of and against the various possible views of the nature of the warranty implied in law. These cases are of importance because they show a tendency in the courts to extend the implied promise till it gives protection against all damages which naturally flow from continued reliance upon the agent’s assertion of authority. At present we give them no further effect. We confine our consideration to the facts in the particular case.

Here the defendant was the president of the corporation which he assumed to represent. The contract called for the performance of services by the plaintiff in cooperation with the defendant as president of the corporation. The defendant impliedly asked the plaintiff to sign the contract with the corporation in reliance upon the defendant’s authority to bind the corporation. No less did the defendant ask the plaintiff to continue to rely upon his assertion of authority when, as president of the corporation, he cooperated with the plaintiff in the organization of the corporation. Finally, the corporation repudiated the contract, but in a letter which the defendant signed as president. There was no assertion, in that letter, that the defendant as president of the corporation had no authority to contract with the plaintiff for his services. On the contrary, it was calculated to disarm any possible suspicion that the defendant did not have such authority and, in effect, constituted a renewal of his assertion that he did have authority. Here decision that the defendant’s assertion of authority was a continuing warranty rests upon no fiction but the actual intention of the parties as disclosed by their acts. We hold only that where a person makes an assertion of authority to bind a principal, which is intended and understood to be a continuing assertion, the warranty of the truth of that assertion which the law implies must from its nature be a continuing warranty. The plaintiff’s cause of action did not accrue till after he had received the letter signed by the defendant as president of the corporation. We do not attempt to indicate what would be our decision if the circumstances presented were different.

The order should be affirmed, with costs, and the questions certified answered as follows: The first and second questions in the negative and the third question in the affirmative.

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

Order affirmed, etc.


author: Lehman, J. O’Brien, J.

text:
    The People of the State of New York, Respondent, v. Robert Thompson, Appellant.

      (Argued May 29, 1929;
    decided July 11, 1929.)

      Sol H. Eisler for appellant.
    The trial court had power to sentence defendant to a definite term, and having done so and accordingly entered a judgment of conviction on January 18, 1929, pursuant to which he was committed, the trial court was without power to subsequently, on January 21, 1929, resentence defendant for an indeterminate term. (People ex rel. Pinchback v. Warden, 184 App. Div. 777; People ex rel. Kipnis v. McCann, 199 App. Div. 30; People v. Sullivan, 54 Misc. Rep. 489; People v. General Sessions, 185 N. Y. 584.)

      Joab H. Banton, District Attorney (Robert C. Taylor and Felix C. Benvenga of counsel), for respondent.
    The trial court had power to vacate its original definite sentence, and substitute a reformatory sentence, under the Parole Commission Law. (People v. Gowasky, 219 App. Div. 19; 244 N. Y. 451; People ex rel. Kipnis v. McCann, 199 App. Div. 30; 234 N. Y. 502; People v. McGrath, 202 N. Y. 445.)
   Lehman, J.

Upon sufficient evidence, the defendant was convicted in the Court of Special Sessions of the offense of illegally practising medicine, as defined by section 1250, subdivision 7, of the Education Law (Cons. Laws, ch. 16). That offense is punishable by imprisonment for a term of not more than one year. (Education Law, § 1263, subd. 3.) Accordingly, he was sentenced to imprisonment in the New York County Penitentiary for the term of one year. Thereafter, the court on its own motion, and over the protest of the defendant, reconsidered the sentence it had imposed and substituted a commitment to the penitentiary upon an indeterminate sentence, in accordance with the provisions of section 4, chapter 579 of the Laws of 1915 (the Parole Commission Law).

We are agreed that even though the Education Law fixes imprisonment for a term not exceeding one year as the penalty for the offense committed by the defendant, yet under the Parole Commission Law the court might have imposed an indeterminate sentence. (People ex rel. Kipnis v. McCann, 199 App. Div. 30; affd., 234 N. Y. 502.) Indeed, we are unanimous that the provisions of that law are mandatory in the cities in which the Parole Commission Law applies, whenever the defendant is not insane or mentally or physically incapable of being substantially benefited by the correctional and reformatory purposes ” of the institution to which he is committed (| 4). The Legislature has decreed that where there is possibility of substantial benefit from an indeterminate sentence to an institution maintained for correctional and reformatory purposes, such a sentence should be imposed upon an offender, but decision of whether the offender is mentally or physically incapable of being substantially benefited is left to the court. That question the court must decide before imposing sentence, but error in its decision would not render a sentence void for lack of jurisdiction. If the original sentence was within the jurisdiction of the court, then the court had no power thereafter to treat it as void and to impose a new sentence.

We are not called upon to indulge in any presumptions of whether ordinarily a criminal offender is sane and physically and mentally capable of. substantial benefit from an indeterminate sentence. The trial court was required to determine that question before it could impose any sentence. It chose to impose a definite sentence, which it might not do, unless it decided that the offender was incapable of being substantially benefited. The question before us is whether, in the absence of an express affirmative finding that the offender was incapable of being substantially benefited, there is a conclusive presumption that the court has failed to perform its duty to pass upon the offender’s capacity to benefit from an indeterminate sentence before it proceeded to impose a fixed sentence.

