Sturgis v. Drew

The plaintiff’s intestate, having a claim against the New Jersey Steam Navigation Company, commenced an action against it in the year 1865. The company appeared and defended; Daniel Drew, as its president, verifying the answer. The issues joined were tried on the 12th April, 1871, and a verdict rendered in favor of the plaintiff. On the 15th April, 1871, a judgment was entered upon the verdict for the damages and costs, which, on successive appeals to the General Term and Court of Appeals, was affirmed.

The New Jersey Steam Navigation Company, the defendant in that action, was incorporated by act of the legislature of New Jersey, on the 29th February, 1839, tbe ninth section of which is as follows: “ And be it enacted that this act shall continue in force for thirty years unless sooner modified or repealed, and that tbe legislature may at any time hereafter alter, modify or repeal tbe same.” Tbe charter expired therefore, by its own limitation, in tbe year 1869, and tbe company ceased to exist. When tbe action was commenced against it by tbe plaintiff’s intestate it was in being, but when tbe judgment was entered, and indeed long before tbe trial was bad, it bad ceased to exist. It is tine that no suggestion of this was made upon tbe record, or to tbe court, in any way, and tbe action was allowed to proceed as if tbe parties were unchanged in any respect. Tbe plaintiff’s rights in this action were predicated of that judgment, and tbe defendant Vanderbilt insisted as a defense *on tbe trial herein, and urged on tbe appeal again, that tbe judgment is a nullity because, tbe company’s charter having expired, it was rendered without jurisdiction. Various considerations bearing upon tbe question were presented by tbe respective counsel in elaborate and able briefs, but tbe result can be briefly pronounced. Tbe charter expired in February, 1869, and tbe company ceased to exist (People v. Walter et al., 17 N. Y., 502), and that state of facts rendered it necessary to apply to tbe court for an order continuing tbe action. {McCulloch v. Norwood, Receiver, etc., 58 N. Y., 562.) In tbe case just cited a judgment was obtained against tbe Lorillard Fire Insurance Company, on tbe 14th May, 1872. On the 24th October, 1871, however, a judgment bad been entered dissolving it and continuing tbe receivership of tbe defendant. When tbe action against tbe company came on for trial its attorneys *138announced in open court that it bad been adjudged insolvent and bad been dissolved and a receiver appointed, but tbe court nevertheless allowed the plaintiff to proceed and take judgment. Tbe proceeding was declared to be invalid, and the judgment valueless, because it was pronounced without the legal presence of the party entitled to defend. It was said that at common law it was very clear such a judgment would be of no force, and that section 121 of the Code and the statute of 1832 (Laws of 1832, chap. 295), which latter was invoked by the plaintiff herein, did not relieve the plaintiff from the necessity of applying for an order of continuance.

Tbe statute of 1832, it was adjudged, while it gave tbe receiver the right to continue an action brought by it in the name of the corporation after his appointment, required that in actions against the corporation after its dissolution an order should be obtained to continue it. The cases are parallel. In the one the dissolution was announced in open court by the attorneys for the corporation, and in the other the act of incorporation declared when the company should cease to exist and become defunct. The notice was given in both cases: in this by the charter and in the case cited by the declaration in open court. The company having ceased to exist could act only through its representatives, and they would be, according to tbe law of New Jersey, tbe president and directors or trustees or managers of the affairs of the corporation at the time of its dissolution, who were vested with full power to settle its affairs and divide its property among the stockholders, and who could be* sued for the debts due from the corporation. (Statute, New Jersey, passed April 15th, 1816.) Our statute is substantially tbe same as this. (1 Rev. Stat., 600, §§ 9, 10.) The judgment was therefore pronounced without tbe legal presence of the persons entitled to defend, and who would be by our statute {stvpra) the directors or managers of the affairs of the corporation, unless some other persons were' appointed by a court of competent authority. The learned counsel for the plaintiff referred to the case of Mo Goon v. Scales (9 "Wall., 23) as an adjudication in favor of the validity of the judgment, but the proper parties it seems had appeared in tbe action, and by a special statute of Wisconsin it also appeared a bank whose functions bad ceased, but which yet owned property and owed debts, might be sued and the property subjected to the *139payment of them. Our system is otherwise and so is that, of New Jersey. We have no such special statute as this. On the contrary, the course to be adopted is distinctly marked out, and when the New Jersey Navigation Company was dissolved by lapse of time, the directors or managers of its affairs became necessary parties, by a proper order, to an action pending against it, whose presence was indispensable to the validity of any further proceedings. If the case suggested any theory which would avoid the application of this rule it would seem to be just to evoke it, because the expiration of the charter was known to the company and should, in fairness, have been stated to the court. It is true that the plaintiff must be supposed to have known it as well, because it was an element of the charter, but it may have escaped his observation.

There is no doctrine, however, which can intervene, and the judgment herein must be reversed, but we think without costs.

Judgment reversed, without costs.