author: Desmond, J. Van Voorhis, J.

text:
    In the Matter of Joseph L. Auer on His Own Behalf and on Behalf of All of Holders of Class A Stock of R. Hoe & Co., Inc., et al., Respondents, against Arthur Dressel, Individually and as President of R. Hoe & Co., Inc., et al., Appellants.
    Argued February 25, 1954;
    decided March 12, 1954.

      Orison S. Marden, Neil P. Gullom, Thomas F. Peterson, John M. Johnston and Robert D. Cole for appellants.
    I. The courts below erred in granting a peremptory order and thus denying appellants their statutory right of trial. (Matter of Durr v. Paragon Trading Corp., 270 N. Y. 464; Matter of Steinway, 159 N. Y. 250; Matter of Schulman v. Dejonge & Co., 270 App. Div. 147; Matter of Coombs v. Edward, 280 N. Y. 361; People ex rel. Wood v. Board of Assessors of Brooklyn, 137 N. Y. 201; People ex rel. Durant Land Improvement Co. v. Jeroloman, 139 N. Y. 14; People v. National Park Bank, 122 App. Div. 635.) II. The requests for the special meeting are revocable. (Shauver v. Ewing, 1 F. 2d 423, 267 U. S. 601.) III. Common stockholders have the right to vote; therefore petitioners have failed to present sufficient requests as matter of law. (Matter of Silberkraus, 250 N. Y. 242; Lord v. Equitable Life Assur. Soc., 194 N. Y. 212; Chriskal v. Petry,. 275 App. Div. 550, 301 N. Y. 562.) IV. In several respects, the meeting is not proposed “ for a proper and lawful purpose ”; consequently, the order should not issue. (Matter of Fierman v. Rose, 175 Misc. 102; Fox v. Cody, 141 Misc. 552; Abberger v. Kulp, 156 Misc. 210; Matter of Koch, 257 N. Y. 318; People ex rel. Manice v. Powell, 201 N. Y. 194; Oakes v. Cattaraugus Water Co., 143 N. Y. 430; Twyeffort v. Unexcelled Mfg. Co., 263 N. Y. 6.) V. On the undisputed facts appellants’ conduct, as a matter of law, did not constitute a refusal of petitioners’ demand.

      Bruce A. Heclcer, John R. Stevenson, John Kadel, Abraham Wilson and David M. Potts for respondents.
    I. The record did not raise a triable issue of fact. (Matter of Murphy v. Delaney, 179 Misc. 436; Matter of Koch, 257 N. Y. 318; Matter of Durr v. Paragon Trading Corp., 270 N. Y. 464.) He The requests for the special meeting cannot be revoked after they have been filed. III. The common stockholders are not entitled to vote on any of the proposals. IV. The special meeting was requested for proper purposes. (Fox v. Cody, 141 Misc. 552; Matter of Korff, 198 App. Div. 553; People ex rel. Manice v. Powell, 201 N. Y. 194; Abberger v. Kulp, 156 Misc. 210.) V. Dressel failed and refused to call the requested meeting.
   Desmond, J.

This article 78 of the Civil Practice Act proceeding was brought by class A stockholders of appellant R. Hoe & Co., Inc., for an order in the nature of mandamus to compel the president of Hoe to comply with a positive duty imposed on him by the corporation’s by-laws. Section 2 of article I of those by-laws says that It shall be the duty of the President to call a special meeting whenever requested in writing so to do, by stockholders owning a majority of the capital stock entitled to vote at such meeting ”. On October 16, 1953, petitioners submitted to the president written requests for a special meeting of class A stockholders, which writings were signed in the names of the holders of record of slightly more than 55% of the class A stock. The president failed to call the meeting and, after waiting a week, the petitioners brought the present proceeding. The answer of the corporation and its president was not forthcoming until October 28, 1953, and it contained, in response to the petition’s allegation that the demand was by more than a majority of class, A stockholders, only a denial that the corporation and the president had any knowledge or information sufficient to form a belief as to the stockholdings of those who had signed the requests. Since the president, when he filed that answer, had had before him for at least ten days the signed requests themselves, his denial that he had any information sufficient for a belief as to the adequacy of the number of signatures was obviously perfunctory and raised no issue whatever (see People ex rel. Kelly v. Common Council, 77 N. Y. 503, 511; People ex rel. Fallert Brewing Co. v. Lyman, 53 App. Div. 470, 474, affd. 168 N. Y. 669; Mutter of Guess, 16 Misc. 306, 307). There was no discretion in this corporate officer as to whether or not to call a meeting when a demand therefor was put before him by owners of the required number of shares. The important right of stockholders to have such meetings called will be of little practical value if corporate management can ignore the requests, force the stockholders to commence legal proceedings, and then, by purely formal denials, put the stockholders to lengtñy and expensive litigation, to establish facts as to stockholdings which are peculiarly within the knowledge of the corporate officers. In such a situation, Special Term did the correct thing in disposing of the matter summarily, as commanded by section 1295 of the Civil Practice Act (see Third Annual Report of N. Y. Judicial Council, 1937, pp. 186-188; Matter of Ackerman v. Kern, 256 App. Div. 626, 629, 630, affd. 281 N. Y. 87).

The petition was opposed on the further alleged ground that none of the four purposes for which petitioners wished the meeting called was a proper one for such a class A stockholders’ meeting. Those four stated purposes were these: (A) to vote upon a resolution indorsing the administration of petitioner Joseph L. Auer, who had been removed as president by the directors, and demanding that he be reinstated as such president; (B) voting upon a proposal to amend the charter and by-laws to provide that vacancies on the board of directors, arising from the removal of a director by stockholders or by resignation of a director against whom charges have been preferred, may be filled, for the unexpired term, by the stockholders only of the class theretofore represented by the director so removed or so resigned; (C) voting upon a proposal that the stockholders hear certain charges preferred, in the requests, against four of the directors, determine whether the conduct of such directors or any of them was inimical to the corporation and, if so, to vote upon their removal and vote for the election of their successors; and (D) voting upon a proposal to amend the by-laws so as to provide that half of the total number of directors in office and, in any event, not less than one third of the whole authorized number of directors constitute a quorum of the directors.

