text:
    John F. Daniell et al., as Executors of Vera L. S. Daniell, Deceased, Appellants and Respondents, v. Josephine L. Hopkins et al., Respondents and Appellants, and John F. Daniell et al., Respondents.

      (Argued June 5, 1931;
    decided July 15, 1931.)

      A. Donald MacKinnon and Andrew Jackson for plaintiffs, appellants and respondents.
    The vacant cemetery lot is subject to sale. (Johnson v. Ocean View Cemetery, 198 App. Div. 854; Matter of Chauncey, 191 App. Div. 359; Lantz v. Buckingham, 11 Abb. [N. S.] 64; Ross v. Glenwood Cemetery Association, 81 App. Div. 357; Thompson v. Hickey, 59 How. Pr. 434; Spear v. Locust Wood Cemetery Co., 72 N. J. Eq. 821; Woodland Cemetery Co. v. Stout, 97 S. W. Rep. 756; Birch v. Birch, 209 App. Div. 892; Darcy v. Presbyterian Hospital, 202 N. Y. 259, Stiles v. Stiles, 113 Misc. Rep. 576; Anderson v. Acheson, 132 Iowa, 744; Robertson v. Mt. Olivet Cemetery Co., 116 Tenn. 221; Dickens v. Cave Hill Cemetery Co., 93 Ky. 385; Derby v. Derby, 4 R. I. 414; Matter of Waldron, 26 R. I. 84; Gardner v. Swan Point Cemetery, 20 R. I. 646; Matter of Brick Presbyterian Church, 3 Edw. Ch. 155; Pitcairn v. Homewood Cemetery Co., 77 Atl. Rep. 1105; Chew v. First Presbyterian Church, 237 Fed. Rep. 219; Buffalo City Cemetery v. City of Buffalo, 46 N. Y. 503; Trustees of First Baptist Church v. Bigelow, 16 Wend. 28;
      Vielie v. Osgood, 8 Barb. 130; Wittemore v. Woodlawn Cemetery, 71 App. Div. 257; Went v. Methodist Protestant Church, 80 Hun, 266; Richards v. N. W. Protestant Dutch Church, 32 Barb. 42.) The power of sale contained in the will gave the executors power to sell the vacant cemetery lot. (Matter of Evans, 234 N. Y. 42; Matter of Buechner, 226 N. Y. 440; May v. Brewster, 73 N. E. Rep. 546; Matter of Gantert, 136 N. Y. 106; Holly v. Gibbons, 176 N. Y. 520; Rositzke v. Meyer, 176 App. Div. 193; Matter of McComb, 117 N. Y. 378; Matter of Heroy, 67 Hun, 13; Chamberlain v. Taylor, 105 N. Y. 185; Greenland v. Waddell, 116 N. Y. 234; Scholle v. Scholle, 113 N. Y. 261; Fowler v. Powers, 200 App. Div. 155; Matter of Powers, 205 App. Div. 49; Matter of Bolton, 146 N. Y. 257; Cahill v. Russell, 140 N. Y. 402; Erwin v. Loper, 43 N. Y. 520.)

      William R. Conklin and Edward S. Bentley for defendants, respondents and appellants.
    Error was committed in imposing an equitable lien upon the cemetery lot and directing that it be sold and that the administrator de bonis non of the estate of Russell Hopkins, deceased, be paid the amount of the alleged equitable lien claimed by it. (Swarthout v. Rainier, 143 N. Y. 499; Seaward v. Davis, 198 N. Y. 415; Hogan v. Kavanaugh, 138 N. Y. 417.) The interest of testatrix as the owner of the vacant cemetery lot was not subject to sale either for the purpose of satisfying an alleged equitable lien thereon, or for the purpose of paying her debts. (Buffalo City Cemetery Co. v. City of Buffalo, 46 N. Y. 503; Clarke v. Keating, 183 App. Div. 212; Went v. Methodist Protestant Church, 80 Hun, 266; Whittemore v. Woodlawn Cemetery, 71 App. Div. 257; Anderson v. Acheson, 132 Iowa, 744; Robertson v. Mt. Olivet Cemetery Co., 116 Tenn. 221; Dickens v. Cave Hill Cemetery Co., 93 Ky. 385; Derby v. Derby, 4 R. I. 414; Matter of Waldron, 26 R. I. 84; Gardner v. Swan Point Cemetery, 20 R. I. 646; Brown v.
      City National Bank, 72 Misc. Rep. 201; 153 App. Div. 928.) The power of sale contained in the will did not give to the executors power to sell the decedent’s real estate for the purpose of paying debts. (Matter of McComb, 117 N. Y. 378; Matter of Heroy, 67 Hun, 13; Chamberlain v. Taylor, 105 N. Y. 185; Greenland v. Waddell, 116 N. Y. 234.) The respondent administrator was not entitled to the imposition of an equitable lien in its favor, in the absence of proof that the moneys used by testatrix for the purchase of the cemetery lot were wrongfully taken from the estate of her first husband. There was no such proof. (Leary v. Corbin, 188 N. Y. 222; Storm v. McGrover, 189 N. Y. 568; Schierloh v. Schierloh, 148 N. Y. 103; Foreman v. Foreman, 251 N. Y. 237; Sinclair v. Purdy, 235 N. Y. 245.)

      Robert W. Bernard for Equitable Trust Company of New York, as administrator de bonis non of the estate of Russell Hopkins, deceased, respondent.
    An equitable lien was properly imposed in favor of the defendant administrator upon the unused cemetery plot. (Real Prop. Law, § 450; Memb. Corp. Law, § 85.)
   Pound, J.

Mrs. Vera L. S. Daniell, wife of John F. Daniell, formerly Mrs. Hopkins, wife of R,ussell Hopkins, deceased, died February 16, 1928, leaving her husband, John F. Daniell, and the four infant defendants, children of her prior marriage with Mr. Hopkins. She left a last will and testament which empowered her executors “ to sell and convey any or all of the real estate of which I may die seized for such prices and on such terms as they shall see fit.” While this power of sale was linked up with a gift to her husband and children of the net proceeds of such sale, she had also directed that her debts be paid and it must be inferred that she had this fact in mind when she executed her will with such power of sale. (Matter of Gantert, 136 N. Y. 106.) She died seized of a burial, plot in Sleepy Hollow Cemetery at Tarrytown, which she had purchased on July 10, 1920, after her second marriage, for which she had paid $36,570. She had also, after the death of her first husband, purchased another lot known as the Hopkins burial lot, paying therefor, with a mausoleum thereon, $41,425. The mausoleum contained crypts for six bodies. Mr. Hopkins’ body alone is interred therein. Mrs. Daniell’s body has not been buried in either lot. It remains in the receiving vault of Sleepy Hollow Cemetery. The Daniell lot has never been used for burial purposes.

Mrs. Daniell died insolvent. She was the executor of the will of her former husband, Russell Hopkins, deceased. The executors of her will brought this action for a declaratory judgment asking that the court so construe the will as to empower them , to sell the Daniell burial lot. The Supreme Court has full jurisdiction to determine the effect of the disposition of real property by will in this State. (Decedent Estate Law; Cons. Laws, ch. 13, § 47.)

The defendant* John F. Daniell joined in the prayer for relief. The infant defendants put the plaintiffs to their proof by a formal denial of the material allegations of the complaint. The defendant The Equitable Trust Company of New York, as administrator de bonis non of the estate of Russell Hopkins, deceased, interposed an answer asking for a declaratory judgment adjudging that it had an equitable lien on the Daniell burial lot for moneys paid by Mrs. Daniell therefor out of the funds of Russell Hopkins, deceased. The Special Term granted judgment for plaintiffs for the relief demanded- in the complaint, subject to an equitable lien in favor of The Equitable Trust Company. The Appellate Division modified the judgment by providing merely for the sale of the cemetery lot to enforce the equitable lien.

The primary question to be answered is whether the power of sale contained in the will of Mrs. Daniell is broad enough to include the burial lot in question. A burial lot is doubtless real property (Real Prop. Law; Cons. Laws, ch. 50, § 2; General Construction Law; Cons. Laws, ch. 22, § 40), but the purchaser of such a lot acquires not a title in fee simple thereto, but only the right to hold the lot for burial purposes. The rights in the lot are limited and circumscribed. Sleepy Hollow Cemetery granted, bargained, sold and conveyed lot No. 2700, section 84, Ephron, to Mrs. Daniell, her heirs and assigns: “ To have and to hold the aforesaid premises to the said party of the second part, her heirs and assigns forever; Subject * * * to such qualifications, restrictions and conditions as are contained in the laws of the State of New York, relating to lots and lands which are laid out and used for cemetery purposes, and to the Rules and Regulations of the Board of Directors governing said Cemetery as set forth on the back ” of the deed.

The rules and regulations, as far as here material, provide: “All lots are conveyed, and are to be held, subject to the act of the Legislature of the State of New York, authorizing the incorporating of Rural Cemeteries, passed April 27, 1847 (L. 1847, ch. 133), and of the several subsequent acts which have been passed relating to such Cemeteries. * * * Lots, after an interment, become forever inalienable and cannot be sold. * * * Upon the death of the owner, unless the lot be disposed of by a last will and testament, it will descend to the ' heics at law, and to their heirs at law, forever.’ ”

Section 84 of the Membership Corporations Law (Cons. Laws, ch. 35), so far as material, provides: “ Title and rights of lot owners. * * * All lots, plats or parts thereof, the use of which has been so conveyed as a separate lot, shall be indivisible, except with the consent of the lot owner and the corporation, or as in this article provided. After a burial therein the same shall be inalienable, except as otherwise provided. Upon the death of an owner of such lot the title thereto shall pass to his heirs-at-law or devisees, subject, however, to the following limitations and conditions:

“(c) if he leaves children and no widow, they or the survivor of them, shall in common have the possession, care and control of such lot during the life of the survivor of them.”

Section 85 of the Membership Corporations Law, so far as material, provides: “Title and conveyance of lots in which there is no burial. If no burial be made in any such lot, * * * the lot owners, with the consent of the corporation, may sell such lot. * * * A lot owner may convey or devise to the corporation his right and title in and to any such lot.”

The infant defendants take the position that no cemetery lot can be subject to sale by the executors of the will of the lot owner for the purpose of paying his debts. They maintain that, although Mrs. Daniell might herself have sold the lot before a burial had been made therein, upon her death the rights previously vested in her came to an end; that her executors did not succeed to her title and could not exercise any power of sale; that this extravagant burial plot and mausoleum must pass for all time to the grantee and her heirs, inalienable and in perpetuity.

If we part from the letter of the law and apply the rule of reason to the interpretation of statutes and regulations under which a burial lot is held in this State, it clearly appears that the court should enforce such statutes and regulations liberally in order to protect the cemetery and to prevent indecent strife over the ground in which interments of dead bodies have been made but that no such sanctity attaches to a burial lot in which no interments have been made. It is the first burial that consecrates the ground. (Love v. Robinson, 219 Penn. St. 469, 475, 476.)

