Case Name: The City Trust, Safe Deposit and Surety Company of Philadelphia, Appellant, v. The American Brewing Company, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1905-06-13
Citations: 182 N.Y. 285
Docket Number: 
Parties: The City Trust, Safe Deposit and Surety Company of Philadelphia, Appellant, v. The American Brewing Company, Respondent.
Judges: 
Reporter: New York Reports
Volume: 182
Pages: 285–301

Head Matter:
The City Trust, Safe Deposit and Surety Company of Philadelphia, Appellant, v. The American Brewing Company, Respondent.
1. Appeal — Judgment Absolute Awarded to Plaintiff by Court of Appeals upon Stipulation of Defendant — Assessment of Damages Thereunder—When Plaintiff May Appeal from Order Refusing to Assess Damages “as a Matter of Law.” While an order of the Appellate Division, affirming an assessment of damages upon a judgment absolute directed by the Court of Appeals, is not appealable to the Court of Appeals, as a matter of right, or even when certified by the Appellate Division, where the assessment of damages involves a discretion on the part of the court or jury making the assessment, yet, where 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 he determined by the Court of Appeals, thereby raising questions of law as to the items rejected and bringing the case within the requirements of section 190 of the Code of Civil Procedure, the appeal is well taken and the order is re viewable in the Court of Appeals.
2. Same — Rule for Assessment of Damages by Supreme Court. In assessing damages, under section 194 of the Code of Civil Procedure, upon an order of the Court of Appeals awarding judgment absolute in favor of the plaintiff in an action, the Supreme Court cannot determine whether the plaintiff is entitled to recover under the allegations of the complaint, since the effect of a judgment absolute is to award to the plaintiff the judgment to which he is entitled upon his complaint without regard to any defense interposed by the answer, and in assessing the damages thereunder the allegations of the complaint are required to be treated as true and the same as if no answer had been interposed.
3. Surety—Principal and Agent — When Surety Company May Eecover from Undisclosed Principal the Amount It Was Compelled to Pay on Liquor Tax Bond Issued on Application of- Agent of Such Principal. Where the agent of an undisclosed principal, with the authority and approval of his principal, applies to a surety company for a bond to enable him to procure a certificate permitting him to engage in the business of trafficking in liquors, and the surety in compliance therewith executes the bond required by the Liquor Tax Law, the transaction constitutes a • contract, binding the principal, that the business will be conducted in conformity with the requirements of law and that violations will not be committed and the surety made liable by reason thereof; a violation, therefore, by his agent constitutes a breach of contract, and the surety having paid a judgment for the penalty and costs imposed upon the agent for such violation the principal is liable under the contract for the amount paid by the surety.
4. When Surety Company May Eecover Amount Paid for Counsel Pees and Disbursements, as Well as Penalty and Taxable Costs Paid, in Action upon Bond for Violation of Liquor Tax Law. Where in an action brought by the surety company, upon personal service of the summons and verified complaint, to recover from the brewing company the amount of the penalty and costs paid by it as surety for a violation of the Liquor Tax Law, the defendant moved for judgment upon the complaint on the ground that it did not state facts sufficient to constitute a cause of action, and the trial court granted such motion and from the judgment thereon entered the defendant appealed to the Appellate Division, which reversed the judgment and ordered a new trial, and the defendant appealed from the order of the Appellate Division to the Court of Appeals, upon a stipulation for judgment absolute, which court affirmed the order and awarded judgment absolute to the plaintiff-— the penalty of the bond, the taxable costs upon the trial, the taxable costs in the Appellate Division and Court of Appeals, which plaintiff was compelled to pay, are all liquidated items and should be allowed upon the assessment of damages; the amount the plaintiff was compelled to pay for counsel fee and disbursements in the defense of the case, being stated in the verified complaint, should also be allowed, under sections 420 and 1212 of the Code of Civil Procedure, which" provide that judgment may be taken on verified complaints, demanding judgment for a sum of money only, without application to the court upon default in actions on contract, express or implied, to pay moneys disbursed or for the value of services rendered by, to, or for the use of, the defendant; since upon judgment absolute on the defendant’s stipulation the damages are assessable as if it bad made default in pleading.
