83 N.Y.S. 343 | N.Y. App. Div. | 1903
The complaint avers that the plaintiff is a resident of the county and State of New York, and that the defendant is a corporation existing under the laws of the State of New Jersey; that the plaintiff is the owner and lawful holder of eighteen shares of the par value of $100 each, of the first preferred stock of the “ Spirits Distributing Company,” a corporation also existing under the laws of the State of New Jersey; and that said corporation was.organized on
“ For good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned hereby guarantees and agrees to pay to the holder of record of the within certificate, so long as said certificate shall be outstanding, but not to exceed the present unexpired term of the period for which said Spirits Distributing Company is incorporated, one and one-half per cent dividend on the 15th days of January, April, July and October, in-each year beginning with the year 1899, on every share of first preferred stock of said Spirits Distributing Company represented by the within certificate.
« (S’g’d) STANDARD DISTILLING AND DISTRIBUTING COMPANY,
“ By N. E. D. Huggins, Secretary.”
The complaint further avers that the defendant made default in payment of the dividends upon the regular quarterly days of 1902 and 1903, and that the plaintiff demanded payment of the sums due and payable to him. under and by virtue of the-certificate of stock held by him, which was refused, and for which sums judgment is demanded. ' -
For a second cause of action the plaintiff seeks to recover- dividends provided to be'paid upon 18 shares of second preferred stock, pursuant to a guaranty in all respects similar to the guaranty upon the first preferred stock and executed by the defendant.
For answer to the complaint the defendant admits the. incorporation of the respective companies; as averred therein; also the execution on its part of the agreement of guaranty, as -averred therein,
For a first and separate defense the defendant avers that the “ Spirits Distributing Company ” was organized for the purpose of purchasing, storing, selling, shipping, warehousing, transporting and forwarding spirits, alcohol and all liquors or compounds containing spirits or alcohol, etc., with a capital stock of $7,350,000, divided into 73,500 shares of the par value of $100 each share, 21,000 shares of which are first preferred stock, upon which the holders were entitled to an annual dividend of seven per centum, if earned; 15,750 are second preferred stock, the holders of which were entitled to a non-cumulative annual dividend, not to exceed six per centum after the dividend on the first preferred stock should be paid; 36,750 shares are common stock, the holders of which were to be paid an annual dividend of whatever profits remained after paying the dividends on the other stock. The defendant further avers that it was organized in June, 1898, for practically the same purposes as the “ Spirits Distributing Company ; ” that in December, 1898, one C. H. Eicks made a proposition to the “ Spirits Distributing Company ” that if it would issue and deliver to him, full paid and non-assessable, $200,000 of their first preferred stock, he would in consideration therefor deliver to it $200,000 of their common stock, and with its assistance cause its charter to be legally amended, so that the first preferred stock should pay an annual dividend of .six per cent, instead of seven per cent, and that the second preferred stock should pay an annual dividend of two per ■cent instead of six per cent, and that he would also procure certain other valuable considerations for it and would procure the defendant to guarantee and pay during the existence of the “ Spirits Distributing Company ” a one and one-half per cent quarterly dividend upon the first preferred stock outstanding. He also made a similar proposition to the defendant. These propositions were duly accepted by both corporations and the scheme was finally carried into effect. The stockholders of the “ Spirits Distributing Company ” gave up their old certificates of stock and received new certificates in place thereof; that the payment of one and one-half per cent on the first preferred stock was guaranteed, as above set forth, by the defendant ; that after such guaranty was made by the defendant, the
For a second and further affirmative defense the defendant averred that inasmuch as the defendant was incorporated solely for the purpose of dealing in alcoholic spirits, as therein averred, it had no. right to enter into the guaranty with the “ Spirits Distributing Company,” and that the said agreement is ul1/ra vires and void. To these two affirmative defenses the plaintiff demurred. "The demurrer was overruled and from the interlocutory judgment entered upon the decision this appeal is taken.
The primary question presented by the demurrer involves a construction of the contract of guaranty. By its express terms .the-defendant corporation undertook to pay the dividend provided for therein so long as the certificates, to which such guaranty applied,
The appellant, however, contends that although the “ Spirits Distributing Company ” is legally dead, yet that this contract survives for the reason that the defendant was the owner of a controlling interest with the “ Distilling Company,” and that it was also a controlling owner of the “ Distilling Company of America,” and was controlling the stock of the “ Spirits 'Distributing Company; ” that it procured the voluntary dissolution of such corporation and thereby by its own voluntary act it has relieved itself from the obligation imposed by the guaranty; that such being the fact, it is now estopped from averring as a defense the dissolution of the “ Spirits Distributing Company; ” that, therefore,- the answer which seeks to make such dissolution available is opposed to equity and justice and should not be permitted. It is to be observed that the comr plaint in this action is predicated solely and entirely upon the terms of the guaranty. ' The plaintiff cannot succeed in his action, unless he is able to show that at the time when the action was brought this guaranty was in existence as a valid, subsisting contract, or that the defendant is estopped from denying its existence. If the act of the defendant and the “ Distilling Company of America ” in instituting the proceedings for the voluntary dissolution of the “ Spirits Distributing Company ” was conceived and carried out for the purpose
In the present case, as we have already observed, the contract itself contemplated the dissolution of the corporation,- either by
So far as the second affirmative defense is concerned, as the ’ defendant is a foreign corporation, it is undoubtedly essential, in order to raise the question of ultra vires, to plead the foreign statute in order that the court may have before it the powers granted and the limitations placed upon the corporations. (Griesa v. Mass. Benefit Assn., 15 N. Y. Supp. 71; affd. on opinion below, 133 N. Y. 619.) It appears that the defendant was incorporated for the purpose of carrying on a business quite similar to that of the “ Spirits Distributing Company,” such is the averment of the answer, and that it had power to buy the stock of the latter. If it had the power to purchase such stock it would seem to have power to guarantee payment of such stock if it sold it to a purchaser (Arnot v. Erie R. Co., 5 Hun, 608; affd. on appeal, 67 N. Y. 315), and if it had the power to purchase and sell such stock, it would have the power to estop itself from raising such question when its contract is sought to be enforced. (Whitney Arms Co. v. Barlow, 63 N. Y. 62.) In view of the fact that the business of these corporations was so closely assimilated in character and the general management and control of each was largely governed by the same individuals, it can neither be affirmed nor denied under the pleadings that the contract of guaranty is ultra vires. It is enough to say now that it may be made to appear, when all the facts are developed, that the contract was one outside of the powers of the corporation to make,
It follows that the interlocutory judgment should be affirmed, with costs.
Van Brunt, P. J., O’Brien, Ingraham and McLaughlin, JJ., concurred.
Judgment affirmed, with costs.