text:
    Caroline Wilks, as Administratrix of the Estate of Joseph Wilks, Deceased, Respondent, v. New York Telephone Company et al., Appellants.
    Tort — nuisance — telephone wires — liability in tort — action for death through coming in contact with telephone wire attached to building in close proximity to high-power wire of another company —• owner of wire not liable where it had been transferred to it by a grantor and at the time and for some months prior to the accident had been in possession of Federal government — grantor which erected and conveyed wire liable if it placed it in a position to make it a menace to others — damage proximate result of original wrong — insufficiency of evidence to show that it created a nuisance.
    1. Liability in tort must by its nature be based upon proof of injury caused by a wrongful act in which the person held responsible in some manner joined either personally or through agent or representative.
    2. In an action to recover for the death of plaintiff’s intestate through his coming in contact with a telephone wire alleged to have been erected across his premises by defendant Federal Company and, before the accident, transferred to defendant New York Company, where the allegations of the complaint are sufficient to charge the first company with the erection and the second with the maintenance of a nuisance and there is evidence sufficient to establish that at the time of the accident the wire was attached to a fixture on the roof of an adjoining building in such close proximity to high-powered wires of an electric company that it constituted a potential menace to life and was a nuisance, but it also appears that at the time of the accident and for five months prior thereto all of the wires and equipment of the New York Company had been in the possession of the United States government and controlled, maintained and operated by it, having been taken over for governmental purposes, the New York Company can be held responsible neither for maintaining nor for participating in the maintenance of a nuisance. It did not erect the nuisance nor was it shown that it knew of its existence, except as such knowledge may be inferred from constructive notice, and it made no voluntary conveyance of any kind; the property was taken temporarily in invitum from it. Hence, there can be no finding of affirmation of continuance of the nuisance during the .time it was maintained by the government.

      (Argued June 7, 1926;
    decided July 9, 1926.)
    3. The Federal Company, however, which erected the wire and voluntarily conveyed it to the New York Company, thereby affirming the latter’s right to use it as it then existed, may be held liable for the death of intestate if the evidence sustains the charge that it erected the wire in such manner as to make it a menace to others. The damage is the proximate result of the original wrong when express or implied authorization to continue existing conditions forms a connecting link and the interposition of the agents of the United States government creates no new factor which breaks the chain of cause and effect for those agents had the same rights and were under the same duties as the original grantee.
    4. An examination of the evidence, however, shows that it is insufficient to sustain a finding that the Federal Company erected the nuisance. The evidence shows almost beyond possible doubt that the upright to which the wire was attached belonged to it and that thereafter the electric company placed a cross-piece thereon as a support for its heavily charged wires. Furthermore, there is no evidence as to when or how the telephone wire was placed upon the upright. II may have been placed there after it had relinquished control. The fact that the span of the wire leading from such support was of unusual length might have justified a finding that it created a condition of danger and a nuisance but the evidence of the relative positions of the light and power wires and the telephone wires during the period before the Federal Company conveyed its property is too vague to permit inference of dangerous proximity. Moreover, the case was tried upon the theory that it had erected a nuisance and no question was submitted to the jury as to whether it had maintained a nuisance after notice.

      Wilks v. New York Telephone Co., 215 App. Div. 792, reversed.
    Appeal from a judgment of the Appellate Division ofxthe Supreme Court in the fourth judicial department, entered December 28, 1925, affirming a judgment in favor of plaintiff entered upon a verdict.

      Thomas Penney, Jr., Charles T. Russell, Olin T. Nye and Otto M. Buerger for New York Telephone Company, appellant.
    The New York Company cannot be held liable for the death of the plaintiff’s intestate under the established principles of law governing liability because such death was not the proximate result of a continuance of a nuisance upon the New York Company’s property by the New York Company. The Buffalo General Electric Company alone created and continued the nuisance which caused the death of the plaintiff’s intestate. (Magee v. New York Telephone Co., 213 N. Y. 232.) The New York Company cannot be held liable for the death of the plaintiff’s intestate under the established principles of law governing liability because such death was not the proximate result of a continuance of a nuisance upon the New York Company’s property by the New York Company. For a period of four months prior to and at the time of the accident to the plaintiff’s intestate, the New York Company’s property was under the sole possession and control of the United States government and out of the possession and control of the New York Company. (Dakota Telephone Co. v. South Dakota, 250 U. S. 163; No. Pacific Ry. Co. v. North Dakota, 250 U. S. 135; Hatcher & Snyder v. Atchison, T. & S. F. Ry. Co., 258 Fed. Rep, 952; Haubert v. B. & C. R. Co., 259 Fed. Rep. 361; McFeena’s Admr. v. Paris Home Telephone, etc., Co., 190 Ky. 299; Taylor v. Western Union Telegraph Company, 207 Mo. 145; Missouri Pacific Railroad Co. v. Ault, 256 U. S. 554; North Carolina R. R. Co. v. Lee, 260 U. S. 16; Davis v. Cohen & Co., 268 U. S. 638; Alabama & Vicksburg R. Co. v. Journey, 257 U. S. 111; Dahn v. Davis, 258 U. S. 421.) Assuming that the United States government can be charged with a continuance of a nuisance while it had the possession and control of the New York Company’s property, this continuance by the United States government never received such sanction or confirmation on the part of the New York Company, in the form of a lease or deed with covenants, that the New York Company can be charged with having participated in the continuance after it parted with the possession. (Roswell v. Prior, 12 Mod. 635; Cheetham v.
      Hampson, 4 T. R. 318; Blunt v. Aiken, 15 Wend. 522; Waggoner v. Jermaine, 3 Den. 306; Brady v. Weeks, 3 Barb. 157; Mayor of Albany v. Cunliff, 2 N. Y. 165; Covert v. Cranford, 141 N. Y. 521; Slavitz v. Morris Park Estate, 98 Misc. Rep. 317.)

      Parton Swift for Federal Telephone and Telegraph Company, appellant.
    The Federal Company cannot be held liable on the ground that it maintained a nuisance created by the Electric Company as matter of law. (Trapp v. McClellan, 68 App. Div. 362; People v. Townsend, 3 Hill, 479; Barring v. Commonwealth, 2 Duval [Ky.], 95; Brown v. McAllister, 39 Cal. 573; State v. Rankin, 3 S. C. 438.) On the record the verdict cannot be sustained on the ground that the Federal Company is liable for maintaining a nuisance created by another party, that issue not being before the court. (Piper v. N. Y. St. Rys. Co., 185 App. Div. 184; Martin v. Petit, 117 N. Y. 118.) The creator of a nuisance is not liable for damages caused thereby subsequent to the conveyance or transfer of the property constituting the nuisance by the creator to another party, unless the creator thereafter continued to receive some benefit from the continuance of the nuisance, or has conveyed with covenant or warranty for the continued use and enjoyment by the grantee of the property constituting the nuisance as it existed at the time of the conveyance or transfer. (Blunt v. Aiken, 15 Wend. 522; Waggoner v. Jermaine, 3 Den. 306; Mayor, etc., v. Cunliff, 2 N. Y. 165; Covert v. Cranford, 141 N. Y. 521; Hanse v. Cowing, 1 Lans. 288; Fealey v. Bull, 163 N. Y. 397.) The act of the United States government, under its war-time powers, in taking possession and control of the telephone system and wires of the New York Company on July 31, 1918, and being in such control at the time of the accident, prevents a recovery against the Federal Company. (Baggott v. Southern Railway. Co., 300 Fed. Rep. 337.)

      La Fay C. Wilkie for respondent.
    The wires were a trespass on the property of Wilks and constituted a nuisance. (Andrews v. Delhi Tel. Co., 36 Misc. Rep. 23; 66 App. Div. 616; Wiseman v. Lucksinger, 84 N. Y. 31; Long Island v. Garvey, 159 N. Y. 334; Heeg v. Licht, 80 N. Y. 579; Butler v. Frontier Telephone Co., 186 N. Y. 486; Lamming v. Galusha, 135 N. Y. 239; Sweet v. Perkins, 196 N. Y. 482.) The erection and fixing of wires on the Sherwood Building by the Federal Telephone Company in close proximity to high-powered wires of the Buffalo General Electric Company is amply sustained by the evidence and the verdict of the jury fully warranted. (Hart v. Hudson Bridge, 80 N. Y. 622; Wittemann v. Sands, 238 N. Y. 434; GaNun v. Palmer, 216 N. Y. 603; Sharp v. Erie, 184 N. Y. 100; Fagan v. Atlantic C. L., 220 N. Y. 303; Lalor v. City oj N. Y., 208 N. Y. 431; Carlisle v. Norris, 215 N. Y. 400; Lee v. Southern Pacific, 116 Cal. 97; Nugut v. Boston R. R. Co., 90 Maine, 62; Arrowsmith v. Nashville, 57 Fed. Rep. 165; St. Louis v. Curt, 28 Kan. 622; Penn. R. R. Co. v. Ellett, 132 Ill. 654.) The defendant New York Telephone Company is liable for its failure to abate the nuisance after it acquired the property of the Federal Telephone Company, February 27, 1918. (Timlin v. S. O., 126 N. Y. 527; Junkman v. Tilyou Co., 213 N. Y. 404; Lusk v. Peek, 132 App. Div. 426; 199 N. Y. 546; Connell v. Jankelson, 163 App. Div. 592; Hirsch v. Radt, 228 N. Y. 100; Irvine v. Wood, 51 N. Y. 224 ; McDonald v. Dundon, 242 Mass. 229; Simmons v. Everson, 124 N. Y. 319.) The fact that the Federal government took over the telephone lines on July 31, 1918, and that the death of Wilks occurred on November 30, 1918, from negligent construction of the telephone wire long prior to the 1st of March, 1918, in no wise reheves the Federal Company and the New York Company from its negligence in failing to abate the nuisance while it was in its possession and under its control. (Cumberland Telephone Co. v. Lawrence, 271 Fed. Rep. 89.)
   Lehman, J.

