Rudd v. Robinson

• Decision Date: 20 March 1891
• Citation: 126 N.Y. 113,26 N.E. 1046
• Parties: RUDD v. ROBINSON.
• Court: New York Court of Appeals Court of Appeals

126 N.Y. 113

26 N.E. 1046

RUDD

v.ROBINSON.

Court of Appeals of New York.

March 20, 1891.

Appeal from supreme court, general term, first department.

This is an appeal from an order denying a motion for a new trial, made upon a case and exceptions under section 1001 of the Code of Civil Procedure.

Thos. Darlington, for appellant.

Benj. F. Blair, for respondent.

EARL, J.

The plaintiff is receiver of the Goodwillie-Wyman Company, an insolvent manufacturing corporation organized under the laws of this state. The action was brought in equity to charge the defendant, as a trustee of the corporation, for the unlawful receipt and appropriation of the money and property of the corporation. An interlocutory judgment was rendered against him, charging him with a large amount of money thus improperly received and appropriated. The liability of the defendant for this money was, in the main, established by the account-books of the corporation, and the principal contention on his behalf upon this appeal is that those books were improperly received as evidence against him. The capital of the corporation was $50,000, of which Robinson, Briggs, and Innet, three of the directors, owned $1,000 each, and the balance of the stock was owned by Fisk and Goodwillie, the two other directors. Goodwillie was president, Fisk treasurer, and Briggs vice-president and secretary, of the corporation. There was no proof that the defendant had actual knowledge of the entries contained in the books which were used as evidence against him, or that he authorized such entries or caused them to be made. There was no proof from which the law would raise a legal presumption that he had knowledge of the entires, unless he is chargeable with such knowledge from the mere fact that he was a stockholder and trustee of the corporation. There is no rule of law which charges a director or stockholder of a corporation with actual knowledge of its business transactions, merely because he is such director or stockholder. In this case the broad claim is made that, in an action by a corporation against one of its members to enforce a personal liability of the member to the corporation, its books are competent evidence against him to show the condition of the accounts between him and it, and to establish the extent of his liability to it upon their simple production, and proof that they are the books of the corporation, kept as such by its officers and agents. The proposition is thus announced in the points of the learned counsel for the plaintiff: ‘Between a corporation and its members all its books regularly kept by its officers and agents, for the purpose of recording its transactions and properly conducting its business, are per se evidence.’ The cases reported in this country and England bearing upon this question are very numerous, and the general expressions of judges contained in their opinions are not entirely harmonious. The conflict, however, is mainly in the dicta of judges, and not in decisions actually made. The books of corporations for many purposes are evidence, not only as between the corporation and its members and between members, but also as between the corporation and its members and strangers. They are received in evidence generally to prove corporate acts of a corporation, such as its incorporation, its list of stockholders, its by-laws, the formal proceedings of its board of directors, and its financial condition when its solvency comes in question. But we have not been able, after a careful examination of the authorities cited by the counsel for the plaintiff and many others, to find any case in which it has been decided that the books of account of a corporation are competent evidence, of themselves, to establish an account or claim against a trustee or stockholder in an action brought in behalf of the corporation, and it has been repeatedly said by judges and taxt-writers that they are not competent for that purpose. In Whart. Ev. (3d Ed.) § 662, it is said that, even in suits by a corporation against its members, its books cannot be used as ‘proving in behalf of the corporation self-serving entries.’ In Ang. & A. Corp. (11th Ed.) § 679, it is said: ‘Entries in the books of a corporation of private pecuniary transactions with a stockholder are not admissible against him, especially when it does not appear by whom the entries were made.’ See, also, 2 Wat. Corp. 646. In Hager v. Cleveland, 36 Md. 477, in an action by a creditor of a manufacturing corporation against a stockholder to enforce his individual liability for a debt contracted by the company, it was held that the books of the corporation, relating to its private transactions, were not admissible in evidence. In Hill v. Water-Works Co., 5 Barn. & Adol. 866, by a clause in the charter of the defendant, it was enacted that its clerks should, in a book provided by the company, keep an account of all acts, proceedings, and transactions of the company, and that every proprietor should have liberty to inspect the same, and take copies of the...