author: Pratt, J.: Bartlett, J.: DykmaN, J.

text:
    WARREN CURRIER, Appellant, v. THE NEW YORK, WEST SHORE AND BUFFALO RAILROAD COMPANY and Others, Respondents.

      Corporation — aotion by a stockholder against the corporation and directors, to restrain waste of its property — when a demand upon the eorpoi'ation to bring the action need not be made.

      A stockholder and bondholder of an insolvent corporation may maintain an action against the corporation, its directors and other persons, to rescind an unlawful contract made by certain of the defendants with the corporation, and compel the wrong-doers to account for property and securities of the corporation wrongfully received from it, without first making a demand upon the corporation to bring an action to redress the wrongs complained of, where it appears from the facts alleged that the corporation is obviously unable to act by reason of its directors being under the control of the very persons who are alleged to have been guilty of the wrongful acts, and who are ipade defendants in the action. (Dykman, J., dissenting.)
    Appeal from an order sustaining demurrers interposed by the defendants to the complaint, and from a judgment entered thereon.
    Several grounds for the demurrers wei’e alleged therein, but the only one considered in the court below, and upon this appeal, was as to whether or not the facts alleged constituted a cause of action.

      John L. Hill, for the appellant.

      P. B. MoLenncm, for the Railway Company and Porter and others, directors, respondents.

      Howa/rd Mcmsfield, for the respondent Winslow.

      Otto T. Bannctrd, for the respondents Bard & Studwell.

      Bard <& Studwell and Thomas Thaoher, for defendant Green, individually, and Canda.
   Pratt, J.:

An examination of the complaint in this action has led me to the conclusion that the demurrers thereto were improperly sustained.' The plaintiff is a stockholder and bondholder of the West Shore Railroad Company, and alleges divers acts of official misconduct by some of the defendants (wbo are directors), in the management and disposition of the funds and property committed to their charge. It also alleges that the contract for construction,, etc., was fraudulently made between the North River Construction Company and the Railroad Company, and that it was and is void as being a mere, cover for the issue of stocks either for no consideration or for a consideration less than its par value. In substance it states that defendants Winslow, Woorrishoffer and Porter, with their-associates, in some way acquired the control of the board of directors of the railroad company and filled it with their creatures and instruments; that they then conceived the design of constructing the road and thus making large profits for themselves and their associates; that they expected to derive their profits from the acquirements of lands for right of way, depots and buildings, and in the construction of its road, furnishing its equipment, etc.; that, in pursuance of their design, those defendants and their associates organized the North River Construction Company under the laws of New Jersey, with a capital of $500,000, all of which they held; that they then had the certificate for its stock transferred to the Central Trust Company in trust, the voting power thereof to be exercised by them, Winslow, Porter and Woerrishoffer; that they constituted a majority of its directors;.that they then increased its stock to $10,000,000, the additional $9,500,000 being issued to the trust company in trust, and the voting power thereof to be exercised by them; that leaving these in the control of the construction company they proceeded to make a contract in its name with the railroad company, by which the construction company in form agreed to expend $1,000,000 in payment for lands, $1,000,000 for buildings, etc., and $4,000,000 for- rolling stock for the railroad company, and to build its road from Cornwall to Oneida (with an option to build to Buffalo), at $100,000 per mile of single track, and $200,000 per mile for double track, the sums being payable in stock and bonds of the railroad company at par, or from the proceeds of the sale thereof; that these securities were to remain in the hands of financial agents of the railroad company, and should be either delivered to the construction company, or be sold by the financial agents of the railroad company, the proceeds then being payable to the construction company as the work progressed; that the railroad company should not issue or dispose of any securities without the consent of the construction company.

If it was the fact that those defendants did control the actions of the railroad company, either through their own acts or those of their associates as directors thereof, it is plain that since- they also controlled the construction company they were simply contracting with themselves, and that the railroad company was helpless in their hands. It requires no argument to demonstrate that a contract made under such circumstances was presumptively fraudulent. (N. Y. Cent. Ins. Co. v. Nat. Protection Ins. Co., 14 N. Y., 85; Duncombe v. N. Y. H. and N. R. R. Co., 84 N. Y., 190, 198; Story’s Eq., §§ 321, 322, 323, 317-320, 246; Wardell's case, note 1 Am. and Eng. R. R. Cases, 425,426; St. James Church v. Church of Redeemer, 45 Barb., 356), and that the railroad company might, at its election, treat it as void and repudiate it. (Gilman C. and S. R. R. Co. v. Kelly, 77 Ill., 416; Thomas v. Brownville, etc., R. R. Co., 2 Federal Rep., 877; Wardell v. N. P. R. R. Co., 4 Dillon, 330; Barnes v. Brown, 11 Hun, 315; 80 N. Y., 535.) But the complaint goes farther and alleges that the defendants Winslow, Woerrishofier and Porter and their associates fraudulently conspired together to accomplish the contract, and thereby to acquire large profits which were to be distributed to the stockholders of the construction company as dividends. It is obvious that, as between these managers and the railroad company, these profits justly belonged to, and ought to have been saved for, the latter. They could not then be directed into the hands of persons who stood in relations of trust to the railroad company, nor into the hands of others who should receive them by means‘of the misconduct of the directors, who were either their instruments or were acting in collusion with them.

Assuming these allegations to be true, I have no doubt that both the making and performance of the contract was a fraud upon the railroad company, and that every director who participated in the scheme was guilty of official misconduct, by which the resources and property of the railroad company were wrongfully used, and that they and every person, whether the construction company or defendants Winslow, Woerrishoffer and Porter and their associates, irrespective of any actual profit which they derived by these means, .became liable to the railroad company for any injury which it sustained in this way. The acts were wrongs, and upon familiar rules all the tort feasors -were jointly and severally liable for the injury, and the farther progress of the injury was remediated by an injunction.

But this is not all of the plaintiff’s case as stated in the complaint. It alleges that the contract contained a clause by which the construction company was relieved from all liability whatever upon its mere application of the proceeds of the securities towards the object specified by the contract. In other words, that it was not bound to build a railway for this railway company, nor to furnish any lands, buildings or railway stock, but simply to apply the proceeds of the stock and bonds, so far as they would go m that direction, with the right to keep any surplus as a profit. If this was the fact, it is difficult to see how the contract created anything more than an agency or trust to receive and apply the proceeds of the securities for the benefit of the railway company, in ways particularly specified, with the right to hold the entire surplus as a commission, in case the funds thus raised were more than sufficient for the purposes provided in the contract. There was no restriction by which the stock was to be sold for par, and tile allegation is that the plan was to issue all the stock and bonds to the construction company. If that course was pursued, the only consideration therefor would be the promise of the construction company to apply the proceeds pro tanto. The allegation is that this was a mere plan by which to evade the statute, which requires that stock shall not be issued except at par in money or money’s worth. If that was true, and that must be assumed on this demurrer, the contract was not only voidable, but absolutely void. (Fisk v. C. R. I. and P. R. R. Co., 53 Barb., 515; Sturges v. Stetson, 1 Bissell, 246, 249; Sawyer v. Hoag, 17 Wall., 619; Green’s Ultra Tires, 153; Williams v. Western Union Tel. Co., 93 N. Y., 190; Count P. G. v. Morris, 7 C. B. [N. S.], 588; 97 E. C. L., 586, 597; Fosdick v. Sturges, 1 Bissell, 255; Henry v. Vermillion and A. R. R. Co., 17 Ohio 187; Tasker v. Wallace, 6 Daly, 364; Neuse River N. Co. v. Comrs. of Newbern, 7 Jones’ Law, 275; Knowlton v. Cong, and E. S. Co., 57 N. Y., 542; Pierce on Railroads, 76; Redfield on Railways, 558.) And all moneys thus realized and wasted were proper charges against persons who participated in the wrong, whoever they were.

The complaint further alleges that defendant Green, who was not a director, was a party to all these plans and wrongful acts; that the construction company' became insolvent, and that the defendants, desirous to cover up the property thus wrongfully obtained from the railroad company, and to keep the control of its direction, fraudulently caused its board of directors to accept the railway property as completed when it was not completed, and when it required the expenditure of several millions of dollars to complete the same, and before the contract for construction could be held to be, in any proper sense, performed, and caused all its remaining stock and bonds to be issued to the construction company in pretended payment of fictitious and fraudulent claims of indebtedness, the object thereof, among other things, being to place the majority of the stock in the hands of defendant Green, to the end that he, being a party to the fraud, might control the direction of the railway company in the interest of said fraudulent designs; and to that end that they eollusivély and fraudulently procured said Green to be appointed receiver of the construction company under the laws of New Jersey, by the chancellor of that State, and that defendant Green thereupon took said stock and securities and carried them out of the State, and as such receiver proposed to vote upon the stock and make use of the bonds and to control the railway company in the interest of the wrong-doers. It is now said that defendant Green is liable for this act only as receiver, even if it was wrongfully done.

