p. 153THE MAYOR, &c., OF NEW YORK CITY, Respondents v. JOHN H. STARIN, Impleaded, &c., Appellant.Headnote
Injunction against general and ordinary business of corporation—void under § 1809 Code, when granted without notice.An injunction order suspending what is, in fact, the general and ordinary business of a corporation, upon the ground that said business is unlawful or ultra vires, is void, unless granted upon notice to the proper officer of the corporation, as provided in § 1809 of the Code, without regard to the question whether said business is or is not illegal or ultra vires.
Where the injunction order is also directed to an individual joined as defendant with the corporation, and if obeyed by him, would suspend the general and ordinary business of the corporation, such order is void as to said individual defendant.
Before Sedgwick, Ch. J., Freedman and Truax, JJ.Appeal by defendant John H. Starin from an order adjudging him guilty of contempt of court.
The facts appear in the opinion.
A. J. Bittenhoefer, attorney, and Roscoe ConJcling, Charles C. Beaman and James McNamee, of counsel for appellant:—
I. The injunction order of August 11 was absolutely void under § 1809 of the Code of Civil Procedure, and all proceedings based upon it must be dismissed, it having been obtained without notice, and its effect being to suspend the general and ordinary business of the corporation. §§ 1809,1812, Code Civ. Broc. There can be no doubt that these sections cover this very case. Here
p. 154is a corporation organized in another state for the express purpose of running steamboats and carrying on a transportation business by water between points on Staten Island and in New York city, and said city is one of the places of doing business named in the articles of incorporation. It is charged with running steamboats between such points and transporting passengers and freight thereon. If it were not so it would not have been made a defendant, and the complaint and affidavits show that it was the practical operator of these boats. This was the business—the daily, general, ordinary business it was carrying on when this order was made. The plaintiffs wished to stop this business. The order they obtained, without notice, is aimed directly at this business, and is very comprehensive. It enjoined the company from running any boats between any point on Staten Island and any point on Manhattan Island, and the boats were at once stopped.Plaintiffs urge that the words “ general and ordinary business” should not be construed to cover the business which this company was conducting, first, because the company was not organized to ran a ferry which the complainant alleges it was doing; second, because the running of such a ferry was in contravention of a statute of the state, and therefore illegal; and third, the business it was transacting was unlawful because it infringed upon the ferry rights of New York city, (a) As to the first point, a proposed New Jersey corporation expressly designing to do a ferry business, must organize under this act or it cannot organize at all. (b) As to the second point, the authorities we will hereafter refer to show most clearly that even if there were a statute prohibiting the running of a ferry, this would not dispense, in an action of this kind, brought in aid of a private right and in no way to enforce any statutory penalty, with the giving of notice. But no such statute exists, (c) If it be said that it is unlawful for this company to run this line or alleged ferry, because the city
p. 156Clark, a pilot, was an employee of the company, as were the three other defendant pilots and four defendant engineers. The allegation is that Clark was “ master.” As to all these persons whose services were indispensable to the transaction of the general and ordinary business of this corporation, the claim of the plaintiffs now is that the injunction was valid, while as to the company it was not. To what an absurd position does this interpretation reduce the act and the courts! In this view the courts should say to the company, you can go on and transact your ordinary business, while they say to all its employees (for if they can say so to one they can say so to all) you shall not lift a hand to carry on the business of this company. The practice of making parties defendant of persons thus situated or employed was severely condemned and an injunction set aside in Grover v. Swain, 29 Hun 454 , and its advocates ought not to be assisted out of their difficulties by the courts. As to Mr. Starin the case stands upon the same principle. The plaintiffs say of Mr. Starin, that he conceived the organization of this company, caused his employees and tools to incorporate it, furnishes it the boats to run, this company is a scheme devised for his personal business and benefit and he is really the person now actually operating the ferry purporting to be operated by said company. The city made to the court these sweeping declarations as to Mr. Starin’s support of the company so as to induce an injunction against him also, on the theory that he was essentially the life of the company and that without him it could not carry on its business. If the statements of the plaintiffs as to Mr. Starin’s connection with this company are true, and, on this appeal, which is based altogether on the city’s • papers, they must be assumed to be true, let the court imagine what possible result could follow the granting of such an injunction order, though good against Mr. Starin alone, except the total stoppage of the general and ordinary business of this corporation. It is the
p. 157effect of the injunction, not its mere words or the frame of the suit, that must be considered in determining whether the order is in violation of the statute. It should be observed that the language of section 1809 does not limit the operation of the section to cases where the injunction order bears directly against the corporation by name. If the operation of the order “suspends the general and ordinary business of a corporation ” that is enough to vitiate it. If it be said that the corporation can go on with its ordinary business by severing its connection with Mr. Starin and getting its boats, docks, supplies, etc., from some other party, we reply that, as the plaintiffs have stated the facts, that is a practical impossibility. They connect him too closely with the company to render it possible for it to shake him off. But were anybody else, whether one person or more, to supply the same facilities ascribed to Mr. Starin, an injunction, by parity of reason, would go against such other person or persons. What the statute prohibits is the suspension of the business of the corporation. Can it be said that where a company is compelled to suddenly change, without previous notice, all the persons on whom it relies in order to carry on its business,- this can be done without a suspension, if only a temporary one, 'of its business ? But this is what, under the allegations of this complaint, this company would have to do, if Mr. Starin is enjoined from doing what he is charged with having done till now.Henry R. BeeJcman, corporation counsel, and Thomas P. Wickes and Alex. I). Keyes of counsel, for respondents :—
