162 Misc. 238 | N.Y. Sup. Ct. | 1937
The action is for a declaratory judgment. On March 1, 1920, the plaintiff, with others, organized Comer & Pollack, Inc. (hereinafter referred to as the corporation), at which time there was issued to the plaintiff one-half of the capital stock. From the time of its formation and until February 13, 1924, the plaintiff acted as director, officer and employee. On the latter date, because of financial reverses in the business of the corporation, all of the capital stock was transferred to Alexander H. Geismar (now City Court justice) in trust, for the purpose of having him negotiate with the creditors of the corporation for an extension of time in which to pay off the corporate obligations. On February 16, 1924, Mr. Geismar (now City Court justice), as trustee, entered into an agreement with the corporation, its creditors and their trustees, which recited the corporation’s request for an extension of time in which to meet its obligations so as to permit a continuance of the business, and acquiescence in the said request by the creditors. Under the terms of the agreement all of the capital stock of the corporation was to be transferred to trustees appointed by the creditors and to be held by them “ in trust during the life
The defendants assert the Statute of Limitations as a defense. The defense is not available even though it be assumed that section 53 of the Civil Practice Act applies to an action for a declaratory judgment. The existence of an actual controversy is a necessary requisite to an action of this nature (James v. Alderton Dock Yards, 256 N. Y. 298) and it is not until the controversy occurs that the statute begins to run. It seems axiomatic that undisclosed conflicting claims between persons bearing a jural relationship do not constitute a controversy, for the word “ controversy ” implies conscious knowledge of its existence. From the claims now asserted by the parties the court assumes that the plaintiff never did suspect that the meaning which he assigned to the language of the contract did not conform to the understanding of the defendant trustees. He was advised of the conflicting interpretation when he made demands for the accounting. It was then that the cause of action accrued.
With respect to the meaning of the contract, it is the plaintiff’s claim that upon payment in full to the creditors the business and assets of the corporation were to revert to the stockholders. The defendants, on the other hand, assert that the contract was intended as an assignment for the benefit of creditors and, as such, all rights of the debtor were cut off without any right of reversion or redemption. “ The ascertainment of the substantial intent of the parties, as expressed, is the fundamental rule in the interpretation of all contracts. We must look to the agreement as a whole, to the matters with which it deals, to the circumstances under which it was made and thereby determine the true intent and purpose of
In accordance with the above there will be judgment for the plaintiff for. the relief requested in the complaint. Proceed accordingly.