« AnteriorContinuar »
acts were strictly limited to those of a representative of a corporation, he could not do. He may file exceptions to the report a referee appointed to take proof of claims, and for that purpose represents not only the corporation, but be stands as a trustee of its funds for all creditors, and may intervene to see that no injustice is done to any one.'
“In Whittlesey v. Delaney, 73 N. Y. 571, it was held that, a corporation having become insolvent, its receiver, as the representative of creditors, has the capacity to make the objection that a judgment against the corporation by confession was not obtained in such a manner as to be binding upon the corporation. To the same effect is Stokes v. Pottery Co., 46 N. J. Law, 237.
"In Carbon Co. v. McMillin, 119 N. Y. 46, 23 N. E. Rep. 530, 7 L. R. A. 46, it was held: 'It is claimed tbat no action could have been maintained by the trustee representing the trust combination against the Brush Electric Light Company to recover the purchase price of the carbons, for the reason that the illegality of the combination would have constituted a good defense. Assuming this predicate, it is asserted that the receiver stands in the same position, and that his title is subject to the same infirmity, as that of the combination which he represents. Without considering the assumption upon which his proposition is based, it is a sufficient answer to the proposition asserted "that the receiver unites in himself' the right of the trust combination and also the right of creditors, and that he may assert a claim as the representative of creditors which be might be unable to assert as a representative of the combination, merely.” The general rule is well established that a receiver takes the title of the corporation or individual whose receiver he is, and that any defense which would have been good against the former may be asserted against the latter. But there is a recognized exception wbich permits the receiver of an insolvent individual or corporation, in the interest of creditors, to disaffirm dealings of the debtor in fraud of their rights. Assuming that the trustee could not have recovered of the Brush Electric Light Company for the reasons suggested, it would be a very strange application of the doctrine that no right of action can spring from an illegal transaction which should deny to innocent creditors of the combination, or to the receiver, who represents them, the right to have the debt collected, and applied in satisfaction of their claims.' To the same effect are Moise v. Chapman, 24 Ga. 249, and Hamor v. Engineering Co. (C. C.), 84 Fed. Rep. 393. In the latter case it is said: “The receivers, representing both the creditors and the defendant, have the right to assert any defense to which the creditors, in contradistinction to the defendant, are entitled.'
"In Insurance Co. v. Swigert, 135 III. 150, 25 N. E. Rep. 680, 12 L. R. A. 328, it was said (page 167, 135 Ill., page 685, 25 N. E. Rep. and page 333, 12 L. R. A.): We understand the rule to be that,
where a receiver is appointed for the purpose of taking charge of the property and assets of a corporation, be is, for the purpose of determining the nature and extent of his title, regarded as representing only the corporate hody itself, and not its creditors or shareholders, being vested by law with the estate of the corporation, and deriying his own title under and through it; and that for purposes of litigation he takes only the rights of the corporation such as could be asserted in its own name, and that upon that basis only can he litigate for the benefit of either shareholders or creditors.' The opinion in the last-mentioned case then proceeds to discuss the power of a receiver, and holds that, so far as the title of the property is concerned, the power of the receiver is solely and only a power with reference to the corporation. The opinion then further holds (page 177, 135 Ill. page 688, 25 N. E. Rep. and page 336, 12 L. R. A.): “But, so far as his powers are derived from a statute, or from a lawful decree of court, and the powers do not involve rights which, at the time of his appointment, were vested in such owners, he is not merely their representative, but is the instrument of the law, and the agent of the court which appointed him. Such right and authority as the law and the court rightfully give him he possesses, and in respect to such right he is not circumscribed and limited by the right which was vested in and available to the owners.
