61 N.Y.S. 21 | N.Y. App. Div. | 1899
Plaintiff dealt with the Rochester Lithographing and Printing Company, which latter company became indebted to the plaintiff,, and upon such indebtedness the plaintiff recovered a judgment and issued an execution which was returned unsatisfied before this action was commenced At the time the indebtedness accrued to the-plaintiff the defendant was a stockholder in the Rochester Lithographing and Printing Company. Plaintiff’s indebtedness accrued by reason of the sale of envelopes, and in this action the plaintiff claims the defendant was liable as a stockholder on the ground that-
We are asked to revérse the judgment because the verdict is against the weight of evidence. We think the evidence presented a question of fact for the consideration of the jury as to whether there was an overvaluation of the properties at the time the corpori ration was born.
The force and effect to be given to the evidence, pro and con, on the subject of overvaluation, were referred to in the course of the
Under the- evidence given, and in the light of such a charge as we have quoted from, we are not inclined to disturb the verdict as being against the weight of the evidence. It may be observed that it is the verdict of a second jury on much the same evidence and in the same direction as the first verdict. It may be further observed that the verdict was sustained, as being in accordance with the weight of the evidence, by the General Term when the case was before it, as reported in 86 Hun, 57.
Apparently the trial judge assumed to follow the opinion of the General Term in this case, and we have looked with some care at the rulings made in the reception and rejection of evidence, and to the requests to charge and to the exceptions relating to refusals, where the requests were declined, and we are inclined to think the trial proceeded in accordance with the rules of law which were applicable to the issues of fact. Besides the opinion found in 86 Hun, 57, several cases bearing upon the questions of law there considered
In chapter 688 of the Laws of 1892, section 42 of. chapter 564 of the Laws of 1890 (The Stock Corporation Law) was amended by inserting in that section the following: “No such stock shall be issued for less than its par value; ” and in section 54 the liability of stockholders is declared to exist “ until the whole amount of its capital stock,, issued and outstanding at the time such debt was incurred, shall have been fully paid.”
When Douglass v. Ireland (73 N. Y. 100) was on trial before me at a Special Term in Lewis county, I submitted to the jury the question as to the value of the property, and upon the coming in of the verdict of the jury assessing the property at a greatly reduced amount from that at which it was taken when turned into the corporation, I thereafter found that the statute had not been complied with; and in the course of the opinion delivered in the Court of Appeals in that case it was said: “ A deliberate and advised overvaluation of property thus purchased and paid for is a fraud upon the law, and a violation of the condition upon which the exemption of stockholders from liability under the provisions of the original statute is made to depend. It is in direct violation of the policy as well as of the terms of the law which demands payment, either in money orpropert/y at its value of all the capital stock of the company, as a condition of immunity to the stockholders from liability for debts of the corporation.”
When the appellant became the purchaser of the stock he took it ¡subject to the provisions of the statute as to liability as well as subject, to the privileges of exemption created by statute. The liability of a stockholder he assumed by becoming a purchaser of the stock, and we think the enforcement of such liability in no way impairs "the obligation of contract. (Matter of Reciprocity Bank, 22 N. Y. 9.)
When the appellant made the first purchase of stock he knew that it had been in part issued for property and in part on account of book credits. It was not until after the filing of the certificates that the stock had been fully paid that credit was obtained from the plaintiff and an indebtedness created which is.represen ted by its judgment against the corporation. Prior to the creation of that debt apparently the appellant knew the circumstances attending the organization of the corporation and before he acquired the last 100 shares of stock in the corporation. The mere recording of the certificate reciting that the stock was fully paid up did not terminate the-liability of the stockholder. (Veeder v. Mudgett, 95 N. Y. 295.)
Upon the evidence given, and the charge of the court, the jury •evidently found that all of the trustees were- guilty of a deliberate overissue of stock, and that seems to follow from a perusal of the evidence as well as a portion of the charge delivered by' the trial judge. He said to the jury: “ You must find that these trustees,
Several requests were made to charge which related to matters-which had already been covered in the body of the charge. Under such circumstances, it was-not error to refuse to. yield to the requests.
.Nor. do we think it was error in the court to allow the witness-Moore to state whether his business which the .corporation had purchased had been profitable. The defendant had claimed that there-was evidence that .the good will of the business should be considered, in.estimating the value of the plant turned over to the corporation,, and under such circumstances it was proper for the plaintiff to prove-that the business had been unprofitable. This question.. seems to-have been passed upon, by the G-eneral Term (86 Hun, 60) in reviewing. the first trial where a -similar question was raised. Nor do we think it was.error*.to receive, .evidence of the actual value of the property for which stock was issued.
In Boynton v. Hatch (47 N. Y. 225) it was said: “The actual value of. the .property is an important item of evidence, and, with other.circupistances,..may- be sufficient to' establish fraud.”
In Douglass v. Ireland (73 N. Y. 105) it was said.: “ The seller-of . the property may well be presumed to know its value.”
: Nor .do we think it was error to allow the witness "Willard testate the amount of the debts of the firm of Willard, Pitt & Moore, as the corporation paid for the property acquired by assuming, their debts, and it, therefore, became necessary to ascertain the extent of the firm’s indebtedness.
We have looked at the other exceptions takeh.„to the rulings,. and. rejection and admission of evidence, and we have" not found any-prejudicial to the defendant, or which require a reversal.
The foregoing views lead to the conclusion that the verdict should, remain:
Adams and Spring, JJ., concurred; McLennan, J., dissented Smith, J.,-not voting.'
Judgment and order affirmed, with costs.