Case ID: ad_168/html/0286-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank W. Baum, Individually and as Committee of the Person and Estate of Annie E. Curtis, on Behalf of Himself Individually and as Such Committee and on Behalf of All Other Stockholders of Publishers Plate Company, Similarly Situated, Appellant, v. Victor H. Stockell, as Assignee for the Benefit of Creditors of Publishers Plate Company and Others, Respondents.
    First Department,
    June 18, 1915.
    Pleading — practice — supplemental summons and complaint — action by stockholder against directors for mismanagement — conspiracy of defendant acting as executor.
    A stockholder suing on behalf of himself and other stockholders to compel the officers and directors of his corporation to account for mismanagement and waste who sets forth that one of the defendants, having qualified as executor of the chief stockholder, brought action in his representative capacity against the corporation pursuant to a conspiracy to dissipate its assets, which action has been abandoned, is entitled to bring in such defendant in his representative capacity by a supplemental summons. Such is the proper practice for adding a defendant not originally named in the summons, and not an application for leave to amend the original summons.
    The plaintiff in the action aforesaid is also entitled to an order authorizing the serving of a supplemental complaint setting out acts of the defendant as executor in collusion with the assignee to whom the corporation assigned its assets for the benefit of creditors, which acts took place before and aftér the commencement of the action, but were unknown to the plaintiff at that time.
    On a motion to serve a supplemental summons and complaint neither the sufficiency of the pleading nor the relevancy of its allegations nor defects of parties plaintiff or defendant will be considered.
    An application for leave to serve a supplemental summons and complaint should not be denied because the plaintiff had previously attempted to serve an amended summons upon the defendant as executor without leave of court, which complaint was stricken out on motion, with leave to the plaintiff to move for an amendment of process nune pro tune.
    
    Appeal by the plaintiff, Frank W. Baum, individually and as committee, etc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 22d day of March, 1915, denying his motion for leave to serve a supplemental summons and complaint.
    
      Isidor Unger [James B. McGarvey with him on the brief], for the appellant.
    
      Henry J. Wehle [John H. Judge with him on the brief], for the respondent Louis B. Hasbrouck.
    
      Lawrence S. Coit, for the respondent Joseph G. Quinn, Jr.
    
      Reginald H. Schenck [Charles S. Daley with him on the brief], for the respondent Victor H. Stockell.
    No appearance for the respondent Leon A. Carley.
   Laughlin, J.:

This is an action by a stockholder in behalf of himself and all other stockholders of the Publishers Plate Company in the right of the company primarily to compel the defendants Hasbrouck, Oarley and Quinn to account to the company, by accounting to the defendant Stockell as assignee for the benefit of its creditors, for alleged mismanagement and waste by them as its directors and officers.

The original complaint shows that 974 shares of a total issue of 1,000 shares of the capital stock of said company were owned by Benjamin P. Curtis, who died on the 28th day of October, 1908, leaving a last will and testament naming the defendant Hasbrouck as executor; that Hasbrouck qualified and is still acting as such executor; that from the 31st day of October, 1908, only three days after the death of said Curtis, and until the assignment of the corporation for the benefit of creditors, Hasbrouck, Oarley and Quinn were its sole directors and officers and had entire charge and control of its business. The original complaint also set forth various acts alleged to have been performed by the defendants Hasbrouck, Oarley and Quinn, pursuant to an agreement constituting a conspiracy to dissipate the assets of the corporation and to appropriate its funds to their own use, benefit and advantage, and charged that an action was brought by Hasbrouck as executor against the corporation on a claim for $6,000, which, however, it was alleged Hashronck as executor “has now abandoned.” Hasbrouck as executor was not joined as a party defendant. The motion made was for leave to bring him in as executor by a supplemental summons. That is the remedy prescribed by section 453 of the Code of Civil Procedure for adding a party defendant not originally named in the summons, and counsel for respondents are in error in contending that the application should have been for leave to amend the summons. Plaintiff also asked leave to serve a supplemental complaint alleging various steps taken by Hasbrouck as executor in said action, taken since the commencement of this action and before the commencement thereof but unknown to plaintiff at the time, toward prosecuting and bringing the action to trial. Those allegations afford the proper basis for a supplemental complaint under section 544 of the Code of Civil Procedure; and the further allegations of collusion between Hasbrouck as executor and the assignee by which it is intended to permit a recovery without regard to the merits of the claim, and the prayer for an injunction enjoining the prosecution of the action by Hasbrouck as executor, render it proper that the supplemental summons be issued and that the service of a supplemental complaint be authorized.

The appellant’s practice is in all respects in accordance with that prescribed by the Code of Civil Procedure and the motion should have been granted. (Herbert v. De Murias, 115 App. Div. 453; Sand v. Borman, 134 id. 651; Code Civ. Proc. §§ 544, 453.) There is no merit to any of the points made by respondents. On such a motion neither the sufficiency of the pleading nor the relevancy of all the allegations nor a defect of parties plaintiff or defendant is to be considered. (Brewster v. Brewster Co., 138 App. Div. 139.)

It is quite clear that this relief is not barred by a former order. The plaintiff assumed to serve an amended summons and complaint adding Hasbrouck as executor without obtaining leave of the court, and that complaint was stricken out on motion of the assignee. When the assignee made that motion the plaintiff moved for an amendment of the summons nunc pro tunc to conform to the amended complaint as served. That motion was denied, with leave to renew. The leave thus granted, if construed literally, was not proper practice, and construed strictly the order in no manner affects the motion for leave to bring in Hasbrouck by a supplemental summons and to serve a supplemental complaint. The order, however, was intended to authorize a proper motion for the relief desired, and this motion was made within the time limited as extended.

It follows that the order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.

Ingraham, P. J., McLaughlin, Clarke and Scott, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.