author: Rippey, J.

text:
    Alexander Hedeman, Appellant, v. Fairbanks, Morse and Company, Respondent.

      Argued May 28, 1941;
    decided July 29, 1941.

      Sidney M. Wittner for appellant.
    The Triangle contract is complete and enforceable and in breach thereof defendant is liable for damages. (Rubin v. Dairymen’s League Co-op. Assn., 284 N. Y. 32; Edison, Inc., v. Blackman Distributing Co., 66 Fed. Rep. [2d] 722; Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205; Taylor v. Morgan’s Sons Co., 124 N. Y. 184; Orester v. Dayton Rubber Mfg. Co., 228 N. Y. 134; Ehrenworth v. Stuhmer & Co., 229 N. Y. 210; Horton v. Hall & Clark Mfg. Co., 94 App. Div. 204; Stone v. Argersinger, 32 App. Div. 208; Kenney v. Knight, 127 Fed. Rep. 408; Pancoast v. Industrial Glass Co., 148 App. Div. 473; 210 N. Y. 565; Jacquin v. Boutard, 89 Hun, 437; Turner v. Goldsmith, 1 Q. B. 544.) Plaintiff is entitled to recover both under his written and oral contract. (Dibble v. Dimick, 143 N. Y. 549; Taylor v. Morgan’s Sons Co., 124 N. Y. 184; Abel v. Nelson, 104 N. Y. Supp. 362; Stone v. Argersinger, 32 App. Div. 208; Jacquin v. Boutard, 89 Hun, 437; Murray Realty Co. v. President & Directors of Manhattan Co., 162 Misc. Rep. 21; Pancoast v. Industrial Glass Co., 148 App. Div. 473 ; 210 N. Y. 565; Warren Chemical & Manufacturing Co. v. Holbrook, 118 N. Y. 586.)

      Robert B. Cumming and John B. Gates for respondent.
    Audiola did not breach its contract with Triangle. (Curtiss Candy Co. v. Silberman, 45 Fed. Rep. [2d] 451; Rubin v. Dairymen’s League Co-op. Assn., 284 N. Y. 32; Biber Bros. News Co. v. New York Evening Post, 144 Misc. Rep. 405; Watson v. Gugino, 204 N. Y. 535; Ford Motor Co. v. Kirkmyer Motor Co., 65 Fed. Rep. [2d] 100,1; DuPont v. Claiborne-Reno Co., 64 Fed. Rep. [2d] 224; 290 U. S. 646; Huffman v. Paige-Detroit Motor Car Co., 262 Fed. Rep. 116; Motor Car Supply Co. v. General Household Utilities Co., 80 Fed. Rep. [2d] 167; Goodyear v. Koehler Sporting Goods Co., 159 App. Div. 116; 220 N. Y. 749; Redican v. Interchangeable Magnetic Sign Co., 162 App. Div. 803.) Assuming, but not conceding, that Audiola breached its contract with Triangle, plaintiff has no claim for damages. (Friede v. White Co., 244 Fed. Rep. 272; Stockton Commission Co. v. Narragansett Cotton Mills, Inc., 11 Fed. Rep. [2d] 618;
      Fuller v. Bradley Contracting Co., 183 App. Div. 6; 229 N. Y. 605; Caldwell Co. v. Connecticut Mills Co., 225 App. Div. 270; 251 N. Y. 565; Cray & Co. v. Western Borax Co., 99 Fed. Rep. [2d] 239; Mende, Inc., v. Wertz Co., 133 Misc. Rep. 355.)
   Rippey, J.

Plaintiff, a salesman, brought this action against his employer to recover commissions alleged to be due him and for damages for wrongful discharge and other counts. Defendant rested at the close of plaintiff’s case, hjpon motion by defendant, the trial judge directed a verdict in favor of plaintiff for $689.53 and interest, representing commissions earned by plaintiff under his contract with defendant prior to May 16, 1934, the date of its actual or attempted termination, and for defendant on all other claims. Upon appeal, the evidence together with any inferences reasonably to be drawn therefrom must be considered in aspect most favorable to plaintiff and if, when so considered, questions of fact arose, it was error for the court to take those questions from the jury and direct a verdict for defendant (Getty v. Williams Silver Co., 221 N. Y. 34).

The Audiola Radio Company of Chicago, in October, 1933, was the manufacturer of radio receivers for sale through jobbers, department stores, furniture stores and similar large retail outlets and plaintiff desired to obtain the agency for the exclusive sale thereof within the city of New York, Long Island, and the State of New Jersey north of but not including Mercer" and Monmouth counties. On the 30th day of October, 1933, the parties entered into a written agreement-whereby the plaintiff was employed by the manufacturer to sell radio receivers under the general supervision and direction of the manufacturer within the aforesaid territory at prices and upon terms from time to time to be designated by the manufacturer for a period of one year ending October 30, 1934. The contract further provided that the plaintiff should devote as much of his time, attention and energies as might be necessary u to actively and energetically increase the sale of the articles ” and that he would not engage in the manufacture or sale of any articles which in the judgment of the manufacturer would conflict or compete with its products during the period of the contract and for one month thereafter. The agreement provided that he should receive as compensation for all services rendered commissions as might be from time to time established by the manufacturer on orders approved and accepted by the manufacturer during the term of the contract and thereafter shipped to and paid for by the purchaser. The evidence shows that five per cent was the agreed commission to be paid on all sales. The manufacturer reserved the right to make direct sales to export account, national sales outlets or manufacturers distributing nationally that might have outlets in the said territory and on such sales no commission should be due unless the manufacturer specially agreed. It was provided that the agreement might be terminated by either party prior to its expiration by delivering to the other thirty days’ notice in writing of election to terminate and that no commission would be payable on sales made after the termination of the contract.

Performance of the contract was immediately undertaken by the parties. Shortly thereafter the Audiola Company was taken over by defendant, who adopted plaintiff’s contract and assumed all obligations of the Audiola Company. Brown, the sales manager for Audiola, was continued in a similar capacity by defendant. The defendant began the manufacture of washing machines and refrigerators in addition to radios. Then followed an intensified effort to procure distributors who were to be given exclusive territorial rights not only for radios but for refrigerators and washing machines and for defendant’s entire line. Plaintiff called Brown’s attention to the Triangle Company, a long-time successful distributor, and inquired of Brown as to how a contract with that concern, which might be for a long term, would affect his, contract with the defendant and his right to five per cent commission within the territory which that contract covered. Brown thereupon promised the plaintiff that if such a contract was negotiated by defendant he would receive five per cent commission on all sales made by Triangle during the full term of its contract. Consideration was given to the fact that upon the execution of such a contract the effect would be plaintiff’s removal from the scene as a jobber for defendant’s products within the territory exclusively assigned to him.

Thereupon, and on or about April 9, 1934, through plaintiff’s solicitation and aid defendant negotiated a contract with the Triangle Radio Supply Co., Inc., for the exclusive distribution within the territory covered by plaintiff’s contract of the entire line of defendant including radio receivers, refrigerators and accessories, the term of which was to extend to and expire March 31, 1935, with the privilege of a year’s extension. The terms of this contract are found in the oral testimony at the trial and in documentary evidence. The contract included provisions, among others, that the Triangle Company should be the exclusive distributor of defendant’s entire fine in the five boroughs of New York city, Long Island and Westchester county, that the details of prices were to be standard, that the term of the contract was for one year with privilege of extension as above indicated and that payments for merchandise when delivered and accepted were to be made on the 10th and 25th of each month, payment date to be arrived at as follows: “ All net invoices maturing approximately a week before or a week after the 10th will be paid on the 10th, and all invoices maturing approximately a week before or a week after the 25th will be paid on the 25th.” All invoices were subject to a discount of two per cent on the dates provided for payment. The contractual relation between defendant and the Triangle Company seems to have been finally established on April 13, 1934, the parties at once entered into performance and there is some evidence that the term of the contract was extended for an additional term of four years.

Performance under the Triangle contract proceeded for some months during which time shipments were made by defendant on orders procured by the Triangle Company. Among the orders was one forwarded to defendant by Triangle on September 29, 1934, for 188 radios. That order was approved and accepted by defendant before any differences arose between Triangle and defendant over their contract. In view of a controversy which later arose between Triangle and the defendant relating entirely to other matters, the latter refused to ship the order except for cash on delivery. The Triangle Company refused to pay cash on delivery since it was not required so to do under the terms of its contract. The evidence showed that Triangle had been successfully engaged in business since 1922, was a bona fide purchaser and was financially responsible. There was evidence that then and previous to that time defendant had many unfilled orders through Triangle from bona fide purchasers.

On May 19, 1934, the Triangle Company wrote Brown that sales resistance to the sales of defendant’s refrigerators was so great that certain improvements it suggested should be incorporated to provide means for successful competition with other manufacturers. Thereafter defendant entered into negotiations with Bruno-New York, Inc., for the purchase of a patent or the procurement of a license under a patent for the improvement of its refrigerators along the fine suggested by the Triangle Company but the only way that the right to use such improvements could be secured was by assigning to Bruno-New York, Inc., the exclusive right to distribute its refrigerators in the territory reserved for Triangle. Defendant thereupon, notwithstanding vigorous protest by the Triangle Company, entered into contract with Bruno-New York, Inc., for the exclusive distribution of its refrigerators within the territory covered by the Triangle agreement and earlier exclusively assigned to plaintiff. On November 3, 1934, defendant wrote a letter to Triangle terminating its contract. Thereafter Bruno-New York, Inc., gave many orders to defendant which it accepted and shipped. Among those approved and accepted was one for 1,500 refrigerators costing upwards of $100,000, but, through delay in the manufacturing process, shipments thereof were not made before March 31, 1935.

