author: Per Curiam.

text:
    L. C. Smith & Bros. Typewriter Company, Respondent, v. Credit Lyonnais, Appellant.
    (Argued March 15, 1934;
    decided December 31, 1934.)

      John C. Higgins, Philip L. Miller and Hyman Zettler for appellant.
    Any impossibility on the part of the defendant to pay its Moscow depositors was caused by a liquidation of the defendant’s Moscow branch ordered by the duly constituted authorities, the impossibility consisting merely in the fact that, although the plaintiff could have got its deposits in cash and could have got them promptly, they might not have been paid according to the strict letter of the contract. Such a technical impossibility would not make a demand a vain and futile act and, therefore, did not excuse demand. (Southwick v. First Nat. Bank, 84 N.. Y. 420; Heard v. Bowers, 23 Pick. 455.) There is no evidence legally sufficient to justify the finding of the jury that the defendant’s Moscow branch became unable to pay its depositors on December 27, 1917. (Seeley v. Osborne, 220 N. Y. 416; Matter of Case, 214 N. Y. 199; Murphy v. Steeplechase Amusement Co., 250 N. Y. 479; Matter of Findlay, 253 N. Y. 1; Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23; Matter of Stern, 235 App. Div. 60; 261 N. Y. 617 Serina v. New York Rys. Corp., 238 App. Div. 302.)

      John A. Garver, Joseph M. Proskauer, Carl A. Mead, Philip A. Carroll, J. Alvin Van Bergh and Frank A. F. Severance for National City Bank of New York, amicus curiœ.

    Legal impossibility, since Soviet recognition, is a complete defense to an action for breach of a contract made and performable in Russia. (Oetjen v. Central Leather Co., 246 U. S. 297; Russian Republic v. Cibrario, 235 N. Y. 255; Salimoff & Co. v. Standard Oil Co., 262 N. Y. 220; Ricaud v. American Metal Co., 246 U. S. 304; Luther v. Sagor, [1921] 3 K. B. 532; Wulfsohn v. Russian Republic, 234 N. Y. 372.) Where a foreign deposit of foreign currency is payable in foreign currency in a foreign nation on demand, and there has been no demand made prior to involuntary closing of the branch, recovery, if any, should be evaluated and interest started running as of the time after the closing when either depositor by demand (or suit in the absence of demand) or bank by notice of closing the account first expressed a desire to make effective the conversion of the foreign currency into dollars. (Tillman v. Guaranty Trust Co., 253 N. Y. 295; Parker v. Hoppe, 257 N. Y. 333; Richard v. Credit Suisse, 242 N. Y. 346; McCormick v. Hopkins, 287 Ill. 66; O’ Keeffe v. City of New York, 176 N. Y. 297; Smith v. Board of Education, 208 N. Y. 84; Rapid T. Subway Constr. Co. v. City of N. Y., 259 N. Y. 472; People v. Canal Commissioners, 47 Pa. 76.)

      Martin Conboy, David Asch and William J. Butler for respondent.
    There was evidence to support the verdict. (Grussy v. Schneider, 50 How. Pr. 134; Rumpf v. Schiff, 109 N. Y. Supp. 51; Servel v. Jamieson, 255 Fed. Rep. 892; State v. Nebraska State Bank, 120 Neb. 539; Morgan Paving Co. v. Carroll, 211 Ala. 121; Sutton v. Libby, 201 S. W. Rep. 615; Alexiou v. Bridgeport-People’s Sav. Bank, 110 Conn. 397; Brown v. Huskamp, 141 S. C. 121; Sjoli v. Hogenson, 19 N. D. 82; Simons v. Douglas, 189 Ky. 644; National Sewer Pipe Co. v. Smith-Jaycox Lumber Co., 183 Iowa, 17; Berg v. Federal Reserve Bank, 55 N. D. 406; Dutton v. Bennett, 262 Mass. 39.)- No error was committed in striking out the affirmative defenses relating to a demand for the payment of the deposits contained in the answers. (Sokoloff v. National City Bank, 239 N. Y. 158; 250 N. Y. 69; Sickles v. Herold, 149 N. Y. 332; Delahunty v. Central Nat. Bank, 37 App. Div. 434; Richard v. National City Bank, 231 App. Div. 559; Shattuck v. Guardian Trust Co., 125 App. Div. 431.)
   Per Curiam.

December 27, 1917, the day upon which the Soviet government issued decrees against all banks in Russia, plaintiff had a deposit payable on demand in defendant’s branch at Moscow. The contract between this debtor and creditor was there to be performed. Confiscation of defendant’s property did not become immediately effective but liquidation at once began. There is no evidence that deposits in this bank were confiscated prior to June 2, 1920, and no evidence that between these dates those in control of political affairs in Russia would have refused defendant the right to comply with a demand by plaintiff if one had been made. Defendant concedes that on June 2, 1920, its ability to honor a demand ceased. Its books show that during that interval it paid more than 6,000,000 rubles to its depositors of which more than a million and a half was paid to clients abroad. . The only demand ever made by plaintiff is the constructive one growing out of the institution of this action on December 15, 1923. If plaintiff refrained from making demand in the hope that the dollar value of the ruble would increase, it was disappointed. Neither on June 2, 1920, the date of the constructive breach, nor on December 15, 1923, the date of the beginning of this action, did its deposit amount to more than nominal value. (Dougherty v. Equitable Life Assur. Society, decided herewith, 266 N. Y. 71.)

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

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

Judgment accordingly.


source: Caselaw Access Project

author: Loughran, J.

license: Public Domain

text:
    Janet Fosdick, Respondent, v. Investors Syndicate, Inc., Appellant.
    (Argued November 26, 1934;
    decided December 31, 1934.)

      Walter C. Lundgren, Reuben B. Crispell, Arthur H. Dean, C. Harold Taylor and William Leo Mulry for appellant.
    The administrative construction by the Superintendent of Banks that defendant did not come within the purview of the Banking Law (Cons. Laws, ch. 2) is to be followed under the well-established doctrine of the administrative construction of statutes. (City of New York v. New York City Ry. Co., 193 N. Y. 543; Story v.
      Craig, 231 N. Y. 33; People v. Durkee, 189 App. Div. 276; Adamson v. Schreiner, 176 App. Div. 95; Matter of Armitage v. Board of Education, 122 Misc. Rep. 586; McLaren v. Fleischer, 256 U. S. 477; Bodine & Clark Livestock Commission Co. v. Great Northern Ry. Co., 63 Fed. Rep. [2d] 472; Huntsville Trust Co. v. Noel, 321 Mo. 749; Whitebird v. Eagle-Picher Lead Co., 40 Fed. Rep. [2d] 479; United States v. Chicago, N. S. & M. R. R. Co., 288 U. S. 1.)

      Herman Kahn and Matthew M. Black for respondent.
    It is the definite and settled public policy to confine the business of banking ¡and investment companies strictly and solely to corporations which obey the prohibitions and safeguards prescribed by the Banking Law. And contracts and transactions of companies which have not complied with these requirements are illegal and void, may not be enforced by the wrongdoer, and may be rescinded by the innocent party. (New York State Loan & Trust Co. v. Helmer, 77 N. Y. 64; Chapman v. Lynch, 156 N. Y. 551; Meserole Securities Co. v. Cosman, 253 N. Y. 130; Phillips v. Investors Syndicate, 145 Misc. Rep. 361; Noble State Bank v. Haskell, 219 U. S. 104.) Even though the Banking Law may not employ the specific words “ void ” or “ illegal,” nevertheless the definite provisions and prohibitions thereof and of the Penal Law and the public policy which inspired the same render all contracts and transactions void and illegal which are entered into by corporations who are not licensed and have not complied with the law. (Barton v. Port Jackson & Union Falls Plank Road Co., 17 Barb. 397; Swing v. Dayton, 124 App. Div. 58; White v. Franklin Bank, 39 Mass. 181; Tracy v. Talmage, 14 N. Y. 162; Urwan v. Northwestern Nat. Life Ins. Co., 125 Wis. 349.) The contention of the defendant that it was absolved from the obligation to obtain a license and comply with the other provisions of our Banking Law, because a superintendent of banks advised that it was unnecessary, and that the same constituted a determination and a practical construction of the statute, was properly rejected. (Kaufman v. Investors Syndicate, 268 N. Y. Supp. 161; Kocak v. Metropolitan Life Ins. Co., 144 Misc. Rep. 422; Van Schaick v. Cronin, 237 App. Div. 182; Broderick v. Horvatt, 148 Misc. Rep. 731.)
   Loughran, J.

The plaintiff is the holder of “ accumulative installment certificates ” issued by the defendant, a foreign corporation. By each of these instruments the defendant certified that, in consideration of the payment of specified sums at fixed times for ten years, it would, at the expiration of that period, pay a stated amount to the recorded owner. This action is brought to recover moneys received, by the defendant in accordance with the terms of the certificates.

Upon sufficient evidence, the courts below have found: That the defendant was an investment company in this State; that within the meaning, definition and purview of the Banking Law of the State of New York it was engaged here in the business of an investment company at the times it sold within this State to the plaintiff and her assignors the certificates that are here in issue; that the defendant did not comply with the New York State Banking Law with regard to investment companies so doing business within this State.” Judgment for the plaintiff followed upon a conclusion of law that the transactions in suit were illegal and void. It has not been held that any act of the defendant was ultra vires. The plaintiff alleges no breach or repudiation by the defendant of any obligation; no failure of consideration. The fact is that the plaintiff and her assignors had defaulted and had abandoned their respective contract rights before they were advised of any infirmity in the undertakings of the defendant.

Accordingly this appeal presents the question whether the failure of the defendant to conform to the Banking Law of this State is without more a sufficient basis to sustain the plaintiff’s recovery. The issue is one of original statutory construction. Everything turns on the meaning of the words of a particular enactment. (American Law Institute, Restatement of the Law of Contracts, § 580; Pollock on Principles of Contract [9th ed.], p. 357; 3 Williston on Contracts, § 1771; Mahar v. Harrington Park Villa Sites, 204 N. Y. 231; Meserole Securities Co. v. Cosman, 253 N. Y. 130.)