The plaintiff’s intestate, Joseph Wilks, was killed on November 30th, 1918, by accidental contact with a telephone wire. The wire had been strung, a number of years before the accident, across the premises occupied by the decedent from the roof of a building known as the Sherwood Building to a point beyond some railway tracks on the other side of the decedent’s premises. The wire broke during a windstorm. The fallen wire was originally erected and owned by the Federal Telephone and Telegraph Company. That company had transferred to the New York Telephone Company all its wires and • equipment at midnight of February 28th, 1918, nine months before the accident. It was stipulated at the trial that “ all the wires, poles, equipment and all of the property of the New York Telephone Company with the exception of its securities was taken over by the United States government on the 31st day of July, 1918, pursuant to a proclamation of the President of the United States and of the Congress of the United States, and that the same were in the possession of, controlled and maintained and operated by the United States government acting through and under the Postmaster-General, from midnight of the 31st day of July, 1918, to midnight of the 31st day of July, 1919.” The current which ordinarily passes through a wire erected for use in connection with a telephone system is not sufficient to cause serious shock or injury to any one who comes in contact with such wire. Plaintiff’s intestate was killed because at the time he touched the wire a current of 2,200 volts was passing through it from a high-powered wire of the Buffalo General Electric Company.

The plaintiff has recovered a judgment for damages of $25,000 against the New York Telephone Company and the Federal Telephone and Telegraph Company. The judgment places liability for the death of plaintiff’s intestate upon two corporations which at the time of that death were not using and had no control of the instrumentalities which caused it. Though the New York Telephone Company still had title to the telephone system which the Federal Company had conveyed to it, it cannot be held liable for negligent operation of that system while in control of the United States government. (Western Union Telegraph Co. v. Poston, 256 U. S. 662.) The Federal Company may certainly not be held liable for negligent use by another of an instrumentality which the Federal Company no longer owned or controlled. Liability in tort must by its nature be based upon proof of injury caused by wrongful act in which the person held responsible in some manner joined either personally or through agent or representative.

The complaint herein charges in effect that the Federal Telephone and Telegraph Company erected wires across the premises leased by the deceased without permission or right or easement and was a trespasser on such premises ; that the wires were erected in such close proximity to highly-charged electric wires that they created a dangerous situation and constituted a nuisance. It further charges that the New York Telephone Company accepted the wires and went into possession of the same and continued to maintain and operate the same long prior to July 1st, 1918, with full knowledge that said wires had been erected and were being maintained in a dangerous manner. These allegations are sufficient to" charge one defendant with the wrongful erection of a nuisance and the other defendant with wrongful maintenance of the nuisance. If these charges were proven, each defendant would of course be responsible for proximate consequences of its own wrong; but question would still remain whether the proximate consequences of the wrongs charged or proven could extend to the death of the plaintiff’s intestate occurring after both the defendants had ceased to use, and had lost control of, the wires which constitute the alleged nuisance, and when the defendants no longer had power or right to abate it.

The evidence is sufficient to establish that at the time of the accident the wire which caused death was attached to a fixture on the roof of the Sherwood Building in such proximity to the high-powered wires of the Buffalo General Electric Company that it constituted a potential menace to life and was a nuisance. This condition existing at the time of the accident may be regarded as the final link in the chain of causation leading to the death of the plaintiff’s intestate. For several months previous to the accident the United States government alone had control of the wire and power to maintain or change the conditions which constituted a nuisance. The question which the court must decide on this appeal is whether the wrongful acts charged against the defendants or either of them are so connected with the condition maintained by the government that in the chain of causation the later condition may be fairly regarded as the result of these acts.

At least so far as concerns the New York Telephone Company, it seems clear both upon principle and authority that it is without responsibility. It is not charged with the erection of the alleged nuisance. The theory of the complaint, as well as the theory upon which the case was tried and submitted to the jury, is that the Federal Telephone and Telegraph Company erected the nuisance. The fault of the New York Telephone Company, if any, is that it took possession of the nuisance when the Federal Telephone Company transferred the wires to it and has maintained the nuisance after it had notice of its dangerous character. No actual notice was shown, but the jury was permitted to infer constructive notice from the fact that this defendant was in control of the wires for a period of five months, during which inspection made with reasonable care might have disclosed any dangers created by the situation. It may have been negligent in faffing to discover and remedy this situation, but the plaintiff elected to try the case upon the theory of nuisanee, not negligence, and in any event the defendant’s negligence ceased when the control of the wires passed out of its control. From that time on it owed no duty to the plaintiff’s intestate or to the public. The death of plaintiff’s intestate occurred not through the negligence of the New York Telephone Company while in possession of the wires but through the continued maintenance of the wires in the same condition by officers of the United States government, upon whom the duty devolved of using reasonable care to discover and remedy a dangerous condition. These considerations seem to dictate the conclusion that the defendant New York Telephone Company was not liable upon the theory of nuisance, if at the time of the fatality it was not responsible for the continued maintenance of the nuisance.

A somewhat similar situation was presented in the case of Virginian Railway Company v. Mullens (271 U. S. 220). In that case there was evidence that the Virginian Railway Company purchased in 1907 a railroad constructed by another railway company. An embankment and track in the bed of a stream tended to obstruct and divert the current in such way as to constitute a nuisance. The court stated that the evidence “ affirmatively and indubitably precluded a finding that the defendant constructed them or did more than use them as an integral part of a completed road which it had purchased as a going concern from a prior owner.” It continued such use until the Federal government took possession and assumed control of the railway on December 28th, 1918. The Supreme Court of the United States held that it was not liable for injuries occasioned by the continued maintenance of the nuisance during the period of Federal control. The maintenance and use during that period were exclusively in the hands of Federal agents. If a duty rested on any one to make any change in them it rested on the Federal agents; and if maintaining and using them without change was a wrong against the plaintiff it was a wrong committed by those agents, for which no liability attached to the defendant.” It is sought to distinguish that case from the one under consideration because there the continued maintenance of the alleged nuisance was by Federal agents acting under the Director-General, and here its continued maintenance was by Federal agents acting under the Postmaster-General. Argument is' made that the language of the statutes providing for such control is not the same in each case and a different liability was intended for wrongs committed by the different classes of Federal agents. That argument need not be analysed. Regardless of the intent of Congress in regard to remedy for wrong committed by the Federal agents, it has been authoritatively determined that neither telegraph company (Western Union Telegraph Co. v. Poston, 256 U. S. 662) nor railroad company (Missouri Pacific Railroad Company v. Ault, 256 U. S. 554) may be held responsible for wrongs committed by the Federal agents in control of corporate property.

May we nevertheless find that the New York Telephone Company participated in the maintenance of the nuisance by such agents, so that responsibility may be predicated upon such participation? In numerous cases in this and other jurisdictions, most of which are based ultimately upon the reasoning or authority of Roswell v. Prior (12 Mod. 636) one who has erected a nuisance has been held hable for damages caused by the maintenance of the nuisance even after control and possession have passed to another. (See Joyce on Law of Nuisances, section 454.) In some cases the decision has been based upon a finding that the grantor has affirmed, and derives benefit from, the maintenance of the nuisance by either demising the property constituting a nuisance and receiving rent or by conveying with a covenant of warranty for quiet enjoyment. (Waggoner v. Jermaine, 3 Denio, 306; Covert v. Cranford, 141 N. Y. 521; Mayor of Albany v. Cunliff, 2 N. Y. 165.) Here the New York Telephone Company made no voluntary conveyance of any kind; the property was taken temporarily in invitum from it. Hence there can be no finding of affirmation of continuance of the nuisance during the time it was maintained by others; and the New York Telephone Company , did not erect the nuisance. It did not even know that it ever maintained a nuisance, except as such knowledge may be inferred from constructive notice.

In the case of Virginian Railway Company v. Mullens (supra) the Supreme Court has noted the distinction between the cases in which, on the grounds we have alluded to, liability has been imposed upon one who has erected a nuisance, for damages caused by its maintenance when in control of another and a case where similar liability is asserted against one who merely maintained it until it was taken away by the sovereign authority. It is nevertheless urged that in this State such distinction is not recognized. It is true that in the case of Timlin v. Standard Oil Co. (126 N. Y. 514) this court has held that a lessee of premises on which a nuisance has been erected by the landlord is liable for damages caused by the maintenance of the nuisance if with knowledge, actual or constructive, the lessee relet the premises. It is to be noted, however, that the court stressed the voluntary character of the reletting as an affirmative ground of liability. If they chose to relet, they took the responsibility.” (See, also, Junkermann v. Tilyou Realty Co., 213 N. Y. 404.)

Such cases may not be considered as a determination that in all cases a lessee who has maintained a nuisance remains liable for damages arising even after he has parted with control. Such a rule would make the lessee liable for damages even after expiration of his term. All the authorities, judicial or extra judicial, seem to agree that one who maintained a nuisance but did not erect it is liable usually only for damages caused by such maintenance. He is not responsible for its continued maintenance after the nuisance has passed into the control of another, unless the lessee voluntarily parted with that control under circumstances from which inference may be drawn that he authorized its continuance or profited thereby. (See, also, Halsbury’s Laws of England, vol. 21, page 555.)

