author: Lehman, J.

text:
    James P. Corr et al., as Administrators of the Estate of Peter H. Corr, Deceased, Appellants, v. George F. Hoffman et al., Respondents.

      (Argued February 11, 1931;
    decided May 12, 1931.)

      Thomas E. O’Brien and Robert A. Huddleston for appellants.
    The findings made at plaintiff’s request are irreconcilable with the findings upon which defendants must rely to support the judgment in their favor, and entitle plaintiff to judgment directing a dissolution and accounting and dismissing the counterclaim upon the merits. (Whalen v. Stewart, 123 App. Div. 446; 194 N. Y. 495.) It was reversible error for the referee to make the supplemental decision, which affected substantial rights of the plaintiff by dismissing the complaint as to defendant George Hoffman and granting him judgment on his counterclaim after an accounting by him had been directed by the original decision and his motion for judgment on the counterclaim had been denied. (Herpe v. Herpe, 225 N. Y. 323; Clancy v. New York, etc., Co., 226 N. Y. 213; Valz v. Sheepshead Bay Bungalow Corp., 249 N. Y. 122; McCall v. McCall, 129 Misc. Rep. 127; Redondo Steamship Co., Inc., v. Irving Bank-Columbia Trust Co., 221 App. Div. 694.) The finding that there had been accounts stated was erroneous. (Rodkinson v. Haecker, 248 N. Y. 480; Marston v. Gould, 69 N. Y. 220; Marvin v. Brooks, 94 N. Y. 71; Insurance Co. v. Whitlock,
      216 App. Div. 78.) The right of pre-emption provided for in the original articles of partnership did not survive the original three-year term of the partnership, and on that ground the counterclaim should have been dismissed. (Meinhard v. Salmon, 249 N. Y. 458; Donemar, Inc., v. Malloy, 252 N. Y. 360; Falk v. Hoffman, 233 N. Y. 199; Cookson v. Cookson, 8 Sim. 529; Clark v. Leach, 8 L. T. Rep. [N. S.] 40; Neilson v. Mossend Iron Co., L. R. [1886] 11 App. Cas. 298; Yates v. Finn, L. R. 13 Ch. Div. 829; Sherwood v. Tucker, 2 Ch. 440; Massed v. Ruh, 202 App. Div. 522; 235 N. Y. 462; Karrick v. Hannaman, 168 U. S. 328.)

      Henry W. Harden and Edward S. Malone for respondents.
    No inconsistency in the findings requires a reversal of the judgment. (Chappedelaine v. Deschenaux, 4 Cr. 306; Stearns v. Page, 7 How. 819; Gage v. Parmlee, 87 Ill. 329; Porto Rico Co. v. Kohn, 20 Fed. Rep. [2d] 705; Carpenter v. Kent, 18 J. & S. 371; 101 N. Y. 591; Parkinson v. Hanbury, 2 L. R. H. L. 1; Carpenter v. Kent, 101 N. Y. 591; Ballard v. Beveridge, 171 N. Y. 194; Furman v. Terbush, 188 App. Div. 402; Bruen v. Hone, 2 Barb. 586; Heartt v. Corning, 3 Paige, 566; Ouderkirk v. Bayless Co., 119 N. Y. 366.) The finding that there had been accounts stated was correct. (Rodkinson v. Haecker, 248 N. Y. 480.) The right of the defendant partner to buy out the plaintiff survived the original three-year term. (Partnership Law, § 45; Robertson v. Miller, 20 Fed. Cas. 946; U. S. Bank v. Binney, 28 Fed. Cas. 811; Matter of Marx, 106 App. Div. 212; Housman v. Waterhouse, 191 App. Div. 850; Cox v. Willoughby, 13 Ch. Div. 863; Neilson v. Mossend Iron Co., 11 App. Cas. 298; Daw v. Herring, 1 Ch. 284; Brooks v. Brooks, 85 L. T. Rep. 453.)
   Lehman, J.

In September, 1901, the plaintiff, Peter H. Corr, and the defendant, George F. Hoffman, entered into a written agreement “ to become copartners together in the art and trade of manufacturing, buying, selling and vending rope, twine, hammocks, etc., which said copartnership shall continue from the date of these presents for and during and to the full end and term of three years next ensuing.” The copartnership, so formed, maintained a principal office in Philadelphia and a branch office in New York city, under the firm name of Hoffman-Corr Manufacturing Company. .At the expiration of the term of three years, it was continued by mutual consent, without new articles. From that time the copartnership was terminable at will but, so long as it continued, the mutual rights and obligations of the partners remained as defined in the written contract, except in so far as particular provisions of the written articles might thereafter be modified by agreement or might be intended to apply only during the original fixed term of three years.

At the time the copartnership was formed, George F. Hoffman was a resident of Philadelphia. There he had been a member of a firm which had conducted a similar business. He owned or controlled whatever remained of the business of that firm, and he intended to continue that business in partnership with the plaintiff. The plaintiff resided in New England, where he conducted a different business. It was agreed in the written contract that Hoffman “ is to supervise and direct the affairs of the said business ” and that Corr “is to have nothing whatever to do with the management of the business.” Profits and losses were to be shared equally, but Hoffman, as managing partner, was bo receive the sum of $10,000 as a salary to be charged as an expense against the net profits of the business. The contract recites that Hoffman “ delivered in as stock and money the sum of Fifty Thousand Dollars,” and that Corr “ has likewise delivered the sum of Fifty Thousand Dollars ” to be used in the partnership business. No further sum was to be contributed by Corr unless mutually agreed to in writing by and between the parties, but Hoffman might at his discretion contribute a sum greater than Fifty Thousand Dollars.”

Under Hoffman’s management the business grew and prospered. Both partners, enriched by its success, were satisfied to leave unchanged the terms of the copartnership contract, except that in 1918 they agreed upon a modification intended to provide for the payment of larger compensation to Hoffman, free from income tax. Corr continued to repose complete confidence in Hoffman. At times he directed inquiries to Hoffman as to some details of the business, perhaps occasionally he was consulted by Hoffman. At the close of each year he received a statement of account which purported to show the condition of the partnership affairs and the annual profits and losses. He had access to the books of the partnership, and the bookkeeper gave him such information as he requested. Corr, after opportunity to examine these annual statements, accepted them and the profits and losses, as shown on the statements, were equally shared by the partners. Out of these profits Corr made additional contributions to the firm capital. Hoffman’s contributions to the firm capital were much larger. The annual statement showed the capital contribution of each partner and in accordance with the terms of the partnership contract, six per cent upon such contribution was allowed to each partner.

The profits of the business were not steady. They were somewhat speculative in their nature. They rose during the hectic years of the World War. They declined in the following years and in some years there was a net loss in the conduct of the business. The plaintiff accepted without objection the annual statements of account, in good years as in bad years; but in 1925 a growing distrust and suspicion of his partner and some of the principal employees of the firm, a doubt whether he had received an equal share of the profits earned in past years, led the plaintiff to investigate the affairs of the copartnership and to examine its books. Then he brought this action against his partner, George F. Hoffman, and against his partner’s brother, Frank E. Hoffman, the manager of the New York office of the firm, He charges in his complaint that they had wrongfully diverted and misappropriated partnership funds and, by fraudulent records and entries in the firm books and accounts, had concealed such diversion and misappropriation; and he asks for a dissolution of the partnership, an accounting of all moneys received by the defendants, or either of them, in connection with the business of the partnership, and a direction that they shall make restitution of all moneys or assets misapplied, misappropriated or diverted from said partnership.”

The plaintiff was entitled, even without proof or allegation of fraud or wrongdoing, to a partnership accounting, unless the receipt and acceptance of the annual statements of account ” and the adjustment of the shares of the partners in the profits and capital of the firm constituted annual accountings or statements of account by the partners. Anticipating a claim that by accepting, without objection, these statements, he had precluded himself from thereafter asserting that they did not correctly reflect the condition of the firm business, the plaintiff alleges in his complaint that he had received from time to time from the defendants statements of accounts purporting to be perfect, just and true, and that he had relied upon them to his damage and detriment “ although said statements of accounts were in many respects false and fictitious, imperfect and untrue.”

The complaint was amplified by two bills of particulars which set forth in detail the matters in which the plaintiff claims that he was defrauded by the defendants. In their answers the defendants denied all allegations of fraud and wrongdoing and the defendant George F. Hoffman asserted in a counterclaim a right to purchase the plaintiff’s share in the partnership business by virtue of a clause contained in the original written contract of copartnership for a fixed term. The issues were referred to a referee to hear and determine.”

It is not entirely clear whether in his complaint the plaintiff sought to impeach accounts stated between the parties on the ground of fraud or whether he maintained that no accounts had been stated. For the purposes of this appeal the distinction is immaterial. There has been an exhaustive and careful trial by the referee in regard to every charge contained in the complaint and in the bills of particulars, regardless of whether the charge was of misappropriation or of fraudulent concealment of the condition of the business by fictitious entries in the books, reflected in the annual accounts rendered. The books of the partnership were produced and examined with the help of accountants and auditors. The charges of alleged diversions, made by the plaintiff in his pleadings or at the trial, have been tried out as completely as they could be upon a new accounting.

The referee in his opinion exhaustively analysed the evidence. Further analysis now would serve no purpose. In unequivocal terms the referee in his opinion exonerated the defendants from every charge of fraud or misappropriation or diversion of the moneys or assets of the corporation. “ There is no ground whatever in this case,” the referee said, for the charges that have been levelled against these defendants. Books of account in considerable volume, and records in great number, have been produced and laid bare to the plaintiff on this trial. The plaintiff has had substantially all the benefits of an accounting. I find that the plaintiff was kept informed from year to year and, indeed, frequently discussed between the yearly period, all matters of the partnership about which he saw fit to inquire. The charges of conspiracy are groundless.”

The evidence did, nevertheless, show that the books were in some respects inaccurate, and, in that sense, false, and so the referee found. At times, payments which were in themselves proper and lawful were entered in the books in a manner which concealed their real nature. Bonuses paid to employees of the branch office in New York were entered as an expense of the cordage department ” of the home office in Philadelphia. Investments in Liberty bonds and United States Treasury certificates were entered as book accounts ” receivable, and the interest and profits of such investments were entered as discounts.” The defendant George F. Hoffman and his bookkeeper explained the reasons why many of the entries were made in a form which might be characterized as misleading. Their explanation satisfied the referee of the good faith of the defendants, and that the plaintiff was not harmed by these entries. The plaintiff still maintains that the result, and, perhaps, the purpose of these entries was to increase improperly other disbursements and expenses of the copartnership business and to conceal the true situation from the plaintiff. We have examined the testimony in the light of these claims, and we conclude that the evidence sustains, if indeed it does not compel, the inference that the entries were made in good faith, for legitimate purposes, and caused no injury to the plaintiff.

