Bonnell v. Wheeler — 8 N.Y. Sup. Ct. 332

Majority

p. 332

No. 1.

SAMUEL BONNELL, Jr., Respondent, v. GEORGE M. WHEELER, CHESTER GRISWOLD and JACOB W. HOYSRADT, Impleaded with others, Appellants. ELI W. BLAKE, Respondent, v. SAME DEFENDANTS, Impleaded, etc., Appellants. SAMUEL BONNELL, Jr., Respondent, v. CHESTER GRISWOLD, JOHN W. GRISWOLD and ELIZABETH H. GRISWOLD, Executors, etc., of JOHN A. GRISWOLD, Deceased, Appellants. ELI W. BLAKE, Respondent, v. SAME DEFENDANTS, Appellants.

No. 2.

No. 3.

No. 4.

Headnote

Hemwrrer—misjoinder of causes of action — Trustees of manufacturing corpm'ation— failw'e to file report—false report—assignment of cause of action against—>Sections 13, 15, chapter 40, 1848.

In a suit brought by a creditor of a mining corporation, created under the general act, chapter 40, Laws of 1848, against the trustees thereof, held, that causes of action, arising under section 13, for failure to file a report, and under section 15, for filing a false report, are properly united; each of them is for a liability somewhat in the nature of a statute penalty, and, virtually, is an action on contract for the recovery of money, and both of them arose out of the same transaction.

The first cause of action set out in the complaint, was for a failure to file a report, as required by section 13 ; the second, for filing a false report in violation of section 15, alleged that the defendants made and filed “a certificate or report, a copy of which is hereunto annexed, marked B,” and that the defendants signed the same, knowing it to be false; the copy of the certificate annexed to the complaint, was not signed by all the defendants. Held, that a demurrer, on the ground that the causes of action, united in the complaint, did not affect all the parties to the action, was well taken ; that the allegation that the certificate was signed by all the defendants, must be considered as restricted and confined to what appears upon the face of the certificate, a copy of which was annexed to the complaint.

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The cause of action against the trustees of the corporation, given by the statute to the creditors thereof for a violation of its provisions, is assignable, and may be enforced by the assignee of the debtor.

The third cause of action was for an alleged conspiracy on the part of the defendants to form the corporation, and that by fraud and misrepresentations, the plaintiffs were induced to become creditors of the corporation. Held, that it was properly joined with the others, as they all related to the same general transaction.

Appeals from orders made by Mr. Justice Bookes, overruling the°defendants’ demurrers, in each of the. above-entitled actions, to the amended complaints therein. ' The plaintiffs therein respectively claim to be creditors of a company, or corporation, formed under an act of the legislature of the State of New York, entitled, “ An act to authorize the formation of .corporations for manufacturing, mining, mechanical or chemical purposes,” passed February 17th, 1848, and the acts amending the same, and known as the Iron Mountains Company of Lake Champlain. The claim of the plaintiff, Samuel Bonnell, Jr., is alleged to amount to $5,511.66, and that of the plaintiff, Eli W. Blake, is alleged to amount to $1,247.40.

Suits Nos. 1 and 2, are prosecuted to recover from the defendants, the amount of the said plaintiffs’ alleged claims, respectively, on the alleged ground that the' said defendants, as the surviving trustees of said company, have become liable to pay the same.

And suits Nos. 3 and 4, are prosecuted to recover the same identical claims from the defendants therein named, as the representatives of John A. Griswold, deceased, who, in his lifetime, was also a trustee of said company, upon a- portion of the grounds set forth in the two first actions.

The complaints are substantially alike, except in the averments descriptive of the plaintiffs’ claims. The plaintiff, Bonnell, was not an original creditor of the Iron Mountains Company, but acquired his claim, if at all, by transfer or assignment from a corporation, styled the “ Birmingham Iron Foundry,” which corporation, it is alleged, performed work and labor, and furnished materials, whereby it became a creditor of said first-mentioned company, subsequently transferring its claim to the plaintiff, Bonnell.

In the first and second actions, the first counts, respectively, set forth the organization, in the month of August, 1869, of the said Iron Mountains Company, under the provisions of the act afore

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said, and that the defendants and said John A. Griswold (since deceased) were duly appointed, and acted, as the trustees of said company for the first year; that during that period, they omitted to make, publish or file a report, within twenty days from the first day of January, 1870, pursuant to the provisions of the twelfth section of the aforesaid act; by means of which alleged omission, it is claimed that the defendants became liable to pay the plaintiffs’ claims, which are also, respectively, stated in said counts.

