Case Name: Otto Geisenheimer and Theodore Graven, respondents, agt. Charles C. Dodge and Anson Pond, impleaded with another, appellants
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1884-12
Citations: 1 How. Pr. (n.s.) 264
Docket Number: 
Parties: Otto Geisenheimer and Theodore Graven, respondents, agt. Charles C. Dodge and Anson Pond, impleaded with another, appellants.
Judges: 
Reporter: Howard's Practice Reports
Volume: 3
Pages: 264–270

Head Matter:
N. Y. SUPERIOR COURT.
Otto Geisenheimer and Theodore Graven, respondents, agt. Charles C. Dodge and Anson Pond, impleaded with another, appellants.
Corporations—Action against trustees, to recover debts due from the company on the ground of failure to file annual reports — Parties— Code of Civil Procedure, sections 456, 837 — When part of the trustees may be proceeded against and the rest left out —When witness not excused from testifying.
In an action against trustees of a corporation, where a suit is brought against three trustees, and the action is brought to trial against two and two are served, the defendants and the plaintiffs stand in the same relation as if only two had been named in the summons and complaint.
Under the provisions of section 456 of the Code of Civil Procedure, in actions where the complaint alleges the defendants to be severally liable, part may be proceeded against and the rest left out. An action under chapter 510 of the Laws of 1875, with an allegation in the complaint demanding a several judgment, is an action where the parties are alleged to be severally liable.
Although a defendant may be excused from answering questions, under the provisions of section 837 of the Code of Civil Procedure, as to penalties, still this action is not such a penalty as will excuse the defendant from answering questions which would tend to expose him to a verdict under chapter 510 of the Laws of 1875.
General Term, December, 1884.
Before Sedgwick, C. J., Van Yorst and Freedman, JJ«
This is an appeal from a judgment, entered on the report of a referee.
This action was brought against the defendants, trustees of the Pyrolusite Manganese Company, a corporation organized under the general manufacturing act, to recover a debt due from the company on the ground of an omission to make, file and publish the annual report required by the twelfth section of said act. Defendants Dodge and Pond were served with summons, and by stipulation the issues were referred to be heard and determined.
The plaintiffs were copartners, and on the 15th day of December, 1881, loaned to the company acting through defendant Dodge, a sum of money upon the security of a consignment of manganese ore from the company to the Paris correspondent of the plaintiffs. Upon the sale of the ore there was a deficiency, and on 21st March, 1882, a balance of $290.56 was ascertained to be due from this company to plaintiffs. That defendant Dodge was a trustee of the company during 1881 and 1882 is conceded.
In July, 1881, the trustees were Edward H. Woodward, Mrs. Pauline Woodward and defendant Dodge. A meeting was held July 12, 1881, and Mrs. Pauline Woodward presented her resignation as trustee, to take effect “ on the legal election of a fourth trustee.” Her resignation was accepted. Arthur T. Woodward was elected such fourth trustee, and defendant Pond was elected trustee in place of Mrs. Woodward, resigned. Ho certificate of the increase of the number of trustees was however made and filed as required by law.
Defendant Pond wss notified of his election and accepted the office. In June, 1882, he joined with defendant Dodge in acting as trustee in petitioning the court for a voluntary dissolution of the company under the statute, and upon this petition the company was dissolved and a receiver appointed in the fall of 1882. The charter election day was December twenty-two of such year.
Ho annual report was made and filed as required in section twelfth of the act, during the years 1882 and 1883. The case was tried before Ernest H. Crosby, Esq., referee, who wrote the following opinion:
Ernest H. Crosby, Referee.
— The counsel for the defendants Dodge and Pond maintains that as the defendant Woodward was not served with a summons, the plaintiffs cannot recover against the other defendants. This view might be correct if the action were brought on contract, but such is not the case. The cause of action is created by section 12 of the manufacturing act of 1848, as amended, for the recovery of a penalty, and the defendants’ liability therefore arises ex delicto. The ordinary rules of actions in tort are applicable and non-joinder is no defense (Strang agt. Sproul, 4 Daly, 326, reversed, but not on this point). The failure to serve the defendant Woodward is equivalent to his non-joinder as a defendant under section 456 of the Code of Civil Procedure. The complaint brings the action under the provision of section 12 of the act of 1848, as amended by chapter 510 of the Laws of 18J5. This section expressly makes the defendants “ jointly and severally liable.” Hence the defend ants are “ alleged to be severally liable,” as required by section 456 of the Code, and the plaintiffs may proceed against the defendants Dodge and Pond, as if they were the only defendants named in the summons. The cases cited by the defendants’ counsel on this point (Dean agt. Whiton, &c.), do not bear upon the question. They arose under section 18 of the act of 1848, and the courts treated these actions as if they were brought on contract. There is no similarity between the liability imposed by section 12 and that imposed by section 18 of the manufacturing act. The former is ex delicto, and the latter is not.
