author: Hubbs, J.

text:
    In the Matter of the Will of William Carroll, Deceased. Ralph C. Carroll, Jr., et al., Infants, by Benjamin F. Schreiber, as Special Guardian, et al., Appellants; Paul A. Curtis, Respondent.

      Argued April 19, 1937;
    decided May 25, 1937.

      Benjamin F. Sclvreiber, as special guardian, for Ralph C. Carroll, Jr., et al., infants, appellants.
    The appointment to respondent was void in its entirety, and the Appellate Division was not justified in severing the bequest so as to sustain part of it. (Matter of Flagler, 248 N. Y. 415; Matter of Murtha, 259 N. Y. 456; Matter of Taylor, 259 N. Y. 578; People v. Parkin, 263 N. Y. 428; Matter of Sherman, 227 N. Y. 350.) The children of Ralph C. Carroll are proper objects of the power of appointment since they are the donee’s blood relatives and, therefore, her “ kindred ” within the meaning of that term as employed by the donor. (Matter of Corlies, 150 Misc. Rep. 596; 242 App. Div. 703; Matter of Freeman, 40 Pa. Ct. 31; Butler v. Elyton Land Co., 84 Ala. 384; Witter v. Walker, 62 Ga. 142.) The property appointed in the specific residuary clause of the donee’s will vested in interest in the infant children immediately on the donee’s death. Custody alone was deferred and there is no unlawful suspension of the power of alienation. (Matter of Hitchcock, 222 N. Y. 57; Steinway v. Steinway, 163 N. Y. 183; Warner v. Durant, 76 N. Y. 133; Fulton Trust Co. v. Phillips, 218 N. Y. 573; Matter of Trevor, 239 N. Y. 6; Matter of Talbot, 126 Misc. Rep. 80; 215 App. Div. 724; Cammann v. Bailey, 210 N. Y. 19; Griffin v.
      Shepard, 124 N. Y. 70; Crawford v. Dexter, 178 App. Div. 764; 224 N. Y. 586; Curtis v. Curtis, 184 App. Div. 274; Matter of Hoyt, 116 App. Div. 217; 189 N. Y. 511; Matter of Bavier, 164 App. Div. 358.) The invalid bequest to respondent passes under the specific residuary clause in the donee’s will to the children. (Matter of Cole, 235 N. Y. 48; Austin v. Oakes, 117 N. Y. 577; Lockwood v. Mildeberger, 159 N. Y. 181; McLean v. McLean, 174 App. Div. 152; 223 N. Y. 695.)

      Daniel J. Mooney, Abel I. Smith and Floyd D. Frost for Ralph C. Carroll, appellant.
    The attempted exercise of the power of appointment, except in favor of Ralph C. Carroll, is void. The appointments to respondent and the children of Ralph Carroll are void, as the persons therein designated as beneficiaries are not proper objects of the power granted to the donee by the will of her father. (Sibley v. Perry, 7 Ves. 552; Ralph v. Carrick, 11 Ch. Div. 873; Ross v. Ross, 20 Beav. 645; King v. Savage, 121 Mass. 303; Jackson v. Jackscn, 153 Mass. 374; Hillen v. Iselin, 144 N. Y. 365; Matter of Chittick, 243 N. Y. 304; Palmer v. Horn, 84 N. Y. 516; Matter of Wilcox, 194 N. Y. 288; Gallagher v. Crooks, 132 N. Y. 338; Carr v. Bedford, 2 Ch. 77; Farmers Loan & Trust Co. v. Polk, 166 App. Div. 43; Wallace v. Diehl, 202 N. Y. 156; Matter of Evans, 234 N. Y. 42.) The attempted exercise of the power of appointment by the second paragraph of the will is void under section 11 of the Personal Property Law (Cons. Laws, ch. 41), and sections 42 and 178 of the Real Property Law (Cons. Laws, ch. 50), inasmuch as it attempts to postpone the absolute ownership of property for more than two lives in being at the time of the creation of the trust. (Hillen v. Iselin, 144 N. Y. 365; Fargo v. Squiers, 154 N. Y. 250; Genet v. Hunt, 113 N. Y. 158; Bishop v. Bishop, 257 N. Y. 40; Matter of Chittick, 243 N. Y. 304; Matter of Horner, 237 N. Y. 489; Matter of Bostwick, 236 N. Y. 242; Matter of Wilcox, 194 N. Y. 288; Matter of Johnson, 233 App. Div. 587; Matter of Durand, 250 N. Y. 45; Fargo v. Squiers, 154 N. Y. 250.) The attempted exercise of the power of appointment to respondent is absolutely void, as both the donee and appointee intended thereby to benefit the husband of the donee, contrary to the will of her father, and the fund passes under the alternative provisions of the father’s will to Ralph Carroll, his only next of kin surviving the donee. (Chenoweth v. Bullitt, 224 Ky. 698; Matter of Wright, [1920] 1 Ch. 108; Portland v. Topham, 11 H. L. Cas. 32; Wright v. Wright, 225 N. Y. 329; Matter of Hoffman, 201 N. Y. 247; Booth v. Baptist Church, 126 N. Y. 215; Kerr v. Dougherty, 79 N. Y. 327; Matter of Hayman, 134 Misc. Rep. 803; 229 App. Div. 853; 256 N. Y. 557; Macy v. Burchill, 131 Misc. Rep. 602 ; 223 App. Div. 702 ; 248 N. Y. 637.) The attempted power of appointment having failed, the fund passes to Ralph Carroll under the alternative provision of paragraph fifth of the will of William Carroll, which fixes the vesting in the absence of any valid disposition of that nature. (Salter v. Drowne, 205 N. Y. 204; New York Life Insurance & Trust Co. v. Winthrop, 237 N. Y. 93; Matter of Fabbricotti, 264 N. Y. 687.)

      Harland B. Tibbetts and Charles H. Kraus for Grace Carroll et al., as trustees, appellants.
    The agreement between the donee-appointor under the power of appointment vested in her by her father’s will, and respondent, to divert to a stranger to the power a portion of the property appointed to respondent by the donee, was a fraud on the power. (Chase Nat. Bank v. Chicago Title & Trust Co., 155 Misc. Rep. 61; 246 App. Div. 201; Matter of Moehring, 154 N. Y. 423; Hutton v. Benkard, 92 N. Y. 295; Cutting v. Cutting, 86 N. Y. 522; Portland v. Topham, 11 H. L. Cas. 32.) Since the appointment to respondent was made in connection with and in fulfillment of an agreement between respondent and the donee to divert a part of the property to a stranger, the fraud on the power was such that the entire bequest must be held void. (Topham v. Portland, 11 H. L. Cas. 32; Matter of Marsden, 4 Drew. 594; Daubeny v. Cockburn, 1 Meriv. 626; Lee v. Fernie, 1 Beav. 483; Salmon v. Gibbs, 3 DeG. & Sm. 343; Birley v. Birley, 25 Beav. 299; Pryor v. Pryor, 2 DeG., J. & S. 205; Matter of Kirwan, 25 Ch. Div. 373; Knowles v. Morgan, 50 Sol. J. 117; Farmer v. Martin, 2 Sim. 511.) The terms of the letter signed by-respondent are clear and unambiguous, and its terms may not be varied or contradicted by testimony of the executor or Curtis as to alleged prior conversations between or declarations of the parties to the agreement. (Hutchison v. Ross, 262 N. Y. 381; Murdock v. Gould, 193 N. Y. 369; Middleworth v. Ordway, 191 N. Y. 404.)

      Jeremiah T. Mahoney and Joseph W. McGovern for respondent.
    The respondent was a proper object of the power of appointment granted to the donee by the will of her father. (Matter of Corlies, 150 Misc. Rep. 596.) Where the exercise of a power of appointment is sought to be invalidated as a “ fraud on the power,” the intention and purpose of the appointor in making the appointment is the essential subject of inquiry. (Matter of Wright, [1920] 1 Ch. 108; Topham v. Duke of Portland, 5 Ch. App. 40.) An appointment, which is sought to be invalidated as a “ fraud on the power,” should be held partially valid and partially invalid, if it appears that it is the combined product of two separate and distinct intentions, one authorized, the other unauthorized. An agreement or understanding between appointor and appointee is material- only in so far as it reveals the true intention of the appointor. (Alexander v. Alexander, 2 Ves. Sr. 641; Chenoweth v. Bullitt, 224 Ky. 698; Lane v. Page, Amb. 234; Aleyn v. Belchier, 1 Eden, 132; Topham v. Duke of Portland, 1 DeG., J. & S. 516; 11 H. L. Cas. 32; Whelan v. Palmer, 39 Ch. Div. 648; Viant v. Cooper, 76 L. T. 768; Ranking v. Barnes, 33 L. J. Ch. 539.) The evidence establishes a definite, unqualified and independent intention on the part of the donee to appoint the sum of $150,000 to respondent, for his own exclusive benefit, regardless of any other intention shq may also have entertained concerning an additional sum of money for her husband. (People v. De Martini, 213 N. Y. 203.)

      Charles H. Griffiths and Pearce H. E. Aul for Harold A. Content, as executor of Elsa C. Milliken, deceased, petitioner.
    An appointment under a power, attended by circumstances clearly indicating an intent to benefit an appointee included within a class designated by the donor, is not void where, after execution of the will exercising the power, the donee obtains the signature of the appointee to a writing in which the appointee states that “ in consideration ” of her having appointed a sum of money to him, he will give a portion thereof to one not within the appointive class, in the absence of a showing that the signing of the writing was the inducing cause of, or consideration for, testatrix making the appointment. (Pryor v. Pryor, 2 DeG., J. & S. 205; Central Trust Co. v. Dewey, 179 App. Div. 112; 223 N. Y. 726; Matter of Tinker, 124 Misc. Rep. 723; 217 App. Div. 255; 244 N. Y. 51; Matter of Southworth, 164 App. Div. 825.)
   Hubbs, J.

In 1910 William Carroll died leaving a will by the fourth paragraph of which he devised and bequeathed the residue of his estate to bis executors in trust to pay the income to his wife during her life. By the fifth paragraph he directed that upon the death of the wife the residuary trust be divided into two equal shares, the proceeds of one to be for the use and benefit of his daughter Elsa during her life, and the proceeds of the other share for the use and benefit of his son Ralph during his life. In the fifth paragraph he gave his daughter power by her last will and testament to dispose of the property so set aside for her use to and among her children or any other ldndred who shall survive her and in such shares and manner as she shall think proper.” A similar power of appointment was given to Ralph to dispose of Ms share to and among Ms Mndred or wife.” With respect to the share set aside' for the use of the daughter Elsa, the will provided that in the absence of any valid disposition of the corpus by her, it should pass to her then surviving cMld or children, descendant or descendants ” and should there be no surviving child or descendant of the daughter, then the share on her decease should pass to the donor’s “ surviving heirs or next-of-ldn, according to the nature of the estate.”

