McCulloch v. Norwood — 36 N.Y. Super. Ct. 180

Majority

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LUCIUS S. McCULLOCH, Plaintiff, v. CARLISLE NORWOOD, Receiver of the LORILLARD FIRE INSURANCE COMPANY,. Defendant.

Headnote

The courts of Common Pleas for the several counties of other States have been regarded by the courts of the State of New York as courts of record.

In the case at bar, the company of which the defendant is the receiver, voluntarily submitted to the jurisdiction of the Court of Common Pleas of the County of Cuyahoga, State of Ohio; and it appears from the case that this court had jurisdiction over the cause at the commencement' of the action. Held, That the action did not abate by the dissolution of the company and the appointment of the defendant as receiver thereof during the pendency of the action, although these facts became known to plaintiff and no substitution of the defendant was made therein; and a judgment entered in said action in favor of plaintiff and against the company, is valid and binding upon and against the defendant, the receiver of said company.

In the absence of proof to the contrary, it will be presumed by the courts of this State that the law of another State in regard to a subject-matter before the court, is the same as the law in this State (Leavenworth v. Brockway, 2 Hill. 202 ; Cheney v. Arnold, 15 N. Y. 353 ; Robinson v. Dauchy, 3 Barb. 21 and 29 ; Hoffman v. Carow, 22 Wend. 324 ).

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Before Freedman, Curtis, and Van Vorst, JJ.

Decided June 28, 1873.

Controversy pursuant to section 372 of the Code, as appears from the following case submitted.

Lucius S. McCulloch claims to recover of the Lorillard Fire Insurance Company the sum of four thousand one hundred and forty-one dollars and twenty-seven cents, and demands payment thereof, with interest, from the receiver above named, who refuses payment and resists the said claim.

The following are the facts upon which the said controversy depends:

On the 13th day of April, A. D. 1866, in the city of Hew York, the said company, being a corporation duly organized under the laws of the State of Hew York, and authorized by its charter to make the contract hereinafter mentioned, executed and delivered its policy of insurance in writing to Lucius S. McCulloch upon certain property located at Berea, in the county of Cuyahoga and State of Ohio, whereby, in consideration of the payment by him of the premium of forty-five dollars to said company, it insured said McCulloch for a peried of one year from that date against loss or damage of said property by fire to the amount of three thousand •dollars, specified in said policy as “$2,000 on his stone “building, $800 on his steam engine and apparatus there“in, and $200 on his household furniture, clothing, and “books stored therein.”

Prior to issuing said policy, said company required said McCulloch to answer in writing certain questions concerning the said property and risk, which questions and answers were made' a warranty and condition of granting said policy, and which were in part as follows :

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“Question 1—Is it (meaning the property aforesaid) “ owned and operated by the applicant?

“ Answer—Yes.

“Question—Is any other person interested in the “property? If so, state the interest.

“Answer—No.

“Question 31—Incumbrance—is there any on the “property?

“Answer—Held by contract.”

At this time, and at the date of the fire, McCulloch was in full possession and absolute enjoyment of the ' property in question. He held the real estate, including the buildings, which he used for a manufactory under a contract of sale from the owners in fee, which provided for the delivery to him of a deed thereto on payment of $2,000, the consideration therefor, of which sum $500, the amount due at that time, had been paid. Of the personal property he was absolute owner.

On the 27th day or August, 1866, the said property so insured was totally destroyed by fire, and on or about the 5th day of September, 1866, the insured served on said company due notice and proof of the fire and loss aforesaid, which loss was duly adjusted by the authorized agent of the company.

The amount of the loss under the said policy by .said fire, estimated according to the actual cash value at the time, was three thousand dollars, which was the amount of damage alleged in said proof of fire and loss. Ho part of said sum has been paid.

In the Court of Common Pleas of the county of Cuyahoga and State of Ohio, on the 2d day of January, 1867, said McCulloch brought suit against said company to recover the amount of said loss under said policy of insurance.

The company duly appeared by its attorney, and the, issues joined in said action having come on for trial before a jury, on or about the 12th day of December, 1867.,

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a verdict was found for the defendant, and a judgment thereon for costs was duly entered.

The plaintiff thereupon moved for a new trial, which was denied.

To certain charges of the court and findings by the jury on said trial the plaintiff excepted, and moved for a new trial, which was denied, and thereupon he duly filed and prosecuted his petition in error in the District Court for the Fourth Judicial District of said State, which tribunal, after argument by both parties, and on or about the 22d day of September, 1868, reversed the judgment with costs, and ordered a new trial.

To this judgment of reversal and order granting a new trial the company excepted, and duly filed and prosecuted its petition in error in the Supreme Court of the State of Ohio, which tribunal, after argument had on the 1st day of February, 1872, by both parties, affirmed said judgment of reversal and order for a new trial.

Previous to the said argument, and after the appointment of the receiver hereinafter mentioned, the attorney of the said company in said suit by letter informed the president therof, who is the defendant herein, that he should appear and argue in behalf of the said petition in error, to which the defendant herein made no reply until the 4th day of March, 1872, when he instructed said attorney that his authority to appear in the case was at an end.

