text:
    The People of the State of New York ex rel. Andrew Matochik, Appellant, against Edgar J. Baker, as Sheriff of Warren County, Respondent.
    Argued April 17, 1953;
    decided July 14, 1953.

      John S. Hall for appellant.
    I. The right of interstate extradition is founded on and controlled by the Federal Constitution and effectuating Federal statute. (Holmes v. Jennison, 14 Pet. [U. S.] 540; Kentucky v. Dennison, 24 How. [U. S.] 66; Jack v. Martin, 12 Wend. 311; Prigg v. Pennsylvania, 16 Pet. [U. S.] 539; United States v. Meyering, 75 F. 2d 716; Matter of Strauss, 197 U. S. 324; People ex rel. Lawrence v. Brady, 56 N. Y. 182; Compton v. Alabama, 214 U. S. 1.) II. The courts of this State will look behind the warrant and if the papers on which it is based do not fulfill the requirements of the Federal statute, relator will be discharged. (People ex rel. Lawrence v. Brady, 56 N. Y. 182; People ex rel. Pahl v. Hagerty, 261 App. Div. 1049; People ex rel. Kubiak v. Zimmerman, 226 App. Div. 589; United States v. Meyering, 75 F. 2d 716; Ex Parte Thornton, 9 Tex. 635; Ex Parte Hogan, 245 S. W. 336 [Mo.]; People ex rel. Lipshitz v. Bessenger, 273 App. Div. 19; State of Florida ex rel. Beck v. Chase, 91 Fla. 413; People ex rel. Brown v. Tighe, 146 App. Div. 491; People ex rel. Higley v. Millspaw, 281 N. Y. 441.) III. The papers upon which the Governor of the State of New York issued the warrant of arrest were defective in substance and should not have been the basis of the issuance of said warrant. (People ex rel. de Martini v. McLaughlin, 243 N. Y. 417; People ex rel. Cornett v. Warden of City Prison of Brooklyn, 60 Misc. 525; People ex rel. Lawrence v. Brady, 56 N. Y. 182; Ex Parte Hart, 63 F. 249; Robb v. Connolly, 111 U. S. 624; People ex rel. Corkran v. Hyatt, 172 N. Y. 176, 188 U. S. 691; United States v. Meyering, 75 F. 2d 716.) IV. The result of the decision in the courts below is to change the existing law rather than to interpret that law. If the law is to be changed, it should be changed by the Legislature and not by the courts. (Anderson v. Wilson, 289 U. S. 20; Iselin v. United States, 270 U. S. 245; Meltzer v. Koenigsberg, 302 N. Y. 523.)

      J. Clarence Herlihy, District Attorney of Warren County,. New York, on behalf of W. Edson McKee, State’s Attorney for Washington County, Vermont, for respondent.
    I. The only restriction imposed upon the States in interstate rendition would appear to he that the individual States may not limit or modify the Federal law. (Kentucky v. Dennison, 24 How. [U. S.] 66; Gerrish v. State of New Hampshire, 97 F. Supp. 527; Compton v. Alabama, 214 U. S. 1; People ex rel. MacSherry v. Enright, 112 Misc. 568, 196 App. Div. 964; People ex rel. Hollander v. Britt, 195 Misc. 722, 276 App. Div. 815.) II. The papers upon which the Governor of the State of New York issued the warrant for the arrest of appellant are valid and proper in form and substance. (Compton v. Alabama, 214 U. S. 1; Matter of Strauss, 197 U. S. 324; People ex rel. MacSherry v. Enright, 112 Misc. 568, 196 App. Div. 964; People ex rel. Hollander v. Britt, 195 Misc. 722, 276 App. Div. 815; State v. Moeller, 191 Minn. 193; Ex Parte Nash, 44 F. 2d 403; Ex Parte Davis, 68 Cal. App. 2d 798; Stark v. Livermore, 3 N. J. 94; Guiley v. Appli, 213 Ark. 350; People ex rel. Higley v. Millspaw, 281 N. Y. 441; Matter of Strauss, 197 U. S. 324.)
   Froessel, J.

This is a habeas corpus proceeding instituted by relator, Andrew Matochik. It was brought to test the legality of his arrest as a fugitive from justice, under a warrant of extradition issued by the Governor of New York State in compliance with a requisition from the Governor of Vermont. Attached to the Vermont Governor’s requisition were, among other papers, (1) a duly certified copy of an information filed against the relator by the State’s Attorney for the County of Washington, Vermont, reciting those facts upon which relator was charged with the crime of 11 burglary in the nighttime ”, and (2) five affidavits, sworn to before a notary public, attesting to the commission of the crime charged. Under Vermont’s Revised Statutes of 1947 (§§ 2371, 8300) a defendant may be prosecuted for that crime by an information rather than an indictment.

The courts below dismissed the writ, holding that the warrant of extradition was properly issued on the basis of the information and the accompanying affidavits. Relator’s appeal to this court is predicated primarily on the contention that a writ of extradition may be issued only where the Governor of the demanding State produces —in the language of section 3182 of title 18 of the United States Code, implementing section 2 of article IV of the Constitution of the United States — “a copy of an indictment found or an affidavit made before a magistrate of any State or Territory, charging the person demanded with having committed treason, felony, or other crime ”. In short, relator contends that Congress, in enacting section 3182, has pre-empted the entire field of extradition legislation.

In its entirety, section 3182 reads as follows: 6 ‘ Whenever the executive authority of any State or Territory demands any person as a fugitive from justice, of the executive authority of any State, District or Territory to which such person has fled, and produces a copy of an indictment found or an affidavit made before a magistrate of any State or Territory, charging the person demanded with having committed treason, felony, or other crime, certified as authentic by the governor or chief magistrate of the State or Territory from whence the person so charged has fled, the executive authority of the State, District or Territory to which such person has fled shall cause him to be arrested and secured, and notify the executive authority making such demand, or the agent of such authority appointed to receive the fugitive, and shall cause the fugitive to be delivered to such agent when he shall appear. If no such agent appears within thirty days from the time of the arrest, the prisoner may be discharged.”

Relator points out that the information attached to the requisition of the Governor of Vermont does not satisfy this statute, inasmuch as it is neither an indictment, nor an affidavit made before a magistrate. Thus the primary question presented is whether a State may extradite on less exacting terms than those prescribed by the Federal statute, or, stated otherwise, whether an information, where that is the statutory method of prosecuting a crime in the demanding State, and supporting affidavits, may constitute a sufficient basis for the issuance of a warrant of extradition.

The question before us does not seem to have been squarely passed upon either by the Supreme Court of the United States or by this court. The lower courts of this State are in conflict as to whether or not there must be a literal compliance with the provisions of section 3182 of the Federal extradition statute. In People ex rel. MacSherry v. Enright (112 Misc. 568, affd. 196 App. Div. 964 [1st Dept.]), it was held that an extradition proceeding may be predicated on an information where the law of the demanding State authorizes prosecution by that method. The warrant was sustained on the theory that an information constitutes a sufficient compliance with the Federal statute.

Subsequent to the MacSherry decision (supra), the Legislature in 1936 enacted the present section 830 of the Code of Criminal Procedure (L. 1936, ch. 892). That section, which is practically identical with section 3 of the Uniform Criminal Extradition Act, provides that a demand for extradition may be recognized by the Governor of this State if “ accompanied by a copy of an indictment found or by information supported by affidavit in the state having jurisdiction of the crime, or by a copy of an affidavit made before a magistrate there ”. (Italics supplied.)

People ex rel. Lipshitz v. Bessenger (273 App. Div. 19, 22) was then decided by the Second Department, holding that a warrant of extradition may not be upheld on the basis of an information. That court stated that the Federal statute was exclusive and controlling ’ ’ insofar ‘ ‘ as any inconsistency exists ’ ’ between it and section 830 of the Code of Criminal Procedure, and concluded that the MacSherry case (supra) had been erroneously decided.

Finally, in People ex rel. Hollander v. Britt (195 Misc. 722, affd. 276 App. Div. 815 [4th Dept.]), Mr. Justice Halpern determined, in a well-reasoned opinion, that an extradition warrant may be sustained on an information. While recognizing as sound the theory of the MacSherry case (supra) that an information is a sufficient compliance with the Federal statute, Mr. Justice Halpern stated further (p. 731): “ As to the second proposition, I cannot find any constitutional prohibition against a State supplementing the provisions of the Federal statute and providing voluntarily that it will extradite persons charged with crime under given circumstances, even though the circumstances are such that the State would not be required to extradite the accused person under the Federal statute (cf. Innes v. Tobin, 240 U. S. 127). There is no inconsistency between such a State statute and the Federal extradition statute and therefore the cases cited by the Second Department in the Lipshitz case (supra, p. 22) holding that ‘ Insofar as any inconsistency exists, the Federal statute is exclusive and controlling ’, are beside the point. I therefore conclude that the State has the right to provide by statute that it will extradite upon the basis of an information filed by the prosecuting attorney in the demanding State, in accordance with the law of that State, even if the Federal statute is construed as not requiring extradition upon such an information.”

