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state as well as a benefit to the railroad companies. People ex rel. Simon v. Bradley, 207 N. Y. 592, 101 N. E. 766.

[2] Section 91 of the Railroad Law (Laws of 1910, c. 481), as amended (Consol. Laws, c. 49), provides for a proceeding like this wherein upon petition the Public Service Commission after due notice and hearing shall determine what alterations or changes, if any, shall be made to change a grade crossing to an overhead crossing. Section 94, subdivision 4, provides that one-half of the expense of making such crossing, above or below grade, or changing or rebuilding an existing struc

ed to the Public Service Commission of this state a petition, alleging that public safety required an alteration in the manner in which the Pennsylvania State Line-Westfield, Part 1, Highway No. 8031, crossed the main line of the New York Central Railroad and the New York, Chicago & St. Louis Railroad, and also in connection therewith an alteration in the manner in which the Buffalo & Lake Erie Traction Company crossed the same highway. After due hearings before the Commission, an order was made on the 14th day of June, 1922, requiring the grade crossing to be closed and discontinued, and a new piece of highway and overhead cross-ture by which such crossing is made, shall be ing of said railroads to be constructed in paid by the railroad corporation, and the reaccordance with the plan and details de- maining one-half of the expense shall be paid scribed in the order. This required the plac- by the state in the case of a state highway. ing of a mass concrete abutment immediate- I find nothing in this law which permits or ly south of the existing tracks of the Nickel authorizes the Public Service Commission to Plate Railroad (so called), thereby appro- appropriate the land of the railroad compriating and rendering useless to the rail-pany for the construction of any part of such road approximately 40 feet of its established overhead crossing, at least where, as in this right of way. At this point the railroad had case, it is not necessary as an engineering a right of way of about 100 feet in the center proposition. If such an appropriation were of which it operated a single-track railroad. permitted, it is readily seen that more than The proposed overhead crossing was elevated half the expense of the construction of an above the track, but the concrete embank-overhead crossing would be cast upon the ment, constituting the approach to the cross-railroad-the company would not only pay ing, was to be built according to the above order on 40 feet of the right of way of the railroad to the south of the track. The railroad company protested, and applied to the Commission for a rehearing, which was granted. Further testimony was adduced before the Commission which later, and on the 7th day of February, 1923, made an order refusing to modify its previous order in this particular.

On appeal to the Appellate Division this order of the Public Service Commission was unanimously affirmed. The appellant is here through leave granted by this court.

one-half of the cost of the overhead structure, but would also lose its property as well, which the Commission had appropriated by its order. The very purpose of expense-sharing would thus be rendered futile.

[3] On the argument and in the briefs, as well as by the uncontradicted testimony, it is conceded that the overhead span could readily be carried over the company's right of way, i. e., over the 40 feet appropriated by the order for an embankment. The additional cost of carrying this overhead crossing 40 feet farther is said to be about $8,000. There is no difficulty with the engineering part of the proposition. On the hearings the

sisted that the railroad company should pay this additional expense, and that the Commission had no power to extend the overhead crossing farther than the tracks themselves

The question immediately arises whether the Public Service Commission had any pow-dispute was over the expense. The state iner in abolishing this grade crossing to appropriate the land or right of way of the railroad company for an abutment or approach. [1] It is well settled that railroad cor--in this case the single track of the Nickel porations may be required at their own expense, not only to abolish existing grade crossings, but also to build and maintain suitable approaches or viaducts to carry highways, newly laid out, over their tracks, or to carry their tracks over such highways. Chicago, M. & St. P. R. Co. v. City of Minneapolis, 232 U. S. 430, 438, 34 S. Ct. 400, 58 L. Ed. 671. The Legislature has placed no such burden upon the railroads of this state, recognizing that the elimination of grade crossings is an advantage to the people of the

Plate Railroad. We do not think the Commission's power can be so limited, as the result would be to deprive it of all power, i. e., if it could not extend the overhead crossing by its order over the adjoining right of way on which there was no railroad track, and it had no power to appropriate the land of the railroad company for approaches, the result would be that the overhead crossing would be suspended in the air without approaches-there would be no overhead crossing. The Public Service Commission, there

(146 N.E.)