The Hoe certificate of incorporation provides for eleven directors, of whom the class A stockholders, more than a majority of whom join in this petition, elect nine and the common stockholders elect two. The obvious purpose of the meeting here sought to be called (aside from the indorsement and reinstatement of former president Auer) is to hear charges against four of the class A directors, to remove them if the charges be proven, to amend the by-laws so that the successor directors be elected by the class A stockholders, and further to amend the by-laws so that an effective quorum of directors will be made up of no fewer than half of the directors in office and no fewer than one third of the whole authorized number of directors. No reason appears why the class A stockholders should not be allowed to vote on any or all of those proposals.

The stockholders, by expressing their approval of Mr. Auer’s conduct as president and their demand that he be put back in that office, will not be able, directly, to effect that change in officers, but there is nothing invalid in their so expressing themselves and thus putting on notice the directors who will stand for election at the annual meeting. As to purpose (B), that is, amending the charter and by-laws to authorize the stockholders to fill vacancies as to class A directors who have been removed on charges or who have resigned, it seems to be settled law that the stockholders who are empowered to elect directors have the inherent power to remove them for cause (Matter of Koch, 257 N. Y. 318, 321, 322; Ablerger v. Kulp, 156 Misc. 210, 212; 1 White on New York Corporations, pp. 558-559; 2 Fletcher’s Cyclopedia Corporations [Perm, ed.], §§ 351, 356). Of course, as the Koch case points out, there must be the service of specific charges, adequate notice and full opportunity of meeting the accusations, but there is no present showing of any lack of any of those in this instance. Since these particular stockholders have the right to elect nine directors and to remove them on proven charges, it is not inappropriate that they should use their further power to amend the by-laws to elect the successors of such directors as shall be removed after hearing, or who shall resign pending hearing. Quite pertinent at this point is Rogers v. Hill (289 U. S. 582, 589) which made light of an argument that stockholders, by giving power to the directors to make by-laws, had lost their own power to make them; quoting a New Jersey case, the United States Supreme Court said: “ ‘ It would be preposterous to leave the real owners of the corporate property at the mercy of their agents, and the law has not done so ’ Such a change in the by-laws, dealing with class A directors only, has no effect on the voting rights of the common stockholders, which rights have to do with the selection of the remaining two directors only. True, the certificate of incorporation authorizes the board of directors to remove any director on charges, but we do not consider that provision as an abdication by the stockholders of their own traditional, inherent power to remove their own directors. Bather, it provides an additional method. Were that not so, the stockholders might find themselves without effective remedy in a case where a majority of the directors were accused of wrongdoing and, obviously, would be unwilling to remove themselves from office.

We fail to see, in the proposal to allow class A stockholders to fill vacancies as to class A directors, any impairment or any violation of paragraph (h) of article Third of the certificate of incorporation, which says that class A stock has exclusive voting rights with respect to all matters other than the election of directors ’ \ That negative language should not be taken •to mean that class A stockholders, who have an absolute right to elect nine of these eleven directors, cannot amend their bylaws to guarantee a similar right in the class A stockholders, and to the exclusion of common stockholders, to fill vacancies in the class A group of directors.

There is urged upon us the impracticability and unfairness of constituting the numerous stockholders a tribunal to hear charges made by themselves, and the incongruity of letting the stockholders hear and pass on those charges by proxy. Such questions are really not before us at all on this appeal. The charges here are not, on their face, frivolous or inconsequential, and all that we are holding as to the charges is that a meeting may be held to deal with them. Any director illegally removed can have his remedy in the courts (see People ex rel. Manice v. Powell, 201 N. Y. 194).

The order should be affirmed, with costs, and the Special Term directed forthwith to make an order in the same form as the Appellate Division order with appropriate changes of dates.

Van Voorhis, J.

(dissenting). This proceeding has been instituted under article 78 of the Civil Practice Act to compel, by way of mandamus, the president of B. Hoe & Co., Inc., to call a special meeting of the class A stockholders to act upon four enumerated proposals. ‘ ‘ In the case of special meetings, the notice must state the business to be transacted, and no other business than that stated can be transacted.” (5 Fletcher’s Cyclopedia Corporations. [Perm, ed.], § 2009.) The president of Hoe was justified in declining to call a class A stockholders ’ meeting pursuant to the demand of these shareholders, regardless of whether they constituted a majority of that class (cf. ByLaws, art. I, § 2) if the proposed meeting would be futile for the reason that none of the proposals could be acted upon for which the meeting was to be called. Stockholders’ meetings at which illegal action is proposed to be taken are restrained by injunction (Ripin v. United States Woven Label Co., 205 N. Y. 442). Certainly the calling of meetings to conduct business which cannot legally be transacted, will not be compelled by mandamus, which lies only to enforce a clear legal right (People ex rel. Empire City Trotting Club v. State Racing Comm., 190 N. Y. 31; Matter of Picone v. Commissioner of Licenses, 241 N. Y. 157). When mandamus is invoked to compel officers to call stockholders’ meetings, “ It is within the discretion of the court to deny the writ for good legal reasons ” (5 Fletcher’s Cyclopedia Corporations, § 2000). This is a “ judicial” discretion (Matter of Shulman v. Dejonge S Co., 270 App. Div. 147; People ex rel. Walker v. Board of Governors of Albany Hosp., 61 Barb. 397), and is reviewable in the Court of Appeals, at least where, as here, the relief has been granted (Gentilala v. Fay Taxicabs, 243 N. Y. 397). Moreover, apart from any question of discretion, an order is reviewable which, granted such relief by mandamus through error of law (Bachman v. Harrington, 184 N. Y. 458; Cohen and Karger, Powers of the New York Court of Appeals, pp. 609-610, 616).

