Case ID: nys_26/html/0649-01.html
Source: Caselaw Access Project
Author: {"author": "\n      MAYHAM, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WARREN et al. v. BIGELOW BLUE STONE CO.
    (Supreme Court, General Term, Third Department.
    December 6, 1893.)
    ¡Corporations—Bight op Stockholder to Besist Foreclosure.
    In an action to foreclose a mortgage given to secure bonds issued by defendant corporation, a stockholder will not be permitted to intervene, in order to object to the validity of the mortgage, where it appears that such stockholder derived her stock from her father, who held it at the time the mortgage was given, and that annual statements showing the amount of the mortgage indebtedness had been sent to her for 12 years after she became a stockholder.
    Appeal from special term, Ulster county.
    Action by Joseph M. Warren and others, as trustees for the benefit of the holders of bonds secured by a mortgage executed for the Bigelow Blue Stone Company, against the Bigelow Blue Stone Company and others, to foreclose said mortgage. Pending the action, Helen M. Kellogg, a stockholder, petitioned to intervene and to be made a defendant, and to be permitted to interpose and answer. The application was denied, and she appeals.
    Affirmed.
    The opinion of Mr. Justice BROWN at special term, on denying the application, is as follows:
    The petitioner on this motion is the owner of shares of stock in the defendant corporation, of which she became the owner in February, 1880. She received them from the estate of her father, Luther Laflin, who was a stockholder at the date of the execution of the mortgage in suit. Interest was paid regularly on the bonds until 1892, and annual statements, showing that mortgage bonds to the amount of $100,000 were among the liabilities of the company, were forwarded to the stockholders. It is not claimed that Mrs. Kellogg or her father did not know of the execution and existence of the mortgage, and it appears uncontradicted that some of the bonds were offered to her father at the time of their issue, but he declined to purchase them. Under these circumstances the petitioner cannot be permitted to plead, as a defense to an action to foreclose the mortgage, that it was not properly executed, or that it was not authorized by the owners of two-thirds of the capital stock. Acquiescence after such lapse of time will be presumed. Kent v. Mining Co., 78 N. Y. 159; Skinner v. Smith, 134 N. Y. 240, 31 N. E. 911. The claim that $32,000 of the bonds have been paid by the company does not rest upon the assertion of any fact. It is fully met in the affidavit of Mr. Caswell, and the transaction explained, and it affirmatively appears that none of the bonds were paid by the company. The defense of usury cannot be pleaded to the mortgage in suit. The petition does not make out a prima facie case, and, if all the facts set forth in the moving papers were before the trial court, the plaintiffs would be entitled to a decree directing a sale of the mortgaged property. The motion must be denied.
    Argued before MAYHAM, P. J., and PUTNAM and HERRICK, JJ.
    Kellogg, Rose & Smith, (L. Laflin Kellogg, of counsel,) for appellant.
    A. T. Clearwater, for respondents.
    King & Speck, (Henry A. King, of counsel,) for respondent Bigelow Blue Stone Co.
    Townsend, Dyett & Einstein, (A. R. Dyett, of counsel,) for respondent Importers’ & Traders’ Bank.
   MAYHAM, P. J.

We think this order should be affirmed, for the reasons stated by the learned judge at special, term. Order affirmed, with $10 costs and printing disbursements. All concur.