text:
    Patrick Ryan, Respondent, v. Progressive Grocery Stores, Inc., Appellant.

      (Argued January 9, 1931;
    decided February 10, 1931.)

      Walter L. Glenney for appellant.
    The loaf of bread, being specifically asked for as Ward’s bread, and contained in its original sealed wrapper, was not warranted by the defendant other than as being Ward’s bread. (Rinaldi v. Mohican Co., 225 N. Y. 70; Canavan v. City of Mechanicville, 229 N. Y. 473; Aronowitz v. Woolworth Co., 134 Misc. Rep. 272; Julian v. Laubenberger, 16 Misc. Rep. 646; Barrington v. Hotel Astor, 184 App. Div. 317; Bigelow v. Maine Central R. R. Co., 110 Me. 105; Trafton v. Davis, 110 Me. 318.)

      William L. Rumsey for respondent.
    Retailers are liable on an implied warranty on the sale of food although goods are in the original package bought from the manufacturer. (Rinaldi v. Mohican Co., 225 N. Y. 70; Race v. Krum, 222 N. Y. 410; Jackson v. Watson, [1909] 2 K. B. 193; Chapman v. Ruggenkamp, 182 Ill. App. 117; Sloan v. Woolworth Co., 193 Ill. App. 620; Farrell v. Manhattan Mkt., 198 Mass. 271; Ward v. Great Atlantic & P. Tea Co., 231 Mass. 90; Lieberman v. Sheffield Farms, 117 Misc. Rep. 531; Vaccano v. Prudential Cond. Milk Co., 133 Misc. Rep. 556; Meyer v. Kirschbaum, 133 Misc. Rep. 330; Cohen v. Dugan Bros., 132 Misc. Rep. 896; Foley v. Liggett & Myers Tobacco Co., 136 Misc. Rep. 468; Pers. Prop. Law, § 96, subd. 2; Williston on Sales, § 235.)
   Cardozo, Ch. J.

The action is for breach of warranty.

Plaintiff through his wife, who acted as his agent, bought a loaf of bread at the defendant’s grocery. The loaf had concealed in it a pin, which hurt the plaintiff’s mouth. There has been a judgment for the damage.

Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller’s skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose” (Pers. Prop. Law; Cons. Laws, ch. 41, § 96, subd. 1).

The plaintiff did not rely on the seller’s skill or judgment. His wife stated to the salesman that she wished to have a loaf of Ward’s bread.” The salesman gave her what she asked for, wrapped in a sealed package as it had come from the Ward Baking Company, the baker. She made her own choice, and used her own judgment.

The leading case in this State as to the meaning of the statute quoted is Rinaldi v. Mohican Co. (225 N. Y. 70). The sale was one of pork, which turned out to be diseased. We held that reliance on the seller’s skill and judgment might be gathered from the purchase as a reasonable inference. We left the question open whether a like inference would be drawn upon a sale in the original package as bought by the vendor from others.

Since Rinaldi v. Mohican Co., the scope of the implied warranty upon a sale of food in sealed containers has been discussed in other courts. There are decisions to the effect that even in such circumstances an implied warranty ensues if the seller’s judgment has been trusted for the selection of the brand or make (Ward v. Great Atlantic & Pacific Tea Co., 231 Mass. 90; Ireland v. Liggett Co., 243 Mass. 243; Lieberman v. Sheffield Farms, (App. Term) 117 Misc. Rep. 531; Williston, Sales, vol. 1, §§ 242, 242-a). We assume for present purposes that so the rule should be declared. Invariably, however, the limitation has been added that there can be no inference of reliance where the buyer selects the brand and gets what he selects. The customer will be taken to confide in “the skill and experience of the seller in determining the kind of canned goods which he will purchase, unless he demands goods of a definite brand or trade name” (Ward v. Great Atlantic & Pacific Tea Co., supra). The statute is then explicit. In the case of * * * a sale of a specified article under its patent or other trade name, there is no implied warranty as to its fitness for any particular purpose” (Pers. Prop. Law, § 96, subd. 4). There is no room for a holding that choice shall be imputed to the seller when the transaction shows upon its face that the judgment of the seller was superseded, and choice determined by the buyer.

The award of damages, if it is to be upheld, must rest upon some other basis than the imputation of reliance.

“Where the goods are bought by description from a seller who deals in goods of that description (whether he be the grower or manufacturer or not),there is an implied warranty that the goods shall be of merchantable quality” (Pers. Prop. Law, § 96, subd. 2).

The facts excluding a warranty under subdivision 1, we are to inquire whether there is a warranty under subdivision 2.

Under the common-law rule long in force in this State, the warranty of merchantable quality was limited to sales by a manufacturer or grower (Hargous v. Stone, 5 N. Y. 73; Hoe v. Sanborn, 21 N. Y. 552; Bartlett v. Hoppock, 34 N. Y. 118; Carleton v. Lombard, Ayres Co., 149 N. Y. 137; Bierman v. City Mills Co., 151 N. Y. 482; Howard Iron Works v. Buffalo Elevating Co., 113 App. Div. 562; 188 N. Y. 619; Williston, Sales, vol. 1, §§ 232, 233). All this has been changed since the coming of the Sales Law (Williston, supra). Dealer as well as manufacturer or grower affirms as to anything he sells, if purchased by description, that it is of merchantable quality. The burden may be heavy. It is one of the hazards of the business.

Most of the sales of defective food stuffs have been dealt with by the courts as if subdivision 1 of the section defining warranties gave the exclusive rule to be applied. In some instances the goods were not purchased by description. In others, the courts may have been unmindful of the fact that the warranty of merchantable quality is no longer confined to manufacturers or growers. Innovations of this order are slow to make their way. Gradually, however, as the statute has become better known, the bearing of subdivision 2 upon sales of food in sealed containers has been perceived by court and counsel. The nature of the transaction must determine in each instance the rule to be applied. There are times when a warranty of fitness has no relation to a warranty of merchantable quality. This is so, for example, when machinery competently wrought is still inadequate for the use to which the buyer has given notice that it is likely to be applied. There are times on the other hand when the warranties co-exist, in which event a recovery may be founded upon either. Fitness for a particular purpose may be merely the equivalent of merchantability” (Williston, Sales, vol. 1, § 235, and cases there cited).

A dual warranty is thus possible for food stuffs as for anything else. Both in this court and in others the possibility is recognized. Aron & Co. v. Sills (240 N. Y. 588) was an action for breach of warranty by retailer against wholesaler upon a sale of condensed milk. At the Appellate Division, the warranty was treated as governed by subdivision 1. When the case came to us, we put that subdivision aside, holding that there was no necessity of deciding whether there was sufficient evidence of reliance, and placed our affirmance of the judgment upon subdivision 2. Whether under the circumstances of this particular case any inference is possible that the buyer relied upon the seller’s skill or judgment we need not decide. For even were the trial court in error as to the existence of an implied warranty that the goods in question were fit for human consumption, bought as they were by description from one who dealt in them, there was a warranty that they were of merchantable quality. If condensed milk is unfit for consumption, clearly it does not comply with this warranty” (240 N. Y. 588).

A like rule has been declared in Massachusetts and in the Federal courts, at all events in controversies between the dealer and the maker (Inter-state Grocer Co. v. Bentley Co., 214 Mass. 227 [sale of sardines]; Parker v. Shaghalian & Co., 244 Mass. 19 [sale of candy]; McNeil & Higgins Co. v. Czarnikow-Rienda Co., 274 Fed. Rep. 397 [sale of sugar]).

Where the buyer specifies what he wants, he can, of course, not rely upon any superior knowledge of the seller that it will serve its purposes. If he did, he must give the seller some latitude of selection. But he may still insist that it must be of a quality which will pass in the market under that description, and he may rightly rely upon the seller to secure him such a quality” (L. Hand, J., in McNeil & Higgins Co. v. Czarnikow-Rienda Co., supra).

The result has not been different in cases where the consumer rather than another dealer has been the victim of the wrong.

Thus, in Wren v. Holt ([1903] 1 K. B. 610) the plaintiff was made ill through the presence of arsenic in beer, which he had bought from the defendant, who was not the manufacturer. In buying the beer, he asked for the product of a particular firm of brewers. A recovery was upheld for breach of an implied warranty of merchantable quality as upon a purchase by description, and this though there had been no reliance on the skill and judgment of the seller. Again, in Morelli v. Fitch ([1928] 2 K. B. 636) there was a recovery for breach of a like warranty upon a sale of a bottle of ginger ale by the keeper of a public house. The customer had asked for ale of a particular make, trusting to his own judgment rather than to the experience of the seller. Even so, the warranty of merchantable quality was held to be a sufficient basis for the recovery of damages.

Loaves baked with pins in them are not of merchantable quality. The dealer is thus charged with liability though the buyer selects the brand, just as he would be hable for concealed defects upon a sale of wool or silk. Assume that the sale had been made by a manufacturer or a grower, and that there had been a request for a special brand. There would then be no warranty of fitness for any “particular” purpose. Would any one dispute, however, that a defect of this order, destroying value altogether, would be covered by the warranty of merchantable quality? The question carries its own answer. The rule is different, to be sure, upon a sale of specific goods, not purchased by description (Hight v. Bacon, 126 Mass. 10). It may even be different, though the purchase is by description, if the goods are subject to inspection and the defects are of such a nature that inspection will reveal them (Williston, Sales, § 234; Pers. Prop. Law, § 96, subd. 3). Here the sale was by description, the defect was wholly latent, and inspection was impossible. In such circumstances, the law casts the burden on the seller, who may vouch in the manufacturer, if the latter was to blame. The loss in its final incidence will be borne where it is placed by the initial wrong.