We think the warrant of extradition was properly issued. 'While there is merit in the view taken in the MacSherry case [supra) that an information is a sufficient compliance with the Federal statute, and while there is ample authority in support of that view [State ex rel. Webster v. Moeller, 191 Minn. 193, 195; Ex parte Ryan, 75 Okla. Cr. 144, 148-149; Matter of Hooper, 52 Wis. 699, 703; 81 A. L. R. 552 et seq.; Spear on Extradition [3d ed.], p. 363; see Matter of Strauss, 197 U. S. 324, 332-333), we predicate our determination herein on the theory, expressed in the Hollander case [supra), that a State may enact legislation to supplement the Federal statute by permitting extradition on less exacting terms than those imposed by the latter statute. This theory has already been acknowledged in other jurisdictions, in treatises, and by those who prepared the Uniform Criminal Extradition Act [Gulley v. Apple, 213 Ark. 350, 357; Matter of Davis, 68 Cal. App. 2d 798; Stark v. Livermore, 3 N. J. Super. 94, 98-99; Ex parte Bledsoe, 93 Okla. Cr. 302; 22 Am. Jur., Extradition, p. 250, n. 1; 9 Uniform Laws Ann., p. 170).

In Scott on Interstate Rendition, we are told that Congress, since enacting in 1793 the first statute on this subject (p. 45) “ has not deemed it necessary to legislate upon any of the phases herein mentioned. Why this remarkable legislative silence by Congress ? Is it not possible that it was intended to share this legislative jurisdiction with the several States of the Union? The States themselves have regarded interstate rendition as a concurrent field of legislation, and therefore, they have not hesitated to enact laws covering the phases omitted by Congress, as well as other laws auxiliary to the Constitution and laws of the United States on this subject.”

At most, the Federal extradition statute prescribes those terms upon which a State shall extradite. It does not purport, expressly or impliedly, to prohibit a State from extraditing on less exacting terms. It seems to us that relator’s contention that there must be a literal compliance with the Federal statute before a State may voluntarily extradite is patently unsound.

Relator further maintains that the papers upon which the warrant was issued were defective in that they failed (1) to show that he was personally in the demanding State at the time of the commission of the alleged crime, and (2) to set forth facts sufficient to constitute a charge of crime. The information, together with the affidavit of Arvin Long, constituted a prima facie showing that relator was in the demanding State when the crime was committed.

It then became necessary for the relator to establish by conclusive evidence that he was not in the demanding State when the crime was committed and is not a fugitive from justice ”. (People ex rel. Higley v. Millspaw, 281 N. Y. 441, 447.) Relator has failed to do this. Indeed, he did not even deny his presence in the demanding State in his petition for the writ of habeas corpus. As to the second point, the allegations contained in the information sufficiently charge every element of the crime of burglary under section 8300 of the Vermont statutes, as a mere comparison will demonstrate.

The order of the Appellate Division should be affirmed.

Lewis, Ch. J., Conway, Desmond, Dye and Fuld, JJ., concur; Van Voobhis, J., taking no part.

Order affirmed.


source: Caselaw Access Project

author: Conway, J. Desmond, J.

license: Public Domain

text:
    Saint Nicholas Cathedral of the Russian Orthodox Church in North America, Appellant, against John Kedroff and Benjamin Fedchenkoff, as Archbishop of the Archdiocese of North America and the Aleutian Islands of the Russian Orthodox Greek Catholic Church, Respondents.
    Argued February 24, 1953;
    decided July 14, 1953.

      Philip Adler for motion.

      Ralph Montgomery Arliush opposed.
    I. Plaintiff tried the action on a twofold theory (a) that at common law the administrative autonomy of the North American district of the Russian Orthodox Church was originally justified by virtue of the ukase of November 20, 1920, and is still justified by political conditions in Soviet Russia, and (b) that the New York Legislature had recognized these facts and confirmed plaintiff’s rights by the enactment of article 5-C of the Religious Corporations Law. II. The courts below erred, as matter of law, in their treatment of plaintiff’s common-law theory. III. The decision of the Court of Appeals was based solely on the statute and the United States Supreme Court made no decision on the common-law theory. IV. The United States Supreme Court made no ruling wMch would bar the courts of this State from adjudicating the case upon its merits and upon established common-law principles. Plaintiff is entitled to a new trial.
   Conway, J.

The decision of this court in St. Nicholas Cathedral v. Kedroff (302 N. Y. 1), directing judgment in favor of the plaintiff, i.e., the group known as the Russian Church in America,” has been reversed by the Supreme Court of the United States in a majority opinion written by Mr. Justice Reed, and the case has been remanded to this court for such further action as it deems proper and not in contravention of this opinion.” (Kedroff v. St. Nicholas Cathedral, 344 U. S. 94, 121.) On the basis of such reversal and remand, the defendants-respondents, i.e., the appointees of the Moscow Patriarchate, now move, in substance, for an order directing final judgment in their favor. Adjudication of the motion requires a re-examinatian of the grounds and rationale of our decision and the extent to which it has been affected by the action of the Supreme Court.

The majority opinion in this court very clearly divided consideration of the case under two heads — one statutory and the other common law. It was held that error, in any event, had been committed below, and that, under common-law principles, a new trial would be required, but that, under the statute, which was deemed controlling, final judgment for plaintiff was mandatory. Amendment of the remittitur was granted to make clear that the ultimate basis for the decision was the statute and that a contention that such statute was unconstitutional had been rejected (302 N. Y. 689). Thereupon the Supreme Court entertained the case and eventually, in an opinion, decided that the statute, as construed and applied by this court, did indeed constitute a violation of the constitutional right to the free exercise of religion, and accordingly, as above noted, returned the matter to us for such further action as we might deem proper and not in contravention of the said opinion. With the statutory phase of the case thus authoritatively eliminated, we are left with the alternative common-law base, which still stands as the basis for future action.

The foregoing is a simplified summary of what we conceive to be the present status of the case. We shall now discuss these views in more detail.

The prevailing opinion in this court, reported in 302 New York at pages 1 to 33, contains an extended review of the origins of this controversy — the history of the Russian Orthodox Church, the founding of the North American Diocese, and the consecration of St. Nicholas Cathedral as the see, the Bolshevik revolution, the persecution, suppression and virtual extinction of the church in Russia by the Soviet Government (pp. 4-9), the patriarchal ukase of 1920 authorizing diocesan bishops to assume full hierarchal power in the event of cessation of the highest church administration in Moscow, subject to confirmation by such authority upon its re-establishment (p. 7), the prior litigations here (pp. 10-15), the renewed activity of the Moscow Patriarchate and the sobor of 1945 (p. 17), the unsuccessful efforts at reconciliation (pp. 17-18), and the commencement of this action (pp. 19-21).

For over twenty years prior to the commencement of this action, St. Nicholas Cathedral — the historical and traditional see of the Russian Orthodox Church in North America — had been occupied by John S. Kedrovsky and his family (302 N. Y., at pp. 4, 12, 16). Kedrovsky was not a cleric of the Russian Orthodox Church, but rather of the short-lived “ Renovated ” or “ Living Church ”, which had been created and supported by the communists in Russia as a divisive influence in the campaign against religion after the Bolshevik revolution, and which purported to assume control of the church abroad. Everyone now admits and agrees that this “ Renovated Church ” was uncanonical and had no standing whatever. Nevertheless, by judgment of the Appellate Division in 1925 (214 App. Div. 483), affirmed by this court without opinion in 1926 (Kedrovsky v. Rojdesvenshy, 242 N. Y. 547), Kedrovsky wrested possession of the cathedral from Archbishop Platon, the true head of the North American Diocese who had been appointed as such by Patriarch Tikhon. That decision, incidentally, was supported on the ground that the occupant of the cathedral must be an appointee of the central church authorities in Russia and that Kedrovsky, not Platon, was the current appointee of the authorities then existing, viz., the “ Renovated Church ”. This, we think, is an illustration of the difficulty in applying a mechanical test in such a situation without full examination and proof as to the nature of the so-called “ central church authorities ”. The courts, perhaps, were then too close in point of time to realize what had really occurred in Russia and they did not have access to the facts now available. In retrospect, however, and with the knowledge born of aftersight, it is now apparent that, by virtue of that decision, the rightful occupant was ousted from the cathedral and its administration and possession turned over to a scMsmatic whose sect actually became extinct after a few years as is admitted by both parties herein.

