text:
    In the Matter of The St. Lawrence & Adirondack R. R. Co. to Acquire Certain Land of Julia De Camp.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Eminent domain—Possession—Code Civ. Pro., § 3379.
    The court is not authorized under § 3379 of the Code in protecting a possession obtained by means of a trespass, force or fraud. The section applies only to cases where the company may be in possession under a color of claim, or has acquired possession in good faith, although technically a trespasser without title.
    2. Same—Officer.
    One who is the duly authorized agent of the company to acquire real estate is an officer of the company within the meaning of § 525 of the Code, relating to verifications; it is not necessary that he be a general officer.

      Appeal from order of the supreme court, general term, fourth department, affirming order authorizing petitioner to continue in possession of the lands in question.
    November 21, 1891, the St. Lawrence & Adirondack Railroad Company, a railroad corporation organized under the general law of the state, made and filed a map locating the route of its road. The road as located crossed township No. 1, Brown’s Tract (so called), situate in the town of Wilmurt, in the county of Herkimer, over lands owned by Julia L. DeCamp, but whose deed was not recorded. On the 15th day of December, 1891, the railroad company commenced proceedings by petition for the condemnation of the lands, and concurrently therewith, upon petition and affidavits which set forth among other things that the company was in possession of the lands and was busily engaged in the construction of its railroad thereon, and “ had cleared the proposed right of way over said premises from trees, etc., to a large extent,” gave notice of application to the special term, to be made on a day named, for an order authorizing the company to continue in possession of the property sought to be condemned and for a stay of all actions and proceedings against it on account thereof. The motion was heard on the papers served by the company and upon affidavits in opposition, and resulted in the granting of an order by the special term January 2, 1892, authorizing the petitioner to continue in possession of the lands and staying all actions and proceedings against the petitioner on account thereof, upon the petitioner depositing in court with the clerk of Herkimer county the sum of $5,000, “ subject in all respects to the order of the court, to be held as security for the payment of the compensation which, may be finally awarded to the defendant as owner or party interested in said lands, and the costs of this proceeding.” The order was affirmed by the general term.
    Other facts are stated in the opinion.

      G. D. Adams, for app’lt; Charles K Snyder, for resp’t.

       Reversing 43 St. Rep., 967.

   Andrews, J.

The order of the special term, from the affirmance of which this appeal is taken, was applied for and granted under the law regulating “ proceedings for the condemnation of real property,” being chapter 95 of the Laws of 1890, which in form is an act to amend the Code of Civil Procedure by adding certain sections. thereto. The particular section under which the application and order was made is § 3379, and is as follows: “ At any stage of the proceeding (for condemnation) the court may authorize the plaintiff, if in possession of the property sought to be condemned, .to continue in possession, and may stay all actions and proceedings on account thereof, upon giving security or depositing such sum of money as the court may direct, to be held as security for the payment of the compensation which may be finally awarded to the owner thereof, and the costs of the proceeding, and in every such case the owner may conduct the proceeding to a conclusion if the plaintiff delays or neglects to prosecute the same.”

The circumstances under which the railroad company entered, into possession, as disclosed in the affidavits presented to the .special term, leave no room to doubt that the entry was tortious, under no claim or pretense of right and before any proceedings were instituted to acquire the title by condemnation, and in defiance of the will of the true owner. The time when the entry was made does not distinctly appear. The engineer and surveyor of the company went upon the lands to survey the route in June, 1891. It is alleged in one of the affidavits in the moving papers that the company had been in possession for a “ long time,” but for how long a time or when the possession was taken is not stated. The map locating the route was filed November 21, 1891, and it cannot be presumed that its possession antedated that time. The company having taken possession by a pure trespass, proceeded to construct its road-bed across the lands in question, cutting down and clearing away the trees and timber thereon, and was so engaged when it for the first time sought the intervention of the court.

The only justification for this violation of the right of property suggested in the moving papers is that lands were unoccupied, unimproved forest lands in the Adirondack wilderness, and that on searching the record title the attorneys for the company had been unable to ascertain in whom the title was vested, and further that the public interests required a prompt and vigorous prosecution of the enterprise and would suffer detriment from delay.

But it appeared from the uncontradicted affidavit on the part of the defendant, that she has continuously conducted the business ■of lumbering on this territory since 1886, running in connection therewith a steamboat on the Moose river flowing through the same, and that on October 22,1891, the defendant’s agent warned the engineer of the company not to trespass on the lands. The agent, again, December 15, 1891, saw the engineer, who informed him that the company had commenced building the road and that “ it would do no good to forbid. Mrs. De Camp had been forbidding all summer.”

It must be regarded as an established fact that the possession which the company asserted in the moving papers originated in a trespass, known to the company to have been such, and was taken under no mistake or misapprehension, and without color of authority. We entertain no doubt that under these circumstances the company was not, when the motion was-made, “in possession ■of the property sought to be condemned,” within the true meaning of § 3379, above quoted, and that the case presented did not authorize the order granted. The provisions of the act, chapter 95 of the Laws of 1890, are substituted for the prior acts regulating the condemnation of real property, which are thereby repealed, except in certain cases not here material to be stated. Section 3383.

The general railroad act of 1850 contained provisions regulating the procedure for the condemnation of lands by railroad companies. Under that act a company was not permitted to take pos session of lands of which condemnation was sought until the proceedings had terminated and payment or deposit of the compensation awarded had been made. Section 18. By § 21 provision was made for cases of defective title. It provided that where an. attempt had been made to acquire title in invitum, or otherwise,, and the title attempted to be acquired was defective, the company might proceed anew to acquire or perfect such title, “ and at any stage of such new proceedings the court may authorize the corporation, if in possession, to continue in possession, and if not in possession, to take possession and use such real estate during the pendency and until the final conclusion of such new proceedings, and may stay all actions or proceedings against the company on account thereof,” on making a deposit or giving security, as the court may direct, and authorizes the party interested in the leal estate to conduct the proceedings to a conclusion if the company delay or omit to prosecute the same.

It is evident that § 3379 of the act of 1890 was framed from § 21 of the general railroad act. Section 21 did not undertake to authorize the court to protect a purely tortious possession by the company, but a possession taken under a claim or color of right, where the title attempted to be acquired, and under which the company entered, was found to be defective. Section 3379» has, it is true, a broader scope. It is not limited to cases of defective title. Its language covers any case where the company may be in possession when the condemnation proceedings are instituted, whether it has before attempted to acquire title or not.

But it would be unreasonable to suppose that the legislature intended to legalize a pure and intentional trespass, or to protect a company in a possession so acquired. Such a construction would offer a premium for disorder and for acquiring possession of the property of another by stealth, force or fraud, and would attribute to the legislature an intention to legalize the commission of wrong and deprive the party injured of the right to resort to the courts for redress. It is not difficult to imagine cases where a company may be in possession under a color of claim, or have acquired possession in good faith, although technically a trespasser without title. To such cases only, we are persuaded, was the statute intended to apply.

The plea of public necessity set out in the moving papers, even1 if well founded, is entitled to no weight in support of the construction of § 3379 claimed by the company. This has ever been the ready and common argument to justify usurpation of authority inconsistent with private rights. But ample provision is made in § 3380 for cases where public interests will be prejudiced by delay pending the proceedings for condemnation. That section authorizes the court, where an answer to the petition has been interposed, to permit the applicant to enter immediately on the land sought to be condemned, and devote it temporarily to the public use on condition of depositing with the court the sum stated in the answer as the value of the property, to be applied as far as may be necessary for that purpose to the' payment of any award which may be made and the costs and expenses of the proceeding, or in case the proceeding should be dismissed or be abandoned, to the payment of any. damages sustained by the land owner by such entry, and his costs and expenses. This remedy was and is still open to the petitioner.

This section confirms the construction we have given to § 3379. The legislature evidently did not contemplate that a fraudulent or forcible entry might be made, and that a possession so acquired should stand in place of the lawful entry provided for in § 3380.

We have not deemed it necessary to decide the question of the constitutional power of the legislature to authorize a railroad company having no title and whose entry and possession is that of a trespasser, to continue in possession of lands pending condemnation proceedings, upon mating the deposit or giving the security provided by § 3379, and meanwhile debarring the true owner of his legal remedies. The occupation permitted by that section carries with it to the company the power to dig up the soil, construct its road-bed and commit acts in the nature of waste, and meanwhile the owner is deprived of the use of his land. If this constitutes a taking of the land within the constitutional guaranty, the legislature could not authorize such taking except on the condition of providing certain and adequate compensation to the owner.

Section 3379 provides for compensation in one event only, that is in case the proceeding for condemnation is terminated in favor of the company. It makes no provision for compensation in case of a successful resistance of the proceeding by the land owner. In that case his only remedy for any injury to his land, or any waste committed during its occupation by the company, would be by action. This, within the authorities in this state, is not compensation or a certain and adequate provision for compensation required by the spirit of the constitutional guaranty. Bloodgood v. The Mohawk & Hudson R. R. Co., 18 Wend., 9. The provision made by § 3380 fully satisfies the constitutional obligation, but § 3379 only provides for one of the alternatives which may happen. See Davis v. R. R. Co., 47 Cal., 517.