Foreign investment companies were first subjected to the supervision of our banking authority by chapter 506 of the Laws of 1890. That statute was repealed and its provisions, in substance, made part of the Banking Law in 1892 (L. 1892, ch. 689, § 215; §§ 200-205.) The language now to be interpreted is found in articles 1, 2 and 7 (now 12-A) of the Banking Law (Cons. Laws, ch. 2), as enacted by chapter 369 of the Laws of 1914. These articles made, inter alla, the following provisions:

The term, ‘ investment company,’ * * * means any corporation other than an insurance corporation formed under the laws of this state or of any other state, and doing business in this state for the purpose of selling, offering for sale, or negotiating to individuals other than bankers bonds or notes secured by deed of trust or mortgages on real property or choses in action, owned, issued, negotiated or guaranteed by it, or for the purpose of receiving any money or property, either from its own members or from other persons, and entering into any contract, engagement or undertaking with them for the withdrawal of such money or property at any time with any increase thereof, or for the payment to them or to any person of any sum of money at any time, either fixed or -uncertain ” (§2).
u No foreign corporation shall transact in this state the business defined in this chapter as the business of an investment company or any part thereof, unless such corporation shall have
" 1. Been authorized by its charter to carry on such business and shall have complied with the laws of the state or country under which it is incorporated;
“ 2. Made the deposit with the superintendent of banks required by section three hundred and six (now § 521) of this article;
“ 3. Designated the superintendent of banks, by an instrument in writing duly executed, its true and lawful attorney upon whom all process in any action or proceeding by any resident of the state against it may be served with the same effect as if it were a domestic corporation and had been lawfully served with process within the state;
4. Received a license duly issued to it by the superintendent as provided in section twenty-seven of this chapter ” (§ 304, now § 519).
The deposit directed to be made with the Superintendent of Banks was designed as security for the depositors with and creditors of such corporation in this state ” (§ 306, now § 521). The corporation was to be licensed so as to enable the Superintendent to “ satisfy himself whether the applicant may safely be permitted to do business in this state ” (§ 27).
It was provided by section 302 (now § 517): No person shall act in this state as the representative of any foreign corporation in transacting the business described in this chapter as the business of an investment company unless such corporation shall have complied with the provisions of this article relating to such corporations.”

The foregoing provisions conditionally restrained in this State every activity in the nature of the business of an investment company by a foreign corporation. The plaintiff, therefore, is bound to maintain that default of. the defendant in observing the conditions so prescribed for the prosecution of its business in this State rendered all such business subject to being denounced as void, at the mere election of those with whom the business was done. In our opinion so sweeping a resolution of the lawmaking power is not to be implied from the context and structure of the statute.

The general purpose of this legislation was the regulation of all investment companies, domestic and foreign. The safeguarding of persons in the situation of the plaintiff was, of course, an object consistent with supervision of foreign corporations like the defendant. “ The nature or terms of a statute or rule of law will also sometimes indicate that it was intended for the protection of one class of individuals against another, and where this is the case a party belonging to the class whose protection was intended may recover what he has paid.” (3 Willis-ton on Contracts, § 1789; Kneeland v. Emerton, 280 Mass. 371, and cases cited.) Such an intention, we think, was not in this case distinctly revealed. “A transaction not in itself immoral is not to be held unlawful on a conjectural view of the policy of a statute.” (Pollock on Principles of Contract [9th ed.], p. 358.) Here no penalty was specifically annexed to any transaction of particular character. The plaintiff argues, indeed, that absence of definition of some consequence that was to follow disregard of the law constrains the court to supply the omission by construction. It seems to us that the implication more plainly is that a sanction elsewhere provided was deemed sufficient. Any person or corporation, who: * * * acts as agent or representative of any * * * investment corporation * * * organized outside of this state, while such * * * investment corporation * * * shall not be authorized under a license of the superintendent of banks to do business in this state * * * is guilty of a misdemeanor ” (Penal Law, § 663).

In short, the statutory restrictions invoked by the plaintiff, we hold, gave neither the right nor the remedy asserted. “ It is true there are cases in which the letter of the statute is not deemed controlling, but the cases are few and exceptional, and only arise when there are cogent reasons for believing that the letter does not fully and accurately disclose the intent. No mere omission, no mere failure to provide for contingencies, which it may seem wise to have specifically provided for, justify any judicial addition to the language of the statute.” (United States v. Goldenberg, 168 U. S. 95, 103.)

Prior to any transaction here involved, the defendant duly sought authority to do business in this State conformably to our Banking Law. The application was withdrawn upon the informal advice of the then Superintendent of Banks that the defendant need comply only with our General Corporation Law (Cons. Laws, ch. 23). It is not suggested that this procedure has significance except as showing that the defendant did not purposefully ignore the conditions imposed upon it by the law of this State. That is to say, the question of the effect of willful disobedience of legislative mandate is not now before us. Rejection of the construction which the plaintiff would have us put upon the applicable statute decides this case. That construction, we have held, is one which the words of the statute will not bear.

The judgment should be reversed and the complaint dismissed, with costs in all courts.

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

Judgment reversed, etc.


text:
    Kings County Trust Company, as Trustee under the Will of Whitman W. Kenyon, Deceased, Appellant, v. Charles Giovinco et al., Defendants, and Arthur A. Wulff, Respondent.
    (Argued November 26, 1934;
    decided December 31, 1934.)

      Allen S. Wrenn for appellant.
    The facts and circumstances of this case rebut any inference of an agreement to extend the mortgage based upon the mere fact of prepayment of interest. (New York Life Ins. Co. v. Casey, 178 N. Y. 381.)

      Harold M. Kennedy for respondent.
    The fact of prepayment was evidence of an extension of the mortgage. (Murray v. Marshall, 94 N. Y. 611; Metzger v. Nova Realty Co., 214 N. Y. 26; Place v. McIlvain, 38 N. Y. 96; Ducker v. Rapp, 67 N. Y. 464; Hitchcock v. Frackelton, 116 Mich. 487; Warner v. Campbell, 26 Ill. 282; New Hampshire Sav. Bank v. Ela, 11 N. H. 335; New Hampshire Sav. Bank v. Colcord, 15 N. H. 119; Crosby v. Wyatt, 10 N. H. 318; People’s Bank v. Pearsons, 30 Vt. 711;
      Batavian Bank v. McDonald, 77 Wis. 486; Hollingsworth v. Tomlinson, 108 N. C. 245; Scott v. Saffold, 37 Ga. 384; First Nat. Bank v. Leavitt, 65 Mo. 562; American Nat. Bank v. Love, 62 Mo. App. 378; Union Bank v. McClung, 9 Humph. [Tenn.] 98; Germania Life Ins. Co. v. Casey, 98 App. Div. 88; 184 N. Y. 554.)
   Per Curiam.

The payment of interest in advance, in the circumstances as found by the trial court and sustained by the weight of evidence, rebuts the presumption (New York Life Ins. Co. v. Casey, 178 N. Y. 381) that such payment indicates an extension of time so as to discharge a surety.

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

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

Judgment accordingly.


author: Lehman, J.

text:
    James Barrencotto, Respondent, v. Cocker Saw Company, Inc., Appellant.

      (Argued November 19, 1934;
    decided December 31, 1934.)

      Philip A. Sullivan for appellant.
    The history of the workmen’s compensation legislation, giving proper regard to the constitutional amendment and to the legislative acts thereunder, establishes clearly that common law actions'by the employee to recover damages for injuries either accidental or from occupational disease were abrogated altogether and cannot be maintained. (Woollcott v. Shubert, 217 N. Y. 212; Ives v. South Buffalo R. R. Co., 201 N. Y. 271.) The fact that the Legislature in enacting the compensation law and in passing various amendments thereto since its enactment has not afforded the plaintiff relief thereunder does not allow him to maintain this common law action in violation of the intent, purpose, plan and scope of section 19 of article 1 of the New York Constitution. (Matter of Lerner v. Rump Bros., 241 N. Y. 153; Bertholf v. O’Reilly, 74 N. Y. 509; Matter of Walker v. Clyde O. S. Co., 215 N. Y. 529; Shanahan v. Monarch Engineering Co., 219 N. Y. 469; Matter of Zirpola v. Casselman, Inc., 237 N. Y. 367; New York Central R. R. Co. v. White, 243 U. S. 188; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514; Matter of Erickson v. Preauss, 223 N. Y. 365.)

      Warner F. Thompson for respondent.
    Since the Workmen’s Compensation Law by its very provisions applies only to accidental injuries and to those occupational diseases which the act enumerates and provides shall be treated as accidents, the said law does not exclude common law actions for disability caused by an occupational disease neither accidentally caused nor enumerated in the law. (Maloney v. Levy & Gilliland Co., 176 App. Div. 470; Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514; Matter of Lerner v. Rump Bros., 241 N. Y. 153; Jeffreyes v. Sager Co., 198 App. Div. 446; 233 N. Y. 535; Wager v. White Star Candy Co., 217 App. Div. 316; Janusz v. Buffalo Porcelain Enameling Corp., 227 App. Div. 833.) Section 19 of article I of the New York Constitution does not bar plaintiff’s cause of action. (Matter of Sweeting v. American Knife Co., 226 N. Y. 199.) Plaintiff has the right to maintain a common law action. (Wager v. White Star Candy Co., 217 App. Div. 316; List v. Eastman Kokak Co., 236 App. Div. 820; Downing v. Oxweld Acetylene Co., 112 N. J. L. 25; Jones v. Reinhardt & Dennis Co., 168 S. E. Rep. 482; Kane v. Federal Match Corp., 5 Fed. Supp. 507.)

      William L. Clay and Philip Halpern, amici curiœ.

   Lehman, J.

The complaint in this action alleges that the plaintiff is an employee of the defendant; that in the course of his employment in the defendant’s factory he inhaled dust and other impurities which caused him to contract a disease; that the plaintiff’s exposure to the conditions which resulted in the disease was due to the defendant’s failure to exercise reasonable care and to perform its statutory duties in the operation of its factory, It further alleges that the disease from which the plaintiff is suffering is not an occupational disease for which compensation is payable under the Workmen’s Compensation Law (Cons. Laws, ch. 67). A motion by the defendant to dismiss the complaint under rules 106 and 107 of the Rules of Civil Practice has been denied.

