author: Cohway, J.

text:
    In the Matter of Michael Richetti, Appellant, against New York State Board of Parole et al., Respondents.
    Argued January 6, 1950;
    decided March 2, 1950.

      Charles H. Gaffney for
    appellant. I. Appellant has not been convicted of a felony under the laws of New York. (Blaufus v. People, 69 N. Y. 107; Schiffer v. Pruden, 64 N. Y. 47; People v. Fabian, 192 N. Y. 443; People v. Marendi, 213 N. Y. 600; People v. La Sassa, 44 N. Y. S. 2d 93; People ex rel. Marcley v. Lawes, 254 N. Y. 249; People ex rel. La Placa v. Murphy, 277 N. Y. 581.) II. Appellant has not been convicted within the meaning of section 242 of the Correction Law. (Hilderbrand v. People, 1 Hun 19, 56 N. Y. 394.)

      Nathaniel L. Goldstein, Attorney-General (George A. Radz, Wendell P..Brown, Herman N. Harcourt and Thomas' F. Sacco-man of counsel), for respondents.
    I. The writ of habeas corpus was properly dismissed." II. Appellant was convicted of a felony committed while on parole and was therefore subject to the forfeiture made mandatory by section 242 of the Correction Law. (Matter of Lewis v. Carter, 220 N. Y. 8; People ex rel. Brooks v. Warden of Women’s Prison, 175 Misc. 663; Matter of Weinrib v. Beier, 294 N. Y. 628; People ex rel. Spurio v. Foster, 293 N. Y. 820; People ex rel. Marcley v. Lawes, 254 N. Y. 249; People v. Fabian, 192 N. Y. 443; People ex rel. La Placa v. Murphy, 277 N. Y. 581; People ex rel. Bistany v. Brophy, 173 Misc. 572; People v. Bork, 78 N. Y. 346, Korematsu v. United States, 319 U. S. 432; People v. Harcq, 292 N. Y. 321.) III. Parole is a privilege and if violated by the commission of á felony and subsequent conviction therefor, subjects the parolee to the penalty provided by section 242 of the Correction Law. (People ex rel. Cecere v. Jennings, 250 N. Y. 239; People ex rel. Kleinger v. Wilson, 254 App. Div. 406; People ex rel. Kurzynski v. Hunt, 250 App. Div. 378; Matter of Rouss, 221 N. Y. 81; Matter of Donegan, 282 N. Y. 285; Matter of Tarsey, 184 App. Div. 946; Matter of Gladstone, 267 App. Div. 670; People ex rel. Depew v. State Bd. of Parole, 187 Misc. 640.)
   Cohway, J.

We have presented for our consideration the construction to be given to the word “ convicted ” in section 242 of the Correction Law. That statute, prior to its amendment in 1948, provided insofar as applicable here: “ Governor to annex condition to discharge. The governor shall * * * annex * * # a condition to the effect that if any such prisoner shall, during the period between the date of his discharge by reason thereof and the date of the expiration of the full term for which he was sentenced, commit a felony within this state * * * and if he shall he convicted of such crime at any time, he shall, in addition to the sentence which may be imposed for such felony be compelled to serve in a state prison the remainder of the term of his previous state prison sentence without reduction which he would have been compelled to serve but for such reduction, as provided for in this article.” (Emphasis supplied.)

The petition herein was entitled as an article 78 proceeding but was treated at Special Term, Clinton County, as an application for the issuance of a writ of habeas corpus and a writ was issued based upon it.

The relator was convicted in 1932 in the county of Queens of the crimes of burglary, third degree, and petit larceny and sentenced to a definite term of twenty years as a second offender. On July 2d of 1945, he was released pursuant to the commutation of our Governor upon the following conditions which were then imposed: (1) that he live and remain at liberty without violating the law; (2) that he be subject to the jurisdiction and control of the Board of Parole; and (3) that were he to commit a felony within this State and be convicted of it, he should be compelled to serve in a State prison the remainder of his previous State prison sentence without reduction which he would have been compelled to serve but for such reduction by commutation. The petitioner subjected himself to the control and jurisdiction of the Parole Board until November 21, 1946 (a period of sixteen months and nineteen days). He was then arrested and charged with the crime of being an accessory to a felony which is a felony under section 2 of the Penal Law. A parole warrant pursuant to section 216 of the Correction Law was issued charging petitioner with violation of his parole. He was indicted, tried and found guilty by the verdict of a jury on March 28, 1947, of the crime of being an accessory to a felony. Sentence was deferred indefinitely, however, and on June 11, 1947, the relator was returned to State prison as a parole violator pursuant to section 217 of the Correction Law. Thereafter the petitioner was advised that by reason of his conviction of a felony he was not entitled to credit for the time spent on parole — the period of sixteen months and nineteen days. After a hearing by the Judge of the Court of General Sessions in New York City before whom he had been tried, petitioner was returned to Special Term, Clinton County, after the deference of sentence had been continued. There the writ was dismissed.

The question thus presented is whether the relator is a parole violator by reason of delinquency or whether he is a parole violator because he has been convicted of a felony while on parole. If he be the former, he will receive credit for time spent outside of prison while on parole. If he be the latter he may receive no credit for the time while out of prison while on parole because he has forfeited that time under the terms of the Governor’s commutation.

The case is unusual because no sentence has been imposed and the question as to whether the court has the power to defer sentence indefinitely has never been presented to us. In many cases cited in the briefs there was either a suspension of sentence or the imposition of sentence and. suspension of the execution of the judgment. (See Penal Law, § 2188.) The question of power has not been argued.here and we do not pass upon it. (See Code Crim. Pro., § 472.)

We have had occasion to point out that the word conviction ” is of equivocal meaning and that the use of the term may vary with the particular statute involved. It presents a question of legislative intent. (People v. Fabian, 192 N. Y. 443, 449; People ex rel. Marcley v. Lawes, 254 N. Y. 249, 254; Matter of Weinrib v. Beier, 294 N. Y. 628, 631; see, also, People v. Harcq, 292 N. Y. 321.) We have reached the conclusion that in section 242 of the Correction Law, it means the adjudication of guilt and imposition of sentence or, in a proper case, suspension of sentence (Penal Law, § 2188). It has been of weight with us in reaching that conclusion, that there may be no appeal by a prisoner who stands in the situation of the relator here nor indeed may there be permissible action under section 4 of article IV of the New York State Constitution. That section grants to the Governor the power to grant pardon after conviction. The last sentence provides: “ He shall annually communicate to the legislature each case of reprieve, commutation or pardon granted, stating the name of the convict, the crime of which he was convicted, the sentence and its date, and the date of the commutation, pardon or reprieve.” (Emphasis supplied.) The petitioner, therefore, not having been convicted of a felony within the meaning of section 242 is a parole violator by reason of delinquency and is entitled to credit for the period he was on parole prior to the date of delinquency.

The orders should be reversed, with costs and the matter remitted to Special Term for proceedings not inconsistent with this opinion.

Loughran, Ch. J., Lewis, Desmond, Dye, Fuld and Froessel, JJ., concur.

Orders reversed, etc.


source: Caselaw Access Project

author: Lewis, J. Fuld, J.

license: Public Domain

text:
    City Bank Farmers Trust Company, as Administrator with the Will Annexed of Leonard Lewisohn, Deceased, Appellant, v. Samuel Cohen, Respondent, et al., Defendants.
    Argued January 3, 1950;
    decided March 2, 1950.

      Charles Angulo and George 8. Mittendorf for appellant.
    I. The typographical error in defendant’s address was not a jurisdictional defect but an irregularity. (Fox v. McGrath, 152 F. 2d 616; Shaw v. Coleman, 22 Jones & Sp. 3; Goldreyer v. Foley, 154 App. Div. 584; Pinckney v. Hegeman, 4 Lans. 374, 53 N. Y. 31; Tweedy v. United Life Ins. Assn., 24 N. Y. Civ. Pro. Rep. 259; Szirtes v. Bly, 185 App. Div. 274; Dennin v. Duffy, 83 Misc. 523; Valz v. Sheepshead Bay Bungalow Corp., 249 N. Y. 122.) II. Under section 105 of the Civil Practice Act the court had power to disregard or cure said irregularity and should have done so. (People v. New York Central R. R. Co., 29 N. Y. 418; Jamaica Sav. Bank v. Risian Realty Corp., 165 Misc. 372; Berkman v. Silverstein, 245 App. Div. 891.) III. Even apart from section 105 plaintiff’s motion under section 1083 had sufficient legal consequence to avoid the bar of the time limitation. (Gaines v. City of New York, 215 N. Y. 533; Tompkins County Trust Co. v. Herrick, 171 Misc. 929.)

