defendant upon it as for money had and received, which the defendant ought to restore. Here, if the loan was illegal, the money thus illegally obtained should be restored."

In Beram v. Kruscal, 18 Misc. Rep. 479, 480, 42 N. Y. S. 1121, the court said:

"The action was originally brought, according to the return, upon a cause of action which was orally pleaded, as follows: 'Money had and received, illegal contract and money illegally retained.' Under that plead

ing the plaintiff could have recovered on proving that he entered into the contract of hiring in reliance upon the defendant's representation that he had a permit for the stand. If the plaintiff did not intentionally violate the public ordinances, the illegality of the contract would not be a bar to his recovering the money obtained from him by the defendant.”

In Kahn v. Rosenstiel (D. C.) 298 F. 656, Judge Learned Hand passed upon a similar case, and said:

"At the time when the contract was made the seller had a permit authorizing him to sell and the buyer a permit to buy, but neither party was a wholesale manufacturer or druggist, and the permits turned out to be void. The buyer paid down $10,000, but on discovery of the illegality of the permits and before any of the liquor was delivered he declined to proceed, and demanded a return of the money paid. If the contract was not fully executed the plaintiff may recover. Spring Co. v. Knowlton, 103 U. S. 49, 26 L. Ed. 347; Block v. Darling, 140 U. S. 234, 11 S. Ct. 832, 35 L. Ed. 476. If executed, he may not. Thomas v. Richmond, 12 Wall. 349, 20 L. Ed. 453; St. L. R. R. Co. v. Terre Haute R. R. Co., 145 U. S. 393, 12 S. Ct. 953, 36 L. Ed. 748; Harriman v. Northern Securities Co., 195 [197] U. S. 244, 25 S. Ct. 493, 49 L. Ed. 739; Williston on Contracts, §§ 1787, 1788. The theory is that until the contract is performed there should be a locus pœnitentiæ. Here the plaintiff alleges that, as soon as his assignor learned that the permits were void, he at once disaffirmed the bargain."

In Adler v. Zimmerman, 233 N. Y. 431, 437, 135.N. E. 840, 842, the Court of Appeals passed on a similar transaction and said:

"By the terms of the National Prohibition Act and the regulations adopted thereunder, it will be seen that, to make the sale of the 30 barrels of whisky in this case legal, it was necessary for Ryan or Adler to have had a permit to sell, for the defendants to have had a permit to sell or use, so as to entitle them to procure intoxicating liquor, and for the defendants to have had also a permit to purchase, a copy of which should have been filed with the director, a copy with the vendor, and a copy with the defendants themselves. When, therefore, the plaintiff, either as principal or as agent, sold 30 barrels of whisky, the presumption is that it was illegal, until brought within the exceptions of the act, or it is shown to have been permitted by the federal authorities."'

In Boer v. Garcia, 240 N. Y. 9, 14, 147 N. E. 231, 232, the court said:

"We think that defendant now has the right to claim that if on the day for shipment he had complied with his contract and with conditions which were binding on him, he would have been compelled to enter upon a course which, so far as he could foresee, would lead to a violation of the law and

(214 N.Y.S.)

that under such circumstances and in accordance with well-settled rules he had the right to draw back and refuse to go forward to what promised to be such a violation."

It is contended that this case is similar in all respects to Basile v. Kentucky Distilleries & Warehouse Co., 210 App. Div. 710, 711, 206 N. Y. S. 264, 265, but there are many points of difference. One is the fact that in the Basile Case there was a provision in the contract that:

"On failure of the buyer to furnish forms 1410 within 30 days after March 1, 1921, to cover shipment of all or any portion of the goods herein contracted for, he/they agrees to accept, in lieu of such portion, warehouse receipts for whisky in bond at distillery warehouse in Kentucky, in proportion of 10 barrels for each 100 cases, and to pay for same at the rate of $3 per proof gallon original gauge in bond.