The position of the Federal Telephone and Telegraph Company is different. It constructed a telephone system for operation under a public franchise. It was under a duty to the public to use care in the construction of its wires; it was under a similar duty to use care in their maintenance. It voluntarily conveyed its property to the New York Telephone Company. While the deed contains no covenant of quiet enjoyment, it does contain other warranties. The property conveyed was intended for use as a telephone system, and by its conveyance the Federal Telephone- and Telegraph Company affirmed the right of the New York Telephone Company to use the-system as it then existed. The agents of the United States government taking over the system might exercise the same right of user as the New York Telephone Company. If the property so conveyed included a nuisance which the grantor had erected or had knowingly maintained, though the dangerous condition was created by the act of another, then the grantor may be held hable for damages caused thereafter to a third party through such user. If the evidence sustains the charge that the defendant Federal Company did erect the wire in such manner as to make it a menace to others, the verdict against it must be sustained. The damage is the proximate result of the original wrong, at least when express or implied authorization to continue existing condition forms a connecting link. (Timlin v. Standard Oil Co., supra.) The interposition of the agents of the United States government creates no new factor which breaks the chain of cause and effect for those agents had the same rights and were under the same duties as the original grantee.

The evidence in favor of the plaintiff is not, however, sufficient to sustain the charge. It is claimed that the Federal Telephone and Telegraph Company attached the wire to a “ horse ” or fixture belonging to the Buffalo General Electric Company, and in such close proximity to the wires of that company that a situation of serious danger was thereby created. It is also claimed that the span of the wire from the Sherwood Building to the pole beyond the railroad tracks to which it was attached was of unusual and improper length; that this length of span made a break in the wire probable and intensified the danger created by the proximity of the ordinarily harmless telephone wires to the highly charged wires of the Buffalo General Electric Company. One of the witnesses produced by the plaintiff, an employee of the Buffalo General Electric Company, did testify that on the day after the accident he found that on the roof of the Sherwood Building the telephone wires were attached to the upright of a “horse” belonging to the Buffalo General Electric Company and that the wires of the latter company were attached to a cross-piece on the top of the same horse. His testimony that the upright to which the telephone wires were attached belonged to the Buffalo General Electric Company, if true, would lead to the inference that the telephone wires were placed there with knowledge or notice of the dangerous situation thereby created. His testimony is contradicted even by other witnesses produced by the plaintiff, and photographs taken immediately after the accident, coupled with testimony produced by both sides, show almost beyond possible doubt that the upright to which the telephone wires were attached bélonged to the Federal Telephone and Telegraph Company and that the Buffalo General Electric Company some time thereafter placed a cross-piece on top of the upright, connected it to a chimney and placed upon it, the heavily charged wires used for light and power. For damages caused solely by wrongful act of the Buffalo General Electric Company no liability may be imposed upon these defendants.

Even if, in spite of what seems conclusive refutation, we should hold that the testimony of the employee of the Buffalo General Electric Company yet constitutes some evidence which the jury might be permitted to consider and weigh, the plaintiff’s case against the Federal Telephone and Telegraph Company is not materially strengthened, for there is no evidence as to when or how its wires were placed upon the upright alleged to belong to the Buffalo General Electric Company. Uncontradicted testimony shows that, at some time previously, the telephone wires were attached to an upright belonging to the telephone company. The only testimony which purported to show when the fixture present - on the roof at the time of the accident was placed there is based on hearsay and was properly stricken out. It may well be that the telephone wires were placed in the position they were in at the time of the accident ón the roof of the Sherwood Building by some third party, and even after the Federal Telephone and Telegraph Company had relinquished its control. It follows that the proof is insufficient to sustain a finding that the Federal Telephone and Telegraph Company erected a nuisance unless the mere fact that the span of the wire leading from the Sherwood Building was of unusual length created a condition of danger.

In spite of the length of the span the wire remained unbroken for years. The wire was not intended to carry a dangerous current. A break would cause no serious danger of injury to person or property, and would, therefore, constitute no nuisance unless the wire came in contact with other wires carrying a much stronger current. There is evidence that such wires of the Buffalo General Electric Company were on the roof of the Sherwood Building for many years. Perhaps during this period and even when the span of telephone wires was erected, the more highly charged wires were in dangerous proximity to the telephone wires, though not on the same fixture. If so, the jury might perhaps find that an excessively long span created a condition of serious danger and constituted a nuisance, but in this case the evidence of the relative positions of the light and power wires and the telephone wires during the period before the Federal Telephone and Telegraph Company conveyed its property is too vague to permit inference of dangerous proximity.

We have intimated that the Federal Telephone and Telegraph Company might be hable if it conveyed property constituting a nuisance, if it had maintained such nuisance, though it did not create it, but the evidence here is insufficient to show the condition of thereof, fixtures and wires when the defendant conveyed its property or how long the existing condition remained unchanged. Moreover the case was tried upon the theory that the defendant Federal Telephone and Telegraph Company had erected a nuisance and no question was submitted to the jury as to whether it had maintained a nuisance after notice.

It follows that the judgment against the Federal Telephone and Telegraph Company should be reversed and a new trial granted, with costs to abide the event, and the judgments against the New York Telephone Company should be reversed and the complaint dismissed, with costs in all court's.

His cock, Ch., Cardozo, McLaughlin and Andrews, JJ., concur; Pound and Crane, JJ., vote to affirm judgment against Federal Telephone and Telegraph Company.

Judgment accordingly.


source: Caselaw Access Project

author: McLaughlin, J.

license: Public Domain

text:
    Bown Brothers, Inc., Respondent, v. Merchants Bank of Rochester, Appellant. (Six Actions.)
    (Argued May 14, 1926;
    decided September 28, 1926.)
    Banks and banking — bills, notes and checks — contract — principal and agent — negligence — bank which accepts drafts for collection acts as agent and is bound to exercise high degree of fidelity and diligence — drafts with bill of lading and documents attached delivered for collection in foreign country — duty of bank to promptly notify customer where it finds that drawee is forbidden by law to sign prescribed certificate.
    1. A bank, which accepts drafts for the purchase price of merchandise, with bill of lading and documents attached, for collection, undertakes to present them to the consignees and receive the amounts called for. It acts as agent of the shipper and as such is bound to exercise a high degree of fidelity and diligence in the performance of its duties and to act in the interest of its principal.
    2. Where, in an action to recover the amount of drafts delivered by plaintiff to defendant for collection in a foreign country, it appears ' that plaintiff had agreed with defendant that the documents were only to be delivered to the consignees upon their signing and delivering a certain form of certificate, but, when the drafts were presented the consignees refused to sign the certificate on the ground that they were prohibited from so doing by the law of the country, but offered to sign a similar certificate prescribed by their law and accept and pay the drafts, it was the duty of the defendant, through its correspondent, to promptly notify the plaintiff that the prescribed form of certificate could not be legally signed, and its failure so to do constituted a negligent act which made it liable for a loss sustained.

      Bown Brothers, Inc., v. Merchants Bank, 214 App. Div. 693, affirmed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered January 16, 1926, affirming a judgment in favor of plaintiff entered upon a decision of the court at a Trial Term, a jury having been waived. .

      George de Forest Lord and Sherman Baldwin for appellant.
    There was no causal relation between the plaintiff’s damages and any acts or omissions of the defendant. (Flett v. Royal Bank of Canada, 207 App. Div. 272; 239 N. Y. 543; Taggart v. Western Union Tel. Co., 198 App. Div. 366; Lowery v. Western Union Tel. Co., 60 N. Y. 198; White v. Western Union Tel. Co., 153 App. Div. 684; Landsberger v. American Tel. Co., 32 Barb. 530; Altman v. Western Union Tel. Co., 84 N. Y. Supp. 54; Brooke v. Tradesmen’s National Bank, 69 Hun, 202; Brauer v. Oceanic Steam Navigation Co., 66 App. Div. 605; Chapman v. Fargo, 223 N. Y. 32; Coppola v. Kraushaar, 102 App. Div. 306.) The signature of the British form or a form similar thereto by the drawees was a material condition precedent to defendant’s obligation to surrender the documents and collect the drafts. (2 Williston on Contracts, § 671; Carroll v. Title Guarantee & Trust Co., 131 App. Div. 221; Sun Printing & Publishing Assn. v. Remington Paper & Power Co., 235 N. Y. 338; Cameron-Hawn Realty Co. v. City of Albany, 207 N. Y. 377; Oakley v. Morton, 11 N. Y. 25; Koster v. Lafayette Trust Co., 147 App. Div. 63.) Performance of the condition was not excused by impossibility or by illegality under the Swedish law. (Van Horn v. Kittitas County, 112 Fed. Rep. 1; Tweedie Trading Co. v. McDonald Co., 114 Fed. Rep. 985; Richards & Company, Inc., v. Wreschner, 174 App. Div. 484; Rederiaktiebolaget Amie v. Universal Transp. Co., Inc., 250 Fed. Rep. 400; Krulewitch v. Nat. Importing & Trading Co., 195 App. Div. 544; Beebe v. Johnson, 19 Wend. 500; Ye Seng Co. v. Corbitt, 9 Fed. Rep. 423; Taylor v. Taintor, 16 Wall. 366.)

      Carlton F. Bown for respondent.
    Defendant is liable because of actual negligence and failure to act in good business faith. (Shipney v. Bowery Bank, 59 N. Y. 485; First Nat. Bank v. Fourth Nat. Bank, 77 N. Y. 320; Commercial Bank v. Red River Nat. Bank, 8 N. D. 382; Pinkney v. Kanawha Valley Bank, 68 W. Va. 254; Diamond Mill Co. v. Groesbeck Nat. Bank, 9 Tex. Civ. App. 31; Clark & Co. v. Bank of Wheeling, 17 Penn. St. 322; Second Nat. Bank v. Merchants Bank, 111 Ky. 930.) There is evidence of damage to plaintiff growing out of defendant’s negligence. (First Nat. Bank v. Fourth Nat. Bank, 77 N. Y. 320.) The British and Swedish forms are similar; therefore, defendant had no right to insist on the British form rather than the Swedish form. (Greenleaf v. Goodrich, 101 U. S. 278; Rhode Island Hospital Trust Co. v. Olney, 16 R. I. 184; State ex rel. Sigsbee v. City of Birmingham, 160 Atl. Rep. 196; State ex rel. City of Butte v. Weston, 29 Mont. 125.)
   McLaughlin, J.

