author: Crine, J.

text:
    James A. Beha, Superintendent of Insurance of the State of New York, Appellant, v. William L. Weinstock, Respondent.
    Insurance — corporations — liquidation — assessment — notice — mutual automobile casualty corporations — assessment of members — provision in Insurance Law for notice within one year after expiration of policy not applicable to assessments made in liquidation proceedings — failure to give notice within year no defense to action by Superintendent of Insurance to recover assessment.
    1. The provision for notice in section 346 of the Insurance Law (Cons. Laws, ch. 28, amd. L. 1922, ch. 417), requiring every member of a mutual automobile casualty corporation to pay his proportionate share of any assessment that may be laid by the corporation in accordance with law and his contract, “if he is notified of such assessment within one year after the expiration or cancellation of his policy,’’ relates to assessments made by the corporation as a going concern and does not apply to liquidation proceedings.
    2. In an action, therefore, brought by the Superintendent of Insurance to recover an assessment levied on defendant, who was a policyholder in such a casualty corporation at the time the Superintendent took possession thereof, pursuant to section 63 of the Insurance Law, for the purpose of liquidating its business, a defense that the defendant was not notified of the assessment within one year after the expiration of his policy is insufficient.

      Beha v. Weinstock, 221 App. Div. 822, reversed.
    (Argued January 9, 1928;
    decided January 20, 1928.)
    Appeal, by permission, from a judgment, entered October 8, 1927, upon an order of the Appellate Division of the Supreme Court in the third judicial department, which unanimously affirmed an order of Special Term granting defendant’s motion for judgment on the pleadings.

      Clarence C. Fowler, Alfred C. Bennett and Pinckney Estes Glantzberg for appellant.
    The Superintendent, by the suit at bar, seeks to enforce only the statute liability of the defendant voluntarily assumed by the defendant when he accepted and retained the policy of insurance. (Commonwealth v. Monitor Ins. Co., 112 Mass. 150; Commonwealth v. Massachusetts Ins. Co., 112 Mass. 116; Matter of Equitable Reserve Fund Life Assn., 131 N. Y. 354; New York Life Ins. Co. v. Statham, 93 U. S. 24; 1 Joyce on Insurance, 114.)

      Ferdinand I. Haber for respondent.
    Both under the policy contract and the statute, definite and specific conditions precedent must be fulfilled before a policyholder can become liable to assessment: (1) A condition that the policyholder be notified of an assessment within one year after the expiration or cancellation of his policy; (2) that the policyholder be assessed only on account of losses and expenses during his menabership, or a proportionate part of a deficiency for a definite period based upon the premium earned upon his policy during the deficiency period. (Beha v. Breger, 130 Misc. Rep. 235.) The Superintendent of Insurance as liquidator is the successor of the corporation and bound by the same limitations and methods of enforcing assessment liability as the corporation itself. (Bell v. Shibley, 33 Barb. 610; Savage v. Medbury, 19 N. Y. 32; Devendorf v. Beardsley, 23 Barb. 656; Matter of Bean v. Stoddard, 207 App. Div. 276; 238 N. Y. 618; Matter of Casualty Co., 244 N. Y. 443; Commonwealth v. Mass. Ins. Co., 112 Mass. 116; Commonwealth v. Monitor Ins. Co., 112 Mass. 150; Matter of Equitable Reserve Fund Life Assn., 131 N. Y. 354.) The complaint is insufficient because it affirmatively appears therefrom that the policyholder was not notified of the assessment within one year from the expiration of his policy. (Bangs v. McIntosh, 23 Barb. 581; Federal Ins. Co. v. Resinger, 46 Ind. App. 146; Decker v. Citizens Ins. Co., 51 Mich. 243; Milwaukee Trust Co. v. Farmers Ins. Co., 115 Wis. 371; Castner v. Ins. Co., 50 Mich. 273; Sands v. Graves, 58 N. Y. 94.)
   Crine, J.

The National Automobile Mutual Casualty Company was organized as a corporation and conducted an insurance business under and by virtue of article 10-B of the Insurance Law of the State of New York (Cons. Laws, ch. 28), and had its principal office for the transaction of business at 75 Maiden Lane, in the city of New York.

On June 28, 1923, the Superintendent of Insurance took possession of the company, pursuant to section 63 of the Insurance Law, for the purpose of liquidating its business. The order of liquidation fixed the rights and liabilities of the corporation, its creditors and policyholders as of July 12, 1923.

Subsequently and on May 29, 1924, the Superintendent of Insurance made his report, wherein he levied an assessment upon the members and policyholders of the company for the purpose of paying the losses and expenses of said company. The amount of the assessment was equal to twice the amount of the cash premium written in the respective policy contracts. The defendant William L. Weinstock, a policyholder, was assessed $206.38, and this action has been brought to recover the amount. The defense interposed, and which has been successful below, is that the insured was not notified of the assessment within the time specified in section 346 of the Insurance Law governing assessments.

This defendant took out his policy for one year on April 17,1922. As amended to take effect April 1, 1122, section 346 read:

“ Section 346. Assessments. The corporation shall in its by-laws and policies fix the contingent mutual liability of the members for the payment of losses and expenses not provided for by its cash funds; but such contingent liability of a member shall not be less than an amount equal to twice the amount of, and in addition to, the cash premium written in the policy. If • the corporation is not possessed of cash funds above its unearned premium sufficient for the payment of the incurred losses and expenses, as estimated or determined, it shall make an assessment for the amount needed to pay such losses and expenses upon the members liable to assessment therefor, in proportion to their several liability. Every member shall be liable to pay and shall pay his proportionate part of any assessment which may be laid by the corporation in accordance with law and his contract, covering any deficiency (excess of liabilities over admitted assets) if he is notified of such assessment within one year after the expiration or cancellation of his policy. Each member’s share of the deficiency for which an assessment is made shall be determined by applying to the premium earned on the member’s policy during the period to be covered by the assessment the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to assessment. All proposed premium assessments shall be filed in the insurance department _ and shall not take effect until approved by the superintendent of insurance, after such investigation as he may deem necessary. • All funds of the corporation and the contingent liability of the members thereof shall be available for the payment of any liability of the corporation.”

The defendant’s policy expired April 17, 1923. The one year referred to in this section after expiration in which to notify a policyholder of an assessment, would in the defendant’s case expire April 17, 1924. As he was not assessed by the insurance liquidator until May 29, 1924, he was not notified within the year after the expiration of his policy. This has been found by the courts below to be fatal to the plaintiff’s recovery. The Attorney-General insists that the one year’s notice does not apply to liquidation proceedings, and we are inclined to agree with him for the following reasons:

This was a mutual insurance company in which the insured was also the insurer. The only funds to pay insurance losses came from the premiums or assessments. Persons other than the insured were interested in maintaining a sufficient insurance fund to pay losses. By section 109 of the Insurance Law the company was directly liable in .case of the insolvency of the insured to persons injured in an accident covered by the policy.

Section 346 provided for a fund to pay losses. First, there was the premium stated in the policy. Then the contingent mutual liability of the members for the payment of losses in excess of its cash funds was provided by assessments, not to be less than an amount equal to twice the amount of and in addition to the cash premium written in the policy. The defendant’s policy contained similar provision, except that the amount of the assessment was not to be greater than twice the premium. The defendant in this case has not been assessed in excess of this amount.

The provision of section 346 relating to notice of assessment, in our opinion relates to assessments made by the corporation as a going concern. Every member, it says, shall be liable for his proportionate part of any assessment laid by the corporation in accordance with law and his contract. All such assessments shall be filed in the Insurance Department, and shall not take effect until approved by the Superintendent of Insurance after such investigation as he may deem necessary. As assessment made by the liquidator, the Insurance Superintendent, would not have to be filed as here stated in the Insurance Department. Such an assessment would not be referred to as taking effect only after the approval of the Superintendent of Insurance and an investigation by him; and yet th s provision applies to all proposed premium assessments, indicating that the assessments referred to excluded those made in liquidation proceedings to pay the debts of the company.