The argument is made that the only damage to be recovered for the breach of the warranty of merchantable quality is the price of the bread, the difference between the value of a good loaf and a bad one. The rule is not so stubborn. Undoubtedly, the difference in value supplies the ordinary measure (Pers. Prop. Law, § 150, subds. 6 and 7; § 151). The measure is more liberal where special circumstances are present with proof of special damage (§ 150, subd. 7; § 151). Here the dealer had notice from the nature of the transaction that the bread was to be eaten. Knowledge that it was to be eaten was knowledge that the damage would be greater than the price (Williston, Sales, vol. 2, § § 614, 614-a; Swain v. Schieffelin, 134 N. Y. 471; Dushane v. Benedict, 120 U. S. 630; Gearing v. Berkson, 223 Mass. 257; French v. Vining, 102 Mass. 132; Birdsinger v. McCormick Harvesting Machine Co., 183 N. Y. 487, 492; American Law Institute, Restatement of Law of Contracts, § 321). For damages thus foreseen, the buyer has his remedy, whether the warranty is one of fitness or of merchantable quality (Williston, supra; Wren v. Holt, supra; Morelli v. Fitch, supra; Swain v. Schieffelin, supra).

There is no variance between proof and pleading sufficient to destroy the judgment.

The facts proved without objection make out a breach of warranty under subdivision 2. In such circumstances the plaintiff ought not to lose the benefit of his judgment because he fancied that he had brought himself within subdivision 1. “The seller may not complain if the jury is told that a warranty exists more limited in its scope than in truth is the fact” (Aron & Co. v. Sills, supra; cf. Abounader v. Strohmeyer & Arpe Co., 243 N. Y. 458). The facts being conceded, the court applies the law.

The conclusion thus reached makes it unnecessary to consider whether there has been a breach of the Agriculture and Markets Law sustaining a recovery (Agriculture & Markets Law; Cons. Laws, ch. 69, §§ 198, 199; Pine Grove Poultry Farm v. Newtown B.-P. Mfg. Co., 248 N. Y. 293; Abounader v. Strohmeyer & Arpe Co., supra). The judgment should be affirmed with costs.

Pound, Crane, Lehman, O’Brien and Hubbs, JJ., concur; Kellogg, J., not sitting.

Judgment affirmed.


source: Caselaw Access Project

author: Crane, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Wagner S. Kelly, Appellant.
    (Argued January 12, 1931;
    decided February 10, 1931.)

      David M. Neuberger for appellant.
    The exclusion from residence districts of professional men engaged in professional pursuits in their own homes was never intended by the Building Zone Resolution. (Rees v. Teachers’ Retirement Bd., 247 N. Y. 372.) Neither vocal instruction nor musical coaching is the carrying on of a trade or industry or the conduct of a business. (United States v. Laws, 163 U. S. 258; People v. Klaw, 55 Misc. Rep. 72; Matter of Pinkey, 47 Kan. 89; Price v. County of Erie, 221 N. Y. 260; Village of Stamford v. Fisher, 140 N. Y. 187; Welch v. City of Niagara Falls, 210 App. Div. 170; City of Rochester v. Rochester Gas & Electric Corp., 233 N. Y. 39; Burks v. Bosso, 180 N. Y. 341; People v. Nelson, 153 N. Y. 94; Matter of Washington Street A. & P. R. R. Co., 115 N. Y. 442; Hayden v. Pierce, 144 N. Y. 512; People v. Purdy, 154 N. Y. 439; Archer v. Equitable Life Ins. Co., 218 N. Y. 18.)

      Kenneth McEwen for The American Academy of Teachers of Singing et al., amici cwrice.

    The information should have been dismissed upon grounds protecting the normal practice of the arts and professions. (People v. Transit Development Co., 131 App. Div. 174; People v. Meola, 193 App. Div. 487; Bailey v. School District, 204 App. Div. 125.)

      Frederick E. Klein for Musicians’ Club, Inc., et al., amici cwrice.

    Coaching professional singers in one’s dwelling without impairing the public health, welfare, convenience and common good does not constitute a crime under the Zoning Law. (City of Buffalo v.
      Chadeayne, 134 N. Y. 163; State of New York v. Foster, 148 App. Div. 258; 205 N. Y. 593; Metropolitan Board of Health v. Heister, 37 N. Y. 661; Cronin v. People, 82 N. Y. 318; Lincoln Trust Co. v. Williams Building Corp., 229 N. Y. 313; People v. Hawkins, 157 N. Y. 1; Tonelle v. Hayes, 118 Misc. Rep. 339; Burke v. Bosso, 180 N. Y. 341; People ex rel. Ortenberg v. Bales, 224 App. Div. 87; 250 N. Y. 598; Booth v. Knipe, 178 App. Div. 423; People v. Sturgis, 121 App. Div. 407; People ex rel. Cohen v. Butler, 125 App. Div. 384.)

      Allen Wardwell, John M. Perry, Hersey Egginton and Franklin Benkard for Juilliard School of Music, amicus curice.

    The framers of the Building Zone Resolution did not intend to include the teaching of music among the uses prohibited in residence districts. (Rees v. Teachers’ Retirement Bd., 247 N. Y. 372; Bohnsack v. McDonald, 26 Misc. Rep. 493; Hickey v. Taaffe, 99 N. Y. 204; Iselin v. Flynn 90 Misc. Rep. 164; Welch v. City of Niagara Falls, 210 App. Div. 170; People ex rel. Ortenberg v. Bales, 224 App. Div. 87; 250 N. Y. 598.)

      Arthur J. W. Hilly, Corporation Counsel (J. Joseph Lilly and Willard S. Allen of counsel), for respondent.
    The teaching of music and the coaching of vocalists, after the manner of the defendant, was one of the things intended by the Building Zone Resolution to be excluded from residental districts. (Barnett v. Vaughan Institute, 119 N. Y. Supp. 45; 134 App. Div. 921; 197 N. Y. 541; United States v. Laws, 163 U. S. 258; O’Reilly v. Erlanger, 108 App. Div. 318; People v. Rubenfeld, 254 N. Y. 245; Kemp v. Sober, 1 Sim. [N. S.] 517; United States v. Commissioner of Immigration, 298 Fed. Rep. 449; United States v. Flynn, 16 Fed. Rep. [2d] 1006, 28 Fed. Rep. [2d] 1002; United States v. Thompson, 41 Fed. Rep. 28; Herbert v. Shanley Co., 242 U. S. 591; Star Opera Co. v. Hylan, 109 Misc. Rep. 132.) The use by the defendant of his premises for other than dwelling purposes is in violation of sections 2 and 3 of article II of the Building Zone Resolution. (People v. Meola, 193 App. Div. 487; Bailey v. School District No. 5, 204 App. Div. 125; People v. Kelly, 227 App. Div. 715.)
   Crane, J.

The defendant is the owner of 320 West Seventy-eighth street in Manhattan, New York city, a private dwelling house of four stories. He has been convicted in the Court of Special Sessions (Municipal Term) of violating the provisions of sections 2 and 3 of article II of the Building Zone Resolution adopted by the Board of Estimate and Apportionment. His house, located in a residence district, was used for music studios contrary, as it has been held, to this zoning law.

Kelly is a professional singer, giving singing lessons or, as he describes it, giving suggestions or ideas to performers as to the best way to put their turn over on the stage.” He is an artist, carrying on his profession in his home. Can this be done in a residential district?

The police power of the State regulating or restricting the use of private property finds its expression and limitation in the charter and the zoning resolutions adopted thereunder.

Chapter 470 of the Laws of 1914, which added sections 242-a and 242-b to the Greater New York Charter, enacts:

§ 242-b. The board of estimate and apportionment may regulate and restrict the location of trades and industries and the location of buildings designed for specified uses, and may divide the city into districts of such number, shape and area as it may deem best suited to carry out the purposes of this section. For each such district regulations may be imposed designating the trades and industries that shall be excluded or subjected to special regulations and designating the uses for which buildings may not be erected or altered. Such regulations shall be designed to promote the public health, safety and general welfare. * * * ”

Only “trades and industries” are subject to exclusion or special regulations.

Trade ” as here used has the meaning of mechanical employment or commercial or business enterprises, while “ industrieSj” is that branch of trade employing capital and labor. These definitions may not be exact or exclusive but signify that the idea conveyed by these words is some business or money making occupation as distinguished from the professions, the arts or agriculture.

And so it was understood by the Board of Estimate and Apportionment which framed the zoning resolutions, keeping well within the empowering law.

Section 2 divides the city into four districts for the purpose of regulating and restricting the location of trades and industries.” ■

According to section 3, Residence Districts ” do not include, but exclude trades and industries.” Within this district buildings must be used exclusively for dwellings, clubs, churches, schools, philanthropic institutions, hospitals, railroad stations, farming and other similar uses, indicating that the line is drawn solely against business or, in other words, trade or industries.

