author: Loughran, J.

text:
    William Hession, Appellant, v. Sari Corporation, Respondent, Impleaded with Others.
    Argued May 20, 1940;
    decided July 24, 1940.

      Walter K. Pick and Myron J. Greene for appellant.
    The provisions of section 29 of the Workmen’s Compensation Law (Cons. Laws, ch. 67), as amended by chapter 684 of the Laws of 1937, apply to and govern the case at bar. (Curtis v. United States Trucking Corp., 2 N. Y. Supp. [2d] 248; Laird v. Carton, 196 N. Y. 169; Deuscher v. Cammerano, 256 N. Y. 328; Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261; Matter of Vincent v. Allerton House Co., 256 N. Y. 522; Matter of Callari v. N. Y. State Rys., 246 App. Div. 332; Kane v. Morse Dry Dock & Repair Co., 250 App. Div. 888; Liberty Mutual Ins. Co. v. N. Y. & Queens Electric Light & Power Co., 161 Misc. Rep. 491; Matter of Orton v. Olds Motor Works, 229 App. Div. 46.) No rights that might be affected by the amendment to section 29 of the Workmen’s Compensation Law had vested on September 1, 1937. (Hodges v. Bewley Truesdale Contracting Co., 231 App. Div. 495; Godfrey v. Brooklyn Edison Co., 115 Misc. Rep. 21; Penziner v. West American Finance Co., 10 Cal. [2d] 160; Billiard Table Mfg. Corp. v. First Tyler Bank & Trust Co., 16 Fed. Supp. 990; U. S. v. Chambers, 291 U. S. 217; Hertz v. Woodman, 218 U. S. 205; New London Northern R. R. Co. v. Boston & Albany R. R. Co., 102 Mass. 386; Wrentham v. Fales, 185 Mass. 539; People ex rel. Albright v. Firemen’s Pension Fund, 103 Col. 1.)

      William B. Davis, William C. Olsen, Theodore L. Karpf and E. C. Sherwood for respondent.
    The defense contained in the supplemental answer of the defendant-respondent is sufficient in law. (Matter of Miller, 110 N. Y. 216; Jacobus v. Colgate, 217 N. Y. 235; Dalziel v. Rosenfeld, 265 N. Y. 76; Autocar Sales & Service Co. v. Hansen, 270 N. Y. 414;
      Addiss v. Selig, 264 N. Y. 274; Orinoco Realty Co. v. Bandler, 233 N. Y. 24.)
   Loughran, J.

On April 7, 1937, the plaintiff was injured while in the course of his employment as a workman of a contractor who was engaged in work upon a building owned by the defendant. On October 25, 1937, he brought this action to recover his damages, alleging that his injuries had been caused by a wrong of servants of the defendant. Issue was joined on December 9,1937.

On September 25, 1939, the defendant moved for leave to serve a supplemental answer. (See Civ. Prac. Act, § 245.) This motion was denied by Special Term and granted at the Appellate Division where the plaintiff was permitted to take this appeal to us on the question whether the order of Special Term was properly made.” The proposed supplemental answer sets forth as a defense that in the period from December 13, 1937, to December 12, 1938, plaintiff accepted from the insurance carrier of his employer awards of workmen’s compensation aggregating $4,604, exclusive of medical expenses. Whether this defense is sufficient in law is the question upon which, as we suppose, the Appellate Division intended to call for our decision.

At the time the plaintiff was injured (April 7, 1937), section 29 of the Workmen’s Compensation Law (Cons. Laws, ch. 67) provided: If an employee entitled to compensation * * * be injured * * * by the negligence or wrong of another not in the same employ, such injured employee * * * shall, before any suit or any award * * * elect whether to take compensation * * * or to pursue his remedy against such other. * * * If such injured employee * * * elect to take compensation * * * the awarding of compensation shall operate as an assignment of the cause of action against such other * * * to the person * * * or insurance carrier liable for the payment of such compensation. If such * * * person * * * or carrier, as such an assignee, recover from such other * * * a sum in excess of the total amount of compensation awarded to such injured employee * * * and the expenses for medical treatment paid by it, together with the reasonable and necessary expenditures incurred in effecting such recovery, it shall forthwith pay to such injured employee * * * two thirds of such excess, and to the extent of two-thirds of any such excess such recovery shall be deemed for the benefit of such employee * * (Laws of 1935, ch. 328. The emphasis is ours.)

As of September 1, 1937, section 29 was amended so a,s to provide: “If an employee entitled to compensation * * * be injured * * * by the negligence or wrong of another not in the same employ, such injured employee * * * need not elect whether to take compensation *. * * or to pursue his remedy against such other but may take such compensation and at any time either prior thereto or within six months after the awarding of compensation, pursue his remedy against such other subject to the provisions of this section. If such injured employee * * * take or intend to take compensation * * .* and desire to bring action against such other, such action must be commenced not later than six months after the awarding, of compensation and in any event before the expiration of one year from the date such action accrues. In such case, * * * the person * * * or insurance carrier liable for the payment of such compensation, * * * shall have a lien on the proceeds of any recovery from such other, * * * after the deduction of the reasonable and necessary expenditures, including attorney’s fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded * * * and the expenses for medical treatment paid by it and to such extent such recovery shall be deemed for the benefit of such * * * person * * * or carrier.” (Laws of 1937, ch. 684. Again the emphasis is ours.) These provisions were in effect on December 13, 1937, when the first award of workmen’s compensation was made to the plaintiff.

The Appellate Division was of opinion that the foregoing 1937 amendment of section 29 could not be invoked by the plaintiff and that this action was precluded by the former provisions of section 29 first quoted above. “ If [the law], as amended by chapter 684 of the Laws of 1937, were applicable,” said the court, there would be a material change, not in procedure, but in vested rights accrued under chapter 328 of the Laws of 1935.” (258 App. Div. 969, 970.)

We can conceive of no right of the defendant against the plaintiff that had vested or accrued under the statute before the amendment of section 29 as of September 1, 1937. When that amendment took effect this action had not been commenced. No award of workmen’s compensation had then been made to the plaintiff. All that had theretofore happened was that the plaintiff had been injured. Any resulting liability of the defendant was extrinsic to the Workmen’s Compensation Law. In the language of the cases dealing with that statute, the defendant is a third party. The statute has never defined the status of such a party. “ He has nothing whatever to do with this law, except to pay the damages for which he is liable.” (O’Brien v. Lodi, 246 N. Y. 46, 50.) In short, the 1937 amendment of section 29 affected only matters of judicial procedure and consequently was applicable to the plaintiff’s alleged previously existing cause of action against the defendant. (See Matter of Berkovitz v. Arbib & Houlberg, Inc., 230 N. Y. 261, 270; Deuscher v. Cammerano, 256 N. Y. 328.) The defense set forth in the proposed supplemental answer was, therefore, insufficient in law. Perhaps it should be noticed that the contrary conclusion of the court below meant that the plaintiff was to bestow upon the insurance carrier of his employer one-third of any damages payable by the defendant in excess of the total of benefits received by the plaintiff under the statute.

The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, and the order of the Special Term affirmed. The question certified is answered in the affirmative.

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

Ordered accordingly.


source: Caselaw Access Project

author: Sears, J.

license: Public Domain

text:
    In the Matter of the Accounting of National City Bank of New York et al., as Executors of Samuel M. Knoop, Deceased. Paul G. Gravenhorst, as Special Guardian for Howard E. St. John, Jr., et al., Infants, Appellant and Respondent; National City Bank of New York, Individually and as Executor and Trustee under the Will of Samuel M. Knoop, Deceased, et al., Respondents and Appellants.
    Submitted May 20, 1940;
    decided July 24, 1940.

      Paul G. Gravenhorst, Jay F. Tiffany and George W. Gravenhorst for Paul G. Gravenhorst, as special guardian for Howard E. St. John, Jr., et al., infants, appellant and respondent.
    The inclusion of trust provisions in-a will does not necessarily show an intention that the fiduciary shall act in two capacities and thereby receive double commissions. (Matter of Glenn, 231 App. Div. 681; McAlpine v. Potter, 126 N. Y. 285; Matter of Core, 241 App. Div. 311; Johnson v. Lawrence, 95 N. Y. 154.) Double commissions cannot be allowed to the same person in two capacities as executor and trustee unless the will clearly j
      contemplates a severance of the executorial and trust functions. (McAlpine v. Potter, 126 N. Y. 285; Matter of Vanneck, 175 App. Div. 363; Matter of Martin, 124 App. Div. 793; Matter of Abrahams, 136 Misc. Rep. 538; Matter of Slocum, 169 N. Y. 153; Matter of Ziegler, 218 N. Y. 544; Matter of Lite, 142 Misc. Rep. 793; Johnson v. Lawrence, 95 N. Y. 154; Hurlburt v. Durant, 88 N. Y. 121; Matter of Bush, 171 Misc. Rep. 1013.) The order of the Appellate Division in so far as it affirms that part of the decree of the Surrogate’s Court which disallows double commissions on the principal of the $8,500 trust should be affirmed. (Matter of Abrahams, 136 Misc. Rep. 538; Matter of Vanneck, 175 App. Div. 363.)

      James D. Ouchterloney and William H. Denne, Jr., for executors, respondents and appellants.
    Separate commissions may be allowed to the same person acting as executor and trustee. (Matter of Schliemann, 259 N. Y. 497; Matter of Murray, 269 N. Y. 620.) The will evidences the intention of the testator to separate the functions and duties of the executors and trustees named in his will. (Matter of Schliemann, 259 N. Y. 497; Matter of Stanfield, 135 N. Y. 292; Matter of Burr, 48 Misc. Rep. 56.) The Appellate Division erred in its determination with respect to the $8,500 fund. (Matter of Coutts, 260 N. Y. 128; Matter of Schliemann, 259 N. Y. 497.)
   Sears, J.