Faced with this usurpation of the authority of the original patriarchal central church, and with the diocese in chaos and confusion, threatened with the loss of its temporalities to schismatics such as Kedrovsky, Archbishop Platon convened an American sobor and the administrative autonomy of the new North American metropolitan district was declared (302 N. Y., at pp. 11-12). This action was taken in pursuance of Patriarch Tikhon’s ukase No. 362 of 1920, a remarkably prescient document, which contained instructions for diocesan bishops in case the activity of the highest church administration should stop and in case the cessation of activity should acquire “ ‘ a protracted or even permanent character ’ ”. In that event, the diocesan bishop was officially empowered to “ ‘ organize the diocesan administration suitable to conditions created ’ ’ ’, with the proviso that “ ‘ all measures that were taken locally in accordance with the present instructions * * * must be submitted for confirmation later to the Central Church Authority when it is re-established.’ ” (302 N. Y., at p. 7.) The American sobor, in establishing the metropolitan district, stated that the “ ‘ final regulation ’ ” of the status of the North American church was to be left to a “ 1 future Sobor of the Russian Orthodox Church which will be legally convoked, legally elected, will sit with the participation of representatives of the American Church under conditions of political freedom * * * and will be recognized by the entire Oecumenical Orthodox Church as a true Sobor of the Russian Orthodox Church.’ ” (302 N. Y., at p. 12.)

Two years after our affirmance in the Cathedral case [supra) we declined to follow such decision to its logical conclusion. In Kedrovshy v. Russian Catholic Church (249 N. Y. 75) we reversed a judgment which had directed Platon and the others in the metropolitan district to turn over to Kedrovsky all the properties and deeds of the new metropolitan district. Realizing that the legitimate claims of the new metropolitan district, whose temporary administrative autonomy had but recently been declared, were entitled to consideration, and In view of the dissensions that have arisen ”, we returned the case to our Supreme Court, leaving it to that court, after full consideration of the facts, and in the exercise of its discretionary power, to achieve a result whereby the faithful of the Russian Orthodox Church in this country might continue to enjoy their accustomed religious temporalities under the supervision of trustees who might “ be relied upon to carry out more effectively and faithfully the purposes of this religious trust ” (pp. 77-78).

Finally, the autonomous status of the metropolitan district, based upon the above-described ukase of 1920, was expressly sustained in Waipa v. Kushwara (259 App. Div. 843, motion for leave to appeal denied 283 N. Y. 780).

The instant action was commenced by the plaintiff corporation, St. Nicholas Cathedral of the Russian Orthodox Church in North America, as the holder of the record title to the cathedral premises. The corporation was created in 1925 by special act of the Legislature, and was composed of Platon and others of the metropolitan district. It is now controlled by and represents Archbishop Leonty, the successor, in December, 1950, of Archbishop Theophilus, who was elected as Platon’s successor as head of the metropolitan district. (The election of Leonty had not taken place at the time of our first opinion which mentioned Theophilus as head of the metropolitan district.) While the corporation continued to hold title to the cathedral down through the years, the cathedral itself was occupied by Kedrovsky (by virtue of the aforesaid judgment in 242 N. Y. 547 which we disregarded in 249 N. Y. 75) until his death in 1934, and the metropolitan district was enjoined from interfering with such possession. Kedrovsky’s son, Nicholas, remained in and occupied the cathedral from 1934 until 1944, when he too died, at which time possession of the cathedral passed informally to his brother, John Kedroff, whose only status was that of a priest in the concededly extinct Renovated Church ”.

Meanwhile, following a period of several years during which the central or patriarchal church had virtually ceased to exist, one Sergius made a compact with the Soviet Government and was appointed acting locum tenens of the patriarchal throne in 1927 (302 N. Y., at p. 15), Sergius, in 1934, appointed Benjamin as “ ‘ permanent Ruling Bishop of the Russian North American Diocese ’ ”, the order reciting that Benjamin had “ ‘ organized in New York a Diocesan Council and that our North American Diocese has begun official existence ’ ” (302 N. Y., at pp. 15-16). During all the period from his appointment in 1934 for the purpose of forming such new diocese down to the commencement of the instant action in 1945, it does not appear that Benjamin asserted any claim to occupancy of the cathedral or took any action to recover possession of it, which conduct may be said to constitute a practical interpretation of his authority as contained in his appointment in forming a new or different diocesan council and North American Diocese.

The present action is in ejectment and was commenced in 1945, as above stated, against John Kedroff, the second son of John S. Kedrovsky, the said Kedroff having taken possession of the cathedral informally on the death of his father and brother without benefit of appointment by anyone. It being quite obvious that Kedroff, on these facts, would not have been able to retain possession of the cathedral as against the claim of plaintiff and of Theophilus, the then bishop of the metropolitan district, and indeed could not put in any defense, he (Kedroff) after the commencement of this action requested reordination as a priest by Benjamin in the latter’s new diocese. (302 N. Y., at p. 20.) Following his reordination by Benjamin in the latter’s new diocese, Kedroff purported to give ” the cathedral to Benjamin who was then permitted to intervene in this action (302 N. Y., at pp. 20-21). Benjamin then occupied the cathedral from October, 1945, until June 6, 1947, when, in order to obtain an adjournment of this action, he agreed to give up possession of the cathedral (302 N. Y., at p. 21). At the time of trial, Benjamin was living at 38 Halsey Street in Brooklyn.

In our opinion we also took note of the general common-law principle developed in the American courts, and notably expressed in Watson v. Jones (13 Wall [U. S.] 679, 724-727) and in our own case of Trustees of Presbytery of N. Y. v. Westminster Presbyt. Church (222 N. Y. 305, 315) and our statute, Religious Corporations Law (§§ 4, 5), that in a central or denominational church, the decision of the highest church judicatories will be accepted as final and conclusive by the civil courts (p. 13). Mention was made on page 21 of the controlling effect we were subsequently to ascribe to the new article 5-C of the Religious Corporations Law, and then we stated (pp. 21-22):

“ Quite apart from this legislative action with respect to the specific dispute here involved, we think that, as a matter of common law as intimated by our 1928 decision in Kedrovsky v. Russian Catholic Church (249 N. Y. 75, supra), there was ample basis and room for an exercise of the discretionary power of the Supreme Court over the conduct of trustees, in favor of the North American metropolitan district. We think that in the light of historical facts and the evidence in the records before us, the conclusion would have been fully warranted that the leaders of the North American metropolitan district are the trustees ‘ who may be relied upon to carry out more effectively and faithfully the purposes of this religious trust ’ (pp. 77-78), i.e., who may administer the temporalities of St. Nicholas Cathedral for the benefit of the faithful for whose use it was originally dedicated.

The courts below, in granting judgment herein to defendants, did not determine, in the exercise of their discretion, whether defendants could be relied upon to carry out faithfully and effectively the purposes of the religious trust. The Westminster and Watson cases (supra), were cited and the conclusion drawn that St. Nicholas Cathedral must be occupied by an archbishop appointed by the central authorities in Moscow and that Benjamin, who was so appointed, was therefore entitled to the possession of the cathedral. This, we think, was error. The determinative issue in the case, apart from the action of the Legislature with respect to the problem, was whether there exists in Moscow at the present time a true central organization of the Russian Orthodox Church capable of functioning as the head of a free international religious body. If the Moscow patriarchal throne has been resurrected by the Soviet Government solely as a means of influencing opinion at home and abroad, and if it may now operate on an international scale, not as a true religious body, but only as an extension or implementation of Russian foreign policy, then it is clear that the North American metropolitan district and not the appointee or ambassador of the central authorities in Moscow, is the proper trustee to manage for the benefit of the faithful in this hemisphere those religious temporalities dedicated to the use of the Russian Orthodox Mission and Diocese prior to 1924 when it became an administratively autonomous metropolitan district.”

And later removing any possibility of ambiguity as to our thoughts on this branch of the case, we said (p. 24): “ In short, we think that further inquiry might well have been made into the present status of the patriarchate in Russia and we think the Supreme Court should have determined, in the exercise of its discretion, whether Benjamin, the appointee of the central church authorities in Moscow, or Metropolitan Theophilus, the archbishop of the North American metropolitan district, was the proper person to administer the temporalities of St. Nicholas Cathedral and whether he was the proper trustee ‘ who may be relied upon to carry out more effectively and faithfully the purposes of this religious trust (Carrier v. Carrier, 226 N. Y. 114).’ (Kedrovsky v. Russian Catholic Church, 249 N. Y. 75, 77-78, supra.) That was not done because it was thought that the cases of Watson v. Jones (13 Wall. [U. S.] 679, supra), and Trustees of Presbytery of N. Y. v. Westminster Presbyt. Church (222 N. Y. 305, supra) required a decision in favor of defendants and that the earlier case of Kedrovsky v. Rojdesvensky (242 N. Y. 547, supra), was determinative of some phases of the problem. Our views on this aspect of the controversy would require reversal and the ordering of a new trial so that the Supreme Court might exercise its discretion along the lines herein indicated. It is unnecessary, however, to discuss that further, for there is another ground requiring reversal here and judgment in favor of plaintiff and the North American metropolitan district which it represents.”

Thus, in so many words, we announced that, in the absence of the statute, we would order a new trial at which findings might be made and discretion exercised, concerning the existence and status of the central church authorities in Moscow and their ability to carry out effectively and faithfully the purposes of the religious trust.