      Irving E. Meller, Charles J. Coleman and Arthur B. Colwin for respondent.
    I. A valid motion for a deficiency judgment was never made and it, therefore, may not be validated nunc pro tune. (Matter of Gallagher v. Cohen, 180 Misc. 1030; Matter of Constantino, 286 N. Y. 681; Matter of Tomhini, 177 Misc. 148, 262 App. Div. 956; Municipal Mtge. Co. v. Syndic Realty Co., 162 Misc. 891; Bushwick Sav. Bank v. Sohmer, 176 Misc. 617; Lapson v. 805 Ave. C Corp., 267 App. Div. 919 ; People ex rel. Northchester Corp. v. Miller, 288 N. Y. 163; Arnold v. Mayal Realty Co., 299 N. Y. 57; Nemeroff v. National City Bank, 262 App. Div. 145.) II. The order to show cause dated December 11, 1945, may not be amended wane pro tune to supply a jurisdictional defect by authorizing something to be done which was not in fact done. (Mohrmann v. Kob, 291 N. Y. 181; Merrick v. Merrick, 266 N. Y. 120; Matter of Dorfman v. Jacobs, 100 Misc. 592; Palmer v. Rotary Realty Co., 233 App. Div. 764; Silverman v. Silverman, 261 App. Div. 1106.) III. Appellant’s application for a new order was properly denied. (Erickson v. Macy, 236 N. Y. 412.) IV. Appellant’s application by order to show cause dated May 14, 1947, to resettle or modify the order of April 10, 1947, or for a new order, was properly denied. (German-American Bank v. Dorthy, 39 App. Div. 166; Ruland v. Tuthill, 187 App. Div. 314; Pringle v. Edenwald Realty Corp., 175 Misc. 137, 261 App. Div. 803.)
   Lewis, J.

In this action to foreclose a mortgage on real property the defendant-respondent Cohen, as mortgagor, was personally served with a summons and the amended complaint but failed to appear or answer. In due course a judgment of foreclosure and sale was entered which contained the usual direct tives and included the provision that, in the event proceeds of the sale of the mortgaged property were insufficient to make the payments thereby decreed, the referee appointed to conduct the sale should specify the amount of the deficiency in his report “ * * * without prejudice to any rights of the plaintiff to apply according to law for a deficiency judgment against the defendants Samuel Cohen * * (Emphasis supplied.)

It is the manner in which that right was exercised which gave rise to the controversy now before us and requires, in the interest of clarity, a statement of procedural steps which have brought the case ultimately to this court.

When avails from the sale of the mortgaged premises failed by a substantial sum to pay the mortgage debt and the costs of foreclosure the plaintiff endeavored to take advantage of statutory procedure designed, under prescribed conditions, to aid a mortgagee to recoup such a deficiency. Pursuant to such procedure prescribed in section 1083 of the Civil Practice Act, the plaintiff applied for and secured at Special Term an order dated December 11, 1945, directing the defendant Cohen as mortgagor to show cause why leave should not be granted to the plaintiff to enter a deficiency judgment. Although the purpose of that order was to give the mortgagor notice of such application, the order itself as issued directed service thereof upon the mortgagor by mail at an erroneous address — an address at which the mortgagor had never resided nor had he ever had a place of business there. Upon the return of the order to show cause — which, it is conceded, the mortgagor did not receive — there was no appearance by the mortgagor. By reason of that circumstance and before discovery of the error in misstating the mortgagor’s address, the mortgagee caused a deficiency judgment in this action to be entered against the mortgagor.

It is not disputed that the mortgagor had no notice or knowledge of the entry against him of the deficiency judgment mentioned above until more than a year later when there came to his attention certain process in a proceeding supplementary to judgment in which he was named as the judgment debtor. Thereupon the mortgagor secured at Special Term an order directing the mortgagee to show cause why an order should not be made vacating the deficiency judgment upon the ground that such judgment was invalid by reason of the fact that the order to show cause upon which it was based had not provided for service thereof upon him by mail or otherwise at either his residence or business address and that he had not been served with notice of the mortgagee’s motion for leave to enter a deficiency judgment. (Civ. Prac. Act, § 1083.)

The mortgagor’s motion for vacatur was met at Special Term by a cross motion by the mortgagee, pursuant to sections 105 and 109 of the Civil Practice Act, for an order amending nunc pro tune the show cause order issued in connection with the application by the mortgagee for leave to enter a deficiency judgment against the mortgagor, such amendment to direct service by mail on or before a date to be specified and changing the return date of such order to show cause to a date to be fixed by the court.

By a single order dated April 10, 1947, Special Term granted the motion by the defendant mortgagor for an order vacating the deficiency judgment entered against him and denied the motion by the plaintiff mortgagee for an order amending nunc pro tune the order to show cause upon which was based the plaintiff’s application for a deficiency judgment against the defendant.

Thereafter — upon the return of an order to show cause and by an order dated May 23, 1947 — Special Term denied an application by the plaintiff mortgagee for an order resettling or modifying the order dated April 10, 1947, or in the alternative for a new order, to provide that the motion originally made by the mortgagee for leave to enter a deficiency judgment herein be set down for a hearing.

At the Appellate Division the Special Term order of April 10, 1947, granting the defendant’s motion to vacate the deficiency judgment and denying plaintiff’s motion to amend nunc pro Pune the order to show cause upon which was based the plaintiff’s application for a deficiency judgment against the defendant, was unanimously affirmed, and thereafter leave to appeal to this court was granted on the following questions certified for our review:

“ 1. The plaintiff’s application for leave to enter a deficiency judgment herein against the defendant, Samuel Cohen, having been made in good faith within the time limited by Section 1083 of the Civil Practice Act, did the proceeding under said section become a nullity merely because the order directing service on said defendant by mail of the notice of said application, contained, in consequence of a typographical error, an erroneous address of the said defendant?

“ 2. Was the said error in defendant’s address a jurisdictional defect which the Court was powerless to cure ?

3. Was the said error in defendant’s address an irregularity which the Court had power to correct under Section 105 of the Civil Practice Act?

“ 4. Upon the record herein should the court after vacating the deficiency judgment herein have heard on the merits said application of the plaintiff under Section 1083 of the Ciyil Practice Act? ”

The Appellate Division also affirmed (two Justices dissenting) the Special Term order dated May 23, 1947.

The case comes to us upon two appeals by the plaintiff: (1) an appeal, by leave of the Appellate Division, from an order of that court unanimously affirming the Special Term order of April 10, 1947; (2) an appeal, taken as of right, from the non-unanimous order of the Appellate Division affirming the Special Term order of May 23, 1947.

It is statutory law that — A motion is made when a notice thereof or an order to show cause is duly served.” (Civ. Prac. Act, § 113.) There is also statutory law which defines those conditions under which a court may grant to a plaintiff mortgagee in a foreclosure action leave to enter a deficiency judgment against a mortgagor: “ * * * Simultaneously with the making of a motion for an order confirming the sale provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser * * * the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought * * *. Such notice shall be served personally or in such other manner as the court may direct. * * * If no motion for a deficiency judgment shall be made as herein prescribed the proceeds of the sale regardless of amount shall be deemed to be in full satisfaction of the mortgage debt and no right to recover any deficiency in any action or proceeding shall exist.” (Civ. Prac. Act, § 1083. Emphasis supplied.)

The record which this appeal brings before us makes clear the fact that the order to show cause issued by Special Term on December 11, 1945 — designed, as it was, to give to the defendant mortgagor notice of a motion to be made by the plaintiff mortgagee for leave to enter a deficiency judgment against him — was never served upon that defendant. It thus appears that the plaintiff, in its effort to secure leave to enter a deficiency judgment in this action, had failed to comply with the italicized portions of the statute last quoted in part above.

In those circumstances the questions certified by the Appellate Division would not determine the correctness of the order of that court, unanimously affirming the Special Term order of April 10,1947. “ We do not consider an appeal, upon questions certified to us by the Appellate Division, unless the answers to such questions will be decisive of the correctness of the order or judgment appealed from.” (Public Nat. Bank v. National City Bank, 261 N. Y. 316, 322; see, also, Los Angeles Investment Securities Corp v. Joslyn, 282 N. Y. 438, 441; Gray v. Vought & Co., 243 N. Y. 585, 586; Bowlby v. McQuail, 240 N. Y. 684, 687; Schieffelin v. Hylan, 229 N. Y. 633, 634.) The nonunanimous order of the Appellate Division, which affirmed the Special Term order of May 23,1947, does not finally determine the action within the meaning of the Constitution. (See Civ. Prac. Act, § 589, subd. 3, cl. [b].)

Accordingly each appeal by the plaintiff should be dismissed, with costs. The questions certified are not answered.

Fuld, J.

(dissenting). Section 1083 of the Civil Practice Act — dealing with “ a motion in the [foreclosure] action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought ”— does not require that the notice be served personally. In so many words, the statute recites that it is to be served personally “or in such other manner as the court may direct.”

In the present case, the motion was made, as required by the statute, within ninety days after the property was sold, and the notice was served, precisely as the court directed, by mailing it to the defendant mortgagor, Samuel Cohen, at “ 805 East 161st Street, Bronx, New York, N. Y.” It so happened that the street numerals were incorrect: the numbers.had become transposed through an obviously inadvertent clerical error, for defendant’s address was “ 850 ”, not “ 805 ”, East 161st Street. Defendant failed to receive notice.

By ruling that the. questions certified to us in connection with the order of April 10, 1947, are not decisive and by dismissing the appeal from that order, the court is in effect holding that, by reason of the mistake, plaintiff forfeited all right to collect the deficiency judgment to which it claimed to be entitled. I cannot subscribe to that view.

The Supreme Court, wherein the foreclosure suit was brought, had conceded jurisdiction of the subject matter and acquired jurisdiction over the person of defendant mortgagor, for he was served personally with the summons and complaint in the action. Such jurisdiction it continued to possess throughout the pendency of that action, that is, until all of the motions and proceedings in the action were disposed of and concluded. The application for a deficiency judgment, section 1083 expressly announces, is “ a motion in the action ”, and, accordingly, it. follows that the mortgagee’s failure — under the facts of the present case — to bring home to defendant notice of the motion could not deprive the court of jurisdiction or of power to deal with the controversy. The conclusion impresses me all the more strongly since the statute was designed merely as a procedural step to protect unfortunate mortgagors ” against the uncontested entry of deficiency judgments for inordinate and inequitable amounts.. (See Hehiman v. Bishop, 272 N. Y. 83, 86.)

