text:
    In the Matter of David Brown Printing Co., Inc. City of New York, Appellant; New York State Department of Labor et al., Respondents.
    Argued January 7, 1941;
    decided March 6, 1941.

      William C. Chanler, Corporation Counsel (Sol Charles Levine, Arthur A. Segall and Morris L. Heath of counsel), for appellant.

      John J. Bennett, Jr., Attorney-General (Jacob G. Welch and Henry Epstein of counsel), for respondents.
   Lewis, J.

Upon an accounting by the assignee, in a proceeding involving a general assignment for the benefit of creditors, a single point of law is in controversy between the State and the city of New York as to the relative priority of a State corporation franchise tax and certain city emergency relief taxes.

In the account filed by the assignee it appeared that the estate of the assignor consisted of accounts receivable in the amount of $503.01, against which were listed various claims including emergency relief taxes in the total amount of $119.71 filed by the city for which priority was demanded. A claim was also filed by the State Department of Labor for unemployment insurance contributions in the amount of $49.60, but as that Department made no objection to the account and did not appeal, no issue as to its claim is now before us.

The assignee’s account did not list a claim by the State for the corporation franchise tax for the period beginning November 1, 1937, and we are told that no claim had been filed therefor. However, it appears that in the process of administering the estate of the assignor, the assignee had paid to the State the full amount of the franchise tax in the amount of $27.50. The present controversy arose when, upon the settlement of the account of the assignee, the order at Special Term directed that the assignee should be given credit for the payment of the corporation franchise tax in full. The account also listed taxes due the United i States, wage claims and expenses of administration which the city concedes had priority over either the franchise tax or emergency relief taxes and the payment of which exhausted the entire estate.

The challenge by the city goes to that part of the order by Special Term which in result gives priority to the corporation franchise tax over city_emergency relief taxes. This result obtains because of the fact that, by approving payment to the State of the franchise tax in full, the estate of the assignor was so depleted that, after payment of certain preferred claims, there were no funds available for the payment of the city emergency relief taxes.

The city appealed to the Appellate Division from the order of Special Term, in so far as it failed to grant to the city emergency relief taxes parity with the State franchise tax. The proceeding is here, by our permission, on appeal by the city from an order of the Appellate Division unanimously affirming the order of Special Term.

Whatever may be the law in other States (see note 36 A. L.R. p. 640), the courts of New York recognize in municipal corporations a common-law right to assert a preference in support of their claims — at least where governmental functions are concerned. (Matter of Northern Bank of New York, 85 Misc. Rep. 594; affd., 163 App. Div. 974; affd., 212 N. Y. 608; Matter of Atlas Television Co., 273 N. Y. 51, 54, 55, 57, 58; Matter of People [Lexington Surety & Indemnity Co.], 282 N. Y. 720.) In the present case the State argues that any preference to which the city is entitled is inferior to that of the State. We have recently held that there is no priority between county and village taxes. (County of Nassau v. Lincer, 280 N. Y. 662; Village of Garden City v. Roeder, 280 N. Y. 663.) The basis of those decisions casts doubt upon the assertion that at common law there is a difference in priority between claims of the State and of the city. Both preferences depend upon the same sovereign right. However, in the case at bar we do not reach the question whether in all cases tax claims by the State and by the city are to be dealt with on a basis of parity. Here we find in the enabling act which is involved, and in the nature of the taxes imposed thereunder, evidence of an intent by the Legislature that claims by the city for emergency relief taxes should share equally with other tax claims by the State.

The emergency relief taxes, for which the city claims parity with the franchise tax due the State, were imposed by the city pursuant to Local Laws 20 and 22 of 1937 (“ Local Laws of Cities in State ”— 1937 [Pub. by Sec. of State], at pp. 239 and 255), which were authorized by chapter 873 of the Laws of 1934, as last amended by chapter 327 of the Laws of 1937. The purpose of these enabling acts is the same as chapter 815 of the Laws of 1933, the constitutionality of which was upheld in New York Steam Corp. v. City of New York (268 N. Y. 137). Without reference to other details of those statutes it is sufficient for our present purposes to note that those enabling acts expressly provide that revenues resulting from taxes to be levied thereunder shall not be deposited in the city’s general fund but shall be deposited in a separate bank account and used solely for purposes of relief from suffering caused by unemployment.

We have held as to kindred statutes that they “ were passed by the Legislature for a State purpose, public health and welfare” (John Hancock Mut. Life Ins. Co. v. Pink, 276 N. Y. 421, 426) ; that by such statutes the State has empowered the city of New York to act as its agent without, however, delegating its taxing powers to the extent of abdicating its constitutional function. (New York Steam Corp. v. City of New York, supra, p. 145, and see pp. 149 and 152; John Hancock Mut. Life Ins. Co. v. Pink, supra, p. 426.) We have also said that by exercising the power granted by such a statute the city of New York “ * * * has imposed a tax as sovereign and to meet a need which concerns tifie welfare of the State.” (Matter of Atlas Television Co., supra, pp. 51, 57, 58.)

These rulings, which construe the various enabling acts and the Local Laws enacted thereunder by which emergency relief taxes have been levied and collected, make it clear that by imposing relief taxes the city is not exercising the ordinary taxing power with which it is endowed to meet the cost of local government. As agent for the State, and by authority expressly granted by the Legislature, the city is collecting funds to be used, not for city purposes, but solely for emergency relief which is a matter of State concern. To accomplish this end the Legislature might, well have made provision to levy and collect such taxes by State agencies already created and functioning. Had it done so, and in the absence of definite provisions as to priority, we would have no doubt that a tax thus imposed directly by the Legislature itself would have been treated on a parity with other State taxes, including the corporation franchise tax. Instead of adopting that course, however, The Legislature for the first time * * * conferred upon a municipal corporation authority to enter the field of indirect or excise taxation. * * * The State * * * empowered its agent, the city of New York, during a fixed period, to experiment in taxation for a State purpose * * *.” (New York Steam Corp. v. City of New York, supra, pp. 144, 145.) Having chosen through the agency of a city to levy and collect taxes and, to accomplish that end, having “ * * * authorized and empowered [such city] * * * to adopt and amend local laws imposing in any .such city any tax * * * which the legislature has or would have power and authority to impose * * * ” (L. 1937, ch. 327, § 1, emphasis supplied), it is difficult to believe that the Legislature intended to place those taxes — the use of which is restricted to a State purpose — upon a lower level of priority than other State taxes.

In the absence of a clear statement in the enabling act which would make city emergency relief taxes inferior to other State taxes in the matter of their priority — including corporation franchise taxes — we believe the Legislature intended to accord them parity.

There remains for consideration the argument made on behalf of the State that a corporation franchise tax is entitled to priority by virtue of section 219-c of the Tax Law (Cons. Laws, ch. 60) which declares that such a tax “ * * * shall be a lien and binding upon the real and personal property of the corporation hable to pay the same until the same is paid in full.” But we find in this record no evidence that the franchise tax here involved had been perfected. (See Tax Law, § 219-e.) It does not appear that the tax had been hquidated and assessed; nor is there proof that a warrant had been issued or a levy made on specific property. The most that can be said is that the statutory hen was general and inchoate. It was “ * * * not so perfected or specific as to change the rule of distribution.” (New York v. Maclay, 288 U. S. 290, 292; Matter of Lincoln Chair & Novelty Co., 274 N. Y. 353.) Indeed, it may well be doubted whether it was intended that even the perfected hen of a corporation franchise tax should have preference over other State claims, the priority of which has been likened to “an equitable hen.” (Marshall v. New York, 254 U. S. 380, 386.) The evident purpose of section 219-c was to overcome the effect of the decision in Wise v. Wise Co. (153 N. Y. 507). (See Marshall v. New York, supra, p. 384.)

The order of the Appellate Division, in so far as it grants priority to a franchise tax over emergency rehef taxes, should be modified to provide for payment of the claims for such taxes on a pro rata basis, with costs.

The order of the Appellate Division should be modified in accordance with this opinion, and as so modified affirmed, with costs in all courts to appellant. (See 285 N. Y. 746.)

Lehman, Ch. J., Loughran, Finch, Rippey, Conway and Desmond, JJ., concur.

Ordered accordingly.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    Walter Powers, Appellant, v. Porcelain Insulator Corporation, Respondent.

      Argued January 9, 1941;
    decided March 6, 1941.

      William L. Clay for appellant.

      John J. Mahoney for respondent.
   Finch, J.

This is an action at common law wherein an employee seeks to recover damages for alleged partial disability on account of silicosis or other dust disease caused by the alleged negligence of the employer. The employer, after interposing an answer which admitted an employer-employee relationship, moved under rule 112 of the Rules of Civil Practice for judgment on the pleadings dismissing the complaint on the grounds that it failed to state a cause of action and that the court was without jurisdiction of the subject of the action. The motion was based on sections 66 and 72 of the Workmen’s Compensation Law (Cons. Laws, ch. 67), which, according to defendant, not only deny compensation under the Workmen’s Compensation Law, but also bar a recovery for damages in an action at common law where a claim is made for partial disability due to silicosis. The Supreme Court entered a judgment dismissing the complaint, and from that judgment plaintiff appeals directly to this court, attacking the constitutionality of such a statute. Accordingly we must first consider whether the 'plaintiff has brought his appeal according to the constitutional and statutory provisions governing appeals directly from a court of record of original jurisdiction. (State Const. art. 6, § 7, subd. 3; Civ. Prac. Act, § 588, subd. 3.)

