Hyperlawhypertext legal database Fisher v. Charter Oak Life Insurance 52 N.Y. Super. Ct. 179

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Fisher v. Charter Oak Life Insurance

52 N.Y. Super. Ct. 179 20 Jones & S. 179 Court N.Y. Super. Ct. Decision date 1885-06-01 English

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JOHN M. FISHER, Appellant, v. THE CHARTER OAK LIFE INSURANCE Co., Respondent.

Headnote

Demurrer — want of jurisdiction over foreign corporation—facts stated not authorizing relief ashed.—Agreement to apportion and pay—Cause of action on. —Foreign corporation—-no interference with internal administration.
The jurisdiction of the superior court is to be presumed. A demurrer is not well taken unless the facts showing want of jurisdiction appear on the face of the complaint. Therefore, a complaint in an action against a foreign corporation, upon contract, which does not show when the contract was made, executed or delivered, nor when nor how the summons was served, is not demurrable for want of jurisdiction, either of the person or the subject matter.
A demurrer on the ground that the complaint does not state facts sufficient to constitute a cause of action is well taken, if the facts stated do not authorize the judgment prayed for, although they may authorize some other relief.
In case of an agreement to apportion and pay the amount apportioned, apportionment is necessary before an action will lie for a money judgment. Therefore, a demurrer to a complaint in an action brought on such an agreement before apportionment, demanding a money judgment, is well taken. But upon proper proof an action will lie to compel the making of an apportionment.
The courts of this state will not interfere with the internal administration of the affairs of a foreign corporation, its officers, books and assets not being within.their jurisdiction. Therefore, there is no cause of action in this state against such corporation to compel it to perform its agreement to make apportionment of moneys to be received by it. '
Query, whether a complaint alleging facts claimed to constitute such a
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cause of action against such foreign corporation, and praying for the equitable relief that it make apportionment, is demurrable as showing want of jurisdiction of the subject matter ?
Before Sedgwick, Oh. J., Freedman and Truax, JJ.
Decided June 1, 1885.
Appeal from judgment in favor of defendant, upon demurrer to complaint.
Defendant demurred to the complaint on the following grounds : First.—That the court had not jurisdiction of the person of the defendant: Second.—That the court had not jurisdiction of the subject of the action ; Third.— That the amended complaint did not state facts sufficient to constitute a cause of action.
The demurrer was argued before, and decided by Ingraham, J., who delivered the following opinion :—
“As to the first and second grounds of the demurrer, it is sufficient to say that the defects do not appear upon the face of the complaint.
“ By subdivision 7 of section 263 of the Code, a superior city court has jurisdiction where an action is brought by a resident of that city against a foreign corporation, to recover damages for breach of a contract, or a sum payable by the terms of a contract, when the contract was made, executed or delivered within this state, or where the summons is served by the delivery of a copy thereof within that city to an officer of the corporation, as prescribed by law. By section 266, it is provided that the jurisdiction of a superior city court, in an action or special proceeding, must always be presumed, and when the defendant appears in the action, the want of jurisdiction is waived by appearance, unless it is pleaded in defense.
“This is an action on contract; it does not appear on the face of the complaint that the contract was not made, executed or delivered within this state, nor that the summons was not served on an officer of the defendant within the city, as prescribed by law, and it therefore
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does not appear on the face of the complaint that the court has not jurisdiction of the person of the defendant, or of the subject of the action.
“As to the third ground of demurrer. The action must, I think, be deemed an action at law for the recovery of a specific sum of money. The only relief demanded in the complaint is a money judgment against the defendant. No other or different relief is asked for, and if plaintiff is not entitled, on the facts alleged in the complaint, to judgment for a specific sum of money against the defendant, the demurrer must be sustained (Edson v. Girvan, 29 Hun, 422 ).
“The agreement on which the action is brought provides, that 6 whereas, a portion of the assets of the company (defendant) are of uncertain value, and cannot be made available as a part of the reserve of the company, and it has become necessary to reduce the liabilities of said company, the plaintiff agrees to reduce the amount of the policy payable to him, two-fifths, viz : from $2,000 to $1,200, and the defendant agrees that when the said company shall realize from .said uncertain assets any divisible surplus, which may properly be divided among the holders of policies so reduced, said company will from, time to time apportion to the said policy . . its fair and equitable proportion of said divisible surplus, by adding to said policy or otherwise, which dividend shall continue upon such reduced policies after they become due and are settled, as well as upon those which remain in force.’
“ This is an express obligation of the defendant, on the realization from the i uncertain assets of a divisible surplus, which may properly be divided among the holders of policies so reduced.’ When a divisible surplus shall have been realized, the company is bound to apportion to said policy its fair and equitable proportion; no discretion is vested in the company. It is not provided that the company may apportion, but it agrees it will apportion. That agreement is founded on a valid consideration, and is one which the court can and should enforce.
