50 N.Y.S. 265 | N.Y. App. Div. | 1898
Lead Opinion
This action was brought against directors of a manufacturing corporation to charge them with the liability imposed by the terms of section 30 of the Stock Corporation Act, for the failure of the corporation to make and file a properly verified report, as required by law, for the year 1892, such default continuing up to and including the 30th of January, 1893. ■ At the last-mentioned date a proper report was filed. Between the 21st and 30th days (inclusive) of January, 1893, the F. J. Kaldenberg Company became indebted to this plaintiff upon discounts of commercial paper in a large sum of money, and the indebtedness arising on such promissory notes, due and payable at the time this action was brought, is sought to be charged against the defendants, appellants herein. At the trial of the cause a verdict was directed for the plaintiff, and from the judgment entered upon the verdict, and from an order denying the defendants’ motion for a new trial, this appeal is-taken.
There was an issue of fact litigated on the trial in respect of which there was conflicting evidence. The withdrawal of that issue from the jury would require a reversal of the judgment if the case turned upon it; but its determination becomes unimportant in the final disposition of the cause. The rights of the parties depend upon questions of law, and in the view we entertain of these questions the course pursued by the court below was the correct one That the plaintiff was not a judgment creditor at the time the action was brought does not affect the right to recover. An amendment to the complaint was allowed on the tidal which showed that certain judicial action had been taken restraining creditors of the corporation from prosecuting claims, and due proof thereof was -made ; but, in addition to that, we have held in several cases that a simple con
It appeared in evidence that in 1892, and long before the indebtedness of the Kaldenberg corporation to this plaintiff accrued, the-, directors of that company signed an annual report which, as to its. contents, complied with the requirements of section 30 of the Stock Corporation Act as amended in 1892. It was signed by a majority of the directors ; it was also verified by the president of the company and was filed in the office of the Secretary of State and in the: office of the clerk of Westchester county; but it was verified only by the president of the company. The contention made by the defendants (appellants) is, that the authentication thus made was sufficient within the fair interpretation of the provision of section 30, relating to the subject of verification of such reports. It is claimed, and rightfully so, that the law is a penal statute, and that it. is to be construed strictly in favor of the directors of a corporation-It is needless to cite authorities to that point, for they are abundant: and unmistakable in their effect; but it has not yet been decided by any court of final authority that judicial construction of the admittedly penal provisions of the act of 1892, or of any other of the-statutes in pari materia, from the General Manufacturing Law of 1848 down to the present time, is to be carried to the point of' judicial nullification; and that would be the effect of the establishment of the appellants’ contention in this case. Section 30 of the-Stock Corporation Act, as amended in 1892, requires the report to-be signed by a majority of directors and verified by the oath of the: president or vice-president and treasurer or secretary. That is a. specific requirement, that two officers shall verify the report. It. may be that the same person may fill two offices and discharge the: duties of both, but that situation does not arise in this case. Section 27 of the Stock Corporation Act provides that the directors, may appoint from their number a president and secretary and treasurer, and may-appoint such other subordinate ■ agents or employees as the by-laws may designate. By article 4 of the-by-laws of the Kaldenberg Company,, read in evidence, it appeared
This interpretation is the only admissible one in view of the course of legislation upon-the subject. In the General Manufacturing Law of 1848, section 12, the provision was, that the verification by either the president or the secretary would suffice; and the same requirement appeared in the amendment to section 12 of the General Manufacturing Law made by chapter 510 of the Laws of 1875, but when the Stock Corporation Act came to be passed in 1890, the policy of the law was entirely changed, and it was required that the report should be signed by the president and a majority of thé directors and be verified by the president and treasurer, thus introducing into the statute the feature of a double verification. The amendment of 1892, which is the one now in question, merely carries out the same requirement of a double verification, but does not limit the making of that verification to the president and treasurer, but allows the vice-president, if there be one, and the secretary to make the verification.
It is very strenuously urged by the learned counsel for the appellants that there was no secretary or treasurer of the Kaldenberg Company during the year 1892, and up to the 30th of January, ■ 1893, by whom the verification could be made; and that consequently there was no way of complying with the provisions of the statute, under consideration, and that an excuse for non-compliance is, therefore, furnished. It is claimed that, inasmuch as, at the time of the
We, therefore, are of the opinion that the court below properly instructed the jury that the plaintiff was entitled to recover, and the judgment should be affirmed, with costs...
Van Brunt, P. J., and O’Brien, J., concurred; Ingraham and McLaughlin, JJ., dissented.