The usual accessories to a dwelling house which are permitted by the regulation shall not include a business.”

The teaching of singing or of music is a profession and is not a business, trade or industry as these words are used in the law, zoning regulation or common parlance.

The arguments of counsel apparently concede that the exclusions would not reach out to the doctor, the dentist, or the lawyer consulting clients at home; but no distinction can be drawn for the purposes here involved between these professions and those of the musician, artist or teacher.

If a building may be used exclusively for a school which may, and generally does, include the teaching of music, and art and in this day dramatics, we cannot suppose that the regulations were intended to exclude the teaching of these arts in private houses. A part is not greater, nor more objectionable than the whole.

These conclusions make it unnecessary to consider the effect which professional activities may have upon the health, safety or general welfare of the public, and the constitutionality of a law which attempted to segregate them. (Nectow v. City of Cambridge, 277 U. S. 183.) Neither do we say that any profession may not be so conducted as to deteriorate or extend into a business, or industry. We will deal with such cases when they arise.

The judgment of the Appellate Division and that of the trial court should be reversed and the information dismissed.

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

Judgments reversed, etc.


text:
    Martha C. Callaghan et al., Appellants, v. Adelia M. Corbin, Respondent.

      (Argued January 14, 1931;
    decided February 10, 1931.)

      George S. Mittendorf, Edward M. Cameron, Jr., and Margaret Smith for appellants.
    The agreement was simply a contract for work, labor and services. The question is simply one of contract law, and the appellants having performed the work, labor and services required by the agreement should be compensated therefor. (Sprague v. Webb, 168 App. Div. 292; Holman v. Johnson, 1 Cowp. 341.) The agreement was not contrary to public policy. (Veazey v. Allen, 173 N. Y. 359; Hazelton v. Sheckells, 202 U. S. 71; Mills v. Mills, 40 N. Y. 543; Marsell v. Maires, 203 App. Div. 646; Oscanyan v. Arms Co., 103 U. S. 261; Weil v. Neary, 278 U. S. 160; Tool Co. v. Norris, 2 Wall. 45; Atcheson v. Mallon, 43 N. Y. 147.) Public policy requires the enforcement of the contract involved in this action, and is not violated by it. (Minehan v. Hill, 144 App. Div. 854; Kemp v. Kemp, 36 Misc. Rep. 79; 12 C. J. 322; Adams v. Outhouse, 45 N. Y. 318; Diamond Match Co. v. Roeber, 106 N. Y. 473; Kloberg v. Teller, 103 Misc. Rep. 641; Steele v. Drummond, 275 U. S. 199.)

      John J. Crawford for respondent.
    Where the matter is one of common interest a party .to a compromise agreement cannot, by an undisclosed collateral arrangement, obtain any benefit beyond that secured to him by the agreement itself. (Bliss v. Matteson, 45 N. Y. 22; Adams v. Outhouse, 45 N. Y. 318; Russell v. Rogers, 10 Wend. 473; Frost v. Gage, 3 Allen, 560; Hanover Nat. Bank v. Blake, 142 N. Y. 404; Breck v. Cole, 4 Sandf. 79; Solinger v. Earle, 82 N. Y. 393; Almond v. Hamilton, 100 N. Y. 527.) The question is not whether any one was injured or deceived by the secret agreement, but whether agreements of this character have an evil tendency. (Oscanyan v. Arms Co., 103 U. S. 261; Veazey v. Allen, 173 N. Y. 359; Weil v. Neary, 278 U. S. 160; Hazelton v. Sheckells, 202 U. S. 71; Tool Co. v. Norris, 2 Wall. 45; Atcheson v. Mallon, 43 N. Y. 147; Marsell v. Maires, 203 App. Div. 646; Mills v. Mills, 40 N. Y. 543.)
   Crane, J.

Floyd S. Corbin died in January of 1924, leaving him surviving his wife, his mother, Mary V. Corbin, a brother, Homer Corbin, and three sisters, Mrs. Urban, Mrs. Callaghan and Mrs. Gregory. By a last will and testament he bequeathed to his wife his automobiles, jewelry, silverware, etc., and all the rest, residue and remainder of his estate he left in trust to his executors to pay the income thereof to his wife for and during her natural life, and upon her death to pay the principal of the said trust fund to the persons who shall at the time of the death of my said wife answer to the description of my next of kin as defined by the Statute of the State of New York and in the proportions fixed thereby.” Memorandum exhibits indicate that the estate left by the deceased was over $800,000. >

For some reason not made evident, the probate of the will was contested by the brother and sisters, and the widow sought to allay their objections by satisfying their wants. At that time the widow was approximately fifty-seven years of age, and the mother about seventy-five.

A compromise was effected wherein $140,000 was taken out of the corpus of the estate and divided between the widow on the one hand and the mother, brother and sisters on the other. The division resulted in giving $65,000 to the widow, the remaining $75,000 being divided among the contestants as follows: $30,000 to Adelia M. Corbin, the mother, $10,000 each to the three sisters and one brother, and $5,000 to the three infants, the children of the brother, Homer Corbin. Of course these children only had a contingent interest, dependent upon their father dying before the widow if the will were probated, and would receive nothing if the contestants were successful.

Upon application'made to the Surrogate under section 19 of the Decedent Estate Law (Cons. Laws, ch. 13; formerly section 24 of the Personal Property Law), the proposed compromise was approved and thereafter carried out. The balance of the estate over and above this $140,000 used in settlement was held in trust under the provisions of the will.

Apparently the widow, Mrs. Corbin, was not friendly with her brother-in-law, Homer, who lived in Chicago, and her sister-in-law, Mrs. Urban, who lived in Baltimore. She could not approach them as she was not on speaking terms with them.” She, therefore, requested Mrs. Callaghan and Mrs. Gregory to intercede for her and get them to withdraw their objections to the probate of the will by accepting the settlement or compromise. She promised these two ladies that for their services she would pay them $7,500, and thereupon she signed the following memorandum:

“ I, Adelia M. Corbin honestly and sacredly pledge myself to divide $7,500 Dollars between Ora and Martha as soon as I receive the amount from the estate.
" May Uth, 1925. ADELIA M. COBBINA ,

This action is brought to recover the money, as the plaintiffs performed the requisite services and procured their brother, Homer, and their sister, Mrs. Urban, to withdraw their objections to the probate and accept $10,000 each in settlement.

So far, the defendant has succeeded upon the plea that this contract or agreement was illegal as against public policy and good morals within the doctrine of such cases as Adams v. Outhouse (45 N. Y. 318); Russell v. Rogers (10 Wend. 473); Hanover Nat. Bank v. Blake (142 N. Y. 404), the idea being that it is illegal for one acting with others in a matter of common interest to secure to himself any profit or advantage over his associates by any secret or undisclosed agreement or understanding. We are unable to see the illegality in this contract.

Under the will offered for probate, the widow had a life_ interest, and the brother and sisters remainders, as next of kin, according to section 98 of the Decedent Estate Law as it was in 1924. The latter filed objections to the will. The fact that they all filed objections is a mere incident; they were not obliged to act together, and their interests were solely individual. There is no law which prevented the widow from giving any one of them a sum of money to withdraw his or her objection, and there is no law which required them to act as a class or with equality. One could have withdrawn his objections upon request, or voluntarily; another could have withdrawn his objections to the probate on the payment of money, and the rest could have continued the contest, or settled the suit themselves. There is no law which prevented the legatee from making such settlement as she pleased with any one or more of the contestants. (Schoonmaker v. Gray, 208 N. Y. 209.) It is conceded that there would be nothing illegal in paying Mrs. Callaghan and Mrs. Gregory the $7,500 promised if they were strangers to the estate, and not possible next of kin. The fact that they are and were such does not make the contract illegal between them and the promisor, solely because they might receive additional sums as compensation for services in procuring others to withdraw their objections to the probate.

Homer Corbin and Mrs. Urban have never raised any objection to the compromise, or claimed that it was illegal for: the plaintiffs to take this money; in .other words, they do not claim to have been deceived. What representations were made to them by the plaintiffs is not stated. If the plaintiffs in any way deceived or misrepresented the situation to Homer and Mrs. Urban it might be that the latter would have some claim upon the plaintiffs for their share of secret profits or for fraud. Ho-such claim is suggested and no such demands have ever been made, so far as the record discloses. We merely have the defendant making the promise, accepting the services, and now insisting upon the illegality of her promise, in order to reap a benefit.

A compromise among creditors rests upon the assumption of equality, and that all will be treated alike. Payment of the debts cannot be made in full, and the fund which does' exist must be distributed equally, if there is to be a settlement and a release. The implication of law is that the debtor will promise no larger proportion to one than to the other. The obligation is placed upon him not only by the rule of good faith, but also by section 61 of the Debtor and Creditor- Law (Cons. Laws, ch. 12) to see that the equality of treatment obtains. There is no such understanding, and no such implication in dealing with various claimants, heirs and next of kin to an estate. The debtor is under a duty, legal and moral, to pay his debts; he owes this duty alike to all his creditors. A legatee is under no duty to heirs or next of kin; he owes them nothing. A person may will and dispose of his property as he pleases, subject to the present limitations of the Decedent Estate Law. Many times dissatisfied heirs and next of kin file shallow objections in an attempt to set aside the will or squeeze out some money from the beneficiaries. There is no law which requires the persons interested in the will to deal with these disinherited relatives with equality.

