Case ID: ad_100/html/0389-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George S. Stoddard, Appellant, v. Bell & Company, Incorporated, Respondent, Impleaded with John L. Dodge and Others.
    
      Interlocutory judgment on demurrer—it should rest on a decision—joinder of a, cause of action for a breach of contract by an individual with one for his misappropriation of the money of a corporation.-
    
    An interlocutory judgment sustaining a demurrer to a complaint should he based upon a decision, not upon an order.
    The complaint in an action alleged that the defendant, Bell & Go., was a New Jersey corporation, having forty shares of capital stock; that the defend-, ant Dodge owned thirty of such" shares, one of which was taken in the name of another individual for the purpose of qualifying him to act as a director; ' that the plaintiff, at the instance of Dodge and on his agreement that no more capital stock should be issued, and on a guaranty of reimbursement and of his . employment as leading salesman at a salary of §5,000 per annum by the company, purchased the remaining ten shares; that the plaintiff subsequently became president and general manager of the corporation; that the defendant Dodge made an unauthorized claim against the company for ten per cent royalties on formulas which belonged to the company, and took and appropriated to his own use ten per cent of the receipts in part payment of such claim; that on the 8th day of February, 1904, Dodge agreed that the plaintiff should be president for that year and receive a salary of §6,000, and that if the sales exceeded by §15,000 those of the previous year he should receive a salary of §7,000; that Dodge subsequently sold some of his stock and caused the plaintiff to be oqsted from his position as president and general manager and himself to be elected president, and another person secretary and treasurer; that this a.ction was taken by Dodge with the fraudulent purpose of destroying the plaintiff’s stock and reducing his dividends; that Dodge was in bad repute and ill-health and was incapacitated from performing the duties of president; that the place of business of the corporation was New .York city, and it had its bank account there, and all its officers and directors, except the director who held one share of stock, were in New York city; that Dodge intended to appropriate the moneys on deposit in the .bank in payment of his unauthorized claim for royalties and that the plaintiff had no other adequate remedy for the relief to which he was 'entitled;
    The plaintiff demanded a judgment canceling the action taken in ousting him and electing Dodge as president and another person as secretary and treasurer and restraining the defendants from taking any action in furtherance of-their alleged fraudulent schemes, and adjudging that the plaintiff is entitled to the -office of president and general manager pursuant, to the terms of his agree- • meht with Dodge on the 8th day of February, 1904, and that an accounting be taken between Dodge and the plaintiff of all moneys withdrawn from the corporation by Dodge as dividends or percentages, and that one-quarter of the amount so appropriated by Dodge and of the receipts of the company be paid to the plaintiff,, and for a receiver if necessary, and for an injunction restraining the bank from allowing the corporation to-withdraw any of its deposits.
    
      Meld, that the plaintiff had united in his complaint in one count at least two causes of action, one against the defendant Dodge for a breach of contract, and the other for corporate moneys wrongfully appropriated by Dodge to his own use;
    That the former, cause of action belonged to the plaintiff in his individual right, but that the other cause of action belonged to the corporation and could only be maintained by the corporation itself or by a stockholder suing in its behalf; That the two causes of action could not properly be united in the same complaint.
    Appeal by the plaintiff, George S. Stoddard, from an interlocutory judgment of the Supreme Court in favor of the defendant, Bell .& Company, Incorporated, entered in the office of the clerk of the county of Hew York on the 2d day of July, 1904, upon the decision of the court, rendered after a trial at the Hew York Special Term, sustaining the said defendant’s demurrer to the plaintiff’s complaint, and also from an order entered in said clerk’s office, on the 27th day of June, 1904, sustaining the said demurrer.
    
      Hector M. Hitchings, for the appellant.
    
      Frank C. Avery, for the respondent.
   Laughlin, J.:

The basis for the interlocutory judgment' appears to be an order instead of a decision, which it should be, although it is signed by the justice who tried the issue. Even if it can be construed as a decision, it is not appealable. ,

It is alleged in the complaint that Bell & Co. is a Hew Jersey •corporation, and succeeded to the business of a Hew York firm of the same name, the members of the old firm taking all the stock issued except one share issued to another party to qualify him for the office of director, and this share was in fact owned by the •defendant Dodge; that only forty shares of capital stock were issued, and of these the defendant Dodge at first took nineteen and •owned the other share which was issued in the name of the individual who became a director and subsequently bought ten more shares; that the plaintiff, at the instance of Dodge and on his agreement that no more capital stock should be issued, and on a guaranty •of reimbursement and of his employment as leading salesman at a salary of $5,000 per annum by the company, .purchased the remaining outstanding ten shares; that Dodge was 'elected president, the plaintiff vice-president and secretary, and later the plaintiff became secretary and treasurer, and, subsequently, owing to the illness of Dodge, general manager,, until the 1st day of February, 1903, from which time until the 29th day of February, 1904, he was president ■of the company on a salary of $6,000 per annum, owing to the fact that Dodge was ill and engaged in other business; that the defendant Dodge made an unauthorized claim against the company for ten per cent royalties on formulas which belonged to the company and took and appropriated to his own use ten per cent of the receipts in part payment of such claim; that on the 8th day of Febxuaiy, 1904, Dodge agreed that the plaintiff should be president for that year and receive a salary of $6,000, and that if the . sales -exceeded by $15,000 those of the previous year he should receive a salary of $7,000; that Dodge subsequently sold some of his «took and caused the plaintiff to be ousted from his position as president and general manager and himself to be elected president, and another secretary and treasurer; that this action was -taken by Dodge with the fraudulent purpose of destroying the plaintiff’s stock and reducing liis 'dividends; that Dodge is-in bad repute and ill-health and is incapacitated from performing the duties of president; that the place of business of the corporation is Hew York city, and it has its bank account there, and all its officers and directors, except the director who .holds one share of stock, are in Hew York city; that Dodge intends to appropriate the moneys on deposit in the bank in payment of his unauthorized claim for royalties and that the plaintiff has no other adequate remedy for the relief to which he is entitled and he prays judgment canceling the action taken in ousting him and electing Dodge as president; and another as secretary and treasurer and restraining the defendants from taking any action in furtherance of their alleged fraudulent schemes, and adjudging that the plaintiff is entitled to the office-of president and general manager pursuant to the terms of his. agreement.with Dodge on the 8th day of February, 1904, and that an accounting be taken between Dodge and the plaintiff of all moneys withdrawn from the corporation by Dodge as dividends or percentages, and that one-quarter of the amount so appropriated by Dodge and of the receipts of the company be paid to the plaintiff,, and for a receiver if necessary, and for an injunction restraining the bank from allowing the corporation to. withdraw any of its deposits.

The demurrer is upon the ground,, among others, that causes of action have been improperly united in the complaint. We are of opinion that the plaintiff has united in this complaint in one count at least two causes of action, one against the defendant Dodge for a, breach of contract and the other for corporate moneys wrongfully appropriated by Dodge to his own use. The former belongs to the plaintiff in his individual right, but the latter belongs to the corporation and may only be maintained by the corporation or by a stockholder in its behalf. It is clear that such causes of action cannot be united in one complaint.

Without, therefore, considering the other grounds of demurrer to-this inartificially drawn complaint, we are of opinion that the appeal from the order should be dismissed and the interlocutory judgment, should be. affirmed, with costs, with leave to plaintiffs to amend their complaint upon payment of costs in this court and in the court below..

Van Brunt, P. J., Patterson, Ingraham, and .McLaughlin, JJ.,, concurred.

Appeal from order dismissed. Interlocutory judgment affirmed, tvith costs, with leave to plaintiff to amend on payment of costs in this court and in the court below.