The case might be different if the burial lot had been bought to provide a suitable resting place for the remains of the purchaser when dead and if his family or executors had sought to thwart his wishes by withholding the body from burial in order to sell the lot to pay debts or legacies. Proper provision for a burial place is a paramount consideration in the administration of the estate of a deceased person. But here we have a woman who with one expensive burial place provided, acquires another at great cost and dies insolvent. Admittedly a man might desire to change his lot for one more eligible. A woman might desire to be laid at rest beside her second husband rather than her first. We do not deny the abstract right to acquire a second burial lot. A reasonable latitude must be allowed to protect the legitimate desires of the deceased as viewed in the light of all her surroundings. But at all times the executors might prefer to sell the lot selected before a burial thereon and buy one more in keeping with the condition of the estate. Nothing in the statutes or rules would seem to prevent. (Surrogate’s Cotut Act, § 216, § 234, subd. 2; § 314, subd. 3.)

Here the executors were justified in withholding Mrs. Daniell’s body from interment in her second burial lot in order, if possible, to conserve her estate against an extravagant desire on her part for another resting place for her earthly remains. The power passed to them, in the absence of any intervening equities, to sell the unused lot. We take the words of the statute, after a burial therein the same shall be inalienable ” and of the regulation, “ lots, after an interment, become forever inalienable and cannot be sold ” as implying, in this case, that the lot may be. sold before a burial therein, under the rules and regulations of the cemetery and that the converse of "the proposition stated in the statute is equally true.

No evidence satisfactorily establishes that Mrs. Daniell misappropriated money belonging to the Hopkins estate to put into the Daniell burial lot. She was entitled to a substantial share of the Russell Hopkins estate, which was considerable in amount. In the absence of proof that Mrs. Daniell unjustly enriched herself by drawing on the Hopkins estate to buy the Daniell burial lot it cannot be assumed that the basis for an equitable hen exists merely because estate moneys went into the purchase. The award of an equitable hen to the defendant representative of the Hopkins estate was, therefore, improper. (Swarthout v. Ranier, 143 N. Y. 499, 503.)

The judgment of the Appellate Division should be reversed and that of the Special Term modified by striking therefrom the provisions for an equitable hen and for costs and as so modified affirmed, without costs.

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

Judgment accordingly.


source: Caselaw Access Project

author: Kellogg, J.

license: Public Domain

text:
    Marian A. Davidson, Respondent, v. The Madison Corporation, Appellant, Impleaded with Others.

      (Submitted June 5, 1931;
    decided July 15, 1931.)

      J. Charles Weschler and Walter T. Kohn for appellant.
    The receipt by the porter of the defendant hotel from plaintiff of her railroad baggage check was not the receipt of plaintiff’s baggage into the care and keeping of an innkeeper within the meaning of the common-law liability, since the innkeeper was obliged to answer for nothing that is out of his inn, but only for those things which are infra hospitia. (Hewlett v. Swift, 33 N. Y. 572; Wilkins v. Earle, 44 N. Y. 172; Piper v. Manny, 21 Wend. 284; Dickinson v. Winchester, 58 Mass. 114; Coskery v. Nagle, 83 Ga. 696; Adelphi Hotel Co. v. Providence Stock Co., 277 Fed. Rep. 905; Carhart v. Wainman, 144 Ga. 632; Huckins Hotel Co. v. Clampitt, 244 Pac. Rep. 945; Keith v. Atkinson, 48 Col. 480; Williams v. Moore, 69 Ill. App. 618; Hagerstron v. Brainard Hotel Corp., 45 Fed. Rep. [2d] 130.) If the innkeeper’s common-law liability does not apply, then there was no liability excepting for actual negligence and no negligence on the part of the defendant hotel has been shown.
      (Claflin v. Meyer, 75 N. Y. 260; Stewart v. Stone, 127 N. Y. 500; Hogan v. O’Brien, 212 App. Div. 193; Adelphi Hotel Co. v. Providence Stock Co., 274 Fed. Rep. 483.)

      Vincent H. Bothwell for respondent.
    The defense that loss of baggage occurred through the act or omission of an independent contractor is not available to an innkeeper, where he undertakes to give baggage service or holds himself out as prepared to do so. (Coskery v. Nagle, 83 Ga. 696; Adelphi Hotel Co. v. Providence Stock Co., 277 Fed. Rep. 905; Keith v. Atkinson, 48 Col. 480; Huckins Hotel Co. v. Clampitt, 224 Pac. Rep. 945; Dickinson v. Winchester, 58 Mass. 114; Williams v. Moore, 69 Ill. App. 618.)
   Kellogg, J.

The plaintiff had been a guest of the Madison Hotel in New York city, which was owned and operated by the defendant Madison Corporation. At the conclusion of a temporary visit to Norfolk, Va., she purchased a railroad ticket from the Pennsylvania railroad and boarded one of its trains for New York city. Prior to leaving she had caused her trunk to be delivered to the railroad and had checked it to the same destination. On arrival, the plaintiff returned to her quarters in the Madison Hotel. The check for the trunk was delivered to the head porter with instructions to get the trunk in ” promptly. The head porter handed the check to a licensed expressman, Peter J. Coen, with similar instructions. Coen delivered the check to a truckman employed by him, who obtained the trunk from the railroad and placed it on his truck. On the return journey to the hotel the truckman was required to pick up another trunk at the Hotel Buckingham. He parked his car at the curb in the vicinity of that hostelry; stopped his motor, leaving the ignition key in the lock; and went into the hotel, leaving the truck unattended. When he returned to the curb the truck .had disappeared, and with it had gone the plaintiff’s trunk. The car and the trunk had been stolen. The contents of the trunk, consisting of expensive furs and dresses, were worth $10,000, and for that sum the plaintiff has recovered a verdict against the Madison Corporation.

An innkeeper is an insurer of the safety of the property of his guest, brought infra hospitium. He is hable for its loss, whether by burglary, theft, fire or negligence, unless it arises from the neglect or misconduct of the guest, the act of God or the public enemies.” (Wilkins v. Earle, 44 N. Y. 172, 178; Hulett v. Swift, 33 N. Y. 571.) The innkeeper’s liability, at common law, did not originally extend to cover property not within the walls of the inn, or the buildings used in connection therewith. “ So that the innholder, by law, shall answer for nothing that is out of his inn, but only for those things which are infra hospitia.” (Calye’s Case, 4 Coke, part 8, p. 63.) In several States of the Union, other than this, the innkeeper’s liability has been greatly extended. The innkeeper has been held hable in respect to baggage never within the hotel precincts, lost in the course of transportation thereto from a railway station, while in the custody of an independent transfer agent, to whom the innkeeper had delivered railroad checks, received from his guest, for the purpose of securing the baggage and bringing it to the inn. (Keith v. Atkinson, 48 Col. 480; Williams v. Moore, 69 Ill. App. 618; Hagerstrom v. Brainard Hotel Corp., 45 Fed. Rep. [2d] 130; Coskery v. Nagle, 83 Ga. 696.) The basis of the recovery in each of these cases was said to be the common-law liability of an innkeeper to his guest.

We are not greatly impressed with the reasoning of these cases. Clearly the dehvery of a railroad check to an innkeeper is not a symbolical dehvery of the baggage which it represents. The baggage is then in the custody of the railroad, and while that custody continues the railroad, not the innkeeper, would be liable for a loss. When the baggage is received by a transfer agent, to whom the check has been dehvered, the custody is that of an independent contractor, not the custody of the innkeeper or his agent. The whole theory of the innkeeper’s liability, that the things of his guest, which are within the walls of his inn, must be defended, at all costs, against attack from within or without, against thievery by inside servants, or robbery by outside footpads, or highwaymen, against nearly all conceivable perils, fails of application where the circumstances are those of the cases cited. Never having had custody or possession of the things of his guest, never having assumed a relationship in the least degree resembling that of a bailee, it is difficult to see how the duty of an innkeeper to safeguard and defend the possessions of his guest may have arisen.

In nearly all the cases cited the authority relied upon for the decisions is Dickinson v. Winchester (58 Mass. 114). In that case the facts considered were these: An innkeeper had engaged certain hackmen to attend at a railroad station to offer arriving travelers free transportation of themselves and baggage to his hotel, should they decide to become his guests. A traveler accepted such an offer from a hackman and entered his hack, to be transported to the hotel and become a guest of the innkeeper. The traveler’s trunk was placed upon a rack near the driver, and was lost or stolen on the way to the inn. The traveler thereupon brought suit against the innkeeper to recover his loss. Chief Justice Shaw, who wrote the opinion of the court, stated: “ The true ground, we are of opinion, on which the claim of the plaintiff rests, is that of an implied contract, and not the mere negligence of the driver of the coach as the defendant’s servant.” He was undecided whether the obligation upon which the recovery must rest was that of an innkeeper or a carrier. Nevertheless, he said: “ When, therefore, such coach owner or his driver thus employed undertook to carry the plaintiff’s son, and took charge of his baggage accordingly, such person became the agent of the defendants pro hac vice, and they became responsible that he should exercise due care and skill in performing the duty, which the defendants had undertaken to do for the plaintiff.” It would seem, therefore, that the basis of the recovery was the negligent performance of a contract to transport the baggage safely, not the breach of the absolute duty of an innkeeper at all hazards to safeguard the baggage of his guest received infra hospitium.

The proprietor of the Madison testified that the hotel made “ charges for the transportation of baggage;” that “ if the porter receives instructions to go and get trunks, he makes his charge.” He was asked: “ Mr. Titze, you make a charge to your guests for the transportation of baggage, do you not?” and he replied, We do, yes.” We have, then, an innkeeper maintaining a system for the transportation of the baggage of his guests for which a charge is made; an order by the guest to the hotel porter to get her baggage and bring it to the hotel; an acceptance of the order and an undertaking to perform the service. How can it be gainsaid that the defendant, for a consideration, promised to obtain the baggage and transport it to the hotel, using at least ordinary care in the fulfillment of the promise? If the defendant chose to perform its contract through an independent contractor, it may have been within its rights. Nevertheless, it could not thereby escape liability for its nonperformance through the negligence of one to whom the contract duty was assigned. The performance in such a case is indeed in legal contemplation rendered by the original obligor, who is still the party hable if the performance is in any respect incorrect.” (1 WiUiston on Contracts, § 411.) In this instance there was evidence to support the conclusion that the contract duty to transport was negligently performed and that there was no negligence on the part of the plaintiff. We prefer, therefore, to affirm the recovery upon this ground. We do not determine that the defendant was or was not liable for the breach of a duty owed by an innkeeper to his guest.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Pound, J.

text:
    Gideon Granger et al., Appellants, v. The City of Canandaigua, Respondent.

      (Argued June 8, 1931;
    decided July 15, 1931.)

