Court Opinion

ID: 5180753
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:41:48.723707+00
Date Added: 2024-06-11T08:26:33.747842
License: Public Domain

Ingraham, J. (dissenting):
Upon the appeal by the plaintiff, I concur with Mr. Justice. O’Brien, and for the reasons stated by him the judgment upon that appeal should be affirmed, with costs. Upon the appeal by the defendant, however, I am unable to concur in the conclusion arrived at by Mr. Justice O’Brien.
The plaintiff is a foreign fire and marine insurance company, and, on the second Monday of January, 1886, was the owner and holder of certain shares of stock in various banks doing business in the city of New York. The complaint alleges three causes of action to recover for the taxes paid the city of New York upon such shares of bank stock for the three years, namely, 1886,1887 and 1888 ; and, except in the change of dates, the allegations constituting each of the three causes of action, are the same. Each of such causes of action is based upon the fact alleged in the complaint, that the defendant claimed and pretended that it had imposed a tax upon the shares of bank stock owned by the plaintiff; that' the amount of such tax was and constituted a valid lien upon the respective shares of stock owned by the plaintiff and a personal liability against the ]fiaintiff, which the defendant could enforce against the plaintiff, and that by the laws of the State of New York the duty was imposed upon each of the banks and its officers to retain so much of any dividend or dividends belonging to this plaintiff as should be necessary to pay the amount of the tax upon the plaintiff’s shares of stock in said bank; that upon such claim and pretense the defendant illegally and wrongfully exacted and collected from each of said banks, as such alleged tax, without the knowledge, direction or consent of the plaintiff, and under compulsion, certain amounts alléged in the complaint, “which moneys Were Wrongfully deducted out of the *160money in. the possession, of said bank, belonging to this plaintiff, against its will and without its consent or knowledge, and have been received and retained by the defendant without right, and said defendant has refused, and still refuses, to pay,” etc., and that the assessment, levy and collection of the tax was void and illegal, as the plaintiff was, at that time, exempt from taxation. These allegations are denied by the answer. • .
I find no evidence in the record to support the allegation that the'moneys which were paid by the bank, “were wrongfully deducted out of the moneys in the possession of said bank belonging to this plaintiff.”
The plaintiff offered in evidence a statement showing the dividends paid by the several banks in which it owned stocks during the years 1886, 1887, 1888,. 1889 and 1890, by which it appeared that the dividends received in the years 1889 and 1890 were considerably in excess of the dividends received in the preceding years. The president of the plaintiff corporation swore.that the banks never had any right to pay this tax, but that, in the opinion of the witness, if the bank 'had not paid this tax, they would have declared another dividend for the amount of this tax, which the plaintiff would have received. Ail that he knows about it is, that, in latter years, the plantiff did receive a dividend which it did not receive in 1886, 1887 and 1888. There is no allegation that any such dividend in the years 1886, 1887 and 1888 was declared for the tax, or that the bank was under any obligation to- pay any dividend for those years, except the dividend that it did pay and which plaintiff received. There is no evidence that any such dividend was declared .prior to the year 1886, the evidence showmgthat it'was received subsequent to the year 1889. An officer of one of the banks in which the plaintiff had stock, testified that it had been the custom of that bank to pay the tax to the city of Kew York upon the shares of stock which the city assessed ; and to those whose stock was not taxed by the city it was in the habit of sending checks for the amount which the tax would have been had the shares been liable, calling such payment the tax dividend. Ko such tax dividend, however, was ever declared upon the stock held by the plaintiff. What the plaintiff received was the regular dividend declared by the bank which was declared and paid free of tax, and the plaintiff never made a demand upon *161the bank for what the witness called the tax dividend. The witness further testified that the regular dividend was paid free from tax; that the tax was paid to the city out of the funds of the Nassau Bank by a check, and that that check was charged to profit and loss; that there was nothing to distinguish the fund from which that check was paid from any other fund out of which the bank paid money, and that there was no formal action of the board of directors in regard to this tax dividend, the president simply sending to those stockholders who were not taxed an amount that he considered equivalent to the tax.
