24 N.Y.S. 567 | The Superior Court of the City of New York and Buffalo | 1893
Lead Opinion
This is a motion for a new trial on exceptions ordered to be heard in the first instance at the general term. The facts in the case are undisputed. The American Bit & Brace Company was organized under the act to authorize the formation of corporations for manufacturing and other purposes, being chapter 40 of the Laws of 1848. The capital stock of the company has never been paid in, nor has any certificate thereof been made and recorded, as required by section 11 of that act. From the 2d day of January, 1892, until the 28th day of January, the defendant was the holder of 56 shares of the capital stock of the company, of the par value of $100 each share, and was during that time secretary and treasurer of the company. On the 28th day of January, 1892, the defendant sold 55 shares of his stock, and the same were on that day transferred on the books of the company to the purchaser, and 1 share was sold by him, and transferred on the books of the company, on the 20th day of February, 1892. On the 2d day of January, 1892, the company made two promissory notes, for four and eight months respectively, of $5,000 each, payable to the order of the company. The notes were signed by the treasurer, and countersigned by the president, Mr. Preston, and delivered to him, as the agent of the company, for negotiation and sale. On February 27th the company sold and delivered these notes to Gertrude E. Lee, for full value, who transferred the same to the plaintiff, for value, before maturity. The two notes were subsequently renewed, and the amount of them put in one note of $10,200, which included accrued interest. From January 2d to February 27th, when they were sold to Mrs. Lee, the notes remained in the possession of the company, unsold and undelivered. On the trial the court, on these facts, directed a verdict for the defendant. The only question raised is, is the defendant,
It may be assumed, as intimated in some of the cases, that stockholders are liable as partners, but in the cases examined it is expressly held that such liability is limited by statute. But where the statute has created or continued the liability against the stockholders, and limited it, as is done by the act of 1848, it becomes immaterial whether they are liable as partners or not. The question of their liability is to be determined by the statute itself, as construed by the courts; and, as the statute expressly fixes that liability, it would seem only necessary to make reference to it. By section 57 of chapter 564 of the Laws of 1890, which is substantially a re-enactment of section 10 of the act of 1848, it is provided that:
‘"Stockholders shall, jointly and severally, he personally liable to the creditors, to an amount equal to the amount of stock held by them, for all debts and contracts made by the corporation, until the whole amount of its capital stock shall have been paid in, and a certificate thereof signed and filed.”
The language of the statute seems to be clear enough to justify the court, without further authority, in holding that, before the stockholder can be charged with the debts of the corporation, it must appear that he was -such stockholder at the time the debt was created. The question has frequently been before the courts under the act of 1848, as well as other of the corporation laws, and the cases are quite uniform in holding to this construction of the statute. The citation of a few will be sufficient to show the line of reasoning of the courts, and the rules adopted: Moss v. Oakley, 2 Hill, 265; Johnson v. Underhill, 52 N. Y. 203; Tucker v. Gilman, 121 N. Y. 189, 24 N. E. Rep. 302. The construction given by the courts, in these cases, to this statute, fixes the liability of the stockholders who were such at the time of the creation of the debt; and as the defendant was not a stockholder when the note was negotiated, and the debt created, he is not chargeable with the payment of these notes, unless it is by some legal fiction which will make the statute ineffective. It is the claim of the plaintiff’s counsel that the plaintiff is the bona fide holder of the notes, for value, before maturity, and no defense can be interposed by the defendant. The defendant is not the maker of the note. His position, at most, is that of surety for the corporation, by reason of its failure to complete its organization. I do not think the rule is applicable to the facts, as they appear in the case. Before he can be charged as a. stockholder, he must have been such when the dene
Dissenting Opinion
[dissenting.) I am unable to agree with the reasoning and conclusion of the learned chief judge in this case, for the following reasons:
When it appeared that the whole amount of capital stock of the company had not been paid in, and that no certificate stating the amount of the capital stock, as fixed, or any part thereof, had been
“A note lias no binding force or legal inception, nor constitutes any contract, until delivered, and in tbe hands of a bona fide holder. It acquires the form of a contract from the delivery, and not, ab initia, from the execution of it. But when delivered it takes effect from its date, and, for all substantial purposes, becomes a binding contract upon the maker, ab initia.”
That the date of the instrument is presumptively the date of its delivery is decided in Cowing v. Altman, 71 N. Y. 435. It is true, in that case, proof was permitted to show the actual date of delivery, but this proof was to enable a bona fide holder to recover upon it,—a very different proposition from allowing proof of like character to defeat an instrument in all respects perfect in the hands of a bona fide holder. See, also, Sanford v. Mickles, 4 Johns. 224; Bank v. Kidder, 106 N. Y. 221, 12 N. E. Rep. 577. In the latter case, recovery was permitted, in the-hands of a bona fide holder, upon negotiable paper stolen from the maker. In Kinyon v. Wohlford, 17 Minn. 239, (Gil. 215,) proof of nondelivery of the paper was attempted to be shown. The court refused it, as against a bona fide holder. Upon the face of the notes, in the present case, there was nothing to put plaintiff upon inquiry. When he received them, if he had made inquiry to find who was responsible, and gone to the books of the company, he would have found, looking at the date of the notes, that defendant was a stockholder at that time, and not only a stockholder, but an officer. If he had pursued his inquiries, he would have found that defendant had disposed of his stock, and also ceased to be an officer, but this would convey nothing to plaintiff’s mind affecting the security. It would simply show that defendant was not then a stockholder, but that he was upon the date of the notes, and consequently liable as such, in accordance with the terms of the contract. It might well be that such examination would disclose that defendant, in fact, was the only person of responsibility behind the notes. Could it then be said, with justice, that defendant could show a different time of delivery, to defeat the notes, when plaintiff purchased upon his sole responsibility, and prima facie the instruments showed he was then liable as a stockholder? A rule that would work such result ought not to be tolerated, and I find no case or principle which upholds it. The fact that the'notes were consolidated in one note after defend