author:
Hubbs, J.
      O’Brien, J. (dissenting in part).

text:
    Town of Amherst, Respondent, v. County of Erie et al., Appellants.

      (Argued October 14, 1932;
    decided January 10, 1933.)

      M. Edwin Merwin and George L. Grobe for appellants.
    There is no authority, - statutory or otherwise, imposing a liability upon the county of Erie for any deficit in the plaintiff’s tax collections or for a deficit in the plaintiff’s budget for 1931. (Carroll v. McArdle, 216 N. Y. 232; Fulton y. Krull, 200 N. Y. 105; Moore v. Foot, 32 Miss. 469; State v. Security Nat. Bank, 139 Minn. 162; New York & Rosendale Cement Co. v. Davis, 173 N. Y. 237; Furey v. Town of Gravesend, 104 N. Y. 405; McKuskie v. Hendrickson, 128 1ST. Y. 555; People ex rel. McCann v. Kilbourn, 68 N. Y. 482; P. R. T. Co. v. Dash, 125 N. Y. 93; Commercial Bank v. Barnum, 49 N. Y. 269; Benton v. Wickwire, 54 N. Y. 226; Smith v. B. & R. R. R. Co., 99 App. Div. 94; 181 N. Y. 132; Wells v. Johnston, 171 N. Y. 324; County of Lancaster v. Trimble, 34 Neb. 752; Town of Iron River v. Bayfield County, 106 Wis. 587; State v. Ada County, 7 Ida. 261; Holroyd v. Town of Indian Lake, 180 N. Y. 318.) Assuming that the special Erie county tax act can be held to impose a liability on the county for a deficit in the town budget, the act is unconstitutional and void as to such provisions in that it directs the use of county moneys for other than county purposes in violation of article 8, section 10, of the New York State Constitution. (Holroyd v. Town of.Indian Lake, 180 N. Y. 318; Horton v. Andrus, 191 N. Y. 231; People ex rel. Farley v. Winkler, 203 N. Y. 445; People ex rel. Desiderio v. Connolly, 238 N. Y. 326; People v. Stoll, 242 N. Y. 453; Town of Whitestown v. Title Guaranty & Surety Co., 72 Mise. Rep. 498 ; 209 N. Y. 512; Meyer v. Town of Amherst, 217 App. Div. 213; Matter of Wendell v. Lavin, 246 N. Y. 115; Bonnell v. Griswold, 80 N. Y. 128; Matter of Manhattan Savings Institution, 82 N. Y. 143; Village of Kenmore v. County of Erie, 252 N. Y. 437; Augustine v. Town of Brant, 249 N. Y. 198; Horn v. Town of New Lots, 83 N. Y. 100; Deady v. Village of Lyons, 33 App. Div. 139.)

      Thomas D. Lynch and James E. Cuff for County of Monroe, amicus curice.

    The existing statutes do not authorize the imposition of the liability upon the county for deficiencies in town tax and, particularly, assessment collections. (L. 1884, ch. 135; L. 1909, ch. 383; People v. McKinny, 52 N. Y. 374; City of Fargo v. Cass County, 35 N. D. 372; County of Lancaster v. Trimble, 34 Neb. 752; Warner v. Pile, 105 Kan. 724; Muskogee Times Democrat v. Board of Commissioners, 76 Okla. 188.) If the special Erie county tax act is construed as imposing a liability on the county for town tax and assessment deficiencies, then it violates article 8, section 10, of the New York State Constitution. (People ex rel. Farley v. Winkler, 203 N. Y. 445; Holroyd v. Town of Indian Lake, 180 N. Y. 318; People ex rel. Desiderio v. Connolly, 238 N. Y. 326; People v. Stoll, 242 N. Y. 453; Sun Publishing Assn. v. Mayor, 152 N. Y. 257; Smith v. Smythe, 197 N. Y. 457; Horton v. Andrus, 191 N. Y. 231; Commissioners of Johnston County v. Lacy, 174 N. C. 141; Matter of Borup, 182 N. Y. 222; State ex rel. Town of Kirkwood v. County,

      Court, 142 Mo. 575; Augustine v. Town of Brant, 249 N. Y. 198; Barton v. City of Syracuse, 36 N. Y. 54; McAvoy v. Mayor, 54 How. Pr. 245; Ehrgott v. Mayor, 96 N. Y. 264.)

      Charles L. Feldman, Corporation Counsel (Herbert A. Hickman of counsel), for City of Buffalo, amicus curiae.

    Any construction of the statute which puts upon the citizens of Buffalo the cost of property improvements in circumscribed local areas or districts within the town of Amherst, makes it unconscionable and unconstitutional. (N. Y. State Const, art. 8, § 10; Sun Publishing Assn. v. Mayor, 152 N. Y. 257; Matter of City of New York [West 231st ¿Sí.], 160 App. Div. 472; 212 N. Y. 590; Horton v. Andrus, 191 N. Y. 231.) The statute contains no provision requiring the county to pay to the town the amount of the deficiency in the town’s tax collections and it cannot be read into the statute. (L. 1884, ch. 135; Furey v. Town of Gravesend, 104 N. Y. 405.)

      Carleton E. Ladd for respondent.
    The items of expense of the plaintiff growing out of the furnishing of sewage disposal, water supply, paving, sidewalks, lighting and fire protection and other items serve a governmental purpose. (.Augustine v. Town of Brant, 249 N. Y. 198; Horton v. Andrus, 191 N. Y. 131; People ex rel. Farley v. Winkler, 203 N. Y. 445; Springfield Fire Ins. Co. v. Village of Keeseville, 148 N. Y. 46; Markey v. County of Queens, 154 N. Y. 675.) The supervisor of the town under the provisions of chapter 383 of the Laws of 1909 is entitled to receive from the town collector the entire amount levied for town expenses before the county is entitled to take. (Lorillard v. Town of Monroe, 11 N. Y. 392; Tax Law, § 59.) The county became hable to the town for the payment of the town’s share of the unpaid tax hens when the town collector was required to dehver to the county treasurer the unpaid tax roll and to make final accounting with the county. (Auditor General v. Supervisors óf Monroe County, 36 Mich. 70.) The county-was obliged to pay or account to the town immediately after the tax sale of lands provided for by section 14 of the Erie county act. (Wells v. Town of Salina, 119 N. Y. 280; Armstrong v. County of Nassau, 101 App. Div. 116.) The uniform and long-continued practice and the practical construction placed upon the tax act by the Erie county administrative officials should have great if not controlling weight if the act is at all doubtful. (City of New York v. New York City Ry. Co., 193 N. Y. 543; Armitage v. Board of Education, 122 Mise. Rep. 586; 210 App. Div. 812; 240 N. Y. 548; Wendell v. Lavin, 246 N. Y. 115; Bullock v. Cooley, 225 N. Y. 566; People ex rel. Williams v. Dayton, 55 N. Y. 367; McCarthy v. Woolston, 210 App. Div. 152.) The Erie county tax act does not violate article 8, section 10, of the New York State Constitution in that it directs the use of county moneys for other than county purposes. (O’Brien v. County of Westchester, 189 App. Div. 13; 235 N. Y. 503; People v. Fitch, 148 N. Y. 71; Board of Supervisors v. State, 153. N. Y. 279; Sun Publishing Assn. v. Mayor, 152 N. Y. 257; County v. Hooker, 204 N. Y. 1.)

      John J. Bennett, Jr., Attorney-General (F. Raemond Chant of counsel), for Comptroller of the State of New York, amicus curice.

    The entire machinery for the collection of real property taxes in Erie county under the special Erie county tax act is completely under the control of the county, including the levy of taxes, their collection and finally the power of sale and recovery of the taxes or purchase of the property. Controlling the machinery and having the power to sell and purchase the property imposes the obligation to pay to or reimburse other political units for the tax shortage of the unit. (Erie County Tax Act, § 4; Tax Law, § 59; Littlejohn v. Little-john, 195 Ala. 614; Lorillard v. Town of Monroe, 11 N. Y. 392.) There is no constitutional objection in holding the county liable to the town. (Dorn v. Oyster Bay, 84 Him, 51; Village of Kenmore y. County of. Erie,
      252 N. Y. 437; Whaley v. County of Monroe, 235 App. Div. 334; Horton v. Andrus, 191 N. Y. 231; People ex rel. Murphy v. Kelly, 76 N. Y. 475; Weismer v. Village of Douglas, 64 N. Y. 91.)

      John Van Voorhis for Town of Irondequoit, amicus curice.

    The act requiring the county to finance the unpaid taxes is constitutional. (Village of Kenmore v. County of Erie, 252 N. Y. 437; Matter of Pardee v. Bay-field, 192 Ápp. Div. 5; 230 N. Y. 542; Michigan Central R. R. Co. v. Powers, 201 U. S. 245; People v. Westchester County, 147 N. Y. 1; People v. Shepard, 236 N. Y. 285; Rumsey v. People, 19uN. Y. 41; People v. Board of Auditors, 74 N. Y. 310; Weet v. Brockport, 16 N. Y. 162; Markey v. County of Queens, 154 N. Y. 675; O’Brien v. County of Westchester, 189 App. Div. 13; 235 N. Y. 503; Maxmilian v. Mayor, 62 N. Y. 160; Lefrois v. County of Monroe, 162 N. Y. 563.) In any case the plan of the law is that the town shall be paid out of tax collections the money provided for in the roll for town requirements in priority to payments to the county. (Tax Law, § 59; L. 1884, ch. 135; L. 1909, ch. 383; O’Briens. County of Westchester, 189 App. Div. 13; 235 N. Y. 503; Armitage v. Board of Education, 122 Mise. Rep. 586; 210 App. Div. 812; 240 N. Y. 548; Bullock v. Cooley, 225 N. Y. 566; People v. Comstock, 78 N. Y. 356; Grimmer v. Tenement House Dept., 205 N. Y. 549; Easton v. Pickersgill, 55 N. Y. 310; People v. Charbineau, 115 N. Y. 433; Matter of Wash. St. R. R. Co., 115 N. Y. 442.) The provisions of the tax laws under which the towns are paid their requirements in priority, to the counties are constitutional. (Sun Printing Assn. v. Mayor, 152 N. Y. 257; Board of Supervisors v. State, 153 N. Y. 279; Admiral Realty Co. v. New York, 206 N. Y. 110; Moore v. Harrison, 224 Mich. 512.)

      Louis L. Babcock for bondholders of Town of Amherst, amici curice.

   Hubbs, J.