Although the prevailing, concurring and dissenting opinions in this court adverted in detail to the constitutional arguments presented in connection with the statutory branch of the case (pp. 29-33, 35, 42-43), it was necessary for defendant to request amendment of the remittitur to make it clear that such constitutional question had been necessarily determined. We were careful in amending the remittitur to limit the constitutional objections solely to the statutory phase of the case. Thus, we said (302 N. Y. 689, 690): “ * * * Upon this appeal there was presented and necessarily passed upon a question under the Constitution of the United States, viz.: whether article 5-C of the Religious Corporations Law, as construed by this court, violated any rights of the defendants guaranteed by the First and the Fourteenth Amendments to the Constitution of the United States. This court held that the aforesaid statute did not violate any of the rights of the defendants guaranteed by those amendments to the Constitution of the United States.”

After argument and submission of the case, the Supreme Court ordered reargument and specifically requested counsel to include a discussion of whether the judgment might be sustained on State grounds (343 U. S. 972). It was only after both parties concluded that it could not be so sustained (because it depended upon the constitutionality of the statute) that the Supreme Court considered the constitutional issue on the merits. Thus the court said (344 U. S. 94, 97): Because of the constitutional questions thus generally involved, we noted probable jurisdiction, and, after argument and submission of the case last term, ordered reargument and requested counsel to include a discussion of whether the judgment might be sustained on state grounds. 343 U. S. 972. Both parties concluded that it could not, and the unequivocal remittitur of the New York Court of Appeals, 302 N. Y. 689 * * * specifically stating the constitutionality of the statute as the necessary ground for decision, compels this view and precludes any doubt as to the propriety of our determination of the constitutional issue on the merits. Grayson v. Harris, 267 U. S. 352; Indiana ex rel. Anderson v. Brand, 303 U. S. 95. The case now has been reargued and submitted.”

We mention this because it makes clear that the only basis for the appeal to the Supreme Court of the United States was our conclusion that the statute had controlling effect and that it was not unconstitutional.

Mr. Justice Reed, delivering the opinion of the court, made express mention of our alternative, nonlegislative basis for decision. He pointed out that we had considered “ 1 whether there exists in Moscow at the present time a true central organization of the Russian Orthodox Church capable of functioning as the head of a free international religious body ’ ” and he noted that we had ‘ ‘ concluded that this aspect of the controversy had not been sufficiently developed to justify a judgment upon that ground. 302 N. Y., at 22-24 ” (344 U. S., at p. 106).

He then proceeded upon the assumption that the prerevolutionary authority and paramount jurisdiction of the Moscow Patriarchate over the American church has continued without change and without interruption down to the present day. In the light of this assumption, Justice Reed then considered the narrow question of the legislative power of New York to enact article 5-C of the Religious Corporations Law, as that statute was construed by us. His opinion throughout refers to this legislative aspect of the controversy. Thus, he says that our determination “ was made on the authority of Article 5-C ” (p. 97), that “ Article 5-C is challenged as invalid ” (p. 100), that this court “ depended for its judgment * * * upon Article 5-C (p. 106) and he concluded for the Supreme Court that we think that the statute here in question passes the constitutional limits ” (p. 107), that ‘ ‘ Such a law violates the Fourteenth Amendment ” (p. 107), and that it constituted “ a transfer by statute of control over churches ” (p. 110). Later, in the concluding and determinative portion of the opinion entitled “ Legislative Power ”, he rejected our conclusion as to “ legislative power over religious organizations ” (pp. 117, 118), he distinguished the American Communications Assn. v. Douds case (339 U. S. 382) (pp. 118, 119) and repeatedly returned to the theme that the statute in question, article 5-C, was beyond the legislative power of the State of New York and violated the Constitution rule against prohibition of the free exercise of religion (pp. 120, 121).

Thus, we feel that the Supreme Court, in its decision, did not determine the constitutional validity of the alternative common-law disposition of the case previously announced by this court, viz., that, apart from the statute, a new trial would be ordered so that our State Supreme Court, under proper instructions, might ascertain all the facts of the controversy and render appropriate findings and exercise of discretion thereon.

Accordingly, we adhere to our prior decision, apart from the statute, to order a new trial upon the issues here involved. Since we have previously, publicly and categorically expressed our considered conclusion that such action would be required in the absence of the statute, and since the statute has been expunged from the case, it would be unreasonable to take a different position now, unless we were compelled to do so by the action of the Supreme Court. We have already shown that the actual decision of that court relates solely and exclusively to the constitutional validity of article 5-C and does not, in terms, affect our conclusions on the nonstatutory aspect of the controversy. Mr. Justice Reed, however, did include in his opinion an extended discussion (pp. 110-116) of the case of Watson v. Jones (13 Wall. [U. S.] 679, supra) which introduced into the law of America the principle that in a central, denominational or hierarchal church, the decision of the highest church authority or tribunal, will be accepted as final and conclusive by the civil courts. He conceded that the principle, as announced, was not a constitutional pronouncement, and could not have been (p. 115). He continued with the comment that (p. 116): “ * * * The opinion radiates, however, a spirit of freedom for religious organizations, an independence from secular control or manipulation — in short, power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine. Freedom to select the clergy, where no improper methods of choice are proven, we think, must now be said to have federal constitutional protection as a part of the free exercise of religion against state interference.”

It can hardly be said that this passing comment, unnecessary to the actual decision of the court upon the validity of article 5-C, has the effect of elevating the rule of Watson v. Jones (supra) to the dignity of a constitutional mandate binding upon all the courts of the land. There is no indication that the Supreme Court, by its decision herein, intended to make a pronouncement of such major proportions.

Nevertheless, whether Watson v. Jones (supra) be viewed as a common-law or constitutional rule, there is still some area in which the civil courts can and must operate in controversies submitted for adjudication. Justice Reed himself implied as much with his qualification that the rule is operative only 1 where no improper methods of choice are proven ’ ’ in the selection of the clergy, of whom, of course, Benjamin is one.

Whatever other limitations have been or will be placed upon the rule of Watson v. Jones (supra), there is one basic qualification to its application. That is that the highest church authority or tribunal, whose decision is to be accorded final and conclusive effect, must in truth and fact be capable of functioning freely with its activities directed by churchmen in the interests of the church and in accordance with the organic law of the church. In other words, where a property right turns upon a decision of the church authority, the civil court is under a duty, if such issue is raised, to ascertain whether the purported authority is duly constituted and functioning. The court is not required, without investigation and in unquestioning obedience to a legal formula, to give conclusive effect to the determinations of any group which purports to exercise authority, particularly as against the contention that the claimed authority is being subverted to secular and irreligious ends.

In the instant case as we noted in our original opinion (302 N. Y., at p. 22): “ We know that a nominal church organization exists in Russia, but that is not enough ”, in view of the position steadfastly maintained by the plaintiff that the central church authority has been absorbed by the Russian Government and its action deprived, during the period of such domination, of any religious significance.” (P. 24.) To reject the claim of the plaintiff in this regard, without hearing and weighing- all the evidence, would be grossly unjust and would constitute an infringement of their right to free exercise of religion. Uncritical acceptance of the principle of Watson v. Jones (supra) without qualification, as to ‘1 improper methods of choice ” of clergy (344 U. S., at p. 116) under the circumstances here involved, does not advance the end of religious liberty but rather retards it, for in effect the court would be requiring the communicants of the metropolitan district to acknowledge the administrative rule of persons whom they believe are mere puppets of a monolithic and atheistic secular power, if such communicants wish to continue to use the religious temporalities they have so long enjoyed.

With respect to the new trial now to be had, there can be no doubt that the plaintiff corporation which holds title to the cathedral premises is entitled to possession thereof. Likewise, we think, there can be no doubt that the trustees of the corporation, who are now members of the North American metropolitan district, are charged with the duty of caring for and maintaining the property. There is also no doubt that the said trustees must administer these temporalities in accordance with and subject to the “ denominational ” usage whatever that may be held to be, and for the beneficiaries for whom the trust was originally created.

Section 5 of the Religious Corporations Law provides that the “ trustees of every religious corporation shall have the custody and control of all the temporalities and property, real and personal, belonging to the corporation and of the revenues therefrom, and shall administer the same in accordance with the discipline, rules and usages of the corporation and of the ecclesiastical governing body, if any, to which the corporation is subject * *

For the purpose of the case at bar, the question of the proper administration of the cathedral trust by the trustees of the plaintiff corporation comes down to which of two clerics — Leonty or Benjamin — is to be put into possession of the edifice.

A line of cases in this court supports the proposition that the civil courts of this State have jurisdiction in equity to inquire into and determine whether trustees of a religious corporation owning realty are properly administering the real property in accordance with the terms of the trust.