The plaintiff submitted to the referee one hundred and eighty-six proposed findings of fact. The defendants submitted one hundred and two. The referee passed upon all these proposed findings and embodied in his decision over one hundred findings which had been proposed by one side or the other. In the main he accepted the proposed findings of the defendants, exonerating them from charges of fraud, diversion or misappropriation of the funds of the copartnership, and accepted the proposed findings of the plaintiff sustaining charges that some of the entries were “ false ” or “ misleading.” We find no inconsistency in these two groups of findings, though perhaps the language of some of the findings proposed by the plaintiff is harsher than the referee would have used if he had formulated them himself or which he did use in his opinion.

Among the conclusions of law in the decision are:

“ 1. The plaintiff had the burden of proving fraud and has failed to so do.”

“ 4. The defendant George F. Hoffman has acted in good faith to the plaintiff in the conduct of the partnership business.”

“ 9. Plaintiff is not entitled to an accounting on any of the charges set forth in the complaint or in the bill of particulars, but inasmuch as the defendant was bound to the exercise of the utmost good faith in his dealings with his partner, and as some errors appear in the account and books examined on the trial, an accounting should be had within the limits hereinafter indicated.”

“ 20. The plaintiff is not entitled to any accounting from the defendant Frank E. Hoffman and the complaint should be dismissed as to Frank E. Hoffman with costs.

“ 21. A judgment should be entered as provided in this decision, and I direct judgment to be made in accordance therewith.”

After the decision of the referee was filed, his judicial determination of all questions of law and of fact was complete. Judgment might be entered upon that report by the clerk as a ministerial act. (Rules of Civil Practice, rule 198.) Before such a judgment was entered, the defendant George F. Hoffman made a motion at Special Term for an order sending the decision back to the referee and “ directing the referee if the same be in his opinion conformable to the evidence introduced before him at the hearing had herein, to correct ” certain alleged errors and omissions contained in the referee’s report. Many, if not all, these alleged errors were plainly due to mistake or inadvertence in the preparation of the findings. The moving affidavit states “ that the relief asked for under this motion does not call for a change in any ruling by the referee upon the law, or alter the decision of the referee upon the merits.”

The motion was granted and the report sent back to the referee. He took no further testimony, but, after hearing the parties, made many of the amendments requested by the defendants. Thereafter the referee upon the defendants’ motion reconsidered his determination that the plaintiff was entitled to an accounting from his partner, George F. Hoffman. Then the referee changed his former ruling and decided that there had been an annual account stated, and no further accounting should be ordered between the partners. He filed a supplemental decision embodying some changes in the findings of fact and substituting for the conclusions of law which entitled the plaintiff to an interlocutory judgment for an accounting, new conclusions of law leading to the final conclusion that “ the defendants Hoffman are entitled to judgment against plaintiff dismissing the complaint on the merits with costs, and the defendant George F. Hoffman is entitled to judgment on the counterclaim with costs.” In his opinion, filed with the supplemental report, the referee explained the reason for the change: I declined to find in my former decision that the accounts rendered annually had become accounts stated. I declined to hold the accounts to be accounts stated, because of the strong fiduciary relation existing between George F. Hoffman and the plaintiff. In view, however, of the decision of the Court of Appeals in Rodkinson v. Haecker, in 248 N. Y. 480, which was published after my former decision, I am convinced that the accounts rendered annually from 1916 down to and including 1924, to which no objection was ever made until just prior to the beginning of the action, became accounts stated.”

The amendments, made by the supplemental decision, of the original findings of fact, in most instances, merely correct errors plainly due to inadvertence. It is said that changes made in the form of four findings are substantial, and, at least' if an accounting were held, might carry important consequences. Even so, when these amended findings are read in the light of the original opinion of the referee, it becomes evident that the amendments merely correct errors or supply omissions in the original findings. In fact, in their original form argument might be made that they are inconsistent with other findings made by the referee. The result is a correct formulation of the referee’s rulings on questions of fact, rather than a change of such rulings. Without such changes there would be some basis for the claim that some of the payments of copartnership moneys made by the defendants were wrongful and that some of the entries in the books were fraudulent. The amendments destroy the basis for such a claim, and make effective the decision of the referee that the plaintiff has received all the profits to which he is entitled. It is said that in one instance, at least, the referee, by his supplemental decision, inserted in a finding a statement of facts which he had originally excised from a proposed finding, and had expressly refused to find. In truth there is such difference in the facts which the referee refused to find and the facts which the referee subsequently inserted in the finding, that the rulings are consistent and both accord with the original intention of the referee.

We are agreed that the conclusions of law in the original decision, that no accounts were stated between the parties and that the plaintiff is entitled to an interlocutory judgment against George F. Hoffman for an accounting were erroneous. Doubtless because of fiduciary relationship existing between the parties, George F. Hoffman owed to the plaintiff the duty of exercising the utmost good faith in all his dealings, and must account to the plaintiff for all his acts. (Marston v. Gould, 69 N. Y. 220; Marvin v. Brooks, 94 N. Y. 71.) None the less, when the partnership was formed the parties could by agreement determine the manner in which such an accounting should be had, and thereafter could, upon the statement of an account, fix by agreement the amount due to each. “ An account stated is nothing more or less than a contract express or implied between the parties. * * * An account stated is conclusive upon the parties unless fraud, mistake or other equitable considerations are shown which make it improper to be enforced.” So we stated in Rodkinson v. Haecker (248 N. Y. 480), and we pointed out that while a fiduciary relationship existing between two parties may be one of the circumstances which enter into a determination of whether from acceptance of an account, without objection, an agreement should be implied that the account is 'Correct, it does not preclude parties who are capable of contracting with each other, from entering into such an agreement..

Doubtless at times, especially where there is a fiduciary relationship, accounts may be rendered without reasonable expectation that they will be scrutinized before they are accepted. Then mere silence and failure to object cannot be construed as an agreement upon the correctness of the accounts. We do not say that a partner is always called upon at his peril to investigate the correctness of a partnership account and to voice his objections promptly, if at all. Often, perhaps usually, partnership accounts are prepared and acted upon, without any intention or expectation that, unless objection is made within a reasonable time, they should be regarded as final and conclusive in fixing the rights and obligations of the parties. Here the parties have, however, expressly agreed with each other in the partnership contract that the said copartnership shall once in twelve months or oftener if need require, upon the request of any one of them shall make and render each to the other * * * a true and perfect account of all profits and increase by them made and all losses sustained * * * and the account so made shall and will clear, adjust, pay and deliver each unto the other at the time of making such account their equal shares of the profit so made as aforesaid.” In language, perhaps, unduly invoved, but nevertheless unequivocal, the parties have provided for an annual statement of account and an adjustment of their respective shares in accordance with the account so stated. Opportunity was provided for examination of the books, and for scrutiny of the accounts rendered. If the accounts were not true and perfect,” the plaintiff was called upon to object within a reasonable time; for the agreement contemplated that the account should “ clear ” and adjust ” the shares of the partners in the partnership property and profits. Here the conclusion that the parties intended to state an account rests not upon doubtful implication but upon express and unambiguous agreement.

The findings, as amended and, perhaps, in their original form, negative any possible claim that there was fraud or overreaching in the statement of the accounts, and establish that, in fact, there was no misappropriation or diversion of copartnership moneys in any transaction which the plaintiff has attacked, and that the adjustment of the shares of the partners, in accordance with the accounts, resulted in plaintiff receiving at least the share to which he is entitled. It follows that, as the referee recognized after he made his original decision, the plaintiff was entitled to no further accounting for the period for which accounts had been stated by the parties and, in view of the form of the action and the proceedings at the trial, was entitled to no further accounting for the short period thereafter during which the copartnership continued.

It does not follow that the referee had the power to correct his own error. “ The rule has long been settled and inflexibly applied that the trial court has no revisory or appellate jurisdiction to correct by amendment error in substance affecting the judgment. * * * It cannot correct judicial errors, either of commission or omission. * * * Clerical errors or mistake in the entry of the judgment or the omission of a right or relief to which a party is entitled as a matter of course may alone be corrected by the trial court through an amendment ” (Herpe v. Herpe, 225 N. Y. 323.) There we spoke of an amendment of a judgment. The rule applies with equal force to the amendment of the decision of a referee upon which a judgment may be entered by the clerk. The referee had heard and determined the issues. His determination was embodied in a report and decision which carried direct and immediate legal consequences. His judicial functions had been completely performed. His judicial authority was then exhausted. He could not thereafter reconsider and change his judicial determination. of the issues referred to him. Except in so far as the supplemental ” decision corrected palpable errors in the form of the findings, intended to embody the original determination of the referee, the supplemental decision was made without power and was without effect. The original decision with its erroneous conclusion remained in full force until corrected or set aside upon appeal. No judgment which failed to conform to that decision could properly be entered, even though a judgment which did so conform would have been tainted with the errors inherent in the decision.

We have said that the findings and conclusions set forth in the supplemental decision ” are sustained by the evidence and in accordance with law; yet no valid direction has ever been made for its entry by any judicial officer. Thus upon this appeal the question is presented whether the Appellate Division could remedy the errors contained in the referee’s decision which the referee had no power to correct and could thus cure the infirmity in the judgment under review. Though that question has not heretofore been presented to this court, its answer seems plain. Upon an appeal from a judgment, the Appellate Division “ may reverse or affirm, wholly or in part, or may modify, the judgment,” and the statute commands that It shall thereupon render judgment of affirmance, judgment of reversal and final judgment upon the right of any or all of the parties, or judgment of modification thereon, * * * except where it may be necessary or proper to grant a new trial or hearing.” (Civ. Prac. Act, § 584.) If the court reverses the judgment, it must determine what final judgment it shall render. The court cannot modify the judgment appealed from, for its infirmity does not lie in its form or substance but in the fact that it does not conform to the only effective decision of the referee. No new trial is proper or necessary, for there has been a careful and exhaustive trial, and upon the reversal of a judgment, the Appellate Division may if necessary make new findings to sustain the judgment it has awarded. (Rules of Civil Practice, rule 239.) It follows that upon a reversal of the judgment now under review the Appellate Division would be constrained to render the same final judgment upon the rights of the parties. Affirmance by the Appellate Division signifies its approval of the conclusions of law upon which the judgment rests and of the findings which sustain those conclusions. In this case at least, we may disregard the form of the judgment of the Appellate Division, for in purpose and effect the judgment of affirmance by the Appellate Division is identical with a judgment of reversal, and the rendering of a new final judgment determining the rights of the parties in the same way.

