158 N.Y. 607 | NY | 1899
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *609
The question up for decision is, was the defendant on the 21st day of December, 1894, a director of the corporation to which the plaintiff on that day made the loan that she now seeks to recover? It is not pretended that there exists any liability against the stockholders of this insolvent corporation in favor of its creditors. The directors omitted to file reports for the years 1892, 1893, 1894 and 1895, as required by section thirty of the Stock Corporation Law, by reason whereof they became personally liable for all the debts of the corporation "then existing, and for all contracted before such report shall be made." This clause, which was taken from the twelfth section of the Manufacturing Act (Laws 1848, chap. 40), has received construction in this court, it being held that the liability for default in publishing the required annual report is limited to debts contracted while the director continues in office, and does not include a debt incurred *612
after he ceases to be a director, although the default continues. (Shaler and Hall Q. Co. v. Bliss et al.,
Before this court in C.N. Bank v. Colwell (
But the appellant insists that the defendant did not cease to be a stockholder. It is not questioned that he did assign and transfer his stock to the treasurer of the corporation more than a year before this debt was contracted and more than two years before the failure of the corporation. Nor is it disputed that the purchaser took possession of the stock and surrendered the certificates to the corporation and obtained a new certificate to himself for the number of shares represented by the old certificate. But, it is said, this was done in contemplation of the insolvency of the corporation and for the purpose *614
of relieving the defendant from liability as a director, and, therefore, the attempted transfer of the stock was void, and there was, in legal effect, no transfer whatever. The statutory provision invoked in support of this contention is to be found in section forty-eight of the Stock Corporation Law and reads as follows: "No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contemplation of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void." The construction of this provision, for which the appellant contends, would render the transfer of stock as between the transferrer and a transferee void, although the transaction was free from fraud. It would render a certificate of stock so transferred void as against a corporation assenting to the transfer, no matter to what extent it may have gone in recognizing the rights and liabilities of the purchaser of the stock, and this we have lately held will not result, even where the shares are assessable. (Rochester Kettle Falls Land Co. v. Raymond,
The appellant cites two authorities in this state which he claims so declare the state of the law upon this subject as to make the statute (if it be given no broader construction than we think belongs to it) wholly unnecessary, for it but restates the law as laid down by the courts. Without conceding that, if his premises be accurate, his argument is justified, we note that one of the two cases cited does not show it to have been the law of this state prior to the adoption of the statute that makes every transfer of stock of a corporation whose insolvency is imminent void as against the creditors of the corporation having a right to resort to the stockholders for the collection of debts. The authorities cited are Nathan v. Whitlock (3 Edwards Chan. 215; affd., 9 Paige Chan. 152) and Veiller v. Brown (18 Hun, 571). In the latter case the defendants had judgment at the Special Term, which was reversed at the General Term, not on the ground that a stockholder could not relieve himself from liability by a bona fide sale of his stock, but for the reason that the evidence disclosed that the sale was not bona fide in that a secret understanding or trust existed in favor of the transferrer. *616
This statute makes the law on that subject very different and along much broader lines. Had it been in existence at the time the cause of action arose in Veiller's case, it would have been unnecessary to introduce evidence tending to show that the sale was not bona fide and that there was a secret understanding by which the stockholder retained a beneficial interest in the stock. All that would have been required to be shown would be that the transfer was made in contemplation of its insolvency. If we are right in the position taken, that the object of the statute was to prevent solvent stockholders from escaping their statutory liabilities to creditors of corporations, as well as their contractual liability to corporations not assenting to the transfer, then there was nothing to prevent the defendant from making absolute disposition of his shares December 27th, 1893. It matters not that he may have been of the opinion that ultimately the corporation would fail and that the effect of the sale of his stock would be to relieve himself from liability as a director. It was his right, if he saw fit, to get rid of the office of director for the purpose of avoiding liability for debts thereafter to be contracted, and he could accomplish that result either by resigning or by an absolute sale and transfer of his stock. He took the latter course, and made what is conceded to be an absolute sale and transfer of his stock without any reservation whatever, and the statute so operated on this act that he ceased to be a director, and hence is not liable for this debt of the corporation, which was contracted a long time thereafter.
The judgment should be affirmed, and judgment absolute ordered for the defendant on the stipulation, with costs.
All concur, except VANN, J., not voting.
Judgment accordingly. *617