As is well known, the Constitution makes two separate provisions for appeals to this court where constitutional questions are involved. Subdivision 1 of section 7 of article 6 allows an appeal, “ as of right, from a judgment or order entered upon the decision of an appellate division of the supreme court which finally determines an action or special proceeding wherein is directly involved the construction of the constitution of the state or of the United States * *

In addition to the foregoing, provision is also made for an. appeal from a final judgment or final order of a court of record of original jurisdiction, but such an appeal is confined to the very limited class of cases where the only question involved on the appeal is the validity of a statutory provision of the state or of the United States under the constitution of the state or of the United States; and on any such appeal only the constitutional question shall be considered and determined by the court.” (Subd. 3.)

Under subdivision 1 an appeal is properly lodged in this court if a substantial constitutional question is directly involved in the case on appeal (Matter of Davega-City Radio, Inc., v. State Labor Relations Bd., 281 N. Y. 13, 19), though other questions may also be involved. But where the appeal is taken under subdivision 3, if in order to reach a decision on the merits it is necessary to pass upon some question other than the constitutionality of a statute, as, for example, a question of statutory construction, then the case is not properly before this court on direct appeal and the appeal must be dismissed. (Matter of Chirillo, 283 N. Y. 417; Doubleday, Doran & Co. v. Macy & Co., 269 N. Y. 272.) Plaintiff does not come here under subdivision 1, but has chosen to appeal as in a case provided for by subdivision 3, and it is by the more exacting requirements of the latter provision that this appeal must be tested.

The arguments of the parties become clearer if we have in mind a brief review of the history of sections 66 and 72 of the Workmen’s Compensation Law.

Prior to 1935, the Workmen’s Compensation Law made no provision for the payment of compensation for disability, partial or permanent, due to silicosis. In Barrencotto v. Cocker Saw Co. (266 N. Y. 139) an action was brought to recover damages at common law for injuries due to silicosis sustained as a result of the employer’s negligence. Defendant moved to dismiss the complaint on the ground that section 11 of the Workmen’s Compensation Law, entitled “ Alternative remedy,” provided, in substance, that the liability of an employer to pay compensation was exclusive and in place of any liability at common law. But this court held that by the terms of section 11 the Legislature had intended to bar actions at common law only in the field within which it had created liability or obligation to provide compensation for injury or disability regardless of fault. Since silicosis was not included in the schedule of compensable occupational diseases enumerated in subdivision 2 of section 3, those who suffered such injuries were free to bring an action at common law. The following year the Legislature amended subdivision 2 of section 3 by adding a twenty-eighth category: Any and all occupational diseases ” (L. 1935, ch. 254; but this amendment did not apply where “ the last injurious exposure * * * occurred prior to September first, nineteen hundred thirty-five ”). Silicosis thus became a compensable disease and under the Barrencotto decision it also became subject to the bar of section 11 concerning actions at common law. In 1936 silicosis was excluded from paragraph 28 of subdivision 2 of section 3, and made the subject of a separate article in the Workmen’s Compensation Law, article 4-A (L. 1936, ch. 887). The concluding section of article 4-A is section 72, entitled Alternative remedy,” which in language almost identical with that of section 11 provides that The liability of an employer prescribed by this article shall be exclusive and in place of any other liability whatsoever, at common law or otherwise * * *.” But in the course of enacting article 4-A, the Legislature also provided that “ Compensation shall not be payable for partial disability due to silicosis or other dust disease ” (§ 66). This is the point at which plaintiff is aggrieved and which causes him to argue that if sections 66 and 72 taken together rule out both the payment of workmen’s compensation and the recovery of damages at common law in cases of partial silicosis disability, article 4-A is to that extent unconstitutional.

For reasons appearing below, plaintiff’s contention on the merits may not be considered at this time, and the appeal must be dismissed because there are involved questions other than the constitutionality of the statute.

Plaintiff’s argument as to the validity of the 1936 amendment which enacted article 4-A is not clear as to whether it is directed against the validity of the provision of section 66 forbidding the payment of compensation, or whether it is directed against the provision of section 72, as apparently construed below, forbidding the recovery of damages at common law. There can be no doubt as to the validity of either one provision in the absence of the other. The Legislature is not bound to provide for compensation, and it is no longer open to debate that the Legislature may provide for a scheme of compensation to the exclusion of any remedy at common law. (State Const. art. 1, § 18; Barrencotto v. Cocker Saw Co., supra, at p. 143.) In order for the plaintiff to succeed, therefore, the attack on either section 66 or section 72 must presuppose the existence of the other section. We will consider both alternatives.

If plaintiff were sustained in his contention that the 1936 amendment is unconstitutional in so far as it purports to deprive him and others similarly situated of the right to compensation theretofore created by the act of 1935, then it would follow that his rights are governed by the act of 1935 as relieved of the invalid amendment which the Legislature sought to engraft upon the statute. In that event plaintiff possesses not the right to recover damages at common law, but only the right to receive workmen’s compensation. But if what plaintiff seeks is to assert his right to compensation, the only proceeding in which that right can be enforced is a claim for compensation submitted to the Industrial Board. (Workmen’s Compensation Law, § 20.) The right to compensation is a right created by statute, and it is unquestioned that the Industrial Board is the only tribunal with authority to hear and determine the claim for compensation in the first instance. An action to recover damages at common law cannot conceivably lead to an award of compensation and, therefore, the question of the plaintiff’s right to compensation cannot possibly be litigated in this action for damages which he has brought.

That brings us to the second alternative, to wit, whether plaintiff is entitled to sue at common law. In considering this alternative we assume that plaintiff would not be entitled to workmen’s compensation, i. e., the validity of section 66 is assumed. Even then, before we may pass upon the constitutionality of section 72, we must first determine the legislative intent as embodied in that section considered with other pertinent statutory provisions. On the one hand, respondent argues that, the Legislature having in 1935 precluded any action at common law based on silicosis, the 1936 amendment denying compensation for partial disability was intended to prevent a recovery of either compensation or damages until the disability had become total or death resulted. On the other hand, it is urged that in enacting section 72, which bears a striking resemblance to section 11, the Legislature must be deemed to have intended that the bar to actions at common law was only to be co-extensive with the right to compensation. In other words, by striking partial disability on account of silicosis from the category of compensable injuries in 1936, the Legislature removed the bar to an action for damages at common law, i. e., in lieu of the benefits available to the workman under the Compensation Law, the Legislature once more restored to the injured workman the right to an action at common law, which had been his right prior to the act of 1935.

The foregoing arguments are suggested by way of illustration only and it is not intended to pass upon the merits of either view or even to suggest that they exhaust the possible interpretations of section 72. We may go no further in the case of an appeal directly to this court from the judgment of a court of record of original jurisdiction when we find that there exists a real question as to the construction of the statute whose constitutionality is attacked. It is clear, therefore, that the appeal in the case at bar must be dismissed because there are presented questions other than the constitutionality of the statute whose validity is challenged by the appellant.

The parties, apparently in an effort to sift out of the case matters extraneous to the question of the constitutionality of the statute, have entered into the following stipulation: “ that the appellant has no remedy under the Workmen’s Compensation Law for the injuries complained of and that in the Court below the case was argued by counsel and decided by the Court on the theory that the plaintiff claimed he was suffering from a dust disease of the lungs and had brought this action to recover damages therefor.”

Although private parties may stipulate that the sole question involved is the constitutionality of the statute which they concede applies (Doubleday, Doran & Co. v. Macy & Co., supra; Matter of Chirillo, supra, at p. 421), there is no such stipulation in the case at bar. By the terms of the stipulation quoted above, the parties agree merely that section 66 of the Workmen’s Compensation Law furnishes no remedy. But it appears to us that the judgment on the pleadings dismissing the complaint necessarily must have been granted on the ground that the prosecution of this action at common law was barred by section 72 of the Workmen’s Compensation Law. In those circumstances, the question first to be determined is whether the right to recover in an action at common law still remains available and that question is unaffected by the stipulation of the parties.

It follows, therefore, that the appeal should be dismissed, without costs.

Lehman, Ch. J., Loughran, Rippey, Lewis, Conway and Desmond, JJ., concur.

Appeal dismissed.


author: Conway, J.

text:
    Winifred Warren, Inc., et al., Appellants and Respondents, v. Turner’s Gowns, Ltd., et al., Respondents and Appellants.
    Argued January 16, 1941;
    decided March 6, 1941.

      Arthur B. Hyman for plaintiffs, appellants and respondents.

      Charles Ballon, Samuel I. Hartman and Irving H. Rosenberg for defendants, respondents and appellants.
   Conway, J.

This is an action seeking an injunction, damages and an accounting of profits by reason of unfair competition by defendants in the sale of dresses, gowns and other women’s wearing apparel. Special Term found that the corporate defendant adopted the name Turner’s Gowns, Ltd., for the purpose of appropriating to itself the plaintiffs’ custom, trade and good will and confusing the plaintiffs’ customers and the public in general; that thereafter the defendants embarked upon a program of unfair trade practices calculated to create, and which did actually create, the impression that their establishment was a branch of plaintiffs; that the public was deceived and misled; that the merchandise sold by the defendants was inferior in design, material and workmanship and sold at lower prices than that of plaintiffs; that as a consequence, the general reputation of the merchandise sold by the plaintiffs was injured.

Then followed findings 46 and 47:

“ 46. The plaintiffs’ business has been hindered, impaired and interfered with by the defendants’ use of the name Turner’s Gowns, Ltd., and the plaintiffs have been damaged thereby.
47. By reason of the facts and circumstances above found, the plaintiffs, if the relief herein prayed for had not been granted, would have continued to be damaged by the diversion of its customers and trade and would have continued to suffer great and irreparable loss, in name and reputation.”

Among the conclusions of law was number 5 which read:

“5. The plaintiffs, are entitled to judgment against the defendants for such damages as plaintiffs have sustained or suffered by reason of the wrongful acts of the defendants herein, and for the profits which the defendants have made by reason of the wrongful acts of the said defendants herein, and the plaintiffs are entitled to an accounting for the purpose' of ascertaining and computing said damages and profits.”