This action brought by the town of Amherst is to recover of the County of Erie the amount of unpaid taxes on the town roll for the fiscal year beginning January 1, 1931, returned to the County Treasurer by the town tax receiver (hereinafter referred to as collector).

In December, 1930, the plaintiff town board prepared and filed with the Board of Supervisors of the county of Erie a budget of estimated expenses totaling $253,827, which after various additions and deductions left a balance to be collected amounting to $1,170,695.74.

The chairman and clerk of the Board of Supervisors were by resolution directed to complete the roll and annex thereto the warrant required by law and when completed to deliver the same to the collector of the town. The roll as completed showed a total amount for town expenditures and town highway moneys of $343,500.96, for special district expenses $569,878.69 and for county and State expenses $257,316.09.

The roll was completed, the warrant attached and the roll and warrant were delivered to the town collector about March 16th, 1931. The warrant required the collector to collect prior to the first day of May next, the several amounts extended in the tax columns of the roll opposite the respective names of the persons and corporations named in the assessment roll and from the moneys so collected” to pay to the supervisor and County Treasurer upon the dates and in the manner therein provided.

The collector, while the roll was in his hands, received $708,238.24, all of which he paid over to the supervisor. He failed to collect $205,141.41 of the amount required by the town budget, and so returned to the County Treasurer. The amount collected being less than the total amount raised for town and special district purposes, this action was instituted subsequent to November 1, 1931, to recover of the county $205,141.41, the difference between the total amount levied for town and special district purposes, and the amount received by the town collector and paid over to the supervisor.

The town of Amherst was organized under article 24 of the Town Law (Cons. Laws, ch. 62), and pursuant to the provisions of that article the certain special districts for which items were included in the budget and warrant were created, each for a governmental purpose. No question was raised as to the propriety of including in the budget the amounts designated for the special districts.

The legality of the adoption and approval by the Board of Supervisors of the budget or as to the issuance of the warrant to the town tax collector is not questioned.

The collector acted legally and in accordance with the resolution of the Board of Supervisors of April 14, 1931, and after turning over to the supervisor the sums collected there remained unpaid on the town budget the sum of $205,141.41.

The defendant contends that the law does not require the county to make up such deficit or permit it to do so. It is urged that the town has been extravagant and reckless; that all of the improvements and the organization of special districts for local improvement purposes was done by the town without the knowledge or consent of the county and without participation by the county in any way therein and it is contended that it would be unjust and inequitable to compel the county to make up the deficit caused by the unwise action of the town.

If the expenditures made by the town and the liabilities incurred by it are for governmental purposes and were made in accordance with the terms of the statute, the fact that they were unwisely and recklessly incurred does not create a legal question. Solution of that problem presents a political question which must be solved by the voters of the town or, if checks are needed, they must be supplied by the Legislature.

The collection of taxes in the county of Erie is governed by a special act of the Legislature (Laws, 1884, ch. 135, as amd. by Laws 1909) ch. 383), which in most respects is similar to the general Tax Law (Cons. Laws, ch. 60) of the State. Section 4 of the special Erie county act and section 59 of the general Tax Law are in substance the same except that the Erie county act (§4) reads that the collector shall pay to the supervisor such sum as shall have been raised,” while the Tax Law (§ 59) requires the collector to pay to the supervisor all the moneys levied.” We believe that the words raised ” and levied ” as used by the Legislature in the two acts have the same meaning and that the provision that the County Treasurer shall he paid the residue of the moneys so collected,” contained in section 4, so indicates.

Section 4 of the Erie county act directs that to each roll delivered to town collectors a warrant shall be annexed, commanding the collector to collect the sum mentioned in the last column of the roll, and from the moneys so collected the collector shall pay, first, to the supervisor of the town such sum as shall have been raised for the support of highways and bridges therein, and returned highway taxes; second, to the supervisor of the town all moneys raised to defray other town expenses; third, to the treasurer of the county the residue of the moneys so collected.”

Section 5 provides that town collectors shall make a return on the days mentioned in the act of all taxes collected by them and pay over the money due to the treasurer, and on a date stated in the act “ shall return the tax roll and make a full, complete and final accounting under oath of all taxes by him so collected, together with a full and correct statement of all unpaid taxes contained in said roll.”

For many years it has been the custom both under the Erie county act, section 4, and the general Tax Law, section 59, for collectors to first pay over to the supervisors of towns the money collected until the full amount of town budgets was paid and then to pay over to the County Treasurer the balance. Such custom should be given consideration in construing the provisions in question. (Grimmer v. Tenement House Dept., 205 N. Y. 549; Bullock v. Cooley, 225 N. Y. 566; Matter of Koenig v. Flynn, 258 N. Y. 292.)

The collector, in paying over to the supervisor the whole amount of the money collected, it being less than the amount of the town’s share, acted in accordance with the general custom and the provisions of section 4. Defendant’s counterclaim based upon the contention that the collector had illegally paid over to the supervisor a portion of the money collected which should have been paid to the- County Treasurer cannot be sustained.

The power of the Legislature in reference to the imposition and collection of taxes is plenary, only limited by constitutional provisions. (Matter of Pardee v. Rayfield, 192 App. Div. 5; affd., 230 N. Y. 543.)

It has provided, by various statutes, the purposes for which taxes may be collected, the method by which they may be imposed, and the machinery for their collection and distribution. The various local agencies employed in the imposition, collection and distribution of taxes are govermental agencies, engaged in performing governmental functions delegated to them by the Legislature.

Town tax collectors are not town officers but independent public officers. (Lorillard v. Town of Monroe, 11 N. Y. 392.) They act directly for the county under a warrant issued by the county which directs what they shall do and constitutes their authority for acting. After they have acted under such warrants, they are commanded to make a return to the authority which issued the warrants.

Under the special Erie county act, section 5, a collector must “ return the tax roll and make a full, complete and final accounting under oath of all taxes by him so collected, together with a full and correct statement of all unpaid taxes contained in said roll.”

The procedure by which a town in Erie county receives through taxation the money with which to carry on its governmental functions is definitely provided by statute in part by the special Erie county act and in part by the town, county and tax laws. The town board prepares a budget for the ensuing year. (Town Law, §§ 145-148.) That is submitted to the county Board of Supervisors which is required after equalization of assessments and correction of error (Tax Law, §§ 50-57), to levy and cause to be raised the amount specified in the estimate. (Town Law, § 148; Tax Law, § 58.)

The tax roll is prepared by the clerk of the Board of Supervisors under direction of the Board. (County Law [Cons. Laws, ch. 11], § 50, subd. 8.)

After the Board of Supervisors shall have perfected the asséssment rolls (Erie County Act, § 1), a warrant is annexed, signed by the chairman and clerk, commanding the town collector and after him the County Treasurer to collect the taxes within the time specified in the warrant and. the collector is commanded to pay over the money, to the supervisor of the town and to the County Treasurer. ■ (Erie County Act, § 4.) The collector is required to return the tax roll to the County Treasurer and make a complete final accounting together with a full and correct statement of all unpaid taxes contained in said roll. (Erie County Act, § 5.)

The town, after the return by the collector of the roll to the County Treasurer, is wholly without means of collecting the uncollected taxes so returned. The statute provides no other way by which it can secure the amount of its. budget. The difference between the amount which it has received from the collector and the amount which it should receive so far as that tax is concerned is absolutely lost to it unless a duty rests on the county to reimburse it, for the amount of uncollected taxes returned to the County Treasurer, which it should have received to make up the amount of its budget. This action is to recover from the county such amount.

The plaintiff town has issued bonds for a large sum in order to carry out public improvements authorized by law, and finds itself in a position where it is unable to meet accruing principal and interest on such indebtedness unless the county is required to advance the amount of uncollected taxes returned by the collector. The town had no general power to borrow money to meet such indebtedness. (Wells v. Town of Salina, 119 N. Y. 280.)

True it is that under section 141 of the Town Law, the town could borrow for temporary purposes in anticipation of the taxes for the current fiscal year,” and issue certificates of indebtedness therefor, but not for a longer period than sixteen months.” After a tax roll has been returned by a town collector, the anticipated receipt of taxes ” can only mean the advance by the county of the amount of the returned taxes as no other way is provided by which the town may recover such taxes. The other provisions of the Town Law to which attention is called, provide only for temporary relief and do not afford towns protection for situations like the one here involved.

In the case at bar, all proceedings up to and including the act of the collector in returning the tax roll to the County Treasurer were regular and according to law. The question presented is whether the county is legally bound to reimburse the town for the amount of the uncollected taxes returned by the town collector. It is conceded that the exact question has never been passed upon in this State. In' the case of Village of Kenmore v. County of Erie (252 N. Y. 437) an attempt was made- by the village-to compel the county to reimburse it for the amount of uncollected taxes returned by the village collector to the County Treasurer. Section 126-d of the Village Law (Cons. Laws, ch. 64, amd. by Laws 1927, ch. 650) provided for such payment by the county to the village. We decided that such provision of the Village Law was-unconstitutional and in violation of section. 10, .article- 8.-of the State Constitution which prohibits any county, city, town or village from incurring indebtedness except for county, city, town or village purposes.

The opinion in that case pointed out that counties are prohibited from expending money for other than county or governmental purposes; that villages are voluntary municipal corporations which may use the money collected from taxes for other than governmental purposes, and that, therefore, if the county were compelled to advance the amount for uncollected taxes to a village, it would be incurring indebtedness for other than a county or governmental purpose. The decision in that case has no application to the case at bar as the purposes for which the money sought to be obtained from the county in this case are governmental. Furthermore, they are for the purposes of a town, which like a county is a corporation formed for the purpose of carrying on local government as a political subdivision of the State, to which is delegated certain governmental duties by the State in order that the governmental duties of the State may be carried on to the best advantage of all the people of the State.

After a collector has made his return to the County Treasurer, all duties resting upon him under the tax warrant cease and no method is provided by which such unpaid taxes can be collected by the town or collector. All further proceedings for the collection of delinquent taxes are carried on by the County Treasurer.

