27 N.Y.S. 677 | N.Y. Sup. Ct. | 1894
The plaintiffs, as judgment creditors of the Rheubottom & Teall Manufacturing Company, bring this action for the purpose of having declared fraudulent and void, as against their judgments, certain real estate and chattel mortgages executed by the above-named judgment debtor to the defendant Jones, and also certain judgments obtained by the defendants Rheubottom and Wright, and by them assigned to the defendants, the Rational Bank of Auburn and the State Bank of Syracuse. The complaint, in setting forth- the facts upon which the plaintiffs rely to obtain the relief sought, does not attempt to number and state separate causes of action, but it nevertheless proceeds upon the theory that the Jones mortgages are void, for the reason that they were given in contemplation of insolvency when the mortgagor was actually insolvent and without “ the written assent of a majority of the stockholders of the mortgagor, nor of the stockholders owning two-thirds of the capital stock of said mortgagor corporation ” having been first obtained, and that the Rheubottom and Wright judgments were suffered and procured by fraud and collusion, to which latter transaction it is not pretended that the defendant Jones was in any sense a party. It would seem, therefore, that the complaint does contain separate and distinct causes of action, upon either one of which plaintiff might recover as against some of the defendants, and it follows that a demurrer may be interposed to each of these causes of action, although they are both stated in one count. Wiles v. Suydam, 64 N. Y. 173; Goldberg v. Utley, 60 id. 427.
The portion of the complaint demurred to is that which alleges that the J ones mortgages were obtained without procuring the written assent of the requisite number of stockholders, and seeks by reason thereof to have the same declared void as against the plaintiffs’ judgments, the defendant insisting that this statutory prerequisite is one which concerns the stockholders only, and that the plaintiffs, as judgment creditors, can take no advantage of its omission.
The question which is thus presented is one which has been
At common law any corporation, unless restrained by some provision of its charter, was permitted to mortgage its property in payment of its debts, or to secure money borrowed for business purposes (De Ruyter v. St. Peter's Church, 3 N. Y. 238 ; Curtis v. Leavitt, 15 id. 9), but this right was curtailed by the general act “ to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes,” which provides that any corporation formed under that act shall be capable in law of holding and conveying any real and personal estate which may be necessary to enable it to carry on its business, “ but shall not mortgage the same or give a lien thereon.” Laws 1848, chap. 40, § 2. This prohibition was modified, however, in 1864, by permitting a corporation to mortgage any or all of its real estate to secure the payment of any debts contracted by it. Laws 1864, chap. 517, § 2. In 1871 it was still further relaxed by extending the privilege so as to include personal property (Laws 1871, chap. 481), and again, in 1878, so as to embrace its “ franchises, privileges, rights and liberties.” Laws 1878, chap. 163. But to each of these enabling acts is attached the proviso that the written assent of the stockholders owning at least two-thirds of the capital stock of such corporation shall be first filed in the office of the clerk of the county where the mortgaged property is situated, although this condition was so far modified in 1875 as to permit the certificate of assent to be filed nunc fro tunc in any case where by accident or mistake it had been omitted. Laws 1875, chap. 88. It appears, therefore, that while the tendency of legislation upon this subject has been constantly
Again, Judge Aitoeews, in the case of Rochester Savings Bank v. Averell, 96 N. Y. 467, while stating that the assent of stockholders “ is an indispensable condition to the creation of a valid mortgage under the act of 1864,” takes occasion to add that “ The object of the legislature in requiring such assent was the protection of stockholders against improvident, collusive or unwise acts of the trustees, the governing body of the corporation, in incumbering the corporate property}’ This case is cited by the learned counsel for the plaintiff as an
But it is argued the amendments to the act of 1848 merely permit the giving of a mortgage upon corporate property provided certain things be done, and that if they are not done the original act applies with its prohibition. This, however, is not my understanding of the intention of the legislature, as expressed by the various amendments to which reference has been made, and as the same has been construed by the courts. On the contrary, its policy seems to be to recede from the inhibitory feature of the original act, and to declare that the mortgaging of corporate property is not improper per se so long as the individual members of the body are protected from any improvidence or corruption on the part of their officers.
The views which I entertain, and which are here expressed, lead to a conclusion which sustains the demurrer and makes the consideration of tlie other questions discussed unnecessary.
The demurrer is, therefore, sustained, with costs to the defendant Jones to abide the result of the trial of the issues of fact raised by the answer to the original complaint.
Ordered accordingly.