Upon the accounting of the National City Bank of New York and Earl E. Beyer, as executors of the last will and testament of Samuel M. Knoop, deceased, questions have arisen as to the amount of fees payable to the executors. The part of the will from which the questions involved have arisen contains two trust provisions, first, the sum of $8,500 is given to the testator’s executors and trustees in trust to collect the income and pay it to one Dell Algood, and upon her death the trust fund of $8,500 to be paid into and form a part of the residuary estate; and, second, the entire residuary estate is given to the executors and trustees to hold and collect the income and to pay the income to two named persons in equal shares or to the survivor of them until each attains the age of twenty-five years, and as each reaches the age of twenty-five years, the residuary estate is bequeathed to the two named persons or to the survivor of them.

The record discloses that the $8,500 trust fund has been separated from the balance of the estate and is in the possession of the National City Bank, and that when certain pecuniary legacies are paid, for which the funds are in the hands of the executors, and the executors’ commissions adjusted and paid, the estate will be fully administered and nothing more will remain, except the residuary estate which also is held in trust.

The specific questions before us are whether the executors are entitled under these circumstances to commissions for paying out as well as for receiving the trust funds above mentioned. If they are so entitled, those acting as trustees will, ultimately, be entitled to fees for receiving and paying out the trust estates. In other words, the question is whether under the terms of this will those acting both as executors and as trustees will be entitled to double commissions. To be entitled to double commissions as to the fund included in the corpus of any trust, there must be a complete severance of the duties of the executors and of the trustees as to such fund. The will must show an intention on the part of the testator to end the executors’ duties at some point of time and require the executors thereupon to constitute and set up the trust to be held and managed as •such for the benefit of the beneficiaries. (McAlpine v. Potter, 126 N. Y. 285; Johnson v. Lawrence, 95 N. Y. 154; Matter of Murray, 269 N. Y. 620.)

In Matter of Schliemann (259 N. Y. 497) "this court construed a will similar to the one now before us as to the trust of the residuary estate and made an authoritative statement of the rule applicable to the matters involved in this appeal. There, as here, the will indicated that after the person named as executor had fully completed administration of the estate, except as such administration might otherwise include distribution, he should hold the residue of the estate in separate trust funds or in one fund to be invested and used for the purposes set forth in the will until final distribution was made (p. 504).

There is in the will before us no interweaving of the duties of the trustees with those of the executors. The separation of the $8,500 fund from the body of the estate was to terminate executorial duties in respect thereto. Upon the payment of debts and legacies, the residuary estate becomes a separate fund. That the $8,500 trust fund passes on the death of the life beneficiary into the residuary estate which constitutes the corpus of another trust requires no intervention of executors, as such, nor are the fees or commissions of the trustees increased thereby. (Matter of Coutts, 260 N. Y. 128.)

The conclusion follows that commissions should be allowed to the executors upon their accounting for paying out the sums to become the principal of the trust funds in question. It makes no difference that such paying out is accomplished by the retention of the funds by the same individuals who had previously acted as executors.

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

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

Ordered accordingly.


text:
    In the Matter of the Claim of Mildred Clarke, Respondent, against Town of Russia et al., Appellants. State Industrial Board, Respondent.
    Argued May 21, 1940;
    decided July 24, 1940.

      Chester J. Winslow for appellants.
    Claimant was not an employee of the town of Russia nor could he be legally employed by the town. (Kittie v. Town of Kinderhook, 214 App. Div. 350; Matter of Lanigan v. Town of Saugerties, 180 App. Div. 227; 223 N. Y. 685.)

      John J. Bennett, Jr., Attorney-General (Roy Wiedersum of counsel), for State Industrial Board, respondent.
    The deceased employee was an employee of the town of Russia at the time he received the accidental injuries causing his death and the award for death benefits in favor of his widow was duly made by the State Industrial Board.
      (Matter of Hiscox v. Holmes, 237 App. Div. 240; Matter of Dann v. Town of Veteran, 254 App. Div. 462; 278 N. Y. 461; Matter of Clemens v. Town of Osceola, 257 App. Div. 884; Kenny v. Union Ry. Co., 166 App. Div. 497; Ide v. Faul & Timmins, 179 App. Div. 567; McDermott v. Ingersoll & Bros., 178 App. Div. 943; Matter of Nellis v. Town of Ohio, 239 App. Div. 862.)
   Sears, J.

Claimant seeks an award under the Workmen’s Compensation Law (Cons. Laws, ch. 67) on behalf of herself and her infant daughter for the death of her husband. The decedent died from an injury which he received while working on a highway for the benefit of appellant Town of Russia. The Town of Russia is a second class town which has secured compensation to its employees under a mutual self-insurance plan as provided in subdivision 3-a of section 50 of the Workmen’s Compensation Law. The town contests the widow’s claim for compensation on the ground that at all times while her husband was working on the highway he was a Justice of the Peace of the town, and, as such, a member of the Town Board. (Town Law [Cons. Laws, ch. 62], § 60.) The decedent had been hired by the foreman in charge of the work contrary to the instructions of the Town Superintendent of Highways and the Town Board, that members of the Board should not be employed to work on highways in the town, upon the decedent’s assurance that it would be all right. Under subdivision 4 of section 140 of the Highway Law (Cons. Laws, ch. 25), a Superintendent of Highways has the power to employ such persons as are necessary to repair highways in the town, but he must file a list of the names of the persons so employed with the compensation paid to each in the office of the Town Clerk. He also has the power to order the Supervisor of the town to make payments of their compensation out of the highway fund. (Town Law, § 119; Highway Law, § 284.) The Town Board, however, has the duty to audit the receipt and disbursement of any moneys of the town by its employees and officers. (Town Law, § 105.) Thus, the payment of compensátian to one employed, by the Superintendent of Highways to work on the highway would come for audit before the Town Board of which the deceased was a member, although he might not be entitled to sit as such when the payment to him was being audited. (Town Law, § 105.) There can be no doubt that persons engaged by the Superintendent to work on town highways are employees of the town. (Kittle v. Town of Kinderhook, 214 App. Div. 345, 350.)

To establish her right to benefits under the Workmen's Compensation Law, it was essential for claimant to show that the technical relationship of employer and employee existed between her husband and the town. Under the common law a contract between a municipality and one of its officers is against public policy and illegal. (Beebe v. Supervisors of Sullivan County, 64 Hun, 377; affd., 142 N. Y. 631.) The decedent's contract of employment was not merely voidable, but void. A compensation award based upon an illegal contract which is void cannot be sustained. (Matter of Swihura v. Horowitz, 242 N. Y. 523; Herbold v. Neff, 200 App. Div. 244.) Since the relationship of employer and employee never existed between the town and the deceased, the reasoning found in Matter of Kenny v. Union Railway Co. (166 App. Div. 497) and in Matter of Ide v. Faul & Timmins (179 App. Div. 567) is inapplicable. Decedent's employment being void, it is not necessary to consider whether the decedent as a public officer took any part in making a contract in which he was individually interested in violation of section 1868 of the Penal Law.

■ The order of the Appellate Division and the award of the State Industrial Board should be reversed and the claim dismissed, without costs.

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

Order reversed, etc.


author: Rippey, J.

text:
    In the Matter of the City of Syracuse, Respondent, against John T. Gibbs et al., Constituting the Water Power and Control Commission, Appellants.

      Argued April 25, 1940;
    decided July 24, 1940,

      John J. Bennett, Jr., Attorney-General (Timothy F. Cohn, Henry Epstein and Jack Goodman of counsel), for appellants.
    The Water Power and Control Commission had jurisdiction to make the determination involved herein. (Starbuck v. Starbuck, 173 N. Y. 503; Matter of City of New York [Court House], 216 N. Y. 489; People v. Raquette Falls Land Co., 100 Misc. Rep. 601; 188 App. Div. 943; Sanborn v. Sanborn, 106 Ohio St. 641; Matter of Niagara Falls Power Co. v. Water Power & Control Comm., 267 N. Y. 265; Grand Rapids and Indiana Ry. Co. v. Osborn, 193 U. S. 17; Bankers Trust Co. v. Raton, 258 U. S. 328; Fowler v. Saks, 7 Mackey [D. C.], 570; United States v. Lowden, 308 U. S. 225.) The determination is supported by sufficient competent proof, and is, therefore, not arbitrary or capricious. (Matter of Niagara Falls Power Co. v. Water Power & Control Comm., 267 N. Y. 265.)

      John C. McLaughlin for Village of Jordan, intervener.
    Where the Legislature has created a fact finding body or commission, and it has taken testimony and made its decision, the courts have no authority to substitute their own judgment in place of the decision of the commission. (Matter of New Rochelle Water Co v. Maltbie, 248 App. Div. 66; People ex rel. Freeborn & Co. v. Graves, 257 App. Div. 587.)

      James C. Tormey, Corporation Counsel (George T. Driscoll of counsel), for respondent.
    The Legislature granted exclusive control over the Syracuse water system to the city of Syracuse. (L. 1888, ch. 532; L. 1889, ch. 291, subd. 3; L. 1890, ch. 314; L. 1892, ch. 27; L. 1894, ch. 184; L. 1905, ch. 723; L. 1906, ch. 631; L. 1909, ch. 156; L. 1921, ch. 499; Cons. Laws, ch. 65, § 528; Trenton v. New Jersey, 262 U. S. 182.) The Water Power and Control Commission did not acquire jurisdiction over the Syracuse water system. (People ex rel. Municipal Gas Co. v. Public Service Comm., 224 N. Y. 156; Matter of Village of Boonville v. Maltbie, 272 N. Y. 40; Matter of Boston & Albany R. R. Co., 53 N. Y. 574; Matter of Quinby v. Public Service Comm., 223 N. Y. 244; People ex rel. Iroquois Gas Corp. v. Public Service Comm., 264 N. Y. 17; Matter of Beauty Spring Water Co., 134 App. Div. 17; Potts v. Village of Haverstraw, 79 Fed. Rep. [2d] 102; Westchester Joint Water Works v. Pelham, 148 Misc. Rep. 349; 241 App. Div. 687; Matter of Albany County, 43 St. Dept. Rep. 666.) The proof does not support the decision rendered by the Commission. (Smythe v. Ames, 169 U. S. 466; People ex rel. Cons. Water Co. v. Maltbie, 275 N. Y. 357; Matter of New York Water Service Corp. v. Water Power & Control Comm., 257 App. Div. 590; Matter of Cote v. Longley, 241 App. Div. 539; Buffalo Structural Co. v. Dickinson, 98 App. Div. 355; Curry v. Quait, 100 Misc. Rep. 604; Anderson v. Leblang, 125 Misc. Rep. 820.)
   Rippey, J.

