This is an appeal by the state of New York from so much of a judgment of the Appellate Division as reverses a determination of the Court of Claims and awards the claimants the full amount claimed together with interest and costs. The amount sought to be recovered from the state is the value of certain stock transfer stamps, which it is claimed were erroneously *Page 430 affixed to certain certificates of stock and memorandum of sale of stock upon the transfer thereof, and canceled in payment of taxes. The stamps affixed were so affixed in deference to the provisions of chapter 414 of the Laws of 1906. The tax attempted to be imposed by that act of the legislature was upon each share of stock of $100 of face value or fraction thereof. That legislative enactment was declared unconstitutional in People exrel. Farrington v. Mensching (187 N.Y. 8) because it unreasonably discriminated against shares of stock of the par value of less than $100. By chapter 186 of the Laws of 1910 provision was made to refund to the persons who suffered loss the amount of taxes erroneously paid.
There are three classes of claims presented by the claimants:
1. Claims for stamps erroneously affixed by the brokers in transactions in their own behalf.
2. Claims for stamps affixed to transfers of stock sold for the account of their customers, where the customers still owe them some balance on stock transactions, although they have been reimbursed for the money paid for stamps.
3. Claims for stamps which were affixed to transfers of stock for customers where the claimants or their predecessors have been reimbursed by their customers for the money paid for the stamps that were affixed.
The Court of Claims allowed the claimants to recover for transactions coming within the first and second classes, but declined to allow a recovery for cases coming within the third class. The Appellate Division reversed the determination of the Court of Claims in so far as it precluded the claimants from recovering for cases within the third class and awarded the claimants judgment for the claims within all of these three classes. The only question now presented for review is whether the claimants should be permitted to recover for moneys paid for stamps which were affixed to transfers of stock for customers where the *Page 431 claimants or their predecessors have already been reimbursed by their customers for the stamps so affixed. In my judgment there is absolutely no foundation for the claims of the claimants to recover from the state upon cases coming within the third class. The statute contemplates that a recovery might be had when stamps had been erroneously affixed "so as to cause loss to the person or persons making such claims." The statute makes it perfectly clear that the only basis for a recovery under its provisions is that the person making the claim is the person who has sustained the loss. The claimants and their predecessors, who were stock brokers, have sustained no loss for stamps erroneously affixed where they have been reimbursed by their customers. To permit them to recover this money from the state is to permit them to acquire state funds which are appropriated only for the benefit of those who sustained a loss. The persons who sustained loss by reason of the stamps having been erroneously affixed are the customers who paid for the stamps. The customers who suffered the loss have never assigned their claims to the claimants or their predecessors. Some of these customers are now dead and others cannot be located. The claim of the claimants so far as it relates to stamps affixed for the benefit of customers who have reimbursed their brokers is plainly an attempt on the part of the brokers to get something for nothing. It is said that the customers have not demanded this sum, but I cannot see that that fact gives these claimants any right to take this money from the state. It is suggested that there are many claims of this character amounting in all to several hundred thousand dollars and it is urged that if the brokers are not permitted to recover upon them there can be no recovery. This fact furnishes no reason why the brokers who have suffered no loss should be permitted to obtain this money from the state. The state has made provision to indemnify those who suffered loss. If those who have suffered loss make no claim to be reimbursed that is no *Page 432 reason why the state should pay this money to others who are not entitled to it. It seems to be assumed that because the state has shown a willingness to reimburse those who have suffered loss and those within this class cannot be located or induced to make a claim, that, therefore, some one must have the right to take this money from the state. This assumption and the claim that is based upon it is unfounded and wrong. The Court of Claims has found as a fact that the customers of the brokers represented by the claimants have not constituted the brokers or the claimants "their attorney in fact, nor in any way authorized the claimants to collect for or on their behalf any moneys due to the said customers for or on account of the erroneous affixation and cancellation of any stamps." This finding has not been reversed by the Appellate Division. Several theories more or less ingenious are now advanced by the claimants to enable them to get possession of the money of the state. It is urged