text:
    In the Matter of the Probate of the Will of Robert Pulvermacher, Deceased. Isidore Pech et al., Respondents; Phyllis Altman et al., Appellants.
    Argued April 13, 1953;
    decided June 4, 1953.

      Bertram H. Siegeltuch and Walter M. Weisberg for Phyllis Altman and another, appellants.
    I. The requirements of subdivision 3 of section 21 of the Decedent Estate Law must be complied with. (Matter of Andrews, 162 N. Y. 1; Matter of Moore, 109 App. Div. 762,187 N. Y. 573; Remsen v. Brinckerhoff, 26 Wend. 325; Lewis v. Lewis, 11 N. Y. 220; Matter of Turell, 166 N. Y. 330.) II. As a matter of law, the undisputed testimony establishes a lack of due publication under subdivision 3 of section 21 of the Decedent Estate Law. (Lewis v. Lewis, 11 N. Y. 220; Ex Parte Beers, 2 Bradf. 163; Wilson v. Hetterick, 2 Bradf. 427; Matter of Harris, 1 Tuck. 293; Matter of Dale, 56 Hun 169, 134 N. Y. 614; Matter of Delprat, 27 Misc. 355; Matter of Schillinger, 258 N. Y. 186.)

      Abraham Zemlock, Albert J. Zemloek and Samuel Gewirtz for Esther Feinberg and others, appellants.
    I. Although the order of reversal by the Appellate Division is upon “ facts and on the law,” that is not controlling as to the points raised upon this appeal. II. The finding of a lack of publication by the Surrogate was amply supported by all the evidence before him. (Ex Parte Beers, 2 Bradf. 163; Wilson v. Hetterick, 2 Bradf. 427; Matter of Palmer, 42 Misc. 469.) III. Evidence of publication of a holographic will may be somewhat relaxed. Nevertheless a substantial compliance with the statute is essential. (Brinckerhoof v. Remsen, 8 Paige Ch. 487; Bemsen v. Brinckerhoff, 26 Wend. 325; Matter of Turell, 166 N. Y. 330; Matter of Levengston, 158 App. Div. 69; Matter of Billet, 106 Misc. 229, 187 App. Div. 309; Matter of Akers, 74 App. Div. 461, 173 N. Y. 620.) IV. All cases cited by the majority of the Appellate Division are inapplicable to or may be distinguished from the facts herein. V. The rules regarding proof of testator’s subscription or acknowledgment of his signature are not identical with rules regarding proof of publication. VI. Disbelief in the testimony of the two witnesses leaves no credible evidence of the execution of the instrument. (Matter of Moore, 109 App. Div. 762, 187 N. Y. 573; Matter of Andrews, 162 N. Y. 1; Matter of Allen, 282 N. Y. 492.)

      Homer I. Harris and Samuel L. Zuckerman for Isidore Pech, respondent.
    I. The requirement of subdivision 3 of section 21 of the Decedent Estate Law is to prevent fraud, and is not intended as a snare for the uninitiated and must be interpreted in such light. (Lane v. Lane, 95 N. Y. 494; Matter of De Hart, 67 Misc. 13; Matter of Marley, 140 App. Div. 823; Matter of Winne, 107 Misc. 398, 205 App. Div. 860; Matter of Fowles, 222 N. Y. 222; Matter of Rausch, 258 N. Y. 327; Bator v. Hungarian Commercial Bank of Pest, 194 Misc. 232; Seguine v. Seguine, 2 Barb. 385; Gilbert v. Knox, 52 N. Y. 125; Trustees of Auburn Seminary v. Calhoun, 25 N. Y. 422.) II. The rule in respect to holographic wills as to manner and method of publication is not so close and severe as where the will is drawn and executed under the direction of an experienced draftsman. (Matter of Levengston, 158 App. Div. 69; Matter of Billet, 106 Misc. 229, 187 App. Div. 309; Matter of Akers, 74 App. Div. 461, 173 N. Y. 620; Matter of Cottrell, 95 N. Y. 329; Matter of Beckett, 103 N. Y. 167; Matter of Wallace, 148 Misc. 867; Gilbert v. Knox, 52 N. Y. 125; Matter of King, 200 N. Y. 189; Matter of Palmer, 42 Misc. 469; Matter of Mullenhoff, 278 App. Div. 963.) III. The language of an opinion must be confined to the facts before the court and no opinion is an authority beyond the point actually decided, nor should it be extended to cases where different facts exist. (Dougherty v. Equitable Life Assur. Soc., 266 N. Y. 71; Adamec v. Post, 273 N. Y. 250; Crane v. Bennett, 177 N. Y. 106; Matter of Liberman, 279 N. Y. 458; Remsen v. Brinckerhoff, 26 Wend. 325; Ex Parte Beers, 2 Bradf. 163; Wilson v. Hetterick, 2 Bradf. 427; Matter of Harris, 1 Tuck. 293; Lewis v. Lewis, 11 N. Y. 220; Matter of Turell, 166 N. Y. 330.) IY. The will may be admitted to probate even if one or both of the witnesses thereto testify against the execution of the will. (Torry v. Bowen, 15 Barb. 304; Trustees of Auburn Seminary v. Calhoun, 25 N. Y. 422; Matter of Cottrell, 95 N. Y. 329; Peebles v. Case, 2 Bradf. 226.) V. The determination of the question of whether a will has been properly executed is a question of fact, in the determination of which there must be considered not only the testimonial proof but the factual situation. (Roberts v. Fulmer, 301 N. Y. 277; California Packing Co. v. Kelly Stor. & Distr. Co., 228 N. Y. 49; Remsen v. Brinckerhoff, 26 Wend. 325; Matter of Rosenthal, 100 Misc. 84; Matter of Cottrell, 95 N. Y. 329; Matter of Rudolph, 97 Misc. 548.) vI. Considering the testimony and proof in the instant case, the presumptions applying in the Surrogate’s Court establish publication of the propounded instrument. (Matter of Carll, 38 Misc. 471; Matter of Bassett, 84 Misc. 656; Matter of Van Benschoten, 105 Misc. 332; Trustees of Auburn Seminary v. Calhoun, 25 N. Y. 422; Matter of Voorhis, 125 N. Y. 765.) YII. The use of the expression “ unequivocal declaration ” in the eases cited by the Surrogate and appellants is not a description properly applicable to probate proceedings. (Shugart v. Halliday, 2 Ill. App. 45; Lewis v. Lewis, 11 N. Y. 220; Ex Parte Beers, 2 Bradf. 163; Wilson v. Hetterick, 2 Bradf. 427; Matter of Katz, 277 N. Y. 470; Remsen v. Brinckerhoff, 26 Wend. 325.)

      Edward B. Schulkind and Irving M. Marcin for Helen Marcin, respondent.
    I. It is sufficient to constitute publication if testator indicates by some ‘ ‘ way or mode ’ ’ to the witnesses that he understands that he executed a will, and any communication to this effect is sufficient. (Remsen v. Brinckerhoff, 26 Wend. 325; Lane v. Lane, 95 N. Y. 494.) II. Such communicatian may be direct or inferred from the circumstances. (Lewis v. Lewis, 11 N. Y. 220; Matter of Cottrell, 95 N. Y. 329.) III. In case of a holographic will the evidence as to publication need not be as clear as in the case where the will is drawn by a third person. (Matter of Beckett, 103 N. Y. 167; Matter of Eldred, 109 App. Div. 777.) IV. Due publication of a will may be established even in direct opposition to the testimony of both witnesses. (Matter of Cottrell, 95 N. Y. 329; Matter of Hohn, 180 Misc. 384.) V. Where an appeal from a Surrogate’s Court decree is taken upon the facts, the Appellate Division is not solely a court of review, but has the same power to decide questions of fact that the Surrogate had. (Matter of Fried-lander, 189 App. Div. 90.)
   Fuld, J.

The courts below have disagreed on whether decedent, Eobert Pulvermacher, published his holographic will in compliance with the statutory mandate that a testator “ declare the instrument * * * subscribed, to be his last will and testament ” at the time that he signs or acknowledges it (Decedent Estate Law, § 21, subd. 3).

In January of 1949, Pulvermacher, while in the safe-deposit vault of his bank, obtained a piece of paper from one of the guards. Soon thereafter, he emerged from a booth near the vault and requested the guard and another vault attendant to ‘ ‘ witness my signature. ” Although familiar with his signature, the guard, as was his wont in the case of all papers, asked him to sign again, and the two witnesses then signed to the right of his second signature.

Only those witnesses and Pulvermacher were present, and both employees emphatically testified, not only that the latter did not say that the paper was a will, but that they did not know that they were witnessing a testamentary disposition. According to one of them, all that Pulvermacher told them was, “ I am going away on a trip. I have some instructions that I want carried out if anything happens ”; and the other witness recalled that, after mentioning a “ trip ”, Pulvermacher merely stated that there was “ something I want to take care of in case something happens to me ”, and that “ with all the accidents which you have today you never know what will happen.” At the time of signing, the paper was folded and held in such a way that, at most, only the bottom quarter was visible. Both witnesses insisted that they read no part of it, though, even if they had, they could not have seen any attestation clause — for there was none. The words exposed were these: “ The Business of L Pulvermacher & Bros has to be continued is wish of deceased otherwise in the event they cannot get along together to dissolve the Business & divide Robert Pulvermacher 308 E 79th St Jan 14 —1949 ”.

Some three years later, Pulvermacher died. We may assume that he intended the writing as his will, but our statute requires more. It requires definite formalities, and one of them is publication (Decedent Estate Law, § 21, subd. 3). Publication, in turn, demands, not only that the testator have knowledge of the character of the instrument, but, equally important, that he share that knowledge with his witnesses. While “ no particular form of words ” is necessary, the courts have held the minimum statutory prescription to be some kind of communication that the instrument, which they are being asked to sign, is testamentary in character. (See, e.g., Matter of Turell, 166 N. Y. 330, 337; see, also, Matter of Moore, 109 App. Div. 762, 765, affd. 187 N. Y. 573; Lewis v. Lewis, 11 N. Y. 220, 224-225; Van Hooser v. Van Hooser, 1 Redf. 365, 373; Darnell v. Buzby, 50 N. J. Eq. 725, 730-732.) It must appear that, as between the testator and the witnesses, there was some meeting of the minds upon the understanding that the instrument was the testator’s will ”. (Matter of Turell, supra, 166 N. Y. 330, 337.) And that understanding must be derived, one court has written, “ from some unequivocal act or saying of the testator ”. (Van Hooser v. Van Hooser, supra, 1 Redf. 365, 373; italics in original.)

The reason for requiring publication is twofold: first, to furnish proof that the testator is under no misapprehension, whether by malicious contrivance or otherwise, as to the nature or identity of the instrument, and second, to impress upon the witnesses the fact that, since the document is a will, they are expected “ to remember what occurred at its execution and be ready to vouch for its validity in court.” (Matter of Moore, supra, 109 App. Div. 762, 765, affd. 187 N. Y. 573; see, also, 1 Davids on New York Law of Wills [1923], § 307, p. 517.)