Six actions were brought, each involving defendant’s liability on a draft drawn by plaintiff and delivered to and accepted by defendant for collection. They were tried together, and argued together at the Appellate Division and in this court. They will be so considered in this opinion.

At the trial a jury, by stipulation made in open court, was waived, and the trial then proceeded before, the judge as though he were sitting at Special Term. There was substantially no dispute as to the facts.

The trial court reported in favor of the plaintiff and upon the decision rendered by him judgment was entered, and an appeal was taken from the judgment to the Appellate Division where the same was affirmed, one of the justices dissenting. An appeal was then taken to this court.

In 1916, during the World War, the plaintiff consigned to certain consignees in the Kingdom of Sweden a quantity of dried fruit, and on the first of May of that year it delivered to the defendant certain drafts for the purchase price of such fruit, with documents attached, with direction to present the same to the consignees and collect the amount called for. The defendant accepted the drafts for the purposes stated and forwarded the same, with documents attached, to its correspondent, Brown Bros. & Co., in New York city and that firm, in turn, forwarded them to its correspondent in London — Brown, Shipley & Co. The drafts were never collected and the actions were brought to recover from the defendant the amount of them, upon the ground that the bank’s failure to collect was due to its negligence and made it liable.

At the time the drafts and documents were forwarded, England and other European countries were at war with Germany. The British government was endeavoring to exercise control over foreign trade to the end that food products should not reach its enemies through neutral countries. The British fleet was seizing some vessels carrying such goods to neutral ports. To insure freedom from such seizure, it was necessary for the purchaser to declare that the goods consigned to it would not be re-exported to countries at war with Great Britain. To accomplish the purpose sought, the British government had formulated' a certificate known as the British form ” which purchasers were required to sign, and which British bankers were required to use in making collection of drafts representing foreign shipments.

Some time in March, 1916, the defendant, through its New York correspondent, was advised that before undertaking items for collection drawn upon European countries, the London bank desired to receive confirmation that documents were only to be delivered to the consignees upon their signing and delivering the “ British form.” This fact was called to the attention of the plaintiff and it agreed that collections were to be made in this way.

On the 17th of April, 1916, a law was passed by the Kingdom of Sweden providing for a form of neutrality declaration and providing that the form prepared by it — and no other — should be used by Swedish subjects. The Swedish form differed somewhat from the British form but, in the main, provided that the goods were exclusively for consumption in Sweden and would not be re-exported. Neither the plaintiff nor the defendant had any knowledge of this law at the time the drafts in suit were made in May, 1916.

Shipments were made from New York in different vessels during the month of May, 1916, and there is no dispute between the parties but what the purchasers became legally obligated for the purchase price at the time the goods were shipped. All that remained for the plaintiff to do was to cause the drafts, with bill of lading and documents attached, to be presented to the consignees and receive the amount called for in the drafts. It was this obligation which the defendant undertook to perform when it accepted the drafts for collection.

The fact is not disputed but what the drafts in the regular course of business were presented to the consignees and accompanying them was the British form of neutrality declaration. The buyers refused to sign this form on the ground that they were prohibited from so doing by the Swedish law. They did, however, offer to sign the Swedish form and, according to the findings, they were then ready, able and willing to accept and pay the drafts and take the bill of lading if they could sign such form. The representative of the defendant refused to deliver the drafts and documents upon those terms.

The defendant, upon receiving notice that the consignees refused to pay the drafts, called the plaintiff’s attention to it, and asked for plaintiff’s instructions. The plaintiff had no information as to the cause of the non-acceptance but immediately notified defendant that it was cabling its brokers in Sweden in connection with the refusal of the consignees to pay. It was not until some time thereafter that the defendant notified the. plaintiff that it was the Swedish law which prevented the consignees from signing the British form and paying the drafts, and asked for further instruction. In response to this inquiry the plaintiff advised defendant that the consignees could not be required to break the laws of the Kingdom of Sweden and that, therefore, the signing of the British form should be waived.

The drafts some time thereafter, just when does not clearly appear, were protested for non-payment and the plaintiff notified, and it asked to have them returned.

But, in the meantime, vessels containing the fruit had been seized by the British government and the goods were subsequently sold in the Prize Court for a small amount, and the proceeds paid to the plaintiff were much less than the price agreed to be paid. The difference between what was realized and the amount of the drafts does not seem to be in dispute, nor is there any dispute but what this difference was the plaintiff’s loss. Whether the defendant is liable for this loss is seriously disputed, and that presents the main question on this appeal.

The difficulty arose by reason of the fact that on the presentation of the drafts, the buyers could not sign the British form because of the law of the Kingdom of Sweden. This being so, what was the defendant’s duty, acting through its agent? I am clearly of the opinion that it could not rightfully insist that the British form should be signed. The agent knew that was legally impossible, and prompt notice of that fact should have been given. It was a negligent act on its part that it did not do so.

In answer to this suggestion, the defendant contends that the contract contemplated that the British form was to be used and that it had no right to surrender the documents and collect the drafts unless that form was used, and no other. The fact that the Swedish consignees could not sign that form, it is urged, was no concern of the defendant. Defendant claims that its duty was discharged when it presented the drafts and documents with the British form. I do not think this follows. The bank acted as the agent of the plaintiff. As such agent it was bound to exercise a high degree of fidelity and diligence in the performance of its duties. (First National Bank of Meadville v. Fourth National Bank, 71 N. Y. 320; Isham v. Post, 141 N. Y. 100, p. 106.) An agent is bound to a high degree of loyalty to his principal, and in carrying out the duties imposed on him he is bound to act in thé interest of his principal.

When the agent ascertained that the Swedish consignees could not sign the British form, it should have adopted some other course which would result in accomplishing the purpose for which the agent had been selected. The purpose was to present the drafts with documents and collect the amount called for. This it could very easily have done if it had permitted the Swedish form to be signed. The bank, acting through its agent, was certainly obligated, immediately upon discovering that the British form could not be signed, to notify the plaintiff. This it did not do. The knowledge which the agent had was the knowledge of the defendant. The only thing which the plaintiff was interested in was the . collection, and for that purpose it employed the bank. The method adopted by the bank in making the collection was no concern of the plaintiff. It was not a material part of the arrangement between the plaintiff and the bank, but was a mere detail in the execution of such arrangement. The performance of the details of the arrangement between the plaintiff and the bank as to the certificate of neutrality was to be in Sweden and was regulated by the law there in force. (Hall v. Cordell, 142 U. S. 116; Union National Bank v. Chapman, 169 N. Y. 538.)

When the Swedish law became operative, then the parties were relieved from performance in the manner contemplated and it was the duty of the bank’s agent to do what it could to save its principal from loss or lessen its damage. (Williams v. Vanderbilt, 28 N. Y. 217, p. 223; Van Buskirk v. Roberts, 31 N. Y. 661; Hart v. Myers, 59 Hun, 420; affd., 128 N. Y. 578; Exchange National Bank v. Third National Bank, 112 U. S. 276, p. 291.)

It was the duty of Brown, Shipley & Co., who knew that a collection of the drafts could not be made if the British form was insisted upon, but that it could be made if the Swedish form was used, to have promptly so notified the plaintiff, through its correspondents. This certainly was an obligation imposed upon the defendant. (Shipsey v. Bowery National Bank, 59 N. Y. 485, p. 491; Second National Bank v. Merchants’ National Bank, 111 Ky. 930.) Its failure in this respect, in my opinion, constituted a negligent act which made it liable to the plaintiff for the loss sustained. The trial court so found, and its findings were affirmed by the Appellate Division.

The judgment appealed from should be affirmed, with costs.

His cock, Ch. J., Cardozo, Pound, Crane and Lehman, JJ.., concur; Andrews, J., absent.

Judgment affirmed.


author: Per Curiam.

text:
    In the Matter of the Application of Sarah Levitch, as Administratrix of the Estate of Ray L. Levitch, Deceased, Respondent, against The Board of Education of the City of New York, Appellant.
    Education Law — schools — teachers — jurisdiction — Commissioner of Education has jurisdiction to hear appeal of teachers though construction or application of statute is involved — decision of Commissioner, on appeal, that teacher was not entitled to notice and hearing before removal, final and conclusive.
    1. Under section 890 of the Education Law (Cons. Laws, eh. 16) the Commissioner of Education has jurisdiction to hear the appeal of any person aggrieved who has been refused pay as a teacher or been affected by the decision of any school authority, notwithstanding the fact that the question may involve the construction or application of a statute, and his decision is final and conclusive.

      (Argued September 28, 1926;
    decided October 5, 1926.)
    2. Where, therefore, a teacher in the public schools of the city of New York, who had been removed from her position, appealed to the Commissioner of Education, who was thereby called upon to decide whether her position had been such as to entitle her to notice and hearing before removal, pursuant to section 872 of the Education Law, which question he decided against her, his decision is final and she and, after her death, her substituted representative are barred from resorting to the courts.

      Matter of Levitch v. Bd. of Education, 216 App. Div. 391, reversed.
    Appeal from an order of the Appellate Division of the Supreme Court in the second judicial department, entered May 6, 1926, which reversed an order of Special Term denying a motion for a peremptory order of mandamus to compel reinstatement of a teacher in the public schools of the city of New York.