The only other point in the case calling for comment is the trusteeship of the defendant Pond. The election of Arthur T. Woodward as trustee was not legal, as there was no provision for a fourth trustee. The validity of Pond’s election depends upon the resignation of his predecessor Pauline Woodward. Her resignation was “to take effect after the legal election of the fourth trustee.” Such “ legal election ” never took place, and the defendants’ counsel contends that consequently she never ceased to be trustee, and there was no vacancy. A resignation signed by a woman must not be construed as rigidly as a more formal document. All the persons interested evidently believed that a fourth trustee, Arthur T. Woodward, had been legally elected. Pauline Woodward’s resignation was accepted on this understanding. It does not appear that she ever claimed to be a trustee thereafter. On the contrary, Arthur T. Woodward and the three defendants were from that time trustees defacto. The condition precedent mentioned in Pauline Woodward’s resignation had occurred according to her intention and that of her co-trustee, and they all seem to have acquiesced in Pond’s election to fill her place. Her resignation and its acceptance consequently made an actual vacancy, and Pond became trustee de jure. In signing the petition of June 3, 1882, both Pond and Dodge acted as trustees, and this alone, without the other acts testified to, is enough to show that they held, over after December 27, 1884, when their terms might have expired (Van Amburgh agt. Baker, 81 N. Y., 46). The fact that they signed this petition appears from Mr. Dodge’s testimony and does not depend upon the admission as an exhibit of the petition itself.
On appeal from the opinion of the referee,
Dill db Chandler, for the appellants made and argued the following points:
I. The statute under which this action is brought is a penal statute and all presumptions are in favor of the defendants. Every fact necessary to establish the liability of a trustee in a suit brought under this act must be affirmatively proven by the plaintiff, even to and including those facts which can only be established by proof in the ¡negative ( Whitney Arms Co. agt. Barlow, 68 N. Y., 37; Bruce agt. Platt, 80 N. Y., 381; Cameron agt. Seamen, 69 N. Y., 401).
II. The action is in form against three trustees, only two are served. The appellant concedes that if the action had been brought against two alone of the trustees, and a joint and several judgment had been demanded in the complaint, under the authority of Strang agt. Sprowl (4 Daly, 302), the plaintiff would be entitled to the judgment, but the principle of law claimed by the appellant is that when the statute gives a joint and several remedy the plaintiff, by bringing his action against all, elects to treat the liability as joint and waives his several remedy (Dean agt. Whiton, 16 Hun, 204; Berries agt. Platt, 21 Hun, 132). Section 456 of the Code of Civil Procedure does not include this action, because the plaintiff, by bringing his action against all the defendants, elected to take his joint remedy, waived his several remedy and did not allege the defendants to be severally liable.
III. The defendant was called as a witness for the plaintiff and asked to testify concerning his acts as trustee. His counsel asked the referee to instruct the witness that it was his privilege to refuse to testify as to his trusteeship on the ground that his answer would tend to expose him to a penal liability. The referee held that the witness was only excused from answering questions which would tend to render him criminally liable. The defendant’s liability under the complaint is penal (Vernon agt. Palmer, 48 Supr. Ct., 231; Whitney Arms Co. agt. Barlow, 68 N. Y., 37, and cases cited under point I). The question of privity was duly raised and properly presented by the request of counsel for the witness (who was the defendant), and it was error on the part of the referee to refuse to so instruct (The People agt. Brown, 72 N. Y., 571; Close agt. Olney, 1 Denio, 319; Taylor agt. Wood, 2 Edw., 94; Southart agt. Retchford, 6 Cow., 252). The instruction as given by the referee was error. A witness is excused from giving an answer which will tend to expose him to a penalty or forfeiture (Code of Givil Pro., sec. 837). This is the cómmon-law rule and extends to everything in the nature of a penalty or forfeiture (Livingstone agt. Tompkins, 4 Johns. Ch., 415; Henry agt. Salina Bank, 1 N. Y., 83).
Baldwin ds Blackmar, for respondents, made and argued the following points;
I. Defendant Pond was a trustee de facto, and as such is liable under the act (Denning agt. Puleston, 55 N. Y., 655 ; Reed agt. Keese, 60 N. Y., 616).
II. As to the referee’s ruling that defendant Dodge, who was called as a witness, was only excused from answering questions which would tend to render him liable criminally, if the refusal so to instruct was error it was not such error as to justify a reversal, because the defendant Dodge was in no wise injured by it (Cloyes agt. Thayer, 3 Hill, 566; Foote agt. Beecher, 78 N. Y., 158; 2 Gra. & Wat. on New Trials, 634; Forrest agt. Forrest, 25 N. Y., 510; Lamb agt. Camden and Amboy R. R. Co., 2 Daly, 475; Bennett agt. Austin, 5 Hun, 538).
III. The defendant claims that the plaintiff, not having succeeded in serving defendant Woodward, cannot proceed against the defendants actually served. The rule which defendant relies on is one of contract liability. It is true that when defendants are jointly liable on contract all should be joined, and if jointly and severally liable each should be served separately or all jointly, and if all are joined and part served, judgment may be taken against all to be satisfied out of the property of those served. On the other hand, in actions of tort one or any number can be served in the same action, but judgment can be taken only against those served. This is not an action on contract but on tort (Miller agt. White, 50 N. Y., 137; Jones agt. Barlow, 62 N. Y., 202; Strang agt. Sproul, 4 Daly, 302; Roberts agt. Johnson, 58 N. Y., 613; Tingley agt. Walters, 2 Sweeney, 175; Stannard agt. Mattice, 7 How., 4; Code of Civil Pro., sec. 456). The non-joinder or non-service of one of the defendants is, therefore, no defense as to the others.
IT. The company was required by the statute, as amended in 1875, to file annual reports after 1876 (Vernon agt. Palmer, 48 J. & S., 231).

Opinion:
The general term affirmed the opinion of the referee.