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Court of Appeals in Pitt v. Davison, 37 N. Y. 235. The provisions of section 802 are not new. They have been considered by the courts in many cases, and I think the rule may now be regarded as well sustained by authority that, where the order which has been disobeyed has been duly personally served upon a party to an action, any subsequent order in the action to continue the effect thereof, or to punish the party for violating the same, may be served upon the attorney. Rochester Lamp Co. v. Brigham, supra; Knott v. Knott, 6 App. Div. 589, 39 N. Y. Supp. 804; Davis v. Davis, 83 Hun, 500, 32 N. Y. Supp. 10; Stubbs v. Ripley, 39 Hun, 626; People v. Brower, 4 Paige, 405; People ex rel. Platt et al. v. Rice, 144 N. Y. 249, 39 N. E. 88; Pitt v. Davison, supra; Isaacs v. Calder, 42 App. Div. 152, 59 N. Y. Supp. 21; Mahon v. Mahon, 5 Civ. Proc. 58; Zimmerman v. Zimmerman, 26 Abb. N. C. 366, 14 N. Y. Supp. 444.
The decision of the Appellate Division in Matter of Depue, 108 App. Div. 58, 95 N. Y. Supp. 1017 is also cited by the respondents as sustaining this doctrine, and the opinion of the Court of Appeals, reversing it, 185 N. Y. 60, 77 N. E. 798, is cited by the appellant to the contrary. The Depue Case is not in point. There the individual punished for contempt was not a party to the action, and it was held by the Court of Appeals that service of an order to show cause why the witness, who was not a party, should not be punished for contempt in disobeying an order for his examination, upon the attorney who appeared for him on the examination, was insufficient to confer jurisdiction upon the court; and the opinion of the Appellate Division tends to support the contention of the respondent, for the reason that it was assumed that the witness was in the same position as a party, and the argument of the court was pointed to show that service upon the attorney was sufficient. Moreover, section 2273 of the Code of Civil Procedure expressly declares that the order to show cause in a contempt proceeding in an action is equivalent to a notice of motion in the action, and that the subsequent proceedings are taken as upon a motion in an action.
The appellant attempted to excuse his failure to appear for examination on the ground of his absence in Mexico and illness. The court, in affording him an opportunity to purge himself of the contempt, granted him all the consideration to which in any event he was entitled, for it plainly appears that he has acted in bad faith in opposing and delaying the examination.
It follows that the order should be affirmed, with $10 costs and disbursements. All concur.
GRANT et al. v. GREENE et al. (Supreme Court, Appellate Division, First Department. November 8. 1907.) 1. DISCOVERY-STATUTORY PROVISIONS-ORDER FIXING NEW DATE-AUTHORITY
Though Code Civ. Proc. § 873, requiring a judge to order an examination of a party as a witness before trial on an ex parte application supported by a certain showing, does not authorize a court to make such an order, yet where the examination could not be had at the time original
and 140 New York State Reporter ly prescribed therefor, owing to a stay procured by the party to be examined, the court had power, on affirmance of the order on appeal and vacation of the stay, to fix another day for examination pursuant to
the original order of the judge. 2. SAME.
Where an examination of a party as a witness before trial could not be had at the time prescribed in the order for such examination, owing to a stay procured by the party to be examined, an order fixing another date, on affirmance of the original order on appeal and vacation of the stay, was not in effect an adjournment, in violation of Code Civ. Proc. $ 876, vesting authority to adjourn the examination in the judge or referee before whom held. Appeal from Special Term.
Action by James A. Grant and another against William C. Greene and the Greene Consolidated Copper Company, impleaded with the Cananea Consolidated Copper Company and another. From an order directing that Greene be examined as a witness in behalf of plaintiff, pursuant to Code Civ. Proc. $ 873 (105 N. Y. Supp. 641), Greene and the Greene Consolidated Copper Company appeal. Affirmed.
Argued before PATTERSON, P. J., and INGRAHAM, LAUGHLIN, CLARKE, and HOUGHTON, JJ.
M. E. Harby (F. W. M. Cutcheon and Franklin E. Searle, on the brief), for appellants.
Walter B. Raymond (Samuel S. Watson and Chester A. Jayne, on the brief), for respondents.
