141 Misc. 330 | N.Y. Sup. Ct. | 1931
The plaintiff was a domestic corporation which was dissolved pursuant to statute in 1919. At that time it had four directors, three of whom have not been relieved from their responsibilities as such; and the fourth director has died. This action was brought to recover compensation for services alleged in the complaint to have been rendered by the plaintiff in 1917, but which did not become payable until 1928.
One of the grounds of the motion is that the action was never authorized by the plaintiff or by any competent authority representing it, and that accordingly the attorney for the plaintiff was without authority to bring the action. The attorney for the plaintiff contends that the action was brought by him under the direction of a director who was the president of the plaintiff at the time it was dissolved, and that the purpose of this director to do so was made known to the other two surviving directors and that they interposed no objection. Thus, on this branch of the motion, the question is presented whether the plaintiff has a retainer from such an authority as 'justifies him in subjecting these parties to this litigation and its possible consequences.
An answer has been interposed and much intermediate litigation has taken place, including a motion, made by the defendant, which was denied, to dismiss the complaint on the ground that the plaintiff did not have legal capacity to sue. The moving papers show without denial, however, that it was not known to those representing the defendant, until now, that the plaintiff corporation had not authorized this action.
It appears from the moving papers that there has been no meeting of the directors or of the stockholders of the plaintiff since its dissolution, and that accordingly the directors as a body have taken no action looking to that end. The answering affidavits allege that the commencement of the action was directed by Director O. G. Orr; that counsel for the plaintiff told Director Wall on one occasion, and Director Osborn on another occasion of Mr. Orr’s intention to institute this action, and that neither of them made any objection to that course, although Mr. Wall declined to be made a party, and “ could not consent to anything ” because his counsel was not available; and that “ this office,” meaning the office of the attorney for the plaintiff, had received no information that Mr. Wall or Mr. Osborn objected to the prosecution of the action. But the affidavit of Director Osborn denies that he ever gave his consent to, and now [protests against the bringing of the action.
Upon dissolution the directors of the plaintiff were charged with the duty of winding up its affairs, and for that purpose were
Accordingly, the court finds as a fact on the evidence before it that there is substantial doubt of the authority of the attorney for the plaintiff to commence or to continue this action; and it should not be prosecuted further without satisfactory evidence of authorization. A consideration of the other branches of the motion, the one seeking amendment of the answer and the other a reference, may be properly deferred until the question of justification for the action itself shall be determined. If the action is to be continued these applications may be renewed.
An order may be submitted requiring the attorney for the plaintiff, within thirty days after the service of the order to be made hereon with notice of entry, to present to the court and to the attorneys for the defendant, evidence showing the act of the trustees of the dissolved corporation which constitute his retainer and authorization to bring this action, with ten dollars costs to the defendant, and staying all proceedings on the part of the plaintiff during the interim; and upon failure to submit adequate proof of these facts, and on a showing thereof, application may be made to the court to set aside the summons and the service thereof, and all other papers served by the attorney for the plaintiff.