237 A.D. 182 | N.Y. App. Div. | 1932
Lead Opinion
This action is one of many brought by the Superintendent of Insurance, as liquidator of the Equitable Casualty
In the second defense the three-year Statute of Limitations provided in subdivision 4 of section 49 of the Civil Practice Act is set up. We have recently held that this section is applicable to this type of action. The second defense is, therefore, sufficient. (See Van Schaick v. Cronin, 237 App. Div. 7, Merrell, J.)
The paragraphs “ three ” to “ seven ” of the answer, pleaded as a separate and distinct defense, set up that the then Superintendent of Insurance, James A. Beha, in person or through his agents, made periodic inspections and constant visitations upon the Equitable Casualty and Surety Company and after hearing the reports of bis agents “ did make no complaint or criticism nor did he call upon the defendant, Arthur Cohen, to do anything in connection with the affairs, business or operations of the said Equitable Casualty and Surety Company.” The answer then goes on to plead:
“ Sixth. That the said James A. Beha, as Superintendent of Insurance, was satisfied with the business and method of business and the operations of the Equitable Casualty and Surety Company, and the conduct of its officers and directors and made no criticism in connection therewith except when criticism and suggestions were made by him was satisfied that the cause of criticism had been eliminated and that his suggestions had been adopted.
“ Seventh. That such acts of nonfeasance as were committed by the said defendant were committed by him in reliance upon the facts set forth in paragraphs ' third,’ ' fourth,’ ' fifth ’ and ‘ sixth ’ hereof.”
Both appellant and respondent interpret the defense as pleaded to mean that the Superintendent of Insurance ratified the acts of the directors of the Equitable Casualty and Surety Company. Rebanee on the failure of the Superintendent of Insurance to criticize is ab that is set up in the answer before us.
We find nothing in the nonfeasance of the Superintendent of Insurance to protect the defendant Cohen from the consequences of his own nonfeasance. The duties of directors of financial institutions are well settled. As the Court of Appeals said in Kavanaugh v. Commonwealth Trust Co. (223 N. Y. 103, 105): “ They are summoned to the same degree of care and prudence that men prompted by self-interest generaby exercise in their own affairs. (Hun v.
A director of a moneyed corporation cannot rest entirely upon the vigilance of the Superintendent of Insurance. Such reliance constitutes no answer to a charge of nonfeasance.
The order appealed from should be modified by granting the motion to strike out the first defense, and as so modified affirmed, with twenty dollars costs and disbursements to the appellant.
Finch, P. J., O’Malley and Sherman, JJ., concur; Merrell, J., dissents and votes for affirmance.
Dissenting Opinion
The action is brought by the Superintendent of Insurance of the State of New York, as liquidator of the Equitable Casualty and Surety Company, for an accounting by the several defendants as directors and officers of said casualty company based upon alleged acts of malfeasance, misfeasance and nonfeasance on the part of said directors whereby the assets of said casualty company were lost. Plaintiff also prays for judgment that the defendants and each of them be adjudged and decreed to restore the moneys, assets and property of the said casualty company misappropriated and wasted by them by reason of the alleged improper acts alleged in the complaint, and that the said directors be directed to return and account for all profits and emoluments received by them, directly or indirectly, by reason of the facts set forth in the complaint, and that the defendants be adjudged and decreed to hold in trust for the benefit of the plaintiff all such moneys, and that plaintiff be adjudged to have a lien upon all of the assets and property of the said surety company in the possession of defendants or under their control or such property as was acquired by the defendants with such moneys, and that the defendants be adjudged to pay to plaintiff the cost and expense of the liquidation of the said Equitable Casualty and Surety Company, together with damages for such an amount as the court may decree had been suffered by plaintiff.
As a second separate and distinct defense to the complaint the defendant alleges that the alleged cause of action set forth in the complaint did not accrue within three years next preceding the commencement of the action. As to such defense this court is unanimously of the opinion that such defense is good and that the three-year statute applies to the present action, and that, therefore, the action is barred under the provisions of subdivision 4 of section 49 of the Civil Practice Act.
As to the first separate defense above mentioned, I am of the
I think the order denying plaintiff's motion to strike out the two defenses was proper and should be affirmed, with costs to defendant, respondent, against plaintiff, appellant.
Order modified by granting the motion to strike out the first defense, and as so modified affirmed, with twenty dollars costs and disbursements to the appellant.
Repealed by Laws of 1932, ehap. 191.— [Rep.