The Workmen’s Compensation Law provides; “ Every employer subject to this chapter shall in accordance with this chapter secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment, without regard to fault as a cause of the injury * * (§ 10.) It further provides; “ The liability of an employer prescribed by the last preceding section shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or any one otherwise entitled to recover damages, at common law or otherwise on account of such injury or death * * (§11.) Exception is made where an employer has failed to secure the payment of compensation, but here it is conceded that the defendant has secured such compensation.

By the Workmen’s Compensation Law a new system was substituted in its entirety for an outgrown and objectionable one.” (Shanahan v. Monarch Engineering Co., 219 N. Y. 469, 478.) The Legislature has provided a system of compensation to an employee for disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury. It thus imposes upon the employer a new liability not known to the common law or enforceable by common law action. At the same time it provides that the new liability shall be exclusive, and thus destroys any right which the employee or any other person may have to recover damages for “ such injury or death.” The defendant maintains that by the substitution so decreed the plaintiff’s alleged cause of action has been destroyed.

Undoubtedly no common law right of action against an employer survives for damages consequent on an “ injury ” to an employee arising out of and in the course of the employment, but the statute itself defines the word “ injury.” “ ‘ Injury ’ and ' personal injury mean only accidental injuries arising out of and in the course of employment and such disease or infection as may naturally and unavoidably result therefrom.” (§ 2, subd. 7.) In common parlance an injury has broader meaning. The Legislature has chosen to make its own definition, and in construing the statute we must accept the legislative definition.

The power of the Legislature to create a new and exclusive system of compensation for injuries sustained by an employee is broad. Reasonable exercise of that power is not restricted by the provisions of the Constitution of the United States. (New York Central R. R. Co. v. White, 243 U. S. 188.) Argument that the Constitution of the State in any manner limits the power of the Legislature is foreclosed by the amendment to the Constitution adopted for that sole end. (Art. I, § 19.) Indeed, the same reasons which called for the exercise of the legislative power to provide a new system of compensation for “ accidental injuries ” might be urged for the extension of that system to every injury resulting from employment, regardless of whether the injury be accidental, or, like an occupational disease, be the natural and unavoidable result of the conditions of the employment.

The Legislature nevertheless remains the sole judge of how and when it shall exercise its powers. It determined, in its wisdom, that, at the outset, it would restrict the operation of the new system of compensation to accidental injuries. Even so, the field of the operation embraced most of the cases in which at common law the employee had a remedy, though inadequate, for injuries resulting from the employment. For injuries not accidental, but the natural and unavoidable result, or even a result which might reasonably be anticipated, from the conditions of the employment, there was seldom any effective remedy at common law, even where the injury was due to disregard of a duty of care imposed by law on the employer; for usually the application of the doctrine of assumption of risk would bar recovery in such case. There the Workmen’s Compensation Law, in its original form, imposed no new liability upon the employer. It did, by sections added thereafter, in some degree enlarge the operation of the new system of compensation. Section 38 provides that the disablement of an employee resulting from an occupational disease described in subdivision two of section three shall be treated as the happening of an accident within the meaning of this chapter,” and subdivision 2 of section 3 provides that “ compensation shall be payable for disabilities sustained or death incurred by an employee resulting from the following occupational diseases: * * Thus the occupational diseases enumerated in that subdivision fell within the scope of the act and within the statutory definition of an injury.” The statute does not apply to other diseases unless “ the disease is an accidental personal injury'within the meaning of subdivision seven of section two * * (§ 48.)

In this case the action is for damages caused to the plaintiff by contracting the disease known as silicosis. The disease is not an “ accidental personal injury,” for its inception is not “ assignable to a determinate or single act, identified in space or time ” and is not assignable to something catastrophic or extraordinary.” (See Matter of Lerner v. Rump Bros., 241 N. Y. 153, 155, opinion by Pound, J.) It is an occupational disease, the natural and unavoidable result of the conditions of the employment; but it is not included in the diseases enumerated or described in subdivision 2 of section 3. For that reason a claim by the plaintiff for compensation has been dismissed by the Industrial Board. The question now arises whether the right to compensation for disability or death resulting from accidental injury under the Workmen’s Compensation Law is the sole right which an employee now has against his employer for injury suffered in the course of employment and excludes and takes the place of all common law remedies, not only for compensable injuries but for injuries entirely outside the scope of the act.

That question is one of statutory construction. The Legislature may, if it chooses, provide a system of compensation for injury to workmen which shall be exclusive of every other remedy or right of action by the employee or any other person. (N. Y. Const, art. I, § 19.) That is true, even though the new system of compensation makes no provision for some persons who previously had a common law right of action for damages caused by such injury. (Shanahan v. Monarch Engineering Co., supra.) It is true, even though the new system provides only for compensation to an employee in case of disability and leaves him without remedy or right to compensation for damages where the injury has not caused industrial disability. (Repka v. Fedders Mfg. Co., 264 N. Y. 538.)

In these cases a plaintiff sought damages for accidental injuries within the scope of the Workmen’s Compensation Law and for which that law provided compensation. We decided that the statutory remedy was exclusive of any other remedy for the same injury. Here, as we have said, the action is brought for an industrial injury entirely outside the scope of the statute. The statute provides that the statutory liability for injury or death shall be exclusive and in place of any other liability on account of such injury or death.” By no construction, even though forced, can these words be found to mean that the right to compensation in case of certain injuries should be exclusive and in place of liability for other injuries. (Cf. Wager v. White Star Candy Co., 217 App. Div. 316, opinion by Kellogg, J.)

Perhaps the opinion in Shanahan v. Monarch Engineering Co. (supra) might indicate that the court assumed, though it did not decide, that the Legislature had exercised, in full degree, its power to provide a new system of compensation which should be exclusive and in place of every other liability of an employer for injury arising out of and in the course of employment. The language of the statute was at that time different. Then the statute provided that The liability prescribed by the last preceding section shall be exclusive.” There is no express limitation of the scope of that provision to the same field to which the new system of compensation was confined. Whether such limitation might be implied was not presented in that case; for the liability imposed by the statute extended to the death for which damages were sought by action. If such question had been presented, the court might still have refused to find by implication a limitation which the Legislature had failed to express.

Since that decision the Legislature has itself in express terms provided the limitation. We cannot disregard the express limitation. There still is a field in which the statute fails to impose liability, on the part of an employer, to provide compensation for injury or death, regardless of fault; and in which an injured person may seek damages by action at law, where there has been fault. Whether the Legislature should provide a more effective and comprehensive remedy in such cases, or whether the employer should in such cases be relieved of liability even in case of fault, is a matter which concerns the Legislature and not the courts.

The order should be affirmed, with costs, and the certified question answered in the affirmative.

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

Ordered accordingly.


text:
    The People of the State of New York, Respondent, v. Herbert Russell, Appellant.

      (Argued November 26, 1934;
    decided December 31, 1934.)

      James D. C. Murray and Daniel Kirchman for appellant.
    A prior conviction may be proved solely for the purpose of affecting the credibility of the witness and not, as stated by the trial court, for the purpose of"“ showing the temperament of the witness and what his inclinations and habits were, and the fact that he consorted with another individual at the time of the commission of this crime, and that he did not do it alone.” (People v. Molineux, 168 N. Y. 264; People v. Thau, 219 N. Y. 39; People v. Richardson, 222 N. Y. 103; People v. Thompson, 212 N. Y. 249; People v. Buffom, 214 N. Y. 53; People v. Zackowitz, 254 N. Y. 192.) The trial court committed error in its charge to the jury upon the question of alibi. (People v. Barbato, 254 N. Y. 169; People v. Hartnett, 208 N. Y. Supp. 246; People v. Allocca, 170 N. Y. Supp. 881; People v. Montlake, 172 N. Y. Supp. 102; People v. Stone, 117 N. Y. 480; State v. Ardoin, 49 La. Ann. 1145; Peyton v. State, 54 Neb. 188; Casey v. State, 49 Neb. 403; McCool v. United States, 263 Fed. Rep. 55; Graham v. State, 153 Ala. 38; Schultz v. Territory, 5 Ariz. 239; Haskins v. State, 148 Ark. 351; People v. Fong Ah Sing, 64 Cal. 253; State v. Brauneis, 84 Conn. 222; Adams v. State, 28 Fla. 512; People v. Ahrling, 279 Ill. 70.)

      William Copeland Dodge, District Attorney (John C. McDermott of counsel), for respondent.
    The weight of the testimony of a witness of a low and criminal character is affected by a disclosure of his past criminal life and particularly is this true when a defendant charged with felony murder in the commission of a robbery is shown to be one who, in the past, used guns and accomplices in the commission of another robbery. And the jury may and should give proper consideration and weight to evidence showing that the witness has committed crimes. (Real v. People, 42 N. Y. 270; People v. Noelke, 94 N. Y. 137.) The charge is to be considered as a whole and when so considered no error appears even if a detached portion when read by itself may have misled the jury. (People v. Koenig, 180 N. Y. 155; People v. Johnson, 185 N. Y. 219; People v. Gilbert, 199 N. Y. 10; Stover v. People, 56 N. Y. 315.)
   Lehman, J.

On March 7th, 1933, Martin L. Harris was killed in his apartment in Harlem. He was a colored man and, it appears, known in Harlem as the policy king.” At the time of the homicide, three persons were living in Harris’ apartment and, in addition, a carpenter was working there. Their testimony establishes that three colored men entered the apartment and one of them held in his hands two revolvers. Harris was shot by that man. Then they escaped with a considerable sum of money. Two pistols used in the “ hold-up ” were found on the floor of the apartment after the robbers escaped.

In July, 1933, five men were indicted for the murder of Harris. Four of them had been previously apprehended. The fifth defendant is still at large. The four defendants who were apprehended were tried jointly. The jury convicted the defendant Bussell of murder in the first degree. It acquitted the defendant Mowatt. It disagreed as to the other defendants on trial.

At the trial three witnesses who were present at the homicide positively identified defendant Russell as the man who entered the apartment of Harris with two guns in his hands and who shot Harris. They also identified the defendant Mavis as one of the participants in the robbery. The two other defendants on trial were concededly not present at the homicide. The People endeavored to prove their guilt by evidence of admissions that they had aided and abetted the felony, in which the others were engaged when Harris was shot. Russell was not present when these alleged admissions were made. Against him the only evidence is the identification by the three witnesses who saw the homicide.

