Case ID: ad_33/html/0371-01.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William T. Gilbert, as Receiver of the Commercial Alliance Life Insurance Company, Appellant, v. Benjamin G. Ackerman, Respondent, Impleaded with Edward L. Finch and Others.
    
      Limitation of action—the period of limitation cannot be so shortened as to bar existing common-law liabilities—claim by a receiver of a corporation.
    
    A statute of limitations, by which the period within which an "action may be - brought upon a common-law" liability is shortened so that no time'whatever is given within which an action may be brought upon such liability existing at the time when the statute is made to take effect, is not applicable to such liability.
    The fact that such a liability is sought to be enforced by the receiver of a corporation, representing a right of action which existed in the corporation prior to his appointment, does not make the statute applicable thereto.
    Appeal by the plaintiff, William T. Gilbert, as receiver of the Commercial Alliance Life Insurance Company, from an interlocutory judgment of the Supreme Court in favor of thé defendant, Benjamin G. Ackerman, entered in the office of the clerk of the county of New York on the 8th day of July, 1898, upon the decision of the court rendered after a trial at the New York Special Term, overruling the plaintiff’s demurrer to the fourth defense contained in the said defendant’s answer.
    
      Henry D. Hotchkiss, for the appellant.
    
      Michael H. Cardozo, for the respondent.
   Van Brunt, P. J.:

This action was commenced on the 18th of March, 1898, against certain former directors of. the Commercial Alliance Life Insurance Company, to recover moneys of the corporation alleged to have been misapplied by them. The defendant Ackerman alleged for a fourth defense that the alleged cause .of action did not accrue within three years from the commencement of the action.

It is conceded that unless chapter 281 of the Laws of 1897 (amending Code Civ. Proc. § 394). deprived the plaintiff of the right to maintain this action, the defense is" bad. Prior to the passage of that act, the Statute of Limitations, in reference to actions against directors or stockholders of a moneyed corporation, required that actions to enforce a liability created by statute should be brought within three years after the cause of action had accruedbut where' the liability was created by the common law, the six-year Statute of Limitations ■ still applied, and this six-year statute was the' one which was in operation at the time the liability of the defendant Ackerman, if any, accrued. The act of T897 included, within the three years’ Statute of Limitations, liabilities existing under the common law. This act was signed on the sixteenth of March, and by its terms went into effect the 1st of September, 1897. The court below held that the statute applied. .

Upon a consideration of the legislation in question, it appears that no time whatever was given to the plaintiff, after the act went into - effect, within which to commence his. action. In all of the cases cited, the time given was after the act went into effect;. but-in the case at bar, the moment the act went into effect the statute applied. It is true that it was a considerable period of time after the act was signed before it Went iiito effect. By its own terms it had no vitality until the 1st of September, 1897, when the rights of the plaintiff were absolutely cut off by its terms. In all the cases-cited, it is held that a party, after a new Statute of Limitations-went into effect, had a reasonable time within which to commence the action. No reseiwation whatever was made by the terms of the act in favor of liabilities which were in existence at the time the. act went into effect. Therefore, there was no time allowed to the plaintiff within which to commence his action after the act became effectual.

It is urged, however, upon the part of the defendant, that the receiver being a creature of the statute, and there being no right at common law to appoint a receiver of a corporation, the Legislature had power, in any manner in which they might see fit, to restrict the right of a receiver to bring actions of this description. That may be conceded. But the Legislature have not done this. The liability was not the creation of the statute, and, therefore, the right to enforce the same could not be absolutely taken away by the Legislature. There was no attempt by the act to restrict the powers or duties of the receiver of a corporation ; but it was a general Statute of Limitations, and, as the receiver represented a right of action which existed in the corporation prior to his appointment, which he had the right to enforce, the Legislature could not absolutely take away a cause of action existing at the time of the passage of the law.

The judgment should, therefore, be reversed, with costs, and the demurrer sustained, with leave to the defendant to serve an amended answer upon payment of costs in this court and in the court below.

Barrett, Rumsey, Patterson and O’Brien, JJ., concurred.

Judgment reversed, with costs, and demurrer sustained, with leave to defendant to serve amended answer upon payment of costs in this court and in the court below.