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Thompson v. Gimbel Bros.

Supreme Court of New York, Appellate Division

June 2, 1911

MYRTLE M. THOMPSON, Appellant,
v.
GIMBEL BROTHERS, a Foreign Corporation, Respondent.

Page 437

APPEAL by the plaintiff, Myrtle M. Thompson, from an order of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 16th day of February, 1911, affirming a judgment of the Municipal Court of the city of New York in favor of the defendant rendered on the 29th day of October, 1910.

COUNSEL

Frederick H. Cunningham, for the appellant.

David J. Gallert and Walter S. Heilborn, for the respondent.

LAUGHLIN, J.:

The plaintiff brings this action on an assignment of seven alleged causes of action against the defendant for installments of salaries of certain of its employees, which were assigned by their attorneys in fact, acting under powers of attorney in the States of Rhode Island and Maine, on default in payment of promissory notes of the same employees, likewise executed in said States by the attorneys in fact acting under the same powers of attorney. The scheme under which the notes and assignments were executed was manifestly devised to evade the usury laws of the State in which the contracts of employment were made and the services were rendered, and also, I think, to evade the provisions of section 42 of the Personal Property Law of this State (Consol. Laws, chap. 41; Laws of 1909, chap. 45). There is no attempt to disguise the fact that the purpose was to evade the usury law, for that is frankly admitted by counsel, who apparently confidently asserts that the plan successfully protects the lender within the provisions of said section 42 of the Personal Property Law. Of course, it does not directly and necessarily concern the employer that his employees have obtained loans at exorbitant rates of interest in States which have no usury law, and that has no material bearing on the question presented for decision. It does, however, concern the employer if thereby

Page 438

his employees be left in a state of constant worry over their tangled financial affairs and the employer be annoyed and harassed by the claims of their creditors; and it is the duty of the court to enforce the public policy, of this State, as declared by the Legislature, within constitutional limits. Section 42 of the Personal Property Law indicates quite plainly, I think, that the Legislature recognized that it was not competent for it to prohibit an employee in private employment from assigning his wages or salary in advance of the same being earned, but it recognized and sought to remedy, to some extent, the evils resulting therefrom. The statute was, I think, enacted, not merely in the interest of the employer, but with a view to encouraging economy on the part of employees, and in the expectation that knowledge of such assignment on the part of the employer within a reasonable time would have a tendency to discourage such assignments, and would tend to minimize the evil consequences resulting therefrom. The provisions of section 42 of the Personal Property Law are as follows:

'1. Any person or persons, firm, corporation or company, who shall after March eighteenth, nineteen hundred and four, make to any employee an advance of money, or loan, on account of salary or wages due or to be earned in the future by such individual, upon an assignment or note covering such loans or advances, shall not acquire any right to collect or attach the same while in the possession or control of the employer, unless within a period of three days after the execution of such assignment or notes and the making of such loan or loans, the party making such loan and taking such assignment shall have filed with the employer or employers of the individual so assigning his present or prospective salary or wages, a duly authenticated copy of such agreement or assignment or notes under which the claim is made.

'2. No action shall be maintained in any of the courts of this State, brought by the holder of any such contract, assignment or notes, given by an employee for moneys loaned on account of salary or wages, in which it is sought to charge in any manner the employer or employers, unless it shall appear to the satisfaction of the court that a copy of such agreement, assignment or notes, together with a notice of lien, was duly

Page 439

filed with the employer or employers of the person making such agreement, assignment or notes, by the person or persons, corporation or company making said loan within three days after the said loan was made and the said agreement, assignment or notes were given.'

If the purpose of this legislation were to give the employer timely notice to enable him to honor the assignment it would have been sufficient to have provided that he would not be liable to the assignee unless due notice and proof of the assignment should be given to him within a specified time before the salary became payable and before payment thereof had actually been made. It is manifest, I think, that this was not the sole purpose of the Legislature. Both subdivisions of the section indicate that the Legislature intended to require that the employer, in order to be liable to the assignee for the accrued and unpaid salary, ...


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