Case ID: ny-super-ct_26/html/0316-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Monell, J. Moncrief, J. (dissenting.)", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Anson E. Hovey, plaintiff and appellant, vs. John Ten Broeck et al. defendants and respondents.
    1. An overseer and book keeper is a “ servant!' within the meaning of the statute authorizing the formation of companies for mining, mechanical and chemical purposes. (2 M. S. 6th ed. p. 658, § 18.)
    2. A stockholder in a mining company is liable for the wages of a “ servant" of the company, which became due within one year previous to the recovery of judgment against the company therefor; and this, even though his engagement was for a longer term than one year.
    (Before Moncrief, Monell and McCunn, JJ.)
    Heard April 13, 1865;
    decided June 24, 1865.
    This was an action to recover from the defendants, as stockholders of the High Shoal Mining and Manufacturing Company, a company created under the act of 1848, respecting corporations for mining, mechanical and chemical purposes, (2 R. S. 5th ed. p. 658,) the sum of $1611 for the services of himself and wife, as servants of said company, performed for them before November 1, 1860. By the 18 th section of that act, stockholders are liable for all debts due and owing to their “ laborers, servants and apprentices for services performed for such corporationand by the provisions of section 24, the stockholders are only liable for debts contracted “ by the company which are to be paid within one year from the time the debt is contracted, and on which a suit is brought against the company within one year after the debt becomes due.” The complaint alleges judgment in an action brought against the company within one year after said debt became due, the issuing of an execution, and its return wholly unsatisfied. The answer, among other things, alleged * * “ Fifth * * that any agreement under which the plaintiff claims to recover in this action was made and entered into on the first day of January, 1856, and that the debt contracted thereby was not to be paid within one year from the time it was so contracted ; and they further say that they are informed, and believe, that said agreement became complete and ended on the first day of January, in the year 1859, and that no services were performed subsequent to such date.” The issues came -on to be tried before Chief Justice Robeetson, and a jury. The only evidence introduced by the plaintiff was the record in a suit brought by him against the company, in which judgment was obtained by default; and his own testimony given on the trial of this action, when the plaintiff rested. The defendants’ counsel moved for the dismissal of the complaint; the court granted the motion ; to which the plaintiff’s counsel excepted. From the judgment entered upon the order and direction to dismiss the complaint, the plaintiff appealed.
    
      John Slosson, for the appellant.
    I. The character and nature of the plaintiff’s services is proved aliunde from the judgment record against the company, and it is proved that the claim against the company was for the same services as those now sued for. The judgment not being attacked for collusion or fraud, is conclusive evidence of the debt, as against the stockholders. (Belmont v. Coleman, 21 N. Y. Rep. 96, and cases there cited, affirming 1 Bos. 188.)
    The. action against the company was brought within one year after the debt became due, under section 24 (marg. 47) of the general manufacturing act. (2 R. S. 5th ed. p. 663.) The debt was due, as alleged, in November, 1860, and the suit was commenced in January, 1861.
    II. The nonsuit was granted on the ground that the plaintiff did not come within the class of persons enumerated in section 18 (marg. 41,) of the general manufacturing act, (2 R. S. 5th ed. p. 662,) “ laborers, servants and apprentices.” In this the judge clearly erred. The character of the services shows that the plaintiff was both a “ laborer” and “ servant." The cases of Aikin v. Wasson, (24 N. Y. 482,) and Ericsson v. Brown, (38 Barb. 390,) are not analogous. In the first, the plaintiff was a contractor for the construction of a railroad; in the second, he was a consulting engineer, and the act under which the suit was brought applied only to ££ laborers and operatives.”
    
      
      T. C. Buckley, for the respondents.
    I. The plaintiff was not a “ laborer, servant or apprentice,” within the meaning of the 18 th section of the act.
    1. He had nothing to do with the mining operations of the company, but was a mere book keeper, farmer, and collector of crops and rents. (Aikin v. Wasson, 24 N. Y. Rep. 482.)
    2. The record in the plaintiff’s suit against the stockholders, is no evidence against these stockholders, as it was not recovered after a trial on the merits. (Strong v. Wheaton, 38 Barb, 616. Belmont v. Coleman, 1 Bosw. 196, 200, 201; Affirmed in Court of Appeals, 21 N. Y. Rep. 96.)
    3. At all events, it is no evidence of the particular description of debt for which the stockholders, in the present case, are sought to be held responsible, and so the judge ruled. (Conant v. Van Schaick, 24 Barb. 87.)
    II. The ruling of the court at the trial, dismissing the complaint, was correct, for the following additional reasons :
    1. The debt due the'plaintiff, as stated in the bill of particulars, was not one which was contracted to be paid in one year.
    2. Nor was there a suit commenced within one year after it became due. Suit was not commenced till January 31,1861, and no operations were carried on by the company after the 1st of January, 1859, when they were sold out under foreclosure. Under no circumstances can these defendants be liable for the services rendered after the company was sold out, in pursuance of the arrangement made with Mr. Darling, or the president of the company, or Mr. Alcott, one of the trustees, made at the time of the foreclosure.
    3. No employment of the plaintiff by the corporation, or any authorized agent, at any time, was shown ; nor was notice of his employment brought home to the defendants. (Laws of 1848, §§ 5, 87. McCullough v. Moss, 5 Denio, 575-578.)
    4. The services were not rendered in this state ; nor were they within the legitimate business of the company. (Whitford v. Panama R. R. Co., 23 N. Y. Rep. 470, 475. Angell & Ames on Corp. § 104.)
   Monell, J.

