Case ID: ad_48/html/0012-01.html
Source: Caselaw Access Project
Author: {"author": "O’Brien, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William R. Montgomery, Respondent, v. The Brush Electric Illuminating Company of New York, Appellant.
    
      Corporation — liability of a stockholder (where its stock had not been paid in full) for a claim due to several persons, jointly, one of whom is a stockholder.
    
    In an action "brought under section 10 of the Manufacturing Act of 1848 (Chap. 40), as continued by section 54 of the Stock Corporation Law of 1892 (Chap. 688), against a stockholder of a corporation whose stock had not been paid for in money or property as required by the statute, to recover for legal services, rendered to the corporation by the plaintiffs assignors, the fact that one of the plaintiffs assignors is a stockholder of the corporation does not preclude a recovery, where it appears that the employment and services of the plaintiff’^ assignors were joint and not several.
    Appeal by the defendant, The Brush Electric Illuminating Company of New York, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 23d day of August, 1899, upon the report of a referee.
    
      Noel Gale, for the appellant.
    
      William G. Wilson, for the respondent.
   O’Brien, J.:

The action was brought to enforce the liability of the appellant as a stockholder of the Brush-Swan Electric Light Company of New England, under section 10 of the Manufacturing Act of 1848 (Chap. 40), as continued by section 54 of the Stock Corporation Law of 1892 (Chap. 688). The alleged liability of the defendant as such stockholder was because of the non-payment for defendant’s stock in money, or property, as required by the statute. The plaintiff was the assignee of claims of Messrs. Evarts, Choate & Beaman and of William G. Wilson for professional services rendered by them to the Brush-Swan Electric Light Company, upon which judgment had been obtained and an execution returned wholly unsatisfied.

No question is raised as to the validity of the judgment or the return of the execution, nor to the rendition or value of the services of 'the plaintiff’s assignors, the principal point urged being that the learned referee erred in holding that the contracts made by the Brusli-Swan Electric Light Company with two other electric light companies, by which it obtained electric light plants for sale, were not for “ property necessary for the business ” of the Brush-Swan Electric Light Company, and that the stock issued for such contracts was not fully paid, and that the defendant, as the holder of some, of such stock, was liable for the debts of the corporation. As correctly held by the referee, this branch of the case is fully covered by Powell v. Murray (3 App. Div. 273; affd., 157 N. Y. 717).

Another contention made before the referee and again in this court, grew out of the fact that one of the plaintiff’s assignors, William Q. Wilson, was a stockholder in the Brush-Swan Electric Light Company, and this, it is urged, afforded a defense to that portion of the cause of action derived from him. It is undoubtedly the rule in this State that an action cannot be maintained by one stockholder in a corporation against another stockholder therein upon the liability imposed by the Manufacturing Act of 1848. This rule, the referee held, did not apply to the case at bar for the reasons, first, that Mr. Wilson held the stock in fact as trustee for another; second, that the plaintiff himself was under no personal disability of this character, although one of his assignors might have been unable to sue in his own right; and, third, that the defendant, to maintain this defense, must show affirmatively how much the claim of Mr. Wilson amounted to, as distinguished from that of Messrs. Evarts, Choate & Beaman.

Without deeming it necessary to concur with the referee upon the first and second ground, which we, therefore, do not decide, we think that the judgment should be affirmed upon the ground that the employment and services of the attorneys were, upon the evidence, joint and not several.

The other minor questions it is unnecessary to discuss, and the judgment accordingly should be affirmed, with costs.

Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ., concurred.

Judgment affirmed, with costs.