Case ID: ny_158/html/0157-01.html
Source: Caselaw Access Project
Author: {"author": "Gray, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George R. Bristor, Appellant, v. Edwin R. Smith, Respondent, Impleaded, etc.
    (Argued January 11, 1899;
    decided February 28, 1899.)
    Corporations — Stockholders’ Liability — Attorney not an Employee. An attorney and counselor at law, regularly employed at a. fixed salary, is not an employee under section 54 of the Stock Corporation Law (L. 1892, ch. 688), making stockholders personally liable for debts of the corporation to “laborers, servants or employees other than contractors,” for services performed.
    Appeal, by permission, from a judgment of the Appellate Divison of the Supreme Court in the second judicial department, entered April 28, 1898, upon an order affirming a judgment in favor of the respondent, entered upon a decision of the court sustaining his demurrer to the plaintiff’s complaint and dismissing the complaint as to him on trial at Special Term.
    The nature of the action, the question certified for review and the material facts are stated in the opinion. ,
    
      Bristor v. Smith, 29 App. Div. 624, affirmed.
    
      George R. Bristor, appellant, in person.
    The intention of the legislature was to include in section 54, chapter 688, Laws of 1892, all employees of a corporation, excepting only contractors. (People ex rel. v. Lacombe, 99 N. Y. 49 ; Smith v. People, 47 N. Y. 336; McKuskie v. Hendrickson, 128 N. Y. 558 ; Matter of N. Y. & B. Bridge, 72 N. Y. 527; People v. McGloin, 91 N. Y. 241 ; Palmer v. Van Santvoord, 153 N. Y. 612; Charron v. Hale, 25 Misc. Rep. 35 ; Conant v. Van Schaick, 24 Barb. 87; People v. B. B. Co., 91 Hun, 313 ; Boyd v. Gorman, 157 N. Y. 365.)
    
      Richard J. Morrisson for respondent.
    The respondent is not liable as a stockholder of the Merchants and Manufacturers’ Protective Company to pay judgments recovered against the company by the plaintiff for his services as an attorney and counselor at law. (Wakefield v. Fargo, 90 N. Y. 213; Krauser v. Ruckel, 17 Hun, 463; Coffin v. Reynolds, 37 N. Y. 640; Hill v. Spencer, 61 N. Y. 274; People 
      v. Remington, 45 Hun, 329; Dean v. De Wolf, 16 Hun, 186; People v. City of Buffalo, 33 N. Y. S. R. 323; People ex rel. v. Myers, 25 Abb. [N. C.] 368; Torbett v. Godwin, 42 N. Y. S. R. 323; Van Dyke v. McQuade, 86 N. Y. 56.)
   Gray, J.

The Appellate Division of the Supreme Court, in the second department, has certified to this court the following question of law: Is an attorney and counselor at law, regularly employed at a fixed salary, an employee under section 54, chapter 688, Laws of 1892?” The question is raised upon a demurrer, interposed by the defendant Smith, respondent here, to the plaintiff’s complaint, wherein he charges the respondent, as a stockholder of the Merchants and Manufacturers’ Protective Company, with being liable to him for an indebtedness of that company. By an agreement between himself and the company, which was in writing and under seal, the company covenanted to employ him to do the legal work in connection with its business .and to pay him therefor a weekly salary of $50 per week. He recovered a judgment against the company for salary due him, under this agreement, and unpaid ; which constitutes the indebtedness sought to be charged upon the stockholder.