By letter dated April 16, 1934, the defendant notified the plaintiff that his services would no longer be needed as of May 15, 1934, and that his contract would thereupon on that date be deemed to be terminated. It is plaintiff’s claim and there is evidence to support his claim that the written contract was modified through sales manager Brown or a new contract entered into with defendant whereby he was to receive a commission of five per cent on all sales made under the Triangle and Bruno-New York, Inc., contracts at least up to March 31, 1935, if orders were accepted and approved by defendant though the goods were not shipped. Specifically, he claims that he was entitled to commissions (1) on sales made by him before May 15, 1934, the alleged effective date of his discharge, (2) on sales made by the Triangle Company for defendant before and after that date, (3) on orders placed by Triangle and Bruno-New York, Inc., and approved by defendant although not filled, (4) on sales made by defendant to the successor of Triangle after the termination of the Triangle contract to March 31, 1935, and that he was entitled to damages for defendant’s breach of its contract with him and of its contract with Triangle.

Among other things the trial court erroneously held as matter of law that the evidence adduced failed to establish that Brown was authorized to modify the written contract between plaintiff and defendant or to make any new contract with plaintiff for defendant. There was no evidence of any written authority. Nevertheless, contrary to the ruling of the court, we think there was ample evidence not only of the authority of Brown to modify the contract but also to make a new contract with the plaintiff, if one were made, and to negotiate with the Triangle Company and later with Bruno-New York, Inc., but, if not, there was evidence of ratification by defendant of his assumed and apparent authority and of acts by defendant to estop it to assert the contrary. If the question of agency is not open to doubt, it is one for the court. But where no written authority of the agent has been proven, questions of agency and of its nature and scope and of ratification by or estoppel of the principal, if dependent upon contradictory evidence or evidence, though not contradictory or disputed, from which different inferences reasonably may be drawn, are questions of fact to be submitted to the jury under proper instructions by the court (Western Transportation Co. v. Hawley, 1 Daly, 327; Bingham v. Harris, 10 Daly, 522, affd., 97 N. Y. 626; Merkel v. Lazard, 114 App. Div. 25; Lilienthal v. German American Brewing Co., 121 App. Div. 628). Affirming the authority of Brown to modify defendant’s written contract with plaintiff on the subject of his right to commissions under the Triangle contract is the admission by defendant by its motion for direction of verdict in plaintiff’s favor for the item of $467 commissions on sales by Triangle made and accepted by defendant prior to May 16, 1934, though the goods were not delivered or paid for until a later date.

Defendant’s motion embraced two items, (1) an item of commissions aggregating $222.53 arising on sales by plaintiff prior to May 16, 1934, and (2) an item of $467 commissions at five per cent arising out of sales by Triangle which were accepted and approved prior to May 16, 1934, but were not consummated by delivery and payment therefor until August 1, 1934. Interest was allowed on the first item from May 16, 1934, and on the second item from August 1, 1934. By the motion for direction of a verdict in plaintiff’s favor for the item of $467, defendant admitted that the written contract between plaintiff and the Audiola Company had been so modified, at least, as to permit of sales by others during the period of plaintiff’s employment on different terms than those embodied in the written contract. Consequently, plaintiff’s discharge did not affect his right to compensation for procuring the Triangle contract (Dibble v. Dimick, 143 N. Y. 549, 553). There was evidence to sustain plaintiff’s claim that defendant had agreed to pay plaintiff commission on sales made by the Triangle Company and approved by defendant prior to March 31, 1935. Among such sales was one of 188 radios and possibly many other sales. Defendant could not defeat plaintiff’s right to compensation for services rendered by refusing arbitrarily to accept orders from the Triangle Company which were within the terms of the contract (Taylor v. Morgan’s Sons Co., 124 N. Y. 184).

Orders for a large amount of merchandise were delivered to defendant from Bruno-New York, Inc., accepted by defendant and the goods in part delivered prior to March 31, 1935. Whether plaintiff was entitled to commission upon such sales depends upon whether the defendant breached its contract with the Triangle Company. That it did is in accord with the evidence. The evidence showing defendant’s refusal to ship radios except upon terms different than stated in the Triangle contract and of the taking away of the territory within which Triangle was awarded exclusive distribution was sufficient in itself, without other evidence which the record contains, of a breach of the Triangle contract by defendant thereby subjecting the defendant to a claim for damages (Orester v. Dayton Rubber Mfg. Co., 228 N. Y. 134). Damages would not be hmited to those arising out of the refusal of the defendant to fill orders actually given but plaintiff would be entitled to recover such damages as he could show he had sustained by total breach of the contract, the measure thereof depending upon the circumstances of the case (Orester v. Dayton Rubber Mfg. Co., supra; Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205). Upon showing the breach by defendant of its contract with Triangle, the latter company was entitled to damages. Plaintiff in turn was entitled to damages measured by the commissions which he might have earned under reasonable probabilities during the remainder of the term of the Triangle contract (Prescott v. Buffalo Fire Appliance Corp., 237 App. Div. 198; Wakeman v. Wheeler & Wilson Mfg. Co., supra). Evidence of plaintiff tending to some extent at least to establish such damages was erroneously excluded by the trial court. If the written contract between plaintiff and defendant was modified or a new contract made between them, as plaintiff claims, his right to commissions could not be defeated by any subsequent modification of the Triangle Company agreement or its termination by defendant without his consent (Pancoast v. Industrial Glass Co., 148 App. Div. 473; affd., 210 N. Y. 565; Horton v. Hall & Clark Mfg. Co., 94 App. Div. 404, 407).

The trial court érroneously held as matter of law that the contract between Triangle and defendant was so uncertain, indefinite and illusory as to be unenforceable. We have already referred to evidence of its terms. By the contract, Triangle was made the exclusive distributor of defendant’s entire fine including radios, refrigerators and washing machines within the territory which defendant later assigned to Bruno-New York, Inc., and was barred from handling any line competing with defendant’s refrigerators. From the evidence adduced the terms of the contract were sufficiently clear, certain and definite to render it enforceable (Edison, Inc., v. Blackman Distributing Co., 66 Fed. Rep. [2d] 722, 727-729; Pancoast v. Industrial Glass Co., supra). Even though, as defendant claims, it were to be held that the contract lacked mutuality at its inception, there was evidence of performance by defendant and a consideration arose which related back to the unilateral promise and became obligatory (Grossman v. Schenker, 206 N. Y. 466).

Whether plaintiff’s written contract was terminated by defendant according to its provisions, whether it was modified by Brown or a new contract was made by him and he had authority to bind the defendant thereby, what the terms of any such modification or new contract were, what the contract between Triangle and the defendant actually was and whether it was breached by defendant were questions of fact for the jury upon the record now presented (Ehrenworth v. Stuhmer & Co., 229 N. Y. 210). Upon the determination of those questions depended the right of plaintiff to recover and the scope of his recovery. We take the record as we now find it and do not attempt to limit or define the questions of fact that may arise upon a retrial of the case. Since the various causes of action and items of recovery are not separable, the conclusion reached requires a new trial of the whole case.

• The judgments should be reversed and a new trial granted, with costs to the appellant in all courts to abide the event.

Loughkan, Finch, Lewis, Conway and Desmond, JJ., concur; Lehman, Ch. J., concurs in result.

Judgments reversed, etc.


source: Caselaw Access Project

author: Lewis, J.

license: Public Domain

text:
    Fred Lapp, Appellant, v. Cora Lapp, Respondent.
    Submitted May 20, 1941;
    decided July 29, 1941.

      Victor D. Borst, Jr., and Christian S. Lorentzcn for appellant.

      Frederick W. Ritter and Charles H. Wald for respondent.
   Lewis, J.

In this matrimonial action an order was made at Special Term reducing the alimony payable to the defendant by the terms of the final decree of separation. Upon appeal by the defendant the Appellate Division modified the order of Special Term “ by striking out the provision adhering to the reduction of the alimony * * * and by inserting a provision denying plaintiff’s motion to reduce or set aside the alimony heretofore awarded to the defendant, and as so modified, unanimously affirmed * * * ” the order of Special Term, with a provision for costs.

The order of the Appellate Division did not state that the modification was upon a question of fact. In consequence of that omission we will assume that the modification was upon an error of law and that the Appellate Division has examined the factual basis of the order of Special Term and is satisfied therewith. We apply to final orders the same presumption as to the grounds of a reversal by the Appellate Division that we are expressly commanded to apply where there has been a reversal of a judgment. ' (Civ. Pr. Act, §§ 602, 620.) ” (Gang v. Gang, 253 N. Y. 356, 358. See, also, Reynolds v. Eagle Pencil Co., 285 N. Y. 448, 449, 450; Goodman v. Marx, 234 N. Y. 172, 173, 174; Larkin v. N. Y. Telephone Co., 220 N. Y. 27, 33, 34.)