We stated in Westminster Prebyt. Church v. Trustees of Presbytery of N. Y. (211 N. Y. 214, 224-225): “ Upon the trial of the action the plaintiff proved all the facts necessary to make out a prima facie case in ejectment. It proved title, possession and ouster by the defendant. * * * The plaintiff having legal title to the property was entitled to the possession thereof so far as appeared from any evidence properly in the record. If, as the defendant asserts, the trustees of the plaintiff corporation are not administering the property in accordance with denominational usage, the Presbytery [defendant] has an adequate remedy in equity to compel them to do so * *

This principle of civil jurisdiction to review the administration of religious trusts was mentioned again in Trustees of Presby tery of N. Y. v. Westminster Presbyt. Church (222 N. Y. 305, 318, supra), and again, in the above-noted case of Kedrovsky v. Russian Catholic Church (249 N. Y. 75, 77-78) a prior litigation affecting the cathedral and similar issues. In the latter case, we stated (pp. 77-78): “In view of the dissensions that have arisen, the Supreme Court may well conclude that the title should be vested in some other trustee who may be relied upon to carry out more effectively and faithfully the purposes of this religious trust (Carrier v. Carrier, 226 N. Y. 114).”

In the case at bar, it appears obvious that the cathedral was dedicated for the use and benefit of the faithful in the old North American Diocese of the Russian Orthodox Church. Prior to the death of Patriarch Tikhon, the last Patriarch who had unquestionable authority in every respect, the proper administration of the trust demanded that the trustees permit the cathedral to be occupied and governed by the appointee of the Patriarch. But, in view of the undeniable break in the patriarchal succession and the virtual extinction of the Patriarchate after the Bolshevik revolution, in view of the patriarchal ukase of 1920, the circumstances under which it was issued and the creation of the North American metropolitan district in reliance thereon, in view of the strong probability that the Patriarchate, though nominally re-established, cannot function except as an arm or agent of an antireligious civil government, in view of what appears to be the overwhelming adherence of the faithful in America to the clergy of the metropolitan district rather than to the new diocese organized by Benjamin; in view of all this, it is incumbent upon the courts of this State to move cautiously and carefully in this difficult field, to gather all the evidence possible, to entertain the views of expert church scholars, to analyze the available documents and the canon law, to make findings of fact and to exercise sound discretion thereon, building up a record which is suitable for intelligent review and adjudication by the appellate courts.

The action of the court, based upon appearances rather than facts which were then difficult to ascertain, and based upon a conventional legal formula uncritically accepted without reappraisal in the light of special circumstances, resulted in a judgment in 1926 which led to the occupancy of the cathedral for over twenty years by persons who had no right to be there, a fact which is now conceded by both parties. It would be most unfortunate if this court, with so graphic a warning at hand, permitted such a mistake to occur again.

Moreover, since the public policy of the State of New York with respect to this controversy was so strongly pronounced in 1945 and 1948, there is some obligation, we think, upon the courts of this State to attempt, if at all possible within the framework of legal rules, statutes and the Constitution, to finally adjudicate in our State courts the questions posed by this litigation so that we may determine them under State decisional law as the United States Supreme Court hoped could be done when it ordered reargument and which it was prevented from doing because of our unequivocal remittitur ” which had been amended at the request of the defendants so as to enable them to test out in the Supreme Court the constitutionality of our State statute as distinguished from our State decisional law (302 N. Y. 689).

In this connection, as bearing upon our settled public policy in passing the legislation of 1945 and 1948, and as confirmation of the interpretation which the majority of this court placed upon such legislation, we note the letter of Governor Thomas E. Dewey, dated December 22, 1950, to Archbishop Leonty of the North American metropolitan district, which appears in plaintiff’s brief in the Supreme Court of the United States but which was not submitted to us on the appeal here. In that letter, Governor Dewey stated:

I have your gracious telegram conveying greetings from the Eighth All American Sobor of Russian Orthodox Greek Catholic Church of North America. I was happy to be able to sign the Acts of the New York State Legislature in 1945 and 1948 which confirmed the members of the Russian Orthodox Greek Catholic Church in the possession of Saint Nicholas Cathedral in New York City, thus freeing it from the evil and sacrilegious influence of representatives of the Soviet.

I join you in looking forward to the time when all worshippers of the Orthodox Greek Church in the world will be free from the clutches of the Soviet Government.

Sincerely yours,

Thomas E. Dewet ”

The motion to amend the remittitur should be granted to the extent that a new trial is ordered and the ease should be remitted to the Supreme Court, New York County, for trial in accordance with the opinion herein.

Desmond, J.

(dissenting). We dissent. Our authority is the clear, positive and binding pronouncement, by the United States Supreme Court, in its opinion in this very case, of the law of this identical controversy (Kedroff v. St. Nicholas Cathedral, 344 U. S. 94). The sole question in the litigation was, and is, this: May intervening defendant Fedchenkoff, holder of an admittedly valid appointment by the Patriarch of Moscow, world head of the Russian Orthodox Church, as archbishop of the North American Diocese, be prevented by the State of New York from occupying as his see church the archdiocesan cathedral in New York City? This court, when the case was here before (St. Nicholas Cathedral v. Kedroff, 302 N. Y. 1) barred the archbishop from the cathedral, and decreed possession thereof to the Russian church in America, a separatist movement. This court’s reliance for that holding was on article 5-C of the New York Religious Corporations Law, judicially construed as transferring the cathedral from control by the mother church in Russia, to control by the ‘1 American Church ”, on a supposed legislative determination that the Moscow Patriarchate was a mere instrumentality of the Communist regime in the U. S. S. R., and so incapable of carrying out the religious trust. But the United States Supreme Court, reaffirming Watson v. Jones (13 Wall. [U. S.] 679) held flatly that the Watson rule gave constitutional protection, under the First Amendment, to the filling of ecclesiastical offices by the appointive power of the church (see Gonsalez v. Archbishop of Manila, 280 U. S. 1).

The Watson v. Jones (supra) formulation of a fundamental American doctrine of religious freedom (old in New York, see Connitt v. Reformed Prot. Dutch Church of New Prospect, 54 N. Y. 551) is simply this: that, as to a subordinate body of a general church organization, the civil courts must accept, as finally binding, the decisions of the supreme judicatory of the general organization in all matters of discipline or belief, or ecclesiastical custom or law. Since, said the Supreme Court in its opinion in our case, the Russian Orthodox Church is hierarchical in government, the power to appoint, and the choice of, its archbishops is a matter of ecclesiastical government, as is the right of that appointee, as such, to occupy the cathedral. Therefore, the question sought to be litigated in this suit was one with which the civil courts had nothing whatever to do. Any State interference with such choice of a prelate, or such occupancy, would be violative of freedom of religion under the Federal Constitution. The Supreme Court, therefore, reversing this court’s reversal of the lower New York courts, sent the case back to us for further proceedings “ not in contravention of ” (344 U. S., p. 121) the Supreme Court’s opinion. Since the sole purpose of the suit was to obtain an adjudication, contrary to that of the Orthodox Church’s highest judicatory, on a pure question of ecclesiastical government and discipline, the only possible consistent course for this court to take, after that reversal, was to order the complaint dismissed. Instead, action most inconsistent is being ordered, in the form of a trial as to the motivations of the Patriarch of Moscow, and as to the qualifications of Archbishop Fedchenkoff. The ordering or holding of such a trial, or any determination therein, either way, on either of the two questions, has been banned in advance, we say, by the Supreme Court, as an unconstitutional intrusion by the State of New York into the inner affairs of a church. Actually, the interference in this, its second form, is more to be condemned than was the first attempt. Our first decision here was based on a New York statute and, perhaps, there was some duty in the New York courts to try to salvage that statute. Yet, now that the statute has been stricken down as unconstitutional, we are licensing a trial in a civil court to find a fact which, if found, could be no basis for any constitutionally valid judgment.

If unconstitutionality under the First Amendment were not so plain here, we would state more fully the impropriety, as a matter of New York practice, of ordering a new trial, on this record. Here, we are told, there are two fact issues to be tried: as to the domination of the Patriarch by the Kremlin, and as to the fitness of his archiepiscopal appointee. But, at the first trial, plaintiff frankly conceded in open court that it could never hope to prove the “ domination ” by common-law evidence, and asked, instead, that judicial notice be taken. After this court gave plaintiff judgment on an 'assumption that the Legislature had acted on knowledge of that supposed fact of patriarchal subjection to the communists, the United States Supreme Court said that, even if such were the fact, State action based thereon could not be valid, in an ecclesiastical matter. So, the trial we are ordering, insofar as it concerns the workings of the Patriarch’s mind and the purity of his motives, is unjustified by the record, and, by concession, foreordained to futility. As to any question of the fitness of the intervening defendant for the archbishopric, no such contention was made at the first trial.

Pressed on us now as some sort of authority for this new trial order are Kedrovsky v. Rojdesvensky (242 N. Y. 547) and Kedrovsky v. Russian Catholic Church (249 N. Y. 75). If either of those decisions deny the right of the Patriarch of Moscow to appoint the archbishop of New York, then they were overruled on November 24, 1952 (344 U. S. 94, supra). The long and short of it is that the order which this court now hands down violates not only the Supreme Court’s mandate, and the First Amendment, but long and thoroughly settled New York law (Jarvis v. Hatheway, 3 Johns. 180 [1808]; Dieffendorf v. Reformed Calvinist Church, 20 Johns. 12 [1822]; Dutch Church in Albany v. Bradford, 8 Cow. 457 [1826]; Connitt v. Reformed Prot. Dutch Church of New Prospect, 54 N. Y. 551 [1874], supra). And those old cases of ours were in the direct line of descent from fundamental American thought much older than the Constitution itself (vide, Roger Williams in the seventeenth century: “ The government of the civill Magistrate extendeth no further than over the bodies and goods of their subjects, not over their saules, and therefore they may not undertake to give Lawes unto the saules and consciences of men ” quoted in Rossiter’s Seedtime of the Republic [1953], p. 197).