To say that the mistake in address was other than an irregularity susceptible of correction under section 105 of the Civil Practice Act, is to lose sight both of the purpose sought to be served by a section 1083 proceeding and of the realities of the situation. Beyond that, it penalizes, and, I venture, without rhyme or reason, the plaintiff mortgagee for a clerical error, inadvertently made. A result, more fair and reasonable, may be achieved within the framework and the spirit of section 1083, if we recognize that the Supreme Court is vested with the power — upon opening the default and vacating the deficiency judgment against defendant — to amend nunc pro tune plaintiff’s order to show cause and hear on the merits its motion under section 1083.

Accordingly, I would modify the order of the Appellate Division affirming Special Term’s order dated April 10, 1947, by remitting the matter to the Appellate Division with directions that it consider on the merits the questions presented; certified questions Nos. 1 and 2 should be answered in the negative and questions Nos. 3 and 4, in the affirmative.

Loughban, Ch. J., Conway, Desmond, Dye and Froessel, JJ., concur with Lewis, J.; Fuld, J., dissents in part in opinion and votes to modify the order of April 10, 1947.

Appeals dismissed, etc.


author: Froessel, J.

text:
    In the Matter of Toni Frissell, Appellant, against Joseph D. McGoldrick, as Comptroller of the City of New York, et al., Respondents.
    Argued January 12, 1950;
    decided March 2, 1950.

      John T. McGovern and John B. Garrity for appellant.
    Petitioner is exempt from sales tax under the provisions of the retail sales tax laws, and particularly under the provisions of a regulation published by the comptroller of the city of New York (art. 70, formerly art. 53). (Howitt v. Street & Smith Publications, 276 N. Y. 345; Pagano, Inc., v. City of New York, 267 App. Div. 980, 295 N. Y. 784.)

      James Carroll, Edwin D. Kyle, Harry H. Van Aken, Edward V. McKeown and E. Douglas Hamilton for Hearst Magazines, Inc., and others, amici curiae, in support of appellant’s position.
    I. Appellant, a photographer, rendered services and did not sell tangible personal property. (Pollard v. Photographic Co., 40 Ch. D. 345; Boucas v. Cooke, [1903] 2 K. B. 227; White Studio, Inc., v. Dreyfoos, 156 App. Div. 762, 160 App. Div. 885; Holmes v. Underwood & Underwood, Inc., 225 App. Div. 360; Lumiere v. Robertson-Cole Distr. Corp., 280 F. 550; Andersen v. City of New York, 295 N. Y. 782; Pagano, Inc., v. City of New York, 295 N. Y. 784.) II. The retail sales tax laws of the City of New York do not apply to payments made for services, even though to make the services effective some tangible property of no independent or market value is delivered and retained. (Burgess v. Ames, 359 I'll. 427; Booth v. City of New York, 296 N. Y. 573; Stampers Arrival of Buyers, Inc., v. City of Neto York, 296 N. Y. 574; Matter of Business Statistics Organisation v. Joseph, 299 N. Y. 443.) III. If appellant sold anything other than her services she sold intangible rights in literary property and the proceeds of such sales are not subject to the retail sales tax laws. (Fisher v. Star Co., 231 N. Y. 414; Pushman v. New York Graphic Soc., 287 N. Y. 302; Howitt v. Street & Smith Publications, 276 N. Y. 345; Altman v. New Haven Union Co., 254 F. 113.)

      John P. McGrath, Corporation Counsel (Isaac C. Donner and Bernard H. Sherris of counsel), for respondents.
    The transactions in issue are taxable sales because petitioner, for a consideration, (1) transferred possession of, and granted a license to use, the photographic prints, and (2) transferred title to them. Either of these incidents is sufficient to support the determination. (Andersen v. City of New York, 295 N. Y. 782; Pagano, Inc., v. City of New York; 295 N. Y. 784; Howitt v. Street & Smith Publications, 276 N. Y. 345; Matter of United Artists Corp. v. Taylor, 273 N. Y. 334; Matter of New York World-Telegram Corp. v. McGoldrick, 272 App. Div. 806.)
   Froessel, J.

Petitioner is a professional photographer. She takes orders from various clients to photograph persons, objects or scenes in or out of doors. The comptroller of the city of New York has assessed her for an alleged deficiency of $2,593.69 in taxes under the New York City Retail Sales Tax Laws (Administrative Code of City of New York, § N41-1.0 et seq., formerly § E41-221.0 et seq.). The business transactions assessed and in dispute are those only between petitioner and one of her clients, Conde Nast Publications, Inc. (hereinafter called Conde Nast), for the period from December 10, 1934, to June 30, 1942. The tax on her transactions with other clients is not in dispute, for they were conducted on a different basis.

The question before us is whether the transactions in dispute constitute taxable sales within the New York City Retail Sales Tax Laws. The comptroller has held them taxable. The Appellate Division, in a proceeding to review under article 78 of the Civil Practice Act, has unanimously confirmed the comptroller’s determination. No findings of fact were made below and in the absence of record evidence to the contrary, we must assume that those facts were found which support the conclusion. If there is substantial evidence to support the comptroller’s determination, we must accept it. (Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104, 108.)

Petitioner was the sole witness before the comptroller. She maintains a dark room ” and office in New York City, and takes special orders from Conde Nast, which either originates the photographic motif or approves petitioner’s suggestions. After the photograph is taken, petitioner develops the negative, and makes an enlarged print thereof. She always retains the negative, but delivers the print to her client which merely makes photoengravings for purposes of reproduction in its publications. As to the colored pictures, she delivers the transparencies for a similar purpose, and they are likewise returned. She testified repeatedly, and without contradiction, that the prints delivered to Conde Hast were returned to her in accordance with their arrangement, and there is no basis for any other finding in that respect. Conde Mast does no retouching, but returns the prints intact. It does not have the exclusive right to reproduce the prints, but merely the first right.

The applicable statute (Administrative Code, § M41-1.0, subd. 5, formerly § E41-221.0) defines sale ” or selling ” as follows: Any transfer of title or possession or both, exchange or barter, license to use, license to consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration ”.

The comptroller’s interpretation of this statute, so far as pertinent here, is found in article 70 of the Comptroller’s Retail Sales Tax Regulations as follows: ‘ ‘ The right given to reproduce a painting, cover drawing, illustration or cartoon is not a sale of tangible personal property and the amount received by the owner for such right is not a taxable receipt where the transfer of possession of the property is a mere incident to the right to reproduce said property and is not especially required for that purpose. The receipts from such right to reproduce tangible personal property are not taxable.”

With respect to the above statutory definition of sale, respondents here claim that there was (1) a transfer of title, (2) a transfer of possession, and (3) a license to use the prints.

(1) Clearly there is no scintilla of evidence whatsoever as to any transfer of title with respect to the Conde Mast transactions. On no possible view of the testimony could that finding be made.

(2) As to transfer of possession, the comptroller himself, by the regulations above quoted, has interpreted the applicable statute to mean that “ where the transfer of possession of the property is a mere incident to the right to reproduce said property and is not especially required for that purpose ”, the transaction is “ not taxable.” Such is the situation here, where the transfer of possession was not especially necessary, as it was in Matter of United, Artists Corp. v. Taylor (273 N. Y. 334). There, possession of films was necessarily transferred so that they could be exhibited publicly at other locations and for a specified time. Except that it was more convenient here to reproduce the prints at the photoengraver’s, the reproduction could have been made at petitioner’s place of business, where she did her own developing and enlarging; the transfer of possession was not especially necessary, but was a mere incident to the right to reproduce, and when reproduced, the prints were always returned.

(3) With respect to the license to use, it certainly cannot be seriously urged that mere temporary possession for the purpose of reproduction was a “ use ” within contemplation of the statute, for again, by his own regulation, the comptroller recognized that in concededly nontaxable transactions, there may be a temporary “ transfer of possession ” as “a mere incident to the right to reproduce ”. In such cases, there must necessarily be handling or “ use ” or possession of the print for that specific purpose.

The situation here is unlike those presented in Andersen v. City of New York (295 N. Y. 782) and Pagano, Inc., v. City of New York (295 N. Y. 784). In those cases, the City of New York offered affirmative proof challenging the petitioner’s claims, and the evidence showed that the clients assumed dominion over the prints by retouching, correcting, or otherwise changing or destroying them, and by failing to return most of them; there was virtually a transfer of title.

The instant case is in many respects similar to Howitt v. Street & Smith Publications, Inc. (276 N. Y. 345) where we held that the right to reproduce paintings which were not used, consumed, altered or defaced nor publicly exhibited was nontaxable. (See also, Dun & Bradstreet, Inc., v. City of New York, 276 N. Y. 198; Booth v. City of New York, 296 N. Y. 573; Stampers Arrival of Buyers, Inc., v. City of New York, 296 N. Y. 574.)

The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, and the determination of the comptroller annulled.

Lottghran, Ch. J., Lewis, Conway, Desmond, Dye and Ftjld, JJ., concur.