An examination of the record fails to disclose an error of law at Special Term requiring modification.

The order of the Appellate Division, in so far as it modifies the order of Special Term, should be reversed and the order of Special Term affirmed, without costs. (See 286 N. Y. 698.)

Lehman, Ch. J., Loughban, Finch, Rippey, Conway and Desmond, JJ., concur.

Ordered accordingly.


text:
    Employers’ Liability Assurance Corporation, Limited, of London, England, Respondent, v. Post & McCord, Inc., Appellant.

      Submitted June 10, 1941;
    decided July 29, 1941.

      Joseph A. Barrett and Robert R. Cardany for appellant.
    The judgment in the action brought by Graziano is res adjudicata as to the sole negligence of plaintiff’s subrogor, in allowing the opening to be maintained by reason of which the injury occurred to Graziano. (Fulton Co. G. & E. Co. v. Hudson River T. Co., 200 N. Y. 287; Williams v. Board of Trustees, 210 App. Div. 161.) The active negligence of plaintiff’s subrogor has been adjudicated in the Graziano case and this is decisive. (Caspersen v. LaSala Bros., 253 N. Y. 491; Treadwell Co. v. United States Fidelity & Guaranty Co., 158 Misc. Rep. 939; 249 App. Div. 809; De Lee v. Pardy Construction Co., 249 N. Y. 103.) The contract made by defendant with the owner of the building does not provide for indemnity to plaintiff’s subrogor for the latter’s own negligence. (Thompson-Starrett Co. v. Otis Elevator Co., 271 N. Y. 36.)

      Bertrand L. Pettigrew for respondent.
    The record in the Graziano case and the decision of the Appellate Division show that Hegeman-Harris Co. was held liable therein on the sole ground of a violation of subdivision 4 of section 241 of the Labor Law (Cons. Laws, ch. 31). (Slaviz v. Wahlig & Sonsin Co., 167 App. Div. 658; Ithaca Trust Co. v. Driscoll Brothers & Co., 169 App. Div. 377; Graziano v. Post & McCord, Inc., 241 App. Div. 682; McNamara v. Eastman Kodak Co., 220 N. Y. 180; 232 1ST. Y. 18.) Plaintiff’s subrogor was adjudicated in the Graziano action to be a general contractor, and being a general contractor, was entitled to the benefit of conditions of defendant’s contract with the owner by the express provisions thereof. (Potter v. Gilbert, 130 App. Div. 632; 196 N. Y. 576; American Employers’ Ins. Co. v. Brandt Masonry Corp., 252 App. Div. 506; Dudar v. Milef Realty Corp., 258 N. Y. 415; Thompson-Starrett Co. v. Otis Elevator Co., 271 N. Y. 36; Long Island R. R. Co. v. American Bridge Co., 175 App. Div. 170; 225 N. Y. 692; Turner Construction Co. v. Rockwood Sprinkler Co., 249 App. Div. 508; 275 N. Y. 635.) If privity to the contract of the defendant with the owner be denied to plaintiff’s subrogor, then the defendant was primarily responsible for Graziano’s injuries and plaintiff should have judgment under its second cause of action. (Lord & Taylor v. Yale & Towne Mfg. Co., 230 N. Y. 132; Scott v. Curtis, 195 N. Y. 424; Dunn v. Uvalde Asphalt Paving Co., 175 N. Y. 214; Oceanic Steam Navigation Co. v. Compania Transatlantica Espanola, 134 N. Y. 461; Canandaigua v. Foster, 156 N. Y. 354; Wanamaker v. Otis Elevator Co., 186 App. Div. 655; Fulton Co. Gas & Electric

      Co. v. Hudson River Tel. Co., 130 App. Div. 343; 200 N. Y. 287; Horning v. Hudson River Tel. Co., 111 App. Div. 122; 186 N. Y. 552; Hudson Valley Ry. Co. v. Mechanicville El. L. & G. Co., 180 App. Div. 86; Dudar v. Milef Realty Corp., 258 N. Y. 415; Thompson-Starrett Co. v. Otis Elevator Co., 271 N. Y. 36.)
   Rippey, J.

On July 6, 1933, one Graziano docketed a judgment in Queens county against Hegeman-Harris Company, Inc., and Post & McCord, Inc., as joint tort feasors, for $18,255.03 in an action brought by Graziano to recover damages for personal injuries which he alleged he received because of the concurring negligence of both of said parties. After affirmance upon appeal, each of the judgment debtors paid one-half of the judgment with interest and costs.

The plaintiff insurance carrier of Hegeman-Harris Company, Inc., as subrogee; brought this action against Post & McCord, Inc., under the authority of section 211-a of the Civil Practice Act, for contribution for the amount its subrogor paid on the judgment. Section 211-a permits the maintenance of an action for contribution where a money judgment has been recovered jointly against two or more defendants in an action for a personal injury or property damage, after the judgment has been paid in whole or in part by one or more of such defendants, in behalf of each defendant who has paid more than his pro rata share when such action could not otherwise be maintained (Ward v. Iroquois Gas Corp., 258 N. Y. 124). By the recovery in the Graziano case, as to Graziano the liability of the defendants therein was conclusively established to be that of joint tort feasors (Fulton County G. & E. Co. v. Hudson River Telephone Co., 200 N. Y. 287; Amalfi v. Post & McCord, Inc., 248 App. Div. 864; leave to appeal denied, 273 N. Y. 677). The issue of liability as between defendants was not litigated or determined on the Graziano. trial and the parties here are not concluded on that issue by the provisions of section 211-a of the Civil Practice Act unless the judgment in the Graziano action was based on facts fatal to recovery herein (Fulton County G. & E. Co. v. Hudson River Telephone Co., supra; cf. Dudar v. Milef Realty Corp., 258 N. Y. 415; Kinloch Tel. Co. v. City of St. Louis, 268 Mo. 485; Burris v. American Chicle Co., 33 Fed. Supp. 104).

In the first cause of action set up in the complaint, respondent alleges that the injuries to Graziano were occasioned solely by the negligence of Post & McCord, Inc., and that, by contract, Post & McCord agreed to indemnify plaintiff’s subrogor for any loss it might sustain because of such negligence. The second cause of action is based on the theory that Post & McCord, Inc., was primarily required to protect Graziano from injury from falling objects, that the accident arose solely because of the failure of Post & McCord to perform its affirmative primary duty, that Hegeman-Harris Company, Inc., was only secondarily liable because of the applicable statutes of the State of New York and that defendant herein impliedly agreed to indemnify Hegeman-Harris Company, Inc., for any damage or loss occasioned by the failure of the defendant herein properly to guard and protect said workmen.” We think that plaintiff may not recover on either theory.

In 1931 the Metropolitan Square Corporation (now known as Rockefeller Center, Inc.) was the owner of property in the city of New York, covering three city blocks between Fifth and Sixth avenues and Forty-eighth and Fifty-first streets, which it proposed to develop by the erection thereon of a group of buildings and by various other improvements. On October 15, 1931, Todd, Robertson, Todd Engineering Corporation and Todd & Brown, Inc., acting as joint agents for the owner, entered into a general contract with Hegeman-Harris Company, Inc., for the construction of buildings numbered 1 and 9 in the said development. It was provided that the general contractor should not itself undertake or engage in any part of the physical construction or erection of the buildings or supply any of its own materials or labor other than those required for the prosecution of its duties of supervision, direction and management and such other obligations as might be imposed upon it by the terms of the contract unless otherwise directed by the owner or managers. The general contractor was nevertheless required to furnish sufficient competent superintendents and foremen in charge of the work, to be responsible for the erection and delivery of the buildings in accordance with the plans and specifications and applicable laws, rules, regulations and ordinances of all governmental authorities and all departments and bureaus thereof and to supervise and see that the terms of all subcontracts were complied with during the progress of the work. The general contractor undertook, in behalf of, and subject to the supervision and approval of, the owner, to enter into all subcontracts for labor and materials to be used in the construction and completion of the buildings and considered necessary or proper by the managers. It was required to adopt all subcontracts already made by the owner and managers, however, and the right was reserved by them to award further subcontracts for materials or labor whenever the owner deemed it for its best interest so to do. The general contractor was required to procure such public liability, owner’s and contractor’s contingent liability and workmen’s compensation insurance as the owner and managers might require, through brokers and in companies selected by them, and other insurance to the extent necessary fully to protect the owner and managers and the general contractor from liability for damages to its employees and to the public and others arising out of its negligence, or otherwise, during the progress of the work. The general" contractor was thus required to keep competent men on the job to see that the subcontractors did their work properly and according to required schedule and sequence as the work progressed (Labor Law, § 241 [Cons. Laws, ch. 31]; Caspersen v. La Sala Bros., 253 N. Y. 491).

On March 16,1931, an agreement was entered into between the owner and managers above mentioned with Post & McCord, Inc. (therein called the contractor), wherein the contractor agreed to furnish, equip and complete in the manner set forth in the contract all structural steel work for such buildings as the owner might elect to erect and for such improvements as it might elect to make upon the proposed development. The owner and managers reserved the right to award general contracts for the construction of any or all of the buildings and improvements to be included in such development to one or more general contractors and, in the event that such award should be made, Post & McCord, Inc., was required, with certain exceptions not here material, to perform1 the agreement as though such general contractor or contractors were named in the agreement in place of the managers.