The defendant knew, when he entered the mutual company, that assessments could be levied up to twice his premium for the purpose of paying the losses. The law so provided; so did his policy. To the extent of this superadded liability, he became an insurer. (Commonwealth v. Monitor Insurance Co., 112 Mass. 150.) The company, as a going concern, from day to day could estimate its apparent contingent liabilities for losses which had occurred and make from time to time the assessments necessary to meet these losses.. Under such circumstances, it was reasonable that the company should notify the policyholder as soon as possible and at least within thu year provided by the statute. A different situation confronted the liquidator. All losses and liabilities were fixed as of a certain date. He would have to gather in all available assets, ascertain all the losses up to that time and figure out the assessments upon policyholders. He would not only have one company to deal with, but as a State department, would in all probability have many proceedings going at the same time. No new business would be taken, of course, after the liquidator took possession. All liability and assets would be fixed in amount as of the date stated. The liabilities of the policyholders could not be increased by the taking on of any new business. It would, therefore, be of little importance whether the policyholder, liable to assessment to pay the debts, received notice at once or within the year, or later in the course of the proper administration of the Insurance Department liquidations. The main thing is that the debts and liabilities are fixed as of a certain date and a policyholder made liable by the statute for these debts up to a certain amount.

The winding up of a corporation, such as a mutual insurance company, takes time, and it can hardly be expected that the Legislature intended to force the Insurance Department to proceed to collect che assets within a definite period. I can see no reason for so limiting its powers.

Therefore, the context of the statute and this reasoning would indicate that the one-year notice of assessment does not apply to liquidation proceedings. The order of the Appellate Division and that of Special Term should be reversed and the motion for judgment on the pleadings denied, with costs in all courts.

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

Orders reversed, etc.


source: Caselaw Access Project

author: Kellogg, J. Crane, J.

license: Public Domain

text:
    The People of the State of New York ex rel. Lehigh Valley Railway Company, Appellant, v. William J. Burke et al., as Assessors of the City of Buffalo, Respondents.
    Tax — assessment — certiorari — appraisal of value of lands under water — value of land when filled less cost of filling proper measure of value —• upon appeal on certiorari where proof shows value of lands depends upon uncertain and highly speculative factors, valuation by trier of facts should not be disturbed — exhibition by relator of valuation report to clerks of Interstate Commerce Commission not a controlling admission that lands are worth amount stated therein.
    1. In appraising, for purposes of taxation, submerged land, which has never been put to industrial uses and has never produced a revenue, the value of the land when filled less the cost of filling is a proper measure of its present value.
    2. Upon appeal in a certiorari proceeding to review an assessment, for purposes of taxation, of real estate, all but a small portion of which is under water, where, from the proof, the conclusion is inevitable that the value of the lands depends upon factors which are uncertain and in a high degree speculative, the valuation by the referee, of which the relator makes no complaint, should not have been disturbed.
    3. A contention that the exhibition by the relator, a railroad corporation, of a certain valuation report, to appraisal clerks in the employ of the Interstate Commerce Commission, wherein the lands in question were valued at a much greater amount than that at which they were assessed, constitutes a controlling admission by the relator upon the question at issue, cannot be sustained, where the value of the property in question was not in issue before the Commission, the report upon its value was not used either to fix rates or to establish a maximum sum to limit the issuance of securities, it was not vouched for by the relator except as it was submitted by it, with other data, to the consideration of the Commission and the valuation was in terms based upon a purported sale of underwater lands which in fact was never effectuated.

      People ex rel. Lehigh Valley By. Co. v. Burke, 221 App. Div. 248, reversed.
    (Argued December 7, 1927;
    decided January 20, 1928.)
    Appeal from an order of the Appellate Division of the Supreme Court in the fourth judicial department, entered June 28, 1927, which reversed an order of Special Term reducing an assessment on real property in the city of Buffalo for purposes of taxation.

      Lyman M. Bass for appellant.
    The market value of relator’s property as of December 1, 1922, must be determined in the light of all of the circumstances surrounding it, including its marketability for the purpose of being subdivided into parcels, the number of years which must reasonably lapse before the whole property can be disposed of, its unavailability for use without the expenditure of money for filling in, and any other relevant facts. (People ex rel. Strong v. Hart, 216 N. Y. 513; People ex rel. City of New York v. Keeler, 237 N. Y. 332; People ex rel. N. Y. C. R. R. Co. v. State Tax Comm., 206 App. Div. 553; Adams Express Co. v. Ohio, 166 U. S. 185; Wilcox v. Consolidated Gas Co., 212 U. S. 19; Bluefield Co. v. Public Service Comm., 262 U. S. 679; Southwestern Tel. Co. v. Public Service Comm., 262 U. S. 276; Georgia Ry. Co. v. Railroad Comm., 262 U. S. 625; People ex rel. Sebring v. Dowd, 206 App. Div. 727; People ex rel. U. S. Rubber Co. v. Knapp, 232 N. Y. 153.) The valuation and assessment of property for taxation under section 6 of the Tax Law of the State of New York is unrelated to the valuation of property by the Interstate Commerce Commission under the Interstate Commerce Act and in particular sections 19-a and 15-a thereof.
      (State Public Utilities Comm. ex rel. Springfield v. Springfield Gas & Elec. Co., 125 N. E. Rep. 891; Poplar v. Speed Elec. Co., [Mont.] P. U. R. 1922B, 367; C. & N. W. Ry. Co. v. Eveland, 13 Fed. Rep. [2d] 442; Temmer v. Denver Tramway Co., 18 Fed. Rep. [2d] 226.)

      Frederic C. Rupp, Corporation Counsel, and Herbert A. Hickman for respondents.
    The admission of evidence of the sale of a part of this property, made two years after the assessment under review, and while the trial of this proceeding was in progress, and its use as the basis for the referee’s finding of value, constituted error and the Appellate Division was right in disapproving the finding based thereon. (Latimer v. Burrows, 163 N. Y. 7; Sebring v. Wellington, 63 App. Div. 498; Jamieson v. Elevated R. R. Co., 147 N. Y. 322.) The valuation of this land by relator before the Interstate Commerce Commission was competent evidence here. (People ex rel. Jamaica Water Supply Co. v. Tax Comrs., 196 N. Y. 39; People ex rel. Railroad Co. v. Keator, 36 Hun, 592; Arnold v. Parmelee, 97 N. Y. 652; People ex rel. Ward v. Sutton, 186 App. Div. 550; People ex rel. R., W. & O. R. R. Co. v. Hicks, 105 N. Y. 198; Stecher Litho. Co. v. Inman, 175 N. Y. 124; Pierson v. Atlantic Nat. Bank, 77 N. Y. 304; Nowack v. Met. St. Ry. Co., 166 N. Y. 433; Maller v. Long Island R. R. Co., 122 App. Div. 463; Boyce v. Greeley Square Hotel Co., 181 App. Div. 61; 228 N. Y. 106; Hitchman C. & C. Co. v. Mitchell, 245 U. S. 229.)
   Kellogg, J.

This is a certiorari proceeding to review an assessment of certain real estate of the relator, made by the respondents, assessors of the city of Buffalo, for general tax purposes for the year 1923. The property was assessed at the figure of $1,378,000. The issues joined by the service of a return to the writ of certiorari were referred by the Special Term to a referee to take evidence and report the same with his findings of fact and conclusions of law. The referee took the proof, found as a fact that the full value of the land did not exceed the sum of $498,626, and reported to the Special Term that the relator’s assessment should be reduced to the figure named. The Special Term adopted the findings of the referee and ordered the assessment reduced to the sum of $498,626. The Appellate Division, upon an appeal to it by the present respondents, reversed the Special Term, found that the true value of the land was the sum of $1,378,000, and directed that the assessment made by the respondents, at the sum named, be reinstated. Thereupon the relator took this appeal.

The subject of the assessment is a tract of land having an area of 226.725 acres, situate within the city limits of the city of Buffalo, and about two miles distant from the business center thereof. It is a strip running northerly and southerly, at the easterly end of Lake Erie, with a length of 5,937.44 feet, or approximately one and one-eighth miles, and a width varying -from 1,444 feet, at its southerly boundary, to 2,101 feet on its northerly boundary. All of the land, except about twelve acres, lies under the waters of Lake Erie. Its easterly boundary is the Hamburg turnpike, a paved street carrying the rails of a surface railroad, upon which trolley cars run along the entire frontage. Beneath the Hamburg turnpike there is an under-pass which affords a means of connection between the assessed land and the railroad lines of the relator lying to the east of the turnpike. Sloping banks from the turnpike to the water’s edge constitute the twelve acres of uplands. The remainder of the property, or about 215 acres, is under water having a mean depth of 8.6 feet. The vertical distance from the surface of the water to bedrock averages sixty feet. The westerly line of the property is the harbor line established by the United States government. Still farther westerly is a breakwater maintained by the United States, which extends the full length of the property. About 1,600 feet of water lie between this breakwater and the harbor line.

