author: Denio, Ch. J.

text:
    In the Matter of Dodd.
    The proceeding to vacate an assessment for a local improvement in the city of New York, under ch. 338 of 1858, though conducted before a justice of the Supreme Court, is not a special proceeding, in the sense of the Code of Procedure.
    The order made by the justice, in vacating, or refusing to vacate, the assessment, is final, and not subject to review here or in the Supreme Court.
    Motiost to dismiss an appeal. The petitioner, John M. Dodd, was assessed for several sums of $63.23 and $8, for paving; in the Eighth avenue in New York. He made application by petition to a justice of the Supreme Court, pursuant to the act of April 17, 1858, and after a hearing pursuant to notice, an order was made vacating the assessments. An appeal was taken, on behalf of the corporation of the city, to the Supreme Court at general term; but that appeal was there dismissed; on the ground, as it is understood, that the order was final, and not subject to review. The corporation, by its counsel, brought this appeal, from the order of the general term.

      C. C. Langdale, for the petitioner.

      W. C. Trull, for the corporation.
   Denio, Ch. J.

The authority under which the justice of the Supreme Court acted, in vacating the assessment, was the act in' relation to frauds in assessments for local improvements in the city of New York, passed in the year 1858 (ch. 338). It authorizes an application, by a person aggrieved by an assessment complained of as fraudulent or irregular, to a justice of the Supreme Court, in special term or in vacation, on notice to the counsel of the corporation ; and the judge is required, forthwith, to proceed to hear the proofs and allegations of the parties. If he finds the complaint well founded, he is to vacate the assessment; and thereupon the lien created thereby, or by any subsequent proceedings, is to cease. On the production of the justice’s certificate, that he has made such an order, it is made the duty of the officer having charge of the assessment lists, to cancel the assessments so vacatedbut the lands which had been charged by the assessments are to be again assessed according to law for such amount as would have been justly chargeable if fraud or irregularity had not been committed.

It is provided that a person applying for relief under the act, may embrace in the proceeding any or all assessments for local improvements in which he is interested.

- The question is, whether an order made by a justice under this act, is subject to review under the general laws respecting appeals from orders and judgments, or whether such an order is final and conclusive. I.am of opinion that it is final. I infer this from the nature of the subject, from the special provisions -of the act, and from the" decisions of this court in analogous cases.

1. The qhestion arises between the public, represented by the municipality, and a citizen generally liable to contribute towards public improvements. It belongs to the class of controversies which are generally the subject of administrative processes, and which are not usually executed by the judiciary, or subjected to judicial proceedings. The power given to the judge might have been committed to the mayor or the common council, or any city officer, without a violation of any principle. The legislature thought it expedient to commit it to a judge; but it does not certainly follow, that the proceeding is to partake of the character of a lawsuit, and be subjected to the delay and expense of a regular litigation. The justice, as I have said, performs, under the act, the functions which might have been conferred on any administrative officer. The very great number of cases to which the jurisdiction would apply, the necessity of completing, speedily and summarily, the proceedings under ordinances for local improvements, and the obvious inconvenience of requiring acts, in the course of municipal administration, to be subjected to the delay of a general judicial review, seem to me to forbid such a construction, unless the intention of the legislature to that effect is exceedingly plain.

2. There is nothing on the face of the enactment which looks to a review of the determination to be made by the justice. This would not be sufficient, alone, to preclude an appeal j for if the controversy were between citizen and citizen, and were strictly judicial in its character, and it was directed to be heard, in the first instance, before a single judge, the general laws respecting appeals from inferior courts would apply to the case, unless there was something in the provisions of the enactment which showed expressly or by implication that the first determination should be final. But this act does, I think, in effect, contain such provisions. The justice is to proceed, forthwith, on being applied to, to hear the proofs and allegations of the parties. This shows that the utmost celerity was contemplated. There is no provision for continuance or adjournments, though, probably, in a case of necessity, the hearing might be continued through several days. The only evidence of the determination which is provided for, is the certificate of the justice. On the production of this paper, the officer'having charge of the assessment lists is to cancel the assessment complained of, and all the proceedings under it; and the lien created by the assessment is immediately to cease. It seems not to have been contemplated that the execution of the determination could be stayed by an appeal; and there is no provision respecting security, or for costs to' be paid by either of the parties in any event. Every thing in the act seems to me to contemplate that the determination should be a speedy and final adjudication upon the complaint; and this is further apparent from the provision that the amount may be again assessed, in a legal manner, upon the land properly chargeable. No possible result of the review could reinstate the lien, if the land should have been aliened or incumbered. If the city can appeal when the determination is against it, the applicant would have a similar right, if he should fail in the first instance; and thus these assessments would often have to be carried to the court of last resort, where, should they be confirmed, the city would have no claim against any one for the costs and expenses.

3. In the case of The New York Central R. R. v. Marvin (1 Kern., 276), and in The Matter of Canal and Walker Streets (2 Kern., 406), it was held that the general provisions of the statutes respecting appeals did not necessarily apply in all cases where a judicial agency was brought in aid of an administrative proceeding. In both these cases, appeals were dismissed, on the ground that the laws contemplated that the orders of the Supreme Court should be final. The expressions touching the finality of the orders, in the acts under which the proceedings in those cases were taken, were more direct than in the one under consideration; but if the statutes are carefully looked at, it will be seen that those expressions were intended only to preclude further litigation in the Supreme Court, and not, in terms, to deny an appeal. The following expression, contained in the opinion of the court in the first of those cases, contains the principle which should determine the question in the present case: “ The whole proceeding is a special creation of the statute, and seems designed to form a complete system of itself, entirely independent of the general provisions of the statutes concerning appeals to this court.”

I do not think the act of 1854 (ch. 270) has any application to the case. It provides for appeals in special proceedings in the Supreme and Superior Courts, and in the Court of Common Pleas of the city of New York, and for costs in such proceedings. But I do not think that this application is a special proceeding, in the sense of the Code. In that system, “ remedies in the courts of justice ” are defined and diyided into classes; and everything which is not an ordinary action is a special proceeding. (§§ 1, 2, 3.) To be a special proceeding, in the sense of the Code, there must be a litigation in a court of justice. The legislature is perfectly competent to invoke the aid of a judicial officer for the regulation of an administrative proceeding, without organizing a special proceeding in a court of justice.

The motion to dismiss the appeal must be granted, but without costs.

Ordered accordingly.


source: Caselaw Access Project

author: Selden, J.

license: Public Domain

text:
    The Union Bank v. Mott.
    A complaint, charging that the defendants had fraudulently overdrawn money from the plaintiff, a bank, and demanding judgment for the amount of the overdraft, and for execution against the bodies as well as property of the defendants, is, it seems, to be regarded as founded in tort.
    Where one of the defendants dies before judgment, the action cannot be revived as a joint one against the survivor and the personal representative of the deceased, but may, it seems, be revived as separate actions.
    Where, in such an action, a motion to revive, made with notice to the representative of the deceased party, was denied as to him, the order affects no substantial right of the plaintiff, and is not appealable.
    This was a motion to dismiss an appeal from the order of the Supreme Court, at general term, in the city of New York, affirming an order made at special term, denying a motion made by the plaintiff for leave to revive the action against the ' executrix of the will of Jacob H. Mott, deceased. ’
    It appeared from the papers read on the hearing of the motion that the action was commenced in March, 1858, against Garret S. Mott and Jacob H. Mott, to recover ninety-six thousand dollars and upwards, which the defendants were charged with • having fraudulently overdrawn, between the first of January,
    1849, and the 31st of December, 1852, from the president, directors and company of the Union Bank of the city of New York (to whose rights the plaintiff had succeeded),.and one thousand dollars in like manner overdrawn from the plaintiff in January, 1853. Such overdrafts were alleged to have been effected through fraudulent collusion between the defendants and one Brotherson, who was bookkeeper of the president, director’s and company of the Union Bank, until the expiration of their charter, on the 31st day of December, 1852, and of the plaintiff subsequent to that date. The fact of such overdrafts was concealed by means of false entries made by Brotherson. in the books of the bank, and was never discovered by the president, directors and company of the Union Bank, or by the trustées of that corporation, and was not discovered by the plaintiff until March 8th, 1853.
    Judgment was demanded against the defendants for the amount thus overdrawn, with interest and costs, and with executions against' the bodies and the property of the defendants.
    The defendants severally answered, denying nearly all the allegations of the complaint, and they set up the statute of limitations, alleging that the action did not accrue within six years next before the commencement of the suit. Before the answer of Garret S. Mott was served, judgment had been obtained against him by default, for nearly $200,000, and he obtained leave to answer only on condition that the judgments stand as security for any amount that should ultimately be recovered against him.
    In November, 1859, the cause was referred to George 0. Goddard, to be heard and determined by him.
    In May, 1861, and before the. trial was completed, Jacob H. Mott died, leaving a will, duly executed, upon which letters testamentary were issued by the surrogate of New York on the 8th day of July, 1861, to Julia M. Mott, as executrix thereof.
    The plaintiff proceeded with the trial against Garret S. Mott, without attempting to revive the action against the representative of the deceased defendant, and on the 13th of July, the referee reported in favor of the defendant, Garret S. Mott, upon which, report judgment was entered in his favor for coste, on the 5th of August, 1861.
    The plaintiff appealed to the general term from that judgment, and on such appeal the judgment was reversed, and a new trial ordered in March, 1863. The defendant moved for a re-argument, in June, and the motion was denied in Novem-j her of the same year.
    The cause was again noticed for trial before the referee, in ■ December last. On the 28th of that month the plaintiff obtained an order from Mr. Justice Leonard, at special term, requiring the defendant, Garret S. Mott, and the executrix of the will of Jacob H. Mott, deceased, to show cause at the special term, on the first Monday in January, why the cause should not be revived against said executrix, and why said executrix and Garret S. Mott should not be required to answer the supplemental complaint, a-copy of which was annexed to the plaintiffs’ petition, on which the order to show cause was obtained.
    The supplemental complaint demanded judgment against the defendant, Julia M. Mott, as executrix, and against the said Garret S. Mott, and each of them, for the sum of $97,254.90, and interest from February 9, 1851, besides coste, and that the plaintiffs have execution therefor, as well against the body of the defendant, Garret S. Mott, as against his property.
    The petition and order were served upon the attorney for Garret S. Mott, but the executrix being in the State of Mas sachusetts, no service was made upon her, and on the 7th of January, on hearing of the' motion between the plaintiff and Garret S. Mott, the motion for leave to revive the action against the executrix was denied. The plaintiff appealed from that order to the general term, where the order was affirmed, and the appeal to this court, which is now asked to be dismissed, is from the order of affirmance.
   Selden, J.

