Court Opinion

ID: 5506833
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:17:25.007195+00
Date Added: 2024-06-11T08:34:03.978374
License: Public Domain

O’BRIEN, J.
The action is brought to enforce the liability of "the directors or trustees of the Manhattan Athletic Club, pursuant to section 8, c. 267, Laws 1875, which provides that:
“The trustees, directors or managers of any society or corporation organized under the provisions of this act shall be jointly or severally liable for all debts due from said society or corporation contracted while they are trustees, .provided said debts are payable one year from the time they shall have been contracted, and provided a suit for the collection of the same shall be brought within one year after the debt shall become due and payable.”
Two causes of action upon promissory notes are set up in the complaint, and, after alleging the incorporation of the club, it is averred that, upon the respective dates, it made its certain promissory notes, •and delivered the same to the plaintiff for value, which at maturity were not paid. It is further alleged that, at the time of the execution and delivery of such notes, the defendants, and each of them, were governors, trustees, and managers of the club; that the notes were payable one day from date of their execution; and that less than one year has elapsed since they became due and payable; and that payment has been refused. Then follow allegations about suit being brought thereon and judgment obtained, and that the whole of the judgment remains unpaid. The answer of defendants Carr and Hoyt sets up seven defenses: (1) They deny the allegation of liability either on the notes or judgments. (2) They allege that each of the notes was given for a debt theretofore due and owing by the club to plaintiff for goods and merchandise theretofore sold and delivered by plaintiff to the club; and that neither at the times the debts were contracted nor the notes given were the defendants all the trustees, but that at such times there were other trustees; and plead nonjoinder. (3) They allege the nonjoinder of the club. (4) They allege that, when plaintiff took the club notes, he elected to look only to the club for their payment, and thereby waived any liability of the trustees for the debt or for the notes. (5) They claim the provision of the act under which the liability is sought to be •enforced is unconstitutional. (6) They allege that the judgments *414against the club are a bar. (7) They claim plaintiff had not, previous to this action, exhausted his remedy against the club, although it had assets. The answer of defendant James alleges no knowledge or information sufficient to form a belief as to any of the allegations of either cause of action, except the allegation that the club was incorporated; denies, on information and belief, that the debt or claim set forth in either cause of action was contracted while he (James) was a trustee; and alleges that the provision of the act mentioned is unconstitutional. Plaintiff demurred to all the defenses in Carr’s and Hoyt’s answer, except that contained in paragraph 1. He demurred to only that portion of or defense in ssid James’ answer which alleges the unconstitutionality of the law. The learned judge sustained the demurrer, and went one step further in holding that the first defense in Carr’s and Hoyt’s answer, which was not demurred to, was bad. As no question was raised as to its sufficiency, we do not think that it should have been disposed of. The reasons assigned by the judge in his opinion are clear and satisfactory, and require no elaboration at our hands.
The only serious question presented relates to the sufficiency of the complaint, which question could be raised and was available to' the defendants upon the demurrer; it having been repeatedly held that, though the defenses to a complaint be bad, a demurrer thereto will not be sustained if the complaint itself is insufficient. The complaint itself is silent as to whether the notes sued upon were the original indebtedness, or merely evidence of an existing indebtedness; and it thus remains to be determined whether, as the result of such silence, a presumption arises either way as to the notes being given for an indebtedness created at the time they were given, or for an indebtedness created prior to the giving of such notes. If the latter presumption is to be indulged in, then, as there is no allegation that the defendants were trustees when the original debt was contracted, but were merely trustees when the notes were subsequently given for the debt, they would not, under the authority of Parrott v. Colby, 6 Hun, 55, affirmed 71 N. Y. 597, and Hardman v. Sage, 124 N. Y. 25, 26 N. E. 354, be liable. The liability of such trustees is predicated upon the creation of the indebtedness. In that case it was held that:
“The acceptance of a note did not merge or extinguish the original indebtedness, but only operated to extend the time of payment, and that, as the plaintiff had not brought an action against the corporation within one year from the time the original debt became due, the defendant was not liable; that the liability of a stockholder in such cases cannot be renewed or extended by any renewal or extension of the indebtedness which the creditor may make with the corporation.”
Although that action was one to hold the defendant liable as a stockholder of a corporation created under the act of 1848, relating to the formation of corporations for manufacturing, mining, mechanical, and chemical purposes, the principles applicable to the liability under that act and under the club act of 1875 are similar. We are referred to the case of Lake v. Tysen, 6 N. Y. 463, as authority for the position that, where nothing is alleged but the making and de*415livery of the note, then the presumption to be indulged in is that it was given for an existing or past indebtedness. It is true that in the course of the opinion this language occurs:
“The referee held, among other things, that the giving of the note by the appellant to the respondent was presumptive evidence that all prior claims between the parties .were settled. * * * The giving of a promissory note is prima facie evidence of an accounting and soltiomcnt of all demands between the parties, and that the maker was indebted to the payee upon such settlement to the amount of the note.”
This language, however, is to be considered in connection with the question before the court, which was whether, where two persons have each claims against the other, and one finally gives a note, the giving thereof is presumptive evidence of a settlement of the accounts. Where such a question is presented, it is undoubted law, as held in that case, that the giving of such note is prima facie evidence of settlement of demands between the parties, and that all prior claims between them were settled. It does not, however, go to the extent of holding, nor is it authority for the position, that, in an action upon a promissory note, it is to be presumed that such note was given for a past or existing indebtedness. We think it is unnecessary to indulge in any presumption, because the complaint must be construed according to the language used; and, under the rule which requires that every inference will be indulged in to support, rather than to overthrow, a pleading, we should hold, as the language used itself would import, that either the debt accrued at the time of the giving of the notes, or that, for value received, the club promised, according to the tenor of the notes, to pay at their maturity, which would result in no debt being created until the notes became due. We think, therefore, that the learned judge below was right in holding that where, upon the face of the complaint, it does not appear that the notes were given for a past or existing indebtedness, no presumption to that effect will be indulged in for the purpose of destroying the sufficiency of the pleading, but that it is a matter to be pleaded, if the facts warrant, as a defense. We think the defendants are equally in error in, contending that their liability is predicated upon the judgment, and not upon the notes, or the debts of which such notes are the evidence; and that, therefore, it was sufficient to allege, as was here done, that the defendants were trustees when the notes' were given, and an allegation that they were trustees when the judgment was obtained was unnecessary. Our conclusion, therefore, is that the judge was right in sustaining the demurrer to the various defenses set up in the answers of the defendants, but that there, was no reason for his adjudging that the first paragraph of the answer of defendants Carr and Hoyt was demurrable, a demurrer thereto not having been interposed, and that question not being before the court; that in this respect the judgment should be modified, but in all other respects affirmed, without costs to either party upon this appeal, and with leave to the defendants to amend their answers upon compliance with the conditions imposed by the interlocutory judgment. All concur.