As to the findings of fact, it is sufficient to say that they are amply supported by the evidence. The conclusions of law flowed naturally from them. The decision directed the entry of an interlocutory judgment referring the matter to a suitable person to determine the amount of plaintiffs’ damages and defendants’ profits. Such judgment was entered with a provision for the later entry of a final one upon the assessment and award of damages and profits.

Upon appeal to the Appellate Division the judgment appealed from was modified so as to limit plaintiffs’ recovery to the injunctive relief granted and in effect to make the judgment final rather than interlocutory. Findings of fact 46 and 47 were modified so as to read as follows:

“ 46. The plaintiffs’ business has been injured, hindered, impaired and interfered with by the defendants’ use of the name Turner’s Gowns, Ltd.
“ 47. By reason of the facts and circumstances above found, the plaintiffs, if the injunction herein prayed for had not been granted, would have continued to suffer great and irreparable injury.”

Conclusion of law numbered 5 was reversed.

The result of the modification is that plaintiffs have had no opportunity to establish their damages and defendants’ profits either before the trial justice or the referee later appointed. Plaintiffs are clearly entitled to their day in court on those matters. The rule in such a case is well stated in Merriam Co. v. Saalfield (198 Fed. Rep. 369, 371): “ * * * the usual practice contemplates an accounting and that such practice should be followed, and an accounting ordered, unless it is made clearly and certainly to appear that neither upon the existing record, nor upon any record which complainant can make before the master, could there be any substantial recovery. If there remains any fair probability that the complainant can produce the necessary proof, or that, upon final hearing, and as aided by all such proof, the trial court or the reviewing court may think that complainant is entitled to a recovery of damages or profits (beyond the amount of any which may be tendered, if a tender is made), then the complainant should have the opportunity to make and present Ms case.” (See, also, Michel Cosmetics, Inc., v. Tsirkas, 282 N. Y. 195, 203; Underhill v. Schenck, 238 N. Y. 7, 17, 18.)

TMs is an action in equity and not one at law. The distinction is clearly pointed out in Westcott Chuck Co. v. Oneida Nat. Chuck Co. (199 N. Y. 247, 251): We think, however, that the trial court erred in failing to award the plaintiff damages. The court doubtless felt controlled in tMs respect by the decision of the Appellate Division, made on an appeal from a previous trial of the case (122 App. Div. 260), in which it was held that in the absence of proof of damage no pecuniary recovery could be had. It is possible that in an action at law for damages proof of actual damage suffered by a plaintiff would be necessary to justify more than a nominal recovery. (Browne on Trade Marks, sec. 499; Paul on Trade Marks, sec. 324.) But this action is in equity. The plaintiff prayed as relief that the defendant account for the profits made by it on its sales, and the law seems well settled that equity will treat the wrongdoer as a trustee for the plaintiff so far as the former has realized profits from its acts. (Browne on Trade Marks, sec. 506; Paul on Trade Marks, sec. 326. See cases there cited; Singer Mfg. Co. v. June Mfg. Co., supra.)

There is no distinction in this respect between actions for unfair competition involving trade-marks and those involving trade names. (Neva-Wet Corp. v. Never Wet P. Corp., 277 N. Y. 163, 169; Glen & Hall Mfg. Co. v. Hall, 61 N. Y. 226; Koehler v. Sanders, 122 N. Y. 65; Ball v. Broadway Bazaar, 194 N. Y. 429; 4 Sutherland on Damages [4th ed.], § 1200, p. 4487; Nims on Unfair Competition and TradeMarks [3d ed.], p. 1067.)

Inability to prove damages would not preclude plaintiffs from recovering, on an accounting, profits' realized from sales unlawfully made, together with interest thereon from the time of the commencement of the action. (Cutter v. Gudebrod Brothers Co., 190 N. Y. 252.) Cf. Michel Cosmetics, Inc., v. Tsirkas (282 N. Y. 195, 199), where there were no profits made by defendant and so only damages were recoverable.

The judgment of the Appellate Division should be modified so as to reinstate the decision and judgment of Special Term and as so modified affirmed, with costs to plaintiffs in the Appellate Division and in this court.

Lehman, Ch. J., Loughran, Finch, Bippey,JLewis and Desmond, JJ., concur.

Judgment accordingly.


text:
    In the Matter of Herman Block, Appellant, against J. Russel Sprague, as County Executive of Nassau County, et al., Respondents.
    Argued February 24, 1941;
    decided March 6, 1941.

      Herman Block and Edwin V. Hellawell for appellant.

      James L. Dowsey, County Attorney (John J. Knob of counsel), for respondents.
   Finch, J.

The parties differ in their interpretation of this law and the question must be determined by an examination of its several provisions.

Article III, sections 301-310 are comprised within the heading “ Budget.” Not later than the first day of October in each year all department heads must furnish to the County Executive estimates for the following fiscal year of the receipts and disbursements of their respective departments. (§ 301.) Not later than the second Monday in November the County Executive must submit to the Board of Supervisors of the county a proposed budget of receipts and expenditures for the ensuing year. (§ 302.) With the proposed budget, the County Executive is required to submit a budget message explaining the main features of the budget. The Executive shall also submit a draft of an ordinance intended to authorize the proposed appropriation expenditures. (§ 303.) Thereafter, the Board of Supervisors shall, within ten days after the filing of the budget, give notice of a public hearing in the manner provided by the statute. At such hearing any person may be heard for or against the estimates as presented by the County Executive or any item thereof. (§ 305.) At the conclusion of such hearing, the Board of Supervisors may strike out or reduce any item of appropriation in the county budget * * *.” Before inserting “ any additional item or increasing any item of appropriation,” the Board of Supervisors must give notice in the manner provided by the statute, of the nature of the proposed changes, together with notice of a public hearing thereon. After such hearing, the Board of Supervisors may insert the additional item or items and make the increase or increases indicated by the public notice or to a lesser amount. The County Executive may veto any such addition or increase which shall not be passed over his veto by less than a two-thirds vote. (§ 306.)

The appellant, a taxpayer of Nassau county, has challenged the sufficiency of the budget upon the ground that the budget proposed by the County Executive contains in general for each branch of the service only four lump sum items, namely, (1) for personal service, (2) for materials and supplies, (3) for expenses (contractual expenses), and (4) for capital outlays. The Special Term held that this was a compliance with the provisions of the Nassau County Government Law. This has been unanimously affirmed by the Appellate Division and we have granted leave to appeal.

A consideration of all the provisions relating to the budget leads us to the conclusion that this proposed budget must contain line by line items and may not consist of lump sums where it is practical to state the items. After the prescribed public hearing upon the budget, the Board of Supervisors, sitting as a legislative body with respect to the budget, may strike out or reduce any item of appropriation in the county budget. * * * Before, however, inserting any additional item or increasing any item of appropriation * * the Board of Supervisors must give notice of the proposed changes and another hearing before inserting the additional item or items * * *.” It is difficult, if not impossible, to see how such procedure may take place unless the budget contains a line by line itemization. Likewise, in providing that with the proposed budget the County Executive must submit a budget message and a draft of an appropriation ordinance, it is provided that the latter need not be itemized further than by departments and by kinds of expenditures which by clear inference requires that the budget itself must be itemized. In addition, after the budget is filed with the Board of Supervisors, that body is limited in its action to striking out or adding “ items ” and to increasing or decreasing items.” How, then, it may be asked, can there be a prescribed dealing with items if there are no items required?

Section 4, article 7, of the State Constitution prescribes what may be done by the Legislature with respect to appropriation bills: The legislature may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein, but it may add thereto items of appropriation * * *.”

In People v. Tremaine (281 N. Y. 1, at p. 10) we said: “ When it [the statute] refers to striking out an item, we cannot conceive it as meaning striking out the entire appropriation for a department — all the items, and putting in a lump sum. The section must have reference to the items which go to make up the sum total of the appropriation for the department. * * * The appropriation for a department must be in such form that the Legislature may be able to strike out or reduce any of its items.” And, further: When, therefore, we are told that the Legislature may not alter an appropriation bill submitted by the Governor, except to strike out or reduce items therein, we expect the appropriation bill to contain items” (p. 5).

It is contended that since the provision concerning the budget message requires the County Executive to submit at the same time with the budget message a draft of an appropriation ordinance referring to the proposed budget, and since the appropriation ordinance need not be itemized further than by departments and by kinds of expenditures in lump sums, it is said to follow that the budget itself need state only the same lump sum expenditures as are enumerated in the appropriation ordinance. The Nassau County Government Law, however, draws a distinction between the budget and the appropriation ordinance. It is only the appropriation ordinance which need not be itemized other than as indicated. That this distinction between the appropriation ordinance and the budget was intentional is seen from the further provision of section 307, which provides: When the county budget and the district budgets shall have been finally adopted, an appropriation ordinance for each such budget, with such amendments as may be necessary to make them conform to the respective budgets as adopted, shall be passed by the board of supervisors * * *.”

Respondent also contends that to require a line by line or itemized budget would nullify other provisions of the Nassau County Government Law, such as those which empower the Board of Supervisors to fix and revise salaries of employees, or to make transfers of appropriations and supplemental appropriations, and those provisions which permit the County Executive to approve and revise allotments during the fiscal year or to consider work programs of departments and revise same during the year and to authorize changes in the civil service roster during the year where increases or decreases have been made in salaries. An examination of these sections reveals that there is nothing therein inconsistent with the requirement of a line by line itemized budget.

The orders should be reversed and the relief prayed for in the petition granted, without costs.

Lehman, Ch. J., Loughran, Rippey, Lewis, Conway and Desmond, JJ., concur.

Orders reversed, etc.


author: Desmond, J.

text:
    United States Fidelity and Guaranty Company, Appellant, v. Arthur H. Goetz et al., Copartners under the Firm Name of Stout & Co., Respondents.

