author: Fboessel, J.

text:
    The People of the State of New York, Respondent, v. Louis J. Farone, Appellant.
    Argued January 6, 1955;
    decided March 11, 1955.

      James F. Carroll for appellant.
    I. Errors in drawing the jury compel reversal. The jury was not drawn by lot according to law. (People v. Wallens, 297 N. Y. 57; People v. Brodlowicz, 182 Misc. 351; People v. Higgins, 172 Misc. 613; Matter of Leary, 175 Misc. 254, 285 N. Y. 693; Stokes v. People, 53 N. Y. 164; People ex rel. Cosgriff v. Craig, 195 N. Y. 190; People v. Damron, 212 N. Y. 256; Hildreth v. City of Troy, 101 N. Y. 234; People v.
      McQuade, 110 N. Y. 284; People v. Fernandez, 301 N. Y. 302.) II. The court erred in its handling of the trial jury. (People ex rel. Munsell v. Court of Oyer & Terminer, 36 Hun 277, 101 N. Y. 245; Capitol Traction Co. v. Hof, 174 U. S. 1; People v. Marshall, 282 App. Div. 36, 306 N. Y. 223; People v. Cocco, 305 N. Y. 282.) III. Defendant’s counsel was denied the right to cross-examine witnesses in the jury inquiry. (Matter of Friedel v. Board of Regents, 296 N. Y. 347; Remmer v. United States, 347 U. S. 227.) IV. The misconduct of a juror and the procedure adopted by the court demand a reversal and new trial. (Johnson v. Riter-Conley Mfg. Co., 149 App. Div. 543; McHugh v. Jones, 283 N. Y. 534; People v. Leonti, 262 N. Y. 256; People v. Cocco, 305 N. Y. 282.) V. The trial court erred in refusing to permit defense counsel to examine the Grand Jury minutes for the purpose of cross-examining the People’s witnesses. (Schwickert v. Levin, 76 App. Div. 373; Richardson v. Nassau Elec. R. R. Co., 190 App. Div. 529; Miller v. Greenwald Petticoat Co., 192 App. Div. 559; Sexton v. Onward Constr. Co., 93 App. Div. 143; People v. Schainuck, 286 N. Y. 161; People v. Pauley, 281 App. Div. 223; People v. Miller, 257 N. Y. 54; Heggos v. Streeter, 182 App. Div. 525.) VI. Defendant was prejudiced by the failure of the court to direct the People to serve an adequate bill of particulars. (People v. Bogdanoff, 254 N. Y. 16.) VII. The court erred in admitting testimony of acts, declarations and admissions of alleged coconspirators made prior to the alleged inception of the conspiracy. (People v. Marshall, 306 N. Y. 223; People v. Kief, 126 N. Y. 661; Brown v. United States, 150 U. S. 93; Morrow v. United States, 11 F. 2d 256; Bartlett v. United States, 166 F. 2d 920.) VIII. The Attorney-General made remarks in his summation which were prejudicial to defendant and warrant reversal. IX. Section 986 of the Penal Law is the book-making statute. It does not apply to gaming as such. (People v. Laude, 81 Misc. 256; People ex rel. Lichtenstein v. Langan, 196 N. Y. 260; People v. Goldstein, 295 N. Y. 61; People v. Erickson, 302 N. Y. 461; Matter of Guardian Life Ins. Co. of America v. Chapman, 302 N. Y. 226; Matter of Sullivan Co., 289 N. Y. 110; Langworthy v. Broomley, 29 How. Prac. 92; Mrowiec v. Polish Army Veterans Assn. of America, 190 Misc. 423; Liebman v. Miller, 20 Misc. 705; Wilkenfeld v. Attic Club, 74 Misc. 543.) X. Convictions under section 986 and section 973 of the Penal Law are incompatible and cannot stand. (People v. Stedeker, 175 N. Y. 57; People v. Bruno, 281 App. Div. 941.) XI. Another penalty is provided for the crimes charged in these counts. Section 986 of the Penal Law does not apply. (People v. Bright, 203 N. Y. 73; People v. Pauley, 281 App. Div. 223.) XII. The common gambler counts in the three indictments should have been merged at the time of the consolidation of the three indictments for trial. (Galtrof v. Levy, 174 Misc. 1004; People v. O’Malley, 52 App. Div. 46.)

      Jacob K. Javits, Attorney-General (Arthur H. Christy and Daniel F. McMahon of counsel), for respondent.
    I. Defendant’s guilt was proved beyond a reasonable doubt. (People v. Dixon, 231 N. Y. 111; People v. McCarthy, 256 App. Div. 522; People v. Sexton, 187 N. Y. 495; People v. Harris, 136 N. Y. 423.) II. The trial court properly impaneled the trial jury. (People v. Sprague, 217 N. Y. 373; People v. McQuade, 110 N. Y. 284; People v. Fernandez, 301 N. Y. 302; Hildreth v. City of Troy, 101 N. Y. 234.) III. The trial court properly handled the allegation of misconduct against the trial juror. (People v. Cocco, 305 N. Y. 282; People v. Sprague, 217 N. Y. 373; People v. Speigel, 149 Misc. 439, 243 App. Div. 595; People v. Lubin, 190 App. Div. 339, 229 N. Y. 601; People v. Leonti, 262 N. Y. 256; People v. McDuffee, 270 App. Div. 1067, 271 App. Div. 760; People v. Caputalo, 138 Misc. 344, 233 App. Div. 706; People v. Rosen, 251 App. Div. 584.) IV. Defendant was properly convicted of violations of sections 970, 973 and 986 of the Penal Law. (People v. Erickson, 302 N. Y. 461; People v. Callahan, 281 N. Y. 726; People v. Delore, 281 N. Y. 726; People v. Bruno, 281 App. Div. 941; People ex rel. Sturgis v. Fallon, 152 N. Y. 1; People v. Stedeker, 175 N. Y. 57; People v. Silver, 251 App. Div. 309; People v. Mumford, 171 Misc. 397.) V. The court properly denied defendant access to the Grand Jury minutes. (Matter of Montgomery, 126 App. Div. 72; People v. Walsh, 262 N. Y. 140; People v. Schainuck, 286 N. Y. 161; People v. Kreis, 302 N. Y. 894; People v. Miller, 257 N. Y. 54; People v. Kelley, 253 App. Div. 430.) VI. The court’s ruling on the motion for the bill of particulars was proper. (People v. Parkinson, 181 Misc. 603; People v. Leary, 282 App. Div. 476.) VII. The court properly admitted testimony of early coconspirators. (People v. Luciano, 277 N. Y. 348; People v. McKane, 143 N. Y. 455.) VIII. Remarks of the Attorney-General in his summation were not improper. (People v. Hines, 284 N. Y. 93; People v. Sprague, 217 N. Y. 373.)
   Fboessel, J.

In the course of the special investigation into gambling in Saratoga County ordered by former Governor Dewey, defendant was indicted for his activities in the operation of three gambling houses in Saratoga Springs — (1) Riley’s Lake House, (2) The Brook and (3) Smith’s Interlaken. There are three separate indictments (which were consolidated for the purposes of trial), one relating to each gambling house, and the several counts thereof are similar. In each indictment defendant was charged with one count of conspiracy (Penal Law, § 580), one count of being a common gambler (Penal Law, § 970), and one count of keeping a gaming and betting establishment (Penal Law, § 973). Then follows in each indictment a series of counts charging defendant with receiving and becoming the custodian of money bet and wagered (Penal Law, § 986). Each of the latter counts charges a different offense for every day of the period covered for each of the three gambling houses. In addition, there was one count in the Interlaken indictment charging defendant with keeping slot machines (Penal Law, § 982). All of the alleged crimes are misdemeanors.

The case was tried for four weeks at an Extraordinary Special and Trial Term of the Supreme Court. Defendant was found guilty as follows: conspiracy: three counts; common gambler: two counts; keeping a gaming and betting establishment : three counts; receiving bets and wagers: six counts. He was acquitted on one count of being a common gambler and on one count of receiving bets and wagers. The remaining counts were not submitted to the jury, having been dismissed by consent, on motion of the People, or otherwise. Except for a modification not in issue here, the Appellate Division affirmed the convictions.

In general, the evidence establishes that Riley’s Lake House, The Brook and Smith’s Interlaken were being operated as wide-open gambling casinos; that, although defendant was not the record holder of title to any of the three houses, he nevertheless held a beneficial interest in and controlled all of them; and that he performed various acts in the operation of at least two of these houses. Upon the evidence in this record, the jury had the right to find defendant guilty of the crimes of which he was convicted, except as hereinafter noted. We turn, then, to the errors of law with which defendant claims his trial was afflicted.

We find no prejudicial error in the selection of the jury, in the trial court’s disposition of the alternate juror’s report to him in the presence of counsel, nor in the trial court’s rulings with respect to the Grand Jury minutes. Nor do we think that the common gambler counts should have been merged at the trial because, as claimed, they constitute a single crime. Section 970 of the Penal Law provides, so far as pertinent here, that a “ person who is the owner, agent or superintendent of a place * * * for gambling * * * is * * * guilty of a misdemeanor ” (emphasis supplied). Here the defendant was convicted of being the owner, agent or superintendent of two separate and distinct gambling casinos. So far as this record shows, there is little or nothing to connect up defendant’s separate operations so as to bring them within a single transaction. We have examined the several other errors assigned, and find them to be insubstantial, save in one respect.