Title to the land came to the relator from two sources. It had acquired many years prior to the year 1921, from individual owners, that portion of the land which lies east of the shore line of Lake Erie. The waters of Lake Erie, through a series of years, had washed away the original shore, so that it became necessary for the Legislature- to establish the correct boundary line. Accordingly, the line was fixed by statute in the year 1913 at a point which gave to the .relator’s holdings an area of 111.49 acres, of which about one hundred acres were under water. This property had been assessed by the city of Buffalo, during the years 1917 to 1922, at the figure of $85,500, or at the rate of approximately $760 an acre. In the year 1921 the remainder of the land, consisting of 115.235 acres, was purchased by the relator from the State of New York for the sum of $86,426.25, or at the rate of about $750 an acre. This carried the relator’s proprietorship to the established harbor line. Thereafter, the city of Buffalo, acting through these respondents, made this assessment, appraising the land at about $6,000 per acre.

Self-evidently the exact counterpart of the relator’s land does not exist. Nor has any parcel of land, similar in area, location and adaptability for industrial uses, ever been the subj ect of purchase and sale. Consequen tly, no identity of opinion on the part of traders, as to the value of this land, tested by moneys actually paid and received for other lots of an identical character, has ever been exhibited by any market. Moreover, the land, which is almost wholly submerged, has never been put to industrial uses, and has never produced a revenue. Therefore, its value cannot be judged by the fact of market price or the fact of previous earnings. It must necessarily rest, for the purposes of this proceeding, in the opinion of the trier of fact, based upon data of an exceedingly uncertain and unsatisfactory character. -

The respondents insist that the strongest proof, upo-' which to base an opinion as to the value of the land, will be found in facts proven by them in relation to three sales of underwater lands, in the vicinity of the land in question. These sales are: 1. A sale in March, 1918, of 7.14 acres of land to the Empire Engineering Company at a price of $17,000 per acre. 2. A sale in 1923 of 7.86 acres by the Buffalo Harbor Land Company to the city of Buffalo at a price of $25,000 per acre. 3. A sale in December, 1923, of 5^4 acres by Alice Perew to the city of Buffalo at a price of $24,500 per acre. All these parcels lie under the waters of Lake Erie at points north of the land in question. They are situate at least one mile nearer to the business center of the city of Buffalo. The area sold aggregates 203^ acres. Six years were required to make the sales. At this rate it would take approximately sixty-six years to effect a sale of all the 226 acres here involved. The purchase of the parcel sold to the Empire Engineering Company was made to procure a site for industrial operations for the purposes of the Great War. The other purchases were made by a municipality. In all such transactions political considerations and influences frequently play a part. Moreover, these sales are balanced by the sale made in January, 1917, to the South Buffalo Railroad Company. This parcel was just south of the land in question and consists of 21.76 acres of land, of which not more than five acres were under ¡water. The purchase price of this parcel was at the ;rate of $19,300 per acre. In other words, the filled-in [land .sold at -a -less price ¡than the sum which the preponderance of, the proof shows would [have been ¡the cost per ;p,cre of -¡filling {an equal acreage. The sale .tends, [therefore, Jo establish the proposition [that the submerged ¡tract -now under ¡consideration fis ¡,without ecpnpmip value. These sales indicate a widely divergent opiniop as to the value of underwater properties in this vicinity. Twenty acres of unfilled land, on the one hand, sold for more than $17,000 an acre. On the other hand, twenty acres of land, three-quarters of which was filled-in land, sold at approximately the same price, or a price not equal to the price of the filling. Moreover, opinions expressed thereby as to the value of two twenty-acre parcels necessarily involve considerations widely different from those involved when, as here, the opinion to be formed relates to the value of a tract of 226 acres.

The respondents also assert that the exhibition by the relator of a certain valuation report, to appraisal clerks in the employ of the Interstate Commerce Commission, was a fact of controlling importance. The Commission had made a tentative report valuing the relator’s properties. This covered carrier properties of the relator in Buffalo as well as non-carrier properties. The former were tentatively valued for rate-making purposes. The latter were tentatively valued, since they might become important in determining the maximum limit for the issuance of securities by the relator. (Act of Congress of March 1, 1913, sec. 19-a.) The relator made no objection to the valuation of the non-carrier properties, which included the property in question. It does not appear that any application to issue securities was before the Commission. A Mr. Parke, a real estate dealer in Buffalo, had made a written report to the relator in which he had valued all the relator’s Buffalo properties, whether carrier or non-carrier. Upon this report there appeared an appraisal of the property in question at the figure of $10,000 per acre. The entire report was exhibited by the relator to clerks in the valuation bureau of the Commission. It is said that this constituted a controlling admission by the relator upon the question at issue. We think otherwise. The value of the particular property in question was not in issue before the Commission. The report upon its value was not used either to fix rates or to establish a maximum .sum to limit the issuance of securities. It was not vouched for by the relator except as it was submitted by it, with other data, to the consideration of the Commission. It is as if the relator had said to the Commission, We have no quarrel with you as to the valuation made of our non-carrier properties. However, we have in our files a valuation report upon all our properties, including our lands under water, made by a Buffalo real estate dealer, which you may look at and which we now submit.” This attitude of the relator was far • removed from a position of express approval of the report or an assertion of its correctness. Moreover, even if it be thought that the relator by its submission of the report impliedly declared that the land in question was worth $10,000 per acre, it must be remembered that the declaration, when made, was not against the relator’s interest. This fact, while it made the declaration none the less admissible, nevertheless impaired its weight as a determining factor upon the issue here involved. (Wigmore on Evidence, sec. 1048.) The assessors themselves did not take the declaration at its face value, for they found the properties worth not $10,000 per acre, but $6,000 per acre. Moreover, the valuation made by Mr. Parke was in terms based upon a purported sale of underwater lands to the Standard Milling Company, a sale which in fact was never effectuated. For all these reasons we consider that the conduct of the relator, in submitting the Parke report to a bureau of the Interstate Commerce Commission, is not, for the decision of issues here presented, of controlling importance.

The price which a buyer will pay for land which can be made useful for industrial purposes only, in. the last analysis, must depend upon the investment required thus to make it useful. “ Property is not to be deemed worthless because the owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use. Others may be able to use it, and make it subserve the necessities or conveniences of life. Its capability of being made thus available gives it a market value- which can be readily estimated.” (Per Mr. Justice Field in Boom Co. v. Patterson, 98 U. S. 403.) The land in question, in its present submerged condition, is useless for any industrial or economic purpose. “ Its capability of being made thus available ” for such uses will determine its value, if valuable it be. According to the relator’s experts the cost of filling in the land, in order to lift it to a point ten feet above water, will be $30,000 per acre, or approximately seven million dollars for the whole. According to the chief engineer of the city of Buffalo, the cost will be $56,000 per acre, or more than twelve million for the whole. An intending purchaser of the entire tract, in making a decision as to the price which he would pay therefor, reasonably would consider the following facts: 1. In order to make the land available for industrial purposes the use of at least seven million dollars must first be expended to lift the land above the water line. 2. The land .as thus improved cannot, as a whole, be immediately disposed of for industrial purposes. The land is adapted to the use of a grain elevator business. However, it cannot, as an entire tract, be devoted to such purposes. All the land in the city of Buffalo, one of the great milliDg centers of the world, upon which a grain elevator business is prosecuted, comprises less than sixty acres. The relator has commissioned many real estate brokers in the city of Buffalo to sell the tract. Nevertheless, during the lapse of several years no substantial offers have been received therefor. The Ford Motor Company, the Standard Oil Company, the Pillsbury Flour Mill, and many other large manufacturing concerns have passed up the property and located their plants elsewhere within the city of Buffalo or in its vicinity. 3. Many years will be required to sell the property parcel by parcel. Witnesses have testified that from fifty to seventy-five years will have passed before the land can thus be disposed of. If the purchaser' seeks to sell at the high prices paid by the Empire Engineering Company and the city of Buffalo for three small parcels the time which will elapse before the sales are completed, judged by the time elapsing in the case of such sales, may be sixty-six years. On the other hand, if he chooses to. make immediate sales at the price controlling the South Buffalo Bailroad Company sale he will not receive the cost of filling in the lands to make the sale. 4. The purchaser who makes the necessary filling will have invested at least seven million dollars in property which brings no annual return. Interest and taxes will be such that the amount of the investment will be doubled at the end of every ten years. At the end of ten years he will have an investment of approximately fifteen million; at the end of twenty years of thirty million; at the end of thirty years of sixty million. In order to break even, for moneys expended in mere improvements, he must have disposed of all the property at the end of one of these periods for at least the amount which the investment will then total, as shown by the foregoing table. We think that when an intending purchaser had considered these facts he would not be ready to pay a high price therefor.