The second counts, after referring to the allegations in the first counts as to the incorporation of said company, respectively, set forth a copy of the charter, or certificate of incorporation thereof, referred to as annexed, and state that the said defendants and the said John A. Griswold, while acting as such trustees as aforesaid, did, on the 13th day of January, 1870, make and file in the office of the clerk of the county of Essex, a certificate or report, a copy of which is made a part of the complaints (referred to' as annexed), and which, it is averred, the said defendants and the said John A. Griswold, in said month of January, 1870, published in the Elizabethtown Post, a newspaper published in said county of Essex; the said certificate or report being, as said plaintiffs respectively allege, false in a material representation, and known by the said defendants and the said John A. Griswold so to be, namely, in-stating that the capital stock of said company had been paid in, in full, when, as the plaintiffs respectively aver, such was not the fact; and that, therefore, by force of the fifteenth section of said act, the said defendants also became liable to the plaintiff, to the amount of their respective claims.

The third counts, after referring to the incorporation of said company, and to the fact that the defendants and said John A. Griswold were the trustees thereof, as aforesaid, respectively' set forth that prior to the organization of the said company, the said defendants and the said John A. Griswold entered into an alleged fraudulent scheme, combination and conspiracy, to form said corporation as it was formed, and to fraudulently cause to be transferred thereto, certain lands owned by a corporation, styled the “ Kingdom Iron Ore Company,” in which company, it is alleged, the defendants and said John A. Griswold were interested as stockholders and officers, and to have the stock of the new company issued to an

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amount largely in excess of the value of said lands; and to have the whole of said stock paid to, or for the benefit of, said Kingdom Iron Ore Company (so-called) in part payment of said lands. The counts then proceed with general allegations of acts and doings on the part of said defendants and said Griswold, in furtherance of said alleged scheme and conspiracy, and state, among other things, that the plaintiffs were thereby induced to become creditors of said corporation, winding up with allegations to the effect that the said alleged omission, set forth in the first counts, and the alleged making of said alleged false report, set forth in said second counts, are and were but part and parcel of said alleged scheme or conspiracy, by means of which alleged doings, it is claimed, the defendants became liable to pay the claims of the plaintiffs, respectively.

The defendants, George M. Wheeler and Chester Griswold, in one demurrer, severally demur to said amended complaints, and to each of them, upon various grounds, which are stated in the opinion, and the defendant, Hoysradt, also demurs separately, upon substantially the same grounds.

Wm. G. Holbrook, for the appellants.

The first and second causes of action were improperly united. (Smith v. Hallock, 8 How., 73 ; Sweet v. Ingerson, 12 id., 331.) The causes of action united, must affect all the parties to the action. (Warth v. Radde, 28 How., 230 ; Smith v. Geortner, 40 id., 185 ; Hess v. Buffalo & N. Y. R. R., 29 Barb., 391 .) The cause of action against the trustees was not assignable. (O'Donnell v. Seybert, 13 Serg. & Rawle, 56 ; Shoemaker v. Kelly, 2 Dall., 213 ; Weyburn v. White, 22 Barb., 82 ; Merchants' Bank v. Bliss, 35 N. Y., 412 ; Miller v. White, 50 id., 139; Robinson v. Weeks, 6 How., 164 ; Lamphere v. Hall, 26 id., 509; Yertore v. Wiswall, 16 How., 8 -14; Quin v. Moore, 15 N. Y., 435 , 436.)

A. Pond, for the respondent.

The first and second counts are properly united. (Merchants' Bank v. Bliss, 35 N. Y., 412 ; McCown v. N. Y. C. R. R., 7 Lans., 75 ; City of Brooklyn v. Cleves, H. & Den., 231; Deyo v. Rood, 3 Hill, 527 ; Vallance v. King, 3 Barb., 551 .) The third cause of action was properly united with

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the others. (Robinson v. Flint, 16 How., 240 ; Vermeule v. Beck, 15 id., 333 ; Badger v. Benedict, 1 Hilt., 414; Borst v. Corey, 15 N. Y., 505 ; Lattin v. McCarty, 41 N. Y., 107 ; Wadley v. Davis, 63 Barb., 500 .)