Adams v. Outhouse (45 N. Y. 318) related to a promise made in consideration of acquiescing or participating in the concealment of estate assets — a clear fraud on the distributees.

The Decedent Estate Law, section 19, was enacted to permit compromises with adverse claimants subject to the approval of the Surrogate. (Fisher v. Fisher, 253 N. Y. 260.) Where the interest of infants, incompetents, nonresidents or absentees is involved or lessenéd by any secret agreement a different question might arise. No infants’ interest was affected by the compromise in this case. This is conceded. The infant children of Homer Corbin would have taken nothing whatever if the will had been set aside or probate refused. Their father was alive. By this compromise they received $5,000 which would not be, and will not be, increased by the nonpayment of the $7,500 involved in this litigation. The utmost claimed by the defendant is that this $7,500 might have gone proportionately to Homer and Mrs. Urban as well as to the plaintiffs. Homer and Mus. Urban, as before stated, have been perfectly satisfied with their settlement.

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

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

Judgments reversed, etc.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v. Jack Spickler, Appellant.
    (Argued January 8, 1931;
    decided February 10, 1931.)

      Max Turner for appellant.
    The verdict of the jury finding the defendant guilty of the slaying beyond a reasonable doubt is opposed to the weight of the evidence. (Code Crim. Pro. § 528; People v. Becker, 210 N. Y. 274; People v. Guadagnimo, 233 N. Y. 344; People v. Klvana, 241 N. Y. 481.)

      William F. X. Geoghan, District Attorney (Henry J. Walsh of counsel), for respondent.
    The defendant’s guilt was proved beyond a reasonable doubt. (People v. Seppi, 221 N. Y. 62; People v. Trybus, 219 N. Y. 18; People v. Seidenshner, 210 N. Y. 341; People v. Taylor, 138 N. Y. 398; People v. Ferraro, 161 N. Y. 365; People v. Sanducci, 195 N. Y. 361.)
   Per Curiam.

We think the judgment of conviction should be reversed on the ground that justice will be promoted by granting a new trial.

The identification of the defendant by witnesses who had seen the struggle from a distance in the hallway of an apartment house is a,t least doubtful enough to make it improper to execute the death penalty without every reasonable safeguard for the avoidance of mistake.

We think the case is conspicuously one where a view of the premises should be ordered to enable the jury to determine whether an identification in such conditions is one that ought to be accepted.

The judgment of conviction should be reversed and a new trial granted.

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

Judgment reversed, etc.


text:
    In the Matter of Joseph W. Heimsoth, an Attorney, Appellant. Association of the Bar of the City of New York, Respondent.
    (Argued January 6, 1931;
    decided February 10, 1931.)

      Arthur T. O’Leary for appellant.
    There is no misconduct in not having pleaded the husband’s interlocutory annulment judgment as a defense to the wife’s separation suit. (Matter of Crandell, 196 N. Y. 127; Grotsch v. Hassey, 133 Misc. Rep. 373; Bryon v. Bryon, 134 App. Div. 320; Burton v. Burton, 150 App. Div. 790; Thorne v. Thorne, 210 App. Div. 55; Murphy v. Murphy, 194 App. Div. 395; Ostro v. Ostro, 169 App. Div. 790; 235 N. Y. 390.)

      Chase Mellen and Einar Chrystie for respondent.
    The order should be affirmed. (Matter of Flannery, 212 N. Y. 610; Matter of Goodman, 199 N. Y. 143.)
   Per Curiam.

We hold that in the circumstances of this case the appellant was under an active duty to see to it that the pendency of the separation suit be brought to the notice of the court upon the inquest for default of an answer in the action for annulment.

The order should be affirmed. ■

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

Order affirmed.


text:
    In the Matter of the Claim of Stephen Werenjchik et al., Respondents, against Ulen Contracting Corporation et al., Appellants. The State Industrial Board, Respondent.
    (Submitted January 5, 1931;
    decided February 10, 1931.)
    (See 255 N. Y. 56.)
   Per Curiam.

The case on appeal, presented to this court by the appellant as comprising a true record of the proof and proceedings before the Industrial Board, contains a document wherein are given the precise ages of the children who are claimants. How the document became a part of the record does not appear. Whether it was offered in evidence by the claimants or the appéllant; whether it was received under objection or by consent; of these things there is no disclosure in the record. In presenting the record to this couit, the appellant has necessarily presented the document. On its face, it exhibits the proof necessary to sustain the award. We think that we were justified in accepting the document at its face value, and that explanations now made as to its origin, never having appeared in the record, have come too late.

The motion should be denied.


author: Cardozo, Ch. J.

text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the Second Russian Insurance Company. John F. Murphy, Appellant.
    (Argued January 5, 1931;
    decided February 10, 1931.)

      Hartwell Cabell and Blaine F. Sturgis for appellant.
    Claimant is entitled to interest from the due date of the claim. (Matter of People [Northern Ins. Co.], 229 App. Div. 639; Pach v. Gilbert, 124 N. Y. 612; Gillig v. Tread-well Co., 148 N. Y. 177; Matter of People [First Russian Ins. Co.], 253 N. Y. 365; Penoyar v. Kelsey, 150 N. Y. 77; Webb v. Bailey, 54 N. Y. 164; Lynch v. Crary, 52 N. Y. 181; Drake on Attachments, § 223; Murphy v. Second Russian Ins. Co., 240 N. Y. 554; Prager v. N. J. Fidelity & Plate Glass Ins. Co., 245 N. Y. 1; Van Rensselaer v. Jewett, 2 N. Y. 135; Dana v. Fiedler, 12 N. Y. 40; Miller v. Robertson, 266 U. S. 243.)

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for respondent.
    Claimant is entitled to interest only from the date of the issuance of the warrant of attachment. (Matter of People [First Russian Ins. Co.], 253 N. Y. 365; Matter of Stoddard [Norske Lloyd Ins. Co.], 242 N. Y. 148; 249 N. Y. 139.)
   Cardozo, Ch. J.

Appellant levied an attachment upon the surplus or reversionary interest of the Second Russian Insurance Company in assets deposited in this State as security for local debts.

The domestic business having been liquidated and the local debts discharged, the surplus in the possession of the liquidator must be paid to the attaching creditor, upon proof of his claim, to the extent of the attachment lien, j

The rule in that regard was settled by a recent decision (Matter of People [First Russian Ins. Co.], 253 N. Y. 365), and is not questioned by either party. The dispute is solely as to the interest.

The respondent takes the position that in the distribution of the surplus, interest is always limited to a period beginning with the date of the warrant of attachment, and can never include interest previously accruing. The appellant insists in opposition that the interest payable by the liquidator must include whatever interest is protected by the lien.

Unquestionably the latter must be accepted as the proper rule. There was no thought in the case cited (Matter of People [First Russian Ins. Co.], supra) to suggest anything to the contrary. It so happened in that case that the only interest demanded was interest from the date of the attachment. The very basis of the decision was that whatever was a lien upon the fund in advance of liquidation was preserved as a lien upon the surplus when liquidation was over (cf. Matter of People [Moscow Fire Ins. Co., Claim of Lesch], 255 N. Y. 570).

The appellant is, therefore, right in his formulation of the rule, but wrong, as we shall see, in its application to the facts. In his affidavit on attachment, he demands judgment for $108,965.99 with interest from May 15, 1922, and costs and disbursements. In his warrant of attachment, dated January 19, 1923, the recital is that the amount of the demand is $108,965, without mention of the interest accruing from the earlier. date, and the sheriff is commanded to attach so much of the property within the county as will satisfy this amount with interest, which, in the absence of other specification, means interest subsequently accruing. The Sheriff was not at liberty to go beyond the warrant. His levy was effective to the extent of the sum stated and no farther. Civil Practice Act, section 910, is distinct in its requirements: The amount of the plaintiff’s demand must be specified in the warrant, as stated in the proofs on which the warrant was granted.” The proofs may have been adequate, but the warrant was not. The sum specified in the warrant is thus the limit of the lien.

The appellant can have no relief without the aid of the attachment. The corporation is insolvent, and a creditor not secured must share ratably with others.

The order should be affirmed with costs.

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

Order affirmed.


text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the Russian Reinsurance Company of Petrograd, Russia, Appellant. In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the First Russian Insurance Company, Established in 1827, Appellant. G. Frank Dougherty et al., Appellants.

      (Argued January 5, 1931;
    decided February 10, 1931.)