      Harry C. Miller for appellants.
    The plaintiffs are the owners of the lands under the waters of Canandaigua lake. (Oklahoma v. Texas, 258 U. S. 574; Hardin v. Jordan, 140 U. S. 371; Gouverneur v. National Ice Co., 134 N. Y. 355; Ledyard v. Ten Eyck, 36 Barb. 102; Stewart v. Turney, 237 N. Y. 117; Land & Lake Assn. v. Conklin, 182 App. Div. 546; Land & Lake Assn. v. Beardsley, 182 App. Div. 550; Commonwealth Water Co. v. Brunner, 175 App. Div. 153; Wilcox v. Bread, 92 Hun, 9; 157 N. Y. 713; Hazelton v. Webster, 20 App. Div. 177; 161 N. Y. 628; Deuterman v. Gainsborg, 9 App. Div. 151; 54 App. Div. 575; 172 N. Y. 595; Calkins v. Hart, 219 N. Y. 145.)

      John Colmey and Fred D. Cribb for respondent.
    Canandaigua lake is navigable in fact and does not come within the definition of small lakes or ponds and the rule of the latter does not apply to this body of water or the lands under the same. (People v. Snyder, 41 N. Y. 397; Brown v. Scofield, 8 Barb. 239; Swinnerton v. Columbia Ins. Co., 37 N. Y. 164; Gouverneur v. National Ice Co., 134 N. Y. 355; Ledyard v. Ten Eyck, 36 Barb. 102; Land & Lake Assn. v. Conklin, 182 App. Div. 546; Commonwealth Water Co. v. Bruner, 175 App. Div. 153; Hazelton v. Webster, 20 App. Div. 177; Deuterman v.
      Gainsborg, 9 App. Div. 151; Calkins v. Hart, 219 N. Y. 145; Smith v. City of Rochester, 92 N. Y. 463.) Plaintiffs’ alleged title to the lands under the waters of Canandaigua lake is traced through and based entirely upon the Hartford Treaty. Their title must stand or fall under the terms of this treaty. (Commonwealth of Massachusetts v. State of New York, 271 U. S. 65; City of Geneva v. Hensen, 140 App. Div. 49; Seneca Nation v. Christy, 126 N. Y. 122; United States v. Holt State Bank, 270 U. S. 49; Wharton v. Wise, 153 U. S. 155; Buffalo & St. L. R. R. Co. v. Supervisors, 48 N. Y. 93; The Genesee Chief v. Fitzhugh, 12 How. [U. S.] 443; The Daniel Ball, 10 Wall. [U. S.] 557; Hamilton v. Erie R. R. Co., 219 N. Y. 343; Techt v. Hughes, 229 N. Y. 222.)
   Pound, J.

The question is as to the title of the bed of Canandaigua lake. If it is in the State, the judgment must be affirmed. If it is in the plaintiffs, defendant must be restrained from entering upon such lands and filling them in for park purposes.

Plaintiffs’ title is based on a deed, conveying among other lands under the waters of fresh water inland lakes, all the lands lying under the waters of Canandaigua lake, executed by Stephen Bates, Sheriff of Ontario county, to Gideon Granger, their ancestor, dated June 10, 1817. The deed conveyed the interest of Oliver Phelps in such lands. He had acquired title from Phelps & Gorham who acquired title from the State of Massachusetts under the famous Treaty of Hartford (1786), so often referred to in judicial decisions (People v. Snyder, 41 N. Y. 397) and articles (Colson, Title to Beds of Lakes in New York,” 9 Cornell Law Quarterly, 159, 288), whereby Massachusetts ceded to New York sovereignty over its lands within the borders of New York and New York ceded to Massachusetts the right of pre-emption of the soil west of a line running north and south through Seneca lake. Title of the present owners to the land here in question comes through the grant from New York to Massachusetts.

Canandaigua lake is navigable in fact. It has been regularly navigated by steamboats for commercial purposes. It is fifteen and six-tenths miles long and has an average width of slightly over one mile. It is surrounded by country homes and farms. It is and was a link in the chain of internal commerce. The city of Canandaigua is at its north extremity. Its outlet communicates with Clyde river, an affluent of the Seneca river.

The question of the title to the bed of fresh water lakes in New York State has frequently been before the courts. It “ has never been determined.” (Stewart v. Turney, 237 N. Y. 117, 123.) “ Natural ponds and small lakes are private property. They pass by grant of land in which they are included.” So said the court in Gouverneur v. National Ice Co. (134 N. Y. 355, 359), in holding that the riparian owners on Croton lake, covering about forty-five acres, owned to the center of the pond. “All rights of property to the soil under the waters of Hemlock lake [seven miles in length and one-half mile in width] were acquired by and belong to its riparian owners,” said the court in Smith v. City of Rochester (92 N. Y. 463, 476) although steamboats plied on the lake, carrying passengers and freight. Ownership of the bed of the lake was unimportant. The decision was unnecessary but Judge Huger entered into a long discussion to establish that title to the bed of the lake passed to Massachusetts under the Treaty of Hartford. In Sweet v. City of Syracuse (60 Hun, 28; revd., 129 N. Y. 316) the court declined to pass on the title to the bed of Skaneateles lake, fifteen miles long and about one mile wide. In City of Geneva v. Henson (195 N. Y. 447, 450) the court held that Seneca lake, 34.68 miles long and 3.46 miles wide, with one exception the largest lake wholly within the territorial limits of the State of New York, was navigable and navigated, but did not pass on the question of title to the bed of the lake. (City of Geneva v. Henson, 202 N. Y. 545.) Chism v. Smith (138 App. Div. 715, 716; 210 N. Y. 198; 174 App. Div. 332, 334) left the question in doubt as to Lake George.

In Stewart v. Turney (supra) all these cases and others were reviewed. The case went far toward holding that the title to the bed of Cayuga lake, which is 38 miles long and from one to three miles wide, is in the State. The court pointed out (p. 124) that where ‘[the law] ’is unsettled the result of a proposed rule may turn the scale ” and that were it necessary we would hold, however, that with regard to a grant of land on Cayuga lake an exception -should be made to the common-law rule ” (p. 123) that the riparian owners owned to the center of the lake.

The author of this opinion (Andrews, J.), in an able article in 16 Cornell Law Quarterly, 277, to which reference is made, indicates a grouping of our navigable inland lakes into large and small and medium. Lakes George, Seneca, Cayuga, Oneida are large lakes; Croton and Hemlock are small. The title to the bed of the large lakes remains in the State; of the small lakes in private ownership. Between the two groups come lakes like Onondaga, Otsego and Canandaigua. Where shall we place them? It seems idle to refer for a comprehensive answer to the Hartford Treaty. The cession of ownership by New York to Massachusetts was equivalent to a grant to an individual. It conveyed no more than would a grant of private ownership. ‘New York State sovereignty retained all its rights.

“ The Treaty of Hartford * * * gave to New York* as incident to its .sovereignty, title to all lands under navigable waters. * * * It would require clear and unequivocal language so to limit the obvious general purpose and effect of the grant.” (Massachusetts v. New York, 271 U. S. 65, 90, 92.)

But the grant to Massachusetts must be construed by reference to the law of New York. Navigability is not, as the decisions of the courts indicate, the determining test in all cases. A grant of land bordering on even a large stream carries title to the center of the stream unless the bed is excluded by the terms of the instrument (Chenango Bridge Co. v. Paige, 83 N. Y. 178), and title to the bed of some of the smaller lakes, although navigable, has been held to be in the riparian owners. Nor is size alone to be considered. In Hemlock lake shape seems to have been a factor. It is long and narrow like a river.

The question becomes ultimately one of practical construction. Here the plaintiffs and their predecessors in title had not, for more than one hundred years, asserted title nor exercised any act of ownership over the bed of the lake until they brought this action. Canandaigua lake is large as lakes and ponds go. Windermere, the largest lake in England, is fourteen miles long and one mile broad. Canandaigua is navigable for commercial purposes. It is longer and wider than Hemlock. The question here is not one of riparian ownership. Plaintiffs claim title independently of the adjacent owners. To hold that the sovereignty had dedicated the bed of such a lake to private uses, subject to rights of navigation only, would be not only to deprive the public of access to the water for recreation and enjoyment but also to deprive the riparian owners of their customary privileges. The English test of public ownership by the ebb and flow of the tide, has long since been abandoned as inconsistent with physical conditions in this country and not practical as applied to such bodies of water as ‘the Great Lakes. (Fulton L., H. & P. Co. v. State, 200 N. Y. 400, 412.) Except as applied to comparatively small and narrow bodies of water, resembling rivers, rather than lakes, it seems no less contrary to our institutions to say that our fresh water lakes are the subject of private ownership.

No more definite rule of general application may be stated and we pass only on the case before us. Conditions may alter cases but we hold that title to the bed of Canandaigua lake is in the State of New York in trust for all the people thereof.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


text:
    In the Matter of the Accounting of the Fulton Trust Company of New York, as Trustee under the Will of Frederick H. Clark, Deceased, Appellant. Elizabeth C. McCormack et al., Respondents.
    (Argued June 3, 1931;
    decided July 15, 1931.)

      William N. Cohen, William Harison and Arthur Sutherland for appellant.
    Where a will expressly relieves the trustee from liability for retaining investments, the trustee, acting in good faith is entitled to the benefit of the immunity. (Gould v. Gould, 126 Misc. Rep. 54; Crabb v. Young, 92 N. Y. 56; Matter of United States Trust Co., 189 App. Div. 75; Matter of Olmstead, 52 App. Div. 515; Matter of Howard, 110 App. Div. 61; Warren v. Pazolt, 203 Mass. 328; Matter of Hurlbut, 210 App. Div. 456.) The trustee was not guilty of negligence. (King v. Talbot, 40 N. Y. 76; McCabe v. Fowler, 84 N. Y. 314; Ormiston v. Alcott, 84 N. Y. 339; Jackson v. Jackson, 1 Atk. 513; Thompson v. Brown, 4 Johns. Ch. 619; Matter of Chapman, [1896] 2 Ch. 763; Jones v. Jones, 2 N. Y. Supp. 844; Green v. Crapo, 181 Mass. 55; Matter of Weston, 91 N. Y. 502; Matter of Mercantile Trust Co., 156 App. Div. 224; Matter of United States Trust Co., 189 App. Div. 75.) A trustee, when acting within the scope of the will, is not liable for an error of judgment, nor to be judged in the light of subsequent events. (Purdy v. Lynch, 145 N. Y. 462; Costello v. Costello, 209 N. Y. 252; Ormiston v. Olcott, 84 N. Y. 339; Matter of Weston, 91 N. Y. 502; Matter of Mercantile Trust Co., 156 App. Div. 224; Green v. Crapo, 181 Mass. 55; Matter of Chapman, [1896] 2 Ch. 763.) There is a distinction between an investment made by a trustee himself and the authorized retention of securities left by the testator. (Jones v. Jones, 2 N. Y. Supp. 844; Matter of Chapman, [1896] 2 Ch. 763; Matter of Weston, 91 N. Y. 502; Matter of Mercantile Trust Co., 156 App. Div. 224; Matter of Hall, 164 N. Y. 196; Green v. Crapo, 181 Mass. 55; Bowker v. Pierce, 130 Mass. 262.)