that the brokers have suffered the loss, and, therefore, are within the contemplation of the statute, and may maintain this claim in their own right. That the brokers did not suffer the loss is conclusively established by the fact that they were fully reimbursed by their customers for the money which they paid for stamps. How they can be said to have suffered the loss when it is conceded that they have been reimbursed by their customers is not clear to me. The fact that the brokers originally owned the stamps and that they erroneously caused them to be affixed to the certificates of stock does not establish that they suffered any loss. The contrary is conclusively established by the fact that the brokers charged the money paid for these stamps to their customers and were fully paid by their customers. To permit the brokers to recover from the state is to permit them to be twice paid for the money advanced for the benefit of their customers. It is entirely immaterial whether the cancellation of the stamps constituted a sale *Page 433 to the customers or whether the fact that the broker advanced the money served to give the broker any legal claim against the customer. The fact is that the brokers did charge the sum they advanced to their customers and that the customers paid the amount to the brokers. It is also suggested that if the customers have sustained a loss, it is only because of the wrongful act of the brokers in deducting the amount paid for the stamps that were erroneously affixed, from the accounts of their customers. If, for the sake of argument, we assume that this deduction by the brokers from the accounts of their customers was a wrongful act, it is manifest that the position of the brokers cannot be legally improved or bettered by founding their claims upon their own wrongful or illegal act against their customers. If the brokers' act in deducting the amount paid for the stamps from the accounts of their customers was a wrongful act, the brokers cannot now invoke their own wrong as a reason why the state should paythem for a loss which their customers have sustained. The fact that the customers did not pay the brokers this sum with knowledge of all the facts or ratify the act of the brokers in deducting this sum from their customers' accounts in no way serves to strengthen the claim which the brokers now make against the state. The fact that not one of the alleged one hundred thousand customers of brokers upon whose stocks stamps were affixed has made a claim to the comptroller for a refund gives the brokers no right to collect this money that is due to the customers. It is suggested that the absence of an express finding that the brokers were actually paid by their customers for the moneys advanced for stamps precludes us from regarding the brokers as having been paid. There is no significance in the omission to make a finding to this effect. The brokers sold the stocks for their customers and before doing so affixed the stamps and then remitted to their customers the proceeds of the sales after deducting the amount paid for stamps. It is immaterial whether *Page 434 the amount received for the sale of stocks was paid to the customers in cash, and the customers paid in cash to the brokers the amount advanced in stamps, or whether the brokers first deducted the amount paid for stamps and paid the balance to their customers. The fact which is evident is that the brokers were entirely paid for the money they advanced for stamps. The suggestion that the brokers should be permitted to recover upon the theory that they act as trustees for the benefit of their customers is altogether inconsistent with the theory that the brokers in their own right may recover this money. The prevailing opinion holds that the customers as such have no cause of action against the state, and upholds a cause of action in the brokers on the ground that they are the persons who erroneously affixed the stamps and have been caused loss thereby. If this be so, the brokers are permitted to recover in their own right on the theory that they are the persons who have suffered loss, and there is no basis for holding that they "may be treated in this action so far as necessary as trustees for the benefit of such customers."
These claimants are asking that the state money be paid to them. The burden is upon them to establish a right to the money which they seek. This right they have entirely failed to establish. Having been already reimbursed by their customers they have suffered no loss, and the fund which the state holds has been appropriated for the benefit of the customers who have actually suffered the loss. If this were a claim of one individual against another it is inconceivable that the individual sued would be compelled to pay unless the individual bringing the action could show a better title than these claimants have shown.
In my opinion, there is no basis for permitting the stock brokers represented by these claimants, who have already been paid by their customers, to recover the sum which they claim from the state. *Page 435
I vote in favor of the reversal of that part of the judgment of the Appellate Division from which the state has appealed.
WILLARD BARTLETT, Ch. J., HISCOCK and COLLIN, JJ., concur with CHASE, J.; SEABURY, J., reads dissenting opinion, and HOGAN, J., concurs; CARDOZO, J., not voting.
Judgment affirmed.