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Cases cited by defendant, that when a board of commissioners are vested by statute with a discretion to apportion, such discretion will not be controlled by the court, do not apply to a case where one of the parties to a contract agrees to apportion. In one case, the statute expressly vests such discretion in third parties, in the other the party to the contract agrees to do a particular act.
“ The complaint alleges that since the execution and delivery of the said agreement, defendant has realized from the uncertain assets referred to in said agreement,' a divisible surplus which under the terms of the said agreement, may properly be divided among the holders of reduced policies, to such an amount that the defendant may and can now properly apportion to said policy issued to this plaintiff, and reduced by the terms of the said agreement,the full amount of the difference "between the amount paid to this plaintiff thereon as aforesaid, and the original amount of said policy, to wit, the sum of $800, and may and can properly and legally pay that amount to this plaintiff as provided by said agreement. Are the allegations sufficient to give the plaintiff a right to a money judgment for $800, or any other sum ?
“ It will be noticed that the agreement is not to pay the policy-holder any sum he is entitled on any divisible surplus being realized from the uncertain assets, but to have apportioned to said policy its fair and equitable proportion of such divisible surplus. He is entitled to his fair and equitable proportion, and before that can' be ascertained, it must appear what its fair and equitable proportion would be, and the defendant must then be required to apportion such a sum to the plaintiff. The word apportion means to ‘ divide and assign in just proportion/ cto distribute among two or more a just part or share to each/ and this is what the defendant has agreed to do, and such proportion must be ascertained before a judgment can be given against the defendant for a sum of money.
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“ The case of Boarman v. Lake Shore & Michigan Southern R’y Co. ( 84 N. Y. 157 ), is instructive on this point. That was an action brought to compel the defendant, a foreign corporation, to pay dividends on certain preferred stock. By the certificate of stock it was provided that said stock is entitled to dividends at the rate of ten per cent, per annum, ‘payable semi-annually, and the payment of dividends as aforesaid, is hereby guaranteed.’ In affirming a judgment in favor- of the plaintiff requiring the defendant to pay dividends to him, and restraining defendant from paying dividends on its common stock until the claim of plaintiff was paid and satisfied, the court says, at page 180 : ‘ While, as a general rule, courts of equity will not exercise visitorial powers over corporations, and its officers are the sole judges as to the propriety of declaring dividends, and in this respect the court will not interfere with the proper exercise of their discretion, yet when the right to the dividend is clear and fixed by the contract, and requires the directors to take action before it can be asserted by an action at law, and a restraint by injunction is essential to maintain the rights of the stockholder, the interposition of a court of equity is a proper exercise of its power, and should be upheld. . . . The judgment here requires a specific performance of the contract, and such relief could not be obtained by an action to recover the dividend.’
“ The relief here would be for a specific performance of the agreement, viz.: to ascertain the divisible surplus and apportion it among the holders of reduced policies; but such relief is not asked for in this action, and as the defendant did not answer, but demurred, plaintiff is not entitled to such equitable relief (Edson v. Girvan, 29 Hun, 422 ).
“ There is another objection to the complaint, which I think is well taken. The complaint does not state facts; the allegations are simply conclusions. ‘ That a divisible surplus has been realized which may properly be divided among the holders of reduced policies to such
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an amount that said defendant may and can properly and legally apportion to said policy held by this plaintiff,the full amount of the difference between the amount paid and the full amount’, are simply conclusions. The Code requires that the facts should be stated from which the conclusions are to be drawn.
“ The demurrer must therefore be sustained, and judgment ordered for the defendant on the demurrer, with costs, with leave to plaintiff to amend within twenty days, on payment of costs.”
From the order entered in conformity with this decision, the plaintiff appealed to the general term.
William Settle, attorney, and of counsel for appellant, argued:
I. When the contingency provided for in the agreement, to wit, the realization occurred, the right to the balance became fixed, and existed independent of any act of the corporation or its officers (Boardman v. Lake Sho. & Mich. So. Ry. Co., 84 N. Y. 178 ). In that case the court held that the action was properly brought for specific performance, because the action was not brought to recover the dividends alone, but to compel the defendant to' do certain other acts, without which there would be no power to pay the dividends, thus intimating that if it was an action for dividends alone, no accounting would be necessary. In the case at bar the action is brought to recover the fixed amount (dividends) remaining unpaid upon the policy. The agreement is that the company will apportion to the policy in question its fair and equitable proportion, etc.; not such an amount as they may think proper, but “its fair and equitable proportion.” If the company is able to pay the whole of the balance unpaid on the policy, then that is its fair and equitable proportion, and the complaint alleges that it is able so to do, and the demurrer admits it.