(239 N. Y. 285)

(Court of Appeals of New York. Jan. 21, 1925.)

fore, must either have the power to extend the overhead crossing to a reasonable extent SUSQUEHANNA S. S. CO., Inc., v. A. O. ANover adjoining rights of way or else it has DERSEN & CO., Inc. the power of appropriation. As it cannot have the latter under the law and Constitution of this state (at least without making compensation), it must have the former in order to function. The Railroad Law providing for changes in grade crossings must have a reasonable construction. McAneny v. New York Cent. R. Co., 238 N. Y. 122, 144 N. E. 362.

Matter of State Highway Commission (Kirkwood Crossing), 201 App. Div. 94, 193 N. Y. S. 808, is in harmony with what is here stated, and does not justify the action of the Commissioners in this case. The Public Service Commission in the Kirkwood Case provided an overhead structure so as to permit the construction of an additional track by the railroad on its right of way, and added to its order this provision:

"The cost of providing an elimination which will make it possible to construct a fourth track at the site of the proposed crossing in excess of an elimination necessary to cross the existing three tracks shall be borne solely by [the] railroad company."

The Appellate Division held, and rightly so, that the Public Service Commission was in error in imposing on the railroad company any more than one-half of the expense of the proposed new crossing. That part of the opinion which intimates that the railroad company could not insist upon a structure which shall take into consideration the possibility of an additional track was not before the court, and is mere dicta. Neither does Matter of New York Cent. & H. R. R. Co., 200 N. Y. 121, 124, 93 N. E. 515, sustain the respondent's contention. The crossings there dealt with were private crossings, and it was decided that the Railroad Law only applies to public crossings. What was there stated in the opinion about cost occasioned by additional main tracks or other improvements was confined to improvements which had no relation to the public safety. Danner v. New York & H. R. Co., 213 N. Y. 117, 106 N. E. 1029.

It follows that the orders appealed from must be reversed and the matter remitted to the Public Service Commission for a further hearing in accordance with the views here expressed, with costs to the appellant.

HISCOCK, C. J., and POUND, ANDREWS and LEHMAN, JJ., concur.

1.

Shipping 49(1)—Agreement assigning hire of vessel held to create obligation to pay charter hire.

Agreement assigning hire of vessel to defendant in consideration of defendant's agreement to pay charter hire in advance, and providing that, if advances should exceed money due by charterer, owner would refund it, held to create obligation to pay charter hire, and was not mere promise to advance hire, subject to owner's promise to refund deficiency, if collection from charterer should be found impossible.

2. Action 25 (4)—“Equitable defenses" may be set up in answer in action on legal liability.

All matters which formerly would have authorized application to Court of Chancery for relief against legal liability, but which could not be pleaded in bar at law, are included under head of equitable defenses within Civil Practice Act, § 262, providing that answer may set up defenses and counterclaims legal and equitable.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Equitable Defenses.]

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5. Jury 13(18)-Trial 3-Equitable defenses triable by jury same as legal defenses, and issues may be tried separately.

Under Civil Practice Act, §§ 422, 424, 425, in absence of counterclaim, equitable defenses CARDOZO and MCLAUGHLIN, JJ., absent. under section 443, subd. 3, court has discretion are triable in same way as legal defenses, but,

Orders reversed, etc.

to order one or more issues to be separately tried prior to trial of other issues.

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load coal. Further hire monthly in advance at rate mentioned charter party.

"It is understood that in case the amount advanced by us should exceed money due by charterers, you will refund same. "Yours very truly,

A. O. Andersen & Co., Inc., "V. Reinmann, Vice Pres. & Gen'l Manager. "P. S.-It is further agreed that we will pay the balance of the first two months hire on delivery in New York, instead of arrival of steamer in Newport News, if required by you. "V. R."

The following was the reply:

"Sept. 12, 1919. "A. O. Andersen & Co., Inc., 50 Broad St., New York City-Gentlemen: Referring to

Appeal from Supreme Court, Appellate Di- your today's letter, we hereby agree to the vision, Second Department.

Action by the Susquehanna Steamship Company, Inc., against A. O. Andersen & Co., Inc. From a judgment of the Appellate Division (208 App. Div. 26, 203 N. Y. S. 568), affirming judgment entered on verdict of a jury for plaintiff, defendant appeals. Reversed, and new trial granted.

