Dowling, J.:
This action was brought by the plaintiffs, as minority stockholders of the Denver and Rio Grande Railroad Company, against the individual defendants, some of whom were at various times directors of the company, for an accounting and restitution of all of the moneys, properties and funds of the company of which it has been wrongfully and unlawfully disseized and divested, and for all loss and damages which the company and its stockholders have sustained in the premises, aggregating $20,000,000. It is founded upon an alleged unlawful, wrongful and fraudulent combination and conspiracy of the individual defendants for the purpose of wrecking the Denver and Rio Grande railroad and causing all of its properties to be wiped out, the entire investment of its stockholders therein to be destroyed, and all of its properties to be absorbed by other interests, including the defendants. It is further alleged that continuously from February, 1915, the conspirators were knowingly and willfully engaged in said unlawful combination and conspiracy and in the furtherance of such unlawful objects and purposes. The agreed manner of accomplishment of the conspiracy is then set forth in seven different subdivisions, as well as the way in which the conspiracy was actually effectuated, the latter being set forth in great detail.
The action grounds in tort, and is not based merely on a neglect or failure of the directors of the company to perform their duties, or their performance in an improper or dishonest manner, but on an unlawful conspiracy with well-defined purposes, having in view the ruin of the company, entered into not only by the defendants, who were directors of the company, but as well by the defendants Krech and Baldwin, who are charged to have been two of the conspirators and to have aided and abetted the others in the performance of their unlawful acts. Krech was president of. the Equitable Trust Company of New York, the trustee of a first mortgage on the Western Pacific Railroad Company (constituting with the Denver and Rio Grande and the Missouri Pacific, the so-called “ Gould System ”), and afterwards became president of the Western Pacific Railroad Corporation, a holding company. Baldwin was a director of the Western Pacific Railroad Company. Neither Krech nor Baldwin was ever a director of the Denver and [17] Rio Grande railroad, so far as the complaint discloses. The action is clearly one in personam and not in rem, based on the theory of a common tort in which all the individual defendants participated.
The action was commenced against George J. Gould in his lifetime by the service of a summons and complaint upon his attorneys, who served a notice of appearance on his behalf, and he interposed a verified answer on March 8, 1922.
George J/Gould died May 16, 1923, a resident of the State of New Jersey, leaving a last will and testament which was admitted to probate in New Jersey; and Kingdon Gould and Schuyler Neilson Rice, both residents of New Jersey, qualified and are acting as executors under said will and under the laws of the State of New Jersey.
The plaintiffs in this action applied for and obtained an order directing the executors of the estate of George J. Gould to show cause why an order should not be granted herein directing the above-entitled action to be continued against them in the place of the said deceased defendant, without prejudice to the proceedings already had, and granting leave to plaintiffs to file and serve a supplemental summons and complaint. The order to show cause further directed substituted service upon the foreign and non-resident executors. Said executors, appearing specially and solely for the purposes of the motion, then made a cross-motion for an order vacating the order to show cause and to vacate and set aside the service thereof, on the ground “ that this court has no jurisdiction over Schuyler Neilson Rice and Kingdon Gould or either of them, as such executors of the estate of George J. Gould, deceased, and has no jurisdiction over any assets of the estate of said deceased.”
The court at Special Term granted plaintiffs’ motion and made an order continuing the action against the executors of the estate of George J. Gould, deceased, and amending the summons and pleadings so as to make them parties defendant in the action, without prejudice to the proceedings already had herein; and further granting leave to plaintiffs to serve a supplemental complaint and directing that a supplemental summons issue to such executors. Said order further denied the cross-motion of said executors for an order vacating the order to show cause and the service thereof.
From such order the foreign executors have taken the present appeal to this court.