      George P. Nicholson, Corporation Counsel (John F. O’Brien, Elliot S. Benedict and Thomas W. A. Crowe of counsel), for appellant.
    The determination by the Commissioner of Education pursuant to section 890 of the Education Law on appeal to him by a teacher, concerning her dismissal and her status as the holder of a license, whether temporary or permanent, under section 872 of the Education Law and her right to reinstatement and salary, is final and conclusive against her. (Education Law, § 890; People ex rel. Light v. Skinner, 159 N. Y. 162; Bullock v. Cooley, 225 N. Y. 566; People ex rel. Hylan v. Finegan, 227 N. Y. 219; Barringer v. Powell, 230 N. Y. 37; People ex rel. Yale v. Eckler, 19 Hun, 609; People ex rel. Walrath v. O’Brien, 112 App. Div. 97; People ex rel. O’Connor v. Board of Education, 196 App. Div. 810; 232 N. Y. 561; People ex rel. Bd. of Education v. Finley, 211 N. Y. 51; Matter of Hirshfield v. Cook, 227 N. Y. 297.)

      Helen P. McCormick for respondent.
    A decision of the Commissioner of Education is not final or binding on this court in matters involving statutory rights of teachers employed in the public schools of the State of New York. (Matter of O’Connor v. Emerson, 196 App. Div. 207; People ex rel. Hylan v. Finegan, 227 N. Y. 219; People ex rel. Bd. of Education v. Finley, 211 N. Y. 51; Matter of Hirshfield v. Cook, 227 N. Y. 297; People ex rel. Merrall v. Cooley, 75 Misc. Rep. 188.)
   Per Curiam.

Assuming, without deciding, that Ray L. Levitch was removed unlawfully from her employment as a school teacher under section 872, subdivision 3, of the Education Law (Cons. Laws, chap. 16), she having appealed to the Commissioner of Education, the decision was final and conclusive upon her. Under section 890, formerly section 880, the Commissioner had jurisdiction to hear the appeal of any person aggrieved who had been refused pay as a teacher or had been affected by the decision of any school authority. The fact that the question may have involved the construction or application of a statute did not deprive him of jurisdiction. (Barringer v. Powell, 230 N. Y. 37, 43.)

The Education Law specifically makes the Commissioner’s decision final and conclusive. There is nothing here to show that his action was purely arbitrary. He was called upon to decide whether the teacher by reason of her various appointments and service came within the provisions of section 872, entitling her to notice and hearing before removal. He decided that she did not hold such a permanent position. Having appealed to the Commissioner, the petitioner and her substituted representative were barred from resorting to the courts What her rights would have been if she had not appealed to the Commissioner we do not determine. His conclusion was final. (Matter of O’Connor v. Emerson, 196 App. Div. 807, 810; affd., 232 N. Y. 561; Bullock v. Cooley, 225 N. Y. 566, 576; People ex rel. Board of Education v. Finley, 211 N. Y. 51.)

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

His cock, Ch. J., Cardozo, Pound, McLaughlin, Crane and Andrews, JJ., concur; Lehman, J., absent.

Judgment accordingly.


author: Pound, J.

text:
    Philip Kassin, Plaintiff, v. M. & L. Building Corporation et al., Defendants, Fanny Brandfon, Respondent, and Morris Schwartz, Appellant.
    (Argued September 30, 1926;
    decided October 12, 1926.)
    Real property — mortgage — foreclosure — practice ■— order made on motion for return of money paid on bid at foreclosure sale a final order — ■ rule charging different parcels of land with payment of mortgage debt in inverse order of alienation subject to qualifications — premises conveyed, subject to blanket mortgage covering them and other parcels, charged with payment of proportionate share of lien — not relieved by prior sale on foreclosure of other parcels for amount more than sufficient to pay amount of judgment.
    1. A motion to require a referee to return money paid by a purchaser at a mortgage foreclosure sale may be regarded as analogous to a motion to be relieved from a bid and purchase under a judicial sale and the order made thereon is, therefore, a final order.
    2. The equitable doctrine that when premises subject to a mortgage are conveyed in parts at different times the parcels are to be primarily charged with the payment of the mortgage debt in the inverse order of alienation, is subject to qualifications when the equities require it.
    3. A motion, by one who at a mortgage foreclosure sale bid in her own premises, for an order directing the referee to return her the amount bid and paid, on the ground that prior to the sale of her premises the amount for which other premises covered by the mortgage had been sold was more than sufficient to pay the amount required under the judgment, is properly denied where it appears that the premises in question were conveyed subject to the blanket mortgage and that a proportionate share of the amount due thereon was a part of the purchase price. '
    4. As to the proper disposition of surplus remaining after paying her share of the mortgage debt and expenses the equities of the parties may be settled in surplus money proceedings.

      Kassin v. M. & L. Building Corp., 215 App. Div. 588, reversed.

      Appeal from an order of the Appellate Division of the Supreme Court in the second judicial department, entered February 19, 1926, which reversed an order of Special Term denying a motion by defendant, respondent, for a direction to the referee in a mortgage foreclosure sale to return to respondent moneys paid by her as purchase price of property bid in .by her, and granted said motion.

      Clarence C. Bachrach for appellant.
    The Brandfon lot, at least to the extent of $7,500 and interest, was the primary fund for the payment of the mortgage held by the plaintiff herein, and, therefore, its sale was necessary and proper. (Zabriskie v. Salter, 80 N. Y. 555; Wood v. Harper, 9 App. Div. 229; Warren v. Boynton, 2 Barb. 13; Briscoe v. Power, 47 Ill. 447; Monarch Coal & M. Co. v. Hand, 197 Ill. 290; Hill v. McCarter, 27 N. J. Eq. 41; Hoy v. Bramhall, 19 N. J. Eq. 563; 1 Wiltsie on Mortgage Foreclosure [3d ed.] 857; 2 Jones on Mortgages of Real Prop. [6th ed.] § 1625, note 130; Bowne v. Lynde, 91 N. Y. 92; Thompson v. Bird, 57 N. J. Eq. 175; Clinton v. Buffalo Land Security Co., 55 App. Div. 440.) The equities of the appellant are superior to those of the respondent to the full amount of the latter’s interest in her lot; the entire proceeds of sale of the Brandfon lot are properly to be applied • toward the payment of the plaintiff’s mortgage. (Zabriskie v. Salter, 80 N. Y. 558; Hart v. Wandle, 50 N. Y. 381; LaFarge Fire Ins. Co. v. Bell, 22 Barb. 54; Livingston v. Mildrum, 19 N. Y. 440.)

      Gerson C. Young and Allan D. Emil for respondent.
    On the sale in foreclosure of the mortgaged premises, respondent had the right to have applied to her particular house the principle of inverse order of alienation. This principle was not abrogated because of the clause in the deed of conveyance to her property to the effect that the premises were taken subject to a blanket mortgage, the proportionate share of which, affecting the said premises, did not exceed $7,500 and interest. The language of the clause in question did not operate so as to entitle appellant to compel the sale of respondent’s house nor did respondent’s house become the primary fund for the payment of plaintiff’s blanket mortgage. (Hopkins v. Woolley, 81 N. Y. 77; Erie County Savings Bank v. Roop, 48 N. Y. 292; Barnes v. Mott, 64 N. Y. 397; Coles v. Appleby, 87 N. Y. 114; Hart v. Wandle, 50 N. Y. 381; Bernard v. Lymburner, 85 N. Y. 172; Bowne v. Lynde, 91 N. Y. 92; Libby v. Tufts, 121 N. Y. 172; Welling v. Ryerson, 94 N. Y. 98.) The equities of the respondent are superior to those of the appellant. (Chapman v. West, 17 N. Y. 125; Ingalls v. Morgan, 10 N. Y. 178; Hubbard v. Lydecker, 78 Misc. Rep. 80; Dorr v. Shaw, 4 Johns. Ch. 17.)
   Pound, J.

The plaintiff foreclosed a mortgage covering thirty-four lots, situate on Crown street in the borough of Brooklyn, city of New York. The appellant, Morris Schwartz, was the owner and holder of a mortgage, second and subordinate to that held by the plaintiff, upon thirty-three of the lots covered by the plaintiff’s mortgage. The respondent, Fanny Brandfon, was the owner of the thirty-fourth lot, the lot not covered by the mortgage held by Schwartz. A judgment of foreclosure and sale was entered which directed the sale of the premises described in the complaint, or so much thereof as may be sufficient to discharge the mortgage debt, the expenses of sale, etc., and the premises were sold one lot at a time. Thirty-three of the lots having been sold, Brandfon’s attorney, who was present at the sale, discovered that the amount for which they had been sold was sufficient to pay the mortgage debt, the expenses of the sale, etc., as required by the judgment of foreclosure and sale. He protested orally and in writing to the referee against the sale of the respondent’s lot. The referee, not being certain that the amount realized was sufficient to cover all the items which he would be required to pay, sold it. The respondent through her attorney thereupon purchased it for the sum of $10,650. Subsequently the referee ascertained, and it is undisputed, that the amount realized from the sale, before the lot of the respondent was sold, was sufficient to pay the mortgage debt, the expenses of the sale, and all the other items required to be paid by him under the judgment herein. On closing title to the lot owned and purchased by Mrs. Brandfon, her attorney protested against paying the balance of the purchase price and taking a deed, but the plaintiff’s attorney insisted upon the terms of the safe being carried out. Thereupon, under protest, the balance was paid, the deed accepted and recorded. The report of sale has not yet been filed. The respondent then moved for an order directing the referee to repay to her the amount paid by her, $10,650, less $429.56 paid by the referee for taxes, arrears of taxes, assessments, water rates, accrued interest, penalties thereon and for stamps on the deed affecting her lot. This motion was denied at Special Term. The Appellate Division reversed and granted the motion. The only question before this court is whether the Brandfon lot should have been sold by the referee.