"In Knights v. Martin, 155 Ill. 486, 40 N. E. Rep. 358, the court said (page 489, 155 Ill., and page 358, 40 N. E. Rep.): "This was a motion to quash an execution issued upon a judgment confessed in vacation, and to set aside the judgment. Shortly after the judgment was confessed, the judgment debtor executed to appellee a deed of assignment of all his property for the benefit of his creditors. The motion was made in the name of the judgment debtor and his assignee, but before decision the debtor formally withdrew the motion as to himself, and it was afterwards prosecuted by the assignee.' The motion was denied. The court then further say: 'Appellants contend that appellee was not a proper party to make this motion, which was made under section 65 of chapter 110 of the Revised Statutes. The assignee takes the same interest and title in the assigned estate that his assignor possessed, and his title will be subject to all the equities that existed in respect thereof in the hands of the assignor, and he may do whatever his assignor might have done in respect of the assigned property if no assignment had been made. * * We are of the opinion that the relationship of the assignee to his assignor and to the assigned estate is such that he may be considered a proper party to make this motion, notwithstanding the rule that no one but a party to a judgment or execution can move to set aside a judgment or quash the execution.”
"The receiver in this case was appointed under the provisions of section 25 of the act with reference to corporations, which statute authorizes
him to close up the business of the corporation, power of properly closing out the business of the and do all things necessary to that end, to sue in corporation, collecting its assets, and distributing all courts, etc. The decree under which he was the estate to those equitably entitled thereto. We appointed directed: "That any and all officers, are of opinion that, where there is fraud and colagents, attorneys, servants, and employees of said lusion in obtaining judgments against a corporadefendant, and any and all parties baving in their tion for which a receiver has been appointed, the possession or under their control any of the prop effect of which judgments will be to diminish the erty or assets of the defendants; immediately sur estate in the receiver's hands, or which should render all such property and assets to the receiver properly come to him, or which would prevent hereinbefore named, and that they, and each and its proper distribution to those equitably entitled all of them, refrain from in any manner intermed thereto, the receiver has such a standing in court dling with said property, or withholding posses with reference to the estate that for the purpose sion thereof from such receiver; and they, and of closing out the estate he may appear and coleach of them, are hereby enjoined from any and lect what is properly owing to the corporation, all attempts to withhold or conceal any of said and defend not only the corporation, but protect property from said receiver, and from contracting its creditors and stockholders from collusive and any liabilities in the name or on behalf of said de fraudulent judgments." fendant Illinois corporation, or of using its name for any purpose or in any proceeding; and all parties having any claims agaisst said defendant Illinois corporation are hereby directed to present LIABILITY OF MUNICIPAL CORPORAthe same in this proceeding for adjudication.' It
TIONS FOR NEGLIGENCE IN THE is absolutely necessary, in closing up the business
EXERCISE OF PRIVATE OR MUNICof a corporation, as provided by the foregoing provision of the statute, that there must not only
IPAL POWERS. be a collection of the debts owing to it, but there must be a determination as to the debts due from
Sec. 1. General Rule Stated.- While the the corporation, before the court can equitably distribute the funds of the corporation in the pay
municipal corporation in performing or omitment of debts. In this case, having in view the ting to perform a duty imposed upon it as an proper distribution of the funds of the corpora agent of the State in the exercise of strictly tion, the court, by its decree, specifically directed
governmental or State functions is not liable that all persons should refrain from interfering
to private action, on account of injuries resultwith the property or withholding possession thereof from the receiver, and that the defendant
ing from the wrongful acts or negligence of and others should be 'enjoined from any and all
its officers or agents, yet with unanimity the attempts to withhold or conceal any of such prop courts declare that where such officers or erty from said receiver, and from contracting any servants are in the exercise of power conliabilities in the name or on behalf of said defend
ferred upon the city for its private benefit or ant,
or using its name for any purpose or in any proceeding. The officers of this cor
pecuniary profit and damage results from poration, until this decree, were prevented from
their negligence or misfeasance, the municithe execution of promissory notes, and from doing pality is liable to the same extent as in the any act increasing the liability of this corporation, case of private corporations or individuals.2 by which the assets in the hands of the receiver
In so far as cities exercise powers not of a should be diminished or destroyed.