The complaint should be dismissed.

Lewis, Ch. J., Dye and Froessel, JJ., concur with Conway, J.; Desmond, J., dissents in opinion in which Fuld, J., concurs; Van Voorhis, J., taking no part.

Motion granted, etc. [See 306 N. Y. 572.]


author: Conway, J. Fuld, J.

text:
    Max Eisenberg, on Behalf of Himself and All Other Stockholders of Central Zone Property Corporation Similarly Situated, Appellant, v. Central Zone Property Corporation, Respondent, et al., Defendants. Max Eisenberg, on Behalf of Himself and All Other Stockholders of Central Zone Property Corporation Similarly Situated, Appellant, v. Central Zone Realty, Inc., Respondent, et al., Defendants.
    Argued May 28, 1953;
    decided October 22, 1953.

      Emil K. Ellis, Frank, S. Samansky, Max Eisenberg, in person, and Abraham J. Heller for Max Eisenberg, appellant.
    I. The Appellate Division was in error. (Sage v. Culver, 147 N. Y. 241; Kavanaugh v. Kavanaugh Knitting Co., 226 N. Y. 185.) II. The plan was inherently illegal. (McLeod v. Lincoln Medical Coll., 69 Neb. 550; Schwab v. Potter Co., 194 N. Y. 409.) III. The plan compels plaintiff to accept a voting trust certificate in exchange for his stock. (Elger v. Boyle, 69 Misc. 273; Matter of Vandenburgh v. Broadway Underground Connecting Ry. Co., 29 Hun 348; Matter of Morse [Bank of America], 247 N. Y. 290; 277 Park Ave. Corp. v. New York Central R. R. Co., 194 Misc. 417, 275 App. Div. 1028.) IV. The voting trust is illegal. (Matter of Morse [Bank of America], 247 N. Y. 290; Manson v. Curtis, 223 N. Y. 313; Alderman v. Alderman, 178 S. C. 8; Sagalyn v. Milkins, Packard & Wheat, 290 Mass. 434; Sage v. Culver, 147 N. Y. 241; McManus v. Durant, 168 App. Div. 643; Forrester v. Boston Montana Cons. Copper Co., 21 Mont. 544; Knickerbocker Investment Co. v. Voorhees, 100 App. Div. 414; Gertenbach v. Rodnon, 171 Misc. 302; Wheeler v. Abilene Nat. Bank Bldg. Co., 159 F. 391.) V. Plaintiff cannot be compelled to accept appraisal as an alternative to an illegal plan. (Schwab v. Potter Co., 194 N. Y. 409; Continental Securities Co. v. Belmont, 206 N. Y. 7; Kent v. Quicksilver Mining Co., 78 N. Y. 159; Meyerhoff v. Bankers Securities, 105 N. J. Eq. 76.) VI. The acts of the New York corporation were ultra vires. (Schwab v. Potter Co., 194 N. Y. 409; McLeod v. Lincoln Medical Coll., 69 Neb. 550; Forrester v. Boston & Montana Cons. Copper Co., 21 Mont. 544; People v. Ballard, 134 N. Y. 269; Matter of Timmis, 200 N. Y. 177;
      Bertles v. Nunan, 92 N. Y. 152; Matter of Carnegie Trust Co., 151 App. Div. 606, 206 N. Y. 390; People v. Schaller, 224 App. Div. 3; Hoag v. Edwards, 69 Misc. 237; Strauss v. Midtown Enterprises, 270 App. Div. 837; Matter of Macdonald, 205 App. Div. 579.) VII. The transfer from the New York to the Delaware corporation was not a sale within the meaning of section 20 of the Stock Corporation Law. (Halstead v. Globe Ind. Co., 258 N. Y. 176; Schwab v. Potter Co., 194 N. Y. 409; Taylor v. Earle, 8 Hun 1; Murrin v. Archbald Cons. Coal Co., 196 App. Div. 107, 232 N. Y. 541; Dalsheimer v. Graphic Arts Co., 86 N. J. Eq. 49; Kremer v. Public Drug Co., 41 S. D. 365; Botts v. Simpsonville & B. C. Turnpike Co., 10 S. W. 134 [Ky.]; Gresham v. Island City Sav. Bank, 21 S. W. 556 [Tex.]; Pittsburg v. Garret, 34 N. E. 493 [Ohio]; Tanner v. Lindell, 79 S. W. 155 [Mo.].) VIII. Strict compliance with section 20 of the Stock Corporation Law is not sufficient. There must be good faith and a proper corporate purpose. (Hinds v. Fishkill & Matteawan Equitable Gas Co., 96 App. Div. 14; Kavanaugh v. Kavanaugh Knitting Co., 226 N. Y. 185; Murrin v. Archbald Cons. Coal Co., 232 N. Y. 541; People v. Ballard, 134 N. Y. 269; Godley v. Crandall & Godley Co., 212 N. Y. 121; Everett v. Phillips, 288 N. Y. 227; Hoag v. Edwards, 69 Misc. 237; Schwab v. Potter Co., 194 N. Y. 409; McLeod v. Lincoln Medical Coll., 69 Neb. 550; Koehler v. St. Mary’s Brewing Co., 228 Pa. 648; Jones v. Grinnel, 179 F. 2d 873.) IX. The transfer to the Delaware corporation was an integral part of an illegal plan and was therefore itself illegal. (Manson v. Curtis, 223 N. Y. 313; Saratoga Co. Bank v. King, 44 N. Y. 87; Adler v. Zimmerman, 233 N. Y. 431; Carmine v. Murphy, 285 N. Y. 413; Sturm v. Truby, 245 App. Div. 357; Matter of Co-Operative Law Co., 136 App. Div. 901, 198 N. Y. 479.)

      Simon H. Rifkind, Samuel J. Silverman and Bernard H. Greene for respondents.
    I. The proposed plan serves a proper corporate purpose — financial benefit to the stockholders. Absent a violation of statute, the proposed plan does not contravene public policy; it does not improperly curtail stockholders’ control or the alienability of their interests. (United States v. Cumberland Public Service Co., 338 U. S. 451; Bank of New York v. Kennedy, 183 Misc. 819, 269 App. Div. 747; Schwab v. Potter Co., 194 N. Y. 409.) II. The plan does not violate any statute. Each step of the plan is authorized by express statute. (Matter of Timmis, 200 N. Y. 177; Giles Dyeing Mach. Co. v. Klauder-Weldon Dyeing Mach. Co., 212 App. Div. 771, 243 N. Y. 547; Mertz v. Guaranty Trust Co., 247 N. Y. 137; Murrin v. Archbald Cons. Coal Co., 196 App. Div. 107, 232 N. Y. 541; Halstead v. Globe Ind. Co., 258 N. Y. 176; Schwab v. Potter Co., 194 N. Y. 409; Taylor v. Earle, 8 Hun 1; Matter of Bacon [.Susquehanna Silk Mills], 287 N. Y. 1; Matter of Rowe, 107 Misc. 549; Matter of Bacskowska v. 2166 Operating Corp., 304 N. Y. 811; Chandler v. Bellanca Aircraft Corp., 19 Del. Ch. 57; Cooney Co. v. Arlington Hotel Co., 11 Del. Ch. 286, 12 Del. Ch. 174; Orpheum Bldg. Co. v. Anglim, 127 F. 2d 478; 277 Park Ave. Corp. v. New York Central R. R. Co., 194 Misc. 417, 275 App. Div. 1028; Matter of Brentmore Estates v. Hotel Barbizon, 263 App. Div. 389.) III. Appraisal is plaintiff’s exclusive remedy. The Appellate Division properly granted judgment on the pleadings in the New York action and dismissal of the complaint in the Delaware action. (Abbot v. American Hard Rubber Co., 33 Barb. 578; People v. Ballard, 134 N. Y. 269; Anderson v. International Minerals & Chemical Corp., 295 N. Y. 343; Beloff v. Consolidated Edison Co. of N. Y., 300 N. Y. 11; Liebschutz v. Schaffer Stores Co., 276 App. Div. 1; Blumenthal v. Roosevelt Hotel, 202 Misc. 988; Murrin v. Archbald Cons. Coal Co., 196 App. Div. 107, 232 N. Y. 541.)
   Conway, J.

The plaintiff more than twenty years ago purchased at public offering one $500 bond secured by a mortgage upon land and a building on East 45th Street in New York City. Difficulties arose during the depression period followed by the formation of a bondholder’s protective committee, reorganization, the issuance to plaintiff of five new bonds plus five shares of stock represented by voting trust certificates in a new New York corporation then organized and known as Central Zone Property Corporation (hereinafter referred to as New York Corporation). The plaintiff retained the new bonds then issued and with the passage of years they have been paid in full. He has also retained his five shares of stock. The questions presented here have to do with those five shares of stock.