In First Construction Co. v. State of New York (221 N. Y. 295) this court had under consideration the proper method of appraising the value of a franchise from the State to fill in underwater lands. It said: “The value of the right in this respect will be the value of the land when filled in less the cost of filling and the addition of value as the result of filling in may be greater or less than the cost of the latter operation.” We see no reason why the same method may not be employed to appraise the value of submerged lands where full title thereto, rather than a franchise therein, is privátely owned. In either case the land may not become useful without filling. Therefore, the cost of filling is a necessary factor entering into the problem of value. It is a factor which every prospective buyer for investment would seek to measure. Its proper measure, therefore, might be of help in determining the price at which the unfilled lands would sell.

Summarizing the proof we find this state of facts: The land in question is presently unproductive of income. No tract of land, similar in area and location, has ever been the subject of a market sale. No offers for the entire tract have ever been received. Lands similarly located, which have brought a substantial price, have a total area of 20 acres, or less than one-tenth the acreage of the land in question. They have been sold in three separate parcels through a period of six years. A parcel of upland, equal in area, has been sold at a price, judged by which underwater lands in this location are without value. Many years will be required to sell the land in question in small parcels at advantageous prices. It is problematical whether the lands can be brought above the water level and then sold at a price greater than the cost of filling. From these facts, the conclusion inevitably follows that the value of the lands depends upon factors which are uncertain and in a high degree speculative." Under the circumstances we think that the valuation made by the referee, of which the relator makes no complaint, should not have been disturbed.

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

Crane, J.

(dissenting). The assessors fixed the valúa- • tion of the relator’s land under water at $6,000 an acre. The Appellate Division on review of the evidence sustained this assessment. There was competent evidence to justify this conclusion of the Appellate Division.

Relator railroad company when it was seeking adjustment of its capitalization before the Interstate Commerce Commission desired to fix the valuation of its property at as high a figure as possible. We must assume that it did not intentionally deceive the Commission. It sought to get from the Commission a ruling which would give it as large an income as the law and the facts would allow. It, therefore, placed a valuation through real estate experts upon this property of $10,000 an acre.

Now that it has to give instead of receive; is obliged to give to the public in the form of taxes instead of get from the public by the sale of securities, it complains that the valuation of $6,000 an acre is too high; that it should be very materially reduced.

I think a good safe way to proceed in all these matters is to take the railroad company at its own valuation. It at least leads to fair dealing. Such methods justify criticism and lack of public confidence. If $10,000' was a proper valuation upon which to get money, $6,000 was none to high for taxation. I know of no rule which permits such drastic fluctuations according to the purpose of the valuation. •

I vote for affirmance.

Cabdozo, Ch. J., Pound, Andbews, Lehman and O’Bbien, JJ., concur with Kellogg, J.; Cbane, J., dissents in opinion.

Ordered accordingly.


author: Cardozo, Ch. J.

text:
    The People of the State of New York ex rel. Thomas H. Hayes, Respondent, v. George V. McLaughlin, as Police Commissioner of the City of New York, Defendant. The People of the State of New York, Appellant.
    Habeas corpus — extradition — indictment — foreign indictment sufficient to sustain issuance of warrant on demand for extradition where it charges crime, however inartificially — problem of its sufficiency as a criminal pleading remitted to courts of jurisdiction where indictment was presented.
    I. Upon return to a writ of habeas corpus, issued to inquire into the validity of the detention of relator under a warrant issued by the Governor in extradition proceedings, the question is not whether the indictment of the relator in the demanding State is sufficient as a criminal pleading but whether he has been in fact, however inartificially, charged with crime in that State. Unless the indictment is so frivolous or contradictory as to be a presentment of innocence rather than crime, our courts do not go beyond the documents when flight is once established. The test is whether the substance of criminality is lacking altogether. (People ex rel. de Martini v. McLaughlin, 243 N. Y. 417, distinguished; People ex rel. Lawrence v. Brady, 56 N. Y. 182, limited.)
    2. Where, therefore, upon examination of a foreign indictment, attacked on the ground that it fails to state the semblance of a crime, it cannot be said that it is inadequate in a broad and practical sense to state the substance of a crime and the claimed defect involves the technicalities of criminal pleading, presenting a problem highly controversial, the question of its validity must be remitted to the courts of the jurisdiction where the indictment was presented.

      People ex rel. Hayes v. McLaughlin, 220 App. Div. 818, reversed.
    (Argued January 16, 1928;
    decided February 14, 1928.)
    Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered June 10, 1927, which affirmed an order of Special Term sustaining a writ of habeas corpus and discharging the relator from custody.

      Joab H. Banton, District Attorney (George Gordon Battle, Isaac H. Levy and Michael J. Driscoll of counsel) for appellant.
    It is not necessary that the indictment should do more than contain a charge of the crime which has been committed. (Matter of Strauss, 197 U. S. 324; Pierce v. Creecy, 210 U. S. 387; Compton v. Alabama, 214 U. S. 1; Morse v. United States, 267 U. S. 83; Henry v. Henkel, 235 U. S. 219; Hogan v. O’Neill, 255 U. S. 55.) The conspiracy indictment contained a sufficient charge of the crime of conspiracy. (Drew v. Thaw, 235 U. S. 439; Grenada Lumber Co. v. Mississippi, 217 U. S. 440; Williamson v. United States, 207 U. S. 447; Nash v. United States, 229 U. S. 377; International Harvester Co. v. Kentucky, 234 U. S. 216; United States v. Amer. Tobacco Co., 221 U. S. 179; Ex parte Reggel, 114 U. S. 650; Hammerschmidt v. United States, 265 U. S. 188; People v. Hegeman, 57 Misc. Rep. 304.)

      Harold Harper and Benjamin A. Matthews for respondent.
    The relator is not substantially charged with the crime of conspiracy. (People ex rel. de Martini v. McLaughlin, 243 N. Y. 417; United States v. Cruikshank, 92 U. S. 542; Lambert v. People, 9 Cow. 578; Brenner v. United States, 287 Fed. Rep. 636; Pettibone v. United States, 148 U. S. 197; State v. Van Pelt, 136 N. C. 633; People ex rel. Lawrence v. Brady, 56 N. Y. 182.) The inquiry whether the relator is substantially charged with crime by the conspiracy indictment is open upon- this proceeding. (Roberts v. Reilly, 116 U. S. 80; People ex rel. Lawrence v. Brady, 56 N. Y. 182; People ex rel. Draper v. Pinkerton, 77 N. Y. 245; People ex rel. de Martini v. McLaughlin, 243 N. Y. 417; People ex rel. Cornett v. Warden, 60 Misc. Rep. 525; Ex parte Slauson, 73 Fed. Rep. 666; People ex rel. Plumley v. Higgins, 109 Misc. Rep. 328; Matter of Waterman, 29 Nev. 288.)
   Cardozo, Ch. J.

The relator is charged to be a fugitive from the public justice of the State of North Carolina. A requisition for his rendition has been honored by the Governor of New York. His discharge has been ordered upon the return to a writ of habeas corpus. The question is whether there has been a sufficient charge of crime.

The relator is under indictment in North Carolina for the crime of conspiracy. He is also under ind'etment for the crime of larceny in obtaining property from one Clemmons by the aid of false pretenses. There is an affidavit charging him with a similar crime in fraud of one Sellers. As to the second and third charges the courts below have held that at the times when these crimes are said to have been committed, the relator was in New York, and hence immune from extradition as a fugitive from justice (People ex rel. Corkran v. Hyatt, 172 N. Y. 176; 188 U. S. 691). As to the first charge, his presence in the demanding State is conceded, but the indictment has been condemned as failing to state the semblance of a crime.