      Frederick B. Campbell and Paul C. Whipp for Russian Reinsurance Company et al., appellants.
    The indefinite stay granted by the adoption of the Superintendent’s so-called plan and the future disposition of the surplus funds by the court below, is contrary to the law and to article 1, section 6, of the State Constitution. (Matter of Second Russian Ins. Co. [Hamburg Ins. Co.], 244 N. Y. 606; Matter of Second Russian Ins. Co., 250 N. Y. 449; Sliosberg v. N. Y. Life Ins. Co., 217 App. Div. 67; 244 N. Y. 482; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149;
      Matter of People [Second Russian Ins. Co.], 244 N. Y. 606; James v. Second Russian Ins. Co., 239 N. Y. 248; Sokoloff v. National City Bank, 239 N. Y. 158; First Russian Ins. Co. v. Beha, 240 N. Y. 601.) The status of the Superintendent of Insurance is not that of a trustee of a trust, either express or implied, but is that of a receiver of property in the possession of the court, an agent of the court; his sole remaining'duty is to hold the funds safely until he is directed by the court how to dispose of them. (Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; Insurance Law, § 63, subd. 5; Matter of People [First Russian Ins. Co.], 253 N. Y. 365; Acken v. Coughlin, 103 App. Div. 1; Sands v. Greeley & Co., 88 Fed. Rep. 130; Drury v. Doherty, 127 Misc. Rep. 263; Matter of Northern Ins. Co., 223 App. Div. 870.) The companies, acting by at least a quorum of their directors, are entitled to these surplus funds which should be returned to them forthwith without the necessity of going through the form arid delay of a trial. (Petrogradsky M. K. Bank v. Nat. City Bank, 253 N. Y. 23; Matter of City Equitable Ins. Co., 238 N. Y. 147) Matter of Norske Lloyd Ins. Co., 242 N. Y. 148; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149.) Our courts should not undertake to liquidate a foreign insurance corporation or to dispose of its assets here to creditors other than those protected by the statutory deposits or by valid attachments obtained prior to the liquidation order. (Insurance Law, § 63, subd. 5; Matter of City Equitable Ins. Co., 238 N. Y. 147; Matter of Norske Lloyd Ins. Co., 242 N. Y. 148; Petrogradsky M. K. Bank v. Nat. City Bank, 253 N. Y. 23.)

      Walter H. Poliak and Ruth I: Wilson for G. Frank Dougherty, appellarit.
    The plan wholly fails of its purpose. It does not provide for the payment of the foreign claims that have been filed with the liquidator either by suit or in this proceeding. Under this plan the Superintendent’s possession becomes merely an obstacle to the collection of claims of this class. (Matter of Second Russian Ins. Co., 244 N. Y. 607; Murphy v. Second Russian Ins. Co., 240 N. Y. 554.) This plan merely hinders* and delays the foreign creditors of a solvent corporation and violates section 63 of the Insurance Law. (Matter of People [City Equitable Fire Ins. Co.], 238 N. Y. 147; Graham v. Railroad Co., 102 U. S. 148; Matter of People [Second Russian Ins. Co], 244 N. Y. 606; Abrahams v. Beneke, 155 App. Div. 525; Schloss v. Schloss, 14 App. Div. 333; Matter of Thompson, 10 App. Div. 40; Chautauqua Citizens’ State Bank v. First Nat. Bank, 98 Kan. 109; National Surety Co. v. Graves, 211 Ala. 533; Brooks v. Smith, 290 Fed. Rep. 33.) The Superintendent of Insurance should be directed to allow and pay all claims whose validity has been established, without regard to classification. (Matter of Norske Lloyd Ins. Co., 242 N. Y. 167; 249 N. Y. 146; Sands v. Greeley & Co., 88 Fed. Rep. 130; Pfahler v. McCrum-Howell Co., 197 Fed. Rep. 684; Brooks v. Smith, 290 Fed. Rep. 39; Matter of Second Russian Ins. Co., 244 N. Y. 607; Culver Lumber & Mfg. Co. v. Culver, 81 Ark. 102; Horton v. McNally Co., 155 App. Div. 322; Low v. R. P. K. Pressed Metal Co., 91 Conn. 91; Barley v. Gittings, 15 App. D. C. 427.)

      jBorris M. Komar for James A. Tillman, appellant.

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for respondent.
    Present retention of these surplus funds by the Superintendent of Insurance until recognition by the United States of a stable government in Russia is the only feasible and lawful policy for the courts of this State to adopt. (Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; Matter of People [City Equitable Fire Ins. Co], 238 N. Y. 147; Matter of Stoddard [Norske-Lloyd Ins. Co], 242 N. Y. 148; Matter of People [Second Russian Ins. Co], 219 App. Div. 46; 244 N. Y. 606; 224 App. Div. 105; 249 N. Y. 538; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; First Russian Ins. Co. v. Beha, 240 N. Y. 601; Matter of Werenjchik, 229 App. Div. 36; Banque de France v. Equitable Trust Co., 33 Fed. Rep. [2d] 202; United States v. Percheman, 7 Pet. 51; Hamilton v. Erie R. R. Co., 219 N. Y. 343; Hauenstein v. Lynham, 100 U. S. 483; Matter of Cooper, 143 U. S. 472; Techt v. Hughes, 229 N. Y. 222; 254 U. S. 643; Goos v. Brocks, 223 N. W. Rep. 13; Society for Propagation of the Gospel v. New Haven, 8 Wheat. [U. S.] 464; Jordan v. Tashior, 278 U. S. 123; Whitney v. Robertson, 124 U. S. 190; Chew Heong v. United States, 112 U. S. 536; Clarke v. Clarke, 178 U. S. 186; De Vaughn v. Hutchinson, 165 U. S. 566; Chirac v. Chirac, 2 Wheat. 257; Levy v. McCartee, 6 Pet. 102; Foster & Elam v. Neilson, 2 Pet. 253.) The surplus funds should not be transmitted to the directors at the present time. (Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23; Russian Reinsurance v. Stoddard, 240 N. Y. 149; Severnoe Securities Co. v. Westminster Bank, 214 App. Div. 14; Spallholz v. Sheldon, 216 N. Y. 205; Treadwell v. Clark, 190 N. Y. 51; Sokoloff v. National City Bank, 239 N. Y. 158; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; Higgins v. Central New England R. R. Co., 155 Mass. 176.)

      John J. Bennett, Jr., Attorney-General {Joseph C. H. Flynn of counsel), for the State of New York.
    The domiciliary receiver cannot take down these surplus funds nor can the liquidator pay the second and third class creditors with them. (Matter of City Equitable Ins. Co., 238 N. Y. 147; Matter of Norske Lloyd Ins. Co., 242 N. Y. 148; James v. Second Russian Ins. Co., 239 N. Y. 248; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; The surplus funds cannot be paid to the surviving directors. (Andre v. Beha, 211 App. Div. 380; 240 N. Y. 605; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149;
      Matter of Second Russian Ins. Co., 225 App. Div. 92; 250 N. Y. 449; Severnoe Securities Corp. v. Westminster Bank, 214 App. Div. 14; Petrogradsky M. K. Bank v. National City Bank, 223 N. Y. 23.)
   Cardozo, Ch. J.

The appellants, Russian Reinsurance Company of Petrograd, Russia,” and First Russian Insurance Company, Established in 1827,” are corpoiations organized under the laws ■ of the Russian Empire, with agencies or branches in the State of New York.

In August, 1925, the Superintendent of Insurance took possession of the assets of these branches in accordance with section 63 of the Insurance Law of the State (Cons. Laws, ch. 28) to conserve, them for the benefit of those entitled thereto. This action was taken in view of the hazards and embarrassments growing out of the confiscatory decrees of the Russian Soviet Republic, and not because of insolvency either present or imminent.

The liquidator was protected in the unimpeded liquidation of the assets by an injunction, sweeping in its generality, whereby creditors were restrained. from pursuing their legal remedies by attachment or execution against the assets so sequestered, and even, it seems, from proceeding to trial (Matter. of People [Second Russian Ins. Co.], 244 N. Y. 606).

The liquidation is now finished. The domestic creditors and policyholders have been paid (Matter of People [Norske Lloyd Ins. Co., Ltd.], 242 N. Y. 148). Paid also have been the creditors, whether foreign or domestic, who acquired liens by attachment before liquidation was begun (cf. Matter of People [First Russian Ins. Co.], 253 N. Y. 365). The Superintendent holds in his hands a surplus of nearly a million dollars for the one company and of more than a million for the other. The question is what disposition he shall make of it.

Creditors and policyholders with claims arising out of foreign business insist that the time has now come when their claims should be enforcible. Either the liquidator of the domestic branch should pay them, or if that remedy be denied, they should be relieved from the injunction which stays the remedy by suit. The insurance companies insist that they are still juristic persons, that they are represented by boards of directors resident in Paris and competent to act, and that subject to the remedies of creditors they are entitled to possession. No conflict of any moment exists between the position of the creditors on the one hand and that of the companies on the other, since the fact is not disputed that the liabilities are few and that a surplus will be left after all of them are paid.

Opposed, however, to the position of the creditors and the companies is the position of the Superintendent of Insurance, the statutoryliquidator. He takes the ground that in view of the hazards and uncertainties of the Russian situation, the surplus should not be paid to any one, but should be left in his hands indefinitely, until a government recognized by the United States shall function in the territory of what was once the Russian Empire. In the meantime creditors as well as companies must be told to stand aside.

The Appellate Division has upheld the contention of the Superintendent, and has entered a decree accordingly. It did not solve the problem. It adjourned it sine die. By the terms of its decree the so-called plan of the Superintendent of Insurance “ with reference to the distribution or disposition of the surplus ” is “ in all respects adopted.” The surplus funds are to “be retained * * * until a government in Russia is recognized by the United States or until the surplus funds may be transmitted to a liquidator or legal representative of the corporation at the domicile abroad [i. e., in Russia] or in accordance with any provision of a treaty of the United States.” In the meantime the injunction is to be continued in all its rigor.

