78 N.Y.S. 425 | N.Y. App. Div. | 1902
This application is based upon sections 50 and 51 of the Stock Corporation Law (Laws of 1892, chap. 688), and to justify the court in granting this application the petitioner must bring himself within the provisions of that act. It is provided by section 50 that “ the owner of a lost or destroyed certificate of stock, if the corporation shall refuse to issue a new certificate in place thereof, may apply to the Supreme Court, at any Special Term held in the district where he resides, or in which the principal business office of the corporation is located, for an order requiring the corporation to show cause-why it should not be required to issue a new certificate in place of the one lost or destroyed.” The application is to be by petition, upon presentation of which to the court an order to show cause is to be granted. Section 51 of the act provides that upon the return of the order the court shall in a summary manner “ and in such mode as it may deem advisable inquire into the truth of the facts stated in the petition, and hear the proofs and allegations of the parties in regard thereto, and if satisfied that the petitioner is the lawful owner of the number of shares, or any part thereof, described in the petition, and that the certificate therefor has been lost or destroyed, and1 cannot after due diligence be found, and that no sufficient cause has been shown why a new certificate should not be issued, it shall make an order requiring the corporation within such time as shall be therein designated to issue and deliver to the petitioner a new certificate for the number of shares specified in the order, upon deposit
The petition in this proceeding alleges that in the year 1886 “ three shares of the capital stock of (the Empire City Fire Insurance Company) were issued to Susan D. Watson of Perth Amboy, Hew Jersey; that said certificate was dated in that year, but the exact date and number of such certificate are unknown to your petitioner and cannot be ascertained by him; ” that on the 31st day of July, 1902, the said Susan D. Watson sold, assigned, transferred and set over unto one Ben jamin Adams all her right, title and interest in and to the said three shares of the capital stock of the Empire City Fire Insurance Company to his own use absolutely for the sum of $300 in cash paid to her by the said Adams, a copy of which assignment is annexed to the petition; that the said Susan D. Watson made an affidavit that the said stock was lost or mislaid and could not be found, a copy of which affidavit is also annexed to the petition; that on the fourth day of August the said Adams duly assigned, transferred and set over to the petitioner all his right, title and interest in and to the said three shares of the stock of the Empire City Fire Insurance Company,, the assignment of which is also annexed to the- petition, and that the petitioner, through his attorney, whose affidavit is annexed to the petition, applied to the corporation for the issue by the said corporation of a new certificate •of said stock, in place of the one lost as aforesaid; that the said corporation, by its president, refused to issue such new certificate, It also appeared from the affidavit of the petitioner’s attorney that he, on behalf of the petitioner, inquired of the president of the Empire City Fire Insurance Company what sort of a bond and other formalities they would require under the by-laws for the issuance of a new certificate in place of' the one which was lost or destroyed, The president replied that they would require an affidavit of the loss of the certificate, and that due and diligent search has been made for it, and that after such search it could not be found; and that a .satisfactory bond would be one of the American Surety Company,
We think this order was entirely unauthorized by the provisions of the Stock Corporation Law to which attention has been called. There was no proof that the corporation had refused to ■ issue the new certificate. Hor did the court hear the proof and allegations of the parties in regard thereto as required by the statute. It is quite apparent that the statute contemplates upon the return of the order to show cause that the court should take proof of the facts stated in the petition. This hearing was to be summary, either before the court or before a referee, but unless the facts upon which the application was based were proved, no order, requiring the corporation to issue a new certificate could be granted. Hor did the court either in the order to show cause, or in the final order, direct the publication of a notice as required by the section referred to. The effect of this order is to divest the person in whose name the stock stands or a person to which the stock may have been transferred, of the title to the stock by issuing to the petitioners a new certificate,1 for by section 51 of the Stock Corporation Law it is provided that “Any person claiming any rights under the certificates alleged to have been lost or destroyed shall have recourse to such indemnity and the corporation shall be discharged from all liability to. such person upon compliance with such order.” Ho court would have authority to make such an order without notice of some kind to the person in whose name the stock stands, or to whom
Other reasons are alleged by counsel for the appellant for a reversal of this order, but as, for the reasons before stated, we are of the opinion that the order cannot stand, it is unnecessary to discuss, them.
It follows that the order appealed from must be reversed, with ten dollars costs and disbursements, and the application dismissed, with fifty dollars costs.
Van Brunt, P. J., and Laughlin, J., concurred; Patterson, J., concurred in result; Hatch, J., concurred except as to costs.
Order reversed, with ten dollars costs and disbursements, and application dismissed, with fifty dollars costs.