City Trust, Safe Deposit & Surety Co. of Philadelphia v. American Brewing Co.

182 N.Y. 285 | NY | 1905

Lead Opinion

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The first question raised is as to whether this order is appealable. No appeal lies from such an order to this court as a matter of right. (Bassett v. French, 155 N.Y. 46.) Neither does an appeal lie even though certified by the Appellate Division where the assessment of the damages involved a discretion on the part of the court or jury making the assessment. (Lewin v. Lehigh V.R.R. Co., 169 N.Y. 336.) But in the case now before us the items of damages disallowed are definitely fixed and determined and the court making the assessment has certified that they were rejected "as a matter of law and not as a matter of discretion," and the Appellate Division has certified that a question of law has arisen which ought to be determined by this court as to the three items disallowed, thus raising three separate and distinct questions of law as to the items rejected. This conforms to the requirements of the second subdivision of section 190 of the Code of Civil Procedure, which provides for an appeal to this court from a determination of the Appellate Division "where the Appellate Division allows the same and certifies that one or more questions of law have arisen, which in its opinion ought to be reviewed by the Court of Appeals." We, consequently, conclude that the appeal is well taken.

The Appellate Division appears to have been of the opinion that the Supreme Court, in assessing the damages under the order of this court awarding judgment absolute in favor of the plaintiff, had the right to try the question and determine whether the plaintiff was entitled to recover under the allegations of its complaint. Had the action been brought to trial upon the issue raised by the answer interposed it is quite possible that it would have been determined that the plaintiff was not entitled to recover, upon its claim for damages in the Appellate Division and Court of Appeals or for its counsel fee and expenses in conducting such appeal. Whether or not the plaintiff would have been entitled to recover those items, or any one of them, would depend upon the facts determined upon such trial. It could not increase the damages of the defendant by interposing a frivolous or unsound defense and then prosecute an appeal from the judgment rendered, unless it was authorized so to do, either expressly or impliedly, by the defendant, its agents or attorneys. But the defendant did not see fit to bring the action to trial upon its answer. It moved for judgment upon the complaint, claiming that it failed to state a cause of action. Upon this it succeeded in the trial court but was defeated in the Appellate Division, and then instead of taking a new trial under the order of that court it took an appeal to this court, stipulating that in case of an affirmance judgment absolute should go against it. This court did affirm the order and awarded judgment absolute against the defendant. The effect of this was to award to the plaintiff the judgment which it was entitled to upon its complaint without regard to any defense that had been interposed by the answer, and in assessing the damages thereunder the allegations of the complaint were required to be treated as true and the same as if no answer had been interposed.

In the case of Bossout v. Rome, W. O.R.R. Co. (131 N.Y. 37) PECKHAM, J., says: "The judgment entered upon the filing of the remittitur from this court was an absolute and final one, which fixed, irrevocably, the liability of the defendant to pay the damages sustained by the plaintiff * * *. The effect of the affirmance of the order granting a new trial and the entry of judgment absolute thereon in the Supreme Court was the same as if the whole of the plaintiff's action had been admitted and a default had occurred, and the sole question left was as to the amount of the damages sustained by the plaintiff."

Upon awarding judgment absolute in this court against the defendant upon its stipulation, the judgment was remitted to the court below and the assessment of damages had pursuant to the provisions of section 194 of the Code, which provides that in such a case "an assessment of damages or any other proceeding requisite to render the judgment effectual may be had in the latter court."

We are of the opinion that the cause of action set forth in the complaint is a breach of contract. The plaintiff, at the request of Kurtz, had executed a bond to the People of the State, as surety, in order to enable him to procure a certificate permitting him to engage in the business of trafficking in liquors. Kurtz thereby is deemed to have agreed with the plaintiff that he would conduct the business in accordance with the requirements of the statute and that he would thereby save the plaintiff from any liability on the bond. Kurtz, however, was but an employee of the defendant, who owned the place and conducted the business of trafficking in liquors therein. His application to the plaintiff to become surety upon the bond was on behalf of the defendant, who was the real but undisclosed principal upon the bond. It is true that PARKER, Ch. J., in delivering the opinion of this court, in which the order of the Appellate Division granting a new trial was affirmed (174 N.Y. 486), called certain acts torts and the violators wrongdoers. But in these expressions he had reference to the acts complained of, of maintaining a gambling device upon the premises in violation of the statute, which was not only a tort but an offense punishable under our penal statute. The very object of the bond required by the People of the State was to prevent such acts and to enforce a compliance with its provisions, and the agreement which the principal is deemed to have made with his surety is to the effect that such acts will not be committed and the surety made liable by reason thereof. As we understand, the rule is elementary that where an undisclosed principal is afterwards discovered he may be held liable by the plaintiff, at his election, upon the contract of his agent which was made with his authority and consent.

