186 A.D. 682 | N.Y. App. Div. | 1919
In July, 1917, the plaintiff and the two defendants proposed to organize a corporation for the sale of Chevrolet automobiles and the plan materialized by forming the corporation. The plaintiff had been offered a dealer’s contract by the Chevrolet Motor Company for the borough of The Bronx and agreed to procure for the corporation this contract. The capital stock of the corporation was to be $15,000, to be divided equally between them. The plaintiff was to pay on his subscription $500. The defendant Stark was to pay on his subscription $500. The defendant Applebaum was to pay $5,000 in full for his own stock and in addition was to advance $9,000 for the plaintiff and Stark to pay for their subscriptions and was to hold the stock as collateral thereto. The plaintiff was to be employed by the company at a weekly salary of $50.
The corporation was formed and was known as the A. S. H. Auto Co., Inc.; the stock was issued to the various parties. The plaintiff contributed his $500 to the company’s treasury. Applebaum paid in full his $5,000 and an additional $1,000
The plaintiff claims that as a result of the contract with the defendants he has been deprived of the dealer’s contract, his contribution of $500 towards the capital stock, his salary of $50 a week from the company, and lastly, his prospective profits that his shares would have earned for him.
These facts were all conceded to be true for the purposes of this action and the trial court held that upon them the plaintiff was entitled only to nominal damages.
This plaintiff in another action has sued the defendants under sections 90 and 91 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28), to compel them to account for their official conduct in the management and disposition of the company’s property. Upon an appeal to this court we held that the complaint stated a cause of action. (See 183 App. Div. 527.) But that action was an entirely different action from the one now sought to be maintained, and a recovery therein would be in behalf of the corporation and rests upon entirely different principles.
The plaintiff’s main argument is an attempt to sustain this cause of action as an action for tort under the authority of Rich v. N. Y. C. & H. R. R. R. Co. (87 N. Y. 382). Although this case was decided in 1882,1 am unable to find any cases in this State which have been based upon that as authority for holding that a contract maliciously violated constitutes tort. That case was referred to by Mr. Justice Beekman at Special Term as being a peculiar case (Kolel America Vatiferes Jerusalem v. Eliach, 29 Misc. Rep. 503), and attention was called to the concluding paragraph of the opinion, which reads as follows: “We are not concerned with the question of the wisdom of the plaintiff’s choice of his form of action, or of what may result if the cause of action pleaded as a tort shall be hereafter assailed, instead of its sufficiency being conceded. It may well be that he has chosen the one most difficult to maintain, and that an action upon one or more of the contracts would be less surrounded by difficulties. But we have nothing to do with his choice. He is entitled to prove his cause of action if he can.” For any willful misfeasance by the defendants as
The failure of the defendants Applebaum and Stark to fulfill their agreements and pay over to the corporation the amounts which they agreed to pay constitutes a breach of their contract with the plaintiff. It may be that the corporation would have the right of action against Stark to recover upon his subscription, but the plaintiff alone can sue for the breach of the contract of the defendant Applebaum to advance the $9,000 for the full payment of the stock of the plaintiff and Stark. That contract obligation survived the formation of the corporation and plaintiff is entitled to prove if he can that his stock has been made worthless or depreciated in value through this breach. It was error for the court to hold, therefore, that the plaintiff was only entitled to recover nominal damages and for this error the judgment and order must be reversed and a new trial granted, with costs to the appellant to abide the event.
Clarke, P. J., Dowling, Page and Shearn, JJ., concurred.
Judgment and order reversed and a new trial ordered, with costs to appellant to abide event.