■ Section 6 provides that the County Treasurer- shall receive upon all unpaid taxes, interest at the rate- of twelve per cent per annum from the first day of May, together with an additional fee of five per cent thereon, and he may issue a warrant directed to town collectors or constables directing them to collect such unpaid taxes including such interest and five per cent fee and all other fees and expenses and they are empowered to collect by levy> distress and sale of -personal property. Section 13 provides that where taxes remain unpaid for six months, the County Treasurer shall proceed to advertise and sell the real estate so taxed for the amount of the tax, fees,' interest and expenses of such sale, such sale to be completed prior to November 30 of each year. Section 15 provides that in all cases where no bid is made on a parcel or for a sufficient sum to pay the taxes, interest, fees and expenses, or in a case where a bidder fails to pay his bid “ said premises shall be deemed to have been sold to and purchased by the county of Erie. The treasurer may make certificates of sale of all land so bid in by or sold to the county,” and may sell and assign the same and all moneys collected must be paid to the County Treasurer and credited to the county.

An examination of the statute discloses that the whole plan outlined in the act vests the entire matter of the collection of delinquent taxes in the county and in the Treasurer thereof. The statute provides the machinery, prescribes the practice and vests the proceeds in the county. In the event of failure to sell, the title, by operation of law, is vested in the county. Nowhere in the statute can be found any provision for turning over to the towns, the money collected by the County Treasurer or any other consideration for the vesting of the title of the property taxed in the county in the event of failure to sell, unless it is required to reimburse the towns as plaintiff contends. As the county is entitled to twelve per cent per annum on the amount of each tax and a five per cent fee in addition, it receives a consideration and has a financial interest in addition to the amount of the tax. The amount of a particular tax is determined by multiplying the assessed valuation of the property by the tax rate. The assessed valuation is supposed to be the real value of the property assessed. We know, of course, that in actual practice it is less. However, it is fair to assume that the value of the property assessed is much more than the tax assessed thereon for any one year. The Legislature might well have had in mind when it provided that the county should collect all returned taxes and that the “ premises shall be deemed to have been sold to and purchased by the county of Erie ” when not sold to a purchaser at the tax sale, that the property would ultimately be sold for at least the tax assessed against it and the interest, fees and expense of collection; that in placing that burden on the county, the Legislature had expected it would ordinarily receive in the end the amount of the returned taxes, the twelve per cent per annum interest and the five per cent fee in addition.'

A tax sale was held in November, 1931, and the parcels of land were sold for delinquent taxes. Thereafter the County Treasurer wrote the words “ tax sold by treasurer ” against each parcel so sold to the county and the county thereafter carried those parcels as “ assets ” upon its books. The county had done everything that it could do prior to the commencement of this action to perfect its title to the parcels of land in question under the provisions of the special statute. The title which it had was inchoate as the statute requires further proceedings to perfect such title and make it absolute.

While it is true that the statute in question does not in so many words direct that the county shall pay to the towns the amount of returned taxes, it seems that such is the policy of the State as exemplified by other statutory provisions.

Section 91 of the Tax Law, applicable to the counties outside of the Forest Preserve which have the power to sell and purchase property at tax sales, requires such counties to pay to the State the State’s portion of the taxes assessed whether collected or not and the County Treasurer of each such county is required to borrow the money to make such payment if the county has not the funds on hand.

Under section 103 of the Tax Law, as the State has the power of sale and the unpaid taxes in the Forest Preserve are turned over to it, it is required to pay to the counties the amount of such unpaid taxes.

Under section 435 of the Education Law (Cons. Laws, ch. 16), the County Treasurer is required to pay the amount of unpaid school taxes to the district treasurer or collector. By former section 126-d of the Village Law, repealed by the 1930 amending act, the County Treasurer was directed to pay all returned village taxes to the village.

While we decided in Village of Kenmore v. County of Erie (supra) that such provision of the statute was unconstitutional, nevertheless it indicates the legislative intent to continue or extend a State policy of requiring the collecting agency of a local subdivision to reimburse the local division for returned taxes.

So, in the special Erie county act, it is specifically provided that the county of Erie must pay to the State its portion of the tax assessed, whether collected by the county or not. Attention is called in respondent’s brief to a large number of special acts which require the local collecting agencies to reimburse inferior local governmental divisions for all taxes returned.

In those various statutes we discern a policy on the part of the Legislature to provide that the State agency given the duty to collect taxes returned by some smaller governmental subdivision of the State shall be liable to reimburse such smaller subdivision in the amount of such returned taxes.

In the absence of an expression in the Erie county act of an intent to require the county to pay to the towns the amount of returned taxes, we are constrained to hold in view of the situation created under the facts of this case and the various provisions of the statutes that such intent is necessarily implied. We are admonished that we should not read into the statute words which it does not contain, and at the same time we are told that we should decide that the county acts as a collecting agency only, and that it must pay over to the towns the taxes returned only when it has collected them. If so, when must the county pay over? After each tax is collected or when all are collected? Or when it has exhausted its resources in collecting? Nowhere in the act can be found any direction that the county must pay over to the town any part of the money collected. Either the county acts as a collecting agent or as a principal. With that situation existing, we are convinced that the court should give effect to the State policy as illustrated by the particular statutes referred to and hold that the county must pay over to the towns the amount of the returned taxes. It is authorized by statute to borrow money for that purpose. (County Law, § 12.) Towns are without authority to borrow money for such purpose.

When the Legislature enacted that the premises shall be deemed to have been sold to and purchased by the county of Erie ” (§ 15), it is reasonable to assume that it intended that the party purchasing (the county) should pay the party holding the claim (the town) for the unpaid taxes returned.

The State having authorized the town to incur a bonded liability for governmental purposes cannot be presumed to have intended that it should be deprived of the means of paying its obligations by having its right to collect unpaid taxes transferred to the county without any obligation on the county’s part to reimburse the town.

The State having vested the title to the unpaid taxes in the county and provided machinery for their collection by which it has full control, and having conferred the right to add twelve per cent per annum and a fee of five per cent and provided that the county has authority to borrow money while the town has not, the conclusion seems irresistible that the Legislature intended that the county should reimburse the towns for the amount of the returned unpaid taxes.

The judgment should be affirmed, with costs.

O’Brien, J. (dissenting in part).

The total amount of taxes levied for town purposes was $913,379.65, of which $569,878.69 was for interest and principal on bonds lawfully issued by the town and $343,500.96 for other town purposes. At the time of the trial $708,238.24 had been received by the town collector and paid over by him to the supervisor, thus leaving a deficit in the taxes collected by the town and payable to the supervisor of $205,141.41. An additional $124,984.90 had been collected by the County Treasurer from voluntary payments by taxpayers and $6,292.64 also had been realized at the tax sale conducted by the County Treasurer. Pursuant to section 4 of the Erie county special act, the town is now entitled to all this money so collected. Therefore, financial requirements are met for all ordinary town operations and a surplus remains applicable to payment of principal and interest on the bonds. The sum requisite to discharge accrued bonded indebtedness fell short, at the time of the trial, by $73,863.87. This deficit is only about eight per cent of the total amount of taxes to which the town is entitled. Must the county immediately borrow that sum and pay it to the town for the purpose of discharging indebtedness incurred by the town on paving, sewer, lighting and sidewalk bonds?

The specific question is whether sufficient grounds exist which warrant courts in reaching the conclusion, in the absence of express statute, that the Legislature intended, by section 15 of the Erie county special tax law or by any other statutory provision, that the county should, prior to actual collection of money or complete vesting of title in the county to delinquent tax lands, supply funds to replenish the town budget for uncollected 'taxes.

By this decision we are holding that from the facts in this case and from various statutory provisions such a legislative intent is necessarily implied. Our decision resulting from an investigation of the legislative mind and a search for a legislative purpose is far reaching. It bears intimate relationship to the administration of the affairs of most, if not nearly all, the towns and counties in the State. Our conclusion is reached not only in the absence of express statute but also in the absence of judicial precedent, proof of custom or practical construction. We are requiring a thing to be done which no statute says must be done and which is not shown ever before to have been done. The result is out of line with the cases most nearly similar in other States wherein statutes closely resembling our own have been interpreted. (Town of Iron River v. Bayfield County, 106 Wis. 587; State v. Ada County, 7 Ida. 261; City of Anthony v. Cutler, 114 Kan. 510.) It is not supported by any decision in any other State. Practical emergency does not evoke it. Considerations such as protection of property or prevention of fiscal chaos or the suspension of the operations of town government do not demand it. A full statutory scheme is effective by which the town can function and creditors can obtain their due.

The first consideration which impresses one with the belief that the Legislature never harbored the purpose attributed to it is its failure ever to have made such a declaration. The existence of statutes which in the clearest terms do manifest an intent to impose such a liability upon counties in respect to the State, to school districts and to villages is also most impressive. The absence of any such statute applicable to towns is significant and, as I think, controlling. In plain English the Legislature has decreed that counties must make good the deficits in school districts, even though moneys have not been received by the County Treasurer (Education Law, § 435) and that every county outside the Forest Preserve must on definite dates pay to the State certain specified proportions of the State tax even though it may then be uncollected and the county must borrow. (Tax Law, § 91.) Erie county especially is commanded to do the same in respect to uncollected State taxes. (Laws 1884, ch. 135, § 11.) The purpose expressed in section 126-d of the Village Law to compel a county to pay a village its uncollected taxes is not obscured by the fact that that purpose cannot constitutionally be effected. (Village of Kenmore v. County of Erie, 252 N. Y. 437.) In placing responsibility on counties in tax matters, the Legislature has covered an extensive field. The subject-matter of this litigation is not included within that field. Towns and cities are not mentioned. The omission of appropriate language for the purpose of displaying a purpose in respect to payment by the county of deficits in a town budget certainly cannot be deemed evidence of mere oversight and the specific mention of the State, of school districts and of villages cannot be regarded as equivalent to an intent to include towns and cities, or even towns alone, in the same category with those governmental entities expressly mentioned. Discovery of any general State policy in respect to towns, except a policy of exclusion, is difficult. To me it seems impossible. Courts cannot by construction cure a casus omissus to supply an omitted provision. (McKuskie v. Hendrickson, 128 N. Y. 555, 558.) The law must to that extent be considered defective. (Furey v. Town of Gravesend, 104 N. Y. 405, 410.) Prior to the amendment of section 435 of the Education Law in its present form, in a proceeding instituted by trustees of a school district against a County Treasurer to compel payment to them of uncollected school taxes, this court gave utterance to these words which are truly germane to the issue whether a County Treasurer is bound, before receipt of tax moneys, to pay town charges: We know of no rule of law or statute which imposes upon the treasurer the duty to pay claims presented before moneys have been received by him.” (People ex rel. Burbank v. Robinson, 76 N. Y. 422, 425.) The necessary implication of legislative intent as exhibited by all statutes now existing seems clearly to impose upon a county no obligation to pay the debts of a town until such a time, at least, as the county may have actually collected the tax.