      Argued January 14, 1941;
    decided March 6, 1941.

      Stewart Maurice for appellant.

      Harold S. Lynton and Samuel H. Kaufman for respondents.
   Desmond, J.

Negotiable bonds, stolen from plaintiff’s assignor, were sold by defendant brokers, for the thief or his agent, to holders in due course. Upon notice that the bonds had been stolen, defendants, in accordance with the rules of the stock exchange, repurchased them, and have since retained possession of them.

Plaintiff brought an action against defendants for conversion of the bonds. Defendants by way of answer set up what was termed a counterclaim for a declaratory judgment that they were the owners of the bonds by reason of having purchased them from holders in due course, whose rights they acquired. Upon a motion by defendants, opposed by plaintiff, the equitable issue raised by the counterclaim was directed to be tried first and trial of the issues raised by the complaint was stayed. Trial of the issues presented by the counterclaim was had before a court without a jury after denial of a motion by plaintiff for a separate trial by jury of certain specified issues of fact. Judgment was rendered in favor of defendants, upon their counterclaim, that they were the owners of the bonds free from any and all claims and the complaint was dismissed. From a unanimous affirmance of the Appellate Division this appeal was taken by leave of this court.

It is conceded that the persons to whom defendants sold the securities and from whom they repurchased them, were holders in due course. Defendants contend that upon reacquiring the bonds they succeeded to the purchaser’s rights and were, therefore, themselves holders in due course. Plaintiff contends that defendants were parties to the original fraud or illegality affecting the title to the bonds and could not become holders in due course under section. 98 of the Negotiable Instruments Law (Cons. Laws, ch. 38) and the decision of this court in Grunted v. United States Fidelity & Guaranty Co. (254 N. Y. 468).

The question whether defendants had, at the time they offered the bonds for sale, actual or constructive notice that they had been stolen was on this record one of fact. The bonds were complete and regular on their face. It cannot be said as matter of law that defendants were chargeable with notice of the defect in title because of their failure to use the standard of care prescribed by the rules of the stock exchange for brokers dealing with a new account or because of their failure to observe that some of the serial numbers forged upon the bonds were unusually high for such issues. The rules of the stock exchange were merely some evidence of the standard of care that should be maintained by persons dealing in securities belonging to others. The numbers forged upon the bonds were not of such a character as to make the forgery apparent; at least so the trial court could have found as a fact.

On the other hand the above-mentioned evidence is such that a jury might find that defendants were put upon inquiry as to the nature of their principal’s possession of the bonds and that they were, therefore, chargeable with constructive notice of the theft. Had the conversion action been tried first the issues determined herein by the court would have been submitted to a j ury. The principal question, therefore, on this appeal is whether a jury trial has been improperly denied. If the answer interposed by defendants is not a counterclaim but merely a defense plaintiff has been deprived of its constitutional right to a jury trial of the issues. The test of what constitutes an equitable counterclaim as distinguished from an equitable defense has been clearly stated by this court. The distinction lies in whether the facts stated in the so-called counterclaim show a need for affirmative relief for the complete protection of the defendants or if proven would merely defeat the plaintiff’s cause of action. (Susquehanna S. S. Co. v. Andersen & Co., 239 N. Y. 285; Walker v. American Central Ins. Co., 143 N. Y. 167, and Bennett v. Edison Electric Illuminating Co., 164 N. Y. 131.)

: Testing the facts set forth in the counterclaim by the rule of the cases cited, we find here no need for affirmative relief. In order to defeat the cause of action for conversion stated in the complaint, the burden would have been on the defendants to show that they were holders in due course. (Negotiable Instruments Law, § 98.) A judgment in their favor in the conversion action would, have been determinative of any claim plaintiff might make to the bonds. The judgment that has here been rendered upon the counterclaim does no more. The argument that defendants are in the need of affirmative equitable relief in the nature of a declaratory judgment in order to render the title to the bonds marketable is illusory. Defendants’ title to the bonds is disputed only by plaintiff and it is only as against plaintiff that a declaratory judgment was asked. Thus by labeling a mere defense to plaintiff’s cause of action a counterclaim, defendants have deprived plaintiff of its right to have a disputed question of fact tried by a jury.

The judgments should be reversed and a new trial granted, with costs ,to the appellant to abide the event.

Lehman, Ch. J., Loughran, Finch, Rippey, Lewis and Conway, JJ., concur.

Judgments reversed, etc.


text:
    David C. Naramore, Appellant, v. State of New York, Respondent.
    (Claim No. 23781.)
    Argued January 13, 1941;
    decided March 6, 1941.

      Harold G. Hutchens for appellant.

      John J. Bennett, Jr., Attorney-General (Leon M. Layden of counsel), for respondent.
   Desmond, J.

On February 17,1934, defendant’s employees opened the sluice gates of the Barge Canal at Fairport, N. Y., and at Cartersville, N. Y., and allowed an extraordinary amount of water to flow into Irondequoit creek. The creek crosses claimant’s premises and at that time, he maintained a dam in it for the purpose of supplying power for the operation of a flour mill. On the day in question there was ice on the water above and around the abutments of the dam. The ice was from one and one-half to two feet thick. The additional water from the canal lifted the ice that was against the dam and the dam toppled over.

The Court of Claims found that the claim was duly filed, that the damages were caused solely by the negligent operation of the canal by defendant, and that claimant was not negligent, and granted judgment for claimant.

The Appellate Division, fourth department, reversed the judgment upon new findings of fact and conclusions of law, and dismissed the claim. A new conclusion of law was that claimant was guilty of negligence which contributed to the failure of the dam. The new findings of fact were to the effect that a channel had been cut in the ice along the upstream side of the dam in each year previous to 1934 in anticipation of the yearly release by the State of the waters in the canal; that claimant had timely notice before the failure of the dam that the water was rising in Irondequoit creek, and that for the preservation of dams of this character a channel should be maintained in the ice on the upstream side of the dam when ice attained a thickness of more than six inches.

The record shows, however, that claimant did not know and could not have anticipated that defendant’s employees would drain the canal so early in the season or in a negligent manner; that a channel was maintained in the ice only at such times as a thaw threatened to increase the volume of water in the creek and that but for the negligence of defendant’s agents the dam would have remained standing.

If the- claim is not barred by the Statute of Limitations the judgment of the Appellate Division must be reversed and that of the Court of Claims reinstated.

The claim was filed pursuant to section 47 (now section 120) of the Canal Law (Cons. Laws, ch. 5), which provides: There shall be allowed and paid to every person sustaining damages from the canals or from their use or management, or resulting or arising from the neglect or conduct of any officer of the state having charge thereof * * Allowance of such claims was first made by the Laws of 1870, chapter 321, section 1, and the act then provided that the claimant had to file his claim within two years. By the Laws of 1894, a similar provision with respect to the allowance of such claims was enacted, but no time was specified for the filing of a claim. (Laws of 1894, ch. 338, § 37, as amd. by Laws of 1899, ch. 280.) However, in 1897 the Court of Claims was established with “ jurisdiction to hear and determine a private claim against the state, which shall have accrued within two years before the claim is filed.” (Laws of 1897, ch. 36.) The jurisdiction of the Court of Claims was further limited by the Laws of 1905, chapter 370, to claims to which a notice of claim had been filed within six months from the time it accrued. At the time claimant sustained the damages herein sought to be recovered, section 15 of the Court of Claims Act (Laws of 1920, ch. 922, as amd.) read in part as follows: “No claim other than for the appropriation of land shall be maintained against the state unless the claimant shall within six months after such claim shall have accrued, file in the office of the clerk of the court of "claims and with the attorney-general either a written claim or a written notice of intention to file a claim against the state.” Claimant filed his claim within the period specified in this section.

It is conceded that claims made under section 47 of the Canal Law prior to September 1, 1929 were limited by the above quoted section of the Court of Claims Act. Defendant contends, however, that since the claim here is for a ytort of its officers and employees, section 12-a of the Court of Claims Act (added by Laws of 1929, ch. 467, in effect Sept. 1, 1929) is applicable. The section reads in part as follows: “ The state hereby waives its immunity. from liability for the torts of its officers and employees and consents to have its liability for such torts determined in accordance with the same rules of law as apply to an action in the supreme court against an individual or a corporation, and the state hereby assumes liability for such acts, and jurisdiction is hereby conferred upon the court of claims to hear and determine all claims against the state to recover damages for injuries to property or for personal injury caused by the misfeasance or negligence of the officers or employees of the state while acting as such officer or employee. * * * no action shall be maintained against the state for damages or injuries pursuant to this section unless a written claim or a written notice of intention to file a claim * * * shall be served upon the attorney-general and the superintendent of public works wdthin sixty days after the alleged injury occurred, nor unless the claim shall be filed thereon within two years after the happening of the event which caused the injury.”..

As shown above, section 47 (now 120) of the Canal Law is a waiver by the State of its immunity from liability for specific tortious acts by its employees and has been part of our law since 1870. Section 12-a of the Court of Claims Act on the other hand is a general waiver by the State of its immunity from liability for the torts of its officers and employees, and is of recent date. Although the language of section 12-a of the Court of Claims Act is broad and inclusive, it does not include . words of repeal. Repeal by implication is not favored. Thus, since section 47 of the Canal Law is not inconsistent with section 12-a of the Court of Claims Act, it can not be said that the Legislature intended by the enactment of the latter section to repeal the former section. The Statute of Limitations contained in section 12-a of the Court of Claims Act applies to claims made pursuant to this section.” The claim here was not made pursuant to section 12-a and, therefore, the statute limitation therein provided does not apply.

When the claim herein accrued, the historically applicable Statute of Limitation was section 15 of the Court of Claims Act as given above and since the claim was made within the time allowed by that section, the Court of Claims had jurisdiction to entertain the suit.