Order reversed etc.


author: Conway, J. Desmoed, J,

text:
    Theodore J. Gram et al., as Executors of John A. Messer, Deceased, Appellants, v. Mutual Life Insurance Company of New York, Respondent.
    Argued January 5, 1950;
    decided March 2, 1950.

      Cornelius J. McCarthy for appellants.
    I. Insured’s letter of February 15, 1946, was not an acceptance of a continuing offer contained in the policies. It was a counteroffer which required acceptance by the company. (Fitch v. Snedaker, 38 N. Y. 248; White v. Corlies, 46 N. Y. 467; Mutual Benefit Life Ins. Co. v. Ellis, 125 F. 2d 127; Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310; Jones v. Union Central Life Ins. Co., 265 App. Div. 388, 290 N. Y. 883; Lofaro v. John Hancock Mut. Life Ins. Co., 239 App. Div. 54, 272 N. Y. 627; Pequot Mfg. Corp. v. Equitable Life Assur. Soc., 253 N. Y. 116; Equitable Life Ins. Co. of Iowa v. Germantown Trust Co., 94 F. 2d 898.) II. Insurer’s reply letter of March 1st was not an acceptance of insured’s counteroffer. At most, that replying letter was a new offer to a new contract. (Restatement, Contracts, §§ 59, 60, 61; 1 Williston on Contracts [Rev. ed.], § 77; Machinery Utilities Co. v. Fry, 224 App. Div. 392; Mutual Benefit Life Ins. Co. v. Ellis, 125 F. 2d 127; Gans v. Ætna Life Ins. Co., 214 N. Y. 326; Nielsen v. General Amer. Life Ins. Co., 89 F. 2d 90; Norris v. Travelers Ins. Co., 148 Kan. 122.) III. The terms of insurer’s new offer specified the acts which would constitute acceptance thereof. Insured did not perform and expressly refused to perform these conditions. No new contract was effected. (Equitable Life Ins. Co. of Iowa v. Germantown Trust Co., 94 F. 2d 898; Park & Pollard Co. v. Industrial Fire Ins. Co., 197 App. Div. 671; Universal Life Ins. Co. v. Devore, 88 Va. 778; Universal Life Ins. Co v. Whitehead, 58 Miss. 226; Fogg v. Portsmouth Athenaeum, 44 N. H. 115; Hobbs v. Massasoit Whip Co., 158 Mass. 194.) IV. Insurer’s reply letter of March 1st was neither an offer which insured could accept, nor an acceptance of insured’s counteroffer. Because it was not subscribed by an official designated in section 14 of the original policies, it was an unauthorized communication not binding on the company.

      Roy P. Ohlin, Louis W. Dawson and Harold A. Mercer for respondent.
    I. The policies were terminated by insured’s letter of February 15, 1946, and were not in force after March 5, 1946. (Gately-Haire Co. v. Niagara Fire Ins. Co., 221 N. Y. 162; Pequot Mfg. Corp. v. Equitable Life Assur. Soc., 253 N. Y. 116; Crown Point Iron Co. v. Ætna Ins. Co., 127 N. Y. 608;
      Bibbo v. Penn Mut. Life Ins. Co., 241 App. Div. 423; Lipman v. Equitable Life Assur. Soc., 58 F. 2d 15; Pacific States Life Ins. Co. v. Bryce, 67 F. 2d 710; Tucker v. Equitable Life Assur. Soc., 174 La. 598; Lofaro v. John Hancock Mut. Life Ins. Co., 239-App. Div. 54, 272 N. Y. 627; Jones v. Union Central Life Ins. Co., 265 App. Div. 388, 290 N. Y. 883.) II. The transaction was irrevocably closed on March 4, 1946. (Lipman v. Equitable Life Assur. Soc., 58 F. 2d 15.) III. Insured’s unequivocal and unqualified election to surrender the policies and terminate the insurance was sufficient without physical delivery of the policies to defendant. (Fidelity Mut. Life Ins. Co. v. Merchants’ & Mechanics’ Bank, 71 F. 2d 777; Roth v. Kaptowsky, 393 Ill. 484; Northwestern Mut. Life Ins. Co. v. Joseph, 31 Ky. L. Rep. 714; Fowler v. State Life Ins. Co., 160 So. 139 [La.] ; State Life Ins. Co. v. Finney, 216 Ala. 562; Firpo v. Slyter, 95 Cal. App. 500; Lofaro v. John Hancock Mut. Life Ins. Co., 239 App. Div. 54; Gould v. Travelers Ins. Co., 266 App. Div. 545; Witt v. John Hancock Mut. Life Ins. Co., 246 App. Div. 614; Rothstone v. Norton, 231 App. Div. 59, 256 N. Y. 601; Belt v. American Central Ins. Co., 29 App. Div. 546, 163 N. Y. 555; Hopkins v. Connecticut Gen. Life Ins. Co., 225 N. Y. 76.)
   Conway, J.

This is an action to recover upon two policies of insurance issued upon the life of John A. Messer, each in the amount of $25,000, and to recover upon a claim for disability benefits under one of the policies. Each party moved for summary judgment in its favor. Special Term granted defendant’s motion, denied plaintiffs’ motion, and dismissed the complaint on the merits. The Appellate Division affirmed, one Justice dissenting.

The defendant (hereinafter called company), on March 5, 1930, issued two policies of insurance to John A. Messer payable upon receipt of due proof of death. In addition one of the policies provided for disability payments at the rate of $250 per month during total disability of the insured. The annual premiums were paid by Messer from 1930 up to and including the policy year ending March 5,1946, at the rate of $1,810 per year. The premium for the year ending March 5, 1947, was tendered by the insured but refused by the company for reasons hereinafter to be discussed. On January 21, 1947, the insured died. The plaintiffs as executors under the last will and testament of the insured requested the company for forms to enable them to make claim under the policies. The company denied any liability other than its liability to pay the cash surrender value of the policies as of March 5, 1946, asserting that the policies were not in force after that date. This asserted right of denial of liability arose out of an exchange of correspondence between the insured and the company. Company contends that the policy contracts were terminated approximately eleven months prior to the insured’s death as the result of insured’s election to surrender them.

On February 15, 1946, the insured, Messer, wrote the company:

“ Effective on the anniversary date, March 5,1946, it will be my desire to surrender above-numbered policies for their then total cash value, $14,469.00, allowing this amount to remain on deposit with the company at the rate of interest prescribed in the policy, interest payable monthly, with the provision that the whole or any part of the principal may be withdrawn on any interest date and with the further provision that, in event of my decease, any balance on deposit shall be payable to my executors, administrators or assigns.

“ Please send me appropriate forms for accomplishing the foregoing.” (Emphasis supplied.)

Messer had the right to surrender the policies for ‘ ‘ net cash value ” under the following provision in each policy: “ Section 8. Gash value. At any time after at least three full years’ premiums have been duly paid but not later than three months after default in payment of premium, this Policy may be surrendered for its net cash value. Such net cash value shall be the cash value as defined below less any indebtedness to the Company hereon. * * * ”

Section 2 of each policy provides for “ Optional Modes of Settlement ” of the proceeds of the policies upon surrender, instead of being paid in one sum. Option 1 provides: “ Option 1. — .By the Company’s holding the proceeds as a principal sum payable at the death of the payee, the Company meanwhile paying monthly interest (with a final interest payment to the date of such death) at three per cent a year plus participation in excess interest at such rate as the Company may determine for each year; * * *.”

Then follow three other options providing for payment of equal monthly installments over various periods of years. .

In none of the four options provided was there a provision for the withdrawal of principal other than through the installments in options 2, 3 and 4.

Thus the insured in his letter of February 15,1946, requested forms appropriate for securing a contract which would grant him the additional very valuable right, not provided for in Ms policies, of withdrawing the whole or any part of the principal on any interest-paying date.

The company replied by a letter dated March 1, 1946, enclosing its form of “ Income Settlement Bequest ”, That was in accord with the following provision of section 2 of each policy reading: “Method of Election.— An optional Mode of Settlement can be elected, ox a previous election revoked or changed, only by written notice to the Company. accompanied by the Policy for endorsement. ”

The form sent did not embody what the insured had asked for by way of withdrawals. ,

The letter, however, which was signed by the assistant actuary who under section 14 of the policies had no authority to modify policy terms, said: “ As requested in your letter of February 15,1946, we are enclosing a form, requesting that the .cash value of your policies be left with the Company under Option 1, our interest option. The form also provides that you will have the right to withdraw the principal sum in whole or in part. The minimum withdrawals that can be made under Option 1 are $250. [Neither option 1 nor the form had a provision requiring withdrawals to be at least $250. Indeed the option 1 quoted above made no provision for withdrawals of principal.]

“ If satisfactory the form should be signed by you and your signature witnessed. It should be forwarded to the Company not later than March 5, 1946 if the surrender is to be effective as of that date. * * *

“ When we receive the signed request form we will issue a supplementary contract providing for the settlement elected. * * *>> (Emphasis supplied.)

That was in accordance with the following provision of section 2 reading: If any of the above options has been elected, a supplementary contract bearing the date on which the proceeds of the Policy become payable and providing for the settlement elected will be issued.”