We leave this question open, since the order must be reversed on the ground that the company was not in possession within the meaning of § 3379.

The point is taken that the petition for condemnation was not properly verified, which if well founded would alone require a reversal of the order, as an order under § 3379 can only be made in the condemnation proceeding. The petition is to be verified in the .same form and by the same persons as pleadings in courts of record (§ 3366), and where the party is a domestic corporation, the verification of a pleading in its behalf must be made by “ an officer thereof.” Codé, § 525.

The petition in question was verified by the attorney for the petitionér, who stated in the verification that he “ is its duly authorized attorney and agent, appointed by the plaintiff to verify petitions and pleadings in behalf of the plaintiff for the institution of condemnation proceedings and otherwise; and is the agent of the plaintiff for the purpose of acquiring the real estate described in the foregoing petition,” and in the petition on the motion for the order now under review, which is made a part of the petition for condemnation, which is verified by the same person, it is stated “ that he is one of the agents for the plaintiff, duly authorized and appointed to purchase lands for its said railroad and secure its right of way."

We think the affiant was an officer of the corporation within the meaning of the Code. He was. not a general officer; but this is not required. He was invested with special and peculiar duties-relating to the acquisition of lands, and in the conduct of proceedings for condemnation. His relation to the company was that of a general agent in respect to those matters, acting under an appointment from the corporation. He was not simply an attorney acting under an ordinary retainer, but was engaged in a special department of the corporate business, having the general management thereof. The objection is not we think well taken. But for the reasons before stated the order should be reversed. '

It appearing, however, that condemnation proceedings are now pending and that the road of the petitioner is substantially completed, the matter should be remitted to the supreme court to enable the company to make such further application as it may be advised.

Order reversed and case remitted, with costs.

All concur, except Earl, Oh. J., taking no part, and Maynard,, J., not voting.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    Duncan F. Cameron, App’lt, v. The New York & Mt. Vernon Water Co. et al., Resp’ts.

      (Court of Appeals,

      Filed May 24, 1892.)

    Water companies—Consolidation.
    A proceeding for the consolidation of two or more water companies, lawfully begun before May 1, 1891, may be lawfully completed as if the statute authorizing the same had not been repealed. The saving clause in the repealing act, Laws 1890, chap. 567, operates on rights accruing and. inchoate, and protects the agreement of the directors although not ratified, by the stockholders until after May 1, 1891.
    Appeal from order of the supreme court, general term, second department, reversing order denying motion to vacate a preliminary injunction restraining the consolidation of the defendant, corporations, and granting the motion.

      É. T. Lovatt, for app’lt; Jno. B. Gleason, for resp’ts.

       Affirming 42 St. Rep., 912.

   Finch, J.

The principal question presented is whether the defendant companies may consolidate or should be restrained from so doing. They are companies incorporated for the purpose of supplying water to the municipality and its inhabitants and their separate corporate existence is conceded. It is not denied that, prior to May 1, 1891, there was competent statutory authority for the consolidation proposed, Laws of 1867, chap. 960; Laws of 1877, chap. 874, but it is insisted that the repeal of these acts. which accompanied the revision of .the corporation law took away the authority and left none in existence. Laws of 1890, chap." 563, 567. By § 22 of the last named act it was provided that such repeal should not affect or impair any act done or right accruing, accrued or acquired before May 1,1891, but the same may be asserted or enforced as fully and to the same extent as if such law had not been repealed. The agreement for consolidation here assailed was made between the companies through their trustees" three days before the repeal, and such officers called a stock- • holders’ meeting to "ratify the agreement and served and began the publication of the required notices. The proceeding thus commenced was regular and authorized and represented a right accruing or in process of enforcement The acts done were not impaired by the repeal, and the rights accruing were preserved and could be asserted and enforced as fully as if no repeal had been enacted. The proceeding for a consolidation lawfully begun could be lawfully completed as if the statute had not been repealed. The contention of the appellant .is that no right to consolidate accrued by the agreement of the trustees; that it could not become" a fixed right or the contract of the corporations until ratified by the stockholders’ meeting, and so no right accrued until after May 1, 1891, and therefore was not saved. That contention leaves out of view important and specific provisions of the saving clause. Mo act done is to be impaired. The directors’ agreement is impaired and utterly annulled if it cannot be ratified by reason of the repeal And the protection given operates not merely upon rights accrued but also upon those accruing, those in process of enforcement, those which, though inchoate and incomplete, have been asserted and are moving on though and authorized procedure to an-ultimate and final result That was exactly this case and the proceeding for a consolidation was not affected by the repeal.

It is claimed that the plaintiff Cameron was not served with' notice of the proposed agreement and of the stockholders’ meeting in due season. Proof was given that the notice was mailed to him April 30,1891. He claims not to have received it until May ■ 26th, but produces it, and it bears date April 29, 1891. There is-no reason to reject the positive proof that it was mailed on April 30th.

The order should be affirmed, with costs.

All concur.


author: Earl, Ch. J.

text:
    In the Matter of the Application of The Board of Street Opening and Improvement to Acquire Lands known as St. John’s Cemetery for a Public Park.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Eminent domain—Cemeteries.
    _ A cemetery owned by a church corporation, and in which far a long time thefe have been no interments, may be taken for a public park under the authority of chapter 320, Laws 1887.

      2. Same.
    The fact that lands have previously been devoted to cemetery purposes does not place them beyond the reach of the power of eminent domain.

      Appeal from order of the supreme court, general term, first department, affirming order appointing commissioners of estimate and assessment in proceedings to condemn lands for a public park.

      S. P. Nash, for app’lt; D. J. Dean, for resp’t.

       Affirming 42 St. Rep,, 836.

   Earl, Ch. J.

The act, chap. 320 of the Laws of 1887, provides that the board of street opening and improvement of the city of New York “is authorized and empowered to select, locate and lay out such and so many public. paries in the city of New York, south of One Hundred and Fifty-fifth street, as the board may from time to time determine;” and it confers upon the board power to acquire for park purposes by condemnation proceedings under the statute “any and all lands, tenements and hereditaments which said board shall deem necessary to be surveyed, used or converted for the laying out, surveying and monumenting of any parks so selected as aforesaid.* 'The board .instituted this proceeding under the act to acquire for park purposes the title to land below One Hundred and Fifty-fifth street known as St. John’s Cemetery, which belonged to a religious corporation in the city of New York, commonly called Trinity Church. It was established as a cemetery as early as 1801, and was used for that purpose until 1839, during which time about ten thousand human bodies had been buried therein. In 1839 an ordinance was passed by the city of New York forbidding interments south of Eighty-sixth street, and since that time no interments have been made in the cemetery, but Trinity Church has preserved and kept it in order and prevented any disturbance thereof.

It is contended on behalf of Trinity Church that under the' general authority given by the statute of 1887 this land, which had been devoted to cemetery purposes, could not be taken for a park. The authority conferred upon the board by the act is broad and general. It is authorized to take for park purposes any land south of One Hundred and Fifty-fifth street It is undoubtedly true that this general language would not be sufficient to authorize it to take land which had been previously taken for and was then devoted to a public purpose. Matter of the N. Y., L. & W. R. R. Co., 99 N. Y., 12; Suburban Rap. Tran. Co. v. The Mayor, 128 id., 510; 40 St. Rep; 498. But this was not a public cemetery, and so far as appears in this record had never been devoted to a public use. The public generally never had any right of burial therein. No burials therein could be made except by permits given by Trinity Church, and all the interments therein had been made by its- authority. The cemetery land was, therefore, devoted to a private and not to a public use. Matter of Deansville Cemetery Ass'n., 66 N. Y., 569.

The fact that lands have previously been devoted to cemetery purposes does not place them beyond the reach of the power of eminent domain. That is an absolute transcendent power belonging to the sovereign which can be exercised for the public welfare whenever the sovereign authority shall determine that a necessity for its exercise exists. By its exercise the homes and the dwellings of the living, and the resting places of the dead, may be alike condemned. It seems always to have been recognized in the laws of this state that under the general laws streets and highways could be laid out through cemeteries, in the absence of special limitation or prohibition. So it is provided in § 10 of chapter 138 of the Laws of 1847, entitled “An act authorizing the incorporation of rural cemetery associations,” that “ no street, road, avenue or thoroughfare shall be laid through such cemetery, or any part of the lands held by such association for the purposes aforesaid, without the consent of the trustees of such association, except by special permission of the legislature of the state.” The act, chapter 273 of the Laws of 1866, authorizing the incorporation of associations to erect monuments to perpetuate the memory of soldiers who fell in defense of the Union, contains a similar provision. The act, chapter 843 of the Laws of 1868, provides that no private or public road shall be laid out or constructed upon or through any graveyard or burying ground in this state, unless the remains therein contained are first carefully removed and properly re-interred in some other burying ground at the expense of the person desiring such road. The act, chapter 203 of the Laws of 1878, provides for the incorporation of pipe line companies, and empowers them to take land by condemnation proceedings; and in § 34 it is provided that “ no company formed under the provisions of this act shall locate or construct any line of pipe or pipe line through or under any building, door-yard, lawn, garden or orchard, except by the consent of the owner thereof, in writing, duly acknowledged before some officer authorized to take acknowledgments of deeds, and no pipe line shall be constructed through any cemetery or burial ground.” It is the necessary implication that, bun for the express prohibition contained in these statutes, under the general provisions of law authorizing the construction of streets, highways and pipe lines, cemetery lands would not be exempt from invasion.