The defendants’ counsel insists that the original defendants were charged upon a joint liability, which survived against Garret S. Mott only, on the death of his oo-defendant, and that the action could not, for that reason, be revived against the representative of the deceased defendants. If the action were founded upon the joint liability of the defendants arising out of an implied contract on their part to return the money wrongfully obtained by them, which is the usual form of action in such cases, the position of the defendants’ counsel would be correct. (Voorhees v. Childs' Executor, 17 N. Y., 354.) The plaintiff’s counsel, however, insists, and I think, correctly, that the basis of the action is tort and not contract, express or implied; that its object is not to recover for money had and received by the. defendants to the plaintiff.’s use (thus waiving the tort), but to obtain judgment for the damages which the plaintiff has sustained through the fraudulent conduct of the defendants. This being the true foundation of the action, and all torts, committed by more than one person, furnishing several as well as joint causes of action, the right of action survived, as well against the personal representative of the deceased, as against the surviving 5 defendant.- The surviving wrongdoer could not, however, in 1 a common law action to recover damages, be joined with the '¡representatives of his deceased associate, for the reason that jthere is no joint liability, and neither the same judgment jjcould be rendered, nor the same execution issued, against both. The Code, I think, has made no change in this respect. It has not authorized, in actions merely personal, for the recovery of money only, the joinder of defendants primarily and personally liable, with others liable only in a representative capacity. (Gardner v. Walker, 22 How. Pr., 405; Voorhees v. Childs' Executor, 17 N. Y., 355.) Where parties are jointly and severally liable, either for torts, or upon contracts, the personal representatives of deceased parties may be proceeded against by action at the same time with actions against the surviving parties,- but it must be by separate actions, and not by joining both classes of defendants in one action; and on the decease of one of several defendants thus liable in a pending action, such action cannot be revived, as a joint action, against the surviving parties and the representatives of the deceased party. I can, however, see no objection to the revivor of the suit in such case, as against the representatives of the deceased party as a separate action, as was suggested by Mr. Justice Welles, in Gardner v. Walker, supra. Such is undoubtedly the appropriate course on the death of a party severally liable on a bill or note, joined with other parties, as defendants under sec. 120 of the Code of Procedure; and there would seem to be great propriety in extending that practice to all cases of joint and several liability. Section 121 of the Code may properly be held to justify that course. Thus far I have deemed it proper to consider the merits of the question involved in the appeal, the subject having been discussed by counsel, although the merits are not before the court on this motion.

The papers do not disclose the grounds upon which the Supreme Court denied the plaintiff’s motion; but, assuming it to have been held by that court that there could be no revivor of the action as a joint one against Garret S. Mott and the representatives of Jacob H. Mott, they must have regarded the motion made in the action against the surviving party, as irregular. The papers were served on the attorney of Garret S. Mott only, no service having been made on the executrix of Jacob H. Mott. The motion, therefore, was made against Garret S. Mott, in an action in which the petitioner was the plaintiff, and he alone was defendant, for leave to revive a separate action in favor of the same plaintiff against another defendant. In that question, Garret S. Mott had no interest. He was no proper party to the proceeding, and if the order asked for had been granted, it would have been entirely nugatory. The denial of a motion, under such circumstances, presents no question which can be reviewed in this court. It in no way affected the substantial rights of the appellant, which would have gained nothing if the motion had been granted, and has lost nothing by its denial. If the right existed, as I am inclined to think it did, to revive the action against the executrix of Jacob H. Mott, that' right remains wholly unaffected by the decision which was made in the court below.' The appeal should, therefore, be dismissed, with costs.

Ordered accordingly.


author: Wright, J.

text:
    Salles et al. v. Butler et al.

    An order of the Supreme Court, refusing permission to appeal from a judgment, after the statutory time for appealing had expired, is not appealable to this court.
    Motion to dismiss appeal. On the 26th September, 1862, judgment was entered in the action against the defendants, and notice of such judgment was given in writing to the defendants and their attorney, on the 9th October, 1862. On the 6th December, 1862, the defendants’ attorney served notice of appeal from the judgment, which notice was immediately returned to him, with the objection thereon indorsed, that the defendants’ time to take an appeal had expired.
    On the' 8th October, 1862, the plaintiffs' attorney gave a stipulation, in writing, to the effect that the defendants, or any of them, might have sixty days from the date thereof to file, and serve exceptions, and to serve case or bill of exceptions. On the 6th December, 1862, the defendant Butler served case and exceptions, with notice of appeal.
    On the 18th February, 1863, the defendant Butler moved, at a special term of the Supreme Court, for an order staying proceedings on the part of the plaintiffs, and for leave to serve. an appeal from said judgment to the general term; which motion was denied, on the ground that the court had no power in the premises, the time in which to appeal having expired. The defendant appealed from the last mentioned order to the general term, and on the second Tuesday of July, 1863, the general term affirmed the order.
    On the 7th August, 1863, the defendant served notice of appeal from the order made at general term to this court.
    The. plaintiffs’ attorney now moves to dismiss the appeal, on the ground that the order is not appealable to this court. .

      J. H. Reynolds, for the plaintiffs.
    J. K. Porter, for the defendants.
   Wright, J.

The statute prescribes the manner and the time in which an appeal may be taken to the general term, from a judgment. It is to be made by the service of a notice, in writing, on the adverse party, and on the clerk with whom the judgment appealed from is entered, stating the appeal from the same, or some special part thereof. (Code, § 327.) And the appeal must be taken within thirty days after written notice of the judgment shall have been given to the party appealing. (Code, § 332.)

In this case written notice of the judgment was given to the defendants, on the 9th October, 1862, and no Steps were taken to appeal from the judgment, for fifty-eight days thereafter. On the 6th December, 1862, the notice of appeal prescribed by the statute was served on the plaintiff's attorney, who immediately returned the same, with the objection that the time for appealing bad expired. The judge, at special term, was, therefore, right in denying the motion for leave to bring an appeal, on the ground that the court was without power to grant it. The court had no power to extend, the period, or allow an appeal when the time had been suffered to expire. When the statute fixes a period of time in which an appeal may be taken, the Supreme Court cannot lawfully extend the statute time. (Humphrey v. Chamberlain, 1 Kern., 274; Wart v. Van Allen, 22 N. Y., 309.) On the merits, then, the order was clearly right.

But the question directly presented is whether an appeal will lie tó this court, from the order. The Code allows appeals^ in three classes of orders: 1st. When the order affects a substantial right, and in effect determines the action and prevents a judgment from which an appeal might be taken; 2d. When the order grants or refuses a new trial; and 3d, A final order affecting a substantial right made in a special proceeding upon a summary application in an action after judgment. (Code, § 11.) The order in question does not fall within either of these classes. It certainly cannot be claimed to fall within either of them, unless it be the latter. Denying leave to bring an appeal after, the statute period for appealing has expired, is not “a final order upon a summary application in an action after judgment ” within the meaning of the Code. As was said in Humphrey v. Chamberlain: “Reading the sentence in connection with the other parts of the section, it is evident that it contemplates a proceeding based upon the judgment, and which assumes its validity, and this .is the construction which has been put upon it by this court.” (Sherman v. Fell, 2 Comst., 186; Dunlop v. Edwards, 3 Comst., 341.)

I think the appeal should be dismissed.

Ordered accordingly.


text:
    Adams v. Fox, Executor, &c., et al.

    After notice of appeal is served and the proper undertaking perfected, this court is so far possessed of the cause as to be competent to make any 'necessary order; e. g., to dismiss- the appeal; although the return of the subordinate court has not been filed.
    From an order for judgment on demurrer, unless the plaintiff should amend, no appeal lies. The case cannot-be reviewed until final judg- . ment has been entered.
    Motion to dismiss appeal. The defendant, P. Gr. Fox, demurred to the complaint. The judge at the. special term held the demurrer not-well taken, and gave judgment for thb plaintiff, with leave to the defendant to withdraw the demurrer and answer. On appeal to the general term, the order was reversed,. and judgment on the demurrer Was given for the defendant, with leave to the plaintiff to amend the complaint. The plaintiff appealed here from this order, no judgment in the action having been entered, so far as appeared.
    The papers on which the motion to dismiss was made were the case made on the appeal from the special to the general term, the order of the general term and the notice of, appeal to this court.

      John K. Porter, for the motion.

      H. C. Adams, contra.

   Denio, Ch. J.

It is objected that this motion cannot be entertained, because the return has not been filed, and it is urged that until this is done, this court is not possessed of the case. But we think that when a notice of appeal has been served, and the j) roper undertaking perfected, the case is so far removed from the subordinate court, that we can entertain any application, which the case, in its then condition, may render necessary. Our general rules are based upon that idea, for they allow an order to dismiss an appeal for a default in filing the return.

The appeal which was attempted to be made in this case was premature. The determination of the demurrer, no doubt, entitled the defendant to judgment, unless the plaintiff should amend; but until final judgment was entered, the case was not in a condition to be reviewed here. The appeal must, therefore, be dismissed.

Ordered accordingly.


author: Finch, J.

text:
    Guilio Santa Barbara et al., Respondents, v. Pasquale Avallone and Stefano Miele, Inc., et al., Defendants, and Stefano Miele, Appellant.

      (Submitted December 9, 1935;
    decided January 21, 1936.)