■ Because the possibility of misapprehension on the part of the testator is greatly reduced where a holographic will is involved, we have demanded “ less strictness in the proof of a compliance with statutory formalities.” (Matter of Turell, supra, 166 N. Y. 330,337.) However, while proof of publication ‘1 may be relaxed somewhat ”, compliance there must still be. (Matter of Moore, supra, 109 App. Div. 762, 765, affd. 187 N. Y. 573; see, also, Matter of Hunt, 110 N. Y. 278, 281; Matter of Beckett, 103 N. Y. 167, 174.) A holographic will, this court has remarked, must be executed with the same formalities as any other. Such is the command of the Legislature. To admit to probate such an instrument * * * [without proof of the formalities] opens the door to the nullification of statutory provision and probably in some cases to fraud.” (Matter of Allen, 282 N. Y. 492, 497.)

We find no warrant to ignore that legislative command in the fact that this state at other times did not — and that many other jurisdictions do not today — number publication as one of the solemnities prerequisite to the due execution of a will. (See, e.g. Remsen v. Brinckerhoff, 26 Wend. 325, 330-331, 337; 1 Roberts on Wills and Codicils [1st Amer. ed., 1823], pp. 105-108; 1 Davids, op. cit., § 306, pp. 514-515; 1 Page on Wills [3d ed., 1941], § 379, pp. 687-688.) The legislature, cognizant of our unbroken line of decisions requiring compliance with each of the statutory formalities even in the case of holographic wills, has continued its requirements unchanged and unrelaxed. (Compare 2 Rev. Stat. of N. Y. [as published under direction of Revisers, 1829], part II, ch. VI, tit. I, § 40, subd. 3, p. 63, with Decedent Estate Law, § 21, subd. 3; see 2 Rev. Stat. of N. Y. [as prepared by Commissioners, 1875], note to proposed § 7, amdg. § 40 of Rev.Stat., p. 1613; cf. Decedent Estate Law, § 16.)

In the ease before us, the testimony, clear and uncontradicted, reveals that the witnesses were not informed, and, indeed, did not believe, that the paper was a will. Pulvermacher’s remarks that he was going on a “ trip ” and that he was leaving instructions ” which he wanted carried out in case “ anything happens,” were at best equivocal. They “ did hot necessarily inform the witnesses that it was a will by excluding every other instrument from the mind.” (Lewis v. Lewis, supra, 11 N. Y. 220, 227.) The witnesses could just as readily have inferred that Pulvermacher was signing a power of attorney or an assignment or that he was providing for an inter vivas gift. And the reference to accident ”, to anything that might happen, might just as well have pertained to nonfatal accidents or to mere delay in returning as to death. (Cf., e.g., Matter of Harris, 1 Tuck. 293, 298.)

Neither the relationship of the bank attendants to Pulvermacher nor the surrounding circumstances were sufficient to bring home to those witnesses that the writing was a will. (Cf. Matter of Beckett, supra, 103 N. Y. 167, 174-176.) The fact that a portion was visible does not indicate that Pulvermacher intended his witnesses to read it and realize its testamentary character. Indeed, the paper Avas folded and held so as to expose only a small part of the writing. In the light of this effort to conceal and secrete the paper’s contents, as well as the relationship of the parties, it might Avell have been presumptuous of them to have read it. If any inference is to be drawn from the way in which the document was presented and from the lack of an attestation clause, it was that Pulvermacher actually sought to keep its nature from his witnesses. There is no need to find motive for such concealment; testators are, it has been said, prone to desire to enshroud their testamentary acts in demons Avays.” (2 Jessup-Redfield, Surrogates’ Luav and Practice [Rev. ed., 1947], § 682, p. 48.)

Unable to contradict the testimony of the two witnesses, proponents seek to controvert it by suggesting that they lied. Those witnesses deny that they knew this was a Avill, the argument goes, in order to avoid the disfavor of their employer, Avhose rules prohibited íavo vault attendants from Avitnessing the same Avill. Even were Ave willing to accept this reasoning — and we are not — proponents have offered no evidence that the will was published. An attack on the credibility of the only witnesses in the case cannot fill the gap in their proof (see Matter of Moore, supra, 109 App. Div. 762, 768-769, affd. 187 N. Y. 573; Matter of Dale, 56 Hun 169, 174-175, affd. 134 N. Y. 614; Woolley v. Woolley, 95 N. Y. 231, 236), a gap which, according to the legislature’s mandate, is fatal to probate. If the result appears to be harsh in this or that case, we must bear in mind that such consequence is compelled by legislative pronouncement, a rule built on what undoubtedly impressed our lawmakers as sound policy. (See Matter of Andrews, 162 N. Y. 1, 5; Lewis v. Lewis, supra, 11 N. Y. 220, 227-228.)

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

Lewis, Ch. J., Conway, Desmond and Dye, JJ., concur with Fuld, J.; Froessel, J., dissents and votes to affirm on the prevailing opinion of the Appellate Division.

Ordered accordingly. [See 305 N. Y. 923.]


source: Caselaw Access Project

author: Fuld, J.

license: Public Domain

text:
    Isadore E. Black et al., Doing Business as Maryta Realty Co., Appellants and Respondents, v. General Wiper Supply Co., Inc., et al., Respondents and Appellants.
    Argued March 5, 1953;
    decided June 4, 1953.

      Isidore Minkin for appellants-respondents.
    I. Tenants’ failure to pay the sewer rent was a default under the lease. (New York Univ. v. American Book Co., 197 N. Y. 294; Miller v. Wilke, 158 App. Div. 208; Dunbar v. City of New York, 177 App. Div. 647; Rankin v. City of New York, 145 App. Div. 838; Carson v. Brockton Sewerage Comm., 182 U. S. 398; Mayor & City Council of Baltimore v. Williams, 61 F. 2d 374; Robertson v. Zimmermann, 268 N. Y. 52; L. X. Corp. v. City of New York, 201 Misc. 400.) II. There was no warranty in the lease that the premises were free of conditions which might be considered defects by the New York Board of Fire Underwriters; the lease was not ambiguous in this respect. (Heller v. Pope, 250 N. Y. 132; Zimmermann v. Loft, 125 App. Div. 725.)

      Victor Konow for respondents-appellants.
    I. Under the facts and circumstances presented herein the lease must be construed most favorably to tenants. (455 Seventh Ave., Inc., v. Hussey Realty Corp., 295 N. Y. 166; Matter of Smith, 194 Misc. 718, 275 App. Div. 956.) II. Since the lease contains no provision for the imposition upon tenants of a sewer rent or charge and since by virtue of section 82d9-9.1 of the Administrative Code of the City of New York the sewer rent or charge is imposed directly upon the owner of the property connected with the city sewer system for the maintenance of the system which directly benefits the property of the owner, there is no liability upon the part of tenants therefor as additional rent under the lease. (Meltzer v. Koenigsberg, 302 N. Y. 523; People v. Friedman, 302 N. Y. 75; Matter of Russo v. Valentine, 294 N. Y. 338; Matter of Rathscheck, 300 N. Y. 346; Matter of Tishman v. Sprague, 293 N. Y. 42; People ex rel. Knott Corp. v. Graves, 286 N. Y. 377; McCluskey v. Cromwell, 11 N. Y. 593; Security Bldg. & Loan Assn. v. Carey, 259 App. Div. 42; New York Univ. v. American Book Co., 197 N. Y. 294.) III. Landlords were guilty of a gross fraud, not only in exaggerating the amount of the claim for the repairs allegedly made by them, but also in fraudulently causing the violations to be cancelled without compliance therewith in order that tenants be charged therefor. Furthermore, paragraph 4 of the lease is ambiguous and paroi testimony was properly admitted to indicate the intentions of the parties with respect to liability for the electrical defects. (People v. Evans, 40 N. Y. 1; Eighth Ave. Coach Corp. v. City of New York, 286 N. Y. 84; Becker v. Frasse & Co., 255 N. Y. 10; Malbone Garage v. Minkin, 272 App. Div. 109, 297 N. Y. 677; Mullen v. Washburn, 224 N. Y. 413; Greenpoint Sugar Co. v. Whitin, 69 N. Y. 328; Reynolds v. Commerce Fire Ins. Co. of N. Y., 47 N. Y. 597.)
   Fuld, J.

In this summary proceeding, an order has been entered awarding the landlord possession of the rented premises as well as a money judgment for $685, representing the cost of certain electrical repairs. Both parties have appealed, by permission of the Appellate Division, to us — the tenants, from the order dispossessing them and directing a judgment for $685; the landlord, from so much of the order as denied recovery for sewer rents, levied against the premises and paid by the landlord. Resolution of the controversy turns upon the construction of a lease covering a two-story brick building in Queens County, New York City, rented in 1948 for use as an industrial and commercial laundry.

As to the tenants’ appeal, little need be said. In the first place, there is no basis in fact for the charge -that the landlord acted fraudulently or in bad faith in requesting from the tenants a larger sum for the repairs than the amount to which he was entitled. And, in the second place, there is no warrant in law for the tenants’ attempt to vary the clear and unambiguous terms of the lease by reliance upon an asserted oral agreement, made before the lease was executed, that the landlord was to be responsible for electrical defects existing when the tenants took possession. (See Raleigh Associates v. Henry, 302 N. Y. 467, 476; see, also, Fogelson v. Rackfay Constr. Co., 300 N. Y. 334, 338-339; 455 Seventh Ave. v. Hussey Realty Corp., 295 N. Y. 166,172.)

However, the question posed by the landlord’s appeal — whether, absent provision in the lease, tenants are liable for sewer rents — is novel and calls for extended treatment.

Sewer rents were first imposed by the City of New York in June of 1950, about a year and a half after the lease was executed. It was enacted, by local law, that the owner of * * * real property connected with the sewer system * * * shall pay a sewer rent or charge for the use of the sewer system. Such rent or charge shall be based on the water supplied to any such real property * * * [and] shall be equal in amount to one-third of the charges for water supplied to such property ” from the municipal water system. (Local Laws, 1950, No. 67 of City of New York; Administrative Code of City of New York, § 82d9-9.1.) Soon thereafter, on November 27 and December 29, 1950, the city, pursuant to that enactment, rendered bills for sewer rent totaling $149.50. Upon the tenants’ refusal to meet those charges, the landlord paid them and sought their recovery in this proceeding.

The burden of sewer rents rests, of course, where the parties intended. And, since this lease is silent on the subject, we may infer the parties’ design only from the nature of the charges themselves and from the over-all scheme of obligation reflected in their agreement.

We begin with the rule, now firmly fixed, that no charges shall be imposed upon a tenant in addition to those specified in the lease. “ The law is well settled ”, this court recently wrote, that changes in a lease are not to be presumed or implied; and no additional liability will be imposed upon a tenant unless it is clearly within the provisions of the instrument under which it is claimed. If the instrument contains any ambiguity it must be resolved against the landlord and in favor of the tenant.” (455 Seventh Ave. v. Hussey Realty Corp., supra, 295 N. Y. 166,172.) Here, the landlord, who drew the lease, specified that the tenants were to pay * * * all water rents and water taxes * * * charged against * * * the demised premises ”, but, in contrast, said nothing of possible sewer rents. This, of itself, goes far toward establishing the parties’ purpose that any other charges levied against the property be borne by the landlord.