The following is the indictment thus found to be inadequate:

“ SuPBBIOB CoUBT, OCTOBEB TEEM A. D. 1925
“ State of Nobth Gasolina, |
Brunswick County. j
The Jurors for the State Upon Their Oath Present, That Thomas H. Hayes and R. J. Anderton late of the County of on or about the 30th day of October, in the year of Our Lord one thousand nine hundred and twenty-three, with force and arms, at and in the County aforesaid, did unlawfully and wilfully, wickedly, designedly, with deceit, and intent to defraud by divers false pretenses and undue means, did conspire and agree to, and with each other, and with other parties, to the Jurors unknown, to deceive and defraud The Fisheries Products Company, a corporation, or its stockholders present and prospective, and pursuant to said unlawful agreement and conspiracy, did commit various and sundry overt acts at and in said County, against the form of the statute in such case made and provided, and against the peace and dignity of the State.
“ KELLUM
[seal] Solicitor
A True Copy
“ (Signed) A. T. McKeithan,
CSC.”

The question decisive of this appeal is not whether the indictment of the relator is sufficient as a criminal pleading. The question is whether “ the fugitive has been in fact, however inartificially, charged with crime in the state from which he has fled ” (Pierce v. Creecy, 210 U. S. 387). A grand jury in North Carolina has said that what has been charged against him is there a crime. The Governor has said the same. Unless a reasonable basis for what they say is lacking altogether, unless the indictment is so frivolous or contradictory as to be a presentment of innocence rather than of crime, we do not go beyond the documents when flight is once established. Doubt, if there is any, must be resolved in the demanding State (Hogan v. O’Neill, 255 U. S. 52, 55; Drew v. Thaw, 235 U. S. 432, 439; Munsey v. Clough, 196 U. S. 364, 373).

We cannot say of this indictment that it is inadequate in a “ broad and practical sense ” (Pierce v. Creecy, supra, p. 402) to state the substance of a charge of crime. In so holding we assume that it is subject to demurrer under the-rules of criminal pleading prevailing in New York. The test, of course, is different. The test is rather this, whether the substance of criminality is lacking altogether when substance is determined by any standard of penal justice that can rationally be supposed to prevail in the demanding jurisdiction. The main defect is said to be the failure to define the unlawful means whereby the conspirators combined to effectuate their purpose to defraud. The necessity for such an averment, if it be assumed, is one of the niceties of criminal pleading. Courts in different jurisdictions have solved the problem differently. The solutions have been coupled with distinctions and exceptions. In this State, the subject had its first consideration in the early case of Lambert v. People (9 Cow. 578). Savage, Ch. J., in the Supreme Court held an indictment good, though the aim of the conspiracy was not criminal and the means were stated generally to be unlawful without other definition. There was much discussion of the ancient learning with its subtle distinctions between cheats and false pretenses. On appeal to the Court of Errors, the court was equally divided. Spenceb, Senator, wrote that the indictment was bad, and Stebbins, Senator, that it was good. The President gave a casting vote with the result that the indictment fell. The closeness of the division attests the measure of the doubt. The courts of England have held differently (Rex v. Gill, 2 B. & Ald. 204; Sydserff v. R., [1847] 11 Q. B. 245; 9 Halsbury, Laws of England, p. 709, § 1401; cf. People ex rel. Lawrence v. Brady, 56 N. Y. 182, at p. 190). So, it seems, have the courts in some of our sister States (2 Bishop, Crim. Law, §§ 198, 199, 200; 3 Bishop, New Crim. Proc. § 216). It is one of the battlefields of the law.

If there is need to emphasize the conflict, the emphasis is found when we turn to the courts of North Carolina, the courts of the demanding State. We find there a series of decisions holding, or seeming to hold, that an indictment for conspiracy to defraud is not subject to demurrer for its silence as to the means (State v. Howard, 12 N. C. 584; State v. Brady, 107 N. C. 822; State v. Younger, 129 N. C. 357). We find other and later judgments explaining and perhaps qualifying the earlier decisions (State v. Van Pelt, 136 N. C. 633; State v. Gulledge, 173 N. C. 746). The indictments in the later cases were not for conspiracy to defraud, but for conspiracy to injure another in his business by the publication of a blacklist, not shown to be wrongful. The courts of North Carolina, and not this court, should say whether this indictment is to have a place in the one group or the other. There may be distinctions to be developed, depending upon the aim of the conspiracy. If that ground of distinction is rejected, there may be a discovery of others. There may even be a reversion to the rufings of the earlier type. These questions are not for us. A problem highly controversial, involving the technicalities of the law of pleading, must be remitted to the courts of the jurisdiction where the indictment was presented. “ If more were required it would impose upon courts, in the trial of writs of habeas corpus, the duty of a critical examination of the laws of States with whose jurisprudence and criminal procedure they can have only a general acquaintance ” (Pierce v. Creecy, supra, at p. 405).

Two cases in this court are cited in support of the contention that the indictment is subject to a closer scrutiny (People ex rel. de Martini v. McLaughlin, 243 N. Y. 417; People ex rel. Lawrence v. Brady, 56 N. Y. 182). Both are cases where the basis of the requisition was not an indictment but a mere complaining affidavit. The finding of an indictment presupposes the testimony of witnesses before a grand jury, and is thus a safeguard against a removal that is ignorant or wanton ” (People ex rel. de Martini v. McLaughlin, supra). In the later of the two cases (People ex rel. de Martini v. McLaughlin), the affidavit, attempting to charge the prisoner as an accessory after the fact, did not even state that he had knowledge of the guilt of the principal. Its weakness as contrasted with an indictment was accentuated by the fact that it was made upon information and belief without description of the sources of the information or the grounds of the belief. We held the process void in view of the cumulative weight of these defects and others. In the earlier case (People ex rel. Lawrence v. Brady, supra), the decision was made in 1874, before the law of interstate rendition had been stated by the Supreme Court as clearly and authoritatively as has been done in recent judgments. Even so, the ruling did not escape criticism when announced (People ex rel. Jourdan v. Donohue, 84 N. Y. 438, 441; Leary’s Case, 6 Abb. N. C. 43, 44; 2 Moore, Extradition, 1030), and has been narrowly confined to situations closely parallel (People ex rel. Marshall v. Moore, 167 App. Div. 479; 217 N. Y. 632). We refuse to extend it to arrest upon indictment.

The order of the Appellate Division and that of the Special Term should be reversed, the writ dismissed, and the relator remanded.

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

Ordered accordingly.


author: Crane, J.

text:
    The City of New York, Appellant, v. Pike Realty Corporation, Respondent.
    Landlord and tenant — lease — New York city — lease by city of vacant property for public garage — refusal of Commissioner of Plant and Structures to permit erection — lessee must pay rent if it retains possession — holding, in action by city for rent, that rent was suspended and dismissal of complaint erroneous — dismissal of counterclaim for damages for breach of covenant also erroneous — measure of such damage.
    1. Where the city of New York leased vacant property under the •Manhattan bridge “ for a public garage ” and thereafter the Commissioner of Plant and Structures refused to permit its erection, the lessee might have surrendered the lease and abandoned the premises, but, where it did not surrender or move out, it must pay the rent reserved and seek recoupment for the city’s breach of contract.
    2. In an action, therefore, by the city, to recover a balance of rent due under the lease, a holding that rent was suspended during the time the city prevented the lessee from erecting a garage and a dismissal of the complaint was erroneous. But a dismissal of defendant’s counterclaim for damages resulting from the city’s breach of covenant was also erroneous. As the damages grew out of the lease or contract sued upon they were a proper subject of counterclaim.
    3. The damages are the difference in value of the leased premises for the use of a public garage and their value as vacant property, or, as the rent stipulated is evidence of the value of the property so used, the difference between the rent received and the value of the premises for the time. Loss of profits is not an element of damage.

      City of New York v. Pike Realty Corporation, 220 App. Div. 824, reversed.
    (Submitted January 13, 1928;
    decided February 14, 1928.)
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered June 30, 1927, unanimously affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term without a jury.

      George P. Nicholson, Corporation Counsel (J. Joseph Lilly and Samuel Plumer of counsel), for appellant.
    The defendant has no defense to the plaintiff's claim for rent due. (Peerless Candy Co. v. Holbreich, 125 Misc. Rep. 889.) There was no eviction of the defendant from the leased premises. (Home Life Ins. Co. v. Sherman, 46 N. Y. 370; Boreel v. Lawton, 90 N. Y. 293; Edgerton v. Page, 20 N. Y. 281.) The alleged refusal of the Superintendent of Buildings to approve the plans for the erection of a two-story public garage on the leased property does not furnish the defendant with any defense to this action. (Metzroth v. City of New York, 212 App. Div. 253; McGuinness v. Allison Realty Co., 46 Misc. Rep. 8; 111 App. Div. 926; Stubley v. Allison Realty Co., 124 App. Div. 162.)