Here, as we have said, most, if not all, of the amendments to the findings, which the referee has made, merely correct palpable error in the formulation of the original findings. Such amendments the referee had power to make, even after his decision was complete. (Herpe v. Herpe, supra, and cases there cited.) Even if, perhaps, the amendments made to four findings were beyond the power of the referee, it is evident that they merely correct errors and omissions in the formulation of the original decision, which the referee intended to make, to the effect that none of the profits of the business have been wrongfully diverted and all have been reflected in the accounts rendered. In approving the findings as amended, the Appellate Division was not called upon to substitute its judgment upon the weight of evidence for the judgment of the referee as expressed in his original decision, nor to choose between inconsistent determinations made by the referee; and there can be no doubt that the Appellate Division in affhming the judgment adopted the amended findings. The case would be different if the original decision contained any findings in favor of the plaintiff which are plainly inconsistent with the findings in favor of the defendants in their amended form. The appellant is entitled to the benefit of any findings which are sustained by the evidence; and perhaps we could not assume that the Appellate Division by its affirmance in effect reversed such inconsistent findings as against the weight of evidence. Perhaps indeed we should not assume that the Appellate Division adopted findings contained in the supplemental decision unless such findings plainly complemented other findings in the original decision. We do not now attempt to define the circumstances under which such an assumption may be accepted. We point out only that in this case the only reasonable inference to be drawn from the judgment of affirmance by the Appellate Division is that the court intended to adopt the findings embodied in the supplemental decision of the referee.

Nothing that we have said here is inconsistent with our decision in Herpe v. Herpe (supra). There a judgment in an equity action was entered, upon a decision of the court, which awarded no costs to the plaintiff. Thereafter the court made an order amending the judgment by awarding costs previously withheld. The court had no power to reconsider its original decision which withheld costs. The attempt to amend the judgment by awarding costs was, therefore, futile. An appeal was taken from that part of the amended judgment which awarded costs, and this court reversed the amended judgment so far as appealed from. That left in full force and effect the original judgment entered upon the decision of the court at Special Term. We did not consider or decide whether upon an appeal from an amended judgment entered without authority an appellate court could review and vacate or modify the original judgment from which no appeal was taken. There was no need to consider that question for no infirmity in the original judgment was pointed out. We do not consider or decide that question now. Here only one judgment has been entered, and the appeal from that judgment brings up for review all the proceedings at the trial and the decision of the referee. An appellate court, if it reverses that judgment, must, as we have pointed out, render the appropriate final judgment upon the rights of the parties.

We have considered so far only the plaintiff’s cause of action. Affirmance of the judgment dismissing the complaint still leaves open some questions which affect the validity of the judgment, in favor of the defendant George F. Hoffman upon his counterclaim, directing the plaintiff to transfer to the defendant all his right, title and interest in the property of the copartnership. The written contract of partnership provided that “ It is further understood and agreed that should the party of the first part [Hoffman] * * * desire, at any time before the end of the term of this contract, to purchase the interest of the party of the second part [Corr] the party of the second part will assign, set over and transfer unto the party of the first part * * * all his right, title and interest in said copartnership by the paying to him * * * of a sum equal to his, the party of the second part, share in the said business which share shall be determined by taking account of stock under the terms, manner and condition aforesaid.” The referee has found upon sufficient evidence that the defendant George F. Hoffman has tendered to the plaintiff “ a sum equal to his * * * share in the said business ” determined by taking stock in the manner provided by the written contract. We have carefully considered the objections of the plaintiff to these findings. We find them without substance. There remains only the question of whether the parties in continuing the partnership after the expiration of the term of the written contract, by implication agreed to continue during the existence of the partnership at will, the right conferred upon George F. Hoffman, by the written contract, to purchase his partner’s interest.

Upon the appeal from an interlocutory order denying a motion for judgment on the pleadings, the Appellate Division sustained the counterclaim in which Hoffman asserted the right to purchase his partner’s interest upon the termination of the partnership at will. (Corr v. Hoffman, 219 App. Div. 278.) Though there is a dearth of direct authority in this country, the conclusion of the Appellate Division is sustained by reason as well as by the weight of judicial authority in England.

The rights and obligations of the partners as between themselves arise from and are fixed by their agreement. (Martin v. Peyton, 246 N. Y. 213.) Here, by written contract, the parties agreed to form a copartnership which should expire at the end of three years. Just as the partnership could' arise only from an agreement (London Assur. Co. v. Bremen, 116 U. S. 461) so, after the expiration of its term, it could be continued only by agreement. Such an agreement need not be express; it may be implied in the conduct of the parties. Continuance of the partnership, by consent of the parties, though without express contract, may not evidence an intention to renew the partnership contract for another fixed term; it does show an unmistakable intention to continue the existing partnership relations indefinitely, and since the existing relations are defined by the provisions of the written contract, the same provisions so far as applicable to a partnership terminable at will continue to govern these relations.

The rule has been variously stated by judicial and extrajudicial authorities. (See Cox v. Willoughby, L. R. 13 Ch. Div. 869.) In the Uniform Partnership Law it appears in the form: “ When a partnership for a fixed term or particular undertaking is continued after the termination of such term or particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were at such termination, so far as is consistent with a partnership at will.” (Partnership Law; Cons. Laws, ch. 39, § 45.) However the rule may be formulated, in applying it we must remember that the rights or obligations of the partners, as between themselves, are continued by agreement and are not imposed by law; and the test is whether the partners in continuing the partnership relations tacitly excluded rights and duties defined by particular provisions of the original articles.

A right conferred upon one partner by written contract to purchase the partnership business at the termination or expiration of the partnership is applicable to and consistent with a partnership at will. (Cox v. Willoughby, L. R. 13 Ch. Div. 863; Daw v. Herring, L. R. [1892] 1 Ch. 284; Essex v. Essex, 20 Beav. 442.) True, here Hoffman’s right to purchase his partner’s share, according to the express provisions of the written contract, may be exercised only if Hoffman should so desire “ before the end of the term of the contract, and that language is not appropriate to a partnership at will. Even if that limitation of time had not been expressed in the original contract, it must have been read into the contract by necessary implication, for all rights and obligations of the partners expired with the end of the term of the partnership. The problem is not whether the language of the provisions of the written contract defining the rights and duties of the partners during a fixed period is appropriate to a partnership terminable at will, but whether in essence such rights and duties are so consistent with or applicable to a partnership at will that the inference is reasonable that the parties intended that they should continue in force. (Daw v. Herring, supra; Brooks v. Brooks, 85 L. T. R. [N. S] 453.) We do not say that in all circumstances a right of pre-emption of partnership property, contained in a written contract for a partnership for a fixed term, remains in force after the term has expired. Sometimes that right is coupled with conditions or stipulations which themselves make exercise of such a right inapplicable to a partnership at will. Then the •inference may follow that the parties did not intend that the right should survive the expiration of the original term of the contract. (Yates v. Finn, 13 Ch. Div. 839; Neilson v. Mossend Iron Co., 11 App. Cas. 298; Clark v. Leach, 8 L. T. R. [N. S.] 40.) Such cases do not militate against the conclusion that the test is whether the parties in continuing the partnership intended that the right of pre-emption accorded to one partner by the written partnership articles should survive. (See Daw v. Herring, supra.) We do not seek to distinguish or explain the decision of Cookson v. Cookson (8 Sim. 529). Its authority has been questioned by later decisions in England and in so far as it may be in conflict with those decisions has been expressly repudiated even there. (See Essex v. Essex, supra; Brooks v. Brooks, supra.)

Here the partnership for a fixed term was created to continue a business in which Hoffman was already engaged and which he owned or controlled. He was the sole managing partner in the business of the new copartnership. The right of pre-emption which was stipulated in-the copartnership articles insured him the right to retain that business after the partnership expired. By con-tinning the copartnership after the expiration of its term without express excision of this stipulation, the parties impliedly retained it as one of the partnership terms, and it may be exercised upon the termination of the partnership. No other inference can reasonably be drawn here. The courts below properly held that the defendant George F. Hoffman still retained his right of pre-emption. Other objections to the judgment have been pressed upon us by the appellant. We must content ourselves with stating our conclusion that none furnish, ground for reversal of that judgment.

The judgment should be affirmed, with costs.

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

Judgment affirmed.


source: Caselaw Access Project

author: Hubbs, J.

license: Public Domain

text:
    Hazel R. Dunkum, Respondent, v. Maceck Building Corporation, Appellant.

      (Argued April 1, 1931;
    decided May 12, 1931.)

      Richard H. McIntyre for appellant.
    The plaintiff cannot avoid the effect of constitutional acts of limitation as well as conduct of her predecessor amounting to estoppel, merely by selecting a statutory form of action suited to such an evasive purpose. (Ostrander v. Darling, 127 N. Y. 70; Meigs v. Roberts, 162 N. Y. 371; Halsted v. Silberstein, 196 N. Y. 1; People v. Turner, 145 N. Y. 451; 168 U. S. 90; Bryan v. McGurk, 200 N. Y. 337; Rubin v. City of Syracuse, 212 App. Div. 475 ; 241 N. Y. 504; Shepard v. Kusch, 89 Misc. Rep. 112; Nehasane Park Assn. v. Lloyd, 167 N. Y. 438; Cardwell v. Clark, 94 Misc. Rep. 433; Wallace v. McEchron, 176 N. Y. 427; Hill v. Supervisors, 119 N. Y. 344; Best Renting Co. v. City of New York, 248 N. Y. 491; Whitman v. City of New York, 85 App. Div. 468; Lewis v. Howe,
      174 N. Y. 340.) The plaintiff’s predecessor, by attempting to redeem, established the validity of the tax sale and deed. (Sanders v. Downs, 141 N. Y. 422; Sanders v. Carley, 83 App. Div. 193; Jackson v. Rowe, 106 App. Div. 65; 191 N. Y. 512.) Plaintiff’s predecessor in title was not a genuine mortgagee when he accomplished his purported redemption from the tax sale. (Chard v. Holt, 136 N. Y. 30; Martin v. Stoddard, 127 N. Y. 61.)

