Gilbert v. Ackerman

The plaintiff became the receiver of the Commercial Alliance Life Insurance Company, in proceedings instituted to dissolve the corporation upon the ground of its insolvency. He commenced this action against the defendants to recover moneys alleged to have been misapplied, or wasted, by them while directors of the company. Among other defenses interposed by the answer of the defendant, who is appellant here, to the demand of the plaintiff, was this, viz.: that the cause of action did not accrue within three years before the commencement of the action. To that defense the plaintiff demurred as being insufficient in law. At the Special Term the demurrer was overruled; but upon appeal to the Appellate Division, in the first department, that court reversed the Special Term judgment and sustained the demurrer ; giving leave to appeal to this court and certifying this question: “ Is the fourth separate defense contained in the defendant’s answer herein insufficient in law upon the face thereof to constitute a defense ? ”

When this action was commenced, in 1898, section 394 of the Code of Civil Procedure provided that an action against a director of a moneyed corporation to enforce a liability created by the common law, or by statute, must be brought within three years after the cause of action has accrued. It had been amended in 1897 so as to include the liability at common law, (Chap. 281, 'Laws of 1897); whereas prior thereto its reference was simply to an action “'to enforce a liability created by law.” That language was held to make it applicable to a liability created by statute law and to be, therefore,

The question is, was the amendment of the section in 1897 a valid exercise of legislative power as to the plaintiff and effectual to bar the remedy formerly available to him ? The amendatory act of 1897 became a law on April 16th of that year; but, by its second section, it provided that it should take effect September 1st, 1897, thus leaving an intervening period of time of four months and fourteen days between its passage and its taking effect. It was held at the Appellate Division that the act was invalid; because no time whatever was given to the plaintiff after it went into effect within which to commence his action. Ho reservation was made by the terms of the act in favor of liabilities, which were in existence at the time the act went into effect; nor was any time allowed within which to commence an action after the act became effectual. I can find no authority, and I am not referred to any, in this state upon the point which is thus raised; while outside of this state it may be said that a number of cases hold adversely to the view taken by the Appellate Division. (Smith v. Morrison, 22 Pick. 430 ; Stine v. Bennett, 13 Minn. 153 ; Duncan v. Cobb, 32 Minn. 460 ; Eaton v. Supervisors, 40 Wis. 668 ; Hedger v. Renmaker, 3 Met. [Ky.] 255 ; Hart v. Bostwick, 14 Fla. 180 ; Wrightman v. Boone Co., 82 Fed. Pep. 412 [Montana].)

The doctrine of these cases would seem to be that if an act affords a reasonable opportunity for parties to commence actions between the time of its passage and the time when, by its terms, it is to go into effect, the legislative power has

I incline to the view that the position taken by the Appellate Division in this action is, on the whole, the preferable one. It establishes a simple and a salutary rule in the enactment of statutes of limitation, which leaves no room for construction and doubt and which harmonizes with the principle that recognizes a statute as speaking the moment it takes effect. That a party is chargeable with knowledge of the

There is no question as to the power of the legislature to pass, or to shorten, statutes of limitation. A party has no more a vested interest in the time for the commencement, of an action, than he has in the form of the action. The only restriction upon the legislature, in the enactment of statutes of limitation, is that a reasonable time be allowed for suits upon causes of action theretofore existing. (Rexford v. Knight, 11 N. Y. 308 ; People v. Turner, 117 id. 227.) The question of reasonableness, naturally and primarily, is with the legislature; and, when the question is brought before the court, the surrounding circumstances are regarded in determining whether the legislature, in prescribing a period of limitation, has erred to the prejudice of substantial rights. The right possessed by a person of enforcing his claim against another is property and if a statute of limitations, acting upon that right, deprives the claimant of a reasonable time within which suit may be brought, it violates the constitutional provision that no person shall be deprived of property without due process of law.

The plaintiff in the present case, as receiver, is asserting a right of action which existed in the corporation, viz.: to hold its directors, as its agents, to a liability to make good the damage caused to the corporate property by their wrongful acts. That was a liability existing at common law and the statute allowed to him the period of six years from the time it arose within which to prosecute it. When, subsequently, the legislature curtailed his right to sue, by an amendment in 1897 of the general Statute of Limitations, which allowed no time in

My conclusion is that the Appellate Division correctly sustained the plaintiff’s demurrer to this defense and that the question certified to us should be answered in the affirmative.

The order should be affirmed, with costs.

All concur.

Order affirmed.