That omission becomes even more telling in view of the fact that, when the lease was executed in 1948, it was common knowledge that, since the year 1929, every city in this state had been empowered by express legislative provision to impose sewer rents based'upon water use or upon any other equitable basis ” (General City Law, § 20, subd. 26). Indeed, here in this state, sewer rents had been levied for years in the city of Buffalo (see Robertson v. Zimmermann, 268 N. Y. 52, 62; L. 1935, ch. 349, § 13) and, in other states throughout the country, comparable levies had been imposed by a number of cities — in Pennsylvania, in Massachusetts and New Hampshire, in Alabama, Kentucky and Virginia and in Arkansas and Oklahoma. (See Carson v. Brockton Sewerage Comm., 182 U. S. 398; City of Leeds v. Avram, 244 Ala. 427; Freeman v. Jones, 189 Ark. 815; Louisville & Jefferson Co. Met. Sewer Dist. v. Seagram & Sons, 307 Ky. 413; Opinion of the Justices, 93 N. H. 478; Sharp v. Hall, 198 Okla. 678; Gericke v. Philadelphia, 353 Pa. 60; Board of Supervisors v. City of Richmond, 162 Va. 14.) It cannot be said, therefore, that these charges were of a character so foreign and improbable as to be beyond the contemplation of the parties. Under these circumstances, the failure to mention sewer rents, when contrasted with the specification that the tenants were to bear the water charges, compels our conclusion that they were to be absolved from responsibility for the sewer levies.

We have little hesitation in reaching this conclusion, since it does not result in imposing on the landlord an entirely new burden. The parties knew both that their agreement covered a building connected with the city sewer and that property owners bore the principal cost of maintaining and improving that system. The expense of maintaining and repairing the sewers was then included in the city’s budget and, since city revenues come in large part from property taxes, this meant that owners of real estate contributed the main share of servicing costs. (See Minority Report in Opposition to Council Bill Int. No. 236 — which, when enacted, became Local Law No. 67 — Covering Imposition and Collection of Sewer Rents, The City Record [June 15, 1950], vol. LXXVHI, pt. VI, pp. 4183- 4184.) The burden of sewer improvements, in like fashion, was completely borne by property owners in the form ’ of special assessments based on the value of their property. (See Minutes of the Board of Estimate and Apportionment, Oct. 16, 1936, p. 4152; also Minutes of Nov. 13, 1936, p. 4769, April 23, 1937, p. 2018, Nov. 19, 1937, p. 6248. See, also, Local Laws, 1950, No. 68, and Local Laws, 1951, No. 96, of City of-New York; Administrative Code, §§ B41-95.5, B41-95.51.)

Unquestionably aware that owners of realty generally paid for sewer upkeep and improvement, the parties entered into this lease without providing that any part of this burden should fall upon the tenants. Quite obviously, such an omission suggests that the landlord was to bear the responsibility for all property taxes and special assessments levied to maintain and improve the sewer system. None would challenge that, since u the lease contained no provision with reference to the payment of taxes that might be imposed upon the property * * *, the burden of their payment remained on the landlord.” (New York University v. American Book Co., 197 N. Y. 294, 296-297; see, also, Spoor-Lasher Co. v. Newburgh Gas & Oil Co., 269 N. Y. 447, affg. 245 App. Div. 329; People ex rel. International Navigation Co. v. Barker, 153 N. Y. 98, 101; 1 Basch, Landlord and Tenant and Summary Proceedings [1950], p. 288.) By not providing otherwise, the parties, we may conclude, manifested their purpose that the landlord, not the tenants, should pay for the maintenance and betterment of the disposal system. And neither that design of the parties nor the burden of the obligations assumed was in any way altered by the fact that, some eighteen months after their lease was executed, the city changed the basis for handling the cost of maintaining and improving its sewers. Instead of continuing to finance sewer upkeep largely from property taxes and paying for improvements with special assessments, the municipality adopted this charge or rent to maintain and improve the sewage disposal system.

Whatever may have been the underlying motivation for the new law (see, e.g., Minority Report in Opposition to Council Bill Int. No. 236, op. cit., The City Record [June 15, 1950], Vol. LXXVIII, pt. VI, p. 4183), it is manifest that it was not prompted by any intent to change the existing obligations of landlord and tenant. Indeed, the very language of the enactment — the owner of any parcel of real property connected with the sewer system * * * shall pay a sewer rent ’ ’ — tends to negate any purpose to shift liability from the property owner. Be that as it may, it seems clear that the sewer charges pay for the same services that were previously financed by local benefit assessments and, in large part, by property taxes — services that the parties intended the landlord to provide. In point of fact, soon after the sewer rent law was enacted, many assessments for sewer improvements — already authorized — were actually cancelled, since the cost and expenses of each of the improvements * * * shall be financed by sewer rents (See, e.g., Administrative Code, § B41-95.5, subd. c; § B4195.51, subd. b.)

Our decision in New York University v. American Book Co. (supra, 197 N. Y. 294), requires no different result. In that case, water charges, measured by a meter, were held to be payable by the tenant of the building rather than by the landlord. There, the provision was in force when the lease was signed and, in contrast to the sewer enactment, recited that it was the “ consumers of water [who] should pay for the water ® * 0 received and used ” and that the bills for such water charges should be made out “ to each and every consumer ” (L. 1882, ch. 410, § 352, later adopted in Greater New York Charter [L. 1897, ch. 378, as amd. by L. 1901, ch. 466] as § 475). It was only reasonable, therefore, that the burden of the water charge fall upon the consumer, the tenant, unless the lease provided otherwise. The sewer rent, however, was first imposed after the lease had been executed and, as already observed, that levy pays for the very same services that, under the lease, were to be paid for by the landlord. In the case before us, the purpose to be served by the sewer rent, the function to be performed by its imposition, indicate that it should be borne by the landlord.

We recognize, of course, that the costs of sewer construction and maintenance will now be apportioned largely on the basis of water consumption and, should the tenants’ laundry prove unusually successful, the landlord may well be faced with a larger charge than he would otherwise have been required to bear. On the other hand, as a result of the imposition of the sewer rent, existing special assessments for sewers previously constructed were cancelled (supra, p. 393), and the landlord was thereby relieved of a burden which had existed prior to enactment of the sewer rent law. It may be that, if the parties were to contract today, they might agree on some scheme for apportioning the sewer charges between them, based upon these or other considerations. We may not, however, make a new bargain for them. Our function is limited to construction of the agreement that the parties actually made, and, as we have shown, it is more consonant with the tenor of their lease to apply the general rule that obligations not imposed on tenants by the agreement should not be placed upon them by the court.

Since, then, the tenants may not be charged with, or held liable for, sewer rents, it is not necessary to consider their further point that, in any event, the landlord may not assert his claim for such rents in a summary proceeding.

The Appellate Division was correct, therefore, in its disposition of each claim, and its order should be affirmed, without costs.

Lewis, Conway, Desmond, Dye and Froessel, JJ., concur; Loughran, Ch. J., deceased.

Order affirmed.

      . For the period July 1, 1949, to May 31, 1950, for example, roughly half of the city’s cash receipts came from real estate taxes. (See Statement by the Office of the Comptroller of the City of New York Summarizing the City’s Cash Receipts and Disbursements, The City Record [June 15, 1950], vol. LXXVIII, pt. VI, pp. 4178-4179.)

      . This statutory language, however, cannot be taken as a conclusive determination, by the city, of liability for sewer charges as between owner and user. Perhaps, as the landlord suggests, the provision making the owner responsible was inserted to support the lien on his property. (See Administrative Code, § 415 [1]-19.0, as amd. by Local Laws, 1950, No. 67 of City of New York.) However, in this connection, it should be noted that language specifically placing the burden of water rents or charges upon the owner is not present in the Administrative Code and yet unpaid water charges are made a lien on the property. (See Administrative Code, § 415[l]-7.0.) Consequently, we have ample indication that the language referred to in the sewer rent law was not needed to provide basis for a lien on the property and that it was probably designed to cast liability for sewer charges upon the owner and landlord.


author:
Desmond, J. Carswell, J.

      Fuld, J.

text:
    In the Matter of Ernst Schwarz, Appellant, against General Aniline & Film Corporation, Respondent.
    Argued March 4, 1953; reargued June 2, 1953;
    decided June 4, 1953.

      Rudolf B. Schlesinger, Joseph Kaskell and Beate Bloch for appellant.
    I. The court has jurisdiction of the subject matter of the proceeding. (Cohen v. Beneficial Loan Corp., 337 U. S. 541.) II. The petition states facts sufficient to constitute a cause of action for assessment of expenses under article 6-A of the General Corporation Law. (Hudson v. United States, 9 F. 2d 825, 272 U. S. 451; State v. La Rose, 71 N. H. 435; United States v. Socony-Vacuum Oil Co., 23 F. Supp. 531; United States v. Winslow, 195 F. 578, 227 U. S. 202; Dick Co. v. Marr, 95 F. Supp. 83; Alden-Rochelle v. American Soc. of Composers, Authors & Publishers, 3 F. R. D. 157; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F. Supp. 308; Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366; United States v. Patten, 226 U. S. 525; United States v. Standard Oil Co., 23 F. Supp. 937.)

      Herbert L. Abrons, Donald O. Lincoln, Eugene L. Stewart and Kathryn V. Crean for respondent. I.
    The court lacks jurisdiction of the subject matter of the proceeding. (Abrams v. Allen, 297 N. Y. 52; Koral v. Savory, Inc., 276 N. Y. 215; Isaac v. Marcus, 258 N. Y. 257; Continental Securities Co. v. Belmont, 206 N. Y. 7; Bosworth v. Allen, 168 N. Y. 157; Ansonia Brass & Copper Co. v. Yew Lamp-chimney Co., 53 N. Y. 123; Matter of Kaplan v. Peyser, 273 N. Y. 147; City Bank Farmers Trust Co. v. Hewitt Realty Co., 257 N. Y. 62; Kavanaugh v. Kavanaugh Knitting Co., 226 N. Y. 185; Yew York Dock Co. v. McCollum, 173 Misc. 106.) II. The petition is legally insufficient because it shows on its face that the conditions required by article 6-A of the General Corporation Law for reimbursement have not been satisfied. (Simon v. Socony-Vacuum Oil Co., 179 Misc. 202; Doman v. Humphrey, 278 App. Div. 1010; United States v. Frankfort Distilleries, 324 U. S. 293; People v. Daiboch, 265 N. Y. 125; Spaulding v. Mutual Life Ins. Co. of N. Y., 96 Yt. 67; United States v. Norris, 281 U. S. 619; Singleton v. Glemmer, 166 F. 2d 963; Harris v. United States, 190 F. 2d 503; Hudson v. United States, 272 U. S. 451; Fisher v. Schilder, 131 F. 2d 522.) III. The petition does not state a cause of action. (Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F. Supp. 308; Commonwealth v. Ingersoll, 145 Mass. 381; Kravis v. Hock, 136 N. J. L. 161; Caminetti v. Imperial Mut. Life Ins. Co., 59 Cal. App. 2d 476; Fidelity-Phenix Fire Ins. Co. of N. Y. v. Murphy, 231 Ala. 680; State ex rel. McElliott v. Fousek, 81 Mont. 457; Doughty v. De Amor eel, 22 R. 1.158. )
   Desmond, J.

This proceeding is brought under sections 64 to 68, found in article 6-A, as enacted in 1945 (L. 1945, ch. 869), of the General Corporation Law, which sections set up a system whereby the New York courts may, in certain situations, order that a corporation reimburse its officials for their previously incurred litigation expenses. With section 63 of the same law we are not concerned here since that part of article 6-A has to do with reimbursements authorized by corporate charter or resolutions. The real question here is as to whether sections 64 to 68, hereinafter dealt with at greater length, cover the present case.