Dissenting Opinion
The court below directed a verdict for the plaintiff which imposed upon the defendants a liability for a debt of this corpora
, Assuming,- however, that this statute does impose the penalty in ease a report is filed, which is not verified as therein required, and that the statute requires that the report should be verified, not only by the oath of the president or vice-president, but also by the treasurer or secretary, it does not -seem to me that it could have been the intention of. the Legislature to impose upon the directors of a corporation of this kind this extréme penalty, in. a case where it was impossible to comply with the provisions of the statute, because there were not in existence the officers whose verifications to the réport was required. There is no provision in the act under which this defendant was incorporated which requires it to have any particular officers. No penalty is imposed upon a corporation organized under this statute for its failure to elect any officers to the corporation. The corporation was organized under chapter 40 of the Laws of 1848. By section 3 of that act it is- provided that such corporation shall be managed by not less than three nor more than nine trustees. By section 5 it is provided that there shall be a president of the company, who shall be designated from the number of the trustees, and also -such subordinate officers as the company, by its by-laws, may designate. Thus the corporation was required to have a president, but whether or not it should have other, officers, and their number, was left to the corporation itself. It appears, however, that by the by-laws of the corporation it was provided that the officers of the company should consist of a president, a vice-president, a secretary and treasurer,_ who should severally be appointed by the trustees, and who should hold office during the pleasure of the board. It further' appeared that prior to November, 1891, the defendant Eberhard' Eaber had been secretary and treasurer of the corporation, and that about the first of November lie wrote and delivered to the president of the corporation a letter which said : “ I resign as secretary and treasurer of the F. J. Kaldenberg Company, to take effect ■ immediately; ” that that letter was delivered to the president of the company about the first of November; was retained by the president in his possession- until the 29th of February, 1892, when the letter was presented to the trustees of the corporation, and was then acted upon and Faber’s successor as treasurer appointed. It
We have thus the fact that a corporation, organized under a statute which required it only to have a president, and having, because of a resignation of its secretary and treasurer, neither of the latter officers— tire duty of such secretary and treasurer being performed by the president — upon being required by law,to make a report verified by the oath of the president and secretary or treasurer, attempted to-comply with the law by making the report required, verified by the only officer that the corporation had who was by statute required to verify it, which report was duly filed as required by the statute and accomplished the object for which the statute was passed, the officers of the corporation thus doing all in their power to comply with the statute. Is not such an act a substantial compliance with the statute ? I think it is. Looking at the object for which this statute .was passed, it would seem that this report provided the information required.It was made in good faith, intending to carry out the provisions of the statute. It was signed by those whom the statute required it' should be signed by, and was verified by the oath of the only officer then in office. To impose this penalty upon these defendants for not doing what it was impossible for them to do, viz., to have this report verified by the second officer, when there was no such officer, seems to to impose a penalty upon these defendants for the failure to do an act which, from the nature of the case, was impossible. Suppose-
This question was presented to the Appellate Division of this ■court in the second department, in Noble v. Euler (20 App. Div. 548). That was an action brought by a creditor of this corporation to recover from one of the defendants the amount of the. indebtedness due to him upon the ground that that report was not verified ¡as required by the statute. The question was referred to á referee, who found that the filing of this report was a substantial compli
•' It seems to me that this rule .as here stated applies to this case. The condition here was that, although a secretary and treasurer had been elected, the duties of the office were principally performed by the president. In the meantime the secretary and treasurer refusing longer to eon tin ue in office had resigned, and by that resignation the office was vacant. It had no incumbent, the president of the corporation performing the duties. In this condition it became the duty of the corporation to file a report verified by the oath of its president and secretary or treasurer. It performed that duty as well as it was able. The report was signed by a majority of the trustees. It was verified by the only existing officer of the corporation. The duty was imposed upon the corporation, not upon its officers, to make the report and this corporation did perform this duty; and where the corporation has performed this duty imposed upon it by statute, so far as it was possible for it to comply with the statute, .and filed a report which, in all respects, followed the provisions of the statute, except so far as the existing conditions rendered it. impossible, and where no injury resulted to any one because of the-variations rendered by the existing’ circumstances necessary, I do not think that in enforcing a penal statute a construction should be given to it which will’ impose a penalty which it was impossible to-avoid. The fact that the verification of the report, as filed in the office of the Secretary of State, was not signed by the officer verify
The plaintiff .attacks the good faith of this resignation, of the, secretary and treasurer, but the evidence was express and ilncontradicted that the letter.of resignation was delivered to and accepted by the president about the 1st day of November,. 1891; and it is clear that from that time on the office was.vacant.
. The counsel for the defendants expressly requested the court to •charge the jury that if if believed the testimony of the witnesses to the effect that a letter was written by Mr. Faber, ¡addressed to'the •corporation .in the fall of 1891, in which he tendered his resignation •as secretary and treasurer of the corporation to take effect immediately, and that such letter was delivered by Mr.. Faber to the presi■dent of. the company for the purpose of effecting such resignation, then- the jury should find for the defendants. That request was refused, and to such refusal to charge the defendants excepted.. I think the defendants were entitled to have this request charged,- and ■that,, for that reason, a new trial should be ordered;
I cannot concur, therefore, with. Mr. Justice Patterson in the ' affirmance of this judgment..
' McLaughlin, J., concurred.
Judgment affirmed, with costs.