The accompanying form entitled INCOME SETTLEMENT REQUEST, MADE AT MATURITY, OR SURRENDER OF CONTRACT, FOR INCOME TO ONE PERSON ” provided in its last paragraph: ‘ ‘ VI. I authorize the company to conform the supplementary contract prepared on the basis of this request to company rules and practices not more restrictive than the policy, and retention by me of the supplementary contract so prepared shall be deemed acceptance of such contract and approval of the company’s construction of this request.” (Emphasis supplied.)

On March 4, 1946, the Income Settlement Request ” was signed and forwarded by the insured.

On March 28, 1946, not having heard from the company since he mailed the Income Settlement Request,” Messer sent a telegram to the home office in New York City which read as follows: “* * * IGNORE MY LETTER FEBRUARY 15 OFFERING TO SURRENDER POLICIES FOR CASH VALUES STOP DESIRE TO RETAIN POLICIES AND CONTINUE PREMIUM PAYMENTS STOP CHECK IN MATT, FOR PREMIUMS DUE MARCH 4 1946 * *

The insured also sent a check to the company’s agent in the amount of the annual premium. The check mailed on March 28, 1946, arrived within the grace period of thirty-one days (provided in section 12 of the policies) after a default in payment during which time the insurance was to continue in full effect. On April 1,1946, the ‘1 supplementary contract ’ ’ was tendered to Messer and his check was tendered back to Messer. Tender was refused. This tender of the ‘ ‘ supplementary contract ’ ’ and the insured’s check was the first and only notice to the insured that any refusal to continue the policy contracts would be attempted.

The policies have never been surrendered to the company and at all times have been in the possession of the insured and the executors of his estate.

It is a well-settled rule of law that when the insured is given the right or option under a life insurance policy to surrender the policy and accept its cash surrender value such right or option constitutes a continuing offer on the part of the insurance company, which, when accepted by the insured through the exercise of such right or option, fixes the rights of the parties without further action on the part of the company. (Pequot Mfg. Corp. v. Equitable Life As sur. Soc., 253 N. Y. 116; Lofaro v. John Hancock Mut. Life Ins. Co., 239 App. Div. 54, affd. 272 N. Y. 627; Gately-Haire Co. v. Niagara Fire Ins. Co., 221 N. Y. 162; Crown Point Iron Co. v. Aetna Ins. Co., 127 N. Y, 608.) It is true that the insured had an absolute right to surrender his policies for their net cash surrender value and either take the proceeds in cash in one sum or elect that the proceeds be paid in accordance with one of the options. However, insured’s letter of February 15th did not effect an election of any one of the listed options, because the settlement he desired was not in the form of any of the options offered by the company in section 2 of its policies. As was said in Nielsen v. General Amer. Life Ins. Co. (89 F. 2d 90, 93): “ The company did not write that form at the time the original policy was issued. Manifestly, the new policy was not one which the insured had the right to demand under the exchange provision. He could not have compelled its issuance in fulfillment of obligations fixed by that provision. It was a separate and distinct contract resulting from negotiation and a new meeting of the minds.”

The instant case is thus distinguishable from the cited cases in that in all of them an option was accepted according to its terms as stipulated. Insured’s letter expressly requested the addition of a provision that the whole or any part of the principal may be withdrawn on any interest date ’ ’. He had no right to such provision under any of the permitted options which provided for the payment of interest only in option 1, or for payments for the periods elected under options 2, 3 and 4. Therefore the insured’s letter of February 15th was not an acceptance of a continuing offer contained in the policies. The insured could not accept what was not offered. It is a fundamental rule of contract law that an acceptance must comply with the terms of the offer. (Restatement, Contracts, §§ 59, 60, 61; 1 Williston on Contracts [Rev. ed.], §§ 73, 76; Barber-Greene Co. v. M. F. Dollard, Jr., Inc., 239 App. Div. 655, 658, affd. 267 N. Y. 545; White v. Corlies, 46 N. Y. 467; Eustathopoulo v. Gillespie, 218 App. Div. 179, 186.) Therefore his letter was in effect a counteroffer made by the insured to the company. (Restatement, Contracts, § 60; see Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310; Jones v. Union Central Life Ins. Co., 265 App. Div. 388, affd. 290 N. Y. 883; Machinery Utilities Co. v. Fry, 224 App. Div. 392.)

The Jones case, cited supra is apposite here. In that case the insured had defaulted in the payment of premiums. Option 2 of the policy provided that in such event the cash surrender value might be applied to the purchase of nonparticipating, paid-up life insurance, upon the written request of the insured and upon the surrender of the policy “ 1 before the expiration of the days of grace.’ ” (P. 389.) The grace period passed. Thereafter insured applied for paid-up insurance, forwarded the application to the company and surrendered the old policy. Before the company accepted the application the insured died. Upon refusal of the company to pay the face of the policy, the beneficiary brought suit since the policy had been automatically extended as term insurance. The company’s defense was that a contract had been effected by the insured’s request for a paid-up policy and that no acceptance of the offer was necessary. The Appellate Division expressly rejecting the argument that acceptance by the company was not necessary, said at page 392: “ But in the case at bar the consent of the company is a ‘ prerequisite to the change of the policy to paid-up life insurance. This is so because the right of the insured to demand that the policy he changed to paid-up life insurance had terminated by his failure,to exercise such right before the expiration of the days of grace.” (Emphasis supplied.)

We affirmed. In the instant case likewise the consent of the company was necessary. In legal effect there is no difference between an inability to accept an option which has terminated as in the Jones case {supra), and inability to accept an option which has never existed or been offered as in the instant case.

The insurer’s reply of March 1st was not an acceptance of the insured’s counteroffer. The company did not accept the insured’s counteroffer of withdrawals of principal without limitation as to amount. Instead it sent a letter and the form of “ Income Settlement. - Request, ’ ’ offering the insured the right to withdrawals of principal but requiring ,a withdrawal of at least $250 if any were made. The statement in the letter that If satisfactory the form should be signed by you ”, shows clearly that the company did not consider it an acceptance of insured’s offer, but a rejection and a counteroffer. This counteroffer was not embodied in any option provision of the policy. The portion thereof which offered to hold the- proceeds as a principal sum and pay interest monthly thereon is part of option 1. The portion which dealt with the payment of installments of principal and interest is found in .options. 2, 3 and 4. fin none of the options is there any provision permitting a withdrawal of principal qua principal. Neither the company letter nor the “ Income Settlement Request ” made any provision for payment of the portion of the principal sum not distributed to the insured in his lifetime. The .offer then was new and distinct. The so-called ‘£, supplementary contract ” later prepared made provision for payment of that portion of the principal sum which was not distributed in the lifetime of the insured to his executors or administrators but the company still declined to make that portion payable. to insured’s “ executors, administrators or assigns ” as requested by him in his letter of February 15th. (Emphasis supplied.)

The distinction between a supplemental or supplementary contract and a new contract of insurance is of prime importance in the case at bar. Under a supplemental contract the rights and duties of the parties flow from the .original contract, whereas under a new contract they flow from the new agreement. Consequently to determine whether there has been a completed bargain it is necessary to consider the terms of offer and acceptance specified by the parties in the correspondence and forms relating to the new contract. Judge Augustus Hafto speaking for a unanimous court in Mutual Benefit Life Ins. Co. v. Ellis (125 F. 2d 127, Note 138 A. L. R. 1484, certiorari denied 316 U. S. 655) said that a supplemental contract of insurance can result only from acceptance of the express terms of a particular option. There is marked similarity between the option provisions and request for a settlement in the Ellis case, cited supra, and in the case at bar.

The court said (p. 130): “ The certificate was not a supplementary insurance contract, for Mrs. Addie accepted none of the options in any accurate or legal sense. She was only entitled to exercise a particular option ‘ at the maturity ’ of the original policy — that is, upon the death of the insured. She perhaps intended to accept Settlement Option A when she requested the company to retain the proceeds of the policies and make interest payments to her during her life. But even though the power to dispose of the principal after her death be thought to have been implied under Option A and to have been exercised by the direction to pay it to the sisters, her retention of the right to have it distributed to herself through the exercise of Options B and C shows that she did not in fact exercise any one of the original options. There was, however, nothing to prevent her from making a new agreement with the company embodying the terms of the certificate and providing that the principal of the policies should be paid to her husband’s three sisters, whose rights would not he derived from the policies or through the exercise of the options hut from the new agreement.” (Emphasis supplied.)

In the instant case the “ Income Settlement Request ” is analogous to the form issued by the insurance company in the Ellis case {supra) by which the application for an “ Interest Income Bearing Certificate ” was made. That certificate so issued is analogous to the so-called “ supplementary contract ” made out by the insurance company in the case at bar. Thus in both cases negotiations between an insurance company and an individual occurred, looking toward the formation of a new contract to come into existence in the future. Other cases in which the courts have found that any modification of the original contract results in a new contract with new and separate rights are: Gans v. Aetna Life Ins. Co. (214 N. Y. 326); Landy v. New York Life Ins. Co. (170 Misc. 942, affd. 256 App. Div. 813); Nielsen v. General Amer. Life Ins. Co. (89 F. 2d 90, supra); see Aetna Life Ins. Co. v. Dunken (266 U. S. 389, 399-400).

The insured under his policy was entitled to have the net cash value within the terms provided specifically in section 8 of the policy or the insured could surrender the policy to “ * * * be settled by one of the following optional Modes of Settlement instead of being paid in one sum ” under section 2. He did neither in the terms offered to him and those terms were indivisible,

To summarize it in three paragraphs, it is a true supplemental or “ supplementary ” life insurance contract when, for instance, the life insurance contract provides a series of options, any one of which may be elected by the insured at an appropriate time. The supplemental contract thus provided for springs into existence upon the making of the election, and by reason of the election, without any further act of the insurance company.