A county’s liability in tax matters is wholly statutory. If legislative command is lacking, so is liability. The Senate and Assembly are now in session and have full power to express their will. We have no right to do the things which some of us may think the Legislature ought to do or should have done. In very recent times this court, in considering the question whether a certain power had been granted to a rating organization, thus expressed our view against a policy perilously near to judicial legislation: The legislative authority should be explicit in terms and the court should not smuggle such a grant into the law under the guise of liberal construction.” (Matter of Importers & Exporters Ins. Co. v. Rhoades, 239 N. Y. 420, 426.)

The town, no less than the county, is authorized at any time after the annual estimate is adopted and before the revenues are received to borrow money in anticipation of the receipt of taxes and revenues and to issue certificates of indebtedness or revenue bonds. (Town Law, § 149.) It is also empowered to audit claims for interest and principal on the bonds issued for local improvement and in the succeeding year to issue bonds for their payment. (§§ 141, 149.) If judgment should be obtained against the town growing out of default in payment of interest or principal for the improvement bonds, amounts sufficient to pay such judgments may lawfully be inserted in the town budget for the succeeding year. (Town Law, § 148.) The town will not be prostrated by its failure at the time of the trial to collect no more than ninety-two per cent of its taxes. It is not the helpless creature that respondent would have us believe.

The County Treasurer is a secondary collecting agent. He acts in the second instance for the public in the same capacity as does the town receiver in the first instance. His collection is not complete until such a time as he receives the delinquent tax money or the county acquires full title to the delinquent lands. The argument resting upon the assertion that the county, being “ deemed ” to have purchased the delinquent lands at the tax sale, owns the unpaid taxes and is, therefore, substituted for all purposes in place of the delinquent taxpayer is contrary to the decisions in all States where the question has arisen. (Warner v. Hinshaw, 105 Kan. 724, 726; Muskogee Times-Democrat v. Board of Commissioners, 76 Okla. 188, 190, 191; 37 Cyc. 1335, 1336; 26 Ruling Case Law, 417.) This argument is based not only on the provisions of section 15 of the Erie county act but also upon the fact that the County Treasurer has noted the words, “ tax sold by treasurer,” against all delinquent parcels and the additional fact that the county carries those parcels as an “ asset.” That asset, however, apparently comprises nothing more than a lien. (Whaley v. County of Monroe, 235 App. Div. 334.) The county’s interest in the land upon which taxes remain unpaid is, prior to foreclosure, merely inchoate. It may never acquire title. The owner has the right of redemption within two years (§ 20) and in effect remains the actual owner subject only to the tax lien. The position of the county in respect to the tax certificate which is delivered to it by the County Treasurer by reason of its legally assumed purchase and which is subject to redemption by the owner of the land (§ 15) is not the same as that respecting the certificate issued to individuals in return for payment of real money (§ 16). The tax is in reality sold to the individual for money. The sale to the county is fictitious or constructive. The property is deemed ” to be sold to the county only as a link in the chain for collection, in order to enable the county to acquire a lien which it can either sell (§ 15) or use as the basis for a foreclosure (§ 32-a), whereby the county can eventually acquire a clear title to the land in payment for the money due on the tax. Such money when obtained belongs to the town (§4) and must be paid over by the County Treasurer to the supervisor. The scheme for reducing this bookkeeping asset of the county to actual ownership with an absolute title by means of foreclosure after five years is described in article 7-A of the general Tax Law (See Whaley v. County of Monroe, supra) and in a similar mode in section 32-a of the Erie county act. The question of the rights of the county and the town might arise if on the foreclosure of the county’s hen, the county should acquire title to land worth less than the amount of the tax. In respect to this question which may never arise, the Legislature is silent. Is it not for that body, rather than the courts, to speak? Matters of governmental policy affecting nearly all the towns and counties in the State are peculiarly legislative rather than judicial.

I, therefore, vote to modify this judgment against the county by awarding to the town only the moneys voluntarily paid by taxpayers to and actually received by the County Treasurer, amounting to $124,984.90, together with the moneys realized by the County Treasurer on the tax sale, amounting to $6,292.64, which aggregate the sum of $131,277.54.

Pound, Ch. J., Crane, Lehman, Kellogg and Crouch, JJ., concur with Hubbs, J.; O’Brien, J. dissents in opinion.

Judgment


source: Caselaw Access Project

author: Pound, Ch. J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Charles N. Mari, Appellant.

      (Argued November 28, 1932;
    decided January 10, 1933.)

      Cyril S. Landau and George V. Fleckenstein for appellant.
    No charge of illegally practicing medicine was substantiated, there being a complete lack of proof to show a holding out by defendant of himself as a physician and a diagnosis as required by the provisions of section 1250, subdivision 7, of the Education Law. (People v. Allcutt, 117 App. Div. 546; 189 N. Y. 517; People v. Somme, 120 App. Div. 20; 190 N. Y. 541; People ex rel. Lederman v. Warden of City Prison, 168 App. Div. 240; People v. Lucas, 198 N. Y. Supp. 846; Commonwealth v. Zimmerman, 221 Mass. 184; People v. Cole, 219 N. Y. 98.) The one act of physiotherapeutic treatment administered by defendant was concededly performed under the supervision and direction of a duly licensed physician in conformity with section 1262 of the Education Law. (People v. Phyfe, 136 N. Y. 554; People v. Somme, 121 App. Div. 488; 190 N. Y. 541.)

      John J. Bennett, Jr., Attorney-General (Sol Ullman of counsel), for respondent.
    Defendant’s acts constituted the practice of medicine. (Education Law, §§ 1250, 1251, 1263; Brown v. Shyne, 242 N. Y. 176; People v.
      Lucas, 198 N. Y. Supp. 846; State v. Bresee, 137 Iowa, 673; Bibber v. Simpson, 59 Me. 181; State v. Smith, 233 Mo. 242; Collins v. Texas, 223 U. S. 288; People v. Ellis, 162 App. Div. 288; People v. Antichi, 233 App. Div. 723 ; 257 N. Y. 571; Commonwealth v. Zimmerman, 221 Mass. 184; State v. Rolph, 140 Minn. 190; Bailey v. Niebrugge, 211 111. App. 82; People v. Jordan, 172 Cal. 391; Kuechler v. Volgmann, 192 N. W. Rep. 1015; People v. Curtis, 152 App. Div. 372; 206 N. Y. 747; People v. Moore, 142 App. Div. 402 ; 201 N. Y. 570.) Defendant offered or undertook to treat a patient. (People v. Devinny, 227 N. Y. 397; People v. Cole, 219 N. Y. 98; People v. Mulford, 140 App. Div. 716; 202 N. Y. 624; People v. Ellis, 162 App. Div. 288; Brown v. Shyne, 242 N. Y. 176; People v. Scholz, 28 N. Y. Cr. Rep. 357; People v. Eifertsen, 239 N. Y. Supp. Ill; People v. Bockman, 255 N. Y. Supp. 691; Collins v. Texas, 223 U. S. 288; State v. Smith, 238 Mo. 242; Bragg v. State, 134 Ala. 165; Eastman v. People, 71 111. 236; Underwood v. Scott, 23 Pac. Rep. 942; Benham v. SZaZe, 116 Ind. 112; People v. Phippin, 70 Mich. 6; SZaZe v. Wilhite, 132 Iowa, 226; Territory v. Newman, 13 N. M. 98; People v. Gordon, 194 111. 560; Kansas v. Johnson, 84 Kan. 411; Jones v. People, 82 111. 453; State v. Greiner, 63 Wash. 46; State v. Corwin, 151 Iowa, 420.)
   Pound, Ch. J.

Defendant is charged with illegally practicing medicine. (Education Law [Cons. Laws, ch. 16], §§ 1250, 1251.) He is a licensed physiotherapist. Physiotherapy is, generally speaking, the treatment of disease by physical remedies rather than drugs. A license to practice physiotherapy must be obtained from the Department of Education and duly registered. The practice of physiotherapy is strictly defined and narrowly limited by law.

For the purpose of medical treatment it is defined in section 1262 of the Education Law as follows: “ Physiotherapy * * * is the use of actinotherapy, hydrotherapy, mechanotherapy, theremotherapy, and electrotherapy, exclusive of the X-ray.” A duly licensed physician may use such modalities but the licensed physiotherapist may not engage in the independent use thereof.

The statute further provides: “A license to practice physiotherapy shall not permit the holder thereof to administer drugs or to practice medicine as defined in section twelve hundred and fifty of this article, except to treat diseases under the supervision of a duly licensed physician.”

A rule of the Regents also provides: “Registered physiotherapist' shall keep a written prescription signed by a licensed physician for each patient given physio-therapeutic treatment. The prescription shall state the diagnosis and the type of treatment ordered. Such records shall be open to the inspection of the Department of Education at all times.”

Thus it would seem that a patient, having consulted a licensed physician of his own choice might after examination and diagnosis be found in need of physiotherapeutic treatment. His physician then writes for him a prescription stating the diagnosis and type of treatment ordered by him and he takes it to a licensed physiotherapist in the same manner as he might take a prescription for drugs to a pharmacist to be filled. The theory that the physiotherapist acts under his own supervising physician does not comport with the practice that the physician examines and prescribes before the physiotherapist sees him.

In this case the defendant contends that he made a mere examination of the patient and reported the results to a licensed physician of his own choosing, unknown to the patient, over the telephone; that he was told by him to apply a light kind of heat and that the physician would come over in a few minutes; that the .physician, after treatment of the patient by the defendant, came to defendant’s office and undertook to examine the patient, against her protest, and without any additional diagnosis, wrote out a prescription for her and a direction card to appellant for physiotherapeutic treatment, which she "never took and that, therefore, defendant did not treat disease except “ under the supervision of a duly licensed physician.”

Adopting for the purpose of the decision so much of defendant’s contention as is consistent with the evidence of the People’s -witness who was a police woman attached to the crime prevention bureau and temporarily assigned to the Attorney-General’s office to get evidence against illegal practitioners of medicine, we think that a case of practice of medicine by defendant was made out; that defendant treated the witness for rheumatism, or at least for her complaint, on his own diagnosis and not under the supervision of a duly licensed physician and on his written prescription. (Brown v. Shyne, 242 N. Y. 176.)