An examination of the request for a special meeting by these stockholders indicates that none of the proposals could be voted upon legally at the projected meeting. The purposes of the meeting are listed as A, B, C and D. Purpose A is described as Voting upon a resolution endorsing the administration of Joseph L. Auer, as President of the corporation, and demanding his immediate reinstatement as President.” For the stockholders to vote on this proposition would be an idle gesture, since it is provided by section 27 of the General Corporation Law that The business of a corporation shall be managed by its board of directors ”. The directors of Hoe have been elected by the stockholders for stated terms which have not expired, and it is their function and not that of the stockholders to appoint the officers of the corporation (Stock Corporation Law, § 60).

Purpose B of the special meeting is to vote upon a proposal to amend the certificate and the by-laws so as to provide that vacancies on the Board of Directors arising from the removal of a director by stockholders or by resignation of a director against whom charges have been preferred may be filled, for the unexpired term, only by the stockholders of the class theretofore represented by the director so removed.” This proposal is interwoven with the next one (C), which is about to be discussed, which is to remove four directors from office before the expiration of their terms in order to alter the control of the corporation. Proposal B must be read in the context that the certificate of incorporation provides for eleven directors, of whom the class A stockholders elect nine and the common stockholders two. So long as any class A shares are outstanding, the voting rights with respect to all matters “ other than the election of directors ’ ’ are vested exclusively in the holders of class A stock, with one exception now irrelevant. This means that the common stockholders are entitled to participate directly in the election of two directors, who, in turn, are authorized by the certificate to vote to fill vacancies occuring among the directors elected by the class A shareholders. This proposed amendment would deprive the directors elected by the common stockholders of the power to participate in filling the vacancies which petitioners hope to create among the class A directors, four of whom they seek to remove by proposal C which is about to be discussed. Such an alteration would impair the existing right of the common stockholders to participate in filling vacancies upon the board of directors and could not be legally adopted at this meeting demanded by petitioners from which the common stockholders are excluded. The effect would he to reclassify voting powers of the common stockholders within the meaning of subdivision 3 of section 35 of the Stock Corporation Law, which is something that section 51 prohibits without the vote of “ the holders of all shares of any class or classes that will be adversely affected ”, and this is ordained even regardless of any provision to the contrary in the certificate of incorporation ’

Purpose C of the special meeting is to vote “ upon a proposal that the Stockholders (1) hear the charges preferred against Harry K. Barr, William L. Canady, Neil P. Cullom and Edwin L. Munzert, and their answers thereto; (2) determine whether such conduct on their part or on the part of any of them was inimical to the best interest of R. Hoe & Co., Inc., and if so (3) vote upon the removal of said persons or any of them as directors of R. Hoe & Co., Inc., for such conduct, and (4) vote for the election of directors to fill any vacancies on the Board of Directors which the Stockholders may be authorized to fill.” By means of this proposal, it is sought to change the control of the corporation and to accomplish what A could not achieve, viz., remove the existing president and reappoint Mr. Joseph L. Auer as president of the corporation. Neither the language nor the policy of the corporation law subjects directors to recall by the stockholders before their terms of office have expired, merely for the reason that the stockholders wish to change the policy of the corporation. In People ex rel. Manice v. Powell (201 N. Y. 194, 201) this court said that It would be somewhat startling to the business world if we definitely announced that the directors of a corporation were mere employees and that the stockholders of the corporation have the power to convene from time to time and remove at will any or all of the directors, although their respective terms of office have not expired.” Fraud or breach of fiduciary duty must be shown (Matter of Koch, 257 N. Y. 318; Raub v. Gerken, 127 App. Div. 42; Fox v. Cody, 141 Misc. 552). In that event, directors may be removed from office before expiration of term by an action brought under subdivision 4 of section 60 of the General Corporation Law. In addition to such procedure, paragraph Fourteenth of the certificate of incorporation states: Any director of the corporation may at any time be removed for cause as such director by resolution adopted by a majority of the whole number of directors then in office, provided that such director, prior to his removal, shall have received a copy of the charges against him and shall have had an opportunity to be heard thereon by the board. The By-Laws may provide the manner of presentation of the charges and of the hearing thereon. ’ ’

Petitioners have instituted this proceeding on the theory that although no power is conferred upon the stockholders by the certificate or the by-laws to remove directors before the expiration of their terms, with or without cause, power to do so for cause is inherent in them as the body authorized to elect the directors (citing Matter of Koch, 257 N. Y. 318, supra; 2 Fletcher’s Cyclopedia Corporations [Perm, ed.], §§ 352, 357; Ballantine on Corporations, § 185.) Petitioners have argued that the grant of this power to the board of directors to remove some of their number for cause after trial, does not eliminate what is asserted to be the inherent right of the stockholders to do likewise. No cases are cited in support of the latter proposition. To the contrary is Fletcher, in the same section cited by petitioners as authorizing the stockholders to act (§ 357), who continues by stating: Of course, if the statutes, charter or by-laws place the power of removal in the directors or other officers, they are the ones to exercise it.” In the same section, Fletcher also states: ‘ The general right of removal of directors is with the stockholders, and ordinarily a director cannot be removed by his fellow directors, but this power the stockholders may delegate to the directors.”

The petition fails to state facts on account of which the remaining directors would he disqualified to hear and decide whatever charges may be presented against the four directors above named, nor has any reason been shown why the delegation of this power to the directors in the corporate charter does not preclude the exercise of the same power by the stockholders. If petitioners’ position be correct, separate trials on the same charges might be conducted by both the board of directors and by the stockholders, with conflicting results.