On March 19, 1935, the Water Power and Control Commission made its order approving the plans of the village of Jordan for the construction and operation of a municipal water system by means of which it might be enabled to procure an adequate supply for its inhabitants of pure and wholesome water from Skaneateles lake (Application 921; 50 St. Dept. Rep. 526). The order, in part, authorized the village to tap into the mains of the village of Elbridge and, by that means, to draw off from the Elbridge supply sufficient water for its requirements. Elbridge, in turn, procured all of its supply from the conduits of the city of Syracuse through which flowed waters from Skaneateles lake under authorization of the Commission by order dated November 25, 1931 (Application 670; 41 St. Dept. Rep. 345). Negotiations between the village of Jordan and the city of Syracuse for agreement as to the quantity of water which the village might draw from the city conduits through the Elbridge mains and the service rate which it should pay to the city for the use of the city conduits in supplying the water failed. As a consequence of the failure of the parties to agree, the village of Jordan filed its application with the Commission (No. 1049) on February 21, 1936, to procure a determination of those questions. Upon that application, after due notice and a full hearing, the Commission made its order under date of August 21, 1936, by which the village was allowed to withdraw a quantity not in excess of sixty-nine million gallons in any one calendar year and the service rate was fixed at two cents per hundred cubic feet of water withdrawn (55 St. Dept. Rep. 251). The order provided that the water should be delivered, taken and paid for in accordance with the provisions of Water Applications 609, 670 and 921 and should remain in force for five years from the date of the order. In proceedings instituted by the city under article 78 of the Civil Practice Act, the determination and order of the Commission were annulled by the Appellate Division and from the order entered upon its decision the Commission has appealed to this court. The majority of the lower court has held that the Commission was without jurisdiction to make the order. The court was unanimously of the opinion that, in any event, the service rate fixed was unreasonable and the determination as to that arbitrary and capricious.

Skaneateles lake is a body of water approximately fifteen miles in, length with an average width of about one mile, lying and extending generally in a northerly-southerly direction in Onondaga, Cayuga and Cortland counties. Its inlet is at the southerly end of the lake whose source, in turn, is many miles distant in Cortland county. The surface area of the lake is approximately thirteen square miles and its watershed is about seventy-five square miles. Its outlet is Skaneateles creek, about ten miles long, commencing at the foot or northerly end of the lake at the village of Skaneateles and extending generally in a northerly direction until it empties into Seneca river at the village of Jordan, the river, at that point, now being a part of the Barge Canal System of the State. The lake is about seven miles from the village of Elbridge, about ten miles from Jordan and about nineteen miles from the city of Syracuse. Its elevation above Elbridge is upwards of three hundred feet, above Jordan is about four hundred fifty feet and in excess of those figures above the city of Syracuse. Before the city of Syracuse about 1894 and other municipal units later tapped the lake for their water supply, the outlet was a source of power for mills, manufacturing plants and factories located along its course, for the supply of water needed by the inhabitants of the town of Elbridge and of the villages of Elbridge and Jordan located therein, the means of removal of pollution arising throughout the drainage basin and a feeder for the old Erie canal which passed through the village of Jordan, but since that time such source of supply has been partially, if not wholly, removed. The Commission has found that the lake and its tributaries and outlet are the only logical, normal and natural sources of water supply for the entire drainage basin and also for any part of the towns of Skaneateles and Elbridge, Onondaga county, and the easterly part of the town of Sennett, Cayuga county, and of the inhabitants thereof who were declared to have a right to be so supplied superior to the rights of the city of Syracuse.

Various local acts of the Legislature have to do with the ' creation of the waterworks system of the city of Syracuse and its procurement and use of a water supply from Skaneateles lake (L. 1888, ch. 532; L. 1889, ch. 291; L. 1890, ch. 314; L. 1892, ch. 27; L. 1894, ch. 184; L. 1894, ch. 360; L. 1906, ch. 631; L. 1909, ch. 156; L. 1918, ch. 449; L. 1923, ch. 271; L. 1930, ch. 66; L. 1931, ch. 796). At the outset, the city challenges the power of the Commission to interfere with its alleged exclusive ownership of, use of, and control over the waters of Skaneateles lake or to grant the order here involved. The city undertakes to include the waters of Skaneateles lake within its waterworks system and then urges that the Legislature granted exclusive control over the Syracuse water system to the city of Syracuse. For its alleged exclusive grant, it relies upon the above listed acts passed prior to 1905 and upon the later acts referred to for confirmation of such grant. It is urged that, by those statutes, the Legislature not only freed it from any control whatsoever by the Water Power and Control Commission and its predecessor water control commissions but gave it absolute power over all the waters of the lake —■ to use and dispose of them within its own jurisdiction for whatsoever price it may charge and elsewhere at such price as it or the Legislature by local law might elect to impose. We find no justification in any provisions of those acts for any such contention.

We need not pause to make a detailed analysis of those acts. Suffice it to say that the city of Syracuse was given the right to take water from the lake, not required by the State for use by the Erie canal, through a single conduit of not more than thirty inches in diamater for the purpose of supplying the city and its inhabitants with water subject to and conditioned, however, upon various limitations and restrictions, subject to State control and to the rights of others, riparian or otherwise, to the use of waters collected from the watershed and impounded in the lake. Referring to section 18 of the act of 1889, that being the section under which power to take water and rights to the city were granted, as amended by chapter 314 of the Laws of 1890, this court said: The rights of the city in and to the use of the surplus waters of the lake, conferred by the act, were expressly declared to be at all times subject to the superior claims of the state thereto ” (Sweet v. City of Syracuse, 129 N. Y. 316, 328). In connection with the question of whether the city acquired by any provision of those acts any property right, the question arose as to whether any public property was appropriated for local or private purposes in violation of constitutional prohibitions. It was held that the State had no property right to give or convey in and to the waters of the lake or to the waters flowing through its outlet and no such right could be conveyed, or was attempted to be conveyed, to the city by the acts in question. The court said (pp. 335, 336)': Neither sovereign nor subject can acquire anything more than a mere usufructuary right therein, and in this case the state never acquired, or could acquire, the ownership of the aggregated drops that comprised the mass of flowing water in the lake and outlet, though it could and did acquire the right to its use. * * * We think that the conditions of the grant to the city of Syracuse are such that no property right or interest which the state has or ever had is transferred, lost or impaired. After all the provisions of the statute are executed the state will possess and enjoy every right, with respect to those waters, that it did before and, if this is so, then no public property is transferred by the act from the state to the city.” We likewise find clear and unambiguous expressions in the early acts negativing the contention of the city. It is said in the act of 1890 with reference to comparative rights to use: It being understood that the rights of the city of Syracuse hereby conferred in and to such surplus waters, are to be subject always to the superior claims of the state thereto.” In chapter 631 of the Laws of 1906, all provisions of former acts not inconsistent with its provisions are saved and section 7 provides: “ This act * * * shall be construed not as an act in derogation of the powers of the state but as one intended to aid the state in the execution of its duties,” etc. The acts passed by the Legislature subsequent to 1906 did not extend to the city any rights to the use of the water of the lake not contained in the previous acts. They provided largely if not entirely permission to dispose of some of the waters taken from the lake by the city of Syracuse to public institutions and to other units outside of the territorial jurisdiction of the city at prices directed to be imposed for such services. We are not concerned in this case with any question concerning the constitutionality of those acts.

We, therefore, are bound to conclude that, by those acts of the Legislature, no exclusive dominion over the waters was given or intended to be given by the State. By the express language used, a contrary intent was clearly expressed. But, even though the intent of the Legislature had been such as the city claims, its purpose could not have been constitutionally accomplished (Smith v. City of Rochester, 92 N. Y. 463; Sweet v. City of Syracuse, supra). It was the duty of the State to control and conserve its water resources for the benefit of all the inhabitants of the State. The public right to the benefit of such resources is an incident of sovereignty. The Legislature, when acting within constitutional limitations and in the interest of the public, may, at will, grant, withhold, or condition the privilege to a municipality of taking water from a public source (Sweet v. City of Syracuse, supra; City of Trenton v. State of New Jersey, 262 U. S. 182; People ex rel. Burhans v. City of New York, 198 N. Y. 439; Ives v. South Buffalo Ry. Co., 201 N. Y. 271, 300, 301; Hathorn v. Natural Carbonic Gas Co., 194 N. Y. 326). The Legislature may delegate the performance of its duty to an agency or commission, but the agency can act only within the scope of the powers delegated expressly or by necessary implication to enable it to carry out the powers expressly given (People ex rel. Municipal Gas Co. v. Public Service Comm., 224 N. Y. 156, 165). Whatever the city got by the statutes upon which it relies was subject to the reserve powers of the State to control, in the public interest, the use of the waters of the lake (People ex rel. Burhans v. City of New York, supra; Matter of Niagara Falls Power Co. v. Water Power & Control Comm., 267 N. Y. 265, 276).

