Court Opinion

ID: 7333212
Source: CourtListenerOpinion
Date Created: 2022-07-25 22:23:16.055593+00
Date Added: 2024-06-11T16:20:10.852385
License: Public Domain

WILLIAMS, J. (dissenting).
After the commencement of the action for negligence, and the joining of issue therein, proceedings were commenced for the voluntary dissolution of the corporation, and an order was subsequently, made dissolving the corporation, appointing a receiver, and enjoining the prosecution of all actions against the corporation. The order appealed from merely modified the injunction so as to permit the continuance of the negligence .action. The relief asked for upon the motion, in addition to that granted by the order appealed from, was that the action be continued against the receiver, and that he be substituted as defendant. The court refused to grant this latter relief, upon the ground, apparently, that the action should not be permitted to be tried in the ordinary way in which negligence actions are tried before the court and a jury, but that a referee should be appointed to determine whether a cause of action ■existed against the corporation, and, if so, to determine the amount of damages to which the plaintiff was entitled, and, as a result, what claim the plaintiff had against the estate of the corporation. The ■serious question here involved is whether plaintiff’s cause of action for negligence against this corporation survived its dissolution, in proceedings for the voluntary dissolution thereof. If the cause of action •did survive, then the plaintiff was entitled to such relief as would enable him to establish and enforce his claim, if he had any, growing •out of such cause of action, against the assets of the corporation. It would seem that this relief should have been such as would enable him to try his action in the usual way in which negligence actions are tried before the court and a jury, and not compel him to submit to be tried before a referee. The receiver should have been substituted as defendant, and the action continued against him to final judgment. The action was brought to recover damages for personal injuries to the plaintiff caused by the negligence of the defendant, and the question is whether the defendant’s assets were relieved by its voluntary-dissolution from all liability for damages resulting from such negligence. Until its dissolution was effected its assets were liable to be .applied to the payment of such damages. After the liability of the corporation had accrued, could the officers, directors, and stockholders, by their voluntary action, procure the dissolution to be brought *16about, and thereby relieve the assets oí the corporation from the payment of such damages ? In Hepworth v. Ferry Co., 22 Civ. Proc. R. 407, 19 N. Y. Supp. 968, note, and Id., 62 Hun, 257, 16 N. Y. Supp. 692, it was held that an action against a corporation for an assault and battery did not abate upon the dissolution of the corporation, but might be revived and continued against its trustees. The dissolution in that case resulted by operation of law from the expiration of its charter. Mr. Justice Cullen, in his opinion at special term, said:
“The defendant was simply an artificial being. The claim which the plaintiff had was in reality against the property and assets of the corporation. It was from that that he was to obtain satisfaction. The property still remains and is in the hands of the defendant’s trustees. It certainly would be inequitable to deprive the plaintiff of satisfaction of his claim, if he has one, when, by the voluntary act of the parties in interest, the stockholders, an end has been put to the corporation; for under the statute its corporate ■ existence might have been continued, had the stockholders seen fit to do so.”
An appeal from the judgment at general term in this case was dismissed by the court of appeals, thus allowing the order continuing the action to remain in full force. In People v. Troy Steel & Iron Co., 82 Hun, 303, 31 N. Y. Supp. 337, a similar order was affirmed, the action continued being one brought by an administratrix to recover damages for the death of her intestate, alleged to have been caused by the negligence of the defendant corporation. This decision was-made in reliance upon the authority of Hepworth v. Ferry Co., above, in view of the action of the court of appeals in that case. In Marstaller v. Mills, 143 N. Y. 398, 38 N. E. 370, it was held that a cause of action survived the dissolution of a corporation when the action was brought by a father to recover damages for the loss of services of his son resulting from injuries alleged to have been caused by the negligence of the defendant corporation. The court there considered section 5 of the business corporation law, and section 30 of the general corporation law, and concluded “that the legislature intended by this provision [section 30, above] that the corporation property should be held and administered upon by the directors, where other persons were not appointed for the purpose of its distribution, in the settlement of all existing claims upon it, whether the claimant was a creditor in the legal sense or not. The term ‘creditor’ is broad enough, in view of the evident purpose of this act and the other provisions we have mentioned, to include those persons to whom the corporation was under any enforceable obligation as well as those to whom it was indebted. * * * Reading together section 5 * * * and section 30, * * * the construction is permitted that all persons, who have claims against the corporation upon which it might be liable, should be regarded as .actual or possible creditors.” It was well settled at common law that the dissolution of a corporation put an end to any action pending against it. An act was passed in 1832, but repealed in 1880, which permitted the continuance by the court of an action until final judgment after the dissolution of the corporation. The same power was, however, given the court after the repeal of the act, under Code Civ. Proc. §§ 785, 786. Hepworth v. Ferry Co. and People v. Troy Steel & Iron Co., above. If the cause of action survives the dissolution of the corporation, the power to continue *17the action is beyond doubt. It seems to us that there can be no doubt that such a cause of action survives the dissolution. The order should therefore be affirmed, with a further modification providing for the bringing in of the receiver, and the continuance of the action against him to final judgment.
The order, as so modified, should be affirmed, with costs to the respondent.