« PreviousContinue »
the defendant is not a resident of the county. The County Court was established by the Constitution, and its jurisdiction expressly defined and declared in that instrument. The jurisdiction granted to that court excludes a cause in which a nonresident of the county is the defendant, or in which the amount claimed exceeds $2,000. And to guard against legislative interference with these two conditions and limitations of its jurisdiction, the Constitution provides that the Legislature may enlarge or restrict the jurisdiction of the County Court, provided it does not extend it so as to authorize an action therein for the recovery of money only in which the damages demanded exceed $2,000, or in which a person not a resident of the county is the defendant. Const. art. 6, § 14. Now, section 296 of the Municipal Court act is an attempt to give a justice of the Supreme Court at Special Term the power to say that in this case the plaintiff may recover $600, when the act says he cannot recover more than $500, and that the plaintiff, if he had so chosen-as he first did-might have had leave to sue the defendant, a foreign corporation not having an office in Kings county, for an unlimited amount in the County Court of that county, when the Constitution has declared that the Legislature shall not touch those two features of that court's jurisdiction. The Legislature could not delegate a power which it did not possess; nor, indeed, if it had the power, was it within its prerogative to delegate to one man, not even to a justice of the Supreme Court, authority which might be unwisely used, to the unintentional, though fatal, confusion of an important part of our judicial system and the inconvenience of the people. The attempt to do so is condemned by every principle of constitutional law and by every consideration of a wise expediency. Cooley on Constitutional Limitations (7th Ed.) c. 5, p. 163; Black's Constitutional Law, § 142 et seq.
For these reasons we hold that the jurisdiction of the Municipal Court in this case rests upon subdivisions 5 and 18 of section 1 of the act, and that they limit the recovery against the defendant here to $500.
The judgment is affirmed, with costs.
FREEDMAN, P. J., concurs.
GREENBAUM, J. (concurring). A study of the history of the origin and jurisdiction of the Municipal Courts shows that there never was a general money limitation affecting all kinds of actions in these courts. The Legislature has from time to time specifically conferred jurisdiction in certain kinds of actions and proceedings, some with definite money limitations and others without such limitations. Sections 2862, 2863, Code Civ. Proc. 1901; Charter 1897 (Laws 1897, p. 485, C. 378, § 1364 et seq.); Consol. Act (Laws 1882, p. I, C. 410, § 1284 et seq.); and the earlier laws upon which the foregoing were based. The provision of the Municipal Court act conferring jurisdiction in actions "upon the bond of a marshal of the city of New York as prescribed in this act” (subdivision 5, § 1) originated in the Laws of 1862, p. 971, c. 484, § 5, which provided that no marshal thereafter appointed or elected should be permitted to enter upon the duties of his office until he shall execute a bond in the penal sum of and 120 New York State Reporter $1,000 to answer the mayor, aldermen, and commonalty of the city of New York and any parties that may complain. Sections 6 and 7 of that act provided for the prosecution of the bond in the name of the party aggrieved in the District Court in much the same manner as now provided by sections 295 and 296 of the Municipal Court act. No money limitation in such action was prescribed, and, in view of the amount of the bond required, the intent of the Legislature is plain that the bond should be prosecuted in any sum to the limit thereof in the District Court. The law with reference to marshals' bonds and their prosecution has remained substantially unchanged since 1862. The evidently deliberate omission of any money limitation in this class of actions and in certain other kinds of actions, such as those described in subdivision 6 and 9 of section 1 of the Municipal Court act, and the express reiteration of the $500 money limitation found in the several subdivisions of the act under section 1, plainly indicate that the Legislature intended no such limitation in an action upon a marshal's bond upon compliance with the legal requirements "prescribed" in that act. Inasmuch as the amount of the marshal's bond was fixed by law at $1,000, an action thereupon could not exceed that sum, and the provisions of the Constitution limiting the jurisdiction of inferior local courts to $2,000, the limit imposed upon County Courts, would not be violated Article 6, § 18, of New York State Constitution; Worthington v.:The London Guarantee & Accident Co., 164 N. Y. 81, 58 N. E. 102.