Elsa died on June 26, 1933, without leaving any child or descendant her surviving. The mother, Grace Carroll, survived her and was living at the time of the trial, as was also the brother Ralph. Elsa left a will by wMch she left $5,000 to her brother, and $250,000 to one Paul Curtis, a cousin, such bequest to go to Ms son if he predeceased her. The remainder of her share of the estate of her father she gave to her executors in trust.

When Elsa’s will was drawn, the petitiomng executor, Content, as her attorney, prepared the will and attended to its execution and also prepared a letter directed to Elsa by the legatee Paul Curtis, wMch letter read as follows:

I am informed that by your last will and testament you have given and bequeathed to me the sum of Two Hundred and Fifty Thousand Dollars ($250,000). In the event that you should predecease me and I should receive the bequest before mentioned, I hereby promise and agree, in consideration of the said bequest, that I will pay to your husband, Foster Milliken, Jr., the sum of One Hundred Thousand Dollars ($100,000) out of the said bequest wMch you have given to me by your said will.”

It is not contended by any of the parties to tMs proceeding that Foster Milliken, Jr., husband of Elsa, was of her Mndred, and, therefore, a proper object of the power granted to Ms wife in her father’s will. The question here involved is as to the effect of the attempted provision for her husband upon the bequest to Paul Curtis.

Content testified that he had advised Elsa that she could not lawfully make her husband a beneficiary of any part of her father's estate; that she had drawn a previous will in which she had given the residue of the estate of her father to her brother Ralph with a request that he pay to her husband the sum of $10,000 per annum; that he advised her that that provision could not be enforced; that on October 6, 1931, she told him that she was not satisfied; that she was growing away from her brother and that she wanted to increase the bequest to her cousin Paul Curtis; that she had given Curtis $50,000 in a prior will; that she wanted to leave him $250,000, and that he prepared the will with the prior will before him and on October 13 she and Mrs. Elliott came to his office where she executed the will; that after the will was executed she told him: “ Paul would like to do something for Foster. He would like to leave him some of this money I am leaving to him, and Paul is perfectly willing to put this in writing to show his good faith.” He then talked with Paul, dictated the letter and had it signed. He was not sure whether the letter was delivered to Elsa or whether he kept it for her. Curtis testified that several days before the will was executed Elsa told him she was going to make a new will; that she knew if her brother Ralph heard about it he would probably start a row with her mother; that she had previously left Curtis $50,000 and his son $50,000, and that she was going to leave him $150,000 and add to it $100,000 which she would like him to give to Mr. Milliken; that he told her if she wanted him to do so, he would sign a paper to that effect; that she said she did not know whether it would be necessary but if she wanted him to she would make a date for him to go down to Mr. Content’s office; that she called him upon the-day the will was executed and asked him to meet her there; that he was not present when the will was executed but that he went in afterwards and heard the letter dictated and signed it.

The Surrogate determined that the promise made by Curtis so vitiated and permeated the bequest to him that the appointment constituted a fraud upon the power and made the bequest to him void.

The Appellate Division, two justices dissenting, decided that the only reasonable interpretation to be placed upon the transaction is that Elsa desired to appoint $150,000 to her cousin and an additional $100,000 to her husband; accordingly, that the lawful appointment of $150,000 to Curtis is separable from the unlawful appointment of $100,000 to him for the benefit of the husband.

It seems to us that the conclusion is inescapable that the testimony of Content, the attorney who drew the instruments, and of Curtis, who was the legatee, do not affect the true intent and purpose of the letter. Stress is laid upon the fact as testified to by Content that the testatrix Elsa did not tell him of the understanding with Curtis until after the will had been executed. Nevertheless, it appears from the testimony of Curtis that she had an understanding with him prior to the execution of the will and the writing constituted only a record of the actual prior agreement. The Surrogate had the benefit of hearing the witnesses testify and of observing their conduct. He found nothing in their testimony to detract from the force of the letter signed by Curtis. Concededly, the attempted bequest for the benefit of the husband was not valid. Curtis alone testified that he was to receive $150,000 and the husband $100,000. Content testified that she told him she wanted to leave Curtis $250,000, and that he did not know until after the will was drawn of the understanding between Curtis and the testatrix. The letter says that the agreement to pay the. husband $100,000 is in consideration of a bequest of $250,000. No one can say whether she would have left Curtis $100,000, $150,000 or a lesser or greater sum had it not been for the agreement to take care of her husband. Only by speculation can it be said that she would have left him $150,000 had it not been for that agreement. Had it not been for her continued possession either personally or by her attorney of the promise on the part of Curtis, no one can say but what she might have changed the will. Curtis was a party to the attempted fraud on the power. If the bequest to him be sustained to the extent of $150,000 on his own testimony, he suffers no penalty. It seems to us that on the facts, the conclusion of the Surrogate was correct; that the entire bequest is involved in the intent to defeat the power and that it is impossible to separate and sustain the bequest to Curtis to the extent of $150,000.

Upon the general question the law of England is correctly stated in Halsbury’s Laws of England (Yol. 23 [1st ed.], pp. 58-62):

“ A person having a limited power must exercise it bona fide for the end designed; otherwise the execution is a fraud on the power and void. Fraud in this connection does not necessarily imply any moral turpitude, but is used to cover all cases where the purpose of the appointor is to effect some bye or sinister object, whether such purpose be selfish or, in the appointor’s belief, a more beneficial mode of disposition of the property and more consonant with that which he believes would be the real wish of the creator of the power under the circumstances existing at the date of the appointment.
“ In all cases of fraudulent execution, the fraud consists in the exercise of the power for purposes foreign to those for which it was created and the exercise of the power may be held fraudulent on any of the three following grounds:
“ (1) If the execution was made for a corrupt purpose.
“ (2) If it was made in pursuance of an, antecedent agreement by the appointee to benefit persons not objects of the power, even although the agreement in itself is unobjectionable. An appointment to a child an object of the power, and a contemporaneous settlement by him of the appointed fund, is, however, valid unless it can be shown that the appointment was made in pursuance of a contract inducing the appointment.
(3) If it was made for purposes foreign to the power, although such purposes are not communicated to the appointee before the appointment and although the appointor gets no personal benefit. * * *.
“Appointments cannot be severed, so as to be good to the extent to which they are bona fide exercises of the power, but bad as to the remainder, unless (1) some.consideration has been given which cannot be restored, or (2) the court can sever the intentions of the appointor and distinguish the good from the bad.”

In a footnote on page 60 it is said:

“ The fact that the appointor knows that the object intends to dispose of the fund in favour of a stranger to the power does not necessarily vitiate the appointment, but it may have that effect if it can be shown that the appointment would not have been made but for the agreement (Pryor v. Pryor, 2 DeG., J. & Sm. 205; Daniel v. Arkwright, 2 Hem. & M. 95; Re Foote and Purdon’s Estate, 1 I. R. 365). The question in each case is the character in which the appointee takes the property; ■if it is for his absolute benefit the appointment is good, but if this is not the appointor’s purpose it is bad (Langston v. Blackmore, Amb. 289; Fitzroy v. Richmond, [Duke] [No. 2], 27 Beav. 190; Birley v. Birley [25 Beav. 299]; Pryor v. Pryor, supra; Cooper v. Cooper, L. R. 8 Eq. 312; Roach v. Trood, 3 Ch. D. 429, C. A.; Re Turner's Settled Estates, 28 Ch. D. 205, C. A.) ”

■ Halsbury calls attention that powers of jointure are an exception to the rule that the court may not sever appointments except upon the conditions stated. The cases of Lane v. Page (27 Eng. Reprint, 155); Aleyn v. Belchier (1 Eden, 132; 28 Eng. Reprint, 634), and Whelan v. Palmer (39 Ch. Div. 648), cited by the Appellate Division, are jointure cases and distinguishable. Topham v. Duke of Portland (1 DeG., J. & Sm. 517) is relied upon in support of the doctrine that the appointment is separable. We find nothing in that case that sustains the respondent's position.

In Pryor v. Pryor (supra) it is stated: The donee of a limited power of appointment may well execute it in favour of an object of the power, though he believes and knows that the appointee will at once dispose of the property in favour of persons who are not objects of the power. -But if, besides this belief and knowledge, there is a bargain between the appointor and appointee that the appointee shall make a disposition in favour of persons not objects of the power, and the just result of the evidence is, that the appointment would not have been made but for the bargain, then the appointment is bad.”

In that case a husband and wife had a power of appointment of certain real estate limited to the use of one or more of their children “ subject to such powers, provisoes remainders and limitations over (such charges, powers, provisoes, remainders and limitations over being for the benefit of the said children or some or one of them).” They appointed the property to two of their sons as joint tenants and contemporaneously the sons conveyed the property in trust to pay the income to themselves and their brothers and sisters for life with remainders in favor of their children. The intent there was clearly to provide a benefit for grandchildren of the donees of the power where the power gave them authority only to appoint for the use of their children. The bargain was considered in its entirety and the appointment held invalid. There the bargain apparently was largely a matter of inference but it was found to exist from the acts of the parties.

In Daubeny v. Cockburn (1 Meriv. 626, 644) it is said:

“ Either, then, you must hold that a child, giving a consideration for an appointment in its favour, is guilty of no fraud on the power; or you must wholly set aside the appointment procured by the fraud. * * * It is a fraud upon the other objects of the power, who might not, and in all probability would not, have been excluded, but for this agreement. It is, more particularly, a fraud upon those who are entitled in default of appointment: for non constat that the father would have appointed at all if the child had not agreed to the proposed terms.”

,Agassiz v. Squire (18 Beav. 431,458,460 [1854]) involved a power to appoint a rent charge in favor of sons and policy moneys in favor of children; donee appointed the rent charge to a son who on the following day settled it in favor partly of himself and other objects and partly in favor of the husband of donee and others not objects; and made appointment of policy moneys to objects and others not objects, including donee’s husband: “ Here the whole object and scope of the appointment is to secure a benefit for Mr. Clifford. That it is that constitutes the fraud; this vice runs through every part of it, and the whole set of deeds seems to me to have been constituted, not with the view of executing the power, bona fide, in favour of the objects of it, and in the course of so doing exceeding the power entrusted, but with the view of giving an advantage to the husband of the donee of the power. * * * I think that the transaction must be taken as a whole, that it was a fraud upon the power, and that this fraud runs through the whole transaction, the scope and object of which is confined to giving, by means of it, benefits to a person, who was, by the donor, excluded from being an appointee, or deriving any advantage from the exercise of the power.”

