Rosenbaum v. U.S. Credit-Sys. Co.

• Decision Date: 22 June 1898
• Parties: ROSENBAUM v. UNITED STATES CREDIT-SYSTEM CO.
• Court: New Jersey Supreme Court

40 A. 591

61 N.J.L. 543

ROSENBAUM

v. UNITED STATES CREDIT-SYSTEM CO.

Court of Errors and Appeals of New Jersey.

June 22, 1898.

(Syllabus by the Court.)

Error to supreme court.

Action by Martin Rosenbaum against the United States Credit-System Company, A demurrer to defendant's plea was overruled in part (37 Atl. 595), and plaintiff brings error. Reversed.

The plaintiff below and here seeks damages for breach of covenant for agency between him and the defendant, an insolvent corporation of this state. On the 1st of December, 1892, by agreement in writing under seal, it was stipulated that the plaintiff should become and be the agent of the defendant for the state of Massachusetts for the term of five years thence next ensuing, in procuring applications for certificates of indemnity against excess of losses from credit, and in collecting and receiving all fees and premiums for certificates of Indemnity issued upon applications therefor procured by him. The plaintiff was to secure new business for the company at the rate of at least $125,000 each three months for the first three years, and was to have not less than $1,000,000 of business each of the last two years. He was also, at his own expense, to establish and maintain an office in the city of Boston, and employ and pay agents and other assistants sufficient in number to enable him to fully execute the contract upon his part. He was to be paid a stipulated sum per $1,000 of guaranty issued by the company at his instance, upon receipt by the company of the premiums therefor. The declaration alleges that this contract was broken by the defendant on the 23d of August, 1894, and from thenceforward, by the defendant's ceasing to employ the plaintiff, without fault upon his part, and that he has suffered damage by deprivation of profits from the agency, and by loss of value in the furniture of the office established by him, and otherwise. Among other pleas filed by the defendant was this: That on the 23d of August, 1894, in a suit in the court of chancery of New Jersey between the commissioner of banking and insurance and the defendant, the latter, by the court's order, was required to show cause before it on the 4th of September then next why an injunction should not issue, and a receiver be appointed, pursuant to the statute in such case made and provided, and that it and its agents were meanwhile required to desist and refrain from collecting or receiving any money owing to the defendant, and from paying out any money, and from selling, assigning, or transferring any of its property; that on the 4th of September, 1894, it was adjudged by the court of chancery that the defendant was insolvent, and that it had suspended its ordinary business for want of funds to carry on the same, and that it was not about to resume its business in a short time with safety to the public and advantage to its stockholders, and that a receiver be appointed to take its assets, and perform the duties imposed upon him by the act concerning corporations, and its supplements; that on the 2d of October, 1894, by another order, the same court decreed that the charter of the defendant be, and the same thereby was, declared forfeited and void, except for the purpose of collecting the property and assets of the defendant, selling the same, and distributing the proceeds of sale among the creditors and stockholders of the defendant, and that in pursuance of such orders the defendant on the 23d of August, 1894, and from thence until the present time, ceased to transact business, and ceased to employ the plaintiff as its agents, which is the breach of covenant by the plaintiff in his declaration alleged. The plaintiff demurred to this plea, and the supreme court overruled the demurrer. Upon this action of the supreme court, error is assigned.

Cortlandt Parker, Jr., for plaintiff in error.

Howard W. Hayes, for defendant in error.

McGILL, Chancellor. The first question presented is whether there was a breach of the contract upon the part of the defendant. In the case of People v. Globe Mut. Life Ins. Co. 91 N. Y. 174, upon which the opinion of the supreme court relies, both parties to the contract (the insurance company and its agent) were restrained by injunction, at the instance of the attorney general, from the further prosecution of the business of the company, and the exercise of any of its corporate franchises; also, a receiver was appointed and the corporation was dissolved; and it was held that action by both the contracting parties was paralyzed by the injunction, so that neither could put the other in the wrong, and there could be no breach of the contract. The case before us differs from that. In this case the suspension of the business of the company was in August, and the forfeiture of the charter was in the October following. The only injunction was that which was contained in the order to show cause, on the 23d of August, which forbade the contraction...