(Argued April 24, 1905;
decided June 13, 1905.)
City Trust, Safe Deposit & Surety Co. v. American Brewing Co., 93 App. Div. 606, reversed.
Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered April 12, 1904, which affirmed a judgment in favor of plaintiff entered upon an assessment of damages and from an order of said Appellate Division which affirmed an order of Special Term denying a motion to set aside such assessment of damages.
The complaint in this action, in substance, alleges that on the 11th day of November, 1898, the plaintiff, as surety for one John M. Kurtz, executed a bond to the People of the State of New York in the penal sum of one thousand dollars, conditioned that if a liquor tax certificate was -issued to said Kurtz, permitting him to engage in the traffic of liquors at 153 IVIain street in the city of Boches ter, he would not permit gambling, etc., upon the premises, following the usual form of bonds required in such cases. The complaint further alleges, in substance, that such liquor tax certificate was delivered to Kurtz; that there was thereafter maintained upon the premises a gambling device known as a nickel in the slot machine, and that on or about the 12tli day of July, 1898, the state commissioner of excise commenced an action against said Kurtz and this plaintiff to recover the penalty of the bond, which resulted in a judgment against the plaintiff for the sum of one thousand dollars and costs, which subsequently was affirmed in the Appellate Division and Court of Appeals, with costs, amounting in the.aggregate to $1,480.43, which the plaintiff has paid to the commissioner of excise, and in addition thereto he has paid his counsel the further sum of $640.53 for costs and expenses in defending the litigation.
The complaint further alleges, in substance, that at the time the bond was made and the liquor tax certificate issued to Kurtz, and during all the time mentioned thereafter, the defendant, The American Brewing Company, owned the lease of the store, the liquor business conducted therein, and all of the stock of goods and fixtures; that it maintained the nickel in the slot machine and received the receipts therefor; that it employed the said Kurtz at twelve dollars per week to manage the saloon, the defendant paying all of the expenses of- running the place, furnishing the beer and receiving the' receipts for the business so carried on ; that the defendant was the real principal and as such procured the liquor tax certificate to be issued in the name of Kurtz, but-for its own use and benefit as the real principal without disclosing such fact to the plaintiff. The complaint demands judgment for the sum of $2,120.96,• with interest from the 18tli day of April, 1901, with the costs of the action.
An answer was interposed and the cause was moved for trial. After the impaneling of the jury and before any evidence had been taken the defendant moved .to dismiss the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. The court granted the motion and ordered the exception taken thereto to be heard at the Appellate Division in the first instance. At the Appellate Division the exception of the plaintiff was sustained and a new trial ordered, with costs to abide the event. Thereupon the defendant appealed from that order to the Court of Appeals, giving the statutory stipulation that in case of an affirmance judgment absolute should be awarded against it. Subsequently the order of the Appellate Division was affirmed by this court and judgment absolute upon the stipulation was awarded against the defendant and the case remitted to the Supreme Court where the original judgment roll was filed. Plaintiff’s damages were first assessed at a Trial Term of the Supreme Court at the full amount of the plaintiff’s claim as alleged in the complaint, but subsequently a motion was made on the part of the defendant to set aside the assessment, which was denied, but upon an appeal to the Appellate Division that court reversed the order, set aside the assessment and ordered a reassessment of the damages. Upon such reassessment the plaintiff was allowed as damages the 81,000 penalty of the bond, with interest and the costs of the trial of the action which it had been compelled to pay, but the costs in the Appellate Division and Court of Appeals were disallowed, together with the sum of $010.53 paid for counsel fee and expenses in conducting the litigation, notwithstanding that the court, in assessing the damages, found that the services rendered by counsel were reasonably worth the amount charged and paid, and that the expenses incurred were necessary in the defense of this action. The court making the assessment filed a formal decision containing findings of fact and conclusions of law, and at the end thereof stated that each of the items rejected were disallowed “as a matter of law and not as a matter of discretion.” The plaintiff filed exceptions to the conclusions of law. in which the three items of damages claimed were disallowed. A motion was then made to set aside the assessment by reason of the court’s refusing to include therein the three items in controversy, which motion was denied, and on appeal therefrom the Appellate Division affirmed the order, but certified that a question of law has arisen which, in its opinion, ought to be reviewed by the Court of Appeals, and it has thereupon certified the following questions:
“1. Is the plaintiff entitled to recover as ■ part of its damages the costs on appeal to the Appellate Division in the action brought by the excise commissioner against John M. Kurtz and plaintiff, which costs are included in the judgment of the Supreme Court in that action and paid by the plaintiff?
