88 N.Y.S. 700 | N.Y. App. Div. | 1904
The action was brought by the plaintiffs as holders of stock and bonds of the defendant, The Fidelity Gas Company of Hoosick Falls, N. Y., to compel the. defendants Smith, Case and Fennessey to account for their official conduct as its officers and directors and for certain of its stock and securities which it is alleged they obtained from the corporation without consideration therefor and for other relief. The defendants Smith and Case answered, admitting some of the allegations of the complaint and denying others, and set out four separate defenses to which the plaintiffs demurred. The court sustained the demurrer' to the second defense, which alleged that there was a defect of parties defendant, with the following proviso : “ With leave to the defendants to demur to the complaint on the ground of such defect of parties defendant within twenty days after entry and service of the interlocutory judgment to be entered hereon,” and overruled the demurrer to the other defenses. And from the interlocutory judgment entered thereon the defendants appeal.
We agree with the court below that the second defense was bad and the demurrer was properly sustained. It was improper, however, upon the trial of an issue of law raised by a demurrer to a separate defense to allow the defendant to demur to the complaint.' The objection to the complaint taken by this defense was one that the defendants could raise by demurrer under subdivision 6 of section 488 of the Code of Civil Procedure. Whether or not there was a defect of parties appeared upon the face of the' complaint,
We also think that the court should have sustained the demurrer to the third separate defense which alleges that actions have been improperly united in the complaint. This ground of demurrer is-allowed by subdivision 7 of séction 488 of the Code of Civil Procedure ; and where the objection appears upon the face of the complaint it.must be taken by demurrer, or the objection is waived, and this objection was, therefore, waived by a failure of the defendants, to take it by demurrer. But so far as. I can understand this complaint, it sets up but one cause of action, and that is to compel the defendants to account for certain alleged violations of their duty as officers of a corporation of which the plaintiffs are stockholders. The complaint is voluminous, alleging many facts which would
As to the other defenses, I think the demurrer was properly overruled. The complaint asking for equitable relief, the defendants had a right to allege as a defense any facts which would tend to show a want of equity in the claim of the plaintiffs to require the defendants to account. The first separate defense alleges that the plaintiffs are not bona fide stockholders of the corporation; that the plaintiffs received the shares of stock held by them as a gift from the defendant Case without any consideration therefor, and that Case had full knowledge of, and consented to, the issue of stock and bonds of the said company, and for that reason the plaintiffs' have no legal capacity to prosecute this action. The defendants were entitled to have these facts considered by the court in determining
We also think that the defendants were entitled to allege the facts set out as a further separate defense for the same reason. Certain facts are there alleged which defendants claim are sufficient to jus-. tify the court in refusing to grant the plaintiffs any equitable relief. One of these allegations is, “ that the plaintiffs have not exhausted or even attempted to pursue their adequate remedies at law for the grievances and wrongs in their complaint alleged; ” and this would be an answer to any right of the plaintiffs to compel the defendants to account to the plaintiffs individually for money or property of ’ the corporation which the defendants have received and which the plaintiffs claim should not have been applied to the payment of the •coupons on the bonds held by them. While the facts alleged in '•these separate defenses may not be a sufficient defense to any relief being granted to the plaintiffs, they are facts that the defendants had a right to plead as an answer to the demand for equitable relief, and, therefore, were not demurrable.
It follows that the interlocutory judgment should be modified by striking out the clause allowing the defendants to demur to the complaint, and by sustaining the demurrer to the third separate defence, •and overruling the demurrer to the’first and fourth separate defenses, and as thus modified the interlocutory judgment should be affirmed, without costs. '
Patterson, O’Brien, McLaughlin and Laughlin, JJ., concurred.
Judgment modified as directed in opinion, and as modified affirmed, without costs.