The new trial as ordered came on regularly for hearing on the 14th day of May, 1872, when judgment was rendered and entered in favor of the plaintiff and against said company for the sum four thousand one hundred and forty-one dollars and twenty-seven cents damages and costs, no part of which has been paid.

In the meantime, and in October, 1871, the Lorillard Fire Insurance Company became insolvent by the great fire at Chicago, and on the 17th of October, 1871, the

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defendant was duly appointed receiver of the company.

On October 24th, 1871, judgment was duly rendered dissolving said corporation and continuing the receivership of the defendant. The action for the dissolution of the corporation was brought under and in conformity to the provisions of the revised statutes entitled “Of proceedings against corporations in equity.” Under the powers conferred upon said receiver, he has taken possession of the property and effects of said company, and has declared certain dividends thereon.

The company continued to be represented by the same attorney and counsel who appeared for it when the action was originally begun, and who argued the above petitions in error in its behalf up to and'until the 14th day of May, 1872, when said, attorney and counsel for said company announced in open court that said company had been adjudged insolvent, and had been dissolved, and a receiver appointed by the Supreme Court of the State of New York, and that, under instructions from said receiver, he no longer had any authority to appear in the case.

This was the first information received by the plaintiff or his attorneys of the insolvency and appointment of the receiver aforesaid; thereupon, and after such statement, said judgment was rendered.

On the 24th day of May, 1872, the' Supreme Court of the State of New York, pursuant to the revised statutes of said state, by its order duly entered, required all creditors of said Lorillard Fire Insurance Company to present their claims within sis months from the publication of said order to Tallmadge W. Foster, Esq., as referee, to hear and determine said claims.

In pursuance of said order, Lucius S. McCulloch, by Convers & Lyman, his attorneys, in October, 1872, duly presented to said referee a statement of his claim in writing, substantially as herein alleged, and offered

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proof thereof; and at the same time the receiver duly appeared before said referee, by Norwood & Coggeshall, his attorneys, and opposed the allowance of said claim.

Thereafter it was and it hereby is stipulated, by both parties, that this claim should be withdrawn from said referee and submitted to the General Term of this court without further proceedings before said referee, as a casé agreed upon in a controversy submitted without action.

None of the admissions herein contained are in any wise to affect either party, or to be regarded as made, except for the purpose of this submission of this controversy.

The questions submitted to the court upon this case are as follows:

First.—Is the judgment rendered against the Lorillard Fire Insurance Company on the 14th day of May, 1872, valid against the receiver ?

If this question is answered in the affirmative, then judgment is to be rendered against the said receiver for the sum of four thousand one hundred and forty-one dollars and twenty-seven cents, with interest from the 14th day of May, 1872.

If this question is answered in the negative, then—

Second.-—Was there such a breach of warranty as to Ms interest in the property insured, on the part of Xiucius S. McCulloch, as to render said policy void %

If this question is answered in the negative, then judgment is to be rendered herein against the said receiver for the sum of three thousand dollars, with interest from the 5th day of November, 1866.

If answered in the affirmative, then judgment is to be rendered in favor of said receiver.

Dated May 14th, 1873.

Converse & Lyman, attorneys for plaintiff.

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Mr. Lyman, of counsel.

Mr. Carlisle Norwood, Jr., for defendant.

This is a controversy submitted pursuant to § 372 of the Code.

The facts appear in the case submitted.

The first objection raised by the defendant is, that in the statement of facts agreed upon, the jurisdiction of the foreign tribunal over the cause, over the thing and over the parties, should have been specifically shown and cannot be presumed. It appears by the statement, that the plaintiff brought suit against the company in the Court of Common Pleas of the county of Cuyahoga and State of Ohio, and that the company duly appeared by its attorney. The courts of Common Pleas for counties in other States, have been regarded in this state as courts of record, possessing in civil cases a general jurisdiction to any amount, with the exception of suit for real property. This court early held this in regard to the Court of Common Pleas for the County of Suffolk, Massachusetts. Harrod v. Barretto ( 1 Hall, 155 ), adopting the rule of presumption in that respect, that prevailed in the Supreme Court of the United States (Kempe’s Lessee, v. Kennedy, 5 Cranch, 173 ). The Supreme Court of this State have held the same. Foot v. Stevens ( 17 Wend. 483 ), and the cases cited on behalf of the defendant do not vary the rule.

The company .voluntarily submitted to the jurisdiction of the tribunal of another State, and admit that they there duly appeared by their attorney. It is clear that the statement of facts submitted, shows that the Ohio court had jurisdiction over the cause at its commencement, and the next question raised by the defendant, and to be considered, is, whether the Ohio tribunal at any time lost that jurisdiction.

