Franklin Fire Insurance v. Jenkins

| N.Y. Sup. Ct. | Aug 15, 1829

By the Court,

Sutherland, J.

The demurrer is well taken. ' The defendants, if liable at all upon the allegations contained in the declaration, are liable individually and severally, and not jointly, as directors. By the act of incorporation, (Statutes, vol. 4. c. 34,) the concerns of the company are to be managed by sixteen directors, and a major part is necessary to constitute a board, and to be competent to the transaction of the business of the corporation. The four defendants ‘ therefore were incapable of doing any corporate act, and could not jointly as directors have wasted and lost the monies, credits and effects of the plaintiffs, by their carelessness, negligence, and, corrupt and wilful mismanagement) in loaning the monies, &c. upon security, which they well knew to be inadequate and insufficient. The act of incorporation imposes no duties on the directors simply as individuals, but on a majority acting as a board. If any one or more of the directors improperly obtain and dispose of the funds or property of the company, they, are undoubtedly responsible; but responsible respectively, as individuals, and not jointly as directors.

The plaintiffs were bound to state with more particularity the acts of misconduct complained of. The first count of the declaration avers in general terms, that through the carelessness, negligence, corrupt and wilful mismanagement of the defendants, as directors, in loaning the monies, credits and effects of the company, upon securities which they at the time knew to be insufficient, the said funds were wasted, impaired and finally lost to the plaintiffs. The gist of this charge is, that the defendafits, as directors, loaned the funds of the company upon inadequate securities, knowing them to be inadequate, without any specification of time, persons or circumstances. It is impossible for the defendants to traverse the charge, or to enter on their defence with safety, without being prepared with testimony in relation to every loan in the maldng of which .they may have participated. The plaintiff is bound to allege all .the circumstances necessary for the support of this action, with such precision, certainty and clearness, that the defendant may know what he is called upon to answer, and be able to plead a direct and unequivocal plea. (1 Chitty’s Pl. 255.) The decíaEation ia this respect is entirely defective. In actions against common carriers, inn-keepers and bailees, a very general form of declaring is allowed; but the particular goods or artides lost are always set out in the declaration, and their delivery to the carrier or inn-keeper is averred ; and from such delivery their liability arises, if the goods are lost or destroyed, (2 Chitty’s Pl. 271 to 276, and notes,) unless they shew the loss to have arisen from the enemies of the state or the act of God. (1 T. R. 33. 7 Cowen, 500, note.) Here it is not alleged in either of the counts what the funds, credits and effects of the plaintiffs were, of which the defendants had the care and control; and in the second count there is no sort of specification of the want of care or negligence, or of the corrupt and wilful mismanagement by which the funds were impaired or lost by the defendants. Both the counts also contain two distinct charges, requiring separate and different answers, and leading to different issues. The grievances complained of, are alleged to have been committed in part by the want of care and attention, and also by the corrupt and wilful mismanagement of the defendants. These are very different allegations, and require distinct and different answers. On these grounds, the declaration appears to me to be bad.

Judgment for defendants on demurrer, with leave to plaintiffs to amend.