In the case at bar we have written evidence which is corroborative of a prior agreement. It seems to us that the Surrogate was quite correct in concluding that it is impossible to separate the valid from the invalid disposition. To say that it clearly appears that the donee would have given $150,000 to Curtis had the bargain not been made is not justified. It clearly appears that an object of the appointment to Curtis was to secure a benefit to the husband of the donee who was excluded by the donor of the power from being an appointee or benefiting from the exercise of the power. The purpose of the donee was to accomplish by an agreement with Curtis an end entirely foreign to the intent of the donor of the power. Her act constituted a fraud on the power in which Curtis actively participated. There was a bargain between the donee and Curtis by which, in consideration of the appointment, he agreed to dispose of a part of the legacy in favor of a person who was not an object of the power. That bargain resulted in vitiating not only the provision for donee’s husband but also the bequest to Curtis within the meaning of the authorities heretofore cited.

The wording of the letter which he signed was “ in consideration of (he said bequest ” he would pay to donee’s husband $100,000 “ out of the said bequest ” of $250,000. It is hard to see how those plain words can be construed otherwise than a bargain 1o share his bequest of $250,000 with another not an object of the power. Such a bargain under all the authorities makes the entire bequest void. (Cf. 46 Yale Law Journal, 344; 49 C. J. p. 1298.)

The appellant Ralph C. Carroll contends that in permitting the donee to appoint to any of her kindred, the donor used the word kindred ” in a narrow sense and intended to limit the possible beneficiaries of the power to her next of kin. If correct in that contention, since the donee died without children, the result would be that she could appoint only to her brother, the appellant Ralph Carroll. There is no inconsistency or ambiguity in the will of William Carroll evidenced by the fact that he gave to his daughter a power of appointment to her children or any other of her kindred. Kindred has a well-established meaning, blood relatives,” as distinguished from that limited number of blood relatives embraced under (he term “ next of kin.” William Carroll in his will used the words next of kin where it is apparent that it was 'his intention that the property was lo pass as in the case of intestacy. The Surrogate has determined that kindred was used in the generally accepted meaning of the word. That determination has been affirmed by the Appellate Division and there appears no reason for according to it a limited application.

A question is raised also as to whether the appointment of testatrix to the children of her brother, Ralph C. Carroll, of the residue of the property of which she had power of appointment did not violate the statute against perpetuities. Her direction is that the pioperty shall be divided by her trustees; that out of the income they shall provide for the care, maintenance and support of each of the children until the child becomes twenty-one years of age, when the principal of the fund shall be paid over. If there was a vesting of the shares in the children upon the death of Elsa with custody subject to termination of the primary life estates, that is, the life tenancy of Grace Carroll, mother of Elsa, and during the minority of the children, there is no violation of the statute, for the only life estates of the property involved under the will of William Carroll are the life estates of Grace Carroll and of Elsa. As determined in Matter of Hitchcock (222 N. Y. 57, 71), where it is clear that the testamentary intent is to confer absolute ownership within the statutory period, the withholding of custody and physical possession for an additional term during which the power to administer is intrusted to a third party, does not create an unlawful perpetuity. Here the withholding of custody and control is only during the minority of the children when they could not act for themselves and it seems that there was no intent other than that the interests of the infants were to vest-subject to such power of control.

The order of the Appellate Division should be modified in accordance with this opinion and as so modified affirmed, without costs.

Crane, Ch. J., O’Brien, Lottghran, Finch and Rippey, JJ., concur; Lehman, J., dissents and votes to affirm.

Judgment accordingly.


source: Caselaw Access Project

author: Rippey, J.

license: Public Domain

text:
    The People of the State of New York ex rel. American Sugar Refining Company et al., Appellants, against James J. Sexton et al., Constituting the Board of Taxes and Assessments of the City of New York, Respondents. The People of the State of New York ex rel. American Sugar Refining Company et al., Appellants, against William S. Miller et al., Constituting the Board of Taxes and Assessments of the City of New York, Respondents. (Two Proceedings.)
    Argued April 19, 1937;
    decided May 25, 1937.

      Eugene Fay and William H. King for appellants.
    Provisions of the Civil Practice Act prohibit defeat of proceedings for misjoinder and empower the court appropriately to direct trial on the merits. (Civ. Prac. Act, §§ 96, 105, 192; Rules Civ. Prac. rule 102.) The liberalizing provisions as to practice and the wider authority granted by the Civil Practice Act have been generally availed of by the courts, and the Court of Appeals, if it concludes that there was misjoinder of parties, may direct appropriate severance and trial upon the merits. (People ex rel. Di Leo v. Edwards, 247 App. Div. 331; Lee v. Schmeltzer, 229 App. Div. 206; Goldey v. Bierman, 201 App. Div. 527; Gerseta Corp. v. Silk Association, 220 App. Div. 302; Prescott v. Guibord, 236 App. Div. 170; Gould v. Gould, 124 Misc. Rep. 240; United States Trust Co. v. Greiner, 124 Misc. Rep. 458; Gibbs v. Sokol, 216 App. Div. 260; Matter of City of New York [Staten Island], 237 N. Y. 275; Comerford v. Fahy Market, 204 App. Div. 533; Davis v. Hauk & Schmidt, Inc., 232 App. Div. 556; Haines v. Bero Engineering Constr. Corp., 230 App. Div. 332.)

      Paul Windels, Corporation Counsel (Oscar S. Cox, Paxton Blair and Milton I. Newman of counsel), for respondents.
    Since the eight parcels embraced in the petition were not owned by the two relators jointly but were owned six by one relator and two by the other, the joinder of the two relators in a single petition was unauthorized, and the petition was rightly dismissed. (People ex rel. Washington Building Co. v. Feitner, 163 N. Y. 384; People ex rel. Zollikoffer v. Feitner, 172 N. Y. 618; People ex rel. Litchfield v. O’Donnel, 187 N. Y. 536; People ex rel. Thomson v. Feitner, 168 N. Y. 441; People ex rel. New York Stock Exchange Building Co. v. Cantor, 221 App. Div. 193; 248 N. Y. 533; People ex rel. Coney Island Jockey Club v. Purdy, 152 App. Div. 175; 207 N. Y. 695; People ex rel. O’Neil v. Purdy, 188 App. Div. 485; People ex rel. Morse Dry Dock & Repair Co. v.
      Purdy, 100 Misc. Rep. 580.) Section 192 of the Civil Practice Act providing that special proceedings shall not be defeated by misjoinder of parties is inapplicable to writs of certiorari. The same is true of the provisions of section 96 authorizing severances. (Matter of McKinney v. McGoldrick, 266 N. Y. 665; People ex rel. N. Y. C. R. R. Co. v. Gilson, 239 App. Div. 108; 265 N. Y. 457; People ex rel. N. Y. C. R. R. Co. v. Bissell, 207 App. Div. 705; People ex rel. Church of the Holy Communion v. Assessors of Town of Greenburgh, 106 N. Y. 671; Matter of Corwin, 135 N. Y. 245; People ex rel. Washington Building Co. v. Feitner, 163 N. Y. 384.)
   Rippey, J.

The American Sugar Refining Company, a New Jersey corporation, and the Brooklyn Cooperage Company, a subsidiary of the former organized under the laws of the State of New York, joined in three separate certiorari proceedings to review tax assessments for the years 1933, 1934 and 1935, respectively, on eight separate parcels of improved real property in Brooklyn, of which six parcels were owned by the former company and two were owned by the subsidiary, on the grounds of inequality, illegality and overvaluation. No returns were filed to the writs. Motions were made by relators to punish respondents for contempt, whereupon counter-motions were interposed by respondents to quash the writs on the ground of misjoinder of parties. At Special Term the motions to quash were denied. Orders entered thereon were reversed by the Appellate Division and appeal has been taken to this court.

Section 907 of the charter of the city of New York (Laws of 1901, ch. 466, as amd. by Laws of 1935, ch. 713) provides for a certiorari to review or correct on the merits any final determination of the Board of Taxes and Assessments where the owner of real property claims that the assessments are illegal or erroneous by reason of inequality or overvaluation. The charter is silent on many matters of practice, form, substance and procedural detail. Under such a situation, it has been consistently held that resort must be had to the provisions of the Tax Law (Cons. Laws, ch. 60) in so far as such provisions are applicable and are not in conflict with pertinent provisions of the charter (People ex rel. Thomson v. Feitner, 168 N. Y. 441; People ex rel. Morse Dry Dock & Repair Co. v. Purdy, 100 Misc. Rep. 580; People ex rel. Brooklyn Development Co. v. Purdy, 96 Misc. Rep. 10; affd., 177 App. Div. 936; People ex rel. New York Water Service Corp. v. Hennessey, 265 N. Y. 609; People ex rel. New York Stock Exchange Building Co. v. Cantor, 221 App. Div. 193; affd., 248 N. Y. 533; People ex rel. Coney Island Jockey Club v. Purdy, 152 App. Div. 175; affd., 207 N. Y. 695; People ex rel. O’ Neil v. Purdy, 188 App. Div. 485; People ex rel. Zollikoffer v. Feitner, 172 N. Y. 618; People ex rel. Litchfield v. O’Donnel, 187 N. Y. 536), and when both the Tax Law and the charter are silent, pertinent and non-conflicting provisions of the Civil Practice Act and the Rules of Civil Practice must be invoked. (People ex rel. N. Y. Central R. R. Co. v. Gilson, 239 App. Div. 108; affd., 265 N. Y. 457; People ex rel. Durham Realty Corp. v. Cantor, 234 N. Y. 507; People ex rel. DiLeo v. Edwards, 247 App. Div. 331; Matter of Belmont, 40 Misc. Rep. 133; People ex rel. Rochester Tel. Co. v. Priest, 181 N. Y. 300.)

In some of the cases cited and in Matter of Corwin (135 N. Y. 245); People ex rel. Church of the Holy Communion v. Assessors (106 N. Y. 671); People ex rel. Manhattan Ry. Co. v. Barker (152 N. Y. 417, 431); People ex rel. Thomson v. Feitner (supra); People ex rel. Sands v. Feitner (173 N. Y. 647); Mercantile Nat. Bank v. Mayor, etc. (172 N. Y. 35, 42) and others that, perhaps, might be found, general expressions have been used which would seem to indicate that provisions of the Code of Civil Procedure and of its successor, the Civil Practice Act, were not to be considered in certiorari proceedings brought to review tax assessments. An examination and analysis of those cases will indicate that any decision involved was based upon the fact that some provision of the Tax Law expressly covered the point at issue. Such decisions must be limited to their own peculiar facts. None of them involved the point in issue here and most, if not all of them, antedated the liberalizing provisions of the Civil Practice Act.