I. The “ general business ” of the company was not suspended. The certificate of incorporation names the places where the business of the Independent Steamboat Company may be carried on, and includes all places accessible by water on the coasts of Long Island, and Staten Island, on the Kill von Kull, Raritan bay, the
p. 159defendant, the Independent Steamboat Company, did maintain an authorized ferry, has been decided by the court of appeals. Mayor v. Starin, 106 N. Y. 1 . That the word “ business,” in § 1809, means lawful business, seems to follow from the construction given by Hogeboom, J., in People v. Troy House Company, 44 Barb., to 1 N. Y. Stat. at Large, 557.IY. No construction of the statute can make the order void as to the defendant, Starin. Section 1809 only applies to corporations and their officers. It was not claimed that defendant Starin was an officer of a corporation. It is true the complaint alleged that Starin controlled the Independent Steamboat Company. But Starin’s ansiver denied this allegation. The question does not arise whether the Steamboat Company might not have disregarded the injunction. The point is could the defendant, John H. Starin, disregard it ? The fact that the injunction issued against a corporation that it could not bind (admitting this contention to be well founded) does not excuse disobedience on the part of those whom it could bind through one injunction issued against both on the same principle that a judgment against two joint debtors may be void as to one and yet valid as to the other. The question therefore may be considered as if the defendant Starin alone had been enjoined from running a ferry. In such a case he would have been bound to obey the order provided the court had jurisdiction of his person and of the subject matter. That the order was irregular or erroneous would be no excuse. People v. Sturtevant, 9 N. Y. 263 ; Mayor v. N. Y. & S. I. Ferry Co., 66 Ib. 622.The case is stated by the counsel for respondents to be as follows:—
“Starin was engaged in running an unlicensed and • therefore unlawful ferry boat between Staten Island and New York by means of a corporation called the Independent Steamboat Company. This company was
p. 160incorporated under the New Jersey .Act of April 7, 1875. The incorporators were persons other than Starin. The company’s business was to be that of common carriers and was to be transacted at, to and from all the places in New Jersey accessible by water on the Hudson river, Kill von Kull, Raritan bay, and their tributaries, and the cities of New York, Brooklyn, and all places on the Hudson river, Staten Island and Long Island. It also appeared that the incorporators of this company were men in the employment of or under the control of the defendant Starin; that the boats used by the company belonged to Starin or to corporations controlled by. him; and that its real business was to run ferries between New York and Staten Island.”
An injunction order was made restraining the Independent Steamboat Company and Starin, from running the steamboats named in the order, as ferry boats between New York and Staten Island, or any other boats or vessels as ferry boats between those places.
Starin, it is assumed now, disobeyed the order, and was found guilty of contempt in disobeying it. He appeals from that order, and on this appeal claims that the injunction order is void under sections 1809 and 1812 of the Code, as made without notice to the proper officer of the defendant corporation and as it suspends'the general and ordinary business of the corporation.
The facts that have been cited show that the running of the steamboats enjoined by the order, was the real business of the defendant corporation. It was not a particular thing done in the course of the business. It was a business and the defendant corporation had no other business, as matter of fact. I am satisfied that the Code refers to a business done in fact by a corporation, whether or not the charter permits them to do some other kind of business which it might do but does not do. The fact that really it ran a ferry unlawfully, necessarily involved according to the purpose of the injunction, that its business should be stopped. Its
p. 161business was stopped, so that the plaintiff might prevent the running of the ferry. The Code says the business shall not be stopped for any reason.
It is said that its incorporation did not justify its doing the business of running a ferry, and that in that sense it was not within its corporate powers. Several things might be said. It is enough to say, that when the injunction asked for, is to be aimed at the general and ordinary business of a corporation, the section necessarily although impliedly forbids that whatever must be determined against the corporation as the foundation or part of the foundation of the injunction, shall not be passed upon, if notice has not been given to a proper officer of the corporation.
In a case like this, a judge would call upon the plaintiff to show why such an order could be granted. The plaintiff would answer the business of the corporation is unlawful or ultra vires. The judge is obliged to say that a determination of that, cannot be made, without notice to the defendants. On notice they may meet the position.
In other words, the statute, when it prohibits such an injunction, prohibits the means by which such an injunction can only be made. I am of opinion then that the order was void against the defendant corporation.
For reasons of a similiar kind it wTas, as I think, void against Starin. What cannot be done directly, cannot be done indirectly. The injunction order against Starin, when obeyed would suspend the general business of the corporation-defendant. I mean to confine the bearing of what I say upon a case where the individual is joined as defendant with the corporation.
The case of the plaintiff substantially is, that, while it must be conceded that Starin is one person and the corporation is another' person by law, yet the corporation is a sham as far as it can be, after the law has created it and given it definite rights, against all including the plaintiff and Starin, and. Starin is really or in
p. 162effect the corporation. If all this be true, yet in fact the corporation was the person who did the business. The injunction supposed that the two were one, and that if Starin exercised his authority over the incorporators as his employees, as alleged, or over the boats as their owner, then, what has been here held to be the general business of the corporation would be stopped. I am. of opinion that the injunction against Starin is against the intent and letter of the Code.
If the injunction was against Starin as an agent of the corporation, there can hardly be a doubt that it would be void against him. On this case, as it is framed by the complaint and the positions taken by the plaintiff under it, it appears that substantially the relief as against Starin is ancillary and subordinate to the relief asked against the corporation. The former should follow the other and abide its disposition.
I am of opinion that the order adjudging the appellant guilty of contempt should be reversed with $10 costs and disbursements to be taxed, and the motion to punish denied with $10 costs.
Freedman and Trtjax, JJ., concurred.