text:
    Ernst Iron Works, Inc., Respondent, v. Duralith Corporation, Appellant, Impleaded with Another.

      (Argued January 20, 1936;
    decided March 3, 1936.)

      Jesse Freidin, Charles L. Apfel and Leonard L. Berliner for appellant.
    There is no proof that Duralith with colors had been sold prior to respondent’s contract, hence respondent failed to prove its case. (Smith v. Kay, 7 H. L. Cas. 750; Bowen v. Evans, 2 H. L. Cas. 757; Sanborne v. Stetson, 2 Story, 481; Taylor v. Guest, 58 N. Y. 262; Moore v. Noble, 53 Barb. 425; Cochran v. Halsey, 25 Minn. 52; Cartwright v. Hughes, 147 So. Rep. 393; Gottlieb v. Leach, 40 Vt. 278; Fitzhugh v. Nirshl, 77 Ore. 514.) The trial court erred in permitting the introduction of oral statements alleged to have been made by appellant’s agent which were specifically contradicted by the terms of the written contract. (Winch v. Farmers Loan & Trust Co., 12 Misc. Rep. 291; Newburger v. American Surety Co., 242 N. Y. 134; Rye v. Humbley, Y. B., 8 Edw. II, No. 9; Jarvis v. Palmer, 11 Paige, 650; Madison Tire & Rubber Co. v. Malcolm Tire Co., 123 Misc. Rep. 425; Electric Paint & Varnish Co. v. Binghamton W. W. S. Co., 134 Misc. Rep. 638; Stonemor Realty Co. v. Beyda, 206 App. Div. 476; Reeves v. Corning, 51 Fed. Rep. 774; Middleworth v. Ordway, 191 N. Y. 404; Preeman v. United States, 244 Fed. Rep. 1; Blair v. Baird, 43 Tex. Civ. App. 134; Eastern Advertising Co. v. Patch, 235 Mass. 580; Brown v. Burns, 3 E. & B. 703;
      Wright v. Couch, 54 S. W. Rep. [2d] 207.) There is no competent evidence to support respondent’s allegation that it relied upon the alleged oral representation of appellant’s agent. (Newburger v. American Surety Co., 242 N. Y. 134; Barnevo v. Munson S. S. Line, 239 N. Y. 486; Union Car Advertising Co. v. Collier, 263 N. Y. 386; Buffalo Builders Supply v. Reeb, 247 N. Y. 170; Brackett v. Griswold, 112 N. Y. 454; Kreshover v. Berger, 135 App. Div. 27; Custar v. Titusville Water & Gas Co., 63 Penn. St. 381; Colt Co. v. Odom, 136 Miss. 651; Wright v. Couch, 54 S. W. Rep. [2d] 207; Colt v. Kinard, 126 S. C. 205; Russell v. Prudential Ins. Co., 73 App. Div. 617; Ochs v. Wood, 221 N. Y. 335; Dillman v. Nadlehofer, 119 Ill. 567.)

      Irving I. Beckler for respondent.
    Oral evidence establishing fraud and misrepresentation was properly admitted. (Bridger v. Goldsmith, 143 N. Y. 424; Jackson v. State, 210 App. Div. 115; Wilson & English Constr. Co. v. N. Y. C. R. R. Co., 240 App. Div. 479; Gillet v. Bank of America, 160 N. Y. 549; Adams v. Gillig, 131 App. Div. 494; 199 N. Y. 314; Wolfe v. Strohecker, 56 Wash. Law Repr. 446; Pearson v. Lord Mayor, [1907] App. Cas. 351.) The plaintiff proceeded upon a rescission upon the trial. (Vail v. Reynolds, 118 N. Y. 297; Hammond v. Pennock, 61 N. Y. 145; Brennan v. National Equitable Investment Co., 221 App. Div. 658; Gravenhorst v. Zimmerman, 236 N. Y. 22; Ring v. Ring, 127 App. Div. 411; 199 N. Y. 574; Matter of Clark, 233 App. Div. 487; Ufland & Co. v. McMahon, 215 App. Div. 267; Keefuss v. Weilmunster, 89 App. Div. 306; Weigel v. Cook, 237 N. Y. 136; Heckscher v. Edenborn, 203 N. Y. 210.)
   Finch, J.

The defendant is engaged in the manufacture and sale of a wall texture called Duralith.” Since 1933 it has been manufacturing and selling in addition a coloring material called “ Duratint.” On May 5, 1933, the plaintiff, a corporation having its place of business in Buffalo, New York, signed a printed contract for the purchase of twenty tons of Duralith, and at the same time signed an order for Duratint. The contract was submitted to the officers of the defendant corporation and accepted by them. The products ordered were delivered to the plaintiff and payment was made for them. Shortly afterwards, in July of 1933, this action was instituted to rescind the contract on the ground that the plaintiff had been induced to enter into it by fraudulent representations of a sales agent of the defendant.

The contract signed by the plaintiff is a- uniform contract used by the defendant. It contains the following clauses:

The company makes no representation regarding previous sales in distributor’s territory.”

No representation or warranty of any kind shall be binding upon either the Duralith Corporation or the dealer unless it has been incorporated in this agreement.”

Despite these provisions of the contract, the plaintiff maintains that the defendant’s sales agent, Liberman, told the officers of the plaintiff before they entered into the contract “ that Duralith ’ with colors had not been sold or distributed in the City of Buffalo or County of Erie previously thereto and that if plaintiff entered into said contract that plaintiff would then become the sole distributor for said product in the City of Buffalo and County of Erie in the State of New York and would be the first and only distributor to sell and distribute said product in the said territory * * The evi-

dence offered at the trial shows that the defendant had made two or three small sales of Duralith in the city of Buffalo prior to entering into the contract with the plaintiff. There is no evidence that a distributor for the Buffalo area had previously been appointed by the defendant. The jury returned a verdict in favor of the plaintiff and the judgment entered thereon has been affirmed.

The defendant maintains that the admission in evidence of testimony of statements made by the sales agent, Liberman, violated the paroi evidence rule since these statements conflict with the provisions of the contract contained in the above quoted clauses. The plaintiff, however, points to the cases which hold that a person cannot exempt himself from liability for fraud by inserting in- his contract a blanket or merger clause. (Bridger v. Goldsmith, 143 N. Y. 424; Jackson v. State, 210 App. Div. 115; Pearson & Son, Ltd., v. Lord Mayor of Dublin, [1907] A. C. 351. See 5 Wigmore on Evidence [2d ed.], § 2439.) No one can dispute the validity and the justice of the rulings in the cited cases. A rogue cannot protect himself from liability for his fraud by inserting a printed clause in his contract. This principle disposes of the blanket clause providing that no representation shall be binding unless incorporated in the agreement. Whether or not paroi evidence of statements made by an agent may be introduced in an action for fraud against a corporation where such statements are at variance with specific provisions in a printed contract which was read by the plaintiff is a closer question (See 56 A. L. R. 13, at p. 51 et seq.); but it is one which it is unnecessary to consider now since the case at bar may be disposed of on other grounds.

Assuming that paroi evidence of the statements of the agent is admissible and that the testimony of plaintiff’s witnesses is. true, is the plaintiff entitled to judgment against the defendant? This action is one in rescission for fraud. Fraud is an essential element and must be proven by the plaintiff. Obviously if the statements made by the agent to the plaintiff were true there was no fraud. The plaintiff alleged and offered testimony to show that the sales agent stated that Duralith with colors, that is Duratint had not been previously sold in Buffalo and that the plaintiff would become the first and only distributor of that product in the territory. To show the falsity of this statement it offered proof of one or two small sales of Duralith which were made about six months prior to its own purchase. But there is no claim that it was ever told that Duralith, as contrasted with Duralith with colors, had never been sold in Buffalo. In fact, it admitted that it was informed of one sale of Duralith in Buffalo made several years before its purchase. It may be, however, that Duralith and Duralith with colors so closely resemble each other that a representation as-to one might be regarded as applying to the other. But in view of the admission that it was informed of one sale of Duralith, it is doubtful whether even this would be sufficient to constitute the statement made a misrepresentation.

It is unnecessary, however, to rest our decision on this ground since there is another and more conclusive reason for reversing the judgment obtained against the defendant. The plaintiff seeks to rescind a contract made between it and the defendant on the ground that it was induced to enter into the contract by the fraud of an agent of the defendant. A principal, however, is not hable for loss caused to another by reason of his reliance upon a deceitful representation of an agent unless the representation was authorized or apparently authorized. (American Law Institute, Restatement of the Law of Agency, §§ 162, 257.) There can be no rebanee on apparent authority unless the circumstances are such that the plaintiff is entitled to rely upon it. (See Deyo v. Hudson, 225 N. Y, 602, 612-614.) “ If a third person has notice of a limitation of an agent’s authority, he cannot subject the principal.to liability upon a transaction with the agent in violation of such limitation.” (Restatement of the Law of Agency, § 166. Cf. Id. § 167. See Tiffany on Agency, § 19; 75 A. L. R. at p. 1047.)

In the case at bar it is conceded that the officers of the plaintiff read the clause stating that the defendant made no representations as to previous sales. They admit that they understood the meaning of the clause and that although they asked the sales agent to change it he refused to do so because his superiors would not accept the contract unless the clause was included. These officers of plaintiff testified that they received the impression that the sales agent lacked the right to change the contract. Thus from their own mouths we have testimony that they knew of the limitations and that they knew that the agent lacked authority to alter the contract. Under these circumstances there can be no doubt that they were aware that the statement made by the sales agent was not binding upon the defendant.

Furthermore, even if the statement of the sales agent was binding on the defendant, it is clear that the plaintiff did not rely upon the statement. The officers of the plaintiff were business men. They were negotiating a contract. They had asked to have a provision of the contract stricken out but this was refused. Nevertheless they claim that they relied upon an oral statement made to them in direct contradiction of this provision of the contract. What was said by this court in Union Car Advertising Co. v. Collier (263 N. Y. 386, 390) concerning other parties is equally applicable to the parties in this case. The court there said: We cannot imagine a man of Mr. Wineburgh’s experience in the advertising business relying upon the representations of a general manager contrary to the express terms of the contract he was about to sign. He must have known that Dana had no power or authority to vary the written contract.”

The plaintiff in its brief offers the following explanation, based upon testimony in the record, to show that it relied upon the statement of the sales agent. The plaintiff described the office as a very elaborate place. He stated that the walls were decorated in Japanese scenes, showing landscape made in relief and each of the walls being decorated in different scenes; that the furniture consisted of a beautiful desk, upholstered chairs in red leather, and curtains on the windows, with a beautiful rug on the floor. That it was nearly lunch time and that Mr. Liberman suggested lunch and invited these boys to the Biltmore Hotel, which they knew was a very expensive place. That after luncheon he signed the check at the hotel and ushered the boys to the cigar stand where the clerk handed out cigars which sold for 50c each.” The Ernst brothers further testified that as a result their resistance was lowered and they, therefore, relied upon the statement of the sales agent. The absurdity of this plea is obvious.

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

Crane, Ch. J., Lehman, O’Brien, Hubbs, Crouch and Loughran, JJ., concur.