This motion may be regarded as analogous to a motion to be relieved from a bid and purchase under a judicial sale and, therefore, a final order. (Merges v. Ringler, 158 N. Y. 701.)

Although the Brandfon lot was not subject to the Schwartz mortgage it was conveyed subject to the blanket mortgage. It is not questioned that the deed provided that the sum of $7,500 thereof affected it. This amount was a part of the purchase price which it should pay. It was, therefore, as between the plaintiff in the foreclosure action and Brandfon, primarily charged with the payment of the blanket mortgage at least to that extent. If she succeeds in getting back the consideration paid at the referee’s sale, she will have her property without paying $7,500, part of the purchase price, which would, be inequitable. (Wood v. Harper, 9 App. Div. 229.) Whether she should pay more will depend on facts later to be established.

The giving of a mortgage is an' alienation pro tanto, i. e., to the amount of the mortgage. (Zabriskie v. Salter, 80 N. Y. 555, 558.) The Schwartz mortgage is to that extent only an alienation of the lots covered thereby prior to the Brandfon deed. (Kellogg v. Rand, 11 Paige, 59, 64.) The equitable doctrine, which is invoked by Brandfon, that when premises subject to a mortgage are conveyed in parts at different times the parcels are to be primarily charged with the payment of the mortgage debt in the inverse order of alienation, is subject to qualifications when the equities require it.

The question remains as to the proper disposition of thé surplus remaining after paying her share of the mortgage debt and expenses of the sale. The Schwartz mortgage covered other lands than the premises involved, in the foreclosure. Their value does not appear. The equities of Brandfon are thus presumptively enhanced to some extent but that fact is not material on this motion. There is no presumption that such equities are enhanced to the full amount of the purchase price of the Brandfon lot. The only question here is whether or not the sale of the Brandfon lot should be set aside as contrary to the judgment of foreclosure.

The equities of the parties may be settled on surplus moneys proceedings where the fund may be marshalled according to the equities which do not fully appear in this proceeding, but respondent may not be relieved from the sale of her lot.

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

Hiscock, Ch. J., Cardozo, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Ordered accordingly.


author: Crane, J.

text:
    The People of the State of New York, Respondent, v. William J. Dunn, Appellant.
    (Submitted October 11, 1926;
    decided October 19, 1926.)
    Crimes — larceny in second degree —■ trial — evidence —■ charge — evidence that money had been repaid incompetent to show attempt by defendant to influence prosecuting witness in absence of evidence showing connection of defendant with payment — employee of defendant who knew of crime and aided and assisted defendant in committing it an accomplice — erroneous charge that he was not.
    1. Upon trial of an indictment for larceny, testimony that the money alleged to have been stolen had been repaid to complainant by unidentified persons is incompetent to show that the defendant attempted wrongfully to influence the action, appearance or testimony of the prosecuting witness, in the absence of evidence showing defendant’s connection with the payment.
    2. Where it appears from the evidence that an employee of defendant, called as a witness by the prosecution, knew that defendant was misappropriating money of his customers and aided and assisted him in so doing during his absence from his office, such employee participated as a principal in the larceny and was equally guilty with and an accomplice of defendant. The statute requiring corroboration of his testimony, therefore, applied and a charge of the trial court that he was not an accomplice constituted error.

      People v. Dunn, 211 App. Div. 847, reversed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 19, 1924, which affirmed a judgment of the Court of General Sessions of the Peace in the county of New York, rendered upon a verdict convicting the defendant of the crime of grand larceny in the second degree.

      George Sylvester and George Z. Medalie for appellant.
    Prejudicial testimony was admitted which requires a reversal of the judgment of conviction. (People v. Buzzi, 238 N. Y. 390; Nowack v. Metropolitan St. R. Co., 166 N. Y. 433; People v. Shillitano, 218 N. Y. 161; Wertheimer v. N. Y. Rys. Co., 177 App. Div. 448; Lacs v. Everard’s Breweries, 170 N. Y. 444.) The court erred in refusing to submit to the jury the question whether or not Cooper was an accomplice. (People v. Crossman, 241 N. Y. 138; People v. Zucker, 20 App. Div. 363; 154 N. Y. 770; People v. Elliott, 155 App. Div. 486; People v. Richardson, 222 N. Y. 103; People v. Katz, 209 N. Y. 311.)

      Joab H. Banton, District Attorney (Robert C. Taylor of counsel), for respondent.
    The People were properly permitted to show that, while this case was on the day calendar reaching trial, Welcker received restitution from defendant's wife. (Wigmore on Ev. [2d ed.] § 105.) Lawson states a like doctrine, quoting from State v. Reed, 62 Me. 130; Lawson Pres. Ev. [2d ed.] 593, 594, rule 107; People v. Vitusky, 155 App. Div. 139. Cooper was not an accomplice. (People v. Zucker, 20 App. Div. 363; 154 N. Y. 770; People v. Bright, 203 N. Y. 73; People v. Sweeney, 213 N. Y. 37; People v. Swersky, 216 N. Y. 471; People v. Cohen, 223 N. Y. 406; People v. Ogle, 104 N. Y. 511; People v. McGuire, 135 N. Y. 639; People v. McGonegal, 10 N. Y. Crim. Rep. 141; 136 N. Y. 62; People v. Ellenbogan, 114 App. Div. 182; 186 N. Y. 603; People v. Gilhooley, 108 App. Div. 234; 187 N. Y. 551; People v. Yannicola, 133 App. Div. 885.)
   Crane, J.

The defendant was convicted in the Court of General Sessions of grand larceny, second degree, and the judgment has been unanimously affirmed by the Appellate Division. He appeals to this court upon errors committed in the admission of evidence. His appeal must be allowed, the judgments reversed and a new trial granted.

The defendant was in the stock brokerage business at No. 1 Wall street, New York city. In November, 1921, a customer, Jerome L. Welcker, gave to the defendant’s employee, one Sidney Cooper, $400.25 to purchase six $100 prior lien four per cent bonds of the St. Louis and San Francisco railroad. The money went into the defendant’s bank account. The bonds were never purchased. The money was apparently appropriated by the defendant. The defense was that the defendant was not in the city of New York in the month of November and knew nothing about the transaction; that he never knowingly appropriated the plaintiff’s money.

The defendant might be Hable civilly for money received by Cooper although not Hable criminaUy. His ignorance of Welcker’s deaHng with Cooper would not relieve him from Habihty to pay his customer but might reheve him criminally. If Cooper took the money, failed to buy the bonds, Dunn would be" Hable to return the money or else for damages suffered through his agent’s neglect. He could not be Hable for a crime, however, unless he knowingly appropriated or misapplied Welcker’s money. The trial of this action centered about the defendant’s knowledge. At this point the prosecution introduced evidence that Welcker shortly before the trial was repaid the money which he had given to Cooper. The persons who paid him are not identified. They met him in the street, took him to a stationery store and gave him a check and cash. He says that he was told that the woman present was Mrs. Dunn. He did not know the people and it is not shown that such payment was made by the defendant or with his authority or that these persons were in any way connected with him or even that the woman was his wife. This testimony was received over the defendant’s objection and exception and was incompetent in view of the use apparently made of it. Welcker stated that he would accept restitution provided that he prosecuted the case just the same.

A broker paying back money to his customer may be evidence of the fact that he received the money or failed to carry out the customer’s order but it is not evidence in itself of a crime or of misappropriation. The jury were told nothing about this. Under the circumstances of this case, the fact that the payment was made shortly before the trial and the emphasis which the district attorney made of the time of payment in his summing-up indicate that the evidence was apparently introduced and used for the purpose of showing that the defendant attempted wrongfully to influence the action, appearance or testimony of the prosecuting witness. This could not be done; at least without showing the defendant’s connection with the payment, and in this case such evidence was totally Jacking.

The court charged that defendant’s clerk, Cooper, was not an accomplice. This question should have been left to the jury as a question of fact. Cooper took Welcker’s money and gave him a receipt for it; also a statement that the firm had bought for his account the bonds ordered. Cooper signed the receipt and he signed the false statement. He deposited the money in the defendant’s bank. He swears that he knew that the bonds were never purchased. He later told Welcker that another broker had a thousand-dollar bond which was to be split up so as to give him the required number. This also was false. If Cooper knew that Dunn, his employer, was misappropriating the money of customers and of Welcker, and he aided and assisted him in doing this, Dunn being absent from New York at the time, Cooper would be participating as a principal in the commission of larceny and would be equally guilty with Dunn.

Under the circumstances Cooper would be an accomplice of Dunn in the larceny of Welcker’s money and the statute would then apply requiring corroboration of his testimony. In view of these errors, which, considering the whole case, cannot be considered unsubstantial or harmless, we think the judgments should be reversed and a new trial ordered.

His cock, Ch. J., Andrews and Lehman, JJ., concur; Cardozo, Pound and McLaughlin, JJ., concur on ground last stated in opinion.