Defendant urges that Ms convictions under section 986 of the Penal Law cannot stand. In counts 4, 8, 13 and 14 of the Riley indictment and counts 4 and 7 of the Interlaken indictment, defendant was charged with Receiving Bets And Wagers and Becoming Custodian[s] of Money Bet And Wagered, in violation of Section 986 of the Penal Law ”. Defendant contends that section 986 is directed only against book-making and pool selling, and cannot be used to prosecute the type of gambling involved here, such as dice and roulette.

It is the theory of the People that the employees of the three gambling casinos received money wagered at the roulette and crap ” tables, and that defendant aided and abetted them in those acts. Such acts according to the People are in violation of section 986, a statute admittedly dealing primarily with bookmaking and pool selling offenses, but part of whose language may, by omitting much of the book-making language, be read as follows: any person who receives * * * any money * * * bet or wagered * * * by or for any other per-is guilty of a misdemeanor ”. son

If we should construe section 986 in the manner here urged by the People, the inevitable consequence would be an unprecedented extension of the scope of our penal laws against gambling. As the statute now reads, the only limitations upon the seemingly broad meaning of the words ‘ ‘ any person who receives * * * money * * * bet or wagered ” are those imposed by the context in which they appear — a context of book-making and pool selling provisions. Once removed from that context, nothing would remain which could rationally limit the application of those words only to professional gamblers. On the contrary, the words, when taken alone, would apply equally to any person — be he casual gambler or professional — who “ receives money bet or wagered ’ ’, i.e., collects on any kind of bet which he has won.

Unlike section 970 which applies only to common gamblers, and section 973 which punishes one who keeps a gaming house, section 986, so construed, would extend far beyond the bookmaker and pool seller — at whom it was originally aimed and against whom it has always been used — and would make it a criminal offense even to accept payment on a private bet with a friend on the outcome of the World Series or of a prize fight (cf. People v. Solomon, 296 N. Y. 220). Such an extension would be inconsistent with both the history and policy of our gambling laws. As we observed in Watts v. Malatesta (262 N. Y. 80, 82): “ casual betting or gaming by individuals as distinguished from betting or gambling as a business or profession, is not a crime. (People v. Stedeker, 175 N. Y. 57; People v. Bright, 203 N. Y. 73; People ex rel. Collins v. McLaughlin, 128 App. Div. 599.) The distinction between the two species has long ‘ obtained in this state where ordinary betting has never been made a crime * * * while the keeping of a gambling house, selling lottery tickets and the profession of a common gambler have been subjected to severe punishment.’ * * * The evil which the law chiefly condemns (N. Y. Const, art I, § 9) and makes criminal (Penal Law, art. 88) is betting and gambling organized and carried on as a systematic business.”

Indeed, the Appellate Division nearly fifty years ago, having-been called upon to construe the precise language now under consideration, reviewed extensively the constitutional and statutory history of gambling in this State, and reached the following conclusion, which is applicable as well to the instant case: “ The statute is aimed at the stakeholder, the bookmaker and the poolseller. To construe the language in the manner contended for by the learned district attorney is to wrench words from the context, to violate the grammatical construction of the sentence, and to ignore the historical development of the statute and the obvious intention of the Legislature in the various enactments of which it is the ultimate result. ’ ’ (People ex rel. Collins v. McLaughlin, 128 App. Div. 599, 615, appeal dismissed 194 N. Y. 556.)

Judicial discussion of the history and purpose of section 986 (formerly Penal Code, § 351) clearly indicates that it was designed as a book-making statute (see Lincoln’s Constitutional History of New York, Vol. III, pp. 49-52; People ex rel. Collins v. McLaughlin, supra; People ex rel. Lichtenstein v. Langan, 196 N. Y. 260; People v. Stedeker, 175 N. Y. 57). Even as recently as People v. Erickson (302 N. Y. 461), in holding that a defendant could be separately convicted for several different acts under section 986, we said, per Desmond, J. (p. 465): “ The statute, therefore, is much more than a statement that engaging in book-making ’ is a misdemeanor, with particulars as to what constitutes ‘ book-making ’. It is, rather, a listing of a number of different kinds of acts or conduct, all of them related to ‘ bookmaking ’, but each of which is, separately, made a misdemeanor. ’ ’ (Emphasis supplied.) It is significant that when the Legislature has chosen to include ‘ ‘ gaming ’ ’ with racing or other bets or wagers, it has specifically said so (Penal Law, § 991). Moreover, section 986 has its own provision against keeping a house or place for ‘ ‘ any ’ ’ of the ‘ ‘ purposes ’ ’ mentioned therein, and if it applied to this case a prosecution under section 973 could not also lie. Common gamblers, gambling establishments, gambling implements and devices and illegal gaming are provided for by sections 970-973 and 977-980; “policy” is governed by sections 974 — 976 of the Penal Law.

The People’s argument with respect to section 986 runs counter not only to the history, policy and long-established construction of our gambling laws, but also to the general rule requiring us strictly to construe penal statutes in favor of an accused. We therefore conclude that defendant’s convictions under section 986 of the Penal Law should be reversed, that those six counts of the indictments should be dismissed, and that in all other respects the judgment should be affirmed.

The judgment of the Appellate Division should be modified in accordance with the opinion herein and, as so modified, affirmed.

Conway, Ch. J., Desmond, Dye, Fuld, Van Voobhis and Burke, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

author: Desmond, J.

license: Public Domain

text:
    Lisette V. Ruegg, as Administratrix of the Estate of Erhart Ruegg, Deceased, Respondent, v. Fairfield Securities Corporation, Appellant.
    Argued February 21, 1955;
    decided March 11, 1955.

      Henry J. Bogatko, John I. O’Neill and William M. Keegan for appellant.
    I. Mr. Korn’s testimony as to the statements he overheard made into the telephone by Mr. Arnold was inadmissible. (Ruppert v. Brooklyn Heights R. R. Co., 154 N. Y. 90;
      People v. Kennedy, 32 N. Y. 141; People v. Harris, 136 N. Y. 423; Ottida, Inc., v. Harriman Nat. Bank & Trust Co., 260 App. Div. 1008; Mankes v. Fishman, 163 App. Div. 789; Gubelman v. Ands Koch, Inc., 234 N. Y. 425.) II. The documents offered at the trial raise a doubt as to whether defendant ever had knowledge of the forbearance or that plaintiff or its attorney ever relied on such knowledge of defendant. III. The letter of March 4, 1949, was not in and of itself an enforcible contract. It lacked both consideration and mutuality. (Schlegel Mfg. Co. v. Cooper’s Glue Factory, 231 N. Y. 459.) IV. The refusal of the trial court to rule upon the admissibility of the evidence and in reserving decision until after the end of the trial was, therefore, reversible error. (Lathrop v. Bramhall, 64 N. Y. 365; Sharpe v. Freeman, 45 N. Y. 802.) V. The trial court committed error in allowing plaintiff to reopen her case,- after both sides had rested, to offer additional and new evidence. (Marshall v. Davies, 78 N. Y. 414.)

      Harold H. Corbin, Charles Korn, Marvin S. Machson and Samuel Statler for respondent.
    I. There was ample consideration for defendant’s promise. (Richardson v. Carpenter, 46 N. Y. 660; Read v. Morford, 203 App. Div. 166; Bank of Troy v. Topping, 9 Wend. 273, 13 Wend. 557; Belknap v. Bender, 75 N. Y. 446.) II. The trial court was right in finally holding that Korn’s recital of what Arnold said was “ clearly ” admissible provided Arnold was talking with Still for it was original evidence of notice to and knowledge of defendant and was not hearsay. (People v. La Barbera, 274 N. Y. 339; Gubelman v. Ands Koch, Inc., 234 N. Y. 425.)
   Desmond, J.

This suit was brought because of defendant’s default in carrying out this promise:

“ March 4th, 1949
Mr. Erhart Ruegg
24 West 40th Street
New York City, New York
Dear Sir:
At the request of Mr. William S. Arnold, we hereby agree to pay to you, for the account of Mr. Arnold, the sum of Twelve Thousand ($12,000.00) Dollars within thirty (30) days after certain Bonds No. 16-2548/9-47 issued by the United States Fidelity and Guaranty Company for William S. Arnold and John Stum, have been cancelled and all the collateral now pledged to secure said bonds has been released by the United States Fidelity and Guaranty Company and returned to our affiliated company.
Very truly yours,
FAIRFIELD SECURITIES CORPORATION By Ralph E. Still
Vice-President

There is no dispute as to the execution of that writing, or as to the signer’s authority to execute it on behalf of the corporate defendant, or as to defendant’s failure to pay. The sole attempted defense at the trial was that plaintiff’s proof did not establish a consideration for making the promise, and that question in turn boiled down to a dispute as to whether it was sufficiently proven at the trial that a certain telephone conversation testified to by one Korn, attorney of record for plaintiff-respondent, was actually a conversation had with Ralph E. Still, vice-president of defendant, who signed the letter sued upon.

