Court Opinion

ID: 3632510
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:11:37.434683+00
Date Added: 2024-06-11T13:43:21.075981
License: Public Domain

The learned trial judge, after finding the facts in detail, found as a conclusion of law as follows: "There is no evidence in this action of a public grievance, and the people, having no interest in the subject-matter of the action, or in any of the acts herein complained of, cannot maintain this action."
It is clear from the complaint and from the detailed findings of fact, that the grievance sought to be redressed is a private and not a public one. It is equally clear that the people have no interest in the subject-matter of the action, or in any of the acts complained of, except in the sense that the people, as a body politic, always have an interest in promoting obedience to the laws and the performance of legal duties and obligations. But this public interest is the political and moral one attaching to sovereignty, and is widely differenced from a private and special interest in particular things. The conclusion of the learned trial judge, that the people as a body politic cannot *Page 298 
maintain this action, would seem to follow as the necessary result of the absence both of a public grievance and of a private and special interest. A suitor, who has no substantial interest in the litigation he institutes, cannot be injured by the dismissal of his suit.
But the learned counsel for the appellants contend that the people can maintain this action, because, and only because, the language of the statute permits it. (Code of Civil Pro. §§ 1781, 1782, 1808, 1976.) The historical review of the law upon the subject is presented in the learned opinions of Judges PECKHAM and VANN in the case at bar, and in the opinion of Judge EARL inPeople v. Lowe (117 N.Y. 175, 190). This review shows that, but for the statute, the action in cases not affecting the public interests could not be maintained by the people without a relator. The question, therefore, is whether the statutes have removed this objection.
This review, I think, also clearly shows that the reasons moving to the enactment of the statutes enlarging the chancery power of supervision of corporations, and the intention of the statutes themselves, were the protection and promotion of interests public in their character. Chancellor KENT, in Atty.Genl. v. Utica Ins. Co. (2 Johns. Ch. 371), the case which led to the provisions of the Revised Statutes upon the subject, admitted that stockholders, aggrieved by the fraudulent breach of trust by the trustees, could resort to equity in default of an adequate remedy at law. They did not need the statutes for their protection.
Fully concurring in the views expressed by EARL, J., inPeople v. Lowe, I venture to add a few suggestions which seem to me to support the conclusion that in this case, under a reasonable construction of the statutes, the complaint was properly dismissed.
This corporation was created to conduct private business, and it conducted no other. Some of the stockholders seem to have conceived that by reason of the management of the trustees, not strictly authorized by the letter of the law, a technical cause of action accrued against them in favor of such *Page 299 
stockholders. The findings of fact by the learned trial judge are to the effect that the action of the trustees was beneficial to all the stockholders. It is not denied that the laws afford ample remedies to these stockholders, or any of them, for whatever relief they can prove themselves entitled to. Under such circumstances, why should the government, without a responsible relator, champion one side of this strictly private controversy, and oppress the other by the weight of its influence and power? Is it reasonable to suppose that the legislature, by the statutes in question, intended to authorize such governmental intervention? Does not a sound public policy require that whatever exclusively pertains to individual interest should be left to the individual? That the state should provide and care for the general interests, and for those which are beyond the reach of the individual? Is it not true that to the extent that such individual can, with safety to all the rest, be permitted freedom to manage his own affairs, governmental intervention is both unnecessary and inexpedient? Is not governmental paternalism to be cautiously guarded, lest it subvert the just rights and liberties of the individual?
Is there any good reason why the individual should call upon the sovereign for help, when the sovereign has afforded him ample methods and liberty to help himself?
I concede that it is within the legislative power, in the absence of constitutional restriction, to provide for governmental intervention in private affairs; and also that cases exist in which private affairs are so connected with the public interests that the government may wisely interfere and regulate them. It may also be conceded that the tendency of the cruder efforts at legislation is to enlarge the field of governmental intervention so as to embrace many subjects which it were better to leave to individual control.