      Bern Budd and Kenneth C. Quencer for Elizabeth C. McCormack et al., respondents.
    There is ample evidence to sustain the finding of negligence. (Matter of Friedlander, 189 App. Div. 90.) The discretionary power to retain investments and the immunity clause in the will do not relieve the trustee from its negligence. (Matter of Hall, 164 N. Y. 196; Carrier v. Carrier, 226 N. Y. 114; King v. Talbot, 40 N. Y. 76; Mattocks v. Moulton, 84 Me. 545; Rae v. Meek, 14 A. C. 558; Matter of Hurlbut, 210 App. Div. 456; Matter of Richardson, 229 App. Div. 738; Guaranty Trust Co. v. U. S. Steel Corp., 107 Misc. Rep. 720; 187 App. Div. 889; 226 N. Y. 693; Matter of Frank, 124 Misc. Rep. 664; Matter of Channing, 129 Misc. Rep. 393; Matter of Gilman, 251 N. Y. 273; National Trustees Co. v. General Finance Co., [1905] A. C. 373; Matter of Jarvis, 110 Misc. Rep. 5.)

      William J. Wallin, as special guardian, for Marion McCormack et al., respondents.
    The trustee was negligent in continuing to retain the sugar stocks for a period of seven years, during all of which time the price of raw sugar declined rapidly, earnings of sugar, corporations were greatly diminished, and the stock market prices of the securities reflected rapidly declining values. (King v. Talbot, 40 N. Y. 76; Perry Trusts, §§ 460, 466; Mertz v. Guaranty Trust Co., 247 N. Y. 137; Dec. Est. Law, § 111; Matter of Hall, 164 N. Y. 196; Gould v. Gould, 213 N. Y. Supp. 286.) The immunity afforded by the will is not sufficiently broad to protect the trustee. (Crabb v. Young, 92 N. Y. 56; Gould v. Gould, 126 Misc. Rep. 54; Toronto General Trust Co. v. C., B. & Q. R. R. Co., 64 Hun, 1; Perry Trusts, § 465.)
   Kellogg, J.

The will of Frederick H. Clark, who died in the year 1920, provided for the transfer of four twenty-sevenths of his residuary estate to the Fulton Trust Company of New York, to be held in trust for the benefit of his daughter Elizabeth C. McCormack during life, one-half of the principal thereof to be paid over to her when she arrived at the age of thirty-five years, and the other half to be paid over to her children upon her death. Pursuant to a decree, settling the executors’ accounts made in Surrogate’s Court on March 14, 1923, the executors delivered to the Fulton Trust Company cash and securities, representing four twenty-sevenths of the residuary estate, to be administered by it in execution of the trust. Among the securities turned over were 1,248 shares of the common stock of the Cuban American Sugar Company of the par value of $10 a share, and 296 shares of the common stock of Guantanamo Sugar Company of no par value. These stocks had originally been held by Frederick H. Clark, the testator. They had been retained by the executors of his will and were distributed to the trustee under a testamentary provision reading as follows: “ I hereby authorize and empower my Executors and Trustees to continue all the investment of money in the securities made by me and which shall come into their possession and control at my decease, without any personal liability for so doing, and in making division of my estate among the legatees and devisees as provided in this my Will, I authorize my Executors and Trustees to divide the securities as far as practicable, giving to each legatee the same proportion of each security, and not to require any one legatee to take his or her share in whole from any kind or class of securities.” In the executors’ accounting, the Cuban American stock had been valued at $22 per share; the Guantanamo stock at $12.25. In this accounting of the trustee, instituted by Elizabeth McCormack on her arrival at the age of thirty-five years, the Cuban stock has been valued at $7; the Guantanamo at .50 cents. The Surrogate has determined that the trustee should have sold the Cuban stock in the month of September, 1927, when its value was $20 per month and the Guantanamo in September, 1928, when its value was $5 per share. These valuations were based exclusively on current prices on the New York Stock Exchange. Having so found, the Surrogate surcharged the accounts of the trustee with a loss of $16,224 on the Cuban American stock, and a loss of $1,332 on the Guantanamo Sugar Company stock.

It has been stated that there appertains to the relation of trustee and cestui que trust, a duty to be faithful, to be diligent, to be prudent in an administration entrusted to the former, in confidence in his fidelity, diligence and prudence; ” that the just and true rule is, that the trustee is bound to employ such diligence and such prudence in the care and management, as in general, prudent men of discretion and intelligence in such matters, employ in their own like affairs.” (King v. Talbot, 40 N. Y. 76, 84, 85.) The statement has been frequently approved. (Matter of Weston, 91 N. Y. 502, 511; Costello v. Costello, 209 N. Y. 252, 261.) In determining whether the acts of a trustee have been prudent, within the meaning of the rule, we must “ look at the facts as they exist at the time of their occurrence, not aided or enlightened by those which subsequently take place ” (per Peckham, J., in Purdy v. Lynch, 145 N. Y. 462, 475); for it is an obvious truth that a wisdom developed after an event and having it and its consequences as a source is a standard no man should be judged by ” (per Collin, J., in Costello v. Costello, supra, at p. 262); and it is impossible to say that trustees are wanting in sound discretion “ simply because their judgment turned out wrong ” (per Holmes, C. J., in Green v. Crapo, 181 Mass. 55, 58). We must distinguish also between the acts of trustees in making investment of trust funds, and their acts in making, or failing to make, prompt disposition of securities received from the hands of the creator of the trust. (Matter of Weston, supra; Jones v. Jones, 2 N. Y. Supp. 844; Matter of Mercantile Trust, 156 App. Div. 224; Matter of Chapman, [1896] 2 Ch. 763.) Self-evidently the purchase of a speculative stock by a trustee is one thing; the retention of such a stock awaiting the arrival of a favorable opportunity to sell, is quite another; the former would constitute negligence; the latter, regarded prospectively, might be prudent, although in retrospect it might seem to have been a grievous error. Furthermore, the distinction between negligence and mere error of judgment must be borne in mind. “ Trustees acting honestly, with ordinary prudence and within the limits of their trust, are not liable for mere errors of judgment ” (per Lindley, J., in Matter of Chapman, supra, at p. 776); a trustee should not be held hable for unfortunate results which he could not be expected to foresee and was powerless to prevent ” (Ormiston v. Olcott, 84 N. Y. 339, at p. 347).

The testator empowered his executors and trustees to continue all the investment of money in the securities made by me and which shah come into their possession and control at my decease, without any personal habihty for so doing.” The very fact that the trustees, as well as the executors, were so authorized, indicates that the testator contemplated that the securities left by him might be held over an extended period. Although, at the time of the executors’ accounting, the sugar stocks had been retained by the executors for three years, the Surrogate absolved them of blame for not making disposal thereof, and directed that the stocks be turned over in kind to the trustee of the various trusts created by the will. The Surrogate then expressed his opinion as to the wishes of the testator in regard to the stocks that it was his desire that they should be kept at all hazards.” If such were his desire, equally was it his wish that they should be kept without any personal liability for so doing.” The testator had an absolute right to provide that his trustee should not be hable for losses accruing from the retention of the securities, although it may have been imprudent so to retain them. (Crabb v. Young, 92 N. Y. 56, 65.) In that case the testator had provided that his trustees should not be liable for losses except those arising from their own willful default, misconduct or neglect.” The court said: “ It is quite clear that they cannot be held liable to replace the moneys lost through even an improvident or careless investment, unless they have acted willfully and have intentionally disregarded the rules which control and regulate the action of prudent and careful men in conducting their own business affairs.” Our will does not go quite so far as the will quoted, but at least there must be evidence of lack of reasonable care.

There is no rule of law which compels the court to hold that an honest trustee is liable to make good loss sustained by retaining an authorized security in a falling market, if he did so honestly and prudently, in the belief that it was the best course to take in the interest of all parties.” (Per Lindley, J., in Matter of Chapman, supra, at p. 776.) It cannot be said that the trustee was negligent in the sense that it was inattentive to its duty, or ignored the question whether a sale of the stocks was advisable or otherwise. The securities of the trust were examined and considered by a committee of the trustee’s directors at least once in every six months. This committee was composed of distinguished financiers, members of the New York Stock Exchange, lawyers and others of note in business circles. It was their judgment that the stock should not be sold. They consulted Henry Clark, a brother of the testator, and first vice-president of the Cuban American Sugar Company, and it was his advice, given as late as 1928, not to sell. They consulted Horace 0. Havemeyer and William 0. Havemeyer, well-known figures in the sugar trade, and received the same advice. True, the trustee, in a written statement sent to beneficiaries of various trusts under the will which it administered, entitled Review of Trust Investments,” and dated June 1st, 1928, reported that the Cuban and Guantanamo stocks were “ unsuitable for long term holdings, as trust investments.” Yet none of these beneficiaries, including the petitioner, Mrs. Clark, the testator's widow, or Mrs. Quincer, all then of full age, ever requested that a sale be made. Moreover, each of these women, in satisfaction of absolute gifts under the terms of the will, had received many shares of stocks in the same sugar companies. Although complaining that the trustee of this particular trust had not made a sale, not one of them, up to the date of the accounting, had disposed of their own stocks. Doubtless, the securities were not suitable to long term holdings. But when to sell? Stocks of variable value ought not to be timidly and hastily sacrificed, nor unwisely and imprudently held.” (Per Finch, J., in Matter of Weston, supra, at p. 511.) The Surrogate determined that the trustee should have sold in September, 1927. Yet from the preceding December of 1926, the market prices for Cuban American had consistently fallen, the high and low for each succeeding month being lower than for the preceding. The same consistent decline followed through to the date of the accounting. The fall was due solely to the oversupply of sugar in the markets of the world. An oversupply of a commodity, compelling sales at prices netting little or no profit, in the long run necessarily induces under planting, which in turn is productive of higher prices for the commodity, and increased profits to the producer. Here was a sugar company, coming through a period of depression with assets unimpaired, with a book value greater rather than less, with liabilities reduced rather than increased, with a cash condition notably sound, able to survive if any sugar company might. Under these circumstances was it the part of wisdom to sell the stocks at what each month may well have seemed bottom prices? With all the advices which the trustee received from those well versed in the sugar trade and in finance, and those experienced in the vagaries of the Stock Exchange, counseling delay, how can it be said that it was negligent in omitting to make prompt disposal of the stocks? Under the circumstances, we think that the trustee, as the event has proven, was guilty, at the very most, of an error of judgment, in not making sale of the stocks at an earlier date. It may have been deficient in prevision and prophesy; it was not lacking in the exercise of care. Therefore, even if the immunity from liability provided for by the testator does not cover the case, we think that there has been no fault and that it was error so to find.