The assets of New York Corporation consist in the main of the land and building on East 45th Street and it is claimed they have a market value of approximately $3,000,000 subject to a mortgage of $1,440,000. There is thus an equity for the stockholders of more than $1,000,000 and the gross receipts from the building have increased progressively between 1945 and 1951.

In March of 1952, the security holders in New York Corporation received a letter to stockholders and voting trust certificate holders and a notice of special meeting. Some had not exchanged their voting trust certificates received on the reorganization in the depression period but were to be permitted to vote as though they had exchanged them for stock certificates. Those owning the totality of stock certificates and voting trust certificates will be referred to hereafter (as they are sometimes in the record) as stockholders. The letter advised that the principal stockholders had considered the feasibility of an arrangement which would enable the stockholders as a group to realize a return on their stock. It is believed that a better price can be obtained for all the shares of stock if they could be sold and delivered as a unit.” Accordingly, said the letter, there had been formulated an outlined plan which would make it possible to sell all the stock of the Corporation [New York Corporation] as a unit when a satisfactory offer is obtained ”. (Emphasis supplied.) The unit sale of stock in New York Corporation was the end to be accomplished by the outlined plan. This purpose required a transfer of all the assets of New York Corporation and then the succeeding steps in the plan to the end that plaintiff would be compelled to join in a unit sale, or as an alternative, to seek an appraisal and cease to be a stockholder. That which was to be accomplished was to take unlawfully from the plaintiff many of his stockholder rights and to impose restrictions upon him never contemplated by any of our statutes. Toward the end of the letter there was a statement that counsel for New York Corporation had obtained a ruling from the Bureau of Internal Revenue that the consummation of the plan would ; not result in taxable gain or deductible loss to New York Corporation, to a Delaware corporation to be formed or to the shareholders of the corporation. That was for the reason, as we are informed in the letter to the stockholders and respondent’s brief, the only design and effect to be accomplished was a dissolution, distribution and liquidation of the New York Corporation and its assets.

The plan as set forth also in the notice of the special meeting of stockholders involved the following steps:

1. The transfer of all assets of New York Corporation to a Delaware corporation to be formed, with an identical capital structure, in exchange for the assumption by the corporation thus to be formed, of the liabilities of New York Corporation and the issuance to New York Corporation of all of the authorized capital stock of the Delaware Corporation (as it will hereafter be called). The Delaware Corporation was to have no othei assets on formation.

2. The deposit by New York Corporation of all the shares of stock of the Delaware Corporation when received, in a voting trust to be formed, of which two named directors of New York Corporation and a third named stockholder would be voting trustees pursuant to a voting trust agreement which would confer upon the Voting Trustees the right to elect directors ” and would also contain, in effect, provisions authorizing the voting trustees “ to sell all of the deposited stock * * * a,s a unit for such consideration in money, notes, mortgages, leases, securities, or otherwise, as they may deem advisable ” provided that the sale was consented to by the holders of voting* trust certificates (there would in fact be only one voting trust certificate holder initially — New York Corporation since it was the sole stockholder of the Delaware Corporation and sole owner of the deposited stock — and whether the voting trust certificates of Delaware Corporation stock were to pass to stockholders of New York Corporation by affirmative exchange by stockholders or by operation of law upon dissolution of New York Corporation is in dispute, as we shall later see) representing at least 66%% of the deposited shares of stock aiidthat there 'was not written objection by 20% or more of such holders within thirty days after the giving of written notice of the terms of the proposed sale. (Emphasis supplied.) Then followed this proposed term of the voting trust agreement: ‘1 The terms of any proposed sale [of the deposited stock] may include an agreement by the purchaser of the stock to have the real property owned by the Delaware Corporation leased to a new corporation to be organised by the Voting Trustees, and in such case the Voting Trustees may organize a new corporation to act as lessee and may lend or contribute to it such part of any net cash proceeds of the sale which may in their judgment be required by such new corporation.” (Emphasis supplied.)

Other terms of the proposed voting trust agreement are not material at this point.

3. The amendment of the certificate of incorporation of the New York Corporation to authorize the transactions set forth in the notice of special meeting.

4. The dissolution of the New York Corporation “ upon the consummation of the foregoing proposals ” and the distribution to each stockholder of the New York Corporation in exchange for his stock (or equivalent security) of a voting trust certificate representing the same number of shares of stock of the Delaware Corporation as are owned by such stockholder in the New York Corporation. (Emphasis supplied.) The brief of the respondent asserts, thus differing from the notice of special meeting to stockholders, that the distribution of the voting trust certificates will be acquired by New York Corporation stockholders only by operation of law upon the dissolution of New York Corporation rather than from affirmative distribution of voting trust certificates in exchange for stock of New York Corporation since the individual stockholders of New York Corporation were never holders of the Delaware Corporation stock which was transferred to the voting trustees.

In other words New York Corporation, under the plan, was X to transfer its assets to Delaware Corporation in exchange for 100% of Delaware Corporation stock, and was to trustee that stock in a voting trust, receiving voting certificates for it. New York Corporation was then to dissolve and distribute to each of its stockholders in return for his stock (or equivalent security) a voting trust certificate representing the same number of shares of stock of Delaware Corporation as were owned by such stockholder in New York Corporation. That would give each stockholder of New York Corporation a voting trust certificate representing stock of the Delaware Corporation of which the three voting trustees had conditional power of disposition and which the stockholders of New York Corporation before its dissolution were to authorize them to sell as a unit upon proper determinable terms. Finally, the letter said: “ Upon the sale of the deposited stock the Voting Trust will terminate and, in the manner provided by the Voting Trust Agreement, there will be distributed pro rata to the Voting-Trust Certificate Holders the net consideration received on the sale, after payment of expenses and other deductions, together with the capital stock of any new corporation that may have been organized by the Voting Trustees for the purpose of acting as lessee.” The voting trust was to continue for ten years unless earlier terminated in a manner provided therefor.

The plaintiff has brought these actions in an effort to prevent the consummation of the plan of the principal stoekz^holffers ”.

Stockholders may not be forced out of corporations by any such method at the hands of directors or officers or principal stockholders ”. The Legislature has not sanctioned it and the claim of respondent that section 20 of the Stock Corporation Law permits it, is without merit. At common law neither the majority stockholders nor the directors could bring about a sale or cause a transfer of any portion of the property, essential for the transaction of its customary business, of a solvent, prosperous corporation, which was justifying the reason for its corporate existence, against the will of a minority however small (Abbot v. American Hard Rubber Co., 33 Barb. 578; People v. Ballard, 134 N. Y. 269; Matter of Timmis, 200 N. Y. 177). As a result, certain injustice'to both majority and minority stockholders followed. A solution was achieved by the legislation‘which is now embodied in section 20 of the Stock Corporation Law. This enabled the holders of two thirds of the shares of stock to “ sell and [or] convey ” its property, rights, privileges and franchises or any interest therein and those opposed, if they so desired, were granted the right to an appraisal of, and payment for, the value of its stock. The statute was in derogation of the common law and, therefore, under applicable rules, has wrought a change only insofar as is expressed in, and required by, its provisions and the mischief to be remedied. (McKinney’s Cons. Laws of N. Y., Book 1, Statutes [1942 ed.], § 301.) To put it simply, upon receipt of the notice of special meeting and the letter to stockholders, plaintiff, after more than twenty years of investment, was suddenly faced with the necessity of deciding, according to respondent’s theory of the applicable law, between two alternatives. He could (1) agree to a transfer of the land and building on East 45th Street in exchange for stock in the corporation to be formed, (2) consent to the trusteeship of such stock in the hands of voting trustees, and (3) agree that the voting trustees in their discretion, under certain specified methods of authorization, might form a second corporation to become lessee of the land and building of which the corporation of which he was a stockholder had been up to that time the fee owner. The sole other alternative of plaintiff, as respondent reads section 20 of the Stock Corporation Law, was to give up his investment, accept the appraisal value of his stock and get out of the New York Corporation so that the principal stockholders might sell all the stock of the first-to-be-formed Delaware Corporation, as a unit. The Legislature never sanctioned such treatment of a minority stockholder and, on application, equity will forbid it. (Kavanaugh v. Kavanaugh Knitting Co., 226 N. Y. 185, 196 [1919].)