Section 290 of the Tax Law provides, among other things, that two or more persons assessed upon the same roll who are affected in the same manner by the alleged illegality, error or inequality, may unite in the same petition.” It is urged by respondents that petitioners are not “ affected in the same manner,” and that, consequently, there is a misjoinder of parties (petitioners). There is much to be said in favor of a contrary conclusion. We do not consider or decide that point. We base our decision on another ground. Assuming, but not deciding, that there is a misjoinder of parties, the orders quashing the writs cannot be sustained. Had there been a non-joinder of necessary parties, the situation would have been different. In such a case, if the result of permitting a new and necessary party to be brought in would render nugatory the statute limiting the time after the completion of the assessment and filing of the roll within which the petition might be filed and the writ granted, the granting of a motion to quash might be imperative. (People ex rel. N. Y. Central R. R. Co. v. Gilson, supra.) The defect in that case was jurisdictional. But here, both parties are properly before the court, and the court, had a timely motion been made, might have ordered a severance (Civ. Prac. Act, § 96), or a motion might have been made to strike out the party improperly joined (People ex rel. Sodus Bay & Southern R. R. Co. v. Cheetham, 45 Hun, 6.) Section 192 of the Civil Practice Act specifically provides that no action or special proceeding shall be defeated by the misjoinder of parties.

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

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

Ordered accordingly.


author: O’Bbien, J.

text:
    The People of the State of New York ex rel. Amalgamated Properties, Inc., Respondent, against George W. Sutton, as Assessor of the City of New Rochelle, et al., Appellants.
    Argued April 20, 1937;
    decided May 25, 1937.

      Aaron Simmons, Corporation Counsel (William L. Moran of counsel), for appellants.
    The property of the relator was assessed at its full market value. (People ex rel. Interstate Land Holding Co. v. Purdy, 206 App. Div. 606; 236 N. Y. 609; People ex rel. Manufacturers Nat. Bank v. Hunt, 241 App. Div. 261.) All property and improvements in the city of New Rochelle are assessed at the ratio of one hundred per cent to each parcel of land and improvements to its full market value. (People ex rel. Powell v. Supervisors, 54 Misc. Rep. 323; People ex rel. Haile v. Brundage, 195 App. Div. 745; People ex rel. Warren v. Carter, 109 N. Y. 576; People ex rel. H. & M. R. R. Co. v. Tax Commissioners, 143 App. Div. 26; People ex rel. United Verde Copper Co. v. Feitner, 54 App. Div. 217.) Relator in order to succeed must show not only that its property was overvalued but also that as a result of such overvaluation it is assessed on a higher basis of value than other properties on the assessment roll. (People ex rel. Rickey v. Hunt, 241 App. Div. 261; People ex rel. Brown v. O’Rourke, 31 App. Div. 583; People ex rel. Powell v. Supervisors, 54 Misc. Rep. 323; People ex rel. Warren v. Carter, 109 N. Y. 576; People ex rel. H. & M. R. R. Co. v. Tax Commrs., 143 App. Div. 26; People ex rel. Suburban Investment Co. v. Miller, 73 Misc. Rep. 214; People ex rel. United Verde Copper Co. v. Feitner, 54 App. Div. 217; People ex rel. Ward v. Feitner, 61 App. Div. 456; 168 N. Y. 677; Sloman-Polk Co. v. City of Detroit, 261 Mich. 689; Clark v. Middleton, 74 N. H. 188; People ex rel. Powell v. Supervisors, 54 Misc. Rep. 323.) The fact that an economic depression overcame the whole country is not justifiable cause for not following the ordinary standards set up by which real property may be assessed. (People ex rel. Manhattan Ry. Co. v. Barker, 146 N. Y. 304; Great Northern Ry. Co. v. Weeks, 297 U. S. 135; People ex rel. Two Lakes Corp. v. Mathews, 151 Misc. Rep. 294.)

      Benjamin W. Moore and Milton L. Bomm for respondent.
    Finders of the facts should not revert to pie-depressi on days for real property valuation. (Heiman v. Bishop, 272 N. Y. 83; Great Northern Ry. Co. v. Weeks, 297 U. S. 135.) Relator is entitled to relief upon the finding that the assessment overvalued its property to the extent of $325,895. (Mercantile Nat. Bank v. Mayor, 172 N. Y. 35; People ex rel. Warren v. Carter, 109 N. Y. 576; People ex rel. Lehigh Valley Ry. Co. v. Burke, 247 N. Y. 227; People ex rel. Ward v. Feitner, 61 App. Div. 456; 168 N. Y. 677; Matter of Cahill v. Goes, 242 App. Div. 423.)
   O’Bbien, J.

Relator’s real property in New Rochelle was assessed for the tax year 1933 as of the value of $1,629,475. The petition for certiorari alleges error by reason of overvaluation and inequality as required by section 290 of the Tax Law (Cons. Laws, ch. 60). The return denies these allegations and alleges that all the real property in New Rochelle was assessed at its full value. On the petition, the order of certiorari and the return a reference was ordered to take testimony in relation to the issues raised by the pleadings. The referee reported that the property was overvalued to the extent of $325,895. Re made no express finding in respect to inequality but in his opinion cited the rule that “ if overvaluation is proven, inequality is presumed.”

In appraising the value of the land and buildings, the referee proceeded upon the correct theory. Evidence was produced in relation to the method of construction, depreciation and reduction in rental. The effect of the financial depression since 1929, which the referee considered, is also a proper element of present market value. (Great Northern Ry. Co. v. Weeks, 297 U. S. 135; Heiman v. Bishop, 272 N. Y. 83, 87.) Market value as of the date of the assessment is a question of fact which, when calculated by correct rules of law and supported by evidence, is not subject to review by this court. (People ex rel. Warren v. Carter, 109 N. Y. 576.)

Since the relator proved overvaluation, it has shown itself to be aggrieved within the meaning of section 290 of the Tax Law. It was under no obligation expressly to prove inequality. Courts will not assume that all property in the assessment district has been overvalued. Unless such is shown to be the fact, then the assessment of relator’s property in excess of its full market value involves inequality. (People ex rel. Ward v. Feitner, 61 App. Div. 456; affd., 168 N. Y. 677; Matter of Cahill v. Goes, 242 App. Div. 423.)

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, Hubbs, Loughran, Finch and Rippey, JJ., concur.

Order affirmed.


text:
    The People of the State of New York ex rel. Sea Insurance Co., Ltd., Respondent, against Mark Graves et al., Constituting the State Tax Commission, Appellants.

      Argued April 20, 1937;
    decided May 25, 1937.

      John J. Bennett, Jr., Attorney-General (Wendell P. Brown of counsel), for appellants.
    The premiums by which the additional tax has been measured were premiums charged for business done in this State and were properly used as a base for the additional assessment. (Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235; London Assur. Corp. v. Thompson, 170 N. Y. 94; Morris & Co. v. Skandinavia Ins. Co., 279 U. S. 405; Palmetto Ins. Co. v. Conn, 272 U. S. 295; Campania De Tabacos v. Collector, 275 U. S. 87; Equitable Life Assur. Society v. Pennsylvania, 238 U. S. 143; People ex rel. Kirkman v. Van Amringe, 266. N. Y. 277; People v. Thames & Mersey Marine Ins. Co., 176 N. Y. 531.)

      John C. Crawley, Archibald G. Thacher and A. Chalmers Charles for respondent.
    The relator’s New Jersey contract with the other insurance companies was for reinsurance only. (Morris & Co. v. Skandinavia Ins. Co., 279 U. S. 405; Mercantile Ins. Co. v. State Ins. Co., 25 Barb. 319; Gledstanes v. Royal Assurance Co., 5 B. & S. 797; Boston Ins. Co. v. Globe Fire Ins. Co., 174 Mass. 229;
      Allgeyer v. Louisiana, 165 U. S. 578; Ætna Life Ins. Co. v. Dunken, 266 U. S. 389; People ex rel. Kirkman v. Van Amringe, 266 N. Y. 277; Stone v. Penn Yan, K. P. & B. Ry. Co., 197 N. Y. 279; Federal & Deposit Co. v. Tafoya, 270 U. S. 426.) The asserted tax would be invalid. (People ex rel. P. S. L. Assur. Soc. v. Miller, 179 N. Y. 227; Equitable Life Assur. Society v. Pennsylvania, 238 U. S. 143.)
   Hubbs, J.

The question presented is whether the relator, Sea Insurance Company, a foreign insurance company, was doing a marine reinsurance business in this State, and, therefore, subject to a tax under section 187 of the Tax Law (Cons. Laws, ch. 60). The relator is an English company. Chubb & Son, a copartnership, of New York is its general agent. That firm is also general agent of several other insurance companies including the Hartford and Federal. All of the companies represented by Chubb & Son entered into an agreement to reinsure a certain percentage of any line taken by any one of the companies, parties to the agreement. The agreement was entered into in the State of New Jersey where the relator had an office for the transaction of business. The Hartford and Federal did business directly with the parties insured in New York. On such business done in New York, the relator by virtue of the contract entered into in New Jersey became a reinsurer for the percentage of the lines specified in the contract of reinsurance. Its portion of the premiums collected for the business written in New York by the Hartford and Federal was paid to the relator at its office in New Jersey. The Hartford and Federal paid the tax assessed against them in New York under section 34 of the Insurance Law (Cons. Laws, ch. 28) based on the premiums collected on business which they did directly with parties insured in New York. The Tax Commission assessed the relator on the amount paid to it by checks sent to it in New Jersey by the Hartford and Federal for its charge for reinsurance on the business written by the Hartford and Federal directly in New York.

The question here is, can such a tax for the privilege of doing business in New York be legally assessed against the relator? That depends upon whether the relator did business in New York. Was it in any way a party to the insurance contracts entered into in New York by the Hartford and Federal Insurance Companies directly with the parties to whom they issued policies? In actual practice, a line of insurance is frequently offered larger than any one company may desire to assume. In such a case one method is to accept the line offered and reinsure the whole or a part of it with some other company or companies.

The contract made by the original insurance company with the other company or companies for its protection as to the whole or a portion of the risk is known as a reinsurance contract.

“ The contract that one insurer makes with another to protect the first from a risk he has already assumed.” (Iowa Life Ins. Co. v. Eastern Mut. Life Ins. Co., 64 N. J. L. 340, 348; London Assur. Corp. v. Thompson, 170 N. Y. 94, 99.)

Of that form of reinsurance contract, Sanford, J., in Hone & Bokee v. Mutual Safety Ins. Co. (1 Sandf. 137, 145; affd., 2 N. Y. 235), said:

“for more than two centuries, the contract of re-assurance has been well known, and its principles firmly established * * *. The contract of re-assurance is described as a contract of indemnity to the party obtaining it.”

