Farley v. . Scherno , 208 N.Y. 269 ( 1913 )

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.