Summary
In Kent v. Universal Film Mfg. Co. (200 App. Div. 539, 546) this, court by Mr. Justice LAUGHLIN, said: "No theory is presented or could be presented by which the Supreme Court of this State has not jurisdiction over a domestic corporation.
Summary of this case from Sliosberg v. New York Life Ins. Co. Nos. 1 2Opinion
April 7, 1922.
Siegfried F. Hartman, for the appellant.
Powell, Wynne Roberts [ Clinton J. Ruch of counsel; John M. Lowrie with him on the brief], for the respondent.
Manifestly the first ground of the demurrer is without merit. No theory is presented or could be presented by which the Supreme Court of this State has not jurisdiction over a domestic corporation. When it incorporated under the laws of this State, it necessarily conferred jurisdiction upon the courts here whether sued by a non-resident, as is the plaintiff, or by a resident of this jurisdiction. In so far as the demurrer is on the grounds of a defect of parties plaintiff or defendant, it is equally without merit. The claim is that Poli is a necessary party plaintiff or defendant, on the theory that he was one of the copartners or joint adventurers. He was not a party to the agreement of the plaintiff and defendant with respect to conducting this theatrical business. He was merely employed as their manager and either instead of receiving wages or salary or in addition thereto, each of the copartners or joint adventurers agreed to give him ten per cent of their respective shares of fifty per cent of the net profits and that payment was to be made to him by the defendant from the net profits. Doubtless that gave him such an interest in the business as would have entitled him to an accounting if he desired it ( Valdes v. Larrinaga, 233 U.S. 705; Weldon v. Brown, 84 App. Div. 482); but according to the allegations of the complaint, which are admitted by the demurrer, defendant has fully accounted to him so that he has no further interest in the profits of the business during the period for which the plaintiff demands an accounting. We are not concerned with the question as to whether Poli would be liable to third persons as one of the partners. The point presented is whether the complaint shows that the parties intended that as between themselves he was to be a partner, and the only evidence of such interest is found not in an agreement between them and him, admitting him as a copartner or coadventurer, but in a separate assignment by each of them of a share of his interest to Poli as compensation for services, and a ratification of those agreements by Exhibit E, which plainly refers to plaintiff and defendant only as the copartners and provides that they each own an undivided half interest in the $7,200 deposited with the lessor and own in equal shares all other assets of the enterprise, and with respect to such other assets recites that both of them "have a private agreement with Fernando Poli, as manager of the Theatre by which they have assigned to him twenty per cent, or ten per cent each, of their interests." Counsel for appellant asserts that Poli was to bear losses also in proportion to his interest in profits. But nothing is alleged warranting that inference. The only other material facts alleged are that for a period during the reconstruction of the theatre Poli advanced a proportionate part of the rent on the understanding that he was to be reimbursed therefor out of the first profits thereafter realized; and that he was so reimbursed.
The intention of the parties is controlling in determining whether as between themselves Poli was to be a copartner or coadventurer ( Rockafellow v. Miller, 107 N.Y. 507; Salter v. Ham, 31 id. 321; Leggett v. Hyde, 58 id. 272; Heye v. Tilford, 2 App. Div. 346.) There were here merely separate agreements between the plaintiff and Poli and the defendant and Poli by which in consideration and as compensation for his services to the enterprise each agreed to give Poli a specified percentage of his share of the assets and of the profits. Those agreements constituted contracts of employment merely by each of the parties separately with Poli and did not make Poli a copartner or coadventurer. ( Hathaway v. Clendening Co., 135 App. Div. 407; Cassidy v. Hall, 97 N.Y. 168; First Nat. Bank of Meriden v. Gallaudet, 122 id. 655; Hill v. Curtis, 154 App. Div. 662; Merchants Nat. Bank v. Barnes, 32 id. 92; Burnett v. Snyder, 81 N.Y. 550; Rockafellow v. Miller, supra; Sanger v. French, 157 N.Y. 213.) In Burnett v. Snyder ( supra) it was held that one contracting with a partner to share in his profits and bear a proportionate part of his losses as a partner does not become a copartner even as to third parties. Since we are of opinion that Poli is not a partner or coadventurer, it is unnecessary to consider the further point as to whether if he were the action could be sustained, on account of his being a non-resident, without making him a party. The allegations of the complaint and the provisions of Exhibit E indicate that Poli also has an assignment from each of the parties of ten per cent of their respective interests in the assets of the company other than moneys deposited as a guaranty for the fulfillment of the provisions of the lease; but it will be observed that the plaintiff does not demand a dissolution of the copartnership or joint adventure or the distribution of its assets. He merely demands an accounting for his share of the profits during the period for which the defendant has fully accounted to Poli and, therefore, on the facts as alleged Poli has no interest in this litigation.