That practice is the usual practice and a contract so made is known as reinsurance. There is, however, another practice by which two or more companies enter into an agreement by which they agree that each will and does in advance reinsure any line taken by any one of the companies in the future to an amount equal to a certain per cent of the line taken by that one of the original insuring companies. To illustrate, the Home, iEtna and Hartford may agree that each will reinsure one-third of any line taken by each of the others. That is reinsurance in advance. The obligation attaches automatically upon the acceptance of a risk by any one of the three companies. The contract is a self-executing contract. It may provide and usually does that upon acceptance of a risk by one of the companies, notice shall be given to each of the reinsuring companies including a survey and a statement of all necessary information in regard to the risk. That was the method employed in the case at bar. (9 Cooley, Briefs on the Law of Insurance [2d ed.], pp. 6741-6760; Imperial Fire Ins. Co. v. Home Ins. Co., 68 Fed. Rep. 698.)

The agreement for the latter type of reinsurance is sometimes called a “reinsurance compact.” (German American Ins. Co. v. Commercial Fire Ins. Co., 95 Ala. 469; 16 L. R. A. 291.)

It is also known as “ open policy or contract of reinsurance.” (Continental Ins. Co. v. Ætna Ins. Co., 139 N. Y. 16.)

The similarity between the two types of reinsurance contracts is of importance because of the contention by appellant that reinsurance in the case at bar was effected when the principal risks insured directly in New York by the Hartford and Federal resulted in premiums being paid by those companies to relator. The appellants concede that where a risk is written in New York and a reinsurance policy covering the particular risk is written in another State, the business of reinsurance is done in the State where the reinsurance policy is written and hence that such a transaction would not be taxable as business done in the State of New York under section 187 of the Tax Law. If the Federal accepted a line of $10,000 on a risk in New York and separately reinsured fifty per cent of the risk with the relator in New Jersey, the place of business of the reinsurance company would be New Jersey and it would not be taxable in New York as it, under those facts, would not be doing business in New York. It would have no contract relation with the owner of the property insured in New York by the Federal. Its only contract would be with the Federal and that contract would be a New Jersey contract. So here, if separate reinsurance contracts had been entered into between the Hartford and Federal and the relator in New Jersey, the relator would not be subject to the tax assessed. Does the fact that the reinsurance liability was assumed by one contract made in advance in New Jersey instead of by separate reinsurance contracts entered into for each original risk change the rule of law applicable? We think not. True it is that no liability as to a specific risk attached under the general reinsurance contract until either the Hartford or Federal accepted a risk in New York when the liability as between the Hartford and Federal and relator attached automatically. But it attached not because the risk had been accepted in New York but because of the terms of the contract entered into in New Jersey. It is suggested that the acceptance of risks directly by the Hartford and Federal in New York constituted doing business in New York by the relator; that the direct insurance contracts entered into in New York by the Hartford and Federal added life to the existing reinsurance contract entered into by relator and made it a party to the contracts entered into in New York by the Hartford and Federal so that it became a party to the business done in New York; but the parties insured directly in New York had no contract with relator and could not enforce the reinsurance contract against it in case of loss. That company was a stranger in fact and in law to the parties insured under the New York contracts made with the Federal and Hartford. In the event of a loss on a policy issued by the Hartford in New York, the insured looked to the Hartford alone and the latter would look to the relator under its New Jersey contract for the portion of the loss which it had reinsured. No act of the original insured brought the reinsurance contract into effect. The insured would not even know that a reinsurance contract existed. (Morris & Co. v. Skandinavia Ins. Co., 279 U. S. 405.)

The premiums received by relator were contracted for in New Jersey and were received there. Its capacity to make and perform its contract was .not derived from the laws of New York. (Alaska Packers Assn. v. Industrial Accident Commission, 294 U. S. 532, 540.)

Appellants rely upon the case of Palmetto Fire Ins. Co. v. Conn (272 U. S. 295). That case has no application. The Palmetto Insurance Company of South Carolina made a contract in Michigan with the Chrysler Automobile Company to insure the owner of each automobile purchased from the Chrysler Company. Automobiles were sold in Ohio and the insurance company sent to each purchaser a certificate of insurance covering the automobile so purchased. The question was whether the insurance company was doing business in Ohio. It was held that it was. In that case, there arose a direct contract of insurance between the purchasers of the automobiles and the insurance company, so that in case of loss the owners of the automobiles so insured had a direct claim against the insurance company. In the case at bar the situation was exactly the opposite. In case of loss the party insured would never know of the reinsurance contract. In that case Justice Holmes said: “ Manifestly, there was nothing in the contract between the plaintiff [insurance company] and the Chrysler Sales Corporation, without more, that Ohio could lay hold of, even if it insured property in Ohio.” That statement is applicable to the facts in this case. Justice Holmes then went on to point out that there was more and, therefore, that the insurance company was doing business in Ohio. The same principle controlled the decision in the Philippine Island case (Compania General DeTabacos v. Collector of Internal Revenue, 275 U. S. 87) and the Equitable Life case (Equitable Life Assur. Soc. v. Pennsylvania, 238 U. S. 143). (Cf. People ex rel. Kirkman v. Van Amringe, 266 N. Y. 277.)

The order should be affirmed, with costs.

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

Order affirmed.


text:
    In the Matter of William H. Walsh, Appellant and Respondent, against New York City Employees’ Retirement System et al., Respondents and Appellants.

      Submitted April 23, 1937;
    decided May 25, 1937.

      Jerome J. Wallner for petitioner, appellant and respondr ent.
    The Appellate Division cannot create a question of fact by declaring that there is one, nor, by assuming to reverse on the facts, reverse a determination that does not involve a question of fact. (Green v. Supreme

      Council of Royal Arcanum, 206 N. Y. 591; Bini v. Smith, 161 N. Y. 120; Livingston v. City of Albany, 161 N. Y. 602; Hirshfeld v. Fitzgerald, 157 N. Y. 166; Otten v. Manhattan Ry. Co., 150 N. Y. 395.) The petitioner’s pension rights are clearly protected by the express wording of section 3, chapter 637 of the Laws of 1932. (Allen v. Stevens, 161 N. Y. 122.) The term “ employee,” as used in chapter 427 of the Laws of 1920, includes all city employees whether employed at an annual rate of pay or on a per diem basis, and the laws thereafter enacted make no distinction between them as to rights and benefits. (Schieffelin v. Berry, 127 Misc. Rep. 178; Matter of Poucher v. Teachers’ Retirement Board, 130 Misc. Rep. 896.)

      Paul Windels, Corporation Counsel (Paxton Blair and Ralph W. Thomas of counsel), for defendants, respondents and appellants.
    Since the provisions in the Economy Act (L. 1932, ch. 637) requiring that the pension rights of employees whose pay cuts it authorizes be calculated with the old pay rate as a base, one whose pay the city had power to reduce apart from the Economy Act can claim no such right in respect of his pension. (Thoma v. City of New York, 263 N. Y. 402; Ryan v. City of New York, 177 N. Y. 271; McAvoy v. City of New York, 52 App. Div. 485; 166 N. Y. 588; People ex rel. O’Loughlin v. Prendergast, 219 N. Y. 377; Schieffelin v. Leary, 219 App. Div. 660; Otten v. Manhattan Ry. Co., 150 N. Y. 395.)
   Rippey, J.

Petitioner applied for a peremptory mandamus order against defendants commanding them to use as the average compensation earnable during bis last five years city service the sum of $2,737.50 in the place of and instead of the sum of $2,333.80 and to correct the annual allowance payable from the pension fund and the pension initial reserve accordingly and to make payments to him from January 1, 1936, in accordance with the corrected figures. The Special Term granted the order. It was unanimously reversed by the Appellate Division upon the law and the facts and the motion denied, but without prejudice to an application for an alternative order of mandamus. Both parties appealed to this court, the defendants from so much of the order of the Appellate Division as provides “ that the reversal shall be without prejudice to an application by the petitioner for an alternative order of mandamus.”

On June 1, 1908, the petitioner was appointed as a-pipe caulker in the Department of Water Supply, Gas and Electricity of the *City of New York and assigned to work in the borough of Brooklyn. He joined the New York City Employees’ Retirement System in 1920 and remained a member in good standing to and including December 31, 1935. On January 1, 1936, he was granted service retirement, at the age of sixty-six years, pursuant to a resolution of the Board of Estimate and Apportionment upon his own application, the resolution of the Board providing that the retirement was subject to later determination and fixation of the amount of the retirement allowance. ' On December 18, 1935, he was notified by the actuary for the system of the approximate calculation of such an allowance, to which he duly filed objections, asserting that the calculation did not comply with chapters 636, 637 and 639 of the Laws of 1932, with chapter 178 of the Laws of 1934, and with section 1 of chapter 536 of the Laws of 1934, amending section 2 of chapter 443 of the Laws of 1933. The Board directed, under date of March 6, 1936, the Comptroller of the City of New York to pay to petitioner an annual retirement allowance of $847.66 during his lifetime in equal monthly installments effective January 1, 1936, that being the amount to which he was entitled, computed on the basis of the average annual compensation earnable during the last five years of city service of $2,333.80 in lieu of-the ordinary service retirement allowance of $1,081.08 under the provisions of option 1 selected by him. This direction was based upon the report of the actuary and the secretary of the Board dated February 29, 1936, in which it appears that the allowance was based upon the number of days during which the petitioner was actually employed during the first three of the last five years and on the 300-day year for the last two years of his service, as follows: 365 days at $7.50 per day for the year 1931; 335 days at the same rate for the year 1932; 317 days for the year 1933, and 300 days for each of the years 1934 and 1935 at the rate of $7 per day. On that basis the total earnings would have amounted to $11,669 for the five years or at the average earning of $2,333.80. This computation was made under rule 37 of the rules and regulations of the Board of Estimate adopted in 1924 which provided that the annual rate of earnable compensation to be used as a basis in computing contributions payable by the city and benefits derived therefrom should be determined (a) upon the annual rate of pay or (b) the per diem rate of pay multiplied by 300 or by such greater number of days in the year for which the employee is paid. Actually, petitioner was employed only 295 days in 1934 and 160 days in 1935. Petitioner claims and asserted in his objections that he had contributed to the retirement system for annuity purposes during his entire final compensation period on a 365-day basis, although he had been forced to take time off because of the emergency economy laws. He asserted that he had made these contributions in the belief that his pension rights would not be reduced by furlough or reduction.

