Opinion
September Term, 1863
John Pyne and Peter Y. Cutler, for the appellants.
John T. Hoffman, for the respondent.
It will be most convenient first to examine the correctness of the judgment sustaining the demurrer to the defendant's counter-claim. Assuming that the testator of the defendants was the owner of the judgment, under such circumstances that, if the plaintiff was liable to pay it, it was a legitimate counter-claim upon the facts set forth, it will be necessary to inquire whether the matters so stated in fact show any liability on the part of the plaintiff to pay that judgment. In my opinion, they clearly do not.
By the 32d section of the general manufacturing act, it is provided that all the stockholders of the company shall be severally and individually liable to the creditors of the company, to the amount of stock held by them respectively, for all debts and contracts made by such company, until the whole amount of its capital stock is paid in. Now it is not averred in the answer that the plaintiff held an amount of stock in the company equal to the amount of the debt held and owned by the defendants. He was not liable to pay that debt unless he held an amount of stock equal to it, and that is not averred. No amount of stock is alleged to be held by him, nor is the number of shares he held alleged, nor the nominal amount of each share. It is only averred that he was a stockholder, and this averment might well be true if he held one share of stock, to the amount of five dollars; but it would not follow from this that he was liable individually to pay the debt due by the company to the defendants' testator.
2 R.S. 5th ed. 660.
In relation to the second ground of counter-claim, the same fatal deficiency of proper and necessary averments is found. By the 35th section of the same act, it is declared that such company shall annually, within twenty days from the first day of January, make and publish a report as therein prescribed; and if the company shall fail to do so, all the trustees of the company shall be jointly and severally liable for all debts of the company then existing, and for all that shall be contracted before such report shall be made. To constitute a liability on the part of the plaintiff under this section, it was essential to have averred that the debt was existing at the time the default was made, or that it was contracted afterwards, and before such report was published. This omission is fatal, and the facts alleged create no liability to pay the debt referred to, on the part of the plaintiff.
The same difficulty arises upon the matters stated in the third ground of counter-claim. By the 46th section of said act, it is declared that if the indebtedness of any such company shall at any time exceed the amount of the capital stock, the trustees of such company assenting thereto shall be jointly and individually liable for such indebtedness to the creditors of the company. It is not stated in the answer what excess of indebtedness has been incurred over and above the capital stock. It is said to be an amount exceeding the capital stock. It may be only one dollar, and the averment of the complaint be satisfied. If the defendant had desired to make the plaintiff liable for his debt, it was incumbent on him to have averred that such excess was equal to, or exceeded the amount of his debt. The plaintiff was liable, as is truly stated in the complaint, only to the extent of such excess; but clearly he was not indebted to the defendant in the amount of his judgment, if such excess did not equal or exceed the amount thereof.
The judgment of the Common Pleas, sustaining the demurrer to the counter-claim, was clearly correct.
It remains to inquire whether there was any error in the refusal to charge, and in the charge as made. The first request to charge assumes that there can be no conversion, unless the party is in the actual possession of the goods at the time of the demand and refusal. The possession of the agent of the defendant was his possession; and the conversion was equally as effective by his refusal to permit his agent to deliver the goods, as if they had been in his actual possession, and he had refused to deliver them himself. The defendant in his answer claimed to be the owner of the goods, and entitled to the possession thereof. In Cobb v. Dows, ( 10 N.Y. Rep. 335,) the question was, whether the defendants had been guilty of a conversion of a quantity of wheat. It is said, in the opinion delivered in the Supreme Court, that if they had taken it into their own hands, or disposed of it to others, or exercised any dominion over it whatever, they were guilty of the conversion, and their liability to the plaintiff was established; and this court held, if they availed themselves of the act of their agent, who refused to deliver the wheat, it was a conversion on their part. In this case, the defendant claimed the ownership and possession of the property; and actual possession of it by him was not necessary before he could be charged with the conversion of it.
The second request to charge has no soundness in it. It was of no importance whatever whether the defendant had acted bona fide in making the purchase by himself at the sale on the 30th of March. The question was, whether the plaintiff had a better and prior title to the property, and this fact was to be determined without any reference whatever to the conduct or motives of the defendants in purchasing the same property at the subsequent sale on the 30th of March. The plaintiff, on a sale upon one execution, issued upon a judgment against the said company, docketed on the 2d of December, 1858, became the purchaser of the goods, and paid to the sheriff making the sale the amount of his bid, and took possession of the property thus sold. This sale was made on the 7th of January, 1859, and the property remained in the same store, and was still there at the time of the demand made by the plaintiff. The company had made an assignment on the 24th of December, 1858, and after such assignment the assignee took possession of the store, and continued such possession until February 1, 1859. On that day Mr. McMartin took possession of the store, and with his assent the goods of the plaintiff were carried there, and were there at the time of the sale to the defendant, who requested the witness to keep the possession of them, and he refused to give them up.
The judge charged the jury, to which the defendant excepted, that if the property purchased by the plaintiff at the sheriff's sale was the same property afterwards purchased by the defendants, and which was left in McMartin's possession, the plaintiff, in virtue of such prior sale, was the owner. This proposition left fairly to the jury the question whether the property purchased by the plaintiff and that purchased and claimed by the defendants was identically the same. The jury found that they were, and that disposes entirely of that question. I find no difficulty in sustaining the other portion of the charge. It was a conceded fact that the goods originally belonged to the company; that a valid and regular judgment was recovered against it; and that an execution was issued upon it, by virtue whereof the goods were levied upon and sold, and the plaintiff became the purchaser, and paid to the sheriff the amount of his bid. The plaintiff testified that he immediately took possession thereof; and if it can be argued that the company had still the possession thereof, by reason of its occupancy of the store up to the 1st of February, that occupancy ceased on that day, and any possible presumption of possession of the goods by the company then ceased. The judgment under which the defendant claimed was not recovered till the 15th of March, at which time, beyond all question, the goods were in the possession of the plaintiff or his agent. There was no error, therefore, in this part of the charge.