      John Caldwell Myers, Benjamin F. Schreiber, John F. Keating and Lester M. Friedman for respondent.
    The trial court correctly interpreted the lease. (Bardisch v. Kalisch, 118 Misc. Rep. 119; Roome v. Phillips, 24 N. Y. 463; Osborn v. Wilson, 118 Misc. Rep. 379; 206 App. Div. 787; People v. Frudenberg, 209 N. Y. 218; Horton v. Horton, 177 N. Y. Supp. 857; Jackson v. Topping, 1 Wend. 388.) The obligation of the respondent to pay rent was suspended. (Grabenhorst v. Nicodemus, 42 Md. 236; Kaiser v. Zeigler, 115 Misc. Rep. 281; Doherty v. Monroe Eckstein Brewing Co., 115 Misc. Rep. 175.)
   Crane, J.

We agree with the interpretation of the lease which has been given by the courts below. The respondent was entitled to erect a public garage upon the premises provided the plans and specifications in other particulars complied with the law and rules of the Building Department. Upon the refusal of the Commissioner of Plant and Structures to permit the erection of such a garage the respondent could have surrendered the lease and abandoned the premises. The city cannot constructively evict through one department of its government and recover full rent through another. The city and its officials for this purpose are one.

The trouble with the appeal, however, is that the respondent did not surrender or move out; it is still in possession and claims the right to possession, provided it can erect its garage. The law is so well settled regarding the respective rights of landlord and tenant that to affirm the ruling of the trial court would we fear create some confusion hereafter.

The trial court held that rent was suspended during the time that the city prevented the respondent from erecting a garage. This rule of suspension applies to partial physical evictions, not to constructive eviction.

“ If the landlord enter wrongfully upon or prevent the tenant from the enj oyment of a part of the demised premises the whole rent is suspended till the possession is restored * * *. A tenant shall not be required to pay rent, even for the part of the premises which he retains, if he has been evicted from the other part by the landlord.” (Christopher v. Austin, 11 N. Y. 216. See, also, Lewis v. Payn, 4 Wend. 423, 427; Sirey v. Braems, 65 App. Div. 472; Matter of Hall v. Irvin, 78 App. Div. 107; McAdam Landlord & Tenant [4th ed.], p. 1381.) But the elementary rule in regard to constructive eviction is that the tenant must abandon the possession of the premises to the landlord, for he cannot claim that he has been forced to go out while he remains in. (Edgerton v. Page, 20 N. Y. 281, pp. 283, 284, 285; Boreel v. Lawton, 90 N. Y. 293, 297; Taylor Landlord & Tenant, sect. 379.)

There was no actual eviction in this case and none is claimed. The refusal of the city to approve the plans for a public garage was at most a breach of the covenants of the lease and a constructive eviction. (Tallman v. Murphy, 120 N. Y. 345; Grabenhorst v. Nicodemus, 42 Md. 236; Talbott v. English, 156 Ind. 299, 307; Keating v. Springer, 146 Ill. 481, 495, 496.) Consequently, the defendant not having abandoned the premises or surrendered the lease must pay the rent reserved and seek recoupment for the city’s breach of contract. And such was the position taken by the defendant in its pleadings. The judgment entered and not the pleadings has raised the difficulty.

The property leased was vacant property under the Manhattan bridge — room for a two-story building. The city, as ruled below, leased the land to the defendant for a public garage and then refused to permit its .erection. The defendant paid the first quarter’s rent. The city sues for the balance due. The defendant pleaded as a defense the refusal of the city to approve its plans for a garage, saying “ that plaintiff, in breach of its covenants in said lease has not permitted the defendant to peaceably have, hold and enjoy the demised premises but has prevented the same.” The same facts were pleaded as a counterclaim — damages being alleged. Nowhere in the answer is it alleged that because of such facts the lease has been surrendered, terminated or the premises abandoned. For all we know the defendant may still want the premises for a garage.

The trial judge in reserving decision at the end of the case finally gave judgment dismissing the complaint and also the counterclaim. He should have done just the reverse, sustained the complaint and also the counterclaim. Conceding under the above rule of law that the city could recover its rent reserved in the lease, the defendant could also recoup or set off its damages resulting from the breach of the covenant express or implied of the quiet enjoyment of the premises for a public garage. This is the purpose for which the property was leased and for which the rent was to be paid. It would be very strange if the city under these circumstances could recover the full rent and also illegally limit the use. For its unauthorized action it must take the consequences of no or of a reduced rent. ,

As the defendant’s damages grew out of the lease or contract sued upon they are a proper subject of counterclaim or recoupment under ¿our practice. (Mayor v. Maibe, 13 N. Y. 151; Edgerton v. Page, 20 N. Y. 281, pp. 285, 286; Taylor Landlord & Tenant, sects. 374, 379.)

The damages would be the difference in value of the leased premises as they were to be, that is, for the use of a public garage — the purpose contemplated — and their value as they are — vacant property. The defendant was not supposed to use them for any other permanent purpose or building. (Thomson-Houston Electric Co. v. Durant Land Improvement Co., 144 N. Y. 34, pp. 47-49.) Naturally the rent stipulated would be evidence of the value of the property when used for a public garage. When a lessor has failed to give possession or wrongfully withholds possession, the tenant need not resort to ejectment but may sue for damages. The measure of damages then is the value of the lease above the rent received or the difference between the rent received and the value of the premises for the time. Of course there would be no damage if the value was less than the rent. (Trull v. Granger, 8 N. Y. 115; Dodds v. Hakes, 114 N. Y. 260.) Here the lessee was in possession. The acts of the lessor materially lessened the value of the property leased, and the rule of the Thomson Case (supra) applies. (See, also, Witherbee v. Meyer, 155 N. Y. 446.) This is hardly a case where the loss of profits would be an element of damage within the law as stated in Snow v. Pulitzer (142 N. Y. 263).

The judgment should be reversed and a new trial granted on all the issues, with costs to abide the event.

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

Judgment reyersed, etc,.


author: Pound, J.

text:
    In the Matter of Leslie V. Bateman, Individually and as Comptroller of the City of Mount Vernon, Respondent, against The Mayor and Common Council of the City of Mount Vernon, Appellants.
    Municipal corporations■ — -Mount Vernon (city of) — relative powers of Board" of Estimate and Contract and of Common Council in creating positions and fixing salaries, of city employees — Common Council without power to strike from estimate submitted by Board items relating to positions and salaries.
    1. Section 81 of the charter of the city of Mount Vernon (L. 1922, ch. 490) read in connection with section 71 plainly indicates that the Legislature intended to confer upon the Board of Estimate and Contract the power to prescribe what subordinate positions of city officials and employees not otherwise provided for shall exist and to fix the salaries or compensation thereof and that the Common Council has no power to' diminish or reject any item which relates to salaries, nor to refuse to appropriate the money necessary to pay them.
    2. The Common Council of the city of Mount Vernon was, therefore, without authority to strike from the estimate submitted by the Board of Estimate and Contract for the year 1928 new items for clerks in the department of finance; to reduce the estimate for salaries of police; to strike out two items for new positions in the building department and substitute in their stead positions which had previously existed but which the board had evidently determined to abolish', and to omit an item for laboratory stations.

      Matter of Bateman v. Mayor, etc., 222 App. Div. 416, affirmed.
    (Argued January 10, 1928;
    decided February 14, 1928.)
    Appeal from an order of the Appellate Division of the Supreme Court in the second judicial department, entered December 23, 1927, which affirmed an order of Special Term granting a motion for a peremptory order of mandamus to compel the Common Council and Mayor of the city of Mount Vernon to convene and approve the annual estimate for 1928 as presented by the Board of Estimate and Contract.