I believe that the executors are correct in their contention that the Supreme Court of this State had no jurisdiction over them. [18] The record discloses that at the time of the commencement of this action and continuously thereafter and until his death George J. Gould was a resident of New Jersey. His will was admitted to probate in the Orphans’ Court of Ocean county, N. J., and letters testamentary were issued out of said court to Kingdon Gould and S. N. Rice, who qualified and are now acting as executors. Not only was the deceased a resident of New Jersey, but both the executors are residents of New Jersey; Kingdon Gould residing at Lakewood, N. J., and S. N. Rice residing at New Brunswick, N. J. These executors receive their executorial powers under the laws of the State of New Jersey. They are called upon to administer, and must administer, this estate, according to the New Jersey laws. Their conduct in the administration of this estate will be measured and weighed by the laws of New Jersey, and not by the laws of New York. They are not. administering the estate in this State and are not claimed to have taken possession of any of the assets of the estate therein. As was said in People v. Baker (76 N. Y. 84): “ We must and do concede, that a State may adjudge the status of its citizen towards a non-resident; and may authorize to that end such judicial proceedings as it sees fit; and that other States must acquiesce, so long as the operation of the judgment is kept within its own confines. But that judgment cannot push its effect over the borders of another State, to the subversion of its laws and the defeat of its policy; nor seek across its bounds the person of one of its citizens, and fix upon him a status, against his will and without his consent, and in hostility to the laws of the sovereignty of his allegiance.”
Free access — add to your briefcase to read the full text and ask questions with AI
Dowling, J.:
This action was brought by the plaintiffs, as minority stockholders of the Denver and Rio Grande Railroad Company, against the individual defendants, some of whom were at various times directors of the company, for an accounting and restitution of all of the moneys, properties and funds of the company of which it has been wrongfully and unlawfully disseized and divested, and for all loss and damages which the company and its stockholders have sustained in the premises, aggregating $20,000,000. It is founded upon an alleged unlawful, wrongful and fraudulent combination and conspiracy of the individual defendants for the purpose of wrecking the Denver and Rio Grande railroad and causing all of its properties to be wiped out, the entire investment of its stockholders therein to be destroyed, and all of its properties to be absorbed by other interests, including the defendants. It is further alleged that continuously from February, 1915, the conspirators were knowingly and willfully engaged in said unlawful combination and conspiracy and in the furtherance of such unlawful objects and purposes. The agreed manner of accomplishment of the conspiracy is then set forth in seven different subdivisions, as well as the way in which the conspiracy was actually effectuated, the latter being set forth in great detail.
The action grounds in tort, and is not based merely on a neglect or failure of the directors of the company to perform their duties, or their performance in an improper or dishonest manner, but on an unlawful conspiracy with well-defined purposes, having in view the ruin of the company, entered into not only by the defendants, who were directors of the company, but as well by the defendants Krech and Baldwin, who are charged to have been two of the conspirators and to have aided and abetted the others in the performance of their unlawful acts. Krech was president of. the Equitable Trust Company of New York, the trustee of a first mortgage on the Western Pacific Railroad Company (constituting with the Denver and Rio Grande and the Missouri Pacific, the so-called “ Gould System ”), and afterwards became president of the Western Pacific Railroad Corporation, a holding company. Baldwin was a director of the Western Pacific Railroad Company. Neither Krech nor Baldwin was ever a director of the Denver and [17] Rio Grande railroad, so far as the complaint discloses. The action is clearly one in personam and not in rem, based on the theory of a common tort in which all the individual defendants participated.
The action was commenced against George J. Gould in his lifetime by the service of a summons and complaint upon his attorneys, who served a notice of appearance on his behalf, and he interposed a verified answer on March 8, 1922.
George J/Gould died May 16, 1923, a resident of the State of New Jersey, leaving a last will and testament which was admitted to probate in New Jersey; and Kingdon Gould and Schuyler Neilson Rice, both residents of New Jersey, qualified and are acting as executors under said will and under the laws of the State of New Jersey.
The plaintiffs in this action applied for and obtained an order directing the executors of the estate of George J. Gould to show cause why an order should not be granted herein directing the above-entitled action to be continued against them in the place of the said deceased defendant, without prejudice to the proceedings already had, and granting leave to plaintiffs to file and serve a supplemental summons and complaint. The order to show cause further directed substituted service upon the foreign and non-resident executors. Said executors, appearing specially and solely for the purposes of the motion, then made a cross-motion for an order vacating the order to show cause and to vacate and set aside the service thereof, on the ground “ that this court has no jurisdiction over Schuyler Neilson Rice and Kingdon Gould or either of them, as such executors of the estate of George J. Gould, deceased, and has no jurisdiction over any assets of the estate of said deceased.”