In its first cause of action, respondent relies particularly upon the clause of the subcontract which reads as follows: The Contractor shall take usual and proper precautions to prevent accidents or damage to persons and property on, about, or adjacent to the premises, and shall erect and keep in place at all times all usual, proper, necessary and required danger signs and safeguards and give full instructions to its employees to prevent damage or injury to or by them or others or to property on or about the hod hoists, well holes, elevator shafts, scaffolding, window openings, stairways, sidewalks, courts, skylights and all other parts of the premises. The Contractor will indemnify the Owner and the Managers against all claims, suits, damages and judgments to which the Owner and/or the Managers may be subjected or suffer by reason of any injury to person or property resulting from negligence or carelessness on the part of the Contractor, its employees or permitted subcontractors in the performance of this Agreement. In case the Contractor shall fail to pay or bond any judgment against the Owner and/or the Managers for any injury to person or property, the Owner may pay such judgment, with all interest and costs, to the person entitled thereto, out of any moneys due or to become due to the Contractor hereunder, and the amount of such payment shall be deducted from the sum to which the Contractor shall be entitled under this Agreement, and if such sum shall be insufficient for the purpose, the Contractor shall pay such deficiency to the Owner on demand. The Contractor will, at all times, carry full Contingent and Public Liability and Workmen’s Compensation Insurance protecting the Owner and the Managers against any and all loss or damage for personal injury, including death which may occur at, on or about the premises or on the streets or sidewalks adjacent thereto or on adjoining property and which may arise from any breach of legal duty or neglect of the Contractor, or its permitted subcontractors or anyone directly or indirectly employed by either of them. The Contractor will carry such insurance in such companies or firms and in such amounts as may be approved by the Managers, and will, on request of the Managers, exhibit to them the policies for such insurance, as well as furnish to the Managers proper certificates of such insurance.”

The Post & McCord contract must be read and construed as a whole, having in mind its purpose and limitations and the circumstances and conditions surrounding its execution and delivery. Its purpose was to provide for only a small portion of the required work" of construction and to protect the owner and managers against defaults and liability for loss which might arise only from the subcontractor’s defaults and negligence in the prosecution of the work which was required to be done under that contract. The learned trial court correctly construed the contract to be not primarily one of indemnity but one essentially for the erection of steel, and the indemnity agreement is an incident of the contract intended to afford to the owner protection against claims for damages.” Nothing is found in the contract which provides indemnity to the general contractor for its own negligence. The general contractor was not a party or privy to that contract except in the sense we have already indicated. It was provided only that in the event a general contract was let the Post & McCord contract should then be a subcontract thereunder for a part of the work to be performed by the general contractor. The agreement between the owner and the general contractor specifically provides that the general contractor will respond for its own negligence and will indemnify the owner and managers for loss arising out of its negligence. However broad the agreement of Post & McCord, Inc., for indemnity may be, its protection extended only to loss by the owner on account of the negligence of Post & McCord in connection with the performance of the work required under its contract. The owner suffered no damage. Through subrogation or otherwise, the general contractor or its insurer can claim nothing through the owner.

Since the contract provided that the subcontractor should carry out his contract in conformity with the “ law ” which should include all laws, rules, regulations, requirements or ordinances of federal, state, county, city and bureau authorities,” etc., a majority of the Appellate Division were of the opinion that it was required to floor over all "open spaces in the building as construction progressed and to hold the owner harmless from claims for damages for injuries resulting from its failure so to do. That provision related, however, only to “ laws ” applicable to the carrying forward of the work specified in the subcontract and flooring and planking of open spaces between steel work were not work which it was required to do. Loss arising out of negligence for which respondent is seeking indemnity did not arise out of the negligence of Post & McCord, Inc., as we will later point out, but arose by virtue of the negligence of plaintiff’s subrogor. It was not the negligence of the owner and managers. Contracts will not be construed to indemnify a person against his own negligence unless such intention is expressed in unequivocal terms.” (Thompson-Starrett Co. v. Otis Elevator Co., 271 N. Y. 36, 41). There was nothing in the- Post & McCord contract indicating any intention that the latter should be required to indemnify the owner or managers or the general contractor for their negligence. On the other hand, the contract on this subject expressly provided solely for protection of the owner against liability for any negligence of Post & McCord, Inc., in connection with the work required in the erection of steel work for the building,

The evidence in the Graziano action was sufficient to establish and the jury found that the Knickerbocker Fireproofing Co., Inc., had a subcontract for the concrete work, including the floors and fireproofing of building No. 1 above referred to; that at the time of the accident to Graziano on August 22, 1932, the thirty-seventh floor was practically completed, the cement having been poured except around the beams of the several openings; that the arches were in place on the thirty-eighth floor and cement was being poured there; that the Post & McCord Company’s derricks and employees were engaged in steel erection on the forty-fifth floor and that riveting of steel work was going on at some or all of the three or four floors below; that Graziano was a carpenter in the employ of the Knickerbocker Company at the time of the accident engaged in erecting wooden forms about an opening between the thirty-seventh and thirty-eighth floors at one corner of an open shaft four or five feet wide by ten or eleven feet long in which air ducts were being installed; that while so engaged, he was standing upon a sawhorse placed by him in the shaft on planks he had placed across the open space and a “ bull pin,” a working tool used by employees of Post & McCord, Inc., weighing some five or six pounds, dropped through the shaft from above where riveters were at work and struck him, causing his injuries; that neither permanent flooring nor temporary planking had been placed across the shaft at floors above the point where he was working although floors had been laid as the work progressed generally throughout the building; that the space was not to be left permanently open but was left open temporarily for the installation of air ducts therein, and was not required for proper construction of the iron or steel work, for raising or lowering materials or for stairways and elevator shafts designed by the plans and specifications; and that Graziano was not himself guilty of any negligence contributing to the accident.

There was sufficient evidence of violation by the general contractor of section 241 of the Labor Law and section 195 of article 10 of chapter 5 of the Code of Ordinances of the City of New York. (McNamara v. Eastman Kodak Co., 220 N. Y. 180; Drummond v. Norton Co., 213 N. Y. 670; Sadrakula v. Stewart & Co., 279 N. Y. 686). The court charged the Graziano jury as matter of law, upon the record there presented, that it was the active duty of the general contractor, if the space required covering, to cover over the floors. The charge was right (Lyles v. Terry & Tench Co., 227 N. Y. 361; De Haen v. Rockwood Sprinkler Co., 258 N. Y. 350; Caspersen v. La Sala Bros., supra; Labor Law, § 241); but right or wrong, that instruction is here beyond attack. If a proximate cause of the accident, violation of the statute, as the court correctly charged, was actionable negligence and violation of the ordinance evidence to be considered with other evidence on the question of negligence. (Teller v. Prospect Heights Hospital, 280 N. Y. 456, 460, 461. Cf. Schmidt v. Merchants Despatch Transp. Co., 270 N. Y. 287, 306.) Whether the general contractor performed its active primary duty in that respect and whether the failure to do so, if there was such failure, was the sole proximate cause of the accident or a concurring cause without which the accident could not have happened were questions of fact for the jury (Lyles v. Terry & Tench Co., supra; De Haen v. Rockwood Sprinkler Co., supra). The jury found that negligence of the general contractor was a proximate cause of the accident. While it is true that the accident could not have happened without the dropping of the pin by employees ■ of Post & McCord, Inc., beyond doubt the pin which started to fall from an upper floor could not have caused the accident to Graziano had the space above where he was working been filled in or planked over by the general contractor as required by ordinance and statute.

The charge and proceedings upon submission in the Graziano case clearly show that Post & McCord, Inc., were held to have no duty to floor or cover over the space in the shaft. Under the charge, the jury were authorized to find and did find that Post & McCord, Inc., was negligent through its employees’ failure to exercise such care as ordinary prudence required in allowing the pin to fall, knowing that persons were working below, that Hegeman-Harris Company, Inc., was negligent in not covering the floors as required by section 241 of the Labor Law and section 195 of chapter 5 of article 10 of the Building Code of the Code of Ordinances of the City of New York and that the two acts of negligence “ operated at the same time to produce the result which might be produced by either.” The jury found that both defendants were liable since, as the court said, in such case they are concurrent causes, each is a proximate cause of the injury and both defendants may be held hable.” The findings of the jury in the Graziano case upon the issues necessarily litigated are conclusive and fatal to any recovery here on any theory that Post & McCord, Inc., was solely primarily hable (Fulton County G. & E. Co. v. Hudson River Telephone Co., supra) and required to pay the entire judgment. The mere fact that the acts of the general contractor and of the subcontractor concurring to produce the accident arose out of and were violations of separate and distinct duties does not bar contribution since the combined negligence of the independent tort feasors or omission of separate acts of care concurred or contributed at the same instant to produce the injury. (13 Am. Jur. Contribution, § 52, and cases cited.)

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

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

Judgment accordingly.


author: Desmond, J.

text:
    Dowdell D. Thomas, as Administrator of the Estate o Marie A. Thomas, Deceased, Appellant, v. Bridget T. Morris, Respondent. Arthur Davis, as Commissioner of Health for Suffolk County, Respondent.
    Argued May 20, 1941;
    decided July 29, 1941.