In earlier litigation in this "cause (see 281 App. Div. 1023), it had been determined that the complaint’s allegations meant “ that defendant promised to pay in consideration of plaintiff’s intestate’s forbearance and that there was such forbearance or reliance on the promise ”, and that this sufficiently pleaded a cause of action. In other words, it was substantially agreed, when the case came to trial, that the only dispute was as to whether any consideration, for the promise, ran from plaintiff’s intestate to defendant, and it was further substantially agreed between the parties at the trial that plaintiff’s intestate’s promise to forbear entering judgment against one Arnold would be sufficient consideration for the agreement in the letter, provided defendant knew that such was the purpose of the letter. Thus, the trial concerned itself with the fact question as to whether defendant’s officer Still did know that the letter signed by him was being given to procure such forbearance by plaintiff’s intestate. That, in turn, resolved itself into a trial of the issue as to whether there was a telephone conversation in which Arnold told defendant’s vice-president Still that the letter was being given in return for, and to obtain, plaintiff’s intestate’s forbearance from entering judgment against Arnold in a suit to recover a certain sum owed by Arnold to plaintiff’s intestate, all of which we will explain more fully hereafter. So, the only real contest on the trial was as to whether lawyer Korn’s testimony, as to a phone call made by Arnold from Korn’s office, described a telephone call to Still, who did not testify on the trial, but part of whose examination before trial was read by plaintiff. The defense contention is, and was, that, since Korn heard only one end of the call (that is, heard Arnold talking) and since Korn did not have direct knowledge as to who was on the other end of the line, therefore (argues defendant), there was no proof that Arnold was talking to Still when Arnold told somebody over the telephone that the letter sued upon was to be given and taken in return for plaintiff’s intestate’s forbearing to enter judgment against Arnold. The Trial Justice (jury trial, as well as formal findings, was waived) had difficulty with this question, but in the end he took the proof over objection, and reserved decision as to whether or not Korn’s testimony on this point was admissible to prove a telephone talk by Arnold with Still. Arnold was not a witness. The trial court ultimately held that Korn’s testimony did not sufficiently connect Still with Arnold’s telephone conversation to which Korn had testified, and that the other evidence in the case, to which we will refer, did not supply this deficiency. Therefore, held the Trial Justice, plaintiff failed to prove her cause of action since the letter of agreement itself did not mention consideration and there was insufficient proof, so that court held, that the telephone conversation gave notice to Still, defendant’s vice-president, that the letter which he was about to sign was being given in consideration for an agreement by plaintiff’s intestate not to enter judgment against Arnold. Judgment of dismissal of the complaint on the merits was entered on the trial court’s decision.

The Appellate Division unanimously reversed, and, in its judgment of reversal, specifically reversed the lower court’s finding, stated in the latter’s opinion, that plaintiff had failed to prove that defendant knew that its promise to pay would be used to procure forbearance. In lieu of that finding, the Appellate Division made new findings, as contained in its opinion, that the conversation which attorney Korn listened to was by Arnold with defendant’s officer Still. Judgment reversing the judgment below and awarding plaintiff the sum sued for, with interest and costs, was entered. Before analyzing the proof, we will deal with a jurisdictional question which might be thought to be in the case. It is not entirely clear, especially since there was a waiver of formal findings at the trial, whether the trial court made a finding of fact when he said that it was not proven that Still was on the other end of the telephone conversation, or whether he was ruling, as matter of law, that the testimony he took on this subject was not proof of that fact. The Appellate Division treated his ruling as a finding of fact, reversed it and made its own contrary finding. The Appellate Division, as stated in its opinion, and for reasons which we will state hereafter, thought that it was proven almost conclusively and that the “ circumstances compel the irresistible inference ”, that the telephone conversation which Korn listened to was, in fact, a telephone conversation between Arnold and Still. Really, it does not make any great difference whether the Appellate Division, in making its new findings and conclusions, was dealing with contrary findings of fact below since the Appellate Division did make it clear that it was holding, not only that Korn’s testimony was admissible as to this conversation, but holding also that the strong preponderance of evidence or weight of evidence favored, if it did not compel, a finding that Still was on the other end of the telephone conversation. The Appellate Division, under these circumstances, had the right to make its own findings of fact, whether or not a contrary finding of fact had been made by the trial court (see Bernardine v. City of New York, 294 N. Y. 361).

We are persuaded, as was the Appellate Division, that this record is sufficient to prove that Arnold was talking to Still when Arnold stated, in a telephone conversation made in Korn’s office and in Korn’s presence, that the letter which Still was about to sign, and did sign, was being given in return for plaintiff’s intestate’s forbearing to make use of a confession of judgment which plaintiff’s intestate had received from Arnold. If we are correct in that, it is the end of the case, and the judgment appealed from is correct.

There is little dispute as to the facts. In 1948, one William S. Arnold, the nature of whose business and the nature of whose connection with either plaintiff’s intestate or defendant is not spelled out in the record, became indebted to plaintiff’s intestate by reason of a $25,000 loan to Arnold from plaintiff’s intestate. Arnold was unable to pay the debt, although he tried to liquidate it, in part or in full, by turning over or promising to turn over, to plaintiff’s intestate, proceeds from the sale of a yacht belonging to Arnold. But the yacht’s sale proceeds left, it seems, a substantial balance unpaid from Arnold to plaintiff’s intestate on the debt. Plaintiff’s intestate, Arnold’s creditor, died in March, 1950, but a year before that, in March, 1949, he had brought a suit against Arnold on the $25,000 indebtedness and Arnold had signed a stipulation of facts, and a concession that he was indebted to plaintiff’s intestate for the full sum of $25,000 with interest and that he had no defense thereto, the same document containing and being a confession of judgment and a consent to the entering of judgment without notice. After the death of Ruegg, his wife, who is the plaintiff here, took over his estate, including this debt, as administratrix, and brought the present suit in October, 1952.

All of the above is undisputed. The trial really concerned events of March 3 and March 4,1949, while Ruegg was still alive, but after he had turned over the unpaid note to Charles Korn who was decedent’s attorney and is now the attorney for his estate. Korn testified that, on March 3,1949, Arnold, the debtor, came to Korn’s office and that there was then and there a discussion between Korn, the creditor’s attorney, and the debtor Arnold, about the unpaid note, during which discussion Arnold not only accepted service of the summons and complaint in the suit on the note and gave Korn the confession of judgment above described, but also, according to Korn’s undisputed testimony, made an arrangement whereby $12,000 (which was, apparently, computed as the balance after the deduction for the estimated value of the boat security) would be paid by defendant Fairfield Securities Corporation, the relations of which corporation with Arnold were, so Korn testified, explained to Korn by Arnold but are not described in the record. It seems from documentary evidence that Arnold and others were defendants in a mail fraud criminal prosécution brought by the United States in a Federal court in Michigan, and that in March, 1949, this criminal prosecution was pending, that the United States Fidelity and Guaranty Company, not a party hereto, had put up bail for Arnold in that cause, that some entity called the Beek Corporation had put up collateral with the United States Fidelity and Guaranty Company, and that defendant Fairfield and Arnold had some unexplained interest in or connection with that collateral. Still, who signed the letter sued on here, was an officer of the Beek Corporation as well as of defendant Fairfield. Now, back to Korn’s testimony. He said that Arnold, after signing the confession of judgment, etc., promised Korn that he (Arnold) would bring to Korn the next day (which would be March 4,1949) an unconditional promise from defendant Fairfield to pay $12,000 to Korn, as attorney for plaintiff’s intestate, when the bail bonds should be cancelled and the collateral returned. Korn testified that Arnold made no telephone call from Korn’s office on March 3d, but left after making an appointment to come back to Korn’s office the next day. According to Korn, Arnold did come back to Korn’s office the next day, bringing with him a paper, not the letter in suit, which had been signed by Still as vice-president of defendant Fairfield and a copy of which first letter (not the one sued upon) is in the record as an exhibit. That copy was produced from defendant’s own files and its authenticity is unquestioned. Attorney Korn testified that he, after looking over that letter, told Arnold that the form of the letter was not satisfactory to Korn and that certain changes would have to be made. Thereupon, according to Korn, Arnold made, from Korn’s office, the telephone conversation which had to be established here in order to prove the element of consideration. Korn testified that he heard Arnold’s end of the conversation, but of course did not hear the voice of, or what was said by, the person at the other end. Korn testified that Arnold stepped to a telephone right alongside Korn’s desk, that Arnold opened a little notebook wherein Korn saw the name of “ Ralph Still ” and an address on Park Avenue, and a telephone number which Korn did not remember at the trial. Korn testified that Arnold, with the little book in his hand, dialed a phone number and began talking to someone on the other end, after first announcing that he was Bill Arnold ” and asking for Still. Korn testified that Arnold told the person on the other end that Korn was not'satisfied with the form of the letter, in that Korn did not want any reference therein to a deduction of premiums from the collateral, that Korn objected to the reference in the letter to the value of the collateral, and that Korn objected, as unnecessary, to the provision made at the lower corner of the letter for a signing by plaintiff’s intestate. Korn swore that, in that phone conversation, Arnold told the person at the other end, who Korn assumed was Still, that Korn had told Arnold that if Korn did not get the letter in the form Korn wanted it, Korn would enter judgment against Arnold on the confession, but that if the letter were delivered in the form requested by Korn, Korn would withhold entry of judgment. This testimony (once wé get past the question as to whether Still was listening at the other end of the telephone) would amount — and this is not disputed — to sufficient proof of consideration in that Still was being told the purpose for which the letter was being given and the benefits to accrue to Arnold from the giving of the letter. Korn testified that, at the end of the telephone conversation, Arnold said to the person at the other end “ I will be over right away ’ ’. Korn’s further testimony was that on March 7, 1949, a few days later, Arnold came back to Korn’s office, bringing with him the new letter which is here sued upon. Comparing the two letters shows that the matters in the first letter to which Korn objected are stricken out on the copy which Still produced of that letter, and that the second letter embodies Korn’s terms. Plaintiff read into evidence, at this trial, part of an examination before trial of Still, in which Still testified that he signed the letter sued upon, that he had previously signed the earlier letter, copy of which he produced, that he (Still) had prepared the earlier letter from Arnold’s instructions, but subsequently destroyed the original of it, and that after the first letter was returned by Arnold to Still, he (Still) made the changes which Arnold had requested of him in a telephone conversation, and signed the new letter. It is most significant that Still, who did not testify at the trial even after the court had admitted the telephone matter in evidence, said in his examination before trial that he was the only person who represented defendant Fairfield in the matter, and he (Still) testified flatly in that examination before trial that he had only one telephone conversation with Arnold about the matter. At some points in his examination before trial, Still said that he assumed that the one telephone call from Arnold to Still came from Arnold in the office of plaintiff’s intestate, but Still made it clear that he was merely assuming that Arnold was calling from the office of Riiegg and that he actually did not know whether the Arnold call was from Ruegg’s office or from the office of Ruegg’s attorney (that is, Korn’s office). The substance of Still’s examination before trial was, therefore, that he prepared the first letter, at the request of Arnold, that he had one phone call from Arnold in which Arnold told him that the letter was not satisfactory to Korn, that Arnold brought the first letter back, that a new letter was prepared with the changes described by Arnold over the telephone, and that Still then signed the letter here in suit. As we have pointed out, Still was not a witness on the trial (although he was then president of defendant) and there is nothing in his examination before trial, as it appears in this record, to show whether or not he was asked whether he actually heard, over the telephone from Arnold, the notification that this letter was being given to prevent the entry of judgment, but Korn’s positive testimony to that effect, in no wise disputed or impeached by anything, is certainly not improbable, was believed by the Appellate Division and apparently by the trial court, and is sufficient in law as proof that this information was in fact given by Arnold to Still. When the fact of the telephone talk has been so conclusively proven, and there is no reason to disbelieve it, there would be every ground for overlooking any technical objection to the receipt of such testimony. However, we do not think any such technical objection was valid. We think that the identity of Still as the other person to the telephone conversation was proven by evidence substantial and even, as the Appellate Division said, compelling. There is, too, a little more proof (marked for identification), in itself of small importance, that the one telephone call which Still testified to receiving came from Korn’s office on March 4th. That proof consists of an office memorandum made by Korn’s secretary at Korn’s office at 11:05 a.m. on March 4th, at a time when Korn was absent from the office. It purports to report a phone call to Korn’s office from Arnold taken down by Korn’s secretary and stating The letter [I] promised you will not be ready before noon There is more in the memorandum indicating that Arnold had told Korn’s secretary that if Korn should wish to verify the financial responsibility of defendant Fairfield, Korn should telephone to a certain named person. This memorandum was admissible, under section 374-a of the Civil Practice Act, as made in the regular course of business, and it is some corroboration for Korn’s testimony that Arnold was expected to be at Korn’s office that afternoon and was there that afternoon in reference to this very same matter. The trial court, in ruling out the testimony of the telephone call (or refusing to accept it as evidence) properly disposed of Gubelman v. Ands Koch, Inc. (234 N. Y. 425), since that case merely held that the contents of a telephone conversation cannot be proven by showing what one person said without proving what the other person said. It did not make any difference in this instance what Still said in answer to Arnold. All plaintiff was trying to prove was that Arnold said certain things to Still which informed Still as to the nature of the consideration for the letter which Still was about to sign.

