author: Crane, J.

text:
    The Association for the Protection of the Adirondacks et al., Respondents, v. Alexander MacDonald, Conservation Commissioner of the State of New York, et al., Appellants.
    Argued February 11, 1930;
    decided March 18, 1930.)

      Hamilton Ward, Attorney-General (C. S. Ferris of counsel), for appellants.
    Section 7 of article 7 of the Constitution was not intended to prohibit the cutting of a relatively small number of trees, or even a single tree, when such cutting will in no wise impair the forest or subvert the purpose for which the Forest Preserve was acquired and is now being maintained. (People ex rel. Manhattan Ry. Co. v. Barker, 152 N. Y. 433; People ex rel. Jackson v. Potter, 47 N. Y. 375; People v. Adirondack Ry. Co., 160 N. Y. 225; Einsfeld v. Murray, 149 N. Y. 367.)

      Wallace T. Stock, Frederick T. Kelsey and John W. DeWitt for Public Park and Playgrounds District of the Town of North Elba, amicus curiae.

    The constitutional provision must be given a broad interpretation consistent with the purposes of government and with the ascertained intent of the framers thereof and of the people. (People v. Tremaine, 252 N. Y. 27; Koster v. Coyne, 184 N. Y. 494; Matter of Burns, 155 N. Y. 23; Rochester v. Quintard, 136 N. Y. 221; People v. Petrea, 92 N. Y. 128; Matter of Gilbert El. R. Co., 70 N. Y. 361; Goodell v. Jackson, 20 Johns. 693; People v. Fancher, 50 N. Y. 288; People v. Albertson, 55 N. Y. 50; People v. Lorillard, 135 N. Y. 285; Admiral Realty Co. v. City of N. Y., 206 N. Y. 110; Matter of Dowling, 219 N. Y. 44.) The intent of the People in adopting this provision of the Constitution was the preservation and use of the Forest Preserve as a great resort for the public for the purposes of health and recreation. (Black on Interpretation of Laws [2d ed.], pp. 20, 194; Wendell v. Lavin, 246 N. Y. 115; People v. Potter, 47 N. Y. 375; Sweet v. Syracuse, 129 N. Y. 316; Stradar v. Stern, 184 App. Div. 700; Waters v. Gerard, 189 N. Y. 302; People v. Mosher, 163 N. Y. 32; People v. Lyman, 157 N. Y. 368.) The proposed bobsled run is a proper and desirable use of the State’s forest lands, consistent with the Constitution. (Matter of Watson, 226 N. Y. 384.)

      Jacob Gould Schurman, Jr., George Welwood Murray, Samuel H. Ordway and Alanson W. Willcox for respondents.
    The history of section 7 of article 7 of the Constitution and the effect uniformly attributed to it, demonstrate the invalidity of chapter 417 of the Laws of 1929. (People v. Adirondack R. Co., 160 N. Y. 225; Adirondack R. Co. v. Indian River Co., 27 App. Div. 326; People v. New York Central & H. R. R. R. Co., 161 App. Div. 322; 213 N. Y. 649; Newcombe v. Ostrander, 66 Misc. Rep. 103; 140 App. Div. 945.) The legislation in question cannot be sustained as an exercise of the police power or as a reasonable use of the Forest Preserve. (Barrett v. State of New York, 220 N. Y. 423.)
   Crane, J.

By chapter 417 of the Laws of 1929 the Conservation Commissioner is authorized to construct and maintain a bobsleigh run or slide on State lands in the Forest Preserve in the town of North Elba, Essex county, on the western slope of the Sentinel Range.

The act was passed for the purpose of providing facilities for the third Olympic winter games, which are to be held at or in the vicinity of Lake Placid, in the year 1932. The bobsleigh run will be approximately one and one-quarter miles in length and six and one-half feet wide, with a return route or go-back road. As additional land will have to be cleared on either side of the run, the width in actual use will be approximately sixteen feet, and twenty feet where the course curves. It is estimated that the construction will necessitate the removal of trees from about four and one-half acres of land, or a total number of trees, large and small, estimated at 2,500. The Forest Preserve within the Adirondacks consists of 1,941,403 acres. The taking of four acres out of this vast acreage for this international sports’ meet seems a very slight inroad upon the preserve- for a matter of such public interest and benefit to the people of the State of New York and elsewhere. The Legislature, recognizing the benefits of an international gathering of this kind, has sought in the public interest, by the enactment of the above law, to provide appropriately and in the spirit of hospitality, the necessary equipment and facilities for these games, and contests, incident to winter sport, of which tobogganing is a large feature. Winter sports of course must be held in a place where there will be an' assurance of sufficient continual cold weather for snow and ice, and the vicinity of Lake Placid gives this assurance. The western slope of the Sentinel range, chosen for the toboggan slide, is the nearest and most appropriate place for its construction in connection with the center of attractions.

Considering the distinction of having one of the beauty spots of New York State selected as appropriate for the International Olympic winter games and the advantages afforded by Lake Placid and its vicinity, together with the good will promoted in the recognition by the State, through its Legislature, of the event, what possible objection can there be to the above law permitting this toboggan slide to be constructed on State land? One objection, and one only — the Constitution of the State, which prevents the cutting of the trees. This objection has been raised by the Association for the Protection of the Adirondacks, which has sought and obtained an injunction restraining the Conservation Commission of this State and the Superintendent of Lands and Forests from constructing and maintaining the bobsleigh run on the ground that chapter. 417 of the Laws of 1929 is unconstitutional and void.

The constitutional provision is section 7 of article VII, reading: “ The lands of the state, now owned or hereafter acquired, constituting the forest preserve as now fixed by law, shall be forever kept as wild forest lands. They shall not be leased, sold or exchanged, or be taken by any corporation, public or private, nor shall the timber thereon be sold, removed or destroyed.”

The lands and trees proposed to be taken for the toboggan slide are within the Forest Preserve and covered by this provision of the Constitution. Taking the words of section 7 in their ordinary meaning, we have the command that the timber, that is, the trees, shall not be sold, removed or destroyed. To cut down 2,500 trees for a toboggan slide, or perhaps for any other purpose, is prohibited. Some opinions, notably those of the Attorneys-General of the State, cited on the briefs and by the Appellate Division, have even gone so far as to state that a single tree, and even fallen timber and dead wood, cannot be removed; that to preserve the property as wild forest lands means to preserve it from the interference in any way by the hand of man.

The words of the Constitution, like those of any other law, must receive a reasonable interpretation, considering the purpose and the object in view. (State of Ohio ex rel. Popovici v. Agler, 280 U. S. 379.) Words are but symbols indicating ideas and are subject to contraction and expansion to meet the idea sought to be expressed; they register frequently according to association, or like the thermometer, by the atmosphere surrounding them. The purpose of the constitutional provision, as indicated by the debates in the Convention of 1894, was to prevent the cutting or destruction of the timber or the sale thereof, as had theretofore been permitted by legislation, to the injury and ruin of the Forest Preserve. To accomplish the end in view, it was thought necessary to close all gaps and openings in the law, and to prohibit any cutting or any removal of the trees and timber to a substantial extent. The Adirondack Park was to be preserved, not destroyed. Therefore, all things necessary were permitted, such as measures to prevent forest fires, the repairs to roads and proper inspection, or the erection and maintenance of proper facilities for the use by the public which did not call for the removal of the timber to any material degree. The Forest Preserve is preserved for the public; its benefits are for the people of the State as a whole. Whatever the advantages may be of having wild forest lands preserved in their natural state, the advantages are for every one within the State and for the use of the people of the State. Unless prohibited by the constitutional provision, this use and preservation are subject to the reasonable regulations of the Legislature.

The laws developing the Forest Preserve and the Adirondack Park, up to the Constitution of 1894, are reviewed in the opinion of this court in People v. Adirondack Ry. Co. (160 N. Y. 225). By chapter 707 of the Laws of 1892 the State Park, known as the Adirondack Park, was created within certain of the Forest Preserve counties. Such park is to be forever reserved, maintained and cared for as ground open for the free use of all the people for their health or pleasure, and as, forest lands necessary to the preservation of the headwaters of the chief rivers of the State, and a future timber supply.”