      J. Henry Esser, Corporation Counsel, for appellants.
    The annual estimate here involved is merely an estimate and not a fixing of salaries por a determining of positions. (Matter of Fuhrmann v. Graves, 235 N. Y. 77; People ex rel. Tyng v. Prendergast, 164 N. Y. Supp. 1042; 164 N. Y. Supp. 1108; 221 N. Y. 659; Lazinsk v. City of New York, 163 App. Div. 423; Lyon v. City of New York, 82 App. Div. 306; 176 N. Y. 609; People ex rel. Collins v. Ahearn, 120 App. Div. 95; Pryor v. City of Rochester, 166 N. Y. 548; People ex rel. Cropsey v. Hylan, 199 App. Div. 218; Matter of Fleischman v. Graves, 235 N. Y. 84; Emerson v: Buck, 230 N. Y. 380; Matter of Martin v. Hylan, 213 App. Div. 519; Matter of Smith v. Hylan, 125 Misc. Rep. 739.) While the present Mount Vernon charter has transferred from the Council to a new Board (Board of Estimate and Contract) the power to fix salaries and determine positions, it has expressly conferred upon the Council, through its appropriating power, the power to control the amounts thus to be expended by the Board. Each body checks the other, and neither possesses any independent power to increase expenditures. Matter of Tierney v. Wynne, 209 App. Div. 401; Matter of Flaherty v. Craig, 226 N. Y. 76; Matter of Emerson v. Buck, 230 N. Y. 22; People ex rel. Cropsey v. Hylan, 199 App. Div. 218; People ex rel. Plancon v. Prendergast, 219 N. Y. 252.) Only the “ salaries of positions already filled ” were intended by section 81 of the charter to be mandatory and beyond the power of the Council to reject or diminish. (Pryor v. City of Rochester, 166 N. Y. 548; Matter of Fuhrmann v. Graves, 235 N. Y. 77; Matter of Emerson v. Buck, 230 N. Y. 380; Matter of Reif v. Schwab, 204 App. Div. 50.) The general plan of making appropriations for salaries is the same under the Mount Vernon charter as under the Second Class Cities Law and harmonizes with the modern judicial conception of municipal government. (Pryor v. City of Rochester, 166 N. Y. 548; Matter of Fuhrmann v. Graves, 235 N. Y. 77;
      Matter of Emerson v. Buck, 230 N. Y. 380; Matter of Reif v. Schwab, 204 App. Div. 50.) The interpretation of the word “ salaries ” in section 81, as referring only to salaries for positions already filled, avoids a conflict in the statutory powers of the Board and Council and is consistent with the general scheme and purpose of the charter, arid sustained by sound principles of municipal government. (Hoey v. Gilroy, 129 N. Y. 132; Matter of School Board of Brooklyn, 157 N. Y. 566; Drew v. Village of White Plains, 157 App. Div. 394; People ex rel. Tyng v. Prendergast, 164 N. Y. Supp. 1042; 221 N. Y. 659.)

      Sydney A. Syme for respondent.
    Section 71 of the Mount Vernon charter confers exclusive power on the Board of Estimate and Contract to determine the number and positions and to fix the salaries or compensation of all city officers and employees of each office, board and department, except where any such positions are created and/or the salaries thereof fixed by or pursuant to some other statutory provision. (People ex rel. Dunn v. Ham, 166 N. Y. 477; Pryor v. City of Rochester, 166 N. Y. 548; People ex rel. Collins v. Ahearn, 193 N. Y. 441; Matter of Thomas, 216 N. Y. 426; Matter of Hamburger v. Board of Estimate, 109 App. Div. 427.) It is the mandatory duty of the Common Council to appropriate all salaries proposed by the Board of Estimate for an ensuing year in that Board’s annual estimate of expenditures for that ensuing year, without diminishing or rejecting any item which relates to salaries. (People ex rel. O'Loughlin v. Prendergast, 219 N. Y. 377; Matter of McAneny v. Board of Estimate, 232 N. Y. 377; Matter of Bronx Parkway Commission v. Hylan, 119 Misc. Rep. 785; 206 App. Div. 688; 236 N. Y. 593; People ex rel. Cropsey v. Hylan, 199 App. Div. 218; 232 N. Y. 601; Matter of College of City of New York v. Hylan, 120 Misc. Rep. 314; 205 App. Div. 372; 236 N. Y. 594; Matter of Tierney v. Wynne, 209 App. Div. 402.) The theory that the prohibition against the Common Council diminishing or rejecting any item which relates to salaries contained in the annual estimate of expenditures adopted by the Board of Estimate refers to salaries for positions already filled, proceeds upon a misapprehension of the provisions of the charter, and a misconception of the scheme and purpose of its provisions in this respect. (People ex rel. Tyng v. Prendergast, 164 N. Y. Supp. 1042; 164 N. Y. Supp. 1108; 221 N. Y. 659; Pryor v. City of Rochester, 166 N. Y. 548.) There is no merit in the contention that the inclusion of certain positions and salaries in the annual estimate adopted and submitted by the Board of Estimate and Contract was not a determination of those positions and a fixing of the salaries thereof. (Lazinsk v. City of New York, 163 App. Div. 423; People ex rel. Tyng v. Prendergast, 164 N. Y. Supp. 1042; 164 N. Y. Supp. 1108; 221 N. Y. 659.) Even if the act of adopting an annual estimate containing positions and salaries did not amount to a determination of such positions and/or a fixing of such salaries by the Board of Estimate, still the items stated to be for salaries that are contained in the annual estimate adopted by the Board are items “ which relate to salaries; ” and, hence, can neither be rejected nor diminished by the Common Council (Charter, § 81). (Matter of N. Y. v. Brooklyn Bridge, 72 N. Y. 527; Matter of Emerson v. Buck, 230 N. Y. 381; Matter of Tierney v. Wynne, 209 App. Div. 401.) The Common Council was without power to insert into the annual estimate the positions of assistant building inspector and secretary to the building inspector. (People ex rel. Dunn v. Ham, 166 N. Y. 477; Matter of Griffin v. Williams, 168 App. Div. 63; Matter of Colligan v. Williams, 91 Misc. Rep. 128; Matter of Tierney v. Wynne, 209 App. Div. 401; Lazinsk v. New York, 163 App. Div. 423; People ex rel. Tyng v. Prendergast, 164 N. Y. Supp. 1048; 164 N. Y. Supp. 1108; 221 N. Y. 659; People ex rel. Kelly v. Dooley, 169 App. Div. 423; Pryor v. City of Rochester, 166 N. Y. 548; Grant v. City of Rochester, 79 App. Div. 460; 175 N. Y. 473; Matter of Emerson v. Buck, 230 N. Y. 38.) The Common Council is without power to reject or diminish any item which appears in the annual estimate for 1928 that was adopted by the Board of Estimate as salaries for extra clerk hire. (People ex rel. Davison v. Williams, 213 N. Y. 130; People ex rel. Sims v. Fire Comm., 73 N. Y. 437; Rowland v. Mayor, etc., of New York, 83 N. Y. 372.)
   Pound, J.

The charter of the city of Mount Vernon (L. 1922, ch. 490) follows the second class cities law (Cons. Laws, § 53; L. 1909, ch. 55) in respect to the powers of the Board of Estimate and Contract and the Common Council. The problem is to determine the relative powers of such bodies in the matter of creating positions of city officials and employees and fixing of the salaries and compensation thereof, as applied to the estimate submitted by the Board to the Common Council for the year 1928.

Section 21 of the charter fixes the salaries of the Mayor, Comptroller, City Judge, President of the Common Council and aldermen.

Section 32 vests in the Common Council the legislative power of the city and provides that its authority, except as otherwise provided in this chapter or by law is legislative only.” Appropriations are made by the Common Council by ordinance specifying each item of money appropriated, the amount thereof, and the department or specific purpose for which the appropriation is made. (§§ 38, 46.)

The'Board of Estimate and Contract consists of the Mayor, the Comptroller and the President of the Common Council. (§ 70.)

Section 71 provides:

“ § 71. Determination of positions and salaries. The board of estimate and contract, except as otherwise provided by law, shall have authority to fix the salaries or compensation, and determine the positions and numbers of all city officers and employees of each office, board and department.”

Section 77 provides, with certain exceptions not applicable here:

“ § 77. Limitation on contracts and expenditures. Neither the board of estimate and contract nor any officer, board or department of the city, excepting as herein otherwise provided, shall create any pecuniary obligation whatever on the part of the city which shall not be payable in the current fiscal year and which cannot be discharged from the income of the same year, * * *.”

Section 79 provides:

“§79. Fiscal year; departmental estimates. The fiscal year of the city shall commence on the first day of January. On or before the first day of October thereafter in each year, all heads of departments and officers empowered by law or by ordinance to control or authorize expenditures, shall furnish to the mayor estimates, in writing, of the amount of expenditures for the next fiscal year in then* respective departments and offices, including a statement of the salaries of all their subordinates, which estimates the mayor shall lay before the board of estimate and contract at its first meeting thereafter, and the same shall be entered in the minutes.”