      Laurence E. Degner for appellant.
    It was error for the Appellate Division to refuse to issue the subpoena duces tecum for the production at the trial of the records sought, (Friedeberg v. Haffen, 162 App. Div. 79; Equitable Life Assur. Society v. Mpasstas, 256 App. Div. 878.) No physician and patient relationship ever existed between defendant-respondent and the State Department of Health, or the Suffolk County Commissioner of Health. Hence the records sought to be produced are not privileged within the purview of section 352 of the Civil Practice Act. (Liske v. Liske, 135 N. Y. Supp. 176; Aultman & Taylor Co. v. Syme, 163 N. Y. 54; Jackson v. Citizens Casualty Co., 252 App. Div. 393; Equitable Life Assur. Society v. Mpasstas, 256 App. Div. 878.)

      George W. Percy for defendant, respondent.
    The order at Special Term was contrary to public policy. The order of reversal was properly made. (McGowan v. Metropolitan Life Ins. Co., 234 App. Div. 366; Matter of Marks, 121 Penn. Super. Ct. Rep. 181; People v. Austin, 199 N. Y. 446.)

      Edgar F. Hazleton and Martin Mellstrom for Arthur Davis, as Commissioner of Health for Suffolk County, respondent.
    Records of the State Department of Health and of the Commissioner of Health of Suffolk County as to specific persons are confidential and not subject to subpoena. (Davis v. Supreme Lodge, Knights of Honor, 165 N. Y. 159; Matter of City Council of New York v. Goldwater, 284 N. Y. 296.) The question presented should not await the trial for its determination. (Matter of City Council of New York v. Goldwater, 284 N. Y. 296.)
   Desmond, J.

The question here certified to us by. the Appellate Division is as to whether certain records kept by the Suffolk County Commissioner of Health in the course of his official duties can be made available to plaintiff through a subpoena duces tecum. The action is for damages for the death of plaintiff’s intestate from typhoid fever. The complaint alleges that the fatal bacillus was transmitted to the decedent by reason of the negligent conduct of defendant, who, it is charged, prepared and handled food served to decedent, a guest at defendant’s hotel, notwithstanding that defendant was, to her own knowledge, a “ typhoid carrier.” Plaintiff moved at Special Term, under rule 162 of the Rules of Civil Practice, on notice to the Suffolk County Health Commissioner and the State Department of Health, for an order requiring each to produce at the trial such records and papers as might indicate whether or not defendant was a typhoid carrier, and, if so, might show what, if any, knowledge defendant had of such condition, and what, if any, information was furnished her by the Suffolk County or State Health Departments, to the effect that she could transmit the disease to others. At Special Term the Attorney-General, considering that such records are not privileged, made known the State’s willingness to produce its records. The County Health Commissioner, however, opposed, and when an order was granted for the issuance of the subpoena, appealed to the Appellate Division. The Appellate Division reversed, holding that, while the question might well await the trial, nevertheless the records were privileged under section 352 of the Civil Practice Act and that the County Health Commissioner could not be required to bring them into court.

We agree with the Appellate Division that, we should go to the substance of the question, and decide whether or not these records are privileged, rather than take the narrow ground that the subpoena should issue only to bring the papers into court, leaving till the trial the determination as to privilege. We decide, however, that no privilege attaches to these records and that the public policy of the State as expressed in the Public Health Law (Cons. Laws, ch. 45) and the State Sanitary Code, confers no such privilege. Privilege does not exist unless conferred by some statute. (People v. Austin, 199 N. Y. 446, 451.) Here the statutes point the other way and seem to require that such records, in so far as they refer to known or suspected typhoid carriers, be made available in a case like this. The Sanitary Code which has the force of law (Public Health Law, § 2-b) requires local health officers to keep the State Department of Health informed of the names, ages and addresses of known or suspected typhoid carriers, to furnish to the State Health Department necessary specimens for laboratory examination in such cases, to inform the carrier and members of his household of the situation and to exercise certain controls over the activities of the carriers, including a prohibition against any handling by the carrier of food which is to be consumed by persons other than members of his own household. (See Sanitary Code, ch. 2, regulations 1, 13, 31, 32, 33 and 34.) Why should the record of compliance by the County Health Officer with these salutary requirements be kept confidential? Hidden in the files of the health office, it serves no public purpose except a bare statistical one. Made available to those with a legitimate ground for inquiry, it is effective to check the spread of the dread disease. It would be worse than useless to keep secret an order by a public officer that a certain typhoid carrier must not handle foods which are to be served to the public.

Section 352 of the Civil Practice Act does not control here. The information in the Health Commissioner’s files concerning the defendant, if there be any such information there, was not acquired by the Health Commissioner in attending a patient in a professional capacity ” nor was the information necessary to enable him to act in that capacity.” Although the information may have come to the Commissioner from a physician in private practice, the transmittal from that physician to the public officer was in obedience to the express command of section 25 of the Public Health Law. An intention that these records as to communicable diseases should not be kept confidential is found in the history of this same section 25. Since 1909 it has provided as to one such disease (tuberculosis) that the report shall not be divulged or made public.” In 1939 the Legislature amended the section by naming three other diseases, not including typhoid fever, as to which the reports should be kept secret. (See Laws of 1939, ch. 159.) It seems to follow that similar reports as to other communicable diseases are not so privileged.

Nothing contained in Matter of City Council of New York v. Goldwater (284 N. Y. 296) supports respondent’s position here. The holding there was that the privilege could be invoked when the information was sought through a subpoena issued by a legislative committee as well as when issued by a court. But the information there sought, unlike the information here to be produced, concerned the diagnosis and treatment of the ills of hospital patients.

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. The certified question should be answered in the negative.

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

Ordered accordingly.


author: Per Curiam.

text:
    Howard W. Lyon et al., Appellants, v. Charles R. Holton et al., Defendants, and Willard A. Mitchell et al., as Executors of Charles M. Schwab, Deceased, et al., Respondents.
    Argued January 21, 1941;
    decided July 29, 1941.

      Samuel J. Levinson and Frank Weinstein for E. Flora Allen, appellant.

      William S. Bennet, Victor House and Samuel H. Levinkind for Howard W. Lyon et al., appellants.
    The corporation must be retained as a party defendant in order to permit proceedings against other defendants not parties to this appeal. (Greaves v. Gouge, 69 N. Y. 154; Flynn v. Brooklyn City R. R. Co., 158 N. Y. 493; Niles v. N. Y. C. & H. R. R. R. Co., 176 N. Y. 119.)

      Alfred McCormack, Hoyt A. Moore, L. R. Breslin, Jr., George M. Billings and Willard A. Mitchell for respondents.
   Per Curiam.

This is an action brought by stockholders to recover a money judgment against the directors of a corporation, and also to obtain certain injunctive relief against both the directors and the corporation itself. Summary judgment has been granted on motion by the corporation and by some of the individual defendants. Since the action continues as to the non-moving defendants, plaintiffs are entitled to have the corporation retained as a nominal party defendant in so far as relief is sought against the remaining individual defendants in favor of the corporation. To the extent that the plaintiffs sought relief against the corporation, and in all other respects except as noted above, the dismissal of the complaint was proper. The judgment, however, should be modified so that the corporation will be retained as a nominal party defendant in the action con- ¡ tinning against the non-moving individual defendants. t The judgments should be modified in accordance with this ¡ opinion and as so modified affirmed, without costs. , !

Lehman, Ch. J., Lotjghran, Finch, Rippey, Lewis, Conway and Desmond, JJ., concur.

Judgment accordingly.


author:
Lewis, J.
      Rippey, J.

text:
    Starling Realty Corporation, Appellant, v. State of New York, Respondent.
    (Claim No. 25342.)

      Argued May 22, 1941;
    decided July 29, 1941.

      Alfred S. Schechter for appellant.
    There was no lack of money available within the meaning of subdivision 7 of section 3 of the Public Buildings Law (Cons. Laws, ch. 44) authorizing the cancellation of the lease. (McNulty v. City of New York, 168 N. Y. 117; Hydraulic Race Co. v. Greene, 230 App. Div. 374; 257 N. Y. 540; People ex rel. Graves v. Sohmer, 207 N. Y. 450; McMaster v. State, 108 N. Y. 542; Danolds v. State, 89 N. Y. 36; Campbell v. State, 240 App. Div. 304.) Assuming there to have been a lack of money available, it was caused by the State’s own wrongful act in refusing to request funds of the Social Security Board, and under these circumstances the;State cannot avail itself of such non-availability of funds as justification for the cancellation of the lease. (Amies v. Wesnofske, 255 N. Y. 156; Matter of Casualty Co. [Bliss Co.], 250 N. Y. 410; Noble v. Higgins, 214 App. Div. 135; 243 N. Y. 538; Dwyer v. Interboro R. T. Co., 241 N. Y. 616; Cameron-Hawn Realty Co. v. City of Albany, 207 N. Y. 377; Patterson v. Meyerhofer, 204 N. Y. 96; Home Bank v. Drumgoole, 109 N. Y. 63; City of Syracuse v. Dales Engineering Co., 233 App. Div. 417; Brennan Constr. Co. v. State, 117 Misc. Rep. 816; Hulbert v. Felber Engineering Works, 75 Misc. Rep. 621.)

