Case ID: ny-st-rep_29/html/0014-01.html
Source: Caselaw Access Project
Author: {"author": "Bradley, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Alfrederick S. Hatch, Resp’t, v. Henry Y. Attrill et al., App’lts.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed January 28, 1890.)
    
    1. Business corporations—Laws 1875, chap. 611, § 21—Liability of director for signing false report—Evidence.
    On the trial of an action to recover from directors of a corporation who had signed a false report as to the stock having been all paid in, when, in fact, only a lot of land had been obtained by the company of far less-value than the capital stock, plaintiff offered in evidence the report of commissioners appointed to take subscriptions to stock, stating that ten per cent, in cash had been paid in, etc. Held, that this was competent, as it had not then been shown that ten per cent, had not been paid in.
    2. Trial—Verdict—Correction of.
    The jury were directed to bring in a sealed verdict. They did present one for $50,000, which the court refused to take, and instructed them, if they found for plaintiff, it must be for the full amount claimed, which they afterwards did. Held, no error.
    (Potter, J., dissents.)
    Appeal from judgment of the general term of the supreme court in the second judicial department, affirming a judgment entered on a verdict in favor of the plaintiff for $163,695.31.
    
      Coles Morris, for app’lt Attrill; Delos McCurdy, for app’lt Soutter; James C. Carter, for app’lts; W. W. MacFarland, for resp’t.
    
      
       Affirming 1 N. Y. State Rep., 497.
    
   Bradley, J.

The purpose of the action was to recover the amount of a debt alleged to be due to the plaintiff from the Rock-away Beach Improvement Company, Limited, a corporation organized pursuant to the general act providing for the organization and regulation of certain business corporations. Laws 1875, chap. 611. The defendants were directors of the company, and the alleged ground of the action is that a certificate signed by them, representing that the amount of the capital stock of the company, amounting to $700,000, was fully paid, was false; and that they were charged with liability by the statute, which provides that “if any certificate or report made, or public notice given, by the officers of any such corporation shall be false in any material representation, all the officers who shall have signed the same shall be jointly and severally liable for all the debts of the corporation contracted while they are officers thereof.” Id., § 21.

The payment for the capital stock was made by the conveyance by defendant, Attrill, to the company, of 120 acres of land subject to a mortgage of $72,000. And the alleged falsity of the certificate was in the fact, as also alleged, that the value of the land so conveyed was much less than the amount of the stock. The certificate in question here is the same, and the facts on the merits are in all respects substantially so in this case as in that of Huntington v. The Same Defendants, decided at the present session of this court. For a more particular statement of the facts, and for the views of the court upon the legal propositions presented, reference may be bad to the opinion of the court in the Huntington case. There are a few additional questions arising upon exceptions in this case. They will be considered. The statute provides that on filing the certificate, with a view to the formation of a corporation, the secretary of state shall issue a license to the persons making the certificate, empowering them as commissioners to open books for subscription to the capital stock; that the commissioners shall proceed to open books for that purpose, and no subscription shall be received unless at the time of making it the subscriber pay to the commissioners ten per cent, of the par value of the stock subscribed for in cash; and that when one-half of the capital stock has been subscribed the commissioners shall call a meeting of the subscribers for the purpose of adopting by-laws for, and electing directors of, the corporation. Id., §§ 4, 5. The commissioners, to whom the license was issued, made their report, by which it was made to appear that books were opened for subscriptions to the stock of the company, and, after stating them, added that at the time of making the subscription each subscriber paid in cash ten per cent, of the par value of each and every share subscribed for by him; and that at least one-half of the capital stock was subscribed in accordance with the statute, and then proceeded to state that a meeting was called, by-laws made and directors of the company elected. The defendants were two of those commissioners, and, with others, signed the report. Upon the trial that report was, by the plaintiff, offered in evidence. Objection was made to so much of it as related to the action of the commission, and exception was taken to its reception. This report was within the statutory proceeding to complete the organization of the company, and was competent, although, perhaps, in view of the pleadings, unnecessary ; but the objection was not taken on that ground or to it as a whole. The fact that ten per cent, of the subscriptions was not paid in cash had not appeared when this evidence was introduced. The exception was not well taken.