See, also, 195 App. Div. 161, 186 N. Y. S. 338; 208 App. Div. 786, 203 N. Y. S. 580; 208 App. Div. 787, 203 N. Y. S. 955.

Herman S. Hertwig and John A. McManus, both of New York City, for appel

lant.

Nathan L. Miller and Alvin C. Cass, both of New York City, for respondent.

CARDOZO, J. Plaintiff's assignor chartered the steamship Lydia to one Crotois for a term of about six months, beginning September 28, 1919, at a monthly hire of $59,380, payable in advance. This action is brought upon a contract made or alleged to have been made by the defendant and the owner of the steamship whereby defendant in consideration of an assignment of the charter party promised, as an original obligor, to make payment of the hire. A balance of $167,446.10 due at the commencement of the ac

tion was reduced by allowances and set-offs to $11,000, for which amount, with costs, a judgment has been recovered.

condition mentioned in same, and assign the
hire as due under charter party, between our-
selves and Mr. J. E. Crotois, to yourselves, and
compensation of the payment as mentioned in
your letter, subject to refund if not due under
charter party.
"Yours very truly,

"VR:LR

"Lydia Steamship Corp.,

"Sec'y & Treas."

The defendant insists that this contract is misinterpreted when it is read as an assumption by the defendant of the obligations of the charterer. In the defendant's view, it is simply a promise to accommodate the owner by advancing the monthly re, subject to a promise by the owner to refund the deficiency, if, upon recourse by the defendant to the charterer, collection and reimbursement shall be found to be impossible. We agree with the courts below that, if this was the meaning, there is no expression of it in the writing. The owner's promise is to refund if the advances are in excess of what the charterer shall owe. The defendant would have us transform this into a promise to refund if the advances are in excess of what the charterer can pay. That would be to remake the contract rather than construe it. The words are not without an office and a value when their natural meaning is ascribed to them. Wind and weather made it impossible to know in advance just when the charter party would end. The vessel might return before the end of the month, or she

[1] The contract between the owner and might be delayed; there might be "overlap"

the defendant is embodied in two letters.

On September 12, 1919, defendant wrote to the Lydia Steamship Company, plaintiff's assignor, as follows:

"Referring to charter party for the steamer 'Lydia,' between yourselves as owners and J. E. Crotois, as charterers, and in consideration of your assigning the hire on the same to us, we hereby agree to pay to you on account of said hire on Thursday, the 18th of September, 1919 ($50,000) fifty thousand dollars, and the balance of the two first months hire on arrival of steamer in Newport News in condition to

or "underlap." If the return was earlier than expected, the payment in advance would be in excess of what was due. Under the contract as written this excess would be refunded.

[2, 3] The question remains whether error was committed in excluding evidence of mistake. The defendant alleges in its answer "for a sixth separate defense" that by the true agreement between the parties it was to be reimbursed by the owner for any advances not collected from the charterer; that

(146 N.E.)

"the letter as signed as aforesaid fails by mutual mistake of the parties, or by mistake on the part of the defendant and fraud on the part of the Lydia Steamship Company, Inc., to state the true agreement of the parties as alleged in the foregoing paragraph, if its legal effect is, as claimed in the amended complaint, to impose on this defendant an absolute obligation to pay the plaintiff the said Crotois charter hire"; and that, "by reason of the premises, the defendant is entitled, if the legal effect of said letter of September 12, 1919, is as alleged by the plaintiff, to have the said letter corrected so that it will express the true agreement of the parties as aforesaid." Judgment is demanded dismissing the complaint and for "such other and further relief in the premises as to the court may seem just." On the trial the defendant attempted to prove the conversations preceding and accompanying the signing of the contract. The trial judge excluded the evidence upon the ground that antecedent conversations were merged in the writings. Defend