Chapter 332 of the Laws of 1893, combining all previous acts, gave to the Forest Commissioners authority to sell certain timber on the Forest Preserve and also power to sell such of the lands as were not needed. They were also authorized to lease camp sites and lay out paths and roads in the park. Then came the Convention of 1894 with the debates indicating a change of policy regarding the sale and destruction of timber and the use of the lands. (Revised Record of the Constitutional Convention of 1894, vol. I, pp. 1100, 1148; vol. II, pp. 57, 1201; vol. IV, pp. 128, 137.)

At the time of the assembling of this Convention, the law of the State authorized the sale, lease, clearing and cultivation of lands in the Forest Preserve and the sale of standing or fallen timber thereon; also permitted the laying out of paths and roads through the property. (See chap. 283, Laws of 1885; chap. 475, Laws of 1887; chap. 707, Laws of 1892; chap. 332, Laws of 1893.)

With these laws before them and the statements in the debates revealing the depredations which had been made on the forest lands, and the necessity for restricting the appropriation of trees and timber, section 7 of article VII was adopted and became park of the Constitution January 1, 1895, where it has remained ever since.

No longer was the land or . timber to be sold or even condemned for public purposes. (People v. Adirondack Ry. Co., supra.) The forests were to be preserved as wild forest lands, and the trees were not to be sold or removed or destroyed. Whereas the Legislature had authorized the building of roads through these lands, this power was thereafter conferred not through legislation, but by constitutional amendments adopted in 1918 and 1927. The section with these amendments now reads: “Nothing contained in this section shall prevent the. State from constructing a State highway from Saranac lake in Franklin county to Long lake in Hamilton county and thence to Old Forge in Herkimer county by way of Blue Mountain lake and Raquette lake, and nothing shall prevent the State from constructing a State highway in Essex county from Wilmington to the top of Whiteface mountain.” If it were deemed necessary to obtain a constitutional amendment for the construction of a State highway, the use to which the Forest Preserve might be put with legislative sanction was greatly limited. Trees could not be cut or the timber destroyed, even for the building of a road. This seems to be a fair conclusion to be drawn from the adoption of these constitutional amendments after the Constitution of 1894.

What may be done in these forest lands to preserve them or to open them up for the use of the public, or what reasonable cutting or removal of timber may be necessitated in order to properly preserve the State Park, we are not at this time called upon to determine. What regulations may reasonably be made by the Commission for the use of the park by campers and those who seek recreation and health in the quiet and solitude of the north woods is not before us in this case. The Forest Preserve and the Adirondack Park within it are for the reasonable use and benefit of the public, as heretofore stated. A very considerable use may be made by campers and others without in any way interfering with this purpose of preserving them as wild forest lands. (See “ The Problem of the Wilderness ” by Robert Marshall in The Scientific Monthly,” Feb. 1930, p. 141.)

But the question still remains whether the construction of a toboggan slide, which requires the cutting of 2,500 trees, is such a reasonable use, or is forbidden by the Constitution.

Counsel for the appellants has very ably argued that as the underlying purpose of all these restrictions upon the State lands is to preserve them for the free use of all the people for their health and pleasure, the erection of a toboggan slide for sport is within this purpose. He has pressed upon our. attention the fact that outdoor sports do much to maintain the health, the happiness and the welfare of the people of this State; and that if a branch of these outdoor sports is to a minor extent permitted within the public lands, the very purpose which the framers of the Constitution of 1894 had in mind will be accomplished; that it is the benefit to the people which this constitutional provision sought to preserve in the preservation of the forest. What can be more beneficial, asks counsel, than the establishment of forest sports, among which is classed this toboggan slide? We must admit much, if not all, that counsel has so eloquently pleaded in behalf of outdoor games. Perhaps much may be due to international sports, such as the Olympic games, lawn tennis, golf, even aviation, for creating good will among the nations, and a desire to establish those friendly relationships so vigorously claimed and earnestly sought for through treaties and world conferences. However tempting it may be to yield to the seductive influences of outdoor sports and international contests, we must not overlook the fact that constitutional provisions cannot always adjust, themselves to the nice relationships of life. The framers of the Constitution, as before stated, intended to stop the willful destruction of trees upon the forest lands, and to preserve these in the wild state now existing; they adopted a measure forbidding the cutting down of these trees to any substantial extent for any purpose.

Tobogganing is not the only outdoor sport. Summer sports in the Adirondacks attract a larger number of people than the winter sports, simply for the reason, if no other, that the summer time still remains the vacation period for most of us. The same plea made for the toboggan slide in winter might be made for the golf course in summer, or for other sports requiring the use or the removal of timber. In other words, this plea in behalf of sport is a plea-for an open door through which abuses as well as benefits may pass. The Constitution intends to take no more chances with abuses, and, therefore, says the door must be kept shut. The timber on the lands of the Adirondack Park in the Forest Preserve, or that on the western slope of the Sentinel range cannot be cut and removed to construct a toboggan slide simply and solely for the reason that section 7, article VII, of the Constitution says that it cannot be done.

Consequently, chapter 417 of the Laws of 1929, permitting the erection of this bobsleigh slide and the destruction of the trees is unconstitutional, and the judgment should be affirmed, with costs..

Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment affirmed.


source: Caselaw Access Project

author: Hubbs, J. Crane, J.

license: Public Domain

text:
    William J. Schieffelin, Respondent, v. Frederick E. Goldsmith et al., Appellants.

      (Argued February 10, 1930;
    decided March 18, 1930.)

      Edward S. Dore, John Caldwell Myers and John F. Collins for Frederick E. Goldsmith et al., appellants.
    The requirement that the Mayor appoint a judge from the same political party as the disabled judge is within the power of the Legislature. (Matter of McAneny v. Board of Estimate, 232 N. Y. 377; People v. Palen, 74 Hun, 289; Rogers v. Common Council of Buffalo, 123 N. Y. 173; Kane v. Gaynor, 144 App. Div. 196; 202 N. Y. 615; People ex rel. Deitz v. Hogan, 214 N. Y. 216; Emerson v. Buck; 230 N. Y. 380; Bohmer v. Haffen, 161 N. Y. 390.) The provision requiring the Mayor to appoint a person from the same political party as the justice temporarily disabled, even if unconstitutional, can be severed from the remainder of the statute and. still preserve an organic whole in full validity. (People ex rel. Alpha P. C. Co. v.
      Knapp, 230 N. Y. 48; People ex rel. Pratt v. Goldfogle, 242 N. Y. 277; Matter of McAneny v. Board of Estimate, 232 N. Y. 377; People ex rel. Woods v. Chrisey, 91 N. Y. 616.) There is no unconstitutional removal or suspension. (Matter of Emerson v. Buck, 230 N. Y. 380; Ramsay v. Hayes, 187 N. Y. 367; Schieffelin v. Hylan, 236 N. Y. 254.)

      Arthur J. W. Hilly, Corporation Counsel (William E. C. Mayer and J. Joseph Lilly of counsel), for Charles W. Berry, appellant.
    The Legislature acted within its powers in enacting chapter 436 of the Laws of 1929, which added section 4-a. to the Municipal Court Code of the city of New York. (Matter of McAneny v. Board of Estimate, 232 N. Y. 377; Matter of Guden, 171 N. Y. 529; McCabe v. City of New York, 213 N. Y. 468; Kittinger v. Buffalo Traction Co., 160 N. Y. 377; Matter of Emerson v. Buck, 230 N. Y. 380; Ramsay v. Hayes, 187 N. Y. 367; Matter of Kane v. Gaynor, 144 App. Div. 196; 202 N. Y. 615; People ex rel. Williamson v. McKinney, 52 N. Y. 374; People ex rel. Bolton v. Albertson, 55 N. Y. 50; Matter of N. Y. & L. I. Bridge Co., 148 N. Y. 540; Lawton v. Steele, 119 N. Y. 226; Rathbone v. Wirth, 150 N. Y. 459; People ex rel. Alpha P. C. Co. v. Knapp, 230 N. Y. 48; Norton v. Shelby County, 118 U. S. 425; Van Antwerp v. State of New York, 218 N. Y. 422; People v. Dooley, 171 N. Y. 74.) The complaint, on its face, does not state facts sufficient to constitute a cause of action. (Matter of Cummings, 142 App. Div. 377; Greene v. Knox, 175 N. Y. 432; Corscadden v. Howe, 177 N. Y. 499; People v. Warden, 154 App. Div. 413; Scofield v. Whitelegge, 49 N. Y. 259; Rees v. Teachers' Retirement Board, 247 N. Y. 372; Kittinger v. Buffalo Traction Co., 160 N. Y. 377.)