In the first and second actions, I think that the first and second causes of action were properly united. Each of them was for a liability somewhat in the nature of a statute penalty, and, virtually, an action on contract for the recovery of money.^[8] They were therefore properly joined, under section 167, subdivision 2, of the Code. The fact that one of the causes of action is for not making a report within twenty days, as required by section 12,^[5] and the second, for making a false report, does not, I think, alter the case. Each one of the counts contains a separate and an independent cause of action, and either of them may be upheld, if the evidence upon a trial warrants it. They are not necessarily inconsistent with each other or contradictory. Even if a report be filed, which is false within section 15 of the act cited, it by no means follows that there has been a compliance with section 12. A report which is false, can scarcely be said to be a report which is required by section 12, and I am inclined to think that when such is the case, an action may be upheld under section 12, if, for any reason, the proof upon a trial would not warrant a judgment, under section 15.

Mor, in my opinion, is there any question but that each of these causes of action, may arise out of “ the same transaction or trans actions connected within the same subject of action,” within section 167, subdivision 1. The subject of the action of the plaintiff, is the debt, and the transactions connected with it, are the unlawful acts of the defendants. These acts arise out of transactions which relate to, and form a part of, the subject of the action. If, in accordance with the opinion in Adams v. Bissell,^[9] we disregard the last clause of subdivision 1 of section 167, which I am not prepared to do, I am nevertheless satisfied that each of the causes of action, arises out of the same transaction, and may be maintained.

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If these views are correct, the first ground of demurrer cannot be upheld.

It is insisted that there is a misjoinder of the first and second causes of action, because they do not affect all the defendants, viz.: Hoysradt, Corning and Burleigh, who were not signers of the alleged false report, set forth in the second cause of action in the first two cases; and that there is a misjoinder of the third cause of action with the first and second, for the same reason. These grounds are stated, also, in the second and sixth grounds of demurrer of the defendants, Wheeler and Griswold, respectively, and in the separate demurrer of the defendant, Hoysradt. The Code^[8] provides that the causes of action, united, “must affect all the parties to the action,” and the objection of a misjoinder may be taken advantage of by demurrer.^[5]

It is claimed by the plaintiffs, that the complaints allege that all the defendants did sign the report, and the demurrers admit the allegation to be true. The second count in the two cases, avers that the company was duly organized and incorporated, as stated in the first count; that the defendants and Griswold were duly named as trustees, and, while such trustees and acting as such, having accepted the same, the “defendants and said John A. Gris-wold, on the 13th day of January, 1870, made and filed in the Essex county clerk’s office ” * * * “ a certificate or report, a copy whereof is hereunto annexed, marked B.” It also alleges that “ said certificate and report was the only report made, filed and published; that said report was false,” etc., stating where. It then proceeds to state, “ that said defendants and the said John A. Griswold signed said certificate, knowing it to be false as hereinbefore stated,” etc. The certificate annexed does not contain the names of the three defendants hereinbefore mentioned. The allegation that they did sign, refers to “ said certificate,” meaning the one annexed, which negatives the allegation that such was the fact. If the last allegation can be considered as in conflict with what had previously been averred, then the reading of the report or certificate annexed, must, I think, determine how the fact is; and, although

† † Warth v. Radde, 28 How. Pr., 230 ; Smith, v. Geortner, 40 id., 185; Hess v. Buffalo & N. Y. R. R. Co., 29 Barb., 391 ; Palmer v. Davis, 28 N. Y., 246 .

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verbally a contradiction, yet, as it refers directly to the report, the allegation must be considered as confined and restricted to what appears upon the face of the certificate, a copy of which is annexed; that is, that Griswold and others did sign it, but that the other three defendants ■ did not. It appears, then, that the report and certificate, set forth, was not signed by either of them, and hence they could not be held responsible for its being false. It is no answer to say that the complaints only purport to have annexed to them, a copy of the report and not of the signatures, for it would lack the essential qualities of a report unless it was signed. Besides, the names attached, constitute a part of the report; are first mentioned at its commencement as being trustees, and the report purports to have been sworn to by each one of the signers, before a notary. It is plain, therefore, that there is a misjoinder of actions as to the first and second causes of action and also of the third, which is based on the first and second; and, in this respect, the demurrers are well taken.