II. If an accounting is necessary, the plaintiff should have been allowed it under the complaint. The complaint states sufficient to entitle plaintiff to an accounting ; that
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being so, the complaint should not have been dismissed, even though no accounting was demanded therein (Sternberger v . McGovern, 56 N. Y. 12 ). In that case the court held that when the complaint sets up a claim for legal and equitable relief, the plaintiff has a right to have both tried. It is true that by section 1207 of the Code, where no answer is interposed, the judgment shall not be more favorable to the plaintiff than that demanded in the complaint—but would a judgment for an accounting be more favorable ? the demand in the complaint is for a fixed sum of money, $800—under no circumstance could plaintiff recover more than that amount under an accounting, and hence the judgment would not be more favorable, and section 1207 of the Code, and Edson v. Girvan ( 29 Hun, 422 ), cited by Judge Ingraham in his opinion at special term, have no application.
Alexander & Oreen, attorneys, and Charles B. Alexander, of counsel for respondent, argued:
I. Unless the plaintiff can, on the facts disclosed, show himself entitled to money damages in an action at law, the demurrer must be sustained. The prayer for relief taken in conjunction with the averments of the complaint, is conclusive upon the plaintiff that this is an action at law for damage in a case where a demurrer has been interposed (Kelly v. Downing, 42 N. Y. 71 ; Alexander v. Katte, 63 How. 262 ; Taylor v. Charter Oak L. I. Co., 9 Daly, 489 ; Edson v. Girvan, 29 Hun, 424 ; Murtha v. Curley, 90 N. Y. 372 ; Covert v. Henneberger, 53 How. Pr. 1 ). Where an answer is interposed, the plaintiff can have any relief consistent with the case made by the complaint and embraced within the issue (Murtha v. Curley, 90 N. Y. 372 ). Of course, where an answer is not interposed, this would not be the case; and for the purposes of section 1207, a demurrer' is not an answer (Kelly v. Downing, supra).
II. The averments of the complaint do not entitle plaintiff to a money judgment. 1. An apportionment must take place before anything becomes due to the
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plaintiff, and Sthis has never been made. Apportion is a word of well-understood meaning both in literature and law. It is derived from the Latin words ad and portio. It is defined by Webster as meaning to divide and assign in just proportion. The word has had careful judicial definition and consideration (Haight v. Day, 1 John. Ch. 18 ; Clarke v. Brooklyn Bank, 1 Edw. Ch. 368 ; 1 Story’s Eq. Jur. 475 a; Walker v. Devereaux, 4 Paige, 253 ; Le Roy v. Corporation of N. Y., 4 Johns. Ch. 356 ), 2. The apportionment not having been made, the action will not lie to recover what might be the result of such apportionment, if such apportionment was had (Del. & Hud. Canal Co. v. Pa. Coal Co., 50 N. Y. 250 ; Scott v. Avery, 5 H. L. Cas. 811; United States v. Robeson, 9 Peters, 319 ; Perkins v. U. S. Electric Light Co., 15 The Rep. 680 ; Milnes v. Gery, 14 Vesey, 400 ; Scott v. Corporation of Liverpool, 3 De Gex & J. 334; Hood v. Hartshorn, 100 Mass. 117 ). 3. Ho action can be sustained, because by the contract and by the complaint, the suit is brought for a dividend, and no action at law will lie to obtain a dividend until it is declared by the body charged with the duty of declaring it (Meeker v. Wright, 76 N. Y. 272 ; Davis v. Mayor, 14 Ib. 506 ; Chase v. Vanderbilt, 37 Super. Ct. 334 ; Webb v. Vanderbilt, 39 Super. Ct. 9 ; Prouty v. Michigan Southern R. R. Co., 4 T. & C. [Sup. Ct.] 241 ; Williams v. Western Union Tel. Co., 93 N. Y. 192 ).
III. If this action is to be treated as a suit in equity, then there is no cause of action pleaded. Equity will only interfere where willful abuse of discretion is alleged. The most striking case on this point is Karnes v. Rochester & Genesee Valley R. R. (4 Abb. N. S. 107). The complaint alleged the existence of an enormous surplus applicable to the payment of a dividend, and ¡irayed an accounting and division. Defendant demurred, and the court sustained the demurrer on the principle above stated. See Verplanck v. Mercantile Ins. Co. ( 1 Edw. 84 ); Luling v. Atlantic Mut. Ins. Co. ( 45 Barb. 510 ); Ely v. Sprague (1 Clarke, 351); State of La. v. Bank of La. ( 3 La. 771 ); Pratt v.
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Pratt ( 33 Conn. 446 ); Scott v. Eagle Fire Co. (7 Paige, 198); Williams v. Western Union Tel. Co. (supra); Goodwin v. Hardy ( 57 Me. 143 ); Minot v. Paine ( 99 Mass. 101 ); Granger v. Bassett ( 98 Mass. 462 ); Phelps v. Farmers’ Bank ( 26 Conn. 269 ); Hyatt v. Allen ( 56 N. Y. 553 ); Jones v. Terre Haute & Richmond R. R. Co. ( 57 N. Y. 196 ); Brundage v. Brundage (1 Supm. Ct. [T. & C.) 82).
IV. This court has no jurisdiction of the person of the defendant. The defendant is a Connecticut corporation. The plaintiff does not appear to be a resident of Hew York (Code, § 263, sub. 7.)
V. The court has no jurisdiction of the subject of the action. The courts of this state will not exercise jurisdiction on their equity side to compel the declartion of a dividend. This rule applies to all courts, and not alone to the supreme court (Chase v. Vanderbilt, supra; Whitehead v. Buffalo & Lake Huron Ry. Co., 18 How. 218 ; Howell v. Chicago & N. W. R. R. Co., 51 Barb. 382 ; Smith v. Mutual Life of N. Y., 14 Allen, 336 ; Landers v. Staten Island R. R., 14 Abb. N. S. 346 ; Thornton v. St. Paul & Chicago R. R., 45 How. Pr. 426 ; Williston v. Mich. Southern Railroad, 13 Allen, 400 ; Merrick v. Van Santvoord, 34 N. Y. 222 ; Eaton v. Aspinwall, 19 N. Y. 119 ; Buffalo & Allegany R. R. Co. v. Cary, 26 N. Y. 75 ; Reiner v. Marquis of Salisbury, L. R. 2 Ch. Div. 378 ; Matthaei v. Galitzin, L. R. 18 Eq. R. 340 ; Doss v. Secretary of State, L. R. 19 Eq. 534 ; Ogdensburgh R. R. v. Vermont R. R., 16 Abb. Pr. N. S. 250). The objection to the jurisdiction is not waived by the appearance of defendant (Wheelock v. Lee, 74 N. Y. 498 ).

For the reasons given by the judge below, I agree with him that the issue upon the demurrer was whether the plaintiff was entitled, upon the averments of the complaint, to the judgment demanded by it. The demand was for a judgment against the defendant, in a specified amount. I also agree that under the terms of the contract, in advance of

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an apportionment to the policy, of its fair and equitable proportion of the divisable surplus referred to, the plaintiff would have no right to demand a money judgment. If the failure to apportion be decreed a breach of contract, there is no possible mode of assessing damages. For the amount of the apportionment can be fixed only through the exercise, in fact, of a discretion by the officers of the company, in view of present circumstances and future contingencies. A court or jury could not exercise that discretion, even if the agreement did not, as it does, contemplate that the officers should exercise it'in trust for the whole body of the holders of policies.

The result is that the demurrer was properly sustained.

If nothing more be said, there may be an application to amend, by changing the demand for judgment in the complaint, to a demand for an accounting, as it was called, on the agreement, or perhaps for a judgment that the defendant proceed to apportion it.

The allegations in the complaint that would be relied upon as the ground of the new demand, show that for sufficient consideration, the defendant has contracted to apportion, &c. This contract has modified whatever would have been the implication as to the right of the company to refrain from making dividends, if the relations between it and the plaintiff were the same as if the plaintiff were a shareholder merely. The plaintiff would have a right to the enforcement of the contract, upon making proper proof.

The performance of the contract by defendant would involve the doing of such things by its officers as would be done by them, if they were proceeding to ascertain if a dividend of profits should be declared in a case where profits could be divided among shareholders. The defendant is a foreign corporation. This court has no facilities or processes sufficient or fit to compel a foreign corporation to take the proceeding described. It cannot bring the officers .or the books or the assets of the corporation

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within its jurisdiction. It must enforce such a judgment, if at all, by proceedings for contempt, and yet there are no persons here whose action can direct the proceedings of the company. Under such circumstances, it is said that a court of equity will refrain from proceeding to a judgment, and that the court of equity will not interfere with the internal administration of the affairs of a foreign corporation (Cumberland Coal Co. v. Hoffman Coal Co., 30 Barb. at p. 171; Howell v. Chicago & North Western Ry. Co., 50 Barb. at p. 383; Chase v. Vanderbilt, 37 Super. Ct. at p. 356, and cases cited).

The learned counsel for respondent takes the position now referred to, under that ground of the demurrer that states that the court has no jurisdiction of the subject of the action. If this be not formally correct, and it is unnecessary to pass upon this, it is true that there is no cause of action here in this state, as the law does not give any remedy here for the things complained of.

Judgment affirmed, with costs.

Freedman and Truax, JJ., concurred.

Cases cited