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

Lehman, Ch. J., Loughran, Finch and Conway, JJ., concur; Rippey and Lewis, JJ., taking no part.

Judgment accordingly.


author: Desmond, J. Lehman, Ch. J.

text:
    In the Matter of Raffaele Mazzarella, Appellant, against Paul J. Kern et al., Constituting the Municipal Civil Service Commission of the City of New York, et al., Respondents.
    Argued January 9, 1941;
    decided March 6, 1941.

      H. Eliot Kaplan and Samuel D. Smoleff for appellant.

      William C. Chanler, Corporation Counsel (David Du Vivier and Paxton Blair of counsel), for respondents.
   Desmond, J.

By legislative mandate every public agency acquiring transit facilities from private corporations must continue to employ all employees of such corporations (except those officers deemed unnecessary), “ who shall have been in the employ of said corporation for one year or more immediately prior to such acquisition and who shall be citizens or shall have filed declarations of intention to become citizens heretofore or within six months after this act takes effect,” viz., June 19,1939. (L. 1939, ch. 927, § 2, otherwise known as the Wicks Act.) The declared purpose of the act is to continue in their respective employments, without competitive examination, employees of transit corporations whose facilities are acquired, so that the operation and maintenance of those facilities will not be disorganized or the public safety endangered by the replacement of experienced with inexperienced personnel. (Id. § 1.) However, the Municipal Civil Service Commission is authorized to exclude from further employment any employee who is found not to be a person of satisfactorily good character ” and must exclude any employee who fails to prosecute his application for citizenship in good faith and with due diligence and within the time limited by and subject to the provisions of law governing naturalization and citizenship.”

Petitioner was an employee of the Brooklyn-Manhattan Transit Corporation when its facilities were acquired by the city of New York in June, 1940. For twenty-six years he had worked for the corporate vendor and its predecessor. He had emigrated to this country from Italy in 1902, when he was twenty-one years old. At the time'the above-quoted act became effective petitioner was not a citizen of this country. He had, however, ten months before the effective date of the act, filed with the Federal Naturalization Bureau an Application for a Certificate of Arrival and Preliminary Form for a Declaration of Intention.”

Only by filing such an application may the process of naturalization be initiated. After investigation and consideration of his application, the applicant is advised that he may or may not file a Declaration of Intention.” The last-mentioned form is specifically prescribed by sections 373 and 409 of title 8 of the United States Code.

Due to the number of similar applications and the policy of the Federal Naturalization Bureau of not considering an application out of the order of its receipt, petitioner’s application was not acted upon until two years after it had been filed, at which time petitioner was permitted to file his Declaration of Intention.” Meanwhile, the transit facilities of petitioner’s employer had been acquired by the city of New York and the period allowed by the above-quoted act within which to file a declaration of intention to become a citizen (six months from the effective date of the act) had expired.

After petitioner had actually filed the form designated by sections 373 and 409 of title 8 of the United States Code as a “ Declaration of Intention,” he received notice from the Municipal Civil Service Commission that his services would be terminated on October 31, 1940, for failure to comply with the provisions of the Wicks Act, in that he had not filed the last-mentioned form within six months of June 19, 1939, the effective date of the act.

By a proceeding under article 78 of the Civil Practice Act, petitioner seeks to restrain the defendants, members of the Civil Service Commission and of the Board of Transportation of the City of New York, from terminating his employment.

The position taken by the courts below and now urged upon us is that the words “declarations of intention to become citizens ” are words of art denoting a particular form issued by the United States Department of Labor. The position seems to us untenable in view of the declared purpose of the act and context of the words.

Where competitive examinations are found to be impractical as a means of determining merit and fitness of applicants for positions in the civil service, other methods may be employed. (N. Y. Const. art. 5, § 6.)

The Wicks Act declares that it would be impractical to determine the merit and fitness of employees of transit corporations to be continued in their employments after the facilities of such corporations ar.e acquired by a governmental agency and that in the interest of public safety such employees should become members of the civil service in the non-competitive class. The reasonableness of the declaration has not been questioned.

The privilege is not conferred, however, irrespective of the merit and fitness of the particular employee. Certain qualifications are prescribed: (1) The employee must have been in the employ of the corporation whose facilities are acquired for at least one year prior to such acquisition; (2) he must be of good character; (3) he must (a) either, be a citizen, (b) or have filed a declaration of intention to become a citizen before the act became effective, (c) or shall have filed a declaration of intention to become a citizen within six months after the act took effect; (4) if he were not a citizen at the time the act became effective, or by the time the transit facilities were acquired, he had “ to prosecute his application for citizenship in good faith and with due diligence and within the time limited by and subject to the provisions of law governing naturalization and citizenship,” in order to retain his position in the civil service.

To hold that the Legislature by the use of the words “ declaration of intention ” specified the precise form described in sections 373 and 409 of title 8 of the United States Code, is tantamount to holding that the Legislature established a qualification which the very employees for whom it was intended would be unable to fulfill. Employees who were not citizens and who, like petitioner, were unable to file that particular paper for the reasons herein stated, could not then be continued in their employments notwithstanding that they had manifested their intention of becoming citizens by filing an application to be allowed to declare formally that intention. Further, such an emphasis of form over matter would defeat the purpose of the act in that the public would be deprived of the services of experienced workmen. In a single instance, perhaps that would not be serious. However, the Legislature could not have known how many employees of transit corporations there were who were not citizens and who had not manifested intentions to become citizens. Thus, to meet the possibility that the number of such employees might be large or might include a few key men the Legislature provided that those who were not citizens might show by overt act that they intended to become citizens, and that if they did so within a specified time they would qualify for a position in the civil service in the non-competitive class.

We do not rest our decision, however, upon the consequences that might ensue from a holding that the language used referred only to a particular form. If the language unequivocally referred to a particular act, we could not construe it to mean a different act, whatever the result might otherwise be. . However, section 2 of the Wicks Act not only admits of a different construction than that which has been given to it by the courts below, but compels a different construction.

In the same paragraph in which the phrase appears, there also appears the phrase “ application for citizenship.” Application for citizenship, as indicated above, is not one act, such as filing the formal Declaration of Intention,” but a seriés of acts. It was the act of initiating this process that the Legislature had in mind, rather than a particular step in that process, when it used the phrase shall have filed declarations of intention to become citizens.” In other words, the Legislature has said that it is the policy of this State that all employees of governmental transit lines shall be citizens and that such employees as are not citizens at the time this act takes effect and have not heretofore manifested intentions to become citizens, hereafter may apply for admission to citizenship in the manner prescribed by the provisions of law governing naturalization, in order to become members of the civil service when the transit lines upon which they are employed are acquired by a governmental agency and shall prosecute their applications with due diligence thereafter in order to remain in their positions.

Petitioner had applied for admission to citizenship before the Wicks Act became effective. He had, therefore, done all that was required of him by the act in order to be continued in his employment when the transit lines upon which he was then working were acquired by the city of New York. That he has diligently and with good faith prosecuted his application is not disputed. He was, therefore, entitled to and, did become an employee in the non-competitive class of the civil service in June, 1940.

The orders of the Appellate Division and of the Special Term should be reversed and the application granted, with costs in all courts.

Lehman, Ch. J.

(concurring). The provision of the statute that a city “ acquiring and owning and operating a transit facility shall continue to employ all employees of any corporation theretofore owning or operating such transit facility * * * who shall have been in the employ of said corporation for one year or more immediately prior to such acquisition and who shall be citizens or shall have filed declarations of intention to become citizens heretofore or within six months after this act takes effect does not make citizenship or declaration of intention to become a citizen a condition precedent to the establishment of the relationship of employer and employee between the city and an employee of the corporation who would otherwise be qualified, but is a requirement that any person who is not a citizen must file a “ declaration of intention to become a citizen ” within six months after the act takes effect in order to authorize the city to continue the employment beyond that time. Concededly, if the words of the statute are given a narrow, technical construction no employee can comply with this requirement within the specified time.

This court has said that “ It is an accepted maxim that the law does not seek to compel a man to do that which he cannot possibly perform. (Broom’s Legal Maxims [4th ed.], 178.) And this reasonable rule has been applied in many cases. (Harmony v. Bingham, 12 N. Y. 99; Matthews v. American Central Ins. Co., 154 N. Y. 449, 463; Herter v. Mullen, 159 N. Y. 28, 39, 43; Buffalo & L. Land Co. v. Bellevue L. & I. Co., 165 N. Y. 247, 254.) ” (Walden v. City of Jamestown, 178 N. Y. 213, 217.) Where the law requires that for the exercise of a privilege or right a notice must be given or an act performed within a specified time, we have said that the requirement “is not absolute and unyielding.” (Murphy v. Village of Fort Edward, 213 N. Y. 397, 402; Matter of Keefe, 245 App. Div. 834; affd., 270 N. Y. 514.) Due diligence to comply with the statute as soon as possible should be sufficient under this statute and strict compliance should not be exacted, at least where the rights of no other person are thereby destroyed or impeded.

For these reasons, regardless of whether or not the statute receives the technical construction placed upon it by the courts below or the more liberal construction placed upon it in the opinion of Judge Desmond, I concur that the order of the Appellate Division should be reversed.

Finch and Lewis, JJ., concur with Desmond, J.; Lehman, Ch. J., concurs in separate opinion; Lohghran, Rippey and Conway, JJ., dissent.

Orders reversed, etc.


author: Lewis, J. Finch, J.

text:
    In the Matter of John Stracquadanio et al., Appellants, against Department of Health of the City of New York, Respondent.

      Argued January 8, 1941;
    decided March 6, 1941.

      Julius November and Edwin Stephen Schweig for appellants.

      Herbert L. Maltinsky and Harry L. Marcus for Associated Milk Dealers, amicus curise.

