160 N.Y.S. 297 | N.Y. App. Div. | 1916
Lead Opinion
This is an action by a stockholder of the National Nassau Bank of New York in the right of the corporation for an accounting by directors for losses resulting from them mismanagement, wrongful acts and negligence.
The facts which ordinarily entitle a stockholder to bring such an action without first demanding that it be brought by the corporation are sufficiently shown by allegations from which the inference flows that such demand would have been futile. The learned counsel for the appellants contends, however, that the facts pleaded in the defense to which the demurrer relates
The facts pleaded by each appellant in the defense to which the demurrer was interposed are the same. They are that on he 16th day of June, 1914, the bank, pursuant to the provisions of section 5220 of the Revised Statutes of the United States, went into voluntary dissolution and was closed, and that the authority of the board of directors was superseded and their power and duties with respect to the assets and to bringing actions were transferred to a liquidating committee by the adoption at a meeting of the shareholders duly convened of a resolution by more than two-thirds of the shareholders as follows:
“Resolved that The National Nassau Bank of New York be placed in voluntary liquidation under the provisions of Sections 5220 and 5221 of the United States Revised Statutes, to take effect June 18th, 1914.
“Resolved that a Committee of Seven (7) consisting of the individuals below named be appointed by the stockholders of The National Nassau Bank, a committee to liquidate the affairs of the bank, it being distinctly understood and agreed on the part of said Committee that no one of said Committee shall make any charge for his services for acting upon said Committee, with power to add to their number and to fill vacancies.
“DICK S. EAMSAY,
“J. F. HITCHCOCK,-
“OHAELES SCHWEINLEE,
“WILLIAM J. KLAUBEEG,
“LAURENCE H. HENDEICKS,
“AETHUE C. HAREIS,
“ THEODOEE S. HAIGHT.”
The demurrer admits the appointment of the committee at the time, in the manner, by the vote, and for the purposes stated, but of course does not admit the conclusion that thereupon the authority of the board of director» was superseded
The provisions of the Bevised Statutes of the United States material to the decision of the question presented are contained in sections 5220 and 5221. Section 5220 provides as follows: “Any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.” Section 5221 provides as follows: “Whenever a vote is taken to go into liquidation it shall be the duty of the board of directors to cause notice of this fact to be certified, under the seal of the association, by its president or cashier, to the Comptroller of the Currency, and publication thereof to be made for a period of two months in a newspaper published in the city of New York, and also in a newspaper published in the city or town in which the association is located, or if no newspaper is there published, then in the newspaper published nearest thereto, that the association is closing up its affairs, and notifying the holders of its notes and other creditors to present the notes and other claims against the association for payment.”
It is conceded and has been authoritatively decided that the adoption of a resolution for voluntary liquidation does not effect a dissolution of the corporation but merely suspends its ordinary functions and that it continues in existence for the purpose of liquidating its affairs and that its directors are not
It is further argued in behalf of the appellants that the plaintiff should have shown a demand on the stockholders. That contention is based on the opinion in Hawes v. Oakland (supra), and there are expressions in the opinion which support it. That rule, however, has never obtained in this jurisdiction, in which this remedy is now sought. Although the cause of action is the same, and the recovery must be the same whether the action is brought in the name of the corporation or in the right of the corporation, no matter in what jurisdiction the remedy is sought to be enforced, yet the remedy must be .that prescribed by the law of the forum in which the action is brought. (German-American Coffee Co. v. Diehl, 216 N. Y. 57.) For this reason we are not bound by the rule suggested in Hawes v. Oakland (supra) which is contrary to the well-established law of this State that the business of a corporation must be conducted by its board of directors, and that the stockholders cannot control their action. (Continental Securities Co. v. Belmont, 150 App. Div. 298; affd., 206 N. Y. 7.)
It follows, therefore, that the order should be affirmed, with ten dollars costs and disbursements.
Dowling, J., concurred; Clarke, P. J., concurred in result;' McLaughlin, J., dissented.
Concurrence Opinion
I concur in the result arrived at by Mr. Justice Laughlin, and in the main agree with the reasons therefor as given by him. I am not, however, prepared to say that authority of a liquidating committee, in a case like the present, to sue in behalf of the corporation, is “ subject to the supervision and control of the board of directors” in such a sense that such an action could be maintained “only by the approval or acquiescence of the board of directors.”
The liquidating committee stands as the representative of the stockholders, and presumably in opposition to the directors.
Dissenting Opinion
. I am unable to concur in the opinion of Mr. Justice Laughlin. It appears from the complaint that the bank went into voluntary liquidation on the 16th day of June, 1911, and is now and was at the time of the commencement of this action in process of liquidation. It does not appear just when the action was commenced, but both at Special Term and on the argument of this appeal counsel for both parties assumed that the action was commenced after the appointment of the committee, and I think that fact is also to be fairly inferred from the allegations of the complaint, which was not verified until nearly one year after the appointment of such committee. Once the stockholders had voted to go into voluntary liquidation, no further business could be done. After that there was no authority on the part of the officers or directors of the bank to transact any business in its name, except that which is implied from the obligation to liquidate its affairs, unless authority were expressly conferred by the stockholders. (Richmond v. Irons, 121 U. S. 27.) No such authority was here given; on the contrary, thé same was withheld by the passage of a resolution by the stockholders appointing a committee of seven “to liquidate the affairs, of the bank.” Thereafter it was the duty of this committee to marshal the assets and discharge the obligations of the bank and to divide among the stockholders anything remaining according to their respective holdings. The corporation, of course, as such, was not dissolved, nor were the directors thereby removed or their terms of office terminated, but they were deprived of all power in so
I think the order appealed from should be reversed and the demurrers overruled.
Order affirmed, with ten dollars costs and disbursements.