we rest our judgment upon a broader ground, since there is room for the contention that the defendant stood upon the defense and made no point that its answer was to be read as something else. The question is fairly here whether the facts establishing the need for reformation, even if not stated as a counterclaim, make out an equitable defense. The plaintiff produces a writing which in form is a contract, and asks the judgment of the court that it be enforced according to its terms. The defendant answers that enforcement is inequitable because fraud or mutual mistake has brought about the result that the writing is not a true expression of the meaning of the parties. This is good as a bar, and does not cease to be good because the defendant, if it had so chosen, might have There is no asked for something more. dearth of subtle discussion as to the effect of mistake in advance of reformation. Cook, Equitable Defenses, 32 Yale Law Journal, 645; Pomeroy, Remedies and Remedial Rights, § 87 et seq.; Hinton, Equitable Defenses under Modern Codes, 18 Mich. L. R. 717. Much of it is an echo of precedents and distinctions formulated in an era when there and that the evidence was "admissible under was no such thing as an equitable defense in that defense if under no other." The ruling a trial at common law. Now, "a defendant was not changed. Some point having been may set forth in his answer as many demade that there should have been "a counter-fenses and counterclaims, or both, as he has, claim in equity," defendant's counsel asked that, if there was any objection to the form of the plea of reformation, the plaintiff be

ant's counsel then reminded the court that

there was "a claim here for reformation,"

directed to state it to the end that the de

fendant might have an opportunity to amend. The direction was not given.

We think the defendant's answer may fairly be construed as setting forth a counterclaim in addition to a defense, if a counterclaim be necessary. The statement that "the defendant is entitled to have the said letter corrected so that it will express the true agreement" is equivalent to a demand that it be corrected by the court accordingly. True, the description of a counterclaim as a defense has been held to dispense with the need of a reply, since otherwise a pleader by his own misdescription might set a trap for his adversary. Acer v. Hotchkiss, 97 N. Y. 395, 408, 409; Equitable Life Assurance Society of the United States v. Cuyler, 75 N. Y. 511; Bates v. Rosekrans, 37 N. Y. 409, 412. Το obviate such dangers the plaintiff must have the benefit of any denials or defenses that a reply could have stated. When that is done and the stage of trial is reached without previous motion challenging the pleading, an answer may be read in accordance with its substance rather than the label of its headings. Acer v. Hotchkiss, supra; National Gum & Mica Co. v. MacCormack, 124 App. Div. 569, 109 N. Y. S. 286.

In the determination of the case before us

whether they are such as were formerly denominated legal or equitable." Civ. Prac. Act, § 262; Code Civ. Pro. § 507; Code of Procedure, § 150. A discussion of equal subtlety has centered upon the distinction between equitable defenses and equitable counterclaims. We have no need at this time to retrace and follow its refinements. They have been made irrelevant or largely so for the courts of this state by a series of early decisions which placed our law of pleading, in this respect at least, upon a broad and simple basis. With us, the rule is that

"Under the head of equitable defenses are included all matters which would have before authorized an application to a Court of Chancery for relief against a legal liability, but which at law could not have been pleaded in bar." Dobson v. Pearce, 12 N. Y. 156, 62 Am. Dec. Mandeville v. Reynolds, 68 N. Y. 528, 545; 152.

The application of this test makes it immaterial that, in the absence of judicial declaration of the existence of the defendant's equities, a legal liability would exist. The judicial declaration may be had as an incldent to the litigation of a defense with the same effect as if incidental to the litigation of a counterclaim. All that is necessary is that the equities when established be destructive of the plaintiff's right. There are repeated restatements of the rule and illustrations of its meaning. Crary v. Goodman

[4] To hold that mistake, though adequate for reformation, is never the basis for relief unless pleaded as a cause of action or a counterclaim would lead, indeed, to unexpected consequences of circuity and hardship. A plaintiff would then be helpless if the defendant were to plead a release or an accord and satisfaction which through some scrivener's mistake had been stated so broadly as to include his cause of action. The bar would stand, unless the complaint was amended so as to change the nature of the suit. New matter in an answer is deemed, it is true, to have been controverted by traverse or avoidance (Civ. Prac. Act, § 243; Code Civ. Pro. § 522), but mistake is not a ground of traverse, and, unless sufficient, as a défense may not be ranked as an avoidance. Our decision in Kirchner v. New Home Sewing Machine Co., 135 N. Y. 182, 189, 31 N. E. 1104, shows that the remedies available to suitors have not been circumscribed so narrowly. We think the principle that underlies our law of equitable defenses was stated long ago with precision and discernment. "The question now is, ought the plaintiff to recover; and anything which shows that he ought not is available to the defendant, whether it was formerly of equitable or legal cognizance." Dobson v. Pearce, 12 N. Y. 156, 168 (62 Am. Dec. 152); Mandeville v. Reynolds, supra. The whole body of principles, whether of law or of equity, bearing on the case, becomes the reservoir to be drawn upon by the court in enlightening its judgment. N. Y. Central Ins. Co. v. Nat. Protective Ins. Co., 14 N. Y. 85, 90, 91.