The order of the Appellate Division should be reversed and the decree of the Surrogate’s Court modified by striking therefrom the provision surcharging the accounts of the trustee, with costs to the appellant in all the courts payable from the fund.

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

Ordered accordingly.


author: Crane, J.

text:
    In the Matter of the Will of Ada W. Putnam, Deceased. Edith I. Smith, Appellant; Richard H. Mitchell, Respondent.

      (Argued June 2, 1931;
    decided July 15, 1931.)

      William R. Conklin, Edward S. Bentley and Sperry Butler for appellant.
    The Surrogate erred in admitting the testimony of the stenographer as to the preparation of the paper offered for probate. (Matter of Coleman, 111 N. Y. 220; Matter of Cunnion, 201 N. Y. 123; Loder v. Whelpley, 111 N. Y. 239; Taylor v. Forster, 2 Car. & P. 195; Bowman v. Norton, 5 Car. & P. 177; King v.
      Inhabitants of Upper Bodington, 8 Dow. & Ry. 726.) The Surrogate erred in excluding evidence of certain acts and declarations of the decedent during the six months which elapsed between the date of the execution of her will and the date of her death. (Smith v. Keller, 205 N. Y. 39; Matter of Levy, 198 App. Div. 773; Marx v. McGlynn, 88 N. Y. 357.)

      George W. Alger for respondent.
    The stenographer was a competent witness and her testimony was properly received on the trial. (Clapp v. Fullerton, 34 N. Y. 190; Hewlett v. Wood, 55 N. Y. 635; Matter of Coleman, 111 N. Y. 220; Clifford v. Denver & Rio Grande Ry. Co., 188 N. Y. 349; Foley v. Royal Arcanum, 151 N. Y. 196; Matter of Cunnion, 201 N. Y. 132; Loder v. Whelpley, 111 N. Y. 239; Matter of Eno, 196 App. Div. 139; Sibley v. Waffle, 16 N. Y. 180; Brand v. Brand, 39 How. Pr. 193; Goddard v. Gardiner, 26 Conn. 172; Landsberger v. Gorham, 5 Cal. 450; Matter of Austin, 42 Hun, 516; Hurlburt v. Hurlburt, 128 N. Y. 420; LeCour v. Importers & Traders Nat. Bank, 61 App. Div. 163; Matter of Kindberg, 207 N. Y. 220; Broad v. Broad, 1 M. & M. 233; Foster v. Hall, 12 Pick. 89; Baumann v. Steingester, 213 N. Y. 328.) The Surrogate did not err in excluding evidence of acts and declarations of the decedent during the period which elapsed after the execution of her will and her death. (Matter of Powers, 176 App. Div. 455; Gick v. Stumpf, 204 N. Y. 413; Smith v. Keller, 205 N. Y. 39.)
   Crane, J.

The will of Ada W. Putnam, dated the 4th day of October, 1928, has been admitted to probate by the Surrogate of New York county, over the objections and contest of Edith I. Smith, a niece of the testatrix. Ada W. Putnam was a widow about seventy years of age whose only living relative was this niece, for whom she had much affection. By the terms of previous wills, executed under such circumstances that undue influence is not suggested, Mrs. Putnam was consistent in mind and purpose to leave Miss Smith the income of her estate for life. This was the provision in all previous wills as well as the present one. The residuary estate, however, in the previous wills had been left to charity, whereas in this last will and testament it was given to the lawyer who drew the instrument, and in consequence has caused all the trouble. Attorneys for clients who intend to leave them or their families a bequest would do well to have the will drawn by some other lawyer. Any suspicion which may arise of improper influence used under the cover of the confidential relationship may thus be avoided. The law, recognizing the delicacy of the situation, requires the lawyer who drafts himself a bequest to explain the circumstances and to show in the first instance that the gift was freely and willingly made. (Matter of Smith, 95 N. Y. 516.) Such wills, when made to the exclusion of the natural objects of the testator’s bounty, are viewed with great suspicion by the law, and some proof should be required beside the factum of the will before the will can be sustained.” (Marx v. McGlynn, 88 N. Y. 357, 371.) In the absence of any explanation a jury may be justified in drawing the inference of undue influence, although the burden of proving it never shifts from the contestant. (Matter of Kindberg, 207 N. Y. 220, p. 228.)

Miss Smith contested this will on the ground of undue influence. The jury, after a clear and concise statement of the law by the Surrogate, found that there was no undue influence, and the will was admitted to probate. There being ample evidence to justify this conclusion, the case comes to this court on certain exceptions taken to the admission and exclusion of evidence, particularly the testimony of Miss Shea, a subscribing witness. She was a clerk in the office of the lawyer who drew the will, and at his request became a subscribing witness thereto. The claim of the appellant is that her testimony related to Confidential communications with the deceased and should have been excluded, the exception in section 354 of the Civil Practice Act applying only to attorneys and not to their clerks. Section 353, prohibiting attorneys from disclosing communications made by a client, extends in so many words to clerks, stenographers and other employees of the attorney. Section 354, however, leaves out the words " clerk, stenographer or other person employed ” in permitting an attorney to testify where he has become a subscribing witness to a will. The ruling of the Surrogate that Miss Shea’s testimony was competent, and that the clerk shares the privilege as well as the prohibition of the attorney, was correct, and we can add nothing to his able opinion dealing with this point:

There is one ruling which,-while not calling for a reversal, may, we fear, be misunderstood, without a word of explanation and limitation. The testatrix, so the evidence shows, had on various occasions previous to the making of this will, expressed a fear and distrust of her attorney. Questions calling for the state of her feelings after the maldng of the will were excluded upon the authority of Smith v. Keller (205 N. Y. 39). This testimony was competent if limited to the feeling of the testatrix for her lawyer and expressed by her within a limited or reasonable period after the maldng of the will. Such statements are not evidence of the facts to which they may relate. They would not be, for instance, evidence of what the lawyer did or said at the time of the making of the will or on any other occasion. Her statements, however, both before and after the making of the will, would be competent to show the state of her mind, her mental capacity, her attitude and feeling toward her lawyer, and her ability to resist his influence. Such was the ruling of this court in Marx v. McGlynn (88 N. Y. 357), which was not modified by anything subsequently said in Smith v. Keller (supra). Earl, J., writing for the court in the Marx case, said: Such memoranda or declarations, whether made before or after the execution of a will, are competent as bearing upon the testator’s mental capacity. They are also competent as bearing upon the condition of the testator’s mind, with reference to the objects of his bounty. They may be given in evidence for the purpose of showing his relations to the people around him, and to the persons named in his will as beneficiaries. They are, however, entitled to no weight in proving external acts, either of fraud or undue influence” (p. 374).

As early as 1854 this court said in Waterman v. Whitney (11 N. Y. 157, p. 165): The difference is certainly very obvious between receiving the declarations of a testator, to prove a distinct external fact, such as duress or fraud for instance, and as evidence merely of the mental condition of the testator. In the former case, it is mere hearsay, and liable to all the objections to which the mere declarations of third persons are subject; while in the latter it is the most direct and appropriate species of evidence. Questions of mental competency and of undue influence belong in this respect to the same class: because as is said by Jarman, in his work on Wills, ' The amount of undue influence which will be sufficient to invalidate a will, must of course vary with the strength or weakness of the mind of the testator.’ ”

The declarations of a testator which are commonly received in proceedings for the probate of wills are expressions that tend to show his mental conditions and feelings, as bearing upon the probability that the instrument in question was the product of a sound mind, unaffected by undue influence — whether it was a mind that was subject to undue influence. (Brady v. Doherty, 253 Mass. 518.) Declarations of a testator made after the execution of the will were held competent in Rusling v. Rusling (36 N. J. Eq. 603). (See, also, Matter of Jackman, 26 Wis. 104.) Wigmore on Evidence ([2d ed.] vol. 3, § 1738) says that in order to show the state of affection or dislike to specific persons and Ms general testamentary attitude toward them a testator’s utterances, acts and expressions, whether prior or subsequent to the making of the will, may be considered.

The statements made in the opinion in Smith, v. Keller (supra), which the Surrogate thought modified this rule as stated in the Marx case, had reference to questions wMch aimed at proving the fact of undue influence instead of the state of the testatrix’s mind or her feelings toward her family and relatives. Chase, J., said: The declarations of the testatrix subsequent to maMng the will were improper and incompetent as affirmative statements of facts to prove fraud and collusion” (p. 48). He recognized the general rule by further stating: So far as such declarations show the mental strength of the testator’s mind, they are allowed for that purpose, but when they are so received they should be confined to the purpose for wMch they are received. * * * They should not be remote and should bear upon their face some evidence of the testator’s mental condition” (p. 49). In that case the declarations sought to be elicited were made some six to ten years after the maMng of the will. TMs alone would have justified their exclusion, as the rule has always been that the evidence of acts and declarations bearing upon the mental state and attitude of the testator must relate to those happening within a reasonable time after the maMng of a will.

The rulings of the Surrogate, however, in the exclusion of this testimony do not call for reversal. The attitude of Mrs. Putnam toward her lawyer before the maMng of the will was fully given; it was not at all favorable according to the contestant’s testimony. The evidence showing the continuation of such feeling after the maMng of the will would not have strengthened her case. The underlying fact is that so far as the contestant herself is concerned, she has received the bounty which the testatrix always had in mind to give her. TMs, as heretofore stated, is fully established by the previous wills which had been executed, containing a like provision for her, and to which no suspicion attached.

The order should be affirmed with costs.

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

Order affirmed.


author: Hubbs, J. Kellogg, J.

text:
    The People of the State of New York, Respondent, v. George Hope, Appellant.
    (Argued June 11, 1931;
    decided July 15, 1931.)

      Michael l. Winter for appellant.
    The prosecution failed to prove the offense charged in the indictment. (Penal Law, § 1250; People ex rel. Municipal Gas Co. v. P. S. Comm., 224 N. Y. 156; Horn v. Klugman, 112 Misc. Rep. 171; People v. Camp, 139 N. Y. 87; 1 Whart. Cr. Law, § 297; People v. Tohman, 2 Barb. 216; State v. Cord, 34 N. H. 515; People v. Ryan, 232 N. Y. 234; People v. Santoro, 229 N. Y. 277; Dehn v. Mandeville, 68 Hun, 335; Hadden v. People, 25 N. Y. 373; People v. Harrison, 261 Ill. 517; Mayo v. State, 43 Ohio St. 567; Ross v. State, 15 Fla. 55; State v. Sutton, 116 Ind. 527; Commonwealth v. Nickerson, 5 Allen, 518; People v. Black, 147 Cal. 426; Matter of Keil, 85 Cal. 309; State v. Leuth, 128 Iowa, 189; People v. De Leon, 109 N. Y. 226; Smith v. State, 63 Wis. 453.)