Limited power was committed to the state water supply commission ” by chapter 723 of the Laws of 1905, amended by chapter 415 of the Laws of 1906, wherein it was provided that no municipal corporation or other civil division of the state, and no board, commission or other body of or for any such municipal corporation or other civil division of the state shall, after this act takes effect, have any power to acquire, take or condemn lands for any new or additional sources of water supply, until it has first submitted the maps and profiles therefor to said commission, as hereinafter provided, and until said commission shall have approved the same ” (§ 2). By chapter 56 of the Laws of 1909, the foregoing provision became section 6 of article 2 of the State Boards and Commissions Law (Cons. Laws, ch. 54) and the State Water Supply Commission was continued (§ 5). By chapter 285 of the Laws of- 1910, chapter 56 of the Laws of 1909 was amended but there was no change in the name of the commission or in its powers as above specified. Those acts were limited to situations where the applicant desired “ to acquire, take, or condemn lands for any new or additional sources of water supply ” and, unless such power of condemnation of land was sought, the city had the right to lay its second conduit without the approval of that commission. The second conduit was laid by the city in 1910 and the capacity thereafter of intake No. 1 and of the two conduits was about thirty-two million gallons daily. The Conservation Law (Cons. Laws, ch. 65) was enacted in 1911 (L. 1911, ch. 647) with a “ division of water power and control by which the above statutes as embodied in chapter 56 of the Laws of 1909 were repealed and the Legislature provided that the Conservation Department should have all the powers and be subject to all the duties of the Water Supply Commission as then fixed by law, created a commission and further provided that “ the commission shall have the powers and perform the duties in relation to the supply of potable waters for the various municipalities, civil divisions and inhabitants of the state, set forth in this article, and as may be further provided by law ” (§ 520). At that time the provisions of section 6 of chapter 56 of the Laws of 1909 were carried over to the Conservation Law and there were added the words, so far as material, that no power existed “ to acquire, or to take a water supply or an additional water supply ” without the approval of the commission having jurisdiction over water supply. We need not further trace the statutory changes affecting control over the water resources of the State except to say that the Water Power and Control Commission was created by chapter 619 of the. Laws of 1926 by what has, by amendments, finally emerged as section 396 of the Conservation Law with powers and duties carried over from the antecedent statutes (Conservation Law, § 399). Without change since 1911, no municipal unit has been permitted to acquire, or to take a water supply or an additional water supply ” without the approval of the commission in charge (Conservation Law, § 521).

Consequently, since 1911, no authority existed by which the city of Syracuse could secure an additional supply of water from Skaneateles lake without the approval of its plans by the suitable commission through the Conservation Department. It had conceived the need of an additional supply of water subsequent to the construction of No. 2 conduit and planned to construct a second intake in the lake, to make required additions to the gatehouse in the village of Skaneateles and to build an additional or a No. 3 conduit extending from the lake to the city. It needed to provide for a possible withdrawal of fifty-six million gallons per day as against thirty-two million gallons maximum permissible under the then existing conditions. It started to construct the third conduit without application to any water control authority but had apparently postponed its completion. In 1931 the need of the additional supply became acute. Recognizing the need to procure the approval of the Commission of its plans before it could proceed with the new construction and before it could take any additional water supply from Skaneateles lake or condemn lands and rights as were needed to carry out the project, the city filed its plans and duly made application in writing to the Water Power and Control Commission on September 22, 1931, for approval and ratification of work already done and foi authority to complete the work and to withdraw the additional water supply (Application No. 609; 41 St. Dept. Rep. 28).

It was then the duty of the Commission, before approval could be given, to determine (1) whether the plans proposed are justified by public necessity,” (2) whether they provide for the proper and safe construction of all work connected therewith,” (3) whether they provide for the proper protection of the supply and the watershed from contamination or provide for the proper filtration of such additional supply,” (4) “ whether such plans are just and equitable to the other municipalities and civil divisions of the state affected thereby and to the inhabitants thereof, particular consideration being given to their present and future necessities for sources of water supply, and whether said plans make fair and equitable provisions for the determination and payment of any and all legal damages to persons and property, both direct and indirect, which will result from the execution of said plans or the acquiring of said lands ” (Conservation Law, § 523). In performance of its duties, the Commission proceeded to hearing of the application and, after hearing all parties interested, made its findings and decision on the testimony taken and the facts presented, which decision, within its jurisdiction, is conclusive on the courts (Matter of Niagara Falls Power Co. v. Water Power & Control Comm., 267 N. Y. 265, 268). It ratified what had previously been done with some reservations not here important, modified and approved the plans as modified and authorized the city to divert water from the lake in an amount not in excess of fifty-six million gallons per day, subject to certain conditions, restrictions and limitations, which, in view of its duties as fixed by the Legislature, it had the power and it was its duty to impose, as follows:

6. The Commission reserves the right from time to time to authorize the amount of water found reasonably necessary for the supply of other parts of the State and the inhabitants thereof to be taken from Skaneateles lake and applicant shall have no claim for compensation for the water so diverted, unless it shall render a service in connection therewith;

“ 7. Skaneateles lake and the tributaries and outlet thereof are hereby declared to be the natural and proper sources of water supply for all parts of the drainage basin thereof' and also for any part of the towns of Skaneateles or Elbridge, Onondaga county, and the easterly part of the town of Sennett, Cayuga county, and of the inhabitants thereof. These inhabitants are hereby declared to have a right so to be supplied superior to the rights of the city of Syracuse and applicant may draw from this lake only water which is in excess of the reasonable needs of these inhabitants and, in default of service rendered, shall have no claim for compensation or for damage by reason thereof;

“ 8. Any municipality, water district or similar political subdivision of the State situated in or including any part of all of the towns and parts of towns above named may apply to this Commission for permission to take the water needed for the supply of such applicant and the inhabitants thereof from any pipe line or conduit owned by the city of Syracuse. On approval of such application said city shall permit the necessary connections to be made to its conduits and shall furnish such water, subject to such terms and conditions as may be specified by this Commission in its decision approving and authorizing such taking. All taps and connections shall be made and the necessary meters installed and maintained at the expense of the taker or takers of the water. Connections shall be made in conformity with the reasonable requirements of the proper authorities of the city of Syracuse. Syracuse shall be paid for the water so taken at the rate which may be agreed upon between that city and the taker of the water, or, if they cannot agree, shall, on application of either party, be fixed by this Commission.”

The city accepted the determination and acted upon it, necessarily assumed and agreed to any burdens it imposed and is not now in any position to question the propriety of the limitations, conditions or restrictions fixed or the power of the Commission to impose them (Matter of City of New York, 216 N. Y. 489; Matter of Niagara Falls Power Co. v. Water Power & Control Comm., supra), even though the determination had been ultra vires and void (People v. Baguette Falls Land Co., 100 Misc. Rep. 601; affd., 188 App. Div. 943). Later proceedings before the Commission also emphasize the estoppel. (1) In Application No. 670, filed by the village of Elbridge on October 23, 1931, the applicant, on November 25, 1931, was authorized by the Commission to construct a water supply system and take its water supply by tapping into at least two of the conduits of the city of Syracuse. The city objected to the power of the Commission to permit interference with its waterworks system or with its alleged exclusive rights to the Skaneateles lake water supply under chapter 631 of the Laws of 1906 and antecedent acts of the Legislature. The determination of the Commission to allow Elbridge to take the water from the Syracuse mains was based not only upon the merits of the application but, in large part, on the conditions and reservations contained in Application 609. In that determination the city also acquiesced and is furnishing Elbridge water through its mains and through the tap, the construction of which the Commission authorized. (2) On February 2, 1935, the village of Jordan filed Application No. 921 with the Commission for authority to construct a water system and procure its supply from Skaneateles lake through the Syracuse conduits by tapping into the mains of the village of Elbridge. Due notice of the application was published and hearing held and, on March 19, 1935, the application was granted expressly under the conditions and reservations of power contained in Application 609. The water system was accordingly constructed and Jordan has since used water from the Syracuse conduits through the tap in the Elbridge mains. The city of Syracuse has taken no steps to review that determination. In any event, the imposition of those conditions was a necessary incident to the power of the Commission to approve Application No. 609.

Application No. 1049, the subject of the present proceeding, is based upon the authority reserved for its benefit by the Commission in granting approval of the city’s Application 609. The reasonableness of the quantity which Jordan may take from the city conduits and the necessity for Jordan to procure its water supply from Skaneateles lake are fully sustained by the evidence and are not open here for attack. Neither was the fixing of the rate per hundred cubic feet of water taken by the village as a service charge arbitrary or capricious. The service rate to be charged was the sharply contested question in the case. The Commission had previously provided that the city should have no claim for compensation for the water so diverted, unless it shall render a service in connection therewith ” (Application 609) and to this condition the city consented when it accepted the benefits of the approval of its plans to take the additional water supply from the lake. No part of the water taken by the village passes through the city mains within the city of Syracuse. It is taken through the Elbridge tap of the city conduits about five and one-half miles from the lake and about twelve or thirteen miles from Syracuse. The actual service to be rendered by the city, the testimony shows, includes the use of part of the services of the city connection, attending to the maintenance of the watershed of Skaneateles lake and attending to the operating and maintaining of the city intakes in Skaneateles lake, the gates, the chlorinating equipment and chlorinating the water and part of the conduit or conduits up to the point of tap.” Rates for service charges were fixed under applicable principles adopted by the Commission on August 20, 1936, which are shown to be sound under good engineering practice. The total annual cost to the city, after considering interest on investment and actual expenditures exclusive of debt service, of delivering water from the lake to the Elbridge tap was found to be $266,357, some $6,000 more than testified to by the city engineer or 1.82 cents per hundred cubic feet on the basis of $24.32 per million gallons. The city engineer testified that the cost was $24 per million gallons. Other testimony and records were considered by the Commission. The service rate was fixed at 2 cents per hundred cubic feet taken. It is immaterial" what other communities may voluntarily pay to the city under other conditions of necessity and service for water delivered to them whether under unwarranted assumptions of the legal rights of ownership by the city of the waters delivered or not. The question of fact as to the propriety of the service rate fixed was one for determination by the Commission on the facts presented here. There being sufficient evidence to support its finding, its determination is conclusive on the courts (Matter of Niagara Falls Power Co. v. Water Power & Control Comm., supra).