      Hugo Hirsh, Howard C. Tracy and George B. Davenport for respondent.
    The statutes of alleged limitation are not applicable. (Nehasane Park Assn. v. Lloyd, 167 N. Y. 431; Cardwell v. Clark, 94 Misc. Rep. 433; Shepard v. Kusch, 89 Misc. Rep. 112; Whitney v. Considine Investing Co., 200 App. Div. 193; Ford v. Clendenin, 215 N. Y. 10; People v. Faxon, 111 Misc. Rep. 699; People v. Durey, 126 Misc. Rep. 640; People ex rel. McGinness v. Lewis, 127 App. Div. 107; People v. Witherbee, 199 App. Div. 272; Ostrander v. Bell, 199 App. Div. 304; Clark v. Kirkland, 133 App. Div. 826; 202 N. Y. 573; Wallace v. McEchron, 176 N. Y. 424.) The Comptroller’s deed is not conclusive evidence of the regularity of all prior proceedings from and including the assessment of the taxes up to the expiration of the time to redeem from the tax sale. (Dever v. Cornwell, 10 N. D. 123; Mattingly v. District of Columbia, 97 U. S. 687; Groesbeck v. Seeley, 13 Mich. 329; Case v. Dean, 16 Mich. 12; Baker v. Kelley, 11 Minn. 480; Stoudenmine v. Brown, 48 Ala. 699; Marx v. Hanthorn, 148 U. S. 172; Cromwell v. MacLean, 123 N. Y. 474; Barnett v. Kovarick, 23 Misc. Rep. 73; Ostrander v. Bell, 199 App. Div. 304; Joslyn v. Rockwell, 128 N. Y. 334; People v. Witherbee, 199 App. Div. 272; Peterson v. Martino, 210 N. Y. 412; People v. Inman, 197 N. Y. 200; Mabie v. Fuller, 255 N. Y. 194.) The Comptroller’s deed was invalid, since no notice to redeem was published by the Comptroller prior to the delivery thereof, as required by law. (Breevort v. City of Brooklyn, 89 N. Y. 128;
      Sanders v. Downs, 141 N. Y. 422; Clason v. Baldwin, 152 N. Y. 204; Ostrander v. Darling, 127 N. Y. 70; Mabie v. Fuller, 255 N. Y. 194.) The redemption from the tax sale of 1866 was valid. (Jackson v. Rowe, 106 App. Div. 65; 191 N. Y. 512; Chard v. Holt, 136 N. Y. 30.) The right to redeem was not affected by possession either of an unrecorded deed or of an unrecorded satisfaction piece. (Bascom v. Smith, 34 N. Y. 320; Sheldon v. Edwards, 35 N. Y. 279; James v. Morey, 2 Cow. 246; Smith v. Roberts, 91 N. Y. 470; Van Nest v. Latson, 19 Barb. 604; Purdy v. Huntington, 42 N. Y. 334; Townsend v. Provident Realty Co., 110 App. Div. 226; Martin v. Stoddard, 127 N. Y. 61; Hulbert v. Clark, 128 N. Y. 295; Raynor v. Wilson, 6 Hill, 469; Tarbell v. West, 86 N. Y. 280; Seely v. Seely, 164 App. Div. 650.)
   Hubbs, J.

This is an action, brought under article 15 of the Real Property Law (Cons. Laws, ch. 50), to compel the determination of a claim to real property. The land at all times in question was vacant and unoccupied.

The plaintiff-respondent traces her title through an unbroken chain back to 1854. The defendant-appellant’s title is based on a deed from the State Comptroller, dated in 1869, which recites that the property was purchased by the State upon a tax sale, held in 1866, for unpaid taxes for the years 1856 and 1857.

It is contended by the respondent that one of her mesne grantors legally redeemed the property from such tax sale. On July 1,1854, Gelston, the then owner, deeded the land to Sharkey. On the same day Sharkey gave back to Gelston a mortgage thereon. On November 21, 1854, Sharkey deeded the land to Bennett. In July, 1869, Bennett deeded to Sanders. In 1855, fourteen years before he received his deed, Sanders had taken an assignment of the mortgage and duly recorded it in the same year. He was, therefore, after the time he received the deed from Bennett, the owner of the record title and also, by assignment, the owner of the mortgage. A certificate of satisfaction of the mortgage, duly acknowledged in 1857, was recorded in 1904. The respondent received her deed in April, 1926, through mesne conveyances from Sanders.

In 1880, Sanders, as assignee of the mortgage, made an application to the State Comptroller to redeem the land from the tax sale of 1866, the sale upon which the appellant relies to establish its title. Sanders, in his application, recited that he was the owner of a duly recorded and unpaid mortgage covering the land in question. The application was granted and Sanders paid to the State Treasurer the amount due. If, at the time, Sanders was the owner of the mortgage and had complied with the provisions of the Tax Law then in force, the land was freed from the tax lien and the title of the appellant’s mesne grantor was rendered a nullity. (Laws of 1855, ch. 427, § 78.)

It is urged by the appellant that the attempted redemption was ineffective:

First, because it must be presumed that Sanders had delivered the certificate of satisfaction of the mortgage at or about the time that it was acknowledged in 1857 and that he was not, therefore, a mortgagee at the date of the attempted redemption in 1880 and not entitled to redeem;

Second, that in 1869, when Sanders received his deed from Bennett, the mortgage which he then owned was merged in the deed, and for that reason he was not, in 1880, a mortgagee entitled to redeem; and

Third, that Sanders was not entitled to redeem because he had not filed in the office of the Comptroller a statement of his mortgage interest required, by section 82 of chapter 427, Laws of 1855, to be filed by a mortgagee in order to entitle him to notice from the Comptroller to redeem.

We think the appellant is wrong in each of its contentions.

The certificate of satisfaction was evidently in the possession of Sanders in 1904, as it was not previously recorded. The records showed him to be the owner of the mortgage at that time. His application to redeem, filed with the State Comptroller, was duly sworn to and stated that he was then the owner of the mortgage. The trial court found as a fact that the certificate of satisfaction was retained by Sanders and filed and recorded at his request. No exception to such finding was filed by the appellant. Under such circumstances the mere fact that the certificate of satisfaction was acknowledged in 1857 does not establish that Sanders was not the owner of the mortgage in 1880 at the time when he paid the taxes and charges to the State Treasurer and redeemed the property. Many reasons might be suggested why Sanders executed and acknowledged the certificate of satisfaction in 1857. Such an occurrence is not so unusual as to create a conclusive presumption that the mortgage was then paid, especially in view of the other facts in the case.

It is a general rule, subject to exceptions, in actions at law, that when different estates coincide and meet in the same person the lesser is merged in the greater. (Sheldon v. Edwards, 35 N. Y. 279.) The doctrine of merger has never been favored in equity and there the estates will be held to be separate when justice requires it and such was the intention of the parties. The intent of the holder of the two estates will be gathered from the situation and the effect which a merger of the title would have upon his interest. Equity will prevent a merger whenever it will result in an injury to the owner and work injustice to him and, in the absence of some intervening right or equity in a third person, he may treat the estates as merged or not as he may deem it to be to his best interest to do. (Smith v. Roberts, 91 N. Y. 470; 2 Pom. Eq. Juris. [4th ed.] §§ 778, 779.)

No intervening right or equity existed in a third party which prevented Sanders from electing to keep the estates separate. The grantee in the deed from the Comptroller had, at all times, the right to cut off the right of the mortgagee to redeem by serving a notice to redeem under section 77 of chapter 427, Laws of 1855.

At the time Sanders received his deed in 1869, more than two years had expired since the tax sale of 1866, at which sale the property was bid in by the State, and which sale is the basis of the appellant’s alleged title. If the tax title, at the time Sanders received his deed, had become perfected and Sanders’ grantor was foreclosed from questioning the regularity of the tax proceedings, the deed to Sanders was of little value. That was the apparent situation, as section 50 (Laws of 1855, ch. 427) required the owner to redeem within two years of the sale. It was, therefore, to his interest to keep the mortgage alive so that he could redeem the property from the tax sale under section 77 (Laws of 1855, ch. 427) which was in force at that time, and which required the purchaser at a tax sale to give to a mortgagee written notice of the sale, Subject to the provisions of section 82 of said chapter. Under such circumstances equity will prevent the merger of the lesser estate in the greater.

Section 82 provided that if a mortgagee required the State Comptroller to give him notice to redeem, as required by section 77, he must file with the Comptroller within two years of the tax sale a notice stating the name of the mortgagor, a description of the land mortgaged and certain other details. That section was repealed by chapter 285, Laws of 1862. Therefore, at the time in question, a mortgagee was not required to file such a notice in the office of the State Comptroller in order to be entitled to the notice to redeem required to be served upon him by section 77 in order to cut off his interest in the land. As no notice to redeem was ever served upon Sanders as the assignee of the mortgage or upon his assignor, as required by section 77, he had a legal right to redeem in 1880, when he paid the amount due and received a certificate of redemption from the State Comptroller. He had the same right, as assignee of the mortgage, that a mortgagee would have had. (Laws of 1855, ch. 427, § 80.) Such right was not affected by-section 1, chapter 280, Laws of 1870, which re-enacted the requirement that a mortgagee should file in the office of the Comptroller a statement of his mortgage if he desired notice to redeem to be served upon him by the Comptroller. That act provided, in case a mortgagee filed the required statement in the office of the Comptroller, that he should have two years within which to redeem after service upon him of notice to redeem. That statute did not confer any new right upon a purchaser of a tax title to cut off the right of a mortgagee to redeem because the purchaser already had the right to cut off the lien of the mortgage by service of a notice under section 77 (Laws of 1855, ch. 427). The act of 1870 provided that a mortgagee could file a statement of his mortgage in the office of the Comptroller within two years of the tax sale. The tax sale took place in 1866, so that more than two years had expired before the law of 1870 was enacted and it was impossible for Sanders to comply with that law. It did not, therefore, apply to Sanders, who was still entitled to redeem under section 77 (Laws of 1855, ch. 427). The case of Chard v. Holt (136 N. Y. 30) does not hold to the contrary, as in that case the mortgagee was at all times in a position to comply with the statute, which required a mortgagee to file a notice setting forth the mortgage and his interest therein. Sanders’ redemption of the property in 1880 from the tax sale of 1866 was, therefore, legal, and effectually cut off the title which the appellant received under the Comptroller’s deed of 1869. (Laws of 1855, ch. 427, § 78.)

We would be content to rest our decision upon the ground that the respondent had legally redeemed the property were it not for the fact that we are unable to agree with the conclusion reached by the Appellate Division to the effect that the appellant was not protected by certain statutes which were enacted for the purpose of limiting the time within which one having an interest in real property sold for taxes must move to protect such interest, which statutes purported to establish a conclusive presumption of the regularity of assessments and sales for taxes.