We have not overlooked the cases in which the general language of statutes has been limited and curtailed of its literal import so as not to give the statutes effect beyond the intent of the law makers. But here we can find no sure ground for curtailing the scope of the statute which we have to construe. We certainly cannot be sure that the law makers, if they had known of this cemetery, disused for burials for fifty years, "and never more to be used for that purpose, located in the midst of a dense and teeming population, would have preferred that it should remain appropriated for the resting place of the long since dead rather than that it should be devoted to use for the comfort, welfare and health of the living. We cannot say that the taking of such a cemetery for such a use is such an unreasonable, unnatural, impolitic or unjust thing that we ought to hold that the general language of the statute does not authorize it to be done.

We have examined the authorities to which our attention has been called by the learned counsel for Trinity Church, and none of them in the least degree sustain the contention that lands devoted to private cemeteries owned by private individuals, or a private corporation, cannot be condemned under the general language authorizing their condemnation for public use. On the contrary the following authorities give strong sanction to the claim that such lands can be taken under general legislative authority for a public use, unless specially protected by statute. Wood v. The Macon & Brunswick R. R. Co., 68 Ga., 589; In re Opening of Twenty-second St., 102 Penn., 108; Egypt St., 2 Grant’s Cases, 455; 4 Brad. Sur., 503; Schoonmaker v. The Beformed Dutch Church, 5 How. Pr., 269; In the Matter of Albany St., 11 Wend., 148; Windt v. German Reformed Church, 4 Sand. Ch., 471.

What are the limits of the doctrine contended for on behalf of Trinity Church ? If a cemetery has for a century been disused as a place of burial, can it not, if the welfare of the public require it, be taken for public use? Countless millions of the human race have been interred in the earth, and must their remains be inviolably left where they are found so long as they can be distinguished from the earth which contains them? There is no law which prohibits the removal of human remains from a cemetery for lawful purpose and placing them elsewhere. On the contrary the law regulates their removal in certain cases. Laws of 1878, chap. 349; Laws of 1847, chap. 133, § 11, as amended by chap. 566 of the Laws of 1880. The remains of the dead in this cemetery can be removed without violating any law, and certainly without violating the law, Penal Code, § 311, against body stealing.

Trinity Church having given permits for burials in this cemetery without granting any interest in the lots in which the burials are made, could at any time remove the remains of the dead and place them in a suitable manner in some other cemetery. No one has acquired any right from it that their remains shall forever remain there. It could not remove them and leave them exposed in the street, or elsewhere. Such an act would shock public sentiment, and could probably be restrained by action in the name of surviving relatives. But that it could decently remove them and place them in some other proper place cannot be doubted. As said by the learned vice chancellor in Windt v. German Reformed Church, supra, “ The only protection afforded to the remains of the dead interred in a cemetery of this description is by the public laws prohibiting their removal, except on the prescribed terms; and in a still stronger public opinion. Probably these furnish all the protection which is consistent with the exigencies of a large city, the population of which increases with marvelous rapidity, and whose wants leave but little room for the remains of the dead, in the dense and crowded haunts and thoroughfares of the living.” By this proceeding the city of New York will acquire all the title of Trinity church, and it will thus be clothed as owner of the land with all the rights Trinity Church had ; and thus it will and must find.some way to dispose of the remains in a manner that will not shock the refined sensibilities or the pious sentiments of the living. It is not needful, however, to determine now what the precise duties and obligations of the city will be in reference to these remains. It is enough now to determine that there is no. obstacle in the way of the condemnation of the title to the fee of the land in this cemetery.

The order should, therefore, be affirmed, with costs.

All concur.


author: Finch, J,

text:
    The People ex rel. Locke W. Winchester, Treasurer of the National Express Co., Resp’t, v. Michael Coleman et al., Commissioners of Taxes, App’lts.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Taxes—Joint stock associations.
    A joint stock company is a partnership with some of the powers of a corporation, hut is not taxable under the Revised Statutes on its capital.
    2. Same.
    The difference between a corporation and a joint stock association is that the creation of the former necessarily destroys the common law liability of the individual members for its debts, and requires at the hands of the creating power an affirmative imposition of new personal liabilities or a specific retention of old ones from the destruction which would otherwise follow, while the formation of a joint stock company destroys no part or portion of the common law liability of its members for the debts contracted.
    Appeal from judgment of the supreme court, general term, first department, affirming judgment entered in favor of relators vacating assessment.

      William II. Clark and George 8. Coleman, for app’lts; James C. Carter, for resp’t

       Affirming 87 St. Rep., 120.

   Finch, J,

The relator was taxed upon its capital on the ground that it had become a corporation, within the meaning of the provision of the Revised Statutes which enacts that “all monied or stock corporations deriving an income or profit from their capital or otherwise shall be liable to taxation on their capital in the manner hereinafter prescribed.” 1 R. S., title 4, chap. 13, § 1.

The company was formed as a joint stock company or association in 1853 by a written agreement of eight individuals with each other, the whole force and effect of which in constituting and creating the organization rested upon the common law rights of the individuals and their power to contract with each other. Thé relation they assumed was wholly the product of their mutual agreement and dependent in no respect upon the grant or authority of the state. It was entered into under no statutory license or permission, neither accepting nor designed to accept any franchise from the sovereign, but founded wholly upon the individual rights of the associates to join their capital and enterprise in a relation similar to that of a partnership. A few years earlier the legislature had explicitly recognized the existence and validity of such organizations, founded upon, contract and evolved from the common law rights of the citizens. Laws of 1849, chap. 258.

That act provided that any joint stock company or association which consisted of seven or more members might sue or be sued in the name of its president or treasurer, and with the same force and effect, so far as the joint property and rights were concerned, as if the suit should be prosecuted in the names of the associates. But the act explicitly disclaimed any purpose of converting the joint stock associations recognized as existing into corporations by a section prohibiting any such construction. (Section 5.) In 1851 the act was amended, in its form and application, but in no respect material to the present inquiry.

There is no doubt, therefore, that when the company was formed and went into operation the law recognized a distinction and substantial difference between joint-stock companies and corporations, and never confused one with the other; and that the existing statute which taxed the capital of corporations had no ■reference to or operation upon joint-stock companies or associations.

But two things have since occurred. The legislature, while steadily preserving the distinction of names, has with equal persistence confused the things by obliterating substantial and characteristic marks of difference, until it is now claimed that the joint-stock associations have grown into and become corporations by force of the continued bestowal upon them of corporate attributes. It is said, and very probably correctly said, that the legislature may create a corporation without explicitly declaring it to be such, by the bestowal of a corporate franchise or corporate attributes, and the cases of banking associations are referred to as instances of actual occurrence. Thomas v. Dakin, 22 Wend., 9; Bank of Watertown v. Watertown, 25 id., 686; People v. Niagara, 4 Hill, 20. It is added that such result may happen even without the legislative intent, and because the gift of corporate powers and attributes is tantamount to a corporate creation. It is then asserted that a series of statutes, beginning with the act of 1849, has ended in the gift to joint-stock associations of every essential attribute possessed by and characteristic of corporations, Laws of 1853, chap. 153 ; Laws of 1854, chap. 245; Laws of 1867, chap. 289; that the lines of distinction between the two, however far' .apart in the beginning, have steadily converged until they have 'melted into Caen.other, and become identical; that every distinguishing mark and characteristic has been obliterated; and no reason remains why joint-stock associations should not be in all respects treated and regarded as corporations.

Some of this contention is true. The case of People ex rel Platt v. Wemple, 117 N.Y., 136; 27 St. Rep., 341, shows very forcibly how almost the full measure of corporate attributes has by legislative enactment been bestowed upon joint stock associations, until the difference, if there be one, is obscure, elusive and difficult to see and describe. And yet the truth remains that all along the line of legislation the distinctive names have been retained as indicative and representative of a difference in the organizations themselves. As recently as the acts of 1880 and 1881, which formed the subject of consideration in the Wemple case, the legis- . lature, dealing with the subject of taxation and desiring to tax business and franchises, imposed the liability upon “ every corporation, joint stock company or association whatever now or hereafter incorporated or organized under any law of this state." It is significant that the words “ or organized ” were inserted by amendment, and evidently for the understood reason that joint stock companies could not properly be said to be “incorporated,” but might be correctly described as “ organized ” under the laws of the state. This persistent distinction in the language of the statutes I should not be inclined to disregard or treat as of no practical consequence, when seeking to arrive at the true intent and proper construction of the statute, even if I were unable to discover any practical or substantial difference between the two classes of organizations upon which it could rest or out of which it grew ; for the distinction so sedulously and persistently observed would strongly indicate the legislative intent and so the correct construction.