If he took these assets as receiver he took them wrongfully and cannot hold or use them to the detriment of the railway company, and the same is true if he acted individually in this way. The complaint charges him individually with conspiracy resulting in injury to this railway company. This is enough. It alleges that he wrongfully, knowing that the construction company was not entitled to this stock, took and carried it way. If he did this, it matters little in what capacity he was acting.

The complaint alleges that other defendants havei become new directors of the railway company, but that they have approved and are now engaged in carrying out these schemes of fraud. If this is true their conduct is also a matter of judicial investigation, and if injury has resulted from their action or inactivity in respect of these matters, they are liable for any loss which may have been sustained by such misconduct. We thus reach the technical questions raised upon this agreement. I have no doubt of the right of a stockholder to file a bill for relief against the wrongs charged. (Butts v. Wood, 37 N. Y., 317; Greaves v. Gouge, 69 id., 155 ; Kent v. Quick Silver Mining Co., 78 id., 159; Sturges v. Stetson, 1 Phila., 304; 1 Biss., 246; Williams v. Western Union Tel. Co., 93 id., 640; Asbury R. C. and I. Co. v. Riche, 14 Eng. R. [Moak’s Notes], 81-85 ; Duckett v. Gover, 22 id., 655.) Bor is the right of a mortgage creditor doubtful in such a case. (Conro v. Port Henry Iron Co., 12 Barb., 27, 58, 59; Story’s Pleadings, § 99 ; Dambman v. Empire Mill, 12 Barb., 341, 345; Innes v. Lansing, 7 Paige, 584; Mickle's Case, 11 id., 118 ; Conro v. Gray, 4 How. Pr., 166; Galwey v. U. S. Steam Sugar Co., 36 Barb., 256; Story Eq., 827, 835, 851.) Every bondholder has the right to insist .that every other bond shall represent value, and certainly that it shall ■ be lawfully and honestly issued. It is insisted that no stockholder or creditor has a standing to sue until a demand has been made upon the corporation to bring an action to redress the wrongs complained of. It is doubtless a general rule that a cestui que twist cannot maintain an action which ought to be brought primarily by the trustee, unless there shall have been a demand upon the trustee. But this does not apply in a case where the trustee is obviously unable to act by reason of being under the control of the very persons who must be the defendants in the proposed action. It would be useless to inquire any such idle and meaningless formality. (Brinckerhoff v. Bostwick, 88 N. N., 56 ; Gray v. N. Y. and Virginia S. S. Co., 3 Hun, 383; Parker v. McKenna, 11 Eng. R. [Moak’s Notes], 484; Hand v. Atlantic Bank, 55 How., 231; Mussina v. Goldthwaite, 7 Am. R., 281; Morgan v. Railroad Co., 1 Wood’s Circt. R. [U. S.], 15; U. S. Trust Co. v. West Shore Railroad Co.)

Again it -is said that the stockholders must stand upon the right of the corporation to rescind, and hence must do all that the corporation would have been obliged to do in order to obtain the. standing in a court of equity. The answer is that upon the allegations of this complaint the corporation itself would not have been obliged to do anything. It has obtained nothing from defendants under the contract. According to the allegations of the complaint the defendants have all the while been wrongfully getting and keeping the property of the corporation. If the complaint is true the company has received nothing from the defendants save that they wrongfully took from it to begin wiih. The action is brought to get back the surplus thus improperly abstracted, to have an account for that purpose, and to enjoin farther progress of the wrongs'. I cannot doubt the propriety of such an action by a stockholder or creditor when the corporation is insolvent. If the right did not exist it would be difficult to fix bounds beyond which the director of a corporation might not go in dealing with the property of which they were never trustees. ■ '.

The judgment should be reversed ivith leave to defendants to answer within twenty days on payment of costs.

Bartlett, J.:

I concur with Mr. Justice Pratt in the result. I may add that the recently reported case of Barr v. New York, Lake Erie and Western Railroad Company (96 N. Y., 444) bears adversely to the respondents on some of the most important points discussed on this appeal.

DykmaN, J.

(dissenting):

The defendants demurred to the plaintiff’s complaint in this action and obtained a judgment in théir favor, from which the plaintiff has appealed. My associates find the complaint good as to some of the defendants, and bad as to some others. The demurrer is to the entire complaint which professes to set forth but one cause of action, and if the complaint be vicious on any point reached by the demurrer it must fall as an entirety.

Independent of this, however, so long as the doctrine of the court of appeals, as annormced in the case of Greaves v. Gouge (69 N. Y., 157), continues in force it will condemn this complaint. It was there decided that an action for injuries caused by the misconduct of an officer of the corporation must be brought in the name of the corporation, unless it or its officers on being applied to for such purpose by a stockholder refuse to bring such action.

The same doctrine was substantially reiterated by the court of ’ appeals in the case of Brinckerhoff v. Bostwick (88 N. Y., 56) and nothing contained in the case of Barr v. New York and Canada Railroad (96 N. Y., 448) is at war therewith. In this last case the opinion of the court was prepared by the same judge who wrote the opinion in the case of Greaves v. Gouge {supra); and this last case is not even mentioned in the opinion. Assuming, therefore, that the case of Greaves v. Gouge still furnishes the law for the determination of this case, the plaintiff cannot maintain this action under his present complaint. Besides this, the plaintiff makes no cáse on the merits; there is no allegation of wrong, or falsehood, or fraud or individual intrigue for private advantage. The legality of the contract against which so much complaint is made is fully established by the decision of the court of appeals in the case of Van Cott v. Van Brunt (82 N. Y., 535).

My conclusion on the whole case is that the judgment appealed from should be affirmed.

Judgment for defendants upon demurrer reversed, with costs, except as to judgments in favor of Canda, Bard & Studwell, which .are affirmed, with costs.


source: Caselaw Access Project

author: Barnard, P. J.: Pratt, J.

license: Public Domain

text:
    OLIVER DOXSEY and OLIVER S. DOXSEY, Appellants, v. THE LONG ISLAND RAILROAD COMPANY, Respondent.

      Obstruction of a ncmgabh stream by the defendant — the burden of proving the right to obstruet it rests upon the defendant.

    Where, in an action brought against a railroad company to recover damages for obstructing a navigable stream-, it appears that one of the defendant’s bridges closed up a common water highway, and that the plaintiffs have sustained damages from the obstruction, their case is established, and it rests upon the defendant to show its authority to construct the bridge, if it had any, and that it was properly built and managed. (Pratt, J., dissenting.)
    Appeal from a judgment of the County Court of Queens county, reversing a judgment in favor of the plaintiffs rendered by a justice of the peace.
    The defendants, a railroad corporation, used and occupied a railroad track in the town of Hempstead, Queens county, for railroad purposes between a place called Pearsalls and Long Beach, in the aforesaid county. The track crossed several navigable streams of water, over which were erected as 'many draw-bridges. This action was brought against the defendants to recover damages because of its refusal and neglect to raise one of these draw-bridges to allow the sailing vessels of the plaintiffs to pass through a navigable portion of the bays of the town of Hempstead, whereby the plaintiffs lost a large quantity of oysters.
    The draw of the bridge was broken which prevented it being raised.

      George A. Mott, for the appellants.

      Edward E. Sprague, for the respondent.
   Barnard, P. J.:

This action is not to be treated as one based upon negligence. The proof is clear that the defendant is in possession of a railroad running from and between Pearsalls and Long Beach, in Queens county. This road, by one of its bridges, is proved to have closed up a common water highway. The action was made out when the obstruction was established and the damage resulting therefrom. It was for those who obstructed or who assumed the road with the obstruction to the water highway. It may be that there was no authority for the bridge. It is more likely that the road was lawful, upon condition that the water highway should be kept open. It would not justify the defendant, if this was the condition, to prove a bad bridge, one which would not work so as to free navigation. The case is not like the statute in respect to railroad fences. The adjoining owner has no right to .a fence except by statute, and if the fence is well built, a sudden destruction of it would free the company until it received notice or ought to have discovered the defect. The right of way over the navigable water is absolute and cannot be taken away by the legislature. Besides, if a railroad fence is proven down, and injury results, it is not the duty of the injured party to‘ prove how long it had been down. Finally, this bridge is proven to have been an obstruction from Thursday night, August twenty-nine, until Sunday, September two, which is strong evidence of negligence in a case like this. The company had notice of the defect Thursday night, and how long before it does not appear.

The judgment should be reversed, with costs, and that of the justice affirmed.

Dykman, J., concurred.