“ 2. Is the plaintiff entitled to recover as part of its damages the judgment for costs on appeal to the Court of Appeals in the same action paid by the plaintiff ?
“ 3. Is the plaintiff entitled to recover as part of its damages its necessary expenses by way of counsel fees and disbursements paid by it to its attorney in the same action and not included in the costs taxed therein ? ”
Charles Van Voorhis for appellant.
This court has jurisdiction • to review the appeal herein. (Langdon v. Mayor, etc., 133 N. Y. 628; Stevens v. C. Nat. Bank, 35 App. Div. 625; 162 N. Y. 253; Bossout v. R., W. & O. R. R. Co., 131 N. Y. 57.) The plaintiff is entitled to recover its damages as alleged in the complaint and as proved and established by the findings of fact upon the assessment. (Hiscock v. Harris, 80 N. Y. 402; Bossout v. R., W. & O. R. R. Co., 131 N. Y. 37; Wright v. City of Mt. Vernon, 78 App. Div. 467; Wilson v. Palmer, 11 Hun, 325; Gray v. Bd. of Suprs., 93 N. Y. 603; Conklin v. Snider, 104 N. Y. 641; Godfrey v. Moser, 66 N. Y. 250; Hitchings v. Van Brunt, 38 N. Y. 335; Roberts v. Baumgarten, 126 N. Y. 337.)
P. M. French for respondent.
The questions sought to be raised by the appeal from the judgment are not reviewable in this court.’ (Bossout v. R., W. & O. R. R. Co., 131 N. Y. 37; Bienenstok v. Ammidown, 155 N. Y. 46; Lewin v. L. V. R. R. Co., 169 N. Y. 336.) The theory upon which appellant has been allowed to recover in this action is that respondent by its wrongful act caused damage to appellant. As decided by this court the right to recover is based upon tort. (C. T., etc., Co. v. A. B. Co., 174 N. Y. 486.) The proper measure of appellant’s damages herein at most is the penalty of the bond with interest and costs of the trial which it was obliged to pay as a result of the Kurtz action. Moneys paid counsel for the defense of the Kurtz action are not a proper measure of damages. (Reggio v. Braggiotti, 7 Cush. [Mass.] 166; Marvin v. Prentice, 94 N. Y. 295; Clason v. N. F. Co., 20 Misc. Rep. 315; Fallon v. Wright, 82 App. Div. 193; People ex rel. Fallon v. Wright, 7 App. Div. 185; 150 N. Y. 444; Bossout v. R., W. & O. R. R. Co., 131 N. Y. 40.)

Opinion:
Haight, J.
The first question raised is as to -whether this order is appealable. Yo 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 tlie 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 voliolo 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 MU- 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 he 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 ¡dace and conducted the business of trafficking in liquors therein. His application to the plaintiff to become surety upon the bond ivas on behalf of the defendant, who was the real hut undisclosed principal upon the bond. It is true that Parker, Oh. J., in delivering the opinion of this court, in which the order of the Appellate Division granting a now 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 premisos 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 ivas 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 he committed and the surety made liable by reason thereof. As avc understand, the rule is elementary that Avhere an undisclosed principal is aftenvards discovered he may he held liable by the plaintiff, at his election, upon the contract of his agent Avhich Avas made Avitli his authority and consent.
In the case of Briggs v. Partridge (64 N. Y. 357, 362) Asdrkavs, <T., says: "A principal may he charged upon a Avritton or parol executory contract entered into by an agent in his own name, Avithin his authority, although the name of the principal docs not appear in the instrument, and Avas not disclosed, and the party dealing with the agent supposed that he Avas acting for himself, and this doctrine obtains as well in respect to contracts Avhich are required to be in Avriting, as to those Avhere a Avriting 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 defendánt 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 appéaled from reversed and the case remitted to the court below to proceed thereon, with costs to the appellant in all the courts.