Defendant presents no argument in support of its demurrer that the complaint fails to state facts sufficient to constitute a cause of action and, therefore, must be deemed to have abandoned the same.
The remaining ground of the demurrer is that the court has not jurisdiction of the subject-matter of the action and that is predicated on the provisions of the 6th paragraph of Exhibit D annexed to the complaint. That is an agreement in Spanish made before a notary public in Havana between the plaintiff and the defendant, by which the plaintiff assigned to the defendant his remaining half interest in the lease, making the defendant the sole owner thereof. The assignment recited that the consideration therefor was $10,000, the receipt of which the plaintiff acknowledged, and with respect thereto the assignment contains the recital that the plaintiff was thereupon advised by the notary that having acknowledged the receipt of the consideration, defendant was free from all responsibility with respect thereto "even though in the future it should be proven that payment of the said sum was not made in whole or in part." The 6th paragraph is as follows: " Sixth. The parties appearing designate this city and its courts for all judicial and extra judicial acts arising out of this document, with waiver of the jurisdiction of their own domiciles." It will be observed that so far as now appears, this litigation does not involve the validity or construction of that assignment. The agreement relates only to an assignment of an interest in a lease of real property in the city of Havana, Cuba, and by the 6th paragraph the parties evidently intended to agree that any controversy arising between them with respect to the validity or construction of the assignment or a right or liability predicated thereon should be decided by the courts of that jurisdiction. The original lease of the theatre to the plaintiff (Exhibit B) and the assignment of a one-half interest therein to defendant (Exhibit C) contained provisions similar to those of the 6th paragraph of Exhibit D. They were all executed before a notary with the same formality as Exhibit D, and were intended as and became public documents relating to the theatre and its use, but neither Exhibit A nor Exhibit E was so executed and neither was intended as, nor was, a public document. The lessor was a party to the first assignment by plaintiff and thereby agreed that further assignments might be made from one party to the other and this doubtless accounts for the fact that the lessor was not a party to the Exhibit D, which is the second assignment. This action is predicated primarily on the agreement known as Exhibit A, which is the original agreement under which the parties embarked on this joint enterprise, and it contains no provision with respect to the jurisdiction of the courts. The principal contention made by the defendant is that Exhibit E makes the provisions of paragraph 6th of Exhibit D part of the contract by which the relations of the parties were continued and to be determined. As already stated, Exhibit E was executed simultaneously with Exhibit D. Exhibit D was confined strictly to an assignment to the defendant of the plaintiff's remaining half interest in the lease and embraces nothing else. It was evidently realized that since the defendant by Exhibit D would become the owner of the entire lease, it was necessary or at least advisable to have a formal agreement to the effect that this was not intended as a termination of the joint adventure or of the rights and interests of the parties with respect thereto other than concerning the ownership of the lease, and that such rights and interests should continue as theretofore so long as defendant remained lessor of the theatre under the then existing lease or under any novation thereof. It is not material whether the law of that jurisdiction precluded the embodiment in Exhibit D of appropriate reservations in this regard or why two agreements were made. Exhibit E refers to the lease and recites the assignment of a half interest therein to the defendant with the consent of the lessor and the assignment on that day of his remaining half interest; and with respect to the purpose for which Exhibit E was executed, it recites as follows: "And the object of this present document is to explain the terms and conditions of said assignment." It is then provided that the assignment that day made by the plaintiff to the defendant was "solely an assignment of his rights and interest in the contract of lease" and that it in no manner limited or affected his rights, ownership and interest in the profits and proceeds of the theatre or of the operation thereof and that such rights and interests should remain the same as they had been from August 30, 1916, up to and including the termination of the lease of the theatre or any novation thereof which might be granted to the defendant, and that in order that there may be a complete understanding between the partners "the terms and conditions under which they have been working are herein set forth." In the succeeding paragraphs, the terms of their agreement (Exhibit A) are, in substance, restated. The 5th paragraph provides that although the defendant has become the sole lessee, plaintiff should continue as owner of one-half of the $7,200 deposited with the lessor. The 