      Leonard M. Wallstein and Ralph M. Frink for respondent.
    Chapter 430 of the Laws of 1929 is unconstitutional in its requirement of membership in a certain political party. (Rathbone v. Wirth, 6 App. Div. 277; 150 N. Y. 459; Matter of Allison v. Welde, 172 N. Y. 421; People v. Dooley, 171 N. Y. 74; People ex rel. Swift v. Luce, 204 N. Y. 478.) Chapter 430 of the Laws of 1929 is entire and not severable, so that this unconstitutional requirement invalidates the whole statute. (Rathbone v. Wirth, 150 N. Y. 459; Matter of Markland v. Scully, 203 N. Y. 158; Sutherland v. Mead, 80 App. Div. 103; People v. Bromwich, 200 N. Y. 385.) Chapter 430 of the Laws of 1929 is unconstitutional because it provides an unauthorizéd method of selecting Municipal Court judges. (People v. Dooley, 171 N. Y. 74.) Chapter 430 of the Laws of 1929 is wholly unconstitutional because it provides for an unconstitutional suspension of, or interference with the performance of duties by, a Municipal Court justice. (Stuart v. Palmer, 74 N. Y. 183; Rathbone v. Wirth, 150 N. Y. 459; People ex rel. Eldred v. Palmer, 21 App. Div. 101; Commonwealth v. Reid, 265 Penn St. 328; People ex rel. Burby v. Howland, 155 N. Y. 270; People ex rel. Holmes v. Lane, 53 App. Div. 531.) Chapter 430 of the Laws of 1929 is unconstitutional because it violates the constitutional requirement of a term of office for justices of the Municipal Court. (People ex rel. Joyce v. Brundage, 78 N. Y. 403; Matter of Batey, 31 App. Div. 309; Speed v. Crawford, 60 Ky. 206; State ex rel. Polk v. Galusha, 74 Neb. 188; State ex rel. Withers v. Stonestreet, 99 Mo. 361; Somer v. State, 5 S. E. Rep. 321.)
   Hubbs, J.

This is a taxpayer’s action to restrain the Comptroller of the city of New York from paying to the defendants Goldsmith and Fontanelli the salaries which they earned while serving temporarily as Municipal Court justices, on the ground that their appointments as temporary justices were illegal. The appointments were made pursuant to chapter 430 of the Laws of 1929, which added a new section (4-a) to the Municipal Court Code. It is contended that said statute is unconstitutional and void. It reads as follows: “ Temporary appointments of justices. If any justice is physically or mentally disabled so as to be unable to perform his duties, the mayor shall have authority to appoint a temporary justice who shall be a resident of the same district as the justice so disabled for a period not to exceed thirty days, upon the certificate of the president of the board of justices setting forth that owing to such disability the public interest requires the temporary appointment of a person in the place of the justice or justices thus disabled. Upon a similar certificate the mayor shall have authority at the expiration of such temporary appointment to renew such appointment from time to time for a period not exceeding thirty days. Any temporary justice appointed pursuant to the provisions of this section shall be a member of the same political party as the justice to whose office he has been appointed.”

Justices Raimo and Whalen became disabled so as to be unable to perform their duties. The' mayor, acting upon certificates of the president of the board of justices, made in pursuance of said section 4-a, and in accordance therewith, appointed the two said defendants temporary justices for periods not to exceed thirty days. They each filed an oath of office and entered upon the performance of the duties of temporary Municipal Court justices. Before the expiration of the said thirty-day appointments this action was commenced to restrain the Comptroller from paying them their salaries.

The constitutionality of the statute is attacked upon five grounds, stated by the learned attorney for the plaintiff in his brief as follows:

Point I. That Chapter 430 of the Laws of 1929 is unconstitutional in requiring membership in a political party as a qualification for appointment to judicial office, contrary to the provisions of Article XIII, Section 1; Article I, Section 1; Article VI, Section 17, and Article X, Section 2, of the Constitution.

Point II. That Chapter 430 of the Laws of 1929 is entire, and not severable, so that this unconstitutional requirement invalidates the whole statute.

Point III. That Chapter 430 of the Laws of 1929 is wholly unconstitutional because it provides an unauthorized method of selecting the justices in violation of Article VI, Sections 17 and 19, and Article X, Section 2, of the Constitution.

“ Point IV. That Chapter 430 of the Laws of 1929 is wholly unconstitutional because it provides for an unconstitutional suspension of Municipal Court justices or interference with the performance of their duties.

Point V. That Chapter 430 of the Laws of 1929 is unconstitutional because it violates the constitutional system of a judicial term of office, recognized by Article VI, Sections 17 and 19.”

If the purpose of the Legislature in enacting the statute was to enable all branches of the Municipal Court to continue in session and transact business even though one or more of its justices should be unable to act, the purpose was laudable. We must assume that the purpose of the Legislature was legitimate. Whether the purpose was wise is not for us to consider. (Bohmer v. Hagen, 161 N. Y. 390-399.)

It is of the greatest importance that the court dispose of the business coming before it with as little delay as possible in order that justice may not be delayed and the poor litigants who bring their sipall cases in that court may have speedy trials and decisions. We cannot impute to the Legislature an improper motive.

The powers of the Legislature in respect to the regulation of the Municipal Court are contained in article VI of the State Constitution, sections 17, 18 and 19.

Section 17, after providing for the election of justices of the peace prescribes: “ * * * All other judicial officers in cities, whose election or appointment is not otherwise provided for in this article, * * * shall be chosen by the electors of such cities, or appointed by some local authorities thereof as may be prescribed by law * * * ”

Section 18 provides: " Inferior local courts of civil and criminal jurisdiction may be established by the legislature, * * *. All inferior local courts now or hereafter established may be regulated or discontinued by the Legislature. * * * ”

Section 19 provides: " * * * except as in this article provided, all judicial officers shall be elected or appointed at such times and in such manner as the Legislature may direct * * *.”

Except as restricted by the Constitution, the powers of the Legislature are unlimited and its enactments are presumed to be within its constitutional authority unless the contrary clearly appears. In construing a • statute " if two constructions be permissible, then the one making the act valid must be adopted.” (Matter of McAneny v. Board of Estimate, etc., 232 N. Y. 377.)

Section 17 provides that justices of the Municipal Court be chosen by the electors or appointed by some local authorities * * * as may be prescribed by law.” Section 18 grants to the Legislature plenary power to establish, to regulate and to discontinue the Municipal Court. Section 19 reads: except as in this Article provided, all judicial officers shall be elected or appointed at such times and in such manner as the Legislature may direct.” The article does not otherwise provide for the election or appointment of Municipal Court justices. They are, therefore, to be elected or appointed “ at such times and in such manner as the Legislature may direct.”

These sections confer upon the Legislature express authority to determine the time and manner of election or appointment of Municipal Court justices, and to regulate and discontinue said court. We have no doubt that the Legislature, acting under the definite grant of power contained in the Constitution, was authorized to enact a statute to provide for a temporary appointment of a Municipal Court justice to act during the disability of a regularly elected justice.

It is urged that the statute in question is unconstitutional because it provides, in the last sentence thereof, a test of office in violation of article I, section 1, and article XIII, section 1, of the Constitution. The sentence in question reads: Any temporary justice appointed pursuant to the provisions of this section shall be a member of the same political party as the justice to whose office he has been appointed.”

Article I, section 1, reads: No member of this State shall be disfranchised, or deprived of any of the rights or privileges secured to any citizen thereof, unless by the law of the land, or the judgment of his peers.”