      I. T. Flatto for appellant.
    The complaint was properly-dismissed upon the merits against the defendant-appellant. (Madison County Trust & Deposit Co. v. Smith, 259 N. Y. 348.)

      Henry Pearlman and Claudia Pearlman for respondents.
    Defendant-appellant personally participated in the conversion and in the fraud practiced upon the plaintiffs. (Kittredge v. Grannis, 244 N. Y. 168; Laverty v. Snethen, 68 N. Y. 522; Comley v. Dazian, 114 N. Y. 161; Levy v. Cleveland, C., C. & St. L. Ry. Co., 210 App. Div. 422; Deutsche Bank v. Humphrey, 272 U. S. 517.) An agent who participates in the conversion of property, or in the perpetration of a fraud upon a third person, is personally hable for the conversion or fraud, and it is no defense that these acts were committed by the agent in the pursuance of his employment or for the benefit of his principal. (Hinkle Iron Co. v. Kohn, 229 N. Y. 179; Brightson v. Claflin, 225 N. Y. 469; McCrea v. McClenahan, 131 App. Div. 247; Passaic Falls Throwing Co. v. Villeneuve-Pohl Corp., 169 App. Div. 727; Spraights v. Hawley, 39 N. Y. 441; Fishkill Sav. Institution v. National Bank, 80 N. Y. 162; Clarkson Home v. Missouri, K. & T. Ry. Co., 182 N. Y. 47; Susquehanna Line v. Auditore, 223 App. Div. 585; Suzuki v. Small, 214 App. Div. 541; 243 N. Y. 590; Richter v. Joelson, 237 App. Div. 572; Debobes v. Butterly, 210 App. Div. 50; Milliken v. Richelieu Co., 175 App. Div. 579; Lynch v. Couger, 181 App. Div. 221; 229 N. Y. 543; Rodney Hunt Machine Co. v. Stewart, 57 Hun, 545; National Surety Co. v. Manhattan Mortgage Co., 185 App. Div. 733; Laska v. Harris, 215 N. Y. 554.) In order to establish a conversion or fraud it is not necessary to find that the agent or officer appropriated the property to his own use or that he profited by the fraud. (Debobes v. Butterly, 210 App. Div. 50; Boyce v. Brockway, 31 N. Y. 490; Suzuki v. Small, 214 App. Div. 541; 243 N. Y. 590; Spraights v. Hawley, 39 N. Y. 441; Passaic Falls Throwing Co. v. Villeneuve-Pohl Corp., 169 App. Div. 727; Laska v. Harris, 215 N. Y. 554.)
   Finch, J.

The question presented is whether the defendant-appellant Miele must account for three bonds and a savings bank book and the proceeds thereof which were delivered by the plaintiffs to the defendant Pasquale Avallone & Stefano Miele, Inc., to collect in Italy and to redeposit to the credit of the plaintiffs in a savings bank in Rome. The defendant-appellant was an officer of this corporation but had no actual knowledge of the transaction in question.

At Special Term judgment was given for the defendant-appellant and the appeal to the Appellate Division, which reversed, was taken by way of a bill of exceptions. Therefore, only a question of law is presented and the facts as found and recited in the findings of fact of Special Term govern.

The essential facts are as follows: The defendant Pasquale Avallone & Stefano Miele, Inc., was engaged in the business of transmitting moneys from the United States to Italy and other European countries and from Italy and other European countries to the United States, as agent for persons desiring such transfers. On August 3, 1924, the plaintiffs delivered three bonds of an Italian company and the savings bank book of an Italian bank to Pasquale Avallone, at that time the president of the Avallone corporation, who accepted them on behalf of the corporation and agreed to collect the proceeds represented by these securities and deposit such proceeds in the Postal Savings Bank at Rome, Italy, to the credit of the plaintiffs. The defendant Avallone corporation delivered the securities to the defendant Italian Discount and Trust Company of New York, to collect the proceeds and perform such other services in connection therewith as it should be directed. Of the proceeds which totaled 44,266 lire, only 400 lire were deposited in the Postal Savings Bank in Rome and a pass book showing a credit for that amount was delivered to the plaintiff. The remainder of the proceeds was remitted to this country in the form of fire and credited by the Italian Discount and Trust Company of New York in a “ Special Lire Account ” to the Avallone corporation. The funds in this account were subject to transfer to a Dollar Account ” in the same bank by direction of the Avallone corporation. Shortly thereafter such transfer was made. The Dollar Account ” was an ordinary checking account, the checks requiring the signatures of both Avallone, as president, and Miele, as treasurer. Subsequently thé proceeds of the plaintiffs’ securities were withdrawn from the account by checks signed by Avallone and Miele on behalf of the corporation.

From 1924 till the institution of this action one of the plaintiffs made numerous inquiries concerning the transfer of the proceeds of the securities but received no definite or satisfactory information. The inquiries were made of Avallone until his death in 1928 and subsequently of Miele.

Special Term granted a judgment against Pasquale Avallone & Stefano Miele, Inc., holding that the defendant had diverted, converted and misappropriated the proceeds of the securities and that the concealment of such fact from the plaintiffs constituted a fraud on them. The complaint was dismissed as to the others, including Miele and the administrators of Avallone. The Appellate Division reversed on the law as to Miele and the administrator of Avallone and directed judgment against them (243 App. Div. 357). Only defendant Miele has appealed to this court.

Do these facts show sufficient connection of the defendant-appellant Miele with this transaction to impose liability upon him for the diversion of the funds?

The facts as noted show that the plaintiffs requested the defendant Avallone corporation to collect these moneys and open an account in the name of the plaintiffs in the bank in Rome. Obviously, since the Avallone corporation had no foreign office it would be necessary for it to employ the services of a correspondent bank. As the result of a failure to-give instructions, incorrect instructions or some other unknown reason, the correspondent bank failed to deposit the proceeds of the securities in the Postal Savings Bank in Rome but instead remitted them to this country and credited them to the account of the Avallone corporation. Although a deposit for collection creates a relationship of principal and agent or bailor and bailee, collection transforms the relationship into that of debtor and creditor, unless there is an agreement to the contrary. (6 Michie on Banks and Banking, p. 4, et seq.) In the case at bar, however, there were specific instructions to redeposit the proceeds of the securities and the relationship of principal and agent or bailor and bailee remained unaltered. (Matter of International Milling Co. [Broderick], 259 N. Y. 77.)

While the securities remained in the lire account, they remained the property of the plaintiffs and were held by the Avallone corporation as their agent. When the Avallone corporation withdrew the moneys of the plaintiff from the lire account, thus changing the form of these moneys and commingling them with the moneys of the Avallone corporation, the latter appropriated these moneys to its own use. Of course, it could not by its own wrongful act divest the title of the plaintiffs to these moneys. Equity might still impress a trust upon the general fund in favor of the owners of these moneys, which, through the wrong of the Avallone corporation, had found their way into the general fund. So long, however, as there remained in this general fund sufficient moneys to meet the obligations of the trust, no breach of such trust was committed by the Avallone corporation. Even when the fund was depleted, the wrong done by the Avallone corporation would not constitute a common-law conversion but instead a breach of trust. If the defendant Miele had signed checks depleting this fund with knowledge that a trust might be impressed upon the fund, he might be said to have acted as agent of the Avallone_corporation in committing such a breach, and he, as well as the Avallone corporation, could be held liable as a trustee de son tort. But Miele may be held liable as an active participant in this wrong of the corporation only if he participated as agent in the withdrawal of the money of the plaintiffs from the lire account, or had knowledge that the moneys of the plaintiffs in that account had been placed in the “ Dollar Account.” The findings do not show that Miele had knowledge that these moneys had gone into the “ Dollar Account,” nor is there any finding that Miele participated in the directions which transferred these moneys from the lire account to the Dollar Account.” The only findings are that the moneys in the lire account were not subject to withdrawal by check, but only by specific direction from defendant Pasquale Avallone and Stefano Miele, Inc., to said Italian Discount and Trust Company,” and that, therefore, “ the defendant Pasquale Avallone and Stefano Miele, Inc., directed the said Italian Discount and Trust Company to convert the said fire collected on the said securities * * * as aforesaid into dollars and transfer the same from the said special fire account * * * to the said ‘ dollar account ’ * * *.” So far, therefore, as the findings go, there is nothing to connect Miele with the transfer of the moneys of the plaintiffs from the lire account to the “ Dollar Account,” nor to show that Miele had any knowledge that these moneys in the “ Dollar Account ” were not in the general dollar account as a part of the regular assets of the corporation.

Any inference that because Miele occupied the office of treasurer he knew the sources of all moneys comprising the Dollar Account ” of the corporation would be an inference of fact and there is no finding to that effect. By the findings of fact we are limited, as was the Appellate Division, since the appeal comes here by way of a bill of exceptions which presents only questions of law and omits the evidence taken upon the trial.

The facts do not show that Miele had any dealings with the plaintiffs prior to the death of Avallone or that he was in any way connected with the transaction. It is true that Miele was one of the signers of the checks withdrawing the credit arising from the deposit of the moneys belonging to the plaintiffs in the dollar account but he had no knowledge that the moneys were other than assets of the Avallone corporation, and, therefore, available for the purposes of its business. There is no finding that he received and retained any of these moneys for which he can be called upon to account. Nor is there any finding that he appropriated any property to himself. No authority has been brought to our attention which would justify our holding this defendant-appellant guilty of conversion. (Cf. Greenway v. Fisher, 1 Car. & P. 190; Hollins v. Fowler, [1875] L. R. 7 H. L. 757; 33 L. T. 73; Casey v. Kastel, 237 N. Y. 305, 313.)

It follows that the judgment of the Appellate Division should be reversed as to the defendant-appellant Miele and that of the Special Term affirmed as to him, with costs in this court and in the Appellate Division. (See 270 N. Y.-.)

Crane, Ch. J., Lehman, O’Brien, Hubbs and Lough-ran, JJ., concur; Crouch, J., not sitting.