      William C. Chanler, Corporation Counsel (David I. Shivitz and Paxton Blair of counsel), for respondent.
   Lewis, J.

In a proceeding under article 78 of the Civil Practice Act we have granted leave to appeal and now review an order of the Appellate Division which unanimously affirmed an order of Special Term denying an application for a mandatory order directing the respondent Board of Health of the City of New York to issue to the appellant a Class C permit to deliver milk as an independent distributor. (Sanitary Code of the City of New York, §§ 155, subd. 3, 156; Board of Health Regulation 3-a, subd. 3-b, par. 3.)

The petitioner-appellant asserts that the sections of the Sanitary Code and the Regulation cited above, which define the conditions under which a Class C permit may be issued, contravene the equal protection clauses of the Federal and State Constitutions and that refusal by the Board of Health to issue such a permit was capricious, arbitrary and in violation of those constitutional provisions.

Success in this proceeding, wherein the performance of an alleged official duty is sought to be enforced, requires of the appellant that he establish a clear legal right to the remedy he has chosen. If the action by the Board of Health by which the appellant is aggrieved involved the exercise of a discretionary power, our inquiry is limited to a determination whether the record discloses circumstances which leave no possible scope for the reasonable exercise of that discretion in the manner of which the appellant complains. (Matter of Durr v. Paragon Trading Corp., 270 N. Y. 464, 469; Matter of Coombs v. Edwards, 280 N. Y. 361, 363; Matter of Schwab v. McElligott, 282 N. Y. 182, 186; Matter of Pruzan v. Valentine, 282 N. Y. 498, 501.)

The Board of Health of the City of New York, in the performance of its statutory duty to protect and promote public health within the city, is authorized to promulgate rules and regulations as means to accomplish that end and, by appropriate provisions in the Sanitary Code, to exercise control and supervision over the delivery of milk and milk products to consumers. (New York City Charter, §§ 553, 556, 558, effective January 1, 1938.)

Permits for the distribution of milk are issued under section 155, subdivision 3, of the Sanitary Code and are divided into three classes as follows: Class A, are issued to dealers who operate pasteurizing plants in the city of New York; Class B, to dealers who operate milk depots; and Class C, to dealers who operate not more than one vehicle in the delivery of milk or milk products and who do not maintain a pasteurizing plant or milk depot but utilize the facilities of such a plant or depot located in the city and which is operated under a permit from the Board of Health. '

The petitioner-appellant has been denied a Class C permit upon the ground that he failed to qualify within the requirements of regulation 3-a, subdivision 3-b (par. 3) promulgated by the Board of Health on July 27, 1939, under authority granted by section 558-f of the City Charter, which regulation provides that “ The applicant must be a person of good character, of sufficient experience in the milk industry, and have been a bona fide independent individual milk distributor in this city prior to June 1,1989.” (Emphasis supplied.)

Concededly the petitioner was not an independent milk distributor prior to June 1, 1939; nor has he owned or operated a pasteurizing plant or milk depot which would qualify him for either a Class A or Class B permit. (Sanitary Code, § 155, subd. 3.)

By this proceeding the petitioner, for himself and others similarly situated, invokes the Fourteenth Amendment of the Federal Constitution and section 11 of article 1 of the Constitution of the State of New York in support of his challenge to the validity of that part of the regulation last quoted above which requires of an applicant for a Class C permit that he shall be of sufficient experience in the milk industry, and shall have been a bona fide independent milk distributor in this city prior to June 1, 1939.

The challenge must be sustained unless it appears that any classification which the regulation may involve has a reasonable basis within the knowledge and experience of the official body by which it was promulgated. It is needless to labor the point, long settled, that we may declare such a regulation invalid only in the event that it is so lacking in reason for its promulgation that it is essentially arbitrary. (Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 78, 79; Borden’s Farm Products Co. v. Baldwin, 293 U. S. 194, 209, 210; Metropolitan Casualty Ins. Co. v. Brownell, 294 U. S. 580, 584; United States v. Carolene Products Co., 304 U. S. 144, 152; People v. Beakes Dairy Co., 222 N. Y. 416, 429.) E the regulation now challenged bears a reasonable relation to a bona fide purpose by the Board of Health to safeguardjthe milk supply of the city of New York as an incident to the protection and promotion of public health, then the promulgation of the regulation was a valid exercise of the Board’s authority.

Clearly section 558 of the New York City Charter endows the Board of Health with a broad discretion in the selection of measures by which public health may be protected within the field of its jurisdiction. In determining whether there was a reasonable basis for the action of the Board in promulgating the regulation here in question, we give consideration first to the rule in Mayflower Farms, Inc., v. Ten Eyck (297 U. S. 266), upon which the petitioner relies. In that case the subject of review was a provision of the New York Milk Control Act which differentiated between milk dealers without trade names which had been broadly advertised and who had entered the business prior to April 10, 1933, and those dealers in that class who had entered the business at a later date. The act granted to the former and denied to the latter the privilege of selling milk in New York city at a price one cent below the minimum which was binding upon dealers having well-advertised trade names. The court held such a classification to be discriminatory and in violation of the equal protection clause of the Fourteenth Amendment of the Federal Constitution. In doing so, however, the court was careful to point out (p. 272) that The record discloses no reason for the discrimination. The report of the committee, pursuant to which the Milk Control Act was adopted, is silent on the subject.” And again, at page 274 of the opinion, we find a statement which clearly differentiates the problem there involved from the one now before us. The appellees do not intimate that the classification bears any relation to the public health or welfare generally; that the provision will discourage monopoly; or that it was aimed at any abuse, cognizable by law, in the milk business.” It is thus made clear that the factor which was lacking in the Mayflower case (supra) as a basis of the enactment there challenged, is present in the record at hand in which the safeguarding of the city’s supply of milk — an essential item of diet — is established as the sole ground for the regulation.

The distribution of milk is a business affected with a public interest — a phrase which has been defined as “ * * * the equivalent of ‘ subject to the exercise of the police power.’ ” ' (Nebbia v. New York, 291 U. S. 502, 533.) It follows that he who enters the business of producing, selling or distributing milk or its products, subjects to regulation in the public interest not only those efforts on Ms part wMch affect the quality of the product as it reaches the consumer, but also the property wMch he contributes to the enterprise. In the city of New York the density of population and many related conditions make the samtary distribution of wholesale milk a major problem for the health authorities. Strict and constant vigilance in the supervision of such distribution is required. The difficulty of making inspections becomes apparent when we learn from the record that there are approximately eight thousand individuals distributing milk in the city of New York, of whom ninety-five per cent are employed by Class A or Class B licensees. For many years prior to 1939 the Board of Health restricted permits to deal in milk to those who operated pasteurizing plants or depots, at wMch places milk dealers and distributors gathered daily of necessity and thus made inspection and supervision of milk and milk products and the facilities for their storage and distribution a simpler matter for the city health authorities. Inspection and supervision under such an arrangement was successful until 1933 when the enactment of chapter 158 of the Laws of 1933 created the State Milk Control Board wMch, under statutory provisions, fixed the minimum price for the sale of milk. Then followed an amendment to the Samtary Code of the city of New York by wMch loose fluid milk was eliminated from the New York city market. These two changes served to bring into the business of milk distribution within the city a large body of independent retail distributors wMch, in 1938, numbered about six hundred, all of whom operated without permits from either local or State authorities. As these independent distributors had no fixed places from wMch to conduct their daily operations, the problem of inspection and the enforcement of the Samtary Code provisions relating to milk distribution became difficult. Finally, in 1938, a large number of unlicensed distributors umted in a demand that the Board of Health grant them licenses. Responsive to tMs demand and recogmzing that sound samtary practice required the supervision of unlicensed distributors, the Board entered upon a careful study as to the advisability of requiring permits for independent distributors.

Prior to its determination to enforce such a requirement and in its consideration of the requisite qualifications for such a permit the Board had the advantage of information bearing upon the problem possessed by its own members and gained from its employees and from data on file in the Department of Health. It also sought the views of experts in the field of public health and held public hearings to gain added information from individuals and from various groups which had manifested interest in the subject. From one or more of these sources it was learned that over a period of years certain unlicensed independent distributors, in an apparent effort to reduce the cost of the milk they delivered and thus to enable them to undersell their competitors, had indulged in various forms of unsanitary practice in the handling and delivery of milk and by various means had escaped inspection by authorized agents of the Health Department. It also appeared that if restrictive permits were not required of independent distributors their number might reasonably be expected to increase; that if their number should increase beyond the number then making retail deliveries, such increase would bring into the business of milk distribution more independent distributors than were required by the city’s normal demand for milk. The resulting competition would make less likely strict adherence to the requirements of the Sanitary Code and departmental regulations and would make more difficult the enforcement of the sanitary rules designed to protect the purity of miffi_during its distribution. In connection with the evidence of adverse conditions likely to attend an increase in the number of unlicensed independent distributors above those then making deliveries, the Board of Health also gave consideration to the fact that in most instances the independent distributors, then unlicensed, had endeavored over a period of years to comply with the requirements of the health authorities and to .that end had invested capital in facilities for cooling and delivering milk which were then available for use.

We regard these considerations, which influenced the Board of Health to promulgate the regulation here in question, as bearing a reasonable relation to an effort by the Board to safeguard the milk supply of the city of New York and thus to protect and promote public health. As a rational basis is thus afforded for the official action challenged by this proceeding, it follows that the order should be affirmed, with costs.

Finch, J.