Such cases as have been cited in support of a power in the stockholders to remove directors for cause are clear in holding that such action can be taken only subject to the rule that ‘ ‘ specific charges must be served, adequate notice must be given and full opportunity of meeting the accusations must be afforded” (Matter of Koch, 257 N. Y. 318, 322, supra).

Although the demand by these petitioners for a special meeting contains no specification of charges against these four directors, the proxy statement, circulated by their protective committee, does describe certain charges. No point appears to be made of the circumstance that they are not contained in the demand for the meeting. Nevertheless, although this proxy statement enumerates these charges and announces that a resolution will be introduced at the special meeting to hear them, to determine whether sufficient cause exists for the removal of said persons as directors, and, if so, to remove them and to fill the resulting vacancies, the stockholders thus solicited are requested to sign proxies running to persons nominated by petitioners’ protective committee. Inasmuch as this committee, with which petitioners are affiliated, has already charged in the most forceful terms that at least one of these directors has been guilty of misconduct and that ‘1 his clique of directors have removed Joseph L. Auer as President ”, it is reasonable to assume that the case of the accused directors has already been prejudged by those who will vote the proxies alleged to represent 255,658 shares of class A stock, and that the 1,200 shareholders who are claimed to have signed proxies have (whether they know it or not) voted, in effect, to remove these directors before they have been tried. The consequence is that these directors are to be adjudged guilty of fraud or breach of faith in absentia by shareholders who have neither heard nor ever will hear the evidence against them or in their behalf. Such a procedure does not conform to the requirements of Matter of Koch (supra) nor the other authorities which have been cited, and is far removed from “ a law which hears before it condemns, which proceeds upon inquiry, and renders judgment only after trial. ’ ’ (Brief by Daniel Webster in Trustees of Dartmouth Coll. v. Woodward, 4 Wheat. [U. S.] 518, 581.) The charges against these directors enumerated in the proxy statement are described as having been preferred by one John Kadel and are to the effect that these four accused directors supported a resolution on July 2, 1953, that severance pay of $50,000 be granted to Mr. Auer “ upon condition that he resign and that he sign an agreement not to participate, with any stockholders group or otherwise, in any action against any of the directors or officers of the Company.” This money was not in fact paid to Auer. The charge based thereon against these directors is that there was a breach of trust in offering to pay $50,000 of the corporation’s money in consideration of a covenant by Auer not to participate (as the minutes of the directors’ meeting of July 2, 1953, actually read) in “ any hostile action against the company, its officers and directors.” It is not clear how this constituted actionable misconduct in view of the circumstance that none of this money actually was paid, and that there was no showing in this record of any misconduct on the part of these four directors which might have furnished a basis for a stockholders ’ derivative action by Auer against these directors. It is not so plain that these directors should be subjected to trial by stockholders, acting through proxies who are evidently prepared to oust them with or without cause, that a mandamus order should, in any event, be issued to compel the calling of a special meeting for that purpose. The other charges, viz., that Mr. Cullom was paid $300 a month as rental for office space in his suite at 63 Wall Street, and that he engaged one of his personal friends and clients in connection with appraisal proceedings involving the common stock of the company for which the friend was paid $5,000, are not supplemented by further facts indicating that such conduct was hostile to the interest of the corporation.

It is not for the courts to determine which of these warring factions is pursuing the wiser policy for the corporation. If these petitioners consider that the stockholders made a mistake in the election of the present directors, they should not be permitted to correct it by recalling them before the expiration of their terms on charges of fraud or breach of fiduciary duty without a full and fair trial, which, if not conducted in court under section 60 of the General Corporation Law, is required to be held before the remaining directors under paragraph Fourteenth of the certificate of incorporation. The difficulty inherent in conducting such a trial by proxy may well have been the reason on account of which the incorporators delegated that function to the board of directors under paragraph Fourteenth of the certificate of incorporation. If it were to develop (the papers before the court do not contain evidence of such a fact) that enough of the other directors would be disqualified so that it would be impossible to obtain a quorum for the purpose, it may well be doubted that these directors could be tried before so large a number of stockholders sitting in person (if it were possible to assemble them in one place) or that they could sit in judgment by proxy. In ancient Athens evidence is said to have been heard and judgment pronounced in court by as many as 500 jurors known as dicasts, but in this instance, if petitioners be correct in their figures, there are 1,200 class A stockholders who have signed requests or proxies, and these are alleged to hold only somewhat more than half of the outstanding shares. Since it would be impossible for so large a number to conduct a trial in person, they could only do so by proxy. Voting by proxy is the accepted procedure to express the will of large numbers of stockholders on questions of corporate policy within their province to determine, and it would be suitable in this instance if the certificate of incorporation had reserved to stockholders the power to recall directors without cause before expiration of term, as in Abberger v. Kulp (156 Misc. 210), but it is altogether unsuited to the performance of duties which partake of the nature of the judicial function, involving, as this would need to do if the accused directors are to be removed before the expiration of their terms, a decision after trial that they have been guilty of faithlessness or fraud. Section 60 of the General Corporation Law is always available for that purpose if the occasion requires.

The final proposal to be voted on at this special meeting (D) relates simply to an amendment to the by-laws so as to provide that a quorum shall consist of not less than one half of the number of directors holding office and in no event less than one third of the authorized number of directors. Section 8 of article II of the by-laws already provides that one half of the total number of directors shall constitute a quorum; the modification that a quorum shall in no event be less than one third of the authorized number of directors was proposed in the event of the removal of the four defendant directors whom petitioners seek to eliminate.

Inasmuch as we consider that for the foregoing reasons none of the business for which the special meeting is proposed to be called could legally be transacted, this proceeding should be dismissed. It is not necessary to analyze whether under other circumstances an order would lie in the nature of an alternative rather than a peremptory mandamus.

