[3] We are of the opinion, however, that the plaintiff has not proven such a fraudulent scheme. The business of the corporation was making benches, vases, fountains, founts, pedestals, and statuary work for garden and house decoration. The proof is that the cost of manufacture of the stock was only about 20 per cent. of the selling price. In 1908, which was a bad year, the company sold from $60,000 to $70,000 of merchandise and made a profit of about $12,000 thereupon. This was repeated in 1909. Two expert accountants, who examined the books and the business of the corporation on behalf of intending purchasers, reported the business of the corporation in excellent condition. It is not claimed that any facts were concealed from these accountants, or any misrepresentations made to them. Of course, the balance sheet of a corporation depends largely upon the inventory of merchandise on hand; but any inventory made of this class of stock would necessarily be elastic, and would suffer a large shrinkage upon a forced sale. During 1908 and 1909 and in the spring of 1910 the company expended between $25,000 and $30,000 in fixing up a leasehold property upon Madison avenue. This of itself would absorb the profits that were shown to have been made from the sale of merchandise.

It is claimed by the plaintiff that Clarke represented that the company had paid dividends; but that fact, if true, made so little impression upon the plaintiff that he did not seek to ascertain what was the dividend paid. We are satisfied that the witness Henry states more accurately when he said that the representation was that the company was a dividend payer, but that the dividends were made in increased salaries to the employés. All the stockholders were employés of the company. That McNaught was a sick man is shown by the evidence of Wood, the defendant's witness, whose manner of testifying leaves a strong impress upon the mind of his truthfulness and accuracy. If this had been a fraudulent scheme from the start between these two defendants, why were not the profits equally divided, and why should Clarke be given two-thirds of the proceeds of the sale of the stock owned by the defendants individually?

[4] Plaintiff's stock was purchased in December, 1909. In January, 1910, it was discovered that more money was necessary, and in July of that year the company went into bankruptcy. This apparently was the result partly of the large amount put into the Madison avenue building and partly of the large amounts paid to the stockholding employés. It does not appear that the moneys put in the Madison avenue building was an unwise investment, as not only was the corporation put in a position to compete with the Tiffany Studios and other competitors, but parts of the building not used by the corporation were thereafter profitably rented to other tenants. The fact, however, that the treasury stock of the corporation was purchased by fraudulent representations of Clarke, is far from proof of a fraudulent conspiracy between McNaught and Clarke, by which the treasury stock of the corporation was to be unloaded for their benefit. The defendant McNaught, although apparently confused as to details of the stock transactions between him and Clarke as to individual stock,

gave evidence which strongly negatived the existence of any preconceived fraud in the sale of this stock. While this evidence is that of an interested party, there is no witness who contradicts him, and he is strongly corroborated by the witness Woods, who never had any financial interest in the corporation, and is not now connected in any way with the defendant McNaught. While proof of fraudulent conspiracy is often necessarily circumstantial, nevertheless the inference. of fraud must be clearly deducible from the facts shown.

The judgment and order appealed from should be reversed on law and fact, and a new trial granted, with costs to appellant to abide the event. The finding that the purchase by plaintiff was induced by any fraud of McNaught is reversed, as against the evidence. Order filed. All concur.

BUCKLES v. STATE.

(Supreme Court, Appellate Division, Third Department. December 28, 1916.) 1. HIGHWAYS 113(3)-CONTRACTS-EXTRA WORK-REQUISITES AND VALIDITY OF CONTRACT.

Where a contractor was directed by the department of highways to perform extra work, being promised a supplemental contract therefor, and the department accepted the work, and agreed to pay for it, the fact that a new commissioner refused to sign the contract will not defeat plaintiff's claim, where correspondence shows that the terms and conditions were substantially agreed upon.

[Ed. Note. For other cases, see Highways, Cent. Dig. § 348; Dec. Dig. 113(3); Contracts, Cent. Dig. § 1335.]

2. EVIDENCE 265(1)-ADMISSION IN JUDICIAL PROCEEDING.

When everything was admitted in the trial, except the question of a contractor's right to recover for extra work, in the absence of a supplemental contract, it was improper to dismiss the claim, because of failure to file notice of claim within time required by law.