      Thomas C. T. Crain, District Attorney (Robert C. Taylor and Felix C. Benvenga of counsel), for respondent.
    The crime charged was fully proved. (People v. Sugarman, 248 N. Y. 255; Smith v. State, 63 Wis. 453; State v. Leuth, 128 Iowa, 189; People v. Camp, 139 N. Y. 87; Matter of McDonald, 50 Mont. 348; Limbeck v. Gerry, 15 Misc. Rep. 663; Hadden v. People, 25 N. Y. 373; People v. Harrison, 261 Ill. 517; People v. Fisher, 30 Cal. App. 135; State v. Newman, 127 Minn. 445; People v. Davis, 56 N. Y. 95; Bork v. People, 91 N. Y. 5; People v. Herlihy, 66 App. Div. 534; 150 N. Y. 184; People v. Bennett, 182 App. Div. 871; People v. Abeel, 182 N. Y. 415; People v. Hamilton, 183 App. Div. 55; 230 N. Y. 577.)
   Hubbs, J.

About one o'clock in the morning of March 22, 1930, Lawrence McCarthy, a young boy, and his brother-in-law, Vincent Klemmer, were on Forty-third street, New York city, in front of McCarthy’s home. They were about to enter an automobile, a Buick coupe, to go on an errand. McCarthy entered the car and seated himself at the wheel. Klemmer took the seat beside him. At that time, three men, whom they did not know, stepped up to the car. They ordered McCarthy to get into the rumble seat, and Klemmer to drive the car. Two of the strangers got into the car and sat on the front seat with Klemmer and one on the rumble seat with McCarthy. One of the men placed a gun against Klemmer, and frightened him. He was ordered to drive ahead and keep his eyes forward or they would blow his head off. One of the men, referring to McCarthy, said, if he moves, let him have it.” They told Klemmer to drive to Long Island. He started the car and drove it about a mile when he saw a police booth at Columbus Circle. He gave the car a sudden turn and hit the booth and stopped the car. The three strangers jumped out and ran. The policeman in the booth saw the defendant sitting on the front seat of the car and succeeded in capturing him after he had jumped out and run a short distance. The other two strangers escaped. The defendant was indicted for kidnapping and has been convicted.

No one can read the record in this case without arriving at the conclusion that the defendant is guilty beyond a reasonable doubt. Several grounds are urged as reasons why the judgment of conviction should be reversed. We have examined all of them and are satisfied that under the facts in this case none of them require a reversal. In fact, most of the grounds urged were not raised by proper exceptions, and, therefore, do not constitute cause for reversal in this court. The only question which we deem it necessary to consider is whether there is any evidence which sustains the charge of kidnapping as defined by section 1250 of the Penal Law which reads:

§ 1250. Kidnapping defined. A person who wilfully: 1. Seizes, confines, inveigles, or kidnaps another, with intent to cause him, without authority of law, to be secretly confined or imprisoned within this state, or to be sent out of the state, or to be sold as a slave, or in any way held to service or kept or detained, against his will; * * * Is guilty of kidnapping.”

Kidnapping was a crime under the common law of England, and was defined by Blackstone (Yol. 4, p. 219) as the forcible abduction or stealing away of a man, woman, or child, from their own country and sending them into another.” Under the common law of England it was a misdemeanor punishable by fine, imprisonment and pillory. The common-law definition was extended in England at a very early day. (People v. Camp, 139 N. Y. 87.) The crime is now defined by statutes, in all of our States, which have greatly enlarged the cases where conviction may be had. (Smith v. State, 63 Wis. 453; People v. Camp, supra.)

The present statute, section 1250 of the Penal Law, is a revision of 2 Revised Statutes, 664, section 28. (Hadden v. People, 25 N. Y. 373.)

The crime both under the English common law and the statute embraces all the elements of assault and false imprisonment. (2 Bishop on Criminal Law [9th ed.], § 750.)

False imprisonment is an offense not made criminal by our law except in the case of a police officer. (Penal Law, § 1844; Smith v. State, supra.)

The indictment charges: “ The said defendant, in the County of New York aforesaid, on the twenty-second day of March, nineteen hundred and thirty, did feloniously and wilfully seize, confine, inveigle and kidnap another, to wit, one Lawrence McCarthy, with intent to cause him, the said Lawrence McCarthy, without authority of law and against his will, to be secretly confined, detained and imprisoned within the State of New York; against the form of the statute in such case made and provided and against the peace of the People of the State of New York and their dignity.”

The evidence establishes beyond question that McCarthy was willfully seized and confined in the automobile without authority of law.

It is not necessary in order to constitute the crime that actual force or violence be used. Such a narrow construction of the statute would render it nugatory. A threat to kill, coupled with the possession of a deadly weapon and apparent power to carry out the threat, is equivalent to the use of actual violence. The crime is frequently committed by the use of threats and intimidation which overcome the will of the victim and secure the control of his person without his consent and against his will.

It is contended by appellant that there was failure upon the trial to establish the criminal intent required under the statute, that is, that the seizure and confinement in the car was with intent to cause ” the one kidnapped " to be secretly confined or imprisoned within this state ” and “ in any way held to service or kept or detained, against hisfwill.” Specifically, the claim of the appellant is that in order to constitute the crime detention alone is insufficient unless coupled with an intent to ‘ hold to service and keep.’ ”

Under the statute there must be a specific criminal intent to cause the victim “ to be secretly confined, or imprisoned within this state, or to be sent out of the state, or to be sold as a slave, or in any way held to service or kept or detained against his will.” The intent with which the victim was seized and confined is material, of the essence of the crime and must be set out in the indictment and established upon the trial. (Hadden v. People, supra; State v. Leuth, 128 Iowa, 189; State v. Newman, 127 Minn. 445.)

The intent need not be established by direct proof. It may be shown by circumstantial evidence. Its existence constitutes a question of fact for the determination of the jury if there is any evidence tending to establish it.

In the case at bar the willful and unlawful seizure and confinement was established by direct evidence. The jury has found upon sufficient evidence that such seizure and confinement was unlawful, willful and with the intent to secretly confine, imprison and detain McCarthy against his will, within the State. It has not found, nor would it have been justified in finding, that the seizure and detention was with the intent to hold to serve. Such a finding was not necessary to sustain a conviction.

The statute must be given a reasonable construction in order to promote the efficient enforcement of the criminal law, to prevent crime and to promote the ends of justice. The object of the statute and of the common law on the subject was the same, to secure the personal liberty of citizens and to secure to them the assistance of the law necessary to release them from unlawful restraint. (Smith v. State, supra; People v. Camp, supra.)

The statute defining kidnapping in Minnesota is almost identical with section 1250 of the Penal Law. In the case of State v. Newman (127 Minn. 445) the court held that the willful and unlawful seizing of a person with the intent to cause him to be secretly confined or imprisoned within the State constituted the crime of kidnapping. We are satisfied that such is the proper construction of the statute, and that it is unnecessary to prove an intent to hold to serve as contended by the appellant. It was sufficient to charge and prove that the defendant willfully and unlawfully seized McCarthy, against his will, and confined and kidnapped him with intent t<r cause him to be secretly confined, detained or imprisoned within this State. All of those elements were established to the satisfaction of the jury. The intent was evidenced by the fact that he was secretly seized in the night time by use of a gun and actually imprisoned, confined and restrained in the automobile.

The appellant urges that the case of People v. Camp (supra) holds to the contrary. In that case, the father of an adult daughter living with him, alleging that she was insane, went to the County Judge and stated the case to him. Two physicians were appointed to examine her. They examined her and certified under oath that she was insane. The Judge approved the certificate. She knew that she had been adjudged insane and was to be taken to an asylum and she was taken in the day time without using force. She went voluntarily. This court decided that even though she was never insane, and the father knew it and used the forms of law from improper and malicious motives, nevertheless, he was not guilty of the crime of kidnapping — that there was no secret confinement within the State as required by statute. The court said: “ When the person seized or inveigled is not removed from the state, the intent must be secret confinement within the state. When the person is seized and removed in broad daylight over public highways and railroads in the presence and view of many people, and taken to a public asylum, where there are public officials, numerous physicians and other people, there certainly is no secrecy about the transaction, and ft bears no resemblance to what has always been understood to be kidnapping ” (p. 92).

There can be no question but that the decision in that case was correct upon principle and authority. This case is entirely different. McCarthy was secretly seized in the night under circumstances calculated to terrify him. His captors had guns which they threatened to use to kill him with if he moved. They forced him to take the rear seat in the car. They apparently intended to take him in the car to Long Island as BJemmer was told to drive there. They had complete control of his person; he was confined and imprisoned in the car. That was not a mere assault or imprisonment. He was secretly confined and imprisoned because his captors were concealing their purpose from the public by compelling Klemmer and McCarthy to appear to be willing participants in the automobile ride, when in fact they were compelled upon the threat of death to act as they did.

The confinement and detention in the automobile for a short time, coupled with the intent, brings the case within the purview of the statute. (State v. Leuth, supra.)

It seems clear that under the common understanding of the term “ kidnapping ” the defendant is guilty of the crime charged and the facts bring the case within the spirit and intent of the statute.

The judgment should be affirmed.

Kellogg, J.

(dissenting). Doubtless, to “kidnap,” according to popular usage, is “ to carry (any one) away by unlawful force or by fraud, and against his will.” (Webster’s International Dictionary.) However, we are not now dealing with a case involving the popular use of words. Nor is it enlightening that according to the concept of the common lawyer, “ lddnapping ” was “ the forcible abduction or stealing away of a man, woman, or child from their own country and sending them into another” (Blackstone, vol. 4, p. 219), or that to “ kidnap ” originally meant “ to carry off (a child or other person) to enforced service or labor on the plantations of the British colonies in America. See kid, a servant.” (Webster’s International Dictionary.) Our decision must be controlled by the definition of kidnapping given in the statute which makes the act a crime. A person is guilty of kidnapping not merely if he “ seizes, confines, inveigles, or kidnaps another,” but only if he so does “ with intent to cause him, without authority of law, to be secretly confined or imprisoned within this state,” or “ to be sent out of the state, or to be sold as a slave, or in any way held to service or kept or detained, against his will.” (Penal Law, § 1250.) Self-evidently, the person accused, to be guilty, must not merely seize or kidnap, in the popular sense of these words, with intent so to do; he must so seize or kidnap with an ultimate purpose of accomplishing something more than the mere seizure. Secret confinement or imprisonment within the State; slavery or bondage or detention without the State — the accomplishment of some one of either of these two sets of purposes must have been aimed at by the seizure. Certainly slavery or bondage without the State was not intended. Nor is there proof, direct or inferential, that secret confinement within the State was the objective of the defendant. Therefore, I think the crime charged was not established.

Cardozo, Ch. J., Pound, Crane, Lehman and O’Brien, JJ., concur with Hubbs, J.; Kellogg, J., dissents in opinion.

Judgment affirmed.


text:
    In the Matter of the Accounting of The National Bank and Trust Company of Norwich, as Executor of A. Bertsell Ireland, Deceased. Frank L. Ireland et al., Appellants; Lena M. Whitmore, Respondent.

      (Argued June 4, 1931;
    decided July 15, 1931.)