“The circumstances under which the promis- governmental character, “voluntarily assumed sory note for which this judgment was rendered
powers intended for the private advantage was given are strongly indicative of fraud and and benefit of the locality and its inhabitants, collusion. The judgment is prejudicial to the there seem to be no sufficient reason why they estate in the hands of the receiver. By it the es should be relieved from that liability to suit tate would be diminished, and the amount in the
and measure of actual damage to which an hands of the receiver for the payment of valid claims would be greatly lessened. One of the
individual or private corporation exercising appellees is the chief stockholder in both of the
the same powers for purposes essentially pricorporations. As a stockholder in the corpora vate would be liable.”8 Notwithstan ling the tion in whose favor a judgment was rendered, he becomes the chief beneficiary by that judgment,
1 Hill v. Boston, 122 Mass. 344, 23 Am. Dec. 332,50 and through his action there is effected a change
Cent. L. J. 84 et seq. in the character of the estate coming to the hands
2 Murtaugh v. St. Louis, 44 Mo. 479; Keating v. Kan. of the receiver and for his own benefit. To hold
sas City, 84 Mo. 415; Carrington v. St. Louis, 89 Mo. that the receiver, in such a case, should not be 208; Ulrich v. St. Louis, 112 Mo. 138; Donaboe v. Kan. permitted to appear and contest a judgment collu sas City, 136 Mo. 657; Welsh v. Rutland, 56 Vt. 228, 48 sively entered into, would be denying him the Am. Rep. 762.
3 Per Stayton, J., in Galveston v. Posnainsky, 62
rule in Michigan has long obtained that mu cases, and some of the later ones, hold that nicipalities are not usually responsible in dam these corporations are liable in the manageages for the neglect of persons in public office, ment of the property only when it is conunless made so by statute,+ at an early day trolled for corporate profit or pecuniary adthe supreme court of that State established vantage to their inhabitants; denying all liathe principle, in recognition of the private bility for negligence in the management of pubcharacter of the municipal corporation, that lic or governmental property. By almost where & city is engaged in making a work unanimity of decision the principle is sustained which is its private property as a municipality, that municipal corporations must respond and not a mere public easement, and done in damages for injuries resulting from their under city employment or contract, it is re negligent management of property under their sponsible for injuries caused by neglect in its control if such property is held for pecuniary process of construction, as it is for any such profit, although it may be used principally for action as directly injures private property governmental purposes. Thus, if, in repair
Sec. 2. Liability Growing Out of Manage- ing a building belonging to the city, and used ment of Property.-Municipal corporations in part for municipal purposes, and in conare to be regarded as artificial persons, own siderable part also as a source of revenue to ing and managing property, and in this ca the corporation, the agents and servants of pacity they are chargeable with all the duties the city dig a hole in the ground adjoining, and obligations of other possessors of prop and negligently leave it open and unguarded, erty and must respond in damages for all so that a person rightfully walking on a path their torts connected therewith, in like man leading by the building, although not a pubner as natural persons or private corpora- lic highway, falls into such hole, and is intions. But it should be noted that as relates jured, the city will be liable to an action at to the management of property concerning common law for the injury. The doctrine governmental, as distinguished from munic as to liability for negligent management of ipal affairs, the adjudications are decidedly property has been farther extended in a reconflicting; however, this want of harmony is cent Oregon case where it was held that the chiefly confined to the management of high fact that waterworks of a city were built unways, and drains and sewers established to der authority imposed upon it by the legisla. promote the public health. The tendency of ture, and under the direction and supervision the later cases is to consider that the duty of a committee appointed by the legislature, of these bodies to keep property under their will not exempt the city from the general rule control in a safe condition as a private rather which imposes upon municipal corporations than a public or governmental duty, and needing and operating such works liability hence they are ordinarily held liable for in for injuries to private individuals through jury to others growing out of their omission their negligent construction or operation. to do so, notwithstanding the property in The weight of authority unites in supporting question is not private corporate property the rule of responsibility whenever the viofrom which the city is deriving profit, but lated duty is itself municipal, although it may strictly public or governmental, producing no concern or be related to governinental affairs. revenue to the local corporation. The earlier Thus, in a recent New York case, it has been
held that the duty imposed by statute on the Tex. 118, 13 Am. & Eng. Cor. Cases, 484, quoted with city to remove dirt from its streets and ashes approval in 15 Am. & Eng. Ency. Law, 1141; 2 Dillon,
and garbage from abutting residences is a Munic. Corp. $ 980. 4 Detroit v. Blackeby, 21 Mich. 84, approved in
quasi-private duty, and therefore the city was O'Leary v. Board, etc., 79 Mich. 281, 285.
held liable for the wrongful acts of its serv5 Detroit v. Corey, 9 Mich. 165, approved 79 Mich. 285; Ashley v. Port Huron, 35 Mich. 296; Defer v. De 7 Hill v. Boston, 122 Mass. 344, 23 Am. Rep. 332; troit, 67 Mich. 346.