[2] Moreover, in this case it is clear that the contract was made by parties who believed themselves to be legally qualified to carry it through. Whether the failure to obtain the withdrawal permits is logically to be ascribed to a change in the regulations, or to a change in the interpretation which the federal authorities placed on the law, the result here would be the same. Substantially the situation was that, because of such a change, of either kind, both being entirely beyond the control of the parties, the performance of the contract became impossible. If it be conceded that a correct interpretation of the law in the first place by the federal bureaus would have inhibited such a purchase by a wholesale liquor dealer, justice and equity in this situation require that plaintiff have the benefit of the fact that, up to the time of the change referred to, under the practical interpretation by those in charge of the enforcement of the law, the transaction was valid.

The order and judgment should be affirmed, with costs.
Order filed. All concur.

(126 Misc. Rep. 568)

JAMES BUTLER, Inc., v. JACKSON.

(Supreme Court, Appellate Term, First Department. February 5, 1926.) Automobiles 11-Statute making owner liable for negligence of operator of automobile used with owner's permission held not retroactive. Highway Law, § 282-e, added by Laws 1924, c. 534, effective July 1, 1924, making negligence of operator of automobile used with owner's permission attributable to owner, is not retroactive, and, as respects accident occurring before such date, exclusion of evidence that owner had rented automobile to driver, and that it was not then being used for owner's benefit or under his direction, was error.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Appeal from Municipal Court, Borough of Manhattan, First District.

Action by James Butler, Inc., against William Jackson. From a judgment for plaintiff, after a trial before a judge and jury, defendant appeals. Reversed, and new trial ordered.

Argued January term, 1926, before BIJUR, DELEHANTY, and WAGNER, JJ.

James F. Robertson, of New York City (Owen F. Hughes, of New - York City, of counsel), for appellant.

John H. Rogan, of New York City (Lilian Herbert Andrews, of New York City, of counsel), for respondent.

PER CURIAM. The record herein presents erroneous rulings highly prejudicial to the defendant. The action is to recover damages for the cost of repairs to plaintiff's auto truck, due, as alleged, to defendant's automobile colliding therewith.

The main defense interposed to the action was that the automobile in question was not under the control or operation of the defendant or any of his agents or servants at the time of the accident. Defendant repeatedly sought to show, in vain, however, that the auto was rented by defendant to one Hendrickson, who was driving it at the time of the accident, and that it was not being used at said time for the benefit of defendant or under his direction; but the court ruled out all testimony of this character on the ground of irrelevancy.

This is not a case which, as intimated by the trial justice, comes within the provision of section 282-e of the Highway Law, as added by Laws 1924, c. 534, as amended by Laws 1925, c. 167, which took effect July 1, 1924, making the negligence of an operator of a motor vehicle, other than the owner, attributable to the owner, when the car is legally used or operated with the permission, express or implied, of the owner. The amendment is not retroactive, and has no application to the accident in question, which occurred on September 24, 1923.

We conclude, therefore, that the judgment should be reversed, and a new trial ordered, with $30 costs to appellant to abide the event.

(215 App. Div. 491)

(214 N.Y.S.)

KITTREDGE v. GRANNIS et al.

(Supreme Court, Appellate Division, First Department. February 5, 1926.) 1. Election of remedies 12-Framing complaint on theory of conversion held not to bar action on implied contract, after reversal and granting of new trial.

Where judgment for plaintiff in action for conversion was reversed and new trial ordered by Court of Appeals, held, that case was triable de novo, and plaintiff was entitled to waive tort and sue on theory of implied contract; framing of first complaint not constituting irrevocable election.

2. Pleading 249 (2)-Complaint for conversion may be amended at trial, to set forth action on implied contract.

Complaint for conversion may be amended at trial, so as to waive tort and set forth action on implied contract for moneys had and received for plaintiff's benefit.

Appeal from Supreme Court, New York County.

Action by Benjamin R. Kittredge against Arthur E. Grannis and others. From an order denying his motion to strike out from a judgment for plaintiff for $161,483.95, his name and the phrase "copartners trading under the firm name and style of Grannis & Lawrence," and accordingly amending and modifying the docket of the clerk of New York county, defendant Grannis, appearing specially, appeals. Affirmed.