      V. D. Stratton for appellants.
    The bequest of the preferred stock constituted a specific legacy. (Matter of Werle, 91 Misc. Rep. 402; Tift v. Porter, 8 N. Y. 518; Matter of Bergan, 56 Misc. Rep. 92; Holt v. Jex, 48 Hun, 528; Matter of Delaney, 133 App. Div. 409; Crawford v. McCarthy, 159 N. Y. 514.) The sale of the preferred stock by the committee of the testator while the testator was living had the same force and effect as a voluntary sale by the testator and operated to adeem the legacy. (Beck v. McGillis, 9 Barb. 35; Matter of Freer, L. R. 22 Ch. Div. 622; Jones v. Green, L. R. 5 Eq. 555; Holmes v. Goodworth, 7 L. J. Ch. 28; Miller v. Miller, 25 Grant Ch. 224; Hoke v. Herman, 21 Penn. St. 301; Blackstone v. Blackstone, 3 Watts, 338; Kenaday v. Sinnott, 179 U. S. 606; Matter of Brann, 219 N. Y. 263; Mentz v. Guaranty Trust Co., 247 N. Y. 137; Matter of Coe, 47 App. Div. 177; Matter of Windmayer, 74 App. Div. 336; Brandreth v.
      Brandreth, 54 Misc. Rep. 158; Matter of Carter, 71 Misc. Rep. 406.) In the absence of any proof showing the real intention of the testator at the time the will was made a presumption which would not disinherit his children should be indulged in rather than a contrary presumption. (Scott v. Guernsey, 48 N. Y. 120; Low v. Harmony, 72 N. Y. 414; Matter of Brown, 93 N. Y. 299; Soper v. Brown, 136 N. Y. 251; Bryer v. Finnen, 178 App. Div. 673; Matter of Knight, 196 App. Div. 358.)

      Neil G. Harrison for respondent.
    When testator was adjudged incompetent he became incapable of manifesting a legal intention. The committee could not change testator’s intent, as manifested by his will, and the committee’s conduct could not alter or revoke the bequest of the preferred stock. Hence, the legacy was not extinguished or adeemed by the committee’s sale of the subject-matter thereof. (Burnham v. Comfort, 108 N. Y. 535; Matter of Carter, 71 Misc. Rep. 406; Brandreth v. Brandreth, 54 Misc. Rep. 158; Wilmerton v. Wilmerton, 176 Fed. Rep. 896; Matter of Cooper, 30 A. L. R. 673.)
   Crane, J.

On November 1, 1928, A. Bertsell Ireland, a resident of Chenango county, became so weak and feeble both mentally and physically that his son Frank L. Ireland was appointed committee of his person and estate. At that time the testator owned ninety-four shares of the common stock of the Ireland Machine & Foundry Co., Inc., and fifty-six shares of the preferred stock. The committee needed money to support the incompetent, especially as the nurse was receiving eighty dollars a week, or three hundred and twenty dollars per month for her services. For this reason he sold the preferred stock for the sum of $4,480, and used the money for the support and maintenance of the incompetent until his death, March 1, 1929. The account of the committee was judicially settled in the County Court of Chenango county, and an order made directing him to pay to the executor of the estate of the decedent the balance of cash remaining in his hands, amounting to $1,848.40.

When the will of the incompetent was opened it was found that he had left and bequeathed unto Lena M. Whitmore the preferred stock in the Ireland Machine & Foundry Co., Inc., which had been sold by the committee. The will was dated May 26, 1926, and was, therefore, executed more than two years prior to the appointment of the committee and the incompetency of the testator.

The bequest of all the preferred stock to Lena M. Whitmore was a specific legacy, and as. the stock was not in existence at the time the will took effect, or at the death of the testator, there was an ademption, extinction or withdrawal of the gift. A change in the nature of the property works an ademption. (Matter of Brann, 219 N. Y. 263; Hoke v. Herman, 21 Penn. St. 301.)

The Appellate Division was of the opinion that the intention of the testator was the governing factor in the case, and that as he had become incompetent to change or modify his will, his committee had no power to dispose of his property or, in this instance, the preferred shares, so as to work an ademption of the legacy. The rule as it existed at common law, and still exists, admits of no such exception. The property constituting the specific legacy had been sold; it had ceased to exist. The exact thing which was given by the will could not physically be passed on to the legatee. From the very nature of the case and of the gift the legacy became extinct.

In the absence of statute there is no power in the courts to change a specific into a general legacy or turn over the balance of the proceeds derived from the sale of the specific property to the legatee in place of the particular thing intended to be given. Out of the moneys received from the sale of the preferred shares by the committee there was left a balance over and above expenditures for the incompetent of $1,848.40, which was turned over to the executor as part of the estate. To give this to Lena M. Whitmore in place of the preferred shares might seem equitable, but it is not in accordance with the directions or will of the testator. He gave her the preferred shares of stock, not the proceeds thereof, and according to all the decisions, when the specific thing given ceases to exist the legacy falls; it cannot be made up out of other property in the estate. This situation has been met in England by the Lunacy Act of 1890 (§ 123, subd. [1]), which provides: “The lunatic, his heirs, executors, administrators, next of kin, devisees, legatees, and assigns, shall have the same interest in any moneys arising from any sale, mortgage, or other disposition, under the powers of this Act which may not have been applied under such powers, as he or they would have had in the property the subject of the sale, mortgage, or disposition, if no sale, mortgage, or disposition, had been made, and the smplus moneys shall be of the same nature as the property sold, mortgaged, or disposed of.” (8 Chitty’s Statutes [6th ed.], p. 479.)

In the case of Matter of Hodgson’s Trusts Public Trustee v. Milne ([1919] 2 Ch. 189) consols belonging to the patient and specifically bequeathed by her will were sold and the proceeds paid into her bank account. After the patient’s death the specific legatees were held to be entitled under this act to the money remaining in the bank after the sum applied by the receiver on behalf of the incompetent. (See, also, Matter of Walker — Goodwin v. Scott, [1921] 2 Ch. 63.) We have no such statute in this State; the nearest approach to it is section 1402 of the Civil Practice Act relating to real property.

The wisdom of adhering to this rule of ademption in the absence of any statute is apparent when we reflect that A. Bertsell Ireland, when he made his will, probably never contemplated physical and mental incapacity and the appointment of a committee to handle his affairs. An intention to hold the shares of the preferred stock for the benefit of a stranger, while spending the remainder of his estate which would naturally go to his children, for doctors, nurses and maintenance, can hardly be imagined. At least a court should not say that a man in his right mind would not under such contemplation have changed his will. Such cases as Wilmerton v. Wilmerton (176 Fed. Rep. 896); National Board v. Fry (293 Mo. 399) and Matter of Cooper (95 N. J. Eq. 210), holding to the contrary, have not been overlooked.

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

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

Ordered accordingly.


author: Cardozo, Ch. J.

text:
    New York Bankers, Inc., Appellant, v. Herbert Duncan, Respondent.

      (Argued June 11, 1931;
    decided July 15, 1931.)

      Charles H. Kelby and Abraham J. Halprin for appellant.
    Plaintiff had no actual knowledge that the notes had been procured from the defendant by fraudulent representations or that the defendant made any such claim. (Title Guarantee & Trust Co. v. Pam, 232 N. Y. 441.) There was no duty upon the plaintiff to inquire into the nature of the transaction which gave rise to the notes. (Cheever v. Pittsburgh R. R. Co., 150 N. Y. 59; Coopersmith v. Maunz, 227 App. Div. 119; Hurst v. Lee, 143 App. Div. 614; American Surety Co. v. Palmer, 211 App. Div. 172; Dutch v. McMahon, 219 App. Div. 203.) Neither friendship nor close relationship between the payee and the holder will prevent the latter from being a holder in due course in the absence of proof of actual knowledge or bad faith. (Title Guarantee & Trust

      Co. v. Pam, 232 N. Y. 441; Karpas v. Bandler, 223 App. Div. 306.) The defendant failed to establish a cause of action upon his counterclaim since plaintiff was not a party to the contract which the defendant sought to rescind and since the plaintiff was itself guilty of no fraud toward the defendant. (Alexander City Bank v. Equitable Trust Co., 223 App. Div. 24; Inman v. Credit Discount Corp., 230 App. Div. 505.) Although the defendant had received certificates of the indebtedness in exchange for the stock and had also received dividends on the stock prior to that exchange, the judgment permits him to retain the certificates and the dividends and at the same time to defeat the action on the notes representing part of the purchase price and to recover such portion of the purchase price as he had already paid. This is error for it is well established that fraud is no defense to an action on a note unless the maker rescinds and restores or offers to restore the consideration received. (New York Trust Co. v. American Realty Co., 213 App. Div. 272; Farmers’ Nat. Bank v. St. Regis Paper Co., 77 App. Div. 558; Reno v. Bull, 226 N. Y. 546; United Transportation Co. v. Glenn, 225 App. Div. 171; Soper v. St. Regis Paper Co., 38 Misc. Rep. 294; 76 App. Div. 409.)

      Gerald F. Hoyt and John S. Russell for respondent.
    The fraud of the salesman is binding upon the plaintiff. (Title Guarantee & Trust Co. v. Pam, 232 N. Y. 441; Kittredge v. Grannis, 244 N. Y. 168.) The judgment for the defendant on his counterclaim was proper in view of the conclusion reached by the jury that the plaintiff did not act in good faith when it received the original notes of the defendant. (Roberts v. Ely, 113 N. Y. 128; Miller v. Schloss, 218 N. Y. 400; Spotten v. DeFreest, 140 App. Div. 792; Miller v. Barber, 66 N. Y. 558.)
   Cardozo, Ch. J.

The complaint is upon three negotiable promissory notes given by the defendant to the Arflex Lamp and Fixture Manufacturing Corporation, and indorsed by the payee to the plaintiff.

The answer is, first, that the notes in suit and others renewed thereby were procured through fraudulent representations by the agent of the payee and were thereafter received by the plaintiff with knowledge of the fraud, and, second, a counterclaim for payments made to the plaintiff on account of the notes before discovery by the defendant of the wrong that he had suffered.

The notes renewed by those in suit were given by the defendant to the Arflex corporation in payment for shares of stock. To induce the purchase of the shares, fraudulent statements as to the financial condition of the corporation were made to the defendant by the salesman Mclntire. There is a concession by the appellant that the finding of fraud has support in the evidence. The notes, promptly after delivery, were indorsed by the payee to the plaintiff, New York Bankers, Inc., which paid value therefor. The question is whether it took them with notice of the fraud.

