Miller v. White

10 Abb. Pr. 385, 59 Barb. 434

• Court: New York Supreme Court
• Decided: January 15, 1871
• Status: Published

Opinion

By the Court.

*—Tappen, J.

The plaintiff recovered a judgment against the Ghitta Percha Manufacturing Company, for the sum - of twenty-four thousand seven hundred and thirty-four dollars and sixty-two cents, June 27, 1866 ; and, the same being unpaid, after execution issued and returned wholly unsatisfied, the plaintiff brings this action against the defendants, alleging that they were trustees of the company, and that the company neglected to file an annual report, as required by the general act of February 17, 1848, and the acts amendatory thereof, and that, therefore, by force of the statute (§ 12) the trustees became personally liable for the debts of the company then existing, and for all debts contracted prior to the making of such report (Laws of 1848, p. 54, ch. 40, § 12).

It has been held that only those who are trustees when the debts are contracted, come within these terms (Shaler & Hall Quarry Co. v. Bliss, 27 N. Y., 300); and in determining that case, it was held that three circumstances must concur in point of time to render a trustee liable:

1. The existence of the debt.

2. The existence of the default in making the report.

3. And the trusteeship.

In the case at bar the amount of the debt is established by the judgment in favor of the plaintiff against the company, and the non-payment thereof is also proven.

This branch of the case, and the sufficiency of the complaint, are fully discussed in the opinion delivered in this case at general term, and reported in 8 Abb. Pr. N. S., 46.

The action was brought to trial at the Kings circuit, June, 1870, and upon the evidence offered and admitted, the court directed a verdict in favor of the plaintiff.

The testimony of the plaintiff, taken by commission in March, 1869, was offered and read in evidence ; that testimony refers to the judgment, and states the facts out of which the indebtedness arose. The defendants’ counsel objected to the admission of this evidence upon various grounds, the chief of which appears to have been that these facts were not stated in the complaint.

The defendants had put in a very full answer, setting up several defenses, and the plaintiff had put in a reply. Certain issues were thus formed, and testimony pertinent to these issues was certainly admissible. In other words, if the plaintiff, in addition to the matters set forth in the complaint, was allowed to testify upon commission as to matters not embraced in the complaint, but distinctly raised and presented as a defense by the answer, it cannot be held as error to admit the testimony.

The defendants had answered that their trusteeship ceased at a certain time. It was competent for the plaintiff to show that this claim had accrued prior to that time ; and if it be said that the complaint did not allege the fact, it is sufficient to say that the answer first raised that question; and if it were a material allegation in the complaint and omitted therein, and not taken advantage of by demurrer, the court has ample powers to permit an amendment before or after judgment. As to the practice on this point, see Lounsbury v. Purdy (18 N. Y., 515).

The defendants objected to the introduction of the judgment roll, upon the ground that the same was imperfect, having no summons or minutes of trial annexed. The complaint and answer were a part of the judgment roll, and the decision of the judge before whom the action was tried was included therein. The office of a summons is to bring parties into court. The judgment was not obtained by default for want of an answer. A very full answer was put in ; the answer shows that the. defendants had been brought into court. They did not appear, however, at the trial, and an inquest was taken against them, and if the clerk of the court did not annex the summons to the judgment roll, as is his duty, the omission will not deprive a prevailing party of his rights (Renouil v. Harris, 2 Sandf., 641; Earle v. Barnard, 22 How. Pr., 437; Hoffnung V. Grove, 18 Abb. Pr., 14 ; S. C., 42 Barb., 548).

With respect to the minutes of trial, the judgment roll shows a trial before the judge (a jury being waived) ; his findings in favor of the plaintiff; and directions for judgment. The judgment roll, with the exception of the summons, appears to meet the requirements of section 381 of the Code; and'as to its sufficiency, or the effect of any irregularity, the judgment roll is not a nullity (2 Sandf., 641; 4 Den., 243 ; 1 Duer, 686).