Pratt, J.

(dissenting):

The complaint in this action alleged that the defendant owned and operated a railroad between Pearsalls and Long Beach, in Queens county, upon which had been erected a draw-bridge, and that said bridge crossed a navigable stream of water of the town of Hempstead. There is no allegation that the bridge was unlawfully erected, and no proof in the case to that effect. It is lawful for railroad corporations to construct their road across streams and to erect draw-bridges thereon, after obtaining consent of the board of supervisors of the county. (Laws of 1875, chap. 482, § 1, subd. 3.) It appears that the bridge in question was erected many years ago, and in the absence of any proof to the contrary it is to be assumed that it was erected with the consent of the proper authorities. It was not, therefore, an unlawful obstruction, and the authorities cited by the appellants relating to “ purprestures ” and public nuisances have no application to the case. A duty, however, rested upon the defendant to construct the bridge in a proper manner, to keep it,in repair, and to operate it with care and caution, so as not unnecessarily to impair the usefulness of the stream or to delay navigation. (Briggs v. N. Y. C. and H. R. R. R. Co., 30 Hun, 293.) This duty is one which hs to be performed with due and reasonable care, and actions growing out of the failure to perform this duty have for their basis the neglect or want of care of the defendant. The foundation of the action is negligence, viz.,' the failure of the defendant to _ perform a duty to the plaintiff which by law is imposed upon it. As in all actions for damages by reason of negligence, the burden of proving negligence rests upon the plaintiff. He does not make out his case by proving that, on a particular occasion, he was unable to pass through the draw-bridge, or that at a particular time the bridge was out of repair. He must show that such a condition is the result of some omission of duty on the part of the defendant or its servants. Upon this question the plaintiff holds the affirmation, and is bound to give evidence of the defendant’s neglect. Tested by this rule this action fails. The bridge was reported out of repair on Friday afternoon. The company took immediate steps, to repair it, and it was in good order on Sunday afternoon. Whether its condition was due to sudden and unknown causes, or whether it was the result of lack of proper inspection or other want of care the evidence does not inform us. The fact that it broke down is as consistent with one theory as another. The plaintiffs offered no evidence that tended to show any neglect on the part of the railroad company, and without such evidence they could not recover.

The judgment was properly rendered by the County Court, and the order appealed from must be affirmed, with costs.

Judgment of County Court reversed, with, costs.


author: Pratt, J.;

text:
    EUGENIA A. RICE, Appellant, v. HETTY J. BARRETT and Others. JOHN J. MURRAY, JOHN PHELAN and ANDREW MANDER, Purchasers, Respondents.

      Judicial sale — defective service wpon cm infant — when a judgment entered upon it may be made binding upon the infant by a subsequent judgment — when a purchaser ioid be compelled to accept a title.

    Appeal from an order denying a motion to compel purchasers to complete their purchase. The action was brought for the partition of certain real estate in the city of Brooklyn.
    The court, at General Term, said: “ We think that when the motion was made, that the respondents should be compelled to complete their purchases, a good merchantable title was tendered to them and that the motion should therefore have been granted. It seems that the suit had been commenced and had proceeded to trial upon the merits, and an interlocutory judgment for sale entered and sale had thereunder, when it was discovered that the service upon the infants, who had appeared by their several guardians ad litem, was defective, and accordingly measures were taken to cure the defect, which were acquiesced in so far as appears by the respondents. Proceedings were stayed, leave granted to file a supplemental complaint and the infants duly served and brought in as defendants. By this proceeding the court properly acquired jurisdiction.
    “A new trial was had, and it appearing to the court that it was for the best interest of the infants to decree that the prior sale should be valid and effectual, such a decree was entered. It was clearly competent for the court to render such a judgment. In effect the case was reheard, and a judgment rendered binding the parties thereto by the interlocutory judgment and sale. The proceeding was not only within the powers of the court, but the course taken was eminently proper and no one has been prejudiced thereby. It is conceded that the court had jurisdiction of the parties, but it claimed that the decree was irregular and void, and that it was necessary to vacate the first sale and interlocutory judgment, enter a new judgment for sale and sell thereunder. ■ Now, the first judgment and sale was valid and binding upon every one, except the infants ; and the last decree was entered simply for the purpose of making it binding upon them, and we are satisfied that such a result was wisely and properly accomplished.”

      Joshua M. Van Oott, for the appellant.

      August G. Hockmeyer, for John Phelan, respondent.

      John li. Bergen, for Andrew Mander, respondent.

      Boa/rdman & Boa/rdmcm, for John J. Murray, respondent.
   Opinion by

Pratt, J.;

Dykman, J., concurred ; Barnard, P. J., dissented.

Order reversed, with costs and disbursements.


author: Dykman, J.;

text:
    In the Matter of the Examination of CLAUDIUS EDLUNDS, a Judgment Debtor, in Proceedings Supplementary to Execution.

      Judgment debtor — when a watch is exempt from seizure, as being a tool amd implement necessa/ry for the debtor’s occupation.

    Appeal from an order, made at chambers, denying a motion for the appointment of a receiver in proceedings supplementary to execution.
    The court at General Term said: “The examination of the defendant disclosed no property, except a cheap watch and chain and a trunk and some clothing. The judgment debtor is a clothing cutter and an unmarried man, but certainly he is entitled to all tools and implements necessary for his occupation, of which a-watch may well be one. There was nothing to receive and no ocear sion for a receiver. The order should be affirmed, with, costs and ■disbursements.”

      JEckoard 8. Hatch, for judgment creditors, appellants.

      McGuire & Kuhn, for judgment debtor, respondent.
   Opinion by

Dykman, J.;

Barnard, P. J., and Pratt, J., •concurred.

Order denying motion for a receiver affirmed, with costs and disbursements.


text:
    HENRY LOEFFLER, Respondent, v. ANDREW FROELICH, Appellant.

      Building contracts — how f cur the pa/rties flm'eto are concluded by the certificate of the arrchitect— when the owner may recover damages for defects in the work, although, the arrchitect has given his certificate.

    Appeal from a judgment in favor of the plaintiff, entered upon the report of a referee.
    This is an action to foreclose a mechanic’s lien. The plaintiff made a contract with the defendant Froelich to furnish the carpenter work for a number of new buildings, and the certificate of the architect was made a condition precedent of his right to receive any payments. The work having been substantially performed, the architect furnished the certificate for the last payment on the understanding that some incompleteness in the work should be perfected by the plaintiff. That certificate was subsequently revoked, and the principal question on the appeal has reference to the effect of the certificate. • ■ ■
    The court at General Term said: “ It is conceded by the counsel for the appellant, in a spirit of great fairness, that the revocation of the certificate produced no effect on its .potency. But it is contended that the certificate is only evidence of substantial compliance with the contract, and that it left the way open for the defendant to prove failures of the plaintiff to perform the same completely. This is in accordance with the modern rule in similar cases, that where a builder has substantially complied with his contract, with an honest intention to perform the same fully and exactly, he may recover notwithstanding unimportant omissions or defects-for which compensation can be made by an allowance to the owner. (Wolcm v. Whitney, 88 N. V., 648; Woodward v. Fuller, 80 id., 312.) In pursuance of what the defendant conceived to be his rights he offered to prove on the trial of this cause that he sustained damages to the extent of $125 by reason of the fact that tüe cornices front and rear were not constructed according to the specifications. An objection to this testimony was sustained and the defendant excepted to this ruling. This was a substantial error. While the plaintiff may recover on a substantial compliance with his contract, of which the certificate of the architect is evidence, yet the defendant must receive compensatiqp for defects and omissions by an allowance as a counter claim in this action, and to that end he must be allowed to prove his damages.
    “ The judgment should be reversed, and a new trial granted, with costs to abide the event. Order of reference vacated.”

      Josiah T. Marean, for the appellant.

      Samuel T. Maddox, for the respondent.
   Opinion by

Dykman, J.;

Barnard, P. J., concurred.

Judgment reversed, and new trial granted, costs to abide event.


author: Pbatt, J.;

text:
    JOSEPH W. PALMER, Respondent, v. THE PENNSYLVANIA COMPANY, Appellant.

