In Re One of the Two Trustees of the Peekamose Fishing Club

| NY | Jan 26, 1897

There are four orders of the first Appellate Division presented for review on this appeal:

First. An order which dismissed an appeal taken by Whiton and Dimock from an order of the Special Term dated Oct. 25, 1895, as resettled Nov. 6, 1895, dissolving the corporation, the dismissal proceeding on the ground that the order of dissolution was entered upon default of the appellants and that they, therefore, had no right to appeal.

Second. An order dated May 15, 1896, which affirmed an order of the Special Term, which denied a motion made by Whiton to open his default on the motion in which the order of dissolution was made.

Third. An order which affirmed an order of the Special Term, entered July 6, 1896, denying a motion made by Dimock and Howard to vacate the order of Oct. 25, 1895, dissolving the corporation.

Fourth. An order which affirmed an order of the Special Term, dated July 6, 1896, directing the receiver to sell the property of the corporation.

We have examined with care the record and have reached the conclusion that if the Special Term had jurisdiction to make the order of Oct. 25, 1895, dissolving the corporation, the orders appealed from were correct. No serious question is made in respect to the regularity of the proceedings up to the time that order was made. The proceedings were instituted under section 2420 of the Code of Civil Procedure. The proper parties were brought in. Dimock and Whiton (the appellants) answered the petition. The matter was referred to a referee to hear the proofs and determine the facts and report to the court. The referee, on July 30, 1895, made and delivered his report to the petitioner, in which, while he found facts bearing upon the question of the number of existing trustees of the corporation when the proceeding was instituted, he did not determine the question whether the number exceeded two, but he did find that the petitioner Ward, and the appellant Dimock, trustees, disagreed and still disagree as to the management of the club. Before the report was filed or served, and on the 23rd of August, 1895, the appellant Whiton obtained an order requiring Ward, Dimock and Howard to show cause why the proceeding for dissolving the corporation should not be dismissed upon the ground that the report of the referee and the testimony had not been filed with all convenient speed, c. The motion came on to be heard August 27, 1895, and the report meanwhile having been filed, the motion was denied. On the same day Whiton and Dimock separately filed exceptions to the report. Three days afterwards, on the 30th day of August, 1895, Whiton obtained another order, entitled in the proceedings, founded on the affidavit of his attorney, the original petition and all the subsequent papers in the proceeding, including the referee's report and the testimony taken by him, and the exceptions to the report, requiring the petitioner Ward and Dimock and Howard to show cause at a Special Term on Sept. 6, 1895, "why a final hearing should not be had and a final order should not be made herein, dismissing this proceeding and denying the prayer of the petitioner for a dissolution of the above-named corporation, or for such other or further relief in the premises as the court may deem equitable and just." The order reciting the papers on which it was founded was duly served on Ward, Dimock and Howard and on the attorney-general (together with a copy of the order proposed by Whiton). On the return day of the order all the parties appeared by counsel. The hearing was adjourned on motion of Ward's attorneys until the second Monday of October. On the adjourned day all the parties again appeared, Whiton by his counsel, Dimock and Howard by their counsel, and Ward by his counsel. On the application of the counsel for Dimock and Howard the hearing was again adjourned until the 23rd of October, 1895. On the 23rd of October the petitioner Ward appeared by his counsel, and Dimock and Howard appeared by counsel, and requested a further postponement, which was denied, and their counsel then withdrew. Whiton did not appear on that day. The counsel for the petitioner Ward (the counsel for the other parties not being present) thereupon submitted the matter to the court, and the court granted an order confirming the report of the referee and for the dissolution of the corporation.