[Ed. Note. For other cases, see Evidence, Cent. Dig. §§ 1029, 1043, 1044, 1046; Dec. Dig. ~265(1).]

Lyon and Cochrane, JJ., dissenting.

Appeal from Court of Claims.

Action by Mary J. Buckles, as administratrix, etc, against the State of New York. From a judgment dismissing the claim, plaintiff appeals. Reversed, and judgment directed for plaintiff.

Argued before KELLOGG, P. J., and LYON, HOWARD, WOODWARD, and COCHRANE, JJ.

O. A. Dennis, of Whitehall, for appellant.

Egburt E. Woodbury, Atty. Gen. (Edmund H. Lewis, Deputy Atty. Gen., of counsel), for the State.

JOHN M. KELLOGG, P. J. [1] The contract was fully performed by the contractor November 12, 1912. After he had entered upon the work, it was discovered that some extra filling was required on the highway before the other work was done upon it. The contractor called the attention of the department of highways to that fact. It, in

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writing, directed him to go on and do the necessary work; that a supplemental contract would be executed as soon as the work was done. He later wrote the department, asking that the supplemental contract be furnished. A little out of patience, the superintendent of repairs wrote him that he had been informed that he must do the necessary filling, and must do a first-class job; must get the necessary stone, and that the men in charge of the contract were to keep track of the same, and there would be a supplemental agreement for it; and told him that, if he could not do the work as required, he better relinquish the contract. He later again asked for the supplemental agreement, and was met with the written reply that it could not be furnished until the work was done. After the work was done, the department prepared the supplemental contract,, which was signed by the contractor and by the superintendent of repairs on the 11th of November, 1912. December 2, 1912, a final estimate, approving of the work and certifying the amount due, was executed by the inspector, the superintendent of repair, and the first deputy commissioner of highways. May 3, 1913, the work was again approved, and final payment recommended. The letters to the department and from the department show clearly that the work was done pursuant to written. directions. While the formal supplemental contract was not made before the work was done, the writings, fairly interpreted, show that the terms and conditions for the extra work were in substance substantially agreed upon in writing, and the supplemental contract, as executed, confirms the previous writings. It is immaterial, under all the circumstances, that this understanding and agreement was not reduced to the form of a supplemental contract. Payment was promised from time to time, but was delayed for an alleged want of funds, or other reasons. February 10, 1914, the new commissioner of highways wrote the claimant that he knew nothing about the matter, and he could not sign the supplemental agreement, and that the claimant must go to the Court of Claims. This was the first suggestion that any question was made about the claim. We have seen that the contractor, under duress, was required to do the work without a supplemental contract.

A corporation or a private person could not, by its agents, procure work to be done under similar circumstances and avoid payment. The object of requiring a supplemental agreement for work is to make certain that the state shall not be imposed upon and to guard against fraud. There is no such question here, for, if there is any wrong, it is not upon the part of the claimant. He was directed in writing by the department to do the work, and did it accordingly. The department accepted the work and agreed to pay for it, and plaintiff should not lose the money justly her due simply because there was a change of administration in the highway department, and the new commissioner was not interested in carrying out the contracts made by the old department, or did not feel called upon to read the correspondence, ascertain the facts, and approve of the supplemental contract, which had been executed by the representatives of the highway department. The claim is so just, the neglect of the state to pay it so unreasonable, that it is unnecessary to cite authorities or to go into a discussion to show that the state should pay this claim.

[2] Apparently the Court of Claims felt that the claim should be paid, but found against the claimant upon the ground that she had not given a notice of an intent to file the claim within the time required by law. At the beginning of the trial the attorney for the claimant stated the ground of the claim. The representative of the Attorney General's office stated that the office had diligently inquired into it, and found that the work had been done according to contract, and said:

"Now, this claim presents to the court one question of law, and that is all, because the facts are practically admitted."

Again:

"There is no question that the quantities are all that the claimant claims; the only question presented to the court is as to whether or not the claimant can recover for this extra labor and material, where no supplemental agreement covers it."