(dissenting). We submit that the time limitation created by the words “ since June 1, 1939/’ contained in the regulation has no relation to the public health and denies to the appellants the equal protection of the law guaranteed by the State and Federal Constitutions. Petitioners apply for a license permitting them to buy sealed bottled milk from approved milk dealers and resell the same to consumers. This application is denied upon the sole ground that under the regulation in question they have not been in the business prior to June 1, 1939. (Sanitary Code of City of New York, §§ 155, 156; Board of Health Regulation 3-a, subd. 3-b, par. 3.) Previous to July, 1939, the Sanitary Code of the city prohibited the sale of milk by one who did not possess a pasteurizing plant or depot. Despite this, many subdealers bought milk in sealed bottles from those having pasteurizing plants or depots and resold it in the same sealed bottles to customers. There were from six to eight hundred of these single individuals and a regulation was adopted permitting these illegal dealers to obtain a so-called Class C license if they had thus been doing business illegally prior to June 1, 1939.

Both the approved milk dealers engaged in the business of selling to these individual distributors and individuals situated as are petitioners, object that the regulation containing as it does a time limitation of June 1, 1939, unlawfully discriminates against them in favor of other milk dealers and individuals of the same class and that no valid reason exists for the inclusion of this arbitrary time limitation.

To sustain the regulation the city urges that if the time limitation is removed there will exist so many individual distributors that it will be impossible to make the proper inspections. This very objection but illustrates and emphasizes the arbitrariness and the unlawfulness of the discrimination which the time limitation creates. Without passing upon the validity of the contention that the mere difficulty of adopting a suitable and effective method of inspection is sufficient to curtail the liberties of those involved, no such issue has been here determined by the Board. Instead an arbitrary date, has been selected.

Nothing has been shown in the case at bar which supports the contention that there is a reasonable relationship between the distribution of sealed milk and the public health or welfare which would afford a reasonable basis upon which the local authority could determine that during the life of this law no individual or corporation shall enter the milk business as a distributor in New York city. (Mayflower Farms, Inc., v. Ten Eyck, 297 U. S. 266; People v. Ringe, 197 N. Y. 143; Hauser v. North British and Mercantile Ins. Co., 206 N. Y. 455; People v. Kuc, 272 N. Y. 72; People v. Cohen, 272 N. Y. 319.) If the same principle is applied to other callings the liberty of the individual will cease to exist. We have here the same two elements which entered into the decision in the Mayflower case (supra), namely: (1) An absolute and arbitrary date set by the Commission, and (2) a discrimination in favor of those who had entered into the industry before that date. What is more, here we have an absolute denial of the right of any one else to enter into an industry which a chosen few are allowed to monopolize.

The case at bar does not fall within the category of cases where a regulatory law may be prospective in operation and may except from its sweep those presently engaged in the calling or activity to which it is directed. The absolute denial to petitioner of the right to engage in the distribution of milk which has been bottled, sealed and pasteurized at a Class A plant pursuant to Department of Health inspection would seem, to have no reasonable connection with public health and welfare. Nor does the power of the Board to consider the declared public policy of the State, including the burden resulting from the Workmen’s Compensation Law (Cons. Laws, ch. 67) and social security laws, give to the Board power to deny petitioner his constitutional right to engage in a legitimate occupation upon the arbitrary ground that petitioner was not engaged in that business before an arbitrary date. To prescribe qualifications for entrance into a business or to prescribe regulations covering the different classes, is entirely different from proscribing the right to engage in such business altogether.

Other States have held invalid similar attempts to curtail individual liberty (Alexander v. City of Elizabeth, 56 N. J. L. 71; Sheffield Farms Co. v. Seaman, 114 N. J. L. 455; Pabst Corp. v. City of Milwaukee, 190 Wis. 349; Whitney v. Watson, 85 N. H. 238; Northwestern National Ins. Co. v. Fishback, 130 Wash. 490). The denial to petitioner of a right to a license merely because he had not been engaged in the milk business as an independent distributor before June 1, 1939, was arbitrary and discriminatory and fails to afford petitioner the equal protection of the laws guaranteed by the State and Federal Constitutions.

Lehman, Ch. J., Loughran and Desmond, JJ., concur with Lewis, J.; Finch, J., dissents in opinion in which Rippey and Conway, JJ., concur.

Order affirmed.


author: Conway, J. Lewis, J.

text:
    In the Matter of Francis J. Kolb, Appellant, against Thomas L. Holling, as Mayor of the City of Buffalo, et al., Respondents.

      Argued January 6, 1941;
    decided March 6, 1941.

      Thomas J. O’Donnell and Godfrey M. Frohe for appellant.

      John J. Bennett, Jr., Attorney-General, amicus curiæ.

      David Diamond, Corporation Counsel (John E. Livermore of counsel), for respondents.
   Conway, J.

The petitioner is a rodman of the Grade Crossing and Terminal Station Commission, who is seeking an order directing the respondents to take appropriate steps so that money may be furnished by the city of Buffalo to pay his salary for a period in August and September, 1939. During the period of his employment from December, 1937, until August 1, 1939, petitioner’s salary was paid by the city of Buffalo. Whether that method of payment shall be continued, and that is what petitioner desires, depends upon our construction of article 7, section 14, of the Constitution of the State of New York effective January 1, 1939, and of the same section as it existed in the Constitution prior to that date, as well as of the respective enabling acts relating thereto.

The Grade Crossing and Terminal Station Commission came into existence as a result of a consolidation (L. 1923, ch. 231) of two prior existing Commissions. Expenses of those Commissions and of the consolidated Commission were payable by the city of Buffalo under applicable statutes and the city was granted power to borrow money from time to time for the purpose of making such payments. It was the duty of the Mayor and Comptroller of the city to issue its bonds for such purposes in such amounts, payable at such times and bearing such rate of interest as the Common Council might from time to time determine.

In 1928 the Legislature enacted four statutes with a view to bringing about State-wide elimination of railroad grade crossings. Chapter 677 related to eliminations within the jurisdiction of the Transit Commission and was known as “ New York City Grade Crossing -Elimination Act.” Chapter 678 applied to eliminations outside the cities of New York, Buffalo and Syracuse. Chapter 679, entitled Grade Crossing Elimination Act, applicable to the City of Buffalo,” was operative there. Chapter 825 applied to eliminations in the city of Syracuse. The State thus sought to use existing available agencies in its State-wide effort.

Thereafter all grade elimination work in the city of Buffalo was performed under chapter 679 of the Laws of_1928 and none under the statute of 1923. Expenses of the Buffalo Commission,” as it was referred to in the act of 1928, were paid by the city of Buffalo and reimbursement thereafter made to it. (L. 1928, ch. 679, § 13.) The salary of the petitioner was paid by the city until August, 1939, seven months after the new Constitution became effective. That was the method devised by the Commission (a State body, L. 1928, ch. 679, § 12), the Legislature of the State, the city of Buffalo and the State Comptroller, for setting up payrolls for employees of the Commission and in paying them.

Not only was that the system devised and in operation until seven months after the adoption of the new State Constitution but the Attorney-General of this State has applied for and has been granted leave by this court to file a brief, amicus curise, in order to advise us that the State of New York asserts that section 2 of chapter 289 of the Laws of 1939 continues the policy and procedure of the prior enactment (L. 1928, ch. 679, § 4, subd. 1), and to urge that no intent to alter the procedure of payment and reimbursement may be found either in the constitutional amendment or the statutory enabling act.

We must then examine the reason for the change in position by the city of Buffalo in refusing to longer pay the salary of petitioner. The city urges that it is because of the new article 7, section 14, of the Constitution which became effective January 1, 1939, and states in its brief that “ While the constitution remained in its 1928 form, the city continued to pay the expenses of the Buffalo Commission on the legal theory that the legislature still had the power to compel the City to do so.” It is conceded by petitioner and alleged in the respondent’s answer that the services rendered during the period in suit were in connection with grade crossing elimination, the construction work for which was not commenced prior to January 1, 1939. If the new section of the Constitution necessitated a change in procedure, then of course the city is correct in its present attitude.

Under the old article 7, section 14, of the Constitution of the State which had been in force from 1927 to 1939, grade crossing eliminations were paid for as follows: Fifty per cent by the railroads, forty-nine per cent by the State and one per cent by the county (as far as Buffalo was concerned). None of the cost was payable by the city of Buffalo. Nevertheless, under that constitutional provision, the Commission, the city and the State, as indicated swpra, construed the statute of 1923 and the statute of 1928 in a practical and constructive manner which worked successfully until 1939. In 1939, following the adoption of the new article 7, section 14, of the Constitution, the Legislature continued this practical, successful and business-like working arrangement for payment of elimination construction work done subsequent to January 1, 1939, by enacting chapter 289 of the Laws of 1939. Sections 2, 4 and 7 of that act are as follows:

“ § 2. Chapters six hundred and seventy-seven, six hundred and seventy-eight, six ■ hundred and seventy-nine, and eight hundred and twenty-five of the laws of nineteen hundred twenty-eight, and all acts supplementary thereto and amendatory thereof, shall continue to apply with full force and effect to the elimination of highway-railroad crossings at grade, the construction work for which was commenced before January first, nineteen hundred thirty-nine, and shall also apply to the elimination of highway-railroad crossings at grade, the construction work for which is commenced after January first, nineteen hundred thirty-nine, except that as to such eliminations upon which construction work is commenced after January first, nineteen hundred thirty-nine (1) the elimination shall. include incidental improvements rendered necessary or desirable because of such elimination, and reasonably included in the engineering plans therefor, as shall be determined by the commission having jurisdiction, and except (2) as the provisions of such act or acts are otherwise inconsistent with section fourteen of article seven of the constitution as now in force or with the provisions of this act.”
“ § 4. The expense of every grade crossing elimination, the construction work for which is commenced after January first, nineteen hundred thirty-nine, including incidental improvements connected therewith, as determined by the commission to be necessary or desirable because of the elimination and reasonably included in the plans for such elimination and railroad improvements not an essential part of the elimination but desired by the railroad company or companies, shall be paid in the first instance out of the state treasury to the persons and corporations entitled thereto from time to time on accountings and vouchers approved by the department or commission having jurisdiction under the acts enumerated in section two hereof upon audit and warrant of the comptroller. Such expense shall be deemed to include any reasonable and necessary expenditures by a municipality, a railroad company or companies, a commission, the Buffalo commission, the Syracuse commission or the department of law of the state of New York made subsequent to November eighth, nineteen hundred thirty-eight and found by the commission having jurisdiction to have been made in contemplation of the commencement of construction after January first, nineteen hundred thirty-nine pursuant to article seven, section fourteen of the constitution of the state of New York, as amended, effective January first, nineteen hundred thirty-nine; provided, however, that all other expenses incurred prior to January first, nineteen hundred thirty-nine, shall be repaid in accordance With the provisions of the acts enumerated in section two hereof, and applicable thereto.”
§ 7. Where a commission, the Buffalo commission, the Syracuse commission, a municipality, the department or the department of law of the State of New York has, under the provisions of the acts enumerated in section two hereof been authorized to incur any expense in connection with a highway-railroad grade crossing ehmination, similar expenses may be incurred after January first, nineteen hundred thirty-nine, to enable it to perform its duties imposed by said acts as supplemented by this act. The commission having jurisdiction shall determine if such expenses are reasonable and necessary for the elimination or for incidental improvements made necessary or desirable thereby and, to the extent so determined, they shall be paid by the comptroller to the party or parties entitled thereto and included in the cost of the project.”

