Case ID: how-pr-ns_1/html/0256-01.html
Source: Caselaw Access Project
Author: {"author": "Danforth, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

COURT OF APPEALS.
    Butler agt. Smalley and another.
    
      -'Manufacturing corporations — Laws 1848, chapter 40, section 12 — Filing of report — Personal liability of trustees — Seasonable time — Order for filing nune pro tunc.
    
    The limitation of “ twenty days,” contained in section 12 of chapter 40 of the Laws of 1848, applies only to the act of making the annual report, and not to the filing and publishing of such report; but the filing and publishing should be done within a reasonable time after the twenty days.
    Where the report was made and delivered to the secretary, who published it the next day, the 18th of January, but by his mistake it was not filed until the 13th day of February, it is not such a default as will make the trustees personally liable.
    As to what would be reasonable time depends upon the circumstances of the case.
    Where the order has not been filed within the twenty days, the procuring of . an order directing its filing nune pro tunc would not relieve the trustees of liability, if the statute actually required that the filing be within twenty , days.
    
      Decided January 1886.
    . Mr. Winsor, for appellant
    
      Mr. Irish, for respondent
   Danforth, J.

The Lathrop Anti-frictionate Company was organized under the manufacturing law of 1848 (chap. 40). It made and published a report of its affairs, as required by section 12 of that act, within twenty days after the 1st day of January, 1878, but the report was not filed until February 13th. The -defendants were its trustees, and the plaintiff, claiming to be a -creditor of the company, brought this action to fix a liability upon them for his debt, on the grounds (1) that the report was false in fact, and (2) was not filed within the same twenty days, “ nor as soon as practicable thereafter.” The first ground seems now to be abandoned by tbe counsel for tbe respondent, and, indeed, could not well be insisted upon. There is no finding that tbe report was false, nor tbat tbe defendants signed it knowing it to be false, but only tbat it omitted from tbe aggregate of indebtedness certain liabilities of tbe company, and tbat tbis was known to tbe defendants at' tbe time tbe report was made and filed; nor is there any finding either of bad faith or of willful or fraudulent purpose on tbe part of tbe trustees, nor of any fact showing actual fraud; and, without one or tbe •othér of these things, tbe penalty imposed for signing a report “false in any material representation’.’ (sec. 15 of the act of 1818, supra) is not incurred (Pier agt. Hanmare, 86 N. Y., 95; Bonnell agt. Griswold, 89 id., 122).

Tbe other point is disposed of by-the construction given to section 12 (supra), in Cameron agt. Seaman (69 N. Y., 396). In tbat case tbe .precise question was whether tbe report must be filed and published as well as made ydthin tbe twenty days from tbe first of January, in order to meet tbe exigency of this section; and it was held tbat tbe limitation of twenty days applied only to tbe act of making, and did not apply to tbe acts of filing' and pubbsbing; tbat, as to those acts, tbe section was directory; but as tbe object of tbe act was to insure a speedy and public disclosure of tbe contents of tbe report, it was said tbat tbe law, in tbe absence of an express provision on tbe subject, implies tbat both filing and publication should be within a reasonable time after tbe twenty days, and tbat tbis requirement exacted prompt performance and diligent action on the part of tbe trustees. Tbis rule was laid down as most consistent with reason and a due regard to convenience and justice, and leads to an inquiry in any given case whether the-party on whom tbe duty is imposed is shown to be in default ' In tbat case, tbe report was made within tbe twenty days, sent by mail to tbe county clerk and to tbe newspaper on tbe twenty-first day, and was in fact both filed and pubbsbed, but of course not until after tbe expiration of tbe twenty days.