The defendant claims that the action abated by the

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dissolution of the company. The act of 1832, “To prevent the abatement of suits by or against corporations,” provides that the court in which any suit or proceeding against a corporation which shall have been dissolved by the Supreme Court, or by the expiration of its charter or otherwise, shall be pending at the time of such, dissolution, shall have power on the application of either party thereto to make an order for the continuance of such suit or proceeding, and the same may be thereafter continued until a final judgment or decree shall have been had therein, which shall have the same effect upon the rights of the parties as if such corporation had not been dissolved” (Laws of 1832, ch. 295 ; 1 R. S. 4 ed. p. 1174, § 14). The Code, § 121, directs that no action shall abate by the death, marriage, or other disability of a party, or by the transfer of any interest therein, if the cause of action survive or continue, and provides for its continuance either in the name of the representative or successor in interest, or in the name of the original party, or that of the transferee, as the case may be. Previously to these enactments, it was held that when pending a suit by a foreign corporation, its charter was repealed, the action did not abate (Lombard Bank v. Thorp, 6 Cowen, 46), and the trustees who succeeded to its property were substituted.

For the purposes of this case, we must assume in the absence of'any proof to the contrary, that the law of Ohio in respect to the abatement and continuance of actions is the same as our own. In Leavenworth v. Brockway ( 2 Hill, 202 ,) the court use this language: “The onus próbandi was upon the defendant, to show “the law of Ohio to be different from that of this State, “if he wished any advantage from it. In the absence “of such proof, the court in cases like the ^present “should act according to its own laws.” “In Chendy “v. Arnold, 15 N. Y. R. 353, Denio, Ch. J., says : “Na “evidence was produced respecting the matrimonial

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“law of Rhode Island. In the absence of such evi- “ dence, we are to intend that is the same as our law.” To the same effect Robinson v. Dauchy, 3 Barb. 21 , 29, where the court assumes, in the absence of proof on the subject, that the law of Massachusetts in respect to the purchase of goods under false pretences is like our own; also Hoffman v. Carow (22 Wen. 324). Consequently, assuming the law of Ohio, in'the absence of all proof in respect to it, to be the same as our own, it then becomes necessary to consider whether we can inquire into the course of proceedings in the suit in the' Ohio courts, to determine whether the action upon the dissolution of the corporation was duly proceeded with in that State, against the corporation and in conformity to law. As in accordance with our law, the suit did not abate: it only remains to see if it was properly continued. In other words, in an action to recover upon a judgment record of a court in another state, where no application has been made for relief in the court where it was recovered, and no objection is interposed by answer or demurrer, or otherwise, before the hearing, can it be a subject of inquiry whether the action was properly continued or not %

This question may be considered as answered by the well-settled presumptions of law in respect to legal proceedings. In the case of Harrod v. Barretto ( 1 Hall, 155 ), the opinion of the court by Oakley, J., seems to make it conclusive, that in an action upon a judgment obtained in the courts of another State, it is competent for the defendant to show by a special plea that the court in which the judgment was rendered had no jurisdiction either of his person or the subject-matter, and'that every presumption is in favor of the jurisdiction of the court which rendered the judgment, and the plea must negate, by positive averments, every fact from which that jurisdiction might arise.

There is nothing in the present case showing on the

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part of the defendant or otherwise any failure "by the Ohio court to retain the jurisdiction it originally acquired over the suit by the voluntary appearance of the corporation. It could not be divested of that jurisdiction by any non-appearance of the attorney at a subsequent stage of the litigation, and gs we must assume the Ohio law, in the absence of all proof, to be the same as our law, we are consequently also bound to presume that the court, by all due measures, continued to be clothed with jurisdiction, until the rendition of its final judgment. For us to presume the contrary would be without precedent, and would also introduce a new element of difficulty in the prosecution of suits to recover upon a judgment rendered in another State. It is better to adhere to the well-considered ruling presented in the case of Harrod v. Barretto (supra), in reference to the legal presumption of regularity and jurisdiction, than to attempt in a summary manner to negate the well-considered judgment of a court in another State.

This view also is in accordance with that policy of legislation and adjudication which seeks to protect the rights and remedies of parties from being destroyed or diminished by proceedings to appoint receivers, and by the dissolution or sequestration of corporations. The construction given to the national banking act, in the Bank of Bethel v. Paguisque Bank (14 Wallace, 383), though not analogous to the blew York statute, shows this tendency. It was held that a bank could be sued though a receiver was appointed and was administering its concerns, and that his decision upon the validity of a claim was not final, but that the creditor, could proceed afterwards to have the validity of the claim judicially adjudicated in a suit in a proper State court, against the bank.

The law cannot endorse the action of a receiver, when he seeks to place himself in a position to reap the benefit of a decision, if it should prove favorable to the com

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pany, and to escape the consequences if it should prove adverse. It is a part of his duty to protect its assets for the "benefit of each anil every creditor alike, and depriving no one by any act of his of his legal rights.

Having arrived at the conclusion that the first question submitted to the- court upon this case is to be answered in the affirmative, and that the judgment in Ohio is valid against the receiver, there is no occasion to look" at the second question submitted.

There should be a judgment rendered in favor of the plaintiff, against the defendant, for the sum of §4,141.27, with interest from May 14, 1872.

Freedman and Van Vorst, JJ., concurred.

Cases cited

Evans v. Wells & Spring 22 Wend. 324 N.Y. p. 180
Foot v. Stevens 17 Wend. 483 N.Y. Sup. Ct. p. 186