Court Opinion

ID: 3605074
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:50:48.372061+00
Date Added: 2024-06-11T13:58:40.430093
License: Public Domain

The judgment appealed from was rendered upon the report of a referee appointed on the application of the plaintiff and without the assent of the defendants, pursuant to the act entitled "An act to facilitate the closing up of insolvent and dissolved mutual insurance companies," passed April 21, 1862. (Sess. Laws, p. 743.) The defendants insist that the mode of trial contemplated by that act, and which was adopted in this case, was a violation of the constitutional provision declaring that "the trial by jury, in all cases in which it has been heretofore used, shall remain inviolate forever." (Art. 1, § 2.) Actions upon contracts for the payment of money were generally cognizable in the courts of common law, before the jurisdiction of law and equity was blended; and the trial of questions of fact arising in such actions was by jury, except in some special cases where, from peculiar circumstances, referees were allowed to take the place of a jury. An action on a promissory note must generally be tried by jury, if any issue of fact be joined in such action; and this was so whether the holder of the note was the original payee or had acquired his right to it by transfer, or by operation of law. But long before the adoption of the Constitution a practice had grown up of winding up and settling the affairs of insolvent estates and insolvent corporations, and of estates in the hands of trustees, by suits in equity; and another practice had, under legislative authority, prevailed to a considerable extent, of settling such estates by subjecting the demands in favor of or against them to adjudication by referees appointed by mutual consent, or if such consent could not be obtained, by an appointment of such referees on the application of one of the parties to a court or judge. For instance: the trustees of the estates of insolvent debtors, under any of the forms of insolvency regulated by statute, might apply to the officer who appointed them, or to any officer having a like authority, to appoint referees to adjudicate upon any controversy between *Page 152 
them, and any person who had a claim against the estate, or any person against whom they, as trustees, made a claim, and the referees were to possess the same powers as referees appointed in personal actions. (2 R.S., pp. 44, 45, §§ 19 to 25.) The estates of insolvent corporations were settled and the liabilities of the stockholders were enforced by summary proceedings, without a jury trial, as was explained in The matter of the Empire Bank
(18 N Y, 199.) In this class of cases, causes of action to which a jury trial was appropriate, and which, if unconnected with an insolvent estate, could not be constitutionally enforced in any other way, were subject to a summary mode of adjudication. The motive for this departure from the course of the common law doubtless was, the avoiding of a multiplicity of regular actions, and the policy of a speedy adjustment of transactions in which a large number of persons were interested. The present case does not fall within any of the particular provisions of this kind which had been enacted and were in existence before the formation of the Constitution. But the Constitution does not refer to particular cases, but to classes of cases. I am of opinion that statutes of the same general character and based upon the same motives of policy with those which have been mentioned, may be passed without a violation of the constitutional provision. In the case under consideration, there was a class of corporations which had or might become insolvent, of which there were many creditors, and many persons, namely, the premium note makers, occupying a position bearing some analogy to ordinary debtors, and a strong analogy to stockholders. They were liable to pay a proportion, or the whole amount of their deposit notes as the state of the indebtedness, and of the other assets, might require.
Existing laws had, prior to the act which is now challenged, and prior to the Constitution, authorized the appointment of a receiver of insolvent corporations, to take the assets into his hands, and enforce the liabilities of the parties bound to contribute. I am of opinion that the statute in question is inpari materia with those which have been mentioned; that it *Page 153 
was founded upon the same motives of policy, and was designed to produce a similar result, namely, a speedy and inexpensive liquidation of the affairs of the insolvent insurance company. Hence, it was a case in which the trial by jury had not been invariably in use before the adoption of the Constitution, and such a mode of trial was not, therefore, guaranteed by its provisions.
But I am of opinion that the plaintiff should have been required to give some evidence of the existence of losses, which rendered an assessment proper. The point was expressly taken by the defendants' counsel, "that there was no legal proof of the occurrence of any losses for which any assessment could be made, nor for which the said note was liable to contribute." The note is conceded not to have been given as a contribution to capital, like the notes required upon the formation of a mutual insurance company; but it is agreed that it was virtually an undertaking to pay a just proportion of all the losses which should occur during the time the maker remained an insured party, and a just proportion of the expenses. The act of 1852 (ch. 71) authorizes a receiver, under the sanction of the court, to make assessments, but does not declare their effect. The directors, while their duties continue, and the receiver, when he has, for some purposes, taken their place, are naturally cognizant of the demands which exist against the institution. They have in their hands all the deposit notes. It was the duty of the directors, and it is the duty of the receiver, under the act of 1852, to make an assessment, that is, a statement of the amount which each of the makers ought to pay towards the satisfaction of the debts. But neither of them, I think, have the power, by this ex parte
proceeding, to determine the amount of the debts and liabilities existing against the corporation. It would be, to say the least, very unusual for the legislature to make a provision, that a conditional contract, such as these premium notes are, could be established to be absolute as to the whole or part of the amount conditionally agreed to be paid, by a proceeding to which the person contracting was not a party, nor *Page 154 
entitled to be heard. In this case the only evidence of losses was the ex parte affidavit of the receiver, which was not competent evidence of the matter stated against the makers of the notes. I do not say that, upon the trial of an action on such a note, the plaintiff would be bound to show the existence of the several fires by which the several insured parties had sustained losses. Evidence which would have concluded the company while it was engaged in its proper business, or notice of a loss and its settlement and allowance, or a judgment recovered against the company would have been sufficient. But a mere list, made out by the receiver, though supported by his ex parte affidavit, is clearly insufficient. The 10th section of the Jefferson County Act, which was the pattern of many mutual companies, explains my idea of what was necessary to be proved. "The directors," it is there said, "after receiving notice of any loss or damage by fire, c., and ascertaining the same, or after the rendition of any judgment, c., against the company for loss or damage," are to "settle and determine the sums to be paid by the several members thereof as their respective proportion of such loss," c. This is what is meant by an assessment. (Laws 1836, ch. 61.)
The foregoing is substantially the view taken of the act of 1852 by the Supreme Court and by this court. (Thomas v.Whalen, 31 Barb., 172; Bangs v. Duckenfield, 18 N.Y., 592); and but for the circumstance I am about to state, I should think the judgment ought to be reversed upon this point. But it has been pointed out, on consultation, that a settled Case in a suit of the present plaintiffs against one Smith Shoemaker was produced on the trial, and that there is an agreement contained in the Case in the present action, that such former case should be made a part of the present one. That former case has not been printed or produced to us, and as it may contain the evidence which has been supposed to be wanting, I agree that the exception which assumes that there was no proof of losses cannot be sustained.
The judgment must, therefore, be affirmed.
All the judges concurring, Judgment affirmed. *Page 155