But I think there was an original and inherent difference between the corporate and joint stock companies known to our law which legislation has somewhat obscured but has not destroyed, and that difference is the one pointed out by the learned counsel for the respondent, and which impresses me as logical and well supported by authority. It is that the creation of the corporation merges in the artificial body and drowns in it the individual rights and liabilities of the members, while the organization of a joint stock company leaves the individual rights and liabilities unimpaired and in full force. The idea was expressed in Supervisors of Niagara v. The People, 7 Hill, 512, and in Gifford v. Livingston, 2 Den., 380, by the statement that the corporators lost their individuality and merged their individual characters into one artificial existence; and upon these authorities a corporation is defined, on behalf of the respondents, to be “ an artificial person created by the sovereign from natural persons and in which artificial person the natural persons of which it is composed become merged and non-existent”

I am conscious that legal definitions invite and provoke criticism because the instances are rare in which they prove to be perfectly accurate; and yet this one offered to us may be accepted if it successfully bears some sufficient test In putting it on trial we may take the nature of the individual liability of the corporators on the one hand, and of the associates on the other, for the debts contracted by their respective organizations as a sufficient test of the difference between them, and contrast their nature and character.

It is an essential and inherent characteristic of a corporation that it alone is primarily liable for its debts, because it alone-contracts them, except as that natural and necessary consequence of its creation is modified in the act of its creation by some explicit command of the statute which either imposes an express liability upon the corporators in the nature of á penalty, or affirmatively retains and preserves what would have been the common law liability of the members from the destruction involved in the corporate creation. In other words, the individual liability of the members, as it would have existed at common law, is lost by their cremation into a coloration, and exists thereafter only by force of the statute, upon some new and modifying conditions, to some partial or changed extent, and so far preventing by the intervention of. an express command the total destruction of individual liabilities which otherwise would flow from the inherent effect of the corporate creation. The penalties sometimes imposed are of course new statutory liabilities which never at common law rested upon • the individual members. The retained liability occasionally established is in the nature and a parcel of such original liability, ■as wc had occasion to show in Rogers v. Decker, 131 N. Y., 490; 43 St. Rep., 781, but is retained by force of the express command of the statute, and. in that manner saved from the destruction ■which otherwise would follow the simple creation of the corporation. Ordinarily these individual liabilities exist upon other than common law conditions, and make the corporators rather sureties or guarantors of the corporation than original debtors, since, in general, their liability arises after the usual remedies against the corporation have been exhausted. But where that is not so, the invariable truth is that the creation of the corporation necessarily destroys the common law liability. of the individual members for its debts, and requires at the hands of . the creating power an affirmative imposition of new personal li- . abilities or a specific retention of old ones from the destruction which would otherwise follow. Exactly the opposite is true of joint stock companies. Their formation destroys no part or portion of their common law liability for the debts contracted. Those debts are their debts, for which they must answer. Per- ■ mission to sue their president or treasurer is only a convenient .mode of enforcing that liability, but in no manner creates or saves ■•it. • The statute of ■ 1853 did interfere with it. That act required, ■ in the first instance, a suit against the president or treasurer, and -so a preliminary exhaustion of the joint property. But that: act was modal, and determined the procedure. It suspended the common law right, but recognized its existence. We so held in Witherhead v. Allen, 4 Abb. Ct. App. Dec., 628, and at the same time said that the associations were not corporations, but mere partnership concerns. Even that mode of procedure has been ■modified by the Code, §§ 1922, 1923, so that the creditor, at ■ his .option, may sue the associates without first bringing his action .against the president or treasurer. These last and quite recent ■enactments show that the legislative intent is still to preserve and not destroy the original difference between the two classes of organizations ; to maintain in Ml force the common law liability of .associates, and not to substitute for it that of corporators; and preserving in continued operation that normal and distinctive diferencc, to evince a plain purpose not to merge the two organizations in one, or destroy the boundaries which separate them. That intent, once clearly ascertained, determines the construction to be, adopted, and may be the only reliable test in view of the power of the state to clothe one organization with all the- attributes of the other.

The drift of legislation has been to lessen and obscure the original and characteristic difference. On the one hand, corporations -have been created with positive provisions retaining more or less the individual liability of the members, and on the other, the joint stock companies have been clothed with most of the corporate attributes, but enough of the original difference remains to show that our legislation not only carefully preserves the distinction of names, but sufficient also of the original difference of character and quality to disclose a clear intent not to merge the two.

We may thus see upon what the legislative intent to preserve them as separate and distinct is founded and what distinguishing ■characteristics remain. The formation of the one involves the merging and destruction of the common law liability of the members for the debts, and requires the substitution of a new or retention of the old liability by an affirmative enactment which avoids the inherent effect of the corporate creation; in the other the common law liability remains unchanged and unimpaired, and needing no statutory intervention to preserve or restore it; the debt of the corporation is its debt and not that of its members, the debt of the joint stock company is the debt of the associates, however enforced; the creation of the corporation merges and drowns the liability of its corporators, the creation of the stock, company leaves unharmed and unchanged the liability of the associates; the one derives its existence from the contract of individuals, the other from the sovereignty of the state. The two are alike, but not the same. More or less they crowd upon and overlap each other, but without losing their identity : and so, while we cannot say that the joint stock company is a corporation, we can say, as we did say, in Van Aernam v. Bleistein, 102 N. Y., 360; 2 St. Rep., 470, that a joint stock company is a partnership with some of the powers of a corporation. Beyond that we do not think it is our duty to go.

The order should be affirmed, with costs.

All concur.


author: Peckham, J.

text:
    The People ex rel. Benjamin F. Young, Agent, Resp’t, v. Clarence Willis, Clerk, et al., App’lts.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Taxes—Assessment of personal property—Contracts for sale of land.
    The assessors of the village of Bath have power to assess contracts for the sale of land situated outside the town as personal property of the agent or trustee holding the same for non-resident owners.
    '3. Same.
    As the statute relating to the assessment and taxation of these contracts applies only to town taxation, they are properly assessable for municipal taxat on against the relator as agent, by virtue of the general laws defining such contracts to be personal property and providing for an assessment against an agent for property so held by him.
    •3. Same—1 R. S., 419, § 3.
    Such contracts are not exempt under 1 R. S., 419, § 3, relating to foreign, capital transmitted for investment by a foreign capitalist.

      Appeal from judgment of the supreme court, general term, fifth department, affirming judgment reducing assessment against personal property of relator and directing repayment of the excessive taxes paid.

      Edward Eassett, for app’lts; M. Rumsey Miller, for resp’t.

       Reversing 35 St. Rep., 176.

   Peckham, J.

The general policy of this state in regard to taxation is to tax all property which is within it and which receives' protection from its laws and their enforcement. This policy has been declared in set terms by that section of the Eevised Statutes which provides that “ all lands and all personal estate within this state, whether owned by individuals or by corporations, shall be liable to taxation, subject to the exceptions ” specified. Part 1, chap. 13, tit. 1 of E. S.; 1 E. S., 387, § 1. The rule is taxation for property within the state, and exemption is the exception. The words used are wide and general.

By § 3 of the above cited chapter and title, the terms “ personal estate ” and “ personal property ” whenever they occur in that chapter must be construed to include all debts due from solvent debtors, whether on account, contract, note, bond or mortgage, etc. By § 5 of title 2 of the same chapter, 1 E. S., 389, it was originally provided that every person should be assessed in the town or ward where he resided when the assessment was made, for all personal estate owned by him, including all such personal estate in his possession or under his control as trustee, guardian, executor or administrator, and in no case could property so held under either of these trusts be assessed against any other person. In 1833 the-legislature passed an act providing for a special manner of assessing contracts such as are involved in this case. Laws of 1833, chap. 250. This act was repealed in 1837. Chap. 137, Laws of 1837. In 1851 the legislature again passed an act for the taxation of these contracts. Chap. 371, Laws of 1851. The important feature of that act is as follows: “ Sec. 1. All debts owing by inhabitants of this state to persons not residing within the United States for the purchase of any real estate shall be deemed personal property within the town or county where the debtor resides, and as such shall be liable to taxation in the same manner and to the same extent as the personal property of citizens of this state.” The act then provided special methods of assessment and for the collection of taxes upon the contracts thus described.

In People v. Trustees of the Village of Ogdensburgh, 48 N. Y., 390, it was held that this last named act applied only to taxation in towns, and that the proceedings for the collection of the tax provided for in the act could not be applied to taxation in villages. In this same year of 1851, the legislature amended the 5th section of the revised statutes above cited (1 E. S., 389), and inserted the word “ agent,” so that the section should read that every person should be assessed in the town or ward where he resided when .the assessment was made, for all personal estate owned by him, including all personal estate in his possession or under his control as agent, trustee, etc., and the provision in the section that in no case should property held under either of the trusts so named be assessed against any other person was retained. ■ This was the general law of the state and it provided for the assessment against agents for all personal property of their principals held by them.