Russell denied participation in the felony and that he was present at the homicide. From the moment of his arrest he claimed that at that time and for some weeks thereafter he was confined to his bed by an attack of rheumatism. He so testified at the trial. He produced a number of witnesses who corroborated this evidence on his part. If the jury believed the testimony of the three witnesses who were present at the time of the homicide and who identified him, it could not reasonably fail to bring in a verdict of guilty of murder in the first degree. If they believed the testimony that Russell was at the time confined to his bed, then the jury was bound to acquit. The issue was simple and on that issue the burden of proof beyond a reasonable doubt, of course, rested on the People.

Though the issue is simple, its resolution requires a careful scrutiny of the evidence on both sides. There may be no ground to believe that the People’s witnesses intentionally testified falsely. There is, nevertheless, ground for doubt as to the correctness of their identification. It is not disputed that immediately after the homicide they were taken to police headquarters and there they picked out a photograph as the likeness of the man who had shot Harris. They were mistaken then. The man whose likeness they picked out was in prison. Subsequently they picked out other photographs and again they were mistaken. Though these previous attempts at identification may be explained, yet they serve to impeach the testimony of these witnesses given at the trial. Even so, the jury might accept their testimony in spite of the denial by the defendant Russell and the testimony of his corroborating witnesses. Careful scrutiny of the evidence produced by both sides and appraisement of the probabilities were called for. In a case as close as this, circumstances which would ordinarily seem immaterial might become a decisive factor in the decision. Errors in the admission of evidence, or in the charge, which we might disregard where the People’s proof points more conclusively to guilt, then may require a reversal of a judgment of conviction.

Since the defendant became a witness in his own behalf, the People had the undoubted right to impeach his credibility by proof of prior convictions. In this case they went further. They brought out on cross-examinatian not only that the defendant had been previously convicted of robbery in the second degree, but that at the time of the robbery of which he was convicted he had an accomplice and that a gun was used in the robbery. That evidence was admitted not upon the theory that it impeached the credibility of the defendant’s testimony as a witness, but that it might tend to show inclinations and tendencies of the defendant which might impel him to commit the crime for which he was on trial. Indeed, the trial judge, in the presence of the jury, stated: I think the District Attorney can ask him whether or not in connection with that previous robbery, there was also a gun used, as showing the temperament of the witness and what his inclinations and habits were, and the fact that he consorted with another individual at the time of the commission of this crime, and that he did not do it alone. He is charged here with going in with two others, and having a lookout. The District Attorney may ask him whether or not there was any gun used in the commission of the previous robbery to which this witness pleaded guilty, and whether or not in that case he had an accomplice.” We have said: “ Inflexibly the law has set its face against the endeavor to fasten guilt upon him by proof of character or experience predisposing to an act of crime.” (People v. Zackowitz, 254 N. Y. 192, 197.) The discussion in the opinion in that case leaves nothing further to be said on that point. This well-established rule has been disregarded here.

The trial judge charged the jury very carefully upon the issues presented by the evidence. Indeed, throughout the case the trial judge showed admirable care for the rights both of the People and the defendants. Nevertheless, in that part of the charge in which the jury was instructed as to the manner in which it should consider the defendant’s attempt to establish an alibi, the trial judge fell into error which in our opinion cannot be disregarded as immaterial. Evidence by a defendant that at the time when it is charged that a crime was committed he was at some other place does not constitute an exculpatory defense upon which the defendant has the burden of proof. Rather, it is evidence which if believed shows that the defendant could not have participated in the crime as claimed by the People. Such evidence is at times fabricated and when given by witnesses who are interested or whose credibility is otherwise impeached, it should be carefully scrutinized. Testimony of a defendant in denial of the charge against him may be viewed with suspicion where a defendant has attempted to fortify his denial by evidence of his presence elsewhere which is shown by independent proof to be fabricated. None the less, it is the proven fabrication which in such case gives rise to the justified suspicion not the mere fact that defendant has attempted to fortify his denial by other evidence that he could not have committed the crime. The People always have the burden of establishing the commission of a crime.

In his charge the trial judge overlooked these fundamental considerations. He charged: “It is obviously essential to the satisfactory proof of an alibi that it should cover the whole of the time of the transaction in question so as to render it impossible that the defendant should have committed the act. It is not enough that it render their guilt improbable.” We have held to the contrary in People v. Barboto (254 N. Y. 170).

He charged further: “ An unsuccessful attempt to establish an alibi is always a circumstance of great weight against the prisoner because the resort to that species of defense implies an admission of the truth and relevancy of the facts alleged and the correctness of the inference drawn from them, if they remain uncontradicted. And where the defense of alibi fails, it is generally on the ground that the witnesses are disbelieved and the story considered to be a fabrication.”

A charge may be a sufficient and even a substantially correct instruction even though it contains phrases which, isolated from their context, seem erroneous. The test is always whether the jury, hearing the whole charge, would gather from its language the correct rules which should be applied in arriving at decision. Here, in effect, the judge charged that the so-called “ alibi defense ” must be regarded with suspicion and even pointed out grounds for suspicion which do not exist in this case. He told the jury further, in effect, that if it did not believe the testimony of the defendant’s witnesses, it might consider the “ defense of alibi ” a fabrication and, therefore, corroboration of the People’s witnesses and an admission by the defendant of the truth and relevancy of their testimony. He thus placed upon the defendant a burden of proof which in law rests upon the People.

The People’s witnesses have testified that the defendant Russell shot and killed Harris at a specified time and place. The defendant’s witnesses have testified that the defendant, at the time of the shooting, was at a different place. In ‘weighing the testimony the jury was called upon to consider the possibility of mistake on the part of the People’s witnesses and the possibility of fabrication on the part of the defendant’s witnesses. There is no independent proof of fabrication. The jury could infer fabrication only if they found that the testimony of the People’s witnesses, who were present at the time of the homicide and who identified the defendant, was true. Disbelief of the defendant’s witnesses would be the inevitable result of belief of the People’s witnesses. It could not, at the same time, be corroboration of the People’s witnesses.

An honest defendant may fortify his denial of the charge against him by other evidence which, if accepted, would demonstrate the falsity of the charge, without thereby subjecting himself to the suspicion that his denial is false and the evidence produced by him fabricated, unless there is independent evidence of such fabrication. The burden of proof of guilt beyond a reasonable doubt may never be shifted from the People to the defendant. The presumption of innocence continues throughout the trial. The charge in this case has substantially deprived the defendant of this fundamental right.

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

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

Judgment of conviction reversed, etc.


text:
    In the Matter of Samson Inselbuch, Respondent, v. Julius Helfand, Appellant, and S. Howard Cohen et al., Constituting the Board of Elections of the City of New York, et al., Respondents.
    (Argued January 2, 1935;
    decided January 3, 1935.)

      Martin M. Goldman and Harry Malter for appellant.
    The moving papers were insufficient to warrant the exercise of the court’s discretion under "section 333 of the Election Law (Cons. Laws, ch. 17). (Matter of Dolen, 225 App. Div. 78; State ex rel. Ballard v. Greene, 87 Vt. 515; Free v. Wood, 137 Kan. 939.)

      Abner C. Surpless, A. David Benjamin, Charles Pokorny and George Fankuchen for petitioner, respondent.
    The order of the Appellate Division granting a re-examination of the voting machines being discretionary, should not be disturbed. (Matter of Wilber, 131 Misc. Rep. 2; Matter of Friedman, 238 App. Div. 341; Matter of Dolen, 225 App. Div. 78; Matter of Schwartzwald, 240 App. Div. 990; Matter of Lauer v. Board of Elections, 262 N. Y. 416; Matter of Mellen v. Board of Elections, 262 N. Y. 422; People ex rel. Toms v. Board of Supervisors, 199 N. Y. 150; Matter of Martin, 255 N. Y. 359; Callanan v. Keeseville, Ausable Chasm & L. C. R. R. Co., 199 N. Y. 268; Nelson v. Hirsch, 264 N. Y. 316; Lewin v. Lehigh Valley R. R. Co., 169 N. Y. 336.) The petition and affidavits establish numerous irregularities, errors and discrepancies which amply justify the order herein. (Matter of Wilber, 131 Misc. Rep. 2; Matter of Friedman, 238 App. Div. 341; Matter of Schwartzwald, 240 App. Div. 990; Matter of Bolen, 225 App. Div. 78.)

      Paul Windels, Corporation Counsel (Nathan Blum of counsel), for S. Howard Cohen et al., constituting the Board of Elections of the City of New York, respondents.
   Per Curiam.

The Appellate Division by a divided court has allowed the application, made under section 333 of the Election Law (Cons. Laws, ch. 17), for an inspection of the voting machines in the sixth Assembly district, Kings county. According to the reported results, the appellant, Julius Helfand, was elected by a majority of fifteen votes. The alleged irregularities in tabulating the total votes as recorded on the machines warranted the court, in the exercise of its discretion, in granting the application. The order merely permits the examination of the total votes as recorded on the machines in order to ascertain if the final vote has been correctly given. Counsel for the Board of Elections informed us on the argument that this can be done in a few hours. The original date fixed for the examination has passed. We, therefore, designate Monday, January 7th, at ten o’clock at the place and under the conditions stated in the order appealed from.

The order should be affirmed, without costs.

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

Order affirmed.


author: Hubbs, J.

text:
    755 Seventh Avenue Corporation, Appellant, v. Earl Carroll, Respondent, Impleaded with Another.

      (Argued January 4, 1935;
    decided January 15, 1935.)

      Joseph L. Greenberg for appellant.
    The undertaking of the respondent is an absolute promise to pay for labor and materials used in the construction of the theatre, and not merely a promise to indemnify for loss. (Brown v. Mechanics & Traders Bank, 43 App. Div. 173; Belloni v. Freeborn, 63 N. Y. 383; Kohler v. Matlage, 72 N. Y. 259.) The sale under the mechanics’ lien foreclosure judgment and the sale under the first mortgage judgment of foreclosure could not possibly affect the plaintiff’s right to the judgment theretofore granted, since respondent’s liability had accrued on his bond upon the filing of the mechanics’ liens against the property of plaintiff for which it was liable to sale. (Hartford Acc. & Ind. Co. v. Federal Bond & Mortgage Co., 59 Fed. Rep. [2d] 950; Stuart v. Carter, 79 W. Va. 92; Friend v. Ralston, 35 Wash. 422.)