A modified or new or changed life insurance contract comes into existence when a new offer, not contemplated or provided for in the original life insurance contract, is made either by the insured or the insurer and accepted in its exact terms by the other. If not so accepted, there is, of course, a new offer which must in turn be accepted.

The so-called “supplementary contract ”, as the term is applied by the insurance company to the paper dated March 19, 1946, is a new offer to contract which had to be accepted in the manner provided in the company’s “ Income Settlement Request ” and with that manner there was concededly no compliance. Instead it is claimed that there was a waiver of provisions therein by the insurance company, not by the insured, or that the conditions as to the delivery of the policies and as to retention of the “ supplementary contract ” constituting evidence of acceptance were surplusage or meaningless.

The terms of the company’s new offer as embodied in the letter of March 1st and the “ Income Settlement Request ” form specified the acts which would constitute a binding acceptance of the offer. The insured refused to accept the new contract as offered. Therefore, no new contract was effected. The application form forwarded by the company contained a number of provisions outlining the terms of the proposed contract. Paragraph VI provided in part: “ Retention by me of the supplementary contract so prepared shall be deemed acceptance of such contract and approval of the company’s construction of this request.” (Emphasis supplied.)

That brings us back to section 2 of the policy entitled “ Optional Modes of Settlement.” Whatever may have been the reasons for drafting section 2 with all the limitations contained therein it is abundantly clear that the insured in his letter of February 15th in which he asked for the right to draw principal after policy surrender and to provide for payment of the balance remaining at his death to his executors, administrators or assigns, was applying for a new contract and that his offer to make such new contract had to be accepted and approved by the proper officer under section 14 before there could be any modification of his original insurance contract. Seemingly the company never contemplated accepting his offer in toto because it never gave the insured the right to have the money remaining with the company after his death paid to his assigns. This alone indicates not only that the insured did not accept something offered in the optional “ Modes of Settlement ” but that what he was seeking was never consented to or granted by the company even in its “ supplementary contract ”. Consequently he was to have the right to examine the new contract and reject it if not suitable to him. “ It is usually considered that when the insured applies for a contract, he has a reasonable time after receipt thereof to examine its terms and return it if unsatisfactory. ” (1 Appleman on Insurance Law and Practice, § 172.) In the instant case the insured not only refused to retain the new contract offered but refused to accept it and his telegram before any tender of the new contract was attempted, evidenced that he did not intend to accept such tender. Moreover, the delivery of the new contract was to be concurrent with the surrender of the original policies. Examination and retention of the new contract to be issued to him were necessary, by the company’s own terms as prescribed by the language of the company in its ‘ ‘ Income Settlement Request,” before there was to be a binding election to give up his old policies. Any and all ambiguities and differences of opinion affecting construction (1) as to the meaning of a provision for retention of the new contract and (2) as to the surrender of the original policy insurance contracts, must be resolved against the company since it drafted the policy contracts and “Income Settlement Request” form. (Hart v. Travelers Ins. Co., 236 App. Div. 309, affd. 261 N. Y. 563; 1 Williston on Contracts [Rev. ed.], § 37; 3 Williston on Contracts [Rev. ed.], § 621; McKinney’s Insurance Law [1949 ed.], § 155, note 5, and cases cited thereunder.)

The insured refused to surrender his old policies, a condition precedent to the issuance of a new policy. The policy provision “ Method of Election ” provides: “ An optional Mode of Settlement can be elected or a previous election revoked or changed, only by written notice to the Company accompanied by the Policy for endorsement.” (Emphasis supplied.)

The requirement for surrender of the policies is repeated in the miscellaneous provision in section 14 of the policies: “In any settlement of this Policy at its maturity as a death claim or on surrender, any indebtedness to the Company on this Policy shall be deducted and surrender of the Policy to the Company will be required.” (Emphasis supplied.)

The surrender requirements of the old policies were repeated by the company in its letter of March 1st: “ When we receive the signed request form we will issue a supplementary contract providing for the settlement elected. The contract will be forwarded * * * to be delivered in exchange for the policies, if the policies have not previously been sent to the Home Office.” (Emphasis supplied.)

The company argues that a physical surrender of the policies is not necessary to terminate the insurance. However, the cases it relies upon involve situations in which an option was elected or a policy was cancelled. In all of them action by the insured effected the option or the cancellation without more. The right conferred upon the insured was therefore absolute. The company could not withhold its consent to defeat that right. As was said, in Fidelity Mut. Life Ins. Co. v. Merchants’ & Mechanics’ Bank (71 P. 2d 777, 778, certiorari denied 293 U. S. 593): The right of the bank as assignee to surrender the policy by December 29th for cash measured by its surrender value was an absolute option dependent only on the bank’s will and act, and not requiring any consent on the part of the insurance company.” (Emphasis supplied.)

The company argues that even though the surrender of the old policy contract and retention of the new one were conditions precedent to the acceptance, that such conditions existed for the benefit of the insurer and could be waived. By reason of the company’s offer of a new contract the insured was to have the right to receive, examine and return the policy if not satisfactory. Retention of it by the insured was specified by the company as the act making a completed acceptance. That' provision was for the benefit of the insured and could not be waived by the company. (See 1 Williston on Contracts [Rev. ed.], § 92, pp. 291-292.) Until those acts were performed by the insured the contract did not come into being. They were not performed. Therefore the payment of the premium and sending of the telegram to the company on March 28th kept the policy contracts in full force.

It is evident that the tender of payment of premium (no one questions the fact that it was by check) was timely and should have been accepted so that the payment would have carried beyond the death of deceased. The tender of payment of the premium for the year March 5, 1946, to March 5, 1947, kept the policy alive for all purposes during that period, including the right of the insured to disability benefits. However, since no option under section 2 was elected and there was no meeting of the minds of the parties as to the creation of a new “ Mode of Settlement ” for this insured alone, the insured would have been insured without such tender, or any action on his part at all, for fourteen years and six months, or until he was sixty-eight years and six months old, for the face amount of the policies from March 5, 1946, according to the table under section 10. (See sections 8 and 9 of the policies.)

In the affidavit submitted by respondent company, it is stated that the plaintiffs are not entitled to summary judgment for disability benefits under policy No. 4303328 because no evidentiary facts of such disability are set forth in plaintiffs’ moving papers ”. In the affidavit of T. J. Gram, submitted by the plaintiffs, it is set forth that the insured was permanently and totally disabled, before he reached the age of sixty, Horn April 1,1946, until the date of his death. The affidavit was not made upon information and belief. The deponent states as a fact known to him: “ * * * that during said period, the insured, John A. Messer, was totally unable to carry on and did not carry on his usual occupation between said, dates, and for a long period of that time was a patient at the St. Francis Hospital in Olean, New York.”

None of the statements in plaintiffs’ affidavit is controverted by the defendant. The company refused to furnish forms for the filing of a claim for total disability benefits. Plaintiffs are entitled to recover disability benefits which accrued under the policy during the period of total disability of the insured from April 1, 1946, to his death.

There does not here arise a situation such as that in Sanders v. Pottlitzer Bros. Fruit Co. (144 N. Y. 209), where we construed several writings and determined as a matter of law, (1) that the parties had entered into a contract, (2) that all that remained was to memorialize it in a formal writing, and (3) that failure so to do did not affect the existence or validity of the contract. But the very text of the writings here in question demonstrates their preliminary character, since that text speaks of an ultimate “ supplementary contract ” as the end of the transaction — a fact that is buttressed by the circumstance that, as we have noted (supra, p. 380), the letter accompanying the Income Settlement Bequest ” was not written by an officer authorized under section 14 to modify or change the policy.

The judgments should be reversed and the motion by appellants for summary judgment granted, with costs in all courts.

Desmoed, J,

(dissenting). I vote for affirmance. With the rules of law stated in the majority opinion I have no quarrel. However, the undisputed, unambiguous documentary proof requires, as matter of law, a holding that, when the insured here signed and returned the request form dated March 4, 1946, the minds of the parties had met, and there then existed a complete agreement as to the terms of a cancellation and surrender, effective March 5, 1946 (Pequot Mfg. Corp. v. Equitable Life Assur. Soc., 253 N. Y. 116, 121). That very March 4, 1946, document signed by the insured, starts out with the statement that the policies are surrendered as of March 5, 1946 ”. Defendant had by letter notified the insured that the request form “ should be forwarded to the Company , not later than March 5, 1946 if the surrender is to be effective as of that date.” The insured did so forward it, and the surrender did become effective.

The parties had agreed, by the same exchange of documents, that the contemplated formal supplementary contract was to be no more than a memorial, or evidence, of the existing pact (see 1130 President St. Corp. v. Bolton Realty Corp., 300 N. Y. 63), and the insured could not reject that memorial so long as it conformed to the arrangement already in effect. No claim has ever been made that the supplementary contract, when tendered by defendant to the insured in due course, was in any way inconsistent with the agreement already concluded. Nevertheless, the insured, at just about the time when, according to the complaint here, he became totally disabled, attempted to revoke the cancellation. He had no right to do so.