See, also, 200 App. Div. 478, 193 N. Y. S. 84.

Argued before CLARKE, P. J., and DOWLING, MERRELL, McAVOY, and BURR, JJ.

Parker K. Deane, of New York City (Royal E. T. Riggs, of New York City, of counsel), for appellant.

Satterlee & Canfield, of New York City (George F. Canfield, of New York City, of counsel, and George Gordon Battle and R. Randolph Hicks, both of New York City, on the brief), for respondent.

CLARKE, P. J. This is an action against the firm of Grannis & Lawrence, composed of the defendants Arthur E. Grannis and Robert C. Lawrence, general partners, and William C. Langley, special partner. The action against William C. Langley was dismissed, it having been established on a separate trial that he was a special partner and so not a proper party to an action against his firm. See Partnership Law of 1919, §§ 96, 97, 98, as added by Laws 1922, c. 640. Arthur E. Grannis was and is a resident of Massachusetts and was not served with process.

Upon a former trial of this action the plaintiff obtained a judg

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

ment in the sum of $149,232.37, which was entered in the following form:

"Adjudged that the plaintiff, Benjamin R. Kittredge, recover of the defendants, Arthur E. Grannis and Robert C. Lawrence (Grannis not being summoned), copartners trading under the firm name and style of Grannis & Lawrence, the sum of $149,232.37, found by the jury, with $161.36 costs as taxed, amounting in all to $149,393.73, and have execution accordingly."

The defendant Grannis, appearing specially, then moved to strike his name from the judgment, to strike out the phrase "copartners trading under the firm name and style of Grannis & Lawrence," and to amend the docket accordingly. That motion was denied at Special Term, and an appeal was taken to this court, which unanimously reversed the order and granted the motion; the opinion being written by Mr. Justice Greenbaum, reported in 200 App. Div. 478, 479, 193 N. N. Y. S. 84, 85. This court said:

"The complaint states two causes of action seeking the same relief. The significant allegations in the first cause of action are that plaintiff was the owner of 95 bonds of various named railroads; that on the 23d day of April, 1908, 'the defendants above named,' without the knowledge or consent of the plaintiff, wrongfully, unlawfully, and fraudulently took into their possession the said bonds, then the property of the plaintiff, and without his knowledge or consent sold said bonds to persons unknown to him, and appropriated and converted said securities to their own use. the second cause of action plaintiff alleges the deposit on or about the 10th day of April, 1908, of the securities hereinbefore described, with a firm known as Coster, Knapp & Co., upon the understanding that they were to be sold by them as and when directed so to be sold, which agree

In

ment has ever since remained without change or modification in full force and effect'; that 'on or about the 23d day of April, 1908, the said Coster, Knapp & Co., without further or other instructions or authority from plaintiff, and without his knowledge or consent, wrongfully, unlawfully, and fraudulently converted and appropriated said securities to their own use,' by pledging them 'with the defendants above named as security for loans and advances of money made by the defendants to the said Coster, Knapp & Co., of all of which defendants then and there had knowledge.' The case thereafter went to trial as an action in tort against the partners, and after rendition of the verdict in favor of the plaintiff the trial court directed the entry of the judgment as above quoted. The contention of the respondent is that the fraudulent acts alleged and proved may be regarded as evidence of an indebtedness upon the theory of an implied contract, thus justifying the form of judgment prescribed by section 1932 of the former Code of Civil Procedure.

"The learned trial justice, in directing the entry of the judgment, recognized that there was no specific provision of law authorizing such a form of judgment in an action in tort, but held that by parity of reasoning the same course should be followed as though the action were based upon a contract. The effect of the judgment as it now reads would be to enable the plaintiff to satisfy the judgment out of the firm property. The transaction as alleged in the complaint was not one arising from any contractual relationship between the plaintiff and the firm of Grannis & Lawrence. The plaintiff's