The petition should be dismissed, with costs in all courts.

Lewis, Ch. J., Dye, Furd and Froesser, JJ., concur with Desmond, J.; Van Yoorhis, J., dissents in opinion in which Conway, J., concurs.

Order affirmed.

       It appears that Hr. John Kadel entered a formal appearance upon the argument herein at Special Term, wherein he described himself on the record as follows: “A stockholder of R. Hoe & Company and the person who made the complaint about the actions of the directors which is the basis of a campaign now being waged and that has been waged by R. Hoe Stockholders Protective Committee. In other words, I am, what you might say, the nominal plaintiff in the action.” This is a formal indication, if such were necessary, that the charges on which these directors are to be tried at the stockholders’ meeting have already been decided against them.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    In the Matter of the Accounting of Bertram Keyserling, as Executor of Anna Bisconti, Deceased, Appellant. Margaret Bisconti, Appellant; John H. Conroy, as Special Guardian for Peter I. Bisconti and Others, Infants, et al., Respondents.
    Argued January 15, 1954;
    decided April 8, 1954.

      Samuel Sumner Goldberg for appellants.
    There was no ambiguity in the will calling for the application of the doctrine of ejusdem generis. The will gave unrestricted discretion to the executor-trustee and his right to pay out should have been upheld. (Matter of Woollard, 295 N. Y. 390; Schreyer v. Schreyer, 101 App. Div. 456, 182 N. Y. 555; Matter of Fox, 292 N. Y. 19; Matter of Hilton, 174 App. Div. 193; Matter of Emmons, 165 Misc. 192; Cammann v. Bailey, 210 N. Y. 19; United States v. Mescall, 215 U. S. 26; Manion v. Peoples Bank of Johnstown, 292 N. Y. 317.)

      John H. Conroy, special guardian for Peter I. Bisconti and others, infants, respondents.
    I. The deceased, having created a valid testamentary trust and prescribed the only conditions under which payments out of corpus might be made, appellant executor is without power to invade principal except in compliance with such conditions. (Crooke v. County of Kings, 97 N. Y. 421; Metcalfe v. Union Trust Co. of N. Y., 181 N. Y. 39; Matter of Wentworth, 230 N. Y. 176; Cuthbert v. Chauvet, 136 N. Y. 326; Douglas v. Cruger, 80 N. Y. 15; Matter of Hanna, 155 Misc. 833; Manion v. Peoples Bank of Johnstown, 292 N. Y. 317; Matter of Watson, 262 N. Y. 284; Dwight v. Fancher, 245 N. Y. 71; Matter of Webb, 122 Misc. 129, 208 App. Div. 793.) II. The rule of ejusdem generis properly was applied to prevent the immediate payment of the residuary to the life tenant and the outright destruction of the trust by the executor. (Matter of Robinson, 203 N. Y. 380; Sims v. United States Trust Co. of N. Y., 103 N. Y. 472; People ex rel. Huber v. Feitner, 71 App. Div. 480; Matter of Hurlbut, 180 Misc. 681; People v. Richards, 108 N. Y. 137; People v. New York & Manhattan Beach Ry. Co., 84 N. Y. 565; Matter of Reynolds, 124 N. Y. 388; Burks v. Bosso, 180 N. Y. 341; Mangam v. City of Brooklyn, 98 N. Y. 585; Matter of Hermance v. Board of Supervisors, 71 N. Y. 481.)
   Conway, J.

In connection with his final accounting, the executor of the will of Anna Bisconti, who is also testamentary trustee thereunder, requested authority to deliver the corpus of a trust of the residuary estate to the life beneficiary, Margaret Bisconti, daughter of the testatrix.

The special guardian of the three infant remaindermen, children of the testatrix’ son, filed objections to the request and is the respondent here. The relevant portions of the will are as follows:

“ Third : I give, devise and bequeath to my son, Petes, V. Bisconti, twenty-five (25%) per cent of the rest, residue and remainder of my estate, to be his absolutely and forever.

“Fourth: The remaining seventy-five (75%) per cent of the rest, residue and remainder of my estate I give, devise and bequeath to my trustees hereinafter named, the survivor or survivors of them, or such one or more as may qualify, in trust nevertheless, for the following uses and purposes.

“ A. My trustees shall hold, manage invest and reinvest the said property and shall collect and receive the income therefrom and pay the net income, in convenient installments, to my daughter during her lifetime.”

Paragraph Fourth, subdivision B, provides for remainder interests “ Upon the death of my said daughter, or upon my death, if my daughter shall not survive me ’ ’.

The will continues: ‘1 Fifth : * * * In addition to the payment of income from the trust for the benefit of my daughter, my trustees are authorized to pay from the principal of the trust such portion thereof as in their sole and uncontrolled discretion they may deem wise, whether because of insufficiency of income personal need or otherwise, and my said trustees shall not be held accountable to any court or to any person for the exercise or non-exercise of this completely discretionary power. ” (Emphasis supplied.)

There is no question as to the validity of the will or testamentary trust.

The sole question presented by the petitioner and the special guardian concerns the construction of the italicized words above quoted in paragraph “ Fifth ”. In other words, does “ or otherwise ” mean “ for any other reason ” or does the doctrine of ejusdem generis apply?

The learned Surrogate in his decree determined that the corpus might be invaded “ pursuant to the terms of the Will, only because of insufficiency of income, personal need or otherwise as construed by the Court in its decision herein ”, and denied the application of the executor-trustee “ on the ground that there has been no showing of insufficiency of income, personal need or otherwise of said Margaret Bisconti ”,

In Ms decision, the Surrogate stated: ‘ ‘ The court holds that the principal may be invaded only because of ‘ insufficiency of income or personal need. ’ The words or otherwise ’ are construed to refer to a reason similar to those specifically mentioned. Under the circumstances the language should not be strained so as to result in the destruction of the trust (Matter of Morse, 198 Misc. 364).”