I have used the term “ conclusive presumption ” advisedly. The court had jurisdiction of the person of the offender and of the offense. Its original sentence did not exceed the penalty fixed by the statute. It seems to me obvious that under the circumstances, the validity or nullity of the sentence cannot be made dependent upon proof of the mental processes of the trial court or of the mental or physical capacity of the offender. Either the sentence for a fixed term must imply a finding that the. offender was not capable of substantial benefit from an indeterminate sentence, or there must, in every case, be an express finding to that effect before the court has jurisdiction to impose a fixed sentence.

Choice between these alternatives seems to me clear. Imprisonment for a fixed term is ordinarily the penalty for criminal offenses. In cities of the first class, the Legislature has provided an alternative system of punishment based upon physical and mental capacity to benefit by an indeterminate sentence to an institution with correctional and reformatory purposes. The duty of the court to pass upon the capacity of a convicted offender, before it determines the system of punishment that should be applied, is clear. Courts may- err, and evén at times ignore the duty that has been imposed upon them, but unless, we are willing to proceed upon a general assumption that courts are ignorant of their duty, then a sentence for a fixed term is necessarily based upon a previous determination that the offender lacks capacity to benefit substantially by correctional and reformatory treatment, just as a sentence under the Parole Law is necessarily based upon a previous determination that the offender is not incapable of such benefit. Decision as to the capacity of the offender is, therefore, necessarily implied in the sentence imposed. To require the court to state expressly that it has determined the question which must be the basis of sentence imposed, would, it seems to me, result in the creation of new technicalities in the administration of the criminal law.

The Parole Law, as I have pointed out, merely provides an alternative system of punishment in cities of the first class. Elsewhere the courts must impose the penalty fixed by law for the offense upon which there has been a conviction. Even in cities of the first class, the alternative system of punishment is applied only where capacity to benefit by the alternative system exists. Otherwise the courts must impose the same form of punishment used throughout the State. A rule that in cities of the first class the courts may not impose the penalty provided by statute for a particular offense until they have expressly found that the alternative system of punishment may not be applied, seems to me anomalous. We are not advised that the courts have generally made such an express finding before sentence, or incorporated a statement to that effect in a commitment. If the original sentence and commitment in this case were a nullity, then it would seem that every sentence imposed for a fixed term, where sentence might have been imposed under the Parole Law, is equally void, unless it affirmatively appears that the court has previously passed upon the capacity of the offender.

For these reasons the judgment of the Appellate Division and that of the Court of Special Sessions should be reversed and the original sentence reinstated.

O’Brien, J.

(dissenting). In respect to the term of imprisonment of those who are not insane or mentally or physically incapable of being substantially benefited by the correctional and reformatory purposes ” of institutions under the jurisdiction of the Department of Correction, the provision for a fixed term which might formerly be imposed under the Public Health Law, as re-enacted by section 1263 of the Education Law, is superseded by chapter 579 of the Laws of 1915. Unless the trial court deemed this defendant insane or incapable of reformation (People ex rel. Kipnis v. McCann, 199 App. Div. 30, 38; affd., 234 N. Y. 502),it was bound to apply the provisions relating to parole as embodied in the later statute. It had no discretion except to determine the prisoner’s sanity or his capacity for reformation. If the first sentence had been imposed after a determinar tion that reformation was impossible, the second sentence would have been void. If the first sentence, however, was a nullity and, in the absence of an express or implied finding of incapacity for reformation, it was such, then it may be treated as never having been pronounced. The court made no express finding or determination. Surely an opinion or determination by the trial court that the prisoner was insane or that he was incapable of benefit cannot, in view of the reasons assigned for resentence, be inferred. Few human beings have sunk so low that no possibility of reclamation will be presumed. Statements by members of the trial court at the time of resentence demonstrate the fact that, after reflection, they were convinced of their total lack of jurisdiction in their application of the Education Law instead of the statute relating to parole. Never did one of them, never did counsel, reveal any indication of an indulgence in the impossible presumption that defendant was insane or was beyond the hope of correction. All took for granted that he was not abnormal and, upon that assumption, they directed their attention solely to a consideration of the statute applicable to bis case. Their statements prove beyond doubt that the original sentence resulted from such a mistake in the application of the law as to deprive the court of jurisdiction. They rebut the presumption that ordinarily would arise concerning the due performance of the judicial function in passing upon questions relating to defendant’s sanity and his capacity for benefit. Where a trial court does not, even by implication, make a finding respecting sanity or the capability of substantial benefit from the correctional and reforma^ tory purposes of institutions under the jurisdiction of the Department of Correction, but does by its own statement necessarily imply that it made no such finding, an appellate court will presume that the prisoner is sane and, like the average human being, is not without a chance of substantial reformation. To presume the contrary would compel a rejection of all experience and common sense and would defeat the purpose of the Parole Law. It was the first sentence, therefore, rather than the second which transcended the court’s jurisdiction. Not only was it erroneous, it was void.

The judgment of the Appellate Division and that of the Court of Special Sessions should be affirmed.

Cardozo, Ch. J., Kellogg and Hubbs, JJ., concur with Lehman, J.; O’Brien J., dissents in opinion in which Pound and Crane, JJ., concur.

Judgments reversed, etc.