It is insisted that the order of the Special Term was without jurisdiction and void, for the reason that the only order it was authorized to make upon the default of Whiton, who made the motion, was an order dismissing his application, and that it could not proceed to make a final order dissolving the corporation, the exact opposite of the relief sought by Whiton. On the other hand, it is claimed, in behalf of the petitioner, that under the circumstances disclosed, the whole matter was before the court, and that the petitioner was in the same position, and the court possessed the same power as if the motion had been brought on on due notice by the petitioner of an application for the confirmation of the report of the referee and an order dissolving the corporation. Under section 2428 of the Code the application for a final order in a proceeding of this character is to be made by the petitioner. The section does not in terms so declare, but we think this is implied in what is expressed. The motion is to be made upon notice to each person who has made himself "a party to the proceeding" by filing a notice of his appearance, etc. It is also in accordance with the general rule that the party who institutes a proceeding is the one to apply for the relief sought. But where in a proceeding to dissolve a corporation the petitioner, after a referee has been appointed, neglects or refuses to proceed, we have no doubt that it is competent for the court on special application of any person interested, to direct the petitioner to move, so that the interests of all may be protected. So, also, we see no reason to doubt that if all the parties appear before the court for the purpose of procuring a final order, the court would be authorized to dispose of the matter, although no formal notice had been given by the petitioner. What was done in this case, taking as we are bound to do, for the purpose of upholding the order of Oct. 25, 1895, the facts most favorable to the respondent was, at least, equivalent to a voluntary appearance by Whiton, Dimock and Howard, and a consent that on the motion of Whiton the court should determine the merits of the controversy and make a final order in the premises. In the first place the order to show cause of August 30, 1895, construed in connection with the papers on which it was founded, indicates that it was intended to bring the whole matter before the court for final adjudication, and was not a mere motion to obtain a dismissal of the proceeding for want of prosecution. The affidavit presented to the court on the application for the order set out the proceedings which had been taken, the making of the referee's report, its delivery to the petitioner, the filing of exceptions, that the petitioner had omitted to serve any notice for a final order and that his delay was causing injury to the parties interested, and it is declared that the affiant believes that the referee's report, "notwithstanding that it was delivered to the petitioner, is in effect a decision in favor of the respondent herein." Upon this affidavit and the papers and proceedings in the matter, the applicant obtained the order to show cause in the terms heretofore stated. It is quite clear, we think, that a final order on the merits was contemplated as the result of the motion.

The counsel for Whiton claimed and now claims that the legal inference from the facts found by the referee is that there were more than two legal trustees of the corporation when the proceeding was instituted, which if true would defeat the proceeding and require its dismissal. We concur in the statement of the General Term, that the true view of Whiton's application is that it was an application for a final order in this special proceeding, and that, although the final order he demanded was one dismissing the proceeding, it was none the less an application for a final hearing of the special proceeding. When the parties appeared on the return of the order, not only was no objection made to the scope of the relief asked, but as appears from the proofs on the part of the petitioner on one of the adjournments, the question was directly raised before the judge, and he decided that the whole matter was before him as an application for a final order, and all the parties, including Dimock and Whiton, acquiesced in this view and the matter was adjourned to the 23rd of October for a final hearing. The whole matter was by the acts and conduct of the parties in possession of the court, and the court, we think, acquired jurisdiction to proceed on the adjourned day, as upon notice formally given by the petitioner to all the parties in interest, of an application for a final order.

The objection founded upon the omission to give formal notice to the attorney-general is without merit. He was served with the motion papers on the order to show cause of August 30, 1895, and of Whiton's proposed order. On the 23rd day of October, 1895, he admitted in writing due and timely service of the proposed order dissolving the corporation and of notice of settlement. This was a sufficient compliance with section 8, chap. 378 of the Laws of 1883. The object of that section was attained by what was done, and there is no reason for denying the attorney-general the power to accept short notice of proceedings referred to in the statute. The result is that the order of dissolution of October 23rd, 1895, was as against Dimock, Whiton and Howard an order obtained upon default, from which they could not appeal. (Code, sec. 1294.) The order made on Whiton's motion to open his default was in the discretion of the courts below, from which no appeal lies to this court. The order denying Whiton and Dimock's motion to vacate the order of Oct. 25, 1895, was also addressed to the discretion of the court, and, no abuse of discretion appearing, is final in this court. The order instructing the receiver as to the sale of the property of the corporation was an ordinary exercise of the jurisdiction of the court and cannot be reviewed here.

The four appeals are, therefore, dismissed, with costs against the respective appellants in favor of the petitioner.

All concur, except BARTLETT, MARTIN and VANN, JJ., dissenting.

Appeals dismissed.