      Pbreign corporation — service of the summons upon a managing agent within this State — who is to-he deemed ‘‘a managing agent” within the mea/ning of section 433 of the Oode of Oivil Procedure-

    Appeal from an order made at a Special Term, denying a motion to set aside the service of the summons in this action upon Thomas C. Pollock, who was alleged to be a managing agent of the defendant, a foreign corporation.
    The affidavit of the person serving the summons stated “ that he knew the person served as aforesaid to be a managing agent of the Pennsylvania Company, mentioned and described in the said summons as defendant in this action. Deponent further says, before making such service he asked said Pollock, ‘ are you the agent of the Pennsylvania Company?’ To which Pollock answered, ‘I am,’ and further, said he did business for said company in New York city, and talked with deponent about a suit which had been brought against the company, and in which he had employed counsel. Deponent further says, that at the time of such service said defendant had a large amount of property in this State, worth at least $3,000,000, and consisting of a number of freight and refrigerator cars. Deponent further says, said defendant does a large business in this State and advertises largely, and has a number of offices in New York city for the transaction of freight business, viz.: At piers 4 and 5, new piers 27 and 28, and foot of Thirty-fifth street. North river, 435 Broadway, 1 Astor House, and 76 Wall,street. Deponent further says, that the freight bills for freight brought to New York by defendant have the name of said Pollock upon them as agent.”
    The defendant read affidavits made by officers of the Pennsylvania Company and by Pollock, stating that each of them was familiar with the organization of the Union Line or Fast Freight Bureau in connection with the Pennsylvania Company, and had a knowledge of its agents and employees; that he was familiar with the relation existing between said Union Line and Thomas O. Pollock, for some years past; that said Pollock was the freight agent of the Pennsylvania Railroad Company in the city of New York, but, as a matter of convenience, in the transaction of certain details in connection with the business of said Union Line, such as the transmission of reports to the Pennsylvania Company or Union Line Bureau, was authorized to act in this respect for the Pennsylvania Company or Union Line Bureauthat said Pollock was paid wholly-by the Pennsylvania Railroad Company, and that he was not authorized to act as agent of the Pennsylvania Company in any capacity whatever other than as above stated; that he was appointed by the Pennsylvania Railroad Company, and is subject to discharge by that company only.
    Pollock also stated, in his affidavit, “ that he told the person attempting to serve the same upon him as aforesaid, that he was employed by and the agent of the Pennsylvania Railroad Company.”
    The court at General Term, said: “There is no doubt that defendants hold Pollock out to the world as their agent in the city of New York. It is plain that lie has a large authority and within a wide held his acts are binding on defendant. The Code does not .specify the extent of the agency required to bind defendants by service of process, except that the person upon whom the service is ■made, must be managing agent. Were the rule to be established as contended by appellants, that the agent must have charge of thp whole business of the corporation, the statute would be a dead letter, for such an agency seldom, if ever exists. Every object of the service is attained when the agent served is of sufficient character and rank to make it reasonably certain that the defendant will be apprised of the service made. The statute is satisfied if he be a managing agent to any extent.” . -

      B. F. Wilkwison, for the appellant.

      Grcmt B. Taylor, for the respondent.
   Opinion by

Pbatt, J.;

Dykman, J., concurred; Babnabd, P. J., not sitting.

Order affirmed, with costs and disbursements-.


author: Davis, P. J.:

text:
    HORACE B. CLAFLIN and Others, Respondents, v. CLINTON H. SMITH and Others, Appellants.

      General assignment — defeats vn the certificate of acknowledgment — when the certificate • wül he sustained.

    This action was brought to set aside a general assignment for the benefit of creditors made by the defendant Clinton Smith to his brother John. Immediately under the attestation clause and the signatures and seals of the parties followed a certificate of acknowledgment as follows:
    On this 21st day of February, 1882, before me personally appeared Clinton H. Smith and John Q-. Smith, of the city of New York, to me personally known to be the individuals described in and who executed the same, and who acknowledged to me that they had executed the same, for the purposes therein mentioned.”
    .Upon the trial the defendants offered, but were not allowed, to prove by the commissioner who signed the certificate that the acknowledgment was in fact made in due form at the time stated. The assignment had been duly recorded. ,

      Held, that the evidence should have been received as it showed that the defendants had in fact ‘complied with all the requirements of t'he statute, and thereby eliminated from the case all questions as to their intent not to comply with them.
    That, construing the certificate in accordance with the rule which requires the court to so read all such official acts as, if possible, to make them effective to preserve the rights of the parties, it satisfied the requirements of the act and rendered the assignment a valid and complete instrument.
    Appeal from a judgment in favor of the plaintiffs, entered upon a trial at the Special Term, and from two intermediate orders admitting several parties as plaintiffs in the action, to whom final judgments were awarded.

      JR. L. Fowler, J. J. Adams and W. F. Dwnnmg, for the appellants,

      Otto Howitz and Demiel O. Briggs, for the respondents.
   Davis, P. J.:

This action was brought by Horace B. Clafiin and others, judgment creditors of the defendant Clinton H. Smith, after the return of an execution unsatisfied, to set aside an assignment made by said Smith for the benefit of his creditors to the defendant John G. Smith. The assignment preferred certain creditors who were after-wards on application to the court permitted to come in as defendants to assert the validity of the assignment. The original plaintiffs prosecuted the action for themselves, and “ on behalf of all others who wish to join ” therein. The several orders appealed from permitted other judgment creditors who were not in condition to commence such an action at the time this suit was brought, but who afterwards, before the making of the orders, had recovered judgments and issued executions which had been returned rmlla bona to come in as parties plaintiff.

On the trial the case upon its merits turned wholly upon the question of the invalidity of the assignment by reason of an alleged defective certificate of acknowledgment of its execution by the assignor and the assignee. The body of the assignment is in all respects valid and complete in form. It concludes with an acceptance of the assignment by the assignee in these words : “And the said party of the second part hereby accepts the trust created and reposed in him by these presents and for himself hereby contracts, covenants and agrees to and with the said party of the first part that he will honestly faithfully execute and carry out the same according to the best of his ability.” Following which is an attestation clause and its execution in this form:

“ In witness whereof, we, the said parties hereto, have hereto set our hands and affixed our seals the day and year first above written.

“ CLINTON H. SMITH, [n. s.]

“ JOHN G. SMITH. [l. s.]

“Witness : Edward C. Graves.”

Immediately under which is a certificate of acknowledgment in the following form:

“ STATE OF NEW YORK,.

.

City AND CouNty of New Yoric. )

On this twenty-first day of February, one thousand eight hundred and eighty-two, before me personally appeared Clinton H. Smith and John G. Smith, of the city of New York, to me personally known to be the individuals described in and who executed the same, and who acknowledged to me that they executed the same for the purpose therein mentioned.

JOHN N. BRUNS,

Commissioner of Deeds, A7. Y. Co.”

After its delivery this instrument was presented for record at the office of the county clerk and by him accepted and recorded as required by the statute. It is asserted by the respondent, and was held by the court below, that the assignment was unlawfully recorded because of the defective certificate of acknowledgment; and for that reason also,was wholly void. On the trial the commissioner of deeds who took the acknowledgment was called as a witness, and the fact that an acknowledgment was made in due form at the time stated in the certificate was offered to be proved. The evidence was excluded and an exception was taken. We are of opinion that the court erred in holding that the certificate was fatally defective. That it is defective in form is apparent; but that defect is manifestly an error of the officer who took the acknowledgment in the omission perhaps of a single word, and undoubtedly it did not arise from any error or omission of the parties in making the acknowledgment. Their offer to show by the commissioner of deeds that the acknowledgment of the execution of the instrument was in fact made, ought, we think, to have been received for the purpose of showing that the assignment was in fact duly acknowledged although the certificate is in form defective. They had a right, it seems to us, to show this for the purpose of establishing that in point of fact they, complied with the requirements of the statute in respect of the act of acknowledgment. This would have eliminated from the case all questions of intent not to comply with any requirement of the statute, and left to the court to determine the naked question of the effect of the mere accidental omission of a public officer to fully certify what was in fact done. A different rule might prevail in a case where the error was the intentional or actual one of the parties, than that which the courts ought to apply to the accidental mistake of an officer in omitting to fully certify what was really performed. Of course, if in the latter ease the certificate of the officer were so absolutely defective that the court could not construe it as signifying, though elliptical in form, substantially what the law requires, the parties must bear the consequences. It is a rule of law in the construction of all such official acts that the court must read them, if possible, in such a way as to make them effective to preserve the rights of parties; and it is in the light of that rule that the certificate in this case should be read, and understood. Its immediate connection with the instrument itself is not to be lost sight of in ascertaining the significance of its words. It stands in direct contact with the clauses of acceptance and of attestation and the signatures and seals of the parties, and it is not to be separated from them and read as an independent certificate for the purpose of destroying its legal effect. On the contrary, it is to be read with the instrument, and as a part of it required by law for the purpose of enabling the parties to the instrument to consummate its execution ; and so read there seems to be no difficulty in seeing in the form of the certificate that Clinton JEL Smith and John Gr. Smith, the parties who executed the instrument, were the persons who personally appeared before the officer, and were personally known to him to be the individuals described in and who executed the same. The phrase “ personally known to be the individuals described in ” plainly refers to the body of the instrument for the description of the persons who personally appeared before and were personally known to the commissioners; and the following words : “ and who executed the same, and who acknowledged to me that they executed the same, for the purposes therein mentioned,” can have no significance except one, which is made explicit and clear by reference to the assignment preceding the certificate, as is the manifest intent of the language used. The contrary construction seems to rest altogether upon the idea that the words “ described in,” and the words “ therein mentioned,” and the words “ the same ” which are twice used in the certificate, can have no significance, and therefore can bave reference to nothing that is not itself also stated in the body of the certificate. But that is not the practical good sense which ought to be applied to the construction of official documents. Those words are to have some significance, if possible to give them one, in construing the certificate. But what difficulty is there in holding that they do refer to and mean the assignment just executed by the parties thereto, who then appeared before the officer for the purpose of acknowledging its execution ? If this certificate were read, as it appears on and immediately following the instrument, by 10,000 plain practical business men it is altogether probable that not one in all that number would hesitate to say that it referred to the instrument and acknowledged its execution. An astute lawyer, studying the certificate with a view to attack the validity of the instrument, might discover an omission of something that if inserted would have made the certificate plainer and clearer than it now appears. But his ability to make such a discovery is not the test which courts seeking to administer justice only, and which are bound to uphold rather than destroy official acts, ought to apply to such a certificate.