The taxes in question, assessed in 1856 and 1857, were defectively assessed, as the assessors failed to comply with the law in making up the assessment roll, and the defects were not mere irregularities but jurisdictional. The State Comptroller also failed to publish the notice to redeem as required by the Laws of 1855, chapter 427, section 61. Section 65 of that chapter made the Comptroller’s deed presumptive evidence that the assessment of the land was regular and valid and that all subsequent proceedings, including the giving of all notices and the sale of the land, were regular and complied with the law. That section was amended by chapter 448 of the Laws of 1885. Under the statute, as amended, the Comptroller’s deed was made conclusive evidence of the regularity of all prior proceedings after the expiration of two years from the date of recording such * * * conveyances.” The amendment also provided that such tax sale and conveyance might be canceled in a proper action brought therefor within the time specified. Chapter 427 of the Laws of 1855 was repealed by chapter 908 of the Laws of 1896. That act, therefore, repealed section 65 (Laws of 1855, ch. 427) which was amended by chapter 448 of the Laws of 1885, and neither chapter 427 of the Laws of 1855 nor the amendment of section 65 thereof by chapter 448 of the Laws of 1885 was in force when this action was commenced. Nevertheless, the Statute of Limitations contained in the act of 1885, while it was in force, constituted a bar to respondent’s right to contest the validity of the tax deed. The law of 1885 was made applicable to Kings county by chapter 217, Laws of 1891.

Section 131, chapter 908, Laws of 1896, makes the Comptroller’s deed conclusive evidence of the legality of the sale and of all tax proceedings leading up to it. The same provision is now contained in section 132 of the Tax Law (Laws of 1909, chap. 62; Cons. Laws, chap. 60).

Defects in tax titles which are not jurisdictional may be remedied by curative acts passed for the purpose of correcting past defects and irregularities which constitute clouds on tax titles. “ If the irregularity consists in doing some act, or in the mode and manner of doing some act, which the legislature might have made immaterial by prior law, it is equally competent to make the same immaterial by a subsequent law.” (Cooley, Const. Limitations [8th ed.], vol. 2, pp. 775, 776.) Such statutes are constitutional and valid. (People v. Turner, 117 N. Y. 227; 145 N. Y. 451; 168 U. S. 90; Halsted v. Silberstein, 196 N. Y. 1.)

The Legislature cannot, however, by its fiat make legal a deed which was theretofore absolutely void because of jurisdictional defects. A curative act enacted for such a purpose is unconstitutional and void. It is an attempt to deprive the owners of the land of their property without due process of law. (Marx v. Hanthorn, 148 U. S. 172; Wallace v. McEchron, 176 N. Y. 424; Cromwell v. MacLean, 123 N. Y. 474.)

But the Legislature may legally enact a Statute of Limitations to prevent the assertion of a right to question the validity of a tax title of vacant and unoccupied lands because of jurisdictional defects in the sale and in the proceedings leading thereto, provided a reasonable time is given for the assertion of the right before the statute becomes operative. (Meigs v. Roberts, 162 N. Y. 371, 378; Doud v. Huntington Hebrew Congregation, 178 App. Div. 748; Halsted v. Silberstein, supra.)

The distinction between a curative act and a Statute of Limitations is clearly pointed out by Chief Judge Cullen in the opinion in Meigs v. Roberts (supra). One is enacted to cure past irregularities which are not jurisdictional, and the other to bar any right, however high the source from which it may be deduced.” The validity of a Statute of Limitations which purports to bar a right which existed before the statute becomes effective depends upon whether the statute allows a reasonable time after it becomes a law within which a party may enforce his right.

If this were a direct action to cancel the tax deed under section 132 of the Tax Law, the defense of the Statute of Limitations would have constituted a bar to the action. The same principle applies in this action brought under article 15 of the Real Property Law. The complaint asserts that the plaintiff is the owner and entitled to possession of the land. The answer alleges that the defendant is the owner and entitled to possession. When it appeared that the defendant held title under a deed from the Comptroller which had been duly recorded and more than one year had expired since the passage of section 131 of chapter 908 of the Laws of 1896, the plaintiff’s right to question the defendant’s title was barred by the provisions of section 131. To hold otherwise would permit article 15 of the Real Property Law to afford a remedy which is barred by section 131 of the Tax Law as enacted in 1896 and by section 132 of the Tax Law as it now reads. It was so decided by Judge Crane of this court at a Special Term in the case of Shepard v. Kusch (89 Misc. Rep. 112).

Chapter 448 of the Laws of 1885 allowed two years after the recording of all conveyances theretofore executed by the Comptroller within which the owner of unoccupied and vacant lands could test the validity of such conveyances. It also allowed six months after the act took effect before the regularity of all proceedings should be conclusively presumed. Section 132 of chapter 908, Laws of 1896, allowed one year from the passage of the act for the same purpose. The time allowed was reasonable, and the owner of such unoccupied and vacant lands who failed to take action to test the validity of such tax deed within the time allowed therefor was effectually barred by such statutes. (Halsted v. Silberstein, supra.)

The question of the validity of a Statute of Limitations which purports to create a conclusive bar against an owner in actual possession of the land taxed, which was raised in Meigs v. Roberts (supra), is not involved in the case at bar, as the land here in question was vacant and unoccupied.

As this land was legally redeemed from the tax sale, the judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Cajrdozo, Ch. J.

text:
    Joseph Cullings, Appellant, v. Edward Goetz, Defendant, and Elias Nickley et al., Respondents.

      (Argued April 10, 1931;
    decided May 12, 1931.)

      Edward A. Wolff for appellant.
    The appellate court was not justified in dismissing the complaint as a matter of law, and holding that the landlord is not liable upon his covenant to repair. (Colorado Mortgage & Investment Co. v. Giacomini, 55 Colo. 540; Senimes v. Kennedy, 74 Fla. 74; Lundstrum v. Pennsylvania Co., 212 Penn. St. 391; Chroust v. Acme Building & Loan Assn., 214 Penn. St. 179; Lutz v. Haley, 10 Montg. Co. Law Rep. 18; Carlson v. City Savings Bank, 82 Neb. 582; Jones v. Millard, 71 Miss. 10; Fraser v. Kruger, 298 Fed. Rep. 693; Kilmer v. White, 254 N. Y. 69; Widmar v. Healey, 247 N. Y. 94; Ahern v. Steele, 115 N. Y. 202; Wolf v. Kilpatrick, 101 N. Y. 146; Edwards v. New York & Harlem R. R. Co., 98 N. Y. 245; Hirschfield v. Alsberg, 47 Misc. Rep. 141; Jaffe v. Harteau, 56 N. Y. 389; Clancy v. Byrne, 56 N. Y. 129; Curran v. Flammer, 49 App. Div. 293; Babbage v. Powers, 54 Hun, 635; 130 N. Y. 281; O’Brien v. Clapwell, 59 Barb. 504.) The Appellate Division did not differentiate between a private place and a public place. (Gilmartin v. Mayor, 55 Barb. 245; Warner v. Lucy, 207 App. Div. 241; 238 N. Y. 637; Schick v. Fleischhauer, 26 App. Div. 210; Frank v. Mandel, 76 App. Div. 413; Kushes v. Ginsberg, 99 App. Div. 417; 188 N. Y. 630; Junkerman v. Tilyou Realty Co., 213 N. Y. 404.)

      D. Francis Searle for respondents.
    A landlord is not liable in tort for damages resulting from a breach of his contract to make repairs to property within the exclusive control of the tenant. (Kushes v. Ginsberg, 99 App. Div. 417; 188 N. Y. 630; Boden v. Schaltz, 101 App. Div. 1; Galob v. Pasnesky, 178 N. Y. 458; Schick v. Fleischhauer, 26 App. Div. 210; Frank v. Mandel, 76 App. Div. 413; Wynne v. Height, 27 App. Div. 9; Marks v. Narnbel R. Co., 245 N. Y. 256; Widmar v. Healey, 247 N. Y. 94.)
   Cajrdozo, Ch. J.

Plaintiff brought his automobile to a garage, intending to drive in. There were two sliding doors at the entrance, one open, the other closed. He tried to push the closed one open, but it did not move upon its track. When he shook it with some force, it fell upon his back, causing injuries for which he sues. His action is against Goetz, lessee of the garage, and the Nickleys, the owners, who were also the lessors. The lease was an oral one, and ran from month to month. The trial judge left the question to the jury whether as one of its provisions the owners had agreed to make the necessary repairs. In the event of that agreement and of failure to repair after notice of the need, owners as well as lessee were to be held for any negligence in the unsafe condition of the doors. The jury found a verdict against all the parties sued. On an appeal by the owners, the Appellate Division reversed, and dismissed the complaint, upon the ground that the failure of the owners to keep the promise to repair was unavailing to charge them with liability in tort.

The evidence of the supposed promise is at best confused and uncertain, if there be evidence at all. For the purpose of this appeal we assume without deciding that it permits conflicting inferences. We assume also that there was freedom from contributory negligence, though another entrance was available, and there is evidence of notice that the one chosen was out of use. Giving the plaintiff’s case the aid of these assumptions, we concur with the Appellate Division in its ruling that liability in tort must be confined to the lessee, whose possession and dominion were exclusive and complete.

The subject has divided juridical opinion. Generally, however, in this country as in England, a covenant to repair does not impose upon the lessor a liability in tort at the suit of the lessee or of others lawfully on the land in the right of the lessee (see e. g., Tuttle v. Gilbert Mfg. Co., 145 Mass. 169; Miles v. Janvrin, 196 Mass. 431; Fiorntino v. Mason, 233 Mass. 451, 454; Carroll v. Intercolonial Club, 243 Mass. 380, 383; Dustin v. Curtis, 74 N. H. 266; Davis v. Smith, 26 R. I. 129; Brady v. Klein, 133 Mich. 422; Cavalier v. Pope, [1905] 2 K. B. 757, 762, 764; Cavalier v. Pope, [1906] A. C. 428, 433; Cameron v. Young, [1908] A. C. 176 : and see, also, 8 A. L. R. 766, collating the decisions). There are decisions to the contrary (Fbod v. Pabst Brewing Co., 158 Wis. 626; Merchants’ Cotton Press & Storage Co. v. Miller, 135 Tenn. 187; Barron v. Leidloff, 95 Minn. 474), but they speak the voice of a minority. Liability in tort is an incident to occupation or control (American Law Inst., Restatement of the Law of Torts, § 227). By preponderant opinion, occupation and control are not reserved through an agreement that the landlord will repair (Cavalier v. Pope, [1906] A. C. at 433; Pollock, Torts [13th ed.], 532; Salmond, Torts [7th ed.], 477). The tenant and no one else may keep visitors away till the danger is abated, or adapt the warning to the need. The landlord has at most a privilege to enter for the doing of the work, and at times not even that if the occupant protests. “ The power of control necessary to raise the duty * * * implies something more than the right or liability to repair the premises. It implies the power and the right to admit people to the premises and to exclude people from them ” (Cavalier v. Pope, [1906] A. C. 433). In saying this we assume the possibility of so phrasing and enlarging the rights of the lessor that occupation and control will be shared with the lessee. There are decisions in Massachusetts that draw a distinction between a covenant merely to repair and one to maintain in safe condition with supervision adequate to the end to be achieved (Miles v. Janvrin, supra; Fiorntino v. Mason, supra; Carroll v. Intercolonial Club, supra; see, also, Robinson v. Heil, 128 Md. 645; Collison v. Curtner, 141 Ark. 122). In the case now at hand, the promise, if there was any, was to act at the request of the lessee. What resulted was not a reservation by an owner of one of the privileges of ownership. It was the assumption of a burden for the benefit of the occupant with consequences the same as if there had been a promise to repair by a plumber or a carpenter (Cf. Zurich Gen. Acc. & L. Ins. Co., Ltd., v. Watson Elevator Co., 253 N. Y. 404, 409; Mollino v. Ogden & Clarkson Corp., 243 N. Y. 450).