Judgments reversed, etc.


source: Caselaw Access Project

author: O’Brien, J.

license: Public Domain

text:
    The Bay Parkway National Bank of Brooklyn in New York, Appellant, v. Ishaia Shalom, Respondent.
    (Argued January 20, 1936;
    decided March 3, 1936.)

      Walter Jeffreys Carlin for appellant.
    There was consideration for the note which constitutes an independent contract. (County Trust Co. v. Mara, 242 App. Div. 206; 266 N. Y. 540; Kelso & Co. v. Ellis, 224 N. Y. 528; Van Norden Trust Co. v. Rosenberg, 62 Misc. Rep. 285; Union Trust Co. v. Lauman, 139 Misc. Rep. 308; Conran Co. v. Brevort Developing Corp., 137 Misc. Rep. 265; First Nat. Bank v. Dowling, 133 App. Div. 793; Edenberg Trust Co. v. Pike, 146 Atl. Rep. 123; Muschelmez v. Tidwich, 167 N. W. Rep. 498; National Bank v. Carper, 67 N. W. Rep. 188; Elisberg v. Simpson, 173 N. Y. Supp. 128.) As a matter of public policy the testimony as to the criminal conspiracy should have been excluded. (Reiner v. North American Newspaper Alliance, 259 N. Y. 250; Geneva Nat. Bank v. O’Brien, 121 Misc. Rep. 282 ; 209 App. Div. 846; First Nat. Bank v. Tisdale, 84 N. Y. 655; Bank of Le Roy v. Purdy, 100 App. Div. 64; National City Bank v. Holyworth, 231 App. Div. 688; Merchants Nat. Bank v. Prescott & Son, Inc., 139 Misc. Rep. 603; 235 App. Div. 878; 253 N. Y. 517.) There was consideration for the note and the defendant is estopped from pleading want of consideration. (County Trust Co. v. Mara, 242 App. Div. 206; 266 N. Y. 540; Union Bank v. Sullivan, 214 N. Y. 332; Dykman v. Keeney, 10 App. Div. 610; 16 App. Div. 131; 160 N. Y. 677; Queensboro Nat. Bank v. Kelly, 220 App. Div. 515; Leary v. Capitol Trust Co., 238 App. Div. 661; Grannis v. Stevens, 216 N. Y. 583; American Brass & Copper Co. v. Pine, 185 App. Div. 473; 229 N. Y. 552; Rector v. Teed, 120 N. Y. 583; Hurd v. Kelly, 78 N. Y. 588; Federal Reserve Bank v. Crothers, 289 Fed. Rep. 777; Sickles v. Herold, 11 Misc. Rep. 583; Longley v. Coons, 244 App. Div. 391; 268 N. Y. 712.)

      George A. Ferris and Bartholomew A. Moynahan for respondent.
    Defendant was not estopped from pleading and proving want of consideration or conditional delivery. (McMullen v. Hof man, 174 U. S. 639; National Bank & Loan Co. v. Petrie, 189 U. S. 423; Rankin v. City Nat. Bank, 208 U. S. 541; Hanover Nat. Bank v. First Nat. Bank, 109 Fed. Rep. 421; Peterson v. Tillinghast, 192 Fed. Rep. 287; Wagner v. Central Banking & Security Co., 249 Fed. Rep. 145; Devlin v. Brady, 36 N. Y. 531.) The issues of the trial were properly submitted do the jury and the trial court correctly admitted testimony on the defenses pleaded. (Seymour v. Cowing, 4 Abb. Ct. App. Dec. 200; Benton v. Martin, 52 N. Y. 570; Williams v. First Nat. Bank, 45 App. Div. 239; 167 N. Y. 594; Garfield Nat. Bank v. Colwell, 57 Hun, 169; Higgins v. Ridgway, 153 N. Y. 130; Bernstein v. Kritzer, 253 N. Y. 410; Whitestown Nat. Bank v. Lewis, 205 App. Div. 553; Chelsea Exchange Bank v. LaHiff, 219 App. Div. 434; Thomas v. Scutt, 127 N. Y. 133; Smith v. Dotterweich, 200 N. Y. 299.)
   O’Brien, J.

The action is on a promissory note dated June 24, 1931, for $5,750, of which defendant is the maker. The defenses are lack of consideration, accommodation for the benefit of plaintiff and an agreement that the note was not to be paid by defendant. This note is a renewal of one for $9,000, dated July 22, 1930.

Prior to the making of the original note dated July 22, 1930, Munsalli & Farbman, a partnership engaged in the sale of lingerie and also the French Lingerie Shop, Inc., a corporation which had taken over the stock of Munsalli & Farbman, were indebted to plaintiff bank. Defendant was a creditor of Munsalli & Farbman and became treasurer of French Lingerie Shop, Inc. He denies that he made any investment in that corporation prior to December, 1930, but admits that the signature, I. Shalom,” as treasurer, on a document certified by Louis Munsalli as president and by Samuel Farbman as secretary concerning the adoption of resolutions by the board of directors of French Lingerie Shop, Inc., on July 9, 1930, is his signature.

Defendant gave his version in respect to the circumstances under which he signed the original note for $9,000, dated July 22, 1930, as well as the later notes, including the one in suit. In view of the verdict we must conclude that the jury credited this testimony. Nasser, a director of plaintiff bank, said to defendant: Please,Mr. Shalom, I want you to sign notes for $9,000 for Munsalli & Farbman. * * * If you don’t sign the note for Munsalli & Farbman, any day there will be a run on the bank,” and that all defendant’s friends would lose their deposits. Nasser added: “ The bank examiner want to see the book. He can’t show up the bank any loss because he was lost some money before, about $20,000; in a small bank if he see that $10,000 loss, the bank will be closed.” Later a conversation occurred among defendant, the director Nasser and the cashier of plaintiff during which, according to defendant’s version, one or both of the bank’s representatives said to defendant: Don’t be worried, we will never sue you for it, we will never ask you for it, because that note belongs to Munsalli & Farbman. We don’t want to show on our book loss of $10,000 because we lost before about $20,000.” In the course of that conversation Munsalli and Farbman arrived and were present with the cashier and the director of the bank when, according to defendant’s version, the president of the bank added his entreaty: Please, Mr. Shalom, help us out. Sign that note. That note belongs to Munsalli & Farbman; never ask you for it.” With this understanding he signed the note. In the following September the amount due on the note had been reduced to $6,250, and defendant, under similar circumstances and entreaties, as he testified, signed a renewal for that amount. The note in suit is a renewal for $5,750. Defendant had an account with the bank and says that he signed the note for the purpose of saving the bank. Defendant’s version is denied by plaintiff’s witnesses. Their version is that the bank held a claim for $7,000 against Munsalli & Farbman and $2,000 in notes of the French Lingerie Shop, Inc., and that defendant had agreed to make good this indebtedness of $9,000.

We need not go so far as actually to hold that there was consideration within the rule of Union Bank v. Sullivan (214 N. Y. 332). We do hold that defendant is estopped from raising that issue. He testified that the bank officials told him that they wanted the note so that any bank examiner would believe that the bank stood in no danger of taking a loss on the claim against Munsalli & Farbman and that they wanted the note to keep in the files only for exhibition to the bank examiner in the event that the Munsalli &, Farbman account should be examined. The question submitted in the charge to the jury was whether an agreement had been made between defendant and the bank officials that he was not to be liable but that he gave the note for the purpose of deceiving the bank examiner.

There are decisions by this court that under certain circumstances an agreement to exempt the maker or indorser of a note from liability is enforceable (Higgins v. Ridgway, 153 N. Y. 130; Bernstein v. Kritzer, 253 N. Y. 410), but the circumstances are different from the facts in this case. The general rule also is that courts do not aid either party to an illegal contract. This rule, however, has its exceptions. When courts allow a defense it is not as a protection to a defendant but as a disability to a plaintiff. (Reiner v. North American Newspaper Alliance, 259 N. Y. 250, 256.) When one knows that his note is to be treated as an asset of a bank, and, as a result, bank examiners are deceived and depositors continue their relations with the bank on the faith of an assumed solvency, then he is estopped from pleading the defense of no consideration. (Hurd v. Kelly, 78 N. Y. 588; Best v. Thiel, 79 N. Y. 15; County Trust Co. v. Mara, 242 App. Div. 206; affd., 266 N. Y. 540.)

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

Crane, Ch. J., Lehman, Hobbs, Crouch, Loughran and Finch, JJ., concur.

Judgments reversed, etc.


author: Finch, J.

text:
    Bradley B. Evans, Appellant, v. Lawrence Stern and Company, Respondent. Martin P. Gray, Appellant, v. Lawrence Stern and Company, Respondent.
    (Argued January 17, 1936;
    decided March 3, 1936.)

      A. Gerald Weinberg for appellants.
    The plaintiffs are employees within the meaning of section 71 of the Stock Corporation Law (Cons. Laws, ch. 59) and entitled to the protection thereof. (Bristor v. Smith, 158 N. Y. 157; Harris v. Norvell, 1 Abb. N. C. 127; Conant v. Van Schaick, 24 Barb. 87; Viele v. Wells, 9 Abb. N. C. 277;
      People v. Remington, 3 Silvernail, 484; Ericsson v. Brown, 38 Barb. 390; Coffin v. Reynolds, 37 N. Y. 640; Williamson v. Wadsworth, 49 Barb. 294; Vincent v. Banford, 12 Abb. Pr. [N. S.] 252; Hill v. Spencer, 61 N. Y. 274; Pfanmiller v. Groesbeck, 68 App. Div. 651; Denise v. Welch, 239 App. Div. 805; Short v. Medberry, 29 Hun, 39; Chapman v. Chumar, 7 N. Y. Supp. 230; Hitchcock v. Pagenstecher, 189 N. Y. Supp. 124; 198 App. Div. 511.) The plaintiffs, services terminated on December 31, 1933, as a matter of fact and law. (Merritt v. Earle, 29 N. Y. 115; Parmalee v. Wilks, 22 Barb. 539; People v. Dunford, 207 N. Y. 17; Reiss v. Usona Shirt Co., 174 App. Div. 181; Bozzone v. Stafford, 85 Misc. Rep. 53; Whitmore v. Werner, 88 N. Y. Supp. 373; Kane v. Auto Lak Mfg. Co., 172 N. Y. Supp. 275; Wood v. Dock & Mill Co., 193 App. Div. 236; Reeder v. Sayre, 70 N. Y. 180; Regg v. Bell, 5 T. R. 471; McNamara v. City of New York, 152 N. Y. 228; Ellis v. Willard, 9 N. Y. 529; Spencer v. Citizens Mut. Life Ins. Co., 3 Misc. Rep. 458; 142 N. Y. 505; Tuthill v. United Life Assn., 143 N. Y. 671; Wachtel v. Equitable Life Ins. Co., 241 App. Div. 172; McMaster v. Insurance Co., 55 N. Y. 222; United Glass Co. v. Vary, 152 N. Y. 121; White v. Royal Ins. Co., 8 Misc. Rep. 613; 149 N. Y. 485; Griggs v. Day, 158 N. Y. 1; Matter of Thompson, 217 N. Y. 111; Western v. State, 237 App. Div. 785; Milbaur v. Richard, 188 N. Y. 453; Kausen v. Leonhardt Realty Co., 79 Misc. Rep. 621; Jacobowitz v. Gittelson, 159 N. Y. Supp. 796.)