A witness called on the part of the plaintiff gave, without objection, his opinion of the value of the property in question, and following his cross-examination a motion made by the defendant's counsel to strike out the evidence of the witness as incompetent-was denied and exception taken. There was no error in that ruling. If the- effect of the cross-examination upon the evidence of the witness on the question of value was such that it was not entitled to any consideration, the defendant’s counsel had the right to have the jury so instructed by the charge of the court, but not to have it stricken out on motion. The most that can be said on the defendant’s view of the evidence is that the ruling was within the discretion of the court. Gawtry v. Doane, 51 N. Y., 84; Marks v. King, 64 id., 628; Platner v. Platner, 78 id., 91; Stokes v. Johnson, 57 id., 673.

The defendants offered to show that the report in question was filed at the suggestion of Mr. Fisk, who was originally one of the plaintiffs in this action, for the purpose of relieving defendant At-trill from liability under the statute and exception was taken to the exclusion of the evidence. It may be observed that the statute provides that the stockholders shall be severally individually liable to the creditors "of the company to an amount equal to that of stock held by them respectively for all debts and contracts of such company until the whole amount of the capital stock has been paid in and a certificate thereof has been made and recorded. Id., § 37. This evidently was the provision referred to in the pro]30sed proof. And it is contended that the evidence so offered would tend 'to prove acquiescence of Fisk in the truth of the certificate and having a bearing upon the valuation put upon the property by the defendants. It is not seen how any such inference could be derived from the evidence offered. The certificate makes no reference to the property, nor could it be inferred by such evidence that a false certificate was within the contemplation of Fisk, but rather that the requisite statutory certificate would be made. Upon that assumption the suggestion was a wise one. It is not seen that the evidence could have had any relevancy to the advantage of the defendants upon any question in this case.

The further question had relation to the rendition of the verdict. Sometime after the jury retired for deliberation, they were directed by the court to bring in a sealed verdict the next morning if they agreed in the meantime. They did then present to the court a sealed verdict in favor of the plaintiff for $50,000. Upon opening it the court informed the jury that it could not receive such a verdict, refused to do so, and directed the jury to .again retire, and instructed them that if they found a verdict for the plaintiff to find it for the full amount claimed. The jury retired and afterwards returned into court and rendered a verdict of .$163,695.31. The direction that the jury seal their verdict was given in the evening with the consent of the parties, and the court was then adjourned until the next morning, which was Thanks.giving, and it was understood that the court should receive the verdict in the morning, and that all motions would be reserved until a subsequent day. The defendant’s counsel afterwards appeared in court, and excepted to the refusal of the court to receive the verdict as first found by the jury. The amount of the debt due the plaintiff was that for which the verdict was finally rendered. That was not questioned. Whether or not the plaintiff was entitled to recover any sum against the defendants was a question of fact for the jury, but in the event they found for the plaintiff the amount of the debt was the measure of recovery. When, therefore, the jury found that the plaintiff was entitled to recover, their further duty was plain. The court refused to receive the verdict as first found, because it was not such an one as the jury, under the instructions of the court, legally were at liberty to render, and they were sent back to reconsider the verdict so far as related to the question of fact with directions as to the amount of it in the event they found for the plaintiff. In that respect and in such event it was matter of correction of a mistake. The province of the jury was not, to any extent, invaded by this action of the court. And before the verdict was recorded it was within the recognized power of the court, for the purpose and as done in this instance, to send the jury back to reconsider their verdict. Warner v. N. Y. C. & H. R. R. R. Co., 52 N. Y., 437.

The judgment should be affirmed.

All concur, except Potter, J., dissenting.