In our opinion, therefore, the words “ the same,” as used in this certificate, are not meaningless but have a legitimate sense, and are to be read as though the words were “ this instrument,” in the first place in which they appear. The law will do this because it preserves and effectuates a manifest intent of the parties to the assignment; and because also it preserves a manifest intention of the public officer who made the certificate, and prevents a mere lapsus on his part from proving fatal to an otherwise complete and entirely valid instrument of the parties who made the acknowledgment. These views do not conflict, as we think, in any sense with the provisions of chapter 466 of the Laws of 1877, known as the general assignment act. Section 2 of that act supersedes the requirements in relation to acknowledgments contained in the provisions of the act of 1860, and does that, as we think, for the express purpose of getting rid of certain technical requirements which the courts had been obliged to uphold in respect of the manner and form of acknowledgment to entitle the assignment to be recorded. The latter act looks only to the substance of the thing, and is satisfied when the act appears in that respect to have been complied with. No form of certificate is therein prescribed, and consequently it need not be in any particular form. (Ritter v. Worth, 58 N. Y., 627; Sheldon v. Stryker, 42 Barb., 284; West Point Iron Co. v. Reymert, 45 N. Y., 703.) It is the policy of the law to uphold a certificate when substance is found (Kelly v. Calhoun, 95 U. S., 713), and it should be the aim of courts in cases of defective certificates to preserve and not to destroy, and the court should be astute to find means to make official acts effectual (Morse v. Clayton, 21 Miss., 373; Wells v. Atkinson, 24 Minn., 161), and for that purpose the court may refer to the deed itself. The numerous authorities cited by one of the learned counsel for the appellant, establish this rule of the courts. In Scharfenburg v. Bishop (35 Iowa, 60) the word “ appear ” was omitted, and it was held obviously a mere clerical error. In Davar v. Cardwell (27 Ind., 478) the form of the certificate was “ acknowledge it; ” it was held that “ it ” meant the deed. In Pickett v. Doe (5 Smedes & M. [13 Miss.], 470) the acknowledging officer inserted his own name instead of that of the grantor, and this was held not to be fatal. In Samuels v. Shelton (48 Mo., 444) the mistake was an omission to identify the deed, and it was held to be of no consequence, because it was obvious what was intended. In Rigler v. Cloud (14 Pa., 364) the court say : It is against the spirit and genius of our government to extend nice ' technical objections to the acts of magistrates and other functionaries of the law, who are called periodically from the mass of the people to disehage such duties without previous legal learning or experience, and thereby disturb estates long settled and purchased for full value, and thus revest the estate in the hands of the original vendor by a legal quirk.” (And see Warner v. Jaffray, 96 N. Y., 253.)

It is not necessary to consider any other questions presented on the appeal, because, if our conclusions be right, it follows that upon the findings of the court below, the judgment should not only be reversed, but this court should also proceed to pronounce judgment dismissing the complaint.

We think that course should be taken, and the judgment should be reversed and judgment ordered upon the facts found, in favor of the defendant, dismissing the complaint, with costs.

Bbadt and Daetiels, J.7., concurred.

Judgment reversed and judgment ordered for the defendant, dismissing complaint, with costs.


author: JDatis, 1j. J.:

text:
    ANNIE SMITH, Respondent, v. PHILIP SMITH, Appellant.

      Costs — powm' of the court to compel the payment of, on the settlement of an action for a sepamtion.

    After tie commencement of this action, brought by the plaintiff to procure a separation from the defendant, her husband, on account of his cruel and inhuman treatment of her, an ag'reement was made by which she was to return to and live with him as her husband, and he was to pay the costs and expenses of her attorney. After the plaintiff had returned to her husband the husband served a verified answer m the action and refused to pay to the plaintiff's attorney his costs and expenses:

      Held, that the court had power, upon the application of the plaintiff, to compel him to pay the costs and expenses of the action as fixed by the court.
    Appeal from an order of the Special Term directing the payment of costs and counsel fees to the plaintiff’s attorney.

      William H. Newman, for the appellant.

      Wm. M. Roberts and Scott Lord, for the respondent.
   JDatis, 1j. J.:

This action was brought by the respondent against the appellant, her husband, for a separation from bed and board for cruel and inhuman treatment. After the commencement of the action an agreement was made between Mrs. Smith and her husband by vdiich she was to return to his bed and board upon certain conditions not fully set forth in the case before us. She makes an affidavit that it was a part of the agreement that he should pay the costs and expenses of the suit to her attorney. And she. requested her attorney to send his bill to the defendant. This was done but the bill was not paid. Several days after the arrangement between the parties and the return of the wife to her husband, he put in a verified answer to the complaint in the action. This fact shows that he did not understand that the suit was discontinued, but intended to litigate it notwithstanding the arrangement between him and his wife. The suit has not in fact been discontinued. A motion was made at Special Term on behalf of the attorney for an order directing the defendant to pay the costs of the plaintiff’s attorney. This was denied, and it would seem that the denial was made on the ground that the attorney could not make such a motion on his own behalf. On the same and additional papers, and before the same judge, the present motion was m^de on behalf of Mrs. Smith, the plaintiff in the action. On this motion the court held, that the agreement of the defendant with his wife to pay the costs and expenses of the action was in fact made, and ordered a reference to take proofs as to what amount should be allowed for such costs and expenses. A hearing was had before the referee which resulted in a report to the effect that the reasonable charges for attorney fees and counsel in the case were the sum of $250; and on a further hearing at Special Term the court ordered that defendant pay the amount reported, with referee’s fees and costs of the motion, amounting on the whole to the sum of $341, and from this order the appeal is taken.

"W-i think the order should be affirmed. The action was not discontinued. It may be that it cannot be further successfully prosecuted because of the agreement of settlement between the parties, but it is another question whether the authority of the court over it touching the question of costs does not exist so far as' to enable it to compel the defendant to carry out that part of the agreement which relates to the costs for the purpose of protecting the plaintiff and her áttorney. There is surely no equitable or moral reason why the defendant should not pay the costs as agreed by him, since thereby in part, he secured the return of plaintiff to her relations of wife to him, and the advantage that follows therefrom in the still pending litigation. The plaintiff should not be turned over to a suit on the agreement because by his own act the defendant, by answering in the action subsequently to the agreement, has elected to keep it in life and has enabled the1 plaintiff to move against him in relation to the costs and expenses of conducting the suit. The defendant cannot now get the action out of court without doing what is just and right touching the matter of the plaintiff’s costs and expenses. And the agreement to pay them may properly come into the consideration of the court in determining that question. The ease is not like that of Chase v. Chase (29 Hun, 527). It is more analogous to the case of Green v. Green (40 How. Pr., 465), where the General Term of the Court of Common Pleas held that on a motion by a defendant for settlement and discontinuance of of sucb an action the court might adjudge the payment of costs and reasonable counsel fees to plaintiff.

The subject of the power of courts of equity in actions for divorce and separate maintenance is elaborately and ably discussed by Rapallo, J., in Griffin v. Griffin (47 N. Y., 137-142), and we see no difficulty in deducing the authority of the Special Term to make the order in this case from the practice and principles announced in that.

The order should however, we think, have directed that on payment of the amount ordered the action should be discontinued. With that modification it should be affirmed, with ten dollars costs and disbursements of the appeal to the respondent.