Article 13, section 1, gives the form of oath to be taken by public officials and then states: “ and no other oath, declaration or test shall be required as a qualification for any offi.ce of public trust.”

The plaintiff would have us decide that the requirement of the statute,. that the person to be appointed temporarily to serve on the Municipal Court must be of the same political party as the justice temporarily disqualified, constitutes a test within the meaning of the Constitution and, therefore, renders the statute void.

It is elementary that courts will not decide constitutional questions unless directly and necessarily involved. The constitutional question suggested is not directly involved or essential to the determination. It does not appear from the record of which political party either of the elected justices was a member. Neither does it appear of which political parties the defendants temporarily appointed to serve as justices were members. For all that appears, the mayor, in making the appointments, did not pay the slightest attention to the provision of the statute which directs that the appointee shall be a member of the same political party as the justice who is temporarily disqualified. Even if we assume that the provision of the statute is unconstitutional and void, we cannot assume that the mayor did not know it. In fact, the presumption is that he knew the law when the appointments were made and made them untrammeled by the provision in question. (People ex rel. Woods v. Crissey, 91 N. Y. 616, 622 and 623; People ex rel. Angerstein v. Kenney, 96 N. Y. 294.)

If we assume that the sentence in question is unconstitutional, it does not follow that the whole statute is void. It is a complete harmonious statute with that sentence deleted. It affords a complete and definite system for appointing temporary justices. The sentence in question adds nothing to and detracts nothing from the purpose of the act. The provisions of the act are not so interdependent that the act cannot operate without the sentence in question. It is not so related to the other provisions that it can be supposed that the Legislature would not have passed the act without it. (People ex rel. Alpha P. C. Co. v. Knapp, 230 N. Y. 48, 60.)

In the case of Rathbone v. Wirth (150 N. Y. 459), relied upon by the plaintiff, the court held that the provision of the statute in question which prescribed the method of appointment could not be severed from the other provisions of the statute, because the statute, read as a whole, made it apparent that its purpose was to change the political construction of the police department, and to strike out that provision would nullify the purpose of the Legislature. The decision is not in conflict with the holding in this case.

We are unable to concur in the contention that the statute is unconstitutional in that it violates article VI, section 17, of the Constitution by providing a dual method of choosing Municipal Court justices, by election and appointment. The Constitution provides that the choice of justices shall be made either by election or appointment. The Legislature has authority to adopt either method, but the method adopted must be exclusive. The case of People v. Dooley (171 N. Y. 74) so decided. It is authority, however, only for the proposition that the Legislature is without power to enact that local judicial officers shall be appointed in certain districts of a municipality and elected in others. There must be a uniform method of choice in the same municipality; in the original selection of such officers for a full term. The present method of selection of Municipal Court justices for a full term is by election in districts, throughout the whole city. The selection of temporary justices, under the provisions of the statute in question, is by appointment only throughout the whole city. The practice prescribed is uniform, all temporary justices must be appointed by the mayor.

As a practical matter, it would be impossible to select temporary justices by election. Should the statute be held to be unconstitutional, on the last ground stated, the result would be to prevent the appointment of temporary justices unless the Legislature should change the method of original selection for a full term from election to appointment. We reach the conclusion that the Legislature acted within its constitutional authority in providing that temporary appointments of justices may be made as prescribed in the statute.

The temporary appointments were not in violation of article VI, section 17, of the Constitution in that such appointments constituted a removal or suspension of the elected justices or a shortening of the term for which said justices were elected. The elected justices continue in office. They continue to receive their salaries and may, during the time the temporary justices are serving, perform any of the functions of their offices, which they are physically and mentally able to perform.

The argument that there may be abuses of the authority granted cannot be considered by us. That was a matter for the Legislature to consider. The legislature rightfully assumes that public officials will perform their duties in good faith and with proper regard to the interests committed to them.” (Matter of Emerson v. Buck, 230 N. Y. 380.)

The statute, if followed in good faith, will undoubtedly accomplish a desirable purpose. It will enable the Municipal Court to function in all of its branches even during the temporary disability of one or more of its justices.

The complaint fails to state a cause of action. The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division, and the question certified answered in the negative.

Crane, J.

(dissenting). Article VI, section 17, of the State Constitution reads: “ All other judicial officers in cities, whose election or appointment is not otherwise provided for in this article, including all judicial officers holding Courts of Special Sessions, Magistrates’ Courts, or other inferior local courts of criminal jurisdiction in the city of New York, shall be chosen by the electors of such cities, or appointed by some local authorities thereof as may be prescribed by law.”

This court decided in People v. Dooley (171 N. Y. 74) that the Legislature could adopt one or the other of these methods for the selection of the judges who came within this provision of the Constitution, but that the Legislature could not adopt both; in other words, that a magistrate could not be elected in one portion of the city, and appointed in another. The words of this court, which are also applicable to Municipal Court justices, are as follows: “ The mandate of the Constitution is that judicial officers in cities, whose election or appointment is not otherwise provided for, shall be chosen by the electors of such cities or appointed by some local authorities thereof. This language is plain and unequivocal. It presents two distinct alternatives. Either may be chosen. It must be one or the other. If the office is to be filled by appointment, the agency by which that is to be accomplished is broadly, yet clearly designated. If the officer is to be elected, the power of appointment is as plainly excluded. If this is not the fair and reasonable construction of this provision of the Constitution then it is within the power of the legislature to authorize the-employment of both methods at the same time, in the same territorial or civil division, or in different divisions, either to suit the caprice of a day or the exigencies of a political condition. If judicial officers of the same grade, performing the same duties in the same local division, may be appointed in part and elected in part at the same time, we shall not have long to wait for such use of the power as will serve the selfish ends of the designing few at the expense of the public weal.”

The case now before us comes squarely within the condemnation of this decision. By the New York City Municipal Court Code (Laws of 1915, cb. 279) the city of New York is divided into 'Municipal Court districts, with specified boundaries. Municipal Court justices are to be elected for terms of ten years by the electors of the several Municipal Court districts at the general election to be held in years at the end of which the respective terms of said justices shall expire. There shall be a president justice selected by the Mayor from among these elected justices. These Municipal Court justices by virtue of their office may administer oaths, take depositions and acknowledgments within the city of New York, and certify the same in the same manner and with like effect as justices of other courts of record. Their full powers are designated by the act.

The Legislature has added by chapter 430 of the Laws of 1929, taking effect the ninth of last April, section 4-a, permitting the mayor to appoint temporary justices. Under this act we may have two Municipal Court justices in the same district, one elected, and the other appointed. In fact, if we consider a constitutional question from the viewpoint of what may be done, we may have two justices in any number of districts, one of whom is appointed, and the other elected. The section reads: “ If any justice is physically or mentally disabled so as to be unable to perform his duties, the mayor shall have authority to appoint a temporary justice who shall be a resident of the same district as the justice so disabled for a period not to exceed thirty days, upon the certificate of the president of the board of justices setting forth that owing to such disability the public interest requires the temporary appointment of a person in the place of the justice or justices thus disabled. Upon a similar certificate the mayor shall have authority at the expiration of such temporary appointment to renew such appointment from time to time for a period not exceeding thirty days. Any temporary justice appointed pursuant to the provisions of this section shall be a member of the same political party as the justice to whose office he has been appointed.”

While it is not at all likely that the Mayor will abuse this power, yet a constitutional power is always judged by that which may be done, and not by that which is likely to occur. Temporary designations may, therefore, be continued indefinitely.

An act which permitted the election of Municipal Court justices in Manhattan and the appointment of them in Brooklyn would clearly be unconstitutional. Yet we have here an act providing for the election of Municipal Court justices who, upon the certificate of a justice elected in another district, may be supplanted by an appointed officer. And these displacements or duplications may take place without number.

We need not discuss what is meant by physical or mental disability, or the extent to which the tired mind and exhausted body may justify the certificate for leave of absence. These are matters entirely within the judgment of the Legislature, and we have nothing to do with them. We are dealing here simply with a question of power under the Constitution, as interpreted by this court in the Dooley case. These temporary justices taken from the bar and not elected, while serving would have the full power not only of trying cases and disposing of judicial matters, but also of performing all other administrative matters provided in the Municipal Court Act.