In the petition, which has been dismissed for insufficiency (and the allegations of which we accept as true), it is said, among other things, that in December, 1941, a Grand Jury in the United States District Court, Southern District of New York, indicted General Aniline & Film Corporation and other defendants, including petitioner Schwarz, individually, for alleged violations of the first section of the Sherman Anti-Trust Act (U. S. Code, tit. 15, § 1). Petitioner was at that time a vice-president and director of General Aniline & Film Corporation, but had resigned as officer and director, and retired, at the end of 1941, a few days after the indictment was handed up. The petition goes on to say that Schwarz was not guilty of any violation of the Sherman Act, that he pleaded not guilty to the indictment, and retained attorneys in New York City to whom he agreed to pay a fee of $7,500 to defend him up to but not including the trial if there should be one, these attorneys informing him at the time that, if the case should go to trial the fee for representing him at such a trial would be $1,000 per day; that Schwarz, from his own funds, paid these attorneys a retainer fee of $7,500 plus certain disbursements. The petition further says that, in January, 1950, petitioner’s lawyers informed him that the United States was no longer interested in prosecuting the cause, but desired to terminate it and was willing, if the court would consent, to permit all the individual defendants, including Schwarz, to plead nolo contendere (see Federal Buies of Criminal Procedure, rule 11), that petitioner did not wish to do so, but that he was told by his attorneys that he would probably be punished by a small fine only, and that the expense of a trial of the case would be financially crushing to him. He alleges in this petition that, pursuaded by these arguments, he pleaded nolo contendere, was fined $500 by the court, paid the fine and requested General Aniline & Film Corporation to reimburse him but that the corporation notified him that it did not feel authorized to do so without an order of the court. Thereupon, through new attorneys, petitioner applied to the United States District Court for an order directing reimbursement of these expenses, but that proceeding was dis- A missed on the ground that the Federal court had no power to enter such an order in the criminal cause, and that, therefore, petitioner’s rights, if any, would, under section 65 (supra), have to be enforced in the State courts. Petitioner thereupon brought this present proceeding in Supreme Court, New York County. Respondent contended, at Special Term, that the proceeding did not lie, for two reasons: first, that the statutes were not intended by the Legislature to apply to expenses incurred in criminal proceedings, but only in stockholders’ suits and similar civil causes; and, second, that even if they did apply, petitioner was barred from recovering by the language found at the end of section 64 (supra), which says that there shall be no such reimbursement in relation to matters as to which it shall have been adjudged, in the action, suit or proceeding in which the fees were incurred, that the official, director or employee is liable for misconduct ” in the performance of his duties. The Special Term opinion said, quoting People v. Daiboch (265 N. Y. 125,128, 129), that, while a plea of nolo contendere is not an admission of guilt, it nonetheless is a conviction and has the same consequences, in the criminal cause in which it is entered, as a plea of guilty. The court called attention to section 5 of the Clayton Act (U. S. Code, tit. 15, § 16) to the effect that a judgment entered on a plea of nolo contendere in an antitrust prosecution is not to be treated as an admission in any other action. Nonetheless, the court thought that the imposition of a fine on petitioner amounted to an adjudication that he was »- liable for misconduct in the performance of his duties, and that, therefore, under the express language of section 64, he could not be awarded reimbursement.____

On petitioner’s appeal to the Appellate Division, the four Justices who voted for affirmance wrote no opinion, so that we do not know on which ground, or grounds, the majority based its approval of a dismissal of the petition. The dissenting Justice, in that court, was of the opinion that petitioner’s conviction did not constitute an adjudication of misconduct ” within the meaning of section 64. He stated that no moral turpitude had been shown in the criminal cause as to this petitioner, and that, accordingly, it would not be against public policy to permit reimbursement. He pointed out that the facts in the antitrust prosecution were not before the court in this petition, and so, he thought, the plea of nolo contendere did not necessarily show any ‘1 misconduct ” as to the corporation, and indeed, might have covered conduct in promotion of the corporation’s interests, and that the making of the plea by defendant might well have been a mere settlement in the antitrust suit, not involving any adjudication, or any misconduct at all. Despite the discussion in appellant’s brief here as to the absence of moral turpitude in antitrust law crimes, it is the fact, and stated in the petition, that these attorneys’ fees were spent by petitioner in defending himself against an indictment for a violation of a Federal criminal statute, that he put-in a plea of nolo contendere, which is unknown except in criminal causes, and that he was ordered to, and did, pay a fine. Thus, whatever be his moral guilt or lack of it, he did incur these expenses while defending himself in a criminal prosecution.

Neither court below discussed the question as to whether article 6-A was intended to apply to expenses incurred by an officer or director in his defense against a criminal indictment. For ourselves, however, we cannot believe that the Legislature, in enacting article 6-A, ever intended to provide reimbursement to anyone for his attorneys’ fees in a criminal cause against himself. As we know, these provisions for reimbursement came into the statute law after, and because of, the famous opinion of Judge Crouch, sitting as an Official Referee, in 1939, in New York Dock Co. v. McCollum (173 Misc. 106). (See Bailey v. Bush Term. Co., 293 N. Y. 735.) There it had been decided, in effect, that the corporation in whose behalf a stockholder’s suit is brought, was not obligated, at common law, to pay legal fees incurred by its directors in defending themselves as individual defendants in such an action. That left corporate directors (and officers) in an unsatisfactory position since, when sued and although successful in a stockholder’s suit, they would find themselves exonerated from fault but subject to the heavy attorneys ’ fees characteristic of the defense of such actions. To ameliorate their condition, article 6-A was put into the General Corporation Law, and it is noteworthy that it follows after, and is an obvious supplement to, article 6 of that law. Article 6, in its sections 60 and 61, describes certain civil actions which may be brought by or on behalf of a corporation against its officers or agents for misconduct toward the corporation. Sections 27-a and 61-a of the General Corporation Law were passed in 1941 (L. 1941, chs. 209, 350) to overcome the effect of the New York Bock Co. case (supra), as to fees of corporate officials, sued in such cases. Those two sections provided, respectively, for indemnity either by provision therefor in a certificate of incorporation or by-laws "(§ 27-a), or for an award by the court of such litigation expenses as special costs (§ 61-a). Neither of those 1941 enactments had any discernible relation to a criminal case. Obviously, the Legislature was talking about the financial difficulties that had befallen certain corporate directors, officers and agents when they were sued, individually, in stockholders’ suits, and had to pay their own lawyers.

Section 27-a (supra) was quite restricted in that it had to do with repayment of litigation expenses, when permitted by certificate of incorporation or by-laws of a corporation only. Section 61-a (supra) contained another kind of limitation — or, at least, another kind of limitation was read into it by the courts — the courts holding that litigation expenses could not be assessed as special costs against a corporation in favor of its officers or directors, unless there was a showing that the corporation itself benefited by the defense of the individuals to the suit. In 1945, pursuant to recommendations by the Law Revision Commission, section 27-a became section 63 in a new article 6-A, and the remaining sections of article 6-A (§§ 64, 65, 66, 67, 68) were added. Sections 65, 66, 67 and 68 describe procedure only, whereas section 64, as pointed out above, contains broadened provisions for assessment against a corporation, of the expenses of any person who is made a party to “ any action, suit or proceeding ” because of his being an officer, director or employee, unless it shall have been adjudged that he was liable for neglect or misconduct in the performance of his duties. While it cannot, of course, be proven mathematically, it seems clear that there never was any intention to apply any of this to defense costs in a criminal case. There just is no evidence whatever that the Legislature was talking about criminal cases. Appellant gets some comfort from a brief, equivocal footnote in a study, made by an attorney employed by the Law Revision Commission, and attached to the 1945 Report of the Law Revision Commission. The writer of that study said in the footnote that it had been urged that the language of section 64 (“ any action, suit or proceeding ”) might cover a criminal proceeding for violation of the antitrust law. But that was a mere comment by the writer of a study made for the commission, referring to a contention made, or which might be made, by somebody else that the section might be applicable in a criminal cause. There is nothing to indicate that the Legislature, or, indeed, the Law Revision Commission, ever had any such thing in mind.

It would be a very strange public policy, indeed, which would set up legal machinery whereby one charged with, or convicted of, a crime, of whatever kind, could require the corporation by whom he was employed to pay his legal expenses. And, aside from that aid to statutory construction, there are plenty of affirmative indications that the Legislature was thinking of, and legislating about, civil causes only. The Law Revision Commission’s report, with which the 1945 statutes originated, made it plain (see bottom p. 139) that the proposed 1945 revision (new article 6-A of the General Corporation Law) had for its purpose the “ making consistent ” of former sections 27-a and 61-a {supra) and setting up better machinery for enforcing (where charter and by-laws did not authorize) reimbursement by a corporation of litigation expenses of its directors and officers. No one ever suggested that former sections 27-a and 61-a had anything to do with criminal cases. At pages 140 and 141, the commission’s 1945 report is talking, obviously, about allowances and attorney’s fees and costs of parties in civil proceedings. Of the numerous decisions and writings cited in that report, not one had to do with a criminal case.

When the Legislature came to enact, into law, the 1945 suggestions of the commission, it included them in the very same chapter (L. 1945, ch. 869) which contained the new statutes requiring security from certain plaintiffs in stockholders’ suits. In other Words, the Legislature considered that articles 6 and 6-A of the General Corporation Law, as revised, were in pari materia and that everything in both articles referred to civil litigation. Indeed, our court, in another connection, has written (Lapchak v. Baker, 298 N. Y. 89, 93) that section 61-b (the security for costs statute in article 6) is “ to be read in connection with article 6-A ” (with which we are immediately concerned here). Other reliable material is available to show that the whole of both articles 6 and 6-A, represented legislative and professional thinking as to stockholders’ suits, with no connection, however remote, with criminal prosecutions (see Stockholders’ Derivative Suits, by Franklin S. Wood, pp. 21, 84-85, 88; 16 New York State Bar Assn. Bulletin, p. 91; 17 New York State Bar Assn. Bulletin, p. 114).

It is suggested that criminal proceedings are covered by the inclusive language of section 64: “ any action, suit or proceeding ”. Those words could, we suppose, carry that meaning, if they stood alone, and if we had no sure guides to their real significance. That identical phrase was in old sections 27-a and 61-a, and it was never asserted that those statutes applied to criminal cases — indeed, old section 61-a itself provided that the litigation expenses it described could be recovered as special costs ”, plainly a reference to civil litigation. We note, too, that the quite similar New Jersey, Kentucky and Delaware statutes set out in an appendix to the Law Revision Commission’s 1945 Report, all include the same verbiage: “ action, suit or proceeding ”, and it is not claimed that any of those statutes have ever been held to contemplate the reimbursement of lawyer’s fees in criminal trials. Our own conclusion is that the draftsman who was responsible for the statutory language: ‘ ‘ any action, suit or proceeding ’ ’ was being overcautious in making sure that the law would apply in an action” at law, a suit” in equity, or a special proceeding

Since we are holding that court-mandated reimbursement, under article 6-A, can never be had as to expenses of one defending himself against criminal charges, it is unnecessary to examine the interesting question of whether a plea of “ nolo contendere ” in a Federal court is an adjudication ” of “ misconduct ”. It is instructive, however, to look a little closer at the exception found at the end of section 64, which denies reimbursement to a corporation official who has been adjudged to be “ liable for negligence or misconduct in the performance of his duties.” We think “ negligence or misconduct ”, as there used, refers right back to sections 60 and 61, setting up civil actions by or on behalf of corporations against their officers or directors who have injured the corporations by wrongdoing or inattention to duty.