In the case of Briggs v. Partridge (64 N.Y. 357, 362) ANDREWS, J., says: "A principal may be charged upon a written or parol executory contract entered into by an agent in his own name, within his authority, although the name of the principal does not appear in the instrument, and was not disclosed, and the party dealing with the agent supposed that he was acting for himself, and this doctrine obtains as well in respect to contracts which are required to be in writing, as to those where a writing is not essential to their validity."

In the case of Brady v. Nally (151 N.Y. 258, 262) VANN, J., in considering a contract to furnish plumbing material for a schoolhouse, quotes the opinion of ANDREWS, J., with approval and determines that case in accordance therewith. (See, also, Tew v. Wolfsohn, 174 N.Y. 272; Meeker v. Claghorn, 44 N.Y. 349, and Mechem on Agency, § 695, and authorities cited in cases referred to.)

The cause of action alleged in the complaint, being upon contract, we think the items of damages claimed therein were liquidated and were assessable before the clerk or before the court below, under the provisions of section 194, to which we have called attention. (Bossout v. Rome, W. O.R.R. Co.,supra.) The penalty of the bond, the taxable costs upon the trial, the taxable costs in the Appellate Division and Court of Appeals, which the plaintiff was compelled to pay, were certainly all liquidated items. The other remaining item of damage claimed was the amount that the plaintiff had been compelled to pay for counsel fee and disbursements in the defense of the case. As to these, section 420 of the Code of Civil Procedure provides that "judgment may be taken without application to the court, where the complaint sets forth one or more causes of action each consisting of the breach of an express contract to pay, absolutely or upon a contingency, a sum or sums of money, fixed by the terms of the contract, or capable of being ascertained therefrom, by computation only; or an express or implied contract to pay money received or disbursed, or the value of property delivered, or of services rendered by, to, or for the use of,the defendant or a third person; and thereupon demands judgment for a sum of money only." Section 1212 of the Code, so far as material to this case, provides that "in an action specified in section 420 of this act, where the summons was personally served upon the defendant, and a copy of the complaint, or a notice stating the sum of money for which judgment will be taken, was served with the summons; or where the defendant has appeared, but has made default in pleading, the plaintiff may take judgment by default, as follows: (1) If the defendant has made default in appearing, the plaintiff must file proof of the service of the summons, and of a copy of the complaint or the notice, and also proof, by affidavit, that the defendant has not appeared; whereupon the clerk must enter final judgment in his favor. (2) If the defendant has seasonably appeared, but has made default in pleading, the plaintiff must file proof of the service of the summons and of the appearance or of the appearance only, and also proof, by affidavit, of the default; whereupon the clerk must enter final judgment in his favor." The provisions of the foregoing sections of the Code were under consideration in this court in the case of Bullard v. Sherwood (85 N.Y. 253) in which the action was brought by an attorney to recover for professional services and disbursements, the same as in this action. The complaint in that action, as well as the complaint in this action, was sworn to. The judgment in that case was taken by default. In this case it was taken, as we have seen, upon an order of this court for judgment absolute upon the defendant's stipulation, in which the damages are assessable the same as if the defendant had made default in pleading. In that case the court held that the damages were assessable by the clerk. FINCH, J., in delivering the opinion of the court, says with reference to the judgment, that "its entry by the clerk was an exact and literal compliance with the provisions of the Code. That directs in a case where application to the court is unnecessary, and where the summons and complaint have been personally served, and the latter is verified, that the judgment be entered for the sum demanded in the complaint. * * * The party, therefore, who makes default in presence of these provisions practically consents to such entry of judgment. He thereby admits that he is indebted in the full amount claimed and concedes that judgment should be entered for that sum."

For the reason stated, the questions certified should be answered in the affirmative and the order appealed from reversed and the case remitted to the court below to proceed thereon, with costs to the appellant in all the courts.