Judgment accordingly.


author: Per Curiam.

text:
    In the Matter of the Application of Syracuse Masonic Temple, Appellant. City of Syracuse, Respondent.

      (Argued December 10, 1935;
    decided January 21, 1936.)

      George R. Fearon and S. D. Solomon for appellant.
    The petitioner is a fraternal corporation and body created to build and maintain its temple for its meetings of the general assembly of its members and subordinate bodies of its fraternity, the entire net income of which real estate is exclusively applied and used for the relief, support and care of worthy and indigent members of the fraternity, their wives, widows or orphans. (Cons. Laws, ch. 60, § 4, subd. 7; Cons. Laws, ch. 3, § 7; People ex rel. Trustees of Masonic Hall v. Farrell, 130 Misc. Rep. 142; People ex rel. Syracuse Masonic Temple v. Ostrander, 105 Misc. Rep. 405.)

      James C. Tormey, Corporation Counsel (John Hmiel of counsel), for respondent.
    The statute under which exemption is claimed must be strictly construed. (People ex rel. Young Men’s Association v. Sayles, 32 App. Div. 197; 157 N. Y. 677; People ex rel. Schenectady O. F. T. A. v.
      McMillan, 199 App. Div. 268; People ex rel. Mizpah Lodge v. Burke, 228 N. Y. 245.) Appellant is not a fraternal corporation within the meaning of the Tax Law (Cons. Laws, ch. 60) and has not used its entire net income for the charitable purposes provided for in the statute. (People ex rel. Mizpah Lodge v. Burke, 228 N. Y. 245; People ex rel. Masonic Assn. v. White, 218 App. Div. 38; 244 N. Y. 564; United States Rad. Co. v. New York, 208 N. Y. 144; Brock v. Poor, 216 N. Y. 387; Elenk Krieg v. Siebrecht, 238 N. Y. 254; Rapid Transit Co. v. New York, 259 N. Y. 472; Schiedell v. Llewlyn R. R. Co., 177 N. Y. Supp. 529; Matter of Young, 15 App. Div. 285; Fickett v. Cohn, 14. Daly, 550; People ex rel. Barcalo Mfg. Co. v. Knapp, 187 App. Div. 89; Matter of Jones, 37 Hun, 430; 103 N. Y. 621; Matter of Albertson, 113 N. Y. 434; People ex rel. Olean Masonic Corp. v. Breder, 121 Misc. Rep. 553; People ex rel. Schenectady O. F. T. A. v. McMillan, 199 App. Div. 268.)
   Per Curiam.

The relator is organized under the provisions of Benevolent Orders Law (Cons. Laws, ch. 3), section 7. Its certificate of incorporation states that the purpose and objects of said corporation shall be “ the acquiring, constructing, maintaining and managing a hall, temple, or other building, or a home for the aged and indigent members of the Masonic order and their dependent widows and orphans, and of collecting and maintaining a library for the use of the bodies uniting to form such corporation, and the entire net income of the property of such corporation shall be exclusively applied, or be used to build, furnish and maintain an asylum, or asylums, a home, or homes, a school or schools, for the free education or relief of the members of the Masonic fraternity, or for the relief, support and care of worthy and indigent members of the fraternity, their wives, widows or orphans.”

It has constructed and maintains a building in the city of Syracuse. It has leased one floor of the building to the Syracuse Masonic Club. The remaining four floors of the building are used and occupied by lodges of the Masonic order as drill halls, lodge rooms, robing rooms, offices and waiting rooms. The relator claims that the building is exempt from taxation under the provisions of subdivision 7 (now subd. 6) of section 4 of the Tax Law (Cons. Laws, ch. 60).

We may assume for the purposes of this appeal, without now deciding, that the relator is a fraternal corporation * . * * created to build and maintain a building * * * for its meeting or meetings of the general assembly of its members, or subordinate bodies of such fraternity and for the accommodation of other fraternal bodies or associations ” within the meaning of that subdivision. (Cf. People ex rel. Masonic Hall Assn. v. White, 218 App. Div. 38; affirmed without opinion, but on answer to certified questions, 244 N. Y. 564.) Exemptions granted by the same subdivision to corporations organized exclusively for other purposes do not apply to it. To obtain exemption of its real property it must comply with the express condition upon which the real property of corporations like itself are granted exemption.

That condition is that the entire net income of [the] real property is exclusively applied or to be used to build, furnish and maintain an asylum or asylums, a home or homes, a school or schools, for the free education or relief of the members of such fraternity or for the relief, support and care of worthy and indigent members of the fraternity, their wives, widows or orphans.” It is not sufficient to include such purposes in the certificate of incorporation, or to provide by resolution that the net income is' to constitute a fund for such purposes. The condition is complied with only where in fact the entire net income “ is exclusively applied or to be used ” for such purposes.

No income of the relator has in fact been applied to such purposes. It claims that the reason is that it has never had any net income and that in accordance with its resolutions whenever its income exceeds its expenses and it enjoys a net income such net income is “to be used ” for such purposes. It has, nevertheless, paid out of income considerable sums in reduction of funded indebtedness and for other purposes which cannot be considered, reasonably, as expenses to be deducted before the net income is arrived at.

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Loughran and Finch, JJ., concur; Crouch, J., not sitting.

Order affirmed.


text:
    B’Nai B’Rith Club, Inc., Respondent, v. The City of New York, Appellant.
    (Argued December 13, 1935;
    decided January 21, 1936.)

      Paul Windels, Corporation Counsel (Oscar S. Cox and Laurence J. Rittenband and Frances W. Lehrich of counsel), for appellant.
    The premises were not exclusively used for charitable or benevolent purposes but were acquired for the purpose of deriving rents, profits or income from their operation and this purpose was fulfilled. (Matter of Yaddo, 216 App. Div. 1; People ex rel. Mizpah Lodge v. Burke, 228 N. Y. 245; Pratt Institute v. New York, 183 N. Y. 151; People ex rel. Masonic Hall Assn. v. White, 218 App. Div. 38; 244 N. Y. 564.) The respondent is not exempt under the latter portion of subdivision 6 of section 4 of the Tax Law (Cons. Laws, ch. 60) because it is not a fraternal corporation, does not use its premises for the requisite purposes and does not apply its entire net income in the manner required by subdivision 6. (Manhattan Maternity & Dispensary v. City of New York, 175 App. Div. 979; People ex rel. Barnard v. Wells, 46 Misc. Rep. 13; 92 App. Div. 622; 179 N. Y. 524; People ex rel. Donner v. Burke, 204 App. Div. 557; 236 N. Y. 650; People ex rel. Masonic Hall Assn. v. White, 218 App. Div. 38; 244 N. Y. 564; People ex rel. Mizpah Lodge v. Burke, 228 N. Y. 254; People ex rel. New York Lodge No. 1, B. P. O. E. v. Purdy, 179 App. Div. 805; 224 N. Y. 710; People ex rel. Delphian Lodge v. Cahoon, 179 App. Div. 287; People ex rel. Schenectady O. F. T. A. v. McMillan, 117 Misc. Rep. 600; 199 App. Div. 268; Boston Lodge v. Boston, 217 Mass. 176.)

      L. E. Schlechter for respondent.
    The premises were and are used exclusively to carry out the purposes for which the respondent was organized, to wit, the mental and moral improvement of men and women, as well as benevolent, literary and patriotic purposes, and to maintain the premises as a meeting place for the membership and for use by other fraternal organizations, the entire net income being exclusively dedicated to the relief of worthy and indigent members. (People ex rel. Syracuse Masonic

      Temple v. Ostrander, 105 Misc. Rep. 405; People ex rel. Crook v. Wells, 179 N. Y. 257; Matter of Syracuse University, 214 App. Div. 375; Matter of Yaddo, 216 App. Div. 1; People ex rel. D. K. E. Soc. v. Lawlor, 74 App. Div. 553; People ex rel. Masonic Hall Assn., v. White, 126 Misc. Rep. 661.)
   Per Curiam.

Respondent is a membership corpora^ tian, not a fraternal organization. It uses the real property in question for rental purposes and profit. It does not, therefore, come under the first part of section 4, subdivision 6 (formerly 7) of the Tax Law (Cons. Laws, ch. 60). The property is not used exclusively for charitable or benevolent purposes, and it is not used exclusively for meetings, and the net income is not used exclusively to build and maintain a home for the members of the corporation; therefore, the real property is not exempt under the second part of section 4, subdivision 6. (Cf. People ex rel. Masonic Hall Assn. v. White, 218 App. Div. 38; affirmed, 244 N. Y. 564.) (See, also, Matter of Syracuse Masonic Temple, 270 N. Y. 8, handed down herewith.)

The judgment of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division.

Crane, Ch. J., O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur; Lehman, J., not sitting.

Judgment accordingly.


text:
    In the Matter of the Board of Supervisors of Westchester County, Respondent, Relative to the Acquisition of Lands for the Mt. Kisco-Bedford County Highway. Joseph C. Baldwin, Appellant.
    (Argued January 8, 1936;
    decided January 21, 1936.)

      Chester B. McLaughlin, Lester D. Stickles and Benjamin J. Brown for appellant.
    The award should be set aside because the commissioners of appraisal were not disinterested. (Rensselaer County Agricultural Soc. v. Weatherwax, 229 App. Div. 30; Adirondack Power & Light Corp. v. Prodger, 121 Misc. Rep. 280; County of Orange v. Storm King Stone Co., 229 N. Y. 460.)

      William A. Davidson, County Attorney (Frank J. Claydon of counsel), for respondent.
    The commissioners of appraisal were wholly disinterested. (Matter of City of Rochester, 234 App. Div. 583.)
   Per Curiam.

We find no substantial error of law in the proceedings, and the finding of damage by the commissioners is conclusive. The question of whether one or more of the commissioners may have received greater compensation and allowance for expenses than the law allows is not directly presented upon this appeal. It does not appear that more was asked or allowed than the parties assumed was authorized by law and error there would not disqualify the commissioners as matter of law. Even though there may be justifiable criticism in regard to some matters connected with the proceeding no actual bias or interest has been conclusively shown.

