7 Johns. Ch. 217 | New York Court of Chancery | 1823
The cause has been brought to a
hearing by the plaintiffs upon the bill and answer, and consequently, the answer is to be taken for true “in all points.” This was one of Lord Bacon’s rules, (rule 64.) and it was afterwards adopted by Lord Clarendon ; and it is a rule admitted throughout the books to be well settled. (Grosvenor v. Cartwright, 2 Ch. Cas. 21. Bohun’s Cur. Canc. 149.) All the averments, in the answer, are to be taken for true; and even where the defendant states, that he believes and hopes to be able to prove such and such matters, they must be considered as proved, as the plaintiff, by not replying, has excluded the defendant from the opportunity of proving his averments. (Barker v. Wyld, 1 Vern. 140.)
Every allegation of fraud and intentional abuse of trust, is fully and explicitly denied in the answer; and I am now to inquire whether the facts charged and admitted, are sufficient to warrant a decree in favour of the plaintiffs, notwithstanding there be no fraud in fact imputable to the defendants, and notwithstanding every averment in the answer of any matter of fact, is to be taken for true.
The plaintiffs contend, that the defendants, who subscribed the certificate, filed in the secretary’s office, in 1815, in pursuance of the statute, and in order to constitute themselves a body politic and corporate, were guilty of fraud, in declaring, “ that the amount of the capital stock of the Company should be 40,000 dollars,” inasmuch as only 33,000 dollars were originally subscribed. The answer to this objection is very obvious and decisive. The statute could not have had reference to the whole capital then ac
It is undoubtedly a far-fetched suggestion, that the plaintiffs were induced, in 1817, to give credit on the assumption of a capital originally subscribed, to 40,000 dollars, when it is not stated that the plaintiffs made any inquiries as to the fact, and when the credit of the company, in 1817, must have rested upon circumstances then existing. Their stability must have depended upon the manner in which their capital had been previously employed and dispersed, and upon the probable productiveness, at that time, of capital employed upon cotton fabrics.
It is further contended, that the stockholders were individually responsible, to the extent of their shares of stock, for the debts of the company, according to the provision of the statute, on the ground that the corporation was dissolved; and the corporation is said to have been dissolved by the sales on execution of their real and personal estate, and by the suspension of the business of the factory. The defendants admit the sales and the suspension of the business of the factory, arising from the depreciation of cot
I do not think I am warranted in carrying that decision beyond the circumstances of the case, and to hold that
Here, then, a fatal objection at once presents itself to this bill. The corporation, in its corporate capacity, is not a party to a suit for a corporate debt; and the individual stockholders are not responsible, in their private capacity, as upon a dissolution of the company.
And, if we were not embarrassed by this technical objection, and the question was fairly before me, under competent parties, touching the abuse of trust by the several defendants, I could not hold that a single charge was supported upon the admissions and against the averments in the answer.
What is the language of the answer to the charges
This is the substance of the answer; and assuming it to be true in all points, I cannot see any ground for the charges in the bill, or any title to relief, as against these individual defendants.
There is a balance due on the mortgage given by the company, and assigned to the plaintiffs; but the bill is not adapted for the foreclosure of that mortgage. The company are a necessary party, for they are the mortgagors. There does not appear, therefore, tobe any sufficient ground for the bill, and, consequently, it must be dismissed. But considering the nature and difficulties of this case, and the circumstances which led the plaintiffs to institute the suit, I shall not charge them with the defendants’ costs. The case has, indeed, been attended with peculiar interest, owing to the former unsuccessful efforts of the plaintiffs to repair their losses, in respect to this same demand. (4 Johns, Ch. Rep. 671. S. C.)
Bill dismissed, without costs.