      Edward L. Jung for respondent.
    The services of the appellants terminated on December 30, 1933, as matter of fact. Hence the notices required by the statute to be given the defendant were not given “ within thirty days after the termination of such services.” (Cons. Laws, ch. 59, § 71; Thompson v. Simpson, 128 N. Y. 270; Adams v. Roscoe Lumber Co., 159 N. Y. 176; Glanzer v. Shepard,
      233 N. Y. 236; Koehler v. Adler, 78 N. Y. 287; Elwood v. W. U. Tel. Co., 45 N. Y. 549; Stratford v. Jones, 97 N. Y. 586.) The plaintiffs’ services, as matter of law, terminated on December 30, 1933, not on December 31, 1933, notwithstanding the notice given them by the corporation and irrespective whether or not they rendered services for the corporation on December 31, 1933, or afterwards. (Van Winkle v. Satterfield, 58 Ark. 617; Regny v. White, 4 Daly, 400; Rubin v. Int. Film Co., 122 Misc. Rep. 413; Delamater v. Miller, 1 Cow. 75; Brunette v. Clark, 1 Sheld. 500; Watts v. Van Ness, 1 Hill, 76; Northrup v. Fort, 14 Wend. 249; Palmer v. City of New York, 2 Sandf. 318; Nodine v. Doherty, 46 Barb. 59.) The plaintiffs were not “ servants, laborers or employees ” of the corporation, within the scope and meaning of the statute. (Cons. Laws, ch. 59; Bristor v. Smith, 158 N. Y. 157; Matter of American Lace Works, 30 App. Div. 321; Farnum v. Harrison, 167 App. Div. 704; 218 N. Y. 67; Hill v. Spencer, 61 N. Y. 274; Dean v. DeWolf, 16 Hun, 186; Krauser v. Ruckel, 17 Hun, 463; Ericsson v. Brown, 38 Barb. 390; Wakefield v. Fargo, 90 N. Y. 213.)
   Finch, J.

The plaintiffs, former employees of the Industrial Furnace Corporation, bring these actions to recover wages due them against the defendant, a stockholder of said corporation, pursuant to section 71 of the Stock Corporation Law (Cons. Laws, ch. 59).

The Industrial Furnace Corporation manufactured and sold electric annealing furnaces. The plaintiffs, college graduates, were employed by the corporation, their principal duty being to travel about the country instructing people who had purchased furnaces in the method of operating them. One of the plaintiffs, Evans, was sent to Russia for a period in order to give such instruction in that country. To instruct the purchasers it was necessary for the plaintiffs actually to operate the furnaces. The instructions generally were given for about a week, but on occasions lasted as long as a month and a half. .Another duty of the plaintiffs, and this occupied practically all of their time during the last few months of their employment, was the making of certain research ” tests. One of these tests, called the impact test,” merely involved striking a piece of metal with a hammer until the metal broke and then noting the number of blows necessary to cause the break. The other test, the wedge test,” was of a similar nature except that it involved the dropping of a weight upon the metal while it was held by a wedge. The plaintiffs also had stenographic and typing work on their reports. They testified that most of their research ” work involved simple arithmetic. When they were first employed the salary of Evans was thirty-five dollars a week and that of the other plaintiff, Gray, two hundred and fifty dollars a month. Subse-. quently Gray’s salary was reduced to one hundred and twenty-five dollars a month.

During the month of December, 1933, the plaintiffs were given a notice informing them that their salaries were to terminate on December 31, 1933. There is evidence that the plaintiffs worked on December 31st although that day was a Sunday.

The plaintiffs had received only partial payments on their salaries during the last two years of their employment. ’ After their discharge they determined to assert their rights against the stockholders of the corporation. They, therefore, retained an attorney who sent the proper notice to stockholders pursuant to section 71 of the Stock Corporation Law. The notices were sent on January 29, 1934, and were received by the defendant on January 30th. The notices stated that the employment of the plaintiffs terminated on December 30, 1933. At the trial the stenographer who typed the notices testified that she had changed the date dictated to her from December 31st to December 30th because she realized that the 31st fell on a Sunday:

At the close of the plaintiffs’ case the defendant moved to dismiss the complaint and a dispute arose as to whether the plaintiffs were bound by the day named in their notice. If they were, notice was not timely since notice had to be received within thirty days after the termination of employment. There was some discussion as to whether the question of when the employment terminated was one of law or of fact. Finally the attorney for the defendant renewed his motion for a verdict, saying, “ I do not care to have the question submitted to the jury as to the credibility of the plaintiffs’ witnesses.” After this the attorney for the plaintiffs joined in the motion for a directed verdict.

The trial court dismissed the complaint on the merits, stating in the memoranda opinion that the plaintiffs were not employees ” within the terms of the statute: The Appellate Division affirmed, one justice dissenting.

We must first determine whether the notice to the defendant was timely. The respondent contends that since both parties moved for a directed verdict at the close of the trial, the judgment of the trial court must be regarded as being based on the facts as well as the law and that, therefore, it must be held that the trial court decided as a matter of fact that the notice was not given within the thirty-day period fixed by the statute. A reading of the colloquy at the close of the trial among counsel for the plaintiffs, counsel for the defendant and the court makes it clear that all agreed that the testimony of the witnesses was true and the only question submitted to the court as to timely notice was whether the plaintiffs were bound by the date of the termination of employment as stated in their notice. The attorney for the defendant repeatedly stated that he did not care to have the credibility of the plaintiffs’ witnesses passed upon and that there was No question of fact here to be passed upon at all.” The only evidence to show that their employment terminated on the 30th rather than the 31st of December is the date in the notice sent to the defendant. The stenographer, however, testified that this was the result of an error on her part. In addition the notice served on the plaintiffs by the corporation, notifying them of their dismissal, fixed the date of termination of salary as the 31st. There is also evidence that one if not both of the plaintiffs were employed on a monthly basis and that both plaintiffs actually worked on December 31st.

Clearly the plaintiffs are not bound by the erroneous date in their notice, the error having been fully explained. There is ample testimony to establish the fact that the employment terminated on the 31st and since the facts were not before the court the evidence must be accepted as true.

Turning now to the question whether the plaintiffs come within the terms of the statute. Section 71 reads as follows: The stockholders of every stock corporation shall jointly and severally be personally liable for all debts due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation * * Prior to 1885 the statute read: “ liable for all debts that may be due and owing to their laborers, servants and apprentices for services performed for such corporation (L. 1848, ch. 40, § 18). Even under the old law it was held that there could be recovery by a civil engineer (Conant v. Van Schaick, 24 Barb. 87; Williamson v. Wadsworth, 49 Barb. 294). “A sort of engineer, a sort of foreman ” (Vincent v. Bamford, 12 Abb. Pr. [N. S.] 252), a foreman and salesman who did some manual labor (Short v. Medberry, 29 Hun, 39), and a newspaper reporter and assistant editor (Harris v. Norvell, 1 Abb. N. C. 127). Recovery was denied to a secretary of a corporation (Coffin v. Reynolds, 37 N. Y. 640), a superintendent and general manager who had complete control of the company in California and Mexico (Hill v. Spencer, 61 N. Y. 274), a general manager and bookkeeper (Wakefield v. Fargo, 90 N. Y. 213), and a superintendent with full power in Guiana and Venezuela (Dean v. DeWolf, 16 Hun, 186).

.When the statute was amended to its present form and the word “ employees ” substituted for apprentices,” it is obvious that the Legislature intended to extend its scope. It cannot be presumed that the Legislature was indulging in a meaningless act. In Palmer v. Van Santvoord (153 N. Y. 612, 616) the court, in reply to.the contention that despite the amendment only manual laborers could recover wages under the statute, said, The word ‘ employees ’ in the statute of 1885 is a word of larger import than the words operatives and laborers ’ which follow it (Gurney v. Atlantic & G. W. Ry. Co., 58 N. Y. 358), and while it may embrace the latter classes, it is not confined to those who perform manual labor only, and to construe it in the narrowest sense as embracing those classes only, would violate one of the accepted canons of construction to which we have referred, that each word used in an enumeration in a statute of several classes or things, is presumed to have been used to express a distinct and different idea.”

Under the present statute there have been recoveries by a salesman working on a commission basis (Hitchcock v. Pagenstecher, 198 App. Div. 511), bookkeepers (Farnum v. Harrison, 167 App. Div. 704; affd., 218 N. Y. 672; People v. Beveridge Brewing Co., 91 Hun, 313), a sales agent who set up and repaired machines sold by his company (Palmer v. Van Santvoord 153 N. Y. 612), a professional baseball player (Pfanmiller v. Groesbeck, 68 App. Div. 651), and a professional hockey player (Denise v. Welch, 239 App. Div. 805). On the other hand, it seems clear and has been held that an attorney employed by the corporation, but not to the exclusion of his other clients, does not come within the terms of the statute (Bristor v. Smith, 158 N. Y. 157).

Thus we find that under the old as well as the new statute the benefits of this provision of the Stock Corporatian Law have only been denied to persons in executive positions and attorneys.

Certainly the plaintiffs in the case at bar are not executives nor consulting professional men. Their positions were more analogous to that of bookkeepers or salesmen who have been permitted to recover under the statute. Their salaries were meagre and in keeping with their positions. They were well within the protection of the statute.

In each case, the judgments should be reversed and judgment granted in favor of the plaintiff, with costs in all courts.

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

Judgments reversed, etc.


author: Per Curiam.

text:
    Martin H. Smith Company, Appellant, v. American Pharmaceutical Company, Inc., et al., Respondents.
    (Argued January 16, 1936,
    decided March 3, 1936.)

      George Gordon Battle, Sylvester J. Liddy, Orson D. Munn and John H. Glaccum for appellant.
    The trial court erred in holding that the defendants have not committed any acts calculated or intended to trade on the reputation of the plaintiff, and that the defendants have not committed any acts for the purpose of misleading or deceiving the public into believing that the defendant corporation’s product is the plaintiff’s product; nor is the defendant corporation’s package calculated to cause such deception, nor has the public been misled or deceived by any acts of the defendant corporation. (Fairbank Co. v. Bell Mfg. Co., 77 Fed. Rep. 869; McLean v. Fleming, 96 U. S. 245; Paris Medicine Co. v. Hill Co., 102 Fed. Rep. 148; Chesebrough Mfg. Co. v. Old Gold Chemical Co., 70 Fed. Rep. [2d] 383; Dutton & Co. v. Cupples, 117 App. Div. 172; American Chain Co. v. Carr Chain Works, Inc., 141 Misc. Rep. 303; Williamson Candy Co. v. Ucanco Candy Co., 3 Fed. Rep. [2d] 156; Siegert v. Finlatter, 7 Ch. Div. 801; Dixon Crucible Co. v. Guggenheim, 2 Brewst. 321; Amoskeag Mfg. Co. v. Spear, 2 Sandf. 599; Matter of United States Mercantile Rep. Co., 21 N. E. Rep. 1034; Coca-Cola Co. v. Gay-Ola Co., 200 Fed. Rep. 720; Watkins Co. v. Hill Products Co., 9 T. M. Rep. 502; Mainzer, Inc., v. Gruberth, 237 App. Div. 89; 262 N. Y. 484; Phenix Cheese Co. v. Kirp, 176 App. Div. 735; McLean v. Fleming, 96 U. S. 245; Garrett & Co. v. Schmidt Bros. Wine Co., 256 Fed. Rep. 943.)