We are unable to accept the view that postponement to the Greek Kalends is the fitting answer to a prayer that the court unlock the fund and formulate a plan of release and distribution. ■

So far as creditors are concerned, the injustice of the plan is obvious, if plan it may be called. The Superintendent took possession for the benefit of domestic creditors whose claims have now been paid. Other creditors, stayed from suing while the liquidation was in progress, have asked the courts to say that their day has now arrived. The answer is not yet.” The court, they have been told, will neither pay them through a liquidator nor lift the injunction restraining other remedies nor even restore the surplus to the possession of the debtor. Liquidation is over, and there has been a fulfillment of the trust for which possession was assumed. Even so, the creditors not within the trust are to be stayed indefinitely and perhaps forever from the pursuit of any remedy, either in equity or at law. We may doubt whether an injunction so unmeasured is consistent with constitutional immunities, and, in particular, with the privilege of access to the courts (Sliosberg v. New York Life Ins. Co., 244 N. Y. 482; Truax v. Corrigan, 257 U. S. 312, 334). What cannot be doubted with reason is its hardship and inequity. In the silence of the statute, a decree instructing the liquidator as to the administration of the surplus must conform to the exactions of equity and justice.

Holding as we do that the surplus must be made available for the payment of creditors and policyholders with claims founded upon foreign business, there remains the question of the remedy. Shall creditors be permitted to prove their claims with the Superintendent and to receive payment at his hands, or shall the order go no farther than to remove the bar of the injunction, and permit the prosecution of suits, with or without attachments, by the usual remedies at law? With exceptions presently to be noted, we think the latter course should be followed, the corporations being solvent and the danger being thus removed that the pursuit of legal remedies will result in waste or inequality. The Superintendent of Insurance has fulfilled the statutory trust when he has paid the domestic creditors and policyholders for whom the trust was laid upon him. It is no part of his duty to ascertain the validity of the claims that will be paid out of the surplus unless inequity would be done if the claimants were remitted to a remedy at law. An exception must indeed be recognized where attachments or executions were levied before the date of liquidation. These hens remained in force when the assets were transferred into the possession of the liquidator, and by order or agreement were to be ascertained and paid by him as a measure fairly incidental to the administration of the trust (Matter of People [First Russian Ins. Co.], 253 N. Y. 365). An exception also must be recognized where proofs of claim were filed and diligently pressed while the Superintendent was still in charge and the injunction still in force. The creditors so proving were acting in response to a published invitation, published in accordance with the order of liquidation, to submit claims of every kind without reference to the place of origin, and were stayed in the meantime from a remedy in the courts. There would be manifest inequity if at this late day an ancillary receiver were to remit them to their legal remedies and thus compel them to prove anew (cf. Sands v. Greely & Co.,88 Fed. Rep. 130, 133; Culver Lumber & Mfg. Co. v. Culver, 81 Ark. 102; and see 44 Harvard Law Review, pp. 437-442, collating the decisions). A court of equity, when once it has assumed control over a fund, may grant relief that “ would otherwise be beyond the scope of its authority ” (McGean v. Metropolitan Elevated, Ry. Co., 133 N. Y. 9, 17), if justice so requires. A different situation would be here if the corporation were insolvent with the result that payment by the liquidator of claims already filed might work a preference with relation to claims not yet submitted (Matter of People [Norske Lloyd Ins. Co.], supra).

The exceptions, not improbably, will come near to eating up the rule, for the record makes it doubtful where any claims, not yet submitted, will be forthcoming in the future. This we cannot know till the injunction is released. We think, however, that the liquidator will discharge the full measure of his duty when he shall havé made provision for the payment of claims already filed. We find no adequate ground for the extension of the duty to claims of later date, an extension that might result in an indefinite prolongation of the term of liquidation. If such claims are in dispute the courts will be open to the disputants when the injunction is removed. The claimants like other suitors must adjust their controversies there.

The fund being thus subjected "to the remedies of creditors, the question must still be answered how the surplus is to be disposed of after such claims have been allowed. We think the surplus then remaining should be paid to the corporations, represented by directors, a quorum of the board.

By section 63 of the statute (Insurance Law; Cons. Laws, ch. 28) the right and duties of the Superintendent of Insurance when acting as a liquidator aré those heretofore exercised by and imposed upon ancillary receivers of foreign corporations in this state ” (subd. 5). An ancillary receiver presupposes in most instances a receiver at the domicile (Matter of People [City Equitable Fire Ins. Co.], 238 N. Y. 147). Very commonly it betokens insolvency as well. Distribution must then be made in submission to the principle that equality is equity [Matter of People [City Equitable Fire Ins. Co.], supra). Conditions are different in the case before us. There is no receiver at the domicile, and the corporations are still solvent, willing; as well as able, to pay their creditors in full.- In such circumstances, the duty of the Superintendent is to pay the surplus to the legal owners/ deducting a sum sufficient to cover his own expenses as well as intervening liens.

Our decision in Russian Reinsurance Co. v. Stoddard (240 N. Y. 149) is not a ruling to the contrary. The ruling there was that a court of equity will not decree the payment of a fund in the hands of a trustee where payment if made will bring exposure to a double liability (cf. Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23, 28). The trustee then before us was engaged in business in many countries, and in some of them the decrees of the Soviet Republic were recognized as law. On the other hand, in the same volume of the reports, we find the record of a case where a corporation exiled from Russia was awarded payment at the hands of the Superintendent of Insurance (First Russian Ins. Co. v. Beha, 240 N. Y. 601). “ The defendant,” we said, “ holds the property and is sued as an officer of the State and there is no danger of recovery against him in another jurisdiction.” Between that case and this no distinction is perceived, and surely none that is substantial.

The present state of the law in respect of these Russian corporations driven from their domicile and there subjected to decrees of confiscation and extinction has been expounded with a full review of the decisions in a recent judgment of this court (Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23; cf. Severnoe Securities Corp. v. London & Lancashire Ins. Co., 255 N. Y. 120). The ruling was that they were still juristic persons, and that their boards of directors, represented by a quorum, were still competent to act. The doctrine of that decision controls the case at hand. True, of course, it is that a court of equity will not decree the payment of a fund to the corporations or their officers if the situation gives notice that waste or spoliation of the assets is threatened or intended. Nothing of the kind appears. The fund will not be paid to the corporations until opportunity has been given to the creditors to enforce their demands against the surplus by execution or attachment if they have failed to protect themselves already by filing proofs of claim. To that end the payment of the surplus may be withheld by the Superintendent for a reasonable time, say, a term of four months from the date of the judgment to be entered on this decision. Creditors who have been stayed in the enforcement of their remedies while liquidation was in progress will thus be given an opportunity to obtain protecting liens without precipitate haste or unseemly competition. Not till then will the fund reach the hands of the directors. The creditors having been •paid or their claims adequately secured, what is left will be held to the uses of the corporate business, and, on the final distribution, for the benefit of shareholders.

The number of shares outstanding differs for the several companies. For the Russian Reinsurance Company the number is 12,000. Of these, 8,000 are represented by powers of attorney now held by the directors. The shares not so represented belong for the most part to shareholders in Russia, who have submitted willingly or unwillingly to the communistic order. The chance is at best remote that they will ever be heard fiom to claim the shares as theirs. For the First Russian Insurance Company, 3,700 shares out of a total of 10,000 are controlled by the directors through powers of attorney, the remainder again belonging to residents of Russia.

In such circumstances the problem confronting the directors after payment of the creditors, presents, one would suppose, ho insuperable difficulties. They should be able, if well advised, to invest the corporate surplus, or otherwise dispose of it, in ways that will be just and equitable to all the interests affected. Whether distribution can be made without the consent of the missing shareholders, or in any event without notice, actual or constructive,' we do not attempt to say. Possibly the directors will be under a duty to hold the assets undistributed for a future of indefinite duration. It is no part of our duty to instruct them. What is certain at any rate is this, that the directors, supported as they are by a large proportion of the shareholders, are as well qualified to deal with the troublesome problem sensibly and fairly as the Superintendent of Insurance or indeed as any one else.

The State of New York is not charged with a duty to wind up the business of these Russian corporations. In aid of domestic creditors, it winds up a branch of such a. business conducted within its borders and in submission to its laws (Matter of People [Norske Lloyd Ins. Co.], 242 N. Y. 148). This done, its duty ends except to turn the surplus over to a competent custodian (Insurance Law, § 63). We do not say that the refusal to go farther has its origin in what is strictly a defect of jurisdiction. In this instance, at all events, there are considerations of convenience and efficiency that may be accepted as decisive, irrespective of the scope of power (see the cases collated in 44 Harvard Law Review, 437, 439, and cf. Travis v. Knox Terpezone Co., 215 N. Y. 259, 264). Russian directors, chosen by Russian shareholders in accordance with Russian law, must work out for them-' selves their problems of internal management. The surplus assets in this State are but a part of the total assets to be administered abroad. We disclaim a continuing duty of visitation and supervision. Fraud will indeed be checked, if fraud becomes apparent. This is far from saying that competent custodians will be divested of their custody, and their powers taken over by the agencies of government. Least of all will this be done on the mere motion of the government, unprompted by any creditor, or by the owner, legal or equitable, of any interest in the business. We think the time is now at hand when the responsibility for the management of these foreign corporations should go back to the managing officers appointed by the shareholders. Our administrative machinery should be no longer clogged, our liquidator no longer burdened, our courts no longer vexed, with problems not our own.