' The appellant bases his .claim upon section-54 of the Stock Corporation Law; which provides, among other tilings, that “ The stockholders of every stock corporation shall, jointly and severally, be personally liable for all debts due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation.” The argument is, in substance, that it was the intention of the legislature to include all the employees of the corporation, excepting only contractors, and that, as the plaintiff was employed by7 this company through the agreement mentioned, he was, necessarily, brought within the scope of the statute and entitled to the protection thereby afforded to corporate employees. The statutory provision, being penal in its nature, should receive a strict construction by the courts and if there is any reasonable doubt as to its application to persons situated as the plaintiff was towards the corporation, the defendant is entitled to its benefit. In construing a statute to ascertain the operation which it should have, its language should be accorded that significance which would be attached to it by men of plain understandings. The words, which are used to express the legislative intent, should be taken in their ordinary and usual meaning and, if a doubt arises as to the sense in which used, it should be solved, if possible, by reference to the context. The maxim noscitur a sociis may apply and aid us to a conclusion as to the sense to be given to the word, or words, in question. (Potter’s Dwarris, 196, 220.) It is a rule of construction that, when a particular class is spoken of and general words follow, the class first mentioned is to be taken as the most comprehensive and the general words treated as referring to matters ejusdem, generis with such class. In Dwarris on Statutes, (p. 263), it is said that a statute which treats of things, or persons, of inferior rank cannot, by any general words, be extended to those of a superior. To the ordinary reader of the language of this statutory provision, I doubt that it would ever occur that the word “ employees ” had any wider significance than to define, in a general way, such classes’’of persons as were engaged in serving the corporation in subordinate capacities; but, when we apply the rules of construction to the case, any other definition of the word becomes unreasonable, if not impossible, than that it means persons sustaining such relations to the corporation as do laborers and servants. The statute was a continuation of previous legislation, which had for its object the protection of those who earned their living by manual labor, and not by professional services, and who were supposed to be the least able to protect themselves. To such persons, and to all who become employed in subordinate and humble capacities and to whom the hardship would be great, if their wages or salaries were not promptly paid, the legislative policy is to afford the protection of a recourse to the stockholders of a company, upon the latter’s default. (Coffin v. Reynolds, 37 N. Y. 640 ; Gurney v. Atl. & Gt. W. Railway Co., 58 ib. 358; Wakefield v. Fargo, 90 ib. 213.) When, in section 54 of the Stock Cor? poration Law, the general word “ employees ” was added after the words “ laborers ” and “ servants,” it could not have been intended, from’the collocation of words and for the want of reason in the thing, to include persons performing services to the corporation of a higher dignity, such as its legal adviser. Indeed, the appellant would be utterly without any reason in claiming the protection of the statute, if he could not pretend that his agreement with the company made him its employee. But the only effect of that agreement, so far as it bore upon their relations, was to secure to each permanency in the relation of attorney and client and certainty as to the measure of compensation. The lawyer does not lessen the dignity and independence of his position towards his client, or in the community, by making such an agreement. He does not, thereby, descend into that inferior and subordinate class of persons who, being continuously employed in the corporate business for a compensation paid in wages, or in salaries, and being under the orders of the managers of the' corporation, are usually regarded as its servants or employees. In People ex rel. Satterlee v. Board of Police (75 N. Y. 44), where the question arose, in connection with the office of a police surgeon, as to the meaning of the word employee, it was observed by Miller, J, that surgeons are not clerks and, as employees are usually considered as embracing laborers and servants and those occupying inferior positions, they can scarcely be included in that class of persons.”

The appellant claims a different and broader significance to be due to the words employees, other than contractors ” and that a greater scope is given to the term employees,” by force of the exception. I am unable, however, to perceive that a different meaning is, or should be, thus given to the word. The coloring received by it from its place in the text and the definition, which, under accepted rules of construction, properly belongs to it, are riot materially disturbed by the form of the legislative expression. The presumption is that the legislature intended that the peculiar protectión thrown around those holding subordinate positions within the corporate organization should not be regarded as inuring to the benefit of those who were employed under contract with the corporation, in the performing of work and in furnishing materials essential to the carrying on of the operations, which were incident to the corporate business and affairs; as it was properly observed at the Special Term.

Boyd v. Gorman (157 N. T. 365) has no application to this case. The subject of our discussion there was whether the restriction of the right of appeal to this court, imposed by the Code of Civil Procedure (Sec. 191, sub. 2, as amended by chap. 574 of the Laws of 1898), extended to an action to recover compensation for the professional services of an attorney. We held that it did and, in the discussion, it was pointed out that, by the use of the word services ” in the section of the Code, all work was included which was done by one person at the request of another and that the nature of the work, whether of a humble or high grade, was unimportant. The distinction is obvious between that case and the present one, where the discussion turns upon a statutory provision, of a penal nature, which creates in favor of certain employees of a stock corporation a liability on the part of the stockholders for the debts which may become due the former, in a certain contingency.

In view of the elaborate and satisfactory opinion, which was delivered at the Special Term and upon which its judgment was 'affirmed, I think enough has been said to warrant the conclusion that the stockholders of a corporation, under ' the statutory provision in question, must pay, not the debts due to all the employees, but those due to such employees as perform services in subordinate positions and for whose inclusion within the scope of the provision there is a politic reason.

I think that the question certified should be answered in the negative and that the order and judgment appealed from should be affirmed, with costs.

All concur.

Judgment and order affirmed.