      Louis D. Frohlich, Nathan Burkan, Herman Finkelstein Albert T. Scharps and Louis Barnett for respondents.
    Plaintiff has no right to a monopoly in the size of its package or in the tin can and the arrangement for holding the capsules. (Viavi Co. v. Vimedia. Co., 245 Fed. Rep. 289; Parker Pen Co. v. Finstone, 7 Fed. Rep. [2d] 753; Morgan’s Sons Co. v. Troxell, 89 N. Y. 292; Fairbank Co. v. Bell Mfg. Co., 77 Fed. Rep. 869; Roncoroni v. Gross, 92 App. Div. 221; Handel Co. v. Jefferson Glass Co., 265 Fed. Rep. 286; 277 Fed. Rep. 1015; Wrisley Co. v. Iowa Soap Co., 122 Fed. Rep. 796; Canal Co. v. Clark, 80 U. S. 311.) The findings of fact and conclusions of law are amply sustained by the evidence. (Cooke & Cobb Co. v. Miller, 169 N. Y. 475.)
   Per Curiam.

In this action to enjoin defendants from using the word “ Ergot-Apiol ” in advertising and selling their product, the following facts have been found:

During the year 1900 plaintiff obtained a trade-mark registration for its preparation under the name Ergoapiol ” and has since used that designation. The principal ingredients are ergot and apiol. Many other manufacturers prior to and subsequent to the year 1900 have sold preparations having the same principal ingredients under the names Ergot-Apiol Compound,” “ Ergot & Apiol Com.,” “ Ergot and Apiol Comp.,” “Apiol. and Ergotin Compound,” “Apiol and Ergotin,” “ Ergot and Apiol,” “ Ergot and Apiol Capsules,” “Apiol and Ergot ” and “ Ergot-Apiol capsules.” Since the year 1926 defendants have sold capsules containing ergot and apiol and in the year 1927 placed upon the market a square cardboard box containing twenty-four capsules and sold its preparation under the designation “ Ergot and Apiol Compound.” In June, 1932, defendants changed the name of their product and the method of packing. They changed the name from “ Ergot and Apiol Compound ” to Ergot-Apiol,” and the receptacle, upon which the new name is printed, from a square cardboard box to a yellow tin box encased in cellophane. In addition to these findings, the undisputed proof is that the contents of defendants’ package were reduced from twenty-four capsules to twenty capsules, the new tin box, instead of colored cream and brown, was very similar in color to plaintiff’s yellow tin box and, although differing slightly in detail, was substantially the same size and shape. Defendants changed the manner of packing from a criss-cross inlay to a nest inlay nearly, if not quite, identical to the one used by plaintiff. The result of these changes is that the new name of defendants’ product bears an extraordinary similarity to the name of plaintiff’s product and that defendants’ new package closely resembles plaintiff’s package while the old name of their preparation was readily distinguishable from plaintiff’s and that defendants’ old package was entirely different and distinct from plaintiff’s. There is also proof that defendants’ sehing agent wrote upon their printed price list ErgotApiol capsules Similar Packages to Smith’s ” and delivered it to a druggist. In two hundred and seventy-eight visits to drugstores where plaintiff’s witnesses asked for Ergoapiol, the salesmen in forty-two instances delivered defendants’ product, Ergot-Apiol.

The courts below have found as facts that defendant corporation has not at any time adopted or used a package similar to plaintiff’s package and that defendants have not committed any acts for the purpose of misleading or deceiving the public into believing that defendant corporation’s product is the plaintiff’s product, nor is the defendant corporation’s package calculated to cause such deception nor has the public been misled or deceived as the result of any acts of the defendant corporation. We think that there is no evidence to support such findings but that on the contrary the evidence leads inevitably to the opposite result.'

The judgments should, therefore, be reversed and judgment directed for the plaintiff as demanded in the complaint, with costs in aU courts.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Judgments reversed, etc.


author: Crane, Ch. J.

text:
    Commissioner of Public Welfare of the City of New York, Appellant, v. Murray Simon, Respondent.
    (Argued January 8, 1936;
    decided March 3, 1936.)

      Paul Windels, Corporation Counsel (Seymour B. Quel, Paxton Blair and Sidney B. Schatkin of counsel), for appellant.
    The proceeding was commenced by the Commissioner of Public Welfare within the period of time prescribed by section 64 of the Inferior Criminal Courts Act. (Commissioner of Public Welfare v. Gavin, 245 App. Div. 545; Commissioner of Public Welfare v. Tavo

      lacci, 237 App. Div. 808; Commissioner of Welfare v. Jackson, 240 App. Div. 142; 265 N. Y. 440; 265 N. Y. 469; Commissioner of Public Welfare v. Nelson, 232 App. Div. 763; Commissioner of Public Welfare v. Ryan, 238 App. Div. 607.)

      David Goldstein and Thomas G. Frost for respondent
    The Court of Appeals is without jurisdiction to entertain the appeal for the reason that the subject matter is civil and not criminal in its nature. (Simis v. Alwang, 48 App. Div. 529; People ex rel. Commissioner of Charities v. Cullen, 151 N. Y. 54; State v. Klitzke, 46 Minn. 343; Impson v. State, 27 Pac. Rep. [2d] 359; Copes v. Malcarne, 172 Atl. Rep. 89; Greenback v. State, 36 Pac. Rep. [2d] 882.) The proceeding was not commenced within the period of time- prescribed by section 64 of the Inferior Criminal Courts Act. (Commissioner of Public Welfare v. Jackson, 240 App. Div. 142; 265 N. Y. 469; State v. Hoult, 169 S. E. Rep. 241; Hall v. Bartlett, 9 Barb. 297; People ex rel. Lawton v. Snell, 216 N. Y. 527; Roy v. Poulin, 105 Me. 411; Todd v. Weber, 95 N. Y. 181; Duncan v. Pope, 47 Ga. 445; Prager v. Manowitz, 243 App. Div. 284; Bucki Lumber Co. v. Atlantic Lumber Co., 128 Fed. Rep. 340; Keniston v. Rowe, 16 Me. 38; Wheelright v. Greer, 10 Allen, 389.)
   Crane, Ch. J.

This is an appeal in a paternity proceeding by the Commissioner of Public Welfare of the City of New York from an order of the Appellate Division reversing an order and judgment of filiation entered against the defendant in the Court of Special Sessions, New York City, and dismissing the information on the ground that the Statute of Limitations had run. The case comes to this court upon a certificate granting leave to appeal, pursuant to section 520 of the Code of Criminal Procedure.

The child in whose behalf this proceeding has been commenced was born September 7,1931, at the Gouverneur Hospital in. New York city. The summons in this proceeding was issued by the Court of Special Sessions March 11, 1935, more than two years after the birth of the child, but before it had arrived at sixteen years of age, to wit, when it was three and a half years of age.

The respondent on this appeal raises two questions, first, the jurisdiction of the court; second, the Statute of Limitations.

The Inferior Criminal Courts Act (L. 1910, ch. 659, as amd.) provides for these paternity proceedings within the city of New York. Section 76 of article V of the act, which covers such proceedings, says that an appeal may be taken from the final order or judgment of the court to the Appellate Division of the Supreme Court. From this the respondent argues that no further appeal to the Court of Appeals is permissible. We have acted upon the contrary assumption in Commissioner of Public Welfare v. Jackson (265 N. Y. 440, and 469). It may be that when this case was before us the point was not raised, but it was considered in Matter of Kane v. Necci (269 N. Y. 13), where we stated that section 520 of the Code of Criminal Procedure applied to the special proceedings of a criminal nature under the Inferior Criminal Courts Act. The reason is apparent by a reference to the provisions of that act.

Article III provides for the jurisdiction and procedure of the Court of Special Sessions, and section 36 of the article relates to appeals. It reads: "If any judgment or determination made by the court of special sessions shall be adverse to the defendant he may appeal therefrom in the same manner as from a judgment in an action prosecuted by indictment, and may be admitted to bail upon an appeal in like manner; and if the judgment of the supreme court upon such an appeal shall be adverse to the defendant, or the people, appeal therefrom may be taken to the court of appeals as prescribed in the code of criminal procedure.”

The Special Sessions is not only a trial court, it is also an appellate court, for it hears appeals from the Magistrate’s Courts. Article IV of the Inferior Criminal Courts Act relates to such appeals, and section 56 of the article reads: “ The judgment of the court of special sessions upon an appeal is final except that a further right of appeal to the court of appeals shall lie as provided for in subdivision three of section five hundred and twenty of the code of criminal procedure.”

Thus we find that trials in the Special Sessions may be carried through on appeal from the judgment to the Appellate Division and to the Court of Appeals, and that appeals from the magistrate’s judgment may go through the Special Sessions to the Court of Appeals. The provision, therefore, in section 76, that appeals in paternity proceedings may be taken to the Appellate Division, did not intend to limit the appeal to that court and thereby break the uniformity of procedure on appeal in criminal cases or in proceedings of a criminal nature. This must be so in the absence of any specific restriction. Why should a case in a Magistrate’s Court be taken through to the Court of Appeals whereas a judgment of the Special Sessions, after trial in that court in paternity proceedings, can only be appealed to the Appellate Division? Apparently the Legislature intended no such limitation in these provisions of the Inferior Criminal Courts Act, and we have so held.

The other point raised upon appeal relates to the Statute of Limitations as contained in section 64. The section reads: “ Proceedings to. establish the paternity of the child and to compel support in accordance with this article may be brought by the mother, whether a minor or not, by the child’s guardian or other person standing in parental relation or being the next of kin of the child, or by any authorized representative of an incorporated society doing charitable or philanthropic work, or if the mother or child is or is likely to become a public charge, by the department of public welfare in the city of New York. Such proceedings may be instituted during the pregnancy of the mother or after the birth of the child, but shall not be brought after the lapse of more than two years from the birth of the child, unless paternity has been acknowledged by the father in writing or by furnishing of support. Provided, however, that the department of public welfare of the city of New York shall be empowered to bring suit in behalf of any child under the age of sixteen who is, or is hable to be a public charge” (subd. 1).

