Case Name: Samuel Hughen, respondent, agt. Edward H. Woodward, impleaded, appellant
Court: New York City Court
Jurisdiction: New York
Decision Date: 1885-06
Citations: 2 How. Pr. 127
Docket Number: 
Parties: Samuel Hughen, respondent, agt. Edward H. Woodward, impleaded, appellant.
Judges: 
Reporter: Howard's Practice Reports
Volume: 2
Pages: 127–130

Head Matter:
CITY COURT OF HEW YORK.
Samuel Hughen, respondent, agt. Edward H. Woodward, impleaded, appellant.
Corporations — Actions against trustee to recover corporate debts as penalty for failure to fie annual reports — Such actions are strictly penal—Party as witness excused, from testifying — Code of Civil Procedure, section 837.
Actions against trustee to recover corporate debts as a penalty for failure to file annual reports are “penalties,” within the meaning of section 837 of the Code of Civil Procedure. In such actions a party defendant is privileged from answering any question concerning the facts alleged in the complaint and cannot be compelled to answer upon an examination before trial any question which would support the claim of the plaintiffs, either against himself or his co-defendants.
General Term, June, 1885.
Before Hawes, Hyatt, and Browne, JJ.
This action was brought against this defendant impleaded with two others, as three trustees of a manufacturing corporation, to recover a debt of the corporation by reason of the failure of the trustees to file an annual report. An order was obtained, ex fiarte, to examine the defendant Edward II. Woodward before trial. Upon the examination he was asked as to who were the other trustees of the corporation. He declined to answer on the ground that he would thereby expose himself to a penalty. The referee before whom he was examined overruled the objection, and application being made by the plaintiff to the court at special term to compel him to answer, the motion was granted and an appeal was taken. Further facts appear in the opinion.
James B. Dill (Dill & Chandler), attorneys for the appellant,
argued that under the common law a witness was excused from answering any question which might expose him to a penalty or forfeiture and the rule extending to every thing in the nature of a penalty or forfeiture (Livingstone agt. Tompkins, 4 Johns. Ch. R., 415), and the privilege extended not only to the main fact, but also to any one of a series of facts which, united together, might prove a fact which would subject him to a penalty or forfeiture (Henry agt. Salina Bank, 1 N. Y., 83). The Code has preserved this same rule (Sec. 837). This action is a penalty or forfeiture within the meaning of section 837 of the Code. It is a penalty, and all the privileges of a penal action are extended to the defendant (Halstead agt. Dodge, 68 How. Pr. R., 170; Vernon agt. Palmer, 48 N. Y. Supr. Ct. R., 231).
Section 383 of the Code of Civil Procedure in providing for the short statute of limitations, uses precisely the same language in describing actions for a penalty or forfeiture; and an action of this nature under this statute has been uniformly held to be a penalty within the meaning of section 383. of the Code (Merchants’ Bank agt. Bliss, 35 N. Y., 412). The witness is excused from answering any question which would tend to prove a trusteeship of the other defendants, because a judgment against them would render him liable to an action for contribution (Chapter 510 of the Laws of 1875).
Henry M. Brigham, for the respondent,
argued that while the action was in the nature of a penalty, it was remedial as to the creditors and not strictly a penalty (Jones agt. Barlow, 62 N. Y., 202). That this was not a penalty within the meaning of section 837 of the Code (Geisenheimer agt. Dodge, 68 How. Pr. R., 264).

Opinion:
Browne, J.
The action is in its nature penal, being to charge the three defendants sued as trustees of a corporation, personally, with the debt of the corporation upon the ground of its failure to file its annual report. The complaint alleges that the three defendants were trustees of the corporation. The defendants answered separately, each interposing a different defense, the defendant Woodward being silent in his answer on the subject of his trusteeship, neither denying nor in terms admitting the allegation.
An order to examine him before trial was granted and the two questions asked, which are involved in this appeal, were : First. " Who were the other acting directors of the company at the beginning of the year 1882 ? " And the second: " Who were the acting directors, who continued to act during 1882, from the beginning of the year until the 1st day of July, 1883 % " Both questions the witness declined to answer on the ground that the answer would expose him to a penalty. The court overruled his objections to answer and he appeals from such ruling. The learned justice bases his ruling on the ground that the witness had, by his answer interposed to the complaint, admitted his trusteeship and thus settled the question of exposing himself to a penalty; and further, that by this admission he had waived his privilege.
My opinion is that the questions propounded to the witness were objectionable. The examination of his pleading will disclose that the witness did not, in terms, admit his trusteeship, his admission being inferred from his failure to deny the allegation in the complaint. His answer is silent on the subject; but for the purpose of pleading and of the issues to be tried, his silence is to be taken as an admission that he was such trustee at the times alleged in the complaint; and no doubt a like rule applies to his silence in respect to the plaintiff's allegation that the other defendants were also trustees, but this admission does not involve more than the first pleaded. To the facts pleaded in the complaint, upon which the answer is silent, the defendant will not be heard to deny. Hence, there is no necessity for interrogating him as to those facts, and beyond them he is protected.
I am convinced, however, that the questions he is asked to answer are more comprehensive than a mere inquiry as to whether the other named defendants were trustees, and the form of the questions suggests to me an attempt on the part of the plaintiff to discover if others than the parties named were trustees. To name other trustees or directors of the company, covering the period when the witness was trustee, would be to furnish the plaintiff with evidence upon which to base a prosecution against them for a penalty sued for, which, if recovered against the persons so disclosed by the witness, would render the latter liable to contribute as co-trustees towards the payment of any judgment recovered (Chap. 510, Laws of 1875). This might prove a link in' the chain of facts resulting eventually in exposing the witness to contribute towards the payment of the penalty. Against this liability he is protected by law (Code Civ. Pro., sec. 837; Henry agt. Salina Bank, 1 N. Y. R., 83).
It may be said that, because defect of parties defendant has not been pleaded, the presumption arises that no other trustees are liable; but this is without force in face of the fact that this action is for a penalty and the defendant is not obliged to admit any liability, nor is he called upon to inform the plaintiff of such defect. In any event, we should not speculate in theories to sustain the defendant's position, it being sufficient that by express affirmative enactment this privilege is accorded to the witness.
When the court is satisfied that the question is within the exception, it is sufficient that the witness claims the benefit thereof, without inquiring in what manner he would be prejudiced by his answer.
Under all the circumstances, I think the witness should be sustained in his refusal to answer the question. The order appealed from should be reversed and an order entered sustaining the objections, with ten dollars costs and disbursements to appellant.