With respect to the actual filing of a report, the plaintiff offered testimony establishing a thorough search in the proper county clerk’s office for the report required to be filed, and an examination of records and indices in the usual and accustomed places for keeping such papers, and for the making of entries of the filing thereof, and that no such papers or the filing thereof appeared or could be ascertained upon such search, which was twice made.

The defendants offered testimony going to show the preparation of a report, and that the same was handed to one of the officers of the company for filing, and one witness thinks he saw it published in a newspaper. This evidence does not meet the fact which the plaintiff’s testimony tended to establish, and it is not sufficient proof to go to a jury as to whether the report was, in fact, filed and published, as required by the statute ; and no other proof was offered by the defendants to establish that fact.

It becomes important to determine the period of time when the defendants ceased to be trustees. There is no dispute that they were and continued to be trustees during the twenty days subsequent to January 1, 1865, within which time the report was required to be made, published and filed, or in default thereof their liability attached.

The action brought by the plaintiff against the company was commenced January, 1865, and the judgment recovered thereon June 37, 1866.

In the present action the defendants set up in their answer that the company was duly dissolved and ceased to exist on April 21, 1865; the defendant J. P. White avers that he resigned the office of trustee on February 16, 1865; the defendant M. M. White avers that he never acted as trustee after the same date, that he never accepted any appointment or election as trustee after that time, and that he was never so elected “ after said February 16, or at any time after March 10,1865.”

The defendant Lazell avers that the company was dissolved April 21, 1865, and that it performed no corporate act after that period, and he denies that he has been a trustee since that date.

As to the defendant Moores M. White it appears by his examination, that he became a trustee at the organization of the company (in 1863), and continued such trustee as long as the company existed. There is no proof of the dissolution of the company, and on the trial it was stated by defendant’s counsel that they did not claim the company was dissolved legally, but merely that it ceased to do business.

M. M. White also testified that he supposed the company’s existence terminated in the early part of 1865 ; he also stated that he was elected a trustee for one year from March, 1864, and that he never resigned. If he did not resign, and if no successor was elected to take his place, he continued to fill the office, or, in other words, to hold over; and it was claimed on his behalf, that he ceased to be a trustee before the judgment was recovered against the company, and, therefore, that it could not be used as evidence against him. The same claim is now made on behalf of the defendant John P. White, but this objection was not made as to either oí them at the trial when the judgment roll was introduced, and is not properly before the general term; but having been discussed there, a brief review of it will be proper here.

In Moss v. Oakley (2 Hill, 265), the defendant was a stockholder when the debt was contracted ; the declaration did not aver that he so continued until the judgment was recovered. On demurrer the declaration was sustained, and the judgment held binding on the stockholder.

In Moss v. McCullough (last reported, 7 Barb., 279, 293), the litigation was of several years’ duration, and was twice before the court of last resort; and although the defendant was not a stockholder when the judgment was recovered against the company, it was held to bind him—and Judge Willard says at page 293, it matters not that the defendant had ceased to be a stockholder, the judgment was proper evidence, &c.

The settled principle is that a creditor, having once established his claim against a corporation by judgment, shall not be compelled, in seeking a remedy against stockholders or trustees, to re-establish the fact of original indebtedness.

The judgment he obtains against a corporation may be impeached for fraud or collusion, but not otherwise; and both stockholder and trustee may relinquish their positions and escape liability for future obligations, but they cannot thereby change the course of proceedings, or the rules of evidence, or their liability as to obligations theretofore incurred by the corporation.

A trustee is not only a stockholder, but he is an officer of the company, with peculiar means of controlling its affairs, and the reasons why he should be bound by the rules of evidence applicable to stockholders, do .not require to be expressed here; they will be found very fully stated by Justice Woodruff in Squires v. Brown (22 How. Pr., 35).

It is not disputed that the omission (if any) to make the report, and the trusteeship of the defendants, were concurrent in point of time. It remains to be seen whether the plaintiff’s claim, for which he recovered judgment against the corporation, accrued during the trusteeship of the defendants.- It will appear from the foregoing statements that the defendant M. M. White at no time ceased to be a trustee, save by inaction; the question is not raised as to the defendant Lazell.