Judgments reversed, etc.


author: .Pound, J.

text:
    Lew A. Satz, Respondent, v. Massachusetts Bonding and Insurance Company, Appellant.
    (Argued September 28, 1926;
    decided October 19, 1926.)
    Insurance • — • contract — warranty — estoppel — insurance company estopped from enforcing condition where it had knowledge of facts not noted in policy — not estopped from standing on breach of warranty set forth in policy by delivery thereof with knowledge on its part of the facts —• insurer has right to rely upon warranties written into policy notwithstanding any knowledge it may have.
    1. The rule that if can insurance company or its general agent is at the time of the issue of a policy notified of facts which, under the terms of the policy, would render it void if not noted on the policy, the company cannot avail itself of such a defense, remains, with proper limitations, the law of the State. Estoppel applies to the breach of a condition and the insurance company may be estopped from enforcing the condition and claiming a forfeiture. Where, however, a warranty contained in the policy itself is vital to the contract, the breach thereof is not acquiesced in by the delivery of the policy with knowledge thereof on the part of the company’s agent and estoppel will not suffice to prevent a showing that it has been broken.
    2. Where, therefore, in an action to recover upon a policy of burglary insurance, the answer alleges as a defense and the reply admits breaches of warranty in that statements of the assured, set forth in the policy and thereby made the basis of the insurance, were untrue, a contention that defendant is estopped from claiming a forfeiture because the policy was issued with full knowledge on its part of the facts, cannot be sustained. The warranties being written into the policy the company has the right, in spite of any knowledge or information it may have, to rely thereon. (BoVard v. N. Y. Life Ins. Co., 98 Mise. Rep. 286; 182 App. Div. 915; 228 N. Y. 521, followed.)

      Satz v. Massachusetts Bonding & Ins. Co., 217 App. Div. 734, reversed.

      Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the first judicial department, entered June 21, 1926, which affirmed a determination of the Appellate Term reversing a judgment of the City Court of the city of New York in favor of defendant, entered upon an order of that court granting a motion' for judgment on the pleadings.

      I. Maurice Wormser, Albert J. Rifkind and Thomas T. Reilley for appellant.
    The plaintiff is estopped from questioning the warranties. Good faith toward the defendant, honest and upright dealing, as well as reasonable care on the part of the plaintiff, required him to examine his policy, and his failure to make such examination, especially in the absence of any claim that the defendant or its agent did anything to mislead him, and thereby prevent him from reading his policy, or which lulled him into a feeling of security, that the policy did in effect contain the plaintiff’s statements of all prior losses, declinations and cancellations of insurance, constitutes laches on the part of the plaintiff, as a matter of law, which precludes him from asserting an estoppel against the defendant. (Metzger v. Ætna Ins. Co., 227 N. Y. 411; Stanulevich v. St. Lawrence L. Assn., 228 N. Y. 527; Baumann v. Preferred Accident Ins. Co., 225 N. Y. 487; Enthoven v. American Fidelity Co., 150 App. Div. 928; 211 N. Y. 561; Allen v. German-American Ins. Co., 123 N. Y. 6; Wolowitch v. National Surety Co., 152 App. Div. 14; Preston v. Ætna Ins. Co., 193 N. Y. 142; Gans v. Ætna Ins. Co., 214 N. Y. 326; Whiteside v. North American Ins. Co., 200 N. Y. 320; Kean v. National Surety Co., 241 N. Y. 252; Rosenthal v. American Bonding Co., 207 N. Y. 162.) The reply to the third and fourth affirmative defenses is insufficient, as a matter of law, to defeat the warranties in the policy. (Wolowitch v. Nat. Surety Co., 152 App. Div. 14; Romberg v. Kouther, 27 Misc, Rep. 228; Arf v. Star Fire Ins. Co., 125 N. Y. 57; North v. Piza, 43 App. Div. 284; affd., 167 N. Y. 578; Feinstein v. Massachusetts Bonding & Ins. Co., 184 App. Div. 233; 230 N. Y. 621.)

      Alfred B. Nathan for respondent.
    Knowledge by the defendant of the prior declination and cancellation of «other policies at the time of the issuance of the policy in ;suit estopped the defendant from asserting that its policy was void because of alleged breaches of warranty in this regard. (Van Schoick v. Insurance Co., 68 N. Y. 434; Robbins v. Insurance Co., 149 N. Y. 477; Forward v. Insurance Co., 142 N. Y. 382; Lewis v. Insurance Co., 181 N. Y. 381; New York Mutual, etc., Association v. Insurance Co., 110 App. Div. 760; 189 N. Y. 525; McClelland v. Insurance Co., 217 N. Y. 336; Wood v. Insurance Co., 149 N. Y. 382; Graham v. Ins. Co., 204 .App. Div. 103; Houlden v. Insurance Co., 188 App. Div. 734; 231 N. Y. 636; Short v. Insurance Co., 90 N. Y. 16; Draper v. Insurance Co., 190 N. Y. 12; Gray v. Insurance Co., 155 N. Y. 180; Skinner v. Norman, 165 N. Y. 565.) Parol evidence is admissible to show that defendant at the time of the issuance of its policy was notified of the real facts in regard to the prior declination and cancellation of other policies of the plaintiff. (Bennett v. Buchan, 76 N. Y. 386; Thebaud v. Insurance Co., 84 Hun, 1; 155 N. Y. 516; Bidwell v. Insurance Co., 24 H. Y. 302; Woodruff v. Insurance Co., 83 N. Y. 133; Short v. Insurance Co., 90 N. Y. 18; Davern v. Insurance Co., 241 N. Y. 318; Forward v. Ins. Co., 142 N. Y. 382; Koenig v. Insurance Co., 16 Misc. Rep. 531; Carmichael v. Insurance Co., 45 Misc. Rep. 597; Richards on Insurance [3d ed.], 161-163.)
   .Pound, J.

The action is on a policy of burglary insurance. The policy provides:

-THE MASSACHUSETTS BONDING & INSURANCE COMPANY,, hereinafter called the Company, in consideration of the payment of the premium and of the statements contained in the schedule hereof, which statements the assured makes on the acceptance of this policy and warrants to be true, hereby agrees to indemnity, in the amounts as defined in Item Twelve (12) of said schedule, the person or persons designated in Statement One (1) thereof.”

In the schedule which is attached to and forms part of the policy it is also expressly provided that the statements herein contained are made the basis of this insurance, and the assured, by the acceptance of this policy, hereby warrants them to be true.”

The plaintiff’s ninth warranty, which is found in the schedule, reads: No burglary, theft or robbery insurance applied for or carried by the assured, at the premises. covered hereby or elsewhere has ever been declined or canceled, except as herein stated — No exceptions.”

Printed in bold type, on the front of the policy at the bottom thereof, are the words “ please bead youb policy.”

The complaint alleges a loss under the terms of the policy and a denial of liability thereunder. The answer sets up as defenses: 1. A breach of warranty in that an application by the assured for a policy of burglary insurance had been declined by one insurance company; and, 2. A further breach of warranty in that a burglary insurance policy issued to assured had been canceled by another insurance company.

Plaintiff’s reply does not deny the making of the warranties and admits that the application had been denied and the policy canceled as alleged in the answer but alleges that the policy in suit was issued with full knowledge of the facts and that defendant is estopped from alleging such breach of warranty. Motion was made by defendant for judgment on the pleadings in the City Court of the City of New York and granted. The Appellate Term reversed the judgment and denied the motion. The Appellate Division affirmed by a divided court, two of the justices dissenting. An appeal to this court was allowed on the following certified questions:

1. Is parol evidence, as to the prior alleged negotiations set forth in the reply, admissible to overcome the breach of the warranties which form the basis of the defenses to the plaintiff’s action on said policy in the City Court of the City of New York, where there is physically attached and incorporated into said policy a schedule of the aforesaid warranties which, by the terms of the policy, the assured on the acceptance thereof warrants to be true?
2. Is the plaintiff, in an action on a policy of burglary insurance instituted in the City Court of the City of New York, estopped from offering parol evidence to overcome the warranties contained in the schedule incorporated in the policy, which warranties, by the terms of the policy, the assured warrants are true upon acceptance and are made the basis of the insurance, where the reply of the plaintiff to the affirmative defenses of breach of said warranties contained in the schedule fails to allege that the defendant did anything to prevent him from examining the policy?
3. Is the plaintiff in his action in the City Court of the City of New York, on a policy of burglary insurance, estopped from adducing parol evidence; to overcome the breach of warranties affirmatively pleaded in the answer; of representations alleged, in his reply, to have preceded delivery of the policy (which alleged representations are inconsistent with the warranties upon the breach of which said affirmative defenses are predicated), where the warranties alleged to have been breached are contained in a schedule physically attached to and incorporated in the policy, where the policy, accepted and retained by the assured, by its terms provides that the warranties are the basis of the insurance and the assured by the acceptance of the policy warrants that they are true, and where the reply does not allege that the defendant did anything to prevent the plaintiff from reading the policy, upon the front of which, when folded for delivery and accepted, appeared in bold type the words ‘ PLEASE READ YOUR POLICY ’ ?
“4. Is the reply to the third and fourth defenses contained in the answer insufficient, as a matter of law, entitling the defendant to judgment on the pleadings? ”

It has been broadly stated: The law is well settled in this State that if the insurance company or its general agent is at the time of the issue of the policy notified of facts which, under the terms of the policy, would render it void if not noted on the policy, the company cannot avail itself of such a defense.” (Lewis v. Guardian Fire & Life Assur. Co., 181 N. Y. 392, 395, citing Van Schoick v. Niagara Fire Ins. Co., 68 N. Y. 434; Wood v. American Fire Ins. Co., 149 N. Y. 382.) This rule was repudiated by the Supreme Court of the United States in the case of Northern Assur. Co. v. Grand View Building Association (183 U. S. 308; 203 U. S. 106) as fallacious and as overlooking the general principle that a written contract cannot be varied or defeated by parol evidence but it remains, with proper limitations, the law of the State. (McClelland v. Mut. Life Ins. Co., 217 N. Y. 336, 345.) It has been applied to conditions on the face of the policy to the effect that the policy shall be void if the insured is not in good health when the policy is delivered (McClelland v. Mut. Life Ins. Co., supra); if the building insured is on leased land, is incumbered, unoccupied, or if the title of the insured is other than of unconditional ownership (Van Schoick v. Niagara Fire Ins. Co., supra); to representations or warranties not physically a part of the policy of insurance (Sternaman v. Met. Life Ins. Co., 170 N. Y. 13); or to cases where the company has been guilty of some fraud or unfair conduct whereby the assured is led to believe that the warranty relied on is not made a part of the contract. (Davern v. American M. L. Ins. Co., 241 N. Y. 318.) But here there is no claim of fraud and the insured is cautioned to read his policy.