Eastman v. Meredith, 36 N. H. 296; Ham v. New York, 6 See Cooley on Torts, 619, 620; Ashley v. Port 70 N. Y. 459. Huron, 35 Mich. 296; Rowland v. Kalamazoo County, 8 Oliver v. Worcester, 102 Mass. 489, 3 Am. Rep. 485. 49 Mich. 553, where at page 560 it is said than an ex. 9 Esberg Gunst Cigar Co. v. Portland, 33 Oreg. 43 amination of the authorities will show that "munic L. R. A. 435. See Mayor, etc. v. Bailey, 2 Denio (N. ipal corporations, in the care and management of their Y.), 433; Darlington v. Mayor, etc., 31 N. Y. 164; property like an individual, are in duty bound to pro Barnes v. District of Columbia, 91 U. S. 540, 552; duce no injury to others.”
Wright v. Holbrook, 52 N. H. 120, 13 Am. Rep. 12.
ants while engaged in such service. This The city must keep its docks, wharves and case regards the duty as an essentially pri-piers suitable for use, 17 although it may not vate one, resting originally on the individual receive pay on its own behalf for their use. 18 property owner, and assumed by the munic- Municipal corporations have been held liable ipality merely for the convenience and ad for the negligent management of gas works, 19 vantage of its citizens. This view would of waterworks,20 of sewers, 21 of cemeteries, 22 seem to be consistent with the historical de of public markets, and of other property.24 velopment of the assumption of such duties However, a city is not liable in damages for by municipalities, and the result appears to injuries inflicted upon a person by the fall of be in accord with the general tendency shown a market house caused by a wind .storm of by recent cases to broaden the liability of unprecedented force and violence, in the abpublic corporations for the tortious acts of sence of negligence.25 And finally it is gentheir agents. But in a recent Tennessee case, erally held tbat when a special power or through the negligence of the driver, a privilege is conferred upon or granted to a sprinkling cart in the service of the city municipal corporation, to be exercised for its struck the plaintiff's buggy and injured the own advantage or emoluments, and not as a plaintiff, it was held that the city was not mere governmental agency, it is liable to the liable, as its servant was engaged in a gov same extent as an individual or a private corernmental duty of the city in promoting the poration for negligence in managing or dealpublic health." Things done for pecuniary ing with the property rights or franchises profit by the city are regarded as strictly held by it under such grant.26 municipal duties.12 Hence, the city is liable for negligence of its ice boat engaged in towing a vessel for the city's gain.18 So there is
Rep. 357; Pittsburg v. Grier, 22 Pa. 54, 60 Am. Dec.
65; Mersey Docks & Harbour Board v. Gibbs, 11 H. liability for negligence in the construction
L. Cas. 686; Seaman v. New York, 80 N. Y. 239; Kenand repair of an electric lighting plant.14 And nedy v. New York, 73 N. Y. 365, 29 Am. Dec. 169; liability exists also for negligent management
Jones on Neg. Munic. Corp. p. 71, note 2.
17 Jones, Neg. Munic. Corp. $ 39. of real estate producing revenue to the city.18 18 Mersey Docks & Harbour Board v. Gibbs, 11 H. So, also, when the city owns a wharf, and re L. Cas. 686. Wilkins v. Rutland, 61 Vt. 336, holds ceives and charges wharfage for its use, it is
that where a city maintains a system of waterworks
for the double purpose of supplying the inhabitants bound the same as a private individual to use
with water for private purposes and providing against ordinary care and diligence in keeping it free fire there is municipal liability for any negligence in and safe from obstructions, and is liable in
that portion of the system supplying individuals for
bire. an action at common law for damages done
19 Western Savings Society v. Philadelphia, 31 Pa. to a vessel by reason of neglect of such duty.16 St. 175, 72 Am. Dec. 730; Kibele v. Philadelphia, 115
Pa. St. 41; San Francisco Gas Works v. San Francisco, 10 Quill v. Mayor of New York, 55 N. Y. Supp. 889, 9 Cal. 453. denying Davidson v. New York, 64 N. Y. Supp. 57. 20 Stoddard v. Winchester, 157 Mass. 567; Brown v. Contra: Love v. Atlanta, 95 Ga. 129.