The plaintiff claimed to recover for the services of himself and wife, from January, 1856, to November, 1860, at the rate of $500 per annum. He proved the recovery of a judgment against the corporation of which the defendants were stockholders, for the amount of his claim, and the return of an execution unsatisfied.

The complaint in the action against the company alleged the rendering of services by the plaintiff and wife for the company between the 1st of January, 1856, and the 1st of November, I860,, and claimed a balance due of $1611.35, for which sum the plaintiff recovered judgment.

In actions against stockholders of corporations formed for mining, mechanical and chemical purposes, it is incumbent upon the plaintiff to show the recovery of a judgment against the corporation ; the return of an execution thereon unsatisfied ; that the debt is due to a laborer or servant, and was contracted by the corporation to be paid within one year.

The judgment against the corporation is open to attack by the stockholders only for fraud or collusion. (Moss v. McCullough, 7 Barb. 279 Moss v. Averell, 10 N. Y. Rep. 449. Belmont v. Coleman, 21 id. 96.) It is conclusive as to the contract with the corporation, the services rendered, and their value.

The only questions, therefore, to be examined in this case are, First. Whether the services were of .a character intended to be protected by the 18th section of the act authorizing the formation of mining companies, {Laws of 1848, p. 54,) and Second, Whether the debt was contracted by the company to be paid within a year; and Third. Whether this suit was commenced within a year after the debt became due.

In respect to the character of the services rendered, the plaintiff testified that the company’s property consisted of large plantations of sixteen or seventeen thousand acres of land, on which were gold mines, iron mines, saw mills, grist mills, &c. and a large portion of farming lands. That he worked in the field.with the men, seeing that they did their duty, and assisted in doing it, and that he also did a variety of other things ; that he sometimes worked in the saw mills, sometimes in the grist mills, sometimes gathering wood with the men, and taking it into the saw mill; that he went to the field and gave out the rations to the negroes, kept the accounts in the absence of others, .collected the farm rents and did more or less traveling for the company. He further testified, that his wife took care of the house belonging to the company, where they lived, and that the agent of the company stayed there a portion of the time, and the captain of the men over Sundays, at which time they were fed and given a place to sleep. He further testified, that the president of the company told him that he would probably have occasion to keep the books, and that his wife’s services would be to attend to the household concerns.

It is evident, I think, that the plaintiff was employed by the company to perform a variety of services. He seems to have been a man of all work. He was an overseer and yet worked with the men. He worked in the different mills on the premises, and apparently had a complete supervision of the property, men and business of the company, and also kept their books. Many of the services he performed as a common laborer, and others as the servant of the company. The word “laborer” in the statute must probably be restricted to mean manual work, but “ servant” cannot be confined to a mere menial service. “Laborer” is more distinctive than “ servant,” and embraces a smaller class ; the former comprehending such only as perform labor with their hands, while the latter includes also such as do menial services. From the nature of the services performed by the plaintiff and his wife, I cannot entertain a doubt that they were of a character intended to be protected by the act. He was both a laborer and a servant; much that he did was manual and some of it menial.

The cases of Aiken v. Wasson, (24 N. Y. Rep. 482.) and Ericsson v. Brown, (38 Barb. 390,) must be regarded as standing by themselves, and as establishing no general principle. In the first case the plaintiff was a contractor with a railroad company, and sued to recover for the work of his men. And it was held he was neither a laborer nor servant. Judge Selden says it is difficult to determine precisely where the line should be drawn between the different classes of persons who may perform services for a company. That case, then, merely settles that a person who makes a contract with a railroad company to construct a portion of its road, is not a servant of the company. In the second case the suit was for the services of a consulting engineer, and it was held he was not a servant. The court draws a distinction, in its interpretation of the statute, between one who performs manual labor and a professional man whose labors are mostly mental. Yet, in both these cases, enough can be found in the reasonings of the court to bring the present plaintiff within the intent of the statute. In the case of Oonant v. Van Schaich, (24 Bari. 87,) the plaintiff recovered for services as civil engineer, and it is there said that there is no middle ground between restricting the recovery to day laborers and applying it to all persons employed in the service of the company, who have not a distinctive appellation as officer or agent.

I think the plaintiff is clearly entitled to the benefit of the statute.

The next question is, was the debt contracted by the company to be paid in one year ?

The plaintiff testified that there was no limit to his engagement ; it was to go on ad infinitum, and he was to be paid $500 a year for the services of himself and wife. The employment was for an indefinite period, and could have been terminated by either party at pleasure. The judgment recovered against the company was evidence of the services rendered, and of the sufficiency of the contract to sustain a recovery. No time was fixed for. the payment of the salary, and the most the defendants could claim was, that it became due with the expiration of the year.