      David Vorhaus and Joseph Fischer for respondent.
    As the result of the mechanics’ lien foreclosure sale, which occurred after the final submission of the motion for summary judgment, it conclusively appears that plaintiff has sustained no greater damage than the amount bid at the mechanics’ hen foreclosure sale. (Rector, etc., of Trinity Church v. Higgins, 48 N. Y. 532; Belloni v. Freeborn, 63 N. Y. 383; Brown v. Mechanics & Traders Bank, 43 App. Div. 173; Schwartz & Co. v. Aimwell Co., 227 N.Y. 184.) Respondent was entitled to the relief granted. (Schwartz & Co. v. Aimwell Co., 227 N. Y. 184; Rector, etc., of Trinity Church v. Higgins, 48 N. Y. 532.) Rehef was properly sought by motion. (Clark v. Rowling, 3 N. Y. 216; Wetmore v. Law, 34 Barb. 515; Heckling v. Allen, 15 Fed. Rep. 196; Mallory v. Norton, 21 Barb. 424; Smith v. McCluskey, 45 Barb. 610; Vanderbilt v. Schreyer, 81 N. Y. 646.)
   Hubbs, J.

Appellant owned land in the city of New York which was mortgaged. On June 14, 1930, the Earl Carroll Realty Corporation took a long-term lease of the property agreeing to erect thereon a new theatre and to pay the entire cost and expense of erection, completion and equipment thereof. On the same date, the respondent Carroll personally executed a construction bond under seal by which he unconditionally guaranteed That the Earl Carroll Realty Corporation * * * will pay the entire cost and expenses of erection, completion and equipment of said first new theatre building.” When the theatre was finished, the Earl Carroll Realty Corporation had not paid for part of the construction and part of the materials and equipment. Mechanics’ hens were filed against the property. The lienors brought an action to foreclose the mechanics’ hens. Appellant, prior to determination of the mechanics’ hen action, brought this action against the respondent on his indemnity bond to recover the amount of the liens as filed and recorded against the property and moved for summary judgment. Upon the return of the motion, it appearing that the action for foreclosure of the hens was pending, an order was entered denying the motion on the ground that in the pending mechanics’ hen action, the amount due to the various henors was in issue and the amount of their claims should be first properly determined in that action. The action for foreclosure of the mechanics’ hens was subsequently tried and the amount of the hens adjudicated to be $118,116.83. The judgment directed the sale of the property to satisfy the mechanics’ hens and on August 1, 1933, the property was sold for the sum .of $250 to one of the henors. The motion for summary judgment in this action had previously been renewed after the amount of the hens had been fixed and judgment granted in the hen action for the sum of $118,116.83, and on August 1, 1933, a summary judgment was granted herein against the respondent Earl Carroll in the sum of $118,116.83. This judgment was docketed on August 3, 1933.

After the commencement of this action and after the making of the first motion for summary judgment herein, an action was brought to foreclose the mortgages on the real property which resulted in a judgment of foreclosure and sale, and on August 18, 1933, seventeen days after the sale under the judgment foreclosing the mechanics’ hens, the mortgagee, under its foreclosure judgment, held a a sale and bought in the property for the sum of $1,000,000, with a resulting deficiency judgment against appellant in the amount of $627,608.61. Thereupon, the respondent Carroll moved at Special Term for an order to show cause why all proceedings on the part of the appellant for the collection or enforcement of the judgment in this action should not be stayed and the judgment vacated and discharged. This resulted in the order in question here made on the 26tb day of February, 1934, vacating and discharging the judgment herein except as to the amount of $250. The last mentioned order was unanimously affirmed by the Appellate Division. The questian presented on this appeal is whether the court was justified, under the facts as shown, in reducing the amount of the judgment to $250, the amount realized on the sale of the property in the action brought for foreclosure of the mechanics’ liens.

A contract to indemnify against liability is breached the moment the liability is imposed and a cause of action arises because of the fact of the breach. In a contract to indemnify against loss there is no cause of action until the obligee has sustained damage. (Cf. Brown v. Mechanics & Traders’ Bank, 43 App. Div. 173, 176.)

Under that rule, the appellant had a cause of action. It is conceded that after the amount of the mechanics’ hens had been fixed by the judgment in the mechanics’ hen action, the summary judgment for $118,116.83 granted in this action was proper. The judgment in the mechanics’ hen action made definite and certain the hability of the defendant under the contract and his agreement “ to pay ” became fixed. The fact that the appellant had not paid the amount of the judgment in the mechanics’ hen action was not a defense in this action. (Rector, etc., of Trinity Church v. Higgins, 48 N. Y. 532.)

The dicta in that case to the effect that the defendant there might after the entry of the judgment pay the taxes for the amount of which the judgment had been rendered and apply to the court to reduce the amount of the judgment by the amount which he paid to -release the tax hen is rehed upon by the respondent here, who urges that the foreclosure of the mechanics’ hens and the cancellation of those hens by the sale on foreclosure for $250 had the same effect as though the defendant had paid the amount of the mechanics’ hens because it removed the hens from the property.

It is to be noted that as a part of the dicta in Rector, etc., of Trinity Church v. Higgins the court said: “A court of law is vested with such equitable power that, upon apphcation after such payment, proceedings for the collection of the judgment, except as to the costs would be stayed ” (p. 539).

Here there was no payment by respondent of the mechanics’ liens. The appellant, against its will, was, by respondent’s breach, placed in a position where it either had to pay the liens or lose its property. The fact that it was unable or unwilling to pay the amount of the judgment in the mechanics’ hen action did not excuse the respondent from paying as he had agreed under his contract. Under appellant’s argument, if the tax hens under consideration in Rector, etc., of Trinity Church v. Higgins had, after ten years, been canceled for a reason other than the act of the defendant in paying the hens, a right would have existed in the defendant to come into court and have-the amount of the tax hens credited on the judgment even though he had not paid them and even though a mortgage had been foreclosed against the property because of his default in paying the identical tax hens.

The law is that any matter to be available on an application for cancellation or reduction of a judgment must be new matter which could not have been foreseen and, therefore, pleaded as a defense in the action. The claim here is that the sale on the mechanics’ hen judgment has established that appellant’s equity in the property was only $250. The fact that appellant’s equity in the property was limited to $250 could have been pleaded in the action. In fact, it was asserted by respondent’s affidavit upon the motion for summary judgment. There is not presented, therefore, within the rule, a new situation which arose subsequent to the entry of the judgment and which could not have been pleaded in the action.

As was said in Ellis v. Delafield (153 App. Div. 26, 31):

The distinction must be kept in mind between matter arising after judgment which should preclude the enforcement of it, and matter which could have been pleaded as a defense to the action in which it was rendered.” A motion of this nature is usually based upon an allegation of payment of the judgment or that the judgment has been discharged in bankruptcy.

The respondent does not allege that he did anything to restore the appellant to the position it would have been in if respondent had not breached his bond. Respondent could have paid the liens or bid in the property for the benefit of the appellant. He failed to do either. The indemnity agreement was breached the moment the liability was imposed by the filing of the hens, though the amount was not fixed until the judgment in the hen action was rendered on May 26, 1933. Respondent has offered no evidence as to the value of the property at the time when the hens were filed or when the judgment in the hen action was rendered, nor does the sale in the hen action estabhsh the value of the property when the hens were filed or the judgment in the hen action entered. Nor is there evidence of value as to any time between those earher dates and the date of sale. How great may have been appellant’s damage as a result of the failure of respondent to fulfill his contract and pay for the improvements cannot be determined by the amount realized on a sale months after the breach. As a result of respondent’s default, appellant has lost title to its property and the effect of the order here under consideration, is to take from appellant also the indemnity against that very danger as to which among other things it contracted with respondent.

In New York & Harlem R. R. Co. v. Haws (56 N. Y. 175, 178) it was said that equity will restrain the collection of a judgment when it wifi be contrary to equity and good conscience to permit it to be enforced. In that case a passenger found money in a railroad car and gave it to the conductor to be delivered to the treasurer of the company to be returned to the owner. No one having claimed the money, the finder sued the railroad company and recovered judgment. The owner then appeared and demanded the money of the railroad company. The railroad company sued in equity to cancel the judgment against it and the court held that the judgment should be canceled as facts occurring subsequent to rendition of the judgment made it contrary to equity and good conscience for the railroad company to be required to pay the judgment, and also to pay the true owner.

Story on Equity Jurisprudence ([11th ed.] vol. 3, § 1572) states the rule as follows: An injunction will issue to restrain enforcement of a judgment because of facts subsequent to entry if “ it would be a virtual fraud in the party recovering at law now to insist upon enforcing his judgment.” That is a correct statement of the general rule.

In this case there is no fraud in requiring the respondent to pay according to the terms of his obligation and no new situation arose subsequent to the entry of the judgment which could not have been foreseen and, therefore, pleaded as a defense in the action. Certainly what the property sold for upon a foreclosure sale, under the conditions then existing in the real property market, is no certain guide to the value of the property at the time the mechanics’ liens were filed and respondent breached his contract, and, hence, no certain guide to the damage sustained by the owner.

The order of the Appellate Division and that of the Special Term should be reversed, with costs in all courts, and the motion denied.

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

Order reversed, etc.


text:
    In the Matter of Aaron Zanger, Appellant. The Association of the Bar of the City of New York, Respondent.
    (Argued January 4, 1935;
    decided January 15, 1935.)

      Charles H. Tuttle, Edwin L. Garvin and Thomas E. Kerwin for appellant.
    Regardless of the existence or non-existence of another person of the same name used by the client, and regardless of whether the appellant knew of his existence, the appellant was not guilty of any unprofessional conduct, certainly not of such moral obliquity as is an essential condition of disbarment. (Smith v. United States Casualty Co., 197 N. Y. 420; Bradley v. Fisher, 13 Wall. 355; Matter of Reifschneider, 60 App. Div. 478.) There must be intentional misconduct before there can be any disbarment; and, in the present case, the undisputed proof, the stipulation of facts, and the explicit findings of the referee after a full personal examination of the appellant, successfully demonstrate the absence of any intentional misconduct. (Matter of Palmieri, 221 N. Y. 611.)