The orders of the Appellate Division and those of the Special Teim should be reversed, and orders entered dissolving the injunction and directing the transfer of the surplus in accordance with this opinion.

The form of the orders may be settled upon notice. Pound, Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Ordered accordingly.


text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the First Russian Insurance Company, Established in 1827, Respondent. G. Frank Dougherty, as Assignee of Leon L. Samuelson, Appellant.
    (Argued January 5, 1931;
    decided February 10, 1931.)

      Walter H. Poliak, G. Frank Dougherty and Charles S. S. Epstein for appellant.
    In the absence of insolvency the rights of other creditors do not require the disallowance of appellant’s claim. (Matter of People [Norske-Lloyd Ins. Co.], 242 N. Y. 164; Matter of People [City Equitable Ins. Co.], 238 N. Y. 157; Matter of Second Russian Ins. Co., 244 N. Y. 609; Hollins v. Brierfield Coal & Iron Co., 150 U. S. 371; Graham v. Ry. Co., 102 U. S. 148; Abrahams v. Beneke, 155 App. Div. 525; Schloss v. Schloss, 14 App. Div. 333; Matter of Thompson, 10 App. Div. 40; Chautauqua Citizens’ State Bank v. First Nat. Bank, 98 Kan. 109; National Surety Co. v. Graves, 211 Ala. 533; Brooks v. Smith, 290 Fed. Rep. 33.)

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for Superintendent of Insurance, respondent.
    Foreign non-attachment claims, based upon policies issued abroad by the parent company, cannot be paid by the Superintendent of Insurance. (Matter of People [City Equitable Fire Ins. Co.], 238 N. Y. 147; Matter of People [Norske Lloyd Ins. Co.], 223 App. Div. 823; 242 N. Y. 148; 249 N. Y. 139; Matter of People [Second Russian Ins. Co.], 219 App. Div. 46; 244 N. Y. 606; 224 App. Div. 105; 249 N. Y. 30; Matter of People [Russian Reinsurance Co.], 223 App. Div. 378; Matter of People [Five Russian Ins. Companies], 229 App. Div. 537; Matter of People [Consolidated Assur. Co.], 230 App. Div. 110.)

      Frederick B. Campbell and Paul C. Whipp for First Russian Insurance Company, respondent.
    The policy does not promise payment in gold rubles, but merely specifies payment in rubles. The evidence does not sustain an exchange value of 51^ cents per ruble on June 10, 1923. (Perry v. Equitable Life Assur. Soc., 45 T. L. R. 468; Buerger v. New York Life Ins. Co., 43 T. L. R. 601; Sokoloff v. National City Bank, 130 Misc. Rep. 66; 223 App. Div. 754; 250 N. Y. 69; Zimmerman v. R. & H. Chemical Co., 240 N. Y. 501.)
   Cardozo, Ch. J.

Appellant, the assignee of a foreign policyholder of First Russian Insurance Company, filed a proof of claim with the Superintendent of Insurance to recover the amount due under a policy of insurance issued to his assignor in Russia in 1910.

By the policy the insurer undertook, in consideration of semi-annual premiums, to pay to the insured in June, 1923, the sum of 10,000 rubles. The insured paid the premiums until June, 1918, when the revolution in Russia and the decrees of the Soviet Republic prevented further payments at the place stated in the contract. Among the provisions of the policy is one to the effect that after premiums have been paid for three years, the insurance shall be continued, even though there are later defaults, but only at a reduced amount. The appellant has given evidence that the amount due under this provision in June, 1923, when the insurance became payable, was 5,921 rubles instead of 10,000 rubles, the face amount of the policy. No objection to this calculation is made by the respondents. For the purpose of the appeal we assume it to be accurate.

The Supreme Court at Special Term confirming the report of a referee disallowed the proof of claim on the ground that the Superintendent of Insurance was without authority to liquidate a claim arising out of foreign business. The Appellate Division unanimously affirmed.

In an opinion handed down herewith, we have held that the liquidator may be required before distributing the surplus* to consider claims of creditors arising out of foreign business, and to pay them if allowed. A different question arises where the corporation is insolvent, or where application for allowance is made before the ascertainment of the surplus and the adoption of a plan for a just and equitable distribution. The insurer in this case is solvent, and payment, if now directed, will be incidental to a general plan whereby all the interests affected will be considered and protected.

The claim being provable, a question remains as to the measure of recovery.

The referee found that in June, 1923, when the contract was broken, the value of 5,921 rubles was equivalent to $3,049.31 in money of the United States.

We are to determine whether this finding is supported by the evidence.

At the time of the Soviet revolution, the gold ruble of the Russian Empire had been supplanted by a paper currency with a value steadily depreciating. The Soviet Republic established at the beginnings of its history a currency in money tokens which declined by leaps and bounds. In October, 1922, an attempt was made to re-establish the gold standard. By a decree of that date there was adopted a gold coin known as the chervonetz, which had the value of ten gold rubles of the empire. With the chervonetz there circulated treasury notes, also redeemable in gold, for one, two, three and five rubles, the value of a gold ruble being equal to fifty-one and one-half cents of our money.

If these were the only facts to be considered, the solution of the problem would be comparatively simple. It is complicated by others. The depreciated paper currency was not called in by the Soviet authorities till August, 1923, or later, and passed from hand to hand in the meantime with the quality of legal tender. None the less, the chervonetz and its subdivisions had been turned into the standard, and the rate of exchange between the two competing currencies was re-established monthly or even oftener to correspond with the current depreciation in the value of the tokens.

We interpret the record as meaning that in June, 1923, the Russian ruble was^again on a gold basis, and that where token rubles were paid in satisfaction of a debt, the number would have to be increased to. the extent necessary to make the payment equivalent to one in gold. If this interpretation is correct,. the sum due to . the appellant should be. computed upon the basis of the value of the chervonetz or of rubles of like fineness (Buerger v. New York Life Assur. Co., 43 T. L. R. 601; cf. Matter of Lendle, 250 N. Y. 502).

The decision must be understood to be confined to the record now before us. We do not attempt to say to what extent a different record, exhibiting in a different light the history of the ruble, would exact a different conclusion. In particular we reserve the question whether the insurer would be liable on the basis of the gold coinage if in truth it had an option to discharge the debt in gold or by the same number of rubles in depreciated paper (cf. Williston, Contracts, vol. 3, § 1407; American Law Institute, Restatement of the Law of Contracts, § 335). We read the record otherwise.

The Soviet decree restoring the gold standard is to be ranked with those every-day transactions of business or domestic Ufe ” that are not subject to impeachment, though the form may have been regulated by the command of the usurping government ” (Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. at p. 29, and cases there cited; Thorington v. Smith, 8 Wall. [U. S.] 1; Stewart v. Salamon, 94 U. S. 434, 435).

The order of the Appellate Division and that of the Special Term should be reversed, and payment directed to be made to the appellant in the sum fixed by the referee, $3,049.31, with interest from June 23, 1923,. and costs in all the courts.

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

Ordered accordingly.


text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the Northern Insurance Company of Moscow, Appellant. In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the Moscow Fire Insurance Company of Moscow, Russia, Appellant.
    (Argued January 5, 1931;
    decided February 10, 1931.)

      Paul- Bonynge and Daniel A. Dorsey for Northern Insurance Company of Moscow, appellant.
    The surplus assets should be released under such safeguards for the protection of creditors and stockholders as the court deems appropriate. (Andre v. Beha, 240 N. Y. 605; First Russian Ins. Co. v. Beha, 240 N. Y. 601; Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23; James & Co. v. Rossia Ins. Co., 247 N. Y. 262; Joint Stock Co. v. National City Bank, 240 N. Y. 368; Moscow Machine Tool & Engine Co. v. Richard, 240 N. Y. 707; People v. Granite State Provident Assn., 161 N. Y. 492.)

      Frederick B. Campbell and Paul C. Whipp for Moscow Fire Insurance Company, appellant.

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for Superintendent of Insurance, respondent.
    Under no conditions should the surplus funds be transmitted to the directors at the present time. (Gaul v. Kiel Co., 133 App. Div. 621; 199 N. Y. 472; 152 N. Y. 251; Koster v. Pain, 41 App. Div. 443; Meinhard v. Salmon, 249 N. Y. 458; Gamble v. Queens County Water Co., 123 N. Y. 91; Farmers L. & T. Co. v. N. Y. & N. R. Co., 150 N. Y. 410; Munson v. Syracuse, 103 N. Y. 58; Meeker v. Winthrop Iron Co., 17 Fed. Rep. 48; Erwin v. Oregon R. & N. Co., 27 Fed. Rep. 625; Bradley v. Converse, 4 Cliff. 375; Wendt v. Fisher, 243 N. Y. 439; Seymour v. Spring Forest Cemetery Assn., 144 N. Y. 333; Duncomb v. N. Y., H. & N. R. Co., 84 N. Y. 190; Blake
      v. Buffalo Creek, 56 N. Y. 485; Barnes v. Brown, 80 N. Y. 527.)

