Bergen County Mutual Assurance Ass'n v. Cole

The Chief Justice delivered the opinion of the court. One of the grounds assigned for setting aside the verdict, is the rejection upon the trial of competent testimony. The defendants called as witnesses their president and secretary, who were corporators and directors of the company. Their testimony was rejected, on the ground that they were parties to the action. The act of [365] 1855 (Nix. Dig. 887, § 26,) removes all disqualification on the score of interest. The only inquiry is, are the corporators parties, or is the corporation, the body politic, alone the party to the action. Different views of the true construction of this statute having been expressed upon the circuit,, it is proper that the question should be fully settled. Nothing is more clear than the distinction existing in law between the person of the corporation and that of the individual corporators. A corporation, says Mr. Kyd, is a political person, capable, like a natural person, of enjoying a variety of franchises. It is vested, by the policy of t'qe law, with a capacity of acting in several respects as an individual, particularly of taking and granting properly, contracting obligations, and of suing and being sued. 1 Kyd 13, 15. The great object of an incorporation is to bestow the character and properties of personality and individuality upon the legal entity called the corporation, as distinct from the persons of the corporators. Dartmouth College v. Woodward, 4 Wheat. 636; Providence Bank v. Billings, 4 Peters 562. And the power of suing and being sued as a person in its corporate name is one of the inherent capacities of every corporation- at common law, as well as by statute. Ang. & Ames on Corp., § 110; Nix. Dig. 138, § 1. As a result of this principle, a contract by a corporation does not bind the individual corporators. A judgment against a corporation is no lien upon the property of the corporators. In a suit by a corporation, the individual corporators are not liable to be served with process, nor are they answerable for costs. In actions by and against corporations, the declarations of corporators are not. admissible in evidence against the corporation as the declarations of partios. The Mayor of London v. Long, 1 Camp. 25 ; 1 Greenl. Ev., § 332. Corporators may be called as witnesses, and compelled to testify against their interest in a suit where the eorpo [366] ration is a party; which could not be if they were parties to the suit, for at common law no party could be compelled to testify against himself.’ City Bank of Baltimore v. Bateman, 7 Har. & J. 104; In the matter of Kip, 1 Paige 613. The members of charitable and religious societies, having no personal and private interest in the property holden by the corporation, are competent witnesses in any suit in which the corporation is a party; which could not be if the corporator was a party, for he could not be a witness for himself. Weller v. Governors of Foundling Hospital, Peake 163; 1 Greenl. Ev., § 333. So the members of municipal corporations may be witnesses for the corporation. Van Wormer v. Albany, 15 Wend. 262; Watertown v. Cowen, 4 Paige 510. The principle pervading these cases is thus clearly stated in a valuable'elementary treatise: “It appears always to have been considered that, in actions by or against corporations, individual corporators are’ competent where they have no interest in the event of the suit; for in all cases the objection to the witness has been, not that he was a member of the corporation, and consequently one of the parties to the suit, but that he had some personal interest which disqualified him from giving evidence.” 1 Phil. & Amos on Ev. 49. It is, says Greenleaf, the corporation, and not the individual member, that is a party to the record in all suits by or against it. 1 Greenl. Ev., § 332. These cases show clearly that, as the law stood at the passage of the act of 1855 concerning evidence, a member of a corporation was not deemed a party to a suit, and that he was excluded from being a witness solely on the ground of interest. This disqualification being removed by the act, the corporators became competent witnesses in suits by or against the corporation. And in this respect there is, in reality, no diffierence between the officers (the president, secretary, and managers,) and any [367] other member of the corporation. Many of the cases cited are where the witness offered was an officer, as well as a member, of the corporation. The provisions of the New York code, in this respect, are similar to our act of 1855. The 398th section declares that no person offered as a witness shall be excluded by reason of his interest in the event of the action. The 399lh section declares that the last section shall not apply to a party to the action, nor to any person for whose immediable benefit it is prosecuted or defended. The true construction of this provision has undergone repeated and elaborate investigation in the courts of that state, and its judicial construction is fully settled. Upon the construction of the second clause of the section, there appears to have been some conflict of authority upon the question whether a corporator is a person for whose immediate benefit an action by or against the corporation is prosecuted or defended. But upon the construction of the first clause the cases are uniform, that a corporator is not a party to an action brought by or against the corporation. The Washington Bank v. Palmer, 2 Sand. Sup. Co. R. 686, 690, note a ; The New York and Erie R. R. Co. v. Cook, Ib. 732; The Montgomery Co. Bank v. Marsh, 11 Barb. 645; S. C. in error, 3 Seldon 481; Pack v. The Mayor, &c., of New York, 3 Coms. 489. In the ease last cited, Mr. Justice Bronson, in delivering the opinion of the Court of Appeals, said it must be regarded as settled, that in a suit by or against a corporation, neither a corporator nor an officer can be rejected as a competent witness for the corporation, on the ground that he is a party to the record. This construction of our statute can in nowise be influenced by the decisions of the Supreme Court of the United States upon the citizenship of a corporation, and the subsequent jurisdiction of the federal courts over actions by and against corporations. If those decisions were less conflicting than they are, if any well-defined princi [368] pie had been settled by them, it is obvious that they have turned upon questions of constitutional construction, and have been influenced by considerations of public policy which do not at all enter into the consideration of the question before this court. Bank of U. S. v. Deveaux, 5 Cranch 61; Bank of Vicksburg v. Slocomb, 14 Peters 60; Louisville R. R. Co. v. Letson, 2 How. 497; Marshall v. The Baltimore and Ohio R. R. Co., 16 How. 314; Wheeden v. The C. and A. R. R. Co., 4 Am. Law Reg. 296; 1 Kent’s Com. 347. On the ground that the court overruled competent evidence, the verdict must be set aside, and a new trial granted. So far as the merits of the case aré concerned, I concur in the opinion of my brethren, that the verdict is not against evidence. Verdict set aside, and a new trial granted.