Ciancimino v. Man — 48 N.Y. St. Rep. 697

Majority

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Peter Ciancimino et al., App’lts, v. Aleick H. Man et al., Resp’ts.

(New York Common Pleas, General Term,

Filed November 7, 1892.)

Headnote

Corporations—Officers—Title to office.

A court of equity has no inherent power to try a disputed title to corporate office, and to enjoin one in possession from the exercise of its functions at the suit of a rival claimant; but, where the particular case presents other features calling for relief which are of equitable cognizance, and the trial of a disputed title to corporate office is only incidental thereto, the court may inquire into the legality thereof and grant relief, but its judgment cannot go to the extent of ousting a de facto officer, nor wilt it he permitted to have that effect.

Appeal from an order refusing to continue, and dissolving an injunction restraining defendants from acting as trustees of the Ciancimino’s Towing & Transportation Co., a domestic corporation, which was granted ex parte upon misrepresentations to the effect that plaintiffs were de facto, as well as de jure trustees of the corporation, as such in actual possession of its property, and the management of its business, and that defendants were about to invade plaintiff’s possession, and to assume management of the business by force and violence. Action to have defendants’ election as trustees judicially declared illegal and void, and for injunctive relief.

John J. McKelvey, for app’lts; Henry H. Man, for resp’ts.

A court of equity has no inherent power to try the disputed title to corporate office, and to enjoin one in possession from the exercise of its functions at the suit of a rival claimant. 1 Pomeroy’s Eq. Jur., § 171; 3 id., § 1345 ; Mickles v. Rochester City Bank, 11 Paige, 118; Lewis v. Oliver, 4 Abb. Pr., 121 ; Mayor v. Conover, 5 id., 171 ; New England Mut. L. Ins. Co. v. Phillips, 13 Am. & Eng. Corpn. Cases, 104; Nathan v. Tompkins, 19 id., 336; Owen v. Whitaker, 20 N. J. Eq., 122 . Such may be done, and judgment of ouster rendered, only in an action in the nature of a quo warranta, instituted by the attorney general on behalf of, and in the name of the People. Code Civil Pro., §§ 1948, 1984; Morris v. Whelan, 64 How. Pr., 109 ; Palmer v. Foley, 45 id., 110 ; Hudson River W. S. R. R. Co., v. Hay, 14 Abb., N. S., 191. Where, however, the particular case presents other features, calling for relief which are of equitable cognizance, and the trial of a disputed title to corporate office is only incidental thereto, the court may inquire into the legality of the election, and grant such relief as the special exigencies require, Reis v. Rohde, 34 Hun, 161 ; Palmer v. Foley, 36 N. Y. Superior Court, 14; Mechanics' Natl. Bank, etc., v Burnet Manfg. Co., 32 N. J. Eq., 236 . Nathan v. Tompkins, 19 Am. & Eng. Corpn. Cases, 336; Perry v. Tuscaloosa C. S. O. M. Co. et al., 33 id., 346 ; but its judgment cannot go to the extent of ousting a de facto officer, nor will it be permitted to have that effect. Johnston v. Jones, 23 N. J. Eq., 216 ; Fadness v. Braunborg, 41 N. W. Pep., 84; Wandsworth, etc., Gas Light & Coke Co., v. Wright, 18 W. R., 728 .

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The verified complaint, and the affidavit of Peter Ciancimino, one of the plaintiffs, alleged that plaintiffs were the trustees de jure and de facto, in quiet and peaceable possession of the property of the corporation, and the management of its business, and that defendants were about to invade their possession and to wrest the property and business from them by force and violence, on the pretense that they (defendants) were trustees de jure. These facts presented a proper case for injunctive relief, Reis v. Rohde, Palmer v. Foley, supra, and upon the truth of their allegation the maintenance of the action, and the power to continue the injunction, were dependent

