34 N.Y. 30, New York and New Haven Railroad Company v. Schuyler

Citation34 N.Y. 30
Party NameTHE NEW YORK AND NEW HAVEN RAILROAD COMPANY v. ROBERT SCHUYLER, MORRIS KETCHUM, EDWARD BEMENT, et al.
Case DateJune 01, 1865
CourtNew York Court of Appeals

Page 30

34 N.Y. 30

THE NEW YORK AND NEW HAVEN RAILROAD COMPANY

v.

ROBERT SCHUYLER, MORRIS KETCHUM, EDWARD BEMENT, et al.

New York Court of Appeal

June 1, 1865

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COUNSEL

Geo. F. Comstock and William Tracy, for the plaintiffs.

Chas. O'Conor and C. A. Rapallo, for the defendant Vanderbilt.

Mann & Rodman, for Belmont, Hooper & Deane.

J. Larocque, for Chauncy and wife, and Alsop.

W. Hutchins, for Fisher, Denny & Co.

W. H. Peckham, for J. Surget.

Jno. M. Buckingham and D. D. Field, for Ketchum & Bement.

Barlow & Kennedy, for Rasbach & Crouse.

Wm. M. Evarts, for Edward Whitehouse.

Judah & Dickman, for Henry Leger.

Weeks, De Forest & Foster, for Talbot & Jones.

C. N. Potter, for Brown Bros. & Co.

A. W. Lord, for Ingraham & Dickinson.

D. D. Lord, for Amos R. Eno.

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J. S. Stearns, for J. Milton Mackie.

Dan. Marvin, for Ketchum & Patten.

W. Rutherford, for De Coppet & Co.

Jno. E. Parsons, for Wm. S. Wetmore and Thos. H. Faile.

OPINION

DAVIS, J.

The practice in this case has been anomalous, and, to some degree, without precedent. There is little danger, however, that any rule will be extracted from its complications likely hereafter to embarrass the courts. Unless, therefore, substantial rights have been violated by the course of procedure, I am opposed to remitting the case, or any of the parties to it, to another decade of litigation on any ground of mere irregularity.

The plaintiffs, after the discovery of the frauds of Robert Schuyler, found some three hundred persons in possession of supposed titles to portions of their capital stock, each of whom was clamorous that his title should be recognized as genuine, or that he should be compensated for injuries sustained from its falsity. Many of these persons had commenced suits at law to recover damages because of the refusal of the plaintiffs to recognize their alleged rights; and the rest, it was presumed, were about to commence such suits.

In this exigency, the plaintiffs invoked the equity powers of the court to shelter them from the impending storm by gathering all these persons and their claims into a single suit, in order, as they averred, that the duties and obligations of the plaintiffs, and the rights and claims of such persons, might be settled in one suit, and thereby a multiplicity of actions and the delay, expense and litigation attendant thereon, be avoided. They called upon the court to investigate the question of the validity of the certificates and transfers of stock held by the defendants; to separate the good from the bad and cancel the latter; to stop all actions then pending and consolidate and try the issues joined in them in this action, and to restrain all other parties from commencing actions upon claims growing out of such certificates and transfers; and to accomplish these ends, they asked and obtained process by injunction, under which the defendants

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have been restrained from prosecuting elsewhere, any claims while this action was pending. It comes, therefore, with an ill grace from plaintiffs, if the defendants have rightly shown themselves entitled to recover damages in any forum, to insist that they can have no remedy in this suit. Having recovered judgment declaring these certificates and transfers spurious, upon a state of facts on which the court held that the defendants were also entitled to be compensated for their injuries, it would seem a hard measure of justice to turn these parties out to seek redress in the very multiplicity of actions which this suit was brought, in part, to avert.

