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Farley v. Scherno

Court of Appeals of the State of New York
Apr 22, 1913
101 N.E. 891 (N.Y. 1913)


Argued April 3, 1913

Decided April 22, 1913

John E. Judge and Lucius A. Waldo for appellants. Louis M. King and A.M. Sperry for respondent.

This is an action to recover the penalty of a bond given on the issuing of a liquor tax certificate to the appellant Scherno, on the ground that there had been a breach of the condition of the bond in that he had allowed the premises to become disorderly and had made a material false statement in his application for the certificate in stating that the premises belonged to his wife, and that he might lawfully carry on a traffic in liquors thereon. The defense is that there was no consideration for the bond for the reason that the premises for which the certificate was issued formed a part of the military reservation and post known as the "Plattsburgh Barracks" of the United States of America. The facts are not in dispute and were found by the court.

The state having given its consent to the purchase by the United States (see Laws of 1890, chap. 18), the legislative power of Congress over the lands purchased is exclusive. ( Commonwealth v. Clary, 8 Mass. 72; Fort Leavenworth Railroad Company v. Lowe, 114 U.S. 525.) The state had no power to license the traffic in liquors on said premises, even if Congress had not expressly prohibited it, as it has. (U.S. Statutes at Large, 1901, Sec. 38, chap. 192.) The liquor tax certificate was, therefore, a nullity and furnished no consideration for the bond.

It has been ruled below that the defendants are estopped by statements in the application to deny that the traffic in liquors could lawfully be carried on on said premises. But the case lacks one of the essential elements of an estoppel. The state has lost nothing in reliance upon the statements in the application. Indeed, it has received the license tax. Metropolitan Life Insurance Company v. Bender ( 124 N.Y. 47) is a typical case of an estoppel arising from a recital in a bond. The recital was that the bond was executed under seal. It was executed by the obligor and delivered by him to the person interested in having it accepted, who attached a seal and delivered it to the obligee, who accepted and acted upon it on the supposition that it had been executed under seal. I cite that case to mark the distinction between it and a case like this in which no possible loss could have been sustained by the obligee in reliance upon the alleged false statement.

It is suggested, however, that, although the liquor tax certificate gave the holder no right to traffic in liquors on the premises in question, it still protected him from a criminal prosecution in the United States courts under section 5391 of the United States Compiled Statutes, which provides that "if any offense shall be committed in any place which has been or may hereafter be ceded to and under the jurisdiction of the United States, which offense is not prohibited or the punishment thereof is not specially provided for by any law of the United States, such offense shall be liable to, and receive, the same punishment as the laws of the state in which said place is situated, now in force, provide for the like offense when committed within the jurisdiction of such state." But as the state cannot license the sale of liquors on a government reservation over which the jurisdiction of Congress is exclusive, the lawfulness of such sale thereon is not affected by the question whether the state has granted a license therefor. The act having been prohibited and no punishment specifically provided, it may be that the offender might be punished in the United States courts the same as he might be punished in the state courts for an unlawful sale of liquor on lands within the jurisdiction of the state. That question is not before us, and, in any event, it is plain that the liquor tax certificate granted in this case would furnish the appellant Scherno no defense to such a prosecution.

The judgments of the Appellate Division and of the trial court should be reversed and the complaint dismissed, with costs in all the courts.

The defendant Antonio Scherno applied to the county treasurer of Clinton county for a liquor tax certificate under section 15 of the Liquor Tax Law. The law requires the application to contain a description of the place where the traffic in liquors is to be carried on and a statement that the applicant "may lawfully carry on such traffic in liquors upon such premises." The application described certain premises and said that they were owned by Scherno's wife and that he might lawfully traffic in liquors thereon.

That statement was false. The premises are a part of the Plattsburgh barracks, a military post of the United States, whereon the traffic in liquors is unlawful.

The defendant, the Fidelity Casualty Company, became the surety on the bond given to accompany the application as required by section 16 of the Liquor Tax Law. The bond was conditioned, among other things, that there was "no material false statement in the application statement for said liquor tax certificate," and also that the applicant would not suffer or permit the place designated in the liquor tax certificate to become disorderly.

The county treasurer issued to Scherno the certificate applied for. Thereafter, and for nearly the full term covered by the certificate, Scherno did in fact traffic in liquors at the place mentioned therein and ran a house of ill-fame.

This action is brought against Scherno and his surety for a violation of the condition of the bond that Scherno would not permit the premises mentioned in the liquor tax certificate to become disorderly. The surety has Interposed as a defense that the liquor tax certificate was void for the reason that the state could not grant Scherno permission to traffic in liquors upon a military post of the United States, and that, therefore, the bond was without consideration.

I think the question of consideration does not enter into the case at all. "For a statutory undertaking no consideration is necessary." ( Thompson v. Blanchard, 3 N.Y. 335; Bildersee v. Aden, 62 Barb. 175; Post v. Doremus, 60 N.Y. 371, 375; Livingston v. Hammer, 7 Bosw. 670, 677; Johnson v. Ackerson, 3 Daly, 430; Gein v. Little, 43 Misc. Rep. 421, 424.) It is sufficient that Scherno attained the object for which the bond was given.

The cause of action set forth in the complaint is that Scherno violated the condition of the bond by keeping a disorderly house — not that he made material false statements in the application. The facts showing that the statements in the application were false appear from the answer of the surety as a defense to the bond. The Appellate Division was clearly right in saying that the surety in the bond was estopped from setting up this defense. ( Farley v. Scherno, 147 App. Div. 375.)

It makes no particular difference that the United States was the owner of the premises mentioned in the application. The result would have been the same though they were owned by any person other than the one mentioned in the application, if the owner's consent to the traffic in liquors had not been obtained. The law required Scherno to show that he had such consent and in that regard the statements in the application were false. This was a plain violation of the express condition of the bond and it seems absurd that it should be considered as a defense in determining the liability of the obligors for the breach of their undertaking in another respect.

I recommend that the judgment appealed from be affirmed, with costs.

CULLEN, Ch. J., WILLARD BARTLETT, HISCOCK, CHASE and HOGAN, JJ., concur with MILLER, J.; CUDDEBACK, J., reads dissenting opinion.

Judgment reversed, etc.

Summaries of

Farley v. Scherno

Court of Appeals of the State of New York
Apr 22, 1913
101 N.E. 891 (N.Y. 1913)
Case details for

Farley v. Scherno

Case Details

Full title:WILLIAM W. FARLEY, as State Commissioner of Excise, Respondent, v …

Court:Court of Appeals of the State of New York

Date published: Apr 22, 1913


101 N.E. 891 (N.Y. 1913)
101 N.E. 891

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