      John J. Bennett, Jr., Attorney-General (,Joseph C. H. Flynn of counsel), for State of New York.
   Per Curiam.

The situation of these appellants differs from that of the First Russian Insurance Company and the Russian Reinsurance Company of Petrograd, in that the corporations are no longer represented by a quorum of the directors.

The Moscow Fire Insurance Company of Moscow, Russia, is left with but one director, and the Northern Insurance Company of Moscow with two.

Directors less than a quorum may be treated as conservators of the property of their companies when there are assets within the State that might otherwise be lost (Severnoe Securities Corp. v. London & Lancashire Ins. Co., 255 N. Y. 120). Even so, a court of equity will exercise a measure of discretion before surrendering possession to claimants whose powers and duties are born of an emergency.'’

Delivery of the assets to directors not constituting a quorum should be conditioned upon the execution of a surety company bond to the People of the State, in a sum equal to the value of the assets so delivered, with a condition to the effect that the director or directors shall faithfully apply the assets to the use of the corporation, its creditors and shareholders, the bond to be enforcible, in case of breach of the condition, by the corporation or by any creditor or shareholder affected thereby.

In the event of inability or failure to comply with, this condition, delivery may be made to a trust company in the city of New York as agent or depositary upon the stipulation of the insurance company and its conservators that the fund will not be withdrawn except upon the order of a court of competent jurisdiction.

The orders of the Appellate Division and those of the Special Term should be reversed, and orders entered dissolving the injunction and directing the transfer or deposit of the surplus in accordance with this opinion.

The form of the order and of the bond prescribed thereby may be settled upon notice.

Card'ozo, Ch. J., Pound, Crane, Lehman, Kellogg, 'O’Brien and Hubbs, JJ., concur.

Ordered accordingly.


text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the Second Russian Insurance Company, Appellant. James A. Tillman, Appellant.
    (Argued January 5, 1931;
    decided February 10, 1931.)

      Paul Bonynge and Daniel A. Dorsey for Second Russian Insurance Company ^appellant.
    The existing injunction should be modified to the extent of permitting the appellant insurance company to make and file a general assignment for'"the benefit of creditors and the Superintendent of Insurance should be directed to release the surplus assets to such assignee. (Rogers v. Pell, 154 N. Y. 518; Vanderpoel v. Gorman, 140 N. Y. 563.)

      Borris M. Komar for James A. Tillman, appellant.
    After the termination of the liquidation proceedings by the Superintendent of Insurance, the continuance of the injunction on creditors’ actions is unwarranted. (Norfolk Hosiery Co. v. Arnold, 143 N. Y. 265; Lown v. Spoon, 158 App. Div. 900; Bean v. Stoddard, 238 N. Y. 618; Burke v. Burke, 212 N. Y. 303; Petrogradsky M. K. Bank v. National City Bank, 254 N. Y. 23; Sliosberg v. New York Life Ins. Co., 217 App. Div. 685; First Russian Ins. Co. v. Beha, 240 N. Y. 601.)

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for respondent.
    Present retention of these surplus funds by the Superintendent of Insurance until recognition by the United States of a stable government in Russia is the only feasible and lawful policy for the courts of this State to adopt. (Russian Reinsurance Co. v. Stoddard, 240 N. Y. 149; Matter of People [City Equitable Fire Ins. Co.], 238 N. Y. 147; Matter of Stoddard [Norske-Lloyd Ins. Co.], 242 N. Y. 148; Matter of People [Second Russian Ins. Co.], 219 App. Div. 46; 244 N. Y. 606; 224 App. Div. 105; 249 N. Y. 538; Russian Reinsur

      ance Co. v. Stoddard, 240 N. Y. 149; First Russian Ins. Co. v. Beha, 240 N. Y. 601; Matter of Werenjchik, 229 App. Div. 36; Banque de France v. Equitable Trust Co., 33 Fed. Rep. [2d] 202; United States v. Percheman, 7 Pet. 51; Hamilton v. Erie R. R. Co., 219 N. Y. 343; Hauenstein v. Lynham, 100 U. S. 483; Matter of Cooper, 143 U. S. 472; Techt v. Hughes, 229 N. Y. 222; 254 U. S. 643; Goos v. Brocks, 223 N. W. Rep. 13; Society for Propagation of the Gospel v. New Haven, 8 Wheat. 464.)

      John J. Bennett, Jr., Attorney-General (Joseph C. H. Flynn of counsel), for State of New York.
   Per Curiam.

The Superintendent of Insurance, after liquidating the domestic branch of the Second Russian Insurance Company, holds an undistributed surplus of about $500,000.

This surplus is insufficient to pay the claims arising from foreign business, the amount due to such claimants being approximately $2,000,000.

The situation differs, therefore, from that of the other insurance companies before us at this term in that the Second Russian Insurance Company, unlike the others, is insolvent.

The appellant, Second Russian Insurance Company, asks that the injunction in the order of liquidation be modified to the extent of permitting the insurance company to execute a general assignment without preferences for the benefit of creditors, the assignee thereunder to be chosen by the court. In this way, equality of treatment will be preserved for all the creditors entitled to share in the estate.

The liquidation of the domestic branch having been completed by the statutory liquidator, and there being no receiver to whom the assets may be transmitted in the territory of the domicile, we are unable to discover anything either in the statutes of this State or in its public policy that prohibits the execution of a general assignment (Rogers v. Pell, 154 N. Y. 518; Vanderpoel v. Gorman, 140 N. Y. 563).

We are not required to determine whether the company would be entitled to other or further relief if more had been demanded. It asks for nothing more, and this, at least, it should receive.

Upon the execution by the corporation of a general assignment without preferences, the assignee thereunder to be a duly qualified trust company, the Superintendent of Insurance should deliver to such assignee the surplus assets of the corporation after deducting therefrom his proper charges and expenses.

In the event that a trust company is unwilling or incompetent to serve, the choice of the assignee will be subject to the approval of the Supreme Court upon notice to the liquidator.

If for any reason not now apparent, the assignment shall be adjudged invalid, or shall fail of its effect, the assignor will be at liberty to apply for the appointment of a receiver to make division of the assets in accordance with the principles of equity.

The appellant Tillman, claiming to be a creditor, asks for a modification of the injunction by permitting him to bring suit against the company, and to enforce any remedies, either attachment or execution, available at law. For the reasons stated in other opinions handed down herewith, the injunction should be dissolved to the extent of his demand.

The orders should be modified in accordance with this opinion, and as modified affirmed, without costs to either party.

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

xOrdered accordingly.


text:
    In the Matter of the Application of The People of the State of New York, by James A. Beha, as Superintendent of Insurance, Respondent, for an Order to Take Possession of the Property of the First Russian Insurance Company, Established in 1827, Respondent. James A. Tillman, as Assignee of Karl Schmidt et al., Appellant.
    (Argued January 5, 1931;
    decided February 10, 1931.)

      Borris M. Komar for appellant.
    The Superintendent of Insurance has power to consider and allow foreign claims of American citizens. (Matter of People [Norske Lloyd Ins. Co.], 242 N. Y. 148; Mabon v. Ongley Electric

      Co., 156 N. Y. 204; Drury v. Doherty, 127 Misc. Rep. 263; Sands v. Greely & Co., 88 Fed. Rep. 130; Willits v. Waite, 25 N. Y. 577.)

      James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for Superintendent of Insurance, respondent.
    Foreign non-attachment claims, based upon policies issued abroad by the parent company, cannot be considered upon the merits by the Superintendent of Insurance nor by the referee in this proceeding. (Matter of People [City Equitable Fire Ins. Co.], 238 N. Y. 147; Matter of People [Norske Lloyd Ins. Co.], 242 N. Y. 148; 249 N. Y. 139; Matter of People [Norske Lloyd Ins. Co., Hallfried], 223 App. Div. 823; Matter of People [Second Russian Ins. Co.], 219 App. Div. 46; 244 N. Y. 606; 224 App. Div. 105; 249 N. Y. 30; Matter of People [Russian Reinsurance Co.], 223 App. Div. 378; Matter of People [Consolidated Assurance Co.], 230 App. Div. 110.)

      Frederick B. Campbell and Paul C. Whipp for First Russian Insurance Company, respondent.
   Per Curiam.

- The appellant, the assignee of foreign policyholders of the First Russian Insurance Company, filed proofs of claim under the policies with the Superintendent of Insurance.

A referee appointed by the Supreme Court to report as to the validity of these and other claims, refused to permit the appellant to give evidence in support of his demand upon the ground that the claim, even if otherwise valid, did not arise out of domestic business.

In an opinion filed herewith in which a plan has been adopted for the distribution of the surplus, we have stated that proofs of claims, though growing out of foreign business, should be considered by the liquidator where the corporations are not insolvent.

The order of the Appellate Division and that of the Special Term should be reversed, with costs in the Appellate Division and in this court, and the application remitted to the Special Term for further proceedings not inconsistent with this opinion.

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

Ordered accordingly.