It seems to me very clear that there is no evidence here to show that the tax which was paid by the bank upon the plaintiff’s shares of stock was the plaintiff’s money, or that the plaintiff is entitled to recover it from the city. It is clear that it was the money of the bank paid by the bank to relieve it from liability under the tax law of the State, which prevents a bank from paying any dividend to its stockholders upon whom a tax is assessed until such tax has been paid. And when the bank declared this dividend to the plaintiff! on its stock, free from the tax, and then, to avoid a liability to the-city on account of the payment of such dividend, paid its own. money to relieve the plaintiff from the tax assessed against it, it was the banks’ money, not the plaintiff’s money, that was paid; and the plaintiff certainly is not entitled to recover it from the city. The fact that it is probable that the bank would have voluntarily paid to. the plaintiff an amount equal to the tax, if it had not paid the tax,, cannot vest the title to the money it had paid to the city in the plaintiff. Assuming that the payment of this tax was not a voluntary payment by the bank, and that the tax was void, it. would be entitled to recover the amount paid, from the city; and to allow the plaintiff to recover would thus subject the city to a double liability for the repayment of the money paid by the bank to the city. The payment was not made for the use of the plaintiff, but was made to-the city to pay a tax imposed" by the city upon stock of the bank making the payment, and which that bank was required by law to pay to the city before it paid any dividend to its stockholders. There is absolutely nothing to show that this money ever was the money of the plaintiff, ever was paid for the use of the plaintiff, or that the plaintiff ever had any title to it.
*162■ IIt is well settled that a stockholder has ho demand against a corporation to recover his share- of its profits until the corporation by a formal declaration of a dividend appropriates a portion of its assets to its stockholders. . Thus, Peckham, J., in Hopper v. Sage (112 N. Y. 533) says: “ It has been held a number of times in this court that when a dividend is declared it belongs to the owner of the stock at that time, but that until such declaration the profits form part -of the assets, and an assignment by a stockholder before such declaration carries with it his proportional share of 'the assets, including all undeclared dividends.”
It being clear that the money was the money of the bank, paid by the bank to the city for its own use, there is no privity between the plaintiff and the city which would entitle the plaintiff -to recover from the city as for money had and received. Thus, in Peckham v. Van Wagenen (83 N. Y. 44) it was held that a person who Avas wrongfully excluded from the rights of a stockholder could not recover from the person recognized by the corporation as a stockholder, dividends paid to such person upon the stock, the court saying: “ Her remedy, if she was wrongfully excluded from the rights of a stockholder, Avas against the company, and she- was not entitled to follow the assets of the company into the hands of parties to whom it had made payment's, and to recover her dividends from them, imtil, at least, she had established her right as a creditor of, the company, and exhausted her legal remedies against it. She could not, in the first instance, resort to a common-law action against the persons whom the. company had recognized as its-only , stockholders, to recover a portion of the dividends admitted to be due .and actually paid to them in their own right, and try her title, to the shares in actions against thém. As an action for money had and received, the casé falls directly within the principle of Butterworth v. Gould (41 N. Y. 450), even if the plaintiff had established a clear legal title to the shares, and a right of action against the company for the dividends thereon. The defendant received the dividends, claiming them as his own, and under no pretense of authority from the plaintiff, and the payment Was made to him in recognition of his title thereto as his own, and did not purport to discharge the company from its liability, if’ any, to the plaintiff, and the case cited, as well as the prior case of Patrick v. Metcalf (37 N. Y. 332), holds *163in express terms that under such circumstances there is no trust and no implied promise to pay the money to the plaintiff.” It seems to me that the principle established in this case is conclusive in the decision of the case at bar. The. money here was the money of the bank. It was paid to and received by the defendant for its own use as money legally due to it, and there existed no relation of .trust between the plaintiff and the defendant, and no implied promise to pay the money to the plaintiff.
Assuming, as the plaintiff claims, that the tax imposed was absolutely void, and that the action of the banks was equivalent to declaring an extra tax dividend to those of its stockholders who were not legally taxed by the city of New York, the plaintiff might have a right of action against the bank- to recover that declared dividend unpaid, but could have no action against the city of New York to recover money paid by the bank as its own money, for the use and purposes of the city.
The plaintiff cannot claim that the bank acted as its agent in making this payment to the city, and that thus it was the plaintiff’s money which was paid, without, at the same time, accepting the act in making the payment as the act of the plaintiff, in which case it is clear that it was a voluntary payment and cannot be recovered back. If it was the plaintiff’s money which was paid by the plaintiff through its agent, the bank, it was then a voluntary payment by plaintiff through its agent to the city. If it was not the plaintiff’s money paid by its agent to the city, then it cannot recover in an action for money had and received.
I think, therefore, that the judgment should be reversed, and the complaint dismissed, with costs..
Judgment affirmed, with costs.