Defendant’s office and office equipment and his conduct had all the indicia of a doctor’s office and a doctor’s treatment. When the People’s witness called at defendant’s office she met the defendant. To her question if he was Dr. Mari he replied that he was; he asked her what was the trouble and she told him she had been suffering with great pains in her hands; he took her family history and made an intimate personal examination of her; he tested her reflexes and looked into her throat, palpated her abdomen, took a specimen of her urine for examination and examined it and told her he found a trace of albumin; took her blood pressure and was about to take a blood test but under her objection he desisted. He then had her place her hands under an electric lamp known as a thermolite.

After about half an hour of this treatment in came Dr. Andrei, who was a licensed physician. He wanted and tried unsuccessfully to examine the patient and he wrote a prescription. She refused his services. She said, Who are you? I didn’t send for you.” She then paid defendant five dollars and got out of his office. Asked by defendant’s counsel if she was not sore because Dr. Andrei had “ spoiled her game,” she said that her game was completed before he came. To account for •the presence of Dr. Andrei we' must take as true the evidence that he was summoned to defendant’s office by or for the defendant. It might be assumed also that he instructed the defendant over the telephone what to do until he arrived, and it is not contended that such practice is unusual. The trouble is, however, that such practice has no sanction whatever in the law, which defines what a licensed physiotherapist may do. To say that the statute contemplated that such a one may make a complete examination of a patient, take his history, report the results to a licensed physician of his own selection over the telephone, act on his verbal instructions until the physician arrives, then have him go through the motions of handing the patient, who repels him, a prescription without any independent examination on his part, is to open the door so wide to evasion as to leave the statute a mere futility. All this procedure may be quite harmless but it is not the procedure permitted by the law.

If on the People’s evidence in this case the triers of fact could not find that defendant held himself out as being able to diagnose and treat diseases, it is difficult to see wherein the statute affords any protection to those who may be attracted to the office of a physiotherapist by his advertisements in connection with rheumatism and like diseases, and into the hands of one who, without adequate medical training, essays to examine them for human ills, say what treatment they need and administer it to them, without any,prior supervision of a duly licensed physician and without a written prescription stating the type of treatment ordered. When such conduct is a fraud or a pretense, as it appears to have been in this case, the courts are not so blind and dumb as to be taken in by it. It is no defense that defendant acted in good faith or did what was customary. (People v. Cole, 219 N. Y. 98.) The only question is whether he violated the statute. Of this there seems to be no doubt.

The judgment should be affirmed.

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

Judgment affirmed.


author: Crane, J.

text:
    Nannie G. Kaufman, Respondent, v. Empire Trust Company, Appellant, and The Adams Express Company et al., Respondents.
    (Argued December 8, 1932;
    decided January 10, 1933.)

      Stuart McNamara and Charles Green Smith for appellant.
    Plaintiff’s application, followed by full allotment of stock to her with notice to her, established a binding contract and fixed and limited her rights. She could not vary its terms through oral request to the defendant-appellant as her agent to obtain stock for her to which she was not entitled. (Bloxam’s Case, 4 DeG., J. & S. 447; Adams Case, 13 Eq. 474; Fleischman v. Furgueson, 223 N. Y. 235; Cream of Wheat Co. v. Crist Co., 222 N. Y. 487; Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310; Sattler v. Hallick, 160 N. Y. 291.) There was no conversion; at most, there was only an omission by an agent to carry out oral instructions which varied from plaintiff’s signed written instructions. (Belger v. Dins-more, 51 N. Y. 166; White v. Ashton, 51 N. Y. 280; Hinckley v. N. Y. C. & H. B. R. R. Co., 56 N. Y. 429; Meyer v. Lathrop, 73 N. Y. 315; Zimmer v. N. Y. C. R. R. Co., 137 N. Y. 460; Greenwald v. Barrett, 199 N. Y. 171; Jonasson v. Weir, 130 App. Div. 528; Cohen v. Morris European & American Express Co., 151 App. Div. 672; Sims v. Farson, 162 App. Div. 426; 220 N. Y. 710; Bates v. Weir, 121 App. Div. 275; Springer v. Wescott, 78 Hun, 365; Mitchell v. Lath, 247 N. Y. 377; Wamsley v. Atlas S. S. Co., 168 N. Y. 533; McCoy v. American Express Co., 253 N. Y. 477; Industrial & General Trust Co. v. Todd, 170 N. Y. 233; Minneapolis Trust Co. v. Mather, 181 N. Y. 205; Meyer v. Price, 250 N. Y. 370; Employers Fire Ins. Co. v. Cotten, 245 N. Y. 102.)

      David Michelsohn and Milton Dammann for plaintiff-respondent.
    The plaintiff properly sued for conversion. (Pierpont v. Hoyt, 260 N. Y. 26; Industrial & General Trust Co. v. Todd, 170 N. Y. 233; Minneapolis Trust Co. v. Mather, 181 N. Y. 205; Scott v. Rogers, 31 N. Y. 678.)

      George L. Trumbull and David H. Houghtaling for The Chase National Bank of the City of New York, defendant-respondent.
    The facts proved at the trial absolve the defendant bank from liability. (M Nitt v. Clark, 7 Johns. 465; Storm v. Rosenthal, 156 App. Div. 544; Trustees of Columbia University v. Kalvin, 132 Mise. Rep. 601; 225 App. Div. 653; Atlantic Coast Line R. R. Co. v. Hollowell, 2 Fed. Rep. [2d] 674; Virginia Export Coal Co. v. Rowland Land Co., 131 S. E. Rep. 253; Kramer v. Ewing, 61 Pac. Rep. 1064; Phillips v. Cornelius, 28 So. Rep. 871; Ellison v. Boyd, 125 S. E. Rep. 493; Bockelman v. Spires, 110 Neb. 234; Duerson v. Bellows, 1 Blackf. 217; Collins v. Whigham, 58 Ala. 438; German Ins. Co. v. Hazojrd Bank, 126 Ky. 730.)

      Leonard P. Moore for The Adams Express Company, defendant-respondent.
   Crane, J.

The parties by a stipulation established the important facts in this case which depends upon the interpretation of written documents. The plaintiff was the holder of seventy-two shares of the common stock of the Adams Express Company. That company, which had only one class of stock, was authorized by vote of the stockholders to issue one hundred thousand shares of five per cent cumulative preferred stock, of the par value of one hundred dollars. The plaintiff consented in writing to this amendment in the stock formation of the company. On October 3rd the Adams Express Company by a letter notified the stockholders, including the plaintiff, of the adoption of the change, and stated the privileges offered to the stockholders for the exchange of their stock, common for preferred. The scheme thus stated, consisted in the exchange of one and seven-tenths shares of the preferred stock for one share of existing stock, “ but, subject, of course, to proportionate allotment among the applicants therefor, in the event of the receipt of applications for such exchange in excess of one hundred thousand (100,000) shares of Preferred Stock.” The stockholders were given the right to surrender “ any part or all of their stock.” This fact must be kept in mind. The plaintiff, having seventy-two shares, was not obliged to surrender all or none; she could surrender for exchange all or any part of the seventy-two shares. Upon the surrender of the shares, the stockholder was to receive (a) a temporary certificate of five per cent cumulative preferred stock, in the ratio of one and seven-tenths (1-7 /10) preferred for one share of existing stock, “ but not in excess of fifty-eight (58) per cent of the total number of shares in the name of the applicant on the books of the Company;” (c) a certificate of deposit for the remainder of the shares so deposited. The plaintiff, therefore, upon the surrender of her seventy-two shares for exchange would be entitled to the proportionate number of preferred stock up to fifty-eight per cent of her total holdings. The certificate of deposit had reference to the shares surrendered for exchange over and above this fifty-eight per cent. The company was authorized to make allotments over the fifty-eight per cent according to the demands for the preferred stock. In other words, if the stockholders desired more preferred stock than was sufficient to go around, it had to be allotted to them proportionately. The company could not tell what the demands would be in response to this letter until the surrender by the stockholders of their stock for exchange. Accordingly, this letter of October 3rd contained the following: “ Final allotment among the applicants for Preferred Stock will be made on October 17, 1927. Upon the making of such allotment, the holders of the Certificates of Deposit, by the surrender of the same duly endorsed for blank delivery, will be entitled to receive any additional shares of Five Per Cent Cumulative Preferred Stock and Scrip Stock for fractional shares involved, in the aforesaid ratio, allotted to the shares represented by said Certificates of Deposit pursuant to this application. * * * Stockholders are entitled to convert 58% of their existing shares into Preferred Stock. They may apply for the exchange of any part or all of their existing shares, but if all the stockholders apply for the conversion of all their shares, allotment in excess of 58% of each stockholder’s shares, of necessity, will have to be cut down proportionately.”

The plaintiff, having consented in writing, as a stockholder, to this proposed change, upon the receipt of the letter of October 3, 1927, surrendered all of her stock holdings, seventy-two shares, to exchange for preferred stock in the proportion stated. Her application for. the exchange read: Application is hereby made for the exchange of 72 of the foregoing shares for shares of Five Per Cent Cumulative Preferred Stock of The Adams Express Company, upon the basis of one and seven-tenths (1-7 /10) shares of Preferred Stock for one share of existing stock, but, subject, of course, to proportionate allotment among the applicants therefor, in the event of the receipt of applications for such exchange in excess of One hundred thousand (100,000) shares of Preferred Stock. * * *

“ It is further understood that final allotment among the applicants for Preferred Stock will be made on October 17, 1927, and that after the making of such allotment, the holder of the aforesaid Certificate of Deposit, upon the surrender of the same duly endorsed for blank delivery, will be entitled to receive any additional shares of Five Per Cent Cumulative Preferred Stock and Scrip Stock for fractional shares involved, in the aforesaid ratio, allotted to the shares represented by said Certificate of Depoait pursuant to application. In addition, upon the surrender of said Certificate of Deposit duly endorsed as aforesaid, the holder thereof will be entitled to receive Temporary Certificates of new Common Stock equal to the number of any remaining shares represented by the Certificate of Deposit that are not exchanged for Preferred Stock.”

The plaintiff received temporary certificates for her fifty-eight per cent allotment and the certificate of deposit in the form above mentioned. Later, and on October 17th, by resolution adopted by the board of managers of the Adams Express Company, a full allotment, to the extent of the shares applied, for, was awarded to all the shareholders who had filed applications, as there had not been a sufficient demand for the preferred stock to require fractional apportionment. On October 25, 1927, the Adams "Express Company, through its agent, The Chase National Bank, notified the plaintiff, together with other stockholders, of said action, in a letter reading as follows: We have been advised by the Adams Express Company that holders of Certificates of Deposit representing shares of common stock have been allotted preferred stock to the extent of 100% of their applications. Holders of such Certificates of Deposit may now obtain the preferred stock to which they are entitled upon surrender, at the Trust Department of the Undersigned, of their Certificates of Deposit properly endorsed and witnessed.”