In truth, of course, there was to be no dissolution of New York Corporation as our Legislature intended in enacting sections 105 and 106 of the Stock Corporation Law despite the words “ dissolve ” and distribute ” found in subdivision numbered 4 in the notice of special meeting and in the letter to stockholders. In the absence of rights of creditors, New York Corporation was trustee of its assets to distribute them upon dissolution pro rata among its stockholders. (Perry on Trusts and Trustees [6th ed.], § 242; Sage v. Culver, 147 N. Y. 241.) Under section 105 of the Stock Corporation Law, the directors of New York Corporation would be the ones to wind up its affairs, sell its assets and distribute them among its stockholders. Those assets were to be exchanged for the stock of the Delaware Corporation. Far from a distribution pro rata of Delaware Corporation stock to plaintiff, that stock was to be trusteed in its entirety to voting trustees clothed with conditional power granted in advance to form a new corporation to become lessee, instead of owner, of the same building on East 45th Street with authority to lend or contribute to that new corporation, such part of any.net cash proceeds of the sale which might in their judgment be required by it.

Plaintiff has brought one action on behalf of himself and all other stockholders of New York Corporation similarly situated, against that corporation and three individuals as officers, directors and owners, or in control, of the majority of its stock. That action has been denominated by the parties the New York action. The amended complaint alleges that the plan outlined above was devised by the respondent in its own interest and was intended to deprive stockholders of all voting rights; that the acts proposed under the plan were ultra vires and that the plan was illegal and void in that it compelled plaintiff either to ask for an appraisal or become a holder of voting trust certificates representing stock in another corporation in place of his stock. The corporation was. served and answered, admitting substantially the nonconclusory allegations of the amended complaint and both plaintiff and respondent corporation moved for judgment on the pleadings under rule 112 of the Rules of Civil Practice. Special Term granted plaintiff’s motion and denied respondent’s. The Appellate Division reversed, granted respondent’s motion and dismissed the complaint. We think that the amended complaint states a cause of action, that the motion of defendant for judgment on the pleadings should be denied and the motion of. plaintiff for judgment on the pleadings should be granted.

Plaintiff also brought a second action on behalf of himself and all other stockholders of New York Corporation similarly situated, against Central Zone Realty, Inc., a Delaware Corporation, and three individuals as officers and directors of New York Corporation and officers and directors of the Delaware Corporation. That action has been denominated the Delaware action. The complaint alleged, among other facts, after annexing as exhibits A and B the exhibits which had that lettering when attached to the complaint in the New York action, that an action had been commenced to enjoin the New York Corporation and the individual respondents therein from putting the challenged plan into effect; that in such action it was alleged that the plan was illegal and void; that the said action was pending; that, with knowledge of such pendency, the Delaware Corporation accepted a transfer of the assets of New York Corporation. Judgment was sought vacating the transfer and enjoining defendants from tailing further steps under the plan. The respondent Delaware Corporation, which was served, answered admitting the factual allegations of the complaint as outlined. Plaintiff moved for a temporary injunction and respondent Delaware Corporation moved to dismiss the complaint. Special Term granted respondent’s motion and denied plaintiff’s. The Appellate Division affirmed and granted leave to appeal from the judgment of affirmance. We hold that the complaint states a cause of action.

In the first above-entitled action the judgment of the Appellate Division should be reversed and the order of Special Term granting the motion of appellant and denying the motion of respondent for judgment on the pleadings affirmed, with costs in this court and in the Appellate Division.

In the second above-entitled action the judgment of the Appellate Division and the order of Special Term, insofar as they dismissed the complaint herein, should be reversed and the motion to dismiss the complaint denied, with costs in all courts. The appeal from so much of the judgment and order as denied the motion for a temporary injunction is dismissed. The certified question is not answered.

Fuld, J.

(concurring). The plan evolved was designed to accomplish the perfectly proper corporate purpose of keeping-taxes at a minimum, upon a possible future sale of the corporation’s properties, and it may not be denied that the consummation of the plan might well have resulted in a gain to all concerned, corporation and stockholders alike. But that does not mean that the corporation is in a position to insist that plaintiff — a holder of five shares of stock out of some 21,000 shares outstanding — either agree to the plan or, objecting to it, seek an appraisal pursuant to sections 20 and 21 of the Stock Corporation Law. To be able to take advantage of those provisions, the corporation must establish that the proposed plan is within their coverage, and that it cannot do. In my view — and it is for this reason that I concur for reversal —khe series of transactions contemplated by the plan involve far more than a ‘ ‘ sale ” or a “ conveyance. ” of corporate assets, within the sense of the applicable statuteA That being so, there is, as the court at Special Term expressed it, “ no legislative warrant for limiting plaintiff and other dissenters to the remedy of appraisal and payment for their stock, and * * * plaintiff is free to contest the validity of the corporate action in the courts ” (203 Misc. 59, 64-65).

Lewis, Ch. J., Desmond, Dye and Froessel, JJ., concur with Conway, J.; Fuld, J., concurs in separate opinion; Van Vooehis, J., taking no part.

Judgment accordingly.


author:
      Per Curiam.
     Fuld and Van Voorhis, JJ.,

text:
    In the Matter of Leonard Belford, Appellant, against Board of Elections of Nassau County, Respondent, and Louis R. Glantz, Intervener, Respondent.
    Argued October 23, 1953;
    decided October 23, 1953.

      Leonard Belford, appellant in person.
    I. The provisions of section 248 of the Election Law require reversal of the order appealed from. (Matter of Callaghan v. Voorhis, 252 N. Y. 14; Matter of Robinson v. Brock, 255 App. Div. 308; Matter of Shaeffer, 237 App. Div. 278; Matter of Aurelio [Cohen], 291 N. Y. 176; Matter of Smythe v. Westchester Co. Bd. of Elections, 198 Misc. 604.) II. The number of the enrolled voters in the three regular parties shows that no prejudice will result to Judge Glantz in the consolidation required by the statute.

      Foster E. Vogel and Morris Alfred Vogel for intervenerrespondent.
    I. Section 248 of the Election Law does not require the deletion of Judge Glantz’s name from the United City party of Long Beach line. (Matter of Aurelio [Cohen], 291 N. Y. 176.) II. The moving papers indicate the type of opposition to Judge Glantz.
   Per Curiam.

This is a proceeding under section 330 of the Election Law. Petitioner, Belford, the candidate of the Clean Government party for the position of City Court Judge of the City of Long Beach, seeks to have the arrangement of the voting machine format, proposed to be used by the Board of Elections, altered so that his opponent, Glantz, will not appear on the ballot on a separate line of the United City party, an independent body.

Judge Glantz is the candidate of the Republican, Democratic and Liberal parties, and so appears on the proposed ballot on a separate line under each emblem.

Petitioner contends that section 248 of the Election Law requires that Grlantz’s listing on the United City party line be consolidated with the line of one of the regular parties. That section reads in part: ‘ ‘ When the same person has been nominated for the same office to be filled at the election by inore than one party, the voting machine shall be so adjusted that his name shall appear in each row or column containing generally the names of candidates for other offices nominated by any such party; and if such candidate has also been nominated by one or more independent bodies, his name shall appear only in each row or column containing generally the names of candidates for other offices nominated by any such party, and the name and emblem of each such independent bodies shall appear, in one such row or column to be designated by the candidate in writing filed with the officer charged with the duty of providing ballots, or if such person shall fail to so designate, the names and emblems of such independent bodies shall appear in such row or column as such officer shall determine.”

Special Term (Pette, J.) observed that a literal reading of the section might sustain petitioner’s contention. However, he went on to state that such a construction “ certainly seems to discriminate against an independent body vis-a-vis an established party and, as so interpreted, would raise serious doubt as to its constitutionality ”. (204 Misc. 858, 859.)- He then concluded that the proposed ballot gives rise to no confusion or difficulty and denied the petition. The Appellate Division unanimously affirmed.

Mr. Justice Pette found that the granting of the relief here sought tends to discriminate against a large body of independent voters. He stated- that the total vote in the city here involved is less than 8,000, yet the petition which originally designated a number of candidates for other offices and Grlantz for City Court, was signed and acknowledged by independent voters, who describe themselves as the United City Party ”, and bears 1,742 signatures — almost 22% of the electorate. Those figures he found gave fair indication that many voters may prefer not to follow a regular party line ” and might refrain from voting for Grlantz rather than vote for him as a candidate of the Democratic, Republican or Liberal parties.

In affirming, a unanimous Appellate Division wrote that “ strict observance of the letter of section 248 * * * would interfere unnecessarily with the intelligent and ready expression of his choice by an independent voter.” (282 App. Div. 891.) That finding of fact is conclusive here. (See Matter of Crane v. Voorhis, 257 N. Y. 298, 301; Matter of Callaghan v. Voorhis, 252 N. Y. 14; Matter of Aurelio [Cohen], 291 N. Y. 176.)

The order should be affirmed.

Fuld and Van Voorhis, JJ.,

dissent in the following memorandum.

To hold — as the court is now holding —- that respondent is entitled to have his name appear in a separate row for the independent body goes far toward nullifying section 248 of the Election Law. Respondent has been named by all three of the regular political parties and his name appears on the voting machine in each of the rows of those three parties. We see nothing unreasonable in the statute’s preventing his name from being listed also as an “ independent ”.

Conway, Desmond, Dye and Froessel, JJ., concur in Per Curiam opinion; Fuld and Van Voorhis, JJ., dissent in memorandum ; Lewis, Ch. J., taking no part.

Order affirmed.