The question presented by this appeal is whether the words in the “ Fifth ” paragraph of the will, “ whether because of insufficiency of income personal need or otherwise ” give rise to an ambiguity thereby necessitating our resort to canons of construction in order to ascertain the intention of testatrix— in this case the canon of ejusdem generis — or whether her intention is clearly found in the words used so that there is no need to apply canons of construction.

The application of the rules of construction of wills is for the purpose of determining the intent of the testator where that intent is not clearly expressed by the testamentary words, and the rules of construction are to be disregarded when the language is clear and definite. It is well established that rules of construction are merely subsidiary aids. (Matter of Watson, 262 N. Y. 284, 293, 294.) If intention of a will-maker is to be found in the words used in the will and these are clear and definite there is no power to change them. (Matter of Watson, supra.) As is stated in Davids on the New York Law of Wills : ‘1 When intention can be ascertained as a fact from the instrument itself * * * there is no occasion for a presumption in respect thereof, and the decision should not be affected by the rules in question. Hence the rules of construction are to be disregarded where the decedent’s intention is clearly or sufficiently manifest, or where the language of the instrument is plain and its meaning obvious.” (Vol. I, § 491, p. 805; see Matter of Rollins, 271 App. Div. 982, affd. 297 N. Y. 612.)

It seems to us that no question as to the intention of the testatrix arises but that a mere reading of the disputed clause indicates that the testatrix intended her trustees to handle the trust for her daughter just as they thought best. There is nothing ambiguous about its wording. Nor can the terms be characterized as technical language which ‘£ has acquired, through judicial decision, a definite and legal significance ” which the courts must presume that the testatrix intended it to have. (See Matter of Krooss, 302 N. Y. 424, 428; see, also, Manion v. Peoples Bank of Johnstown, 292 N. Y. 317, 321.) The trustees’ discretion to invade the principal was to be “uncontrolled” — “whether” for the two reasons specified “or otherwise”. Reading the paragraph as an integrated whole, the word “ whether ”, following words of an essentially negative character, excluding all control over the trustees, eliminates any restriction on their judgment and renders the special items enumerated words of description only- — the words “ or otherwise ” being another and more general descriptive category. Moreover, the broad inclusive character of the terms ‘ ‘ insufficiency of income ’ ’ and ‘‘ personal need ’ ’, makes it evident that the words, “ or otherwise ”, represent terms of enlargement to include every conceivable situation outside those stated. (See, e.g., United States v. Mescall, 215 U. S. 26, 31.) There is a clear distinction between this language and the frequent affirmative enumeration of testamentary bequests, such as ‘ ‘ chairs, tables, or other household furniture ’ ’, where, obviously, the last general term must be governed by those preceding it.

In view of the clear intention of the testatrix, we find it unnecessary at this time to discuss or decide whether the testatrix’ declarations of her intention at the time of the making of the will are admissible. (See Baumann v. Steingester, 213 N. Y. 328; Matter of Wheeler, 32 App. Div. 183, affd. on the opinion below, 161 N. Y. 652.)

The order of the Appellate Division and the decree of the Surrogates’ Court should be reversed, and the matter remitted to the Surrogates’ Court for further proceedings not inconsistent with this opinion, with costs in all courts to all parties appearing separately and filing separate briefs, payable out of the estate.

Lewis, Ch. J., Desmond, Dye, Fuld, Froessel and Van Voorhis, JJ., concur.

Order reversed, etc.

       A second executor and trustee has renounced.


author: Lewis, Ch. J. Desmond, J.

text:
    In the Matter of Freda K. Ralph, Appellant, against Board of Estimate of the City of New York et al., Respondents.
    Argued January 19, 1954;
    decided April 8, 1954.

      Stephen J. Rudd and Irving L. Bruns for appellant.
    I. There was no triable issue in this proceeding. (Matter of Rumsey Mfg. Corp. [Corsi], 296 N. Y. 113; Matter of Newbrand v. City of Yonkers, 285 N. Y. 164.) II. The decision of respondents based upon the trial committee’s findings is not supported by substantial evidence, nor is it based upon a reasonable inference from undisputed testimony. (Matter of Larson v. Paine Drug Co., 218 N. Y. 252; Matter of Gibbs v. Macy & Co., 214 App. Div. 335, 242 N. Y. 551; Matter of Stork Restaurant v. Boland, 282 N. Y. 256.)

      Adrian P. Burke, Corporation Counsel {Henry J. Shields and Seymour B. Quel of counsel), for respondents.
    I. Petitioner cannot question the power of the Appellate Division to consider the matter de nova. Special Term was without power to pass upon the merits of the proceeding, since the proceeding was brought to review the determination of a hearing at which evidence was taken pursuant to statutory direction. (Matter of Newbrand v. City of Yonkers, 285 N. Y. 164; Matter of Daley v. Board of Estimate of City of N. Y., 267 App. Div. 592; Matter of Miller v. Kling, 291 N. Y. 65; Matter of Tiernan v. Walsh, 294 N. Y. 299; Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327; Matter of Donahue v. Fletcher, 299 N. Y. 227; Matter of Burke v. Bromberger, 300 N. Y. 248; Matter of Lynch’s Builders Restaurant v. O’Connell, 303 N. Y. 408.) II. Petitioner failed to submit evidence, required by the statute, that the death of such death was not the result of willful negligence on his part. (Matter of Slattery v. Board of Estimate & Apportionment of City of N. Y., 271 N. Y. 346; Matter of Scanlon v. Herald Co., 201 App. Div. 173; Matter of Lampert v. Siemons, 235 N. Y. 311; Matter of Gibbs v. Macy & Co., 214 App. Div. 335, 242 N. Y. 551; Matter of McCarter v. La Rock, 240 N. Y. 282; Matter of Scholtzhauer v. C. & L. Lunch Co., 233 N. Y. 12.)
   Lewis, Ch. J.