      Carleton S. Cooke and Einar Chrystie for respondent.
    The appellant’s participation in the proven impersonation of another person by the witness was a fraud upon the court amounting to professional misconduct. (Matter of Goodman, 158 App. Div. 465; 220 N. Y. 570; Matter of Rouss, 221 N. Y. 81.) The jurisdiction of the Court of Appeals is confined to the question whether there is evidence to support the finding of guilt. (Matter of Goodman, 199 N. Y. 143; Matter of Axtell, 257 N. Y. 210; Matter of Hawes, 217 N. Y. 602; Matter of Flannery, 212 N. Y. 610.)
   Lehman, J.

The appellant, an attorney, has been charged with professional misconduct: “ (a) In representing to the court that the person called by him as a witness as above stated was Samuel Levando, the President of S. Levando, Inc., when he knew that such representation was false and that the person so called was in fact Frank J. Feldman.

" (b) In preparing and submitting to the court an affidavit in opposition to the motion made to correct that endorsement on a precept purporting to be signed and verified by Samuel Levando, the president of S. Levando & Co., when in fact as respondent well knew said affidavit had been signed by Feldman, and attaching to said affidavit an affidavit verified by the respondent containing the statement above referred to.”

The Appellate Division has found him guilty and has ordered his disbarment.

At the hearing, conducted before the referee appointed by the Appellate Division, there was no dispute as to the facts upon which the charges are based. Dispute, if any, is confined to the inferences which may properly be drawn from these facts as to the appellant’s motives and purposes. At the outset of the hearing a stipulation was made that the following is a statement of the facts, proceedings and papers herein and that the same may be considered by the referee and the court with the same force and effect as if established by the testimony of witnesses and the introduction of documentary evidence.” The attorney took the stand as a witness in his own behalf and testified briefly as to his motives and state of mind in performing the acts set forth in the agreed statement of facts. Then he was subjected to a minute examination by the referee and to cross-examination by the petitioner. With the exception of evidence which establishes, without dispute, the previous good reputation of the appellant, no other testimony was taken.

It thus appears, without dispute, that in May, 1925, the Yona-Varah Realty Corporation leased to S. Levando, Inc., a store and basement in premises 175 West Seventy-third street, New York city. In May, 1929, the landlord instituted dispossess proceedings against the tenant claiming two months’ rent and demanding a money judgment for the same with interest. An answer was interposed on behalf of the tenant by one Frank J. Feldman.

At the trial of this dispossess proceeding the appellant appeared as attorney for the tenant. The disputed question there was whether the rent was unpaid for one or for two months. He called, as the only witness for the tenant, Frank J. Feldman. Feldman gave his name as S. Levando and testified that he was the president of S. Levando, Inc., the tenant who was sued, and that he had paid all the rent due except for one month. At the close of the trial the court, believing this witness, held that there was only one month’s rent due.

A few days thereafter a motion was made by the landlord to correct the indorsement on a petition and precept in a previous dispossess proceeding between the same parties. The appellant, as attorney, prepared an affidavit to be submitted by the tenant in opposition to the motion. That affidavit begins with the recital: Samuel Levando, being duly sworn, deposes and says: I am the President of the tenant in this proceeding.” Feldman signed this affidavit as S. Levando ” and swore to it. The appellant himself made an affidavit in the same proceeding in which he referred to the “ statement made in the affidavit of the President of the tenant, Mr. Levando.” Upon learning that Feldman had falsely represented that he was S. Levando, the president of the corporation, though in fact he was at no time such president, the landlord’s attorney moved to set aside the final order in the dispossess proceeding and for a new trial. The motion was granted and upon the new trial the court decided in favor of the landlord upon its claim that two months’ rent was unpaid. The ground of the decision was that Feldman’s testimony should be rejected because, upon the previous trial, he had testified that he was S. Levando.

An attorney owes to the court absolute good faith. Any intentional deceit practiced by an attorney upon the court is evidence of a moral obtuseness which may unfit him for his high calling. Efficient administration of justice requires that an attorney shall be held to high moral standards of conduct. Disregard of such standards should not be condoned upon the plea that more serious offenses by others are common. The attorney here makes no such plea. He says that there has been no intentional deceit on his part, no act which is morally reprehensible. The referee appointed to hear and report upon the charges was, of course, selected by the Appellate Division because his own. reputation as a member of the bar establishes that he understands and lives up to the traditional high standards of his profession. After hearing and examining the appellant, the referee reported that the respondent was guilty at most of a mistake of the head rather than a conscious or malicious mistake of the heart,” and that the charges should be dismissed. The Appellate Division has decided otherwise. The question before us is whether from the agreed facts an inference may be drawn that the appellant was guilty of such professional misconduct as would constitute a cause for disbarment. (Matter of Flannery, 212 N. Y. 610; Cf. Matter of Schwarz, 231 N. Y. 642.)

That question necessarily requires consideration of the knowledge of the appellant that Feldman was in fact not S. Levando, the president of S. Levando, Inc., and the reason why the appellant failed to disclose whatever knowledge he had to the court. The facts established by the stipulation or admissions of the attorney and which are relevant upon these points, are as follows: Feldman had been a client of the appellant in certain personal matters in the year 1924 and the appellant knew that his name then was Frank J. Feldman. The relation of attorney and client between Feldman and appellant had ceased at least one year before any of the proceedings here in question in which appellant had appeared. The appellant “ knew that Feldman had conducted his business as and used the name of S. Levando.” In April, 1928, S. Levando, Inc., was sued by Pelz-Greenstein, Inc., for the purchase price of goods sold and delivered. The summons and complaint were served upon Feldman though the affidavit of service states that the service had been made upon “ S. Levando, president of the corporation.” Feldman filed a verified answer written by himself on a form containing a general denial and signed by him S. Levando, Inc., by S. Levando, President.” Throughout this action Feldman appeared as S. Levando and so executed a stipulation of settlement and an affidavit in which he describes himself as S. Levando, president of S. Levando, Inc. He negotiated the settlement himself under this name with the agents and attorneys for Pelz-Greenstein, Inc., and was known to them as S. Levando. With the proceeding until that point the appellant had no connection, but after judgment in the action was entered, Feldman asked that the appellant represent him. On a motion made thereafter in the action by the appellant as attorney, he prepared and submitted an affidavit sworn by Feldman as S. Levando, president of Levando, Inc., and “ Pelz-Greenstein’s attorneys referred to the proceedings and dealings had with Mr. Levando, meaning thereby Feldman, on numerous occasions.” The appellant thus obtained knowledge that Feldman did use the name of S. Levando in business dealings and claimed to be president of S. Levando, Inc. When Feldman testified upon the dispossess proceedings the appellant’s “ knowledge of the use of the name S. Levando by Feldman and of Feldman’s connection with S. Levando, Inc., was based upon Feldman’s statements to him and the proceedings at the trial on June 21, 1929, and in the Pelz-Greenstein case.” The appellant did not know the real Samuel Levando and had never met him until the oral hearing on the motion to vacate the order made after the trial in the dispossess proceedings at which Feldman had testified under the assumed name of S. Levando. At the time of that trial the appellant did not know whether “ Feldman was or was not an officer or president of S. Levando, Inc.” In fact Feldman was at no time president of that corporation although he was connected with it in some manner. So far we have referred only to the facts which were stipulated and except for some condensation and omission of detail we have stated the facts in the language of the stipulation. These facts are amplified and explained by the minutes of the two trials in the dispossess proceedings, the minutes of preliminary hearings upon these charges before the Association of the Bar, and by certain affidavits in connection with these various proceedings. All these papers are incorporated by reference in the stipulation and submitted to the referee. Without them the stipulated facts cannot be fully understood. They do not contradict or alter the agreed facts. In effect they constitute the background against which these facts must be viewed.

The complete picture then shows that the appellant, in a proceeding against S, Levando, Inc., called as witness for the defendant a man whom he had previously known as Frank J. Feldman and permitted the witness to testify that he was Samuel Levando and the president of S. Levando, Inc,, and thereafter the appellant submitted to the court affidavits prepared by himself in which, again, Feldman described himself as Samuel Levando, president of S. Levando, Inc. The appellant knew at that time that Feldman was conducting a small business under the name of S. Levando, Inc. He had been informed that Feldman had permission from Samuel Levando to conduct the business under that name. He had also been informed that in connection with that business Feldman was known as Levando. The dispute which was the subject-matter of the pending litigation concerned dealings by the landlord with Feldman personally and in those dealings the agents of the landlord had known Feldman under the name of Levando. Although the appellant knew that a man named Samuel Levando actually existed, he had never met him and had no reason to believe that Levando had any personal knowledge of or connection with the disputed transaction. In fact Levando had no such knowledge or connection. Doubtless the appellant should properly have insisted that" the witness state that his name was Frank J. Feldman and that he was conducting his business in the corporate name of S. Levando, Inc., and that in the disputed transactions, as well as in his other dealings, he was known as Mr. Levando. If a disclosure of the fact that Feldman assumed the name of Levando only in his business transactions could conceivably have injured his case or in any way affect the decision, then it would clearly have been the duty of the appellant as an officer of the court to give such information. If concealment of that fact could benefit any person or injure any person or deceive any person entitled to know all the facts, then perhaps in this case, intentional failure to make full disclosure might constitute professional misconduct calling for disciplinary action by the Appellate Division.

Since, in this case, the witness Feldman was, in fact, the man who conducted all the disputed transactions with the landlord’s agents and was the only person who could have testified at the trial upon the litigated issues of fact, his assumption of the name of another person could have no bearing upon the result unless possibly, the trier of the fact might reasonably give greater credence to the testimony of a witness bearing the name of Samuel Levando than to the testimony of a witness bearing the name of Frank J. Feldman.

The name of a person like the name of a thing serves merely to identify him. For honest purposes a person may, if he choose, assume a new name. (Smith v. United States Casualty Co., 197 N. Y. 420.) Not infrequently a person is known by one name in private life and by another name on the stage or public platform or in professional life. The question here is not whether Feldman might legally conduct his business under the name of Levando, but whether his attorney was guilty of serious professional misconduct in permitting him to testify under that name. A trier of the fact must weigh the credibility of the testimany presented. He is entitled to be informed of the identity of the witnesses, for the weight that should reasonably be given to the testimony may depend to some extent upon the reputation and past life of the witnesses. A witness may not impersonate another person nor conceal his own identity. A name assumed for such purpose is then a masquerade or mask. Assumption of the name of another for such purpose or where it may have such effect constitutes deceit and an attorney who abets such deceit is guilty of gross professional misconduct.