The Appellate Division has held that the two years’ limitation applied to this proceeding, giving no effect to those words, that the department of public welfare of the city of New York shall be empowered to bring suit in behalf of any child under the age of sixteen who is, or is hable to be a public charge.” The exception thus created in behalf of the Department of Public Welfare takes it without the two-year period. Such has been the ruling in Commissioner of Public Welfare v. Gavin (245 App. Div. 545). Perhaps it is not quite accurate to say that the Appellate Division has given no effect to this exception. That court interpreted to bring suit ” to mean a civil action or proceeding to recover a sum of money. We do not see how any such action could be maintained to recover in behalf of a child who is liable to become a public charge. These proceedings to obtain support are of a summary nature to afford immediate rehef. Actions to recover sums of money, as we know, in New York city are more or less delayed. A judgment in such an action brought by the Department of Public Welfare might cover past charges and expenses, but what form would the judgment take in an action at law to meet the future liabilities?

The Inferior Criminal Courts Act apparently was enacted to give the procedure in these paternity proceedings whereby the public might be relieved from the support of those hable to become public charges. This procedure is simple, direct and speedy, and can meet the future as well as the past by the order of filiation provided under sections 69 and 70 requiring specific sums to be paid for support and their manner of payment. To bring suit,” therefore, is just another way of saying that the Department of Public Welfare may bring proceedings in behalf of any child -under the age of sixteen who is liable to be a public charge.

For these reasons the order of the Appellate Division should be reversed, and that of the Court of Special Sessions of the city of New York affirmed, without costs.

Hubbs, Loughran and Finch, JJ., concur; Lehman, O’Brien and Crouch, JJ., dissent.

Ordered accordingly.


text:
    The People of the State of New York, Respondent, v. Edgar Orr, Appellant.
    (Submitted January 15, 1936;
    decided March 3, 1936.)

      Samuel Segal for appellant.
    The circumstantial evidence did not meet the standard required in a criminal case. (People v. Fitzgerald, 156 N. Y. 253; Ruppert v. Brooklyn Heights R. R. Co., 154 N. Y. 90; People v. Razezicz, 206 N. Y. 249.) The People failed to prove defendant guilty beyond a reasonable doubt. (People v. Goldberg, 151 Misc. Rep. 386; People v. Mantin, 184 App. Div. 767; People v. Owens, 148 N. Y. 648.)

      William Copeland Dodge, District Attorney (Ambrose J. Delehanty of counsel), for respondent.
    The People’s case was fully proved. (People v. Birnbaum, 208 App. Div. 476; People v. Smith, 114 App. Div. 513; People v. McCarthy, 250 N. Y. 358.)
   Finch, J.

The defendant-appellant has been convicted of the crime of unlawfully entering a building with the intent to commit a larceny, felony and malicious mischief therein. The Appellate Division has sustained the conviction, two justices dissenting. This appeal is by permission of a justice of the Appellate Division.

The evidence in the record may be summarized as follows:

On January 29,1935, at 6:35 p. m., a detective employed by the Holmes Protective Agency encountered the defendant running down the freight side or fire exit stairs from the second floor of a twenty-story building. The detective, who had come to the freight side of the building from, the Holmes office, which was on the second floor, asked the defendant from whence he came, and he stated that he was coming from a firm on the fifth floor. Investigatian showed that this firm had already been closed for the night. A policeman, who had arrived, asked the defendant what he was doing in the building and he explained that he had been sent by a trucking concern to obtain a package for delivery. This also proved to be false. At 7:50 p. m. a Holmes detective found a screen panel, which was normally attached to the door on the seventeenth floor, leaning against the wall on that floor. Nobody testified that he had placed the screen on the door that evening, but there was testimony that the floor had been closed and that the Holmes Company had given a reply signal which meant that every screen and door was locked. The defendant when taken into custody had with him no bag, no keys, nor tools of any kind. There was testimony that many people were working late in the building and that they were constantly going up and down.

A defendant may be convicted on circumstantial evidence, but with circumstances lacking and mere suspicion substituted, no conviction can be sustained. In the case at bar one suspects that the defendant may have removed the screen from the door on the seventeenth floor, but this is a mere surmise drawn from the fact that the defendant was found running down the stairs from the second floor to the street. Proof is lacking as to the time of the removal of the screen panel. All we have is that the office on the seventeenth floor was locked for the night at approximately 6 p. m. and that at 7:50 p. m. the screen panel was found to have been removed. The defendant, on the other hand, was found running down the stairs at 6:35 p. m. Thus there is not even the circumstance of the sequence of time to show that the screen panel was removed before the defendant ran down the stairs.

The evidence in the case at bar is inadequate to sus - tain a conviction for the crime of unlawful entry. In this record we have only the fact that this defendant was found running down the stairs of the building and that he gave the policeman and the Holmes detective a false explanation for his presence in the building. We have nothing to show that this defendant was ever on the seventeenth floor. There is not even evidence that the Holmes detective went to the freight side of the building in response to an alarm received from the seventeenth floor. Suspicions arising from the falsity of the explanation given by the defendant do not remedy this lack of proof to connect the defendant with the removal of the screen. Such suspicions are not proof. The defendant’s presence in the premises was as consistent with his innocence as with his guilt. His conduct at the time of his arrest was suspicious but it did not show that he committed or intended to commit a crime.

We find that the conviction cannot be sustained on the facts in this record.

The judgments should be reversed and a new trial ordered.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Crouch and Loughran, JJ., concur.

Judgments reversed, etc.


text:
    In the Matter of the Will of Michael Winburn, Deceased. Maurice Wineburgh et al., Appellants; Marie Winburn et al., Respondents.

      (Argued December 2, 1935;
    decided March 3, 1936.)
   O’Brien, J.

In this proceeding we reversed (265 N. Y. 366) an order of the Appellate Division affirming a decree of one of the Surrogates of New York county-construing the will of Michael Winburn and held that as to one-half of the residuary, except two legacies, the testator died intestate. Our remittitur directed the Surrogate to proceed in accordance with the opinion of this court, which, by necessary implication, held that the part of the estate in respect to which the testator died intestate should be distributed in accordance with the statute.

Some of the parties who were unsuccessful at the Appellate Division appealed to this court. Others of that group refrained from taking an appeal. The executors and trustees who had been successful in the Surrogate’s Court and at the Appellate Division and some of the other parties in like position move to amend the remittitur by modifying the decree so as to award distributive shares only to those parties who appealed to this court and by affirming as to all other distributees who did not appeal. They rely principally upon St. John v. Andrews Institute (192 N. Y. 382) and Matter of Horner (237 N. Y. 489).

In the prevailing opinion in the St. John case occurs the statement (p. 389): “ The great stumbling block in this case seems to be the apparent, if not real, incongruity of the result arrived at; that is to say, that a distribution will be made in favor of four of a certain class of defendants, which is denied to two others of the class, whose rights are exactly the same.” In Croker v. Williamson (208 N. Y. 480, 484) this court stated this rule: “ It is clear both upon reason and authority that no such anomalous result could be tolerated as that of a judgment declaring a will invalid on general grounds as to part of the legatees and valid as to others [citing authorities]. Thus it appears that in the face of an action involving the general validity of a will and of the probate thereof, the interests of legatees are so tied together that they cannot be separated and that a judgment rejecting or upholding the will as to one legatee will similarly affect the others. Their interests under the will must stand or fall together, and it would seem to be pretty clear that they are, therefore, united.’ ” The same thought had previously been expressed in Altman v. Hofeller (152 N. Y. 498, 506), wherein it is written: “ Our attention, however, has been called to no authority which sustains the doctrine that where there is error which requires a reversal, the judgment can be properly reversed and a new trial granted as to some of the defendants and affirmed as to others, unless in a case where their interests and the issues between them are so far separate that upon a new trial the issues between the plaintiff and the defendants as to which it is affirmed will not be involved or determined; so that there cannot be two different and inconsistent judgments upon the same issue in the action.” Among the authorities cited in the prevailing opinion in the St. John case is this quotation from Freeman on Judgments: “If a defendant does not appeal, and is not made a party to the appeal by the service on him of notice thereof, an appeal by his co-defendant, followed by a reversal of the judgment, cannot authorize the retrial of the cause as against the non-appealing defendant, and the new trial must be confined to the issues between the parties to the appeal ” (p. 386). That action arose in the Supreme Court and Matter of Horner was decided upon the authority of that decision. In the opinions in those cases there is no indication that section 2573 or section 2755 of the Code of Civil Procedure, applicable only to proceedings in the Surrogate’s Court, or section 289 of the Surrogate’s Court Act was brought to the attention of this court. The section last mentioned was re-enacted in this form: Who must be made parties. Each party who has appeared in the special proceeding in the Surrogate’s Court, must be made a party to the appeal. A person not a party, may be brought in by order of the appellate court, made after the appeal is taken, in such manner as the order may prescribe.”

The distributees whom the moving parties seek to exclude from the benefits of our decision are Marie Win-burn, the widow; John Winburn, a half nephew; Eva Clayburgh, a half niece; Phoebe Cohen, a niece, and the Estate of Hattie Weinberg, a niece, all of whom had appealed to the Appellate Division but did not appeal to this court, and Abraham Wineburgh, a brother, who took no appeal to either court. Of these parties, according to the affidavit in support of this motion, Marie Win-burn, John Winburn and Eva Clayburgh, although denominated as respondents, filed briefs in this court arguing for reversal. They did not acquiesce in the decisions of the Surrogate and the Appellate Division. All had appeared as parties in the proceeding in the Surrogate’s Court, and, pursuant to section 289 of the Surrogate’s Court Act, must be deemed parties to the appeal and, within the meaning of section 193, subdivision 1, of the Civil Practice Act, parties before this court. Section 584 of the Civil Practice Act, as amended by Laws of 1926, chapter 215, provides: “ Judgment or order on appeal. Upon an appeal from a judgment or an order, any appellate court to which the appeal is taken, which is authorized to review such judgment or order, may reverse or affirm, wholly or in part, or may modify, the judgment or order appealed from, and each interlocutory judgment or intermediate or other order which it is authorized to review, and as to any or all of the parties. It shall thereupon render judgment of affirmance, judgment of reversal and final judgment upon the right of any or all of the parties, or judgment of modification thereon, according to law, except where it may be necessary or proper to grant a new trial or hearing, when it may grant a new trial or hearing.” This amendment took effect two years subsequent to the decision in the Horner case and confers upon this court the same power formerly residing only in the Appellate Division and Appellate Term. It appears that all these parties to the proceeding in the Surrogate’s Court are parties to the appeal and parties before this court and that it was our duty to render judgment upon their rights as we have rendered it. The motions to amend the remittitur should, therefore, be denied.

The attorneys for some of the parties who were successful in this court make a cross-motion to amend the remittitur, but this motion is made only in the event that the other motion is granted. This cross-motion should, therefore, be denied.

The motions to amend the remittitur should be denied.

Crane, Ch. J., Lehman, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Motions denied.


author: Crane, Ch. J. Crouch, J.

text:
    In the Matter of the Estate of Alice G. Walter, Deceased. Maude A. Ganoung, an Infant, by Charles H. Newman, as Special Guardian, Appellant; Horace S. Potter et al., as Administrators of the Estate of Horace S. Walter, Deceased, Respondents.
    (Argued January 8, 1936;
    decided March 3, 1936.)

