Court Opinion

ID: 5180699
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:41:44.926306+00
Date Added: 2024-06-11T08:26:33.612861
License: Public Domain

Williams, J. (dissenting):
The case has been to the Court of Appeals upon demurrer to the original complaint, and it was then said that tlie complaint was demurrable because it did not contain allegations and a prayer for relief sufficient to make it an action in equity. (143 N. Y. 377.) By amendment, the plaintiffs have inserted allegations and have amended the prayer for relief, which would seem to cure that defect and to make the action clearly one in equity. It is now claimed that the action cannot be maintained in equity upon" the amended pleading, and against all the parties made defendants therein.
In Brinckerhoff v. Bostwick (reported in the Court of Appeals, 88 N. Y. 52; 99 id. 185 and 105 id. 567) it was held that an action in equity could be maintained to call the directors of a corporation to account for their negligent wrongful acts, whereby the corporation and its stockholders suffered damage. Rapallo, J. (88 N. Y. 58) said: “ The liability of the directors of corporations, for violations of their duty or breaches of the trust committed to them, and the jurisdiction of courts of equity to afford redress to the corporation, and in proper cases to its shareholders for such wrongs exist independently of any statute. By the Revised Statutes of New York (2 R. S. 462) it is declared that the chancellor has jurisdiction over directors, managers and other trustees and officers of corporations, to compel them to account for their official conduct in the management and disposition of the funds and property committed *516to their charge, and to compel payment by them to the corporation whom they represent, of all sums of money, and the value of all property which they may have acquired to themselves or transferred to others, or may have lost or wasted by any violation of their duties as such trustees. These enactments are, however, merely declaratory of a jurisdiction long previously conceded to exist, both in this -State and in England.” Earl, J. (in 99 N. Y. 193) said: “The action is against the directors as trustees to call them to account for the manner in which they discharged their trust, and is one of which courts of equity always have jurisdiction.” Peckham, J. (in 105 N. Y. 570, 571) said: “This action * * * is brought * * * against defendants who were directors of the bank, to call them to account as trustees for the manner in- which they have discharged their trust. Of such actions courts of equity have always had jurisdiction. * * * TJnder the allegations of the complaint, and upon the very numerous bases of liability respecting the several defendants, it is hard to see exactly what kind of a verdict could be directed as to form, in case the action were .to be regarded as a common-law one, and the jury were to give a verdict for the plaintiff which should cover the whole case, and upon which judgment should be entered. The verdict might be for different sums against different defendants,, and founded upon distinct liabilities growing out of different acts as to-each, and yet the foundation of the verdict in regard to the facts found against-each defendant would be problematical in the extreme. The sums for which defendants might be liable may not only be different,, but the total liability of all might exceed the total damage proved, and thus there would be a verdict for different sums against the different defendants, and an excess of total liability over the damage proved, and provision would have to be made for such a state of facts in the judgment to be entered, which ought to be based, upon a special application, on notice to the court, and upon its directions then given. All this shows how entirely impracticable would be a reference to a jury of the whole issue as in a common-law action, with a general verdict arid a judgment to be entered thereon, without any further application to the court.”
"When this action was in the Court of Appeals before, Finch, J. (in 143 N. Y. 382) said: “ There is a wide and vital difference, between the two cases (i. e.,. Brinckerhoff v. Bostwick [105 N. *517Y. 567] and this case). In. this the action is by the corporation against its delinquent directors; in the other it was by a stockholder who could not sue at law, but was compelled to go into equity to obtain his relief, and whose right of action was wholly and purely of an equitable character. It may be, nevertheless, that a corporation may sue its directors in equity to recover losses sustained, for there seem to be some cases in which the remedy has been allowed. Granting' that, and granting also what I am not now ready to admit as the law of this State that the facts pleaded in the present case are sufficient to support the action as an equitable one, we are left by the pleader in a doubt which can only be solved by recurring to the demand for relief.”
It would seem that the allegations inserted in the amended complaint can leave the court no longer in doubt as to this action being equitable in its nature.
The 57th clause contains the additional allegations, and the prayer for relief is also amended. It is not necessary to refer in detail to these added allegations and prayer for relief. They are such as to make the action clearly one in equity, and one that is maintainable as such, unless the Court of Appeals shall directly overrule and reverse the case of Brinckerhoff v. Bostwick, above quoted from. The case of Higgins v. Tefft (4 App. Div. 62) was one in which the complaint was entirely like the complaint in this case before it was amended as to its allegations and prayer for relief, and necessarily followed the decision of the Court of Appeals in 143 Hew York, above.
It seems to me that in the present condition of the decisions of our Court of Appeals, as hereinbefore indicated, and without considering other cases or the question as a debatable one, we should hold this complaint to be a good one, and the demurrer thereto as not well taken.
The judgment sustaining the demurrer should be reversed, with costs of appeal to the appellants, and judgment ordered overruling the demurrer, with costs of the trial court.
Patterson, J., concurred.
Judgment affirmed, 'with costs.