O'Brien v. . Fitzgerald ( 1894 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] On its face and in its form this is an action at law to recover damages for negligence. The corporation, represented by its duly appointed receivers, sues individuals who were its directors for such neglect or wrong in the performance of their duties as resulted in large losses, and demands a money judgment for the damages sustained. There is no suggestion that any equitable relief is essential to a full and complete redress, and no facts are stated which indicate a need of such intervention. It is not averred that a discovery is requisite to the completeness of the remedy: on the contrary, the acts of negligence are asserted as fully known, and capable of proof. It is not alleged that an accounting is necessary to ascertain the damages, but these are claimed as a definite and fixed sum, resulting directly from the negligent acts of the defendants. It is not asserted that such defendants are severally liable for separate and personal misconduct, and in separate and different amounts, although that is a reasonable inference from the facts stated in the complaint, but demands judgment against all and against each for the full amount claimed. The circumstance led to the interposition of a demurrer to the complaint, based upon the ground that different causes of action affecting different defendants had been improperly joined. It is not denied that the demurrer is well taken if the action is to be regarded as one at law, but the contention is that it is an action in equity for the vindication of a trust and the protection of its beneficiaries; and that view of it has been taken by the courts below with some hesitation, and with a very obvious doubt of the consistency of our earlier rulings.

I think those courts are right in saying that the formal demand of relief with which the complaint concludes is not decisive of the legal or equitable character of the action. We so held inBell v. Merrifield, (109 N.Y. 202), saying that where an answer had been interposed and facts were stated in a complaint which "show that it is of an equitable nature, and that the cause of action is simply equitable, we do not think a case is made for trial by jury under the Code (§ 968), merely because the complaint improperly asks for a money judgment only." That language clearly and plainly implied that a demand of judgment for money only would stamp the action as one at law, unless the facts pleaded showed an equitable cause of action simply, and that the relief asked was, therefore, improperly confined to a money demand merely. In other words, our doctrine was that the demand of money only, on its face and primarily, characterized the action as one at law, but not so conclusively as to prevent a different result where the action was clearly equitable rather than legal in its nature, and purely legal relief is improperly demanded. But the case before us is not of that character. The facts as pleaded show a perfect cause of action at law in favor of the receivers as representatives of the bank against the directors for misconduct resulting in loss. The actual and real relation between them and the corporation is that of agents acting for their principal, (Hun v. Cary, 82 N.Y. 65), and the directors may be sued at law for any damages caused by their culpable misfeasance or non-feasance. Within the doctrine of the case cited the complaint before us stated a perfect cause of action to recover damages at law, and a proper and consistent demand for a money judgment awarding such damages. In the cited case the action was held to be of a legal character, and requires the same ruling now, unless our doctrine has changed, or some valid distinction can be drawn. In support of that idea the case of Brinckerhoff v. Bostwick (105 N.Y. 567), is pressed upon our attention as indicating that the present action must be regarded as of an equitable character. But there is a wide and vital difference between the two cases. In this the action is by the corporation against its delinquent directors: in the other it was by a stockholder who could not sue at law but was compelled to go into equity to obtain his relief, and whose right of action was wholly and purely of an equitable character.

It may be, nevertheless, that a corporation may sue its directors in equity to recover losses sustained, for there seem to be some cases in which the remedy has been allowed. Granting that, and granting also what I am not now ready to admit as the law of this state, that the facts pleaded in the present case are sufficient to support the action as an equitable one, we are left by the pleader in a doubt which can only be solved by recurring to the demand for relief. He comes into court upon a complaint which, on the concession made, pleads an ambiguous state of facts, such as may support equally an action at law or in equity, and leaving us with no means of determining which view must prevail except by reference to the relief demanded. In such a case that relief as asked must necessarily solve the doubt, because there is no other solution. The facts pleaded do not help us, for they fit equally either a legal or an equitable action, assuming the latter to be maintainable, and we are justified in relying upon the formal relief demanded to settle the point in dispute. That accords with our system of pleading and with the distinction drawn by the Code. Where the action is for the recovery of money only it is classed as legal and is triable by a jury; and while we have held that we are not concluded by the formal demand of relief, but may look into the facts to see, nevertheless, if it be not equitable relief which they imperatively require, yet where the facts do not aid us, where they are just as appropriate to a legal as an equitable cause of action, where they are ambiguous as to the subject of inquiry, we must be guided by the relief asked in reaching a conclusion. That, I think, is the situation here upon the assumption most favorable to the plaintiffs, that upon the facts pleaded without further allegations an equitable action could be supported. My doubt about that is very grave, although I leave the question open. If there were further allegations showing somewhere or in some way the need of equitable intervention the difficulty would be removed. The cases of Glenn v. Lancaster, (21 Abb. New Cases, 272), and of Hun v. Cary, already cited, point to this conclusion, and are not overruled or affected by Brinckerhoff v. Bostwick.

It follows that the judgment overruling the demurrer should be reversed and the demurrer sustained, with costs.

All concur.

Judgment accordingly.