The consideration for the letter was afterwards forthcoming in fact, since, up to the time Ruegg died on March 2,1950, almost a year after the delivery of the letter, judgment had not been entered and it was only after his death that any attempt was made to collect on the letter promise. In the meantime and by the end of 1949, apparently, the bail bond collateral held by the bonding company and worth far more than $12,000 had been released by the bonding company to defendant Fairfield, except some $3,300 in cash, but defendant Fairfield paid nothing to Ruegg or his estate. It appears, although there is no express finding on this and it is not essential for the decision of this case, that when the letter sued upon was written, Fairfield had received a pledge, presumably from Arnold, of $12,000 worth of securities. It was also shown on the trial that at the time the letter sued upon was given, Fairfield owed Arnold at least $24,000. All of this tends to explain why defendant Fairfield, through Still, was willing to sign the letter sued upon.

The judgment should be affirmed, with costs.

Conway, Ch. J., Dye, Fuld, Froessel, Van Voorhis and Burke, JJ., concur.

Judgment affirmed.


author: Per Curiam.

text:
    The People of the State of New York, Appellant, v. Arthur J. Fromen, Respondent.
    Argued March 4, 1955;
    decided March 11, 1955.

      John F. Dwyer, District Attorney (Merrill Q. Windelbery of counsel), for appellant.

      William B. Mahoney and John B. Corcoran for respondent.
   Per Curiam.

The appeal in this case was taken July 22,1954, and was reached for argument on March 4, 1955. During the intervening period of more than seven months, no application was made for enlargement of time for argument of the appeal, as required by section 536 of the Code of Criminal Procedure, despite the fact that appellant was advised of the necessity of compliance therewith. No adequate reason has been given for this failure. In People v. Solomon (296 N. Y. 85) we cautioned the Bar concerning the necessity of observing the provisions of this statute. The appeal should be dismissed, on the court’s own motion.

Conway, Ch. J., Desmond, Dye, Ftjld, Fboessel, Van Voobhis and Btjbke, JJ., concur.

Appeal dismissed.


author: Feoessel, J. Dye, J.

text:
    Grace T. Cole, as Administratrix of the Estate of George W. Cole, Deceased, Respondent, v. Charles Swagler, as Administrator of the Estate of Eugene Swagler, Deceased, Appellant.
    Argued January 18, 1955;
    decided March 11, 1955.

      jReid 8. Moule and Lowell Grasse for appellant.
    I. As a matter of law plaintiff has not presented a prima facie case of negligence by showing, without further explanation, that a car owned by defendant’s intestate had left the road and collided with some trees. (Wonk v. Ambrosino, 307 N. Y. 321; Galbraith v. Busch, 267 N. Y. 230; Lahr v. Tirrill, 274 N. Y. 112; Towne v. Bunce, 283 App. Div. 847, 307 N. Y. 868; Hammond v. Hammond, 227 App. Div. 336; Foltis, Inc., v. City of New York, 287 N. Y. 108; Griffen v. Manice, 166 N. Y. 188; Curley v. Ruppert, Inc., 272 App. Div. 441; Wetsell v. Reilly, 159 App. Div. 688.) II. As a matter of law plaintiff has failed to establish that there was any negligence on the part of defendant’s intestate. (Ruppert v. Brooklyn Heights R. R. Co., 154 N. Y. 90; People v. Harris, 136 N. Y. 423.)

      Emil L. Cohen, Nathan A. Weiss and Norman B. Lewis for respondent.
    I. The physical facts clearly warranted the finding of the jury that defendant’s intestate was the driver of the-death car. (Towne v. Bunce, 307 N. Y. 868.) II. The physical facts clearly warranted the jury in finding that the driver of the death car was negligent in driving at an excessive .rate of speed or without having the car under proper control, or both. (Betzag v. Gulf Oil Corp., 298 N. Y. 358; Dunham v. Village of Canisteo, 303 N. Y. 498; Stubbs v. City of Rochester, 226 N. Y. 516; Noseworthy v. City of New York, 298 N. Y. 76; Jones v. Liberty Fast Freight Co., 280 App. Div. 935; Allen v. Ennis, 253 App. Div. 769; Gadd v. Universal Road Mach. Co., 263 App. Div. 456; Di Carlo v. Feldman, 246 App. Div. 682; Montgomery v. Humphrey, 284 App. Div. 365.)
   Feoessel, J.

On December 20, 1952, at about 3:30 a.m., the weather being clear and the pavement dry, a Hudson automobile owned by defendant’s intestate was proceeding easterly along Lake Shore Road, a four-lane highway in Erie County, in the direction of Buffalo. It overtook and passed a patrol car in which two local deputy sheriffs were traveling at twenty-five or thirty miles an hour. Neither of the deputies was asked to estimate the speed of the Hudson car. One of them testified that he observed no other cars immediately behind or in front of the Hudson, and that none was traveling in the opposite direction.

After the Hudson had passed, the deputies continued at the same speed for a mile or a mile and a half, when they were stopped by a woman waving her arms [she was never identified], standing at the roadside in her nightgown shouting “ They’re killed They stopped and found the same Hudson car that had passed them resting in the field about ten feet from the edge of the road, on the right side. The car was sheered right in half ”, with only wires and cables still connecting the front and rear halves; the front lights were still lit. The right-hand door of the car had been torn off. Beyond this, however, there was no evidence of the relative positions in which the door and the two halves of the car came to rest. The condition of the car’s tires, steering gear, brakes and other safety equipment was similarly undisclosed.

By the time the deputies arrived on the scene, Dr. Olson, who lived on the adjoining property, was already there, having been summoned from Ms bed by the ringing of his doorbell. The person who summoned Dr. Olson was never identified. The doctor testified that he had hurried to Ms neighbor’s property —■ the neighbor was not further identified — and there found two men lying in and about the wrecked automobile.

