Court Opinion

ID: 3618977
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:01:18.365021+00
Date Added: 2024-06-11T14:07:35.726912
License: Public Domain

Two questions are presented by the exceptions taken by the appellant in this case. First, whether a referee upon trial of issues of fact, has power to dismiss the complaint upon the ground that it does not contain facts sufficient to maintain an action. Second, if such power is possessed, whether the facts set out in the complaint in the present case showed a cause of action. As to the first question, there can be no doubt. An examination of the Code from section 143 to 148, will show that the objection is not waived by failing to present it either by demurrer or answer. All that the plaintiff is entitled to prove, to establish his right of action, are the facts contained in the complaint, and it would be absurd to hold that the referee could not dismiss the complaint, but, after the facts were proved, might nonsuit the plaintiff on the ground that the proof failed to show a right of action. In trials before referees, judgment is entered upon the report, and there is no opportunity to move in arrest on the ground that the complaint shows no cause of action. It therefore follows that the referee may dismiss the complaint on this ground. The possession of this power *Page 646 
by the referee was assumed in Emery v. Pease (20 N.Y. 62). (See also Ludington v. Taft, 10 Barb. 447, and Gould v.Glass, 19 id. 195.) The real question in the case is, whether the facts set out in the complaint showed a right of recovery by the plaintiff against the defendant as stockholder of the company. I think it must be assumed that the averments of the commencement of the action and recovery of judgment against the corporation were sufficient upon the motion to dismiss. That the omission to aver that such action was commenced within a year from the time the cause therefor accrued, ought to have been disregarded by the referee. The cause of action alleged in the complaint is, that the company were indebted to the plaintiff's assignor for services for the company as secretary and otherwise. This presents the question whether a stockholder is liable in case of the insolvency of the company for the services of its secretary. The addition of the words, "and otherwise," does not aid the complaint unless it shall be held that a stockholder is liable for all services rendered the company, and if this be so, it is clear the complaint is good, for in that event he would be liable for services rendered as secretary. The eighteenth section of the act authorizing the formation of manufacturing companies, etc. (3 Gen. Stat. [Edmonds' ed.] 736), provides that the stockholders of any company organized under the act shall be jointly and severally individually liable for all debts that may be due and owing to their laborers, servants or apprentices for services performed for such corporation. The question is, whether the secretary of the company is included under the terms used in the statute. I think he is not. That although in a certain sense he is a servant of the company, he is not so within the meaning of the statute. The design of the statute was to afford protection to a class of employees of the company known as laborers, servants and apprentices, and not as officers and agents of the company. It was deemed proper by the legislature to leave the latter class to their remedy against the company only. Section five of the act provides for the appointment of a president and subordinate officers of the company. Had the *Page 647 
statute designed to include these officers it would have used terms embracing them, but they are in the last section called officers and not servants of the company. Again, the officers of the company are not within the same reason for special protection as the laborers. The latter are occupied with their labor, and have no means of knowing any thing of the pecuniary condition of the company, while the former are usually better acquainted with that than the general creditors. No reason is seen why the officers should have any additional security for their salaries beyond that of the general creditors. I think that neither the services of the secretary, nor those of any other officer of the corporation, come within the eighteenth section, and that a stockholder is not liable therefor. This accords with the reasoning of this court in Aikin v. Wasson (24 N.Y. 482), and of the Supreme Court in Erricson v. Brown (38 Barb. 390), andConant v. Van Schaick (24 id. 87). The precise point was not involved, and therefore not decided. It was held in Richardson
v. Abendroth (43 id. 163) that the stockholders were liable for the salary of the secretary, but no reasons were assigned therefor, and I think the case, in this respect, erroneous. It thus appears that the stockholders are not liable for all services rendered for the company. The addition of the words, "and otherwise," does not, therefore, import that the assignor had rendered any services for which such liability exists. From the absence of any proposition to amend, I think the inference probable that the assignor had rendered no such service. However this may be, the referee was right in dismissing the complaint, and the judgment must be affirmed.
All the judges concurring,
Judgment affirmed. *Page 648