The order should be affirmed, with costs.

Crane, Ch. J., Lehman, O’Brien, Hubbs, Crouch, Loughran and Finch, JJ., concur.

Order affirmed.


author: Finch, J. Crane, Ch. J. Lehman, J.

text:
    Gurney P. Hood, as Commissioner of Banks of the State of North Carolina, Respondent, v. Guaranty Trust Company of New York et al., as Trustees of the Estate of Theodore Roosevelt, Deceased, Appellants.

      (Argued November 25, 1935;
    decided January 28, 1936.)

      George L. Kobbé for appellant.
    The plaintiff did not take possession of the assets and business of the bank in the manner alleged in the complaint or in accordance with the provisions of section 218-c of the Consolidated Statutes of North Carolina for the purpose of liquidating it in the way and manner provided by that section. He, therefore, did not acquire any authority or standing to act under that section. (Angell v. Van Schaick, 132 N. Y. 187; Corporation Comm. v. Murphey, 197 N. C. 42.)

      Kenneth C. Royall, William D. Whitney and Bruce Bromley for respondent.
    The plaintiff has made out a good cause of action to recover an assessment under the North Carolina statutes which he is entitled to enforce in New York. (Maxwell v. Thompson, 195 App. Div. 616; 232 N. Y. 619; Marin v. Augedahl, 247 U. S. 142; Royal Arcanum v. Green, 237 U. S. 531; Matter of Independence Trust Co. v. Keesler, 206 N. C. 12; Shipman v. Treadwell, 200 N. Y. 472; 208 N. Y. 404; Bernheimer v. Converse, 206 U. S. 516; Converse v. Hamilton, 224 U. S. 243; Selig v. Hamilton, 234 U. S. 652; Pope v. Heckscher, 266 N. Y. 114; Knickerbocker Trust Co. v. Iselin, 109 App. Div. 688; Whitman v. Oxford Nat. Bank, 176 U. S. 559; Stratton v. Bertles, 238 App. Div. 87; Howarth v. Angle, 162 N. Y. 179; Broderick v. American General Corp., 71 Fed. Rep. [2d] 864; Broderick v. McGuire, 174 Atl. Rep. 314; Broderick v. Rosner, 294 U. S. 629.)
   Finch, J.

This is an action brought by the Commissioner of Banks of the State of North Carolina, to collect an assessment on stock of the Page Trust Company, a banking corporation of North Carolina, held by the defendants, as trustees under the will of Theodore Roosevelt.

The complaint alleges that on May 20, 1933, the Page Trust Company voluntarily closed its doors and by formal resolution passed by a majority of its board of directors placed its assets and business under the control of the plaintiff for liquidation. Thereupon, on the 22d of May, the plaintiff duly filed in the Superior Court of North Carolina notice of possession and on the 22d of June levied a one hundred per cent assessment on all stock of the trust company, and duly filed a copy of such levy in the Superior Court. It is further alleged that on the date the plaintiff took possession the defendants were the owners and holders of 100 shares of the capital stock, and that under the provisions of the statutes of North Carolina they became liable for an assessment at the hand of the Commissioner of Banks of that State. It is alleged also that pursuant to statute the filing of the notice of levy of assessment is docketed as a judgment against the various stockholders. The plaintiff sues both upon the judgment and the assessment.

The defendant trustees by answer admit the stock ownership but set up as defenses:

First. That they are non-resident -and that personal service has not been made upon them and that they have never appeared or submitted themselves to the jurisdiction of the court of North Carolina;

Secondly. That the Commissioner of Banks was not authorized to prosecute suits for the collection of assessments outside of the State of North Carolina, and

Thirdly. That the Commissioner levied this assessment, not for the purpose of liquidation, but for the purpose of reorganization.

At the trial it appeared without contradiction that the bank had voluntarily closed its doors on May 20, 1933, and that the board of directors by formal resolution had placed it in the hands of the plaintiff for liquidation. Since then the liquidation has proceeded. At the trial therejwas also testimony as to the law of North Carolina. The plaintiff then rested andjso also did the .defendants since the latter had presented their case by the introduction of exhibits during the cross-examination of the plaintiff’s witness. These exhibits consisted of a copy of the resolution of the board of directors placing the trust company in the hands of the Commissioner and a proposed plan of reorganization together with a notice of the reorganization sent to the stockholders, depositors and creditors accompanied by a statement of the Commissioner announcing his approval of the proposed reorganization. The plan of reorganization provided for liquidation of the trust company by selling its good assets to a new bank and levying a one hundred per cent assessment against the stockholders of the trust company with which to supply new cash for the new bank. In addition each depositor and creditor was to receive a portion of his presently due claim in a time certificate. The record contains a formal abandonment of the proposed reorganization.

Motions for judgment by the plaintiff and to dismiss the complaint by the defendants were made. Both parties stipulated that findings of fact and conclusions of law be waived and a verdict directed as though a jury were present. The court at Trial Term dismissed the complaint upon the ground that the defendants were non-residents and had never been served with process within the State of North Carolina. The Appellate Division reversed and granted judgment for the plaintiff.

The question presented for decision, in brief, is — To what extent did these defendants, by acquiring stock of the Page Trust Company, make themselves hable to the assessments levied against their stock in North Carolina pursuant to statutory authority and sued upon here by the Commissioner of Banks of North Carolina?

It may be taken as settled that when these defendants acquired stock they impliedly agreed that the Page Trust Company in the State of North Carolina should represent them therein in any action to enforce stock liability, except as to their status as stockholders and such other defenses as may be deemed personal to them. In Marin v. Augedahl (247 U. S. 142, 150), when a receiver of an insolvent corporation in Minnesota sued in North Dakota to enforce an assessment against a stockholder, a nonresident of Minnesota, pursuant to an order of the Minnesota court, it was said: “ Whether the stockholder against whom the order is here sought to be enforced was personally a party to the suit in which it was made does not appear; nor is it material. Under the rule in Minnesota, as also the general rule, he was sufficiently represented by the corporation to be bound by the order insofar as it determined the character and insolvency of the corporation and other matters affecting the propriety of a general assessment such as was made.”

Likewise in Bernheimer v. Converse (206 U. S. 516, 529) it was said: It may be regarded as settled that upon acquiring stock the stockholder incurred an obligation arising from the [statutory] provision, contractual in its nature and, as such, capable of being enforced in the courts not only of that state, but of another state and of the United States * * *.”

We are thus brought to a consideration of the pertinent statute of North Carolina. If there has been compliance with this statute the defendants are bound by the order in so far as it determined the insolvency of the bank and the necessity for an assessment and they are only entitled to set up personal defenses.

The statute provides that “ Whenever any bank for any reason shall suspend operations for any length of time, said bank shall, immediately upon such suspension of operations, be deemed in the possession of the commissioner of banks and subject to liquidation hereunder.” (North Carolina Code; Cons. Stat., N. C., ch. 5, art. 3, § 218 [c], subd. 2.)

The statutes further require the Commissioner of Banks within forty-eight hours after talcing possession of a bank to file a notice of his action with his reasons therefor in the office of the Clerk of the Superior Court. (Subd. 3.) Within thirty days from the filing of the notice of taking possession the Commissioner of Banks must make and state an inventory of the assets and liabilities of the bank and he may levy an assessment on each stockholder and file a notice of this levy with the court, which levy shall be indexed as- judgments and shall have the force and effect of a judgment of the Superior Court. (Subds. 9, 13.) It is further provided that any stockholder may appeal to the Superior Court from the levy of assessment; the issue raised by the appeal may be determined as other actions in the Superior Court.” (Subd. 13.) Any surplus remaining in the hands of the Commissioner of Banks after the payment of all liabilities to depositors and other creditors is to be repaid pro rata to stockholders who have paid the assessment. (Subd. 13.)

From the facts as stated it is clear that the Commissioner has complied with all the provisions of the statute. It cannot be held that the Commissioner failed to comply with the statute because the Commissioner gave notice on June 5 that an assessment would be levied on June 22. His action was in accordance with the statute which provides that an assessment may be levied thirty days after the filing of the notice of taking possession. The date of levy was thirty days after notice of taking possession and an earlier giving of notice of intention to levy does not violate the statutory requirement.

The argument is raised, however, that the statutory liability of stockholders cannot be enforced unless there is a necessity for such enforcement and that no such necessity exists unless the bank is found to be insolvent. Turning to the order of levy of assessment we note that it contains a finding by the Commissioner that an assessment is necessary in order to discharge the liability to general creditors of the said Page Trust Company.” Slight effort was necessary to determine the hopeless insolvency of- this trust company. Insolvency had been implicit in its every act for a number of months. Even previous to the bank holiday declared by the President’s order the officers of the Page Trust Company had requested the Commissioner of Banks to issue an order restricting the withdrawals of deposits. Pursuant to this request such an order had been issued. At the close of the bank holiday the trust company made application for a license to reopen without restrictions, but, after an examination of its assets, the license to reopen without restrictions was denied. From then, until it finally closed its doors on May 20th, the Page Trust Company limped along and continued business only under restrictions. Subsequently the board of directors attempted to reorganize in accordance with a statute (No. Car. Code; Cons. Stat., N. C., ch. 5, art. 2, § 217 [m] 1) which is applicable when a bank’s aggregate property * * * shall not be sufficient in amount to pay its debts or which * * * may be unable to pay its debts in the ordinary course of business as they mature ” or which is in the process of liquidation or is without authority to conduct an unrestricted banking business. The proposed plan of reorganization emphasized the insolvent condition of this company. Even if the attempted reorganization had been successful each depositor and creditor would still have had to take a portion of his claim in time certificates. Moreover, in the case of a voluntary liquidation where a bank has closed its doors, generally there would be no need for the Commissioner to make a determination of the necessity for an assessment because it is obvious that insolvency supplied the reason for the closing. That apparently was the picture in the mind of the North Carolina court when it said in one case that ordinarily only personal defenses would be litigated in such a case. (Corporation Commission v. McLean, 202 N. C. 77.)