The order of the Appellate Division should be reversed, with costs, and the determination of the Commission affirmed.

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

Order reversed, etc.


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    Louis H. Pink, Superintendent of Insurance of the State of New York, as Liquidator of Guardian Casualty Company, Respondent, v. American Surety Company of New York, Appellant.

      Argued May 20, 1940;
    decided July 24, 1940.

      E. Myron Bull and Andrew E. Stewart for appellant.
    The contract is so uncertain with respect to a trust that defendant should be permitted a trial. (Smith v. Bodine, 74 N. Y. 30; Everett v. De Fontaine, 78 App. Div. 219; Hathaway v. Clendening Co., 135 App. Div. 407; Freeman v. Miller, 157 App. Div. 715; Mariner, Inc., v. Hughes, 235 App. Div. 143; Hill v. Curtis, 154 App. Div. 662; Gordon Co. v. Garcia Sugars Corp., 241 App. Div. 155; Hutchinson v. Birdsong, 211 App. Div. 316; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519; Chicago Home for Girls v. Carr, 300 Ill. 478; Cone v. Cullen, 108 Conn. 126; Chitwood v. Farm Bureau Mut. Automobile Ins. Co., 117 W. Va. 797; Matter of Bacon Co., 261 Fed. Rep. 109; Gillet v. Bank of America, 160 N. Y. 549; Genesee Wesleyan Seminary v.
      U. S. F. & G. Co., 247 N. Y. 52; Commercial Bank v. Armstrong, 148 U. S. 50; Jennings v. U. S. F. & G. Co., 294 U. S. 216.) The relationship between the parties was contractual and was not one of trust and confidence. There was no special relationship upon which a trust may be predicated. (Allemannia Ins. Co. v. Firemen's Ins. Co., 209 U. S. 326; Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235; Greenman v. General Reinsurance Corp., 237 App. Div. 648; 262 N. Y. 701; Meinhard v. Salmon, 249 N. Y. 458; Wendt v. Fischer, 243 N. Y. 439; April v. April, 272 N. Y. 331; Doyle v. Chatham & Phenix Nat. Bank, 253 N. Y. 369; Browning v. Fidelity Trust Co., 250 Fed. Rep. 321; Fidelity & Deposit Co. v. Pink, 302 U. S. 224; Railway & Express Co. v. United States, 56 Fed. Rep. [2d] 687; Jennings v. U. S. F. & G. Co., 294 U. S. 216; Britton v. Ferrin, 171 N. Y. 235; Goodrich v. Dunbar, 17 Barb. 644.)

      Irvin Waldman and Alfred C. Bennett for respondent.
    Salvage is unmistakably a trust fund under the terms and conditions of the contract which is clear and unambiguous and may not be varied, altered or contradicted, by custom, usage or so-called practical construction. (Standard Marine Ins. Co. v. Westchester Fire Ins. Co., 93 Fed. Rep. [2d] 286; Taylor v. Benham, 5 How. 233; McKee v. Lamon, 159 U. S. 317; Greenman v. General Reinsurance Corp., 237 App. Div. 648; 262 N. Y. 701; Morris & Co. v. Skandinavia Ins. Co., 279 U. S. 405; Kerber Straw Hat Corp. v. Lincoln, 239 App. Div. 727; 266 N. Y. 410; National Surety Co. v. Massachusetts Bonding & Ins. Co., 19 Fed. Rep. [2d] 448; Hall v. McMahon, 10 Abb. Pr. 319; Mygatt v. New York Protection Ins. Co., 21 N. Y. 52; DePeyster v. American Fire Ins. Co., 6 Paige, 486; Brainard v. New York C. R. R. Co., 242 N. Y. 125; Hopwood Plays, Inc., v. Kemper, 263 N. Y. 380; Clark v. Carolina Y. R. Ry. Co., 225 N. Y. 589; Carthage Tissue Paper Mills v. Village of Carthage, 200 N. Y. 1; Britton v. Ferrin, 171 N. Y. 235; Fidelity & Deposit Co. v. Pink, 302 U. S. 224.) The cause of action asserted against defendant as a fiduciary may not be defeated by setoffs. (Pink v. Title Guarantee & Trust Co., 274 N. Y. 167; Britton v. Ferrin, 171 N. Y. 235; Morris v. Windsor Trust Co., 213 N. Y. 27; Allaire v. Silberberg, 210 App. Div. 109; Ritter v. Mountain Camp Holding Corp., 252 App. Div. 602; Atkinson v. Fox, 242 App. Div. 707; Bank of United States v. Braveman, 259 N. Y. 65; Van Dyke v. McQuade, 85 N. Y. 616; Kerber Straw Hat Corp. v. Lincoln, 239 App. Div. 727; 266 N. Y. 410.)
   Rippey, J.

On June 2, 1934, the Superintendent of Insurance of the State of New York was directed by an order of the Supreme Court of Erie County, upon a finding of insolvency, to take possession of the property and affairs of the Guardian Casualty Company, a domestic corporation, and to liquidate its business, pursuant to the provisions of former article XI of the Insurance Law (Cons. Laws, ch. 28). By the terms of that order, the Superintendent was vested with title to all of the property, contracts and choses in action 'of the insolvent for the purposes of the liquidation. In this litigation, the question arises whether the defendant may offset certain claims which it has against the insolvent arising out of losses it incurred as surety for the insolvent against claims of the liquidator arising out of contracts by which the insolvent reinsured certain risks assumed by defendant.

Prior to the entry of the order of liquidation, the insolvent and the defendant were engaged in the business of insurance and of reinsurance and had entered into two general reinsurance agreements, referred to in the complaint, which applied to risks which each might insure for the other. Plaintiff alleged and defendant admitted that, under such agreements, the Guardian Casualty Company reinsured various risks which the defendant had assumed in the course of its operations, and that the defendant had incurred and paid losses on such risks, had made demand upon the Guardian Casualty Company for its proportion of said losses am had received payment thereof from the latter in the amounts demanded. Plaintiff alleged that thereupon defendant instituted salvage proceedings “ on behalf of itself and Guardian Casualty Company in order to recoup the said losses suffered and subsequently did recoup and recover salvage of which Guardian Casualty Company and the plaintiff herein as Liquidator is entitled to the sum of Nine Thousand Six Hundred Eighty Seven and 56/100 ($9,687.56) Dollars,” that plaintiff demanded payment thereof less an offset of $413.52 to which defendant was entitled and that payment was refused. Defendant admitted that it instituted the salvage proceedings and recovered the sum mentioned in the complaint but denied that it was entitled to offset only the item set up in the complaint and as partial defenses set forth two other items which it asserts it is entitled to set off and separately alleged that these items were assigned to it subsequent to the date on which the Guardian Casualty Company was declared insolvent by assignments procured without any purpose of using the rights to be acquired by way of setoff. At Special Term an order was made striking out the separate defenses and setoffs and upon appeal the order of the Special Term was affirmed. The complaint, on its face, stated a good cause of action at law as will later appear. The plaintiff thereupon entered judgment for the amount demanded in the complaint with interest and costs. Defendant jhas appealed to this court by our permission and brings up for review the order of the Appellate Division which affirmed the order of the Special Term striking out the separate and partial defenses and setoffs.

Two general agreements for reinsurance were dated respectively July 16, 1928, and April 1, 1930, and completely fix the rights and liabilities of the parties upon either undertaking reinsurance of specific risks for the other. So far as material to the determination of this suit, the provisions were the same in both contracts and similar to the provisions of the Standard Form of Beinsurance Agreement adopted January 15, 1930, by the Surety Association of America. Under the agreements, specific risks were later assumed by defendant and reinsured, in part, by the Guardian Casualty Company. No territorial limit was specified within which risks might be undertaken. There being no stipulations to the contrary, there was no privity between the parties first insured by defendant and the reinsurer and no claim for loss could be maintained by those parties against the latter (Herckenrath v. American Mutual Ins. Co., 3 Barb. Ch. 63; Greenman v. General Reinsurance Corp., 237 App. Div. 648; affd., 262 N. Y. 701). The risks of defendant incurred under its original insurance policies were the sole objects of the reinsurance (Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235; Jackson v. St. Paul Fire & Marine Ins. Co., 99 N. Y. 124). The agreements were to indemnify the defendant only for losses incurred by the latter of specific risks. Arising out of the losses on those specific risks, the salvage referred to in the complaint was obtained.

Under the agreements the Guardian Casualty Company, as reinsurer, received no collateral or indemnity of any kind. It was provided that the reinsured [defendant in this case] shall take charge of all matters arising ” under the bond in connection with claims. It shall decide whether or not it is liable thereunder, and shall determine the amount of its liability in case it decides that it is Hable. It shalllsettle or compromise any claims, and defend, settle, or compromise any suits and take such other action, not involving the extension of credit or the advancing of money, in connection with any claim matter arising under the bond, as it may deem advisable. Any such decision, determination, settlement, defense, compromise or other action of the reinsured in connection with any claim matter arising under the bond shaU be final and conclusive and unconditionally binding upon the reinsurer. * * * The reinsured’s authority to handle and settle claims in accordance with its own judgment as outlined above shall not be annulled, abridged, or otherwise affected if the reinsured consults the reinsurer, by letter, in conference, or otherwise, with reference to such handling and settling of claims ” and the reinsurer shaH stand its proportionate share oU any loss under the bond and of costs and expenses and interest as defined by the terms of the agreement, Sole control and direction of any claims and suits were thus in the hands of the reinsured, and its action and determination thereon, in the absence of fraud or bad faith, were conclusive on the reinsurer. The reinsurer, however, was entitled, under the contract, to share with the reinsured any collateral security or indemnity held by the reinsured or any right of action possessed by the reinsured in connection with the bond and to share with the reinsured any salvage or recovery in the proportion that the amount of reinsurance bore to the amount of the bond.