LAUGHLIN, J. The validity of the order is challenged upon the ground that an order to take the deposition of a party or witness, pursuant to the provisions of article 1, tit. 3, c. 9, of the Code of Civil Procedure, cannot be made by the court, but only by a judge, but the order from which the appeal is taken merely fixes a time for the examination to be had pursuant to a former order duly made by a justice of the Supreme Court
. The proceedings on the part of the plaintiff had been stayed, by an order granted at the instance of the appellants, until after the time for the examination pursuant to the order of the justice had passed, and therefore the objection is not tenable. It appears that, on the application of the plaintiffs in this action, a justice of the court on the 19th day of January, 1907, duly granted an order for the examination of the appellants concerning matters relative to the allegations contained in the complaint pursuant to the provisions of section 873 of the Code of Civil Procedure, and for that purpose directed that Greene appear before the referee therein named, at the latter's office in the borough of Manhattan, New York, on the 25th day of January, 1907, at 10 o'clock in the forenoon. On the 23d day of January the appellant Greene and the companies obtained from the same justice an order to show cause, returnable at the Special Term one-half hour after the time fixed for the examination, why the order for the examination should not be vacated, and staying proceedings under the order until the hearing and determination of the mo
On the 1st day of February, after a hearing at Special Term, the motion to vacate the order for the examination was granted; but on appeal to this court that order was duly reversed on the 5th day of
April, 1907. The reversal restored the original order; but, the time for the examination thereunder having passed while the plaintiffs' proceedings were stayed by an order obtained by the appellants, it became necessary for the plaintiffs to apply de novo to a judge for an order for the examination, or to apply to the court for an order fixing a date for the examination pursuant to the original order of the justice. The plaintiffs pursued the latter course, and the appellants insist that the former course only was open to them, and that the court was without jurisdiction to make the order. The provisions of the Code of Civil Procedure to which reference has been made plainly show that the Legislature conferred the authority to order such examination upon a judge, and not upon the court, and they have been authoritatively so construed. Wiechers v. N. H. Sewing Machine Co., 38 App. Div. 1, 56 N. Y. Supp. 235; Heishon v. Knickerbocker Life Ins. Co., 77 N. Y. 279. It does not follow, however, that the court, which is vested with power to stay, modify, and vacate such orders, may not give effect to an order duly made by fixing a time for the examination, where the examination at the time originally prescribed therefor could not be had, owing to a stay procured by or in behalf of the party to be examined, or those opposed in interest to the examination. It is true that the court could not initiate the examination; but it would seem that the court should have authority to render effective in such circumstances an order duly made by a judge.
It is contended that the order, in effect, constitutes an adjournment of the proceeding before the referee, and that this may not be done, since authority to adjourn the proceeding is vested in the judge or referee before whom the examination is to be taken by virtue of the express provisions of section 876 of the Code of Civil Procedure. This argument is fallacious. Proceedings under the order having been duly stayed, neither the plaintiffs nor the officer before whom the examination was to be had could have taken any step toward the adjournment of the hearing without being guilty of contempt. It has been the settled practice of the court, where the time for an examination under an order has expired by reason of a stay, on vacating the stay and sustaining the order, to fix another time for the examination, either with or without special application for the purpose, and to direct that it be had at such time pursuant to the original order. 2 Abbott's Practice & Forms (2d Ed.) 232; Haebler v. Hubbard, 36 Misc. Rep. 612, 74 N. Y. Supp. 461; Rochester Lamp Co. v. Brigham, 1 App. Div. 490, 37 N. Y. Supp. 402.
The opinion in Grant et al. v. Greene et al., 106 N. Y. Supp. 532, 011 the appeal from an order adjudging Greene in contempt for failing to obey the order now under consideration, disposes of the objection that service on the attorney was insufficient.
It follows that the order should be affirmed, with $10 costs and disbursements. All concur.
and 140 New York State Reporter
(55 Misc. Rep. 411.)
TAYLOR v. THOMAS et al.
(Supreme Court, Trial Term, Saratoga County, July, 1907.)
1. CORPORATIONS-FBAUD-PURCHASE OF CORPORATE STOCK-LIABILITY OF Di
A purchaser of stock in a national bank relied on the report of its directors as to its financial condition. Held, that they, having reasonable cause to believe that the report was false, were liable to the purchaser in a common-law action for deceit.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 12, Corporations, s
256.) 2. SAME-DAMAGES.
Where the Comptroller of the Currency informed a national bank that assets of nearly twice the amount of its capital stock were doubtful, and that they should be immediately collected or removed from the bank's books, and the directors made a report in which such assets appeared without having made any examination, held, that one who purchased shares of the bank in reliance on such report is entitled to recover from the directors the amount paid, with interest.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 12, Corporations, f 256.)
