Musco v. United Sur. Co.

• Decision Date: 23 November 1909
• Citation: 196 N.Y. 459,90 N.E. 171
• Parties: MUSCO v. UNITED SURETY CO.
• Court: New York Court of Appeals Court of Appeals

196 N.Y. 459

90 N.E. 171

MUSCO

v.UNITED SURETY CO.

Court of Appeals of New York.

Nov. 23, 1909.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Damiano Musco against the United Surety Company. From an order and interlocutory judgment of the Appellate Division (132 App. Div. 300,117 N. Y. Supp. 21), reversing an order of the Special Term (115 N. Y. Supp. 199), overruling a demurrer to the answer and dismissing the complaint, defendant, with leave of court, appeals.

On such appeal the question certified to us is, ‘Does the plaintiff's complaint set forth facts sufficient to constitute a cause of action?’ Question answered in affirmative. The action was brought to recover on a bond executed by one Ferrara as principal and the appellant as surety, pursuant to the provisions of chapter 185, p. 263, Laws 1907. The complaint, in substance, among other things alleged the execution of said bond by said principal and surety, whereby they bound themselves in the sum of $15,000, on the condition that if the said principal should ‘faithfully and diligently hold and transmit any, and all moneys, or the equivalent thereof which shall be delivered to them for transmission to a foreign country or countries as provided by * * * chapter 185 of the Laws of 1907, and duly account for and promptly pay over all moneys, or the equivalent thereof, received by him as aforesaid, then this obligation to be void’; that between the date of execution of said undertaking and the commencement of this action various people delivered to said Ferrara various sums of money to be transmitted abroad, and which he failed to transmit or account for, and the said people thereafter assigned their respective causes of action to the plaintiff. A copy of the undertaking attached to the complaint recites that said principal ‘is engaged in, or is about to engage in, the selling of steamship or railroad tickets for transportation to or from foreign countries, and in conjunction with said business carries on, or is about to carry on, the business of receiving deposits of money for the purpose of transmitting the same, or the equivalent thereof, to foreign countries, and is required to make, execute, and deliver a bond pursuant to chapter 185 of the Laws of 1907,’ and it has been assumed in the argument of this case that said Ferrara was engaged in business as aforesaid, and did come under the provisions of said act. The appellant by its answer and the respondent by his demurrer thereto have presented the question whether the law requiring the execution of said bond is constitutional, and such question is the one really involved in the general question submitted to us whether the complaint sets forth a cause of action.Edward Blumenstiel, for appellant.

Nelson L. Keach, for respondent.

HISCOCK, J. (after stating the facts as above).

Chapter 185 of the Laws of 1907 is entitled, ‘An act to regulate the taking of deposits by certain persons, firms, and corporations.’ Amongst other things it provides (section 1): ‘All corporations, firms and persons now or hereafter engaged in the selling of steamship or railroad tickets for transportation to or from foreign countries, who in conjunction with said business carry on the business of receiving deposits of money for the purpose of transmitting the same, or the equivalent thereof, to foreign countries, shall, before entering into said business, or before continuing said business, except as hereinafter provided, make, execute and deliver a bond to the people of the state of New York in the sum of fifteen thousand dollars, conditioned for the faithful holding and transmission of any money, or the equivalent thereof, which shall be delivered to it or them for transmission to a foreign country.’ Also (section 6): ‘This act shall not apply to drafts, money orders and travelers' checks issued by trans-Atlantic steamship companies or their duly authorized agents or to national banks, state banks or trust companies.’ Also that a suit to recover on such a bond may be brought by or upon the relation of any party aggrieved. Also that any corporation, firm, or person continuing in the business aforesaid, ‘contrary to the provisions of this act,’ shall be guilty of a misdemeanor.

The appellant as surety, having executed an undertaking in accordance with the provisions of said act with and for a person engaged in receiving deposits as aforesaid, in this action brought in behalf of persons who made deposits with the principal after such undertaking was executed, which have not been accounted for, defends on the ground that said act is unconstitutional. It insists that the statute is unconstitutional, first, because it is an unjustifiable interference with the rights of citizens to carry on a legitimate business; second, because it unjustly discriminates between members of the same class, since it exempts steamship companies or their authorized agents in certain respects from the operation of the said statute; and, third, because it is in violation of the provisions of the federal Constitution that Congress shall regulate foreign commerce. We are of the opinion that these contentions cannot prevail; that, in the first place, the appellant is debarred from making them; and, secondly, that the objections, even if available to it, could not be sustained.

The appellant and its principal have waived any question concerning the constitutionality of the act in question. That act in effect, prohibited appellant's principal from carrying on the business of receiving deposits unless he should execute an undertaking as therein provided. Conversely, in effect, it authorized him to conduct such business if he should execute such a bond. He very well may have concluded that it would be to his advantage in the conduct of the business to give such an undertaking, whether he could be compelled so to do or not, and he executed one. Having done this, and respondent's assignors having made deposits with him, as we must assume, on the faith of such undertaking, neither he nor his surety can now raise the question of constitutionality, for it is well settled that an individual may waive even constitutional provisions for his benefit when no question of public policy or public morals is involved. Mayor, etc., of New York v. Manhattan Ry. Co., 143 N. Y. 1, 37 N. E. 494; Cooley's Constitutional Limitations ...