Thus, under the terms of the contract the reinsurer was entitled to its proportion of the salvage recovered by defendant. Nevertheless, only defendant was permitted to secure it in the first instance. 'The Guardian Casualty Company could not question any decision made or action taken by defendant in connection therewith. Nevertheless, defendant was bound to act in good faith. By the express terms of the contracts the agreements were regarded by the parties hereto as an honorable engagement rather than as a mere legal obligation.” The salvage was received for a specific purpose, by the terms of the contracts, to reimburse both the reinsured and reinsurer proportionately for their losses. Out of its receipt, no relation of debtor and creditor was created. In relation to any salvage collected to recoup losses on specific risks under the reinsurance contracts the reinsured was a trustee for the reinsurer as to moneys in its hands belonging to the latter or to be applied to a specific purpose (Kane v. Bloodgood, 7 Johns. Ch. 90, 110; National Surety Co. v. Massachusetts Bonding & Ins. Co., 19 Fed. Rep. [2d] 448, 452; Taylor v. Benham, 5 How. [U. S.] 233, 274; McKee v. Lamon, 159 U. S. 317) and an action at law might be maintained to recover the proportion to which the plaintiff was entitled (Kane v. Bloodgood, supra).

Defendant may not avoid the above result by proof of general custom or usage for such may not be interposed to alter, vary or contradict unambiguous contractual provisions or modify or change legal obligations assumed by the parties under their contracts (Kerber Straw Hat Corp. v. Lincoln, 266 N. Y. 410).

The risks which the defendant assumed and as to which it sustained losses which it sought to set off against the plaintiff’s cause of action had no connection with the reinsurance contracts. The Guardian Casualty Company sought to do business in the State of Louisiana. As a condition precedent to its right to do business in that State it was required to file a bond with the Secretary of State with an approved surety for fifty thousand dollars for the purpose of guaranteeing prompt payment of all claims arising and accruing to any person during the term of the bond by virtue of any contract of insurance or indemnity or fidelity or guarantee contracted in the State whenever such payment should become due and should promptly pay any judgment obtained arising out of any such contract. (Act No. 58 of the Extra Session of the Legislature of the State of Louisiana for the year 1921.) It thereupon applied to the defendant for a surety bond and in that application agreed to indemnify and save the surety harmless from and against every claim, demand, liability, cost, charge, counsel fee * * *, expense, suit, order, judgment and adjudication whatsoever.” Upon that agreement the bond was executed and filed. It was upon that agreement that claims are presented against the Guardian Casualty Company by the def endant. The Guardian Casualty Company delivered its workmen’s compensation and employers’ liability policy of insurance to the Great Southern Lumber Company whereby it agreed to protect that company and its subsidiaries, among which was the Bogalusa Paper Company, Inc., from claims under the Workmen’s Compensation Law. The setoffs are based upon payments by the defendant under its surety bond of awards to claimants against those companies duly made under the Workmen’s Compensation Law._Prior to insolvency, the Guardian Casualty Company paid these awards as they became due. From and after its insolvency it failed to pay and the defendant was required to make those subsequent payments. Thus any claim against the plaintiff in this action arose subsequent to the time of his appointment as liquidator.

Offsets are allowable in the event only that they come within the permissible provisions of former section 420 of the Insurance Law (now section 538, subd. 1) which provide, with exceptions not here material, that “ in all cases of mutual debts or mutual credits between the insurer and another person, such credits and debts shall be set off and the balance only shall be allowed or paid.” It is clear from the above that the claims of the parties to this action were not held in the same right, that at the time of the insolvency there was no debt in so far as the offsets claimed by the defendant were concerned and there were consequently no mutual debts within the meaning of the above-cited provision of the Insurance Law (Morris v. Windsor Trust Co., 213 N. Y. 27; Pink v. Title Guarantee & Trust Co., 274 N. Y. 167, 175, 176). In 1934 after compromise and payment of the claims by defendant, assignments were made and delivered by the Great Southern Lumber Company to defendant of the claims of the former against the Guardian Casualty Company, but that fact does not change the result.

The judgment appealed from should be affirmed, with costs.

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

Judgment affirmed.


text:
    Sam Terner, Respondent, v. Glickstein & Terner, Inc., Appellant.
    Argued May 20, 1940;
    decided July 24, 1940.

      Milton D. Goldman, Leonard Mook and Harry Katz for appellant.
    Equity will not entertain jurisdiction where there is an adequate remedy at law. (Robinson v. Whitaker, 205 App. Div. 286; Boissevain v. Boissevain, 129 Misc. Rep 5; Daly v. Sobieski, 123 Misc. Rep. 176; Low v. Swartwout,
      171 App. Div. 725; Chadbourne v. Mayer, 207 App. Div. 754; Gosselin Corp. v. Tapparelli, 191 App. Div. 580; Black v. Vanderbilt, 70 App. Div. 16; Standard Film Service Co. v. Alexander Film Corp., 209 N. Y. Supp. 924; Consolidated Rubber Tire Co. v. Firestone Tire & Rubber Co., 135 App. Div. 805; Spring v. Fidelity Mutual Life Ins. Co., 183 App. Div. 134; Fetzer v. Title Guarantee & Trust Co., 250 App. Div. 567.) Actions instituted by employees pursuant to section 16b of the Fair Labor Standards Act of 1938 (U. S. Code, tit. 29) are actions at law and not in equity. (Moreno v. Picardy Mills, Inc., 17 N. Y. Supp. [2d] 848; Emerson v. Lincoln Candies, Inc., 17 N. Y. Supp. [2d] 851; Cox v. Lykes Brothers, 237 N. Y. 376.) Plaintiff cannot maintain an action in equity for an accounting unless a trust or fiduciary relationship exists between the parties. (Moore v. Coyne, 113 App. Div. 52; Schantz v. Oakman, 163 N. Y. 148; Marvin v. Brooks, 94 N. Y. 71; Tiffany v. Hess, 67 Misc. Rep. 258; Lee v. Washburn, 80 App. Div. 410; Yuengling v. Betz, 120 App. Div. 709; Rivelson v. Silverstein, 65 App. Div. 614; Pelkey v. Pelkey, 236 App. Div. 55.)

      Morton Miller and Joseph Shankey for respondent.
    The complaint states facts sufficient to constitute a cause of action. (Crown Embroidery Works v. Gordon, 190 App. Div. 472; Case v. First Nat. Bank, 59 Misc. Rep. 269; Emerson v. Mary Lincoln Candies, Inc., 17 N. Y. Supp. [2d] 851.) The appellant is in reality a trustee and the respondent is, therefore, entitled to an accounting. (Newton v. Porter, 69 N. Y. 133; Lightfoot v. Davis, 198 N. Y. 261; American Sugar Refining Co. v. Fancher, 145 N. Y. 552; Converse v. Sickles, 16 App. Div. 49; 161 N. Y. 666; Roberts v. Ely, 113 N. Y. 128; Falk v. Hoffman, 233 N. Y. 199; Shank v. Schuchman, 212 N. Y. 352; Fur & Wool Trading Co. v. Fox, Inc., 245 N. Y. 215; Kerber Straw Hat Corp. v. Lincoln, 239 App. Div. 727; Talmudic Literature Publishers, Inc., v. Lewin, 226 App. Div. 1; Rhodes v. Little Falls Dairy Co., 230 App. Div. 571.) The form of the action, whether it be at law or in equity, does not warrant a dismissal of the complaint. (Port v. Holzinger, 212 App. Div. 124; Bloom v. Gelb, 227 App. Div. 619; Sasanow v. Williamsburg Savings Bank, 256 App. Div. 928.)
   Rippey, J.

Plaintiff, a former employee of defendant, alleging that he has no adequate remedy at law, has brought this action in equity in behalf of himself and of others similarly situated in which he seeks judgment directing the defendant to account for and pay to the plaintiff, and all others similarly situated, the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages; directing the defendant to pay a reasonable attorney’s fee to the attorneys for the plaintiff herein, together with the costs and disbursements of this action ” and for such other and further relief as may seem just and proper.

The motion to dismiss the complaint for failure to state facts sufficient to constitute a cause of action was made on the sole ground that, upon the face of the complaint, it appears that plaintiff has an adequate remedy at law. We do not consider whether a good cause of action at law might be spelled out from the allegations of the complaint. The complaint here is framed in equity and equitable relief alone is demanded and if the action does not he in equity for the reason urged by defendant, the complaint must be dismissed (Gosselin Corp. v. Mario Tapparelli Fu Pietro of America, Inc., 191 App. Div. 580; affd., 229 N. Y. 596; Voehl v. Title Guarantee & Trust Co., 266 N. Y. 662; New York State E. & G. Corp. v. Maltbie, 241 App. Div. 780; affd., 266 N. Y. 521).

Plaintiff alleges that defendant was, at the times mentioned in the complaint, engaged in the business of manufacturing, transporting and selling merchandise in interstate commerce, the goods being produced by plaintiff and others in behalf of whom he brought this action; that defendant paid to such employees wages at less than the rate of twenty-five cents per hour in violation of the provisions of section 6 of the Fair Labor Standards Act of 1938 of the United States of America (52 U. S. Stat. 1060); that he and his fellow workers were employed by defendant for work weeks longer than forty-four hours without compensation for such employment in excess of forty-four hours in such work weeks at a rate not less than one and one-half times the regular rates in violation of section 7 of such act and that demand was made for compliance with the provisions thereof .and compliance refused.