      J. S. Truman and Lewis B. Parmerton for Owego National Bank, amicus curiae.

      John J. Bennett, Jr., Attorney-General {James H. Glavin, Jr., and Jacob S. Honigsbaum of counsel), for respondent.
    Paragraph “ Seventeenth ” of the lease put claimant on notice that funds might not be available during its term. (Nellis v. State, 204 App. Div. 176.)
   Lewis, J.

An authorized agency of the State canceled mid-term a written lease of office space. We Are to determine whether formal conditions stated in the lease are sufficient in law to relieve the State from further liability thereunder.

The claimant, Starling Realty Corporation, is the owner of an office building in Ossining, New York. In October, 1937, after building alterations costing $1,200 had been made to accommodate the tenancy, the State leased for a term of three years commencing November 15, 1937, a portion of claimant’s building for the use of the Division of Placement and Unemployment ■ Insurance. The annual rent reserved was $2,200, payable in equal monthly installments of $183.33. The State entered into possession in November, 1937, and continued in possession until July 31, 1938, when it vacated the premises after notice of cancellation had previously been given by letter dated June 29, 1938. In that written notice an accredited agent of the State advised the claimant that the lease was canceled pursuant to the provisions of paragraph designated ‘ Seventeenth ’ of our lease with you.” The reason assigned for such action was “ that the necessary moneys are not and have not been made available with which to pay the rent.”

The Court of Claims dismissed upon the merits the present claim for rent filed by the landlord against the State for a period of four months beginning August 1, 1938. The Appellate Division affirmed, two justices dissenting. The claim is here upon appeal, as of right, by the landlord-claimant who asserts that, at the time of cancellation, there was no lack of funds available for rent payable by the State as agreed in the lease; and that if it be assumed that money was not available, the State cannot take advantage of its own wrongful act in refusing to request funds from the Federal Social Security Board from which the rent in suit would have been payable.

The position thus taken by the claimant upon this appeal is opposed to findings of fact by the Court of Claims which have been affirmed by the Appellate Division. Upon the record before us we cannot say that there is no evidence to support those findings. Accordingly they supply the factual basis upon which we must determine whether the reason assigned by the State for the cancellation of the lease, when considered with the provisions of paragraph seventeen of the lease itself, is legally sufficient to relieve the State of New York from liability for rent after July 31,1938.

Before considering the legal aspect of paragraph seventeen of the lease we set forth in summary the facts found by the Court of Claims which negative certain assertions now made by the claimant.

The Division of Placement and Unemployment Insurance was created for the purpose of administering the Unemployment Insurance Law (Labor Law, Cons. Laws, ch. 31, art. 18). For the fiscal year beginning July 1, 1938, the Legislature appropriated $304,916 for the maintenance of the Division. (L. 1938, ch. 20.) Meantime, and in accord with section 502 of the Social Security Act (U. S. Code, tit. 42, ch. 7) the Federal government had made a grant to the State of more than $5,500,000 for use in the administration of that law. Thereafter the activities of the Division of Employment were combined with the Bureau of Unemployment Compensation and, in accord with an agreement between the State and Federal governments, the appropriation by the State and the Federal grant to the State were turned over to the Social Security Board. As a part of the latter arrangement the Social Security Board agreed to furnish all funds necessary to operate the combined New York State Employment Service and the Bureau of Unemployment Compensation, including personal service, rent and equipment. Under rules of the Social Security Board, the Division of Placement and Unemployment Insurance was required quarterly to submit an itemized line budget to the Social Security Board. The budget was subject to approval by the Board which had the right to allow the budget in its entirety or to disallow any item. The allocation of funds by the Social Security Board to the State Division of Placement and Unemployment Insurance was based upon the budget as approved — the State Division being limited in its disbursement of funds to the specific uses and purposes, and to the amounts, set forth in the budget. On June 1, 1938, the Social Security Board recommended to the State Division of Placement and Unemployment Insurance the discontinuance of a number of small offices, including the office at Tarrytown. It requested, however, that if the State officials believed any one or more of the offices named in the letter should be continued after June 28, 1938, a full explanation of such need should accompany the budget request for the quarter beginning July 1, 1938. On June 14, 1938, the State Division of Placement and Unemployment Insurance, by letter to the Social Security Board, in good faith and for good and sufficient reasons,” recommended the discontinuance of the Ossining office instead of the Tarrytown office and the recommendation was acted upon and approved by the Social Security Board. The itemized line budget submitted by the State Division to the Social Security Board for the quarter beginning July 1, 1938, made provision for the rental of the Ossining office for only one month — being the month of July, 1938, which is the last month for which rent was paid by the State to the claimant. That item in the quarterly budget was approved by the Social Security Board and, as indicated above, was paid to the claimant. On June 29, 1938, the notice, to which reference has been made, was given in writing, viz., that because the necessary moneys were not available for the payment of rent for the Ossining office, the lease was canceled as of July 31, 1938, pursuant to the provisions of the seventeenth ” paragraph. Finally there is the finding of fact that on and after June 29, 1938, the necessary moneys were not available for the rental of the Ossining office after July 31,1938.

From these facts found by the Court of Claims upon ample evidence, and which must control our decision (Civ. Prac. Act, § 589, subd. 2), we pass to a consideration of the paragraph of the lease which was mentioned in the letter of cancellation and is one of the express conditions upon which the claimant and State agreed:

“ Seventeenth. It is understood and agreed by and between the parties hereto that pursuant to subdivision 7 of section 3 of the Public Buildings Law, the contract of the State hereunder shall be deemed executory only to the extent of the moneys available to the Superintendent of Public Works for the leasing of said premises and that no liability shall be incurred by the State beyond the money available for such purpose; provided that, if the moneys available therefor are moneys appropriated for and made available to one or more departments, commissions, boards or officers other than the Superintendent of Public Works the contract of the State hereunder shall be deemed executory only to the extent of the moneys available to the one or more departments, commissions, boards or officers to which the premises shall be allotted by such Superintendent of Public Works and that no liability in such cases shall be incurred by the State beyond the money available for such purposes.”

The insertion in the lease of the foregoing provision which, in unmistakable terms, conditions the State’s liability, was in accord with the requirement of a declared public policy. (Public Buildings Law [Cons. Laws, ch. 44], § 3, subd. 6.) We may not ignore the limitations by which the Legislature has thus restricted the expenditure of public moneys. They are wise and should be enforced. The State has chosen to enact something similar to the Statute of Frauds for its own protection. Those dealing with it do so knowing this fact and at their own risk. * * * However inequitable the conduct of the state may be it has said that it shall only be responsible upon one condition. * * * ” (Belmar Contracting Co. v. State of New York [Andrews, J.], 233 N. Y. 189, 194.) In the present case inequity may have resulted to the claimant but here again we must give effect to the settled rule that contracts are made in submission to existing legislation.” (People ex rel. City of New York v. Nixon, 229 N. Y. 356, 361.) In this instance the claimant was made aware, both by its implied knowledge of the law and by an express provision in the lease itself, that the liability of the State for rent reserved for the full term was conditional.

The charge by the claimant that the State was guilty of a wrongful act in refusing to request funds from the Federal Social Security Board from which the rent here in suit would have been payable, is without merit. It is argued that the respondent may not take advantage of the fact that money was not available ” when it made no request therefor. We interpret the word available ” as used in the lease as meaning available in the course of ordinary budgetary procedure. This implies a request made by the responsible head of a department for those items only which are necessary to a proper and efficient administration of the department, and the approval of those items by the final budgetary authority. We have in this case a finding by the Court of Claims that the State Division of Placement and Unemployment Insurance * * * in good faith and for good and sufficient reasons recommended the discontinuance of the Ossining office * * * and the recommendation was approved and acted upon by the Social Security Board.” Even if it be assumed that the item, if requested, would have been approved — a conclusion for which there is no basis in the evidence — it could hardly be said that funds not necessary to a proper and efficient administration of the department would be “ money available for such purposes ” within the language chosen by the Legislature and employed in paragraph seventeen of the lease.

The judgment should be affirmed, with costs.

Rippey, J.

(dissenting). Under the terms of clause seventeenth of the lease made with the Department of Public Works in behalf of the State Division of Placement and Unemployment Insurance for certain premises at Ossining, for the use of that department of the State government, the lease was executory only to the extent of the moneys available ” for payment of the rental although the term of the lease was stated to be for three years from the 15th day of November, 1937. Although the landlord fully performed the provisions of the lease on its part to be performed and the department was in possession under the terms of the lease, notification was given by that department of its termination as of July 31,1938.

It has been found that there were ample funds available in the hands of the Social Security Board, appropriated either by the State or Federal government, with which to pay the rental on this lease for the fiscal year commencing July 1, 1938. The same person who served that notice, in spite of the proposal of the Federal Social Security Board to continue the Ossining office, requested its discontinuance and on account of that request the Social Security Board failed to include in its budget for the period subsequent to July 31, 1938, the necessary allocation with which to satisfy the rent. The lower courts have construed the term available ” to refer only to the funds which might be allocated by the Social Security Board for the payment of the rent. We think that, as a matter of law, such construction is not permissible in view of the wording of the lease, applicable findings of fact in the lower court, the facts and circumstances surrounding the leasing, and the purpose of the Legislature and of Congress in making the appropriations for the fiscal year commencing July 1, 1938. What was meant and intended by the parties to the lease was that the lease should be executory in the event that there was inadequate legislative appropriation available.