      Charles H. Newman for appellant.
    At the time of the death of the brother the appellant, in the eye of the law, was his child and his descendant, with all the rights of that relation. (Matter of Cook, 187 N. Y. 253; Matter of MacRae, 189 N. Y. 142; Carpenter v. Buffalo General Electric Co., 213 N. Y. 101; Bourne v. Dorney, 184 App. Div. 476; 227 N. Y. 641.) The words “ child or other descendant ” as used in section 29 of the Decedent Estate Law (Cons. Laws, ch. 13) include a legally adopted child. (Matter of Cook, 187 N. Y. 253; Matter of Horn, 256 N. Y. 294; Bourne v. Dorney, 184 App. Div. 476; 227 N. Y. 641; Matter of Foster, 108 Misc. Rep. 604; Matter of Horvath, 155 Misc. Rep. 734; Warren v. Prescott, 84 Me. 483.) The words “ child ” and “ children ” are generally held to include an adopted child. (Ross v. Ross, 129 Mass. 243; Power v. Hafley, 85 Ky. 671; Matter of Rowan, 132 Penn. St. 299; Markover v. Kraus, 132 Ind. 294; Gray v. Holmes, 57 Kan. 217; Dodin v. Dodin, 16 App. Div. 42; 162 N. Y. 635; Matter of Winchester, 140 Cal. 468; Matter of Walworth, 85 Vt. 322; Bernero v. Goodwin, 267 Mo. 427; Hopkins v. Gifford, 309 Ill. 363.)

      Adolph H. Huttar and Eugene Terry for respondents.
    An adopted child inherits from but not through the foster parent. (Hopkins v. Hopkins, 236 N. Y. 545; Matter of Powell, 112 Misc. Rep. 74; 193 App. Div. 965; Matter of Hall, 234 App. Div. 151; 259 N. Y. 637; Winkler v. New York Car Wheel Co., 181 App. Div. 239; Bertholf v. U. S. Shipping Board Emergency Fleet Corp., 18 Fed. Rep. [2d] 99; Matter of Haight, 63 Misc. Rep. 624; Cook v. Munn, 12 Abb. N. C. 344; Matter of Hafner, 45 App. Div. 549; Tuttle v. Tuttle, 2 Dem. 48; Matter of Spitz, 129 Misc. Rep. 78; Matter of Leask, 197 N. Y. 193.) The order should be affirmed. (Phillips v. McConica, 59 Ohio St. 1; Matter of Woodcock, 103 Me. 214; Matter of Horn, 256 N. Y. 294; Matter of Martin, 224 App. Div. 873.)
   Crane, Ch. J.

On October 6, 1920, the appellant, Maude Ayers Ganoung; then three years old, was duly adopted by one James H. Ganoung, who had no children of his own blood. This adopted daughter lived with her foster parent until his death in 1933. Alice Ganoung Walter, a sister of James H. Ganoung, knew all about the adoption, and expressed her approval of it; she was very friendly with her niece by adoption, made gifts to her; they visited back and forth; in fact they were neighbors. When Mrs. Walter married she was past fifty and had no children of her own.

On December 2, 1932, Mrs. Walter made her will giving all her property to her brother. As it is quite short we give it in full:

Last Will and Testament.

“ I, Alice Ganoung Walter, of the Town of Ulysses in the County of Tompkins and State of New York being of sound mind and memory, do make, publish and declare this my last Will and Testament, in manner following that is to say:

“ First, I give, devise and bequeath all my property both real estate and personal property including my farm of about 39§ acres in the Town of Ulysses, Tompkins County, N. Y. to my brother, James H. Ganoung, of Rochester, N. Y., absolutely. All that I have I will to my said brother.

Lastly, I appoint my brother, James H. Ganoung, executor of this, my last Will and Testament: hereby revoking all former wills by me made.

“ In witness whereof, I have hereunto subscribed my name the 2nd day of December in the year Nineteen hundred and thirty-two.

“ (Signed) ALICE GANOUNG WALTER.”

Notice that there is no remainder, reversion or gift over on the death of James.

On January 12, 1933, the brother, James H. Ganoung, died leaving the appellant, his adopted child, surviving and no other children or descendants. On May 1, 1933, the testatrix, Alice Ganoung Walter, died without having made any change in her will.

The Surrogate of Tompkins county held that the legacy to the testatrix’s brother did not lapse at his death but passed to the adopted daughter, Maude Ayers Ganoung. The Appellate Division thought otherwise and reversed the decree. We are of the opinion that the Surrogate’s decision is in accordance with the statutes and the authorities.

The status of an adopted child is no longer in doubt (Domestic Relations Law [Cons. Laws, ch. 14], art. 7). Section 114 of that law provides: The foster parent or parents and the person adopted sustain toward each other the legal relation of parent and child, and have all the rights arid are subject to all the duties of that relation, including the right of inheritance from each other, * * * but as respects the passing and limitation over of real or personal property dependent under the provisions of any instrument on the foster parent dying without heirs, the person adopted is not deemed the child of the foster parent so as to defeat the rights of remaindermen.” As we mentioned above, there is no provision in the will of the testatrix respecting the passing or limitation over of the bequest to James H. Ganoung.

This court said in Matter of Cook (187 N. Y. 253, 261): In the eye of the law, therefore, adopted children are lineal descendants of their foster parent. They are in the line of descent from him through the command of the statute, the same as if that line had been established by nature.” And in Bourne v. Dorney (184 App. Div. 476; affd., 227 N. Y. 641) it was held that the Statutes of Descent and Distribution strictly available to those, of the blood inure to the benefit of an adopted child under the present statute of adoption.

The adopted child, however, is not left in this case dependent upon the adoption statute and these expressions of the courts, sufficient though they might prove to be. Section 29 of the Decedent Estate Law (Cons. Laws, ch. 13) covers the facts here presented. Whenever,” reads that section, any estate, real or personal, shall be devised or bequeathed to a child or other descendant of the testator, or to a brother or sister of the testator, and such legatee or devisee shall die during the lifetime of the testator, leaving a child or other descendant who shall survive such testator, such devise or legacy shall not lapse, but the property so devised or bequeathed shall vest in the sm’viving child or other descendant of the legatee or devisee, as if such legatee or devisee had survived the testator and had died intestate.”

These words as they are given and read apply precisely and exactly to the appellant's situation. It is conceded that if James H. Ganoung had survived his sister one day his legacy would have passed to his adopted daughter. The above statute says that if a brother, to whom personal property is bequeathed, die during the lifetime of the testatrix, leaving a child or other descendant, the legacy shall not lapse but vest in the child or descendant. What kind of child or descendant? The statute states ■— as if such brother had survived the testatrix and had died intestate. Had he survived, the adopted daughter would have taken. The Domestic Relations Law so enacts and all parties so admit.

What then is the escape from this statute? The plea is, that because section 29 of the Decedent Estate Law (formerly R. S. part 2, ch. 6, tit. 1, art. 3, § 52) was the law before the present adoption statute was enacted (Laws of 1887, ch. 703), the words child ” and descendant ” must be limited to blood relationship as they were when the Revised Statutes became the law. The answer to this suggestion is that the Legislature passed both the Decedent Estate Law and the Domestic Relations Law and had full power over the disposition of property by will or descent. By the latter law it made an adopted child the same as a natural child for the purposes of inheritance from its foster parent. Such a “ child ” thus created by the Legislature fitted in exactly to the existing Decedent Estate Law, section 29, which said that a legacy to a brother would not lapse by his death but pass to his child “as if such legatee [brother] * * * had survived.” The “ child ” created by the Legislature would take on survivorship under the adoption statutes (Dom. Rel. Law). The Legislature could not make it plainer and there was no need for amending section 29.

The Legislature could and did give a broader meaning to the word “ child ” so as to include “ adopted child ” under the circumstances stated in section 29. And as if to remove all doubt if there could be any the Legislature made one specific reservation by providing that the person adopted is not deemed the “ child ” of the foster parent so as to cut off any hmitation over “ dependent ■under the provisions of any instrument on the foster parent dying without heirs.” This was to safeguard the intention of a testator who by his will in using the word “ heirs ” may have meant blood relations and also to prevent fraud through an adoption for the very purpose of cutting out a remainder. (See Matter of Horn, 256 N. Y. 294.) In United States Trust Co. v. Hoyt (150 App. Div. 621) it was held that where a deed of trust left property to the foster parents for fife and on their death without issue to the next of kin of the foster father, an adopted child was entitled to the entire remainder to the exclusion of the collateral relatives.

Much reliance has been placed upon Matter of Leask (197 N. Y. 193, 195), where the instrument provided for a limitation over of income payable to a nephew in these words, “ Dining his Hie, and, upon his death leaving a child or children surviving him to pay over the principal of said sum to such child or children.” This case called for an interpretation of the will and was decided upon the apparent intention of the testator, not on the construction of the above statutes. As was said of this decision in the Hoyt Case (supra), “ an adopted child did not come within the intent or meaning of the testator ” (p. 633). The same idea was expressed by Justice Cullen (later of this court) in Dodin v. Dodin (16 App. Div. 42, at p. 48): “ While the law made the defendant Josephine a legal child of the deceased, the test is not what her status was at law, but how she is treated in the nomenclature or vocabulary of the testator.”

We are not puzzled to ascertain the intent of this testatrix as she made no limitation over and consequently did not use the words child,” heirs ” or descendants.”

The extraordinary result which would follow the narrow construction given to section 29 of the Decedent Estate Law would be strikingly noticed had James H. Ganoung left a natural child as well as his child by adoption. The natural child would take all of the bequest under Mrs. Walter’s will and the adopted daughter nothing. This is not in harmony with the beneficent consideration which the Legislature has given to children by adoption.

The case of Matter of Martin (133 Misc. Rep. 80; affd., 224 App. Div. 873, without opinion), in so far as it is inconsistent with the views here expressed, does not reach our approval.

Intestacy is avoided, a will upheld by the decision we make, which is the end desired wherever possible. (Meeks v. Meeks, 161 N. Y. 66.)

The order of the Appellate Division should be reversed and the decree of the Surrogate’s Court affirmed, with costs in this court and in the Appellate Division payable out of the estate.

Crouch, J.

(dissenting). My difficulty in accepting the majority view is this: Nowhere on the face of the statutes, or by implication from their history, can I discover any indication of a legislative intent to give an adopted child any right under what is now section 29 of the Decedent Estate Law. Indeed, the contrary is indicated.

That section had its origin in section 52 of title 1 of chapter 6 of part 2 of the Revised Statutes of 1829 (2 R. S. [1st ed.] p. 66). It was part of the comprehensive revision covering the entire field “ Of Wills and Testaments; of the Distribution of the Estates of Intestates; and of the Rights, Powers and Duties of Executors and Administrators ” (Ch. 6). It reads as follows:

“ § 52. Whenever any estate, real or personal, shall be devised or bequeathed to a child or other descendant of the testator, and such legatee or devisee shall die during the fife-time of the testator, leaving a child or other descendant who shall survive such testator, such devise or legacy shall not lapse, but the property so devised or bequeathed shall vest in the surviving child or other descendant of the legatee or devisee, as if such legatee or devisee had survived the testator and had died intestate.”