Although it is usual to advance or pay salaries monthly or quarterly, yet upon a contract to serve for a year, at a stipulated rate of compensation for the whole period, no right of action would accrue until tlie expiration of the year.

There was nothing in the evidence to show that the liability of the company could not have been enforced within the year. The 24th section of the act, which exempts stockholders from liability for debts which are not to he paid within a year, must be construed to mean such debts, the payment of which is, in express terms, extended beyond a year, and the collection'of which cannot he enforced before the expiration of that period.

The debt in this case was due at the end of the year, and the judgment (which in that particular cannot be disturbed here) shows a recovery for services to the first of November, 1860.

The plaintiff, in his action against the company, recovered his salary from the 1st of January, 1856. But in this action he can recover only for so much as became due within a year prior to the commencement of that action.

If the views I have here expressed are correct, then the plaintiff is entitled to recover the proportion of salary from January 1,1860, to November 1,1860. But for the salary due December 81,1859, the defendants are not liable, a suit against the company not having been commenced within a year-thereafter.

I think the complaint was improperly dismissed. The judgment should be reversed and a new trial ordered, with costs of the appeal to the appellant, to abide the event.

HoCuítn, J. concurred.

Moncrief, J. (dissenting.)

The agreement under which the services were rendered was made in December, 1855, and in duration has no limit; it was to go on ad infinitum for all that I know,” is the testimony of the plaintiff. The claim made by him in his bill of particulars is for services rendered $ $ from the 1st day of January, 1856, to the 1st day of November, 1860, * * at §500 per annum, as per agreement.

The ordinary and natural interpretation of such an arrangement could only extend to the last day of December, 1856: If, thereafter, the plaintiff continued to perform the same services for the company, and the law would imply the renewal of contracts for other years, they would severally expire on the 31st day of December, 1857 and 1858. What services, if any, were rendered by the plaintiff, or any other person, for the company, after this latter period, does not appear by the testimony. It does appear that the property of the company was sold under a foreclosure, about the 1st of January, 1858, or 1859 ; that the plaintiff became the purchaser, and accepted a deed of the whole property, and held such deed until the summer or fall of 1860, and left the property in October of the same year. The points of the learned counsel for the appellant assert (1.) “the action against the company was brought within one year after the debt became due. * * The debt was due * * in November, 1860, and suit was commenced in January, 1861.” In reference to the time when the action was commenced, it is proper to remark that I have not been able to find sufficient evidence ; the citation of the appellant, or of the respondent, does not verify either assertion as to the fact, the former possibly referring to a summons entitled (by a typographical error) in this court, dated November 9, 1860, and the latter "relying upon the date of the amended complaint. Section 24 (marg. 47) of the General Manufacturing Act, (2 R. S. 5th ed. p. 663,) enacts that “No stockholder shall be personally liable for the payment of any debt contracted by any company formed under this act, which is not to be paid within one year from the time the debt is contracted, nor unless a suit for the collection of such debt shall be brought against such company within one year after the debt became due. * * Assuming, therefore, that the arrangement was a continuing agreement for one year after January 1, 1856, it would cease when services under it were no longer performed, after the 31st day of December, 1858. Whatever debt the company could be said, therefore, to have contracted with the plaintiff became due on that day, or on the 1st day of January, 1859.

The judgment against the company is not evidence of the debt claimed against these defendants ; its office seems to be to exhaust all means belonging to the corporation as a condition precedent to an attack upon the stockholders.

In Belmont v. Coleman, (1 Bosw. 188,) an indebtedness was established aliunde from the judgment against the company ; the bill of exchange, drawn and accepted by its officers, raised a presumption that it was not only given for a sufficient consideration, but for legitimate purposes.”

Slee v. Bloom, (19 John. 456,) is authority only for the proposition that “ a judgment against the company, as well as an account stated between the creditor and its officers, was evidence of the debt.” It was expressly held in 20 John. 669; 684, 5, (S. C.) “ that if the judgment was founded on error,” it was competent to impeach it. Judge Hoffman, with whom, in Belmont v. Coleman, was Bosworth, late chief justice, who simply concurred in affirming the judgment, says (p. 200) the stockholders may question it (the judgment against the company) in any way showing illegality or error, when sued individually.” Upon the review of that case, in the Court of Appeals, (21 N. Y. Rep. 96,) it should be observed that the learned judge who wrote the opinion lays down the rule that the “ creditor of a company seeking to enforce his personal liability upon a stockholder is required to prove the existence of the debt, and that judgment has been obtained, and execution issued, and returned as the statute requires.” (P. 101.) The affirmance by all the judges was placed upon the grounds that there was.no error in the admission of evidence, or in the refusal of a nonsuit, and one half of the court expressly refused to commit themselves to the doctrine that a judgment against the corporation is even prima facie evidence against a stockholder.

As there is no evidence as to the performance of any services by the plaintiff for the company within one year next before the commencement of his action against it, he failed to establish a debt against it for which the defendants could be held to respond, and his complaint was properly dismissed.

In my opinion the judgment should be affirmed.