Those who join in this opinion agree, also, with the able concurring opinion of Carswell, J., who sat with us in the rehearing of this appeal.

The order should be affirmed, with costs.

Carswell, J.

(concurring). I concur in Judge Desmond’s opinion for affirmance for the reasons given therein and for an additional reason.

Section 64 of the General Corporation Law directs reimbursement by a corporation of a director, officer or employee who has been put to expense as a consequence of having been made a party to any action,” etc., because he is or was a director, except when guilty of misconduct. This opening phrasing properly becomes the subject matter of interpretation only because certain terminology in section 64 and the following sections, characteristic of and conventionally used in civil actions, makes the meaning of the opening phrase obscure or equivocal or has a possibly restrictive effect upon it. It thus becomes necessary to determine by interpretation whether “ any action,” etc., includes both civil or criminal actions or is limited to a civil action. This requires us to ascertain whether the proper rule of interpretation is strict construction or liberal construction, in order to determine whether or to what extent the light shed by the context, on the words any action,” etc., reveals the true legislative purpose or intent, having in mind that the pertinent sections were all the subject of a single legislative document and enactment in chapter 869 of the Laws of 1945.

Reimbursement for such expenses could not be had at common law (Bailey v. Bush Term. Co., 293 N. Y. 735). Therefore, sections 64 and 65 are in derogation of the common law. Section 63 provides two methods of reimbursement (a) by a provision in the certificate of incorporation; and (b) by a provision in the by-laws or a resolution of the stockholders. This is a regulation of the exercise of a common-law right of freedom of contract and is merely declaratory thereof. In the instant case, there is no provision in a certificate and no by-law or resolution authorizing such reimbursement. The parties have refrained or deliberately refused to make such authorization, although free to do so and to include specifically not only civil but criminal actions.

Section 64, therefore, is in derogation of both the common law and the contract rights or engagements of the parties. Strict construction, therefore, is the rule applicable (Matter of Ryan, 291 N. Y. 376, 400; Erickson v. Macy, 231 N. Y. 86, 91; Dean v. Metropolitan Elevated Ry. Co., 119 N. Y. 540, 547). Only by observing such a rule is the extension or broadening of a legislative change avoided and true legislative intent made effective.

Section 65 which is referred to in section 64 sheds light on the true scope of section 64. It provides in subdivision (a) that the reimbursement is to be sought in the action,” etc., in which the expenses were incurred or (b) in a separate proceeding in the Supreme Court. Subdivision (a) is the only one that specifies in detail what expenses are to be the subject of reimbursement. Applying the rule of strict construction here to ascertain legislative intent, subdivision (a) is the sole determinant of the extent of the reimbursement and if reimbursement cannot be had in subdivision (a) it may not be had in subdivision (b). If subdivision (a) is to be construed as inclusive of both a basic civil action and a basic criminal action, then subdivision (a) is valid as to a civil action but invalid as to a criminal action. The Legislature is without power to bestow jurisdiction in civil matters on a court which by constitutional provision is vested with jurisdiction only in criminal prosecutions or proceedings ” (N. Y. Const., art. VI, § 11). A typical example is the County Courts of Kings, Bronx, Queens and Richmond Counties. A director acquitted in a criminal action under the Donnelly Act, for instance, may not have reimbursement for expenses under subdivision (a) of section 65 under the principle just stated (People ex rel. Clark v. Adel, 129 Misc. 82, 87, 90). If a statute is subject to two interpretations, one valid and the other invalid, the valid interpretation must be adopted (McKinney’s Cons. Laws of N. Y., Book 1, Statutes [1942 ed.], § 141, pp. 210, 211; § 150, pp. 236, 237; Dollar Co. v. Canadian Car & Foundry Co., 220 N. Y. 270; Matthews v. Matthews, 240 N. Y. 28; People v. Mancuso, 255 N. Y. 463).

A judicial determination between two who were defendants in a criminal action as to the respective rights and obligations of one to the other based inter alla upon presence or absence of fault is a jurai question that is indisputably an exercise of civil jurisdiction. (Cf. Bailey v. Bush Term. Co., supra.)

Section 65, the complement of section 64, being thus limited to a basic civil action or proceeding, the legislative intention, therefore, clearly was to limit similarly section 64 to a civil action or proceeding. This is the inevitable consequence of the impact of context. If the legislative intention was to include a criminal action, under the rule of strict construction, a clear direction or an imperative command to include a criminal action must be given by the Legislature. To adopt the appellant’s construction would require that the effect of the impact of the context be dispelled by inserting before the word 11 action ” in the opening phrase in section 64 the words “ civil or criminal ” and would require a recasting of section 65 so as to specifically direct in subdivision (a) that reimbursement be had in the basic civil action and in the event the expenses were incurred in a criminal action provide for an explicit direction in subdivision (b) that such expenses be sought in a separate proceeding in the Supreme Court.

To accept appellant’s interpretation would be an unwarranted exercise by the court of the legislative function and give effect to an intent never expressed'by the Legislature, under the guise of interpretation, and would be in derogation both of the common law and the contract engagements of the parties made available to them by methods set out in section 63.

The foregoing analysis of sections 63, 64 and 65 discloses that the legislative intent, as expressed throughout chapter 869 of the Laws of 1945, is to confine reimbursement in proper situations to expenses incurred in a civil action or proceeding.

Fuld, J.

(dissenting). I.cannot agree that the lone circumstance that petitioner’s legal expenses were incurred in defending a criminal, rather than a civil, antitrust proceeding removes his claim from the compass of section 64 of the General Corporation Law. Both the language and the design of that statute point the conclusion — apparently adopted by all the judges who passed upon the case below •— that that factor does not, in and of itself, constitute a bar to reimbursement.

Nor do I believe that such recompense is proscribed on the further ground — not considered by the court (opinion of Desmond, J., pp. 403-404) —that the judgment entered upon petitioner’s plea of nolo contendere constitutes, in the language of section 64, an adjudication that he is liable for negligence or misconduct in the performance of his duties ” as an official of the corporation. Especially so, where, as here, petitioner was made a party defendant to the antitrust suit in his ‘ ‘ capacity ’ ’ as officer and director of a corporate defendant, with which he had not the slightest connection until some six years after the allegedly illegal agreement was concluded and the unlawful conspiracy begun.

Section 64 of the General Corporation Law, upon which decision depends, reads as follows:

Any person made a party to any action, suit or proceeding by reason of the fact that he * * * is or was a director, officer or employee of a corporation shall be entitled to have his reasonable expenses, including attorneys’ fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding ® * * assessed against the corporation * * ° except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties.” (Emphasis supplied.)

That provision is bare of any limitation restricting its scope or application to civil eases. In point of fact, the legislature adopted language as broad and as all-inclusive as was possible. The statute encompasses “ any action, suit or proceeding ”, and, in so many words, entitles any person made a party to reimbursement for attorneys’ fees incurred in connection with the defense ‘ of such action, suit or proceeding. ’ ’ Lacking is any intimation, much less any verbiage, that such reimbursement was to be restricted to a particular kind of an action. And my conclusion that the statute means what it says — that the phrase any action, suit or proceeding ” is not limited to civil proceedings — is borne out by its history.

Before 1945, when Article 6-A, with its section 64, was added to the General Corporation Law, section 27-a empowered a corporation to provide in its certificate of incorporation or its by-laws that each director should be indemnified against expenses incurred in connection with the defense of “ any action, suit or proceeding ” in which he was made a party by reason of his having been a director. Section 61-a, though broader in its coverage (applying to officers as well as directors) was expressly limited to any action, suit or proceeding ” against such officers or directors “ brought by the corporation, or brought in its behalf ”. Here, then, was language to be used if the legislature desired to provide reimbursement only in a limited type of case. No such verbiage — indeed, no limiting language whatsoever — was employed when the legislature enacted section 64. Instead, as already indicated, it provided that reimbursement could be had by any person made a party ‘ ‘ to any action, suit or proceeding ” by reason of his being a corporate officer or director. In other words, while, before 1945, only expenses in actions brought by the corporation, or brought in its behalf ”, were mandatorily reimbursable, new section 64, in sharp contrast, called for reimbursement in 11 any action, suit or proceeding ”. Rejection of the narrow language of former section 61-a, and adoption in its place of the exceedingly broad phrasing of section 64, bespeaks a design completely at odds with the restriction now imposed by the court.

Indeed, the Law Revision Commission, the very body responsible for the enactment of Article 6-A, suggested a special proceeding for collecting fees expended in defending a “ criminal ” antitrust suit (1945 Report of N. Y. Law Revision Commission [N. Y. Legis. Doc., 1945, No. 65], at p. 161, fn. 36). Thus, in the study submitted by the commission to the legislature, there is a discussion of the ‘ ‘ type of action covered ’ ’ by the proposed article. After calling attention to the broad language of old section 27-a, to lie imported into new sections 63 and 64, the writer expressly declared that such phrasing

“ might cover certain types of actions [fn. 36, E.g., a criminal proceeding against the corporation and its officers or directors for violation of the anti-trust laws] in which the court, lacking powers of a court of equity, would not he in a position to pass upon the right to indemnity or to make allowances. ’ ’

This contingency, the study continued, “ can he avoided ” by providing for ‘1 the maintenance of a special proceeding against the corporation for the sole purpose of determining these questions ” (1945 Report of N. T. Law Revision Commission, op. cil., p. 161.) Adopting that proposal, the legislature made provision in subdivision (b) of section 65 for the suggested special “separate proceeding.” This, I suggest, was the clearest indication possible that Article 6-A was meant .to entitle officers and directors to reimbursement for expenses incurred in defending a criminal antitrust proceeding.

To the point, made in Judge Desmond’s opinion (p. 402), that it would be a “ strange public policy ” to set up legal machinery by which a person, charged with a crime, “ could require the corporation by whom he was employed to pay his legal expenses ”, several answers are at hand. There is nothing either “ strange ” or against “ public policy ” in reimbursing a corporate official for the expenses of defending an action brought against him solely because of his acts on behalf of the corporation which he, in good faith, believed would further its best interests. The legislature, having in mind the realities of business life, may well have concluded that the risk of an official’s indictment under the antitrust laws is no more than a normal hazard of corporate operation, a risk of doing business to be borne by the company which, in all probability, profited from his activities. In point of fact, as Justice Carswell himself notes in his concurring opinion (p. 405), a corporation would be “ free ”, under the procedure embodied in section 63, to indemnify an officer or director against reasonable expenses incurred by him in defending “not only civil but criminal actions.” And, even apart from section 63, it has been held that a corporation is empowered to pay attorneys’ fees and other legal expenses incurred by a director in defending a criminal antitrust suit, even though he was actually convicted. (See Simon v. Socony-Vacuum Oil Co., 267 App. Div. 890, affg. 179 Misc. 202, 203-206.) Since, then, there is court sanction for reimbursing a corporate official for expenses incurred in defending a criminal antitrust proceeding, it is difficult to perceive any basis for declaring that section 64, if construed to effect that very same result by a somewhat different procedure, would offend against public policy.

And what of the official or director who, following indictment and trial, is actually acquitted? Certainly, no reason of policy may be advanced for denying him reimbursement for attorneys’ fees in defending the suit. His only fault was that he was an official of a corporation whom the government chose to indict for a violation of the antitrust laws. Nevertheless, according to the court, even such an official — his complete innocence established and the indictment against him dismissed — would be barred from obtaining reimbursement under section 64. Mere statement of such a consequence compels rejection of the underlying rationale.