Action by William C. Taylor against Cassius B. Thomas and others. Judgment for plaintiff.
Edgar T. Brackett, for plaintiff.
VAN KIRK, J. This action is brought to recover the sum of $4,800, with interest from July 1, 1904, because of deceit practiced upon the plaintiff by the defendants. During the year 1904 the defendants were directors and stockholders of the Citizens' National Bank of Saratoga Springs, which was a national banking association. On April 6, 1904, the regular report of the condition of the bank was made, and was attested by the defendants; the report showing the condition of the bank at the close of business on the 28th day of March, 1904, and containing the following items: Capital stock, $100,000; surplus, $50,000; undivided profits, $13,456.75. On or about May 24, 1904, William R. Waterbury, then a stockholder of the Citizens' National Bank, met the plaintiff, his brother-in-law, and spoke to him concerning the purchase of 20 or 30 shares of the said bank stock. Mr. Waterbury informed the plaintiff that he considered the stock a good purchase. He told him the substance of the report of April 6th, the amount of the capital stock, the surplus, and approximately the undivided profits, referring at the time to the said report. He also told him of the dividends that the bank had been paying and his own estimate of the value of the stock. The statement showed the stock to be of a book value in excess of $160 per share. The plaintiff left before the conversation was completed, but later wrote to Mr. Waterbury, inclosing two checks, which aggregated $4,800, and instructing Mr. Waterbury to buy the shares of stock spoken of. The checks were sent on or about the 1st day of June, 1901, and the stock was delivered by Mr. Waterbury to the plaintiff June 27, 1904. The plaintiff himself never saw
the statement, and had no other information at the time he purchased the stock, except that furnished him by Mr. Waterbury.
On or about the 27th day of June the Citizens' National Bank received notice from the Comptroller that its capital was impaired to the amount of $100,000, and must be made good by assessment, or the bank would be placed in liquidation. Directly thereafter the assessment was regularly made of 100 per cent. on the capital stock, and thereafter, but before this action was begun, the plaintiff paid his assessment in the sum of $3,000. It is admitted that no losses were incurred by the bank between the 28th day of March, 1904, and the 30th day of June, 1904, so that the condition upon the 28th day of March was the same as upon the 30th day of June, when the assessment was made. On or about March 1, 1904, the Comptroller informed the bank that items carried as assets to the amount of more than $194,000 were doubtful, and that immediate steps must be taken to collect them, or they be removed from the books of the bank. These items appeared in the report dated April 6th. These facts were known to the defendants at the time they attested the report.
The defendants claim that this action cannot be maintained; that the only action, if any, available to the plaintiff, is one under the national banking act; that the statute provides for actions to recover relief against the misconduct of directors, and provides the remedy which must be followed. The rule is that, where a liability is created by statute and the statute provides the remedy, that remedy is exclusive and must be followed. Plank Road Co. v. Morley, 23 N. Y. 553, 554. But here the liability set forth in the complaint is not created by statute. The action is not a statutory action. It is the common-law action to recover damages for deceit affecting the plaintiff only, not the bank or the stockholders generally, and must be considered as such. In the complaint the plaintiff has set forth a cause of action for deceit, and not a cause of action under the statute.
Such a right of action exists. Prescott v. Haughey (C. C.) 65 Fed. 653, 655–659. There is nothing in the United States statutes that destroys the common-law action for deceit practiced by the directors of a national bank. Hardmann v. Bowen, 39 N. Y. 198. If the plaintiff were attempting to enforce a’liability created by statute against directors of a national bank, we should have a different case than that at bar. Hale v. Hardon, 95 Fed. 766, 769, 37 C. C. A. 240. The cases cited by defendants sustain these propositions. Bank v. Peters (C. C.) 44 Fed. 13, 14; Hayden v. Thompson (C. C.) 67 Fed. 273; Gerner v. Thompson (C. C.) 74 Fed. 125, 126. In the latter case the court says:
“But rights of action arising at the common law and growing out of transactions not injuriously affecting the capital stock or the interests of the shareholders at large may be enforced by any one suffering special injury thereby.”
If, therefore, the evidence establishes all of the elements necessary for a recovery in such an action, the action in its present form can be maintained. Kuelling v. Lean Mfg. Co., 183 N. Y. 78, 85, 75 N. E. 1098, 2 L. R. A. (N. S.) 303, 111 Am. St. Rep. 691.
The report of April 6, 1904, was attested to be true by the defend