58 N.Y.S. 717 | N.Y. App. Div. | 1899
This is an appeal by the defendant, the National Lead Company, from part of a judgment entered against it, upon the decision of the
The action is based upon section 48 of the Stock Corporation Law of 1892 (Chap. 688), which, after declaring that certain preferential conveyances, assignments and transfers of property or payments of money or allowance of judgment or the giving of liens or securities, when a corporation is insolvent or its insolvency is imminent, shall be invalid as against creditors, enacts that every person receiving by means of any prohibited act or deed any property of a corporation shall be bound to account therefor to its creditors or stockholders or other trustees. By the judgment entered in this case, the acts and transactions which resulted in the defendant,- the National Lead Company, acquiring a preference were declared tobe invalid, and all the instrumentalities by which that preference was effected were adjudged void. A receiver was appointed to take into his possession the assets of the company and the moneys or property acquired by the National Lead Company through the transactions adjudged invalid, and from that much of the judgment no appeal is taken. In the judgment, however, is inserted a provision that the receiver therein and thereby appointed shall apply the property, goods and chattels of the Charles H. Pleasants Company that may come into his hands, “ first, to the payment to the plaintiff of -the amount of a certain judgment obtained by the said Lodi Chemical Company against the Charles H. Pleasants Company in the City Court of New York on the sixth day of May, 1897, for the sum of twelve hundred and nineteen 23/100 dollars, with interest thereon
This provision of the judgment does not follow the decision made and filed by the justice at Special Term. There is no adjudication in that decision that the plaintiff is entitled to the payment of its judgment in priority to any other creditor. In the filed decision, the learned judge decides only that the preference to the National Lead Company is void, and that all the judicial and other ymoceedings through and by means of which that preference was furthered or secured are invalid; and he directs that a receiver of the property he appointed, to whom those in possession of that property shall be required to account. In that decision no direction whatever is given for distribution of the moneys in the hands of the receiver.
It is claimed, however, by the respondent that no other creditor of the Charles II. Pleasants Company having appeared in this action, it is entitled to the payment of its judgment; and that the only relief it needed was payment of its judgment, and that under a prayer for general relief in the complaint the court was warranted in granting it. It is claimed that such relief Avas authorized by vrliat Avas decided in Lopez v. Merchants & Farmers’ National Bank (18 App. Div. 427); but that case does not control. ' That was an action in aid of an attachment and to prevent the application of attached property to the payment of prior liens acquired in violation of the jirovisions of section 48 of the Stock Corporation Law. The court said that the plaintiffs were authorized to maintain the action with the vieAV of removing the fraudulent obstructions upon the property of the corporation which would prevent those plaintiffs from realizing upon their attachment. (Citing Home Bank v. Brewster, 15 App. Div. 342.) It is true that the court also says that the plaintiffs in the Lopez case occupied very much the situation they Avould have been in if the moneys had been paid over to the condemned defendants and their action had been for the recovery of the money; and that the plaintiffs were authorized to maintain the action in their own behalf and by their diligence to receive the fruit thereof without joining other creditors. Nevertheless, it was an action in aid of an attachment. There was a lien to he protected and enforced, and
A diligent creditor pursuing his remedy, and for the enforcement only of his own right, may be ordinarily entitled to preference; but in an action based on this statute, where no individual lien has been acquired which would give priority, the purpose and object of the statute must be considered. In its present form, the 48tli section of the Stock Corporation Law is a re enactment, with some amplification and a. wider scope, of a provision of the Revised Statutes (1 R. S. 603, § 4). The policy underlying each statute is the same, viz.: “ The object to be accomplished by it is to secure equality among all creditors of a corporation, and to prevent fraudulent transfers in derogation otf in fraud of their rights.” (O’ Brien v. East River Bridge Co., 36 App. Div. 24.) In Hilton v. Ernst (38 id. 96) it is said, in the opinion of the referee, - adopted by the court as its own : “ The statute constitutes an assurance to all who deal with the corporation that, in case it becomes insolvent, no creditor will be permitted to acquire a preference over other
O’Bbien, Ingraham and McLaughlin, JJ., concurred.
Judgment modified as directed in opinion; the question of costs and of compensation to the plaintiff to be reserved until final judgment.