Hanna v. . LyonHanna v. . Lyon
Thе findings of the trial court establish conclusively that the defendants’ testators, Charles P. Lyon and Jоshua J. Rogers, were, as officers and directors .of the People’s Hational Bank of Salem, N. Y., guilty of negligence, resulting in a loss of many thousands of dollars to the bank, a loss so great that an assessment equal to the capital stock was charged upon the stоckholders. Upon these findings the trial court gave judgment for the plaintiff, which was reversed in the Appellаte Division and the complaint dismissed. The form of the order of reversal was such as to mаke it the duty of this court, under section 1338 of the Code of Civil Procedure, to assume that it was not reversed upon the facts.
*110
The question presented for our determination is whether either of the plaintiffs is entitled to maintain an action against the defendants upon the facts found. The law is settled in this state that Ri;ectors_of monetary corporations are held to the same degree of care that men of ordinary prudence exercise in regai-d to their own affairs.
(Cassidy
v.
Uhlmann,
170 N.
Y.
517;
Bloom
v.
National Savings & Loan Co.,
The bank could have successfully prosecuted an action against the defendants, but it did not do so; and in such a case it is well settled that a stockholder may bring such an action in behalf of himself and all others in like situаtion, either after demand made that the bank should bring the action and its refusal, or without demand where the persons who committed the wrongful acts continue to be directors of thе corporation.
(Brinckerhoff
v.
Bostwick,
The plaintiff Hanna by his complaint brought himself within the rule established by these authorities by alleging in effect that all of the present directors of the bank, with one exception, were directors of the bank at the time of the acts and misconduct which led to the suspension of the bank, and that аll of the old directors were guilty of negligence and misconduct in connection with their supervision and management of the bank, and the bank was made a party defendant.
But while the plaintiff Ilanna was a stockholder at the time of the commission of the acts of which he complained, he had ceased to be a stockholder at the time of the commencement of the action, and hence was without authority to maintain it. His rights as a stockholder had passed to the *111 subsequent purchaser of the stock, and the Appellate Division was, therefore, right in reversing the judgment as to him and dismissing the complaint.
The plaintiff Piser is a stockholder and as such has the-right under the authorities we have cited to maintain an action for the purpose of securing to the bank this asset of the bank, which accrued to it by reason of the misconduct of the defendants. It is true that she was not a pаrty to the action at the-time of its commencement, but the action was brought in behalf оf the plaintiff and all other stockholders in like situation avIio should in due time come in and sеek relief by and contribute to the expenses of the action. The plaintiff Piser movеd the court at Special Term that she be made a party plaintiff to the actiоn. This motion was opposed by the defendants, but the court granted the order making her a рarty plaintiff, so amending the complaint as to make it contain the necessary аllegations to entitle her to prove her claim upon the trial, and so amending the аnsAver that it met the amended allegations in the complaint.
In the notice of apрeal from the judgment entered in favor of the plaintiffs the defendants gave notice of their intention to bring up for review the order making Clarissa Piser a party plaintiff. The Appеllate Division, however, did not reverse-that order, and, hence, the order making her a рarty plaintiff stands; and it was accordingly error for the Appellate Division to dismiss the complaint as to her. In other respects the judgment was right and must stand.
As we think that the interests of justice will be best sub-served by a new trial as to the plaintiff Piser, the judgment appealed from must be affirmed, except in so far as it dismissed the complaint as to the plaintiff Piser, and as to her the judgment must be reversed and a new trial granted, Avith costs to the appellant Piser to abide the final award of costs.
Bartlett, Martin, Vann, Cullen and Werner, JJ., concur; O’Brien, J., absent.
Judgment accordingly.