During the period covered by the complaint, defendant was required under section 6 of the act (U. S. Code, tit. 29, § 206) to pay to its employees wages of not less than twenty-five cents per hour, and, under section 7 of the act (U. S. Code, tit. 29, § 207), to employ them for not more than forty-four hours per week, in any event unless compensation was paid for employment in excess of those hours at a rate not less than one and one-half times the regular rate. Section 16, subdivision b, of the act (U. S. Code, tit. 29, § 216) reads as follows: (b) Any employer who violates the provisions of section 206 or section 207 of this chapter shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated, or such employee or employees may designate an agent or representative to maintain such action for and in behalf of all employees similarly situated. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”

The remedy above provided is one solely for liquidated money damages. No accounting is necessary to determine the amount to be recovered but if need of discovery exists a complete and adequate remedy is provided by other means than by this action (Civ. Prac. Act, §§ 288, 295; Rules Civ. Prac. §§ 122-133). Even though an accounting were required to ascertain the amount of damages, that fact would be insufficient to support a claim for equitable relief unless a fiduciary relationship were shown, and none is pleaded (Schantz v. Oakman, 163 N. Y. 148; Moore v. Coyne, 113 App. Div. 52). The remedy at law, as provided by the statute, is complete, adequate, efficient, plain and effective. Plaintiff’s rights are clear and the amount which. he is entitled to recover known to him. The right of recovery is not based on any confidential or fiduciary relation between the parties. No trust relationship is alleged or in fact exists. The mere fact that the action is representative in form is not decisive; no one of the plaintiffs has any interest in recovery by others. The primary right arises from a tort and the right of action is not dependent upon any equitable feature or incident (Pomeroy’s Equity Jurisprudence [4th ed.], § 178). Under such conditions, an action in equity will not lie.

The orders should be reversed, with costs to defendant in all courts, and the motion to dismiss the complaint granted, with ten dollars costs. The first question is answered in the affirmative. The second question is not answered.

Finch, Seaes, Lewis and Conway, JJ., concur; Lough-ran, J., dissents; Lehman, Ch. J., taking no part.

Orders reversed, etc. '


author: Lewis, J.

text:
    In the Matter of Sigmar K. R. Hilfer, Appellant, against Board of Regents of the University of the State of New York, Respondent.
    Argued May 21, 1940;
    decided July 24, 1940.

      Roy P. Monahan, Arthur C. Goldberg and James F. Sharkey for appellant.
    The Legislature intended that subdivision 4 of section 1265 of the Education Law (Cons. Laws, ch. 16) should be strictly complied with. (People ex rel. Lawton v. Snell, 216 N. Y. 527; Wuesthoff v. Germania Life Ins. Co., 107 N. Y. 580; People ex rel. Barnes v. Gardner, 24 N. Y. 583; People ex rel. Greenberg v. Reid, 151 App. Div. 324; Bradley v. Buffalo, N. Y. & E. R. R. Co., 34 N. Y. 427; State v. Robinson, 253 Mo. 271.)

      John J. Bennett, Jr., Attorney-General (Bernard Bienstock of counsel), for respondent.
    The procedure and findings of the Medical Grievance Committee were in conformity with the provisions of section 1265 of the Education Law (Cons. Laws, ch. 16). (Salducco v. Etkin, 268 N. Y. 606.)
   Lewis, J.

In a proceeding under article 78 of the Civil Practice Act we review an order of the Appellate Division confirming a determination by the Board of Regents of the University of the State of New York which suspended for two years the petitioner’s license to practice medicine.

At the threshold of our inquiry a question of procedure arises which controls our decision. Having been charged under the provisions of section 1264, subdivision 2 (a) of the Education Law (Cons. Laws, ch. 16) with fraud and deceit in the practice of medicine, the petitioner, as a duly licensed physician, was entitled to have his guilt determined in accord with the definite procedure prescribed by the Legislature. Under section 1265 of the Education Law provision is made for the appointment by the Board of Regents of a “ Committee on Grievances ” consisting of ten members whose qualifications and tenure are clearly defined. To that committee is granted statutory jurisdiction “ to hear all charges against duly licensed physicians of this state ” for certain statutory violations, including the charges preferred against the present appellant (§ 1265, subd. 4). After a hearing upon such charges the committee shall determine the same upon the merits and transmit its determination with the record to the Department of Education which, after due notice and a hearing and in the event such practitioner is found guilty, may revoke or suspend his license or impose such disciplinary measures as the facts warrant. As to procedure before the Committee on Grievances, the statute provides that after written charges have been filed and a copy thereof and notice of the time and place of a hearing thereupon have been served upon the accused practitioner, the chairman may appoint a subcommittee which shall hear the charges in the first instance and make a written report of its findings and recommendations to the Grievance Committee. The statute further provides that said grievance committee may thereupon act upon said recommendation as it shall deem fit, or may take further testimony if the same seem desirable in the interest of justice.” (§ 1265, subd. 4.)

Then follows prescribed procedure which, in one vital requirement, was not followed in the proceeding before us: “ * * * the said committee shall determine said charges upon their merits (the vote of each member of said committee to be recorded as part of the committee’s findings). If by unanimous vote the practitioner is found guilty of such charges or any of them, said committee shall transmit to the department the record, findings and determination wherein and whereby such practitioner has been found guilty, and their recommendation, and the regents after due hearing shall in their discretion execute an order accepting or modifying such determination of said committee as herein-above provided. If the practitioner is found not guilty, said committee shall order a dismissal of the charges, and the exoneration of the accused.” (Emphasis supplied.) (Education Law, § 1265, subd. 4.)

We are convinced by the record that the Committee on Grievances and its subcommittee before which the charges were heard, were constituted according to statutory requirements and that the appellant’s challenge in that regard is ■without merit.

We, therefore, pass to a consideration of the vote by the Committee on Grievances upon the resolution offered at its meeting of December 1, 1938, which purports to have determined on the merits that the appellant was guilty of fraud and deceit in the practice of medicine as charged. The record shows that the entire Grievance Committee — comprising ten members — were present at that meeting. However, it appears from the minutes of the meeting, that only nine members voted for the resolution. One member is recorded as “ not voting.”

It is suggested by counsel for the respondent that although adopted by a non-unanimous vote of the committee members the resolution of December 1, 1938, which determined on the merits that appellant was “ guilty of the charges of fraud and deceit in the practice of medicine ” was made legally sufficient by the fact that, at a subsequent meeting of the same committee held January 5, 1939, the member who had been recorded as not voting ” for the resolution of December 1, 1938, was recorded as voting for a resolution which fixed the form of disciplinary action to which appellant should be subjected and which the committee recommended to the Department of Education. We regard the suggestion as without merit. The vote recorded at the meeting of January 5, 1939, will not serve to give unanimity to the vote recorded upon the resolution of December 1, 1938. The statute provides that “ the vote of each member of said committee [shall] be recorded as part of the committee’s findings.” (§ 1265, subd. 4.) The official minutes of the meeting held on the latter date are before us. They record one member as not voting ” for the resolution by which the Committee on Grievances expressed its determination on the merits ” that the appellant is guilty of the charges of fraud and deceit in the practice of medicine.” Upon those minutes, which concededly do not record the “ unanimous vote ” of the committee as required by statute, rests the respondent’s determination of the appellant’s guilt. The procedure prescribed by the Legislature is not thus satisfied.

In an effort to protect the public against the diagnosis and treatment of disease and physical disorders by those unlearned in medical science and untrained in its practical application, the Legislature requires of a medical practitioner that he be licensed. Rigid qualifications must be met before a license may be granted (Education Law, §§ 1251, 1256); rigid statutes define the duties thereafter to be obeyed by the licensee. (Id. § 1264.) Such a license is a valuable right which has been given statutory protection. As the Legislature has protected the public against the quack and the charlatan, so it gives protection to the physician whose license is threatened by charges of professional misconduct. He is to be personally served with any charges and is afforded a hearing before a statutory tribunal; he is given the right to counsel and definite procedure is prescribed by which a determination of the charges may be reached. “ The mode or way in which the act shall be done or the determination reached * * * must be strictly pursued, otherwise the act or the determination will be void.” (People ex rel. Lawton v. Snell, 216 N. Y. 527, 534. See, also, 2 Lewis’ Sutherland Statutory Construction [2d ed.], § 627, p. 1135; Crawford on Statutory Construction, § 246, p. 482.)

In the present case the determination of the appellant’s guilt by the non-unanimous vote of the Committee on Grievances does not conform with the mandatory requirements prescribed by the Legislature in such circumstances. It follows that the order of the Appellate Division should be reversed and the supplemental petition herein granted, with costs in all courts.

Lgughran, Finch, Rippey, Sears and Conway, JJ., concur; Lehman, Ch. J., taking no part.

Order reversed, etc.


text:
    The People of the State of New York, Plaintiff, v. Edward C. Dethloff, Respondent, and Samuel Sapowitch, Appellant.
    Argued June 12, 1940;
    decided July 24, 1940.

      James O. Moore, Daniel J. Kenefick and Philip Halpern for defendant-appellant.
    The intention of the Legislature in adopting section 2595 of the Code of Civil Procedure is clear and unmistakable: (1) To have the first appointment of a public administrator for Erie county made immediately upon the creation of the office; (2) to have the term of the first appointee run from the date of the appointment to the expiration of five years from the following January first; (3) to have subsequent appointments made every five years thereafter, to wit, on January first, for terms of five years each. (Matter of Ahlers, 141 App. Div. 891; 201 N. Y. 592; Travelers Ins. Co. v. Padula Co., 224 N. Y. 397; Matter of Bickerton, 232 N. Y. 1; Archer v. Equitable Life Assur. Soc., 218 N. Y. 18.) The statute should be read and construed in the light of the common law rule that an appointment to office in anticipation of a vacancy therein is invalid if the officer making the appointment is no longer in office when the vacancy occurs. So read and construed, it is clear that the Legislature did not intend to authorize a prospective appointment of public administrator of Erie county by a Surrogate whose own term of office was to expire before the commencement of his appointee’s term. (People v. Fitzgerald, 180 N. Y. 269; People ex rel. Smith v. Kenyon, 241 App. Div. 177; 265 N. Y. 537; Ferkin v. Board of Education, 253 App. Div. 751; Matter of Towne v. Porter, 128 App. Div. 717; State ex rel. Morris v. Sullivan, 81 Ohio St. 79; Oberhaus v. State, 173 Ala. 483; People ex rel. Sweet v. Ward, 107 Cal. 236; Ivy v. Lusk, 11 La. Ann. 486; State ex rel. Bownes v. Meehan, 45 N. J. L. 189; Dickinson v. Jersey City, 68 N. J. L. 99) State ex rel. Attorney-General v. Thompson, 9 Ohio C. C. 161.)

