Case ID: ny-st-rep_62/html/0804-01.html
Source: Caselaw Access Project
Author: {"author": "Finch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank M. Hunting, Resp’t, v. Ferdinand S. M. Blun, App’lt.
    
    
      (Court of Appeals,
    
    
      Filed November 27, 1894.)
    
    1. Corporation—Stockholder—Liability.
    _ In an action under § 18, chap. 40 of 1848, the performance of the condition precedent to such liability is excused by reason of an injunction, which renders such performance practically impossible.
    2. Same.
    In measuring the quality of such excuse, the plaintiff is not required to go behind the explicit order of the court and determine at his peril whether he can safely follow it.
    3. Same.
    Though the judgment granting the injunction is erroneous, yet, if the court had jurisdiction of the subject matter, its mistake is only available on an appeal or some direct review of the decision.
    Appeal from order of the general term of the supreme court m the fifth judicial department, entered upon an order which denied a motion by defendant for a new trial and directed judgment in favor of plaintiff upon the verdict directed by the court.
    
      B. T. Wright, for app’lt; B. 0. Ailcen. for resp’t.
    
      
       Affirming, 53 St. Rep. 343.
    
   Finch, J.

The plaintiff as assignee of certain employees of an insolvent corporation sued the defendant, a stockholder, for the amount of their unpaid wages. It was necessary for the plaintiff to prove the condition precedent attached by the law to his right of action that judgment upon the demand had been rendered against the corporation, and execution thereon had been returned unsatisfied. He proved such a judgment, obtained in the Auburn city court, but the corporation was located out of the city, and the judgment was held to be a nullity for want of jurisdiction in the local court. The plaintiff then sought to excuse the non-performance of the essential condition by showing that it became impossible within the period prescribed. He produced the record of an action in the supreme court brought by a creditor of the corporation to sequestrate its property and for the appointment of a receiver. Judgment was rendered granting that relief and forbidding creditors from suing the company or interfering with its assets. This injunction made performance of the condition precedent practically impossible. Such fact excused the omission. Hardman v. Sage, 124 N. Y. 32; 35 St. Rep. 54. But the defendant now attacks that judgment as also void for want of jurisdiction, and insists that plaintiff was at liberty to sue, and could have disregarded the injunction as a nullity and without being guilty of contempt of court. Even if that were true, I do not think he was bound to take the risk. In judging of his omission to act, and measuring the quality of his excuse, it does not seem to me that we should require him to go behind the explicit order of the court and determine at his peril whether he could safely defy it. The fact of its existence may reasonably justify a conclusion that a practical impossibility stood in the way of a suit by plaintiff against the corporation. But, however that may be, I think the judgment of sequestration and the injunction which accompanied it were not shown to be void by any evidence which the defendant offered. The plaintiff in that case, by his complaint, fairly alleged all that was needed to authorize the judgment of the court. It avers the recovery of a judgment against the corporation in the Auburn city court, the docket of that judgment in the Cayuga county clerk’s office, the issue of an execution and the return of the same unsatisfied; Those allegations presented a case over which the jurisdiction of the court was unquestionable. They were sufficient to invoke and requir.e a judicial determination whether they were true or not, and whether sequestration should follow, it may be that the court erred in regarding the city court judgment as valid. That was a question of law for the court to decide, and its error, if it made one, was a judicial error to be corrected by an appeal. We held substantially that in Whittlesey v. Frantz, 74 N. Y. 457. That was a case like the one before us in every respect except as to tbe defect which made the creditor’s judgment void and null.

The difficulty there was that by reason of a misnomer the corporation had not been sued at all, and there was no judgment against it. Our first answer to the objection went upon the concession that the error might make the judgment invalid, but we ■held that the judgment of sequestration could not be collaterally attacked for error in the proofs on which it rested. So in this case the evidence may have been insufficient, and the court in error, either because no defect was alleged or pointed out, or because the court thought that the presence of the president of the corporation in Auburn, where a part of the corporate property was situated, answered the requirement of the statute as to the defendants that “they are within the city of Auburn.” Laws of 1887, chap. 633, § 2. However erroneous the decision might have been, the court had jurisdiction -of the subject-matter presented for its consideration, and its mistake, if made, was only available on an appeal or some direct review of the decision. We think the case cited is decisive of this appeal.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.