The plaintiff surrendered her temporary certificates and the certificate of deposit to her bank, the Empire Trust Company, and asked it, assuming her story to be true, to get her common stock on her certificate of deposit. As preferred stock had been allotted to her for the full amount of her seventy-two shares, in the proportion of one and seven-tenths preferred shares to one of common, the Empire Trust received the preferred shares from the Chase National Bank, which the plaintiff refused to accept. Claiming that the defendant Empire Trust Company had converted her stock, she brought this action for damages, and has recovered a judgment upon that theory.

That the plaintiff was entitled to fifty-eight per cent of her holdings of preferred stock, and bound to take it, is not questioned. Her claim is in reference to the certificate of deposit. She claims that under the plan she could elect, at any time up to the surrender of her certificate of deposit, whether she wanted the balance of. her seventy-two shares over the fifty-eight per cent, in common or in preferred stock. We can find nothing in the options given to the plaintiff by the Adams Express Company or the Chase National Bank which afforded her any such election. The proposal has been outlined above, and by it the company gave the plaintiff the right to surrender any or all of her stock, for which she was to receive fifty-eight per cent of her holding in preferred stock. As to the balance she got a certificate of deposit which, by October 17,1927, was good for as much of the preferred stock as could be given to the plaintiff, measured and apportioned according to the demand therefor. This was the proposal held out to the plaintiff. She accepted it. Whatever may have been her rights prior to October 17, 1927, with reference to the certificate of deposit, we are not called upon to state, as on that day the Adams Express Company, acting upon her acceptance and written request, allotted to her preferred stock for all of her holdings, and so notified the plaintiff in writing.

We have here a proposal acted upon, accepted and carried out. It was too late after the allotment of October 17th for the plaintiff to change her mind. We find nothing ambiguous or confusing in the letters and communications to the plaintiff, as a stockholder, beyond the complications and difficulties arising out of language used to explain any reorganization or rearrangement of capital stock. The plaintiff received what she asked for and agreed to take.

The judgment against the Empire Trust Company upon the theory of conversion, therefore, is improper and must be reversed.

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

Pound, Ch. J., Lehman, Kellogg, O’Brien and Crouch, JJ., concur; Hubbs, J., not sitting.

Judgments reversed, etc.


author: O’Brien, J.

text:
    In the Matter of the Claim of Flora Younger, Appellant, against Motor Cab Transportation Co., Inc., et al., Respondents. State Industrial Board, Respondent.
    (Argued November 22, 1932;
    decided January 10, 1933.)

      Gustave G. Rosenberg for appellant.
    The injuries resulting in the death of the deceased arose out of and in the course of his employment. (Sstorc v. Stansbury, Inc., 188 N. Y. 388; Clark v.' Voorhees, 23 State Dept. Rep. 886.)

      John J. Bennett, Jr., Attorney-General (Joseph A. McLaughlin and Alexander Wolf of counsel), for State Industrial Board, respondent.
    The finding of the Industrial Board that the accidental injuries and death of the employee did not arise out of and in the course of his employment is conclusive. (Workmen’s Compensation Law, § 23.)
   O’Brien, J.

Claimant’s husband was employed as a chauffeur by the owner of a taxicab and during his working hours he was accidentally killed. The question is whether his death arose out of his employment.

The cab which he operated was kept overnight at the employer’s garage. At five o’clock in the morning the chauffeur called for it, drove it a distance of three-blocks from the garage and parked it at a location advantageous for securing passengers. He selected his position at a spot which would be at the head of a line of taxicabs which usually at an early hour formed at this street intersection. Whether all these cabs belonged to the same owner does not appear. For all the record shows, the rivalry to obtain first place in the fine existed not only among the drivers but also among different owners of the vehicles. The fares collected by this driver were divided on a percentage basis between him and his employer and, therefore, unless proof were produced that all the cabs which customarily stood in this fine were included within one ownership, success in securing first place inured to the mutual benefit of deceased and his employer. Under such conditions, the chauffeur in taking the cab from the garage with the least possible delay was engaged in promoting his employer’s interests.

Having acquired this post of precedence, to the probable profit of his employer as well as himself, the deceased returned on foot to the garage for the purpose of receiving his weekly wages. The day was Saturday, which was pay day, and there is evidence by the employer’s superintendent that the driver could call at the garage for his check at any time during pay day and that it was his duty to come in for his pay. After his check had been delivered to him he proceeded, again on foot, in the direction of the parked taxicab, when, at a distance of forty or fifty feet from the garage, he was struck by a motor vehicle and fatally injured.

The State Industrial Board and the Appellate Division have ruled that this claim does not come within the provisions of the Workmen’s Compensation Law (Cons. Laws, ch. 67). Our decision in Matter of Cunningham v. Hunterspoint Lumber & Supply Co. (256 N. Y. 574) is cited in support of that ruling. We think that it does not apply. In that case the employee during the lunch hour was injured while journeying to a bank to cash his pay check. His accident occurred far from his place of employment and plainly outside working hours and consequently at a time and place other than in the course of his employment. Here the employment had not ceased, even temporarily, and that fact, considered with the evidence that not only was collection of checks on the employer’s premises allowed but that a duty rested upon the employee to call for his pay and that the employee’s early departure from the premises was made partly for the benefit of the employer, marks a distinction. If, instead of taking time to park his car for the mutual benefit of himself and his employer, the deceased had been injured before he left the premises or, after proceeding only forty or fifty feet, he had immediately returned for the purpose of obtaining his pay and had then been run down at the exact location where the accident did occur, we think that the liberal interpretation heretofore placed upon this statute would forbid dismissal of the claim. When, as in this case, some advantage to the employer, even though slight, can be discovered in the injured workman’s conduct, his act cannot be regarded as purely personal and wholly unrelated to his employment. Under such circumstances his injury occurs not only in the course of his employment but it also arises out of it. The principle of decisions like Sztorc v. Stansbury, Inc. (189 App. Div. 388); Springer v. North (205 App. Div. 754), and Matter of Wickham v. Glenside Woolen Mills (252 N. Y. 11) must be deemed to control the facts in this case.

The order of the Appellate Division and the determination of the State Industrial Board should be reversed and the matter remitted to the State Industrial Board for a rehearing, with costs in all courts against the State Industrial Board.

Pound, Ch. J., Crane, Hubbs and Crouch, JJ., concur; Lehman and Kellogg, JJ., dissent.

Ordered accordingly.


author: Hubbs, J.

text:
    Joseph Lavine, as Administrator of the Estate of Henry J. Lavine, Deceased, Respondent, v. Indemnity Insurance Company of North America, Appellant.

      (Argued October 28, 1932;
    decided January 10, 1933.)

      Charles B. Sullivan and John J. Connors, Jr., for appellant.
    Section 109 of the Insurance Law cannot operate to extend the coverage accorded by the policy. ('Coleman v. New Amsterdam Casualty Co., 247 N. Y. 271; Roth v. National Automobile Ins. Co., 202 App. Div. 667; Geitner v. U. S. F. & G. Co., 251 N. Y. 205; Brustein v. New Amsterdam Casualty Co., 255 N. Y. 137; Aldrich v. N. Y. Life Ins. Co., 235 N. Y. 214.) Plaintiff had the burden of estabhshing that the accident came within the indemnity coverage of defendant’s policy. This burden was not shifted by defendant’s alleging in substance in its answer that the accident did not come within the coverage of the policy. (O’Connell v. New Jersey Fidelity & Plate Glass Ins. Co., 201 App. Div. 117; Tolmie v. Fidelity & Casualty Co., 95 App. Div. 352; 183 N. Y. 581; Shawmut Coal & C. Co. v. American Credit Indemnity Co., 232 N. Y. 29; Whitlock v. Fidelity & Casualty Co., 149 N. Y. 45; Farmers Loan & Trust Co. v. Siefke, 144 N. Y. 354; Claflin v. Meyer, 75 N. Y. 260; Caldwell v. N. J. Steamboat Co., 47 N. Y. 282; Lamb v. Camden & Amboy R. R. & Transp. Co., 46 N. Y. 271; Travelers Ins. Co. v. McConkey, 127 U. S. 667.) Defendant was not estopped from disclaiming liability as to the person to whom the policy was issued, and there is no estoppel available to plaintiff in the action. (Gerka v. Fidelity & Casualty Co., 251 N. Y. 51; Seltzer v. Indemnity Ins. Co., 252 N. Y. 330; Weatherwax v. Royal Indemnity Co., 250 N. Y. 281.)

      Harry M. Schaffer for respondent.
    The defendant’s insurance policy covered the legal liability of its assured for the death of the plaintiff’s intestate. (Marshal v. Commercial Travelers Assn., 170 N. Y. 434; Michel v. Prussian Nat. Ins. Co., 171 N. Y. 25'; Bushey & Sons v. American Ins. Co., 237 N. Y. 24; Gerka v. Fidelity & Casualty Co., 251 N. Y. 51.) The burden of proving the affirmative defense pleaded in the answer was upon the defendant. (Lilly v. Preferred Acc. Ins. Co., 41 Mise. Rep. 8; Tolmie v. Fidelity & Casualty Co., 95 App. Div. 352; 183 N. Y. 581; Williams v. United States Assn., 82 Hun, 268; 147 N. Y. 693; O’Connor v. N. J. Fidelity Ins. Co., 201 App. Div. 119; 235 N. Y. 583; Parry v. Maryland Casualty Co., 228 App. Div. 393.) No valid ground existed for disclaiming liability under the policy. In any event, defendant by its own acts and conduct waived the right, if any, to disclaim liability. (Sachs v. Maryland Casualty Co., 170 App. Div. 494; Farrel v. Merchants’ Mutual Automobile Liability Co., 203 App. Div. 118; Glens Falls Cement Co. v. Travelers Ins. Co., 162 N. Y. 399; Commercial Casualty & Ins. Co. v. Fruin-Colnon Contracting Co., 32 Fed. Rep. [2d] 432; Rosenblum v. Maryland Casualty Co., 153 App. Div. 23; Weatherwax v. Royal Indemnity Co., 250 N. Y. 281; Hermanence v. Globe Indemnity Co., 221 App. Div. 394; Black Co. v. London Guarantee & Acc. Co., 190 App. Div. 218; Miller v. Union Indemnity Co., 209 App. Div. 455.)
   Hubbs, J.

