Court Opinion

ID: 5482573
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:59:22.197097+00
Date Added: 2024-06-11T08:33:38.309996
License: Public Domain

Carswell, J.*
(concurring). I concur in Judge Desmond’s opinion for affirmance for the reasons given therein and for an additional reason.
Section 64 of the General Corporation Law directs reimbursement by a corporation of a director, officer or employee who has been put to expense as a consequence of having been made a party “ to any action,” etc., because he is or was a director, except when guilty of misconduct. This opening phrasing properly becomes the subject matter of interpretation only because certain terminology in section 64 and the following sections, characteristic of and conventionally used in civil actions, makes the meaning of the opening phrase obscure or equivocal or has a possibly restrictive effect upon it. It thus becomes necessary to determine by interpretation whether “ any action,” etc., includes both civil or criminal actions or is limited to a civil action. This requires us to ascertain whether the proper rule of interpretation is strict construction or liberal construction, in order to determine whether or to what extent the light shed by the context, on the words “ any action,” etc., reveals the true legislative purpose or intent, having in mind that the pertinent sections were all the subject of a single legislative document and enactment in chapter 869 of the Laws of 1945.
Reimbursement for such expenses could not be had at common law (Bailey v. Bush Term. Co., 293 N. Y. 735). Therefore, sections 64 and 65 are in derogation of the common law. Section *40563 provides two methods of reimbursement (a) by a provision in the certificate of incorporation; and (b) by a provision in the by-laws or a resolution of the stockholders. This is a regulation of the exercise of a common-law right of freedom of contract and is merely declaratory thereof. In the instant case, there is no provision in a certificate and no by-law or resolution authorizing such reimbursement. The parties have refrained or deliberately refused to make such authorization, although free to do so and to include specifically not only civil but criminal actions.
Section 64, therefore, is in derogation of both the common law and the contract rights or engagements of the parties. Strict construction, therefore, is the rule applicable (Matter of Ryan, 291 N. Y. 376, 400; Erickson v. Macy, 231 N. Y. 86, 91; Dean v. Metropolitan Elevated Ry. Co., 119 N. Y. 540, 547). Only by observing such a rule is the extension or broadening of a legislative change avoided and true legislative intent made effective.
Section 65 which is referred to in section 64 sheds light on the true scope of section 64. It provides in subdivision (a) that the reimbursement is to be sought in the “ action,” etc., in which the expenses were incurred or (b) in a separate proceeding in the Supreme Court. Subdivision (a) is the only one that specifies in detail what expenses are to be the subject of reimbursement. Applying the rule of strict construction here to ascertain legislative intent, subdivision (a) is the sole determinant of the extent of the reimbursement and if reimbursement cannot be had in subdivision (a) it may not be had in subdivision (b). If subdivision (a) is to be construed as inclusive of both a basic civil action and a basic criminal action, then subdivision (a) is valid as to a civil action but invalid as to a criminal action. The Legislature is without power to bestow jurisdiction in civil matters on a court which by constitutional provision is “ vested with jurisdiction only in criminal prosecutions or proceedings ” (N. Y. Const., art. VI, § 11). A typical example is the County Courts of Kings, Bronx, Queens and Richmond Counties. A director acquitted in a criminal action under the Donnelly Act, for instance, may not have reimbursement for expenses under subdivision (a) of section 65 under the *406principle just stated (People ex rel. Clark v. Adel, 129 Misc. 82, 87, 90). If a statute is subject to two interpretations, one valid and the other invalid, the valid interpretation must be adopted (McKinney’s Cons. Laws of N. Y., Book 1, Statutes [1942 ed.], § 141, pp. 210, 211; § 150, pp. 236, 237; Dollar Co. v. Canadian Car & Foundry Co., 220 N. Y. 270; Matthews v. Matthews, 240 N. Y. 28; People v. Mancuso, 255 N. Y. 463).
A judicial determination between two who were defendants in a criminal action as to the respective rights and obligations of one to the other based inter alla upon presence or absence of fault is a jurai question that is indisputably an exercise of civil jurisdiction. (Cf. Bailey v. Bush Term. Co., supra.)
Section 65, the complement of section 64, being thus limited to a basic civil action or proceeding, the legislative intention, therefore, clearly was to limit similarly section 64 to a civil action or proceeding. This is the inevitable consequence of the impact of context. If the legislative intention was to include a criminal action, under the rule of strict construction, a clear direction or an imperative command to include a criminal action must be given by the Legislature. To adopt the appellant’s construction would require that the effect of the impact of the context be dispelled by inserting before the word 11 action ” in the opening phrase in section 64 the words “ civil or criminal ” and would require a recasting of section 65 so as to specifically direct in subdivision (a) that reimbursement be had in the basic civil action and in the event the expenses were incurred in a criminal action provide for an explicit direction in subdivision (b) that such expenses be sought in a separate proceeding in the Supreme Court.
To accept appellant’s interpretation would be an unwarranted exercise by the court of the legislative function and give effect to an intent never expressed'by the Legislature, under the guise of interpretation, and would be in derogation both of the common law and the contract engagements of the parties made available to them by methods set out in section 63.
The foregoing analysis of sections 63, 64 and 65 discloses that the legislative intent, as expressed throughout chapter 869 of the Laws of 1945, is to confine reimbursement in proper situations to expenses incurred in a civil action or proceeding.

 Carswell, J., designated for the purposes of this case.