Looking at the extensive signification given to the words “ personal estate ” or “ personal property ” by the Eevised Statutes (1 E. S., 388), it has been held that contracts such as those in question here were personal estate and that they existed and had a situs at the place where they were held. People v. Trustees, etc., 48 N. Y., supra. As this method of assessing an individual for personal property in his possession or under his control as agent is provided by a general statute relating to assessment and taxation, and as the special proceeding provided by another statute for assessing such contracts as these only applies to town taxation, it would seem to follow that in a proceeding which did not involve an assessment for town taxation, the general statute would apply, unless there were some other special provisions which covered the case to the exclusion of the general statute.

The relator makes that claim in this case. He says that the system of taxation for municipal purposes is distinct and independent of that for town, county or state purposes, and that the general provisions of the Eevised Statutes regarding taxation, as they have been from time to time amended, apply only to municipalities so far as they are expressly or impliedly adopted by the charters or laws regulating taxation for municipal purposes. This doctrine has received the approval of this court. Mayor of Troy v. The Mutual Bank, 20 N. Y., 387.

It is then further argued by the relator that if there be any law providing for an assessment of these contracts for village purposes, it is the special statute already cited in regard to their assessment for town taxation.' This statute it is urged is referred to and made a part of the scheme (if there be any), for village taxation by reason of a reference to the powers and duties of town assessors contained in the village charter when treating of village assessors.

For the purpose of sustaining the assessment herein the defendants refer to the same statutes cited by the relator, and they claim that in this case, in the charter and in other laws which in their general application embrace the village of Bath, there is a direct reference to the general law in regard to assessments already spoken of, and the general law is thereby made applicable to the village assessors of Bath and they therefore maintain the legality of this assessment.

The first provision in the charter to which our attention is called is to be found in § 2 of title 4 of chapter 264 of the Laws of 1851. Laws 1851, pages 514, 520. It reads as follows: The assessors elected under this act shall, within the village of Bath, exercise all the powers and perform all the duties of corporation assessors, in the same manner as town assessors, according to the laws of this state now in force, and any laws which may from time to time be hereafter enacted.

The relator says this section makes it incumbent upon the village assessors, in making their assessments, to follow precisely and in everything the provisions of all laws, general or special, which embrace the subject of town assessors and their powers and duties in making assessments, and that as town assessors must specially assess these contracts under the special act, village assessors must do the same. This claim entirely ignores the method of proceeding laid down in that act for town assessors and makes no allowance for the fact that the plan of those proceedings is such that it is impossible to carry it out so far as it concerns village assessments. People v. Trustees of Ogdensburgh, supra, at page 398. We put another construction on this language.

The effect of this section is to authorize the village assessors to exercise within the village the powers of town assessors-so far as the same may be applicable to the different situation. The general law of the state provides that the town assessor shall assess a person in the town where he resides, and such assessment shall include all personal estate in his possession or under his control as agent, trustee, etc., and in no case shall such property be assessed against any other person. By virtue of the above mentioned provision in the charter of the village, this power is transferred to the village assessor, and he must assess a resident in the village where he resides, and such assessment must include all personal estate in his possession or under his control as agent These contracts are in the possession of the relator' as agent, and they are personal property. The inference cannot be made that they are to' be assessed as provided for by the special act relating to towns, because as we-have seen the act cannot be administered in villages without, further legislation.

In giving village assessors the same powers within their village as those exercised by town assessors, it cannot be supposed the legislature meant to endow the former with powers under-an. act which by its terms relates only to assessments for town taxation, and the provisions of which are so drawn as to be wholly inapplicable to villages. The authority must plainly be measured by the circumstances under which the power is to be exercised,, and where the circumstances are substantially the same the village assessor looks to the law applicable to the town assessor for his guide. Thus when he comes to inquire how personal property in the hands of an agent shall be assessed, he finds the general law which is applicable to a town assessor and he governs-himself by it. He is not to be governed by a special law applicable to one species of personal property only and which serves as a guide to the town assessor in regard to town taxation, because he sees that the provisions of that act not only are confined to town taxation, but because it is plain, as is said in the Ogdensburgh case, that the provisions for making the assessment, and for collecting the tax do not apply to taxation in villages. Hence it can be unhesitatingly maintained that this reference in the charter to the powers and duties of town assessors does not, make the special statute for the assessment of these contracts part, of the law relating to the village of Bath. It does make the general law applicable to it

Other legislation is referred to upon this subject. Chapter 308-of the Laws of 1884, entitled “An act to confer additional powers upon the trustees and officers of incorporated villages in the state of Hew York,” is cited, and it provides that the officers of a village created by special charter shall have the same powers which, are prescribed in any general act for the incorporation of villages, except as such special charter may be in conflict with any provision of the general act.

Turning to chapter 90 of the Laws of 1883, we find an act amending the general act for the incorporation of villages, which was passed in 1870, and is known as chapter 291 of the Laws of that year. The act of 1883, § 13, provides among other things that in cases where the assessors shall become elective officers under that act, they shall have the power of town assessors, and be subject to the laws applicable to the same, subject to the provisions of that act.

The same reasoning which has just been suggested regarding a similar provision in the charter of the village of Bath, applies with the same force here. A statute which applies only to one certain kind of personal property, and in relation to town taxation only, and which could not be carried out in relation to village taxation without amendment, cannot be held to be applicable to village assessors by reason of the wording of these acts of 188S and 1884.

One other citation from the charter is made by the relator, which is contained in § 2 of title 5. It is as follows: The trustees-are authorized and empowered to raise money by tax, to be assessed on the estates, real and personal, within the corporation,- and collected from the several owners thereof, whether such owners are residents of the corporation or not, to pay all contingent and other expenses of the corporation; and also to carry into-effect the several powers and privileges granted by this act as-herein provided.

It is claimed that by virtue of this section the assessors had no-power to make an assessment against any one but the owner by name, whether he was a resident or a non-resident.

It will be noticed that this section does not refer to the assessors- or assume to point out the method by which they shall make an assessment. It furnishes no rule to them upon the subject. It was evidently not intended to refer, and it does not in fact refer to the administrative details by which an effective and legal assessment was to be levied and a legal tax collected. It in effect did no more than furnish a general power to the trustees of the village to raise money by taxation, and it declared in substance that the taxable property should consist of all the estates, real and personal, within the corporation, and should be paid eventually by the-owners thereof, whether they were residents of the village or not How this result was to be accomplished the section did not point, out, nor was there any necessity for, or appropriateness in making the attempt. The method or plan by which assessments were to-be made, by whom and at what time and in what manner, were subjects of other sections treating of assessments. This section ■does not in any manner restrict or alter the provision otherwise made in the charter in terms or by reference to some other statute, by which an assessment is to be made and as to its form and method.

It is like the general provision in the Bevised Statutes that “All lands and all personal estate within this state,' whether owned by individuals or by corporations, shall be liable to taxation, subject, to the exceptions hereinafter specified.” It is the statement of a general proposition or policy, and the means or method by which it is to be carried out are left for treatment under appropriate heads.

We are of the opinion that the form of this assessment was proper, and that as the statute relating to the assessment and taxation of these contracts applies only to town taxation, they were properly assessed for municipal taxation against the relator as agent by virtue of the general laws defining such contracts to be personal property and providing for an assessment against an agent for property so held by him.

There is one other ground taken by relator in opposition to this assessment.

• Claiming that, if assessable at all, these contracts must be assessed under the special act already referred to, he yet urges that even such act does, not apply and that the contracts are exempt from municipal taxation under that provision of the Bevised Statutes (1 B. S., 419, § 3) which reads as follows: When any bond, mortgage, note, contract, account “ or other demand, belonging to any person, not being a resident of this state, shall be sent to this state for collection, or shall be deposited in this state for the same purpose, such property shall be exempt from taxation; and nothing contained in this chapter shall be construed to render any agent of such owner liable to be assessed or taxed for such property; but every such agent shall be entitled to have any such property • deducted from his assessment, upon making affidavit before the assessors, at the time appointed by them for revising their assessments, that such property belongs to a non-resident owner, and therein specifying his name and residence. 1 B. S., 419, § 3.

In 1851, by chapter 176 of the laws of that year (already herein referred to), an amendment was added to the fifth section of article 1; title 2, chapter 13 of the Bevised Statutes, 1 B. S., 389, •§ 5, by which agents of moneyed corporations or capitalists were ■exempted from taxation under that section for any moneys in their possession or under their control transmitted to them for purposes of investment or otherwise.

Under the provisions of the Bevised Statutes as thus amended by the act oi 1851, it was argued in a case before this court, that the exemption continued only during the time the moneys remained uninvested, and that when invested, if the securities remained in the hands of the agent, they were taxable. Such construction was held impossible by reason of the provisions of the section in the same chapter under which this relator claims exemption and which is above quoted in full. 1 R. S., 419, § 3., These two provisions it was held were clearly designed to afford the foreign capitalist who invested his funds in this state every conceivable protection, and that his capital should be exempt from taxation whether invested or not, and whether the securities were taken away or remained here for collection. Williams v. Board of Supervisors, 78 N. Y., 561; People ex rel. v. Comrs. of Taxes, 42 Hun, 560; 4 St Rep., 471; People ex rel. Cochrane v. Coleman, 128 N. Y., 524; 40 St. Rep., 493.