It having been found that the assessment was necessary in order to discharge the liability to the general creditors there can be no doubt that the bank was insolvent. It has been held in numerous cases that a bank is insolvent if it is unable to pay its debts in the ordinary course of business. (Federal Reserve Bank v. Idaho Grimm Alfalfa Seed Growers’ Assn., 8 Fed. Rep. [2d] 922; writ of certiorari denied, 270 U. S. 646; Cronkleton v. Ebmeier, 38 Fed. Rep. [2d] 748; Ferry v. Bank of Central New York, 15 How. Pr. 445; Matter of Empire State Bank, 10 How. Pr. 498; Babka Plastering Co. v. City State Bank, 264 Ill. App. 142; Steele v. Commissioner of Banks, 240 Mass. 394; Commonwealth ex rel. Bell v. Tradesmen’s Trust Co., 237 Penn. St. 316. Cf. Sterrett v. Third Nat. Bank, 46 Hun, 22; affd., 122 N. Y. 659.)

It is urged that the action of the Commissioner in determining the need for an assessment is conclusive. The statutes of North Carolina do not so provide. In the recent case of Matter of Independence Trust Co. v. Keesler (206 N. C. 12) the questions of insolvency and necessity for assessment were raised and these questions and others were fully tried out. Indeed the statutes of North Carolina have been held constitutional on the very-ground that a full opportunity is offered to try out every issue raised whether of law or of fact involved in an assessment in accordance with the procedure provided for the trial of actions brought in the Superior Court. (Corporation Commission v. Murphey, 197 N. C. 42; affd., 280 U. S. 534.) Similar statutes of other States also have been declared valid. (Coffin Bros. & Co. v. Bennett, 277 U. S. 29; Butler v. Mobley, 170 Ga. 265; Davis v. Moore, 130 Ark. 128.) So long as a State preserves an opportunity to raise and try in court every possible defense, as was done in North Carolina, the guaranty of due process of law is complied with and no constitutional objection' remains to any power short of arbitrary which may be intrusted to a Commissioner of Banks by a State. (Coffin Bros. & Co. v. Bennett, supra.) That is a matter confined solely to the policy of the particular State. Within that orbit the State’s interpretation of its own statutes is elsewhere controlling. (Marin v. Augedahl, supra. Cf. Supreme Council of Royal Arcanum v. Green, 237 U. S. 531; Modern Woodmen of America v. Mixer, 267 U. S. 544; Southworth v. Morgan, 205 N. Y. 293; 2 Beale on Conflict of Laws, p. 866.)

Whether the defenses to a levy of assessment may be raised at one time or another, so long as they may be raised at some time before the stockholder is compelled to pay, is a mere matter of State procedure, and the Fourteenth Amendment to the Constitution of the United States is not concerned with the mere matter of State procedure. (Coffin Bros. & Co. v. Bennett, supra.) The North Carolina law does not differ in substance from the Minnesota law upheld in Bernheimer v. Converse (supra). The differences are only in procedure. The Minnesota law provided, first, for a determination of insolvency by a court, then, a levy of assessment. The North Carolina law provides, first, for a determination for assessment or insolvency by an administrative official, followed by a levy of assessment, and then an opportunity to come into court and contest the determination or necessity for assessment. The sequence of steps differs but the statutes are alike in their essentials. Under either statute the corporation or its stockholders could contest the findings or allegations of insolvency or necessity for assessment in the State where the corporation is domiciled. Where such finding or allegation is contested by a corporation and then the finding is upheld it is clear that the determination is an adjudication of insolvency and necessity for assessment and “ These questions cannot be reopened in another court when the receiver sues to collect the amount of the assessment.” (Selig v. Hamilton, 234 U. S. 652, 662.) There is no reason for not reaching the same result, where the corporation, although it has the opportunity to contest the allegation or finding, fails to do so because it is obvious that the corporation is so hopelessly insolvent that such contest would be futile. The corporation represents its stockholders whether it challenges the findings of an administrative official or bows to the obvious. This conclusion is implicit in the cases upholding the Federal statute which makes the determination of the Comptroller conclusive. (Kennedy v. Gibson, 8 Wall. [U. S.] 498; Casey v. Galli, 94 U. S. 673; Bushnell v. Leland, 164 U. S. 684.)

Nothing in this opinion is to be construed as holding that without personal service within the State personal judgment could be entered against a non-resident stockholder. The rule of Pennoyer v. Neff (95 U. S. 714), recently reiterated by this court in Pope v. Heckscher (266 N. Y. 114), in no way conflicts with the conclusion herein reached. We merely hold that the stockholders, having implicitly agreed that the corporation represent them, are bound by a finding of the necessity for an assessment and the amount of the assessment. In the words of Justice, now Chief Justice, Hughes, in Selig v. Hamilton (supra, p. 662): “ It follows that if the court, thus having jurisdiction and acting upon the evidence before it in the statutory proceeding, assessed former stockholders for the purpose of providing for debts incurred while they held their stock, its determination with respect to the amount of the assessment and the necessity therefor must be deemed conclusive. These questions cannot be reopened in another court when the receiver sues to collect the amount of the assessment. The stockholder in such a suit is free to urge his personal defenses but this does not mean that he may resist the receiver’s demand upon the ground that the assessment was not needed. The marshalling of the amounts recovered from stockholders is also the appropriate subject for the consideration of the court which under the statute collects and distributes the fund. It is quite obvious that another court, in an action by the receiver against the stockholder, could not undertake to fix the amount required to pay the debts for which the stockholder is hable unless it virtually assumed the duty imposed by the statute of determining what a ratable assessment should be and thus denied due credit to the determination already made in a court of competent jurisdiction.”

The assessment in North Carolina is not and cannot be treated as a conclusive judgment against the defendants. In an action brought on such assessment in New York it is only conclusive as to the necessity for and the amount of the assessment. Personal defenses may still be set up and if found valid will prevent the Commissioner of Banks from obtaining judgment.

At the trial the deféndants could have raised defenses personal to themselves. They not only did not raise such defenses but instead conceded their status as stockholders and attempted only to defend by seeking to compel the reiitigation of the question of the necessity for and the amount of the assessment. This they could not do.

This court has already affirmed a judgment enforcing an assessment made by a Bank Superintendent of another State under a statute strikingly similar. (Maxwell v. Thompson, 232 N. Y. 619, affg. 195 App. Div. 616.) The same result has been reached elsewhere. (Gile v. Duke, 5 Fed. Rep. [2d] 952; Hanson v. Soderberg, 105 Wash. 255.)

Even if the determination of the necessity for an assessment and the amount thereof were open to challenge in the courts of this State, the plaintiff would still be entitled to judgment in the case at bar. The validity of the assessment depends upon the Commissioner having complied with the requirements specified in the statutes of North Carolina. The complaint alleges that the levy was made in compliance with law by an order stating that the assessment was necessary. The presumption lies that the Commissioner of Banks, being a public official, acted in compliance with law. (Hamilton v. Erie R. R. Co., 219 N. Y. 343.) (See Matter of Marcellus, 165 N. Y. 70, 77; United States v. Chemical Foundation, Inc., 272 U. S. 1, 14, 15.) The record thus shows a prima facie case of such compliance. At the trial no evidence was offered by the defendants in contradiction of this prima facie case. No attempt was made to show that the assessment was unnecessary or to point out any particular in which the necessary procedure was not followed by the Commissioner of Banks, and, therefore, judgment must go against them.

The conclusions above reached preclude the practical harm which would result from requiring the Commissioner of Banks to try the question of the necessity and amount of the assessment in each action brought, with perhaps varying results in each State, so that non-residents in one State might be absolved by a finding of fact in their favor, while in another State others not so fortunate would be held. Such practical harm has been recognized by the courts. In Broderick v. American General Corp. (71 Fed. Rep. [2d] 864, at p. 870), a case‘very similar to the case at bar, the court said:

Surely it was not contemplated by the legislature that in each suit the Court should wade through all the facts and figures involved in the bank’s assets and liabilities to make the determination which the legislature had already authorized the Superintendent himself to make, with possibility of conflict between the decisions of different courts in different cases affecting stockholders of the same bank.”

It would be attended with injurious consequences to forbid action against the stockholders until the precise amount necessary to be collected shall be formally ascertained. This would greatly protract the final settlement, and might be attended with large losses by insolvency and otherwise in the intervening time. The amount must depend in part upon the solvency of the debtors and the validity of the claims. Time will be consumed in the application of these tests, and the results in many cases cannot be foreseen. The same remarks apply to the enforced collections from the stockholders. A speedy adjustment is necessary to the efficiency and utility of the law; the interests of the creditors require it, and it was the obvious policy and purpose of Congress to give it. If too much be collected, it is provided by the statute, that any surplus which may remain after satisfying all demands against the association, shall be paid over to the stockholders. It is better they should pay more than may prove to be needed than that the evils of delay should be encountered.” (Kennedy v. Gibson, 8 Wall. [U. S.] 498, at p. 505.)

It follows that the judgment appealed from should be affirmed, with costs.

Crane, Ch. J.

(concurring in result). I do not consider the judgment entered in North Carolina to be of any greater force and effect than the assessment levied by the Commissioner of Banks. For the purposes of this action, however, it makes no difference whether the action be upon the judgment or upon the assessment. Both were alleged and proved, and the action is to recover the amount of the assessment. The validity of the assessment depends upon the Commissioner having complied with the preliminary requisites as specified in the Laws of North Carolina, chapter 4 of the Laws of 1921 as amended. The record shows a prima facie case of such compliance.

The defendants had an opportunity upon the trial to meet this issue, that is, to show that the assessment was void both as to residents and non-residents, in that the Commissioner had acted without authority. This the defendants failed to do, having offered no testimony whatever. They have had their day in court. Opportunity has been given them to attack this assessment, but they have relied solely upon the failure of the plaintiff to prove insolvency of the bank, the necessity for the assessment and the pro rata share which the defendants as stockholders should pay to meet the liabilities.