Beady and Daniels, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.


text:
    FRANCIS E. JOHNSON, as Administrator, etc., of CORNELIUS S. JOHNSON, Respondent, v. ANDROS B. STONE and WILLIAM L. DONE, Appellants.

      Lunatic — right of his committee to rescind a disadvantageous ‘purchase made by him — power of the cowrt to enter a judgment in conformity with the equitable rights of the defendants as between each other.

      On January 28, 1881, the defendants sold to one Johnson, a lunatic, 5,000 shares of the stock of a mining company in consideration of the sum of $50,000 paid to them by him. The defendants did not then know that Johnson was a lunatic, and the sale was made in the ordinary course of business and with no attempt at deception, but the defendants did know that the stock had no market value and that the price paid therefor was greatly in excess of its true value. On February 25, 1881, the original plaintiff in this action was appointed the committee of Johnson. On or about March first the plaintiff offered to return the certificates for the shares of the mining stock to the defendants, and demanded the repayment of the $50,000. The defendants refused to repay it.

      Held, that the plaintiff could maintain an action against them to recover the amount so paid.
    It appeared upon the trial that the defendants owned the stock sold in unequal proportions, one owning one-fourth and the other three-fourths thereof, and that the money received was divided in that proportion. The judgment adjudged that the defendants should refund the money in the same proportions in which they had received it.

      Held, that the judgment was a proper one for a court of equity to render, but that if the defendants objected thereto it should be so amended as to'make it a joint judgment for the full amount against both. ¡

    Appeal from a judgment in favor of the plaintiff, entered upon the trial of tbis action at a Special Term.

      G. W. Dillcmay, for the appellants.

      Francis O. Feed, for the respondent.
   Davis, P. J.:

This action was commenced by Francis E. Johnson, as committee of the personal estate of Cornelius Johnson, who had been declared a lunatic. Subsequently Cornelius Johnson died .and Francis E. Johnson was appointed administrator of his estate, and the title of the' plaintiff in the action was changed accordingly. In the month of February, 1881, Cornelius Johnson was, in proceedings duly had in this court, found by the jury to be a lunatic and incompetent to manage himself or his affairs; and to have been such lunatic on and since the 16th day of Dpcember, 1880. The inquisition in the matter was confirmed by this court on or about the 23d day of February, 1881, and Francis E. Johnson was appointed committee of the person and estate of said Cornelius, and said Francis duly qualified as such committee.

On the 28th of January, 1881, the defendants, in consideration of the sum of $60,000, then paid by said lunatic, sold and transferred to him 6,000 shares of capital stock in a mining company, known as the Jones’ Bonanza Mining Company, at the rate of ten dollars per share. The defendants did not then know that said Johnson was a lunatic, and the sale was made in the ordinary course of business and with no attempt at deception. The complaint alleges that, as the said defendants then well knew, the said-alleged mining stock had no market value ; that the sum obtained from said lunatic therefor was greatly in excess of its intrinsic or true value; that it was then worth little or nothing.

These allegations are not denied by the answer. , The stock' so purchased came into the hands of the committee of the lunatic, who, on or about the 1st day of March, 1881, offered to the defendants the certificates for said shares, and to return and restore all that had been received bj the lunatic for said $50,000 paid to them by him ; and demanded that they pay and deliver over to said committee the sum of $50,000 so paid to them’ by the lunatic. The defendants refused to receive said stock and to return said money, and thereupon this action was brought.

In the further progress of the action several questions were by the court sent down for trial by a jury, in answer to which the jury found that Cornelius S. Johnson was, at the time of the purchase and transfer to him of the 5,000 shares of stock mentioned in the complaint, and the payment of $50,000 therefor to the defendants, a lunatic, and incompetent to manage his affairs. On the subsequent trial before the court at Special Term the questions and answers of the jury were received by the court in evidence and made a part of its findings. The court also found that the alleged purchase and sale of the stock, and the payment of $50,000, were made as averred in the complaint, and that the defendants transferred and delivered the said stock, and received the said $50,000, the said Johnson being at that time a lunatic and incompetent by reason of lunacy to manage his own affairs. It also found that the defendants at the time of the sale owned the stock sold in unequal proportions, the defendant Stone owning three-fourths and the defendant Done one-fourth thereof, and that the moneys paid by Johnson, after their receipt were divided between the defendants in that proportion. It also found that the subsequent tender and demand were made by the committee, as alleged in the complaint, and the refusal on the part of the defendants to receive the stock and repay the money. And at the request of the defendants the court further found that the contract of sale, and the payment of the money for the stock, were made in the ordinary course of business with no attempt at deception, and without notice or knowledge on the part of the defendants that Johnson was a lunatic and incompetent to manage his affairs. ,

No part of the evidence taken on the trial before the jury, or of the oral or other evidence (except the verdict of the jpry), taken on the trial at Special Term is included in the case. We are bound, therefore, to assume that the findings of fact were all supported by sufficient evidence on both of those trials.

The principal question presented on the appeal is as to the light of the plaintiff to maintain this action without proving that the defendants were guilty of fraud and deceit in making a sale to the lunatic and receiving his money. This is based upon the idea that the action is in form and substance ex delicto. The complaint undoubtedly contains some allegations which would be entirely proper in an action at law for fraud and deceit. But it was obviously framed, not with a view to maintain an action of that character, but one in equity for the purpose of avoiding the alleged sale and recovering back the consideration upon a return of the stock; and in that view the allegations which are supposed to charge fraud are not improper, and do not, as we think, require any further proof than such as would call upon a court of equity to adjudge the transaction to have been unlawful and in that sense fraudulent, and, therefore, to set the same aside and require the restoration of the consideration paid. The "complaint does allege that the act of the defendants was wrongful and unlawful, but it nowhere alleges that tho-*e acts were done with intent to cheat or deceive the purchase)'. Fraud is not, therefore, the gravamen of the action, and inasmuch as dealings of this character with a lunatic are in equity regarded as wrong and unlawful to such an extent as to justify their rescission and the restoration of the parties to their previous condition, there are not, we think, any such allegations in the complaint as necessarily to make this action one at law for fraud and deceit. The findings, therefore, by the court, that there was no deception practiced by the defendants in making the sale, and that they did not know of the insanity of the person with whom they were dealing is not sufficient, as we think, to entitle the defendants to a dismissal of the complaint. A sale to a lunatic is void when the fact of lunacy existing at the time of the sale is established, whether the defendant had or had not knowledge of its existence. (Van Deusen v. Sweet, 51 N. Y., 378 ; Hicks v. Marshall, 8 Hun, 327; Diggs v. American Tract Society, 84 N. Y., 330; Mutual Life Insurance Co. v. Hunt, 79 id., 541.) This rule is subject to the qualification that where a sale is for the benefit of the lunatic or his estate, and is made in good faith, without knowledge of his condition, and the party who has made it cannot be put' im, statu quo, '& court of equity will not invalidate the transaction. But these facts, in order to confirm the contract, must be alleged and proved by the defendants. The exception has no application to this case, because it is clear that the sale was not a transaction for the benefit of the lunatic or his estate ; and it is equally clear that, at the time of the tender of the stock and demand of the money, the defendants, by receiving the same back and refunding the money, would have been placed m statu quo. The stock is not shown at any time to have had any market value. There is no evidence to show that it had depreciated, or that it could not be sold at its real value, as well in March as in the previous February. After the lunacy had been adjudged to have existed at the time of the sale, that fact was made known to the defendants when the committee came with the stock and offered to restore it, and receive back the consideration paid. The refusal to take the stock and refund the money was a wrong which, in equity, charges the defendants with all the liability resulting from an unlawful withholding from the committee of a portion of the lunatic’s estate. We are able to see no facts found or proved in the case which relieve the defendants from the consequences of the general rule. But it is insisted that separate causes of action against the defendants were shown, and that therefore the complaint should be dismissed, as no joint judgment could be rendered against the defendants. That, however, we think, is a mistaken view of the case. The sale is shown to have been a single one of 5,000 shares of the stock. It was made by the defendant Done, acting for himself and the defendant Stone, and there is nothing to show any separate individual transaction between either of those parties and the lunatic. Upon the findings in the case, which, as before said we must assume to have been supported by evidence, the plaintiffs were entitled, if they so demanded, to have had a joint judgment against both of the defendants to enforce a repayment of the money. But it appeared in the case that although the sale was a single transaction made for-the joint benefit of the defendants, yet in fact the stock sold was owned by them in the proportions of one-fourth by Done and three-fourths by Stone, and the money received was, after its payment to Done by the lunatic, divided in like proportions. The court, therefore, for the purpose of administering equity as between these parties, proceeded to adjudge their liability to refund the money in precisely the proportions in which they received it. Of course this is an equitable disposition of their rights, and there is no just cause for either of the defendants to complain. If the recovery of such a judgment be erroneous, the only legitimate result would be a modification of the judgment by us, so that it should be in form joint against both, leaving them to adjust as between themselves their respective equitable obligations and duties. But we see no good reason why a court of equity might not proceed to render judgment precisely as has been done, so as to enforce the separate liabilities against the defendants individually for the amount of moneys received by them respectively, and relieve each from any obligation to pay any part of it which has not come to his own hands. (See Armitage v. Pulver, 37 N. Y., 499.) That case, and the rules therein discussed and laid down, seem’ to be quite sufficient to uphold this form of -procedure; for this may be treated as the learned judge in that case treated it, as in its nature an equitable action to ascertain and determine so far as relates to this branch of it the sums which the several defendants are bound to contribute.