(1855) 12 N. Y. 266, 64 Am. Dec. 506, was an | 213 N. Y. 563, 108 N. E. 80. Cases to the conaction of ejectment. Plaintiff claimed the trary may be found in the Appellate Division legal title. Defendant said in defense that (see, e. g., Ward v. Union Trust Co., 166 App. the property in dispute was by mistake omit- Div. 762, 152 N. Y. S. 237), but they go back ted from his deed. We held the answer good to Born v. Schrenkeisen (supra) for whatas an equitable defense. There was the same ever authority supports them. situation, followed by the same ruling in Hoppough v. Struble (1875) 60 N. Y. 430. We said (page 434) that a decree of reformation, though proper, was not necessary. "The same state of facts which would entitle the defendant to a reformation of the deed would establish his equitable right to the possession, and would as effectually defeat the action, as would the legal title." Other cases, both earlier and later, announce a like conclusion in situations similar in substance though varying in details. We may instance Haire v. Baker (5 N. Y. 357), where we said that in an action to recover damages for the breach of a covenant against incumbrances defendant might show by way of defense that by mistake the incumbrance complained of was omitted from an exception; Pitcher v. Hennessey, 48 N. Y. 415, where, upon an answer which, like this one, was a cross between a counterclaim and a defense, we said (page 422) that the equitable defense "should have been tried and determined by the court," though the action was at law; Cavalli v. Allen, 57 N. Y. 508, where, upon pleadings much the same, we reached the same conclusion; Mandeville v. Reynolds, 68 N. Y. 528, 543, 545, where, in an action on a judgment, the defendant showed in defense that there was fraud in its procurement; and Young v. Overbaugh, 145 N. Y. 158, 39 N. E. 712, where the legal title was overcome by a defense of a parol gift, followed by possession and improvements. To this list may be added Lamont v. Cheshire, 65 N. Y. 30; Chase v. Peck, 21 N. Y. 581, 586; Glacken v. Brown, 39 Hun, 294, 298; Madison v. Benedict, 73 App. Div. 112, 76 N. Y. S. 402; Page v. Higgins, 150 Mass. 27, 28, 22 N. E. 63, 5 L. R. A. 152; Eustis Mfg. Co. v. Saco Brick Co., 198 Mass. 212, 217, 84 N. E. 449; and Loewenthal v. Haines, 160 App. Div. 503, 145 N. Y. S. 579. There is, indeed, a dictum in Born v. Schrenkeisen, 110 N. Y. 55, 60, 17 N. E. 339, that mistake, though of such a nature as to justify reformation, does not help a defendant sued at law unless it is pleaded as a counterclaim. What was said, if more than dictum, was at all events not essential to the decision, for the case went off upon the ground that the defect of pleading was unimportant because disregarded by the parties. We find a return in later cases to the earlier and simpler view. Walker v. Am. Central Ins. Co., 143 N. Y. 167, 38 N. E. 106; Bennett v. Edison Electric II. Co., 18 App. Div. 410, 46 N. Y. S. 459; Id., 164 N. Y. 131, 58 N. E. 7; cf. City of N. Y. v. Matthews,

[5] There remains for consideration the manner of the trial. Our statute provides that in an action for money only "an issue of fact must be tried by a jury unless a jury trial is waived or a reference is directed." Civ. Prac. Act, § 425; Code Civ. Pro. § 968. An issue of fact arises upon a denial in the answer, or upon "a material allegation of new matter," constituting a defense. Civ. Prac. Act, § 422; Code Civ. Pro. § 964; Code of Procedure, § 253 et seq. There is no distinction in this respect between kinds of defenses, dependent upon their origin in equity or at law. The distinction is between all defenses on the one side and counterclaims on the other. Civ. Prac. Act, § 424; Code Civ. Pro. § 974. The rule is settled under these provisions that equitable defenses are triable in the same way as defenses that are legal. Southard v. Curley, 134 N. Y. 148, 31 N. E. 330, 16 L. R. A. 561, 30 Am. St. Rep.

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