The other portion of the charge is unquestionably correct. If the jury found the facts as stated by the court, no doubt remains of a conversion by the defendant. If he had not intended to enforce his rights, which he deemed he acquired by the sale, when the demand was made on him for the goods he would naturally have disclaimed any right or title to them. His conduct then, and his claim in his answer to be the owner of the goods and entitled to the possession, coupled with the facts found by the jury, remove all doubts of the conversion of them made by him.
The judgment should be affirmed, with costs.
The counter-claim set up in the answer was not a cause of action arising out of the transaction set forth in the complaint as the foundation of the claim, or connected with the subject of the action. Hence the demurrer to the same was properly sustained. (Code, § 150.) It was also properly sustained, for the reason that the counter-claim did not belong to the original defendant in the action at the time the same was commenced. ( Rice v. O'Connor, 10 Abbott's Pr. Rep. 362; Gage v. Angell, 8 How. Pr. Rep. 335; Van Valen v. Lapham, 13 id. 240; Pattison v. Richards, 22 Barb. 143.)
The judge properly refused to nonsuit the plaintiff. There plainly was sufficient evidence to require the judge to submit to the jury the question whether the defendant Lewis had converted the goods. It also justified the judge in refusing to charge the jury that unless they found the goods to have been in the actual possession of the defendant at the time of the alleged demand and refusal, such demand and refusal would not authorize them to find a conversion by the defendant.
I am also of the opinion that the judge properly refused to charge the jury that if they found there was a bona fide purchase by the defendant at the sheriff's sale they should find a verdict for the defendant. A verdict for the defendant would have been erroneous, unless the jury had found that the plaintiff's title was fraudulent against the defendant's purchase; and the judge was not asked to submit that question to them. It was not so clearly fraudulent, if fraudulent in fact, as to have justified the judge in holding that as matter of law it was fraudulent. He must have so held if he had authorized the jury to render a verdict for the defendant if they found he was a bona fide purchaser of the goods.
All that the judge charged the jury respecting the demands and refusals, was, that such demands and refusals were "evidence of a conversion" by the defendant. He did not charge that those acts were conclusive evidence of a conversion; and, as I understand the charge, he submitted to the jury the question whether the evidence established a conversion by the defendant. This was correct.
But I am constrained to say I think the judge erred in charging the jury "that if the property purchased by the plaintiff at the sheriff's sale was the same property afterwards purchased by the defendant, and which was left in McMartin's possession, the plaintiff, in virtue of such prior sale, was the owner." The plaintiff was not in the actual possession of the goods at the time the defendant purchased them and assumed to control them. He could only show that he was entitled to the possession, by proof that he owned them. And the evidence established that they were assigned by the defendants in the executions to Sargent on the 24th day of December, 1858, which was before either party to the action purchased them; and no evidence was given to show that Sargent's title was not good as against the plaintiff. The judge ignored this fact when he told the jury they might find the plaintiff owned the goods, if they found the goods were those purchased by him at the sheriff's sale. It seems to me the plaintiff should have shown that Sargent did not acquire any title to the goods under the assignment of the company to him on the 24th day of December, 1858, before he could claim that he obtained title to the same by his purchase under the execution against the company on the 7th day of January, 1859.
I am also of the opinion that this part of the charge was erroneous, for the reason that it prevented the jury from determining whether the plaintiff's title was not fraudulent as against the judgment and execution under which Lewis purchased. If the assignment of the 24th of December, 1858, was a nullity, the store in which the goods were must be deemed to have been in the possession of the company until the 1st day of February thereafter, which was twenty-four days after the plaintiff purchased the goods. The plaintiff was a member of the company, and had been its president; and when it was claimed that Sargent was in possession of the store, as assignee of the company, the plaintiff was there as his agent. It can not be said that the plaintiff's purchase of the goods was accompanied by an immediate delivery thereof to him, and followed by an actual and continued change of possession. They remained in the same store in which the company deposited them, until they were seized by the execution creditor of the company, under whose process the defendant purchased the same. I think the true rule is, that the continuance of possession by a defendant, after the sale of his property under an execution, is prima facie evidence of fraud, as well where the property is bid in by a third person as where it is struck off to the plaintiff in the execution. The Supreme Court so held in Fonda v. Gross, (15 Wend. 628;) and that court decided, in Gardenier v. Tubbs, (21 id. 169,) that where property is bought at a sheriff's sale by the plaintiff in an execution, and left in the possession of the defendant, without any good excuse shown, the sale is void as against the creditors of the defendant, notwithstanding that the plaintiff subsequently, and before the levying of an execution on the part of other creditors, reduces the property to his actual possession. But as the rule now is, the judge could not have pronounced the plaintiff's title fraudulent as against the creditors of the company, under whose execution the defendant purchased the goods; but he should have submitted the question to the jury, whether the plaintiff's title was not fraudulent as against that creditor and the defendant. (2 R.S. 137, § 4; Gardner v. McEwen, 19 N.Y. 123.)
For the error in the charge of the judge to the jury, the judgment of the court of Common Pleas should be reversed, and a new trial granted, costs to abide the event.
DENIO, Ch. J. and ROSEKRANS, J. expressed no opinion.
Judgment affirmed.