Mclntire, the guilty salesman, is the holder of a majority of the common stock of the Arflex corporation. He is also a majority shareholder in the plaintiff, though his holdings are subject to the restrictions of a voting trust. In neither corporation is he a director or an officer. Gunther, the plaintiff’s president, acted for the plaintiff in the matter of the discount.' He was unquestionably a banker of experience and standing. Even so, his testimony as to this transaction is uncertain and indefinite, little more than a recital of the usual course of business. He did not know, so he tells us, that the notes had been given in return for shares of stock; if he had known this, he would have wished to inquire about them further. He supposed them to have been given for lighting fixtures sold by Arflex to a customer. He does not tell us, however, by whom the notes were offered to him, whether by Mclntire or some one else. There should have been full disclosure as to this, for Mclntire’s intervention would be freighted with significance. He was not, as we have seen, an officer of Arflex and did not represent it in its business generally, so far at least as we are informed by anything in the record. He had been acting for it as a salesman in the disposition of its shares, and this to Gunther’s knowledge. If the notes were in his custody and were offered by him for discount, that circumstance in itself must have carried with it to the buyer a hint as to their origin. At best, there would be something unusual, if not indeed irregular, in the offer of the paper by an agent for the sale of shares instead of by the fiscal officers who normally would represent the corporation in the business of a discount. True, Gunther does not tell us that the paper was offered to him by Mclntire, but neither does he say that it was not, and the events that followed make it highly probable that it was. When the notes matured from time to time, and there was need of renewals or of payments on account, it was Mclntire who notified the defendant; and to him and not to the plaintiff nor to Arflex, the defendant transmitted the new paper and the checks for the part payments, many of these to the order of Mclntire himself. Significant, also, in its bearing upon the plaintiff’s state of mind is the testimony of Mayo who at the time of the trial was the plaintiff’s vice-president and till then had been an employee with supervision of its books. He states that Arflex paper was discounted, whenever offered, without inquiry or security.. Later on, this statement is explained or retracted, but whether adequately or not was a question for the triers of the facts. Certain at all events it is that no report by Arflex as to assets or liabilities is in evidence from the plaintiff’s files, though there is testimony that if any had been received, the files would show it. Silent also is the record as to a report from the defendant, or from any bank or credit agency speaking in his name.

Every holder [of a negotiable instrument] is déemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course ” (Neg. Instr. Law, § 98; Cons. Laws, ch. 38). The statute is declaratory of the rule at common law. “ Where there is fraud, the presumption is that he who is guilty will part with the note for the purpose of enabling some third party to recover upon it, and such presumption operates against the holder, and it devolves upon him to show that he gave value for it ” (First Nat. Bank v. Green, 43 N. Y. 298, 301, quoting Bailey v. Bidwell, 13 Mees. & Wels. 73.) Even proof of value will not avail unless coupled with proof that the value was given without notice of the fraud (Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191, 205). The fact that the holder of the paper, or an officer or agent of the holder, is the only witness testifying as to the circumstances of the transfer, will not serve of itself to make a question for the jury (American Exchange Nat. Bank v. N. Y. Belting & P. Co., 148 N. Y. 698, 704, 706, 708; Hull v. Littauer, 162 N. Y. 569; Second Nat. Bank v. Weston, 172 N. Y. 250, 258). The testimony may be so free from suspicious features, the transaction exhibited may be so fair upon its face, as to forbid conflicting inferences. If, however, the disclaimer of notice proceeds from an interested source and if there are circumstances in addition to arouse suspicion or incredulity, the jury and not the judge must say whether the burden of repelling notice has been adequately borne (Canajoharie Nat. Bank v. Diefendorf, supra; Joy v. Diefendorf, 130 N. Y. 6; American Exchange Nat. Bank v. N. Y. Belting & P. Co., supra; Second Nat. Bank v. Weston, supra).

We do not rule upon this record that the defendant has proved the plaintiff to be a holder in bad faith. Our ruling is merely this, that the evidence for the plaintiff is not so barren of suspicious features as to command the conclusion that it has proved itself to be a holder in good faith (cf. Seymour v. McKinstry, 106 N. Y. 230, 240). We are to remember the tie between the two corporations, the seller and the buyer; the dominating interest of the wrongdoer as a shareholder in each of them; the silence or forgetfulness of the titular agent of the buyer as to the details of the purchase; the intervention of the wrongdoer as an active intermediary in all the later stages of part payment and renewal; and the omission by the buyer of inquiries or precautions that are usual or certainly not uncommon upon the sale of business paper. Remembering these things, we have no alternative but to hold that the appraisal of their significance was matter for a jury.

The plaintiff makes an argument that even if it rightly failed to recover on the notes, there should have been a refusal to permit the defendant to recover on the counterclaim, and this for the reason that the counterclaim was based upon the theory of a rescission of the purchase, and that there was no evidence of a return or tender to the seller of benefits received. One answer to this argument suffices among a number available. The sufficient answer is that the defendant is not proved to have anything that he would be under a duty to return if the controversy were one between him and the seller. He received shares of stock, but he surrendered them to the corporation before discovery of the fraud in exchange for the delivery of certificates of indebtedness. These certificates are not shown to be negotiable. They were mere tokens of the Arflex debt, and the defendant, to rid himself of the, bargain, was not required to return them. In addition to the certificates, he received some dividends on the shares, but these were less than a cash payment made when the shares were purchased in addition to the notes (Kley v. Healy, 127 N. Y. 555).

The charge as a whole sufficiently informed the jury that the burden was on the defendant to prove that the purchase had been procured by fraud, and that only if fraud had been made out was the burden cast upon the plaintiff to prove that the transfer of the notes was to a holder in due course.

The judgment should be affirmed with costs.

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

Judgment affirmed.


text:
    Town of Islip, Appellant, v. F. E. Summers Coal and Lumber Company, Inc., Respondent, Impleaded with Others. In the Matter of the Application of F. E. Summers Coal and Lumber Company, Inc., Respondent, v. Warren C. Haff, as Town Clerk of the Town of Islip, Appellant.
    (Argued June 11, 1931;
    decided July 15, 1931.)

      Robert H. Koehler for appellant.
    The ordinance is a valid enactment under the Town. Law and is wholly within the purposes provided in the statute. (Lincoln Trust Co. v. Williams, 229 N. Y. 313; 43 C. J. § 363; Morrison v. Pettigrew, 14 Fed. Rep. [2d] 453; Heerat v. Portland, 8 Fed. Rep. [2d] 871; Bacon v. Walker, 204 U. S. 311; Wulfsohn v. Burden, 241 N. Y. 288; People v. Weller, 207 App. Div. 337; Damman v. Milwaukee, 139 Wis. 356; Village of Euclid v. Ambler Realty Co., 272 U. S. 388; Spector v. Building Inspector, 250 Mass. 63; So. Pacific Co. v. Portland, 177 Fed. Rep. 958; People ex rel. Publicity Leasing Co. v. Ludwig, 218 N. Y. 540; People v. Schweinler Press, 214 N. Y. 395.)
    . Guy 0. Walser for respondent.
    The ordinance is unconstitutional and void. (Stubbe v. Adamson, 173 App. Div. 305; 220 N. Y. 459; Atlantic v. Goldsboro, 232 U. S. 548; City of Rochester v. Macauley, 199 N. Y. 207; People v. Schweinler Press, 214 N. Y. 395; Lincoln Trust Co. v. Williams, 229 N. Y. 313; Morrison v. Pettigrew, 14 Fed. Rep. [2d] 453; 43 C. J. § 363; Wulfsohn v. Burden, 241 N. Y. 288; Heerat v. Portland, 8 Fed. Rep. [2d] 871;
      Bacon v. Walker, 204 U. S. 311; People v. Weller, 207 App. Div. 337; Damman v. Milwaukee, 139 Wis. 356; Village of North Pelham v. Ohliger, 216 App. Div. 728; 245 N. Y. 593; Matter of Rogers Avenue, 29 Abb. N. C. 361; People v. N. Y. C. & H. R. R. R. Co., 206 N. Y. 274; Forster v. Scott, 136 N. Y. 577; Matter of City of New York, 196 N. Y. 255.)
   Pound, J.

The question is whether the zoning ordinance of the town of Islip is unconstitutional in so far as it requires a set back of ten feet from the street on that part of Montauk avenue which is zoned for business purposes. The court below has held that such ordinance is detrimental and prejudicial to the use of the premises for building purposes and unconstitutional as a taking of private property for public purposes without just compensation.

Can it be said that the ordinance in this respect on its face “ passes the bounds of reason and assumes the character of a merely arbitrary fiat? ” (Village of Euclid v. Ambler Realty Co., 272 U. S. 365, 389.) If the validity of the legislative classification for zoning purposes be fairly debatable, the legislative judgment must be allowed to control.” (Village of Euclid v. Ambler Realty Co., supra, p. 388; Matter of Wulfsohn v. Burden, 241N. Y. 288, 296.)

In the light of these rulings how can a court say upon mere inspection of the zoning ordinance that the end in view is not reasonably pursued by its adoption in order to lessen congestion in the streets and thereby to promote the public safety? (Town Law; Cons. Laws, ch. 62, § 349-o.)

In the monograph entitled Buildings: Their Uses and Spaces about Them,” in “ Regional Survey of New York and its Environs ” (Yol. VI, at p. 135) we find the suggestion that: One of the most simple and necessary preventives of overbuilding of business blocks is to require that when blocks occupied by dwellings are converted into business or apartments, the original setback of the residences, up to 25 feet at least, should be retained. The space that the private residence has for purposes of amenity is usually no more than business or apartment buildings occupying the same block need for purposes of access,” and at page 136 appears the following: “ When we come to consider the need of adequate space about stores for purposes of access and parking of vehicles we will find that what are wanted are wider streets and deeper lots rather than increased frontage. But the really important questions are the distribution of the store frontage throughout the community and the preservation of adequate open space about the business buildings, in the places where it is wanted to enable business to function efficiently. In many suburban store districts there is ample space in the aggregate, but it is not properly distributed so as to give satisfactory means of access, space for loading and unloading, room for parking without interference of through traffic, and sufficient light and ventilation. In most business districts existing space needs to be better distributed. With adequate zoning regulations sufficient space could be provided about each group of business buildings to meet all their needs without increasing their frontages.”

It thus appears that a wise public policy may require the owners of new buildings in business districts under proper conditions to set their buildings back from the street in order to enable their business to function without congesting the streets. (Gorieb v. Fox, 274 U. S. 603.)

The correct rule to apply where underlying questions of fact may condition the constitutionality of legislation of this character ” is to uphold the presumption of constitutionality in the absence of some factual foundation of record for overthrowing ” it. (O’Gorman & Young, Inc., v. Hartford Fire Ins. Co., 282 U. S. 251, 257.)

It does not appear upon the face of the ordinance or from any facts of which the court must take judicial notice that in Islip evils do not exist for which this zoning ordinance is a proper remedy. The record does not show unreasonableness. In the like case of Village of North Pelham v. Ohliger (245 N. Y. 593) the required setback was four feet instead of ten. This court refused to hold the ordinance void on its face.

A peremptory order of mandamus should not have been granted, nor should judgment have been given against the town in this action on the record below.

The judgment of the Appellate Division should be reversed and that of the trial court affirmed, with costs in this court and in the Appellate Division. x

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

Judgment accordingly.