Section 81 provides:

“ § 81. Annual estimate. Not later than the first day of November prior to the commencement of each fiscal year, the board of estimate and contract shall make and adopt an itemized statement, in writing, of the estimated revenues and expenditures of the city for such fiscal year, which shall be known as the annual estimate. The estimated revenues shall contain an estimate of the probable revenues which, in the judgment of the board of estimate and contract, will be received by the city during the fiscal year, less the amount required to be deposited to the credit of the sinking fund, if any; a statement of the amount of the sinking fund, which, in the judgment of the board of estimate and contract, is available and should be applied to the payment of the principal of any bonded indebtedness of the city falling due during the said fiscal year; and a statement of all unexpended balances or estimated unexpended balances of the current fiscal year remaining to the credit of the city, or of any office, board or department thereof. The estimate of expenditures shall contain an estimate of the several amounts of money which the board of estimate and contract deems necessary to provide for the expenses of conducting the business of the city in each board, department and office thereof and for the various purposes, contemplated by this chapter and otherwise by law for the said fiscal year; to pay the principal and interest of any bonded or other indebtedness of the city falling due during the said fiscal year; and the amount of any judgments recovered against the city and payable during the said fiscal year, and the probable amount necessary to defray the amount of tax to be levied in the city for state and county purposes and the Bronx Valley sewer assessments. After said annual estimate shall have been completed and on or before November fifteenth, the board of estimate and contract shall submit the same in final form to the common council with a statement, in writing, of such reasons for such estimate as it may deem proper. The common council shall, as soon thereafter as may be possible, convene and consider the said estimate. It shall give a public hearing to such persons as wish to be heard in reference thereto. After such hearing, and on or before December first, the common council shall adopt such estimate so submitted or shall diminish or reject any items therein contained, and adopt said estimate as so amended. The common council shall not have the power to diminish or reject any item which relates to salaries, the indebtedness or estimated revenues, or the sums estimated as necessary to pay the tax to be levied within the city for state and county purposes, or the sums lawfully payable within said fiscal year upon judgments; nor shall the common council increase any item for any purpose contained in said estimate.”

Section 83 provides:

“ § 83. Tax budget. The amount of estimated expenditures contained in the annual estimate adopted by the common council, less the amount of estimated revenues applicable to the payment thereof, and the amount of all judgments payable prior to the tax levy, shall constitute the tax budget.”

Section 85 provides:

“ § 85. Annual appropriations. When the common council shall have adopted the final estimates of the board of estimate and contract, or said estimate as amended by it, the same shall be entered at large in its minutes and become a part of its proceedings. The several sums estimated for expenditures therein shall be and become appropriated in the amounts and for the several departments, officers and purposes as therein specified for the said fiscal year. The several sums therein enumerated as estimated revenues and the moneys necessary to be raised by tax in addition thereto to pay the expenses of conducting the business of the city and for the purposes contemplated by this chapter and otherwise by law, shall be and become applicable in the amounts therein named for the purpose of meeting said appropriations. In case the revenues received by the city exceed the amount of such revenues named in said annual estimate, or in case there remain any unexpended balances of appropriations made for the support of the city government or for any other purpose, then such surplus revenues or such unexpended balances shall except as otherwise provided by law, remain upon deposit and be included as part of the estimated revenues for the succeeding year. Nothing herein contained shall prevent the transfer prior to the close of the fiscal year of unexpended balances from one department, officer or purpose to another department, officer or purpose provided such transfer be authorized by resolution duly adopted by the board of estimate and contract and by the common council.”

Section 117 provides:

§ 117. Constitution of police and fire departments. 'The police and fire departments shall, as to their membership, and component parts, remain as now constituted until the same shall be changed by action of the common council. The board of estimate and contract has power at all times to determine the number of officers and members of each of said departments and the classes and grades into which they shall be divided. The common council may pass ordinances not inconsistent with law for the government of the police and fire departments, and regulating the powers and duties of their officers and members. The commissioner shall appoint, as vacancies in said department occur, all officers and members thereof, and classify and apportion them into grades to conform to such ordinances.”

Other sections of the charter provide that the various heads of departments may make certain appointments, but all other appointments of subordinates are such as may be prescribed by the board of estimate and contract.”

The Board of Estimate and Contract is thus, given large powers in the matter of deciding what subordinates may be appointed in the various departments and fixing their salaries or compensation. The Common Council is given no direct or express powers in this respect.

In Pryor v. City of Rochester (166 N. Y. 548) the court had under consideration the Second Class Cities Law. At that time the law did not expressly limit the power of the Common Council of cities of the second class to reject items included in the estimate relating to salaries. The power is now so limited by Second Class Cities Law (§ 75). The court said:

“We think a fair and proper interpretation of this statute renders it clear that the Legislature intended that to the board and not to the council should be confided the power to fix such salaries or compensation [of offices actually existing]; that as to any of the items contained in the statement of the board which were in fact estimates and not fixed and existing liabilities established by law, the common council had power to diminish or reject, but 0 that as to those which were thus established it possessed no such power.”

So in Matter of Emerson v. Buck (230 N. Y. 380) it was held that there was no limitation upon the power of the Common Council of the city of Buffalo to reduce the amount demanded by the estimate of the Board of Education and that in the absence of such a limitation the Board had no authority to make an estimate which the Council must accept without deduction.

The charter of Mount Vernon differs from the charters under consideration in the cases cited. It expressly provides that “ the common council shall not have power to diminish or reject any item which relates to salaries.” (§ 81.)

So far as the present statute, the charter of the city, establishes a positive right to create positions and fix salariés in the Board of Estimate and Contract it must be regarded as withdrawing from the Common Council the legal right to refuse to appropriate the money necessary to pay such salaries. (Pryor v. City of Rochester, supra, p. 559.) Section 81 read in connection with section 71 plainly indicates that the Legislature intended to confer upon the Board of Estimate and Contract the power to prescribe what subordinate positions of city officials and employees not otherwise provided for shall exist and to fix the salaries or compensation thereof and that the common council has no power to diminish or reject any item which relates to salaries: Salary is compensation for fixed regular wages and, on reading the charter provisions as a whole, we are unable to attach any significance to the fact that section 71 uses the words salaries or compensation ” while section 81 uses the word " salaries.”

The Board thus has plenary power to create subordinate positions not otherwise provided for in the city charter or otherwise and to fix the salaries or compensation thereof, although the items contained in the estimate are new positions. The Common Council must approve the same and make the necessary appropriations therefor without diminishing or rejecting any item in the estimate relating thereto. (People ex rel. O’Loughlin v. Prendergast, 219 N. Y. 377.)

We now come to the application of the rule to the case ' before us.

Under the head department of finance ” the estimate contained the following items: Claims clerk, $1,800; clerk to deputy comptroller, $1,800; indexing and vault clerk, $1,800.

The Common Council struck these items out as unnecessary. Clearly the Board was empowered to create these positions and fix the salaries.

Under the head police,” the estimate contained the item of salaries $295,893. The Common Council reduced this item to $262,693. The Board has power at all times to determine the number of officers and men of the police and fire departments and the classes and grades into which they shall be divided. (§ 117.) To be able to exercise this power, the Board was authorized to fix the item of salaries at a sum which would enable it to exercise this power in the future. If it does not exercise its power so as to exhaust the appropriation, any unexpended balance will be included as a part of the estimated revenues of the city for the succeeding year. (Charter, § 86.) The item was clearly one relating to salaries and was beyond the power of the Common Council to diminish.

Under the head “ building department ” the annual estimate contained under salaries ” two items for new positions each as follows: Construction inspector, $2,500.” The Common Council struck out these items and inserted two items for assistant building inspector, $2,500, and secretary building inspector, $2,500.

The result of this action was to reject the items relating to positions and salaries presented by the Board and to insert other items in their place. The positions of assistant building inspector and secretary .to building inspector had previously existed but were not included in the annual estimate. The Board had evidently determined to abolish such positions in the exercise of its power to determine what positions should exist in the Building Department. The Council had no power to reject the items contained in the estimate for they related to salaries. It had no power to insert the items for the old positions for by so doing it fixed the positions in the Department.

Another item of $71.55 for laboratory stations was omitted under the head of state and county taxes and was properly restored. (§ 71, supra.)

The court has ordered the Common Council to adopt the estimate as a whole as submitted without changing any of the items therein contained. The only items in dispute and under review are those above referred to. Some other items may be. subject to criticism. The Common Council did not reject or diminish them. The relator seeks to have the rejected items restored. We hold merely that they should be so restored. The estimate and the budget as a whole are not properly before us for review.

The order should be affirmed, with costs.

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

Order affirmed, etc.