Bearing these suggestions in mind, it is submitted that, in the construction of the statutes in question, it is reasonable to presume, in the absence of controlling language to the contrary, that the legislature did not intend to extend the direct and voluntary intervention of the government to the championship *Page 300 
of the cause of one party against the other in a strictly private controversy over their respective interests as affected by the management of a private corporate enterprise.
The statutes are as follows (Code of Civ. Pro. § 1781): "An action may be maintained against one or more trustees, directors, managers, or other officers of a corporation, to procure a judgment for the following purposes, or so much thereof as the case requires: `1. Compelling the defendants to account for their official misconduct in the management and disposition of the funds and property committed to their charge. 2. Compelling them to pay to the corporation which they represent, or to its creditors, any money, and the value of any property which they have acquired to themselves, or transferred to others, or lostor wasted by a violation of their duties. * * *
"`4. Removing a defendant from his office upon proof or conviction of misconduct and directing a new election to be held by the body or board duly authorized to hold the same, in order to supply the vacancy created by the removal; or where there is no such body or board, or where all the members thereof are removed, directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies.'"
§ 1782. "An action may be brought, as prescribed in the last section, by the attorney-general in behalf of the people of the state; or except where the action is brought for the purposes specified in subdivisions third or fourth of that section, by a creditor of the corporation, or by a trustee, director, manager, or other officer of the corporation, having a general superintendence of its concerns."
§ 1808. "Where the attorney-general has good reason to believe that an action can be maintained in behalf of the people of the state, as prescribed in article second, third or fourth of this title, except section 1797 of this act, he must bring an action accordingly, or apply to a competent court for leave to bring an action as the case requires, if in his opinion the public interests require that an action should be brought. *Page 301 
In a case where the action can be brought only by the attorney-general in behalf of the people, if a creditor, stockholder, director or trustee of the corporation applies to the attorney-general for that purpose and furnishes the security required by law, the attorney-general must bring the action or apply for leave to bring it, if he has good reason to believe that it can be maintained. Where such an application is made, section 1986 of this act applies thereto, and to the action brought in pursuance thereof."
§ 1986. "Where an action is brought by the attorney-general, as prescribed in this title on the relation or information of a person having an interest in the question, the complaint must allege, and the title of the action must show, that the action is brought upon the relation of that person. In such a case, the attorney-general must, as a condition of bringing the action, require the relator to give satisfactory security to indemnify the people against the costs and expenses thereof. Where security is so given, the attorney-general is entitled to compensation for his services, to be paid by the relator in like manner as the attorney and counsel for a private person."
I think the sections in question authorized the attorney-general to bring this action; that is to say, the people as a body politic or corporate, having a capacity to sue, authority was thereby conferred upon the attorney-general to make them a party plaintiff in this action, if, as was no doubt the case, in his opinion the public interests required the action to be brought.
But this amounts to nothing more than that the people may rightfully claim their day in court upon the alleged cause of action they present.
It is for the court to decide whether they present and establish a good cause of action. Section 1808 clearly implies that the attorney-general may not thus bring the action unless in his opinion the public interests do require it. If the legislature did not intend that the action should be brought unless in the opinion of the attorney-general the public interests should require it, it is clear that they did not intend that it *Page 302 
should be sustained except in furtherance of the same interests.
Evidence tending to show such interests thus becomes essential to a recovery. It will not be contended that the opinion of the attorney-general is of any further force than to show that he did not exceed his authority in using the name of the people as a party plaintiff.
If, in fact, the people have no public interests to promote by bringing the action, the mistaken opinion of the attorney-general to the contrary will not reverse the situation and cure the material defect. He can, in fact, have no opinion as to the public interests involved if there are none. It hence results that the sections in question may be construed to authorize a recovery in an action of this nature brought in the name of the people without a relator, where it appears or is established upon the trial that the public interests are thereby to be protected, or in some substantial way promoted, apart from the mere private relief to be awarded to individuals, and failing in this, that the action fails.
In People v. Lowe, EARL, J., said that municipal, religious and eleemosynary corporations "which are public and discharge functions which might otherwise devolve upon the government" may become subject to chancery visitation. If, for instance, the trustees of an incorporated charitable institution, endowed by benevolent persons long since dead, should squander its funds, or divert them to purposes foreign to the charity, it might well be that if the state should not interpose no redress could be had.
