Third Department, November, 1911.

[Vol. 147. land was taken as necessary at the time it was taken, nevertheless by an alteration of plan it has become unnecessary and, therefore, the State repudiates the act of its agent lawfully authorized thereto and declines either to take the property or to pay damages therefor. If the contention of the State be upheld the law has played a very cruel trick upon this claimant. There is no proof of collusion or fraud upon the part of the State Engineer or this claimant. With the authority given to the State Engineer to appropriate land for the purposes expressed in the statute every formality required to divest the claimant of this land has been complied with. The claimant acting in good faith immediately closed up its contracts which were pending and did only so much new business as was necessary to lose out the stock on hand. It would be a strange rule of law if this claimant was required at its peril to employ experts and prove in a court of law that the taking of the whole or a part of these premises was not necessary or advantageous to the State. If it had been to the advantage of the State to take possession of this property the claimant's objection that the whole or a part thereof was unnecessarily taken would not hold for a moment. Whether or not it was a wise policy for the State Engineer to appropriate all of this property the Legislature left to the State Engineer to determine. (People v. Fisher, 190 N. Y. 468.) The law has since been amended so as to limit the power of the State Engineer in the appropriation of lands to those only the appropriation of which is approved by the Canal Board, but such was not the statute at the time these lands were taken. (See Laws of 1903, chap. 147, § 4, as amd. by Laws of 1906, chap. 365; Id. § 4, as amd. by Laws of 1908, chap. 196; Laws of 1909, chap. 273, and Laws of 1911, chaps. 468, 736.)

It is urged by the State that by a subsequent change in the line of the canal the taking of any of this property has been rendered unnecessary, and that this judgment of the Court of Claims in effect revests the title of the land in the claimant. However plausible this argument may be, we cannot affirm this judgment upon this ground, first, because the law does not authorize the courts to revest title in any such indirect manner, and, secondly, as a matter of equity, to so hold would

App. Div.]

Third Department, November, 1911.

deprive the claimant of its right of compensation for the injury to its business which naturally followed after the original appropriation by the State. If this property had once been lawfully appropriated it can be returned to the claimant only under some statutory power which is here lacking. If there be any way in which the State can evade the payment of the price of condemnation by revesting the title of the land in the claimant it certainly cannot be done by giving back any doubtful title or by any judgment of the court arbitrarily misconstruing the enactments of the Legislature.

Another contention on the part of the State to which reference should be made is that the power of the State Engineer is limited by section 6 of the act referred to, so that this appropriation could only be made with the consent of the Canal Board. As I read the statute, however, the appropriation of lands for the purposes of the canal or of the work of improvement thereof is authorized by section 4, and the alteration of contracts referred to in section 6 as requiring the consent of the Canal Board is simply the alteration of contracts for work upon the canal. (See, also, § 6, as amd. by Laws of 1907, chap. 394; since amd. by Laws of 1911, chap. 736.) The appropriation of lands for the purposes of the canal or of the work to be done thereupon at any stage in the proceedings was vested in the State Engineer alone until the act was amended subsequent to the appropriation of the land in question. The evident purpose of section 6 is to prevent frauds by authorizing the enlargement of contracts to favorites after the contract had once been assigned through competition. The taking of this land does not in any way alter the construction contract. The necessary sustaining wall may be built by a new contract with some other contractor. No alteration of any contract is in any way involved.

We are thus brought to the final contention on the part of the State, to wit: That the State Engineer was at this time limited in his power to the appropriation of lands within the blue line of the canal as first plotted. The minimum width of the prism of the canal was to be seventy-five feet. There was no maximum width prescribed, nor were the powers of the State Engineer in any way circumscribed in the laying out of

Third Department, November, 1911.

[Vol. 147. the canal, except that in cities he was to make the width less than seventy-five feet only with the approval of the Canal Board. By section 3 of the act referred to the route must be laid out by the State Engineer, and he was thereby "authorized and required to make such deviations therefrom as may be necessary or desirable for bettering the alignment, reducing curvature, better placing of structures and their approaches, securing better foundations, or generally for any purpose tending to improve the canal and render its navigation safer and easier." (See, also, § 3, as amd. by Laws of 1905, chap. 740, and Laws of 1907, chap. 710; since amd. by Laws of 1908, chap. 508, and Laws of 1910, chap. 83.) By section 4 he was authorized to appropriate lands for the use of the improved canal "and for the purposes of the work and improvement authorized by this act" which should in his judgment be necessary. (See, also, § 4, as amd. by Laws of 1906, chap. 365; since amended by statutes supra.) Under the contract for the construction of this part of the canal as it then existed the evidence overwhelmingly establishes that part at least of this land was necessary for the actual placing of the supporting walls to make firm the foundation of the canal. It would seem to the extent of the land which was necessary for that purpose that the claim for damages is indisputable, and this conclusion alone would reverse the judgment. This land was just above a contemplated lock. Whether by reason of this fact this land was necessary either in the use or construction of the canal was for the State Engineer to determine. In addition to that part of the land needed for the actual placement of the supporting wall how much was in his judgment needed for the purpose of the construction of this wall was for the State Engineer to determine. He has certified that all was