      Henry W. Killeen, Thomas C. Burke and Francis J. Maloney for defendant-respondent.
    The Legislature had unrestricted authority to provide how and when appointments to the office of public administrator of Erie county should be made, including power to provide for an appointment in anticipation of the expiration of a term. (Sun Publishing Assn. v. Mayor, 8 App. Div. 230; 152 N. Y. 257; People ex rel. Wood v. Draper, 15 N. Y. 532; People ex rel. Ward v. Scheu, 167 N. Y. 292; Morrall v. County of Monroe, 271 N. Y. 48; Palmer v. Stubley, 57 Misc. Rep. 480.)
   Lewis, J.

Each of the two defendants claims the office of Public Administrator of Erie County by legal appointment. Recognizing in the controversy a matter of public concern, and in an effort to bring about a judicial determination of the question involved, the Attorney-General invoked procedure authorized by sections 546-548 of the Civil Practice Act and in due course the matter came before the Appellate Division as a submitted controversy.

The claim of the defendant-respondent Dethloff, which has been upheld by the Appellate Division, rests upon his appointment on September 7, 1939 — to take office January 1, 1940 —by Surrogate Montesano, who was then serving as Surrogate of Erie County under an interim appointment terminating December 31, 1939, made necessary by his predecessor’s death in office.

The claim of the defendant-appellant Sapowitch rests upon his appointment on January 1, 1940, „ by Surrogate Vandermeulen who had been duly elected Surrogate and assumed office on that date. -

As each defendant asserts that bis appointment was made under authority given to the Surrogate of Erie County by section 125 of the Surrogate’s Court Act (Laws of 1920, ch. 928) — formerly section 2595 of the Code of Civil Procedure (Laws of 1914, ch. 443) — our problem is one of statutory construction to determine the precise authority granted by the Legislature to the appointing officer. The material portions of the statute to be construed are as follows:

The surrogate of the county of Erie shall, within ten days after September first, nineteen hundred and fourteen, and every five years thereafter, except as hereinafter provided, appoint a suitable person as public administrator of and for said county, to take office immediately, and to hold office for the term of five years from the first day of January succeeding his appointment, unless sooner removed for cause.

“ In case of a vacancy in said office by reason of ‘death, resignation or otherwise, said surrogate shall fill the same by appointing a suitable person as public administrator, to take office immediately upon his appointment and qualification, and hold for the term of five years from the first day of January succeeding his appointment, unless sooner removed for cause. * * * ”

At the outset we note among the conceded facts that on September 7, 1939, when the defendant Dethloff was appointed, there was an incumbent in the office of Public Administrator whose term of office did not expire until December 31, 1939. It also appears that in the formal appointment of each defendant his term is designated as “ beginning on the first day of January, 1940, and expiring at midnight on the 31st day of December, 1944.”

The question is thus presented — did the statute under consideration authorize Surrogate Montesano, whose term of office expired December 31, 1939, to anticipate a vacancy which normally would not occur until his term had expired and to appoint on September 7, 1939, a Public Administrator to take office January 1, 1940?

The judgment which we review, in effect, answers that question in the affirmative. In reaching that conclusion we believe the Appellate Division erred in adopting an interpretation of the statute which ascribes to the Legislature an intent to introduce a system of prospective or anticipatory appointments despite a long-standing public policy and a well-established common law rule to the contrary and in the absence of a clear indication in the statute of an intent to bring about such a change. Furthermore, by excising from the statute the phrase “ to take office immediately,” as being in irreconcilable conflict with the remainder of the statute, we believe the Appellate Division has discarded the phrase which, more than any other, discloses the true intent of the act and gives point to much of the statute which remains. !

In that connection it is not difficult to understand why the phrase to take office immediately ” must be disregarded if the view which has thus far prevailed is to be adopted. The defendant Dethloff concedes that he could not have taken office under his appointment until a vacancy occurred on January 1, 1940. He asserts that he had the right to take office on that date solely by reason of his appointment which had been made on September 7, 1939. If he is correct in the latter assertion, and if he gives full effect to the language which the Legislature chose to employ to express its intent, it must follow that he was required to take office immediately ” after his appointment on September 7, 1939. But on that date no vacancy in the office existed. It is this anomalous position in which the respondent is thus placed which prompted the Appellate Division to reject the phrase as being in conflict with what it conceives to be the purpose of the act.

Viewed in the light of settled rules of construction and of certain common law principles, we find in the statute a grant by the Legislature to the Surrogate of Erie County of a power of appointment which we believe was improperly exercised in favor of the defendant Dethloff. If the Legislature intended that the normal method of appointment should give way to the abnormal practice of permitting prospective appointments which, as in the instant case, may become effective after the appointing officer is out of office, we would expect to find some clear indication of an intent to abrogate a well-established common. law rule. That rule, as stated by Judge Vann in People v. Fitzgerald (180 N. Y. 269, 274), is “ * * * that an appointment to office in anticipation of a vacancy therein is good only in case the officer making the appointment is still in office when the vacancy occurs.” (See, also, People ex rel. Smith v. Kenyon, 241 App. Div, 177, 180; affd., 265 N. Y. 537; State ex rel. Morris v. Sullivan, 81 Ohio St. 79; 26 L. R. A. [N. S.] 514; Throop on Public Officers, § 92; Mechem on Public Offices and Public Officers, § 133.)

Of course it is true, as suggested by the Appellate Division, that it is always within the power of the Legislature, subject to constitutional limitations, to change the common law rule or to create exceptions to it. But we must read the statute in the light of the common law in force at the time of its enactment. The Legislature will not be presumed to have intended a change in a settled rule of common law then in force, unless it employs language which clearly imports such intention. When a change is intended, “ * * * it is not deduced from words of doubtful meaning. Uncertainties are resolved against consequences so drastic.” (Hopkins v. Lincoln Trust Co., 233 N. Y. 213, 215. See, also, 2 Lewis’ Sutherland on Statutory Construction [2d ed.], §§5 454-455, pp. 862-864; Dwarris on Statutes [2d ed. (1848)], pp. 563, 564, 565; Maxwell on Interpretation of Statutes, p. 71.)

We are told that the statute under consideration is inaptly phrased. Upon that subject there is merit in the suggestion by counsel for the appellant Sapowitch that any awkwardness of expression in the statute disappears if the clause and every five years thereafter, except as hereinafter provided,” is transposed from the place in which it is found to the end of the first sentence. (Archer v. Equitable Life Assurance Society, 218 N. Y. 18, 22.) It is unnecessary, however, to go to that length to ascertain what we believe to be the true intent of the statute. Finding in it no language which clearly authorizes a Surrogate to make a prospective appointment in anticipation of a vacancy to occur after he is out of office, we apply to the statute the rule of construction stated by Chief Judge Ruger in Hayes v. Davidson (98 N. Y. 19, 22): “ If the terms in which it is couched are susceptible of two interpretations, that one ought to be adopted which conforms most nearly to the rules of the common law * *

Proceeding, as we must, upon the assumption that the Legislature did not deliberately place in the statute a phrase which was intended to serve no purpose (Allen v. Stevens, 161 N. Y. 122, 145; Palmer v. Van Santvoord, 153 N. Y. 612, 616), we give full effect to the phrase to take effect immediately.” This phrase, which the respondent has chosen to disregard, reveals to us the legislative intent that in making the original appointment to the office of Public Administrator and whenever thereafter for any cause a vacancy in the office should occur midyear, such appointments should be made immediately.” Thus in the case of the first appointment in September, 1914, and when subsequent appointments were to be made to vacancies occurring midyear, there was to be prefixed to the statutory term of five calendar years, to begin on the first day of January following such appointment, whatever fraction of the year remained until that date. Such a construction gives effect to what we believe to have been the purpose of the Legislature to avoid delay in the first appointment of a Public Administrator under the act (See Code Civ. Proc. § 2595 [Laws of 1914, ch. 443]), and in filling vacancies in that office whenever they occurred midyear thereafter. Thus were preserved the recognized advantages of continuity in service in a public office.

Before reaching this conclusion we have taken into consideration the entire statute, as the rule requires of us, and have been influenced by the language of the second paragraph, quoted above, which strongly suggests that the interpretation outlined above, which we conclude to be correct, is in line with the Legislature’s purpose. We have not overlooked the use in the statute of the word “ succeeding ” emphasized by the respondent and found in the clause, “ * * * and to hold office for the term of five years from the first day of January succeeding bis appointment.” This clause appears in substantially the same form in both paragraphs. The word “ succeeding,” when considered in its context, refers clearly either to the first appointment to be made under the statute or to appointments made thereafter to fill vacancies occurring during any calendar year.

We do not share the respondent Dethloff’s view that on occasions when in normal circumstances a Public Administrator’s term of office expires on December 31st, as in the case now before us, the power of appointment is to be exercised on the anniversary of the effective date of the original statute or ten days thereafter. The facts in the case at bar serve to prove the error of such an interpretation which, as we have seen, contravenes established principles of common law and statutory construction. The power of appointment is to be exercised by whomever may be the qualified and acting Surrogate of_Erie County on the date when a vacancy has occurred in the office of Public Administrator.

It follows that the judgment should be reversed and judgment directed in favor of the defendant Sapowitch, without costs.

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

Judgment accordingly.