The defendant, J. P. White, in testifying, states that he resigned as trustee on February 16,1865, and both he and the defendant, M. M. White, insist that the claim accrued after that period.

The evidence of the plaintiff shows that the debt accrued prior to February 14, 1865 ; his-services commenced September 1, 1862. A contract in writing was made August 1, 1863, and he says that he continued in the employ of the company after February 14,1865; that he received money from them after that date, and gave them credit for two thousand seven hundred and seventy-two dollars and fifty cents, an amount large enough to balance the services and more.

On the part of the defendants, various questions were put to the witnesses examined on their part, as to whether the company owed the plaintiff anything ; but the court properly overruled these questions, upon the ground that the answers would impeach the judgment, and that the judgment could not be so impeached. The questions were put in a variety of forms, but all to the same effect, and the court said, “You may show what, if any, of these services were rendered subsequent to February 16, 1865.”

Two exhibits were then offered in evidence by defendants, the one being an account dated April 15,1865, rendered to the company by the defendant; and the other a letter written by the plaintiff, dated May 22, 1865; these were received in evidence. This letter is a reply to, and contains extracts from, letters received by the plaintiff from the company’s officers, and speaks oí a' shipment of five hundred ponchos, on March 30, to make up a deficiency in former shipments of ponchos. The letter also speaks of commissions due him when the last voucher from the government was obtained on April 16, 1865 ; but none of the evidence meets the case on the part of the plaintiff, or tends to establish, as a fact, that the liability or debt of the company accrued after the defendant JohnP. White ceased to be a trustee.

None of the books, of the company were produced upon the trial, the defendants testifying that they could not find them, that the books had passed into other hands, and that the company had sold out to a new company in the spring of 1865.

At the conclusion of the trial the defendants claimed to go to the jury on the question of fact as to the filing of the report. The court refused this, and stated that there was no question for the jury in the case.

. An examination of the whole case shows that there was no impeachment of the judgment as to the amount due, nor any proper evidence offered to that end. Nor did the evidence, as a whole, raise any question of fact, which could have been properly decided in favor of the defendants, either as to the making of a report, or as to the “time” when the plaintiff’s claim accrued.

The defendant’s fifth request to charge, went to aR the defendants and was clearly improper. No attempt was made to separate one of the defendants from the other in that request. The sixth request assumes a fact which was not established, and so with the subsequent requests, and the attention of the court was not called to any questions arising on the evidence as to the amount of the indebtedness at the time of the alleged resignation of the defendant John P. White.

On the argument at general term the defendants’ counsel claimed that no debt existed in favor of the plaintiff upon the written contract with the company, while John P. White was trustee. The concluding clause of the contract says, “that when aE bills certb fied shall have been received by them, they will pay a portion of them equal to ten per cent., &c.”

The claim of the plaintiff appears to have been for services commencing in September,' 1862, and for other services commencing upon and under the contract which is dated August 1, 1863. So that the services covered a considerable period of time. There was no claim that the company had not the benefit of the, contract, and there were large sales of goods, by the plaintiff, for the account of the company, to the government, while the defendants were trustees. That provision of the contract simply points out how and when the plaintiff should be paid—it does nothing else. If the defendants were trustees when the goods were sold, and the services rendered, then they were trustees when the plaintiff’s claim accrued ; but no question presenting the case in this manner was mooted at the trial, and in that respect there is no ruling to be examined or corrected. As previously stated, the plaintiff in his testimony shows that he continued in the company’s service after February 15,1865, and received money thereafter, and had fully credited the company for all services after that period, and no books or accounts of the company were produced, and no competent proof offered to refute this.

The rulings of the court appear to have been proper on the whole case as presented, particularly as to the defendants M. M. White and Lazell, nor was there any error as to the defendant John P. White, and the judgment should affirmed with costs.

Judgment accordingly.

Present, J. F. Barnard, P. J., and Gilbert and Tappen, JJ.