The failure of the insured physically to return the policies is of no particular significance and added nothing to his rights (Gately-Haire Co. v. Niagara Fire Ins. Co., 221 N. Y. 162; Lofaro v. John Hancock Mut. Life Ins. Co., 272 N. Y. 627; Foley v. Equitable Life Assur. Soc., 290 N. Y. 424; Degnan v. Metropolitan Life Ins. Co., 178 Misc. 312).

Lohghran, Oh. J., Lewis, Dye and Froessel, JJ., concur with Conway, J.; Desmond, J., dissents in opinion in which Fuld, J., concurs.

Judgments reversed, etc.


author: Conway, J.

text:
    The People of the State of New York, Respondent, v. Irving Feiner, Appellant.
    Submitted January 9, 1950;
    decided March 2, 1950.

      Sidney E. Greenberg for appellant.
    I. The People did not prove beyond a reasonable doubt that defendant committed the acts charged. II. The conviction of defendant violates the First and Fourteenth Amendments of the Federal Constitution. (Lovell v. City of Griffin, 303 U. S. 444; Hague v. C. I. O., 307 U. S. 496; Grosjean v. American Press Co., 297 U. S. 233; Thomas v. Collins, 323 U. S. 516; Bridges v. California, 314 U. S. 252; West. Virginia State Bd. of Educ. v. Barnette, 319 U. S. 624; Thornhill v. Alabama, 310 U. S. 88; Murdock v. Pennsylvania, 319 U. S. 105; People v. Nixon, 248 N. Y. 182.) ITT. Defendant was entitled to use a loud-speaker. (Saia v. New York, 334 U. S. 558.) TV. In the absence of the persons being present at the time the alleged characterizations were made, there is no basis for convicting defendant for the use of such language, even if it may be assumed that such language was used. (Cantwell v. Connecticut, 310 U. S. 296; Chaplinshy v. New Hampshire, 315 U. S. 568; People v. Phillips, 245 N. Y. 401; Shankroff v. La Guardia, 61 N. Y. S. 2d 839, 247 App. Div. 785; Schenck v. United States, 249 U. S. 47; Herndon v. Lowry, 301 U. S. 242; Terminiello v. Chicago, 337 U. S. 1.) V. The conviction also violates section 8 of article I of the State Constitution. (People v. Kieran, 26 N. Y. S. 2d 291; People v. Nixon, 248 N. Y. 182.) VI. The sentence is excessive.

      Reuben T. Uretsky for New York State Civil Rights Congress, amicus curia, in support of appellant’s position.
    I. The conviction directly abridges the basic constitutional rights of freedom of speech and freedom of assembly guaranteed by the Fourteenth Amendment of the United States Constitution and section 8 of article I of the State Constitution, and must be reversed. (Schneider v. State [Irvington], 308 U. S. 147; Hague v. C. I. O., 307 U. S. 496; De Jonge v. Oregon, 299 U. S. 353; Terminiello v. Chicago, 337 U. S. 1; People v. Muller, 286 N. Y. 281; Thomas v. Collins, 323 U. S. 516; Bridges v. California, 314 U. S. 252.) II. Appellant’s constitutional rights to procedural due process under the Fourteenth Amendment have been violated by the application in this case of section 722 of the Penal Law in such manner that no ascertainable standard guilt for the offense is provided. (Winters v. New York, 333 U. S. 507; Connolly v. General Constr. Co., 269 U. S. 385; Small Co. v. American Sugar Refining Co., 267 U. S. 233; United States v. Cohen Grocery Co., 255 U. S. 81; United States v. C. I. O., 335 U. S. 106.)

      Jesse E. Cantor, District Attorney (Dan J. Kelly of counsel), for respondent.
    I. The evidence clearly shows acts and language and possible disturbances tending to a breach of the peace. II. The police officers were confronted with a tense situation. III. The duty rested on the Court of Special Sessions to determine the accurate version among conflicting stories of witnesses for the People and for defendant and its decision should not be disturbed. (People v. Tepperman, 151 Misc. 810; People v. Yergan, 164 Misc. 83; People v. Arcidiaco, 156 Misc. 461.) IV. It is immaterial whether any breach of the peace actually occurred or whether the persons affected by defendant’s conduct were actually annoyed. (People v. Yergan, 164 Misc. 83; People v. Lipschitz, 120 Misc. 633; People v. Squires, 135 Misc. 214; People v. Berkowitz, 132 Misc. 744; People v. Hipple, 263 N. Y. 242; People v. Nesin, 179 App. Div. 869; People v. Galpern, 259 N. Y. 279; People v. Nixon, 248 N. Y. 182; Whitney v. California, 274 U. S. 357; Hague v. C. I. O., 307 U. S. 496.) V. There has been no violation of the constitutional rights of defendant nor does his conviction violate either the Fourteenth or the First Amendment of the Federal Constitution. (People v. Pieri, 269 N. Y. 315; People v. Arcidiaco, 156 Misc. 461; People v. Berman, 156 Misc. 463; Chaplinsky v. New Hampshire, 315 U. S. 568.) VI. The use of a loud-speaker was never an issue in the trial of defendant’s case in the Court of Special Sessions of the City of Syracuse and his conviction in that court.
   Conway, J.

Defendant was convicted of the offense of disorderly conduct (Penal Law, § 722) in the Court of Special Sessions of the City of Syracuse. The conviction was affirmed by the Onondaga County Court and the case is here by permission of a Judge of this court.

On the evening of March 8, 1949, defendant, Irving Feiner, a student at Syracuse University, was addressing a group of people on South McBride Street, near Harrison Street, in the city of Syracuse. A complaint concerning the gathering was received over the telephone by the police department and two officers, Flynn and Cook, were dispatched to the scene to investigate. That was about 6:30 p.m. Officer Flynn, an acting sergeant, arrived in a police car about twelve or thirteen minutes later and found officer Cook already there in another police car. They observed a crowd of approximately seventy-five or eighty people, both colored and white, gathered near defendant, who was standing on a large wooden box, situated between the sidewalk and a parked automobile on South McBride Street. The automobile was about forty or forty-five feet from the corner and the crowd extended to about twenty or twenty-five feet from the corner. The crowd covered an area of about fourteen by thirty-five feet.

Defendant was speaking into a hand microphone which was attached to loud-speakers on the automobile. Between five and ten associates of defendant were present. They distributed circulars and helped set up the sound amplification apparatus. Defendant was exhorting his listeners to attend a meeting to be held that night in the Syracuse Hotel. In the course of his remarks, defendant “ called Mayor Costello [of Syracuse] a champaign [sic] sipping bum and President Truman a bum. He referred to the American Legion as Nazi Gestapo agents — he also said the fifteenth Ward was run by corrupt politicians and that horse rooms were operating.”

The crowd gathered by defendant filled the space between the curb and the building line on the sidewalk. Pedestrians, trying to use the sidewalk, were forced to step out to walk in the street. Some of the crowd spread out onto the street, and, since traffic was passing at the time, the officers attempted to get the .people back on the sidewalk. As officer Cook ápproached the. scene' earlier in the police car, he had to slow down pretty near to a stop at that point ’ ’ because of the pedestrians in the street.

Officer Flynn further observed that there was ‘ ‘ angry muttering ” throughout the crowd and he had trouble getting through it. The crowd was restless. There was some pushing and shoving. They were milling around back and forth. Remarks were being made in the audience both for and against the speaker. ‘ ‘ Some were calm and some were not — they were discussing the speech pro and con.” There was, however, no disorder. After telephoning the police station from a nearby store, Flynn returned to the police cars with Cook and then they crossed the street and mingled with the crowd.

Defendant was speaking in a loud, high-pitched voice and was appealing to the colored people in particular. Defendant said that the Negro people did not have equal rights and that they should rise up in arms and fight for them. Flynn got the “ impression ” that defendant was trying to arouse the Negro people against the whites. Defendant’s statement' that the Negro people should rise up in arms and fight stirred up a little excitement ” and the crowd “ seemed to mill around a little then.” One man approached the officers and said if you don’t get that ‘ son of a bitch ’ off,' I will go ovér and get him off there myself. ’ ’ Other persons made remarks about the police force not being able to handle the crowd and that they did not see why they had to put up with that kind of stuff in the neighborhood.”

At this point, Flynn “ figured it had gone far enough ”. The crowd was “ getting to the point where they would be unruly.” Although there had been no actual disturbance, Flynn said, “ we stepped in to prevent it from resulting in a fight.” ‘ Flynn approached the defendant, not for the purpose of arresting him, but to get him to break up the congregation. He asked defendant to get down off the box but the latter just looked, and kept right on talking to the crowd.” Flynn waited a minute and then demanded that he get down, but defendant still refused. The crowd, which was now quiet, was pressing closer around defendant and the officer. Finally, Flynn told defendant he was under arrest and reached up to take hold of him. Defendant stepped down off the box and announced over the microphone that “ ‘the law has arrived, and I suppose they will take over now.’ ” In all, Flynn had asked defendant to get down three times over a space of four or five minutes. Officer Flynn had been present at the scene about fifteen or twenty minutes and Cook about twenty-five or thirty minutes. Defendant, of course, had been speaking for some time longer than a half hour.

On his case, in addition to character witnesses from the faculty of Syracuse University, defendant introduced evidence controverting the officers’ testimony concerning the size and temperament of the crowd, the degree of obstruction of the sidewalk and street, the substance of the talk, and defendant’s response to the officer’s request. Portions of this testimony corroborated elements of the People’s case; portions were not believed by the Trial Judge.