This is an action brought pursuant to section 109 of the Insurance Law (Cons. Laws, ch. 28) to collect, under an automobile garage public liability and property damage policy issued by the defendant, the amount of a judgment for damages recovered by the plaintiff against Adolf C. Englert on account of the death of the plaintiff’s intestate in an automobile accident. An execution against Englert has been returned unsatisfied. The complaint alleges that the death of plaintiff’s intestate was caused by a Studebaker automobile which was being operated by the agent, servant or employee and upon the business of Englert and with his consent and approval. It does' not allege that Englert was the owner of the automobile or that he maintained it.

The answer contains a denial and a separate defense in which it is alleged that the automobile in question was not owned by Englert. The policy of insurance stood in the name of Adolf C. Englert, doing business as auto exchange. It contained the following indemnity agreement:

“ Indemnity Insurance Company of North America, Philadelphia, A Stock Company (Hereinafter called the Company) Hereby agrees with the Assured Named in the Declarations attached hereto and hereby made a part hereof, as respects bodily injuries or property damage accidentally suffered or alleged to have been suffered during the term of this Policy, by any person or persons not employed by the Assured, including death resulting at any time from such injuries, as follows:

To indemnify the Assured against loss from the liability imposed by law upon the Assured for such injuries resulting from (a) the maintenance and operation of an automobile sales agency, garage or station, including repair shops; or (b) the ownership or maintenance or use of any automobile for any purpose usual to the Assured’s operations as described in the Declarations including private pleasure use; ”
Also the following conditions: “ B. It is understood and agreed that this Policy shall cover the personal liability of the owner, any co-partner, or if a corporation, of the president, vice-president, secretary or treasurer of the named Assured, in connection with the use for private personal purposes, of any automobile or automobiles owned by the named Assured, provided, however, that the name of such owner, co-partner, president, vice-president, secretary or treasurer be stated in an endorsement attached to this policy, and further, that the salaries of such named persons be included in the remuneration upon which the premium for this Policy is based and a premium paid to the Company thereon.
C. This Policy shall cover such injuries or damage so sustained while at the locations described in the Declarations or upon the premises or ways immediately adjacent thereto, and such injuries so sustained by reason of any automobile while being operated or used within the limits of the United States of America ór the Dominion of Canada. It shall also cover such injuries so sustained elsewhere, caused by employees of the Assured sent from the locations described herein and whose duties require their presence elsewhere while in the service of the Assured in connection with the business operation described herein.”

In the declarations referred to in the indemnity agreement the address of the assured is given as 225 North Allen street, Albany, New York, his business as auto sales and its location as 225 North Allen street, Albany, New York.

The record indicates that Englert, the assured, at the time of the accident was operating an auto sales business in Albany at the address stated and also an auto sales business at 300 Schenectady street, Schenectady, New York; that one Swieskowski, an employee of Englert, was sent out from the Schenectady office to obtain cars; that Lavine, plaintiff’s intestate, was riding with Swieskowski; that the automobile in which they were riding left the highway while attempting to pass a truck and that Lavine was killed.

It is the contention of the defendant that the policy covered insured’s operations in connection with the Albany sales room and did not cover his operations in connection with the Schenectady sales room. It further contends that while the policy under clause (b) of the indemnity paragraph above quoted would cover the use of an automobile for private pleasure use, it does not cover an automobile used in connection with the assured’s operations in business other than in connection with the Albany sales room.

The plaintiff contends that under paragraph C of the conditions above quoted, the policy covers as to injuries sustained by reason of any automobile while being operated or used within the limits of the United States and that clause C of the conditions is not limited by the reference in the indemnity clause above quoted to the declarations describing the business and location covered.

The plaintiff further contends that the provisions in section 109 of the Insurance Law, to the effect that no policy shall be issued to the owner of a motor vehicle unless there shall be contained within such policy a provision insuring such owner against liability for damages and death or injuries to persons or property resulting from negligence in the operation of such motor vehicle in the business of such owner or otherwise by any person legally using or operating the same with the permission, express or implied, of such owner, must be read into the policy under consideration.

At the trial the judgment roll in the action brought by the plaintiff as administrator against Englert and the driver of the truck was received in evidence. There was also introduced in evidence the notice of accident given by Englert to the defendant. In that notice the name of the person operating the automobile is given as either Lavine or Swieskowski. There is also testimony to the effect that Swieskowski was reported as being the one who was driving the automobile at the time of the accident. No further evidence was introduced relative to the happening of the accident or as to who was driving the car, although the notice of accident contained the statement that Swieskowski was employed by Englert.

Upon this state of proof the trial court found: “ That on or about April 30, 1929, a certain Studebaker automobile owned by Adolf Englert and while being operated by Henry Swieskowski on the New York State highway between the village of Coxsackie, N. Y., and Catskill, N. Y., was in an accident and as a result of which the plaintiff’s intestate, Henry J. Lavine received injuries which caused his death.”

The defendant excepted to so much of that finding as finds that the Studebaker automobile therein referred to was owned by Adolf Englert. There are additional findings to the effect that the policy of insurance covered the legal liability of Englert, the assured, for the judgment recovered against him by the plaintiff in the prior action, and that, by operation of law, the coverage provided for in section 109 of the Insurance Law is deemed to be contained in the policy of insurance herein with the same force and effect as if recited in the policy itself.

As a conclusion of law, the trial court found that the insurance company, having pleaded that the Studebaker automobile was not being used when the accident occurred in connection with the assured’s Albany place of business, and that the loss was not within the coverage of the policy, the burden of proof thereof was upon the defendant, and further that the defendant failed in its burden of proving said defense.

In those conclusions we think the trial court was in error. There was an issue of fact as to whether the automobile was being operated by the agent, servant or employee and upon the business of the said Adolf Englert and with his consent and approval. While the finding that the automobile was being operated by Swieskowski was not excepted to and the notice of accident contains the bare statement that Swieskowski was employed by Englert, the facts required to bring the case within section 109 of the Insurance Law as to the operation of the automobile by any person legally using or operating the same with the permission, express or implied, of the owner are not established. The finding of ownership is specifically excepted to and there is no proof to be found in the record that Englert was the owner of the automobile which caused the injuries as the result of which Lavine died.

The notice of the accident is not proof of the facts therein stated. In this situation of the record, this judgment cannot stand. While the policy in question must be read as if it contained the extended liability clause provided for under section 109 of the Insurance Law, it must be deemed limited in amount and coverage as set forth in the contract agreement. The primary purpose of the extended liability clause contained in section 109 is to meet the defense in an action on the policy that the owner was not at the time of the accident operating the car personally or by his agent, although it was being operated by a member of his family or another with Ms consent, express or implied. The purpose is not to make insurance compulsory or to prevent limitation of coverage. (Brustein v. New Amsterdam Casualty Co., 255 N. Y. 137.)

The policy under consideration must be held limited in coverage to the agreement of the parties as expressed therein. From an examination of the policy and the declarations attached thereto, it is apparent that the policy was intended to cover the ownership or maintenance or use of any automobile for any purpose usual to the assured’s operations in the business of auto sales at 225 North Allen street, Albany, New York, including private pleasure use. The premium is based upon the payroll for that particular business. If the evidence upon a new trial establishes that the car was actually owned by Englert or under his control, and was being driven by a person with the permission, express or implied, of Englert, either upon Ms business in connection with the Albany sales office, or for private pleasure use, the policy covers.

It is contended by plaintiff that as Englert’s salary was included in the remuneration upon wMch the premium on the policy was based, the policy would cover if the automobile was owned by him and was being used at the time for Ms private personal purposes even if used in connection with the Schenectady sales office, as that was a private enterprise and the owner an individual.

That contention is based on paragraph. B of the conditions contained in the policy- above quoted. The argument is based upon the assumption that the Schenectady business was a private personal purpose ” within the meaning of paragraph B of the conditions and upon the further assumption that the automobile was owned by Englert. As to that contention we express no opinion as the question is not involved in the case, there being no evidence that Englert was the owner of the automobile.

It is further contended by the plaintiff that the defendant is liable regardless of the ownership of the automobile under paragraph C of the conditions contained in the policy above quoted. Paragraph C of the conditions contains the words: “ This policy shall cover * * * such injuries so sustained by reason of any automobile while being operated or used within the limits of the United States.”

Clause C is a condition of the agreement. The agreement is the indemnity agreement. The words such injuries ” contained in the indemnity agreement refer to the bodily injuries suffered by any person not employed by the insured at any time from the ownership or maintenance by the assured of any automobile for any purpose usual to the assured’s operations as described in the declarations including.private pleasure use.

When thus read, we find the limitation intended by the parties to be to injuries resulting from the üse of an automobile in connection with the sales business conducted by the assured at Albany. To hold otherwise would be to permit an assured to take out a policy such as this, the premium for which would be based upon the payroll for a particular business and to extend the coverage contracted for, possibly without knowledge on the part of the insurance company, to any number of similar businesses thereafter acquired regardless of location. To give to the words of paragraph C above quoted the effect claimed for them by the respondent would be an entirely unreasonable construction not justified in view of the other provisions of the policy. Without the inclusion of the word “ such ” and the words “ so sustained ” in condition C, the company would be liable for injuries sustained by reason of any automobile regardless of the assured’s lack of ownership or control thereof or its use without his permission express or implied.

If the facts proved upon a new trial do not bring the case within the coverage provided by the indemnity agreement above quoted, or within paragraph B of the conditions above quoted, the injuries sustained, if arising out of the business conducted at the Schenectady sales office, do not fall within the coverage of the policy for the reason that the indemnity clause and also paragraph C of the conditions refer to the assured’s operations as described in the declarations and which are clearly limited to those of an auto sales business conducted at 225 North Allen' street, Albany, New York.

We conclude without reference to any question of liability under paragraph B of the conditions that there may be a recovery upon a new trial if it is established, first, that Englert was the owner of the car and it was being used with his consent as provided by section 109 of the Insurance Law for any purpose usual to the assured’s operations ” in the auto sales business located at 225 North Allen street, Albany, New York (Brustein v. New Amsterdam Casualty Co., supra) or, second, that, being under his control although not owned by him, it was being used with his consent for a purpose usual to his business at No. 225 North Allen street, or, third, if either owned or controlled by him it was being used with his permission for his private pleasure.