The next question is: Did the Legislature intend to discriminate between private individuals and corporations in actions upon such bonds, where the amount claimed exceeds $500? Subdivision 18 of section i of the New York Municipal Court act provides that the jurisdiction of the court “extends to actions against the city, a domestic corporation, or foreign corporation having an office in the city, and an administrator or executor as such, where the amount claimed does not exceed five hundred dollars." The language of subdivision 18 expresses a limitation to the extent of $500 in all actions mentioned in the other subdivisions of the jurisdictional section of this act. An examination of the sources of said subdivision 18 may throw light on the subject. Section 1284 of the consolidation act contained a special subdivision similar to that found in the present Municipal Court act extending jurisdiction to corporations in actions "where the sum claimed does not exceed two hundred and fifty dollars." On the other hand, under the Greater New York Charters (1897 and 1901) jurisdiction was conferred upon the Municipal Courts against domestic corporations and foreign corporations having an office in this city generally and without the express money limitations as stated in subdivision 18, § 1, of the Municipal Court act. Such actions could therefore as well have been maintained in a sum exceeding $500 ágainst a domestic corporation or a foreign one with an office here as against an individual up to the time the Municipal Court act went into effect. There is no apparent reason for the peculiar and anomalous situation which discriminates in favor of corporations on marshals' bonds; particularly when it is a matter of common knowledge that many corporations are specially engaged in the business of
executing such bonds. The only reasonable explanation that can be given for the peculiar condition pointed out is that it is the result more of an unfortunate and unsuccessful attempt to gather into one subdivision the parties over which the court should have jurisdiction than of any desire to discriminate between parties defendant in the various actions. If it were possible to resort to any reasonable construction which would prevent an unreasonable discrimination between classes of parties to the same kind of an action, this should be done. It is not the province of the courts to enact legislation, and, where the plain meaning of the words would have to be distorted to effectuate a result, the courts cannot deliberately ignore the language of the statutes, but are obliged to give effect to the only meaning of which the words, however unhappily expressed or placed, are capable.
The learned counsel for the appellant urges that the limitation of $500 should be construed as applicable to the case of “executors and administrators” only, because they are immediately and closely followed in subdivision 18 by the words, "where the amount claimed does not exceed five hundred dollars.” Such a contention would be arbitrary, and not permissible, particularly as we find that subdivision 13 of section 1285 of the consolidation act, which extended jurisdiction against corporations, contains no reference to "executors and administrators," and in language quite analogous to that employed in subdivision 18, § 1, of the Municipal Court act, limited the jurisdiction to actions where the amount claimed “does not exceed two hundred and fifty dollars."
Nor is there force in the application of the rule of construction, also urged by appellant, that, "where there is an irreconcilable conflict between the different parts of the same act, the last in order of position must control," because there is not only no irreconcilable conflict, albeit an unfortunate and discriminatory result is effected, but sections 293 and 296 of the Municipal Court act, which treat of the procedure to be taken before commencing an action upon a marshal's bond, although subsequent in position to subdivision 18, § 1, are in effect referred to in subdivision 5, § 1, by the words "as prescribed in this act," and are thus made to precede subdivision 18 of said section 1.
The conclusion is reluctantly arrived at that no jurisdiction is conferred against a corporation in any action where the amount claimed exceeds $500, and the judgment must be affirmed.
MULHERAN v. GEBHARDT et al.
(Supreme Court, Appellate Division, Fourth Department. March 8, 1904.) 1. CORPOBATIONS-DIRECTORS AND OFFICERS-MISCONDUCT--ACTION BY STOCK
Where a suit was brought by a stockholder, on behalf of a corporation, against the corporation, its officers and directors, for an alleged fraudulent and illegal conversion of certain of its stock and money, to recover the same for the benefit of the corporation, but the complaint failed to allege that defendant G., who was a director at the time the suit was brought, and 120 New York State Reporter had any connection with such fraudulent conversion, etc., and he did not become a director until long after the conversion had been consummated, the complaint was demurrable as to him, since the mere fact that he was
a director did not make him a necessary party to the action. Appeal from Special Term.
Action by Bernard Mulheran against John Gebhardt and others. From an interlocutory judgment overruling a demurrer, defendant Gebhardt appeals. Reversed.
Argued before McLENNAN, P. J., and SPRING, WILLIAMS, HISCOCK, and STOVER, JJ.
White, Cheney & Shinaman, for appellant.
