Thompson v. American Optical Co. — 173 A.D. 123

Majority

p. 123

Warren E. Thompson, Respondent, v. American Optical Company, Appellant.

First Department,

June 2, 1916.

Headnote

Libel — libel by trustee of corporation appointed under laws of Massachusetts — corporation not liable for torts of trustee — newly-discovered evidence —libel written on letterhead of corporation.

Where, pursuant to the laws of the State of Massachusetts, the property and affairs of a corporation are transferred to trustees who are authorized to continue business in its name, a trustee is personally liable for a libel contained in a letter written by him; the wrong is not chargeable to the corporation.

p. 124

Hence, where the plaintiff has been nonsuited because of his failure to connect the defendant corporation with the libel, he will not be granted a new trial because newly-discovered evidence shows that the libel was written by the trustee upon a letterhead bearing the name of the corporation.

Appeal by the defendant, American Optical Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 1st day of May, 1916, vacating a judgment entered herein on the 16th day of March, 1916, and granting-plaintiff a new trial on the ground of newly-discovered evidence, surprise and in furtherance of justice.

William Band, Jr., for the appellant.

Lewis Schuldenfrei, for the respondent.

The action is for damages for a libel. The libel was contained in a letter written upon paper which had the defendant’s letterhead, and was signed “ American Optical Company, H. H. Styll, Legal Dept.” Upon the trial of the action the plaintiff put Styll upon the stand, who swore that he wrote the letter but that he was acting for three trustees who, under the laws of Massachusetts, held by transfer the property of the defendant, and that he was not the attorney for the defendant at the time he wrote the letter. The plaintiff was surprised by this evidence, and stated that he could make no further proof connecting the defendant with the publication, and the complaint was dismissed. Plaintiff afterwards made this application to open the judgment, alleging his discovery after the trial that the letter in question was written upon paper which contained the letterhead of the defendant company.

Under the laws of Massachusetts it seems to be permissible for a corporation to transfer its property to trustees and for the trustees thereafter to do business in the name of the old corporation. For any liability in the course of that business the trustees are personally liable, and not the corporation. While this practice under "the Massachusetts law is apt to create con

p. 125

fusion and lead the public to believe that the acts of the trustees were in fact the acts of the corporation, nevertheless after the property had been transferred to the trustees under whatever name the trustees did their business their acts were in fact independent of the corporation and could create no liability against the corporation, It is argued that because the letterheads were allowed to be used by the trustees, including the words “Incorporated 1869,” the defendant corporation was estopped from claiming that the act of Styll was not the act of the corporation. It is probable that when the property was transferred to the trustees some letter paper was also transferred. The use of that letter paper thereafter by the attorney for the trustees was the act of the trustees and not the act of the corporation, and we are unable to see any element of estoppel which would prevent the corporation from denying the authority of the attorney to act in its behalf.

As the plaintiff fails to show, therefore, that any cause of action exists against the defendant, the judgment should not be set aside and the order should be reversed, with ten dollars costs and disbursements, and motion denied.

Clarke, P. J., Scott, Dowling and Page, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied.