Hyperlawhypertext legal database Day v. Bank of the State 52 N.Y. Super. Ct. 363

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Day v. Bank of the State

52 N.Y. Super. Ct. 363 20 Jones & S. 363 Court N.Y. Super. Ct. Decision date 1885-12-07 English

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HENRY DAY, Appellant, v. THE BANK OF THE STATE OF NEW YORK, Impleaded with THE MUNICIPAL GAS LIGHT CO. OF NEW YORK, Respondent.

Headnote

Joinder—Causes of action—Owner of stock against possessor of the certificate and the company.
An owner of stock of a company, from whom the certificate thereof has been, taken wrongfully and without his knowledge, and delivered to a third party, cannot unite a cause of action or claim against said third party, with a cause of action in a claim against the company, unless the allegations of the complaint show that the several claims are parts of a single claim or cause of action.
Allegations that plaintiff is the owner of certain stock of a company ; that the certificate thereof was wrongfully, and without his knowledge, taken from his possession, and delivered to a third party, having on it a power to transfer, the plaintiff’s name to which was forged; that said third party refused to return the certificate, and claimed to the company that the certificate had been duly assigned to him, and that he was the lawful holder thereof; and that in consequence the company, although requested, had refused to recognize the plaintiff as the owner of the shares; coupled with a demand for judgment that plaintiff be adjudged to be the owner of the shares, and that the company may be compelled to recognize him as such, to act accordingly, and to account for divi dend.—Held, on demurrer, to be insufficient, under the above rule.
Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
Decided December 7, 1885.
Appeal by plaintiff from judgment entered upon order and interlocutory judgment sustaining defendant’s demurrer to complaint on the ground that it improperly unites causes of actions.
The complaint averred that the plaintiff is the owner of certain shares of the capital stock of the defendant, The Municpal Gas Light Company, and was formerly in possession of the certificates for the shares ; that the said certificate was wrongfully, and without his knowledge, taken from his possession and delivered to the defendant.
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The Bank of the State of ¡New York, having upon it certain instruments purporting to authorize the transfer of the shares, and to be signed by plaintiff ; that plaintiff’s name had been forged upon the instruments ; that the plaintiff had requested the bank to return the certificate to him, and that it had refused to do so, and has claimed and does claim to, among others, the defendant The Municipal Gas Light Company, that the certificate has been duly assigned to it, and that it is the lawful holder thereof; that in consequence the defendant, The Municipal Gas Light Company, although requested, has refused to recognize the plaintiff as the owner of the shares ; and it demands judgment that the plaintiff may be adjudged to be owner of the said shares; that the Municipal Gas Light Company may be compelled to recognize him as such owner and to act accordingly ; to account for dividends already declared, which have not been paid to him, &c.
The defendant, The Bank of the State of ¡New York, demurred on the ground that causes of action had been improperly united.
The demurrer was argued at special term before Ingraham, J., who delivered the following opinion :
“ It is rather difficult to determine from the complaint what cause of action the plaintiff has against The Municipal Gas Light Company. It is not alleged that the plaintiff’s shares of stock in The Municipal Gas Light Company have been transferred on the books of the corfrpany. It is not alleged that dividends have been declared on the said shock which the company refused to pay, or that The Municipal Gas Light Company has done any act inconsistent with plaintiff’s ownership of the shares of the stock.
“ The general allegation that The Municipal Gas Light Company, although requested, has refused to recognize the plaintiff as the owner of the stock, is simply a conclusion and not a fact.
“ On the transfer of the shares of stock of the company to the plaintiff, he became a member of the corporate
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body, and thereby became entitled to partake in the surplus profits of the corporation, and ultimately, on the dissolution of the corporation, to so much of the capital of the corporation as was not required to pay its debts (Burrill v. Bushwick R. R. Co., 15 N. Y. 216 ). And the owner of such shares in the stock of the company can, under some circumstances, maintain an action to compel the corporation to issue and deliver to him the written evidence of the existence of such shares, and of the ownership of them—a paper usually called a stock certificate.
“The plaintiff in this action alleges that such a stock certificate has been issued by the corporation to him, and that such stock certificate is still outstanding.
“ The mere declaration of a dividend by the defendant, which the defendant refuses to pay to the plaintiff, the lawful owner of the stock, would not justify this action, for by a declaration of such dividend the corporation becomes a debtor of the stockholder for the amount of the dividend declared, and for such debt he may maintain his action (Williams v. Western Union Tel. Go., 93 N. Y. 192 ).
“ The mere possession of the written evidence of the ownership of the shares of stock by the defendant, The Bank of the State of New York, does not, as between itself and the gas company, give the bank the right to participate in the management, profits, or property of the defendant corporation. In order to vest the bank with the title to the shares of stock, as between it and the plaintiff, it is necessary that the plaintiff should have assigned by an instrument in writing his interest» in the stock of the corporation, and it is necessary to a valid transfer that the assignment and power of attorney to make all necessary transfers, should be executed by the owner of the stock (McNeil v. Tenth Nat’l. Bank, 46 N. Y. 330 ). But as between the purchaser and the corporation, until a transfer on the books has been made, he is not a stockholder, and has rio claim to act as such, but possesses merely a right to make himself a stockholder by
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the prescribed form (N. Y. & New Haven R. R. Co. v. Schuyler, 34 N. Y. 80 ).
“The complaint does allege a good cause of action against The Bank of the State of New York for the recovery by plaintiff of the stock certificates.
“In some cases an action in equity for the specific delivery of papers wrongfully detained can be maintained (Hammond v. Morgan, 51 Super. Ct. 478). This cause of action for the recovery of such certificate is entirely separate and distinct from any claim that the plaintiff might have against the corporation for the refusal to pay him dividends or allow him to participate in the management of the corporation; and while it might be, in an action brought by a shareholder of the corporation, to compel such corporation to issue to him evidence of his ownership of the shares of stock belonging to him, or to allow him to participate in the management of the corporation, that a third party claiming to own. some interest in the stock claimed by the plaintiff would be a proper party to such action, the facts as alleged in this complaint do not make out such a cause of action.
“The controversy as to the ownership of the stock certificate is between the plaintiff and the bank only, and with that controversy The Municipal Gas Light Company has nothing to do, and the recovery, by plaintiff, from the bank, of the stock certificate and instrument purporting to be an assignment and power of attorney annexed thereto, will, so far as appears, be all the relief to which, from the facts alleged, plaintiff is entitled, and will vest the plaintiff with full title to the stocks.
“ The demurrer must therefore be sustained, with leave to plaintiff to amend the summons and complaint on payment of costs.”
Franklin Lord, attorney, and John E. Parsons, of counsel for appellant, on the questions considered in the opinion, argued:
I. It is respectfully submitted that a good cause of action was alleged as to the gas company,
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and that to the action the respondent was a proper party. (1) The certificates of the gas company’s stock were issued by the company to Mr. Day. As a stockholder, he was entitled not only to dividends, but to all the other rights which belong to the ownership of stock, including a participation in management, the important right to vote at stockholders’ meetings, to examine books, to have dividends declared to his name, so as to be able to collect or transfer the right to them without impediment, etc. (2) If the gas company refused to recognize Mr. Day as a stockholder, he had a cause of action to compel it to do so ; and it was not necessary for him to wait until a dividend had been declared to another name, or a stockholders’ meeting had been had, at which his vote was- lost, before applying to a court for relief. An absolute refusal to recognize Mr. Day as a stockholder, put, too, upon the alleged transfer of his stock, justified an immediate action by him. -
II. That a stockholder of a corporation, whose certificates have been wrongfully taken from his possession, and gone into the possession of third parties with forged transfers, may in equity sue his company if it claim that the stock has been transferred, and refuses to recognize him, and that to such an action the third party, whose wrongful possession of the certificates creates the difficulty, may be joined as a party, is settled by authority (Cottam v. Eastern Counties Ry. Co., 1 Johns. & Hem. 243 ; Johnson v. Renton, L. R. 9 Eq. 181, 188 ; Denny v. Lyon, 38 Pa. St. 98 ; Tayler v. Great Indian Ry. Co., 4 De Gex & J. 559 ; Lowry v. Commercial Bank, Taney G. C. Dec. 310, 399 ; Pollock v. National Bank, 7 N. Y. 274 ; Pomeroy on Remedies, &c., § 455 ; Cahoon v. Bank of Utica, 7 N. Y. 486 ; Reed v. Stryker, 4 Abb. Ct. App. 26 ; Lattin v. McCarty, 41 N. Y. 107 ; Meyer v. Van Collem, 28 Barb. 230 ; Palen v. Bushnell, 46 Ib. 24; Richtmyer v. Richtmyer, 50 Ib. 59 ; Hammond v. Cockle, 2 Hun, 495 ).
Were there not direct authority, true principles of law would cover the case. Where the original certificates of
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stock are outstanding in third hands, it is reasonable and proper that the right of such third party shall be determined in the action brought by the stockholder, thug protecting the company from a double claim. It is in consequence of the claim of the respondent that the gas company refuses to recognize Mr. Day as a stockholder. To establish Mr. Day’s right, the substantial controversy is with the respondent. That being settled in this action, judgment against-the gas company will go as a necessary consequence. Were Mr. Day to be driven to the necessity of first suing the respondent in equity for his certificates, the gas company might still continue its refusal, and thus force Mr. Day to a second suit. The whole subject is one and should be disposed of in one action.
Shipman, Barlow, Larocque & Choate, attorneys, and Joseph Larocque, of counsel for respondent, argued:
I. The complaint states two causes of action : 1. A cause of action against the gas company to recover dividends, past and future, on shares standing in the plaintiff’s name, and to compel his recognition as a member of that corporation. 2. A cause of action against the bank to recover certain certificates of stock and assignments attached thereto, of which the plaintiff claims to be the owner, and entitled to the immediate possession.
II. These two causes of action so united do not both belong to either one of the subdivisions of section 484. 1. The cause of action stated against the gas company, so far as it relates to dividends, falls under subdivision 1. It is a cause of action arising “upon contract, expressed or implied.” When a dividend is -declared by a corporation, the stockholder becomes the creditor of the corporation in respect of such dividend, and may maintain an action for its recovery. 2. The cause of action stated against the bank is for the recovery of chattels, viz., certain instruments described as stock certificates, with assignments and powers óf attorney attached, and this cause of action falls within subdivision T of section 484.
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III. The said causes of action are improperly united, in that they do not each affect all the parties to the action. 1. So far as the cause of action stated against the bank is concerned, the gas company is not affected by it, and is in no sense a necessary party to its determination. The two corporations are strangers to each other. The issue presented by that cause of action is as to the ownership and right to the possession of the certificates, assignments and powers. 2. So far as the cause of action stated against the gas company is concerned, the bank is not affected by it. The bank does not claim to be a member of the gas company, and until duly admitted to such membership, would not be heard to assert any right to any dividends declared on the shares in question, or to exercise any right of membership (Equitable Life Society v. Schermerhorn, 60 How. 377 ).
IV. Neither can subdivision 9 of section 484 be successfully invoked to sustain the joinder of these causes of action, because : 1. As before shown, they respectively fall under different subdivisions preceding subdivision 9 ; and, 2. Because they do not arise out of the same transaction or transactions connected with the same subject of action, (a.) The transaction out of which the plaintiff’s cause of action against the gas company arises, occurred many years ago, when the plaintiff was admitted as a member of the gas corporation, (b.) The transaction out of which the alleged cause of action against the bank arose, is a recent transaction, with which the gas company had nothing to do, and relates to the acquisition by the bank of the possession of certain certificates, with powers of attorney and assignments thereto attached (McDonald v. Kountz, 58 How. 152 ; Thompson v. St. Nicholas Bank, 61 Ib. 163 ; Wiles v. Suydam, 64 N. Y. 173 ; Equitable Life Assurance Soc. v. Schermerhorn, 60 How. 477 ; Keep v. Kaufman, 56 N. Y. 332 ).
V. The English authorities relied upon by the learned eounsél for the plaintiff below, and the cases arising in other states to which he refers, it is respectfully sub
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mitted, throw no light upon the questions presented in the case at bar. These questions are controlled by the provisions of section 484 of our Code, and by the decisions of our tribunals giving construction to that section, and though the books are full of cases in which the provisions of this section have been construed, no authority in them can be found in conflict with the views expressed by this court at special term, in sustaining the demurrer in the case at bar.

I think there can be no doubt that the complaint sets out such facts as would be the foundation of two separate actions, one against each defendant. On a demui'rer of this kind, it is not a question as to whether the statement of facts is sufficient to show that the causes of action exist. Only the natures of the causes of action are to be considered. If there be no other consideration to be invoked, then, under secti'on 484 of the Code, the complaint is defective, because each cause of action does not affect both defendants.

But it must be apparent that this does not of itself necessarily decide the controversy. For there may be a narration in a complaint, which sets up causes of action severally, and yet may also show what may be called another or third cause of action, which is but a single cause, embracing the two other causes. Such pleading occurs generally in an action to enforce an equity remedy. A familiar example is a judgment creditor bringing an action to compel payment of his judgment out of property that has been conveyed, as alleged, in fraud of creditors, by separate transfers to some or all of the defendants severally. In such an instance, the plaintiff might proceed against the defendants severally, and it would appear on the face of the complaint that there were several causes of action. Tet in fact the complaint would set out but one cause of action, which would be the right to pursue the whole of the debtor’s property as a totality, and the

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several transferees, as claiming parts of the whole, would be competently made defendants to allow the plaintiff’s remedy to be enforced.

It must then be asked, what remedy beside the two causes of action just alluded to, does the plaintiff claim, which embraces the two, or to enforce which completely, it will be necessary or important to plaintiff to enforce the two.

Looking first at the claim against the bank, it will not be necessary to enlarge the proposition that all of the plaintiff’s right as against it could be fully enforced without the presence of the gas company as a defendant. The gas company is not averred to have or claim any interest which, if setup, would appear to affect the plaintiff’s claim that the bank should deliver up the certificates.

The next basis for an equitable single cause of action to be examined is the plaintiff’s claim against the gas company. What is that claim ? The complaint states, that the bank is in possession of the certificates of shares, and claims to be the holder of them, through transfers to which plaintiff’s name had been placed, by forgery, and has claimed to the gas company “ that by reason of the said papers, the said stock has been duly assigned to it, and that it is the holder thereof.” The complaint then avers: that “in consequence, the defendant, The Municipal Gas Light Company of New York, has refused to recognize the plaintiff as the owner of the said shares of stock.” It is very important to discover what fact is pleaded in the phrase, “has refused to recognize.” The complaint does not aver that the gas company has transferred to the bank upon its books the shares, or has declared any dividend to shareholders, or has even threatened to transfer to the bank. These things, not being pleaded, are presumed not to exist. If the plaintiff claimed against the defendant gas company, that it had transferred the shares to the bank, and that it should replace them in the name of the plaintiff, it might plausibly be argued that the bank could be made a party as an

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adverse claimant. . Such is not this case. The refusal to recognize, &c., can amount to nothing more than the expression of what may be called a judgment of the gas company, as to the rights of plaintiff. As there is no demurrer to the sufficiency of this as a statement of the cause of action, the question is not whether there can be judgment for it, but it is whether the claim of the bank, as set up in the complaint, has any relation to the position of the gas company, which would deprive the plaintiff of the advantages of the judgment he claims against thé company. It does not seem to have any relation. It seems that the refusal to recognize was the consequence of the bank making the claim set out in the complaint, upon certain assertions of fact, in the nature of evidence ; but that would be immaterial to the plaintiff obtaining judgment for a recognition, if the plaintiff could furnish sufficient evidence that the assertions of fact were untrue. The plaintiff could enjoy such a judgment to every extent, and the claim of the bank would not be an incumbrance upon it, or impair or diminish its advantages. It could be obtained with the certificate in the hands of the bank ; for on the pleadings it is still plaintiff’s property, and the apparent assignment upon it is really a nullity. I do not, therefore, see that the claim against the bank has any connection with that against the gas company.

Nor do I perceive in the complaint any claim of the plaintiff of which the several claims against the defendants are parts or branches. So far as it may be the right to obtain a delivery of the certificate from the bank, the refusal of the gas company to recognize the plaintiff is immaterial. There is no claim to obtain title or possession of which it is averred the plaintiff has been wrongfully deprived. The complaint shows that both are perfect in plaintiff. The claims are several in their nature, and have no bearing upon a common subject-matter, unless it be that of possession or title, and for neither of these is the action brought. I am of opinion that the case was correctly decided below.

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Judgments and orders appealed from affirmed, with costs.

Van Vorst and Freedman, JJ., concurred.

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