Swagler, defendant’s intestate, was lying on the ground outside the left forward section of the car with one foot “ wedged up ” between the bottom of the partly open left front door and the running board. Cole, plaintiff’s intestate, was found inside the car to the right of the steering wheel with his buttocks seated on the right side of the car. Cole’s feet, according to Dr. Olson, were “ to the right of the mid-line of the car ”. He agreed that the feet were “ where a passenger’s feet would be ”. Only the uppermost portion of Cole’s body was slouched to the left onto the driver’s seat.

With the aid of one of the deputies, Dr. Olson removed Cole’s body from the car. The county medical examiner arrived shortly thereafter and found Cole dead. He testified that Cole’s fatal injuries included, among other things, a broken neck, a fractured skull, a crushed chest, a small laceration of the right eyelid, ecchymosis with swelling of the right eye, contusion of the bridge of the nose, and a laceration of the left shin.

Swagler, however, was found to be still alive, though unconscious and badly injured. One of the deputy sheriffs attempted to question him on details of the accident, but Swagler held his hands over his smashed face and repeatedly made only a “ small sound ” which the deputy understood as “ George ” — the first name of plaintiff’s intestate.

Although Swagler also mumbled ‘ ‘ George ’ ’ after the deputy asked Mm wMch one of them had been driving the car, little significance need be attached thereto for Swagler continued to mumble “ George ” even when asked such further questions as ‘‘ Were any children ” — or ladies — “in the car ? ’ ’. Indeed, as Deputy Sheriff Olday described it, Swagler ‘‘ mumbled and he had his hand over his face; very low. It wasn’t clear ”. An ambulance was called and Swagler was removed to the hospital where he died three days later. The hospital record showing the nature of his injuries was not offered in evidence.

Deputy Sheriff Leszczynski measured the path [the course was not given] traveled by the car after leaving the highway and fixed the distance at 177 feet. While the order in which the car encountered various obstacles after leaving the road is not clear from the testimony, it is undisputed that two trees were struck by the car — one about twenty feet from the point of departure and another somewhat beyond the first. The vehicle also passed through some bushes. The car had uprooted the smaller of the two trees, six inches in diameter, and had stripped the bark from the other, sixteen inches in diameter. The grade and nature of the terrain over which the car passed was not given.

The foregoing is substantially the relevant evidence introduced at the trial. Both the trial court and the Appellate Division regarded it as sufficient in law to submit to the jury. The jury, after seventy-eight minutes of deliberation, brought in a verdict for plaintiff.

It is clear that in a case such as this, where both parties ’ intestates died as a result of the same event which constitutes the subject matter of the suit, and where no eyewitnesses can be found, only circumstantial evidence will be available to enable the jury to reconstruct the circumstances surrounding the accident. In such death cases, the ‘ ‘ plaintiff is not held to as high a degree of proof of the cause of action as where an injured plaintiff can himself describe the occurrence ” (Noseworthy v. City of New York, 298 N. Y. 76, 80). Thus reasonable inferences may be drawn from the evidence to make out a prima facie case (Galbraith v. Busch, 267 N. Y. 230; Wank v. Ambrosino, 307 N. Y. 321, 323-324).

The reasonable inferences, however, must permit an assemblage of all the facts nécessary to establish the cause of action — i.e., negligence cmd proximate cause (Boyce Motor Lines v. State of New York, 306 N. Y. 801). Stated otherwise, to hold defendant liable for the death of Colé, the evidence here must show (1) that Swagler was in control of the car at the time of the accident; (2) that Swagler was negligent in his operation of the car, and (3) that said negligent operation by Swagler was the proximate cause of the crash in which Cole died.

(1) The case of Towne v. Bunce (307 N. Y. 868), recently decided by us, involved a similar accident in which both persons in a car that left the road were killed by the crash. We there affirmed the lower court’s dismissal of the complaint, it appearing that it was ‘‘ impossible ’ ’ to infer from the scattered position of the bodies which of the parties’ intestates had been driving. In our opinion, such is not the case here, and the only reasonable inference is that Swagler was driving his own car.

(2) From the physical circumstances that the car had traveled 177 feet after leaving the highway, striking two trees, uprooting one, passing through bushes and breaking itself in two before it came to rest, the jury had the right to find that when Swagler’s car left the road it was traveling at a high rate of speed. Whether it was in excess of the State-wide maximum speed of fifty miles per hour (Vehicle and Traffic Law, § 56, subd. 3), however, cannot be determined upon the scanty facts in this record. Speed in excess of that permitted by law, it is true, may be evidence of negligent operation (Lee v. City Brewing Corp., 279 N. Y. 380, 388-389), but that has not been established here. Even beyond this, however, as we have often stated, there can be no inference of additional negligence, such as the failure to keep a lookout or maintain control, based on the mere fact that the car left the road (Galbraith v. Busch, supra; Lahr v. Tirrill, 274 N. Y. 112, 117; Marinan v. Kronberger, 280 N. Y. 640; Epstein v. Cohen, 288 N. Y. 307). As we said, per Crouch, J., in Tortora v. State of New York (269 N. Y. 167, 170): When an automobile swerves and leaves the road for nef definitely assignable reason, it is altogether possible that the accident was due to either of several causes, the failure of the steering gear or a lapse on the part of the driver. Both frequently happen. * * * In all such cases the balance of probabilities between causes which entail liability and others which do not is equal enough so that an inference of fact which entails liability is the result of mere speculation.” Thus, it does not appear to us that a case of negligence has been made out on this record.

(3) Even if we were to hold that excessive speed amounting to negligence was established here, in order to sustain the judgment appealed from we would be required to say that the jury could have found that such speed was the proximate cause of Cole’s death (see Joyce v. Brockett, 205 App. Div. 770, 772, affd. 237 N. Y. 561). This we may not do, for, as Judge Cardozo wrote in Martin v. Herzog (228 N. Y. 164, 170), we must beware of “ confusing the question of negligence with that of the causal connection between the negligence and the injury ’ ’.

Speed upon a highway in and of itself will not explain a swerve therefrom without some additional evidence, as, for example, limited visibility or a curve in the road. It is plaintiff’s burden to demonstrate the presence of some such added circumstance in order to recover on the theory that excessive speed constituted the proximate cause of the crash. Here we are told the night was clear, the pavement dry, there was neither snow nor rain, and we have no evidence of any curve in the road.

Thus, in the present case, more evidence than that which was offered was required to make out a prima facie case. The evidence presented was exceedingly meager, and might well have been supplemented by additional proof tending to cast light on the cause of the accident. While the possible existence of such proof can, of course, have no bearing upon our disposition of the case, it is nevertheless obvious from its lack that plaintiff proceeded on the theory that the automobile must have been traveling beyond the lawful limit because of the resulting damage, and that was all that was necessary to make out a prima facie case.

It is well settled that where an accident is one which might naturally occur from causes other than a defendant’s negligence, the inference of his negligence is not fair and reasonable (Foltis, Inc., v. City of New York, 278 N. Y. 108, 117; Galbraith v. Busch, supra, pp. 233-234; Tortora v. State of New York, supra). Here it may have been a variety of causes other than Swagler’s negligence that led to this accident. Indeed, the cause of the accident remains undisclosed upon this record.

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

Dye, J.

(dissenting). I dissent and vote to affirm. As I read this record, the circumstances surrounding the happening of the fatal accident justified the trial court in submitting the controverted issues to the jury for its determination. The charge to the jury was adequate and the proof was such that a jury was justified in drawing an inference that the car was being operated by its owner, the decedent Swagler. Furthermore, there is undisputed evidence that the death car, after leaving the high-way, made a path through the field measuring 177 feet, broke several natural obstacles, uprooted a tree and when it finally came to rest, was completely demolished — “ sheared right in half ”. True, there were no eyewitnesses but taken together such circumstances were enough to support the inference implicit in the jury verdict that the death car was being operated by the decedent Swagler in a negligent and careless manner. All findings of fact, implicit in the jury verdict, having been unanimously affirmed in the court below, are not open for our review.

The judgment should be affirmed, with costs.

Conway, Ch. J., Desmond, Fuld, Van Voobhis and Bubke, JJ., concur with Fboessel, J.; Dye, J., dissents in an opinion.

Judgments reversed, etc.


author: Conway, Ch. J.

text:
    In the Matter of Colgate-Palmolive-Peet Company, Respondent, against Lazarus Joseph, as Comptroller of the City of New York, Appellant.
    Argued January 19, 1955;
    decided March 11, 1955.

      Leo A. Larkin, Acting Corporation Counsel (Stanley Buchsbaum, Seymour B. Quel and Leroy Mandle of counsel), for appellant.
    I. The corrugated shipping cartons in which petitioner shipped the soap and toilet articles sold to New York City retail grocers and druggists were not purchased by these retailers for resale. Hence these sales are sales at retail taxable under the city’s sales tax laws. (Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104; Matter of Jacobs v. Joseph, 282 App. Div. 622; Matter of American Molasses Co. v. McGoldrick, 256 App. Div. 649, 281 N. Y. 269; Sterling Bag Co. v. City of New York, 256 App. Div. 645, 281 N. Y. 269; Matter of Wood Packing Box Co. v. McGoldrick, 262 App. Div. 720, 286 N. Y. 665.) II. The resale certificates, taken by petitioner from the retail grocers and druggists to whom it sold soap and toilet articles, did not exempt it from collecting sales tax on the sale of shipping containers because petitioner knew that these customers were not engaged in the business of reselling such containers. (Matter of Carrano v. McGoldrick, 270 App. Div. 925.) III. There is no basis for the claim of estoppel. (Metropolitan Life Ins. Co. v. Childs Co., 230 N. Y. 285; People ex rel. Rice v. Graves, 242 App. Div. 128, 270 N. Y. 498, 298 U. S. 683.) IV. The sales tax assessment here imposed does not constitute a second gross receipts tax. Petitioner is obliged to pay because it failed to obey the mandate of the law that it collect the sales tax. It may still recover the sales tax from its customers. (Matter of Fifth Ave. Bldg. Co. v. Joseph, 297 N. Y. 278; Matter of Kesbec, Inc., v. McGoldrick, 278 N. Y. 293.) V. The use tax is not at all involved in the final determination under review.

