Case ID: ny-st-rep_23/html/0213-01.html
Source: Caselaw Access Project
Author: {"author": "Sedgwick, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Harrison B. Moore et al., Resp’ts, v. New Jersey Lighterage Company et al., App’lts.
    
      (New York Superior Court, General Term,
    
    
      Filed May 6, 1889.)
    
    Corporation—Assessment on stock—When, and to what extent, injunction GRANTED.
    A corporation made a call upon its stockholders generally, including the plaintiffs, of fifty dollars per share, threatening forfeiture of stock if not paid. The plaintiffs, who are owners of shares which have been fully paid for, applied for, and obtained, an injunction restraining the corporation from (jeclaring any forfeiture of stock, or taking any other action, under or by virtue of the resolution of the directors, as to said call. Held, that as the resolution directing the call specifically threatens to enforce it under its charter—that is to proceed to forfeit the shares of those stockholders who do not fulfil the demands of the call—the plaintiffs have a right, in equity, to restrain an attempt to forfeit their shares. When this restraint is made, they are fully protected against- any injury that may come from the enforcement of the call against other shareholders.
    
      Appeal from order enjoining defendants during the pendency of the action.
    
      Enos N. Taft, for app’lts; Albert A. Abbott, for resp’ts.
   Sedgwick, J.

The defendants’ corporation is foreign, having been constituted by the statutes of New Jersey. I assume that the plaintiffs are residents of this state, and that the courts of this state have jurisdiction of the action. The appellants make no question as to the jurisdiction.

The defendant’s corporation made a call upon its stockholders generally, including the plaintiffs, of fifty dollars per share. In this call it was declared that any stockholder might assign to the corporation his share, and that in such case the corporation would issue to him a certificate for_ one-half of the number of shares assigned, and the assignment should be in satisfaction of the call.

The plaintiffs claimed in this action that such a call was not authorized by law,-and was invalid, because the shares of the company had been before the call fully paid for, and were not assessable, and the corporation was not authorized by law to take anything but cash in payment for shares. It, however, appears that if the plaintiffs were not hable to the threatened consequences of the call, they would not be injured by other shareholders acceding to the terms of the call.

. On the papers, the plaintiffs shares have been fully paid for, and the call should not be enforced against them. The resolution directing the call specifically threatens to enforce it under its charter, that is to proceed to forfeit the shares of those stockholders who do not fulfill the demands of the call. The plaintiffs have a right, in equity, to restrain an attempt to forfeit their shares. When this restraint is made by order of the court, they are fully protected against ■ any injury that may come from the enforcement of the call against other shareholders. The order below should be modified by enjoining the defendants from proceeding to forfeit the plaintiffs shares. The plaintiffs have an adequate protection at law against any action the corporation may bring for money judgment upon the supposed obligations of the call.

I do not think that the order of injunction is contrary to the provisions of section 1809, Code Civil Procedure; but omitting the specific injunction against other directors than the one served, will take the question out of the case.

The order is modified as • the opinion suggests, and, as modified, affirmed, without costs.

0’GtORMAR, J., concurs.