The basic flaw in the majority’s reasoning, it seems to me, stems from a faulty assumption of an essential difference between the criminal and the civil in the area of antitrust regulation. As a general rule, it is of course true, a criminal proceeding is aimed at redressing a wrong to the public, while a civil suit brought by a private citizen seeks to vindicate only a personal right. Moreover, the difference between the two usually reflects a corresponding difference in the degree of dereliction charged or the importance of the duty violated. In the area of antitrust or, for that matter, of most economic regulation, however, both civil and criminal proceedings involve assertion of a public right and protection of a social interest. As a result, there appears little justification for sanctioning reimbursement of expenses in a civil antitrust case and refusing like recovery following a criminal antitrust proceeding — particularly since the choice of procedure under the statute is left completely with the Attorney General (see U. S. Code, tit. 15, §§ 1,4, 24) and there is no suggestion that exercise of his discretion is to be governed by the enormity of the violation charged. Under those circumstances, the right to recovery of expenses should not, I venture, depend on the happenstance of whether the asserted antitrust violation is attacked by criminal indictment or civil complaint.

In either case, it appears clear that the legislature intended that an officer or director should recover his reasonable defense expenses under section 64. The fact undoubtedly is, as Judge Desmond states (opinion, pp. 402-403), that abuses attending the prosecution of stockholders’ derivative suits prompted enactment of Article 6-A. However, a statute’s reach is not to be measured solely by the evil that occasioned its birth. (See, e.g., Fasulo v. United States, 272 U. S. 620, 627; see, also, Crawford, Statutory Construction [1940], pp. 247-248.) And, as I have tried to show, both the language chosen and the procedures adopted in Article 6-A manifest the design that reasonable expenses incurred in defending an antitrust suit are recoverable — provided, of course, that the petitioning officer or director has not been “ adjudged * liable for negligence or misconduct in the performance of his duties.”

The judgment entered upon petitioner’s plea of nolo contendere does not, in my view, adjudge him so liable. Far from being an acknowledgment of guilt or an admission of misconduct, that plea “ is in the nature of a compromise between the Government and the defendants ’ ’, a device, so to speak, by which the proceeding may be settled with the approval of the court. (Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366, 372; see, also, State v. La Rose, 71 N. H. 435.) And the New Hampshire Supreme Court has written, “ Under the plea of nolo, the defendant does not confess or acknowledge the charge against him as upon a plea of guilty * * ®. The plea is in the nature of a compromise between the state and the defendant — a matter not of right, but of favor. Various reasons may exist Avhy a defendant conscious of innocence may be willing to forego his right to make defence if he can be permitted to do so Avithout acknowledging his guilt.” (State v. La Rose, supra, 71 N. H. 435, 438-439.) Indeed, in People v. Daiboch, 265 N. Y. 125, we actually recognized that a plea of nola contendere or, more precisely, its equivalent, a plea of non vult, does not constitute a concession of any fact set out in the indictment. Although the court there held that it is a conviction of a crime, under section 1941 of the Penal Law, for purposes of second offender treatment, the opinion explicitly and carefully pointed out that that plea cannot be used or taken as an admission of the facts alleged in the indictment ” (265 N. Y., at p. 129); While the judgment entered upon nolo contendere may, therefore, be regarded as a conviction under certain statutes applying to multiple offenses, such a judgment has never been considered an adjudication of guilt or even an admission of any fact contained in the indictment. (See, also, Twin Ports Oil Co. v. Pure Oil Co., supra, 26 F. Supp: 366, 376.)

Any doubt that a judgment entered upon a nolo contendere plea is in the nature of a compromise, a settlement of the controversy, rather than an adjudication of any fact asserted or a determination of any charge alleged, is laid to rest by a Clayton Act provision (38 U. S. Stat. 731, U. S. Code, tit. 15, § 16), distinguishing between a judgment of conviction following a trial and one entered after a plea of nolo. “ A final judgment or decree rendered in.any criminal prosecution ” brought by the United States under the antitrust laws, the statute recites, shall be prima facie evidence against such defendant in any suit or proceeding brought by any party against such defendant ’ ’. However, the statute goes on expressly to exclude from its application consent judgments or decrees entered before any testimony has been taken ”, and the term, consent judgments or decrees ”, has been held to include a decree entered after a plea of nolo contendere. (See, e.g., Twin Ports Oil Co. v. Pure Oil Co., supra, 26 F. Supp. 366, 371-372; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F. Supp. 308, 311-312.)

Beyond that, however — and I go further than is necessary for decision in this case — even if I were to assume that a plea of nolo contendere is an acknowledgment of guilt, it still would not follow that the judgment entered upon such a plea amounts to an adjudication that petitioner was liable for negligence or misconduct in the performance of his duties.” That exception obviously exempts a corporation from the duty to reimburse its officials only when they have been disloyal, or breached some obligation, to the corporation itself. It has no application when, in the faithful discharge of corporate duties and in the furtherance of what are regarded as the company’s best interests, ah officer or director may incidentally have committed acts involving him in a criminal antitrust proceeding. In short, if an official has exercised the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs ” (Kavanaugh v. Commonwealth Trust Co., 223 N. Y. 103, 105; see, also, General Rubber Co. v. Benedict, 215 N. Y. 18), he should not be deemed guilty of “ negligence or misconduct in the performance of his duties ’ ’, within the sense of section 64, even though his actions on behalf of the corporation result in his being adjudged guilty under the antitrust laws. (See Simon v. Socony-Vacuum Oil Co., supra, 179 Misc. 202, 203-205, affd. 267 App. Div. 890; 3 Fletcher’s Cyclopedia Corporations [Perm, ed.], § 1039; cf. Cass v. Realty Securities Co., 206 N. Y. 649, affg. 148 App. Div. 96, 99; Seymour v. Spring Forest Cemetery Assn., 157 N. Y. 697, affg. 4 App. Div. 359, 376-377.)

The circumstance of such an adjudication does not suggest any disloyalty to corporate interests or even imprudence in the conduct of business affairs. In view of the extreme uncertainty which prevails as a result of * * * vague and conflicting adjudications ”, two authorities on the subject have written, it is impossible for a lawyer to determine what business conduct will be pronounced lawful or unlawful by the courts. * * Legitimate business enterprise, desirous of knowing and obeying the law, has no safe standards by which to be guided.” (Jackson and Dumbauld, Monopolies and the Courts, 86 U. of Pa. L. Rev. 231, 232, 236; see, also, Cahill, Must We Brand American Business as Criminal?, Amer. Bar Assn., Proceeding of Section of Antitrust Law [1952], 26, 29-31.) And in the Socony-Vacuum Oil Co. case (supra, 267 App. Div. 890, affg. 179 Misc. 202), the court ruled that directors may not be held personally liable to stockholders for expending corporate funds on behalf of themselves in connection with their defense of a criminal antitrust suit, even though they were convicted after trial. While observing that those officials had participated in the unlawful acts leading to their prosecution and conviction, the court declared (179 Misc., at p. 203) that the evidence indicated that they “ did not violate any duty which they owed the corporation; that they acted honestly and reasonably and for what they believed to be the best interests of the company.”

The order of the Appellate Division should be reversed.

Dye and Fboessel, JJ., concur with Desmond, J.; Cars-well, J., concurs in separate opinion; Fuld, J., dissents in opinion in which Lewis, Ch. J., and Conway, J., concur.

. Order affirmed.

       Carswell, J., designated for the purposes of this case.

       Designated pursuant to section 5 of article VI of the State Constitution in place of Van Voorhis, J., disqualified.


author: Per Curiam. Dye, J.

text:
    Pauline Salzman, Appellant, v. Vincent R. Impellitteri, as Mayor of the City of New York, et al., Appellants, et al., Defendants, and Nathaniel L. Goldstein, as Attorney-General of the State of New York, Intervener, Respondent.
    Argued May 29, 1953;
    decided June 5, 1953.

      Herman Katz, Louis A. Cioffi and Edward S. Blackstone for Pauline Salzman, appellant.
    I. The New York City Transit Authority Act (L. 1953, ch. 200, as amd. by ch. 201) is a local act and not a V general ” law. (Greene v. Dunscomb, 281 N. Y. 261; Adler v. Deegan, 251 N. Y. 467; Matter of Bronx Parkway Comm. v. Hylan, 119 Misc. 785, 206 App. Div. 688, 236 N. Y. 593.) II. The act is an unconstitutional interference with the
      property, affairs or government of the City of New York, without the city’s antecedent prescribed consent. (New Rochelle Trust Co. v. White, 258 App. Div. 400; Matter of Rapid Tr. R. R. Comrs. of City of N. Y., 197 N. Y. 81; Matter of City of New York [Gillen Place], 195 Misc. 685; Matter of McAneny v. Board of Estimate of City of N. Y., 232 N. Y. 377; People ex rel. Rodgers v. Coler, 166 N. Y. 1; Union Real Estate Co. v. City of New York, 183 App. Div. 417; Litchfield Constr. Co. v. City of New York, 244 N. Y. 251; Matter of Continental Guar. Corp. v. Craig, 240 N. Y. 354; City of New York v. New York Tel. Co., 278 N. Y. 9.) III. The “ Authority ” act unconstitutionally pledges the credit of the City of New York. (Albany Port Dist. Comm. v. National Commercial Bank & Trust Co., 259 App. Div. 1115, 283 N. Y. 768; Reiss Constr. Co. v. City of New York, 183 Misc. 617; Matter of Emerson v. Buck, 230 N. Y. 380; Wilmerding v. O’Dwyer, 272 App. Div. 35.) IV. The appointment formula prescribed by the act and the absence of any removal formula renders the act (ohs. 201, 202) unconstitutional. (Barrett v. Boehm, 256 App. Div. 13; People ex rel. Bush v. Houghton, 182 N. Y. 301.) V. Whether the acceptance of the Transit Authority is mandatory or optional, constitutional conditions precedent cannot be waived by contract. VI. All references in chapters 202 through 208 of the Laws of 1953 to the Authority set up in chapters 200 and 201 of the Laws of 1953 should be stricken as unconstitutional legislative “ duress ” and coercion and, therefore, inoperative. (Denihan Enterprises v. O’Dwyer, 302 N. Y. 457.)