The Appellate Division held that “ a question of fact was presented as to whether or not the reductions were effected in accordance with the emergency legislation (Chap. 637, Laws of 1932), for the purpose of reducing the respondent’s salary temporarily during the course of the emergency, or whether the reductions were of a permanent nature, independent of the emergency legislation, and to make such salary conform to the prevailing rate of wages, pursuant to section 220 of the Labor Law ” (Cons. Laws, ch. 31). It was undisputed that the retirement system accepted contributions on the basis of a seven-day week up to and including the year 1934, but the Appellate Division held that this act “ must be considered in the light of all the facts and circumstances with respect to the intention of the parties at the time the reductions were made.” The defendants admit that the reduction in petitioner’s rate of pay from $7.50 per day to $7 per day commencing January 1, 1933, was not made pursuant to the provisions of the Economy Act and it was held by the Appellate Division that this admission is conclusive in an application of this character. In connection with that admission, defendants asserted that the reduction was determined upon pursuant to the provisions of the Labor Law and constituted a compliance with the Labor Law and that the placing of petitioner in the budget on the basis of a five and one-half day week was done pursuant to the provisions of the charter and not under the Economy Act, the city having taken into consideration past experience as to the particular class of labor in which petitioner was engaged, having regard to physical conditions, weather conditions, amount of work to be done, funds available, and the like.

Defendants assert that the petitioner occupied a position in the labor class and that his compensation was determined pursuant to section 56 of the Greater New York Charter (Laws of 1901, ch. 466, as amd.), which vested in the Board of Aldermen upon the recommendation of the Board of Estimate and Apportionment the power and imposed the duty to fix the salary of the petitioner and pursuant to section 220 of the Labor Law requiring the prevailing rate of wages for laborers and mechanics. At no time has the petitioner questioned this and it is conceded by the petitioner upon this appeal that the reduction of salary from $7.50 per day to $7 per day was rightfully made as claimed by defendants. The right of the city of New York to make such reduction in salary and the methods employed by the city in so doing and the right to shorten the number of days of actual employment are conceded. It is settled that the petitioner is one of the employees of the city embraced within the provisions of subdivision 3 of section 220 of the Labor Law. (McAvoy v. City of New York, 52 App. Div. 485; affd., 166 N. Y. 588.)

Section 2 of chapter 637 of the Laws of 1932 (known as the Emergency Act) provides that “ Notwithstanding any general, special or local law, ordinance or referendum, or the Greater New York charter, as amended, to the contrary, except as otherwise provided in this act, the board of aldermen of the city of New York, upon the recommendation of the board of estimate and apportionment of such city, shall have the exclusive power to fix the salary of each and every officer or person, * * * whose compensation, wholly or in part, is paid out of the city treasury, except that the provisions of this act shall not be construed to apply to or affect the provisions of the labor law, * * *.” And section 3 of that act reads as follows: “ Any reduction of salaries under the authority of this act or by the board of estimate and/or the board of aldermen of the city of New York in the adoption of the budget for the year nineteen hundred and thirty-three, and subsequent years during the pendency of the emergency, shall not reduce the pension or retirement rights or privileges of any city, county or state officer or employee whose salary or compensation, wholly or in part, is paid out of the city treasury, who, at the time of such reduction, is a member of a pension or retirement system. The contributions of a member of such a pension or retirement system shall continue on the basis of his now earnable salary or compensation unless such member shall signify in writing to the pension or retirement system of which he is a member, within thirty days after the first payment to him of salary or compensation at such reduced rate, his election to have his benefits and obligations computed on the basis of his reduced earnable salary or compensation. In all cases where such member shall elect to contribute on the basis of his reduced salary or compensation, the contributions both of the public and of the member shall be computed and made on such basis.” The act took effect on December 17, 1932.

It is the contention of defendants that section 3 has no application here inasmuch as the salary of petitioner was not reduced or fixed under the provisions of section 2 of the act, whereas the petitioner asserts that this was the only act referring to pensions and must be held applicable. During the years 1931, 1932, 1933 and 1934 there was deducted from the petitioner’s earnings for pension purposes an amount based on yearly earnings of $2,737.50 (a seven-day week at $7.50 per day), and Ms annuity was determined in accordance with his accumulated deductions pursuant to section 1711 of the Greater New York Charter (added L. 1920, ch. 427). Petitioner did not signify in writing to defendants that he elected to have the benefits and obligations computed on the basis of reduced earnable salary or compensation as he might have done under section 3 of chapter 637 of the Laws of 1932.

There can be no question that the purpose of the Economy Act was to enable the city of New York to reduce salaries and compensation of employees of the city. A proper construction of section 3 indicates that that section applies to employees whose salaries have been reduced (1) under the authority of the act (2) by the Board of Estimate and/or the Board of Aldermen of the City of New York in the adoption of the budget. Thus that provision in regard to pensions does not apply exclusively to employees whose salaries are reduced under the authority given by section 2 of the act. It applies to all employees of the city of New York whose salaries

have been reduced either under that act or under any other authority which the city had.

There is no question of fact in this case.

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

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

Ordered accordingly.


author: O’Brien, J.

text:
    Arthur Hotop, Respondent, v. Maryland Casualty Company, Appellant.

      Argued April 23, 1937;
    decided May 25, 1937.

      Philip Huntington and David S. Hill, Jr., for appellant.
    Recovery against the surety on an undertaking on appeal is limited to the amount of the penalty provided in the bond, when that is a fixed sum. (Oshiel v. De Graw, 6 Cow. 63; Pevey v. Sleight, 1 Wend. 518; Culver v. v. Green, 4 Hill, 570; Shapiro v. Equitable Cas. & Surety Co., 256 N. Y. 341; Kmetz v. De Ronde, 231 N. Y. 255; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519.)

      Phillip S. Rivlin, Eugene A. Leiman and Arthur A. Singer for respondent.
    The appeal bond was intended to afford ultimate protection to the insured to the full extent of its complete liability. (Shapiro v. Equitable Casualty & Surety Co., 256 N. Y. 341; Chester v. Broderick, 131 N. Y. 549; Saratoga Trap Rock Co. v. Standard Accident Ins. Co., 143 App. Div. 852; Brewster v. Empire State Surety Co., 145 App. Div. 678; Brassil v. Maryland Casualty Co., 210 N. Y. 235.) Payment by the defendant under the insurance policy did not discharge its surety-ship obligation on the appeal bond. (Maine Lumber Co. v. Maryland Casualty Co., 216 App. Div. 35; 244 N. Y. 537; Stapley v. United States Casualty Co., 142 Misc. Rep. 471; Merrill v. Equitable Surety Co., 131 Misc. Rep. 541.)
   O’Brien, J.

Plaintiff was injured by a motor vehicle owned by English & Greenfader, Inc. Defendant Maryland Casualty Company had issued a liability policy to English & Greenfader, Inc., for bodily injury limited to $20,000. In an action against English & Greenfader, Inc., this plaintiff recovered a verdict for $25,000, which, on plaintiff’s stipulation, was reduced by the trial justice to $15,000. Both parties appealed. The Appellate Division modified the judgment by reinstating the verdict and judgment for $25,922.99 was entered. That judgment was not paid by English & Greenfader, Inc., and plaintiff instituted an action under section 109 of the Insurance Law (Cons. Laws, ch. 28) against the insurer, Maryland Casualty Company, present defendant, which then paid plaintiff $20,317.55.

The present action is brought to recover the sum of $5,605.44, which represents the difference between the judgment of $25,922.99 entered upon the decision of the Appellate Division, and the $20,317.55, the amount collected from defendant. The cause of action is based upon an appeal bond issued by defendant Maryland Casualty Company and filed by English & Greenfader, Inc., on its appeal to the Appellate Division from the judgment for $15,000, as reduced by the trial justice, in the action of Hotop v. English & Greenfader, Inc.

The undertaking on appeal recites the recovery of a judgment for $15,000 by Hotop against English & Greenfader, Inc., the appealing party, and this defendant, Maryland Casualty Company, undertakes that the appellant will pay all costs and damages which may be awarded against the appellant on said appeal, not exceeding Five Hundred ($500.00) dollars, and does also undertake, that if the judgment ----so appealed from, or any part thereof, is affirmed, or the appeal is dismissed, the appellant will pay the sum recovered or directed to be paid by the judgment---or the part thereof as to which it is affirmed.” This bond does not in express language limit the amount to any fixed sum as was carefully done in Shapiro v. Equitable Casualty & Surety Co. (256 N. Y. 341) and Stapley v. United States Casualty Co. (260 N. Y. 323). By its terms the surety undertakes to pay the judgment or the part thereof as to which it is affirmed. The only judgment to which the undertaking could refer is the judgment recited therein, that is the judgment for $15,000, from which the appeal was taken. The undertaking is expressed in the language of section 594 of the Civil Practice Act and its purpose must be deemed to be the staying of execution. This defendant obligated itself by that instrument to pay $15,000, in the event that the appeal was dismissed or the judgment was affirmed, or such part of $15,000, in the event that the judgment should be reduced. Nothing in the undertaking can lead to an inference that either party intended that, in the event of a modification by addition to the judgment, the surety would pay such additional sum. Since the ■ plaintiff had stipulated on the trial to a reduction from $25,000 to $15,000, the only issues which could reasonably have been contemplated by the parties were affirmance of the judgment from which the appeal was taken, its reduction or a dismissal of the appeal. The language of the undertaking clearly indicates such an intention. By defendant’s payment of $20,317.55 to plaintiff it has fully discharged its obligation pursuant to its undertaking on appeal and also its obligation under its liability policy.

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

Crane, Ch. J., Lehman, Hubbs, Loughran, Pinch and Rippey, JJ., concur.

Judgments reversed, etc.


author: Crane, Ch. J.

text:
    The People of the State of New York ex rel. Daniel P. Guiney, Respondent, against Lewis J. Valentine, as Police Commissioner of the City of New York, Appellant.
    Argued April 26, 1937;
    decided May 25, 1937.

      Paul Windels, Corporation Counsel (Paxton Blair and Henry J. Shields of counsel), for appellant.
    The testimony adequately established petitioner's guilt. Where the evidence was conflicting, the Commissioner resolved the conflict in a manner which betrays no abuse of discretion. (Kirkpatrick v. Allemannia Fire Ins. Co., 102 App. Div. 327; 184 N. Y. 546; Smith v. Smith, 273 N. Y. 380; People ex rel. Wood v. Department of Health, 144 App. Div. 628; 202 N. Y. 610; People ex rel. Cunningham v. Bingham, 134 App. Div. 602; People ex rel. Brown,
      v. Greene, 106 App. Div. 230; 184 N. Y. 565; People ex rel. Hogan v. French, 119 N. Y. 493; People ex rel. Burke v. Waldo, 163 App. Div. 28; People ex rel. Masterson v. French, 110 N. Y. 494.)