On the hearing of the order to show cause why the injunction should not be continued pendente lite, it sufficiently appeared from the affidavits submitted lor defendants, that for upwards of a year immediately preceding the application for the injunction, Peter Ciancimino, upon whose affidavit it was granted, and by whom also the complaint was verified, had been enjoined, by another injunction order issued against him in an action pending in the supreme court, from taking possession of, or in anywise interfering with the property or business of the corporation; that until the close of business hours on the previous day defendants had been in quiet, peaceable and uninterrupted possession of the corporate property and business, and that before the beginning of the business hours in the morning of the day on which they applied for and served the injunction granted herein, plaintiffs, during the absence of the defendants, forcibly and violently broke into the company’s office in anticipation of the injunction, and that defendants would be thereby rendered powerless to resist and retake possession, and assumed custody and control of the company’s books, papers and property. These facts conclusively refuted plaintiffs’ allegation that they were de facto trustees, in actual, peaceable and undisturbed possession of the management and control of the corporate business and property.

The jurisdictional facts were thus disproved, and the power of the court to determine the action, or to award injunctive relief therein, arrested; and the motion to continue the injunction was thus properly denied, and its dissolution properly directed.

From the foregoing facts it also appeared that defendants were de facto trustees, and last in the actual and peaceable possession of the company’s office, and the management of its business, and the injunction thereupon was void under the provisions of the Code of Civ. Pro., § 1809, that such an order shall not be granted-to restrain a trustee, director or other officer of a corporation from the performance of his duties except upon notice.

But independent of the grounds above mentioned, and assum. ing that the court had jurisdiction, the order appealed from wan properly made. Until the final adjudication in favor of plaintiffs of the facts entitling them to injunctive relief, the granting of the provisional remedy by injunction authorized by the Code of Civ. Pro., § 602-610, rested in judicial discretion, H. R. T. Co. v. W. T. & R. R. Co., 121 N. Y., 397 ; 31 St. Rep., 524 ; Mac Laury v. Hart, 121 N.Y., 636 ; 31 St. Rep., 939 , and the facts that he had

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wilfully concealed the injunction of the supreme court, the knowledge of which would unquestionably have materially influenced the judge who granted the injunction herein in disposing of plaintiff’s application, that his allegations of plaintiff’s quiet and peaceable possession of the corporate business and property were shown to be untrue, and that its order was prostituted and abused, justified the court in discrediting the statements of any of the plaintiffs as those of parties in interest, Dietlin v. Egan, 46 St. Rep., 762 , though not specifically denied. For the deception and misrepresentation practiced upon the court on the application for the injunction, it was also within the province of the judge to vacate it, High on Injunctions, § 1469, and a fortiori to do so for its abuse. De Peyster v. Graves, 2 Johns. Ch., 148 ; Higgins v. Dewey, 39 St. Rep., 94 .

We entertain no doubt as to the propriety of the order made by the judge who granted the injunction, appointing an officer of this court custodian of the company’s office and property, and directing delivery thereof to him, when informed of the uses to which the injunction was perverted; ñoras to the directions in the order appealed from that the custodian deliver the property of which he had secured possession to the defendants.

Deposit of the property affected into court, or where that was impracticable delivery to its custodian for such purpose appointed, has been frequently required pending an application for relief and when such was deemed necessary for the protection of the contending parties. The authority to do so is but a necessary adjunct to the greater authority of awarding the relief, and farcical, indeed, would be the dignity of our courts if they could not by drastic measures insure the return of property, the possession of which was obtained by means of an abuse of their mandates and orders surreptitiously procured. We are not required, except when the order appealed from is reversed or modified, to direct restitution of moneys or property secured by means of it, Code Civ. Pro., § 1323; and as it nowhere appears that the custodian obtained possession of property, other than such as plaintiffs had secured by an abuse of the injunction, there is no occasion for any modification of the order appealed from, in so far as it directed the custodian to deliver the property in his possession to defendants. If notwithstanding, however, defendants have inadvertently obtained possession of other property, the direction for restitution would be ex gratia, and from this plaintiffs are precluded because of their own conduct; and they should, therefore, be left to their remedy by action.

The order appealed from should be affirmed, with costs.

Daly, Ch. J., and Pryor, J., concur.