Case ID: abb-pr-ns_11/html/0455-01.html
Source: Caselaw Access Project
Author: {"author": "Cardozo, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MAPPIER against MORTIMER.
    
      Supreme Court, First District;
    
    
      Special Term, October, 1871.
    Pleading.—Complaint to Charge Stockholders and Trustees.
    A cause of action to charge the stockholders in a corporation formed under the general act of 1848, on the ground that the subscriptions have not been paid in and a certificate filed as prescribed by section 10 of that act, cannot be united with a cause of action to charge the same persons as trustees, for not having published annual reports, as required by section 12 of the same act. The first cause of action is founded on an implied contract; the second upon a liability created by operation of law.
    Demurrer to the complaint.
    Frederick T. Mappier brought this action against John Mortimer and three others, to charge them individually, under sections 10 and 13 of the manufacturing Companies’ act of 1848, as having been stockholders and trustees in the Kelly Skirt Manufacturing Company. The defendant made a motion to strike out certain parts of the complaint on the ground that allegations to charge one as trustee under section 12 could not be added to a complaint in an action to charge the same person as stockholder under section 10, since the liabilities created by those two sections constituted different causes of action. The motion was granted, and leave given to amend the complaint by setting out the causes separately.
    
    The amended complaint alleged as follows: For a first cause of action, 1. That the Kelly Manufacturing Company was a corporation organized under the manufacturing companie’s act of 1848. 2. That' by reason of various promissory notes, the company was indebted to the plaintiffs in the sum of about eight thousand dollars, in June, 1869. 3. That on August 1, 1869, and within one year from the accruing of the indebtedness, the plaintiffs commenced an action therefor against the company, in the New York, superior court, and, on September 7, 1869, recovered judgment for the full sum. 4. Execution against the company returned unsatisfied, and that the whole debt was still due. 5. That at the time when the indebtedness accrued, the defendants were each of them a stockholder in the company. 6. That by the terms of the certificate of incorporation, the whole amount of capital stock was fixed at two hundred and fifty thousand dollars, but the same was not paid in, one-half within one year, and the other half within two years of the incorporation of the company, nor was any certificate of the amount of capital stock fixed and paid in, ever subscribed by the president and a majority of the trustees of said company, nor was any such certificate ever recorded in the office of the clerk of New York county, where the business of the company was carried on.
    For a second cause of action, the plaintiff repeated all the foregoing allegations, except the last clause, and further alleged: 1. That the defendants were trustees of the company, and had been so since its incorporation. 2. That, the company had made no report within twenty days from January 1,1866, nor for 1867,1868, or 1869, nor had any report ever been made as required by the statute. •
    Wherefore the plaintiffs demanded judgment against the defendants for the sum due.
    The defendant, Mortimer, demurred, on the grounds:
    1. That several causes of action were improperly united. 2. That the first pretended cause of action did not state facts sufficient to constitute a cause of action.
    
      Charles M. Marsh, in support of demurrer.
    I. No actions can be united except as provided by section 167 of the Code of Procedure.
    II. These causes can by no possibility be included under any one of the subdivisions of this section, except 1 or 2; that is, 1. As arising out of the same transaction or transactions connected with the same subject matter; or, 2. Contract, express or implied.
    III. Do they come under these subdivisions ? They are not both on contract, (a.) The action against them as stockholders, has been settled as being one on contract (Corning v. McCullough, 1 N. Y. [1 Comst.], 47). (5.) The cause of action against them as trustees, is equally weU settled to be for a penalty (Merchants’ Bank v. Bliss, 35 N. Y., 412). (c.) The two actions thus come under different branches of legislation, for one is remedial, the other penal, (d.) An examination of another part of the same statute, shows this construction to be correct": The Code, section 91 (statute of limitations), provides: “Within six years upon a contract obligation or liability, express or implied.” . . . Section 92 says: “ Within three years .... an upon a "statute for a penalty or forfeiture.” Thus, the action against them for the penalty for neglect of duty in filing their report, is not upon a contract, obligation, or liability, express or implied. 2. They do not arise ont of the same transaction, for under the authorities above quoted, the cause of action in one is the original purchase of the goods (Corning v. McCullough, supra). The other is for a neglect of a duty imposed by statute (Merchants’ Bank v. Bliss, 35 N. Y., 412). This clearly is not the same transaction.
    IV. But not only do they not come under any one subdivision, but they are actually under different subdivisions. 1. The one against them as stockholders, is under the second subdivision, upon implied contracts. 2. The other cause of action comes under the seventh, as “a claim against a trustee by virtue of a contract or by operation of law.” To set forth this cause of action, it is alleged : (a.) The defendants were trustees. (b.) They neglected their duty as such, and failed to file their report. (<?,) From this arises a liability to this claim, by operation of law.
    V. It thus seems: 1. That the actions cannot be brought under any one subdivision of section 167. 2. That they are in terms, under separate subdivisions. 3. The section expressly says : “But the causes of action, so united, must all belong to one of these classes.”
    
      John Townsend, for plaintiffs, opposed.
    
      
      See Sterne v. Hermann, p. 376, ante, where a motion to the same effect was denied by the supreme court at special term in the same district.
    
   Cardozo, J.

The complaint states two different causes of action. The defendants are sought to be held upon the first because of their being stockholders. There is no averment in the first cause of action that the defendants were trustees, and it would be inappropriate to that cause of action. The second cause of action is based upon an omission to do a duty which belonged to the defendants, as trustees. The first cause of action is founded on implied contract (Corning v. McCullough, 1 N. Y. [1 Comst.], 47). The second is against a trustee, upon a liability created by operation of law (35 N. Y., 412 ; 19 Barb., 529).

These causes of action do not belong to the same class; they are not both upon contract, neither are both against a trustee. • They cannot, therefore, be united (Code, § 167), and the demurrer on that ground, is, therefore, well taken.

Judgment for plaintiff on demurrer, with leave to plaintiff to amend, on usual terms.