      Sol Charles Levine, S. H. Levine and Joseph M. Godman for respondent.
    I. Within the meaning of the local laws, petitioner is not liable for the sales or compensating use tax either as a retail purchaser or as a retail vendor of the corrugated cartons in which it delivers to grocers and druggists its products to be resold by them. (Matter of American Molasses Co. v. McGoldrick, 256 App. Div. 649, 281 N. Y. 269; Matter of Wood Packing Box Co. v. McGoldrick, 286 N. Y. 665.) II. The city council has expressly shown a clear intention to exclude a packer such as petitioner from the imposition of a compensating use or sales tax either as retail purchaser or retail vendor. III. Even if the transaction between petitioner and its customers could, under certain states of fact, become a retail sale of the container taxable to the customer, the receipt by petitioner of resale certificates exonerated it from the obligation to collect the tax. IV. The city is entitled to but one tax, either from the consumer or the retail vendor, but not to two taxes. (Matter of Fifth Ave. Bldg. Co. v. Joseph, 297 N. Y. 278; Matter of United Parcel Service of N. Y. v. Joseph, 272 App. Div. 194.) V. There is no basis in the record for holding petitioner liable either under the Sales Tax Law or the Use Tax Law as a purchaser at retail of the cartons. (Matter of Gunther’s Sons v. McGoldrick, 279 N. Y. 148; Matter of United Artists Corp. v. Taylor, 273 N. Y. 334.) VT. The comptroller’s failure to remove his regulation declaring that one in petitioner’s position was considered by him to be the retail consumer of the container after such regulation had been invalidated by this court and his failure to announce in a new regulation that thereafter he intended to hold petitioner as a tax collector with respect to a retail sale of the container to its customers estops him from holding petitioner responsible as a collector. This estoppel is fortified by the comptroller’s consistent practices with respect to petitioner’s retail grocery and druggist customers in refraining from collecting from and imposing upon them a tax: (Matter of Kesbec, Inc., v. McGoldrick, 278 N. Y. 293; Libby, McNiel & Libby v. Department of Taxation, 260 Wis. 551; La Societe Francaise v. California Employment Comm., 56 Cal. App. 2d 534, 320 U. S. 736.) VII. The net result of the comptroller’s administrative practices is to impose, contrary to the local law provisions, a mandatory vendor’s tax and not a mandatory consumer’s tax; and is in violation of the prohibition in the State enabling act against the imposition of more than one tax upon the gross income or gross receipts of any one person, petitioner having paid his gross receipts tax with respect to the receipts in question. (Matter of Tiffany, 179 N. Y. 455; Holmes v. County of Erie, 266 App. Div. 220, 291 N. Y. 798; Matter of Merchants Refrig. Co. v. Taylor, 275 N. Y. 113.)
   Conway, Ch. J.

Petitioner, the Colgate-Palmolive-Peet Company, is a corporation organized under the laws of the State of Delaware, and has its principal place of business in Jersey City, New Jersey. Its business consists of the manufacture, packing and sale of soaps and toilet articles such as toothpaste, shaving cream and the like. These articles are sold in bulk principally to wholesalers, jobbers, retail grocers and retail druggists. The sales involved on this appeal are those made by the petitioner to retail grocers and druggists in the city of New York.

The issue is whether petitioner may be held liable as a retail vendor or as a retail purchaser for the New York City Sales Tax upon the corrugated cardboard cartons in which it ships its products to those grocers and druggists. No question of ■the use tax is involved.

It is undisputed that when the petitioner sells its products in the cartons there is a sale not only of the contents of the carton, but of the carton itself. Testimony was given by a number of petitioner’s customers that, after they had ripped open the cartons and had removed the products, they considered the cartons as waste or rubbish. One of petitioner’s employees testified that if the cartons were opened by its customers in one particular manner, and with a special tool or implement, then the cartons so opened would be reusable as cartons, but there was no testimony that any of petitioner’s customers opened cartons in that manner. Some of petitioner’s customers testified that they occasionally used the cartons, after removing the contents, for the delivery of their own wares; but none of petitioner’s customers who testified indicated that he purchased the cartons for the purpose of resale. All but two of them further indicated that they knew of no other similar retailers who ever resold such used cartons. The conclusion is inescapable that there was no general custom and practice among petitioner’s customers of reselling the empty cartons. That some of the cartons may have been resold in isolated instances does not undermine that conclusion, nor establish a contrary custom. That being so, the further logical conclusion is that the carton first used by the petitioner for the purpose of shipping its goods is then received by the retailer and, after a brief use as a temporary storage container, is emptied of its contents and disposed of as waste or rubbish.

The applicable statutes levied a tax ‘ ‘ upon the amount of the receipts from every sale of tangible personal property sold at retail * * * ” (Administrative Code of City of New York, § N41-2.0, subd. a, par. 1). In the definitions section of this statute, a sale at retail is defined as “ a sale to any person for any purpose other than for resale in the form of tangible personal property * * * ” (Administrative Code, § N41-1.0, subd. 7).

The comptroller determined that the petitioner should have paid sales taxes to the City of New York upon the sales of cartons made by it to its customers. That involved a determination that the sales made by petitioner were retail sales, or sales “ for any purpose other than for resale ”, as defined by the statutes.

The Appellate Division annulled the comptroller’s determinatian, holding that the petitioner itself is the consumer of the cartons. That conclusion, however, is not in accord with the decided cases of this court.

Upon review in such cases as this, the function of the court is limited to ascertaining whether or not there is a rational and legal basis for the decision of the administrative body (Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104, 108).

In Matter of American Molasses Co. v. McGoldrick (281 N. Y. 269) and Sterling Bag Co. v. City of New York (281 N. Y. 269), the issues were whether or not a retail sale took place when a manufacturer of metal and wooden barrels and casks, as well as when a manufacturer of large burlap and cotton sacks and bags, sold those containers to another company which packed its wares into them and resold the whole to its customers. We held that the packers of the wares were not retail purchasers from the manufacturers of the containers. The reasoning in that case was that “ the container and contents are not inseparably connected. * * ■ * The container remains ‘ tangible personal property ’ after it has been filled by the refiner or packer and resold as an incident of the sale of the contents; it may be resold as tangible personal property by the purchaser of the contents who has no use for an empty container after the contents have been removed ” (281 N. Y. 273-274; emphasis supplied. gee, also, Matter of Wood Packing Box Co. v. McGoldrick, 286 N. Y. 665),

The same may be said of the cartons in the present case. They are not an integral part of and inseparable from their contents; but the cartons are used “ only to facilitate the sale of the product packed in the container and not for the purpose of a resale of the container as an article of commerce ” (281 N. Y. 269, 273; emphasis supplied). The testimony of petitioner’s customers amply establishes that they did not customarily engage in the resale of petitioner’s containers “as an article of commerce There was no basis, therefore, for any conclusion that petitioner sold the cartons for the sole purpose of resale — which is the statutory test for a sale not at retail.

The Appellate Division decided that the present case was not controlled by our decisions in the American Molasses Company, the Sterling Bag Company, and the Wood Packing Box Company cases (supra). The grounds advanced by the majority in the Appellate Division for distinguishing the present case from those cases, viz., the durable nature of the containers in those cases, the price differential depending upon which container was used, and the customer’s ability to choose a container of a specific type — all these are differences, but they are not substantial grounds of distinction. The metal or wooden barrels or boxes and the burlap or cotton bags or sacks may differ in their relative degree of durability; but all of these as well as the cartons used by the petitioner herein are not inseparable from their contents, and hence all may be said with equal accuracy to be sold as containers by the packer, and to be capable of resale by the retailer as articles of commerce apart from their contents. Since there is no basis for deciding that the present case differs substantially from those other cases, they are controlling; and in the present case they dictate a decision that petitioner is not a retail vendee although it may be liable as a vendor at retail unless its customers buy the cartons for the sole purpose of reselling them. Petitioner has been unable to show that.

At the time of its sales to its retail customers, and in order to avoid liability for sales taxes, petitioner obtained from each of them a signed resale certificate which stated that all the tangible personal property purchased by the customer was purchased for resale in the form of tangible personal property. These certificates, however, do not specify whether they cover only the contents of the cartons, or whether they cover both the contents of the carton and the carton itself. Indeed, in its brief on this appeal, the petitioner stated that “ * * * it must be admitted by both sides that the customer was not even aware that he was buying a container either at retail or wholesale. ’ ’ If that be so, then the customer could never have intended that the resale certificate include the cartons, and that leaves petitioner in the position of one who has made a retail sale without collecting the sales tax.

Although it is not necessary to investigate whether the petitioner had actual knowledge that the cartons were not in fact being resold by its customers, nevertheless there is testimony which would show such knowledge. One of petitioner’s custamers stated on cross-examination that a salesman for petitioner had come into his store and requested the witness to sign a resale certificate. The storekeeper related the incident thus: I remember the salesman was in my store for an order and he asked me what I did with the boxes, and I told Mm I gave them away to the customers. He told me to sign it [i.e., the resale certificate] and I signed it ” (emphasis supplied).