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Dissenting Opinion

I dissent and vote for the dismissal of the appeal, upon the ground that the order of the Appellate Division is not reviewable in this court, within the principle of our decisions in Bossout v. Rome, W. O.R.R. Co., (131 N.Y. 37), and, more recently, inLewin v. Lehigh Valley R.R. Co., (169 ib. 336).

The judgment, which was rendered upon our determination, was final and section 194 of the Code allows, simply, an assessment of damages in the court below. I think that the assessment of damages was confined to the Supreme Court and that the proceedings incidental thereto were not subject to the general provisions of the Code, which relate to the review by this court of determinations of the Appellate Division.

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Dissenting Opinion

There is no question in this case except such as arises upon proceedings to assess damages upon a stipulation for judgment absolute.

I cannot concur in the opinion for two reasons: (1) The orders are not appealable to this court. There are some propositions on that point that I will state from the adjudged cases in this court and that I suppose no one will dispute.

No appeal to any court will lie from a judgment entered upon default. (Code Civ. Proc., sec. 1294.)

The proceedings for assessing damages after default in answering and proceedings for assessing damages upon a stipulation for judgment absolute are the same and governed by the same rules. In the latter case the proceeding is the same as upon an ordinary inquest.

However the assessment is made, whether by a sheriff with a jury, by a judge at Circuit with or without a jury, or by a referee, the questions are always the same, and the rules for reviewing the trial of an action do not prevail or apply.

In each case a motion may be made to set aside the inquisition, and when it appears that injustice has been done, the court may set it aside, but it is all a matter of discretion, and when refused, a judgment or order entered upon the inquisition is not reviewable upon legal grounds.

In no case can there be any appeal beyond the Supreme Court. There is no provision of the Code that authorizes any exceptions to be taken in such a proceeding, and no provision that authorizes an appeal. The disposition of the inquisition in the Supreme Court always rests in discretion, and only questions of law raised by exceptions can be reviewed in this court.

The Supreme Court cannot send such a case here on a certificate that certain specified questions of law have arisen that should be reviewed in this court. Every one of these propositions have been taken from the decisions of this court. (Bossout v. Rome,W. O.R.R. Co., 131 N.Y. 37; Bassett v. French, 155 N.Y. 46;Lewin v. Lehigh Valley R.R. Co., 169 N.Y. 336.)

The case last cited came here from the Appellate Division with a certificate that five separate questions of law were involved, but we dismissed the appeal on the ground that the court had no jurisdiction to hear such an appeal. I am unable to see how that case differs from this.

1. But the opinion from which I dissent suggests a very simple way to avoid all the rules above stated, and by means of which all such cases can be brought to this court. All that is necessary to do is to get the sheriff, with or without his jury, to certify that the damages have been determined as matter of law and not as matter of fact, or in the exercise of discretion, and what was never appealable before becomes appealable then. He can thus create a question of law to be transmitted to this court through the certificate of the Appellate Division. He can change the character of the whole proceeding by removing it from the domain of discretion to that of pure law. Of course, the judge at Circuit with or without a jury or a referee can do the same thing since they are all dealing with the same questions, that is, assessing damages as upon a default. It makes no difference that the courts have said over and over that the proceedings are, in their very nature, always subject to discretion, the sheriff can convert them every time into one of pure law and he can do anything in that way that either a judge or referee can do since they are acting in the same capacity. It would be only reasonable to suppose, from what this court has said, that such certificates had no application to such a proceeding and had no effect upon the nature or character of the determination. If the sheriff could not make a question of law for the Appellate Division, it is difficult to see how that court can make one for us.

2. On the merits, I think the opinion is equally wide of the mark. It all rests on one proposition and that is that this court in deciding the principal case, where it was held that the plaintiff was entitled to judgment absolute, held that the defendant's liability was upon contract. (City Trust, S.D. S. Co. v. Am. Brewing Co., 174 N.Y. 486.) I hope it will never be imputed to this court that it has solemnly decided that a party is liable as a principal upon a contract such as a liquor tax bond that he never signed or executed and had never seen or heard of. Kurtz applied for the license and got it. He signed the bond as principal and the plaintiff as surety. But it is said that the defendant was behind Kurtz, and, as an undisclosed principal, the state licensed it, although it never applied for one and the state officers could know nothing about its qualifications to receive a license; and Kurtz, having signed the bond as principal, he bound the defendant as an undisclosed principal although the defendant's officers never heard of the bond or of the fact that the plaintiff had become surety for Kurtz. All this, it is said, this court has most solemnly decided and that is the cornerstone of the opinion in this case.