I think the possession taken under the resolution of the directors and upon the closing of the bank, the action of the Commissioner thereon in levying the assessment by an order stating “ that an assessment against the stockholders of the Page Trust Company, Aberdeen, North Carolina, is necessary in order to discharge the liability to general creditors,” and the filing of a copy of such levy in the office of the Clerk of the Superior Court is sufficient to show in the first instance a compliance with the law. When the defendants failed to point out any particular in which the necessary procedure was not followed by the Commissioner of Banks, judgment should go against them in the courts of this State.

Lehman, J.

(dissenting). The defendants, residents of the State of New York, have been since January 31, 1931, the owners and holders of 100 shares of the capital stock of the Page Trust Company, a banking corporation organized and doing business under the laws of the State of North Carolina. The rights and obligations of the stockholders of a corporation arise from and are defined by the charter, constitution and by-laws of the corporation; and the laws of the State which creates the corporation are “ integrally and necessarily the criterion to be resorted to for the purpose of ascertaining the significance of the constitution and by-laws.” (Supreme Council of Royal Arcanum v. Green, 237 U. S. 531, 542.) The statutes of North Carolina provide that: " The stockholders of every bank organized under the laws of North Carolina, whether under the general law or by special act, shall be individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such corporation, to the extent of the amount of their stocks therein at par value thereof, in addition to the amount invested in such shares, except as otherwise provided. * * *.” (No. Car. Code; Consolidated Laws, N. C., ch. 5, art. 4, § 219-a.) This action is brought to enforce that liability.,

It may be regarded as settled that upon acquiring stock the stockholder incurred an obligation arising from the [statutory] provision, contractual in its nature and, as such, capable of being enforced in the courts not only of that State, but of another State and of the United States (Whitman, etc., v. Bank, 176 U. S. 559), although the obligation is not entirely contractual and springs primarily from the law creating the obligation. (Christopher v. Norvell, 201 U. S. 216.) ” (Bernheimer v. Converse, 206 U. S. 516, 529.) The defendants do not dispute the existence of the obligation or that it may be enforced in the courts of this State. They appeal to this court from the judgment rendered against them on the ground that liability upon that obligation has not been properly established.

The statutes of North Carolina not only create the obligation but provide a remedy for the enforcement of the obligation. That remedy constitutes a part of the statutory method for the liquidation of banks. (No. Car. Code; Cons. Laws, § 218-c.) That section confers upon the Commissioner of Banks of the State power to take possession of any bank which he shall find “ in an insolvent, unsafe or unsound condition * * * to continue its business,” or which neglects or fails to obey certain requirements of the Commissioner of Banks, or which has voluntarily placed its assets and business under the control of the Commissioner of Banks; or which “ shall suspend operations for any length of time.” (Subds. 1 and 2.) It requires the Commissioner of Banks, within forty-eight hours after taking possession of a bank, to file “ with the clerk of the Superior Court in the county where said bank is located, a notice of his action which shall state the reason therefor.” (Subd. 3.) “ Within thirty days after the filing of the notice of the taking possession of any bank in the office of the clerk of the Superior Court, the commissioner of banks, or the duly appointed agent, shall make and state an inventory of the assets and liabilities of the said bank, and shall file one copy thereof with the Clerk of the Superior Court in the pending action and shall keep one copy on file in the said bank.” (Subd. 9.) “After the expiration of thirty days from the date of the filing of the notice of the taking possession of any bank, in the office of the Clerk of the Superior Court, the commissioner of banks may levy an assessment equal to the stock liability of each stockholder in the bank, and shall file a copy of such levy in the office of the clerk of the Superior Court, which shall be recorded and indexed as judgments, and shall have the force and effect of a judgment of the Superior Courts of this State; and the same shall become due and payable immediately, * * * and actions on said assessment may be instituted against any non-resident stockholders in the same manner as other actions against non-residents of the State. Any stockholder may appeal to the Superior Court from the levy of the assessment; the issue raised by the appeal may be determined as other actions in the Superior Court * * *. All sums collected under the levy shall become immediately available as general assets of the bank for distribution as other assets; Provided, however, that whenever the expenses of liquidation have been paid and all of the liabilities to depositors and other creditors shall have been discharged, the money then remaining in the hands of the commissioner of banks shall be applied pro rata to the repayment of the amounts paid in by the stockholders ” (Subd. 13).

The Commissioner of Banks has, at least in form, complied with all these provisions of the statute. On May 20, 1933, he took possession of the bank after the bank was closed for business by the directors who, by formal resolution, placed its assets under his control for liquidation. He filed the required notice of possession on May 22. The bank might then have opposed his action, if for any reason it was invalid. When it failed to do so, the action of the Commissioner became conclusive upon the bank and all its stockholders. “ In such case it has been frequently held that the representation which a stockholder has by virtue of his membership in the corporation is all that he is entitled to.” (Bernheimer v. Converse, supra, p. 532.) It must be remembered, however, that though no stockholder can thereafter, in another proceeding, collaterally attack the right of the Commissioner of Banks to liquidate the bank for the reasons stated in the notice, yet these reasons do not include insolvency of the bank, and liquidation of the bank would be in accordance with the statutory powers of the Commissioner even if the bank was not insolvent.

In order to enforce the statutory obligation of the stockholders in such liquidation, there must be necessity for such enforcement, and such necessity must be determined by the Commissioner of Banks before liability arises. The liability imposed by the obligation is a separate liability and each stockholder is responsible only for his proportion of the debts of the bank. The Federal statutes for a long time imposed an obligation upon the stockholders of national banks in identical language. In construing that statute it has been said that the words of the statute do not “ mean that the stockholder promises the creditor as surety for the debts of the corporation, but merely impose a liability on him as secondary to those debts, which debts remain distinct, and to which the stockholder is not a party. The liability is a consequence of the breach by the corporation of its contract to pay, and is collateral and statutory.” It is conditional and enforceable only according to the statute “ independent of which the cause of action does not exist.” (McClaine v. Rankin, 197 U. S. 154, 161, 162.) In the process to be pursued to fix» the amount of the separate liability of each of the shareholders, it is necessary to ascertain, (1), the whole amount of the par value of all the stock held by all the shareholders; (2)., the amount of - the deficit to be paid after exhausting all the assets of the bank; (3), then to apply the rule that each shareholder shall contribute such sum as will bear the same proportion to the whole amount of the deficit as his stock bears to the whole amount of the capital stock of the bank at its par value.” (United States v. Knox, 102 U. S. 422, 425.) At the trial of this action no evidence was given to establish the amount of the deficit, if any, to be paid after exhausting the assets of the bank. The plaintiff showed only that the Commissioner of Banks on June 5, 1933, mailed to stockholders a notice “ that on the 22nd day of June, 1933, the Commissioner of Banks under and by virtue of the provisions of Paragraph 13, Chapter 113, Public Laws of 1927, as amended by Chapter 243, Public Laws of 1931, will levy an assessment against the stockholders of the above named bank, and will, on the said 22d day of June, 1983, docket said assessment in the office of the Clerk of Superior Court of Moore County,” and that on June 22d he did docket an order of assessment stating: it appearing to the Commissioner of Banks that an assessment against the stockholders of the Page Trust Company * * * is necessary, * * * the Commissioner of Banks of the State of North Carolina hereby levies an assessment,” etc. The plaintiff maintains, and the Appellate Division has held, that under the statute the determination of the Commissioner of Banks that an assessment is necessary is conclusive and may not be attacked in an action brought in this State against a non-resident to enforce the assessment.

The statute of North Carolina does not in terms provide that the determination of the Commissioner of Banks shall be conclusive. It is said, however, that such provision is there by fair implication. The power of the State to intrust to the Commissioner of Banks the function of determining whether in the course of his administration of an insolvent bank he should enforce the statutory liability of stockholders is not open to challenge. (Kennedy v. Gibson, 8 Wall. [U. S.] 498; Casey v. Galli, 94 U. S. 673.) His determination of the necessity and the amount of the assessment to be made may, if the statute so provides, be conclusive in a statutory action thereafter brought to enforce such liability. Even then, it must appear that the statute authorized such determination, and that the Commissioner of Banks did not exceed the jurisdiction confided in him. Here there is grave question whether the statute was intended to provide that the assessment made by the Commissioner of Banks should be in any respect conclusive, even in statutory proceedings in North Carolina. The statute provides, it is true, that an assessment made by the Commissioner shall have the force and effect of a judgment of the Superior Court, yet it is clear that the determination of an administrative officer, like the judgment of a court, cannot be given conclusive effect outside of the administrative field, unless there has been notice and opportunity to be heard before the determination is made. Certainly the determination of an administrative officer cannot be given conclusive effect where enforcement of the judgment of a court would violate constitutional safeguards.

Probably to meet such objection, the statute further provides that any stockholder may appeal to the Superior Court from the levy of the assessment; the issue raised by the appeal may be determined as other actions in the Superior Court” (Subd. 13). What issue may be raised in such an action? Certainly the question of whether the Commissioner has under the statute any power to levy an assessment; for that question concerns the jurisdiction of the Commissioner and the jurisdiction of an administrative officer may always be challenged. If that challenge be successfully met, then the question of the effect of the determination by the Commissioner is primarily a question of statutory construction and secondarily of constitutional power.

The Supreme Court of the State of North Carolina, construing the statute in Corporation Commission v. Murphey (197 N. C. 42), said: When a banking corporation is adjudged insolvent, because its assets, available for the payment of its liabilities, are not sufficient for the payment of the same, each stockholder has notice that he is liable to an assessment on account of his individual, statutory liability. He is interested then only in the amount or amounts for which he may be assessed on account of such liability. Under the procedure prescribed by the statute, he has notice that the corporation has been adjudged insolvent; he also has notice of the amount of the assessment made against him. He may appeal from the assessment to the Superior Court of the county in which the proceeding for the liquidation of the corporation is pending; on his appeal, all issues raised by him, whether of law or of fact, involving his liability on the assessment, will be determined, in accordance with the procedure for the trial of actions brought and prosecuted in the Superior Court ” (p. 45). (Italics are mine.) For that reason the State court upheld the constitutionality of the statute and its decision was affirmed by the Supreme Court of the United States (280 U. S. 534) in a memorandum decision: Judgment affirmed. Coffin Brothers & Co. v. Bennett, 277 U. S. 29; Missouri Pacific R. Co. v. Nebraska, 164 U. S. 403, 414; Knights of Pythias v. Meyer, 265 U. S. 30, 32-33.”