The facts as found establish that the Social Security Board had the power to allocate the funds which were placed in its hands for the maintenance, among other things, of the Ossining office without the request, consent or approval of the State agency. Nevertheless, it acted upon the report of the State agency that that office was no longer necessary and, as a consequence, failed to allocate necessary funds for rental purposes. The contract must be construed in the light of fair dealings between the parties (Campbell v. State, 240 App. Div. 304, 309; Patterson v. Meyerhofer, 204 N. Y. 96; Amies v. Wesnofske, 255 N. Y. 156). There was nothing in the facts and circumstances or in the findings of fact which established an obligation on the part of the State any different than would exist under similar facts between individuals. Concededly there were moneys available in the hands of the Federal Social Security Board by legislative and congressional appropriation for the payment of the rent. Those appropriations were made with the intent and purpose, among other things, of providing funds for carrying out the particular lease.

Applicable statutes and appropriation measures are referred to and fully discussed in the dissenting opinion of Mr. Justice Heffebnan in the court below and our decision here might well be based upon that opinion. In view of our construction of the lease and in the light of the applicable law, the conclusion of the Court of Claims “ that no moneys were available for the payment of the rent reserved in said lease after July 31, 1938,” is not sustained by the facts..

The judgment appealed from should be reversed and judgment should be directed in favor of the claimant for the relief demanded, with costs.

Lehman, Ch. J., Loughban and Desmond, JJ., concur with Lewis, J.; Rippey, J., dissents in opinion in which Finch and Conway, JJ., concur.

Judgment affirmed. (See 286 N. Y. 696.)


author:
Lehman, Ch. J.
      Finch, J.

text:
    The People of the State of New York, Appellant, v. Hans Muller and Vincent Teofilo, Respondents.
    Submitted April 25, 1941;
    decided July 29, 1941.

      William O’Dwyer, District Attorney (J. Vincent Keogh and Henry J. Walsh of counsel), for appellant.
    The facts as stipulated justified the respondents’ conviction. (People v. Bellows, 281 N. Y. 67.) The complainant was not a party to a labor dispute. (Canepa v. “John Doe,” 277 N. Y. 52; American Gas Stations, Inc., v. “John Doe,” 250 App. Div. 227; Silverglate v. Kirkman, 171 Misc. Pep. 1051; Scharf v. “John Doe,” 247 App. Div. 882; Weil & Co. v. “ John Doe,” 168 Misc. Rep. 211.)

      Louis Waldman, Solomon Jacobson and Samuel Duker for respondents.
    The judgment should be affirmed because the peaceful and orderly picketing was against a company with which the union had a bona fide labor dispute. (National Protective Assn. v. Cumming, 170 N. Y. 315; Exchange Bakery & Restaurant, Inc., v. Rifkin, 245 N. Y. 260; Nann v. Raimist, 255 N. Y. 307; J. H. & S. Theaters v. Fay, 260 N. Y. 315; Sherman v. Abeles, 265 N. Y. 383; Goldfinger v. Feintuch, 276 N. Y. 281; Santise v. Martins, Inc., 258 App. Div. 663.) The defendants were not guilty of disorderly conduct under subdivision 2 of section 722 of the Penal Law because the peaceful and orderly picketing negatived any intention to provoke a breach of the peace, or any tendency to occasion a breach of the peace. (People ex rel. Clark v. Keeper, 176 N. Y. 465; People v. Phillips, 245 N. Y. 401; People v. Monnier, 280 N. Y. 77; People v. Nixon, 248 N. Y. 182; People v. Perry, 265 N. Y. 362; People v. McCauliff, 267 N. Y. 581; Senn v. Tile Layers’ Protective Union, 301 U. S. 468; Stillwell Theatre, Inc., v. Kaplan, 259 N. Y. 405.)
   Lehman, Ch. J.

The defendants have been convicted upon a charge of “ Disorderly conduct tending to a breach of the peace, in violation of section 722, subdivision 2, of the Penal Law.” Some testimony was taken at the hearing of the charge, but by stipulation all the testimony was expunged from the record and the parties stipulated the facts pertaining to the complaint which were to be taken in lieu of the sworn testimony.” We quote the facts as stipulated in full:

“ 1. The complainant, Ben Berkowitz, is the owner of a retail haberdashery store at 1587 Pitkin Avenue, Brooklyn, County of Kings;
2. That on or about November 26th, 1935, the complainant and the National Wiring & Protective Co. Inc. entered into written agreements which are here offered in evidence at Exhibits 1 and 2;
“3. The National Wiring & Protective Co. Inc. have made agreements with other subscribers similar to the one represented by Exhibits 1 and 2;
“ 4. That on or about January 3, 1940, the defendant-Andrew Fosgreen came to the store of the complainant and had a conversation with the complainant, in the course of which he told him that the union and the employees were on strike against the National Wiring & Protective Co. Inc., and that they would put out pickets in front of his store, and that the maintenance of the burglar alarm system was unfair to Local No. 3 unless the complainant obtains union service on that system;
“5. That two days later, on January 5, 1940, the defendants Hans Muller and Vincent Teofilo appeared in front of the complainant’s premises, each bearing a sign attached to his person, reading substantially as follows: ‘ Maintenance of Burglar Alarm in this store unfair to Local No. 3, International Brotherhood of Electrical Workers Union, A. F. of L.; ’
6. That the defendants Hans Muller and Vincent Teofilo picketed in an orderly and peaceful way;
“ 7. That all three defendants are members of the International Brotherhood of Electrical Workers Union, and are on strike;
“ 8. That there is a labor dispute over wages and hours between the International Brotherhood of Electrical Workers Union, Local No. 3, the employees, and the National Wiring & Protective Co. Inc.;
9. That no labor was performed on the burglar alarm system installed at the complainant’s premises since January 1, 1940.”

The stipulated facts thus establish beyond dispute that the defendants are members of a labor union engaged in a labor dispute with the National Wiring and Protective Co., Inc., over wages and hours of its employees. The National Wiring and Protective Co., Inc., has installed in the complainant’s place of ■ business an electric burglar alarm apparatus and has agreed to maintain the apparatus in serviceable condition, and the union has demanded that the complainant obtain union service on that system. The defendants have picketed in an orderly and peaceful way. Their conduct has not been disorderly in any way and has not tended towards a breach of the peace, unless peaceful picketing with a sign calculated to inform the public that the burglary alarm system installed in the complainant’s store is not being maintained by the union of which' the defendants are members is unlawful, and without more constitutes disorderly conduct.

The picketing is for the purpose of promoting the lawful interests of a labor union in a labor dispute. (Goldfinger v. Feintuch, 276 N. Y. 281.) There is here a labor dispute ” as that term is defined in section 876-a of the Civil Practice Act even under the restrictive interpretation of the scope of the statute by this court in Opera on Tour, Inc., v. Weber (285 N. Y. 348). Even were that not true, however, peaceful picketing by the members of a union in front of a business served by the union is the exercise of a right of free speech guaranteed by the Constitution of the United States as construed by the Supreme Court of the United States. (American Federation of Labor v. Swing, 312 U. S. 321, decided February 10, 1941; Bakery & Pastry Drivers & Helpers Local No. 802 v. Wohl, 313 U. S. 548.) Construction of the Federal Constitution by the Supreme Court of the United States is binding on all State courts.

The order should be affirmed.

Finch, J.

(dissenting). May a storekeeper suffer damages through loss of business and be annoyed, disturbed, interfered with and offended by having his store picketed because there is used therein an electrical burglar alarm installed four years before with an incidental agreement by the supplier to keep the machine in order?

Defendants were convicted of having violated the Penal Law (§ 722), defining disorderly conduct, in that they picketed the retail haberdashery store of complainant in such a manner as might occasion a breach of the peace. The complainant was a consumer who, four years before the acts of picketing herein complained of, had contracted with the National Wiring and Protective Company, Inc. (hereinafter called National) for the installation of a burglar alarm apparatus for the store premises together with an incidental agreement whereby the storekeeper paid a monthly charge of $7.50 for the use of the apparatus and to keep the same in serviceable condition. The storekeeper on his part agreed not to repair, or to permit any other person to tamper with, or repair this apparatus. This contract for the acquisition of the burglar alarm was deemed renewed from year to year unless notice was given otherwise, was in effect at the time of the picketing and was silent as to whether union or non-union help was to service the alarm. At the time of the picketing in question, this contract was binding on both parties and was not up for renewal.

On January 3, 1941, the owner of the store was notified that the employees of National were on strike and that, unless the services of the members of the International Brotherhood of Electrical Workers (hereinafter called the union) were engaged to service this burglar alarm apparatus, the store would be picketed. The haberdashery store was not in the same trade or occupation as National, no members of the union were employed by the complainant, and there were no labor disputes between complainant and any of his own employees. Complainant, therefore, was not a party to the labor dispute and did not sell in his store, for profit or otherwise, any of the articles manufactured by National. The only relationship between complainant and National was through the acquisition by the storekeeper of the burglar alarm apparatus with the incidental right to have it kept in serviceable condition through the payment of a small monthly charge. Also no repair work to the burglar alarm apparatus was being done at the time of the picketing, nor has been done since the inception of the strike. Nevertheless, the two defendants, as pickets, appeared in front of the store each bearing a sign reading “ Maintenance of Burglar Alarm in this store unfair to Local No. 3, International Brotherhood of Electrical WorkersUnion, A.E. of L.”

