107 N.Y.S. 331 | N.Y. App. Div. | 1907
The appeal is by the plaintiff. The action is upon defendant’s promissory note, which reads :
“ On Not. 1st, after date, I promise to pay to the order of Hap-goods, Ine., Twenty-five hundred dollars at their- office, for 25 shares Hapgoods, Inc., stock. Yalue received.
“ R M. LUSOPI.”
When it appeared on the trial that the note was given in payment of an original issue of stock in the plaintiff corporation, made to the defendant after the corporation was formed, and that the defendant had not paid in ten per cent cash, the court directed a verdict for the defendant. (See Stock Corp. Law, .§ 41.
In this State statutes, not common-law principles, regulate contracts for shareholding in corporations. (General Electric Co. v. Wightman, 3 App. Div. 118, 123.) In this State it is settled that the omission to obey a statutory requirement of a payment in cash upon a subscription makes the subscription invalid and hot binding upon the subscriber. (New York & Oswego M. R. R. Co. v. Van Horn, 57 N. Y. 473; Cook Corp. [5th ed.] § 174; South Buffalo Natural Gas Co. v. Bain, 9 Misc. Rep. 425, citing authorities.) The giving, of the note was not the equivalént, of a- cash payment of ten per cent. In Excelsior Grain Binder Co. v. Stayner (25 Hun, 91) and in Durant v. Abendroth (69 N. Y. 148) the reasoning which, rejected checks as equivalent to cash is applicable to- notes as well. Such á transaction is not a payment, but á promise. It is contended by the learned counsel for the appellant that Ogdensburgh, etc., R. R. Co. v. Wolley (1 Keyes, 118; S. C., 3 Abb. Ct. App. Dec. 398) is authority which renders it “ doubtful whether or not the note would have-been void.” That case was cited to the Commission of Appeals by the appellant in New York & Oswego M. R. R. Co. v. Van Horn (supra). It was to recover upon installments due upon a stock subscription. Originally the defendant had given, his note for the ten per cent cash requirement. Afterwards the defendant gave two notes for a sum including the ten per cent, and the original note was surrendered. The notes were negotiated "and then put in judgment, which was Satisfied. The defense to the action on the installments was the non-paynient of the ten per.cent in cash. The. court held that as the corporation
It was admitted that the note was made “ pursuant to the terms of •the agreement executed by the plaintiff and defendant on September 27,1904. The agreement recited that whereas the plaintiff desired the defendant to work for it, and the defendant desired to, work for it, in consideration of the premises and in further consideration hereinafter mentioned, it was mutually agreed, etc. The plaintiff agreed to give such employment and to pay the defendant $125 a month, and the additional sum of ten per cent of the net profits of the New York office. The agreement also provided : “ It is further agreed by the party of the first part that in consideration of and in part payment for the services rendered by the party of the second part that the stock purchased as above by the party of the second part shall entitle said party of the second part to a bonus of 100 per cent of common stock to be delivered by Herbert J. Hapgood, of which 50 per cent shall be delivered at the time the preferred stock is paid for in cash, and 50 per cent one year from date of this contract, providing the party of the second part is employed with Hapgoods at that time.” The appellant urges that inasmuch as pursuant to the agreement the stock was to be delivered by Herbert J. Hap-good, not the plaintiff, which stock had been already issued, “ this alone was sufficient to prevent the note from being void.” But the stock for which the note was given is referred to in the undertaking of defendant in that contract which reads as follows: “ To subscribe for and pay for 50 shares of the preferred stock of Hapgoods at $100 per share, par value; 25 shares to be paid for by his certain promissory note given this day and due November 1, 1904. The balance of the 25 shares to be paid for on or before December 31, 1904.” It was admitted that the note was made pursuant to -the contract. It appears then that the stock which was to be delivered by Herbert Hapgood was a bonus .of common stock, not the stock in question, and moreover that it was “ in consideration of
The question of the additional allowance was largely to he determined by the trial court, and J cannot say that the exercise of its discretion was 'sb unwise as to justify any-interference on our part.
The judgment should be affirmed, with costs.
Woodward and Miller, JJ., concurred; Hooker, J., voted to modify -the order by striking out the provision granting extra allowance; Hirsohberg-, P. J., not voting.
Judgment and order affirmed, with costs. r
See Laws of 1892, chap. 688, $ 41.— [Rep.