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New York Appellate Court Decides Case Involving Manufacturing of China

The complaint alleges two causes of action. For a first cause of action according to a New York Injury Lawyer, was that the plaintiff alleges that – it is a membership corporation of New York State; defendant is a domestic corporation; plaintiff corporation is ‘comprised of member organizations’ which ‘manufacture approximately ninety-five percent (95%) in dollar sales of all restaurant china manufactured in the United States’; prior to the commencement of the action, the several ‘member organizations duly assigned to plaintiff their respective causes of action against the defendant’, growing out of the matters thereafter alleged in the complaint.

Plaintiff’s assignors for many years had manufactured restaurant chinaware and advertised extensively throughout the United States the sanitary nature and other advantages of china dinnerware manufactured by them; by such means they had acquainted the users of and potential customers for, with the names of plaintiff’s assignors as being the manufacturers of such products; by such advertising, the plaintiff’s respective assignors had gained the confidence and respect of the users of their products, particularly as to the sanitary benefits thereof, all of which was reflected in their respective increase of yearly sales; the products of said assignors were received and used with complete confidence by the users thereof, particularly as to their sanitary qualities; the plaintiff’s assignors and the defendant were and are competitors in the manufacture and sale of restaurant ware; the defendant ‘wilfully, maliciously, falsely and fraudulently caused to be published and widely circulated among the users and purchasers of restaurant dinnerware many advertisements allegedly representing the comparative sanitary qualities of the defendant’s product and restaurant china’ and further that ‘upon information and belief, the advertisements of the defendant purported to illustrate and portray the relative sanitary qualities’ of the products ‘as determined by a testing made by a leading, prominent and respected institution in the field of public health’; the alleged ‘test’ was ‘wilfully, maliciously, falsely and fraudulently’ represented by the defendant to show that the products of plaintiff’s assignors were inferior (defective product) to those of the defendant from the standpoint of sanitary quality; the defendant’s advertisements were false and known by the defendant to be false, yet nevertheless were circulated and published to injure and destroy the amicable business relations between the plaintiff’s assignors and their customers to enhance the defendant’s profits; solely by reason of the ‘wilful, malicious, false and fraudulent advertisements’ published and circulated by the defendant, the business of plaintiff’s assignors was reduced and former and potential customers led to believe that such products were of poor sanitary quality (product liability may arise); and, the plaintiff’s assignors were obliged to expend substantial sums for advertising to overcome the false representations of the defendant’s advertising; the plaintiff’s assignors suffered damage in the sum of $1,000,000.

For a second cause of action, that – the defendant negligently misinterpreted and misrepresented the tests which it had conducted; the misrepresentations of the defendant, and the damages caused thereby, were due solely to its negligence and without any contributory fault on the part of plaintiff’s assignors; defendant’s negligence and carelessness caused plaintiff’s assignors damages in the sum of $1,000,000.

The issue on whether the plaintiff has the legal capacity to sue must first be determined. Defendant claims it has not such capacity. As will be noted, the complaint alleges that plaintiff is a membership corporation organized under the laws of New York State with its principal office in Erie County. A Nassau County Personal Injury Lawyer said the certificate on file contains, as required by such law, a recital of the purposes of which it is incorporated. As reviewed, none of the purposes gives the plaintiff the right to accept an assignment of a cause of action for the purpose of commencing suit on such assigned cause. Nevertheless, the complaint alleges two separate causes of action, one being for damages of $1,000,000 growing out of an alleged prima facie tort, and the other for a similar amount of damages growing out of negligence.

Not only do the purposes for which the plaintiff was organized under the Membership Corporation Law not include the power to accept an assignment of a cause of action for the purpose of commencing suit on it, but it appears that under the Penal Law, ‘no corporation shall take an assignment of any claim or demand, with the intent of bringing an action or proceeding thereon.’

The Penal Law has no applicability to the facts alleged in either cause of action set forth in the complaint in this case. The tenor of the complaint is to the effect that the alleged wrongful acts committed by the defendant caused damage to plaintiff’s assignors (not plaintiff) and that they occurred before the commencement of the action. It is obvious from the complaint that the ‘plaintiff’s assignors’, for whose benefit the action is being commenced, are manufacturing concerns engaged in business for profit, in competition with the defendant.

A Queens Personal Injury Lawyer said that corporations cannot maintain actions on claims which, in violation of the Penal Law, are assigned to the corporation for the purpose of bringing suit thereon’.

Although there is no allegation in the complaint stating the date when the ‘plaintiff’s assignors’ became members of plaintiff corporation, it was obviously between 11 June 1957 (when plaintiff’s certificate of incorporation was filed in the Erie County Clerk’s office) and 18 December 1959, when the summons in this action is dated. During all of that time, Section 275 of the Penal Law was in effect in its present form.

In view of the above, the court holds that the assignments which plaintiff alleges as the basis for the causes of action set forth in the complaint were and are prohibited; that the plaintiff is not the real party in interest and that the actions should have been brought in the respective names of the alleged assignors.

At present, ‘personal injury’ is often used to designate a physical injury to the party. But usually, when there is an attempt to put the matter into legal phraseology, these and equivalent words are understood to import the meaning in which they have long been used by recognized authorities, whether in legal text-books and commentaries or precise definition by courts, in classifying the rights of individuals. In 1 Blackstone’s Com. 129 et seq., the author classifies and distinguishes those rights which are annexed to the person, jura personarum, and acquired rights in external objects, jura rerum; and in the former he includes personal security, which consists ‘in a person’s legal and uninterrupted enjoyment of his life, his limbs, his body, his health and his reputation’. And he makes the corresponding classification of remedies. The idea expressed is that a man’s reputation is a part of himself, as his body and his limbs are, and that detraction of it is an injury to his personality, and Chancellor Kent in his twenty-fourth lecture shows that the same classification of rights was expressed in our colonial legislation and has always been observed.’

The form of the action is not material. The controlling consideration is, that it does not relate to property interests, but to personal injuries.’

The similarity between the causes of action enumerated in the General Construction Law, and the cause of action involved in a decided case of, with the causes of action contained in the complaint in the instant action, is striking. Applying the canons of statutory construction, noscitur a sociis (meaning it is known from its associates) and ejusdem generis (meaning of the same kind) as set forth in McKinney’s Consolidated Laws of New York (Book 1, Statutes, Section 239) it appears clearly that the plaintiff’s alleged causes of action are based upon and within the meaning of the words ‘other actionable injury to the person’ as those words are used in Section 37-a of the General Construction Law.

The alleged causes of action set forth in the complaint to recover damages for personal injuries could not be lawfully assigned to plaintiff for such assignments are prohibited by the Personal Property Law.

You might find yourself in the same situation as the abovementioned case law and you have no idea what to do. Whether you have been injured due to someone’s negligence, or are involved in a product liability, or premises liability matter, contact Stephen Bilkis & Associates. We will provide you with guidance and a free consultation.

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