That was the only question tried; everything else was admitted out of the case, and it was too late after that for the court to dismiss the claim upon the ground that there was no proof that a notice to present a claim was filed. The state should be held to the admission made by it upon the trial. The claim is so just that, if the Attorney General had asked to withdraw the admission, the court would have been justified in refusing its consent.

We conclude that, under the peculiar circumstances of this case, the contractor and his administratrix have fully complied with the terms of the contract, and that the extra work was done by a contract binding upon the state. At this time the state cannot be heard to deny that such a supplemental contract was made. Considering the manner in which the case was tried, it was error for the court to dismiss the claim upon the ground stated by it.

The determination of the Court of Claims should therefore be reversed, and judgment directed for the plaintiff for the amount claimed, with proper interest thereon. All concur, except LYON, J., who dissents, in opinion in which COCHRANE, J., concurs.

LYON, J. (dissenting). So far as appears, no rejection of the claim had been made prior to February 10, 1914, when the state commissioner of highways then in office refused to sign a separate agreement relating to the work in question, which had been done during the administration of a predecessor in office, and so notified the appellant's attorney in writing, stating he saw no way except for the claimant to go to the Court of Claims. Evidently the appellant's attorney understood the suggestion made by the commissioner of highways, as on March 30th following he filed the claim with the clerk of the Board of Claims, but did not file the claim, or a notice of intention to file it, in the office of the Attorney General, as also required by section 264 of the Code of Civil Procedure; and neither a copy of the claim nor of an intention to file it has ever been filed in the Attorney General's office. Had the appellant's attorney so done within six months following the receipt of the communication from the state commissioner of highways, I think we might be warranted in holding

that a notice of intention had been filed in time. Although the claim may concededly be a just one, the requirement of the section is necessary for the protection of the state. An almost unbroken line of authorities is to the effect that, unless such notice of intention shall be duly filed, the claim cannot be maintained against the state.

The possible remedy of the claimant is through an act by the Legislature, permitting the Court of Claims to hear and determine the claim, notwithstanding the failure to file notice of intention to file claim as required by law.

COCHRANE, J., concurs.

PEOPLE ex rel. ERIE R. CO. v. PUBLIC SERVICE COMMISSION,
SECOND DIST.

(Supreme Court, Appellate Division, Third Department. December 28, 1916.) 1. RAILROADS 225-DUTY TO OPERATE-PRIVATE SIDE TRACK-COMMISSIONS -POWERS.

Any power the Public Service Commission has to require a railroad to operate a side track on private property is statutory.

[Ed. Note. For other cases, see Railroads, Cent. Dig. § 739; Dec. Dig. 225.1

2. RAILROADS 225-DUTY TO OPERATE-PRIVATE SIDE TRACK.

Public Service Commissions Law (Consol. Laws, c. 48) § 27, requiring railroads to maintain switch connections with private side tracks upon certain conditions, confers no authority upon the Public Service Commission to require a railway company to operate over a side track constructed on private property.

[Ed. Note. For other cases, see Railroads, Cent. Dig. § 739; Dec. Dig. 225.]

Kellogg, P. J., and Woodward, J., dissenting.

Certiorari proceeding by the People, on the relation of the Erie Railroad Company, against the Public Service Commission, Second District, to review a determination of the Commission requiring the relator to operate a switch connection and side track on the property of the Lancaster Machine & Knife Works. Determination annulled, and matter remitted to the Commission.

Argued before KELLOGG, P. J., and LYON, HOWARD, WOODWARD, and COCHRANE, JJ.

Lewis E. Carr, of Albany, for relator.

Ledyard P. Hale, of Albany, for Public Service Commission.

COCHRANE, J. The Lancaster Machine & Knife Works owns and operates a manufacturing plant about one-fourth of a mile easterly from the station of the relator at Lancaster, N. Y., and adjacent to its railroad. Prior to the year 1896, when the machine and knife works became the owner of its said premises, a side track was constructed from the main track of the relator to the factory of the machine and

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