In the present case, therefore, there is evidence that petitioner had actual knowledge that, in one case at least, the cartons were not being resold; and the instant case is thus distinguishable from Matter of American Cyanamid & Chem. Corp. v. Joseph (308 N. Y. 259), in which there was no such actual knowledge. It cannot be said, therefore, that there was no duty upon the petitioner to inquire as to whether the retail grocers and druggists were also reselling the cartons. Nor is that an unreasonable burden to cast upon such a vendor under similar circumstances, particularly where there is in fact no customary and ready market for the resales alleged by the taxpayer-vendor to be the usual practice of its vendees.

The petitioner herein urged that the comptroller’s determination violates the spirit of both the sales and the use taxes. The use tax itself is not involved on this appeal, hence the issue of whether or not a carton is attached to or sold with ” the products manufactured by the petitioner, and is therefore exempt from taxation under the Use Tax Law (cf. Administrative Code, § M41-17.0, subd. 9), is not before us. The preceding discussion clearly shows that the sales tax is applicable.

It was also argued that to compel petitioner to pay the sales tax which it should have collected from its customers amounts to the imposition of a second gross receipts tax. In the first place, the sales tax collected from retail vendors, who have failed to collect it from their vendees, is not an additional gross receipts tax, but a penalty for failing to collect the sales tax. In Matter of Mendoza Fur Dyeing Works v. Taylor (272 N. Y. 275) the argument was likewise made that the sales tax amounted to double taxation, but we said that a taxing statute must be given a practical construction, and where the tax involved is a sales tax upon the sale of tangible personal property to the consumer, it is not always-possible to reach a practical determination as to who is the ultimate consumer with entire certainty so as to avoid entirely the possibility of a resultant double taxation to a limited extent ” (272 N. Y. 281).

A practical approach to the sales tax would require that, where a series of transfers may take place, the tax be imposed on the very first occasion that a transfer of title or possession meets the statutory test of a retail sale, for then the value of the item taxed will be greatest and the tax received will be at its highest. Although, as we have previously indicated, petitioner may not be held liable as a retail vendee, when petitioner’s customers buy the cartons and their contents they may be held as retail vendees of the cartons depending upon the purpose for which they bought them. If it were solely for the purpose of resale, the petitioner is secure from sales tax liability; but petitioner failed to shoAv any such purpose on the part of its customers.

It was further urged that the comptroller acted in such a manner as to induce the petitioner to take a course of action which now results in pecuniary liability. The basis of this argument was the comptroller’s conduct in leaving on the books a regulation which included Avithin the definition of retail sales the sale of packing and shipping materials to persons using them for packing, wrapping or crating goods being prepared for sale (Rules and Regulations, City Sales Tax, art. 69, subd. 2). By its terms, however, this regulation applied only to sales of containers to those who packed them Avith goods for resale, and not to retailers of the products so contained. Moreover, the practical effect of our decisions in the American Molasses Company, the Sterling Bag Company and the Wood Packing Box Company cases (supra) was to overrule and nullify this regulation, for those cases held that a packer is not the retail vendee of the packing materials it buys and uses in its business. But whether or not this regulation was nullified by our prior decisions would not be decisive upon whether or not a retail sale took place when the carton was resold by the present petitioner to its retailer. That is a separate and distinct problem. Furthermore, it is pursuant to the mandate of the statute that the vendor must collect the sales tax, and the regulations are but to clarify and specify the manner of compliance xvith the taxing law. There was no act of the comptroller, no regulation relating to sales by such as petitioner to its retail outlets, upon which the petitioner could have rightfully relied in taking a course of action to its detriment. Certainly it could not justifiably rely upon a regulation which never encompassed the type of sales here involved, and which regulation had been nullified by decisions of this court. Petitioner has not shown the elements necessary to give rise to an estoppel (cf. Metropolitan Life Ins. Co. v. Childs Co., 230 N. Y. 285, 292).

There is ample basis for the comptroller’s determination that the sales by petitioner to its customers were sales at retail, and that the petitioner was not protected by the resale certificates it obtained.

Accordingly, the order of the Appellate Division should be reversed and the determination of the comptroller confirmed, with costs in this court and in the Appellate Division.

Desmond, Dye, Fuld, Froessel and Van Voorhis, JJ., concur; Burke, J., taking no part.

Order reversed, etc.


author: Ftjld, J.

text:
    Rentways, Inc., Appellant, v. O’Neill Milk & Cream Co., Inc., Respondent.
    Argued January 13, 1955;
    decided April 14, 1955.

      Vernon Murphy for appellant.
    I. It was not within the province of the' Appellate Division to apply different rules to this plaintiff or to create a new theory of defense in the first instance. (Judd v. O’Brien, 21 N. Y. 186; Matter of Kallus [Ideal Novelty & Toy Co.], 292 N. Y. 459; Atterbury v. Bank of Washington Heights, 241 N. Y. 231.) II. Defendant’s liability is based upon an executed agreement under the terms of which defendant leased six trucks for a period of three years which commenced on October 22, 1946. (Gillet v. Bank of America, 160 N. Y. 549; Edrington-Minot Corp. v. Garsson, Inc., 219 App. Div. 65; Simon v. Etgen, 213 N. Y. 589; Chipman v. Montgomery, 63 N. Y. 221; Wanamaker, N. Y. Inc., v. Otis Elevator Co., 186 App. Div. 655; Tunick v. Federal Food Stores, 117 Misc. 329; Dent v. North Amer. S.S. Co., 49 N. Y. 390.) III. There is no evidence in the record to enable the Appellate Division to make new findings modifying plaintiff’s verdict by subtracting (a) the unpaid rent for four small trucks from June 1 to October 22, 1949; and (b) the maintenance expenses for the two large trucks for the same period. (Costigan v. Mohawk & Hudson R. R. Co., 2 Denio 609; Milage v. Woodward, 186 N. Y. 252; Ware Bros. Co. v. Cortland Cart & Carriage Co., 192 N. Y. 439; Ducasse v. American Yellow Taxi Operators, 224 App. Div. 516; Mount Pleasant Stable v. Steinberg, 238 Mass. 567.)

      David Krause and Theodore J. Groh for respondent.
    I. The contract here involved should be strictly construed against plaintiff. (Mutual Ins. Co. v. Hurni Co., 263 U. S. 167; Atterbury v. Bank of Washington Heights, 241 N. Y. 231; Gillet v. Bank of America, 160 N. Y. 549; McKenna v. Metropolitan Life Ins. Co., 220 App. Div. 53.) II. The contract was divisible. Its performance was in fact divided by the way the delivery and receipt of the trucks were separate as between the small and large trucks. (Mitchell, Inc., v. Dannemann Hosiery Mills, 258 N. Y. 22; Price v. Spielman Motor Sales Co., 261 App. Div. 626; Chiapparelli v. Baker, Kellogg & Co., 252 N. Y. 192; Portfolio v. Rubin, 233 N. Y. 439; Ming v. Corbin, 142 N. Y. 334; De Graff & Palmer v. Mayper, 65 Misc. 185; Seymour v. Warren, 179 N. Y. 1; Nicoll v. Sands, 131 N. Y. 19; Woolsey v. Funke, 121 N. Y. 87; Kirke La Shelle Co. v. Armstrong Co., 263 N. Y. 79.) III. The deductions ordered by the Appellate Division from the prima facie amount of damages for the breach as to the two large trucks are supported by evidence in the record and by authority. (Ware Bros. Co. v. Cortland Cart & Carriage Co., 192 N. Y. 439; Dunn v. Allen, 59 App. Div. 561; Preager v. Unity Shoemakers Corp., 257 App. Div. 632; Kahn v. Antevil, 248 App. Div. 889; Milbank v. Jones, 141 N. Y. 340; Hayes v. Wightman, 237 App. Div. 158, 261 N. Y. 708; Matter of Kellett Aircraft Corp., 191 F. 2d 231.)
   Ftjld, J.

The major question in this case concerns the commencement and termination dates of a written lease for the hire of six milk trucks. The S & E Motor Hire Corporation, plaintiff’s assignor (hereinafter referred to as plaintiff), entered into an agreement with defendant O’Neill Milk & Cream Co., Inc., on January 14,1946, to lease to defendant six new Brockway trucks, two of six-ton capacity and four smaller vehicles. They were to be built, painted and lettered according to defendant’s specifications ; the lessor was to pay all the expenses of their servicing and operation; and the lessee was to pay a weekly rental of $63 for each of the larger trucks and $53 for each of the smaller ones.

The agreement, embodied in a printed contract form prepared by plaintiff, provided in paragraph I that

“ The Lessor hereby leases and the Lessee hereby hires from the Lessor six motor vehicle(s) as described below, or vehicle(s) of other manufacture substantially similar, for a period of three (3) years to commence on the date the contracted truck(s) is (are) put into the service of the Lessee.”

Although, as the undisputed evidence showed, the parties intended that all six trucks were to be delivered within ninety days from the date the contract was signed, plaintiff did not furnish any trucks until some four and a half months later, when, on June 1, 1946, only the four smaller trucks were turned over. Defendant was billed for, and paid, the stipulated weekly rental for these four trucks as of and from June 1. Plaintiff supplied two additional trucks in the first week of September, 1946, one small and one large, but these were older and not the two large Brockways called for by the contract. These older trucks were used and paid for by defendant until October 22, when plaintiff finally delivered the large new ones.