I, therefore, ’ dissent.

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

Ordered accordingly.


author: Cardozo, Ch. J.

text:
    In the Matter of Flora M. G. Buccini, as Executrix of Alberto Buccini, Deceased, Appellant, against Paterno Construction Company, Respondent.
    (Submitted February 10, 1930;
    decided March 18, 1930.)

      James Wilson Young for appellant.
    The question as to the amount to be paid for services falls within the arbitration provision. (Matter of Kelley, 240 N. Y. 74; Matter of Berkowitz, 230 N. Y. 261; Itoh Company, Ltd., v. Boyer Oil Co., Inc., 198 App. Div. 881.)

      Henry S. Mansfield for respondent.
    The amount due, if any, for the work alleged to have been done by the deceased up to the date of his death is not arbitrable under the contract. It is expressly left to decision of the owner. (Marchant v. Mead-Morrison Mfg. Co., 252 N. Y. 284.)
   Cardozo, Ch. J.

Alberto Buccini made a contract with the Paterno Construction Company to decorate the ballroom, banquet hall and swimming pool in a dwelling described as Paterno’s Castle ” on Riverside Drive in the city of New York. The character of the decorations was such as to call for the exercise of artistic skill, and there is a provision that all the decorative figured work shall be done by Buccini personally and that only the plain work may be delegated to mechanics. There is also this provision: All questions that may arise under this contract and in the performance of the work thereunder shall be submitted to arbitration at the choice of either of the parties.”

Buccini died while the work was in progress. The contract being personal, the effect of his death was to terminate the duty of going forward with performance, but to leave the owner liable for benefits received (Wolfe v. Howes, 20 N. Y. 197; Spalding v. Rosa, 71 N. Y. 40; Lacy v. Getman, 119 N. Y. 109; 3 Williston on Contracts, § 1973). When the value of the benefits was disputed, the executrix made demand that the controversy be submitted to arbitration. Her petition was granted by the Supreme Court at Special Term and denied at the Appellate Division. An appeal to this court followed.

All questions that may arise under this contract and in the performance of the work thereunder shall be submitted to arbitration at the choice of either of the parties hereto.” We think the controversy as to value is within the range of that provision. Into every contract of personal service the law reads the implied condition ” that sickness or death shall be an excuse for non-' performance (Spalding v. Rosa, supra, at p. 44; Dolan v. Rodgers, 149 N. Y. 489, 493, 495). The parties may say by their contract what compensation shall be made in the event of that excuse. The award will then conform to the expression of their will.' They may leave the subject open, to be governed by the law itself. The award will then conform to the .principles of liability in gucm-contract and to the considerations of equity and justice by which that liability is governed. In either event the controversy is one that has its origin in the contract and in the performance of the work thereunder, just as much as if the work had been completed under a contract silent as to price, and the controversy had relation to the reasonable value. Death of the contractor has not nullified the contract in the sense of emancipating the claimant from the restraint of its conditions. They limit her at every turn. She cannot stir a step without reference to the contract, nor profit by a dollar without adherence to its covenants (cf. Reeder v. Sayre, 70 N. Y. 180, 184). The interrupted work may have been better than any called for by the plans. Even so, there can be no recovery if the contractor willfully and without excuse has substituted something else (Jacob & Youngs, Inc., v. Kent, 230 N. Y. 239). The value proportionately distributed may be greater than the contract price. Even so, the price, and not the value, will be the maximum beyond which the judgment may not go (Clark v. Gilbert, 26 N. Y. 279, 283). The recovery in such a case cannot exceed the contract price, or the rate of it for the part of the service performed” (Clark v. Gilbert, supra). The question to be determined is not the value of the work considered by itself and unrelated to the contract. The question to be determined is the benefit to the owner in advancement of the ends to be promoted by the contract.

Stress is laid by the owner upon a term of the agreement whereby payments are to be made at the rate of 75% of the value of the work installed as the work progresses,” and whereby the owner is to determine the amount due when such payments are requested. This provision is inapplicable to the case that has arisen. It has in view the continuing fulfillment of the contract and requests for part payment while performance is in progress. It has no bearing upon a situation where through death or disability of one party or of both the duty of performance has been ended without the fault of either.

Stress is laid also upon the source of the demand for arbitration. The contract is that there shall be arbitration “ at the choice of either of the parties.” The demand was not by the parties, but by the executrix of one of them. We think the executrix stands to that extent in the place of her testator. It is a presumption of law, in the absence of express words, that the parties to a contract intend to bind not only themselves, but their personal representatives” (Kernochan v. Murray, 111 N. Y. 306, 308; Francis v. Ferguson, 246 N. Y. 516,518). Arbitration is a means for the settlement of differences. Those who succeed to the differences succeed also to the means.

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

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

Ordered accordingly.


author: Crake, J.

text:
    Susan Fisher et al., Appellants, v. Albert A. Fisher, Respondent, and Gertrude Brady et al., Appellants.

      (Argued February 13, 1930;
    decided March 18, 1930.)

      Eugene L. Klocke for plaintiffs-appellants, and Daniel N. McNaughtan for Liberty Bank et al., defendants-appellants.
    There are no contingent remainders in unborn grandchildren of testator under the will and the property vested in the six children of testator. (Stokes v. Weston, 142 N. Y. 433; Appell v. Appell, 177 App. Div. 571; 221 N. Y. 602; Sawyer v. Cubby, 146 N. Y. 192; Camman v. Bailey, 210 N. Y. 19; Macy v. Burchett, 131 Misc. Rep. 602; 223 App. Div. 702; 248 N. Y. 637; Connelly v. O’Brien, 166 N. Y. 408.) Section 73 of the Real Property law and section 24 of the Personal Property Law.are constitutional. (Chauvet v. Ives, 173 N. Y. 194; Schoonmaker v. Gray, 208 N. Y. 214; Matter of Tinker, 124 Misc. Rep. 723; 217 App. Div. 255; 244 N. Y. 51; Matter of Field, 115 Misc. Rep. 734; Matter of Bemis,
      116 Misc. Rep. 516; Matter of Watson, 124 Misc. Rep. 222; Clark v. Cordis, 4 Allen, 466; Loring v. Hildreth, 170 Mass. 328.)

      Frederick F. Grots for Gertrude Fisher et al., defendants-appellants.

      Omar G. Olds for respondent.
   Crake, J.

Section 73 of the Real Property Law (Cons. Laws, ch. 50) and section 24 of the Personal Property Law (Cons. Laws, ch. 41), now embodied in section 19 of the Decedent Estate Law (Cons. Laws, ch. 13), give to the Supreme Court or the Surrogate’s Court, having jurisdiction, the power to authorize executors, administrators and trustees to adjust by compromise any controversy that may arise between different claimants to the estate or property in their hands, to which agreement such executors, administrators or trustees and all other parties in being who claim an interest in such estate, shall be parties in person or by guardian. Power is likewise given to these courts to authorize the person named as executor in an instrument purporting to be the last will and testament of a deceased person or the petitioners for administration with such will annexed, to adjust by compromise any controversy that may arise between the persons claiming as devisees or legatees under such will, and the persons entitled to or claiming the estate of the deceased under the Statutes of Descent and Distribution. Where an infant, lunatic, person of unsound mind or habitual drunkard is a necessary party to the compromise, he shall be represented in the proceedings by a special guardian who shall in the name and on behalf of the party he represents make all proper instruments necessary to carry into effect the compromise sanctioned by the court.

There is contained this provision regarding unknown and future contingent interest: “ (d) If it appears to the satisfaction of the court that the interests of persons unknown or the future contingent interests of persons not in being are or may be affected by the compromise, the court must appoint some suitable person or persons to represent such interests in the compromise and to make all proper instruments necessary to carry into effect any compromise that is sanctioned by the court.”

Compromises of conflicting interests in estates to avoid the cost and expense of litigation were not unknown to the law prior to this statute. (Chauvet v. Ives, 173 N. Y. 192.) Not until this action do we find that the meaning or constitutionality of the provisions of the statute have been challenged, although a few cases indicate that the law has been referred to and appEed. (Matter of Tinker, 124 Misc. Rep. 723; 217 App. Div. 255; 244 N. Y. 51; Matter of Field, 115 Misc. Rep. 733, 734; Matter of Bemis, 116 Misc. Rep. 516; Matter of Watson, 124 Misc. Rep. 216, 222.)