The court at Special Term granted plaintiffs’ motion and made an order continuing the action against the executors of the estate of George J. Gould, deceased, and amending the summons and pleadings so as to make them parties defendant in the action, without prejudice to the proceedings already had herein; and further granting leave to plaintiffs to serve a supplemental complaint and directing that a supplemental summons issue to such executors. Said order further denied the cross-motion of said executors for an order vacating the order to show cause and the service thereof.
From such order the foreign executors have taken the present appeal to this court.
I believe that the executors are correct in their contention that the Supreme Court of this State had no jurisdiction over them. [18] The record discloses that at the time of the commencement of this action and continuously thereafter and until his death George J. Gould was a resident of New Jersey. His will was admitted to probate in the Orphans’ Court of Ocean county, N. J., and letters testamentary were issued out of said court to Kingdon Gould and S. N. Rice, who qualified and are now acting as executors. Not only was the deceased a resident of New Jersey, but both the executors are residents of New Jersey; Kingdon Gould residing at Lakewood, N. J., and S. N. Rice residing at New Brunswick, N. J. These executors receive their executorial powers under the laws of the State of New Jersey. They are called upon to administer, and must administer, this estate, according to the New Jersey laws. Their conduct in the administration of this estate will be measured and weighed by the laws of New Jersey, and not by the laws of New York. They are not. administering the estate in this State and are not claimed to have taken possession of any of the assets of the estate therein. As was said in People v. Baker (76 N. Y. 84): “ We must and do concede, that a State may adjudge the status of its citizen towards a non-resident; and may authorize to that end such judicial proceedings as it sees fit; and that other States must acquiesce, so long as the operation of the judgment is kept within its own confines. But that judgment cannot push its effect over the borders of another State, to the subversion of its laws and the defeat of its policy; nor seek across its bounds the person of one of its citizens, and fix upon him a status, against his will and without his consent, and in hostility to the laws of the sovereignty of his allegiance.”
The court has no power to bring the foreign executors into this suit as parties defendant against their will. A foreign executor was defined in Hopper v. Hopper (125 N. Y. 400, 402): “ By the phrase ' foreign executor ’ the courts never mean the mere non-residence of the individual holding the office, but the foreign origin of the representative character. That is the sole product of the foreign law, and, depending upon it for existence, cannot pass beyond the jurisdiction of its origin. The individual may come here and acquire rights or incur liabilities which our tribunals will defend or enforce, but he can have no representative rights or liabilities since we recognize in him no representative character. The foreign executor may make a contract here which our courts will compel him to perform because it is his contract, but where it is the testator’s only he cannot sue or be sued upon it, since the right or the liability is purely representative and exists only by force of the official character, and so, cannot pass beyond the jurisdiction which gave it. (Johnson v. Wallis, 112 N. Y. 230.)”
[19] The statutory provision as to suits by or against foreign executors or administrators is section 160 of the Decedent Estate Law (being section 1836-a of the Code of Civil Procedure, without substantial change, added to the Decedent Estate Law by section 1 of chapter 919 of the Laws of 1920). It reads as follows: “ Foreign executor or administrator may sue or be sued. An executor or administrator duly appointed in any other State, Territory or District of the United States or in any foreign country may sue or be sued in any court in this State in his capacity of executor or administrator in like manner and under like restrictions as a nonresident may sue or be sued, if within twenty days after any such executor or administrator shall commence, or appear in, any action or proceeding in any court in this State or within twenty days after he shall be required or directed by summons or otherwise to appear therein, there shall be filed in the office of the clerk of the court in which such action or proceeding shall be brought or be pending a copy of the letters testamentary or letters of administration issued to such executor or administrator duly authenticated as prescribed by section forty-five of this chapter; in default whereof all proceedings in such action or proceeding may be stayed until such duly authenticated copy of such letters shall be so filed.”
In Helme v. Buckelew (229 N. Y. 363, 371), Judge Cardozo said, in reference to the then section 1836-a of the Code of Civil Procedure: “ I am persuaded that the Legislature did not contemplate the maintenance of actions at law to be followed by the ordinary judgment in personam against foreign representatives, whether there were assets in the State .at the end of the litigation or even at the beginning. If such actions are authorized, I do not know how we are to enforce the judgments. Surely the plaintiff is not expected to sell the property upon execution, and appropriate it to the use of himself and no one else. That would conflict with the scheme of the statute regulating suits against ancillary executors and administrators (Code Civ. Pro. sec. 2635)