Zeltner v. Henry Zeltner Brewing Co. (85 A.D. 387, 1903)

O’Brien, J..: •

The receiver of the defendant corporation moved to vacate and :set aside a judgment herein on the ground that the summons and complaint have never been served, on the defendant corporation. It appeared that the summons was served on a person who.had been president, but such service was made after he had resigned.

In Yorkville Bank v. Zeltner Brewing Co., No. 1 (80 App. Div. 578), where the same facts appeared, this court held that such a service was bad and did not confer jurisdiction, and accordingly vacated the judgment. Upon this question of service, therefore, as the same facts are here made to appear and this court thus decided the precise question involved, this would be conclusive upon the disposition to be made were it not that we are to inquire, into the reasons which induced the learned judge at' Special Term to depart from that decision.

.It appears that in a proceeding brought in the second department to vacate a judgment the good faith of the resignation of the president of the defendant corporation and the reasons which brought it about, were presented for the consideration of the court. (Zeltner v. Zeltner Brewing Co., 79 App. Div. 136.) It having been found that the resignation was made with a view to throwing the company into the hands of a receiver and. was made in bad faith, the court held that it was not effective and that, notwithstanding such resignation, the president of the corporation was not rélieved from • the obligation of performing his duties as president, nor was he relieved thereby from his office as president, and the service upon him, though made after the alleged resignation, was good. Upon appeal in that case to the Court of Appeals upon a question certified, that court was asked : “ Were the resignations of the officers and directors (excepting the secretary) of The Henry Zeltner Brewing Company for the purpose of enabling this action to be brought and a receiver of the property of the corporation to be appointed,, legal or effective ? ” This question was answered in the negative, the court holding (Zeltner v. Zeltner Brewing Company, 174 N. Y. 247) that such resignations are neither ’legal nor effective since • the statute (Code Oiv. Proc. § 1810, subd. 3) was never designed to permit the officers of a corporation to abandon their posts of duty and abdicate their official functions for the express purpose of shifting their burdens to the shoulders of the court. The learned judge writing the opinion in that case said: “ We may admit for the purposes of this discussion that, as a general rule, such officers may resign at will and that the validity of such resignations does not depend upon their formal acceptance.”

Were the same facts jiresented in this record so that it was made to appear that the object and purpose of the resignation was to secure the appointment of a receiver and, therefore, that it was in bad faith, it would be our duty to follow the decision of the Court of Appeals in that case. The record before us, however, is barren of any facts from which any such conclusion could be drawn. We ■ have merely the papers upon which the motion to vacate the judgment was made, showing the resignation of the president prior to the service upon him of the summons and embodying the opinion of the Appellate Division in the second department and of the Court of Appeals in the case to which we have referred. The learned judge at Special Term assumed that he had the right to consider the entire record which had been presented to the Court of Appeals in that case (Zeltner v. Zeltner Brewing Co., supra), although no such record was presented on the hearing of the motion made, nor was such record or proof of the facts or allegations therein contained bearing upon the nature of the resignation ever served upon the receiver, and the receiver was in no way given an opportunity to meet or answer such record or proof.

This practice, we think, cannot be sustained. No doubt the same facts appearing in the record in the Court of Appeals could have been presented tending to show that the resignation of the president was made in bad faith and for an improper and illegal purpose, but to avail of them they should have been presented when the motion was made at the Special Term. We do not think that there is any practice which would sanction the courts determining the .motion upon facts which appeared in a record or in papers not presented upon the motion. If it was proposed to show that the resignation was colorable or in bad faith or for an improper or illegal purpose, it was entirely competent for the plaintiff, in answer to the motion to vacate the judgment, to show such facts, and, to that end, undoubtedly he could have resorted to the record in the Court of Appeals or presented otherwise the same facts as were therein established and upon which that court based its decision. We think, however, that it was improper for the learned judge at Special Term to go outside the papers used upon the hearing and, of' his own motion, determine that he would consider other and different papers not presented to him and which he concluded were sufficient .to justify his denying the application:

In Chcvpuis v. Long (77 App. Div. 274) it was said': “We have on several occasions lately called attention to this practice which we think is bad and should not be encouraged, of permitting in support of a motion affidavits to be read and received which have not been served and which the person against whom they are used - has had- no opportunity of answering.” The practice here followed goes one step further, and, if sanctioned, would permit the court without notice to the parties to decide the motion upon papers which were neither presented nor used upon the hearing and which formed part of a record in an entirely different and distinct litigation.

We think that the order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars; costs.

Van Brunt, P. J., Patterson, McLaughlin and Laughlin, JJ., concurred.

■ Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.