STOVER, J. The plaintiff alleges: That certain defendants other than Gebhardt entered into a combination of persons engaged in the ice business, that these defendants acted as promoters of the stock, that options for various ice plants were procured by the defendant Bartels, and that on December 1, 1898, an agreement between the defendants other than Gebhardt was consummated, and they became associated in the transaction. That all of the defendants continued to be associated together, except the defendant Sawmiller, a director of the company, who was succeeded in the office of director on or about March 12, 1900, by the defendant Gebhardt, and that prior to March 12, 1900, the defendant Gebhardt had no connection with the transaction or the defendants named therein. That during the month of December, 1898, and after the agreement was entered into, a further agreement was entered into between the plaintiff and the defendants, other than Gebhardt, to sell to Bartels certain real estate and personal property in Onondaga county. That, in pursuance of the agreement, the various people engaged in the ice business delivered options to Bartels on or about January 31, 1899. That, by virtue of said agreement, the defendants, other than the defendant Gebhardt, were to act as the promoters of said company, and in the interest of all persons delivering options to Bartels. That a corpora
. tion was then organized, and the property of the plaintiff and others obtained, plaintiff agreeing that he would not go into the ice business for a period of 10 years. That plaintiff was to receive $8,000 for his property, under the agreement. That plaintiff received one-third of the value of his property in cash, one-third in preferred stock of the company, and the remaining one-third in the common stock of the company, in accordance with the agreement. That the company was capitalized at $300,000, in 3,000 shares of $100 each. It was alleged: That after the incorporation of the company 1,700 shares of the capital stock of the company were delivered to plaintiff and other subscribers in payment of two-thirds of the purchase price of the property transferred to said Bartels, but that said Bartels retained and held for himself and the other defendants hereinbefore named," being the defendants other than Gebhardt, 1,300 shares of the capital stock of said company, and that said stock is still retained and held by said persons. That Bartels thereafter received deeds of the vari
ous properties, and that bonds were issued by the corporation. Plaintiff alleges: That he was ignorant of the fact that all of the capital stock of the company was to be issued to the defendant Bartels, and was also ignorant of the fact that 1,300 shares of the capital stock were to be retained by said Bartels, and was also ignorant of the fact that, instead of disposing of the said 1,300 shares of the capital stock of said company and using the proceeds thereof to pay the one-third purchase price of the various pieces of property, before mentioned as having been purchased by said company for one-third of the purchase price in cash, said company would issue its bonds therefor. That said Bartels and the other defendants had fraudulently concealed such knowledge from the plaintiff, with the intent to defraud the plaintiff, “and falsely and wrongfully, and with the intention to defraud and cheat plaintiff, obtained the issue of the whole of said 3,000 shares of stock to the said Bartels in pretended payment of said properties as aforesaid." That the said defendants Bartels, Listman, and Shinaman have obtained for themselves, and at the expense of the plaintiff and other original stockholders, and without consideration, the amount of 1,300 shares of stock, which stock, or the proceeds thereof, the said Bartels, Listman, and Shinaman, or their assigns, now retain and hold. That, by reason of the control of said 1,300 shares of stock, the said Listman, and other defendants named as directors and trustees of said People's Ice Company, are in position to control, and do control, a majority of the stock of the defendant company, and have controlled, and do now control, the election of trustees and directors and all other officers. That plaintiff had demanded of the officers and directors of said corporation that an action be brought by said company to recover the proceeds of said 1,300 shares of stock issued without consideration, and that it has been refused. Plaintiff alleges that the corporation refused to bring the action against the defendants for the conversion of the stock, and therefore the corporation is made a party.
It will be seen that the only allegation against the d 'endant Gebhardt is that on March 12, 1900, he succeeded Ignatius Sawmiller as a director of said company, the allegation further being, in paragraph 7 of the complaint, “and prior to the said March 12, 1900, the defendant John Gebhardt had no connection with said transaction or with the defendants above named therein, as plaintiff is informed and believes.” There is no other allegation in the complaint in any way connecting Gebhardt with the transactions of the defendant. Summarized, the complaint sets forth a cause of action against certain persons who, by reason of false representation or illegal means of some kind, have obtained certificates of stock to the amount of $130,000, which belonged to the corporation defendant. The plaintiff, being a stockholder, has made his demand upon the directors to commence the action, and upon their refusal brings the action, making the corporation a defendant. The action, therefore, is one to enforce a right of the corporation, and the recovery, if any, must inure to the benefit of the corporation. The wrong done is to the corporation, namely, that $130,000 of its stock, which should represent cash turned into its treasury, has been converted to the use of the individuals.