The business of National is to market burglar alarms by means of installing the apparatus with an incidental service agreement to keep the same in working order. Once the. apparatus is installed, it is in continuous use on the premises, and no right of resale exists in the owner of the premises. Thus in the case at bar the storekeeper was the ultimate consumer of this property. (Cf. People v. Bellows, 281 N. Y. 67; Canepa v. “ John Doe,” 277 N. Y. 52.)

We are thus brought to a consideration of the fundamental question involved, namely, whether picketing of a storekeeper, who has acquired -and is now using as an ultimate consumer a burglar alarm apparatus, is lawful. May this complainant be coerced into taking sides in a labor dispute in another industry to which he was not a party, in which he has no interest, and where no legitimate action of his could dispose of the controversy? If the complainant had submitted to the coercion of the union and its members by allowing them to service the burglar alarm system, he would have subjected himself to liability for damages for breach of contract. On the other hand, if he refused, his business and trade would suffer serious jeopardy by the continued picketing of his premises. Looking at the matter realistically, the parading of pickets in front of a retail store, even though the conduct of the picket is peaceful and orderly, seriously interferes with the business of the store. There are many persons among the population who, because of personal convictions, will not cross a picket line, besides many timid persons who fear bodily harm or other retaliation, and hence choose another store.

Under the well-established policy of this State, embodied in the Constitution, statutes, and judicial decisions, the right of working men to organize to better their conditions has long been recognized. Strikes, picketing, and the right to bargain collectively through representation of their own choosing are rights which have been guaranteed by both the New York State Labor Relations Act (Labor Law [Cons. Laws, ch. 31], art. 20) and the Constitution recently adopted for New York State (Art. 1, § 17). However, such methods must be to further lawful labor objectives by lawful means. There is no denial of the right of working men to join an existing union or to form new unions to induce an employer to employ union labor or to improve conditions of employment. But the use of these weapons must not be abused. Picketing must not exceed peaceful persuasion, and where it cannot be disassociated from violence, its use will be prohibited. The means as well as the end must be lawful. (Busch Jewelry Co. v. United Retail Employers’ Union, 281 N. Y. 150; Milk Wagon Drivers Union v. Meadowmoor Dairies, 312 U. S. 287.) How far may these weapons be used against third parties who are not parties to the original controversy? This question must be answered by reference to recent cases.

Originally the right to strike and the right to picket arose between the original parties to the labor contract. Freedom of choice in the selection of representatives on each side of the dispute is the essential foundation of the statutory scheme [National Labor Relations Act].” (Texas & N. O. R. R. Co. v. Brotherhood of Railway & Steamship Clerks, 281 U. S. 548, 569.) The reasonable self-interest of labor then caused similar rights to arise between the union and establishments in the same industry where no grievance existed between employer and employee, giving the union the right to insist that even here the same terms and conditions of employment be maintained in order that such employers and employees might not profit at the expense of those who maintained union standards. The decisions in the Court of Appeals have long recognized the common economic interest among workers to maintain union conditions not in some single factory, but generally throughout the industry, in order that those not keeping to the union standards might not profit at the expense of those who do. (Mays Furs & Ready-to-Wear, Inc., v. Bauer, 278 N. Y. 331; National Protective Assn. v. Cumming, 170 N. Y. 315; Exchange Bakery & Restaurant, Inc., v. Rifkin, 245 N. Y. 260.) The right to communicate the facts of such a labor dispute between a union and an employer in the same industry is protected by the United States Constitution. (American Federation of Labor v. Swing, 312 U. S. 321; Bakery & Pastry Drivers & Helpers Local No. 802 v. Wohl, 313 U. S. 548.) So, too, union workers with proper regard for their self-interest, may refuse to work on nonunion materials. (Bossert v. Dhuy, 221 N. Y, 342.)

A further step impelled by the reasonable self-interest of labor was taken when it was held that picketing of a retail establishment which resold for profit the product of a nonunion manufacturer was justified. (Goldfinger v. Feintuch, 276 N. Y. 281.) Unless this union could follow this nonunion product and seek to persuade customers not to purchase at the point of outlet, it would follow that any manufacturer or other non-union supplier might, through the establishment of his plant in an out-of-the-way place, make impractical the application of the right to picket. It is true that even in the event of the removal of the plant to an out-of-the-way place the picketing would tend to persuade other workers not to take the place of the strikers, but its further effect of inducing the consumer public not to buy would thereby be thwarted completely unless the right existed to follow the product into the hands of those who profited through the non-union standards which might be reflected in the price of the product. Unless, therefore, the union could follow the non-union product into the hands of those engaged in the business of reselling for profit, we would have continuously present as great a factor to permit employers and employees to profit from not maintaining union standards as we had when economic organization was based on the operations of a single shop and the right was not recognized to have union conditions prevail generally. Because of the damage to the laborer which may be caused by the retailer who sells non-union goods for profit, the union has the right to picket such retailer. (Goldfinger v. Feintuch, supra. See, also, People v. Bergstein, 286 N. Y. 613, decided herewith.)

In the case at bar, we are dealing not with a retailer but with an ultimate' consumer. Here, since the acquisition has been completed for over four years and there exists only an incidental agreement for renewal which is not subject to renewal at this time, picketing would have no legitimate reason for existence except as a form of punishment. No room exists for an act of persuasion ■ as in the case of the retail seller for profit.

The picketing of this ultimate consumer, who is not engaged in the industry in which the labor dispute has arisen, provides a true secondary boycott which has always been held an unlawful labor objective and which this court has recently condemned. In People v. Bellows (281 N. Y. 67, 77) this court said: “ In this particular we differ with the Special Sessions and hold that such picketing, which has been declared unlawful by this court, does constitute disorderly conduct * * *.”

Likewise, in a recent case, where the plaintiff had purchased a sign which had been erected in front of his place of business by labor affiliated with the union which was a rival of the defendant union, and the defendants caused the place of business of plaintiff to be picketed, and as a result plaintiff suffered loss of business and would suffer irreparable damage and injury: “ The complaint sufficiently alleges that the picketing by the defendants is part of a true secondary boycott and an unlawful interference with the business of the plaintiff.” (Canepa v. “ John Doe,” 277 N. Y. 52, 54.)

It is urged that, since the picketing of the complainant’s store was peaceful and orderly it does not amount to disorderly conduct. The magistrate, however, has found that the parading of pickets in front of this store interferes with the business of the store, causes many persons to refrain from entering the store for fear of bodily harm or other retaliation, and threatens to cause a breach of the peace. Where picketing is unlawful and threatens to cause a breach of the peace, we have only recently held that such acts amount to disorderly conduct within the meaning of section 722, subdivision 2, of the Penal Law which provides that any person who acts in such a manner as to annoy, disturb, interfere with, obstruct or be offensive to others, whereby a breach of the peace may be occasioned, shall be deemed to have committed the offense of disorderly conduct. (People v. Bellows, 281 N. Y. 67.)

It is further urged, however, that since the right of free speech is guaranteed by the Federal and State Constitutions, this conviction, if upheld, will lead to an unconstitutional interpretation of section 722, subdivision 2, of the Penal Law. Assuming that the right to picket is entitled to no less rights than we give to the right to free speech (Cf. American Federation of Labor v. Swing, supra; Bakery & Pastry Drivers & Helpers Local No. 802 v. Wohl, supra), by the same token, an abuse of the right of free speech would likewise be an abuse of picketing. It has been repeatedly held that the constitutional rights of freedom of speech are not absolute and are subject to such reasonable regulations as are necessary to promote and preserve the public peace. (Near v. Minnesota, 283 U. S. 697; Stromberg v. California, 283 U. S. 359; Whitney v. California, 274 U. S. 357; Patterson v. Colorado, 205 U. S. 454.) The power and the duty of the State to take adequate steps to preserve the peace and to protect the privacy, the lives, and the property of its residents cannot be doubted.” (Thornhill v. Alabama, 310 U. S. 88, 105.)

Labor unions, when their actions are unlawful, are not free from the provisions of the Penal Law and where picketing is used to further an unlawful labor objective, such as a combined effort of employees to coerce an employer to pay a stale or disputed claim, to extort money from the employer, to force the employer to commit a crime, to injure the employer solely because of malice or ill will, or to conspire in the face of an emergency or otherwise to coerce others to cease maintaining law and order or defense among those engaged in police duty or in the armed forces, it is subject to reasonable limitation by the courts and Legislature of the State. (Opera on Tour, Inc., v. Weber, 285 N. Y. 348, 356.)

It follows that the order of the Appellate Part of the Court of Special Sessions should be reversed and the judgment of conviction affirmed.

Loughran, Lewis and Desmond, JJ., concur with Lehman, Ch. J.; Finch, J., dissents in opinion in which Rippey and Conway, JJ., concur.

Order affirmed.