"We are not, therefore, inclined to interfere with the judgment on the ground of this objection, except so far as to hold that if the defendants insist that the judgment should be joint, and not several as rendered, and consent to a modification to that effect such modification may be made, in which case the judgment should be modified to that extent, and affirmed as modified; otherwise the judg ment must be affirmed, and in either case with costs to the respondents.

DaNiels, J., concurred.

Judgment affirmed, unless appellants consent by stipulation that the judgment be joint and not several as rendered, in which case the judgment modified to that extent and affirmed as modified; but in either case with costs to the respondent.


text:
    AUGUSTUS B. DE BOST, Respondent, v. ALBERT PALMER COMPANY, Appellant.

      Corporation — apa/rty dealing with it must ascertain the authority of its offiem's — duty of the court to pass upon requests to charge.

    In an action against a corporation upon a written agreement purporting to be executed on its behalf by its president, the corporation claimed that its. president had not authority to make the contract. Upon the trial the defendant offered in evidence its by-laws, in force at the time the contract was made, for the purpose of showing that its president had no power to bind it by the contract. Upon the plaintiff’s objecting that the evidence was incompetent, because it was not proposed to be shown that he had notice of the-by-laws, the court excluded it.

      JBelcl, that this was error; that all persons dealing with a corporation are bound to take notice of the nature„and extent of theauthoritypossessedbyits officers.
    At the close of the testimony the counsel for the defendant submitted to the court an unnecessary and unreasonable number of requests to charge. The-court not having embodied all these requests in its charge, the counsel for the defendant said; “ I desire to call your honor’s attention to certain propositions embodied in the written requests to charge which I have submitted;” — the court here said: “I decline to charge further than I have already,” to which the defendant excepted.

      Held, that the exception was well taken; that the counsel was entitled to distinguish and point out the specific propositions he desired to have charged.
    Appeal from a judgment in favor of the plaintiff, entered on the-verdict of a jury, and from an order denying a motion for a new trial, made upon the minutes of the justice before whom the action was tried.

      Dill ds Chandler, for the'appellant.

      George A. Strong, for the respondent.
   Davis, P. J.:

This action is brought upon two alleged causes of action: Eirst To recover commissions upon the sale of certain real property belonging to the defendant under an oral agreement alleged to have been made between the plaintiff and the defendant. Second. To recover commissions upon an agreement in writing, alleged to have been made by the defendant with the plaintiff for the payment to the latter of commissions upon the sale of the same lands. The-answer put in issue the making of the alleged agreement and especially denied that the written instrument, a copy of which was annexed to the complaint, was executed by the defendant or evei ratified by it. The defendant is a corporation created under the laws of this State. The instrument (exhibit A, annexed to the con. plaint), appears to be an agreement of the defendant corporation and four individuals as owners of certain real estate therein1 described, and recites that-they had entered into a written agreement with one Leon De Bost, for the sale of the lands to him for $45,000; that the sale was made by Augustus De Bost (the plaintiff) as their agent with the understanding that upon payment of the sum of $45,000, they would allow and pay him $5,000 for making the sale. It then in substance provides for the payment of that commission to the plaintiff by the several parties in proportion to their respective interests, the interest of the defendant corporation being stated at one-tenth, and the amount to be paid at one-tenth of $5,000. This instrument was signed and sealed by the several individual parties to it, and so far as the corporation is concerned' as follows: “ A. W. Palmer, President [l. s.].” It was acknowledged before a notary public by the individuals, and by A. W. Palmer individually and not as president in the usual form of acknowledgments. On the trial it became an important question whether or not this instrument was executed in such form as to bind the corporation. Palmer was its president. He testified that he was not authorized to sign it for the company, and that he told the plaintiff so at the time he signed the contract. Por the purpose of showing the extent of his authority as president in the making of contracts, the defendant’s counsel produced the by-laws of the corporation, which were conceded to be the original by-laws of the company in force and without change since January 18, 1879, and offered them in evidence to show what authority the president had in respect to the making and execution of contracts for the corporation. The eleventh article of the by-laws provided, that no debt or liability, except as hereinafter provided; shall be contracted by any trustee or any officer of the company, excepting as provided in these by-laws; and that no contract or liability shall be authorized and be the act of this company, unless the same shall be first audited and passed upon by the board of trustees, except as hereinbefore provided, and the evidence of such indebtedness shall be executed as provided in article fifteen.”

That article declared that £ca suitable seal shall be provided which shall be under the charge of the president and treasurer and the affixing of the seal to contracts and instruments, together with the signature of the president and secretary or treasurer, shall bind the company.”

The plaintiff’s counsel objected to the admission of those by-laws on the ground that inasmuch as defendant’s counsel states that he does not propose to show notice to us, the proof was immaterial, irrelevant and not evidence against the plaintiff.” The objection was sustained and the evidence excluded and the defendant excepted. We are unable to see any ground upon which the exclusion of this evidence can be sustained. The defendant clearly had a right to show if it could that the contract was not authorized by the corporation, and not so executed as to bind the corporation. The president of the company was an agent having a special power and authority' declared and defined by the by-laws of the corporation. All persons dealing with him in the name of the corporation were bound to take notice of the nature and extent of his authority when he assumed to act as president of the corporation in making any contract; and it was certainly competent to put the by-laws of the corporation in evidence for the purpose of showing the extent of his authority. The objection was not well taken, and should have been overruled and the exception raises in our opinion a point fatal to the judgment. The rule on this subject is an extremely well settled one as will be found by reference to numerous authorities. (Adriance v. Roome, 52 Barb., 399; Dabney v. Stevens, 10 Abb, [N. S.], 39; Risley v. I. B. and W. R. Co., 1 Hun, 202.) In Alexander v. Cauldwell (83 N. Y., 480), the Court of Appeals state the rule as follows : “ Every one knows that corporations are artificial creations existing by virtue of law and organized for purposes defined in their charters; and he who deals with one of them is chargeable with notice of the purpose for which it was formed, and when he deals with agents or officers of one of them he is bound to know their powers and the extent of their authority. Corporations, like natural persons, are bound only by the acts and contracts of their agents, done and made within the scope of their authority.” The by-laws of the corporation were therefore competent evidence for the purpose of showing what power had been conferred upon its president as its special agent. It was, we think, error to exclude them.

It is not necessary to consider the other numerous exceptions in the case, most of which were of no importance. An allusion should be made to one which presents, we think, a fatal error. At the close of the testimony the counsel for the defendant submitted to the court a volume of requests to charge unreasonable and unnecessary in number. In charging the jury the court 'did not embody all these requests, and the defendant’s counsel, after taking some exceptions to the charge, said: “I desire to call your honor’s attention to certain' propositions embodied in the written requests to charge, which 1 have submitted to —.” At this point the court interfered saying : “I decline to charge further than I have already,” and the defendant excepted. ’We think this was an erroneous disposition - of the matter. The counsel was attempting to call attention to certain propositions embodied in the requests to charge. He was not asking to charge the whole as a body, and he was entitled to distinguish and point out the specific propositions he desired to have charged. The court prevented him from doing this, and thus deprived him of what seems to us to have been a clear legal right. In Chapmam, v. McCormick (86 N. Y., 479), the counsel said: “I want to ask the court to charge the jury in certain respects.” The court refused to entertain the request, and the counsel excepted. In reversing the judgment the Court of Appeals say: “ It may be that no suggestion would have changed that mind (of the court), but , had it been heard, the defendant would have had either the benefit of an exception to that decision, or a ruling of the court in accordance with his views. To one or the other he was entitled ; and it was beyond the power of the court to deprive him of it. As a trial judge is bound to instruct the jury on each proposition of law submitted to him by counsel, bearing upon the evidence, so it must be a legal right of counsel to submit such propositions, and its denial by the court a subject of exception and review upon appeal. The judge, therefore, erred in refusing the request of counsel, and the error is fatal to the judgment, unless it appears that there was no question in the case to be submitted to the jury.”