The learned judge also suggested that quasi public corporations, like railroad, banking and insurance companies, might be subject, when the exigency should require it, to the like visitation. A life insurance company, holding millions for the benefit of policyholders, may be plundered by its trustees, or the rights of the policyholders jeopardized by unauthorized investments. The policyholders may have such an interest as would justify their intervention, but their interests in the aggregate rise to a quasi public character. *Page 303 
A corporation is vested with the franchise of supplying a city with pure and wholesome water, and has the means and facilities for the purpose, but its trustees misapply its funds and thus disable it from rendering the proper service. So, too, a strictly private corporation may, by the application of its funds to purposes not contemplated by its charter, create a public nuisance or establish a monopoly injurious to the public interests, or, as in the case cited from 2 Johns. Ch., which was present to the minds of the revisers, an insurance company may carry on the business of banking without the statutory regulations which safeguard the public interests in cases of banking corporations. In all such cases the direct interposition of the attorney-general may be necessary and proper. It is reasonable to suppose that the statutes were intended to enable that officer to seek the aid of the court in redressing the public grievances suggested, and others of similar character. It will still remain for the court to decide as to the sufficiency of the alleged cause of action. The contrast between the grievances suggested and the private ones in the case before us is obvious. The statutes can be given their proper remedial effect without resorting to a construction authorizing the attorney-general to intrude upon strictly private rights.
The statutes are framed to provide respectively the public remedy as it may be needed, and the private remedy upon the relation of the private suitor in cases where it may be properly extended. It is easy to avoid confounding the one with the other; and if it is true that the letter of the statute authorizes the attorney-general of his own motion to engross both remedies, such is not the intent of the statutes, and, therefore, not within their authorization.
The rule is well settled that statutes should receive a sensible construction, such as will effectuate the legislative intention, and avoid an unjust or absurd conclusion. This rule is strikingly illustrated and applied in the recent case of theHoly Trinity Church v. United States (143 U.S. 457). An act of congress made it unlawful for any person or corporation to *Page 304 
assist or encourage the migration of any alien or foreigner into the United States under any contract or agreement, made previous to such migration, that such alien or foreigner should perform "labor or service of any kind" in the United States. The Holy Trinity Church, a religious corporation, did first make a contract with an alien residing in England to migrate to New York and there enter its service as rector and pastor, and in pursuance of the contract the migration was accomplished and the service entered upon. The court conceded that the case was within the prohibition of the letter of the statute, but held that it was not within the intention, and, therefore, not within the statute itself. In our own courts, in cases of doubt, this rule of construction has often been resorted to, and not infrequently freedom of inclusion or exclusion of particular cases has been allowed in order that the intention may not wholly fail, or may not be perverted to unjust or absurd results. I cite a few of the many cases. (Tracy v. Troy  Boston R.R. Co., 38 N.Y. 433;Holmes v. Carley, 31 id. 289; Lake Shore, etc., R. Co. v.Roach, 80 id. 339; Burch v. Newbury, 10 id. 374; People
v. N.Y. Comrs. Taxes, 95 id. 554; People v. Lacombe,
99 id. 43; People v. Utica Ins. Co. 15 Johns. 358.) I think it ought to be applied in this case.
The fact that the removal of the trustees forms, at least nominally, part of the relief sought, does not of itself warrant a recovery. It should appear that the public interests require their removal.
Argument for making the people sole party plaintiff, deduced from the fact that the corporation is the creation of the government, would be applicable to an intervention upon public grounds. Power given for public purposes is abused when perverted by loaning it to individuals for strictly private purposes.
The language of the Code does not require us to presume that the legislature intended either the favoritism to one individual or the prejudice to the other, which such a loan of power implies, and, without explicit language to that effect, we may safely refrain from imputing such intention. *Page 305 
For these reasons, and especially for those stated in People
v. Lowe, I advise an affirmance of the judgment.
All concur with VANN, J., except BROWN and LANDON, JJ., dissenting.
Judgment reversed.