Now, in the case before us, it is conceded that the report was made within the twenty days, viz., on the 17th of January. It was conclusively proven that, at the moment of making, the report was delivered to the secretary for filing and publication. He caused its publication the next day; and the plaintiff himself proved that it was owing to the mistake of the secretary that it was not then filed. At the outset of the case the plaintiff introduced and put in evidence the annual report of the company, dated January 17, 1878, and a petition dated February 8th, addressed to the supreme court, and its order therein. The report was in form sufficient, and the petition, verified by the secretary, stated that the report was published on the 18th of January, but, “ by mistake, was not filed in the office of the clerk of the county of New York.” The prayer of the petition was granted, and the court, on the 13th day of February, ordered the report filed as of January 17th. In the course of the trial the defendant, John Smalley, had testified that the report was filed in the clerk’s office January, 1878, and, upon cross-examination, the plaintiff’s counsel called his attention to that evidence, saying: “And that you still affirm ? is that so ? Answer. That is so, in one respect” And being further pressed, said: “ That report was made out and given to my son [meaning the secretary], and I supposed he took it there.” This answer was, on motion of the examining counsel, stricken out; but subsequently, on the same examination, the question was repeated, the plaintiff’s counsel saying:

“ Question. I now repeat my former question, did you swear on your direct examination as follows: ‘Q. Ho you know whether there was any report of the Lathrop Anti-frictionate Company filed in 1878, in January of that year? A Yes, sir; there was?’ Answer. I did. Q. You did not file it yourself ? A. No, sir. Q. Don’t you know that your son, William W. Smalley, subsequently, and as late as February 8th, made an application to the court upon a petition, in which he swore that through some mistake or other that report had not been filed within the first twenty days of the year, as required by law ? A. I think I did Q. 'Why did you swear as you did, that the report was filed in January, when you knew that your son had made a petition, under oath, that it was not ? A. As far as I was concerned, it was filed; I did everything in my power; I had helped him to make out a report, and he took it, and I was not aware at the time but what it was filed.”

William Smalley, referred to by the foregoing witness, testified that he was secretary of the company; that the report was filed in 1878, and published. He testified to the preparation of a petition to the supreme corn! for leave to file the report, and the granting of the order, on the 13th of February, that the report be then filed nunc pro tunc, as of the 18th of January, 1878.

The referee committed no error in refusing to hold that the order-relieved the defendant. Such entries are sometimes made in the progress of litigation, upon the principle that a delay of the court shall prejudice no one. 'Here the duty to file the report was imposed by statute upon the corporation, and over it the court had no jurisdiction. But the application was an act by the defendant in furtherance of his duty, and an indication of ■ good faith in respect to the proper disposition of the-report. It was an effort to do that-which the corporation had. not done.

Under another act, similar in its purpose (Laws 1875, chap. 611, sec. 18), a director may escape the consequences of an omission on the part of the company by himself, subsequently and within-, a fixed time, filing a certificate or report; but no such provision is to be found in the act before us. It is enough, however, as we-have seen (Cameron agt. Seaman, supra), that it be filed within a reasonable time after the expiration of 'the twenty days; and the referee was asked to find that whether this was done would depend upon the circumstances of the' case. This he refused to-do, and the defendant excepted. In this the referee erred, and also in Ending that there was neither prompt performance nor diligent action on the part of the company with respect to the-filing of the report To prepare a report for filing and publication, to place it in good faith in the hands of the secretary for deposit in tbe clerk’s office, and in tbe office of a newspaper, is, at least, equal in significance to a delivery of a report to a mail agent for transmission to those places. In the one case, as in the other, the company avails itself of the usual method of performing its duty; and in the absence of anything to show the want of good faith and active diligence in respect thereto on its part, a trustee, when no time is fixed by statute within which an act shall be performed, should not be subjected to a penalty, provided the thing required is actually done at a reasonable time, having regard to the nature and circumstances of the performance. The case at bar is not within the mischief at which the act is aimed, as it concededly is not within its terms. The referee erred in refusing to find as requested, and he found without evidence the existence of a default upon which the defendant might be charged.

■ We think thejudgment appealed from should be reversed, and a new trial granted, with costs to abide the event

All concur, except Huger, C. J., and Rapallo, J., not voting.