76 N.Y.S. 143 | N.Y. App. Div. | 1902
This appeal is from a judgment dismissing the complaint entered on a verdict directed by the court. There is little or no dispute as to the material facts involved. The complaint alleges, and the evidence adduced upon the trial establishes, that the Commercial Alliance Insurance Company was incorporated in 1888 under the statutes of the State of New York, and that immediately following its incor
At the close of the trial each party moved for the direction of a verdict. The motions were denied and thereupon the counsel for the plaintiff asked that the issues of fact be submitted to the jury, which request was granted, the court, however, refusing (notwithstanding it was requested so to do by defendant’s counsel) to state to the jury the issues submitted. The jury were unable to agree upon a verdict and were by consent of all the parties discharged, after which the court directed a verdict for the defendants, to which an exception was taken by the plaintiff;
Before considering the merits involved in the appeal it may not be out of place to call attention to the fact that the practice pursued, so far as the same relates to or is involved in the direction of the verdict, was not only irregular, but was entirely unauthorized. A verdict contemplates, and necessarily involves, the presence of both court and a jury, and whenever it is directed it is absolutely necessary that both be present. There can, from the very nature of things, be no such thing as a verdict directed unless both the court and jury are present, because in such verdict there is involved an order by the court and an execution of the same by the jury. Once a jury has been discharged, the court has no power to direct a verdict, because there is not only no one to direct, but no one to execute the direction. Therefore, the exception taken to the direction in this case would, in and of itself, necessitate a reversal of the judgment appealed from, were it not for the fact that it was conceded upon the argument before us that the objection made and exception taken were not directed to the practice adopted; and in connection with this concession, a request was made on the part of counsel for both of the parties that the error be overlooked and the case decided upon the merits.
Passing, then, from this question to the merits, we are of the opinion that the judgment must be reversed. As already indicated, there is little or no conflict as to the facts. Upon the facts as hereinbefore stated, the real question is, whether the directors of an insurance company can take its property and assets and give them
Nor is the fact that they acted in good faith of the slightest importance or any excuse for what they did. It may be conceded, and it is undoubtedly true, that what the defendants did was done in good faith upon the supposition that their acts would ultimately turn out for the best interests of the Commercial Company. It is not difficult to see the object sought to be accomplished by the transaction. It was the destruction of the Maine and New Brunswick company, upon the supposition that, when destruction had finally taken place, out of its ruins would come disappointed policyholders, the majority of whom would be glad to surrender policies in that company and take new ones in the Commercial Company, for which the Commercial Company would receive the premiums, which would largely increase both its business and assets. But the directors, as indicated, had no power to use the funds of the Commercial Company for this purpose, and the courts, so far as we have been able to discover, never yet have sanctioned, but, on the contrary, have always condemned, this method of acquiring business. Once judicial sanction is given to it, it is not difficult to see how the funds of an insurance company might be used in a stock speculation, a mining scheme, or lost in many other ways which might be suggested. Good business methods forbid it, and the statutes of the State prohibit it.
But it is urged that the defendants cannot be held liable, since the release of the surviving incorporators of the Maine Company by the payment of $25,000 released them. This suggestion is based upon the assumption that the defendants and the incorporators of the Maine Company were joint tort feasors and, therefore, the release of one constituted the release of all. But they were not joint .tort feasors. The incorporators of the Maine Company had a right to resign their offices, if they so desired. The property of that corporation was not by that act either destroyed or injured to any extent. The presumption was that the persons who took their places would discharge their duties according to law and manage
Nor did the release given by the Commercial Company to the defendant Miller release the other defendants. No authority whatever was shown on the part of the officers of the Commercial Company, who executed the release, to do so. It is true Miller testified that he had a litigation with the Commercial Company, which was settled by-the payment to him of the sum of $8,000, and upon such settlement mutual releases were exchanged. But it must be borne in mind that he was at that time a director of the Commercial Company, and his resignation was contemporaneous with his release. The release is general in form, was executed by Dunham, the president, and Whitehead, the assistant secretary. One of the by-laws of the Commercial Company provided that “ no deed, instrument or contract of any description, excepting as provided in Article X, Section 2, purporting to have been made on behalf of the company,, and excepting in relation to the ordinary routine of the business of the company shall be valid unless authorized by the board of directors or the executive committee.” There is no evidence, whatever, nor is there a suggestion in the record, that the board of directors or the executive committee ever authorized the execution of this release. Nor do we think the board of directors or executive committee would have had the power, had they attempted to exercise it, to release Miller. By his act, in connection with others, the property pi the corporation had been wasted, and no act could have been done which would have released him or the others, except the restoration of the property to the corporation or it had been made good for the loss which it had sustained. If he could be relieved from, liability in
At the close of the trial, therefore, the fact was uncontradicted that the defendants, as the directors of the Oommercial Alliance Life Insurance Company, had unlawfully used, to the damage of the stockholders and creditors of that company, $35,000; that only $25,000 had been recovered, and they were, therefore, in law, liable for the difference, together with interest thereon, and a verdict should have been directed against them for that sum.
The judgment appealed from, therefore, must be reversed, and a new trial ordered, with costs to the appellant to abide the event of the action.
Yan Brunt, P. J., O’Brien, Ingraham and Hatch, JJ., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.