We are unable to agree with the conclusion reached by the Trial Term that the defendant by its conduct had waived the defense now insisted upon and estopped itself from urging such defense. The defendant’s conduct did not, in any way, prejudice the plaintiff. (Weatherwax v. Royal Indemnity Co., 250 N. Y. 281; Gerka v. Fidelity & Casualty Co., 251 N. Y. 51.)

The burden of proof rested upon the plaintiff to establish that the policy covered. That burden was not shifted to the defendant, because of an affirmative allegation in the answer to the effect that the policy did not insure against the accident in question. The denials in the answer raised an issue as to whether the accident came within the indemnity coverage provided in the policy. That was the issue, and not whether liability did not exist under the policy because the accident fell under some provision of the policy relieving the defendant from liability.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to the appellant to abide the event.

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

Judgments reversed, etc.


text:
    Angela L. Barone, as Administratrix of the Estate of James E. Barone, Deceased, Respondent, v. AEtna Life Insurance Company, Appellant.

      (Argued December 2, 1932;
    decided January 10, 1933.)

      Frank L. Ward for appellant.
    The Supreme Court was without jurisdiction to pass upon the questions raised, and the judgment herein is void. (McMahon v. Gretzula, 227 App. Div. 256; Lane v. Lane, 229 App. Div. 50; Boyal Indemnity Co. v. Heller, 256 N. Y. 322; Thacker v. Hubbell & Appleby, 122 Va. 379; Eaton v. Eaton, 233 Mass. 351; Matter of Walker, 136 N. Y. 20; Davidsburg
      v. Knickerbocker Life Ins. Co., 90 N. Y. 526; Robinson v. Oceanic Steam Navigation Co., 112 N. Y. 315; Burckle v. Eckhart, 3 N. Y. 132; Skoczlois v. Vincour, 221 N. Y. 276.) Neither the insurance agent nor his clerk had power to extend the policy so as to cover a new contract, and even if the agent had power to extend the coverage of said policy, the message sent by plaintiff to the agent was never delivered to him and hence there was not a meeting of the minds and no contract resulted. (Dudley v. Perkins, 225 N. Y. 448; Farmers’ Fund v. Looker, 207 App. Div. 37; Struzewski v. Farmers Fire Ins. Co., 226 N. Y. 338; Alhambra American Co. v. Associated First Nat. Pictures, Inc., 207 App. Div. 550; Hicks v. British American Ins. Co., 162 N. Y. 284; McMahon v. Gretzula, 227 App. Div. 256; Lane v. Lane, 229 App. Div. 50.)

      William J. Darch and George W. Watson for respondent.
    Notice to the clerk is notice to the agent and binds the carrier. (Chase v. Peoples Ins. Co., 14 Hun, 456; Moore v. N. Y. Bowery Fire Ins. Co., 55 Hun, 540; Bodine v. Exchange Fire Ins. Co., 51 N. Y. 117; Arff v. Star Fire Ins. Co., 125 N. Y. 64; Carpenter v. German Ins. Co., 135 N. Y. 298; Cullinan v. Bowker, 40 Mise. Rep. 441; Kinney v. Amazon Ins. Co., 36 Hun, 69; Brown v. German American Ins. Co., 10 N. Y. St. Repr. 413; Cook v. ¿Etna Ins. Co., 7 Daly, 560; Allen v. St. Louis Ins. Co., 85 N. Y. 473; Davis v. Lamar Ins. Co., 18 Hun, 230.) The policy should be reformed. (McMahon v. Gretzula, 227 App. Div. 256; Astrin v. E. N. Y. Woodwork Mfg. Co., 210 App. Div. 720; Dobrosky v. Weintraub, 32 State Dept. Rep. 64; Paskie v. Commercial Cas. Ins. Co., 223 App. Div. 603; LeGendre v. Insurance Co., 95 App. Div. 562; 179 N. Y. 537; Schuesler v. Insurance Co., 103 App. Div. 12; 185 N. Y. 578; XJlman v. Equitable Ins. Co., 161 App. Div. 708; Schenectady Varnish Co. v. Auto Ins. Co., 127 Mise. Rep. 751; Castellano v. American Fire Ins. Co., 222 App. Div. 169; Maher v. Hiberma Ins. Co., 67 N. Y. 283; Mincho v. Insurance Co., 124 App. Div. 578.)
   Pound, Ch. J.

This is an action to reform a policy of compensation insurance in force until April 23, 1929. The policy is general in its terms and describes no particular place of work. Barone, the insured, was a contractor for sewer pipe and gas line jobs whose work took him from place to place as he obtained contracts. When he moved to a new job he notified the insurance agent and the insurance agent made out a slip called "a declaration which contained a description of the work-place, the nature of the work and the estimated payroll and attached it to the policy. Insured, now deceased, had completed a job at Hamburg where he was covered by the policy and was about to move to a new job known as the Bergen-LeBoy job. He was ill in a hospital in Jamestown and he sent his wife to Batavia to see Newman L. Hawks, the insurance agent there with whom he had transacted his insurance business for some years, and have the policy cover the new job. She went to Batavia, arriving in the evening after office hours. She met Mary Underdunk, whom she knew as a clerk or bookkeeper in Mr. Hawks’ office, with whom she had previously transacted insurance business, and told her of her errand. Miss Underdunk told her the office was closed but that she would take care of that endorsement on that job.” Thereafter during the term of the policy there was an accident on the job and the insurance agent then told Barone he was not covered. All this appears without dispute. When told of the conversation between Miss Underdunk and Mrs. Barone, Hawks said: “ Well, if you told Mary [Miss Underdunk] you are covered.” She told Mary but Mary did not tell Hawks. At the time of the accident no coverage appeared on the face of the policy.

Proceedings were instituted before the Industrial Board but it was agreed all around that the Board could not permit a recovery against the insurance carrier on the policy and this action was begun in the Supreme Court, before the Industrial Board had rendered its decision, to reform the policy so as to cover the Bergen-LeRoy job.

The defendant did not plead that a proceeding was pending before the Industrial Board. It now raises the jurisdictional question and contends that since our decision in Royal Indemnity Co. v. Heller (256 N. Y. 322) the Supreme Court has been ousted of jurisdiction to reform a contract of compensation insurance and exclusive jurisdiction has been vested in the Industrial Board. No question of reformation arose in the Heller case. It dealt with equitable defenses only. It was held that the Board might consider a defense of mutual mistake and enforce the true agreement of the parties.

Workmen’s Compensation Law (Cons. Laws, ch. 67, § 23) says: “an award or decision of the board shall be final and conclusive upon all questions within its jurisdiction,” but there had been no decision of the Board when this action was begun. The Supreme Court has general jurisdiction in law and equity (N. Y. Const, art. VI, § 1), and the reformation of contracts is a well-understood field of equitable jurisdiction. Giving additional jurisdiction to other tribunals does not take general jurisdiction away from the Supreme Court. (Matter of Stilwell, 139 N. Y. 337, 342; Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261, 274.) We held in the Heller case that these matters may be disposed of summarily before the Industrial Board as being within the wide scope of the powers intrusted to it. The Board may make a decision thereon which is final and conclusive, except for judicial review, but it has never been held that the power to make such a decision means that the parties may not resort to the Supreme Court to adjust their difficulties in this regard if they choose and that is what they did in this case. The Industrial Board has, and can have, no exclusive jurisdiction to reform insurance contracts. To raise the point that the Board had first obtained jurisdiction, it should have pleaded another proceeding pending. This it failed to do and thus it waived the only point which was open to it to make.

The defense that the risk was not covered by the policy is of a strictly technical character and is of a type that has found little support in judicial decisions. Here we have unquestionably a valid policy of compensation insurance, which by certain formalities may be shifted from job to job on notice to the agent. The idea that there may be a substantial difference in such jobs requiring investigation, deliberation and decision by the company is in the main illusory. We have an insurance agent who is held out to the public as one authorized to attach declarations to such policies as a matter of course. He had previously attached such declarations and had even waived the requirement of a declaration and the company had paid a loss when there was no declaration covering it attached to the policy, although it is claimed that this was by way of compromise only. The agent had the apparent power to contract for risks and the insured was safe in relying thereon.

But it is suggested that the clerk had no power to cover risks. By the application of a doctrine enunciated in the New York case of Bodine v. Exchange Fire Ins. Co. (51 N. Y. 117), and generally followed (Arff v. Star Fire Ins. Co., 125 N. Y. 57), it is held that the business of an insurance agent, either in issuing policies or soliciting insurance, is not of such a discretionary or personal nature that it cannot be delegated. It is held to be a matter of common knowledge, of which the company is, of course, aware, that the insurance business is carried on by agents largely through subordinates; that it cannot properly be carried on in any other way, and that, therefore, the ordinary local but so-called general agent may, as a matter of implied consent, appoint sub-agents and subordinates whose statements, acts, knowledge or receipt of notice, within the ordinary course of business will bind the company. (1 Mechem on Agency [2d ed.], § 1054; Vance on Insurance [2d ed.], p. 429.)

The fact that the interview with the clerk occurred on the street is immaterial. The employee of the agent in the Bodine case was on the street when he delivered a policy of insurance without the actual payment of the premium, although a condition appeared in the policy that it should not take effect until the premium was paid. “ An insurance agent can authorize his clerk to contract for risks.” (Bodine v. Exchange Fire Ins. Co., supra, p. 123.) Here the manner of doing business in the office indicated that the clerk had entire charge of the office when her employer was absent and apparently had the same authority that he apparently had. “ These clerks can bind their principals in any of the business which they are authorized to transact.” (Bodine v. Exchange Fire Ins. Co., supra, p. 123.)

It is a matter of common knowledge that when we tell a clerk in an insurance agent’s office to renew a policy and he says, You are covered,” we are covered. No elaborate analysis or refinement of the agent’s actual powers or the actual or apparent powers of the clerk should be permitted to defeat the liability of the company. (Stewart v. Mutual Life Ins. Co., 155 N. Y. 257; Whipple v. Prudential Ins. Co., 222 N. Y. 39; Syracuse Lighting Co. v. Maryland Casualty Co., 226 N. Y. 25.) Insurance companies cannot be ignorant of that which every man knows. Here the policy was actually issued and mere notice to the clerk had been considered enough in such cases to change the place of coverage.

The judgment should be affirmed, with costs.

Crane, O’Brien and Hubbs, JJ., concur; Lehman and Kellogg, JJ., dissent; Crouch, J., not sitting.

Judgment affirmed.