Atlanta, 66 Ga. 71; Aldrich v. Tripp, 11 R. I. 141, 23 11 Connelly v. Mayor of Nashville, 100 Tenn. 262, 46 Am. Rep. 434; Stock v. Boston, 149 Mass. 410; Hand S. W. Rep. 565. This case is debied in Quill v. v. Brookline, 126 Mass. 324; Wilkins v. Rutland, 61 Mayor, etc., 55 N. Y. Supp. 889, 892. Maxmillian v. Vt. 336; Grimes v. Keene, 52 N. H. 330, 335; Powers New York, 62 N. Y. 160, negligence of ambulance v. Fall River, 168 Mass. 60; Lynch v. Springfield driver; Burrill v. Augusta, 78 Me. 118, negligence of (Mass.), 54 N. E. Rep. 871. Contra: Mendel v. Wheel. book and ladder company. See Lafayette v. Allen, 81 ing, 28 w. Va. 233, 57 Am. Rep. 665. Ind. 166, wbere a city was held liable to an engineer 21 Murphy v. Lowell, 124 Mass. 564. who was put to work on a defective fire engine. When 22 Toledo v. Cone, 41 Ohio St. 149, holding that the city is liable for damages caused by the erection of a principle of respondeat superior applies to municipal pest house, see Clayton v. Henderson (Ky.), 44 L. R. corporations where the acts of their servants or agents A. 474. County liable for a nuisance resulting in in refer to powers and duties ministerial in their nature jury caused by a small pox hospital. Haag v. Van. and character. derberg County, 60 Ind. 511, 28 Am. Rep. 654. City 23 Barron v. Detroit, 94 Mich. 601, 34 Am. St. Rep. not liable for negligence of boiler inspector. Mead y. 366; Suffolk v. Parker, 79 Va. 660, 52 Am. Rep. 640; New Haven, 40 Conn. 72.
Littlefield v. Norwich, 40 Conn. 406; Savannah v. Cul. 12 2 Dillon, Munic. Corp. $ 985.
lens, 38 Ga. 334; Weymouth v. New Orleans, 40 La. 13 Pbiladelphia v. Garagrin, 17 U. S. App. 612.
Ann. 344. 14 Bullmaster v. St. Joseph, 70 Mo. App. 60.
24 Cowloy v. Sunderland, 6 H. & N. 565, injury re. 15 Worden v. New Bedford, 131 Mass. 23, 41 Am. sulting from negligence in managing a wringing ma. Rep. 186; Jones, Neg. Munic. Corp. $ 38, and cases; cbine kept in a public wash house. Bailey v. New York, 3 Hill (N. Y.), 531.
25 Flori v. St. Louis, 69 Mo. 341. 16 Petersburg v. Applegratb, 28 Gratt. 321, 26 Am. 26 Esberg Gunst Cigar Co. v. Portland, 33 Oreg. 43
Sec. 3. Ground of Liability Stated.--Un Sec. 4. Liability for Negligence in Conder the adjudications it is thus manifest that structing Public Works and Failure to Keep responsibility growing out of the management in Repair-Sewers and Drains.—The city of property may be based on either of the will be held liable for damages directly retwo grounds: First. That the municipal cor sulting from the careless or upskillful manner poration is managing property. As the cor of constructing public work,29 as, for examporation is in full control of the property, in ple, a sewer, 30 and when it is completed the like manner as the individual and private cor- ministerial duty to use ordinary care to keep poration, it should be required to so manage it in repair and free from obstruction so that it as not. to cause damage to others, and all its capacity may be used and enjoyed is who, in the exercise of due care, are damaged mandatory.31 "The work of constructing by reason of the negligent management of sewers is ministerial, and when the corporasuch property should be given the right of tion undertakes this work it is responsible in private action against the corporation, other a civil action for damages caused by the carewise they are denied legal protection in this less or unskillful performance of the work.''32 respect. Although the property may be gov- | And a city authorized by its charter to estabernmental, as that term is used, and be non lish sewers cannot escape liability for its neg. productive to the city, the duty to properly