Defendant continued to operate the six trucks until May 31, 1949 — three years from the date upon which it received delivery of the first four trucks — and then returned them, treating that date as the end of the three-year lease period for all six vehicles. Plaintiff, however, took the view that the contract did not terminate until October 22, 1949 — three years from the date that the last of the six trucks was delivered — and continued to bill defendant until that date. Upon defendant’s refusal to pay, plaintiff brought this action to recover the rent allegedly due for the six trucks for the period from June 1 to October 22,1949.

The trial court, expressly observing that ‘ ‘ this is not a divisible contract ”, adopted plaintiff’s view that the three-year period specified in the contract was to be figured from October 22,1946. Plaintiff was awarded the sum of $4,286.10, representing the rental for the six trucks from June 1 to October 22, 1949, less the amount plaintiff received from renting the trucks to others during that period.

The Appellate Division modified, concluding that the agreement was ‘ divisible ’ ’ and that the rental term of the four small trucks commenced on June 1, 1946, and that of the two large trucks on October 22. The lease was, accordingly, held to have terminated as to the small vehicles on June 1, 1949, and defendant’s cancellation on that date was deemed to constitute a breach only as to the large trucks. The measure of plaintiff’s damages was fixed at the amount of the agreed rental of the two large trucks from June 1 to October 22, less deductions (1) for the rentals received by plaintiff from others during that period and (2) for the expenses of servicing and operation that plaintiff would have incurred had defendant not defaulted. Plaintiff has appealed to this court from the resulting judgment of modification.

The element of uncertainty which has engendered this litigation was caused solely by plaintiff’s failure to deliver all of the six trucks within the ninety-day period contemplated by the parties. The construction urged by plaintiff would thus enable it to profit by its own breach, by arbitrarily extending the term of the contract through the device of delaying the delivery of one or more of the trucks. According to plaintiff, its failure to deliver the two large new trucks prior to October 22, 1946, effected an extension of the lease term from three to three and a half years. It might, by further delay of delivery, just as well have been enlarged to four or five years, or even longer.

The contract, however, plainly manifests the design of the parties that the rental term is to be one of three years, and not one of indefinite duration depending upon the timeliness of plaintiff’s performance. A cardinal principle governing the construction of contracts is that the entire contract must be considered and, as between possible interpretations of an ambiguous term, that will be chosen which best accords with the sense of the remainder of the contract. (See, e.g., Fleischman v. Furgueson, 223 N. Y. 235, 239; First Nat. Bank v. Jones, 219 N. Y. 312, 315; 1 Restatement, Contracts, § 235, subd. [c].) ‘ ‘ That interpretation is favored which will make every part of a contract effective.” (Fleischman v. Furgueson, supra, 223 N. Y. 235, 239.) The agreement in the present ease may, perhaps, be ambiguous as respects its commencement date, but, as to the crucial provision that the duration of the rental term be three years, it is clear and unequivocal. Its ‘‘ every part ’ ’ may here be made effective ” only by construing the lease term as commencing separately for each truck or group of trucks on the date of its delivery. If plaintiff’s reading of the agreement, that the lease term began and ended for all of the trucks on October 22, were to be adopted, the three-year duration provision would, in effect, be read out of the contract; and, indeed, the leasing of the four small trucks to defendant during the period prior thereto would, most strangely, have to be regarded as not having been made pursuant to the contract at all.

Further militating against plaintiff’s interpretation is the equally well-settled maxim that, where there is ambiguity in the terms of a contract prepared by one of the parties, ‘ ‘ it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against ” such party. (Mutual Ins. Co. v. Hurni Co., 263 U. S. 167, 174; see Atterbury v. Bank of Washington Heights, 241 N. Y. 231, 238; Gillet v. Bank of America, 160 N. Y. 549, 554-555.) Application of that principle is particularly appropriate in this case, where the contract was embodied in a printed form prepared specifically by plaintiff for its use and where plaintiff itself, by its own delay of delivery, introduced the element of uncertainty into an otherwise clear provision. It would be anomalous if a lessor could, by his own conduct, vary the scope and meaning of a provision of his own formulation to the disadvantage of the lessee.

Little is to be gained by attempting to resolve the issue of interpretation in this case by resort to any fixed rule of divisibility or entirety. (See 3 Corbin on Contracts, §§ 694, 695; see, also, 3 Williston on Contracts [rev. ed., 1936], § 861, pp. 2413-2415.) It is unnecessary for us to determine whether this lease contract would be treated as a divisible one in some other connection or for some other purpose. As hearing on the issue of interpretation here presented, however, it is significant that the contract fixed different rental rates for the four small trucks and for the two large ones, and that the parties themselves treated the contract as immediately effective, as respects the small trucks, upon their delivery over four months prior to the delivery of the large trucks. Plaintiff sent periodic invoices, which defendant paid, for the use of the small trucks, at the stipulated weekly rate, during the entire period that elapsed between the dates of delivery of the two groups of vehicles. This practical construction of the contract reflected the parties’ intent that their respective obligations as to the four small vehicles be treated as separate and distinct from those affecting the large vehicles. (Of. 3 Williston, op. cit., p. 2419.)

We agree, therefore, with the conclusion reached by the Appellate Division that the lease term commenced separately for each group of trucks on the date of its delivery to defendant, and that defendant’s termination of the contract as of June 1, 1949, constituted a breach on its part only as regards the large vehicles.

It is urged, however, that, since plaintiff argued at the trial that the lease term commenced for all six trucks on October 22, and defendant, that it began on June 1, the Appellate Division had, and this court has, no alternative but to accept either the one construction or the other. To say that appellate courts must decide between two constructions proffered by the parties, no matter how erroneous both may be, would be to render automatons of judges, forcing them merely to register their reactions to the arguments of counsel at the trial level. It is quite true that an appellate court should not, and will not, consider different theories or new questions, if proof might have been offered to refute or overcome them had they been presented at the trial. (See Lindlots Realty Corp. v. County of Suffolk, 278 N. Y. 45, 52; Daley v. Brown, 167 N. Y. 381, 388; Osgood v. Toole, 60 N. Y. 475, 479.) But, quite obviously, the present is not such a case. Here, the issue involved the meaning of the written contract between the parties. The writing was in the record; each party had full opportunity to adduce all pertinent evidence bearing on its construction; and there is no claim or suggestion that either party would or could have offered any further evidence. In that state of the record, the Appellate Division was not limited to a choice between the opposing constructions contended for, at the trial, but was privileged to give to the contract a meaning conceivably * * * different from that which either party justifiably attached to the words.” (3 Williston, op. cit., p. 1743; see Persky v. Bank of America Nat. Assn., 261 N. Y. 212, 217-219; see, also, Cohen and Karger, Powers of the New York Court of Appeals [1952], pp. 625-628.)

The judgment should be affirmed, with costs.

Conway, Ch. J., and Dye, J., dissent and vote to remit the case to the Appellate Division for the reasons stated by Breitel, J., in the Appellate Division, and also for the reason that the case was tried at Trial Term by both sides upon the assumption that the contract was an entire and indivisible one. An appellate court should confine itself to the theory mutually agreed upon by the parties (Daley v. Brown, 167 N. Y. 381; 6 Carmody on New York Practice [2d ed.], § 336, p. 255), Trials are held to enable parties to bring to the court for decision disputed questions of fact or law, and parties who fail to avail themselves of the opportunity offered them to present such questions of fact or law to a trial court cannot on appeal present them for decision in this court.” (Persky v. Bank of America Nat. Assn., 261 N. Y. 212, 218-219; see, also, Martin v. Home Bank, 160 N. Y. 190, 199; Wright v. Wright, 226 N. Y. 578.) The question of fact here — whether when the contract was executed the parties intended a divisible or an entire contract — was never presented as a disputed issue at the trial. It was, therefore, not properly open to review upon appeal in the Appellate Division,

The judgment of the Appellate Division should be reversed and the case remitted to that court in order that it may review the questions of fact as determined by the trial court, without costs to either party.

Desmond, Froessel and Van Voorhis, JJ., concur with Fuld, J.; Conway, Ch. J., and Dye, J., dissent in an opinion; Burke, J., taking no part.

Judgment affirmed.

      . The Appellate Division gave the parties the choice between stipulating the amounts of such deductions or submitting to a limited new trial. The parties thereupon entered into a stipulation fixing those amounts, on the basis of which the Appellate Division directed the entry of final judgment. Although it recited that it was not to be construed to limit either party’s right to appeal to this court, the stipulation is necessarily conclusive as to the amounts agreed upon by the parties in lieu of submitting to a new trial. (See Pines v. Beck, 300 N. Y. 181, 186-187; Hine v. New York Elevated R. R. Co., 149 N. Y. 154, 160-161.)

      . It may be that, when complete delivery was not made within the period specified, or a reasonable time thereafter, defendant could have cancelled the lease and that, by accepting the trucks at a later date, it waived its right to timely delivery. However, when it did accept delivery, defendant did not thereby waive the basic provision that the lease term was to be for a period of three years.

      . Actually, the interpretation adopted by the Appellate Division was advanced by defendant in the trial court after announcement of that court’s orally delivered decision, by way of exception thereto. The record discloses that, when the point was raised, the trial judge did not reject it as untimely, but rather expressed his view on the merits, in opposition, that the lease in suit was "not a divisible contract.”