We think the counsel was entitled to select from his numerous requests that had been already handed up, either or any upon which he thought the court had not sufficiently or'properly charged, for ' the purpose of procuring a. charge thereon, or availing himself of a distinct exception if it were refused, and the mode of disposing of his request was equivalent to an absolute refusal to pérmit him to do this. On the evidence in the case there were questions of fact to' be submitted to the jury especially upon the question of ratification of the'contract by the corporation.

The judgment should be reversed, and a new trial ordered, with costs to abide event. '

Brady and Daniels, JJ., concurred.

Judgment reversed, new trial ordered, costs to abide event.


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    THE DUQUESNE CLUB OF PITTSBURGH, Appellant, v. THE PENN BANK OF PITTSBURGH, Respondent.

      Practice — when one foreign corporation can sve another in t, <s State — Code of Oml Procedure, sec. 1780.
    Since the adoption of section 1780 of the Code of Civil 1 rocedure a foreign corporation cannot he sued in the courts of this State by a. other foreign corporation, except in the three cases therein specifically prescribed.
    The provisions of the said section so restricting the right to bring actions in this State against foreign corporations, do not conflict with the provisions of section 2 of article 10 of the United States Constitution,, declaring that the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States.
    Appeal from an order made at Special Term vacating an attachment.
    In May, 1884, the plaintiff, a foreign corporation, obtained, in this court, a warrant of attachment against the property of the defendant, also a foreign corporation, upon the ground, as stated in the warrant, “ that the defendant is a foreign corporation.”
    For some time prior to the granting of the warrant, the plaintiff had kept its bank account with the defendant, at the city of Pittsburgh, in the State of Pennsylvania, where both corporations carried on business. At the time of applying for the attachment, the defendant had suspended payment, and, it is alleged', was then indebted to the plaintiff in the suin'of $4,800 — the balance on deposit to the plaintiff’s credit at the time the bank suspended. The refusal by the defendant to pay this alleged balance is the cause of action set forth in the affidavit and complaint upon which the warrant of attachment was granted. The summons was served upon the defendant by publication. The defendant moved to vacate the attachment on the ground that, under section 1780 of the Code of Civil Procedure, the court had no jurisdiction in the premises. That motion was granted, and from the order entered vacating the attachment this appeal has been taken.

      A. O. Brown, for the appellant.

      James 'Watson, for the respondent.
   Davis, P. J.:

Both the plaintiff and the defendant in this action are foreign corporations created under the laws of Pennsylvania, and having their place of business at Pittsburgh in that State. The plaintiff commenced its action against the defendant in this court by filing a summons and complaint, and obtaining an order for service of the same by publication on the ground of the defendant’s non-residence. It also, upon an affidavit sufficient in form, obtained an attachment against the property of the defendant. The defendant, appearing by attorney for that purpose only, moved to vacate the attachment on the ground that both parties were foreign corporations, and that the action of the plaintiff could not be maintained in this State. The motion was granted at Special Term; and from the order vacating the attachment this appeal is taken.

Section 1780 of the Code of Civil Procedure makes provision for the cases in which a foreign corporation may be sued in this State. It provides, first, that an action against a foreign corporation may be maintained by a resident of the State or by a domestic corporation for any cause of action ; secondly, that an action against a foreign corporation may be maintained by another foreign corporation or by a non-resident in one of the following cases only: 1st. Where the action is brought to recover damages for the breach of a contract made within the'State, or relating to property situated within the State at the time of the making thereof. 2d. Where it is brought to recover real property situated within the State, or a chattel which is replevied within the State; and 3d. Where the cause of action arose within the State, except where the object of the action is to affect the title to real property situated without the State. It is apparent that this action is not one within either of those provisions. It is brought for a cause of action which arose in the State of Pennsylvania upon a contract made and wholly to be performed, and the- allóged breach of which occurred, within that State. Both parties being foreign corporations and each having its place of business in another State, are of course non-residents of this State. In Ervin v. Oregon Navigation Company (28 Hun, 269) this court held that since the adoption of section 1780 of the Code a foreign corporation can only be sued by a non-resident in one of the cases mentioned therein. But it is insisted by the counsel for the appellant that section 1780 is in conflict with the provisions of the Constitution of the United States, which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States. But without considering fully the elaborate and able arguments of the counsel upon that question, it is enough to say that the plaintiff in this case, being a corporation of Pennsylvania, is not, within the meaning of the Constitution, a citizen of that or any other State, and therefore may not claim in another State whatever rights and immunities are preserved by that instrument to the citizens of all the States. By section 1 of article 14 of the amendments to the Constitution, citizenship is expressly defined and declared as follows: “ All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

This amendment does not declare corporations to be citizens. It applies to natural and not to artificial persons. The several decisions of the courts of the United States which have heretofore held that corporations are not citizens within the meaning of the Constitution are, therefore, applicable to and controlling of the construction to be given to the new amendment. (Paul v. Virginia, 8 Wall., 181; Conner v. Elliott, 18 How. [U. S.], 591; Lafayette Ins. Co. v. French, Id., 407; Ducat v. Chicago, 10 Wall., 410.)

13ut if it were otherwise, and the plaintiff corporation is to be regarded as a citizen of Pennsylvania, it would not have the right to maintain this action in our courts, because the right to maintain such actions against foreign corporations is not one under our law that pertains to citizenship, but is a right pertaining only to residence. A citizen of our State, who is not a resident of the State, could not maintain the action under section 1780 of the Code, and therefore a citizen of another State, who is not a resident of this State, is equally denied the right to maintain such an action. There is nothing therefore, we think, at all in conflict with any of the provisions of the Constitution of the United States in our statutory enactments controlling this class of cases. As the action cannot be maintained it necessarily' follows, therefore, that the right of attachment cannot be upheld.

The motion was properly disposed of by the court below and the order should be affirmed, with ten dollars costs and disbursements.

Beady and DaNteLs, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.


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    THOMAS H. ADAMS, Appellant, v. THE PENN BANK OF PITTSBURGH, Respondent.

      Foreign corporation — right of a non-resident to sue it in this State — Oode of Gwil Procedure, sec. 1780.
    One not a resident or this State can only maintain an action against a foreign corporation, in the courts of this State, in the cases specified in section 1780 of the Code of Civil Procedure.
    The right to maintain an action here against a foreign corporation depends upon the residence and not upon the citizenship of the plaintiff.
    Appeal from an order, made at a Special Term, vacating an attachment.

      A. C. Brown, for the appellant.

      James Watson, for the respondent.
   Davis, P. J.:

In this case the plaintiff is a non-resident of this State, and is a resident of the State, of Pennsylvania. The defendant is a corporation of the State of Pennsylvania, having its place of business in the city of Pittsburgh in that State. Neither of the parties have a residence in the State of New York. The action'is commenced by the filing of a summons and complaint, and the obtaining of an .order for service of the same by publication. The defendant appeared solely for the purpose of making this motion.

Section 1780 of the Code of Civil Procedure, which is controlling ■of th!e cases in which actions may be maintained in the courts of this State against foreign corporations, does not permit such an action by a non-resident, except in certain specified cases, neither of which exists in this action. The plaintiff being a resident may be-presumed to be a citizen of the State of' Pennsylvania, although that fact is not affirmatively shown. But, assuming him to be such, he is entitled to all the privileges and immunities secured to citizens of the United States, and of the several States, by the Constitution of the United States. But those provisions do not secure to citizens of any State the right to exercise in another State, privileges and immunities which are not conferred upon.citizens of that State. For instance, the plaintiff does not by virtue of any provision of the Constitution of the United States possess the right to maintain an action against the defendant in this State, because he might maintain such an action in the State of Pennsylvania. The privileges and immunities that he can claim in this State under the Constitution are only such as pertain to citizens of this State by reason of their citizenship. In order, therefore, to entitle him to maintain his action against a foreign corporation, notwithstanding the provisions of the Code to the contrary,‘he must be able to show that a citizen of this State circumstanced precisely as he is, could maintain such an action. But it is manifest that under section 1780 the right to maintain the action does not depend upon citizenship, but upon residence; and a citizen of this State who actually resides in the State of Pennsylvania cannot by reason of his citizenship sue a corporation of Pennsylvania in our courts, except in one of the cases specifically declared by ■statute. As the question is wholly controlled by residence, it necessarily follows that a resident of another State cannot come into our •courts and insist upon maintaining an action against a foreign corporation, except only in cases allowed by our statute. The plaintiff, therefore, fails to show any right to maintain his action against the •defendant, and consequently is not entitled to hold the attachment which he has sued out.

The motion was properly disposed of in the court below, and the ■order should be affirmed, with ten dollars costs and disbursements.

Beady and Daniels, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.