In none of these cases did the questions here presented arise, nor were the points referred to or discussed.

Our attention on this appeal is directed to that part of this section which refers to the contingent interest of unknown persons. May the courts authorize the settlement of a controversy over a wiE or an estate which affects or wipes out such interest?

The power of the State to regulate the tenure of real property within its Emits and the modes of its acquisition and transfer and the rules of its descent and the extent to which a testamentary disposition of it may be exercised by its owners is undoubted. Every person must will his lands and property in accordance with and subject to the conditions and limitations provided by statute, or else he cannot wiE them at aE. His power is bounded by the conditions prescribed. (United States v. Fox, 94 U. S. 315.) For iEustration, the rights of dower and of curtesy may be wiped out altogether or modified, as has been done by the recent Decedent Estate Law (Laws of 1929, ch. 229). Trusts may not be created except for two Eves in being. The suspension of the power of aEenation of an estate for a longer period is void and of no effect. (Real Prop. Law, § 42.) Testamentary gifts to charitable and reEgious associations of more than one-half of the testator’s estate in certain circumstances are prohibited. (Decker v. Vreeland, 220 N. Y. 326.) Many other illustrations showing the power of the Legislature over the disposition of property may be cited, but these are sufficient to indicate that contingent remainders may be aboEshed or subjected to compromises made in good faith to settle contests over wills and estates. Of course any such laws can only apply to those instruments of transfer taking effect after the date of enactment.

A similar statute has been under review by the Supreme Court of Massachusetts in Copeland v. Wheelwright (230 Mass. 131). " There is nothing,” said that court, in the express terms of the statute which prevents the entire extinguishment by agreement of a future contingent interest in appropriate circumstances. Such an interest may be so remote, and its actual enjoyment so improbable that its retention would appear to be nothing more substantial than a film of mist.” A word of caution, however, was given to guardians appointed for such interests to use the most scrupulous care to see that the compromise viewed with a reference to the basis for contest is just and reasonable in all its aspects, including its effect upon future contingent interests. That court further said: The statute in question may be treated as a provision to the effect that, where a will creates future contingent interests, the precise extent to which it shall be executed, in cases where aU other parties in interest in the estate make an agreement upon that subject, shall depend upon a judicial decree entered upon general principles of justice and reason following a full investigation and report by an independent officer appointed by the court. The general interest of the public that property shall not be entangled by the impalpable and unreal possibility of uncertain and improbable contingencies springing up in the future, might support such an enactment.”

How far these sections of the Real and Personal Property Laws go, or may legally go in wiping out vested or contingent interests by a compromise among living persons, we do not at this time determine. We limit the present review of this statute to the holding that, where an unknown contingent interest may or may not exist under the terms of the will — where, by a fair or reasonable construction of the instrument there may be no contingent interest, the whole matter being one of doubt and subject to interpretation — then in such a case the statute empowers the Surrogate’s Court to determine judicially "that there is no contingent interest affected, and to authorize a settlement of a contest or controversy over the will.

The facts on this appeal call for the application of this section as thus explained.

Joseph E. Fisher was a resident of the city of Buffalo, where he died on the 11th day of August, 1928, leaving a last will and testament, by which he devised and bequeathed to his brother Albert A. Fisher, as trustee, all his share and interest in the business conducted by his brother and himself, under the firm name of Martin Fisher & Sons, including all the assets thereof, all property, both real and personal, owned by them as copartners or as tenants in common. This devise and bequest, however, was in trust to carry on the business or to sell or mortgage the property and to divide it into trusts for the testator’s wife and six children (as he called them). One-quarter of the principal was to be held in trust for the wife during her life, and then added to the trusts for the children. The remaining three-quarters of the principal was to be divided into six separate trusts for the. six. children. Four of these children, ranging in age from: eighteen to twenty-five, were by the testator’s first Wife, and constituted his heirs at law and next of kin; the other two children were children of the second wife, Genevieve P. Fisher. The Liberty Bank of Buffalo and Albert A. Fisher were named as executors of the will, and Albert A. Fisher as trustee thereunder. The net value of the estate left in trust is about $62,000. There were no grandchildren living at the testator’s death.

When the will was offered for probate, objections were filed by the testator’s four children. The relations of the widow, the second wife, and the four older children, who were by the first wife, were unfriendly. These children were dissatisfied with the terms of the will and employed counsel to contest its probate on the ground of the testator’s incompetency. Five months after the death of Joseph E. Fisher all the parties interested in the probate proceedings, including the special guardians and the executors and trustees, entered into an agreement of compromise, pursuant to section 73 of the Real Property Law and section 24 of the Personal Property Law. This agreement was approved by the Surrogate of Erie county on the 4th day of February, 1929. Thereafter and on May 29, 1929, a supplementary agreement was executed and approved by the said Surrogate on June 11, 1929. These agreements in effect wiped out the trust provisions in the will and vested the property absolutely in the beneficiaries named, in the proportions therein stated, Albert A. Fisher, the brother, agreeing to pay certain sums specified for the interest of the deceased in the personal and real property of the firm. The trusts set up in the will were to be created out of Fisher’s copartnership interest in the business in which he and his brother Albert were partners. This necessarily complicated the situation. The winding up of the business, if necessary, might have materially affected the value of the assets. The brother, therefore, by this agreement agreed to purchase the testator’s interest. The value of the real property which he agreed to purchase was to be reached by three appraisers, members of the Buffalo Real Estate Board. The details of these agreements need not be given in full, as they are not material to the controversy before us.

The Surrogate, on an application for approval, heard the matter fully, and by his two orders, one of February 4, 1929, and the other of June 11,1929, approved, sanctioned and ratified and confirmed the agreements, and authorized the executors to adjust the controversy as agreed. These orders recite the appointment of a guardian for all the infants and a special guardian to represent unknown persons and future contingent interests of all persons not in being. The orders also recite notice to all parties of the hearing before the court as to the merits and propriety of the settlement.

The proceedings to probate the will were in the Surrogate’s Court of Erie county. The application for the settlement of the contest was pursuant to the sections of the Real and Personal Property Laws, above given, so that the Surrogate’s Court had full and complete jurisdiction of the subject-matter and of all the parties. Did the Surrogate have the power to make the order annulling the trust provisions of the will, and approving the compromise agreement which vested the principal or corpus of the estate absolutely in the widow and the six living children? In other words, could the decree or order of the Surrogate thus dispose of the contingent interest of unknown or unborn persons?

According to the rule which we are to apply, as above stated in this opinion, the answer for this case depends upon whether there was reasonable uncertainty as to the existence of any contingent interest. If the provisions of the will in this particular were doubtful, presenting a juridical question, and the Surrogate, in the exercise of his jurisdiction, construed the will as not giving any interest in the property to unknown persons, then his conclusion that the property could be divided between living persons was valid and binding on all courts. We think that the Surrogate was justified in thus viewing the will. It is by no means clear that there are any contingent interests.

The paragraph presenting this question reads as follows: The principal sums of the several trusts set up for my children living at my death shall be paid to each child respectively when said child becomes forty-five years of age, or in case the said child dies before reaching the age of forty-five years, said corpus to be held in trust until the youngest issue of said child in being at my death becomes thirty years of age or sooner dies, in either of which events the corpus of said trust shall go to the heirs of my said child.

In case of a child who has predeceased me, the trust for the issue of said child shall terminate when the youngest issue of said child in being at my death becomes thirty years of age or sooner dies, in either of which events the corpus of said trust shall go to the heirs of my said child.”