6th paragraph provides that all of the assets of the theatre operating company belong to the parties in equal shares and that each party had a private agreement with Poli as manager of the theatre by which he assigned to Poli a ten per cent interest. The 7th paragraph provided that in the future as in the past the defendant should be treasurer of the partnership and should render weekly statements and balances and make weekly liquidations of the income from the theatre in the form theretofore observed. The 8th paragraph provides that the defendant as compensation for the film service supplied to the theatre, should receive fifty per cent of the net profits after deducting operating expenses as therein provided and the remaining fifty per cent should be divided equally between the parties and that defendant should pay for the advertising as theretofore. The 9th paragraph provides for the annual valuation of the assets for the purpose of determining the profits. The 10th paragraph provides that both parties ratify their agreement of December 31, 1918, with Poli according to which each of them assigned to him twenty per cent of his interest in the profits of the theatre and further provides that it is understood that the defendant should have seventy per cent of the total net profits, plaintiff twenty per cent and Poli ten per cent. I am unable to agree with the contention of the learned counsel for the appellant that the provisions of Exhibit D with respect to the jurisdiction in which any controversy between the parties is to be determined has become a part of the agreement for a copartnership or joint adventure and requires that the courts of this State, under the laws of which the defendant was incorporated, shall refuse to entertain jurisdiction and relegate the plaintiff, who is a citizen of the United States but a resident of Havana, to the courts of the Republic of Cuba. That contention is predicated on the claim that Exhibits D and E are to be deemed one agreement. They are, of course, to be construed together, and for the purpose of ascertaining what they mean may be read together as if a single agreement. ( Matter of Brandreth, 169 N.Y. 437; Marsh v. Dodge, 66 id. 533.) That rule, however, does not require that the two separate instruments must be deemed consolidated and one for all purposes or that a separate and independent provision of one, such as the jurisdictional paragraph, which has no bearing on the construction to be placed on the two instruments is to be deemed incorporated in the other. ( Thorpe v. Mindeman, 123 Wis. 149; 101 N.W. Rep. 417; Milske v. Steiner Mantel Co., 103 Md. 235; 63 Atl. Rep. 471; Barker v. Sartori, 66 Wn. 260; 119 Pac. Rep. 611; Knowles v. Toones, 96 N.Y. 534; Guerini Stone Co. v. Carlin, 240 U.S. 264.) I am, therefore, of opinion that the provisions of Exhibit D with respect to the jurisdiction in which the rights and obligations of the parties arising thereunder are to be enforced do not apply to Exhibit E or to Exhibit A and were not intended to deprive either party of the right to invoke the jurisdiction of the Supreme Court of this State and should not be so construed. The Federal court regards contracts by which parties attempt to confer exclusive jurisdiction over a particular court, foreign or domestic, as contrary to public policy and void. ( Gough v. Hamburg Amerikanische Packetfahrt Aktiengesellschaft, 158 Fed. Rep. 174; Kuhnhold v. Campagnie Generale Transatlantique, 251 id. 387; Mutual Reserve Fund Life Assn. v. Cleveland Woolen Mills, 82 id. 508; Prince Steam-Shipping Co. v. Lehman, 39 id. 704; Slocum v. Western Assur. Co., 42 id. 235.) In Engel v. Shubert Theatrical Co. ( 166 App. Div. 394) it was deemed sufficient to apply the rule of strict construction to such a contract and the court refrained from adjudicating with respect to the validity thereof. In Gitler v. Russian Co. ( 124 App. Div. 275) it was merely held that a contract, founded on a good consideration, with respect to the remedy to be adopted for the enforcement of an existing judgment would be given effect for the reason that no question of public policy was there involved such as is involved with respect to a general contract to oust the court of jurisdiction before a controversy has arisen thereunder. It does not appear to have been authoritatively decided in this jurisdiction whether the Federal court decisions will be followed; but I think they should be applied to the extent of holding that the defendant, a domestic corporation, could not, even if it were so intended, contract to oust the courts of this State of jurisdiction to call it to account under its agreements with the plaintiff. (See Benson v. Eastern Building Loan Assn., 174 N.Y. 83; Meacham v. Jamestown, F. C.R.R. Co., 211 id. 346; Buel v. B. O. Southwestern R. Co., 24 Misc Rep. 646.) Therefore, no ground of the demurrer was well taken.
It follows that the orders should be affirmed, with ten dollars costs and disbursements, with leave to defendant to withdraw the demurrer and to answer upon payment of said costs and ten dollars costs of motion at Special Term.
CLARKE, P.J., SMITH, MERRELL and GREENBAUM, JJ., concur.
Orders affirmed, with ten dollars costs and disbursements, with leave to defendant to withdraw demurrer and to answer on payment of said costs and ten dollars costs of motion at Special Term.