It is a mistake to suppose that this action addressed itself to any single head of equity jurisdiction. It sought, it is true, the cancellation of illegal certificates and transfers, which were prima facie evidences of title to stock, on the ground that they were clouds on the title of the holders of genuine shares; and chiefly in this aspect it was sustained on demurrer by this court (17 N.Y. 592); but it was also a "bill of peace"--to quiet titles, settle rights and prevent a multiplicity of actions; and, as was said by COMSTOCK, J., in the decision referred to, "the number of parties and the multitiplicity of actual or threatened suits, will sometimes justify a resort to a court of equity when the subject is not at all of an equitable character and there is no other element of equity jurisdiction. "To which he might have added, that wherever those facts did justify such resort, a court of equity would fully dispose of all the rights and questions springing out of the subject matter of the suit as to every party, however multitudinous or complicated they might be. The action sought also to have the pending suits, in which portions of the defendants were plaintiffs, consolidated in this suit and their issues tried with it, and to prevent all of the defendants from prosecuting any claim growing out of the subject matter of this suit in any court of this State or elsewhere, for the reasons already quoted, and because the plaintiffs, as they said, "could not acknowledge or recognize any of the said false and fraudulent certificates of stock, or any of the said transfers of stock; or, as constituting any claim against the com

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pany without an adjudication by some court of competent jurisdiction requiring them to do so. "

While, therefore, it was, in one aspect, a suit to remove a cloud upon a title and cancel the instruments creating such cloud, it had a far reaching and broader scope under which the plaintiffs hoped and intended to secure a judgment that would put at rest forever all possible claims against them, growing out of the Schuyler frauds. If it could be maintained to extinguish such claims, surely it can be to uphold them. The court did not err in so adjudging, if, while investigating the facts upon which the plaintiffs sought relief, it found that the same facts that entitled them to a part of what they sought also entitled the defendants to relief against them; and it was no undue stretch of equity jurisdiction to award the relief to both in the same action. The objection that by such a course the plaintiffs have been deprived of trial by jury, is without any sound foundation. The very nature of the action forbade such a trial. It is a primary consequence of a resort to a court of equity that trial by jury is no matter of right, and wherever the equity of the complainant's bill gives such a court jurisdiction, it draws to the same forum and mode of trial every question, whether its nature be legal or equitable, that can be legitimately considered within its scope. Under the Code, legal and equitable jurisdictions are combined in the same tribunal, but the principles of each remain distinctive and undisturbed. Whenever a plaintiff calls upon the court to exercise its jurisdiction upon principles of equity, he elects thereby his mode of trial and waives any constitutional right of trial by jury that he might at law have demanded, both as to the remedy he seeks and the defense that may be interposed.

Under the peculiar circumstances of this case, the court should not scrutinize, with critical care, the pleadings of the respondents, to see whether there be not some defectiveness in setting forth the nature and grounds of their claims to relief, or in demanding the same. The objections were not raised at the stage of the trial when it was most important to have the defects, if any existed, distinctly pointed out,

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and when amendments could have been readily allowed; hence, on this appeal the plaintiffs should be regarded as having waived such objections, or the pleadings be considered as properly amended.

In my opinion, the action of the General Term on the appeal from the judgment entered on the decision of the Special Term, in 1860, is not here to be reviewed, nor is it material to the case, if it were. Since that time the case has gone back to the Special Term, and the trial of the case has been completed by a disposition of all its issues, and another or amended judgment has been entered, from which an appeal was taken to the General Term, and the judgment affirmed. From this last judgment the appeal properly lies to this court. In its practical effect, the decision of the General Term on the first appeal, when considered in the light of subsequent proceedings, amounts to nothing more than a ruling that the case had not been fully tried and a final judgment rendered therein as to all the parties, and under that ruling it ordered the case back, with directions to the judge at Special Term to do what was, in its opinion, requisite to render the judgment complete. The action of the Special Term, in so far as it had gone, was in substance held correct, and pro forma affirmed; but it was instructed that its ruling that defendants could not recover cross-judgments in this suit was erroneous, and therefore the case was remitted to the original court, with directions to proceed in the necessary assessment, to entitle the defendants to judgments for damages, under the facts already found. If that judgment of the General Term was a final one, it should have been appealed from, within the prescribed time, to this court, by any party...

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