Brinckerhoff v. Bostwick

• Citation: 1 N.E. 663,99 N.Y. 185
• Parties: BRINCKERHOFF and others v. BOSTWICK and others.
• Decision Date: 08 May 1885
• Court: New York Court of Appeals

99 N.Y. 185

1 N.E. 663

BRINCKERHOFF and others

v.BOSTWICK and others.

Court of Appeals of New York.

Filed May 8, 1885.

The National Bank of Fishkill was organized in April, 1865, with a capital of $200,000, and continued to do business thereafter until January, 1877, when it became insolvent, and the defendant Henry Bostwick was appointed its receiver. From the time of its organization until that time, Bostwick and the other defendants were its directors. At the time of the appointment of the receiver the entire capital of the bank had been lost, and there was a large deficiency of assets to pay its creditors, and the stockholders were rendered liable for a large sum of money to make up such deficiency. In January, 1880, the plaintiff Theodore Brinckerhoff, a stockholder suing in his own behalf, and for the benefit of all the other stockholders of the bank, commenced this action against the defendants, alleging in his complaint that they, during all the time mentioned, had been directors of the bank, and that by their misconduct, carelessness, and negligence, and their inattention to its affairs, the property and effects of the bank had been stolen, wasted, and squandered, so that the bank was rendered utterly insolvent, and its stockholders were thus greatly damaged, and relief was demanded that the damages which the bank and its stockholders had sustained by reason of the matters stated, be ascertained and determined, and that the defendants, who were directors of the bank, be adjudged to pay such damages, and that the defendant Bostwick, as receiver of such bank, recover, collect, and receive such damages for the benefit of the creditors and stockholders of the bank. The defendants demurred to the complaint upon various grounds, but the demurrer was finally overruled in this court. 88 N. Y. 52. Thereafter, upon their petition to the court, other stockholders were allowed to come in and be made plaintiffs in the action, and the defendants withdrew their demurrer and answered the complaint, denying all the allegations of misconduct contained therein, and setting up the three-years and the six-years limitations in bar of the action.

The action was brought to trial at a circuit court, and, after some evidence had been given to sustain the allegations of the complaint, the defendants objected to certain evidence offered, on the ground that ‘the plaintiffs in this action cannot maintain the action for any transactions or thing whereby loss resulted to the plaintiffs which happened more than three years before the commencement of the action,’ and the court decided that the action was subject to the limitation of three years, to which decision the plaintiffs excepted. Plaintiffs' counsel then offered evidence tending to establish a cause of action, as alleged in the complaint, plaint, against the defendants for losses arising from transactions between the years 1871 and December 31, 1876, and defendants' counsel objected to the competency of such evidence on the same grounds as before, which objection was sustained by the court, and the plaintiffs duly excepted. Plaintiffs' counsel thereupon stated that they could offer no evidence of a transaction by defendants tending to establish the cause of action alleged in the complaint, which had not happened at some time between the years 1871 and December 31, 1876. The court thereupon ruled that none of such evidence was admissible under the statute of limitations, to which ruling plaintiffs duly excepted, and then rested their case, and, upon motion of defendants' counsel, the court dismissed the complaint on the ground that the three-years limitation applied, and plaintiffs excepted. From the judgment entered at the circuit the plaintiffs appealed to the general term, and from judgment of affirmance there, to this court.

E. A. Brewster, O. D. M. Baker, and John F. Schlosser, for appellants, Theodore Brinckerhoff and others.

Samuel Hand, for respondents, Henry Bostwick and others.

EARL, J.

If the cause of action alleged in the complaint was barred by lapse of time as to the original plaintiff, Theodore Brinckerhoff, then the plaintiffs were properly nonsuited. The important questions to be determined are whether the action was barred by any of the limitations specified in the Code, and, if so, by which one of them. We are of opinion that it was not barred by section 394, which controlled the decision of the trial judge, and which provides that ‘this chapter does not affect an action against a director or stockholder of a moneyed corporation or banking association to recover a penalty or a forfeiture imposed, or to enforce a liability created by law; but such an action must be brought within three years after the cause of action has accrued.’ The claim on the part of the defendant is that the words ‘a liability created by law,’ in this section, mean simply a legal liability. On the other hand, it is claimed on the part of the plaintiffs that these words mean a liability created by some statute; and we are of that opinion. The phrase is not such as would have been used, and certainly is not such as is commonly if ever used, in statutes to describe a liability existing at common law, independently of any statutory provision. Such expressions as ‘required by law,’ ‘regulated by law,’ ‘allowed by law,’ ‘made by law,’ ‘limited by law,’ ‘as prescribed by law,’ ‘a law of the state,’ are of frequent occurrence in the codes and other legislativeenactments; and they are always used as referring to statutory provisions only. The phrase ‘created by or under the laws of the state’ occurs several times in the Code, and is always used in the sense of a thing brought into existence by or under statute law. Code, §§ 1775, 1784, 1785, 1797, 1798, 1812. The liability referred to is one created by the same law which imposes penalties and forfeitures, and they are always imposed by statute law. The section would have taken a different form if the legislature had meant by the phrase ‘liability created by law’ all ‘legal liabilities,’ because, then, their sense would have been precisely expressed if the words ‘to recover a penalty or forfeiture imposed, or to enforce a liability created, by law’ had been entirely omitted from the section, and then all actions against directors and stockholders of moneyed corporations must have been commenced within the three years.

The construction we give to this section is made quite obvious if we trace the history of the law embodied therein. It was copied from section 109 of the Code of Procedure, as amended in 1849, which was similar except as to the time of limitation. Section 109 was section 89 of the Code of 1848, and there read as follows: ‘This title shall not affect actions against directors or stockholders of a moneyed corporation to recover a penalty or forfeiture imposed, or to enforce a liability created, by the second title of the chapter of the Revised Statutes, entitled ‘Of moneyed corporations,’ but such action must be brought within six years after the discovery by the aggrieved party of the facts upon which the penalty or forfeiture attached or the liability was created;' and that section was copied from section 44, c. 4, pt. 3, Rev. St. The second title of the chapter of the Revised Statutes, entitled ‘Of moneyed corporations,’ was one imposing liabilities upon directors and stockholders of moneyed corporations for a variety of matters and acts particularly specified; and that title was largely copied from the act (chapter 325 of the Laws of 1825) where similar liabilities were imposed upon directors, with a provision that no statute of...