113 N.Y.S. 408 | N.Y. App. Div. | 1908
The plaintiff is an attorney and counselor at law and brings this action to recover for professional services rendered to the Real Estate Owners’ Fire Insurance Company. After the commencement of the action a receiver was appointed for the company and he was duly substituted as defendant. The circumstances under which the receiver was appointed are not revealed by the record now before the court, nor does it appear that the company was insolvent. The demurrer is upon the ground that the alleged defense and counterclaim to which it is interposed is insufficient in law upon the face thereof, and that the counterclaim does not state facts sufficient to constitute a cause of action. , Under the heading, “ For a separate and further defense and by way of counterclaim” the defendant pleads his appointment as receiver, his substitution as defendant, that the corporation was a domestic corporation organized on the 6th day of December, 1905, and further alleges that the plaintiff, together with other persons, on or about the date the corporation was organized, became a subscriber to the capital stock of the company by executing a subscription agreement which is set forth and shows, among other things, that he subscribed for 2,000 shares of the par value of $10 each at $15 a share and inclosed with his subsci’iption his check for ten per cent of the subscription price, payable to the order of the company, and agreed to pay the remaining ninety per cent “ whenever the capital has been fully subscribed and the same is called for by the board of directors,” and that his subscription immediately upon the organization of the company was duly transferred to it. It is further alleged that the plaintiff failed to pay the original ten per cent for which he gave his check, aggregating the sum of $3,000, and that on or about the 1st day of May, 1906, the board of directors duly adopted a resolution requiring him to pay the balance of his subscription, aggregating $27,000, on the 1st day of June, 1906, and that he has also defaulted in that payment. Judgment is demanded on the denials of the rendition of the se'rvices for a dismissal of the complaint and for $30,000 on the counterclaim.
The subscription agreement of the plaintiff shows that the corporation, for the capital stock of which he subscribed, was “ to be organized under the laws of the State of Mew York.” From this
“ § 41. Subscriptions to-stock.— If the whole capital stock shall not have been subscribed at the time of tiling the certificate of incorporation, the directors named in the certificate may open books of subscription to fill up the capital stock in such places, and after giving such notices as they may deem expedient, and may continue to receive subscriptions until the whole capital stock is subscribed. At the time of subscribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount subscribed by him in cash, and no such subscription shall be received or taken without such payment.”
The decisions construing this statute and the statutes from which it has been taken are not in harmony. They are in accord to the effect that a subscription after incorporation is void unless the ten per cent is paid in cash (Black River & Utica R. R. Co. v. Clarke, 25 N. Y. 208 ; New York & Oswego M. R. R. Co. v. Van Horn, 57 id. 473), but with respect to original subscriptions prior to the incorporation, some of the authorities hold that they too are void unless the ten per cent be paid in cash (See Excelsior G. B. Co. v. Stayner, 25 Hun, 91; Perry v. Hoadley, 19 Abb. N. C. 76), and others hold that such subscriptions become valid and binding upon acceptance by the company even though the ten per cent were not paid. (Lake Ontario, etc., R. R. Co. v. Mason, 16 N. Y. 451, 458 ; Phœnix Warehousing Co. v. Badger, 67 id. 294; Beattys v. Town of Solon, 64 Hun, 120 ; United Growers Co. v. Eisner, 22 App. Div. 1; South Buffalo Natural Gas Co. v. Bain, 9 Misc. Rep. 425.) There is some difficulty in deciding which of these authorities should be deemed controlling with respect to plaintiff’s subscription to the capital stock of this company. It is alleged that the company was organized under the laws of the State of New York, and although we have no fact with respect to the nature of its business, excepting
It follows, therefore, that the interlocutory judgment should be reversed, with costs, and the demurrer sustained, with costs, with leave to the receiver to amend upon payment of costs of this appeal and of the demurrer.
Patteeson, P. J., McLaughlin, Houghton and Scott, JJ., concurred.
Judgment reversed, with costs, and demurrer sustained, with costs, with leave to defendant to amend on payment of costs.