This appeal presents for decision the question whether the appellant, the widow of Henry W. Ralph who was City Register of the City of New York at the time of his death, is entitled to an ordinary death benefit, or to an accidental death pension from the New York City employees’ retirement system as a result of her husband’s death.

The relevant statute is section B3-33.0 of the Administrative Code of the City of New York which provides in part as follows:

Death benefits; accidental death benefits.— Upon the accidental death of a member before retirement, provided that evidence shall be submitted to such board proving that the death of such member was the natural and proximate result of an accident sustained while a member and while in the performance of duty at some definite time and place and that such death was not the result of wilful negligence on his part, his accumulated deductions shall be paid to his estate, or to such persons as he has nominated or shall nominate by written designation, duly acknowledged and filed with such board. Upon application by or on behalf of the dependents of such deceased member, such board shall grant a pension of one-half of the final compensation of such employee:

“1. To his widow, to continue during her widowhood; * * (Emphasis supplied.)

It is not disputed that Henry W. Ralph, at the time of his death, was an employee of the City of New York, a member in good standing of its employees’ retirement system, and that he met his death as a result of an automobile accident. If, within the language of section B3-33.0 (quoted supra) the decedent, at the time of the fatal accident, was in the performance of duty at some definite time and place ”, his widow, the petitioner herein, is entitled to an accidental death pension rather than an ordinary death benefit from the employees’ retirement system.

The accident sustained by Henry W. Ralph occurred on January 30, 1948. As a result of injuries then suffered his death occurred on the following day. Thereafter the present petitioner-appellant applied to the New York City employees’ retirement system for an accidental death pension based upon her claim that, at the time when and place where her husband met with fatal injuries, he was engaged in the performance of duty incident to his official position. The medical board of the retirement system- — to which such applications are referred — ■ determined that there was no proof that the decedent was engaged in the performance of duty at the time of the accident, and recommended to the Board of Estimate that the application for an accidental death pension be denied. Thereupon the Board of Estimate referred the matter to its secretary to act as a trial committee. Upon evidence taken at a hearing duly held the trial committee recommended that the application be denied upon the ground that the accident which befell the decedent and his subsequent death i£ were not sustained while in the performance of duty at some definite time and place.” Thereafter the Board of Estimate by formal resolution denied payment of an accidental death benefit to the petitioner-appellant who subsequently brought the present proceeding to annul the Board’s determination and to award her an accidental death pension.

At Special Term the determination of the Board of Estimate was vacated and the Board was directed to grant the petitioner-appellant an accidental death pension. At the Appellate Division, where the proceeding was considered de novo on the merits, the order of Special Term was reversed on the law, and the determination of the Board of Estimate was confirmed upon the asserted ground that The record as presented does not disclose such a preponderance of proof in petitioner’s favor as to require or authorize a contrary determination by the court.” It is conceded that the fatal injuries sustained by the decedent occurred when, upon leaving Romano’s camera shop located at 117-02 New York Boulevard in Jamaica, he was struck by an automobile southbound on that thoroughfare. Our inquiry goes to the question whether at that time and place he was engaged in performing a duty incidental to his official position.

Passing to evidence — which we regard as decisive — taken from the record made at the hearing before the trial committee named by the Board of Estimate and from affidavits which are a matter of record before us: It was established without contradiction that since 1945 the decedent — during his term of office as Register of the City of New York — had been engaged in an effort to develop a microfilm process by means of which instruments of conveyance filed in his office affecting the title to real property, and certain manuscripts, could be recorded and indexed more economically as to labor, cost and space. Under instructions received from the decedent the witness Romano, the proprietor of Romano’s camera shop, was doing the experimental work, including the planning and building of a camera, a camera cabinet and the base mounting required for the particular functions the camera was to perform in which the microfilm was used. During a period in excess of two years while Romano and the decedent were collaborating toward the completion of this project, the decedent had made annual reports to the Mayor of New York concerning the development of the microfilm process. For this work — done by Romano under the decedent’s direction as to measurements and other essential factors — Romano had been paid by the City of New York. In fact, there was evidence that Romano was paid by the city for the work he was doing on the day of decedent’s accident. In addition it appears that, after the accident, there was found in a pocket of the coat decedent was then wearing an unexecuted draft of a new contract with Romano which contained new measurements for the camera cabinet — previously the subject of conference by Romano and the decedent — which contract covered future work to be done on the project by Romano.

As bearing upon what decedent was doing immediately prior to the time he was injured on January 30, 1948, it appears that during the afternoon of that day he made the last of his many visits to the Romano shop which was located in a building at the southwest corner of the intersection of New York and Foch Boulevards fronting upon New York Boulevard — a north-south thoroughfare. From the testimony by Romano before the trial committee, and from a separate verified statement by him which stands uncontradicted in the record before us, we learn that it was decedent’s custom periodically to inspect the progress of the work being done on the camera which was being built at Romano’s camera shop and which was to be used in a demonstration to be conducted in the Bronx Register’s Office for the photographing of city records. As to the particular reason for the decedent’s visit to the camera shop on the afternoon he was injured, it appears from Romano’s testimony that the decedent came there to confer with Romano and his mechanics for the purpose of checking measurements for a new cabinet, which measurements were to be inserted in a new contract, the lack of which had held up ” Romano’s work on the camera and related items. That conference ended at 4:20 at which time the decedent left Romano’s establishment. When doing so he called back to Romano — So long, I will give you a buzz in the morning or come down myself. ’ ’ Within two to four minutes after decedent had left the shop through the front door which opens onto New York Boulevard, Romano was called back to the front window by the shouting of one of his mechanics. Upon .looking to the right or south at a thirty-degree angle from the window Romano saw decedent’s body lying in the roadway of New York Boulevard at a point twenty to twenty-five feet from Romano’s position. At that time the pavement was dry, the decedent’s body being six feet out into the roadway from a thick bank of snow along the curb.