The foundation for the exemption consists in the fact that it is in substance and effect foreign capital transmitted for investment by the foreign capitalist. This is no such case. The relator is agent of the owners of the real estate lying within this state, and they own as trustees and they are residents of England, and their cestui que trust is also a resident of that country. The trust was created many years ago and a sale of the lands brings no capital from abroad. I7o funds have been transmitted by reason of these sales by any foreign capitalist for purposes of investment or otherwise. On the contrary these contracts represent the moneys or some part thereof to be paid the foreign residents through their agent here, as the purchase price of lands in this state previously owned by them as trustees under a trust long ago created and known to all lawyers in western 27ew York as the trust of the “ Pulteney estate,’’ and so described in the record in this case. 27either the letter nor the spirit of either of the above cited statutes applies in this case.

We think the orders of both the general and special terms are erroneous and they must be' reversed and the assessment origi•nally made by the defendants must be sustained, with costs in all courts.

All concur. „


author: Andrews, J.

text:
    John Reed, App’lt, v. George McConnell, Survivor, Resp’t.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Pleading—Cause op action—Judgment must bb on cause ci? ACTION PLEADED.
    The plaintiff’s complaint contained two causes of action: (1.) for work, labor and services, and money paid and materials furnished by him in building a tannery on premises of defendants; (2) that the were rendered and furnished under an agreement that they would take him into-partnership, which they afterwards refused to do, and he claimed damages. On the-trial it appeared that the oral agreement contemplated a, partnership for twelve years, but plaintiff was permitted against defendants’ objection to show the value of a bark contract obtained by him for the supply of the tannery, in order to show what the profits of the business would have been. At the conclusion of plaintiff’s evidence defendants moved to dismiss the complaint on the ground that the contract was void under the statute and that the evidence as to the bark contract was immaterial, and the motion was denied, and when plaintiff rested defendants specifically took the point that the contract proved was void by the-statute, but the trial judge gave judgment for plaintiff including the value of the bark contract. Held, error; as the recovery was on a cause of-action not alleged in the complaint, and the defendants had not by their silence or conduct acquiesced in the trial of the new cause of action on. which the judgment proceeded.

      3. Same—Waiver.
    The defendants did not waive their rights by not objecting to the evidence of the value of the bark contract when it was first offered specifically on the ground of the statute, as plaintiff had ample notice of the ground taken at the close of the evidence and applied for no amendment of the complaint.
    Appeal from judgment of the supreme court, general term, third department, reversing judgment for plaintiff, entered upon decision of special term upon a trial without a jury.

      Matthew Hade and Edgar T. Brackett, for app’ltF. A. Smith, for resp’t.

       Affirming 41 St. Rep., 815.

   Andrews, J.

This is an appeal from an order of the general term, reversing a judgment for the plaintiff entered upon a decision of the court on a trial without a jury, and granting a new trial. It not appearing that the order of reversal was upon the facts, it is conclusively presumed that the reversal was upon the law, and the order must be sustained if it appears that any material error of law, pointed out by proper exception, was committed on the trial against the party against whom the judgment was rendered

The court on the appeal from the order will scan the whole record, and all exceptions taken on the trial by the party obtaining the order of reversal are before the court for consideration. 'The court is not confined to the examination-of the exceptions upon which the general term granted the order. If upon any ground the order is justified, it must stand, even although..we may disagree with the general term as to the particular ground upon which it proceeded. The whole record is before us and all the exceptions, and the respondent may challenge every ruling of law against him contained in the record, and the court must find that no error was committed to his prejudice in any ruling to which exception was taken before it can reverse the order granting a new trial. People v. Board of Supervisors, 70 N. Y., 228; Mackay v. Lewis, 73 id., 382; Roberts v. Baumgarten, 126 id., 341; 37 St. Rep., 482.

There is an insuperable difficulty in the way of the plaintiff on this appeal. He has been permitted to recover upon a cause of action not alleged in the complaint. He sought in his pleading to recover damages for the breach of an alleged contract. He failed to establish that any valid contract was made, for the reason that the contract proved was void by the statute of frauds. It was substantially admitted by the plaintiff on the trial that the contract sued upon was within the statute, but it was contended on his behalf that the defendants having insisted upon the statute as a bar to the enforcement of the contract, the plaintiff was entitled to recover in this action the value of any property received by the defendants from the plaintiff thereunder.

The defendants insisted that this was a new and different cause of action, not within the pleadings, and inconsistent with ■the cause of action alleged in the complaint The plaintiff made ho application for amendment. The trial judge overruled the contention of the defendants and awarded to the plaintiff, among ■other things, the sum of $12,500, as the value of a bark contract, which the court found was a contribution of the plaintiff to the tannery enterprise, which was the subject of the void contract.

For a proper understanding of the question, some of the essential facts should be stated. The complaint contained two causes of action. The first was for work, labor and services, and money paid -and material furnished by the plaintiff in building a tannery on premises of the defendants. The complaint for a second cause of action alleged that the work, labor and services, ■and the money and materials mentioned in the first cause of action, were rendered and furnished “ under an agreement with the defendants that they would take the plaintiff as an equal partner with the defendants in the tannery business to be carried ■on at the said tannery ; that after the completion of said tannery by the plaintiff the defendants refused to take the plaintiff in as ■said partner, although often requested so to do, by means whereof the plaintiff has been damaged in the sum of fifteen hundred dollars, wherefore the plaintiff demands judgment,” etc. This was plainly a cause of action for damages for the breach by the defendants of the contract to admit the plaintiff as a partner in the tannery business. The nature of the alleged contract, whether verbal or written, was not alleged in the complaint.

The answer denied the contract alleged, and interposed several ■defenses and counterclaims.

• On the trial the plaintiff, in support of the second cause of •action, gave evidence tending to show that in March, 1877, the plaintiff solicited the defendants to build a tannery on premises for which he had a contract of purchase. The plaintiff, at the same time, held a verbal option from one Griffin to purchase from the latter 50,000 cords of bark from his lands in the vicinity for the price of fifty cents a cord. It was thereupon verbally agreed between the plaintiff and defendants that the defendants should furnish the plaintiff the money necessary to complete the purchase of the tannery site and erect the tannery.,

The plaintiff was to cause the proposed site to be conveyed to the defendants, and to give the defendants the benefit of his verbal option from Griffin for the purchase of the 50,000 cords of bark, and procure Griffin to enter into a contract with them for the sale of the bark on the terms of the verbal option. The plaintiff was to superintend the building of the tannery, and when completed was to conduct the tannery business therein for the defendants, and was to receive as his compensation $1,000 a year and one-third of the net profits.

The tannery site was conveyed to the defendants; the plaintiff procured Griffin to enter into a contract with the defendants to ¡sell to them the 50,000 cords of bark at the price of fifty cents a ■cord; the tannery was built, and the plaintiff conducted the business therein until October, 1878, when, as is found by the trial judge, the defendants in violation of' their contract, and without cause, discharged him, and refused further to carry out their contract with him. The evidence shows that it was contemplated •that this arrangement between the parties was to continue twelve years, that being the period which would as supposed be required to exhaust the. bark purchased of Griffin.

The plaintiff as part of his case was permitted, against the objection of the defendants that the evidence was incompetent and immaterial, to show the value of the bark contract. On the assumption that the contract between the plaintiff and the defendants was valid, the evidence was competent.

The contract had been wrongfully broken by the defendants. By the contract the plaintiff was to share in the profits of the business. The fact that the defendants had a favorable contract, for the supply of the tannery with bark might properly be considered in determining what the profits of the business would have been, and the loss sustained by the plaintiff from the breach of the contract of employment. When this evidence was intro.duced no question had been specifically raised as to the validity of the contract under the statute of frauds either in the pleadings or on the trial. But at the conclusion of the plaintiff’s evidence the defendants moved to dismiss the complaint as to the second count on the ground that the contract proved was void under the statute, and also to strike out all the evidence as to the bark contract as immaterial. The motions were denied, and exceptions, were duly taken.

Upon the conclusion of the evidence, the plaintiff’s counsel insisted that “ the contract being void by the statute of frauds, the plaintiff is entitled to recover the value of his contribution to the tannery enterprise,” and, among other items, the value of the bark contract.

This claim was resisted by the counsel for the defendants on the ground that the plaintiff having failed to establish the cause of action on the contract, was not entitled to recover on the theory that, the contract being void, the defendants were liable for the value of property contributed by the plaintiff thereunder. The trial judge overruled the contention of the defendants and awarded judgment for the plaintiff, which included the sum of $12,500, the value as found of the bark contract.

This recovery was in violation of the rule that no judgment can be sustained in favor of a plaintiff on a cause of action not alleged in the complaint, unless the defendant by his silence or conduct acquiesced in the trial of the new and different cause of action, upon which the judgment proceeded.

The tendency of modern legislation justly favors a liberal construction of pleadings in the interest of substantial justice. The Code requires that the allegations of a pleading shall be liberally construed to promote this object. Code, § 519. The courts, adopting the new spirit, no longer apply the technical and artificial rules which formerly prevailed, whereby the rights of parties were often subordinated to the mere form in which the rights were asserted. But the rule that a party7 coming into court asserting one cause of action cannot recover on another and different one is unchanged. It is essential to the orderly administration of justice and the protection of the rights of litigants. Lawyers could never safely advise their clients and parties would frequently be. misled if any other rule was admitted. Where a cause of action is imperfectly stated, or on the trial a variance is disclosed between the pleadings and the proof, not affecting the essential nature of the claim asserted, the court has ample power to grant relief without turning a party out of court.