We see in these words that the trust set up for a child (and for precision we will deal with one trust only) is to terminate when the child becomes forty-five years of age, for at that time the corpus, or principal, is to be paid to him and the trust is to terminate. Provision is made by the testator for the payment over in cáse the child die before forty-five in only two instances, neither of which can now occur. A grandchild must be in existence at the time of the testator’s death. If there be such a grandchild, the trust is to continue until that grandchild becomes thirty years of age; or if he dies sooner, then the property shall go to the heirs of the child dying before forty-five. The testator failed to make any provision where there was no grandchild in existence at the time of his, the testator’s, death. If the child for whom the trust was created, therefore, die before he is forty-five years of age, there being no grandchild in existence at the time of the testator’s death, what is to become of the corpus of the trust? It may be said with some reason that in such an instance there is intestacy and the corpus would go to the heirs or next of kin of the testator. The child for whom the trust was created would be such heir or next of kin. Grandchildren born after the death of the testator would, therefore, have no contingent interest under the testator’s will. If they ever received any property of the testator’s, it would be by way of limitation and not by purchase.

Again, we may view this provision of the will as meaning that if there were no grandchild living at the death of the testator, the child for whom the trust was created took absolutely and in all events. That is, the property was vested in the child and his heirs or next of kin, subject only to the condition that the principal should not be paid over to him until he arrived at forty-five years of age.

Whatever the proper construction of this will may be, the uncertainty is quite apparent. The possible contingent interests of grandchildren born after the testator’s death are so remote, indefinite and vague as to bring this will within those salutary provisions of the Real and Personal Property Laws permitting settlements and agreements to be made of will contests in order to avoid loss and expense.

The orders and decrees of the Surrogate permitting the settlement were, therefore, legal and valid, and as no appeal was taken from them, cannot be attacked collaterally. No attempt has been made to set them aside on the ground of fraud. They stand binding on all courts and on the parties to this controversy which arises as follows:

The title to the real estate of the partnership and to the personal property was disposed of by the compromise agreements. Albert A. Fisher, the brother, and surviving partner, was to purchase this property from the heirs and next of kin. He refused to carry out the agreements, no doubt with a view of having the courts pass upon the validity of the Surrogate’s decrees. The Special Term of the Supreme Court in this action for specific performance gave judgment for the plaintiffs, directing Albert A. Fisher to carry out and perform his agreement. The judgment of the Appellate Division should be reversed, and that of the Special Term affirmed, without costs in this court or in the Appellate Division.

Cardozo, Ch. J., Pound, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment accordingly.


author: O’Brien, J.

text:
    Mansfield Handvill, Respondent, v. W. Heyward Drayton, 3d., et al., Appellants, Impleaded with Others.
    (Argued February 13, 1930;
    decided March 18, 1930.)

      Carroll G. Walter and Henry A. Uterhart for appellants.
    Buggies was plaintiff’s agent as a matter of law, and the courts below erred in not dismissing the complaint upon that ground. (Bosak v. Parrish, 252 N. Y. 212; Henken v. Schwicker, 174 N. Y. 298; Small v. Housman, 208 N. Y. 115; Carlisle v. Norris, 215 N. Y. 400; Timpson v. Allen, 149 N. Y. 513.) Buggies had no authority to accept money as defendants’ agent for investment for the benefit of customers in the exercise of his own discretion. (Bosak v. Parrish, 252 N. Y. 212; Booth v. Litchfield, 201 N. Y. 466; Kalina v. Gair Co., 125 N. Y. Supp. 1040; Timpson v. Allen, 149 N. Y. 513; Barber v. Ellingwood, 135 App. Div. 549; Matter of Ruef, 180 App. Div. 203; 223 N. Y. 582; Matter of Case, 214 N. Y. 199; People v. Scharf, 217 N. Y. 204.) The plaintiff is not entitled to recover upon the theory of apparent or ostensible authority. (Edwards v. Dooley, 120 N. Y. 540; Mechem on Agency [2d ed.], §§ 245, 246, 751, 752, 754; Jacobus v. Jamestown Mantel Co., 211 N. Y. 154; Walsh v. Hanford Fire Ins. Co., 73 N. Y. 5; Bickford v. Menier, 107 N. Y. 490; Buskirk v. Talcott, 96 N. Y. Supp. 714; Burlingame v. Ætna Ins. Co., 36 App. Div. 358.)

      Branch P. Kerfoot and Frederic H. McCoun for respondent.
    Buggies was not, as a matter of law, plaintiff’s agent and the court below did not err in refusing to dismiss the complaint upon that ground. (Henken v. Schwicker, 174 N. Y. 298; Small v. Housman, 208 N. Y. 115; Carlisle v. Norris, 215 N. Y. 400.)
   O’Brien, J.

Plaintiff has recovered judgment against members of a partnership of stockbrokers on the theory of conversion by them through an apparent agent. The complaint alleges that one Ruggles was employed by defendants or, in any event, was held out by them as .their agent; that at their request, through Ruggles, plaintiff paid and delivered to them certain moneys and securities for investment purposes, and that, instead of using them for investment, defendants converted them to their own use. The proof is clear that plaintiff delivered money and securities to Ruggles, that he embezzled them and died insolvent.

Late in the year 1922 plaintiff and Ruggles became acquainted. Plaintiff was deeply impressed by Ruggles’ personality and ostensible financial wizardry and intrusted him with small sums for speculation which were returned with profit. Ruggles was not a broker but, as a customer, was then trading with brokers other than defendants. Plaintiff directed those brokers to place to the credit of Ruggles a few shares of stocks and some bonds to be used by Ruggles in any way he saw fit. Later, Ruggles transferred his trading operations from those brokers to defendants and opened four separate stock and grain accounts with them in his own name as a customer. He daily frequented defendants’ offices and plaintiff often visited him there. On one of these visits, Ruggles confided to him the pretended secret that he had been commissioned to trade in his own name in behalf of some of the members of defendants’ firm and suggested that if plaintiff would let him have some money he also could open an account in Ruggles’ name and thus participate with péople engaged in big business. Plaintiff, replying that his account was to be with defendants, accepted Ruggles’ proposal but he never opened an account with and never received statements from them. He continued his custom of delivering securities and money to Ruggles in conformity with his former practice and Ruggles always receipted for them in his own name. Plaintiff admits that he authorized Ruggles in his discretion to buy or sell any stock, that he left the entire management to him, that he never gave an order to any one in defendants’ office except Ruggles and that he never mentioned this account to any one in the office except Ruggles. Defendants’ evidence is that Ruggles never had a joint account with any of them, never received a salary or commission, never was employed by them and that they never accepted money or securities for customers’ accounts on discretionary orders. None of them ever heard that plaintiff or any one gave money or securities to Ruggles as an alleged representative of their firm, never heard that Ruggles claimed to be an employee or agent and no one ever inquired concerning his employment or agency. Plaintiff relies upon testimony, all of which is denied, that Ruggles occupied a desk reserved exclusively for him in a room referred to as Ruggles’ room, made entries in defendants’ books, examined accounts not open to inspection except by employees and members of the firm, used a private telephone from which customers were excluded, communicated with a customer for the purpose of notifying her to put up more margin, introduced plaintiff to defendants and to the manager of a branch office as our ” customer, that one of defendants expressed an intention to place Ruggles in charge of their grain trading and that he was their business getter.” One witness testified that one afternoon Ruggles was the last to depart from the branch office and that, as he left, he locked the door.

From conflicting evidence the inference might be drawn that defendants held Ruggles out as one clothed with authority to represent them in some vague manner and to some undefined extent. Actual employment is disproved and no evidence supports the judgment by which defendants are held responsible for acts within an apparent scope of employment. Authority by Ruggles, either real or apparent, to engage in such a special, peculiar and unusual transaction with plaintiff rests upon no foundation in the evidence. Rather, the whole record points to the fact that he was plaintiff’s agent. (Timpson v. Allen, 149 N. Y. 513; Bosak v. Parrish, 252 N. Y. 212.)

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

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and Hubbs, JJ., concur.

Judgments reversed, etc.


author: Pound, J.

text:
    William S. Dunlay, Appellant, v. Avenue M Garage & Repair Co., Inc., et al., Respondents, Impleaded with Another.

      (Submitted February 14, 1930;
    decided March 18, 1930.)

