Case ID: ad_87/html/0312-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jed E. Adams, Jr., Respondent, v. Henry Slingerland Appellant, Impleaded with Benjamin T. Rhoads, Jr., and Others.
    
      Liability of a stockholder of a full liability business corporation—it is restricted by section 55 of the Stock Corporation Law—misjoinder of parties defendant.
    
    The liability imposed' upon the stockholders of a full liability business corpora-' tion by section 6 of the Business Corporations Law (Laws of 1892, chap. 691)-which provides, “All the stockholders of the corporation shall be severally individually liable to its creditors for all its debts and liabilities,” is modified, and restricted by the provision of section 55 of the Stock Corporation Law (Laws of 1892, chap. 688) which declares that, no action shall be brought to-enforce the liability of a stockholder for the debts of a corporation unless an action to collect the indebtedness shall have been brought against the corporation within two years after the debt became due.
    The objection that there is a misjoinder of parties defendant is not a defense which may be raised by answer.
    Appeal by the defendant, Henry Slingerland, from an interlocutory 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 6th day of February, 1903, upon the decision of the court, rendered. after a trial at the New York Special Term, sustaining the plaintiff’s demurrer to certain defenses pleaded in the said- defendant’s amended answer.
    
      Louis F. Reed, for the appellant.
    
      Edward S. Clinch, for the respondent.
   Laughlin, J.:

The plaintiff is a creditor of the Morton Boarding Stables, a full liability business corporation, and he brings this action against the stockholders to enforce the liability imposed by section 6 of the Business Corporations Law (Laws of 1892, chap. 691), which provides as follows: “ All the stockholders of the corporation shall be severally individually liable to its creditors for all its debts and. liabilities.” In the complaint six causes of action are separately pleaded. The answer sets up separately as a defense to each that no action for the collection of the debt was brought against the corporation within two years after it became due.. The plaintiff demurred.to these defenses upon the ground that they were insufficient in law, and the demurrer has been sustained.

The appellant contends that the liability of the stockholders of a business corporation imposed by section 6 of the Business Corporations Law is modified and restricted by the latter part of section 55 of th¿ Stock Corporation Law (Laws of 1892, chap. 688), which declares that no action shall be brought to enforce the liability of a stockholder for the debts of the corporation unless an action to collect the indebtedness shall have been brought against the corporation within two years after the debt became due. This contention is upheld by our decision in Adams v. Wallace (82 App. Div. 117), made since the decision at Special Term in the case at bar. We regard that decision as controlling, and, without examining the question anew, it requires a reversal.

The answer also sets up as a defense to each of the causes of action that there is a misjoinder of parties defendant; that the defendants cannot be sued jointly, and that plaintiff has joined more .than one defendant on a several liability. The plaintiff also demurred to this part of the answer, and the demurrer was sustained. The facts upon which this objection is based appear upon the face of the complaint. The substance of the objection is that there is a misjoinder of parties defendant; but this would not be a ground of demurrer (Code Civ. Proc. § 488; Hall v. Gilman, No. 1, 77 App. Div. 458; Barnes v. Blake, 59 Hun, 371; 13 N. Y. Supp. 77); nor is it new matter; and, therefore, it does not constitute a defense which may be interposed by answer. (Code Civ. Proc. § 500.) It is not apparent how one defendant who is_ liable ' on a cause of action is prejudiced by having another defendant,, also liable severally, joined with him.; but the precise question for decision is, whether it is a defense that may be interposed by "answer; and being of the opinion that it is not, it becomes unnecessary for us to decide whether there is authority for joining defendants who are severally liable in an action at law, or whether the question might have been properly raised in any other manner.

It follows, therefore, that the interlocutory judgment, in so far as it sustains the demurrer to the 4th clause or subdivision of the answer to each of the six several causes of action, should be reversed and thé demurrer to that extent overruled; and in other respects the interlocutory judgment should be affirmed, with leave to defendants to amend answer within twenty days. No costs to either party as against the other.

Van Brunt, P. J., Patterson, O’Brien and Hatch, JJ., concurred,

Interlocutory judgment, in so far as it sustains demurrer to 4th clause or subdivision of answer to each -of the six several causes of action, reversed and demurrer to that extent overruled; in other respects interlocutory judgment affirmed, with leave to defendant to amend answer within twenty days; no costs to either party as against the other.