But where the allegation of the complaint is unproved, not in some particular or particulars only, but in its entire scope and meaning, it is not a case of variance, but a failure of proof, and no judgment can be rendered in favor of the plaintiff upon the pleading as it stands. This is the statute rule and was the rule of the courts before the statute. The authorities upon these general propositions are numerous. - We refer to some recent ones only. Southwick v. First Natl. Bank, 84 N. Y., 420 ; Truesdell v. Sarles 104 id., 167 ; 5 St. Rep., 565.

Testing the present case by these rules, it is clear that the judgment rendered for the plaintiff for the value of the bark contract was erroneous. The plaintiff alleged a contract in his second ■count, and its breach, and demanded damages- in the sum of .$15,000. It turned out on the trial that he had no contract and therefore that the defendant could not have broken any contract with the plaintiff. The cause of action alleged was not only not made out, but was affirmatively disproved. There was no basis for any recovery by the plaintiff on his second cause of action. The cause of action should have therefore been dismissed. But he was allowed to recover notwithstanding his failure to prove the contract he alleged, because in acting under the void contract he had pursuant to its terms transferred certain property to the defendants, and it is claimed that the defendants having insisted that the contract was void under the statute, they were bound to restore to the plaintiff any property, or the value of any property they had acquired from or through him in pursuance of the contract and before its repudiation. The general principle that a party to a void contract cannot repudiate it and retain what he has received from the other under it, is well settled. Day v. N. Y. C. R. R. Co., 51 N. Y., 583, and cases cited. The law in such case will raise an implied assumpsit in favor of the other party, to accomplish justice and prevent fraud. But a cause of action founded on a contract to recover damages for its breach, and a cause of action to recover the value of property received thereon by the party who aferwards repudiates it as void by the statute of frauds, are fundamentally different

The claim that there was no valid contract, and that, therefore, there is a right of action for the value of property received under it, is totally inconsistent with a claim to enforce the contract and to recover upon it It is quite immaterial that the value of the bark contract may have been a material fact in support of the -cause of action alleged, or that it supplied the basis for a recovery in an action brought upon the theory that the contract was void. This action was not brought upon that theory, and because facts are developed in the trial of one cause of action which suggest a right of recovery in an action for a different cause does not .authorize the substitution of the latter cause for the one alleged.

The argument urged by the appellant that the defendants waived their rights by not objecting to the evidence of the value of the bark contract when it was first offered specifically on the-ground of the statute, is not, we think, tenable. They objected generally that the evidence was incompetent and immaterial. When the plaintiff rested, they specifically took the point that the contract proved was void by the statute. The plaintiff had ample notice of the ground taken. He applied for no amendment of the complaint, but on the contrary insisted that he was. entitled to recover the value of the bark contract under the pleadings as they stood.

We are also of opinion that there was error in computing the amount of the money judgment awarded to the plaintiff under the first count of the complaint.

But without going into this matter in detail, and without considering the question upon which the general term proceeded, we think the order should be affirmed, for the reason that the plaintiff failed to establish the second cause of action stated in the complaint, and that the recovery of the value of the bark contract (if recoverable at all) could not be had in this action.

The order should be affirmed and judgment absolute directed for the defendants on the stipulation, with costs.

All concur.


author: Bari,, Oh. J.

text:
    William S. Williams, App’lt, v. The United States Trust Company of New York, Resp’t.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Pledge—Securities.
    Plaintiff borrowed $300,000 of defendant upon his note - and pledge! $400,000 worth of bonds as collateral security, executing an agreement that defendant might sell the bonds without notice upon the non-perform-once of plaintiff; and if the securities fell so that the margin on the loan was less than twenty per cent, the difference should be made good, and upon a failure to do so the note should become due forthwith, and the defendant be at liberty immediately to sell the securities. The margin, by-depreciation of the securities, fell below twenty per cent; the defendant elected that the note should become due, and sold the securities. Held, that no wrong was done to the plaintiff by the sale of the bonds.
    2. Same—Waiver.
    After the loan matured plaintiff wrote asking a few days indulgence, which was given for a month, when defendant began to make sales of the stock, reporting to plaintiff, who found no fault, and when the securities had fallen so as to be worth less than the loan, defendant sold them fairly in the market from time to time. Held, that the rights of the parties, under the written agreement remained unchanged.
    Appeal from judgment of the supreme court, general term,, first department, affirming judgment dismissing the complaint and directing a judgment for défendant upon a counterclaim.

      John It, Eos Passos, for app'lt; Joseph If. Ghoate and Edward W. Sheldon, for resp’t.

       Affirming 38 St. Ben., 701.

   Bari,, Oh. J.

On the 1st day of March, 1884, the plaintiff, borrowed of the defendant the sum of $300,000, and as collateral security for the same pledged to it bonds of the par value of $400,000. At the same time he executed and delivered to it the following instrument embodying the agreement between him and it:

“ 300,000. New York, March 1, 1884.

Six months after date, without grace, I promise to pay to the United States Trust Company of New York, at the office of said •company in the city of New York, three hundred thousand dollars, for value received, with interest at the rate of 4 per cent per annum, having pledged to the said company as security (with authority to sell the same or any securities that may be substituted in lieu thereof, on the non-performance . of the promise in such manner as they in their discretion may deem proper, without notice, either at the New York Stock Exchange or at public or private sale, and to apply the proceeds thereon), four hundred thousand dollars Louisville & Nashville R. R. Co. 1st Mtge. Bonds, N. O. and Mobile Division. In case of depreciation in the market value of the security hereby pledged, or which may hereafter be pledged for the loan, a payment is to be made on account, or additional approved security given, so that the said market value •shall always be at least twenty per cent more than the amount unpaid of this note.

“In case of failure to do so, this note shall be deemed to be due and payable forthwith, anything hereinbefore expressed to the contrary notwithstanding, and the company may immediately reimburse itself by sale of the security.

“W. S. Williams,

“ 32 Broad street,

“ Office Y. S. & Co.”

In July, 1884, the plaintiff at the request of the defendant paid $15,000 upon the loan, and that is all he paid thereon. In October and December, 1884, and January, 1885, long after the maturity of the loan according to the terms of the agreement, the defendant •sold the bonds without notice to the plaintiff, and after applying the proceeds of the sale there remained a balance due on account of the loan to the defendant

The plaintiff brought this action to recover damages for an unlawful conversion of the bonds. He failed to recover and the defendant had judgment for the balance due it.

The rights and relations of the parties were clearly defined in the written instrument Whatever may have been the rights of the plaintiff and the duties of the defendant before the maturity •of the loan, it is clear, and indeed undisputed, that - after that time it could by the terms of the instrument sell the bonds for the payment of any balance due it without notice to him.

Hence no wrong was done to the plaintiff by the sale of these bonds unless the written agreement was in some way modified or the rights of the plaintiff thereunder in some way enlarged or changed. Prior to the maturity of the loan there were some interviews and communications between the parties; but they all had reference, as I understand them, to the security of the loan prior to its maturity. They did not in any way affect the right®, and duties of the parties under the 'written instrument after the loan by the terms of the instrument should mature.

The rights of the defendant under the instrument were in noway modified by anything that occurred after the first day oí September when the loan matured. On the third day of that month the plaintiff wrote a letter to the defendant in which, he-said: “Please continue your indulgence to me for a few days and oblige.” The indulgence was continued until the 4th day of October, when the defendant sold $1,000 of the bonds, and afterward it made four other sales of bonds in the same month and in December, amounting in all at par to $18,000, and these sales were-all immediately reported to the plaintiff, and he found no fault with them.

On the 1st day of January there was nearly $270,000 still due upon the bond, and on that day the plaintiff wrote the defendant requesting it to apply the interest falling due upon the bonds upon the principal of the loan, and in that letter he said: “I thank you for the kind, liberal manner in which you have always treated me, and only regret that times have continued so unfavorable as not to have put me in a position to take up the loan.” To this letter, on the 5th day of January, the defendant replied refusing his request, and saying that it “ would be more than pleased to have the loan paid and off the books.” Soon thereafter the bonds began to decline in the market, and after they had so declined as to be worth less than the loan the defendant began to sell the remainder of them in the market, and sold them fairly from time to time in the month of January, and reported the sales to the plaintiff.

It is clear that the rights of the parties under the written agreement, after the maturity of the loan, remained unchanged, and! that no wrong was done to the plaintiff by.the sale of the bonds, He was, therefore, properly defeated in his action, and the judgment should be affirmed, with costs.

All concur.


author: O’Brien", J.

text:
    The People ex rel. The Seth Thomas Clock Co., App’lt, v. Edward Wemple, Comptroller, Resp't.

      (Court of Appeals,

      Filed May 24, 1892.)