Again, the evidence here does not permit any inference that Feldman was permitted to testify under the name of Samuel Levando for such purpose or that, in fact, his testimony had such effect. Both Feldman and Samuel Levando were small merchants unknown to the court. They were cousins, they had been in business together. There is no suggestion that Feldman had done anything in the past by which his testimony might have been impeached if he had- testified under the name of Feldman. There could be no impersonation by him of the real Samuel Levando, president of S. Levando, Inc., when no interested person knew of the existence of such a man and, indeed, if there was wrongful purpose in the assumption of his name it must have been a purpose to conceal his existence; and whether or not such a person existed was in fact immaterial. •

Thus on the agreed facts it appears that the appellant acted without wrongful motive. There was no false testimony on a material point; there was no purpose to deceive the court; there was no purpose to injure the opposing side. Harm resulted from his act only to his client, for because of the alleged fraud a new trial was granted and on the second trial decision was given against him because the trial judge rejected his testimony on the ground of the same alleged fraud.

An attorney should avoid even suspicion of wrong conduct. The act of the appellant was thoughtless and he admits that it would have been better if he had insisted that Feldman testify that the name of Levando was assumed only for business purposes and convenience. Then he would have avoided suspicion of wrong. The justified suspicion of wrong created by himself has resulted in a second trial of the dispossess proceedings. Admonition should not be necessary that an attorney may not, even thoughtlessly, permit a witness to give testimony which might create even a suspicion of deceit. He should never give occasion for investigation by the Association of the Bar of his acts or his motives and the Appellate Division should not be called upon to pass on the honesty of motives. It is the duty of the members of the bar to refrain from all acts which indicate a lack of frankness or could sustain an inference of intent to deceive unless upon investigation wrongful motive is excluded. None the 'less, where, as here, the act is thoughtless, where deceit is neither its purpose or effect, an attorney is not guilty of professional misconduct which justifies disbarment.

Since in this case the evidentiary facts are undisputed and the only possible inferences from those facts point to innocence of the attorney, this court has jurisdiction to review the order of disbarment.

The order of the Appellate Division should be reversed, without costs, and the proceeding dismissed.

Hubbs, Crouch and Loughran, JJ., concur; O’Brien, J., dissents and votes to affirm; Crane, Ch. J., not voting; Finch, J., not sitting.

Order reversed, etc.


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    The Ebling Company, Appellant, v. Trinity Estates, Inc., et al., Defendants. Charles Axelrod, Respondent.

      (Argued January 3, 1935;
    decided January 15, 1935.)

      Eugene Cohn for appellant.
    The finding of the Appellate Division negativing fraud constitutes reversible error. (Nickell v. Tracy, 184 N. Y. 386; Thompson v. Postal Life Ins. Co., 226 N. Y. 363; Pennacchio v. Greco, 107 App. Div. 225; Hobaica v. Byrne, 216 App. Div. 307; Gabriel v. Graham, 168 App. Div. 847; Adams v. Gillig, 199 N. Y. 314; Ritzwoller v. Lurie, 225 N. Y. 464.) The order of the Special Term should not have been reversed. That order properly directed respondent to turn over to the receiver the rents of which he had illegally obtained possession and which in equity and in good conscience should have gone to the receiver for the plaintiff’s benefit. (Prudence Co. v. 160 West 73rd St. Corp., 260 N. Y. 205; Monica Realty Corp. v. 122 Fifth Ave. Corp., 264 N. Y. 52.)

      Henry P. Goulston for respondent.
    The order of the Appellate Division and the report of the referee were fully sustained by the evidence. (Wyckoff v. Scofield, 98 N. Y. 475; Manufacturers Trust Co. v. Sadenet Realty Co., 234 App. Div. 893; Argali v. Pitts, 78 N. Y. 239;
      Hollenbeck v. Donnell, 94 N. Y. 342; Howell v. Rysley, 10 Paige, 43; Rider v. Bagley, 84 N. Y. 461; Sullivan v. Rosson, 223 N. Y. 217; New York Life Ins. Co. v. Fulton Development Corp., 265 N. Y. 348.) Courts are not authorized by summary order to require a person to pay to a receiver a sum of money although the receiver claims such money as rent collected prior to his qualification and taking possession of the premises, since such moneys never legally belonged to the receiver, nor to the plaintiff as mortgagee in the action, since they have no lien or other rights thereto until the receiver takes possession. (Matter of Scarsdale Co., 159 App. Div. 912; Matter of Baltes, 51 App. Div. 491; Rosenthal v. Slutnik, 175 App. Div. 970.)
   Hubbs, J.

The appellant was the holder of a mortgage on an apartment house occupied by numerous tenants. The owner and mortgagor was Trinity Estates, Inc., the defendant corporation, of which the respondent, Charles Axelrod, was president and principal stockholder. The mortgage contained the usual clause providing for the appointment of a receiver.

In October, 1932, certain interest and taxes were due and unpaid. To prevent foreclosure of the mortgage, the respondent agreed personally to pay the taxes and interest up to January 1, 1933. He defaulted in paying taxes. Thereafter, in an interview with Mr. Haebler, president of the appellant, on February 25, he agreed to turn over to the appellant $2,000 in order to bring about an adjustment and prevent a foreclosure. Two days later, on February 27, respondent delivered to Mr. Haebler his personal check for $2,000 payable to appellant, at which time discussion was had in regard to the terms of an agreement thereafter to be reduced to writing. The discussion was to the effect that the rate of interest should be reduced; that there should be no foreclosure and no receivership; that notes should be given for back taxes and interest about to become due, ' and that the rents should be assigned to the appellant. No definite, completed arrangement or contract was made at that time. "It was arranged that respondent was to meet Mr. Cohn, appellant’s attorney, at the attorney’s office the next morning, February 28, to draft and sign an agreement which would carry out the tentative arrangement. On the morning of February 28 respondent went to the offices of appellant’s attorney where a discussion was had between Mr. Cohn and respondent about the terms of the agreement. The same morning he went to the bank and stopped payment on the check. He testified that payment was stopped after he went to Mr. Cohn’s offices. Respondent says that in the discussion with Mr. Cohn he learned that ifc was required that the agreement to be drawn up by appellant’s attorney should contain a provision to the effect that he would personally guarantee the payment of the notes to be given and that such provision was contrary to the understanding between himself and Mr. Haebler. Respondent left Mr. Cohn’s office without executing an agreement. Thereafter, on the same day, he made repeated attempts to revive the negotiations so that some arrangement might be made to prevent a foreclosure.

In the meantime, however, the president of the appellant had learned that payment had been stopped on the check and he refused to have any further conversation with respondent and ordered that all negotiations be stopped and that this action be commenced.

On February 28 and March 1 respondent collected rents due March 1 to the amount of $1,904. He told the tenants that he needed money on account of the mortgage matter. He also granted certain reductions in rentals which he claimed were granted in pursuance of an agreement theretofore made. On March 1 papers in the foreclosure action were filed and on March 2 an order was entered appointing a receiver, which order was served on respondent on March 4. On that day he paid Mrs. Weiner, the superintendent of the building, $140. It does not appear that the payment was made after the service of the order or that it was for his personal obligation. Respondent deposited the money which he had collected from the tenants in his personal bank account in which he deposited all receipts from rent and from which he made all payments on behalf of the corporation, the mortgagor corporation not having a bank account. The receiver appointed in this action made a motion to compel respondent, who was not a party to the foreclosure action, to pay over the amount of the rents which he had collected upon the theory that those rents were collected in fraud of the mortgagee and of the receiver. The matter was sent to a referee who found in favor of respondent. The Special Term set aside the referee’s report and found in favor of the receiver. The Appellate Division, by a divided court, reversed and made findings in favor of respondent. The only question that is of importance on this appeal is whether respondent’s act in the collection of rents was in fraud of the mortgagee and of the receiver. The referee found that the rents were all collected on February 28 and March 1 prior to the appointment of the receiver; that respondent paid out all that he collected for repairs and running expenses of the premises; that he had neither fraudulently collected such rents nor fraudulently disposed of the same. The Special Term, in setting aside the report of the referee, found that the conduct of Axelrod was fraudulent and directed that he turn over to the receiver the amount of the rents collected less $140 paid to the superintendent of the building. The Appellate Division reversed, approved the findings of the referee and denied the motion.

The appellant contends that the motion should have been granted on the ground that respondent perpetuated fraud in that he had made an agreement on February 27,. under which foreclosure was to be withheld; that he had given a check for $2,000 and that he stopped payment on that check for the purpose of delaying the threatened foreclosure, thereby enabling him to collect the rents; and that he had obtained the rents through unwarranted reductions and false statements made to the tenants.

In the collection of the rents the respondent acted either as agent of the defendant corporation or as its president. Clearly, the defendant corporation, in the absence of fraud, was entitled to collect the rents which became due on March 1, and before the appointment of the receiver. The receiver had no interest in rents which had accrued and been paid to the defendant before' his appointment. (New York Life Ins. Co. v. Fulton Development Corp., 265 N. Y. 348, opinion by Crane, J., decided Nov. 20, 1934.)

It is the contention of the appellant that this case falls within the statement made by Judge Lehman in Prudence Co. v. 160 West 73rd Street Corp. (260 N. Y. 205, at p. 213): “ What we have said must not be accepted as an indication that an order appointing a recéiver of rents and profits may be frustrated by a collusive or fraudulent lease for an inadequate rental or advance payment of rent in an anticipation of a foreclosure action.”

Here it has been found that the rent was not paid in advance. It was due on March 1 and collected on that day or the preceding day. If it had not been for the alleged agreement made between respondent and the president of the plaintiff there could be no question about the right of the defendant corporation to collect the rents in question.