The rule in this State is settled in accord with the prevailing doctrine. Dicta, supposed to be inconsistent, are summoned to the support of a contrary position. They will be considered later on. Whatever their significance, they cannot overcome decisions directly to the point. As often as the question has been squarely up, the answer has been consistent that there is no liability in tort. Some of the decisions rejecting liability are judgments of this court (Kushes v. Ginsberg, 188 N. Y. 630, affg. 99 App. Div. 417; Sterger v. Van Sicklen, 132 N. Y. 499; cf. Reynolds v. Van Beuren, 155 N. Y. 120, 125; Wolf v. American Tract Soc., 164 N. Y. 30, 35; Golob v. Pasinsky, 178 N. Y. 458, 461). Others too many to be fully numbered, are in courts of intermediate appeal (Schick v. Fleischhauer, 26 App. Div. 210; Frank v. Mandel, 76 App. Div. 413, 417; Stelz v. Van Dusen, 93 App. Div 358; Boden v Scholtz. 101 App. Div. 1, 2; Pernick v. Central Union Gas Co., 183 App. Div. 543). The doctrine, wise or unwise in its origin, has worked itself by common acquiescence into the tissues of our law. It is too deeply imbedded to be superseded or ignored. Hardly a day goes by in our great centers of population but it is applied by judges and juries in cases great and small. Countless tenants, suing for personal injuries and proving nothing more than the breach of an agreement, have been dismissed without a remedy in adherence to the authority of Schick v. Fleischhauer and Kushes v. Ginsberg. Countless visitors of tenants and members of a tenant’s family have encountered a like fate. If there is no remedy for the tenant, there is none for visitors or relatives present in the tenant’s right (Miles v. Janvrin, supra, at p. 440; Elefante v. Pizitz, 182 App. Div. 819, 821). Liability has been enlarged by statute where an apartment in a tenement house in a city of the first class is the subject of the lease (Altz v. Lieberson, 233 N. Y. 16). The duty in such instances is independent of the contract. It is one imposed by law, with liability in tort where the duty is ignored. Here the plaintiff was injured in the use of a garage. His remedy is against the tenant at whose invitation he was there.

We have spoken of dicta that are cited to the contrary. They do not touch the liability of the landlord for conditions within the premises affecting only the lessee or those who enter upon the premises in the right of the lessee. They have to do with nuisances threatening danger to the public beyond the land demised (cf. Sterger v. Van Sicklen, supra, at p. 501; Ahern v. Steele, 115 N. Y. 203, 209; City of Brooklyn v. Brooklyn City R. R. Co., 47 N. Y. 475, 483; Clancy v. Byrne, 56 N. Y. 129; Jaffe v. Harteau, 56 N. Y. 398; Brady v. Klein, supra; 18 Halsbury, Laws of England, § 989; 21 id. §§ 651, 955). Even when thus confined, they are dicta, and nothing more, at least in this State, though reiteration may have given them an authority not otherwise belonging to them. Be that as it may, the fact remains that the decision in every instance exonerated the lessor. One case, it is true, there is (Kilmer v. White, 254 N. Y. 64, 69), which had to do with conditions within the premises, and not with those outside, but it cites Jaffe v. Harteau (supra), and does not suggest even remotely a purpose to establish a new rule. There is merely a cautious reservation of the doctrine to be applied in situations different from any before us at the time.

The fount and origin of whatever has been said anywhere as to the enlargement of liability by a covenant to repair is an early case in England ([1794] 2 H. Bl. 350), the unsatisfactory case of Payne v. Rogers ” (Salmond, Torts [7th ed.], 279). A traveler on a highway slipped into a vault or cellar through a hole in the pavement. In opinions meagrely reported, the court held that for the avoidance of circuity of action, the law would permit the traveler to bring his action directly against the owner, who had covenanted to repair, instead of leaving him to a suit against the tenant and remitting the latter to a remedy over (cf. City of Lowell v. Spaulding, 4 Cush. 277, 279; Inhabitants of Milford v. Holbrook, 9 Allen, 17, 21). The point of the ruling has been stated by this court to inhere in the distinction between a covenant to repair for the benefit of a lessee and a covenant of a like nature for the benefit of strangers (City of Brooklyn v. Brooklyn City R. R. Co., 47 N. Y. 475, 483, 485). " The one relates to private matters alone. The other relates to matters with which the public and third persons are also concerned ” (City of Brooklyn v. Brooklyn City R. R. Co., supra). Even in fche jurisdiction of its origin, Payne v. Rodgers has been narrowly limited by Cavalier v. Pope, if in view of later criticism it is still authority for anything (Salmond, supra). Its doctrine cannot apply if the lessee, upon the payment of fche damages suffered by the victim of the negligence, would have no right of recourse against the owner on the footing of the covenant. (Kushes v. Ginsberg is decisive that the right does not exist when the injury is suffered within the premises demised.

The minority doctrine as to the liability of owners who have made a covenant to repair has won a notable adherent in the American Law Institute. The view is expressed by the Institute in its restatement of the law of torts (§ 227) that the covenant is equivalent to a reservation of occupation or control. There is frank concession, however, in the explanatory notes that in New York and elsewhere the law is settled to the contrary.

Other grounds of liability suggested in the plaintiff’s argument have been considered and are found to be untenable.

We state for greater caution, though the caution should be needless, that nothing said in this opinion has relation to a case where a part only of the building is in the possession of the lessee, and the dangerous condition is in the ways or other parts retained by the lessor (Dollard v. Roberts, 130 N. Y. 269; Kilmer v. White, supra; American Law Inst., Restatement of the Law of Torts. § 230).

The judgment should be affirmed, with costs.

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

Judgment affirmed.


author: Crane, J.

text:
    In the Matter of the Accounting of Walter H. Thacher, as Executor of Joseph Horn, Deceased, Appellant. William Hodgetts, Respondent.
    (Argued April 9, 1931;
    decided May 12, 1931.)

      Charles A. Taussig and Stallo Vinton for appellant.
    In its ordinary and primary meaning, child or children refers only to naturally begotten- offspring. (Pigg v. Clarke, 3 Ch. 672; Phillips v. Ferguson, 85 Va. 509.) The respondent should not be included as a residuary legatee. (Matter of Leask, 197 N. Y. 193.)

      Cyrus B. Austin for respondent.
    The language of the will and the surrounding facts indicate that the testator did not intend to differentiate between natural and adopted children of his wife’s predeceased brothers and sisters. (Matter of Title Guarantee & Trust Co., 195 N. Y. 339; Gilliam v. Guaranty Trust Co., 186 N. Y. 127; Chew v. Sheldon, 214 N. Y. 344.) By force of the statute of adoption, respondent was the child of a sister of the wife of the deceased, and is, therefore, described as a legatee in the will. (Domestic Relations Law, § 114; Matter of Leask, 197 N. Y. 193; Gilliam v. Guaranty Trust Co., 186 N. Y. 127; Bourne v. Donney, 184 App. Div. 476; Von Beck v. Thomsen, 44 App. Div. 373; Matter of Foster, 108 Misc. Rep. 604; Bray v. Miles, 23 Ind. App. 432.) The case is not one falling within the class excepted by section 114 of the Domestic Relations Law from the provisions of that section. (Matter of Leask, 197 N. Y. 193; Von Beck v. Thomsen, 44 App. Div. 373; Matter of Hopkins, 102 App. Div. 458.)
   Crane, J.

By an agreed state of facts it appears that Joseph Horn, who died in Brooklyn November 1, 1925, left a last will and testament, the second paragraph of which read as follows:

Second. I give and bequeath the sum of One Thousand ($1,000.00) Dollars to each of the brothers and sisters of my late wife Nellie Horn who survived her at the time of her death on January 21st, 1924, and the same sum, namely, One Thousand ($1,000.00) Dollars, to the child or children by representation or as a group, of each of the brothers and sisters of my late wife who predeceased her leaving a child or children; and in the event that any of the said legatees predecease me leaving a child or children, then it is my will that the share of such legatee shall go to such child or children by representation, the child or children taking together the legacy of the deceased parent; it being my will that each of my late wife’s brothers and sisters or their respective families shall receive One Thousand ($1,000.00) Dollars.”

Nellie Horn, his wife, died January 21, 1924. She had a sister, Mary Thacher Hodgetts, who had died on November 27,1911, leaving as her sole survivor William Hodgetts, a legally adopted son.

When the testator made his will on January 3, 1925, and left $1,000 to the child of the sister of his late wife who predeceased her, leaving a child, Mary Thacher Hodgetts and her legally adopted son fitted in exactly to this description. Joseph Horn knew that this sister of his wife had died many years before, leaving an adopted son. The bequest of $1,000 was intended for him, although instead of using his name the testator described him as a child of his wife’s sister who had predeceased her.

There is no doubt of the identity nor of the testator’s intention, but the appellant claims that article 7, section If 4, of the Domestic Relations Law (Cons. Laws, ch. 14) prevents William Hodgetts from talcing, under the authority of Matter of Leask (197 N. Y. 193). The section reads as follows, in so far as pertinent: The foster parent or parents and the person adopted sustain toward each other the legal relation of parent and child, and have all the rights and are subject to all the duties of that relation, including the right of inheritance from each other, * * * and such right of inheritance extends to the heirs and next of kin of the person adopted , and such heirs and next of kin shall be the same as if he were the legitimate child of the person adopting, but as respects the passing and limitation over of real or personal property dependent under the provisions of any instrument on the foster parent dying without heirs, the person adopted is not deemed the child of the foster parent so as to defeat the rights of remaindermen.”