      Francis D. McGarey, John J. McMahon, Jr., and William S. Overend for respondent.
    The evidence was insufficient to sustain the action of the Police Commissioner. (People ex rel. McCabe v. Fire Commissioners, 106 N. Y. 257; People ex rel. Leonard v. Cropsey, 149 App. Div. 730; Slaymaker v. Warren, 224 App. Div. 229; People ex rel. McAuley v. Baker, 139 App. Div. 148; People ex rel. Dougan v. Greene, 97 App. Div. 404; People ex rel. McDermott v. Roosevelt, 6 App. Div. 382; People ex rel. Tighe v. McAdoo, 121 App. Div. 178; Matter of Shea v. Valentine, 249 App. Div. 556; People ex rel. Balke v. French, 123 N. Y. 660; People ex rel. Baran v. Waldo, 162 App. Div. 345; People ex rel. Burns v. Baker, 124 App. Div. 565.)
   Crane, Ch. J.

On the afternoon of September 22,1935, Patrolman Guiney was off duty at four o’clock. That evening he spent at his sister’s house playing cards and drinking whisky; at least he had four drinks, according to his own statement. At a little after midnight he came down Washington avenue toward Bergen street, Brooklyn, when he saw an automobile, in which one Salvatore Autorino was asleep while waiting for his father-in-law, who was “ in the house.” Guiney was off duty and in civilian clothes. Autorino testified:

He told me to get out of the car, and when I got out of the car he asked me for my license, see, so he was in civilian clothes, and I didn’t know he was an officer, so I thought he was a hold-up-man, so I kicked him, and I ran up an alley-way, * * *, he fired at me, * * * and I stayed theer until I heard some people out in front of the door.”

Guiney proceeded to a nearby saloon where he was arrested, at the time having a pistol in his hand.

Sergeant Scott swore:

“From my observation, it appeared to me as though Patrolman Guiney was intoxicated.”

Sergeant Motjenbacker testified:

“ I saw that Patrolman Guiney had been drinking.” And further, that Guiney said to him, “ Well I went over to some fellow sitting in an automobile and I told him to stick up his hands. He jumped out of the car and I fired two shots at him.”

The police surgeon, Henry Weinstein, who had been sent for to examine Guiney, said, “ The odor of his breath was somewhat alcoholic, likewise aromatic. * * * He denied having been drinking.” As before stated, Guiney in his testimony said he had had four drinks of whisky, so he did not tell the truth to the surgeon.

Autorino proceeded to the station house and made charges against the patrolman. Guiney told the officers that the man sitting in the car fired two shots at him. In his own behalf, he testified: The next thing I knew I got a kick, and I fell kind of back to the car, and at the same time I heard a noise that sounded like the discharge of a revolver, so I jumped in back of the car to get out of the line of fire, and as I did I heard a second shot, it didn’t sound as close as the first.” Although Autorino came to the station house and identified Guiney as the man who shot at him, Guiney made no charge against him for illegally having a gun or for assaulting him with it. Besides, Autorino swore that he had no weapon or gun of any kind.

The Police Commissioner sustained the charge made against the patrolman, which was of conduct unbecoming an officer, prejudicial to good order and efficiency, and intoxication, and dismissed him from the force. The Commissioner’s findings were supported by the evidence, as appears from the- extracts, given above. The Commissioner is responsible for the discipline of his force, and if there be evidence to sustain the charges made against an officer, the courts are not justified in interfering with his decision. This rule has been repeatedly stated. In People ex rel. Hogan v. French (119 N. Y. 493, 496) this court said:

“ Where there was any evidence of the offense charged, or the facts admitted of any inference of guilt, we should follow the conclusion of the commissioners in view of their peculiar responsibilities and their larger opportunities of arriving accurately at the truth.” And in People ex rel. Brown v. Greene (106 App. Div. 230, 232; affd., 184 N. Y. 564) it was said: “ The holding of the appellate courts of this State has uniformly been that the good of the service requires that a wide discretion should be vested in police commissioners, and that their judgment and determination in a given case will not be disturbed unless there is an absence of evidence to sustain it. They being the statutory judges of offenses against the discipline and efficiency of the police force Under their jurisdiction, their findings and determinations on the facts, when the evidence is conflicting and contradictory, should be regarded as conclusive, when there is, as in this case, sufficient evidence, if believed, to sustain their determinations.”

Upon this same matter this court in People ex rel. Masterson v. French (110 N. Y. 494, 499) expressed the following views:

“The government of a police force assimilates to that required in the control of a military body, and the interference of an extraneous power in its practical control and direction, must always be mischievous and destructive of the discipline and habits of obedience, which should govern its subordinate members. If its determinations upon all questions are subject to review, and appeals to some tribunal outside the force may be taken without restraint, it must necessarily lead to a want of respect towards their official superiors, and an impairment of the habits of obedience and discipline which are so essential to the efficiency and good conduct of a well regulated police force.”

Approaching the evidence with these cautionary rules in mind we see at once that if the testimony against Guiney was believed, it 'was sufficient to justify disciplinary action. That- the evidence was contradicted by Guiney did not justify a reversal of the Commissioner’s determination. He was not obliged to believe it, especially as in parts it was contradictory and questionable. By section 1304 of the Civil Practice Act, the questions to be determined upon a hearing of the certiorari proceedings such as this include whether upon all the evidence a verdict of the jury in accordance with the findings would be set aside by the court as against the weight of evidence. To the Commissioner was presented a fair question of fact. His determination is supported by the evidence and it should not be set aside because the courts might have or could have arrived at a different conclusion.

The order of the Appellate Division should be reversed and the application for an order of certiorari denied, with costs in all courts.

Lehman, O’Beien, Hubbs, Loughban, Finch and Rippey, JJ., concur.

Order reversed, etc.


text:
    The People of the State of New York, Respondent, v. Felix J. Cummings and George Lewis, Appellants.
    Argued January 18, 1937;
    decided May 25, 1937.

      Benjamin C. Ribman and Leo Healy for Felix J. Cummings, appellant.
    The trial court committed reversible error in refusing to charge that the jury could bring in a verdict of murder in the second degree or of manslaughter in the first degree, for the reason that it was possible in view of the facts to justify a verdict of murder in the second degree or manslaughter in the first degree. (People v. Koerber, 244 N. Y. 147; People v. Moran,
      246 N. Y. 100; People v. Schleiman, 197 N. Y. 383; People v. Seiler, 246 N. Y. 262; People v. Marwig, 227 N. Y. 382; People v. Smith, 232 N. Y. 239; People v. Marendi, 213 N. Y. 600; People v. Collins, 234 N. Y. 355; People v. Van Norman, 231 N. Y. 454.)

      Frank J. Irving and Joseph A. Solovei for George Lewis, appellant.
    WfiZram F. X. Geoghan, District Attorney (Henry J. Walsh of counsel), for respondent.
    The guilt of Cummings was proved beyond a reasonable doubt. The trial court committed no errors in its charge. (People v. Kropowitz, 271 N. Y. 505; People v. Leonardi, 143 N. Y. 360.)
   Crane, Ch. J.

In the case of People v. Koerber (244 N. Y. 147) this court decided that in a felony murder case it was error to refuse to charge the various degrees of homicide, where the defendant was so intoxicated that a question might arise as to his ability to form an intent to commit robbery or • larceny. The opinion states: “ The fact that the accused did not have the intent to rob would not mean that an acquittal should follow * * *. The jury would have to say under proper instructions as to the degrees of crime ” (p. 154). Both in this Koerber case and in People v. Moran (246 N. Y. 100) we called attention of the trial justices to the exceptional rule of People v. Schleiman (197 N. Y. 383), which case was tried before me in 1909 when I was on the trial bench. The charge to the jury, that they must find a defendant guilty of murder in the first degree or acquit should only be made where there is “ no possible view of the facts which would justify any other verdict except a conviction of the crime charged or an acquittal.”

Where the evidence is so substantial as to put in question the mental capacity of the defendant to form an intent to commit the felony, the degrees of homicide should be and must be charged. Only where there is no question of fact as to the killing while in the commission of a felony can the various degrees of homicide safely be omitted. Not every statement that a defendant was intoxicated necessarily creates a question of fact on the element of intent. To apply the above rules requires a careful consideration of the evidence and the nature of the case. The testimony of intoxication might be so slight, so trivial, such a mere sham as to amount to no evidence or create no issue.

On this appeal, however, I feel that the evidence is of such weight and substance as to fairly raise the question of the defendant Cummings’ mental state or intent. I appreciate that his actions in the saloon or grill at 1942 Fulton street, in Brooklyn, were such as to indicate that he knew what he was doing when he held up the place; told Lewis to shoot Ralph Nischo, and took the money from the cash box; yet there is another side which creates a dispute which a jury, and not a judge, should decide.

The police officer said the defendant Cummings smelt of liquor. Cummings’ own testimony details his course of drinking in various places preceding the alleged holdup. Witnesses from bis home relate the condition he was in when he reached there shortly after the killing; and his associate Lewis testifies that before going to the place of the homicide Cummings was stupidly drunk and sick from liquor. We have in this evidence something more than a mere defendant’s claim, without anything to support it, that he was intoxicated. To my mind, therefore, this case comes within the rulings of the above authorities, and should be reversed for the error of the trial judge in refusing to charge the various degrees of homicide, and compelling the jury to choose between guilty of murder in the first degree,” or “ not guilty at ah.”

During this past year we have had many of these felony murder cases coming to our court wherein the degrees of homicide might just as well have been charged without any injury to the People or the enforcement of law, thus avoiding the very serious question of the correctness of a charge omitting the degrees. We again caution the trial judges to use the short form of charge — murder in the first degree, or, not guilty — only when there can be no question whatever of the killing during the commission of the felony. If the evidence shows the defendant to have been intoxicated or his mentality so impaired or weakened as to call in question his ability to have formed an intent, then the degrees of homicide must be charged.

For the reasons here stated, as to each defendant the judgment of conviction should be reversed and a new trial ordered.

Lehman, Loughran and Rippey, JJ., concur; O’Brien, Hubbs and Finch, JJ., dissent.

Judgments of conviction reversed, etc.


author: Finch, J.

text:
    The People of the State of New York, Appellant and Respondent, v. Paul La Barbera, Respondent and Appellant.

      Argued April 29, 1937;
    decided May 25, 1937.

      David L. Brunstrom, District Attorney, for The People of the State of New York, appellant and respondent.
    Section 542 of the Code of Criminal Procedure required an affirmance of the conviction. (People v. Thorn, 156 N. Y. 286.) The defect was lawfully waived. (People v. Thorn, 156 N. Y. 286; People v. Bragle, 88 N. Y. 585; People v. Gowasky, 244 N. Y. 451; People v. Sugarman, 248 N. Y. 255; People v. Toledo, 150 App. Div. 403; 206 N. Y. 661; Pierson v. People, 79 N. Y. 424; Draz v. United States, 223 U. S. 442.) The Court of Appeals is without jurisdiction to entertain the attempted appeal of the defendant. (Code Crim. Proc. § 520; People
      v. Carmichael, 249 N. Y. 189.) The testimony of Mrs. Gagliano as to her conversation with the defendant was competent. (People v. Kennedy, 164 N. Y. 449; People v. Friedman, 205 N. Y. 161; Kelley v. People, 55 N. Y. 565; People v. Ferrara, 199 N. Y. 414.)