From that day to this the language has remained unchanged, except that by the Laws of 1912, chapter 384, the words “or to a brother or sister of the testator ” were added.

The intent of section 52 was to modify the common law rule of lapse. (Matter of Wells, 113 N. Y. 396, 400.) It did not apply to adopted children, since adoption was unknown to the common law and there was no general adoption statute until 1873.

At this point I ask myself when and by what legislative enactment the original application of section 52 (now Dec. Est. Law, § 29) was extended to apply to adopted children? I am unable to answer. Here follow the only relevant acts:

By Laws of 1873, chapter 830, adoption of children was legalized. Section 10 of that act, which is the origin of section 114 of the Domestic Relations Law, read as follows:

“ § 10. A child, when adopted, shall take the name of the person adopting, and the two thenceforth shall sustain toward each other the legal relation of parent and child, and have all the rights and be subject to all the duties of that relation, excepting the right of inheritance, except that as respects the passing and limitations over of real and personal property, under and by deeds, conveyances, wills, devises and trusts, said child adopted shall not be deemed to sustain the legal relation of child to the person so adopting.”

I cannot believe that the Legislature, expressly excepting, as it thus did, the right of inheritance even from the foster parent, intended to or did by that section grant to an adopted child the right to take a devise to a deceased foster parent under what was then section 52 (2 R. S. p. 66) and is now section 29 of the Decedent Estate Law. The same policy which dictated the exclusion of inheritance dictated the exclusion of the analogous ■— indeed almost identical ■— right under section 52. Whether socially justified or not, the blood tie is a strong human instinct and has always been so recognized in the law. During the years since 1873, the ban on inheritance by adopted children has been modified from time to time, but always by express statutory enactments; and these enactments necessarily have been strictly construed by the courts, since they were in derogation of common law. Thus:

By Laws of 1887, chapter 703, section 10 of the adoption statute of 1873 was amended by changing the clause “ excepting the right of inheritance ” so as to read “ including the right of inheritance.” Literally read, that amendment threw wide the doors; but apparently that was not the legislative intent, for in the Domestic Relations Law of 1896 (Laws of 1896, ch. 272, § 64) the clause was amended to read •“ including the right of inheritance from, each other.” Since the status of parent and child by adoption was created by something in the nature of contract, descent and distribution were permitted as between the parties to it. But beyond that the Legislature did not go; and so the courts have held. (Hopkins v. Hopkins, 202 App. Div. 606; affd., 236 N. Y. 545; Matter of Hall, 234 App. Div. 151; affd., 259 N. Y. 637.)

By Laws of 1931, chapter 562, the adoption law (Dona. Rel. Law, § 114) was amended again so as to permit one adopted child to inherit from another adopted child of the same foster parent or parents. But that amendment was not intended, even by implication, to change the rule that an adopted child could not inherit from a natural child of the same parent or parents. (Note of Commission on Revision of Decedents Law, see 14 McKinney’s Statutes, Supplement, p. 69.)

It is submitted that the Legislature has never, either expressly or impliedly, said that "an adopted child may, under section 29 of the Decedent Estate Law, take a devise to his deceased foster parent from one in the direct line, much less from a collateral. The course of legislation for many years in respect to descent and distribution of property, as far as adopted children are concerned, evidences a clear intent to confine it to the immediate parties to the adoption contract. To permit a contrary result in an almost identical matter does violence, as it seems to me, to an established policy, and is judicial legislation pure and unalloyed.

Matter of Horn (256 N. Y. 294) is the case relied upon as establishing the contrary view. But all the court did there was to seek and to find the intent of the testator from the language of the will and from surrounding circumstances. There is no doubt,” said the court, of the identity nor of the testator’s intention ” (p. 296).

Here we are not concerned with the intent of the testatrix. On the record there can be no substantial claim that she intended to give her property to the appellant. What we are concerned with is the intent of the Legislature in enacting the two statutes by virtue of which the appellant claims that property. I fail to find any indication of a legislative intent to permit an adopted child to take under the lapse statute. On the contrary, it seems to me the Legislature, following a long-continued policy, has deliberately refrained from granting that right. A change in policy should come from the Legislature and not from the courts. Moreover, there may well be two views of the desirability of such a change. The adopted child is not the only one to be considered. Some heed should be given to the plight of the average testator, who, for instance, would be surprised to learn that a gift by will to his brother would, in case his brother died first, go to some child of alien blood, adopted perhaps long after the will was made.

The judgment should be affirmed.

Lehman, Loughran and Finch, JJ., concur with Crane, Ch. J.; Crouch, J., dissents in opinion, in which O’Brien and Hubbs, JJ., concur.

Ordered accordingly.


author: Crouch, J.

text:
    Frank Knauss, Inc., Respondent, v. Indemnity Insurance Company of North America, Appellant.

      (Argued January 14, 1936;
    decided March 3, 1936.)

      James I. Cuff and James I. McGuire for appellant.
    There is no question of waiver and if there was there can be no coverage by waiver. (Draper v. Oswego Co. Fire Relief Assn., 190 N. Y. 12; Gerka v. Fidelity & Casualty Co., 251 N. Y. 51; Kelly v. St. Michael’s Roman Catholic Church, 148 App. Div. 767; Garlick v. Metropolitan Life Ins. Co., 109 App. Div. 175; Weiss v. N. J. Fidelity & Plate Glass Ins. Co., 131 App. Div. 834; Williams v. Fire Assn., 119 App. Div. 573.)

      William Gold and George Goldberg for respondent.
    The decision of the United States District Court did not so adjudicate, and the claim there litigated did not arise out of damage to property while in plaintiff’s care, custody and control, or otherwise within the exception of the policy sued upon. (Armstrong v. Sisti, 242 N. Y. 440.) Appellant is estopped from disclaiming liability by reason of its conduct in taking and prosecuting appeals to the Circuit Court of Appeals from the judgments theretofore rendered against respondent in the United States District Court. (Weatherwax v. Royal Indemnity Co., 250 N. Y. 281.) Appellant’s evidence failed to establish its contention that it had no connection with the prosecution of the appeal. (Fox v. Union Turnpike Co., 59 App. Div. 363; Hope v. Troy & Lansingburgh R. R. Co., 110 N. Y. 643. Feeney v. Long Island R. R. Co., 116 N. Y. 375; Morris v. N. Y., O. & W. Ry. Co., 148 N. Y. 88; Horan v. Hastorf,
      223 N. Y. 494; Ferris v. Hard, 135 N. Y. 354; Browne v. Steher Lithographic Co., 24 App. Div. 484; Northam v. Dutchess Co. Mut. Ins. Co., 177 N. Y. 73; Audley v. Townsend, 126 App. Div. 431; Converse v. Sickles, 16 App. Div. 49; 161 N. Y. 666; Magnolia Metal Co. v. Pound, 60 App. Div. 318; Miller v. Union Indemnity Co., 209 App. Div. 455; Black Co. v. London Guarantee & Accident Co., 190 App. Div. 218; Tozer v. Ocean Accident Ins. Co., 94 Minn. 478; Mason-Henry Press v. Æna Life Ins. Co., 211 N. Y. 489; Miller v. Union Indemnity Co., 209 App. Div. 455; Rosenwasser v. Globe Indemnity Co., 224 N. Y. 561; Gerka v. Fidelity & Casualty Co., 251 N. Y. 51; Rosenbloom v. Maryland Casualty Co., 153 App. Div. 23.)
   Crouch, J.

The plaintiff has recovered a judgment upon insurance written by the defendant indemnifying it against loss from liability for injury to property excluding property owned, leased, occupied or used by, or in the care, custody or control of the assured, or of any of his employees.” The loss sued upon is the amount of certain judgments rendered against the plaintiff (at that time named Washington Bulkley, Inc.), in the District Court for the Eastern District of New York, affirmed by the Circuit Court of Appeals. (Goodwin-Gallagher Sand & Gravel Corp. v. Washington Bulkley, Inc., 31 Fed: Rep. [2d] 112; affd., 31 Fed. Rep. [2d] 115.) A scow, under charter to the gravel corporation, was dispatched with a cargo of gravel consigned to the plaintiff. When it reached the mouth of Wallabout canal it was tied up to a pier located there. Two of the plaintiff’s employees were sent to haul it from that point up the canal to the bulkhead of the plaintiff’s yard. Before this was reached, the employees moored it for the night alongside a railroad pier, where uneven bottom caused the scow to tilt with the faffing tide, dump its cargo, break one of the mooring Unes and sustain damage.

The plaintiff was made a party to the litigation which followed, involving claims by the scow’s owner and by the charterer for injury to the scow and for loss of its cargo. The defendant, as insurer, questioned its liability under the policy for this loss, but agreed to have the case defended by its attorneys on the understanding that the question of liability should await the result of the trial, since the care, custody and control of the scow was directly in issue. Under this arrangement the parties have, in this action, treated the decision in the District Court as determinative, the only evidence bearing on the issue of care, custody and control being the record, judgments and opinion in that litigation. The defendant contends there is no evidence to sustain the finding below that the scow was not, when the damage occurred, in the care, custody or control of the plaintiff. With that contention we agree. When one has followed the sinuosities of the admiralty pleadings to the end, it seems reasonably clear that the scow’s owner claimed the scow was, by virtue of the charter, in the care, custody and control of the charterer during the entire charter period, and was negligently damaged during that period either by the charterer or -— what amounted to the same thing so far as the owner was concerned — by those to whom the charterer had intrusted the care, custody and control. Because of that claim the charterer impleaded the plaintiff and alleged facts showing that the plaintiff’s employees went on board the scow and undertook to haul the scow up the canal and that because of the negligence of those employees and of the master of the scow, while thus having the scow in charge, the damage resulted. On the trial there was a sharp conflict as to whether the master of the scow was present when she was shifted. The opinion of the District Court stated that he was not; that the plaintiff’s employees had undertaken to move the scow up the canal, and had moored it at a foul berth selected by them; and that even if the scow’s master was aboard at the time, he was the agent ad hoc of the plaintiff. Judgments accordingly went against the plaintiff. There is no way of reconciling the opinion and judgments with a finding, based only on them, that the scow was not in fact in the plaintiff’s care, custody and control when damaged. A statement in the opinion that the.scow had been in the care, custody and control of the charterer during the charter period has evident reference only to the relation between the owner and the charterer, upon the basis of which the charterer was made secondarily liable for the damage to the scow.

Upon the appeal from the judgments of the District Court, the plaintiff was represented by the attorneys selected by the insurer, who had tried the case. In the present action it has been held below that the prosecution of the appeal by the insurer’s attorneys without a further reservation of its rights, expressly waived the insurer’s right to renounce liability under the policy for the admiralty judgments.

The circumstances of the original employment of these attorneys, and of matters in connection with the prosecution of the appeal, appear in certain letters. While further oral evidence was adduced by defendant on this issue, none was offered on behalf of plaintiff. It accordingly remains to be considered whether, on the documentary and uncontradicted evidence, there are facts or grounds for reasonable inference that the insurer had abandoned its position that the loss might be one for which the policy did not provide coverage.