The only instance in which the adopted child is not deemed to be the child of the foster parent is where future estates may be cut off by such adoption. Where the passing by limitation over of real or personal property is dependent on a parent dying without heirs or children, it would be very easy for a person having no child or children to adopt one and thus cut off the contingent remainder. The statute was aimed at such a possibility. Such is the reasoning in Matter of Leask (supra). That case and this restriction in section 114 have no application here, as Joseph Horn gave the adopted son a bequest by description with the same effect as if he had named him. There was no possibility of any subsequent action by survivors defeating the intention of the testator.

The order should be affirmed, with costs.

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

Order affirmed.


text:
    Charles C. James, Respondent, v. Alderton Dock Yards, Limited, Appellant.

      (Argued April 6, 1931;
    decided May 12, 1931.)

      Clarence K. McGuire and Walter T. Neville for appellant.
    A declaratory judgment should not have been rendered. (Chadbourne v. Mayer, 207 App. Div. 754; Loesch v. Manhattan Life Ins. Co., 128 Misc. Rep. 232; Bareham v. City of Rochester, 246 N. Y. 140.)

      Russell H. Robbins, Reid L. Carr and Paul Austin Crouch for respondent.
    The court properly exercised its discretion in granting a declaratory judgment. (White v. Benjamin, 150 N. Y. 258; Westchester Mortgage Co. v. Grand Rapids I. R. R. Co., 246 N. Y. 194; Bloomquist v. Farson, 222 N. Y. 375; Watts v. Adler, 130 N. Y. 646; Baron v. Korn, 127 N. Y. 224; Durant v. Whedon, 201 App. Div. 196; Sartorius v. Cohen, 249 N. Y. 31; Brownell v. Board of Education, 239 N. Y. 369; Ufa Films, Inc., v. Ufa Eastern Division Distribution, Inc., 134 Misc. Rep. 129; 226 App. Div. 869; Allen v. Carsted Realty Corp., 133 Misc. Rep. 359; 226 App. Div. 733; Hollins & Co. v. Paget, [1917] 1 Ch. 187; Thompson Bros. & Co. v. Amis, [1917] 2 Ch. 220.) The judgment was proper. (Morgan v. Calvert, 126 App. Div. 327; Mogelewsky v. Rohig, 104 App. Div. 147; Spears v. Mayor, 87 N. Y. 359; Lightfoot v. Davis, 196 N. Y. 261; Bloomquist v. Farson, 222 N. Y. 375; Peck v. Schenectady Ry. Co., 170 N. Y. 298.)
   Crane, J.

The Alderton Dock Yards, Ltd., was a domestic corporation operating a ship repair plant and dry docks in the borough of Brooklyn, city of New York. The capital stock consisted of 25,000 shares of common stock of the par value of $100 a share, which was all owned by Albert H. Alderton and his family, with the exception possibly of qualifying certificates. Alderton was president and treasurer of the corporation, and the plaintiff Charles C. James and others having a financial interest in its success constituted the board of directors.

In January of 1926 the directors and stockholders voted that the corporation sell its property on such terms and at such price as should be determined by the board of directors who were authorized, together with the officers, to take the necessary steps to procure a purchaser. On July 12, 1926, at a meeting of the board of directors, a resolution was passed providing for the appointment of an executive committee to be the sole selling agent of the corporation with power to negotiate and accept in its name bids for the sale of the property. The members of the executive committee were Charles C. James, the plaintiff, and Messrs. Alderton, Davidson, Ritchings and Ackerson. It was also unanimously determined at that meeting that only the directors were to use their best efforts to obtain a purchaser of the property of the defendant, and the compensation for so doing would be paid to whomsoever brought about the sale.

In January of 1926 the plaintiff agreed with the defendant through its president, Albert H. Alderton, that the compensation for his services in obtaining a contract of sale with the Morse Dry Dock and Repair Company would be contingent upon the making of such contract of sale; and he would be entitled to no compensation if he did not succeed m making a contract for the defendant with the Morse Dry Dock and Repair Company; but if he succeeded he was to be paid for his said services when payments under such contract, if made, became payable to the defendant after the claims of its various creditors had been satisfied. This agreement was not in writing, but is found in a conversation which James had with Alderton about the time that the negotiations with the Morse Dry Dock and Repair Company were nearing completion. “Aider-ton said to me,” testified the plaintiff, “ Now, before we go any further on this thing, C. C., I think we ought to have an understanding as to what you are to be paid in case you put this deal through.’ I said, 1 Well, Allie, I think it is too soon to decide that. We don’t know yet whether we are going- to put it through. But as we have always agreed, I think whatever is the fair thing when it is accomplished is the thing to pay me. I do not want any money unless you get yours out of this thing. I have stuck with you all the way through, and I am going to try to pull you out. If I can I will expect you to treat me very handsomely. If not, you don’t owe me a thing in the world.’ ”

The deal went through, and on April 9, 1926, the Alderton Dock Yards, Ltd., sold to the Morse Dry Dock and Repair Company its plant, real estate, business and good will for $1,400,000. Two hundred thousand dollars of this purchase price was paid in cash, and the rest by assuming and the giving of mortgages. A third mortgage was given to the defendant as part of the purchase price in the sum of $425,000 due and payable on April 9, 1931. After the consummation of this sale the board of directors proposed to compensate the plaintiff for his services and offered him $6,000 which he refused. He has brought this action to recover $88,750 as fair and reasonable compensation, arriving at the figure by charging ten per cent on the value of the chattels and five per cent on the value of the remainder. The action was commenced on May 28, 1929, the complaint demanding a declaratory judgment, adjudging the value of the plaintiff’s services to the defendant, and making the amount a hen upon all sums due and to be paid thereafter by the dock company to the defendant.

At the time of the trial and the decision of the court, July 2, 1930, the third mortgage, securing the only sum due from the dock company to the defendant, had been extended from its due date, April 9, 1931, to April 9, 1936. This fact, found by the trial court, caused it to conclude as a matter of law that the amount of the plaintiff’s compensation, $88,750, became due and payable at once. The court, therefore, by its judgment gave the plaintiff a hen in this amount on ah moneys due from the dock company, including that secured by the mortgage.

The plaintiff’s claim against the defendant is for commission in selling property. The price of the sale was $1,400,000, of which the plaintiff claims ten per cent on the value of the personalty and five per cent on that of the real estate, making in ah a total of $88,750, which he says is reasonable compensation. The contract to pay him any compensation rests in paroi, and is denied by the defendant. Whether or not the plaintiff’s services are worth the sum claimed, or whether there is any agreement to pay him anything, is a question of fact to be determined upon a trial. This issue would ordinarily be determined by a jury in an action at law. On the face of the plaintiff’s testimony the amount due him was not to be paid until defendant received payment from the dock company under its contract of sale. The times of payment were fixed. Under ordinary conditions, therefore, we would expect the plaintiff to wait until these times had arrived and then demand payment or bring suit. He did not do this, but before the amount of the third mortgage became due brought this action for a declaratory judgment apparently for the sole purpose of procuring a lieupon the purchase price due .from the dock company.

Whatever acceleration in practice has been accomplished by the declaratory judgment it has not widened and extended the equitable lien. The basis for this lien is the same as heretofore; that is, it is dependent upon some agreement express or implied that there shall be a lien upon specific property, or else it is the means adopted for enforcing equities which could not be otherwise established. It is settled law in this State that an agreement either by paroi or in writing to pay a debt out of a designated fund does not give an equitable Hen upon the fund nor operate as an equitable assignment thereof. (Williams v. Ingersoll, 89 N. Y. 508, 518; see, also, Ingersoll v. Coram, 211 U. S. 335.)

The theory of equitable Hens has "its ultimate foundation in contracts express or implied which either deal with or in some manner relate to specific property, such as a tract of land, particular chattels or security, a certain fund and the like. The agreement must deal with some particular property either by identifying it or by so describing it that it can be identified and must indicate with sufficient clearness an intent that the property so described or rendered capable of identification is to be held, given or transferred as security for the obfigation. (3 Pomeroy’s Eq. Juris. [4th ed.] pp. 2961-2965.) The impfied contract is a term used to define those situations and conditions which make it equitable and just in applying the equity powers of the court to establish and declare a Hen where otherwise there might be no relief. (See Pomeroy, supra, p. 2976, § 1238, for illustration.)

The substitution of an equitable Hen in the place of a money judgment in an ordinary action at law should not be accomplished under the guise of a declaratory judgment. Here the plaintiff had a claim for commissions; the time of payment only was postponed. When the defendant received the purchase price the plaintiff was to be paid. The date of payment, according to the maturity of the third mortgage, was April 9, 1931. At that time the plaintiff’s commissions would be payable from the defendant. He could then maintain his action at law to recover them, and the question of the making of the agreement and the value of his services would be for a jury to determine unless a jury were waived. The repudiation of the contract by the defendant or the extension of the mortgage in no way affected the plaintiff’s action at law. He either had an agreement or he did not. Under the ruling in this case every contract for the sale of goods or the performance of services could be tried in the form of an action for a declaratory judgment where the defendant repudiated the agreement or denied its existence. There was nothing here to prevent the plaintiff from bringing his action at law for services rendered against the corporation when the due date arrived. The judgment recovered would then be enforced by execution like any other money judgment in an action at law. The only purpose that the plaintiff could have had in bringing this form of action was to establish a lien upon the third mortgage. Nothing in his contract for services gives him such a lien. Viewing the testimony in the most favorable light, all the plaintiff had from the corporation was a promise to pay him well for his services in negotiating a sale of the defendant’s property to the dock company. There is no suggestion that he was to be paid out of any specific property or that the mortgage or any other funds were to be assigned to him or subjected to a lien for his commissions. His agreement is no different than that of any other broker or agent for commissions. His work and labor created a debt due him from the defendant, and to collect this debt his action at law was adequate. No elements in his arrangements with the defendant bring his claim within the rule which permits the courts to enforce payment by fixing a lien upon specific property.

Section 473 of our Civil Practice Act gives power to the Supreme Court to declare rights and other legal relations on request for such declaration, whether or not further relief is or could be claimed, and such declaration shall have the force of a final judgment. Rule 212 of the Rules of Civil Practice provides that if in the opinion of the court the parties should be left to relief by existing forms of action it may decline to pronounce a declaratory judgment, stating the grounds on which the discretion is so exercised; and rule 213 provides that questions of fact may on direction of the court be submitted to a jury.

