97 N.Y.S. 473 | N.Y. App. Div. | 1906
Plaintiff brings this action against the defendant to charge him with an alleged debt of the Universal Lasting Machine Company, a domestic stock corporation, on the ground that the corporation did not" in the year 1897, or in the month of January, 1898, file .the annual report as to its financial condition required by section 30. of chapter 688 of the Laws of 1892, and that he himself, as director of such corporation, did not during the year 1897 or within thirty days from the 1st day of Fébruary, 1898, file the statement permitted by such section, exonerating himself from liability because of such failure. - v
Plaintiff’s assignor, one Harvey M. Munsell, in tlie year 1889 entered into a contract with the Universal Lasting Machine Com
During the years from 1889 to the spring of 1896 very many interviews were had between Hunsell and Englehorn, the president of the corporation, in. which the president expressed great hope .for the ultimate success of the experiments and the machine, and from which it would appear that Hunsell was reasonably resigned to' the long delay; and, indeed, counsel for the respondent admits by his points that the tirne of performance of the contract was extended by Hunsell at least .to April, 1896. At this time a new president of the corporation was elected and the defendant was made one of the directors and continued to act as such until March 28, 1898, when the corporation made a general assignment for the benefit of its creditors. The retiring president assured Hunsell that the incoming president would look after his interests as carefully as he himself, had done, and that-he need have no fear that he would not be taken care of as well as the circumstances would permit. In the
The patents were not assigned, the machine was neither com-pleted nor delivered, nor was the money paid. In September, 1899, Munsell assigned to the plaintiff all his rights under the contract and claims against any persons thereunder.. Thereafter the plaintiff notified the defendant that he proposed to hold him liable because of his directorship and the failure of the company to file an annual report in the years 1897 and 1898, particularly for the consideration paid, because there had been a “ breach ” of the contract by the corporation. Thereupon plaintiff brought this action, and in his complaint, in addition to setting forth the incorporation of the company, directorship of the defendant, failure to file the reports, entering into the contract, payment of -the $4,000' assignment to himself, demand upon defendant to pay, alleged specifically that Munsell was at all times ready and willing to perform, and offered to and did perform his part of such contract, but that the corporation, by the making of a general assignment for the benefit of its creditors, incapacitated itself to perform and did not perform, but “ wholly failed and neglectéd to do so, whereby said Harvey M. Munsell was damaged in the sum of four thousand dollars ($4,000), for which said corporation became indebted to him,” and judgment was demanded for such sum, with interest from the 28th of March, 1898, the date of the general assignment for the benefit of creditors.
Both parties concede, as they manifestly must, that in order to charge a director with a debt of the corporation, three elements must exist, directorship, failure to make and file the report, and a debt against the corporation existing at some period of the directorship and at the time of the failure. (Rector, etc., of Trinity Church v. Vanderbilt, 98 N. Y. 170, 173.) It is. also conceded by the respondent that the “ debt” must be one existing,in fact, and that a. director cannot be held liable for unliquidated damages arising
Without any amendment of his complaint, or request to amend, and against the earnest and repeated protest of the defendant by seasonable and proper motion, the plaintiff' was permitted to recover upon the theory that in June, 1897, Munsell rescinded his contract with the corporation and demanded repayment of the $4,000 which lie had paid thereon, knd that, hence, at that time a debt in assumpsit arose against the corporation, which the defendant became liable to pay, because in the January following the corporation filed no annual report, and because lie himself filed no report which would exonerate him'from such failure. /
It seems very plain that tiie complaint is framed not upon rescission of the contract, but upon its breach. The plain allegation is that Munsell was at all times ready and willing to perform, but that the corporation by making the general assignment for the benefit of its creditqrs, incapacitated itself from performance and - thereby broke its contract. That the damages asked are confined to the consideration paid does not remedy the difficulty. . The consideration paid may have represented the largest and the only damages flowing from a breach, for-the contract may have been of no valiie.
The plaintiff alleged a cause of action arising out of a breach of his assignor’s contract with the corporation, for which the defendant as director was not liable. He was permitted to prove and recover upon a wholly different cause of action, without amendment asked or allowed and against seasonable objection by the defendant. Under such circumstances the pleadings cannot be conformed to the proof, even though defendant was probably not misled. (Southwick v. First National Bank of Memphis, 84 N. Y. 420 ; Reed v. McConnell, 133 id. 426 ; Davis v. Broadalbin Knitting Co., 90 App. Div. 567.)
If plaintiff’s complaint be interpreted as one in rescission, because the corporation had made itself incapable, of performing the contract by its general assignment for the benefit of its creditors, still the plaintiff could not recover from the defendant on that ground,
The judgment and order- should be reversed and a, new trial granted, with costs.to the appellant to abide the event.
O’Brien,'P. J., Ingraham, McLaughlin and Laugiilin, JJ., concurred.
Judgment, and order reversed, new trial ordered, costs to appellant to abide event.