Lyell Avenue Lumber Co. v. Lighthouse

| N.Y. App. Div. | Mar 9, 1910

Kruse, J.:

The principal question here is whether Lighthouse was a stockholder. I think the evidence supports the finding that he was. While he did not sign the certificate incorporating the State Hotel Company, he subscribed a preliminary subscription paper to the effect that the subscribers would organize a corporation under the laws of this State, to be known as the State Hotel Company, to purchase certain real estate therein named,' and thereafter conduct and carry on a hotel, the capital stock of which was to be $100,000, consisting of 1,000 shares, and the real estate to be put into the company at $55,000 by the present owners thereof, and paid-up stock . issued to them therefor. The real estate belonged to Lighthouse. He conveyed it to some of his associates in the. enterprise, whogave back a mortgage for $40,000, but paid nothing down. It was expected the corporation would take over the property and pay for it.

The corporation has all the power, according to its certificate of incorporation, that was contemplated by the subscription paper; and more than that. The objection now made on behalf of Lighthouse, that he is not a stockholdér in the corporation because the certificate is more comprehensive in its terms as regards the purpose and business of the corporation than was Contemplated by the subscription paper, I think is untenable. While there is no direct evidence to show that he had personal knowledge of th¿ contents of the certificate he knew that a corporation had been formed ; he was the owner of the real property referred to in the subscription paper arid expected to be paid therefor from the proceeds of the.sale of bonds of the corporation; he made loans to the company for the purpose of improving the property for a hotel; the lumber for which the judgment was obtained against the State Hotel Company and which forms the basis of this suit, was Used in improving the property ; he stated to the plaintiff’s agent that he was a stockholder in the corporation ; that the plaintiff would be paid for the lumber ; he gave a proxy and was represented by- the holder thereof at a meeting of the stockholders of the company, which latter fact was expressly found by the trial court at the request of the defendant’s attorney. In short, the evidence- shows he was interested in the enterprise from the beginning, took an active part in its management, and regarded himself as a stockholder in the corporation.

In this connection, however, it should be stated and the trial court finds that Lighthouse signed the subscription paper upon an oral condition made at the time of signing that the subscription should not be binding unless and until the company had $40,000 with which to pay the mortgage given to him. The trial judge decided, however, that the oral condition was ineffectual to defeat the legal effect of his subscription, and I think he was right- in so deciding.

The appellants also contend that no corporation was ever formed because the incorporators did not sign the certificate at the end, and, therefore, Lighthouse never became a stockholder. The certificate was signed by the incorporators above the attestation clause, and they acknowledged the execution thereof, and the certificate of acknowl-. edgment is subjoined thereto. The filing of the certificate as required by law and what was thereafter done by the incorporators was at least sufficient to form a de facto corporation, and Lighthouse having held himself out as-a stockholder, acted as such, and taken part in the affairs of the corporation, cannot now question the legal existence of the corporation in that respect or his liability as a stockholder upon the ground that his written subscription was conditional. (Phoenix Warehousing Co. v. Badger, 6 Hun, 293 ; Yonkers Gazette Co. v. Jones, 30 A.D. 316" court="N.Y. App. Div." date_filed="1898-07-01" href="https://app.midpage.ai/document/yonkers-gazette-co-v-jones-5184438?utm_source=webapp" opinion_id="5184438">30 App. Div. 316 ; Beals v. Buffalo Construction Co., 49 id. 589.)

Appellants further urge that the action- is not maintainable by the plaintiff for the reason that the corporation has been dissolved and a receiver appointed;'that all the assets of the corporation are in custodia legis / that the receiver, if any one, should bring the action. It is only necessary to say that the liability here arises upon the statute itself, and that the question has been quite recently decided adversely to the appellants in tins court. (Ford v. Chase, 118 A.D. 605" court="N.Y. App. Div." date_filed="1907-03-06" href="https://app.midpage.ai/document/ford-v-chase-5202195?utm_source=webapp" opinion_id="5202195">118 App. Div. 605; affd., 189 N.Y. 504" court="NY" date_filed="1907-06-11" href="https://app.midpage.ai/document/ford-v--chase-3602878?utm_source=webapp" opinion_id="3602878">189 N. Y. 504.)

The other objections urged by the learned counsel for the appellant have been considered, but are insufficient, as I think, to justify a reversal of the judgment.

I think the case Was correctly decided and that the judgment. should be affirmed, with costs.

All concurred.

Interlocutory judgment affirmed, with costs.