The use of a declaratory judgment, while discretionary with the court, is nevertheless dependent upon facts and circumstances rendering it useful and necessary. The discretion must be exercised judicially and with care. (Westchester Mortgage Co. v. Grand Rapids & I. R. R. Co., 246 N. Y. 194.) It is usually unnecessary where a full and adequate remedy is already provided by another well-known form of action. The general purpose of the declaratory judgment is to serve some practical end in quieting or stabilizing an uncertain or disputed jurai relation either as to present or prospective obligations. (Brownell v. Board of Education, 239 N. Y. 369; Sartorious v. Cohen, 249 N. Y. 31.) No limitation has been placed or attempted to be placed upon its use, and yet this main purpose underlies the exercise of discretion. (See “ The Declaratory Judgment,” by Prof. Edwin M. Borchard, 28 Yale Law Journal, 105; Braman v. Babcock, 98 Conn. 549, 553.) Where there is no necessity for resorting to the declaratory judgment it should not be employed. (Wight v. Board of Education, 99 N. J. Eq. 843; List’s Estate, 283 Penn. St. 255; Ackerman v. Union & New Haven Trust Co., 91 Conn. 500; North Eastern Marine Engineering Co. v. Leeds Forge Co., [1906] 1 Ch. 324; [1906] 2 Ch. 498.)

Under the facts of this case the plaintiff had an action at law for commissions. He needed no declaratory judgment to establish his rights. He chose this form of action for the purpose of procuring a lien which is dependent not upon procedure but upon an agreement, express or implied, subjecting property to a hen. There being no such arrangement with the defendant the plaintiff had no hen in law or equity. There being no hen nor equities justifying one there was no necessity for a declaratory judgment. In our above statements we have not touched upon the legality of the plaintiff’s contract even if made. Whether the president had power to make such an arrangement binding on the defendant is reserved from determination as unnecessary to this decision. (Alexander v. Equitable Life Assur. Society, 233 N. Y. 300.)

The judgment of the Appellate Division and that of the Special Term should, therefore, be reversed, and as the action for commissions was prematurely brought, the complaint dismissed, with costs in ah courts.

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

Judgments reversed, etc.


text:
    Marine Basin Company, Inc., Respondent, v. Northwestern Fire and Marine Insurance Company, Appellant.

      (Argued April 7, 1931;
    decided May 12, 1931.)

      Jay Leo Rothschild for appellant.
    The policy contemplates liability, only in the event that loss was sustained by the plaintiff, with respect to vessels in its charge, while being altered and/or repaired in the plaintiff’s shipyard. (Weinberg & Holman, Inc., v. Providence Washington Ins. Co., 254 N. Y. 387.) The vessel in suit was never placed in charge of plaintiff. (Hogan v. O’Brien, 123 Misc. Rep. 865; Armstrong v. Sisti, 242 N. Y. 440; State v. Clark, 86 Me. 194; Carron v. Boston & Albany R. R., 164 Mass. 523.) The legal liability insured against was that in connection with a vessel in the charge of plaintiff, being altered and/or repaired at the time of the accident. (Atlantic Basin Iron Works v. American Ins. Co., 250 N. Y. 322; Aldrich v. N. Y. Life Ins. Co., 235 N. Y. 214; Bushey & Sons v. American Ins. Co., 237 N. Y. 24.)

      Cyrus S. Judien and Frank S. Easby-Smith for respondent.
    The policy covers the legal liability of plaintiff in connection with the sinking of the vessel. (Van Bokkelen v. Travelers Ins. Co., 34 App. Div. 399; Griffey v. New York Central Ins. Co., 100 N. Y. 417; Liverpool & London & Globe Ins. Co. v. Kearney, 180 U. S. 132; Marcus v. U. S. Casualty Co., 249 N. Y. 21.) The printed portion of the policy must be read in connection with the typewritten rider, the two together constituting the coverage under the policy. (Hayward v. Liverpool & London Fire & Life Ins. Co., 2 Abb. Ct. App. Dec. 349; Gunther v. Liverpool Ins. Co., 134 U. S. 110.) The policy was designed to cover the business of plaintiff, which was to repair ships and also to lay up ships. (Underwood v. Globe Indemnity Co., 245 N. Y. 111; Blank v. Marine Basin Co., 178 App. Div. 666; Tarbox v. Tarbox, 111 Me. 374.) The phrase “ with privilege to lay up and make additions, alterations, and repairs, and to go in dry dock ” has the same meaning as though it-read " with privilege to lay up and /or lay up and make additions, alterations, and repairs, and/or to go in dry dock.” (Lamborn v. National Park Bank, 212 App. Div. 25; Weisman v. Continental Life Ins. Co., 267 S. W. Rep. 21; Osborn v. Wilson & Co., 118 Misc. Rep. 379; 206 App. Div. 787; Crown Embroidery Works v. Gordon, 190 App. Div. 472.)
   Hubbs, J.

The plaintiff, prior to October 25, 1925, was engaged in the business of making alterations and repairs on boats and had a plant therefor. It also had docks and wharfs, not necessarily used in its work. In June, 1924, the owners of the boat Faith tied the boat to the wharf and inquired of the plaintiff what the charge would be for leaving it tied there' and was told that it would be thirty-five dollars a month. The boat was tied and laid up in charge of a watchman employed by the owners of the boat. Many boats laid up and tied to the dock owned by the plaintiff. On October 25, 1925, the boat was sunk, owing to the negligence of the plaintiff in failing to furnish it with safe dockage. The plaintiff was obliged to pay the owners the damage suffered by reason of the sinking of the boat.

This action is to recover from the defendant insurance company the amount which the plaintiff was obliged to pay to the owners of the boat and certain attorneys’ fees which it paid. The question for determination is whether the policy issued by the defendant covered the loss in question. The trial court found that it did not. The Appellate Division made new findings, reversed, and gave judgment to the plaintiff, one justice dissenting. We are, therefore, required to examine the facts. (York Mortgage Corp. v. Clotar Construction Corp., 254 N. Y. 128.)

The defendant filled out a printed form of policy commonly used in writing insurance on a vessel. It attempted to adapt the form to one covering a ship repairer’s legal liability by attaching to the blank form a typewritten indorsement or rider, and by typewriting on the form after the statement of the amount insured, the words Ship repairer’s legal liability policy.” The printed form reads: “ Warranted confined to the use and navigation of the ............................. with privilege to lay up and make additions, alterations, and repairs, and to go in dry dock.” It is apparent that the form was designed to be used by filling in the blank space the name of the waters to be navigated. If filled out as intended it might have read. Warranted confined to the use and navigation of the Hudson River with privilege to lay up and make additions, alterations, and repairs, and to go in dry dock.” Before the blank space referred to there was a blank space m which to fill in the name of the vessel to be insured. In that space was typewritten the words: “ Ship repairer’s legal liability policy.” It is clear that the liability insured against was ship repairer’s legal liability. In the blank space first referred to was attached a typewritten rider which reads: “ To cover on any vessel or vessels that may be in charge of the Marine Basin Company especially in their floating dry dock and/or their Marine Railway situated at Brooklyn, N. Y., as below:

“ Underwriters to cover only the Assured’s legal liability for any and all losses (up to the amount of this. policy) which may occur on vessels injured or damaged while in the assured’s charge being altered and /or repaired by the Marine Basin Company at their shipyard, whether in dry dock or on marine railway or not, but this policy is not liable for any losses which can be collected under other policies of assured, nor under pohcies held by owners of vessels unless there is recourse against assured.

“ It is understood that in the event of loss under this pohcy the assured can recover from the Underwriters for work without first having recourse to the owners.

To pay only the excess of $100 each claim.

Warranted no claim for personal injury to or death of any person or persons under Workmen’s Compensation acts or otherwise.

(Attached to and forming part of pohcy No. 4387 of the Northwestern Fire & Marine Insurance Company.) ”

Then follow the printed words of the pohcy: With privilege to lay up and make additions, alterations, and repairs, and to go in dry dock.” It should be noted that the words quoted are not part of a sentence started on the rider, but are part of a sentence following the blank space on the pohcy form.

The plaintiff contends that the language used in the pohcy means that the insurance was to cover boats laid up ” as well as boats laid up for the purpose of making repairs; also that the boat Faith, at the time it sank, was “ in charge of ” the plaintiff being altered and /or repaired,” within the meaning of the words of the pohcy. We have reached the conclusion that the plaintiff is wrong in both contentions.

Insurance pohcies “ must be given a fair and reasonable interpretation to cover the risks which the parties had reason to anticipate, and had reason to beheve would be met by the pohcy.” (Underwood v. Globe Indemnity Co., 245 N. Y. 111.) Guided by that principle, it must be held that a fair reading of the pohcy in question clearly shows that it was intended to cover only ” boats while in the assured’s charge being altered and /or repaired.” The boat Faith was not in charge of the plaintiff and was not being altered or repaired by it. Its owners had rented dockage space of the plaintiff at thirty-five dollars a month rental. The boat had been tied up in the space rented in charge of a watchman employed by the owners. From time to time from June, 1924, it had been taken out by the owners and used- and then brought back and tied up to the dock in charge of their own watchman. In order to permit a recovery we must hold that the policy covers all boats tied up at the plaintiff’s dock, in space rented from the plaintiff for the purpose, even though not in charge of the plaintiff or being altered or repaired by it, or laid up in its charge for that purpose. The evidence does not permit such a holding.

The plaintiff’s secretary and treasurer testified that the boat Faith was not in charge of the plaintiff and it was conceded that the watchman was employed by the owners of the boat. The payment of thirty-five dollars a month was for the use of a portion of the dock in the nature of rent and not a payment to the plaintiff for assuming charge of the boat. It was so decided in Blank v. Marine Basin Co., Inc. (178 App. Div. 666), which was an action against the plaintiff in the case at bar. We are in accord with that decision.

The words printed on the blank policy form, with privilege to lay up and make additions, alterations, and repairs, and to go in dry dock,” must be read in connection with their context which limits liability “ only ” to vessels in charge of ” the assured and being altered and/or repaired, whether in dry dock or on marine railway or not.” Thus read there is no ambiguity in the wording of the policy, and it is rendered fair and reasonable, and its words are given their natural meaning. (Atlantic Basin Iron Works v. American Ins. Co., 250 N. Y. 322.)

We do not intend to decide that the policy only covered while alterations or repairs were actually being made on a boat. It may be that such a policy would cover a boat while laid up for the purpose of making altérations and repairs and in charge of an assured. That question is not involved in this case and is not passed upon.

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

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

Judgment accordingly.