In the case of Bollard v. N. Y. Life Insurance Co. (98 Misc. Rep. 286) Judge Lehman, then Mr. Justice Lehman, sitting in Appellate Term, wrote a notable opinion which marks a new departure on this subject. There as here the warranties were a part of the contract; there it was claimed that the applicant for insurance correctly answered the questions but the representative of the company entered wrong answers on the blank and the insured signed the application without reading it over. There section 58 of the Insurance Law (Cons. Laws, ch. 28) required the policy of a life insurance company to contain the entire contract. Here the policy contains the entire contract, although section 58 does not apply. (Baumann v. Preferred Accident Ins. Co., 225 N. Y. 480.) Judge Lehman distinguished the cases in which an estoppel had been found and quoted with approval from the opinion in the case of Hook v. Michigan Mut. Life Ins. Co. (44 Misc. Rep. 478; affd., 139 App. Div. 922) as follows: Good faith toward the defendant as well as reasonable care on the part of the plaintiff required an examination of the contract, and a failure to make such examination constituted laches on the part of the plaintiff which precludes him from asserting an estoppel against the defendant.”

The dismissal of the complaint in the Bollard case was affirmed in 182 App. Div. 915 and 228 N. Y. 521. It has been followed in Stanulevich v. St. Lawrence Life Assn. (228 N. Y. 586). Judge Lehman writing in the Davern Case (supra, at p. 326) further elucidated it as follows: “ In that case, however, the oral answers were given to an agent and the insured knew that they were reduced to writing by the agent. He knew further that the answers so reduced to writing were annexed to the policy delivered to him, as required by statute, so that he might have the opportunity to examine the answers which the insurance company claimed he had given before it assumed the risk. The company was compelled to rely on its agent as to the nature of the representations made. The insured had personal knowledge and under such circumstances the company had the right to rely upon the correctness of the answers inserted in the policy, since, with full knowledge by the insured that opportunity to examine the policy and the representations upon which the company claimed that it was issued was offered the insured for his protection and to enable him to object, the insured chose to accept the policy as correct without examination.”

It may be difficult logically to distinguish between the application of the doctrine of waiver and estoppel to a condition incorporated in the policy the breach of which voids the policy and to a breach of warranty. The duty imposed on the insured to read his policy; the application of the parol evidence rule thereto; vary almost imperceptibly as applied to either case. In insurance law the term warranty is not infrequently convertible with condition. The breach of a condition precedent may often affect the liabilities of the parties more seriously than the breach of a warranty. We have, however, in recent cases thus sought to distinguish and divide: If a warranty contained in the policy itself is vital to the contract the breach thereof is not acquiesced in by the delivery of the policy with knowledge thereof on the part of the company’s agent. Estoppel will not suffice to prevent a showing that it has been broken. But estoppel applies to the breach of a condition. The insurance company may be estopped from enforcing the condition and claiming a forfeiture.

The Bollard case may be distinguished by the fact that in that case it might be said that the knowledge of the agent was not the knowledge of the company and that the company was compelled to rely on its agent. Here it is alleged that the company investigated and knew the facts. But in the Bollard case it was claimed that the insured gave truthful answers to the questions while here the answers were untrue. We come then to the application of the principle that warranties are not restricted to facts unknown to the company when issuing the policy. If the warranties are written into the policy the company has the right, in spite of any knowledge or information it may have, to rely thereon. (City of New York v. N. Y. & S. B. Ferry & S. T. Co., 231 N. Y. 18, 26.) The Bollard case is, therefore, controlling. The tendency on the part of the courts to treat insurance contracts as standing in a class by themselves and to protect against forfeitures invoked in defense of honest claims has led to much subtlety. As Professor Woodruff says in his preface to his “ Cases on Insurance (2d ed. p. v): What do they know of the law of the insurance contract who only the law of contract know? ” But the present rule of the New York courts as applicable to this case is established and on it we rest our decision without further attempt to harmonize all the cases on the subject.

Question No. 1 should be answered in the negative. Questions 2, 3, 4 in the affirmative.

The order of the Appellate Division should be reversed and the judgment of the City Court affirmed, with costs of all appeals.

Hiscock, Ch. J., Cardozo, McLaughlin, Crane and Andrews, JJ., concur; Lehman, J., absent.

Ordered accordingly.


text:
    Cecilia Kwiatkowski et al., Respondents, v. The Brotherhood of American Yeomen, Appellant.
    (Argued October 4, 1926;
    decided October 19, 1926.)
    Insurance — contract — warranty — evidence — provision in contract that answers to questions were to be regarded as statements of insured and that false statements should preclude recovery — erroneous admission of evidence to show that applicant could not read and that question falsely answered was never asked — beneficiaries claiming under contract may recover only in accordance with its terms.
    Where, by the express terms of a contract of life insurance the answers contained in the application, which is annexed to and made part of the contract, are to be regarded as statements of the insured and she agrees that there shall be no recovery if such statements are false, it is error, in an action to recover on the contract, to permit the plaintiff to show that insured could not read or write English, that the questions were put to her by the medical examiner in a foreign language and that she was never asked the question which in the written statement is answered falsely and that she never gave such answer. The applicant might have^ refused to accept the contract until it had been read over and interpreted to her by some person in whom she had confidence and was deterred by no act of defendant from learning its contents. The beneficiaries, therefore, claiming under such contract, may recover only in accordance with its terms. (Satz v. Massachusetts Bonding & Ins. Co., 243 1ST. Y. 385, followed.)

      Kwiatkowski v. Brotherhood of Am. Yeomen, 216 App. Div. 647, reversed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered May 11, 1926, affirming a judgment in favor of plaintiffs entered upon a verdict directed by the court.

      John H. Clogston for appellant.
    The plaintiff cannot recover. (Stanulevich v. St. Lawrence Life Association, 228 N. Y. 586; Davern v. American M. L. Co., 241 N. Y. 318.)

      Percy S. Lansdowne and Robert J. Lansdowne for respondents.
    The plaintiffs have established their cause of action and are entitled to recover. (Sutter v. Vande

      veer, 122 N. Y. 652.) The statement in the application as to the number and ages of the children of the insured in no event was a warranty. (Jennings v. Supreme Council, 81 App. Div. 76; Sternaman v. Metropolitan Life Ins. Co., 170 N. Y. 13; Gioia v. Metropolitan Life Ins. Co., 97 Misc. Rep. 380; Grubiak v. John Hancock Mutual Life Ins. Co., 208 App. Div. 714; Moore v. Prudential Casualty Co., 170 App. Div. 849; Charlton v. Metropolitan Life Ins. Co., 202 App. Div. 757.)
   Per Curiam.

The plaintiffs herein are the beneficiaries named in the certificate of membership issued by this defendant to Julianna Boldt, the mother of the plaintiff, Cecelia Kwiatkowski. Under the terms of the certificate the defendant agreed to pay to the beneficiaries the sum of five thousand dollars upon the death of Mrs. Boldt. The certificate was delivered to Mrs. Boldt. In accordance with section 232 of the Insurance Law (Cons. Laws, ch. 28) the certificate provided that the “ charter or articles of incorporation, the by-laws of the association, and the application for membership, and the medical examination, signed by the applicant, with all amendments to each thereof, shall constitute the agreement between the association and the member.” Annexed to the certificate at the time of its delivery and forming a part thereof was a photostatic copy of the application for membership containing questions and answers. This was signed by Mrs. Boldt with her mark, and contains a provision: I further agree that the statements and answers made herein, the pen or photographic copy of which being attached to my certificate, shall be held to be my statements, and I agree that any untrue answer to any question * * * shall immediately, whether material to this risk or otherwise, * * * render the certificate issued null and void.”

It is undisputed that the answer to one of the questions, as set forth in this written statement, is untrue.

The applicant made a contract with the defendant. That contract is in writing. By its express terms the answers contained in the photostatic copy of her application were to be regarded as hér statements, and she agreed that there should be no recovery if such statements were false. The plaintiffs, in spite of this clause in the contract, have been permitted to introduce evidence to show that the applicant could not read or write English, that the questions were put to her by a medical examiner in the Polish language, and that she was never asked the question which in the written statement is answered falsely, and that she never gave such answer. If the plaintiffs were seeking a reformation of the contract made by the applicant, through whom they claim, evidence that the answers contained in the written statement were never given and that the defendant, through its agents, have taken unfair advantage of her disability to read English, might be relevant. We do not pass upon such question now. In the present case the plaintiffs are suing upon a contract and under its terms are not entitled to a recovery. The applicant might have refused to accept that contract until it had been read over and interpreted to her by some person in whom she had confidence. She chose not to do so. The defendant had not previously agreed to issue any certificate or policy except upon the terms of the written contract. The applicant was not deterred by any act of the defendant from learning its contents. We have held in Satz v. Massachusetts Bonding & Insurance Co., 243 N. Y. 385 (decided herewith) that the beneficiaries claiming under such contract may recover only in accordance with its terms.

The judgments should, therefore, be reversed and the complaint dismissed, with costs.

Hiscock, Ch. J., Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgments reversed, etc.'