      Denis M. Hurley, Corporation Counsel (W. Bernard Richland, Pauline K. Berger and Barbara Carroll of counsel), for Vincent R. Impellitteri and another, appellants.
    I. The New York City Transit Authority Act and the tax laws which are intertwined with it were enacted without compliance with home rule requirements. (Matter of Corrigan v. Joseph, 304 N. Y. 172; Matter of Kuhn v. Curran, 294 N. Y. 207; Matter of Carey v. Morton, 297 N. Y. 361; Sun Print. & Pub. Assn. v. Mayor of City of N. Y., 152 N. Y. 257; Admiral Realty Co. v. City of New York, 206 N. Y. 110; Matter of McAneny v. Board of Estimate of City of N. Y., 232 N. Y. 377; Bronx Gas & Elec. Co. v. Maltbie, 268 N. Y. 278; Matter of Mayor of City of N. Y. [Elm St.], 246 N. Y. 72; Matter of Holland v. Bankson, 290 N. Y. 267; New Rochelle Trust Co. v. White, 283 N. Y. 223.) II. The transfer of the power to determine the necessity for, the routes of, and whether and to what extent the construction and extension of transit facilities should be undertaken at municipal expense, and the power to operate the transit system to a Transit Authority, the members of which are not appointed by city officers or authorities, violates the letter and spirit of section 8 of article IX of the State Constitution. (People ex rel. Metropolitan St. Ry. Co. v. State Bd. of Tax Comrs., 174 N. Y. 417; People ex rel. Town of Pelham v. Village of Pelham, 215 N. Y. 374; Matter of Brown-Lipe Gear Co. v. Ferris, 275 N. Y. 418; Matter of Wendell v. Lavin, 246 N. Y. 115; People ex rel. Bolton v. Albertson, 55 N. Y. 50; Rathbone v. Wirth, 150 N. Y. 459; People ex rel. Bush v. Houghton, 182 N. Y. 301; Devoy v. Mayor of N. Y., 36 N. Y. 449; People ex rel. Balcom v. Mosher, 163 N. Y. 32; People ex rel. Wood v. Draper, 15 N. Y. 532.) III. The Transit Authority laws violate sections 1 and 3 of article VIII and section 5 of article X of the State Constitution. (Board of Supervisors of Cayuga Co. v. State of New York, 153 N. Y. 279; People ex rel. Balcom v. Mosher, 163 N. Y. 32; Village of Kenmore v. County of Erie, 252 N. Y. 437; Litchfield Constr. Co. v. City of New York, 244 N. Y. 251; Matter of Rapid Tr. R. R. Comrs. of City of N. Y., 197 N. Y. 81; Williamsburgh Sav. Bank v. State of New York, 243 N. Y. 231; Robertson v. Zimmermann, 268 N. Y. 52; Gaynor v. Marohn, 268 N. Y. 417; Western N. Y. Water Co. v. Erie Co. Water Authority, 279 App. Div. 1132, 304 N. Y. 743; Union Free School Dist. No. 3 v. Town of Rye, 280 N. Y. 469.) IV. The act provides that the agreement must contain a provision committing the city to incur a total exceeding $574,000,000. In addition, there would be imposed upon the city an amount of indebtedness unascertainable in extent until the end of the term. Such full amount will cause the city’s constitutional debt incurring limit to be greatly exceeded immediately upon the signing of the agreement in direct violation of section 4 and subdivision E of section 7 of article VIII of the State Constitution. (Levy v. McClellan, 196 N. Y. 178; Smith v. Town of Quin, 155 So. 865 [Ala.]; Beard v. City of Hopkinsville, 24 S. W. 872 [Ky.] ; Benjamin v. City of Mayfield, 186 S. W. 169 [Ky.]; Keller v.
      City of Scranton, 49 A. 781 [Pa.]; Lesser v. Warren Borough, 85 A. 839 [Pa.] ; Duane v. City of Philadelphia, 185 A. 401 [Pa.]; Smull v. Delaney, 175 Misc. 795.) V. It is the manifest purpose of chapters 200 through 205 of the Laws of 1953 to empower the Transit Authority to control the taxing power to achieve an objective utterly unrelated to the taxing power. The power to tax can be granted or withheld only by the Legislature or by the elected officials of a municipality to which the Legislature grants the power. It cannot be placed within the discretion of appointed officers oi‘ the State to grant or withhold the taxing power. Such condition being invalid, the city has full power to exercise the taxing powers granted in chapter 199 of the Laws of 1953, and in such other laws. (Asbury v. Town of Albermarle, 78 S. E. 146 [N. C.]; Gautier v. Ditmar, 204 N. Y. 20; Matter of Board of Educ., Town of Brookhaven v. Graves, 214 App. Div. 40; Wilson v. School Dist. of Phila., 195 A. 90 [Pa.] ; Township of Bernards v. Allen, 39 A. 716 [N. J.]; Stewart v. City of Cheyenne, 154 P. 2d 355 [Wyo.].) VI. The conditioning of the city’s power to raise taxes on real estate upon the requirement that it transfer its transit system to the Transit Authority violates section 9 of article IX of the State Consitution and deprives the city of its property without due process of law in violation of section 6 of article I. (United States v. New Orleans, 98 U. S 381; Helena Con. Water Co. v. Stelle, 49 P. 382 [Mont.] ; Osborn v. Robbins, 36 N. Y. 365; Reiter v. Illinois Nat. Cas. Co., 65 N. E. 2d 830 [Ill.] ; People ex rel. Rodgers v. Coler, 166 N. Y. 1; Germania Sav. Bank v. Village of Suspension Bridge, 159 N. Y. 362; County of Nassau v. City of Long Beach, 272 N. Y. 260; Webb v. Mayor of City of N. Y., 64 How. Prac. 10; Benson v. Mayor of City of N. Y., 10 Barb. 223; Litchfield Constr. Co. v. City of New York, 244 N. Y. 251.) VII. Chapters 206 and 207 of the Laws of 1953 relate to the property, affairs and government of the city but, in violation of section 11 of article IX, were not passed upon a home rule request or a two-thirds vote. Such acts further violate section 8 of article IX by transferring from municipal officials to the State Comptroller the power to determine the circumstances under which temporary indebtedness may be incurred for an unforeseeable public emergency. (Wilmerding v. O’Dwyer, 272 App. Div. 35, 297 N. Y. 664; McGrath v. Grout,
      171 N. Y. 7; Levy v. McClellan, 196 N. Y. 178; Gubner v. McClellan, 130 App. Div. 716; Hills v. Peekskill Sav. Bank, 101 N. Y. 490; Matter of Evans v. Berry, 262 N. Y. 61; Matter of Mayor of City of N. Y. [Elm St.], 246 N. Y. 72; Matter of Osborn v. Cohen, 272 N. Y. 55; People ex rel. Wood v. Draper, 15 N. Y. 532; People ex rel. Bolton v. Albertson, 55 N. Y. 50.)

      Nathaniel L. Goldstein, Attorney-General, in person (Wendell P. Brown and Ruth Kessler Toch of counsel), for intervenerrespondent.
    I. The motions of the Attorney-General addressed to the pleadings should have been granted. (Niagara Falls Power Co. v. White, 292 N. Y. 472; Bull v. Stichman, 273 App. Div. 311, 298 N. Y. 516; Incorporated Vil. of Island Park v. Island Park-Long Beach, Inc., 274 App. Div. 930; County of Albany v. Hooker, 204 N. Y. 1; Pauchogue Land Corp. v. Long Island State Park Comm., 243 N. Y. 15; Breen v. Mortgage Comm. of State of N. Y., 285 N. Y. 425; Town of Ohio v. People, 264 App. Div. 220; Federation of Labor v. McAdory, 325 U. S. 450; People v. Morris, 13 Wend. 325; City of New York v. Village of Lawrence, 250 N. Y. 429; Matter of Cash v. Bates, 301 N. Y. 258; Matter of Moss, 277 App. Div. 289.) II. It will be only by a voluntary act upon the part of the city if the Transit Authority statute becomes effective and an agreement is made thereunder. The act imposes or compels nothing. (New York Steam Corp. v. City of New York, 268 N. Y. 137; Kittinger v. Buffalo Traction Co., 160 N. Y. 377; People ex rel. New York Elec. Lines Co. v. Squire, 107 N. Y. 593; Matter of New York Elevated R. R. Co., 70 N. Y. 327; Matter of Church, 92 N. Y. 1; People v. Dunn, 157 N. Y. 528.) III. The laws creating the Transit Authority and the fiscal laws are all in the field of State concern wherein the State Legislature has plenary power. (Oswego & Syracuse R. R. Co. v. State of New York, 226 N. Y. 351; Adler v. Deegan, 251 N. Y. 467; City of New York v. Village of Lawrence, 250 N. Y. 429; Robertson v. Zimmermann, 268 N. Y. 52; Kelly-Sullivan, Inc., v. Moss, 174 Misc. 1098, 260 App. Div. 921; Matter of La Guardia v. Smith, 288 N. Y. 1; Matter of Ricker v. Village of Hempstead, 290 N. Y. 1; People ex rel. Simon v. Bradley, 207 N. Y. 592; Matter of McAneny v. Board of Estimate of City of N. Y., 232 N. Y. 377; Admiral Realty Co. v. City of New York, 206 N. Y. 110.) IV. The method

      of appointment of members of the Transit Authority provided in the act is valid under the State Constitution. (People ex rel. Simon v. Bradley, 207 N. Y. 592; People ex rel. Metropolitan St. Ry. Co. v. State Bd. of Tax Comrs., 174 N. Y. 417; Matter of Morgan v. Furey, 186 N. Y. 202; Hequembourg v. City of Dunkirk, 49 Hun 550; State Bd. of Pharmacy v. Bellinger, 138 App. Div. 12; Matter of Stoughton v. Cohen, 281 N. Y. 343; Matter of Wendell v. Lavin, 246 N. Y. 115; Ely v. Holton, 15 N. Y. 595; Matter of Bronx Parkway Comm. v. Hylan, 119 Misc. 785, 206 App. Div. 688, 236 N. Y. 593.) V. The provision of the transit law requiring the city to continue to pay the capital costs on the transit lines does not violate article VIII or section 5 of article X of the Constitution. It does not require the city to give or loan its credit (art. VIII, § 1) nor to levy taxes or assessments upon real estate (art. VIII, § 3). No provision of the law involves the city’s debt limit. (Union Free School Dist. No. 3 v. Town of Rye, 280 N. Y. 469; People ex rel. Board of Comrs. of Washington Park v. Banks, 67 N. Y. 568; Bogart v. County of Westchester, 270 App. Div. 274, 296 N. Y. 701; Sun Print. & Pub. Assn. v. Mayor of City of N. Y., 152 N. Y. 257; Matter of Bronx Parkway Comm. v. Hylan, 119 Misc. 785, 206 App. Div. 688, 236 N. Y. 593; Matter of Tobin v. La Guardia, 290 N. Y. 119; Brooklyn Public Lib. v. City of New York, 250 N. Y. 495; County of Oneida v. City of Utica, 260 App. Div. 363, 285 N. Y. 788; Adler v. Deegan, 251 N. Y. 467.) VI. There is no delegation of taxing power. (Matter of Evans v. Berry, 262 N. Y. 61.) VII. Section 20 of article III can hav.e no bearing whatsoever; the transit law does not appropriate State moneys or property. (Board of Supervisors of Co. of Seneca v. Allen, 99 N. Y. 532; People ex rel. Eisman v. Ronner, 185 N. Y. 285; People ex rel. Einsfeld v. Murray, 149 N. Y. 367; Gaynor v. Village of Port Chester, 230 N. Y. 210; Buchanan v. Town of Salina, 270 App. Div. 207.) VIII. Section 17 of article III cannot possibly be violated; the transit law requires the city’s consent, by the agreement with it, to turn the lines over for operation. IX. As a municipality the city, as against the State, cannot sustain a charge of a deprivation of property without due process of law. (Robertson v. Zimmermann, 268 N. Y. 52.)
   Per Curiam.

This is a taxpayer’s action to enjoin the City of New York from entering into any kind of agreement with the New York City Transit Authority pursuant to chapters 200-208 of the Laws of 1953, and for a declaratory judgment determining that no transaction which those statutes purport to authorize can be executed due to their alleged unconstitutionality. The action was begun before any lease or other form of agreement had been made between the city and the Transit Authority respecting the subways; indeed, before the members of the Authority had been appointed.