On the evidence, the Special Sessions Judge found defendant guilty of disorderly conduct under section 722 of the Penal Law. In section 722, the Legislature has enumerated certain acts which, if committed with intent to provoke a breach of the peace, or which, even without such intent, may reasonably occasion a breach of the peace, render the actor guilty of disorderly conduct. The section provides in part as follows:

“ Any person who with intent to provoke a breach of the peace, or whereby a breach of the peace may be occasioned, commits any of the following acts shall be deemed to have committed the offense of disorderly conduct:

“ 1. Uses offensive, disorderly, threatening, abusive or insulting language, conduct or behavior;

“ 2. Acts in such a manner as to annoy, disturb, interfere with, obstruct, or be offensive to others;

“ 3. Congregates with others on a public street and refuses to move on when ordered by the police; * *

Defendant was charged with and found guilty of a violation of subdivision 2 of section 722, but it is settled that the iudgment of conviction in a case such as this will be affirmed if the evidence establishes a violation of any of the subdivisions of the section. (People v. Hipple, 263 N. Y. 242, 244.)

In finding the defendant guilty, the court, in an oral decision addressed to defendant, said: “ * * * You had a perfect right to appear there and to use that implement, the loud speaker. You had a right to have it in the street. There is no question about that. * * * ” The court further assumed that defendant had a legal right to refer to Mayors Costello and O’Dwyer, President Truman and the American Legion in abusive and disrespectful terms. The Trial Judge then reviewed the evidence, pointing out the size of the crowd gathered by defendant, the blocking of the sidewalk, the necessity for pedestrians to walk out on the roadway and the unrest and hostility engendered in a portion of the crowd. He continued:

“ Now, under those circumstances I think the officers were fully justified in feeling that a situation was developing which could very, very easily result in a serious disorder. I think the officers were very patient up to that time. I think that on the basis of the evidence here that you deliberately agitated and that in every way that you could, you goaded these officers to action. * * *

“ * * * I think they [the police officers] had every reason in the world to believe, on the basis of the facts that they have testified to, that something serious was about to happen. And then the Officer asked you to get down off the box, and he asked you again, and then one of the Officers says he took you by the arm or reached for you. Three times you had to be requested to get off the box. I think that all those facts that have been testified to here are sufficient to sustain the charge of Disorderly Conduct. * * *

“ I find on the facts that you are guilty as charged in the Information and Warrant.”

The findings contained in the decision of the Trial Judge sufficiently establish that defendant, under section 722 and our cases construing it, was guilty of disorderly conduct — putting aside, for the moment, constitutional objections to the conviction.

The statement made by the Trial Judge to defendant that “ on the basis of the evidence here * * * you deliberately agitoted and * # * in every way that you could, you goaded these officers to action ” was clearly a finding that defendant, by his conduct under the circumstances, intended to provoke a breach of the peace. Certainly, defendant acted “ in such a manner as to annoy, disturb, interfere with, obstruct, or be offensive to others ”, within the meaning of subdivision 2, and such conduct, in conjunction with an intent to provoke a breach of the peace, is sufficient in itself to establish the offense of disorderly conduct. The defendant’s conduct, at the very least, was such that it tended to disturb the public peace and quiet and to occasion a breach of the peace. That, under our cases, is sufficient. (People v. Nixon, 248 N. Y. 182, 188-189; People v. Galpern, 259 N. Y. 279, 281-282, 284-285; People v. Hipple, supra; People v. Monnier, 280 N. Y. 77, 78-79; People v. Edel, 286 N. Y. 637.) It is clear, apart from constitutional objections, that defendant’s refusal to accede to the requests of the police officer within the scope of his lawful authority justified defendant’s arrest and subsequent conviction for disorderly conduct. (People v. Nixon, supra-, People v. Galpern, supra.)

Defendant’s main contention on this appeal is that his conviction of the offense of disorderly conduct violates the right of freedom of speech guaranteed by our Federal and State Constitutions. We assume that the constitutional question was properly raised below, even though defendant’s attorney did not specifically move on the record to dismiss on that ground, for both courts below considered it.

It is perhaps laboring the obvious and oft-repeated to state that the constitutional guarantee of freedom of speech is not an absolute right to be indiscriminately exercised under all circumstances and conditions. Social welfare requires, in certain instances, reasonable regulation of freedom of speech ivhich, unrestrained, would produce calamitous or undesirable results — mot only for the locality and public order but also, in the long run, for the individual involved. The preservation of order and the prevention of disturbance are of prime importance to the State. As was said in Cox v. New Hampshire (312 U. S. 569, 574 [Hughes, Ch. J.]): “Civil liberties, as guaranteed by the Constitution, imply the existence of an organized society maintaining public order without which liberty itself would be lost in the excesses of unrestrained abuses. The authority of a municipality to impose regulations in order to assure the safety and convenience of the people in the use of public highways has never been regarded as inconsistent with civil liberties but rather as one of the means of safeguarding the good order upon which they ultimately depend. The control of travel on the streets of cities is the most familiar illustration of this recognition of social need. * # # j>

In the instant case, we have a situation in which-on a public street a portion of defendant’s audience became enraged and •aroused at his utterances. Others were sympathetic and were present for the specific purpose of .assisting and applauding the efforts of the defendant. The crowd became restless and potentially unruly. It filled the sidewalk and' spilled out into the adjacent thoroughfare obstructing or impeding both pedestrian and vehicular traffic. An imminent danger of a breach of the peace, of a disturbance of public order, perhaps even of riot, was threatened. Defendant, at the very least, knew of the condition and was heedless of the potential evil consequences. More, as found by the trial court, .he deliberately continued in a vein calculated to precipitate those consequences. We do not ■ think, under those circumstances, that defendant had a constitutional right to disregard the police officer’s word of warning with impunity and to continue to blare out his provocative utterances over loud-speakers to a milling, restless throng composed of hostile and sympathetic listeners. Where both the audience and the speaker are inevitably proceeding toward an eruption of civil strife — where, indeed, both seem to be working up to a pitch where serious disorder might well be expected — the power and duty of the State to punish the speaker who refuses to desist after appropriate warning is clear.

Justice Robebts stated the relevant considerations well in Cantwell v. Connecticut (310 U. S. 296, 308) as follows: “ The offense known as breach of the peace embraces a great variety of conduct destroying or menacing public order and tranquility. It includes not only violent acts but acts and words likely to produce violence in others. No one would have the hardihood to suggest that the principle of freedom of speech sanctions incitement to riot or that religious liberty connotes the privilege to exhort others to physical attack upon those belonging tb another sect. When clear and present danger of riot, disorder, interference with traffic upon the public streets, or other immediate threat to public safety, peace, or order, appears, the power of the State to prevent or punish is obvious. Equally obvious is it that a State may not unduly suppress free communication of views, religious or other, under the guise of conserving desirable conditions. * * * ”

In the instant case, there is no indication that the action of the police officer was taken as a subterfuge or excuse for suppression of defendant’s views and opinions. The courts below have found, and we are bound by the finding, that the officer was motivated solely by a proper concern for the preservation of order and the protection of the general welfare, in the face of an actual interference with traffic and an imminently threatened disturbance of the peace of the community.

We are well aware of the caution with which the courts should proceed in these matters. The intolerance of a hostile audience may not, in the name of order, be permitted to silence unpopular opinions. (49 Col. L. Rev. 1118.) The Constitution does not discriminate between those whose ideas are popular and those whose views arouse opposition or dislike or hatred — guaranteeing the right of freedom of speech to the former and withholding it from the latter. We recognize, however, that the State must protect and preserve its existence, and, unfortunate as it may be, the hostility and intolerance of streei audiences and the substantive evils which may flow therefrom, are practical facts of which the courts and the law enforcement officers of the State must take notice. Where, as here, we have a combination of an aroused audience divided into hostile camps, an "actual interference with traffic and a speaker who is deliberately agitating and goading the crowd and the police officers to action, we think a proper case has been made out, under our State and Federal Constitutions, for punishment.

Defendant’s principal, but mistaken, reliance is upon the recently decided case of Terminiello v. Chicago (337 U. S. 1, 5). There the Supreme Court reversed the conviction of the defendant upon the ground that it might have been based upon certain instructions of the Trial Judge to the jury authorizing a verdict of guilty if defendant’s speech stirred the people to anger, invited dispute or brought about a condition of unrest. It there appeared that the speech of Terminiello was delivered in a private hall or auditorium and not upon the public street. In the abstract, no one may disagree with the proposition that a person cannot constitutionally be convicted for doing no more than delivering a speech which stirs people to anger, invites dispute or brings about a condition of unrest. That, however, is not the instant case. Here, the defendant, as indicated above, disrupted pedestrian and vehicular traffic on the sidewalk and street, and, with intent to provoke a breach of the peace and with knowledge of the consequences, so inflamed and agitated a mixed audience of sympathizers and opponents that, in the judgment of the police officers present, a dear danger of disorder and violence was threatened. Defendant then deliberately refused to accede to the reasonable request of the officer, made within the lawful scope of his authority, that the defendant desist in the interest of public welfare and safety.

We conclude that defendant was properly convicted of the offense of disorderly conduct and that his conviction, under the circumstances, does not infringe upon his constitutional right to freedom of speech.

The judgment should be affirmed.

Loughran, Ch. J., Lewis, Desmond, Dye, Fuld and Froessel, JJ., concur.

Judgment affirmed.