    1. Taxes—Corporations—Exemption.
    Relator is a foreign corporation with large factories for making clocks, and watches in Connecticut, where the principal part of its manufacturing operations is carried on. It has a business office and sales agency in the city of New York, where the greater part of its contracts for the sale-of goods are made. It also actually manufactured within this state from, sixteen to twenty thousand dollars worth of goods a year, while that done in the foreign state amounted to over $500,000 per annum. Held, that relator must be considered as carrying on manufacturing within this state* so as to be brought within the rule as to exemption prior to 1889.
    5. Same.
    If the corporation, in the regular course of its business, in good faith* and not for the purpose of evading the law, was actually carrying on any part of its manufacturing operations here, that was enough. It was not left for the taxing officer or the courts to prescribe how much or what percentage should be done within this state to entitle it to the exemption.
    S. Same.
    A manufacturing corporation of another state cannot bring its products here, and by putting the several parts together and adjusting them to each other, or by performing upon the article some slight operation, though it may involve labor that may be necessary before rising it or exposing it for sale, thereby entitle itself to exemption from taxation on the ground that it is carrying on manufacturing within this state.
    4. Same—Basis of taxation.
    Relator kept goods for sale here. It had money on deposit, and other property. This, whatever its value, was the basis of taxation, and not a comparison between the total sales made by relator and the total sales made in this state. '
    Appeal from judgment of the supreme court, general term, third department, affirming decision of state comptroller assessing tax upon relator as a foreign corporation doing business in this state.

      William S. Cogswell, for app’lt; S. W. Hosendale, Atty. Gen., for resp’t

       Reversing 43 St. Rep., 60.

   O’Brien", J.

The comptroller imposed a tax upon the relator, a foreign corporation organized and existing under the laws of the state of Connecticut, of $5,605.51, for the years 1880 to 1890, both inclusive, under chapter 542 of the Laws of 1880, as amended by subsequent enactments. The relator, insisting that the tax was illegal, applied to the comptroller under chapter 463 of the Laws of 1889, for a revision and readjustment, and that application having been denied, sued out a writ of certiorari, under the same statute, to review the decision. The general term, where the writ was returnable, affirmed the determination of the comptroller, and "the relator Has appealed to this court. A foreign corporation carrying on business within this state, unless it appears that it is within some one of the exceptions contained in the statute, is •subject to taxation. The basis of the tax in such cases is the “ amount of capital stock employed within this state.” If it does not employ any of its capital here, there is no basis for taxation. So also a foreign manufacturing corporation actually engaged in manufacturing within this state was exempt from taxation the .same as a domestic corporation of the same character. This exemption was restricted by chapter 353 of the Laws of 1889, which requires that the corporation in order to be entitled to claim the exemption shall be “ wholly engaged in carrying on manufactures within this state.” The legislature in passing this amendment intended to apply a new rule to the taxation of foreign manufacturing corporations. Under the statute, as originally enacted, the inquiry was whether such a corporation was actually carrying on manufacturing within this state. If it was, then it came within the exemption even though the greater part of its manufacturing operations were carried on at home. If it was carrying on enough of its manufacturing operations in this state so that it could be said fairly and reasonably to be engaged in manufacturing here, then it came within the letter and the spirit of the exemption clause, and neither the comptroller nor the courts, had the right to hold that because only a comparatively small-portian of all its manufacturing operations were, carried on here, it. was not, for that reason, within the exemption.

If the corporation, in. the ordinary and regular course of its business, in good faith and not for the purpose of evading the law, was actually carrying on any part of its manufacturing operations here that was enough. It was not left for the taxing officer or the courts to prescribe how much or what percentage of its whole manufacturing business should be done within this state in order to entitle the corporation to claim'the exemption. If the legislature, in providing that manufacturing corporations should be exempt from taxation, intended as it probably did to encourage and foster manufactures within the state, the policy of the law would apply as well to a corporation carrying on a small business, as to one engaged in larger and more extensive operations. One foreign corporation might find it necessary or convenient to carry on a large part of its manufacturing operations here while another would desire to carry on only a very small part, but this circumstance would not furnish a reason for holding that the former was within the exemption and the latter was not. As to the tax imposed upon the relator for the years 1889 and 1890 and after the. amendment referred to, this question does not arise. That can be questioned only with respect to the amount and the basis of computation adopted by the comptroller. But it does arise with respect, to the tax levied for the years preceding. The relator is engaged extensively in the manufacture of clocks and watches. It has large factories for that purpose in Connecticut and there the principal part of its manufacturing operations are carried on. It has a business office and sales agency in the city of -New York where the greater part of its contracts for the sale of the products', of its factories are made. It appears also that during the years-for which the tax was levied it actually manufactured within this-state to the extent of from $16,000 to $20,000 in each year. The-record does not show the particular character and nature of the relator’s operations in this state, claimed to constitute manufacturing within the state.

In the opinion of the court below it' is said that what the relator calls manufacturing probably consists in some incidental, additional work to the manufactured products forwarded from-Connecticut, such as may conveniently and suitably be added at the place where the goods are exposed for sale. If this were the fact, it would not bring the relator within the exemption. A. manufacturing corporation of another state cannot bring its products here, and by putting the several parts together and adjusting them to each other, or by performing upon the article some-slight operation, though it may involve labor that may be necessary before using it or exposing it for sale, and thereby entitle' itself to exemption from taxation on the ground that it is carrying on manufacturing within this state. The things which the-relator manufactures are clocks and watches, and unless it produces the whole or some part of the article in this state from the-original material, by means of labor, machinery and operatives,, such as are Usually applied to manufacturing- operations, it is not within the exemption. Whatever the facts may be with respect-to the manufacturing operations which it is claimed the relator is-carrying on in this state, we are concluded on this question by. the record. The relator’s petition for the writ alleges, in substance, that since 1878 it has been engaged in manufacturing within this state, though the amount of such manufacturing here is small in comparison with that done in Connecticut. That since 1880 the amount manufactured here averaged in each year from $16,000 to $20,000, while that in Connecticut averaged from $500,-000 to $700,000. In the return to the writ this statement is not denied, though it does state “ that during each of said years the relator was not engaged in carrying on manufacturing within this state, as will more fully and specially appear by reference to the reports of the relator and of the commissioner appointed by defendant, hereto annexed.” The reports referred to, however, do show that during each year the relator manufactured within this state from $16,000 to $20,000 in value of goods. The fact that the relator manufactured articles ' within this state during the years named of the value specified must, therefore, be deemed to-be admitted. The only question in issue is one of law, and that, is whether the manufacture here of so small a percentage of its total products brings it within the exemption.

This question does not depend upon the relation which the value of the goods made here bears to the total value of the product of the relator’s operations. A foreign corporation of this; character might manufacture one-half of its whole product here and yet that might not amount to any more in value than the relator manufactured in this case. Ho one would claim, however, in that case that the corporation was not within the exemption. The rule must be the same whether the corporation is weak or strong. Whether its total product is a few thousand dollars or millions. It may be that upon a rehearing the fact which is now admitted may be changed, but unless it is the relator must be considered as carrying on manufacturing within this state. But we are of the opinion that the tax imposed was excessive. The-capital stock of the relator was $500,000 till 1888, and since that, time $600,000. This was invested in its plant and business. Only such part of it was employed within this state as was represented by the actual value of property whether in money, goods or other tangible things. It kept goods for sale here. It had money on deposit and it may be other property. This, whatever its value, was the basis of taxation. People v. Coleman, 126 N. Y., 433; 38 St. Rep., 237. That property represented all the capital employed in this state. The comptroller adopted another basis. He ascertained first the total sales made by the relator and then the total sales made in this state and decided that the capital stock employed within this state was in proportion to the whole-capital stock as the amount of sales made in this state was -to the total amount of sales made everywhere. In the year 1890 about seventy per cent of the total sales were made in this state, and from this fact the comptroller assumed that seventy per cent of the capital was employed hem A large part of the sales made were by sample,’ and the goods in such cases were delivered to the purchaser directly from the factory in Connecticut. In many cases the goods never came within the state at all. In other cases they merely passed through to their destination. Sales made in this way were no part of the capital stock employed within the state, and could not constitute any element in the process of ascertaining it It might sell its whole product by sample from an office in New York to be delivered to the purchaser from the factory and yet not employ any part of its, capital within the state

It might employ an agent in New York to make contracts for the sale and delivery of goods in Europe, or in some other state, but these contracts would not represent capital within this state. The value of the goods that it kept on hand within the state in warehouses or otherwise in the transaction of its business, and from which it made shipments or sales in the usual way, was property that represented capital stock, and all money on deposit here and used in the business here also could be made the basis for the tax, but sales made by sample followed by a delivery from the factory could not If the relator kept no property within the state in any of the years for which the tax was assessed, there was no basis for that year upon which to compute the tax. Such property as it keeps here in the transaction of its business, whatever it may consist of, is, we think, the true basis for such computation. The capital stock employed in this state cannot exceed that

The judgment of the general term and determination of the comptroller should be reversed, with costs, and the comptroller directed to revise and readjust the account against the relator upon the principles herein stated.

All concur, except Maynard, J., not sitting.