The statutes in question are permissive only, in a field in which the State is concerned. Under these circumstances, and assuming that any transfer will not be by absolute conveyance, but by a lease of limited term with reversion to the city, we cannot say that the legislation is on its face unconstitutional. Whether it would be constitutional without those concomitants need not now be decided. Arguments addressed to policy are not within our province. Whether the statutes will be constitutionally applied, or whether other constitutional questions, not now foreseeable, will arise, we cannot know in advance. Such problems, if any, must be dealt with when presented.

The judgment should be modified in accordance with this opinion and, as so modified, affirmed, without costs.

Dye, J.

(dissenting). I agree that a justiciable controversy exists, which has not been rendered moot, by the execution of the lease between the city and the Transit Authority and that we may, accordingly, deal with the problem on its merits. A majority of this court is about to decide that the Transit Authority legislation (L. 1953, ohs. 200-208) on its face ” does not appear to be unconstitutional.” With this I cannot agree.

The People, as every one knows, have vested the legislative power in the Senate and Assembly (N. Y. Const., art. Ill, § 1). Nonetheless under the home rule provisions the Legislature is prohibited from enacting any laws in relation to the ‘ ‘ property, affairs or government ” of any city except when requested by the city affected and then only upon the concurrent action of two-thirds of the members of each house of the legislature ’ ’ (N. Y. Const., art. IX, § 11).

Here, concededly, there was no compliance with this salutary condition precedent. The laws were passed without any request by the city and without a two-thirds vote of both houses of the Legislature. This fatal omission may not he excused for the Constitution in so many words requires it — nor may it be justified on any theory of an overriding State concern.

The statutes now under consideration, on their face, have reference only to New York City and, dealing as they do with the city-owned transit system, must meet the test of the Constitution if validity is to be accorded. Never before has the State intervened to require a city to turn over to an appointed authority the control, operation and management of a vast proprietary interest such as is involved here. Regulation of utilities, including transportation within the province of the Public Service Commission or the Rapid Transit Commission, is something quite different from the complete assumption and control authorized by the Transit Authority laws.

It is no answer to our problem to say that the Transit Authority Act authorizes but does not compel the city to turn over its transit facilities by “ deed, lease, license or other arrangement, provided the term thereof shall not be less than ten years ” (L. 1953, ohs. 200-201). To he sure the language used connotes permission, but the permission is so intertwined with the fiscal aspects of the tax laws enacted as a part thereof (ohs. 202-208) as to make any choice wholly illusory. It may not he denied that if the city is to have the benefit of the tax laws, it must divest itself of the control of its transit system or, to state it simply, the city must either choose to comply with the Transit Authority provisions or else forfeit the additional taxes — a choice of a sort but nonetheless, for all practical purposes, without an alternative. Even though the laws he treated as permissive, we cannot escape the conclusion that they nonetheless d";-1 solely with the 11 property, affairs or government ” oí A-City of New York.

The existing home rule provisions of the Constituí ica adopted by the People, after many rears of struggle for local self-government are, as wo have heretofore .-.tided, intended to vest in the cities of the State increased cod roi of iheir own “ property, affairs and govei rmivui (Malta- of II oil a ml v. Bankson, 290 N. Y. 267, 270) and “ to extend the field in which a city might legislate and to exclude the Legislature from that field ” (New Rochelle Trust Co. v. White, 283 N. Y. 223, 230). On the threshold of its being, the Transit Authority legislation was not given the benefit of legislative compliance with the antecedent requirements of the home rule provisions without which its validity may not be approved. Because we deem such lack to be fatal, other aspects contravening the State Constitution need not now be discussed.

The presumption attending the constitutionality of legislative enactments is not being overlooked. By the same token, we may not disregard the threat to constitutional government that lurks in a piecemeal whittling away of constitutional mandates. To accord these statutes validity because the act does not appear to be “ on its face unconstitutional ” is to create a pattern for future guidance the effect of which will eventually, if it has not already done so, vitiate constitutional home rule. The power to withhold or to grant the right to tax on condition may indeed become a formidable weapon of unlimited possibilities.

The judgment appealed from should be reversed and a judgment entered granting the relief demanded in the complaint.

Lewis, Ch. J., Conway, Desmond, Fuld, Froessel and Van Voorhis, JJ., concur in Per Curiam opinion; Dye, J., dissents in opinion.

Judgment accordingly.


author: Per Curiam.

text:
    In the Matter of the Probate of the Will of Jean Townsend, Deceased. Philip L. Zenner et al., Appellants; Otto Townsend et al., Respondents.
    Argued April 23, 1953;
    decided June 5, 1953.

      William C. Martin and Philip L. Zenner, in person, for Philip L. Zenner, appellant.
    I. As a matter of law, the court should have dismissed the objections and admitted the will to probate. (Matter of Martin, 151 Misc. 94, 243 App. Div. 513; Matter of Hesdra, 119 N. Y. 615; Matter of Roge v. Valentine, 280 N. Y. 268; Matter of Williams, 141 N. Y. 572; Matter of Bitzer, 124 Misc. 432; Matter of Hoffman, 86 Misc. 365; Matter of Smart, 84 Misc. 336; Matter of Taylor, 10 Abb. Prac. [N. S.] 300.) II. The lower court improperly admitted into evidence testimony which was irrelevant and prejudicial. (Waterman v. Whitney, 11 N. Y. 157; Marx v. McGlynn, 88 N. Y. 357; Smith v. Keller, 205 N. Y. 39; Matter of Putnam, 257 N. Y. 140; Gill v. Montgomery Ward & Co., 198 Misc. 645.) III. The lower court should have dismissed the objection as to fraud and directed the jury to disregard all testimony admitted as to fraud before submitting the case to the jury. IV. It was error for the lower court to deny proponent’s motion for a new trial on the ground of newly discovered evidence. V. Due to a trial stenographer’s error or inability, certain material testimony was withheld from the jury, which factor was prejudicial to proponent’s trial. (Metzger v. Cushman’s Sons, 243 N. Y. 118; Heibeck v. Hess, 228 App. Div. 194; Burd v. Bleischer, 208 App. Div. 499; Hartford Accident & Ind. Co. v. Buchanan, 200 App. Div. 235.) VI. The court improperly permitted contestants’ attorneys in their summations to make inflammatory personal remarks concerning proponent and statements which were not in accordance with the evidence; all of which prevented proponent from receiving a fair trial. (Cattano v. Metropolitan St. Ry. Co., 173 N. Y. 565; Leonard v. Home Owners’ Loan Corp., 270 App. Div. 363, 785; Benoit v. New York Central & H. R. R. R. Co., 94 App. Div. 24; Cherry Cr. Nat. Bank v. Fidelity & Cas. Co., 207 App. Div. 787; Graham v. Graham, 142 App. Div. 131; National Supply Co. v. Jebb, 142 App. Div. 256; Loughlin v. Brassil, 187 N. Y. 128; Simpson v. Foundation Co., 201 N. Y. 479; Dimon v. New York Central & H. R. R. R. Co., 173 N. Y. 356; Williams v. Brooklyn Elevated R. R. Co., 126 N. Y. 96.) VII. Interests of justice require a reversal and admission of the will to probate or a new trial. (Matter of Kindberg, 207 N. Y. 220; Marden v. Dorthy, 160 N. Y. 39.) VIII. There is no credible evidence to refute the testimony of the three witnesses to the will, the signature on the will, the acknowledged signature on various deeds and a check, and the handwriting expert.

      Victor Levine, Norman M. Pinsky and Nicholas J. Changose for Elmer R. Cornish and another, appellants.
    I. There is no substantial evidence that the execution of the will was procured by fraud. (Matter of Matthis, 271 App. Div. 1051; Matter of Roge v. Valentine, 280 N. Y. 268; Matter of Martin, 151 Misc. 94, 245 App. Div. 513; Marden v. Dorthy, 160 N. Y. 39.) II. There is no substantial evidence that decedent did not sign the will. (Matter of Burnham, 201 App. Div. 621, 234 N. Y. 475; Matter of Horton, 272 App. Div. 646, 297 N. Y. 891; Matter of Hesdra, 119 N. Y. 615; Matter of Kindberg, 207 N. Y. 220; Matter of Bennett, 238 N. Y. 583.)

      John J. Mahon for Otto Townsend and others, respondents.
    There was no error in the submission of the ease to the jury, and the jury’s verdict is amply sustained by the evidence. (Matter of Kindberg, 207 N. Y. 220; Matthews v. Hill, 165 App. Div. 672; Hammond v. Varian, 54 N. Y. 398; Hynes v. McDermott, 82 N. Y. 42; Matter of Burnham, 201 App. Div. 621, 234 N. Y. 475; Matter of Martin, 151 Misc. 94, 243 App. Div. 513.)

      Charles P. Ben, special guardian for Marvin O. Barrett, Jr., and another, infants, respondents.
    I. There is abundant evidence from which it can be found that the paper writing purporting to be the last will and testament of decedent was not freely or voluntarily made or executed by her and, if it was in fact subscribed by her, such subscription was obtained by fraud. II. There is sufficient evidence from which it can be found that the signature on the disputed paper writing was not genuine or valid. (Marden v. Dorthy, 160 N. Y. 39; Punsky v. City of New York, 129 App. Div. 558; Elwood v. Western Union Tel. Co., 45 N. Y. 549; Matter of Kindberg, 207 N. Y. 220; Hammond v. Varian, 54 N. Y. 398; Matthews v. Hill, 165 App. Div. 672; Hynes v. McDermott, 82 N. Y. 42.)
   Per Curiam.

We assume, without deciding, that there is in this record a bare question of fact as to whether or not Mrs. Townsend signed this will. On the one hand, there is the testimony of the three attesting witnesses, and of a handwriting expert of thirty years’ experience, supported by the fact that the will leaves testatrix’ estate to her closest Mn, and that its provisions are not unnatural, and are substantially the same as those she had discussed previously with an attorney. On the other hand, there is testimony by two laymen that they were familiar with the handwriting of Mrs. Townsend and that, in their opinion, the signature on the propounded paper was not hers.

The jury tried the issues under a framed order, entered following the filing of contestants’ objections. That order contained six questions relating to (1) execution; (2) publication; (3) whether there were two witnesses; (4) mental competency; (5) freedom from restraint; and (6) fraud, deceit or undue influence. Counsel for both contestants called them “ the usual shotgun ” objections. During the trial, contestants’ attorneys conceded that there was no real claim of unsoundness of mind, undue influence, or duress, and that “ The objections are addressed solely to the execution of the will”, to which the court responded, Very well.” Thus, all other framed issues were out of the case. Nevertheless, the court thereafter permitted, on the stated ground that it had a bearing on the fraud question, testimony by two of contestants’ witnesses that they would not believe another witness under oath. Nor did the court submit to the jury the issue with respect to execution as framed, but substituted an issue as to whether the will was “ duly executed ”, without any instructions as to the meaning of that technical phrase.

Not only does this record contain insufficient proof of fraud, but, by concession, fraud was out of the case. Nevertheless, counsel for the parties tell us that both sides summed up to the jury on a supposed issue of fraud, and we do not know whether the jury’s finding was that Mrs. Townsend was defrauded into signing the will or that she did not sign it at all. A new trial is necessary.

The order of the Appellate Division and the decree of the Surrogate’s Court should be reversed and a new trial granted, with costs to abide the event.

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

Order reversed, etc.