There was nothing obscure about the original reservation of liability. The possibility that the loss was not covered was promptly pointed out, and the insurer instructed by plaintiff to defend the case, leaving open the question of ultimate responsibility. “All it could or was bound to do was to fairly and reasonably assert its rights under the policy in such a manner as would be notice to the insured that it did not intend to waive those rights by proceeding with the defense of the action. This it did.” (Mason-Henry Press v. Ætna Life Ins. Co., 211 N. Y. 489, 497.) Something might none the less be made of the prosecution of the appeal as an election or an implied admission of liability if this had been done altogether on the responsibility of the insurer or its attorneys. The evidence is conclusive that it was not. Before taking this appeal, the attorneys submitted to plaintiff, as well as to the insurer, their views as to the likelihood of success and were instructed to proceed with it. The plaintiff also authorized the attorneys to stipulate the amount of damages, arranged that payment of these be suspended pending the appeal and procured the undertaking on appeal. There were no circumstances of estoppel or election by which the insured was denied the right to settle the case or assume charge of the litigation, as in Brassil v. Maryland Casualty Co. (210 N. Y. 235) and other like cases. There is no evidence or reason to infer that plaintiff was misled or prejudiced in any way. The prosecution of the appeal by the attorneys who had tried the case in the District Court and were familiar with it was a common sense course which did not necessarily import an abandonment of the position the insurer had taken, since both parties were still primarily interested in defeating the claim of the gravel corporation. Even if this were open to doubt, the action of the attorneys in consulting plaintiff about taking the appeal, and of plaintiff in authorizing and taking other responsibilities in connection with it, permits only one conclusion — that both understood that it was not the sole concern and responsibility of the insurer. Lacking any evidence either of estoppel or of intention to abandon the defense, which the insurer had seasonably asserted* the conclusion of an express waiver is not sustained.

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

Crane, Ch. J., Lehman, O’Brien, Hubbs, Loughran and Finch, JJ., concur.

Judgments reversed, etc.


text:
    Richard Boylhart, by Gertrude Boylhart, His Guardian ad Litem, et al., Appellants, v. DiMarco & Reimann, Inc., Respondent, Impleaded with Others.
    (Argued January 23, 1936;
    decided March 3, 1936.)

      Emil N. Baar, Arthur Bloch, James E. Whalen and David E. Winer for appellants.
    Pure questions of fact were presented to the jury for its determination and the verdict against the defendant-respondent was amply supported by the evidence, and it was error to set it aside. (Metzroth v. City of New York, 241 N. Y. 470; Shirley v. Larkin Co., 239 N. Y. 94; Auburn City Nat. Bank v. Hunsiker, 72 N. Y. 252; Dillon v. Cockcroft, 90 N. Y. 649; Winkelman v. Winkelman, 208 App. Div. 68; Housman v. Waterhouse, 191 App. Div. 851; Dean v. Bauer, 101 Misc. Rep. 301; Jacobsen v. Buckley, 36 Misc. Rep. 779;
      Hirtenstein v. Farrell, 34 Misc. Rep. 515; Ramsey v. National Contracting Co., 49 App. Div. 11; Earl v. Crouch, 57 Hun, 586; 61 Hun, 624; 131 N. Y. 613; Kunz v. City of Troy, 104 N. Y. 344; Fritz v. Friedland, 209 App. Div. 889; 239 N. Y. 580; Murnane v. Third Ave. R. Co., 172 N. Y. Supp. 188; Hine v. Aird-Don Co., 232 App. Div. 359; Schmidt v. Cook, 4 Misc. Rep. 85; 12 Misc. Rep. 449; Kelley v. Hudson Co., 65 Misc. Rep. 574; Crawford v. Wilson & Baillie Mfg. Co., 8 Misc. Rep. 48; 144 N. Y. 708; Sarapin v. S. S. Corrugated Paper Machinery Co., 209 App. Div. 377; Robinson v. Rockland Light & Power Co., 187 App. Div. 720; Conrow v. Snyder, 215 App. Div. 603; Junkermann v. Tilyou Realty Co., 213 N. Y. 404; Klepper v. Seymour House Corp., 246 N. Y. 85; McFarlane v. City of Niagara Falls, 247 N. Y. 340.) Defendant-respondent being engaged in work necessitating storage of materials on public streets, which could only be done under a permit granted by the city of New York, could not by a subcontract divest itself of its duty to protect • the public. (Ramsey v. National Contracting Co., 49 App. Div. 11; Schiverea v. Brooklyn Heights R. R. Co., 89 App. Div. 340; Johnston v. Phœnix Bridge Co., 44 App. Div. 581; Water Co. v. Ware, 16 Wall. 566; Woodman v. Railroad Co., 149 Mass. 235; Downey v. Low, 22 App. Div. 460; Deming v. Terminal Railway of Buffalo, 169 N. Y. 1.) Defendant-respondent exercised control and supervision over and directed the placing of its own steel, thereby rendering it liable for its negligence. (Rosenberg v. Schwartz, 260 N. Y. 162.) The infant plaintiff was impliedly invited to go upon the pile of beams and the respondent was bound to anticipate that children would climb upon the beams and that slight force would cause their dislodgment. (Ferrari v. N. Y. C. R. R. Co., 224 App. Div. 182; Parnell v. Holland Furnace Co., 234 App. Div. 567; 260 N. Y. 604.)

      William Dike Reed for respondent.
    The trial court properly set aside the verdict and dismissed the plaintiffs’ complaint as against the defendant general contractor upon the ground that there was no evidence to warrant a judgment against it. ( Uppington v. City of New York, 165 N. Y. 222; Glenn v. Oakdale Contracting Co., 257 N. Y. 497; Schmidt v. City of New York, 179 App. Div. 667; 228 N. Y. 572; Hyman v. Barrett, 224 N. Y. 436; Hayling v. City of New York, 233 App. Div. 595; Hunt v. Mayor, 109 N. Y. 134.) The duty of a general contractor engaged in the prosecution of a public improvement is no greater than that of the municipality, and it is not liable for the collateral negligence of the employees of an independent subcontractor. (Fithian v. Degnon Contracting Co., 175 App. Div. 386; McNamara v. City of New York, 144 App. Div. 504; Johnson v. City of New York, 208 N. Y. 77; McCafferty v. S. D. & P. M. R. R. Co., 61 N. Y. 178; Dorn v. Snare & Triest Co., 62 Misc. Rep. 269; Von Lengerke v. City of New York, 150 App. Div. 98; 211 N. Y. 558; Berg v. Parsons, 156 N. Y. 109; Froelich v. City of New York, 199 N. Y. 466; Moore v. Wills, Inc., 250 N. Y. 426; Engel v. Eureka Club, 137 N. Y. 100; Hexamer v. Webb, 101 N. Y. 377; Storrs v. City of Utica, 17 N. Y. 104; Downey v. Low, 22 App. Div. 460.)
   Crouch, J.

The respondent, DiMarco & Reimann, Inc., contracted with the city of New York to construct part of a new subway. Under the contract, portions of the construction work might be sublet to subcontractors approved by the city. The steel construction was so sublet to the Rosaire Contracting Company. The contractor was authorized by the city to occupy such portions of the street surface as might be necessary for the storage of materials. Certain steel beams to be used in the structure were stored on a neighboring street, insecurely piled by the subcontractor. The infant plaintiff with two companions were playing follow the leader on and around the pile. While standing on the pile the leader “ wiggled ” the beams, causing several of them to roll down the pile and injure the plaintiff. On the trial the plaintiff had a verdict against both the contractor and the subcontractor. Thereafter, the trial judge set aside the verdict and dismissed the complaint as against the contractor. The Appellate Division unanimously affirmed the judgment against the subcontractor and, by a divided court, affirmed the dismissal as to the contractor.

The only question which need be considered is whether the contractor, under the facts here, is subject to liability for the negligence of the subcontractor in piling the beams in the street. The applicable principle of law is well settled. One employing another is not hable for his collateral negligence unless the relation of master and servant existed between them. So that a person employing a contractor to do. work is not hable for the negligence of that contractor or his servants. On the other hand, a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibihty attaching on him of seeing that duty performed by delegating it to a contractor. He may bargain with the contractor that he shall perform the duty and stipulate for an indemnity from him if it is not performed, but he cannot thereby relieve himself from liability to those injured by the failure to perform it.” (Lord Blackburn in Dalton v. Angus & Co., 6 App. Cas. 740, 829.) (Compare American Law Institute, Restatement of the Law of Torts, ch. 15, topic 2, and particularly § 417.) The distinction between the two things is that in the one- case the danger has its origin in an act of negligence collateral to the work, which could not be foreseen and guarded against beforehand, while in the other the danger is inherent in the work contracted to be done and might reasonably be expected. (Hyman v. Barrett, 224 N. Y. 436, 439.) If the contractor leaves a pickaxe in the road (Penny v. Wimbledon Urban District Council, [1899] 2 Q. B. 72, 76), or negligently drops a stone from a bridge under construction over a highway (Reedie v. L. & N. W. Ry. Co., 4 Ex. 244), or negligently fires a blast (Herrington v. Village of Lansingburgh, 110 N. Y. 145), or while making repairs to a house, casually dislodges a board (Hyman v. Barrett, supra), his employer is not liable. If, however, he makes an excavation (Storrs v. City of Utica, 17 N. Y. 104), or raises an embankment (Deming v. Terminal Railway of Buffalo, 169 N. Y. 1) in a highway and fails to guard it or give warning, or leaves an insecure pile of iron rails in a street (Ramsey v. National Contracting Co., 49 App. Div, 11), his employer is liable. When one -undertakes work in a pubfic highway which, unless carefully done, will create conditions which are dangerous to members of the pubfic using the highway, in the usual and ordinary manner, he is under a duty to use requisite care. That duty cannot be delegated.

The work which the respondent had contracted with the city to do rendered necessary some use of the street surface for storage of materials. Permission for such use had been given to it. That carried with it a duty, among other things, to use reasonable care in piling the material on the street. Thirty pieces of steel, ranging from twelve and one-half to sixteen feet long and weighing from 450 to 900 pounds each, piled four feet high in the street, created a condition inherently dangerous to the pubfic -unless the work of piling was carefully done. Among the members of the pubfic to whom the duty of care was owing were children playing on the street, since their proclivities as matter of common knowledge might draw them to such objects in the course of play. (Earl v. Crouch, 57 Him, 586; 61 Hun, 624; affd., 131 N. Y. 613; Kunz v. City of Troy, 104 N. Y. 344; Long v. City of Dunkirk, 260 N. Y. 599; cf. Restatement of the Law of Torts, § 302, subd. m.)

Upon the evidence the case was clearly for the jury, which found the subcontractor lacking in the duty of care to the plaintiff, a member of the pubfic. The same duty, under the facts, rested primarily and unavoidably upon the respondent. Its liability, vicarious though it may be, necessarily follows.

The judgment of the Appellate Division and that of the Trial Term should be reversed and the verdict reinstated, with costs in all courts.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Loughran and Finch, JJ., concur.

Judgments reversed, etc.