This court, I am glad to say, never decided anything of the kind. Here is what the court said in the opinion. The italics are my own:

"Plaintiff could recover of Kurtz, and probably would were he responsible, but why may he not recover from the party which, while benefitting by the suretyship, committed the injury? — from the hidden principal that by a wrongfulact, prohibited by the conditions of the bond and forbidden by statute, caused a loss to this plaintiff?

"Ever since Justinian said, `The maxims of law are these: to live honestly, to hurt no man and to give every one his due,' it has been a leading object of jurisprudence to compel wrongdoers to make reparation. Now it is a general rule of law that aperson commits a tort and renders himself liable for damages who does some act forbidden by law if that act causes another substantial loss beyond that suffered by the rest of the public, and that rule covers this case.

"Defendant, through its agent Kurtz, induced plaintiff to become a surety on the bond for Kurtz, and then, in violation of the statute, it conducted a nickel-in-the-slot machine on the premises, by means of which misconduct the surety was compelled to pay the penal sum of the bond. In other words, defendantcommitted an act forbidden by law, and the direct effect of its act was to cause plaintiff a substantial loss beyond that suffered by the rest of the public, and for the damage thussustained it should respond to plaintiff." (City Trust, S.D. S. Co. v. American Brewing Co., 174 N.Y. 486.)

If I can understand the meaning of language, I should say that the defendant was held liable for a wrong or tort in placing the slot machine in the saloon and thereby producing a forfeiture of the bond upon which the plaintiff was surety. That is plain enough and that makes the decision sensible and reasonable. But because the judge called the defendant a "hidden principal" that phrase is seized upon to change the decision to a judgment oncontract, which makes it quite unreasonable and indefensible.

In giving construction to one of our own decisions I would always prefer the theory that makes the decision sensible and reasonable rather than the one which makes it absurd, but I fear that the opinion in this case rejects the former and adopts the latter. The law of agency knows such a thing as a "hidden principal," but it has not the slightest application to the case at bar. I assume that no concealed principal could procure admission to the bar through an agent, or to the civil service list, or procure a license to traffic in liquors, or acquire any other right or privilege that requires personal qualifications or is granted only upon personal application. Of course, the defendant could not have committed a tort and violated a contract at the same time by the act of putting a slot machine into the saloon. It is reasonable enough to say it committed a wrong, but just how it made a contract and broke it has not yet been explained and I fear never will be. Of course, it is necessary in order to reverse the orders before us to impute to one of our own decisions what seems to me to be an absurdity. But I fail to see anything in the case before us that requires us to put such a strain upon law and common sense.

The prevailing opinion as it appears to me sanctions two novelties. The first one is that the sheriff or other assessing officer in default cases can, with a stroke of his pen, break down all the barriers that this court has erected against appeals of this character to this court, by simply stating that the damages have been determined or certain items rejected as matter of law and not as matter of fact or discretion. Since the practice in cases of ordinary appeals or decisions has no application to inquests, I am unable to see where the sheriff gets the power to change the legal effect of the determination by any such statement.

The second one is that this court has solemnly decided in174 N.Y. 486, that a corporation, by putting a slot machine into a saloon, kept by an individual who held a liquor tax certificate and had given a bond, became thereby the principal upon that written instrument and made all the promises and covenants in the same, although none of its officers ever signed or executed the bond and had never seen or heard of it and became responsible upon the bond as upon contract to the surety who paid it, although the defendant never had any business transaction whatever with the sureties. All this is based upon the words "hidden principal" contained in the opinion. These, to my mind, are two very extraordinary propositions, and since I am not able to see my way clear to concur in either of them, I will be recorded for affirmance or the dismissal of the appeal.

CULLEN, Ch. J., BARTLETT and VANN, JJ., concur with HAIGHT, J.; GRAY, J., reads dissenting memorandum and WERNER, J., concurs; O'BRIEN, J., reads dissenting opinion.

Order reversed, etc.