The sections just quoted mean and can mean only one thing, viz., that the Legislature intended a continuance of the method of payment for elimination construction work done after January 1, 1939, in the same manner as for work done prior thereto.

The only reason urged by the city of Buffalo as indicating necessity for a change in the method of payment of petitioner’s salary is the insertion or presence in the new article and section of the words shall be paid by the state in the first instance.” (N. Y. Const. art. 7, § 14.) The use of those words by the Constitutional Convention bore no relation to any conceived or attempted change in the method of payment theretofore obtaining through the city of Buffalo, subject to reimbursement. Those words related to the proposal that as between the State and the railroads, the State was to pay for the entire elimination in the first instance and thereafter to receive payment from the railroads as provided in the constitutional amendment. An examination of the Revised Record (Vol. 2, pp. 902-905 and 1036-1043) of the New York State Constitutional Convention of 1938 indicates the manner in which and the purpose for which those words were written into the Constitution.

The constitutional amendment as originally proposed bore Introductory Number 89. As so proposed, the State was to pay for grade-crossing eliminations in their entirety. On July 12, 1938, an amendment of the proposal was moved by Mr. Fearon (p. 902) as follows:

“ Mr. Fearon: I move to amend the proposal by striking out line 14 on page 3, the following words: ‘ shall be borne wholly by the State,’ and by further amending the bill by adding at the end of line 15 on page 3 the following, change the period to a comma and add the following words, 1 shall be paid by the State in the first instance, but the State shall be entitled to recover from the railroad' company or companies, by way of reimbursement, * * *.’ ”

On July 18, 1938, a further amendment was proposed by Mr. Moses in substitution for Mr. Fearon’s amendment (pp. 1032, 1033). That second amendment retained the words as quoted up to the word “ reimbursement ” and then worded the balance of the section as it was finally adopted by the Convention and by the People.

The debate clearly indicates that the whole purpose of the amendments of Mr. Fearon and Mr. Moses was to compel the railroads to pay for (1) the entire amount of the railroad improvements not an essential part of the elimination, and (2) the amount of the net benefit to the company or companies from the elimination exclusive of such railroad improvements, the amount of such net benefit to be adjudicated after the completion of the work in the manner to be prescribed by law, and in no event to exceed fifteen per cent of the expense of the elimination, exclusive of all incidental improvements.

The controversy was entirely over the question whether the railroads should pay something or the State should pay all. From the debate it is quite evident that no delegate had in mind changing or altering the certification, bookkeeping or payment methods which had been worked out by the Commission, the Legislature, the State Comptroller and Attorney-General and which had functioned satisfactorily for more than nine years. There is nothing in the change of wording between old and new article 7, section 14, which had any relation to the method of payment of petitioner’s salary prior to the adoption 'of the new Constitution. Under the old provision and chapter 679 of the Laws of 1928 not one dollar of the money of the city of Buffalo went to pay petitioner’s salary, yet the Commission certified the payroll upon which petitioner’s name appeared and his salary was paid by the city and reimbursed to it. Under the new constitutional provision and the enabling act (L. 1939, ch. 289), not one dollar of petitioner’s salary was to be paid eventually by the city of Buffalo and yet the Legislature in terms, under section 2 of that act, quoted supra, provided for the continuance of the method of payment followed under chapter 679 of the Laws of 1928 for work undertaken subsequent to January 1, 1939.

The practical construction put upon a constitutional provision, as well as upon a statute, by the Legislature or by departments of State government, is entitled to great weight, if not controlling influence, when such practical construction has continued in operation over a long period of time. (People v. Home Ins. Co., 92 N. Y. 328, 337; City of New York v. New York City Ry. Co., 193 N. Y. 543, 548; People ex rel. Joyce v. Brundage, 78 N. Y. 403, 406; People ex rel. Williams v. Dayton, 55 N. Y. 367, 378; City of New York v. Fifth Avenue Coach Co., 237 App. Div. 383, 398; affd., 262 N. Y. 481; People ex rel. Einsfeld v. Murray, 149 N. Y. 367, 376.)

The following quotations seem peculiarly applicable here:

“ * * * These expositions are entitled to great weight, as they evince the sense in which the language was understood at the time. It is not unlikely that the Legislature was composed of some of the same persons who composed the constitutional convention. At all events the discussions in and out of the convention were then fresh, and the Legislature would naturally be governed by considerations similar to those which actuated members of the convention. * * * The weight to be given to contemporaneous construction is well expressed by Marcy, J., in People v. Green (2 Wend. 274). He says: ‘ Great deference is certainly due to a legislative exposition of a constitutional provision, and especially when it is made almost contemporaneously with such provision, and may be supposed to result from the same views of policy, and modes of reasoning which prevailed among the framers of the instrument propounded.’ ” (People ex rel. Joyce v. Brundage, 78 N. Y. 403, 406.)
The practical construction of the clause in question by the Legislature, commencing with the adoption of the amendment of 1853 and continued to the present time, which has been acquiesced in and acted upon by the executive and administrative departments of the government, and which, so far as we know, has never before been questioned, is entitled to great, and we think controlling, weight in its interpretation. It has almost the force of a judicial exposition (Story on Const., § 408), and, unless such legislation and practice is manifestly in violation of the words used, the greatest weight should be given to it in construing them. (Cooley Const. Lim., 67, and cases cited.) ” (People ex rel. Williams v. Dayton, 55 N. Y. 367, 378.)

It seems to us that the granting of the relief prayed for will continue the orderly method of paying petitioner’s salary as contemplated by the Legislature and as followed by the city of Buffalo since at least 1911 and including a period of seven months after the adoption of the new Constitution and that no violation of a constitutional mandate will be occasioned thereby.

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

Lewis, J.

(dissenting). By the decision about to be made the payment for any grade crossing elimination work, including the expense incurred for work incidental to the elimination, which was commenced in the city of Buffalo after January 1, 1939, is authorized to be made in the first instance from funds supplied by the’ city and payable through the local Grade Crossing and Terminal Station Commission. My dissent from the view of a majority of the court rests upon my interpretation of article 7, section 14, of the State Constitution, effective January 1, 1939, which, in language clear and unequivocal, directs that “ The expense of any grade crossing elimination the construction work for which was not commenced before January first, nineteen hundred thirty-wine, including incidental improvements connected therewith as authorized by this section, whether or not an order for such elimination shall theretofore have been made, shall be paid by the state in the first instance * * *.” (Emphasis supplied.)

I find nothing in chapter 289 of Laws of 1939 — an act supplementing the Grade Crossing Elimination Act, applicable to the city of Buffalo — which supports the practice about to be approved. That statute provides, subject to a significant exception presently to be noted, that chapters 677, 678, 679 and 825 of the Laws of 1928, and acts supplemental and amendatory thereof, shall continue to govern the procedure applicable to the payment for all grade crossing elimination projects commenced in the city of Buffalo after January 1, 1939. However, the Legislature was careful to avoid any conflict with the last amendment to article 7, section 14, of the Constitution by expressly providing the following exception, which exerts a controlling influence upon my view of the problem presented by the proceeding now before us: “ * * * and except (2) as the provisions of such act or acts are otherwise inconsistent with section fourteen of article seven of the constitution as now in force or with the provisions of this act.” (§ 2.) By this exception the Legislature clearly recognized that a fundamental change in State policy in relation to the payment of the cost of highway crossings by railroads at grade had taken place.

One of the clear purposes of that change, as I view it, was to relieve municipalities of future expense in connection with grade crossing eliminations. Thereafter the State, at the outset, was to pay the entire cost of each project and was to be reimbursed by the railroads. No authority exists, legislative or judicial, by which a different procedure may be made effective. True, it may be that for a. long period of years incidental expenses, such as the petitioner’s wage, have been paid in the first instance from funds supplied by the city of Buffalo. And it is not difficult to understand why State fiscal agents are quite willing to have that practice continue. It may also be true that to continue the practice of past years may serve local convenience. But the fact is that practice does not accord with —■ indeed, it disregards — the plain language of our present Constitution, which directs that such an expense shall be paid by the state in the first instance.” I indulge in the permissible presumption that the framers of that mandate understood the force of the language used and, as well, the people who adopted it.” (People v. Rathbone, 145 N. Y. 434, 438.)

Lehman, Ch. J., Loughran, Finch, Rippey and Desmond, JJ., concur with Conway, J.; Lewis, J., dissents in opinion.

Ordered accordingly.