The respondent Commissioner of Banks relies upon that decision as authority for his contentions here. An analysis of that decision shows that it barely touches the questions raised by the appellant here. In the earlier case, as the Supreme Court of North Carolina pointed out, the bank had been adjudicated insolvent. That adjudication was binding upon all the stockholders of the bank because there the stockholders were represented by the bank and it established conclusively that each stockholder was “ hable to an assessment on account of his individual * * * liability ” and the stockholder was “ interested then only in the amount or amounts for which he may be assessed on account of such liability.” The procedure prescribed by the statute, as construed by the court, provided for notice and opportunity to be heard upon every issue of law or fact as to the validity of the assessment, and certainly that must include the only issue in which the stockholder was then interested. Thus construed, the statute provided “ a mode only of commencing against [the stockholders] suits to enforce their statutory liability to depositors.’ ” (Coffin Bros. & Co. v. Bennett, 277 U. S. 29, 31.)

In the case now under consideration, there has been no adjudication that the bank is insolvent. On the contrary, the power of the Commissioner to liquidate the bank is derived from the voluntary act of the directors of the bank in closing its doors and placing its assets under his control, and it appears that the directors of the bank took such action for the purpose of making effective a proposed plan of reorganization which included an assessment of one hundred per cent upon the stockholders’ liability. It is true that this plan of reorganization has been long since abandoned and the Commissioner of Banks does not now contend that an assessment for the purpose of carrying out the plan of reorganization would be valid. His contention now is that in spite of the fact that there has been no prior adjudication of insolvency, where there is actual insolvency he may levy an assessment upon stockholders for the purpose of enforcing their statutory liability. He unquestionably has that power under the North Carolina statute as construed in Matter of Independence Trust Co. v. Keesler (206 N. C. 12), but only if in truth the bank is actually insolvent, and a stockholder, before his property can be used for the satisfaction of his statutory liability, must have opportunity to contest the validity of the assessment and its amount.

If the procedure authorized by the statute is only “ ‘ a mode * * * of commencing against [stockholders] suits to enforce their statutory liability to depositors ’ ” ('Coffin Bros. & Co. v. Bennett, supra), then it would seem that the State could not compel non-residents of that State to go to the State in response to notice not served upon them within the State. Here it must be remembered that in Corporation Commission v. Murphey (supra) the defendant was a resident of the State. No court has yet held that in an action brought in another State against stockholders resident there, the assessment of the Commissioner of Banks in North Carolina is conclusive, unless previously challenged by resort to the courts of that State.

In Bernheimer v. Converse (206 U. S. 516); Converse v. Hamilton (224 U. S. 243); Selig v. Hamilton (234 U. S. 652); Marin v. Augedahl (247 U. S. 142), cited by Judge Finch as authority for that proposition, the court held only that a judgment in a proceeding against the corporation would be conclusive as an adjudication in rem establishing the status of the corporation, in subsequent proceedings in personam against a stockholder of the corporation. There, as pointed out above, the stockholder was represented by the corporation. These cases might be applicable if these defendants challenged the right of the Commissioner of Banks to liquidate the bank; for there the corporation would represent the shareholders. Here the defendants challenge the determination of the Conunissioner made in the course of liquidation to enforce the shareholders’ statutory liability, and according to the construction which the Supreme Court of the State of North Carolina has placed upon the statute, there is no such liability unless the corporation is insolvent. Insolvency has not been adjudicated in any proceeding in rem against the corporation or in any other proceeding in which the defendants appeared or were represented. Indeed no issue as to the validity of the assessment which the appellant seeks to raise in this action has ever been adjudicated in any court.

It is said, however, that under the provisions of the statute, those issues may be adjudicated only in the statutory proceedings in the Superior Courts of North Carolina. The State could so provide in the case of resident stockholders. It is at least doubtful whether the statute intends that non-residents must resort to the courts of the State of North Carolina in order to challenge the validity of an assessment; for the statute provides as to them that after an assessment has been levied “ actions on said assessment may be instituted against any non-resident stockholder in the same manner as other actions against non-residents of the state” (Subd. 13). That provision seems to indicate that the Legislature intended to make a distinction between resident stockholders and non-resident stockholders in regard to the procedure for the enforcement of an assessment. Against resident stockholders the assessment should have “ the force and effect of a judgment ” subject, however, by attack through “appeal” (Subd. 13). Against nonresident stockholders judgment should be entered only in an action brought, like “ other actions against nonresidents of the state,” i. e., an action in which the court would obtain jurisdiction of the person of the non-resident stockholder. It seems to me difficult to give this provision any other construction, but question of construction is unimportant, for the Legislature would have no power to provide otherwise.

The State could not provide that without personal service within the State a personal judgment could be entered against a non-resident stockholder. (Pennoyer v. Neff, 95 U. S. 714.) True stockholders of a bank or other corporation may be bound by an adjudication against the corporation where by express or implied agreement of the stockholders the corporation has power to represent the stockholders. Outside that field the State may not deprive a stockholder of his right to litigate, in accordance with the requirements of due process, all matters affecting his rights. (Pope v. Heckscher, 266 N.Y. 114, 118.) In the cases there cited, the issue left undecided by prior adjudication where the stockholder was represented by the corporation, was only the fact of his status as stockholder and defenses personal to him.” Here no prior adjudication has been made of any issue affecting the validity of the assessment except the right of the Commissioner of Banks to liquidate the bank for reasons other than insolvency. Under the statute as construed in Corporation Commission v. Murphey (supra), all such issues could be raised in judicial proceedings in the State of North Carolina. The State cannot, by notice, compel a non-resident stockholder to resort to the courts of the State to present his defense; yet to sustain the action brought in New York against a stockholder resident here, it is said that the assessment becomes conclusive, because the New York stockholder has not, in obedience to notice, challenged the assessment by judicial proceedings in North Carolina. Thus the courts of this State are asked to give judgment upon a statutory liability without proof that the liability exists, except the fiat of an administrative officer, and without right by the defendant to challenge that fiat. Such procedure might be a convenient method of enforcing liability, but disregard of the requirements of due process cannot be justified on the ground of administrative convenience.

Finally it is argued that the judgment against these defendants may be sustained on the ground that even though the assessment is not a judgment entitled to full faith and credit, yet that the administrative act of the Commissioner establishes, either presumptively or conclusively, that the assessment is necessary. Analogy is found in decisions of the Supreme Court of the United States which construed the Federal statutes in regard to the statutory liability of national banks, as intended to make the determination of the Commissioner conclusive. In those cases the insolvency of the bank was not challenged; nor was there any other challenge relating to the jurisdiction of the administrative officer. (Kennedy v. Gibson, 8 Wall. [U. S.] 498; Casey v. Galli, 94 U. S. 673; Bushnell v. Leland, 164 U. S. 684.) Moreover it was pointed out in United States v. Knox (102 U. S. 422, 425) that although assessments made by the Comptroller are conclusive in a statutory action, yet if the Comptroller’s determination were unjust it cannot be doubted that a court of equity, if. its aid were invoked, would promptly restrain him by injunction.” Those cases have no application here, where the statute does not provide that in North Carolina the determination of the Commissioner shall be conclusive, and more important perhaps, where the jurisdiction of the administrative officer is challenged and the determination of the administrative officer is sought to be enforced, not in a statutory action, but in an action in another State to enforce the quasi contractual statutory liability of the stockholders. There, it seems clear, that the court may require proof which will enable it to fix the amount of such liability in the manner set forth in United States v. Knox (supra).

Nor c'an the judgment be sustained on the ground that there is a presumption that the Commissioner acted properly and within the scope of his powers and that, therefore, his determination that the levy was necessary establishes a prima facie case. The trial court did not so find and its judgment has been reversed on the law. Even assuming, though that assumption may be doubtful, that in some cases such a presumption might supply the place of evidence, no such presumption could possibly apply here. The Commissioner took control of the bank for reasons other than insolvency. He was required by statute to make an inventory of the assets and liabilities of the bank within thirty days after he took possession. Only after the expiration of the thirty days could he levy an assessment. It is clear that until that time the Commissioner of Banks could not determine whether the bankjvas insolvent, or the amount of the assessment which should be levied, yet it appears that on June 5th, seventeen days before the expiration of the time to make and state the inventory, he sent the stockholders notice that on the 22nd day of June, 1933, the Commissioner of Banks * * * will levy an assessment against the stockholders of the above named bank.” Now, though the directors closed the bank for the purpose of reorganizing it, though the Commissioner gave this notice long before the date at which the necessity for a levy was to be determined, and though the Commissioner never expressly found that the bank was insolvent, it is said that as matter of laux the courts of this State, at least in the absence of evidence to the contrary, must find that the Commissioner properly determined that the bank was insolvent, as a prerequisite to the assessment. Moreover, even then each stockholder would be interested in the amount of the assessment, and the Commissioner was required to determine that (Corporation Commission v. Murphey, supra); yet here it is undisputed that he never made such determination, but always levied a one hundred per cent assessment. (Cf. United States v. Knox, supra.) Under these circumstances the courts of this State may not grant judgment enforcing the stockholders’ statutory liability without proof that the occasion for enforcing such liability in the amount demanded had arisen.

The judgment of the Appellate Division should be reversed and judgment of Trial Term affirmed.

O’Brien and Loughran, JJ., concur with Finch, J.; Crane, Ch. J., concurs in result in separate opinion; Lehman, J., dissents in opinion in which Hubbs, J., concurs; Crouch, J., not sitting.

Judgment affirmed.