needed, and the claimant was foreclosed from asserting the contrary. After claimant's land has been taken in conformity with the statute, after certification by the constitutional State officer, that all was needed for purposes for which he was authorized to appropriate the same, the Court of Claims had denied compensation on the ground that the State Engineer exercised no judgment in appropriating any of this land. The law does not play battledore and shuttlecock with a man's

App. Div.]

Third Department, November, 1911.

property. That the State Engineer did exercise his judgment is plain. Whether wisely or not is not for us to judge. His acts are conclusive upon the State, even though by a change of plan the land be not now needed. Claimant is entitled to compensation, and judgment should be reversed, with costs, and a new trial ordered.

BETTS, J., concurred.

Judgment affirmed, with costs.

ARCHIBALD HOWARD and Others, as Trustees in Bankruptcy of the OUTING PUBLISHING COMPANY, Appellants, v. MAGAZINE AND BOOK COMPANY, Respondent.

Third Department, November 15, 1911.

Bankruptcy - damages for failure to fulfill bankrupt's contract - claim against the bankrupt - setoff in an action brought by the trustee -burden of proof.

Receivers and trustees in bankruptcy are not obliged to continue to perform a contract of the bankrupt, and damages growing out of their failure to do so are properly claims against the bankrupt and not against the receivers or trustees as such.

An unliquidated claim for damages resulting from the failure of the receivers and trustees in bankruptcy to continue the performance of a contract made by the bankrupt may constitute a proper setoff against any claim of the bankrupt asserted by the receivers and trustees in bankruptcy against the other party to the contract.

Such right of setoff does not exist, however, as against a claim for services or materials supplied by the receivers or trustees in bankruptcy, even if in so doing the receivers and trustees were simply continuing the performance of a contract which had been partly performed by the bankrupt.

In an action brought by trustees in bankruptcy to recover the value of services and materials furnished partly by the bankrupt, pursuant to a contract with the defendant, and partly by the trustees in bankruptcy in continuing the performance of the contract, the burden is upon the defendant, if he seeks to assert a counterclaim based upon the failure to make complete performance of the contract, to show affirmatively the items of work and materials furnished by the bankrupt in order that the counterclaim may be allowed only against that part of the claim asserted by the trustees in the right of the bankrupt.

KELLOGG and BETTS, JJ., dissented.

Third Department, November, 1911.

[Vol. 147.

APPEAL by the plaintiffs, Archibald Howard and others, as trustees, etc., from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Broome on the 17th day of September, 1910, upon the verdict of a jury rendered by direction of the court.

Lewis Seymour [John G. Pembleton of counsel], for the appellants.

Leon Lewin, for the respondent.

SMITH, P. J.:

The appellants, as trustees in bankruptcy, sued respondent upon a claim for services and materials of the alleged value of $92.75, furnished by the bankrupt and by themselves as receivers and trustees in bankruptcy between March 11 and August 3, 1909. Respondent answered setting up a counterclaim of $1,500 for failure of the bankrupt to carry out a certain advertising contract during the months of April, May, June, July and August, 1909. Upon the trial an admission of the claim as stated was made by respondent in open court, and also that the bill had not been paid. It was further admitted that the market value of the advertising space involved was $1,500, and the appellants introduced some evidence tending to show that the bankrupt had made full settlement on account of this contract. Both parties moved for judgment, whereupon the court allowed respondent's counterclaim to the extent of appellants' claim as admitted, and directed a judgment for costs in respondent's favor. The petition in bankruptcy was filed April 12, 1909, and the adjudication of bankruptcy was made April 29, 1909. The record gives no information as to how much of the total services and materials sued for by appellants had been furnished by them as receivers and trustees, and how much had been furnished by the bankrupt. It contains no items of appellants' claim and no dates regarding it other than the two including dates mentioned.

It seems clear that the counterclaim was, as pleaded, against the bankrupt, even although it was on account of damages for failure to perform a contract subsequent to the date of the bankruptcy. Receivers and trustees in bankruptcy are not