Summary
In Brinckerhoff v. Bostwick (reported in the Court of Appeals, 88 N.Y. 52; 99 id. 185 and 105 id. 567) it was held that an action in equity could be maintained to call the directors of a corporation to account for their negligent wrongful acts, whereby the corporation and its stockholders suffered damage.
Summary of this case from O'Brien v. FitzgeraldOpinion
Argued May 3, 1887
Decided May 13, 1887
O.D.M. Baker for appellants. Milton A. Fowler for respondents.
This action has already been held by this court to be an equitable one. It is brought by plaintiff in his own behalf, as stockholder of the bank, and in behalf of all others similarly situated, against defendants, who were directors of the bank, to call them to account as trustees for the manner in which they have discharged their trust. Of such actions courts of equity have always had jurisdiction. ( Brinckerhoff v. Bostwick, 99 N.Y. 185.) Nothing in the opinion in this case, when last here, and reported, supra, gives color to the idea that the case was regarded otherwise than as an equitable one. The judge, it is true, in delivering the opinion, said that defendants' liability was not created by statute but was a common law liability springing out of defendants' relation to the bank and the manner in which they discharged their obligations and duties as directors thereof. The expression "common law liability" was obviously used in contradistinction to that of a liability imposed by statute, and had no reference whatever to a liability enforceable at common law in distinction from one cognizable in equity. Since the first decision of this case, by this court ( 88 N.Y. 52), other stockholders, upon their petition, have been added as plaintiffs, and the judgment demanded against the defendants is that they may be adjudged to pay the damages sustained by the plaintiffs, and that the receiver may recover, collect and receive the same for the benefit of the creditors and stockholders of the bank, or else that plaintiffs may recover, etc.
Under the allegations of the complaint and upon the very numerous bases of liability respecting the several defendants, it is hard to see exactly what kind of a verdict could be directed as to form, in case the action were to be regarded as a common law one, and the jury were to give a verdict for the plaintiff, which should cover the whole case and upon which judgment should be entered. The verdict might be for different sums against different defendants, and founded upon distinct liabilities growing out of different acts as to each, and yet the foundation of the verdict in regard to the facts found against each defendant would be problematical in the extreme.
The sums for which defendants might be liable may not only be different but the total liability of all might exceed the total damage proved, and thus there would be a verdict for different sums against the different defendants, and an excess of total liability over the damage proved, and provision would have to be made for such a state of facts in the judgment to be entered, which ought to be based upon a special application, on notice, to the court, and upon its directions then given. All this shows how entirely impracticable would be a reference to a jury of the whole issue as in a common law action, with a general verdict and a judgment to be entered thereon without any further application to the court.
In Hun v. Cary ( 82 N.Y., 65) there was but one negligent or improper act alleged, that being the purchase of the lot and erection of the building on it under the circumstances proved. The damage was plain; it was of the same amount against all who were liable at all, and a general verdict in damages could properly be given which could be entered without any further application to the court, and would be final in regard to the rights of all parties. The court said under such circumstances it was not error to try the issue there involved by a jury, and that there were no equitable rights to be adjusted and no occasion to appeal to an equitable forum. The difference between the cases is wide and material.
The cases cited by defendants' counsel as to the right of trial by jury in cases of fraud, etc., do not apply here.
The case of Bradley v. Aldrich ( 40 N.Y., 504) merely holds that an allegation of grounds in plaintiff's complaint for equitable relief and nothing else, where proof of such grounds fails, does not permit the court to try an action for fraud without a jury. The former practice of the Court of Chancery was to dismiss the bill when all ground for equitable interposition failed, even though a cause of action at law appeared to arise out of the transaction. When a party alleges a cause of action of an equitable nature he must prove one, so far as the question of a trial by jury is concerned, and he cannot escape such tribunal by alleging an equitable cause of action and, while wholly failing to prove it, obtain a trial by the court of a common law action arising out of the transaction. To show that there is an issue of fraud in a case does not necessarily make the case one for a jury, or give a defendant a legal right to such a trial as if it were a common law action.
An action with an issue of fraud in it could and can now certainly be tried by the court (unless issues were properly framed for trial by jury), even against the desire of defendants, as in an action to set aside a deed or assignment or other instrument on the ground of fraud. This action is an equitable one and the issues to be tried by a jury are to be reviewed by the court in the same manner as in equitable actions, and the plaintiff does not fail to show the equitable nature of this action by proving the allegations of his complaint, even though the ground of the liability of the trustees whom he is seeking to call to account is their negligence and fraud. A cour of equity still has jurisdiction of such an action.
The case of Davison v. Associates of Jersey Co. ( 71 N.Y. 333, 340), is of the same general nature as Bradley v. Aldrich ( supra).
The action was brought to enforce the specific performance of a contract for the sale of land and had been once tried. On the second trial the plaintiff demanded a jury trial on the ground that it appeared on the former trial that defendants had conveyed the lots before the commencement of the action, and that the evidence would now show a cause of action at common law for damages only. The court denied the motion and the denial was upheld in this court on the ground that the plaintiff, by bringing his action for a specific performance of the contract to convey, had elected his forum and waived his right to a jury trial, but that the rule was different in the case of a defendant, who could not be deprived of a jury trial in a proper case, because plaintiff demanded equitable instead of legal relief. In other words, if defendant had asked for a trial by jury of the issue as to damages (the equitable relief of a specific performance having passed away by the conveyance of the land by the defendants to other parties), such request would have been granted, and it would have been no answer to such application to show that the action was originally for equitable relief. This case is nothing of the sort
But without doubt there are issues which ought to be tried by jury, and the order of the Special Term very wisely provided for framing issues for such a trial.
The order of the General Term should be reversed and that of the Special Term affirmed, with costs in both courts.
All concur.
Ordered accordingly.