      Walter S. Bexford for defendant, respondent and appellant.
    It was error to instruct the jury, and read the evidence in the absence of the defendant. (Code Crim. Proc. § 356; Maurer v. People, 43 N. Y. 1; People v. Winchell, 7 Cow. 525; People v. Perkins, 1 Winch. 91; 1 Cow. 335; People v. Bragle, 88 N. Y. 585; Messner v. People, 45 N. Y. 1.) The evidence of the witness, as to a conversation with the defendant at his restaurant was incompetent, and should have been excluded, he having denied any guilt in the crime. (People v. DePaulo, 235 N. Y. 41; People v. Norkin, 237 N. Y. 592; People v. Conrow, 200 N. Y. 356; People v. Kennedy, 164 N. Y. 449.) Circumstantial evidence does not point to the guilt of the accused but is consistent with his innocence. (People v. Fitzgerald, 156 N. Y. 253; People v. Owens, 148 N. Y. 648; People v. Smith, 162 N. Y. 520; People v. Bonifacio, 190 N. Y. 150.) Sufficient evidence has not been produced, nor does such evidence exist, to establish the guilt of the defendant beyond a reasonable doubt. (People v. Barile, 244 App. Div. 372; People v. Fitzgerald, 156 N. Y. 253; People v. Bennett, 49 N. Y. 137; People v. Owens, 148 N. Y. 648; People v. Trimarchi, 231 N. Y. 263; Ruloff v. People, 18 N. Y. 179.)
   Finch, J.

The defendant was convicted of the crime of arson in the second degree. The Appellate Division reversed on the law and granted a new trial. The case comes here on a certification obtained by the People from a justice of the Appellate Division that a question of law is involved. Subsequently the same justice, upon the application of the defendant, certified that questions pf law and facts are involved in this action which ought to be reviewed by the Court of Appeals, and permission is hereby given to appeal from such order affecting the substantial rights of the defendant.” Pursuant to this certificate the defendant appeals by way of cross-appeal.

The appeal of the defendant must be dismissed since there is no judgment of conviction from which he can appeal. (Code Crim. Proc. § 520, subd. 3; People v. Carmichael, 249 N. Y. 189.) The appeal by the People, however, was validly taken. (People v. Fisher, 223 N. Y. 459.)

The reversal and the grant of a new trial by the Appellate Division was based upon the following facts: After the charge and the retirement by the jury for deliberation, the jury returned and asked that the testimony of a witness be read. The entire testimony of the witness was read by the court, and a juror asked a question and received an answer. It was then brought to the court’s attention by the District Attorney that, although the attorneys for the defendant were present, the defendant himself was absent. The proceedings were halted and the defendant was brought into court. The court then turned to counsel for the defendant and said:

“ The Court: The defendant is now present. Now Mr. Lombardo, does the defendant waive the reading of this testimony to the jury not in his presence?
Mr. Lombardo: I will waive it.
“ The Court: And may it be stipulated that this testimony so read not in his presence does not have to be re-read now in his presence?
Mr. Lombardo: Yes, sir.
Mr. Brunstrom: And the reading, as it has just now been read, will be with the same force and effect as if the defendant had been here.
The Court: May that be stipulated?
Mr. Lombardo: As far as I am concerned.
“ The Court: You are speaking for the defendant?
Mr. Lombardo: Yes.
“ The Court: And the defendant is present here.”

The Appellate Division held that it was essential that the defendant be present throughout the trial (Code Crim. Proc. § 356), and that proceeding with the trial in his absence could not be waived, citing Maurer v. People (43 N. Y. 1).

The requirement of section 356, that the defendant be present in person during a trial for a felony, is of ancient origin. Its origin is to be found in the necessity for the presence of the defendant when criminal guilt was determined by ordeal or by battle. (Goldin, History of Presence of Accused, 16 Columbia Law Rev. 18.) When these methods of trial were abandoned, the presence of the defendant was still necessary. Until comparatively recent times, a defendant in a criminal suit was not allowed to be represented by counsel. (3 Blackstone’s Commentaries, p. 25; Powell v. Alabama, 287 U. S. 45, 60.) Although the defendant now is entitled to be represented by counsel, the requirement that the defendant must be present has persisted and is to be found in the statutes or Constitutions of many of the States.

In capital cases it is held that even though the defendant has waived his right to be present, a verdict rendered in his absence, or after a trial from which he has been absent, is defective and the' conviction must be reversed. (Hopt v. Utah, 110 U. S. 574; Lewis v. United States, 146 U. S. 370; Sherrod v. State, 93 Miss. 774; State v. Reed, 65 Mont. 51. Contra, Cawthon v. State, 119 Ga. 395; State v. Hardee, 192 N. C. 533.) New York and some other States will not permit a plea of guilty where the crime charged is or may be punishable by death.

In the case of felonies not punishable by death, the rule of law is different. The defendant may plead guilty and waive bis right to a trial. He may waive the right to be present during the examination of a witness by defense counsel (People v. Bragle, 88 N. Y. 585), and the right to be confronted by a witness for the People (People v. Sugarman, 248 N. Y. 255). The question has never been passed upon in New York, but the courts of other States are almost unanimous in holding that the defendant may waive his right to be present at the trial or at the time of the rendition of the verdict. (McCorkle v. State, 14 Ind. 39; Sahlinger v. People, 102 Ill. 241; State v. Way, 76 Kan. 928; Boreing v. Beard, 226 Ky. 47; Commonwealth v. McCarthy, 163 Mass. 458; State v. Gorman, 113 Minn. 401; Price v. State, 36 Miss. 531; Clemens v. State, 176 Wis. 289; Diaz v. United States, 223 U. S. 442. Cf. Smith v. State, 59 Ga. 513; State v. Kelly, 97 N. C. 404; Rex v. Streek, 2 Car. & P. 413; 172 Eng. Reprint, 187.) No reason appears for holding that the defendant' cannot waive this right, especially where the waiver is made with full knowledge of what has occurred and it is evident that the defendant has suffered no prejudice. ■

The case of Maurer v. People (43 N. Y. 1) is not in point. The Maurer case involved a charge of murder, and neither the defendant nor his counsel Waived the defendant’s right to be present at the trial.

We thus conclude that it was error to reverse and grant a new trial on the ground that the defendant could not waive the reading of the testimony to the jury in his absence. He had the power to waive the objection and he exercised that power.

Do any other legal giounds appear upon which the reversal may be sustained? It is urged that no evidence is present to show guilt beyond a reasonable doubt.

The facts brought out at the trial are in brief as follows: The defendant, ■ a saloon keeper in Jamestown, N. Y., formerly owned the premises for the burning of which he was indicted. The title to the premises had been in a land company which had in effect abandoned them, since -taxes were in arrears and interest on the mortgage was unpaid. The holder of the mortgage sold it to the defendant for $500 in cash. At the request of the defendant the name of the assignee in the assignment was left blank, and subsequently William Peters, a cook in the saloon of the defendant, who was engaged to marry the defendant’s sister-in-law, was made the record assignee of the mortgage. A fire insurance policy in the sum of $3,000 was made payable to Peters as assignee of the mortgage, although Peters had no financial interest in the mortgage.

Several months prior to the fire, the defendant had telephoned one Peter Gagliano. Gagliano’s wife, a niece of the defendant, answered the phone and called her husband. She heard her husband “ repeat ‘ $300.’ ” At about this time, Peter Gagliano, the witness Musso, and a lawyer called at the place of business of the defendant. Gagliano and the defendant left the others and went into a booth where they were overheard to converse about the mortgage. Shortly thereafter Musso rented the premises, paying $5 toward the lease, this sum being part of a sum of $25 which had been supplied to him by Gagliano. In April, 1935, the premises were set on fire by Gagliano and Musso. An explosion occurred which set fire to the clothes of Gagliano, causing burns which resulted almost immediately in his death. The gasoline used in setting the fire came from a garage operated by the brother of the defendant. Musso was subsequently apprehended, convicted, and sent to prison.

The defendant sent Peters to the defendant’s attorney to arrange for recovery upon the loss from the fire insurance company. In December, 1935, Mrs. Gagliano called on the defendant and accused him of causing her husband’s death by hiring him to burn the building in question for the sum of $300. At first the defendant denied this charge, but later he impliedly admitted it, and finally expressly admitted that he had employed Peter Gagliano to fire the building.

Upon this evidence a jury could readily find beyond a reasonable doubt that the defendant was guilty of the crime charged.

It is asserted that it was error to permit Mrs. Gagliano to testify that she heard her husband “ repeat ‘ $300 ’ ” while speaking to the defendant on the telephone, since this testimony was hearsay. She did not testify as to what the defendant said, but testified only as to what she heard her husband say. Such testimony is not hearsay. It was properly admitted, since it constituted a foundation for the subsequent testimony of the same witness as to her conversation with the defendant at the time that she accused him of having hired her husband to set fire to the building. Moreover, the same testimony was later admitted without objection or exception on direct examination by the prosecution, and again on cross-examination by the defense.

It is also urged that the testimony of Mrs. Gagliano, concerning the defendant’s admissions to her, was inadmissible since the defendant had denied the charge that he was responsible for her husband’s death. The full testimony dealing with this matter shows that the witness visited the defendant and told him that she thought he was responsible for her husband’s death, and that he should pay her the $300 which he had promised her husband. He denied responsibility, and stated that he had not promised Gagliano $300. If the conversation had stopped there, the testimony might not have been admissible. The defendant, however, went on and by express statement admitted his guilt. He told Mrs. Gagliano that her husband had spent the $300 on another woman, that $38 was still owing to the husband, and that when the insurance money was collected, this $38 would be paid to her; that he had picked Gagliano to set the fire because “ if he had not done so somebody else would have.” These admissions were probative evidence of the guilt of the defendant, and, therefore, were admissible. (People v. Friedman, 205 N. Y. 161, 166.) The cases relied upon by the defendant involved persons who maintained silence in the face of accusations of guilt or who denied their guilt. (People v. Norkin, 237 N. Y. 592; People v. Conrow, 200 N. Y. 356; People v. Kennedy, 164 N. Y. 449; People v. De Paulo, 235 N. Y. 39.)

It follows that the order of the Appellate Division should be reversed, and the judgment of the Trial Term affirmed. The appeal by the defendant should be dismissed.

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

Ordered accordingly.