It is the contention of respondent that inasmuch as appellant, through its attorney, sought to put into the proposed written agreement a provision that respondent would personally guarantee the payment of the notes to be given, there was a breach of the verbal agreement on the part of the appellant and that respondent was under no obligation to go on; that he stopped payment on the check for that reason, until such time as "that misunderstanding could be straightened out. The referee and the Appellate Division have found that there was no fraud committed by respondent; that the oral agreement was never consummated, that it was simply a preliminary discussion and that when respondent ascertained that a condition was to be inserted in the written agreement which he had not and would not consent to, he was justified in stopping payment of the check. There is evidence to sustain those findings.

If it were to be determined that respondent, in the collection of the rents, acted as an individual and not as a representative of the corporate defendant, and that he personally had possession of the rents when the receiver was appointed, there would be a further question as to whether this proceeding could be maintained against him in his individual capacity. (Cf. Matter of Scarsdale Co., 159 App. Div. 912; Matter of Baltes, 51 App. Div. 491.) We do not pass upon that question but assume simply for the purpose of this decision that the proceeding might be properly maintainable against him individually. The evidence justified the findings made by the referee and approved by the Appellate Division.

The order should be affirmed, with costs.

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

Order affirmed.


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    The People of the State of New York, Respondent, v. Lancelot M. Berkeley, Appellant.
    (Argued January 7, 1935;
    decided January 15, 1935.)

      Lancelot M. Berkeley, in person, for appellant.
    The Multiple Dwelling Law does not impose on agents the duty to make repairs or alterations. (Altz v. Leiberson, 233 N. Y. 16; McAlpin v. Powell, 70 N. Y. 126; Slater v. Barnes, 207 App. Div. 413.)

      Paul Windels, Corporation Counsel (Henry J. Shields and Paxton Blair of counsel), for respondent.
   Per Curiam.

Defendant was charged with the commission of a misdemeanor by violating provisions of the Multiple Dwelling Law (Laws of 1929, ch. 713; Cons. Laws, ch. 61-A). The information charged that the defendant was the agent having the management and control of a certain class A multiple dwelling. An inspector in the Tenement House Department of the city of New York, who verified the information, testified at the trial that he never saw defendant at the premises and never had any conversation with him ; that he did not know that he was. agent of the building or that he had management or control of it. It does appear that defendant filed an application for alterations of the building in question with the Tenement House Department. He verified the application simply as “Attorney in Fact; ” that he hired two plumbers to do some work in the building and made payments to them therefor, and at least some of the payments were made by cheeks signed “ L. M. Berkeley, power of attorney.” It was conceded at the trial that no effort was made to locate the owner of the building, although the name of the owner was known, apparently. The testimony presented did not establish beyond a reasonable doubt that defendant was a person who had assisted in the violation of a provision of the Multiple Dwelling Law.

The judgments should be reversed and the information dismissed.

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

Judgments reversed, etc.


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    In the Matter of Terijon Weitling, Respondent. Julian A. Gregory et al., Copartners under the Firm Name of Gregory, Stewart & Montgomery, Appellants.

      (Argued January 8, 1935;
    decided January 22, 1935.)

      W. Randolph Montgomery and Benjamin A. Matthews for appellants.
    Appellants are entitled to retain the papers until the reasonable value of their services has been paid. (Robinson v. Rogers, 237 N. Y. 467; Matter of Sebring, 238 App. Div. 281; Matter of Krooks, 257 N. Y. 329; Matter of Tillman, 259 N. Y. 133.) The court erred in destroying appellants’ retaining lien without taking testimony or affording an opportunity for cross-examination. (Matter of H-, an Attorney, 87 N. Y. 521; Matter of Eldridge, 82 N. Y. 161; Matter of Speranza, 186 N. Y. 280; Matter of Knapp, 85 N. Y. 284.)

      F. Campbell Jeffery for respondent.
    The Special Term had the right to exercise its discretion in the matter. (Bloom v. Irving Trust Co., 152 Misc. Rep. 50; Matter of Badger, 9 Fed. Rep. [2d] 560; Matter of Lydig, 262 N. Y. 408.)
   Hubbs, J.

Appellants, who are attorneys at law, were retained by respondent to commence and prosecute an action to recover on a claim for $72,761.89 with interest. The retainer was upon a contingent fee. The appellants performed extensive services under their contract of employment, including a jury trial and an appeal to the Appellate Division. They paid out for expenses over one thousand dollars.

The respondent became dissatisfied with their services and retained other counsel who demanded that the papers and documents in connection with the action be surrendered to him. Appellants wrote a letter to respondent saying that if it was his wish to substitute other counsel they had no objection provided he compensated them for the services which they had rendered. Without paying appellants for services rendered, the respondent made a motion to compel the appellants to deliver to him all papers connected with the action. Respondent’s affidavit served upon appellants with the notice of motion charged the appellants with unprofessional conduct as attorneys in the conduct of the action. Those charges were denied by appellants who resisted the respondent’s motion upon the ground that they should not be deprived of their retaining lien by being compelled to surrender the papers upon which, as attorneys, they had a valid retaining lien, until they were paid the fair and reasonable value of the services which they had rendered.

The lien which they possessed was a valuable right given by law to secure them for the payment of the reasonable value of the services which they had rendered as attorneys in the action. (Robinson v. Rogers, 237 N. Y. 467.)

The fact that their retainer provided for the payment of a contingent fee did not affect the validity of their lien. Upon their discharge they were entitled to be paid the fair and reasonable value of the services which they had rendered upon the basis of a quantum meruit. (Matter of Krooks, 257 N. Y. 329.)

A client is at liberty to change his attorney and cancel the contract of retainer whenever he, for any reason, is dissatisfied and desires to do so. He can only do so, however, upon payment for services rendered. In the absence of such payment, the retaining hen remains in force and the attorney cannot be compelled to surrender the papers in relation to the action in his possession, in the absence of unprofessional conduct on his part.

It is clear that in the absence of a finding of misconduct, the Special Term would not have been justified in granting an order requiring appellants to surrender the papers in their possession without providing in some adequate way for their compensation. It is urged by respondent that the Special Term was justified on the affidavits presented in finding such misconduct, and, therefore, that the order was proper. It is not clear that the Special Term so found. The order appointed a referee to determine the amount of appellants’ charging lien, if any. The making of such order is entirely inconsistent with the contention of respondent that the Special Term determined on the affidavits submitted that appellants had been guilty of unprofessional conduct in the conduct of respondent’s case. If appellants had been found to have been guilty of unprofessional conduct which justified an order depriving them of their retaining lien, the same finding would deprive them of their charging lien. In any event, the Special Term should not have so found on the affidavits presented. It is a serious matter to charge an attorney with such unprofessional conduct as will entitle a client to a surrender of papers in his possession without the payment of his fair and just compensation. Ordinarily where the charge of misconduct is denied in detail, the issue should not be determined upon conflicting affidavits alone. Testimony should be taken and the issue should be heard by the court or the matter sent to a referee. In a matter of such importance, the witnesses should be produced .in court subject to cross-examination. (New York Life Ins. Co. v. Guttag Corp., 265 N. Y. 292; Matter of Eldridge, 82 N. Y. 161; Matter of H-, an Attorney, 87 N. Y. 521.)

The fact that the Special Term recognized the right of . the appellants to be heard upon the issue as to whether they possessed a charging lien and if so, the amount, and sent that question to a referee, did not justify the court in deciding without a proper hearing that they were not entitled to a retaining lien.

The order of the Appellate Division and that of the Special Term should be reversed, with costs to the appellants in all courts, and the matter remitted to the Special Term to proceed in accordance with this opinion.

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

Ordered accordingly.


text:
    The People of the State of New York, Respondent, v. Nathan Klein, Appellant.
    (Appeals Nos. 1, 2 and 3.)
    (Argued January 16, 1935;
    decided January 22, 1935.)

      Jesse Freidin, Charles L. Apfel and Leonard L. Berliner for appellant.
    Infant witnesses under the age of twelve years were not duly qualified by the trial court by proper preliminary examination, and their testimony was improperly received. (People v. Stanley, 130 App. Div. 64; People v. Linzey, 79 Hun, 23; Wheeler v. United States, 159 U. S. 523; State v. Whittier, 21 Me. 347; Olshansky v. Prensky, 185 App. Div. 469; People v. Donohue, 114 App. Div. 830; People v. Chamberlain, 92 Misc. Rep. 720; Stoopick v. Goldstein, 174 App. Div. 306.) There was no corroboration of the testimony of the infant witnesses to support the conviction. (People v. De Garmo, 73 App. Div. 46; People v. Gralleranzo, 54 App. Div. 360; People v. Cascia, 191 App. Div. 376; People v. Deitsch, 237 N. Y. 300; People v. Dixon, 231 N. Y. 111; People v. Bills, 129 App. Div. 798; People v. Grauer, 12 App. Div. 464; People v. Brehen, 218 N. Y. Supp. 469; People v. Smith, 86 Hun, 485.)

      Martin W. Littleton, Jr., District Attorney (Philip Huntington of counsel), for respondent.
   Per Curiam.

The conviction of defendant, in three separate proceedings, upon the uncorroborated testimony of one infant witness in each proceeding, must be reversed, as the. evidence does not establish the guilt of defendant beyond a reasonable doubt. The sole witness in each of two proceedings was under eleven years of age, and in the other proceeding the sole witness was under fourteen years of age. The two witnesses under twelve years of age were not properly examined, preliminarily, by the magistrate, before being sworn, to determine the child’s competency. (Code Crim. Proc. § 392; Civ. Prac. Act, § 365.) The statute creates a presumption that a child under twelve years of age is not competent to be sworn. That presumption must be overcome by a proper prehminary examination. If, after such examination, it appears that the child should not be sworn, his Statement may be taken, but no person shall be held or convicted of an offense upon such testimony unsupported by other evidence.” Thus the legislative intent is indicated that no person shall be convicted upon the Uncorroborated testimony of a child under twelve years of age whose competency has not been established by a preliminary examination. (Cf. Olshansky v. Prensky, 185 App. Div. 469.) The record discloses that two of the witnesses, including the child thirteen years of age, had on a previous trial, at which another person was being tried upon the same charge upon which defendant was tried, identified the person then being tried as the person who had committed the act for the commission of which defendant has been convicted. The conviction of the defendant must be reversed and a new trial granted.

In each case, the judgments should be reversed and a new trial ordered.

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

Judgments reversed, etc.