The defendants’ counsel further insists that the complaint in the Bonnell case, does not 'state facts sufficient to constitute a cause of action, because it shows upon its face that Bonnell was not. an original creditor, but derives his claim only by assignment or transfer from the “ Birmingham Iron Foundry.” "In other words, that the claim was not assignable by the trustees of the “ Birmingham Iron Foundry,” so as to transfer to Bonnell any cause of action against the defendants, which arises under the twelfth and fifteenth sections of the manufacturing act, by virtue of which a recovery is claimed.^[8] The provisions referred to, provide for a liability of trustees or officers of a company, for all debts existing or contracted, without limiting or restricting such liability to the creditor alone, and extend the remedy, I think, for the collection of the debt, against the trustees or officers who neglect their duty, and fail to comply with the law. They do not change the nature of the debt, for which the company was originally, and continues to be, liable nor invest it with a character which presents an assignment of the same,, which carries’with .it all the incidental remedies given by statute. The act embraces “ all the debts of the company,” which, I think, means debts due, not only to the original creditor, but to

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such person as may be entitled to the same by virtue of a lawful assignment. Regarding the action as brought upon the contract, and the remedy under the statute, as merely incidental, I am inclined to think that it stands precisely in the same position as any other action of a similar character, which has been lawfully transferred to another party. But, even if this position may be doubted, the plaintiff’s cause of action may be considered as embraced within the rule laid down in some of the reported cases, to the effect that a cause, of action against a vendee of land, for fraudulent representations as to an incumbrance, or an action for fraudulent representations in obtaining money or property, survives to and against the personal representatives, and an assignee may sue thereon.^[8]

Although the first and second causes of action, set forth in the plaintiff’s complaint, do not, perhaps, distinctly show an injury arising from the defendants’ wrongful acts, or which tends to affect, impair or diminish the estate of the “ Birmingham Iron Foundry,” or of the plaintiff, yet it is quite apparent that the unlawful acts of the defendants may have such an effect. The law declares that such an injury may have accrued from the facts stated, and it is a fair and legitimate inference, I think, that the failure of the defendants to comply with the provisions of the statutes cited, may have occasioned and did cause that injury, and seriously affected and impaired the property and estate of the plaintiff or his assignor. It is also a presumption of law, that the debt was contracted in the first instance, and an assignment of the same made with full knowledge of the remedies under the statute, and with entire reliance upon the same. In my opinion, the case now presented, bears no analogy to an action brought to recover damages for personal injuries, which is not assignable for the reason that no one has a property in the personal sufferings of another, and therefore the acts complained of cannot injuriously affect, impair or diminish his estate. The cause of action here, clearly, goes beyond the person. It is a debt incurred for work and labor performed and materials furnished, which, if not paid, diminishes the property of the creditor or of his assignee. If the causes of action are regarded as

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brought for mere penalties, then—some of the later cases hold—the right of action is assignable, and not a mere personal privilege.^[8] As the statute does not prohibit the assignment of a claim like that for which the plaintiff seeks to recover, but appears to favor the right to assign, and as such right is not in conflict with- any principle of law, and is upheld by the reported cases, my conclusion is, that the grounds of demurrer, last considered, are not well taken, except as to the defendant, Hoysradt, who, as we have already seen, was not a signer of the certificate, and therefore cannot be made liable under the second cause of action.

There was no misjoinder of the third cause of action with the first and second causes of action, so far as the substance of the same is concerned, and I see no difficulty in regard to them. The question presented in regard to this branch of the case, was passed upon in Arthur v. Griswold,^[9] and it is there held, that, although the causes of action are different, they are to be deemed properly united and they relate to the same general transaction.

In the third and fourth actions, the complaints against the execu- . tors are of the same general character, as in the first and second actions, except that the cause of action alleging a conspiracy, being the third cause of action in these two cases, is omitted. The observations already made cover all the objections urged, and, as none exists which is fatal to a recovery, the demurrer must be overruled as to these.

In the first and second actions, the order appealed from must be reversed, with ten dollars costs; and the defendants are entitled to judgment on the demurrer, with leave to the plaintiff in each to amend, upon payment of costs, within twenty days after a service of a copy of the order herein. In the third and fourth actions, the order must be affirmed, with ten dollars costs. Judgment must be ordered for the plaintiffs upon the demurrer, with leave to the defendants to answer within twenty days after service of a copy of the order herein, and upon payment of costs.

Present—Miller, P. J., and Boardman, J.

Ordered accordingly.

* Meech v. Stoner, 19 N. Y., 26 ; McDougall v. Walling, 48 Barb., 364

‡ ‡ See MS. opinion of Church, Ch. J., in Court of Appeals.

Footnotes

* McCoun v. The N. Y. C. & H. R. R. R. Co., 7 Lans., 75 .
† † S. L. of 1848, chap. 40.
‡ ‡ 28 Barb., 386 .
* § 167.
* S. L. of 1848, chap. 40, pp. 54, 57.
* Haight v. Hayt, 19 N. Y., 464 ; Byxbie v. Wood, 24 N. Y., 607 ; Graves v. Spier, 58 Barb., 349 , 385; Johnston v. Bennett, 5 Abb. P. R. (N. S.), 331.