ligence on the ground that it did the work care for it should in all cases be regarded as directly tbrough the superintendent of its private as distinguished from public. Second. streets when its charter provided that it Where damage grows out of the negligent should be done by contract to the lowest bidmanagement of property in connection with der. 83 Where the superintendent of the public work of a local or purely municipal streets of a city, baving charge of the concharacter liability exists. In actions of this struction of a sewer, provides all material for character municipal corporations have sought bracing the sides of the work and directs the to avoid responsibility by attempting to show manner of placing them, and the work is done that the neglected duty in the particular case accordingly, and a laborer, while working in was legislative or judicial as distinguished the trench, is injured because of defective from ministerial. But this doctrine is to be bracing, such negligence is that of the city reasonably applied, and the city, under the and not of a fellow-servant, though a foreguise of it, will not be allowed to cause dam man was in immediate charge of the work.34 age, as, for instance, in maintaining a nui “So it is the duty of corporations to keep sance.27 So, under cover of the doctrine, the sewers in repair, and if they are negligently city will not be exonerated where damages re- permitted to become obstructed or filled up, sult from a flagrant misuse of discretion, as so as to cause the water to flow back and do in the adoption of a defective plan for public injury, there is a liability on the part of the work.28
corporation having control over them.">85
This rule "seems to be the general, if not L. R. A. 435, 440. The mere happening of an accident
uniform, doctrine on this subject. The causing injury is evidence of negligence whenever the thing causing the injury is under the control of de.
sewers of the city are its private property; fendant, and the accident is such as in the ordinary course of things does not bappen if those who have lyn, 101 N. Y. 136, 54 Am. Rep. 664; Pye v. Mankato, the management Use proper care. Esberg Gunst 36 Minn. 373; New Jersey Soule v. Passaic, 47 N. J. Cigar Co. v. Portland, 33 Oreg. 43 L. R. A. 435. For Eq. 28; Terre Haute v. Hudimet, 112 Ind. 542; some cases as to presumptions from accidents result Spangler v. San Francisco, 84 Cal. 12. ing in injury, see Shafer v. Lacock (Pa.), 29 L. R. A. 29 Boulder v. Fowler, 11 Colo. 396. 254; Judson v. Giant Powder Co. (Cal.), 29 L. R. A. 30 Frostburg v. Duffy, 70 Md. 47. 718; Ryder v. Kinsey (Minn.), 34 L. R. A. 557; Scott v. 81 Woods v. Kansas City, 58 Mo. App. 272, 279; Stew. London & St. K. Docks Co., 3 Hurlst. & C. 596; 1 art v. Clinton, 79 Mo. l. c. 612; Foster v. St. Louis, Shear. & Red. Neg. $$ 59, 60; Thomp. Neg. 1230; Mul 71 Mo. 157; Taylor v. St. Louis, 14 Mo. 20. len v. St. John, 57 N. Y. 567, 15 Am. Rep. 530; Warren 32 Per Wagner, J., in Thurston v. St. Joseph, 51 Mo. v. Kauffman, 2 Pbil. 259; Huey v. Gahlenbeck, 6 Am. 1. c. 519; Dopaboe v. Kansas City, 136 Mo. 657; Roll v. St. Rep. 790.
Indianapolis, 52 Ind. 547. Compare Child v. Boston, 27 Speir v. Brooklyn, 139 N. Y. 6, 21 L. R. A. 641, 36 4 Allen (Mass.), 41, and Barry y. Lowell, 8 Allen Am. St. Rep. 664; Cohen v. New York, 113 N. Y. 532; (Mass.), 127. Stanley v. Davenport, 54 Iowa, 463; Little v. Madison, 33 Donaboe v. Kansas City, 136 Mo. 657. 42 Wis. 643.
34 Donaboe v. Kansas City, 136 Mo. 657. 28 Ashley v. Port Huron, 35 Mich. 296, 24 Am. Rep. 35 Per Wagner, J., in Thurston v. St. Joseph, 51 Mo. 552; Defer v. Detroit, 67 Mich. 346; Seifert v. Brook 1. c. 519.