22 N.Y.S. 892 | N.Y. Sup. Ct. | 1893
In the year 1883, Sherman Bros. & Company, Limited, was incorporated under chapter 611 of the Laws of 1875 of the state of Hew York, relating to the organization and regulation of business corporations. The defendants in March, 1886, were elected directors of said corporation, for the term “until the next annual election.” They accepted the trust, and entered upon the discharge of their duties as directors. Ho election of directors was thereafter had. In July, 1889, an action was commenced in behalf of the people of the state of Hew York to dissolve said corporation. A temporary receiver was appointed in July, 1889. The action came on for trial in January, 1890, and a decision was made that the corporation should be dissolved. Final judgment of dissolution was entered in January, 1890. The temporary receiver was made permanent receiver. The affairs of the company were closed on the 15th day of January, 1891, and the receiver discharged. Sherman Bros. & Company, Limited, was engaged in buying and selling grain, and
There was evidence tending to show that the defendant Henry L. Fish, Jr., was elected a director of Sherman Bros. & Company on the 1st day of March, 1886. His term of office was for and until the next annual election. As we have seen, no other election of directors was thereafter had. Being a director, and taking part, as such, in the affairs of the corporation, the entries in its books during the period of his directorship were properly admitted in evidence against him. Huntington v. Attrill, 118 N. Y. 379, 380, 23 N. E. Rep. 544; Blake v. Griswold, 103 N. Y. 434, 9 N. E. Rep. 434.
Two reasons are urged by the counsel for the defendants Sherman why the plaintiff was not entitled to a direction of a verdict against them:
First, that the banks used the property of Sherman Bros. & Company, Limited, to pay the notes, and consequently, the debt having been discharged, the simple transfer of the evidence of indebtedness vested no right of action in the transferee of the notes; the argument being that the warehouse receipts, being payable to the order of the company, represented property in store belonging to that corporation, and that the transfer of the certificates to the banks carried with them the ownership of the property represented by the receipts, and that Avhen the stockholders of the elevators paid Sherman Bros. & Company’s debt to the banks, and received the notes and warehouse receipts, the notes were, in effect, paid, and no right of action passed to the transferee. Ho account is taken in the counsel’s argument of the important circumstance that his clients had fraudulently removed from the elevators, and converted to their own use, the grain called for by the warehouse receipts. The holders of the notes, not being able to find the grain, called upon the warehousemen to make good their receipts. They did so by paying the amounts due the pledgees, the banks. The banks indorsed the notes in blank, and delivered them, with the receipts attached, to the representatives of the elevators, who had paid them the money. They thereby, we think, became the creditors of Sherman Bros. & Company, and, as such, had the right to maintain an action against the defendants to recover the penalty provided by the act of 1875 for the failure of the directors io make their annual report.
It is further contended by appellants’ counsel that the plaintiff never became the creditor of the corporation, so as to entitle him to