Thus does the record make it clear that the decedent met with a fatal accident less than four minutes after he had left a conference with Romano and his staff and at a point but a short distance from the building where that conference took place — a conference which had no relation to his private business but related only to his collaboration in an effort, financed by city funds, which he had been making over a period of at least two years as Register of the City of New York, to better the public service his office was required to furnish.

The following finding by the Board of Estimate’s trial committee has met with the approval of the Appellate Division:

“ On all the evidence produced, and after hearing the witnesses and carefully considering the exhibits, your Trial Committee finds that the Claimant has not sustained her burden of proving that the death of the decedent occurred while in the performance of duty.

“ Even assuming that the visit of decedent to the Romano camera establishment to see Mr. Romano was in the performance of duty, and in the opinion of your Committee there was substantial evidence that it was not, the accident occurred after such interview was completed and while decedent was on his own time and about his personal pursuits. The accident occurred after office hours and after the termination of his business with Mr. Romano, whichever way the nature of such business is regarded.”

Finding in this record no evidentiary basis for the inference implicit in the trial committee’s finding quoted above, we cannot agree with the Appellate Division’s disposition of this case.

The evidence is not disputed that the decedent did not go to the Romano camera shop on private business. In each instance, including the occasion of his journey to and from the shop on the afternoon of the accident, he had gone there for purposes clearly in furtherance of his effort to improve the filing system in his office for the efficiency of which he was responsible as Register. It cannot be reasonably said that the instant he left the camera shop the official character of his mission — with incidental travel — ceased. The decedent’s return to his office or to his home was a necessary complement to the mission which brought him from Ms office to the Romano shop. (Cf. Matter of Oram v. Moon Co., 285 N. Y. 42, 46; Matter of Gibbs v. Macy & Co., 214 App. Div. 335, 336-337, affd. 242 N. Y. 551.) Performance of official duty had prompted his conference with Romano and the technical staff in the latter’s shop. When that conference ended he left promptly and we find in this record no evidence that at the time of the accident — wMch occurred immediately following his leave-taking — he was doing anything other than returning to his office or his home. Whatever Ms destination, it was still necessary for him to traverse the same route as he took from his office to the camera shop, for, even if he were returning to his home, he would travel the same way as though returning to his office, but beyond it.

In reaching our conclusion in this case we are not unmindful that in Matter of Stork Restaurant v. Boland (282 N. Y. 256) this court, in defining the scope of judicial review of quasi-judicial administrative action, declared that “ * * * where from the evidence either of two conflicting inferences may be drawn, the duty of weighing the evidence and making the choice rests solely upon the [administrative] Board ” (p. 267). However, in that same opinion (pp. 273-274) will be found the following statement which has influenced us in reaching our present decision: A finding is supported by the evidence only when the evidence is so substantial that from it an inference of the existence of the fact may be drawn reasonably. A mere scintilla of evidence sufficient to justify a suspicion is not sufficient to support a finding upon which legal rights and obligations are based. That requires ‘ such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. ’ (Consolidated Edison Co. v. National Labor Relations Board, 305 U. S. 197, 229.) ”

The order of the Appellate Division should be reversed and the proceeding remitted to the Board of Estimate for further proceedings not inconsistent with this opinion, with costs in this court and in the Appellate Division.

Desmond, J.

(dissenting). The New York City employees’ retirement system, as set up under title B of chapter 3 of the city’s Administrative Code, includes special benefits for members who suffer accidental deaths while in the actual physical performance of their official duties. On the death of any employee while a member of the retirement system, his estate or nominee is entitled to the return of his accumulated deductions ” plus a half-year salary or full-year salary, depending on length of service (Administrative Code, § B3-32.0). Appellant’s rights to those “ ordinary benefits ” is conceded. But much different and greater benefits are available to the dependents of a member accidentally killed while on duty. In the latter case, besides the return to the member’s estate or nominee of his “ accumulated deductions ”, there is payable to his dependents a pension of one half of the deceased employee’s compensation (Administrative Code, § B3-33.0). But the grant of such a pension is specifically conditioned on the production of proof by the applicants therefor, that death resulted from an accident sustained while in the performance of duty at some definite time and place ”. To give this statutory language any meaning at all, we must read it as saying that a “ pension ” (Administrative Code, § B3-33.0) as distinguished from an “ ordinary death benefit ” (Administrative Code, § B3-32.0) requires an affirmative showing of death from an accident sustained by the member at the “ definite time and place ” of his actual, physical work for the city. (Unless such was the intent, the use of the words definite time and place ” was without purpose.)

Obviously, petitioner did not prove that her late husband’s fatal accident was at the time and place of his employment. The exact opposite appears without dispute, since he was run down by an automobile in the street, while on his way home from the camera shop. This is not a workmen’s compensation case where one who is returning home after an errand for his employer may raise a question of fact as to arising out of and in the course of employment ” (Workmen’s Compensation Law, § 2, subd. 7), but even in such a case a fact finding against the claim could not be set aside on appeal. Quite differently, the statute we are construing puts on the survivors the burden of proof that the death-causing accident occurred at the actual time and place of employment. So, even if Mr. Ralph’s business at the camera shop had some relation to his duties as City Register, it still could not be said, as matter of law, that the decision against the claim was unfounded.

With the fairness of this strict statute we cannot concern ourselves, but we must remember that what is here involved is the grant of a pension for a service-connected death, in addition to ordinary death benefits.

The order should be affirmed.

Conway, Dye, Fuld and Froessel, JJ., concur with Lewis, Ch. J.; Desmond, J., dissents and votes for affirmance in an opinion in which Van Voorhis, J., concurs.

Order reversed, etc.