      Max H. Newman for appellant.
    Neither officers nor directors of a corporation may purchase unissued capital stock which results in their obtaining the corporate control, or for any advantageous purpose, without first affording to existing stockholders the right to participate, pro rata, in the, purchase of such remaining unissued capital stock, (Archer v. Hesse, 164 App. Div. 493; Whitaker v. Kilby, 55 Misc. Rep. 337; Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N. Y. 435; Matter of Green v. Miller, 249 N. Y. 88; Bosworth v. Allen, 168 N. Y. 157; Harrington v. Erie Co. Sav. Bank, 101 N. Y. 257; Pollitz v. Wabash R. R. Co., 207 N. Y. 113; Hassel v. Pohle, 214 App. Div. 654.)

      Frank W. Holmes for respondents.
    The findings are sustained by the evidence. (Morgan v. Bon Bon Co., 222 N. Y. 22.) The directors had a right to issue for adequate consideration the seventy-six shares of unissued authorized capital stock. (Archer v. Hesse, 164 App. Div. 493; Dusenberry v. Sagamore Dev. Co., 164 App. Div. 573; Curry v. Scott, 54 Penn. St. 277; Russell v. American Gas & Electric Co., 152 App. Div. 136.)
   Pound, J.

The action is brought by plaintiff, who is the holder of twenty shares in defendant Avenue M Garage & Repair Co., Inc., to compel the defendants Ageno and Montalbine to return to the defendant corporation seventy-six shares of its capital stock alleged to have been issued to them improperly, and to restrain them from voting thereon. It arises out of a struggle between two factions of stockholders of a small corporation for the control of the directorate. The subject of shareholders’, rights in such cases has given rise to extended discussion. (See “ Shareholders’ Pre-emptive Rights,” by Frey, 38 Yale Law Journal, 563; The Pre-emptive Right of Shareholders to Subscribe to New Shares,” by Drinker, 43 Harvard Law Review, 586.) The controlling principles of law stated in the opinions must, however, be read in connection with the facts in the particular case before the courts.

The authorized capital stock of the defendant corporation consists of 800 shares of the par value of $50 per share. Prior to March 14, 1927, all the capital stock had been issued except 76 shares which consisted of unissued authorized capital stock. The affairs of the corporation had become somewhat involved. At a special meeting of the board of directors March 14, 1927, a resolution was adopted that 50 shares of such unissued stock should be issued to R. C. Graham, at par, in satisfaction of a debt owing to Graham from the corporation for services rendered to it as a salesman. Graham afterwards transferred the stock to defendant Guinan and he afterwards transferred the same to defendant Montalbine. At the same time the board of directors authorized the issue of 26 shares of such unissued stock to defendant Ageno, at par, for cash to meet other outstanding indebtedness of the corporation. No opportunity was given to the shareholders generally to purchase such shares.

Ageno was president of the corporation and a member of the board of directors. His sister, the defendant Montalbine, was also a member of the board of directors and the resolution authorizing the issue of stock to defendant Ageno was adopted, over protest, by their votes. The result of this issue of 26 shares of stock to Ageno was not to give the Ageno faction a majority of the stock over the faction represented by plaintiff. Prior to the issuance of such stock, plaintiff’s faction owned 378 shares of the total issued stock of 724 shares. With the 26 shares so issued the Ageno faction was still short of a majority but it afterwards acquired such control through the purchase by Ageno of 76 shares from Mr. May, another stockholder, and of the Graham shares by Montalbine. With this acquisition the Ageno faction had a majority which gave it the control of the board of directors and the corporation at the end of the year.

The plaintiff invokes the rule that neither officers nor directors of a corporation may purchase unissued capital stock which results in giving them control of the corporation without first affording to existing stockholders the right to participate pro rata in the purchase of such remaining unissued capital stock. The defendants take the position on the law that as the 76 shares of stock were not a new issue, nor treasury stock, but were merely unissued authorized capital stock, the directors had a right to sell them to any one at par, unless they were conspiring to injure the corporation or another stockholder. The court below has substantially upheld this latter contention on the law. The rule is too broadly stated by the defendants and requires elucidation to prevent misapprehension.

It is well established that a stockholder has an inherent right to a proportionate share of new stock issued for money only and not to purchase property for the purposes of the corporation or to effect a consolidation and that while he can waive that right, he cannot be deprived of it without his consent except when the stock is issued at a fixed price not less than par and he is given the right to take it at that price in proportion to his holding or in some other equitable way that will enable him to protect his interest by acting on his own judgment and using his own resources. (Stokes v. Continental Trust Co., 186 N. Y. 285.)

The reason for the rule is plain. The power to manage the affairs of a corporation resides in its directors. The power to elect directors resides in the stockholders. The right to vote for directors and on some other propositions as regulated by statute is about all the power the stockholder has. Hence, the power of the individual stockholder to vote in proportion to the number of his shares cannot be cut off or curtailed by the issue of shares of new stock without giving him an opportunity to participate therein. Otherwise the majority could deprive the minority of their proportionate power in the election of directors and of their proportionate right to share in the surplus, each of which is an inherent, pre-emptive and vested right of property.” (Stokes v. Continental Trust Co., supra, at p. 298.) The court in such a case will protect the inherent right of the minority to have that status preserved against invasion even by the bona fide admission of new interests. This is no more than an application of the rule which requires directors to deal fairly with all their stockholders.

In respect to the balance of shares constituting the initial authorized issue, as distinguished from new shares, the case is different. The subscribers ordinarily take such shares with the clear understanding that the subscription shall be completed before they may rely on the preservation of their proportional status. The understanding may, however, be otherwise. The issued stock may be related to the unissued stock as stock for immediate issue to stock for future expansion. In such case the pre-emptive right might not be denied. It has been too loosely stated that “ a corporation may use its original unissued authorized capital stock for any legitimate or lawful purpose it sees fit.” (Archer v. Hesse, 164 App. Div. 493, 497.) If the issue of the unissued original shares, whenever authorized, is reasonably necessary to raise money to be used in the business of the corporation rather than the expansion of such business beyond the original limits, the original shareholders have no right to count on obtaining and keeping their proportionate part of the original stock.

But this holding is not in conflict with another elementary rule. We are not dealing with the sale of a new issue of stock to outsiders as in the case of Stokes v. Continental Trust Co. (supra), or with unissued stock held for future expansion of corporate activities, but with the purchase of unissued stock by directors. Directors must always be free from fraud in their relations with their shareholders. Fair dealing is required. One formula of fair dealing is universally recognized, i. e.: Directors may not authorize the issue of unissued stock to themselves for the primary purpose of converting them from minority to majority stockholders. Such conduct, as indicated by Andrews, J., in Whitaker v. Kilby (55 Misc. Rep. 337; affd., 122 App. Div. 895), is inequitable in the highest degree. It involves a breach of the duty of the directors as fiduciaries representing all the stockholders, irrespective of any doctrine of pre-emptive right. Corporate directors cannot manipulate the property, of which they have control in a trust relation, primarily with the intent to secure a majority of the stock or of directors in any particular interest. This is not a fair exercise in good faith of the power with which they are clothed.” (Elliott v. Baker, 194 Mass. 518.) Before acquiring stock for such a purpose the directors should offer it at a fixed price to all the stockholders, sell at auction or obtain a waiver of their rights.

Applying these principles of law to the facts found herein, the question arises whether the sale of the stock acquired by Ageno was primarily for a reasonably necessary purpose and beneficial to the corporation or for the sinister purpose of serving the personal ends of the directors in obtaining control of the corporation. The trial court has found in substance on the evidence that the shares in question were issued for full value and in good faith to discharge a debt to Graham, to raise money to meet corporate obligations and to enable the corporation to carry on its business and that no contest for corporate control was then afoot. Such shares as were issued to Ageno did not give his faction the control, of the corporation which was obtained only when the additional shares were legitimately purchased from Graham and May. “ The plaintiff is in the position of all minority stockholders, who cannot interfere with the management of the corporation so long as the trustees are acting honestly and within their discretionary powers.” (Burden v. Burden, 159 N. Y. 287, 308.) He has failed to make out the breach of trust on which his cause of action rests.

The judgment should be affirmed, with costs.

Cardozo, Ch. J., Crane, Lehman, Kellogg, O’Brien and Hubbs, JJ., concur.

Judgment affirmed.